WALLDORF, Germany July 27 /PRNewswire-FirstCall/ — SAP AG (NYSE: SAP) today announced its preliminary financial results for the second quarter ended June 30, 2010.

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FINANCIAL HIGHLIGHTS – Second Quarter 2010

Second Quarter 2010(1)

IFRS

Non-IFRS(2)

€ million, unless
otherwise stated

Q2 2010

Q2 2009

% change

Q2 2010

Q2 2009

% change

% change
const. curr.(3)

Software revenue

637

543

17%

637

543

17%

5%

Software and software-related service revenue

2,258

1,953

16%

2,258

1,953

16%

8%

Total revenue

2,894

2,576

12%

2,894

2,576

12%

5%

Total operating expenses

-2,120

-1,935

10%

-2,054

-1,866

10%

4%

– thereof restructuring

-1

-17

-94%

-1

-17

-94%

Operating profit

774

641

21%

840

710

18%

5%

Operating margin (%)

26.7

24.9

1.8pp

29.0

27.6

1.4pp

0.2pp

Profit after tax

491

426

15%

551

478

15%

Basic earnings per share (€)

0.41

0.36

14%

0.46

0.40

15%

(1) All figures are preliminary and unaudited.

(2) Adjustments in the revenue line items are for support revenue that an entity acquired by SAP would have
recognized had it remained a stand-alone entity but that SAP is not permitted to recognize as revenue under
IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items
are for acquisition-related charges and discontinued activities. See Explanations of Non-IFRS Measures in the
appendix for details.

(3) Constant currency revenue and operating profit figures are calculated by translating revenue and operating
profit of the current period using the average exchange rates from the previous year’s respective period
instead of the current period. Constant currency period-over-period changes are calculated by comparing the
current year’s non-IFRS constant currency numbers with the non-IFRS number of the previous year’s
respective period. See Explanations of Non-IFRS Measures in the appendix for details.

Revenues – Second Quarter 2010

* IFRS software and software-related service revenues were euro 2.26 billion (2009: euro 1.95 billion), an increase of 16% (8% at constant currencies).
* IFRS software revenues were euro 637 million (2009: euro 543 million), an increase of 17% (5% at constant currencies).
* IFRS total revenues were euro 2.89 billion (2009: euro 2.58 billion), an increase of 12% (5% at constant currencies).

Income – Second Quarter 2010

* IFRS operating profit was euro 774 million (2009: euro 641 million), an increase of 21%. Non-IFRS operating profit was euro 840 million (2009: euro 710 million), an increase of 18% (5% at constant currencies). In the second quarter of 2009, the IFRS and Non-IFRS operating income was impacted by restructuring charges of euro 17 million resulting from a reduction of positions. In contrast, restructuring charges were not material in the second quarter of 2010.
* IFRS operating margin was 26.7% (2009: 24.9%), an increase of 1.8 percentage points. Non-IFRS operating margin was 29.0% (2009: 27.6%), or 27.8% at constant currencies, an increase of 1.4 percentage points (0.2 percentage points at constant currencies). In contrast to the respective quarter in 2009, the second quarter of 2010 was not materially impacted by restructuring expenses which had, in the second quarter of 2009, negatively impacted the IFRS and Non-IFRS operating margin by 0.7 percentage points. However, severance expenses of euro 11 million (2009: euro 1.3 million) negatively impacted the second quarter 2010 IFRS and Non-IFRS operating margin by 0.4 percentage points (2009: 0.1 percentage points).
* IFRS profit after tax was euro 491 million (2009: euro 426 million), an increase of 15%. Non-IFRS profit after tax was euro 551 million (2009: euro 478 million), an increase of 15%. IFRS basic earnings per share were euro 0.41 (2009: euro 0.36), an increase of 14%. Non-IFRS basic earnings per share were euro 0.46 (2009: euro 0.40), an increase of 15%. The impact, net of tax, of the severance expenses incurred in the second quarter 2010 on the second quarter 2010 IFRS and Non-IFRS basic earnings per share was euro 0.01. The impact, net of tax, of the restructuring expenses incurred in the second quarter 2009 on the second quarter 2009 IFRS and Non-IFRS basic earnings per share was euro 0.01. The IFRS effective tax rate in the second quarter of 2010 was 27.4% (2009: 28.5%).

Second Quarter 2010 Non-IFRS operating profit excludes acquisition-related charges and discontinued activities totaling euro 66 million (2009: euro 69 million). Second quarter 2010 Non-IFRS profit after tax and Non-IFRS basic earnings per share exclude acquisition-related charges and discontinued activities totaling euro 60 million net of tax (2009: euro 52 million).

“We are pleased to report another quarter of growth in software and software-related service revenue,” said Werner Brandt, CFO of SAP. “The top line results were driven by continued growth in software revenue, strong support revenue, mainly from the majority of our customers who endorsed Enterprise Support, and double-digit growth in subscription revenue.”

“Customers continue to invest for growth across large, midsized and small enterprises and within many industries,” said Bill McDermott, Co-CEO of SAP. “We had outstanding growth in strategic markets like the U.S. and we saw continued double-digit growth in key emerging markets in Latin America and Asia. This solid performance is due to renewed customer confidence, an ever-expanding ecosystem, as well as focused execution on our go-to-market strategy.”

“Our focus on customer-driven innovation is positively impacting our growth. Reaching more than 100,000 customers is a testament to the inroads we have made in expanding our volume business and our success in the small and midsized enterprise (SME) segment,” said Jim Hagemann Snabe, Co-CEO of SAP. “Our success in the SME segment creates a strong foundation for the new version of our on-demand platform SAP Business ByDesign. The new version will be available on time on July 31st and is ready for volume deployment in six countries.”

SAP Completes Tender Offer for Shares of Sybase, Inc.

SAP also announced today that it has completed the cash tender offer for all outstanding shares of common stock of Sybase. Under the terms of the agreement, Sybase will operate as a separate company under the leadership of current CEO John Chen and will remain focused on its core business. Sybase will continue to execute plans and product strategies around its core database and information management business and Sybase’s expertise in the mobile business will be a key driver for the Sybase and SAP vision for the unwired enterprise. For more details on SAP and Sybase, please visit www.sap.com/about/investor/sybase.epx .

The acquisition rounds out the Company’s three pillar strategy of providing solutions on-premise, on-demand and on-device supported by orchestration. Already the clear leader in on-premise business software solutions, the Company expects that with its aggressive push into on-demand and now on-device, with the biggest and most heterogeneous mobile platform provided by the acquisition of Sybase, it will be able to extend its reach into new user categories well beyond its traditional user base.

