006 - SAP Software Solutionswhen working and partnering with SAP. Together, as co-CEOs, we believe...

Upping the game006

meeting natUral disasters head-on054

leading with processes as well as prodUction060

streaming past the competition150

slick integration258

To our Shareholders LettertotheShareholders ExecutiveBoard

Transparency and IntegrityInvestorRelations

SustainabilityCorporateGovernanceReport

ReportbytheSupervisoryBoard CompensationReport

Declaration of the Executive Board

Independent Auditor’s Report

Review of Operations TheSAPGroupofCompanies

SoftwareandServicePortfolioPartnerEcosystem

ResearchandDevelopmentAcquisitionsCustomersEmployees

FinancialMeasuresCitedinthisReviewEconomicConditions

Income,Finances,andAssetsCorporateGovernance

InformationConcerningTakeoversRiskManagementandRiskFactors

BusinessintheNewYear:EarlyNewsOutlook

Financial Statements ConsolidatedFinancialStatementsIFRS

FinancialStatementofSAPAG(HGB)–ShortVersion

Additional Information Five-YearSummary Addresses PublicationsforShareholders FinancialCalendar PublicationDetails

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001

Letter to the SharehoLderSClarity fosters innovation

The past year was marked by changes to the business environment, as customers adapted to a new market reality. Customer buying behavior shifted to an emphasis on smaller transactions and projects with immediate return; decision making moved increasingly to line of business executives and away from the traditional IT power base of the CIO; and there were increased requirements for solutions to help CEOs, COOs, and CFOs manage perfor-mance, compliance, and gain more business insight for faster decision making. To respond quickly to this “new normal” of customer behavior, SAP began an ambitious transformation to bring us closer to customers and to increase speed to value. We laid a new foundation for sustainable growth, implemented lean principles and increased engagement with employees – our most powerful assets – while paying close attention to costs, reducing them by €662 million year-over-year, with a clear focus on improving our operating margin.

As 2009 drew to a close, these transformation efforts, combined with strong field execution and a renewed focus on innovation, allowed SAP to finish the year with better-than-expected fourth-quarter and full-year results as software and software-related service (SSRS) revenue was down only 5% for 2009 (non-GAAP, constant currencies). Execution was strong in the Asia Pacific and Americas regions, with the BRIC countries, the United States, the United Kingdom, and Germany leading the pack. We won some outstanding customers in key indus-tries, such as banking, insurance, public sector, and telecommunications. We also exceeded our operating margin target for the year at 27.5% (non-GAAP, constant currencies).

Today, companies in all industries and of all sizes are looking to SAP to help them grow again. They want to be more innovative, agile, and competitive, and they are focused on tech-nology investments that can help them take full advantage of a more positive economic outlook. As such, we expect 2010 to be a powerful year for SAP as we look to significantly expand our leadership of the enterprise application software market with new innovative products, new customer opportunities, and a focus on sustainable top-line and margin growth.

The changes in the SAP Executive Board made early this year were designed to intensify and accelerate our business strategy. SAP is more focused than ever on delivering a faster pace of innovation enabling customers to consume our solutions on-premise, on-demand, and on-device. We will help customers drive down their cost of operations by orchestrating their information technology, while providing consistency and security of data and business processes. Moreover, we will leverage the latest technologies, such as virtualization, cloud, and in-memory to ensure that our business solutions are easy to implement, easy to use, and seamlessly integrate across SAP and non-SAP environments.

At the forefront is the SAP Business ByDesign solution, which we anticipate delivering mid-2010 as a volume-ready cloud suite. In addition, this year SAP will begin delivering on-demand extensions to our market-leading SAP Business Suite 7, giving customers a choice of on-premise, on-demand, or a hybrid of both. We will also bring to market innovations such as

Dear Shareholders, Customers, Partners, and Colleagues,

002 SAP Annual Report 2009

LettertotheShareholders

networkedapplications,in-depthindustrysolutions,andapplicationsdesignedtohelpbusi-nessusersbemoreinformed,productive,andefficient.Atthesametime,SAPwillmorefullyleveragetheindustry’slargestecosystemtodrivegrowthforSAPandinnovationforourcustomers.WewillprovideourpartnersthesupporttheyneedtohelpensuretheirsuccesswhenworkingandpartneringwithSAP.

Together,asco-CEOs,webelieveourstrongworkingrelationshipandcomplementaryskillscanhelpaccelerateSAP’stransformation.Ourjointambitionistofosteracultureofinnova-tionatSAPthatengagesandinspiresourpeoplearoundonegoal:helpingourcustomersbebest-runbusinesses.Westandatthebeginningofanewerawhereinformationtechnologymeansmorethanjustindividualapplicationsorproducts–itenablesallfacetsofsocietytoflourish.WelookforwardtostrengtheningourstrongpartnershipswithallstakeholdersasweleadSAPintoanewgenerationofprofitablegrowth.

Thesuccessfulconclusionto2009istestimonytothemarketleadershipofSAP,builtuponthetrustedadvisorstatuswehaveearnedwithmorethan95,000customers,andtotheinnovativepoweranddriveofSAPemployeesandpartners.Whilethelastyearhasbeendefinedbyachangedmarketenvironmentandinternaltransformation,SAPisuniquelypreparedandpositionedtotakefulladvantageoftheopportunitiesthatareinfrontofus.

Bestregards,

BillMcDermott JimHagemannSnabeCo-CEO Co-CEOSAPAG SAPAG

Fromleftside:Jim Hagemann Snabe(Co-CEO)Bill McDermott(Co-CEO)

003

eXecUtiVe Board CoMMitteD to tHe sUCCess of oUr CUstoMers

a

B

c


ExecutiveBoard

a Bill McDermott(48)Co-CEO

JoinedSAP:2002

B Jim Hagemann Snabe(44)Co-CEO

JoinedSAP:1990

c Werner Brandt(56)Chief Financial Officer

JoinedSAP:2001

d Gerhard Oswald(56)Chief Operating Officer JoinedSAP:1981

e Vishal Sikka(42)Chief Technology Officer JoinedSAP:2002

d

e

005

Upping the game

more information at www.sapannualreport.com/2009/en

a sporting goods giant scores with sap apparel and foot-wear.

High performance matters in business as much as it does in sports. To maintain its competitive edge, the leading sporting goods company adidas Group leveraged the SAP Apparel and Footwear application to improve the efficiency of its complex global supply chain and accelerate future growth. The application helps companies in the apparel, footwear, and lifestyle industries to manage products with multiple characte-ristics such as style, color, and size along the fashion value chain. As a result of the implementation of the SAP software, adidas has been able to increase operational efficiency, improve its supply chain performance, and introduce industry best practices across the organization.

inVestor relations transparent, open CoMMUniCation

Our dialog with investors focused on our strategy, our product portfolio, and SAP Enterprise Support. SAP stock significantly outperformed all of the international benchmark stock indexes.

Thestockmarketsbegan2009inamoodofcautiousoptimism.Theheavylossesassociat-edwiththeprolongedinternationalfinancialcrisishadmadethepreviousyearoneofthedarkestchaptersinthehistoryofthecapitalmarkets,buttheworstnowseemedtobeover.Stockpricesstabilizedinthelasttwomonthsof2008,onlytoplungeagaininJanuaryandFebruary2009.Inthisperiod,theDAX®,whichisthebenchmarkGermanstockindex,de-clined25%to3,666points–itslowestlevelsinceAugust2004.Thisdownturnwascausedbyprofit-taking,decliningconfidenceinthefinancialsectoramonginvestors,andthecon-tinuinganxietyoffinancialmarketparticipantsaboutthestabilityoftheglobaleconomy.Butalthoughmosteconomicexpertsandcompanydirectorspredictedgloomyscenariosforthestockmarkets,withtheworldfacingthemostseriouseconomicandfinancialcrisissincethe1930s,thestockmarketsboomed.

Optimisticinvestorsputtheirfaithinthegovernment-backedrescuepackagesworthbillionsofdollarsandinvestedinequitiesagain.Marketsremainedvolatileinthesecondquarterof2009–fluctuatingbetweenskepticismandconfidence–andsharepricesretreatedworld-wideinconsequence.Favorablebusinessresults,combinedwithincreasinghopesofrecovery,particularlyinthefast-growingemergingeconomiesoftheBRICcountries(Brazil,Russia,India,andChina),bolsteredsentimentonthestockmarketstowardthemiddleoftheyear.BetweenAprilandJune,theDAX30indexandtheDowJonesEUROSTOXX50®indexofblue-chipstocksintheeuroarea,recordedgrowthof17.7%and16.0%,respectively.

Thisupwardtrendpersistedfrommid-yearuntiltheendoftheyear.Itwasreflectedinagen-eralimprovementinstockmarketsentimentandinrisingstockprices,especiallyinthefourthquarter.TheBRICcountriessawstockprices(indollars)soarbyupto75%inmid-December.Thefinancialmarketsretreatedagainattheendoftheyear,however,asaresultofconcernsovertheEmirateofDubai’slevelofdebtandthedowngradingofeuro-areamemberGreece’screditrating.Theyearendedwitharally,whichattimesliftedtheDAXabove6,000inlateDecember.

AriseintheTechnologyPeerGroupIndex®(TechPGI)oftenmajortechnologystockswasaclearpointerthatinvestorswerehopingthetechnologysectorwouldstageaquickrecovery.Theindexincreased60.7%overtheyearasawhole.TheDowJonesindexopenedat8,776pointsatthebeginningof2009andclimbedapproximately20%to10,548pointsinthecourseoftheyear.TheS&P500®rose25.2%,andtheS&PNorthSoftware-SoftwareIndexTMrosealmosttwiceasfastasthat,byapproximately50%.


SAP OuTPERFORMS THE DAX

SAPstockstartedwellin2009andcontinuedtoperformstronglyovertheyear.Thepriceofthestockincreased30.7%inthecourseoftheyear,whiletheDAX30andEUROSTOXX50benchmarkindexesroseonly23.8%and21.1%,respectively.SAPstockoutperformedtheDAXandEUROSTOXXinthecrisisyearof2008aswell.Afterclosingat€25.24ontheXetra®tradingsystemattheendof2008,thestockroseto€29.64followingpublicationofthe2008resultsonFebruary9,2009–itshighestlevelinthefirstquarter.Butconcernsovertheimpactoftheglobalfinancialcrisisontheeconomycontinuedtoinfluencestockmarketsentiment,andSAPstockwasaffectedbythegeneraldownwardtrend.ItbottomedfortheyearonMarch6at€25.01.GoodquarterlyresultsattheendofJulyputSAPstockbackontrack,andbyAugust7ithadrisento€33.45.

Soonafterwards,onSeptember11,itreached€35.26–itshighestlevelin2009.ThelasttimeSAPstockhadbeenatthislevelwasinearlyOctober2008,beforetheglobalfinancialcrisishitthestockmarkets.Profit-takingthencausedthestocktofallto€33.28attheendofthethirdquarter.SAPstockwasvolatileinthefourthquarter:Positivestockmarketsenti-mentpushedthepricebackupto€35.08onOctober14,promptinganotherroundofprofit-taking.Thepricefellagainfollowingpublicationofourpreliminarythird-quarterresults,inwhichwerevisedouroutlookguidanceforsoftwareandsoftware-relatedservicerevenuein2009.SAPstockhititslowestfourth-quarterlevelat€30.09onDecember9,whenstockmarketswerereactingtothedevelopmentsinDubaiandGreecementionedabove.Itendedthefourthquarterandtheyearasawholeat€33.00.

SAP Share PriceOurinteractivestockchartwithdailyclosingpricesisavailableontheInternet.www.sap.com/investor

SAP Share in Comparison with the DAX 30, the Dow Jones EuRO STOXX 50 and the S&P North Software-Software Index January 1, 2009 to February 28, 2010Percent

150.00

140.00

130.00

120.00

110.00

100.00

90.00

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01 02 03 04 05 06 07 08 09 10 11 12 01 02

SAPShare(Xetra)

DAX30PerformanceIndex(Xetra)

DowJonesEUROSTOXX50–PriceIndex

S&PNorthSoftware-SoftwareIndex–PriceIndex

009InvestorRelations

PricemovementsofSAPstockwerecloselyparalleledbythoseofSAPAmericandepo-sitaryreceipts(ADRs)ontheNewYorkStockExchange.ThepriceoftheADRsdependslargelyonthepriceoftheunderlyingSAPstockandontheeuro-to-dollarexchangerate.TheADRsstoodatUS$35.62attheendof2008andatUS$46.81oneyearlater.LiketheSAPstock,theADRsthusrose31%overtheyear.

DIVIDEND AMOuNT uNCHANGED

SAPhaspaidadividendeveryyearsincethestockwasfloatedin1988.AttheAnnualGeneralMeetingofShareholders,theExecutiveBoardandtheSupervisoryBoardwillrecommendadividendforthe2009fiscalyearof€0.50pershare.Thiswouldresultinatotaldistributeddividendof€594 million.Thedividendpayoutratio(whichheremeanstotaldistributeddividendasapercentageofprofitaftertax)wouldbe34%.Thisrepresentsanotherslightincrease(2008:32%).

NO SHARE BuyBACkS

Wedidnotbuybackanysharesfortreasuryin2009.AmongthepurposestowhichweputourexcesscashwastherepaymentofthesyndicatedloanwehadtakentoacquireBusinessObjects.Formoreinformation,seetheNotestotheConsolidatedFinancialStatementssection.

CAPITAl STOCk uNCHANGED

SAP’scapitalstockis€1,226,039,608.Itisissuedas1,226,039,608no-parshares,eachwithanattributablevalueof€1inrelationtothecapitalstock.

key Facts About SAP Stock /SAP ADRs

listings

Germany Berlin-Bremen,Frankfurt,Stuttgart

USA(ADRs) NewYorkStockExchange

IDs and symbols

WKN/ISIN 716460/DE0007164600

NYSE(ADRs) 803054204(CUSIP)

Reuters SAPG.For.DE

Bloomberg SAPGR

Quotron SAGR.EU.

Weighting on December 31, 2009

DAX30 5.29%

PrimeAllShare 4.40%

CDAX® 4.43%

HDAX® 4.58%

DowJonesSTOXX50 1.14%

DowJonesEUROSTOXX50 1.80%


lARGER FREE FlOAT

Theproportionofourstockinfreefloatincreasedagainslightlyin2009.ApplyingthenewdefinitionacceptedontheFrankfurtStockExchange–whichexcludestreasurystockfromthefreefloat–onFebruary28,2010,thefreefloatstoodat72.4%(2008:68.2%).Approximately24.6%(2008:28.7%)ofthestockwasunderthecontrolofthethreefoundersandtheirtrustsandholdingcompanies.U.S.institutionsandindividualsremainedthenextlargestgroupofshareholders,holdingaround21.6%ofthestock.ContinentalEuropeaninvestorsoutsideGermanyheldabout11.7%,followedbyinstitutionsintheUKandIreland,whichheldapproximately9.1%.InstitutionsinGermanyheld8.2%andinvestorsfromtherestoftheworldheld1.7%ofthestockatthecloseoftheyear.Privateorunidentifiedinvestorsheld20.1%.SAPheld3.0%ofthestockintreasury.

EMPlOyEES PROFIT FROM SuCCESS

Asinpreviousyears,ouremployeesandmanagersprofitedfromourbusinesssuccess.Formoreinformationaboutourstockawardprograms,seetheNotestoConsolidatedFinancialStatementssection.

COMMuNICATION WITH INVESTORS

Ourdirectorsandseniorofficersagainaimedforthegreatestpossibletransparencyandopennessintheircontinuousdialogwithourshareholders.Inmorethan600one-on-onemeetingsheldatSAP,duringinvestorroadshowsworldwide,andatinvestorevents,weansweredinstitutionalinvestors’andanalysts’inquiriesaboutourbusiness.Wealsoheldtelephoneconferencesandanalystmeetingswhenwepublishedourquarterlyresults.Inves-torpresentationsattheSAPPHIREconferenceinOrlando,Florida,aswellasSAPInvestorDaysinWalldorf,GermanyandNewtownSquare,Pennsylvania,UnitedStates,wereotherkeyelementsofourcommunicationwiththefinancialmarkets.Theseeventsfocusedonourstrategy,includingon-demandstrategy,themidmarketsegment,andSAPEnterpriseSup-port.Weheldaninvestors’workshopinLondonandhostedaWebseminartoexplainwhatwouldhappenwhenSAP’sfinancialreportingswitchedcompletelyfromU.S.GAAPtoIFRS.OurWebsitealsoprovidesmuchinformationonthatsubject.Inaddition,wegavepresen-tationsabouttheenvironment,socialissues,andcorporategovernancetosociallyresponsi-bleinvestors(SRIs)ataconferenceandanSRIroadshow.

Return on Common Stock – WkN 716460; ISIN DE0007164600

Initialinvestment:€10.000

Dateofinvestment Dec.31,1999 Dec.31,2004 Dec.31,2008

Periodofinvestment 10years 5years 1year

Value(€)onDecember31,20091) 8,882 10,672 13,290

Average annual return – 1.2% 1.3% 32.9%

Performancecomparators

DAX30Performance–totalreturnindex –1.5% 7.0% 23.8%

REXGeneralBond–totalreturnindex 5.4% 4.3% 4.9%

S&P500Composite–totalreturnindex –4.4% –0.7% 22.5%

S&PNorthSoftware-SoftwareIndex–priceindex –12.5% 1.3% 43.3%

1)AssumingalldividendswerereinvestedSource:Datastream

011InvestorRelations

COMPREHENSIVE SERVICE FOR INDIVIDuAl INVESTORS ProvidingafullserviceforretailinvestorsisapriorityforSAP.WethereforebroadcastallkeyeventsatwhichmembersofourExecutiveBoardpresentnewsaboutSAPtofinancialana-lystsandinstitutionalinvestorsliveontheInternetandpublishthepresentationmaterials.InvestorscanfindawiderangeofinformationaboutSAPandSAPstockontheInternet.Weupgradedtheseofferingsin2009,addingnewfeatureslikeRSSfeedsandsocialmedialinkssuchasFacebook.Since2008wehavealsopublishedanoverviewofanalysts’currentassessmentsincollaborationwithVARAResearch.

ThequarterlySAPINVESTORmagazineisoneofthecornerstonesofSAP’sserviceforindividualinvestors.Othersarethemonthlye-mailnewsletter,theshareholderhotline,andthee-mailcontactatinvestor@sap.com.OurinvestorrelationsteamheldpresentationsatinvestorfairsandshareholderconventionsinGermanyandtheUnitedStates,forexample,atTheWorldMoneyShowinOrlando,Florida,theBetterInvestingNationalConventioninAtlanta,Georgia,InvestEdinSaltLakeCity,Utah,andtheconferenceoftheAmericanAs-sociationofIndividualInvestorsinOrlando,Florida.InadditiontointensifyingourcontactswithindividualU.S.investorsatfinancialconventions,wealsocommunicatedindepthwithfinancialadvisorsfromsmallandlargebrokerhousesservingretailinvestors,includingquarterly“squawkbox”telephoneconferences.

INTERNATIONAl AWARDS FOR INVESTOR RElATIONS

ThebusinessinformationcompanyThomsonReuterspresenteduswithitsExtelSurveyAward2009,afterSAPhadbeenvoted“theleadingPan-Europeancompanyforinvestorrelations.”TheThomsonReutersawardisbasedondetailedsurveysofinstitutionalinves-torsandfinancialanalysts.WewonIRMagazine’sawardforbestinvestorrelationsbyacontinentalEuropeancompanyintheU.S.market,andtheGermaninvestmentmagazineCapitalrankedSAPeighthoutoftheEUROSTOXXcompanies.PrivateinvestorsalsoratedSAPfavorably–theBIRD(BestInvestorRelationsDeutschland)rankingofDAXcompaniesputusinsecondplace.

SAP INVESTORSubscribetoourprintedmagazineforinvestors.www.sap.com/investor

Return on SAP ADRs – 803054204 (CuSIP)

InitialinvestmentUS$10,000

Dateofinvestment Dec.31,1999 Dec.31,2004 Dec.31,2008

Periodofinvestment 10years 5years 1year

Value(€)onDecember31,20091) 9,590 11,101 13,089

Average annual return – 0.4% 2.1% 30.9%

Performancecomparators

S&P500Composite–totalreturnindex –0.9% 0.4% 26.5%

1)AssumingalldividendswerereinvestedSource:Datastream


sUstainaBilitylong-terM, strategiC CoMMitMent to sUstainability

At SAP, we are committed to being an enabler and exemplar of sustainability – from running our company in sustainable manner to helping our customers holistically manage their sustainability strategy. We are focused on programs that help build a sustainable future.

BuildingonSAP’s38-yearheritageofprovidingsolutionsthathelpcompaniesaddressbusi-nessefficiency,SAPcontinueddownthispathbyelevatingsustainabilityintoastrategic,long-termcorporateinitiativein2009.Wedeclaredourcommitmenttoenablingsustainablebusiness,bothforcustomersthroughoursoftware–SAPasanenablerofsustainability–aswellasinternallyasasustainabilitypractitioner–SAPasanexemplarofsustainability.Ourgoalwastofocusonaddressingeconomic,social,andenvironmentalimpactoppor-tunitiesthatleveragethestrengthsofSAP.ThisstrategiccommitmentwasfurtherdemonstratedinMarch2009whenthecompanyannouncedanewcross-functionalsustainabilityorganizationledbySAP’sfirstchiefsustain-abilityofficer.TheorganizationwascreatedtodriveandcoordinateSAP’sinternalandexternalsocial,economic,andenvironmentalsustainabilityefforts–fromthecreationofsolutionsthatenablesustainablebusinessprocessesforcustomerstoSAP’sownsustainabilityoperations.TheorganizationformsamatrixwithSAP’sexistingcorporatefunctionsandthusensuresconsistentexecutionofallsustainabilityprogramsandefforts.Asapractitionerofsustainability,SAPalsolivesuptoitssocialresponsibilitiesthroughIT-ledinnovationthatcandriveeconomicdevelopmentandparitythroughresource-efficientgrowth.

SAP AS AN ENABlER

Supporting Customers with a Holistic Approach to Sustainability ManagementSAP’smorethan95,000customersacrossmorethan25industriesrepresentasignificantportionoftheglobalgrossdomesticproduct(GDP)andaccountforsignificantmanmadegreenhousegasemissions.Thus,SAPisinauniquepositiontohelptheseorganizationsmeettheirsustainabilitygoalsthroughthecreationanddeliveryofsoftwaresolutionsthatautomatesustainablebusinesspractices.Asaleadingproviderofbusinessprocessesandanalyticsforbusinessintelligence,SAPisleveragingtheirstrengthsinsupportingcustomersbyofferingaholisticandintegratedportfolioofsustainabilitysolutionsthatallowcompaniesworldwidetotrack,measure,andreportsustainabilitymetricsacrosstheentireenterprise.In2009,thisengagementincludedthelaunchoftheSAPBusinessObjectsSustainabilityPerformanceManagementapplication,whichautomatesdatacollectionandreportcompi-lation,andthereleaseofanenhancedversionoftheSAPEHSManagementapplication,willhelpsmanageoperational,financial,andreportingrisksinenvironment,health,andsafety.

The SAP sustainability mapcanbefoundonlineatwww.sap.com/solutions/executiveview/sustainability/sustain-ability-map.

013Sustainability

Asaframeworktoactivelyencouragecontinuedstakeholdercollaborationaroundfuturesustainabilitysolutions,SAPalsoreleasedanextensive“sustainabilitymap.”Forthefirsttime,themapcatalogstheentirelandscapeofthecustomer’sbusinessprocessesandITactivitiesrelatedtosustainability.SAPinvitedstakeholderstocollaborateinimprovingthemapgoingforward–adistinctivemovetargetedatredefiningthewaycustomersbuildtheirstrategiesandITcompaniesbuildtheirsolutionsintheareaofsustainability.

InsupportofSAP’scommitmenttodeliveringinnovativeandcomprehensivesustainabilitysolutions,werecognizedthatonecannotgoitalone.SAPembracedcollaborationandco-innovationacrossthecustomerandpartnerecosystem.Additionally,SAPpursuedstrategictuck-inacquisitions,suchasClearStandardsinMay2009,whichcontributedtoSAP’sover-allrobustportfolio.

SAP AS AN EXEMPlAR

Managing Internal Operations in a Sustainable WayInMarch2009,SAPannouncedanaggressivecommitmenttoreduceitstotalgreenhousegas(GHG)emissionsbacktothelevelsof2000by2020,cuttingitsemissionsapproxi-matelyinhalffromitsyear-2007peaklevelsof540kilotonsCO2.ThiswillreturnSAPtoitsapproximateyear-2000emissionslevelof275kilotonsCO2.SAPinitiateditsfirstglobalGHGinventoryin2008.

InJanuary2010,SAPannounceditspreliminaryreportofGHGemissionsfor2009.Thecompany’sworldwideCO2emissionsfor2009totaled425kilotons,a15%decreasefromthe500kilotonslevelof2008.Thisequatestoamonetarysavingsofapproximately€90 mil-lion,influencedbybothdirectinternalprogramsaswellasthe2009globaleconomicslowdown.Theemissionsdecreasewasachieveddirectlywithouttheapplicationofoffsets.

SAPwillreportin-depthcarbonfootprintdetailsinits2009SustainabilityReport,whichwillbeindependentlyverified,tobeissuedinspring2010.

Embracing lEED StandardsWorldwide,SAPiscommittedtoincorporatingsustainabledesignfeaturesintoallitsnewbuildingprojects,withthegoalofdesigningnewbuildingstoatleastaLEED(LeadershipinEnergy&EnvironmentalDesign)Silverstandard.InMay2009,SAPopenedanewadditiontoitsU.S.headquartersinNewtownSquare,Pennsylvania,designedtoLEEDPlatinumstandards.Thenewbuildinghasavarietyofenergy-efficientfeatures.Geothermalwellsusetheconstantgroundtemperatureofthe

lEEDFurtherinformationonLEEDstandardscanbefoundonlineatwww.usgbc.org/leed.


earthtobothheatandcoolareasofthebuilding.Lightingsystemsbasedontheconceptof“daylightharvesting”arecontrolledbysensorsthatdimthelightinglevelsandraiseorlowerwindowshadesbasedonthelevelofsunlightcomingthroughthetriple-glazedglassexteriorwall.Ahybridairconditioningsystemproducesiceduringtheovernighthourswhenenergydemandsandelectricratesarelowest,withthechilledwaterfromthemeltingiceusedtocoolthebuildingduringtheheatoftheday.

InApril2009,SAPinstalledasolarpanelsystematitsPaloAltocampusinCalifornia,whichisexpectedtoreducethecampus’carbonemissionsby154metrictonsannually.Itwillalsoeliminatethepeak-loadenergyconsumptionoftheregionalcomputingcenterontheelectricalsupplygridduringdaylighthours,providingbothenvironmentalandfinancialbenefits.

SAP’sopenedanewcampusinBrazilinJune2009thatisawaitingLEEDGoldcertification.Thebuildingfeaturesitsownsewagetreatmentplantthatprovidesclean,recycledwaterfortoiletsandirrigationforthecampusgardenanddevicessuchasautomaticsensortapsanddualflushtoiletsthatreducewaterconsumptionbymorethan50%.Thecampusisalsorunningon100%renewableenergyprovidedbyahydroelectricpowerplant.

Sustainability ReportInMay2009,SAPreleasedits2008SustainabilityReport,thecompany’sfirstindependentlyverifiedreport,achievinga“B+”GlobalReportingInitiative(GRI)adherencelevel.Thereportfeaturedauniquerole-basedinterfacethatusedXcelsiussoftwarefromtheSAPBusiness-ObjectsportfoliotoallowreaderstointeractwithanduseSAP’sdatainanintuitiveandengagingway.

Recognizedbyexternalindependentorganizationsfortheirefforts,SAPwasnamedastheleaderofthesoftwaresectoroftheDowJonesSustainabilityIndexes(DJSI)forthethirdconsecutiveyear.InadditiontoitsinclusionintheDJSI,in2009,SAPwasalsorecognizedforitssustainablebusinesspracticesbytheCorporateKnightsGlobal100MostSustain-ableCorporationslist–whereithasbeenincludedeveryyearsinceitsinceptionin2005–aswellastheFTSE4Goodindex.SAPhasalsobeennamedtotheGlobalChallengesIndex,whichrecognizessustainabilityperformance,andtheNASDAQOMXCRDGlobalSustainability50Index.

SAP Sustainability ReportThereportcanbefoundonlineatwww.sapsustain-abilityreport.com.

015Sustainability

Corporate Social Responsibility unites Employees with a Clear PurposeIn2009,werealignedourcorporatesocialresponsibility(CSR)initiativesunder“ClearPurpose,”aglobalprogramthattakesamoreholisticapproachtostakeholdermanagement,corporategiving,in-kindgiving,and employeeengagement.SAPseesClearPurposeashavingmultiplebenefits,andtherebypositionsSAPasanemployerofchoiceandonethathelpseachnonprofitandnongovernmentalorganizationwithwhichwepartnerbecomebest-runcompanies.

Programssupportnonprofitorganizationsandnongovernmentalorganizations(NGOs)basedontheframeworkofthefollowingfourpillarsoffocustomaximizeimpact:•Education–mathematics,science,informationtechnology,literacyandyouthentrepre-

neurship•Goodgovernanceandtransparency –openness,communication,andaccountability• Bridgingthedigitaldivide –lesseningthegapbetweenpeoplewitheffectiveaccesstodig-

italandinformationtechnologyandthosewithverylimitedornoaccessatall,usuallyduetoimpoverishment

•Environmentalstewardship–cooperativeplanningandmanagementofenvironmentalresourceswithorganizations,communities,andotherstoactivelyengageinthepreventionoflossofhabitatandfacilitateitsrecoveryintheinterestoflong-termsustainability

Employee EngagementSAPunlockstheclearpurposeofeachemployeethroughavarietyofinnovativeinitiatives–frommassmobilizationtoskills-basedvolunteerism.In2009,16%ofouremployeesvolun-teeredduringcorporate-ledvolunteerdaysandsignatureinitiatives:•Morethan62,000hours,totalingapproximately7,700workdays–or21years–ofvolun-

teerismbySAPemployeesacross30countries•DuringthefifthannualSAPMonthofService,undertheClearPurposebanner,morethan

40%ofemployeesbasedinNorthAmericaandLatinAmericavolunteeredinOctober2009withengagementratesupwardsof70%incountriessuchasPuertoRicoandChile.Inmanycases,volunteeractivitiesservedasteam-buildingopportunitiesinwhichlineofbusinessesworkedtogethertoservetheircommunities.

•290employeesservedasFIRSTLEGOLeaguementors,coaching198teamsin29coun-tries.Asaresult,approximately1,400children–aged9to16–experiencedthisinnova-tive,interactiveroboticsprogramwithafocusoneducation,technology,andinnovation.

Corporate Social ResponsibilityFurtherinformationonourprogramscanbefoundonlineatwww.sap.com/about/CSR.


Corporate GivingIn2009,SAPdonatedmorethan€7 milliontononprofitorganizations.Componentstocorporategivingincluded,butwerenotlimitedto:•Partnershipswithmorethan200organizationsgloballywithinourpillarsoffocus•Employermatchingofemployeegivingtomorethan1,100organizationsinNorthAmerica

andtheAsia-PacificJapanregion•Approximately200volunteergrantsawardedtononprofitorganizationsinsupportof

individualemployeevolunteerismbyU.S.-basedemployeesthroughthe“SAPDollarsforDoers”program.

Software DonationsSAPdonatessoftwarefromourSAPBusinessObjectsportfoliotoeligiblenonprofitorgani-zations.ThroughapartnershipwithTechSoupGlobal,in2009,morethan900nonprofitor-ganizationsinBrazil,Canada,Germany,andtheUnitedStateshavedeployedSAPsoftwaretobuildcapacity,promoteperformance,agility,andorganizationalalignment,anddrivetrans-parencyandgoodgovernancewithintheirorganizations.

Supporting MicrofinancingIn2009,SAPmadeacommitmenttoprovidefinancial,software,andexpertassistancetoPlaNetFinance,aleadinginternationalnonprofitorganizationthatofferssupportservicestomicrofinanceinstitutions(MFIs).SAPandPlaNetFinanceaimtoimprovethemicrofinancesectorthroughacombinationofmicrofinancing,theuseofnewtechnologyandthecreationofvalue-chainextensionsthathelpentrepreneursatthebaseoftheeconomicpyramidcre-atesustainablebusinesses.Threemainareasweretargetedwiththepartnership:•Technologydevelopmentforfieldinitiatives•DevelopmentofsoftwaresolutionsforMFIs•DeploymentofSAPtechnologyforPlaNetFinance’scorporateinitiatives

Tostarttheirfirstjointfieldinitiative,SAPandPlaNetFinancehavecarefullystudiedthesheanutvaluechaininNorthernGhana,inAfrica,toidentifyhowmicrofinance,education,andtechnologycanhelpimprovetheincomesandlivingconditionsofwomenwhopickandpro-cessthenutsintosheabutter.

PlaNet FinanceFurtherinformationonPlaNetFinancecanbefoundonlineatwww.planet-finance.org/EN/.

017Sustainability

SAP university AlliancesTheSAPUniversityAlliancesprogramprovidesSAPsoftwarelicenses,curriculummaterials,trainingworkshops,andacademic-orientedeventsaroundtheworld.SAPcurrentlydonateslicenseaccesstoitsfullrangeofsoftwareproductsforreal-life,hands-onclassroomexperiencesformorethan200,000studentsinundergraduateandgraduatedegreeprogramsatover1,000collegesanduniversitiesworldwide.

Keydevelopmentsin2009included:•ExpansionoftheprogramtocountriessuchasGreece,Hungary,Israel,Macau,Pakistan,

andPortugal•IntroductionofnewcoursesforSAPBusinessObjectsportfoliothatfullycomplements

thegrowingacademicofferingsforSAPBusinessSuitesoftware•LaunchofSAPUniversityAlliancescommunityinSAPCommunityNetwork,amultifaceted

onlineenvironmentthatdeliversthelatestacademicresourcesforbringingreal-lifeSAPknowledgeandskillstothedesktopsofprofessorsandstudentsglobally.Byyear-end,thisnewcommunityreachedwellover100,000registeredparticipants.

SAPUniversityAlliancesdirectlysupportshighereducationindevelopinggraduateswiththecriticalbusinessprocessknowledgeandadvancedITexpertisethatSAPcustomersandpartnersrequiretoremaincompetitive.

university AlliancesFurtherinformationonouruniversityalliancesprogramcanbefoundonlineatwww.sap.com/about/CSR/education/university-alliances.


corporate goVernance reportresponsible ManageMent

SAP’s global business operations and international shareholder structure mean that effective, transparent corporate governance is key for the Company.

Intheirwork,theSupervisoryBoardandExecutiveBoardthereforeattachgreatimportancetogoodcorporategovernance.Corporategovernanceistheapplicationofinternationalandnationalvaluesandprinciplesofgood,responsiblemanagementtotheactivitiesofacompany’sexecutiveandsupervisorybodiesanditsemployees.Itisnotasystemofrigidrulesandregulations.Rather,itisaprocessinwhichvaluesandprinciplesconstantlyevolveinlinewithchangingrequirements.

CORPORATE GOVERNANCE AT SAP

BecauseSAPislistedontheGermanstockexchange,itscorporategovernanceisbasedontheprovisionsoftheGermanStockCorporationActandoftheGermanCorporateGovernanceCode(the“Code”inthisreport)asfromtimetotimeamended.SAPalsocomplieswiththeprovisionsthatarerelevanttoitasaGermancompanylistedontheNewYorkStockExchange(NYSE).TheseincludetheCorporateGovernanceStandardsoftheNYSEandtheU.S.Sarbanes-OxleyAct.SAPprovidesitsshareholderswithdetailedinfor-mationaboutitsimplementationoftheCode’srecommendationsbypublishinganannualdeclarationofimplementationbytheExecutiveandSupervisoryBoards,asrequiredbytheGermanStockCorporationAct,section161.Inaddition,withtheannualfinancialstatementstheExecutiveBoardpublishesacorporategovernancestatementpursuanttotheGermanCommercialCode,section289a,describingcertainaspectsoftheCompany’scorporategovernanceingreaterdetail.ThepresentreportisasummarizedaccountofcorporategovernanceatSAPin2009.

EXECuTIVE BOARD

Atthetimethisannualreportwenttopress,theSAPExecutiveBoardhadfivemembers.ItissolelyresponsibleformanagingtheCompany.IthasadutytoexerciseitsmanagementpowersintheinterestoftheCompanyandinpursuitofthesustainedgrowthofcorporatevalue.ItdiscussesandagreesonitsstrategyfortheCompanywiththeSupervisoryBoard,ensurescompliancewiththerequirementsofthelawthroughouttheGroup,andmaintainsappropriateriskmanagementstructuresandriskcontrols.

SuPERVISORy BOARD

TheSAPSupervisoryBoardhas16memberswho,inequalnumbers,representtheshare-holdersandtheemployees.Itappoints,monitors,andadvisestheExecutiveBoard.TheExecutiveBoardinvolvestheSupervisoryBoardindecisionsonmattersoffundamentalimportancefortheCompany.TheSupervisoryBoardhasreservedtoitselftheapprovalof

019CorporateGovernance

certaindefinedtransactionsoffundamentalimportance.WhenselectingcandidatestobeproposedtotheAnnualGeneralMeetingofShareholdersforelectiontotheSAPSuper-visoryBoard,theSupervisoryBoardlooksforpeoplewiththenecessaryknowledge,abili-ties,andexpertexperience.

CORPORATE GOVERNANCE STATEMENT

TheSAPAGExecutiveBoardpublishedourfirstcorporategovernancestatementpursuanttotheGermanCommercialCode,section289awiththeCompany’sfinancialstatementsfor2009.Thedutytopublishacorporategovernancestatementisnew;itarisesundertheGermanAccountingLawModernizationAct,whichcameintoforcein2009.CompaniesmustpublishthecorporategovernancestatementeitheraspartoftheirannualreportorontheirWebsite.ItmustincludethedeclarationofimplementationpursuanttotheGermanStockCorporationAct,section161,certaininformationoncorporategovernancepractices,andanaccountofhowtheExecutiveBoardandtheSupervisoryBoardwork,whositsonwhichSupervisoryBoardcommittees,andhowthosecommitteeswork.Thecorporategov-ernancestatementpublishedbySAPAGfor2009isonSAP’sWebsiteatwww.sap.com/about/governance/statement.

CODE RECOMMENDATIONS

Everyyear,theSupervisoryBoardandExecutiveBoardissueadeclarationstatingwhetherSAPhasimplementedandisfollowingtheCode’srecommendationsandidentifyinganyrecommendationsthattheCompanyhasnotfollowed–withanexplanationofwhyithasnotdoneso.ThedeclarationofimplementationisonSAP’sWebsiteatwww.sap.com/about/governance/statutes.Implementationdeclarationspublishedinpreviousyearsarealsoavail-ableonthisWebsite,andalinkisprovidedtothecurrentandpreviousversionsoftheCode.TheExecutiveBoardandSupervisoryBoardissuedthecurrentdeclarationofimple-mentationonOctober30,2009.ItisalsoincludedinthecorporategovernancestatementpublishedonSAP’sWebsiteatwww.sap.com/about/governance/statement.

Thedeclarationofimplementationreportsthatwedonotfollowfiveofthe82recommenda-tionsintheversionoftheCodepublishedonJune18,2009,anddidnotfollowfiveofthe84recommendationsintheversionoftheCodepublishedonJune6,2008.Thereasonsfornotfollowingtheserecommendationsaredescribedindetailinthedeclarationofimple-mentationrequiredbytheGermanStockCorporationAct,section161(1).

CODE SuGGESTIONS

Withoneexception,wefollowall16suggestionsinthecurrentCode,whichisdatedJune18,2009.Asinthepreviousyear,wehavenotagreedtopaySupervisoryBoardmembersperformance-orientedcompensationbasedonSAP’slong-termsuccessassuggestedintheCode,section5.4.6,paragraph2.Wedoubtwhetherthelong-termsuccessofSAPistherightbasisforSupervisoryBoardcompensationorimprovestheSupervisoryBoardmembers’motivation.VariablecompensationatSAPisthereforelinkedtothedividendandcanthusbereadilydeterminedbyapplyingtheSupervisoryBoardcompensationprovi-sionsintheArticlesofIncorporation.Webelievethatthisensurestransparent,appropriatecompensationforSupervisoryBoardmembersthatreflectstheirlegalresponsibilities.

German Corporate Governance CodeThemostrecentversionoftheCodeisavailableonlineatwww.corporate-gover-nance-code.de.


CODE OF BuSINESS CONDuCT

SAP’scorporategovernancepracticesincludeourCodeofBusinessConductforemploy-eesandmembersoftheExecutiveBoard.TheCodeofBusinessConductexpressesthehighstandardsthatwerequirefromouremployeesandExecutiveBoardmembersandsetsoutthemainprinciplesthatguideourbusinessconducttowardcustomers,businesspartners,andshareholders.WeseeourCodeofBusinessConductasthestandardforourdealingsinvolvingcustomers,businesspartners,vendors,shareholders,andcompetitors.ByfollowingourCodeofBusinessConduct,wedemonstrateacommitmentagainstallformsofunfaircompetitivepractice,corruption,andmisrepresentation.AcomplianceteamreportingtoourgeneralcounselmonitorsworldwidecompliancewiththeGroup’sinternalpolicies,suchasourCodeofBusinessConduct.Itregularlyreviewstheseinternalpolicies,revisesthemifnecessary,anddeliversrelatedtraining.

THE WORk OF THE EXECuTIVE AND SuPERVISORy BOARDS

TheExecutiveBoardandSupervisoryBoardcooperatecloselyforthebenefitoftheCom-pany.TheExecutiveBoardregularlyprovidestheSupervisoryBoardwithfullandtimelyreportsonallmaterialmattersofbusinessplanningandperformance,includinganydeviationsofactualbusinessperformancefromplan,therisksituation,andriskmanagement.SAPprovidesitsshareholderswithin-depthinformationabouthowtheExecutiveandSuperviso-ryBoardswork,howtheSupervisoryBoardcommitteesarecomposed,andhowthesecommitteeswork,initscorporategovernancestatement.FormoreinformationaboutthejointworkoftheExecutiveandSupervisoryBoardsandabouttheworkoftheSuper-visoryBoardanditscommitteesin2009,seetheReportbytheSupervisoryBoardinthisannualreport.

APPlyING INTERNATIONAl CORPORATE GOVERNANCE STANDARDS

AsaNYSE-listedcompany,SAPissubjecttoU.S.financiallegislationandtotherulesoftheSECandNYSE.BesidesimplementingtherequirementsoftheSarbanes-OxleyAct,section404,andotherSarbanes-OxleyActrequirements,includingconductinganannualauditofourinternalcontroloverfinancialreporting,wecomplywiththerulesapplicabletonon-U.S.companiessetoutintheNYSEListedCompanyManual.TheserulesgoverntheestablishmentandmembershipofanauditcommitteeandSAP’srelateddutiestoreporttoNYSE.InaccordancewiththeSECandNYSEcorporategovernancerules,wehavepublished,atItem16GinourAnnualReportonForm20-F,areportonthesignificantdiffer-encesbetweentheNYSEcorporategovernancerulesandtheGermancorporategover-nancerules,whichweapply.TheAnnualReportonForm20-FispublishedonSAP’sWebsiteatwww.sap.com/about/investor/reports/2009.epx.

TRANSPARENCy, COMMuNICATION, AND SERVICE FOR SHAREHOlDERS

OurshareholderscanobtainfullandtimelyinformationaboutSAPonourWebsiteandcanaccesscurrentandhistoricalCompanydata.Amongotherinformation,SAPpostsallofitsfinancialreports,allrelevantnewsabouttheCompany’sgoverningbodies,corporategovernancedocumentation,newsinfrequently-asked-questionformatoncurrentbusinessmeasures,informationrequiringad-hoc(current)disclosure,pressreleases,andnewsofdirectors’dealingsnotifiablepursuanttotheGermanSecuritiesTradingAct,section15a.ShareholdersarealsoabletowatchalivebroadcastoftheentireAnnualGeneralMeetingof

Code of Business ConductSAP’sCodeofBusinessConductsisavailableonlineatwww.sap.com/corpgovernancePoliciesandStatutes.

021CorporateGovernance

ShareholdersontheInternet.Theycanvoteaccordingtotheirsharesatthemeetingbyin-structingaproxyoftheirchoiceoroneoftheproxiesprovidedforthatpurposebySAP.AllofthedocumentationrelatedtotheAnnualGeneralMeetingofShareholdersispostedingoodtimeonSAP’sWebsiteatwww.sap.com/AGM.

FINANCIAl ACCOuNTING, RISk MANAGEMENT, AND INTERNAl CONTROl STRuCTuRE

TheMay2009AnnualGeneralMeetingofShareholdersappointedKPMGtoaudittheCom-pany’sfinancialstatements.WepreparetheSAPAGfinancialstatementsinaccordancewiththeGermanCommercialCodeandourstatutoryconsolidatedfinancialstatementsinaccordancewithIFRS.WealsopreparetheAnnualReportonForm20-FinaccordancewithSECrequirements.TheExecutiveBoardisresponsibleforfinancialaccounting.TheSuper-visoryBoardapprovestheSAPAGfinancialstatementsandthestatutoryconsolidatedfinancialstatements.

InGermanstock-corporationandcommerciallaw,therearespecialrequirementsforinternalriskmanagementthatapplytoSAP.Tomeetthem,ourglobalriskmanagementsystemsupportsriskplanning,identification,analysis,handling,andresolution.Wealsomaintainstan-darddocumentationofallourinternalcontrolstructuresandcontinuallyevaluatetheiref-fectiveness.AsacompanylistedontheNYSE,weconductanannualauditofourinternalcontroloverfinancialreportinginaccordancewiththecomplexrequirementsoftheU.S.Sarbanes-OxleyAct,section404,withourauditor,KPMG.KPMG’sauditofourfinancialre-portingcontrolhadnotfoundanyindicationbyMarch11,2010,thatitwasnoteffectiveonDecember31,2009.Incompliancewiththereportingobligationsintroducedin2009un-dertheGermanCommercialCode,sections289(5)and315(2)(5)in2009,boththeSAPAGreviewofoperations(whichispublishedinGerman)andtheReviewofSAPGroupOperationsincludecomprehensiveinformationabouttheprincipalfeaturesoftheinternalcontrolandriskmanagementsystemwithrespecttotheSAPAGandconsolidatedaccount-ingprocesses.

EXECuTIVE BOARD AND SuPERVISORy BOARD COMPENSATION INFORMATION

TheGermanCorporateGovernanceCoderecommendsthatcertaindetailsofExecutiveandSupervisoryBoardmembercompensationandshareownership,stockoptions,andsimilarincentivesbeincludedinthecorporategovernancereportorinthecompensa-tionreportaspartofthecorporategovernancereport.Thesedetails,aswellasthelegallyrequiredinformationaboutExecutiveandSupervisoryBoardmembers’compensa-tion,areallavailableinthecompensationreport.ThecompensationreportispartoftheauditedReviewofSAPGroupOperationsaswellasformingpartofthiscorporategover-nancereport.TheSupervisoryBoardhasapprovedtheReviewofSAPGroupOperations,includingthecompensationreport,andadoptedthecompensationreport’scontentforthepurposeofcorporategovernanceandcompensationreportingasrequiredbytheCode.


RepoRt by the SupeRviSoRy boaRdCooperation and Control

For SAP, 2009 was one of the most difficult years ever. Faced with deep economic crisis, many companies in many regions of the world again postponed investments. For the first time in the history of SAP, the management had to reduce the global workforce. From the Super-visory Board’s many discussions with the Executive Board, we know how hard the Executive Board found this drastic step, and we wish to record our special thanks to Léo Apotheker and Henning Kagermann for their strong leadership. The program was implemented as fairly as possible and with every consideration for the interests of our people: Responsibility toward our employees is at the heart of our corporate culture.

In response to the difficult market conditions in 2009, SAP concentrated most on software solutions that can deliver rapid returns for customers and give them new competitive edge. We shipped innovative products, including SAP BusinessObjects Explorer and SAP Busi-ness Suite 7 software. We also embarked on a process of wholesale transformation to make ourselves much more agile in our response – both to the changes we anticipate in the soft-ware industry, and to changing customer expectations.

Wisely, in 2009 the Executive Board took the opportunity to gear up for a new era of profit-able growth. Their concerted efforts already began to bear fruit before the year was out. There was a definite turnaround in the second half of the year, and the final quarter was very encouraging. Sales improved in the Asia Pacific Japan region and the Americas region, and in some key markets and sectors, suggesting that SAP is gaining momentum for a year of growth in 2010. In 2009, we limited the decline in non-GAAP revenue from our software and software-related services to 5% year-over-year at constant currencies. Our non-GAAP oper-ating margin on a constant currency basis was 27.5%, surpassing the outlook guidance the Company had given.

Overall, SAP held up well in a difficult year. SAP leads its segment of the market, and its agility puts a larger share – and more profitable growth – within grasp. To position the Company even more strongly for the future, the Supervisory Board nonetheless decided to make changes to the Executive Board at the beginning of 2010. On February 7, the Supervisory Board reached an agreement with Léo Apotheker that his term on the Executive Board would not be renewed after expiration, and he resigned his seat with immediate effect, also in agreement with the Supervisory Board. At the same time, the Supervisory Board appointed chief technology officer Vishal Sikka to the Executive Board. That day the Executive Board, with Supervisory Board approval, also named the two new co-CEOs: Bill McDermott, head of global field operations, and Jim Hagemann Snabe, head of product development.

Dear Shareholders,

023Report by the Supervisory Board

AtitsmeetingafewdayslateronFebruary11,2010,theSupervisoryBoardacceptedtheresignationofJohnSchwarzfromtheExecutiveBoard.ThetermofGerhardOswald’sExecutiveBoardappointmentwasextendedtotheendof2011.Inaddition,heacceptedthechiefoperatingofficerportfoliofromErwinGunst,whohadtoleaveforhealthreasonsonJanuary31,2010.ErwinGunsthadalsobeenlaborrelationsdirector,andtheSupervisoryBoardaskedWernerBrandttoreplacehiminthisroleonaninterimbasis.

TheSupervisoryBoardthanksLéoApothekerforhishugecontributiontothesuccessofSAPovermorethan20years,rangingfromimpressivesuccessinthefieldtohisachieve-mentsasCEO.WealsothankErwinGunstforallhissuccessfulworkoverasimilarlylongperiod,culminatingintheestablishmentofthechiefoperatingofficerportfolioontheExecutiveBoard,andJohnSchwarzforhiscrucialcontributiontothesuccessfulandveryrapidas-similationofBusinessObjectsintoourCompany.TheSupervisoryBoardwishesallthreeeverysuccessinthefuture.

TheSupervisoryBoardhaseveryconfidencethatthenewmanagementwillcontinuetodriveforwardthereorientationoftheCompany’sstrategyanditsfocusonprofitablegrowth,andthatwithourinnovationsitwillextendSAP’sleadingposition.

TheSAPSupervisoryBoardcloselymonitoredtheworkoftheSAPExecutiveBoardin2009.Toefficientlyorganizeandperformourduties,particularlyinachallengingeconomicenviron-ment,werelyonin-depthandcooperativedialoguewiththeExecutiveBoard.ThatiswhythisreportstartsbyexplainingtheongoingpartnershipbetweenthetwoBoards.ThereportalsofocusesonthemaintopicsdiscussedbytheSupervisoryBoard,theworkofitscom-mittees,corporategovernanceatSAP,andtheauditoftheSAPAGandconsolidatedfinan-cialstatements.

COOPERATION BETWEEN THE EXECuTIVE AND SuPERVISORy BOARDS

In2009,wedischargedthedutiesimposedonusbythelawandbytheCompany’sArticlesofIncorporation.WewereregularlyconsultedbytheExecutiveBoardontherunningoftheCompanyandwescrutinizedandmonitoredtheworkofmanagement.WemonitoredtheExecutiveBoard’smanagementoftheSAPGroupwithregardtolegality,correctness,appro-priateness,andcost-effectiveness.Inaddition,theExecutiveandSupervisoryBoardscon-sultedontheCompany’sstrategicorientationandregularlydiscussedprogressinimple-mentingstrategy.WewereinvolvedwheneverdecisionsoffundamentalimportancetoSAPweremade.


TheSupervisoryBoardregularlyreceivedfullandtimelyreportsfromtheExecutiveBoard,bothfrommembersinpersonandinwrittendocuments.Thereportschieflyconcernedplan-ning,theCompany’sbusinessperformanceincludingtherisksituation,riskmanagement,compliance,andtransactionsofspecialsignificanceforSAP.TheExecutiveBoardalsoindi-catedwhentheCompany’sbusinessdeviatedfromtheplansandtargetsandexplainedthesedeviations.

ThecontentandscopeoftheExecutiveBoard’sreportsfullymettherequirementsthattheSupervisoryBoardhadplacedonthem.Besidesthesereports,theSupervisoryBoardreceivedsupplementaryinformationfromtheExecutiveBoard.Inparticular,theExecutiveBoardwasavailableatSupervisoryBoardmeetingsfordiscussionsandtoanswerourquestions.WecheckedtheinformationreceivedfromtheExecutiveBoardforplausibilityaswellascriticallyexamininganddiscussingit.TheSupervisoryBoardmaintainsalistoftransactionsforwhichtheExecutiveBoardrequirestheSupervisoryBoard’sconsent.Weupdatethelistregularlyasrequired,mostrecentlyin2009.TheSupervisoryBoardcarefullyconsideredalltransactionsinthelistedcategoriesanddiscussedthemwiththeExecutiveBoard,focusingonthebenefitsandeffectsofeachtransaction.TheSupervisoryBoardagreedtoalltrans-actionswhereitsconsentwasrequired.

TheExecutiveBoardalsokeptthechairpersonoftheSupervisoryBoardfullyinformedbetweenmeetingsoftheSupervisoryBoardanditscommittees.Forexample,theCompa-ny’stwoco-CEOs(and,fromJune2009,itssingleCEO)andthechairpersonoftheSuper-visoryBoardmetregularlytodiscussSAP’sstrategy,currentprogressinbusiness,andriskmanagement,aswellasotherkeytopicsanddecisionsthatarose.Theco-CEOs(and,sinceJune2009,theCEO)informedtheSupervisoryBoardchairperson,withoutdelay,ofimportanteventsthatweresignificantforassessingSAP’ssituationandprogressorforthemanagementofSAP.

SuPERVISORy BOARD MEETINGS

TherewerefourordinarymeetingsandoneextraordinarymeetingoftheSupervisoryBoardin2009.TheresolutionsofthefullSupervisoryBoardweremadeatthesemeetings.Areso-lutionononeitemwasadoptedusingthecircularcorrespondenceprocedure.TheSupervisoryBoarddiscussedthefollowingtopicsand,wherenecessary,maderesolutions:

Extraordinary Meeting in JanuaryThemeetingonJanuary27,2009,tookplaceagainstthebackgroundoftheworldeconomiccrisis.WithreferencetotheCompany’skeyfinancialindicatorsinthefourthquarterandthroughout2008,wediscussedindepththeneedtocontinuethecostcontainmentprograminstigatedbytheExecutiveBoardinOctober2008andtoinstituteadditionalcost-cuttingmeasuresin2009.WewereinagreementwiththeExecutiveBoardthatthesemeasureswererequiredtosustainand,ifpossible,tostrengthenSAP’scompetitiveness.ToenableSAPtoadaptitssizetotoday’smarketconditionsandcombattheeffectsoftheglobalrecession,afterin-depthdiscussionstheSupervisoryBoardauthorizedtheExecutiveBoardatthelat-ter’ssuggestiontoreducetheworkforceto48,500full-timeequivalentsworldwidebytheendof2009bytakingadvantageofnaturalattritionwhereverpossibleandtocontinuetomain-taintightcostcontrolsonallvariableexpenses,includingthird-partyservicesandcapitalexpenditure.Atthismeeting,theSupervisoryBoardapprovedtheappointmentofRobertEnslinasCEOofSAPAmerica,Inc.andpresidentofourNorthAmericaregion,replacingGregTomb.

025ReportbytheSupervisoryBoard

Meeting in FebruaryAtourmeetingonFebruary12,2009,wediscussedthe2008fourth-quarterandfull-yearresultsandtheprogressofourbusinessduring2008.WereceivedanddiscussedindepthareportfromtheExecutiveBoardonstrategyfor2009–whichwasclearlygoingtobeadifficultyear–andagreedthebudgetfor2009presentedbytheExecutiveBoard,includ-ingthecapitalexpenditurebudgetandliquidityplanfor2009.WereviewedindetailthefinancingmodelspresentedbytheExecutiveBoardinconnectionwithSAP’sfuturefinancingstrategyandauthorizedtheExecutiveBoardtoraiseloancapitalnotexceeding€1.1billiontosecureadditionalliquidity.TheSupervisoryBoardapprovedHenningKagermann’scandidacyandacceptanceofaseatonthesupervisoryboardofDeutschePostAG.Incon-sequenceofHelgaClassen’sresignationfromtheSupervisoryBoardonherentryintosemi-retirement,andherreplacementbyanewmember,ChristianeKuntz-Mayr,wediscussedthehandoverofHelgaClassen’sfunctionsontheGeneralCommitteeandtheMediationCom-mittee.WealsoelectedChristianeKuntz-MayrtotheTechnologyandStrategyCommittee.Atthesametimeweamendedthiscommittee’srulesofprocedurebyrepealingtherulecon-cerningthenumberofmembers.TheSupervisoryBoardextendedWernerBrandt’sappoint-mentasamemberoftheExecutiveBoardofSAPAGfromJanuary 1, 2010,toDecember 31,2013.

TheExecutiveBoardonceagainreportedtousinsummarizedformonourequityinvest-mentsin2009.Thecorporategovernanceofficerpresentedhisannualreporttous,inwhichhestatedthathehadnotidentifiedanybreachesoftheapplicablerulesin2008.Thecapitalmarketcomplianceofficersubmittedhisannualreport.TheCompensationCommittee,FinanceandInvestmentCommittee,TechnologyandStrategyCommittee,andAuditCom-mitteereportedonthemostrecenttopicsdiscussedattheirmeetings.TheFinanceandInvestmentCommitteereportedthatitsupportedthefinancingstrategyfor2009presentedtoitsmeetingbytheExecutiveBoard.TheTechnologyandStrategyCommitteereportedonthecurrentsituationwithregardtoSAPBusinessByDesignandfutureplansfortheproduct.TheAuditCommitteereportedontheprogressoftheauditofthe2008annualfinancialstatementsandourinternalriskmanagement.FollowingtheCompensationCommittee’sreportandatitsrecommendation,theSupervisoryBoarddecidedthattheExecutiveBoard’scompensationsystemin2009shouldcomprisethreecomponents:afixedelement,adirec-tors’profit-sharingbonus,andalong-term,performance-orientedincentiveelementintheformofvirtualoptions.Ofthecashcompensation,25%wouldbethefixedsalaryandtheremaining75%wouldbemadeupofthedirectors’profit-sharingbonus.Thefairmarketvalueofthevirtualoptionsatthetimeofissuewouldbeone-and-one-halftimesthefixedcompensationelement.OnthebasisofareportsubmittedbytheCompensationCommittee,theSupervisoryBoardapprovedtheconclusionofaconsultingcontractbetweentheformerExecutiveBoardmemberPeterZenckeandSAPAG,effectiveuntilDecember31,2009.


