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SAP Reports 16% Growth in Software and Software-Related Service Revenues for the Second Quarter

July 28, 2010 By vani Leave a Comment

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%

Software and software-related service revenue

2,258

1,953

16%

2,258

1,953

16%

Total revenue

2,894

2,576

12%

2,894

2,576

12%

Total operating expenses

-2,120

-1,935

10%

-2,054

-1,866

10%

– thereof restructuring

-1

-17

-94%

-1

-17

-94%

Operating profit

774

641

21%

840

710

18%

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%

Software and software-related service revenue

4,205

3,695

14%

4,205

3,706

13%

Total revenue

5,403

4,974

5,403

4,985

Total operating expenses

-4,072

-4,026

-3,951

-3,879

-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.

(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.

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

Statements of Comprehensive Income – Quarter

Income Statements – Half Year

Statements of Comprehensive Income – Half Year

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

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

Support revenue

1,526

1,337

Subscription and other software-related service revenue

Software and software-related service revenue

2,258

1,953

Consulting revenue

528

517

Training revenue

Other service revenue

-22

Professional services and other service revenue

617

610

Other revenue

Total revenue

2,894

2,576

Cost of software and software-related services

-415

-400

Cost of professional services and other services

-497

-467

Research and development

-397

-373

Sales and marketing

-658

-561

General and administration

-156

-123

Restructuring

-1

-17

-94

Other operating income/expense, net

-33

Total operating expenses

-2,120

-1,935

Operating profit

774

641

Other non-operating income/expense, net

-86

-22

>100

Finance income

Finance costs

-21

-28

-25

Other financial gains/losses, net

-2

-3

-33

Financial income, net

-12

-23

-48

Profit before tax

676

596

Income tax expense

-185

-170

Profit after tax

491

426

– Profit attributable to non-controlling interests

-100

– Profit attributable to owners of parent

491

425

Basic earnings per share, in €

0.41

0.36

Diluted earnings per share, in €

0.41

0.36

* 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

Reclassification adjustments on exchange differences on translation, before tax

-11

Exchange differences on translation

131

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

-7

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

Available-for-sale financial assets

-7

Gains (losses) on cash flow hedges, before tax

-40

-7

Reclassification adjustments on cash flow hedges, before tax

Cash flow hedges

-29

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

-5

Other comprehensive income before tax

Income tax relating to components of other comprehensive income

-6

Other comprehensive income after tax

100

Total comprehensive income

591

445

– attributable to non-controlling interests

– 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

Support revenue

2,920

2,589

Subscription and other software-related service revenue

184

144

Software and software-related service revenue

4,205

3,695

Consulting revenue

1,007

1,071

-6

Training revenue

130

142

-8

Other service revenue

-21

Professional services and other service revenue

1,174

1,260

-7

Other revenue

Total revenue

5,403

4,974

Cost of software and software-related services

-814

-786

Cost of professional services and other services

-948

-989

-4

Research and development

-790

-738

Sales and marketing

-1,215

-1,074

General and administration

-304

-262

Restructuring

-1

-183

-99

Other operating income/expense, net

-100

Total operating expenses

-4,072

-4,026

Operating profit

1,331

948

Other non-operating income/expense, net

-122

-23

>100

Finance income

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

Income tax expense

-319

-261

Profit after tax

878

622

– Profit attributable to non-controlling interests

– Profit attributable to owners of parent

877

621

Basic earnings per share, in €

0.74

0.52

Diluted earnings per share, in €

0.74

0.52

* 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

Reclassification adjustments on exchange differences on translation, before tax

-17

Exchange differences on translation

255

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

-1

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

Available-for-sale financial assets

-1

Gains (losses) on cash flow hedges, before tax

-72

-22

Reclassification adjustments on cash flow hedges, before tax

Cash flow hedges

-56

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

-10

Other comprehensive income before tax

188

Income tax relating to components of other comprehensive income

-6

Other comprehensive income after tax

210

Total comprehensive income

1,088

675

– attributable to non-controlling interests

– 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

Other financial assets

574

486

Trade and other receivables

2,768

2,546

Other non-financial assets

217

147

Tax assets

202

192

Total current assets

7,366

5,255

Goodwill

5,136

4,994

Intangible assets

829

894

-7

Property, plant, and equipment

1,415

1,371

Other financial assets

337

284

Trade and other receivables

Other non-financial assets

-3

Tax assets

125

Deferred tax assets

364

398

-9

Total non-current assets

8,306

8,119

Total assets

15,672

13,374

€ millions

2010

2009

Change in %

Equity and liabilities

Trade and other payables

698

638

Tax liabilities

125

-98

Financial liabilities

219

146

Other non-financial liabilities

990

1,577

-37

Provisions

354

332

Deferred income

1,919

598

>100

Total current liabilities

4,183

3,416

Trade and other payables

-3

Tax liabilities

259

239

Financial liabilities

1,764

729

>100

Other non-financial liabilities

Provisions

224

198

Deferred tax liabilities

137

190

-28

Deferred income

Total non-current liabilities

2,518

1,467

Total liabilities

6,701

4,883

Issued capital

1,227

1,226

Treasury shares

-1,349

-1,320

Share premium

331

317

Retained earnings

8,851

8,571

Other components of equity

-104

-317

-67

Equity attributable to owners of parent

8,956

8,477

Non-controlling interests

Total equity

8,971

8,491

Equity and liabilities

15,672

13,374

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

7,171

Profit after tax

621

622

Other comprehensive income

Share-based compensation

-2

Dividends

-594

Treasury shares transactions

-4

Convertible bonds and stock options exercised

Other

June 30, 2009

1,226

318

7,453

-361

-26

-1,341

7,269

7,272

January 1, 2010

1,226

317

8,571

-319

-11

-1,320

8,477

8,491

Profit after tax

877

878

Other comprehensive income

-3

255

-1

-41

210

Share-based compensation

-1

Dividends

-594

Treasury shares transactions

-5

-113

-118

Convertible bonds and stock options exercised

105

June 30, 2010

1,227

331

8,851

-64

-52

-1,349

8,956

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

Impairment loss on financial assets recognized in profit

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

Other adjustments for non-cash items

Deferred income taxes

-65

Decrease/increase in trade receivables

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

-49

Purchase of intangible assets and property, plant, and equipment

-125

-106

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

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

Purchase of treasury shares

-120

Proceeds from reissuance of treasury shares

Proceeds from issuing shares (share-based compensation)