SAP will host a press briefing on August 19, 2010 in Boston, Massachusetts, where SAP Co-CEO Bill McDermott, Sybase CEO John Chen and members of the SAP leadership team will share details on joint company strategy and product road maps, along with planned co-innovations in mobility, analytics and database technologies. Details on the event will follow in a media alert to be issued in early August.

FINANCIAL HIGHLIGHTS – Six Months 2010

First Half 2010(1)

IFRS

Non-IFRS(2)

€ million, unless
otherwise stated

1H 2010

1H 2009

% change

1H 2010

1H 2009

% change

% change const. curr.(3)

Software revenue

1,101

962

14%

1,101

962

14%

6%

Software and software-related service revenue

4,205

3,695

14%

4,205

3,706

13%

9%

Total revenue

5,403

4,974

9%

5,403

4,985

8%

4%

Total operating expenses

-4,072

-4,026

1%

-3,951

-3,879

2%

-1%

– thereof restructuring

-1

-183

-99%

-1

-178

-99%

Operating profit

1,331

948

40%

1,452

1,106

31%

20%

Operating margin (%)

24.6

19.1

5.5pp

26.9

22.2

4.7pp

3.5pp

Profit after tax

878

622

41%

986

740

33%

Basic earnings per share (€)

0.74

0.52

42%

0.83

0.62

34%

(1) All figures are preliminary and unaudited.

(2) Adjustments in the revenue line items are for support revenue that an entity acquired by SAP would have
recognized had it remained a stand-alone entity but that SAP is not permitted to recognize as revenue under
IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items
are for acquisition-related charges and discontinued activities. See Explanations of Non-IFRS Measures in
the appendix for details.

(3) Constant currency revenue and operating profit figures are calculated by translating revenue and
operating profit of the current period using the average exchange rates from the previous year’s respective
period instead of the current period. Constant currency period-over-period changes are calculated by
comparing the current year’s non-IFRS constant currency numbers with the non-IFRS number of the previous
year’s respective period. See Explanations of Non-IFRS Measures in the appendix for details.

Revenues – Six Months 2010

* IFRS software and software-related service revenues were euro 4.21 billion (2009: euro 3.70 billion), an increase of 14%. Non-IFRS software and software-related service revenues were euro 4.21 billion (2009: euro 3.71 billion), an increase of 13% (9% at constant currencies).
* IFRS software revenues were euro 1.10 billion (2009: euro 962 million), an increase of 14% (6% at constant currencies).
* IFRS total revenues were euro 5.40 billion (2009: euro 4.97 billion), an increase of 9%. Non-IFRS total revenues were euro 5.40 billion (2009: euro 4.99 billion), an increase of 8% (4% at constant currencies).

Six months 2009 Non-IFRS revenue figures exclude a deferred support revenue write-down from the acquisition of Business Objects of euro 11 million.

Income – Six Months 2010

* IFRS operating profit was euro 1.33 billion (2009: euro 948 million), an increase of 40%. Non-IFRS operating profit was euro 1.45 billion (2009: euro 1.11 billion), an increase of 31% (20% at constant currencies). In the first half of 2009, the IFRS and Non-IFRS operating income was impacted by restructuring charges of euro 183 million and euro 178 million, respectively, resulting from a reduction of positions.
* IFRS operating margin was 24.6% (2009: 19.1%), an increase of 5.5 percentage points. Non-IFRS operating margin was 26.9% (2009: 22.2%), or 25.7% at constant currencies, an increase of 4.7 percentage points (3.5 percentage points at constant currencies). In contrast to the respective first half of 2009, the first half of 2010 was not materially impacted by restructuring expenses which had, in the first half of 2009, negatively impacted the IFRS and Non-IFRS operating margin by 3.7 percentage points and 3.6 percentage points, respectively. However, severance expenses of euro 38 million (2009: euro 3.1 million) and unused lease space expenses of euro 8 million negatively impacted the IFRS and Non-IFRS operating margin by 0.9 percentage points (2009: 0.1 percentage points).
* IFRS profit after tax was euro 878 million (2009: euro 622 million), an increase of 41%. Non-IFRS profit after tax was euro 986 million (2009: euro 740 million), an increase of 33%. IFRS basic earnings per share were euro 0.74 (2009: euro 0.52), an increase of 42%. Non-IFRS basic earnings per share were euro 0.83 (2009: euro 0.62), an increase of 34%. The impact, net of tax, of the severance and unused lease space expenses incurred in the first half of 2010 on the first half 2010 IFRS and Non-IFRS basic earnings per share was euro 0.03. The impact, net of tax, of the restructuring expenses incurred in the first half of 2009 on the first half 2009 IFRS and Non-IFRS basic earnings per share was euro 0.11. The IFRS effective tax rate in the first half year 2010 was 26.6% (2009: 29.6%). The year over year decrease in the effective tax rate mainly results from tax effects on changes in foreign currency exchange rates. The currency related tax effects recorded in the second quarter 2010 were substantially compensated by several individually minor negative tax effects.

First half 2010 Non-IFRS operating profit excludes acquisition-related charges and discontinued activities totaling euro 121 million (2009: euro 158 million). First half 2010 Non-IFRS profit after tax and Non-IFRS basic earnings per share exclude acquisition-related charges and discontinued activities totaling euro 108 million net of tax (2009: euro 118 million).

Cash Flow – Six Months 2010

Operating cash flow was euro 1.28 billion (2009: euro 1.82 billion), a decrease of 30%. The year-over-year decrease in operating cash flow resulted from 1) timing of cash inflows as the Company received significantly more payments from customers in 2009 compared to 2010 due to the onset of the financial crisis that caused 2008 payment delays; 2) net cash outflows for derivative financial instruments used for the hedging of foreign exchange risks which did not affect profit, but were higher in the first six months 2010 compared to the prior period; and 3) a one-time payment in the second quarter of 2010 from the settlement of a lawsuit with the main part of the corresponding insurance reimbursement expected to be received in subsequent periods. Free cash flow was euro 1.16 billion (2009: euro 1.72 billion), a decrease of 33%. Free cash flow was 21% of total revenues (2009: 35%). At June 30, 2010, SAP had a total group liquidity of euro 3.96 billion (December 31, 2009: euro 2.28 billion), which includes cash and cash equivalents and short term investments. At June 30, 2010, net liquidity, defined as total group liquidity less short term debt, was euro 2.19 billion.