Audit MeetingAtitsMarch26,2009,meeting,theSupervisoryBoardfocusedprincipallyonthedocumentsconcerningSAPAG’s2008financialstatementsandconsolidatedfinancialstatements,theauditsconductedbyKPMGAGWirtschaftsprüfungsgesellschaft(KPMG),andtheExecutiveBoard’sproposedresolutionontheappropriationofretainedearningsfor2008.TheAuditCommitteereported,amongotherthings,ontheformandscopeofitsexaminationofthedocumentsrelatingtothefinancialstatementsandrecommendedthattheSupervisoryBoardapprovethem.Theauditorattendedthemeetingandreportedindetailontheauditandtheresultsoftheaudit.TheauditorthendiscussedtheresultswiththeSupervisoryBoardandanswereditsquestions.TheSupervisoryBoardapprovedtheaudit.Therewerenofindingsfromitsownexamination,sotheSupervisoryBoardgaveitsconsenttothefinancialstatementsfor2008.WecheckedandendorsedtheExecutiveBoard’sproposaltoappropriateretainedearnings.

Inaddition,wepassedourproposedresolutionsfortheagendaoftheMay2009AnnualGeneralMeetingofShareholders,whichincludedapprovingtheproposaltotheMeetingconcerningtheelectionofanauditorfor2009inaccordancewiththeAuditCommittee’srecommendation.Afurtheritemontheagendaatthismeetingwasareportonbusinessinthefirstquarterof2009.TheSupervisoryBoardgaveitsconsentforvariouslegaltransac-tionsbetweenSAPandindividualExecutiveandSupervisoryBoardmembers.Afterafulldiscussion,wealsoapprovedtheExecutiveBoard’sproposedmaximumtotalbudgetfor2009forvirtualstockoptionstobegrantedunderthenew2009SOPPerformancePlanandstockappreciationrights(STARs)tobegrantedunderthe2009STARPerformancePlan.TheSupervisoryBoardalsoagreedtoconcludedirectors’andofficers’(D&O)liabilityinsur-ancepoliciesformembersoftheSupervisoryBoardandtheExecutiveBoard,andforcor-porateofficers,fromApril1,2009,toApril1,2010.

TheCompensationCommittee,theTechnologyandStrategyCommittee,andtheSpecialCommittee,whichwassetuptohandletheOraclelawsuit,gavereportsontheirrecentmeetings.TheCompensationCommitteereportedonitsrenewedin-depthdiscussionsontheExecutiveBoard’scompensationsystem.HavingreceivedtheCompensationCommit-tee’sreport,theSupervisoryBoardfollowedtheCompensationCommittee’srecommenda-tionandagreedthevariouscomponentsofandmetricsfortheExecutiveBoard’s2009com-pensationpackageapartfromtheallocationofvirtualstockoptions.ApplyingthestructuredefinedbythefullSupervisoryBoard,theCompensationCommitteeallocatedvirtualstockoptionsatitsextraordinarymeetingonMay6,2009.TheTechnologyandStrategyCommit-teereportedontheproductportfoliomanagementprocessandtheproductportfolio.TheSpecialCommitteereportedontheprogressoftheOraclelitigationintheUnitedStates,es-peciallytheconfidentialsettlementnegotiationsatthesettlementconferencefollowingthecourthearingonFebruary23,2009,andontheinternalanalysesofthecircumstancesthatgaverisetothedispute.


Meeting in JulyAtthemeetingonJuly31,2009,wefocusedonbusinessinthesecondquarterof2009,anassessmentofthefirsthalfoftheyear,theforecastforthesecondhalf,andfurtherplanning.TheExecutiveBoardreportedtousontheresultsfromthevariouslinesofbusinessandonthecompetitivepositionofSAPingeneral.TheExecutiveBoardreportedontheintegrationofBusinessObjectsintoSAP,whichisnearingcompletion;ontheenhancementofSAPcoreproducts(includingtheavailabilityofSAPBusinessSuite7);onthefavorablemarketresponsetotheextendedSAPEnterpriseSupportserviceofferings;andontheprogressoftheSAPBusinessByDesignsolution.TheExecutiveBoardprovideduswithinformationaboutthemidtermstrategyoftheSAPGroupupto2014,expandingonthedetailedstrategypaperthatwehadpreviouslyreceived.

TheExecutiveBoardalsoreportedtousagaininsummarizedformonequityinvestmentsmadebetween2003and2008,explainingingreaterdepththeeconomicimpactofacquiringOutlookSoftandVirsa.TheSupervisoryBoardresolvedtoextendthelistoftransactionsrequiringconsent:Inthefuture,thechairpersonoftheSupervisoryBoardistobeinformedaboutallplannedacquisitions–irrespectiveoftheirvalue–andmaydecideathisorherowndiscretiontoasktheFinanceandInvestmentCommitteeorthefullSupervisoryBoardfortheiradviceorconsentbeforeanacquisitioniscompleted.

TheSupervisoryBoardextendedtheappointmentofJohnSchwarzasanExecutiveBoardmemberfromJuly1,2010,untilJune30,2011,andconfirmedthathiscompensationduringthisperiodwouldremainatitscurrentlevel.TheSupervisoryBoardapprovedtheappoint-mentofVishalSikka,SAPChiefTechnologyOfficer,tothepostcorporateofficerofSAPGroup.TheGeneralCommittee,AuditCommittee,TechnologyandStrategyCommittee,andCompensationCommitteereportedontheirmeetings.TheGeneralCommitteereportedontheallocationofvirtualstockoptionstomanagersandemployeesundertheSOPPerform-ancePlan2009.Italsoreportedthat,inordertoavoidtaxdisadvantagesforU.S.employ-ees,ithadagreedtosupplementarytermsstatingthatanyamountsemployeesaretoreceiveafterexercisingtheiroptionswillnotbepaidoutuntiltheprogramendsin2014.TheGeneralCommitteealsoreportedonitsdecisiontoapprovetheissuetobeneficiariesofupto20 milliontreasurysharesbyMay31,2010,tosatisfyrightsattachingtoconvertiblebondsandstockoptionsundershare-basedcompensationprograms.TheAuditCommitteereportedthatithadmadenofindingsinitsexaminationofthefinancialreportingofthesecondquarterandfirsthalfof2009.

TheAuditCommitteefurtherreportedthatabudgethadbeenagreedforKPMGtoaudittheSAPGroupforfiscalyear2009,andthatfocusesforthe2009audithadbeendiscussedanddefinedwiththeauditor.TheTechnologyandStrategyCommitteereportedontheCom-pany’son-demandstrategyforthelargeenterprisetargetmarketandthecurrentsituationregardingSAPBusinessByDesign.


Meeting in OctoberThetopicscoveredattheSupervisoryBoardmeetingonOctober30,2009,werebusinessinthethirdquarterof2009,theforecastforthefourthquarter,andthefull-yearforecastfor2010.TheExecutiveBoardprovideduswithinformationaboutSAP’scompetitivesitua-tion,theongoingbusinesschallengescausedbythefinancialmarketcrisis,changesincustomerdemandpatterns,andourmaincompetitors’activities.TheExecutiveBoardreport-edonthesuccessfulintroductionoftheSAPBusinessExplorersoftware,thecurrentsitua-tionwithregardtotheSAPEnterpriseSupportserviceofferings,andtheplannedgo-to-marketdatefortheSAPBusinessByDesignsolution.TheExecutiveBoardprovideduswithdetailedinformationabouttheimplementationofSAP’smidtermstrategy.Asaresultoftheprivateplacementtransaction(“schuldschein”),thefinancingapprovalthatwegrantedtheExecutiveBoardatthemeetingonFebruary12,2009,wasreducedtoabout€400 million.Totakeadvantageofthefavorablecredittermscurrentlyavailableforcorporatebonds,weauthorizedtheExecutiveBoardatitsrequestandontherecommendationoftheFinanceandInvestmentCommitteetoraiseloancapitalofnotmorethan€1 billionin2010.WestipulatedthatissuancedetailsrequirepriorapprovaloftheFinanceandInvestmentCommittee.WeauthorizedtheExecutiveBoardtodissolvetheSAPPortalsEuropeangroupcompanystructurebelowSAPAmerica,whichwascreatedin2001/2002,andtotakethestepsnecessaryforthatpurpose.

AheadofthedecisionaboutExecutiveBoardcompensationinthefirstquarterof2010,theSupervisoryBoardagreedtocommissionanindependentexternalconsultingfirmtore-port,basedonreferencevaluesforexecutiveboardcompensationatothercompanies,onwhethertheplannedExecutiveBoardcompensationiscustomaryandappropriate.Wedecidedtointroduceatthenextopportunity,whichisinApril2010,adeductibleintheD&OinsurancepolicyforExecutiveBoardmembersinaccordancewiththeminimumrequire-mentsofthenewGermanAppropriateExecutiveBoardRemunerationAct.However,afterdetaileddiscussiontheSupervisoryBoarddecidednottointroduceaD&OinsurancedeductibleformembersoftheSupervisoryBoard.TheSupervisoryBoardalsodeterminedthatithadasufficientnumberofindependentmembers.WiththeagreementoftheExecu-tiveBoard,itissueditsannualdeclarationofimplementationoftheGermanCorporateGovernanceCode(the“Code”)pursuanttotheGermanStockCorporationAct,section161.SpeciallydesignedquestionnairesweresenttoSupervisoryBoardmembersinAugust 2009inconnectionwiththeregularreviewoftheefficiencyoftheSupervisoryBoard’sactivi-tiespursuanttosection5.6oftheGermanCorporateGovernanceCode.Themembersre-ceivedawrittencopyoftheSupervisoryBoardchairperson’sanalysisoftheresultsofthesurveypriortothemeeting.TheresultswerediscussedatthemeetingonFebruary11,2010.

TheAuditCommittee,CompensationCommittee,TechnologyandStrategyCommittee,andFinanceandInvestmentCommitteereportedontheirrecentmeetings.TheAuditCommit-teereportedontheprogressofitsauditoftheinternalcontrolstructure,statingthattheEx-ecutiveBoardhadimplementedanewriskmanagementconcepttoidentifyandanalyzerisksthatpotentiallythreatentheGroup’sabilitytocontinueasagoingconcern.TheAuditCommitteealsoreportedthatboththeinternalauditserviceandtheglobalcomplianceorganizationhadsubmittedtheirannualreportsandthatitwasoftheopinionthatSAPhasaneffectiveGroup-widecompliancesystem.TheAuditCommitteereportedthatithadamendeditsrulesofproceduretocomplywiththeprovisionsofthenewGermanAccount-


ingLawModernizationAct.TheCompensationCommittee’sreportpresentedpossibleapproachestoimplementingthenewGermanAppropriateExecutiveBoardRemunerationAct,whichrequirestheExecutiveBoardcompensationsystemtobemodifiedinSpring2010whentheperformancetargetsaresetfor2010.TheTechnologyandStrategyCom-mitteereportedonproductstrategyanditsplannedimplementation.ThefuturedevelopmentofSAPBusinessSuiteandtherestoftheproductportfoliowasakeytopic.TheFinanceandInvestmentCommitteereportedspecificallyonitsreviewofSAP’sventurecapitalactivi-ties,thefinancingstrategypresentedbytheExecutiveBoardtowhichithadgivenitsap-proval,andtheacquisitionoftheSwiss-basedcompanySAFAG,whichitassessedfavorably.

Circular Correspondence ProcedureBasedonthedeliberationsattheSupervisoryBoardmeetingofOctober30,2009,theSupervisoryBoardapprovedbycircularcorrespondenceatechnicalamendmenttotheterms,effectiveDecember4,2009,forthelastexercisedateforstockoptionsgrantedtoExecutiveBoardmembersin2005undertheSAPStockOptionPlan(SAPSOP)2002,inthesamewayastheExecutiveBoardwouldapplythemforSAPGroupemployees.Thisamendment,whichdoesnotaffecttheexercisepriceinanyway,preventedrecipientsfrommakingalossasaresultofthelongperiodbetweenthenoticeofexercise(December15,2009)andtheexercisedate(February1,2010)ifthepriceofSAPstockontheexercisedatewasbelowtheexercisepriceof€33.55(plusadministrationfee)specifiedinthePerformancePlan.Inconsequenceofthistechnicalamendmenttotheterms,theexerciseofoptionswouldonlybeexecutedifontheexercisedatetheSAPstockcouldbesoldatnotlessthantheexer-ciseprice(plusadministrationfee).

THE WORk OF THE SuPERVISORy BOARD COMMITTEES

ThecommitteesmadeakeycontributiontotheworkoftheSupervisoryBoard.Thecommit-teesthatmetweretheGeneralCommittee,theCompensationCommittee,theFinanceandInvestmentCommittee,theAuditCommittee,theTechnologyandStrategyCommittee,theNominationCommittee,andtheSpecialCommittee.WhenChristianeKuntz-MayrtookherseatontheSupervisoryBoardwitheffectfromJanuary1,2009,changesweremadetothecommittees’membership.

ThedutiesoftheGeneral Committee,whichhassixmembers,includecoordinatingtheSupervisoryBoard’swork,dealingwithcorporategovernancematters,andapprovingtheyear’svirtualstockoptionallocationstoemployeesundertheSOPPerformancePlan2009.ItschairpersonisHassoPlattner.

Thefive-memberCompensation Committee,alsochairedbyHassoPlattner,carriesoutthepreparatoryworknecessaryforthepersonneldecisionsmadebytheSupervisoryBoard,particularlywithregardtotheExecutiveBoardcompensationpackageandcompensationamounts.Itdeliberatesonnear,medium,andlong-termplansforExecutiveBoardmember-shipanditidentifiesandshortlistspotentialcandidatesformembership.Itisalsoresponsibleforconcluding,amending,andterminatingthecontractsofExecutiveBoardmembers.

TheFinance and Investment Committee,withfourmembers,isresponsibleformattersre-latedtofinance,acquisitions,andminorityinvestments.ItschairpersonisWilhelmHaarmann.


TheAudit Committeeisresponsibleformattersrelatingtofinancialreportingandauditingaswellasriskmanagementandcompliance.Ithasfourmembers.ThecommitteeischairedbyErhardSchipporeit,whoformanyyearswasthechieffinancialofficerofaDAXcompanythatisalsolistedontheNYSEandthereforequalifiesasanindependentfinancialexpertinthemeaningoftheGermanStockCorporationAct,section100(5),andtheequivalentU.S.provisions.

TheTechnology and Strategy Committee,whichhasninemembers,regularlyreviewstheSAP’sproductstrategywithregardtothedevelopmentanddeploymentoftechnologiesandsoftware.ItadvisestheExecutiveBoardontechnologicalandstrategicdecisionsandonplannedinvestmentsinresearchanddevelopment.Italsomonitorsproductstrategyexecu-tion.TheCommitteemonitorsallkeytrendsonthemarketthatarerelevanttoSAP’ssoft-wareandservices,andassesseswhichtechnologieswillbeneededtomaintainandimproveSAP’sleadingposition.HassoPlattnerchairsthisCommittee.

GermanlawrequiresaMediation Committee,butitonlymeetstomakepersonnelproposalswherethereisnottherequiredtwo-thirdsmajorityontheSupervisoryBoardforanExecutiveBoardmember’sappointmentordismissal.TheSAPMediationCommitteehasneveryetneededtomeet.

WehaveaNomination Committee,asrecommendedintheCode.Itiscomposedsolelyofshareholderrepresentatives.ItstaskistodefinetherequirementsforSAPSupervisoryBoardmembersandsuggestsuitablecandidatesfornominationforelectionattheAnnualGeneralMeetingofShareholders.TheNominationCommitteehasthreemembersandischairedbyHassoPlattner.

TheSpecial CommitteeoftheSupervisoryBoardistaskedwithcoordinatingandmanagingtheSupervisoryBoard’sexternallegaladvisorsconcernedwiththeinvestigationandanalysisofthefactsinconnectionwiththelegalactionbroughtbyOracle.HassoPlattneralsochairsthiscommittee.

FormoreinformationabouttheSupervisoryBoardcommitteesandtheirmemberships,visitSAP’sWebsiteatwww.sap.com/about/governance/supervisory.

During2009,thecommitteesfocusedonthefollowingtopics:

•TheGeneral Committeemettwicein2009.ItapprovedtheallocationofvirtualstockoptionstoemployeesundertheSOPPerformancePlan2009andtheSTARPerformancePlan.Italsoapprovedtheuseoftreasurysharestosatisfyconversionandsubscriptionrightsattachingtoconvertiblebondsandstockoptions,respectively,thatweregrantedtoemployeesonshare-basedcompensationplans.


•TheCompensation Committeeheldfourregularmeetingsandoneextraordinarymeeting.Amongothermatters,itdeliberatedontheExecutiveBoardcompensationsystemandchangestoExecutiveBoardcompensation.ThenumberofvirtualstockoptionsissuedtoeachmemberoftheExecutiveBoardin2009bywayofshare-basedcompensationundertheSOPPerformancePlan2009wasdecidedbytheCompensationCommitteeatanextra-ordinarymeetingonMay6,2009,andreflectedthefairvalueoftheoptions.TheCom-pensationCommitteeapprovedtheamendmentstoJohnSchwarz’semploymentcontractmadenecessarybytheintegrationofBusinessObjectsAmericasintoSAPAmerica,Inc.inacircularcorrespondencedecisiondatedJune30,2009.AtameetingonJuly30,2009,theCompensationCommitteechangedthevirtualstockoptiontermsforExecutiveBoardmembersJohnSchwarzandBillMcDermotttoavoidtaxdisadvantagesduetoanewregulationintheUnitedStates:Theamountspayableaftertheoptionshavebeenexercisedwillnotbepaidoutuntiltheprogramendsin2014.InanticipationoftheGermanAppropriateExecutiveBoardRemunerationActofJuly31,2009,whichcameintoeffectonAugust5,2009,theCommitteeamendeditsrulesofproceduretotheeffectthatinthefuture,thefullSupervisoryBoardwillhavetodetermineindividualExecutiveBoardmembers’actualcompensationaswellasthecompensationsystem.TheCommitteeamendeditsrulesofproceduretoreflectthenewrecommendationintheGermanCorporateGovernanceCode,section4.2.2(3),thatwhenanexternalexpertiscommissionedtoassesstheappropri-atenessofexecutiveboardremuneration,careshouldbetakentoensurethattheexpertisindependentoftheexecutiveboardandthecompany.

•TheFinance and Investment Committeeheldthreemeetings.Betweenthesemeetings,theExecutiveBoardinformedtheCommitteemembersinwritingabouttheequityinvest-mentsundertakenin2008and,onatimelybasis,aboutthoseequityinvestmentsin2009whichtheExecutiveBoardhasadutytoinformtheCommitteeabout.Asinpreviousyears,theFinanceandInvestmentCommitteefocusedontransactionsinvolvingequityinterestsandthefinancingstrategyofSAPAG.Inparticular,theExecutiveBoardprovidedtheCommitteewithin-depthinformationabouttheacquisitionofsharesinSAFAG,acompanybasedinSwitzerland,followingpublicationofthepublicoffer.TheCommitteediscussedtheventurecapitalactivitiesofSAPAGduringtheperiodcoveredbythisreportonaregularbasis,anditadoptedandamendeditsrulesofprocedure.

•TheAudit Committee heldfourmeetingsduringtheyearatwhichmemberswerephysicallyinattendance,andsixtelephoneconferencemeetings.ItdeliberatedontheSAPAGandconsolidatedfinancialstatements,thereviewsofSAPAGandSAPGroupoperations,theAnnualReportonForm20-Fforfiscalyear2008,thedevelopmentofriskmanagementintheSAPGroup,theexaminationoftheinternalcontrolandrisk-managementstructure,theexaminationoftheinternalauditsystem,andcomplianceintheSAPGroup.ItdidworkpreparatorytotheSupervisoryBoard’sproposaltotheAnnualGeneralMeetingofShare-holderswithrespecttotheelectionofanauditorforfiscalyear2009andverifiedtheauditor’sindependence.Followingtheelectionoftheauditor,theAuditCommitteedecidedwiththeauditoronthefocusareasoftheauditandagreedtheauditor’sfee.TheAuditCommitteedeliberatedregularlyonSAP’sbusinessperformanceanditsimpactontheCompany’sfinancialaccounting.ItdiscussedwiththeExecutiveBoardthefinancialnumbersforfiscalyear2008,thequarterlynumbersandquarterlyreportsin2009,theresultsofthe2008audit,andtheauditor’squarterlyreviewsofselectedsoftwareagreements.TheauditorattendedallphysicalAuditCommitteemeetingsandreportedindepthonitsauditworkandquarterlyreviewsofselectedsoftwareagreements.Inadditiontothesediscus-


sionsinthephysicalmeetings,theExecutiveBoardheldtelephoneconferenceswiththeAuditCommitteebeforetheannouncementofthepreliminaryquarterlyresultstoin-formCommitteemembersaboutthepreparationandreviewofthequarterlyfinancialreportsandaboutthepreliminaryquarterlyresults.Beforepublishingquarterlyreports,theExecutiveBoardsendsthemtotheCommitteeanddiscussesthemwiththeCom-mitteebytelephoneconference.

•TheTechnology and Strategy Committeemetfourtimesduringtheyear.ItdiscussedthekeydevelopmentsinthesoftwareindustryinthecomingyearsandSAP’sproductstra-tegy.Itfocusedparticularlyontheproduct-relatedfactorsrequiredtosuccessfullylaunchSAPBusinessByDesign.Itexaminedtherelationshipbetweenproductstrategyandcorporatestrategy.ItalsodiscussedthefuturedevelopmentofSAPBusinessSuiteandSAP’sentireproductportfolio.

•TheNomination Committee didnotmeetin2009becausetherewerenochangesintheshareholderrepresentativesontheSupervisoryBoard.

•TheSpecial Committee mettwicein2009,discussingindetailthecurrentstateoftheOraclelitigationagainstSAPAGanditssubsidiaries,SAPAmericaandTomorrowNow.

Theregularreportsfromthecommitteesensuredthatwereceivedcomprehensiveinforma-tionaboutallmatterscoveredbythecommitteesandwerethereforeabletodiscussanddeliberateonthesetopicsthoroughly.

CORPORATE GOVERNANCE

SAP’scorporategovernanceofficermonitoredourcompliancewiththoserecommendationsintheCodewithwhichinourdeclarationweclaimtocomply,andreportedinfulltotheSupervisoryBoard.SupervisoryBoardmembershadnoconflictsofinterestinthemeaningofsectionof5.5.2theCode.

TheSupervisoryBoardgranteditsconsenttotheconclusionofcontractswithSupervisoryBoardmemberswhereitsconsentwasrequired.DetailedinformationaboutcompliancewiththeCodeisavailableintheExecutiveandSupervisoryBoards’corporategovernancereport.TheSupervisoryBoardhascloselyexaminedtheExecutiveBoard’scorporategovernancestatementpursuanttotheGermanCommercialCode,section289a.Ithasap-provedthestatementinconjunctionwiththereviewofoperationsandfullyendorsedit.

Corporate GovernanceSAP’scorporategover-nancestatementcanbefoundonlineatwww.sap.com/about/governance/statement.


SAP AG AND CONSOlIDATED ACCOuNTS FOR 2009

Asinrecentyears,KPMGauditedtheSAPAGandconsolidatedaccountsfor2009.TheAnnualGeneralMeetingofShareholderselectedKPMGastheSAPAGandSAPGroupauditoronMay19,2009.TheSupervisoryBoardproposedtheappointmentofKPMGontherecommendationoftheAuditCommittee.BeforeproposingKPMGtotheAnnualGener-alMeetingofShareholdersasauditorfortheyear,thechairpersonoftheSupervisoryBoardandtheAuditCommitteehadobtainedconfirmationfromthefirmthatcircumstancesdidnotexistthatmightprejudiceitsindependenceastheauditor.TheSupervisoryBoardhasagreedwithKPMGthattheauditorshouldreporttotheSupervisoryBoardandrecordintheauditor’sreportanyfactfoundduringtheauditthatisinconsistentwiththedeclarationgivenbytheExecutiveBoardandtheSupervisoryBoardconcerningimplementationoftheCode.

KPMGexaminedtheSAPAGfinancialstatementspreparedinaccordancewiththeGermanCommercialCode,theSAPAGreviewofoperations,theconsolidatedfinancialstatementspreparedinaccordancewithInternationalFinancialReportingStandards(IFRS)asrequiredbytheGermanCommercialCode,section315a,andthereviewofSAPGroupoperations,asrequiredbytheGermanCommercialCode,section315,andcertifiedthemwithoutquali-fication.Theauditorthusconfirmedthat,initsopinionbasedonthefindingsoftheaudit,theSAPAGandconsolidatedfinancialstatements,inaccordancewiththeapplicableaccount-ingregulations,accuratelypresentSAPAG’sandtheSAPGroup’sassets,financialposi-tion,andincome.KPMGalsocertifiedwithoutqualificationthatSAP’sinternalcontrolsoverfinancialreportingcomplywithU.S.GAAP.Theauditorstatesinthisauditopinion,whichisprintedintheAnnualReportonForm20-F,thatitconsidersSAP’sinternalcontrolsoverfinancialreportingtobeeffectiveinallmaterialrespects.

AllAuditCommitteeandSupervisoryBoardmembersreceivedthedocumentsconcerningthefinancialstatementsmentionedabove,theauditreportspreparedbyKPMG,andtheExecutiveBoard’sproposalfortheappropriationofretainedearningsingoodtime.AftertheExecutiveBoardhadexplainedthem,theAuditCommitteeandtheSupervisoryBoardreviewedthefinancialstatementdocumentsinthelightofKPMG’sauditreports.Theauditorattend-edthemeetingoftheAuditCommitteeonMarch24,2010,andtheauditmeetingofthefullSupervisoryBoardonMarch25,2010,andreportedontheauditandtheresultsoftheauditindetail.Theauditoralsoreportedthatithadnotidentifiedanymaterialweaknessesinourinternalcontrolandrisk-managementstructureforfinancialreporting.Duringthediscus-sionwiththeauditor,boththeAuditCommitteeandtheSupervisoryBoardaskeddetailedquestionsabouttheform,scope,andresultsoftheaudit.TheAuditCommitteereportedtotheSupervisoryBoardonitsreviewofthefinancialstatements,itsdiscussionswiththeauditor,anditsexaminationofthefinancialreportingprocess.ItconfirmedthatthestructureoftheSAPGroupinternalcontrol,riskmanagement,andinternalauditingsystemsiseffec-tive.TheCommitteereportedthatKPMGhadinformedtheCommitteethatnocircumstanceshadarisenduringtheauditthatmightgivecauseforconcernaboutKPMG’spartialityandhadlistedtheservicesithadprovidedthatwerenotpartoftheaudit.TheCommitteereportedthatithadexaminedtheauditor’sindependence,takingthenon-auditservicesithadren-deredintoconsideration,andstatedthatintheCommittee’sopiniontheauditorpossessedtherequireddegreeofindependence.


TheAuditCommitteeandSupervisoryBoardwereabletosatisfythemselvesthatKPMGhadconductedtheauditproperly.Inparticular,theyconcludedthatboththeauditreportsandtheaudititselffulfilledthelegalrequirements.OnthebasisofthereportandtheAuditCommittee’srecommendation,theSupervisoryBoardapprovedtheauditand,becausetherewerenofindingsfromitsownexamination,gaveitsconsenttotheSAPAGfinancialstatements,theconsolidatedfinancialstatements,thereviewofSAPAGoperations(includingtheExecutiveBoard’scorporategovernancestatementpursuanttotheGermanCommercialCode,section289a),andthereviewofSAPGroupoperations.Thefinancialstatementsandreviewsofoperationswerethusformallyadopted.TheSupervisoryBoard’sassess-mentofthesituationofSAPAGandtheGroupcoincidedwiththatoftheExecutiveBoardassetoutinthereviewsofSAPAGandSAPGroupoperations.TheSupervisoryBoardconsideredtheproposalpresentedbytheExecutiveBoardfortheappropriationofretainedearnings.Ithadregardtotherequirementsofstringentdividendspolicy,theeffectsonliquidity,creditworthiness,andthefuturefinancesofSAPAG,andtookintoaccounttheinterestsoftheshareholders–whichincludeddiscussionwiththeauditor.ItendorsedtheExecutiveBoard’sproposal.

MEMBERSHIP CHANGES ON THE SuPERVISORy BOARD AND EXECuTIVE BOARD IN 2009

Attheendofthe2008,HelgaClassen,amemberelectedbytheemployees,tooksemire-tirementandlefttheSupervisoryBoard.ChristianeKuntz-MayrjoinedtheSupervisoryBoardinHelgaClassen’splaceonJanuary1,2009.Asindicatedinthe2008report,CEOHenningKagermannretiredafteralongperiodofserviceonMay31,2009.ExecutiveBoardMemberClausHeinrichleftSAPonthesamedate.TheirtaskswereassignedtotheotherExecutiveBoardmembers.Wewouldliketothankbothofthemonceagainfortheiroutstandingwork.ThechangesontheExecutiveBoardin2010arediscussedabove.

TheSupervisoryBoardthankstheExecutiveBoard,themanagersoftheGroupcompanies,andallofouremployeesfortheircommitmentandhardworkin2009.Wewouldalsoliketothankourcustomersandpartners,whocontributedsignificantlytoSAP’ssuccessaswell.

HassoPlattnerFortheSupervisoryBoard


compensation report 1)

CoMpensation for exeCUtive anD sUpervisory boarD MeMbers

This compensation report outlines the criteria that we apply to determine com-pensation for Executive Board and Supervisory Board members, discloses the amount of compensation paid, and describes the compensation systems. It also contains information about Executive Board members’ share-based compensa-tion plans, shares held by Executive Board and Supervisory Board members, and the directors’ dealings required to be disclosed in accordance with the German Securities Trading Act.

COMPENSATION FOR EXECuTIVE BOARD MEMBERS

Compensation SystemInadeparturefrompreviouspractice,in2009theExecutiveBoardmembers’compensationsystemwasnotsetbytheCompensationCommitteeoftheSupervisoryBoard.Instead,theCompensationCommitteepreparedproposals,which(asisthecaseforindividualExec-utiveBoardmembers’totalremuneration)wereapprovedbythefullSupervisoryBoard.

ExecutiveBoardmembers’compensationisintendedtoreflecttheGroup’ssizeandglobalpresenceaswellasoureconomicandfinancialstanding.Thelevelisinternationallycompeti-tivetorewardcommitted,successfulworkinadynamicenvironment.

ThecompensationoftheExecutiveBoardasabodyisperformance-based.Ithasthreeelements:afixedelement(salary),aperformance-relatedelement(directors’profit-sharing),andalong-termincentiveelement(share-basedcompensation).

Acompensationtargetissetforthetotaloffixedandperformance-relatedelements.Thistargetisreviewedand,ifnecessary,updatedeveryyearinlightofourbusinessperformanceanddirectors’compensationatcomparablecompaniesontheinternationalstage.Everyyear,theSupervisoryBoardsetsthetargetperformance-relatedcompensation,reflectingtherelevantvaluesinSAP’sbudgetforthatyear.ThenumberofvirtualstockoptionsissuedtoeachmemberoftheExecutiveBoardin2009bywayofshare-basedcompensationwasdecidedbytheCompensationCommitteeonMay6,2009,andreflectedthefairvalueoftheoptions.

ThefollowingcriteriaapplytotheelementsofExecutiveBoardcompensationfor2009:•Thefixedelementispaidasamonthlysalary.•Theamountofperformance-relatedcompensationtobepaidoutinrespectof2009de-

pendedontheSAPGroup’sachievementofitstargetsfor(non-GAAP)operatingmargin,(non-GAAP)operatingincome,andthecash-flowconversionratio(U.S.GAAP).

1ThiscompensationreportispartoftheauditedReviewofSAPGroupOperationsandofourcorporategovernancereport.


•OnFebruary11,2010,theSupervisoryBoardassessedSAP’sperformanceagainsttheagreedtargetsanddeterminedhowmuchperformance-relatedcompensationwaspayable.ThepaymentwillbemadeaftertheAnnualGeneralMeetingofShareholdersinJune2010.

•Theregularformofshare-basedcompensationwastheissueofvirtualstockoptionsun-derthetermsofthe2009stockoptionplan(SOPPerformancePlan2009).ThetermsanddetailsoftheSOPPerformancePlan2009aredescribedinNote28intheNotestoCon-solidatedFinancialStatementssection.

ClausesareincludedinthecontractsofExecutiveBoardmembersBillMcDermottand,witheffectfrom2009,JohnSchwarztofixeuro-denominatedcompensationintheirlocalcurrencies.

Amount of CompensationExecutiveBoardmembers’compensationwasasfollowsin2009:

Thevaluesforregularshare-basedcompensationinthetableaboveresultfromthefollowingallocationsofvirtualstockoptionsgrantedin2009undertheSOPPerformancePlan2009.

€(000) Fixed Elements Performance- Related Element

Regular long-Term Incentive Elements

Total

Salary Other1) Directors’Profit-Sharing

Share-BasedCompensation

(SAPSOP2009)2)

Prof.Dr.HenningKagermann

(Co-CEOandMemberuntilMay31,2009)

312.5 7.4 2,026.2 – 2,346.1

LéoApotheker(Co-CEO) 750.0 137.3 4,862.8 950.0 6,700.1

Dr.WernerBrandt 455.0 19.1 2,950.1 577.0 4,001.2

ErwinGunst 455.0 36.0 2,950.1 577.0 4,018.1

Prof.Dr.ClausE.Heinrich(untilMay31,2009) 189.6 9.3 658.8 – 857.7

BillMcDermott3) 900.4 74.9 2,776.7 577.0 4,329.0

GerhardOswald 455.0 437.5 2,950.1 577.0 4,419.6

JohnSchwarz4) 581.5 28.2 2,910.7 577.0 4,097.4

JimHagemannSnabe 455.0 131.1 2,950.1 577.0 4,113.2

Total 4,554.0 880.8 25,035.6 4,412.0 34,882.4

1)Insurancecontributions,benefitsinkind,expensesformaintenanceoftwohouseholdsduetoworkabroad,reimbursementlegalandtaxadvicefees,leavecompensation

2)Fairvalueatthetimeofallocation3)Includesdiscretepaymentsarisingthroughapplicationofthefixedexchange-rateclausetothefollowingitems:

salaryfor2008:€29,600;profit-sharingbonusfor2008:€53,200;salaryfor2009:€47,500;profit-sharingbonusfor2009:€91,900

4)Includesdiscretepaymentsarisingthroughapplicationofthefixedexchange-rateclausetothefollowingitems:salaryfor2009:€5,000;profit-sharingbonusfor2009:€29,000

037CompensationReport

ThefollowingtableshowstotalExecutiveBoardcompensationin2008,includingSAPSOP2007stockoptionsgranted.

2009 Allocations

Quantity Fair Value per Right at Time of Grant

Total Fair Value of long-Term

Incentive Elements at Time of Grant

Fair Value per Right on Dec. 31, 2009

Total Value on Dec. 31, 2009

€ €(000) € €(000)


(CEOandMemberuntilMay31,2009)1)

– – – – –

LéoApotheker(Co-CEO) 169,040 5.62 950.0 4.89 275.5

Dr.WernerBrandt 102,670 5.62 577.0 4.89 167.4

ErwinGunst 102,670 5.62 577.0 4.89 167.4

Prof.Dr.ClausE.Heinrich1) – – – – –

BillMcDermott 102,670 5.62 577.0 4.89 167.4

GerhardOswald 102,670 5.62 577.0 4.89 167.4

JohnSchwarz 102,670 5.62 577.0 4.89 167.4

JimHagemannSnabe 102,670 5.62 577.0 4.89 167.4

Total 785,060 4,412.0 1,279.9

1)RetiredMay31,2009.Noallocationsin2009.

€(000) Fixed Elements Performance- Related Element

Regular long-Term Incentive Elements

Total

Salary Other1) Directors’ProfitSharing

Share-BasedCompensation

(SAPSOP2007)2)


(Co-CEOandmemberuntilMay31,2009)750.0 15.7 2,606.1 948.4 4,320.2

LéoApotheker(Co-CEO) 687.5 334.5 2,388.9 632.3 4,043.2

Dr.WernerBrandt 455.0 23.5 1,581.0 577.3 2,636.8

ErwinGunst3) 227.5 18.1 790.5 – 1,036.1

Prof.Dr.ClausE.Heinrich 455.0 19.8 1,581.0 577.3 2,633.1

BillMcDermott3) 395.2 142.4 631.3 – 1,168.9

GerhardOswald 455.0 627.9 1,581.0 577.3 3,241.2

JohnSchwarz4) 424.9 14.3 1,295.2 577.3 2,311.7

JimHagemannSnabe3) 227.5 22.3 790.5 – 1,040.3

Dr.PeterZencke(memberuntilDec.31,2008) 455.0 27.8 1,581.0 577.3 2,641.1

Total 4,532.6 1,246.3 14,826.5 4,467.2 25,072.6

1)Insurancecontributions,benefitsinkind,expensesformaintenanceoftwohouseholdsduetoworkabroad,compensationfromseatsonothergoverningbodiesintheSAPGroup,reimbursementoflegalfees.2)Fairvalueatthetimeofallocation.3)MemberoftheExecutiveBoardfromJuly1,2008.(Thetableshowscompensationsincethatdate.)4)MemberoftheExecutiveBoardfromMarch1,2008.(Thetableshowscompensationsincethatdate.)


Share-BasedCompensationUnderSAPSOP2007

END-OF-SERVICE BENEFITS

Normal End-of-Service undertakings

Retirement Pension PlanMembersoftheExecutiveBoardreceivearetirementpensionwhentheyreachtheretire-mentageof60andvacatetheirExecutiveBoardseatoradisabilitypensionif,beforereach-ingtheregularretirementage,theybecomesubjecttooccupationaldisabilityorpermanentincapacity.Asurvivingdependant’spensionispaidonthedeathofaformermemberoftheExecutiveBoard.Thedisabilitypensionis100%ofthevestedretirementpensionentitle-mentandispayableuntilthebeneficiary’s60thbirthday,afterwhichitisreplacedbyaretire-mentpension.Thesurvivingdependant’spensionis60%oftheretirementpensionorvesteddisabilitypensionentitlementatdeath.EntitlementsareenforceableagainstSAPAG.

ThebenefitpayablehasbeenagreedwiththeactiveExecutiveBoardmembers.Ifserviceisendedprematurely,pensionentitlementisreducedinproportionastheactuallengthofservicestandsinrelationtothemaximumpossiblelengthofservice.

2008 Allocations

Quantity Fair Value per Right at Time of Grant

Total Fair Value of long-Term

Incentive Elements at Time of Grant

Fair Value per Right on Dec. 31, 2008

Total Value on Dec. 31, 2008

€ €(000) € €(000)


(Co-CEOandMemberuntilMay31,2009)3)

133,396 7.11 948.4 4.67 623.0

LéoApotheker(Co-CEO) 88,933 7.11 632.3 4.67 415.3

Dr.WernerBrandt 81,200 7.11 577.3 4.67 379.2

ErwinGunst1) – – – – –

Prof.Dr.ClausE.Heinrich4) 81,200 7.11 577.3 4.67 379.2

BillMcDermott1) – – – – –

GerhardOswald 81,200 7.11 577.3 4.67 379.2

JohnSchwarz2) 81,200 7.11 577.3 4.67 379.2

JimHagemannSnabe1) – – – – –

Dr.PeterZencke5) 81,200 7.11 577.3 4.67 379.2

Total 628,329 4,467.2 2,934.3

1)MemberoftheExecutiveBoardfromJuly1,2008.(Noallocationssincethatdate.) 2)MemberoftheExecutiveBoardfromMarch1,2008.(Thetableshowsallocationssincethatdate.) 3)RetiredMay31,2009.Subjecttoexpirationofterm,optionsremainopenunderatwo-yeargraceperiod. 4)RetiredMay31,2009.Theoptionscanbeexerciseduntilendofterm. 5)RetiredDecember31,2008.Theoptionscanbeexerciseduntilendofterm.


OnJanuary1,2000,SAPAGintroducedacontributoryretirementpensionplan.Atthattime,theperformance-basedretirementplanwasdiscontinuedforExecutiveBoardmembers.EntitlementsaccrueduptoDecember31,1999,wereunaffected.ThepensionbenefitsarederivedfromanyaccruedentitlementsonDecember31,1999,underperformance-basedpensionagreementsandasalary-linkedcontributionfortheperiodcommencingJanuary1,2000.Thecontributionis4%ofapplicablecompensationuptotheapplicableincomethres-holdplus14%ofapplicablecompensationabovetheapplicableincomethreshold.Forthispurpose,applicablecompensationis180%ofannualbasesalary.TheapplicableincomethresholdisthestatutoryannualincomethresholdforthestatepensionplaninGermany(West),asamendedfromtimetotime.

ExceptionalretirementpensionagreementsapplytothefollowingExecutiveBoardmembers:•LéoApotheker’sagreementprovidesonlyforaretirementpension,butnotforasurviving

dependant’sordisabilitypension.ThepensioncontributionreflectshisparticipationintheFrenchsocialsecuritysysteminthattheemployercontributionspaidbySAPundertheFrenchsocialinsuranceplanaredeductedfromit.

•HenningKagermann’srightstoretirementpensionbenefitswereincreasedbyfurtherannualcontributionsbecauseheremainedamemberoftheExecutiveBoardafterhis60thbirthdayuntilhisretirementonMay31,2009.

•BillMcDermotthasrightstofuturebenefitsunderthepensionplanofSAPAmerica.ThepensionplanofSAPAmericaisacashbalanceplanthatonretirementprovideseithermonthlypensionpaymentsoralumpsum.Thepensionbecomesavailablefromthebene-ficiary’s65thbirthday.Subjecttocertainconditions,theplanalsoprovidesearlierpaymentorinvaliditybenefits.SAPalsomadecontributionstoathird-partypensionplanforBillMcDermott.In2009,SAPpaidcontributionstotaling€199,600(2008:€474,500).SAP’scontributionsreflectBillMcDermott’spaymentsintothispensionplan.TheSAPAmericapensionplanclosedwitheffectfromJanuary1,2009.Interestcontinuestobepaidontheearnedrightstobenefits.Inviewofthesecircumstances,SAPadjusteditspaymentstoanon-SAPpensionplan.

•InsteadofpayingforentitlementsunderthepensionplanforExecutiveBoardmembers,SAPpaysequivalentamountstoanon-SAPpensionplanforJimHagemannSnabe.In2009,SAPpaidcontributionstotaling€108,400(2008:€92,100).

•SAPmadenoretirementpensionplancontributionsinrespectofJohnSchwarzin2008and2009.

Thefollowingtableshowsthechangeintotalprojectedbenefitobligation(PBO)andinthetotalaccrualsforpensionobligationstoExecutiveBoardmembers:


ThefollowingtableshowstheannualpensionentitlementofeachmemberoftheExecutiveBoardonreachingage60basedonentitlementsfromSAPunderperformance-basedandsalary-linkedplansvestedonDecember31,2009:

€(000) Vested on December 31,

2009

Vested on December 31,

2008

Prof.Dr.HenningKagermann2) 340.41) 334.91)

LéoApotheker(Co-CEO) 45.5 45.5

Dr.WernerBrandt 54.1 48.0

ErwinGunst 34.4 32.8

Prof.Dr.ClausE.Heinrich3) 189.7 186.1

BillMcDermott 124.2 121.8

GerhardOswald 208.4 201.2

1)DuetotheextensionofHenningKagermann’scontractbeyondhis60thbirthday,thesevaluesrepresenttheretirementpensionentitlementthathereceivedafterhiscurrentExecutiveBoardcontractexpiredonMay31,2009,basedontheentitlementsvestedonMay31,2009andonDecember31,2008,respectively.

2)MemberofExecutiveBoardandCo-CEOuntilMay31,20093)MemberofExecutiveBoarduntilMay31,2009

€(000) Prof. Dr. Henning

kagermann(Co-CEO)2)

léo Apotheker (Co-CEO)

Dr. Werner Brandt

ErwinGunst1)

Prof. Dr. Claus E.Heinrich3)

Bill McDermott

Gerhard Oswald

Total

PBOJanuary1,2008 5,865.2 422.5 613.7 280.3 2,730.9 588.4 3,014.8 13,515.8

Lessplanassetsmarketvalue

January1,2008

5,228.0 630.4 510.7 272.9 2,028.7 45.0 2,316.4 11,032.1

Accrued January 1, 2008 637.2 – 207.9 103.0 7.4 702.2 543.4 698.4 2,483.7

PBOchangein2008 –277.2 17.3 88.1 108.9 81.0 366.6 84.3 469.0

Planassetschangein2008 277.2 28.4 113.3 –224.8 282.6 –11.7 320.2 785.2

PBODecember31,2008 5,588.0 439.8 701.8 389.2 2,811.9 955.0 3,099.1 13,984.8


December31,2008

5,505.2 658.8 624.0 48.1 2,311.3 33.3 2,636.6 11,817.3

Accrued December 31, 2008 82.8 – 219.0 77.8 341.1 500.6 921.7 462.5 2,167.5

PBOchangein2009 317.4 88.4 201.0 92.0 –58.0 3.1 527.1 1,171.0

Planassetschangein2009 255.0 29.2 31.1 97.4 436.2 9.2 237.6 1,095.7

PBODecember31,2009 5,905.4 528.2 902.8 481.2 2,753.9 958.1 3,626.2 15,155.8


December31,2009

5,760.2 688.0 655.1 145.5 2,747.5 42.5 2,874.2 12,913.0

Accrued December 31, 2009 145.2 – 159.8 247.7 335.7 6.4 915.6 752.0 2,242.8

1)WhenErwinGunstjoinedtheExecutiveBoardandhisemploymentwithSAP’sSwitzerlandaffiliateended,hisvestedplanfundsweretransferredtoanexternalvestedbenefitsaccount.

2)MemberofExecutiveBoardandCo-CEOuntilMay31,20093)MemberofExecutiveBoarduntilMay31,2009


Thesearevestedentitlements.TotheextentthatmemberscontinuetoserveontheExecu-tiveBoardandthatthereforemorecontributionsaremadefortheminthefuture,pensionactuallypayableatage60willbemorethanshowninthetable.

Postcontractual Noncompete ProvisionsDuringtheagreed12-monthpostcontractualnoncompeteperiod,ExecutiveBoardmembersreceiveabstentionpaymentscorrespondingto50%oftheirfinalaveragecontractualcom-pensationasmembers.

Early End-of-Service undertakings

Severance PaymentsThestandardcontractforallExecutiveBoardmemberssinceJanuary1,2006,providesthatonterminationbeforefullterm(forexample,wherethemember’sappointmentisrevoked,wherethememberbecomesoccupationallydisabled,orinconnectionwithachangeofcon-trol),SAPAGwillpaytothemembertheoutstandingpartofthecompensationtargetfortheentireremainderoftheterm,appropriatelydiscountedforearlypayment.AmemberhasnoclaimtothatpaymentifheorsheleavesSAPforreasonsforwhichheorsheisresponsible.

IfanExecutiveBoardmember’spostontheExecutiveBoardexpiresorceasestoexistbe-causeof,orasaconsequenceof,changeorrestructuringorduetoachangeofcontrol,SAPAGandeachExecutiveBoardmemberhastherighttoterminatetheemploymentcontractwithineightweeksoftheoccurrencebygivingsixmonths’notice.Achangeofcon-trolisdeemedtooccurwhenathirdpartyisrequiredtomakeamandatorytakeoveroffertotheshareholdersofSAPAGundertheGermanSecuritiesAcquisitionandTakeoverAct,whenSAPAGmergeswithanothercompanyandbecomesthesubsumedentity,orwhenacontrolorprofittransferagreementisconcludedwithSAPAGasthedependentcompa-ny.AnExecutiveBoardmember’scontractcanalsobeterminatedbeforefulltermifhisorherappointmentasanSAPAGExecutiveBoardmemberisrevokedinconnectionwithachangeofcontrol.

Postcontractual Noncompete ProvisionsAbstentioncompensationforthepostcontractualnoncompeteperiodasdescribedaboveisalsopayableonearlycontracttermination.

Payments to Retiring Executive Board Members in 2009HenningKagermann’stermofofficeontheExecutiveBoardexpiredonMay31,2009,asdidthenoticeperiodinhiscontractofemployment.Hereceivedthefollowingpaymentsin2009inconnectionwithhisretirement:•HenningKagermannreceivesmonthlyabstentioncompensationof€163,200,correspond-

ingto50%ofhisfinalaveragecontractualcompensation,inconsiderationofanagreed12-monthpostcontractualnoncompeteperiod.

•Hereceivesamonthlyretirementpensionof€28,400.•Uponterminationofhisemploymentcontract,HenningKagermannreceivedcompensa-

tionforunusedleavetotaling€1,199,400.


ClausHeinrich’scontractasanExecutiveBoardmemberwasendedwitheffectfromMay31,2009.Hereceivedthefollowingpaymentsin2009inconnectionwithhisretirement:•ClausHeinrichreceivedapaymentof€4,120,600inrelationtotheearlyterminationofhis

contract,inaccordancewiththeagreementsonpaymentsforearlytermination.•Uponterminationofhisemploymentcontract,ClausHeinrichreceivedcompensationfor

unusedleavetotaling€235,800.•Thetermsofthestock-basedcompensationplannotwithstanding,itwasagreedthat

ClausHeinrichmayexercisehisrightspertainingtoallocationsunderSAPSOP2007withoutlimitationuntiltheyexpire.

•Wehavesetasidethepostcontractualnoncompeteprovisionsinhiscontract.

Payments to Former Executive Board MembersIn2009,wepaidpensionbenefitsof€764,000toExecutiveBoardmemberswhohadre-tiredbeforeJanuary1,2009(2008:€763,000).Attheendoftheyear,thePBOforformerExecutiveBoardmemberswas€15,777,000(2008:€11,367,000).Planassetsof€16,512,000areavailabletoservicetheseobligations(2008:€12,646,000).

Additionally,untilDecember2009formerExecutiveBoardmemberPeterZenckereceivedmonthlyabstentioncompensationof€98,700,correspondingto50%ofhisfinalaveragecontractualcompensation,inconsiderationofanagreed12-monthpostcontractualnoncom-peteperiod.

Executive Board Members’ long-Term Incentives MembersoftheExecutiveBoardholdvirtualstockoptionsundertheSOPPerformancePlan2009andSAPSOP2007,stockappreciationrights(STARs)undertheIncentivePlan2010,stockoptionsunderSAPSOP2002,andstockoptionsandconvertiblebondsundertheLTIPlan2000,whichweregrantedtotheminpreviousyears.Forinformationaboutthetermsanddetailsoftheseplans,seetheNotestotheConsolidatedFinancialState-mentssection,Note28.

SOP Performance Plan 2009ThetablebelowshowsExecutiveBoardmembers’holdings,onDecember31,2009,ofvirtualstockoptionsissuedundertheSOPPerformancePlan2009.

ThestrikepriceforanoptionvarieswiththeperformanceofSAPstockovertimeagainsttheTechPGIindex.Thegrossprofitperoptionislimitedto€30.80,correspondingto110%oftheSAPsharepriceonthedateofissue.

Theissuedoptionshaveatermoffiveyearsandcanonlybeexercisedonspecifieddatesafterthetwo-yearvestingperiod.Therefore,noneoftheoptionsheldcouldbeexercisedonDecember31,2009.


SOPPerformancePlan2009StockOptions

SAP SOP 2007 ThetablebelowshowsExecutiveBoardmembers’holdings,onDecember31,2009,ofvirtualstockoptionsissuedtothemundertheSAPSOP2007plansinceitsinception,includingvirtualstockoptionsissuedtothembothduringandbeforetheirrespectivemem-bershipoftheExecutiveBoard.

Thestrikepriceforanoptionis110%ofthebaseprice.Thepremiumof10%onthebasepriceistodiscourageexerciseoftheoptionsunlessthemarketpriceofSAPstockhasrisenbyatleast10%comparedwiththebaseprice.Theissuedoptionshaveatermoffiveyearsandcanonlybeexercisedonspecifieddatesafterthetwo-yearvestingperiod.Theoptionsissuedin2007couldbeexercisedwitheffectfromJune2009,followingexpirationofthetwo-yearvestingperiod.

year Granted Holding on December

31, 2009

Fair Value per unit at

Time ofGrant

Fair Value per unit on December

31, 2009

Accrual on December

31, 2009

QuantityofOptions

€ € €(000)


(Co-CEOuntilMay31,2009)1)

2009 – – – –

LéoApotheker(Co-CEO) 2009 169,040 5.62 4.89 275.5

Dr.WernerBrandt 2009 102,670 5.62 4.89 167.4

ErwinGunst 2009 102,670 5.62 4.89 167.4

Prof.Dr.ClausE.Heinrich1) 2009 – – – –

BillMcDermott 2009 102,670 5.62 4.89 167.4

GerhardOswald 2009 102,670 5.62 4.89 167.4

JohnSchwarz 2009 102,670 5.62 4.89 167.4

JimHagemannSnabe 2009 102,670 5.62 4.89 167.4

Total 785,060 1,279.9

1)RetiredMay31,2009.Noallocationsin2009.


SAPSOP2007StockOptions

Incentive Plan 2010Theadditionalnonrecurringshare-basedcompensationawardedin2006comprisesSTARsfortheIncentivePlan2010share-basedcompensationplan.TheIncentivePlan2010isashare-basedcompensationplanintendedtorewardasubstantialincreaseinourmarketcap-italization.TheExecutiveBoardwillqualifyforpayoutundertheplanonlyif,notlaterthantheendof2010,SAP’saveragemarketcapitalizationduringthelastsixmonthsofayearisnotlessthan50%greaterthanitsaveragevaluebetweenJuly1andDecember31,2005,andSAPstockoutperformstheS&PNorthSoftware-SoftwareIndex(whichisthesucces-soroftheGSTISoftwareindex)overthesameperiod.Payoutsarescaledasfollows:•Ifmarketcapitalizationdoesnotincreaseby50%ormore,theExecutiveBoardwillnot

receiveapayout.•Ifmarketcapitalizationincreasesbymorethan50%butlessthan100%,targetachieve-

mentwillbemeasuredprogressively.•IfSAP’smarketcapitalizationincreasesnotlessthantwofoldduringthesaidperiod,the

ExecutiveBoardwillreceiveapayoutof€100 million.

year Granted Holding on December

31, 2009

Fair Value per unit at

Time of Grant


31, 2009

Accrual on December

31, 2009

QuantityofOptions

€ € €(000)



2007 118,637 8.00 3.09 366.6

2008 133,396 7.11 5.21 637.0

LéoApotheker(Co-CEO) 2007 79,093 8.00 3.09 244.4

2008 88,933 7.11 5.21 424.7

Dr.WernerBrandt 2007 72,216 8.00 3.09 223.1

2008 81,200 7.11 5.21 387.8

ErwinGunst1) 2007 56,258 8.00 3.09 173.8

2008 70,284 7.11 5.21 335.7

Prof.Dr.ClausE.Heinrich4) 2007 72,216 8.00 3.09 223.1

2008 81,200 7.11 5.21 387.8

BillMcDermott1) 2007 62,508 8.00 3.09 193.1

2008 70,284 7.11 5.21 335.7

GerhardOswald 2007 72,216 8.00 3.09 223.1

2008 81,200 7.11 5.21 387.8

JohnSchwarz2) 2007 – – – –

2008 81,200 7.11 5.21 387.8

JimHagemannSnabe1) 2007 37,505 8.00 3.09 115.9

2008 56,228 7.11 5.21 268.5

Total 1,314,574 5,315.9

1)MemberfromJuly1,2008.TheholdingwasallocatedbeforeappointmenttotheExecutiveBoard.2)MemberfromMarch1,2008.OnlyallocationssinceappointmenttotheExecutiveBoardareshown.3)RetiredMay31,2009.Subjecttoexpirationofterm,optionsremainopenunderatwo-yeargraceperiod.4)RetiredMay31,2009.Theoptionscanbeexerciseduntilendofterm.


TheSTARsawardedtoExecutiveBoardmembersunderthisplanexpireonDecember31,2010.Forinformationaboutthetermsanddetailsoftheseplans,seetheNotestotheConsolidatedFinancialStatementssection,Note28.

NonrecurringShare-BasedCompensation:IncentivePlan2010

SAP SOP 2002 ThetablebelowshowsExecutiveBoardmembers’December31,2009,holdingsofstockoptionsissuedinpreviousyearsundertheSAPSOP2002plansinceitsinception.

ThestrikepriceforanSAPSOP2002stockoptionis110%ofthebasepriceofoneSAPshare.ThebasepriceisthearithmeticmeanclosingauctionpriceforSAPstockintheXetratradingsystem(oritssuccessorsystem)overthefivebusinessdaysimmediatelybeforetheissuedateofthatstockoption.Thestrikepricecannotbelessthantheclosingauctionpriceonthedaybeforetheissuedate.Theissuedoptionshaveatermoffiveyearsandcanonlybeexercisedonspecifieddatesafterthetwo-yearvestingperiod.

AsaresultoftheissueonDecember21,2006,ofbonussharesataone-to-threeratioun-deracapitalincreasefromcorporatefunds,onexerciseeachstockoptionnowentitlesitsbeneficiarytofourshares.ForbettercomparabilitywiththepriceofSAPstocksinceim-plementationofthecapitalincrease,thefollowingtableshowsnotthenumber(quantity)ofoptionsbutthenumber(quantity)ofsharestowhichtheyentitletheholder.Consequent-ly,thestrikepricesshownarepricespershareandnotperoption.Thenumberofsharesshowninthetableisfourtimesthenumberofoptions,andthestrikepriceforanoptionisfourtimesthestrikepricepershareshowninthetable.

Original Quantity Granted

Fair Value per unit

at Time of Grant


31, 2009

Accrual on December

31, 2009

NumberofRights

€ € €(000)



188,182 24.87 0.15 22.4

LéoApotheker(Co-CEO) 125,455 24.87 0.15 14.9

Dr.WernerBrandt 62,727 24.87 0.15 7.5

ErwinGunst1) 28,815 14.02 0.15 3.4

Prof.Dr.ClausE.Heinrich2) 62,727 24.87 0.15 7.5

BillMcDermott1) 45,345 14.02 0.15 5.4

GerhardOswald 62,727 24.87 0.15 7.5

JimHagemannSnabe1) 17,290 14.02 0.15 2.0

Total 593,268 70.6

1)MemberfromJuly1,2008.TheserightswereallocatedbeforeappointmenttotheExecutiveBoard.2)RetiredMay31,2009.Subjecttoexpirationofterm,optionsremainopenunderatwo-yeargraceperiod.


InDecember2009,theSupervisoryBoardagreedanamendmenttothetermsofSAPSOP2002foroptionsgrantedin2005.Fordetailsoftheamendment,seetheNotestotheCon-solidatedFinancialStatementssection,Note28.

Therighttoexerciseoptionsissuedin2004expiredin2009.