Proceeds from borrowings

1,063

697

Repayments of borrowings

-6

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

-14

Proceeds from exercise of equity-based derivative financial instruments

Net cash flows from financing activities

439

121

Effect of foreign exchange rates on cash and cash equivalents

-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

-66

571

543

Support revenue

1,526

-88

1,438

1,337

Subscription and other software-related service revenue

-3

Software and software-related service revenue

2,258

-157

2,101

1,953

Consulting revenue

528

-36

492

517

-5

Training revenue

-4

Other service revenue

-1

-22

-26

Professional services and other service revenue

617

-41

576

610

-6

Other revenue

-1

Total revenue

2,894

-199

2,695

2,576

Non-IFRS Operating Expense Numbers

Cost of software and software-related services

-415

-374

-400

-352

Cost of professional services and other services

-497

-496

-467

-466

Research and development

-397

-396

-373

-372

Sales and marketing

-658

-643

-561

-542

General and administration

-156

-147

-123

Restructuring

-1

-17

-94

Other operating income/expense, net

-33

Total operating expenses

-2,120

-2,054

107

-1,947

-1,935

-1,866

Non-IFRS Profit Numbers

Operating profit

774

840

-92

748

641

710

Other non-operating income/expense, net

-86

-75

-22

>100

Finance income

Finance costs

-21

-28

-25

Other financial gains/losses, net

-2

-3

-33

Financial income, net

-12

-23

-48

Profit before tax

676

753

596

665

Income tax expense

-185

-17

-202

-170

-17

-187

Profit after tax

491

551

426

478

- Profit attributable to non-controlling interests

-100

- Profit attributable to owners of parent

491

551

425

477

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

* 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

-81

1,020

962

Support revenue

2,920

-98

2,822

2,589

2,600

Subscription and other software-related service revenue

184

-2

182

144

Software and software-related service revenue

4,205

-182

4,023

3,695

3,706

Consulting revenue

1,007

-41

966

1,071

-6

-10

Training revenue

130

-5

125

142

-8

-12

Other service revenue

-21

Professional services and other service revenue

1,174

-46

1,128

1,260

-7

-10

Other revenue

-1

Total revenue

5,403

-229

5,174

4,974

4,985

Non-IFRS Operating Expense Numbers

Cost of software and software-related services

-814

-733

-786

-687

Cost of professional services and other services

-948

-946

-989

-987

-4

Research and development

-790

-787

-738

-736

Sales and marketing

-1,215

-1,188

-1,074

-1,037

General and administration

-304

-295

-262

Restructuring

-1

-183

-178

-99

Other operating income/expense, net

-100

Total operating expenses

-4,072

121

-3,951

109

-3,842

-4,026

147

-3,879

-1

Non-IFRS Profit Numbers

Operating profit

1,331

121

1,452

-120

1,332

948

158

1,106

Other non-operating income/expense, net

-122

-105

-23

>100

Finance income

Finance costs

-33

-53

-38

Other financial gains/losses, net

-1

-6

-83

Financial income, net

-12

-42

-71

Profit before tax

1,197

138

1,335

883

158

1,041

Income tax expense

-319

-30

-349

-261

-40

-301

Profit after tax

878

108

986

622

118

740

- Profit attributable to non-controlling interests

- Profit attributable to owners of parent

877

108

985

621

118

739

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

** 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

-7

234

266

-9

-12

Americas

269

-39

230

164

Asia Pacific Japan

127

-20

107

114

-6

Software revenue

637

-66

571

543

Software and software-related service revenue by region

Germany

360

329

Rest of EMEA

718

-26

692

701

-1

Total EMEA

1,078

-25

1,053

1,030

United States

616

-49

567

481

Rest of Americas

207

-33

174

158

Total Americas

822

-81

741

639

Japan

111

-14

107

-9

Rest of Asia Pacific Japan

247

-37

210

178

Total Asia Pacific Japan

358

-51

307

285

Software and software-related service revenue

2,258

-157

2,101

1,953

Total revenue by region

Germany

506

463

Rest of EMEA

884

-32

852

882

-3

Total EMEA

1,390

-32

1,358

1,345

United States

802

-62

740

663

Rest of Americas

275

-43

232

214

Total Americas

1,077

-106

971

877

Japan

125

-16

109

126

-1

-13

Rest of Asia Pacific Japan

302

-45

257

229

Total Asia Pacific Japan

427

-61

366

355

Total revenue

2,894

-199

2,695

2,576

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

-14

445

472

-3

-6

Americas

440

-40

400

316

Asia Pacific Japan

201

-26

175

174

Software revenue

1,101

-81

1,020

962

Software and software-related service revenue by region

Germany

671

-1

670

605

Rest of EMEA

1,409

-45

1,364

1,307

1,311

Total EMEA

2,079

-44

2,035

1,912

1,916

United States

1,087

-23

1,064

941

947

Rest of Americas

399

-46

353

312

Total Americas

1,485

-68

1,417

1,253

1,259

Japan

208

-14

194

203

204

-5

Rest of Asia Pacific Japan

432

-54

378

326

327

Total Asia Pacific Japan

641

-69

572

530

Software and software-related service revenue

4,205

-182

4,023

3,695

3,706

Total revenue by region

Germany

949

895

896

Rest of EMEA

1,743

-56

1,687

1,673

1,676

Total EMEA

2,692

-56

2,636

2,568

2,572

United States

1,422

-27

1,395

1,313

1,319

Rest of Americas

522

-62

460

425

Total Americas

1,944

-89

1,855

1,738

1,744

Japan

235

-15

220

246

-4

-11

Rest of Asia Pacific Japan

531

-68

463

422

423

Total Asia Pacific Japan

767

-84

683

668

669

Total revenue

5,403

-229

5,174

4,974

4,985

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

-100

Cost of professional services and other services

-75

Research and development

Sales and marketing

General and administration

Total share-based compensation

-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

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*

-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*

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*

Support revenue (non-IFRS)

1,526

1,394

1,364

1,333

1,337

1,263

Subscription and other software-related service revenue (IFRS)

Revenue adjustment*

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

Software and software-related service revenue (IFRS)

2,258

1,947

2,566

1,937

1,953

1,741

Revenue adjustment*

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*

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*

Expense adjustment*

113

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.

Filed Under: International News Tagged With: Basic Earnings Per Share, Business Combination Accounting, earnings per share, exchange rates, explanations, Nyse, operating expenses, operating margin, operating profit, Period Changes, previous year, PRNewswire, profit figures, Quarter Ended June, Related Service, sap ag, Sap Software, Second Quarter Ended June, Service Revenues, Software Revenue

Teva Reports Strong Second Quarter 2010 Results Driven by Growth in All Businesses

July 28, 2010 By vani Leave a Comment

European Sales Grew 10% in Local Currencies –
JERUSALEM–(Business Wire)–
Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA) today reported results for
the quarter ended June 30, 2010.

Second Quarter Highlights:

* Quarterly net sales of $3.8 billion, reflecting organic growth of 12%,
compared to the comparable period in 2009.
* Quarterly non-GAAP net income and non-GAAP EPS of $981 million and $1.08, up
32% and 30%, respectively, compared with the second quarter of 2009. Quarterly
GAAP net income and EPS totaled $797 million and $0.88, up 53% and 52%,
respectively, compared with the second quarter of 2009.
* Quarterly non-GAAP operating income of $1.2 billion, up 22% compared with the
second quarter of 2009. Quarterly GAAP operating income totaled $1.1 billion, up
53% compared with the second quarter of 2009.
* Quarterly global in-market sales of Copaxone® of $773 million, up 13% over the
second quarter of 2009. Copaxone® continues to be the leading MS therapy in the
U.S. and globally.
* Quarterly cash flow from operations of $954 million, up 45% compared with the
second quarter of 2009. Free cash flow of $700 million, up 86% compared with the
second quarter of 2009.
* Financing of ratiopharm acquisition secured with debt offering of $2.5 billion
and committed bank loans of $1.5 billion.
* For the first six months of 2010, sales increased by 14%, non-GAAP EPS
increased by 29% and GAAP EPS increased by 52%, compared to the first six months
of 2009.

“This was truly a superb quarter, in which Teva achieved record-breaking
results, including outstanding organic growth,” commented Shlomo Yanai, Teva`s
President and Chief Executive Officer. “It was an especially strong quarter in
North America, where we had nine new product launches, and in Europe, where we
experienced solid growth despite the challenging market environment.”

Mr. Yanai continued, “2010 is well on track to becoming another year of
profitable growth and major achievements for Teva, a year in which we will make
significant progress towards achieving our long-term strategic objectives.”

Net sales for the second quarter increased 12% to $3,800 million, compared to
$3,400 million in the second quarter of 2009.

Exchange rate differences negatively impacted sales in the second quarter of
2010 by approximately $52 million compared to the second quarter of 2009, while
having a negligible positive impact on operating income. The impact on sales
resulted from the decline in the value of certain currencies relative to the
U.S. dollar (primarily the Euro, the British pound and the Hungarian forint),
partially offset by the strengthening of the value of other currencies relative
to the U.S. dollar (primarily the Canadian dollar, the Israeli shekel and the
Russian ruble) in the second quarter of 2010 compared with the second quarter in
2009.

Non-GAAP net income for the second quarter of 2010 totaled $981 million, an
increase of 32% compared to the second quarter of 2009, while non-GAAP diluted
earnings per share were $1.08, an increase of 30% compared to the second quarter
of 2009. On a U.S. GAAP basis, net income for the second quarter totaled $797
million, up 53% compared to the second quarter of 2009, while diluted earnings
per share were $0.88, up 52% compared to the second quarter of 2009.

Non-GAAP net income and non-GAAP EPS for the second quarter of 2010 are adjusted
to exclude the following items:

* Amortization of purchased intangible assets of $130 million;
* Financial expenses of $123 million related to hedging activity in connection
with the acquisition of ratiopharm, net of gains from the sale of marketable
securities;
* Income of $23 million in connection with legal settlements;
* Other adjustments totaling $19 million; and
* Related tax benefits of $65 million.

Teva believes that excluding these items facilitates investors’ understanding of
the trends in the Company’s underlying business. In the second quarter of 2009,
non-GAAP net income and non-GAAP EPS excluded amortization of purchased
intangible assets, inventory step-up, legal settlements, restructuring expenses
and related tax effects. See the attached tables for a reconciliation of U.S.
GAAP reported results to the adjusted non-GAAP figures.

Quarterly non-GAAP operating income (which excludes amortization of purchased
intangible assets, restructuring expenses, purchase of R&D in-process and
impairment of assets, offset by income in connection with legal settlements, as
detailed above) reached $1,201 million, an increase of 22% compared with the
second quarter of 2009. On a U.S. GAAP basis, operating income for the second
quarter of 2010 totaled $1,075 million, up 53% compared to the second quarter of
2009.

Sales in North America in the second quarter reached $2,467 million, accounting
for 65% of total sales and representing an increase of 17% compared with the
second quarter of 2009. The increase in quarterly sales resulted from the launch
of generic versions of Hyzaar® (losartan potassium – hydrochlorothiazide),
Cozaar® (losartan potassium) and Yaz® (drospirenone and ethinyl estradiol), as
well as continued strong sales of generic versions of Pulmicort Respules®
(budesonide), Mirapex® (pramipexole) and Eloxatin® (oxaliplatin) launched in
previous quarters. The quarter’s sales also reflected continued strong sales of
Copaxone®. Generic and other product sales in the U.S. were $1,502 million in
the quarter, up 14% compared to the comparable quarter in 2009.

As of July 16, 2010, Teva had 206 product applications awaiting final FDA
approval, including 44 tentative approvals. Collectively, the brand products
covered by these applications had annual U.S. sales of over $107 billion. Of
these applications, 134 were “Paragraph IV” applications challenging patents of
branded products. Teva believes it is the first to file on 82 of the
applications, relating to products with annual U.S. branded sales exceeding $48
billion.

Sales in Europe in the second quarter of 2010 totaled $811 million, accounting
for 21% of total sales and representing an increase of 4% compared with the
second quarter of last year. In local currency terms, sales in Europe grew 10%
compared with the second quarter of 2009. The increase in sales was mostly
attributable to strong generic sales in Italy, Spain and France, as well as
increased sales of Copaxone® and Azilect®.

Since the beginning of 2010, Teva received 594 generic approvals in Europe
relating to 111 compounds in 209 formulations, including four European
Commission approvals valid in all EU member states. In addition, as of June 30,
2010, Teva had approximately 2,574 marketing authorization applications pending
approval in 30 European countries, relating to 241 compounds in 470
formulations, including seven applications pending with the EMA.

International sales in the second quarter of 2010 totaled $522 million,
accounting for 14% of total sales and representing an increase of 1% compared to
the second quarter of 2009. In local currency terms, international sales grew 6%
compared with the second quarter of 2009. The increase in sales was driven
primarily by increased sales in Latin America and Israel. Sales in the quarter
were adversely affected from the timing of Copaxone® sales in government
tenders.

Copaxone® remains the number one MS therapy in the U.S. and globally. Global
in-market sales reached $773 million in the second quarter of 2010, an increase
of 13% over the second quarter of 2009. In the U.S., quarterly in-market sales
increased 21% to $531 million compared to the second quarter of 2009. In-market
sales outside the U.S. totaled $243 million, flat compared to the second quarter
of 2009, with growth in sales recorded in Europe and Latin America offset by
weaker sales in certain international markets due to timing of tenders. In local
currency terms, in-market sales of Copaxone® outside the U.S. grew 2% in the
second quarter of 2010.

Global in-market sales of Azilect® reached $70 million in the quarter, a 29%
increase over the comparable period in 2009, benefiting primarily from an
increase in sales in Europe (mostly in France Spain, Italy and Germany). In
local currency terms, global in-market sales of Azilect® grew 33% in the second
quarter of 2010.

