Form 20-F
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
¨ |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
þ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2011
OR
¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
¨ |
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
For the transition period from to
Commission file number: 1-14251
SAP AG
(Exact name of Registrant as specified in its charter)
SAP CORPORATION
(Translation of Registrants name into English)
Federal Republic of
Germany
(Jurisdiction of incorporation or organization)
Dietmar-Hopp-Allee 16
69190 Walldorf
Federal Republic of Germany
(Address of principal executive offices)
Wendy Boufford
c/o SAP Labs
3410 Hillview Avenue, Palo Alto, CA, 94304, United States of America
650-849-4000 (Tel)
650-849-2650 (Fax)
(Name, Telephone, Email and/or Facsimile number and
Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Name of each exchange on which registered |
American Depositary Shares, each Representing
one Ordinary Share, without nominal value |
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New York Stock Exchange |
Ordinary Shares, without nominal value |
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New York Stock Exchange* |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period
covered by the annual report:
Ordinary Shares, without nominal value: 1,228,083,382 (as of December 31, 2011)**
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes þ No
¨
If this report is an annual or transition report, indicate by check mark if
the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ¨ No þ
Note Checking the box above will not relieve any registrant required
to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)
Yes ¨ No
¨
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer þ |
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Accelerated filer ¨ |
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Non-accelerated filer ¨ |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing:
U.S. GAAP ¨
International Financial Reporting Standards as issued by the International Accounting Standards
Board þ Other ¨
If Other has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow.
Item 17 ¨ Item 18 ¨
If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No
þ
* |
Listed not for trading or quotation purposes, but only in connection with the registration of American Depositary Shares representing such ordinary shares pursuant to
the requirements of the Securities and Exchange Commission. |
** |
Including 37,765,849 treasury shares. |
Table of Contents
i
ii
iii
INTRODUCTION
SAP AG is a German stock corporation (Aktiengesellschaft) and is referred to in this report, together with its subsidiaries, as SAP, or
as Company, Group, we, our, or us. Our Consolidated Financial Statements included in Item 18. Financial Statements in this report have been prepared in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board, referred to as IFRS throughout this report.
In this report: (i) references to US$, $, or dollars are to U.S. dollars; (ii) references to or euro are to the euro. Our
financial statements are denominated in euros, which is the currency of our home country, Germany. Certain amounts that appear in this report may not add up because of differences due to rounding.
Unless otherwise specified herein, euro financial data have been converted into dollars at the noon buying rate in New York City for
cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the Noon Buying Rate) on December 30, 2011, which was US$1.2973 per 1.00. No representation is made that such
euro amounts actually represent such dollar amounts or that such euro amounts could have been or can be converted into dollars at that or any other exchange rate on such date or on any other date. The rate used for the convenience translations also
differs from the currency exchange rates used for the preparation of the Consolidated Financial Statements. This convenience translation is not a requirement under IFRS and, accordingly, our independent registered public accounting firm has not
audited these US$ amounts. For information regarding recent rates of exchange between euro and dollars, see Item 3. Key Information Exchange Rates. On March 8, 2012, the Noon Buying Rate for converting euro to dollars was
US$1.3256 per 1.00.
Unless the context otherwise requires, references in this report to ordinary shares are to
SAP AGs ordinary shares, without nominal value. References in this report to ADRs are to SAP AGs American Depositary Receipts, each representing one SAP ordinary share.
SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP BusinessObjects Explorer, StreamWork, SAP HANA, and other SAP
products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal
Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects Software Ltd. Business Objects is an SAP company.
Sybase and Adaptive Server, iAnywhere, Sybase 365, SQL Anywhere, and other Sybase products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Sybase Inc. Sybase is an SAP company. Crossgate,
m@gic EDDY, B2B 360°, and B2B 360° Services are registered trademarks of Crossgate AG in Germany and other countries. Crossgate is an SAP company. All other product and service names mentioned are the trademarks of their respective
companies. Data contained in this document serves informational purposes only. National product specifications may vary.
Throughout this report, whenever a reference is made to our website, such reference does not incorporate by reference into this report
the information contained on our website.
We intend to make this report and other periodic reports publicly available on our
Web site (www.sap.com) without charge immediately following our filing with the U.S. Securities and Exchange Commission (SEC). We assume no obligation to update or revise any part of this report, whether as a result of new information, future events
or otherwise, unless we are required to do so by law.
1
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements and information based on the beliefs of, and assumptions made by, our management using
information currently available to them. Any statements contained in this report that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. We have based these
forward-looking statements on our current expectations, assumptions, and projections about future conditions and events. As a result, our forward-looking statements and information are subject to uncertainties and risks. A broad range of
uncertainties and risks, many of which are beyond our control, could cause our actual results and performance to differ materially from any projections expressed in or implied by our forward-looking statements. The uncertainties and risks include,
but are not limited to:
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Uncertainty in the global economy, financial markets, and in political conditions could have material negative impact on our business, financial
position, profit, and cash flows. |
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Third parties have claimed, and might claim in the future, that we infringe their intellectual property rights, which could lead to damages being
awarded against us and limit our ability to utilize certain technologies in the future and could have a material negative impact on our business, financial position, profit, or cash flows. |
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Undetected security flaws in our software or our proprietary systems or those of our third-party service and software providers may be exploited by
other persons, which could damage SAP or our customers and significantly impact our financial position, profit, cash flows, and reputation. |
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If our established customers do not buy additional software products, renew maintenance agreements, or purchase additional professional services, this
could have a material adverse impact on
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our business, financial position, profit, and cash flows. |
We describe these and other risks and uncertainties in the Risk Factors section.
If one or more of these uncertainties or risks materializes, or if managements underlying assumptions prove incorrect, our actual
results could differ materially from those described in or inferred from our forward-looking statements and information.
The
words aim, anticipate, assume, believe, continue, could, counting on, is confident, estimate, expect, forecast,
guidance, intend, may, might, outlook, plan, project, predict, seek, should, strategy, want,
will, would, and similar expressions as they relate to us are intended to identify such forward-looking statements. Such statements include, for example, those made in the Operating Results section, our quantitative and
qualitative disclosures about market risk pursuant to the International Financial Reporting Standards (IFRS), namely IFRS 7 and related statements in our Notes to the Consolidated Financial Statements, the Risk Factors section, our outlook
guidance, and other forward-looking information appearing in other parts of this report. To fully consider the factors that could affect our future financial results, both our Annual Report and Annual Report on Form 20-F should be considered, as
well as all of our other filings with the Securities and Exchange Commission (SEC). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date specified or the date of this report. Except
where legally required, we undertake no obligation to publicly update or revise any forward-looking statements as a result of new information that we receive about conditions that existed upon issuance of this report, future events, or otherwise
unless we are required to do so by law.
This report includes statistical data about the IT industry and global economic trends
that comes from information published by sources including International Data Corporation (IDC), a provider of market information and advisory
2
services for the information technology, telecommunications, and consumer technology markets; investment bank Goldman Sachs; the European Central Bank (ECB); the International Monetary Fund
(IMF); and the Organisation for Economic Co-operation and Development (OECD). This type of data represents only the estimates of IDC, Goldman Sachs, the ECB, the IMF, the OECD and other sources of industry data. SAP does not adopt or endorse any of
the statistical information provided by sources such as IDC, Goldman Sachs, the ECB, the IMF, the OECD or other similar sources that is contained in this report. In addition, although we believe that data from these companies is generally reliable,
this type of data is inherently imprecise. We caution readers not to place undue reliance on this data.
FINANCIAL MEASURES CITED IN THIS REPORT
Measures we Use to Manage Operating Performance
We use various performance
measures to help promote our primary goal of sustained growth in corporate value and our ancillary goal of profitable revenue growth. The following are the key measures we used in 2011:
Non-IFRS SSRS revenue: Our software and software-related service (SSRS) revenue includes software and support revenue plus
subscription and other software-related service revenue. The principal source of software revenue is the fees customers pay for software licenses. Software revenue is our key revenue driver because it tends to affect our other revenue streams.
Generally, customers who buy software licenses also enter into maintenance contracts, and these generate recurring software-related service revenue in the form of support revenue after the software sale. Maintenance contracts cover support services
and software updates and enhancements. We generate subscription and software-related service revenue when we provide software on subscription or in a cloud mode, that is, with obligatory hosting terms. Software revenue also tends to stimulate
service revenue from consulting and training sales.
Non-IFRS operating profit/non-IFRS operating margin: In 2011, we used non-IFRS
operating profit/non-IFRS operating margin and constant currency non-IFRS operating profit/non-IFRS operating margin to measure our overall operational process efficiency and overall business performance. Non-IFRS operating margin is the ratio of
our non-IFRS operating profit to total non-IFRS revenue, expressed as a percentage. See below for a discussion of the IFRS and non-IFRS measures we use.
Measures we Use to Manage Non-Operating Performance
We use the following
performance measures to manage non-operating items:
Finance income, net: This measure provides
insight especially into the return on liquid assets and capital investments and the cost of borrowed funds. To manage our financial income, net, we focus on cash flow, the composition of our liquid asset and capital investment portfolio, and the
average rate of interest at which assets are invested. We also monitor average outstanding borrowings and the associated finance costs.
DSO and DPO: We manage working capital by controlling the days sales outstanding for operating receivables, or DSO (defined as average number of days from the raised
invoice to cash receipt from the customer), and the days payables outstanding for operating liabilities, or DPO (defined as average number of days from the received invoice to cash payment to the vendor).
Measures we Use to Manage Overall Performance
For managing our overall performance we use the following measures:
Earnings
per share (EPS): EPS measures our overall performance, because it captures all operating and non-operating elements of profit as well as income tax expense. It represents the portion of profit after tax allocable to each
SAP share outstanding (using the weighted average number of shares
3
outstanding over the reporting period). EPS is influenced not only by our operating and non-operating business, and income taxes, but also by the weighted average number of shares outstanding. We
believe that stock repurchases and dividend distributions are a good means to return value to shareholders in accordance with the authorizations granted by them.
Effective tax rate: We define our effective tax rate as the ratio of income tax expense to profit before tax, expressed as a percentage.
Operating, investing and financing cash flows: Our consolidated statement of cash flows provides insight as
to how we generated and used cash and cash equivalents. When used in conjunction with the other primary financial statements it provides information that helps us evaluate the changes of our net assets, our financial structure (including our
liquidity and solvency), and our ability to affect the amounts and timing of cash flows in order to adapt to changing circumstances and opportunities.
Value-Based Management
Our holistic view of the performance measures
described above together with our associated analyses comprise the information we use for value-based management. We use planning and control processes to manage the compilation of these key measures and their availability to our decision makers
across various management levels.
SAPs long-term strategic plans are the point of reference for our other planning and
controlling processes, including creating a multi-year plan until 2015. We identify future growth and profitability drivers at a highly aggregated level. This process is intended to identify the best areas in which to target sustained investment.
Next, we evaluate our multi-year
plans for our support and development functions and break down the customer-facing plans by sales region. Based on our detailed annual plans we determine the budget for the respective year. We
also have processes in place to forecast revenue and profit on a quarterly basis to quantify whether we expect to realize our strategic goals and to identify any deviations from plan. We continuously monitor the concerned units in the Group to
analyze these developments and define any appropriate actions.
Our entire network of planning, control, and reporting
processes is implemented in integrated planning and information systems, based on SAP software, across all organizational units so that we can conduct the evaluations and analyses needed to make informed decisions.
Measures Used in this Report
Like in prior years, we provided our 2011 outlook on the basis of certain non-IFRS measures as described above. Therefore, this report contains a non-IFRS based comparison of our actual performance in
2011 against that outlook.
This introductory section provides:
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A reconciliation of IFRS measures to the respective and most comparable non-IFRS measures |
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An explanation of the non-IFRS measures we disclose in this report including an explanation of changes we made effective from January 1, 2012
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The reasons why management believes these non-IFRS measures are useful to investors and the limitations of these measures |
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An explanation of our constant currency information
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4
Reconciliations of IFRS to Non-IFRS Numbers for 2011 and 2010
The following tables reconcile our IFRS numbers to the respective and most comparable non-IFRS numbers for each of 2011 and 2010. Our 2010
non-IFRS comparative amounts have been adjusted to conform to the amended non-IFRS definitions introduced in 2011 that also exclude expenses for share-based compensation and restructuring. Due to rounding, the sum of the numbers presented in these
tables might not precisely equal the totals we provide.
Reconciliations of IFRS to Non-IFRS Numbers for 2011 and 2010
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millions, unless otherwise stated |
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for the years ended December 31, |
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2011 |
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2010 |
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IFRS |
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Adj. |
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Non-IFRS |
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Currency Impact |
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Non-IFRS Constant Currency |
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IFRS |
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Adj. |
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Non-IFRS |
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Revenue |
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Software revenue |
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3,971 |
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0 |
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3,971 |
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96 |
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4,067 |
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3,265 |
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0 |
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3,265 |
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Support revenue |
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6,967 |
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27 |
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6,994 |
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58 |
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7,052 |
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6,133 |
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74 |
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6,207 |
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Subscription and other software-related service revenue |
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381 |
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0 |
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381 |
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1 |
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380 |
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396 |
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0 |
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396 |
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Software and software-related service revenue |
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11,319 |
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27 |
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11,346 |
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153 |
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11,499 |
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9,794 |
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74 |
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9,868 |
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Consulting revenue |
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2,341 |
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0 |
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2,341 |
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35 |
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2,376 |
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2,197 |
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0 |
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2,197 |
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Other service revenue |
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573 |
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0 |
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573 |
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8 |
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581 |
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473 |
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0 |
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473 |
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Professional services and other service revenue |
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2,914 |
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0 |
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2,914 |
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43 |
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2,957 |
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2,670 |
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0 |
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2,670 |
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Total revenue |
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14,233 |
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27 |
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14,260 |
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196 |
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14,456 |
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12,464 |
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74 |
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12,538 |
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Total operating expenses |
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Cost of software and software-related services |
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2,107 |
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285 |
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1,822 |
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1,823 |
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202 |
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1,621 |
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Cost of professional services and other services |
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2,248 |
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32 |
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2,216 |
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2,071 |
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18 |
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2,053 |
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Research and development |
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1,939 |
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41 |
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1,898 |
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1,729 |
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23 |
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1,706 |
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Sales and marketing |
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3,081 |
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127 |
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2,954 |
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2,645 |
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95 |
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2,550 |
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General and administration |
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715 |
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30 |
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685 |
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636 |
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26 |
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610 |
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Restructuring |
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4 |
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4 |
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0 |
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3 |
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3 |
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0 |
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TomorrowNow litigation |
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717 |
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717 |
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0 |
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981 |
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981 |
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0 |
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Other operating income/expense, net |
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25 |
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0 |
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25 |
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9 |
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0 |
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9 |
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Total operating expenses |
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9,352 |
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|
198 |
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9,550 |
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|
127 |
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9,677 |
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9,873 |
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1,342 |
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8,531 |
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Operating profit and margin |
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Operating profit |
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4,881 |
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171 |
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4,710 |
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|
69 |
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4,779 |
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2,591 |
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1,416 |
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4,007 |
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Operating margin in % |
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34.3 |
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33.0 |
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33.1 |
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20.8 |
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32.0 |
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Explanation of Non-IFRS Measures
We disclose certain financial measures, such as non-IFRS revenue, non-IFRS operating expenses, non-IFRS operating profit, non-IFRS
operating margin, non-IFRS earnings per share,
constant currency revenue and operating profit measures that are not prepared in accordance with IFRS and are therefore considered non-IFRS financial measures. Our non-IFRS financial measures may
not correspond to
5
non-IFRS financial measures that other companies report. The non-IFRS financial measures that we report should only be considered in addition to, and not as substitutes for or superior to,
revenue, operating expenses, operating profit, operating margin, earnings per share or other measures of financial performance prepared in accordance with IFRS.
We believe that the disclosed supplemental historical and prospective non-IFRS financial information provides useful information to investors because management uses this information, in addition to
financial data prepared in accordance with IFRS, to attain a more transparent understanding of our past performance and our anticipated future results. In 2011, we used these non-IFRS measures consistently in our internal planning and forecasting,
reporting and compensation, as well as in our external communications as follows:
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Our management primarily uses these non-IFRS measures rather than IFRS measures as the basis for making financial, strategic and operating decisions.
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The variable remuneration components of our Executive Board members and employees are based on non-IFRS revenue and non-IFRS operating profit measures
rather than the respective IFRS measures. |
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The annual budgeting process for all management units is based on non-IFRS revenue and non-IFRS operating profit numbers rather than the respective
IFRS numbers. |
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All forecast and performance reviews with all senior managers globally are based on these non-IFRS measures, rather than the respective IFRS numbers.
|
|
|
|
Both our internal performance targets and the guidance we provided to the capital markets are based on non-IFRS revenues and non-IFRS profit measures
rather than the respective IFRS numbers. |
Our non-IFRS financial measures reflect adjustments based on the items below, as well as
adjustments for the related income tax effects.
Non-IFRS Revenue
Revenue items identified as non-IFRS revenue have been adjusted from the respective IFRS numbers by including the full amount of support
revenue that would have been recorded by entities acquired by SAP had they remained stand-alone entities but which we are not permitted to record as revenue under IFRS due to fair value accounting for the support contracts in effect at the time of
the respective acquisitions.
Under IFRS, we record at fair value the support contracts in effect at the time entities were
acquired. Consequently, our IFRS support revenue, our IFRS software and software-related service revenue, and our IFRS total revenue for periods subsequent to acquisitions do not reflect the full amount of support revenue that would have been
recorded for these support contracts absent these acquisitions by SAP. Adjusting revenue numbers for this revenue impact provides additional insight into the comparability across periods of our ongoing performance.
In light of our continuing focus on the cloud business and considering our recent acquisition of SuccessFactors, we are widening the range
of revenues for which acquisition-related deferred revenue write downs are adjusted for in determining our non-IFRS revenue and profit numbers. We continue to adjust for deferred revenue write downs, that is for revenues that would have been
recognized had the acquired entities remained stand-alone entities but that we are not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. However, in the definitions of our non-IFRS measures used
through 2011, such adjustments for deferred revenue write downs were limited to support revenue. From 2012 onwards, we will also make such deferred revenue write down adjustments for cloud subscription revenue and other similarly recurring revenues.
All other
6
non-IFRS measures will remain unchanged. As the deferred revenue write-down adjustments for recurring revenues other than support revenue from acquisitions that were executed through 2011 were
immaterial, we do not restate prior period non-IFRS measures to align with the new definition.
Non-IFRS Operating Expense
Operating expense figures that are identified as non-IFRS operating expenses have been adjusted by excluding the
following expenses:
|
|
|
Acquisition-related charges |
|
|
|
Amortization expense/impairment charges of intangibles acquired in business combinations and certain stand-alone acquisitions of intellectual property
(including purchased in-process research and development) |
|
|
|
Settlements of pre-existing business relationships in connection with a business combination |
|
|
|
Acquisition-related third-party expenses |
|
|
|
Discontinued activities: Results of discontinued operations that qualify as such under IFRS in all respects except that they do not represent a major
line of business. Under U.S. GAAP, which we reported under until 2009, we presented the results of operations of the TomorrowNow entities as discontinued operations. Under IFRS, results of discontinued operations may only be presented as
discontinued operations if a separate major line of business or geographical area of operations is discontinued. Our TomorrowNow operations were separate, but were not a major line of business and thus did not qualify for separate presentation under
IFRS. |
|
|
|
Expenses from our share-based compensation plans |
Non-IFRS Operating Profit, Non-IFRS Operating Margin, and Non-IFRS Earnings Per Share
Operating profit, operating margin, and earnings per share identified as non-IFRS operating profit, non-IFRS
operating margin, and non-IFRS earnings per share have been adjusted from the respective IFRS measures by adjusting for the above-mentioned non-IFRS revenue and non-IFRS operating expenses.
We exclude certain acquisition-related expenses for the purpose of calculating non-IFRS operating profit, non-IFRS operating margin, and
non-IFRS earnings per share when evaluating SAPs continuing operational performance because these expenses generally cannot be changed or influenced by management after the relevant acquisition other than by disposing of the acquired assets.
Since management at levels below the Executive Board has no influence on these expenses, we generally do not consider these expenses for the purpose of evaluating the performance of management units. Additionally, these non-IFRS measures have been
adjusted from the respective IFRS measures for the results of the discontinued activities, share-based compensation expenses and restructuring expenses.
Usefulness of Non-IFRS Measures
We believe that our non-IFRS
measures are useful to investors for the following reasons:
|
|
|
The non-IFRS measures provide investors with insight into managements decision-making, since management uses these non-IFRS measures to run our
business and make financial, strategic and operating decisions. |
|
|
|
The non-IFRS measures provide investors with additional information that enables a comparison of year-over-year operating performance by eliminating
certain direct effects of acquisitions and discontinued activities. |
|
|
|
Non-IFRS and non-GAAP measures are widely used in the software industry. In
|
7
|
|
most cases, our non-IFRS measures are more suitable for comparison with our competitors corresponding non-IFRS and non-GAAP measures than are our IFRS measures.
|
Additionally, we believe that our adjustments to our IFRS numbers for the results of our discontinued
TomorrowNow activities are useful to investors for the following reasons:
|
|
|
Despite the migration from U.S. GAAP to IFRS, we will continue to internally treat the ceased TomorrowNow activities as discontinued operations and
thus will continue to exclude potential future TomorrowNow results, which are expected to mainly comprise expenses in connection with the Oracle lawsuit, from our internal management reporting, planning, forecasting, and compensation plans.
Therefore, adjusting our non-IFRS measures for the results of the discontinued TomorrowNow activities provides insight into the financial measures that SAP uses internally. |
|
|
|
By adjusting the non-IFRS numbers for the results from our discontinued TomorrowNow activities, the non-IFRS numbers are more comparable to the
non-GAAP measures that SAP used through the end of 2009. That enhances the comparability of SAPs performance measures before and after the full IFRS migration. |
We include the revenue adjustments outlined above and exclude the expense adjustments outlined above when making decisions to allocate
resources, both on a company level and at lower levels of the organization. In addition, we use these non-IFRS measures to gain a better understanding of SAPs operating performance from period to period.
We believe that our non-IFRS financial measures described above have limitations, including but not limited to the following:
|
|
|
The eliminated amounts may be material to us.
|
|
|
|
Without being analyzed in conjunction with the corresponding IFRS measures, the non-IFRS measures are not indicative of our present and future
performance, foremost for the following reasons: |
|
|
|
While our non-IFRS profit numbers reflect the elimination of certain acquisition-related expenses, no eliminations are made for the additional revenue
and other revenue that result from the acquisitions. |
|
|
|
While we adjust for the fair value accounting of the acquired entities recurring revenue contracts we do not adjust for the fair value accounting
of deferred compensation items that result from commissions paid to the acquired companys sales force and third parties for closing the respective customer contracts. |
|
|
|
The acquisition-related charges that we eliminate in deriving our non-IFRS profit numbers are likely to recur should SAP enter into material business
combinations in the future. |
|
|
|
The acquisition-related amortization expense that we eliminate in deriving our non-IFRS profit numbers is a recurring expense that will impact our
financial performance in future years. |
|
|
|
The revenue adjustment for the fair value accounting of the acquired entities support contracts and the expense adjustment for
acquisition-related charges do not arise from a common conceptual basis. This is because the revenue adjustment aims to improve the comparability of the initial post-acquisition period with future post-acquisition periods while the expense
|
8
|
|
adjustment aims to improve the comparability between post-acquisition periods and pre-acquisition periods. This should particularly be considered when evaluating our non-IFRS operating profit and
non-IFRS operating margin numbers as these combine our non-IFRS revenue and non-IFRS expenses despite the absence of a common conceptual basis. |
|
|
|
Our discontinued activities and restructuring charges could result in significant cash outflows. The same applies to our share-based compensation
expense because most of our share-based compensation plans are to be settled in cash rather than shares. |
|
|
|
The valuation of our cash-settled, share-based payment plans could vary significantly from period to period due to the fluctuation of our share price
and other parameters used in the valuation of these plans. |
|
|
|
We have in the past issued share-based compensation awards to our employees every year, and intend to continue doing so in the future. Thus our
share-based compensation expenses are recurring although the amounts usually change from period to period. |
Despite these limitations, we believe that the presentation of the non-IFRS measures and the corresponding IFRS measures, together with
the relevant reconciliations, provides useful information to management and investors regarding present and future business trends relating to our financial condition and results of operations. We do not evaluate our growth and performance without
considering both non-IFRS measures and the relevant IFRS measures. We caution the readers of our financial reports to follow a similar approach by considering our
non-IFRS measures only in addition to, and not as a substitute for or superior to, revenue or other measures of our financial performance prepared in accordance with IFRS.
Constant Currency Information
We believe it is important for investors to have information that provides insight into our sales. Revenue measures determined under IFRS provide information that is useful in this regard. However, both
sales volume and currency effects impact period-over-period changes in sales revenue. We do not sell standardized units of products and services, so we cannot provide relevant information on sales volume by providing data on the changes in product
and service units sold. To provide additional information that may be useful to investors in breaking down and evaluating changes in sales volume, we present information about our revenue and various values and components relating to operating
profit that are adjusted for foreign currency effects. We calculate constant currency revenue and operating profit measures by translating foreign currencies using the average exchange rates from the previous year instead of the current year.
We believe that constant currency measures have limitations, particularly as the currency effects that are eliminated
constitute a significant element of our revenue and expenses and could materially impact our performance. We therefore limit our use of constant currency measures to the analysis of changes in volume as one element of the full change in a financial
measure. We do not evaluate our results and performance without considering both constant currency measures in non-IFRS revenue and non-IFRS operating profit measures on the one hand and changes in revenue, operating expenses, operating profit, or
other measures of financial performance prepared in accordance with IFRS on the other. We caution the readers of our financial reports to follow a similar approach by considering constant currency measures only in addition to, and not as a
substitute for or superior to, changes in revenue, operating expenses, operating profit, or other measures of financial performance prepared in accordance with IFRS.
9
Free Cash Flow
We use our free cash flow measure to estimate the cash flow remaining after all expenditures required to maintain or expand our organic business have been paid off. This measure provides management with
supplemental information to assess our liquidity needs. We calculate free cash flow as net cash from operating activities minus purchases, other than purchases made in connection with business combinations, of intangible assets and property, plant,
and equipment.
Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
Change |
|
Net cash flows from operating activities |
|
|
3,775 |
|
|
|
2,922 |
|
|
|
29 |
% |
Purchase of intangible assets and property, plant, and equipment |
|
|
445 |
|
|
|
334 |
|
|
|
33 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow |
|
|
3,330 |
|
|
|
2,588 |
|
|
|
29 |
% |
10
Part I
Item 1, 2, 3
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED
TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
SELECTED FINANCIAL DATA
The following table sets forth our selected consolidated financial data as of and for each of
the years in the five-year period ended December 31, 2011. The consolidated financial data has been derived from, and should be read in conjunction with, our Consolidated Financial
Statements prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS), presented in Item 18. Financial Statements of this report.
Our selected financial data and our Consolidated Financial Statements are presented in euros. Financial data as of and for the year
ended December 31, 2011 has been translated into U.S. dollars for the convenience of the reader.
11
Part I
Item 3
SELECTED FINANCIAL DATA: IFRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions, unless otherwise stated |
|
2011(1) |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
|
US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement Data: Years ended December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software and software-related service revenue |
|
|
14,684 |
|
|
|
11,319 |
|
|
|
9,794 |
|
|
|
8,198 |
|
|
|
8,457 |
|
|
|
7,427 |
|
Total revenue |
|
|
18,464 |
|
|
|
14,233 |
|
|
|
12,464 |
|
|
|
10,672 |
|
|
|
11,575 |
|
|
|
10,256 |
|
Operating profit |
|
|
6,332 |
|
|
|
4,881 |
|
|
|
2,591 |
|
|
|
2,588 |
|
|
|
2,701 |
|
|
|
2,698 |
|
Operating margin in %(2) |
|
|
34.3 |
|
|
|
34.3 |
|
|
|
20.8 |
|
|
|
24.3 |
|
|
|
23.3 |
|
|
|
26.3 |
|
Profit after tax |
|
|
4,461 |
|
|
|
3,439 |
|
|
|
1,813 |
|
|
|
1,750 |
|
|
|
1,848 |
|
|
|
1,908 |
|
Profit attributable to owners of parent |
|
|
4,460 |
|
|
|
3,438 |
|
|
|
1,811 |
|
|
|
1,748 |
|
|
|
1,847 |
|
|
|
1,906 |
|
Earnings per share(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic in |
|
|
3.75 |
|
|
|
2.89 |
|
|
|
1.52 |
|
|
|
1.47 |
|
|
|
1.55 |
|
|
|
1.58 |
|
Diluted in |
|
|
3.75 |
|
|
|
2.89 |
|
|
|
1.52 |
|
|
|
1.47 |
|
|
|
1.55 |
|
|
|
1.58 |
|
Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
1,189 |
|
|
|
1,189 |
|
|
|
1,188 |
|
|
|
1,188 |
|
|
|
1,190 |
|
|
|
1,207 |
|
Diluted |
|
|
1,190 |
|
|
|
1,190 |
|
|
|
1,189 |
|
|
|
1,189 |
|
|
|
1,191 |
|
|
|
1,210 |
|
Statement of Financial Position Data: At December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
6,441 |
|
|
|
4,965 |
|
|
|
3,518 |
|
|
|
1,884 |
|
|
|
1,280 |
|
|
|
1,608 |
|
Total assets(3) |
|
|
30,130 |
|
|
|
23,225 |
|
|
|
20,839 |
|
|
|
13,374 |
|
|
|
13,900 |
|
|
|
10,161 |
|
Current financial liabilities(4) |
|
|
1,727 |
|
|
|
1,331 |
|
|
|
142 |
|
|
|
146 |
|
|
|
2,563 |
|
|
|
82 |
|
Non-current financial liabilities(4) |
|
|
3,795 |
|
|
|
2,925 |
|
|
|
4,449 |
|
|
|
729 |
|
|
|
40 |
|
|
|
6 |
|
Issued capital(5) |
|
|
1,593 |
|
|
|
1,228 |
|
|
|
1,227 |
|
|
|
1,226 |
|
|
|
1,226 |
|
|
|
1,246 |
|
Total equity |
|
|
16,485 |
|
|
|
12,707 |
|
|
|
9,824 |
|
|
|
8,491 |
|
|
|
7,171 |
|
|
|
6,478 |
|
(1) |
Amounts presented in US$ have been translated for the convenience of the reader at 1.00 to US$1.2973, the Noon Buying Rate for converting
1.00 into dollars on December 30, 2011. See Item 3. Key Information Exchange Rates for recent exchange rates between the Euro and the dollar. |
(2) |
Operating profit is the numerator and total revenue is the denominator in the calculation of operating margin. Profit attributable to owners of parent
is the numerator and weighted average number of shares outstanding is the denominator in the calculation of earnings per share. |
(3) |
The large increase in total assets from 2009 to 2010 was mainly due to the acquisition of Sybase in 2010 and the large increase in total assets from
2007 to 2008 was due to the acquisition of Business Objects in 2008. See Note (4) to our Consolidated Financial Statements for more information on acquisitions. |
(4) |
The balances
include primarily bonds, private placements and bank loans. Current is defined as
|
|
having a remaining life of one year or less; non-current is defined as having a remaining term exceeding one year. The significant increase in current financial liabilities during 2008 was due to
financial debt incurred to finance the acquisition of Business Objects. The significant increase in non-financial liabilities in 2010 was due to an acquisition-term loan used to finance the acquisition of Sybase. In addition, we issued two bonds and
a U.S. private placement transaction, of which, the proceeds were primarily used to finance the acquisition of Sybase. See Note (18b) to our Consolidated Financial Statements for more information on our liabilities. |
(5) |
The 2007 and 2008 figures reflect cancellations of 23 million and 21 million treasury shares effective September 7, 2007 and
September 4, 2008, respectively. See Item 9. The Offer and Listing General for more detail on the cancellation of shares.
|
12
Part I
Item 3
EXCHANGE RATES
The prices for ordinary shares traded on German stock exchanges are denominated in euro. Fluctuations in the exchange rate between the
euro and the U.S. dollar affect the dollar equivalent of the euro price of the ordinary shares traded on the German stock exchanges and, as a result, may affect the price of the ADRs traded on the NYSE in the United States. See Item 9. The
Offer and Listing for a description of the ADRs. In addition, SAP AG pays cash dividends, if any, in euro. As a result, any exchange rate fluctuations will also affect the dollar amounts received by the holders of ADRs on the conversion into
dollars of cash dividends paid in euro on the ordinary shares represented by the ADRs. Deutsche Bank Trust Company Americas is the depositary (the Depositary) for SAP AGs ADR program. The deposit agreement with respect to the ADRs requires the
Depositary to convert any dividend payments from euro into dollars as promptly as practicable upon receipt. For additional information on the Depositary and the fees associated with SAPs ADR program see Item 12 Description of Securities
Other Than Equity Securities American Depositary Shares.
A significant portion of our revenue and expense is
denominated in currencies other than the euro. Therefore, fluctuations in the exchange rate between the euro and the respective currencies in which we conduct business could materially affect our business, financial position, income or cash flows.
See Item 5. Operating and Financial Review and Prospects Foreign Currency Exchange Rate Exposure for details on the impact of these exchange rate fluctuations.
The following table sets forth (i) the average, high and low Noon Buying Rates for the
euro expressed as U.S. dollars per 1.00 for the past five years on an annual basis and (ii) the high and low Noon Buying Rates on a monthly basis from July 2011 through March 8, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
Average(1) |
|
|
High |
|
|
Low |
|
2007 |
|
|
1.3797 |
|
|
|
1.4862 |
|
|
|
1.2904 |
|
2008 |
|
|
1.4695 |
|
|
|
1.6010 |
|
|
|
1.2446 |
|
2009 |
|
|
1.3955 |
|
|
|
1.5100 |
|
|
|
1.2547 |
|
2010 |
|
|
1.3216 |
|
|
|
1.4536 |
|
|
|
1.1959 |
|
2011 |
|
|
1.4002 |
|
|
|
1.4875 |
|
|
|
1.2926 |
|
|
|
|
|
|
|
|
|
|
Month |
|
High |
|
|
Low |
|
2011 |
|
|
|
|
|
|
|
|
July |
|
|
1.4508 |
|
|
|
1.4014 |
|
August |
|
|
1.4510 |
|
|
|
1.4158 |
|
September |
|
|
1.4283 |
|
|
|
1.3446 |
|
October |
|
|
1.4172 |
|
|
|
1.3281 |
|
November |
|
|
1.3803 |
|
|
|
1.3244 |
|
December |
|
|
1.3487 |
|
|
|
1.2926 |
|
2012 |
|
|
|
|
|
|
|
|
January |
|
|
1.3192 |
|
|
|
1.2682 |
|
February |
|
|
1.3463 |
|
|
|
1.3087 |
|
March (through March 8, 2012) |
|
|
1.3320 |
|
|
|
1.3114 |
|
(1) |
The average of the applicable Noon Buying Rates on the last day of each month during the relevant period. |
The Noon Buying Rate on March 8, 2012 was US$1.3256 per 1.00.
DIVIDENDS
Dividend Distribution Policy
Dividends are jointly proposed by SAP AGs Supervisory Board (Aufsichtsrat) and Executive Board (Vorstand) based on SAP AGs
year-end stand-alone statutory financial statements, subject to approval by the shareholders. Dividends are officially declared for the prior year at SAP AGs Annual General Meeting of Shareholders. SAP AGs Annual General Meeting of
Shareholders usually
13
Part I
Item 3
convenes during the second quarter of each year. Dividends are usually remitted to the custodian bank on behalf of the shareholder within one business day following the Annual General Meeting of
Shareholders. Record holders of the ADRs on the dividend record date will be entitled to receive payment of the dividend declared in respect of the year for which it is declared. Cash dividends payable to such holders will be paid to the Depositary
in euro and, subject to certain exceptions, will be converted by the Depositary into U.S. dollars.
Dividends paid to holders
of the ADRs may be subject to German withholding tax. See Item 8. Financial Information Other Financial Information Dividend Policy and Item 10. Additional Information Taxation, for further information.
Annual Dividends Paid and Proposed
The following table sets forth in euro the annual dividends paid or proposed to be paid per ordinary share in respect of each of the years indicated. One SAP ADR currently represents one SAP AG ordinary
share. Accordingly, the final dividend per ADR is equal to the dividend for one SAP AG ordinary share and is dependent on the euro/U.S. dollar exchange rate. The table does not reflect tax credits that may be available to German taxpayers who
receive dividend payments. If you own our ordinary shares or ADRs and if you are a U.S. resident, refer to Item 10. Additional Information Taxation, for further information.
|
|
|
|
|
|
|
|
|
|
|
Dividend Paid per Ordinary Share |
|
Year Ended December 31, |
|
|
|
|
US$
|
|
2007 |
|
|
0.50 |
|
|
|
0.77 |
(1) |
2008 |
|
|
0.50 |
|
|
|
0.68 |
(1) |
2009 |
|
|
0.50 |
|
|
|
0.60 |
(1) |
2010 |
|
|
0.60 |
|
|
|
0.85 |
(1) |
2011 (proposed) |
|
|
1.10 |
(2),(4)
|
|
|
1.46 |
(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 at the Annual General Meeting of Shareholders of SAP AG currently scheduled to be held on May 23, 2012.
|
(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 8,
2012 of US$1.3256 per 1.00. The dividend paid may differ due to changes in the exchange rate. |
(4) |
Thereof a special dividend of 0.35 per share to celebrate our 40th anniversary. |
The amount of dividends paid on the ordinary shares depends on the amount of profits to be distributed by SAP AG, which depends in part
upon our performance. In addition, the amount of dividends received by holders of ADRs may be affected by fluctuations in exchange rates (see Item 3. Key Information Exchange Rates). The timing and amount of future dividend
payments will depend upon our future earnings, capital needs and other relevant factors, in each case as proposed by the Executive Board and the Supervisory Board of SAP AG and approved at the Annual General Meeting of Shareholders.
RISK FACTORS
Economic, Political, Social, and Regulatory Risk
Uncertainty in the global economy, financial markets, and in political conditions could have material negative impact on our business, financial position, profit, and cash flows.
Our customers willingness to invest in acquiring and implementing our products generally varies with economic and political
conditions as well as any periods of disruption or volatility in global financial markets. A global economic crisis, a U.S. or euro area recession, or the current euro area debt crisis could have a negative impact on SAP. In the regions in which we
do business and the industries in which our customers operate, economic uncertainty or
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volatility in financial markets could have negative effects, including:
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General reluctance to invest in IT |
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Decreased customer demand for our software and services, including delayed, canceled, and smaller orders |
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Customers inability to obtain credit on acceptable terms, or at all, to finance purchases of our software and services
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Increased incidence of default and insolvency of customers, business partners, and key suppliers |
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Increased default risk, which may lead to significant write-downs in the future |
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Greater pressure on the prices of our products and services |
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Pressure on our operating margin |
Economic, financial market, or political instability could have a material negative impact on our business, financial position, profit, and cash flows, and could also exacerbate the other risks we
describe in this report.
Our international business activities subject us to numerous and potentially conflicting regulatory requirements,
and the associated risks could harm our business, financial position, profit, and cash flows.
We currently market our
products and services in more than 120 countries in the Americas, APJ, and EMEA regions. Sales in these countries are subject to numerous risks inherent in international business operations. Among others, these risks include:
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Conflict and overlap among different tax regimes |
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Possible tax constraints impeding business operations in certain countries |
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Expenses associated with the customization of our products on a local level and transacting business in compliance with local regulatory requirements
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Operational difficulties in countries with a high corruption perception index |
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Protectionist trade policies |
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Demands of works councils and labor unions, and immigration law requirements, in different countries |
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Data privacy and access by foreign authorities to customer, partner, or employee data |
As we expand further into new regions and markets, these risks could intensify. One or more of these factors could negatively impact our
operations globally or in one or more countries or regions. This could result in significant negative impact to our reputation and our business, financial position, profit, and cash flows.
Social and political instability caused, for example, by terrorist attacks, civil unrest, war or international hostilities, pandemic disease outbreaks, or natural disasters could have a significant
negative impact on our business.
Terrorist attacks and other acts of violence or war, civil and political unrest (such as
that in the Middle East and North Africa), pandemic disease outbreaks, or natural disasters (such as the earthquakes in Japan) could have a significant negative impact on the related economy or beyond. An event that results, for example, in the loss
of significant numbers of employees or in the disruption of operations at our headquarters or other key locations could affect our ability to provide normal business services and to generate the expected income. That could lead to a significant
negative impact on our customers and their investment decisions. This could in turn lead to a significant negative impact on our reputation and on our business, financial position, profit, and cash flows.
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Market Risks
If our established customers do not buy additional software products, renew maintenance agreements, or purchase additional professional services, this could have a material adverse impact on our
business, financial position, profit, and cash flows.
In 2011, we continued to offer a wide range of support services. We
continue to depend materially on the success of our support portfolio and on our ability to deliver high-quality services. Traditionally, our large installed customer base generates additional new software, maintenance, consulting, and training
revenue. If existing customers cancel or do not renew their maintenance contracts, accept alternative offerings from other vendors, or decide not to buy additional products and services, this would have a material negative impact on our business,
financial position, profit, and cash flows.
Our market share and profit may decline due to intense competition, consolidation, and
technological innovation in the software industry.
The software industry continues to evolve rapidly, due to competition,
consolidation, and technological innovation. As a result, the market for our products and services is intensely competitive. Over the last decade, we have diversified from our large enterprise resource planning (ERP) offerings to new products and
services, like on-device, cloud, and in-memory computing, which exposes us to competitors varying in size, geographic location, and specialty. New development models and new delivery and licensing models, such as software as a service (SaaS),
platform as a service (PaaS), business process outsourcing (BPO), and cloud computing, enable competitors to offer integrated packaged solutions that compete with ours. SaaS providers and other participants in the growing SaaS ecosystem for
applications also compete with SAP for segment share. Cloud
computing is driving fast adoption of Web-based business models. As a result, it is easier for new entrants to orchestrate or own end-to-end value chains and to impact our key growth markets.
Aggressive tactics by mobile device platform providers and database providers could impact the market potential for our mobile apps and in-memory computing and could cut us off from potential revenue sources. In addition, competitors may gain market
share because of acquisitions. Current and potential competitors are establishing or may in the future establish or extend cooperative relationships among themselves or with third parties to better address their customers needs. This increased
competition could result in increased price pressure, cost increases, and loss of market share and therefore have a significant negative impact on our business, financial position, profit, and cash flows.
Business Strategy Risks
Demand for
our new products may not develop as planned and our strategy for new markets, new business models, and new consumption models may not be successful.
Our strategy centers on innovating on our stable core products and services, and developing on-premise, cloud, and mobile solutions. We focus on continuous innovation through new business and consumption
models, by enhancing our technology, by expanding our partner ecosystem, and by creating the infrastructure for volume business. The demand for, and customers acceptance of, new products, technologies, and services we introduce are subject to
uncertainty. Despite our efforts, demand for our products, technologies, and services may fail to develop as planned, and this could have a material negative impact on our business, financial position, profit, or cash flows. In addition, entering
new market segments exposes us to the risks associated with developing and launching new products and services. For more information, see the Product Risks section.
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If we fail to develop new relationships and enhance existing relationships with channel partners,
software suppliers, system integrators, value-added resellers, and independent software vendors (ISVs) that contribute to the success of our products and services, our business, financial position, profit, and cash flows may be adversely impacted.
A fundamental pillar of our success is a solid partner ecosystem. We have entered into cooperation agreements with channel
partners and leading software and hardware vendors. Most of these agreements are of relatively short duration and are nonexclusive. The parties concerned typically maintain similar arrangements with our competitors, and some are our competitors.
Additionally, we maintain a network of ISVs that develop their own business applications for the SAP NetWeaver technology platform. We are still exposed to risks related to our third-party relationships, such as that the relevant counterparties
might not:
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Devote sufficient resources to promote, sell, support, and integrate their products within our portfolio |
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Comply with applicable regulations, resulting in delayed, disrupted, or terminated sales and services |
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Renew their agreements with us at all or on terms acceptable to us |
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Provide high-quality products and services |
If one or more of these risks materialize, the marketing of and demand for our products and services may be adversely impacted, and we may not be able to compete successfully with other software vendors.
This could harm our reputation or adversely impact our business, financial position, profit, and cash flows.
Human Capital Risks
If we do not effectively manage our geographically dispersed workforce, our business may not operate efficiently, and this could have a negative impact on our business, financial position, profit, and
cash flows.
Our success is dependent on appropriate alignment of our workforce planning process and location strategy with
our general strategy. Changes in headcount and infrastructure needs could result in a mismatch between our expenses and revenue. It is critical that we manage our internationally dispersed workforce effectively, taking short and long term workforce
and skill requirements into consideration. Our failure to do so could hinder our ability to operate our business efficiently, which could have a negative impact on our financial position, profit, and cash flows.
If we are unable to attract and retain managers and employees with specialized knowledge and technology skills, we might not be able to manage our
operations effectively or develop successful new products and services.
Our highly qualified employees and managers
provide the foundation for our continued success. Competition in our industry for highly skilled and specialized personnel and leaders is intense. In certain regions and specific technology and product areas, we have set ambitious growth targets
(for example, in China). If we are unable to attract well-qualified personnel, or if our highly skilled and specialized personnel leave SAP and good replacements are not available, we may not be able to manage our operations effectively or develop
successful new products and services as planned. This is particularly true as we continue to introduce new and innovative technology offerings and expand our business in emerging markets. Hiring such personnel may also expose us to claims by other
companies seeking to prevent their employees from working for a competitor.
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Organizational and Governance-Related Risks
Corporate governance laws and regulatory requirements in Germany, the United States, and elsewhere have become much more stringent.
As a stock corporation domiciled in Germany with securities listed in Germany and the United States, we are subject to German, U.S., and
other governance-related regulatory requirements. The regulatory requirements have become significantly more stringent in recent years, and some legislation, such as the U.S. Foreign Corrupt Practices Act, is being applied more rigorously. The rules
are highly complex, and there can be no assurance that we will not be held in breach of regulatory requirements if, for example, one or more employees behave fraudulently or negligently, or if we fail to comply with certain formal documentation
requirements. Any related allegations of wrongdoing against us, whether merited or not, could have a material negative impact on our reputation as well as on the trading price of our ordinary shares and American depositary receipts (ADRs).
Failure on our part to implement our sustainability strategy in a way that meets customer, partner, or other stakeholder expectations or
generally accepted sustainability standards could harm our reputation and have a negative impact on our results of operations and our business.
For SAP, sustainability means the holistic management of environmental, social, and economic risks and opportunities. We have identified sustainability risks in three major areas:
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Functionality of our software |
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Sustainability in our solutions and green IT |
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Accessibility and security of our products |
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Privacy and data protection in connection with the use of SAP
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products (For more information, see the Product Risks section.) |
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SAPs own sustainable operations |
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Energy management and other environmental issues like carbon management, water use, and waste |
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Human capital management, including health, safety, diversity, employee satisfaction, and talent attraction and retention (For more information, see
the Human Capital Risks section.) |
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The ethical behavior of suppliers and partners |
If our sustainability strategy and operations, which are described in our Sustainability Report at www.sapsustainabilityreport.com, are not sufficient to meet the expectations of our customers, investors,
and partners, or generally accepted sustainability standards, this could harm our reputation and have an adverse impact on our business, financial position, profit, and cash flows.
Principal shareholders may be able to exert control over our future direction and operations.
If SAP AGs principal shareholders and the holdings of entities controlled by them vote in the same manner, this could delay, prevent or facilitate a change in control of SAP or other significant
changes to SAP AG or its capital structure. See Item 7. Major Shareholders and Related-Party Transactions Major Shareholders for further information.
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U.S. judgments may be difficult or impossible to enforce against us or our Board members.
Currently, except for Bill McDermott and Vishal Sikka, all members of SAP AGs Executive Board and all members of the
Supervisory Board are non-residents of the United States. A substantial portion of the assets of SAP and our Board members are located outside the United States. As a result, it may not be possible to effect service of process within the United
States upon non-U.S. resident persons or SAP or to enforce against non-U.S. resident persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the securities laws of the United States. In addition, awards of
punitive damages in actions brought in the United States or elsewhere may be unenforceable in Germany.
Communication and Information Risks
We may not be able to prevent unauthorized disclosure of information that is subject to regulatory requirements, or are trade secrets,
and such disclosure may harm our business and reputation.
Confidential communications and information about sensitive
subjects, such as our future strategies, technologies, and products; mergers and acquisitions; unpublished financial results; or customer, employee, or other personal data could be inadvertently or prematurely disclosed. Such disclosure may require
notification of multiple regulatory agencies and the data owner, where appropriate, which may damage our market position, reduce future revenue, or lead to fines and penalties, any of which could have a significant negative impact on our business,
reputation, financial position, profit, and cash flows.
Financial Risks
Our sales are subject to quarterly fluctuations and our sales forecasts may not be accurate, which could negatively impact our profit margin.
Our revenue and operating results can vary and have varied in the past, sometimes
substantially, from quarter to quarter. Our revenue in general, and in particular our software revenue, is difficult to forecast for a number of reasons, including:
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The relatively long sales cycles for our products |
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The large size and extended timing of individual license transactions |
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The introduction of new licensing and deployment models such as on-demand and subscription models |
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The timing of the introduction of new products or product enhancements by us or our competitors |
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Changes in customer budgets |
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Decreased software sales that could have a significant negative impact on related maintenance revenue |
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Licensing models that require the recognition of revenue over an extended period of time |
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Seasonality of a customers technology purchases |
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Limited visibility into the ability of acquired companies to accurately predict their sales pipelines and the likelihood that the projected pipeline
will convert favorably into sales |
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Other general economic, social, and market conditions, such as the global economic crisis and the current difficulties for countries with large debt
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Because many of our customers make their IT purchasing decisions near the end of calendar quarters, and with
a significant percentage of those decisions being made during the fourth quarter, even a small delay in purchasing decisions could have a significant negative impact on our revenue results for a given year. Our dependence on large transactions has
decreased in recent years with a trend towards an increased number of transactions coupled with a decrease in deal size. However, the loss or delay of one or a few large sales, which are still characteristic of
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the large enterprise segment, could have a significant negative impact on our results.
We use a pipeline system to forecast sales and trends in our business. Pipeline analysis informs and guides our business planning, budgeting, and forecasting, but pipeline estimates do not
necessarily consistently correlate to revenue in a particular quarter. The reliability of our plans, budgets, and forecasts may therefore be compromised. Because our operating expenses are based upon anticipated revenue levels and a high percentage
of our expenses are relatively fixed in the near term, any shortfall in anticipated revenue or delay in revenue recognition could result in significant variations in our results of operations from quarter to quarter or year to year. Continued
deterioration in global economic conditions would make it increasingly difficult for us to accurately forecast demand for our products and services, and could cause our revenue, results of operations and cash flows to fall short of our expectations
and public forecasts. That could have a significant negative impact on our stock price. To the extent any future expenditure fails to generate the anticipated increase in revenue, our quarterly or annual operating results may be subject to a
significant negative impact and may vary significantly from preceding or subsequent periods.
External factors may impact our liquidity and
increase the default risk associated with and the valuation of our financial assets and trade receivables.
An economic
downturn could have a significant negative impact on our future liquidity. We use global centralized financial management to control liquid assets, interest, and currencies. The primary aim is to maintain liquidity in the Group at a level that is
adequate to meet our obligations. Our total group liquidity was 5.6 billion on December 31, 2011. This position is supported by our strong operating cash flows, of which a large part is recurring, and by credit facilities on which we can
draw if necessary.
However, an economic downturn could increase the default risk associated with our total
group liquidity. That could have a significant negative impact on the valuation of our financial assets. SAPs investment policy with regard to total Group liquidity is set out in our internal treasury guideline document, which is a collection
of uniform rules that apply globally to all companies in the Group. Among its stipulations, it requires that with limited exceptions we invest only in assets and funds rated A- or better. The weighted average rating of our total group liquidity is
in the range A to A-. We continue to pursue a policy of cautious investment characterized by wide portfolio diversification with a variety of counterparties, predominantly short-term investments, and standard investment instruments.
There can be no assurance that the prescribed measures will be successful or that uncertainty in global economic conditions will not have
a significant negative impact on our business, financial position, and profit.
Managements use of estimates could affect our
financial position, profit, and cash flows.
To comply with IFRS, management is required to make many judgments, estimates,
and assumptions. The facts and circumstances on which management bases these estimates and judgments, and managements judgment regarding the facts and circumstances, may change from time to time and this could result in significant changes in
the estimates, with a significant negative impact on our financial position, profit, or cash flows. For more information, see the Notes to the Consolidated Financial Statements section, Note (3c).
Current and future accounting pronouncements and other financial reporting standards, especially but not only concerning revenue recognition, may have
a significant negative impact on the financial results we present.
We regularly monitor our compliance with all of the
financial reporting standards that are
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applicable to us and any new pronouncements that are relevant to us. As a result, we might be required to change our accounting policies, particularly concerning revenue recognition, to alter our
business models so that it reflects new or amended financial reporting standards, or to restate our published financial statements. We cannot exclude the possibility that this may have a significant negative impact on our business, financial
position, profit, and cash flows. For a summary of significant accounting policies, see the Notes to the Consolidated Financial Statements section, Note (3).
Because we conduct operations throughout the world, our business, financial position, profit, and cash flows may be affected by currency and interest rate fluctuations.
Our Group-wide management reporting and our external financial reporting are both in euros. Nevertheless, a significant portion of our
business is conducted in currencies other than the euro. Approximately 69% of our revenue in 2011 was attributable to operations outside the euro area and was translated into euros. Consequently, period-over-period changes in the euro rates for
particular currencies can significantly affect our reported revenue and income. In general, appreciation of the euro relative to another currency has a negative effect while depreciation of the euro relative to another currency has a positive
effect. Variable-interest balance-sheet items are also subject to changes in interest rates, so there is a risk that these balance-sheet items may result in an adverse impact on our business, financial position, profit, and cash flows. For more
information about our currency and interest-rate risks and our related hedging activity, see the Notes to the Consolidated Financial Statements section, Notes (25) and (26).
The cost of using derivative instruments to hedge share-based payment plans may exceed the benefits of hedging them.
We use derivative instruments to reduce the impact of our share-based payment plans on our income statement and to limit future expense
associated with those plans. We decide case by case whether and to what extent we should hedge this risk. The expense of hedging the share-based payment plans could exceed the benefit achieved by
hedging them or that a decision to leave the plans materially unhedged might prove disadvantageous.
The market price for our ADRs and
ordinary shares may be volatile.
The trading prices of our ADRs and ordinary shares have experienced and may continue to
experience significant volatility in response to various factors including, but not limited to:
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the announcement of new products or product enhancements by us or our competitors; |
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technological innovation by us or our competitors; |
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quarterly variations in our results of operations or results that fail to meet our or our financial analysts expectations;
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the announcement of new products or product enhancements by us or our competitors; |
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changes in revenue and revenue growth rates on a consolidated basis or for specific geographic areas, business units, products or product categories;
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changes in our externally communicated outlook or credit rating; |
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changes in our capital structure, for example due to the potential future issuance of addition debt instruments; |
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general market conditions specific to particular industries; |
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litigation to which we are a party; |
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general and country specific economic or political conditions (particularly wars, terrorist attacks, etc.);
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proposed and completed acquisitions or other significant transactions by us or our competitors; and |
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general market conditions. |
Many of these factors are beyond our control. In the past, companies that have experienced volatility in the market price of their stock have been subject to shareholder lawsuits including securities
class action litigation. Any such lawsuits against us, with or without merit, could result in substantial costs and the diversion of managements attention and resources, resulting in a decline in our results of operations and our stock price.
Project Risks
Implementation of SAP software often involves a significant commitment of resources by our customers and is subject to a number of significant risks
over which we often have no control.
A core element of our business is the successful implementation of software solutions
to enable our customers to make their business a best-run business. The implementation of SAP software is led by SAP, by partners, by customers, or by a combination thereof. Depending on various factors, such as the complexity of solutions, the
customers implementation needs or the resources required, SAP faces a number of different risks. For example, trained consultants might not be immediately available to assist customers in the implementation of our products, the features of the
implemented software might not meet customers expectations or the software might not fit the business model of the customer, customer-specific factors may destabilize the implementation of the software, or customers and partners might not
implement the measures offered by SAP to safeguard against functional and technical risks.
As a result of these and other risks, some of our customers have incurred significant
implementation costs in connection with the purchase and installation of SAP software products. Also, some customers implementations have taken longer than planned. We cannot guarantee that we can reduce or eliminate protracted installation or
significant third-party consulting costs, that shortages of trained consultants will not occur, or that our costs will not exceed the agreed-upon fees on fixed-price contracts. Unsuccessful customer implementation projects could result in claims
from customers, harm SAPs reputation, and cause a loss of future revenues.
Product Risks
We use technologies under license from third parties. The loss of the right to use technologies could delay implementation of our products or force us
to pay higher license fees.
We have taken numerous third-party technologies under license and incorporated them into our
products and we depend on those technologies in the aggregate. There can be no assurance that the licenses for these third-party technologies will not be terminated, that the licenses will be available in the future on terms acceptable to us, or
that we will be able to obtain third-party software licenses for future products. Changes to or the loss of third-party licenses could lead to a material increase in the cost of licensing, or that SAP software products may become unusable or
materially reduced in their functional scope. As a result, we could incur additional development or license costs to ensure the continued functionality of our products. The risks increase where we acquire a company or a companys intellectual
property assets that have been subject to third-party technology licensing and product standards less rigorous than our own.
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If we are unable to keep up with rapid technological innovations and the expectations of our customers,
we may not be able to compete as effectively as our competitors.
Our future success continues to depend on our ability to
enhance and expand our existing products, technology, and services and keep pace with technological developments (including evolving cybersecurity threats). It also depends on our ability to introduce new products, technologies, and services that
are accepted in the market and that satisfy changing customer requirements.
We might not be successful in bringing new
solutions, solution enhancements, and services to market before our competitors, and we might not be able to generate enough revenue to offset the significant research and development costs we incur. Moreover, we might not anticipate and develop
technological improvements or succeed in adapting our products to technological change, changing regulatory requirements, emerging industry standards, and changing customer requirements. Finally, we might not succeed in producing high-quality
products, enhancements, and releases in a timely and cost-effective manner to compete with applications and other technologies offered by our competitors.
Undetected defects or delays in the introduction of new products and product enhancements may result in increased costs to us and reduced demand for our products.
To achieve customer acceptance, our new products and product enhancements often require long development and testing periods. Development
work is subject to various risks. For example, scheduled market launches could be delayed, or products might not completely satisfy our stringent quality standards, meet market needs or the expectations of customers, or comply with local standards
and requirements. New products may contain undetected defects or they may not be mature enough to process large volumes of data. In
some circumstances, we might not be in a position to rectify such defects or entirely meet the expectations of customers. As a result, we might be faced with customer claims for cash refunds,
damages, replacement software, or other concessions. The risk of defects and their adverse consequences could increase as we seek to introduce a variety of new software products simultaneously. Significant undetected defects or delays in introducing
new products or product enhancements could affect market acceptance of SAP software products, and adversely impact our reputation, business, financial position, profit, and cash flows.
The use of SAP software products by customers in business-critical applications and processes and the relative complexity and technical
interdependency of our software products create a risk that customers or third parties may pursue warranty, performance, or other claims against us for actual or alleged defects in SAP software products, in our provision of services, or in our
application hosting services. We have in the past been, and may in the future be, subject to warranty, performance, or other similar claims.
Although our contracts generally contain provisions designed to limit our exposure due to actual or alleged defects in SAP software products or in our provision of services, these provisions may not cover
every eventuality or be effective under the applicable law. Regardless of its merits, any claim could entail substantial expense and require the devotion of significant time and attention by key management personnel. Publicity surrounding such
claims could affect our reputation and the demand for our software.
Our technology strategy may not succeed or customers may not adopt our
technology platform offering.
Our technology strategy centers on the SAP NetWeaver technology platform, the Sybase Unwired
Platform, and our on-demand platform. Its success depends on the convergence of our platforms and their
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integration with our in-memory database technology. It also relies on our ability to maintain a dynamic network of ISVs developing their own business applications using our platform technology.
As with any open platform design, the greater flexibility provided to customers to use data generated by non-SAP software might reduce customer demand to select and use certain SAP software products. If our technology platform strategy is not well
received by customers, if competitors develop superior technology, or if our solutions have significant defects, this could have an adverse impact on our business, financial position, profit, and cash flows.
Cybersecurity Risks
Undetected
security flaws in our software or our proprietary systems or those of our third-party service and software providers may be exploited by other persons, which could damage SAP or our customers and significantly impact our financial position, profit,
cash flows, and reputation.
Our core processes, such as software development, sales and marketing, customer service,
financial transactions, and cloud services rely on our IT infrastructure and applications. Malicious software, sabotage, cyber incidents, natural disasters, or the failure of an underlying technology (such as the Internet) could cause an outage of
our infrastructure, which could lead to a substantial denial of service and ultimately to production downtime, recovery costs, and customer claims. This could have a significant negative impact on our business, financial position, profit, or cash
flows.
We are to a substantial extent dependent on the exchange of a wide range of information over our publicly available
infrastructure. Specifically, our products and services, including our cloud offerings, rely on this infrastructure and our applications. We have implemented a number of measures designed to ensure the security of our information, IT
resources, and other assets. Nonetheless, unauthorized users could gain access to our systems through cyber-attacks and steal, use without authorization, and sabotage our intellectual property
and confidential data. Any breach of our IT security, misuse, or theft could lead to loss of production, to recovery costs, or to litigation brought by customers or business partners, which could have a significant negative impact on our business,
financial position, profit, cash flows, and reputation.
There is a danger of industrial espionage, cyber-attacks, misuse, or
theft of information or assets, or damage to assets by trespassers in our facilities or by people who have gained authorized access to our facilities, systems, or information. Such cybersecurity breaches, misuse, or other disruptions could
jeopardize the security of information stored in and transmitted through our computer systems as well as the computer systems of our customers, service providers, or business partners. Such misuse could potentially lead to the leakage of
confidential information, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes, and supply shortages. This could lead to significant claims for damages against us. Additionally,
despite testing prior to their release, our products may contain security flaws, particularly when first introduced or when new versions are released. Because technologies used to obtain unauthorized access or to sabotage systems change frequently
and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Actual or alleged defects could expose us to product liability claims and warranty
claims, and harm our reputation, and that could impact our future sales of products and services.
Our products include
security features that are intended to protect the privacy and integrity of our customers data. We devote significant resources to training our personnel and addressing security vulnerabilities through
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engineering more secure products, continuously enhancing security and reliability features in our products and systems, deploying security updates to address security vulnerabilities, and
improving our incident response time. In addition, we have implemented a variety of defense mechanisms intended to safeguard our infrastructure. Examples are firewalls, antivirus software, intrusion detection systems, and high-availability
landscapes including our development and quality infrastructures. We adhere to several best practices, many of which are regularly certified. However, we cannot guarantee that these measures will be adequate to prevent serious impairment of
our business operations.
A data security breach could have a significant negative impact on SAP and our customers.
SAP products and services, including those used by our customers on the Internet, rely on our IT infrastructure and applications.
Unauthorized users could gain access to our systems through cyber-attacks and introduce backdoors or steal, use without authorization, and sabotage our intellectual property and confidential data. A breach of our IT security could lead to loss of
production, to recovery costs, or to litigation brought by customers or business partners, which could have a significant negative impact on our business, financial position, reputation, profit, and cash flows.
We continuously employ IT security programs to manage identified risks and monitor whether these measures, including firewalls, intrusion
detection and anti-virus applications are adequate to prevent serious impairment of our business operations as the method and variety of cyber-attacks are rapidly escalating and changing. Additionally, as noted in the description of the previous
risk, we adhere to several certified best practices.
Other Operational Risks
Third parties have claimed, and might claim in the future, that we infringe their intellectual property rights, which could lead to damages being awarded against us and limit our ability to utilize
certain technologies in the future.
We continue to believe that we will increasingly be subject to intellectual property
infringement claims as the number of products in our industry segment grows, as we acquire companies, with increased use of third party code including open source code and as we expand into new industry segments with our products, resulting in
greater overlap in the functional scope of products.
Any claims, with or without merit, and negotiations or litigation
relating to such claims, could preclude us from utilizing certain technologies in our products, be time-consuming, result in costly litigation, and require us to pay damages to third parties, stop selling or reconfigure our products and, under
certain circumstances, pay fines and indemnify our customers. They could also require us to enter into royalty and licensing arrangements on terms that are not favorable to us, cause product shipment delays, subject our products to injunctions,
require a complete or partial redesign of products, result in delays to our customers investment decisions, and damage our reputation.
Software includes many components or modules that provide different features and perform different functions. Some of these features or functions may be subject to third-party intellectual property
rights. The rights of another party could encompass technical aspects that are similar to one or more technologies in one or more of our products. Intellectual property rights of third parties could preclude us from using certain technologies in our
products or require us to enter into royalty and licensing arrangements on unfavorable or expensive terms.
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The software industry is making increasing use of open source software in its development
work on solutions. We also integrate certain open source software components from third parties into our software. Open source licenses may require that the software code in those components or the software into which they are integrated be freely
accessible under open source terms. Third-party claims may require us to make freely accessible under open source terms a product of ours or non-SAP software upon which we depend.
In addition to open source, SAP continues to expand its participation in standards organizations and increase the use of standards in its
products. Participation in standards organizations may require licensing of SAPs intellectual property to contributors to the standard or to all standards implementers, including competitors, on a nondiscriminatory basis in accordance with
licensing terms defined by standards organizations. Within the software-related standards field, there is a trend toward expanding the scope of licensing obligations and narrowing an intellectual property owners right to revoke a license if
sued by a licensee. This could further reduce our ability to use intellectual property related to standards. Use of patents inadvertently licensed through standards could expose SAP to third-party claims. Consequently, compliance with open source or
certain standards could have a material negative impact on our business, financial position, profit, and cash flows.
Claims and lawsuits
against us could have a material negative impact on our business, financial position, profit, cash flows, and reputation.
Claims and lawsuits are brought against us, including claims and lawsuits involving businesses we have acquired. Adverse outcomes to some
or all of the claims and lawsuits pending against us might result in the award of significant damages or injunctive relief against us that could negatively impact our ability to conduct our business.
The outcome of litigation and other claims or lawsuits is intrinsically uncertain.
Managements view of the litigation may also change in the future. Actual outcomes of litigation and other claims or lawsuits could differ from the assessments made by management in prior periods, which could result in a material negative
impact on our business, financial position, profit, cash flows, and reputation.
For more information, see the discussion of
our legal liability risks in the Notes to the Consolidated Financial Statements section, Note (24).
We might not acquire and
integrate companies effectively or successfully and our strategic alliances might not be successful.
To expand our
business, we have in the past made acquisitions of businesses, products, and technologies. We expect to continue to make such acquisitions in the future. Managements negotiation of potential acquisitions and alliances and integration of
acquired businesses, products, or technologies demands time, focus, and resources of management and of the workforce. Acquisitions carry many additional risks. These include, among others:
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The selection of the wrong integration model for the acquired company |
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The failure to integrate the acquired business and its different business and licensing models |
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The failure to integrate the acquired technologies or products with our current products and technologies |
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The loss of key personnel of the acquired business |
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Material unknown liabilities and contingent liabilities of acquired companies, including legal, tax, intellectual property, or other significant
liabilities that may not be detected by the due diligence process |
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Debt incurrence or significant cash expenditures |
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Difficulties in implementing, restoring, or maintaining internal controls, procedures, and policies |
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Negative impact on relationships with customers, partners, or third-party providers of technology or products |
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Difficulties in integrating the acquired companys accounting, human resource, and other administrative systems |
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Legal and regulatory constraints |
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Practices or policies of the acquired company that may be incompatible with our compliance requirements |
In addition, acquired businesses might not perform as anticipated, resulting in charges for the impairment of goodwill and other
intangible assets on our statements of financial position. Such charges may have a significant negative impact on operating margins and profit. We have entered into, and expect to continue to enter into, alliance arrangements for a variety of
purposes, including the development of new products and services. There can be no assurance that any such products or services will be successfully developed or that we will not incur significant unanticipated liabilities in connection with such
arrangements. We may not be successful in overcoming these risks and we may therefore not benefit as anticipated from acquisitions or alliances.
We may not be able to obtain adequate title to or licenses in, or to enforce, intellectual property.
Protecting and defending our intellectual property is key to our success. We use a variety of means to identify and monitor potential risks and to protect our intellectual property. These include applying
for patents, registering trademarks and other marks and copyrights and rights of authorship, taking certain action to stop copyright and trademark infringement, entering into licensing, confidentiality, and nondisclosure
agreements, and deploying protection technology. Despite our efforts, there can be no assurance that we can prevent third parties from obtaining, using, or selling without authorization what we
regard as our proprietary technology and information. All of these measures afford only limited protection, and our proprietary rights could be challenged, invalidated, held unenforceable, or otherwise affected. Some intellectual property may be
vulnerable to disclosure or misappropriation by employees, partners, or other third parties. There can also be no assurance that third parties will not independently develop technologies that are substantially equivalent or superior to our
technology. Also, it may be possible for third parties to reverse-engineer or otherwise obtain and use technology and information that we regard as proprietary. Accordingly, we might not be able to protect our proprietary rights against unauthorized
third-party copying or utilization, which could have a significant negative impact on our competitive position and our financial position, and result in reduced sales. Any legal action we bring to enforce our proprietary rights could be costly,
distract management from day-to-day operations, and lead to claims against us, which could have a significant negative impact on our business, financial position, profit, and cash flows. Such actions by us could also involve enforcement against a
partner or other third party, which may have a significant negative effect on our ability, and our customers ability, to use that partners or other third parties products. In addition, the laws and courts of certain countries may
not offer effective means to enforce our intellectual property rights.
We may not be able to protect our critical information or assets or
safeguard our business operations against disruption.
As a global software business, we are to a substantial extent
dependent on the exchange of a wide range of information and on the availability of the infrastructure we use. In 2011, we implemented a number of additional measures designed to ensure the security of our
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information, IT resources, and other assets. Nonetheless, there is still a danger of industrial espionage, cyber-attacks, misuse, or theft of information or assets, or damage to assets by
trespassers in our facilities or by people who have gained authorized access to our facilities, systems, or information. Any misuse, theft, or breach of security could have a significant negative impact on our business, financial position, profit,
and cash flows.
Our insurance coverage may not be sufficient to prevent claim settlements from adversely impacting our business, financial
position, profit, and cash flows.
We continue to maintain and manage insurance coverage against a diverse portfolio of
risks. Our objective is to ensure that financial effects of occurrences are excluded or minimized to the extent practicable at reasonable cost. Despite these measures, certain categories of risks are still not currently insurable at reasonable cost.
Even if we obtain insurance, our coverage may be subject to exclusions that limit or prevent our indemnification under the policies. Further, we cannot guarantee the ability of the insurance companies to meet their liabilities from claims. If these
risks materialize, it may have a negative impact on our business, financial position, profit, and cash flows.
We may incur losses in
connection with venture capital investments.
We plan to continue investing in technology businesses through our subsidiary
SAP Ventures. Many of these enterprises currently generate net losses and require additional capital outlay from their investors. Changes to planned business operations have in the past, and also may in the future, affect the performance of
companies in which SAP holds investments, and that could negatively affect the value of our investments. Moreover, for tax purposes, the use of capital losses and impairments of equity securities is often restricted, which may adversely affect our
effective tax rate.
ITEM 4. INFORMATION ABOUT SAP
Our legal corporate name is SAP AG. SAP AG is translated in English to SAP Corporation. SAP AG, formerly known as SAP Aktiengesellschaft
Systeme, Anwendungen, Produkte in der Datenverarbeitung, was incorporated under the laws of the Federal Republic of Germany in 1972. Where the context requires in the discussion below, SAP AG refers to our predecessors, Systemanalyse und
Programmentwicklung GbR (1972-1976) and SAP Systeme, Anwendungen, Produkte in der Datenverarbeitung GmbH (1976-1988). SAP AG became a stock corporation (Aktiengesellschaft) in 1988. Our principal executive offices, headquarters and registered office
are located at Dietmar-Hopp-Allee 16, 69190 Walldorf, Germany. Our telephone number is +49-6227-7-47474.
As part of our
activities to reduce the number of legal entities in the SAP group, in 2011 we integrated certain subsidiaries into the following significant SAP subsidiaries: SAP America, Inc. and SAP (Schweiz) AG.
For a (i) description of our principal capital expenditures and divestitures and the amount invested (including interests in other
companies) since January 1, 2009 until the date of this report and (ii) information concerning our principal capital expenditures and divestitures currently in progress, including the distribution of these investments geographically and
the method of financing, see Item 4. Information About SAP Description of Property Capital Expenditures.
THE SAP GROUP OF COMPANIES
Celebrating its 40th year in business in 2012, SAP is the world leader in enterprise
applications in terms of software and software-related service revenue, and the worlds third-largest independent software manufacturer based on market capitalization. With more than 183,000 customers in over 130 countries, the SAP Group
includes subsidiaries in every major country and employs more than 55,000 people.
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Business Activity and Organizational Structure
Business Activity
Our
core business is selling licenses for software solutions and related services to help companies of all sizes better manage industry-specific and line-of-business processes. SAP core solutions, which cover standard business applications and
technologies, provide customers with a stable, consistent solution suite that allows them be more efficient and agile, make decisions in real time, and create new value for their own customers. SAP technologies unwired by mobile apps,
simplified by cloud solutions, and fueled by in-memory computing are driving value and growth for customers, partners, and entire markets.
To meet customers variety of preferences for delivery and adoption, SAP provides solutions from its portfolio on premise, in the cloud, and on device deployments all underpinned by our SAP
HANA. SAP solutions enable customers to orchestrate data and business processes across all operating environments.
Organizational
Structure
Our legal corporate name is SAP AG. SAP is headquartered in Walldorf, Germany. Our company is structured along
the following areas:
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Technology and Innovation Platform |
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Global Customer Operations |
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Chief Operations Office |
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Global Finance and Administration |
SAP markets and distributes its products and services primarily through a worldwide network of local subsidiaries, which are licensed to distribute SAP products to customers in defined territories. Under
their respective license agreements, the subsidiaries pass on to the
licensor a certain percentage of the revenue generated by distributing the products. Distributorship agreements are in place with independent resellers in some countries.
For a complete list of subsidiaries, associates, and other equity investments, see the Notes to the Consolidated Financial Statements
section, Note (34).
Our management reporting breaks our activities down into four segments: Product, Consulting, Training, and
Sybase. For more information about our segments, see the Notes to the Consolidated Financial Statements section, Note (29).
Mission and
Strategy
Market
With customers in more than 24 industries, from small businesses and midsize companies to large enterprises, in countries across the world, SAP has traditionally served a global market for enterprise
software and services that is subject to the same trends that drive the world economy. Despite ongoing macroeconomic uncertainty and volatility, numerous market forces are changing the business and technology landscape:
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Globalization: Emerging economies that continue to experience fast growth, outpacing more established markets
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Internet of Things: Increasing connectedness through mobile devices both people-to-people connectivity
and machine-to-machine connectivity |
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Consumerization of IT: Increasing demand for enterprise IT to deliver the same user experience as consumer technology
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Big Data: An increase in data produced and consumed in unprecedented volumes doubling every 18 months
according to International Data Corporation (IDC) |
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Business and social collaboration networks: Increasingly distributed, yet
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highly networked workforces connected through social network technologies |
To be successful in this climate, businesses must use technology and real-time analytics to better conduct business in real time, get closer to their customers, and innovate with more competitive and
relevant products in each market and customer segment they serve.
Business and Technology Trends
Market dynamics require enterprises to evaluate their business models and opportunities for sustained growth and greater efficiency. SAP
customer companies of all sizes continually evaluate, expanding into new geographies, approaches for engaging new customer segments in emerging markets and elsewhere, entering into adjacent vertical industries, and increasing networking at the
enterprise level. Businesses and public sector organizations are also addressing customers and constituents needs for transparency and openness by empowering them with greater access to information.
Three major technology trends in-memory computing, enterprise mobility, and the cloud have triggered change in the world of
IT and SAP is playing a crucial role in accelerating that change. Those trends are changing not only the way enterprises adopt and deploy business technology, but also fundamentally the way that work is done. The pervasiveness of the cloud and
mobile devices, together with the power of in-memory computing, allow people to connect and collaborate wherever and whenever they choose. At the same time, they can access and analyze large amounts of data in seconds. We strongly believe that the
convergence of these technologies has the potential to create enormous business value and power new business models both in developed countries and emerging markets. We further believe this will change cultures both within companies and
externally among their customers, partners, and others across their business ecosystems.
Connectivity of people and devices
through mobile technology is increasing at an
exponential rate. There are more than five billion mobile subscribers in the world today, and in the future, we will be able to connect hundreds of billions of objects automobiles,
household appliances, machines in real time. This machine-to-machine connectivity or Internet of Things will drive enormous business value and we are already seeing examples of this in smart utility grids and smart buildings.
The explosion of Big Data in an increasingly connected world where people and devices exchange information continues at an unprecedented
rate. Enterprise data volume is increasing by over 50% to 60% every year while IT budgets are growing at only 5%. Our customer businesses of all sizes and in all industries must increase their focus on analyzing volumes of data for new insights,
greater customer intimacy, and competitive advantage. In this environment, in-memory computing delivers a dramatic change in computing, analytics, and data storage. It leverages advances in multicore processing and more affordable servers, storing
information in the main memory rather than in relational databases, to greatly accelerate processing times. It will fundamentally disrupt the traditional IT stack comprised of hardware, middleware, and software, where the disk-based relational
database is the bottleneck. We believe that advances in in-memory computing will become the new backbone of next-generation business applications and enterprise technology.
To increase efficiency and lower costs of ownership, enterprises are rapidly embracing cloud computing and virtualization, as well as changes in data storage through in-memory computing, to rethink the
way they invest in information technology. These advances are simplifying and removing layers from the traditional technology stack. SAP is helping drive change as customers reduce the amount they spend on hardware and services in favor of
investment in software-based innovation. Increasingly, customers are looking to embrace social networking and collaboration technologies as a part of their cloud road map. We are
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developing a new category of cloud applications with a people-centric approach to help customers speed up decisions, strengthen customer relationships, and drive growth.
Enterprise mobility continues to transform the way work is done and businesses are run. Smartphones already outsell PCs. By 2013, mobile
devices will be the primary method of Internet access worldwide. A mobile workforce is seen as becoming more productive, since employees can now do their job any time, from any location, rather than being tethered to their office desktop. The
pervasiveness of mobile technology, together with advances in the cloud and analytics, empower workforces and consumers in new ways, regardless of location. This way, people can respond quickly and intelligently to timely information about events
and their surroundings.
With the continuing threat of climate change and resource price instability, businesses are also
paying close attention to the strategic importance of managing sustainability.
Vision and Mission
Our vision is to help the world run better and improve peoples lives. We have a great opportunity to reshape the IT industry and
transform business networks. In the next decade, we see a major demographic shift that will drive an exponential demand for natural resources. Businesses and governments will need a new category of sustainable solutions to cope up with this demand
and provide high value services to their consumers and citizens. With our vast experience in resource management and our new technology innovations, we can power these new types of solutions.
Our mission is to help every customer become a best-run business. We do this by delivering new technology innovations without disruptions:
Enterprise mobility will transform consumption of IT; in-memory technology will simplify the IT stack and drive high value applications; and the cloud delivery of IT solutions will become mainstream. By
leveraging our strong base in applications and analytics as well as new technology innovations, we can offer solutions that make our customers run better.
In summary, we measure our success based on our customers success: When our customers win, we win. We are committed to optimizing
the business value of our customers IT investments, lowering their total cost of ownership (TCO), and helping them innovate for the future. Our passion for growth and trusted partnerships with our customers, employees, shareholders, and
members of our open ecosystem remains resolute.
Strategy for Growth
Our strategy for growth seeks to increase SAPs market leadership in existing and new market categories. The market trends in mobile,
big data, cloud computing, and social networking present a unique opportunity for SAP to deliver expanded business value through a concerted innovation strategy focused on these market trends that delivers these innovations without disruption to our
customers business and further leverages their existing investments in SAP software. To that end, as the information technology industry undergoes a structural shift away from investments in hardware toward increased investments in new
software-based innovation, particularly in the area of cloud, mobile, and in-memory technology, SAP wants to position itself at the forefront of accelerating that change.
As a result, compared to 2010, we are doubling our addressable market for 2015 by focusing on five market categories:
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Applications: With SAP Business Suite software, SAP is already recognized as the undisputed market leader in business
applications and enterprise resource planning (ERP). Customers can rapidly deploy standardized core business processes and functions with line-of-business and industry-specific applications across 24 industries and 11 lines of business.
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As SAP innovates and grows these industry-specific and line-of-business-focused core applications, we continue to improve the overall end-user experience for our customers and lower TCO. We are
injecting in-memory computing innovation into SAP Business Suite, starting with the controlling profitability analysis accelerator powered by SAP HANA. The accelerator has been available since the fourth quarter of 2011 as a
rapid-deployment solution that is installed and ready to use within twelve weeks. At the same time, we have extended maintenance for SAP Business Suite to 2020, an extraordinarily long commitment to our customers by industry standards.
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Analytics: SAP is an acknowledged global market leader in analytics. We continue to augment our market-leading portfolio
of analytics solutions, including our governance, risk, and compliance (GRC) solutions and our enterprise performance management (EPM) solutions, with the power of SAP in-memory technology. The first major effort was the SAP NetWeaver Business
Warehouse component powered by SAP HANA introduced in the fourth quarter of 2011. Empowered with real-time business insight that can be delivered in milliseconds with SAP HANA individuals, teams, and business networks can quickly anticipate
or predict change, uncover new opportunities, and take immediate, bold, decisive action. |
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Mobile: As the global market leader in mobile solutions, SAP intends to continue to drive the unwiring of the enterprise
and simplify the consumption of enterprise data and applications. Customers benefit by having the freedom to operate anytime, anywhere, on any device with mobile apps that
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ease access to enterprise processes and information. IT units and partners can create new or mobilize existing apps with the Sybase Unwired Platform. We continue to enable our customers to manage
mobile devices, and develop and deploy mobile applications to reach their employees and end consumers. SAP delivered 50 mobile apps by the end of 2011 with partners adding several hundred more. The company will continue to innovate in this important
area of growth. |
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Cloud: Given the importance of the cloud for applications delivery, we strive to be a leading player in the cloud market.
Acquiring SuccessFactors will help toward achieving that objective. We are aiming for innovations in the cloud that our customers can use in every line of business. We aim to redefine the cloud market beyond software-as-a-service (SaaS), including
line-of-business solutions and ERP cloud solutions and platform-as-a-service (PaaS); targeting new areas such as collaboration services (including both people-centric applications and business network solutions); information services (including
business intelligence in the cloud and data services); and mobile services (especially mobile device management in the cloud). Our strategy is aimed at ensuring that customer businesses of all sizes, subsidiaries, and lines-of-business can fulfill
their unique requirements with cloud and virtualization tools and services and on-demand solutions, add-ons and industry-specific extensions from SAP, partners, or their own developers. |
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Database and technology: SAP NetWeaver provides the technology foundation for SAP applications. In addition, it delivers
a portfolio of enterprise technology to extend |
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applications to reach more people and to adopt new processes, devices, and consumption models. We strive to be a leading player in the database market. While SAP will continue to offer customers
a wide range of choice, the attractive Sybase database portfolio
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including SAP Sybase Adaptive Enterprise Server (ASE) and SAP Sybase IQ, combined with the unprecedented power and potential of SAP HANA, presents significant opportunity to address the market
for structured and unstructured data. |
Our groundbreaking SAP HANA platform allows customers to take advantage of in-memory
computing across all of these market categories. Installed on top of an existing infrastructure and working with available data, they can use it to query multiple types of data sources in real time, at speeds and volumes like never before. As a
result, customers gain immediate business insight to transform
organizations and achieve fundamental performance improvement compared to existing systems in their IT landscape.
SAPs momentum in the five market categories will be fueled by our strategy of innovation without disruption, co-innovation with our ecosystem, and ability to orchestrate technology consistently
across the enterprise.
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Accelerate Innovation Without Disruption
While we focus on innovations in our five market categories, our strategy is to deliver innovation with minimum disruption. We will ensure
this by reducing TCO for customers adopting our innovations in these areas through rapid-deployment solutions that draw on our years of experience implementing solutions across more than 24 industries and application virtualization. SAPs
commitment to accelerated innovation cycles and extended maintenance for SAP Business Suite software offers consistency, predictability, and innovation without disruption to customers IT environments. SAP stands out among vendors in its
ability to enable enterprises to become more agile and efficient while freeing up resources to innovate, better connect with customers, and grow in todays global market.
Expand Our Ecosystem
Through our open ecosystem, we offer customers
maximum choice, value, and the best possible technology through the power of co-innovation from SAP and our partners. SAP continues to invest in our broad partner ecosystem to drive development and delivery of innovative software solutions that
address industry-specific and local market needs. We will offer development toolkits on our solutions that will allow our partners to extend our current solutions as well as build new solutions.
Orchestration
Orchestration allows our customers to link on-premise, cloud, and mobile solutions in a cost-effective and consistent manner. Based on
SAPs strategic role in providing the technology backbone for our customers, we are uniquely positioned to define the blueprint and the architectural guidelines that bring together these various IT elements. Through orchestration, we provide
master data management, business process management, and unified lifecycle management across all SAP solutions at low TCO.
Competition
SAP continues to be the world leader in applications, analytics, and mobile, and aims for leadership in the cloud and database and technology market categories. Our primary competitors in applications are
IBM, Oracle, and Microsoft. Compared with SAP, those companies derive a much higher portion of their revenue from other segments of the IT market, such as hardware (Oracle, IBM); operating systems, and desktop applications (Microsoft); and IT
services (IBM). Key competitors in analytics include IBM (Cognos), SAS Institute, and Oracle (Hyperion). The mobile market is still highly fragmented. Competitors with offerings that overlap with ours include Antenna and Spring Wireless (an SAP
Ventures portfolio company). In the cloud market, we face line-of-business players such as Salesforce.com, Workday, and NetSuite. Oracle has also become a competitor in this market through its acquisition of RightNow and its planned acquisition of
Taleo. Principal competitors in the database and technology business include IBM, Microsoft, and Oracle. Our offerings also compete with those of specialized vendors in various local markets and subsegments.
Sustainability
Sustainability is core to the overall business strategy at SAP and contributes to our vision to make the world run better and thus improve
peoples lives. We approach sustainability as the holistic management of social, environmental, and economic risks and opportunities for increased near-term and long-term profitability and as a responsibility to our stakeholders. We are
committed to fully integrating sustainability into our strategy and business model and in this way we pursue a corporate strategy that is sustainable rather than a stand-alone sustainability strategy.
SAP software, including the SAP ERP application and other SAP Business Suite applications, has helped organizations become more
profitable, resource-efficient, and accountable over the past 40 years. These
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applications can also help solve difficult sustainability business problems such as dynamic energy management. Our solutions are helping provide greater levels of collaboration for sustainability
among stakeholders and greater access to enterprise-level computing for many of those previously excluded from market participation.
In addition, SAP provides a dedicated line of solutions for sustainability with the essential power to integrate at the center.
But to deliver our vision, we recognize there are important associated responsibilities and dependencies. The most relevant of these for sustainability efforts include:
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Human capital management Ensuring that we have access to the very best talent within our company and throughout the ecosystem to develop,
deliver, and use our technologies |
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Intellectual capital management Ensuring that we organize the most effective research and development capability so we can deliver the
highest quality pipeline of new products, solutions, and services while developing and safeguarding our corporate reputation and brand equity |
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Security and privacy Ensuring that we design and deliver our solutions to afford the very highest levels of data security and privacy
control |
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Business conduct Ensuring that we conduct our business activities to the highest levels of ethical behavior, as set out in our Code of
Business Conduct and other company policies |
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Climate and energy Ensuring that we reduce and minimize the environmental impact of our solutions, services, and corporate operations
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Financial Management Strategy
The primary aim of our financial management is to maintain liquidity in the SAP
Group at a level that is adequate to meet our obligations at all times. Finance may be required to proactively sustain liquidity at that level. It may also be necessary to enter into financing
transactions when additional funds are required that cannot be wholly sourced from free cash flow (for example, to finance large acquisitions).
PORTFOLIO OF SOFTWARE AND SERVICES
Working closely with customers and partners worldwide, SAP is committed to a product and services strategy that enables customers to use enterprise application software wherever and whenever they need.
Whether deployed on premise, in the cloud, or on a mobile device, SAP solutions work together as one, as networked solutions that orchestrate business processes and information meeting the unique needs of businesses and business networks
of all sizes.