Business Outlook

SAP is providing the following outlook for the full-year 2010, which now takes into account the acquisition of Sybase:

* The Company expects full-year 2010 Non-IFRS software and software-related service revenue (1) to increase in a range of 9% – 11% at constant currencies (2009: euro 8.2 billion). SAP’s business, excluding the contribution from Sybase, is expected to contribute 6 – 8 percentage points to this growth.
* The Company expects the full-year 2010 Non-IFRS operating margin to be in a range of 30% – 31% (2009: 27.4%) at constant currencies.
* The Company projects an effective tax rate of 27.5% – 28.5% (based on IFRS) for 2010 (2009: 28.1%).

(1) Unchanged from the past, software and software-related service revenue continues to only include software and services directly related to software. Revenues from all other services (including consulting, training and Sybase’s messaging services) continue to be reported as Professional Services and Other Service Revenue.

Major Customer Wins

In the second quarter of 2010, SAP closed major contracts in key regions.

In EMEA: E.ON IT GmbH, Sisal S.p.A., Bashneft ANK OAO, Swiss Reinsurance Company Ltd., DSG Retail Ltd; In the Americas: American Water Works Service Co., U.S. Department of Agriculture, Delta Air Lines, Inc., Pelagio Oliveira S/A, Montepio Luz Savinon I.A.P, H.D. Smith Wholesale Drug Co., United Nations; In Asia Pacific/Japan: Shanghai Huayi (Group) Company, Huaneng Lancang River Hydro Power, National Institute for Environmental Studies, Sumitomo Chemical Co.,Ltd, Malaysia Airports Holdings Berhad, Parkway Hospitals Singapore Pte Ltd.

Webcast / Supplementary Financial Information

SAP senior management will host a conference call today at 3:00 PM (CET) / 2:00 PM (UK) / 9:00 AM (Eastern) / 6:00 AM (Pacific). The conference call will be web cast live on the Company’s website at http://www.sap.com/investor and will be available for replay.

Supplementary financial information pertaining to the quarterly results can be found at http://www.sap.com/investor.

SAP First Half 2010 Interim Report

The First Half 2010 Interim Report will be published on July 29th, 2010 and will be available for download at http://www.sap.com/investor.

About SAP

SAP is the world’s leading provider of business software(*), offering applications and services that enable companies of all sizes and in more than 25 industries to become best-run businesses. With more than 102,500 customers in over 120 countries, the company is listed on several exchanges, including the Frankfurt stock exchange and NYSE, under the symbol “SAP.” For more information, visit www.sap.com.

(*) SAP defines business software as comprising enterprise resource planning, business intelligence, and related applications.

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (“SEC”), including SAP’s most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.

Copyright © 2010 SAP AG. All rights reserved.

SAP, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver 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 in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serve informational purposes only. National product specifications may vary.

For more information, press only:

Christoph Liedtke

+49 (6227) 7-50383

christoph.liedtke@sap.com, CET

Guenter Gaugler

+49 (6227) 7-65416

guenter.gaugler@sap.com, CET

Jim Dever

+1 (610) 661-2161

james.dever@sap.com, ET

For more information, financial community only:

Stefan Gruber

+49 (6227) 7-44872

investor@sap.com, CET

Martin Cohen

+1 (212) 653-9619

investor@sap.com, ET

Follow SAP Investor Relations on Twitter at @sapinvestor.

Appendix – Financial Information to Follow

FINANCIAL INFORMATION

FOR THE SECOND QUARTER AND HALF YEAR 2010

– Condensed, Preliminary and Unaudited –

Page

Financial Statements (IFRS)

Income Statements – Quarter

F1

Statements of Comprehensive Income – Quarter

F2

Income Statements – Half Year

F3

Statements of Comprehensive Income – Half Year

F4

Statements of Financial Position

F5

Statements of Changes in Equity

F6

Statements of Cash Flows

F7

Supplementary Financial Information

Reconciliations from Non-IFRS Numbers to IFRS Numbers

F8 to F9

Revenue by Region

F10 to F11

Share-Based Compensation

F12

Free Cash Flow

F12

Days Sales Outstanding

F12

Headcount

F12

Multi-Quarter Summary

F13

Explanations of Non-IFRS Measures

F14 to F16

Financial Statements (IFRS)

CONSOLIDATED INCOME STATEMENTS OF SAP GROUP

For the three months ended June 30

€ millions, unless otherwise stated

2010

2009

Change in %

Software revenue

637

543

17

Support revenue

1,526

1,337

14

Subscription and other software-related service revenue

95

73

30

Software and software-related service revenue

2,258

1,953

16

Consulting revenue

528

517

2

Training revenue

71

70

1

Other service revenue

18

23

-22

Professional services and other service revenue

617

610

1

Other revenue

19

13

46

Total revenue

2,894

2,576

12

Cost of software and software-related services

-415

-400

4

Cost of professional services and other services

-497

-467

6

Research and development

-397

-373

6

Sales and marketing

-658

-561

17

General and administration

-156

-123

27

Restructuring

-1

-17

-94

Other operating income/expense, net

4

6

-33

Total operating expenses

-2,120

-1,935

10

Operating profit

774

641

21

Other non-operating income/expense, net

-86

-22

>100

Finance income

11

8

38

Finance costs

-21

-28

-25

Other financial gains/losses, net

-2

-3

-33

Financial income, net

-12

-23

-48

Profit before tax

676

596

13

Income tax expense

-185

-170

9

Profit after tax

491

426

15

– Profit attributable to non-controlling interests

0

1

-100

– Profit attributable to owners of parent

491

425

16

Basic earnings per share, in €

0.41

0.36

14

Diluted earnings per share, in €

0.41

0.36

14

* For the three months ended June 30, 2010 and 2009 the weighted average number of shares were 1,188 million
(Diluted: 1,189 million) and 1,188 million (Diluted: 1,189 million), respectively (treasury stock excluded).