SAPSOP2002StockOptions

lTI Plan 2000BeneficiariesundertheLTIPlan2000couldchoosebetweenconvertiblebondsandstockoptions.Thechiefdifferencewasinthewaytheexerciseorconversionpricewasdeter-mined.ThebondconversionpricedependsontheclosingpriceofSAPstockthedaybeforethebondwasissued,whiletheoptionstrikepricevarieswiththeperformanceofSAPstockovertimeagainsttheS&PNorthSoftware-SoftwareIndex(thesuccessoroftheGSTISoft-wareindex).Theissuedoptionshaveatermoftenyearsandcouldonlybeexercisedinportionsofone-thirdeachonspecifieddatesaftertwo-year,three-year,orfour-yearvestingperiodsrespectively.

year Granted

Strike Price per Share

Holding on January 1, 2009

Rights Exercised

in 2009

Price on Exercise

Day

ForfeitedShares2)

Holding on December 31, 2009

€ QuantityofShares

RemainingTerminYears

QuantityofShares

QuantityofShares

QuantityofShares



(Co-CEOandMemberuntil

May31,2009)3)

20042) 37.50 200,000 0.13 – – 200,000.00 – –2005 33.55 267,820 1.11 – – – 267,820 0.11

2006 46.48 143,404 2.10 – – – 143,404 1.10

LéoApotheker(Co-CEO) 20042) 37.50 112,000 0.13 – – 112,000 – –

2005 33.55 149,980 1.11 – – – 149,980 0.11

2006 46.48 95,604 2.10 – – – 95,604 1.10

Dr.WernerBrandt 20042) 37.50 112,000 0.13 – – 112,000 – –

2005 33.55 149,980 1.11 – – – 149,980 0.11

2006 46.48 87,292 2.10 – – – 87,292 1.10

ErwinGunst1) 2005 33.55 61,264 1.11 – – – 61,264 0.11

2006 46.48 44,596 2.10 – – – 44,596 1.10

Prof.Dr.ClausE.Heinrich3) 20042) 37.50 112,000 0.13 – – 112,000 – –

2005 33.55 149,980 1.11 – – – 149,980 0.11

2006 46.48 87,292 2.10 – – – 87,292 1.10

BillMcDermott1) 2006 46.48 77,296 2.10 – – – 77,296 1.10

GerhardOswald 2005 33.55 149,980 1.11 – – – 149,980 0.11

2006 46.48 87,292 2.10 – – – 87,292 1.10

JimHagemannSnabe1) 2005 33.55 51,180 1.11 – – – 51,180 0.11

2006 46.48 37,164 2.10 – – – 37,164 1.10

Total 2,176,124 536,000 1,640,124

1)MemberfromJuly1,2008.TheserightswereallocatedbeforeappointmenttotheExecutiveBoard. 2)Theoptionsfromthe2004tranchewereforfeitedonFebruary16,2009(Planenddate). 3)RetiredMay31,2009.Subjecttoexpirationofterm,optionsremainopenunderatwo-yeargraceperiod.


ThetablebelowshowsstockoptionsheldbymembersoftheExecutiveBoardonDecem-ber31,2009,grantedinearlieryearsundertheLTIPlan2000.ThestrikepricesforLTIPlan2000stockoptionsreflectthepricespayablebyanExecutiveBoardmemberforoneSAPcommonshareonexerciseoftheoptiononDecember31,2009.ThestrikepricesvarywiththeperformanceofSAPstockovertimeagainsttheS&PNorthSoftware-SoftwareIndex.AsaresultoftheissueonDecember21,2006,ofbonussharesataone-to-threeratioun-deracapitalincreasefromcorporatefunds,onexerciseeachstockoptionnowentitlesitsbeneficiarytofourshares.ForbettercomparabilitywiththepriceofSAPstocksinceimple-mentationofthecapitalincrease,thefollowingtableshowsnotthenumber(quantity)ofop-tionsbutthenumber(quantity)ofsharestowhichtheyentitletheholder.Consequently,thestrikepricesshownarepricespershareandnotperoption.Thenumberofsharesshowninthetableisfourtimesthenumberofoptions,andthestrikepriceforanoptionisfourtimesthestrikepricepershareshowninthetable.

LTIPlan2000StockOptions

ThetablebelowshowsconvertiblebondsheldbymembersoftheExecutiveBoardonDecember31,2009,grantedinearlieryearsundertheLTIPlan2000.ThestrikepricesforLTIPlan2000convertiblebondsreflectthepricespayablebyanExecutiveBoardmemberforoneSAPshareonconversionofthebond.ThestrikepricesarefixedandcorrespondtothequotedpriceofoneSAPshareonthebusinessdayimmediatelyprecedingthegrantoftheconvertiblebond.AsaresultoftheissueonDecember21,2006,ofbonussharesataone-to-threeratiounderacapitalincreasefromcorporatefunds,onconversioneachbondnowentitlesitsbeneficiarytofourshares.ForbettercomparabilitywiththepriceofSAPstocksinceimplementationofthecapitalincrease,thefollowingtableshowsnotthenumber(quantity)ofconvertiblebondsbutthenumber(quantity)ofsharestowhichtheyentitletheholder.Consequently,thestrikepricesshownarepricespershareandnotperbond.Thenumberofsharesshowninthetableisfourtimesthenumberofbonds,andthestrikepriceforabondisfourtimesthestrikepricepershareshowninthetable.

year Granted Strike Price per Share


Rights Exercised

in 2009

Price on Exercise

Date




QuantityofShares


RemainingTermin

Years



2000 18.65 112,128 1.14 112,128 34.55 – –

2001 22.67 157,500 2.14 – – 157,500 1.14

LéoApotheker(Co-CEO)2) 2002 28.00 87,500 3.14 – – 87,500 2.14

Total 357,128 112,128 245,000

1)RetiredMay31,2009.Subjecttoexpirationofterm,optionsremainopenunderatwo-yeargraceperiod.2)MemberfromAugust1,2002.ThisholdingwasallocatedbeforeappointmenttotheExecutiveBoard.


LTIPlan2000ConvertibleBonds

Total Expense for Share-Based CompensationInthereportyearandtheprioryear,totalexpensefortheshare-basedcompensationplansofExecutiveBoardmemberswasrecordedasfollows:

year Granted Strike Price per Share


Rights Exercised

in 2009

Price on Exercise

Date



RemainingTermin

Years

QuantityofShares


RemainingTermin

Years



2000 72.58 89,700 1.14 – – 89,700 0.14

2001 47.81 126,000 2.14 – – 126,000 1.14

2002 37.88 360,000 3.14 – – 360,000 2.14

LéoApotheker(Co-CEO)2) 2000 83.67 95,400 1.19 – – 95,400 0.19

2001 47.81 120,000 2.14 – – 120,000 1.14

2002 37.88 70,000 3.14 – – 70,000 2.14

Dr.WernerBrandt 2001 47.81 20,000 2.14 – – 20,000 1.14

2002 37.88 120,000 3.14 – – 120,000 2.14

Prof.Dr.ClausE.Heinrich1) 2000 72.58 65,700 1.14 – – 65,700 0.14

2001 47.81 88,000 2.14 – – 88,000 1.14

2002 37.88 200,000 3.14 – – 200,000 2.14

GerhardOswald 2000 72.58 65,700 1.14 – – 65,700 0.14

2001 47.81 88,000 2.14 – – 88,000 1.14

Total 1,508,500 1,508,500

1)RetiredMay31,2009.Subjecttoexpirationofterm,theconvertiblebondsremainopenunderatwo-yeargraceperiod.2)MemberfromAugust1,2002.ThisholdingwasallocatedbeforeappointmenttotheExecutiveBoard.

€(000) 2009 2008

Prof.Dr.HenningKagermann(Co-CEOandMemberuntilMay31,2009) 167.9 55.9

LéoApotheker(Co-CEO) 376.3 37.3

Dr.WernerBrandt 351.8 98.9

ErwinGunst1) 343.1 108.0

Prof.Dr.ClausE.Heinrich 184.5 98.9

BillMcDermott1) 339.3 97.4

GerhardOswald 351.8 98.9

JohnSchwarz2) 397.0 158.1

JimHagemannSnabe1) 318.3 95.2

Total 2,830.03) 848.6

1)MemberoftheExecutiveBoardfromJuly1,20082)MemberoftheExecutiveBoardfromMarch1,20083)Includesincrementalexpenseof€430,000resultingfromtheamendmentoftheexerciseconditionsforthe2005grantofSAPSOP2002


SHAREHOlDINGS AND TRANSACTIONS OF EXECuTIVE BOARD MEMBERS

NomemberoftheExecutiveBoardholdsmorethan1%ofthecommonstockofSAPAG.MembersoftheExecutiveBoardheldatotalof15,336SAPsharesonDecember31,2009.OnDecember31,2008,membersoftheExecutiveBoardheldatotalof88,527SAPshares.Thedifferenceisdueprimarilytotheretirementoftwomembers.

ThetablebelowshowstransactionsbyExecutiveBoardmembersandpersonscloselyassociatedwiththemnotifiedtoSAPpursuanttotheGermanSecuritiesTradingAct,section15a,in2009.

TransactionsinSAPShares

EXECuTIVE BOARD: OTHER INFORMATION

Wedidnotgrantanycompensationadvanceorcreditto,orenterintoanycommitmentforthebenefitof,anymemberofourExecutiveBoardin2009orthepreviousyear.

Asfarasthelawpermits,SAPAGanditsaffiliatedcompaniesinGermanyandelsewhereindemnifyandholdharmlesstheirrespectivedirectorsandofficersagainstandfromtheclaimsofthirdparties.Tothisend,wemaintaindirectors’andofficers’(D&O)groupliabilityinsurance.Thepolicyisannualandisrenewedfromyeartoyear.Theinsurancecoversthepersonalliabilityoftheinsuredgroupforfinanciallosscausedbyitsmanagerialactsandomis-sions.ThecurrentD&Opolicy,whichdoesnotprovideforanindividualdeductible,doesnotexpireuntilMarch31,2010,soin2009nodeductible,asenvisagedintheGermanCor-porateGovernanceCodeof2008,applied.

COMPENSATION FOR SuPERVISORy BOARD MEMBERS

Compensation SystemSupervisoryBoardmembers’compensationisgovernedbyourArticlesofIncorporation,section16.EachmemberoftheSupervisoryBoardreceives,inadditiontothereimburse-mentofhisorherexpenses,compensationcomposedoffixedelementsandavariableelement.ThevariableelementdependsonthedividendpaidbySAPoncommonshares.

Thefixedelementis€75,000forthechairperson,€50,000forthedeputychairperson,and€37,500forothermembers.FormembershipofaSupervisoryBoardcommittee,membersreceiveadditionalfixedcompensationof€2,500(providedthattherelevantcommitteemeetsduringthefiscalyear)andthechairpersonofthecommitteereceives€5,000.Thefixedremunerationelementisdueforpaymentaftertheendofthefiscalyear.

Transaction Date Transaction Quantity unit Price

€

WernerBrandt October29,2009 Stockpurchase 1,000 31.95


Thevariablecompensationelementis€8,000forthechairperson,€6,000forthedeputychairperson,and€4,000fortheothermembersoftheSupervisoryBoardforeach€0.01bywhichthedividenddistributedpershareexceeds€0.25.

However,theaggregatecompensationexcludingcompensationforcommitteemembershipsmustnotexceed€200,000forthechairperson,€150,000forthedeputychairperson,and€100,000forothermembers.

AnymemberoftheSupervisoryBoardhavingservedforlessthantheentirefiscalyearreceivesone-twelfthoftheirrespectiveremunerationforeachmonthofservicecommenced.Thisalsoappliestothehighercompensationlevelsforthechairpersonanddeputychairper-sonandtotheadditionalcompensationforcommitteechairsandmemberships.

Amount of CompensationSubjecttotheresolutionontheappropriationofretainedearningsbytheAnnualGeneralMeetingofShareholdersonJune8,2010,thecompensationpaidtoSupervisoryBoardmembersinrespectoffiscalyear2009willbeassetoutinthetablebelow:

€(000) 2009 2008

Fixed Com-pensation

Variable Com-pensation

Compensation for Committee

Work

Total Fixed Com-pensation

Variable Com-pensation

Compensation for Committee

Work

Total

Prof.Dr.h.c.mult.HassoPlattner

(chairperson)

75.0 125.0 20.0 220.0 75.0 125.0 25.0 225.0

LarsLamadé(deputychairperson) 50.0 100.0 2.5 152.5 50.0 100.0 2.5 152.5

PekkaAla-Pietilä 37.5 62.5 5.0 105.0 37.5 62.5 7.5 107.5

ThomasBamberger 37.5 62.5 2.5 102.5 37.5 62.5 2.5 102.5

PanagiotisBissiritsas 37.5 62.5 5.0 105.0 37.5 62.5 5.0 105.0

WilliBurbach 37.5 62.5 5.0 105.0 37.5 62.5 5.0 105.0

HelgaClassen(untilDecember31,2008) 0.0 0.0 0.0 0.0 37.5 62.5 2.5 102.5

Prof.Dr.WilhelmHaarmann 37.5 62.5 10.0 110.0 37.5 62.5 9.0 109.0

PeterKoop 37.5 62.5 4.8 104.8 37.5 62.5 2.5 102.5

ChristianeKuntz-Mayr

(fromJanuary1,2009)

37.5 62.5 2.3 102.3 0.0 0.0 0.0 0.0

BernardLiautaud(fromJune3,2008) 37.5 62.5 2.5 102.5 21.9 36.5 1.5 59.8

Dr.GerhardMaier 37.5 62.5 5.0 105.0 37.5 62.5 5.0 105.0

Dr.h.c.HartmutMehdorn 37.5 62.5 2.5 102.5 37.5 62.5 1.5 101.5

Prof.Dr.-Ing.Dr.h.c.Dr.-Ing.

E.h.JoachimMilberg

37.5 62.5 10.0 110.0 37.5 62.5 11.5 111.5

Prof.Dr.Dr.h.c.August-WilhelmScheer

(untilApril4,2008)

0.0 0.0 0.0 0.0 12.5 20.8 2.5 35.8

Dr.ErhardSchipporeit 37.5 62.5 7.5 107.5 37.5 62.5 7.5 107.5

StefanSchulz 37.5 62.5 5.0 105.0 37.5 62.5 5.0 105.0

Prof.Dr.-Ing.Dr.-Ing.E.h.KlausWucherer 37.5 62.5 2.5 102.5 37.5 62.5 2.5 102.5

Total 650.0 1,100.0 92.1 1,842.1 646.9 1,094.8 98.3 1,840.0


Inaddition,wereimbursetomembersoftheSupervisoryBoardtheirexpensesandthevalue-addedtaxpayableontheircompensation.ThetotalcompensationofallSupervisoryBoardmembersin2009forworkforSAPexclud-ingcompensationrelatingtotheofficeofSupervisoryBoardmemberwas€1,095,100(2008:€1,050,300).ThoseamountsarecomposedentirelyofremunerationreceivedbyemployeerepresentativesontheSupervisoryBoardrelatingtotheirpositionasSAPemployeesin2008and2009respectively.

lONG-TERM INCENTIVES FOR THE SuPERVISORy BOARD

Wedonotoffermembersstockoptionsorothershare-basedcompensationfortheirSuper-visoryBoardwork.Anystockoptionsorothershare-basedcompensationreceivedbyem-ployee-electedmembersrelatetotheirpositionasSAPemployeesandnottotheirworkontheSupervisoryBoard.

Shareholdings and Transactions of Supervisory Board MembersSupervisoryBoardchairpersonHassoPlattnerandthecompanieshecontrolledheld127,186,143SAPsharesonDecember31,2009(December31,2008:128,987,982SAPshares),representing10.374%(2008:10.523%)ofSAP’scapitalstock.Noothermem-beroftheSupervisoryBoardheldmorethan1%oftheSAPAGcommonstockattheendof2009orofthepreviousyear.MembersoftheSupervisoryBoardheldatotalof127,193,136SAPsharesonDecember31,2009(December31,2008:128,995,306SAPshares).

ThetablebelowshowstransactionsbySupervisoryBoardmembersandpersonscloselyassociatedwiththemnotifiedtoSAPpursuanttotheGermanSecuritiesTradingAct,sec-tion15a,in2009:

TransactionsinSAPShares

Transaction Date Transaction Quantity unit Price

€

Dr.GerhardMaier August17,2009 Stocksale 6,384 32.65

HassoPlattnerGmbH&Co.

BeteiligungsKG

September14,2009 Stocksale 1) 1)

1)OnSeptember14,2009,thenotifyingpartyconcludedacontractwithabank,whichactsascommissionagent,underwhichthenotifyingpartyissellingatotalof€240,000,000ofSAPstockinmonthlytranchesof€15,000,000untilthetermendsonDecember31,2010.Thenumberofsharessoldistheresultofdividingthevaluesoldbythesharepricecurrentatthetimeofsale.


SuPERVISORy BOARD: OTHER INFORMATION

Wedidnotgrantanycompensationadvanceorcreditto,orenterintoanycommitmentforthebenefitof,anymemberofourSupervisoryBoardin2009orthepreviousyear.

HassoPlattner,thechairpersonoftheSupervisoryBoard,enteredintoaconsultingcontractwithSAPafterhejoinedtheSupervisoryBoardinMay2003.Thecontractdoesnotprovideforanycompensation.Theonlycostweincurredunderthecontractwasthereimbursementofexpenses.

Asfarasthelawpermits,weindemnifySupervisoryBoardmembersagainst,andholdthemharmlessfrom,claimsbroughtbythirdparties.Tothisend,wemaintaindirectors’andoffi-cers’groupliabilityinsurance.Formoreinformationaboutthisinsurance,seetheExecutiveBoard:OtherInformationsection.


meeting natUral disasters head-on


sap cUstomer relationship management helps a global disaster relief organization streamline its systems and reach more people in need.

Since 1948, Direct Relief International has been working to provide medical assistance to improve the quality of life for people affected by poverty, disaster, and civil unrest around the globe. By the early 2000s, the relief organization received approximately US$30,000 per year in dona-tions over the Internet. But the day after the tsunami in the Indian Ocean in December 2004, the organization collected US$750,000 in just 24 hours. Finding its infrastructure pushed to its limits, the relief organization reached out to SAP to help it scale up to meet the demand for aid. In partnership with SAP, Direct Relief International developed a strategy to deliver US$2 billion in wholesale medical supplies over the next five years. Integrating the organization’s many disparate IT functions was a challenge. But by leveraging the SAP Customer Relationship Management (SAP CRM) application, the relief organization has been able to streamline its financial, compliance, and warehouse management systems. As a result of increased efficiency, Direct Relief International is now able to save more lives around the world.

We prepare consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) endorsed by the European Union (EU). In addition to the many disclosures required under the IFRS, the notes to our statements contain additional information that we provide voluntarily.

The review of group operations meets the requirements of the German Handels-gesetzbuch (HGB) commercial code, but it also contains additional voluntary information.

The full version, with notes to the statements, is part of our “Annual Report on Form 20-F”, which we will submit to the U.S. Securities and Exchange Commis-sion and publish on our Web site. This increases transparency, which the inter-national finance community has every right to demand.


Declaration of the Executive Board

Independent Auditor’s Report

Review of Operations TheSAPGroupofCompanies

SoftwareandServicePortfolioPartnerEcosystem

ResearchandDevelopmentAcquisitionsCustomersEmployees

FinancialMeasurescitedinthisReviewEconomicConditions

Income,Finances,andAssetsCorporateGovernance

InformationConcerningTakeoversRiskManagementandRiskFactors

BusinessintheNewYear:EarlyNewsOutlook

058

059

063068079083092093095099108110125126129145146

057

declaration of the eXecUtiVe Board

Tothebestofourknowledge,andinaccordancewiththeapplicablereportingprinciples,theconsolidatedfinancialstatementsgiveatrueandfairviewoftheassets,liabilities,financialpositionandprofitorlossoftheGroup,andthemanagementreportoftheGroupincludesafairreviewofthedevelopmentandperformanceofthebusinessandtheposi-tionoftheGroup,togetherwithadescriptionoftheprincipalopportunitiesandrisksasso-ciatedwiththeexpecteddevelopmentoftheGroup.

Walldorf,March10,2010

SAPAGWalldorf,Baden

TheExecutiveBoard

BillMcDermott

WernerBrandt

VishalSikka

JimHagemannSnabe

GerhardOswald


independent aUditor’s report

WehaveauditedtheconsolidatedfinancialstatementspreparedbySAPAG,Walldorf,comprisingthestatementoffinancialposition,theincomestatement,thestatementofcomprehensiveincome,thestatementofchangesinequity,thestatementofcashflowsandthenotestotheconsolidatedfinancialstatements,togetherwiththereviewofgroupoperationsforthebusinessyearfromJanuary1toDecember31,2009.Thepreparationoftheconsoli-datedfinancialstatementsinaccordancewithIFRSs,asadoptedbytheEU,andtheadditionalrequirementsofGermancommerciallawpursuantto§315aAbs.1HGB[Handelsgesetzbuch“GermanCommercialCode”]aswellasthepreparationofthereviewofgroupoperationsinaccordancewith§315HGBaretheresponsibilityoftheparentcompany’smanagement.Ourresponsibilityistoex-pressanopinionontheconsolidatedfinancialstatementsandonthereviewofgroupoperationsbasedonouraudit.

Weconductedourauditoftheconsolidatedfinancialstate-mentsinaccordancewith§317HGBandGermangener-allyacceptedstandardsfortheauditoffinancialstatementspromulgatedbytheInstitutderWirtschaftsprüfer[InstituteofPublicAuditorsinGermany](IDW),andinsupplementa-rycompliancewithInternationalStandardsonAuditing(ISA)andthestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperformtheauditsuchthatmisstate-mentsmateriallyaffectingthepresentationofthenetas-sets,financialpositionandresultsofoperationsintheconsolidatedfinancialstatementsinaccordancewiththeapplicablefinancialreportingframeworkandinthereviewofgroupoperationsaredetectedwithreasonableassur-ance.KnowledgeofthebusinessactivitiesandtheeconomicandlegalenvironmentoftheGroupandexpectationsastopossiblemisstatementsaretakenintoaccountinthede-terminationofauditprocedures.Theeffectivenessoftheaccounting-relatedinternalcontrolsystemandtheevi-dencesupportingthedisclosuresintheconsolidatedfinan-cialstatementsandthereviewofgroupoperationsareex-aminedprimarilyonatestbasiswithintheframeworkoftheaudit.Theauditincludesassessingtheannualfinancialstatementsofthoseentitiesincludedinconsolidation,thedeterminationofentitiestobeincludedinconsolidation,theaccountingandconsolidationprinciplesusedandsig-nificantestimatesmadebymanagement,aswellaseval-

uatingtheoverallpresentationoftheconsolidatedfinancialstatementsandthereviewofgroupoperations.Webelievethatourauditprovidesareasonablebasisforouropinion.

Ouraudithasnotledtoanyreservations.Inouropinion,basedonthefindingsofouraudit,thecon-solidatedfinancialstatementscomplywithIFRSs,asadopt-edbytheEU,theadditionalrequirementsofGermancom-merciallawpursuantto§315aAbs.1HGBandgiveatrueandfairviewofthenetassets,financialpositionandre-sultsofoperationsoftheGroupinaccordancewiththeserequirements.ThereviewofgroupoperationsisconsistentwiththeconsolidatedfinancialstatementsandasawholeprovidesasuitableviewoftheGroup’spositionandsuit-ablypresentstheopportunitiesandrisksoffuturedevelop-ment.

Mannheim,March11,2010

KPMGAGWirtschaftsprüfungsgesellschaft

Prof.Dr.Schindler MeurerWirtschaftsprüfer Wirtschaftsprüfer

059IndependentAuditor’sReport

sap ramp-Up sUpports process innovation for leading bathroom design company in germany.

leading with processes as well as prodUction


Hansgrohe AG has long been praised for its innovative approach to bathroom design. But with SAP’s help, the company is now a trailblazer in manufacturing and logistics. The company is driving lean manufacturing processes by implementing radio-frequency identification (RFID) tags to track the flow of goods across its divisions and sites in real time. Hansgrohe generates 98% of its revenue from business processes suppor-ted by SAP. So it made sense for the company to call on SAP for its RFID project. The design company implemented the technology through the SAP Ramp-Up program, which provides in-depth support to customers leveraging new software solutions within real-world applications. Despite major challenges, such as preventing interference from radio signals, the system was ready within six months. The new technology translates scanned tag data into key business information, leading to increased quality and fewer errors while saving data entry time. Hansgrohe has gained a decisive business edge for its use of RFID and aims to explore further applications of the technology in the future.

reView of operations 1)

Forward-looking Statements

Thisreportcontainsforward-lookingstatementsandinfor-mationthatisbasedonmanagement’sbeliefsandassump-tionsthataremadeusinginformationcurrentlyavailabletothem.Anystatementscontainedinthisreportthatarenothistoricalfactsareforward-lookingstatementsasde-finedintheU.S.PrivateSecuritiesLitigationReformActof1995.Wehavebasedtheseforward-lookingstatementsonourcurrentexpectations,assumptionsandprojectionsaboutfutureconditionsandevents.Asaresult,ourfor-ward-lookingstatementsandinformationaresubjecttoun-certaintiesandrisks.Abroadrangeofuncertaintiesandrisks,manyofwhicharebeyondourcontrol,couldcauseouractualresultsandperformancetodiffermateriallyfromanyprojectionsexpressedinorimpliedbyourforward-lookingstatements.Therisksanduncertaintiesinclude,butarenotlimitedto:claimsandlawsuitsagainstus;ourabilitytouseourintellectualpropertyandintellectualprop-ertylicensedtousbythirdparties;ourabilitytoprocurenewlicenses,renewexistingmaintenanceagreementsandtoselladditionalprofessionalservices,particularlywithrespecttoourinstalledcustomerbase;economicconditionsingeneralandtrendsinourbusiness,particularlythecur-rentglobaleconomicconditions;andotherrisksanduncer-tainties.Wedescribetheseandotherrisksanduncertain-tiesintheRiskManagementandRiskFactorssection.Thewords“aim,”“anticipate,”“assume,”“believe,”“continue,”“could,”“countingon,”“isconfident,”“estimate,”“ex-pect,”“forecast,”“guidance,”“intend,”“may,”“outlook,”

“plan,”“project,”“predict,”“seekto,”“should,”“strate-gy,”“want,”“will,”“would,”andsimilarexpressionsastheyrelatetousareintendedtoidentifysuchforward-look-ingstatements.Suchforward-lookingstatementsandinformationinclude,forexample,thequantitativeandquali-tativedisclosuresaboutmarketriskpursuanttotheInter-nationalFinancialReportingStandards(IFRS),namelyIFRS7andrelatedstatementsinourNotestotheConsolidatedFinancialStatements,theRiskManagementandRiskFactorssection,ouroutlook,andotherforward-lookinginformationappearinginotherpartsofthisreport.Thefac-torsthatcouldaffectourfuturefinancialresultsaredis-cussedmorefullyinourfilingswiththeU.S.SecuritiesandExchangeCommission(SEC),includingamongothersourAnnualReportonForm20-Fforfiscalyear2008,whichwasfiledonMarch26,2009andourAnnualReportonForm20-Fforfiscalyear2009,whichweintendtofilewiththeSECbeforeJune30,2010.Readersarecautionednottoplaceunduerelianceontheseforward-lookingstate-ments,whichspeakonlyasofthedateofthisreport.Ex-ceptwherelegallyrequiredweundertakenoobligationtopubliclyupdateorreviseanyforward-lookingstatementsasaresultofnewinformationthatwereceiveaboutconditionsthatexisteduponissuanceofthisreport,futureevents,orotherwise.

1)PicturesandgraphsareincludedforillustrativepurposesonlyandarenotpartoftheauditedReviewofSAPGroupOperations.


THE SAP GROuP OF COMPANIES

Foundedin1972,SAPisoneoftheleadinginternationalprovidersofbusinesssoftwareand,basedonmarketcapi-talization,wearetheworld’sthird-largestindependentsoft-waremanufacturer.Wehavemorethan95,000customersinover120countriesandemploymorethan47,500peopleatlocationsinmorethan50countriesintheEuropean,MiddleEast,andAfrica(EMEA);Americas;andAsiaPacificJapan(APJ)regions.SAPisheadquarteredinWalldorf,Germany.

Ourcorebusinessissellinglicensesforsoftwaresolutionsandrelatedservices.Oursolutions,whichcoverstandardbusinessapplicationsandtechnologies,aswellasspecificindustryapplications,aredesignedtohelpcompaniesmaketheirbusinessprocessesmoreefficientandagileandcreatesustainablenewvalue.

In2009,theSAPproductportfoliofeaturedthefollowingkeysoftwareapplications,whicharedeliveredthroughmul-tipledeploymentandconsumptionoptions:•SAPBusinessSuitesoftwareforlargeorganizationsand

internationalcorporations.Thesoftwaresupportscorebusinessoperationsrangingfromsupplierrelationshipstoproductiontowarehousemanagement,sales,andalladministrativefunctions,throughtocustomerrelation-ships.Therearespecificsolutionsforindustries,forin-stance,hightech,oilandgas,utilities,chemicals,health-care,retail,consumerproducts,andthepublicsector.

•SAPBusinessAll-in-Onesolutions,theSAPBusinessByDesignsolution,andtheSAPBusinessOneappli-cation,whichaddresstheneedsofsmallbusinessesandmidsizecompanies.

•TheSAPBusinessObjectsportfolio,whichcoversavari-etyofdemandsfromsmalltolargecompanieswithsolutionsforbusinessuserswhoneedtoanalyzeandre-portinformation,makeinformedstrategicandtacticaldecisions,buildbusinessplans,andmanageriskandcompliance.

•SAPsolutionsforsustainabilitytohelpenableorganiza-tions’sustainabilityinitiatives.Thesesolutionsincludethemeasurementofsustainabilitykeyperformanceindi-cators,energyandcarbonmanagement,andsolutionsforproductsafety,environment,health,andsafety.

•TheSAPNetWeavertechnologyplatform,whichintegratesinformationandbusinessprocessesacrossdiversetechnologiesandorganizationalstructures.

Inaddition,weofferconsulting,maintenance,andtrainingservicesforoursoftwaresolutions.Wedevelopourproductsinclosecooperationwithcustomersandindepen-dentbusinesspartners.

Ourmanagementreportingbreaksouractivitiesdownintothreesegments:Product,Consulting,andTraining.Formoreinformationaboutoursegments,seeNote29intheNotestotheConsolidatedFinancialStatementssection.

AlloftheinformationinthisReviewofGroupOperationsrelatestothesituationonDecember31,2009,orthefiscalyearendedonthatdateunlessotherwisestated.

Mission and Strategy

Market Themarketforbusinesssoftwareisaglobalgrowthmar-ket.Factorssuchasconstantlydevelopingcorporate-governancelawandreportingregulations,increasinglyglo-balizedbusinessandtrade,thedriveforsustainability,andthepressureofcompetitioncompelbusinessestocontinuouslyadaptinachangingenvironment.Theymustnotonlybringinnovativeandcompetitiveproductstomar-ket,theymustalsocontinuouslyoptimizetheirownstruc-tures,streamlineprocesses,andextendcustomerandpartnernetworks.Withoutleading-edgeITsolutions,theseareimpossiblechallengesforcompanies–whetherintheadvancedeconomiesorindevelopingcountriesandemergingeconomies.

063ReviewofOperations

Trends and OrientationCompaniesfaceincreasingcomplexityofentrepreneurialactivitiesandneedtorethinkhowtheyconductbusinessintoday’sglobal,fast-paced,andvolatileenvironment.Tostaycompetitiveandminimizerisk,businessleadersandtheiremployeesneedtounderstandandsuccessfullyman-ageanever-changingwebofglobalmarkets,products,reg-ulations,andpartners.Atthesametime,opennessandtransparencyhavebecomebusinessimperatives.Today’scustomermarketplaceandsocietyaredemandingtrans-parencyfromcompanies.

Thebestbusinesseshaveacomprehensiveviewofwhatishappeningwithintheirenvironmentandsharekeyinfor-mationwithanextendedbusinessnetworkofpartners,suppliers,andcustomers.Now,morethanever,companiesneedclaritytorefocusbusinessstrategiesandstream-lineexecution.Inaddition,theyneedtransparencytodem-onstrateaccountabilityandtoprotecttheirreputations.

Technologysolutionscanincreasevisibilityacrosstheor-ganizationandthroughoutthebusinessnetworktoensurethatorganizationscanclosethegapbetweenstrategyandexecution,linkingdecision-makingsystemstointegrat-ed,end-to-endprocesses.

MissionOurmissionistohelptheworldrunbetterinordertocre-ateenduringprosperityforpeopleeverywhere.Wehelpcustomersaroundtheglobeperformatasignificantlyhigh-erlevelofeffectivenessandefficiencybyenablingclosed-loopperformanceoptimizationtoachieveprofitable,sus-tainablegrowth.Tosucceed,westrivetobuildfromourestablishedleadingpositioninthebusinesssoftwaremarketandacceleratebusinessandITinnovationforfirmsandindustries.Inreachingforthisgoal,wearealsocon-tributingtoglobaleconomicdevelopmentonagrandscale.

Weofferbothon-premiseandon-demandsolutionsthathelpcompaniesofallsizesclosethegapbetweenstrategyandexecution.Ourportfolioofsoftwareandservicescanhelpcustomersattaintheinsight,efficiency,andflexi-bilitythatenablesthemtorespondtochangesinthebusinessenvironmentwithmoreagilityandeffectivenessandcapturethefullbenefitsofbusinessnetworks.

Attheheartofourstrategystandsaccountabilitytoourcustomersbyhelpingthemincreasevalueandlowertotalcostofownership.Weintendtowidenthemarketweaddresswithadditionalvaluableofferingsforourcustom-ersincluding,forexample,agrowingportfolioofon-de-mandsolutions,andsoftwaresolutionsscaledtothede-mandsofsmallbusinessesandmidsizecompanies.

CompetitionIntermsofsoftwareandsoftware-relatedservicerevenue,wearetheworldmarketleaderinbusinesssoftwareap-plications.Inthemidmarket,wearealsotheworldwidemar-ketleaderintermsofsoftwareandsoftware-relatedser-vicerevenue.Intheglobalmarket,ourchiefcompetitorsareOracle,Microsoft,andIBM.WhereasSAPconcentratesonthebusinesssoftwaresegment,ourcompetitorsalsoaddressothersegmentsoftheITmarket,suchasdata-basemanagementapplications(Oracle,IBM),operatingsystems(Oracle,Microsoft),desktopapplications(Micro-soft),ITservices(IBM),andservers(Oracle).

Ourcompetitorsintheon-demandsoftwaresegmentin-clude,amongothers,Salesforce.comandNetSuite.Unlikemostcompetitors,SAPcanalsooffercustomersflexiblemodelssuchashybridsoftheon-premiseandon-demandmodels.

Ourcompetitorsinthebusinessintelligencesegmentoffer-ingsolutionsthataddresstheneedsofbusinessusersin-cludeamongothersSASInstitute,Inc.,Oracle(throughitsacquisitionofHyperionin2007),andIBM(throughitsac-quisitionofCognosin2007).


Strategy for GrowthOurcustomerbaseincludesmanylargeglobalenterprisesaswellasmidsizecompanies.SuchglobalcompaniesusetheSAPportfoliotoautomatetheirbusinesstransac-tions,enablingbettermanagementandgovernance.Inourtraditionalcorebusiness,weseektowinagreatershareofourexistingcustomers’ITbudget.Wealsoaimtowinnewcustomers,forinstance,companiesthathavebeenusingcompetitororcustomsoftware.

Oursolutionsforindustriesarecrucialforthestrengthofourproductportfolio.In2009,wefocusedonstrategicindustrieswithexceptionalgrowthpotential,including,forexample,banking,retail,utilities,andthepublicsector.Additionally,weintroducedSAPsolutionsforsustainabilityfocusedontacklingenergyconsumption,greenhousegasemissions,productsafety,healthcare,andsustainabili-typerformancemanagement.

Solutionstoaddresstheneedsofbusinessusersremainacentralelementofourstrategyforgrowth.In2009,wefocusedeffortsonfurtherintegratingproductsfromouracquisitionofBusinessObjectsintooursolutionsportfolio.

TheSAPBusinessByDesignsolutionisdesignedtoopenupanewsegmentoftheglobalmarketforus,smallerbusinesseswithbetween100and500employees.Theyhavedistinctlydifferentsoftwareneeds:GettingtheirnewITsolutionrunningquickly,atminimumriskandpredictablecost,isoftenmoreimportantforthesecustomersthanspecificfunctionaldepth.Manysuchcompaniesdonotbe-lievethattheirneedscanbemetbytraditionalsoftwareofferingsorbytheavailableon-demandsolutions.

Weintendtocombinethefollowingmeasurestohelpusrealizeourfullgrowthpotential:

•Organicgrowth:Ourprimarygrowthstrategyistocon-tinuetodevelopourownproductportfolioandourownbaseofdirectcustomers,focusingonrapidinnova-tionandspeedtomarket.

•Co-innovation:Collaboratingwithcustomersandpart-nersremainsoneofourcorepolicies.Wecontinuetoinvestinourpartnerecosystemtosupportthedevelop-mentofsolutionsbuiltontheSAPNetWeavertechnologyplatformandleveragepartnersalesforcestoaddressthevariousmarketandcustomersegments.

•Focusedacquisitions:Withtargetedstrategicand“fill-in”acquisitionsthataddtoourbroadsolutionofferings,wegainspecifictechnologiesandcapabilitiestomeettheneedsofourcustomers.

SustainabilitySAPiscommittedtoimprovingitsownoperationstobemoresustainable,andtodeliveringcustomersolutionstoimprovesustainabilityonagrandscale.Overthepast10years,SAPhasbeenrecognizedbytheDowJonesSustainabilityIndexforupholdingethical,environmental,social,andgovernancevaluesinourproductsandservic-es.Forthelastthreeyears,theindexhasnamedSAPastheleaderinthesoftwaresector.InourSustainabilityReport,weprovidemoredetailedinformationaboutouref-fortsincorporateenvironmental,social,andeconomicperformance,andaboutproductsandservicesofoursthatsupportsustainableoperations.


Thefollowingtablepresentsthekeyperformanceindica-torsthatSAPusestomeasure,review,andmonitoritssustainabilityperformance.Thenumbersfor2009willbepresentedinaseparatesustainabilityreport,whichwillbepublishedinthenearfuture.

In2009,weusedthefollowingkeyperformanceindicatorstomeasure,review,andmonitoroursustainabilityperfor-mance:•Carbonfootprint:SAP’sgoalistoreducetotalgreen-

housegasemissionsto2000levelsby2020.Thisequatestoloweringemissionsbyabout50%from2007levels.Weselected2000asourtargetyeareventhoughwehavealmostdoubledinsizeasacompanyoverthelasteightyears,includingouracquisitions(wehadapproximately24,000employeesin2000,com-paredtoapproximately47,500today).Wethereforefeelthatstrivingfor2000levelsisambitious.Basedonourpreliminarycalculations,CO2emissionsfor2009totaledapproximately425kilotons,whichrepresentsa15%decreasecomparedto2008.

•Totalelectricityconsumption:Ourelectricityconsump-tionrelatestoourfacilitiesandourdatacenters.SAPhasaround400locationsinover50countries.Weseektofollowsustainabledesignandfacilitymanagementpractices.Westrivetoachievehighenergyandenviron-mentalstandardsfornewofficebuildings.Wearealsomakingimprovementstoexistingfacilitiestoreduceourenergyandwaterconsumptionandourwaste.Togetherwiththeeffortsofouremployees,thishasresultedinadecreaseinelectricityconsumptionofabout7%com-paredto2008.

•Datacenterenergy:WefocusonreducingenergyconsumptioninSAPdatacentersaswellasonaddress-ingtheimpactofSAPsoftwareoncustomers’ITinfra-structures.Aswediscoverwaystomakeourowndatacentersmoreefficient,wecanintroducethesebestpracticestoourcustomerstohelpthemlowertheirowncarbonfootprint.OureffortswillalsodrivebenchmarksforcomparingITefficiency.

•Employeeturnover:Atalentedworkforceisessentialtocorporatesuccess,especiallyinthesoftwareindustry,whereintellectualpropertyiscrucial.Werecognizethatourpeopleandtheirrichdiversityandculturalwealthareourstrongestassets.Infact,excellenceinhumanre-sourcemanagementhasalwaysbeenastrategicpriorityforus.Wearecommittedtoattractingandretaininggiftedpeopletofosterinnovationforthebenefitofourcustomersandsociety.Turnoverrateistheultimatemeasureofourabilitytoretainthebesttalent.

•Womeninmanagement:Duetothelownumberofwom-enchoosingtostudyinformationtechnology(IT),theentireITindustrystrugglestoattractasufficientlylargegroupofwomenintoourtalentpipeline.Werecognizethatweneedtomakeaconsciousefforttolookforcan-didateswithdiversebackgroundsforvacantpositions.Wetrackthenumberofwomeninmanagementasacrit-icaldiversitymetric.Currently,thatnumberisnotatsat-isfactorylevels.In2009,wethereforerolledoutapro-gramtoincreasetheprofileofwomenworkingatSAPaswellastheadvancementofwomenintoleadershipposi-tions.

2008

Carbonfootprintinkilotons1) 500

Totalelectricityconsumptioningigawatthours 326

Datacenterenergyingigawatthours 167

Employeeturnoverin% 11.4

Womeninmanagement(%ofwomeninseniormanagement) 8.7

Customersatisfaction(TRI*MIndex,scalefrom–66to+134) 93 1)In2009,weimprovedthewaywemeasureourcarbonfootprintbyincludingmoreScope3emissions

fromourlogisticschainandfrombusinesstravelinprivatevehiclesandweimprovedourreportingoncompanycarsandexternaldatacenters.Thisalsoinvolvedcorrectingresultsfromthepast.


•Customersatisfaction:Oneveryimportantindicatorofoursuccessiscustomersatisfaction,whichisaleadingdriveroffuturerevenueandprofitability.Wemonitorcustomersatisfactiononaquarterlybasis.TNSInfratest,anindependentagency,conductsacustomersurveyandreportstheresultstotheSupervisoryBoard.Re-sultsaremeasuredusingtheTRI*MIndex.TheTRI*MIn-dexscalerangesfrom–66to+134,with+134beingthebestmeasure.In2009,ouroverallcustomersatis-factionscoresdecreasedslightly,afterhavingimprovedforfourconsecutiveyears.Insomeregions,negativeperceptionsresultedfromachangeinoursoftwaresup-portmodel.Asareactiontothis,wehaveseendecliningcustomerloyaltytoSAP,particularlyinEurope.Asaconsequence,weareengagingwithusergroupstoartic-ulateandmeasuretheaddedvalueofthenewsupportmodel.Thesecondhalfof2009showedastabilizingtrendincustomersatisfactionandloyalty.

Inadditiontothekeyindicatorspresentedinthetableabovewemeasurethefollowingkeyperformanceindicators:•Employeesatisfaction:Whiletheturnoverrateistheulti-

matemeasureofourabilitytoretainthebesttalent,employeecommitmentandemployeesatisfactionareim-portantindicatorsofourabilitytotrainandretainthebestworkforce.

•BusinessHealthCultureIndex:SAP’shealthmanage-mentservicehasdevelopedaholisticandcomprehen-siveprogramtomeettheneedsofouremployees.Ourextensiveemployeehealthprogramisfocusedontheneedsofemployeeswithsedentary,highlydemandingin-tellectualjobs.TheBusinessHealthCultureIndexmea-suresthestress/satisfactionbalanceofemployees,indi-catingorganizationalhealthandreadinesstomeetstrategicobjectives.

•Socialinvestment:OurClearPurposeengagementprogramcoordinatesourcontributionsintheareasofed-ucation;goodgovernanceandtransparency;bridgingthedigitaldivide,andenvironmentalstewardship.Ourtargetforsocialinvestmentisabout1%ofourprofitbe-foretaxandiscomprisedofcorporategiving,technol-ogydonations,andSAP-sponsoredvolunteering.Byap-plyingourcollectiveexpertiseandresources,ourcorporatesocialresponsibilityinitiativesdirectlyandindi-rectlyimpactmanyglobalandlocalprograms.

•Renewableenergyconsumed:SAPisusingmoreandmoreelectricityfromrenewablesources.WepurchasesomeofthisgreenelectricityfromlocalutilitycompaniesandproducesomeusingsolarpanelsonSAPfacilities.


SOFTWARE AND SERVICE PORTFOlIO

OurportfolioofSAPsoftwareandservicescanhelpcus-tomersrespondtochangesinthebusinessenvironmentwithmoreagilityandeffect,surviveglobalcompetition,andgrowprofitably.Thegoalattheheartofourportfolioofsoftwareandservicesisthereforethebestpossiblecom-binationofefficiency,insight,andflexibility:•Efficiency–Innovativebusinessprocessestooptimize

operations:SAPconnectsandstreamlinesprocessesacrossourcustomers’businessestodriveefficiencyandhelpenablebusinessoperationstoachievestrategicgoals.

•Insight–Improveddecisionsforgreatersuccess:SAPenablesbusinesspeopletomakemoreinsightfulandtimelystrategicdecisionsbasedonbetterinforma-tioninthecontextofspecificbusinessissues.

•Flexibility–Strategicandoperationalagility:WithSAPsoftware,customerscanmoreeasilypursuenewstrategiesandcapturethefullbenefitsofbusinessnetworks,becausebusinessprocessesareflexibleandtheplatformisextensible.

Services

SAP Product and Service Portfolio

Software and Software-Related Service Revenue

Software

Software-Related Services

Professional Services and Other Services

SAP Business Suite

Sustainability Solutions

Solutions for SME

SAP BusinessObjects Portfolio

Technology Platform Custom Development

Support Services

Other Services

Consulting

Education

Professional Services and Other Service Revenue

Applications Platform


Software Portfolio

SAP Business SuiteSAPBusinessSuitesoftwarecanhelpcustomersexecuteandoptimizetheirbusinessandITstrategiesbyprovidingmodularapplicationsthatimprovetheirabilitytoperformtheirend-to-endbusinessprocesseswithintheorganiza-tionandacrossthebusinessnetwork.TheapplicationsaredesignedtobeextensiblesothattheyworkwithotherSAPandnon-SAPsoftwareapplications.OrganizationsanddepartmentsinallindustriescanincrementallydeploySAPBusinessSuitetoaddressspecificbusinesschallengesinlinewiththeirbusinesspriorities–withoutcostlyupgrades.SAPBusinessSuitesoftwareaimstoprovidebetterinsightandvisibilityacrossorganizations,improveoperationalef-fectivenessandefficiency,andincreasetheflexibilitytoad-dressbusinesschange.

TheSAPBusinessSuitesoftwareincludesthefollowingapplications:•TheSAPERPapplicationisdesignedtooptimize

businessandITprocessesbyreducingITcomplexity,in-creasingadaptability,anddeliveringmoreITvalueatalowercostthantraditionalenterpriseresourceplanningsolutions.Itcansupportmission-critical,end-to-endbusinessprocessesforfinance,humancapitalmanage-ment,assetmanagement,sales,procurement,andotheressentialcorporatefunctions.SAPERPcanalsosupportindustry-specificprocessesbyprovidingindus-try-specificbusinessfunctionsthatcanbeactivatedselectivelyviatheswitchframework,keepingtheapplica-tioncorestableandhelpingensuremaximumperformance.

•TheSAPCustomerRelationshipManagement(SAPCRM)applicationprovidesacomprehensiveapplicationtohelpmarketing,sales,andserviceprofessionalsob-taincompletecustomerintelligencethattheycanlever-agetoeffectivelymanagecustomerrelationshipsandcustomer-relatedprocesses.SAPCRMcanenablemulti-channelcustomerinteractions,includingmobilesmartphones,theInternet,andsocialmedia,andalsooffersacommunicationsinfrastructurethatisdesignedtohelpconnectingwithotherusersanytime,anywhere.SAPof-ferscustomerrelationshipmanagementsolutionsinbothon-premiseandon-demanddeploymentmodels.

•TheSAPProductLifecycleManagement(SAPPLM)ap-plicationhelpscompaniesmanage,track,andcontrolallproduct-relatedinformationoverthecompleteproductandassetlifecycleaswellasthroughouttheextendedsupplychain.SAPPLMisdesignedtofacilitatecreativityandtofreetheprocessofproductinnovationfromorga-nizationalconstraints.

•TheSAPSupplierRelationshipManagement(SAPSRM)applicationprovidesaprocurementapplicationthathelpsorganizationsinallindustriesimprovetheircentralizedsourcingandcontractmanagementandinteractwithsup-pliersthroughmultiplechannels.SAPSRMisdesignedtoaccelerateandoptimizetheentireend-to-endprocure-to-payprocessbysupportingintegratedprocessesandbyenforcingcontractcompliance,whichcanresultinrealizablesavings.

•TheSAPSupplyChainManagement(SAPSCM)appli-cationhelpscompaniesadapttheirsupply-chainprocess-estotherapidlychangingcompetitiveenvironment.SAPSCMhelpstransformtraditionalsupplychainsfromlinear,sequentialprocessesintoopen,configurable,responsivesupplynetworksinwhichcustomer-centric,demand-drivencompaniescanmonitorandrespondmoresmartlyandquicklytodemandandsupplydynamicsacrossagloballydistributedenvironment.

WefirstdeliveredenhancementpackagesforSAPBusi-nessSuitein2007,providingregularupdatesforSAPERP.Thisdeliverymodel,whichweintroducedfortheentireSAPBusinessSuitein2008,isdesignedtomakeitsimplerandfasterforcustomersrunningSAPBusinessSuiteap-plicationstoadoptnewproductfunctions,industry-specif-icfeatures,andenterpriseservices.Italsoshieldscustom-ersfromsomeofthecomplexityofmultipleupgradesandoffersthemanopportunitytoreduceinformationtech-nology(IT)costsbyconsolidatingtheirsystemsonasingleplatformandreducingthenumberofseparatesoft-wareinstancesthatneedtobemaintained.Ourenhance-mentpackagemodelisalsodesignedtogivecustomersplanningsecurity.

IndustrySolutionsSAPdeliversdistinctsolutionportfoliosservingorganiza-tionsinmajorindustriesandsectors.Thesesolutionportfo-liosdeliverindustry-specificfunctionsalongwithbestpracticeswehavedevelopedwithourcustomers.Ourin-dustrysolutionsaredesignedtomeettheneedsofthemajorindustrysectorslistedbelow.Theportfolioalsoin-cludesapplicationsfornumeroussubsectorsandsegmentsoftheseindustries.


ProcessManufacturingIndustries•Chemicals •Mining•Lifesciences •Oilandgas•Millproducts

DiscreteManufacturingIndustries•Aerospaceanddefense •Hightech•Automotive •Industrialmachinery and

components•Engineering,construction,andoperations

ConsumerIndustries•Consumerproducts •Wholesaledistribution•Retail

ServiceIndustries•Media •Transportationandlogistics•Professionalservices •Utilities•Telecommunications

FinancialServicesIndustries•Banking •Insurance

PublicServiceIndustries•Defenseandsecurity •Highereducationand

research•Healthcare•Publicsector

Solutions for Small Businesses and Midsize CompaniesSAPoffersaportfolioofsolutionsdesignedspecificallytomeettheneedsofsmallbusinessesandmidsizecompa-nies.Likelargecompanies,thesefirmsneedtofindwaystodrivegrowthandincreaseprofitability,andthatbeginswithhavingaccesstotherightinformationattherighttime.Thisisessentialformaintainingmarketcompetitiveness,buildingandpreservingcloserelationshipswithcustomersandsuppliers,andstreamliningbusinessprocessestore-ducebottlenecksandthusimprovecustomerservice.Opti-mizingcashflowisalsoessentialtoincreasefinancialstrengthandtheflexibilityrequiredtosupportbusinessop-erationsandgrowth.BecauseSAPrecognizesthatonesizedoesnotfitall,weprovideasolutionportfolioandreleasestrategytomeettheneedsofabroadrangeofsmallbusinessesandmidsizecompanies.

SAPBusinessAll-in-OneSAPBusinessAll-in-Onesolutionsarecomprehensiveandflexiblebusinessmanagementsoftwarewithbuilt-insup-portforindustrybestpractices.Thesolutionsbestfittheneedsofmidsizecompanieswith100to2,500employeesthatarelookingforacomprehensive,integratedindustrysolutiontopowertheirbusinessendtoend.

Inoneconfigurablesolution,SAPBusinessAll-in-Onehelpscompaniesmanageeverythingfromfinancials,humanresources,procurement,inventory,manufacturing,logistics,productdevelopment,andcorporateservices,tocus-tomerservice,sales,andmarketing.SAPBusinessAll-in-Onesolutionsareavailablefromawidenetworkofquali-fiedpartnersthatdelivermorethan700industry-specificsolutionsinmorethan50countries.SAPaimstoprovideallthedeploymenttoolsandmethodologiesthatpartnersneedtodeliverfast,predictableimplementationwithlowrisk,lowcost,andrapidtimetovalue.

SAPBusinessOneTheSAPBusinessOneapplicationprovidesasingle,inte-gratedsolutionformanagingtheentirebusiness,includingsupportforfinancials,sales,customerrelationships,in-ventory,andoperations.Itisdesignedtofittheneedsofsmallbusinessestypicallywithfewerthan100employeesthathaveoutgrowntheiraccounting-onlysystemsandarelookingtostreamlinetheirbusinessoperationswithanintegrated,on-premisesolution.WithSAPBusinessOne,smallbusinessescanstreamlinetheirend-to-endopera-tions,getinstantandcompleteinformation,andaccelerateprofitablegrowth.Withitspublishedsoftwaredevelopmentkitandover550industry-specificsolutionsandfunctionaladd-ons,SAPBusinessOnecanbetailoredandextendedtomeetspecificbusinessprocessesandchangingneeds.

SAPBusinessByDesignSAPBusinessByDesignisasingleon-demandsolutionthatcomprisesfunctionsofSAPBusinessSuiteandthere-foredeliversbestpracticesforfinancialmanagement,customerrelationshipmanagement(CRM),humanresources(HR),projectmanagement,procurement,andsupplychainmanagement.Itisdesignedtofitcompanieswith100to500employeesthatwantthebenefitsoflarge-scaleandin-tegratedbusinessmanagementapplicationswithoutalargeandcomplexITinfrastructure.SAPBusinessByDesigncanunifymultiplebusinessoperations.Itcanenablecom-paniestoimplementpreconfiguredbusinessprocessestosolveimmediateproblems.


SAPBusinessByDesignisdesignedtoenablecustomerstoimprovetransparencyandimprovevisibilityacrossthebusinessbyunifyingbusinessprocesses.Withbettervisibility,information,andprocesses,peoplecanmakefaster,better-informeddecisions.Inaddition,thesolutioncanenablecompaniestocomplywithincreasingregulatorydemands.SAPBusinessByDesignisdesignedtohelpcustomersincreaseemployeeproductivityinallbusinessoperationsbyimprovingproductivityandreducingsoft-ware-relatedtrainingneedswithasingleuserinterface,personalizedbusinessportalsforeachemployee,andbuilt-inhelp.SAPBusinessByDesignprovidesanalyticsanddashboardsthatcanfacilitatesmarter,fasterdecision-mak-ing.Collaborationfeaturescanenhancethewayemploy-eesworktogether.

SAPBusinessByDesignisdesignedtohelpcustomersre-alizelowerandmorepredictableITcostsbyusinganon-demandsolution.Itismanaged,monitored,andmaintainedbySAPexpertsinhosteddatacenters.Inaddition,SAPBusinessByDesignprovidesbuilt-inserviceandsupportthatcanhelptoensuresmooth,predictabledeploymentandoperation.

Currently,thesolutionisavailableinChina,France,Germany,India,theUnitedKingdom,andtheUnitedStates.Wearecontrollingtheramp-upprocess,carefullyselectingnewcustomersandworkinginclosecollaborationwiththemandwithpartners,andfeedingtheirexperiencebackintoproductdevelopment.

Therearefurthersolutionsforsmallbusinessesandmid-sizecompaniesintheSAPBusinessObjectsportfolio.Formoreinformation,seetheSAPBusinessObjectsPortfoliosection.

AdditionalSolutionsforSmallBusinessesandMidsizeCompaniesTheSAPBusinessObjectsportfolioalsoincludessolutionsspeciallydesignedforsmallbusinessesandmidsizecom-panies.•SAPBusinessObjectsEdgesolutionsarepowerfuland

versatilebusinessintelligence(BI)andenterpriseper-formancemanagement(EPM)solutionsdesignedformid-sizecompaniesthatcanaddressseveralrequirementsfromflexiblead-hocreportingandanalysistodashboards,datavisualization,dataintegration,andhighdataquali-tyaswellasbudgeting,planningandconsolidation,andstrategymanagement.

•Xcelsiusispoint-and-clickdatavisualizationsoftwarede-signedforcreatinginteractivedashboardsandvisualbusinessmodelsfromExcelspreadsheetsandcorporatedatasourcestoshareviaMicrosoftOffice,AdobePDF,theInternet,andcorporateportals–allwithoutanypro-gramming.TheXcelsiussoftwarecomprisestwoproductgroupingstomeettwodistinctneeds:visualpresenta-tionsanddashboarding.

•CrystalReportssoftwarehelpsusersdesigninteractivereportsfromanydatasourceandcanenablethemtoanswerbusinessquestionswithfewerreports,andreducedITcosts.DocumentscreatedusingCrystalReportscanbesharedinanon-premisemodeorinanon-demandmode.

•CrystalReportsServerisreportinganddashboardman-agementsoftwarethatcanenablesmallbusinessesandmidsizecompaniestosecurelyview,interactwith,andsharereportsanddashboardsontheInternet,bye-mail,oncorporateportals,andinMicrosoftOfficeapplications.Itisdesignedtoempowerbusinessuserstogetbetterinsightintotheirbusinessperformancewithaccesstosummarydashboardsanddetailedreports–allinoneplace.

•ThedesktopeditionofSAPBusinessObjectsInteractiveAnalysissoftwareisdesignedtoprovidead-hocqueryandanalysisfunctionsinaself-serviceenvironmentfordata-savvybusinessprofessionals.Anintuitiveinterfaceenablescustomerstocombinemanytypesofdatafromdifferentsourcesintointeractivedocuments,andhelpsthemuncovertrusted,shareableanswerstospontaneousanditerativebusinessquestions.

•TheSAPBusinessObjectsAccessControlapplication,availableinaversionformidsizecompanies,isdesignedtoenableefficientprotectionofinformationandpre-ventionoffraudbycontrollingaccessandauthorizationsacrossthecompany.Theapplicationcanhelpminimizethetimeandcostofenforcingsegregationofdutiesacrossapplications,andcanhelppreventimproperaccesstoITsystems.

•TheSAPBusinessObjectsGlobalTradeServicesappli-cation,availableinaversionformidsizecompanies,canenableorganizationstostreamlinecomplexexportpro-cesses,automatecompliance,ensureexpeditedcustomsclearance,andgainthevisibilityneededtooptimizetradeprocesseswhichcanlowerriskandminimizeduties.TheapplicationiscertifiedforelectroniccommunicationwithmultiplecustomssystemsaroundtheglobeandfullyintegrateswithSAPandnon-SAPsoftware.