Our product portfolio builds on a scalable, powerful technology platform. We can use this base to accelerate
product innovation and co-innovate with partners and customers to offer new and complementary solutions. We deliver a combination of innovation in analytics, cloud, and mobile accelerated by transformational advances in in-memory computing
on a stable technology foundation and in rapidly deployable, easily adoptable, industry-specific packages. SAP solutions empower people everywhere with the freedom to work in real time, anytime and anywhere, enabling companies to shape
innovation in their industries and lead their markets. In taking care to safeguard our customers technology investments, we also strive to enhance their business value. This way, customers can adopt innovation at their own pace, without
disruption, for their specific industry needs.
Security is integral to our commitment to delivering high-quality software, and
we endeavor to enhance security in the development of our products and services and by acquiring new technologies and expertise.
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Software Portfolio
Applications
As we innovate and grow our core applications and industry
solutions, we continue to focus on improving the overall end-user experience for our customers.
SAP Business Suite
SAP Business Suite software enables companies to optimize their business and IT strategies with an integrated portfolio of business
applications and solutions designed to work with other SAP and non-SAP software. The software increases visibility across departments and business silos, improving the ability to make clearer decisions while improving operational efficiency and
increasing the flexibility needed to address change.
SAP Business Suite applications can be deployed on a modular basis to
address particular business needs within specific timelines, targeting business processes with the highest potential impact.
Customers can incrementally enhance these applications through enhancement packages that they receive through our support offerings,
alleviating the need for costly and time-consuming upgrades.
The core applications that make up SAP Business Suite are the
following:
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The SAP ERP application helps optimize business and IT by reducing IT complexity, increasing adaptability, and delivering more business value at a
lower cost than traditional ERP solutions. It supports mission-critical business processes including finance, human capital management, asset management, sales, and procurement, and other essential corporate functions. SAP ERP enables
industry-specific processes with functionality that can be activated selectively, keeping the application core stable for high performance.
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The SAP Customer Relationship Management (SAP CRM) application manages and monitors sales, service, and marketing processes while supporting key
back-office activities. SAP CRM enables multichannel customer interactions with, for example, smartphones, the Internet, and social media and also offers a dedicated communications infrastructure that helps connect all people anytime, anywhere.
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The SAP Product Lifecycle Management (SAP PLM) application manages, tracks, and controls product-related information over the complete product and
asset lifecycle and across the extended supply chain, while freeing the product innovation process from organizational constraints. |
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The SAP Supplier Relationship Management (SAP SRM) application supports key procurement activities including demand-driven sourcing, centralized
contract management, and interaction with suppliers through multiple channels. SAP SRM helps accelerate and optimize the entire procure-to-pay cycle by enabling integrated processes and enforcing contract compliance. |
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The SAP Supply Chain Management (SAP SCM) application helps adapt company-specific supply-chain processes to the rapidly changing competitive
environment and enables the transformation of traditional supply chains with linear, sequential processes into open, configurable, and responsive supply networks. |
Industry Solutions
SAP supports companies in 24 industries with
solution portfolios that enable best-practice industry processes. These portfolios are the result of decades of trustful co-innovation with industry-leading customers that have been
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sharing their best practices to help customers, suppliers, and partners in their business networks to optimize the joint network performance. We also provide IT value through orchestration across
on-premise and cloud solutions and on any device, providing flexibility, security, and scalability on a single IT platform. The benefits of orchestration are:
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Solutions that are more easily consumed through implementable steps |
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Quick ROI through rapid-deployment solutions |
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Secure, reliable operations tuned for the individual business |
SAP Rapid Deployment Solutions
SAP Rapid Deployment solutions
combine preconfigured software and predefined services with content such as SAP best practices, templates, tools, and business user enablement, to fulfill specific business requirements at significantly reduced service-to-software ratios. By
providing predictable pricing, scope, timelines, and outcomes, as well as by leveraging proven best practices from an extensive ecosystem of customers and qualified partners, SAP Rapid Deployment solutions make it easier to adopt solutions and
reduce the implementation risk. Ready to run in typically 12 weeks or less, these solutions help lower the total cost of implementation and give customers immediate and tangible value.
Solutions for Small Businesses and Midsize Companies
SAP offers a
number of targeted solutions for small businesses and midsize companies including the SAP Business All-in-One solution, SAP Business One application, and SAP BusinessObjects Edge solutions, which combine business management and business intelligence
software. For those who want the benefits of large-scale, integrated business management applications without a complex IT infrastructure, the SAP Business ByDesign solution not only provides a modern cloud solution, but also a platform that
customers can use to build their
own solutions. Like large corporations, these firms seek to streamline business processes, cut costs, drive growth, and increase profitability by receiving the right information at the right
time across all operations.
SAP Business All-in-One
SAP Business All-in-One solutions are designed for small businesses and midsize companies with 100 to 2,500 employees. SAP Business
All-in-One solutions support integrated business processes that cover everything from financials, procurement, inventory, manufacturing, logistics, product development, human resources, sales, services, and marketing. At any time, these ERP
applications can be extended with additional functionality to scale as business needs change. SAP Business All-in-One solutions are available from qualified partners that deliver more than 660 industry-specific solutions in 55 countries. SAP
provides the deployment tools and methodologies that partners need to deliver fast, predictable implementation with low risk, low cost, and rapid time to value. Customers can choose between an on-premise deployment and hosted deployment purchased on
a subscription basis.
SAP Business One
The SAP Business One application is designed for small businesses with fewer than 100 employees that have outgrown their accounting-only systems and are looking to streamline their operations with a
single unified solution. The application supports virtually the entire business with support for financials, sales, customer relationships, inventory, and operations to help small businesses boost efficiency and accelerate profitable growth.
SAP Business One can be tailored and extended to meet specific business needs.
SAP Business ByDesign
See the Cloud section, below.
SAP BusinessObjects Edge
See the Analytics section, below.
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Solutions for Sustainability
With the continuing threat of climate change and resource price instability, businesses are paying close attention to the strategic
importance of managing sustainability for both long-term and short-term profitability. Leaders taking a proactive and strategic approach can enjoy first-mover advantage in innovation for new lines of business as well as cost and risk reduction and
improved reputation.
SAP is not only working to become a more sustainable company, but we also provide a broad range of
solutions to help our customers pursue a sustainable business strategy. We have designed sustainability solutions that fall into five key business demand areas: sustainability reporting and analytics, energy management, operational risk management,
sustainable supply chain and products, and sustainable workforce. These include:
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The SAP BusinessObjects Sustainability Performance Management analytic application that helps organizations more easily set sustainability goals and
objectives, measure and communicate performance, and reduce data collection costs and errors |
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The SAP Carbon Impact OnDemand (See the Cloud section, below) |
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The SAP Environment, Health, and Safety Management (SAP EHS Management) application that addresses regulatory compliance and helps companies identify,
manage, and mitigate EHS risks by taking an integrated approach to all aspects of risk and compliance |
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The SAP Manufacturing Integration and Intelligence (SAP MII) application that provides the tools and content to help customers track and identify
opportunities for energy reduction in manufacturing |
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The SAP Advanced Metering Infrastructure (AMI) Integration for
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Utilities, which helps optimize revenues and demand, enable more cost-effective customer service, and improve market efficiency. It also automates data exchanges for energy suppliers and
infrastructure operators. |
Analytics
SAP BusinessObjects Portfolio
The SAP BusinessObjects portfolio
includes business intelligence and enterprise information management solutions that enable companies to provide trusted information to every member of a business network, helping them respond faster and make better-informed decisions. The portfolio
also includes enterprise performance management and governance, risk, and compliance solutions, which help customers maximize profitability, manage risk and compliance, and optimize systems and processes. It also includes analytic applications
designed to help business users reach strategic goals, deliver predictable results, and make sound decisions. Reflecting SAPs commitment to openness and interoperability in heterogeneous software landscapes, the solutions are designed to
integrate with data sources and systems from other providers as well as SAP Business Suite applications and other SAP BusinessObjects solutions.
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SAP BusinessObjects business intelligence (BI) solutions enable users to interact with business information and obtain answers to ad hoc
questions without advanced knowledge of the underlying data sources. Available in cloud, on-premise, and mobile deployment options, the software allows users to access data across all sources and formats and then delivers it as useful, consumable
information. BI tools also help customers uncover trends and patterns, solve business problems, anticipate changes, and reach organizational goals.
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SAP BusinessObjects enterprise information management (EIM) solutions help customers manage and enhance data integration, data quality
management, and metadata management. Augmenting and leveraging EIM functions in the SAP NetWeaver technology platform, the solutions allow companies to build a trustworthy data foundation that supports both business and IT initiatives. Customers can
access, integrate, move, or cleanse data structured and unstructured to deliver timely, unified information. |
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SAP BusinessObjects enterprise performance management (EPM) solutions help companies improve their control performance, organization agility,
and decision making. The solutions support processes across multiple lines of business including finance, supply chain, and procurement, and include applications for strategy management; planning, budgeting and forecasting; financial consolidation;
profitability and cost management; and spend and supply chain performance management. |
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SAP BusinessObjects governance, risk, and compliance (GRC) solutions provide organizations with a proactive, real-time approach to managing
governance, risk, and compliance across heterogeneous environments. |
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SAP BusinessObjects analytic applications address challenges in specific industries and lines of business. Co-created with customers and
designed to work in virtually any environment, the applications provide the insight and best-practice support companies need to better understand risk, uncover opportunities, and make the right decisions to optimize their business. The applications,
which can be deployed
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quickly, are designed to work in virtually any IT system and deliver value to customers rapidly. |
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SAP BusinessObjects Edge solutions help midsize companies streamline and enhance their budgeting, planning and consolidation, and strategy
management processes. These versatile solutions support flexible ad hoc reporting and analysis, dashboard-based data visualization, data integration, and data quality management. |
Mobile
Enterprise
information is now accessed more and more on the move, as mobile workers use smartphones and other devices to stay connected and productive both in and out of the office. Our customers and partners are mobile too.
The strategy employed by Apple and Google to launch smartphones for consumers won people over with an incredible user experience, mobile
apps delivered by their ecosystem, and unprecedented information access. The move has consequently generated intense demand outside the consumer sphere, from businesses and their employees, based on their experiences with consumer applications. No
longer satisfied with limited device choices and a few mobile apps to help them stay in touch and be productive, employees are now putting intense pressure on IT for change in two respects: The flexibility to choose devices and easy-to-use mobile
apps. As such, IT needs to focus on infrastructure and security issues as well as the user experience.
In 2010, we acquired
Sybase to broaden our mobility product portfolio. By leveraging enterprise mobility technology from Sybase together with our existing mobile solutions, we are enhancing our infrastructure, tools, and applications to be able to access data stored in
SAP software from anywhere and on any device. This mobile platform is based on open standards; it runs on all major mobile operating systems and manages and supports all major device types.
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Sybase Unwired Platform enables SAP, customers, and partners to build mobile apps to extend
existing applications, such as SAP Business Suite software, beyond the desktop to mobile devices. This approach makes it possible for customers to unlock business value from existing SAP software investments and deliver value to people everywhere.
We intend to help our customers extend their reach by:
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Enabling business users to consume SAP software data and processes from different devices everywhere (mobile apps for business and productivity)
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Providing business users with information from both inside and outside the enterprise so that they can make decisions based on a broad array of data
according to their individual use cases (analytical capabilities) |
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Helping business users to cooperate and optimize performance across a dynamic business network of people (collaboration tools)
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Enabling partners, customers, and business users to extend the functionality of SAP software and build their own user experiences
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Helping our customers reach their consumers through mobile apps that deliver a great user experience |
In 2011, we delivered a number of mobile apps to customers (for example, SAP Travel Expense Approval, SAP CRM Sales, and SAP Retail
Execution).
Cloud
Driven by technology advances in cloud computing and a rapid value business model, on-demand delivery of business solutions continues to be a viable option for customers of all sizes. We have embraced
this shift and are delivering on our commitment to offer the right portfolio of highly strategic and reliable cloud
solutions that will interact and work with existing SAP software investments.
Cloud solutions from SAP leverage technologies such as collaboration and content services to offer new people-centric approaches to solving business problems. Our solutions are designed to take advantage
of the inherently networked nature of the cloud model to allow people and businesses to collaborate within and across enterprise boundaries. Built on a well-orchestrated set of platform features, these solutions offer fast time to value and a
low-risk deployment option to help ensure business success. Customers can also consume the innovations instantly without the need for on-site IT to manage the infrastructure.
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The SAP Business ByDesign solution delivers a complete enterprise solution for small businesses, midsize companies, and large enterprise subsidiaries.
This approach enables customers to focus on developing and growing the business while minimizing the need to build and operate IT systems. For SAP Business ByDesign, two new feature packs were released successfully in 2011. Customers can find new
solutions from SAP and partners that enhance the SAP Business ByDesign solution in SAP Store, including add-ons, mash-ups, and extensions from SAP and partners. |
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The SAP Information Interchange OnDemand solution by Crossgate is another cloud offering. The solution delivers prebuilt business partner profiles that
connect trading partners, enabling fast, efficient business-to-business (B2B) commerce and invoicing that improves how a customers partners are integrated and how they share data. After establishing a one-time connection with trading
partners for all relevant processes, customers can then instantly exchange related electronic documents for all types of materials, goods, and
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services using existing SAP applications. |
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SAP StreamWork application is a cloud-based collaborative solution that brings together people, information, and structure, with enterprise
applications and business processes to deliver faster business results. With SAP StreamWork businesspeople can work within and between companies to solve problems, develop strategies, brainstorm, collect feedback, or drive decisions.
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In addition to the solutions above, several cloud solutions targeting specific functional usage are also
available, for example, SAP Sales OnDemand, SAP Sourcing OnDemand, SAP Carbon Impact OnDemand, and SAP BusinessObjects BI OnDemand.
Database and Technology
For all these layers to fit together, an orchestration layer that works across all applications within a customer landscape is required.
Therefore, we plan to continue to invest in the areas of lifecycle management, master data management, and process orchestration. The goal is to continuously reduce the cost of ownership and support data consistency and process management across
multiple layers of applications. In addition, we will invest in our technology portfolio in order to provide a technology foundation which powers all current deployment scenarios for applications, in whatever mode they are deployed (on premise, in
the cloud, or on a mobile device). For example, the SAP NetWeaver technology platform continues to provide a stable foundation for SAP Business Suite and other SAP software. It enables enterprises to extend and optimize business processes
orchestrated across delivery models. SAP NetWeaver delivers a modular set of functions to help reduce IT complexity and increase business flexibility across heterogeneous IT landscapes through open interfaces, middleware, and process management
tools.
With SAP Sybase Adaptive Server Enterprise, customers have another database choice as one
single source for support, maintenance, and lifecycle management.
Another key innovation in the SAP technology portfolio is
in-memory computing. The SAP HANA platform, comprising the SAP HANA database and other components, is based on this technology and enables real-time analysis on large quantities of detailed data. This breakthrough technology is intended to be
installed in a nondisruptive way, as a side-by-side attachment to other technology and applications, such as analytics, the SAP NetWeaver Business Warehouse (SAP NetWeaver BW) component, and SAP Business Suite software.
SAP NetWeaver BW is available with SAP HANA as an underlying in-memory-based database. Remarkable simplification, reduction in TCO,
improved performance, and breakthrough analytics are just some of the benefits that can be realized by column-based storage with high compression and query performance. It is also possible to natively combine SAP NetWeaver BW data with real-time
sourced data in data marts in SAP HANA. We plan to deliver additional applications that will run on SAP NetWeaver BW powered by SAP HANA.
SAP Services Portfolio
The SAP Services portfolio exists to help our customers derive value from their SAP solutions in a fast, cost-effective and predictable
way.
We provide a holistic approach to the entire application lifecycle, incorporating a broad array of methodologies, tools,
and certified partner offerings to help our customers gain value from their SAP investment while meeting their business needs. Tightly integrated with our development organization, services contribute to a closed customer-feedback loop to the
development organization and end-to-end risk and quality management throughout the
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entire customer lifecycle. The SAP Services portfolio includes industry- and solution-focused services, business and IT transformation services, custom development services, support services,
program management, project management and quality assurance, and education and certification.
We have aligned our services
portfolio around the following categories:
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High value services: Typically people-centric services in areas such as business transformation, industry-specific (for example, banking), and
architecture-focused projects |
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Innovation services: Service offerings that are helping lead the market adoption of SAP innovations such as SAP HANA, mobility, and cloud offerings
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Engineered services: Service offerings that are assembled to order to provide faster time to value and lower TCO with greater predictability, including
our extensive portfolio of services for SAP Rapid Deployment solutions |
We continue to offer services to
address traditional projects, but increasingly we will look to our ecosystem to provide such offerings to our customer base.
SAP Services has a local presence in more than 50 countries and runs more than 70 training centers, seven global support centers, and 10
custom development centers in the Americas, Asia, and Europe. With approximately 21,000 SAP Services professionals around the world, customers needs can be met around the clock to support SAP solutions.
Our custom development and support services and Sybase customer support and services are categorized as software-related services, while
the remaining services areas, provided by SAP Consulting, the SAP Education organization, Sybase Messaging, Sybase Consulting, and Sybase Education, are categorized as professional services.
Software-Related Services
SAP Custom Development
The SAP Custom Development organization
develops customer-specific solutions and business functions on SAP technology covering the lifecycle of services to develop and support custom solutions at every stage. With an extensive network of experts across 10 development centers worldwide,
SAP Custom Development helps extend, enhance, and optimize existing solutions or build innovative new applications according to customer needs. SAP Custom Development also develops focused business solutions to support the specific needs of various
industries.
Support Services
SAP offers several options to support our customers business solution landscapes and their respective needs. Our support units offer a range of customer support services before, during, and after
implementation of our software solutions. We provide around-the-clock technical support in every region. We also offer proactive, preventive support services to protect and enhance our customers investments in SAP technology and software.
SAP offers a comprehensive, tiered support model to customers worldwide. The offering includes SAP Enterprise Support and SAP
Standard Support. Customers choose the option that best meets their requirements. However, the vast majority of customers choose SAP Enterprise Support. The expanded maintenance and support portfolio helps deliver choice, predictable pricing, and
value for customers.
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SAP Standard Support delivers support services to enable continuous and effective IT operations. This baseline level of support provides our customers
with the services and tools to minimize the cost and risk associated with keeping IT systems up and running, including updates. SAP Standard Support ensures that customers SAP solutions run
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efficiently by delivering improvements, quality management, knowledge transfer, and problem resolution. |
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SAP Enterprise Support is comprehensive, proactive support and maintenance extending beyond our SAP Standard Support offering. It provides our
customers with an application lifecycle management approach that can help them manage IT complexity and integrate solutions across their IT landscapes. As well as updates, for mission-critical processes the service provides continuous quality checks
to analyze technical risks. We deliver the quality management methodology, processes, and tools needed to perform advanced testing and implement solution deployment, operations, and continuous improvement initiatives using the SAP Solution Manager
application management solution. |
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The SAP MaxAttention support option expands SAP Enterprise Support, covering the entire lifecycle of an SAP solution in a tailored format for customers
with a full range of services that help organizations safeguard complex solutions, plan for new releases and upgrades, and improve productive solution operations. SAP MaxAttention is designed to provide customers with our highest level of customer
support built on a dedicated engagement model with a technical support advisor and service-level agreements, supported by long-term commitments delivered by the SAP Active Global Support organization. |
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SAP Safeguarding services help our customers mitigate the technical risks of an implementation, integration, migration, or upgrade project. They smooth
the process of going live and help customers prepare for live use of the software. An on-site technical quality manager helps ensure that
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customers receive the support they need, that knowledge transfer takes place, and that our customers improve the performance, data consistency, and availability of their IT solution from SAP.
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The Sybase Customer Service and Support organization offers technical support for the Sybase family of
products. It maintains regional support centers in Asia, Europe, Latin America, and North America, providing uninterrupted technical services around the world. Sybase users and partners have access to software fixes, technical information sources,
and newsgroups on the Sybase support Web site.
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Sybase Standard Support services include updates and new version releases that become available during the maintenance period. They are designed for
high-quality around-the-clock support for critical issues, access to new releases, and online support services. |
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Sybase Enterprise Support services offer personalized high-availability support for companies with mission-critical projects. Services include priority
access to the Enterprise Technical Team, proactive services, and other specialized options. Sybase Enterprise Support provides the highest priority of response times. |
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In addition, Sybase also offers some support service options geared towards partners and users, primarily for designated workplace level and tools
products, and certain iAnywhere Solutions. |
Professional Services
We offer two broad categories of professional services consulting and education.
Consulting Services
SAP Consulting offers planning, implementation, and optimization services for
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business solutions. We are able to provide our services with a strong industry focus, and can also deliver solutions at functional or departmental levels. Our consultants engage in:
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Business transformation activities such as executive advisory services, value partnerships, and business process and platform services. These support
our customers in responding to business challenges in a rapidly changing business environment and bridging the gap that can exist between IT and the wider business |
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IT transformation services, seeking to reduce customers TCO with tangible business value accompanied by reduced effort and costs
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Performance and insight optimization services providing analysis and modeling of business challenges to introduce innovative business processes
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Business applications services providing highly engineered solutions to our customers application and analytical needs
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Project and program management and risk management as well as quality assurance services across the solution landscape, including optimizing solutions
following merger and acquisitions activities or divestiture of business units |
By delivering our portfolio of
services based on proven business processes with clearly defined cost and scope, we deliver faster, cost-effective value and greater predictability to our customers while at the same time lowering the services-to-software ratio.
In addition, the Sybase Professional Services organization offers customers comprehensive consulting, education, and integration services
designed to optimize their business solutions using Sybase and products from other providers.
Education Services
The offerings of SAP Education assist SAP customers and partners with knowledge transfer related to SAP products and services. SAP Education offerings include training-needs analysis, certification
assessments, learning software, and tools. We provide a consistent curriculum for learners around the world and deliver these offerings through a number of delivery models, including online e-learning, virtual live classroom, learning on demand, and
classroom training. Every year, more than 300,000 individuals in the market are trained by SAP Education, making it one of the largest IT training organizations in the world.
Sybase provides a broad education curriculum allowing customers and partners to increase their proficiency in Sybase products. Basic and advanced courses are offered at Sybase education centers, and
specially tailored customer classes and self-paced training are also available. A number of Sybase distributors and authorized training providers also provide education in Sybase products.
Sybase Mobile Services
The comprehensive Sybase Mobile Services portfolio
ranges from mobile messaging interoperability to mobile content delivery and mobile commerce services, for operators, content providers, enterprises, and financial institutions.
We deliver advanced mobile services to our customers by addressing the complexities of the wireless ecosystem: Incompatible networks,
messaging protocols, handsets, and billing systems.
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Sybase 365 addresses operator services focused on Short Message Service (SMS), Multimedia Message Service (MMS), GPRS Roaming Exchange (GRX), and
Internet Protocol Exchange (IPX) messaging interoperability between mobile operators worldwide. Messages are delivered through a secure operator-grade messaging platform, with
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advanced protocol conversion, routing, queuing, and transcoding capabilities. The interoperability service greatly simplifies the deployment and delivery of interoperator messaging over
incompatible networks, protocol stacks, and handsets. Services include traffic analysis and detailed reporting and statistics. Sybase 365 operates two network operations centers to monitor our messaging service infrastructure, direct and monitor
global maintenance and repair activities, and provide direct technical support to Sybase customers around the clock. |
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Sybase Enterprise Services provide mobile services for enterprises, brands, and content providers, enabling customers to monetize premium mobile
content and deliver interactive services, mobile CRM, mobile advertising, and mobile marketing campaigns globally. Services include global billing, settlement, reporting, and analysis. |
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mCommerce Services provide an end-to-end platform covering mBanking, mPayments, and mRemittance, to both developed and emerging markets. Coupling this
with our messaging platform and global reach (SMS and MMS), we are well positioned to enable mobile operators, financial institutions, and enterprises to realize the potential of mobile commerce. |
RESEARCH AND DEVELOPMENT
Research and development are at the heart of SAPs customer-focused innovation strategy. Led by SAP Research and SAP Labs, SAPs research and development efforts channel the Companys deep
expertise and diversity to investigate new technology and develop new applications for delivering business value to current and future SAP customers.
Research
SAP Research is the global technology research and innovation unit of SAP. By exploring emerging IT trends, the group drives applied research and the incubation of promising projects while focusing on the
business impact and contribution to the SAP portfolio. The business model of SAP Research is based on co-innovation with customers, partners, and other third parties; activities span from large-scale collaborative research projects with academic and
industrial partners to specific innovation projects with individual customers. The best-validated results and technologies are further developed into prototypes and potential business opportunities within SAP.
SAPs global research network consists of 19 locations worldwide and involves more than 800 partners from industry, academia, and
governments as well as SAP customers. The group demonstrates its approach to co-innovation and applied research, among others, with a network of living labs and co-innovation centers. These sites provide hands-on, real-life settings to expand on
trends and drive new prototypes as well as dedicated customer solutions. Contributing to talent development at SAP, SAP Research runs its own doctoral program that is attracting top candidates who wish to work on their theses in a real business
context.
Significant initiatives by SAP Research in 2011 include:
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Business Web initiative: The business Web is envisioned as a cloud platform and business environment that
offers a one-stop shop for applications, services, and content, as well as tools for rapidly developing and operating applications in the cloud. It combines SAPs strength in business process management with the benefits of cloud computing and
enterprise mobility. The business Web platform is being shaped together with
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partners and early adopters by working on real-world B2B scenarios from various industries. The project will continue in 2012, and a team of 80 researchers is currently working on the first
prototypes. |
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Future fleet at SAP: In a field test from February to September 2011, this project offered over 500 SAP employees the
chance to get behind the wheel of 27 e-cars charged solely with renewable energy at four SAP locations around Walldorf. SAP Research developed a software prototype to administer the e-cars and demonstrated that IT plays a key role in enabling
electric mobility. |
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Successful conclusion of the THESEUS/TEXO research project: Funded by the German Federal Ministry of Economics and
Technology, this project focused on developing software for the evolving Web-based service economy with semantic technology. Project results include the creation of the Unified Service Description Language, a platform-neutral language for describing
services, making it easier to compare and trade services online.
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Development
The SAP Labs network leverages the business and IT acumen of SAP and includes a distributed network of locations in high-tech centers across the globe that deliver local market-oriented solutions
optimized for customer value. Each SAP Labs location has the flexibility of a small company as an integral part of the global network and each has a clear focus topic and area of responsibility. SAP Labs engage closely with universities, offering
leadership talks, engineering courses, and exchange programs. They take part in outreach and corporate social responsibility programs such as the FIRST LEGO Leagues and work with local charities. Allied with SAPs strong brand, SAP Labs
engagement ensures that within their local ecosystems, SAP continues to be recognized as an employer of choice and that SAP attracts the best talent.
In 2011, SAP continued to make strides in introducing leaner, faster, and more efficient development across the Company. While more agile methods of development have been associated with companies of
smaller size, SAP is among the first companies of its size and scale to adopt short development cycles, small teams with greater empowerment, and closer customer alignment.
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Research and Development Expenditure
Our strong commitment to research and development (R&D) is also reflected in our expenditures: In 2011, we increased our R&D
expense by 210 million, or 12%, to 1,939 million (2010: 1,729 million). We spent
13.6% of total revenue on R&D in 2011 (2010: 13.9%). Our non-IFRS R&D expense as a portion of total operating expenses declined slightly from 20.0% to 19.9% year over year a
fact that demonstrates an increase in our efficiency.
The importance of R&D was also reflected in the breakdown of employee profiles. At
the end of 2011, our total full-time equivalent (FTE) count in development work was 15,861 (2010: 15,884). Measured in FTEs, our R&D headcount was 28% of total headcount (2010: 30%). Total R&D expense includes not only our own personnel
costs but also the external cost of works and services from the providers and cooperation partners we work with to deliver and enhance our products. We also incur external costs for translating, localizing, and testing products, for obtaining
certification for them in different markets, patent attorney services, strategy consulting, and the professional development of our R&D workforce.
New SAP Offerings
New Applications
Cross-Industry SAP Business Suite Software
Through our enhancement packages for our core applications as well as new versions of
industry-specific applications, we have provided updates and enhancements for various functional areas of our SAP Business Suite software. These include the latest enhancement packages for SAP
ERP, SAP Product Lifecycle Management (SAP PLM), SAP Customer Relationship Management (SAP CRM), and SAP Supplier Relationship Management (SAP SRM), as well as applications supporting supply network collaboration, supplier lifecycle management,
extended warehouse management, asset retirement obligation management, sourcing and contract lifecycle management, transportation management, and a manager self-services add-on.
In addition, we are currently working on products and solutions that address the priorities of lines of business across multiple
industries. Other key initiatives and areas of development include master data governance, commodity management, the visual enterprise, extending the business network, multichannel support, transportation management, and sustainability enhancements.
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In 2011, we launched a number of core applications for different lines of business,
designed to help companies work as efficiently as possible:
SAP Web Channel Experience Management
Addressing companies need to deliver an integrated and consistent customer experience over the Web, SAP developed the SAP Web
Channel Experience Management application. Launched in July 2011, it allows organizations to deploy easy-to-use Web shops, fully integrated with their back-end order management and inventory systems. In addition, this next generation e-commerce
solution brings together e-marketing, sales, online self-service, and social customer conversations on a single platform to provide a one-stop, synchronized Web customer experience.
SAP Commodity Risk Management
Companies can use the SAP Commodity Risk
Management application to take suitable steps for coping with fluctuating commodity prices and mitigating currency risks, thereby helping safeguard their profitability, control materials costs, and comply with applicable regulations.
SAP Commodity Procurement
The SAP Commodity Procurement application provides end-to-end support for commodity buying processes and knits them tightly with quality management, settlement, and, most importantly, with risk
management.
SAP Commodity Sales
The SAP Commodity Sales application helps companies contract at market prices and streamline billing. It supports automated provisional, differential, and final invoicing. Each SAP commodity management
application is designed to support enterprise services that help integrate them with other vendors applications.
SAP Business Suite Industry Solutions
SAP Billing for Telecommunications
In January 2011, we launched the integrated SAP Billing for Telecommunications package, designed to cover the widespread demands and service portfolios of telecommunications service providers. With this
package, individual SAP offerings for rating, charging, invoicing, and financial management are combined on a flexible billing platform, offered in conjunction with analytics and a broad-based value management program. Building on the Highdeal and
Sybase acquisitions, this solution marks a new step in enabling these customers to launch and monetize next-generation service offerings.
SAP Collaborative E-Care Management
Launched in November 2011, the SAP Collaborative E-Care Management application connects patients, care providers, and their families through medical monitoring software and mobile devices to better manage
patients health with individualized treatment plans and educational content in real time.
SAP Social Services Management for Public
Sector
Launched in February 2011, the SAP for Public Sector solution portfolio continues its innovation for distinct
industry demands with the introduction of a new solution to help improve disbursement processes for monetary social benefits. The SAP Social Services Management for Public Sector package is designed for government agencies at the federal, state, and
local level that are tasked with administering and approving monetary benefits as they relate to social services.
SAP Trade Promotion
Optimization
The SAP Trade Promotion Optimization application, released in May 2011, deploys advanced modeling and
predictive analytics to enable marketing and sales teams to systematically predict and optimize promotion outcomes, including revenue and profit, for both manufacturers and retailers.
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Solutions for Small Businesses and Midsize Companies
Enhancements to SAP Business One
Building on strong market acceptance, the SAP Business One application reached the milestone of 30,000 customers. By September 2011, 32,000 small businesses and midsize companies in over 100 countries
were running SAP Business One. The new application features improvements that include enhanced integration technologies and support for mobility and social networking. New delivery options offer SAP Business One fully hosted and managed by selected
SAP partners. Alternatively, starter packages provide preconfigured software enabling customers to go live in three to ten days.
Sustainability Solutions
SAP
EHS Management
In September 2011, we added new risk assessment and incident management features to SAP EHS Management
software. Companies in asset-intensive industries can go beyond compliance by implementing a closed-loop process to proactively assess and control workplace safety risks, avoiding costly incidents and improving operational efficiency. The new
incident management functionality helps organizations learn from accidents and near-miss events, and take preventive actions to keep people, assets, and the environment safe.
SAP Product Safety Management OnDemand
For manufacturers, ensuring
material and product safety requires safe transportation, storage, and use as directed by key regulations such as the EU Regulation on the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), the U.S. Toxic Substances
Control Act (TSCA), and the Globally Harmonized System of Classification and Labelling of Chemicals (GHS). The SAP Product Safety Management OnDemand solution, launched in October 2011, helps
integrate material and product safety. The solution is available on a usage-based subscription providing cloud access to an SAP-hosted platform that includes the SAP EHS Management and SAP EHS
Regulatory Content packages. The solution is available today to chemical producers and retailers in Europe. The solution is fully integrated with SAP ERP and includes key functionality including substance master data, safety data sheets, dangerous
goods management, global label management, standard operating procedures, and substance volume tracking.
New Analytics Solutions
Business Intelligence Solutions
The 4.0 release of SAP BusinessObjects BI solutions in February 2011 manifests the broad range of technology innovations that are shaping the future of analytics. These solutions enable real-time
analysis, with in-memory computing, putting powerful BI in users hands through new mobile capabilities. They allow the combination of business and social data to provide new insights by bringing together structured and unstructured
information, all delivered on a platform that provides various models for deployment on premise, in the cloud, embedded in business operations, or in a hybrid manner.
Enterprise Information Management Solutions
In February 2011, SAP
made available the 4.0 release of SAP BusinessObjects EIM solutions, designed in conjunction with the 4.0 release of SAP BusinessObjects BI solutions, as well as SAP HANA appliance software to help customers perform real-time analytics on big data,
integrate structured and unstructured data, and analyze information from social networks. In addition, with new offerings such as SAP BusinessObjects Information Steward software and SAP Master Data Governance application, business and IT can
collaborate like never before to support information governance across the enterprise.
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Enterprise Performance Management Solutions
In May 2011, we shipped the 10.0 release of SAP BusinessObjects EPM solutions, designed to help organizations better execute on their
business strategy. New in the 10.0 release are a unified Web and Microsoft Excel interface that can be used across multiple applications for a common look and feel and greater productivity, comprehensive applications designed for finance and other
lines of business, and support for new technologies such as mobile devices.
Governance, Risk, and Compliance Solutions
In March 2011, SAP made available the 10.0 release of SAP BusinessObjects GRC solutions. These solutions help reduce
the cost and effort required to manage risk and compliance programs; more confidently protect revenue streams, shareholder value and reputation; and contribute to optimized organizational performance and results. The 10.0 release introduces a common
look and feel across all applications in the GRC suite; embeds BI reports and dashboards; and includes a graphical tool to define and depict risks.
Analytic Applications for Industries and Lines of Business
In
2011, we launched a number of analytic applications in the SAP BusinessObjects portfolio tailored to address challenges in specific industries and lines of business. Co-created with customers and designed to work in any environment, the applications
provide the insight and best-practice support that companies need to better understand risk, uncover opportunities, and make the right decisions to optimize their business.
Analytics Applications for Sustainability
To help companies ensure
product safety, comply with environmental regulations, and better protect their employees, in 2011 we
released SAP Best Practices packages for sustainability. These include the SAP Best Practices for Analytics in Health and Safety, SAP Best Practices for Analytics in Product Safety and
Stewardship, and SAP Best Practices for Analytics in Environment Compliance packages. The new packages feature operational analytics designed to give line-of-business managers in environment, health and safety and product areas improved insight into
core processes and information.
New Mobile Solutions
Mobile Apps for SAP BusinessObjects
In February 2011, SAP launched
the 4.0 release of SAP BusinessObjects BI and EIM solutions to bring business analytics to mobile devices, as well as mobile apps for SAP BusinessObjects and SAP Business Explorer software. Leveraging Sybase Unwired Platform, our mobile BI suite can
process content from SAP and business applications from other providers.
Mobile Platform
In September 2011, SAP launched the next-generation Sybase Unwired Platform with release 2.1. The platform is an expansive enterprise
mobility solution for developing and managing the entire lifecycle of native and Web apps across key mobile device platforms. We also announced an enhanced version of our software development kit (SDK) for ecosystem partners and customers, enabling
them to develop complementary applications to help run their business better. The SDK includes a wide variety of mobile apps that can run on a broad selection of mobile devices.
Mobile Apps for Industry and Lines of Business
In November 2011,
SAP and Sybase announced a series of new mobile apps built on Sybase Unwired Platform aimed at making business processes and business information mobile across key industries including
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manufacturing, consumer products, utilities, high tech, oil and gas, and retail:
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The SAP Field Service mobile app provides full online and offline access to assignments, service orders, and service confirmation. Functions for
mobilizing and customizing SAP CRM applications give field service engineers more mobile application features. |
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The SAP Retail Execution mobile app provides online and offline access to accounts, contacts, visits, surveys, and products and fully integrates
with native device functionality. |
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The SAP EAM Work Order mobile app addresses the requirements for plant maintenance operations staff for work order management,
notifications, technical object management, inventory, and business partner management. |
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Mobile apps for employee productivity are simple single-purpose mobile apps, built on Sybase Unwired Platform. Designed similar to consumer
apps, they can be used by employees with zero training. These productivity apps allow users to act on workflows and access critical business information stored in SAP ERP Human Capital Management solution, SAP CRM, SAP SRM, and other applications
from their mobile devices. |
Mobile Device Management
In November 2011, we added some critical capabilities for Afaria mobile management software, including end-user self-service portal and
application enablement. In addition, the new telecommunication expense management capabilities provide administrators with a powerful tool for easily managing employee mobile costs such as voice and data roaming. Application on-boarding for iOS,
Android, and BlackBerry devices enables IT organizations to create and preload libraries of mobile apps for simplified access by authorized employees.
New Cloud Solutions
SAP Business ByDesign Feature Pack 2.6
In February 2011,
SAP launched a new release for the SAP Business ByDesign solution, which serves as an open platform on which a broad ecosystem of partners can further customize the software. Enhancements included usability, support for additional mobile devices,
and on-demand integration of subsidiary operations into on-premise installations at headquarters. With this release, SAP Business ByDesign was also made available in Austria, Canada, and Switzerland.
SAP Business ByDesign Feature Pack 3.0
Based on strong co-innovation with customers and partners, SAP announced general availability of the second release of the SAP Business ByDesign solution in August 2011. SAP Business ByDesign was made
available for Australia and Mexico, with language support in Spanish. In addition, mobile support was extended to include the Microsoft Windows Phone 7 mobile platform.
SAP Product Safety Management OnDemand
See the New Applications
section.
SAP Sales OnDemand
In March 2011, SAP introduced the SAP Sales OnDemand solution, SAPs first user-centric cloud-based application for sales professionals with designed-in social collaboration. The solution, which
complements the on-premise SAP CRM, offers enterprises running SAP Business Suite software a preintegrated cloud solution that embraces the way sales representatives collaborate and improves their productivity. We launched SAP Sales OnDemand at the
SAPPHIRE NOW conference in 2011 and made it generally available in a number of countries at the end of the second quarter.
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SAP Sourcing OnDemand
The latest version of the Sourcing OnDemand solution was made available in March 2011. The solution was designed for sourcing
professionals to obtain rapid and sustainable savings through best-practice management, real-time visibility, and greater control within strategic sourcing, contract lifecycle management, and supplier management.
New Database and Technology Solutions
SAP HANA Platform
In June 2011, SAP announced the general availability of the SAP HANA platform, bringing to customers high-speed analytics, new business
applications, renewed existing SAP solutions, and IT simplification with SAP in-memory computing technology.
Applications for SAP HANA
In 2011, SAP delivered the following applications based on the SAP HANA platform:
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SAP Electronic Medical Record: Doctors in the neurology department at the Charité hospital in Berlin are using
this new mobile app to access patient health records while on the wards. Doctors can use the app to call up lab results and images, the patients home address, and various facets of a patients medical record. Instant access to patient
data and images helps healthcare professionals collaborate and take better decisions. |
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Charitable Transformation (ChariTra) online network, launched in November 2011, is built on the SAP HANA platform and
helps connect volunteers, nonprofit organizations, and corporations work together toward social causes and make a difference in their communities.
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SAP Smart Meter Analytics software, launched in September 2011, enables utility companies to turn
massive volumes of data into powerful insights. With the new solution powered by SAP HANA, utility companies can help customers adopt more sustainable energy-use practices. |
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SAP BusinessObjects Strategic Workforce Planning application, launched in December 2010, is powered by SAP
HANA to support advanced capabilities that manage and optimize a companys workforce planning processes. |
Accelerators for SAP HANA
In September 2011, SAP released the SAP CO-PA Accelerator software for cost and profitability analysis, improving the speed and depth of working with large volumes of financial data. This solution can be
implemented with the wider SAP BusinessObjects EPM solutions portfolio to help organizations create a complete picture of their cost and profit drivers. Deployed either by SAP Consulting as a rapid-deployment solution, or by an experienced SAP
partner, the SAP CO-PA Accelerator helps companies engage in faster and more efficient profitability cycles and month-end closing processes.
We also released SAP Customer Segmentation Accelerator software, designed to help marketing departments analyze and segment in new ways. The solution helps organizations build highly specific segmentation
on high volumes of customer data and at unparalleled speed. Marketers can now work with massive populations of granular data to better understand customer demand, behavior and preferences targeting the right customers with the right offers
across every segment, tactic, and channel. The accelerator is also delivered as a rapid-deployment solution to ensure a quicker time to value.
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Patents
As a leader in enterprise applications, SAP actively seeks intellectual property protection for innovations and proprietary information. Our software innovations continue to strengthen our market position
inenterprise solutions and services. Our investment in R&D has resulted in numerous patents. In 2011, we obtained 756 granted and validated patents worldwide. Our portfolio includes patent families covering, for example, SAP Business Suite
software, SAP BusinessObjects products, SAP Business ByDesign, and Sybase products.
While our intellectual property is
important to our success, we believe our business as a whole is not entirely dependent on any particular patent.
PARTNER ECOSYSTEM
SAP customers want choice when it comes to partnering with companies best suited to their needs choice in the solutions they implement and choice in their source for purchasing, implementing, and
supporting those solutions. Our ecosystem and channels strategy delivers open choices to customers through a collaborative, innovative, and interactive network of partners, customers, and individuals. Tapping into this ecosystem, customers are
connected with a diverse set of providers and resources to help them succeed and become best-run businesses. By teaming with our partners, we can offer customers more innovation, more flexibility, and more variety in the solutions we offer than we
could alone. Customers, in turn, can rapidly experience benefits of the best software available from the worlds leading software, services and technology companies, including emerging technologies, such as in-memory computing, cloud computing,
and mobility, as well as analytics and line-of-business solutions.
A key factor for the success of our ecosystem strategy is
the SAP PartnerEdge program, which promotes productive partnerships and consistent service quality for a
variety of SAP partner types. Since a thriving partner ecosystem is central to our success, we have expanded the program to better serve our partners by providing more functional enhancements,
operational improvements, and increased program benefits.
In 2011, we continued to expand our ecosystem in ways that deliver
timely innovations to the market to help create a technology landscape for customers today, as well as for the future. We ended 2011 with more than 11,000 partners of various types from services, technology, software, original equipment
manufacturers (OEMs), and value-added resellers (VARs) and distributors. As a result of these local, regional and global partnerships, SAP continues to fuel innovation with customers and partners worldwide in its five market categories, as detailed
by some examples in 2011:
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Applications: SAP now offers SAP Application Visualization software by iRise, which accelerates solution design by
improving communication between business users and IT departments. The SAP Social Media Analytics application by NetBase delivers marketers more accurate real-time analytics for understanding their markets and customers through the social Web. SAP
Intelligence Analysis for Public Sector by Palantir helps public safety and security agencies run better, so that communities will run safer. And the SAP Defense Command and Control application by Systematic helps advance frontline logistics.
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Analytics: SAP Crystal Server 2011 software and the 4.0 release of SAP BusinessObjects Edge BI software are now being
resold by channel partners. The software is designed to enable small and midsize enterprises, as well as lines of business, to better understand all facets of their businesses and make confident, data-driven decisions as events unfold, in real time.
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building on its collaboration with Google to help customers manage large data volumes in intuitive, visual displays and facilitate faster, better-informed decisions. SAP will enhance its business
analytics software with location-based data capabilities, allowing people to interact with real-time information on Google Maps. |
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Mobile: SAP and Accenture announced a relationship to develop and deploy new mobility solutions, which leverage Sybase
Unwired Platform to tap new growth opportunities in the market for enterprise mobility. SAP also has opened up mobile solutions from the Sybase portfolio to partners within our global ecosystem, enabling SAP value-added resellers the opportunity to
sell Sybase-branded enterprise mobility apps and solutions for application development, device management, and security. In addition, SAP expanded its relationship with Verizon to jointly market and sell key components of Verizons Managed
Mobility portfolio so that customers can easily access their on-premise and cloud-based SAP applications virtually anytime and anywhere. |
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Cloud: SAP partnered with Amazon, Dell, IBM, Microsoft, and Verizon to deliver enterprise solutions in the cloud as part
of our commitment to provide customers with flexibility in software deployment options and innovations in cloud computing. SAP announced it is working in a three-way strategic collaboration with EMC and VMware to develop tools and services that make
it easier for customers to adopt cloud and run SAP systems in cloud infrastructures with increasing levels of automation. We also expanded our solution reseller program for SAP Business ByDesign to 11 countries.
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Database and Technology: SAP expanded its relationship with OpenText, announcing two new applications for SAP NetWeaver
Portal developed by SAP and OpenText: SAP Portal Content Management, an enterprise solution for managing document-related content, and SAP Portal Site Management, a solution helping a broad number of users easily manage Web content.
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Collaboration and Structure
Best-run businesses require best-in-class technologies to enable and drive success. For this to be possible, customers need choice in solutions and partners, and access to rapid innovation and a speedy
time to value from their investments. SAP offers a number of partner programs to enhance co-innovation and help partners to grow their business in new ways, while reaching customers through creative new channels. SAP also fosters a number of
different communities interactive networks of developers, customers and partners that come together to collaborate on a broad range of topics.
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SAP Community Network: With over two million members in more than 200 countries, SAP Community Network is where
customers, partners, employees, and experts go to exchange news and work together. It comprises the SAP Developer Network community, the Business Process Expert community, the Business Analytics community, the SAP University Alliances community, and
SAP EcoHub online marketplace. |
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SAP Store: The online or e-channel for enterprise solutions and services from SAP and partners, SAP Store,
offers quick, easy to implement solutions that are built and suited for the online environment, including business analytics, mobile apps, cloud solutions, and other business process software and services. SAP Store offers over 1,200
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solutions from both SAP and over 600 solution partners. SAP Store offers customers access to information, insights and ability to trial applications before purchase for truly informed decision
making. |
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SAP solution extensions: Developed by independent partners, solution extensions integrate easily with SAP software,
offering customers cross-solution and cross-industry functions that complement SAP solution offerings. Solution extensions are sold by SAP as SAP-branded offerings. A number of new solution extensions were introduced in 2011, including from partners
IBM, iRise, Systematic, and Palantir. |
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SAP OEM partner program: Through this program, more than 800 partner participants embed SAP technology into their
products for end-user benefit. A dedicated team of SAP integration experts works closely with our OEMs from onboarding to enablement to ensure that they have the tools and products they need to embed or integrate SAP technology with
their solutions or service offerings to meet their customers needs most efficiently. In doing so, they also expand the reach of SAP offerings, including the SAP BusinessObjects portfolio, SAP Business Suite, SAP HANA, and solutions from
Sybase, into new and different markets. |
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SAP Co-Innovation Lab: The global SAP Co-Innovation Lab network is aimed at driving and facilitating innovative projects
between SAP and its partners, both globally and in the regions. Lab facilities are located in Bangalore, India; Palo Alto, California (United States); São Paulo, Brazil; and Tokyo. Additional expert teams are located in Walldorf, Germany, and
Seoul, Korea. Since the inception of SAP Co-Innovation Lab in 2007, SAP
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and its partners participating in lab projects have strived to create innovative solutions; accelerate technology adoption and enablement; provide a global, shared project infrastructure; and
showcase joint achievements. The formation of SAP Co-Innovation Lab is made possible through the support of sponsoring partners Cisco, F5, HP, Intel, NetApp, and VMWare. |
Finance Plan for SAP Solutions
To help companies invest in SAP solutions and the
associated services and hardware, we work with leading global financiers that specialize in IT financing to deliver the SAP Financing service, a financing structure for customers. Since its inception, it has become a firmly established SAP Services
offering, having helped arrange more than 3,200 finance deals for SAP customers in all segments small businesses, midsize companies, and large enterprises. To give customers flexibility to choose among potential economic benefits, the plan
offers all of the popular financing models with their different advantages: It can help conserve liquidity and it provides an alternative to credit from their existing banking relationships.
ACQUISITIONS AND DISPOSALS
Strategic Acquisitions
SAPs acquisition strategy complements existing applications and solutions with innovative technologies and
capabilities while maintaining its track record of organic growth. We made the following acquisitions in 2011:
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In February, we acquired security software, identity and access management software, and development and consulting resources from SECUDE, a Swiss
company. The acquisition enables us to provide secure client-server communications to customers without the need for third-party offerings. It underscores our
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commitment to investing in product security for our customers and users, and fulfills a key customer requirement by shipping SAP solutions with default security software.
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In September, we acquired Right Hemisphere, a leading provider of visual enterprise solutions. The 3-D model-based visualization and communications
technologies from Right Hemisphere enable visual navigation and interrogation of an entire product or asset and all of its associated data in one unified environment. The addition of visualization capabilities to our core product offerings will help
customers across diverse industries accelerate time to market, increase people and asset productivity and improve information quality and processes across all lines of businesses. |
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In November, we acquired Crossgate, a leading provider of hosted B2B integration services. Crossgate enables companies to fully integrate and network
with trading partners, clients and suppliers, allowing electronic data exchange with any business partner regardless of its technical capability. As a result of this acquisition, we can provide an easy way for trading partners to collaborate, share
data, and automate processes that link customers and suppliers for streamlined B2B e-commerce. |
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In December, we announced our intention to acquire SuccessFactors, the market-leading provider of cloud-based human capital management (HCM) solutions.
Our cash tender offer was successfully completed on February 21, 2012. We have acquired more than 90% of the SuccessFactors ordinary shares. The acquisition will add SuccessFactors team and technology to SAPs cloud assets,
significantly boosting our momentum as a provider of cloud
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applications, platforms, and infrastructure. In combination, SAP and SuccessFactors will offer a full range of advanced end-to-end cloud and on-premise solutions for all key business processes.
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Disposals
In November, we sold 100% of our shareholding in Steeb Anwendungssysteme, Abstatt, to All for One Midmarket. Steeb Anwendungssysteme is one of the leading SAP system resellers in Germany, with
approximately 1,000 customers almost all in Germany.
Venture Activities
Over the past 15 years, we have partnered with outstanding entrepreneurs worldwide to build industry-leading businesses. We seek to
invest in innovative, fast-growing companies with a proven product and business model, and provide our portfolio companies with the expertise, relationships, geographic reach, and capital to help them grow their business and scale their revenues. We
invest globally with a particular focus on emerging companies in Europe, India, and the United States, as well as in Brazil and China in the future.
In 2011, we made new investments in the following companies:
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Control4, based in Salt Lake City, Utah (United States), provides operating systems for the smart home, delivering intelligent control over consumer
electronics products, appliances, and networking systems through an easy-to-use and intuitive software interface. |
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Alteryx, based in Irvine, California (United States), provides an integrated, location business intelligence applications platform for delivering fast,
extensible, and spatially-enabled business analytics tools and services. |
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OpenX, based in Pasadena, California (United States), is a leading independent
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provider of digital advertising technology that enables businesses to manage and grow their online advertising revenue. |
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JustDial, based in Mumbai, India, is the leading local search engine in India focused on providing consumers with immediate access to fast, reliable,
and comprehensive information on businesses, products, and services across India. |
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SAVO Group, based in Chicago, Illinois (United States), is a leading provider of cloud-based collaborative sales enablement solutions.
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One97 Communications, based in New Delhi, India, provides mobile value-added services to mobile operators, consumers, and enterprises in India
including mobile content, advertising, and commerce services. |
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Box.net, based in Palo Alto, California (United States), provides a secure content sharing and collaboration platform in the cloud.
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Lithium, based in Emeryville, California (United States), is a leading provider of cloud solutions that accelerate business through social customer
experience for both customers and employees. |
ENERGY AND EMISSIONS
Serving our customers, pursuing our strategy of innovation, and driving toward sustainable success all demand that we address our
environmental impact. We recognize the need to do our part to reduce the emissions that contribute to climate change and to become more energy efficient. These efforts bring tangible benefits not just to the environment, but to our business. New
efficiencies drive significant savings that directly impact our financial performance. These savings also enable us to invest further in innovation, as well as sustainability initiatives such as our increased purchase of renewable energy.
By working to improve our efficiency, we have learned what it takes to do so. We are better
positioned to design solutions to help our customers thrive in a resource-constrained world. We have been challenged to solve problems in new ways, making us more innovative and driving financial success for our Company, employees, investors, and
other stakeholders. In addition, our focus on becoming more sustainable has engaged our employees, who overwhelmingly indicate in the employee survey that these efforts are important to SAP.
We assess our progress on energy and greenhouse gas emissions through four key performance indicators that reveal not just how well we are
addressing our environmental impact, but also our broader performance in terms of forging new solutions and executing on our strategy.
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Carbon footprint: We recognize our responsibility to protect the environment by lowering emissions contributing to
climate change. SAPs goal is to reduce total greenhouse gas emissions to levels of the year 2000 by 2020. For the fifth consecutive year, we increased our carbon efficiency, from 36.3 grams per euro in 2010 to 34.4 grams per euro in 2011
(measured in emissions caused per euro revenue). In parallel with the increase in our revenue, some activities required to support our business, such as travel to serve our customers, also increased, which ultimately led to an increase in our total
greenhouse gas emissions. SAPs greenhouse gas emissions increased 8% worldwide to 490 kilotonnes (2010: 455 kilotonnes, including Sybase). Our focused sustainability initiatives have led to a cumulative cost avoidance of 190 million
since 2008 in comparison to a business-as-usual extrapolation based on 2007. The experience we gain from our own initiatives helps us develop software to help our customers
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with their energy efficiency programs, and so contributes to the success of our business. |
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Total energy consumption: Our total energy consumption includes all energy produced or purchased by our organization.
Reducing our energy consumption positions us to weather anticipated increases in energy prices, and enables us to better serve customers that are increasingly focused on exercising energy- and emission-aware purchasing strategies. Our total energy
consumption increased 2% from approximately 845 gigawatt hours in 2010 to 860 gigawatt hours in 2011 due to the growth of our business. Specifically, we can trace this increase to our data centers and corporate cars. While our total consumption went
up, however, our efficiency also improved. For example, while the number of cars in our fleet increased to accommodate growth, the energy consumed per car decreased. In 2011, we implemented a range of efficiency projects in such areas of our
business as our buildings and data centers. |
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Data center energy: We focus on making data centers more energy efficient by measuring and managing the data center
energy consumption per employee. These efforts are part of our larger green IT strategy, which also includes working with customers and hardware providers to forge new sustainable solutions. Despite our continuous efforts, the growth in our business
has led to an increase of data center energy intensity from 2,746 kilowatt hours per FTE (2010) to 2,824 kilowatt hours per FTE in 2011. |
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Renewable energy: SAP continues to expand its use of electricity from renewable sources, both to decrease our reliance on
fossil fuels and nuclear power and to support an emerging
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market that is crucial for a sustainable future. We purchase some of this green electricity from local utility companies and produce some using solar panels on our facilities. At the end of 2011,
approximately 47% of our total electricity consumption stemmed from renewable sources, up from 45% in 2010. |
For more information about how SAP solutions help companies run better from environmental, social, and economic perspectives, see the
Portfolio of Software and Services section.
SEASONALITY
Our business has historically experienced the highest revenue in the fourth quarter of each year, due primarily to year-end capital
purchases by customers. Such factors have resulted in 2011, 2010, and 2009 first quarter revenue being lower than revenue in the prior years fourth quarter. We believe that this trend will continue in the future and that our revenue will
continue to peak in the fourth quarter of each year and decline from that level in the first quarter of the following year.
SALES, MARKETING AND DISTRIBUTION
SAP primarily uses its worldwide network of subsidiaries to market and distribute
SAPs products and services locally. These subsidiaries have entered into license or commissionaire agreements with the SAP entity owning the underlying intellectual property (generally SAP AG) pursuant to which the subsidiary acquired the
right to sublicense or sale SAPs products to customers within a specific territory. Under these agreements, the subsidiaries retain a certain percentage of the revenue generated by the sublicensing activity. We began operating in the United
States in 1988 through SAP America, Inc., a wholly owned subsidiary of SAP AG. Since then, the United States has become one of our most important markets.
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In addition to our subsidiaries sales forces, we have developed an independent sales
and support force through value-added resellers unrelated to SAP who assume responsibility for the licensing, implementation and some initial level of support of our solutions. We have also entered into partnerships with major system integration
firms, telecommunication firms and computer hardware providers to offer certain SAP Business Suite applications.
We establish
partnerships with hardware and software suppliers, systems integrators and third-party consultants with the goal of providing customers with a wide selection of third-party competencies. The role of the partner ranges from pre-sales consulting for
business solutions to the implementation of our software products to project management and end-user training for customers and, in the case of certain hardware and software suppliers, to technology support. Beyond these partnerships, a significant
amount of consulting and training regarding SAP products is handled by third-party organizations that have no formal relationship or partnership with SAP.
Traditionally, our sales model has been to charge a one-time, up front license fee for a perpetual license to our software (without any rights to future products) which is typically installed at the
customer site. We now offer our solutions in a variety of ways which include in the cloud, hosted solutions, and subscription-based models that provide the customer with a right to unspecified future software products. Although revenues from these
new types of models currently are not material, we expect the revenues from most of these models to increase in the future.
Our marketing efforts cover large, multinational groups of companies as well as small and midsize enterprises. We believe our broad
portfolio of solutions and services enables us to meet the needs of customers of all sizes and across industries.
Capitalizing
on the possibilities of the Internet, we actively make use of online marketing. Some of our solutions can be tested online via the Internet demonstration and
evaluation system, which also offers special services to introduce customers and prospects to new solutions and services.
INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS AND LICENSES
We rely on a combination of the protections provided by applicable statutory and common law rights, including trade secret, copyright, patent, and trademark laws, license and non-disclosure agreements,
and technical measures to establish and protect our proprietary rights in our products. For further details on risks related to SAPs intellectual property rights, see Item 3 Key Information Risk Factors Other Operational
Risks.
We may be dependent in the aggregate on technology that we license from third parties that is embedded into our
products or that we resell to our customers. We have licensed and will continue to license numerous third-party software products that we incorporate into and/or distribute with our existing products. We endeavor to protect ourselves in the
respective agreements by obtaining certain rights in case such agreements are terminated.
We are a party to certain patent
cross-license agreements with certain third parties.
We are named as a defendant in various legal proceedings for alleged
intellectual property infringements. See Note (24) to our Consolidated Financial Statements for a more detailed discussion relating to certain of these legal proceedings.
ORGANIZATIONAL STRUCTURE
As of
December 31, 2011, SAP AG controlled directly or indirectly 199 subsidiaries. Our subsidiaries perform various tasks such as the distribution of SAPs products and providing SAP services on a local basis, research and development, customer
support, marketing, and administration. Our primary research and development facilities, the overall group strategy and the corporate administration functions are concentrated at our headquarters in Walldorf, Germany.
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The following table illustrates our most significant subsidiaries based on revenues as
of December 31, 2011:
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Name of Subsidiary |
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Country of Incorporation |
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Function |
Germany |
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SAP Deutschland AG & Co. KG, Walldorf |
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100 |
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Germany |
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Sales & Marketing, Consulting, Training and Administration |
Rest of EMEA |
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|
|
|
|
|
|
|
SAP (UK) Limited, Feltham |
|
|
100 |
|
|
Great Britain |
|
Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration |
SAP (Schweiz) AG, Biel |
|
|
100 |
|
|
Switzerland |
|
Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration |
SAP France S.A., Paris |
|
|
100 |
|
|
France |
|
Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration |
United States |
|
|
|
|
|
|
|
|
SAP America, Inc., Newtown Square |
|
|
100 |
|
|
USA |
|
Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration |
Rest of Americas |
|
|
|
|
|
|
|
|
SAP Canada Inc., Toronto |
|
|
100 |
|
|
Canada |
|
Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration |
Japan |
|
|
|
|
|
|
|
|
SAP JAPAN Co., Ltd., Tokyo |
|
|
100 |
|
|
Japan |
|
Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration |
Rest of APJ |
|
|
|
|
|
|
|
|
SAP Australia Pty Limited, Sydney |
|
|
100 |
|
|
Australia |
|
Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration |
DESCRIPTION OF PROPERTY
Our principal office is located in Walldorf, Germany, where we own and occupy approximately 425,000 square meters of office and
datacenter space including our facilities in neighboring St. Leon-Rot. We also own and lease office space in various other locations in Germany, totaling approximately 115,000 square meters. In approximately 65 countries worldwide, we occupy roughly
1,360,000 square meters. The space in most locations other than our principal office in Germany is leased. We also own certain real properties in Newtown Square and Palo Alto (United States); Bangalore
(India); Sao Leopoldo (Brazil), London (UK) and a few other locations in and outside of Germany.
The office and datacenter space we occupy includes approximately 260,000 square meters in the EMEA region, excluding Germany, approximately 325,000 square meters in the region North and Latin America, and
approximately 235,000 square meters in the APJ Region.
The space is being utilized for various corporate functions including
research and development, customer support, sales and marketing, consulting, training, administration
61
Part I
Item 4
and messaging. Substantially all our facilities are being fully used. For a discussion on our non-current assets by geographic region see Note (29) to our Consolidated Financial Statements.
Also see, Item 6. Directors, Senior Management and Employees Employees, which discusses the numbers of our employees, in FTEs, by business area and by geographic region, which may be used to approximate the productive
capacity of our workspace in each region.
We believe that our facilities are in good operating condition and adequate for our
present usage. We do not have any significant encumbrances on our properties. We do not believe we are subject to any environmental issues that may affect our utilization of any of our material assets. We are currently undertaking construction
activities in various locations to increase our capacity for future expansion of our business. Our significant construction activities are described below, under the heading Principal Capital Expenditures and Divestitures Currently in
Progress.
Capital Expenditures
Principal Capital Expenditures and Divestitures Currently in Progress
In
Japan, we commenced an office relocation project in the first half of 2012 to consolidate three of our current Tokyo offices into one office with the capacity of 1,200 seats. This project aims to increase work efficiency and working space. We
estimate the total cost of this project to be approximately 24 million, which we will fully incur in 2012. The relocation project will be finalised at the end of April 2012.
In 2012 we commenced construction of our office building in Palo Alto, US. The construction aims at optimizing work space conditions to
support line of business requirements and the improvement of general building conditions. We estimate the total cost of this project to be approximately 12 million, of which we had paid approximately 1 million as of
December 31, 2011. The construction of our office building will be finalised at the end of 2012.
In the second half of 2011 we began construction of a new building for a research center in
Potsdam, Germany. The new research center will collaborate closely with universities in the Berlin/Brandenburg area in Germany, creating a total of 100 new jobs. Focus will be on the deployment of the new in-memory computing technology introduced by
SAP, including SAP HANA software. SAP estimates to invest for the construction of the building approximately 17 million, of which we had paid approximately 1 million as of December 31, 2011. The construction of our new
research center will be finalised in the second half of 2013.
Principal Capital Expenditures and Divestitures for the Last Three Years
Our principal capital expenditures for property, plant, and equipment amounted to 372 million for 2011 (2010:
287 million; 2009: 207 million). Principal capital expenditures in 2011 for property, plant, and equipment increased compared to 2010 mainly due to an increase in spending on IT hardware. The increase from 2009 to 2010 was mainly due to
an increase in spending on IT hardware and cars. Principal capital expenditures for property, plant and equipment for the period from January 1, 2012 to the date of this report were 100 million. For a related discussion on our property,
plant, and equipment see Note (17) to our Consolidated Financial Statements.
Our capital expenditures for intangible
assets such as software licenses, acquired technologies and customer contracts amounted to 114 million in 2011 from 1,814 million in 2010 (2009: 51 million). This decrease was due primarily to executing only a few small
business combinations in 2011 while in 2010 we acquired Sybase. Our investments allocated to goodwill amounted to 170 million in 2011 from 3,398 million in 2010 (2009: 41 million). This decrease was again due to the few
small acquisitions we closed in 2011 as compared to 2010. The significant increase from 2009 to 2010 (in the addition to goodwill and intangible
62
Part I
Item 4, 4A, 5
assets) was primarily attributable to the acquisition of Sybase in 2010, whereas in 2009 we only had some small acquisitions. For further details on acquisitions and related capital expenditures,
see Note (4) and Note (16) to our Consolidated Financial Statements.
For further information regarding the principal
markets in which SAP competes, including a breakdown of total revenues by category of activity and geographic market for each of the last three years, see Item 5. Operating and Financial Review and Prospects Operating Results of
this report.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
OVERVIEW
Our principal sources of revenue are sales of software products and related services. Software revenue is primarily derived from software
license fees that customers pay to use our products. Support revenue is derived from support services which provide the customer with unspecified upgrades, updates and enhancements and software support. Our software and support revenue is included
within software and software-related services on our income statement. In addition to those revenue streams, our software and software-related service revenue includes subscription and other software-related service revenue.
Subscription revenues flow from contracts that have both a software element and a support element. Subscription contracts typically give
our customers the use of current software and the right to unspecified future products. We typically charge a fixed monthly or quarterly fee for a definite term up to five years. Software rental revenue flows from software rental contracts, which
include software and support service elements. These contracts provide the customer with current software products and
support but do not provide the right to receive unspecified future software products. Customers pay a periodic fee over the rental term and we recognize fees from software rental contracts
ratably over the term of the arrangement. Our revenue from other software-related services includes revenue from our in the cloud offerings, from hosting contracts that do not entitle the customer to readily exit the arrangement, and from
software-related revenue-sharing arrangements.
We also earn revenue from our professional services, which are included within
professional services and other service revenue on our income statement. This revenue consists of consulting and other service revenue; consulting revenue is primarily derived from the services rendered with respect to implementation of our software
products and other service revenue results primarily from our training and hosting activities; and the messaging services business that we acquired as a part of the Sybase acquisition in 2010. Our training revenue results from rendering training for
customer project teams and end-users, as well as training third-party consultants with respect to SAP software products. Our messaging revenue primarily results from per message transaction fees. Hosting revenue results from non-mandatory hosting
services and application management services. Non-mandatory hosting services revenue consists of revenue from hosting contracts from which the customer can readily exit if it wishes to run the software on its own systems.
See Item 4. Information about SAP Portfolio of Software and Services for a more detailed description of the products
and services we offer.
The following discussion is provided to enable a better understanding of our operating results for the
periods covered, including:
|
|
|
the factors that we believe impacted our performance in 2011; |
|
|
|
our outlook for 2011 compared to our actual performance (non-IFRS);
|
63
Part I
Item 5
|
|
|
a discussion of our operating results for 2011 compared to 2010 and for 2010 compared to 2009; |
|
|
|
the factors that we believe will impact our performance in 2012; and |
|
|
|
our operational targets for 2012 (non-IFRS). |
The preceding overview should be read in conjunction with the more detailed discussion and analysis of our financial condition and results of operations in this Item 5, Item 3. Key Information
Risk Factors and Item 18. Financial Statements.
ECONOMIC CONDITIONS
Global Economic Trends
The growth of the global economy became steadily more sluggish in 2011. At the same time, heightened uncertainty and growing tensions on
the financial markets had led to a worldwide decrease of confidence in financial systems among companies and consumers by the end of the year, according to the latest report by the European Central Bank (ECB). The International Monetary Fund (IMF)
paints a similar picture of the global economy in 2011, and it remarks that it had not expected developments to take that course after the upturn in 2010. The Organisation for Economic Co-operation and Development (OECD) notes that growth was
especially slow in the advanced economies in 2011, whereas the emerging markets grew vigorously, though not as rapidly as the year before.
The ECB reports that the economic situation in the Europe, Middle East, and Africa (EMEA) region in 2011 was held back by the tensions on the financial markets in the euro area. In particular, it expected
economic activity to grow weaker in the euro countries in the final quarter of the year. A key factor was declining demand on European financial markets, which made financing generally more difficult. The OECD even talks of a mild
recession, caused by decreasing domestic and export demand. On
the other hand, for countries in the Middle East and Africa that did not experience serious civil unrest, high energy prices and strong demand from the emerging markets boosted economic growth,
the ECB says.
In the Americas region, throughout 2011 growth was slowest in the United States, although the ECB did report a
short-lived remission there in the third quarter. According to the IMF, the reason for the slow growth was that government stimulus programs proved inadequate to generate sufficient consumer or business demand. For the rest of the region, only South
America enjoyed strong economic growth in 2011, says the IMF.
In the Asia Pacific Japan (APJ) region, different circumstances
gave rise to different economic outcomes in 2011. In Japan, the determining factors were the earthquake in March followed by the associated tsunami and nuclear disaster, from which the Japanese economy made a surprisingly quick recovery during the
remainder of the year, according to both the ECB and the OECD. While growth in Japan decreased in the first half of the year, not least because of the preceding economic crisis, it turned around in the second half of the year as a result of
increased domestic demand and strong export sales. In contrast, the emerging markets in Asia saw economic growth in the high single-digit percentages in 2011. However, the rate of growth did decrease due to slower export growth, explains the ECB.
The most rapidly growing economy, China, was also affected, but Chinas economy lost only a little momentum in the second half of the year and still achieved a growth rate that almost reached double digits.
The IT Market
Unlike
the overall economy, which was increasingly weighed down by sovereign debt problems in many industrialized nations, the global IT market was generally stable in 2011 aside from certain segments and regions discussed below. That is the view
expressed by International Data Corporation (IDC), a market research firm based in the United States. IDC
64
Part I
Item 5
notes that in the BRIC countries (Brazil, Russia, India, and China) IT market growth was well into double-digit percentages.
The software segment continued to grow steadily in 2011, IDC reports. Growth was strongest in the emerging markets and the BRICs. By
contrast, economic uncertainty slowed growth in the hardware segment, especially in the second half of the year. Companies in particular held back investment in new hardware toward the end of the year. However, mobile devices such as smartphones and
tablets, along with the apps that run on them, were among the growth markets in 2011.
In the Europe, Middle East, and Africa
(EMEA) region, the sovereign debt crisis not only impacted economic development as a whole in several euro area countries, it also weakened the IT market in the second half of year, especially in Western Europe. For these countries the IDC sees IT
sales growth floundering in the lower single-digit percentages, and therefore once again reduces its expectations compared to its previous report. However, the major casualty was the hardware segment. The market for software and services was less
severely affected.
The Americas region IT market was also stronger in the first half of 2011 than in the second, according to
IDC. More than once in the course of the year, it revised its projections for the United States downward in response to gathering economic gloom. But IDC still expects a midrange single-digit growth percentage from the U.S. software market. With the
exception of the PC segment, in 2011 the overall IT market was relatively stable in the United States compared with Western Europe.
The defining moment in 2011 for the Asia Pacific Japan (APJ) region was the earthquake off the coast of Japan in March, with its far-reaching consequences for the environment, the people, and the economy
of Japan. Although the Japanese IT market has already regained lost impetus, growth was slightly slower over 2011 than in the year before as the country struggled against the economic headwinds.
OUTLOOK FOR 2011
Performance Against Outlook for 2011 (Non-IFRS)
Our 2011 operating profit-related internal management goals and published outlook guidance were based on non-IFRS numbers. For this reason, in this section we discuss performance against our outlook
exclusively and expressly in terms of non-IFRS numbers derived from IFRS measures. All discussion in the Operating Results (IFRS) section is in terms of IFRS measures, and the numbers in that section are not explicitly identified as IFRS measures.
Outlook for 2011 (Non-IFRS)
At the beginning of 2011, we forecast that our software and software-related service revenue (non-IFRS) would increase between 10% and 14% in 2011 on a constant currency basis (2010: 9,868 million).
We expected that software revenue would grow more quickly than software and software-related service revenue. We forecast that all regions would contribute to this growth, although we expected more rapid growth in the Americas and APJ regions than
in the EMEA region.
We also expected that our operating profit (non-IFRS) for 2011 would be between 4.45 billion and
4.65 billion on a constant currency basis (2010: 4.01 billion). Based on this forecast, we expected operating margin (non-IFRS) to widen 0.5 to 1.0 percentage points on a constant currency basis (2010: 32.0%).
We anticipated an IFRS effective tax rate of between 27.0% and 28.0% in 2011 (2010: 22.5%) and a non-IFRS effective tax rate of between
27.5% and 28.5% (2010: 27.2%).
In April, we confirmed the forecast for 2011 we had published in January. However, owing to our
positive performance in the first half, we reported in July that growth for both non-IFRS operating profit and non-IFRS software and software-related revenue was expected to reach the upper end of the range we forecast at the start of the year.
65
Part I
Item 5
In October, we adjusted the outlook guidance for the IFRS effective tax rate to between
28.5% and 29.5% (2010: 22.5%) due to the effects of the reduction in the provision recorded for the TomorrowNow litigation.
To
assist in understanding our 2011 performance as compared to our 2011 outlook a reconciliation from our IFRS financial measures to our non-IFRS financial measures is provided below. These IFRS financial measures reconcile to the nearest non-IFRS
equivalents as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions, except operating margin |
|
IFRS Financial Measure |
|
|
Support Revenue Not Recorded Under IFRS |
|
|
Acquisition- Related Charges |
|
|
Share- based compensation |
|
|
Restruc- turing |
|
|
Discon- tinued Activities |
|
|
Non-IFRS Financial Measure |
|
|
Currency Effect on the Non-IFRS Financial Measure |
|
|
Non-IFRS Financial Measure at Constant Currency |
|
Software and software-related service revenue |
|
|
11,319 |
|
|
|
27 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
11,346 |
|
|
|
153 |
|
|
|
11,499 |
|
Total revenue(1) |
|
|
14,233 |
|
|
|
27 |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
14,260 |
|
|
|
196 |
|
|
|
14,456 |
|
Operating profit(1) |
|
|
4,881 |
|
|
|
27 |
|
|
|
447 |
|
|
|
68 |
|
|
|
4 |
|
|
|
717 |
|
|
|
4,710 |
|
|
|
69 |
|
|
|
4,779 |
|
Operating margin in % |
|
|
34.3 |
|
|
|
0.1 |
|
|
|
3.1 |
|
|
|
0.5 |
|
|
|
0 |
|
|
|
5.0 |
|
|
|
33.0 |
|
|
|
0 |
|
|
|
33.1 |
|
(1) |
Operating profit is the numerator and total revenue is the denominator in the calculation of our IFRS operating margin and the comparable non-IFRS
operating margin, and are included in this table for the convenience of the reader. |
2011 Actual Performance Compared to Outlook (Non-IFRS)
In 2011, we increased our software and software-related service revenue (non-IFRS) by 17% to 11,499 million on a constant
currency basis (2010: 9,868 million), clearly exceeding our expectation of 10% to 14% growth announced in January 2011, as well as our revised forecast in July, in which we expected to achieve the upper end of that range. Despite the partially
uncertain economic situation in 2011, our new and established customers continued to invest strongly in our products. As a result, software revenue grew more strongly than software and software-related revenue. All regions contributed to the growth,
with software revenue growing more rapidly in the Americas and APJ regions than in the EMEA region on a constant currency basis.
In 2011, we achieved an operating profit (non-IFRS) of 4,779 million on a constant currency basis. Thus, we not only clearly surpassed the target of 4,450 million to
4,650 million announced in January, but also our July adjusted forecast, in which we anticipated reaching the upper limit of this range. The non-IFRS operating margin widened 1.1
percentage points to 33.1% on a constant currency basis, which was better than the expected 0.5 to 1.0 percentage point improvement.
We achieved an effective tax rate of 27.9% (IFRS) and 26.6% (non-IFRS), which is lower than the effective tax rate of 28.5% to 29.5% (IFRS) and 27.5% to 28.5% (non-IFRS) projected for 2011. This decrease
in comparison to the outlook mainly resulted from the development of profit before taxes at constant currency especially in North America and Europe, and from taxes for prior years.
Operating Results (IFRS)
This Operating Results (IFRS) section
discusses results exclusively in terms of IFRS measures, so the IFRS numbers are not explicitly identified as such.
66
Part I
Item 5
Our 2011 Results Compared to Our 2010 Results (IFRS)
Revenue
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
Change in % 2011 vs 2010 |
|
Software revenue |
|
|
3,971 |
|
|
|
3,265 |
|
|
|
22 |
% |
Support revenue |
|
|
6,967 |
|
|
|
6,133 |
|
|
|
14 |
% |
Subscription and other software-related service revenue |
|
|
381 |
|
|
|
396 |
|
|
|
4 |
% |
Software and software-related service revenue |
|
|
11,319 |
|
|
|
9,794 |
|
|
|
16 |
% |
Consulting revenue |
|
|
2,341 |
|
|
|
2,197 |
|
|
|
7 |
% |
Other service revenue |
|
|
573 |
|
|
|
473 |
|
|
|
21 |
% |
Professional services and other service revenue |
|
|
2,914 |
|
|
|
2,670 |
|
|
|
9 |
% |
Total revenue |
|
|
14,233 |
|
|
|
12,464 |
|
|
|
14 |
% |
Total Revenue
Total revenue increased from 12,464 million in 2010 to 14,233 million in 2011, representing an increase of 1,769 million or 14%. This total revenue growth reflects a 16%
increase from changes in volumes and prices and a 2% decrease from currency effects. The revenue growth is due primarily to an increase in software revenue of 706 million and an increase in support revenue of 834 million. In 2011,
software and software-related service revenue totaled 11,319 million as a result of this increase. Software and software-related service revenue represented 80% of all revenue in 2011 compared with 79% in 2010. In 2011, professional
services and other service revenue contributed 2,914 million to our total revenue, representing an increase of 9% compared to 2010.
For an analysis of our total revenue by region and industry, see the Revenue by Region and Revenue by Industry sections.
Software and Software-Related Service Revenue
Software revenue represents fees earned from the sale or license of software to customers. Support revenue represents fees earned from
providing customers with technical support services and unspecified software upgrades, updates, and enhancements. Subscription and other software-related service revenue represents fees earned from software subscriptions, on-demand offerings,
software rentals, and other types of software-related service contracts.
Software and software-related service revenue
increased from 9,794 million in 2010 to 11,319 million in 2011, representing an increase of 16%. The software and software-related service revenue growth reflects a 17% increase from changes in volumes and prices and a 1%
decrease from currency effects.
Software revenue increased from 3,265 million in 2010 to 3,971 million
in 2011, representing an increase of 706 million or 22%. This increase reflects growth of 25% from changes in volumes and prices and a 3% decrease from currency effects.
67
Part I
Item 5
SAP Business Suite software contributed the greatest share of growth in software revenue,
followed by SAP HANA and mobile solutions.
In 2011, our customer base again expanded. Based on the number of contracts
concluded, 20% of the orders we received for software in 2011 were from new customers (2010: 23%). The value of orders received for software grew 16% year over year. The total number of contracts signed for new software increased 17% to 59,059
contracts (2010: 50,439 contracts).
Our stable customer base and the continued investment in software by new and existing
customers throughout 2011 and the previous year resulted in an increase in support revenue from 6,133 million in 2010 to 6,967 million in 2011. Our SAP Enterprise Support offering generated most of the support revenue. The
834 million or 14% increase in support revenue reflects growth of 15% from changes in volumes and prices and a 1% decrease from currency effects. Our premium offerings and strong growth in revenue from SAP Enterprise Support were among
the factors accounting for the increase in support revenue.
Subscriptions and other software-related service revenue declined
15 million or 4% to 381 million (2010: 396 million). This reduction reflects changes in volume and prices only, and results mainly from the fact that global enterprise agreements and other similar long-term license
agreements have become less popular among our customers as a contract model. Increasingly, our customers prefer instead to invest in the purchase of software licenses. Consequently, our subscriptions revenue decreased year over year, as expected. We
do not expect subscription revenue from long-term license agreements, such as global
enterprise agreements and flexible license agreements, in itself to rise significantly in the future.
Professional Services and Other Service Revenue
Professional
services and other service revenue consists primarily of consulting and other service revenue. We generate most of our consulting revenue from the implementation of our software products. Other service revenue consists mainly of training revenue
from providing educational services to customers and partners on the use of our software products and related topics, and revenue from the messaging services business acquired from Sybase.
Professional services and other service revenue increased from 2,670 million in 2010 to 2,914 million in 2011,
representing an increase of 244 million or 9%. This growth reflects an 11% increase from changes in volumes and prices and a 2% decrease from currency effects.
Consulting revenue increased from 2,197 million in 2010 to 2,341 million in 2011, representing 8% growth from changes in volumes and prices and a 1% decrease from currency effects.
Consulting revenue contributed 80% of professional services and other service revenue (2010: 82%). Consulting revenue contributed 16% of total revenue in 2011 (2010: 18%).
Other service revenue increased from 473 million in 2010 to 573 million in 2011, representing an increase of 21%. This growth reflects a 23% increase from changes in volumes and
prices and a 2% decrease from currency effects. The increase is due mainly to revenues from messaging services and training revenue.
68
Part I
Item 5
Revenue by Region and Industry
Revenue by Region
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
Change in % 2011 vs 2010 |
|
Germany |
|
|
2,347 |
|
|
|
2,195 |
|
|
|
7 |
% |
Rest of EMEA |
|
|
4,644 |
|
|
|
4,068 |
|
|
|
14 |
% |
Total EMEA |
|
|
6,991 |
|
|
|
6,263 |
|
|
|
12 |
% |
United States |
|
|
3,699 |
|
|
|
3,243 |
|
|
|
14 |
% |
Rest of Americas |
|
|
1,392 |
|
|
|
1,192 |
|
|
|
17 |
% |
Total Americas |
|
|
5,091 |
|
|
|
4,435 |
|
|
|
15 |
% |
Japan |
|
|
652 |
|
|
|
513 |
|
|
|
27 |
% |
Rest of Asia Pacific Japan |
|
|
1,499 |
|
|
|
1,253 |
|
|
|
20 |
% |
Total Asia Pacific Japan |
|
|
2,151 |
|
|
|
1,766 |
|
|
|
22 |
% |
SAP Group |
|
|
14,233 |
|
|
|
12,464 |
|
|
|
14 |
% |
Revenue by Industry
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
Change in % 2011 vs 2010 |
|
Manufacturing Discrete |
|
|
2,617 |
|
|
|
2,190 |
|
|
|
19 |
% |
Manufacturing Process |
|
|
1,461 |
|
|
|
1,255 |
|
|
|
16 |
% |
Consumer Products |
|
|
1,433 |
|
|
|
1,243 |
|
|
|
15 |
% |
Energy & Natural Resources |
|
|
2,001 |
|
|
|
1,796 |
|
|
|
11 |
% |
Services |
|
|
2,190 |
|
|
|
1,959 |
|
|
|
12 |
% |
Financial Services |
|
|
1,196 |
|
|
|
1,058 |
|
|
|
13 |
% |
Public Services |
|
|
1,399 |
|
|
|
1,246 |
|
|
|
12 |
% |
Retail & Wholesale |
|
|
1,300 |
|
|
|
1,124 |
|
|
|
16 |
% |
Healthcare & Life Sciences |
|
|
636 |
|
|
|
593 |
|
|
|
7 |
% |
Total revenue |
|
|
14,233 |
|
|
|
12,464 |
|
|
|
14 |
% |
Revenue by Region
We break our operations down into three regions: the Europe, Middle East, and Africa (EMEA) region; the Americas region, which comprises North and Latin America; and the Asia Pacific Japan (APJ) region,
which includes Japan, Australia, and other parts of Asia. We allocate revenue amounts to each region based on customers locations. For more information about revenue by geographic region, see the Notes to the Consolidated Financial Statements
section, Note (29).
The EMEA Region
In 2011, the EMEA region generated 6,991 million in revenue (2010: 6,263 million) or 49% of total revenue (2010: 50%). This represents a year-over-year increase of 12%. Total revenue in
Germany increased 7% to 2,347 million in 2011 (2010: 2,195 million). Germany contributed 34% of all EMEA region revenue (2010: 35%). The remaining revenue in the EMEA region was primarily generated in the UK, France, Switzerland,
the Netherlands, Russia, and Italy. Software and software-related
69
Part I
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service revenue generated in the EMEA region in 2011 totaled 5,529 million (2010: 4,883 million). Software and software-related service revenue represented 79% of all revenue in
2011 compared with 78% in 2010.
The Americas Region
In 2011, 36% of our total revenue was generated in the Americas region (2010: 36%). Total revenue in the Americas region increased 15% to 5,091 million. Revenue generated in the United States
increased 14% to 3,699 million. This growth reflects a 20% increase from changes in volumes and prices and a 6% decrease from currency effects. The United States contributed 73% of all Americas region revenue (2010: 73%). Revenue increased 17%
to 1,392 million in the remaining countries of the Americas region. This growth reflects a 20% increase from changes in volumes and prices and a 3% decrease from currency effects. This revenue was principally generated in Canada, Brazil,
and Mexico. Software and software-related service revenue generated in the Americas region in 2011 totaled 3,958 million (2010: 3,427 million). Software and software-related service revenue represented 78% of all revenue (2010:
77%).
The APJ Region
In 2011, 15% of our total revenue was generated in the APJ region (2010: 14%); most of the revenue was from Japan. Total revenue in the APJ region increased 22% to 2,151 million. In Japan, total
revenue increased 27% to 652 million in 2011, representing a 30% contribution to all revenue generated across the APJ region (2010: 29%). This growth in revenue reflects a 22% increase from changes in volumes and prices and a 5% increase
from currency effects. Revenue increased 20% in the remaining countries of the APJ region. Revenue in the remaining countries of the APJ region was generated primarily in Australia, India and China. Software and software-related service revenue
generated in the APJ region in 2011 totaled 1,832 million (2010: 1,484 million).
Software and software-related service revenue represented 85% of all revenue in 2011 compared with 84% in 2010.
Revenue by Industry
To help us better meet the requirements of
existing and potential customers, we restructured our industry groups in 2011, and now serve nine sectors rather than six as in 2010.
The first of our three new sectors, healthcare and life sciences, incorporates healthcare, medicine, and pharmaceuticals, which were previously distributed across our public services and manufacturing
process industry groups. The new energy and natural resources sector combines our oil and gas, mining, utilities, and waste management segments. These were previously in our manufacturing process and services industry segments. We have defined our
new retail and wholesale sector to focus more strongly on two areas that we had previously included in our consumer products industry sector. We restructured two further sub-areas to reflect changing customer needs. Engineering, construction, and
operations, which previously belonged to our manufacturing discrete industry sector, is now included in our services sector. The postal industry has been assigned to the public services industry sector.
We allocate our customers to an industry sector at the outset of an initial arrangement. All subsequent revenue from a particular customer
is recorded under that sector.
In 2011, we achieved above-average growth in the following sectors, measured by changes in
total revenue: Manufacturing discrete (2,617 million, at a growth rate of 19%), manufacturing process (1,461 million, at a growth rate of 16%), retail and wholesale (1,300 million, at a growth rate of 16%) and consumer products
(1,433 million, at a growth rate of 15%).
Results from the other sectors were as follows: Financial services:
1,196 million, at a
70
Part I
Item 5
growth rate of 13%; public services: 1,399 million, at a growth rate of 12%; services: 2,190 million, at a growth rate of 12%; energy and natural resources:
2,001 million, at a growth rate of 11%; and healthcare and life sciences: 636 million, at a growth rate of 7%.
Operating Profit and Margin
Total Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
% of total revenue |
|
|
2010 |
|
|
% of total revenue |
|
|
Change in % 2011 vs 2010 |
|
Cost of software and software-related services |
|
|
2,107 |
|
|
|
15% |
|
|
|
1,823 |
|
|
|
15% |
|
|
|
16 |
% |
Cost of professional services and other services |
|
|
2,248 |
|
|
|
16% |
|
|
|
2,071 |
|
|
|
17% |
|
|
|
9 |
% |
Research and development |
|
|
1,939 |
|
|
|
14% |
|
|
|
1,729 |
|
|
|
14% |
|
|
|
12 |
% |
Sales and marketing |
|
|
3,081 |
|
|
|
22% |
|
|
|
2,645 |
|
|
|
21% |
|
|
|
16 |
% |
General and administration |
|
|
715 |
|
|
|
5% |
|
|
|
636 |
|
|
|
5% |
|
|
|
12 |
% |
Restructuring |
|
|
4 |
|
|
|
0% |
|
|
|
3 |
|
|
|
0% |
|
|
|
<100 |
% |
TomorrowNow litigation |
|
|
717 |
|
|
|
5% |
|
|
|
981 |
|
|
|
8% |
|
|
|
<100 |
% |
Other operating income/expense, net |
|
|
25 |
|
|
|
0% |
|
|
|
9 |
|
|
|
0% |
|
|
|
178 |
% |
Total operating expenses |
|
|
9,352 |
|
|
|
66% |
|
|
|
9,873 |
|
|
|
79% |
|
|
|
5 |
% |
Operating Profit and Operating Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
millions, except for operating margin |
|
2011 |
|
|
2010 |
|
|
Change in % 2011 vs 2010 |
|
Operating profit |
|
|
4,881 |
|
|
|
2,591 |
|
|
|
88% |
|
Operating margin in % |
|
|
34.3% |
|
|
|
20.8% |
|
|
|
13.5pp |
|
Operating Profit and Operating Margin
In 2011, our operating profit totaled 4,881 million (2010: 2,591 million), a significant year-over-year improvement. A
contributor to the increased operating profit in 2011 was a 717 million reduction of the TomorrowNow litigation provision. We had increased this provision in 2010, which resulted in a 981 million negative impact on operating
profit in that year. For more information about the TomorrowNow litigation, see the Notes to the Consolidated Financial Statements section, Note (24). Overall, revenue increased in 2011 while operating expenses decreased.