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP

for the second quarter ended June 30

€ millions

2010

2009

Profit after tax

491

426

Gains (losses) on exchange differences on translation, before tax

142

3

Reclassification adjustments on exchange differences on translation, before tax

-11

0

Exchange differences on translation

131

3

Gains (losses) on remeasuring available-for-sale financial assets, before tax

-7

1

Reclassification adjustments on available-for-sale financial assets, before tax

0

0

Available-for-sale financial assets

-7

1

Gains (losses) on cash flow hedges, before tax

-40

-7

Reclassification adjustments on cash flow hedges, before tax

11

25

Cash flow hedges

-29

18

Actuarial gains (losses) on defined benefit plans, before tax

-5

3

Other comprehensive income before tax

90

25

Income tax relating to components of other comprehensive income

10

-6

Other comprehensive income after tax

100

19

Total comprehensive income

591

445

– attributable to non-controlling interests

1

1

– attributable to owners of parent

590

444

CONSOLIDATED INCOME STATEMENTS OF SAP GROUP

For the six months ended June 30

€ millions, unless otherwise stated

2010

2009

Change in %

Software revenue

1,101

962

14

Support revenue

2,920

2,589

13

Subscription and other software-related service revenue

184

144

28

Software and software-related service revenue

4,205

3,695

14

Consulting revenue

1,007

1,071

-6

Training revenue

130

142

-8

Other service revenue

37

47

-21

Professional services and other service revenue

1,174

1,260

-7

Other revenue

24

19

26

Total revenue

5,403

4,974

9

Cost of software and software-related services

-814

-786

4

Cost of professional services and other services

-948

-989

-4

Research and development

-790

-738

7

Sales and marketing

-1,215

-1,074

13

General and administration

-304

-262

16

Restructuring

-1

-183

-99

Other operating income/expense, net

0

6

-100

Total operating expenses

-4,072

-4,026

1

Operating profit

1,331

948

40

Other non-operating income/expense, net

-122

-23

>100

Finance income

22

17

29

Finance costs

-33

-53

-38

Other financial gains/losses, net

-1

-6

-83

Financial income, net

-12

-42

-71

Profit before tax

1,197

883

36

Income tax expense

-319

-261

22

Profit after tax

878

622

41

– Profit attributable to non-controlling interests

1

1

0

– Profit attributable to owners of parent

877

621

41

Basic earnings per share, in €

0.74

0.52

42

Diluted earnings per share, in €

0.74

0.52

42

* For the six months ended June 30, 2010 and 2009 the weighted average number of shares were 1,189 million
(Diluted: 1,189 million) and 1,188 million (Diluted: 1,189 million), respectively (treasury stock excluded).

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP

for the six months ended June 30

€ millions

2010

2009

Profit after tax

878

622

Gains (losses) on exchange differences on translation, before tax

272

35

Reclassification adjustments on exchange differences on translation, before tax

-17

0

Exchange differences on translation

255

35

Gains (losses) on remeasuring available-for-sale financial assets, before tax

-1

1

Reclassification adjustments on available-for-sale financial assets, before tax

0

0

Available-for-sale financial assets

-1

1

Gains (losses) on cash flow hedges, before tax

-72

-22

Reclassification adjustments on cash flow hedges, before tax

16

43

Cash flow hedges

-56

21

Actuarial gains (losses) on defined benefit plans, before tax

-10

2

Other comprehensive income before tax

188

59

Income tax relating to components of other comprehensive income

22

-6

Other comprehensive income after tax

210

53

Total comprehensive income

1,088

675

– attributable to non-controlling interests

1

1

– attributable to owners of parent

1,087

674

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION OF SAP GROUP

as at June 30, 2010 and December 31, 2009

€ millions

2010

2009

Change in %

Assets

Cash and cash equivalents

3,605

1,884

91

Other financial assets

574

486

18

Trade and other receivables

2,768

2,546

9

Other non-financial assets

217

147

48

Tax assets

202

192

5

Total current assets

7,366

5,255

40

Goodwill

5,136

4,994

3

Intangible assets

829

894

-7

Property, plant, and equipment

1,415

1,371

3

Other financial assets

337

284

19

Trade and other receivables

66

52

27

Other non-financial assets

34

35

-3

Tax assets

125

91

37

Deferred tax assets

364

398

-9

Total non-current assets

8,306

8,119

2

Total assets

15,672

13,374

17

€ millions

2010

2009

Change in %

Equity and liabilities

Trade and other payables

698

638

9

Tax liabilities

3

125

-98

Financial liabilities

219

146

50

Other non-financial liabilities

990

1,577

-37

Provisions

354

332

7

Deferred income

1,919

598

>100

Total current liabilities

4,183

3,416

22

Trade and other payables

34

35

-3

Tax liabilities

259

239

8

Financial liabilities

1,764

729

>100

Other non-financial liabilities

12

12

0

Provisions

224

198

13

Deferred tax liabilities

137

190

-28

Deferred income

88

64

38

Total non-current liabilities

2,518

1,467

72

Total liabilities

6,701

4,883

37

Issued capital

1,227

1,226

0

Treasury shares

-1,349

-1,320

2

Share premium

331

317

4

Retained earnings

8,851

8,571

3

Other components of equity

-104

-317

-67

Equity attributable to owners of parent

8,956

8,477

6

Non-controlling interests

15

14

7

Total equity

8,971

8,491

6

Equity and liabilities

15,672

13,374

17

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY OF SAP GROUP

For the six months ended June 30

€ millions

Other Components of Equity

Issued
Capital

Share
Premium

Retained
Earnings

Exchange
Differences

Available-
for-Sale
Financial
Assets

Cash
Flow
Hedges

Treasury
Shares

Equity
Attributable
to Owners
of Parent

Non-Controlling
Interests

Total
Equity

January 1, 2009

1,226

320

7,423

-395

-1

-42

-1,362

7,169

2

7,171

Profit after tax

621

621

1

622

Other comprehensive income

2

34

1

16

53

53

Share-based compensation

-2

-2

-2

Dividends

-594

-594

-594

Treasury shares transactions

-4

21

17

17

Convertible bonds and stock options exercised

4

4

4

Other

1

1

1

June 30, 2009

1,226

318

7,453

-361

-26

-1,341

7,269

3

7,272

January 1, 2010

1,226

317

8,571

-319

13

-11

-1,320

8,477

14

8,491

Profit after tax

877

877

1

878

Other comprehensive income

-3

255

-1

-41

210

210

Share-based compensation

-1

-1

-1

Dividends

-594

-594

-594

Treasury shares transactions

-5

-113

-118

-118

Convertible bonds and stock options exercised

1

20

84

105

105

June 30, 2010

1,227

331

8,851

-64

12

-52

-1,349

8,956

15

8,971

CONSOLIDATED STATEMENTS OF CASH FLOWS OF SAP GROUP

as at June 30

€ millions

2010

2009

Profit after tax

878

622

Adjustments to reconcile profit after taxes to net cash provided by operating activities:

Depreciation and amortization

225

253

Gains/losses on disposals of non-current assets

1

3

Impairment loss on financial assets recognized in profit

0

7

Decrease/increase in sales and bad debt allowances on trade receivables

6

97

Other adjustments for non-cash items

15

13

Deferred income taxes

36

-65

Decrease/increase in trade receivables

31

628

Decrease/increase in other assets

-216

-96

Decrease/increase in trade payables, provisions and other liabilities

-802

-687

Decrease/increase in deferred income

1,108

1,048

Net cash flows from operating activities

1,282

1,823

Business combinations, net of cash and cash equivalents acquired

0

-49

Purchase of intangible assets and property, plant, and equipment

-125

-106

Proceeds from sales of intangible assets or property, plant, and equipment

17

13

Purchase of equity or debt instruments of other entities

-651

-573

Proceeds from sales of equity or debt instruments of other entities

689

233

Net cash flows from investing activities

-70

-482

Dividends paid

-594

-594

Purchase of treasury shares

-120

0

Proceeds from reissuance of treasury shares

85

10

Proceeds from issuing shares (share-based compensation)

21

4

Proceeds from borrowings

1,063

697

Repayments of borrowings

-6

0

Purchase of equity-based derivative instruments (hedge for cash-settled share-based payment plans)

-14

0

Proceeds from exercise of equity-based derivative financial instruments

4

4

Net cash flows from financing activities

439

121

Effect of foreign exchange rates on cash and cash equivalents

70

-25

Net decrease/increase in cash and cash equivalents

1,721

1,437

Cash and cash equivalents at the beginning of the period

1,884

1,280

Cash and cash equivalents at the end of the period

3,605

2,717

Supplementary Financial Information

RECONCILIATIONS FROM NON-IFRS NUMBERS TO IFRS NUMBERS

(Preliminary and unaudited)

The following tables present a reconciliation from our non-IFRS numbers (including our non-IFRS at constant currency numbers) to the respective most comparable IFRS numbers. Note: Our non-IFRS numbers are not prepared under a comprehensive set of accounting rules or principles.

€ millions, unless otherwise stated

Three months ended June 30

2010

2009

Change in %

IFRS

Adj.*

Non-IFRS*

Currency
impact**

Non-IFRS
constant
currency**

IFRS

Adj.*

Non-IFRS*

IFRS

Non-IFRS*

Non-IFRS
constant
currency**

Non-IFRS Revenue Numbers

Software revenue

637

0

637

-66

571

543

0

543

17

17

5

Support revenue

1,526

0

1,526

-88

1,438

1,337

0

1,337

14

14

8

Subscription and other software-related service revenue

95

0

95

-3

92

73

0

73

30

30

26

Software and software-related service revenue

2,258

0

2,258

-157

2,101

1,953

0

1,953

16

16

8

Consulting revenue

528

0

528

-36

492

517

0

517

2

2

-5

Training revenue

71

0

71

-4

67

70

0

70

1

1

-4

Other service revenue

18

0

18

-1

17

23

0

23

-22

-22

-26

Professional services and other service revenue

617

0

617

-41

576

610

0

610

1

1

-6

Other revenue

19

0

19

-1

18

13

0

13

46

46

38

Total revenue

2,894

0

2,894

-199

2,695

2,576

0

2,576

12

12

5

Non-IFRS Operating Expense Numbers

Cost of software and software-related services

-415

41

-374

-400

48

-352

4

6

Cost of professional services and other services

-497

1

-496

-467

1

-466

6

6

Research and development

-397

1

-396

-373

1

-372

6

6

Sales and marketing

-658

15

-643

-561

19

-542

17

19

General and administration

-156

9

-147

-123

0

-123

27

20

Restructuring

-1

0

-1

-17

0

-17

-94

-94

Other operating income/expense, net

4

0

4

6

0

6

-33

-33

Total operating expenses

-2,120

66

-2,054

107

-1,947

-1,935

69

-1,866

10

10

4

Non-IFRS Profit Numbers

Operating profit

774

66

840

-92

748

641

69

710

21

18

5

Other non-operating income/expense, net

-86

11

-75

-22

0

-22

>100

>100

Finance income

11

0

11

8

0

8

38

38

Finance costs

-21

0

-21

-28

0

-28

-25

-25

Other financial gains/losses, net

-2

0

-2

-3

0

-3

-33

-33

Financial income, net

-12

0

-12

-23

0

-23

-48

-48

Profit before tax

676

77

753

596

69

665

13

13

Income tax expense

-185

-17

-202

-170

-17

-187

9

8

Profit after tax

491

60

551

426

52

478

15

15

- Profit attributable to non-controlling interests

0

0

0

1

0

1

-100

-100

- Profit attributable to owners of parent

491

60

551

425

52

477

16

16

Non-IFRS Key Ratios

Operating margin in %

26.7

29.0

27.8

24.9

27.6

1.8pp

1.4pp

0.2pp

Effective tax rate in %

27.4

26.8

28.5

28.1

-1.1pp

-1.3pp

Basic earnings per share, in €

0.41

0.46

0.36

0.40

14

15

* Adjustments in the revenue line items are for support revenue that an entity acquired by SAP would have recognized had it remained a stand-alone entity but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges and discontinued activities. See Explanations of Non-IFRS Measures for details.

** Constant currency revenue and operating income figures are calculated by translating revenue and operating income of the current period using the average exchange rates from the previous year’s respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year’s non-IFRS constant currency numbers with the non-IFRS number of the previous year’s respective period. See Explanations of Non-IFRS Measures for details.

Differences may exist due to rounding.