SAP BusinessObjects Portfolio TheSAPBusinessObjectssolutionsaimtohelpbusinessusersoptimizetheirbusinessperformancebysupportingstrategictargetsofourcustomers,predictableresults,andsounddecisions.

BusinessIntelligenceSolutionsandInformationManagementSolutionsWiththeSAPBusinessObjectsbusinessintelligence(BI)solutionsandSAPBusinessObjectsinformationmanage-ment(IM)solutions,companiescangainanintelligenceplatformthatprovideseveryconstituentinabusinessnet-workwithtrustedbusinessinformation,helpingthemre-spondfasterandmakebetter,timelierdecisions.Theseso-lutionscanenablecustomerstoimplementBIandenterpriseinformationmanagementstrategiesforbothSAPandnon-SAPsoftwareenvironments,reflectingSAP’scommit-menttoopennessandinteroperabilityinheterogeneoussoftwarelandscapes.•SAPBusinessObjectsBIsolutionsareavailableinboth

on-demandandon-premisedeploymentoptions.Theyincludeaflexible,scalablebusinessintelligenceplatformwithintegratedservicesthatareback-end,notuser-facing.Examplesofintegratedplatformservicesincludesecurity(whocanaccessthesystemandwhatinfor-mationtheycansee),loadbalancing(pluginextraservers,andworkissharedacrossthem),andscheduling(re-freshreportsduringthenightwhensystemusageislow).TheBIsolutionsalsoenableuserstointeractwithbusinessinformationandaccuratelyansweradhocques-tionswithoutadvancedknowledgeoftheunderlyingdatasourcesandstructures.Theycanhelpcustomersaccessdataacrossallsourcesandformatsanddeliveritasuseful,consumableinformationinsideandoutsidetheorganization.Customerscanusethesetoolstouncovertrendsandpatternsandsolvebusinessproblems,toanticipatebusinesschanges,andtohelpreachorganiza-tionalgoals.CustomerscanalsouseBIsolutionstosupporttheirforecastingoffuturebusinessconditions,totrackandanalyzekeybusinessmetricsviadash-boards,tointeractwithsophisticatedvisualrepresenta-tionsofinformation,andtotakeadvantageofuser-friendlycapabilitiesthatprovideself-serviceaccesstocriticalbusinessinformation.Self-serviceaccessenablesbusinessuserstocreatereportsandperformanalysesthemselveswithoutdependingontheirITsupport.

•SAPBusinessObjectsIMsolutionsprovidefunctionsfordataintegration,dataqualitymanagement,andmetadatamanagement–workingseamlesslywithfunctionsintheSAPNetWeavertechnologyplatform,suchasdatawarehousing,masterdatamanagement,andinforma-tionlife-cyclemanagementtohelpbuildatrustworthydatafoundationthatoffersagilesupportforbusinessorITinitiatives.Thesolutionshelpenableworld-classin-formationmanagementinbothSAPandnon-SAPsoft-wareenvironments.Customerscanaccess,profile,integrate,transform,move,orcleansestructuredorun-structureddatatodelivertimely,unified,andhigh-qualityinformation.Withmetadatamanagementandtextanalysissolutions,customerscancollectandunifydatafromdisparatesourcesforend-to-endimpactanalysis.

EnterprisePerformanceManagementSolutionsandGov-ernance,Risk,andComplianceSolutionsSAPBusinessObjectsenterpriseperformancemanage-ment(EPM)solutionsandgovernance,risk,andcompliance(GRC)solutionsenablecustomerstomaximizebusinessprofitability,manageriskandcompliance,andoptimizecor-poratesystems,people,andprocesses.Thesesolutionsaredesignedtointegratewithnon-SAPdatasourcesorsystemsaswellasSAPBusinessSuiteapplications,SAPBusinessObjectsBIsolutions,andSAPBusinessObjectsIMsolutions.•SAPBusinessObjectsEPMsolutionshelpcompanies

benefitfromincreasedlevelsofstrategicalignment,makingperformancemorepredictableandultimatelyim-provedecision-making.SAPBusinessObjectsEPMsolutionsareoptimizedforbothSAPandnon-SAPenvi-ronments,acrossmultiplelinesofbusinessincludingfinance,thesupplychainandprocurement,andtheyin-cludesolutionsforstrategymanagement;planning,budgetingandforecasting;financialconsolidation;andprofitabilityandcostmanagement.ThesolutionsareintegratedwithSAPBusinessObjectsBIsolutionsandSAPBusinessObjectsGRCsolutionstofurtherhelpcompaniesclosethegapbetweenstrategyandexecu-tion.

•SAPBusinessObjectsGRCsolutionsenablecompaniestoaggregateandmanagethekeyrisksoftheirbusi-ness,automatecontrolsacrossprocesses,andmonitorrisksandcontrolsacrossdisparatesystems.Thesolu-tionscanhelpincreasevisibilityacrossriskandcomplianceinitiatives,reducecost,andmanageriskacrosstheenter-prise.Theycanalsohelpsupportsustainabilityefforts.


AdditionalSolutionsforBusinessUsersBusinessusersneeddirectaccesstopeople,processes,andinformationtosupporttheirday-to-dayactivities.TheDuetandAlloysolutionsaredesignedtoprovidedirectaccesstoSAPBusinessSuitesoftwarefromthefamiliarMicrosoftOfficeandIBMLotusNotessoftware,respec-tively.Asaresult,businessuserscanbecomemoreproductive,theirdecision-makingcanimprove,andtheircompliancewithcorporatepoliciescanincrease.

Solutions for Sustainability Ourvisionforasustainableenterpriseispresentedinasustainabilitymapthatcatalogsthefulllandscapeofsus-tainability-relatedsolutionsandbusinessprocesses.Itservesasananchortoourongoingstakeholderengage-mentandasaguidetohelpusprioritizeoursolutionroadmap.SAPalreadyhasabroadsetofsustainabilitysolutions,andwehavecommittedsignificantresourcestoensurein-creasingbreadthanddepthofcoveragethroughorganicdevelopmentandpartnership.

SolutionsforSustainabilityPerformanceManagementTheSAPBusinessObjectsSustainabilityPerformanceManagementapplicationhelpsenterprisesfocusonstrate-gicexecutionoftheirsustainabilityinitiatives–balancingsocial,environmental,andeconomicperformance.Itpro-videsacomprehensivesustainabilityreportingprocess,fromreportingframeworkdefinition(forinstance,inaccor-dancewiththeGlobalReportingInitiative)todatacollec-tionworkflowandreporting.

Theapplicationhelpsreducethetime,cost,anderrorsassociatedwithdisclosureandenablesenterprisestofocusonidentifyinginefficienciesandopportunitiesforimprove-ment.ItprovidespredefinedintegrationwithSAPapplicationssuchasSAPEnvironment,Health,andSafetyManage-mentandSAPERPapplications,theSAPCarbonImpacton-demandsolution,SAPBusinessObjectsEPMsolutions,andSAPBusinessObjectsGRCsolutions.Itintegrateswithnon-SAPsoftwareusingWebservicesandguideddatacollectionfunctions.

SAPBusinessObjectsSustainabilityPerformanceManage-mentprovidesautomated,accuratemultidimensionalre-portingandplanningforcompliance,visibility,andcontrol.

SolutionsforEnergyandCarbonManagementSAPCarbonImpactisanon-demandsolutiontoassistenterprisesinimplementingstrategiesforreportingandprofitablyreducingtheircarbonandenvironmentalfoot-print.Thesolutionhelpscompaniesmeasure,mitigate,andmonetizecarbonemissionsandotherenvironmentalim-pactsacrossbusinessoperations.

TheSAPAMIIntegrationforUtilitiessoftwareprovidessupportfortheprocessesthatutilitiesneedtohandlecomplexbillingarisingfromadvancedmeteringinfrastruc-ture(AMI)andsmartmeters.

CustomersuseSAPManufacturingIntegrationandIntelli-gence(SAPMII)toconnectplantoperatingdataheldincontrolsystemsordatahistorianstodashboardsandotheranalyticaltechnologies.Thisallowsrapididentificationofenergyusage,qualityresults,andotherplanttrendssocompaniescantakequickactiontooptimizetheiropera-tions.

SolutionsforEnvironment,Health,andSafetyTheSAPEnvironment,Health,andSafetyManagement(SAPEHSManagement)applicationaddressesindustryneedsforproductsafety,hazardoussubstances,anddan-gerousgoodshandlingofproductsacrossawiderangeofindustries,includingchemicals,consumerproductsandhightech.Companiescanalsousethissoftwaretoman-agecompliancewithEuropeanlawconcerningtheregistra-tion,evaluation,authorization,andrestrictionofchemicals(REACH),whichcanhelpthemsecuretherighttomarkettheirproducts.TheSAPRecyclingAdministrationapplica-tioncanhelpensurecompliancewithworldwiderecyclinglegislationforpackaging,batteries,andwasteelectricalandelectronicequipment.SAPEHSManagementcanhelpcompaniescomplywithenvironmentallawsandpolicies.Itsupportshealthandsafety,industrialhygiene,andoccupationalhealthprocess-es,andcanhelpreduceassociatedcosts,efforts,andrisksonplantandcorporatelevels.

Customersarechallengedtoimplementeffectivesustain-abilityprograms,becausedatamustflowacrossbusinessprocessesandbecauseprogresstowardsgoalsmustbevisibletodriveresults.SAPsolutionsforsustainabilityarealreadyintegratedwithSAPBusinessSuitesoftware.SAPBusinessObjectsIntegrationsoftwareallowsdatafromSAPapplicationsandSAPBusinessObjectsBIsolutionstobedisplayedininteractiveanalyticsanddashboards,so


thatcustomerscanmonitoroperationsandidentifyenvi-ronment,health,andsafetyrisksattheircompanies.Cus-tomerscanthentakeactionasneededwithinSAPappli-cationstoaddressthoserisks.

SAP NetWeaverTheSAPNetWeavertechnologyplatformisareliable,secure,andscalablefoundationthatcanrunmission-criti-calbusinessprocessesforSAPapplications.Asthetechnicalfoundationforservices-orientedarchitecture(SOA),SAPNetWeaverisdesignedtodeliveracomprehensivesetofmodular,middlewarefunctionstoreduceITcomplex-ityandincreasebusinessflexibilityacrossheterogeneousITlandscapes.TheplatformcanprovideITorganizationsthelowestcostofoperationandoptimalbusinessavailabil-ityforSAPapplicationsthroughlifecyclemanagement,identitymanagement,securecommunications,andend-to-endbusinessactivitymonitoring.

SAPNetWeaverisdesignedtoprovidecustomerswithaflexiblewaytointegrateandextendbusinessprocessesthatrunacrossSAP,SAP-certifiedpartner-built,andcus-tom-builtapplicationsbydeliveringprebuiltintegrationcontent,enterpriseservices,anddeploymentandmodel-driventools.Withsupportforbusinessprocessmanage-ment,mission-criticalbusinessprocessescanbemoni-toredforefficiency,integrity,andsecurity.BusinessuserscanalsouseSAPNetWeavertodefinebusinessrulestoensureconsistentprocessesacrossthebusinessnet-work.Advanceduserinterfacetechnologies,suchasWeb-basedportals,enterprisesearch,desktopapplications,andmobiledevicescanhelpimproveuserexperienceandefficiencywithsecureandpersonalizedaccesstobusinessapplicationsandinformation.

Sustainability Performance Management

Assured Reporting/Compliance Benchmarks & Analytics Strategy & Risk Financial Performance

Energy and Carbon Energy-efficient Assets Energy Management

Product Safety and Stewardship

Product Compliance

Material & Product Safety

Recall Management

Environmental Footprint

Sustainable Design

Recycling & Re-Use

Carbon Management Smart Grids

Environment, Health and Safety

Environmental Performance Occupational Health Industrial Hygiene

& SafetyEmergency

Management

Sustainable Workforce Labor Compliance & Rights Diversity Talent Management

IT Infrastructure Availability, Security, Accessibility & Privacy Green IT

Sustainable Supply Chain Procurement Traceability Commodity Trade & Risk Management

Resource Optimization

Supply Chain Optimization


ThroughintegrationwiththeSAPBusinessObjectsport-folio,SAPNetWeaveraimstohelpcustomersimplementanenterpriseinformationmanagementstrategytoensuretrustedinformation.Customerscanintegrate,cleanse,manage,govern,andarchivestructuredandunstructureddatainformationtomeetcompliancemandates,promotebusinessinsight,andimprovedecision-making.

Options for Purchasing and Deploying SoftwareRecenttechnologicaldevelopmentsandnewpurchasingmodelshavemadeitpossibleforcompaniestoadjusthowtheyconsumeanddeploysoftware.Recognizingtheevolvingneedsofourcustomers,SAPdeliversmultipleoptionsforconsuminganddeployingenterprisesoftwarebytakingadvantageofthesenewtechnologiesandmodels.SAPbasesitsconsumptionanddeploymentop-tionsonthefollowingguidingprinciples:•Deliveryofmodularapplicationsacrossmultiplelinesof

business•Integratedprocessesandinformationacrosssolutions–

regardlessofdeploymentmodel•Flexible,subscription-basedmodelstoenableevencost

distribution•Focusedservicesforrapidimplementations•Extendsolutionswiththeglobalecosystemtoincrease

valueforcustomers

SAPon-demandsolutionshelpcustomersquicklyandeasi-lyimplemententerprise-widebusinesssolutions,andre-duce–oreveneliminate–theneedforon-siteITresourcestomanageinfrastructure.Theycanhelpcustomersshifttooperationalexpenses,createlessvolatilecashflows,andgraduallyscaletheuseofthesolutionstomatchtheneedsoftheorganization.SAPdeliversmultiplelevelsofon-de-mandsolutionsaimedatempoweringourcustomerstoanalyzebusinessactivitiesandimprovebusinessprocesses:•Enterprise-wideprocessesforsmallerorganizations

andsubsidiariesdriveefficientbusinessprocessesacrosstheentireorganizationwithSAPBusinessByDesign

•Process-basedsolutionsaddressline-of-businessrequirementsforcustomerrelationshipmanagement,sourcing,contractmanagement,andcarbontrading.Currentlyavailableon-demandsolutionsincludeSAPCRM,SAPE-Sourcing,SAPContractLifecycleManagement,andSAPCarbonImpact

•Enterprise-levelordepartment-levelanalysisandreport-ingwiththeSAPBusinessObjectsBIOnDemandsolu-tion.Thissolutioncanstore,share,browse,search,re-port,andanalyzeinformationatthelevelspecifiedbythecompany

SAPon-premisesolutionsaimtoprovidestrategicvaluetoourcustomers,includingend-to-end,industry-specificbusinessprocessesandbusinessanddomainexpertiseembeddedintheapplications.However,businesstrendsregardingnewusageandpricingmodelsofon-demandsoftwarehaveanimpactontheoverallsystemlandscapeofcustomers.Asaresult,weprovidemanyoptionsthataimtohelpourcustomersreducecostsandincreaseagility:•Rapidlyimplementingnewinnovationsusingenhance-

mentpackages•Leveragingvirtualizationtechnologies•Usingsharedservicesimplementationstorealizeecono-

miesofscaleforcommonfunctions,suchaspurchasing•Hostingapplicationsthroughecosystempartnersto

reduceITcostsforapplicationmaintenance•LeveragingSAPEnterpriseSupportservicestoidentify

opportunitiesforimprovingefficiencyandreducingITcosts

ManySAPcustomershaveindicatedthattheywishtocontinuetoleveragetheirexistinginvestmentsinon-prem-iseapplicationswhileextendingbusinesscapabilitiesinarapid,cost-effective,andintegratedmannerusingon-de-mandapplicationsandotherSAPcapabilities.TheabilityofSAPsolutionstointegrateandcombinecanhelpcustom-erstoleveragethebenefitsofbothon-demandandon-premiseapplications.Withthisapproach,SAPcustomerscanrelyonasinglevendorforalllinesofbusiness,ratherthanusingmultiplevendorswithspecializationsforonlyasingledepartment.SAPcustomerscangainthebenefitofleveragingon-demandsolutionsthatarecomplemen-tarytoSAPon-premisesolutionstoavoidadditionalintegra-tioncostsandgainfasterandmoreeffectivedeploymentsofnewbusinesssolutions.WithSAP’sintegrated,combinedmodel,companiescancontinuetoensureprocesseffi-ciencyandbusinessinsightacrossallsystemsanddataprivacyandcompliance–regardlessofdeploymentmodel.SAPoffersflexiblelicenseagreements(FLAs)andglobalenterpriseagreements(GEAs)aslong-termen-gagementmodelsforourcustomers.AnFLAprovidesflex-ibleaccesstoSAPsolutionsbasedontheagreedvalueofsoftwareanddefinedpaymentsforacontractterm.AGEAisastrategicrelationshipwithSAP’smostimportantcustomers,inwhichdefinedcustomergoalsaremetandmeasuredregularly.Bothhelpalignexecutionofcustom-ers’ITtobusinessstrategy.


TheSAPecosystemalsogivescompaniesgreaterchoiceandflexibilitybyprovidingacombinationofresourcesthathelpbestaddressuniqueoperationalsituations.Soft-ware,technology,andservicepartnersextenddeploy-mentandconsumptionoptionsforSAPcustomersbypro-vidingofferingsthatinclude:•Businessprocessoutsourcing•Applicationsthatproviderapiddeploymentandacceler-

atedresultsovervirtualplatforms•Abroadsetofintegratedcomplementarysoftware

applications•Servicesthathelpcustomersacceleratecommercial

impactanddeliverbetterresults

Finance Plan for SAP SolutionsImplementingbusinesssoftwaresolutionscanrepresentamajorinvestment.Withaglobalpartnerofours,SiemensFinancialServicesGmbH(SFS),weofferSAPFinancing,aservicethathelpscompaniesinvestinSAPsolutions.SAPFinancingisofferedtocustomersinmorethan45countriesbySFSandotherleadingITfinancingspecialists.Interestintheplan,whichisnowafirmlyestablishedSAPServicesoffering,ishigh:Ithashelpedarrangealmost2,000financedealssinceinception.SAPcustomersfromallsegments–smallbusinesses,midsizecompanies,andlargeenterprises–arebenefitingfromtheattractivefinancingsolutions.Theplanoffersallofthepopularfinancemodels,withtheirvariousadvantages:Theycanhelpconserveliquiditybyavoidinginitialinvestmentandprovideanalternativetocreditfromthebank.Thatgivescustom-ersmoreoptionsandpotentialeconomicbenefits.

Services PortfolioThecomprehensiveSAPServicesportfolioisdesignedtooptimizeourcustomers’success,helpingcustomerstomanagetheirtransformationtobecomemoretransparentabouttheirbusinesswhileloweringtotalcostofowner-ship.SAPprovidesaholisticapproachwithapplicationlife-cyclemanagement,incorporatingabroadarrayofmethod-ologies,tools,andcertifiedpartnerofferingstohelpourcustomersgainvaluefromtheirSAPinvestmentwhilemeet-ingtheirbusinessneeds.Thetightintegrationbetweenourprofessionalservicesandoursupportservicesaimstooffercustomersbenefitsateverylevelandineverystageoftheirsolutionlifecycle.Customers’feedbackdirectlyin-fluencesourproductdevelopment.

TheSAPServicesportfolioincludesconsulting,education,customdevelopment,supportservices,andmanagedservices.Theofferingsarecategorizedintoprofessionalservicesandsoftware-relatedservices.OurprofessionalservicesareprovidedbySAPConsultingandSAPEduca-tion.Software-relatedservicesaresupportservicespro-videdbySAP’ssupportunits(SAPActiveGlobalSupport,SAPBusinessObjectsCustomerAssurance,andSMEServiceandSupport)andcustomdevelopmentprovidedbytheSAPCustomDevelopmentorganization.

SAPServiceshasalocalpresenceinmorethan50countriesandrunsmorethan70trainingcenters,sevenglobalsup-portcenters,andninecustomdevelopmentcentersinEurope,Asia,andtheAmericas.Witharound19,000SAPservicesprofessionalsaroundtheworld,customers’needscanbemetaroundtheclocktosupportSAP-centricsolutions.


SAPStandardSupportdeliverssupportservicestoenablecontinuousandeffectiveIToperations.Thislevelofsup-portprovidesourcustomerswiththeservicesandtoolstominimizethecostandriskassociatedwithkeepingITsys-temsupandrunning.SAPStandardSupportensuresthatcustomers’SAPsolutionsrunefficiently,andthattheyenablethetechnicalexecutionoftheirbusinessobjectivesbydeliveringimprovements,qualitymanagement,knowl-edgetransfer,andproblemresolution.

TheSAPMaxAttentionsupportoptionexpandsSAPEnter-priseSupport,coveringallstagesofanSAPsolution’slifecycleinatailoredformatforcustomers–fromplanningandimplementationtooperationsandoptimization–withafullrangeofservicesthathelporganizationssafeguardcomplexsolutions,planfornewreleasesandupgrades,andim-plementcontinuousimprovementpracticesforproductivesolutionoperations.SAPMaxAttentionisdesignedtoprovidecustomersourhighestlevelofcustomersupportbuiltonadedicatedengagementmodelwithatechnicalsupportadvisorandservice-levelagreements,supportedbylong-termcommitmentsdeliveredbytheSAPActiveGlobalSupportorganization.SAPSafeguardingserviceshelpourcustomersmitigatethetechnicalrisksofanimplementation,integration,migra-tion,orupgradeproject.Theysmooththego-liveprocessandhelpcustomersprepareforliveuseofthesoftware.Anon-sitetechnicalqualitymanagerhelpsensurethatcus-tomersreceivethesupporttheyneed,thatknowledgetransfertakesplace,andthatourcustomersimprovetheperformance,dataconsistency,andavailabilityoftheirITsolutionfromSAP.

Software-Related Services

SAPCustomDevelopmentTheSAPCustomDevelopmentorganizationdevelopsindi-vidualized,customer-specificsolutionsandbusinessfunc-tionsontheSAPplatformcoveringthelifecycleofservicestodevelopandsupportcustomsolutionsateverystage.

SupportServicesTosupportcustomers’increasinglycomplexsolutionland-scapesandtheirrespectiveneeds,SAPoffersseveralsupportpackages.

SAP’ssupportunitsofferarangeofservicestosupportourcustomersbefore,during,andafterimplementationofoursoftwaresolutions.Weprovidearound-the-clocktechnicalsupportineveryregion.Theorganizationsalsoofferproactive,preventivesupportservicestoprotectandenhanceourcustomers’investmentsinSAPtechnolo-gyandapplications.

SAPEnterpriseSupportservicesareourcomprehensive,proactivesupportandmaintenanceoffering,providingourcustomerswithanapplicationlife-cyclemanagementap-proachthatcanhelpthemmanageincreasedITcomplexityandintegratesolutionsacrosstheirITecosystems.Ourmainsupportproduct,SAPEnterpriseSupport,aimstoen-surethatourcustomers’businessescanmanagecontinu-ousandacceleratedinnovationwithcontrollableimpactonbusinessoperations.SAPEnterpriseSupportservicesprovideanoverallblueprinttohelpcustomersoptimizetheoperationoftheirentirelandscape.Mission-criticalsup-portprovidescontinuousqualitychecksthatanalyzetechnicalrisks.Weimplementcontinuousimprovementac-tivities,maintaincustomcode,accessthemissioncontrolcenter,andgenerateservice-levelagreementsforcorrectiveaction.Weaimtodeliverthequalitymanagementmethod-ology,processes,andtoolsneededtoperformadvancedtestingandimplementsolutionsdeployment,operations,andcontinuousimprovementinitiativesusingtheSAPSo-lutionManagerapplicationmanagementsolutionforallcustomersandpartners.


Professional Services

SAPConsultingSAPConsultingoffersplanning,implementation,andopti-mizationservicesforbusinesssolutions,andisdesignedtohelpcustomersgainthegreatestvaluefromtheirneworexistingSAPsoftwareinvestments.TheSAPServicesportfolioincludesbusinesstransformationservices,suchasExecutiveAdvisoryServicesandBusinessProcessandPlatformServices,thatsupportorganizationsinrespond-ingtobusinesschallengesinarapidlychangingbusinessenvironment.ExecutiveAdvisoryServicesarebusinesstransformationservicesaimedtoguideexecutivestowardbetterinsightsbybridgingITandbusinessprocesses.BusinessProcessandPlatformServicescanhelpcustom-ersstreamlinetheiroperationswhiletakingadvantageofSAPsoftwaretoautomatebusinessprocessesonabusinessprocessplatform.WeadviseandsupportcustomersondesigningbusinessprocessesandITinfrastructureandhelpcustomerswithprojectmanagementandsolutionimple-mentationandintegration.WealsohelpcustomersoptimizesolutionsandITlandscapesaccommodatingchallengesfrommergersandacquisitionsordivestitureofbusinessunits.

SAPcanalsoassistcustomersinminimizingtheenviron-mentalimpactoftheirdatacenters,supportinga“GreenIT”approach.SAPcanassistcustomerswithpro-fessionalservicestominimizethenumberofserversthroughlandscapeconsolidationandthroughworkwithtechnologypartnerstoprovidethemostenergy-efficientinfrastructure,usingvirtualizationandothertechniques.

SAPEducationTheofferingsofSAPEducationassistSAPcustomersandpartnerswithknowledgetransfer,maximizingthevaluetheycancreatewiththeirSAPsolutions.SAPEducationofferingsincludetrainingneedsanalysis,certificationassessments,learningsoftware,andtools.Weprovideaconsistentcurriculumforlearnersaroundtheworldanddelivertheseofferingsthroughanumberofdeliverymod-els,includingonlinee-learning,virtualliveclassroom,learningondemand,andclassroomtraining.Everyyear,hundredsofthousandsofindividualsaretrainedbySAPEducation,makingitoneofthelargestITtrainingorganizationsintheworld.

OtherServicesChiefamongtheotherservicesintheportfolioareSAPManagedServicesofferings.TheSAPManagedServicesorganizationprovidesapplicationmanagementservicesandhostingservices,runningandmanagingSAPsolutionsonbehalfofcustomers.


PARTNER ECOSySTEM

WhencustomerschooseSAPsoftware,theyalsogainac-cesstotheSAPecosystem,oneoftheleadingbusinessnetworksinthesoftwareindustry.Itsmembersareahostofsoftwarepartners,systemintegratorsandresellers,technologypartners,developers,industryspecialistsandSAPsoftwareusers.

Toprovidecustomersaccesstoarichsetofcomplementa-ryhardware,software,andservicesolutions,SAPfocusesonglobalandlocalpartnershipopportunitiesfornumerousbusinessareasandcustomerneeds.Ourrichpartnercommunityincludessoftwareandhardwarepartnersandprovidersofoutsourcing,content,hosting,education,andsupportservices.Amongthemarewell-knownvendors,suchasAdobe,Cisco,EMC,HP,IBM,Intel,Microsoft,Novell,andResearchInMotion,aswellasthousandsofsmallercompanies.•TheSAPNetWeavertechnologyplatformenablesour

partnerstodevelopproductsandservicesthatfitintoourcustomers’ITenvironments.Atthesametime,itisintendedtohelpusincreaserevenuefromthemanyvendorsthatlicenseourtechnologyplatform.TheSAPNetWeavercommunitycontinuestogainmomentum,withindependentsoftwarevendors(ISVs)currentlydevelopingmorethan1,700applicationsbasedonSAPNetWeaver.

•InApril2009,SAPannouncedtheopeningofSAPCo-InnovationLabinBangalore,complementingourglobalnetworkofco-innovationlabs.SAPCo-InnovationLaboffersanenvironmentinwhichISVs,systemintegrators,andtechnologypartnerscanworkwithusandwithcustomersonnewtechnologies.

•In2009,SAPcontinuedtodevelopthebreadthofoffer-ingsavailableonSAPEcoHub,anonlinesolutionmarket-placeenablingSAPcustomerstodiscover,evaluateandbuysolutionsfromSAPpartnerstocomplementtheirexistingITlandscapesfromSAP.SAPEcoHubbringstogetherthefullscopeoftheSAPecosystembylinkingcommunitycontenttoinformationaboutofferingsfromSAPpartnersthataredesignedandselectedtoaddressspecificbusinesschallengesSAPcustomersface.TheadditionstoSAPEcoHubin2009includedpackagedoffer-ingsofsoftwareandservicesinspecificregions,theadditionofservicespartnersandthedeliveryofSAP’ssustainabilityroadmapandassociatedproducts.

Communities of InnovationToencouragecontinuousco-innovation,collaboration,andongoingimprovementinawiderangeofproducts,services,andbusinessprocesses,wefostervariouscommunitiesofinnovation–interactivenetworksofdevelopers,custom-ers,andpartnersthatcometogethertocollaborateonavarietyoftopics.Thesearesomeofthemajorcommuni-tiesinSAPCommunityNetwork:•TheSAPDeveloperNetwork(SDN)communityoffers

nearly2 millionmembersinmorethan200countriesthechancetotradeexperienceandinsights,pursuebusi-nessopportunities,andlearnfromeachother.ItisthebiggestinnovationcommunityassociatedwithSAP.SDNincludesdiscussionforums,blogs,wikis,softwareandtooldownloads,ande-learning.Awealthoftechnicalas-setsattractsmorethanhalfa millionvisitorstoSDNeverymonth.

•TheBusinessProcessExpertcommunityisabusinessprocesscommunitywithmorethan600,000memberscovering18industriesandawidevarietyofhorizontalsubjects.Collaborationinthecommunity,thesharingofbestpractices,andadvancedtrainingofferingsareamongthecatalyststhatcangenerateprocessinnova-tion.Communitymembers,including,forexample,specialistsondiverseindustries,businessandapplicationconsultants,CIOs,andbusinessprocessexperts,findampleopportunitiestoexchangeideasinmoderatedforums,wikis,andexpertblogs.

•TheIndustryValueNetworkprogramprovidesacollabor-ativeenvironmentforISVs,systemintegrators,andtechnologyvendorstoworktogetherwithSAPandourcustomersinvariousindustries.Therearenow16differ-entIndustryValueNetworkgroups.Theworktheydoisdesignedtohelpcompaniesdevelopsolutionsusingenterpriseservices.

•TheEnterpriseServicesCommunityprogramprovidesaforuminwhichcustomers,partners,andemployeesofSAPformcollaborativegroupsfocusedondefiningre-quirementsforbusinessprocessplatformsandspecifi-cationsforenterpriseservices.Thecommunitycurrentlyhasover340membersworkingmorethan130defini-tiongroups.SosuccessfulisthiscollaborativeapproachthatthemajorityoftheenterpriseservicesincludedinthethirdenhancementpackageforSAPERPsoftwaresprangfromrequestsbycustomersandpartnersworkingtogetherinthecommunity.


•FollowingtheacquisitionofBusinessObjects,SAPaddedtheSAPBusinessObjectscommunitytoSAPCommunityNetwork.Thiscommunity,withmorethan295,000membersprovidesanenvironmentforSAPBusinessObjectsusersanddeveloperstosharebestpracticesandpursueinnovationopportunitiesonSAPBusinessObjectsofferings.

•InFebruary2009,SAPCommunityNetworkopenedtheSAPUniversityAlliancescommunity.Withmorethan85,000members,thiscommunityfocusesonbringingre-al-lifeSAPknowledgeandskillsintouniversityclass-rooms.ThisispartofSAP’scorporatecitizenshipcom-mitmenttotheeducationandmentoringofuniversitystudentsandgraduateswhoarethebusinessexpertsandITleadersofthefuture.

•SAPCommunityNetworklaunchedacommunityjobboardin2009,providingSAPdevelopersandcustomerstheabilitytomoreeasilynetworkandidentifyjobop-portunitiesthattakeadvantageoftherichSAPskillbaseintheSAPcommunities.

•InOctober2009,SAPannouncedapartnershipwithleadingsocialnetworkingsiteLinkedIn.ThispartnershipbuildsontheeffortstobetterhighlightSAPproductskillsintheglobalmarketplacebyallowingSAPCommu-nityNetworkmemberstopositiontheircommunityinvolvementandoverallSAPproductknowledgeonLinkedInprofiles.

IndependentmarketintelligencefirmsincludingForrester,Gartner,andInternationalDataCorporation(IDC)alsoreportonourcommunitystrategy,mentioningthestrategicedgeandbusinessadvantagesgainedfromSAP’scustom-er-centricnetwork.In2009,thecommunitiesfromSAPwererecognizedbyindependentresearchorganizationsAltimeterGroupandSiteIQasleadingtheindustryoncrite-riaincludingoverallengagement,qualityofinformationandeaseofuse.

Sharing knowledge Among usersToshareknowledgeandinfluenceSAPdevelopmentefforts,ourcustomershaveestablishedusergroupsinregionsaroundtheworld.ThetwolargestaretheAmericas’SAPUsers’Group(ASUG),withmorethan75,000members,andtheGerman-SpeakingSAPUserGroup(DSAG),whichhasaround30,000membersinGerman-speakingcoun-tries.In2007,SAPinitiatedaprogramthatencouragedallofthesegroupstosharetheirexpertiseandrecommendedpracticeswiththewideruser-groupcommunity.Itkindledsomevaluablediscussion,which,intheend,isgoodforallSAPstakeholders.Anumbrellaorganization,SAPUserGroupExecutiveNetwork(SUGEN),embraces12nationalSAPusergroupswiththesharedaimofdefiningpriori-tiesandagreeingplansofactiontobringgreaterfocustothedialogbetweenSAPanditsusergroupsontheglobalplane.

Development PartnershipsIn2009,wecontinuedtoforgepartnershipsandsharedprojectsthatwebelievewillhelpshapeourfuture,securingandenhancingglobalrelationships.Wenowhave21globalservicespartners,morethan1,200servicepartnersworld-wide,and34globaltechnologypartners,andtheSAPso-lutionextensionofferingscontinuetogrow.Thesearesomeexamples:•Continuingtoidentifyopportunitiestoworkwithpartners

andbringingadditionalvaluetocustomers,SAPandAtosOrigin,aglobalservicespartner,extendedtheirpart-nershiptofocusonreducingcustomerriskandstreamlin-ingupgradingandgo-liveprocesses,forcustomersinkeyEuropeancountriesincludingFrance,Germany,theNetherlands,Spain,andtheUnitedKingdom.


•AsadoptionofSAPBusinessObjectssolutionscontin-uedtogrowamongSAP’sinstalledbase,wesecuredad-ditionalpartnershipsinanefforttocomplementtheproductoffering.SAPsignedaglobalsalesagreementwithAPOSSystems.TheagreementfocusesonofferingcustomersAPOS’extensionstoSAPBusinessObjectsXIsolutionstoenhancemanagement,monitoring,andcon-troloftheirdeploymentsofthissoftware.

•AspartofourreleaseofSAPBusinessSuite7software,wesecuredcertifiedsystemintegratorpartnershipswithAtosOrigin,CapGemini,IBM,andWiprotodriveadoptionofSAPBusinessSuiteanddelivercertifiedconsultantstothemarketplacein2009.

•Tooffercustomersaccelerated,unifiedaccesstode-tailedenterprisedataforbetterbusinessvisibility,SAPandTeradataCorporation,theworld’slargestcom-panyfordatawarehousingandenterpriseanalytics,agreedtoprovidetheSAPNetWeaverBusinessWare-housecomponentontheTeradatadatabase.Withthisagreement,customersusingbothSAPandTeradataproductscanbenefitfromanintegratedend-to-endofferingincludingdatawarehouseinfrastructureandmanagementaswellasbusinessintelligencetools.

•InsupportofSAPEnterpriseSupportservices,SAPpartnersfocusedoncertificationandadoptionoftheRunSAPmethodology.Duringtheyear,partnersincludingIBMGlobalBusinessServicesandEDSannouncedtheircertificationinRunSAPmethodology.

•SAPandIBMdeliveredAlloy,co-innovationsoftwarefea-turingSAPBusinessSuiteandIBMLotusNotes,tothemarketplace.AlloypresentsinformationanddatafromSAPsoftwareprocessesinthecontextofthedesktopfamiliartoLotusNotesusers.

•Aspartofourglobalmobilityproductstrategy,SAPen-teredintopartnershipsfocusedonenablingcustomerstobringtheSAPBusinessSuitetomobiledevices.Westartedaco-innovationofferingwithSybase,focusedonenablingmobileuserstoaccessSAPsolutionsforin-creasedproductivityandefficiency.Inaddition,westart-edadevelopmentprojectwiththesoftwaremanufacturerSyclotodelivermobileassetandservicemanagementsolutionstocustomers.

•TheSAPecosystemwasacorecomponentofthelaunchoftheSAPBusinessObjectsExplorersoftwareinMay.ThecompanysecuredpartnersascontributorstothetechnologyofferingincludingIntelandAdobe.Partnersthatfocusedonprovidinghardwarecomponentstocom-plementthesoftwareincludedDell,Fujitsu,IBM,andHP.

•TheITconsultingandoutsourcingcompanyCognizantbecameaglobalservicespartnerofSAPinMay.Thismarkedtheevolutionofasuccessfulrelationshipbe-tweenSAPandCognizant.InSAPCo-InnovationLabandtheCognizantTouchstoneCenterinBangalore,weaimtodevelopanddelivervalue-addedsolutionsacrossavarietyofindustriestoprovideourjointcustomersenhancedflexibility,agility,andefficienciesintheirenter-priseapplications.

•WecontinuedtoaddtoourlistofSAPsolutionexten-sions.FocusedonidentifyingqualifiedproductsthateasilyintegrateintoexistingSAPlandscapesandmeetcriteriaforglobalcustomerdemand,wesecurednewofferingsfrompartnerstoaddtoourpricelist.Newsolutionextensionsin2009includeSAPEnterpriseInventoryOptimizationapplicationbySmartOps,SAPDataMainte-nanceapplicationforERPbyVistex,andSAPExtendedEnterpriseContentManagementapplicationbyOpenText.

•WecontinuedtodevelopourpartnershipwithNovell,focusingonGRCsolutions.InOctoberthecompaniesannouncedtheirintentiontodeliverintegratedGRCsolu-tionsthroughproductintegrationandplanningandacollaborativego-to-marketstrategy.ThecombinationofSAPBusinessObjectsGRCsolutionsandNovell’ssecurityandidentityproductswillbridgethegapbetweenbusinessprocessandITsecurityandcontrols.


•InApril,ourvirtualizationcommunityshifteditsfocustosolutionsaddressingGreenIT.Partners,customers,andmanufacturersincludingAMD,Cisco,Citrix,EMC,HP,Intel,NetworkAppliance,Novell,RedHat,Sun,andVMwareagreedtoworkwithSAPtodirectlyidentifyanddevelopsolutionsthatenabletechnologytoassistcom-paniesinrunningtheirIToperationsmoreefficiently.

•WebroadenedourrelationshipwithInteltooptimizetheoperationofSAPBusinessOneapplicationswiththeIntelXeonProcessor.ThisstepintherelationshipwasdesignedtoenablesmallbusinessestoachievefastertimetovaluefortheirITinvestments,thereforesavingcosts.Thiscombinationofferingwasmadeavailableasindustry-specificbundlesdeliveredthroughoriginalequipmentmanufacturers.

•Continuingtoworkwithpartnerstobetterenablecus-tomersinthemidmarket,weannouncedacollabora-tivefast-startprogramtogetherwithHP.Thiseffortpro-videscustomerstheSAPBusinessAll-in-OnesolutiononHPhardware.

•InNovember2009,severalregionalannouncementsweremadeaffectingSAP’sglobalecosystem.InCanada,SAPannouncedthreenewmembersoftheSAPEx-tendedBusinessprogramcertifiedtodeliverSAPBusi-nessAll-in-OnesolutionstomidsizeCanadianfirms.InChina,newofferingswereannouncedforthatcountry’secosystem,includingcontentrelevantfortheChinesemarketpublishedvianewonlinediscussionareas,forums,wikis,andblogsforitsSAPCommunityNetworkChina.Meanwhile,inIndia,newsofdevelopmentsatthere-centlyopenedSAPCo-InnovationLabinBangalorein-cludedmentionofthreenewsolutionsnowavailabletothewidermarketsbasedonthejointdevelopmentef-fortsofSAPanditspartnersatthelab.


RESEARCH AND DEVElOPMENT

Inordertocapitalizeonthepowerofdiversity,SAPdistrib-utesthedevelopmentofitssoftwaresolutionsacrosslocationsinstrategicmarketsworldwide.Inaddition,togetherwithleadinguniversities,partners,andcustomers,wecultivatenewITtrendsandtechnologiesonaglobalscale.

Worldwide Distribution of DevelopmentSAPemploys14,813peopleinsoftwaredevelopmentcen-tersin11countries.ThelargestoftheseSAPLabsisinWalldorf,Germany,followedbyBangalore,IndiaandPaloAlto,CaliforniaintheUnitedStates.WiththeintegrationofSAPBusinessObjectsdevelopmentcenters,SAPnowhasthreenewdevelopmentcentersinVancouver,Canada,Dublin,Ireland,andParis,France.

Thinkinggloballyandactinglocally,thenetworkofSAPLabsbenefitsfromhighlyqualifiedemployeeswithdifferentculturalbackgrounds.Withtheirdiverseexpertise,theseemployeesuseourresourcesinanintelligentandefficientway,aimingtogenerateasignificantandlastingcompeti-tiveadvantageforSAP.

WedevisedthestructureoftheSAPLabsnetworktoac-celerateproductinnovationandraiseproductivity.Duetothenetwork’sflexibility,wecanquicklyreacttonewcus-tomerandmarketrequirements.Furthermore,theglobalarrangementofourdevelopmentorganizationenablesustodevelopproductsandservicesincollaborationwithlead-ingcustomersandpartnersworldwide.

In2009,SAPinvested€1.6 billion(2008:€1.6 billion)inresearchanddevelopmentforbusinesssoftwaresolutions.

Research and Development € millions |changesincepreviousyear

1,089

+20%

1,344

+23%

1,461

+9%

1,627

+11%

1,591

–2%

1,600

1,200

800

400

0

2005 2006 2007 2008 2009

U.S.GAAPdata / IFRSdata


SAP ResearchSAPResearch,ourglobalresearchorganization,identifiesandshapesemergingITtrendsandgeneratesbreak-throughtechnologiesthroughappliedresearch.Itsfindingssignificantlycontributetoourproductportfolioandhelpustomaintainourtechnologicaledge.EachSAPResearchcenteriscollocatedwitheitherapartneruniversityoranSAPdevelopmentcenter,creatingasolidfoundationforcollaborativeresearch.

The Global Research NetworkSAPResearchexploresopportunitiesthathavenotyetbeendevelopedintoproducts.Astructuredapproachtoresearchandtrendmanagementensuresthatwegener-atetheutmostvalueoutofcreativitytomakeinnovationhappen.Thegroupplaysaleadingroleinmultipleresearch

projects,collaboratingwithscientistsandresearchersthroughoutitsco-innovationnetwork,aswellaswithcus-tomersandpartners.Inaddition,SAPResearchcons-tantlyworksonthetransferofcustomer-drivenresearchresultstoimproveourexistingportfolio.

ProspectiveSAPsolutionsareturnedintotangibleexperi-encesin“livinglabs.”TheFuturePublicSecurityCenterinDarmstadt,Germany,forexample,demonstratestechno-logicalresearchresultsinreal-worldsettingsintheareaofpublicsafety.Usersareintroducedtonewtechnologiesatanearlystageandplayanactivepartintheresearchprocess.Thisresearchapproachisalsobasedonclosecollaborationwithcustomersandpartners.

Montreal, Toronto CANADA

Budapest HUNGARY

Sofia BULGARIA

Brisbane AUSTRALIA

Dublin IREL AND

Belfast UNITED KINGDOM

São Leopoldo BRAZIL

Palo Alto USA

Development Center

Research Center

Co-Innovation Lab

Ra’anana ISRAEL

Pretoria SOUTH AFRICA

Walldorf GERMANY

Darmstadt, Dresden, Karlsruhe, Walldorf GERMANY

Levallois, Paris FRANCE

Sophia Antipolis FRANCE

St. Gallen, Zürich SWITZERL AND

Tokyo JAPAN

Shanghai CHINA

Vancouver CANADA

Montreal CANADA

Bangalore INDIA


Next Big ThingsThroughitsexplorationofvariousbusinessareasandbasedonthefindingsofitsresearchprojects,SAPResearchisabletoidentifypotential“nextbigthings”–maximumimpact,next-generationtechnologiesandapplications.Thefollowingexampleshighlightsomeofthesetopics:•Cloudcomputingisthegenericumbrellatermforflexible,

IT-relatedservices,suchasstorage,computingpower,softwaredevelopmentenvironments,andapplications,combinedwithservicedeliverythroughtheInternettoconsumersandbusinesses.Cloudsprovidemajoroppor-tunitiesfornewbusinessmodelsbyrestructuringthevaluechainsintheITindustry.Inaddition,cloudcomput-ingdramaticallychangesthedynamicsfornewserviceofferingssinceitconsiderablylowerstheentrybarriersfornewcomersbyshiftingfromhugeinitialcapitalin-vestmentstopay-what-you-usebusinessmodels.Thein-frastructuredemandsofthevisionsforthe“InternetofServices”andthe“InternetofThings”canbemetmosteconomicallybythecloudcomputingmodel.Itisespe-ciallysmall,innovativecompaniesthatwillusecloudcomputingasascalableservice.

•TheInternetofThingsfusesthedigitalworldandthephysicalworldbybringingtogetherdifferentconceptsandtechnicalcomponents.Everydayobjectsandmachines,evenhousesandindustrialbuildings,havesensorsandcan“communicate”witheachotherviatheInternet.Onepracticaldimension,introducedatSAPTechEd2009inVienna,isthetopicofproductcounter-feitingsecurityorglobalbrandprotectionservice.Prod-uctcounterfeiting,smuggling,andotherillegaltradingpracticesareevolvingasfastasemergingtrendsandtechnologiesworldwideandareincreasinglyfindingtheirwayintovariousbusinesssectorssuchasthephar-maceuticalindustryandaircraftandautomobilespare-partsmanufacturing.InajointventurecalledOriginal1withpartnersNokiaandGiesecke&Devrient,wearedevelopingthepossibilityforbrandownerstouseaser-viceprotectingtheiroriginalproductsalongthewholesupplychain.ExpertspredictthattheInternetofThingswillleadtotremendousefficiencygainsinmanyindus-tries,suchasmanufacturingandenergysupply.Applica-tions,services,middlewarecomponents,networks,andendpointswillbestructurallyconnectedinentirelynewways.Thiswillmakenewmodelspossibleforbusinessprocesses,collaboration,miniaturizationofdevices,andintheareaofmobilecommunications.

•ThankstotheInternetofServices,theabilitytocreateaWeb-basedserviceindustryisbecomingareality.Inthefuture,peopleshouldbeabletodomorethanbuybooks,bookflights,orplantripsontheInternet.Theyshouldalsobeabletomakeappointmentswiththeirchild’spedi-atrician,coordinateexportstoforeigncountries,andprovideconsultingadviceforbusinesses.Inthistypeofvirtualworld,softwareandserviceproviders,brokers,anduserscancollaborateusingaservicedeliveryplatformtobuildflexibleanddynamically-integratedapplications.Theplatformsupportsthewholelifecycleofaserviceofferingfromitscreationandintroductiontoredesignwithincorporateduserfeedback.SAPResearchislook-ingtofurtherexploreservicesthatcanbemanagedusingITand,whencombined,lendthemselvesintoval-ue-addedservices.

•Afurtherresearchfocusareaisthedevelopmentoftech-nologiesforemergingeconomies.Theoverallaimistoengageinresearchactivitiesthatinvestigatetheuniquerequirementsofemergingeconomiesinordertomakeadirectimpactontheirsocialandeconomicdevelop-ment.Theresearchagendaincludesinnovativebusinesssolutionsforverysmallbusinesses,thusgivingprefer-encetotheidentificationandinceptionofnewtechnolo-gies.Suchinitiativescontributetojobcreation(socialimpact)andpovertyalleviation(economicimpact).


New Research GroupInJuly2009,SAPResearchestablishedanewresearchgroupinBangalore,themaincampusofSAPLabsIndia.Withitsstellardevelopmentovertheyears,anever-growingnumberofworld-leadingenterprises,andalongtraditionofacademicexcellence,Indiaoffersawealthofopportuni-tiesforinnovationandisoneofSAP’skeymarkets.

TheresearchersinBangalorearefocusingmostlyontop-icsintheareasofdecisionsupportsystemsfortextunder-standing,serviceinfrastructures,andWebinformationquality.

Global Business IncubatorWestartedtheGlobalBusinessIncubatorin2008asthesuccessortoSAPInspire.Thisprogram,basedinPaloAlto,California,intheUnitedStatesandWalldorf,Germany,fo-cusesoncreatinginnovativenewbusinessesforSAP.TheGlobalBusinessIncubatorgroupacceleratestheidenti-ficationandcommercializationofnewbusinessopportuni-tiesadjacenttoSAP’scorebusiness.Bybringingto-getherteamsofinternalandexternalentrepreneursandusingamilestone-gatedfundingprocess,thegroup“incubates”newbusinessesinsidethecompanyfromideatocommercialization.TheGlobalBusinessIncubatorhasbeenstartingnewinitiativessince2008atthepaceofroughlyoneperquarter.

Investments in Innovative CompaniesSAP’sinvestmentinothercompaniesaddstotheprocessofinnovationbyactingasawindowonexternalinnovation.Foundedin1996,SAPVenturesisthecorporateventurecapitalarmofSAP,andinvestsincompaniesthatdeveloppromisingtechnologiesandapplications.SAPVenturescanmakeinvestmentdecisionsthatdonotnecessarilyreflectourcurrentbusinessstrategyandisthereforeabletoinvestinentirelynewfieldsthatoffertheprospectofhighgrowthandprofitability.TheideabehindSAPVenturesistobringsubstantialbenefittoitsportfoliocompaniesbyfacilitatinginteractionbetweeninnovativeyoungcompaniesandtheSAPecosystemandtoaidSAPinidentifyingdisruptivetrends,newmarketopportunities,andpotentialacquisitioncandidates,partnersandsuppliers.

SAPVenturesinvestsgloballyandhasportfoliocompaniesinEurope,India,andtheUnitedStates.In2009,SAPVen-turesfocusedondigitalmediaandonlinemarketingandchanneledinvestmentinaspiringenterprisessuchasTremorMediaandReturnPath.TheSAPVenturesportfolioin-cludesleadingstartupslikeAlfresco,Connectiva,Green-plum,iYogi,JasperSoft,LinkedIn,Loglogic,Newgen,Qumu,RightHemisphere,andVendavo.

TheSAPNetWeaverFundprogram,capitalizedwithUS$125 million,aimstoinvestincompaniestofuelinnova-tionandgrowthwithintheSAPecosystemandintechno-logiesbasedontheSAPNetWeavertechnologyplatform.SincetheinceptionoftheSAPNetWeaverFundin2006,SAPhasmadeinvestmentsinseveralcompaniesresultinginsignificantproductdevelopmentandco-innovationthathasdeliveredvaluetoourcustomers.TheSAPNetWeaverFundportfolioincludescompaniessuchasNakisa,alead-erinthevisualworkforcemanagementmarket,andInno-centive,aproviderofopeninnovationsolutionsfortheen-terprise.

Committing Resources to Research and DevelopmentWemustcontinuouslyimproveourportfolioofproductsifwewishtomaintainandbuildonourcurrentleadingposi-tionasavendorofbusinesssoftware.In2009,ourre-searchanddevelopment(R&D)expensedecreasedslightlyby2%to€1,591 million(2008:€1,627 million),butwespent14.9%oftotalrevenueonR&Din2009(2008:14.1%).TheincreaseintheR&Dquotientinspiteofthecost-savingmeasuresimplementedin2009reflectsouren-gagementindevelopment.TheR&Dquotientwasinflu-encedbyan8%decreaseinrevenueandbya5%reduc-tioninthenumberofR&Demployees.However,thepersonnelexpensefortheR&Demployeeswasnegativelyimpactedin2009byanincreaseinvariablepayduetooverachievementofCompanygoals.R&Dexpendituresincludeexpenseforexternallyprocureddevelopmentservices,inadditiontoHRcosts.Theim-portanceofR&Dwasalsoreflectedinthebreakdownofemployeeprofiles.Attheendof2009,ourtotalfull-timeequivalent(FTE)countindevelopmentworkwas14,813(2008:15,547).R&Demployeesaccountfor31%(prioryear:30%)ofallSAPemployeesworldwide.


Development News and New OfferingsIn2009,weextendedoursolutionportfoliofocusingpri-marilyonincreasingintegrationbetweenproductlinestohelpourcustomersclosethegapbetweenstrategyandexecution.Workingwithourcustomersandpartners,wecreatednewcapabilitiesinallcoreareasofoursolutionsportfolio:enterpriseapplicationsandindustrysolutionsinSAPBusinessSuite,solutionsforsmallbusinessesandmidsizecompanies,solutionsaddressingtheneedsofbusinessusers,andtheSAPNetWeavertechnologyplat-form.Wealsoexpandedourserviceofferings.

Expanded Offerings for Enterprise Applications and Industry Solutions SAPBusinessSuiteapplicationsandallSAPindustrysolutionswereimprovedtoadapttotheacceleratingrateofchangeofthemarketandcustomerexpectations:•SAPERP:InMay2009,wedeliveredthefourthenhance-

mentpackagefortheSAPERPapplication.Functionalimprovementsprovidestrongersupportforparallelaccount-ingandreporting,treasuryandriskmanagement,andelectronicpayments.Humancapitalmanagementcapa-bilitieswereimprovedtosupportrecruiting,learning,andperformancemanagementprocesses.Search,re-porting,andself-servicecapabilitiesimprovedusabilityforcasualandbusinessusers.EnhancementpackagescontinuetoenableourcustomerstoaddfunctionstotheirSAPapplicationswithoutupgrades,reducingtheto-talcostofmanagingorextendingthecapabilitiesoftheirenterpriseprocesses.

•SAPCustomerRelationshipManagement(SAPCRM):ThenewversionoftheSAPCRMapplication,SAPCRM7.0,deliveredinMay2009,iscontinuingtogainmomen-tumwithourcustomers,andisexperiencingstrongadoptionbyourcustomers’users.SAPCRMischarac-terizedbyeaseofuseandadaptabilitytomeetrapidlychangingmarketconditions,combinedwiththepowerofintegratedend-to-endsales,marketing,andservicebusinessprocesses(suchasthenewloyaltymanagementcapabilities),andwearebecomingthesolutionofchoiceforSAPcustomers.WearecontinuingtogrowthoughtleadershipthroughseveralexcitinginnovationssuchasthemobilitypartnershipwithSybase,socialCRM,andcommunications-enabledbusinessprocessestohelpourcustomersstaycurrentandaheadoftheircompetition.

•SAPSupplierRelationshipManagement(SAPSRM):InFebruary2009,weannouncedthegeneralavailabilityofthelatestversionoftheSAPSRMapplication,SAPSRM7.0,aspartofSAPBusinessSuitesoftware.SAP

SRMnowextendscompliancecapabilitieswithenhance-mentstocentralizedsourcingandcontractmanagement,servicesprocurement,catalogmanagement,supplierenablement,usability,andaccessibilitytoinformation.Fur-thermore,SAPsupportsSRMcustomersincomplyingwithregulatoryandinternalguidelines.SAPSRMalsohelpsfullydeliverontheimportantprocurementprocess-esforourcustomers.Wealsoplantoreleasenewver-sionsoftheSAPE-SourcingandSAPContractLifecycleManagementon-demandsolutionsin2010.Thesenewversionsaredesignedtoimprovetheamountofnegotiat-edsavings,optimizecostvisibility,increasesustainablesavings,andprovidemoreadvancedon-demandsupport.

•SAPSupplyChainManagement(SAPSCM):InMay2009,anewversionofSAPSCMbecamegenerallyavail-ablewithcapabilitiesthatleveragepoint-of-salesdatatoimproveplanningaccuracyandvisibility,providenewforecastingmethods,andenableattribute-orcharacteris-tics-basedplanning.Thesupplynetworkcollaborationcapabilitieswereenhancedtoimprovecoordinationandcollaborationwithcontractmanufacturers.Weintro-ducedmajorenhancementstowarehouseandtranspor-tationmanagement,suchasgraphicalwarehouselayoutmodeling,improvedvisualization,tighterintegrationofexportcontrols,andincreasedutilization,throughen-hancedintegratedprocesses.Weexpandedtheradio-frequencyidentification(RFID)andauto-IDsolutionfoot-printofSAPSCMwithsupportforserializationtechnol-ogyandtheEPCISstandard,aglobalcommunicationsstandardbyEPCglobalthatimprovestransparencyinthetrackingofgoods.

•SAPProductLifecycleManagement(SAPPLM):WithitsfourthenhancementpackagegenerallyavailableinMay2009,SAPPLMintroducedanewuserinterfacewithsimplifiedaccesstoinformationwithinthecontextofspecificrolestoimproveproductivity,reducetraining,eliminatemanualactivities,andmakedecisionsmorerapidly.Thisintuitivenewuserinterfacedeliversinforma-tionfromunitsacrossanorganizationtoestablishaprod-uct-centricview.DirectcollaborationcapabilitieswithinSAPPLMenableintercompanydesignnetworkswithasophisticatedauthorizationconcept.Theresultisabetterandfastercollaboration,whichcanimprovethequalityofproductdevelopmentresultinginfewerchangecycles.Integratedproductlabelinghelpscompaniestoreducetheriskofproductrecallscausedbyimproperlabelingandhelpsthemsavetimebyautomatingthevariousstepsintheproduct-labelingprocess.


New Developments for Small Businesses and Midsize CompaniesWedeliveredinnovativedevelopmentsforourmanycus-tomersinthesmallandmidsizeenterprise(SME)segmentin2009:•SAPBusinessByDesign:InJuly2009,wedeliveredfea-

turepack2.0fortheSAPBusinessByDesignsolution.Thisnewversion,availableinsixkeymarketsundercon-trolledrelease,significantlyexpandsfunctionalityandprovidesmorevaluetocustomersbyofferingbusinesssupportfor35end-to-endprocessscenarios.ThroughintegrationwithsoftwarefromtheSAPBusinessObjectsportfolio,includingCrystalReportssoftwareanddash-boardsfromXcelsiussoftware,executivesofmidsizecompaniescanbenefitfromincreasedtransparencyintotheirbusinessoperationandcanutilizecomprehensiveanalyticstomakedecisionsthatcanimprovetheirbusinessperformance.Thislatestfeaturepackalsointegratescustomerrelationshipmanagement,order-to-cashwithautomatedbilling,projectprofitabilityandresourcemanagement,timeandexpensereimbursement,procure-to-pay,andserviceandrepair.Finally,companiescancollaboratemoreeffectivelyinternally,aswellaswithcus-tomers,suppliers,andpartnersthroughnewgroupwareintegrationwithMicrosoftOffice.Forexample,group-wareintegrationwithdesktoptoolssuchasMicrosoftOfficeenablesuserstosynchronizetasks,appointments,ande-mailand,forinstance,exportstandardlettersandlistingstoworkontheminMicrosoftOfficeapplica-tions.Thishelpscompaniesworkmoreeffectively–internallyandwiththeircustomers,vendors,andotherbusinesspartners.