Our operating margin widened 13.5 percentage points to 34.3% in 2011 (2010: 20.8%). The reduction of the TomorrowNow litigation
provision had a 5.0 percentage point positive effect on operating margin in 2011; in
2010, we had significantly increased the provision, which had a negative impact of 7.9 percentage points on operating margin.
In 2011, operating expenses decreased 521 million or 5% to 9,352 million (2010: 9,873 million). This
reduction is due primarily to the reduction of the TomorrowNow litigation provision, which we had significantly increased in the previous year.
The sections that follow discuss our costs by line item.
Cost of Software and
Software-Related Services
Cost of software and software-related services consists primarily of various customer
support costs, the cost of developing custom solutions to address individual customers business requirements, and license fees and commissions we pay to third parties for database software and the other complementary third-party products that
we sublicense to our customers.
71
Part I
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In 2011, costs for software and software-related services rose 16% to
2,107 million (2010: 1,823 million). The main cost driver was an increase in personnel to cover the growing demand for SAP Enterprise Support in 2011, which in turn had a positive effect on support revenue. The license fees and the
commissions that we pay to third parties for database software also rose in parallel with the increase in software revenue. The margin on our software and software-related services, defined as software and software-related services profit as a
percentage of software and software-related services revenue, remained constant year over year in 2011 at 81% (2010: 81%).
Cost of
Professional Services and Other Services
Cost of professional services and other services consists primarily of the
cost of consulting and training personnel and the cost of bought-in third-party consulting and training resources. This item also includes sales and marketing expenses for our professional services and other services resulting from sales and
marketing efforts where those efforts cannot be clearly distinguished from providing the professional services and other services.
Costs for professional and other services rose 9% from 2,071 million in 2010 to 2,248 million in 2011. The margin on our professional and other services, defined as professional and
other services profit as a percentage of professional and other services revenue widened to 23% in 2011 (2010: 22%). The increase in profitability is due mainly to the positive trend in consulting.
Research and Development Expense
Our research and development (R&D) expense consists primarily of the personnel cost of our R&D employees, costs incurred for independent contractors we retain to assist in our R&D activities,
and amortization of the computer hardware and software we use for our R&D activities.
In 2011, R&D costs rose 12% to 1,939 million. This increase primarily results
from the increase in personnel costs.
In 2011, R&D expense as a percentage of total revenue was unchanged at 14% because
R&D costs increased year over year at the same rate as sales.
Sales and Marketing Expense
Sales and marketing expense consists mainly of personnel costs and direct sales expense incurred to support our sales and marketing teams
in selling and marketing our products and services.
Sales and marketing costs rose 16% from 2,645 million in 2010
to 3,081 million in 2011. The increase was due primarily to the increased personnel costs of our expanded sales teams in new growth markets among others and to increased variable remuneration as a result of surpassing our corporate goals.
Travel and marketing costs rose as a result of increased business operations. The increase in the number of employees in sales and marketing led to accelerated revenue growth. At the same time, the ratio of sales and marketing costs to total
revenue, expressed as a percentage, increased 22% year over year (2010: 21%). This was because expenses grew disproportionately to revenue.
General and Administration Expense
Our general and administration expense consists mainly of the cost of personnel working in our finance and administration functions.
Our general and administration expense rose from 636 million in 2010 to 715 million in 2011, representing a 12%
increase. This was due mainly to the increase in personnel costs. The ratio of general and administration costs to total revenue in 2011 remained constant year over year at 5%.
72
Part I
Item 5
Segment Results
We have four reportable operating segments: Product, Consulting, Training, and Sybase.
Total revenue and profit figures for each of our operating segments differ from the respective revenue and profit figures classified in our
Consolidated Statements of Income because of several differences between our internal management reporting and our external IFRS reporting. For further details of our segment reporting and a
reconciliation from our internal management reporting to our external IFRS reporting, see the Notes to the Consolidated Financial Statements section, Note (29).
Segment Profitability
|
|
|
|
|
|
|
|
|
|
|
|
|
millions, unless otherwise stated |
|
2011 |
|
|
2010 |
|
|
Change in % 2011 vs. 2010 |
|
Product Segment |
|
|
|
|
|
|
|
|
|
|
|
|
External revenue |
|
|
10,025 |
|
|
|
9,020 |
|
|
|
11 |
|
Segment expenses |
|
|
4,085 |
|
|
|
3,625 |
|
|
|
13 |
|
Segment contribution |
|
|
5,940 |
|
|
|
5,395 |
|
|
|
10 |
|
Segment profitability |
|
|
59% |
|
|
|
60% |
|
|
|
1pp |
|
Consulting Segment |
|
|
|
|
|
|
|
|
|
|
|
|
External revenue |
|
|
2,955 |
|
|
|
2,714 |
|
|
|
9 |
|
Segment expenses |
|
|
2,091 |
|
|
|
1,968 |
|
|
|
6 |
|
Segment contribution |
|
|
864 |
|
|
|
746 |
|
|
|
16 |
|
Segment profitability |
|
|
29% |
|
|
|
27% |
|
|
|
2pp |
|
Training Segment |
|
|
|
|
|
|
|
|
|
|
|
|
External revenue |
|
|
376 |
|
|
|
362 |
|
|
|
4 |
|
Segment expenses |
|
|
229 |
|
|
|
226 |
|
|
|
1 |
|
Segment contribution |
|
|
147 |
|
|
|
136 |
|
|
|
8 |
|
Segment profitability |
|
|
39% |
|
|
|
38% |
|
|
|
1pp |
|
Sybase Segment |
|
|
|
|
|
|
|
|
|
|
|
|
External revenue |
|
|
873 |
|
|
|
387 |
|
|
|
>100 |
|
Segment expenses |
|
|
647 |
|
|
|
260 |
|
|
|
>100 |
|
Segment contribution |
|
|
226 |
|
|
|
127 |
|
|
|
78 |
|
Segment profitability |
|
|
26% |
|
|
|
33% |
|
|
|
7pp |
|
Product Segment
The Product segment is primarily engaged in marketing and licensing our software products and providing support for them. Support includes technical support for our products, assistance in resolving
problems, providing user documentation, unspecified software upgrades, updates, and enhancements. The Product segment also performs certain custom development projects. The Product segment includes our sales, marketing, and service and support lines
of business.
In 2011, revenue in the Product segment increased 11% to 10,025 million (2010:
9,020 million). This growth reflects a 13% increase from changes in volumes and prices and a 2% decrease from currency effects. The reason for this growth was the rise in software license sales, which in turn led to an increase in support
revenue. Software revenue, which is added to revenues in the Product segment, rose by 19% to 3,282 million (2010: 2,766 million). This growth reflects a 22% increase from changes in volumes and prices and a 3% decrease from currency
effects. Support revenue increased by
73
Part I
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9% to 6,302 million (2010: 5,776 million). This growth reflects a 10% increase from changes in volumes and prices and a 1% decrease from currency effects. Subscription and other
software-related service revenue declined 3% to 377 million (2010: 387 million). All regions contributed to the increased revenue in the Product segment.
In 2011, expenses in the Product segment increased 13% to 4,085 million (2010: 3,625 million). Expenses from software sales account for approximately 56% of total expenses in the Product
segment, whereas approximately 16% of total expenses in the Product segment are attributable to marketing and approximately 28% to support services. The increased expenses in the Product segment are the result of increased business operations
following the rise in demand in 2011.
The contribution of the Product segment rose by 10% to 5,940 million (2010:
5,395 million), representing segment profitability of 59% (2010: 60%).
Consulting Segment
The Consulting segment is primarily engaged in the implementation of our software products.
In 2011, revenue in the Consulting segment increased 9% to 2,955 million (2010: 2,714 million). This growth reflects a
10% increase from changes in volumes and prices and a 1% decrease from currency effects. Geographically, all regions contributed to this segment revenue increase, with the Americas and APJ regions contributing most significantly.
Expenses in the Consulting segment rose by 6% to 2,091 million (2010: 1,968 million). The increased expenses in the
Consulting segment are the result of increased business operations following the rise in demand in 2011.
The contribution of
the Consulting segment rose 16% to 864 million (2010: 746 million), representing segment profitability of 29% (2010: 27%).
Training Segment
The Training segment is primarily engaged in providing educational services on the use of our software products and related topics for customers and partners. Training services include traditional
classroom training at SAP training facilities, customer and partner training, user training, and e-learning.
In 2011, revenue
in the Training segment increased 4% to 376 million (2010: 362 million). This growth reflects a 6% increase from changes in volumes and prices and a 2% decrease from currency effects. The EMEA and Americas regions were the primary
contributors to this growth in revenue. With an increase of 19%, growth was particularly high in Latin America. The APJ region recorded a decline of 2%.
Expenses in the Training segment rose 2% to 230 million (2010: 226 million). The increased expenses in the Training segment are the result of increased business operations following the
rise in demand in 2011.
The contribution of the Training segment rose 8% to 147 million (2010: 136 million),
representing segment profitability of 39% (2010: 38%).
Sybase Segment
The Sybase segment is primarily engaged in implementing our vision of a wireless enterprise for customers and partners. To this end, we
supply enterprise software and mobile software solutions for information management, development, and integration.
The
contribution of the Sybase segment to overall segment results is determined using a different approach than that used for the other segments. The Sybase segment includes development, administration, and other costs that do not apply to the other
segments.
Sybase was acquired in 2010, so 2010 revenue and expenses for the Sybase segment are for five months only.
74
Part I
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In 2011, revenue in the Sybase segment increased 126% to 873 million (2010:
387 million). This growth reflects a 130% increase in volume and price changes (taking into account that revenue figures were only available for five months in the previous year), and a 5% decrease from currency effects.
Expenses in the Sybase segment rose 149% to 646 million (2010: 260 million).
The contribution of the Sybase segment rose 78% to 226 million (2010: 127 million), representing segment profitability
of 26% (2010: 33%).
Financial Income
In 2011, financial income improved to 38 million (2010: 67 million). Our finance income was 123 million (2010: 73 million) and our finance costs were
161 million (2010: 140 million).
Finance income mainly consists of interest income from loans and
receivables (cash, cash equivalents, and current investments), which was 64 million in 2011 (2010: 34 million). This increase is attributable mainly to the higher average liquidity than in 2010.
Finance costs mainly consist of interest expense on financial liabilities (123 million in 2011 compared to 77 million
in 2010). This year-over-year increase resulted mainly from the
financial debt incurred in connection with the Sybase acquisition. We used bank loans, bonds, and private placements to finance this acquisition. For more information about these financing
instruments, see the Notes to the Consolidated Financial Statements section, Note (18b).
Another factor in financial income
in 2011 was the derivatives we utilize to execute our financial risk management strategy. The associated fair value effects were reflected in interest income of 37 million (2010: 25 million) and interest expenses of
37 million (2010: 31 million).
Income Tax
Our effective tax rate increased to 27.9% in 2011 (2010: 22.5%). The main reason for this significant year-over-year difference is the change in the measurement of the TomorrowNow litigation provision.
While 2010 saw a tax rate reduction of almost 5 percentage points as a result of the significant increase of the TomorrowNow litigation provision, in 2011 we experienced an effective tax rate increase resulting from the reduction of the same
provision. However, this increase was offset by tax effects related to intercompany financing. For more information, see the Notes to the Consolidated Financial Statements section, Note (11).
Our 2010 Results Compared to Our
2009 Results (IFRS)
Revenue
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2010 |
|
|
2009 |
|
|
Change in % 2010 vs 2009 |
|
Software revenue |
|
|
3,265 |
|
|
|
2,607 |
|
|
|
25 |
% |
Support revenue |
|
|
6,133 |
|
|
|
5,285 |
|
|
|
16 |
% |
Subscription and other software-related service revenue |
|
|
396 |
|
|
|
306 |
|
|
|
29 |
% |
Software and software-related service revenue |
|
|
9,794 |
|
|
|
8,198 |
|
|
|
19 |
% |
Consulting revenue |
|
|
2,197 |
|
|
|
2,074 |
|
|
|
6 |
% |
Other service revenue |
|
|
473 |
|
|
|
400 |
|
|
|
18 |
% |
Professional services and other service revenue |
|
|
2,670 |
|
|
|
2,474 |
|
|
|
8 |
% |
Total revenue |
|
|
12,464 |
|
|
|
10,672 |
|
|
|
17 |
% |
75
Part I
Item 5
Total Revenue
Total revenue increased from 10,672 million in 2009 to 12,464 million in 2010, representing an increase of 1,792 million or 17%. SAPs business without the Sybase
results contributed 14% to this growth. This total revenue growth reflects a 10% increase from changes in volumes and prices and a 7% increase from currency effects. Specifically, our software revenue increased by 658 million as compared
to 2009 and our support revenue increased by 848 million as compared to 2009. Additionally, our SSRS revenue increased, resulting in software and software-related service revenue of 9,794 million in 2010. Software and
software-related service revenue represented 79% of our total revenue in 2010 compared to 77% in 2009. Professional services and other service revenue contributed 2,670 million to our total revenue in 2010. This represents an increase of
8% compared to 2009. Professional services and other service revenue accounted for 21% of our total revenue in 2010 compared to 23% in 2009.
For an analysis of our total revenue by region and industry, see the Revenue by Region and Revenue by Industry sections.
Software and Software-Related Service Revenue
Software revenue
represents fees earned from the sale or license of software to customers. Support revenue represents fees earned from providing customers with technical support services and unspecified software upgrades, updates, and enhancements. Subscription and
other software-related service revenue represents fees earned from software subscriptions, in the cloud offerings, rentals, and other types of software-related service contracts.
In 2010, software and software-related service revenue increased from 8,198 million in 2009 to 9,794 million,
representing an increase of 19%. The software and software-related service revenue growth reflects a 13% increase from changes in volumes and prices and a 6%
increase from currency effects. SAPs business without the Sybase results contributed 16% to this growth.
Software revenue increased from 2,607 million in 2009 to 3,265 million in 2010, representing an increase of 658 million or 25%. The software revenue growth consists of a
16% increase from changes in volumes and prices and a 9% increase from currency effects.
SAP Business Suite revenue
contributed most to the overall organic increase in software revenue, followed by SAP BusinessObjects solutions as well as our products based on our SAP NetWeaver platform.
Our customer base increased again in 2010. Based on the value of software orders received, excluding Sybase, 18% of our software orders received in 2010 were attributable to deals with new customers
(2009: 17%). The value of software orders received, excluding Sybase, increased 21% year over year. The total number of new software deals closed, excluding Sybase, increased by 5% to 44,875 (2009: 42,639).
Support revenue increased from 5,285 million in 2009 to 6,133 million in 2010, representing an increase of
848 million or 16%. This support revenue growth reflects a 10% increase from changes in volumes and prices and a 6% increase from currency effects. The SAP Enterprise Support maintenance service was the largest contributor to our support
revenue. Our increased support revenue resulted from our stable customer base and the continued sale of software to existing and new customers throughout 2010.
Subscription and other software-related service revenue increased 90 million or 29% to 396 million compared to 306 million in 2009. The increase in revenue reflects a 25%
increase from volumes and prices and a 4% increase from currency effects. It derives primarily from subscription contracts concluded in 2009 and 2010.
76
Part I
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Professional Services and Other Service Revenue
Professional services and other service revenue consists primarily of consulting and other service revenue. We generate most of our
consulting revenue from the implementation of our software products. Other service revenue consists mainly of training revenue from providing educational services to customers and partners on the use of our software products and related topics, such
as revenue from the Sybase acquired messaging services business.
Professional services and other service revenue increased
196 million or 8% from 2,474 million in 2009 to 2,670 million in 2010. The rise consists of a 2% increase from changes in volumes and prices and a 6% increase from currency effects.
Consulting revenue increased 6% from 2,074 million in 2009 to 2,197 million in
2010. The increase was derived from currency effects. In 2010, consulting contributed 82% of professional services and other service revenue (2009: 84%). Consulting revenue contributed 18% of
total revenue (2009: 19%). A substantial portion of consulting revenue follows on from software license sales. Software license sales were relatively weak in 2009. In this context, the growth in consulting revenue in 2010 is unremarkable.
Other service revenue increased 18% from 400 million in 2009 to 473 million in 2010. The other service
revenue increase consists of a 13% increase from changes in volumes and prices and a 5% increase from currency effects. This increase resulted primarily from training revenue, hosting revenue that the SAP IT organization generates by operating,
managing, and maintaining SAP solutions and messaging revenue from Sybase, which we acquired in July 2010.
Revenue by Region and Industry
Revenue by Region
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2010 |
|
|
2009 |
|
|
Change in % 2010 vs 2009 |
|
Germany |
|
|
2,195 |
|
|
|
2,029 |
|
|
|
8 |
% |
Rest of EMEA |
|
|
4,068 |
|
|
|
3,614 |
|
|
|
13 |
% |
Total EMEA |
|
|
6,263 |
|
|
|
5,643 |
|
|
|
11 |
% |
United States |
|
|
3,243 |
|
|
|
2,695 |
|
|
|
20 |
% |
Rest of Americas |
|
|
1,192 |
|
|
|
925 |
|
|
|
29 |
% |
Total Americas |
|
|
4,435 |
|
|
|
3,620 |
|
|
|
23 |
% |
Japan |
|
|
513 |
|
|
|
476 |
|
|
|
8 |
% |
Rest of APJ |
|
|
1,253 |
|
|
|
933 |
|
|
|
34 |
% |
Total APJ |
|
|
1,766 |
|
|
|
1,409 |
|
|
|
25 |
% |
Total revenue |
|
|
12,464 |
|
|
|
10,672 |
|
|
|
17 |
% |
77
Part I
Item 5
Revenue by Industry
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2010 |
|
|
2009 |
|
|
Change in % 2010 vs 2009 |
|
Manufacturing Discrete |
|
|
2,190 |
|
|
|
1,910 |
|
|
|
15 |
% |
Manufacturing Process |
|
|
1,255 |
|
|
|
1,038 |
|
|
|
21 |
% |
Consumer Products |
|
|
1,243 |
|
|
|
1,056 |
|
|
|
18 |
% |
Energy & Natural Resources |
|
|
1,796 |
|
|
|
1,457 |
|
|
|
23 |
% |
Services |
|
|
1,959 |
|
|
|
1,776 |
|
|
|
10 |
% |
Financial Services |
|
|
1,058 |
|
|
|
909 |
|
|
|
16 |
% |
Public Services |
|
|
1,246 |
|
|
|
1,086 |
|
|
|
15 |
% |
Retail & Wholesale |
|
|
1,124 |
|
|
|
921 |
|
|
|
22 |
% |
Healthcare & Life Sciences |
|
|
593 |
|
|
|
519 |
|
|
|
14 |
% |
Total revenue |
|
|
12,464 |
|
|
|
10,672 |
|
|
|
17 |
% |
Revenue by Region
The EMEA Region
In 2010, 50% of our total revenue was derived from the
EMEA region (2009: 53%). Our revenue from the EMEA region grew 11% in 2010 to 6,263 million (2009: 5,643 million). This growth reflects an 8% increase from changes in volumes and prices and a 3% increase from currency effects. Total
revenue in Germany increased 8% to 2,195 million in 2010 (2009: 2,029 million). Germany contributed 35% to our total revenue from the EMEA region, which is a decrease of 1 percentage point compared to 2009. Other EMEA revenue in
2010 originated primarily from the United Kingdom, France, Switzerland, the Netherlands, Italy, and Russia. Software and software-related service revenue generated in the EMEA region in 2010 totaled 4,883 million (2009: 4,336
million). Software and software-related service revenue accounted for 78% of all revenue in the EMEA region in 2010 (2009: 77%).
The
Americas Region
Of our 2010 total revenue, 36% (2009: 34%) was recognized in the Americas region. Revenue in the region
increased 23% to 4,435 million in 2010. Revenue from the United States rose 20% to 3,243 in 2010, which represents an increase of 13% from changes in volumes and prices and a 7% increase from
currency effects. The United States contributed 73% (2009: 74%) of the Americas region revenue. Revenue from the rest of the Americas region increased 29% to 1,192 million, which
represents an increase of 15% from changes in volumes and prices and a 14% increase from currency effects. This revenue was principally generated in Canada, Brazil, and Mexico. In 2010, software and software-related service revenue from our Americas
region grew 26% to 3,427 million (2009: 2,718 million). This growth included a 9% increase from currency effects. Software and software-related service revenue represented 77% of all revenue in the Americas region in 2010 (2009:
75%).
The APJ Region
In 2010, the APJ region contributed 14% (2009: 13%) to our total revenue, with most of this revenue being derived from Japan. In the APJ region, revenue rose by 25% to 1,766 million in 2010.
Revenue from Japan increased 8% to 513 million, which represents 29% (2009: 34%) of our revenue from the APJ region. The revenue rise in Japan reflects a 5% decrease due to changes in volumes and prices and a 13% increase from currency
effects. Together, the other countries in the APJ region principally Australia, India, and China saw a 34% increase in revenue, reflecting a 16% increase in volumes and prices and an 18% increase from currency effects. In 2010, our APJ
78
Part I
Item 5
region achieved software and software-related service revenue growth of 30% (including 17% from currency effects) to reach 1,485 million (2009: 1,144 million). Software and
software-related service revenue represented 84% of all revenue in the APJ region in 2010 (2009: 81%).
Revenue by Industry
To help us better meet the requirements of existing and potential customers, we restructured our industry groups in
2011, and now serve nine sectors rather than six as in 2010. Accordingly we have adjusted our 2010 to 2009 comparison to nine industry sectors.
Based on the new nine industry sector structure and in comparison with our total revenue change in 2010, we outperformed in the
energy & natural resources industry sector with revenue of 1,796 million, which represents a growth rate of 23%, in retail & wholesale with an increase of 22% to
1,124 million, in manufacturing process with revenue of 1,255 million and an increase of 21% and in consumer products, where our total revenue amounted to 1,243 million, representing an increase of 18% compared to
2009. Financial services industries revenue grew 16% to 1,058 million. Healthcare & lifesciences achieved 593 million revenue and a year-over-year growth rate of 14%. Public services achieved 1,246 million
revenue at a growth rate of 15%; discrete manufacturing industries revenue was 2,190 million, an increase of 15%, and service industries revenue grew 10% to 1,959 million.
Operating Profit and Margin
Total Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2010 |
|
|
% of total revenue |
|
|
2009 |
|
|
% of total revenue |
|
|
Change in % 2010 vs 2009 |
|
Cost of software and software-related services |
|
|
1,823 |
|
|
|
15% |
|
|
|
1,658 |
|
|
|
16% |
|
|
|
10% |
|
Cost of professional services and other services |
|
|
2,071 |
|
|
|
17% |
|
|
|
1,851 |
|
|
|
17% |
|
|
|
12% |
|
Research and development |
|
|
1,729 |
|
|
|
14% |
|
|
|
1,591 |
|
|
|
15% |
|
|
|
9% |
|
Sales and marketing |
|
|
2,645 |
|
|
|
21% |
|
|
|
2,199 |
|
|
|
21% |
|
|
|
20% |
|
General and administration |
|
|
636 |
|
|
|
5% |
|
|
|
564 |
|
|
|
5% |
|
|
|
13% |
|
Restructuring |
|
|
3 |
|
|
|
0% |
|
|
|
198 |
|
|
|
2% |
|
|
|
<100% |
|
TomorrowNow litigation |
|
|
981 |
|
|
|
8% |
|
|
|
56 |
|
|
|
1% |
|
|
|
>100% |
|
Other operating income/expense, net |
|
|
9 |
|
|
|
0% |
|
|
|
33 |
|
|
|
0% |
|
|
|
73% |
|
Total operating expenses |
|
|
9,873 |
|
|
|
79% |
|
|
|
8,084 |
|
|
|
76% |
|
|
|
22% |
|
Operating Profit and Operating Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
millions, except for operating margin |
|
2010 |
|
|
2009 |
|
|
Change in % 2010 vs 2009 |
|
Operating profit |
|
|
2,591 |
|
|
|
2,588 |
|
|
|
0% |
|
Operating margin in % |
|
|
20.8% |
|
|
|
24.3% |
|
|
|
3.5pp |
|
79
Part I
Item 5
Operating Profit and Operating Margin
In 2010, our operating profit was almost unchanged year over year at 2,591 million (2009: 2,588 million) despite costs
totaling 981 million (2009: 56 million) that negatively impacted our operating profit. These costs resulted from an increase in the provision we recorded for the TomorrowNow litigation. For more information about the TomorrowNow
litigation, see the Notes to the Consolidated Financial Statements section, Note (24). Acquisition-related charges of 300 million (2009: 271 million) also had a greater effect on operating profit than in the previous year.
Our operating margin was 20.8% (2009: 24.3%), a decrease of 3.5 percentage points. Acquisition-related charges and effects
from discontinued TomorrowNow activities negatively impacted our operating margin by 10.3 percentage points in 2010 (2009: 3.1 percentage points). In 2009, restructuring charges of 198 million impacted the operating margin by 1.9
percentage points, whereas in 2010 restructuring expenses did not materially impact our operating margin.
Our total operating
expenses increased 1,789 million or 22% to 9,873 million compared with 8,084 million in 2009, primarily as a result of the greater expense from discontinued TomorrowNow activities and the acquisition of Sybase.
The sections that follow discuss our costs by line item. All cost line items below were impacted by the inclusion of Sybase
for the months August to December 2010.
Cost of Software and Software-Related Services
Cost of software and software-related services consists primarily of various customer support costs, cost of developing custom solutions
that address customers unique business requirements, and license fees and commissions paid to third parties for databases and the other complementary third-party products sublicensed by us to our customers.
Cost of software and software-related services increased 10% from 1,658 million
in 2009 to 1,823 million in 2010. The principal reason for this increase was an increase in headcount to cover growing demand for SAP Enterprise Support in 2010, demand that was also reflected in growing software-related service revenue.
The margin on our software and software-related services, defined as the ratio of the gross software and software-related services result to software and software-related service revenue, expressed as a percentage, was 81% in 2010 (2009: 80%).
Cost of Professional Services and Other Services
Cost of professional services and other services consists primarily of the cost of consulting and training personnel and the cost of bought-in third-party consulting and training resources. This item also
includes sales and marketing expenses for our professional services and other services resulting from sales and marketing efforts where those efforts cannot be clearly distinguished from providing the professional services and other services.
Cost of professional services and other services rose 12% from 1,851 million in 2009 to 2,071 million in
2010. The margin on our professional services and other services, defined as the ratio of the gross professional services and other services result to professional services and other services revenue, expressed as a percentage, was 22% in 2010
(2009: 25%).
The reasons for the decline in the profitability of our professional services and other services were investments
we made to prepare for growing demand in 2010 after the downturn in 2009 and costs incurred on unprofitable consulting contracts.
Research and Development
Our
research and development (R&D) expense consists primarily of the personnel cost of our R&D employees, costs incurred for independent contractors we retain to assist in our R&D
80
Part I
Item 5
activities, and amortization of the computer hardware and software we use for our R&D activities.
Our total R&D expense rose 9% to 1,729 million in 2010. The increase was mainly due to the inclusion of Sybase and to unfavorable currency effects.
Our R&D expense as a percentage of total revenue declined to 14% (2009: 15%). Total revenue increased more steeply than R&D
expense, resulting in a reduction in the R&D ratio.
Sales and Marketing
Sales and marketing expense consists mainly of personnel costs and direct sales costs to support our sales and marketing lines of
business in selling and marketing our products and services.
Sales and marketing expenses increased 20% to
2,645 million in 2010 compared to 2,199 million in 2009. The increase was mainly due to increased travel and marketing expenses driven by an increase in our business activity, and unfavorable currency effects. By increasing our
sales force we accelerated our revenue growth. Sales and marketing expense as a percentage of total revenue was 21% in 2010, little changed since 2009.
General and Administration
Our general and administration (G&A) expense consists mainly of personnel costs to support our finance and administration
functions.
Our G&A expense rose from 564 million in 2009 to 636 million in 2010, representing an
increase of 13%. The increase in cost was mainly driven by the inclusion of Sybase and by unfavorable currency effects. G&A expenses as a percentage of total revenue in 2010 were consistent with the 2009 level of 5%.
Segment Discussions
The acquisition of Sybase, Inc. affected our internal reporting to management. In addition to our previously reported segments,
Product, Consulting, and Training, we added a new reportable segment: Sybase. While this new segment is named Sybase, it is not identical to the acquired Sybase business since parts of the acquired business are now integrated with and thus reported
in other segments, and certain SAP activities are now in our Sybase segment.
Total revenue and profit figures for each of
our operating segments differ from the respective revenue and profit figures classified in our Consolidated Statements of Income because of several differences between our internal management reporting and our external IFRS reporting. For further
details of our segment reporting and a reconciliation from our internal management reporting to our external IFRS reporting, see the Notes to the Consolidated Financial Statements section, Note (29).
81
Part I
Item 5
Segment Profitability
|
|
|
|
|
|
|
|
|
|
|
|
|
millions, unless otherwise stated |
|
2010 |
|
|
2009 |
|
|
Change in % 2010 vs. 2009 |
|
Product Segment |
|
|
|
|
|
|
|
|
|
|
|
|
External revenue |
|
|
9,020 |
|
|
|
7,846 |
|
|
|
15 |
|
Segment expenses |
|
|
3,625 |
|
|
|
3,115 |
|
|
|
16 |
|
Segment contribution |
|
|
5,395 |
|
|
|
4,731 |
|
|
|
14 |
|
Segment profitability |
|
|
60% |
|
|
|
60% |
|
|
|
0pp |
|
Consulting Segment |
|
|
|
|
|
|
|
|
|
|
|
|
External revenue |
|
|
2,714 |
|
|
|
2,498 |
|
|
|
9 |
|
Segment expenses |
|
|
1,968 |
|
|
|
1,717 |
|
|
|
15 |
|
Segment contribution |
|
|
746 |
|
|
|
781 |
|
|
|
4 |
|
Segment profitability |
|
|
27% |
|
|
|
31% |
|
|
|
4pp |
|
Training Segment |
|
|
|
|
|
|
|
|
|
|
|
|
External revenue |
|
|
362 |
|
|
|
332 |
|
|
|
9 |
|
Segment expenses |
|
|
226 |
|
|
|
217 |
|
|
|
4 |
|
Segment contribution |
|
|
136 |
|
|
|
115 |
|
|
|
18 |
|
Segment profitability |
|
|
38% |
|
|
|
35% |
|
|
|
3pp |
|
Sybase Segment |
|
|
|
|
|
|
|
|
|
|
|
|
External revenue |
|
|
387 |
|
|
|
0 |
|
|
|
N/A |
|
Segment expenses |
|
|
260 |
|
|
|
0 |
|
|
|
N/A |
|
Segment contribution |
|
|
127 |
|
|
|
0 |
|
|
|
N/A |
|
Segment profitability |
|
|
33% |
|
|
|
N/A |
|
|
|
N/A |
|
Product Segment
The Product segment is primarily engaged in marketing and licensing our software products and providing support for them. Support includes technical support for our products, assistance in resolving
problems, providing user documentation, unspecified software upgrades, updates, and enhancements.
The Product segment also
performs certain custom development projects. The Product segment includes the sales, marketing, and service and support lines of business.
Product segment revenue increased 15% from 7,846 million in 2009 to 9,020 million in 2010. This growth reflects an 8% increase from changes in volumes and prices and a 7% increase
from currency effects. The increase was driven by an increase in customer licensing of our software, which in turn contributed to an increase in support revenue. Software revenue as part of the total Product segment revenue
increased 17% from 2,373 million in 2009 to 2,766 million in 2010. This growth reflects an 8% increase from changes in volumes and prices and a 9% increase from currency
effects. Support revenue increased 14% from 5,076 million in 2009 to 5,776 million in 2010. This growth reflects an 8% increase from changes in volumes and prices and a 6% increase from currency effects. Subscription and other
software-related service revenue increased 28% from 304 million in 2009 to 387 million in 2010.
Product segment expenses increased 16% from 3,115 million in 2009 to 3,625 million in 2010. Expenses from the
sales line of business account for roughly 54% of the entire Product segment expenses, while expenses from the marketing line of business account for roughly 17% and expenses from the service and support line of business account for roughly 29% of
overall Product segment expenses. The increase in Product segment expenses is related to accelerated business activities due to incipient economic recovery in 2010.
82
Part I
Item 5
Product segment contribution increased 14% from 4,731 million in 2009 to
5,395 million in 2010. Product segment profitability remained at 60% in 2010.
Consulting Segment
The Consulting segment is primarily engaged in the implementation of our software products.
Consulting segment revenue increased 9% from 2,498 million in 2009 to 2,714 million in 2010. This growth reflects a
3% increase from changes in volumes and prices and a 6% increase from currency effects. Geographically all regions contributed to this segment revenue increase, predominantly in North America and our APJ region.
Consulting segment expenses increased 15% from 1,717 million in 2009 to 1,968 million in 2010. This expense growth
was primarily the result of investments to prepare for the increased demand in 2010 after the downturn in 2009.
Consulting
segment contribution decreased 5% from 781 million in 2009 to 746 million in 2010. Consulting segment profitability was 27% in 2010 compared to 31% in 2009.
Training Segment
The Training segment is primarily engaged in
providing educational services on the use of our software products and related topics for customers and partners. Training services include traditional classroom training at SAP training facilities, customer and partner-specific training and
end-user training, as well as e-learning.
Training segment revenue was 362 million in 2010, which represents an
increase of 9% from 332 million in 2009. This growth reflects a 2% increase from changes in volumes and prices and a 7% increase from currency effects. Geographically, the Americas and APJ regions were the primary contributors to our 2010
Training segment revenue increase.
In 2010, our Training segment revenue growth was especially high in North America, with a 29% increase, whereas Training segment revenue decreased 3% in the EMEA region.
Our Training segment expenses increased 4% from 217 million in 2009 to 226 million in 2010. Costs increased to
support the growing business activities in 2010 after the downturn in 2009.
The Training segment contribution increased 18%
from 115 million in 2009 to 136 million in 2010. Training segment profitability was 38% in 2010 compared to 35% in 2009.
Sybase Segment
The Sybase segment is primarily engaged in enabling the unwired enterprise for customers and partners by delivering enterprise and mobile
software solutions for information management, development, and integration. The measurement of the result for the Sybase segment differs from the measurements for the other segments, as the Sybase segment result includes development,
administration, and other corporate expenses while these expenses are excluded from the measurement of the results of the other segments.
Sybase segment revenue was 387 million, mainly driven by sales of databases, mobility solutions, and messaging services. Sybase segment expenses were 260 million in 2010.
The Sybase segment contribution was 127 million in 2010, resulting in a Sybase segment profitability of 33%.
Finance Income, Net
Finance income, net, improved to -67 million (2009: -80 million). Our finance income in 2010 was 73 million
(2009: 37 million) and our finance costs were 140 million (2009: 117 million).
Finance income mainly
consists of interest income from loans and receivables (e.g. cash,
83
Part I
Item 5
cash equivalents, and current investments; 34 million in 2010 compared to 35 million in 2009). The decrease was mainly due to interest rate reductions which were partly
offset by an increase in average liquidity in 2010 compared to 2009.
Finance cost mainly consists of interest expense on
financial liabilities (77 million in 2010 compared to 63 million in 2009). The increase compared to 2009 resulted mainly from the financial debt incurred in connection with the Sybase acquisition. We used bank loans, bonds, and
private placements to finance this acquisition. For more information about these financing instruments, see the Notes to the Consolidated Financial Statements section, Note (18b). In addition, the pending TomorrowNow litigation caused interest
expenses of 12 million in 2010 (2009: 0 million).
Another significant contribution to the finance income, net
in 2010 came from the derivatives that we utilize to execute our financial risk management strategy. These derivatives caused time value effects that were reflected in interest income with an amount of 25 million (2009: 0 million)
and in interest expense with an amount of 31 million (2009: 38 million).
Income Tax
The 2010 effective tax rate was 22.5% compared to 28.1% in 2009. Approximately 5 percentage points of this decrease resulted from the
increase in provision recorded for the TomorrowNow litigation. For more information, see the Notes to the Consolidated Financial Statements section, Note (11).
FOREIGN CURRENCY EXCHANGE RATE EXPOSURE
Although our reporting currency is the euro, a significant portion of our business is conducted in currencies other than the euro. Since
the Groups entities usually conduct their business in their respective functional
currencies, our risk of exchange rate fluctuations from ongoing ordinary operations is not considered significant. However, occasionally we generate foreign-currency-denominated receivables,
payables, and other monetary items by transacting in a currency other than the functional currency; to mitigate the extent of the associated foreign currency exchange rate risk, the majority of these transactions are hedged as described in Note
(26) to our Consolidated Financial Statements. Also see Notes (3) and (25) for additional information on foreign currencies.
Approximately 69% and 67% of our total revenue 2011 and 2010, respectively, was attributable to operations in non-euro participating countries. As a result, those revenues had to be translated into euros
for financial reporting purposes. Fluctuations in the value of the euro had an unfavorable impact on our total revenue of 195 million, profit before tax of 147 million and profit after tax of 123 million for 2011,
and had favorable impacts on our total revenue of 705 million, profit before tax of 68 million and profit after tax of 72 million for 2010. For 2009 the euro had favorable impacts on our total revenue of
18 million and our profit after tax of 1 million, whereas the euro had unfavorable impacts on our profit before tax of 12 million. In addition, we held foreign currency options as of December 31, 2011 to partially
hedge the cash flow risk from the consideration expected to be paid in U.S. Dollar for the acquisition of SuccessFactors, Inc. For more information see Note (4).
The impact of foreign currency exchange rate fluctuations discussed in the preceding paragraph is calculated by translating current period figures in local currency to euros at the monthly average
exchange rate for the corresponding month in the prior year. Our revenue analysis, included within the Operating Results, section of this Item 5, discusses at times increases and decreases due to currency effects, which are
calculated in the same manner.
84
Part I
Item 5
OUTLOOK
Future Trends in the Global Economy
The European Central Bank (ECB)
expects serious structural problems to continue in the advanced economies in 2012. The ECB believes tension on the international financial markets will persist, and hamper recovery. It expects the resilient emerging markets will drive the growth in
the global economy. The International Monetary Fund (IMF) projects global economic growth in the middle of the single-digit percentage range in 2012, that is to say, slightly slower than in 2011. It forecasts that the growth rate in the advanced
economies will be in the low single-digits, but trending upward. It projects growth in the upper single-digit percentages in the emerging markets.
In the Europe, Middle East, and Africa (EMEA) region, the ECB expects that the economy of the euro area will gradually recover in 2012. The recovery will, it suggests, be supported by solid global demand,
very low short-term interest rates, and steps to stabilize the functionality of the financial sector. However, the real economy will be held back somewhat by problematic financial markets and government bond markets in the euro area. In contrast,
the Organisation for Economic Co-operation and Development (OECD) expects a mild recession in the euro countries in the first half of 2012. It expects some recovery in the second half, encouraged by government confidence-building measures. According
to the ECB, the slow pace of political reform, continuing social unrest, and an uncertain global economy will impede growth and affect overall economic stability in some countries in the Middle East and North Africa in 2012.
In the Americas region, the ECB foresees a slowing of economic recovery in early 2012. The reasons for this include: Slow progress on the
U.S. labor market and adverse conditions on the financial markets. The ECB also expects changes in U.S. public spending and finances to hold back growth even further as temporary
reductions in taxes and support for unemployment programs come to an end, although the unemployment situation eased unexpectedly in early 2012. The OECD does not expect the U.S. economy to regain
momentum until after 2012.
In the Asia Pacific Japan (APJ) region, divergent trends in Japan and the emerging markets will
continue in 2012, says the ECB. The Japanese economy will benefit from growing domestic demand generated by continued reconstruction and more government stimulus programs, but will be held back by easing global demand, the ECB forecasts. The OECD
also expects the Japanese economy could already see a slowdown in growth by the second half of the year if government reconstruction measures are not continued. According to the ECB, the emerging markets of Asia will see economic growth losing some
momentum in 2012, but growth is still expected to be strong. This is because of the expected turbulence on the financial markets worldwide and weak economies in some of the leading advanced countries, it explains.
The various institutions still expect that their forecasts will be affected by high uncertainty and significant risks. The ECB believes
the tensions on the financial markets may become even more problematic. The OECD predicts the sovereign debt crisis in the euro area and fiscal policy issues in the United States may affect global economic growth.
IT Market: The Outlook for 2012
The global IT market will continue to expand in 2012, and it will do so more quickly than the global economy as a whole, according to International Data Corporation (IDC), a market research firm based in
the United States.
The rate of growth in the industrialized and emerging economies will again be mixed, IDC expects. IDC
believes that in 2012 the IT market will expand only minimally in the industrialized economies but quite substantially in the
85
Part I
Item 5
emerging economies some of which could see double-digit percentage growth. Investment bank Goldman Sachs is more circumspect than IDC in this regard. It predicts that global IT spending
will grow much more slowly in 2012 than it did in 2011.
In 2012, analysts identify the greatest market potential in five
areas. Cloud computing is expected to move beyond Software as a Service (SaaS). Mobile and mobile apps are flourishing and becoming more important for enterprises. The analytics market is expected to expand, driven by the increasing need for
simulations, predictions, and optimization. Databases that can handle high data volumes are becoming strategic and are renewing the relationship between business and information technology. And in the slipstream of these trends, applications will be
surging ahead as well.
For its current EMEA region outlook IDC has revised its predictions for 2012 especially for Western
Europe. It believes the ongoing debt crisis in the euro area will increasingly impact the economy and that companies will respond by investing less. Consequently, IT market growth in Western Europe will not exceed the low to middle single digit
percentages in 2012, IDC forecasts.
Similarly, IDC has revised its outlook for the Americas region, and in particular for the
United States compared with previous calculations. It expects the U.S. IT market to expand by a percentage in the middle of the single-digit range: Growth will be slightly slower in the hardware segment, but there will be constant single-digit
growth in the software segment, it believes.
Looking at the Asia Pacific Japan region, IDC predicts that IT sales in Japan
will continue to recuperate from the impact of the March 2011 earthquake and tsunami. It expects the segment to grow several percent in 2012 with the help of publicly financed reconstruction programs. In the emerging economies of Asia, IDC expects
double-digit IT sales growth.
In other words, IDCs worries about the growth of the IT market in 2012 apply chiefly
to Western Europe and the United States. IDC believes the risk to be greater there than elsewhere that IT spending might decline. The analysts remain optimistic in their projections and risk analyses for other countries. UBS, a major Swiss bank,
views the market prospects and risks for North America in a rather more positive light than those for Western Europe. It believes that the public sector and the financial services industry in those countries may buy fewer IT services than before.
Forecast for SAP
Strategy for Profitable Growth
SAP seeks profitable growth across its portfolio of products and services. Our goal is to double our addressable market to US$230 billion and increase the number of people who use and benefit from SAP
solutions to one billion by 2015. Our ability to deliver software-based innovation and value in target growth areas of applications, analytics, mobile, cloud, and database and technology, positions us favorably in segments of the enterprise market
with higher growth than expected global GDP rates. SAP continues to invest and increase its presence and market share in countries experiencing high growth, such as Brazil, China, India, and Russia. At the same time, SAPs combination of a
stable, consistent core, together with breakthrough innovations, continues to expand our business in all operating regions, with double-digit growth in each region in 2011.
SAPs ongoing growth depends on our ability to deliver innovative solutions to market and drive ongoing value for our customers. We continue to improve our research and development effectiveness,
working in leaner teams to accelerate innovation cycles and engage more closely with our customers. We also are investing in our go-to-market channels to expand capacity and drive greater volume sales, while expanding our technology partner
ecosystem to foster co-innovation as a force multiplier in creating new business value for our customers.
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Go-to-Market Investment Delivers Customer Value
SAP goes to market by region, customer segment, and industry. In each region, we concentrate our sales efforts on the fastest-growing
markets with the most business potential. We evolve and invest in our go-to-market coverage model to effectively sell industry-specific solutions while increasing our engagement with customers in line-of-business functions (for example, human
resources, sales, and marketing) and users of business analytics. We continue to provide companies of any size small, midsize, and large with new software purchasing options that align to their specific budgetary, resource and
deployment preferences. In 2011, we reached a milestone of more than 1,000 companies running SAP Business ByDesign, which small businesses and midsize companies can use as a cloud-based platform. In addition, we introduced new cloud-solutions for
large enterprises built on SAP Business ByDesign.
Greater Volume and Co-Innovation Through an Open Ecosystem
SAP continues to engage an expanding partner ecosystem to increase market coverage, enhance our solutions portfolio, and spur innovation.
SAP and its vibrant partner ecosystem offer greater choice and business value through the power of co-innovation, appealing to customers that want to avoid being locked in to a single vendor. SAP channel partners offer customers
knowledgeable local delivery of solutions across industries and geographies. In 2011, SAP continued to substantially increase the share of our software revenue that we generate through indirect channels. SAP technology partners continue to drive our
research agenda, enhance the SAP solution portfolio, and monetize new technology breakthroughs.
Organic Growth and Targeted Acquisitions
Organic growth remains the primary driver of SAPs strategy. We continue to invest in our own product development and technology
innovation, improving the speed, number of projects, and innovations brought to market. Our open ecosystem strategy enables us to leverage the innovative potential of our partners to drive customer value. We also will continue to acquire targeted,
strategic, and fill-in technology to add to our broad solution offerings and improve our coverage in key strategic markets to best support our customers needs. On that front, we will be concentrating on the SuccessFactors
acquisition and thus expanding our cloud business in 2012.
Operational Targets for 2012 (Non-IFRS)
Revenue and Operating Profit Outlook
In light of our continuing focus on the cloud business and considering our recent acquisition of SuccessFactors, we are widening the range of revenues for which acquisition-related deferred revenue write
downs are adjusted for in determining our non-IFRS revenue and profit numbers. We continue to adjust for deferred revenue write downs, i.e. for revenues that would have been recognized had the acquired entities remained stand-alone entities but that
we are not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. However, in the definitions of our non-IFRS measures used through 2011, such adjustments for deferred revenue write downs were limited to
support revenue. From 2012 onwards, we will additionally make such deferred revenue write down adjustments for cloud subscription revenue and other similarly recurring revenues. All other non-IFRS measures will remain unchanged. As the deferred
revenue write-down adjustments for recurring revenues other than support revenue from acquisitions that were executed through 2011 were immaterial, we do not restate prior period non-IFRS measures to align with the new definition.
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The Executive Board is providing the following outlook for the full-year 2012 from
todays perspective:
|
|
|
We expect full-year 2012 non-IFRS software and software-related service revenue to increase in a range of 10% to 12% at constant currencies (2011:
11.35 billion). This includes a contribution of up to 2 percentage points from SuccessFactors business. |
|
|
|
We expect full-year 2012 non-IFRS operating profit to be in a range of 5.05 billion to 5.25 billion at constant currencies (2011:
4.71 billion). Full-year 2012 non-IFRS operating profit excluding SuccessFactors is expected to be in a similar range.
|
|
|
|
We project a full-year 2012 IFRS effective tax rate of 26.5% to 27.5% (2011: 27.9%) and a non-IFRS effective tax rate of 27.0% to 28.0% (2011: 26.6%).
|
The growth we expect in software and software-related service revenue (non-IFRS) is based on our
expectation of double-digit growth, at constant currencies, in our software revenue. The increase we expect in non-IFRS operating profit is based on the expectation that the operating margin, not including the SuccessFactors acquisition, will
increase by 50 basis points due to increased total revenue and efficiency gains.
We present the
following reconciliation from our 2011 IFRS software and software-related service revenue, IFRS total revenue, IFRS operating profit, and IFRS operating margin to the non-IFRS equivalents to facilitate comparison between IFRS numbers and the
non-IFRS numbers in our 2012 outlook:
Reconciliations of IFRS to Non-IFRS Numbers for 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions, unless otherwise stated |
|
IFRS Financial Measure |
|
|
Support Revenue Not Recorded Under IFRS |
|
|
Operating Expenses1)
|
|
|
Discontinued Activities3)
|
|
|
Non-IFRS Financial Measure |
|
Software and software-related service revenue |
|
|
11,319 |
|
|
|
27 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
11,346 |
|
Total revenue2) |
|
|
14,233 |
|
|
|
27 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
14,260 |
|
Operating profit2) |
|
|
4,881 |
|
|
|
27 |
|
|
|
519 |
|
|
|
717 |
|
|
|
4,710 |
|
Operating margin in % |
|
|
34.3 |
|
|
|
0.1 |
|
|
|
3.6 |
|
|
|
5.0 |
|
|
|
33.0 |
|
1) |
Included in
operating expenses are acquisition-related charges, share-based payment expenses, and restructuring charges. |
2) |
These financial
measures are the numerator or the denominator in the calculation of our IFRS and non-IFRS operating margin, and are included in this table for transparency. |
3) |
The discontinued
activities include the results of our discontinued TomorrowNow business. |
Goals for Liquidity and Finance
We seek to maintain a positive net liquidity position at the end of 2012. We intend to reduce our financial debt as and when the debt
falls due. We will consider issuing new debt, such as
bonds or U.S. private placements, only if market conditions are advantageous. Depending on the level of net liquidity we seek to achieve, we intend to continue to consider repurchasing shares for
treasury in the future, but not before the fourth quarter of 2012.
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Investment Goals
Excepting acquisitions, our planned capital expenditures for 2012 will be covered in full by operating cash flow and will chiefly be spent on new information technology.
As part of our growth and innovation strategy, we plan to invest around US$2 billion in China by 2015. This demonstrates our long-term
strategic commitment to China, the worlds second largest economy. We have successfully grown our business in China over the past 20 years and now want to scale our operations to fully meet the needs of both enterprises and our ecosystem. Our
SAP Labs and SAP Research facilities there will continue to drive innovation for our Chinese customer base. We will also create more research and development facilities, and hire the best people to work for us. Our objective is to help drive
sustainable growth in China through informatization.
SAP continues to invest and increase its presence and market share in
countries experiencing high growth. For example, at the end of 2011 we increased our sales forces in such countries. We have also opened a nearshore delivery center in Romania, and are looking to hire 400 consultants in that country by 2014. We
intend to invest between 30 million and 40 million into the center, which is the overall investment that will go into training programs for employees and the cost of the headquarters. Further, we have decided to set up a new
nearshore services center in Portugal, which we expect to be operational in the first half of 2012. The new services center will create 100 new jobs in 2012. These nearshore centers will be SAPs first units of this kind, working with clients
across Europe, the Middle East, and Africa (EMEA).
Proposed Dividend
We plan to continue our dividend policy, which is that the payout ratio should be approximately 30% excluding the TomorrowNow litigation
effect in the calculation. This results in a dividend of
0.75 per share representing a payout ratio of 30% excluding the TomorrowNow litigation effect from the calculation.
In addition, we propose to reward our shareholders with a special dividend of 0.35 per share due to the 40th anniversary of
SAP.
If the Annual General Meeting of Shareholders so resolves, we will therefore increase the dividend from 0.60 to
1.10 per share in 2012.
Premises on Which our Outlook is Based
In preparing our outlook guidance, we have taken into account all events known to us at the time we prepared this report that could
influence SAPs business going forward.
Among the premises on which this outlook is based are those presented concerning
economic development and our expectation that we will not benefit from any effects in 2012 from a major acquisition, without regard to the acquisition of SuccessFactors.
Medium-Term Prospects
We expect our business, our revenue, and our profit
to grow, assuming there is a sustained recovery in the global economy. Our strategy is to increase software and software-related service revenue and our operating margin through greater efficiency across all sales channels, services, our support
infrastructure, and research and development.
From todays perspective we are aiming to increase our revenue to more
than 20 billion by 2015. In the same period, we aim to widen our non-IFRS operating margin to 35%.
To achieve these
goals, we want to further strengthen our position in our five market categories and have one billion users by 2015.
|
|
|
We want to extend our leadership in the applications segment. |
|
|
|
We want to extend our market share in analytics.
|
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|
|
|
We want to extend our leadership in mobile computing. |
|
|
|
We want to become a profitable market leader in cloud computing, generating 2 billion revenue in this segment by 2015.
|
|
|
|
We want to become the fastest-growing provider of databases and technology. |
Our plan is for indirect sales to be contributing up to 40% of total revenue by 2015.
SAPs vision to help the world run better comes to life in product innovation that drives business value for our customers. By
delivering on our product road map, SAP is powering a market-wide transformation in how people and organizations work together and run better. Building on a track record of innovation, SAP is again at the forefront of a major shift in the IT sector,
away from commoditized hardware and toward renewed investment in differentiating IT: business software that drives efficiency, agility, and growth.
The stability and consistency of SAPs core suite of applications is a competitive advantage for SAP and our customers. In 2011, SAP committed to faster cycles of innovation with minimum disruption
to customer operations, and extended maintenance for core applications until 2020. This long-term planning security differentiates SAP within the software industry and demonstrates our commitment to our customers success. Our customer-focused
innovation strategy also concentrates on three areas that will transform the way business is done mobile computing, in-memory computing, and cloud computing. This combination of nondisruptive innovation at the core and breakthrough innovation
helps our customers lower total cost of ownership, increase productivity, and accelerate their own business innovation at the same time. It will enable us to provide business value and grow our business in the five market categories on which we
focus: applications; analytics; mobile; cloud; and database and technology.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Centralized Financial
Management
We use global centralized financial management to control liquid assets and monitor exposure to interest rates
and currencies. The primary aim of our financial management is to maintain liquidity in the Group at a level that is adequate to meet our obligations. Most SAP companies have their liquidity managed by the Group, so that liquid assets across the
Group can be consolidated, monitored, and invested in accordance with Group policy. High levels of liquid assets provide a strategic reserve, helping to keep SAP flexible, sound, and independent. In addition, various credit facilities are currently
available for additional liquidity, if required. For more information about these facilities, see the Credit Facilities section.
We manage credit, liquidity, interest rate, equity price, and foreign exchange rate risks on a Group-wide basis. We use selected
derivatives exclusively for this purpose and not for speculation, which is defined as entering into a derivative instrument for which we do not have a corresponding underlying transaction. The rules for the use of derivatives and other rules and
processes concerning the management of financial risks are collected in our treasury guideline document, which applies globally to all companies in the Group. For more information about the management of each financial risk and about our risk
exposure, see the Notes to the Consolidated Financial Statements section, Notes (25) to (27).
Liquidity Management
Our primary source of cash, cash equivalents, and current investments is funds generated from our business operations.
Over the past several years, our principal use of cash has been to support operations and our capital expenditure requirements resulting from our
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growth, to acquire businesses, to pay dividends on our shares, and to buy back SAP shares on the open market. On December 31, 2011, our cash, cash equivalents, and current investments were
primarily held in euros and U.S. dollars. We generally invest only in the financial assets of issuers or funds with a minimum credit rating of A-, and pursue a policy of cautious investment characterized by wide portfolio diversification with a
variety of counterparties, predominantly short-term investments, and standard investment instruments. We rarely invest in the financial assets of issuers with a credit rating lower than A-, and such investments were not material in 2011.
We believe that our liquid assets combined with our undrawn credit facilities are sufficient to meet our present operating needs and,
together with expected cash flows from operations, will support our currently planned capital expenditure requirements over the near term and medium term.
To expand our business, we have made and expect to continue making acquisitions of businesses, products, and technologies. For more information about the financial debt incurred in 2010 for that purpose,
mainly in connection with the acquisition of Sybase, see the Cash Flows and Liquidity section. Depending on our future cash position and future market conditions, we might issue additional debt instruments to fund acquisitions, maintain financial
flexibility, and limit repayment risk. Therefore, we continuously monitor funding options available in the capital markets and trends in the availability of funds, as well as the cost of such funding.
Capital Structure Management
The primary objective of our capital structure management is to maintain a strong
financial profile for investor, creditor, and customer confidence and to support the growth of our business. We seek to maintain a capital structure that will allow us to cover our funding
requirements through the capital markets at reasonable conditions, and in so doing, ensure a high level of independence, confidence, and financial flexibility.
We currently do not have a credit rating with any agency. We do not believe that a rating would have a substantial effect on our current or future borrowing conditions and financing options.
Our goal is to remain in a position to return excess liquidity to our shareholders by distributing annual dividends and repurchasing
shares. The amount of future dividends and the extent of future repurchases of shares will be balanced with our effort to continue to maintain an adequate liquidity position. For more information about dividends and share repurchases and about our
current capital structure ratios, see the Notes to the Consolidated Financial Statements section, Note (22).
Cash Flows and Liquidity
Total Group liquidity on December 31, 2011, primarily comprised amounts in euros (3,737 million) and U.S.
dollars (833 million). Current investments are included in other financial assets on the statement of financial position. Bank loans, private placement transactions, and bonds are included within financial liabilities on the statement of
financial position. Financial debt on December 31, 2011, primarily comprised amounts in euros (2,999 million) and U.S. dollars (966 million). Around 3% of our financial debt is held at variable interest rates and is not hedged.
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Analysis of Net Liquidity
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
Change |
|
Cash and cash equivalents |
|
|
4,965 |
|
|
|
3,518 |
|
|
|
1,447 |
|
Current investments |
|
|
636 |
|
|
|
10 |
|
|
|
626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Group liquidity |
|
|
5,601 |
|
|
|
3,528 |
|
|
|
2,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current bank loans |
|
|
101 |
|
|
|
1 |
|
|
|
100 |
|
Current private placement transaction |
|
|
423 |
|
|
|
0 |
|
|
|
423 |
|
Current bond |
|
|
600 |
|
|
|
0 |
|
|
|
600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liquidity 1 |
|
|
4,477 |
|
|
|
3,527 |
|
|
|
950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current bank loans |
|
|
1 |
|
|
|
1,106 |
|
|
|
1,105 |
|
Non-current private placement transaction |
|
|
1,240 |
|
|
|
1,071 |
|
|
|
169 |
|
Non-current bond |
|
|
1,600 |
|
|
|
2,200 |
|
|
|
600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liquidity 2 |
|
|
1,636 |
|
|
|
850 |
|
|
|
2,486 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Group liquidity consists of cash and cash equivalents (for example, cash at banks,
money market funds, and time deposits with original maturity of three months or less) and current investments (for example, investments
with original maturities of greater than three months and remaining maturities of less than one year) as reported in our IFRS Consolidated Financial Statements.
Total financial debt consists of current financial liabilities (for example, overdrafts,
current bank loans, bonds or private placements) and non-current financial liabilities (for example, non-current bank loans, bonds, or private placements) as reported in our IFRS Consolidated Financial Statements. For more information about our
financial debt, see the Notes to the Consolidated Financial Statements section, Note (18).
Net liquidity is total Group liquidity less total financial debt as defined above. Net
liquidity should be considered in addition to, and not as a substitute for, cash and cash equivalents, other financial assets, and financial liabilities included in our IFRS Consolidated Financial Statements.
The increase in total Group liquidity from 2010 was mainly due to the positive cash inflows from our operations.
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For information about the impact of cash, cash equivalents, current investments, and our
financial liabilities on our income statements, see
the analysis of our finance income, net, in the Operating Results (IFRS) section.
Analysis of Consolidated
Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
Change in % 2011 vs. 2010 |
|
|
Change in % 2010 vs. 2009 |
|
Net cash flows from operating activities |
|
|
3,775 |
|
|
|
2,922 |
|
|
|
3,019 |
|
|
|
29 |
|
|
|
3 |
|
Net cash flows from investing activities |
|
|
1,226 |
|
|
|
3,994 |
|
|
|
299 |
|
|
|
69 |
|
|
|
>100 |
|
Net cash flows from financing activities |
|
|
1,176 |
|
|
|
2,520 |
|
|
|
2,170 |
|
|
|
<100 |
|
|
|
<100 |
|
Analysis of Consolidated Statements of Cash Flow: 2011 compared to 2010
Net cash provided by operating activities improved 853 million or 29% to 3,775 million in 2011 (2010: 2,922
million). The years good sales figures were the factor with the greatest effect on operating cash flow in 2011. By effective management of working capital, we were again able to reduce the days sales outstanding (DSO) for receivables,
defined as average number of days from revenue recognition to cash receipt from the customer. In 2011, we reduced DSO by five days to 60 days (2010: 65 days).
Cash outflows from investment activities totaled 1,226 million in 2011, much reduced from the 2010 figure of 3,994 million. In 2011, cash outflows were mainly driven by investments in
time deposits and German government bonds, and also by our business and infrastructure following the acquisition of tangible and intangible assets. In 2011, we paid 188 million for the acquisition of consolidated companies compared to
4,194 million in 2010. Much of the 2010 outflow was attributable to the purchase price paid for the acquisition of Sybase.
Cash outflows from financing activities totaled 1,176 million in 2011, compared to cash inflows of 2,520 million in 2010. Our 2011 cash outflows were mainly due to the repayment of a
credit facility we entered into in connection
with our acquisition of Sybase. This was partly offset by a private placement completed in the United States on June 1, 2011, which led to a cash inflow of US$750 million. In the
previous year, cash inflows were driven mainly by the incoming payments from our financing activities related to the acquisition of Sybase.
The increase in total dividend to 713 million was due to an increase in the dividend paid from 0.50 per share in the previous year to 0.60 in the reporting year (total dividend
payout in 2010: 594 million). In 2011, we repurchased shares for treasury in the amount of 246 million (2010: 220 million).
Analysis of Consolidated Statements of Cash Flow: 2010 Compared to 2009
Net cash provided by operating activities decreased 97 million or 3% to 2,922 million in 2010 (2009: 3,019
million). The comparative operating cash inflows in 2009 had, however, been supported by payments from customers on trade receivables for which payment was deferred in 2008 in the context of that years financial crisis. The
102 million we paid out in connection with the TomorrowNow litigation had a negative effect on 2010 operating cash flows. This was partly offset by the effective management of our working capital as evidenced by a decrease of our average
collection period, which is measured in days sales outstanding, or DSO (defined as average number of days from
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Part I
Item 5
revenue recognition to cash receipt from the customer) by 14 days from 79 days in 2009 to 65 days in 2010.
Net cash used in investing activities increased significantly from 299 million in 2009 to 3,994 million in 2010 mainly due to our acquisition of Sybase in 2010. In 2010, we invested
334 million in our technology and business infrastructure by purchasing intangible assets and property, plant, and equipment, a significant portion of which represented the purchase of patents, vehicles, IT hardware, and the cost of
constructing office buildings (2009: 225 million).
Net cash inflows from financing activities were
2,520 million in 2010 compared to net cash outflows of 2,170 million in 2009. The net cash inflows in 2010 were mainly due to the proceeds from our financing transactions conducted in connection with the Sybase acquisition. In
total, the financing transactions conducted in 2010 led to cash inflows in the amount of 5,380 million of which 2,196 million were used to partly repay the acquisition-related term loan and assumed outstanding convertible bonds
from Sybase. The net cash outflows in 2009 were mainly due to the repayment of the credit facility we entered into in connection with our acquisition of Business Objects. The dividend distributed in 2010 was 594 million, unchanged from
the previous year (2009: 594 million). We repurchased shares for treasury in the amount of 220 million in 2010 (2009: 0 million).
Credit Facilities
Other sources of capital are available to us through
various credit facilities, if required.
We are party to a revolving 1.5 billion syndicated credit facility
agreement with an initial term of five years ending in December
2015. The use of the facility is not restricted by any financial covenants. Potential proceeds are for general corporate purposes. Borrowings under the facility bear interest at the euro
interbank offered rate (EURIBOR) or London interbank offered rate (LIBOR) for the respective currency plus a margin ranging from 45 to 75 basis points that depends on the amount drawn. We pay a commitment fee of 15.75 basis points per annum on
unused amounts of the available credit facility. So far, we have not used and do not currently foresee any need to use this credit facility. Consequently, there were no borrowings outstanding under the facility as at December 31, 2011.
As at December 31, 2011, SAP AG had additional available credit facilities totaling approximately 490 million.
As at December 31, 2011, there were no borrowings outstanding under these credit facilities. Several of our foreign subsidiaries have credit facilities available that allow them to borrow funds in their local currencies at prevailing interest
rates, generally to the extent SAP AG has guaranteed such amounts. As at December 31, 2011, approximately 54 million was available through such arrangements. Total aggregate borrowings under these lines of credit amounted to
1 million as at December 31, 2011.
OFF-BALANCE SHEET ARRANGEMENTS
Several SAP entities have entered into operating leases for office space, hardware, cars and certain other equipment. These arrangements
are sometimes referred to as a form of off-balance sheet financing. Rental expenses under these operating leases are set forth below under Contractual Obligations. We believe we do not have forms of material off-balance sheet
arrangements that would require disclosure other than those already disclosed.
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Part I
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CONTRACTUAL OBLIGATIONS
The table below presents our on- and off-balance sheet contractual obligations as of December 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual obligations |
|
|
|
|
Payments due by period |
|
millions |
|
Total |
|
|
Less than 1 year |
|
|
1-3 years |
|
|
3-5 years |
|
|
More than 5 years |
|
Debt obligations(1) |
|
|
4,567 |
|
|
|
1,392 |
|
|
|
1,552 |
|
|
|
791 |
|
|
|
832 |
|
Other non-current obligations on the statement of financial position(2) |
|
|
92 |
|
|
|
1 |
|
|
|
7 |
|
|
|
3 |
|
|
|
81 |
|
Operating lease obligations(3) |
|
|
878 |
|
|
|
212 |
|
|
|
345 |
|
|
|
190 |
|
|
|
131 |
|
Purchase obligations(3) |
|
|
572 |
|
|
|
371 |
|
|
|
122 |
|
|
|
48 |
|
|
|
31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,025 |
|
|
|
808 |
|
|
|
1,078 |
|
|
|
550 |
|
|
|
589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
This represents bank loans, private placement transactions, bonds, other financial liabilities and interest thereon. |
(2) |
Amounts mainly consist of employee-related liabilities. Not included in the table are non-current tax liabilities of 408 million, which
include provisions for uncertainties in income taxes. |
(3) |
See Note (23) to our Consolidated Financial Statements for additional information about operating lease and purchase obligations. Our expected
contributions to our pension and other post employment benefit plans are not included in the table above. We expect to contribute in 2012 statutory minimum and discretionary amounts of 1 million to our German defined benefit plans and
47 million to our foreign defined benefit plans, all of which are expected to be paid as cash contributions. Our contributions to our German and foreign defined contribution plans have ranged from 132 million to
151 million in 2009 through 2011; we expect similar contributions to be made in 2012. |
We expect to meet these contractual obligations with our existing cash, our cash flows
from operations and our financing activities. The timing of payments for the above contractual obligations is based on payment schedules for those obligations where set payments exist. For other obligations with no set payment schedules, estimates
as to the most likely timing of cash payments have been made. The ultimate timing of these future cash flows may differ from these estimates.
Obligations under Indemnifications and Guarantees
Our software license agreements generally include certain provisions for indemnifying customers against liabilities if our software products infringe a third partys intellectual property rights. In
addition, we occasionally provide function or performance guarantees in
routine consulting contracts and development arrangements. We also generally provide a six to twelve month warranty on our software. Our warranty liability is included in other provisions. For
more information on other provisions see Note (19b) to our Consolidated Financial Statements. For more information on obligations and contingent liabilities refer to Note (3) and Note (23) in our Consolidated Financial Statements.
RESEARCH AND DEVELOPMENT
For information on our R&D activities see Item 4. Information about SAP Research and Development. For information on our R&D costs see Item 5. Operating and Financial
Review and Prospects Operating Results and for information related to our R&D employees see Item 6. Directors, Senior Management and Employees Employees.
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Item 5
CRITICAL ACCOUNTING ESTIMATES
Our Consolidated Financial Statements are prepared based on the accounting policies described in Note (3) to our Consolidated
Financial Statements in this report. The application of such policies requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, revenues and expenses in
our Consolidated Financial Statements. We base our judgments, estimates and assumptions on historical and forecast information, as well as regional and industry economic conditions in which we or our customers operate, changes to which could
adversely affect our estimates. Although we believe we have made reasonable estimates about the ultimate resolution of the underlying uncertainties, no assurance can be given that the final outcome of these matters will be consistent with what is
reflected in our assets, liabilities, revenues and expenses. Actual results could differ from original estimates.
The
accounting policies that most frequently require us to make judgments, estimates, and assumptions, and therefore are critical to understanding our results of operations, are:
|
|
|
valuation of trade receivables; |
|
|
|
accounting for share-based compensation; |
|
|
|
accounting for income tax; |
|
|
|
accounting for business combinations; |
|
|
|
subsequent accounting for goodwill and other intangibles; |
|
|
|
accounting for legal contingencies; and |
|
|
|
recognition of internally generated intangible assets from development. |
Our management periodically discusses these critical accounting policies with the Audit Committee of the Supervisory Board. See Note
(3c) to our Consolidated Financial Statements for further discussion on our critical accounting estimates and critical accounting policies.
NEW ACCOUNTING STANDARDS NOT YET ADOPTED
See
Note (3e) to our Consolidated Financial Statements for our discussion on new accounting standards not yet adopted.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
SUPERVISORY BOARD
The current members of the Supervisory Board of SAP AG, each members principal occupation, the year in which each was first elected and the year in which the term of each expires, respectively, are
as follows:
|
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|
|
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|
|
|
|
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|
|
|
|
Name |
|
Age |
|
|
Principal Occupation |
|
Year First Elected |
|
|
Year Term Expires |
|
Prof. Dr. h.c. mult. Hasso Plattner, Chairman(1)(2)(5)(6)(7)(10) |
|
|
68 |
|
|
Chairman of the Supervisory Board |
|
|
2003 |
|
|
|
2012 |
|
Pekka Ala-Pietilä(1)(6)(7)(10) |
|
|
55 |
|
|
Co-founder and CEO Blyk Ltd. |
|
|
2002 |
|
|
|
2012 |
|
Prof. Dr. Wilhelm Haarmann(1)(2)(4)(10) |
|
|
61 |
|
|
Attorney at Law, Certified Public Auditor and Certified Tax Advisor; HAARMANN Partnerschaftsgesellschaft, Rechtsanwälte, Steuerberater, Wirtschaftsprüfer |
|
|
1988 |
|
|
|
2012 |
|
Bernard Liautaud(6)(11) |
|
|
49 |
|
|
General Partner, Balderton Capital |
|
|
2008 |
|
|
|
2012 |
|
Dr. h.c. Hartmut Mehdorn(1)(4)(5) |
|
|
69 |
|
|
Chief Executive Officer, Air Berlin PLC, Rickmansworth, UK |
|
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1998 |
|
|
|
2012 |
|
Prof. Dr.-Ing. Dr. h.c. mult. Dr.-Ing. E.h. mult. Joachim Milberg(1)(2)(3)(6)(7) |
|
|
68 |
|
|
Chairman of the Supervisory Board of BMW AG |
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|
2007 |
|
|
|
2012 |
|
Dr. Erhard Schipporeit(1)(3)(9)(10) |
|
|
63 |
|
|
Management Consultant |
|
|
2005 |
|
|
|
2012 |
|
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer(1)(6) |
|
|
67 |
|
|
Managing Director of Dr. Klaus Wucherer Innovations- und Technologieberatung GmbH |
|
|
2007 |
|
|
|
2012 |
|
Lars Lamadé, Vice Chairman(2)(5)(8)(10) |
|
|
40 |
|
|
Employee, Project Manager Service & Support |
|
|
2002 |
|
|
|
2012 |
|
Thomas Bamberger(3)(8) |
|
|
44 |
|
|
Employee, Chief Operating Officer Global Service & Support |
|
|
2007 |
|
|
|
2012 |
|
Panagiotis Bissiritsas(2)(4)(6)(8) |
|
|
43 |
|
|
Employee, Support Expert |
|
|
2007 |
|
|
|
2012 |
|
Peter Koop(6)(8) |
|
|
45 |
|
|
Employee, Industry Business Development Expert |
|
|
2007 |
|
|
|
2012 |
|
Christiane Kuntz-Mayr(6) |
|
|
49 |
|
|
Employee, Deputy Chairperson of the Works Council of SAP AG |
|
|
2009 |
|
|
|
2012 |
|
Dr. Gerhard Maier(2)(3)(8) |
|
|
58 |
|
|
Employee, Development Project Manager |
|
|
1989 |
|
|
|
2012 |
|
Dr. Hans-Bernd Meier(12) |
|
|
60 |
|
|
Retiree, independent Consultant for SAP Project |
|
|
2011 |
|
|
|
2012 |
|
Stefan Schulz(4)(5)(6)(8)(10) |
|
|
42 |
|
|
Employee, Development Project Manager |
|
|
2002 |
|
|
|
2012 |
|
(1) |
Elected by SAP AGs shareholders on May 10, 2007. |
(2) |
Member of the
General and Compensation Committee. |
(3) |
Member of the Audit Committee. |
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Part I
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(4) |
Member of the
Finance and Investment Committee. |
(5) |
Member of the
Mediation Committee. |
(6) |
Member of the
Technology and Strategy Committee. |
(7) |
Member of the Nomination Committee. |
(8) |
Elected by SAP
AGs employees on April 23, 2007. |
(9) |
Member of the
Audit Committee and determined to be the Audit Committee financial expert. |
(10) |
Member of the Special Committee. |
(11) |
Elected by SAP AGs shareholders on June 3, 2008, replaced August-Wilhelm Scheer who resigned from the Supervisory Board on the same day.
|
(12) |
Replaced Willi Burbach who left the Supervisory Board on August 7, 2011 |
For detailed information on the Supervisory Board committees and their tasks, including
the Audit Committee and Compensation Committee, please refer to Item 10 Additional Information Corporate Governance.
Pursuant to the German Co-determination Act of 1976 (Mitbestimmungsgesetz), members of the Supervisory Board of SAP AG consist of eight representatives of the shareholders and eight representatives of the
employees. Of the eight employee representatives, two must be nominated by the trade unions. The elected employees must be at least 18 years of age and must have been in the employment of SAP AG or one of its German subsidiaries for at least one
year. They must also fulfill the other qualifications for election codified in Section 8 of the German Works Council Constitution Act. These qualifications include, among other things, not having been declared ineligible or debarred from
holding public office by a court.
Certain current members of the Supervisory Board of SAP AG were members of supervisory
boards and comparable governing bodies of enterprises other than SAP AG in Germany and other countries as of December 31, 2011. See Note (30) to our Consolidated Financial Statements for more detail. Apart from pension obligations towards
employees, SAP AG has not entered into contracts with any member of the Supervisory Board that provide for benefits upon a termination of the employment or service of the member.
EXECUTIVE BOARD
The current members of the Executive Board, the year in which each member was first appointed and the year in which the term of each
expires, respectively, are as follows:
|
|
|
|
|
|
|
|
|
Name |
|
Year First Appointed |
|
|
Year Current Term Expires |
|
Bill McDermott, Co-CEO |
|
|
2008 |
|
|
|
2017 |
|
Jim Hagemann Snabe, Co-CEO |
|
|
2008 |
|
|
|
2017 |
|
Dr. Werner Brandt |
|
|
2001 |
|
|
|
2013 |
|
Gerhard Oswald |
|
|
1996 |
|
|
|
2014 |
|
Vishal Sikka |
|
|
2010 |
|
|
|
2017 |
|
The following changes occurred in the Executive Board in 2011:
|
|
|
In July 2011, Angelika Dammann resigned as a member of the Executive Board. Following Angelikas resignation, Werner Brandt, CFO of SAP, started
to act as interim head of Global HR and interim labor relations director. |
A description of the management
responsibilities and backgrounds of the current members of the Executive Board are as follows:
Bill McDermott,
Co-CEO (Vorstandssprecher), 50 years old, holds a masters degree in business administration. He joined SAP in 2002 and became a member of its Executive Board on July 1, 2008. On February 7, 2010 he became Co-CEO alongside Jim
Hagemann Snabe.
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Part I
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Besides the duties as Co-CEO, he is responsible for strategy, governance, corporate development, innovation, sales, field services, consulting, ecosystem activities, communications, and
marketing.
Jim Hagemann Snabe, Co-CEO (Vorstandssprecher), 46 years old, holds a master degree in operational research.
He joined SAP in 1990 and became a member of its Executive Board on July 1, 2008. On February 7, 2010 he became Co-CEO alongside Bill McDermott. Besides the duties as Co-CEO, he is responsible for strategy, governance, corporate
development, innovation, products and solutions development, communications, and marketing.
Werner Brandt, 58 years
old, business administration graduate. Werner Brandt joined SAP in early 2001 as the Chief Financial Officer and member of the Executive Board. He is responsible for finance and administration including investor relations and data protection and
privacy. He is also responsible for Global Human Resources and is SAPs Labor Relations Director (acting). Prior to joining SAP, Werner Brandt was CFO and member of the Executive Board of Fresenius Medical Care AG since 1999. In this role, he
was also responsible for labor relations. Before joining Fresenius Medical Care AG, Werner Brandt headed the finance function of the European operations of Baxter International Inc.
Gerhard Oswald, 58 years old, economics graduate. Gerhard Oswald joined SAP in 1981 and became a member of the Executive Board in
1996. He became Chief Operating Officer on February 11, 2010. In this position he is responsible for SAP active global support, installed base maintenance & support, global IT, globalization services, quality governance &
production, COO operations, university alliances, global user groups organization, chief process office, and SAP Labs network.
Vishal Sikka, 44 years old, holds a PH. D. degree in computer science from Stanford University. He joined SAP in 2002 and became a
member of its Executive Board on February 7, 2010 leading technology and innovation. His responsibilities include the SAP technology platform and products, including database, application
platform and middleware, collaboration, business analytics, and search. He is also responsible for the development of new products and new business areas, including the SAP research, incubation, and new products organizations. Before joining the
Executive Board, he was the first Chief Technology Officer at SAP, and prior to that was SAPs Chief Software Architect. Before joining SAP, he was area vice president for platform technologies at Peregrine Systems, and prior to that he founded
and led two start-ups Bodha, Inc. and IBrain Software.
The members of the Executive Board of SAP AG as of
December 31, 2011 that are members on other supervisory boards and comparable governing bodies of enterprises, other than SAP, in Germany and other countries, are set forth in Note (30) to our Consolidated Financial Statements. SAP AG has
not entered into contracts with any member of the Executive Board that provide for benefits upon a termination of the employment of service of the member, apart from pensions, benefits payable in the event of an early termination of service, and
abstention compensation for the postcontractual noncompete period.
To our knowledge, there are no family relationships among
the Supervisory Board and Executive Board members.
COMPENSATION REPORT
Compensation for Executive and Supervisory Board Members
This compensation report outlines the criteria that we applied for the year 2011 to determine compensation for Executive Board and Supervisory Board members, discloses the amount of compensation paid, and
describes the compensation systems. It also contains information about Executive Board members share-based payment plans, shares held by
99
Part I
Item 6
Executive Board and Supervisory Board members, and the directors dealings required to be disclosed in accordance with the German Securities Trading Act.
Compensation for Executive Board Members
Compensation System for 2011
Executive Board members compensation for 2011 is intended to reflect SAPs size and global presence as well as our economic and financial standing. The compensation level is internationally
competitive to reward committed, successful work in a dynamic environment.
The Executive Board compensation package is
performance-based. In 2011, it had four elements:
|
|
|
A variable short-term incentive (STI) plan to reward performance in the plan year |
|
|
|
A variable medium-term incentive (MTI) plan to reward performance in the plan year and the two subsequent years |
|
|
|
A share-based long-term incentive (LTI) plan tied to the price of SAP shares |
The Supervisory Board set a compensation target for the sum of the fixed element and the two variable elements. It reviews, and if
appropriate revises, this compensation target every year. The review takes into account SAPs business performance and the compensation paid to board members at comparable companies on the international stage. The amount of variable
compensation depends on SAPs performance against performance targets that the Supervisory Board sets for each plan year. The performance targets are key performance indicator (KPI) values aligned to the SAP budget for the plan year.
The following criteria apply to the elements of Executive Board compensation for 2011:
|
|
|
The fixed element is paid as a monthly salary.
|
|
|
|
The variable compensation under the STI plan depends on the SAP Groups performance against the KPI target values for non-IFRS constant currency
software and software-related service revenue growth and non-IFRS constant currency operating profit. In addition, the STI element has a discretionary component that allows the Supervisory Board, at the end of the period in question, to address not
only an Executive Board members individual performance, but also SAPs performance in terms of market position, innovative power, customer satisfaction, employee satisfaction, and attractiveness as an employer. Moreover, if there has been
any extraordinary and unforeseeable event the Supervisory Board can, at its reasonable discretion, retroactively adjust payouts up or down in the interest of SAP. On February 16, 2012, the Supervisory Board assessed SAPs performance
against the agreed targets and determined the amount of STI payable. The STI pays out after the Annual General Meeting of Shareholders in May 2012. |
|
|
|
The variable compensation under the MTI plan depends on the SAP Groups performance over the three years 2011 to 2013 against the KPI target
values for software and software-related service revenue growth and earnings per share (both of which are non-IFRS, constant currency values). In addition, the MTI element has a discretionary component that allows the Supervisory Board, at the end
of the period in question, to address not only an Executive Board members individual performance, but also SAPs performance over the three years 2011 to 2013 in terms of market position, innovative power, customer satisfaction, employee
satisfaction, and attractiveness as an employer. The MTI pays out after the Annual General Meeting of Shareholders in 2014.
|
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Part I
Item 6
|
|
|
The LTI component consists of the issue of virtual share options under the terms of the 2011 share option (SAP SOP 2010) plan. For the terms and detail
of the SAP SOP 2010 plan, see the Notes to Consolidated Financial Statements section, Note (28). The number of virtual share options to be issued to each member of the Executive Board in 2011 by way of long-term incentive was decided by the
Supervisory Board on March 18, 2011, with effect from June 9, 2011, and reflects the fair value of the virtual share options awarded. |
The contracts of Executive Board members Bill McDermott and Vishal Sikka include clauses that determine the exchange rates for the translation of euro-denominated compensation into U.S. dollars.
Executive Board Compensation System for 2012
There is a new compensation system for Executive Board members with effect from January 1, 2012, replacing the arrangements in place in 2011. It is more competitive, and more strongly aligned to the
goals in our strategy for 2015.
In place of the four elements in the discontinued package (the fixed annual salary and the
short-term, medium-term, and long-term incentive elements), future packages will have only three elements. Executive Board members will still receive a fixed salary, as they did in 2011. Their compensation will also still have a variable short-term
incentive (STI) element, which will, as in the past, reward performance from year to year. However, the long-term incentive (LTI) element has been completely redesigned. The annual medium-term incentive (MTI) plans will be discontinued, although MTI
allocations already made on or before December 31, 2011, will not be affected. The STI element will be scaled so that, assuming 100% target achievement and assuming the SAP share price is the same when any variable element pays out as it was
when it was granted, the STI to LTI weighting will be approximately
30% to 70% for the co-CEOs and 42% to 58% for other members of the Executive Board.
The new long-term incentive element, the LTI Plan 2015, is called the RSU Milestone Plan 2015. It focuses on the SAP share price and on certain objectives derived from our Company strategy for the
years through 2015. RSU stands for restricted share unit. We established the LTI Plan 2015 at the beginning of 2012 as a standard LTI element in compensation packages for the years 2012 through 2015. It will pay out in the
years 2016 through 2019, so the first payout will not be until after the end of 2015. In February 2012, each member of the Executive Board was allocated a certain number of SAP restricted share unit virtual shares for 2012. At the
beginning of 2013, 2014, and 2015, the virtual share allocation process will be repeated for each of those years respectively. The number of restricted share units allocated to each member for a given year is his or her milestone award
(an amount in euros) for that year divided by the SAP share price over a reference period (defined in the LTI Plan 2015 terms) at the beginning of the year in question.
The number of RSUs an Executive Board member actually earns in respect of a given year could be greater or smaller than the initial allocation. It depends on Company performance against the objectives for
that year (a year is a performance period in the Plan). The objectives derive from SAPs strategy for the period to 2015. The Plan objectives relate to two key performance indicators (KPIs): our non-IFRS total revenue and our
non-IFRS operating profit. The KPI targets have already been set for the entire life of the LTI Plan 2015 for the years 2012 to 2015.
After the end of each performance period (which is a Plan year), the Supervisory Board assesses the Companys performance against the objectives set for that year and determines the number of RSUs to
be finally allocated to (and which then vest in) each Executive Board member. There are objective-based performance hurdles to clear each year before any RSUs can vest. There is also a cap: Normally, the quantity
101
Part I
Item 6
of vested RSUs a member can attain in respect of a Plan year is capped at 150% of his or her initial RSU allocation for that year. The Company strategy underlying the LTI Plan 2015 focuses on
where SAP aims to be by 2015, so the Plan gives greater weight to performance against the KPI targets for 2015 (the final year of the Plan) than against the targets for 2012 through 2014. After the end of 2015, the number of vested RSUs a member of
the Executive Board actually receives for that year is revised. In circumstances where the targets for the individual years are not achieved but the 2015 targets are achieved, the outcome of this revision would be that a member would receive as many
vested RSUs for 2015 as would make up for any that he or she did not receive in the earlier years by reason of failures to achieve targets. On the other hand, if the Company underachieves against the 2015 objectives, Executive Board members may in
the worst case lose all of the vested RSUs allocated to them for 2015.
All vested RSUs are subject to a three-year holding period. The holding period commences
at the end of the year (performance period) for which the RSU was allocated. The amount an RSU eventually pays out depends on the SAP share price at the end of the holding period. A member who leaves the Executive Board before the end of the Plan
retains his or her vested RSUs for completed Plan years but not any allocated but unvested RSUs for the year during which he or she leaves.
Each vested RSU entitles its holder to a (gross) payout corresponding to the price of one SAP share after the end of the three-year holding period. The applicable share price is measured over a reference
period defined in the RSU Milestone Plan 2015 terms.
Subject to the requirements in the German Stock Corporation Act,
section 87 (1), the Supervisory Board is entitled to revise the STI and the LTI in extraordinary and unforeseeable circumstances.
Executive Board Members
Compensation in 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
thousands |
|
|
|
|
Fixed Elements |
|
|
Performance- Related
Element |
|
|
Long-Term Incentive
Elements |
|
|
Total |
|
|
|
Salary |
|
|
Other1) |
|
|
Short-Term Incentive
(STI) |
|
|
Share-Based Payment
(SAP SOP 2010)2) |
|
|
|
|
Bill McDermott (co-CEO)3) |
|
|
1,279.9 |
|
|
|
408.0 |
|
|
|
3,935.5 |
|
|
|
950.0 |
|
|
|
6,573.4 |
|
Jim Hagemann Snabe (co-CEO) |
|
|
1,150.0 |
|
|
|
107.6 |
|
|
|
3,271.2 |
|
|
|
950.0 |
|
|
|
5,478.8 |
|
Dr. Werner Brandt |
|
|
700.0 |
|
|
|
29.7 |
|
|
|
1,979.6 |
|
|
|
577.0 |
|
|
|
3,286.3 |
|
Gerhard Oswald |
|
|
700.0 |
|
|
|
34.5 |
|
|
|
1,979.6 |
|
|
|
577.0 |
|
|
|
3,291.1 |
|
Vishal Sikka4) |
|
|
700.0 |
|
|
|
120.5 |
|
|
|
2,103.7 |
|
|
|
577.0 |
|
|
|
3,501.2 |
|
Dr. Angelika Dammann
(member until July 8, 2011)5) |
|
|
466.7 |
|
|
|
45.9 |
|
|
|
1,163.1 |
|
|
|
384.7 |
|
|
|
2,060.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
4,996.6 |
|
|
|
746.2 |
|
|
|
14,432.7 |
|
|
|
4,015.7 |
|
|
|
24,191.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) |
Insurance contributions, benefits in kind, expenses for maintenance of two households due to work abroad, reimbursement of legal and tax advice fees,
nonrecurring payments, use of aircraft, tax |
2) |
Fair value at the time of grant |
3) |
Includes discrete payments arising through application of the fixed exchange-rate clause to the following items: salary for 2011: 129,900;
profit-sharing bonus for 2011: 664,300 |
4) |
Includes a discrete payment arising through application of the fixed exchange-rate clause to the following item: profit-sharing bonus for 2011:
124,100 |
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Part I
Item 6
5) |
Angelika Dammanns appointment as member of the Executive Board ended on July 8, 2011. Her contract with SAP AG ended on August 31,
2011. Due to the end of her contract on August 31, 2011 the number of virtual options issued to her in 2011 was reduced. The amount of the Short-Term Incentive includes pro rata temporis amounts of the STI 2011 (585,000), the MTI 2011
(330,300) and the MTI 2010 (247,800). |
Assuming 100% target achievement, the amounts the MTI
2011 and the MTI 2010 will pay out in 2013 and 2014 are as follows.