€ millions, unless otherwise stated

Six months ended June 30

2010

2009

Change in %

IFRS

Adj.*

Non-IFRS*

Currency
impact**

Non-IFRS
constant
currency**

IFRS

Adj.*

Non-IFRS*

IFRS

Non-IFRS*

Non-IFRS
constant
currency**

Non-IFRS Revenue Numbers

Software revenue

1,101

0

1,101

-81

1,020

962

0

962

14

14

6

Support revenue

2,920

0

2,920

-98

2,822

2,589

11

2,600

13

12

9

Subscription and other software-related service revenue

184

0

184

-2

182

144

0

144

28

28

26

Software and software-related service revenue

4,205

0

4,205

-182

4,023

3,695

11

3,706

14

13

9

Consulting revenue

1,007

0

1,007

-41

966

1,071

0

1,071

-6

-6

-10

Training revenue

130

0

130

-5

125

142

0

142

-8

-8

-12

Other service revenue

37

0

37

0

37

47

0

47

-21

-21

-21

Professional services and other service revenue

1,174

0

1,174

-46

1,128

1,260

0

1,260

-7

-7

-10

Other revenue

24

0

24

-1

23

19

0

19

26

26

21

Total revenue

5,403

0

5,403

-229

5,174

4,974

11

4,985

9

8

4

Non-IFRS Operating Expense Numbers

Cost of software and software-related services

-814

81

-733

-786

99

-687

4

7

Cost of professional services and other services

-948

2

-946

-989

2

-987

-4

-4

Research and development

-790

3

-787

-738

2

-736

7

7

Sales and marketing

-1,215

27

-1,188

-1,074

37

-1,037

13

15

General and administration

-304

9

-295

-262

0

-262

16

13

Restructuring

-1

0

-1

-183

5

-178

-99

-99

Other operating income/expense, net

0

0

0

6

1

7

-100

-100

Total operating expenses

-4,072

121

-3,951

109

-3,842

-4,026

147

-3,879

1

2

-1

Non-IFRS Profit Numbers

Operating profit

1,331

121

1,452

-120

1,332

948

158

1,106

40

31

20

Other non-operating income/expense, net

-122

17

-105

-23

0

-23

>100

>100

Finance income

22

0

22

17

0

17

29

29

Finance costs

-33

0

-33

-53

0

-53

-38

-38

Other financial gains/losses, net

-1

0

-1

-6

0

-6

-83

-83

Financial income, net

-12

0

-12

-42

0

-42

-71

-71

Profit before tax

1,197

138

1,335

883

158

1,041

36

28

Income tax expense

-319

-30

-349

-261

-40

-301

22

16

Profit after tax

878

108

986

622

118

740

41

33

- Profit attributable to non-controlling interests

1

0

1

1

0

1

0

0

- Profit attributable to owners of parent

877

108

985

621

118

739

41

33

Non-IFRS Key Ratios

Operating margin in %

24.6

26.9

25.7

19.1

22.2

5.5pp

4.7pp

3.5pp

Effective tax rate in %

26.6

26.1

29.6

28.9

-3.0pp

-2.8pp

Basic earnings per share, in €

0.74

0.83

0.52

0.62

42

34

* Adjustments in the revenue line items are for support revenue that an entity acquired by SAP would have recognized had it remained a stand-alone entity but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. See Explanations of Non-IFRS Measures for details.

** Constant currency revenue figures are calculated by translating revenue of the current period using the average exchange rates from the previous year’s respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year’s non-IFRS constant currency numbers with the non-IFRS number of the previous year’s respective period.

Differences may exist due to rounding.

REVENUE BY REGION

(Preliminary and unaudited)

The following tables present our IFRS and non-IFRS revenue by region based on customer location. The tables also present a reconciliation from our non-IFRS revenue (including our non-IFRS revenue at constant currency) to the respective most comparable IFRS revenue. Note: Our non-IFRS revenues are not prepared under a comprehensive set of accounting rules or principles.

€ millions

Three months ended June 30

2010

2009

Change in %

IFRS

Adj.*

Non-IFRS*

Currency
impact**

Non-IFRS
constant
currency**

IFRS

Adj.*

Non-IFRS*

IFRS

Non-IFRS*

Non-IFRS
constant
currency**

Software revenue by region

EMEA

241

0

241

-7

234

266

0

266

-9

-9

-12

Americas

269

0

269

-39

230

164

0

164

64

64

40

Asia Pacific Japan

127

0

127

-20

107

114

0

114

11

11

-6

Software revenue

637

0

637

-66

571

543

0

543

17

17

5

Software and software-related service revenue by region

Germany

360

0

360

0

360

329

0

329

9

9

9

Rest of EMEA

718

0

718

-26

692

701

0

701

2

2

-1

Total EMEA

1,078

0

1,078

-25

1,053

1,030

0

1,030

5

5

2

United States

616

0

616

-49

567

481

0

481

28

28

18

Rest of Americas

207

0

207

-33

174

158

0

158

31

31

10

Total Americas

822

0

822

-81

741

639

0

639

29

29

16

Japan

111

0

111

-14

97

107

0

107

4

4

-9

Rest of Asia Pacific Japan

247

0

247

-37

210

178

0

178

39

39

18

Total Asia Pacific Japan

358

0

358

-51

307

285

0

285

26

26

8

Software and software-related service revenue

2,258

0

2,258

-157

2,101

1,953

0

1,953

16

16

8

Total revenue by region

Germany

506

0

506

0

506

463

0

463

9

9

9

Rest of EMEA

884

0

884

-32

852

882

0

882

0

0

-3

Total EMEA

1,390

0

1,390

-32

1,358

1,345

0

1,345

3

3

1

United States

802

0

802

-62

740

663

0

663

21

21

12

Rest of Americas

275

0

275

-43

232

214

0

214

29

29

8

Total Americas

1,077

0

1,077

-106

971

877

0

877

23

23

11

Japan

125

0

125

-16

109

126

0

126

-1

-1

-13

Rest of Asia Pacific Japan

302

0

302

-45

257

229

0

229

32

32

12

Total Asia Pacific Japan

427

0

427

-61

366

355

0

355

20

20

3

Total revenue

2,894

0

2,894

-199

2,695

2,576

0

2,576

12

12

5

* Adjustments in the revenue line items are for support revenue that an entity acquired by SAP would have recognized had it remained a stand-alone entity but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. See Explanations of Non-IFRS Measures for details.

** Constant currency revenue figures are calculated by translating revenue of the current period using the average exchange rates from the previous year’s respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year’s non-IFRS constant currency numbers with the non-IFRS number of the previous year’s respective period.

Differences may exist due to rounding.