•SAPBusinessAll-in-One:In2009,wecontinuedtoenhancetheSAPBusinessAll-in-Onesolutiontoincludeinte-gratedpreconfiguredSAPBusinessObjectssolutions–inadditiontothecomprehensive,preconfiguredbestpracticesdeliveredforSAPCRMandSAPERPapplica-tionsin2008.Thesesolutionsprovidecustomerswithinstantaccesstotrustedandtimelydataatthecoreoftheirbusinessoperations.Additionally,wecontinuedinvestingintheSAPBusinessAll-in-Onefast-startpro-grambyextendingthesolutionconfiguratortoconfigureCRMfunctionsonline.PartnersparticipatingintheSAPBusinessAll-in-Onefast-startprogramcannowde-ploythesolutionconfiguratorontheirWebsitesandfeaturetheiruniqueofferingstoprospects.Severalofourpartnersalreadyhaveitliveontheirsites.Finally,wedeliveredtheSAPBusinessObjectsDataIntegratorsoftwarefordatamigrationtoSAPBusinessAll-in-One.Ithelpsreduceprojectrisksandspeedtheimplementa-tionofSAPBusinessAll-in-Onesolutions.

•SAPBusinessOne:In2009,wereleasedenhancementstothe2007versionoftheSAPBusinessOneapplicationthatofferabundleoflegalenhancements,streamlinedbusinessprocesses,improvedusability,built-inlocalbestpractices,andintegrationwithWeb-basedCRMande-commerce.

•SAPBusinessObjectsEdgesolutions:InApril2009,welaunchednewsolutions,includingSAPBusinessObjectsEdgeBI,ourcomprehensivebusinessintelligencesoftwareforsmallbusinessesandmidsizecompanies.Now,aspartofSAPBusinessObjectsEdge,BImid-marketcompaniescanuseSAPBusinessObjectsExplor-ersoftwarethathelpsbusinessusersquicklyandeasilyexploreinformationfromdiversesourcesandin-stantlyanswerbusinessquestions.WealsodeliveredtheSAPBusinessObjectsEdgeStrategyManagementapplication,whichhelpssmallbusinessesandmidsizecompaniesimprovetheirperformanceandalignexecutionwithstrategybyconnectinggoals,initiativesandmetrics.WealsodeliveredtheSAPBusinessObjectsEdgePlanningandConsolidationapplication,whichhelpstheseorganizationscreate,execute,andmonitorbudgetsthatarealignedtofinancialplansandresources.


Expanded SAP BusinessObjects Portfolio In2009,weextendedourportfolioofsolutionstomeettheneedsofbusinessuserswithnewenhancementstotheSAPBusinessObjectssolutionsandnewversionsofDuetandAlloy.•SAP-BusinessObjectsbusinessintelligence(BI)solu-

tions:In2009,wedeliveredSAPBusinessObjectsEx-plorersoftware.SAPBusinessObjectsExplorersoft-ware,acceleratedversionforSAPNetWeaverBusinessWarehouse(SAPNetWeaverBW),combinesintuitiveinformationsearchandexplorationfunctionswiththehighperformanceandscalabilityofSAPNetWeaverBWAccelerator,soitcanempowertheorganizationandputBIwithinthereachofmorebusinessusersinacompany.Withimmediateinsightsintovastamountsofdata,userscanimprovetheirabilitytomakesound,timelydecisions.

•TheacceleratedversionofSAPBusinessObjectsExplor-ersoftwaredeliverspowerfulfunctions,including:–Searchacrossdatafieldsandmetadata:Userssimply

enterafewkeywordstoinstantlyfindthemostrelevantinformationfromacrossalldatasources.Theyneednopreviousknowledgeaboutwhatdataexistsorwheretofindit.

–Intuitiveexplorationofdataandcharts:Thesoftwarecomplementsresultswithcontextuallyrelevantdetails.TheexperienceiscomparabletoInternet-stylesearchandbrowsinganonlinestore.Usersdonotneeddatamodelsordataknowledge.

–Automatedrelevancyandchartgeneration:SAPBusinessObjectsExplorerpresentsthemostrelevantsearchresultsfirstandautomaticallygeneratesthechartthatbestrepresentstheinformation.

–Highperformanceandscalability:Thecombinedsoft-wareandhardwaresolutiondeliversthehighperfor-manceandscalabilitythatusersneedforimmediateresponseandanswerswhentheybrowseverylargedatasets.

•SAPBusinessObjectsinformationmanagement(IM)solutions:InJune2009,wedeliveredenhancementstoSAPBusinessObjectsDataFederatorandSAPBusinessObjectsDataServicessoftware.Thesesolu-tionssupportbothSAPandnon-SAPsoftwareenviron-ments.TheyoffergreatersupportforSAPcustomersbyintegratingwithSAPNetWeaverBW.Inaddition,thereisdeeperintegrationbetweenSAPBusinessObjectsDataServicesandtheSAPNetWeaverMasterDataManagementcomponent(SAPNetWeaverMDM)forim-proveddatacleansing.Wealsodeliveredapplication-specificversionsofSAPBusinessObjectsDataQuality

ManagementsoftwaretohelpcustomerssolvedataqualityproblemswithSAP,Informatica,andSiebelappli-cations.WiththenewversionofSAPBusinessObjectsMetadataManagementsoftware,customerscancon-solidatemetadatatogainvisibilityintoSAPNetWeaverBWobjects.Theycanthusobtaininformationondatalineageandusageandconductchangeimpactanalyses.

•SAPBusinessObjectsgovernance,risk,andcompliance(GRC)solutions:WedeliveredanewversionoftheSAPBusinessObjectsGlobalTradeServicesapplicationthatcontinuedtheevolutionofthisproductandfocusedonmanagingsupplychainriskandcomplianceacrossallofanorganization’stradeprocesses.ExecutionofourroadmapcontinuedwithnewversionsoftheSAPBusinessObjectsProcessControlandSAPBusinessObjectsRiskManagementapplications,builtontheSAPNetWeavertechnologyplatform.Thepro-cesscontrolapplicationofferscustomersacomprehen-siveconceptwithwhichtorealizeautomatedcontrolmechanismsthathelpthemensurecompliancewithnu-merouslegalandregulatoryrequirements.Thelatestreleaseoftheriskmanagementapplicationenablescom-paniestoautomaticallymonitorandproactivelyidentifyenterpriserisks.Thecombinationofthesetwosolutionsenablescustomerstotakearisk-basedapproachtocontrols.Thesewereourfirstapplicationstodeliverem-beddedSAPBusinessObjectsBIcapabilitiesthroughintegrationwithCrystalReportsandXcelsiussoftware–notablyaspartofourupdatingofSAPBusinessObjectsAccessControl.ThefirstversionoftheSAPBusines-sObjectsSustainabilityPerformanceManagementappli-cationhelpsorganizationsdefineandcommunicatetheirsustainabilityobjectives,appropriatelymanagerisks,andreportonsustainabilityperformance.Itdoessobyprovidingareportingandmanagementframeworkthatenablesorganizationstofocusondrivingsustain-abilityperformanceratherthandatacollectionandreportcompilation.


•SAPBusinessObjectsenterpriseperformancemanage-ment(EPM)solutions:ThereleaseofSAPBusinessObjectsEPM7.5deliveredthesecondphaseofourfive-yearroadmapandincludednewversionsoftheSAPBusinessObjectsPlanningandConsolidationapplicationonboththeSAPNetWeaverandMicrosoftplatformstohelpcustomersstreamlinetheirplanning,budgeting,andforecastingprocesses.AnewversionoftheSAPBusinessObjectsStrategyManagementapplicationwasreleasedwithnewvisualizationandreportingcapa-bilitiesenabledbySAPBusinessObjectsBIsolutions.WeenhancedtheSAPBusinessObjectsFinancialConsolidationapplicationwithnewaccountingcompliancefeaturesandrichintegrationwithSAPERPandSAPNetWeaverBWtofurtherhelpcompaniesmeetdemandsforafaster,moreaccuratefinancialcloseprocess.WealsoreleasedanewversionoftheSAPBusinessObjectsProfitabilityandCostManagementapplication,whichhelpscustomersgainmoreinsightintocostdriversandtheireffectonprofitability.AsecondversionoftheSAPBusinessObjectsSpendPerformanceManagementapplicationwasreleasedtohelpcustomersidentifycost-savingopportunitiesandidentifyriskinthesupplychain.InFebruary2009,wedeliveredthenewSAPBusinessObjectsXBRLPublishingsolutionbyUBmatrix,designedtohelpcustomersmeetnewregulatoryrequire-mentsfortheelectroniccommunicationoffinancialandbusinessdata.AlsoinFebruary,welaunchedtheSAPBusinessObjectsSupplyChainPerformanceManage-mentapplication,whichcontinuestoextendourperfor-mancemanagementvisionbeyondfinance.Ithelpscom-paniesmeasurablyimprovesupplychaineffectiveness,createresponsivesupplychainnetworks,anddeliverim-provedcostcontrol.

InadditiontoupdatesforSAPBusinessObjectssolutions,wedeliveredthefirstversionofAlloysoftware,ajointdevelopmentwithIBM,inMarch2009.InOctober2009,wedeliveredanewversionofDuetsoftware.

Enhancements to SAP NetWeaver EnhancementsmadetotheSAPNetWeavertechnologyplatformin2009focusonhelpingourcustomersrunbusinessapplicationsefficiently,acceleratethedesignandintegrationofapplicationstoenhancebusinessprocesses,manageandaccessrelevantdataacrosstheentireenterprise,andsimplifythewayusersaccessapplicationsandinformation.•SAPNetWeaverCompositionEnvironment:InMay

2009,wereleasedthefirstenhancementpackagefortheSAPNetWeaverCompositionEnvironmentoffering,whichprovidesalean,integrated,standards-baseddevel-opment,modeling,andruntimeenvironment.Softwaredevelopersandtechnicalconsultantscanusetheen-hancedcompositedesignerandcompositelife-cyclemanagementcapabilitiestoimproveproductivity.Aspartofthisenhancementpackage,wealsodeliveredtheSAPNetWeaverBusinessProcessManagementcom-ponentandtheSAPNetWeaverBusinessRulesMan-agementcomponent–thenextgenerationoftoolsforin-creasingprocessflexibilitywithnewbusinessprocessmanagementandbusinessrulesmanagementcapabilities.Businessprocessexpertscanusethesetoolstogen-erateaconsistentviewofcoreandcompositeprocessesforbothbusinessandIT.

•SAPNetWeaverProcessIntegration(SAPNetWeaverPI):WiththereleaseofthefirstenhancementpackageforSAPNetWeaverProcessIntegrationinMay2009,ourcustomerscannowtakeadvantageofEnterpriseServicesRepositoryenhancementstoimproveSOAdesigngovernance.SAPNetWeaverPIalsosupportshigherdatavolumesandcentralizedadministrationcapabilities.

•SAPNetWeaverInformationLifecycleManagement:SAPhasdeliveredathree-prongedapproachtoinforma-tionlife-cyclemanagementthatmeetsthecomplexinfor-mationmanagementneedsoftoday’sorganizations:dataarchiving,whichfocusesonkeepingthegrowthofdatavolumeincheck;retentionmanagement,whichdealswiththelifecycleofdatafromthetimeitiscreateduntilitisdestroyed;andaretentionwarehouse,whichad-dressesthedecommissioningoflegacyapplicationsandsystems.


•SAPNetWeaverIdentityManagement:In2009,wereleasedanewversionofSAPNetWeaverIdentityMan-agement.KeyenhancementsinthisreleaseincludeintegrationwithSAPBusinessObjectsAccessControlforcompliantuserprovisioning,standards-basedinte-gration(ServiceProvisioningMarkupLanguage)withSAPBusinessSuite(employeescenarios)toenablebusiness-drivenidentitymanagement,identityservicestoenableaccesstoidentitymanagementfunctionsfromexternalapplicationsandSOAenvironments,andgreaterintegra-tionwiththeSAPNetWeaverinfrastructureincludingWebDynpro-basedWebuserinterfacesformoreconsis-tentlook-and-feelandeasiermanagement.

New Developments for ServicesWithexpertiseinawiderangeofindustries,theSAPServicesorganizationcontinuestodevelopanddeliverservicestoalignITandbusinessstrategies.TheseservicesenablecustomerstorealizemaximumbenefitsfromITinvestmentsmorequickly,freeupITbudget,andrespondrapidlytomarketchanges.Fromplanningandimplementationtorun-ningapplications,SAPServicesofferingssupportorganiza-tionsalongtheentireapplicationlifecycle.CustomerscanleverageITlandscapesmoreeffectivelytooptimizeprocessesanddriveinnovation.

Additionalservicedevelopmentsfocusongivingcustomersanaccurateviewofwheremaximumvaluecanbeachieved,whileconsistentlykeepingbusinesscostsataminimum.Leveragingbestpractices,tools,methodologiesandrepeat-able,quicktimetovalue,metric-drivenofferingsarekeytoourstrategy.Bydoingthis,SAPServicescandelivercus-tomerservicesthatscalefaster–significantlyreducingimplementationcostandensuringcustomersatisfaction.•InApril2009,SAPandSAPUserGroupExecutiveNet-

work(SUGEN)announcedtherolloutoftheSUGENSAPEnterpriseSupportprogramusingkeyperformanceindicators(KPIs)todefineandmeasurehowSAPcus-tomersderivevaluefromSAPEnterpriseSupport.

•InDecember2009,SAPannouncedthattheKPIsachievedundertheprogramshowedclearvaluetopar-ticipatingSAPcustomers.

•InJanuary2010,SAPannouncedatieredsupportmodelforcustomersworldwide.ThissupportofferingincludesSAPEnterpriseSupportservicesandtheSAPStandardSupportoption,andwillenableallcustomerstochoosetheoptionthatbestmeetstheirrequirements.


ACQuISITIONS

In2009,wereinforcedourstrategyoforganicgrowthcom-plementedbyshareorassetacquisitionsaimedatenrich-ingourproductportfoliointermsofbothtechnologyandfunctions.Wemadethefollowingacquisitionsin2009:•InMay,weacquiredtheassetsofSkyDataSystems

Inc.,aU.S.company.SkyDataSystemsspecializesinmobileCRMsolutions.

•InJune,weacquiredClearStandardsInc.,aU.S.company.ClearStandardsprovidesenterprisecarbonmanagementsolutionsandhelpsorganizationsmeasureandcontrolgreenhousegasemissionsandotherenvironmentalim-pactsacrossinternaloperations.Thesoftwarealsosupportssustainabilityreporting.Ourobjectiveinextend-ingourproductportfoliointhefieldofsustainabilityistohelpourcustomersmeetthecarbonmanagementre-quirementsinthistimeofincreasinglystringentgovern-mentregulationsandpublicexpectationsofbettertrans-parency.

•InJune,wealsoacquiredHighdealS.A.,aFrenchcom-pany.Highdealdeliverssophisticatedpricing,chargingandratingsolutionsdesignedtosupportcommunicationserviceproviders.SAPhasintegratedtheHighdealsolu-tionsinabusinessprocessplatformthatprovidescus-tomerswithacomprehensivereal-timetransactionman-agementsystem.

•InSeptember,weacquiredamajorityofthesharesofSAFAG,aSwisspubliccompany.SAFdevelopsorder-ingandforecastingsoftwarefortheretail,logistics,andindustrialsectors.Thecompanyemploysaninnova-tiveconceptualdemandchainmanagementapproachthatallowstheprocesschaintobecontrolledandoptimizedbyitscentraldrivingforce–thecustomers’buyingbehavior.

•InDecemberweacquiredtheassetsofSOALogix,Inc.,aU.S.company.SOALogixspecializesinpackagedsoftwaretomapinformationflowsbetweenemployees,processes,andapplications.Itsproductportfolioin-cludessolutionsforintegratingindustry-specificprojectmanagementsoftwarewithSAPapplicationsforportfolioandprojectmanagement.


CuSTOMERS

Despitethetoughspendingenvironment,SAPwasabletosecurecustomers,especiallyinsectorslessaffectedbycurrentmarketconditions,includingtelecommunications,banking,infrastructure,andthepublicsector.Ourtotalcus-tomerbasesurpassed95,000.

SAPhasalsoobservedmanycustomersalreadyinvestinginstrategicprojectsthatseektoachievemoreinsightandtransparencyintheirbusiness.SAPhelpsthesecustomersoptimizestrategiesandbusinessprocessessothattheycanbecome“clearenterprises.”

CustomersthatsigneddealswithSAPin2009included:•DeutscheBankplanstostartamulti-yearinitiativein

2010toreplaceindividualsoftwaresolutionsinitshomemarketbyanewcorebankingsystembasedontheSAPforBankingsolutionportfolio.TheSAPimplementationshallunderpinDeutscheBank’sstrategytopushforahighdegreeofindustrializationandstandardizationofprocesses.

•FairfaxCounty,Virginia,UnitedStates,hasselectedSAPapplicationsforfinance,humanresources,andprocure-menttostreamlinetheday-to-dayoperationsofitscoun-tygovernmentandpublicschoolsystem.

•EnWinUtilities,themunicipalelectricitydistributorforthecityofWindsor,Ontario,Canada,selectedSAPsoft-waretohelpincreasevisibilityandefficiencyacrossitsoperations,lowerITcostsandbuildasolidfoundationtoaddressfutureopportunitiesinadvancedmeteringinfrastructure(AMI)andsmartgridadoption.EnWinwillreplaceitsOracleandIBMsoftwarewiththeSAPERPapplication,SAPforUtilitiesindustrysolutions,andsolu-tionsfromtheSAPBusinessObjectsportfolio.

•BostonUniversityinMassachusetts,UnitedStates,selectedtheSAPERPapplicationforenterpriseresourceplanning.ByconsolidatingmultiplelegacysystemsontoonesingleERPsystem,BostonUniversityseekstoen-suremaximumtransparencyacrosstheuniversity’scorebusinessfunctionsandtoprovideeasy,intuitive,andsecureaccesstoinformationforitsnearly8,500employees.

•Cargojet,Canada’spremiercargoairline,decidedtointegratefinancialsandreducecostswithSAPBusinessAll-in-Onesolutions.Cargojethasenjoyedsignificantgrowth,increasingitsfreighterfleetandexpandingits

networkbyprovidingvalue-addedservicestoitscustom-ers.AsCargojetcontinuestodevelopitsbusinessmodel,ithasselectedSAPsoftwaretobetteraddressitsbusinessandITneedsforthefuture.

•U.S.constructionfirmBartonMalowwantedtoimproveitscompetitivepositionandaddahighdegreeofvisi-bilityacrossoperations,soitreplaceditsdecades-oldlegacysystemwithSAPBusinessAll-in-OneandBIso-lutionsfromtheSAPBusinessObjectsportfolio.

•MapleLeafFoodsisahouseholdnameintheCanadianfoodindustryandhassignificantandgrowingbakeryoperationsintheUnitedKingdomandtheUnitedStates.Tosupporttheestablishmentofanefficientandfullyin-tegratedsystemlandscapeandasharedservicesorgani-zation,MapleLeafFoodslicensedSAPBusinessSuitesoftwareandindustry-specificapplications.

•ConsumersEnergy,aleadingelectricutilitylocatedinMichigan,UnitedStates,becamethefirstutilitytopur-chasetheSAPAMIIntegrationforUtilitiessoftwarefromSAP.ThenewsmartmeteringsoftwarewillhelpCon-sumersEnergyimproveefficiencyandprovidecustomerswithtimelyinformationtohelpthembettermanagetheirenergyusage.

•WestinghouseElectricCompany,basedintheUnitedStates,providesfuel,services,technology,equipmentandnewplantdesignsfortheglobalcommercialnuclearenergyindustry.Inanticipationofgrowthinthenewplantsegmentofitsbusiness,driveninlargepartbyWesting-house’sAP1000nuclearreactor,WestinghousechoseseveralsolutionsfromtheSAPportfoliotosupportitsgrowthstrategy.

•AlBathaGroup,anSAPcustomerintheUnitedArabEmiratessince1999,launchedE-City,thefirstsuper-spe-cialtyelectronicsstoreintheMiddleEastin2009.Thestoreoffersworld-classcustomerserviceandsellsawiderangeofhigh-endelectronicitems.E-CityisusingtheSAPPoint-of-Saleapplication,whichoffersunprecedent-edflexibilitytoaddressretail-specificneedssuchaspricing,discounts,promotions,tendertypes,layaways,andreturns.

•Takko,oneofthelargestfashiondiscountshopsinGer-many,willplanandstructureitspurchasingwiththeSAPMerchandiseandAssortmentPlanningapplication.PartoftheSAPforRetailindustryportfolio,theappli-cationhelpscreatetransparencyandincreaseplanningreliability.


•UKlawfirmShoosmithshaschosenSAPandSAP’sglobalpartnerTataConsultingServices(TCS)toreplaceitspracticemanagementsystemwithnewsoftware.TCSwillimplementitsownlegalmanagementsolutionandSAPERPonSAPNetWeaverforShoosmiths.Thiswillgivethefirmaplatformthatprovidesbothspe-cificlawpracticemanagementcapabilitiesandSAPforProfessionalServicesindustrysolutions.

•BundesagenturfürArbeit,Germany’sfederalemploymentagency,selectedSAPtomanageitshumanresourcesandfinancialmanagementsystems.Afterathoroughre-viewprocess,theagencydecidedtoreplaceitslegacyapplicationswithSAP’sflagshipERPapplication.ByadoptingSAPsolutions,itexpectstoimprovetranspar-encyandtocreateafuture-readyinfrastructure.

•TheStateOilCompanyofAzerbaijanRepublic(SOCAR)isthelargestAzerbaijanicompany,with120organiza-tionsand65,000employees.Withthegoalofbecomingaworldleaderinoilandgasproduction,SOCARchoseSAPBusinessSuitesoftwaretoreduceoperationalcosts,utilizeresourcesbetter,andimprovetheaccuracyofcorporateplanning.

•LaboratoriosFarmasaisaleadingproduceranddistribu-torofphytopharmaceuticalsinMexico.Withgrowingdemandforitsproducts,Farmasaneededbusinesssoft-warethatcouldenableenhancedoperationalcontrolandproducttraceability.BydeployinganSAPBusinessAll-in-OnepartnersolutionfromCrystalisConsultingMexico,Farmasaquicklyimprovedbusinessprocessefficiencyandoperationalvisibility.

•Embelleze,oneofthelargestcosmeticscompaniesinBrazil,investedinSAPsoftwaretoguaranteeanenviron-mentcapableofsupportingitsgrowthincomingyears.TheprojectincludestheimplementationofSAPBusinessAll-in-One,SAPCRM,andSAPBusinessObjectsXI.

•AlimentosWilsonisatraditionalBrazilianmanufacturerinthefoodandbeveragesegment.Thecompanyhasiniti-atedanewprocessofexpansioninitsbusiness.Itwassearchingforasolutionabletosupportitsgrowthinanefficientway,soitimplementedanSAPBusinessAll-in-Onesolution.

•Surbana,atownshipplanneranddeveloperinSingapore,decideditwastimetoinvestinanSAPERPsystemtosupportfuturegrowth.SurbanawillalsobenefitfromthedeepindustryknowledgeandglobalbestpracticesembeddedintheSAPsolutions.

•BharatSancharNigam,India’stoptelecommunicationscompany,selectedSAPERPforcountrywideimplemen-tation.BharatSancharNigamwillmigrateitsfinance,commissioning,andoperationsfunctionstoasingleERPsystemtoprovidebetterdecisionpathwaysthroughouttheorganization.

•CKERestaurantsofCarpinteria,California,intheUnitedStates,hasselectedtheSAPBusinessObjectsPlanningandConsolidationapplicationtoproduceitsmonthlyforecastsandannualbudget.CKEoperatesseveralres-taurantchains–includingCarl’sJr,GreenBurrito,Hardee’s,andRedBurrito–andhasmorethan3,000locationsin42statesand14countries.Withasingleuserinterface,SAPBusinessObjectsPlanningandConsolidationprovidesthedataCKEneedstocompleteitsbudgets,forecasts,andconsolidatedfinancialreports.


Throughnumerouspolicies,weseektobeopentothedifferentconditionsthatapplywhereverSAPispresentintheworld,andtoleveragethepowerofourdiverseem-ployeebaseforthebenefitofthecompany.Examplesofourpoliciesandinitiativesincludenumerouswork/lifebalanceoptions,suchasflextimeatmanyofourlocations,part-time,sabbatical,andearlyretirementworkingmodels,homeoffices,supportforworkingparents(parent-and-childoffices,forexample),performance-basedcompensa-tionprograms,andtargetedrecruitmentandtrainingstrate-gies,aswellascomprehensivehealthplans.

AtSAP,wepromoteanenvironmentwhererespect,trust,andopennessreign,motivatingouremployeestosharetheirknowledgeandexperiencewithothersandhelpingSAPfosterinnovativewaysofworking.Allemployeesareen-couragedtosharetheirdiversecompetencies,engagetheirfullpotential,andgenerateinnovation.NotonlydoSAPanditsemployeesbenefitfromdiversityinourCompany,butsoalsodoourpartnersandcustomers.

Equal OpportunitiesOurapproachtorecruitmentalsosupportsdiversityamongouremployees.Westriveatalltimestoidentifythemostdiversepoolofqualifiedcandidatesforanyopenposition.Eachregiondevotesappropriateresourcestoensurethatopenpositionsareadvertisedinamannerdesignedtoreachthemostdiversepopulationpossible.TheSAPglobalrecruitingpolicyisacompilationofallexistinghumanresourcespoliciesthatregulatetheareasofinternalandexternalrecruitment.

Global Diversity Ourglobaldiversitypolicyseekstoprovideaframeworkthatpositivelysupportsbusinessprocessesandproce-duresbyconsidering,integrating,andleveragingdiversityglobally.Ourpolicyistodobetterthanmerelycomplyingwithlegalrequirements.Forexample,oneofthebusinessimperativesaddressestheefficientandeffectivecooper-ationofeveryteammemberwithinourglobalorganizationbasedonacommonunderstandingoftheCompany’svaluesandobjectivesaswellasarespectfulwayofthink-ingandactingtowardeachindividual.

EMPlOyEES

ItisouremployeeswhoenableSAPtohelpenterprisesofallsizesinallindustriesincreaseefficiency,improvebusinessprocesseswithSAPsolutionsandservices,andbecomebest-runbusinesses.Ouremployeesandourentireecosystemconstituteaglobalcommunitypursuingacommongoal:usingSAPsolutionsinnovativelytosupportourcustomers’businessprocesses.Wewillcontinuetostriveforaworkforcethatisdiverse,integrateslocalandglobalskills,supportscollaborationandcooperationacrossthecompany,andcontinuallyfosteremployeeengagement.

Wearecommittedtoouropencorporatecultureandfivecorevalues:•Integrity:Wearehonestandfair.Wetakeresponsibility

forallouractions,andwetreatourcustomersandcol-leagueswithsincerityandrespect.

•Excellence:Weneversettle.Weconstantlychallengeourselvestodeliverthebestpossibleresultsinevery-thingwedo.Wearethoughtfulandpreciseinouractionstoachieveever-higherstandards.

•Partnership:Wecollaborate.Webuildrelationshipsbasedontrust,confidence,andrespect.Wevalueteam-workandworktogetherwithcolleagues,customers,andpartnerstocreatebest-runbusinessesaroundtheworld.

•Innovation:Weareintellectuallycurious.Welookfor-ward,weneveracceptthestatusquo,andweconstantlyseeksolutionsthatwillworktodayandinthefuture.

•Openness:Weareclearandapproachable.Westrivetobringsimplicitytocomplexproblems.Wearereceptiveofnewideasandconstantlyseeknewopportunities.

Diversity Empowers Success and InnovationOnDecember31,2009,SAPemployedmorethan47,500peoplefrommorethan120countries.ForSAP,adiverseworkforceisnotonlyareality,butalsoafundamentaldriv-erofourbusinessresults.WeareproudoftheuniquecontributioneachindividualmakesatSAPandrecognizethatourdiversehumancapitalistheessenceofoursuccess.Wearecommittedtoouropencorporatecultureandembracediversityasaforceforinnovation.


In2006,SAPestablishedaglobaldiversityofficewithachartertocontinueexpandingdiversityeffortsandmakethemsustainablethroughouttheorganization.ProgramsincludeGlobeSmart,anonlineinterculturaltooldesignedtohelpemployeesworkmoreeffectivelywithcolleagues,partners,customers,andvendorsaroundtheworld,aswellassupportfordiversity-relatedemployeenetworks,globaldiversityevents,andspecialworkshopsforemployees.

Code of Business ConductOurCodeofBusinessConduct,bindingforallSAPem-ployees,setsthestandardforhowemployeesinteractwithcustomers,partners,competitors,andvendors.Thecodereflectsourcontinuingcommitmenttomaintainourreputationasaserious,professionalbusinesspartner.ItispartofSAP’sbusinesspolicytocarryoutallCompanyactivitiesinaccordancewiththeletterandspiritofapplicablelegalre-quirementsandmaintainhighstandardsofbusinessethics.Weseeourcodenotjustasacollectionoflegalrequire-mentstobefulfilled;itcontainstheprinciplesthatinformhowwedobusinessanditreflectsourmoralandethicalobligation.

Employee EngagementAsasociallyresponsibleorganization,SAPisengagedininitiativesthatarebasedonourCompanyvalues.“ClearPurpose”istheglobalSAPemployeeengagementprogram.Activitiesfocusoneducation,bridgingthedigi-taldivide,andenvironmentalstewardship.Employeeen-gagementactivitiesaremeanttoimprovethecommunitieswhereweliveandwork.Allofourcorporatesocialrespon-sibilityeffortsshouldbeasourceofprideforourem-ployeesandprovideopportunitiesforindividualinvolvement.SAPemployeesparticipateinagreatvarietyofvolunteereventsthroughoutthecourseoftheyear.Formoreinformationandexamples,seetheSustainabilitysection.

Developing and Retaining TalentAsaglobalcorporation,SAPrecruitsitsemployeesfromallovertheworld.Inaneraofmobilityandglobalization,weattractanincreasinglyinternationalworkforceaccordingtothevaryingdemandsoflocalandregionallabormarketsandthequalificationsofavailableapplicants.Thisstrategicallyimportantstepallowsustotargetactivitiesaccordingtothestrengthsandexpertiseofourpeopleinvariouslocations,whilealsokeepingusclosetoourcustomersandlocalecosystemsforco-innovation.

Recruitinghighlyqualifiedpersonnelfromaroundtheworldallowsustocultivateabroadbaseofculturallydiversetalentfromwhichwecandevelopourfutureleadershipteams.Weactivelyencourageallourtalentedpeople,includingcarefulattentiontothoseintheearlystagesoftheircareers,offeringthemperformance-drivendevelop-menttopreparethemfortheirfuturepositions.In2009,weintroducedtheValueUniversityprogram,anapproachtoleveraginglearningtoattract,retain,anddevelopoursalestalentandtodelivervaluetoourcustomersandshare-holders.ValueUniversitydeliversfoundationalknowledgeandessentialtoolsthroughrole-basededucationalses-sionsforsalesandsalessupportprofessionals–todrivesuccessforSAPcustomersandouremployee’scareer.In2009,over6,000employeestookover150,000ValueUniversitytrainingsessions.

SAPinvestsinlearninganddevelopmentforitsemploy-ees.OurenterpriseportalcontainsaCareerSuccessCen-terforemployeesandaManager’sSuccessCenterforpeoplemanagers.Bothareeffectivetoolsforcareerplanningandprovideguidance,tools,andsupportinformationtohelpourpeoplesucceedintheirroles.In2009,SAPpro-videdanaverageofaroundninedaysoftrainingperem-ployee.TheSkillsOn-Demandlibraryprovidesemployeeswithaccesstoapproximately13,000e-learningcourses,books,simulations,andotherlearningmaterialsthatcanhelpemployeesexpandtheirskillsetsanddrivetheircareerdevelopment.HRprocessesfortalentmanagementsup-portourinnovationandperformancestrategy.Also,allem-ployeesactivelyworktoachieveourbusinessgoals.Cus-tomerresponsefromaroundtheworld,employeesurveys,awardsinmultiplemarketsbytheGreatPlacetoWorkInstitute,amongothers,andrecognitionfrommagazinessuchasFortuneandGermanpublicationssuchasmanagermagazinandCapitalvalidatethisstrategy.


Employees Share in SAP’s SuccessOnlyhighlymotivatedemployeesdeliverthetop-qualityworkthatourcustomersdemand.Toretainthem,wemustoffercompetitiveemploymentconditions.Wethereforeprovidebenefitstoouremployeesthatreflectourbusinesssuccess.Inadditiontocompetitivesalaries,weofferouremployeesmanyadditionalbenefits.Weawardedstockap-preciationrights(STARs)toabout30,000employeesin2009inrecognitionoftheirperformancewiththecash-outtiedtotheoutperformanceoftheSAPsharepriceovertheTechPGIindex.TheTechPGIiscomposedofpeercom-paniesofSAPinthetechnologysectorworldwide.Inaddition,morethan3,000executivesandselectedtopper-formerswereawardedSOPsundertheSAPSOPPerfor-mancePlan2009.TheSTARsawardedunderthisprogramarealsotiedtotheSAPsharepriceoutperformingtheTechPGIindex.Byofferingstockpurchaseprogramsin35countriessothatemployeescanbuysubsidizedshares,wealsoencouragethemtoadoptanentrepreneurialap-proachtotheirwork.

Global RecognitionSAPisregularlyrecognizedasapreferredemployerinmarketsaroundtheworld.Theseareexamplesofrecentawardsandrecognitionwegainedin2009:•SAPAGhasbeennamedoneofthebestcompaniesto

workforinGermany,rankingsecondinthecategoryforlargeenterpriseswithmorethan5,000employeesinthe2009listcompiledbytheGreatPlacetoWorkInstituteinGermany.TheinstitutealsopresentedspecialawardstoSAPfordiversityanddevelopmentofolderemployees.

•SAPIndiawasnamed“TopSoftwareCompany”atthe2009DataquestAnnualAwards,thefirstenterprisesoftwarecompanytowinthisIndianaward.

•Forthethirdyearinarow,SAPJapanhasbeenchosenasoneofthetop25JapanesefirmsintheGreatPlacetoWorkinJapansurvey.

•SAPwasrankedamongthebestworkplacesinFinlandbytheGreatPlacetoWorkInstituteinFinland(eighthoutof20short-listedcompaniesinthecategoryforcompa-nieswith50to500employees).

•SAPMéxicoachieved10thplaceinMexicointheprestigiousCNNLasSuperEmpresas(BestEnterprises)ranking.

•SAPHungarywasnamedasa“BestWorkplaceforWomen”bytheAssociationforWomen’sCareerDevel-opmentinHungary,inthecategoryforHungariancom-panieswithmorethan250employees.

HeadcountAtthebeginningof2009,SAPannouncedthatitwouldadaptitssizetotoday’smarketconditionsandreduceitsworkforcefrom51,544,thetotalonDecember31,2008,to48,500bytheendof2009,takingfulladvantageofattritionasafactorinreachingthisgoal.Thisreduc-tiontookplaceinallfunctionalareasandinallregions.

Attheendof2009,ourtotalworldwidefull-timeequivalentheadcountwas47,584(2008:51,544).Aboutthreethousandpositionswereeliminatedunderthecost-contain-mentprogramannouncedatthebeginningoftheyear.Approximately1,000employeeswhowerenotcoveredbythisprogramlefttheCompany.Ofour47,584employees,14,925werebasedinGermany(2008:15,582).In2009,theaverageageofouremployeeswasapproximately38(2008:37).Theaveragelengthofservicewasabout5.2years(2008:5.1years).About29%ofouremployeeswerewomen(2008:29%).Headcountinthefieldofsoftwareandsoftware-relatedservicesdecreased1%to6,422(2008:6,466).OurR&Dheadcountdecreased5%to14,813(2008:15,547).Professionalservicesandotherservicescounted12,349employeesattheendof2009–adecreaseof12%(2008:14,051).Reflectingoverallbusinessactivity,salesandmarketingheadcountdeclined11%to9,513(2008:10,701).Generalandadministrationheadcountdecreased6%to3,051(2008:3,244).Ourinfrastructureemployees,whoprovideITandfacilitymanagementservices,numbered1,436,adecreaseof6%(2008:1,535).

Employees at year-End Full-time equivalents |changesincepreviousyear

35,873

+11%

39,355

+10%

44,023

+12%

51,544

+17%

47,584

–8%

52,000

39,000

26,000

13,000

0

2005 2006 2007 2008 2009



ThelargestnumberofSAPemployees(53%)workintheEMEAregion(including31%inGermany),while25%areemployedintheAmericasregionand22%intheAPJregion.Theyear-over-yearheadcountdecreaseswere1,488or11%intheAmericasregion;1,466or5%intheEMEAregion;and1,006or9%inourAPJregion.OrganizationTherewerevariousimportantchangesinourorganizationin2009andearlyin2010:•HenningKagermann,co-CEO,leftSAPinMay2009af-

ter27yearswiththeCompanyand18yearsontheEx-ecutiveBoard.OnJune1,2009,LéoApothekerbecamethesoleCEOofSAP.

•ClausHeinrich,amemberofourExecutiveBoard,leftSAPinMay2009athisownrequestafter21yearswiththeCompanyand13yearsontheExecutiveBoard.

•InFebruary2010,weannouncedthattheSupervisoryBoardhadreachedamutualagreementwithCEOLéoApothekernottoextendhiscontractasamemberoftheExecutiveBoard.LéoApothekerresignedasCEOandfromtheExecutiveBoardwithimmediateeffect.

•InFebruary2010,BillMcDermott(headofourglobalfieldorganization)andJimHagemannSnabe(headofbusinesssolutionsandtechnology)wereappointedasco-CEOs.

•InFebruary2010,VishalSikka,ourchieftechnologyofficer,wasappointedtotheExecutiveBoard.

•InFebruary2010,SAPannouncedthatGerhardOswald,ExecutiveBoardmemberresponsibleforourglobalserviceandsupport,hadalsobeenappointedchiefoper-atingofficer,replacingErwinGunst,whosteppeddownforhealthreasons.

•InFebruary2010,theSupervisoryBoardacceptedtheresignationofJohnSchwarz,thememberoftheExecu-tiveBoardresponsibleforSAPBusinessObjects,ourecosystem,andcorporatedevelopment,withimmediateeffect.

Farbabstufung noch nicht verbindlich!

Employees by Functional Area Full-time equivalents |percent |changesincepreviousyear

General and administration 3,051

6%|–6%

Professional services and other services 12,349

26%|–12%

Research and development 14,813

31%|–5%

Software and software- related services 6,422

14%|–1%

Sales and marketing 9,513

20%|–11%

Infrastructure 1,436

3%|–6%


FINANCIAl MEASuRES CITED IN THIS REVIEW

Reporting StandardsSince2007,wehavebeenrequiredbyGermanandEuro-peanlawtoprepareConsolidatedFinancialStatementsinaccordancewithIFRS.InadditiontoourreportingunderIFRSwecontinuedtoprepareConsolidatedFinancialStatementsunderU.S.GAAP.

BeginningwithourauditedConsolidatedFinancialState-mentsasofandfortheyearendedDecember31,2009,wefullymigratedtoIFRSanddiscontinuedpreparingU.S.GAAPfinancialinformationasoftheendof2009.There-fore,ourpressreleaseannouncingourpreliminaryfourthquarterandfullyear2009financialresultswasthelastdocumentinwhichweprovidedU.S.GAAPfinancialinfor-mation.Our2009AnnualReportaswellasourAnnualReportonForm20-Fforfiscalyear2009andforthesub-sequentyearswillonlypresentIFRSfinancialstatements.Assuch,ourbusinessoutlookfor2010announcedonJanuary27,2010,isforthefirsttimeonthebasisofnon-IFRSnumbersderivedfromIFRSnumbers.Concurrentlywiththischangeinourexternalfinancialcommunication,wemodifiedourinternalmanagementreporting,planningandforecasting,andvariablecompensationplans,whicharenowalignedwiththeIFRSandnon-IFRSnumbersthatweprovideinourexternalcommunications.

Managing for ValueIn2009andin2008,weexpressedourinternalmanage-mentreportingandoperationalobjectivesandtargetsintermsoffinancialmeasuresderivedfromU.S.GAAPnum-bers,adjustedbyeliminatingcurrencyandcertainextra-ordinaryeffectsincludingthoserelatedtoacquisitions.Werefertothesemeasuresasconstantcurrencynon-GAAPmeasures.Thisnon-GAAPinformationdiffersfromournumbersreportedaccordingtoU.S.GAAP.Startingin2010,webaseourinternalmanagementreportingandoperationalobjectivesandtargetsonconstantcurrencynon-IFRSmeasuresasmorefullydescribedbelow.

Weusevariousvalue-basedperformancemeasurestohelppromoteourprimarygoalofsustainedgrowthincorporatevalueandourancillarygoalofprofitablerevenuegrowth.

In2009andin2008,forpurposesofourinternalmanage-mentreporting,weeliminatedadeferredsupportrevenuewrite-downresultingfromanacquisition,aswellasrecur-ringacquisition-relatedchargesfromcertainkeyU.S.GAAP-derivedmeasureswemainlyusedtomanageouroperationalbusiness,whicharenon-GAAPsoftwareandsoftware-relatedservicerevenue,non-GAAPoperatingincomeandnon-GAAPoperatingmargin.In2008,wefocusedonnon-GAAPgrowthofsoftwareandsoftware-relatedservicerevenueandnon-GAAPoperatingmargin,whereasin2009wehadastrongerfocusonnon-GAAPoperatingincomeandnon-GAAPoperatingmarginandaddedthecashconversionrateasourgrouptargetedmea-sure.Thecashconversionrateistheratioofthenetcashprovidedbyoperatingactivitiesfromcontinuingoper-ationstotheincomefromcontinuingoperations,basedonU.S.GAAP.Startingin2010,wewillmanageouropera-tionalbusinessbasedonconstantcurrencynon-IFRSmeasuresratherthantheconstantcurrencynon-GAAPmeasuresweusedin2009andin2008.

Tocompareratesofgrowthinunderlyingbusinessvol-umes,weusemeasuresbothbeforeandafterweexcludecurrencyeffectsfromthenumbersbeingcomparedbytranslatingthemattheexchangeratesfromtheimmediate-lyprecedingyear,i.e.wetranslatetherelevant2009numbersat2008exchangeratesbeforecomparingthemtotherelevant2008numbers.Werefertomeasuresfromwhichcurrencyeffectshavebeeneliminatedascon-stantcurrencymeasures.Thefollowingaresomeofthekeymeasuresweusebeforeandafterweexcludecurren-cyeffects:•Oursoftwareandsoftware-relatedservicerevenuein-

cludessoftwareandsupportrevenueplussubscriptionandothersoftware-relatedservicerevenue.Theprincipalsourceofsoftwarerevenueisthefeescustomerspayforsoftwarelicenses.Softwarerevenueisthekeyreve-nuedriverbecauseittendstoaffectourotherrevenuestreams.Generally,customersthatbuysoftwarelicens-esalsoenterintomaintenancecontracts,andafterthesoftwaresalethesegeneraterecurringsoftware-relatedservicerevenueintheformofsupportrevenue.Mainte-nancecontractscoversupportservices,regularsoft-waremaintenance,andsoftwareupdatesandenhance-ments.Wealsogeneratesoftware-relatedservicerevenuewhenweprovidesoftwareonsubscriptionorobligatoryhostingterms.Softwarerevenuealsotendstostimulateservicerevenuefromconsultingandtrainingsales.


•In2009and2008,weusednon-GAAPoperatingmarginandconstantcurrencynon-GAAPoperatingmargintomeasureouroveralloperationalprocessefficiencyandtheperformanceofourcorebusiness(softwarelicenses,support,andothersoftware-relatedservicerevenue).Non-GAAPoperatingmarginistheratioofournon-GAAPoperatingincome,whichincludessupportrevenuefromanacquiredcompanythatwouldhavebeenreportedhaditbeenanindependentcompanyandexcludesacquisi-tionrelatedcharges,tototalnon-GAAPrevenue,expressedasapercentage.SeebelowforadiscussionoftheIFRSandnon-IFRSmeasuresweusebeginningin2010.

Thecashconversionrateisdefinedastheratioofournetcashflowsfromoperatingactivitiesfromcontinuingoperationstoincomefromcontinuingoperations(U.S.GAAP).Thecashconversionratemeasurestheproportionofourincomefromcontinuingoperationsthatiscon-vertedtocashflow.

Wealsouseperformancemeasures–mainlyfinancialincome,netandtheeffectiveGrouptaxrate–tomanagenon-operatingitems.•Financialincome,netprovidesinsightespeciallyintothe

returnonliquidassetsandcapitalinvestmentsandthecostofborrowedfunds.Tomanageourfinancialincome,net,wefocusoncashflow,thecompositionofourliquidassetandcapitalinvestmentportfolio,andtheaveragerateofinterestatwhichassetsareinvested.Wealsomonitoraverageoutstandingborrowingsandtheassoci-atedfinancecosts.

•Anotheraspectismanagementofworkingcapitalbycontrollingthedays’salesoutstandingforreceivables,DSO(definedasaveragenumberofdaysfromtheraisedinvoicetocashreceiptfromthecustomer)andthedays’payablesoutstandingforliabilities,DPO(definedasaveragenumberofdaysfromthereceivedinvoicetocashpaymenttothevendor).

•In2009andin2008wedefinedoureffectiveGrouptaxrateastheratioofincometaxestoincomefromcon-tinuingoperationsbeforeincometaxes(inaccordancewithU.S.GAAP),expressedasapercentage.Startingin2010,wewillcalculatetheeffectiveGrouptaxrateonanIFRSbasis.

Earningspershare(EPS)isameasureoftheoverallper-formanceoftheGroup,becauseitcapturesalloperatingandnon-operatingelementsofprofit.ItrepresentstheportionofprofitaftertaxallocabletoeachSAPshareout-standing(usingtheweightedaveragenumberofsharesoutstandingoverthereportingperiod).EPSisinfluencednotonlybyouroperatingandnon-operatingbusinessbutalsobytheweightedaveragenumberofsharesoutstand-ing.Webelievethatstockrepurchasesanddividenddis-tributionsareagoodmeanstoreturnvaluetoshareholdersinaccordancewiththeauthorizationsgrantedbythem.

Ourholisticviewoftheperformancemeasuresdescribedabovetogetherwithourassociatedanalysesmakeuptheinformationbaseweuseforvalue-basedmanagement.Weuseplanningandcontrolprocessestomanagethecompi-lationofthesekeymeasuresandtheiravailabilitytothede-cisionmakers.

TheCompany’slong-termstrategicplansarethepointofreferenceforourotherplanningandcontrollingprocesses,includingcreatingamulti-yearplan.Weidentifyfuturegrowthandprofitabilitydriversatahighlyaggregatedlevel.Thisprocessisintendedtoidentifythebestareasinwhichtotargetsustainedinvestment.Thenextstepistoevaluatemulti-yearplansforareasofdevelopmentandforcustomer-facingandsupportfunctions,andtobreakthemdownbysalesregion.Weallocateresourcestoachievetargetswederivefromdetailedannualplans.Wealsohaveprocessesinplacetoforecastonaquarterlybasis,internalrevenueandincome,toquantifywhetherwehaverealizedourgoalsandtoidentifyanydeviationsfromplan.WecloselymonitortheconcernedunitsintheGrouptoanalyzethesedevelopmentsanddefineanyappropriateactions.


Theentirenetworkofplanning,control,andreportingpro-cessesisimplementedinintegratedplanningandinfor-mationsystemsacrossallorganizationalunitssothatwecanconducttheevaluationsandanalysesneededtomakeinformeddecisions.

Measures used in this Report Weprovidedour2009outlookonthebasisofcertainnon-GAAPmeasuresasdescribedabove.Therefore,thisreportcontainsacomparisonofouractualperformancein2009againstthatoutlook.Ouroutlookfor2010isex-pressedinnon-IFRStermswhichareexplainedinthefol-lowingsection.

Thisintroductorysectionprovides:•Areconciliationofthenon-GAAPmeasuresweusedin

2009andin2008totherelatednon-IFRSmeasures,andareconciliationofthosenon-IFRSmeasurestotherelatedIFRSmeasures.

•Anexplanationofthenon-GAAPandnon-IFRSmeasureswediscloseinthisreport.Webelieveitiscriticaltoprovidethesereconciliationsandtheexplanatoryinfor-mationforboththerelevantnon-GAAPandnon-IFRSmeasurestoensuretransparencyandclarityinourfinan-cialreportingparticularlyaswestartedprovidingouroutlookbasedonnon-IFRSmeasuresinsteadofthenon-GAAPmeasuresbeginningin2010.

Reconciliations from IFRS to Non-IFRS to Non-GAAP Numbers for 2009 and 2008ThefollowingtablesreconcilefromourIFRSnumberstotherespectiveandmostcomparablenon-IFRSnumbers,andthenreconcilefromthosenon-IFRSnumberstotherespectiveandmostcomparablenon-GAAPnumbers,ineachcasefor2009and2008.Duetorounding,numberspresentedinthesetablesmaynotadduppreciselytothetotalsweprovide.


Reconciliation from IFRS to Non-IFRS to Non-GAAP

€millions,unlessotherwisestated 2009

IFRS Adjustment Non-IFRS Currency Effect

Non-IFRS Constant Currency

Non-IFRS Constant

Currency vs. Non-GAAP

Constant Currency

Non-GAAPConstant Currency

Revenue

Softwarerevenue 2,607 0 2,607 17 2,624 0 2,624

Supportrevenue 5,285 11 5,296 –19 5,277 0 5,277

Subscriptionandothersoftware-related

servicerevenue

306 0 306 –7 299 0 299

Software and software-related service revenue 8,198 11 8,209 – 8 8,201 0 8,201

Consultingrevenue 2,074 0 2,074 –11 2,063 0 2,063

Trainingrevenue 273 0 273 1 274 0 274

Otherservicerevenue 85 0 85 0 85 0 85

Professional services and other service revenue 2,432 0 2,432 – 11 2,421 0 2,421

Other revenue 42 0 42 0 42 0 42

Total revenue 10,672 11 10,683 – 19 10,664 0 10,664

Total operating expenses

Costofsoftwareandsoftware-relatedservices –1,714 240 –1,474

Costofprofessionalservicesandotherservices –1,851 4 –1,847

Researchanddevelopment –1,591 4 –1,587

Salesandmarketing –2,199 73 –2,126

Generalandadministration –564 4 –560

Restructuring –198 4 –194

Otherincome/expense,net 33 0 33

Total operating expenses – 8,084 327 – 7,756 36 – 7,720 – 11 – 7,731

Operating profit and margin

Operating profit 2,588 339 2,927 17 2,944 –11 2,933

Operating margin in % 24.3 27.4 27.6 27.5


Reconciliation from IFRS to Non-IFRS to Non-GAAP

€millions,unlessotherwisestated 2008

IFRS Adjustment Non-IFRS Non-IFRS vs. Non-GAAP

Non-GAAP

Revenue

Softwarerevenue 3,606 0 3,606 0 3,606

Supportrevenue 4,602 157 4,759 0 4,759

Subscriptionandothersoftware-relatedservicerevenue 258 0 258 0 258

Software and software-related service revenue 8,466 157 8,623 0 8,623

Consultingrevenue 2,498 0 2,498 0 2,498

Trainingrevenue 434 0 434 0 434

Otherservicerevenue 107 0 107 0 107

Professional services and other service revenue 3,039 0 3,039 0 3,039

Other revenue 70 0 70 – 1 69

Total revenue 11,575 157 11,732 – 1 11,731

Total operating expenses

Costofsoftwareandsoftware-relatedservices –1,743 290 –1,453 0 –1,453

Costofprofessionalservicesandotherservices –2,285 –6 –2,291 –5 –2,296

Researchanddevelopment –1,627 12 –1,615 1 –1,614

Salesandmarketing –2,546 90 –2,456 2 –2,454

Generalandadministration –624 1 –623 1 –622

Restructuring –60 57 –3 3 0

Otherincome/expense,net 11 0 11 0 11

Total operating expenses – 8,874 443 – 8,431 3 – 8,428

Operating profit and margin

Operating profit 2,701 600 3,301 2 3,303

Operating margin in % 23.3 28.2 28.2

Thisreportdisclosescertainfinancialmeasures,suchasnon-GAAPrevenue,non-GAAPexpenses,non-GAAPoperatingincome,non-GAAPoperatingmargin,non-IFRSrevenue,non-IFRSexpenses,non-IFRSoperatingprofit,non-IFRSoperatingmargin,constantcurrencyrevenue,andconstantcurrencyoperatingincomemeasuresthatarenotpreparedinaccordancewithU.S.GAAPorIFRSandarethereforeconsiderednon-GAAPandnon-IFRSfinancialmeasures.Ournon-GAAPandnon-IFRSfinancialmea-

suresmaynotcorrespondtonon-GAAPandnon-IFRSfinancialmeasuresthatothercompaniesreport.Thenon-GAAPandnon-IFRSfinancialmeasuresthatwereportshouldbeconsideredinadditionto,andnotassubstitutesfororsuperiorto,revenue,operatingincome,operatingmargin,orothermeasuresoffinancialperformancepre-paredinaccordancewithU.S.GAAPorIFRS.


Explanations of Non-GAAP MeasuresWebelievethatthesupplementalhistoricalandprospec-tivenon-GAAPfinancialinformationpresentedherepro-videsusefulsupplementalinformationtoinvestorsbecauseitisthesameinformationusedbyourmanagementinrun-ningourbusinessandmakingfinancial,strategicandoper-ationaldecisions–inadditiontofinancialdatapreparedinaccordancewithU.S.GAAPorIFRS–toattainamoretransparentunderstandingofourpastperformanceandourfutureresults.Beginningin2008,weusedthesenon-GAAPmeasuresasdefinedbelowconsistentlyinourplanningandforecasting,reporting,compensationandexternalcom-municationuntiltheendof2009.Specifically:•Ourmanagementprimarilyusedthesenon-GAAPmea-

suresratherthanU.S.GAAPmeasuresasthebasisformakingfinancial,strategicandoperatingdecisions.

•Thevariableremunerationcomponentsofourboardmembersandemployeesthatarecompensatedwithre-gardtoourGroup-targetedmeasureswerebasedin2009onSAP’sachievementofitstargetsfornon-GAAPoperatingincome,non-GAAPoperatingmarginatcon-stantcurrenciesandcashflowconversionratio.

•Theannualbudgetingprocessinvolvingallmanagementunits,whichincludescostssuchasshare-basedcom-pensationandrestructuring,wasbasedonnon-GAAPrevenueandnon-GAAPoperatingincomenumbersrath-erthanU.S.GAAPnumbers.

•Allmonthlyforecastandperformancereviewswithallse-niormanagersgloballywerebasedonthesenon-GAAPmeasures,whicharederivedfromU.S.GAAPmeasuresratherthanU.S.GAAPnumbers.

•Bothcompany-internaltargetsettingandguidancepro-videdtothecapitalmarketswerebasedonnon-GAAPrevenueandnon-GAAPincomemeasuresratherthanU.S.GAAPnumbers.

Webelievethatournon-GAAPmeasuresareusefultoin-vestorsforthefollowingreasons:•Thenon-GAAPmeasuresprovideinvestorswithinsight

intomanagement’sdecision-makingsincemanagementusedthesenon-GAAPmeasurestorunourbusinessandmakefinancial,strategicandoperatingdecisions.

•Thenon-GAAPmeasuresprovideinvestorswithaddition-alinformationthatenablesacomparisonofyear-over-yearoperatingperformancebyeliminatingcertaindirecteffectsofacquisitions.

Ournon-GAAPfinancialmeasuresreflectadjustmentsbasedontheitemsbelow:

Non-GAAPRevenueRevenuesinthisreportidentifiedasnon-GAAPrevenuehavebeenadjustedfromtherespectiveU.S.GAAPandIFRSnumbersbyincludingthefullamountofsupportrevenuethatwouldhavebeenrecordedbytheacquiredentityhaditremainedastand-aloneentitybutwhichwearenotpermittedtorecordasrevenueunderU.S.GAAPandIFRSduetofairvalueaccountingforthesupportcon-tractsineffectatthetimeoftherespectiveacquisition.

UnderU.S.GAAPandIFRS,werecordatfairvaluethesupportcontractsineffectatthetimeanentitywasacquired.Consequently,ourU.S.GAAPandIFRSsupportrevenue,ourU.S.GAAPandIFRSsoftwareandsoftware-relatedservicerevenue,andourU.S.GAAPandIFRStotalrevenueforperiodssubsequenttoacquisitionsdonotreflectthefullamountofsupportrevenuethatwouldhavebeenrecordedforthesesupportcontractsabsenttheacquisitionbySAP.Adjustingrevenuenumbersforthisrevenueimpact(ifsignificant)providesadditionalinsightintothecomparabilityacrossperiodsofourongoingperformance.

Non-GAAPOperatingExpenseOperatingexpensefiguresinthisreportthatareidentifiedasnon-GAAPoperatingexpensehavebeenadjustedbyexcludingthefollowingacquisition-relatedcharges:•Amortizationexpense/impairmentchargesofintangibles

acquiredinbusinesscombinationsandcertainstand-aloneacquisitionsofintellectualproperty

•Expensefrompurchasedin-processresearchanddevel-opment

•Restructuringexpensesandsettlementsofpre-existingrelationshipsincurredinconnectionwithabusinesscom-bination

•Acquisition-relatedthird-partycosts(sinceourearlyadoptionofSFAS141RandtherevisionofIFRS3)asofJanuary1,2009,whicharerequiredtobeexpensed.ThepreviousversionofSFAS141andIFRS3requiredcapitalization.


Non-GAAPOperatingIncomeandNon-GAAPOperatingMarginOperatingincomeandoperatingmargininthisreportiden-tifiedasnon-GAAPoperatingincomeandnon-GAAPoperatingmarginhavebeenadjustedfromtherespectiveoperatingincomeandoperatingmarginasrecordedunderU.S.GAAPandIFRSbyadjustingfortheabove-mentionednon-GAAPrevenueandnon-GAAPexpenses.

Weincludethesenon-GAAPrevenuesandexcludethesenon-GAAPexpensesforthepurposeofcalculatingnon-GAAPoperatingincomeandnon-GAAPoperatingmarginwhenevaluatingthecontinuingoperationalperformanceoftheCompanybecausetheseexpensesgenerallycannotbechangedorinfluencedbymanagementaftertherele-vantacquisitionotherthanbydisposingoftheacquiredas-sets.SincemanagementatlevelsbelowtheExecutiveBoardhasnoinfluenceontheseexpenses,wegenerallydonotconsidertheseexpensesforthepurposeofevaluat-ingtheperformanceofmanagementunits.AswebelievethatourCompany-wideperformancemeasuresneedtobealignedwiththemeasuresgenerallyappliedbymanage-mentatvaryinglevelsthroughouttheCompany,weincludetheserevenuesandexcludetheseexpenseswhenmakingdecisionstoallocateresources,bothonaCom-panylevelandatlowerlevelsoftheorganization.Inaddition,weusethesenon-GAAPmeasurestogainabetterunderstandingoftheCompany’scomparativeoperatingperformancefromperiodtoperiod.