MTI Target Payouts
|
|
|
|
|
|
|
|
|
thousands |
|
MTI 2011 Target Payouts 2014 |
|
|
MTI 2010 Target Payouts 2013 |
|
Bill McDermott (co-CEO) |
|
|
820.0 |
|
|
|
820.0 |
|
Jim Hagemann Snabe (co-CEO) |
|
|
820.0 |
|
|
|
820.0 |
|
Dr. Werner Brandt |
|
|
495.5 |
|
|
|
495.5 |
|
Gerhard Oswald |
|
|
495.5 |
|
|
|
495.5 |
|
Vishal Sikka |
|
|
495.5 |
|
|
|
443.9 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,126.5 |
|
|
|
3,074.9 |
|
|
|
|
|
|
|
|
|
|
The share-based payment amounts in 2011 result from the following virtual share option grants under the
SAP SOP 2010.
Share-Based Payment Under SAP SOP 2010 (2011 Grants)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 Grants |
|
|
|
Quantity |
|
|
Fair Value per Right at Time of Grant |
|
|
Total Fair Value at Time of Grant |
|
|
Fair Value per Right on Dec. 31, 2011 |
|
|
Total Fair Value on Dec. 31, 2011 |
|
|
|
|
|
|
|
|
|
thousands |
|
|
|
|
|
thousands |
|
Bill McDermott (co-CEO) |
|
|
112,426 |
|
|
|
8.45 |
|
|
|
950.0 |
|
|
|
7.13 |
|
|
|
801.6 |
|
Jim Hagemann Snabe (co-CEO) |
|
|
112,426 |
|
|
|
8.45 |
|
|
|
950.0 |
|
|
|
7.13 |
|
|
|
801.6 |
|
Dr. Werner Brandt |
|
|
68,284 |
|
|
|
8.45 |
|
|
|
577.0 |
|
|
|
7.13 |
|
|
|
486.9 |
|
Gerhard Oswald |
|
|
68,284 |
|
|
|
8.45 |
|
|
|
577.0 |
|
|
|
7.13 |
|
|
|
486.9 |
|
Vishal Sikka |
|
|
68,284 |
|
|
|
8.45 |
|
|
|
577.0 |
|
|
|
7.13 |
|
|
|
486.9 |
|
Dr. Angelika Dammann (member until July 8, 2011) |
|
|
45,523 |
|
|
|
8.45 |
|
|
|
384.7 |
|
|
|
7.13 |
|
|
|
324.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
475,227 |
|
|
|
|
|
|
|
4,015.7 |
|
|
|
|
|
|
|
3,388.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103
Part I
Item 6
Total Executive Board Payment in 2010, Including SAP SOP 2010 Share Options Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
thousands |
|
Fixed Elements |
|
|
Performance- Related Element |
|
|
Long-Term Incentive Elements |
|
|
Total |
|
|
|
Salary |
|
|
Other1) |
|
|
Short-Term Incentive (STI) |
|
|
Share-Based Payment (SAP SOP 2010)2) |
|
|
|
|
Bill McDermott (co-CEO)3) |
|
|
1,355.2 |
|
|
|
196.4 |
|
|
|
1,920.6 |
|
|
|
950.0 |
|
|
|
4,422.2 |
|
Jim Hagemann Snabe (co-CEO) |
|
|
1,150.0 |
|
|
|
114.5 |
|
|
|
1,648.7 |
|
|
|
950.0 |
|
|
|
3,863.2 |
|
Dr. Werner Brandt |
|
|
700.0 |
|
|
|
18.4 |
|
|
|
997.7 |
|
|
|
577.0 |
|
|
|
2,293.1 |
|
Gerhard Oswald |
|
|
700.0 |
|
|
|
97.6 |
|
|
|
997.7 |
|
|
|
577.0 |
|
|
|
2,372.3 |
|
Vishal Sikka4) |
|
|
697.3 |
|
|
|
215.4 |
|
|
|
969.9 |
|
|
|
577.0 |
|
|
|
2,459.6 |
|
Dr. Angelika Dammann (member until July 8, 2011) |
|
|
350.0 |
|
|
|
106.4 |
|
|
|
498.9 |
|
|
|
288.5 |
|
|
|
1,243.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
4,952.5 |
|
|
|
748.7 |
|
|
|
7,033.5 |
|
|
|
3,919.5 |
|
|
|
16,654.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) |
Insurance contributions, benefits in kind, expenses for maintenance of two households due to work abroad, reimbursement legal and tax advice fees,
nonrecurring payments, security services, tax |
2) |
Fair value at the time of grant |
3) |
Includes discrete payments arising through application of the fixed exchange-rate clause to the following items: salary for 2010: 205,200;
profit-sharing bonus for 2010: 271,900 |
4) |
Includes discrete payments arising through application of the fixed exchange-rate clause to the following items: salary for 2010: 70,100;
profit-sharing bonus for 2010: 76,100 |
Share-Based Payment Under SAP SOP 2010 (2010 Grants)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Grants |
|
|
|
Quantity |
|
|
Fair Value per Right at Time of Grant |
|
|
Total Fair Value at Time of Grant |
|
|
Fair Value per Right on Dec. 31, 2010 |
|
|
Total Fair Value on Dec. 31, 2010 |
|
|
|
|
|
|
|
|
|
thousands |
|
|
|
|
|
thousands |
|
Bill McDermott (co-CEO) |
|
|
135,714 |
|
|
|
7.00 |
|
|
|
950.0 |
|
|
|
8.19 |
|
|
|
1,111.5 |
|
Jim Hagemann Snabe (co-CEO) |
|
|
135,714 |
|
|
|
7.00 |
|
|
|
950.0 |
|
|
|
8.19 |
|
|
|
1,111.5 |
|
Dr. Werner Brandt |
|
|
82,428 |
|
|
|
7.00 |
|
|
|
577.0 |
|
|
|
8.19 |
|
|
|
675.1 |
|
Gerhard Oswald |
|
|
82,428 |
|
|
|
7.00 |
|
|
|
577.0 |
|
|
|
8.19 |
|
|
|
675.1 |
|
Vishal Sikka |
|
|
82,428 |
|
|
|
7.00 |
|
|
|
577.0 |
|
|
|
8.19 |
|
|
|
675.1 |
|
Dr. Angelika Dammann (member until July 8, 2011) |
|
|
41,214 |
|
|
|
7.00 |
|
|
|
288.5 |
|
|
|
8.19 |
|
|
|
337.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
559,926 |
|
|
|
|
|
|
|
3,919.5 |
|
|
|
|
|
|
|
4,585.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104
Part I
Item 6
End-of-Service Benefits
Regular End-of-Service Undertakings
Retirement Pension Plan
Members of the Executive Board receive a retirement pension when they reach the retirement age of 60 and vacate their Executive Board
seat or a disability pension if, before reaching the regular retirement age, they become subject to occupational disability or permanent incapacity. A surviving dependants pension is paid on the death of a former member of the Executive Board.
The disability pension is 100% of the vested retirement pension entitlement and is payable until the beneficiarys 60th birthday, after which it is replaced by a retirement pension. The surviving dependants pension is 60% of the
retirement pension or vested disability pension entitlement at death. Entitlements are enforceable against SAP AG.
If
service is ended before the retirement age of 60 is reached, pension entitlement is reduced in proportion as the actual length of service stands in relation to the maximum possible length of service.
The applied retirement pension plan is contributory. The contribution is 4% of applicable compensation up to the applicable income
threshold plus 14% of applicable compensation above the applicable income threshold. For this purpose, applicable compensation is 180% of annual base salary. The applicable income threshold is the statutory annual income threshold for the state
pension plan in Germany (West), as amended from time to time.
Exceptional retirement pension agreements apply to the
following Executive Board members:
|
|
|
Bill McDermott and Vishal Sikka have rights to future benefits under the pension plan of SAP America. The pension plan of SAP America is a cash
|
|
|
balance plan that on retirement provides either monthly pension payments or a lump sum. The pension becomes available from the beneficiarys 65th birthday. Subject to certain conditions, the
plan also provides earlier payment or invalidity benefits. The SAP America pension plan closed with effect from January 1, 2009. Interest continues to be paid on the earned rights to benefits. |
|
|
|
SAP also made contributions to a third-party pension plan for Bill McDermott and Vishal Sikka. SAPs contributions are based on Bill
McDermotts and Vishal Sikkas payments into this pension plan. Additionally in view of the close of the SAP America pension plan, SAP adjusted its payments to this non-SAP pension plan. In 2011, SAP paid contributions for Bill McDermott
totaling 470,800 (2010: 765,700) and for Vishal Sikka totaling 95,700 (2010: 153,200). |
|
|
|
Instead of paying for entitlements under the pension plan for Executive Board members, SAP pays equivalent amounts to a non-SAP pension plan for Jim
Hagemann Snabe. In 2011, SAP paid contributions totaling 283,800 (2010: 283,100). |
|
|
|
Gerhard Oswalds performance-based retirement plan was discontinued when SAP introduced a contributory retirement pension plan in 2000. His
pension benefits are derived from any accrued entitlements on December 31, 1999, under performance-based pension agreements and a salary-linked contribution for the period commencing January 1, 2000. Gerhard Oswalds rights to
retirement pension benefits will increase by further annual contributions because he will remain a member of the Executive Board after his 60th birthday until his retirement on June 30, 2014.
|
105
Part I
Item 6
Total Projected Benefit Obligation (PBO) and the Total Accruals for Pension Obligations to
Executive Board Members
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
thousands |
|
Bill
Mc Dermott (co-CEO) |
|
|
Dr. Werner Brandt |
|
|
Gerhard Oswald |
|
|
Vishal Sikka |
|
|
Dr. Angelika Dammann (Member until July 8, 2011) |
|
|
Total |
|
PBO January 1, 2010 |
|
|
958.1 |
|
|
|
902.8 |
|
|
|
3,626.2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
5,487.1 |
|
Less plan assets market value January 1, 2010 |
|
|
42.5 |
|
|
|
655.1 |
|
|
|
2,874.2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,571.8 |
|
Accrued January 1, 2010 |
|
|
915.6 |
|
|
|
247.7 |
|
|
|
752.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,915.3 |
|
Accrued January 1, 2010 (new Board members) |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0.2 |
|
|
|
0 |
|
|
|
0.2 |
|
PBO change in 2010 |
|
|
115.1 |
|
|
|
381.5 |
|
|
|
501.2 |
|
|
|
13.3 |
|
|
|
62.9 |
|
|
|
1,074.0 |
|
Plan assets change in 2010 |
|
|
10.1 |
|
|
|
266.6 |
|
|
|
500.7 |
|
|
|
11.8 |
|
|
|
78.7 |
|
|
|
867.9 |
|
PBO December 31, 2010 |
|
|
1,073.2 |
|
|
|
1,284.3 |
|
|
|
4,127.4 |
|
|
|
46.7 |
|
|
|
62.9 |
|
|
|
6,594.5 |
|
Less plan assets market value December 31, 2010 |
|
|
52.6 |
|
|
|
921.7 |
|
|
|
3,374.9 |
|
|
|
45.0 |
|
|
|
78.7 |
|
|
|
4,472.9 |
|
Accrued December 31, 2010 |
|
|
1,020.6 |
|
|
|
362.6 |
|
|
|
752.5 |
|
|
|
1.7 |
|
|
|
15.8 |
|
|
|
2,121.6 |
|
PBO change in 2011 |
|
|
66.3 |
|
|
|
215.4 |
|
|
|
358.1 |
|
|
|
6.4 |
|
|
|
50.0 |
|
|
|
696.2 |
|
Plan assets change in 2011 |
|
|
4.0 |
|
|
|
209.3 |
|
|
|
436.3 |
|
|
|
3.5 |
|
|
|
98.5 |
|
|
|
751.6 |
|
PBO December 31, 2011 |
|
|
1,139.5 |
|
|
|
1,499.7 |
|
|
|
4,485.5 |
|
|
|
53.1 |
|
|
|
112.9 |
|
|
|
7,290.7 |
|
Less plan assets market value December 31, 2011 |
|
|
56.6 |
|
|
|
1,131.0 |
|
|
|
3,811.2 |
|
|
|
48.5 |
|
|
|
177.2 |
|
|
|
5,224.5 |
|
Accrued December 31, 2011 |
|
|
1,082.9 |
|
|
|
368.7 |
|
|
|
674.3 |
|
|
|
4.6 |
|
|
|
64.3 |
|
|
|
2,066.2 |
|
The table below shows the annual pension entitlement of each member of the Executive Board on reaching age
60 based on entitlements from SAP under performance-based and salary-linked plans vested on December 31, 2011.
Annual Pension
Entitlement
|
|
|
|
|
|
|
|
|
thousands |
|
Vested on December 31, 2011 |
|
|
Vested on December 31, 2010 |
|
Bill McDermott (co-CEO)1) |
|
|
98.3 |
|
|
|
101.1 |
|
Dr. Werner Brandt |
|
|
80.6 |
|
|
|
72.9 |
|
Gerhard Oswald |
|
|
243.7 |
2) |
|
|
228.1 |
|
Vishal Sikka1) |
|
|
6.5 |
|
|
|
6.3 |
|
Dr. Angelika Dammann (member until July 8, 2011) |
|
|
8.2 |
|
|
|
3.5 |
|
1) |
The rights shown here for Bill McDermott and Vishal Sikka refer solely to rights under the SAP America pension plan. |
2) |
Due to the extension of Gerhard Oswalds contract beyond his 60th birthday, this value represents the retirement pension entitlement that he would
receive after his current Executive Board contract expires on June 30, 2014, based on the entitlements vested on December 31, 2011. |
106
Part I
Item 6
These are vested entitlements. To the extent that members continue to serve on the
Executive Board and that therefore more contributions are made for them in the future, pensions actually payable at the age of 60 will be higher than the amounts shown in the table.
Postcontractual Noncompete Provisions
During the agreed 12-month postcontractual noncompete period, Executive Board members receive abstention payments corresponding to 50%
of their final average contractual compensation as members.
The following table
presents the net present values of the postcontractual noncompete abstention payments. The net present values in the table reflect the discounted present value of the amounts that would be paid in the fictitious scenario in which the Executive Board
members leave SAP at the end of their respective current contract terms and their final average contractual compensation prior to their departure equals the compensation in 2011. Actual postcontractual noncompete payments will likely differ from
these amounts depending on the time of departure and the compensation levels and target achievements at the time of departure.
Net
Present Values of the Postcontractual Noncompete Abstention Payments
|
|
|
|
|
|
|
|
|
thousands |
|
Contract Term Expires |
|
|
Net Present Value of Postcontractual Noncompete Abstention Payment |
|
Bill McDermott (co-CEO) |
|
|
June 30, 2017 |
|
|
|
5,545.2 |
|
Jim Hagemann Snabe (co-CEO) |
|
|
June 30, 2017 |
|
|
|
4,621.8 |
|
Dr. Werner Brandt |
|
|
December 31, 2013 |
|
|
|
3,154.4 |
|
Gerhard Oswald |
|
|
June 30, 2014 |
|
|
|
3,118.8 |
|
Vishal Sikka |
|
|
December 31, 2017 |
|
|
|
2,878.1 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
19,318.3 |
|
|
|
|
|
|
|
|
|
|
Early End-of-Service Undertakings
Severance Payments
The standard contract for all Executive Board
members since January 1, 2006, provides that on termination before full term (for example, where the members appointment is revoked, where the member becomes occupationally disabled, or in connection with a change of control), SAP AG will
pay to the member the outstanding part of the compensation target for the entire remainder of the term, appropriately discounted for early payment. A member has no claim to that payment if he or she leaves SAP AG for reasons for which he or she is
responsible.
If an Executive Board members appointment to the Executive Board expires or
ceases to exist because of, or as a consequence of, change or restructuring or due to a change of control, SAP AG and each Executive Board member has the right to terminate the employment
contract within eight weeks of the occurrence by giving six months notice. A change of control is deemed to occur when a third party is required to make a mandatory takeover offer to the shareholders of SAP AG under the German Securities
Acquisition and Takeover Act, when SAP AG merges with another company and becomes the subsumed entity, or when a control or profit transfer agreement is concluded with SAP AG as the dependent company. An Executive Board members contract can
also be terminated before full term if his or her appointment as an SAP AG Executive Board member is revoked in connection with a change of control.
107
Part I
Item 6
Postcontractual Noncompete Provisions
Abstention compensation for the postcontractual noncompete period as described above is also payable on early contract termination.
Permanent Disability
In case of permanent disability, the contract will end at the end of the quarter in which the permanent inability to work was determined. The Executive Board member receives the monthly basic salary for a
further twelve months starting from the date the permanent disability is determined.
Payments to Executive Board Members Retiring in 2011
Angelika Dammann resigned from her position as Executive Board member with effect from July 8, 2011, with the
approval of the Supervisory Board. She received the following payments in connection with her retirement with effect from August 31, 2011:
|
|
|
Angelika Dammann received a payment of 3,658,503 in relation to the early termination of her contract. |
|
|
|
In July 2011, we waived the postcontractual noncompete provisions in her contract. The postcontractual noncompete provisions were subject to a
termination notice of six months. As she retired at the end of August 2011, she received monthly abstention
|
|
|
compensation of 103,650 corresponding to 50% of her final average contractual compensation for the remaining noncompete period of 4.5 months. |
|
|
|
The rights that had been allocated to her under LTI 2010 and LTI 2011 did not lapse on her retirement but remain available to her without restriction
until their expiration which in all cases is five years after grant. |
Payments to Former Executive Board Members
In 2011, we paid pension benefits of 1,346,000 to Executive Board members who had retired before January 1,
2011 (2010: 1,290,000). At the end of the year, the PBO for former Executive Board members was 25,267,000 (2010: 24,878,000). Plan assets of 25,788,000 are available to service these obligations (2010: 25,120,000).
Executive Board Members Long-Term Incentives
Members of the Executive Board hold or held throughout the year share-based payment rights under the SAP SOP 2010, SOP Performance Plan 2009, SAP SOP 2007, SAP SOP 2002, and LTI Plan 2000, which were
granted to them in previous years. For information about the terms and details of SAP SOP 2010, SOP Performance Plan 2009, and SAP SOP 2007, see the Notes to the Consolidated Financial Statements section, Note (28).
108
Part I
Item 6
SAP SOP 2010
The table below shows Executive Board members holdings, on December 31, 2011, of virtual share options issued to them under the SAP SOP 2010 since its inception. The strike price for an option
is 115% of the base price. The issued options have a term of seven years and can only be exercised on specified dates after the vesting period. The options issued in 2010 are exercisable beginning in September 2014 and the options issued in 2011 are
exercisable beginning in June 2015.
SAP SOP 2010 Virtual Share Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Granted |
|
|
Strike Price per Share |
|
|
Holding on January 1, 2011 |
|
|
Rights Exercised in 2011 |
|
|
Price on Exercise Date |
|
|
Exercisable Rights of Retired Members of the Executive Board |
|
|
Forfeited Rights |
|
|
Holding on December 31,
2011 |
|
|
|
|
|
|
|
|
|
Quantity of Options |
|
|
Remaining Term in Years |
|
|
Quantity of Options |
|
|
|
|
|
Quantity of Options |
|
|
Quantity of Options |
|
|
Quantity of Options |
|
|
Remaining Term in Years |
|
Bill McDermott (co-CEO) |
|
|
2010 |
|
|
|
40.80 |
|
|
|
135,714 |
|
|
|
6.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,714 |
|
|
|
5.69 |
|
|
|
|
2011 |
|
|
|
48.33 |
|
|
|
112,426 |
|
|
|
7.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,426 |
|
|
|
6.44 |
|
Jim Hagemann Snabe (co-CEO) |
|
|
2010 |
|
|
|
40.80 |
|
|
|
135,714 |
|
|
|
6.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,714 |
|
|
|
5.69 |
|
|
|
|
2011 |
|
|
|
48.33 |
|
|
|
112,426 |
|
|
|
7.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,426 |
|
|
|
6.44 |
|
Dr. Werner Brandt |
|
|
2010 |
|
|
|
40.80 |
|
|
|
82,428 |
|
|
|
6.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,428 |
|
|
|
5.69 |
|
|
|
|
2011 |
|
|
|
48.33 |
|
|
|
68,284 |
|
|
|
7.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,284 |
|
|
|
6.44 |
|
Gerhard Oswald |
|
|
2010 |
|
|
|
40.80 |
|
|
|
82,428 |
|
|
|
6.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,428 |
|
|
|
5.69 |
|
|
|
|
2011 |
|
|
|
48.33 |
|
|
|
68,284 |
|
|
|
7.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,284 |
|
|
|
6.44 |
|
|
|
|
|
|
|
|
|
|
|
|
Vishal Sikka |
|
|
2010 |
|
|
|
40.80 |
|
|
|
82,428 |
|
|
|
6.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,428 |
|
|
|
5.69 |
|
|
|
|
2011 |
|
|
|
48.33 |
|
|
|
68,284 |
|
|
|
7.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,284 |
|
|
|
6.44 |
|
Dr. Angelika Dammann (member until July 8, 2011) |
|
|
2010 |
|
|
|
40.80 |
|
|
|
41,214 |
|
|
|
6.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,214 |
|
|
|
5.69 |
|
|
|
|
2011 |
|
|
|
48.33 |
|
|
|
68,284 |
|
|
|
7.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,761 |
|
|
|
45,523 |
|
|
|
6.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
1,057,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,761 |
|
|
|
1,035,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOP Performance Plan 2009
The table below shows the current Executive Board members holdings, on December 31, 2011, of virtual share options issued
under the SOP Performance Plan 2009.
The strike price for an option varies with the performance of SAP shares over time
against
the TechPGI index. The gross profit per option is limited to 30.80, corresponding to 110% of the SAP share price on the date of issue.
The issued options have a term of five years and can only be exercised on specified dates after the two-year vesting period. In this
case the options have been exercisable since May 2011.
109
Part I
Item 6
SOP Performance Plan 2009 Virtual Share Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Granted |
|
|
Strike Price per Share |
|
|
Holding on January 1, 2011 |
|
|
Rights Exercised in 2011 |
|
|
Price on Exercise Date |
|
|
Exercisable Rights of Retired Members of the Execu- tive Board |
|
|
Forfeited Rights |
|
|
Holding on December 31,
2011 |
|
|
|
|
|
|
|
|
|
Quantity of Options |
|
|
Remaining Term in Years |
|
|
Quantity of Options |
|
|
|
|
|
Quantity of Options |
|
|
Quantity of Options |
|
|
Quantity of Options |
|
|
Remaining Term in Years |
|
Bill McDermott (co-CEO) |
|
|
2009 |
|
|
|
variable |
|
|
|
102,670 |
|
|
|
3.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,670 |
|
|
|
2.35 |
|
Jim Hagemann Snabe (co-CEO) |
|
|
2009 |
|
|
|
variable |
|
|
|
102,670 |
|
|
|
3.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,670 |
|
|
|
2.35 |
|
Dr. Werner Brandt |
|
|
2009 |
|
|
|
variable |
|
|
|
102,670 |
|
|
|
3.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,670 |
|
|
|
2.35 |
|
Gerhard Oswald |
|
|
2009 |
|
|
|
variable |
|
|
|
102,670 |
|
|
|
3.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,670 |
|
|
|
2.35 |
|
Vishal Sikka 1) |
|
|
2009 |
|
|
|
variable |
|
|
|
35,588 |
|
|
|
3.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,588 |
|
|
|
2.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
446,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
446,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) |
The holding was allocated before appointment to the Executive Board in 2010. |
SAP SOP 2007
The table below shows Executive Board members holdings, on December 31, 2011, of virtual share options issued to them under the SAP SOP 2007 plan since its inception, including virtual share
options issued to them both during and before their respective membership of the Executive Board.
The strike price for an option is 110% of the base price. The issued options have a term
of five years and can only be exercised on specified dates after the two-year vesting period. The options issued in 2007 could be exercised with effect from June 2009, following expiration of the two-year vesting period. The options issued in 2008
have been exercisable since March 2010, following expiration of the two-year vesting period.
110
Part I
Item 6
SAP SOP 2007 Virtual Share Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Granted |
|
|
Strike Price per Option |
|
|
Holding on January 1, 2011 |
|
|
Rights Exercised in 2011 |
|
|
Price on Exercise Date |
|
|
Exercisable Rights of Retired Members of the Executive Board |
|
|
Forfeited Rights |
|
|
Holding on December 31, 2011 |
|
|
|
|
|
|
|
|
|
Quantity of Options |
|
|
Remaining Term in Years |
|
|
Quantity of Options |
|
|
|
|
|
Quantity of Options |
|
|
Quantity of Options |
|
|
Quantity of Options |
|
|
Remaining Term in Years |
|
Bill McDermott (co-CEO)1) |
|
|
2007 |
|
|
|
39.28 |
|
|
|
62,508 |
|
|
|
1.23 |
|
|
|
62,508 |
|
|
|
44.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.23 |
|
|
|
|
2008 |
|
|
|
35.96 |
|
|
|
70,284 |
|
|
|
2.18 |
|
|
|
70,284 |
|
|
|
44.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.18 |
|
Jim Hagemann Snabe (co-CEO)1) |
|
|
2007 |
|
|
|
39.28 |
|
|
|
37,505 |
|
|
|
1.23 |
|
|
|
37,505 |
|
|
|
43.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.23 |
|
|
|
|
2008 |
|
|
|
35.96 |
|
|
|
56,228 |
|
|
|
2.18 |
|
|
|
56,228 |
|
|
|
43.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.18 |
|
Dr. Werner Brandt |
|
|
2007 |
|
|
|
39.28 |
|
|
|
72,216 |
|
|
|
1.23 |
|
|
|
72,216 |
|
|
|
43.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.23 |
|
|
|
|
2008 |
|
|
|
35.96 |
|
|
|
81,200 |
|
|
|
2.18 |
|
|
|
81,200 |
|
|
|
44.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.18 |
|
Gerhard Oswald |
|
|
2007 |
|
|
|
39.28 |
|
|
|
72,216 |
|
|
|
1.23 |
|
|
|
72,216 |
|
|
|
43.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.23 |
|
|
|
|
2008 |
|
|
|
35.96 |
|
|
|
81,200 |
|
|
|
2.18 |
|
|
|
81,200 |
|
|
|
43.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.18 |
|
Vishal Sikka1) |
|
|
2007 |
|
|
|
39.28 |
|
|
|
12,502 |
|
|
|
1.23 |
|
|
|
12,502 |
|
|
|
43.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.23 |
|
|
|
|
2008 |
|
|
|
35.96 |
|
|
|
17,571 |
|
|
|
2.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,571 |
|
|
|
1.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
563,430 |
|
|
|
|
|
|
|
545,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) |
The holding was allocated before appointment to the Executive Board in 2010. |
SAP SOP 2002
The table below shows Executive Board members December 31, 2011, holdings of share options issued in previous years under the SAP SOP 2002 plan since its inception. The strike price for an SAP
SOP 2002 share option is 110% of the base price of one SAP share. The base price is the arithmetic mean closing auction price for SAP shares in the Xetra trading system (or its successor system) over the five business days immediately before the
issue date of that share option.
The strike price cannot be less than the closing auction price on the day before the issue
date. The issued options have a term of five years and can only be exercised on specified
dates after the two-year vesting period. As a result of the issue on December 21, 2006, of bonus shares at a one-to-three ratio under a capital increase from corporate funds, on exercise
each share option now entitles its beneficiary to four shares. For better comparability with the price of SAP shares since implementation of the capital increase, the following table shows not the number (quantity) of options but the number
(quantity) of shares to which they entitle the holder. Consequently, the strike prices shown are prices per share and not per option. The number of shares shown in the table is four times the number of options, and the strike price for an option is
four times the strike price per share shown in the table. The right to exercise options issued in 2006 expired in February 2011.
111
Part I
Item 6
SAP SOP 2002 Share Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Granted |
|
|
Strike Price per Share |
|
|
Holding on January 1, 2011 |
|
|
Rights Exercised in 2011 |
|
|
Price on Exercise Date |
|
|
Exercisable Rights of Retired Members of the Executive Board |
|
|
Forfeited Rights |
|
|
Holding on December 31, 2011 |
|
|
|
|
|
|
|
|
|
Quantity of Shares |
|
|
Remaining Term in Years |
|
|
Quantity of Shares |
|
|
|
|
|
Quantity of Shares |
|
|
Quantity of Shares |
|
|
Quantity of Shares |
|
|
Remaining Term in Years |
|
Bill McDermott (co-CEO)1) |
|
|
2006 |
|
|
|
46.48 |
|
|
|
77,296 |
|
|
|
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,296 |
|
|
|
|
|
|
|
|
|
Jim Hagemann Snabe (co-CEO)1) |
|
|
2006 |
|
|
|
46.48 |
|
|
|
37,164 |
|
|
|
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,164 |
|
|
|
|
|
|
|
|
|
Dr. Werner Brandt |
|
|
2006 |
|
|
|
46.48 |
|
|
|
87,292 |
|
|
|
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,292 |
|
|
|
|
|
|
|
|
|
Gerhard Oswald |
|
|
2006 |
|
|
|
46.48 |
|
|
|
87,292 |
|
|
|
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,292 |
|
|
|
|
|
|
|
|
|
Vishal Sikka1) |
|
|
2006 |
|
|
|
46.48 |
|
|
|
7,436 |
|
|
|
0.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
296,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
296,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) |
The holding was allocated before appointment to the Executive Board in 2010. |
LTI Plan 2000
Beneficiaries under the LTI Plan 2000 could choose between convertible bonds and share options. The chief difference was in the way the exercise or conversion price was determined. The bond conversion
price depends on the closing price of SAP shares the day before the bond was issued, while the option strike price varies with the performance of SAP shares over time against the S&P North Software-Software Index (the successor of the GSTI
Software index). The issued options have a term of ten years and could only be exercised in portions of one-third each on specified dates after two-year, three-year, or four-year vesting periods respectively.
The strike prices for LTI Plan 2000 convertible bonds reflect the prices payable by an Executive Board member for one SAP share on
conversion of the bond. The strike prices are fixed and correspond to the quoted price of one SAP share on the business day immediately
preceding the grant of the convertible bond. As a result of the issue on December 21, 2006, of bonus shares at a one-to-three ratio under a capital increase from corporate funds, on
conversion each bond now entitles its beneficiary to four shares. For better comparability with the price of SAP shares since implementation of the capital increase, the following table shows not the number (quantity) of convertible bonds but the
number (quantity) of shares to which they entitle the holder. Consequently, the strike prices shown are prices per share and not per bond. The number of shares shown in the table is four times the number of bonds, and the strike price for a bond is
four times the strike price per share shown in the table.
The right to exercise share options and convertible bonds issued
in 2001 expired in February 2011. On December 31, 2011, no current member of the Executive Board held share options or convertible bonds under the LTI Plan 2000.
112
Part I
Item 6
LTI Plan 2000 Convertible Bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Granted |
|
|
Strike Price per Share |
|
|
Holding on January 1, 2011 |
|
|
Rights Exercised in 2011 |
|
|
Price on Exercise Date |
|
|
Exercisable Rights of Retired Members of the Executive Board |
|
|
Forfeited Rights |
|
|
Holding on December 31, 2011 |
|
|
|
|
|
|
|
|
|
Quantity of Shares |
|
|
Remaining Term in Years |
|
|
Quantity of Shares |
|
|
|
|
|
Quantity of Shares |
|
|
Quantity of Shares |
|
|
Quantity of Shares |
|
|
Remaining Term in Years |
|
Dr. Werner Brandt |
|
|
2001 |
|
|
|
47.81 |
|
|
|
20,000 |
|
|
|
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
0 |
|
|
|
|
2002 |
|
|
|
37.88 |
|
|
|
120,000 |
|
|
|
1.14 |
|
|
|
120,000 |
|
|
|
43.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.14 |
|
Gerhard Oswald |
|
|
2001 |
|
|
|
47.81 |
|
|
|
88,000 |
|
|
|
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88,000 |
|
|
|
|
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
228,000 |
|
|
|
|
|
|
|
120,000 |
|
|
|
|
|
|
|
|
|
|
|
108,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expense for Share-Based Payment
In the report year and the prior year, total expense for the share-based payment plans of Executive Board members was recorded as follows.
Total Expense for Share-Based Payment
|
|
|
|
|
|
|
|
|
thousands |
|
2011 |
|
|
2010 |
|
Bill McDermott (co-CEO) |
|
|
1,053.5 |
|
|
|
382.9 |
|
Jim Hagemann Snabe (co-CEO) |
|
|
1,052.9 |
|
|
|
373.8 |
|
Dr. Werner Brandt |
|
|
621.9 |
|
|
|
355.2 |
|
Gerhard Oswald |
|
|
621.9 |
|
|
|
355.2 |
|
Vishal Sikka |
|
|
652.8 |
|
|
|
151.8 |
|
Dr. Angelika Dammann (member until July 8, 2011) |
|
|
417.3 |
|
|
|
28.1 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
4,420.3 |
|
|
|
1,647.0 |
|
|
|
|
|
|
|
|
|
|
113
Part I
Item 6
Shareholdings and Transactions of Executive Board Members
No member of the Executive Board holds more than 1% of the ordinary shares of SAP AG. Members of the Executive Board held a total of
20,560 SAP shares on December 31, 2011 (2010: 13,747 shares).
The table below shows transactions by Executive Board members and persons closely
associated with them notified to SAP pursuant to the German Securities Trading Act, section 15a, in 2011.
Transactions in SAP Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Date |
|
|
Transaction |
|
Quantity |
|
|
Unit Price in |
|
Dr. Werner Brandt |
|
|
February 15, 2011 |
|
|
Share purchase1) |
|
|
120,000 |
|
|
|
37.8750 |
|
|
|
|
February 15, 2011 |
|
|
Share sale1) |
|
|
120,000 |
|
|
|
44.0854 |
|
|
|
|
June 6, 2011 |
|
|
Share purchase |
|
|
1,200 |
|
|
|
41.99 |
|
Dr. Angelika Dammann (member until July 8, 2011) |
|
|
May 30, 2011 |
|
|
Share purchase |
|
|
600 |
|
|
|
42.3750 |
|
Gerhard Oswald |
|
|
May 31, 2011 |
|
|
Share purchase |
|
|
1,163 |
|
|
|
42.9848 |
|
Bill McDermott (co-CEO) |
|
|
June 9, 2011 |
|
|
Purchase of ADRs |
|
|
1,960 |
|
|
|
41,897 |
2) |
Jim Hagemann Snabe (co-CEO) |
|
|
June 9, 2011 |
|
|
Share purchase |
|
|
2,410 |
|
|
|
41.5965 |
|
Vishal Sikka |
|
|
August 18, 2011 |
|
|
Purchase of ADRs |
|
|
1,500 |
|
|
|
34,322 |
3) |
1) |
Sale and purchase of shares in line with the LTI Plan 2000 |
2) |
Original purchase price was US$61.229 per unit |
3) |
Original purchase price was US$49.317 per unit |
Executive Board: Other Information
We did not grant any compensation advance or credit to, or enter into any commitment for the benefit of, any member of our Executive
Board in 2011 or the previous year.
As far as the law permits, SAP AG and its affiliated companies in Germany and elsewhere
indemnify and hold harmless their respective directors and officers against and from the claims of third parties. To this end, we maintain directors and officers (D&O) group liability insurance. The policy is annual and is renewed
from year to year. The insurance covers the personal liability of the insured group for financial loss caused by its managerial acts and omissions. The current D&O policy includes an individual deductible for Executive Board members of SAP AG as
required by section 93 (2) of the German Stock Corporation Act.
Compensation for Supervisory Board Members
Compensation System
Supervisory Board members compensation is
governed by our Articles of Incorporation, section 16. Each member of the Supervisory Board receives, in addition to the reimbursement of his or her expenses, compensation composed of fixed elements and a variable element. The variable element
depends on the dividend paid by SAP on its shares.
The fixed element is 100,000 for the chairperson, 70,000 for
the deputy chairperson, and 50,000 for other members. For membership of the Audit Committee, Supervisory Board members receive additional fixed annual remuneration of 15,000, and for membership of any other Supervisory Board committee
10,000, provided that the committee concerned has met
114
Part I
Item 6
in the year. The chairperson of the audit committee receives 25,000, and the chairpersons of the other committees receive 20,000. The fixed remuneration is payable after the end of
the year.
The variable compensation element is 10,000 for the chairperson, 8,000 for the deputy chairperson, and
6,000 for the other members of the Supervisory Board for each 0.01 by which the dividend distributed per share exceeds 0.40. The variable remuneration is payable after the end of the Annual General Meeting of Shareholders that
resolves on the dividend for the relevant year.
However, the aggregate compensation excluding compensation for committee memberships must
not exceed 250,000 for the chairperson, 200,000 for the deputy chairperson, and 150,000 for other members of the Supervisory Board.
Any members of the Supervisory Board having served for less than the entire year receive one-twelfth of the annual remuneration for each month of service commenced. This also applies to the increased
compensation of the chairperson and the deputy chairperson and to the remuneration for the chairperson and the members of a committee.
Amount of Compensation
Subject to the resolution on the appropriation of retained earnings by the Annual General Meeting of Shareholders on
May 23, 2012, the compensation paid to Supervisory Board members in respect of 2011 will be as set out in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
(000) |
|
Fixed Compensation |
|
|
Compensation for Committee Work |
|
|
Variable Compensation |
|
|
Total |
|
|
Fixed Compensation |
|
|
Compensation for Committee Work |
|
|
Variable Compensation |
|
|
Total |
|
Prof. Dr. h.c. mult. Hasso Plattner (chairperson) |
|
|
100.0 |
|
|
|
100.0 |
|
|
|
150.0 |
|
|
|
350.0 |
|
|
|
100.0 |
|
|
|
60.0 |
|
|
|
150.0 |
|
|
|
310.0 |
|
Lars Lamadé (deputy chairperson) |
|
|
70.0 |
|
|
|
28.3 |
|
|
|
130.0 |
|
|
|
228.3 |
|
|
|
70.0 |
|
|
|
1.7 |
|
|
|
130.0 |
|
|
|
201.7 |
|
Pekka Ala-Pietilä |
|
|
50.0 |
|
|
|
30.0 |
|
|
|
100.0 |
|
|
|
180.0 |
|
|
|
50.0 |
|
|
|
20.0 |
|
|
|
100.0 |
|
|
|
170.0 |
|
Thomas Bamberger |
|
|
50.0 |
|
|
|
15.0 |
|
|
|
100.0 |
|
|
|
165.0 |
|
|
|
50.0 |
|
|
|
15.0 |
|
|
|
100.0 |
|
|
|
165.0 |
|
Panagiotis Bissiritsas |
|
|
50.0 |
|
|
|
20.0 |
|
|
|
100.0 |
|
|
|
170.0 |
|
|
|
50.0 |
|
|
|
20.0 |
|
|
|
100.0 |
|
|
|
170.0 |
|
Willi Burbach (until August 7, 2011) |
|
|
33.3 |
|
|
|
16.7 |
|
|
|
66.7 |
|
|
|
116.7 |
|
|
|
50.0 |
|
|
|
10.0 |
|
|
|
100.0 |
|
|
|
160.0 |
|
Prof. Dr. Wilhelm Haarmann |
|
|
50.0 |
|
|
|
50.0 |
|
|
|
100.0 |
|
|
|
200.0 |
|
|
|
50.0 |
|
|
|
31.7 |
|
|
|
100.0 |
|
|
|
181.7 |
|
Peter Koop |
|
|
50.0 |
|
|
|
20.0 |
|
|
|
100.0 |
|
|
|
170.0 |
|
|
|
50.0 |
|
|
|
10.0 |
|
|
|
100.0 |
|
|
|
160.0 |
|
Christiane Kuntz-Mayr |
|
|
50.0 |
|
|
|
10.0 |
|
|
|
100.0 |
|
|
|
160.0 |
|
|
|
50.0 |
|
|
|
10.0 |
|
|
|
100.0 |
|
|
|
160.0 |
|
Bernard Liautaud |
|
|
50.0 |
|
|
|
10.0 |
|
|
|
100.0 |
|
|
|
160.0 |
|
|
|
50.0 |
|
|
|
10.0 |
|
|
|
100.0 |
|
|
|
160.0 |
|
Dr. Gerhard Maier |
|
|
50.0 |
|
|
|
25.0 |
|
|
|
100.0 |
|
|
|
175.0 |
|
|
|
50.0 |
|
|
|
25.0 |
|
|
|
100.0 |
|
|
|
175.0 |
|
Dr. Hans-Bernd Meier (from August 8, 2011) |
|
|
20.8 |
|
|
|
0 |
|
|
|
41.7 |
|
|
|
62.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. h.c. Hartmut Mehdorn |
|
|
50.0 |
|
|
|
10.0 |
|
|
|
100.0 |
|
|
|
160.0 |
|
|
|
50.0 |
|
|
|
10.0 |
|
|
|
100.0 |
|
|
|
160.0 |
|
Prof. Dr.-Ing. Dr. h.c. Dr.-Ing. E.h. Joachim Milberg |
|
|
50.0 |
|
|
|
55.0 |
|
|
|
100.0 |
|
|
|
205.0 |
|
|
|
50.0 |
|
|
|
35.0 |
|
|
|
100.0 |
|
|
|
185.0 |
|
Dr. Erhard Schipporeit |
|
|
50.0 |
|
|
|
35.0 |
|
|
|
100.0 |
|
|
|
185.0 |
|
|
|
50.0 |
|
|
|
35.0 |
|
|
|
100.0 |
|
|
|
185.0 |
|
Stefan Schulz |
|
|
50.0 |
|
|
|
30.0 |
|
|
|
100.0 |
|
|
|
180.0 |
|
|
|
50.0 |
|
|
|
21.7 |
|
|
|
100.0 |
|
|
|
171.7 |
|
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer |
|
|
50.0 |
|
|
|
10.0 |
|
|
|
100.0 |
|
|
|
160.0 |
|
|
|
50.0 |
|
|
|
10.0 |
|
|
|
100.0 |
|
|
|
160.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
874.1 |
|
|
|
465.0 |
|
|
|
1,688.3 |
|
|
|
3,027.5 |
|
|
|
870.0 |
|
|
|
325.0 |
|
|
|
1,680.0 |
|
|
|
2,875.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115
Part I
Item 6
In addition, we reimburse to members of the Supervisory Board their expenses and the
value-added tax payable on their compensation.
The total compensation of all Supervisory Board members in 2011 for work for
SAP excluding compensation relating to the office of Supervisory Board member was 1,688,300 (2010: 995,000). Those amounts are composed entirely of remuneration received by employee representatives on the Supervisory Board relating to
their position as SAP employees in 2010 and 2011 respectively.
Supervisory Board member Wilhelm Haarmann is an attorney at
the German bar and a partner at HAARMANN Partnerschaftsgesellschaft in Frankfurt am Main, Germany. Wilhelm Haarmann and HAARMANN Partnerschaftsgesellschaft occasionally advise SAP on particular projects, tax matters, and questions of law. In 2011,
the fees for such services totaled 358,800 (2010: 73,000).
Long-Term Incentives for the Supervisory Board
We do not offer members share options or other share-based payment for their Supervisory Board work. Any share options or other
share-based payment received by employee-elected members relate to their position as SAP employees and not to their work on the Supervisory Board.
Shareholdings and Transactions of Supervisory Board Members
Supervisory
Board chairperson Hasso Plattner and the companies he controlled held 121,515,102 SAP shares on December 31, 2011 (December 31, 2010: 122,148,302 SAP shares), representing 9.895% (2010: 9.956%) of SAPs share capital. No other member of
the Supervisory Board held more than 1% of the SAP AG share capital at the end of 2011 or of the previous year. Members of the Supervisory Board held a total of 121,524,139 SAP shares on December 31, 2011 (December 31, 2010: 122,156,130 SAP
shares).
The table below shows
transactions by Supervisory Board members and persons closely associated with them notified to SAP pursuant to the German Securities Trading Act, section 15a, in 2011:
Transactions in SAP Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Date |
|
Transaction |
|
|
Quantity |
|
|
Unit Price in |
|
Christiane Kuntz-Mayr |
|
February 15, 2011 |
|
|
Share purchase |
1) |
|
|
3,128 |
|
|
|
32.3128 |
|
|
|
February 15, 2011 |
|
|
Share sale |
1) |
|
|
3,037 |
|
|
|
44.0854 |
|
Dr. Gerhard Maier |
|
November 15, 2011 |
|
|
Share sale |
1) |
|
|
12,600 |
|
|
|
43.8294 |
|
1) |
Sale and purchase of shares in line with the LTI Plan 2000 |
Supervisory Board: Other Information
We did not grant any compensation advance or credit to, or enter into any commitment for the benefit of, any member of our Supervisory
Board in 2011 or the previous year.
Hasso Plattner, the chairperson of the Supervisory Board, entered into a consulting
contract with SAP after he joined the Supervisory Board in May 2003. The contract does not provide for any compensation. The only
cost we incurred under the contract was the reimbursement of expenses.
As far as the law permits, we indemnify Supervisory Board members against, and hold them harmless from, claims brought by third parties.
To this end, we maintain directors and officers group liability insurance. The current D&O policy does not include an individual deductible for Supervisory Board members as envisaged in the German Corporate Governance Code.
116
Part I
Item 6
EMPLOYEES
Headcount
The following tables set forth the number of employees, measured
in full-time equivalents by functional area and by geographic region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011 |
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
Full-time equivalents |
|
EMEA1) |
|
|
Americas |
|
|
Asia Pacific Japan |
|
|
Total |
|
|
EMEA1) |
|
|
Americas |
|
|
Asia Pacific Japan |
|
|
Total |
|
|
EMEA1) |
|
|
Americas |
|
|
Asia Pacific Japan |
|
|
Total |
|
Software and software-related services |
|
|
4,068 |
|
|
|
2,079 |
|
|
|
2,816 |
|
|
|
8,963 |
|
|
|
3,804 |
|
|
|
1,827 |
|
|
|
2,254 |
|
|
|
7,885 |
|
|
|
3,227 |
|
|
|
1,276 |
|
|
|
1,919 |
|
|
|
6,422 |
|
Professional services and other services |
|
|
6,808 |
|
|
|
3,963 |
|
|
|
2,497 |
|
|
|
13,268 |
|
|
|
6,787 |
|
|
|
3,955 |
|
|
|
2,410 |
|
|
|
13,152 |
|
|
|
6,635 |
|
|
|
3,473 |
|
|
|
2,240 |
|
|
|
12,348 |
|
Research and development |
|
|
8,713 |
|
|
|
3,028 |
|
|
|
4,120 |
|
|
|
15,861 |
|
|
|
8,617 |
|
|
|
3,154 |
|
|
|
4,113 |
|
|
|
15,884 |
|
|
|
8,525 |
|
|
|
2,534 |
|
|
|
3,755 |
|
|
|
14,814 |
|
Sales and marketing |
|
|
4,856 |
|
|
|
4,581 |
|
|
|
2,343 |
|
|
|
11,780 |
|
|
|
4,593 |
|
|
|
4,214 |
|
|
|
2,180 |
|
|
|
10,987 |
|
|
|
4,202 |
|
|
|
3,559 |
|
|
|
1,752 |
|
|
|
9,513 |
|
General and administration |
|
|
2,073 |
|
|
|
1,120 |
|
|
|
542 |
|
|
|
3,735 |
|
|
|
2,053 |
|
|
|
1,005 |
|
|
|
518 |
|
|
|
3,576 |
|
|
|
1,919 |
|
|
|
724 |
|
|
|
408 |
|
|
|
3,051 |
|
Infrastructure |
|
|
1,182 |
|
|
|
702 |
|
|
|
274 |
|
|
|
2,158 |
|
|
|
1,135 |
|
|
|
628 |
|
|
|
266 |
|
|
|
2,029 |
|
|
|
854 |
|
|
|
408 |
|
|
|
174 |
|
|
|
1,436 |
|
SAP Group (December 31) |
|
|
27,700 |
|
|
|
15,473 |
|
|
|
12,592 |
|
|
|
55,765 |
|
|
|
26,989 |
|
|
|
14,783 |
|
|
|
11,741 |
|
|
|
53,513 |
|
|
|
25,362 |
|
|
|
11,974 |
|
|
|
10,248 |
|
|
|
47,584 |
|
Thereof Acquisitions |
|
|
264 |
|
|
|
49 |
|
|
|
90 |
|
|
|
403 |
|
|
|
1,174 |
|
|
|
1,975 |
|
|
|
1,084 |
|
|
|
4,233 |
|
|
|
158 |
|
|
|
73 |
|
|
|
0 |
|
|
|
231 |
|
SAP Group (months end average) |
|
|
27,296 |
|
|
|
15,010 |
|
|
|
12,040 |
|
|
|
54,346 |
|
|
|
25,929 |
|
|
|
13,164 |
|
|
|
10,877 |
|
|
|
49,970 |
|
|
|
25,927 |
|
|
|
12,288 |
|
|
|
10,554 |
|
|
|
48,769 |
|
1) |
Europe, Middle
East, Africa |
On December 31, 2011, our total worldwide headcount expressed in FTEs was 55,765
(December 31, 2010: 53,513 FTEs). This represents an increase in headcount of 2,252 FTEs in comparison to 2010. Of the overall headcount increase in 2011, 403 resulted from acquisitions. The average number of employees in 2011 was 54,346 (2010:
49,970).
We define the FTE headcount as the number of people we would employ if we only employed people on full-time
employment contracts. Students employed part time and certain people who are employed by SAP but who for various reasons are not currently working are excluded from our figures. Also, certain temporary employees are not included in our figures. The
number of such temporary employees is not material.
On December 31, 2011, the largest number of SAP employees
(50%) were employed in the EMEA region (including 29% in Germany), while 28% were employed in the Americas region (including 19% in the United States) and 22% in the Asia Pacific Japan (APJ) region.
Because we invested in support in 2011, our support headcount increased in all regions.
Our worldwide headcount in the field of software and software-related services grew 14% to 8,963 (2010: 7,885). Professional services and other services counted 13,268 employees at the end of 2011 a slight increase of 1% (2010: 13,152). Our
R&D headcount remained relatively stable in comparison to the prior year at 15,861 FTEs (2010: 15,884). Sales and marketing headcount grew 7% to 11,780 at the end of the year (2010: 10,987), because we also invested in the sales and marketing of
our products and services in 2011 and employed more sales staff in all regions with a strong focus on the emerging markets. Our general and administration headcount increased 4% to 3,735 full-time employees at the end of the year (2010: 3,576). Our
infrastructure employees, who provide IT and facility management services, numbered 2,158, an increase of 6% (2010: 2,029).
In the Americas region headcount increased by 690, or 5%; in the EMEA region the increase was 711 or 3%; in the APJ region it was 851 or
7%.
117
Part I
Item 6
Our personnel expense per employee was approximately 108,000 in 2011 (2010:
approximately 105,000). The personnel expense per employee is defined as the personnel expense divided by the average number of employees. For more information about employee compensation and a detailed overview of the number of people we
employed, see the Notes to the Consolidated Financial Statements section, Note (8).
Employee Relations and Labor Unions
On a worldwide basis, we believe that our employee relations are excellent. Employees of SAP France S.A. and SAP Labs France S.A. are
subject to a collective bargaining agreement.
On the legal entity level, the SAP AG works council represents the employees of
SAP AG with 39 members; the employees of SAP Deutschland AG & Co. KG (SAP Germany) are represented by a works council with 31 members. For different areas of co-determination the entity-level works councils have elected committees. By law
the works councils are entitled to consultation and, in some areas, to co-determination rights concerning labor conditions at SAP AG and SAP Germany. Other employee representatives include the group works council currently having seven members
(members of the works councils of SAP AG and SAP Germany), the representatives of severely disabled persons in all entities and on group level (Germany) and the spokespersons committee as the representation of the executives.
Each of SAP France S.A., SAP Labs France S.A. and Sybase France SARL are represented by a French works council. A French works council is
responsible for protecting the employees collective interests by ensuring that management considers the interests of employees in making decisions on behalf of the company. A French works council is entitled to certain company information and
to consult with management on matters that are expected to
have an impact on company structure or on the employees it represents. The union negotiates agreements with SAP France S.A. and SAP Labs France S.A. Some negotiations are compulsory under law.
The staff representatives are obligated to present all individual or collective complaints regarding salary, policies or agreements between the employees and the company in question.
In addition, the employees of our subsidiaries SAP Espana S.A., SAP Belgium N.V., SAP Nederland B.V. and Sybase Nederland B.V. are also
represented by works councils. Each of SAP (UK) Limited and SAP Ireland Limited has an employee consultation forum which represents the employees interests.
In the second half of 2012 SAP AG will have an European Works Council (EWC). The EWC will represent all SAP persons employed by SAPs European entities. By law, the EWC will be entitled to consult
with employees regarding transnational matters in Europe.
SHARE OWNERSHIP
Beneficial Ownership of Shares
The ordinary shares beneficially owned by the persons listed in Item 6. Directors, Senior Management and Employees Compensation Report is disclosed in Item 7. Major Shareholders
and Related-Party Transactions Major Shareholders.
SHARE-BASED COMPENSATION PLANS
Share-Based Compensation
We maintain certain share-based compensation plans. The share-based compensation from these plans result from cash-settled and
equity-settled awards issued to employees. For more information on our share-based compensation plans refer to Item 6. Directory, Senior Management and Employees Compensation Report and Note (28) to our Consolidated Financial
Statements.
118
Part I
Item 7
ITEM 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS
MAJOR SHAREHOLDERS
The share capital of SAP AG consists of ordinary shares, which are issued only in bearer form. Accordingly, SAP AG generally has no way of determining who its shareholders are or how many shares a
particular shareholder owns. SAPs ordinary shares are traded in the United States by means of ADRs. Each ADR currently represents one SAP AG ordinary share. On March 8, 2012, based on information provided by the Depositary there were
44,018,856 ADRs held of record by 1,167 registered holders. The ordinary shares underlying such ADRs represented 3.58% of the then-outstanding ordinary shares (including treasury stock). Because SAPs ordinary shares are issued in bearer form
only, we are unable to determine the number of ordinary shares directly held by persons with U.S. addresses.
The following table sets forth certain information regarding the beneficial ownership of
the ordinary shares to the extent known to SAP as of March 8, 2012 of: (i) each person or group known by SAP AG to own beneficially 5% or more of the outstanding ordinary shares; and (ii) the beneficial ownership of all members of the
Supervisory Board and all members of the Executive Board, individually and as a group, in each case as reported to SAP AG by such persons. There was, as far as we are able to tell given the nature of our shares, no significant change in the
percentage ownership held by any major shareholder during the past three years. None of the major shareholders have special voting rights. On August 8, 2011, BlackRock, Inc., New York, USA, informed us that on August 2, 2011 its percentage
of voting rights exceeded 5% and was then 5.02%.
|
|
|
|
|
|
|
|
|
|
|
Ordinary Shares Beneficially
Owned |
|
Major Shareholders |
|
Number |
|
|
% of Outstanding |
|
Dietmar Hopp, collectively(1) |
|
|
75,273,200 |
|
|
|
6.128 |
% |
Hasso Plattner, Chairperson Supervisory Board, collectively(2) |
|
|
121,515,102 |
|
|
|
9.893 |
% |
Klaus Tschira, collectively(3) |
|
|
93,079,595 |
|
|
|
7.578 |
% |
Executive Board Members as a group (5 persons) |
|
|
20,560 |
|
|
|
0.002 |
% |
Supervisory Board Members as a group (16 persons) |
|
|
121,524,206 |
|
|
|
9.893 |
% |
Executive Board Members and Supervisory Board Members as a group (21 persons)(4)
|
|
|
121,544,766 |
|
|
|
9.895 |
% |
Options and convertible bonds that are vested and exercisable within 60 days of March 8, 2012, held by Executive Board
Members and Supervisory Board Members, collectively |
|
|
0 |
|
|
|
N/A |
|
(1) |
Represents
75,273,200 ordinary shares beneficially owned by Dietmar Hopp, including 3,404,000 ordinary shares owned by DH Besitzgesellschaft mbH & Co. KG (formerly known as Golf Club St. Leon-Rot GmbH & Co. Betriebs-oHG) of which DH
Verwaltungs-GmbH is the general partner and 71,869,200 ordinary shares owned by Dietmar Hopp Stiftung, GmbH. Mr. Hopp exercises voting and dispositive powers of the ordinary shares held by such entities. The foregoing information is based
solely on a Schedule 13G filed by Dietmar Hopp and Dietmar Hopp Stiftung, GmbH on February 14, 2012. |
(2) |
Includes Hasso
Plattner Förderstiftung GmbH 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) |
We believe each of
the other members of the Supervisory Board and the Executive Board beneficially owns less than 1% of SAP AGs ordinary shares as of March 8, 2012. |
119
Part I
Item 7, 8
We at present have no knowledge about any arrangements, the operation of which may at a
subsequent date result in a change in control of the company.
RELATED-PARTY TRANSACTIONS
For further information on related-party transactions see Note (31) to our Consolidated Financial Statements.
ITEM 8. FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
See Item 18. Financial Statements and pages F-1 through F-108.
OTHER FINANCIAL INFORMATION
Legal Proceedings
We are subject to a variety of legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including claims and lawsuits involving businesses we have
acquired. In 2010, we recorded a provision of US$ 1.3billion for the TomorrowNow litigation. When the trial judge set aside the 2010 verdict and offered Oracle a remittitur of US$272 million, we subsequently reduced the provision to US$272 million.
Although the outcome of such proceedings and claims cannot be predicted with certainty, management does not believe that the outcome of all other matters currently pending against us has had or will have a material adverse effect on our business,
financial position, profit or cash flows. Any litigation, however, involves potential risk and potentially significant litigation costs, and therefore there can be no assurance that any litigation which is now pending or which may arise in the
future will not have such a material adverse effect on our business, financial position, profit, cash flows or reputation.
See
a detailed discussion of our legal proceedings in Note (24) to our Consolidated Financial Statements.
Dividend Policy
For more information on dividend policy see the disclosure in Item 3. Key Information Dividends Dividend Distribution Policy.
Significant Changes
Business
Combinations
In February 2012, SAP acquired SuccessFactors, the market-leading provider of cloud-based human capital
management solutions. Our cash tender offer was successfully completed on February 21, 2012. We have acquired more than 90% of the SuccessFactors ordinary shares. The acquisition has added SuccessFactors team and technology to SAPs
cloud assets, significantly boosting SAPs momentum as a provider of cloud applications, platforms, and infrastructure. In combination, SAP and SuccessFactors will offer a full range of advanced end-to-end cloud and on-premise solutions for all
key business processes. For more information, see the Notes to the Consolidated Financial Statements section, Note (4).
In
connection with the acquisition of SuccessFactors we used the syndicated term loan facility to partially finance the purchase price. For more information, see the Notes to the Consolidated Financial Statements section, Note (26).
SAP has acquired software and related assets from datango, a provider of workforce performance support software. The transaction will
broaden the SAP software portfolio in the education space. Headquartered in Berlin, datango was founded in 1999 and has a long-standing relationship with SAP. In recent years, datango software has been successfully deployed in the SAP Business
ByDesign solution. Together, SAP and datango will capitalize on a trend in education software toward creating applications that contain tools for authors, such as e-collaboration, along with self-help scenarios and auto-teaching functions.
120
Part I
Item 8, 9
New Share-Based Compensation Plans
In January 2012, our Supervisory Board implemented a new share-based payment plan (the LTI Plan 2015) for Executive Board members.
The Plan is designed to award members restricted share units (RSUs) each year from 2012 through 2015, with a budget of RSUs
already awarded for each year at the beginning of the Plan. The number of RSUs that actually vest with the member after each year depends on our performance against objectives, defined at the beginning of the Plan, in terms of non-IFRS total revenue
and non-IFRS operating profit. These objectives are derived from our Company strategy for the years through 2015. Each year, if SAP outperforms or underachieves against the objectives, the number of RSUs awarded is adjusted up or down to an actual
number in the range between 80% and 150% of the initial target number. If the actual level of target achievement for a given year is below 80%, none of the initially allocated RSUs for that year vests. Each RSU that does vest entitles the
beneficiary Executive Board member to a payout corresponding to the SAP share price after the end of a three-year holding period. For more information, see the Compensation Report section.
Also in January 2012, the Executive Board announced a new share-based payment plan for employees. The plan for employees, like the LTI
Plan 2015 for Executive Board members, is designed to award restricted share units (RSUs). The number of RSUs that actually vest after the end of a year depends on the same objectives as are
defined for the LTI Plan 2015 for Executive Board members. The Executive Board decided in December 2011 on the size of the 2012 tranche.
The total budget so far allocated for the LTI Plan 2015 and the employee plan is 179 million. The eventual financial effect cannot be estimated as it will depend on the number of vested RSUs that
actually pay out and on the SAP share price, and thus the final amount paid may be above or below the budgeted amounts. All of the expense will be recorded in the period 2012 through 2015, most of it in 2012.
ITEM 9. THE OFFER AND LISTING
GENERAL
Our ordinary shares are officially
listed on the Frankfurt Stock Exchange, the Berlin Stock Exchange and the Stuttgart Stock Exchange. The principal trading market for the ordinary shares is Xetra, the electronic dealing platform of Deutsche Boerse AG. The ordinary shares are issued
only in bearer form.
ADRs representing SAP AG ordinary shares are listed on the New York Stock Exchange (NYSE) under the
symbol SAP, and currently each ADR represents one ordinary share.
121
Part I
Item 9
TRADING ON THE FRANKFURT STOCK EXCHANGE AND THE NYSE
The table below sets forth, for the periods indicated, the high and low closing sales prices for the ordinary shares on the Xetra trading
System of the Frankfurt Stock Exchange together with the closing highs and lows of the DAX, and the high and low closing sales prices for the ADRs on the NYSE (information is provided by Reuters):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price per Ordinary Share in |
|
DAX(1) in points |
|
Price per ADR in
US$ |
|
|
High |
|
Low |
|
High |
|
Low |
|
High |
|
Low |
Annual Highs and Lows |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
2009 |
|
35.26 |
|
25.00 |
|
6,011.55 |
|
3,666.41 |
|
52.37 |
|
31.69 |
2010 |
|
38.40 |
|
31.12 |
|
7,077.99 |
|
5,434.34 |
|
54.08 |
|
41.59 |
2011 |
|
45.90 |
|
34.26 |
|
7,527.64 |
|
5,072.33 |
|
68.31 |
|
48.43 |
Quarterly Highs and Lows |
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
35.86 |
|
31.12 |
|
6,156.85 |
|
5,434.34 |
|
50.64 |
|
42.81 |
Second Quarter |
|
37.68 |
|
33.97 |
|
6,332.10 |
|
5,670.04 |
|
49.93 |
|
41.59 |
Third Quarter |
|
37.86 |
|
34.46 |
|
6,351.60 |
|
5,816.20 |
|
49.84 |
|
43.54 |
Fourth Quarter |
|
38.40 |
|
35.84 |
|
7,077.99 |
|
6,134.21 |
|
54.08 |
|
46.93 |
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter |
|
44.67 |
|
37.45 |
|
7,426.81 |
|
6,513.84 |
|
61.67 |
|
48.76 |
Second Quarter |
|
45.90 |
|
41.07 |
|
7,527.64 |
|
7,026.85 |
|
68.31 |
|
58.19 |
Third Quarter |
|
44.02 |
|
34.26 |
|
7,471.44 |
|
5,072.33 |
|
64.50 |
|
48.71 |
Fourth Quarter |
|
44.72 |
|
36.87 |
|
6,346.19 |
|
5,216.71 |
|
62.74 |
|
48.43 |
Monthly Highs and Lows |
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
July |
|
44.02 |
|
40.38 |
|
7,471.44 |
|
7,107.92 |
|
64.50 |
|
57.21 |
August |
|
42.77 |
|
34.26 |
|
6,953.98 |
|
5,473.78 |
|
61.41 |
|
48.72 |
September |
|
38.53 |
|
35.44 |
|
5,730.63 |
|
5,072.33 |
|
53.76 |
|
48.71 |
October |
|
43.92 |
|
36.87 |
|
6,346.19 |
|
5,216.71 |
|
62.74 |
|
48.43 |
November |
|
44.39 |
|
41.70 |
|
6,133.18 |
|
5,428.11 |
|
62.02 |
|
55.16 |
December |
|
44.72 |
|
39.92 |
|
6,106.09 |
|
5,670.71 |
|
59.97 |
|
52.21 |
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
January |
|
46.19 |
|
41.45 |
|
6,539.85 |
|
6,017.23 |
|
60.48 |
|
53.25 |
February |
|
50.65 |
|
46.81 |
|
6,948.25 |
|
6,616.64 |
|
68.15 |
|
61.45 |
March (through March 8, 2012) |
|
51.80 |
|
50.75 |
|
6,941.77 |
|
6,633.11 |
|
68.80 |
|
66.38 |
(1) |
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 issuers free-float market capitalization. Adjustments to the DAX are made for capital changes, subscription rights and dividends. |
On March 8, 2012, the closing sales price per ordinary share on the Frankfurt Stock Exchange (Xetra Trading System) was 51.80
and the closing sales price per ADR on the NYSE was US $68.80, as reported by Reuters.
122
Part I
Item 10
ITEM 10. ADDITIONAL INFORMATION
ARTICLES OF INCORPORATION
Organization and Register
SAP AG is a stock corporation organized in the
Federal Republic of Germany under the Stock Corporation Act (Aktiengesetz). SAP AG is registered in the Commercial Register (Handelsregister) at the Lower Court of Mannheim, Germany, under the entry number HRB 350269. SAP AG publishes
its official notices in the Internet version of the Federal Gazette (www.ebundesanzeiger.de).
Objects and Purposes
SAPs Articles of Incorporation state that our objects involve, directly or indirectly, the development, production and marketing of
products and the provision of services in the field of information technology, including:
|
|
|
developing and marketing integrated product and service solutions for e-commerce; |
|
|
|
developing software for information technology and the licensing of its use to others; |
|
|
|
organization and deployment consulting, as well as user training, for e-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. |
SAP is authorized to act in all the business areas listed above and
to delegate such activities to affiliated entities within the meaning of the German Stock Corporation Act; in particular SAP is authorized to delegate its business in
whole or in part to such entities. SAP AG is authorized to establish branch offices in Germany and other countries, as well as to form, acquire or invest in other companies of the same or related
kind and to enter into collaboration and joint venture agreements. SAP is further authorized to invest in enterprises of all kinds principally for the purpose of placing financial resources. SAP is authorized to dispose of investments, to
consolidate the management of enterprises in which it participates, to enter into affiliation agreements with such entities, or to limit its activities to manage its shareholdings.
CORPORATE GOVERNANCE
Introduction
SAP AG, as a German stock corporation, is governed by three separate bodies: the Supervisory Board, the Executive Board and the Annual
General Meeting of Shareholders. Their rules are defined by German law, by the German Corporate Governance Code and by SAPs Articles of Incorporation (Satzung) and are summarized below. See Item 16G. Differences in Corporate Governance
Practices for additional information on our corporate governance practices.
The Supervisory Board
The Supervisory Board appoints and removes the members of the Executive Board and oversees and advises the management of the corporation.
At regular intervals it meets to discuss current business as well as business development and planning. The SAP Executive Board must consult with the Supervisory Board concerning the corporate strategy, which is developed by the Executive Board. The
Supervisory Board maintains a list of transactions for which the Executive Board requires the Supervisory Boards consent. Accordingly, the Supervisory Board must also approve the annual budget of SAP upon submission by the Executive Board and
certain subsequent deviations from the approved budget.
123
Part I
Item 10
The Supervisory Board is also responsible for representing SAP AG in transactions between SAP AG and Executive Board members.
The Supervisory Board, based on a recommendation by its Audit Committee, provides its proposal for the election of the independent public
accountant to the Annual General Meeting of Shareholders. The Supervisory Board is also responsible for monitoring the auditors independence, a task it has delegated to its audit committee.
The German Co-determination Act of 1976 (Mitbestimmungsgesetz) requires supervisory boards of corporations with more than 2,000 employees
to consist of an equal number of representatives of the shareholders and representatives of the employees. The minimum total number of supervisory board members, and thus the minimum number of shareholder representatives and employee
representatives, is legally fixed and depends on the number of employees employed by the corporation and its German subsidiaries. Our Supervisory Board currently consists of sixteen members, of which eight members have been elected by SAP AGs
shareholders at the Annual General Meeting of Shareholders and eight members which have been elected by the employees of the German SAP entities (i.e. entities of the SAP Group having their registered office in Germany).
Any Supervisory Board member elected by the shareholders at the Annual General Meeting of Shareholders may be removed by three-quarters of
the votes cast at the Annual General Meeting of Shareholders. Any Supervisory Board member elected by the employees may be removed by three quarters of the votes cast by the employees of the German SAP entities.
The Supervisory Board elects a chairperson and a deputy chairperson among its members by a majority of vote of its members. If such
majority is not reached on the first vote, the chairperson will be chosen solely by the members elected by the shareholders and the deputy chairperson will be chosen solely by the
members elected by the employees. Unless otherwise provided by law, the Supervisory Board acts by simple majority. In the case of any deadlock the chairperson has the deciding vote.
The members of the Supervisory Board cannot be elected for a term longer than approximately five years. The term expires at the close of
the Annual General Meeting of Shareholders giving its formal approval of the acts of the Supervisory Board and the Executive Board in the fourth fiscal year following the year in which the Supervisory Board was elected unless the Annual General
Meeting of Shareholders specifies a shorter term of office when electing individual members of the Supervisory Board or the entire Supervisory Board. Re-election is possible. Our Supervisory Board normally meets four times a year. The remuneration
of the members of the Supervisory Board is determined by the Articles of Incorporation.
As stipulated in the German Corporate
Governance Code (GCGC), an adequate number of our Supervisory Board members are independent. To be considered for appointment to the Supervisory Board and for as long as they serve, members must comply with certain criteria concerning independence,
conflicts of interest and multiple memberships of management, supervisory and other governing bodies. They must be loyal to SAP in their conduct and must not accept any position in companies that are in competition with SAP. Members are subject to
insider trading prohibitions and the respective directors dealing rules of the German Securities Trading Act. A member of the Supervisory Board may not vote on matters relating to certain contractual agreements between such member and SAP AG.
Further, as the compensation of the Supervisory Board members is laid down in the Articles of Incorporation, Supervisory Board members are unable to vote on their own compensation, with the exception that they are able to exercise voting rights in a
General Meeting of Shareholders in connection with a resolution amending the Articles of Incorporation.
124
Part I
Item 10
Pursuant to the German Stock Corporation Act publicly traded stock corporations like SAP
must have at least one independent member of the supervisory board with expertise in the fields of financial reporting or auditing. The Supervisory Board may appoint committees from among its members and may, to the extent permitted by law, entrust
such committees with the authority to make decisions on behalf of the Supervisory Board. Currently the Supervisory Board maintains the following committees:
The focus of the Audit Committee (Prüfungsausschuss) is the oversight of SAPs external financial reporting as well as SAPs risk management, internal controls (including internal controls
over the effectiveness of the financial reporting process), internal audit and compliance matters. According to German Law SAPs Audit Committee includes at least one independent member with specialist expertise in the fields of financial
reporting or auditing. Among the tasks of the Audit Committee are the discussion of SAPs quarterly and year end financial reporting prepared under German and U.S. regulations, including this report. The Audit Committee proposes the appointment
of the external auditor to the Supervisory Board, determines focus audit areas, discusses critical accounting policies and estimates with and reviews the audit reports issued and audit issues identified by the auditor. The audit committee also
negotiates the audit fees with the auditor and monitors the auditors independence. SAPs Global Internal Audit Services (GIAS), SAPs Global Compliance Office (GCO) and SAPs Risk Management Office (RMO) report upon request or
at the occurrence of certain findings, but in any case at least once a year (GCO and RMO) or twice a year (GIAS), directly to the Audit Committee.
The Audit Committee has established procedures regarding the prior approval of all audit and non-audit services provided by our independent auditor. See Item 16C. Principal Accountant Fees and
Services for details.
Furthermore the Audit Committee monitors the effectiveness of our internal risk management and other monitoring processes that are or need to be established.
The Supervisory Board has determined Erhard Schipporeit to be an audit committee financial expert as defined by the regulations of the SEC
issued under Section 407 of the Sarbanes-Oxley Act as well as an independent financial expert as defined by the German Stock Corporation Act. See Item 16A. Audit Committee Financial Expert for details. He is also the chairperson of
the Audit Committee.
The General and Compensation Committee (Präsidial und Personalausschuss) coordinates the work of the
Supervisory Board, prepares its meetings and deals with corporate governance issues. In addition, it carries out the preparatory work necessary for the personnel decisions made by the Supervisory Board, notably those concerning compensation for the
Executive Board members and the conclusion, amendment and termination of the Executive Board members contracts of appointment.
The German Stock Corporation Act prohibits the Compensation Committee from deciding on the remuneration of the Executive Board members on behalf of the Supervisory Board and requires that such decision is
made by the entire Supervisory Board. This Act also provides the General Meeting of Shareholders with the right to vote on the system for the remuneration of Executive Board members, such vote not being legally binding for the Supervisory Board.
The Finance and Investment Committee (Finanz- und Investitionsausschuss) addresses general financing issues. Furthermore, it
regularly discusses acquisitions of intellectual property and companies, venture capital investments and other investments with the Executive Board and reports to the Supervisory Board on such investments. It is also responsible for the approval of
such investments if the individual investment amount exceeds certain specified limits.
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Required by the German Co-determination Act of 1976 (Mitbestimmungsgesetz), the Mediation
Committee (Vermittlungsausschuss) convenes only if the two-thirds majority required for appointing/revoking the appointment of Executive Board members is not attained. This committee has never held a meeting in SAP AGs history.
The Strategy and Technology Committee (Strategie- und Technologieausschuss) monitors technology transactions and provides the Supervisory
Board with in-depth technical advice.
The Nomination Committee (Nominierungsausschuss) is exclusively composed of shareholder
representatives and is responsible for identifying suitable candidates for membership of the Supervisory Board for recommendation to the Annual General Meeting of Shareholders.
The Special Committee (Sonderausschuss) is tasked with coordinating and managing the Supervisory Boards external legal advisors concerned with the investigation and analysis of the facts in
connection with the legal action brought by Oracle Corporation.
The duties, procedures and committees of the Supervisory Board
are specified in their respective bylaws, if any, which reflect the requirements of the German Stock Corporation Act and the recommendations of the GCGC.
According to the provisions of the Sarbanes-Oxley Act, SAP does not grant loans to the members of the Executive Board or the Supervisory Board.
The Executive Board
The Executive Board manages the Companys
business, is responsible for preparing its strategy and represents it in dealings with third parties. The Executive Board reports regularly to the Supervisory Board about SAP operations and business strategies and prepares special reports upon
request. A person may not serve on the Executive Board and on the Supervisory Board at the same time.
The Executive Board and the Supervisory Board must cooperate closely for the benefit of the
Company. Without being asked, the Executive Board must provide to the Supervisory Board regular, prompt and comprehensive information about all of the essential issues affecting the SAP Groups business progress and its potential business
risks. Furthermore, the Executive Board must maintain regular contact with the chairperson of the Supervisory Board. The Executive Board must inform the chairperson of the Supervisory Board promptly about exceptional events that are of significance
to SAPs business. The chairperson must inform the Supervisory Board accordingly.
Pursuant to the Articles of
Incorporation, the Executive Board must consist of at least two members. Currently, SAP AGs Executive Board is currently comprised of five members. Any two members of the Executive Board jointly or one member of the Executive Board and the
holder of a special power of attorney (Prokurist) jointly may legally represent SAP AG. The Supervisory Board appoints each member of the Executive Board for a maximum term of five years, with the possibility of re-appointment. Under certain
circumstances, a member of the Executive Board may be removed by the Supervisory Board prior to the expiration of that members term. A member of the Executive Board may not vote on matters relating to certain contractual agreements between
such member and SAP AG, and may be liable to SAP AG if such member has a material interest in any contractual agreement between SAP and a third party which was not previously disclosed to and approved by the Supervisory Board. Further, as the
compensation of the Executive Board members is set by the Supervisory Board, Executive Board members are unable to vote on their own compensation, with the exception that they are able to exercise voting rights in a General Meeting of Shareholders
resolving a non-binding vote on the system for the remuneration of Executive Board members.
Under German law SAP AGs
Supervisory Board members and Executive Board members
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have a duty of loyalty and care towards SAP AG. They must exercise the standard of care of a prudent and diligent businessman and bear the burden of proving they did so if their actions are
contested. Both bodies must consider the interest of SAP AG shareholders and our employees and, to some extent, the common good. Those who violate their duties may be held jointly and severally liable for any resulting damages, unless they acted
pursuant to a lawful resolution of the Annual General Meeting of Shareholders.
SAP has implemented a Code of Business Conduct
for employees (see Item 16B. Code of Ethics for details). The employee code is equally applicable to managers and members of the Executive Board.
Under German law the Executive Board of SAP AG has to assess all major risks for the SAP Group. In addition, all measures taken by management to reduce and handle the risks have to be documented.
Therefore, SAPs management has adopted suitable measures such as implementing an enterprise-wide monitoring system to ensure that adverse developments endangering the corporate standing are recognized at a reasonably early point in time.
The Global Compliance Office (GCO), an extension of SAPs Global Legal Department, was created by the SAP Executive Board
in 2006 to oversee and coordinate legal and regulatory policy compliance at SAP. Effective March 1, 2007, the Company appointed a Chief Global Compliance Officer who reports to the General Counsel, and also has direct communication channels and
reporting obligations to the Executive Board and the Audit Committee of the Supervisory Board. The GCO manages a network of more than 100 local subsidiary Compliance Officers who act as the point of contact for local questions or issues under the
SAP Code of Business Conduct for employees. The GCO provides training and communication to SAP employees to raise awareness and understanding of legal and regulatory compliance policies. Employee help lines are also supported in each region where
questions
can be raised or questionable conduct can be reported without fear of retaliation.
Pursuant to Sec. 289a of the German Commercial Code (Handelsgesetzbuch) the Executive Board of publicly listed companies like SAP AG are required to issue a corporate governance declaration
(Erklärung zur Unternehmensführung) every year together with its annual financial statements. Companies are free to include the corporate governance declaration in their annual report to shareholders or publish the declaration on their
website. SAP has chosen to publish the declaration on its website under (http://www.sap.com/about/governance/statement/index.epx). As stipulated by law the declaration comprises the declaration of compliance with the recommendations of the GCGC
pursuant to Sec. 161 of the German Stock Corporation Act, relevant disclosures of the companys corporate governance practices such as ethical, work and welfare standards, and a description of the Executive Board and Supervisory Boards
rules of procedure as well as information on the composition and rules of procedure of their sub-committees.
The Annual General Meeting of
Shareholders
Shareholders of the Company exercise their voting rights at shareholders meetings. The Executive Board
calls the Annual General Meeting of Shareholders, which must take place within the first eight months of each fiscal year. The Supervisory Board or the Executive Board may call an extraordinary meeting of the shareholders if the interests of the
stock corporation so require. Additionally, shareholders of SAP AG holding in the aggregate a minimum of 5% of SAP AGs issued share capital may call an extraordinary meeting of the shareholders. Shareholders as of the record date are entitled
to attend and participate in shareholders meetings if they have provided timely notice of their intention to attend the meeting.
At the Annual General Meeting of Shareholders, the shareholders are asked, among
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other things, to formally approve the actions taken by the Executive Board and the Supervisory Board in the preceding fiscal year, to approve the appropriation of the corporations
distributable profits and to appoint an independent auditor. Shareholder representatives of the Supervisory Board are generally elected at the Annual General Meeting of Shareholders for a term of approximately five years. Shareholders may also be
asked to grant authorization to repurchase treasury shares, to resolve on measures to raise or reduce the capital of the Company or to ratify amendments of our Articles of Incorporation. The Annual General Meeting of Shareholders can make management
decisions only if requested to do so by the Executive Board.
CHANGE IN CONTROL
There are no provisions in the Articles of Incorporation of SAP AG that would have an effect of delaying, deferring or preventing a
change in control of SAP AG and that would only operate with respect to a merger, acquisition or corporate restructuring involving it or any of its subsidiaries.
According to the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz) a bidder seeking control of a company with its corporate seat in Germany and traded on a
European Union stock exchange must publish advance notice of a tender offer, submit a draft offer statement to the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) for review, and obtain certification
from a qualified financial institution that adequate financing is in place to complete the offer. Once a bidder has acquired shares representing 30% of the voting power of the target company, it must make an offer for all remaining shares. The
Securities Acquisition and Takeover Act requires the executive board of the target company to refrain from taking any measures that may frustrate the success of the takeover offer. However, the target executive board is permitted to take any action
that a
prudent and diligent management of a company that is not the target of a takeover bid would also take. Moreover, the target executive board may search for other bidders and, with the prior
approval of the supervisory board, may take other defensive measures, provided that both boards act within the parameters of their general authority under the German Stock Corporation Act. An executive board may also adopt specific defensive
measures if such measures have been approved by the supervisory board and were specifically authorized by the shareholders no later than 18 months in advance of a takeover bid by resolution of 75% of the votes cast.
Under the European Takeover Directive of 2004 member states had to choose whether EU restrictions on defensive measures apply to companies
that are registered in their territory. Germany decided to opt out and to retain its current restrictions on a board implementing defensive measures (as described above). As required by the Directive if a country decides to opt out the German
Securities Acquisition and Takeover Act grants companies the option of voluntarily applying the European standard by a change of the Articles of Incorporation (opt-in). SAP AG has not made use of this option.
CHANGE IN SHARE CAPITAL
Under German law, the capital stock may be increased in consideration of contributions in cash or in kind, or by establishing authorized capital or contingent capital or by an increase of the
companys capital reserves. Authorized capital provides the Executive Board with the flexibility to issue new shares for a period of up to five years. The Executive Board must obtain the approval of the Supervisory Board before issuing new
shares with regard to the authorized capital. Contingent capital allows the issuance of new shares for specified purposes, including stock option plans for Executive Board members or employees and the issuance of shares upon conversion of
convertible bonds and exercise of stock options. By law, the Executive Board may only issue new shares with regard to the contingent capital for the specified purposes.
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Capital increases require an approval by 75% of the votes cast at the General Meeting of Shareholders in which the increase is proposed, and requires an amendment to the Articles of
Incorporation.
The share capital may be reduced by an amendment to the Articles of Incorporation approved by 75% of the votes
cast at the General Meeting of Shareholders. In addition, the Executive Board of SAP AG is allowed to authorize a reduction of the companys capital stock by canceling a defined number of repurchased treasury shares if this repurchasing and the
subsequent reduction have already been approved by the General Meeting of Shareholders.
The Articles of Incorporation do not
contain conditions regarding changes in the share capital that are more stringent than those provided by German law.
RIGHTS ACCOMPANYING OUR SHARES
There are no limitations imposed by German law or the Articles of Incorporation of SAP
AG on the rights to own securities, including the rights of non-residents or foreign holders to hold the ADRs or ordinary shares, to exercise voting rights or to receive dividends or other payments on such shares.
According to the German stock corporation law, the rights of shareholders cannot be amended without shareholders consent. The
Articles of Incorporation do not provide more stringent conditions regarding changes of the rights of shareholders than those provided by German law.
Voting Rights
Each ordinary SAP AG share represents one vote. Cumulative
voting is not permitted under German law. A corporations articles of incorporation may stipulate a majority necessary to pass a shareholders resolution differing from the majority provided by law, unless the law does not mandatorily
require a certain majority.
Section 21 (1) of SAP AGs Articles of Incorporation provides that resolutions may be passed at the General Meeting of Shareholders by the majority as provided by law. This means
that resolutions may be passed by a majority of 50% plus one vote of votes cast (simple majority), unless the law provides or requires a higher majority. German law requires that the following matters, among others, be approved by at least 75% of
the votes cast at the General Meeting of Shareholders in which the matter is proposed:
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changing the corporate purpose of the company set out in the articles of incorporation; |
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capital increases and capital decreases; |
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excluding preemptive rights of shareholders to subscribe for new shares or for treasury shares; |
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a merger into, or a consolidation with, another company; |
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a transfer of all or virtually all of the assets; and |
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a change of corporate form. |
Section 21 (3) of SAP AGs Articles of Incorporation provides that, if at an election no candidate receives a simple majority of votes during the first ballot in an election, a second,
deciding ballot shall be conducted between the candidates who received the largest number of votes. If the second ballot is tied, the election shall be determined by drawing lots.
Dividend Rights
See Item 3. Key Information Dividends.
Preemptive Rights
Shareholders have preemptive rights to subscribe (Bezugsrecht) for any issue of additional shares in proportion to their shareholdings in the issued capital. The
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preemptive rights may be excluded under certain circumstances by a shareholders resolution (approved by 75% of the votes cast at the General Meeting of Shareholders) or by the Executive
Board authorized by such shareholders resolutions and subject to the consent of the Supervisory Board.
Liquidation
If SAP AG were to be liquidated, any liquidation proceeds remaining after all of our liabilities were paid would be distributed to our
shareholders in proportion to their shareholdings.
Disclosure of Shareholdings
SAP AGs Articles of Incorporation do not require shareholders to disclose their share holdings. The German Securities Trading Act
(Wertpapierhandelsgesetz), however, requires holders of voting securities of SAP AG to notify SAP AG and the Federal Financial Supervisory Authority of the number or shares they hold if that number reaches, exceeds or falls below specified
thresholds. These thresholds are 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% of the corporations outstanding voting rights. In respect of certificates representing shares, the notification requirement shall apply exclusively to the holder of
the certificates. In addition, the German Securities Trading Act also obliges anyone who holds, directly or indirectly, financial instruments that result in an entitlement to acquire, on ones initiative alone and under a legally binding
agreement, shares in SAP AG, to notify SAP AG and the Federal Financial Supervisory Authority if the thresholds mentioned above have been reached, exceeded or fallen below, with the exception of the 3% threshold. In connection with this notification
obligation positions in voting rights and other financial instruments have to be aggregated.
Exchange Controls and Other Limitations
Affecting Security Holders
The euro is a fully convertible currency. At the present time, Germany does not restrict the
export or import of capital, except for
investments in certain areas in accordance with applicable resolutions adopted by the United Nations and the European Union. However, for statistical purposes only, every individual or
corporation residing in Germany (Resident) must report to the German Central Bank (Deutsche Bundesbank), subject only to certain immaterial exceptions, any payment received from or made to an individual or a corporation residing outside
of Germany (Non-Resident) if such payment exceeds 12,500 (or the equivalent in a foreign currency). In addition, German Residents must report any claims against or any liabilities payable to Non-Residents if such claims or
liabilities, in the aggregate, exceed 5 million (or the equivalent in a foreign currency) at the end of any calendar month. Residents are also required to report annually to the German Central Bank any shares or voting rights of 10% or
more which they hold directly or indirectly in non-resident corporations with total assets of more than 3 million. Corporations residing in Germany with assets in excess of 3 million must report annually to the German Central Bank
any shares or voting rights of 10% or more held directly or indirectly by a Non-Resident.
TAXATION
General
The following discussion is a summary of certain material German tax and U.S. federal income tax consequences of the acquisition,
ownership and disposition of our ADRs or ordinary shares to a U.S. Holder. In general, a U.S. Holder (as hereinafter defined) is any beneficial owner of our ADRs or ordinary shares that (i) is a citizen or resident of the U.S. or a corporation
organized under the laws of the U.S. or any political subdivision thereof, an estate whose income is subject to U.S. federal income tax regardless of its source or a trust, if a U.S. court can exercise primary supervision over its administration and
one or more U.S. persons are authorized to control all substantial decisions of the trust; (ii) is not a resident of Germany for purposes of the income tax treaty between the
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U.S. and Germany (Convention between the Federal Republic of Germany and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income and Capital and to certain other Taxes, as amended by the Protocol of June 1, 2006 and as published in the German Federal Law Gazette 2008 vol. II pp. 611/851; the Treaty); (iii) owns the ADRs or ordinary shares
as capital assets; (iv) does not hold the ADRs or ordinary shares as part of the business property of a permanent establishment or a fixed base in Germany; and (v) is fully entitled to the benefits under the Treaty with respect to income
and gain derived in connection with the ADRs or ordinary shares.