Teva’s global respiratory product sales totaled $221 million in the quarter, up
17% compared to $189 million in the second quarter of 2009. The increase is
attributable to continued growth in Qvar® and ProAir™ sales in the U.S. Teva’s
respiratory product sales in the U.S. totaled $143 million in the second
quarter. As of June 30, 2010, Teva maintained its leadership position with a 50%
market share in the SABA (short acting beta agonist) market in the U.S., while
Qvar® continued to solidify its number two position in the inhaled
corticosteroid category (ICS) market with a 19% market share.

Teva’s women’s health business sales reached $82 million in the quarter, up 3%
compared to $80 million in the comparable quarter in 2009, benefiting from
strong sales of Seasonique® and ParaGard® in the second quarter.

API sales to third parties totaled $163 million in the second quarter, up 21%
compared to $135 million in the comparable quarter in 2009.

Non-GAAP gross profitmargin reached 59.0% in the second quarter of 2010,
compared to the 58.5% non-GAAP gross profit margin recorded in the comparable
quarter of 2009. Non-GAAP gross profit margins continued to benefit from the
contribution to sales of new and recently launched generic products in the U.S.,
improved gross margins of the U.S. generics base business as well as the
contribution to sales of innovative and branded products (including Copaxone®,
ProAir™, Azilect®, Qvar® and women’s health products). GAAP gross profit margin
reached 55.8% in the second quarter of 2010, compared to GAAP gross profit of
52.0% in the comparable quarter of 2009. The improvement was due to the
inventory step up expenses recorded in connection with the acquisition of Barr
Pharmaceuticals and higher amortization of purchased intangible assets recorded
in the second quarter of 2009, in addition to the above factors.

Net Research & Development (R&D) expenditures in the second quarter totaled $217
million, or 5.7% of sales, compared to $169 million recorded in the second
quarter of 2009, or 5.0% of sales. Gross R&D in the second quarter of 2010,
before reimbursement from third parties for certain R&D expenses, totaled $227
million, or 6.0% of sales, an increase of 8% compared to the comparable quarter
in 2009. For the full year, Teva continues to expect net R&D expenses to be
between 6% and 6.5% of net sales.

Selling and Marketing (S&M) expenditures (excluding amortization of purchased
intangible assets) totaled $636 million, or 16.7% of sales, for the second
quarter, compared to $641 million, or 18.9% of sales, in the comparable quarter
of 2009. The decrease in S&M expenses is attributable primarily to the
termination, as of the beginning of the quarter, of payments to sanofi-aventis
in connection with Copaxone®’s North American sales, offset by higher royalty
payments in connection with new and recently launched generic products sold in
the U.S.

General and Administrative (G&A) expenditures totaled $189 million, or 5.0% of
sales, for the second quarter, compared with $197 million, or 5.8% of sales, in
the comparable quarter of 2009.

The tax expense provided for the second quarter was $183 million of pre-tax
non-GAAP income of $1,176 million. Teva’s current estimate of the annual tax
rate of non-GAAP income for 2010 is 15%, compared to a rate of 16% of pre-tax
non-GAAP income for all of 2009. On a GAAP basis, the annual tax rate for 2010
is estimated to be approximately 12%.

Cash flow generated from operating activities during the second quarter of 2010
was $954 million, compared to $658 million in the comparable quarter in 2009.
Free cash flow – excluding gross capital expenditures (of $136 million) and
dividends (of $164 million), partially offset by sales of assets ($46 million) -
reached $700 million.

Cash and marketable securities as of June 30, 2010 were $5.2 billion, up
approximately $2.2 billion from March 31, 2010, due to the sale of $2.5 billion
principal amount of senior notes and strong cash generation in the second
quarter, net of approximately $903 million of debt repayment, primarily bank
debt incurred in connection with the Barr acquisition.

Total equity as of June 30, 2010 amounted to $19.4 billion, an increase of $104
million compared to $19.3 billion as of December 31, 2009. The increase in total
equity is attributable primarily to GAAP net income, offset by the negative
impact of currency translation resulting from the weakening of major non-U.S.
currencies compared to the U.S. dollar (mainly the Euro, the Hungarian forint,
the Polish zloty and the Czech koruna) as well as dividends paid to
shareholders.

For the second quarter of 2010, the weightedaverage share count for the fully
diluted earnings per share calculation was 921 million shares on both a GAAP and
non-GAAP basis. As of June 30, 2010, Teva’s share count going forward for the
fully diluted share calculation is estimated at 922 million shares, while the
share count for calculating Teva’s market capitalization is approximately 898
million shares.

Dividend

The Board of Directors, at its meeting on July 26, 2010, declared a cash
dividend for the second quarter of 2010 of NIS 0.70 (approximately 18.1 cents
according to the rate of exchange on July 26, 2010) per share.

The record date will be August 4, 2010, and the payment date will be August 19,
2010. Tax will be withheld at a rate of 9%.

Conference Call

Teva will host a conference call to discuss the Company’s second quarter 2010
results, on Tuesday, July 27, 2010 at 8:30 a.m. ET. The call will be webcast and
can be accessed through the Company’s website at www.tevapharm.com. Following
the conclusion of the call, a replay of the webcast will be available within 24
hours at the Company’s website. A replay of the call will also be available
until August 3, 2010, at 11:59 p.m. ET, by calling 858-384-5517 or 877-870-5176.
The Conference ID# is 353522.

About Teva

Teva Pharmaceutical Industries Ltd. (NASDAQ:TEVA) is a leading global
pharmaceutical company, committed to increasing access to high-quality
healthcare by developing, producing and marketing affordable generic drugs as
well as innovative and specialty pharmaceuticals and active pharmaceutical
ingredients. Headquartered in Israel, Teva is the world’s largest generic drug
maker, with a global product portfolio of more than 1,250 molecules and a direct
presence in over 60 countries. Teva’s branded businesses focus on neurological,
respiratory and women’s health therapeutic areas as well as biologics. Teva’s
leading innovative product, Copaxone®, is the number one prescribed treatment
for multiple sclerosis. Teva employs more than 35,000 people around the world
and reached $13.9 billion in net sales in 2009.

Teva’s Safe Harbor Statement under the U. S. Private Securities Litigation
Reform Act of 1995:

This release contains forward-looking statements, which express the current
beliefs and expectations of management. Such statements involve a number of
known and unknown risks and uncertainties that could cause our future results,
performance or achievements to differ significantly from the results,
performance or achievements expressed or implied by such forward-looking
statements. Important factors that could cause or contribute to such differences
include risks relating to: our ability to successfully develop and commercialize
additional pharmaceutical products, the introduction of competing generic
equivalents, the extent to which we may obtain U.S. market exclusivity for
certain of our new generic products and regulatory changes that may prevent us
from utilizing exclusivity periods, potential liability for sales of generic
products prior to a final resolution of outstanding patent litigation, including
that relating to the generic versions of Neurontin®, Lotrel®, Protonix®, and
Yaz® current economic conditions, the extent to which any manufacturing or
quality control problems damage our reputation for high quality production, the
effects of competition on our innovative products, especially Copaxone® sales,
dependence on the effectiveness of our patents and other protections for
innovative products, especially Copaxone®, the impact of consolidation of our
distributors and customers, the impact of pharmaceutical industry regulation and
pending legislation that could affect the pharmaceutical industry, our ability
to achieve expected results though our innovative R&D efforts, the difficulty of
predicting U.S. Food and Drug Administration, European Medicines Agency and
other regulatory authority approvals, the uncertainty surrounding the
legislative and regulatory pathway for the registration and approval of
biotechnology-based products, the regulatory environment and changes in the
health policies and structures of various countries, any failures to comply with
the complex Medicare and Medicaid reporting and payment obligations, the effects
of reforms in healthcare regulation, supply interruptions or delays that could
result from the complex manufacturing of our products and our global supply
chain, interruptions in our supply chain or problems with our information
technology systems that adversely affect our complex manufacturing processes,
potential tax liabilities that may arise should our agreements (including
intercompany arrangements), be challenged successfully by tax authorities, our
ability to successfully identify, consummate and integrate acquisitions and
other business combinations (including our pending acquisition of ratiopharm),
the potential exposure to product liability claims to the extent not covered by
insurance, our exposure to fluctuations in currency, exchange and interest
rates, as well as to credit risk, significant operations worldwide that may be
adversely affected by terrorism, political or economical instability or major
hostilities, our ability to enter into patent litigation settlements and the
increased government scrutiny of our agreements with brand companies in both the
U.S. and Europe, the termination or expiration of governmental programs and tax
benefits, impairment of intangible assets and goodwill, any failure to retain
key personnel or to attract additional executive and managerial talent,
environmental risks, and other factors that are discussed in our Annual Report
on Form 20-F for the year ended December 31, 2009, in this report and in our
other filings with the U.S. Securities and Exchange Commission (“SEC”).

Teva Pharmaceutical Industries Limited

Consolidated Statements of Income
(Unaudited, U.S. Dollars in millions, except share and per share data)

Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
Net sales 3,800 3,400 7,453 6,547
Cost of sales (a) 1,679 1,631 3,319 3,207
Gross profit 2,121 1,769 4,134 3,340
Research and development expenses 217 169 424 388
Selling and marketing expenses (b) 644 649 1,396 1,253
General and administrative expenses 189 197 371 393
Legal settlements, acquisition and restructuring expenses and impairment (9) 52 25 66
Purchase of research and development in process 5 – 9 –
Operating income 1,075 702 1,909 1,240
Financial expenses- net (c) 148 61 175 124
Income before income taxes 927 641 1,734 1,116
Provision for income taxes (d) 118 98 203 123
809 543 1,531 993
Share in losses of associated companies – net 9 20 17 19
Net income 800 523 1,514 974
Net income attributable to non-controlling interests 3 2 4 2
Net income attributable to Teva 797 521 1,510 972

Earnings per share attributable to Teva: Basic ($) 0.89 0.61 1.69 1.13
Diluted ($) 0.88 0.58 1.66 1.09
Weighted average number of shares (in millions): Basic 895 860 894 858
Diluted 921 895 921 895

Non-GAAP net income attributable to Teva:*** 981 742 1,811 1,376

Non-GAAP earnings per share attributable to Teva: Basic ($) 1.10 0.86 2.03 1.60
Diluted ($) 1.08 0.83 1.99 1.54

Weighted average number of shares (in millions): Basic 895 860 894 858
Diluted 921 911 921 911

*** See reconciliation attached.

(a) Cost of sales includes $122 million and $143 million of amortization of purchased intangible assets in the three months ended June 30, 2010 and 2009, respectively, and $76 million of inventory step-up in the three months ended June 30, 2009.
(b) Selling and marketing expenses includes $8 million of amortization of purchased intangible assets in the three months ended June 30, 2010 and 2009.
(c) Financial expenses includes $147 million resulting from hedging of the ratiopharm acquisition offset by $24 million gain from sale of securities in the three months ended June 30, 2010.
(d) Provision for income taxes includes $(65) million and $(58) million of related tax effect of non-GAAP charges in the three months ended June 30, 2010 and 2009, respectively.