Webelievethatournon-GAAPfinancialmeasuresde-scribedabovehavelimitations,whichincludebutarenotlimitedtothefollowing:•Theeliminatedamountsmaybematerialtous.•Withoutbeinganalyzedinconjunctionwiththecorre-

spondingU.S.GAAPorIFRSmeasures,thenon-GAAPmeasuresarenotindicativeofourpresentandfutureperformance,foremostforthefollowingreasons:–Whileournon-GAAPincomenumbersreflecttheelimi-

nationofcertainacquisition-relatedexpenses,noeliminationsaremadefortheadditionalrevenuesandotherrevenuesthatresultfromtheacquisitions.

–Theacquisition-relatedchargesthatweeliminateinde-rivingournon-GAAPincomenumbersarelikelytorecurshouldSAPenterintomaterialbusinesscombina-tionsinthefuture.

–Theacquisition-relatedamortizationexpensethatweeliminateinderivingournon-GAAPincomenumbersisarecurringexpensethatwillimpactourfinancialper-formanceinfutureyears.

–Therevenueadjustmentforthefairvalueaccountingoftheacquiredentities’supportcontractsandtheex-penseadjustmentforacquisition-relatedchargesdonotarisefromacommonconceptualbasis.Thisisbe-causetherevenueadjustmentaimstoimprovethecomparabilityoftheinitialpost-acquisitionperiodwithfuturepost-acquisitionperiodswhiletheexpenseadjustmentaimstoimprovethecomparabilitybetweenpost-acquisitionperiodsandpre-acquisitionperiods.Thisshouldparticularlybeconsideredwhenevaluatingournon-GAAPoperatingincomeandnon-GAAPoperatingmarginnumbersasthesecombineournon-GAAPrevenueandnon-GAAPexpensesdespitetheabsenceofacommonconceptualbasis.

Webelieve,however,thatthepresentationofthenon-GAAPmeasuresinconjunctionwiththecorrespondingIFRSorU.S.GAAPmeasures,aswellastherelevantreconcilia-tions,providesusefulinformationtomanagementandin-vestorsregardingpresentandfuturebusinesstrendsrelatingtoourfinancialconditionandresultsofoperations.Wethereforedonotevaluateourgrowthandperformancewithoutconsideringbothnon-GAAPornon-IFRSmeasuresandtherelevantU.S.GAAPorIFRSmeasures.Wecau-tionthereadersofthisreporttofollowasimilarapproachbyconsideringournon-GAAPornon-IFRSmeasuresonlyinadditionto,andnotasasubstitutefororsuperiorto,revenuesorothermeasuresofourfinancialperfor-mancepreparedinaccordancewithU.S.GAAPorIFRS.


ConstantCurrencyPeriod-Over-PeriodChangesWebelieveitisimportantforinvestorstohaveinformationthatprovidesinsightintooursales.RevenuemeasuresdeterminedunderU.S.GAAPorIFRSprovideinformationthatisusefulinthisregard.However,bothsalesvolumeandcurrencyeffectsimpactperiod-over-periodchangesinsalesrevenue.Wedonotsellstandardizedunitsofprod-uctsandservices,sowecannotproviderelevantinformationonsalesvolumebyprovidingdataonthechangesinproductandserviceunitssold.Toprovideadditionalinfor-mationthatmaybeusefultoinvestorsinbreakingdownandevaluatingchangesinsalesvolume,wepresentinfor-mationaboutourrevenueandvariousvaluesandcom-ponentsrelatingtooperatingincomethatareadjustedforforeigncurrencyeffects.Wecalculateconstantcurrencyyear-over-yearchangesinnon-GAAPrevenueandnon-GAAPoperatingincomebytranslatingforeigncurrenciesusingtheaverageexchangeratesfromthepreviousyearinsteadofthereportyear.Webelievethatdataonconstantcurrencyperiod-over-pe-riodchangeshaslimitations,particularlyasthecurrencyeffectsthatareeliminatedconstituteasignificantelementofourrevenueandexpensesandmayseverelyimpactourperformance.Wethereforelimitouruseofconstantcurrencyperiod-over-periodchangestotheanalysisofchangesinvolumeasoneelementofthefullchangeinafinancialmeasure.Wedonotevaluateourresultsandper-formancewithoutconsideringbothconstantcurrencyperiod-over-periodchangesinnon-GAAPrevenueandnon-GAAPoperatingincomeontheonehandandchangesinrevenue,expenses,income,orothermeasuresoffinancialperformancepreparedinaccordancewithU.S.GAAPorIFRSontheother.Wecautionthereadersofthisreporttofollowasimilarapproachbyconsideringdataonconstantcurrencyperiod-over-periodchangesonlyinadditionto,andnotasasubstitutefororsuperiorto,dataonchangesinrevenue,expenses,income,orothermeasuresoffinan-cialperformancepreparedinaccordancewithU.S.GAAPorIFRS.

Explanations of Non-IFRS MeasuresUpondiscontinuingourU.S.GAAPaccountingandthefulltransitiontoIFRS,wehavereplacedournon-GAAPmeasureswithnon-IFRSmeasuresbeginningin2010.

Wehaveadjustedbothournon-GAAPmeasuresandournon-IFRSmeasuresfromtherespectiveU.S.GAAPandIFRSnumbersby:•Includingthefullamountofsupportrevenuethattheac-

quiredentitywouldhaverecognizedhaditremainedastand-aloneentitybutthatwearenotpermittedtorecog-nizeasrevenueunderU.S.GAAPandIFRSasaresultoffairvalueaccountingforsupportcontractsineffectatthetimeoftherespectiveacquisition.

•Excludingacquisition-relatedcharges.

However,theadjustmentamountsforacquisition-relatedchargesdifferbetweenournon-GAAPmeasuresandournon-IFRSmeasures,duetodifferencesbetweenU.S.GAAPandIFRS.Specifically:•Foracquisitionstakingplaceuptotheendof2008,

U.S.GAAPrequiredthatcertainacquisition-relatedre-structuringexpensesbeaccountedforasliabilitiesas-sumedinabusinesscombination;however,theseexpens-esarerequiredtobechargedtoexpenseunderIFRS.Consequently,theseacquisition-relatedrestructuringex-pensesareeliminatedonlyinournon-IFRSnumbers.

•Foracquisitionstakingplaceuptotheendof2008,pur-chasedin-processresearchanddevelopmentwaschargedtoexpenseimmediatelyunderU.S.GAAP,whilebeingcapitalizedandamortizedovertheexpectedlifeun-derIFRS.Consequently,theimmediatechargetoex-penseiseliminatedinournon-GAAPmeasureswhileonlytheamortizationiseliminatedinournon-IFRSmea-sures.


StartingonJanuary1,2009,wealignedouraccountingforacquisitionsthroughtheadoptionofnewaccountingstan-dardsunderbothU.S.GAAPandIFRS.Therefore,wedonotexpectmaterialdifferencesforupcomingacquisitionswithrespecttoacquisition-relatedrestructuringexpensesandpurchasedin-processresearchanddevelopment.

Additionally,ournon-IFRSmeasureshavebeenadjustedfromtherespectiveIFRSnumbersfortheresultsofthediscontinuedoperationsthatqualifyassuchinallrespectsexceptthattheydonotrepresentamajorlineofbusiness.Wewillrefertotheseactivitiesas“discontinuedactivities.”UnderU.S.GAAP,wepresenttheresultsofoperationsoftheTomorrowNowentitiesasdiscontinuedoperations.UnderIFRS,resultsofdiscontinuedoperationsmayonlybepresentedasdiscontinuedoperationsifaseparatema-jorlineofbusinessorgeographicalareaofoperationsisdiscontinued.OurTomorrowNowoperationswerenotaseparatemajorlineofbusinessandthusdidnotqualifyforseparatepresentationunderIFRS.WebelievethatthisadditionaladjustmenttoourIFRSnumbersfortheresultsofourdiscontinuedTomorrowNowactivitiesisusefultoin-vestorsforthefollowingreasons:•DespitethemigrationfromU.S.GAAPtoIFRS,wewill

continuetointernallyviewtheceasedTomorrowNowactivitiesasdiscontinuedactivitiesandthuswillcontinuetoexcludepotentialfutureTomorrowNowresults,whichareexpectedtomainlycompriseofexpensesinconnec-tionwiththeOraclelawsuit,fromourinternalmanage-mentreporting,planning,forecasting,andcompensationplans.Therefore,adjustingournon-IFRSmeasuresfortheresultsofthediscontinuedTomorrowNowactivitiesprovidesinsightintothefinancialmeasuresthatSAPwilluseinternallybeginningin2010withourmigrationtoIFRS.

•Byadjustingthenon-IFRSnumbersfortheresultsfromourdiscontinuedTomorrowNowoperations,thenon-IFRSnumbersaremorecomparabletothenon-GAAPmea-suresthatSAPusedthroughtheendof2009,whichmakesSAP’sperformancemeasuresbeforeandafterthefullIFRSmigrationeasiertocompare.

Free Cash Flow (IFRS) Weuseourfreecashflowmeasuretoestimatethecashflowremainingafterallexpendituresrequiredtomaintainorexpandtheorganicbusinesshavebeenpaidoff.Thisassistsmanagementwithsupplementalinformationtoas-sessourliquidityneeds.Wecalculatefreecashflowasnetcashflowsfromoperatingactivitiesminusadditionstonon-currentassets,excludingadditionsfromacquisitions.Freecashflowshouldbeconsideredinadditionto,andnotasasubstitutefororsuperiorto,cashfloworothermeasuresofliquidityandfinancialperformancepreparedinaccordancewithU.S.GAAPorIFRS.

Free Cash Flow

€millions 2009 2008 Change

Netcashflowsfrom

operatingactivities

3,015 2,158 40%

Additionstonon-currentassets

excludingadditionsfromacquisitions

–225 –339 –34%

Free cash flow 2,790 1,819 53%


ECONOMIC CONDITIONS

Global Economic TrendsFortheglobaleconomy,2009wasayearofcrisis:TheIn-ternationalMonetaryFund(IMF)callsitthedeepestworld-widerecessioninrecenthistory,whileCreditSuisse,amajorSwissbank,referstoitasthenewGreatDepression.TheUnitedNationsalsoreportsthatthedownturnwassteepandsimultaneousthroughouttheworld.

Beginninginlate2008,manygovernmentsintroducedstimulusmeasuresofunprecedenteddimensions,whichhelpedbringsomerespitein2009–frommid-yearintheemergingeconomies,andduringthefinalquarterintheadvancedeconomies.Sincethen,internationaltradeandglobalindustrialoutputhavebeguntorecuperate.

Whilerecoverybeganearlierthanoriginallyexpected,globaleconomicoutputstilldeclinedin2009,althoughonlybyasmallsingle-digitpercentage.Therewasconsiderablevariationamongtheregions.

WithintheEurope,MiddleEast,andAfrica(EMEA)region,theupturntowardtheendof2009wasuneven.TheEuro-peanCentralBank(ECB)reportedthatwhiletherewasonlyslightimprovementintheeconomiesofCentralandEasternEurope,exportsfromtheeuroareastartedtopickupaftermid-year–especiallyfromGermany.Atthebeginningof2009,itsexportswerestillindecline.Govern-mentstimuluspackagesandthegrowthoftradewereamongthefactorsthatencouragedeconomicrecoveryintheeuroarea.

AnupturnalsostartedintheAmericasregioninthesecondhalfoftheyear.ThemajorimpetusintheUnitedStateswasgovernmentalsupportfortheeconomy,whichprompt-edunexpectedlyhighlevelsofconsumerspending.Aboveall,thegovernmentmeasuresstimulatedthemarketsforautomobilesandhomes.Thethirdquartersawareturntoeconomicgrowth,andexportsgrewinresponsetoin-creaseddemandfromtheemergingeconomies.Nonethe-less,CreditSuissecalculatesthatattheendof2009,overalleconomicactivityintheUnitedStateswasstillwellbelowthelevelsachievedintheyearsbeforethecrisis.TheECBnotesthatrapidlyrisingimportsanddecreasinginvestmentincommercialpropertyweigheddowntheU.S.economy.

TheoveralleconomyofLatinAmericacontractedin2009byapercentageinthelowersingledigits.However,theECBbelievesthereissufficientevidencetosupporttheviewthatmostcountrieswereinrecoverybytheendoftheyear.InNovember,Brazilevenpostedmoderatesingle-digitgrowthinindustrialproductionascomparedwith2008.

ThegapbetweenemergingandadvancedeconomieswasespeciallywideintheAsia-Pacificregionin2009.Theemergingeconomiesimplementedmassivestimuluspack-ages,whichbroughtthemcontinuedgrowththroughtheyear,albeitatareducedpace.Thiswasthefirstsignofanupturnthatwastospreadacrosstheworld.TheOrganisa-tionforEconomicCo-operationandDevelopment(OECD)notesthatintheemergingAsianeconomiestherewasalreadydiscussionbylate2009abouthowandwhengov-ernmentstimulusmeasuresshouldbewounddown.

Ontheotherhand,CreditSuissereportsthattheJapaneseeconomyfaredworsein2009thanhadinitiallybeenex-pected.Findingthemselvesinintenseinternationalcompe-titiontoreducecosts,companieswerereluctanttoinvestwhiletheystillhadunutilizedcapacity.ButtheECBbe-lievesthatinrecentmonthsthemoodhasimprovedeveninJapan,andthattheeconomyhasstartedtorecover.

The IT MarketTheITmarketwasimpactedbytheglobaleconomiccrisisin2009.ITspendingdeclinednoticeably,as,wherevertheycould,businessesandretailcustomerspostponedpur-chasesandselectedlessexpensiveproductsorconfigura-tions.U.S.ITmarketanalystInternationalDataCorpora-tion(IDC)reportsthatthemarketreachedbottominthethirdquarterof2009.

Thehardwaresectorwasaffectedmoreseriouslythanthesoftwarebusiness.IntheITservicessegment,theeffectwasfirstfeltafewmonthslater,andrecoveryalsooccurredlaterthaninthehardwareandsoftwaresectors.AccordingtoIDC,salesinthesoftwaremarketgrewonlyverylittlein2009.TheywereflatinITservices,anddeclinedsharplyinthehardwaresegment.UBS,amajorSwissbank,re-portsthatsalestoconsumersheldupbetterthansalestocompanies.


However,analystssaythefinalquarterof2009markedthebeginningoftheeconomicrecovery.Forinstance,invest-mentbankGoldmanSachsreportsthatITspendinggrewmorequicklythanexpected.Itbelievestheeconomicyearwasrevertingtothenormalcycle,inwhichcompaniesspendwhatisleftoftheirbudgetattheendoftheyear.In2009,thatwasarelativelylargeamountbecauseofcost-savingeffortsinthefirstninemonths.

IntheEMEAregion,thecrisisaffectedtheEuropeancoun-triesmostseriously.Untilthethirdquarter,theITsectorinEuropecontractedcontinuouslyasthehostileeconomicclimatediscouragedcapitalspendingbycompanies.IDCreportsthatinWesternEuropethemarketforsoftwareexpandedonlyminimallyoverthefullyear,whiletheITser-vicesmarketcontractedalittle.Atthesametime,spend-ingonhardwaredecreasedintherangeofdouble-digitpercentagepoints.Germanywasparticularlyaffected:Al-thoughin2008marketanalystshadstillbeenpredictingdouble-digitpercentagegrowththerein2009,actualgrowthwasinthelowersingledigitsfromthebeginningoftheyear.Thedownwardtrendcontinued,andfromthethirdquar-teritespeciallyaffectedtheITservicessegment.

IDCreportsthatthecontractionwasdramaticinCentralandEasternEurope.There,thesoftwareandITservicessegmentssuffereddeclineswellintodouble-digitpercent-ages,andthehardwaremarketwasthemostseriouslyaffected.Bycontrast,itsanalystsdescribedtheMiddleEastandAfricaasoasesofstabilityearlyin2009.How-ever,whenoilpricesdecreasedandinternationalinvestorswithdrewtheirfundsinthesecondquarter,thecrisiscametotheseregionsaswell.Itwasrelativelyharmless,though:Softwarespendingdeclinedslightly,servicesbudgetsgrewslightly,andtherewasonlyasingle-digitpercentagedecreaseinhardwaresales.

TheITmarketintheAmericasregionwasalsounevenin2009.WhilethenumbersfromNorthAmericawerecom-parablewiththosefromotheradvancedeconomies,inLatinAmericatherewasdouble-digitpercentagegrowthinthesoftwaresegment,substantialgrowthintheservicesmarket,andonlyalittlelostgroundinthehardwaresector.ThiswasbecausewhilemanycompaniesplannedfewernewITprojects,theydidprotecttheirestablishedITbudgets.IDCreportedsignsthatthemarketintheAmericasregion

wasstabilizingfromthethirdquarter.InUBS’sanalysis,lowpricesandgovernmenteconomicstimuluspackagesledtogreaterdemandforsoftwarethanhadbeenex-pected.Theimpactoftherecessiononhardwareandser-vicesspendingwasmoresustained.IntheUnitedStates,thegovernment’swide-rangingmea-surestosupporttheeconomybegantotakeeffectfromthethirdquarter,forestallingfurthercontractionintheITsector,accordingtoIDC.Itsmarketanalystsreportmod-estsingle-digitpercentagegrowthinthesoftwareandser-vicessegmentsoverthefullyear.OnlytheresultsfromthehardwaresectordrovetheITmarketintonegativeterri-tory,IDCreasons.GoldmanSachspresentsadifferentanalysis:Itbelievesthesoftwaremarketsufferedadouble-digitpercentagecontractionatthebottomofthecrisisinthesecondandthirdquarters.GoldmanSachsconcludesthatfull-yearspendingonsoftwaredeclinedmoresteeplyintheUnitedStatesthanintheworldasawhole,althoughsalesinthefourthquarterwerebetterthanithadexpected.

NordidtheAPJregionescapetheeconomiccrisisin2009.IDCsaysthedifferencetherebetweenadvancedandemergingeconomieswasverymarked.Intheemergingeconomies,ITbudgetgrowthmerelyslowedinresponsetotheglobaleconomicdownturn–andgovernmenteconomicstimuluspackageswerealreadybearingfruitasearlyasthethirdquarter.ThiswasmostnoticeableinChina,wherelowpricesandgovernmentstimulationsoonrestoredde-mand,accordingtoUBS.Theadvancedeconomiesthatrelymoreonexports,notablyJapan,recordedsubstantialdecline.Theyalsohadthelongesttowaitfortheupturn.IDCbelievesfull-yearsalesdecreasedineverysegmentoftheITsector.


INCOME, FINANCES, AND ASSETS

Performance Against Outlook for 2009 (Non-GAAP)Weexpressedour2009operatingincome-relatedinternalmanagementgoalsandpublishedoutlookinnon-GAAPterms.Forthisreason,inthefollowingsectionwediscussperformanceagainstouroutlookexclusivelyandexpresslyintermsofnon-GAAPnumbersderivedfromU.S.GAAPmeasures.AllsubsequentdiscussionsintheOperatingRe-sults(IFRS)sectionareintermsofIFRSmeasures.Asaresult,thenumbersinthatsectionarenotexplicitlyidentifiedasIFRSmeasures.

Outlook for 2009 (Non-GAAP)Atthebeginningof2009,weprojectedthatour2009non-GAAPoperatingmargin,whichexcludedanonrecurringdeferredsupportrevenuewrite-downfromtheacquisitionofanacquiredentityandacquisition-relatedcharges,tobeintherangeof24.5%to25.5%atconstantcurrencies.Thatincludednonrecurringrestructuringcostsofbetween€200 millionand€300 million,whichweexpectedtoincuraswereducedourworkforceandwhichweexpectedwouldnegativelyimpactournon-GAAPoperatingmarginbyapproximatelytwotothreepercentagepoints.

Duetoourresultsforthefirsthalfof2009,weupdatedouroutlookinJuly2009byincreasingourexpectednon-GAAPoperatingmargintoarangeof25.5%to27.0%atcon-stantcurrencies.OurJuly2009outlookincludednonrecur-ringrestructuringcostsof€200 million,whichweexpectedtoincuraswereducedourworkforceandwhichweex-pectedwouldnegativelyimpactournon-GAAPoperatingmarginbyapproximatelytwopercentagepoints.Atthebeginningof2009,ournon-GAAPoperatingmarginoutlookwasbasedontheassumptionthatour2009non-GAAPsoftwareandsoftware-relatedservicerevenue,whichex-cludesadeferredsupportrevenuewrite-downfromanacquisition,woulddeclinenotmorethan1%atconstantcurrencies(2008:€8,623 million).InJuly2009,weupdatedourassumptiontotheeffectthatour2009non-GAAPsoftwareandsoftware-relatedservicerevenuewoulddeclineinarangeof4%to6%atconstantcurrencies.

InOctober2009,weconfirmedouroutlookregardingthe2009non-GAAPoperatingmarginbutdecreasedtheun-derlyingrevenueassumption.Wecontinuedtoexpectourfull-year2009non-GAAPoperatingmargintobeintherangeof25.5%to27.0%atconstantcurrencies.The2009non-GAAPoperatingmarginoutlookwasnowbasedontheassumptionthatour2009non-GAAPsoftwareandsoftware-relatedservicerevenuewoulddeclineinarangeof6%to8%atconstantcurrencies.

WeannouncedinJanuary2009andconfirmedinApril,July,andOctober,thatinordertoenableourCompanytoadaptitssizetotoday’smarketconditionsandthebroaderimpactoftheglobalrecession,wewereimplementingaglobalreductionofourworkforceto48,500byyear-end2009,takingfulladvantageofattritionasafactorinreach-ingthisgoal.InJanuary2009,wealsoannouncedthatweexpectedthereductionofourworkforcetotriggerone-timerestructuringexpensesofbetween€200 millionand€300 millionfor2009.InJuly,weclarifiedthisone-timere-structuringexpenseexpectationbyannouncingtotalre-structuringexpensesfor2009tobeapproximately€200 million.

Atthebeginningof2009,weprojectedaneffectivetaxrateofbetween29.5%and30.5%(basedonU.S.GAAPincomefromcontinuingoperations)for2009(2008:30.0%).InOctober2009,weupdatedouroutlookforthe2009effectivetaxratetobetween27.0%and28.0%.

2009 Actual Performance Compared to Outlook (Non-GAAP) Our2009non-GAAPoperatingmarginonaconstantcur-rencybasiswas27.5%,surpassingtheoutlookweprovid-edatthebeginningof2009(24.5%to25.5%),updatedinJuly(25.5%to27.0%),andconfirmedinOctober2009.Itwas0.7percentagepointsnarrowerthanthepreviousyear’snon-GAAPoperatingmarginof28.2%.Thiscontrac-tionwasdueprimarilytotheslowdowninrevenuebroughtaboutbytheglobalfinancialcrisis.Inaddition,restructuringexpensesof€196 millionresultingfromtheworkforcere-ductionannouncedinearly2009negativelyimpactedournon-GAAPoperatingmarginby1.8percentagepoints.ThisoperatingmarginresultexceededtheoutlookweconfirmedinOctober2009fornon-GAAPoperatingmarginatcon-stantcurrency,duetothefactthatwesurpassedourassump-tionfornon-GAAPsoftwareandsoftware-relatedservicerevenueonaconstantcurrencybasiswitha5%year-over-yeardecline.Inaddition,werealizedthismarginbycontinuingourcomprehensivecostsavingsimplementedinlate2008,whichincludedasignificantreductionofspendingonexternalserviceproviders,businesstravel,andothervariablecosts.Onaconstantcurrencybasisoverthefullyear,ournon-GAAPsoftwareandsoftware-relatedservicerevenuedeclined5%to€8,201 million(2008:€8,623 million),missingtheassumptionsprovidedinJanuary(declineof


1%),meetingtheupdatedassumptionprovidedinJuly(de-clineinarangeof4%to6%)andsurpassingtheassump-tionprovidedinOctober2009(declineinarangeof6%to8%).Thisresultwasachievedduetoabetter-than-expect-edresultinsoftwarerevenueinthefourthquarterof2009.

Weachievedaneffectivetaxrateof28.1%(basedonU.S.GAAPincomefromcontinuingoperations),whichwaslowerthantheeffectivetaxrateprojectedinJanuaryof2009(29.5%to30.5%)andslightlyhigherthanourupdat-edprojectionofOctober2009(27.0%to28.0%).Operating Results (IFRS)ThisOperatingResultssectiondiscussesresultsexclusive-lyintermsofIFRSmeasures,sotheIFRSnumbersarenotexplicitlyidentifiedassuch.

Revenues

Total RevenueTotalrevenuedecreasedfrom€11,575 millionin2008to€10,672 millionin2009,representingadecreaseof€903 millionor8%.Thisentiredecreasewascausedbychangesinvolumesandprices.Thedeclinemainlyrelatestoadecreaseinsoftwarerevenueof€999 millionor28%ascomparedto2008.Thisdecreasewasoffsetinpartbyincreasedsupportandsubscriptionrevenue,whichresult-edinsoftwareandsoftware-relatedservicerevenueof€8,198 millionin2009.Softwareandsoftware-relatedser-vicerevenuerepresented77%ofourtotalrevenuein2009comparedto73%in2008.Professionalservicesandotherservicerevenuecontributed€2,432 milliontoourtotalrevenuein2009.Thisrepresentsadecreaseof20%com-paredto2008.Professionalservicesandotherservicerevenueaccountedfor23%ofourtotalrevenuein2009comparedto26%in2008.Theotherrevenuecomponentoftotalrevenuewasimmaterialforboth2008and2009.

Forananalysisofourtotalrevenuebyregionandindustry,seetheRevenuebyRegionandRevenuebyIndustrysections.

Total Revenue€ millions |changesincepreviousyear

8,509

+13%

9,402

+10%

10,256

+9%

11,575

+13%

10,672

–8%

12,000

9,000

6,000

3,000

0

2005 2006 2007 2008 2009


Software Revenue€ millions |changesincepreviousyear

2,743

+16%

3,003

+9%

3,407

+13%

3,606

+6%

2,607

–28%

4,000

3,000

2,000

1,000

0

2005 2006 2007 2008 2009


Software and Software-Related Service Revenue€ millions |changesincepreviousyear

5,955

+15%

6,605

+11%

7,441

+13%

8,466

+14%

8,198

–3%

9,000

6,750

4,500

2,250

0

2005 2006 2007 2008 2009



SoftwareandSoftware-RelatedServiceRevenueSoftwarerevenuerepresentsfeesearnedfromthesaleorlicenseofsoftwaretocustomers.Supportrevenuerepre-sentsfeesearnedfromprovidingcustomerswithtechnicalsupportservicesandunspecifiedsoftwareupgrades,up-dates,andenhancements.Subscriptionandothersoftware-relatedservicerevenuerepresentsfeesearnedfromsubscriptions,softwarerentals,andothertypesofsoft-ware-relatedservicecontracts.

In2009,softwareandsoftware-relatedservicerevenuede-creasedfrom€8,466 millionin2008to€8,198 million,representingadecreaseof€268 millionor3%.Thisentiredecreasewascausedbychangesinvolumesandprices.

Softwarerevenuedecreasedfrom€3,606 millionin2008to€2,607 millionin2009,representingadecreaseof€999 millionor28%.Thesoftwarerevenuedeclinecon-sistsofa27%decreasefromchangesinvolumesandpric-esanda1%decreasefromcurrencyeffects.

In2009,wecontinuedtofocusonourestablishedproductportfolio:SAPBusinessSuite,ourplatform-relatedprod-uctsbasedonSAPNetWeaver,andthesolutionsaimedatbusinessusersprimarilyavailableintheSAPBusinessObjectsportfolio.WecontinuedtointegrateourSAPBusinessObjectssolutionswithproductsfromSAPBusinessSuiteandSAPNetWeavertoprovideaddedval-uetoourcustomers.

SAPBusinessSuiterevenuecontributedmosttotheover-alldecreaseofsoftwarerevenuewitha38%decrease,butarecoverystartedinthesecondhalfof2009.Positivecontributiontosoftwarerevenuedevelopmentcamefromcustomerdevelopmentprojects,whichrose35%comparedto2008.

Throughout2009ourcustomerbaseremainedrelativelystable.Basedonthenumberofdealsclosed,37%ofoursoftwarerevenuein2009wasattributabletocontractswithnewcustomers(2008:32%).Thetotalnumberofnewsoftwaredealssettleddecreasedby10%to42,639(2008:47,572).Thevalueofsoftwareorderentrydeclined28%yearoveryear.Basedontheorderentryvalue,thenewcustomershareincreasedfrom13%in2008to17%in2009.

Ourstablecustomerbaseandthecontinuedsaleofsoft-waretoexistingandnewcustomersthroughout2009resultedinanincreaseinsupportrevenuefrom€4,602 mil-lionin2008to€5,285 millionin2009,representinganincreaseof€683 millionor15%.Thesupportrevenuegrowthreflectsa14%increasefromchangesinvolumesandpricesanda1%increasefromcurrencyeffects.

Subscriptionandothersoftware-relatedservicerevenueincreased€48 millionor19%to€306 millioncomparedto€258 millionin2008.Theincreaseinrevenuereflectsa16%increasefromvolumesandpricesanda3%increasefromcurrencyeffects.Theincreasewasprimarilyrelatedtonewgenerallicenseagreementsandflexiblelicenseagreementsrepresentingafoundationforfuturesubscrip-tionandothersoftware-relatedservicerevenuegrowth.

Professional Services and Other Service RevenueProfessionalservicesandotherservicerevenueconsistsprimarilyofconsultingandtrainingrevenue.Consultingrevenueisprimarilyderivedfromtheimplementationofoursoftwareproducts.Trainingrevenueresultsmainlyfromprovidingeducationalservicesontheuseofoursoftwareproductsandrelatedtopicstocustomersandpartners.

Professionalservicesandotherservicerevenuedecreasedfrom€3,039 millionin2008to€2,432 millionin2009,representingadecreaseof€607 millionor20%entirelyre-flectedbychangesinvolumesandprices.Thedecreaseinprofessionalservicesandotherservicerevenueismainlyduetoeconomicconditions,whichcausedourcustomerstodecreasetheirspendingonsoftware,postponeimple-mentationprojects,andreducetrainingactivities.


Consultingrevenuedecreasedfrom€2,498 millionin2008to€2,074 millionin2009,representingadecreaseof17%whichisentirelyduetochangesinvolumesandprices.Our2009consultingrevenuedeclinedprimarilyduetotheeconomicconditions,whichledtodecreasedcustom-erspendingonsoftwareinvestments,andcontinuedstrictcostcontrolpolicies.In2009,consultingcontributedto85%ofourrevenueresultinprofessionalservicesandoth-erservicerevenuecomparedto82%in2008.Consultingrevenueasapercentageoftotalrevenuedecreasedto19%in2009comparedto22%in2008.

Trainingrevenuedecreasedfrom€434 millionin2008to€273 millionin2009,representingadecreaseof37%entirelyduetochangesinvolumesandprices.Thedeclineintrainingrevenueresultedprimarilyfromeconomiccon-ditions,whichledcustomerstoimplementtightcostcontrolsonsoftwareprojectsandrelateduserenabling.Thisledtoasignificantdecreaseofattendeeratesinourtrainingofferings.

Otherservicerevenuemainlyconsistsofrevenuegene-ratedbytheSAPManagedServicesorganization,whichoperates,managesandmaintainsSAPsolutions.Otherservicerevenuedecreasedfrom€107 millionin2008to€85 millionin2009,representingadecreaseof21%.Allofthisdecreasewascausedbychangesinvolumesandprices.

Revenue by Region and Industry

RevenuebyRegionWeoperateourbusinessinthreeprincipalgeographicre-gions:theEurope,MiddleEast,andAfrica(EMEA)region;theAmericasregion,whichcomprisesNorthandLatinAmerica;andtheAsiaPacificJapan(APJ)region,whichcomprisesJapan,Australia,andotherpartsofAsia.Weallocaterevenueamountstoeachregionbasedonwherethecustomerislocated.Foradditionalinformationwithrespecttooperationsbygeographicregion,seetheNotestotheConsolidatedFinancialStatementssection,Note 29.


Revenue by Region1

€ millions |percent|changesincepreviousyear

1)basedoncustomerlocation

uSA 2,695

25%|–7%

Germany 2,029

19%|–7%

Rest of Americas 925

9%|–7%

Rest of APJ 933

9%|–4%

Rest of EMEA 3,614

34%|–10%

Japan 476

4%|–8%


Revenue by Industry€ millions |changesincepreviousyear

Public Services Industries 1,136

7%

Financial Services Industries 909

17%

Service Industries 2,516

–7%

Process Manufacturing Industries 2,008

–15%

DiscreteManufacturing

Industries 2,127

–13%

Consumer Industries 1,976

–12%


TheEMEARegionIn2009,53%(2008:54%)ofourtotalrevenuewasde-rivedfromtheEMEAregion.OurtotalrevenuefromtheEMEAregionwas€5,643 million,whichrepresentsade-clineof9%comparedto2008(2008:€6,206).Thisde-creasereflectsa7%decreasefromchangesinvolumesandpricesanda2%decreasefromcurrencyeffects.TotalrevenueinGermanydecreased7%to€2,029 millionin2009(2008:€2,193 million).Germanycontributed36%toourtotalrevenuefromtheEMEAregion,whichisaslightincreaseof0.6 percentagepointscomparedto2008.MostoftherestofourEMEArevenuein2009originatedfromtheUnitedKingdom,France,Switzerland,theNetherlands,Italy,andSpain.

TheAmericasRegionOfour2009totalrevenue,34%(2008:34%)wasrecog-nizedintheAmericasregion.Totalrevenueintheregiondecreased7%to€3,620 millionin2009.TotalrevenuefromtheUnitedStatesdeclined7%in2009,whichrepre-sentsadecreaseof10%fromchangesinvolumesandpricesanda3%increasefromcurrencyeffects.TheUnit-edStatescontributed74%(2008:74%)ofourtotalreve-nuefromtheAmericasregion.TherestoftheAmericasregionsawa7%decreaseintotalrevenueto€925 million,whichrepresentsadecreaseof3%fromchangesinvol-umesandpricesanda4%decreasefromcurrencyef-fects.ThisrevenuewasprincipallygeneratedinCanada,Brazil,andMexico.

TheAPJRegionIn2009,theAPJregioncontributed13%(2008:13%)toourtotalrevenue,withmostofthisrevenuebeingderivedfromJapan.IntheAPJregion,totalrevenuedeclinedby5%to€1,409 millionin2009.RevenuefromJapande-creased8%to€476 million,whichrepresents34%(2008:35%)ofourtotalrevenuefromtheAPJregion.TherevenuedeclineinJapanreflectsa19%decreaseduetochangesinvolumesandpricesandan11%increasefromcurrencyeffects.TherestoftheAPJregionsawadecreaseintotalrevenueof4%,whichwasallcausedbychangesinvolumesandprices.RevenuefromtheAPJregionwasprincipallygeneratedinAustralia,China,andIndia.

RevenuebyIndustryWehaveidentifiedsixindustrysectorsonwhichtofocusourdevelopmenteffortsinthekeyindustriesofourexistingandpotentialcustomers.Weprovidebestbusinessprac-ticesandspecificintegratedbusinesssolutionstothosein-dustries.Weallocateourcustomerstoanindustryattheoutsetofaninitialarrangement.Allsubsequentrevenuesfromaparticularcustomerarerecordedunderthatindustrysector.

Incomparisonwithtotalrevenuechangein2009,weout-performedinthefinancialservicesindustrysectorwithrevenueof€909 million,whichrepresentsagrowthrateof17%,andinpublicservices,whereourtotalrevenueamountedto€1,136 million,representinganincreaseof7%comparedto2008.Infinancialservices,weperformedparticularlywellduetoourincreasedindustryfocusinbankingandinsurance.

Inourmatureindustrysectors,notablyintheprocessanddiscretemanufacturingindustries,themarketwasdiffi-cultasaresultofthefinancialcrisis.Customersreducedtheirspending,especiallyonnewsoftwareandprofes-sionalservices.Comparedto2008,ourtotalrevenuefromtheprocessmanufacturingindustriesdeclined15%,andfromthediscretemanufacturingindustriesitdeclined13%.


Operating Profit and Margin Cost-ContainmentMeasuresin2009WeannouncedinJanuarythattoenableourCompanytoadaptitssizetomarketconditionsandthebroaderimpactoftheglobalrecession,wewereimplementingaglobalre-ductionofourworkforceto48,500byyear-end2009,takingfulladvantageofattritionasafactorinreachingthisgoal.WeconfirmedtheannouncementinJulyandOctober.WeexpectedinJanuarythatthereductionofourwork-forcewouldtriggerone-timerestructuringexpensesofbe-tween€200 millionand€300 millionfor2009.InJuly,weclarifiedthisexpectation,announcingtotalrestructuringexpensesfor2009ofapproximately€200 million.In2009,weactuallyincurredarestructuringchargeof€198 mil-lion,whichwasrecordedintotaloperatingexpenses.Tocountertheseadditionalcostsandtoreacttotheglobalfinan-cialcrisis,throughout2009wecontinuedthecost-con-tainmentmeasuresweinitiallyimplementedinthefourthquarterof2008.

TotalOperatingExpensesOurtotaloperatingexpensesfor2009decreasedto€8,084 millioncomparedto€8,874 millionin2008repre-sentingadecreaseof€790 millionor9%.Themaindriverforthisdecreasewasthecost-containmentmeasuresimplementedinthefourthquarterof2008andcontinuedthrough2009.Thesecostsavingsrealizedthroughthecost-containmentmeasureswerepartiallyoffsetbythere-structuringchargesmentionedaboveandanincreaseinvariablecompensation,especiallyinGermany,incompari-sonto2008.

CostofSoftwareandSoftware-RelatedServicesCostofsoftwareandsoftware-relatedservicesconsistsprimarilyofvariouscustomersupportcosts,costofdevel-opingcustomsolutionsthataddresscustomers’uniquebusinessrequirementsandlicensefeesandcommissionspaidtothirdpartiesfordatabasesandtheothercomple-mentarythird-partyproductssublicensedbyustoourcus-tomers.

Operating Profit€ millions |changesincepreviousyear

2,337

+16%

2,503

+7%

2,698

+8%

2,701

+0%

2,588

–4%

2,800

2,100

1,400

700

0

2005 2006 2007 2008 2009


Operating MarginPercent |changesincepreviousyearinpercentagepoints(pp)

27.5

+0.6pp

26.6

–0.9pp

26.3

–0.3pp

23.3

–3.0pp

24.3

+1.0pp

24

18

12

6

0

2005 2006 2007 2008 2009



Operating Expenses Breakdown€ millions |percent|changesincepreviousyear

General and administration – 564

7%|–10%

Cost of professional services and other services – 1,851

23%|–19%

Research and development –1,591

20%|–2%

Restructuring –198

2%|+230%

Cost of software and software-related

services – 1,714

21%|–2%

Sales and marketing – 2,199

27%|–14%

Other operating income/expense, net 33

0%|+204%


Thecostofsoftwareandsoftware-relatedservicesde-creased2%from€1,743 millionin2008to€1,714 millionin2009.Asapercentageofsoftwareandsoftware-relatedservicerevenue,costofsoftwareandsoftware-relatedservicesremainedstableat21%in2009.Throughout2009thesupportorganizationcontinueditseffortstoimprovetheefficiencyofourprocessesbycontinuingthefocusofmovingintolow-costlocations(Bul-garia,China,andIndia).Approximately23%ofourglobalsupportresourceswerebasedinthelow-costlocationsattheendof2009,whichisanincreaseof1.5 percentagepointscomparedto2008.

CostofProfessionalServicesandOtherServicesCostofprofessionalservicesandotherservicesconsistprimarilyofconsultingandtrainingpersonnelexpensesaswellasexpensesforthird-partyconsultingandtrainingresources.Thisitemalsoincludessalesandmarketingexpensesrelatedtoourprofessionalservicesandotherservicesresultingfromsalesandmarketingeffortsthatcannotbeclearlydistinguishedfromprovidingtheservices.

Costofprofessionalservicesandotherservicesdeclined19%from€2,285 millionin2008to€1,851 millionin2009asaresultofstrictcostcontrols.Asapercentageofpro-fessionalservicesandotherservicesrevenue,costofprofessionalservicesincreasedslightlyfrom75%in2008to76%in2009.Despitethestrictcostcontrolsonourprofessionalservicesandotherservices,ourdecreasedrevenuein2009resultedinacontractionofourprofes-sionalservicesandotherservicesmargin.

ResearchandDevelopmentOurR&Dexpensesconsistprimarilyofpersonnelexpens-esforourR&Demployees,costsincurredforindependentcontractorsretainedbyustoassistinourR&Dactivities,andamortizationofcomputerhardwareandsoftwareinourR&Dactivities.

R&Dexpensesin2009decreasedby2%to€1,591 millioncomparedto€1,627 millionin2008.ThedecreaseinR&Dexpensewasmainlytheresultofadeclineinthird-partynon-customer-relatedcosts.Asapercentageoftotalrevenue,R&Dexpensesincreasedfrom14%in2008to15%in2009.Thisincreasewasprimarilyduetoareductionintotalrevenueof8%.ThisdeclineinrevenuewaspartiallyoffsetbyaR&Dheadcountreductionof5%.DespitethereductioninR&Dheadcount,personnelexpensesfortheR&Demployeesincreasedduetoanincreaseinvariablecompensationresultingfromoverachievementofourcompanytargetsin2009.

SalesandMarketingSalesandmarketingcostsconsistmainlyofpersonnelex-pensesanddirectsalescoststosupportoursaleandmarketinglinesofbusinessinsellingandmarketingourproductsandservices.

Salesandmarketingexpensesdecreased14%from€2,546 millionin2008to€2,199 millionin2009.Thede-creaseinsalesandmarketingexpenseswasmainlytheresultoflowerpersonnelexpensesduetoheadcountre-ductionandtightcostcontrolsinallareas.Asaper-centageoftotalrevenue,salesandmarketingexpensesdecreasedfrom22%in2008to21%in2009.

GeneralandAdministrationOurgeneralandadministration(G&A)expensesconsistmainlyofpersonnelexpensestosupportourfinanceandadministrationfunctions.

G&Aexpensesdecreasedfrom€624 millionin2008to€564 millionin2009.Thisrepresentsadecreaseof10%.Thisdecreasewasdrivenbylowerpersonnelexpensesduetothereductioninheadcountandcostsavingsintheareaofnon-customer-relatedthird-partyandtravelexpens-es.Asapercentageoftotalrevenue,G&Aexpensesremainedrelativelystablecomparedtothe2008at5%.


OperatingProfitOur2009operatingprofitdecreasedby4%to€2,588 mil-lion(2008:€2,701 million).Wewereabletoachievethisresultdespitetheslowdowninrevenue(8%)broughtaboutbytheglobalfinancialcrisisandtheadditionalone-timeimpactfromtherestructuringcharges(€198 million)incurredin2009duetothesavingsrealizedfromthecost-contain-mentmeasures,whichpartiallyoffsetthenegativeimpactsonourmargin.

OperatingMarginOuroperatingmargin,whichistheratioofoperatingprofittototalrevenueexpressedasapercentage,was24.3%,onepercentagepointhigherthaninthepreviousyear(2008:23.3%).The€198 millioninrestructuringchargesresultingfromthereductionofpositionsannouncedinJanuary2009negativelyimpactedouroperatingmarginby1.9per-centagepoints.

Segment DiscussionsCurrentlywehavethreereportableoperatingsegments:Product,Consulting,andTraining.TotalrevenueandprofitfiguresforeachofouroperatingsegmentsdifferfromtherespectiverevenueandprofitfiguresclassifiedinourConsolidatedStatementsofIncomebecauseofseveraldifferencesbetweenourinternalmanagementreportingandourexternalIFRSreporting.ForfurtherdetailsofoursegmentreportingandareconciliationfromourinternalmanagementreportingtoourexternalIFRSreporting,seetheNotestotheConsolidatedFinancialStatementssection,Note29.

ProductSegmentTheProductsegmentisprimarilyengagedinmarketingandlicensingoursoftwareproductsandprovidingsupportforthem.Supportincludestechnicalsupportforourproducts,assistanceinresolvingproblems,providinguserdocumen-tation,unspecifiedsoftwareupgrades,updates,anden-hancements.TheProductsegmentalsoperformscertaincustomdevelopmentprojects.TheProductsegmentin-cludesthesales,marketing,andserviceandsupportlinesofbusiness.

Productsegmentrevenuedecreased6%from€8,366 mil-lionin2008to€7,846 millionin2009.Allofthedecreaseresultedfromchangesinvolumesandprices.Thereasonforthedecreaseisthatthedeclineinrevenuefromsoftwaresolutionlicensingwasgreaterthantheincreaseinoursup-portrevenue.SoftwarerevenueaspartofthetotalProd-uctsegmentrevenuedecreased29%from€3,356 millionin2008to€2,373 millionin2009.ThechangeinsoftwarerevenueintheProductsegmentresultsentirelyfromchangesinvolumesandprices.Supportrevenueincreased

Product Segment ProfitabilityPercent

59 61 58 56 60

80

60

40

20

0

2005 2006 2007 2008 2009

Consulting Segment ProfitabilityPercent

22 26 27 28 31

80

60

40

20

0

2005 2006 2007 2008 2009

Training Segment ProfitabilityPercent

35 38 42 43 35

80

60

40

20

0

2005 2006 2007 2008 2009


10%from€4,596 millionin2008to€5,076 millionin2009.Thisgrowthresultsentirelyfromchangesinvolumesandprices.Subscriptionandothersoftware-relatedservicerevenueincreased18%from€257 millionin2008to€304 millionin2009.

Productsegmentexpensesdecreased15%from€3,655 millionin2008to€3,120 millionin2009.Expensesfromthesaleslineofbusinessaccountforroughly55%oftheentireProductsegmentexpenses,whileexpensesfromthemarketinglineofbusinessaccountforroughly20%andexpensesfromtheserviceandsupportlineofbusinessaccountforroughly25%ofoverallProductsegmentexpenses.ThedecreaseinProductsegmentex-penseswastheresultofourcost-containmentmeasures.

Productsegmentcontributionincreasedfrom€4,711 mil-lionin2008to€4,726 millionin2009,or60%oftotalseg-mentrevenuecomparedto56%oftotalsegmentrevenuein2008.

ConsultingSegmentTheConsultingsegmentisprimarilyengagedintheimple-mentationofoursoftwareproducts.

Consultingsegmentrevenuedecreased12%from€2,824 millionin2008to€2,499 millionin2009.Thisde-creasewasallcausedbychangesinvolumesandprices.GeographicallytheEMEAregion,NorthAmerica,andtheAPJregionhaveallcontributedtothesegmentrevenuedecline.InLatinAmericarevenuealsodeclined,butatalowerrate.Wereactedtoadecreaseindemandforourcon-sultingservicesbydecreasingourConsultingsegmentre-sourcesby11%.OurheadcountreductionwashighestinNorthAmericaandtheAPJregionat17%and16%,respectively.Wewereabletomitigatethisrevenuedecreasewithcostsavingsrealizedfromthereductioninthird-partynon-customer-relatedcosts.

Consultingsegmentexpensesdecreased15%from€2,040 millionin2008to€1,724 millionin2009.Thisex-pensedecreaseisprimarilytheresultofthereductionofourworkforce,decreasedpurchaseofthirdpartyservices,andothersavingsrealizedfromourcost-containmentmeasures.

Consultingsegmentcontributiondecreased1%from€784 millionin2008to€775 millionin2009.Consultingsegmentprofitabilityincreasedthreepercentagepointsto31%.

TrainingSegmentTheTrainingsegmentisprimarilyengagedinprovidingedu-cationalservicesontheuseofoursoftwareproductsandrelatedtopicsforcustomersandpartners.TrainingservicesincludetraditionalclassroomtrainingatSAPtrainingfacili-ties,customerandpartner-specifictrainingandend-usertraining,aswellase-learning.

Trainingsegmentrevenuewas€332 millionin2009,whichrepresentsadecreaseof37%from€525 millionin2008.Thisrevenuedecreasewasdueentirelytochangesinvol-umesandprices.Ourtrainingrevenueshortfallwasespe-ciallyhighintheAmericasregionwitha47%decrease.Revenuedecreased31%inboththeEMEAandAPJregions.Theprimarydriversforthisrevenuedeclinewereintheareaoftraditionalclassroomtraining(40%)andineduca-tionconsulting(53%).

OurTrainingsegmentexpensesdecreased28%,from€300 millionin2008to€217 millionin2009,mainlyduetothedeclineindemandforourtrainingservicesandtoourcost-containmentmeasures.

TheTrainingsegmentcontributiondecreased49%from€225 millionin2008to€115 millionin2009.Trainingseg-mentprofitabilitydecreasedeightpercentagepointsto35%.

Financial Income, NetFinancialincome,net,decreasedto–€80 million(2008:–€50 million).Ourfinanceincomein2009was€32 million(2008:€72 million)andourfinancecostswere€101 mil-lion(2008:€123 million).Ourfinanceincomesubstantiallycomprisedincomefromcashandcashequivalentsandfromotherfinancialassets.Our2009financecostsaroseprincipallyinconnectionwiththefinancingforouracqui-sitionofBusinessObjectsandwithourissuanceofprivateplacementtransactions(“schuldschein”)in2009.

Thedecreaseinfinancecostsin2009wasmainlyduetotherepaymentofouroutstandingcreditfacilityinconnec-tionwiththeBusinessObjectsacquisition.Financecostsassociatedwithourschuldscheintransactionsoffsetpartofthateffect.Thedecreaseinfinanceincomein2009resultedmainlyfromsignificantinterest-ratereductions,whichwereonlypartlyoffsetbyanincreaseinaverageliquiditysince2008.


Income TaxOureffectivetaxratedecreasedto28.1%in2009from29.6%inthepreviousyear.Thedecreaseinoureffectivetaxrateandinourincometaxexpensein2009mainlyresultedfromnonrecurringacquisition-relateditems.Formoreinformation,seetheNotestotheConsolidatedFinancialStatementssection,Note11.

Profit after Tax and Earnings per ShareProfitaftertaxdecreasedby5.3%to€1,750 million(2008:€1,848 million).Theprimaryreasonforthischangewasthedeclineinourrevenue,whichwasnotcompletelycom-pensatedbyadecreaseinoperatingexpensesandincometaxexpense.

Ourearningspersharewas€1.47,whichwasadecreaseincomparisontothepreviousyear(2008:€1.55).Thisdecreaseresultedfromthedeclineinprofitaftertaxincom-parisontothepreviousyear,thenumberofsharesout-standinghavingchangedonlyslightly,to1,188 millionin2009from1,190 millionin2008.

Dividend

WeplantocontinueourdividendpolicyofrecentyearsandbelieveourshareholdersshouldbenefitappropriatelyfromtheprofittheCompanymadein2009.TheExecutiveBoardandSupervisoryBoardwillrecommendtotheAnnualGen-eralMeetingofShareholdersthatadividendof€0.50persharebepaid(2008dividend:€0.50).Thedividendpayoutratio(whichheremeanstotaldistributeddividendasapercentageofprofit)wouldbe34%,whichrepresentsaslightincreasecomparedtothepreviousyear(2008divi-dendpayoutratio:32%).

Profit after Tax (IFRS) / Net Income (u.S. GAAP)€ millions |changesincepreviousyear

1,496

+14%

1,836

+23%

1,908

+4%

1,848

–3%

1,750

–5%

2,000

1,500

1,000

500

0

2005 2006 2007 2008 2009


Earnings per Share € |changesincepreviousyear

1.21

+15%

1.50

+24%

1.58

+5%

1.55

–2%

1.47

–5%

1.60

1.20

0.80

0.40

0

2005 2006 2007 2008 2009


Dividend per Share € |changesincepreviousyear

0.36

+32%

0.46

+27%

0.50

+9%

0.50

+0%

0.50

+0%

0.60

0.50

0.40

0.30

0.20

2005 2006 2007 2008 2009



Iftheshareholdersapprovethisrecommendationandtreasurystockremainsatthe2009closinglevel,theprovi-sionaltotalamountdistributedindividendswouldbe€594 million.TheactualamountdistributedmightdifferfromtheprovisionaltotalbecauseofchangesbeforetheAnnualGeneralMeetingofShareholdersinthenum-berofrepurchasedsharesheldintreasury.Transactionsrelatedtoshare-basedcompensationcouldalsochangetheamountofcommonstock.Wedistributed€594 millionindividendsfromour2008earnings.Asidefromthedistrib-uteddividend,in2008wealsoreturned€487 milliontotheshareholdersbyrepurchasingSAPsharesfortreasury.In2009wedidnotrepurchasefurtherSAPsharesfortrea-suryduetotheuncertaineconomicconditions.Finances (IFRS)

Cash Flow and liquidity

NetCashFlowsfromOperatingActivitiesGrows40%Netcashflowsfromoperatingactivitiesincreased40%to€3,015 million(2008:€2,158 million),primarilyasaresultofeffectiveworkingcapitalmanagement.Ontheotherhand,theaveragecollectionperiod,measuredindays’salesoutstanding(DSO)onarolling12-monthbasis,rosein2009to79(2008:71)asthedifficulteconomicenvironmentin2009ledtoanextensionofpaymenttermsandmorelatepayments.

Weusednetcashof€299 millionininvestingactivities,significantlylessthaninthepreviousyear(2008:€3,766 million).TheamountwashighinthepreviousyearmainlybecauseofourpaymentofthepurchasepriceforBusinessObjects.

Therewasanetcashoutflowfromfinancingactivitiesof€2,166 millionin2009,whereasinthepreviousyearfi-nancingactivitiesprovided€1,281 millionnetcashinflow.ThefinancingoftheacquisitionofBusinessObjectsgaverisetoanincreaseinfinancialliabilitiesin2008,andalsorepresentedtheprimarysourceof€2,288 millionnetcashinflowin2008.In2009,werepaidallamountsstilloutstand-ingunderthecreditfacilitywithwhichwefinancedouracquisitionofBusinessObjects,andweissuedprivateplace-menttransactions(“schuldschein”)totaling€697 million.Thedividenddistributedin2009was€594 million,un-changedfromthepreviousyear(2008:€594 million).Wedidnotbuybackanysharesfortreasuryin2009(2008:€487 million).

GroupLiquidityGrows37%Cashandcashequivalentsincreased47%to€1,884 mil-lionattheendofthefiscalyear(2008:€1,280 million).

Groupliquiditystoodat€2,284 milliononDecember31,2009(December31,2008:€1,662 million).Groupliquiditycomprisedcashandcashequivalentstotaling€1,884 mil-lion(December31,2008:€1.280 million)andshort-terminvestmentstotaling€400 million(December31,2008:€382 million).TheincreasecomparedtoDecember31,2008,wasmainlyduetopositivenetcashflowsfromoper-atingactivities.Netliquidity,definedasGroupliquiditylessbankloans,was€1,581 million(2008:–€659 million).

Wehavevarioussourcesofloancapital:•TofinancetheacquisitionofBusinessObjects,ween-

teredintoanagreementforacreditfacilitythatwasorigi-nallyfor€5 billionandwasrepayablebyDecember31,2009.Intotal,weborrowedapproximately€3 billionagainstthecreditfacility.InOctober2009,werepaidallamountsoutstandingunderthisfacility.

•Weissued“schuldschein“transactionstotaling€697 millionin2009.

•WearrangedinSeptember2009tohavea€1 billionsyn-dicatedcreditfacility,whichwasduetoendinNovember2009,extendedforthreeyears.Therefinancingofferwasoversubscribed,sowetooktheopportunitytoenhanceourfuturefinancialflexibilitybyincreasingthesizeofthe

Group liquidity Development€ millions

1,662

Total Group liquidity

12/31/2008

Operating cash flow

+ 3,015

Capital expenditure

– 225

Acquisitions

– 73

Dividends paid

– 594

Repayments of debt

– 2,303

Proceeds from private placement

+ 697

Other

+ 105

2,284

Total Group liquidity

12/31/2009


facilityto€1.5 billion.Thissyndicatedfacilityisavailableforgeneralcorporatepurposesinadditiontothebilateralfacilitiesthatwehaveinplace.Wehadnotdrawnontheoriginalfacilityandcurrentlyhavenoplanstodrawonthenewfacility.

•Attheendof2009,theother,bilaterallinesofcreditavail-abletoSAPAGtotaledapproximately€545 million(2008:€597 million).Wedidnotdrawonthesefacilitiesduring2009or2008.SeveralsubsidiariesintheSAPGrouphadcashcreditfacilitiesintheirlocalcurrency,forwhichSAPAGactedasguarantor.Thesetotaled€51 million(2008:€52 million).Oursubsidiaries’bankloanstotaled€6 mil-lion(2008:€21 million)attheendof2009.

Wedonotcurrentlyhaveacreditratingwithanyexternalratingagency.Ourdebt-to-equityratio(totalliabilitiesasaportionoftotalequity)islow,at58%(2008:94%),andwedonotbelieveanychangeincreditconditionsthatmightbeobtainedwitharating(suchasanarrowercreditspreadonfinancingtransactions)wouldhaveasubstantialeffectonourfinancialsituation.Ourtotalliabilitiesof€4,883 mil-lioncomprised70%currentliabilities(2008:87%)and30%non-currentliabilities(2008:13%).

Attheendof2009,ourcurrentliabilitieswereclassifiedas(amongothers)46%othernonfinancialliabilities(2008:25%),18%deferredincome(2008:11%),19%tradeandotherpayables(2008:10%),and4%financialliabilities(2008:44%).

Ofthenon-currentliabilities,approximately50%wereclas-sifiedasfinancialliabilities(2008:4%).Theincreaseresultedfromthe“schuldschein”transactionsduringtheyear.

Financial Management

CentralizationWeuseglobalcentralizedfinancialmanagementtocontrolliquidassets,interest,andcurrencies.

TheprimaryaimofourfinancialmanagementistomaintainliquidityintheGroupatalevelthatisadequatetomeetourobligations.MostSAPcompanieshavetheirliquidityman-agedbytheGroup,sothatliquidassetsacrosstheGroupcanbeconsolidated,monitored,andinvestedinaccordancewithGrouppolicy.Highlevelsofliquidassetsandmarket-ablesecuritiesprovideastrategicreserve,helpingtokeepSAPflexible,sound,andindependent.The€1.5 billionsyndicatedcreditfacilityandother,bilaterallinesofcreditareavailableforadditionalliquidityifrequired.

InOctober2009,werepaidthecreditfacilitywithwhichwehadfinancedtheacquisitionofBusinessObjects.Ourfinancecostsdecreasedto€101 millionin2009(2008:€123 million)asaresultoftheloweraverageamountout-standingonthisfacility.

Ourcentralinterestmanagementpolicyisguidedbyliquidi-tyandriskconsiderations,andourinvestmentstrategyisconservative.Weassignarating-basedcounterpartylimittoeachofourbusinesspartners.Itisthemaximumtotalofourinvestmentsandotherrelevantbusinesswiththatcoun-terparty.TheminimumratingofourcounterpartiesisA–.Asidefromratings,weregularlymonitorcreditdefaultswapspreadsandthepriceofourbusinesspartners’stocktoidentifynegativeeffectsasearlyaspossible.Wespreadourinvestmentsverywidely,andtheyaregenerallyshort-termtoenableustoredistributethemquickly.Tofurtherre-duceourcounterpartyrisk,weinvestasignificantportionofourliquidityinassetsthatarebackedbygovernmentbonds.