THE FOLLOWING IS NOT A COMPREHENSIVE DISCUSSION OF ALL GERMAN
TAX AND U.S. FEDERAL INCOME TAX CONSEQUENCES THAT MAY BE RELEVANT FOR U.S. HOLDERS OF OUR ADRs OR ORDINARY SHARES. THEREFORE, U.S. HOLDERS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE OVERALL GERMAN TAX AND U.S. FEDERAL INCOME
TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR ADRs OR ORDINARY SHARES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, INCLUDING THE EFFECT OF ANY STATE, LOCAL OR OTHER FOREIGN OR DOMESTIC LAWS.
German Taxation
The
summary set out below is based on German tax laws, interpretations thereof and applicable tax treaties to which Germany is a party and that are in force at the date of this report; it is subject to any changes in such authority occurring after that
date, potentially with retroactive effect, that could result in German tax consequences different from those discussed below. This discussion is also based, in part, on representations of the Depositary and assumes that each obligation of the
Deposit
Agreement and any related agreements will be performed in accordance with its terms. For additional information on the Depository and the fees associated with SAPs ADR program see
Item 12. Description of Securities Other Than Equity Securities American Depository Shares.
For purposes of
applying German tax law and the applicable tax treaties to which Germany is a party, a holder of ADRs will generally be treated as owning the ordinary shares represented thereby.
German Taxation of Dividends
Under German income tax law, the full amount
of dividends distributed by a company is generally subject to German withholding tax at a domestic rate of 25% plus a solidarity surtax of 5.5% (effectively 1.375% of dividends before withholding tax), resulting in an aggregate withholding tax rate
from dividends of 26.375%. Non-resident corporate shareholders will generally be entitled to a refund in the amount of two fifths of the withholding tax (including solidarity surtax). This does not preclude a further reduction of withholding tax, if
any, available under a relevant tax treaty.
Generally, for many non-resident shareholders the withholding tax rate is
currently reduced under applicable income tax treaties. Rates and refund procedures may vary according to the applicable treaty. To reduce the withholding tax to the applicable treaty tax rate a non-resident shareholder must apply for a refund of
withholding taxes paid. Claims for refund, if any, are made on a special German claim for refund form, which must be filed with the German Federal Tax Office (Bundeszentralamt für Steuern, D-53221 Bonn, Germany; http://www.bzst.de). The
relevant forms can be obtained from the German Federal Tax Office or from German embassies and consulates. For details, such non-resident shareholders are urged to consult their own tax advisors. Special rules apply for the refund to U.S. Holders
(we refer to the below section Refund Procedures for U.S. Holders).
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Refund Procedures for U.S. Holders
Under the Treaty, a partial refund of the 25% withholding tax equal to 10% of the gross amount of the dividend and a full refund of the
solidarity surtax can be obtained by a U.S. Holder. Thus, for each US$100 of gross dividends paid by SAP AG to a U.S. Holder, the dividends (which are dependent on the euro/dollar exchange rate at the time of payment) will be initially subject to a
German withholding tax of US$26.375, of which US$11.375 may be refunded under the Treaty. As a result, a U.S. Holder effectively would receive a total dividend of US$85 (provided the euro/dollar exchange rate at the time of payment of the dividend
is the same as at the time of refund, otherwise the effective dividend may be higher or lower).
To claim the refund of amounts
withheld in excess of the Treaty rate, a U.S. Holder must submit (either directly or, as described below, through the Data Medium Procedure participant) a claim for refund to the German tax authorities, with, in the case of a direct claim, the
original bank voucher (or certified copy thereof) issued by the paying entity documenting the tax withheld, within four years from the end of the calendar year in which the dividend is received. Claims for refund are made on a special German claim
for refund form, which must be filed with the German Federal Tax Office (Bundeszentralamt für Steuern, D-53221 Bonn, Germany). The German claim for refund form may be obtained from the German tax authorities at the same address where
applications are filed, from the Embassy of the Federal Republic of Germany, 2300 M Street NW, Washington, DC 20037, or can be downloaded from the homepage of the German Federal Tax Office (http://www.bzst.de).
U.S. Holders must also submit to the German tax authorities a certification of their U.S. residency status (IRS Form 6166). This
certification can be obtained from the Internal Revenue Service by filing a request for certification (generally on an IRS Form 8802, which will not be processed unless a user fee is paid) with the Internal Revenue Service,
P.O. Box 71052, Philadelphia, PA 19176-6052. U.S. Holders should consult their own tax advisors regarding how to obtain an IRS Form 6166.
An IT-supported quick-refund procedure is available for dividends received (the Data Medium Procedure DMP). If the U.S.
Holders bank or broker elects to participate in the DMP, it will perform administrative functions necessary to claim the Treaty refund for the beneficiaries. The refund beneficiaries must confirm to the DMP participant that they meet the
conditions of the Treaty provisions and that they authorize the DMP participant to file applications and receive notices and payments on their behalf. Further each refund beneficiary must confirm that (i) it is the beneficial owner of the
dividends received; (ii) it is resident in the U.S. in the meaning of the Treaty; (iii) it does not have its domicile, residence or place of management in Germany; (iv) the dividends received do not form part of a permanent
establishment or fixed base in Germany; and (v) it commits, due to its participation in the DMP, not to claim separately for refund.
The beneficiaries also must provide an IRS Form 6166 certification with the DMP participant. The DMP participant is required to keep these documents in its files and prepare and file a combined claim for
refund with the German tax authorities by electronic media. The combined claim provides evidence of a U.S. Holders personal data including its U.S. Tax Identification Number.
The German tax authorities reserve the right to audit the entitlement to tax refunds for several years following their payment pursuant to
the Treaty in individual cases. The DMP participant must assist with the audit by providing the necessary details or by forwarding the queries to the respective refund beneficiaries.
The German tax authorities will issue refunds denominated in euros. In the case of shares held through banks or brokers participating in
the Depository, the refunds will be issued to the Depository, which will convert
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the refunds to dollars. The resulting amounts will be paid to banks or brokers for the account of the U.S. Holders.
German Taxation of Capital Gains
Under German income tax law, a capital
gain derived from the sale or other disposition of ADRs or ordinary shares by a non-resident shareholder is subject to income tax in Germany only if such shareholder has held, directly or indirectly, ADRs or ordinary shares representing 1% or more
of the registered share capital of a company at any time during the five-year period immediately preceding the sale or other disposition.
Generally, a capital gain derived from the sale or other disposition of ADRs or ordinary shares by a non-resident corporate shareholder is, in principle, exempt from corporate income tax. However, a
portion of 5% of a capital gain derived is treated as non-deductible business expenses. Therefore, effectively a portion of 95% of a capital gain derived from the sale or other disposition of ADRs or ordinary shares by a non-resident corporate
shareholder is exempt and a portion of 5% of a capital gain derived is subject to corporate income tax.
However, a U.S. Holder
of ADRs or ordinary shares that qualifies for benefits under the Treaty is not subject to German income or corporate income tax on the capital gain derived from the sale or other disposition of ADRs or ordinary shares.
German Gift and Inheritance Tax
Generally, a transfer of ADRs or ordinary shares by a shareholder at death or by way of gift will be subject to German gift or inheritance tax, respectively, if (i) the decedent or donor, or the
heir, donee or other transferee is resident in Germany at the time of the transfer, or with respect to German citizens who are not resident in Germany, if the decedent or donor, or the heir, donee or other transferee has not been continuously
outside of Germany for a period of more than five years; (ii) the ADRs or ordinary
shares are part of the business property of a permanent establishment or a fixed base in Germany; or (iii) the ADRs or ordinary shares subject to such transfer form part of a portfolio that
represents 10% or more of the registered share capital of the Company and has been held, directly or indirectly, by the decedent or donor, respectively, at the time of the transfer, actually or constructively together with related parties.
However, the right of the German government to impose gift or inheritance tax on a non-resident shareholder may be limited by
an applicable estate tax treaty. In the case of a U.S. Holder, a transfer of ADRs or ordinary shares by a U.S. Holder at death or by way of gift generally will not be subject to German gift or inheritance tax by reason of the estate tax treaty
between the U.S. and Germany (Convention between the Federal Republic of Germany and the United States of America for the Avoidance of Double Taxation with respect to Estate, Gift and Inheritance Taxes, German Federal Law Gazette 1982 vol. II page
847, as amended by the Protocol of December 14, 1998 and as published on December 21, 2000, German Federal Law Gazette 2001 vol. II, page 65; the Estate Tax Treaty) so long as the decedent or donor, or the heir, donee or other
transferee was not domiciled in Germany for purposes of the Estate Tax Treaty at the time the gift was made, or at the time of the decedents death, and the ADRs or ordinary shares were not held in connection with a permanent establishment or a
fixed base in Germany. In general, the Estate Tax Treaty provides a credit against the U.S. federal gift or estate tax liability for the amount of gift or inheritance tax paid in Germany, subject to certain limitations, in a case where the ADRs or
ordinary shares are subject to German gift or inheritance tax and U.S. federal gift or estate tax.
Other German Taxes
There are currently no German net worth, transfer, stamp or other similar taxes that would apply to a U.S. Holder on the acquisition,
ownership, sale or other disposition of our ADRs or ordinary shares.
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U.S. Taxation
The following discussion applies to U.S. Holders only if the ADRs and ordinary shares are held as capital assets for tax purposes. It does not address tax considerations applicable to U.S. Holders that
may be subject to special tax rules, such as dealers or traders in securities, financial institutions, insurance companies, tax-exempt entities, regulated investment companies, U.S. Holders that hold ordinary shares or ADRs as a part of a straddle,
conversion transaction or other arrangement involving more than one position, U.S. Holders that own (or are deemed for U.S. tax purposes to own) 10% or more of the total combined voting power of all classes of voting stock of SAP AG, U.S. Holders
that have a principal place of business or tax home outside the United States or U.S. Holders whose functional currency is not the dollar and U.S. Holders that hold ADRs or ordinary shares through partnerships or other
pass-through entities.
The summary set out below is based upon the U.S. Internal Revenue Code of 1986, as amended (the
Code), the Treaty and regulations, rulings and judicial decisions thereunder at the date of this report. Any such authority may be repealed, revoked or modified, potentially with retroactive effect, so as to result in U.S. federal income
tax consequences different from those discussed below. No assurance can be given that the conclusions set out below would be sustained by a court if challenged by the IRS. The discussion below is based, in part, on representations of the Depositary,
and assumes that each obligation in the Deposit Agreement and any related agreements will be performed in accordance with its terms.
For U.S. federal income tax purposes, a U.S. Holder of ADRs will be considered to own the ordinary shares represented thereby. Accordingly, unless the context otherwise requires, all references in this
section to ordinary shares are deemed to refer likewise to ADRs representing an ownership interest in ordinary shares.
U.S. Taxation of Dividends
Subject to the discussion below under Passive Foreign Investment Company Considerations, distributions made by SAP AG with respect to ordinary shares (other than distributions in liquidation
and certain distributions in redemption of stock), including the amount of German tax deemed to have been withheld in respect of such distributions, will generally be taxed to U.S. Holders as ordinary dividend income.
As discussed above, a U.S. Holder may obtain a refund of German withholding tax under the Treaty to the extent that the German withholding
tax exceeds 15% of the dividend distributed. Thus, for each US$100 of gross dividends paid by SAP AG to a U.S. Holder, the dividends (which are dependent on the euro/dollar exchange rate at the time of payment) will be initially subject to German
withholding tax of US$25 plus US$1.375 solidarity surtax, and the U.S. Holder will receive US$73.625. A U.S. Holder who obtains the Treaty refund will receive from the German tax authorities an additional amount in euro that would be equal to
US$11.375. For U.S. tax purposes, such U.S. Holder will be considered to have received a total distribution of US$100, which will be deemed to have been subject to German withholding tax of US$15 (15% of US$100) resulting in the net receipt of US$85
(provided the euro/dollar exchange rate at the time of payment of the dividend is the same as at the time of refund, otherwise the effective dividend may be higher or lower).
In the case of a distribution in euro, the amount of the distribution generally will equal the dollar value of the euro distributed (determined by reference to the spot currency exchange rate on the date
of receipt of the distribution, or receipt by the Depositary in the case of a distribution on ADRs), regardless of whether the holder in fact converts the euro into dollars, and the U.S. Holder will not realize any separate foreign currency gain or
loss (except to the extent that such gain or loss arises on the actual disposition of foreign currency received).
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Item 10
However, a U.S. Holder may be required to recognize foreign currency gain or loss on the receipt of a refund in respect of German withholding tax to the extent the U.S. dollar value of the refund
differs from the U.S. dollar equivalent of that amount on the date of receipt of the underlying dividend.
Dividends paid by
SAP AG generally will constitute portfolio income for purposes of the limitations on the use of passive activity losses (and, therefore, generally may not be offset by passive activity losses) and as investment income for
purposes of the limitation on the deduction of investment interest expense. Dividends paid by SAP AG will not be eligible for the dividends received deduction generally allowed to U.S. corporations under Section 243 of the Code. Dividends paid
by SAP AG to an individual after December 31, 2002 and received prior to January 1, 2013 are treated as qualified dividends subject to capital gains rates, i.e. at a maximum rate of 15%, if SAP AG was not in the prior year and,
is not in the year in which the dividend is paid, a passive foreign investment company (PFIC). Based on our audited financial statements and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S.
federal income taxes with respect to our 2011 tax year. In addition, based on our audited financial statements and our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and
shareholder data, we do not anticipate becoming a PFIC for the 2012 tax year.
U.S. Taxation of Capital Gains
In general, assuming that SAP AG at no time is a PFIC, upon a sale or exchange of ordinary shares to a person other than SAP AG, a U.S.
Holder will recognize gain or loss in an amount equal to the difference between the amount realized on the sale or exchange and the U.S. Holders adjusted tax basis in the ordinary shares. Such gain or loss will be a capital gain or loss and
will be considered a long-term capital gain (taxable at a reduced rate for individuals) if
the ordinary shares were held for more than one year. The deductibility of capital losses is subject to significant limitations. Upon a sale of ordinary shares to SAP AG, a U.S. Holder may
recognize a capital gain or loss or, alternatively, may be considered to have received a distribution with respect to the ordinary shares, in each case depending upon the application to such sale of the rules of Section 302 of the Code.
Deposit and withdrawal of ordinary shares in exchange for ADRs by a U.S. Holder will not result in its realization of gain or
loss for U.S. federal income tax purposes.
U.S. Foreign Tax Credit
In general, in computing its U.S. federal income tax liability, a U.S. Holder may elect for each taxable year to claim a deduction or,
subject to the limitations on foreign tax credits generally, a credit for foreign income taxes paid or accrued by it. For U.S. foreign tax credit purposes, subject to the applicable limitations under the foreign tax credit rules, German tax withheld
from dividends paid to a U.S. Holder, up to the 15% provided under the Treaty, will be eligible for credit against the U.S. Holders federal income tax liability or, if the U.S. Holder has elected to deduct such taxes, may be deducted in
computing taxable income.
For U.S. foreign tax credit purposes, dividends paid by SAP AG generally will be treated as
foreign-source income and as passive category income (or in the case of certain holders, as general category income). Gains or losses realized by a U.S. Holder on the sale or exchange of ordinary shares generally will be
treated as U.S.-source gain or loss.
Passive Foreign Investment Company Considerations
Special and adverse U.S. tax rules apply to a U.S. Holder that holds an interest in a passive foreign investment company (PFIC). Based on
current projections concerning the composition of SAP AGs income and assets, SAP AG does not believe that it will be treated as a PFIC for its
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Part I
Item 10, 11
current or future taxable years. However, because this conclusion is based on our current projections and expectations as to its future business activity, SAP AG can provide no assurance that it
will not be treated as a PFIC in respect of its current or any future taxable years.
MATERIAL CONTRACTS
SuccessFactors, Inc.
Pursuant to the Agreement and Plan of Merger dated as of December 3, 2011 by and among SAP America, Inc., a wholly owned subsidiary of SAP AG (SAP America), Saturn Expansion Corporation, a wholly
owned subsidiary of SAP America (Saturn) and SuccessFactors, Inc. (SuccessFactors), Saturn commenced a cash tender offer for all of the outstanding shares of the common stock of SuccessFactors, par value US$0.001 per share (each a share), at a price
of US$40.00 per share, representing an enterprise value of approximately US$3.6 billion. On February 21, 2012, SAP acquired more than 90% of the outstanding ordinary shares of SuccessFactors. Subsequent to the acceptance of the shares for
payment under the tender offer, SAP effected a short-form merger under Delaware and acquired the remaining shares for the same US$40.00 per share price that was paid in the tender offer. The transaction was funded from SAPs cash on hand and a
1 billion credit facility.
The preceding description is a summary of the Agreement and Plan of Merger and is qualified
in its entirety by the Agreement and Plan of Merger which is incorporated by reference as Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC by SuccessFactors on December 5, 2011.
Sybase, Inc.
Pursuant
to the Merger Agreement dated May 12, 2010 by and among Sybase, Inc., SAP America, Inc., and Sheffield Acquisition Corp., a wholly owned subsidiary of SAP America, Inc., Sheffield Acquisition Corp. commenced a cash tender offer for all of the
outstanding shares of Sybase common stock at US$65.00 per share,
representing an enterprise value of approximately US$5.9 billion. The transaction closed on July 26, 2010 after receipt of the majority of the outstanding shares of Sybases common
stock and clearance by the relevant antitrust authorities. Subsequently, SAP acquired the remaining common shares and the combination was completed on July 29, 2010. The transaction was funded from SAPs cash on hand and a euro 2.64
billion acquisition term loan facility.
The preceding description is a summary of the Merger Agreement and is qualified in its
entirety by the Merger Agreement which is incorporated by reference as Exhibit 4.7 to our 2010 Annual Report on Form 20-F filed with the Commission on March 18, 2011.
DOCUMENTS ON DISPLAY
We are subject to the
informational requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements, we file reports and furnish other information as a foreign private issuer with the SEC. These materials, including this report and
the exhibits thereto, may be inspected and copied at the SECs Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The SEC also maintains a Web site at www.sec.gov that contains reports and other information
regarding registrants that file electronically with the SEC. This report as well as some of the other information submitted by us to the SEC may be accessed through this Web site. In addition, information about us is available at our Web site:
www.sap.com.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various financial risks, such as market risks, including changes in foreign currency exchange rates, interest rates and
equity prices, as well as credit risk and liquidity risk. We manage these risks on a Group-wide basis. Selected derivatives are exclusively used for this purpose and not for
136
Part I
Item 11, 12
speculation, which is defined as entering into derivative instruments without a corresponding underlying transaction. Financial risk management is done centrally. See Notes (25), (26) and
(27)
to our Consolidated Financial Statements for our quantitative and qualitative disclosures about market risk.
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
AMERICAN DEPOSITARY SHARES
Fees and Charges Payable by ADR Holders
Deutsche Bank Trust Company Americas is the Depositary for SAP AGs ADR program. ADR holders may be required to pay the following charges:
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taxes and other governmental charges; |
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registration fees as may be in effect from time to time for the registration of transfers of SAP ordinary shares on any applicable register to the
Depositary or its nominee or the custodian or its nominee in connection with deposits or withdrawals under the Deposit Agreement; |
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applicable air courier, cable, telex and facsimile expenses of the Depositary; |
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expenses incurred by the Depositary in the conversion of foreign currency; |
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$5.00 or less per 100 ADSs (or portion thereof) to the Depositary for the execution and delivery of ADRs (including in connection with the depositing
of SAP ordinary shares or the exercising of rights) and the surrender of ADRs as well as for the distribution of other securities; |
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a maximum aggregate service fee of U.S. $2.00 per 100 ADSs (or portion thereof) per calendar year to the Depositary for the services performed by the
Depositary in administering the ADR program, including for processing any cash dividends and other cash distributions; and
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$5.00 or less per 100 ADSs (or portion thereof) to the Depositary for distribution of securities other than SAP ordinary shares or rights.
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These charges are described more fully in Section 5.9 of the Amended and Restated Deposit Agreement
dated November 25, 2009, incorporated by reference as Exhibit 4.1.2 to our 2010 Annual Report on Form 20-F filed with the Commission on March 18, 2011.
Applicable service fees are either deducted from any cash dividends or other cash distributions or charged separately to holders in a manner determined by the Depositary, depending on whether ADSs are
registered in the name of investors (whether certificated or in book-entry form) or held in brokerage and custodian accounts (via DTC). In the case of distributions of securities other than SAP ordinary shares or rights, the Depositary charges the
applicable ADS record date holder concurrent with the distribution. In the case of ADSs registered in the name of the investor, whether certificated or in book entry form, the Depositary sends invoices to the applicable record date ADS holders. For
ADSs held in brokerage and custodian accounts via DTC, the Depositary may, if permitted by the settlement systems provided by DTC, collect the fees through those settlement systems from the brokers and custodians holding ADSs in their DTC accounts.
The brokers and custodians who hold their clients ADSs in DTC accounts in such case may in turn charge their clients accounts the amount of the service fees paid to the Depositary.
In the event of a refusal to pay applicable fees, the Depositary may refuse the requested services until payment is received or may set
off the amount of the service from any distribution to be made to the ADR holder, all in accordance with the Deposit Agreement.
If any taxes or other governmental charges are payable by the holders and/or beneficial owners of ADSs to the Depositary, the Depositary,
the custodian or SAP may withhold
137
Part I
Item 12
or deduct from any distributions made in respect of the deposited SAP ordinary share and may sell for the account of the holder and/or beneficial owner any or all of the deposited ordinary shares
and apply such distributions and sale proceeds in payment of such taxes (including applicable interest and penalties) or charges, with the holder and the beneficial owner thereof remaining fully liable for any deficiency.
Fees and Other Payments Payable by the Depositary to SAP
The Depositary has agreed to make certain payments to SAP as reimbursement for expenses incurred by SAP in connection with its ADR
program and in support of SAPs ongoing investor relations activities related to the ADR program. For the year ended December 31, 2011, the Depositary has made direct and indirect
payments to SAP of US $2,494,566 for investor relations activities related to the ADR program, including the production of annual reports and Form 20-F filings, 2011 NYSE listing fees, road shows, production of investor targeting, peer analysis,
shareholder identification reports and perception studies, postage for mailing annual and interim reports and other communications to ADR holders and participation in retail investor activities, broker conferences, SAP sponsored analyst events and
capital markets days.
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Part II
Item 13, 14, 15
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF
SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM
15. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures of SAP that are designed to ensure that information required to be
disclosed by SAP in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commissions rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information required to be disclosed by SAP in the reports that it files or submits under the Exchange Act is accumulated and communicated to SAP management, including SAPs
principal executive and financial officers (i.e. SAPs co-chief executive officers (Co-CEOs) and chief financial officer (CFO)), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
SAPs management evaluated, with the participation of SAPs Co-CEOs and CFO the effectiveness of SAPs disclosure controls and procedures as of December 31, 2011. The evaluation was led by SAPs Global Governance
Risk & Compliance function, including dedicated SOX Champions in all of SAPs major entities and business units with the participation of process owners, SAPs key corporate senior management, senior management of each
business group, and as indicated above under the supervision of SAPs Co-CEOs and CFO. Based on the foregoing, SAPs management, including SAPs Co-CEOs
and CFO, concluded that as of December 31, 2011, SAPs disclosure controls and procedures were effective.
MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of SAP is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities
Exchange Act of 1934. SAPs internal control over financial reporting is a process designed under the supervision of SAPs Co-CEOs and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external reporting purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
SAPs management assessed the effectiveness of the Companys internal control over financial reporting as of December 31,
2011. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Integrated Framework.
Based on the assessment under these criteria, SAP management has concluded that, as of December 31, 2011, the Companys internal
control over financial reporting was effective.
KPMG, our independent registered public accounting firm has issued its
attestation report on the effectiveness of SAPs internal control over financial reporting, which is included in Item 18. Financial Statements, Report of Independent Registered Public Accounting Firm.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There has been no change in our internal control over financial reporting during the period covered by this report that has materially
139
Part II
Item 15, 16, 16A, 16B, 16C
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Supervisory Board has determined that Erhard Schipporeit is an audit committee financial expert, as defined by the
regulations of the Commission issued pursuant to Section 407 of the Sarbanes-Oxley Act of 2002 and meeting the requirements of Item 16A. He is independent, as such term is defined in Rule 10A-3 under the Exchange Act.
ITEM 16B. CODE OF ETHICS
In 2003, SAP adopted a Code of Business Conduct that applies to all employees (including all personnel in the accounting and controlling departments), managers and the members of SAPs Executive
Board (including our CEOs and CFO). Our Code of Business Conduct constitutes a code of ethics as defined in Item 16.B of Form 20-F. Our Code of Business Conduct sets standards for all dealings with customers, partners, competitors
and suppliers and includes, among others, regulations with regard to confidentiality, loyalty, preventing conflicts of interest, preventing bribery, and avoiding anti-competitive practices. International differences in culture, language, and legal
and social systems make the adoption of uniform Codes of Business Conduct across an entire global company challenging. As a result, SAP has set forth a master code containing minimum standards. In turn, each company within the SAP Group has been
required to adopt a similar code that meets at least these minimum standards, but may also include additional or more stringent rules of conduct. Newly acquired companies also are required to meet the minimum standards set forth in the Code of
Business Conduct. Effective February 2012, SAP amended its Code of Business Conduct to address certain changes in bribery laws, and to update the intellectual
property and non-retaliation provisions. We have made our amended Code of Business Conduct publicly available by posting the full text on our Web site under
http://www.sap.com/corporate-en/investors/governance/statutes/codeofconduct.epx.
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES, AUDIT RELATED FEES, TAX FEES AND ALL OTHER FEES
Refer to Note (32) to our Consolidated Financial Statements for information on fees paid to our independent
registered public accounting firm, KPMG, for audit services and other professional services.
AUDIT
COMMITTEES PRE-APPROVAL POLICIES AND PROCEDURES
As required under German law, our shareholders appoint our
independent auditors to audit our financial statements, based on a proposal that is legally required to be submitted by the Supervisory Board. The Supervisory Boards proposal is based on a proposal by the Audit Committee. See also the
description in Item 10. Additional Information Corporate Governance.
In 2002 our Audit Committee adopted a
policy with regard to the pre-approval of audit and non-audit services to be provided by our independent auditors. This policy, which is designed to assure that such engagements do not impair the independence of our auditors, was amended and
expanded in 2003, 2007 and 2009 (changes in 2009 only related to information requirements). The policy requires prior approval of the Audit Committee for all services to be provided by our independent auditors for any entity of the SAP Group. With
regard to non-audit services the policy distinguishes among three categories of services:
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(i) 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 |
140
Part II
Item 16C, 16D, 16E
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would be inconsistent with maintaining the auditors independence. |
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(ii) 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 by the Audit Committee. |
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(iii) 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. |
Our Chief Accounting Officer or individuals empowered by him review all individual requests to engage our independent auditors as a service provider in accordance with this policy and determines the
category to which the requested service belongs. All requests for engagements with expected fees over a specified limit are additionally reviewed by our CFO. Based on the determination of the category the request is (i) declined if it is a
prohibited service, (ii) approved if it is a service requiring universal approval and the maximum aggregate amount fixed by the Audit Committee has not been reached or (iii) forwarded to the Audit Committee for
individual approval if the service requires individual approval or is a service requiring universal approval and the maximum aggregate amount fixed by the Audit Committee has been exceeded.
Our Audit Committees pre-approval policies also include information requirements to ensure the Audit Committee is kept aware of the
volume of engagements involving our independent auditors that were not individually pre-approved by the Audit Committee itself.
Substantially all of the work performed to audit our Consolidated Financial Statements was performed by our principal accountants
full-time, permanent employees.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Rule 10A-3 of the Exchange Act requires that all members of our audit committee be independent, subject to certain
exceptions. In accordance with German law, the Audit Committee consists of both employee and shareholder elected members. Rule 10A-3 provides an exception for an employee of a foreign private issuer such as SAP who is not an executive officer of
that issuer and who is elected to the supervisory board or audit committee of that issuer pursuant to the issuers governing law. In this case, the employee is exempt from the independence requirements of Rule 10A-3 and is permitted to sit on
the audit committee.
We rely on this exemption. Our Audit Committee includes two members who are non-executive employees of
SAP AG, Thomas Bamberger and Gerhard Maier, who were named to our Supervisory Board pursuant to the German Co-determination Act (see Item 6. Directors, Senior Management and Employees. for details). We believe that the reliance on this
exemption does not materially adversely affect the ability of our Audit Committee to act independently and to satisfy the other requirements of Rule 10A-3.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We did not purchase any ADRs in 2011. The following table sets out information concerning repurchases of our ordinary shares, which we mainly use to serve our employee discount stock purchase programs,
Long-Term Incentive Plans, Stock Option Plans and other such plans. The maximum number of shares that may yet be purchased under these plans and programs as of December 31, 2011 was 85,042,489.
141
Part II
Item 16E, 16F, 16G
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Period |
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(a)Total Number of Shares Purchased |
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(b)Average Price Paid per Share (in ) |
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(c)Total Number of Shares Purchased as Part of
Publicly Announced Plans and Programs |
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(d)Maximum Number of Shares that May Yet Be Purchased Under these Plans
and Programs |
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January 1/1/11 1/31/11 |
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0 |
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0 |
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83,559,544 |
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February 2/1/11 2/28/11 |
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2,770,000 |
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44.10 |
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2,770,000 |
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83,664,603 |
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March 3/1/11 3/31/11 |
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835,000 |
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42.96 |
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835,000 |
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83,758,905 |
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April 4/1/11 4/30/11 |
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0 |
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0 |
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83,793,112 |
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May 5/1/11 5/31/11 |
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0 |
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0 |
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83,824,592 |
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June 6/1/11 6/30/11 |
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0 |
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0 |
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84,659,971 |
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July 7/1/11 7/31/11 |
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0 |
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0 |
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84,695,541 |
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August 8/1/11 8/31/11 |
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0 |
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0 |
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84,774,390 |
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September 9/1/11 9/30/11 |
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0 |
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0 |
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84,832,133 |
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October 10/1/11 10/31/11 |
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0 |
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0 |
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84,878,750 |
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November 11/1/11 11/30/11 |
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1,200,000 |
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43.89 |
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1,200,000 |
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84,983,252 |
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December 12/1/11 12/31/11 |
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810,000 |
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43.56 |
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810,000 |
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85,042,489 |
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Total |
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5,615,000 |
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43.81 |
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5,615,000 |
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Purchases between January 1, 2011 and December 31, 2011 were made in accordance
with the authorization to acquire and use treasury shares granted at the Annual General Meeting of Shareholders on June 8 2010, pursuant to which the Executive Board was authorized to acquire, on or before June 30, 2013, up to
120 million shares of SAP. The authorization from June 8, 2010 replaced the authorization from May 19, 2009.
Both authorizations were subject to the provision that the shares to be purchased, together with any other shares already acquired and
held by SAP, do not account for more than 10% of SAPs capital stock.
ITEM 16F. CHANGES IN
REGISTRANTS CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES
The following summarizes the principal ways in which our corporate governance practices differ from the New York Stock Exchange (NYSE) corporate governance rules applicable to U.S. domestic issuers (the
NYSE Rules).
INTRODUCTION
SAP is incorporated under the laws of Germany, with securities publicly traded on markets in Germany, including the Frankfurt Exchange and in the United States on the NYSE.
The NYSE Rules permit foreign private issuers to follow applicable home country corporate governance practices in lieu of the NYSE
corporate governance standards, subject to certain exceptions. Foreign private issuers electing to follow home country corporate governance rules are required to disclose the principal differences in their corporate governance practices from those
required under the NYSE Rules. This Item 16G summarizes the principal ways in which SAPs corporate governance practices differ from the NYSE Rules applicable to domestic issuers.
LEGAL FRAMEWORK
The primary source of law relating to the corporate
governance of a German stock corporation is the German Stock Corporation Act (Aktiengesetz). Additionally, the Securities Trading Act (Wertpapierhandelsgesetz), the German Securities Purchase and Take Over Act (Wertpapiererwerbs- und
Übernahmegesetz), the Stock Exchange Admission Regulations, the
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Part II
Item 16G
German Commercial Code (Handelsgesetzbuch) and certain other German statutes contain corporate governance rules applicable to SAP. In addition to these mandatory rules, the German Corporate
Governance Code (GCGC) summarizes the mandatory statutory corporate governance principles found in the German Stock Corporation Act and other provisions of German law. Further, the GCGC contains supplemental recommendations and
suggestions for standards on responsible corporate governance intended to reflect generally accepted best practices.
The
German Stock Corporation Act requires the executive and the supervisory board of publicly listed companies like SAP to declare annually that the recommendations set forth in the GCGC have been and are being complied with or which of the
recommendations have not been or are not being complied with and why not. SAP has disclosed and reasoned deviations from a few of the GCGC recommendations in its Declaration of Compliance on a yearly basis since 2003. Declarations from 2006 forward
are available on the SAP website (http://www.sap.com/corporate-en/investors/governance/statutes/declarationof implementation.epx).
SIGNIFICANT DIFFERENCES
We believe the following to be the significant differences between German corporate governance practices, as SAP has implemented them,
and those applicable to domestic companies under the NYSE Rules.
GERMAN STOCK CORPORATIONS ARE REQUIRED TO HAVE A TWO-TIER BOARD SYSTEM
SAP is governed by three separate bodies: (i) the Supervisory Board, which counsels, supervises and controls the
Executive Board; (ii) the Executive Board, which is responsible for the management of SAP; and (iii) the General Meeting of Shareholders. The rules applicable to these governing bodies are defined by German law and by SAPs Articles
of Incorporation. This corporate structure differs from the unitary board
of directors established by the relevant laws of all U.S. states and the NYSE Rules. Under the German Stock Corporation Act, the Supervisory Board and Executive Board are separate and no
individual may be a member of both boards. See Item 10. Additional Information Corporate Governance for additional information on the corporate structure.
DIRECTOR INDEPENDENCE RULES
The NYSE Rules require that a majority of the
members of the board of directors of a listed issuer and each member of its nominating, corporate governance, compensation and audit committee be independent. The NYSE Rules stipulate that no director qualifies as independent
unless the board of directors has made an affirmative determination that the director has no material direct or indirect relationship with the listed company. However, under the NYSE Rules a director may still be deemed independent even if the
director or a member of a directors immediate family has received during a 12 month period within the prior three years up to $120,000 in direct compensation. In addition, a director may also be deemed independent even if a member of the
directors immediate family works for the companys auditor in a non-partner capacity and not on the companys audit. By contrast, the GCGC requires that the Supervisory Board ensure that proposed candidates are persons with the
necessary knowledge, competencies and applicable experience, and that the Supervisory Board includes what it considers an adequate number of independent members. A Supervisory Board member is considered independent if he or she has no business or
personal relations with SAP or its Executive Board that could give rise to a conflict of interest. The members of the Supervisory Board must have enough time to perform their board duties and must carry out their duties carefully and in good faith.
For as long as they serve, they must comply with the criteria that are enumerated in relation to the selection of candidates for the Supervisory Board concerning independence, conflict of interest and multiple memberships of
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Part II
Item 16G
management, supervisory and other governing bodies. They must be loyal to SAP in their conduct and they must not accept appointment in companies that are in competition with SAP. Supervisory
Board members must disclose any planned non-ordinary course business transactions with SAP to the Supervisory Board promptly. The Supervisory Board members cannot carry out such transactions before the Supervisory Board has given its permission. The
Supervisory Board may grant its permission for any such transaction only if the transaction is based on terms and conditions that are standard for the type of transaction in question and if the transaction is not contrary to SAPs interest. SAP
complies with these GCGC director independence requirements.
German corporate law requires that for publicly listed stock
corporations at least one member of the Supervisory Board who has expert knowledge in the areas of financial accounting and audit of financial statements must be independent. Mr. Erhard Schipporeit who is the Chairman of SAPs Audit
Committee meets these requirements. However, German corporate law and the GCGC do not require the Supervisory Board to make an affirmative determination for each individual member that is independent or that a majority of Supervisory Board members
or the members of a specific committee are independent.
The NYSE independence requirements are closely linked with risks
specific to unitary boards of directors that are customary for U.S. companies. In contrast, the two-tier board structure requires a strict separation of the executive board and supervisory board. In addition, the supervisory board of large German
stock corporations is subject to the principle of employee codetermination as outlined in the German Co-Determination Act of 1976 (Mitbestimmungsgesetz). As a result, the Supervisory Board of SAP AG consists of 16 members, of which eight have been
elected by SAP AGs shareholders at the Annual General Meeting and eight members have been elected by employees of SAP AG and its German
subsidiaries. Typically, the chairperson of the supervisory board is a shareholder representative. In case of a tie vote, the supervisory board chairperson may cast the decisive tie-breaking
vote. This board structure creates a different system of checks and balances, including employee participation, and cannot be directly compared with a unitary board system.
AUDIT COMMITTEE INDEPENDENCE
As a foreign private issuer, the NYSE Rules
require SAP to establish an Audit Committee that satisfies the requirements of Rule 10A-3 of the Exchange Act with respect to audit committee independence. SAP is in compliance with these requirements. The Chairman of SAPs Audit Committee and
Mr. Joachim Milberg meet the independence requirements of Rule 10A-3 of the Exchange Act. The other two Audit Committee members, Messrs. Thomas Bamberger and Gerhard Maier, are employee representatives who are eligible for the exemption
provided by Rule 10 A-3 (b) (1) (iv) (C) (see Item 16D Exemptions from the listing standards for audit committees for details).
The Audit Committee independence requirements are similar to the Board independence requirements under German corporate law and GCGC. See the section above under Director Independence Rules.
Nonetheless, SAP meets the NYSE Rules on audit committee independence applicable to foreign private issuers.
RULES ON NON-MANAGEMENT BOARD
MEETINGS ARE DIFFERENT
Section 303 A.03 of the NYSE Rules stipulates that the non-management board of each listed
issuer must meet at regularly scheduled executive sessions without the management. Under German corporate law and the GCGC the Supervisory Board is entitled but not required to exclude Executive Board members from its meetings. The Supervisory Board
exercises this right temporarily during its meetings, for example when it discusses or decides Executive Board member affairs like the appointment of new Executive Board members.
144
Part II
Item 16G
RULES ON ESTABLISHING COMMITTEES DIFFER
Pursuant to Section 303 A.04 and 303 A.05 of the NYSE Rules listed companies are required to set up a Nominating/Corporate Governance
Committee and a Compensation Committee, each composed entirely of independent directors and having a written charter specifying the committees purpose and responsibilities. In addition, each committees performance must be reviewed
annually. With one exception, German corporate law does not mandate the creation of specific supervisory board committees. Required by the German Co-Determination Act of 1976 (Mitbestimmungsgesetz), the Mediation Committee (Vermittlungsausschuss)
convenes only if the 2/3 majority required for appointing/revoking the appointment of Executive Board Members is not attained. This committee has never been convened in SAPs history. In addition, the GCGC recommends that the Supervisory Board
establish an Audit Committee and a Nomination Committee. In addition to the legally required Mediation Committee, SAP has the following committees, which are in compliance with the GCGC: General and Compensation Committee, Audit Committee, Strategy
and Technology Committee, Finance and Investment Committee, Nomination Committee, and Special Committee (See Item 10. Additional Information Corporate Governance for more information).
RULES ON SHAREHOLDERS COMPULSORY APPROVAL ARE DIFFERENT
Section 312 of the NYSE Rules requires U.S. companies to seek shareholder approval of all equity-compensation plans, including certain material revisions thereto (subject to certain exemptions as
described in the rules), issuances of common stock, including convertible stock, if the common stock has, or will have upon issuance, voting power of or in excess of 20% of the then outstanding common stock, and issuances of common stock if they
trigger a change of control.
According to the German Stock Corporation Act and other applicable German laws, shareholder
approval is required for a broad range of matters, such as amendments to the articles of association, certain significant corporate transactions (including inter-company agreements and material restructurings), the offering of stock options and
similar equity compensation to its Executive Board members or its employees by a way of a conditional capital increase or by using treasury shares (including significant aspects of such an equity compensation plan as well as the exercise
thresholds), the issuance of new shares, the authorization to purchase the corporations own shares, and other essential issues, such as transfers of all, or substantially all, of the assets of the stock corporation, including shareholdings in
subsidiaries.
SPECIFIC PRINCIPLES OF CORPORATE GOVERNANCE
Under the NYSE Rules Section 303A.09 listed companies must adopt and disclose corporate guidelines. Since October 2007, SAP has applied, with few exceptions, the recommended corporate governance
standards of the GCGC rather than company-specific principles of corporate governance. The GCGC recommendations differ from the NYSE Standards primarily as outlined in this Item 16G.
SPECIFIC CODE OF BUSINESS CONDUCT
NYSE Rules Section 303 A.10
requires listed companies to adopt and disclose a code of business conduct and ethics for directors, officers and employees, and to disclose promptly any waivers of the code for directors or executive officers. Although not required under German
law, SAP has adopted a Code of Business Conduct, which is equally applicable to employees, managers and members of the Executive Board. SAP complies with the requirement to disclose the Code of Business Conduct and any waivers of the code with
respect to directors and executive officers. See Item 16B. Code of Ethics for details.
145
Part III
Item 17, 18, 19
PART III
ITEM 17. FINANCIAL STATEMENTS
Not
applicable.
ITEM 18. FINANCIAL STATEMENTS
The Consolidate Financial Statements are included herein on pages F-1 through F-105.
The following are filed as part of this report:
|
|
|
Report of Independent Registered Public Accounting Firm. |
|
|
|
Consolidated Financial Statements |
|
|
|
Consolidated Income Statements for the years ended 2011, 2010 and 2009.
|
|
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2011, 2010 and 2009. |
|
|
|
Consolidated Statements of Financial Position as of December 31, 2011 and 2010. |
|
|
|
Consolidated Statements of Changes in Equity for the years ended December 31, 2011, 2010 and 2009. |
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009. |
|
|
|
Notes to the Consolidated Financial Statements.
|
ITEM 19. EXHIBITS
The following documents are filed as exhibits to this report:
|
|
|
1 |
|
Articles of Incorporation (Satzung) of SAP AG, as amended effective October 13, 2011 (English translation). |
|
|
2.1 |
|
Form of global share certificate for ordinary shares (English translation).(1) |
|
|
|
|
Certain instruments which define rights of holders of long-term debt of SAP AG and its subsidiaries are not being filed because the total amount of securities authorized under each
such instrument does not exceed 10% of the total consolidated assets of SAP AG and its subsidiaries. SAP AG and its subsidiaries hereby agree to furnish a copy of each such instrument to the Securities and Exchange Commission upon
request. |
|
|
4.1.2 |
|
Amended and Restated Deposit Agreement dated as of November 25, 2009 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.(2) |
|
|
4.7 |
|
Merger Agreement dated May 12, 2010 by and among SAP America, Inc., Sheffield Acquisition Corp. and Sybase, Inc.(3) |
|
|
4.8 |
|
Agreement and Plan of Merger dated December 3, 2011 by and among SAP America, Inc., Saturn Expansion Corporation, SAP AG and SuccessFactors, Inc.(4) |
|
|
8 |
|
For a list of our subsidiaries see Note (34) to our Consolidated Financial Statements in Item 18. Financial Statements. |
|
|
12.1 |
|
Certification of Bill McDermott, Co-Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a). |
146
Part III
Item 19
|
|
|
|
|
12.2 |
|
Certification of Jim Hagemann Snabe, Co-Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a). |
|
|
12.3 |
|
Certification of Werner Brandt, Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a). |
|
|
13.1 |
|
Certification of Bill McDermott, 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 Jim Hagemann Snabe, 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 Exhibit 2.1 of SAP AGs Annual Report on Form 20-F filed on March 22, 2006. |
(2) |
Incorporated by reference to Exhibit 99(A) of Post Effective Amendment #1 to SAP AGs Registration Statement on Form F-6 filed on
November 25, 2009. |
(3) |
Incorporated by reference to Exhibit 2.1 to Sybase, Inc.s Current Report on Form 8-K filed on May 13, 2010. |
(4) |
Incorporated by
reference to Exhibit 2.1 to SuccessFactors, Inc.s Current Report on Form 8-K filed on December 5, 2011. |
147
SIGNATURES
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this report on its behalf.
|
SAP AG
(Registrant) |
|
By: /s/ BILL MCDERMOTT Name: Bill McDermott Title: Co-Chief Executive Officer |
Dated: March 22, 2012
|
By: /s/ JIM HAGEMANN SNABE |
Name: Jim Hagemann Snabe
Title: Co-Chief Executive Officer |
Dated: March 22, 2012
|
By: /s/ WERNER BRANDT |
Name: Dr. Werner Brandt
Title: Chief Financial Officer |
Dated March 22, 2012
148
SAP AG AND SUBSIDIARIES
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Supervisory Board of SAP AG:
We have audited the accompanying consolidated statements of financial position of SAP AG and subsidiaries (SAP or the Company) as of December 31, 2011 and 2010, and the
related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2011. We also have audited SAPs internal control over financial reporting
as of December 31, 2011, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). SAPs management is responsible for these
consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Annual
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Companys internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.
A companys internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of SAP AG and subsidiaries as of December 31, 2011 and 2010, and the consolidated results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2011, in
conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB). Also in our opinion, SAP AG maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2011, based on criteria established in Internal Control Integrated Framework issued by the COSO.
|
/s/ KPMG AG |
Wirtschaftsprüfungsgesellschaft |
Mannheim, Germany
February 23, 2012
F-2
SAP AG AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENTS OF SAP GROUP
for the years ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note |
|
|
(Unaudited) 2011(1) |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions, unless otherwise stated |
|
Software revenue |
|
|
|
|
|
|
5,152 |
|
|
|
3,971 |
|
|
|
3,265 |
|
|
|
2,607 |
|
Support revenue |
|
|
|
|
|
|
9,038 |
|
|
|
6,967 |
|
|
|
6,133 |
|
|
|
5,285 |
|
Subscription and other software-related service revenue |
|
|
|
|
|
|
494 |
|
|
|
381 |
|
|
|
396 |
|
|
|
306 |
|
Software and software-related service revenue |
|
|
|
|
|
|
14,684 |
|
|
|
11,319 |
|
|
|
9,794 |
|
|
|
8,198 |
|
Consulting revenue |
|
|
|
|
|
|
3,037 |
|
|
|
2,341 |
|
|
|
2,197 |
|
|
|
2,074 |
|
Other service revenue |
|
|
|
|
|
|
743 |
|
|
|
573 |
|
|
|
473 |
|
|
|
400 |
|
Professional services and other service revenue |
|
|
|
|
|
|
3,780 |
|
|
|
2,914 |
|
|
|
2,670 |
|
|
|
2,474 |
|
Total revenue |
|
|
(5 |
) |
|
|
18,464 |
|
|
|
14,233 |
|
|
|
12,464 |
|
|
|
10,672 |
|
Cost of software and software-related services |
|
|
|
|
|
|
2,733 |
|
|
|
2,107 |
|
|
|
1,823 |
|
|
|
1,658 |
|
Cost of professional services and other services |
|
|
|
|
|
|
2,916 |
|
|
|
2,248 |
|
|
|
2,071 |
|
|
|
1,851 |
|
Research and development |
|
|
|
|
|
|
2,515 |
|
|
|
1,939 |
|
|
|
1,729 |
|
|
|
1,591 |
|
Sales and marketing |
|
|
|
|
|
|
3,997 |
|
|
|
3,081 |
|
|
|
2,645 |
|
|
|
2,199 |
|
General and administration |
|
|
|
|
|
|
928 |
|
|
|
715 |
|
|
|
636 |
|
|
|
564 |
|
Restructuring |
|
|
(6 |
) |
|
|
5 |
|
|
|
4 |
|
|
|
3 |
|
|
|
198 |
|
TomorrowNow litigation |
|
|
(24 |
) |
|
|
930 |
|
|
|
717 |
|
|
|
981 |
|
|
|
56 |
|
Other operating income/expense, net |
|
|
(7 |
) |
|
|
32 |
|
|
|
25 |
|
|
|
9 |
|
|
|
33 |
|
Total operating expenses |
|
|
|
|
|
|
12,132 |
|
|
|
9,352 |
|
|
|
9,873 |
|
|
|
8,084 |
|
Operating profit |
|
|
|
|
|
|
6,332 |
|
|
|
4,881 |
|
|
|
2,591 |
|
|
|
2,588 |
|
Other non-operating income/expense, net |
|
|
(9 |
) |
|
|
97 |
|
|
|
75 |
|
|
|
186 |
|
|
|
73 |
|
Finance income |
|
|
|
|
|
|
160 |
|
|
|
123 |
|
|
|
73 |
|
|
|
37 |
|
Finance costs TomorrowNow litigation |
|
|
|
|
|
|
10 |
|
|
|
8 |
|
|
|
12 |
|
|
|
0 |
|
Other finance costs |
|
|
|
|
|
|
219 |
|
|
|
169 |
|
|
|
128 |
|
|
|
117 |
|
Finance costs |
|
|
|
|
|
|
209 |
|
|
|
161 |
|
|
|
140 |
|
|
|
117 |
|
Financial income, net |
|
|
(10 |
) |
|
|
49 |
|
|
|
38 |
|
|
|
67 |
|
|
|
80 |
|
Profit before tax |
|
|
|
|
|
|
6,186 |
|
|
|
4,768 |
|
|
|
2,338 |
|
|
|
2,435 |
|
Income tax TomorrowNow litigation |
|
|
|
|
|
|
365 |
|
|
|
281 |
|
|
|
377 |
|
|
|
20 |
|
Other income tax expense |
|
|
|
|
|
|
1,360 |
|
|
|
1,048 |
|
|
|
902 |
|
|
|
705 |
|
Income tax expense |
|
|
(11 |
) |
|
|
1,724 |
|
|
|
1,329 |
|
|
|
525 |
|
|
|
685 |
|
Profit after tax |
|
|
|
|
|
|
4,461 |
|
|
|
3,439 |
|
|
|
1,813 |
|
|
|
1,750 |
|
Profit attributable to owners of parent |
|
|
|
|
|
|
4,460 |
|
|
|
3,438 |
|
|
|
1,811 |
|
|
|
1,748 |
|
Profit attributable to non-controlling interests |
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
Basic earnings per share, in |
|
|
(12 |
) |
|
|
3.75 |
|
|
|
2.89 |
|
|
|
1.52 |
|
|
|
1.47 |
|
Diluted earnings per share, in |
|
|
(12 |
) |
|
|
3.75 |
|
|
|
2.89 |
|
|
|
1.52 |
|
|
|
1.47 |
|
(1) |
The 2011 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.2973 to 1.00, the Noon Buying Rate
certified by the Federal Reserve Bank of New York on December 30, 2011. |
The accompanying Notes are an
integral part of these Consolidated Financial Statements.
F-3
SAP AG AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP
for the years ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
|
millions |
|
Profit after tax |
|
|
|
|
|
|
3,439 |
|
|
|
1,813 |
|
|
|
1,750 |
|
Items that will not be reclassified to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gains (losses) on defined benefit pension plans |
|
|
(19 |
) |
|
|
12 |
|
|
|
39 |
|
|
|
6 |
|
Income tax relating to items that will not be reclassified |
|
|
(11 |
) |
|
|
5 |
|
|
|
18 |
|
|
|
0 |
|
Other comprehensive income after tax for items that will not be reclassified to profit or loss |
|
|
|
|
|
|
7 |
|
|
|
21 |
|
|
|
6 |
|
Items that will be reclassified subsequently to profit or loss |
|
|
(21 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on translations |
|
|
|
|
|
|
106 |
|
|
|
193 |
|
|
|
74 |
|
Available-for-sale financial assets |
|
|
(27 |
) |
|
|
7 |
|
|
|
3 |
|
|
|
15 |
|
Cash flow hedges |
|
|
(26 |
) |
|
|
1 |
|
|
|
21 |
|
|
|
43 |
|
Income tax relating to items that will be reclassified |
|
|
(11 |
) |
|
|
7 |
|
|
|
0 |
|
|
|
12 |
|
Other comprehensive income after tax for items that will be reclassified to profit or loss |
|
|
|
|
|
|
105 |
|
|
|
175 |
|
|
|
120 |
|
Other comprehensive income net of tax |
|
|
|
|
|
|
98 |
|
|
|
154 |
|
|
|
114 |
|
TOTAL COMPREHENSIVE INCOME |
|
|
|
|
|
|
3,537 |
|
|
|
1,967 |
|
|
|
1,864 |
|
attributable to owners of parent |
|
|
|
|
|
|
3,536 |
|
|
|
1,965 |
|
|
|
1,862 |
|
attributable to non-controlling interests |
|
|
|
|
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
The accompanying Notes are an integral part of
these Consolidated Financial Statements.
F-4
SAP AG AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION OF SAP GROUP
as at December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note |
|
|
(Unaudited) 2011(1) |
|
|
2011 |
|
|
2010 |
|
|
|
|
|
|
US$ |
|
|
|
|
|
|
|
|
|
millions |
|
Cash and cash equivalents |
|
|
|
|
|
|
6,441 |
|
|
|
4,965 |
|
|
|
3,518 |
|
Other financial assets |
|
|
(13 |
) |
|
|
1,060 |
|
|
|
817 |
|
|
|
158 |
|
Trade and other receivables |
|
|
(14 |
) |
|
|
4,531 |
|
|
|
3,493 |
|
|
|
3,099 |
|
Other non-financial assets |
|
|
(15 |
) |
|
|
243 |
|
|
|
187 |
|
|
|
181 |
|
Tax assets |
|
|
|
|
|
|
269 |
|
|
|
207 |
|
|
|
187 |
|
Total current assets |
|
|
|
|
|
|
12,544 |
|
|
|
9,669 |
|
|
|
7,143 |
|
Goodwill |
|
|
(16 |
) |
|
|
11,298 |
|
|
|
8,709 |
|
|
|
8,428 |
|
Intangible assets |
|
|
(16 |
) |
|
|
2,626 |
|
|
|
2,024 |
|
|
|
2,376 |
|
Property, plant, and equipment |
|
|
(17 |
) |
|
|
2,012 |
|
|
|
1,551 |
|
|
|
1,449 |
|
Other financial assets |
|
|
(13 |
) |
|
|
698 |
|
|
|
538 |
|
|
|
475 |
|
Trade and other receivables |
|
|
(14 |
) |
|
|
109 |
|
|
|
84 |
|
|
|
78 |
|
Other non-financial assets |
|
|
(15 |
) |
|
|
51 |
|
|
|
39 |
|
|
|
31 |
|
Tax assets |
|
|
|
|
|
|
189 |
|
|
|
146 |
|
|
|
122 |
|
Deferred tax assets |
|
|
(11 |
) |
|
|
603 |
|
|
|
465 |
|
|
|
737 |
|
Total non-current assets |
|
|
|
|
|
|
17,586 |
|
|
|
13,556 |
|
|
|
13,696 |
|
Total assets |
|
|
|
|
|
|
30,130 |
|
|
|
23,225 |
|
|
|
20,839 |
|
|
|
|
|
|
Trade and other payables |
|
|
(18 |
) |
|
|
1,216 |
|
|
|
937 |
|
|
|
923 |
|
Tax liabilities |
|
|
|
|
|
|
531 |
|
|
|
409 |
|
|
|
164 |
|
Financial liabilities |
|
|
(18 |
) |
|
|
1,727 |
|
|
|
1,331 |
|
|
|
142 |
|
Other non-financial liabilities |
|
|
(18 |
) |
|
|
2,570 |
|
|
|
1,981 |
|
|
|
1,726 |
|
Provision TomorrowNow litigation |
|
|
(24 |
) |
|
|
300 |
|
|
|
231 |
|
|
|
997 |
|
Other provisions |
|
|
|
|
|
|
429 |
|
|
|
331 |
|
|
|
290 |
|
Provisions |
|
|
(19 |
) |
|
|
729 |
|
|
|
562 |
|
|
|
1,287 |
|
Deferred income |
|
|
(20 |
) |
|
|
1,357 |
|
|
|
1,046 |
|
|
|
911 |
|
Total current liabilities |
|
|
|
|
|
|
8,129 |
|
|
|
6,266 |
|
|
|
5,153 |
|
Trade and other payables |
|
|
(18 |
) |
|
|
56 |
|
|
|
43 |
|
|
|
30 |
|
Tax liabilities |
|
|
|
|
|
|
529 |
|
|
|
408 |
|
|
|
369 |
|
Financial liabilities |
|
|
(18 |
) |
|
|
3,795 |
|
|
|
2,925 |
|
|
|
4,449 |
|
Other non-financial liabilities |
|
|
(18 |
) |
|
|
119 |
|
|
|
92 |
|
|
|
85 |
|
Provisions |
|
|
(19 |
) |
|
|
345 |
|
|
|
266 |
|
|
|
292 |
|
Deferred tax liabilities |
|
|
(11 |
) |
|
|
615 |
|
|
|
474 |
|
|
|
574 |
|
Deferred income |
|
|
(20 |
) |
|
|
57 |
|
|
|
44 |
|
|
|
63 |
|
Total non-current liabilities |
|
|
|
|
|
|
5,516 |
|
|
|
4,252 |
|
|
|
5,862 |
|
Total liabilities |
|
|
|
|
|
|
13,645 |
|
|
|
10,518 |
|
|
|
11,015 |
|
Issued capital |
|
|
|
|
|
|
1,593 |
|
|
|
1,228 |
|
|
|
1,227 |
|
Share premium |
|
|
|
|
|
|
544 |
|
|
|
419 |
|
|
|
337 |
|
Retained earnings |
|
|
|
|
|
|
16,172 |
|
|
|
12,466 |
|
|
|
9,767 |
|
Other components of equity |
|
|
|
|
|
|
48 |
|
|
|
37 |
|
|
|
142 |
|
Treasury shares |
|
|
|
|
|
|
1,786 |
|
|
|
1,377 |
|
|
|
1,382 |
|
Equity attributable to owners of parent |
|
|
|
|
|
|
16,474 |
|
|
|
12,699 |
|
|
|
9,807 |
|
Non-controlling interests |
|
|
|
|
|
|
10 |
|
|
|
8 |
|
|
|
17 |
|
Total equity |
|
|
(21 |
) |
|
|
16,485 |
|
|
|
12,707 |
|
|
|
9,824 |
|
Equity and liabilities |
|
|
|
|
|
|
30,130 |
|
|
|
23,225 |
|
|
|
20,839 |
|
|
(1) |
The 2011 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.2973 to 1.00, the Noon Buying Rate
certified by the Federal Reserve Bank of New York on December 30, 2011. |
The accompanying Notes are an
integral part of these Consolidated Financial Statements.
F-5
SAP AG AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY OF SAP GROUP
as at December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Attributable to Owners of Parent |
|
|
|
|
|
|
|
|
|
Issued Capital |
|
|
Share Premium |
|
|
Retained Earnings |
|
|
Other Components of Equity |
|
|
Treasury Shares |
|
|
Total |
|
|
Non- Controlling Interests |
|
|
Total Equity |
|
|
|
|
|
|
Exchange Differences |
|
|
Available- for-Sale Financial Assets |
|
|
Cash Flow Hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note Reference |
|
|
(21 |
) |
|
|
(21 |
) |
|
|
(21 |
) |
|
|
Statement of comprehensive income |
|
|
|
(21 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2009 |
|
|
1,226 |
|
|
|
320 |
|
|
|
7,422 |
|
|
|
393 |
|
|
|
1 |
|
|
|
43 |
|
|
|
1,362 |
|
|
|
7,169 |
|
|
|
2 |
|
|
|
7,171 |
|
Profit after tax |
|
|
|
|
|
|
|
|
|
|
1,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,748 |
|
|
|
2 |
|
|
|
1,750 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
74 |
|
|
|
14 |
|
|
|
32 |
|
|
|
|
|
|
|
114 |
|
|
|
|
|
|
|
114 |
|
Comprehensive income |
|
|
0 |
|
|
|
0 |
|
|
|
1,742 |
|
|
|
74 |
|
|
|
14 |
|
|
|
32 |
|
|
|
0 |
|
|
|
1,862 |
|
|
|
2 |
|
|
|
1,864 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
594 |
|
|
|
|
|
|
|
594 |
|
Issuance of shares under share-based payments programs |
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
5 |
|
Reissuance of treasury shares under share-based payments programs |
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42 |
|
|
|
34 |
|
|
|
|
|
|
|
34 |
|
Addition of non-controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
10 |
|
|
|
10 |
|
Other |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
1,226 |
|
|
|
317 |
|
|
|
8,571 |
|
|
|
319 |
|
|
|
13 |
|
|
|
11 |
|
|
|
1,320 |
|
|
|
8,477 |
|
|
|
14 |
|
|
|
8,491 |
|
Profit after tax |
|
|
|
|
|
|
|
|
|
|
1,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,811 |
|
|
|
2 |
|
|
|
1,813 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
21 |
|
|
|
188 |
|
|
|
3 |
|
|
|
16 |
|
|
|
|
|
|
|
154 |
|
|
|
|
|
|
|
154 |
|
Comprehensive income |
|
|
0 |
|
|
|
0 |
|
|
|
1,790 |
|
|
|
188 |
|
|
|
3 |
|
|
|
16 |
|
|
|
0 |
|
|
|
1,965 |
|
|
|
2 |
|
|
|
1,967 |
|
Share-based payments |
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
2 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
594 |
|
|
|
|
|
|
|
594 |
|
Issuance of shares under share-based payments programs |
|
|
1 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24 |
|
|
|
|
|
|
|
24 |
|
Purchase of treasury shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220 |
|
|
|
220 |
|
|
|
|
|
|
|
220 |
|
Reissuance of treasury shares under share-based payments programs |
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158 |
|
|
|
153 |
|
|
|
|
|
|
|
153 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
1,227 |
|
|
|
337 |
|
|
|
9,767 |
|
|
|
131 |
|
|
|
16 |
|
|
|
27 |
|
|
|
1,382 |
|
|
|
9,807 |
|
|
|
17 |
|
|
|
9,824 |
|
Profit after tax |
|
|
|
|
|
|
|
|
|
|
3,438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,438 |
|
|
|
1 |
|
|
|
3,439 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
7 |
|
|
|
112 |
|
|
|
7 |
|
|
|
0 |
|
|
|
|
|
|
|
98 |
|
|
|
|
|
|
|
98 |
|
Comprehensive income |
|
|
0 |
|
|
|
0 |
|
|
|
3,431 |
|
|
|
112 |
|
|
|
7 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,536 |
|
|
|
1 |
|
|
|
3,537 |
|
Share-based payments |
|
|
|
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 |
|
|
|
|
|
|
|
9 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
713 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
713 |
|
|
|
|
|
|
|
713 |
|
Issuance of shares under share-based payments programs |
|
|
1 |
|
|
|
46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47 |
|
|
|
|
|
|
|
47 |
|
Purchase of treasury shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246 |
|
|
|
246 |
|
|
|
|
|
|
|
246 |
|
Reissuance of treasury shares under share-based payments programs |
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
251 |
|
|
|
278 |
|
|
|
|
|
|
|
278 |
|
Change in non-controlling interests |
|
|
|
|
|
|
|
|
|
|
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19 |
|
|
|
10 |
|
|
|
29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011 |
|
|
1,228 |
|
|
|
419 |
|
|
|
12,466 |
|
|
|
19 |
|
|
|
9 |
|
|
|
27 |
|
|
|
1,377 |
|
|
|
12,699 |
|
|
|
8 |
|
|
|
12,707 |
|
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-6
SAP AG AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS OF SAP GROUP
as at December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note |
|
|
(Unaudited) 2011(1) |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
|
|
|
|
Profit after tax |
|
|
|
|
|
|
4,461 |
|
|
|
3,439 |
|
|
|
1,813 |
|
|
|
1,750 |
|
Adjustments to reconcile profit after tax to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
(16),(17 |
) |
|
|
939 |
|
|
|
724 |
|
|
|
534 |
|
|
|
499 |
|
Income tax expense |
|
|
(11 |
) |
|
|
1,724 |
|
|
|
1,329 |
|
|
|
525 |
|
|
|
685 |
|
Financial income, net |
|
|
(10 |
) |
|
|
49 |
|
|
|
38 |
|
|
|
67 |
|
|
|
80 |
|
Decrease/increase in sales and bad debt allowances on trade receivables |
|
|
|
|
|
|
23 |
|
|
|
18 |
|
|
|
49 |
|
|
|
64 |
|
Other adjustments for non-cash items |
|
|
|
|
|
|
18 |
|
|
|
14 |
|
|
|
29 |
|
|
|
3 |
|
Decrease/increase in trade receivables |
|
|
|
|
|
|
553 |
|
|
|
426 |
|
|
|
123 |
|
|
|
593 |
|
Decrease/increase in other assets |
|
|
|
|
|
|
77 |
|
|
|
59 |
|
|
|
122 |
|
|
|
209 |
|
Decrease/increase in trade payables, provisions and other liabilities |
|
|
|
|
|
|
493 |
|
|
|
380 |
|
|
|
1,116 |
|
|
|
124 |
|
Decrease/increase in deferred income |
|
|
|
|
|
|
157 |
|
|
|
121 |
|
|
|
66 |
|
|
|
48 |
|
Cash outflows due to TomorrowNow litigation |
|
|
(24 |
) |
|
|
67 |
|
|
|
52 |
|
|
|
102 |
|
|
|
19 |
|
Interest paid |
|
|
|
|
|
|
180 |
|
|
|
139 |
|
|
|
66 |
|
|
|
69 |
|
Interest received |
|
|
|
|
|
|
119 |
|
|
|
92 |
|
|
|
52 |
|
|
|
22 |
|
Income taxes paid, net of refunds |
|
|
|
|
|
|
1,178 |
|
|
|
908 |
|
|
|
818 |
|
|
|
722 |
|
Net cash flows from operating activities |
|
|
|
|
|
|
4,897 |
|
|
|
3,775 |
|
|
|
2,922 |
|
|
|
3,019 |
|
Business combinations, net of cash and cash equivalents acquired |
|
|
(4 |
) |
|
|
244 |
|
|
|
188 |
|
|
|
4,194 |
|
|
|
73 |
|
Purchase of intangible assets and property, plant, and equipment |
|
|
|
|
|
|
577 |
|
|
|
445 |
|
|
|
334 |
|
|
|
225 |
|
Proceeds from sales of intangible assets or property, plant and equipment |
|
|
|
|
|
|
71 |
|
|
|
55 |
|
|
|
44 |
|
|
|
45 |
|
Purchase of equity or debt instruments of other entities |
|
|
|
|
|
|
2,654 |
|
|
|
2,046 |
|
|
|
842 |
|
|
|
1,073 |
|
Proceeds from sales of equity or debt instruments of other entities |
|
|
|
|
|
|
1,814 |
|
|
|
1,398 |
|
|
|
1,332 |
|
|
|
1,027 |
|
Net cash flows from investing activities |
|
|
|
|
|
|
1,590 |
|
|
|
1,226 |
|
|
|
3,994 |
|
|
|
299 |
|
Purchase of non-controlling interests |
|
|
|
|
|
|
36 |
|
|
|
28 |
|
|
|
0 |
|
|
|
0 |
|
Dividends paid |
|
|
(22 |
) |
|
|
925 |
|
|
|
713 |
|
|
|
594 |
|
|
|
594 |
|
Purchase of treasury shares |
|
|
(22 |
) |
|
|
319 |
|
|
|
246 |
|
|
|
220 |
|
|
|
0 |
|
Proceeds from reissuance of treasury shares |
|
|
|
|
|
|
326 |
|
|
|
251 |
|
|
|
127 |
|
|
|
24 |
|
Proceeds from issuing shares (share-based compensation) |
|
|
|
|
|
|
60 |
|
|
|
46 |
|
|
|
23 |
|
|
|
6 |
|
Proceeds from borrowings |
|
|
|
|
|
|
673 |
|
|
|
519 |
|
|
|
5,380 |
|
|
|
697 |
|
Repayments of borrowings |
|
|
|
|
|
|
1,304 |
|
|
|
1,005 |
|
|
|
2,196 |
|
|
|
2,303 |
|
Net cash flows from financing activities |
|
|
|
|
|
|
1,526 |
|
|
|
1,176 |
|
|
|
2,520 |
|
|
|
2,170 |
|
Effect of foreign currency exchange rates on cash and cash equivalents |
|
|
|
|
|
|
96 |
|
|
|
74 |
|
|
|
186 |
|
|
|
54 |
|
Net decrease/increase in cash and cash equivalents |
|
|
|
|
|
|
1,877 |
|
|
|
1,447 |
|
|
|
1,634 |
|
|
|
604 |
|
Cash and cash equivalents at the beginning of the period |
|
|
(22 |
) |
|
|
4,564 |
|
|
|
3,518 |
|
|
|
1,884 |
|
|
|
1,280 |
|
Cash and cash equivalents at the end of the period |
|
|
(22 |
) |
|
|
6,441 |
|
|
|
4,965 |
|
|
|
3,518 |
|
|
|
1,884 |
|
|
(1) |
The 2011 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.2973 to 1.00, the Noon Buying Rate
certified by the Federal Reserve Bank of New York on December 30, 2011. |
The accompanying Notes are an
integral part of these Consolidated Financial Statements.
F-7
SAP AG AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(1) |
GENERAL INFORMATION ABOUT CONSOLIDATED FINANCIAL STATEMENTS |
The accompanying Consolidated Financial Statements of SAP AG and its subsidiaries (collectively, we,
us, our, SAP, Group, and Company) have been prepared in accordance with International Financial Reporting Standards (IFRS). The designation IFRS includes all standards issued by
the International Accounting Standards Board (IASB) and related interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).
We have applied all standards and interpretations that were effective on and endorsed by the European Union (EU) as at December 31, 2011. There were no standards or interpretations impacting our
Consolidated Financial Statements for the years ended December 31, 2011, 2010, and 2009, that were effective but not yet endorsed. Therefore our Consolidated Financial Statements comply with both IFRS as issued by the IASB and with IFRS as
endorsed by the EU.
Our Executive Board approved the Consolidated Financial Statements on
February 23, 2012, for submission to our Supervisory Board.
All
amounts included in the Consolidated Financial Statements are reported in millions of euros ( millions) except where otherwise stated. Due to rounding, numbers presented throughout this document may not add up precisely to the totals we
provide and percentages may not precisely reflect the absolute figures.
(2) |
SCOPE OF CONSOLIDATION |
The Consolidated Financial Statements include SAP AG and all subsidiaries of SAP AG. Subsidiaries are all entities
that are controlled directly or indirectly by SAP AG.
The financial statements of SAP AG and its subsidiaries used in the
preparation of the Consolidated Financial Statements have December 31 as their reporting date. All financial statements were prepared applying the same IFRS Group accounting policies. Intragroup assets and liabilities, equity, income, expenses
and cash flows relating to transactions between entities of the SAP Group are eliminated in full.
The following table
summarizes the changes in the number of entities included in the Consolidated Financial Statements.
Entities Consolidated
in the Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
German |
|
|
Foreign |
|
|
Total |
|
December 31, 2009 |
|
|
19 |
|
|
|
144 |
|
|
|
163 |
|
Additions |
|
|
4 |
|
|
|
58 |
|
|
|
62 |
|
Disposals |
|
|
2 |
|
|
|
20 |
|
|
|
22 |
|
December 31, 2010 |
|
|
21 |
|
|
|
182 |
|
|
|
203 |
|
Additions |
|
|
4 |
|
|
|
9 |
|
|
|
13 |
|
Disposals |
|
|
2 |
|
|
|
15 |
|
|
|
17 |
|
December 31, 2011 |
|
|
23 |
|
|
|
176 |
|
|
|
199 |
|
The additions relate to legal entities added in connection with acquisitions and
foundations. The disposals are due to sales, mergers, and liquidations of consolidated or acquired legal entities.
In 2010,
we acquired Sybase, which is significant to some positions in our financial
statements and may affect comparability of our 2011 Consolidated Financial Statements with our 2010 and 2009 Consolidated Financial Statements. For more information about our business
combinations and the effect on our Consolidated Financial Statements, see Note (4).
F-8
(3) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
(3a) |
Bases of Measurement |
The Consolidated Financial Statements have been prepared on the historical cost basis except for the following:
|
|
|
Derivative financial instruments, available-for-sale financial assets (except for investments in certain equity instruments without a quoted market
price), 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. |
|
|
|
Pensions are measured according to IAS 19(Employee Benefits) as described in Note (19a). |
Where applicable, information about the methods and assumptions used in determining the respective measurement bases and fair values is
disclosed in the Notes specific to that asset or liability.
(3b) |
Relevant Accounting Policies |
Business Combinations and Goodwill
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred. The consideration transferred in an acquisition is
measured at the fair value of the assets transferred and liabilities incurred at the date of transfer of control. Settlements of pre-existing relationships are not included in the consideration transferred. Such amounts are recognized in profit and
loss. Identifiable assets acquired and liabilities assumed in a business combination (including contingent consideration) are measured at their fair values at the acquisition date. Changes in contingent consideration classified as a liability at the
acquisition date are recognized in profit and loss. We decide on a transaction-by-transaction basis
whether to measure the noncontrolling interest in the acquiree either at fair value or at the proportionate share of the acquirees identifiable net assets. Where a business combination is
achieved in stages SAP recognizes the gain or loss from remeasuring the equity interest to fair value in finance income. Acquisition-related costs incurred are expensed and included in general and administration expenses.
The excess of the consideration transferred in a business combination over the fair value of the SAP share of the identifiable net
assets acquired is recorded as goodwill.
In respect to at-equity investments, the carrying amount of goodwill is included in
the carrying amount of the investment.
Foreign Currencies
Assets and liabilities of our foreign subsidiaries that use a functional currency other than the euro are translated at the closing rate at the date of the Statement of Financial Position. Income and
expenses are translated at average rates of exchange computed on a monthly basis. All resulting exchange differences are recognized in other comprehensive income. Exchange differences from monetary items denominated in foreign currency transactions
that are part of a long-term investment are also included in other comprehensive income in our Consolidated Statements of Financial Position. When a foreign operation is disposed of, liquidated, or abandoned, the foreign currency translation
adjustments applicable to that entity are reclassified from other comprehensive income to profit or loss.
On initial
recognition, foreign currency transactions are recorded in the respective functional currencies of Group entities by applying to the foreign currency amount the exchange rate at the date of the transaction. Monetary assets and liabilities that are
denominated in foreign currencies are remeasured at the period-end closing rate. Resulting exchange differences are recognized, in the period in which they arise, in other non-operating expense, net in the Consolidated Income Statements.
F-9
Operating cash flows of foreign subsidiaries are translated into euros using average
rates of exchange computed on a monthly basis. Investing and financing cash flows of foreign subsidiaries are translated into euros using the exchange rates in effect at the time of the respective transaction. The effect of exchange rate changes on
cash is reported in a separate line in the Consolidated Statements of Cash Flows.
Any goodwill arising from the acquisition of a foreign operation and any fair value
adjustments to the carrying amounts of assets and liabilities arising from the acquisition are treated as assets and liabilities of the foreign operation and translated at the respective closing rates.
The exchange rates of
key currencies affecting the Company were as follows:
Exchange Rates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing Rate as at December 31, |
|
|
Annual Average Exchange Rate |
|
Equivalent to 1 |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
U.S. dollar |
|
USD |
|
|
1.2939 |
|
|
|
1.3362 |
|
|
|
1.3863 |
|
|
|
1.3201 |
|
|
|
1.3962 |
|
Pound sterling |
|
GBP |
|
|
0.8353 |
|
|
|
0.8608 |
|
|
|
0.8656 |
|
|
|
0.8570 |
|
|
|
0.8901 |
|
Japanese yen |
|
JPY |
|
|
100.20 |
|
|
|
108.65 |
|
|
|
110.17 |
|
|
|
115.07 |
|
|
|
130.66 |
|
Swiss franc |
|
CHF |
|
|
1.2156 |
|
|
|
1.2504 |
|
|
|
1.2299 |
|
|
|
1.3699 |
|
|
|
1.5097 |
|
Canadian dollar |
|
CAD |
|
|
1.3215 |
|
|
|
1.3322 |
|
|
|
1.3739 |
|
|
|
1.3583 |
|
|
|
1.5832 |
|
Australian dollar |
|
AUD |
|
|
1.2723 |
|
|
|
1.3136 |
|
|
|
1.3436 |
|
|
|
1.4198 |
|
|
|
1.7394 |
|
Revenue Recognition
We derive our revenue from the sale or license of our software products and of support, subscription, consulting, development, training, and other services. The vast majority of our software arrangements
include support services, and many also include professional services and other elements.
Software and software-related
service revenue, as shown in our Consolidated Income Statements, is the sum of our software revenue, support revenue, and revenue from subscriptions, cloud subscriptions and support, and other software-related services. Professional services and
other service revenue as shown in our Consolidated Income Statements is the sum of our consulting revenue and other service revenue. Other service revenue as shown in our Consolidated Income Statements mainly consists of revenue from training
services, messaging services, and SAP marketing events. Revenue information by segment and geographic region is disclosed in Note (29).
If, for any of our product or service offerings, we determine at the outset of an
arrangement that the amount of revenue cannot be measured reliably, we conclude that the inflow of economic benefits associated with the transaction is not probable, and we defer revenue until
the arrangement fee becomes due and payable by the customer. If, at the outset of an arrangement, we determine that collectability is not probable, we conclude that the inflow of economic benefits associated with the transaction is not probable, and
we defer revenue recognition until the earlier of when collectability becomes probable or payment is received. If collectability becomes unlikely before all revenue from an arrangement is recognized, we recognize revenue only to the extent of the
fees that are successfully collected unless collectability becomes reasonably assured again. If a customer is specifically identified as a bad debtor, we stop recognizing revenue except to the extent of the fees that have already been collected.
We account for out-of-pocket expenses invoiced by SAP and reimbursed by customers as support, consulting, or training
revenue, depending on the nature of the service for which the out-of-pocket expenses were incurred.
F-10
Software revenue represents fees earned from the sale or license of software to
customers. Revenue from the sale of perpetual licenses of our standard products is recognized in line with the requirements for selling goods stated in IAS 18 (Revenue) when evidence of an arrangement exists, delivery has occurred, the risks
and rewards of ownership have been transferred to the customer, the amount of revenue and associated costs can be measured reliably, and collection of the related receivable is reasonably assured. The sale is recognized net of returns and
allowances, trade discounts, and volume rebates. We usually sell or license software on a perpetual basis.
Occasionally, we
license software for a specified time. Revenue from short-term time-based licenses, which usually include support services during the license period, is recognized ratably over the license term. Revenue from multi-year time-based licenses that
include support services, whether separately priced or not, is recognized ratably over the license term unless a substantive support service renewal rate exists; if this is the case, the amount allocated to the delivered software is recognized as
software revenue based on the residual method once the basic criteria described above have been met. In general, our software license agreements do not include acceptance-testing provisions. If an arrangement allows for customer acceptance-testing
of the software, we defer revenue until the earlier of customer acceptance or when the acceptance right lapses. We usually recognize revenue from software arrangements involving resellers on evidence of sell-through by the reseller to the
end-customer, because the inflow of the economic benefits associated with the arrangements to us is not probable before sell-through has occurred.
Sometimes we enter into customer-specific software development agreements. We recognize software revenue in connection with these arrangements using the percentage-of-completion method based on contract
costs incurred to date as a percentage of total estimated contract costs required to complete the development work. If we do not have a sufficient basis to reasonably
measure the progress of completion or to estimate the total contract revenue and costs, revenue is recognized only to the extent of the contract costs incurred for which we believe recoverability
to be probable. When it becomes probable that total contract costs exceed total contract revenue in an arrangement, the expected losses are recognized immediately as an expense based on the costs attributable to the contract.
Support revenue represents fees earned from providing customers with unspecified future software updates, upgrades, and enhancements,
and technical product support. We recognize support revenue for most of our services ratably over the term of the support arrangement. We do not separately sell technical product support or unspecified software upgrades, updates, and enhancements.
Accordingly, we do not distinguish within software and software-related service revenue or within cost of software and software-related services the amounts attributable to technical support services and unspecified software upgrades, updates, and
enhancements.
Subscription and other software-related service revenue represents fees earned from subscription and software
rental arrangements, cloud subscriptions and support, and other software-related services. Subscription contracts combine software and support service elements, as under these contracts the customer is provided with current software products, rights
to receive unspecified future software products, and rights to support services during the subscription term. Customers pay a periodic fee for a defined subscription term, and we recognize such fees ratably over the term of the arrangement beginning
with the delivery of the first product.
Software rental contracts also combine software and support service elements. Under
such contracts the customer is provided with current software products and support, but not with the right to receive unspecified future software products. Customers pay a periodic fee over the rental term and we recognize fees from software rental
contracts ratably over the term of the arrangement.
F-11
Revenue from cloud subscriptions relates to software hosting arrangements that provide
the customer with the right to use certain software functionality, but do not include the right to terminate the hosting contract and take possession of the software without significant penalty. Cloud subscription revenue as well as revenue from
support services provided for our cloud offerings is generally recognized ratably over the term of the arrangement.
Other
software-related service revenue mainly results from software-related revenue-sharing agreements with other software vendors.
We recognize consulting and other service revenue when the services are performed. Consulting revenue primarily results from
implementation contracts to install and configure our software products. Usually, our consulting contracts do not involve significant production, modification, or customization of software and are recognized using the percentage-of-completion method
of accounting as outlined above.
Other service revenue consists of fees from training services, cancelable hosting
contracts, application management services (AMS), messaging services, revenue from SAP marketing events, and referral fees.
Training services provide educational services to customers and partners regarding the use of our software products. We recognize
training revenue when the services are rendered. Cancelable hosting contracts allow the customer to terminate a software hosting arrangement at any time and to take possession of the hosted software without significant penalty. In these contracts
revenue is allocated to the hosting element and to the software element. The hosting revenue is recognized ratably over the agreed hosting period. Our AMS contracts provide post-implementation application support, optimization, and improvements to a
customers IT solution. We recognize revenue from AMS services when the services are rendered. Messaging revenue mainly represents fees earned from transmitting electronic text messages from one mobile phone provider to another. We recognize
revenue from message
services based upon the number of messages successfully processed and delivered. Revenue from fixed-price messaging arrangements is recognized ratably over the contractual term of the
arrangement. Revenue from marketing events hosted by SAP, for which SAP sells tickets to its customers, is recognized after the marketing event takes place. Fees from referral services are commissions from partners to which we have referred
customers.
The vast majority of our software arrangements form multiple-element arrangements, as they include support
services, and many also include professional services and other elements. As authorized by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8), we follow the guidance provided by FASB ASC Subtopic 985-605,
Software Revenue Recognition, as amended, in order to determine the recognizable amount of license revenue in multiple-element arrangements. Revenue from multiple-element arrangements is recognized using the residual method of revenue recognition
when company-specific objective evidence of fair value exists for all of the undelivered elements (for example, support services, consulting services, or other services) in the arrangement, but does not exist for one or more delivered elements
(generally software). We determine the fair value of and allocate revenue to each undelivered element based on its company-specific objective evidence of fair value, which is the price charged when that element is sold separately or, for elements
not yet sold separately, the price established by our management if it is probable that the price will not change before the element is sold separately. We allocate revenue to undelivered support services based on the rates charged to renew the
support services annually after an initial period. Such renewal rates generally represent a fixed percentage of the discounted software license fee charged to the customer. The vast majority of our customers renew their annual support service
contracts at these rates. We allocate revenue to future incremental discounts whenever customers are granted the right to license additional software at a higher discount than the one given within the initial
F-12
software license arrangement, or to purchase or renew support or services at rates below company-specific objective evidence of fair value of the service.
We defer revenue for all undelivered elements and recognize the residual amount of the arrangement fee attributable to the delivered
elements, if any, when the revenue recognition criteria described above have been met and company-specific objective evidence of fair value for the undelivered elements exists.
Combining or segmenting multiple-element arrangements consisting of software and consulting or other professional services depends on:
|
|
|
Whether the arrangement involves significant production, modification, or customization of the software, and |
|
|
|
Whether the services are not available from third-party vendors and are therefore deemed essential to the software. |
If neither of the above is the case, revenue for the software element and the other element is recognized separately. In contrast, if
one or both of the above is the case, the elements of the arrangement are combined and accounted for as a single unit of accounting, and the entire arrangement fee is recognized using the percentage-of-completion method as outlined above. If the
arrangement includes multiple elements, we exclude those elements from contract accounting that meet the criteria for separate recognition (for example support services or training), provided that the elements have stand-alone value.
Our contributions to resellers that allow our resellers to execute qualified and approved marketing activities are recognized as an
offset to revenue, unless we obtain a separate identifiable benefit for the contribution, and the fair value of the benefit is reasonably estimable.
Cost of Software and Software-Related Services
Cost of software and
software-related services includes the cost incurred in producing
the goods and providing the services that generate software and software-related service revenue. Consequently this line item includes employee expenses relating to these services, amortization
of acquired intangibles, third-party licenses, shipping and ramp-up cost, etc.
Cost of Professional Services and Other Services
Cost of professional services and other services includes the cost incurred in providing the services that generate
professional service and other service revenue including messaging revenues. The item also includes sales and marketing expenses related to our professional services and other services that result from sales and marketing efforts that cannot be
clearly separated from providing the services.
Research and Development
Research and development includes the costs incurred by activities related to the development of software solutions (new products,
updates, and enhancements) including resource and hardware costs for the development systems.
Development activities involve
the application of research findings or other knowledge to a plan or design of new or substantially improved software products before the start of commercial use. Development expenditures are capitalized only if all of the following criteria are
met:
|
|
|
The development cost can be measured reliably. |
|
|
|
The product is technically and commercially feasible. |
|
|
|
Future economic benefits are probable. |
|
|
|
We intend to complete development and market the product. |
We have determined that the conditions for recognizing internally generated intangible assets from our software development activities are not met until shortly before the products are available for sale.
Development costs incurred after the recognition criteria are met have not
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been material. Consequently, all research and development costs are expensed as incurred.
Sales and Marketing
Sales and marketing includes costs incurred for the selling and marketing activities related to our software solutions,
software-related service portfolio and messaging business.
General and Administration
General and administration includes costs related to finance and administrative functions, human resources and general management as
long as they are not directly attributable to one of the other operating expense line items.
Leases
We are a lessee of property, plant, and equipment, mainly buildings, hardware, and vehicles, under operating leases that do not
transfer to us the substantive risks and rewards of ownership. Rent expense on operating leases is recognized on a straight-line basis over the life of the lease including renewal terms if, at inception of the lease, renewal is reasonably assured.
Some of our operating leases contain lessee incentives, such as up-front payments of costs or free or reduced periods of
rent. The incentives are amortized over the life of the lease and the rent expense is recognized on a straight-line basis over the life of the lease. The same applies to contractually-agreed future increases of rents.
Income Tax
Deferred
taxes are accounted for under the liability method. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the Statements of
Financial Position and their respective tax bases and on the carryforwards of unused tax losses and unused tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which
the
deductible temporary differences, unused tax losses, and unused tax credits can be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have
been enacted or substantively enacted by the end of the reporting period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in profit or loss, unless related to items directly recognized in equity, in the
period that includes the respective enactment date.
The carrying amount of a deferred tax asset is reviewed at the end of
each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax assets to be utilized.
Share-Based Compensation
Share-based compensation covers cash-settled and equity-settled awards issued to our employees. The fair values of both equity-settled and cash-settled awards are measured at grant date using an
option-pricing model.
The fair value of equity-settled awards is not subsequently remeasured. The grant-date fair value of
equity-settled awards is recognized as personnel expense in profit or loss over the period in which the employees become unconditionally entitled to the rights, with a corresponding increase in share premium. The amount recognized as an expense is
adjusted to reflect the actual number of equity-settled awards that ultimately vest. We grant our employees discounts on certain share-based compensation plans. Since those discounts are not dependent on future services to be provided by our
employees, the discount is recognized as an expense when the rights are granted.
For the share-based payment plans that are
settled by paying cash rather than by issuing equity instruments, a provision is recorded for the rights granted reflecting the vested portion of the fair value of the rights at the reporting date. Personnel expense is accrued over the period the
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beneficiaries are expected to perform the related service (vesting period), with a corresponding increase in provisions. Cash-settled awards are remeasured to fair value at each Statement of
Financial Position date until the award is settled. Any changes in the fair value of the provision are recognized as personnel expense in profit or loss. The amount of unrecognized compensation expense related to non-vested share-based payment
arrangements granted under our cash-settled plans is dependent on the final intrinsic value of the awards. The amount of unrecognized compensation expense is dependent on the future price of our common shares which we cannot reasonably predict.
In the event we hedge our exposure to cash-settled awards, changes in the fair value of the respective hedging instruments
are also recognized as personnel expense in profit or loss. The fair values for hedged programs are based on market data reflecting current market expectations.
For more information about our share-based compensation plans, see Note (28).