Teva Pharmaceutical Industries Limited

Condensed Balance Sheets
(U.S. Dollars in millions)

June 30, December 31,
2010 2009
ASSETS unaudited audited
Current assets:
Cash and cash equivalents 4,854 1,995
Short-term investments 24 253
Accounts receivable 4,985 5,019
Inventories 3,078 3,332
Deferred taxes and other current assets 1,502 1,542
Total current assets 14,443 12,141
Long-term investments and receivables 628 534
Deferred taxes, deferred charges and other assets 630 642
Property, plant and equipment, net 3,622 3,766
Identifiable intangible assets, net 3,639 4,053
Goodwill 12,223 12,674
Total assets 35,185 33,810

LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities of long term liabilities 1,946 1,301
Sales reserves and allowances 2,978 2,942
Accounts payable and accruals 2,647 2,680
Other current liabilities 611 679
Total current liabilities 8,182 7,602
Long-term liabilities:
Deferred income taxes 1,686 1,741
Other taxes and long term payables 712 727
Employee related obligations 171 170
Senior notes and loans 5,050 3,494
Convertible senior debentures 21 817
Total long-term liabilities 7,640 6,949
Equity:
Teva shareholders’ equity 19,328 19,222
Non-controlling interests 35 37
Total equity 19,363 19,259
Total liabilities and equity 35,185 33,810

Teva Pharmaceutical Industries Limited

Reconciliation between Reported and Non-GAAP Net Income
(Unaudited, U.S. Dollars in millions, except share and per share data)

Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
Reported net income attributable to Teva 797 521 1,510 972
Inventory step-up – 76 – 296
Purchase of research and development in process 5 – 9 –
Amortization of purchased intangible assets – under cost of sales 122 143 244 189
Amortization of purchased intangible assets – under selling and marketing 8 8 16 16
Legal settlements (23) 42 (6) 42
Impairment of assets 3 – 3 2
Acquisition and restructuring expenses 11 10 28 22
Financial expenses related to hedging activity of the ratiopharm acquisition 147 – 147 –
Gain from sale of marketable securities (24) – (24) –
Related tax effect (65) (58) (116) (163)
Non-GAAP net income attributable to Teva 981 742 1,811 1,376

Diluted earnings per share attributable to Teva: Reported ($) 0.88 0.58 1.66 1.09
Non-GAAP ($) 1.08 0.83 1.99 1.54

Add back for diluted earnings per share calculation:
Interest expense on convertible senior debentures, and issuance costs, net of tax benefits Reported ($) 11 1 22 2
Non-GAAP ($) 11 12 22 23

Diluted weighted average number of shares (in millions): Reported 921 895 921 895
Non-GAAP 921 911 921 911

Teva Pharmaceutical Industries Limited

Reconciliation between Reported and Non-GAAP Operating Income
(Unaudited, U.S. Dollars in millions)

Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
Reported operating income 1,075 702 1,909 1,240
Inventory step-up – 76 – 296
Purchase of research and development in process 5 – 9 –
Amortization of purchased intangible assets – under cost of sales 122 143 244 189
Amortization of purchased intangible assets – under selling and marketing 8 8 16 16
Legal settlements (23) 42 (6) 42
Impairment of assets 3 – 3 2
Acquisition and restructuring expenses 11 10 28 22
Non-GAAP operating income 1,201 981 2,203 1,807

Teva Pharmaceutical Industries Limited

Condensed Cash Flow
(Unaudited, U.S. Dollars in millions)

Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
Operating activities:
Net income 800 523 1,514 974
Purchase of research and development in process 5 – 9 –
Other adjustments to reconcile net income to net cash provided from operations 149 135 317 417

Net cash provided by operating activities 954 658 1,840 1,391

Net cash provided by (used in) investing activities 189 (175) (139) (317)

Net cash provided by (used in) financing activities 1,525 (1,131) 1,350 (1,155)

Translation adjustment on cash and cash equivalents (170) 59 (192) (12)

Net increase (decrease) in cash and cash equivalents 2,498 (589) 2,859 (93)

Balance of cash and cash equivalents at beginning of period 2,356 2,350 1,995 1,854

Balance of cash and cash equivalents at end of period 4,854 1,761 4,854 1,761

Teva Pharmaceutical Industries Limited

Three Months Ended
June 30, % of Total % of Total
2010 2009 2010 2009 % Change
(Unaudited, U.S Dollars in millions)

Sales by Geographic Area
North America 2,467 2,108 65% 62% 17%
Europe* 811 777 21% 23% 4%
International 522 515 14% 15% 1%
Total 3,800 3,400 100% 100% 12%

* Includes EU member states, Switzerland & Norway.

Teva Pharmaceutical Industries Limited

Six Months Ended
June 30, % of Total % of Total
2010 2009 2010 2009 % Change
(Unaudited, U.S Dollars in millions)

Sales by Geographic Area
North America 4,776 4,033 64% 62% 18%
Europe* 1,623 1,516 22% 23% 7%
International 1,054 998 14% 15% 6%
Total 7,453 6,547 100% 100% 14%

* Includes EU member states, Switzerland & Norway.

Investor Relations:
Teva Pharmaceutical Industries Ltd.
Elana Holzman, 972 (3) 926-7554
or
Teva North America
Kevin Mannix, 215-591-8912
or
Media:
Teva Pharmaceutical Industries Ltd.
Yossi Koren, 972 (3) 926-7590
or
Teva North America
Denise Bradley, 215-591-8974

Filed Under: International News Tagged With: bank loans, chief executive officer, comparable period, Copaxone, Eps, free cash flow, market environment, Ms Therapy, nasdaq, net income, net sales, New Product Launches, operating income, Organic Growth, pharmaceutical industries, Quarter Ended June, Quarterly Cash Flow, second quarter, Shlomo Yanai, Teva Pharmaceutical Industries Ltd

Acme United Corporation Reports 7% Sales Increase for the Second Quarter

July 24, 2010 By vani Leave a Comment

FAIRFIELD, Conn.–(Business Wire)–
Acme United Corporation (NYSE AMEX:ACU) today announced that net sales for the
second quarter ended June 30, 2010 were $20.6 million, compared to $19.2 million
in the comparable period of 2009, an increase of 7% (8% in local currency). Net
income was $1,567,000, or $.48 per diluted share, for the quarter ended June 30,
2010, compared to $1,341,000 or $.40 per diluted share for the comparable period
last year, an increase of 17% in net income and 20% in diluted earnings per
share.

Net sales for the six months ended June 30, 2010 were $33.7 million, compared to
$30.5 million in the same period in 2009, an increase of 11% (10% in local
currency). Net income for the six months ended June 30, 2010 was $1,780,000, or
$.54 per diluted share, compared to $1,383,000, or $.41 per diluted share in the
comparable period last year, a 29% increase in net income and 32% in diluted
earnings per share.

Net sales for the quarter ended June 30, 2010 in the U.S. segment increased 1%
compared to the same period in 2009. Net sales for the six months ended June 30,
2010 in the U.S. segment increased 5% compared to the same period in 2009. Sales
in the U.S. were a reflection of the slow economic recovery in the U.S. Net
sales in Canada for the three and six months ended June 30, 2010 increased 10%
and 14%, respectively, in U.S. dollars compared to the same periods in 2009 but
decreased 2% and 1% respectively, in local currency. European net sales for the
three and six months ended June 30, 2010 increased 64% and 46%, respectively, in
U.S. dollars compared to the same periods in 2009 and increased 75% and 49%
respectively, in local currency. Sales in Europe increased due to growth in the
mass and office markets.

Gross margins were 36.7% in the second quarter of 2010 versus 37.1% in the
comparable period last year. The gross margins in the second quarter of 2010
were impacted by higher airfreight expense of approximately $250,000 due to
labor shortages and production constraints in the Asian factories. For the first
six months of 2010, gross margins were 37.6%, compared to 37.4% in the same
period in 2009.

The effective tax rate for the first six months of 2010 was 17%, compared to 34%
in the same period of 2009. The effective tax rate for the six months ended June
30, 2010, reflects approximately $180,000 of tax benefits associated with the
Company`s donation of land to the City of Bridgeport, CT in the fourth quarter
of 2009.

Walter C. Johnsen, Chairman and CEO said, “We had a solid quarter in sales,
earnings, and cash flow. However, the Company incurred substantial air freights
costs due to lower production than planned, with the resultant need to expedite
shipments to meet customer demand on time. We are addressing this by increasing
supply stock and expanding capacity.” Mr. Johnsen added that he was pleased with
the growth in European sales.

The Company`s bank debt less cash on June 30, 2010 was $8.9 million compared to
$8.9 million on June 30, 2009. During the 12 month period ended June 30, 2010,
Acme purchased 241,000 shares of its common stock for treasury for a total of
approximately $2.25 million and paid a total of $650,000 in dividends, which
were offset by cash flow from operations of $3 million. As of June 30, 2010,
there were 83,376 shares remaining for purchase under the Company`s stock
repurchase program.

ACME UNITED CORPORATION is a leading worldwide supplier of innovative cutting,
measuring and safety products to the school, home, office and industrial
markets. Its leading brands include Westcott, Clauss, Camillus and
PhysiciansCare .