Mostoftheliquidityreserveisavailableatshortnotice.Ournetinterestincomeisthusaffectedbybothlong-termandshort-terminterestratefluctuationsonthefinancialmarkets.


FinancialInstrumentsMinimizeRisksEverymonth,theSAPsalescompaniesineachcountrypaytoSAPAG,theparentcompanyandlicensor,alicensefeerelatedtotheirsoftware,support,andsubscriptionrevenue.Tocompensateforthecurrencyfluctuationstowhichthesepayments,beingmostlyinlocalcurrency,aresub-ject,ourglobalcurrencymanagementofficedeterminesourcurrencyexposuresbasedonbalance-sheetitemsandcashflowsexpectedindifferentcurrencies.Ifnecessary,wehedgethemwiththeappropriatederivativesthatgener-allyrunforupto15months.Withoutexception,allofourcurrencyfuturestransactionsrelatetoactualunderlyingbusinessthatweareconducting.

TheloanwetookinconnectionwiththeacquisitionofBusi-nessObjectswassubjecttoavariableinterestrate.Tohedgetherisktoourincomeandcashflowfromexposuretointerest-ratefluctuation,weenteredintoseveralinterest-rateswapcontracts.Wehavealsousedinterest-rateswapcontractstohedgethevariable-interestfinancialliabilitiesarisingoutofthe“schuldschein”transactionsweissuedinAprilandMay2009.

Alongwithfixedsalary,employeecompensationmayin-cludecomponentsthatvarywithstockperformance.OurSTARPerformancePlan(astockappreciationrightplan)andtheSOPPerformancePlan(avirtualstockoptionplan)aresuchcomponents,passingontoouremployeestheabsoluteorrelativeappreciationofvalueweachieveoveradefinedterm.Weusederivativeinstrumentsfromindepen-dentbankstomanagesomeoftheassociatedshare-pricerisk.Eachofthesecontractsissubjecttoourinternaldi-rectivesconcerningthecreditworthinessofeachbankcon-cerned.Fordetailsabouttheuseofhedgingcontracts,seetheNotestotheConsolidatedFinancialStatementssection.

Therulesfortheuseofderivativesandotherrulesandprocessesconcerningthemanagementoffinancialrisksarecollectedinourtreasuryguidelinedocument,whichappliesgloballytoallcompaniesintheSAPGroup.Wedonotspeculateinderivatives.

LowDebtRatioWereducedourdebtratio(totalliabilitiesasaportionoftotalassets)in2009from48%to37%.Thatwearestronglyequity-financedisevidentfromthefactthatbankloansandoverdraftsrepresentedonly5%oftotalassets(2008:17%)attheendof2009.Costofequitydecreasedslightlyin2009.Thisismainlyduetoadecreaseinourbetacoefficient,whichmeasuresthevariationofSAPstockagainstthecomparatorindex.Thedecreasewasnotcompletelyoffsetbyaslightincreaseintherisk-freeinterestratecomparedtotheprioryear.Themarketriskpremiumwasunchanged.

TheaveragerateofannualinterestonDecember31,2009,forourfixed-interestbankloansandoverdraftswas4.32%ontotalbankloansandoverdraftsof€703 million(2008:4.30%ontotalbankloansandoverdraftsof€2,321 million).Thechiefelementinourbankloansandoverdraftsattheendof2009wasthe”schuldschein”transactionsweissuedinAprilandMay2009,whereasattheendof2008itwastheloanwehadtakeninconnec-tionwiththeacquisitionofBusinessObjects.

Assets (IFRS)

Analysis of Consolidated Statements of Financial Position

Ourtotalassetsandtotalliabilitiesandequitydeclined4%in2009to€13,374 millionfrom€13,900 millioninthepreviousyear.Thisdeclinewasmainlyduetoadecreaseincurrentassetsasexplainedbelow.Thesharpdecreasein

Investments € millions |changesincepreviousyear

504

+49%

902

+79%

1,097

+22%

4,898

+346%

299

–94%

5,000

3,750

2,500

1,250

0

2005 2006 2007 2008 2009



investments,asidefromthesteeprisein2008fromtheac-quisitionofBusinessObjects,wasprimarilytheresultofthetighteningofourbudgetsinresponsetotheeconomiccrisis.

Totalcurrentassetsdeclined6%to€5,255 million(2008:€5,571 million).A47%increaseincashandcashequiva-lentsto€1,884 million(2008:€1,280 million)thataroseoutofastrongincreaseincashflowsfromoperatingactivi-tieswasmorethanoffsetbythedeclineinrevenuein2009,whichresultedinadecreaseintradeandotherre-ceivablesof20%to€2,546 million(2008:€3,178 million).

Ourrolling12-monthaveragecollectionperiod,whichismeasuredindays’salesoutstanding(DSO),increasedeightdaysto79(2008:71).Therisewastheresultofthetighteconomicsituationin2009,whichledtoanextensionofpaymenttermsanddelayedpayments.

Totalnon-currentassetsdecreasedslightlyto€8,119 mil-lionin2009(2008:€8,329 million).The€210 milliondecreasewasmainlyaresultofdepreciationandamorti-zation.

Totalcurrentliabilitiesdeclinedfrom€5,824 millionin2008to€3,416 million,mainlybecausein2009wecompletelyrepaida€2,303 millioncreditfacilitythatwehadarrangedinconnectionwiththeacquisitionofBusinessObjects.Ontheotherhand,non-currentliabilitiesroseto€1,467 million

(2008:€905 million).Thechiefreasonwasthe”schulds-chein”transactionstotaling€697 millionthatweissuedin2009.

Profitaftertaxadded€1,308 milliontoequityin2009.Thishadapositiveeffectonourequityratio(thatis,theratiooftotalequitytoequityandliabilities),whichroseto63%(2008:52%).Anothercontributortotheriseintheequityratiowasthe27%decreaseintotalliabilitiesto€4,883 mil-lion(2008:€6,729 million),whichwaschieflytheresultofrepaymentofthecreditfacility,partlyoffsetbytheissu-anceoftheschuldscheintransactionsnotedabove.

Equity RatioPercent |changesincepreviousyearinpercentagepoints(pp)

64

+3pp

66

+2pp

64

–2pp

52

–12pp

63

+11pp

60

45

30

15

0

2005 2006 2007 2008 2009


Breakdown of Consolidated Statements of Financial PositionPercent

Assets liabilities

Short term

long term

Shareholders’ equity

40

60

39

61

42

6

52

26

11

63

2008 2009 2008 2009


Competitive Intangibles

MarketValueofEquityRemainsSignificantlyHigherThanBookValueTheassetsthatarethebasisforourcurrentaswellasfu-turesuccessdonotappearontheConsolidatedState-mentsofFinancialPosition.Thisisapparentfromacom-parisonofthemarketcapitalizationofSAPAG,whichwas€40.5 billionattheendoftheyear(2008:€30.9 billion),withtheequityontheConsolidatedStatementsofFinan-cialPosition,whichwas€8.5 billion(2008:€7.2 billion).Thedifferenceismainlyduetocertainintangibleassetsthattheapplicableaccountingstandardsdonotallowtoberecorded(atalloratfairvalue)ontheConsolidatedState-mentsofFinancialPosition.Theyincludecustomercapital(ourcustomerbaseandcustomerrelations),employeesandtheirknowledgeandskills,ourecosystemofpartners,softwarewedevelopedourselves,ourabilitytoinnovate,thebrandswehavebuiltup–inparticular,theSAPbranditself–andourorganization.Althoughwedecreasedourspendingonmarketingactivitiesaspartofthecost-reduc-tionmeasuresweimplementedin2008andcontinuedin2009,theSAPbrandsufferedlittlelossinvalue.In2009,theSAPbrandranked27thontheInterbrandandBusi-nessWeekscoreboardof100TopGlobalBrands,comparedto31stinthepreviousyear.Ourbrand’srankingisnowatanall-timehigh.AgainstotherGermanbrands,theSAPbrandrankedthirdbehindMercedes-BenzandBMW,andgloballyagainstotherITbrandsoursranked10th.In2009,InterbranddeterminedavalueofUS$12.1 billion(2008:US$12.2 billion)fortheSAPbrand.

Customer,Human,andOrganizationalCapitalGrowsInspiteofachallengingenvironment,ourcustomercapitalcontinuedtogrow–althoughthisisnotreflectedinour2009revenuesduetosmallerordersizes.Wegainedap-proximately13,000newcustomersinvariousmarketsegmentsandstrengthenedourexistingcustomerrelation-ships.Withthehelpofanindependentserviceprovider,TNSInfratest,weregularlymeasurethesatisfactionand

loyaltyofourcustomers.Havingincreasedineachofthefourpreviousyears,overallcustomersatisfactiondeclinedslightlyin2009.Formoreinformationaboutournewcus-tomers,seetheCustomerssection.Employee-relatedandR&Dactivitiesincreasedthevalueofouremployeebaseandourownsoftware.Formoreinformation,seetheEmployeesandResearchandDevel-opmentsections.Wealsoincreasedthevalueofourpartnerecosystembycontinuingtodevelopsalesandde-velopmentpartnerships.

End-of-year SituationSAPwasingoodhealthattheendof2009.Despitetheunfavorableeconomicclimateandtheeffectsofthefinancialcrisis,wecanpointtoourbroad,innovativerangeofsolutions,highlyqualifiedandhighlymotivatedwork-force,strongmarketposition,efficientprocesses,soundprofitability,andliquidity.


CORPORATE GOVERNANCE Corporate Governance Statement

TheGermanCommercialCode,section289a,whichen-teredintoforceonMay29,2009,requireslistedstockcorporationstopublishacorporategovernancestatementeitheraspartoftheirreviewofoperationsorontheirWebsite.TheExecutiveBoardfiledSAP’scorporategover-nancestatementonMarch10,2010,andpublisheditontheSAPWebsiteathttp://www.sap.com/about/gover-nance/statement/index.epx.


INFORMATION CONCERNING TAkEOVERS REQuIRED By THE GERMAN COMMERCIAl CODE, SECTION 315 (4), WITH EXPlANATORy MATERIAl

AsagroupparentcompanyusinganorganizedmarketinthemeaningoftheGermanSecuritiesAcquisitionandTakeoverAct,section2(7),forvotingsharesthatwehaveissued,wearerequiredbytheGermanCommercialCode,section315(4)(1to9),toprovidethefollowingdetailsinourReviewofGroupOperations.Wealsoincludeexplana-torymaterialalongwiththecompulsorydisclosures:•SAPAG’scapitalstockonDecember31,2009,was

€1,226,039,608,issuedas1,226,039,608commonno-parbearershares.Eachsharehasanattributablevalueof€1.Onecommonshareentitlesthebearertoonevote.Americandepositaryreceipts(ADRs)representingoursharesarelistedontheNewYorkStockExchange(NYSE)intheUnitedStates.ADRsaredepositcertifi-catesofnon-U.S.sharesthataretradedonU.S.stockexchangesinsteadoftheunderlyingshares.OneSAPADRcorrespondstooneSAPshare.

•TheSAPsharesarenotsubjecttotransferrestrictions.WearenotawareofanyotherrestrictionsaffectingvotingrightsorthetransferofSAPshares.

•SAPheld37,262,465treasurysharesonDecember31,2009.Thesetreasurysharesdonotentitleustoanyrights,andhencetoanyvotingrightsordividend.TheExecutiveBoardisentitledtoresellorcanceltreasurystock.InaccordancewiththeGermanStockCorporationAct,section71(1)(8),incertainsituationstheExecu-tiveBoardisalsoauthorized,withthepermissionoftheSupervisoryBoard,toalienatetreasurysharesandtoexcludethepreemptiverightsoftheshareholders.

•FoundingshareholderandSupervisoryBoardchairper-sonHassoPlattnerhaddirectSAPAGholdingsandindi-rectholdingsinSAPAGthroughcompaniesandtrustsunderhiscontroltotaling10.374%ofthecapitalstockonDecember31,2009.Exceptasreportedabove,wearenotawareofanydirectorindirectcapitalholdingsthatexceed10%ofthevotingrights.DeutscheBankTrustCompanyAmericasholdsapproximately7.35%oftheSAPAGcapitalstockintrusttofacilitateADRtradingontheNYSE.

•TheSAPAGArticlesofIncorporationdonotentitleanyindividualSAPshareholdertoappointmemberstotheSupervisoryBoard,nordoshareholdershavespecialrightsconferringsupervisorypowersontheminanyotherrespect.

•InvotesontheformalapprovaloftheiractsattheAnnualGeneralMeetingofShareholders,employeerepresen-tativesontheSupervisoryBoard–likeallothermembersoftheSupervisoryBoard–areprohibitedfromexercis-ingthevotingrightsassociatedwithshares.Beyondthis,therearenovotingrightrestrictionsforSAPsharesheldbyemployees.

•Conditionsfortheappointmentanddismissalofmem-bersoftheExecutiveBoardandamendmentoftheArti-clesofIncorporationreflecttherelevantprovisionsintheGermanStockCorporationAct.UndertheSAPArti-clesofIncorporation,theExecutiveBoardconsistsofatleasttwomemberswhoareappointedforaperiodofnotmorethanfiveyearsbytheSAPSupervisoryBoardinaccordancewiththeGermanStockCorporationAct,section84.TheSupervisoryBoardcanappointachair-personoftheExecutiveBoardandoneormoredeputychairpersonsfromamongthemembersoftheExecutiveBoard.TheArticlesofIncorporationalsostipulatethattheSupervisoryBoardcanappointdeputyExecutiveBoardmembers,whohavethesamerightsasthefullmembersregardingtheexternalrepresentationofSAPAG.TheSupervisoryBoardcanrevokeappointmentstotheExec-utiveBoardinaccordancewiththeGermanStockCor-porationAct,section84,ifcompellingreasonsexist,suchasgrossnegligenceonthepartoftheExecutiveBoardmember.IftheExecutiveBoardisshortofarequiredmember,onemaybeappointedinurgentcasesbyacourtinaccordancewiththeGermanStockCorporationAct,section85.

•InaccordancewiththeGermanStockCorporationAct,sections179,133,amendmentoftheArticlesofIn-corporationisbyresolutionoftheAnnualGeneralMeet-ingofShareholderswithamajorityofatleastthree-quartersofthecommonstockrepresentedinthevote.OurArticlesofIncorporationdonotcontainanyprovisionthatconflictswiththisstipulation.

•UnderourArticlesofIncorporation,theExecutiveBoardisauthorizedtoincreasethecommonstockwithinthelimitsofexistingauthorizedcapitalamountsandsubjecttoSupervisoryBoardconsent.OnDecember31,2009,therewerefourauthorizedcapitalamountstotaling€480 million.Formoredetailsontheindividualauthorizedcapitalamounts,seetheNotestotheConsolidatedFinancialStatementssection,Note21.TheAnnualGeneralMeetingofShareholdersonMay19,2009,authorizedtheExecutiveBoardtobuybackfortreasuryonorbeforeOctober31,2010,SAPAGsharesrepresentingintotalnotmorethan€120 millionofthe


capitalstock.Thesharesrepurchasedunderthisauthori-zation,togetherwithanysharesthatwerepreviouslyacquiredandarestillheldbySAPintreasuryandanyothersharescontrolledbySAP,mustnotexceed10%ofSAP’scapitalstock.ThelawalsoprovidesthatSAPcanbuybacksharesincertainothercases.Theseinclude,forexample,buybacktopreventimminentseriousharmtoSAPandbuybacktoofferthesharestoemployees.Formoredetails,seetheGermanStockCorporationAct,section71(1)(1to5).TheExecutiveBoardisalsoau-thorizedtoissueconvertiblebondsandstockoptionswithconversionorsubscriptionrightsinrespectofsharesofSAPwithatotalattributablevalue,inrelationtothecommonstock,ofnotmorethan€100 millionsecuredbyacorrespondingamountofcontingentcapital.Execu-tiveBoardpowers,suchasthosedescribed,toissueandbuybackstockandtograntconversionandsub-scriptionrightsarewidelyfollowedcommonpracticeamongGermancompanieslikeSAP.TheygivetheExec-utiveBoardtheflexibilityitneeds,inparticulartheop-tionstouseSAPsharesasconsiderationinequityin-vestments,raisefundsonthefinancialmarketsatshortnoticeonfavorableterms,orreturnvaluetosharehold-ersduringthecourseoftheyear.Additionally,theshare-holdershaveapprovedcontingentcapitalamountstosatisfyconversionandsubscriptionrightsgrantedundershare-basedcompensationplans.Theapprovedbutunissuedcontingentcapitalforthesepurposestotaled€107,576,348onDecember31,2009.OnDecember31,2009,therewere9,505,804conversionandsub-scriptionrightsoutstandingthatwehadgrantedtobene-ficiariesofshare-basedcompensationplans,eachofwhich,sincetheincreaseincommonstockfromcorpo-ratefundsinDecember2006,entitleditsholdertofournewsharesissuedfromcontingentcapital.SAPisalsoentitledtosatisfytheserightswithtreasuryshares.Stockoptionswereissuedonlyupto2006withsubscriptionrightstoSAPAGsharesissuedfromcontingentcapitalcreatedforthatpurpose.Subsequentplansin2007andthereafterhavebeenvirtualstockoptionplans,underwhichonlystockappreciationrightsareissued.Wearethere-forenownolongerempoweredtoissueoptionsonSAPsharestoourExecutiveBoardmembersoremployees.

•TheArticlesofIncorporationdonotcontainanyprovi-sionsthatgranttheExecutiveBoardspecialpowersinatakeoversituation.

•Wearepartytomaterialcontractsthataresubjecttochange-of-controlprovisionsintheeventofatakeoverbid,asfollows:–Toincreaseitsfinancialflexibility,inSeptember2009

SAPAGnegotiatedathree-year€1.5 billionsyndicatedcreditfacilitywithagroupofinternationalbanks.Thisfacilityreplaceda€1 billionfacilitythathadbeenavail-abletoSAPAGuntilthattime.Neitherthepreviousfacility,whichwasestablishedin2004,northenewfa-cilityhasyetbeendrawnon.Thecreditfacilityagree-mentcontainsachange-of-controlclause.ThisclauseobligesSAPAGtonotifythebanksifitlearnsthatinthemeaningoftheGermanSecuritiesAcquisitionandTakeoverActanypersonoranygroupofpersonsact-ingtogetherhasacquireddirectorindirectcontrolofmorethan50%ofthevotingshares.If,onreceivingthenotification,banksthatrepresentatleasttwo-thirdsofthecreditvolumesorequire,thebankshavetherighttocancelthecreditfacilityanddemandcompleterepaymentoftheoutstandingdebt.Ifnocontinuationagreementisreached,thecreditfacilitywouldendandtheobligationtorepaywouldbecomeeffectiveatanascertainabletime.

–InAprilandMay2009,SAPAGissuedseveraltranch-esofaprivateplacementtransaction(“schuldschein”).Thetotalschuldscheinisfor€697 million,withthree-yearandfive-yeartranches.Theunderlyingagreementscontainchange-of-controlclauses.TheseclausesgivethelendersspecialterminationrightsifinthemeaningoftheGermanSecuritiesAcquisitionandTakeoverActanypersonoranygroupofpersonsactingtogetheracquiresdirectorindirectcontrolofmorethan50%ofthevotingsharesofSAP.Ifnocontinuationagreementisreachedwithin30daysafterachangeofcontrol,thelenderswouldbeentitledtodeclaretheloandueanddemandrepaymentoftheoutstandingdebtwith-outdelay.

–InagreementsbetweenSAPAGandvariousbanksforbilateralcreditfacilitiesthattotaled€545 milliononDecember31,2009,wehaveagreedmaterialadversechangeclausespermittingthebankstoterminateifeventsoccurthataremateriallyadversetotheeco-nomicstandingofSAPAG.Thepossibilitycannotberuledoutthatachangeofcontrolwouldbematerially


adverseforthosepurposes.Theseclausesarecustom-ary.Inthepast,wehaveutilizedthesebilateralcreditfacilitiesonlyinfrequentlyforafewdays.Webelievethatinviewofourcurrentliquiditysituation,terminationofthesecreditfacilitieswouldnothaveamateriallyad-verseeffect,atleastinthenearterm.

–Wehaveenteredintorelationshipswithvariouscompa-niestojointlydevelopandmarketnewsoftwareprod-ucts.Theserelationshipsaregovernedbydevelopmentandmarketingagreementswiththerespectivecom-panies.Someoftheagreementsincludeprovisionsthat,intheeventofachangeofcontroloveroneoftheparties,givetheotherpartyarighttoconsenttotheassignmentoftheagreementortoterminateit.

–AgreementshavebeenconcludedwiththemembersoftheExecutiveBoardconcerningcompensationintheeventofachangeofcontrol.Theseagreements,whichareencounteredwithincreasingfrequencyinGermanyandelsewhere,aredescribedintheCompensationReportsection,whichisanintegralpartofthisreviewofoperations.Wehavenoanalogouscompensationagreementswithemployees.


RISk MANAGEMENT AND RISk FACTORS

Internal Structure of Control and Risk ManagementAsaglobalenterprise,weareexposedtoawidevarietyofrisksacrossourentirerangeofbusinessoperations.Inthebroadestsense,wedefineriskasthedangerofnotachiev-ingourfinancial,operative,orstrategicgoalsasplanned.Wehavecomprehensiverisk-managementstructuresinplace,whichareintendedtoenableustorecognizeandanalyzerisksearlyandtotaketheappropriateaction.Thissystemisimplementedasanintegralpartofourbusinesspro-cessesacrosstheentireSAPGroup;itcomprisesmultiplecontrolmechanismsandconstitutesanimportantelementofthecorporatedecision-makingprocesses.Thesemechanismsincluderecording,monitoring,andcontrollinginternalenterpriseprocessesandbusinessrisks,anumberofmanagementandcontrollingsystems,aplanningpro-cessthatisuniformthroughouttheGroup,andacompre-hensiverisk-reportingsystem.Seekingtoensureourcorporaterisk-managementeffortsareeffectiveandtoen-ableustoaggregaterisksandreportonthemtranspar-ently,wehaveoptedforanintegratedapproachthatisuni-formlyimplementedthroughouttheGroupbyaglobalgovernance,risk,andcompliance(GRC)organizationwithadirectreportinglinetothechieffinancialofficerofSAPAG.TheGRCorganizationhasthefollowingmandate:•Tocontinuouslyidentifyandassesstherisksincurred

withinallimportantbusinessoperationsusingauniform,methodicalapproach

•Tomonitortheimplementationandeffectivenessofthemeasureschosentocounteractrisks

•ToregularlyreportonriskstomanagementandtheExecutiveBoard

•ToreviewrisksinthelightofSAP’sglobalinsurancestrategy

•Toissueandimplementsecuritypolicies•Toensurecompliancewithregulationsrequiringthe

establishmentandmonitoringofeffectiveinternalcontroloverfinancialreportingundertheU.S.Sarbanes-OxleyAct,section404

AsastockcorporationdomiciledinGermanythatissuessecuritieslistedonaU.S.stockexchange,wearesubjecttobothGermanandU.S.governance-relatedregulatoryrequirements.TheExecutiveBoardhasestablishedamoni-toringsystemforthetimelyidentificationofdevelopmentsthatmayendangerSAPAGasagoingconcern,asrequiredbytheGermanStockCorporationAct,section91(2).InU.S.law,therequirementsintheU.S.Sarbanes-OxleyAct,section404,applytous,andinaccordancewiththoserequirementsweconductanassessmentoftheeffective-nessofourinternalcontroloverfinancialreporting.

TheExecutiveBoardhasestablishedrisk-managementstructuresandisresponsiblefortheirformulationandef-fectiveness.Ourrisk-managementstructuresaremoni-toredbytheAuditCommitteeoftheSupervisoryBoard,asisourinternalstructureofcontrol.Inaddition,everyyearourauditoralsodetermineswhetherornotourearlyiden-tificationsystemforrisksisadequatetoidentifyrisksthatmayendangerSAPAGasagoingconcernearlyenough.

Ourrisk-managementstructuresweredevelopedandim-plementedtoreflectinternationallyrecognizedframeworkssuchasCOSO.Theyhavefivekeyelements:•Therisk-managementorganization•AGroup-widerisk-managementpolicyapprovedbythe

ExecutiveBoard•AuniformGroup-wideprocessmodelinvolvingthe

essentialelementsofriskmanagement–riskplanning,identification,analysis,control,andmonitoring

•SoftwareimplementedthroughouttheGrouptosupporttherisk-managementprocesses

•Group-widecascadingriskreporting

AnofficerfromtheGRCorganization,typicallyariskman-ager,isassignedtoeachofourimportantbusinessunitsandlocalsubsidiaries,seekingtoensurethatriskmanage-menteverywhereisconducteduniformlyandinclosecooperationwiththeGRCorganization.Regionalandglob-almanagementsupportstheGRCorganization’sofficersinthiswork.Inthisway,theorganizationunderpinsimple-mentationofandcompliancewithourrisk-managementpolicy.


Therisk-managementpolicyissuedbyourExecutiveBoardgovernshowwehandleriskwithinSAPanddefinesamethodologythatappliesuniformlyacrossallpartsoftheGroup.Itstipulateswhoisresponsibleforconductingrisk-managementactivitiesanddefinesreportingandmoni-toringstructures.Thepolicyisundercontinuousreviewandisamendedifnecessary.Ourglobalinternalauditser-viceconductstargetedreviewstotestimplementationofandcompliancewithourrisk-managementpolicy.Thefollowingsectionsdescribethekeycontentelementsofthepolicy:ourriskplanning,identification,analysis,control,andmonitoring.

Riskplanningandriskidentificationareconductedincoop-erationbetweentheriskmanagerandthebusinessunitorsubsidiary.Weusevarioustechniquestoidentifyrisks.TheGRCorganizationandthevariousbusinessunitsapplytheresultsofriskplanningandidentificationintheirriskanalyses,whichestimatetheprobabilityofoccurrenceofariskandthequantumofpotentiallossordamageassoci-atedwithitusingthesamemethodsacrosstheentireCom-pany.Dependingontheestimatedprobabilityofoccurrenceandpotentialloss,weclassifyariskas“high,”“medium,”or“low.”Inaddition,weapplyotherriskanalysismethodssuchassensitivityanalysesandsimulationtechniques.

Afterriskanalysiscomeriskcontrolandriskmonitoring.Thebusinessunitsareresponsibleforcontrollingtheirrisks.TheGRCorganizationworksinclosecooperationwiththepeopleresponsibleforcontrollingtherisks,seekingtoensurethateffectivestrategiesareimplement-edtominimizerisks.Risksmaybereducedbytakingactivestepstocounteractthem,orinsomecasesrisksareaccepted.ContinuouslymonitoringrisksputstheGRCorganizationinapositiontoidentifyanddirecteffectiveriskmitigationmeasures.Risk-monitoringworkmayalsoidentifynewrisks.Weonlyuseinsuranceforriskcontrolwheretheeconomicbenefitappearsworthwhiletous.

Wehavedevelopedourownrisk-managementsoftwaresolutiontocreatetransparencyacrossallrisksthatexistwithinourGroupaswellastofacilitateriskmanagementandtheassociatedreportingsystem.Werecordandaddressidentifiedrisksinoursolution.Risk-managementinforma-tionheldinthesolutionisconsolidatedandaggregatedforthequarterlyreport.Thesolutionalsosupportstherisk-basedapproachofourinternalcontrolandrisk-managementstructureforfinancialreporting(ICRMSFR).

Allidentifiedandrelevantrisksarereportedatthelocal,regional,andgloballevelsinaccordancewithourrisk-man-agementpolicy.Attheregionalandgloballevels,wehaveexecutiveriskcouncilsthatregularlydiscussrisksandcountermeasures.RisksarereportedtotheExecutiveBoardaccordingtodefinedcriteria,andifnecessarytheExecu-tiveBoarditselfmonitorsthem.Importantrisksarealsore-portedtothechairpersonoftheSupervisoryBoardandtothechairpersonoftheAuditCommittee.WeanalyzeanyrisksthatjeopardizetheGroup’sabilitytocontinueasagoingconcern,andifnecessarynotifytheExecutiveBoardandSupervisoryBoardadhoc.

Internal Control and Risk-Management Structure for Financial ReportingOurinternalcontrolandrisk-managementstructureforfinancialreporting(ICRMSFR)isembeddedinourGroup-widerisk-managementstructuresandincludesorganiza-tionalstructuresandcontrolandmonitoringstructuresdesignedtoensurethatdataandinformationconcerningourbusinessarecollected,compiled,andappraisedinaccordancewiththelawandproperlyreflectedinthecon-solidatedIFRSConsolidatedFinancialStatementsandtheReviewofOperations.

OurICRMSFRincludespolicies,procedures,andmea-suresdesignedtosecurecomplianceofourfinancialreportswiththeapplicablelawandstandards.Weanalyzenewstatutes,standards,andotherpronouncements,becausefailuretoimplementthemwouldpresentasubstantialrisktothecomplianceofourfinancialreporting.Wecodifyalloftherulesthataregloballyrelevanttousinourinternalpolicydocuments,suchasourGroupAccountingGuide-lineandGlobalRevenueRecognitionGuideline.Thesepoli-ciesandourcorporateclosingdatescheduletogetherdefinetheclosingprocessinwhichallaffiliatesreporttoourcorporatefinancialreportingoffice.Thecorporatefinancial


reportingofficehelpsourlocalsubsidiariescomplywithGroupaccountingpolicyintheirfinancialstatementsandsupervisestheirwork.Ourinternalauditserviceandcorporatefinancialreportingofficeconductauditsofouraffiliates’financialreportsandtesttheeffectivenessofourinternalcontroloverfinancialreporting.Thecorporatefinancialreportingdepartmentdoesallofourconsolida-tion.Weoutsourcesomework,suchasvaluatingprojectedbenefitobligations.Theemployeeswhoworkonourfinancialreportingreceivetraininginourpoliciesandpro-cesses.OurICRMSFRhasbothpreventiveanddetec-tivecontrols,including,forexample,automatedandnonau-tomatedreconciliations,segregateddutieswithdoublecontrol,authorizationconceptsintheSAPsoftwaresystem,andmonitoring.Inadditiontothecomponentsmentionedabove,theanalysesthatourrisk-managementfunctionconducts,forexampleregularreviewsofprocessdocumen-tationandeffectivenesstesting,contributetotheidenti-ficationofrisksthataffectfinancialreportingandtothein-troductionofmeasurestomitigatethoserisks.

OurGRCorganizationandourindependentglobalinternalauditservicetesttheeffectivenessofourICRMSFR.Basedontheresults,ourmanagementassessestheef-fectivenessonDecember31eachyearoftheICRMSFRandpublishestheoutcomeofitsassessment.Acom-mitteechairedbySAPAG’schieffinancialofficermeetsregularlytosetthescopeforourtestofICRMSFReffec-tiveness,todiscussanypossibleweaknessesinthecontrols,andtodeterminemeasurestoaddressthem.Atitsmeet-ings,theAuditCommitteeoftheSupervisoryBoardregu-larlydeliberatesonthemanagement’sassessmentsoftheeffectivenessofourICRMSFRwithregardtotheIFRSConsolidatedFinancialStatements.

TheassessmentoftheeffectivenessofourinternalcontroloverfinancialreportinginaccordancewiththerequirementsintheU.S.Sarbanes-OxleyAct,section404,wasthatourinternalcontroloverfinancialreportingwaseffectiveonDecember31,2008.Wehavealsoconductedtheassess-mentofeffectivenessasitwasonDecember31,2009,andwedidnotfindanyindicationbyMarch10,2010,thatourinternalcontroloverfinancialreportingwasnoteffec-tiveonDecember31,2009.

However,neithertheICRMSFRnortherisk-managementstructurescanprovideabsolutecertaintywithregardtotheachievementoftheirpurposes.Notably,theICRMSFRoffersrelative–butnotabsolute–certaintythatstate-mentsinourfinancialreportsarenotmateriallymisleading.

Risk FactorsKeyrisksidentifiedandtrackedusingtheenterpriserisk-managementprogramaresummarizedbelow,brokendownbythesameriskcategoriesasweuseinourinternalrisk-managementreportingstructure.

Economic, Political, and Regulatory Risk

Thewidespreaduncertaintyintheglobaleconomyandinpoliticalconditionshasnegativelyimpactedourbusiness,financialposition,income,andcashflows,andmaycon-tinuetodosointhefuture.Ourcustomers’willingnesstoinvestinacquiringandimple-mentingSAPproductsgenerallyvarieswitheconomicandotherbusinessconditions.Intheregionsinwhichwedobusinessandtheindustriesinwhichourcustomersoperate,persistenteconomicuncertaintymaycontinuetohavenegativeeffects,including:•GenerallydecliningITinvestment•Decreasedcustomerdemandforoursoftwareandser-

vices,includingdelayed,cancelledandsmallerorders•Customers’inabilitytoobtaincreditonacceptableterms,

oratall,tofinancepurchasesofoursoftwareandservices•Increasedincidenceofdefaultandinsolvencyofcustom-

ers,businesspartners,andkeysuppliers•Increaseddefaultrisk,whichmayleadtosignificant

write-downsinthefuture•Greaterpressureonthepricesofourproductsand

services•Pressureonouroperatingmargin

In2009,theeconomiccrisisnegativelyimpactedourbusi-ness.Ifcurrenteconomicconditionspersistorfurtherworsen,weexpectasustainednegativeimpactonourrev-enuegrowth,moredefaults,andaconsequentnegativeimpactonourincome.Moreover,continuedorfurthereco-nomicdeteriorationcouldexacerbatetheotherriskswedescribeinthisreport.


Wehaveimplementedarangeofstrategiestoaddresstheserisks.Wewillcontinuetoapplycostdisciplineandaconservativefinancialplanningpolicy.Moreover,wearecontinuouslyadaptingourorganizationandprocessesastheeconomicenvironmentchanges.Asshownin2009,despitearangeofmeasuresandregularmonitoringoftherisksituation,wecannotexcludethepossibilitythatourbusiness,financialposition,income,orcashflowsmaybenegativelyimpacted.

Ourglobalbusinessactivitiessubjectustoregulatoryre-quirementsandeconomicandotherrisksthatcouldharmourbusiness,financialposition,income,orcashflows.Wecurrentlymarketourproductsandservicesinover120countriesintheAmericas,APJ,andEMEAregions.Salesinthesecountriesaresubjecttorisksinherentininterna-tionalbusinessoperations.Amongothers,theserisksin-clude:•Regionalandlocaleconomicdeclineorinstabilityand

resultingmarketuncertainty•Generaleconomicorpoliticalconditionsineachcountry

orregion•Conflictandoverlapamongdifferenttaxregimes•Possibletaxconstraintsimpedingbusinessoperationsin

certaincountries•Themanagementofanorganizationspreadovervarious

jurisdictions•Exchangeratefluctuations•Longerpaymentcycles•Regulatoryconstraintssuchasimportandexportrestric-

tions,competitionlawregimes,legislationgoverningtheuseoftheInternet,additionalrequirementsforthedevelopment,certification,anddistributionofsoftwareandservices,traderestrictions,changesintariffandfreightratesandtravelandcommunicationcosts

•Expensesassociatedwiththecustomizationofourprod-uctsonalocallevelandtransactingbusinessinthelocalcurrency

•Differingdemandsfromworkscouncilsandlaborunionsinthedifferentcountries

•Thehighercostofdoingbusinessinternationally

Asweexpandfurtherintonewregionsandmarkets,theseriskscouldintensify.Oneormoreofthesefactorscouldnegativelyimpactouroperationsgloballyorinoneormorecountriesorregions.Asaresult,ourbusiness,financialpositionandreputation,income,orcashflowscouldbeim-pacted.

Weaddresstheseriskswithvariousmeasuresdependingonthecircumstances,including,forexample,makinglocalorganizationalchanges,takingadvicefromeconomicsconsultants,lawfirms,taxadvisors,andauthoritiesinthecountriesconcerned,andbringingcourtactions.

Socialandpoliticalinstabilitycaused,forexample,byterroristattacks,warorinternationalhostilities,pandemicdiseaseoutbreaks,ornaturaldisasterscouldnegativelyimpactourbusiness.Terroristattacksandotheractsofviolenceorwar,pandemicdiseaseoutbreaks,ornaturaldisasterscouldhaveanega-tiveimpactontheworldeconomy.Theresultantsocialandpoliticalinstabilitycouldcontributefurthertothecurrenteconomicdeclineandeconomicandpoliticaluncertaintyinmanyregionsinwhichwedobusiness.Thatcouldnega-tivelyimpactourrevenueandinvestmentdecisions,andthoseofourcustomers.Ourcorporateheadquarters,whichin-cludesourmainresearchanddevelopmentdepartmentsandcertainothercriticalbusinessfunctions,islocatedintheGermanstateofBaden-Württemberg.AcatastrophiceventaffectingthenorthernpartofBaden-Württembergcouldhaveahighlymaterialimpactonouroperations.Cat-astrophiceventsatotherSAPcenters,notablyBuenosAires(Argentina),SãoPaulo(Brazil),Shanghai(China),Prague(CzechRepublic),Bangalore(India),Dublin(Ire-land),Paris,Ra’anana(Israel),Tokyo,MexicoCity,London,Vancouver(Canada),orSingapore,oratourU.S.locationsinNewYork,PaloAlto(California),orNewtownSquare(Pennsylvania),couldalsoimpactouroperations.Acata-strophiceventthatresultsinthelossofsignificantpercent-agesofpersonnelorthedestructionordisruptionofoper-ationsatourheadquartersorotherkeylocationscouldaffectourabilitytoprovidenormalbusinessservicesandtogeneratetheexpectedincome.


Theareainwhichourheadquartersissituatedisgenerallyfreeofcatastrophicnaturaldisasters.OurdataredundanciesanddailyinformationbackupworldwidearedesignedtoensurethatourkeyITinfrastructureandcriticalbusinesssystemsshouldnotsufferamaterialnegativeimpactfromsuchanaturaldisaster.Tominimizepossiblelossesandenableacoordinatedandeffectivecorporateresponse,wehavealreadyorganizedlocalcrisisresponseteamsateachoftheplacesmentionedaboveanddevelopedplanstokeepcriticalbusinessprocessesworking.Ourregionalre-sponseteamfortheAmericas,APJ,orEMEAsalesre-gions,andourglobalresponseteam,coordinatetheworknecessitatedbyacrisis,dependingonthemagnitudeofthecrisis.Bycontinuingtoorganizemorelocalcrisisre-sponseteams,includingatoursmallerlocations,andbydevelopingbusinesscontinuityplansforglobalaspectsofouractivity,weareimplementingaworldwidebusinesscontinuitymanagementsystem.ThesuccessfulauditofourITorganizationtotheinternationallyrecognizedBritishstandardBS25999(BusinessContinuityManagement)inAugust2009wasanimportantmilestoneintheimplemen-tationofourbusinesscontinuitymanagementsystem.Althoughthisriskcouldmaterialize,webelievethatinviewofthesemeasuresandthewaySAPisorganized,thelikelihoodofalong-termimpactonourassets,financialposition,andincomeislow.

Market Risks

Ifourestablishedcustomersdonotbuyadditionalsoftwareproducts,renewmaintenanceagreements,orpurchaseadditionalprofessionalservices,ourbusiness,financialposi-tion,income,orcashflowscouldbenegativelyimpacted.Ourlargeinstalledcustomerbasetraditionallygeneratesadditionalnewsoftware,maintenance,consulting,andtrainingrevenue.In2009,wecontinuedtorolloutSAPEn-terpriseSupport,awide-rangingsetofvalue-addingsup-portservicesthathelpsourcustomersoperatetheirITsys-temsmoreeffectively.Toachieveourbusinessgoals,wedependmateriallyonthesuccessofoursupportportfolioandonourownabilitytodeliverhigh-qualityservices.Ifexistingcustomerscancelordonotrenewtheirmaintenancecontracts,oriftheyseekalternativeofferingsfromothervendorsordecidenottobuyadditionalproductsandservices,thiswillhaveamaterialnegativeimpactonourbusiness,financialposition,income,orcashflows.

Wecontinuouslymonitortheperformanceofoursupportorganizationindeliveringitsservicesaspromised,andwecontinuouslymonitorthesatisfactionofourcustomers,workingcloselywithSAPusergroups,sothatwecantakestepstomitigatetheserisksifnecessary.

Ourmarketshareandincomemaydeclineduetotheintensecompetitionandconsolidationinthesoftwareindustry.Thesoftwareindustrycontinuestoevolverapidly,duetoconsolidationandtechnologicalinnovation.Asaresult,themarketforourproductsandservicesremainsintenselycompetitive.Overthelasttenyears,wehaveexpandedfromourtraditionallargeERPofferingstonewproductsandservices,whichexposeustocompetitorsvaryinginsize,geographiclocation,andspecialty.Competitorsmaygainmarketsharebecauseofacquisitions,orbecausethegrowingpopularityofnewdevelopmentmodels,suchasservice-orientedarchitecture(SOA),andnewdeliveryandlicensingmodels,suchassoftwareasaservice(SaaS),businessprocessoutsourcing(BPO),andcloudcomputing,enablesthemtoalsoofferintegratedpackagesolutionsthatcompetewithours.Forexample,IBM,Oracle,andMi-crosofthaveacquiredcompaniestoextendtheirsolutions


portfoliosormarketshare,whichhasincreasedcompetitivepressureonSAP.SaaSproviderssuchasSalesforce.com,partofagrowingSaaSecosystemforapplications,alsocompetewithSAPforsegmentshare.Currentandpotentialcompetitorsareestablishingormayinthefutureestablishorextendcooperativerelationshipsamongthemselvesorwiththirdpartiestobetteraddresstheircustomers’needs.Thisincreasedcompetitioncouldresultinincreasedpricepressure,costincreases,andlossofmarketshareforSAP.

However,webelievethatourstrategyoforganicgrowthcomplementedbyfocusedacquisitionsandouradoptionoftheSaaSmodelremainvalidandrelevantforthisenviron-mentandthatwecanprotectourleadershipincoremarkets.

Business Strategy Risks

Demandforournewproductsmaynotdevelopasplannedandourmidmarketstrategymaynotbesuccessful.Especiallyinthecurrenteconomicclimate,thedemandfortheproductsandserviceswehaverecentlyintroduced,andcustomers’acceptanceofthem,aresubjecttoahighlevelofuncertainty.Gainingnewmidsizecustomerswiththeaimofbuildingonourleadingpositioninthemidmarketisakeypartofourstrategy.Inthatcontext,introducinganewbusinessmodel,expandingourpartnerecosystem,andcreatingtheinfrastructureforvolumebusinessareallofgreatimportance.Despiteourefforts,demandforourproductsandservicesinthemidmarketmayfailtodevelopasplanned,andthiscouldhaveamaterialnegativeimpactonourbusiness,financialposition,income,orcashflows.Inaddition,enteringnewmarketsegmentsexposesustotherisksassociatedwithdevelopingandlaunchingnewproducts.Formoreinformation,seetheProductRiskssec-tion.

Wearecontinuingourstrategyoftargetedandmonitoredproductdeliveriestomeetourcustomers’requirementsforproductsthatoffershortertime-to-valueatminimumriskandpredictablecosttobothSAPandthecustomer.There-fore,webelieveitisunlikelythatplannedinnovationsornewbusinessmodelswillsignificantlyimpairourplannedresults.

Ifwefailtodevelopnewrelationshipsandenhanceexistingrelationshipswithchannelpartners,softwaresuppliers,systemintegrators,value-addedresellers,andindependentsoftwarevendors(ISVs)thatcontributetothesaleofourproductsandservices,ourbusiness,financialposition,in-come,orcashflowsmaybeadverselyimpacted.Wehaveenteredintocooperationagreementswithchan-nelpartnersandleadingsoftwareandhardwarevendors.Mostoftheseagreementsareofrelativelyshortdurationandarenonexclusive.Thepartiesconcernedtypicallymaintainsimilararrangementswithourcompetitors,andsomecompetewithusthemselves.Additionally,wemaintainanetworkofISVsthatdeveloptheirownbusinessapplicationsfortheSAPNetWeavertechnologyplatform.Thesethird-partyrelationshipscarrynumerousrisks.Forexample:•Therelevantcounterpartiesmaynotrenewtheiragree-

mentswithusatallorontermsacceptabletous•Therelevantcounterpartiesmayfailtoprovidehigh-quali-

typroductsandservices•Therelevantcounterpartiesmaynotdevotesufficient

resourcestopromote,sell,support,andintegratetheirproductswithinourportfolio

Ifoneormoreoftheserisksmaterialize,themarketingofanddemandforourproductsandservicesmaybenegative-lyimpactedandwemaynotbeabletocompetesuccess-fullywithothersoftwarevendors,whichcouldharmourreputationornegativelyimpactourbusiness,financialposi-tion,income,orcashflows.

Weassessthelikelihoodofsuchariskeventhavingasig-nificantimpactonourexpectedbusinessperformancetobelow,because,forleadingsystemintegratorsandforITinfrastructureproviderssuchasIBMandMicrosoft,evenwheretheyareincompetitionwithus,cooperationagreementsareanefficientandattractiveopportunitytoraisetheirownbusinessperformanceintheenterprisesector.Inourview,thisalsoholdstrueforouragreementwithOraclegoverningSAP’sresaleofOracledatabaselicenses,sinceweareOracle’slargestdatabaseresellerworldwide.Moreover,wehaveestablishedathoroughcertificationprocessforallthird-partysolutions,designedtoensurethattheyareofconsistentlyhighquality.Todate,wehavecertifiedmorethan2,000third-partysolu-tionsforSAPNetWeaver.


Human Capital Risks

Ifwedonoteffectivelymanageourgeographicallydis-persedworkforce,ourbusinessmaynotoperateefficient-ly,andthiscouldhaveanegativeimpactonourincome.Oursuccessisdependentonappropriatealignmentofourworkforceplanningprocessandlocationstrategywithourmid-termstrategy.Changesinheadcountandinfrastruc-tureneedscouldresultinamismatchbetweenourcostsandrevenue.Additionally,itiscriticalthatwemanageourgeographicallydispersedemployeebasewell.Ifwedonotmanageourheadcountandourgeographicallydispersedemployeebaseeffectively,ourbusinessmaynotoperateefficientlyandthiscouldhaveanegativeimpactonourfinan-cialposition,income,orcashflows.

Wearefocusingonmitigatingthisriskthrougharangeofactivitiesincluding,butnotlimitedto,successionmanage-ment,employerbranding,careermanagement(offeringop-portunitiestoimproveskills,competencies,andqualifica-tions),andextendedbenefitprograms–forexample,aperformance-orientedremunerationsystem,anemployer-financedpensionplan,andlong-termincentiveplans.

Ifweareunabletoattractandretainmanagementandemployeeswithspecializedknowledgeandtechnologyskills,wemaynotbeabletomanageouroperationseffectivelyordevelopsuccessfulnewproductsandservices.Ourhighlyqualifiedemployeesandmanagersprovidethefoundationforourcontinuedsuccess.Competitioninourindustryforhighlyskilledandspecializedpersonnelandleadersisintense.IfweareunabletoattractwellqualifiedpersonnelorifourhighlyskilledandspecializedpersonnelleaveSAPandqualifiedreplacementsarenotavailable,wemaynotbeabletomanageouroperationseffectivelyordevelopsuccessfulnewproductsandservices.Thisisparticularlytrueaswecontinuetointroducenewandin-novativetechnologyofferings.Hiringsuchpersonnelmayalsoexposeustoclaimsbyothercompaniesseekingtopreventtheiremployeesfromworkingforacompetitor.

Despitetheserisks,webelieveourleadingmarketpositionwillenableustohireinternationaltoptalentswiththepo-tentialtocontributetoSAP’sgrowingbusinesssuccessinthefuture.Inaddition,weseektobuildemployeeandmanagementstrengthsthrougharangeoftargetededuca-tionandtraining,mentoringandcoachingprograms,andspecialtop-talentprograms.Wethereforecurrentlyassesstheriskofatangibleadverseimpactonourbusinessoperationsfromfailuretorecruittheemployeesweneed,andfromthelossofmanagersandemployees,aslow.

Organizational and Governance-Related Risks

BothinGermanyandintheUnitedStates,corporategov-ernancelawshavebecomemuchmoreonerous.AsastockcorporationdomiciledinGermanywithsecuri-tieslistedinGermanyandtheUnitedStates,wearesub-jecttoGerman,European,andU.S.governance-relatedregulatoryrequirements.Thestandardshavebecomesig-nificantlymoreonerousinrecentyears,notablywiththeimplementationoftheSarbanes-OxleyActandmorerigor-ousapplicationoftheForeignCorruptPracticesActintheUnitedStates,andtheincreasingdegreeofregulationinGermany.Therulesarehighlycomplex,andtherecanbenoassurancethatwewillnotbeheldinbreachofregu-latoryrequirementsif,forexample,individualemployeesbehavefraudulentlyornegligently,orifwefailtocomplywithcertainformaldocumentationrequirements.Anyrelatedallegationsofwrongdoingagainstus,whethermeritedornot,couldhaveamaterialnegativeimpactonourreputationaswellasonthetradingpriceofourcommonstockandADRs.

Itisdifficulttoassesstheriskinvolvedexactlyduetothelargevarietyofpotentialnoncompliancescenarios.WecontinuallymonitornewregulatoryrequirementsandensureemployeeawarenessofrequiredstandardsandourCodeofBusinessConduct.Wehaveaglobalcomplianceofficethatmanagesallofourpolicy-relatedcompliancemea-sures.Achiefglobalcomplianceofficercoordinatespolicyimplementation,training,andenforcementeffortsthrough-outSAP.EnforcementactivitiesaremonitoredandtrackedtoallowtrendingandriskmanagementanalysisandtoensureconsistentpolicyapplicationthroughouttheGroup.


SAP’ssustainabilitystrategymaybedifficulttomaintain,andafailurebyustomeetcustomerorpartnerexpec-tationsorgenerallyacceptedsustainabilitystandardscouldhaveanadverseimpactonourresultsofoperations,ourbusiness,andourreputation.ForSAP,sustainabilityisastandardthatguidesouren-gagementinnewbusinessopportunities–holisticallyen-compassingprofitablegrowth,environmentalvalue,andsocietalbenefit.Therefore,weaddresssustainabilityrisks,especiallyrelatingtoclimatechange,corporateintegrity,humanresourcesmanagement,theethicalbehaviorofsup-pliers,theaccessibility,user-friendliness,andsafetyofourproducts,privacyanddataprotectioninconnectionwiththeuseofSAPproducts.Ifoursustainabilitystrategyisnotsufficienttomeettheexpectationsofourcustomersandpartnersorgenerallyacceptedsustainabilitystan-dards,thiscouldharmourreputationandhaveanadverseimpactonourbusiness,income,financialposition,orcashflows.Weaddresstherisksintheserespectswithsuitablemeasuresaimedatavoidingnegativeeffectsforourcustomers,employees,andinvestors,allofwhomexpectareliablesustainabilitystrategyfromSAP.Inourassessment,therefore,thisriskislow.

Communication and Information Risks

Wemaynotbeabletopreventunauthorizeddisclosureofourfuturestrategies,technologies,andproducts,orofinformationthatissubjecttodataprotectionorprivacylaw,andsuchdisclosuremayharmourbusiness.Wehavetakenarangeofmeasuresinrecentyearstomiti-gatetheriskthatinternalconfidentialcommunicationsandinformationaboutsensitivesubjects,suchasourfuturestrategies,technologies,andproducts,orinformationthatissubjecttodataprotectionorprivacylaw,areimproperlyorprematurelydisclosedtothepublic.However,thereisnoguaranteethattheprotectivemechanismswehaveestab-lishedwillworkineverycase.Ourcompetitivepositioncouldsustainseriousdamageif,forexample,confidentialinformationaboutthefuturedirectionofourproductdevel-opmentbecamepublicknowledge,resultinginreducedrevenueinthefuture.Anysuchprematuredisclosurecouldhaveanegativeimpactonourbusiness,assets,income,orcashflows.

ThemeasuresdescribedaboveincludeGroup-wideman-datorysecuritystandardsandguidelinesrelatingtointernalandexternalcommunications,technicalprecautionstopreventthetransmissionofconfidentialinternalcommuni-cationsoverexternalcommunicationnetworks,andtheprovisionofencryption-protectedequipmenttoemployeeswhofrequentlyhandleconfidentialinformation.Becauseofthewiderangeofmeasuresinplace,whichweregularlyreview,weconsiderthelikelihoodthatthisriskmaynega-tivelyimpactourassets,financialposition,orincometobelow.

Financial Risks

Ourrevenuemixmayvaryandmaynegativelyimpactourprofitmargins.Variancesorslowdownsinoursoftwarelicensesalesmaynegativelyimpactcurrentorfuturerevenuefrommain-tenanceandservices,sincesuchrevenuetypicallyfollowsandisdependentonsoftwaresales.Anydecreaseinthepercentageofourtotalrevenuederivedfromsoftwarelicensingcouldhaveamaterialnegativeimpactonourbusiness,financialposition,income,orcashflows.Wehaveintroducednewlicensingmodelssuchason-demandandsubscriptionmodelswhichtypicallyresultinrevenuebeingrecognizedoveranextendedperiod.Asignificantportionoftherelatedcostofdeveloping,marketing,andprovidingoursolutionstocustomersundersuchnewmodelscouldbeincurredpriortotherecognitionofrevenue,thusimpactingourprofitmarginintheshortterm.

Theeconomiccrisishasledtoanincreasedriskofdefaultonreceivablesandfinancialassetsandmaynegativelyimpactourfinancialassets.Acontinuationordeepeningoftheeconomiccrisismayleadtomoresuchlosses.Ifweexperienceahigherriskofdefaultonourreceivablesandfinancialassets,ourbusiness,financialposition,in-come,orcashflowsmaybenegativelyimpacted.SAP’spolicywithregardtoinvestmentinfinancialassetsissetoutinourinternaltreasuryguidelinedocument,whichisacollectionofuniformrulesthatapplygloballytoallcompaniesintheGroup.Amongitsstipulations,itrequiresthatweinvestonlyinassetsfromissuersorfundswitharatingofA-orbetter.Theweightedaverageratingofourfi-nancialassetsisintherangeofAA-toA+.Wepursueapolicyofcautiousinvestmentcharacterizedbywideportfo-


liodiversificationwithavarietyofcounterparties,predomi-nantlyshort-terminvestments,andtheuseofstandardin-vestmentinstruments.However,therecanbenoguaranteethatthosemeasureswillprovesuccessful.

Becauseofourinvestmentpolicy,wedonotcurrentlyforeseetheproblemsonthefinancialmarketshavinganysignificantnegativeeffectonourfinancialassets.Wehavetakenmeasuresandimplementedglobalprojectstomonitorandreducedefaultsandlossesonreceivables.

Ourfutureliquiditymaybeimpactedbyanegativedevelop-mentintheglobaleconomy.Weuseglobalcentralizedfinancialmanagementtocontrolliquidassets,interest,andcurrencies.TheprimaryaimistomaintainliquidityintheGroupatalevelthatisadequatetomeetourobligations.OurnetliquidityonDecember31,2009,was€1.6 billion.InSeptember 2009,wereplacedourexisting€1 billionsyndicatedcreditfacility,whichwasduetoexpireinNovember 2009.Thenewsyndicatedcreditfacilitytotals€1.5 billionandhasamaturityofthreeyears(September2012).Wealsohaveotherbilateralcreditfacil-itiesonwhichwecandrawifnecessary.However,wecannotexcludethepossibilitythatuncertaintiesinthecreditmarketmayleadtoincreasedfinancingexpensesandnegativelyaffectourfinancialposition,income,orcashflows.

Management’suseofestimatesmayaffectourincomeandfinancialposition.TocomplywithIFRS,managementisrequiredtomakemanyjudgments,estimates,andassumptions.Thefactsandcircumstancesonwhichmanagementbasestheseestimatesandjudgments,andmanagement’sjudgmentofthefactsandcircumstances,maychangefromtimetotimeandthismayresultinsignificantchangesintheestimates,withanegativeimpactonourassetsorincome.

Weaddresstheseriskswitharangeofmeasures,suchassuitablemanagementtraininganddoubleverificationofestimates.

Currentandfutureaccountingpronouncementsandotherfinancialreportingstandards,especiallybutnotonlyconcerningrevenuerecognition,mayadverselyaffectthefinancialinformationwepresent.Weregularlymonitorourcompliancewithallofthefinancialreportingstandardsthatareapplicabletousandanynewpronouncementsthatarerelevanttous.Findingsofourmonitoringactivityornewfinancialreportingstan-dardsmayrequireustochangeourinternalaccountingpol-icies,especiallybutnotonlyconcerningrevenuerecogni-tion,toalterouroperationalpolicysothatitreflectsneworamendedfinancialreportingstandards,ortorestateourpublishedfinancialaccounts.Wecannotexcludethepossi-bilitythatthismayhaveamaterialimpactonourassets,income,orcashflows.Forasummaryofsignificantaccount-ingpolicies,seetheNotestotheConsolidatedFinancialStatementssection,Note3.

Becauseweconductoperationsthroughouttheworld,ourassets,income,orcashflowsmaybeaffectedbycurrencyandinterest-ratefluctuations.Ourmanagementandexternalaccountingisineuros.Nevertheless,asignificantportionofourbusinessiscon-ductedincurrenciesotherthantheeuro.Approximately64%ofourconsolidatedrevenuein2009wasattributabletooperationsoutsidetheeuroareaandwastranslatedintoeuros.Consequently,period-over-periodchangesintheeuroratesforparticularcurrenciescansignificantlyaffectourreportedrevenueandincome.Ingeneral,appre-ciationoftheeurorelativetoanothercurrencyhasanegativeeffectwhiledepreciationoftheeurohasaposi-tiveeffect.Variable-interestbalance-sheetitemsarealsosubjecttochangesininterestrates,sothereistheriskthatthesebalance-sheetitemsmayresultinanegativeim-pactonourincomeorcashflows.Formoreinformationaboutourcurrencyandinterest-raterisksandourrelatedhedgingactivity,seetheNotestotheConsolidatedFinan-cialStatementssection,Note26.

Wecontinuouslymonitorourexposuretocurrencyfluctua-tionrisksbasedonbalance-sheetitemsandexpectedcashflowsandpursueaGroup-wideforeignexchangeriskmanagementstrategyusing,forexample,derivativefinan-cialinstrumentsasappropriate.Tohedgetheriskfromexposuretointerest-ratefluctuations,wehaveenteredintoseveralinterest-rateswapcontracts,withwhichwecon-vertthevariableinterestintofixedinterest.


Thecostofusingderivativeinstrumentstohedgeshare-basedcompensationplansmayexceedthebenefitsofhedgingthem.ToreducetheimpactofourSTARandSAPSOPshare-basedcompensationplansonourincomestatement,weusederivativeinstrumentstoreducerisksresultingfromfutureexpensesassociatedwiththoseplans.Wedecideonanindividualbasisifandtowhatextentwehedgethisrisk.However,wecannotexcludethepossibilitythattheexpenseofhedgingtheSTARandSOPplansmayexceedthebenefitachievedbyhedgingthemorthatadecisionnottohedgemayprovedisadvantageous.Nonetheless,weconsiderthelikelihoodthatthisriskmayimpactourassetsorincometobelow.