Other
Components of Equity
Other components of equity include:
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Currency effects arising from the translation of the financial statements of our foreign operations as well as the currency effects from intercompany
long-term monetary items for which settlement is neither planned nor likely to occur in the foreseeable future. |
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Unrealized gains and losses on available-for-sale financial assets. |
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Gains and losses on cash flow hedges comprising the net change in fair value of the effective portion of the respective cash flow hedges that have not
yet impacted profit or loss. |
Treasury Shares
Treasury shares are recorded at acquisition cost and are presented as a deduction from total
equity. Gains and losses on the subsequent reissuance of treasury shares are credited or charged to share premium on an after-tax basis. On cancellation of treasury shares any excess of their
carrying amount over the calculated par value is charged to retained earnings.
Non Controlling Interest
Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. Changes in
non-controlling interest result from changes in equity of the respective subsidiary as well as changes in ownership. Upon a change in ownership the carrying amount of the controlling and non controlling interest is adjusted to reflect the changes in
their relative interests in the subsidiary. Any difference between the amount of adjustment to non-controlling interest and the fair value of the consideration paid or received is recognized directly in retained earnings.
Earnings per Share
We present basic and diluted earnings per share (EPS). Basic earnings per share is determined by dividing profit after tax attributable
to equity holders of SAP AG by the weighted average number of common shares outstanding during the respective year. Diluted earnings per share reflect the potential dilution that would occur if all in the money securities to issue common
shares were exercised or converted. The average market value of the Companys shares for purposes of calculating the dilutive effect of share options is based on quoted market prices for the period during which the options were outstanding.
Financial Assets
Our financial assets comprise cash and cash equivalents (highly liquid investments with original maturities of three months or less), loans and receivables, acquired equity and debt investments, and
derivative financial instruments (derivatives) with positive fair values.
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These assets are recognized and measured in accordance with IAS 39 (Financial
Instruments: Recognition and Measurement ). Accordingly, financial assets are recognized in the Consolidated Statements of Financial Position if we have a contractual right to receive cash or other financial assets from another entity. Regular way
purchases or sales of financial assets are recorded at the trade date. Financial assets are initially recognized at fair value plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.
Interest-free or below-market-rate loans and receivables are initially measured at the present value of the expected future cash flows. The subsequent measurement depends on the classification of our financial assets to the following categories
according to IAS 39:
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Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are neither quoted in an
active market nor intended to be sold in the near term. This category comprises trade receivables, receivables and loans included in other financial assets, and cash and cash equivalents. We carry loans and receivables at amortized cost less
impairment losses. Interest income from items assigned to this category is determined using the effective interest method if the time value of money is material. For further information on trade receivables see the Trade and Other Receivables
section. |
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Available-for-sale financial assets: Available-for-sale financial assets are non-derivative financial assets that are not assigned to either of the two
other categories and mainly include equity investments and debt investments. If readily determinable from market data, available-for-sale financial assets are measured at fair value, with changes in fair value being reported net of tax in other
comprehensive income. Fair value changes are not recognized in profit or loss until the assets are sold or impaired.
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Available-for-sale financial assets for which no market price is available and whose fair value cannot be reliably estimated in the absence of an active market are carried at cost less impairment
losses. |
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Financial assets at fair value through profit or loss: Financial assets at fair value through profit or loss comprise only those financial assets that
are held for trading, as we do not designate financial assets at fair value through profit or loss on initial recognition. This category solely contains embedded and freestanding derivatives with positive fair values, except where hedge accounting
is applied. All changes in the fair value of financial assets in this category are immediately recognized in profit or loss. For more information about derivatives, see the Derivatives section. |
All financial assets not accounted for at fair value through profit or loss are assessed for impairment at each reporting date or if we
become aware of objective evidence of impairment as a result of one or more events that indicate that the carrying amount of the asset may not be recoverable. Objective evidence includes but is not limited to a significant or prolonged decline of
the fair value below its carrying amount, a high probability of insolvency, or a material breach of contract by the issuer such as a significant delay or a shortfall in payments due. Impairment charges in the amount of the difference of an
assets carrying amount and the present value of the expected future cash flows or current fair value, respectively, are recognized in finance income, net. For available-for-sale financial assets such impairment charges directly reduce an
assets carrying amount while impairments on loans and receivables are recorded using allowance accounts. Account balances are charged off against the respective allowance after all collection efforts have been exhausted and the likelihood of
recovery is considered remote. Impairment losses are reversed if the reason for
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the original impairment loss no longer exists. No such reversals are made for available-for-sale equity investments.
Income/expenses and gains/losses on financial assets consist of impairment charges and reversals, interest income and expenses, dividends, and gains and losses from the disposal of such assets. Dividend
income is recognized when earned. Interest income is recognized based on the effective interest method. Neither dividend nor interest income is included in net gains/losses at the time of disposal of an asset. Financial assets are derecognized when
contractual rights to receive cash flows from the financial assets expire or the financial assets are transferred together with all material risks and benefits.
Investments in Associates
Companies in which we do not have a
controlling financial interest, but over which we can exercise significant operating and financial influence (associates) are accounted for using the equity method.
Derivatives
We account for derivatives and hedging activities in
accordance with IAS 39 at fair value.
Derivatives without Designated Hedge Relationship
Many transactions constitute economic hedges, and therefore contribute effectively to the securing of financial risks but do not
qualify for hedge accounting under IAS 39. For the hedging of currency risks inherent in foreign currency denominated and recognized monetary assets and liabilities, we do not designate our held-for-trading derivative financial instruments as
accounting hedges, as the realized profits and losses from the underlying transactions are recognized in profit or loss in the same periods as the realized profits or losses from the derivatives.
Embedded Derivatives
We occasionally have contracts that require payment streams in currencies other than the functional currency of either party to the
contract. Such embedded foreign currency derivatives are separated from the host contract and accounted for separately if the following are met:
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The economic characteristics and risks of the host contract and the embedded derivative are not closely related. |
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A separate instrument with the same terms as the embedded derivative would meet the definition of a derivative. |
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The combined instrument is not measured at fair value through profit or loss. |
Derivatives with Designated Cash Flow Hedge Relationship
Derivatives that are part of a hedging relationship that qualifies for hedge accounting under IAS 39 are carried at their fair value.
We designate and document the hedge relationship, including the nature of the risk, the identification of the hedged item, the hedging instrument, and how we will assess the hedge effectiveness. The accounting for changes in fair value of the
hedging instrument depends on the effectiveness of the hedging relationship. The effective portion of the unrealized gain or loss on the derivative instrument determined to be an effective hedge is recognized in other comprehensive income. We
subsequently reclassify the portion of gains or losses from other comprehensive income to profit or loss when the hedged transaction affects profit or loss. The ineffective portion of gains or losses is recognized in profit or loss immediately. For
more information about our hedges, see Note (26).
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Valuation and Testing of Effectiveness
The fair value of our derivatives is calculated by discounting the expected future cash flows using relevant interest rates, and spot
rates over the remaining lifetime of the contracts.
Gains or losses on the spot price and the intrinsic values of the
derivatives designated and qualifying as cash flow hedges are recognized directly in other comprehensive income, while gains and losses on the interest element and on those time values excluded from the hedging relationship are recognized in profit
or loss immediately.
The effectiveness of the hedging relationship is tested prospectively and retrospectively.
Prospectively, we apply the critical terms match for our foreign currency hedges as currencies, maturities, and the amounts are identical for the forecasted transactions and the spot element of the forward exchange rate contract or intrinsic value
of the currency options, respectively. For interest rate swaps, we also apply the critical terms match as the notional amounts, currencies, maturities, basis of the variable legs (EURIBOR), reset dates, and the dates of the interest and principal
payments are identical for the debt instrument and the corresponding interest rate swaps. Therefore, over the life of the hedging instrument, the changes in cash flows of the hedging relationship components will offset the impact of fluctuations of
the underlying forecasted transactions.
Retrospectively, effectiveness is tested on a cumulative basis applying the Dollar
Offset Method by using the Hypothetical Derivative Method. Under this approach, the change in fair value of a constructed hypothetical derivative with terms reflecting the relevant terms of the hedged item is compared to the change in the fair value
of the hedging instrument employing its relevant terms. The hedge is deemed highly effective if the results are within the range 80% to 125%.
Trade and Other Receivables
Trade receivables are recorded at invoiced amounts less sales allowances and allowances for doubtful accounts. We record these allowances based on a specific review of all significant outstanding
invoices. When analyzing the recoverability of our trade receivables, we consider the following factors:
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First, we consider the financial solvency of specific customers and record an allowance for specific customer balances when we believe it is probable
that we will not collect the amount due according to the contractual terms of the arrangement. |
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Second, we evaluate homogenous portfolios of trade receivables according to their default risk primarily based on the age of the receivable and
historical loss experience, but also taking into consideration general market factors that might impact our trade receivable portfolio. We record a general bad debt allowance to record impairment losses for a portfolio of trade receivables when we
believe that the age of the receivables indicates that it is probable that a loss has occurred and we will not collect some or all of the amounts due. |
Account balances are written off, that is, charged off against the allowance after all collection efforts have been exhausted and the likelihood of recovery is considered remote.
In our Consolidated Income Statements, expenses from recording bad debt allowances for a portfolio of trade receivables are classified
as other operating income, net, whereas expenses from recording bad debt allowances for specific customer balances are classified as cost of software and software-related services or cost of professional services and other services, depending on the
transaction from which the respective trade receivable results. Sales allowances are recorded as an offset to the respective revenue item.
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Included in trade receivables are unbilled receivables related to fixed-fee and
time-and-material consulting arrangements for contract work performed to date.
Other Non-Financial Assets
Other non-financial assets are recorded at amortized cost, which approximates fair value due to their short-term nature.
We capitalize the discount of our loans to employees as prepaid expenses and release it ratably to personnel expenses.
Intangible Assets
We
classify intangible assets according to their nature and use in our operation. Software and database licenses consist primarily of technology for internal use, whereas acquired technology consists primarily of purchased software to be incorporated
into our product offerings and in-process research and development. Other intangibles consist primarily of acquired trademark licenses and customer contracts.
Purchased intangible assets with finite useful lives are recorded at acquisition cost and are amortized either based on expected usage or on a straight-line basis over their estimated useful lives ranging
from two to 16 years. All of
our intangible assets, with the exception of goodwill, have finite useful lives and are therefore subject to amortization.
We recognize acquired in-process research and development projects as an intangible asset separate from goodwill if a project meets the
definition of an asset. Amortization for these intangible assets starts when the projects are complete and the developed software is taken to the market. We typically amortize these intangibles over five to seven years.
Amortization expenses of intangible assets are classified as cost of software and software-related services, cost of professional
services and other services, research and development, sales and marketing, and general and administration depending on their use.
Property, Plant, and Equipment
Property, plant, and equipment are carried at acquisition cost plus the fair value of related asset retirement costs, if any and if reasonably estimable, and less accumulated depreciation. Interest
incurred during the construction of qualifying assets is capitalized and amortized over the related assets estimated useful lives.
Property, plant, and equipment are depreciated over their expected useful lives, generally using the straight-line method. Land is not depreciated.
Useful Lives of
Property, Plant, and Equipment
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Useful Lives of
Property, Plant, and Equipment |
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Buildings |
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25 to 50 years |
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Leasehold improvements |
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Based on the lease contract |
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Information technology equipment |
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3 to 5 years |
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Office furniture |
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4 to 20 years |
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Automobiles |
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4 to 5 years |
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Leasehold improvements are depreciated using the straight-line method over the shorter of
the term of the lease or the useful life of the asset. If a renewal option exists, the term used
reflects the additional time covered by the option if exercise is reasonably assured when the leasehold improvement is first put into operation.
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Impairment of Goodwill and Non-Current Assets
We test goodwill for impairment at least annually and when events occur or changes in circumstances indicate that the recoverable
amount of a cash-generating unit to which goodwill has been allocated to is less than its carrying value.
The recoverable
amount of goodwill is estimated each year at the same time. The goodwill impairment test is performed at the level of our operating segments since there are no lower levels in SAP at which goodwill is monitored for internal management purposes.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the operating segments
that are expected to benefit from the synergies of the combination. If the carrying amount of the operating segment to which the goodwill is allocated exceeds the recoverable amount, an impairment loss on goodwill allocated to this operating segment
is recognized. The recoverable amount is the higher of the operating segments fair value less cost to sell and its value in use. These values are generally determined based on discounted cash flow calculations. We determine the recoverable
amount of a segment based on its value in use. Impairment losses on goodwill are not reversed in future periods if the recoverable amounts exceed the carrying amount.
We review non-current assets, such as property, plant, equipment, and acquired intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or
group of assets may not be recoverable. Intangible assets not yet available for use are tested for impairment annually.
For
the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or
groups of assets. If assets do not generate cash inflows that are
largely independent of those from other assets or groups of assets, the impairment test is not performed at an individual asset level; instead, it is performed at the level of the cash-generating
unit (CGU) to which the asset belongs.
An impairment loss is recognized if the carrying amount of an asset or its CGU
exceeds its estimated recoverable amount. The recoverable amount of an asset or its CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses are recognized in other operating income, net in profit or loss.
Impairment losses for non-current assets recognized in the prior periods are assessed at each reporting date for indicators that the loss has decreased or no longer exists. Accordingly, if there is an
indication that the reasons that caused the impairment no longer exist, we would consider the need to reverse all or a portion of the impairment through profit or loss.
Contingent Assets
We carry insurance policies amongst others to offset
the expenses associated with defending against litigation matters as well as other risks. To mitigate the risk of customer default, our trade receivables are partially covered by merchandise credit insurance. We recognize the respective
reimbursements in profit or loss when it is virtually certain that the reimbursement will be received and retained by us.
Liabilities
Financial Liabilities
Financial liabilities include trade and other payables, bank loans, issued bonds, private placements and other financial liabilities which comprise derivative and non-derivative financial liabilities.
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Financial liabilities are recognized and measured in accordance with IAS 39. Accordingly,
they are recognized in the Consolidated Financial Statements if we have a contractual obligation to transfer cash or another financial asset to another party. Financial liabilities are initially recognized at fair value. In the case of financial
liabilities not at fair value through profit or loss this includes directly attributable transaction costs. If material, financial liabilities are discounted to present value based on prevailing market rates adjusted for credit risk, with the
discount being recognized over time as interest expense. The subsequent measurement depends on the allocation of financial liabilities to the following categories according to IAS 39:
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Financial liabilities at fair value through profit or loss only comprise those financial liabilities that are held for trading, as we do not designate
financial liabilities at fair value through profit or loss on initial recognition. This category solely contains embedded and other derivatives with negative fair values, except where hedge accounting is applied. All changes in the fair value of
financial liabilities in this category are immediately recognized in profit or loss. For more information about derivatives, see the Derivatives section. |
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Financial liabilities at amortized cost include all non-derivative financial liabilities not quoted in an active market which are measured at amortized
cost using the effective interest method. |
Expenses and gains/losses on financial liabilities consist of
interest expenses, and gains and losses from the disposal of such liabilities. Interest expense is recognized based on the effective interest method.
Financial liabilities are derecognized when the contractual obligation is discharged, canceled or has expired.
Non-Financial Liabilities
Other non-financial liabilities with fixed or determinable payments that are not quoted in an active market are mainly the result of
obligations to employees and fiscal authorities and are generally measured at amortized cost.
Provisions
Provisions are recorded when:
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It is more likely than not that we have a legal or constructive obligation to third parties as a result of a past event. |
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The amount can be reasonably estimated. |
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It is probable that there will be an outflow of future economic benefits to settle the obligation, while there may be uncertainty about the timing or
amount of the future expenditure required in the settlement. |
We regularly adjust provisions as further
information becomes available or circumstances change. Non-current provisions are reported at the present value of their expected settlement amounts as at the reporting date. Discount rates are regularly adjusted to current market interest rates.
Post-Employment Benefits
We measure our pension-benefit liabilities and other post-employment benefits based on actuarial computations using the projected-unit-credit method in accordance with IAS 19. The assumptions used to
calculate pension liabilities and costs are disclosed in Note (19a). As a result of the actuarial calculation for each plan we recognize an asset or liability for the overfunded or underfunded status of the respective defined benefit plan. We
classify a portion of the liability as current (determined on a plan-by-plan basis) if the amount by which the actuarial present value of benefits included in the benefit obligation payable within the next 12 months exceeds the fair value of plan
assets. Changes in the amount of the defined benefit obligation or plan assets
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resulting from demographic and financial data different than originally assumed and from changes in assumptions can result in actuarial gains and losses. We recognize all actuarial gains and
losses directly in retained earnings.
SAPs pension benefits are classified as defined contribution plans if the
payment to a separate fund relieves SAP of all obligations from the pension plan. Obligations for contributions to defined contribution pension plans are recognized as an expense in profit or loss when paid or due.
Certain of our foreign subsidiaries are required to provide termination indemnity benefits to their employees regardless of the reason
for termination (retirement, voluntary, or involuntary). We treat these plans as defined benefit pension plans if the substance of the post-employment plan is a pension-type arrangement. Most of these arrangements provide the employee with a
one-time payout based on compensation levels, age, and years of service on termination independent of the reason (retirement, voluntary, or involuntary).
Deferred Income
Deferred income is recognized as software revenue,
support revenue, subscription revenue, consulting revenue, development revenue, training revenue, or other service revenue, depending on the reasons for the deferral, once the basic applicable revenue recognition criteria have been met, for example,
when the related services are performed or when the discounts are used.
Presentation in the Consolidated Statements of Cash Flows
We classify interest and taxes paid as well as interest and dividends received as cash flows from operating activities.
Dividends paid are classified as financing activities.
Certain comparative amounts in the Consolidated Statement of Cash
Flows have been reclassified to conform with the current
years presentation. Such reclassifications are considered immaterial to the financial statements.
(3c) |
Management Judgments and Sources of Estimation Uncertainty |
The preparation of the Consolidated Financial Statements in conformity with IFRS requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, revenues, and expenses, as well as disclosure of contingent assets and liabilities.
We base our judgments, estimates, and assumptions on historical and forecast information, as well as regional and industry economic conditions in which we or our customers operate, changes to which could
adversely affect our estimates. Although we believe we have made reasonable estimates about the ultimate resolution of the underlying uncertainties, no assurance can be given that the final outcome of these matters will be consistent with what is
reflected in our assets, liabilities, revenues, and expenses. Actual results could differ from original estimates.
The
accounting policies that most frequently require us to make judgments, estimates, and assumptions, and therefore are critical to understanding our results of operations, are:
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Valuation of trade receivables |
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Accounting for share-based compensation |
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Accounting for income tax |
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Accounting for business combinations |
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Subsequent accounting for goodwill and other intangibles |
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Accounting for legal contingencies |
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Recognition of internally generated intangible assets from development
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Our management periodically discusses these critical accounting policies with the Audit
Committee of the Supervisory Board.
Revenue Recognition
As described in the Revenue Recognition section of Note (3b), we do not recognize revenue before persuasive evidence of an arrangement exists, delivery has occurred, the risks and rewards of ownership
have been transferred to the customer, the amount of revenue can be measured reliably, and collection of the related receivable is reasonably assured. The determination of whether the amount of revenue can be measured reliably or whether the fees
are collectible is inherently judgmental as it requires estimates as to whether and to what extent subsequent concessions may be granted to customers and whether the customer is expected to pay the contractual fees. The timing and amount of revenue
recognition can vary depending on what assessments have been made.
In most of our revenue-generating arrangements we sell
to the customer more than one product solution or service. Additionally, we have ongoing relationships with many of our customers and often enter into several transactions with the same customer within close proximity in time. We therefore have to
determine:
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Which arrangements with the same customer are to be accounted for as one arrangement |
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Which deliverables under one arrangement are to be accounted for separately |
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How to allocate the total arrangement fee to the individual elements of one arrangement |
The determination of whether different arrangements with the same customer are to be accounted for as one arrangement is highly
judgmental as it requires us to evaluate whether the arrangements are negotiated together or linked in any other way. The timing and amount
of revenue recognition can vary depending on whether two arrangements are accounted for separately or as one arrangement.
Under an arrangement including software and other deliverables, we do not account for the software and the other deliverables
separately if one of the other deliverables (such as consulting services) is deemed to be essential to the functionality of the software. The determination whether an undelivered element is essential to the functionality of the delivered element
requires the use of judgment. The timing and amount of revenue recognition can vary depending on how that judgment is exercised, because software revenue which may otherwise have been recognized up front is recognized over the term of providing the
essential deliverable.
We also do not account separately for different deliverables under an arrangement if we have no
basis for allocating the overall arrangement fee to the different elements of the arrangement. We believe that such allocation basis exists if we can demonstrate for each undelivered element of the arrangement company-specific objective evidence of
fair value as further defined in the Revenue Recognition section of Note (3b). Judgment is required in the determination of company-specific objective evidence of fair value which may impact the timing and amount of revenue recognized depending on:
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Whether company-specific objective evidence of fair value can be demonstrated for the undelivered elements of a software arrangement
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The approaches used to demonstrate company-specific objective evidence of fair value |
Additionally, our revenue would be significantly different if we applied a revenue allocation policy other than the residual method.
Revenue from consulting, other professional services, and customer-specific software development projects is determined by
applying the percentage-of-completion method.
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The percentage-of-completion method requires us to make estimates about total revenue, total cost to complete the project, and the stage of completion. The assumptions, estimates, and
uncertainties inherent in determining the stage of completion affect the timing and amounts of revenue recognized and expenses reported. If we do not have a sufficient basis to measure the progress of completion or to estimate the total contract
revenue and costs, revenue recognition is limited to the amount of contract costs incurred. The determination of whether a sufficient basis to measure the progress of completion exists is judgmental. Changes in estimates of progress towards
completion and of contract revenue and contract costs are accounted for as cumulative catch-up adjustments to the reported revenue for the applicable contract.
Valuation of Trade Receivables
As described in the Trade and Other
Receivables section in Note (3b), we account for impairments of trade receivables by recording sales allowances and allowances for doubtful accounts on an individual receivable basis and on a portfolio basis. The assessment of whether a receivable
is collectible is inherently judgmental and requires the use of assumptions about customer defaults that could change significantly. Judgment is required when we evaluate available information about a particular customers financial situation
to determine whether it is probable that a credit loss will occur and the amount of such loss is reasonably estimable and thus an allowance for that specific account is necessary. Basing the general allowance for the remaining receivables on our
historical loss experience, too, is highly judgmental, as history may not be indicative of future development, particularly in the global economic circumstances resulting from the recent global financial crisis. Changes in our estimates about the
allowance for doubtful accounts could materially impact the reported assets and expenses in our financial statements, and our profit could be adversely affected if actual credit losses exceed our estimates. To mitigate this risk, our trade
receivables are
partially covered by merchandise credit insurance.
Accounting for Share-Based
Compensation
As described in Note (28), we have issued both equity-settled as well as cash-settled share-based
compensation plans.
We use certain assumptions in estimating the fair values for our share-based compensation plans,
including expected future stock price volatility and expected option life (which represents our estimate of the average amount of time remaining until the options are exercised or expire unexercised). In addition, final payout for these plans also
depends on our share price at the respective exercise dates. All these assumptions may significantly impact the fair value determination and thus the amount and timing of our share-based compensation expenses. Furthermore, the fair values of the
options granted under our 2009 Plan (SOP PP) are dependent on our performance against the Tech Peer Group Index (TechPGI) since grant date, the volatility and the expected correlation between the market price of this index, and our share price.
For the purpose of determining the estimated fair value of our stock options, we believe expected volatility is the most
sensitive assumption. Regarding future payout under the plans, the price of shares of SAP will be the most relevant factor. In respect to our plan granted in 2009 (SOP PP), we believe that future payout will be significantly impacted not only by our
share price but also by the requirement to outperform the TechPGI. Changes in these factors could significantly affect the estimated fair values as calculated by the option-pricing model, and the future payout.
Accounting for Income Tax
We conduct operations and earn income in numerous foreign countries and are subject to changing tax laws in multiple jurisdictions within the countries in which we operate. Our ordinary business
activities also include
F-24
transactions where the ultimate tax outcome is uncertain, such as those involving revenue sharing and cost reimbursement arrangements between SAP Group entities. In addition, the amount of income
tax we pay is generally subject to ongoing audits by domestic and foreign tax authorities. As a result, judgments are necessary in determining our worldwide income tax provisions. We have made reasonable estimates about the ultimate resolution of
our tax uncertainties based on current tax laws and our interpretation thereof. Such judgments can have a material effect on our income tax expense, income tax provision, and profit after tax.
The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax assets to be utilized. This assessment requires management judgments, estimates, and assumptions. In evaluating our ability to
utilize our deferred tax assets, we consider all available positive and negative evidence, including the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable.
Our judgments regarding future taxable income are based on expectations of market conditions and other facts and circumstances. Any adverse change to the underlying facts or our estimates and assumptions could require that we reduce the carrying
amount of our net deferred tax assets.
For more information about our income tax, see Note (11).
Accounting for Business Combinations
In our accounting for business combinations, judgment is required in determining whether an intangible asset is identifiable, and should be recorded separately from goodwill. Additionally, estimating the
acquisition date fair values of the identifiable assets acquired and liabilities assumed involves considerable management judgment. The necessary measurements are based on
information available at the acquisition date and are based on expectations and assumptions that have been deemed reasonable by management. These judgments, estimates, and assumptions can
materially affect our financial position and profit for several reasons, among which are the following:
|
|
|
Fair values assigned to assets subject to depreciation and amortization affect the amounts of depreciation and amortization to be recorded in operating
profit in the periods following the acquisition. |
|
|
|
Subsequent negative changes in the estimated fair values of assets may result in additional expense from impairment charges.
|
|
|
|
Subsequent changes in the estimated fair values of liabilities and provisions may result in additional expense (if increasing the estimated fair value)
or additional income (if decreasing the estimated fair value). |
Subsequent Accounting for Goodwill and Other Intangibles
As described in the Intangible Assets section in Note (3b), all our intangible assets other than goodwill have finite
useful lives. Consequently, the depreciable amount of the intangible assets is allocated on a systematic basis over their useful lives. Judgment is required in:
|
|
|
The determination of the useful life of an intangible asset as this determination is based on our estimates regarding the period over which the
intangible asset is expected to produce economic benefits to us. |
|
|
|
The determination of the amortization method, as IFRS requires the straight-line method to be used unless we can reliably determine the pattern in
which the assets future economic benefits are expected to be consumed by us. |
F-25
Both the amortization period and the amortization method have an impact on the
amortization expense that is recorded in each period.
In making impairment assessments for our intangible assets and
goodwill, we use certain assumptions and estimates about future cash flows, which are complex and require significant judgment and assumptions about future developments. They can be affected by a variety of factors, including changes in our business
strategy, our internal forecasts, and an estimate of our weighted-average cost of capital. Due to these factors, actual cash flows and values could vary significantly from the forecasted future cash flows and related values derived using the
discounted cash flow method. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, different assumptions and estimates could materially affect our financial position and profit.
The results of goodwill impairment tests may depend on the allocation of goodwill to our operating segments. This allocation is
judgmental as it is based on our estimates regarding which operating segments are expected to benefit from the synergies of the business combination.
We recorded no charges on our goodwill and no significant impairment charges on our intangible assets during 2011. Although we do not currently have an indication of any significant impairment, there can
be no assurance that impairment charges will not occur in the future. For more information, see Note (16).
Accounting for Legal
Contingencies
As described in Note (24), currently we are involved in various claims and legal proceedings. We review
the status of each significant matter not less frequently than each quarter and assess our potential financial and business exposures related to such matters. Significant judgment is required in the determination of whether a provision is to be
recorded and what the
appropriate amount for such provision should be. Notably, judgment is required in:
|
|
|
Determining whether an obligation exists |
|
|
|
Determining the probability of outflow of economic benefits |
|
|
|
Determining whether the amount of an obligation is estimable |
|
|
|
Estimating the obligation |
Due to uncertainties relating to these matters, provisions are based on the best information available at the time.
At the end of each reporting period, we reassess the potential obligations related to our pending claims and litigation and adjust our respective provisions to reflect the current best estimate. In
addition, we monitor and evaluate new information that we receive after the end of the respective reporting period but before the Consolidated Financial Statements are authorized for issue to determine whether this provides additional information
regarding conditions that existed at the end of the reporting period. Such revisions to our estimates of the potential obligations could have a material impact on our financial position and profit. The effects of changes in estimates of potential
liabilities related to our legal contingencies had no material impact on our 2009 results. The change in the provision for the TomorrowNow litigation had a material impact on our 2010 and 2011 financial statements. For further information about this
case, see Notes (19b) and (24).
Recognition of Internally Generated Intangible Assets from Development
Under IFRS, internally generated intangible assets from the development phase are recognized if certain conditions are met. These
conditions include the technical feasibility, intention to complete, the ability to use or sell the asset under development, and the demonstration of how the asset will generate probable future economic benefits. The cost of a recognized internally
generated intangible asset
F-26
comprises all directly attributable cost necessary to make the asset capable of being used as intended by management. In contrast, all expenditures arising from the research phase are expensed as
incurred.
We believe that determining whether internally generated intangible assets from development are to be recognized
as intangible assets requires significant judgment, particularly in the following areas:
|
|
|
Determining whether activities should be considered research activities or development activities. |
|
|
|
Determining whether the conditions for recognizing an intangible asset are met requires assumptions about future market conditions, customer demand and
other developments. |
|
|
|
The term technical feasibility is not defined in IFRS, and therefore determining whether the completion of an asset is technically feasible
requires judgment and a company-specific approach. |
|
|
|
Determining the future ability to use or sell the intangible asset arising from the development and the determination of the probability of future
benefits from sale or use. |
|
|
|
Determining whether a cost is directly or indirectly attributable to an intangible asset and whether a cost is necessary for completing a development.
|
We have determined that the conditions for recognizing internally generated intangible assets from our
software development activities are not met until shortly before the developed products are available for sale. This assessment is monitored by us on a regular basis.
(3d) |
New Accounting Standards Adopted in the Current Period |
The new accounting standards adopted in fiscal year 2011 did not have a material impact on our Consolidated Financial Statements.
(3e) |
New Accounting Standards not yet Adopted |
A number of new standards, amendments to standards and interpretations are not yet effective for the year ended December 31, 2011, and have not been applied in preparing these Consolidated Financial
Statements. None of these is expected to have a considerable effect on the Consolidated Financial Statements of the Group, except for:
|
|
|
Amendments to IFRS 7 (Financial Instruments: Disclosures) Transfers of financial assets, which become mandatory for our 2012 Consolidated
Financial Statements and might result in additional disclosures. |
|
|
|
Amendments to IFRS 7 (Financial Instruments: Disclosures) Offsetting financial assets and financial liabilities, which become mandatory for our
2013 Consolidated Financial Statements (subject to timely endorsement by the EU) and require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards followed, and the related net
credit exposure and which might result in additional disclosures. |
|
|
|
IFRS 9 (Financial Instruments), which becomes mandatory for our 2015 Consolidated Financial Statements (subject to timely endorsement by the EU) and is
expected to impact the classification and measurement of financial assets. We have not yet completed the determination of the impact on our Consolidated Financial Statements. |
|
|
|
IFRS 10 (Consolidated Financial Statements), IFRS 11 (Joint Arrangements) and IFRS 12 (Disclosure of Interests in Other Entities): This new set of
standards provides a single consolidation model that identifies control as the basis for consolidation for all types of entities, establishes principles for the financial reporting by parties to a joint arrangement and
|
F-27
|
|
combines, enhances and replaces the current disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. As a consequence of these new IFRSs,
the IASB also issued amended and retitled IAS 27 (Separate Financial Statements) and IAS 28 (Investments in Associates and Joint Ventures). The new requirements become mandatory for our 2013 Consolidated Financial Statements (subject to timely
endorsement by the EU). We have not yet completed the determination of the impact on our Consolidated Financial Statements. |
|
|
|
IFRS 13 (Fair Value Measurement) defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair
value measurements. The new standard becomes mandatory for our 2013 Consolidated Financial Statements (subject to timely endorsement by the EU) and is not expected to have a significant impact on our Consolidated Financial Statements.
|
|
|
|
Amendments to IAS 1 (Presentation of Financial Statements), which become mandatory for the Groups 2013 Consolidated Financial Statements (subject
to timely endorsement by the EU), aim to improve and align the presentation of items of other comprehensive income in financial statements prepared in accordance with IFRS and U.S. GAAP, and will impact the presentation of items within the
Consolidated Statements of
|
|
|
Comprehensive Income. While not early-adopting the amendments to IAS 1, SAP already provides additional disclosures to enhance the readers insight into which elements of SAPs
cumulative other comprehensive income will, through recycling, impact profit or loss in the future. |
|
|
|
Amendments to IAS 19 (Employee Benefits), which become mandatory for our 2013 Consolidated Financial Statements (subject to timely endorsement by the
EU), aim to improve the understanding of how defined benefit plans affect an entitys financial position, financial performance and cash flows, and are likely to impact, for example, the amount of actuarial gains and losses that will impact
profit and loss versus be allocated to other comprehensive income as remeasurements. We have not yet completed the determination of the impact on our Consolidated Financial Statements. |
|
|
|
Amendments to IAS 32 (Financial Instruments: Presentation) Offsetting financial assets and financial liabilities, which become mandatory for the
Groups 2014 Consolidated Financial Statements (subject to timely endorsement by the EU), aim to eliminate inconsistencies when applying the offsetting criteria and include some clarifications. We have not yet completed the determination of the
extent of the impact on our Consolidated Financial Statements. |
F-28
(4) |
BUSINESS COMBINATIONS |
In 2011, we concluded the following business combinations:
Acquired Businesses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sector |
|
Acquisition Type |
|
|
Acquired Voting Interest |
|
Acquisition Date |
|
SECUDE AG, Emmetten, Switzerland |
|
SECUDE is a privately held entity engaged in IT security software products and solutions. |
|
|
Asset Purchase |
|
|
n/a |
|
|
February 1, 2011 |
|
|
|
|
|
|
Right Hemisphere Inc., San Ramon, CA, USA |
|
Right Hemisphere is a privately held entity focusing on visual 3-D enterprise solutions |
|
|
Share Purchase |
|
|
100% |
|
|
September 16, 2011 |
|
|
|
|
|
|
Crossgate AG, Munich, Germany |
|
Crossgate is a privately held entity specializing in hosted B2B integration services, enabling companies to fully integrate and network with trading partners, clients, and
suppliers. |
|
|
Share Purchase |
|
|
100% (including a previously owned minority interest of 6%) |
|
|
November 1, 2011 |
|
All transactions were immaterial to SAP individually and in the aggregate. All of the
acquired businesses develop and/or sell software in specific areas of strategic interest to us or complement our service portfolio.
Business combinations of the prior year are described in the Notes to our Consolidated Financial Statements for 2010. We disclosed that the fair values of the deferred taxes and liabilities relating to
legal and litigation related liabilities were provisional. The valuation was completed in 2011. Adjustments to the allocation of the acquisition price resulted in the immaterial changes to amounts reported in the prior year.
Acquisitions After the End of the Reporting Period
On February 21, 2012, we acquired more than 90 percent of the outstanding ordinary shares of SuccessFactors, and obtained control of SuccessFactors. Subsequent to the acceptance of the tender offer
we effected a short-form merger and acquired the remaining shares for the same US$40.00 per share price that was paid in the cash tender offer. Taking into account all components, we estimate the total consideration
to be transferred to be US$3.6 billion (2.75 billion), all of which is paid in cash. Acquisition-related costs (to be included in general and administrative expenses in our income
statements) approximate 12 million (thereof 3.8 million recognized in 2011).
SuccessFactors is a
provider of cloud- based human capital management (HCM) solutions. As a result of the acquisition, we expect to significantly accelerate our momentum as a provider of cloud applications, platforms, and infrastructure, and to establish an advanced
end-to-end offering of cloud and on-premise solutions for managing all relevant business processes.
The initial accounting
for the business combination is incomplete at the time the financial statements were authorised for issue. Based on preliminary valuations of the assets acquired and liabilities assumed in the acquisition, we expect to acquire assets of
approximately 0.9 billion to 1.1 billion, including identifiable intangible assets ranging from 0.7 billion to 0.8 billion and cash of approximately 0.1 billion. The assumed liabilities are expected to range from
0.5 billion
F-29
to 0.7 billion. We estimate that goodwill resulting from this acquisition will range from 2 billion to 2.5 billion. The goodwill recognized is not expected to be deductible for
income tax purposes. Due to the fact that valuations of assets, liabilities, and contingencies are ongoing, the presented figures may change significantly.
The goodwill arising from the acquisition consists largely of the synergies and the skills and technical talent of SuccessFactors
workforce. The allocation of goodwill to our reportable segments will depend on our final management structure which has not yet been determined.
For detailed information about our revenue recognition policies, see Note (3).
For revenue information by segment and geographic region, see Note (29).
Revenue from
construction-type contracts (contract revenue) is included in software revenue and consulting revenue depending on the type of project. The status of our construction projects in progress at the end of the reporting period accounted for under IAS 11
was as follows:
Construction Projects in Progress
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Revenue recognized in the respective year |
|
|
172 |
|
|
|
141 |
|
|
|
109 |
|
Aggregate cost recognized (multi-year) |
|
|
229 |
|
|
|
163 |
|
|
|
106 |
|
Recognized result (+profit/-loss; multi-year) |
|
|
14 |
|
|
|
17 |
|
|
|
14 |
|
Advance payments received |
|
|
5 |
|
|
|
5 |
|
|
|
3 |
|
Gross amounts due from customers |
|
|
20 |
|
|
|
21 |
|
|
|
8 |
|
Gross amounts due to customers |
|
|
44 |
|
|
|
35 |
|
|
|
7 |
|
Loss provisions |
|
|
27 |
|
|
|
28 |
|
|
|
1 |
|
Restructuring expenses were as follows:
Restructuring Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Employee-related restructuring expenses |
|
|
0 |
|
|
|
1 |
|
|
|
187 |
|
Facility-related restructuring expenses |
|
|
4 |
|
|
|
4 |
|
|
|
11 |
|
|
|
Restructuring expenses |
|
|
4 |
|
|
|
3 |
|
|
|
198 |
|
Restructuring expenses in 2011 and 2010 relate to changes in estimates for prior-year restructurings.
F-30
As restructuring expenses were significant to our operations in 2009, we have presented
these expenses separately in our Consolidated Income Statements in accordance with IAS 1.97. If not presented separately, these expenses would break down as follows:
Restructuring Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Cost of software and software-related services |
|
|
0 |
|
|
|
0 |
|
|
|
17 |
|
Cost of professional services and other services |
|
|
4 |
|
|
|
1 |
|
|
|
60 |
|
Research and development |
|
|
0 |
|
|
|
1 |
|
|
|
48 |
|
Sales and marketing |
|
|
0 |
|
|
|
1 |
|
|
|
59 |
|
General and administration |
|
|
0 |
|
|
|
0 |
|
|
|
14 |
|
Restructuring expenses |
|
|
4 |
|
|
|
3 |
|
|
|
198 |
|
(7) |
OTHER OPERATING INCOME/EXPENSE, NET |
Other operating income/expense, net, was as follows:
Other Operating Income/Expense, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Miscellaneous other operating expenses |
|
|
3 |
|
|
|
5 |
|
|
|
3 |
|
Gain on disposals of non-current assets |
|
|
18 |
|
|
|
3 |
|
|
|
11 |
|
Miscellaneous other operating income |
|
|
10 |
|
|
|
11 |
|
|
|
25 |
|
Other operating income/expense, net |
|
|
25 |
|
|
|
9 |
|
|
|
33 |
|
Gain on disposals of non-current assets includes gains from the sale of a disposal group as of
December 1, 2011.
(8) |
EMPLOYEE BENEFITS EXPENSE AND HEADCOUNT |
Employee Benefits Expense
Employee benefits expense comprises the following:
Employee Benefits Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Salaries |
|
|
4,939 |
|
|
|
4,383 |
|
|
|
4,007 |
|
Social security expense |
|
|
642 |
|
|
|
607 |
|
|
|
554 |
|
Pension expense |
|
|
176 |
|
|
|
149 |
|
|
|
147 |
|
Share-based payment expense |
|
|
68 |
|
|
|
58 |
|
|
|
54 |
|
Termination benefits |
|
|
59 |
|
|
|
63 |
|
|
|
14 |
|
Employee-related restructuring expense |
|
|
0 |
|
|
|
1 |
|
|
|
187 |
|
Employee benefits expense |
|
|
5,884 |
|
|
|
5,261 |
|
|
|
4,963 |
|
Pension expense includes the amounts recorded for our defined benefit and defined
contribution plans as described in Note (19a).
Expenses for local state pension plans are included in social security expense.
F-31
Number of Employees
On December 31, 2011, the breakdown of our full-time equivalent employee numbers by function in SAP and by region was as follows:
Number of Employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011 |
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
Full-time equivalents |
|
EMEA1) |
|
|
Americas |
|
|
Asia Pacific Japan |
|
|
Total |
|
|
EMEA1) |
|
|
Americas |
|
|
Asia Pacific Japan |
|
|
Total |
|
|
EMEA1) |
|
|
Americas |
|
|
Asia Pacific Japan |
|
|
Total |
|
Software and software-related services |
|
|
4,068 |
|
|
|
2,079 |
|
|
|
2,816 |
|
|
|
8,963 |
|
|
|
3,804 |
|
|
|
1,827 |
|
|
|
2,254 |
|
|
|
7,885 |
|
|
|
3,227 |
|
|
|
1,276 |
|
|
|
1,919 |
|
|
|
6,422 |
|
Professional services and other services |
|
|
6,808 |
|
|
|
3,963 |
|
|
|
2,497 |
|
|
|
13,268 |
|
|
|
6,787 |
|
|
|
3,955 |
|
|
|
2,410 |
|
|
|
13,152 |
|
|
|
6,635 |
|
|
|
3,473 |
|
|
|
2,240 |
|
|
|
12,348 |
|
Research and development |
|
|
8,713 |
|
|
|
3,028 |
|
|
|
4,120 |
|
|
|
15,861 |
|
|
|
8,617 |
|
|
|
3,154 |
|
|
|
4,113 |
|
|
|
15,884 |
|
|
|
8,525 |
|
|
|
2,534 |
|
|
|
3,755 |
|
|
|
14,814 |
|
Sales and marketing |
|
|
4,856 |
|
|
|
4,581 |
|
|
|
2,343 |
|
|
|
11,780 |
|
|
|
4,593 |
|
|
|
4,214 |
|
|
|
2,180 |
|
|
|
10,987 |
|
|
|
4,202 |
|
|
|
3,559 |
|
|
|
1,752 |
|
|
|
9,513 |
|
General and administration |
|
|
2,073 |
|
|
|
1,120 |
|
|
|
542 |
|
|
|
3,735 |
|
|
|
2,053 |
|
|
|
1,005 |
|
|
|
518 |
|
|
|
3,576 |
|
|
|
1,919 |
|
|
|
724 |
|
|
|
408 |
|
|
|
3,051 |
|
Infrastructure |
|
|
1,182 |
|
|
|
702 |
|
|
|
274 |
|
|
|
2,158 |
|
|
|
1,135 |
|
|
|
628 |
|
|
|
266 |
|
|
|
2,029 |
|
|
|
854 |
|
|
|
408 |
|
|
|
174 |
|
|
|
1,436 |
|
SAP Group (December 31) |
|
|
27,700 |
|
|
|
15,473 |
|
|
|
12,592 |
|
|
|
55,765 |
|
|
|
26,989 |
|
|
|
14,783 |
|
|
|
11,741 |
|
|
|
53,513 |
|
|
|
25,362 |
|
|
|
11,974 |
|
|
|
10,248 |
|
|
|
47,584 |
|
Thereof acquisitions |
|
|
264 |
|
|
|
49 |
|
|
|
90 |
|
|
|
403 |
|
|
|
1,174 |
|
|
|
1,975 |
|
|
|
1,084 |
|
|
|
4,233 |
|
|
|
158 |
|
|
|
73 |
|
|
|
0 |
|
|
|
231 |
|
SAP Group (months end average) |
|
|
27,296 |
|
|
|
15,010 |
|
|
|
12,040 |
|
|
|
54,346 |
|
|
|
25,929 |
|
|
|
13,164 |
|
|
|
10,877 |
|
|
|
49,970 |
|
|
|
25,927 |
|
|
|
12,288 |
|
|
|
10,554 |
|
|
|
48,769 |
|
1) |
Europe, Middle East, Africa |
The increase of our full-time equivalent employee numbers in 2010 was mainly due to the acquisition of Sybase in July 2010.
Allocation of Share-Based Compensation Expense
The allocation of expense for share-based compensation, net of the effects from hedging these instruments, to the various expense items is as follows:
Share-Based Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Cost of software and software-related services |
|
|
5 |
|
|
|
4 |
|
|
|
5 |
|
Cost of professional services and other services |
|
|
11 |
|
|
|
9 |
|
|
|
9 |
|
Research and development |
|
|
16 |
|
|
|
19 |
|
|
|
18 |
|
Sales and marketing |
|
|
15 |
|
|
|
16 |
|
|
|
12 |
|
General and administration |
|
|
21 |
|
|
|
10 |
|
|
|
10 |
|
|
|
Total share-based compensation |
|
|
68 |
|
|
|
58 |
|
|
|
54 |
|
Thereof cash-settled share-based payment plans |
|
|
33 |
|
|
|
29 |
|
|
|
49 |
|
Thereof equity-settled share-based payment plans |
|
|
35 |
|
|
|
29 |
|
|
|
5 |
|
For more information about our share-based compensation plans, see Note (28).
F-32
(9) |
OTHER NON-OPERATING INCOME/EXPENSE, NET |
Other non-operating income/expense, net was as follows:
Other Non-Operating Income/Expense, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Foreign currency exchange gain/loss, net |
|
|
58 |
|
|
|
175 |
|
|
|
73 |
|
Thereof realized gain/loss |
|
|
59 |
|
|
|
317 |
|
|
|
89 |
|
Thereof unrealized gain/loss |
|
|
13 |
|
|
|
199 |
|
|
|
168 |
|
Thereof embedded derivatives |
|
|
12 |
|
|
|
57 |
|
|
|
6 |
|
Miscellaneous other non-operating income |
|
|
2 |
|
|
|
3 |
|
|
|
8 |
|
Miscellaneous other non-operating expense |
|
|
19 |
|
|
|
14 |
|
|
|
8 |
|
Other non-operating income/expense, net |
|
|
75 |
|
|
|
186 |
|
|
|
73 |
|
Other finance income, net was as follows:
Finance Income, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Finance income |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income from |
|
|
|
|
|
|
|
|
|
|
|
|
available-for-sale financial assets (debt) |
|
|
2 |
|
|
|
0 |
|
|
|
0 |
|
loans and receivables |
|
|
62 |
|
|
|
34 |
|
|
|
35 |
|
derivatives |
|
|
37 |
|
|
|
25 |
|
|
|
0 |
|
Gains on |
|
|
|
|
|
|
|
|
|
|
|
|
available-for-sale financial assets (debt) |
|
|
1 |
|
|
|
2 |
|
|
|
0 |
|
available-for-sale financial assets (equity) |
|
|
12 |
|
|
|
9 |
|
|
|
1 |
|
Share of result of associates |
|
|
9 |
|
|
|
3 |
|
|
|
1 |
|
Finance income |
|
|
123 |
|
|
|
73 |
|
|
|
37 |
|
Finance cost |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense from |
|
|
|
|
|
|
|
|
|
|
|
|
financial liabilities at amortized cost |
|
|
123 |
|
|
|
77 |
|
|
|
63 |
|
derivatives |
|
|
37 |
|
|
|
31 |
|
|
|
38 |
|
TomorrowNow litigation |
|
|
8 |
|
|
|
12 |
|
|
|
0 |
|
Losses on |
|
|
|
|
|
|
|
|
|
|
|
|
available-for-sale financial assets (equity) |
|
|
0 |
|
|
|
1 |
|
|
|
1 |
|
Impairment losses from |
|
|
|
|
|
|
|
|
|
|
|
|
available-for-sale financial assets (equity) |
|
|
2 |
|
|
|
3 |
|
|
|
11 |
|
Fee expenses |
|
|
7 |
|
|
|
16 |
|
|
|
4 |
|
Finance cost |
|
|
161 |
|
|
|
140 |
|
|
|
117 |
|
Finance income, net |
|
|
38 |
|
|
|
67 |
|
|
|
80 |
|
F-33
Income tax expense for the years ended December 31 comprised the following components:
Tax Expense According to Region
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Current tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
Germany |
|
|
635 |
|
|
|
413 |
|
|
|
344 |
|
Foreign |
|
|
521 |
|
|
|
459 |
|
|
|
380 |
|
Total current tax expense |
|
|
1,156 |
|
|
|
872 |
|
|
|
724 |
|
Deferred tax expense/income |
|
|
|
|
|
|
|
|
|
|
|
|
Germany |
|
|
12 |
|
|
|
23 |
|
|
|
16 |
|
Foreign |
|
|
185 |
|
|
|
370 |
|
|
|
23 |
|
Total deferred tax expense/income |
|
|
173 |
|
|
|
347 |
|
|
|
39 |
|
Total income tax expense |
|
|
1,329 |
|
|
|
525 |
|
|
|
685 |
|
Major Components of Tax Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Current tax expense/income |
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense for current year |
|
|
1,152 |
|
|
|
862 |
|
|
|
783 |
|
Taxes for prior years |
|
|
4 |
|
|
|
10 |
|
|
|
59 |
|
Total current tax expense |
|
|
1,156 |
|
|
|
872 |
|
|
|
724 |
|
Deferred tax expense/income |
|
|
|
|
|
|
|
|
|
|
|
|
Origination and reversal of temporary differences |
|
|
162 |
|
|
|
388 |
|
|
|
51 |
|
Unused tax losses, research and development tax credits and foreign tax
credits |
|
|
11 |
|
|
|
41 |
|
|
|
12 |
|
Total deferred tax expense/income |
|
|
173 |
|
|
|
347 |
|
|
|
39 |
|
Total income tax expense |
|
|
1,329 |
|
|
|
525 |
|
|
|
685 |
|
Profit before tax consisted of the following:
Profit Before Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Germany |
|
|
2,323 |
|
|
|
2,009 |
|
|
|
1,324 |
|
Foreign |
|
|
2,445 |
|
|
|
329 |
|
|
|
1,111 |
|
Total |
|
|
4,768 |
|
|
|
2,338 |
|
|
|
2,435 |
|
F-34
The following table reconciles the expected income tax expense computed by applying our
combined German corporate tax rate of 26.34% (2010: 26.29%; 2009: 26.21%) to the actual income tax expense. Our 2011 combined German corporate tax rate includes a corporate income tax rate of 15.00% (2010: 15.00%; 2009: 15.00%), plus a solidarity
surcharge of 5.5% thereon, and trade taxes of 10.51% (2010: 10.46%; 2009: 10.38%).
Relationship Between Tax Expense and
Accounting Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
millions, unless otherwise stated |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Profit before tax |
|
|
4,768 |
|
|
|
2,338 |
|
|
|
2,435 |
|
Tax expense at applicable tax rate of 26.34% (2010: 26.29%; 2009: 26.21%) |
|
|
1,256 |
|
|
|
615 |
|
|
|
638 |
|
Tax effect of |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign tax rates |
|
|
77 |
|
|
|
68 |
|
|
|
57 |
|
Non-deductible expenses |
|
|
89 |
|
|
|
101 |
|
|
|
94 |
|
Tax exempt income |
|
|
149 |
|
|
|
96 |
|
|
|
52 |
|
Withholding taxes |
|
|
93 |
|
|
|
39 |
|
|
|
40 |
|
Research and development and foreign tax credits |
|
|
33 |
|
|
|
53 |
|
|
|
20 |
|
Prior-year taxes |
|
|
25 |
|
|
|
27 |
|
|
|
56 |
|
Reassessment of deferred tax assets, research and development tax credits, and foreign tax credits |
|
|
0 |
|
|
|
11 |
|
|
|
8 |
|
Other |
|
|
21 |
|
|
|
3 |
|
|
|
8 |
|
Total tax expense |
|
|
1,329 |
|
|
|
525 |
|
|
|
685 |
|
Effective tax rate in % |
|
|
27.9 |
|
|
|
22.5 |
|
|
|
28.1 |
|
F-35
Deferred tax assets and liabilities on a gross basis as at December 31, 2011 and 2010,
are attributable to the following items:
Recognized Deferred Tax Assets and Liabilities
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
Deferred tax assets |
|
|
|
|
|
|
|
|
Intangible assets |
|
|
68 |
|
|
|
69 |
|
Property, plant, and equipment |
|
|
16 |
|
|
|
14 |
|
Other financial assets |
|
|
12 |
|
|
|
12 |
|
Trade and other receivables |
|
|
23 |
|
|
|
30 |
|
Net operating loss carryforwards |
|
|
57 |
|
|
|
56 |
|
Pension provisions |
|
|
104 |
|
|
|
97 |
|
Share-based payments |
|
|
31 |
|
|
|
37 |
|
Other provisions and obligations |
|
|
286 |
|
|
|
549 |
|
Deferred income |
|
|
44 |
|
|
|
41 |
|
Research and development and foreign tax credits |
|
|
17 |
|
|
|
23 |
|
Other |
|
|
103 |
|
|
|
112 |
|
Deferred tax assets |
|
|
761 |
|
|
|
1,040 |
|
Deferred tax liabilities |
|
|
|
|
|
|
|
|
Intangible assets |
|
|
421 |
|
|
|
507 |
|
Property, plant, and equipment |
|
|
58 |
|
|
|
47 |
|
Other financial assets |
|
|
210 |
|
|
|
226 |
|
Trade and other receivables |
|
|
15 |
|
|
|
21 |
|
Pension provisions |
|
|
37 |
|
|
|
37 |
|
Other provisions and obligations |
|
|
1 |
|
|
|
3 |
|
Deferred income |
|
|
3 |
|
|
|
5 |
|
Other |
|
|
25 |
|
|
|
31 |
|
Deferred tax liabilities |
|
|
770 |
|
|
|
877 |
|
Deferred tax assets/liabilities, net |
|
|
9 |
|
|
|
163 |
|
The decrease in deferred tax assets mainly results from the tax effect of the reduction
in the provision recorded for the TomorrowNow litigation. The decrease in deferred tax liabilities mainly results from the subsequent effects of our business combinations in prior years. It mostly
relates to intangible assets and other financial assets.
Current
income tax payments were reduced in 2011 in the amount of 53 million (2010: 1 million; 2009: 2 million) due to the TomorrowNow litigation.
F-36
Deferred tax assets have not been recognized in respect of the following items for the years
ended December 31, 2011, 2010, and 2009, because it is not probable that future taxable profits will be available against which we can utilize the benefits thereof:
Items not Resulting in a Deferred Tax Asset
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Unused tax losses |
|
|
|
|
|
|
|
|
|
|
|
|
Not expiring |
|
|
38 |
|
|
|
9 |
|
|
|
13 |
|
Expiring in the following year |
|
|
10 |
|
|
|
5 |
|
|
|
1 |
|
Expiring after the following year |
|
|
93 |
|
|
|
103 |
|
|
|
138 |
|
Total unused tax losses |
|
|
141 |
|
|
|
117 |
|
|
|
152 |
|
Unused research and development and foreign tax credits |
|
|
|
|
|
|
|
|
|
|
|
|
Not expiring |
|
|
17 |
|
|
|
21 |
|
|
|
0 |
|
Expiring after the following year |
|
|
3 |
|
|
|
2 |
|
|
|
4 |
|
Total unused tax credits |
|
|
20 |
|
|
|
23 |
|
|
|
4 |
|
We have not recognized a deferred tax liability on approximately 5.54 billion
(2010: 4.56 billion) for undistributed profits of our subsidiaries, because we are in a position to control the timing of the reversal of the temporary difference and it is probable that such
differences will not reverse in the foreseeable future.
The proposed
dividend payment of 1.10 per share for the year ended December 31, 2011, will not have any effects on the income tax of SAP AG.
Total income tax
including the items charged or credited directly to share premium and other comprehensive income for the years ended December 31, 2011, 2010, and 2009, consists of the following:
Total Income Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Income tax recorded in profit |
|
|
1,329 |
|
|
|
525 |
|
|
|
685 |
|
Income tax recorded in share premium |
|
|
10 |
|
|
|
1 |
|
|
|
0 |
|
Income tax recorded in other comprehensive income that will not be reclassified to profit and loss |
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gains/losses on defined benefit pension plans |
|
|
5 |
|
|
|
18 |
|
|
|
0 |
|
Income tax recorded in other comprehensive income that will be reclassified to profit and loss |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains/losses on available-for-sale financial assets |
|
|
0 |
|
|
|
0 |
|
|
|
1 |
|
Gains/losses on cash flow hedges |
|
|
1 |
|
|
|
5 |
|
|
|
11 |
|
Currency effects |
|
|
6 |
|
|
|
5 |
|
|
|
0 |
|
Total |
|
|
1,307 |
|
|
|
506 |
|
|
|
697 |
|
F-37
The income tax recorded in share premium relates to our equity-settled share-based
compensation.
We are subject to ongoing tax audits by domestic and foreign tax authorities. As a result of the tax audit of
SAP AG and its German subsidiaries for the years 2003 through 2006, we are in dispute with the German tax authorities in respect of intercompany financing matters. We strongly disagree with the tax authorities position and intend to vigorously
contest it. Currently, we expect that we will need to initiate litigation to prevail. We have not recorded a provision for this matter as we believe that the authorities claim has no merit and that no adjustment is warranted. If, contrary to
our view,
the German tax authorities were to prevail in their arguments before the court, we would expect to have an additional tax expense (including related interest expense) for the tax audit period
2003 through 2006 and for the following years 2007 through 2011 of approximately 130 million in total.
Restricted shares (the bonus shares in the Share Matching Plan as discussed in Note (28) below) granted to
employees under our share-based compensation programs are included in the diluted earnings per share calculations to the extent they have a dilutive effect.
Earnings per share for
the years ended December 31 was calculated as follows:
Earnings per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
millions, unless otherwise stated |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Profit attributable to owners of parent |
|
|
3,438 |
|
|
|
1,811 |
|
|
|
1,748 |
|
Issued ordinary shares |
|
|
1,227 |
|
|
|
1,226 |
|
|
|
1,226 |
|
Effect of treasury shares |
|
|
38 |
|
|
|
38 |
|
|
|
38 |
|
Weighted average shares basic(1) |
|
|
1,189 |
|
|
|
1,188 |
|
|
|
1,188 |
|
Dilutive effect of share-based payment plans(1) |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
Weighted average shares diluted(1) |
|
|
1,190 |
|
|
|
1,189 |
|
|
|
1,189 |
|
Basic earnings per share, in , attributable to owners of
parent |
|
|
2.89 |
|
|
|
1.52 |
|
|
|
1.47 |
|
Diluted earnings per share, in , attributable to owners of
parent |
|
|
2.89 |
|
|
|
1.52 |
|
|
|
1.47 |
|
(1) |
Number of shares
in millions |
F-38
(13) |
OTHER FINANCIAL ASSETS |
Other financial assets as at December 31 were as follows:
Other Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
millions |
|
Current |
|
|
Non-Current |
|
|
Total |
|
|
Current |
|
|
Non-Current |
|
|
Total |
|
Loans and other financial receivables |
|
|
269 |
|
|
|
313 |
|
|
|
582 |
|
|
|
42 |
|
|
|
328 |
|
|
|
370 |
|
Debt investments |
|
|
400 |
|
|
|
0 |
|
|
|
400 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Equity investments |
|
|
0 |
|
|
|
161 |
|
|
|
161 |
|
|
|
0 |
|
|
|
107 |
|
|
|
107 |
|
Available-for-sale financial assets |
|
|
400 |
|
|
|
161 |
|
|
|
561 |
|
|
|
0 |
|
|
|
107 |
|
|
|
107 |
|
Derivatives |
|
|
148 |
|
|
|
17 |
|
|
|
165 |
|
|
|
116 |
|
|
|
0 |
|
|
|
116 |
|
Investments in associates |
|
|
0 |
|
|
|
47 |
|
|
|
47 |
|
|
|
0 |
|
|
|
40 |
|
|
|
40 |
|
Total |
|
|
817 |
|
|
|
538 |
|
|
|
1,355 |
|
|
|
158 |
|
|
|
475 |
|
|
|
633 |
|
Loans and Other Financial Receivables
Loans and other financial receivables mainly consist of time deposits, investments in insurance policies relating to pension assets
(semi-retirement and time accounts) for which the corresponding liability is included in employee-related obligations (see Note (20b)), other receivables, and loans to employees. The majority of our loans and other financial receivables is
concentrated in Germany.
As at December 31, 2011, there were no loans and other financial receivables past due but
not impaired. We have no indications of impairments of loans and other financial receivables that are not past due and not impaired as at the reporting date. For general information on financial
risk and the nature of risk, see Note (25).
Available-for-Sale Financial Assets
Our available-for-sale financial assets consist of debt investments in German government bonds and equity investments in listed and
unlisted securities.
These
available-for-sale financial assets are denominated in the following currencies:
Currencies of Available-for-Sale Financial
Assets
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
Euros |
|
|
432 |
|
|
|
34 |
|
U.S. dollars |
|
|
123 |
|
|
|
71 |
|
Other |
|
|
6 |
|
|
|
2 |
|
Total |
|
|
561 |
|
|
|
107 |
|
Our equity investments include securities measured at cost because they do not have a
quoted market price and fair value cannot be reliably measured. These equity investments had a carrying value of 122 million and 79 million
as at December 31, 2011, and 2010, respectively. Effects from impairment losses, reclassifications and gains/losses from sales of such equity investments were immaterial for all periods
presented.
F-39
As of December 31, 2011, we do not intend to dispose of any equity investments at
cost in the near future. For information on fair value measurement with regard to our equity investments at cost, see Note (27).
Derivatives
Detailed information about our derivative financial instruments is presented in Note (26).
(14) |
TRADE AND OTHER RECEIVABLES |
Trade and other receivables were as follows:
Trade and Other Receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
millions |
|
Current |
|
|
Non-Current |
|
|
Total |
|
|
Current |
|
|
Non-Current |
|
|
Total |
|
Trade receivables, net |
|
|
3,431 |
|
|
|
0 |
|
|
|
3,431 |
|
|
|
3,031 |
|
|
|
0 |
|
|
|
3,031 |
|
Other receivables |
|
|
62 |
|
|
|
84 |
|
|
|
146 |
|
|
|
68 |
|
|
|
78 |
|
|
|
146 |
|
Total trade and other receivables |
|
|
3,493 |
|
|
|
84 |
|
|
|
3,577 |
|
|
|
3,099 |
|
|
|
78 |
|
|
|
3,177 |
|
The carrying amounts of our trade receivables as at December 31 are as follows:
Carrying Amounts of Trade Receivables
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
Gross carrying amount |
|
|
3,566 |
|
|
|
3,187 |
|
Sales allowances charged to revenue |
|
|
94 |
|
|
|
112 |
|
Allowance for doubtful accounts charged to expense |
|
|
41 |
|
|
|
44 |
|
Carrying amount trade receivables, net |
|
|
3,431 |
|
|
|
3,031 |
|
Changes in the allowance for doubtful accounts were as follows:
Increase (Decrease) in Allowance for Doubtful Accounts Charged to Expense
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
January 1 |
|
|
44 |
|
|
|
48 |
|
Utilization |
|
|
6 |
|
|
|
0 |
|
Addition |
|
|
6 |
|
|
|
9 |
|
Release |
|
|
3 |
|
|
|
14 |
|
Exchange rate effects and other changes |
|
|
0 |
|
|
|
1 |
|
December 31 |
|
|
41 |
|
|
|
44 |
|
Concentrations of credit risks are limited due to our large customer base and its distribution across
many different industries and countries worldwide.
F-40
The aging of trade receivables as at December 31 was:
Aging of Trade Receivables
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
Not past due and not individually impaired |
|
|
2,803 |
|
|
|
2,390 |
|
Past due but not individually impaired |
|
|
|
|
|
|
|
|
Past due 1-30 days |
|
|
308 |
|
|
|
278 |
|
Past due 31-120 days |
|
|
163 |
|
|
|
206 |
|
Past due 121-365 days |
|
|
58 |
|
|
|
60 |
|
Past due over 365 days |
|
|
13 |
|
|
|
42 |
|
Total past due but not individually impaired |
|
|
542 |
|
|
|
586 |
|
Individually impaired, net of allowances |
|
|
86 |
|
|
|
55 |
|
Carrying amount of trade receivables, net |
|
|
3,431 |
|
|
|
3,031 |
|
We believe that the recorded sales and bad debt allowances adequately provide for the credit risk
inherent in trade receivables.
For more information about financial risk and how we manage it, see Notes (25) and (26).
(15) |
OTHER NON-FINANCIAL ASSETS |
Other Non-Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
millions |
|
Current |
|
|
Non-current |
|
|
Total |
|
|
Current |
|
|
Non-current |
|
|
Total |
|
Prepaid expenses |
|
|
95 |
|
|
|
39 |
|
|
|
134 |
|
|
|
101 |
|
|
|
31 |
|
|
|
132 |
|
Other tax assets |
|
|
68 |
|
|
|
0 |
|
|
|
68 |
|
|
|
58 |
|
|
|
0 |
|
|
|
58 |
|
Advance payments |
|
|
11 |
|
|
|
0 |
|
|
|
11 |
|
|
|
8 |
|
|
|
0 |
|
|
|
8 |
|
Inventories |
|
|
11 |
|
|
|
0 |
|
|
|
11 |
|
|
|
12 |
|
|
|
0 |
|
|
|
12 |
|
Miscellaneous other assets |
|
|
2 |
|
|
|
0 |
|
|
|
2 |
|
|
|
2 |
|
|
|
0 |
|
|
|
2 |
|
Total other non-financial assets |
|
|
187 |
|
|
|
39 |
|
|
|
226 |
|
|
|
181 |
|
|
|
31 |
|
|
|
212 |
|
Prepaid expenses primarily consist of prepayments for operating leases, support services, and software
royalties that will be charged to expense in future periods.
F-41
(16) |
GOODWILL AND INTANGIBLE ASSETS |
Goodwill and Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
Goodwill |
|
|
Software and Database Licenses |
|
|
Acquired Technology/ IPRD |
|
|
Customer Relationship and Other Intangibles |
|
|
Total |
|
Historical cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2010 |
|
|
5,088 |
|
|
|
334 |
|
|
|
663 |
|
|
|
758 |
|
|
|
6,843 |
|
Foreign currency exchange differences |
|
|
38 |
|
|
|
3 |
|
|
|
7 |
|
|
|
5 |
|
|
|
43 |
|
Additions from business combinations |
|
|
3,398 |
|
|
|
11 |
|
|
|
569 |
|
|
|
1,155 |
|
|
|
5,133 |
|
Other additions |
|
|
0 |
|
|
|
79 |
|
|
|
0 |
|
|
|
0 |
|
|
|
79 |
|
Retirements/disposals |
|
|
0 |
|
|
|
10 |
|
|
|
1 |
|
|
|
5 |
|
|
|
14 |
|
|
|
December 31, 2010 |
|
|
8,524 |
|
|
|
417 |
|
|
|
1,240 |
|
|
|
1,903 |
|
|
|
12,084 |
|
|
|
Foreign currency exchange differences |
|
|
117 |
|
|
|
1 |
|
|
|
19 |
|
|
|
28 |
|
|
|
165 |
|
Additions from business combinations |
|
|
170 |
|
|
|
1 |
|
|
|
26 |
|
|
|
11 |
|
|
|
208 |
|
Other additions |
|
|
0 |
|
|
|
76 |
|
|
|
0 |
|
|
|
0 |
|
|
|
76 |
|
Retirements/disposals |
|
|
5 |
|
|
|
6 |
|
|
|
18 |
|
|
|
12 |
|
|
|
41 |
|
|
|
December 31, 2011 |
|
|
8,806 |
|
|
|
489 |
|
|
|
1,267 |
|
|
|
1,930 |
|
|
|
12,492 |
|
|
|
Accumulated amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2010 |
|
|
94 |
|
|
|
219 |
|
|
|
376 |
|
|
|
266 |
|
|
|
955 |
|
Foreign currency exchange differences |
|
|
2 |
|
|
|
4 |
|
|
|
7 |
|
|
|
5 |
|
|
|
18 |
|
Additions depreciation |
|
|
0 |
|
|
|
36 |
|
|
|
143 |
|
|
|
142 |
|
|
|
321 |
|
Retirements/disposals |
|
|
0 |
|
|
|
10 |
|
|
|
1 |
|
|
|
5 |
|
|
|
14 |
|
|
|
December 31, 2010 |
|
|
96 |
|
|
|
249 |
|
|
|
527 |
|
|
|
408 |
|
|
|
1,280 |
|
|
|
Foreign currency exchange differences |
|
|
1 |
|
|
|
0 |
|
|
|
12 |
|
|
|
13 |
|
|
|
26 |
|
Additions depreciation |
|
|
0 |
|
|
|
49 |
|
|
|
171 |
|
|
|
266 |
|
|
|
486 |
|
Retirements/disposals |
|
|
0 |
|
|
|
3 |
|
|
|
18 |
|
|
|
12 |
|
|
|
33 |
|
|
|
December 31, 2011 |
|
|
97 |
|
|
|
295 |
|
|
|
692 |
|
|
|
675 |
|
|
|
1,759 |
|
|
|
Carrying value December 31, 2010 |
|
|
8,428 |
|
|
|
168 |
|
|
|
713 |
|
|
|
1,495 |
|
|
|
10,804 |
|
|
|
Carrying value December 31, 2011 |
|
|
8,709 |
|
|
|
194 |
|
|
|
575 |
|
|
|
1,255 |
|
|
|
10,733 |
|
The disposal of goodwill (5 million) relates to the sale of a disposal group that
included operations of an acquired entity.
The additions to software and database licenses in 2011 and 2010 were
individually
acquired from third parties and include cross-license agreements and patents, whereas the additions to acquired technology and other intangibles primarily result from our business combinations
discussed in Note (4).
F-42
We carry the following significant intangible assets:
Significant Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Amount in Millions |
|
|
Remaining Useful Life in Years |
|
|
|
2011 |
|
|
2010 |
|
|
Sybase Acquired technologies |
|
|
435 |
|
|
|
518 |
|
|
|
3-5 |
|
Business Objects Acquired technologies |
|
|
50 |
|
|
|
86 |
|
|
|
1-4 |
|
Sybase Maintenance-related customer relationships |
|
|
706 |
|
|
|
846 |
|
|
|
11 |
|
Sybase Messaging and license- related customer relationships |
|
|
173 |
|
|
|
189 |
|
|
|
1-9 |
|
Business Objects Maintenance- related customer relationships |
|
|
215 |
|
|
|
250 |
|
|
|
10-13 |
|
Business Objects Other customer relationships |
|
|
42 |
|
|
|
67 |
|
|
|
5-8 |
|
Total significant intangible assets |
|
|
1,621 |
|
|
|
1,956 |
|
|
|
|
|
The carrying amount of goodwill by reportable segment at December 31, 2011, and 2010, was as follows:
Goodwill by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
12/31/2011 |
|
|
Thereof Changes in 2011 |
|
|
12/31/2010 |
|
|
Thereof Changes in 2010 |
|
Product |
|
|
5,206 |
|
|
|
151 |
|
|
|
5,001 |
|
|
|
776 |
|
Consulting |
|
|
781 |
|
|
|
11 |
|
|
|
764 |
|
|
|
67 |
|
Training |
|
|
176 |
|
|
|
3 |
|
|
|
171 |
|
|
|
22 |
|
Sybase |
|
|
2,546 |
|
|
|
0 |
|
|
|
2,492 |
|
|
|
2,533 |
|
|
|
Total |
|
|
8,709 |
|
|
|
165 |
|
|
|
8,428 |
|
|
|
3,398 |
|
For more information about our segments see Note (29).
The recoverable amounts for all our segments have been determined based on value in use calculations. The calculations use
cash flow projections based on actual operating results and a company-wide five-year business plan approved by management. Cash flows for periods beyond this five-year business plan were extrapolated using the segment-specific terminal
growth rates disclosed in the table below. These terminal growth rates do not exceed the long-term average growth rates for the markets in which our operating segments operate. Our estimated cash
flow projections are discounted to present value by means of the pre-tax discount rates disclosed in the table below together with the terminal revenue growth rates. These pre-tax discount rates are based on a weighted average cost of capital
approach (WACC).
F-43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
Consulting |
|
|
Training |
|
|
Sybase |
|
Pre-tax discount rates |
|
|
12.7 |
% |
|
|
12.1 |
% |
|
|
12.6 |
% |
|
|
13.6 |
% |
Terminal revenue growth rate |
|
|
3.6 |
% |
|
|
3.2 |
% |
|
|
2.4 |
% |
|
|
3.6 |
% |
The segments sell complementary products and services and their recoverable amounts are based on some of
the same key assumptions. These key assumptions on which management has based its cash flow projections for the period covered by our five-year business plan are:
|
|
|
Key assumption |
|
Basis for determining values assigned to key assumption |
Budgeted revenue growth |
|
Revenue growth rate achieved in the period immediately before the budget period, increased for an expected increase in SAPs addressable market in the areas of cloud,
mobility, and database as well as expected growth in the established categories of applications and analytics. Values assigned reflect past experience as well as expectations regarding an increase in the addressable market. |
Budgeted operating margin |
|
Operating margin budgeted for a given budget period equals the operating margin achieved in the period immediately before the budget period, increased for expected efficiency
improvements. Values assigned reflect past experience, except for efficiency improvements. |
We believe that any reasonably possible change in any of the above key assumptions would
not cause the carrying value of our product, consulting, or training segments to exceed their respective recoverable amounts.
The Sybase segments recoverable amount exceeds its carrying amount by 922 million. The projected cash flows for the Sybase
segment are derived from the budgeted operating margins
and based on an average cash flow growth rate of 18% during the five-year business plan approved by management. The average cash flow growth rate would need to be 7.8 percentage points lower in
order for the Sybase segments recoverable amount to be equal to its carrying amount. For the year ended December 31, 2011, the Sybase segment exceeded 2011 projected cash flows.
F-44
(17) |
PROPERTY, PLANT, AND EQUIPMENT |
Property, Plant, and Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
Land and Buildings |
|
|
Other Property,
Plant, and
Equipment |
|
|
Advance Payments
and Construction in Progress |
|
|
Total |
|
Historical cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2010 |
|
|
1,252 |
|
|
|
1,277 |
|
|
|
33 |
|
|
|
2,562 |
|
Foreign currency exchange differences |
|
|
50 |
|
|
|
38 |
|
|
|
1 |
|
|
|
89 |
|
Additions from business combinations |
|
|
10 |
|
|
|
14 |
|
|
|
0 |
|
|
|
24 |
|
Other additions |
|
|
30 |
|
|
|
226 |
|
|
|
7 |
|
|
|
263 |
|
Retirements/disposals |
|
|
34 |
|
|
|
165 |
|
|
|
0 |
|
|
|
199 |
|
Transfers |
|
|
28 |
|
|
|
3 |
|
|
|
31 |
|
|
|
0 |
|
|
|
December 31, 2010 |
|
|
1,336 |
|
|
|
1,393 |
|
|
|
10 |
|
|
|
2,739 |
|
|
|
Foreign currency exchange differences |
|
|
7 |
|
|
|
3 |
|
|
|
0 |
|
|
|
10 |
|
Additions from business combinations |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Other additions |
|
|
29 |
|
|
|
337 |
|
|
|
6 |
|
|
|
372 |
|
Retirements/disposals |
|
|
19 |
|
|
|
183 |
|
|
|
1 |
|
|
|
203 |
|
Transfers |
|
|
7 |
|
|
|
1 |
|
|
|
8 |
|
|
|
0 |
|
|
|
December 31, 2011 |
|
|
1,360 |
|
|
|
1,551 |
|
|
|
7 |
|
|
|
2,918 |
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2010 |
|
|
382 |
|
|
|
809 |
|
|
|
0 |
|
|
|
1,191 |
|
Foreign currency exchange differences |
|
|
19 |
|
|
|
26 |
|
|
|
0 |
|
|
|
45 |
|
Additions depreciation |
|
|
45 |
|
|
|
166 |
|
|
|
0 |
|
|
|
211 |
|
Impairments |
|
|
2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2 |
|
Retirements/disposals |
|
|
23 |
|
|
|
136 |
|
|
|
0 |
|
|
|
159 |
|
Transfers |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
December 31, 2010 |
|
|
425 |
|
|
|
865 |
|
|
|
0 |
|
|
|
1,290 |
|
|
|
Foreign currency exchange differences |
|
|
4 |
|
|
|
1 |
|
|
|
0 |
|
|
|
5 |
|
Additions depreciation |
|
|
47 |
|
|
|
191 |
|
|
|
0 |
|
|
|
238 |
|
Retirements/disposals |
|
|
16 |
|
|
|
150 |
|
|
|
0 |
|
|
|
166 |
|
Transfers |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
December 31, 2011 |
|
|
460 |
|
|
|
907 |
|
|
|
0 |
|
|
|
1,367 |
|
|
|
Carrying value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
911 |
|
|
|
528 |
|
|
|
10 |
|
|
|
1,449 |
|
|
|
December 31, 2011 |
|
|
900 |
|
|
|
644 |
|
|
|
7 |
|
|
|
1,551 |
|
|
|
The additions and disposals in other property, plant, and equipment relate primarily to the replacement
and purchase of computer hardware and cars acquired in the normal course of business.
F-45
(18) |
TRADE AND OTHER PAYABLES, FINANCIAL LIABILITIES, AND OTHER NON-FINANCIAL LIABILITIES |
(18a) |
Trade and Other Payables |
Trade and other payables as at December 31 were as follows:
Trade and Other Payables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 Term |
|
|
2010 Term |
|
millions |
|
Current |
|
|
Non-Current |
|
|
Balance on
12/31/2011 |
|
|
Current |
|
|
Non-Current |
|
|
Balance on
12/31/2010 |
|
Trade payables |
|
|
727 |
|
|
|
0 |
|
|
|
727 |
|
|
|
700 |
|
|
|
0 |
|
|
|
700 |
|
Advance payments received |
|
|
95 |
|
|
|
0 |
|
|
|
95 |
|
|
|
97 |
|
|
|
0 |
|
|
|
97 |
|
Miscellaneous other liabilities |
|
|
115 |
|
|
|
43 |
|
|
|
158 |
|
|
|
126 |
|
|
|
30 |
|
|
|
156 |
|
Trade and other payables |
|
|
937 |
|
|
|
43 |
|
|
|
980 |
|
|
|
923 |
|
|
|
30 |
|
|
|
953 |
|
Miscellaneous other liabilities include mainly deferral amounts for free rent periods.
(18b) |
Financial Liabilities |
Financial liabilities as at December 31 were as follows:
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 Term |
|
|
2010 Term |
|
millions |
|
Current |
|
|
Non-Current |
|
|
Balance on
12/31/2011 |
|
|
Current |
|
|
Non-Current |
|
|
Balance on
12/31/2010 |
|
Bonds |
|
|
600 |
|
|
|
1,595 |
|
|
|
2,195 |
|
|
|
0 |
|
|
|
2,191 |
|
|
|
2,191 |
|
Private placement transactions |
|
|
423 |
|
|
|
1,237 |
|
|
|
1,660 |
|
|
|
0 |
|
|
|
1,069 |
|
|
|
1,069 |
|
Bank loans |
|
|
101 |
|
|
|
1 |
|
|
|
102 |
|
|
|
1 |
|
|
|
1,098 |
|
|
|
1,099 |
|
Other financial liabilities |
|
|
207 |
|
|
|
92 |
|
|
|
299 |
|
|
|
141 |
|
|
|
91 |
|
|
|
232 |
|
Financial liabilities |
|
|
1,331 |
|
|
|
2,925 |
|
|
|
4,256 |
|
|
|
142 |
|
|
|
4,449 |
|
|
|
4,591 |
|
Financial liabilities are unsecured, except for the retention of title and similar rights
customary in our industry. Effective interest rates on our financing debt were 2.98% in 2011, 2.76% in 2010, and 4.32% in 2009.
An analysis showing the contractual cash flows of our financial liabilities based on
maturity is provided in Note (25). Information on the risk associated with our financial liabilities is provided in Note (26) and information on fair values is provided in Note (27).
F-46
Bonds
As at December 31, 2011, we had outstanding bonds with the following terms:
Bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
|
|
Issue Price |
|
|
Coupon Rate |
|
|
Effective Interest Rate |
|
|
Nominal Volume on 12/31/2011 in millions |
|
|
Balance on 12/31/2011 in millions |
|
|
Balance on 12/31/2010 in millions |
|
Eurobond 1 2010 |
|
|
2014 |
|
|
|
99.755 |
% |
|
|
2.50% (fix) |
|
|
|
2.65 |
% |
|
|
500 |
|
|
|
498 |
|
|
|
498 |
|
Eurobond 2 2010 |
|
|
2017 |
|
|
|
99.780 |
% |
|
|
3.50% (fix) |
|
|
|
3.59 |
% |
|
|
500 |
|
|
|
498 |
|
|
|
497 |
|
Eurobond 3 2010 |
|
|
2012 |
|
|
|
99.863 |
% |
|
|
1.75% (fix) |
|
|
|
2.01 |
% |
|
|
600 |
|
|
|
600 |
|
|
|
598 |
|
Eurobond 4 2010 |
|
|
2013 |
|
|
|
99.857 |
% |
|
|
2.25% (fix) |
|
|
|
2.39 |
% |
|
|
600 |
|
|
|
599 |
|
|
|
598 |
|
|
|
Bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,195 |
|
|
|
2,191 |
|
The Eurobonds are listed for trading on the Luxembourg Stock Exchange.
Private Placement Transactions
Our private placement transactions have the following terms:
Private
Placements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
|
|
Coupon Rate |
|
|
Effective Interest Rate |
|
|
Nominal Volume in Respective Currency on 12/31/2011 in millions |
|
|
Balance on 12/31/2011 in millions |
|
|
Balance on 12/31/2010 in millions |
|
German promissory note SSD |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
697 |
|
|
|
697 |
|
|
|
696 |
|
Tranche 1 2009 |
|
|
2012 |
|
|
|
4.04% (fix) |
|
|
|
4.08 |
% |
|
|
63.5 |
|
|
|
|
|
|
|
|
|
Tranche 2 2009 |
|
|
2012 |
|
|
|
3.46% (variable) |
|
|
|
3.51 |
% |
|
|
359.5 |
|
|
|
|
|
|
|
|
|
Tranche 3 2009 |
|
|
2014 |
|
|
|
4.92% (fix) |
|
|
|
4.98 |
% |
|
|
86 |
|
|
|
|
|
|
|
|
|
Tranche 4 2009 |
|
|
2014 |
|
|
|
3.81% (variable) |
|
|
|
3.86 |
% |
|
|
158 |
|
|
|
|
|
|
|
|
|
Tranche 5 2009 |
|
|
2014 |
|
|
|
3.72% (variable) |
|
|
|
3.76 |
% |
|
|
30 |
|
|
|
|
|
|
|
|
|
U.S. private placement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US$ 1,250 |
|
|
|
963 |
|
|
|
373 |
|
Tranche 1 2010 |
|
|
2015 |
|
|
|
2.34% (fix) |
|
|
|
2.40 |
% |
|
|
US$ 300 |
|
|
|
|
|
|
|
|
|
Tranche 2 2010 |
|
|
2017 |
|
|
|
2.95% (fix) |
|
|
|
3.03 |
% |
|
|
US$ 200 |
|
|
|
|
|
|
|
|
|
Tranche 3 2011 |
|
|
2016 |
|
|
|
2.77% (fix) |
|
|
|
2.82 |
% |
|
|
US$ 600 |
|
|
|
|
|
|
|
|
|
Tranche 4 2011 |
|
|
2018 |
|
|
|
3.43% (fix) |
|
|
|
3.50 |
% |
|
|
US$ 150 |
|
|
|
|
|
|
|
|
|
|
|
Private placements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,660 |
|
|
|
1,069 |
|
The coupon and the effective interest rates for the floating rate tranches 2, 4, and 5 of
the German promissory notes (Schuldscheindarlehen, SSD) were calculated based on the last three-month EURIBOR interest rate fixing for the tranches in 2011.
The U.S. private placement notes were issued through one of our subsidiaries that has the
U.S. dollar as its functional currency.
F-47
Bank Loans
Our bank loans have the following terms:
Bank Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
|
|
Coupon Rate |
|
|
Effective Interest Rate |
|
|
Nominal Volume on 12/31/2011 in millions |
|
|
Balance on 12/31/2011 in millions |
|
|
Balance on 12/31/2010 in millions |
|
Acquisition term loan |
|
|
2012 |
|
|
|
1.45% (var.) |
|
|
|
2.02% |
|
|
|
0 |
|
|
|
0 |
|
|
|
992 |
|
Additional term loan |
|
|
2012 |
|
|
|
2.64% (var.) |
|
|
|
2.64% |
|
|
|
100 |
|
|
|
100 |
|
|
|
100 |
|
Other loans |
|
|
|
|
|
|
variable |
|
|
|
variable |
|
|
|
2 |
|
|
|
2 |
|
|
|
7 |
|
|
|
Bank loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102 |
|
|
|
1,099 |
|
The acquisition term loan to finance the acquisition of Sybase in July 2010 with an
initial drawdown of approximately 2.64 billion and an outstanding nominal volume of 1.0 billion as at December 31, 2010, was repaid early during 2011.
The coupon and the effective interest rate for the additional term loan were calculated
based on the last 12-month EURIBOR interest rate fixing for this financing instrument in 2011.
Other Financial Liabilities
Our other financial liabilities mainly
comprise derivative liabilities and liabilities for accrued interests.
(18c) |
Other Non-Financial Liabilities |
Other non-financial liabilities as at December 31 were as follows:
Other
Non-Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 Term |
|
|
2010 Term |
|
millions |
|
Current |
|
|
Non-Current |
|
|
Balance on
12/31/2011 |
|
|
Current |
|
|
Non-Current |
|
|
Balance on
12/31/2010 |
|
Other employee-related liabilities |
|
|
1,541 |
|
|
|
92 |
|
|
|
1,633 |
|
|
|
1,362 |
|
|
|
85 |
|
|
|
1,447 |
|
Other taxes |
|
|
440 |
|
|
|
0 |
|
|
|
440 |
|
|
|
364 |
|
|
|
0 |
|
|
|
364 |
|
Other non-financial liabilities |
|
|
1,981 |
|
|
|
92 |
|
|
|
2,073 |
|
|
|
1,726 |
|
|
|
85 |
|
|
|
1,811 |
|
Other employee-related liabilities mainly relate to vacation accruals, bonus and sales commission accruals
as well as employee-related social security obligations.
Other taxes comprise mainly payroll tax liabilities and value-added
tax liabilities.
F-48
Provisions based on due dates as at December 31 were as follows:
Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
millions |
|
Current |
|
|
Non-Current |
|
|
Total |
|
|
Current |
|
|
Non-Current |
|
|
Total |
|
Pension plans and similar obligations (see Note (19a)) |
|
|
25 |
|
|
|
71 |
|
|
|
96 |
|
|
|
2 |
|
|
|
76 |
|
|
|
78 |
|
Other provisions (see Note (19b)) |
|
|
537 |
|
|
|
195 |
|
|
|
732 |
|
|
|
1,285 |
|
|
|
216 |
|
|
|
1,501 |
|
Total |
|
|
562 |
|
|
|
266 |
|
|
|
828 |
|
|
|
1,287 |
|
|
|
292 |
|
|
|
1,579 |
|
(19a) |
Pension Plans and Similar Obligations |
We maintain several defined benefit and defined contribution pension plans for our employees in Germany and at foreign subsidiaries, which provide for old age, disability, and survivors benefits.
The measurement dates for the domestic and foreign benefit plans are December 31. Individual benefit plans have also been established for members of our Executive Board. Furthermore, in certain countries we provide termination indemnity
benefits to employees regardless of the cause for termination. These types of benefits are typically defined by law in these foreign countries.
Our domestic defined benefit pension plans provide participants with pension benefits that
are based on the length of service and compensation of employees.
There is also a domestic employee-financed pension plan for which SAP guarantees a minimum return on investment which is equivalent to
the return guaranteed by the insurer. Even though the risk that SAP would be liable for a return that cannot be met by the insurance company is very remote, these employee-financed plans do not qualify as defined contribution plans under IFRS and
are included in domestic plan assets and plan liabilities.
Foreign defined benefit pension plans provide participants with
pension benefits that are based on compensation levels, age, and length of service.