Forward-looking statements in this report, including without limitation,
statements related to the Company`s plans, strategies, objectives, expectations,
intentions and adequacy of resources, are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Investors
are cautioned that such forward-looking statements involve risks and
uncertainties including, without limitation, the following: (i) the Company`s
plans, strategies, objectives, expectations and intentions are subject to change
at any time at the discretion of the Company; (ii) the impact of current
uncertainties in global economic conditions and the ongoing financial crisis
affecting the domestic and foreign banking system and financial markets,
including the impact on the Company`s suppliers and customers (iii) currency
fluctuations (iv) the Company`s plans and results of operations will be affected
by the Company`s ability to manage its growth, and (v) other risks and
uncertainties indicated from time to time in the Company`s filings with the
Securities and Exchange Commission.

ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SECOND QUARTER REPORT 2010
(Unaudited)

Three Months Ended Three Months Ended
Amounts in 000′s except per share data June 30, 2010 June 30, 2009

Net sales $ 20,585 $ 19,161
Cost of goods sold 13,034 12,056
Gross profit 7,551 7,105
Selling, general, and administrative expenses 5,605 5,086
Income from operations 1,946 2,019
Interest expense 79 44
Interest income (41 ) (31 )
Net interest expense 38 13
Other expense (income) 24 (30 )
Total other expense (income) 62 (17 )
Pre-tax income 1,884 2,036
Income tax expense 317 695
Net income $ 1,567 $ 1,341

Shares outstanding – Basic 3,158 3,325
Shares outstanding – Diluted 3,289 3,388

Earnings per share basic $ 0.50 $ 0.40
Earnings per share diluted 0.48 0.40

ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SECOND QUARTER REPORT 2010 (cont.)
(Unaudited)

Six Months Ended Six Months Ended
Amounts in 000′s except per share data June 30, 2010 June 30, 2009

Net sales $ 33,706 $ 30,458
Cost of goods sold 21,042 19,056
Gross profit 12,664 11,402
Selling, general, and administrative expenses 10,417 9,302
Income from operations 2,247 2,100
Interest expense 131 86
Interest income (73 ) (66 )
Net interest expense 58 20
Other expense (income) 39 (19 )
Total other (expense) 97 1
Pre-tax income 2,150 2,099
Income tax expense 370 716
Net income $ 1,780 $ 1,383

Shares outstanding – Basic 3,163 3,336
Shares outstanding – Diluted 3,270 3,396

Earnings per share basic $ 0.56 $ 0.41
Earnings per share diluted 0.54 0.41

ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
SECOND QUARTER REPORT 2010
(Unaudited)

Amounts in 000′s June 30, 2010 June 30, 2009

Assets:
Current assets:
Cash $ 4,250 $ 3,228
Accounts receivable, net 20,416 18,467
Inventories 17,970 19,299
Prepaid and other current assets 1,213 961
Total current assets 43,849 41,955

Property and equipment, net 1,994 2,249
Long term receivable 1,865 1,919
Other assets 2,562 2,509
Total assets $ 50,270 $ 48,633

Liabilities and stockholders’ equity:
Current liabilities
Accounts payable $ 6,177 $ 6,131
Other current liabilities 4,298 4,276
Total current liabilities 10,475 10,407
Bank debt 13,125 12,122
Other non current liabilities 1,746 1,995
25,346 24,524
Total stockholders’ equity 24,924 24,109
Total liabilities and stockholders’ equity $ 50,270 $ 48,633

Acme United Corporation
Paul G. Driscoll, 203-254-6060
Fax: 203-254-6521

Filed Under: International News Tagged With: 5 million, 6 million, Acme United Corporation, Amex, business wire, comparable period, conn, Currency Sales, diluted share, economic recovery, Fairfield, Gross Margins, Months Ended June, net income, net sales, nyse amex, Office Markets, Quarter Ended June, Second Quarter Ended June, six months

Pioneer Southwest Energy Partners L.P. Announces Quarterly Distribution on Common Units

July 24, 2010 By vani Leave a Comment

DALLAS–(Business Wire)–
Pioneer Southwest Energy Partners L.P.(“Pioneer Southwest”)(NYSE:PSE) today
announced a cash distribution of $0.50 per unit on Pioneer Southwest’s
outstanding common units for the quarter ended June 30, 2010. The distribution
is payable August 12, 2010, to unitholders of record at the close of business on
August 4, 2010.

Pioneer Southwest is a Delaware limited partnership, headquartered in Dallas,
Texas, with current production and drilling operations in the Spraberry field in
West Texas. For more information, visit www.pioneersouthwest.com.

Pioneer Southwest Energy Partners L.P.
Investors
Frank Hopkins, 972-969-4065
or
Nolan Badders, 972-969-3955
or
Media and Public Affairs
Susan Spratlen, 972-969-4018
or
Suzanne Hicks, 972-969-4020

Filed Under: International News Tagged With: august 4, Badders, business wire, Cash Distribution, Dallas Business, dallas texas, delaware, drilling operations, Energy Partners, Frank Hopkins, information visit, Limited Partnership, nolan, Nyse, pioneer, PSE, public affairs, Quarter Ended June, Quarterly Distribution, Www Southwest

Nash Finch Reports Second Quarter 2010 Results

July 23, 2010 By vani Leave a Comment

MINNEAPOLIS–(Business Wire)–
Nash Finch Company (NASDAQ: NAFC), one of the leading food distribution
companies in the United States, today announced financial results for the twelve
weeks (second quarter) ended June 19, 2010.

Financial Results

Total Company sales for the second quarter 2010 were $1.15 billion compared to
$1.22 billion in the prior-year quarter, a decrease of 5.1%. Sales for the first
twenty-four weeks of 2010 were $2.33 billion compared to $2.36 billion in the
prior-year period, a decrease of 1.0%. Excluding the impact of the
non-comparable sales increase of $59.4 million attributable to the acquisition
of the three military distribution centers on January 31, 2009 and the sales
decrease attributable to the previously announced transition of a portion of a
food distribution customer buying group to another supplier, total Company sales
decreased by 3.8% in the second quarter and 2.8% year-to-date.

Consolidated EBITDA1 for the second quarter 2010 was $31.9 million, or 2.8% of
sales, as compared to $33.6 million, or 2.8% of sales, for the
prior-year-quarter. For the first twenty-four weeks of 2010, Consolidated EBITDA
was $60.5 million, or 2.6% of sales, compared to $62.9 million, or 2.7% of
sales, in the prior-year period. Consolidated EBITDA is a non-GAAP financial
measure that is reconciled to the most directly comparable GAAP financial
results in the attached financial statements.

Net earnings for the second quarter 2010 were $10.7 million, or $0.81 per
diluted share, as compared to net earnings of $9.5 million, or $0.72 per diluted
share, in the prior year quarter. Net earnings for the first twenty-four weeks
of 2010 were $18.7 million, or $1.40 per diluted share, as compared to net
earnings of $24.0 million, or $1.80 per diluted share, in the same prior-year
period. Net earnings for both years were impacted by several significant items
which are presented in the table below.

“Although the negative sales trend that manifested in the third quarter 2009
continued into the first half of 2010 in the food distribution and retail
industry, our results reflect several major accomplishments, which include
maintaining total Company year-over-year EBITDA as a percentage of sales,
reducing debt, investing in strategic initiatives and share repurchases, and
controlling expenses and capital expenditures,” said Alec Covington, President
and CEO of Nash Finch. “We continue to have a solid balance sheet and have
significant availability in our credit facility which provides us flexibility to
capitalize on attractive growth opportunities should they present themselves.”

The Company recently announced the closing of its Bridgeport, Michigan
distribution center, which is scheduled to be completed in the third quarter.
“The transition is proceeding smoothly and we anticipate that the full
transition will be completed by the end of the third quarter,” said Covington.

The following table identifies the significant items affecting our Consolidated
EBITDA, net earnings and diluted earnings per share for the second quarter and
year-to-date 2010 and prior year results:

2nd Quarter YTD
(dollars in millions except per share amounts) 2010 2009 2010 2009
Significant credits (charges)
Distribution center closing costs $ (1.2 ) – (1.2 ) –
Retail stores opening & closing costs – (0.6 ) – (0.8 )
Acquisition, integration and start-up costs (0.3 ) (0.8 ) (0.6 ) (1.4 )
Tax consulting fees – – – (0.5 )
Significant charges impacting Consolidated EBITDA (1.5 ) (1.4 ) (1.8 ) (2.7 )

Gain on acquisition of a business – – – 6.7
Net increase in lease reserves – – – (1.2 )
Impairments – (0.9 ) – (0.9 )
Total significant net credits (charges) impacting earnings before tax (1.5 ) (2.3 ) (1.8 ) 1.9
Income tax on significant net credits (charges) 0.6 0.9 0.8 (0.8 )
Income tax effect on gain on acquisition of a business – – – 2.7
Reversal of previously recorded income tax reserves and refunds – – – 1.6
Total significant net credits (charges) impacting net earnings (0.9 ) (1.4 ) (1.0 ) 5.4
Diluted earnings per share impact $ (0.07 ) (0.10 ) (0.08 ) 0.41

Military Distribution Results

2nd Quarter % YTD %
(dollars in millions) 2010 2009 Change 2010 2009 Change
Sales $ 456.6 461.0 (1.0%) 934.6 871.3 7.3 %
Segment EBITDA1 $ 13.4 11.2 18.9% 27.0 23.2 16.4 %
Percentage of Sales 2.9% 2.4% 2.9% 2.7%

The military segment sales in the second quarter decreased 1.0% and were
reflective of weaker domestic sales, partially offset by an increase in overseas
sales. The military segment sales increased 7.3% in year-to-date 2010 reflecting
the impact of the acquisition of three military distribution centers on January
31, 2009. After adjusting for the non-comparable sales impact of these three
distribution centers of $59.4 million, military sales increased 0.5%
year-to-date.

The military segment EBITDA increased by 18.9% and 16.4% in the second quarter
and year-to-date 2010, respectively, compared to the prior year. The military
EBITDA as a percentage of sales was 2.9% in the second quarter and year-to-date
2010, respectively, as compared to 2.4% and 2.7% in the prior year.