€ millions

Six months ended June 30

2010

2009

Change in %

IFRS

Adj.*

Non-IFRS*

Currency
impact**

Non-IFRS
constant
currency**

IFRS

Adj.*

Non-IFRS*

IFRS

Non-IFRS*

Non-IFRS
constant
currency**

Software revenue by region

EMEA

459

0

459

-14

445

472

0

472

-3

-3

-6

Americas

440

0

440

-40

400

316

0

316

39

39

27

Asia Pacific Japan

201

0

201

-26

175

174

0

174

16

16

1

Software revenue

1,101

0

1,101

-81

1,020

962

0

962

14

14

6

Software and software-related service revenue by region

Germany

671

0

671

-1

670

605

0

605

11

11

11

Rest of EMEA

1,409

0

1,409

-45

1,364

1,307

4

1,311

8

7

4

Total EMEA

2,079

0

2,079

-44

2,035

1,912

4

1,916

9

9

6

United States

1,087

0

1,087

-23

1,064

941

6

947

15

15

12

Rest of Americas

399

0

399

-46

353

312

0

312

28

28

13

Total Americas

1,485

0

1,485

-68

1,417

1,253

6

1,259

19

18

13

Japan

208

0

208

-14

194

203

0

204

3

2

-5

Rest of Asia Pacific Japan

432

0

432

-54

378

326

0

327

33

32

16

Total Asia Pacific Japan

641

0

641

-69

572

530

1

530

21

21

8

Software and software-related service revenue

4,205

0

4,205

-182

4,023

3,695

11

3,706

14

13

9

Total revenue by region

Germany

949

0

949

0

949

895

0

896

6

6

6

Rest of EMEA

1,743

0

1,743

-56

1,687

1,673

4

1,676

4

4

1

Total EMEA

2,692

0

2,692

-56

2,636

2,568

4

2,572

5

5

2

United States

1,422

0

1,422

-27

1,395

1,313

6

1,319

8

8

6

Rest of Americas

522

0

522

-62

460

425

0

425

23

23

8

Total Americas

1,944

0

1,944

-89

1,855

1,738

6

1,744

12

11

6

Japan

235

0

235

-15

220

246

0

246

-4

-4

-11

Rest of Asia Pacific Japan

531

0

531

-68

463

422

0

423

26

26

9

Total Asia Pacific Japan

767

0

767

-84

683

668

1

669

15

15

2

Total revenue

5,403

0

5,403

-229

5,174

4,974

11

4,985

9

8

4

* Adjustments in the revenue line items are for support revenue that an entity acquired by SAP would have recognized had it remained a stand-alone entity but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. See Explanations of Non-IFRS Measures for details.

** Constant currency revenue figures are calculated by translating revenue of the current period using the average exchange rates from the previous year’s respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year’s non-IFRS constant currency numbers with the non-IFRS number of the previous year’s respective period.

Differences may exist due to rounding.

SHARE-BASED COMPENSATION

(Preliminary and unaudited)

€ millions

Six months ended June 30

2010

2009

Change in %

Share-based compensation per expense line item

Cost of software and software-related services

0

2

-100

Cost of professional services and other services

1

4

-75

Research and development

8

7

14

Sales and marketing

4

4

0

General and administration

4

3

33

Total share-based compensation

17

20

-15

Note: The share-based compensation expenses do not differ between SAP’s IFRS and non-IFRS measures.

Differences may exist due to rounding.

FREE CASH FLOW

(Preliminary and unaudited)

€ millions

Six months ended June 30

2010

2009

Change in %

Net cash flows from operating activities

1,282

1,823

-30

Additions to non-current assets excluding additions from acquisitions

-125

-106

18

Free cash flow

1,157

1,717

-33

Differences may exist due to rounding.

DAYS SALES OUTSTANDING

(Unaudited)

as at June 30, 2010 and December 31, 2009

2010

2009

Change in days

Days sales outstanding in days*

73

79

-6

* Day Sales Outstanding (DSO) measures the length of time it takes to collect receivables. SAP calculates
DSO by dividing the average invoiced accounts receivables balance of the last 12 months by the average
monthly sales of the last 12 months.

NUMBER OF EMPLOYEES (in Full-Time Equivalents)

June 30, 2010

June 30, 2009

EMEA

Americas

Asia Pacific Japan

Total

EMEA

Americas

Asia Pacific Japan

Total

Software and software-related services

3,479

1,422

2,100

7,001

3,238

1,239

1,840

6,317

Professional services and other services

6,407

3,544

2,243

12,194

6,916

3,597

2,358

12,871

Research and Development

8,288

2,458

3,600

14,346

8,620

2,553

3,889

15,062

Sales & Marketing

4,216

3,704

1,811

9,731

4,320

3,600

1,808

9,728

General & Administration

1,891

717

418

3,026

1,945

750

418

3,113

Infrastructure

1,044

471

208

1,723

888

409

179

1,476

SAP Group (June 30)

25,325

12,316

10,380

48,021

25,927

12,148

10,492

48,567

SAP Group (average H1)

25,314

12,117

10,304

47,735

26,422

12,712

10,877

50,011

MULTI-QUARTER SUMMARY

(IFRS and non-IFRS; preliminary und unaudited)

€ millions, unless otherwise stated

Q2/2010

Q1/2010

Q4/2009

Q3/2009

Q2/2009

Q1/2009

Software revenue (IFRS)

637

464

1,120

525

543

418

Revenue adjustment*

0

0

0

0

0

0

Software revenue (non-IFRS)

637

464

1,120

525

543

418

Support revenue (IFRS)

1,526

1,394

1,364

1,333

1,337

1,252

Revenue adjustment*

0

0

0

0

0

11

Support revenue (non-IFRS)

1,526

1,394

1,364

1,333

1,337

1,263

Subscription and other software-related service revenue (IFRS)

95

89

82

79

73

71

Revenue adjustment*

0

0

0

0

0

0

Subscription and other software-related service revenue (non-IFRS)

95

89

82

79

73

71

Software and software-related service revenue (IFRS)

2,258

1,947

2,566

1,937

1,953

1,741

Revenue adjustment*

0

0

0

0

0

11

Software and software-related service revenue (non-IFRS)

2,258

1,947

2,566

1,937

1,953

1,752

Total revenue (IFRS)

2,894

2,509

3,190

2,508

2,576

2,397

Revenue adjustment*

0

0

0

0

0

11

Total revenue (non-IFRS)

2,894

2,509

3,190

2,508

2,576

2,408

Operating profit (IFRS)

774

557

1,022

619

641

307

Revenue adjustment*

0

0

0

0

0

11

Expense adjustment*

66

54

113

68

69

78

Operating profit (non-IFRS)

840

612

1,134

687

710

396

Operating margin (IFRS)

26.7

22.2

32.0

24.7

24.9

12.8

Operating margin (non-IFRS)

29.0

24.4

35.5

27.4

27.6

16.4

Effective tax rate (IFRS)

27.4

25.7

31.1

20.5

28.5

31.7

Effective tax rate (non-IFRS)

26.8

25.3

30.5

21.0

28.1

30.1

Basic earnings per share, in € (IFRS)

0.41

0.33

0.57

0.38

0.36

0.17

Basic earnings per share, in € (non-IFRS)

0.46

0.37

0.64

0.42

0.40

0.22

Headcount**

48,021

47,598

47,584

47,810

48,567

49,922

* Adjustments in the revenue line items are for support revenue that an entity acquired by SAP would have recognized had it remained a stand-alone entity but
that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line
items are for acquisition-related charges and discontinued activities. See Explanations of Non-IFRS Measures for details.

** in full-time equivalents at quarter end

Differences may exist due to rounding.