F-49
The following table shows the development of the present values of the defined benefit
obligations and the fair value of the plan assets with a reconciliation of the funded status to net amounts:
Change in the
Present Value of the DBO and the Fair Value of the Plan Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Plans |
|
|
Foreign Plans |
|
|
Other Post- Employment Plans |
|
|
Total |
|
millions |
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Change in benefit obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year |
|
|
416 |
|
|
|
346 |
|
|
|
439 |
|
|
|
343 |
|
|
|
25 |
|
|
|
20 |
|
|
|
880 |
|
|
|
709 |
|
Service cost |
|
|
2 |
|
|
|
4 |
|
|
|
19 |
|
|
|
17 |
|
|
|
3 |
|
|
|
3 |
|
|
|
20 |
|
|
|
16 |
|
Interest cost |
|
|
20 |
|
|
|
18 |
|
|
|
14 |
|
|
|
17 |
|
|
|
1 |
|
|
|
1 |
|
|
|
35 |
|
|
|
36 |
|
Employee contributions |
|
|
25 |
|
|
|
46 |
|
|
|
4 |
|
|
|
4 |
|
|
|
0 |
|
|
|
0 |
|
|
|
29 |
|
|
|
50 |
|
Actuarial loss (+)/gain () |
|
|
11 |
|
|
|
13 |
|
|
|
0 |
|
|
|
29 |
|
|
|
1 |
|
|
|
2 |
|
|
|
10 |
|
|
|
44 |
|
Benefits paid |
|
|
5 |
|
|
|
4 |
|
|
|
28 |
|
|
|
17 |
|
|
|
2 |
|
|
|
1 |
|
|
|
35 |
|
|
|
22 |
|
Acquisitions/divestitures |
|
|
4 |
|
|
|
1 |
|
|
|
1 |
|
|
|
4 |
|
|
|
0 |
|
|
|
4 |
|
|
|
5 |
|
|
|
9 |
|
Curtailments/settlements |
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4 |
|
|
|
3 |
|
|
|
4 |
|
Other changes |
|
|
1 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1 |
|
|
|
0 |
|
Past service cost |
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
3 |
|
Foreign currency exchange rate changes |
|
|
0 |
|
|
|
0 |
|
|
|
16 |
|
|
|
45 |
|
|
|
1 |
|
|
|
0 |
|
|
|
17 |
|
|
|
45 |
|
Benefit obligation at year-end |
|
|
462 |
|
|
|
416 |
|
|
|
457 |
|
|
|
439 |
|
|
|
27 |
|
|
|
25 |
|
|
|
946 |
|
|
|
880 |
|
Thereof fully or partially funded plans |
|
|
462 |
|
|
|
416 |
|
|
|
417 |
|
|
|
404 |
|
|
|
13 |
|
|
|
12 |
|
|
|
892 |
|
|
|
832 |
|
Thereof unfunded plans |
|
|
0 |
|
|
|
0 |
|
|
|
40 |
|
|
|
35 |
|
|
|
14 |
|
|
|
13 |
|
|
|
54 |
|
|
|
48 |
|
Change in plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year |
|
|
414 |
|
|
|
345 |
|
|
|
386 |
|
|
|
311 |
|
|
|
4 |
|
|
|
4 |
|
|
|
804 |
|
|
|
660 |
|
Expected return on plan assets |
|
|
19 |
|
|
|
17 |
|
|
|
7 |
|
|
|
19 |
|
|
|
1 |
|
|
|
0 |
|
|
|
27 |
|
|
|
36 |
|
Employer contributions |
|
|
2 |
|
|
|
1 |
|
|
|
17 |
|
|
|
31 |
|
|
|
3 |
|
|
|
5 |
|
|
|
22 |
|
|
|
37 |
|
Employee contributions |
|
|
25 |
|
|
|
46 |
|
|
|
4 |
|
|
|
4 |
|
|
|
0 |
|
|
|
0 |
|
|
|
29 |
|
|
|
50 |
|
Benefits paid |
|
|
5 |
|
|
|
4 |
|
|
|
28 |
|
|
|
17 |
|
|
|
2 |
|
|
|
1 |
|
|
|
35 |
|
|
|
22 |
|
Acquisitions/divestitures |
|
|
4 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4 |
|
|
|
2 |
|
Settlements |
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4 |
|
|
|
3 |
|
|
|
4 |
|
Other changes |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1 |
|
|
|
0 |
|
|
|
1 |
|
|
|
0 |
|
Actuarial loss (-)/gain (+) |
|
|
9 |
|
|
|
9 |
|
|
|
7 |
|
|
|
1 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2 |
|
|
|
8 |
|
Foreign currency exchange rate changes |
|
|
0 |
|
|
|
0 |
|
|
|
11 |
|
|
|
37 |
|
|
|
0 |
|
|
|
0 |
|
|
|
11 |
|
|
|
37 |
|
Fair value of plan assets at year-end |
|
|
460 |
|
|
|
414 |
|
|
|
387 |
|
|
|
386 |
|
|
|
5 |
|
|
|
4 |
|
|
|
852 |
|
|
|
804 |
|
Funded status at year-end |
|
|
2 |
|
|
|
2 |
|
|
|
70 |
|
|
|
53 |
|
|
|
22 |
|
|
|
21 |
|
|
|
94 |
|
|
|
76 |
|
Amounts recognized in the Consolidated Statement of Financial Position: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current pension assets |
|
|
0 |
|
|
|
0 |
|
|
|
2 |
|
|
|
2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2 |
|
|
|
2 |
|
Accrued benefit liability (current) |
|
|
0 |
|
|
|
0 |
|
|
|
25 |
|
|
|
2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
25 |
|
|
|
2 |
|
Accrued benefit liability (non-current) |
|
|
2 |
|
|
|
2 |
|
|
|
47 |
|
|
|
53 |
|
|
|
22 |
|
|
|
21 |
|
|
|
71 |
|
|
|
76 |
|
Total |
|
|
2 |
|
|
|
2 |
|
|
|
70 |
|
|
|
53 |
|
|
|
22 |
|
|
|
21 |
|
|
|
94 |
|
|
|
76 |
|
F-50
The following weighted average assumptions were used for the actuarial valuation of our
domestic and foreign pension liabilities as well as other post-employment benefit obligations as at the respective measurement date:
Actuarial Assumptions for Defined Benefit Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Plans |
|
|
Foreign Plans |
|
|
Other Post-Employment Plans |
|
Percent |
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Discount rate |
|
|
4.6 |
|
|
|
4.9 |
|
|
|
5.1 |
|
|
|
3.2 |
|
|
|
3.3 |
|
|
|
4.7 |
|
|
|
5.4 |
|
|
|
5.7 |
|
|
|
5.7 |
|
Rate of compensation increase |
|
|
2.5 |
|
|
|
2.5 |
|
|
|
2.5 |
|
|
|
1.8 |
|
|
|
1.8 |
|
|
|
2.3 |
|
|
|
3.0 |
|
|
|
5.0 |
|
|
|
6.9 |
|
The assumed discount rates are derived from rates available on high-quality corporate bonds and
government bonds for which the timing and amounts of payments match the timing and the amounts of our projected pension payments.
The components of total expense of defined benefit pension plans for the years 2011, 2010, and 2009 recognized in operating expense were as follows:
Total Expense of Defined Benefit Pension Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Plans |
|
|
Foreign Plans |
|
|
Other Post- Employment Plans |
|
|
Total |
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Service cost |
|
|
2 |
|
|
|
4 |
|
|
|
6 |
|
|
|
19 |
|
|
|
17 |
|
|
|
15 |
|
|
|
3 |
|
|
|
3 |
|
|
|
2 |
|
|
|
20 |
|
|
|
16 |
|
|
|
11 |
|
Interest cost |
|
|
20 |
|
|
|
18 |
|
|
|
18 |
|
|
|
14 |
|
|
|
17 |
|
|
|
15 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
35 |
|
|
|
36 |
|
|
|
34 |
|
Expected return on plan assets |
|
|
19 |
|
|
|
17 |
|
|
|
15 |
|
|
|
7 |
|
|
|
19 |
|
|
|
14 |
|
|
|
1 |
|
|
|
0 |
|
|
|
0 |
|
|
|
27 |
|
|
|
36 |
|
|
|
29 |
|
Curtailment |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1 |
|
Past service cost |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
3 |
|
|
|
0 |
|
|
|
Total expense |
|
|
1 |
|
|
|
3 |
|
|
|
3 |
|
|
|
23 |
|
|
|
12 |
|
|
|
15 |
|
|
|
3 |
|
|
|
4 |
|
|
|
3 |
|
|
|
25 |
|
|
|
13 |
|
|
|
15 |
|
Actual return on plan assets |
|
|
28 |
|
|
|
26 |
|
|
|
-3 |
|
|
|
5 |
|
|
|
18 |
|
|
|
42 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
33 |
|
|
|
44 |
|
|
|
39 |
|
Due to the fact that our domestic defined benefit pension plans primarily consist of an
employee-financed post-retirement plan that is fully financed with qualifying insurance policies, current service cost may turn into a credit as a
result of adjusting the defined benefit liabilitys carrying amount to the fair value of the qualifying plan assets. Such adjustments are recorded in service cost.
F-51
We have recognized the following amounts of actuarial gains and losses for our defined
benefit pension plans:
Actuarial Gains (Losses) on Defined Benefit Pension Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Plans |
|
|
Foreign Plans |
|
|
Other Post-Employment Plans |
|
|
Total |
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Beginning balance of actuarial gains (-) and losses (+) on defined benefit plans |
|
|
6 |
|
|
|
10 |
|
|
|
18 |
|
|
|
86 |
|
|
|
53 |
|
|
|
57 |
|
|
|
0 |
|
|
|
2 |
|
|
|
2 |
|
|
|
80 |
|
|
|
41 |
|
|
|
37 |
|
Actuarial gains (-) and losses (+) on defined benefit plans recognized during the period |
|
|
2 |
|
|
|
4 |
|
|
|
5 |
|
|
|
7 |
|
|
|
30 |
|
|
|
3 |
|
|
|
1 |
|
|
|
2 |
|
|
|
0 |
|
|
|
8 |
|
|
|
36 |
|
|
|
8 |
|
Other changes |
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
5 |
|
|
|
1 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1 |
|
|
|
0 |
|
|
|
2 |
|
Foreign currency exchange rate changes |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4 |
|
|
|
3 |
|
|
|
2 |
|
|
|
1 |
|
|
|
0 |
|
|
|
0 |
|
|
|
5 |
|
|
|
3 |
|
|
|
2 |
|
Ending balance of actuarial gains (-) and losses (+) on defined benefit plans |
|
|
4 |
|
|
|
6 |
|
|
|
10 |
|
|
|
97 |
|
|
|
86 |
|
|
|
53 |
|
|
|
1 |
|
|
|
0 |
|
|
|
2 |
|
|
|
92 |
|
|
|
80 |
|
|
|
41 |
|
For the determination of the total expense for the years 2011, 2010, and 2009, the projection of the
defined benefit obligation and the fair value of the plan assets as at December 31, 2011, 2010, and 2009, the following principal actuarial assumptions (expressed as weighted averages for our foreign and post-employment benefit plans) were
used:
Actuarial Assumptions for Total Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Plans |
|
|
Foreign Plans |
|
|
Other Post-Employment Plans |
|
% |
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Discount rate |
|
|
4.9 |
|
|
|
5.1 |
|
|
|
5.8 |
|
|
|
3.2 |
|
|
|
4.4 |
|
|
|
5.0 |
|
|
|
5.3 |
|
|
|
5.6 |
|
|
|
6.5 |
|
Expected return on plan assets |
|
|
4.5 |
|
|
|
4.5 |
|
|
|
4.5 |
|
|
|
1.5 |
|
|
|
5.1 |
|
|
|
5.3 |
|
|
|
7.8 |
|
|
|
7.6 |
|
|
|
6.5 |
|
Rate of compensation increase |
|
|
2.5 |
|
|
|
2.2 |
|
|
|
2.1 |
|
|
|
1.8 |
|
|
|
1.8 |
|
|
|
2.3 |
|
|
|
3.1 |
|
|
|
4.9 |
|
|
|
6.3 |
|
Our investment strategy on domestic benefit plans is to invest all contributions in
stable insurance policies. The expected rate of return on plan assets for our domestic benefit
plans is calculated by reference to the expected returns achievable on the insured policies given the expected asset mix of the policies.
F-52
The expected return assumptions for our foreign plan assets are based on weighted average
expected long-term rates of return for each asset class, estimated based on factors such as historical return patterns for each asset class and forecasts for inflation. We review historical return patterns and other relevant financial factors for
appropriateness and reasonableness and make modifications to eliminate certain effects when considered necessary. Our foreign benefit plan asset allocation at December 31, 2011, and our target asset allocation for the year 2012 are as follows:
Plan Asset Allocation for Foreign Plans and Other Post-Employment Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent |
|
Target Asset Allocation 2012 |
|
|
Actual % of 2011 Plan Assets |
|
|
Target Asset Allocation 2011 |
|
|
Actual % of 2010 Plan Assets |
|
Asset category |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
12 |
|
|
|
10 |
|
|
|
12 |
|
|
|
11 |
|
Fixed income |
|
|
66 |
|
|
|
60 |
|
|
|
81 |
|
|
|
80 |
|
Real estate |
|
|
3 |
|
|
|
3 |
|
|
|
3 |
|
|
|
5 |
|
Insurance policies |
|
|
1 |
|
|
|
1 |
|
|
|
0 |
|
|
|
0 |
|
Cash and other assets |
|
|
18 |
|
|
|
26 |
|
|
|
4 |
|
|
|
4 |
|
|
|
Total |
|
|
100 |
|
|
|
100 |
|
|
|
100 |
|
|
|
100 |
|
The investment strategies for foreign benefit plans vary according to the respective
conditions in the country in which the benefit plans are situated. Generally, a long-term investment horizon has been adopted for all major foreign benefit plans. Our policy is to invest in a risk-diversified portfolio consisting of
a mix of assets within the above target asset allocation range.
Our
expected contribution in 2012 is 1 million for domestic defined benefit pension plans and 47 million for foreign defined benefit pension plans, all of which is expected to be paid in cash.
The amounts for the
current year and four preceding years of pension obligation, plan assets, funded status, and experience adjustments are as follows:
Pension Obligation, Plan Assets, Funded Status and Experience Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Plans |
|
|
Foreign Plans |
|
|
Other Post-Employment Plans |
|
|
Total |
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
Defined benefit obligation |
|
|
462 |
|
|
|
416 |
|
|
|
346 |
|
|
|
314 |
|
|
|
274 |
|
|
|
457 |
|
|
|
439 |
|
|
|
343 |
|
|
|
306 |
|
|
|
287 |
|
|
|
27 |
|
|
|
25 |
|
|
|
20 |
|
|
|
18 |
|
|
|
13 |
|
|
|
946 |
|
|
|
880 |
|
|
|
709 |
|
|
|
638 |
|
|
|
574 |
|
Liability experience adjustments |
|
|
11 |
|
|
|
13 |
|
|
|
13 |
|
|
|
10 |
|
|
|
37 |
|
|
|
0 |
|
|
|
29 |
|
|
|
31 |
|
|
|
45 |
|
|
|
0 |
|
|
|
1 |
|
|
|
2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1 |
|
|
|
10 |
|
|
|
44 |
|
|
|
18 |
|
|
|
55 |
|
|
|
38 |
|
Plan assets |
|
|
460 |
|
|
|
414 |
|
|
|
345 |
|
|
|
314 |
|
|
|
272 |
|
|
|
387 |
|
|
|
386 |
|
|
|
311 |
|
|
|
261 |
|
|
|
311 |
|
|
|
5 |
|
|
|
4 |
|
|
|
4 |
|
|
|
3 |
|
|
|
0 |
|
|
|
852 |
|
|
|
804 |
|
|
|
660 |
|
|
|
578 |
|
|
|
583 |
|
Asset experience adjustments |
|
|
9 |
|
|
|
9 |
|
|
|
18 |
|
|
|
8 |
|
|
|
30 |
|
|
|
7 |
|
|
|
1 |
|
|
|
28 |
|
|
|
99 |
|
|
|
10 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2 |
|
|
|
8 |
|
|
|
10 |
|
|
|
107 |
|
|
|
40 |
|
|
|
Funded status |
|
|
2 |
|
|
|
2 |
|
|
|
1 |
|
|
|
0 |
|
|
|
2 |
|
|
|
70 |
|
|
|
53 |
|
|
|
32 |
|
|
|
45 |
|
|
|
24 |
|
|
|
22 |
|
|
|
21 |
|
|
|
16 |
|
|
|
15 |
|
|
|
13 |
|
|
|
94 |
|
|
|
76 |
|
|
|
49 |
|
|
|
60 |
|
|
|
9 |
|
F-53
Defined Contribution Plan/State Plans
We also maintain domestic and foreign defined contribution plans. Amounts contributed by us under such plans are based on a percentage of
the employees salaries or the amount of contributions made by employees. Furthermore in Germany, as well as in some other countries, we make contributions to public pension plans that are operated by national or local government or a similar
institution. The expenses of defined contribution plans and state plans for the years 2011, 2010, and 2009, were as follows:
Total Expense of Defined Contribution Plans and State Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Defined contribution plans |
|
|
151 |
|
|
|
136 |
|
|
|
132 |
|
State plans |
|
|
244 |
|
|
|
215 |
|
|
|
183 |
|
|
|
Total expense |
|
|
395 |
|
|
|
351 |
|
|
|
315 |
|
Changes
in other provisions over the reporting year were as follows:
Other Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
Balance 1/1/2011 |
|
|
Addition |
|
|
Accretion |
|
|
Acqui- sition |
|
|
Utili- zation |
|
|
Release |
|
|
Currency Impact |
|
|
Balance 12/31/2011 |
|
Employee-related provisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions for share-based compensation |
|
|
147 |
|
|
|
49 |
|
|
|
0 |
|
|
|
0 |
|
|
|
70 |
|
|
|
9 |
|
|
|
2 |
|
|
|
119 |
|
Other employee-related provisions |
|
|
167 |
|
|
|
93 |
|
|
|
0 |
|
|
|
0 |
|
|
|
63 |
|
|
|
8 |
|
|
|
0 |
|
|
|
189 |
|
Customer-related provisions |
|
|
50 |
|
|
|
83 |
|
|
|
0 |
|
|
|
0 |
|
|
|
56 |
|
|
|
29 |
|
|
|
0 |
|
|
|
48 |
|
Litigation-related provisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TomorrowNow litigation |
|
|
997 |
|
|
|
32 |
|
|
|
0 |
|
|
|
0 |
|
|
|
25 |
|
|
|
757 |
|
|
|
16 |
|
|
|
231 |
|
Other litigation-related provisions |
|
|
43 |
|
|
|
26 |
|
|
|
0 |
|
|
|
0 |
|
|
|
13 |
|
|
|
5 |
|
|
|
2 |
|
|
|
53 |
|
Other provisions |
|
|
97 |
|
|
|
17 |
|
|
|
5 |
|
|
|
5 |
|
|
|
25 |
|
|
|
8 |
|
|
|
1 |
|
|
|
92 |
|
|
|
Total Other Provisions |
|
|
1,501 |
|
|
|
300 |
|
|
|
5 |
|
|
|
5 |
|
|
|
252 |
|
|
|
816 |
|
|
|
11 |
|
|
|
732 |
|
Thereof current |
|
|
1,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
537 |
|
Thereof non-current |
|
|
216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
195 |
|
For more information about our share-based compensation programs, see Note (28).
Other employee-related provisions primarily comprise obligations for time credits, severance payments, jubilee expenses, and
semiretirement. While most of these employee-related provisions could be claimed within the next 12 months, we do not expect the related cash flows within this time period.
Customer-related provisions include performance obligations as well as expected contract
losses. The associated cash outflows are substantially short-term in nature.
Litigation-related provisions relate primarily
to the litigation matters described in Note (24). We have established provisions taking into account the facts of each case. The timing of the cash outflows associated with legal claims
F-54
cannot be reasonably determined in all cases. The legal and litigation-related provisions assumed in connection with the 2011 acquisitions are measured at provisional values. For details see Note
(3c). The estimate regarding the provision for the TomorrowNow litigation was adjusted substantially following the judgment of the court in September 2011. For more details, see Note (24).
Other provisions relate mainly to decommissioning, restoration and similar liabilities associated with leased facilities, onerous
contracts, warranty obligations and restructuring provisions. The associated cash outflows for decommissioning, restoration and similar liabilities, which are typically long-term in nature, are generally expected to occur at the dates of exit of the
facilities to which they relate. The utilization of onerous leases depends on the terms of the underlying lease contract. The related outflow for the remaining other provisions is of short-term nature.
Deferred income consists mainly of prepayments made by our customers for support services and professional services,
fees from multiple element arrangements allocated to undelivered elements, and amounts recorded in purchase accounting at fair value for obligations to perform under acquired support contracts in connection with acquisitions.
Issued Capital
As at December 31, 2011, SAP AG had issued 1,228,083,382 no-par shares (December 31, 2010: 1,226,822,697) with a calculated nominal value of 1 per share. All the shares issued are fully
paid. The following table shows the changes in the number and the value of issued shares and treasury shares in millions.
Change in Issued
Capital and Treasury Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares in Millions |
|
|
Value in Millions |
|
|
|
Issued Capital |
|
|
Treasury Shares |
|
|
Issued Capital |
|
|
Treasury Shares |
|
January 1, 2009 |
|
|
1,226 |
|
|
|
38 |
|
|
|
1,226 |
|
|
|
1,362 |
|
Issuing shares under share-based payment programs |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Reissuance of treasury shares under share-based payment programs |
|
|
0 |
|
|
|
1 |
|
|
|
0 |
|
|
|
42 |
|
|
|
December 31, 2009 |
|
|
1,226 |
|
|
|
37 |
|
|
|
1,226 |
|
|
|
1,320 |
|
Issuing shares under share-based payment programs |
|
|
1 |
|
|
|
0 |
|
|
|
1 |
|
|
|
0 |
|
Purchase of treasury shares |
|
|
0 |
|
|
|
6 |
|
|
|
0 |
|
|
|
220 |
|
Reissuance of treasury shares under share-based payment programs |
|
|
0 |
|
|
|
4 |
|
|
|
0 |
|
|
|
158 |
|
|
|
December 31, 2010 |
|
|
1,227 |
|
|
|
39 |
|
|
|
1,227 |
|
|
|
1,382 |
|
Issuing shares under share-based payment programs |
|
|
1 |
|
|
|
0 |
|
|
|
1 |
|
|
|
0 |
|
Purchase of treasury shares |
|
|
0 |
|
|
|
6 |
|
|
|
0 |
|
|
|
246 |
|
Reissuance of treasury shares under share-based payment programs |
|
|
0 |
|
|
|
7 |
|
|
|
0 |
|
|
|
251 |
|
|
|
December 31, 2011 |
|
|
1,228 |
|
|
|
38 |
|
|
|
1,228 |
|
|
|
1,377 |
|
F-55
Authorized Shares
The Articles of Incorporation authorize the Executive Board to increase the issued capital:
|
|
|
Up to a total amount of 250 million by issuing new common shares against contributions in cash until June 7, 2015 (Authorized Capital
I). The issuance is subject to the statutory subscription rights of existing shareholders. |
|
|
|
Up to a total amount of 250 million by issuing new common shares against contributions in cash or in kind until June 7, 2015
(Authorized Capital II). Subject to certain preconditions and the consent of the Supervisory Board, the Executive Board is authorized to exclude the shareholders statutory subscription rights. |
|
|
|
Up to a total amount of 30 million by issuing new common shares against contributions in cash or in kind until June 7, 2015 (Authorized
Capital III). The new shares can only be used for share-based compensation (as employee shares). Shareholders subscription rights are excluded. |
Contingent Shares
SAP AGs issued capital is subject to a
contingent increase of common shares. The contingent increase may be effected only to the
extent that the holders of the convertible bonds and stock options that were issued by SAP AG under certain share-based payment plans exercise their conversion or subscription rights. As at
December 31, 2011, 134 million, representing 134 million shares, is still available for issuance (2010: 207 million).
Share Premium
Share premium represents all capital contributed to SAP
with the proceeds resulting from the issuance of issued capital in excess of their calculated par value. Share premium arises mainly from issuance of issued capital, treasury shares transactions and share-based compensation transactions.
Retained Earnings
Retained earnings contain prior years undistributed profit after tax and unrecognized pension costs. Unrecognized pension costs
comprise actuarial gains and losses relating to defined benefit pension plans and similar obligations.
F-56
Other comprehensive income
The component of other comprehensive income before tax that will be reclassified to profit or loss in the future includes the following items:
Items Booked in Other Comprehensive Income that will be Reclassified to Profit or
Loss Before Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Gains (losses) on exchange differences on translation |
|
|
106 |
|
|
|
193 |
|
|
|
76 |
|
Reclassification adjustments on exchange differences on translation |
|
|
0 |
|
|
|
0 |
|
|
|
2 |
|
|
|
Exchange differences on translation |
|
|
106 |
|
|
|
193 |
|
|
|
74 |
|
Gains (losses) on remeasuring available-for-sale financial assets |
|
|
6 |
|
|
|
5 |
|
|
|
15 |
|
Reclassification adjustments on available-for-sale financial assets |
|
|
1 |
|
|
|
2 |
|
|
|
0 |
|
|
|
Available-for-sale financial assets |
|
|
7 |
|
|
|
3 |
|
|
|
15 |
|
Gains (losses) on cash flow hedges |
|
|
23 |
|
|
|
88 |
|
|
|
41 |
|
Reclassification adjustments on cash flow hedges |
|
|
22 |
|
|
|
67 |
|
|
|
84 |
|
|
|
Cash flow hedges |
|
|
1 |
|
|
|
21 |
|
|
|
43 |
|
Treasury Shares
By resolution of SAP AGs Annual General Meeting of Shareholders held on June 8, 2010, the Executive Board of SAP AG was authorized to purchase, on or before June 30, 2013, up to
120 million shares of the Company on the condition that such share purchases, together with any previously acquired shares, do not account for more than 10% of SAP AGs issued capital. Although treasury shares are legally considered
outstanding, there are no dividend or voting rights associated with shares held in treasury. We may redeem or resell shares held in treasury or we may use treasury shares for the purpose of servicing subscription rights and conversion rights under
the Companys share-based payment programs. Also, we may use the shares held in treasury as consideration in connection with the acquisition of other companies.
Miscellaneous
Under the German Stock Corporation Act (Aktiengesetz), the total amount of dividends available for distribution to SAP AGs shareholders is based on the profits of SAP AG as reported in its statutory
financial statements, which are determined under the accounting rules stipulated by the German Commercial Code (Handelsgesetzbuch). For the year ended December 31, 2011, the Executive Board of SAP AG intends to propose a dividend of
1.10 per share (that is an estimated total dividend of 1,3 billion) to be paid from the profits of SAP AG.
Dividends per share for 2010 and 2009 were 0.60 and 0.50 respectively and were paid in the succeeding year.
F-57
(22) |
ADDITIONAL CAPITAL DISCLOSURES |
Capital Structure Management
The primary objective of our capital structure management is to maintain a strong financial profile for investor, creditor, and customer confidence, and to support the growth of our business. We aim for a
capital structure that gives us a high degree of independence,
security, and financial flexibility so that we can, for example, access capital markets on reasonable terms to satisfy funding requirements.
We currently do not have a credit rating with any agency. We do not believe that a rating would have a substantial effect on our current
or future borrowing conditions and financing options.
Capital Structure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
% Change |
|
|
|
Millions |
|
|
% of
Equity and Liabilities |
|
|
Millions |
|
|
% of
Equity and Liabilities |
|
|
|
|
Total equity |
|
|
12,707 |
|
|
|
55 |
|
|
|
9,824 |
|
|
|
47 |
|
|
|
29 |
|
Total current liabilities |
|
|
6,266 |
|
|
|
27 |
|
|
|
5,153 |
|
|
|
25 |
|
|
|
22 |
|
Total non-current liabilities |
|
|
4,252 |
|
|
|
18 |
|
|
|
5,862 |
|
|
|
28 |
|
|
|
27 |
|
Total liabilities |
|
|
10,518 |
|
|
|
45 |
|
|
|
11,015 |
|
|
|
53 |
|
|
|
5 |
|
Equity and liabilities |
|
|
23,225 |
|
|
|
100 |
|
|
|
20,839 |
|
|
|
100 |
|
|
|
11 |
|
F-58
At year-end 2011, we returned to being mainly equity-financed, as our debt ratio (defined as
the ratio of total liabilities to equity and liabilities) decreased to 45% at the end of 2011 (as compared to 53% at the end of 2010). This positive development is mainly due to the strong operating cash flow in 2011, which enabled us to repay all
of the acquisition-related debt outstanding as at December 31, 2010. For the same reason, the ratio of total financial debt to equity and liabilities decreased to 17% at the end of 2011 (21% as at December 31, 2010). Total financial debt
consists of bank loans, bonds, and private placements. While we monitor these ratios continuously, our main focus is on the management of our net liquidity position as outlined in the following table:
Group Liquidity of SAP Group
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
Change |
|
Cash and cash equivalents |
|
|
4,965 |
|
|
|
3,518 |
|
|
|
1,447 |
|
Current investments |
|
|
636 |
|
|
|
10 |
|
|
|
626 |
|
|
|
Total Group liquidity |
|
|
5,601 |
|
|
|
3,528 |
|
|
|
2,073 |
|
Current bank loans |
|
|
101 |
|
|
|
1 |
|
|
|
100 |
|
Current private placement transactions |
|
|
423 |
|
|
|
0 |
|
|
|
423 |
|
Current bonds |
|
|
600 |
|
|
|
0 |
|
|
|
600 |
|
|
|
Net liquidity 1 |
|
|
4,477 |
|
|
|
3,527 |
|
|
|
950 |
|
Non-current bank loans |
|
|
1 |
|
|
|
1,106 |
|
|
|
1,105 |
|
Non-current private placement transactions |
|
|
1,240 |
|
|
|
1,071 |
|
|
|
169 |
|
Non-current bonds |
|
|
1,600 |
|
|
|
2,200 |
|
|
|
600 |
|
|
|
Net liquidity 2 |
|
|
1,636 |
|
|
|
850 |
|
|
|
2,486 |
|
Net liquidity 1 is total Group liquidity minus current financial debt. The increase of
current financial debts relates to reclassifications due to changes in the respective maturity profile.
Net liquidity 2 is
net liquidity 1 minus non-current financial debt. Our strong operating cash flow in 2011 was the main reason for the improvement of our net liquidity ratios since December 31, 2010. The increase in private placement liabilities in 2011 compared
with December 31, 2010, results from a US$750 million private placement transaction concluded in the United States on June 1, 2011.
We seek to maintain a positive net liquidity position at the end of 2012. We intend to reduce our financial debt as and when the debt falls due. We will consider issuing new debt, such as bonds or private
U.S. placements, only if market conditions are advantageous. Depending on the level of net liquidity we seek to achieve, we intend to continue to consider repurchasing
shares for treasury in the future, but not before the fourth quarter of 2012.
For further information about our financial debt, see Note (18b).
Distribution Policy
Our goal is to remain in a position to return excess liquidity to our shareholders by distributing annual dividends and
repurchasing shares. The amount of future dividends and the extent of future repurchases of shares will be balanced with our effort to continue to maintain an adequate liquidity position.
In 2011, we were able to distribute 713 million in dividends from our 2010 profit (as compared to 594 million in
each of 2010 and 2009 related to 2009 and 2008 profit, respectively). Aside from the distributed dividend, in 2011 and 2010 we also returned
F-59
246 and 220 million respectively to our shareholders by repurchasing our own shares (no share repurchase occurred in 2009).
Commitments exist in connection with our equity-settled share-based payment plans (as
described in (Note 28)), which we intend to meet by reissuing treasury shares or issuing common shares (For more information about contingent capital, see (Note 21)).
(23) |
OTHER FINANCIAL COMMITMENTS AND CONTINGENT LIABILITIES |
Other Financial Commitments
Our other financial commitments as at December 31, 2011, and 2010, were as follows:
Other Financial Commitments
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
Operating leases |
|
|
878 |
|
|
|
754 |
|
Contractual obligations for acquisition of property, plant, and equipment and intangible assets |
|
|
76 |
|
|
|
74 |
|
Other purchase obligations |
|
|
496 |
|
|
|
387 |
|
|
|
Purchase obligations |
|
|
572 |
|
|
|
461 |
|
Total |
|
|
1,450 |
|
|
|
1,215 |
|
Our operating leases relate primarily to the lease of office space, hardware, and cars,
with remaining non-cancelable lease terms between less than one and 25 years. On a limited scale, the operating lease contracts include escalation clauses (based, for example, on the consumer price index) and renewal options. The contractual
obligations for acquisition of property, plant, and equipment, and intangible
assets relate primarily to the construction of new and existing facilities, hardware, software, patents, office equipment and car purchase obligations. The remaining obligations relate mainly to
marketing, consulting, maintenance, license agreements, and other third-party agreements. Historically, the majority of such purchase obligations have been realized.
Commitments under
operating leasing contracts and purchase obligations as at December 31, 2011, were as follows:
Other Financial
Commitments
|
|
|
|
|
|
|
|
|
millions |
|
Operating Leases |
|
|
Purchase Obligations |
|
Due 2012 |
|
|
212 |
|
|
|
371 |
|
Due 2013-2016 |
|
|
535 |
|
|
|
170 |
|
Due thereafter |
|
|
131 |
|
|
|
31 |
|
|
|
|
|
|
878 |
|
|
|
572 |
|
Our rental and operating lease expenses were 241 million,
267 million, and
264 million for the years 2011, 2010, and 2009, respectively.
F-60
Contingent Liabilities
In the normal course of business, we usually indemnify our customers against liabilities arising from a claim that our software products infringe a third partys patent, copyright, trade secret, or
other proprietary rights. In addition, we occasionally grant function or performance guarantees in routine consulting contracts or development arrangements. Also, our software license agreements generally include a clause guaranteeing that the
software substantially conforms to the specifications as described in applicable documentation for a period of six to 12 months from delivery. Our product and service warranty liability, which is measured based on historical experience and
evaluation, is included in other provisions (see Note (19b)).
For contingent liabilities related to litigation matters, see
Note (24).
(24) |
LITIGATION AND CLAIMS |
We are subject to a variety of claims and lawsuits that arise from time to time in the ordinary course of our
business, including proceedings and claims that relate to companies which we have acquired, and claims that relate to customers demanding indemnification for proceedings initiated against them based on their use of SAP software. We will continue to
vigorously defend against all claims and lawsuits against us. We record a provision for such matters when it is probable that we have a present obligation that results from a past event, is reliably estimable and the settlement of which is probable
to require an outflow of resources embodying economic benefits. For the TomorrowNow litigation, we have recorded a provision of US$272 million (US$1.3 billion as at December 31, 2010). We currently believe that resolving all other claims and
lawsuits against us, individually or in the aggregate, did not and will not have a material adverse effect on our business, financial position, profit, or cash flows. Consequently, the provisions currently recorded
for these other claims and lawsuits are neither individually nor in aggregate material to SAP.
However, the outcome of litigation and other claims or lawsuits is intrinsically subject to considerable uncertainty. Managements view of the litigation may also change in the future. Actual
outcomes of litigation and other claims or lawsuits may differ from the assessments made by management in prior periods, which could result in a material impact on our business, financial position, profit, cash flows, or reputation. We cannot
reliably estimate the maximum possible loss in case of an unfavorable outcome.
For a description of the development of the
provisions recorded for litigation, see Note (19b).
Among the claims and lawsuits are the following:
Intellectual Property Litigation
In January 2007, German-based CSB-Systems AG (CSB) instituted legal proceedings in Germany against SAP. CSB alleges that SAPs products infringe one or more of the claims of a German patent and a
German utility model held by CSB. In its complaint, CSB has set the amount in dispute at 1 million and is seeking permanent injunctive relief. Within these proceedings CSB is not precluded from requesting damages in excess of the amount
in dispute. In July 2007, SAP filed its response in the legal proceedings including a nullity action and cancellation proceeding against the patent and utility model, respectively. The nullity hearing on the German patent was held in January 2009
and the German court determined that the patent is invalid. On appeal in June 2011, the Federal Supreme Court also concluded the patent was invalid. The cancellation hearing for the utility model was held in May 2009 and the court determined that
the utility model was invalid. CSB is appealing the invalidity determination of the utility model, however, the infringement hearing has been stayed pending the appeals.
F-61
In May 2010, CSB-Systems International, Inc., (CSB) instituted legal proceedings in the
United States against SAP. CSB alleges that SAPs products infringe one or more of the claims in one patent held by CSB. In its complaint, CSB seeks unspecified monetary damages and permanent injunctive relief. The Markman hearing was held in
June 2011. The trial is scheduled for June 2012.
In March 2007, United States-based Oracle Corporation and certain of its
subsidiaries (Oracle) instituted legal proceedings in the United States against TomorrowNow, Inc., its parent company SAP America, Inc., and SAP Americas parent company SAP AG (SAP). Oracle filed several amended complaints between 2007 and
2009. As amended, the lawsuit alleges copyright infringement, violations of the Federal Computer Fraud and Abuse Act and the California Computer Data Access and Fraud Act, unfair competition, intentional and negligent interference with prospective
economic advantage, and civil conspiracy. The lawsuit alleges that SAP unlawfully copied and misappropriated proprietary, copyrighted software products and other confidential materials developed by Oracle to service its own customers. The lawsuit
seeks injunctive relief and monetary damages, including punitive damages, alleged by Oracle to be in the billions of U.S. dollars. The trial was held in November 2010. Prior to trial, SAP AG, SAP America, and TomorrowNow stipulated to liability for
certain claims, and SAP agreed to pay Oracle US$120 million for attorneys fees. After the trial, the jury returned a damages verdict of US$1.3 billion. The judgment which was issued on February 3, 2011, additionally provided for
prejudgment interest of US$15 million. The judgment amount is also subject to post-judgment interest, which accrues from the time judgment is entered.
The jury based its verdict on the theory of a hypothetical license, that is, the value of what TomorrowNow would have paid if it had negotiated with Oracle a license for the copyrights infringed by
TomorrowNow. Before and during the course of the trial, various
damages amounts had been presented by the parties to the litigation. They included the following:
a) Before the trial, Oracle had requested damages in excess of US$3.5 billion based on alleged saved acquisition costs; the court dismissed that damages claim based on a pretrial motion, but
Oracle has the right to appeal that dismissal.
b) During the trial, Oracles damages experts presented an amount of
US$408 million based on lost profits and disgorgement of infringers profit.
c) During the trial, members of Oracle
management presented, as part of their testimonies, amounts of up to US$5 billion. Oracles damages expert presented a damages estimate of at least US$1,655,600,000 under a hypothetical license theory. Oracles counsel
asked the jury to award somewhere between US$1.65 and US$3 billion.
d) During the trial, the damages expert for
TomorrowNow and SAP presented an amount of US$28 million based on lost profits and infringers profits or, alternatively, US$40.6 million based on a hypothetical license theory. Counsel for SAP and TomorrowNow asked the jury to award US$28
million.
We believed both before and during the trial and continue to believe that the hypothetical license theory is not an
appropriate basis for calculating the damages. Instead, we believe that damages should be based on lost profits and infringers profits. As such, SAP filed post-trial motions asking the judge to overturn the judgment. A hearing on the
post-trial motions was held in July 2011. On September 1, 2011, the trial judge issued an order which set aside the jury verdict and vacated that part of the judgment awarding US$1.3 billion in damages. The trial judge also gave Oracle the
choice of accepting the reduced damages of US$272 million or having a new trial, which would decide between damages based on lost profits or infringers profits. Oracle filed a motion seeking an early appeal from the ruling vacating the
jurys damages award, which was denied by the judge.
F-62
Consequently, Oracle elected to proceed with a new trial. The new trial date has not yet been set.
Additionally, in June 2007, SAP became aware that the United States Department of Justice (U.S. DOJ) had opened an investigation concerning related issues and had issued subpoenas to SAP and TomorrowNow.
The DOJ investigation has been resolved by way of a plea agreement which includes TomorrowNow pleading guilty to 11 counts of violations of the Computer Fraud and Abuse Act, one count of criminal copyright infringement, the payment of a US$20
million fine and three years probation. No charges were brought against SAP AG or subsidiaries thereof other than TomorrowNow.
In April 2007, United States-based Versata Software, Inc. (formerly Trilogy Software, Inc.) (Versata) instituted legal proceedings in
the United States against SAP. Versata alleges that SAPs products infringe one or more of the claims in each of five patents held by Versata. In its complaint, Versata seeks unspecified monetary damages and permanent injunctive relief. The
trial was held in August 2009. The jury returned a verdict in favor of Versata and awarded Versata US$138.6 million for past damages. In January 2011, the court vacated the jurys damages award and ordered a new trial on damages in May 2011.
The re-trial was held in May 2011. The jury returned a verdict in favor of Versata and awarded Versata US$345 million for past damages. In September 2011, the judge denied SAPs post-trial motions with the exception of reducing the damages
verdict by US$16 million to approximately US$329 million. The judge also ordered approximately US$60 million in pre-judgment interest. Additionally, the judge granted Versatas request for a broad injunction which prohibits SAP from 1) selling
products in the United States with the infringing functionality, 2) providing maintenance to or accepting maintenance revenue from existing customers in the United States until such customers disable the infringing functionality and verify such
disablement, and 3) licensing additional users to existing customers in the United States until such customers disable the infringing functionality and verify such
disablement. Finally, the judge stayed the injunction pending the outcome of an appeal. SAP is appealing.
In August 2007, United States-based elcommerce.com, Inc. (elcommerce) instituted legal proceedings in the United States against SAP. elcommerce alleges that SAPs products infringe one or more of the
claims in one patent held by elcommerce. In its complaint, elcommerce seeks unspecified monetary damages and permanent injunctive relief. The court in East Texas granted SAPs request to transfer the litigation from East Texas to Pennsylvania.
Subsequent to the Markman ruling by the court, the parties agreed to the entry of final judgment regarding non-infringement by SAP. elcommerce has appealed the courts Markman ruling. The hearing for the appeal has not yet been scheduled.
In February 2010, United States-based TecSec, Inc. (TecSec) instituted legal proceedings in the United States against SAP,
Sybase, IBM, and many other defendants. TecSec alleges that SAPs products infringe one or more of the claims in five patents held by TecSec. In its complaint, TecSec seeks unspecified monetary damages and permanent injunctive relief. The trial
has not yet been scheduled. The legal proceedings have been stayed against all defendants pending the outcome of an appeal by TecSec regarding the courts determination that IBM does not infringe the patents.
In April 2010, SAP instituted legal proceedings (a Declaratory Judgment action) in the United States against Wellogix, Inc. and Wellogix
Technology Licensing, LLC (Wellogix). The lawsuit seeks a declaratory judgment that five patents owned by Wellogix are invalid and/or not infringed by SAP. The trial has not yet been scheduled. The legal proceedings have been stayed pending the
outcome of re-examinations filed with the U.S. Patent and Trademark Office.
Other Litigation
In April 2008, South African-based Systems Applications Consultants (PTY)
F-63
Limited (Securinfo) instituted legal proceedings in South Africa against SAP. Securinfo alleges that SAP has caused one of its subsidiaries to breach a software distribution agreement with
Securinfo. In its complaint, Securinfo seeks damages of approximately 610 million plus interest. In September 2009, SAP filed a motion to dismiss which was rejected. A trial date which was scheduled for June 2011 has been postponed. No
new trial date has been scheduled yet.
We are subject to ongoing audits by domestic and foreign tax authorities. Along with
many other companies operating in Brazil, we are involved in various proceedings with Brazilian authorities regarding assessments and litigation matters on non-income taxes on intercompany royalty payments and intercompany services. The total
potential amount related to these matters for all applicable years is approximately 82 million. We have not recorded a provision for these matters, as we believe that we will prevail on these matters.
For income-tax risk-related litigation please refer to Note (11).
(25) |
FINANCIAL RISK FACTORS |
We are exposed to various financial risks, such as market risks (including foreign currency exchange rate risk,
interest rate risk, and equity price risk), credit risk, and liquidity risk.
Market Risk
Foreign Currency Exchange Rate Risk
Foreign currency exchange rate risk is the risk of loss due to adverse changes in foreign currency exchange rates. Under IFRS, foreign currency exchange rate risks arise on account of monetary financial
instruments denominated in currencies other than the functional currency where the non-functional currency is the respective risk variable; translation risks are not taken into consideration.
As a globally active enterprise, we are subject to risks associated with fluctuations in
foreign currencies with regard to our ordinary operations. Since the Groups entities mainly conduct their operating business in their own functional currencies, our risk of exchange rate
fluctuations from ongoing ordinary operations is not considered significant. However, occasionally we generate foreign-currency-denominated receivables, payables, and other monetary items by transacting in a currency other than the functional
currency. To mitigate the extent of the associated foreign currency exchange rate risk, the majority of these transactions are hedged as described in Note (26).
In rare circumstances, transacting in a currency other than the functional currency also leads to embedded foreign currency derivatives being separated and measured at fair value through profit or loss.
In addition, SAP AG is exposed to risks associated with forecasted intercompany cash flows in foreign currencies. These cash
flows arise out of royalty payments from SAP subsidiaries to SAP AG. The royalties are linked to the subsidiaries external revenue. This arrangement leads to a concentration of the foreign currency exchange rate risk with SAP AG in Germany, as
the royalties are mostly denominated in the subsidiaries local currencies, while the functional currency of SAP AG is the euro. The highest foreign currency exchange rate exposure of this kind relates to the currencies of subsidiaries with
significant operations, for example the U.S. dollar, the pound sterling, the Japanese yen, the Swiss franc, the Canadian dollar, and the Australian dollar.
Generally, we are not exposed to any significant foreign currency exchange rate risk with regard to our investing and financing activities, as such activities are normally conducted in the functional
currency of the investing or borrowing entity. However, as at December 31, we were exposed to a cash flow risk from the consideration to be paid in U.S. dollars for the acquisition of SuccessFactors, Inc. as the funds are provided through our
free cash and a term loan, both generated in euros. For more information, see Notes (4) and (26).
F-64
Interest-Rate Risk
Interest-rate risks result from changes in market interest rates, which can cause changes in the fair values of fixed-rate instruments
and in the interest to be paid or received for variable-rate instruments. We are exposed to interest-rate risk as a result of our investing and financing activities mainly in euros and U.S. dollars.
As at December 31, 2011, our liquidity was mainly invested in time deposits and government bonds with fixed yields, and money
market instruments with variable yields, held as cash equivalents and current investments. Since we do not account for the fixed-yield time deposits held at year-end at fair value, we are not exposed to an interest-rate risk with regard to these
investments. However, a fair value interest rate exposure arises from the government bonds classified as available for sale. Also, we are exposed to a cash flow risk from the variable-yield money market funds in the euro zone and the U.S.
As at December 31, 2011, we are also exposed to an interest-rate risk from our financing activities (for more details
on the individual instruments see Note (18b)). While all our issued bonds with a total volume of 2.2 billion and our U.S. private placement notes with a volume of US$1.25 billion pay fixed interest, the SSD, totaling
697 million has a 547.5 million variable-rate tranche, which gives rise to a cash-flow risk, as the interest payments are based on the prevailing EURIBOR rates. The same applies to the variable-rate additional term loan
with a volume of 100 million.
Equity-Price Risk
Equity-price risk is the risk of loss due to adverse changes in equity markets. We are exposed to such risk with regard to our
investments in listed equity securities (2011: 39 million; 2010: 28 million) and our share-based compensation plans (for the exposure from these plans see Note (28)).
Credit Risk
Credit risk is the risk of economic loss of principal or financial rewards stemming from a counterpartys failure to repay or service debt according to the contractual obligations.
To reduce the credit risk in trade receivables and investments, we have made the following arrangements:
|
|
|
An agreement with an insurer to insure part of our trade receivables against credit losses |
|
|
|
The receipt of rights to collateral for certain investing activities in the full amount of the investment volume, which we would only be allowed to
make use of in the case of default of the counterparty to the investment. |
With the exception of these
transactions, we have not executed significant agreements to reduce our overall credit risk exposure, such as master netting arrangements. Therefore, the total amounts recognized as cash and cash equivalents, current investments, loans and other
financial receivables, and derivative financial assets represent our maximum exposure to credit risks, except for the agreements mentioned above.
Liquidity Risk
Liquidity risk results from the potential inability to
meet financial obligations, such as payments to suppliers or employees. A maturity analysis that provides the remaining contractual maturities of all our financial liabilities held at December 31, 2011, is shown in the table below. Financial
liabilities shown in the table below for which repayment can be requested by the contract partner at any time are assigned to the earliest possible period. Variable interest payments were calculated using the last relevant interest rate fixed as at
December 31, 2011. As we settle our derivative contracts gross, we show the pay and receive legs separately for all our currency and interest rate derivatives, whether or not the fair value of the derivative is negative. The cash outflows for
the currency derivatives are translated using the applicable forward rate.
F-65
The cash flows for unrecognized but contractually agreed financial commitments are shown in
Note (24).
Contractual Maturities of Financial Liabilities and Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Amount |
|
|
Contractual Cash Flows |
|
millions |
|
12/31/2011 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2015 |
|
|
2016 |
|
|
Thereafter |
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
727 |
|
|
|
727 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Financial liabilities |
|
|
4,034 |
|
|
|
1,264 |
|
|
|
687 |
|
|
|
840 |
|
|
|
276 |
|
|
|
495 |
|
|
|
792 |
|
|
|
Total of non-derivative financial liabilities |
|
|
4,761 |
|
|
|
1,991 |
|
|
|
687 |
|
|
|
840 |
|
|
|
276 |
|
|
|
495 |
|
|
|
792 |
|
Derivative financial liabilities and assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency derivatives without designated hedge relationship |
|
|
179 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash outflows |
|
|
|
|
|
|
2,887 |
|
|
|
10 |
|
|
|
10 |
|
|
|
10 |
|
|
|
10 |
|
|
|
40 |
|
cash inflows |
|
|
|
|
|
|
2,797 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Currency derivatives with designated hedge relationship |
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash outflows |
|
|
|
|
|
|
569 |
|
|
|
50 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
cash inflows |
|
|
|
|
|
|
534 |
|
|
|
49 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Interest rate derivatives with designated hedge relationship |
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash outflows |
|
|
|
|
|
|
9 |
|
|
|
5 |
|
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
cash inflows |
|
|
|
|
|
|
6 |
|
|
|
3 |
|
|
|
1 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Derivative financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency derivatives without designated hedge relationship |
|
|
118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash outflows |
|
|
|
|
|
|
2,172 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
cash inflows |
|
|
|
|
|
|
2,281 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Currency derivatives with designated hedge relationship |
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash outflows |
|
|
|
|
|
|
82 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
cash inflows |
|
|
|
|
|
|
87 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
Total of derivative financial liabilities and assets |
|
|
99 |
|
|
|
14 |
|
|
|
13 |
|
|
|
12 |
|
|
|
10 |
|
|
|
10 |
|
|
|
40 |
|
F-66
Contractual Maturities of Financial Liabilities and Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying Amount |
|
|
Contractual Cash Flows |
|
millions |
|
12/31/2010 |
|
|
2011 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2015 |
|
|
Thereafter |
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
699 |
|
|
|
699 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Financial liabilities |
|
|
4,445 |
|
|
|
145 |
|
|
|
2,220 |
|
|
|
667 |
|
|
|
824 |
|
|
|
253 |
|
|
|
695 |
|
|
|
Total of non-derivative financial liabilities |
|
|
5,144 |
|
|
|
844 |
|
|
|
2,220 |
|
|
|
667 |
|
|
|
824 |
|
|
|
253 |
|
|
|
695 |
|
Derivative financial liabilities and assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency derivatives without designated hedge relationship |
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash outflows |
|
|
|
|
|
|
883 |
|
|
|
9 |
|
|
|
9 |
|
|
|
9 |
|
|
|
9 |
|
|
|
42 |
|
cash inflows |
|
|
|
|
|
|
852 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Currency derivatives with designated hedge relationship |
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash outflows |
|
|
|
|
|
|
360 |
|
|
|
38 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
cash inflows |
|
|
|
|
|
|
333 |
|
|
|
36 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Interest rate derivatives with designated hedge relationship |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash outflows |
|
|
|
|
|
|
12 |
|
|
|
9 |
|
|
|
5 |
|
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
cash inflows |
|
|
|
|
|
|
5 |
|
|
|
4 |
|
|
|
2 |
|
|
|
1 |
|
|
|
0 |
|
|
|
0 |
|
Derivative financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency derivatives without designated hedge relationship |
|
|
80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash outflows |
|
|
|
|
|
|
4,502 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
cash inflows |
|
|
|
|
|
|
4,590 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Currency derivatives with designated hedge relationship |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash outflows |
|
|
|
|
|
|
62 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
cash inflows |
|
|
|
|
|
|
64 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
Total of derivative financial liabilities and assets |
|
|
63 |
|
|
|
25 |
|
|
|
16 |
|
|
|
12 |
|
|
|
11 |
|
|
|
9 |
|
|
|
42 |
|
The overall decrease of cash outflows for our non-derivative financial liabilities
compared to year-end 2010 is mainly due to the early repayment of the acquisition term loan in the amount of 1 billion while our 2011 financing activities only amounted to 580 million. For more information, see Note (18b).
(26) |
FINANCIAL RISK MANAGEMENT |
We manage market risks (including foreign currency exchange rate risk, interest rate risk,
equity price risk), credit risk, and liquidity risk on a Group-wide basis through our global treasury department. Our risk management and hedging strategy is set by our treasury guideline and
other internal guidelines, and is subject to continuous internal risk analysis. Derivative financial instruments are only purchased to reduce risks and not for speculation, which is defined as entering into derivative instruments without a
corresponding underlying transaction.
F-67
In the following sections we provide details on the management of each respective
financial risk and our related risk exposure. In the sensitivity analyses that show the effects of hypothetical changes of relevant risk variables on profit or other comprehensive income we determine the periodic effects by relating the hypothetical
changes in the risk variables to the balance of financial instruments at the reporting date.
Foreign Currency Exchange Rate Risk
Management
We continually monitor our exposure to currency fluctuation risks based on monetary items and forecasted
transactions and pursue a Group-wide strategy to manage foreign currency exchange rate risk, using derivative financial instruments, primarily foreign exchange forward contracts, as appropriate, with the primary aim of reducing profit or loss
volatility.
Currency Hedges Without Designated Hedge Relationship
The foreign exchange forward contracts we enter into to offset exposure relating to foreign currency-denominated monetary assets and
liabilities from our operating activities are not designated as being in a hedge accounting relationship, because the realized currency gains and losses from the underlying items are recognized in profit or loss in the same periods as the gains and
losses from the derivatives.
Currency hedges without a designated hedge relationship also include foreign currency
derivatives embedded in non-derivative host contracts that are separated and accounted for as derivatives according to the requirements of IAS 39.
In addition, we held foreign currency options as at December 31, 2011, to partially hedge the cash flow risk from the consideration to be paid in U.S. dollars for the acquisition of SuccessFactors.
For more information see Note (4).
Currency Hedges with Designated Hedge Relationship (Cash Flow Hedges)
We enter into derivative financial instruments, primarily foreign exchange forward contracts, to hedge significant
forecasted cash flows (royalties) from foreign subsidiaries denominated in foreign currencies with a defined set of hedge ratios and a hedge horizon of up to 15 months. Specifically, we exclude the interest component and only designate the spot rate
of the foreign exchange forward contracts as the hedging instrument to offset anticipated cash flows relating to the subsidiaries with significant operations, including the United States, the United Kingdom, Japan, Switzerland, Canada, and
Australia. We generally use foreign exchange derivatives that have maturities of 15 months or less, which may be rolled over to provide continuous coverage until the applicable royalties are received.
In 2011, net losses totaling 14 million (2010: net losses of 55 million; 2009: net losses of 18 million)
resulting from the change in the component of the derivatives designated as hedging instruments were recorded in other comprehensive income.
For the years ended December 31, 2011 and 2010, no previously highly probable transaction designated as a hedged item in a foreign currency cash flow hedge relationship ceased to be probable.
Therefore, we did not discontinue any of our cash flow hedge relationships. Also, we identified no ineffectiveness in 2011 and 2010 and only immaterial ineffectiveness for these hedges in 2009. In 2011, we reclassified net losses of
13 million (2010: net losses of 44 million; 2009: net losses of 37 million) from other comprehensive income to profit or loss due to the hedged items affecting income. Generally, the cash flows of the forecasted
transactions are expected to occur and to be recognized in profit or loss monthly within a time frame of 15 months from the date of the statement of financial position. It is estimated that 21 million of the net losses recognized in other
comprehensive income as at December 31, 2011,
F-68
will be reclassified from other comprehensive income to profit or loss during fiscal year 2012.
Foreign Currency Exchange Rate Exposure
In line with our
internal risk reporting process, we use the value-at-risk method to quantify our risk positions and to manage foreign currency exchange rate risk. Our calculation of the value-at-risk includes both, our foreign currency-denominated financial
instruments and our forecasted intercompany transactions, although the latter are scoped out of IFRS 7. As our internal calculation of value-at-risk is thus not in line with the requirements of IFRS 7, we have opted to disclose our risk exposure
based on a sensitivity analysis considering the following:
|
|
|
Since the SAP Groups entities generally operate in their functional currencies, the majority of our non-derivative monetary financial
instruments, such as cash and cash equivalents, trade receivables, trade payables, loans to employees and third parties, bank liabilities, and other financial liabilities, are denominated in the respective entities functional currency. Thus, a
foreign currency exchange rate risk in these transactions is nearly non-existent. In exceptional cases and limited economic environments, operating and financing transactions are denominated in currencies other than the functional currency, leading
to a foreign currency exchange rate risk for the related monetary instruments. Where we hedge against currency impacts on cash flows, these foreign-currency-denominated financial instruments are economically converted into the functional currency by
the use of forward exchange contracts or options. Therefore, fluctuations in foreign currency exchange rates neither have a significant impact on profit nor on other comprehensive income with regard to our non-derivative monetary financial
instruments. |
|
|
|
Income or expenses recorded in connection with the non-derivative monetary financial instruments discussed above are mainly recognized in the relevant
entitys functional currency. Therefore, fluctuations in foreign currency exchange rates neither have a significant impact on profit nor on other comprehensive income in this regard. |
|
|
|
Our free-standing derivatives designed for hedging foreign currency exchange rate risks almost completely balance the changes in the fair values of the
hedged item attributable to exchange rate movements in the Consolidated Income Statements in the same period. As a consequence, the hedged items and the hedging instruments are not exposed to foreign currency exchange rate risks, and thereby have no
effect on profit or other comprehensive income. |
Consequently, we are only exposed to significant foreign
currency exchange rate fluctuations with regard to:
|
|
|
Derivatives held within a designated cash-flow hedge relationship |
|
|
|
Foreign currency embedded derivatives |
|
|
|
The foreign currency options held as at December 31, 2011, in connection with the acquisition of SuccessFactors. |
With respect to the nominal amounts of derivatives held within a designated cash-flow hedge relationship, the foreign currency options
and foreign currency embedded derivatives, the data at year-end is not representative of the exposure during the year as a whole. On average, our exposure to foreign currency exchange rate risk in 2011 was based on nominal amounts of 1.3
billion, with a range of exposure on nominal amounts from a low of 815 million to a high of 2.4 billion, which was also the year-end exposure.
As mentioned above, the interest element, which is not part of the assigned cash flow hedge relationship and is recognized in profit or loss, is not affected by currency fluctuations. As we do
F-69
not have a significant exposure to a single currency in our derivatives held within a designated cash flow hedge relationship, we disclose our exposure to our major foreign currencies (as
described in Note (26)) in total. If, on December 31, 2011, the euro had gained (lost) 10% against all our major currencies, the effective portion of the foreign currency cash-flow hedge recorded in other comprehensive income would have
been 70 million higher (lower) (December 31, 2010: 46 million higher (lower); December 31, 2009: 55 million higher (lower)) than presented.
With respect to our foreign currency embedded derivatives, any changes in the value of such derivatives is recognized in profit or loss.
If, on December 31, 2011, the euro had gained (lost) 10% against the Swiss franc (which is the currency accounting for the majority of our exposure from foreign currency embedded derivatives), Other non-operating expense, net would have been
41 million higher (lower) (December 31, 2010: 42 million higher (lower); December 31, 2009: 38 million higher (lower)) than presented.
The foreign currency options held to hedge the cash flow risk from the consideration to be paid in U.S. dollars for the acquisition of SuccessFactors, were not designated as cash flow hedges. Therefore,
any change in the value of these derivatives is recognized in profit or loss. If, on December 31, 2011, the euro had gained (lost) 10% against the U.S. dollar, Other non-operating expense, net would have been 6 million higher
(50 million lower) than presented.
Our sensitivity to foreign currency exchange rate fluctuations has increased during
the year ended December 31, 2011, mainly due to the increase of the nominal amounts hedged in a cash-flow hedge relationship and the nominal amounts underlying the foreign currency options held in connection with the acquisition of
SuccessFactors.
Interest-Rate Risk Management
The primary aim of our interest-rate risk management is to reduce profit or loss volatility by creating a balanced structure of fixed
and variable cash flows. We therefore manage interest rate risks by adding interest rate-related derivative instruments to a given portfolio of investments and debt financing.
As at December 31, 2011, a cash flow interest rate risk existed with regard to our investing activities in money market instruments
with variable yields in the amount of 1.4 billion.
While the majority of our financial debt carries a fixed interest
rate, 648 million in financial liabilities carry floating interest rates. To hedge the cash-flow risk resulting from fluctuations in future interest payments for the variable-rate tranches of the German promissory notes (SSD), which have
a nominal value of 548 million, we entered into interest rate payer swaps. With these instruments, we are economically converting the underlying floating rate into a fixed rate, as the changes in the cash flows of the hedged items
resulting from changes in EURIBOR are offset against the changes in the cash flows of the interest rate swaps. On December 31, 2011, the nominal volume of the interest rate payer swaps covered the total volume of the variable-rate tranches of
the SSD. The cash flow risk resulting from fluctuations in future payments relating to the outstanding balance of 100 million of the additional term loan as at December 31, 2011, was not hedged. Interest rate swaps included,
approximately 97% (2010: 75%) of our total interest-bearing financial liabilities outstanding as at December 31, 2011, had a fixed interest rate whereas 69% (2010: 65%) of our interest-bearing investments had a fixed interest rate.
Therefore, we are mainly exposed to an interest-rate risk from our variable-yield money market instruments.
F-70
Derivatives with Designated Hedge Relationship (Cash Flow Hedges)
As at December 31, 2011, we held interest rate derivatives with a designated hedge relationship that had a
negative fair value of 8 million (2010: 10 million), for which in 2011 net losses of 3 million (2010: 10 million net losses; 2009: 14 million net losses) were
recorded in other comprehensive income due to the designation as cash-flow hedge instruments. In 2011, we reclassified net losses of 4 million (2010: net losses of 6 million;
2009: 26 million) out of other comprehensive income to finance income, net due to the hedged items affecting income. We did not record any ineffectiveness for these hedges for the fiscal years 2011, 2010, and 2009.
The following table
shows the contractual maturities of the cash flows for the SSD interest payments:
Contractual Maturities of the Cash Flows
for SSD Interest Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
Start Date |
|
End Date |
|
|
Nominal Volume in Millions |
|
|
Reference Rate |
|
April 9,2009 |
|
|
April 9, 2012 |
|
|
|
359.5 |
|
|
|
3-month-EURIBOR |
|
April 9,2009 |
|
|
April 9, 2014 |
|
|
|
158 |
|
|
|
3-month-EURIBOR |
|
June 2,2009 |
|
|
June 2, 2014 |
|
|
|
30 |
|
|
|
3-month-EURIBOR |
|
Interest Rate Exposure
A sensitivity analysis is provided to show our interest rate risk exposure on December 31, 2011, considering the following:
|
|
|
Changes in interest rates only affect non-derivative fixed-rate financial instruments if they are recognized at fair value. Therefore, we do not have a
fair value risk in our non-derivative financial liabilities as we account for them at amortized cost. On December 31, 2011, we had fixed-rate government bonds classified as available-for-sale as described in Note (25). We therefore consider
interest rate changes relating to the fair value measurement of such fixed-rate non-derivative financial assets classified as available-for-sale in the equity-related sensitivity calculation. |
As our investment portfolio did not contain fixed-rate financial assets throughout the whole of 2011, the data at year-end is not
representative of the year as a whole. On average, our exposure to fair value interest rate risk from investing activities in 2011 was based on interest-bearing assets of 250 million, with a range of exposure from a high of
500 million to a low of 0 million. The year-end exposure was 400 million.
|
|
|
Income or expenses recorded in connection with non-derivative financial instruments with variable interest rates are subject to interest rate risk if
they are not hedged items in an effective hedge relationship. Since we have entered into interest rate payer swaps for the variable components of the SSD, we therefore have no significant interest-rate risk arising from our SSD. Thus, we take into
consideration interest rate changes relating to our additional term loan and our investments in money market instruments in the profit-related sensitivity calculation. |
With respect to the invested amounts, the data at year-end is not representative of the year as a whole. On average, our exposure to
cash flow interest rate risk from investments in 2011 was based on investments of 1.3 billion, with a range of exposure on investments from a low of 875 million to a high of 1.4 billion which was also the year-end exposure.
With respect to the financed amounts, the data at year-end is not representative of the year as a whole. Significant debt
F-71
amounts from the acquisition term loan raised in connection with the acquisition of Sybase were refinanced in 2011. On average, our exposure to cash flow interest rate risk from financing
activities in 2011 was based on interest-bearing liabilities of 308 million, with a range of exposure from a high of 1.1 billion to a low of 100 million which was also the year-end exposure.
|
|
|
Due to the designation of interest rate payer swaps to a cash flow hedge relationship, the interest rate changes affect the respective amounts recorded
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-rate payments for the SSD. We therefore only consider interest
rate sensitivity in discounting the interest rate swaps fixed leg cash flows in the equity-related sensitivity calculation for the interest rate swaps designated to be in a hedge relationship. With respect to the borrowing and related hedged
amounts, the data at year-end is representative for the year as a whole. |
Due to the current low interest
rate level we base our sensitivity analyses on a yield curve shift of +100/20 basis points to avoid negative interest rates.
If, on December 31, 2011, 2010, and 2009 interest rates had been 100 basis points higher (20 basis points lower), this would not have had a material effect on:
|
|
|
The gains/losses on available-for-sale financial assets positions in other comprehensive income |
|
|
|
Finance income, net for our variable-interest-rate investments and financial debt |
|
|
|
The effective portion of the interest rate cash flow hedge in other comprehensive income
|
Equity-Price Risk Management
Our investments in equity instruments with quoted market prices in active markets (2011: 39 million; 2010: 28 million)
are monitored based on the current market value that is affected by the fluctuation in the volatile stock markets worldwide. An assumed 20% increase (decrease) in equity prices as at December 31, 2011 (2010), would not have a material impact on
the value of our investments in marketable securities and the corresponding entries in other comprehensive income.
We are
exposed to equity price risk with regard to our share-based payment plans. In order to reduce resulting profit or loss volatility, we hedge certain cash flow exposures associated with these plans through the purchase of derivative instruments, but
do not establish a designated hedge relationship. While the underlying share-based payment plans are not within the scope of IFRS 7 and thus the resulting equity price risk is not required to be analyzed, the derivative instruments used to hedge
these plans are. Nevertheless, in our sensitivity analysis we include the underlying share-based payment plans and the hedging instruments. Thus, we base the calculation on our net exposure to equity prices as we believe taking only the derivative
instrument into account would not properly reflect our equity price risk exposure. An assumed 20% increase (decrease) in equity prices as at December 31, 2011, would have increased (decreased) our share-based compensation expenses by
27 million (25 million) (2010: 53 million; 2009: 46 million).
Credit Risk Management
To mitigate the credit risk for our investing activities and derivative financial assets, we conduct all our activities only with
approved major financial institutions and issuers that carry high external ratings, as required by our internal treasury guideline. Among its stipulations, the guideline requires that we invest only in assets from issuers with a minimum rating of at
least A.We only make investments at issuers with a lower rating in exceptional cases. However, such investments were not material in 2011. The
F-72
weighted average rating of our financial assets is in the range A to A-. We pursue a policy of cautious investments characterized by predominantly current investments, standard investment
instruments, as well as a wide portfolio diversification by doing business with a variety of counterparties.
To further
reduce our credit risk we require collateral for certain investments in the full amount of the investment volume which we would be allowed to make use of in the case of default of the counterparty to the investment. As such collateral, we only
accept bonds of non-financial corporations with at least investment grade level.
In addition, the concentration of credit
risk that exists when counterparties are involved in similar activities by instrument, sector, or geographic area is further mitigated by diversification of counterparties throughout the world and adherence to an internal limit system for each
counterparty. This internal limit system stipulates that the business volume with individual counterparties is restricted to a defined limit, which depends on the lowest official long-term credit rating available by at least one of the major rating
agencies, the Tier 1 capital of the respective financial institution, or participation in the German Depositors Guarantee Fund or similar protection schemes. We continuously monitor strict compliance with these counterparty limits. As the
premium for credit default swaps mainly depends on the market participants assessments of the creditworthiness of a debtor, we also closely observe the development of CDS spreads in the market to evaluate probable risk developments to timely
react to changes if these should manifest.
The default risk of our trade receivables is managed separately, mainly based on
assessing the creditworthiness of customers through external ratings and our historical experience with respective customers, and it is partially covered by merchandise credit insurance.
Outstanding receivables are continuously monitored locally. Credit risks are accounted for through individual and portfolio allowances
(described in detail in Note (3)). The impact of
default on our trade receivables from individual customers is mitigated by our large customer base and its distribution across many different industries and countries worldwide. For further
information about our trade receivables, see Note (14). For information about the maximum exposure to credit risk, see Note (25).
Liquidity Risk Management
Our liquidity is managed by our global treasury department with the primary aim of maintaining liquidity at a level that is adequate to meet our financial obligations.
Our primary source of liquidity is funds generated from our business operations, which have historically been the primary source of the
liquid funds needed to maintain our investing and financing strategy. The majority of our subsidiaries pool their cash surplus to our global treasury department, which then arranges to fund other subsidiaries requirements or invest any net
surplus in the market, seeking to optimize yields, while ensuring liquidity, by investing only with counterparties and issuers of high credit quality, as explained above. Hence, high levels of liquid assets and marketable securities provide a
strategic reserve, helping keep SAP flexible, sound, and independent.
Apart from effective working capital and cash
management, we have reduced the liquidity risk inherent in managing our day-to-day operations and meeting our financing responsibilities by arranging an adequate volume of available credit facilities with various financial institutions on which we
can draw if necessary.
In order to retain high financial flexibility, as at December 15, 2010, SAP AG entered into a
1.5 billion syndicated credit facility agreement with an initial term of five years ending in December 2015, effectively replacing the 1.5 billion syndicated revolving credit facility signed in September 2009. The use of the
facility is not restricted by any financial covenants. Borrowings under the facility bear interest of EURIBOR or LIBOR for the respective currency plus a margin of 45 basis points to 75 basis
F-73
points, depending on the amount drawn. We are also required to pay a commitment fee of 15.75 basis points per annum on the unused available credit. As at December 31, 2011, there were no
borrowings outstanding under the facility. Furthermore, as at December 15, 2011, SAP AG secured a forward loan in the amount of 200 million bearing fixed interest with the exact borrowing rate determined at the date of drawdown at
the applicable EURIBOR plus a margin of 35 basis points per annum.
To partially finance the forecasted acquisition of
SuccessFactors, as at December 3, 2011, SAP AG entered into a 1.0 billion syndicated term loan facility agreement with an initial term of one year ending in December 2012, which may be extended by six months. The use of the facility
is not restricted by any financial covenants. Borrowings under the facility bear interest of EURIBOR plus a margin of 60 to 85 basis points, depending on the point in time during the term when the credit facility is used. We are also required to pay
a commitment fee of 12.5 basis points per annum increasing to a maximum of 20 basis points , depending on the amount drawn. As at December 31, 2011, there were no borrowings outstanding under the
facility; however in connection with closing the acquisition of SuccessFactors on February 21, 2012, we drew 1 billion under the facility.
Additionally, as at December 31, 2011, and 2010, SAP AG had available lines of credit totaling 490 million and
545 million, respectively. As at December 31, 2011, and 2010, there were no borrowings outstanding under these lines of credit. As at December 31, 2011, and 2010, certain subsidiaries had lines of credit available that allowed
them to borrow in local currencies at prevailing interest rates up to 54 million and 60 million, respectively. Total aggregate borrowings under these lines of credit were immaterial as at December 31, 2011, and 2010.
(27) |
ADDITIONAL FAIR VALUE DISCLOSURES ON FINANCIAL INSTRUMENTS |
Fair Value of Financial Instruments
We use various types of financial instruments in the ordinary course of business which are grouped into the following categories: loans and receivables (L&R), available-for-sale (AFS),
held-for-trading (HFT) and amortized cost (AC).
F-74
The table below shows the carrying amounts and fair values of financial assets and
liabilities by category of financial instrument as well as by category of IAS 39. Since the line items Trade receivables, Trade payables and Other financial assets contain both financial and non-financial assets
or liabilities (such as other taxes or advance payments), the non-financial assets or liabilities are shown in the column headed Not in scope of IFRS 7 to allow a reconciliation to the corresponding line items in the Consolidated
Statements of Financial Position. The carrying amounts and fair values of our financial instruments as at December 31 were as follows:
Fair Values of Financial Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
|
|
2011 |
|
|
2010 |
|
|
|
|
Book Value 12/31 |
|
|
Measurement Categories |
|
|
Fair Value 12/31 |
|
|
Not in Scope of IFRS 7 |
|
|
Book Value 12/31 |
|
|
Measurement Categories |
|
|
Fair Value 12/31 |
|
|
Not in Scope of IFRS 7 |
|
|
Category |
|
|
At Amortized Cost |
|
|
At Cost |
|
|
At Fair Value |
|
|
|
|
|
At Amortized Cost |
|
|
At Cost |
|
|
At Fair Value |
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
L&R |
|
|
4,965 |
|
|
|
4,965 |
|
|
|
|
|
|
|
|
|
|
|
4,965 |
|
|
|
|
|
|
|
3,518 |
|
|
|
3,518 |
|
|
|
|
|
|
|
|
|
|
|
3,518 |
|
|
|
|
|
Trade receivables |
|
L&R |
|
|
3,577 |
|
|
|
3,431 |
|
|
|
|
|
|
|
|
|
|
|
3,431 |
|
|
|
145 |
|
|
|
3,177 |
|
|
|
3,031 |
|
|
|
|
|
|
|
|
|
|
|
3,031 |
|
|
|
146 |
|
Other financial assets |
|
|
|
|
1,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities |
|
L&R/AFS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400 |
|
|
|
400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
AFS |
|
|
|
|
|
|
|
|
|
|
122 |
|
|
|
39 |
|
|
|
39 |
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
79 |
|
|
|
28 |
|
|
|
28 |
|
|
|
40 |
|
Other nonderivative financial assets |
|
L&R |
|
|
|
|
|
|
396 |
|
|
|
|
|
|
|
|
|
|
|
396 |
|
|
|
186 |
|
|
|
|
|
|
|
188 |
|
|
|
|
|
|
|
|
|
|
|
188 |
|
|
|
182 |
|
Derivative assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with hedging relationship |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 |
|
|
|
3 |
|
|
|
|
|
without hedging relationship |
|
HFT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
161 |
|
|
|
161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113 |
|
|
|
113 |
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
AC |
|
|
980 |
|
|
|
727 |
|
|
|
|
|
|
|
|
|
|
|
727 |
|
|
|
253 |
|
|
|
952 |
|
|
|
699 |
|
|
|
|
|
|
|
|
|
|
|
699 |
|
|
|
253 |
|
Financial liabilities |
|
|
|
|
4,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonderivative financial liabilities |
|
AC |
|
|
|
|
|
|
4,034 |
|
|
|
|
|
|
|
|
|
|
|
4,107 |
|
|
|
|
|
|
|
|
|
|
|
4,445 |
|
|
|
|
|
|
|
|
|
|
|
4,463 |
|
|
|
|
|
Derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
with hedging relationship |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37 |
|
|
|
37 |
|
|
|
|
|
without hedging relationship |
|
HFT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
179 |
|
|
|
179 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109 |
|
|
|
109 |
|
|
|
|
|
Total financial instruments |
|
|
|
|
4,661 |
|
|
|
4,031 |
|
|
|
122 |
|
|
|
382 |
|
|
|
4,340 |
|
|
|
125 |
|
|
|
1,785 |
|
|
|
1,593 |
|
|
|
79 |
|
|
|
2 |
|
|
|
1,573 |
|
|
|
115 |
|
Aggregation according to IAS 39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at fair value through profit or loss |
|
HFT |
|
|
161 |
|
|
|
|
|
|
|
|
|
|
|
161 |
|
|
|
161 |
|
|
|
|
|
|
|
113 |
|
|
|
|
|
|
|
|
|
|
|
113 |
|
|
|
113 |
|
|
|
|
|
available-for-sale |
|
AFS |
|
|
561 |
|
|
|
|
|
|
|
122 |
|
|
|
439 |
|
|
|
439 |
|
|
|
|
|
|
|
107 |
|
|
|
|
|
|
|
79 |
|
|
|
28 |
|
|
|
28 |
|
|
|
|
|
loans and receivables |
|
L&R |
|
|
8,937 |
|
|
|
8,792 |
|
|
|
|
|
|
|
|
|
|
|
8,792 |
|
|
|
145 |
|
|
|
6,883 |
|
|
|
6,737 |
|
|
|
|
|
|
|
|
|
|
|
6,737 |
|
|
|
146 |
|
F-75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
|
|
|
|
Book Value 12/31 |
|
|
Measurement Categories |
|
|
Fair Value 12/31 |
|
|
Not in Scope of IFRS 7 |
|
|
Book Value 12/31 |
|
|
Measurement Categories |
|
|
Fair Value 12/31 |
|
|
Not in Scope of IFRS 7 |
|
millions |
|
Category |
|
|
|
At Amortized Cost |
|
|
At Cost |
|
|
At Fair Value |
|
|
|
|
|
At Amortized Cost |
|
|
At Cost |
|
|
At Fair Value |
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at fair value through profit or loss |
|
|
HFT |
|
|
|
179 |
|
|
|
|
|
|
|
|
|
|
|
179 |
|
|
|
179 |
|
|
|
|
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
109 |
|
|
|
109 |
|
|
|
|
|
at amortized cost |
|
|
AC |
|
|
|
5,014 |
|
|
|
4,761 |
|
|
|
|
|
|
|
|
|
|
|
4,834 |
|
|
|
253 |
|
|
|
5,397 |
|
|
|
5,144 |
|
|
|
|
|
|
|
|
|
|
|
5,162 |
|
|
|
253 |
|
Out of IAS 39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments related to employee benefit plans |
|
|
|
|
|
|
186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
186 |
|
|
|
182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
182 |
|
Investment in associates |
|
|
|
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47 |
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40 |
|
Derivatives with hedging relationship |
|
|
|
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
39 |
|
|
|
39 |
|
|
|
|
|
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
34 |
|
|
|
34 |
|
|
|
|
|
Total financial instruments |
|
|
|
|
|
|
4,660 |
|
|
|
4,031 |
|
|
|
122 |
|
|
|
382 |
|
|
|
4,340 |
|
|
|
125 |
|
|
|
1,785 |
|
|
|
1,593 |
|
|
|
79 |
|
|
|
2 |
|
|
|
1,573 |
|
|
|
115 |
|
Determination of Fair Values
IAS 39 defines fair value as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing
parties in an arms length transaction. Accordingly, best evidence of fair value provides quoted prices in an active market. Where market prices are not readily available, valuation techniques have to be used to establish fair value. We have
classified our financial instruments into those that are measured at fair value and those that are measured at cost or amortized cost.
Financial Instruments Measured at Fair Value
Depending on the
inputs used for determining fair value, we have categorized our financial instruments at fair value into a three-level fair value hierarchy as mandated by IFRS 7.
The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3). The inputs used to measure fair value for one single instrument may fall into different levels of the fair value hierarchy. In such cases, the
level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance
of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
The levels of the fair value hierarchy, its application to our financial assets and liabilities, and the respective determination of fair value are described below:
|
|
|
Level 1: Quoted prices in active markets for identical assets or liabilities. |
|
|
|
Available-for-sale debt and equity investments: The fair values of these marketable securities are based on quoted market prices as at
December 31. |
F-76
|
|
|
Level 2: Inputs other than those that can be observed, 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. |
|
|
|
Derivative financial instruments: The fair value of foreign exchange forward contracts is based on discounting the expected future cash flows over the
respective remaining term of the contracts using the respective deposit interest rates and spot rates. The fair value of our foreign currency options is calculated taking into account current spot rates and strike prices, the volatility of the
respective currencies, the remaining term of the options as well as market interest rates. 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 and future rates for the remaining term of the contracts as a basis. |
|
|
|
Available-for-sale equity investments in public companies: Certain of our equity investments in public companies were restricted from being sold for a
limited period. Therefore, fair value is determined based on quoted market prices as at December 31, deducting a discount for the disposal restriction based on the premium for a respective put option. |
|
|
|
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. |
The following table
allocates those financial assets and liabilities that are measured at fair value in accordance with IAS 39 either through profit or loss or other comprehensive income as at December 31, 2011, to the three levels of the fair value hierarchy
according to IFRS 7.
Classification of Financial Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
millions |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt investments |
|
|
400 |
|
|
|
0 |
|
|
|
0 |
|
|
|
400 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Equity investments |
|
|
18 |
|
|
|
21 |
|
|
|
0 |
|
|
|
39 |
|
|
|
1 |
|
|
|
27 |
|
|
|
0 |
|
|
|
28 |
|
Available-for-sale financial assets |
|
|
418 |
|
|
|
21 |
|
|
|
0 |
|
|
|
439 |
|
|
|
1 |
|
|
|
27 |
|
|
|
0 |
|
|
|
28 |
|
Derivative financial assets |
|
|
0 |
|
|
|
165 |
|
|
|
0 |
|
|
|
165 |
|
|
|
0 |
|
|
|
116 |
|
|
|
0 |
|
|
|
116 |
|
|
|
Total |
|
|
418 |
|
|
|
186 |
|
|
|
0 |
|
|
|
604 |
|
|
|
1 |
|
|
|
143 |
|
|
|
0 |
|
|
|
144 |
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial liabilities |
|
|
0 |
|
|
|
222 |
|
|
|
0 |
|
|
|
222 |
|
|
|
0 |
|
|
|
146 |
|
|
|
0 |
|
|
|
146 |
|
|
|
Total |
|
|
0 |
|
|
|
222 |
|
|
|
0 |
|
|
|
222 |
|
|
|
0 |
|
|
|
146 |
|
|
|
0 |
|
|
|
146 |
|
|
|
F-77
Financial Instruments Measured at Cost/at Amortized Cost
The fair values of these financial instruments are determined as follows:
|
|
|
Cash and cash equivalents, trade receivables, other non-derivative financial assets: Because the financial assets are primarily short-term, it is
assumed that their carrying values approximate their fair values. Non-interest-bearing or below market-rate non-current 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. |
|
|
|
Available-for-sale equity investments in private companies: For these investments in equity instruments primarily consisting of venture capital
investments, fair values cannot readily be observed as they do not have a quoted market price in an active market. Also, calculating fair value by discounting estimated future cash flows is not possible as a determination of cash flows is not
reliable. Therefore, such investments are accounted for at cost approximating fair value, with impairment being assessed based on revenue multiples of similar companies and review of each investments cash position, financing needs, earnings
and revenue outlook, operational performance, management and ownership changes, and competition. |
|
|
|
Accounts payable and non-derivative financial liabilities: Non-derivative financial liabilities include financial debt and other non-derivative
financial liabilities. Accounts payable and other
|
|
|
non-derivative financial liabilities are mainly short-term, and thus their fair values approximate their carrying values. The carrying values of financial debt with variable interest rates
generally approximate the fair values. The fair value of fixed-rate financial debt is based on quoted market prices or determined by discounting the cash flows using the market interest rates on December 31. |
(28) |
SHARE-BASED PAYMENT PLANS |
SAP has granted awards under various cash-settled and equity-settled share-based payment plans to its directors and
employees. Most of these awards are described in detail below. SAP has other share-based payment plans, none of which, individually or in the aggregate, are material to the Consolidated Financial Statements.
a) |
Cash-Settled Share-Based Payment Plans |
SAPs stock appreciation rights are cash-settled share-based payment plans and include the following programs, which are described in detail below: Virtual Stock Option Plan (SOP 2007 (2007/2008
tranche)), SOP Performance Plan 2009 (SOP PP), Virtual Stock Option Plan 2010 (SOP 2010 (2010/2011 tranche)), and BO Rights (former Business Objects awards assumed in connection with the Business Objects acquisition in 2008). SAP purchased various
call options to hedge part of the anticipated cash flow exposure relating to its share-based payment plans. The call options have been structured to replicate the payouts required, if any, under the terms of the rights. Through the hedging program,
the change in fair value of the call options offsets the compensation expense on the options recognized.
F-78
The following parameters and assumptions were used for the computation of the fair value at
grant date:
Fair Value and Parameters at Grant Date by Cash-Settled Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Plan |
|
SOP 2010 2011 Tranche |
|
|
SOP 2010 2010 Tranche |
|
|
SOP PP |
|
Grant date |
|
|
6/9/2011 |
|
|
|
9/9/2010 |
|
|
|
5/6/2009 |
|
Weighted average fair value |
|
|
8.24 |
|
|
|
6.46 |
|
|
|
5.62 |
|
Expected life in years |
|
|
5.8 |
|
|
|
5.8 |
|
|
|
4.6 |
|
Risk-free interest rate (depending on maturity) |
|
|
2.64 |
% |
|
|
1.63 |
% |
|
|
2.39 |
% |
Grant price of SAP share |
|
|
42.03 |
|
|
|
35.48 |
|
|
|
28.00 |
|
Price of SAP share |
|
|
41.73 |
|
|
|
35.45 |
|
|
|
28.23 |
|
Expected volatility of SAP shares |
|
|
27.1 |
% |
|
|
26.9 |
% |
|
|
35.0 |
% |
Expected dividend yield of SAP shares |
|
|
1.66 |
% |
|
|
1.65 |
% |
|
|
1.76 |
% |
Grant price of reference index |
|
|
n. a. |
|
|
|
n. a. |
|
|
|
97.54 |
|
Share price of reference index |
|
|
n. a. |
|
|
|
n. a. |
|
|
|
108.82 |
|
Expected volatility of reference index |
|
|
n. a. |
|
|
|
n. a. |
|
|
|
25.2 |
% |
Expected dividend yield of reference index |
|
|
n. a. |
|
|
|
n. a. |
|
|
|
1.06 |
% |
Expected correlation SAP share/reference index |
|
|
n. a. |
|
|
|
n. a. |
|
|
|
36.5 |
% |
F-79
As at December 31, 2011, the valuation of our outstanding cash-settled plans was based
on the following parameters and assumptions:
Fair Value and Parameters Used at Year End for Cash-Settled Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOP 2007 (2007/2008
Tranche) |
|
|
SOP PP |
|
|
SOP 2010 (2010/2011
Tranche) |
|
|
BO Rights |
|
Option pricing model used |
|
|
Binomial |
|
|
|
Monte-Carlo |
|
|
|
Monte-Carlo |
|
|
|
Binomial |
|
Range of grant dates |
|
|
3/21/2007 4/3/2008 |
|
|
|
5/6/2009 |
|
|
|
9/9/2010 6/9/2011 |
|
|
|
2/10/1998 1/21/2008 |
|
Quantity of awards issued in thousands |
|
|
15,664 |
|
|
|
10,321 |
|
|
|
10,589 |
|
|
|
5,162 |
|
Weighted average fair value as at Dec 31, 2011 |
|
|
5.20 |
|
|
|
3.12 |
|
|
|
7.84 |
|
|
|
27.41 |
|
Weighted average intrinsic value as at Dec 31, 2011 |
|
|
3.82 |
|
|
|
0 |
|
|
|
0.80 |
|
|
|
22.90 |
|
Expected life as at Dec 31, 2011 in years |
|
|
0.8 |
|
|
|
2.2 |
|
|
|
4.9 |
|
|
|
1.3 |
|
Risk-free interest rate (depending on maturity) |
|
|
0.00% |
|
|
|
0.18% |
|
|
|
0.70% to 1.20% |
|
|
|
0.30% |
|
Expected volatility SAP shares |
|
|
25.5% to 27.1% |
|
|
|
28.6% |
|
|
|
27.4% to 29.1% |
|
|
|
32.0% |
|
Expected dividend yield SAP shares |
|
|
1.70% |
|
|
|
1.70% |
|
|
|
1.70% |
|
|
|
1.70% |
|
Share price of reference index |
|
|
n. a. |
|
|
|
173.06 |
|
|
|
n. a. |
|
|
|
n. a. |
|
Expected volatility reference index |
|
|
n. a. |
|
|
|
18.0% |
|
|
|
n. a. |
|
|
|
n. a. |
|
Expected dividend yield reference index |
|
|
n. a. |
|
|
|
1.11% |
|
|
|
n. a. |
|
|
|
n. a. |
|
Expected correlation SAP share/reference index |
|
|
n. a. |
|
|
|
40.4% |
|
|
|
n. a. |
|
|
|
n. a. |
|
Expected volatility of the SAP share price is based on a mixture of implied volatility
from traded options with corresponding lifetimes and exercise prices as well as historical volatility with the same expected life as the options granted. For the SOP PP valuation, the expected volatility of the Tech Peer Group Index (ISIN
DE000A0YKR94) (TechPGI) is based on the
historical volatility derived from the index price history.