“Our military division continues to perform despite the tough economic times,”
said Covington. “I am pleased with the significant increase in our military
division EBITDA which primarily resulted from the operating improvements
implemented across the acquired distribution centers. We are on track to open
our new Columbus, Georgia distribution center by the end of the third quarter
which will provide significant transportation savings and allow for long-term
strategic growth opportunities.”

Food Distribution & Retail Results

2nd Quarter % YTD %
(dollars in millions) 2010 2009 Change 2010 2009 Change
Sales
Food Distribution $ 574.2 619.8 (7.4 %) 1,158.0 1,221.9 (5.2 %)
Retail 123.8 135.8 (8.8 %) 241.7 263.8 (8.4 %)
Total $ 698.0 755.6 (7.6 %) 1,399.7 1,485.7 (5.8 %)
Segment EBITDA1
Food Distribution $ 13.7 17.0 (19.5 %) 24.9 30.2 (17.6 %)
Retail 4.9 5.4 (9.3 %) 8.6 9.5 (9.2 %)
Total $ 18.6 22.4 (17.0 %) 33.5 39.7 (15.7 %)
Percentage of Sales
Food Distribution 2.4% 2.7% 2.1 % 2.5 %
Retail 4.0% 4.0% 3.6 % 3.6 %
Total 2.7% 3.0% 2.4 % 2.7 %

The combined food distribution and retail segment sales decrease in the second
quarter and year-to-date periods compared to the 2009 periods was 7.6% and 5.8%,
respectively. The decrease in sales was negatively impacted by the previously
announced transition of a portion of a customer buying group to another supplier
during the second quarter 2010. However, after adjusting to exclude this sales
impact of $16.2 million, sales declined 5.6% for the second quarter and 4.7%
year-to-date which is primarily the result of a decrease in comparable sales to
existing customers driven by deflation in certain product categories. Retail
same store sales declined 4.3% as compared to the prior year quarter and 4.0% in
the year-to-date comparison. In addition, we have closed four retail stores
since the beginning of the second quarter 2009.

The food distribution and retail segment EBITDA decreased by 17.1% and 15.7% in
the second quarter and year-to-date 2010, respectively, compared to the same
period last year. Food distribution and retail segment EBITDA as a percentage of
sales was 2.7% and 2.4% in the second quarter and year-to-date 2010,
respectively, as compared to 3.0% and 2.7% in the prior year.

Financial Target Progress

Improvements on our key financial targets have been achieved since the targets
were announced as part of the Company`s strategic plan in November 2006. In
particular, Consolidated EBITDA margin improved from 2.2% to 2.8% of sales and
the debt leverage ratio has improved from 3.11x to 2.14x from Fiscal 2006 to the
second quarter 2010. The ratio of free cash flow to net assets has increased
from 8.7% in Fiscal 2006 to 10.0% in the second quarter 2010. Finally, the
organic revenue growth metric has been negatively impacted by the current state
of the economy, but should improve when consumer confidence begins to recover.

The following table charts the Company`s progress towards its long-term
financial targets that are anticipated to be attained through successful
execution of the strategic plan.

Financial Targets Long-term 2nd Quarter Fiscal Fiscal Fiscal Fiscal
Target 2010 2009 2008 2007 2006
Organic Revenue Growth 2.0% (3.8%) (0.6%) 3.1% (2.1%) (2.9%)
Consolidated EBITDA Margin 4.0% 2.8% 2.7% 3.1% 2.8% 2.2%
Trailing Four Quarter Free Cash Flow2 / Net Assets 10.0% 10.0% 10.6% 12.0% 9.2% 8.7%
Total Leverage Ratio (Total Debt / Trailing Four 2.5 – 3.0 x 2.14x 2.02x 1.75x 2.20x 3.11x
Quarter Consolidated EBITDA)

2 Defined as cash provided from operations less capital expenditures for
property, plant & equipment during the trailing four quarters divided by the
average net assets for the current period and prior year comparable period
(total assets less current liabilities plus current portion of long-term debt
and capital leases).

Liquidity

Total debt at the end of the second quarter of 2010 was $294.1 million, a
reduction of $44.7 million as compared to $338.8 million at the end of the
second quarter of 2009. The Company continues to focus on effectively managing
its balance sheet and is currently in compliance with all of its debt covenants.
The debt leverage ratio as of the end of the second quarter 2010 was 2.14x.
Availability on the Company`s revolving credit facility at the end of the
quarter was $193.1 million.

Share Repurchase Program

As previously announced, our Board of Directors approved a share repurchase
program authorizing the Company to spend up to $25.0 million to purchase shares
of the Company`s common stock. The program took effect on November 16, 2009 and
will continue until December 31, 2010. During the second quarter 2010 we
repurchased a total of 182,802 shares for $6.5 million, at an average price per
share of $35.62. Since the program`s inception, we have repurchased a total of
472,432 shares for $16.3 million, at an average price per share of $34.57.

A conference call to review the second quarter 2010 results is scheduled for at
8:30 a.m. CT (9:30 a.m. ET) on July 22, 2010. Interested participants can listen
to the conference call over the Internet by logging onto the “Investor
Relations” portion of Nash Finch’s website at http://www.nashfinch.com. A replay
of the webcast will be available and the transcript of the call will be archived
on the “Investor Relations” portion of Nash Finch’s website under the heading
“Audio Archives.” A copy of this press release and the other financial and
statistical information about the periods to be discussed in the conference call
will be available at the time of the call on the “Investor Relations” portion of
the Nash Finch website under the caption “Press Releases.”

Nash Finch Company is a Fortune 500 company and one of the leading food
distribution companies in the United States. Nash Finch`s core business, food
distribution, serves independent retailers and military commissaries in 36
states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores and
Egypt. The Company also owns and operates a base of retail stores, primarily
supermarkets under the Econofoods, Family Thrift Center, AVANZA, Family Fresh
Market and Sun Mart trade names. Further information is available on the
Company’s website at www.nashfinch.com.

This release contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.Such statements relate to trends and events
that may affect our future financial position and operating results.Any
statement contained in this release that is not statements of historical fact
may be deemed forward-looking statements. For example, words such as “may,”
“will,” “should,” “likely,” “expect,” “anticipate,” “estimate,” “believe,”
“intend, ” “potential” or “plan,” or comparable terminology, are intended to
identify forward-looking statements.Such statements are based upon current
expectations, estimates and assumptions, and entail various risks and
uncertainties that could cause actual results to differ materially from those
expressed in such forward-looking statements.Important factors known to us that
could cause or contribute to material differences include, but are not limited
to, the following:

* the effect of competition on our food distribution, military and retail
businesses;
* general sensitivity to economic conditions, including the uncertainty related
to the current state of the economy in the U.S. and worldwide economic slowdown;
continued disruptions to the credit and financial markets in the U.S. and
worldwide; changes in market interest rates; continued volatility in energy
prices and food commodities;
* macroeconomic and geopolitical events affecting commerce generally;
* changes in consumer buying and spending patterns;
* our ability to identify and execute plans to expand our food distribution,
military and retail operations;
* possible changes in the military commissary system, including those stemming
from the redeployment of forces, congressional action and funding levels;
* our ability to identify and execute plans to improve the competitive position
of our retail operations;
* the success or failure of strategic plans, new business ventures or
initiatives;
* our ability to successfully integrate and manage current or future businesses
we acquire, including the ability to manage credit risks and retain the
customers of those operations;
* changes in credit risk from financial accommodations extended to new or
existing customers;
* significant changes in the nature of vendor promotional programs and the
allocation of funds among the programs;
* limitations on financial and operating flexibility due to debt levels and debt
instrument covenants;
* legal, governmental, legislative or administrative proceedings, disputes, or
actions that result in adverse outcomes;
* failure of our internal control over financial reporting;
* changes in accounting standards;
* technology failures that may have a material adverse effect on our business;
* severe weather and natural disasters that may impact our supply chain;
* unionization of a significant portion of our workforce;
* costs related to multi-employer pension plan which has liabilities in excess
of plan assets;
* changes in health care, pension and wage costs and labor relations issues;
* product liability claims, including claims concerning food and prepared food
products;
* threats or potential threats to security; and
* unanticipated problems with product procurement.

A more detailed discussion of many of these factors, as well as other factors
that could affect the Company`s results, is contained in the Company`s periodic
reports filed with the SEC.You should carefully consider each of these factors
and all of the other information in this release.We believe that all
forward-looking statements are based upon reasonable assumptions when
made.However, we caution that it is impossible to predict actual results or
outcomes and that accordingly you should not place undue reliance on these
statements.Forward-looking statements speak only as of the date when made and we
undertake no obligation to revise or update these statements in light of
subsequent events or developments.Actual results and outcomes may differ
materially from anticipated results or outcomes discussed in forward-looking
statements. You are advised, however, to consult any future disclosures we make
on related subjects in future reports to the Securities and Exchange Commission
(SEC).

1 Consolidated EBITDA and segment EBITDA is calculated as earnings before
interest, income tax, depreciation and amortization, adjusted to exclude
extraordinary gains or losses, gains or losses from sales of assets other than
inventory in the ordinary course of business, and non-cash charges (such as
LIFO, asset impairments, closed store lease costs and share-based compensation),
less cash payments made during the current period on non-cash charges recorded
in prior periods. Consolidated EBITDA should not be considered an alternative
measure of our net income, operating performance, cash flows or liquidity.
Consolidated EBITDA is provided as additional information as a key metric used
to determine payout pursuant to our Short-Term and Long-Term Incentive Plans.

NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share amounts)

Twelve Twenty Four
Weeks Ended Weeks Ended
June 19 June 20 June 19 June 20
2010 2009 2010 2009

Sales $ 1,154,617 1,216,594 $ 2,334,310 2,356,914
Cost of sales 1,060,280 1,117,565 2,148,153 2,162,766
Gross profit 94,337 99,029 186,157 194,148

Other costs and expenses:
Selling, general and administrative 62,835 67,703 127,482 137,339
Gain on acquisition of a business – – – (6,682 )
Depreciation and amortization 8,170 9,372 16,755 18,707
Interest expense 5,366 5,840 10,624 11,144
Total other costs and expenses 76,371 82,915 154,861 160,508

Earnings before income taxes 17,966 16,114 31,296 33,640

Income tax expense 7,252 6,576 12,641 9,682
Net earnings $ 10,714 9,538 $ 18,655 23,958

Net earnings per share:

Basic $ 0.83 0.73 1.43 1.85
Diluted $ 0.81 0.72 1.40 1.80

Declared dividends per common share $ 0.18 0.18 $ 0.36 0.36

Weighted average number of common shares
outstanding and common equivalent shares outstanding:
Basic 12,904 13,005 13,015 12,985
Diluted 13,263 13,321 13,352 13,326

NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share amounts)

Assets June 19, 2010 January 2, 2010
Current assets:
Cash and cash equivalents $ 765 830
Accounts and notes receivable, net 231,778 250,767
Inventories 312,935 285,443
Prepaid expenses and other 14,587 11,410
Deferred tax assets 9,249 9,366
Total current assets 569,314 557,816

Notes receivable, net 21,869 23,343

Property, plant and equipment: 634,610 637,167
Less accumulated depreciation and amortization (423,467 ) (422,529 )
Net property, plant and equipment 211,143 214,638

Goodwill 166,545 166,545
Customer contracts and relationships, net 19,698 21,062
Investment in direct financing leases 3,083 3,185
Other assets 11,804 12,947
Total assets $ 1,003,456 999,536

Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt and capitalized lease obligations $ 3,517 4,438
Accounts payable 234,103 240,483
Accrued expenses 59,613 60,524
Income taxes payable – 3,064
Total current liabilities 297,233 308,509

Long-term debt 270,352 257,590
Capitalized lease obligations 20,228 21,442
Deferred tax liability, net 19,378 19,323
Other liabilities 43,657 42,113
Commitments and contingencies – –
Stockholders’ equity:
Preferred stock – no par value.
Authorized 500 shares; none issued – –
Common stock of $1.66 2/3 par value
Authorized 50,000 shares, issued 13,675 and 13,675 shares respectively 22,792 22,792
Additional paid-in capital 109,109 106,705
Common stock held in trust (2,367 ) (2,342 )
Deferred compensation obligations 2,367 2,342
Accumulated other comprehensive income (10,569 ) (10,756 )
Retained earnings 275,801 261,821
Treasury stock at cost, 1,282 and 863 shares, respectively (44,525 ) (30,003 )
Total stockholders’ equity 352,608 350,559
Total liabilities and stockholders’ equity $ 1,003,456 999,536

NASH FINCH COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)

Twenty-Four
Weeks Ended
June 19 June 20
2010 2009
Operating activities:
Net earnings $ 18,655 23,958
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Gain on acquisition of a business – (6,682 )
Depreciation and amortization 16,755 18,707
Amortization of deferred financing costs 846 794
Non-cash convertible debt interest 2,413 2,231
Amortization of rebateable loans 2,531 2,519
Provision for bad debts 433 869
Provision for (reversal of) lease reserves (434 ) 1,066
Deferred income tax expense 174 586
(Gain) loss on sale of real estate and other (229 ) 134
LIFO credit (362 ) (287 )
Asset impairments 818 898
Share-based compensation 3,462 5,715
Deferred compensation 463 548
Other (387 ) (74 )
Changes in operating assets and liabilities, net of effects of
acquisition
Accounts and notes receivable 17,099 (14,561 )
Inventories (27,130 ) (11,081 )
Prepaid expenses 157 734
Accounts payable (12,992 ) (2,701 )
Accrued expenses (804 ) (12,442 )
Income taxes payable (6,398 ) (1,467 )
Other assets and liabilities 2,609 1,327
Net cash provided by operating activities 17,679 10,791
Investing activities:
Disposal of property, plant and equipment 347 107
Additions to property, plant and equipment (10,369 ) (5,555 )
Business acquired, net of cash – (78,056 )
Loans to customers (600 ) (2,125 )
Payments from customers on loans 1,102 1,798
Corporate owned life insurance, net (297 ) (235 )
Other – 629
Net cash used in investing activities (9,817 ) (83,437 )
Financing activities:
Proceeds from revolving debt 10,600 86,300
Dividends paid (4,549 ) (4,617 )
Proceeds from exercise of stock options – 196
Repurchase of common stock (15,191 ) –
Payments of long-term debt (233 ) (220 )
Payments of capitalized lease obligations (1,839 ) (1,600 )
Increase (decrease) in book overdraft 3,285 (4,682 )
Payments of deferred financing costs – (2,706 )
Net cash provided (used) by financing activities (7,927 ) 72,671
Net increase (decrease) in cash and cash equivalents (65 ) 25
Cash and cash equivalents:
Beginning of year 830 824
End of period $ 765 849

NASH FINCH COMPANY AND SUBSIDIARIES
Supplemental Data (Unaudited)

June 19 June 20
Other Data (In thousands) 2010 2009

Total debt $ 294,097 $ 338,769
Stockholders’ equity $ 352,608 $ 374,334
Capitalization $ 646,705 713,103
Debt to total capitalization 45.5 % 47.5 %

Non-GAAP Data
Consolidated EBITDA – trailing 4 qtrs. (a) $ 137,718 142,362
Leverage ratio – trailing 4 qtrs. (debt to consolidated EBITDA) (b) 2.14 2.38

Comparable GAAP Data
Debt to earnings before income taxes (b) 13.74 5.91

(a) Consolidated EBITDA is calculated as earnings before interest, income tax, depreciation and amortization, adjusted to exclude extraordinary gains or losses, gains or
losses from sales of assets other than inventory in the normal course of business, and non-cash charges (such as LIFO, assets impairments, closed store lease costs and
share-based compensation), less cash payments made during the current period on non-cash charges recorded in prior periods. Consolidated EBITDA should not be considered
an alternative measure of our net income, operating performance, cash flows or liquidity. Consolidated EBITDA is provided as additional information as a key metric used
to determine payout pursuant to our Short-Term and Long-Term Incentive Plans.

(b) Leverage ratio is defined as the Company’s total debt at June 19, 2010 and June 20, 2009, divided by Consolidated EBITDA for the respective four trailing quarters. The
most comparable GAAP ratio is debt at the same date divided by earnings from continuing operations before income taxes for the respective four quarters.

Derivation of Consolidated EBITDA; Segment Consolidated EBITDA; and Segment Profit (in thousands)

FY2010
2009 2009 2010 2010 Trailing
Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs

Earnings (loss) from continuing operations before income taxes $ 31,655 (41,545 ) 13,330 17,966 21,406
Add/(deduct)
LIFO (445 ) (2,301 ) (40 ) (321 ) (3,107 )
Depreciation and amortization 12,592 9,304 8,585 8,170 38,651
Interest expense 7,621 5,607 5,258 5,366 23,852
Special charge – 6,020 – – 6,020
Goodwill impairment – 50,927 – – 50,927
Gain on litigation settlement (7,630 ) – – – (7,630 )
Closed store lease costs 425 1,644 – (434 ) 1,635
Asset impairment 840 722 517 301 2,380
Stock compensation 1,706 1,663 1,605 1,857 6,831
Gains on sale of real estate (54 ) – – – (54 )
Subsequent cash payments on non-cash charges (712 ) (772 ) (740 ) (969 ) (3,193 )
Total Consolidated EBITDA $ 45,998 31,269 28,515 31,936 137,718

2009 2009 2010 2010 Trailing
Segment Consolidated EBITDA Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
Military $ 15,731 12,031 13,615 13,364 54,741
Food Distribution 22,461 15,455 11,227 13,634 62,777
Retail 7,806 3,783 3,673 4,938 20,200
$ 45,998 31,269 28,515 31,936 137,718

2009 2009 2010 2010 Trailing
Segment profit Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
Military $ 13,448 10,146 11,816 11,519 46,929
Food Distribution 15,181 11,495 5,799 8,581 41,056
Retail 1,937 (1,449 ) 227 2,389 3,104
Unallocated
Interest (6,541 ) (4,790 ) (4,512 ) (4,523 ) (20,366 )
Gain on litigation 7,630 – – – 7,630
Special charge – (6,020 ) – – (6,020 )
Goodwill impairment – (50,927 ) – – (50,927 )
$ 31,655 (41,545 ) 13,330 17,966 21,406

FY2009
2008 2008 2009 2009 Trailing
Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
Earnings from continuing operations before income taxes $ 13,029 10,643 17,526 16,114 57,312
Add/(deduct)
LIFO 8,360 7,849 – (287 ) 15,922
Depreciation and amortization 11,643 9,051 9,335 9,372 39,401
Interest expense 7,556 6,034 5,304 5,840 24,734
Gain on acquisition of a business – – (6,682 ) – (6,682 )
Closed store lease costs 480 (317 ) 1,066 – 1,229
Asset impairment 694 1,065 – 898 2,657
Stock compensation 3,013 1,814 3,307 2,408 10,542
Subsequent cash payments on non-cash charges (787 ) (635 ) (617 ) (714 ) (2,753 )
Total Consolidated EBITDA $ 43,988 35,504 29,239 33,631 142,362

2008 2008 2009 2009 Trailing
Segment Consolidated EBITDA Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
Military $ 14,279 11,484 11,948 11,239 48,950
Food Distribution 21,487 17,412 13,257 16,946 69,102
Retail 8,222 6,608 4,034 5,446 24,310
$ 43,988 35,504 29,239 33,631 142,362

2008 2008 2009 2009 Trailing
Segment profit Qtr 3 Qtr 4 Qtr 1 Qtr 2 4 Qtrs
Military $ 11,783 9,242 9,905 9,421 40,351
Food Distribution 5,869 5,155 5,982 10,508 27,514
Retail 1,916 1,450 (470 ) 1,209 4,105
Unallocated
Interest (6,539 ) (5,204 ) (4,573 ) (5,024 ) (21,340 )
Gain on acquisition – – 6,682 – 6,682
$ 13,029 10,643 17,526 16,114 57,312