EXPLANATIONS OF NON-IFRS MEASURES

This document discloses certain financial measures, such as non-IFRS revenues, non-IFRS expenses, non-IFRS operating income, non-IFRS operating margin, non-IFRS net income, non-IFRS earnings per share, free cash flow as well as constant currency revenue and operating income 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 non-IFRS financial measures that other companies report. The non-IFRS financial measures that we report should be considered in addition to, and not as substitutes for or superior to, revenue, operating income, cash flows, or other measures of financial performance prepared in accordance with IFRS. Our non-IFRS financial measures included in this document are reconciled to the nearest IFRS measure in the tables on the pages F8 to F13 above.

We believe that the supplemental historical and prospective non-IFRS financial information presented here provides useful supplemental information to investors because it is the same information used by our management in running our business and making financial, strategic and operational decisions – in addition to financial data prepared in accordance with IFRS – to attain a more transparent understanding of our past performance and our future results. The non-IFRS measures as defined below replaced the Non GAAP measures which we used until the termination of our US GAAP reporting. We use these non-IFRS measures consistently in our planning and forecasting, reporting, compensation and external communication. Specifically,

* Our management primarily uses these non-IFRS measures rather than IFRS measures as the basis for making financial, strategic and operating decisions.
* The variable remuneration components of our board members and employees are based on revenue and operating profit. However, the basis for the compensation is on non-IFRS revenue and non-IFRS operating profit rather than the respective IFRS measures.
* The annual budgeting process involving all management units is based on non-IFRS revenues and non-IFRS operating income numbers rather than IFRS numbers with costs such as share-based compensation and restructuring only being considered on corporate level.
* All monthly forecast and performance reviews with all senior managers globally are based on these non-IFRS measures, rather than IFRS numbers.
* Both, company-internal target setting and guidance provided to the capital markets are based on non-IFRS revenues and non-IFRS income measures rather than IFRS numbers.

We believe that our non-IFRS measures are useful to investors for the following reasons:

* The non-IFRS measures provide investors with insight into management’s 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.

Our non-IFRS financial measures reflect adjustments based on the items below, as well as the related income tax effects:

Non-IFRS revenue:

Revenues in this document 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 an entity acquired by SAP had it remained a stand-alone entity 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 acquisition.

Under IFRS, we record at fair value the support contracts in effect at the time an entity was 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 the acquisition by SAP. Adjusting revenue numbers for this revenue impact (if significant) provides additional insight into the comparability across periods of our ongoing performance.

Non-IFRS operating expense:

Operating expense figures in this report that are identified as non-IFRS operating expense have been adjusted by excluding the following acquisition-related charges:

* Acquisition related charges
o Amortization expense/impairment charges of intangibles acquired in business combinations and certain standalone acquisitions of intellectual property (including purchased in-process research and development)
o Restructuring expenses and settlements of pre-existing relationships incurred in connection with a business combination
o Acquisition-related third-party expenses
* Discontinued Activities: 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

Non-IFRS operating income, non-IFRS operating margin, non-IFRS net income and non-IFRS earnings per share:

Operating income, operating margin, net income and earnings per share in this document identified as non-IFRS operating income, non-IFRS operating margin, non-IFRS net income and non-IFRS earnings per share have been adjusted from the respective operating income, operating margin, net income and earnings per share numbers as recorded under IFRS by adjusting for the above mentioned non-IFRS revenues and non-IFRS expenses.

We exclude the acquisition related expense adjustments for the purpose of calculating non-IFRS operating income, non-IFRS operating margin, non-IFRS net income and non-IFRS earnings per share when evaluating the continuing operational performance of the Company 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.

We include the revenue adjustements outlined above and exclude the expense adjustements 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 the Company’s comparative operating performance from period to period. We believe that our non-IFRS financial measures described above have limitations, which include but are 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:
o While our non-IFRS income numbers reflect the elimination of certain acquisition-related expenses, no eliminations are made for the additional revenues and other revenues that result from the acquisitions.
o The acquisition-related charges that we eliminate in deriving our non-IFRS income numbers are likely to recur should SAP enter into material business combinations in the future.
o The acquisition-related amortization expense that we eliminate in deriving our non-IFRS income numbers is a recurring expense that will impact our financial performance in future years.
o 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 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 income 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.

Additionally, our non-IFRS measures have been adjusted from the respective IFRS numbers for the 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. We refer to these activities as “discontinued activities.” Under our U.S. GAAP which we provided 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 not a separate major line of business and thus did not qualify for separate presentation under IFRS. We believe that this additional non-IFRS adjustment to our IFRS numbers for the results of our discontinued TomorrowNow activities is useful to investors for the following reasons:

* Despite the migration from U.S. GAAP to IFRS, we will continue to internally view the ceased TomorrowNow activities as discontinued activities and thus will continue to exclude potential future TomorrowNow results, which are expected to mainly comprise of 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 will use internally beginning in 2010 with our migration to IFRS.
* By adjusting the non-IFRS numbers for the results from our discontinued TomorrowNow operations, the non-IFRS numbers are more comparable to the non-GAAP measures that SAP used through the end of 2009, which makes SAP’s performance measures before and after the full IFRS migration easier to compare.

We believe, however, that the presentation of the non-IFRS measures in conjunction with the corresponding IFRS measures as well as 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 therefore do not evaluate our growth and performance without considering both non-IFRS measures and the relevant IFRS measures. We caution the readers of this document to follow a similar approach by considering our non-IFRS measures only in addition to, and not as a substitute for or superior to, revenues or other measures of our financial performance prepared in accordance with IFRS.

Free Cash Flow

We use our free cash flow measure to estimate the cash flow remaining after all expenditures required to maintain or expand the organic business have been paid off. This assists management with the supplemental information to assess our liquidity needs. We calculate free cash flow as net cash from operating activities minus additions to non-current assets, excluding additions from acquisitions. Free cash flow should be considered in addition to, and not as a substitute for or superior to, cash flow or other measures of liquidity and financial performance prepared in accordance with IFRS.

Constant Currency Period-Over-Period Changes

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 income that are adjusted for foreign currency effects. We calculate constant currency year-over-year changes in revenue and operating income by translating foreign currencies using the average exchange rates from the previous year instead of the report year.

We believe that data on constant currency period-over-period changes has limitations, particularly as the currency effects that are eliminated constitute a significant element of our revenue and expenses and may severely impact our performance. We therefore limit our use of constant currency period-over-period changes 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 period-over-period changes in non-IFRS revenue and non-IFRS operating income on the one hand and changes in revenue, expenses, income, or other measures of financial performance prepared in accordance with IFRS on the other. We caution the readers of this document to follow a similar approach by considering data on constant currency period-over-period changes only in addition to, and not as a substitute for or superior to, changes in revenue, expenses, income, or other measures of financial performance prepared in accordance with IFRS.