Expected
life of the options reflects both the contractual term and the expected, or historical, exercise behavior. The risk-free interest rate is derived from German government bonds with a similar duration. Dividend yield is based on expectations of future
dividends.
F-80
The number of awards under our cash-settled plans developed as follows in the years ended
December 31, 2011, 2010, and 2009:
Changes in Numbers of Outstanding Awards under our Cash-Settled Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(000) |
|
SOP 2007
(2007/2008 Tranche) |
|
|
SOP PP |
|
|
SOP 2010
(2010/2011 Tranche) |
|
|
BO Rights |
|
Outstanding as at 12/31/2008 |
|
|
14,486 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
2,963 |
|
Granted in 2009 |
|
|
0 |
|
|
|
10,321 |
|
|
|
N/A |
|
|
|
0 |
|
Exercised/paid in 2009 |
|
|
0 |
|
|
|
0 |
|
|
|
N/A |
|
|
|
704 |
|
Expired in 2009 |
|
|
0 |
|
|
|
0 |
|
|
|
N/A |
|
|
|
0 |
|
|
|
Forfeited in 2009 |
|
|
998 |
|
|
|
243 |
|
|
|
N/A |
|
|
|
372 |
|
|
|
Outstanding as at 12/31/2009 |
|
|
13,488 |
|
|
|
10,078 |
|
|
|
N/A |
|
|
|
1,887 |
|
Granted in 2010 |
|
|
0 |
|
|
|
0 |
|
|
|
5,397 |
|
|
|
0 |
|
Exercised/paid in 2010 |
|
|
167 |
|
|
|
0 |
|
|
|
0 |
|
|
|
571 |
|
Expired in 2010 |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Forfeited in 2010 |
|
|
323 |
|
|
|
503 |
|
|
|
24 |
|
|
|
216 |
|
|
|
Outstanding as at 12/31/2010 |
|
|
12,998 |
|
|
|
9,575 |
|
|
|
5,373 |
|
|
|
1,100 |
|
|
|
Granted in 2011 |
|
|
0 |
|
|
|
0 |
|
|
|
5,192 |
|
|
|
0 |
|
Exercised/paid in 2011 |
|
|
8,172 |
|
|
|
0 |
|
|
|
0 |
|
|
|
432 |
|
Expired in 2011 |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Forfeited in 2011 |
|
|
832 |
|
|
|
632 |
|
|
|
515 |
|
|
|
130 |
|
|
|
Outstanding as at 12/31/2011 |
|
|
3,994 |
|
|
|
8,943 |
|
|
|
10,050 |
|
|
|
538 |
|
|
|
Additional information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards exercisable as at 12/31/2009 |
|
|
5,965 |
|
|
|
0 |
|
|
|
N/A |
|
|
|
1,390 |
|
Awards exercisable as at 12/31/2010 |
|
|
12,998 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,060 |
|
|
|
Awards exercisable as at 12/31/2011 |
|
|
3,994 |
|
|
|
8,943 |
|
|
|
0 |
|
|
|
538 |
|
|
|
Aggregate intrinsic value of vested awards in million, as at 12/31/2009 |
|
|
0 |
|
|
|
0 |
|
|
|
N/A |
|
|
|
19 |
|
Aggregate intrinsic value of vested awards in million, as at12/31/2010 |
|
|
15 |
|
|
|
0 |
|
|
|
0 |
|
|
|
22 |
|
|
|
Aggregate intrinsic value of vested awards in million, as at 12/31/2011 |
|
|
15 |
|
|
|
0 |
|
|
|
0 |
|
|
|
10 |
|
|
|
Weighted average exercise price in |
|
|
37.03 |
|
|
|
47.58 |
|
|
|
42.88 |
|
|
|
21.29 |
|
Provision as at 12/31/2009 in millions |
|
|
53 |
|
|
|
14 |
|
|
|
N/A |
|
|
|
29 |
|
Provision as at 12/31/2010 in millions |
|
|
59 |
|
|
|
36 |
|
|
|
4 |
|
|
|
24 |
|
|
|
Provision as at 12/31/2011 in millions |
|
|
20 |
|
|
|
28 |
|
|
|
27 |
|
|
|
17 |
|
|
|
Expense recognized in 2009 in millions |
|
|
20 |
|
|
|
5 |
|
|
|
N/A |
|
|
|
6 |
|
Expense recognized in 2010 in millions |
|
|
0 |
|
|
|
21 |
|
|
|
4 |
|
|
|
6 |
|
|
|
Expense recognized in 2011 in millions |
|
|
4 |
|
|
|
8 |
|
|
|
28 |
|
|
|
5 |
|
|
|
F-81
a.1) SAP Stock Option Plan 2007 (SOP 2007 (2007/2008 Tranche))
Under the SAP Stock Option Plan 2007, in 2007 and 2008 we granted top executives and top performers cash-based virtual stock options,
the value of which was dependent on the multi-year performance of the SAP share.
The virtual stock options granted under the
SOP give the employees the right to receive a certain amount of money by exercising the options under the terms and conditions of this plan. After a vesting period of two years, the plan provides for 11 predetermined exercise dates every calendar
year (one date per month except in April) until the rights lapse five years after the grant date.
The exercise price is 110%
of the grant base value, which is derived from the average fair market value of one common share over the 20 business days following the announcement date of the Companys preliminary results for the preceding fiscal year. The awards granted in
2008 and 2007 have a grant-base value of 32.69 and 35.71, respectively.
Monetary benefits under the SOP are
capped at 100% of the exercise price (39.28 for options granted in 2007, and 35.96 for options granted in 2008).
a.2) SOP
Performance Plan 2009 (SOP PP)
Under the SOP Performance Plan 2009, we granted to top executives and top performers
cash-based virtual stock options, the value of which depends on the multi-year performance of the SAP share relative to an industry-specific share price index, the TechPGI.
The future payout at the exercise date will be based on the outperformance of the SAP share price over the TechPGI. Exercise is only possible if the SAP share price has outperformed the TechPGI. For that
purpose, the SOP PP 2009 agreement defines the initial value of the TechPGI (97.54) as well as the SAP initial exercise price (28.00 per share). After a vesting period of two years, the plan provides for
12 predetermined exercise dates every calendar year (one date per month) until the rights lapse five years after the grant date.
Monetary benefits are capped at 110% of the exercise price (30.80).
a.3) SAP Stock Option Plan 2010 (SOP 2010 (2010/2011 Tranche))
Under
the SAP Stock Option Plan 2010, in 2010 and 2011 we granted members of the Senior Leadership Team, SAPs Top Rewards (employees with an exceptional rating) and members of the Executive Board cash-based virtual stock options, the value of which
depends on the multi-year performance of the SAP share.
The grant-base value is based on the average fair market value of
one common share over the five business days prior to the Executive Board resolution date.
The virtual stock options granted
under the SOP 2010 give the employees the right to receive a certain amount of money by exercising the options under the terms and conditions of this plan. After a three-year vesting period (four years for members of the Executive Board), the plan
provides for 11 predetermined exercise dates every calendar year (one date per month except in April) until the rights lapse six years after the grant date (seven years for members of the Executive Board). Employees can only exercise their virtual
stock options provided they are employed by SAP; if they leave the company, they forfeit them. Executive Board members options are non-forfeitable once granted if the service agreement ends in the grant year, the number of options is
reduced pro rata temporis. Any options not exercised at the end of the respective term expire.
The exercise price is 110% of
the grant base value (115% for members of the Executive Board) which is 46.23 (48.33) for the 2010 tranche and 39.03 (40.80) for the 2011 tranche.
Monetary benefits will be capped at 100% of the exercise price (150% for members of the Executive Board).
F-82
a.4) Business Objects Cash-Settled Awards Replacing Pre-Acquisition Business Objects Awards (BO Rights)
Prior to being acquired by SAP, the employees of Business Objects companies were granted equity-settled awards giving
rights to Business Objects shares. Following the Business Objects acquisition in 2008, the Business Objects shares were no longer publicly traded and mechanisms were implemented to allow the employees to cash out their awards either by receiving
cash instead of Business Objects shares (cash payment mechanism or CPM) or by receiving Business Objects shares that they subsequently sell to SAP France (liquidity agreement mechanism or LAM). In substance, the implementation of CPM and LAM
resulted in a conversion of the equity-settled awards to cash-settled share-based payment awards (replacing awards) that replaced the stock options and Restricted Stock Units (RSUs) originally granted (replaced awards).
The replaced awards had vesting periods in the range of two to five years, and contractual terms in the range of two to ten years.
The replacing awards closely mirror the terms of the replaced awards (including conditions such as exercise price and
vesting) except that:
|
|
|
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. |
|
|
|
The replaced awards were indexed to Business Objects share price whereas the replacing awards are indexed to SAPs share price as follows:
SAPs offering price for Business Objects shares during the tender offer (42) is divided by SAP AGs share price at the tender offer closing date (32.28) and
|
|
|
the result is multiplied by the weighted average closing price of the SAP share during the 20 trading days preceding the exercise or disposition date. |
The benefit resulting from the stock option exercise or the RSU vesting is either paid directly to the employees (in countries where the
CPM applies) or the employees continue to receive shares of Business Objects on stock options exercise or RSU vesting (in countries where the LAM applies). In these cases, the employees have a put option to resell the shares to SAP within three
months from exercise, while SAP has a call option on these shares.
In both cases, these awards are accounted for as a
cash-settled award because the obligation to the employee is ultimately settled in cash, both under the CPM and the LAM mechanism.
b) |
Equity-Settled Share-Based Payment Plans |
Equity-settled plans include primarily the Share Matching Plan (SMP).
Under the
Share Matching Plan (SMP) implemented in 2010, SAP offers its employees the opportunity to purchase SAP AG shares at a discount of 40%. The number of SAP shares an eligible employee may purchase through the SMP is limited to a percentage of the
employees annual base salary. After a three-year holding period, such plan participants will receive one free matching share of SAP for every three SAP shares acquired. The terms for the members of the Senior Leadership Team (SLT) are slightly
different than those for the employees.
Members of the SLT do not receive a discount when purchasing the shares. However,
after a three-year holding period, members of the SLT receive two free matching shares of SAP stock for every three SAP shares acquired. This plan is not open to members of the SAP Executive Board.
F-83
The following table shows the parameters and assumptions used at grant date to determine the
fair value of free-matching shares, as well as the quantity of shares purchased and free-matching shares granted through this program in 2011 and 2010:
Fair Value and Parameters at Grant Date for SMP
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
Grant date |
|
|
6/8/2011 |
|
|
|
9/8/2010 |
|
Share price at grant date |
|
|
41.73 |
|
|
|
35.45 |
|
Purchase price set by the Executive Board |
|
|
44.07 |
|
|
|
35.12 |
|
Risk-free interest rate |
|
|
1.95% |
|
|
|
0.82% |
|
Expected dividend yield of SAP shares |
|
|
1.70% |
|
|
|
1.65% |
|
Expected life of free-matching shares in years |
|
|
3.0 |
|
|
|
3.0 |
|
Free-matching share fair value at grant date |
|
|
39.69 |
|
|
|
33.71 |
|
Number of shares purchased in thousands |
|
|
1,334 |
|
|
|
1,591 |
|
Number of free-matching shares granted to employees in thousands |
|
|
408 |
|
|
|
489 |
|
Number of free-matching shares granted to SLT in thousands |
|
|
73 |
|
|
|
82 |
|
Total free-matching shares granted in thousands |
|
|
481 |
|
|
|
571 |
|
The following table shows the breakdown of the expense recognized for this program in 2011 and 2010 and
the unrecognized expense at year end in millions:
Recognized and Unrecognized Expense at Year End for SMP
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
Expense recognized relating to discount |
|
|
18 |
|
|
|
21 |
|
Expense recognized relating to amortization of free-matching shares |
|
|
9 |
|
|
|
2 |
|
Additional discount granted under the Share Award Program |
|
|
4 |
|
|
|
3 |
|
|
|
Total expense relating to SMP |
|
|
31 |
|
|
|
26 |
|
|
|
Unrecognized expense as at December 31, |
|
|
22 |
|
|
|
15 |
|
Average remaining vesting period in years as at December 31, |
|
|
2.2 |
|
|
|
2.7 |
|
(29) |
SEGMENT AND GEOGRAPHIC INFORMATION |
a) |
Information on the Reportable Segments |
Our internal reporting system produces reports in which business activities are presented in a variety of ways, for example, by line of business, geography, and areas of responsibility of the individual
Executive Board members (Board areas). Based on these reports, the
Executive Board, which is responsible for assessing the performance of various company components and making resource allocation decisions as our Chief Operating Decision Maker (CODM), evaluates
business activities in a number of different ways. Until the second quarter of 2010 we had only three operating segments, which were organized according to our lines of business. After the acquisition of
F-84
Sybase in July 2010, we implemented a dedicated Sybase business unit next to our existing segments Product, Consulting, and Training. Consequently, a new segment was added to our segment
reporting. Although the new segment is called Sybase, it is not identical to the acquired Sybase business. Certain activities of the acquired business are integrated and thus reported in our Product, Consulting, and Training segments while certain
activities that existed in SAP prior to the Sybase business combination have been transferred to the Sybase segment. In our segment reporting, the revenue is presented according to the sales responsibilities rather than the product being sold. As
such, the Sybase segment is able to generate revenue selling SAP products as well as Sybase products, while the revenue shown in the other segments can also be attributable to both SAP and Sybase products, which have been sold by sales personnel of
SAP.
The Product segment is primarily engaged in marketing and licensing our software products and providing support
services for our software products. The Consulting segment performs various professional services, mainly relating to the implementation of our software products. The Training segment provides educational services on the use of our software products
and related topics for customers and partners. The Sybase segment derives its revenue from licensing a range of software products, including enterprise and mobile databases, middleware, synchronization, encryption and device management software,
from performing support services, professional services, and training services associated with these software products, and from providing mobile messaging services.
Our management reporting system reports our inter-segment services as cost reductions and does not track them as internal revenue. Inter-segment services mainly represent utilization of manpower resources
of one segment by another segment on a project-by-project basis. Inter-segment services are charged based on internal cost rates including certain indirect overhead costs but without profit margin.
The accounting policies applied in the internal reporting to our CODM differ from IFRS
accounting principles described in Note (3) as follows:
|
|
|
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 segments revenue includes certain amounts classified as software revenue in our Consolidated Income Statements. Additionally revenue for Sybase products might be reported
under any of the four segments. |
|
|
|
The internal reporting to our CODM excludes share-based compensation expenses andsince 2009restructuring costs at segment level. For all
years presented, these expenses were managed and reviewed at Group level only. |
|
|
|
Differences in foreign currency translations result in deviations between the amounts reported internally to our CODM and the amounts reported in the
Consolidated Financial Statements. |
|
|
|
The revenue numbers in the internal reporting to our CODM include the support revenue that would have been reflected by acquired entities had it
remained a stand-alone entity but which are not reflected as revenue under IFRS as a result of purchase accounting for support contracts in effect at the time of an acquisition. |
|
|
|
The income measures in the internal reporting to our CODM include the full amount of support revenue and exclude the following acquisition-related
charges as well as discontinued activities: |
|
|
|
Amortization expense/impairment charges of intangibles acquired in business combinations and certain stand-alone acquisitions of intellectual property
|
F-85
|
|
|
Expenses from purchased in-process research and development |
|
|
|
Restructuring expenses and settlements of pre-existing relationships |
|
|
|
Acquisition-related third-party costs that are required to be expensed
|
|
|
|
Results of the discontinued operations that qualify as such under IFRS in all respects except that they do not represent a major line of business. For
2011, 2010, and 2009, this relates exclusively to the operations of TomorrowNow. |
Segment Revenue and
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
Product |
|
|
Consulting |
|
|
Training |
|
|
Sybase |
|
|
Total |
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue from reportable segment |
|
|
10,025 |
|
|
|
2,955 |
|
|
|
376 |
|
|
|
873 |
|
|
|
14,229 |
|
Segment result |
|
|
5,940 |
|
|
|
864 |
|
|
|
147 |
|
|
|
226 |
|
|
|
7,177 |
|
Depreciation and amortization directly attributable to each segment |
|
|
14 |
|
|
|
11 |
|
|
|
1 |
|
|
|
16 |
|
|
|
42 |
|
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue from reportable segment |
|
|
9,020 |
|
|
|
2,714 |
|
|
|
362 |
|
|
|
387 |
|
|
|
12,483 |
|
Segment result |
|
|
5,395 |
|
|
|
746 |
|
|
|
136 |
|
|
|
127 |
|
|
|
6,404 |
|
Depreciation and amortization directly attributable to each segment |
|
|
17 |
|
|
|
8 |
|
|
|
2 |
|
|
|
7 |
|
|
|
34 |
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue from reportable segment |
|
|
7,846 |
|
|
|
2,498 |
|
|
|
332 |
|
|
|
N/A |
|
|
|
10,676 |
|
Segment result |
|
|
4,731 |
|
|
|
781 |
|
|
|
115 |
|
|
|
N/A |
|
|
|
5,627 |
|
Depreciation and amortization directly attributable to each segment |
|
|
53 |
|
|
|
7 |
|
|
|
2 |
|
|
|
N/A |
|
|
|
62 |
|
F-86
Reconciliation of Revenue and Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
External revenue from reportable segments |
|
|
14,229 |
|
|
|
12,483 |
|
|
|
10,676 |
|
External revenue from activities outside of the reportable segments |
|
|
31 |
|
|
|
55 |
|
|
|
7 |
|
Adjustment support revenue |
|
|
27 |
|
|
|
74 |
|
|
|
11 |
|
|
|
Total revenue |
|
|
14,233 |
|
|
|
12,464 |
|
|
|
10,672 |
|
|
|
Segment result from reportable segments |
|
|
7,177 |
|
|
|
6,404 |
|
|
|
5,627 |
|
External revenue from activities outside of the reportable segments |
|
|
31 |
|
|
|
55 |
|
|
|
7 |
|
Development expensemanagement view |
|
|
1,746 |
|
|
|
1,800 |
|
|
|
1,801 |
|
Administration and other corporate expensesmanagement view |
|
|
751 |
|
|
|
651 |
|
|
|
659 |
|
Share-based payment expense |
|
|
68 |
|
|
|
58 |
|
|
|
54 |
|
Restructuring |
|
|
4 |
|
|
|
-2 |
|
|
|
194 |
|
Acquisition-related restructuring expenses |
|
|
0 |
|
|
|
5 |
|
|
|
4 |
|
Acquisition-related charges |
|
|
448 |
|
|
|
305 |
|
|
|
267 |
|
Adjustment support revenue |
|
|
27 |
|
|
|
74 |
|
|
|
11 |
|
TomorrowNow litigation |
|
|
717 |
|
|
|
983 |
|
|
|
56 |
|
|
|
Operating profit |
|
|
4,881 |
|
|
|
2,591 |
|
|
|
2,588 |
|
Other non-operating expense, net |
|
|
75 |
|
|
|
186 |
|
|
|
73 |
|
|
|
Financial income, net |
|
|
38 |
|
|
|
67 |
|
|
|
80 |
|
Profit before tax |
|
|
4,768 |
|
|
|
2,338 |
|
|
|
2,435 |
|
Segment Revenue
External revenue from activities outside of the reportable segments mainly represents revenue incidental to our main business activities and minor currency translation differences.
Segment Result
The
segment results of our segments Product, Consulting, and Training reflect operating expenses directly attributable or reasonably allocable to the segments, including costs of revenue, and sales and marketing expenses. Costs that are not directly
attributable
or reasonably allocable to the segments such as administration and other corporate expenses are not included in the segment result. Development expense is excluded from the segment result because
our CODM reviews segment performance without taking development expense into account.
The measurement of the segment result
for the Sybase segment differs from the measurement for the other segments, as the Sybase segment result includes development, administration and other corporate expenses while these expenses are excluded from the measurement of the segment results
of the other segments.
F-87
Depreciation and amortization expenses reflected in the segment result include the
amounts directly attributable to each segment.
Development expense and administration and other corporate expense disclosed
in the reconciliation above are based on a management view and do not equal the amounts under the corresponding caption in the Consolidated Income Statements. The differences are mainly due to the fact that the development expense which is
attributed to Sybase is included in the Sybase segment expenses, and that our management view focuses on organizational structures and cost centers rather than the classification of cost by functional area.
Segment Assets/Liabilities
Segment asset/liability information is not regularly provided to our CODM. Goodwill by reportable segment is disclosed in Note (16).
b) |
Geographic Information |
The following tables present revenue by location of customers and information about non-current assets detailed by geographic region.
Noncurrent assets comprise goodwill, intangible assets, property, plant, and equipment, tax assets and other nonfinancial assets.
Total Revenue by
Location of Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Germany |
|
|
2,347 |
|
|
|
2,195 |
|
|
|
2,029 |
|
Rest of EMEA1) |
|
|
4,644 |
|
|
|
4,068 |
|
|
|
3,614 |
|
|
|
Total EMEA |
|
|
6,991 |
|
|
|
6,263 |
|
|
|
5,643 |
|
|
|
United States |
|
|
3,699 |
|
|
|
3,243 |
|
|
|
2,695 |
|
Rest of Americas |
|
|
1,392 |
|
|
|
1,192 |
|
|
|
925 |
|
|
|
Total Americas |
|
|
5,091 |
|
|
|
4,435 |
|
|
|
3,620 |
|
|
|
Japan |
|
|
652 |
|
|
|
513 |
|
|
|
476 |
|
Rest of Asia Pacific Japan |
|
|
1,499 |
|
|
|
1,253 |
|
|
|
933 |
|
|
|
Total Asia Pacific Japan |
|
|
2,151 |
|
|
|
1,766 |
|
|
|
1,409 |
|
|
|
SAP Group |
|
|
14,233 |
|
|
|
12,464 |
|
|
|
10,672 |
|
1) |
Europe, Middle East, Africa |
F-88
Software and Software-Related Service Revenue by Location of Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Germany |
|
|
1,726 |
|
|
|
1,564 |
|
|
|
1,439 |
|
Rest of EMEA1) |
|
|
3,803 |
|
|
|
3,319 |
|
|
|
2,897 |
|
|
|
Total EMEA |
|
|
5,529 |
|
|
|
4,883 |
|
|
|
4,336 |
|
|
|
United States |
|
|
2,870 |
|
|
|
2,497 |
|
|
|
2,018 |
|
Rest of Americas |
|
|
1,088 |
|
|
|
930 |
|
|
|
700 |
|
|
|
Total Americas |
|
|
3,958 |
|
|
|
3,427 |
|
|
|
2,718 |
|
|
|
Japan |
|
|
579 |
|
|
|
448 |
|
|
|
404 |
|
Rest of Asia Pacific Japan |
|
|
1,253 |
|
|
|
1,036 |
|
|
|
740 |
|
|
|
Total Asia Pacific Japan |
|
|
1,832 |
|
|
|
1,484 |
|
|
|
1,144 |
|
|
|
SAP Group |
|
|
11,319 |
|
|
|
9,794 |
|
|
|
8,198 |
|
|
|
1) |
Europe, Middle East, Africa |
Software Revenue by Location of Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Total EMEA1) |
|
|
1,774 |
|
|
|
1,471 |
|
|
|
1,304 |
|
Total Americas |
|
|
1,482 |
|
|
|
1,247 |
|
|
|
855 |
|
Total Asia Pacific Japan |
|
|
715 |
|
|
|
547 |
|
|
|
449 |
|
|
|
SAP Group |
|
|
3,971 |
|
|
|
3,265 |
|
|
|
2,607 |
|
|
|
1) |
Europe, Middle
East, Africa |
Non-Current Assets
|
|
|
|
|
|
|
|
|
millions |
|
2011 |
|
|
2010 |
|
Germany |
|
|
2,162 |
|
|
|
1,896 |
|
Rest of EMEA1) |
|
|
5,537 |
|
|
|
4,808 |
|
|
|
Total EMEA |
|
|
7,699 |
|
|
|
6,704 |
|
|
|
United States |
|
|
4,513 |
|
|
|
5,565 |
|
Rest of Americas |
|
|
96 |
|
|
|
60 |
|
|
|
Total Americas |
|
|
4,609 |
|
|
|
5,625 |
|
|
|
Japan |
|
|
12 |
|
|
|
4 |
|
Rest of Asia Pacific Japan |
|
|
196 |
|
|
|
117 |
|
|
|
Total Asia Pacific Japan |
|
|
208 |
|
|
|
121 |
|
|
|
SAP Group |
|
|
12,516 |
|
|
|
12,450 |
|
|
|
1) |
Europe, Middle East, Africa |
For information about the breakdown of our full-time equivalent employee numbers by region, see Note (8).
F-89
|
|
|
Executive Board |
|
Memberships on supervisory boards and other comparable governing bodies of enterprises, other than subsidiaries of SAP on
December 31, 2011 |
Bill McDermott Co-Chief
Executive Officer Strategy, Governance, Corporate Development, Innovation, Sales, Field Services, Consulting, Ecosystem Activities, Communications, Marketing |
|
Board of Directors, ANSYS, Inc., Canonsburg, Philadelphia, United States Board of Directors, Under Armour, Inc., Baltimore, Maryland, United States Board of Directors,
PAETEC Communications, Inc., Fairport, New York, United States (until December 1, 2011) |
|
|
Jim Hagemann Snabe
Co-Chief Executive Officer Strategy, Governance,
Corporate Development, Innovation, Products and Solutions Development, Communications, Marketing |
|
Board of Directors, Thrane & Thrane A/S, Lyngby, Denmark Board of Directors, Bang & Olufsen a/s, Stuer, Denmark (from September 23, 2011)
Board of Directors, Linkage A/S, Copenhagen, Denmark (until November 22, 2011) |
|
|
Dr. Werner Brandt
Chief Financial Officer, Labor Relations Director (acting) Finance and Administration including Investor Relations and Data Protection & Privacy |
|
Supervisory Board, Deutsche Lufthansa AG, Frankfurt am Main, Germany Supervisory Board, QIAGEN N.V., Venlo, the Netherlands Supervisory Board, Heidelberger
Druckmaschinen AG, Heidelberg, Germany (until July 28, 2011) |
|
|
Gerhard Oswald Chief
Operating Officer SAP Active Global Support, Installed Base Maintenance & Support, Global IT, Globalization Services, Quality,
Governance & Production, COO Operations, University Alliances, Global User Groups Organization, Chief Process Office, SAP Labs Network |
|
|
|
|
Vishal Sikka Technology
Platform (including Application Platform & Database), Products (BI tools, EIM, Analytics & Planning Applications), Product Architecture & Governance, Design & New Applications, Research including Global
Incubation |
|
|
|
|
Board Members Who Left During 2011
Dr. Angelika Dammann (until July 8, 2011) |
|
|
F-90
|
|
|
Supervisory Board |
|
Memberships on supervisory boards and other comparable governing bodies of enterprises, other than subsidiaries of SAP on
December 31, 2011 |
Prof. Dr. h. c. mult. Hasso Plattner2), 4), 5), 7), 8) Chairman |
|
|
|
|
Lars Lamadé1), 2), 4), 8) Deputy Chairman Project Manager Service & Support |
|
|
|
|
Pekka Ala-Pietilä5), 7), 8) Chairman of the Board, Blyk Ltd., London, UK |
|
Board of Directors, Pöyry Plc, Vantaa, Finland Chairman of the Board of Directors, CVON Group Limited, London, UK Board of Directors, CVON
Limited, London, UK Board of Directors, CVON Innovations Limited, London, UK Chairman of the Board of Directors, Blyk Services Oy, Helsinki, Finland Chairman of the Board of
Directors, CVON Innovation Services Oy, Turku, Finland Board of Directors, CVON Future Limited, London, UK
Chairman of the Board of Directors, Blyk (NL) Ltd., London, UK Chairman of the Board of Directors, Blyk (DE) Ltd., London, UK Chairman of the Board of Directors,
Blyk (ES) Ltd., London, UK Chairman of the Board of Directors, Blyk (BE) Ltd., London, UK
Board of Directors, Blyk.nl NV, Amsterdam, the Netherlands Chairman of the Board of Directors, Blyk.be SA, Hoeilaart, Belgium Chairman of the Board of
Directors, Blyk International Ltd., London, UK Board of Directors, HelloSoft Inc., San José, California, United States (until
January 1, 2011) Chairman of the Board of Directors, Solidium Oy, Helsinki, Finland (from March 4, 2011) |
|
|
Thomas
Bamberger1), 3)
Chief Controlling Officer COO |
|
|
|
|
Panagiotis Bissiritsas1), 2), 5), 6) Support Expert |
|
|
|
|
Willi Burbach (until August 7, 2011) Developer |
|
|
|
|
Prof. Dr. Wilhelm Haarmann2), 6), 8) Attorney-at-law, certified public auditor, certified tax advisor Senior Partner HAARMANN
Partnerschaftsgesellschaft, Rechtsanwälte, Steuerberater, Wirtschaftsprüfer, Frankfurt am Main, Germany |
|
|
F-91
|
|
|
Supervisory Board |
|
Memberships on supervisory boards and other comparable governing bodies of enterprises, other than subsidiaries of SAP on
December 31, 2011 |
Peter Koop1),
5) Industry Business Development Expert |
|
|
Christiane Kuntz-Mayr1), 5)
Deputy Chairperson of the Works Council at SAP AG |
|
|
|
|
Bernard
Liautaud5)
General Partner Balderton Capital, London, UK |
|
Board of Directors, Clinical Solutions Holdings Ltd., Basingstoke, Hampshire, UK
Board of Directors, nlyte Software Ltd., London, UK Board of Directors, Talend SA, Suresnes, France Board of Directors, Cap Gemini, Paris,
France Board of Directors, Quickbridge (UK) Ltd., London, UK Board of Directors, SCYTL Secure Electronic Voting SA, Barcelona, Spain Board of Directors, Abiquo
Group Inc., Redwood City, California, United States Board of Directors, Vestiaire de Copines SA, Neuilly-sur-Seine, France (from August 2,
2011) Board of Directors, Dashlane, Inc., New York, New York, United States (from September 9, 2011) |
|
|
Dr. Gerhard Maier1), 2), 3) Development Project Manager |
|
|
|
|
Dr. h. c. Hartmut Mehdorn4), 6)
Chief Executive Officer, Air Berlin PLC, Rickmansworth, UK |
|
Advisory Board, Fiege-Gruppe, Greven, Germany Board of Directors, RZD Russian Railways, Moscow, Russia (from October 27, 2011) |
|
|
Dr. Hans-Bernd Meier (from August 8, 2011) Independent Consultant for SAP Projects |
|
|
|
|
Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h. Joachim Milberg2), 3), 5), 7) Chairman of the Supervisory Board, BMW AG, Munich, Germany |
|
Supervisory Board, Bertelsmann AG, Gütersloh, Germany Supervisory Board, Festo AG, Esslingen, Germany Supervisory Board, ZF Friedrichshafen AG,
Friedrichshafen, Germany (until December 31, 2011) Supervisory Board, Festo AG & Co. KG, Esslingen, Germany (from March 24,
2011) Board of Directors, Deere & Company, Moline, Illinois, United States |
|
|
Dr. Erhard Schipporeit3), 8)
Independent Management Consultant |
|
Supervisory Board, Talanx AG, Hanover, Germany Supervisory Board, Deutsche Börse AG, Frankfurt am Main, Germany Supervisory Board, HDI
V.a.G., Hanover, Germany Supervisory Board, Hannover Rückversicherung AG, Hanover, Germany
Supervisory Board, Fuchs Petrolub AG, Mannheim, Germany Supervisory Board, BDO AG, Hamburg, Germany (from July 7, 2011) Board of Directors, TUI
Travel PLC, London, UK Board of Directors, Fidelity Funds SICAV,
Luxembourg |
F-92
|
|
|
Supervisory Board |
|
Memberships on supervisory boards and other comparable governing bodies of enterprises, other than subsidiaries of SAP on
December 31, 2011 |
Stefan
Schulz1), 4), 5), 6), 8)
Development Project Manager |
|
|
|
|
Prof. Dr.-Ing. Dr.-Ing. E. h. Klaus Wucherer5)
Managing Director of Dr. Klaus Wucherer Innovations- und Technologieberatung GmbH, Erlangen, Germany |
|
Supervisory Board, Heitech AG, Erlangen, Germany Supervisory Board, Dürr AG, Bietigheim-Bissingen, Germany Supervisory Board, Infineon
Technologies AG, Munich, Germany (until February 17, 2011) Supervisory Board, LEONI AG, Nuremberg, Germany |
Information as at December 31, 2011
1) |
Elected by the employees |
2) |
Member of the Companys General and Compensation Committee |
3) |
Member of the Companys Audit Committee |
4) |
Member of the Companys Mediation Committee |
5) |
Member of the Companys Technology and Strategy Committee |
6) |
Member of the Companys Finance and Investment Committee |
7) |
Member of the Companys Nomination Committee |
8) |
Member of the Companys Special Committee |
The total compensation of the Executive Board members for the years 2011, 2010, and 2009 was as follows:
Executive Board Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
thousands |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Short-term employee benefits |
|
|
20,175.5 |
|
|
|
13,254.4 |
|
|
|
30,470.4 |
|
Share-based payment |
|
|
4,015.7 |
|
|
|
3,919.5 |
|
|
|
4,412.0 |
|
|
|
Subtotal |
|
|
24,191.2 |
|
|
|
17,173.9 |
|
|
|
34,882.4 |
|
|
|
Post-employment benefits |
|
|
1,546.5 |
|
|
|
1,999.0 |
|
|
|
1,479.0 |
|
thereof defined-benefit |
|
|
696.2 |
|
|
|
797.0 |
|
|
|
1,171.0 |
|
thereof defined-contribution |
|
|
850.3 |
|
|
|
1,202.0 |
|
|
|
308.0 |
|
Termination benefits |
|
|
4,124.9 |
|
|
|
10,947.5 |
|
|
|
2,326.8 |
|
Other long-term benefits |
|
|
4,031.0 |
|
|
|
3,407.0 |
|
|
|
0 |
|
|
|
Total |
|
|
33,893.6 |
|
|
|
33,527.4 |
|
|
|
38,688.2 |
|
The share-based compensation amounts disclosed above are based on the grant date fair
value of the virtual stock options issued to Executive Board members during the year.
Share-Based
Compensation for Executive Board Members
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Number of stock options granted |
|
|
475,227 |
|
|
|
559,926 |
|
|
|
785,060 |
|
Total expense in thousands |
|
|
4,420.3 |
|
|
|
2,987.5 |
|
|
|
2,830.0 |
|
In the table above, the share-based compensation expense is the amount recorded in
profit or loss under IFRS 2 in the respective period.
F-93
The projected benefit obligation (PBO) for pensions to Executive Board members and the
annual pension entitlement of the members of the Executive Board on reaching age 60 based on entitlements from performance-based and salary-linked plans were as follows:
Retirement Pension Plan for Executive Board Members
|
|
|
|
|
|
|
|
|
|
|
|
|
thousands |
|
2011 |
|
|
2010 |
|
|
2009 |
|
PBO December 31 |
|
|
7,290.7 |
|
|
|
7,326.9 |
|
|
|
6,529.9 |
|
Annual pension entitlement |
|
|
437.3 |
|
|
|
466.2 |
|
|
|
466.6 |
|
Subject to the adoption of the dividend resolution by the shareholders at the Annual General Meeting of
Shareholders on May 23, 2012, the total annual compensation of the Supervisory Board members for 2011 is as follows:
Supervisory Board Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
thousands |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Total compensation |
|
|
3,027.4 |
|
|
|
2,875.0 |
|
|
|
1,842.1 |
|
thereof fixed compensation |
|
|
874.1 |
|
|
|
870.0 |
|
|
|
650.0 |
|
thereof committee remuneration |
|
|
465.0 |
|
|
|
325.0 |
|
|
|
92.1 |
|
thereof variable compensation |
|
|
1,688.3 |
|
|
|
1,680.0 |
|
|
|
1,100.0 |
|
The Supervisory Board members do not receive any share-based compensation for their
services. As far as members who are employee representatives on the Supervisory Board receive share-based compensation such compensation is for their services as employees only and is unrelated to their status as members of the Supervisory Board.
The total compensation of all Supervisory Board members in 2011 for work for SAP
excluding compensation relating to the office of Supervisory Board member was 1,688.3 thousands (2010: 1,028.0 thousands; 2009: 1,095.1 thousands).
During fiscal year
2011, payments to former Executive Board members were as follows:
Payments to Former Executive Board Members
|
|
|
|
|
|
|
|
|
|
|
|
|
thousands |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Pension benefits |
|
|
1,346.0 |
|
|
|
1,290.0 |
|
|
|
764.0 |
|
PBO |
|
|
25,267.0 |
|
|
|
24,878.0 |
|
|
|
15,777.0 |
|
SAP did not grant any compensation advance or credit to, or enter into any commitment for
the benefit of, any member of
the Executive Board or Supervisory Board in 2011, 2010, or 2009.
On December 31,
2011, the shareholdings of SAPs board members were as follows:
Shareholdings of Executive and Supervisory Board
Members
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of SAP shares |
|
2011 |
|
|
2010 |
|
|
2009 |
|
Executive Board |
|
|
20,560 |
|
|
|
13,747 |
|
|
|
15,336 |
|
Supervisory Board |
|
|
121,524,139 |
|
|
|
122,156,130 |
|
|
|
127,193,136 |
|
F-94
Detailed information on the different elements of the compensation as well as on the
number of shares owned by members of the Executive Board and the Supervisory Board are disclosed in the Compensation Report which is part of our Management Report and of our Annual Report on Form 20-F, both of which are available on SAPs Web
site.
(31) |
RELATED PARTY TRANSACTIONS |
Certain Executive Board and Supervisory Board members of SAP AG currently hold, or held within the last year,
positions of significant responsibility with other entities, as presented in Note (30). We have relationships with certain of these entities in the ordinary course of business, whereby we buy and sell a wide variety of products and services at
prices believed to be consistent with those negotiated at arms length between unrelated parties.
After his move from
SAPs Executive Board to SAPs Supervisory Board in May 2003, Hasso Plattner entered into a contract with SAP AG under which he provides consulting services for SAP. The contract provides for the reimbursement of out-of-pocket expenses
only, which were immaterial to SAP in all periods presented.
Hasso Plattner is the sole proprietor of H.P. Beteiligungs
GmbH, which itself holds 90% of Bramasol, Inc., Palo Alto, California, United
States. Bramasol is an SAP partner with which we generated revenue which was immaterial to SAP in all periods presented. The amounts charged to SAP for the services of Bramasol were immaterial to
SAP in all periods presented.
In 2011, SAP purchased land from Campus am Jungfernsee GmbH & Co. KG, a company that
is wholly owned by Hasso Plattner. The purchase price agreed is 2.6 million to be paid in 2012.
SAP supports the
family & kids @ work gemeinnützige UG organization (family & kids @ work). Family & kids @ work looks after children whose parents work for SAP and other employers in the vicinity of our St. Leon-Rot
facility in Germany. Christiane Kuntz-Mayr, who is a member of the SAP Supervisory Board, is engaged by family & kids @ work as a manager. In 2011, SAP supported family & kids @ work with a total of 2.3 million in the
form of a one-time payment, a loan, and an annual fee.
Wilhelm Haarmann practices as a partner of the law firm HAARMANN
Partnerschaftsgesellschaft in Frankfurt am Main, Germany. The amounts charged to SAP for the services of HAARMANN Partnerschaftsgesellschaft were immaterial to SAP in all periods presented.
Please refer to Note (30) for disclosures of the compensation of our Executive Board and Supervisory Board members.
F-95
(32) |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
At SAP AGs Annual General Meeting of Shareholders held on May 25, 2011, SAPs shareholders mandated
KPMG AG Wirtschaftsprüfungsgesellschaft to serve as SAP AGs independent auditor for 2011. KPMG AG Wirtschaftsprüfungsgesellschaft and other firms in the global KPMG network charged the following fees to SAP for audit and other
professional services related to 2011 and the previous years:
Fees for Audit and Other Professional Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
millions |
|
KPMG AG (Germany) |
|
|
Foreign KPMG Companies |
|
|
Total |
|
|
KPMG AG (Germany) |
|
|
Foreign KPMG Companies |
|
|
Total |
|
|
KPMG AG (Germany) |
|
|
Foreign KPMG Companies |
|
|
Total |
|
Audit fees |
|
|
2 |
|
|
|
7 |
|
|
|
9 |
|
|
|
2 |
|
|
|
8 |
|
|
|
10 |
|
|
|
2 |
|
|
|
6 |
|
|
|
8 |
|
Audit-related fees |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Tax fees |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
All other fees |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
2 |
|
|
|
7 |
|
|
|
9 |
|
|
|
2 |
|
|
|
8 |
|
|
|
10 |
|
|
|
2 |
|
|
|
6 |
|
|
|
8 |
|
Audit fees are the aggregate fees charged by KPMG for the audit of our Consolidated
Financial Statements as well as audits of statutory financial statements of SAP AG and its subsidiaries. Audit-related fees are fees charged by KPMG for assurance and related services that are reasonably related to the performance of the audit or
review of our financial statements and are not reported under audit fees. Tax fees are fees for professional services rendered by KPMG for tax advice on transfer pricing, restructuring, and tax compliance on current, past or contemplated
transactions. The all other fees category includes other support services, such as training and advisory services on issues unrelated to accounting and taxes.
Business Combinations
On February 21, 2012, SAP acquired SuccessFactors. Please see Note (4) for details.
In connection with the acquisition of SuccessFactors. we used the syndicated term loan facility to partially finance the purchase price. For more information, see Note (26).
New Share-Based Compensation Plans
In January 2012, our Supervisory Board implemented a new share-based payment plan (the LTI Plan 2015) for Executive Board members.
The Plan is designed to award members restricted share units (RSUs) each year from 2012 through 2015, with a budget of RSUs
already awarded for each year at the beginning of the Plan. The number of RSUs that actually vest with the member after each year depends on our performance against objectives, defined at the beginning of the Plan, in terms of non-IFRS total revenue
and non-IFRS operating profit. These objectives are derived from our Company strategy for the years through 2015. Each year, if SAP outperforms or underachieves against the objectives, the number of RSUs awarded is adjusted up or down to an actual
number in the range between 80% and 150% of the initial target number. If the actual level of target achievement for a given year is below 80%, none of the initially allocated RSUs for that year vests. Each RSU that does vest entitles the
beneficiary Executive Board member to a payout corresponding to the SAP share price after the end of a three-year holding period. For more information, see the Compensation Report section.
F-96
Also in January 2012, the Executive Board announced a new share-based payment plan for
employees. The plan for employees, like the LTI Plan 2015 for Executive Board members, is designed to award restricted share units (RSUs). The number of RSUs that actually vest after the end of a year depends on the same objectives as are defined
for the LTI Plan 2015 for Executive Board members. The Executive Board decided in December 2011 on the size of the 2012 tranche.
The total budget so far allocated for the LTI Plan 2015 and the employee plan is
179 million. The eventual financial effect cannot be estimated as it will depend on the number of vested RSUs that actually pay out and on the SAP share price, and thus the final amount paid may be above or below the budgeted amounts. All of
the expense will be recorded in the period 2012 through 2015, most of it in 2012.
F-97
(34) |
SUBSIDIARIES, ASSOCIATES, AND OTHER EQUITY INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at December 31, 2011 |
|
Ownership |
|
|
Total Revenue
in 20111) |
|
|
Profit/Loss (-) after Tax
for 20111) |
|
|
Total Equity as at 12/31/20111) |
|
|
Number of Employees as at 12/31/20112) |
|
Name and Location of Company |
|
% |
|
|
(000) |
|
|
(000) |
|
|
(000) |
|
|
|
|
I. Fully Consolidated Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GERMANY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crossgate AG, Munich3) |
|
|
100.0 |
|
|
|
3,784 |
|
|
|
2,281 |
|
|
|
119,615 |
|
|
|
120 |
|
Crossgate Technologies AG, GöttingenRosdorf3),4) |
|
|
100.0 |
|
|
|
1,310 |
|
|
|
899 |
|
|
|
797 |
|
|
|
77 |
|
OutlookSoft Deutschland GmbH, Walldorf4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
1 |
|
|
|
1 |
|
|
|
0 |
|
Right Hemisphere GmbH, Munich3),4) |
|
|
100.0 |
|
|
|
66 |
|
|
|
3 |
|
|
|
36 |
|
|
|
1 |
|
SAF Germany GmbH, Konstanz4) |
|
|
100.0 |
|
|
|
582 |
|
|
|
27 |
|
|
|
387 |
|
|
|
0 |
|
SAP Beteiligungs GmbH, Walldorf |
|
|
100.0 |
|
|
|
3 |
|
|
|
2 |
|
|
|
49 |
|
|
|
0 |
|
SAP Deutschland AG & Co. KG, Walldorf8)9) |
|
|
100.0 |
|
|
|
2,759,982 |
|
|
|
606,243 |
|
|
|
1,285,917 |
|
|
|
4,723 |
|
SAP Dritte Beteiligungs- und Vermögensverwaltung GmbH, Walldorf4),5),8) |
|
|
100.0 |
|
|
|
0 |
|
|
|
61,197 |
|
|
|
553,154 |
|
|
|
0 |
|
SAP Erste Beteiligungs- und Vermögensverwaltung GmbH, Walldorf5),8) |
|
|
100.0 |
|
|
|
0 |
|
|
|
23,158 |
|
|
|
804,545 |
|
|
|
0 |
|
SAP Foreign Holdings GmbH, Walldorf |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
61 |
|
|
|
0 |
|
SAP Fünfte Beteiligungs- und Vermögensverwaltung GmbH,
Walldorf4),8) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,318,309 |
|
|
|
0 |
|
SAP Hosting Beteiligungs GmbH, St. Leon-Rot |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
26 |
|
|
|
0 |
|
SAP Portals Europe GmbH, Walldorf4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
644 |
|
|
|
124,115 |
|
|
|
0 |
|
SAP Portals Holding Beteiligungs GmbH, Walldorf4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
30 |
|
|
|
928,937 |
|
|
|
0 |
|
SAP Projektverwaltungs- und Beteiligungs GmbH, Walldorf4),5),8) |
|
|
100.0 |
|
|
|
0 |
|
|
|
32,248 |
|
|
|
323,902 |
|
|
|
0 |
|
SAP Puerto Rico GmbH, Walldorf |
|
|
100.0 |
|
|
|
27,447 |
|
|
|
2,991 |
|
|
|
2,366 |
|
|
|
34 |
|
SAP Retail Solutions Beteiligungsgesellschaft mbH, Walldorf |
|
|
100.0 |
|
|
|
0 |
|
|
|
679 |
|
|
|
13,822 |
|
|
|
0 |
|
SAP Sechste Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf3),8) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
25 |
|
|
|
0 |
|
SAP Vierte Beteiligungs- und Vermögensverwaltung GmbH, Walldorf |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
25 |
|
|
|
0 |
|
SAP Zweite Beteiligungs- und Vermögensverwaltung GmbH, Walldorf4).5),8) |
|
|
100.0 |
|
|
|
0 |
|
|
|
80,695 |
|
|
|
164,750 |
|
|
|
0 |
|
Sybase Germany GmbH, Düsseldorf4) |
|
|
100.0 |
|
|
|
34,226 |
|
|
|
1,854 |
|
|
|
1,119 |
|
|
|
156 |
|
TechniData BCS GmbH, Siegen |
|
|
100.0 |
|
|
|
4,162 |
|
|
|
86 |
|
|
|
831 |
|
|
|
31 |
|
TechniData GmbH, Markdorf |
|
|
100.0 |
|
|
|
503 |
|
|
|
17,005 |
|
|
|
80,013 |
|
|
|
0 |
|
F-98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at December 31, 2011 |
|
Ownership |
|
|
Total Revenue
in 20111) |
|
|
Profit/ Loss (-) after Tax
for 20111) |
|
|
Total Equity as at
12/31/20111) |
|
|
Number of Employees as at 12/31/20112) |
|
Name and Location of Company |
|
% |
|
|
(000) |
|
|
(000) |
|
|
(000) |
|
|
|
|
REST OF EUROPE, MIDDLE EAST, AFRICA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ambin Properties (Proprietary) Limited, Johannesburg, South Africa4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
243 |
|
|
|
233 |
|
|
|
0 |
|
Armstrong Laing Limited, London, United Kingdom4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
1 |
|
|
|
3,065 |
|
|
|
0 |
|
Business Objects (UK) Limited, London, United Kingdom4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
2,368 |
|
|
|
30,535 |
|
|
|
0 |
|
Business Objects Holding B.V., s-Hertogenbosch, the Netherlands4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
184 |
|
|
|
4,208 |
|
|
|
0 |
|
Business Objects Software Limited, Dublin, Ireland |
|
|
100.0 |
|
|
|
752,508 |
|
|
|
276,843 |
|
|
|
3,017,120 |
|
|
|
224 |
|
Cartesis UK Limited, London, United Kingdom4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
30 |
|
|
|
1,119 |
|
|
|
0 |
|
Christie Partners Holding CV, Rotterdam, the Netherlands4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
1 |
|
|
|
21,824 |
|
|
|
0 |
|
Crossgate Italia S.p.A., Milan, Italy3),4) |
|
|
100.0 |
|
|
|
364 |
|
|
|
60 |
|
|
|
594 |
|
|
|
13 |
|
Crossgate S.a.r.l., Paris, France3),4) |
|
|
100.0 |
|
|
|
251 |
|
|
|
378 |
|
|
|
3,778 |
|
|
|
3 |
|
Crossgate UK Ltd., Slough, United Kingdom3),4) |
|
|
100.0 |
|
|
|
184 |
|
|
|
278 |
|
|
|
5,245 |
|
|
|
6 |
|
Crystal Decisions (Ireland) Limited, Dublin, Ireland4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
85 |
|
|
|
44,527 |
|
|
|
0 |
|
Crystal Decisions France S.A.S., Levallois-Perret, France4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
5,497 |
|
|
|
6,655 |
|
|
|
0 |
|
Crystal Decisions Holding Limited, Dublin, Ireland4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
152 |
|
|
|
77,708 |
|
|
|
0 |
|
Crystal Decisions UK Limited, London, United Kingdom4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
12 |
|
|
|
2,202 |
|
|
|
0 |
|
Edgewing Limited, London, United Kingdom4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
17 |
|
|
|
0 |
|
Joe D Partners CV, Utrecht, the Netherlands4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
16,229 |
|
|
|
621,539 |
|
|
|
0 |
|
Limited Liability Company SAP CIS, Moscow, Russia |
|
|
100.0 |
|
|
|
349,593 |
|
|
|
31,405 |
|
|
|
109,845 |
|
|
|
619 |
|
Limited Liability Company SAP Kazakhstan, Almaty, Kazakhstan |
|
|
100.0 |
|
|
|
33,086 |
|
|
|
3,955 |
|
|
|
5,567 |
|
|
|
15 |
|
Limited Liability Company SAP Ukraine, Kiev, Ukraine |
|
|
100.0 |
|
|
|
16,599 |
|
|
|
923 |
|
|
|
2,551 |
|
|
|
93 |
|
Merlin Systems Oy, Espoo, Finland4) |
|
|
100.0 |
|
|
|
9,463 |
|
|
|
692 |
|
|
|
2,569 |
|
|
|
29 |
|
S.A.P. Nederland B.V., s-Hertogenbosch, the Netherlands |
|
|
100.0 |
|
|
|
376,155 |
|
|
|
47,926 |
|
|
|
380,050 |
|
|
|
398 |
|
F-99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at December 31, 2011 |
|
Ownership |
|
|
Total Revenue
in 20111) |
|
|
Profit/ Loss (-) after
Tax for 20111) |
|
|
Total Equity as at
12/31/20111) |
|
|
Number of Employees as at 12/31/20112) |
|
Name and Location of Company |
|
% |
|
|
(000) |
|
|
(000) |
|
|
(000) |
|
|
|
|
SAF Simulation, Analysis and Forecasting Slovakia s.r.o., Bratislava, Slovakia4) |
|
|
100.0 |
|
|
|
1,311 |
|
|
|
103 |
|
|
|
272 |
|
|
|
23 |
|
SAPNOVABASE, A.C.E., Porto Salvo, Portugal4) |
|
|
66.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
SAP (Schweiz) AG, Biel, Switzerland |
|
|
100.0 |
|
|
|
576,669 |
|
|
|
89,183 |
|
|
|
168,840 |
|
|
|
600 |
|
SAP (UK) Limited, Feltham, United Kingdom |
|
|
100.0 |
|
|
|
673,825 |
|
|
|
50,362 |
|
|
|
71,201 |
|
|
|
1,083 |
|
SAP BelgiumSystems Applications and Products NV/SA, Brussels, Belgium4) |
|
|
100.0 |
|
|
|
177,627 |
|
|
|
12,751 |
|
|
|
110,734 |
|
|
|
235 |
|
SAP BULGARIA EOOD, Sofia, Bulgaria4) |
|
|
100.0 |
|
|
|
2,636 |
|
|
|
142 |
|
|
|
653 |
|
|
|
10 |
|
SAP Business Services Center Europe, s.r.o., Prague, Czech Republic |
|
|
100.0 |
|
|
|
21,750 |
|
|
|
772 |
|
|
|
7,028 |
|
|
|
316 |
|
SAP Commercial Services Ltd., Valletta, Malta |
|
|
100.0 |
|
|
|
0 |
|
|
|
2 |
|
|
|
12 |
|
|
|
0 |
|
SAP ČR, spol. s r.o., Prague, Czech Republic |
|
|
100.0 |
|
|
|
85,560 |
|
|
|
9,276 |
|
|
|
29,971 |
|
|
|
237 |
|
SAP CYPRUS Ltd, Nicosia, Cyprus4) |
|
|
100.0 |
|
|
|
2,731 |
|
|
|
137 |
|
|
|
1,961 |
|
|
|
2 |
|
SAP d.o.o., Zagreb, Croatia |
|
|
100.0 |
|
|
|
6,413 |
|
|
|
469 |
|
|
|
883 |
|
|
|
13 |
|
SAP Danmark A/S, Copenhagen, Denmark |
|
|
100.0 |
|
|
|
147,497 |
|
|
|
16,985 |
|
|
|
31,776 |
|
|
|
158 |
|
SAP Egypt LLC, Cairo, Egypt |
|
|
100.0 |
|
|
|
4,633 |
|
|
|
2,713 |
|
|
|
4,622 |
|
|
|
35 |
|
SAP EMEA Inside Sales S.L., Barcelona, Spain |
|
|
100.0 |
|
|
|
16,399 |
|
|
|
525 |
|
|
|
2,178 |
|
|
|
124 |
|
SAP EspañaSistemas, Aplicaciones y Productos en la Informática, S.A., Madrid, Spain4) |
|
|
100.0 |
|
|
|
233,879 |
|
|
|
22,918 |
|
|
|
200,433 |
|
|
|
356 |
|
SAP Estonia OÜ, Tallinn, Estonia |
|
|
100.0 |
|
|
|
1,507 |
|
|
|
142 |
|
|
|
126 |
|
|
|
1 |
|
SAP Finland Oy, Espoo, Finland |
|
|
100.0 |
|
|
|
100,698 |
|
|
|
5,154 |
|
|
|
70,063 |
|
|
|
106 |
|
SAP France Holding, Paris, France |
|
|
100.0 |
|
|
|
1,382 |
|
|
|
89,758 |
|
|
|
4,969,849 |
|
|
|
4 |
|
SAP France, Paris, France4) |
|
|
100.0 |
|
|
|
743,215 |
|
|
|
189,451 |
|
|
|
1,602,884 |
|
|
|
1,430 |
|
SAP HELLAS S.A.SYSTEMS, APPLICATIONS AND PRODUCTS IN DATA PROCESSING, Athens, Greece |
|
|
100.0 |
|
|
|
28,669 |
|
|
|
1,620 |
|
|
|
9,233 |
|
|
|
53 |
|
SAP Hungary Rendszerek, Alkalmazások és Termékek az Adatfeldolgozásban Informatikai Kft., Budapest,
Hungary |
|
|
100.0 |
|
|
|
43,825 |
|
|
|
91 |
|
|
|
15,693 |
|
|
|
404 |
|
SAP Ireland Limited, Dublin, Ireland |
|
|
100.0 |
|
|
|
3,237 |
|
|
|
355 |
|
|
|
825 |
|
|
|
0 |
|
F-100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at December 31, 2011 |
|
Ownership |
|
|
Total Revenue
in 20111) |
|
|
Profit/ Loss (-) after Tax
for 20111) |
|
|
Total Equity as at
12/31/20111) |
|
|
Number of Employees as at 12/31/20112) |
|
Name and Location of Company |
|
% |
|
|
(000) |
|
|
(000) |
|
|
(000) |
|
|
|
|
SAP Ireland US-Financial Services Ltd., Dublin, Ireland4) |
|
|
100.0 |
|
|
|
255 |
|
|
|
165,948 |
|
|
|
2,537,691 |
|
|
|
3 |
|
SAP Israel Ltd., Raanana, Israel |
|
|
100.0 |
|
|
|
21,717 |
|
|
|
2,636 |
|
|
|
706 |
|
|
|
56 |
|
SAP Italia Sistemi Applicazioni Prodotti in Data Processing S.p.A., Milan, Italy4) |
|
|
100.0 |
|
|
|
328,025 |
|
|
|
25,211 |
|
|
|
267,781 |
|
|
|
508 |
|
SAP Labs Bulgaria EOOD, Sofia, Bulgaria |
|
|
100.0 |
|
|
|
21,310 |
|
|
|
1,040 |
|
|
|
3,115 |
|
|
|
457 |
|
SAP Labs Finland Oy, Espoo, Finland4) |
|
|
100.0 |
|
|
|
6,617 |
|
|
|
213 |
|
|
|
45,993 |
|
|
|
45 |
|
SAP LABS France S.A.S., Mougins, France |
|
|
100.0 |
|
|
|
41,258 |
|
|
|
1,947 |
|
|
|
19,731 |
|
|
|
277 |
|
SAP Labs Israel Ltd., Raanana, Israel |
|
|
100.0 |
|
|
|
40,131 |
|
|
|
1,276 |
|
|
|
13,238 |
|
|
|
291 |
|
SAP Latvia SIA, Riga, Latvia |
|
|
100.0 |
|
|
|
1,979 |
|
|
|
34 |
|
|
|
482 |
|
|
|
1 |
|
SAP Malta Investments Ltd., Valletta, Malta |
|
|
100.0 |
|
|
|
0 |
|
|
|
2 |
|
|
|
12 |
|
|
|
0 |
|
SAP Middle East and North Africa L.L.C., Dubai, United Arab Emirates |
|
|
49.0 |
|
|
|
76,783 |
|
|
|
16,460 |
|
|
|
4,596 |
|
|
|
198 |
|
SAP Nederland Holding B.V., s-Hertogenbosch, the Netherlands4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
2,548 |
|
|
|
521,529 |
|
|
|
0 |
|
SAP Norge AS, Lysaker, Norway |
|
|
100.0 |
|
|
|
74,740 |
|
|
|
6,172 |
|
|
|
23,724 |
|
|
|
83 |
|
SAP Österreich GmbH, Vienna, Austria |
|
|
100.0 |
|
|
|
174,889 |
|
|
|
20,005 |
|
|
|
33,508 |
|
|
|
339 |
|
SAP Polska Sp. z o.o., Warsaw, Poland |
|
|
100.0 |
|
|
|
69,864 |
|
|
|
7,602 |
|
|
|
33,206 |
|
|
|
119 |
|
SAP Portals Israel Ltd., Raanana, Israel4) |
|
|
100.0 |
|
|
|
61,924 |
|
|
|
19,502 |
|
|
|
35,182 |
|
|
|
311 |
|
SAP PortugalSistemas, Aplicações e Produtos Informáticos, Sociedade Unipessoal, Lda., Porto Salvo,
Portugal |
|
|
100.0 |
|
|
|
54,549 |
|
|
|
3,235 |
|
|
|
11,647 |
|
|
|
96 |
|
SAP Public Services Hungary Kft., Budapest, Hungary |
|
|
100.0 |
|
|
|
1,314 |
|
|
|
108 |
|
|
|
431 |
|
|
|
5 |
|
SAP Romania SRL, Bucharest, Romania |
|
|
100.0 |
|
|
|
16,153 |
|
|
|
2,235 |
|
|
|
7,588 |
|
|
|
100 |
|
SAP Saudi Arabia Software Services Limited, Riyadh, Kingdom of Saudi Arabia |
|
|
100.0 |
|
|
|
23,828 |
|
|
|
2,069 |
|
|
|
33,470 |
|
|
|
26 |
|
SAP Saudi Arabia Software Trading Limited, Riyadh, Kingdom of Saudi Arabia |
|
|
51.0 |
|
|
|
18,829 |
|
|
|
5,469 |
|
|
|
2,349 |
|
|
|
36 |
|
SAP Service and Support Centre (Ireland) Limited, Dublin, Ireland |
|
|
100.0 |
|
|
|
63,779 |
|
|
|
1,687 |
|
|
|
29,372 |
|
|
|
715 |
|
F-101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at December 31, 2011 |
|
Ownership |
|
|
Total Revenue
in 20111) |
|
|
Profit/ Loss (-) after
Tax for 20111) |
|
|
Total Equity as at
12/31/20111) |
|
|
Number of Employees as at 12/31/20112) |
|
Name and Location of Company |
|
% |
|
|
(000) |
|
|
(000) |
|
|
(000) |
|
|
|
|
SAP sistemi, aplikacije in produkti za obdelavo podatkov d.o.o., Ljubljana, Slovenia |
|
|
100.0 |
|
|
|
16,352 |
|
|
|
749 |
|
|
|
7,332 |
|
|
|
24 |
|
SAP Slovensko s.r.o., Bratislava, Slovakia |
|
|
100.0 |
|
|
|
35,364 |
|
|
|
2,631 |
|
|
|
20,754 |
|
|
|
160 |
|
SAP Svenska Aktiebolag, Stockholm, Sweden |
|
|
100.0 |
|
|
|
140,440 |
|
|
|
12,119 |
|
|
|
23,763 |
|
|
|
119 |
|
SAP Türkiye Yazilim Üretim ve Ticaret A.S., Istanbul, Turkey |
|
|
100.0 |
|
|
|
51,901 |
|
|
|
1,720 |
|
|
|
12,499 |
|
|
|
120 |
|
SAP UAB (Lithuania), Vilnius, Lithuania |
|
|
100.0 |
|
|
|
3,199 |
|
|
|
104 |
|
|
|
233 |
|
|
|
3 |
|
SAPV (Mauritius), Ebene, Mauritius3),7) |
|
|
0 |
|
|
|
0 |
|
|
|
36 |
|
|
|
13,314 |
|
|
|
0 |
|
SAP West Balkans d.o.o., Belgrade, Serbia |
|
|
100.0 |
|
|
|
12,068 |
|
|
|
2,001 |
|
|
|
4,196 |
|
|
|
27 |
|
Sybase (Schweiz) GmbH, Zurich, Switzerland4) |
|
|
100.0 |
|
|
|
1,526 |
|
|
|
72 |
|
|
|
1,301 |
|
|
|
6 |
|
Sybase (UK) Limited, Maidenhead, United Kingdom4) |
|
|
100.0 |
|
|
|
39,010 |
|
|
|
7,253 |
|
|
|
6,440 |
|
|
|
200 |
|
Sybase 365 Limited, Maidenhead, United Kingdom4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Sybase ApS, Copenhagen, Denmark4) |
|
|
100.0 |
|
|
|
336 |
|
|
|
19 |
|
|
|
456 |
|
|
|
2 |
|
Sybase Europe B.V., Utrecht, the Netherlands4) |
|
|
100.0 |
|
|
|
177,866 |
|
|
|
4,219 |
|
|
|
23,355 |
|
|
|
45 |
|
Sybase France S.a.r.l., Paris, France4) |
|
|
100.0 |
|
|
|
46,298 |
|
|
|
12,006 |
|
|
|
1,653 |
|
|
|
114 |
|
Sybase Iberia S.L., Madrid, Spain4) |
|
|
100.0 |
|
|
|
13,089 |
|
|
|
22 |
|
|
|
21,745 |
|
|
|
33 |
|
Sybase Italia SRL, Milan, Italy4) |
|
|
100.0 |
|
|
|
7,968 |
|
|
|
303 |
|
|
|
150 |
|
|
|
32 |
|
Sybase Luxembourg S.a.r.l, Luxembourg4) |
|
|
100.0 |
|
|
|
213 |
|
|
|
0 |
|
|
|
25 |
|
|
|
0 |
|
Sybase Nederland B.V., Utrecht, the Netherlands4) |
|
|
100.0 |
|
|
|
1,926 |
|
|
|
157 |
|
|
|
1,535 |
|
|
|
12 |
|
Sybase Norge AS, Oslo, Norway4) |
|
|
100.0 |
|
|
|
613 |
|
|
|
71 |
|
|
|
895 |
|
|
|
2 |
|
Sybase Software BVBA/SPRL, Zaventem, Belgium4) |
|
|
100.0 |
|
|
|
2,833 |
|
|
|
89 |
|
|
|
947 |
|
|
|
16 |
|
Sybase South Africa (Proprietary) Limited, Johannesburg, South Africa4) |
|
|
100.0 |
|
|
|
21,609 |
|
|
|
1,424 |
|
|
|
3,109 |
|
|
|
131 |
|
Sybase Sverige AB, Kista, Sweden4) |
|
|
100.0 |
|
|
|
5,546 |
|
|
|
174 |
|
|
|
1,726 |
|
|
|
22 |
|
Systems Applications Products Africa Region (Proprietary) Limited, Johannesburg, South Africa4) |
|
|
100.0 |
|
|
|
31,680 |
|
|
|
6,221 |
|
|
|
20,611 |
|
|
|
15 |
|
Systems Applications Products Africa (Proprietary) Limited, Johannesburg, South Africa |
|
|
100.0 |
|
|
|
0 |
|
|
|
4,098 |
|
|
|
85,410 |
|
|
|
0 |
|
F-102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at December 31, 2011 |
|
Ownership |
|
|
Total Revenue
in 20111) |
|
|
Profit/ Loss (-) after
Tax for 20111) |
|
|
Total Equity as at
12/31/20111) |
|
|
Number of Employees as at 12/31/20112) |
|
Name and Location of Company |
|
% |
|
|
(000) |
|
|
(000) |
|
|
(000) |
|
|
|
|
Systems Applications Products Nigeria Limited, Abuja, Nigeria4) |
|
|
100.0 |
|
|
|
13,435 |
|
|
|
955 |
|
|
|
2,690 |
|
|
|
34 |
|
Systems Applications Products South Africa (Proprietary) Limited, Johannesburg, South Africa4) |
|
|
89.5 |
|
|
|
191,933 |
|
|
|
7,618 |
|
|
|
33,369 |
|
|
|
317 |
|
TomorrowNow (UK) Limited, Feltham, United Kingdom4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
6 |
|
|
|
22 |
|
|
|
0 |
|
TomorrowNow Nederland B.V., Amsterdam, the Netherlands |
|
|
100.0 |
|
|
|
0 |
|
|
|
67 |
|
|
|
3,275 |
|
|
|
0 |
|
AMERICAS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110405, Inc., Newtown Square, Pennsylvania, USA |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
16,147 |
|
|
|
0 |
|
Business Objects Argentina S.R.L., Buenos Aires, Argentina4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
79 |
|
|
|
0 |
|
Business Objects Option, LLC, Wilmington, Delaware, USA |
|
|
100.0 |
|
|
|
0 |
|
|
|
1,004 |
|
|
|
65,757 |
|
|
|
0 |
|
Clear Standards, Inc., Sterling, Virginia, USA4) |
|
|
100.0 |
|
|
|
1,061 |
|
|
|
-1,189 |
|
|
|
15,251 |
|
|
|
0 |
|
Crossgate Inc., Atlanta, USA3),4) |
|
|
100.0 |
|
|
|
313 |
|
|
|
-921 |
|
|
|
-7,335 |
|
|
|
24 |
|
Extended Systems, Inc., Boise, Idaho, USA4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
-41 |
|
|
|
17,557 |
|
|
|
0 |
|
Financial Fusion, Inc., Concord, Massachusetts, USA4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Frictionless Commerce, Inc., Newtown Square, Pennsylvania, USA4) |
|
|
100.0 |
|
|
|
926 |
|
|
|
-671 |
|
|
|
36,524 |
|
|
|
0 |
|
iAnywhere Solutions Canada Ltd., Waterloo, Canada4) |
|
|
100.0 |
|
|
|
1,367 |
|
|
|
1,313 |
|
|
|
3,385 |
|
|
|
142 |
|
iAnywhere Solutions Inc., Dublin, California, USA4) |
|
|
100.0 |
|
|
|
30,102 |
|
|
|
66,396 |
|
|
|
177,422 |
|
|
|
67 |
|
INEA Corporation USA, Wilmington, Delaware, USA4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
333 |
|
|
|
0 |
|
Inxight Federal Systems Group, Inc., Wilmington, Delaware, USA4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
-1 |
|
|
|
99 |
|
|
|
0 |
|
Khimetrics Canada, Inc., Montreal, Canada4) |
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
Liberia LLC, Wilmington, Delaware, USA4) |
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
Maxware, Inc., Newtown Square, Pennsylvania, USA4) |
|
|
100.0 |
|
|
|
190 |
|
|
|
45 |
|
|
|
-377 |
|
|
|
0 |
|
Right Hemisphere Inc., San Ramon, California, USA3),4) |
|
|
100.0 |
|
|
|
756 |
|
|
|
-1,605 |
|
|
|
48,508 |
|
|
|
28 |
|
SAP America, Inc., Newtown Square, Pennsylvania, USA |
|
|
100.0 |
|
|
|
3,186,980 |
|
|
|
257,874 |
|
|
|
1,520,738 |
|
|
|
5,740 |
|
F-103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at December 31, 2011 |
|
Ownership |
|
|
Total Revenue
in 20111) |
|
|
Profit/ Loss (-) after
Tax for 20111) |
|
|
Total Equity as at
12/31/20111) |
|
|
Number of Employees as at 12/31/20112) |
|
Name and Location of Company |
|
% |
|
|
(000) |
|
|
(000) |
|
|
(000) |
|
|
|
|
SAP Andina y del Caribe C.A., Caracas, Venezuela |
|
|
100.0 |
|
|
|
24,069 |
|
|
|
2,085 |
|
|
|
2,779 |
|
|
|
36 |
|
SAP ARGENTINA S.A., Buenos Aires, Argentina |
|
|
100.0 |
|
|
|
156,386 |
|
|
|
10,194 |
|
|
|
29,911 |
|
|
|
573 |
|
SAP Brasil Ltda, São Paulo, Brazil |
|
|
100.0 |
|
|
|
446,070 |
|
|
|
519 |
|
|
|
97,702 |
|
|
|
1,275 |
|
SAP Canada Inc., Toronto, Canada |
|
|
100.0 |
|
|
|
674,306 |
|
|
|
47,090 |
|
|
|
451,864 |
|
|
|
2,058 |
|
SAP Colombia S.A.S., Bogota, Colombia |
|
|
100.0 |
|
|
|
65,014 |
|
|
|
-6,671 |
|
|
|
-10,507 |
|
|
|
159 |
|
SAP Costa Rica, S.A., San José, Costa Rica |
|
|
100.0 |
|
|
|
7,409 |
|
|
|
423 |
|
|
|
2,502 |
|
|
|
9 |
|
SAP Financial Inc., Toronto, Canada4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
23,551 |
|
|
|
7,743 |
|
|
|
0 |
|
SAP Global Marketing, Inc., New York, New York, USA |
|
|
100.0 |
|
|
|
238,518 |
|
|
|
3,892 |
|
|
|
22,759 |
|
|
|
480 |
|
SAP Government Support & Services, Inc., Newtown Square, Pennsylvania, USA4) |
|
|
100.0 |
|
|
|
97,000 |
|
|
|
22,037 |
|
|
|
148,490 |
|
|
|
183 |
|
SAP Industries, Inc., Newtown Square, Pennsylvania, USA4) |
|
|
100.0 |
|
|
|
358,574 |
|
|
|
42,453 |
|
|
|
401,089 |
|
|
|
403 |
|
SAP International, Inc., Miami, Florida, USA4) |
|
|
100.0 |
|
|
|
56,008 |
|
|
|
809 |
|
|
|
12,855 |
|
|
|
50 |
|
SAP Investments, Inc., Wilmington, Delaware, USA4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
21,303 |
|
|
|
659,558 |
|
|
|
0 |
|
SAP LABS, LLC, Palo Alto, California, USA4) |
|
|
100.0 |
|
|
|
458,999 |
|
|
|
20,168 |
|
|
|
137,595 |
|
|
|
2,029 |
|
SAP México S.A. de C.V., Mexico City, Mexico |
|
|
100.0 |
|
|
|
223,775 |
|
|
|
-11,504 |
|
|
|
-10,147 |
|
|
|
408 |
|
SAP PERU S.A.C., Lima, Peru |
|
|
100.0 |
|
|
|
24,280 |
|
|
|
209 |
|
|
|
1,333 |
|
|
|
44 |
|
SAP Public Services, Inc., Washington, D.C., USA4) |
|
|
100.0 |
|
|
|
334,786 |
|
|
|
49,020 |
|
|
|
263,747 |
|
|
|
237 |
|
SAP Technologies Inc., Palo Alto, California, USA4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
SAP Ventures Fund I, L.P., Wilmington, Delaware, USA3),7) |
|
|
0 |
|
|
|
0 |
|
|
|
4,455 |
|
|
|
15,481 |
|
|
|
0 |
|
Sybase 365 LLC, Dublin, California, USA4) |
|
|
100.0 |
|
|
|
49,237 |
|
|
|
-6,371 |
|
|
|
92,932 |
|
|
|
128 |
|
Sybase 365 Ltd., Tortola, British Virgin Islands4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
-1,990 |
|
|
|
0 |
|
Sybase Argentina S.A., Buenos Aires, Argentina4) |
|
|
100.0 |
|
|
|
2,251 |
|
|
|
351 |
|
|
|
1,469 |
|
|
|
12 |
|
Sybase Canada Ltd., Waterloo, Canada4) |
|
|
100.0 |
|
|
|
18,579 |
|
|
|
990 |
|
|
|
5,105 |
|
|
|
69 |
|
Sybase de Mexico, S. De R.L. de C.V., Mexico City, Mexico4) |
|
|
100.0 |
|
|
|
5,805 |
|
|
|
-1,586 |
|
|
|
-135 |
|
|
|
27 |
|
Sybase do Brasil Software Ltda., Sâo Paulo, Brazil4) |
|
|
100.0 |
|
|
|
17,328 |
|
|
|
-1,178 |
|
|
|
-316 |
|
|
|
31 |
|
F-104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at December 31, 2011 |
|
Ownership |
|
|
Total Revenue
in 20111) |
|
|
Profit/ Loss (-) after
Tax for 20111) |
|
|
Total Equity as at
12/31/20111) |
|
|
Number of Employees as at 12/31/20112) |
|
Name and Location of Company |
|
% |
|
|
(000) |
|
|
(000) |
|
|
(000) |
|
|
|
|
Sybase Global LLC, Dublin, California, USA4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
7,529 |
|
|
|
0 |
|
Sybase Intl Holdings LLC, Dublin, California, USA4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
12,047 |
|
|
|
0 |
|
Sybase, Inc., Dublin, California, USA4) |
|
|
100.0 |
|
|
|
355,879 |
|
|
|
23,167 |
|
|
|
4,509,013 |
|
|
|
1,225 |
|
TomorrowNow, Inc., Bryan, Texas, USA4) |
|
|
100.0 |
|
|
|
16 |
|
|
|
421,025 |
|
|
|
-192,873 |
|
|
|
3 |
|
ASIA PACIFIC JAPAN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Zhang Zhong Hu Dong Information Technology Co. Ltd., Beijing, China4) |
|
|
100.0 |
|
|
|
1,676 |
|
|
|
254 |
|
|
|
-603 |
|
|
|
6 |
|
Business Objects Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
261 |
|
|
|
0 |
|
Business Objects Software (Shanghai) Co., Ltd., Shanghai, China4) |
|
|
100.0 |
|
|
|
7,444 |
|
|
|
1,715 |
|
|
|
7,102 |
|
|
|
108 |
|
iAnywhere Solutions K.K., Tokyo, Japan4) |
|
|
100.0 |
|
|
|
8,845 |
|
|
|
-162 |
|
|
|
-2,903 |
|
|
|
21 |
|
PT SAP Indonesia, Jakarta, Indonesia |
|
|
100.0 |
|
|
|
44,166 |
|
|
|
5,090 |
|
|
|
13,989 |
|
|
|
49 |
|
PT Sybase 365 Indonesia, Jakarta, Indonesia4) |
|
|
100.0 |
|
|
|
94 |
|
|
|
-6 |
|
|
|
229 |
|
|
|
0 |
|
Right Hemisphere Ltd., Auckland, New Zealand3) |
|
|
100.0 |
|
|
|
547 |
|
|
|
-1,365 |
|
|
|
4,953 |
|
|
|
39 |
|
Ruan Lian Technologies (Beijing) Co. Ltd., Beijing, China4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
-26 |
|
|
|
-1,164 |
|
|
|
1 |
|
SAP (Beijing) Software System Co., Ltd., Beijing, China |
|
|
100.0 |
|
|
|
307,921 |
|
|
|
-10,043 |
|
|
|
26,608 |
|
|
|
2,652 |
|
SAP Asia Pte Limited, Singapore, Singapore |
|
|
100.0 |
|
|
|
259,969 |
|
|
|
31,471 |
|
|
|
58,537 |
|
|
|
676 |
|
SAP Asia (Vietnam) Co. Ltd., Ho Chi Minh City, Vietnam3),4) |
|
|
100.0 |
|
|
|
382 |
|
|
|
27 |
|
|
|
405 |
|
|
|
34 |
|
SAP Australia Pty Limited, Sydney, Australia |
|
|
100.0 |
|
|
|
426,967 |
|
|
|
25,988 |
|
|
|
259,227 |
|
|
|
615 |
|
SAP HONG KONG CO. LIMITED, Hong Kong, China |
|
|
100.0 |
|
|
|
32,187 |
|
|
|
-937 |
|
|
|
1,163 |
|
|
|
50 |
|
SAP INDIA (HOLDING) PTE LTD., Singapore, Singapore |
|
|
100.0 |
|
|
|
0 |
|
|
|
-6 |
|
|
|
300 |
|
|
|
0 |
|
SAP INDIA PRIVATE LIMITED, Bangalore, India |
|
|
100.0 |
|
|
|
343,699 |
|
|
|
38,868 |
|
|
|
185,953 |
|
|
|
1,518 |
|
SAP JAPAN Co., Ltd., Tokyo, Japan |
|
|
100.0 |
|
|
|
639,458 |
|
|
|
48,744 |
|
|
|
528,303 |
|
|
|
1,053 |
|
SAP Korea Limited, Seoul, South Korea |
|
|
100.0 |
|
|
|
118,258 |
|
|
|
11,014 |
|
|
|
27,358 |
|
|
|
215 |
|
SAP Labs India Private Limited, Bangalore, India |
|
|
100.0 |
|
|
|
153,304 |
|
|
|
-4,379 |
|
|
|
3,569 |
|
|
|
4,138 |
|
F-105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at December 31, 2011 |
|
Ownership |
|
|
Total Revenue
in 20111) |
|
|
Profit/ Loss (-) after Tax for 20111) |
|
|
Total Equity as at
12/31/20111) |
|
|
Number of Employees as at 12/31/20112) |
|
Name and Location of Company |
|
% |
|
|
(000) |
|
|
(000) |
|
|
(000) |
|
|
|
|
SAP Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia |
|
|
100.0 |
|
|
|
59,606 |
|
|
|
6,610 |
|
|
|
18,383 |
|
|
|
122 |
|
SAP New Zealand Limited, Auckland, New Zealand |
|
|
100.0 |
|
|
|
42,207 |
|
|
|
4,324 |
|
|
|
33,945 |
|
|
|
42 |
|
SAP PHILIPPINES, INC., Makati, Philippines |
|
|
100.0 |
|
|
|
28,426 |
|
|
|
879 |
|
|
|
9,090 |
|
|
|
38 |
|
SAP R&D Center Korea, Inc., Seoul, South Korea4) |
|
|
100.0 |
|
|
|
9,009 |
|
|
|
347 |
|
|
|
15,944 |
|
|
|
90 |
|
SAP SYSTEMS, APPLICATIONS AND PRODUCTS IN DATA PROCESSING (THAILAND) LTD., Bangkok, Thailand6) |
|
|
49.0 |
|
|
|
45,622 |
|
|
|
2,396 |
|
|
|
35,215 |
|
|
|
50 |
|
SAP TAIWAN CO., LTD., Taipei, Taiwan |
|
|
100.0 |
|
|
|
58,408 |
|
|
|
6,271 |
|
|
|
26,331 |
|
|
|
71 |
|
Sybase (N.Z.) Limited, Wellington, New Zealand4) |
|
|
100.0 |
|
|
|
2,564 |
|
|
|
750 |
|
|
|
4,389 |
|
|
|
5 |
|
Sybase (Singapore) Pte Limited, Singapore 4) |
|
|
100.0 |
|
|
|
9,539 |
|
|
|
-22 |
|
|
|
974 |
|
|
|
168 |
|
Sybase 365 Ltd. (HK), Hong Kong, China4) |
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
Sybase Australia Pty Limited, Sydney, Australia4) |
|
|
100.0 |
|
|
|
15,267 |
|
|
|
2,100 |
|
|
|
8,357 |
|
|
|
35 |
|
Sybase Hong Kong Limited, Hong Kong, China4) |
|
|
100.0 |
|
|
|
8,975 |
|
|
|
-150 |
|
|
|
223 |
|
|
|
69 |
|
Sybase India, Ltd., Mumbai, India4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
161 |
|
|
|
2,675 |
|
|
|
0 |
|
Sybase K.K., Tokyo, Japan4) |
|
|
100.0 |
|
|
|
20,690 |
|
|
|
510 |
|
|
|
1,597 |
|
|
|
66 |
|
Sybase Korea, Ltd, Seoul, South Korea4) |
|
|
100.0 |
|
|
|
9,364 |
|
|
|
326 |
|
|
|
2,877 |
|
|
|
47 |
|
Sybase Philippines Inc., Makati City, Philippines4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
1 |
|
|
|
-11 |
|
|
|
0 |
|
Sybase Software (China) Co. Ltd., Beijing, China4) |
|
|
100.0 |
|
|
|
16,922 |
|
|
|
2,055 |
|
|
|
16,536 |
|
|
|
396 |
|
Sybase Software (India) Private Ltd, Mumbai, India4) |
|
|
100.0 |
|
|
|
3,904 |
|
|
|
257 |
|
|
|
6,741 |
|
|
|
196 |
|
Sybase Software (Malaysia) Sdn. Bhd., Kuala Lumpur, Malaysia4) |
|
|
100.0 |
|
|
|
2,387 |
|
|
|
103 |
|
|
|
1,643 |
|
|
|
3 |
|
Sybase Taiwan Co. Ltd., Taipei, Taiwan4) |
|
|
100.0 |
|
|
|
3,913 |
|
|
|
-430 |
|
|
|
1,019 |
|
|
|
19 |
|
Technidata EHS Solutions Asia Pte Limited, Singapore4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
-51 |
|
|
|
47 |
|
|
|
0 |
|
TomorrowNow Australia Pty Limited, Sydney, Australia4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
6 |
|
|
|
404 |
|
|
|
0 |
|
TomorrowNow Singapore Pte Limited, Singapore, Singapore4) |
|
|
100.0 |
|
|
|
0 |
|
|
|
-10 |
|
|
|
79 |
|
|
|
0 |
|
F-106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as at December 31, 2011 |
|
Ownership |
|
|
Total Revenue
in 20111) |
|
|
Profit/ Loss (-) after Tax
for 20111) |
|
|
Total Equity as at
12/31/20111) |
|
|
Number of Employees as at 12/31/20112) |
|
Name and Location of Company |
|
% |
|
|
(000) |
|
|
(000) |
|
|
(000) |
|
|
|
|
II. INVESTMENTS IN ASSOCIATES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alteryx Inc., Orange, California, USA4) |
|
|
9.20 |
|
|
|
18,338 |
|
|
|
-1,587 |
|
|
|
-4,456 |
|
|
|
132 |
|
ArisGlobal Holdings, LLC, Stamford, Connecticut, USA4) |
|
|
16.00 |
|
|
|
32,837 |
|
|
|
-3,017 |
|
|
|
2,283 |
|
|
|
696 |
|
China DataCom Corporation Limited, Guangzhou, China4) |
|
|
28.30 |
|
|
|
0 |
|
|
|
0 |
|
|
|
40,276 |
|
|
|
0 |
|
Greater Pacific Capital (Cayman), L.P., Grand Cayman, Cayman Islands |
|
|
5.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
Original1 GmbH, Frankfurt am Main, Germany |
|
|
40.00 |
|
|
|
60 |
|
|
|
-4,405 |
|
|
|
3,494 |
|
|
|
17 |
|
Procurement Negócios Eletrônicos S/A, Rio de Janeiro,
Brazil4) |
|
|
17.00 |
|
|
|
19,484 |
|
|
|
1,451 |
|
|
|
15,773 |
|
|
|
0 |
|
TechniData IT-Service GmbH, Markdorf, Germany4) |
|
|
26.00 |
|
|
|
12,300 |
|
|
|
600 |
|
|
|
1,254 |
|
|
|
101 |
|
1) |
These figures are based on our local IFRS financial statements prior to eliminations resulting from consolidation and therefore do not reflect the contribution of these
companies included in the Consolidated Financial Statements. The translation of the equity into group currency is based on period-end closing exchange rates, and on average exchange rates for revenue and net income/loss. |
2) |
As at December 31, 2011, including managing directors, in FTE |
3) |
Consolidated for the first time in 2011 |
4) |
Wholly or majority-owned entity of a subsidiary / investment of a subsidiary |
5) |
Entity with profit and loss transfer agreement |
6) |
The remaining shares are the preference shares without the right to vote. |
7) |
Consolidated in accordance with IAS 27 in conjunction with SIC 12 |
8) |
Pursuant to HGB, section 264 (3) or section 264b, the subsidiaries are exempt from applying certain legal requirements to their statutory stand-alone financial
statements including the requirement to prepare notes to the financial statements and a review of operations, the requirement of independent audit and the requirement of public disclosure. |
9) |
Entity whose personally liable partner is SAP AG |
F-107
|
|
|
as at December 31, 2011 |
|
|
Name and Location of Company |
|
|
III. OTHER EQUITY INVESTMENTS (ownership of 5 percent or more) |
|
|
Aepona Ltd., Belfast, Northern Ireland, United Kingdom |
|
|
Apigee Corporation, Santa Clara, California, USA |
|
|
Apriso Corporation, Long Beach, California, USA |
|
|
Connectiva Systems, Inc., New York, New York, USA |
|
|
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern, Germany |
|
|
EIT ICT Labs GmbH, Berlin, Germany |
|
|
Ignite Technologies, Inc., Frisco, Texas, USA |
|
|
InnovationLab GmbH, Heidelberg, GermanyiTAC Software AG, Dernbach, GermanyiYogi Holdings Pvt. Ltd., Port Louis,
Mauritius |
|
|
Lavante, Inc., San José, California, USA |
|
|
MuleSoft, Inc., San Francisco, California, USA |
|
|
MVP Strategic Partnership Fund GmbH & Co. KG, Grünwald, Germany |
|
|
On Deck Capital, Inc., New York, New York, USA |
|
|
Onventis GmbH, Stuttgart, Germany |
|
|
OpenX Software Limited, London, United Kingdom |
|
|
PayScale Inc., Seattle, Washington, USA |
|
|
Post for Systems, Cairo, Egypt |
|
|
Powersim Corporation, Herndon, Virginia, USA |
|
|
Realize Corporation, Tokyo, Japan |
|
|
Retail Solutions, Inc. (legal name: T3C, Inc.), Mountain View, California, USA |
|
|
Return Path, Inc., New York, New York, USA |
|
|
Smart City Planning, Inc., Tokyo, Japan |
|
|
SupplyOn AG, Hallbergmoos, Germany |
|
|
InnoWerftTechnologie- und Gründerzentrum Walldorf Stiftung GmbH, Walldorf, Germany |
|
|
The SAVO Group Ltd., Chicago, Illinois, USA |
|
|
F-108