Nash Finch Company
Bob Dimond, 952-844-1060
Executive Vice President & CFO

Filed Under: International News Tagged With: 5 million, business wire, Buying Group, Comparable Sales, diluted share, distribution centers, Distribution Customer, earnings, EBITDA, Financial Statements, Food Distribution Companies, Military Distribution, Minneapolis Business, Nafc, nasdaq, Nash Finch, Nash Finch Company, Quarter Ended June, Sales Trend, Second Quarter Ended June

Infosys Technologies (Nasdaq: INFY) Announces Results for the Quarter Ended June 30, 2010

July 14, 2010 By vani Leave a Comment

BANGALORE, India, July 13 /PRNewswire-FirstCall/ –

Highlights

Consolidated results for the quarter ended June 30, 2010

Revenues were $ 1,358 million for the quarter ended June 30, 2010; QoQ growth was 4.8%; YoY growth was 21.0%

* Net income after tax* was $ 326 million for the quarter ended June 30, 2010; QoQ decline was 6.6%; YoY growth was 4.2%
* Earnings per American Depositary Share (ADS)** was 0.57 for the quarter ended June 30, 2010; QoQ decline was 6.6%; YoY growth of 3.6%
* 38 clients were added during the quarter by Infosys and its subsidiaries
* Gross addition of 8,859 employees (net addition of 1,026) for the quarter by Infosys and its subsidiaries
* 1,14,822 employees as on June 30, 2010 for Infosys and its subsidiaries

* Excluding the income from sale of our investment in OnMobile Systems, Inc. of US $ 11 mn in Q4 FY10, QoQ decline was 3.6%

** Excluding the income from sale of our investment in OnMobile Systems, Inc. of US $ 11 mn in Q4 FY10, QoQ decline was 3.4%

“While the global economic environment remains uncertain, we continue to see greater demand for services from our clients,” said S. Gopalakrishnan, CEO and Managing Director. “The challenge for the industry is to enhance the investment to grow the business, given the uncertainty in the environment.”

Business outlook

The company’s outlook (consolidated) for the quarter ending September 30, 2010 and for the fiscal year ending March 31, 2011, under International Financial Reporting Standards (IFRS), is as follows:

Outlook under IFRS#

Quarter ending September 30, 2010

* Consolidated revenues are expected to be in the range of $ 1,413 million to $ 1,427 million; YoY growth of 22.4% to 23.7%
* Consolidated earnings per American Depositary Share are expected to be in the range of $ 0.59 to $ 0.60; YoY growth of 5.4% to 7.1%

Fiscal year ending March 31, 2011##

* Consolidated revenues are expected to be in the range of $ 5.72 billion to $ 5.81 billion; YoY growth of 19.0% to 21.0%
* Consolidated earnings per American Depositary Share are expected to be in the range of $ 2.42 to $ 2.52; YoY growth of 5.2% to 9.6%

# Exchange rates considered for major global currencies: AUD / USD – 0.86; GBP / USD – 1.50; Euro / USD – 1.23

## Excluding the income from sale of our investment in OnMobile Systems, Inc. of US $ 11 mn in fiscal 2010, the EPS growth is expected to be in the range of 6.1% to 10.5%

Expansion of services and significant projects

With insight and experience of three decades, and improved and enhanced portfolio of services and products, we offer greater value to our clients and stakeholders.

Transformation

We continue to drive transformation for our existing clients; a number of new clients have solicited our help to make their businesses more dynamic and profitable.

A leading aero structures manufacturer engaged our aerospace engineering team to design and develop components for their commercial airplane program. For a global consumer electronics leader, we are re-engineering their global service exchange platform to help meet their growing service needs. A major transformation project we won this quarter was from a large manufacturer of computer systems and provider of related services, in which we are providing business, functional and consulting expertise. A provider of secure electronic payments and credit/debit card processing services engaged us to improve their reporting, monitoring, business intelligence and service. It is also consulting us to analyze and recommend process improvements. A leading global chemical company engaged us to define sales requirements and implement a sales force automation package for their North American sales force. A producer of specialist aluminium products sought our services for globally harmonizing business processes and implementing next generation enterprise resource planning software. For a global specialty retailer, we conceptualized and launched a platform that provides a comprehensive view of their competitors’ pricing and assortment. We helped a large UK-based retailer revamp its promotions and improve its marketing effectiveness. A European retailer of office automation services consulted us to harmonize their processes and consolidate applications across Europe. A major transformational project won this quarter was from a leading European pipeline engineering company for whom we have implemented an enterprise resource planning system across 32 countries.

Operations

Leading global companies continue to engage us to manage their operations and ensure larger returns to scale for them.

Our expertise in manufacturing and operations helped us win a deal with a global telecom company. We will run the client’s quality and business compliance operations, helping it to offer competitive new products in emerging markets. A European telecom major chose us to design, develop, deploy and maintain an agent desktop application. Among the clients who opted for our product lifecycle management services are a leading oilfield service company and an agri-business major. For a global internet services company, we will develop and maintain a new content management product. A global financial services company selected us to develop a platform for merchants worldwide to deliver card members offers through multiple channels. An investment management company partnered us to implement a new commission system for its wholesale brokers to develop scale and reduce time to market. We managed the North American customer relationship management applications for a manufacturer of automobiles and motorcycles. Another automobile manufacturer selected us as a key partner for development projects in their strategic order management and distribution portfolio. We are implementing a centralized loyalty management system with real time access for a leading retail company. We were instrumental in implementing a single multi-channel order management platform for a reputed British retailer. Our retail solutions team was selected as the single strategic vendor for application services for a North American apparel retailer. We also developed a web property for the B2C online sales for another specialty retailer.

Innovation

We have won major strategic projects this quarter on our strength and ability to innovate products and processes.

A European telecom giant chose us to develop their next generation set top box platform to offer consumers high-definition content and a host of other services. For a large global retailer, we are creating rich mobile applications, with an aim to enhance the shopping experience for their customers. An aircraft manufacturer chose us as their partner to design a new aircraft development program.

“The volatile currency environment is a concern for the industry,” said V. Balakrishnan, Chief Financial Officer. “Our flexible financial and operating model enables us to prioritize our investments and focus on high quality growth even in this tough environment.”

About Infosys Technologies Ltd.

Infosys (Nasdaq: INFY) defines, designs and delivers IT-enabled business solutions that help Global 2000 companies win in a Flat World. These solutions focus on providing strategic differentiation and operational superiority to clients. With Infosys, clients are assured of a transparent business partner, world-class processes, speed of execution and the power to stretch their IT budget by leveraging the Global Delivery Model that Infosys pioneered. Infosys has over 114,000 employees in over 50 offices worldwide. Infosys is part of the NASDAQ-100 Index and The Global Dow. For more information, visit www.infosys.com.

Safe Harbor

Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2010 and on Form 6-K for the quarters ended June 30, 2009, September 30, 2009 and December 31,2009. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company’s filings with the Securities and Exchange Commission and our reports to shareholders. The company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the company.

Filed Under: International News Tagged With: American Depositary Share, Business Outlook, Consolidated Earnings, Consolidated Results, consolidated revenues, financial reporting standards, firstcall, Fiscal Year Ending March, global economic environment, gopalakrishnan, Infosys Technologies, Infy, international financial reporting standards, managing director, nasdaq, net income, Onmobile, q4, Quarter Ended June, Year Ending March

BRIEF-AOT says Suvarnabhumi airport’s passengers down in Q3

July 11, 2010 By vani Leave a Comment

July 10 (Reuters) – Airports of Thailand PCL AOT.BK

* Says number of passengers through its core Suvarnabhumi airport fell 5.8 percent to 8.63 million in the third quarter ended June, with international passengers down 1 percent and domestic passengers decreasing 10.55 percent, it said in a statement.

* Passenger numbers at the airport fell to 50,000-60,000 per day in April and May due to local political unrest, it said. The volume now rose to a normal level of 100,000 per day on average, it said.

* For nine months ended June, passenger traffic volume at the airport increased 19.5 percent to 32.2 million, with international traffic volume rising 17.25 percent and domestic traffic volume up 27.18 percent, it said.

* Majority state-owned Airports operates the country’s six main airports — Suvarnabhumi and Don Muang in Bangkok, Hat Yai, Chiang Mai, Chiang Rai and Phuket — and these handle around 90 percent of total air traffic in the country (Reporting by Viparat Jantraprap; Editing by Jeremy Laurence)

Filed Under: International News Tagged With: air- traffic, aot, Chiang Rai, Domestic Traffic, Don Muang, Hat Yai, international passengers, International Traffic, Months Ended June, nine months, Passenger Numbers, Passenger Traffic, Pcl, phuket, political unrest, q3, Quarter Ended June, reuters, Suvarnabhumi Airport, Traffic Volume

Natco Pharma – Natco Pharma Results 2009 – Natco Pharma Q1 Results 2009 – Natco Pharma net rises 46% to Rs 8 crore

August 12, 2009 By admin Leave a Comment

Natco Pharma | Natco Pharma Results 2009 | Natco Pharma Q1 Results 2009 | Natco Pharma net rises 46% to Rs 8 crore

Hyderabad-based Natco Pharma’s net profit grew 45.7% to Rs 8.1 crore during the quarter ended June 30, 2009, against Rs 5.5 crore in the corresponding quarter of the previous year.

The total income of the company rose 10.1% to Rs 50.9 crore from Rs 46.2 crore in the same period last year.

The company said its earnings have been spurred by contribution from its US retail and domestic oncology businesses.

For more such FInancial and Stock Market News visit http://buzzingstock.in

Filed Under: Business News Tagged With: bse, BuzzingStock, earnings, Indian Companies Annual Results, Indian Companies Quarterly Results, Indian Companies Results, Indian Stock Market News, Natco Pharma, Natco Pharma First Quarter Results, Natco Pharma Net Rises 46% To Rs 8 Crore, Natco Pharma Q1 Results 2009, Natco Pharma Quarterly Results, Natco Pharma Results, Natco Pharma Results 2009, net profit, nse, oncology, previous year, q1 results, Quarter Ended June, rs 50, rs 8, Stock Market News

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BRIEF-AOT says Suvarnabhumi airport’s passengers down in Q3

Natco Pharma – Natco Pharma Results 2009 – Natco Pharma Q1 Results 2009 – Natco Pharma net rises 46% to Rs 8 crore

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