Project Risks

ImplementationofSAPsoftwareofteninvolvesasignificantcommitmentofresourcesbyourcustomersandissubjecttoanumberofsignificantrisksoverwhichweoftenhavenocontrol.Theserisksinclude,forexample:•OurSAPtrainedconsultantsmaynotbeimmediately

availabletoassistcustomersintheimplementationofourproducts.

•Thefeaturesoftheimplementedsoftwaremaynotmeettheexpectationsorthesoftwaremaynotfitthebusinessmodelofthecustomer.

•Third-partyconsultantsmaynothavetheexpertiseorresourcestosuccessfullyimplementthesoftware.

•Customer-specificfactorsmaydestabilizetheimplemen-tationofthesoftware.

•CustomersandpartnersmaynotimplementthemeasuresofferedbySAPtosafeguardagainsttechnicalrisks.

Asaresultoftheseandotherrisks,someofourcustom-ershaveincurredsignificantthird-partyconsultingcostsinconnectionwiththepurchaseandinstallationofSAPsoft-wareproducts.Also,somecustomers’implementationprojectshavetakenlongerthanplanned.Wecannotguar-anteethatwecanreduceoreliminateprotractedinstalla-tionorsignificantthird-partyconsultingcosts,thatshortag-esofourtrainedconsultantswillnotoccur,orthatourcostswillnotexceedtheagreedfeesonfixed-pricecontracts.Unsuccessfulcustomerimplementationprojectscouldresultinclaimsfromcustomers,harmSAP’sreputation,andcausealossoffuturerevenues.

OurcustomersnowincreasinglyfollowmodularprojectapproachestooptimizetheirITenvironment.Also,ourproj-ectsuseriskmanagementprocessesthatareseamlesslyintegratedintoSAPprojectmanagementmethodsandareintendedtosafeguardsuccessfulimplementationwithco-ordinatedrisk-managementandquality-managementpro-grams.Inouropinion,wemakeadequatefinancialplanningprovisionfortheremainingindividualrisks.Inaddition,wehaveadequateinsurancecoverageagainstarangeoftypicalliabilityscenariosdefinedonthebasisofknownprojectrisks.Inviewofthesemeasures,weconsidertheprojectriskresultingfromsoftwaresales,implementations,andupgradestobelowoverall.However,wecannotexcludethepossibilitythatthisriskcouldmateriallyaffectourassets,finances,orprofit.


Product Risks

Undetectedsecurityflawsinoursoftwaremaybeexploitedbyotherpersons,damagingSAPorourcustomers.Ourproductsincludesecurityfeaturesthatareintendedtoprotecttheprivacyandintegrityofourcustomers’data.Despitethesesecurityfeatures,ourproductsmaybevul-nerabletoattacksbyunauthorizedindividualsororgani-zationssucceeding,forexample,inbypassingfirewallsandmisappropriatingconfidentialinformation.Suchattacksorotherdisruptionscouldjeopardizethesecurityofinforma-tionstoredinandtransmittedthroughthecomputersys-temsofourcustomersorbusinesspartnersandleadtosignificantclaimsfordamagesagainstus.Resolvingprob-lemsandclaimsassociatedwithactualorallegeddefectsmaybecostlyandmayhaveamaterialimpactonourrepu-tationoroperations.

Wecounterthisriskwithamultilevelapproach.First,ourdevelopmentprocessincludesmeasuresforpreventingse-curityproblems,whicharesubjecttomultiplecontrolcheckspriortoproductdelivery.Secondly,ourapplicationsaresuppliedwithsecuritydocumentationintendedtoen-abletheiroptimumintegrationintothecustomer’sexistingsecurityarchitectureusingthesecurityfunctionswede-liverwithproducts.However,intheunlikelyeventthatase-curityproblemisidentifiedinSAPsoftware,wehelpcus-tomersrectifythesituationasquicklyaspossible.Despitethefactthatweperformextensivesecuritytestsandourproductshavenotbeensignificantlyexposedtomajorse-curityattackssofar,wecannotexcludethepossibilitythatthisriskcouldadverselyimpactourassets,financialposition,orincome.

Weusetechnologiesunderlicensefromthirdparties.Losingthesetechnologiescoulddelayimplementationofourproductsorforceustopayhigherlicensefees.Wehavetakennumerousthird-partytechnologiesunderlicenseandincorporatedthemintoourproducts.Wemaybehighlydependentonthosetechnologiesintheag-gregate.Therecanbenoassurancethatthelicensesforthesethird-partytechnologieswillnotbeterminated,thatthelicenseswillbeavailableinthefutureontermsacceptabletous,orthatwewillbeabletolicensethird-partysoftwareforfutureproducts.Changesinorthelossofthird-partylicensescouldleadtoamaterialincreaseinthecostoflicensing,orSAPsoftwareproductsmay

becomeunusableormateriallyreducedintheirfunctional-ity.Asaresult,wemayneedtoincuradditionaldevelop-mentorlicensingcoststoensurethecontinuedfunctional-ityofourproducts.Theriskincreasesifweacquireacompanyoracompany’sintellectualpropertyassetsthathavebeensubjecttothird-partytechnologylicensingandproductstandardslessrigorousthanourown.Wead-dressthisriskbyconductinggenerallythoroughduedili-gencebeforetakinglicenses,exercisingcomprehensivecontractmanagement,systematicallymonitoringourdevel-opmentprocesses,andregularlyreviewingourinvest-ments.

Ifweareunabletokeepupwithrapidtechnologicalinnovations,wemaynotbeabletocompeteeffectively.Ourfuturesuccessdependsinpartonourabilityto:•Continuetoenhanceandexpandourexistingproducts

andservices;and•Developandintroducenewproductsandprovidenew

servicesthatsatisfyincreasinglysophisticatedcustomerrequirements,keeppacewithtechnologicaldevelop-ments,andareacceptedinthemarket.

Therecanbenoassurancethattheproductenhancements,newsolutions,andserviceswedevelopwillsuccessfullyanticipateandadequatelyreflectchangingtechnologiesandcustomerrequirements.Norcantherebeanyassurancethatwewillbringnewsolutions,solutionenhancements,andservicestomarketbeforeourcompetitors,orthatwewillbeabletogenerateenoughrevenuetooffsetthesignificantresearchanddevelopmentcostsweincurinbringingtheproductsandservicestomarket.Wemaynotanticipateanddeveloptechnologicalimprovements.Inaddition,wemaynotsucceedinadaptingourproductstotechnologicalchange,changingregulatoryrequirements,emergingindustrystandards,andchangingcustomerrequirements.Finally,wemaynotsucceedinproducinghigh-qualityproducts,enhancements,andreleasesinatimelyandcost-effectivemannertocompetewithapplicationsandothertechnologiesofferedbyourcompetitors.


Wecontinuouslyalignourorganizationandprocesses,aswellasourproductsandservices,tothechangingmarketandweworkwithstate-of-the-arttechnologies.Inaddition,weconductwide-rangingmarketandtechnologyanalysesandresearchprojects,seekingtoensurethatweremaincompetitiveinthefuture.Inviewofthesemeasures,weconsiderthelikelihoodthatthisriskmaynegativelyimpactourassets,financialposition,orincometobelow.

Undetecteddefectsordelaysinnewproductsandproductenhancementsmayresultinincreasedcoststousandreduceddemandforourproducts.Toachievecustomeracceptance,ournewproductsandproductenhancementsoftenrequirelongdevelopmentandtestingperiods.Developmentworkissubjecttovariousrisks.Forexample,scheduledmarketlaunchescouldbedelayed,orproductsmaynotcompletelysatisfyourstrin-gentqualitystandards,meetmarketneedsortheexpecta-tionsofcustomers,orcomplywithlocalstandardsandre-quirements.Newproductsmaycontainundetecteddefectsortheymaynotbematureenoughtoprocesslargevol-umesofdata.Insomecircumstances,wemaynotbeinapositiontorectifysuchdefectsorentirelymeettheex-pectationsofcustomers.Asaresult,wemaybefacedwithcustomerclaimsforcashrefunds,damages,replacementsoftware,orotherconcessions.Theriskofdefectsandtheiradverseconsequencesmayincreaseasweseektointro-duceavarietyofnewsoftwareproductssimultaneously.SignificantundetecteddefectsordelaysinintroducingnewproductsorproductenhancementscouldaffectmarketacceptanceofSAPsoftwareproducts,andcouldhaveamaterialnegativeimpactonourbusinessandreputation.

TheuseofSAPsoftwareproductsbycustomersinbusiness-criticalapplicationsandprocessesandtherelativecom-plexityofoursoftwareproductsentailariskthatcustomersorthirdpartiesmaypursuewarranty,performance,orotherclaimsagainstusforactualorallegeddefectsinSAPsoftwareproducts,inourprovisionofservices,orinourapplicationhostingservices.Wehaveinthepastbeen,andmayinthefuturebe,subjecttowarranty,performance,orothersimilarclaims.

Althoughourcontractsgenerallycontainprovisionsde-signedtolimitourexposurearisingoutofactualorallegeddefectsinSAPsoftwareproductsorinourprovisionofservices,theseprovisionsmaynotcovereveryeventualityorbeeffectiveundertheapplicablelaw.Regardlessofitsmerits,anyclaimcouldentailsubstantialexpenseandrequirethedevotionofsignificanttimeandattentionbykeymanagementpersonnel.Publicitysurroundingsuchclaimscouldaffectourreputationandthedemandforoursoft-ware.Wecountertheseriskswiththoroughprojectmanage-ment,projectmonitoring,rigidandregularqualityassur-ancemeasurescertifiedtoISO9001,andprogramriskassessmentsduringproductdevelopment.Thegenerallyhighqualityofourproductsisconfirmedbyourconstantlyhighcustomersatisfactionratingsasmeasuredbyregularcustomersurveys.Inourassessment,therefore,theriskthatourplannedresultsmaybesignificantlyimpairedbyproductdefectclaimsfromSAPcustomersislow.

OurSAPNetWeavertechnologyplatformstrategymaynotsucceedormaymakesomeofourproductslessdesirable.ThecontinuedsuccessoftheSAPNetWeavertechnologyplatformdependsonourmaintainingadynamicnetworkofindependentsoftwarevendorsdevelopingtheirownbusi-nessapplicationsforSAPNetWeaver.Inaddition,aswithanyopenplatformdesign,thegreaterflexibilityprovidedtocustomerstousedatageneratedbynon-SAPsoftwaremightreducecustomerdemandtoselectandusecertainSAPsoftwareproducts.IfSAPNetWeaverisnotwellre-ceivedbycustomers,ifcompetitorsdevelopsuperiortech-nology,orifthesolutionhassignificantdefects,theremaybeamaterialadverseimpactonourbusiness,finan-cialposition,income,orcashflows.

Tocounterthisrisk,wehaveestablishedathoroughcertifi-cationprocessforallthird-partysolutions,designedtoensurethattheyareofconsistentlyhighquality.Uptonow,morethan2,000third-partysolutionshaveattainedSAPNetWeavercertification,soweassessthelikelihoodthatthisriskwillmaterializeaslow.


Other Operational Risks

Thirdpartiesmayclaimweinfringetheirintellectualproper-tyrights;thatcouldresultindamagesbeingawardedagainstusandlimitourabilitytoutilizecertaintechnologiesinthefuture.Thirdpartieshaveclaimed,andmayclaiminthefuture,thatwehaveinfringedtheirintellectualpropertyrights.Webelieveoursoftwareproductswillincreasinglybesubjecttosuchclaimsasthenumberofproductsinourindustrysegmentgrows,andasweexpandintonewindustrysegmentswithourproducts,resultingingreateroverlapinthefunctionalscopeofproducts.Anyclaims,withorwithoutmerit,andnegotiationsorlitigationrelatingtosuchclaims,couldprecludeusfromutilizingcertaintechnolo-giesinourproducts,betime-consuming,resultincostlylit-igation,orrequireustopaydamagestothirdpartiesand,undercertaincircumstances,payfines.Theycouldalsore-quireustoenterintoroyaltyandlicensingarrangementsontermsthatarenotfavorabletous,causeproductshipmentdelays,subjectourproductstoinjunctions,requireacom-pleteorpartialredesignofkeyproducts,resultindelaystoourcustomers’investmentdecisions,anddamageourreputation.

Softwareingeneralincludesmanycomponentsormodulesthatprovidedifferentfeaturesandperformdifferentfunc-tions.Someofthesefeaturesorfunctionsmaybesubjecttointellectualpropertyrights.Itcanhappenthatrightsofanotherpartyrefertotechnicalaspectsthataresimilartooneormoretechnologiesinoneormoreofourproducts.SAPrespectstheintellectualpropertyrightsofthirdparties.Wecannotexcludethepossibilitythatintellectualpropertyrightsofthirdpartiesmayprecludeusfromutilizingcertaintechnologiesinourproductsorrequireustoenterintoroyaltyandlicensingarrangementsonunfavorableorex-pensiveterms.

Thesoftwareindustryismakingincreasinguseofopensourcesoftwareinitsdevelopmentworkonsolutions.Wealsointegratecertainopensourcesoftwarecomponentsfromthirdpartiesintooursoftware.Theopensourcelicensemayrequirethatthesoftwarecodeinthosecomponentsorthesoftwareintowhichtheyareintegratedbefreelyac-cessibleunderopensourceterms.Whilewetakeprecau-

tionstoprotectopensourcesoftware,wecannotexcludethepossibilitythatthird-partyclaimsmayrequireustomakefreelyaccessibleunderopensourcetermsaproductofoursornon-SAPsoftwareuponwhichwedepend.Wecannotexcludethepossibilityofaresultantmaterialimpactonourassets,financialposition,orincome.

Claimsandlawsuitsagainstusmayhaveadverseoutcomes.Avarietyofclaimsandlawsuitsarebroughtagainstus,includingclaimsandlawsuitsinvolvingbusinesseswehaveacquired.Adverseoutcomesinsomeoralloftheclaimsandlawsuitspendingagainstusmightresultintheawardofsignificantdamagesorinjunctivereliefagainstusthatcouldnegativelyimpactourabilitytoconductourbusiness.Wecurrentlybelievethatresolvingthesependingclaimsandsuits,individuallyorintheaggregate,willnothaveamaterialadverseeffectonourbusiness,financialposition,income,orcashflows.However,theoutcomeoflitigationandotherclaimsisintrinsicallysubjecttoconsiderableuncertainty.Management’sviewofthecasesmayalsochangeinthefuture.Actualoutcomesoflitigationandotherclaimsmaydifferfromtheassessmentsmadebymanage-mentinpriorperiods,whichcouldresultinamaterialnegativeimpactonourbusiness,financialposition,income,cashflows,orreputation.

Wemightnotintegrateacquiredcompanieseffectivelyorsuccessfullyandourstrategicalliancesmightnotbesuccessful.Tocomplementorexpandourbusiness,wehaveinthepastmadeacquisitionsofbusinesses,products,andtechnol-ogies.Weexpecttocontinuetomakesuchacquisitionsinthefuture.Management’snegotiationofpotentialacqui-sitionsandalliancesandintegrationofacquiredbusinesses,products,ortechnologiesdemandstime,focus,andre-sourcesofmanagementandofitsworkforce.Acquisitionscarrymanyadditionalrisks.Theseinclude,amongothers:•Itmaynotbepossibletosuccessfullyintegratetheac-

quiredbusiness,anditsdifferentbusinessandlicensingmodels.

•Itmaynotbepossibletointegratetheacquiredtechnolo-giesorproductswithcurrentproductsandtechnologies.


•Itmaynotbepossibletoretainkeypersonneloftheacquiredbusiness.

•Wemayassumematerialunknownliabilitiesofacquiredcompanies,includinglegalorintellectualpropertycon-tingenciesorothersignificantrisksthatmaynotbede-tectedbytheduediligenceprocess.

•Wemayincurdebtorsignificantcashexpenditures.•Wemayhavedifficultyimplementing,restoring,ormain-

taininginternalcontrols,procedures,andpolicies.•Theremaybeanegativeimpactonrelationshipswith

customers,partners,orthird-partyprovidersoftechnol-ogyorproducts.

•Wemayhavedifficultyintegratingtheacquiredcom-pany’saccounting,humanresource,andotheradminis-trativesystems.

•Theremayberegulatoryconstraints.•Theacquiredbusinessmayhavepracticesorpolicies

thatareincompatiblewithourcompliancerequirements.

Inaddition,acquiredbusinessesmightnotperformasanticipated,resultinginchargesfortheimpairmentofgoodwillandotherintangibleassets.Suchchargesmayhaveasignificantnegativeimpactonoperatingmarginsandincome.Furthermore,wehaveenteredinto,andex-pecttocontinuetoenterinto,alliancearrangementsforavarietyofpurposesincludingthedevelopmentofnewproductsandservices.Therecanbenoassurancethatanysuchproductsorserviceswillbesuccessfullydevelopedorthatwewillnotincursignificantunanticipatedliabilitiesinconnectionwithsucharrangements.Wemaynotbesuc-cessfulinovercomingtheserisksandwemaythereforenotbenefitasanticipatedfromacquisitionsoralliances.Wecannotexcludethepossibilitythatourbusiness,financialposition,income,orcashflowswillbenegativelyimpacted.

Wecountertheseacquisition-relatedrisksbymeansofmanydifferentmethodologicalandorganizationalmeasures.Theserangefromgenerallythoroughtechnical,operation-al,financial,andlegalduediligencechecksonthecompanyorassetstobeacquiredandaholisticevaluationofmate-rialtransactionandintegrationrisksbeforeconclusionofanytransaction,todetailed,standardizedintegrationplanninganditsexecutionbyadedicatedintegrationteam.Wethere-forebelievewehaveminimizedthisrisk.However,wecannotexcludethepossibilitythatourassets,finances,orincomewillbenegativelyaffected.

OurITsecuritymeasuresmaybebreachedorcompromisedandwemaysustainunplannedITsystemunavailability.Ourcoreprocesses,suchassoftwaredevelopment,salesandmarketing,customerservice,andfinancialtransac-tions,relyonourITinfrastructureandITapplications.Out-ageofourinfrastructuremaybecausedbymalwareorvirusattacks,sabotagebyhackers,naturaldisasters,orthefailureofanunderlyingtechnology(suchastheInternet).SucheventscouldleadtoasubstantialdenialofserviceoralterationorcompromiseofdatafromSAP,ourcustomers,orourpartners,givingrisetoproductiondowntime,recoverycosts,andcustomerclaims.AbreachofourITsecuritymeasuresandtheresourcesweexpendattemptingtoavoidsuchbreachescouldhaveanegativeimpactonourfinan-cialpositionorincome.However,avarietyofdefensemech-anismsareinplacetosafeguardourITinfrastructure.Ex-amplesarefirewalls,antivirussoftware,intrusiondetectionsystems,andhigh-availabilityITlandscapes–includingourdevelopmentandqualityinfrastructures.Weassumethemeasuresdiscussedinthissectionareadequatetopreventseriousimpairmentofourbusinessoperations.Inaddition,ourITprocessesareregularlymonitoredandcertifiedtoISO9001(QualitySystem),ISO27001(Infor-mationSecurityManagementSystem),andBS25999-2(BusinessContinuityManagement).

Wemaynotbeabletoobtainadequatetitletoorlicensesin,ortoenforce,intellectualproperty.Weuseavarietyofdifferentmeanstoprotectourintellec-tualproperty.Theseincludeapplyingforpatents,register-ingtrademarksandothermarksandcopyrightandrightsofauthorship,takingappropriateactiontostopcopyrightandtrademarkinfringement,enteringintolicensing,confidenti-ality,andnondisclosureagreements,anddeployingprotec-tiontechnology.Despiteourefforts,therecanbenoassurancethatwecanpreventthirdpartiesfromobtaining,using,orsellingwithoutauthorizationwhatweregardasourproprietarytechnologyandinformation.Allofthesemeasuresaffordonlylimitedprotection,andourproprie-taryrightscouldbechallenged,invalidated,heldunenforce-able,orotherwiseaffected.Someintellectualpropertymaybevulnerabletodisclosureormisappropriationbyem-ployees,partners,orotherthirdparties.Therecanalsobenoassurancethatthirdpartieswillnotindependentlydeveloptechnologiesthataresubstantiallyequivalentorsuperiortoourtechnology.Also,itmaybepossibleforthirdpartiestoreverse-engineerorotherwiseobtainandusetechnologyandinformationthatweregardasproprietary.


Accordingly,wemightnotbeabletoprotectourproprie-taryrightsagainstunauthorizedthird-partycopyingorutilization,whichcouldnegativelyimpactourcompetitivepositionandresultinreducedsales.Anylegalactionwebringtoenforceourproprietaryrightscouldbecostly,distractmanagementfromday-to-dayoperations,andleadtoclaimsagainstus,whichcouldnegativelyimpactourincome.Suchactionsbyuscouldalsoinvolveenforce-mentagainstapartnerorotherthirdparty,therebyad-verselyaffectingourability,andourcustomers’ability,tousethatpartnerorotherthirdparties’products.Inaddition,thelawsandcourtsofcertaincountriesmaynotoffereffectivemeanstoenforceourintellectualpropertyrights.

Wemaynotbeabletoprotectourcriticalinformationorassetsorsafeguardourbusinessoperationsagainstdisruption.Asaglobalsoftwarebusiness,wearetoasubstantialex-tentdependentontheexchangeofawiderangeofinfor-mationandontheavailabilityofourcommunicationsandITnetworks.Wehaveimplementedanumberofbarriersdesignedtoensurethesecurityofourinformation,ITre-sources,andotherassets.Nonetheless,thereisadangerofindustrialespionageandofmisuseortheftofinformationorassetsbytrespassersinourfacilitiesorbypeoplewhohavegainedauthorizedaccesstoourfacilities,systems,orinformation.Anymisuse,theft,orbreachofsecuritycouldhaveanegativeimpactonourbusiness,financialposition,income,orcashflows.

Thebarrierswehaveadoptedtominimizethisriskinclude,forexample,physicalaccesscontrolsystemsatallofourfacilities,andmultilevelaccesscontrols,closed-circuittelevisionsurveillance,andsecuritypersonnelinallcriticalareas.Accesstoinformationandinformationsystemsiscontrolledusingauthorizationconcepts.Managersandem-ployeesareregularlysensitizedtotheissuesandgivenappropriatetraining.Wekeepthesemeasuresundercon-tinuousreviewtomeetcurrentthreats.

Ourinsurancecoveragemaynotbesufficienttopreventclaimsettlementsfromnegativelyimpactingourfinancialposition,income,orcashflows.Wemaintaininsurancecoverageagainstadiverseportfolioofrisks.Ourobjectiveistoensurethatfinancialeffectsofoccurrencesareexcludedorminimizedtotheextentprac-ticableatreasonablecost.Despitethesemeasures,cer-taincategoriesofrisksarenotcurrentlyinsurableatreason-ablecost.Evenifweobtaininsurance,ourcoveragemaybesubjecttoexclusionsthatlimitorpreventourindemnifi-cationunderthepolicies.Further,wecannotguaranteetheabilityoftheinsurancecompaniestomeettheirliabilitiesfromclaims.Ifthisriskmaterializes,itmayhaveasignifi-cantnegativeimpactonourbusiness,financialposition,in-come,orcashflows.

Inviewofthescopeofourinsurancecoverageandourse-lectionofinsurers,andbecausewekeepourinsuranceprogramunderconstantreview,weconsiderthelikelihoodthatthisriskmaynegativelyimpactourassets,financialposition,orincometobelow.

Wemayincurlossesinconnectionwithventurecapitalinvestments.Weplantocontinueinvestingintechnologybusinesses.Manyoftheseenterprisescurrentlygeneratenetlossesandrequireadditionalcapitaloutlayfromtheirinvestors.Changestoplannedbusinessoperationshaveinthepast,andalsomayinthefuture,affecttheperformanceofcompaniesinwhichSAPholdsinvestments,andthatcouldnegativelyaffectthevalueofourinvestments.Moreover,fortaxpurposes,theuseofcapitallossesandimpairmentsofequitysecuritiesisoftenrestricted,whichmaynegative-lyaffectoureffectivetaxrate.

However,thisriskislowbecauseofthelimitedscopeofourventure-capitalactivities,makingasignificantimpactonourassets,financialposition,income,orcashflowsun-likely.Weaddressthisriskbydiversifyingourportfolioandactivelymanagingourinvestments.


Consolidated Risk ProfileIn2009,thecategorieswiththehighestpercentagescoresinouroverallriskdistributionprofileweremarketrisks,followedbyproductrisks,projectrisks,andotheroperation-alrisks.Allofthosecategoriestogetheraccountfor67%asaportionofallrisksintheconsolidatedprofile.Alloftheothercategoriesofriskarecurrentlyrelativelyinsignificanttous.

Noneofthequantifiableindividualrisksidentifiedbyourrisk-managementsystemexceededthethresholdwesettodefinearisktoourabilitytocontinueasagoingconcern.In2009,the“high”and“medium”risksdecreasedasaper-centageofthetotalnumberofrisksintherisk-levelmatrixweuse.Attheendofthefourthquarter,theriskscategorizedas“high”accountedfor3%(2008:4%;2007:2%),whiletheproportionof“medium”levelrisksde-creasedoverthecourseoftheyearto13%(2008:22%;2007:13%).Asaresult,theproportionofriskscatego-

rizedas“low”increasedto84%(2008:74%;2007:85%).Inourview,therisksdescribedabovedonotindividuallyorcumulativelythreatenourabilitytocontinueasagoingconcern.Webelieveourbusinessopportunities,alsodescribedinthisreview,willbeofmuchgreatersignificance.Becauseofourstrongpositioninthemarket,ourtechno-logicalleadership,ourhighlymotivatedemployees,andourstructuredprocessesforearlyriskidentification,weareconfidentthatwecancontinuein2010tosuccessfullycoun-terthechallengesarisingfromtherisksinourriskprofile.


BuSINESS IN THE NEW yEAR: EARly NEWS

InJanuary2010,weannouncedthatweareofferingacomprehensivetieredsupportmodeltocustomersworld-wide.ThisofferingincludesSAPEnterpriseSupportser-vicesandtheSAPStandardSupportoptionandwillenablecustomerstochoosetheoptionthatbestmeetstheirre-quirements.

InFebruary2010,weannouncedvariouschangesintheExecutiveBoard.Formoreinformation,seetheOrganiza-tionsection.


OuTlOOk

Future Trends in the Global EconomyManyanalystsagreethatthenascentglobalupturnwillcontinuein2010.Thereasonstheygivearetherecoveryonthefinancialmarketsandthereturnofconsumercon-fidenceinresponse,forexample,tomeasuresbygovern-mentsinmanycountriestosupportandstimulatetheeconomy.

However,theysaytherecoveryisweakintheadvancedeconomiesandwillnotgainsubstantialmomentumevenin2011.Outputintheadvancedeconomiesattheendof2011willstillbebelowpre-crisislevels.Thisrecoverywillthereforebeslowerthanthoseofthepast,theyconclude.Nonetheless,theInternationalMonetaryFund(IMF)andtheOrganisationforEconomicCo-operationandDevelop-ment(OECD)haverevisedtheirprojectionsupwardintheirlatestreports,ascomparedwiththeirforecastsatthebeginningofthefourthquarterof2009.

Incomparison,theemerginganddevelopingeconomiesaremovingaheadstrongly,theysay.Inthesecountries,theIMFpredictsmid-rangesingle-digitpercentagegrowthin2010andevengreaterprogressin2011,drivenchieflybyhighlevelsofdomesticdemand.MajorSwissbankCreditSuisseseesparticularlygoodprospectsforBrazil,China,Korea,andIndia.

Insum,globaleconomicgrowthin2010willnotmatchpre-viousperiodsofrecovery,accordingtotheEuropeanCentralBank(ECB).IntheviewoftheECB,sustainedglob-algrowthwillcomenotfromtemporarymeasuressuchasgovernmentstimuluspackagesbutfromacontinuedim-provementinfundingconditions.

SomegrowthisexpectedintheeconomiesoftheEurope,MiddleEast,andAfrica(EMEA)region,butitisthoughtitwillremaininthelowersingle-digitrangeuntil2011andoutputwillstaybelowpre-crisislevelsuntilthen.TheECBsaysinvestmentactivitywillcontinuetodeclineduringthisperiod,thoughataprogressivelyslowerrate.

Intheeuroarea,thesituationremainsproblematic,be-causehighunemploymentisholdingbackconsumerspendingandcompromisingconfidenceineconomicrecov-ery,companiesarestrugglingwithunderutilizationofca-pacity,andgovernmentstimuluspackagesareonlytempo-rary.Nonetheless,growingoverseasdemand,notablyintheemergingeconomiesofAsia,isrevivingexportsales.WhatistruefortheeuroareaistrueforGermanyinpartic-ular:TheGermaneconomyisexpandingappreciablyin2010,butnotasstronglyasinprevioustimesofrecovery.

ThecountriesofCentralandEasternEurope,theMiddleEast,andAfricaaresaidtobefaringbetter.CreditSuisse,forexample,ismoreoptimisticthanitwas:Itprojectslowsingle-digitpercentagegrowthfor2010,andexpectsastrongerrecoveryin2011.Petroleum-exportingcoun-triesmayevenbenefitsubstantiallyfromrisingoilpricesin2010,itbelieves.

ThesignsarethattheeconomyisalsorecoveringintheAmericasregionin2010.WhereasLatinAmericacanexpectgrowthinthemiddleofthesingle-digitrange,theupturninNorthAmericawillprovetobemodest,accordingtoCreditSuisse.TheU.S.economyismakingprogress,thanksprimarilytothegrowthofdemandinAsia.Thestepstakentostimulatetheeconomyarealsoprovingsuccess-ful,becauseaccordingtotheOECDthefinancialsectorisrecuperatingandthehousingmarketisstabilizing.TheUnitedNations(UN)believestheUnitedStateswillseegrowthnearthebottomofthesingle-digitpercentagerangein2010,andCreditSuissealsoexpectseconomicgrowthtobeunusuallyslowforthebeginningofarecovery.

TheAsiaPacificregionisanexampleofthedifferenceinperformancebetweenemerginganddevelopingeconomiesontheonehandandadvancedeconomiesontheother.TheIMFnotesthatemergingeconomies,mostnotablyIndiaandChina,areinthevanguardoftheglobalrecovery,eventhoughgrowthisslowerthanitwasbeforethecrisis.CreditSuisseexpectshighsingle-digitgrowthrates,re-flectinganotherincreaseindomesticdemandanddouble-digitpercentageexportgrowth.

Ontheotherhand,theOECDandtheUNreportthattheupturnintheadvancedeconomies,suchasJapan,isnotexpectedtobestrong.Japanisbenefitingfromanincrease


indemandfromemergingeconomiesinAsia,butdomesticdemandremainsweakdespitegovernmentstimulusmeasures.Theprospectsfor2011arenobetter,accordingtoCreditSuisse.

Whetherthesepredictionsturnouttoberightdependschieflyonwhethergovernmentscontinuetotakestimulativemeasures,theanalystssay.Endingsuchmeasurestoosoonwouldjeopardizetherecovery.OnlytheOECDurgesthatthestimuluspackagesshouldnotbecontinuedmuchlongerbecauseitbelieveswithdrawingthemwouldsignaltheendofthecrisis.

Thepredictionsarealsosubjecttochangesandtrendsinlevelsofunemploymentandconsumerspending,oilandothercommodityprices,thehealthofthefinancialsector,andthestrengthoftheeuro.Recoverymaybequickerorslower,dependingonwhichwaythesefactorsaffectconfidenceintheeconomy.Takentogether,analystsseetheserisksasbalancingoneanother.

IT Market Outlook for 2010TheITmarketwillbedistinctlymorepositivein2010thanin2009,sayanalysts.Theyonlydifferintheirviewsontheextentoftherecovery.UBS,amajorSwissbank,fore-seesgrowthinthehighsingle-digitpercentagerangein2010.Thisisadownwardrevisionfromitsearlierprojec-tions:Becausethemarketwasbetterthanexpectedin2009,itbelievesthereisnowlesspotentialfor2010.ITmarketanalysisfirmInternationalDataCorporation(IDC)ismorecircumspect,andexpectsmarketgrowthtobeinthelowsingle-digitrange.InvestmentbankGoldmanSachsexpectsaslowimprovementintheadvancedecon-omies–butnotenoughtomakeupthegroundlostin2009.Itbelievestheremaybedouble-digitgrowthintheemergingeconomies.

Inanyevent,theITindustrywillprofitthisyearfromthein-ternalcost-savingmeasuresimplementedduringthecrisisandentertheeconomicrecoverywithlowerinternalcosts.ThisisbasedontheassumptionthattheITindustrywillbeabletoavoidsignificantcostincreasesresulting,forex-ample,fromnewhiringsorrehirings,duringrecovery.Thesecompanieswillthenbeabletoimprovetheirliquidityforgreaterresilienceagainstanyreneweddeteriorationintheeconomicclimate.

Thedriverofrecoveryin2010isexpectedtobethehard-waresector,becausemanycompaniesarereplacingorupgradingtheirhardware.Butmanywillalsoinvestinnewsoftware,sotheanalystsarealsooptimisticaboutthesoftwaremarketin2010.GoldmanSachsconsidersthatsoftwarecompanieswhichlaunchednewsolutionsorversionsin2009havethebestprospects.

Themostimportantsoftwaretrendin2010,andtheonewiththemostrobustchancesforthefuture,issoftwareasaservice(SaaS),accordingtoGoldmanSachs.SaaSisadeliverymodelinwhichcustomersaccessthesoftwaretheyusefromanInternetserver,committingonlyverylimit-edinvestmentsoftheirown.GoldmanSachsexpectscompaniesthatofferSaaStogrowtwiceasquicklyasoth-ers.Italsobelievesmergersandacquisitionswillconso-lidatethesuppliersintheSaaSmarketoverthenexttwotothreeyears.

Ashardwarecompaniesseektoaddserviceofferingstotheirportfolioin2010,thesoftwareservicessegmentwillalsoseemoremergersandacquisitions,accordingtoUBS.Inconsequence,itbelievescompetitionwillstiffenintheservicesmarket,andthatthiswillholdbackgrowthinthatsegment.Currentcontractsintheservicessegmentstillincludelow-budgetcontractsfromthecrisisyear,2009.

IDCexpectsarecoveryinsmallstepsintheEMEAregionin2010and2011.Thisareacanbenefitfromitsexistingtechnologicallandscapeasalaunchpadforexpansion.However,recoveryisexpectedtoprogressslowlyinWest-ernEurope:Pricesarestillundergreatpressure,andcus-tomersarereluctanttoinvest.IDCforecaststhatinGer-many,forexample,spendinggrowthinallsegmentsoftheITmarketwillbeinthelowsingle-digitpercentagerange.InCentralandEasternEuropeandtheMiddleEast,how-ever,itexpectsthatoncetheeconomicclimateimproves,therewillbeamuchfasterrecoveryin2010.

IDCpredictsthatin2010theITmarketintheAmericasre-gionwillalsorecuperatefromthecrisis.Inviewoftheunexpectedlypositiveeconomictrendattheendof2009,IDCisevenmoreoptimisticnowthanitwaslastyear,andexpectssingle-digitexpansionofallsegmentsintheITmarket.


GoldmanSachsbelievesprospectsareespeciallygoodintheUnitedStates.ItexpectsITspendingtogrowmorequicklythanpreviouslyforecast,althoughcompanieswillremaincautiousaboutinvesting.IDCsharesthisviewandforecastsmodestsingle-digitexpansion.Inthesoftwaresegment,cloudcomputingandSaaSareexpectedtoprovidevigorousrevenueandprofitgrowth.Thesoftwaresegmentisalsoexpectedtobenefitfromtheanticipatedreplacementofoldhardwareatmanycompanies.

AslightexpansionoftheITmarkethasbeenapparentintheAsiaPacificregionsincetheendof2009,andisex-pectedtogainmomentumin2010.Theemergingandad-vancedeconomiesareexpectedstilltoshowverydifferentratesofrecovery.IDCbelievestheITmarketsintheemerg-ingeconomies,especiallyinChinaandIndia,willexpandbyhighsingle-digitorpossiblydouble-digitpercentagesin2010.IDCnotesthatadvancedeconomies–mostnotablyJapan,whichdependsheavilyonexports–arestilllabor-ingthroughthecrisis.Itexpectsonlyalimitedrecoveryinthesoftwareservicessegment,andpossiblyfurthercontrac-tioninthesoftwareandhardwaresegments.Thisisbe-causealthoughindustrialproductionisbeginningtogrowagainthere,unemploymentremainshighandconsumerconfidencelow,impedingvigorouseconomicrecovery.

AllanalysisoftheITmarketisbasedontheassumptionthatitwilldevelopinasimilarwayastheeconomyasawhole.Whethermattersdevelopasdescribeddependsonwhethertheunderlyingpredictionsabouttheprogressoftheeconomyareright.Inparticular,fortheITsectoritdependsonwhethergovernmentstimuluspackagescontinueandwhethertheyareeffectiveinincreasingcon-sumerdemand.

Forecast for SAP

Strategic PerspectivesSAPstrivestoenablegrowth–acrossbusinesses,acrossindustries,acrossentireeconomies–andanenhancedlevelofoptimizationforvaluechains.Ourambitionistomakebusinessesandinstitutionsaroundtheworldmoreefficientandeffective,thusallowingthemtotakeonthechallengeofachievingclaritywithintheenterprise.Todothat,westrivetodeliverperformanceoptimization–notonlyforourcustomers,butfortheirentirebusinessnetwork.

Ourstrategyistodeliversuperiorsoftwareapplications,services,andaglobalecosystemthatenableclosed-loopperformanceoptimizationforcompaniesofallsizes,therebyhelpingthemtodrivesustainable,profitablegrowth.Weintendtohelpourcustomersachieveperformanceoptimizationbydeliveringsolutionandtechnologyexcel-lence,creatingamoreholisticcustomerexperience,andenhancingourecosystemtodeliverwholesolutions.

Delivering Solution and Technology ExcellenceSAPplanstoevolveitstightlyintegratedpackagedappli-cationstoeaseadoptionthroughincreasedmodularity.Specifically,weintendtoaugmentourextensiblebusinessprocessplatformwithpointsolutionsthataddressspecificindustryorlineofbusinessneeds,createacomplemen-taryinformationplatformandperformanceoptimizationca-pabilities,deliverbusinessprocessmodelingcapabilitiestoenablecustomerstodeveloptheirownsolutions,andprovideascalableon-demandplatformtoeasedeploymentandconsumptionofnewsolutions.

Creating a More Holistic Customer ExperienceSAPintendstodevelopthebusinessmodeltomoreeffec-tivelysupporttheend-to-endrequirementsofourcustom-ers,whichincludesdeliveringsolutionsfocusedontheneedsofthelinesofbusinessandbusinessusers,provid-ingnewsoftwarepurchasingmodelswhichaligntothebudgetaryconcernsofourcustomers,andcontinuingtocultivateandprotectourrelationshipwithourexistingcustomers.


SAPintendstoincreasethelevelofengagementwiththeecosystemtodeliverend-to-endcustomervaluewith“wholesolutions.”WebelievethatthesewholesolutionswillbringtogetherSAPsolutionswithpartnerofferingsandbroadercommunityresources.Indoingso,wewillenableourecosystemtoeffectivelyleveragetheSAPplatformsandhencecreatejointmonetizationandrevenueopportunities.

Organic Growth and Targeted AcquisitionsOurstrategyremainsprimarilyfocusedonorganicgrowth.Asaresult,wewillcontinuetoinvestinproductdevelop-mentworkofourown,alongwithourinvestmentininfra-structure,sales,andmarketing.Ourplatformstrategyalsoenablesustoleveragetheinnovativepotentialofourpartnersfortheuseofourcustomers.Inadditionweexpecttocontinuetomaketargetedacquisitionstoim-proveourcoverageinkeystrategicfields.

Operational Targets for 2010 (Non-IFRS)Weareprovidingthefollowingoutlookfor2010:•Weexpectnon-IFRSsoftwareandsoftware-related

servicerevenuetoincreaseintherange4%to8%atconstantcurrenciesin2010(2009:€8.2 billion).

•Weexpectthenon-IFRSoperatingmargintobeintherange30%to31%atconstantcurrenciesin2010(2009:27.4%).

•Weprojectacorrespondingincreaseinouroperatingprofit.

•Weprojectaneffectivetaxrateof27.5%to28.5%(basedonIFRS)for2010(2009:28.1%).

•IftheAnnualGeneralMeetingofShareholderssoresolves,in2010wewillpayadividendthatprovidesapayoutratioofapproximately34%.

•Exceptingacquisitions,ourplannedcapitalexpendituresfor2010willbecoveredinfullbyoperatingcashflowandwillchieflybespentoncompletingnewofficebuild-ingsatvariouslocationsaswellasonITequipment.

Amongthepremisesonwhichthisoutlookisbasedarethosepresentedconcerningeconomicconditionsandourexpectationthatwewillnotbenefitfromanypositiveeffectsin2010fromamajoracquisition.

Medium-Term PerspectivesWeexpectourbusiness,ourrevenue,andourprofittogrow,assumingthereisasustainedrecoveryinthefinan-cialmarketsandassumingthecurrentfinancialcrisisdoesnotresultinlonger-termconsequences.Ourstrategyistoincreasesoftwareandsoftware-relatedservicere-venue,whichcomprisessoftwareandmaintenancerevenueandsubscriptionsandothersoftware-relatedservices,whilealsoincreasingouroperatingmarginthroughgreaterefficiencyacrossallsaleschannels,services,thesup-portinfrastructure,andresearchanddevelopment.Wein-tendtoachieveanon-IFRSoperatingmarginof35%inthemid-term.

Weareseeingsignificantstructuralchangesintheenter-prisesoftwarespace,andwithanticipatedchangecomesopportunity.Ourobjectiveistobringtoourcustomersthebestbusinesssolutions,leveragingallrelevanttechnol-ogyinnovationsanddothissothattheyareasreliableandeasytoconsumeaspossible.

Weunderstandourcustomerswantstabilityfromthecorebusinesssuiteandlowercosttooperate.Asaresult,wewillcontinueourfocusoninnovation,andmakingoursolu-tionsmoreaffordableandeasiertouse.Wewillcontinueinnovatingonmultiplefronts,providingcapabilitiesthataremodular,whichcanbedeployedsidebysidewiththesolutionsthatcustomerscanalreadyrun.Weintendtomeetourpromiseoftruevaluedeliverytoourcustomers.


streaming pastthe competition


an aUdio headset and lifestyle vendor tUrns Up the vol- Ume on its sUccess with sap bUsiness bydesign.

In 2007, Skullcandy, the number-two headphone manufacturer and developer of core audio products for the surf, skate, and snow markets in the United States, was looking for a major retail partner to take it to the next level. Little did the company know that three of the country’s largest retail chains would all want to jump in with Skullcandy at once. To take advantage of the huge growth opportunity afforded by partnering with these retailers, Skullcandy needed to improve the control of its supply chain and develop a comprehensive partner management system. Being a small, young company with employees who regularly skateboard around the office, Skullcandy was initially reticent about collaborating with a technology provider as large as SAP. But the scalability and out-of-the-box functionality offered by SAP helped the niche manufacturer to achieve its ambitions. Now, Skullcandy is quickly moving ahead to beco-ming a process-driven business.

With a clear view, you can understand better how things relate, you can work more effectively, and you can steer toward a better future. At SAP, we have been working with companies of all sizes and of all kinds for 35 years. That experience is priceless. It drives development across the entire spectrum of our offerings.

The result: solutions and services that bring maximum clarity to the work and workings of a company. That’s what we do best, and it’s what we do ourselves: Our financial statements and the notes present a complete picture of SAP in business in 2009.


Consolidated Income Statements

Consolidated Statements of Comprehensive Income

Consolidated Statements of Financial Position

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

(1)GeneralInformationaboutConsolidatedFinancialStatements (2)ScopeofConsolidation (3)SummaryofSignificantAccountingPolicies (4)BusinessCombinations (5)Revenue (6)ExpensesbyNatureandHeadcount (7)Restructuring (8)OtherOperatingIncome/Expense,Net (9)OtherNon-operatingIncome/Expense,Net (10)FinancialIncome,Net (11)IncomeTax (12)EarningsperShare (13)OtherFinancialAssets (14)TradeandOtherReceivables (15)OtherNon-financialAssets (16)GoodwillandIntangibleAssets (17)Property,Plant,andEquipment (18)TradeandOtherPayables,FinancialLiabilitiesandOtherNon-financialLiabilities (19)Provisions (20)DeferredIncome (21)TotalEquity (22)AdditionalCapitalDisclosures (23)OtherFinancialCommitmentsandContingentLiabilities (24)LitigationandClaims (25)FinancialRiskFactors

(26)FinancialRiskManagement (27)AdditionalFairValueDisclosuresonFinancialInstruments (28)Share-BasedPaymentPlans (29)SegmentandGeographicInformation (30)BoardofDirectors (31)RelatedPartyTransactions (32)PrincipalAccountantFeesandServices (33)GermanCodeofCorporateGovernance (34)SubsequentEvents (35)Subsidiaries,Associates,andOtherEquityInvestments

FinancialStatementofSAPAG(HGB)–ShortVersion

154

155

156

158

159

160160161181187187188189189190190192193195196197199200200208208210210211214218223228238242247248248248249

256

153ConsolidatedFinancialStatementsIFRS

consolidated financial statements ifrs

Consolidated Income Statements of SAP GroupfortheyearsendedDecember31,

€millions,unlessotherwisestated Note 2009 2008 2007

Softwarerevenue 2,607 3,606 3,407

Supportrevenue 5,285 4,602 3,852

Subscriptionandothersoftware-relatedservicerevenue 306 258 182

Software and software-related service revenue 8,198 8,466 7,441

Consultingrevenue 2,074 2,498 2,221

Trainingrevenue 273 434 410

Otherservicerevenue 85 107 113

Professional services and other service revenue 2,432 3,039 2,744

Other revenue 42 70 71

Total revenue (5) 10,672 11,575 10,256

Costofsoftwareandsoftware-relatedservices –1,714 –1,743 –1,350

Costofprofessionalservicesandotherservices –1,851 –2,285 –2,091

Researchanddevelopment –1,591 –1,627 –1,461

Salesandmarketing –2,199 –2,546 –2,173

Generalandadministration –564 –624 –499

Restructuring (7) –198 –60 –2

Otheroperatingincome/expense,net (8) 33 11 18

Total operating expenses – 8,084 – 8,874 – 7,558

Operating profit 2,588 2,701 2,698

Other non-operating income/expense, net (9) – 73 – 27 2

Financeincome 32 72 142

Financecosts –101 –123 –7

Otherfinancialgains/losses,net (10) –11 1 –11

Financial income, net – 80 – 50 124

Profit before tax 2,435 2,624 2,824

Incometaxexpense (11) –685 –776 –916

Profit after tax 1,750 1,848 1,908

–Profitattributabletonon-controllinginterests 2 1 2

–Profitattributabletoownersofparent 1,748 1,847 1,906

Basic earnings per share, in € (12) 1.47 1.55 1.58

Diluted earnings per share, in € (12) 1.47 1.55 1.58

TheaccompanyingNotesareanintegralpartoftheseConsolidatedFinancialStatements.


Consolidated Statements of Comprehensive Income of SAP Group fortheyearsendedDecember31,

€millions Note 2009 2008 2007


Gains(losses)onexchangedifferencesontranslation,beforetax 76 –63 –196

Reclassificationadjustmentsonexchangedifferencesontranslation,beforetax –2 0 0

Exchange differences on translation 74 – 63 – 196

Gains(losses)onremeasuringavailable-for-salefinancialassets,beforetax (27) 15 1 –2

Reclassificationadjustmentsonavailable-for-salefinancialassets,beforetax (27) 0 –3 –1

Available-for-sale financial assets (27) 15 – 2 – 3

Gains(losses)oncashflowhedges,beforetax (26) –41 –15 89

Reclassificationadjustmentsoncashflowhedges,beforetax (26) 84 –55 –85

Cash flow hedges (26) 43 – 70 4

Actuarial gains (losses) on defined benefit plans, before tax (19a) – 6 – 54 – 4

Other comprehensive income, before tax 126 – 189 – 199

Income tax relating to components of other comprehensive income (11) – 12 39 4

Other comprehensive income after tax 114 – 150 – 195

Total comprehensive income 1,864 1,698 1,713

–attributabletonon-controllinginterests 2 1 2

–attributabletoownersofparent 1,862 1,697 1,711



Consolidated Statements of Financial Position of SAP GroupasatDecember31,

Assets

€millions Note 2009 2008

Cash and cash equivalents 1,884 1,280

Other financial assets (13) 486 588

Trade and other receivables (14) 2,546 3,178

Other non-financial assets (15) 147 126

Tax assets (11) 192 399

Total current assets 5,255 5,571

Goodwill (16) 4,994 4,975

Intangible assets (16) 894 1,140

Property, plant, and equipment (17) 1,371 1,405

Other financial assets (13) 284 262

Trade and other receivables (14) 52 41

Other non-financial assets (15) 35 32

Tax assets (11) 91 33

Deferred tax assets (11) 398 441

Total non-current assets 8,119 8,329

Total assets 13,374 13,900


Equity and liabilities

€millions Note 2009 2008

Trade and other payables (18) 638 599

Tax liabilities (11) 125 363

Bankloans (18) 4 2,319

Otherfinancialliabilities (18) 142 244

Financial liabilities (18) 146 2,563

Other non-financial liabilities (18) 1,577 1,428

Provisions (19) 332 248

Deferred income (20) 598 623

Total current liabilities 3,416 5,824

Trade and other payables (18) 35 42

Tax liabilities (11) 239 278

Bankloans (18) 699 2

Otherfinancialliabilities (18) 30 38

Financial liabilities (18) 729 40

Other non-financial liabilities (18) 12 13

Provisions (19) 198 232

Deferred tax liabilities (11) 190 239

Deferred income (20) 64 61

Total non-current liabilities 1,467 905

Total liabilities 4,883 6,729

Issued capital1) 1,226 1,226

Treasury shares – 1,320 – 1,362

Share premium 317 320

Retained earnings 8,571 7,422

Other components of equity – 317 – 437

Equity attributable to owners of parent 8,477 7,169

Non-controlling interests 14 2

Total equity (21) 8,491 7,171

Equity and liabilities 13,374 13,900

1)Authorized–notissuedoroutstanding:480millionno-parsharesatDecember31,2009and2008Authorized–issuedandoutstanding:1,226millionno-parsharesatDecember31,2009and2008



Consolidated Statements of Changes in Equity of SAP GroupasatDecember31,

€millions Issued Capital

Share Premium

Retained Earnings

Other Components of Equity Treasury Shares

Equity At-tributable

to Owners of Parent

Non- Control-ling Inte-

rests

Total Equity

Exchange Differen-

ces

Available-for-Sale

Financial Assets

Cash Flow Hedges

January 1, 2007 prior to IFRIC 13 adoption 1,268 332 6,380 – 134 4 6 – 1,742 6,114 9 6,123

Cumulateddifferencefromthefirst-time

adoptionofIFRIC13

–12 –12 –12

January 1, 2007 after IFRIC 13 adoption 1,268 332 6,368 – 134 4 6 – 1,742 6,102 9 6,111

Profitaftertax 1,906 1,906 2 1,908

Othercomprehensiveincome –196 –3 4 –195 –195

Share-basedcompensation –40 –40 –40

Dividends –556 –556 –556

Cancellationoftreasuryshares –23 –796 819

Treasurysharestransactions 12 –811 –799 –799

Convertiblebondsandstockoptionsexercised 1 43 44 44

Other 1 1 1

Otherchangesnon-controllinginterests 2 2 –10 –8

December 31, 2007 1,246 347 6,925 – 330 1 10 – 1,734 6,465 1 6,466


Othercomprehensiveincome –32 –63 –2 –53 –150 –150


Dividends –594 –594 –594

Cancellationoftreasuryshares –21 –723 744

Treasurysharestransactions –6 –372 –378 –378

Convertiblebondsandstockoptionsexercised 1 13 14 14

Other –1 –1 –1

December 31, 2008 1,226 320 7,422 – 393 – 1 – 43 – 1,362 7,169 2 7,171


Othercomprehensiveincome –6 74 14 32 114 114


Dividends –594 –594 –594

Treasurysharestransactions –6 42 36 36

Convertiblebondsandstockoptionsexercised 5 5 5

Other 1 1 1

Additionofnon-controllinginterests 10 10

December 31, 2009 1,226 317 8,571 – 319 13 – 11 – 1,320 8,477 14 8,491



Consolidated Statements of Cash Flows of SAP Group asatDecember31,

€millions 2009 2008 2007


Adjustmentstoreconcileprofitaftertaxtonetcashprovidedbyoperatingactivities:

Depreciationandamortization 499 539 262

Gains/lossesondisposalsofnon-currentassets –11 11 1

Gains/lossesondisposalsoffinancialassets –2 –16 –1

Impairmentlossonfinancialassetsrecognizedinprofit 10 15 8

Decrease/increaseinsalesandbaddebtallowancesontradereceivables 64 76 0

Otheradjustmentsfornon-cashitems 14 52 45

Deferredincometaxes –39 –91 8

Decrease/increaseintradereceivables 593 –48 –521

Decrease/increaseinotherassets 205 –12 –277

Decrease/increaseintradepayables,provisionsandotherliabilities –116 –277 375

Decrease/increaseindeferredincome 48 61 124

Net cash flows from operating activities 3,015 2,158 1,932

Purchaseofnon-controllinginterests 0 0 –48

Businesscombinations,netofcashandcashequivalentsacquired –73 –3,773 –672

Repaymentofacquirees'debtinbusinesscombinations 0 –450 0

Purchaseofintangibleassetsandproperty,plant,andequipment –225 –339 –400

Proceedsfromsalesofintangibleassetsorproperty,plant,andequipment 45 44 27

Cashtransferredtorestrictedcash 0 –448 –550

Useofrestrictedcash 0 1,001 0

Purchaseofequityordebtinstrumentsofotherentities –1,073 –396 –788

Proceedsfromsalesofequityordebtinstrumentsofotherentities 1,027 595 1,040

Net cash flows from investing activities – 299 – 3,766 – 1,391

Dividendspaid –594 –594 –556

Purchaseoftreasuryshares 0 –487 –1,005

Proceedsfromreissuanceoftreasuryshares 24 85 156

Proceedsfromissuingshares(share-basedcompensation) 6 20 44

Proceedsfromborrowings 697 3,859 47

Repaymentsofborrowings –2,303 –1,571 –48

Purchaseofequity-basedderivativeinstruments(hedgeforcash-settledshare-basedpaymentplans) 0 –55 0

Proceedsfromtheexerciseofequity-basedderivativefinancialinstruments 4 24 75

Net cash flows from financing activities – 2,166 1,281 – 1,287

Effect of foreign exchange rates on cash and cash equivalents 54 – 1 – 45

Net increase (decrease) in cash and cash equivalents 604 – 328 – 791

Cash and cash equivalents at the beginning of the period 1,280 1,608 2,399

Cash and cash equivalents at the end of the period 1,884 1,280 1,608

Interestpaidin2009,2008,and2007amountedto€69million,€105million,and€6million,respectively,andinterestreceivedin2009,2008,and2007amountedto€22million,€72millionand€142million,respectively.Incometaxespaidin2009,2008,and2007,netofrefunds,were€722million,€882million,and€811million,respectively.TheaccompanyingNotesareanintegralpartoftheseConsolidatedFinancialStatements.


NOTES TO THE CONSOlIDATED FINANCIAl STATEMENTS

(1) General Information about Consolidated Financial StatementsTheaccompanyingConsolidatedFinancialStatementsofSAPAGanditssubsidiaries(collectively,“we,”“us,”“our,”“SAP,”“Group,”and“Company”)havebeenpre-paredinaccordancewithInternationalFinancialReportingStandards(IFRS).Thedesignation“IFRS”includesallstandardsissuedbytheInternationalAccountingStandardsBoard(IASB)andrelatedinterpretationsissuedbytheInternationalFinancialReportingInterpretationsCommittee(IFRIC).

WehaveappliedallstandardsandinterpretationsthatwereeffectiveonandendorsedbytheEuropeanUnion(EU)asatDecember31,2009.Therewerenostandardsorin-terpretationsimpactingourConsolidatedFinancialState-mentsfortheyearsendedDecember31,2009,2008,and2007thatwereeffectivebutnotyetendorsed.ThereforeourConsolidatedFinancialStatementscomplywithbothIFRSasissuedbytheIASBandwithIFRSasendorsedbytheEU.

SAP’sExecutiveBoardapprovedtheConsolidatedFinan-cialStatementsonMarch10,2010forsubmissiontotheCompany’sSupervisoryBoard.

AllamountsincludedintheConsolidatedFinancialState-mentsarereportedinmillionsofeuros(€ millions)exceptwhereotherwisestated.Duetorounding,numberspre-sentedthroughoutthisdocumentmaynotadduppreciselytothetotalsweprovideandpercentagesmaynotpre-ciselyreflecttheabsolutefigures.

(2) Scope of ConsolidationTheConsolidatedFinancialStatementsincludeSAPAGandallentitiesthatarecontrolleddirectlyorindirectlybySAPAG.Wefullyconsolidateoneentityinwhichweholdonly49%ofthevotingshares,duetoanagreementwiththemajorityshareholderwhichprovidesthatSAPfullycontrolstheentity,receivesallbenefits,andincursallrisks.Allotherconsolidatedentitiesaremajority-owned.

AllSAPentitiespreparetheirfinancialstatementsasatDecember31.Allfinancialstatementswerepreparedapply-ingthesameGroupIFRSaccountingandvaluationprin-ciples.Intercompanytransactionsandbalancesrelatingtoconsolidatedentitieshavebeeneliminated.

ThefollowingtablesummarizesthechangeinthenumberoflegalentitiesincludedintheConsolidatedFinancialStatements.

Theadditionsrelatetolegalentitiesaddedinconnectionwithacquisitionsandfoundations.Thedisposalsareduetomergersandliquidationsofconsolidatedoracquiredlegalentities.

The2009changesinthescopeofcompaniesincludedintheConsolidatedFinancialStatementshavenoimpactonthecomparabilitywiththe2008ConsolidatedFinancialStatements.In2008,weacquiredBusinessObjects,whichwasmaterialtoSAPandaffectedcomparabilitywithour2007ConsolidatedFinancialStatements.Foradditionalin-formationonourbusinesscombinationsandtheeffectonourConsolidatedFinancialStatements,seeNote(4).

Overview of legal Entities Consolidated in the Financial Statements

German Foreign Total

December 31, 2007 23 116 139

Additions 5 68 73

Disposals –6 –19 –25

December 31, 2008 22 165 187

Additions 1 11 12

Disposals –4 –32 –36

December 31, 2009 19 144 163


(3) Summary of Significant Accounting Policies

(3a) Bases of MeasurementTheConsolidatedFinancialStatementshavebeenpre-paredonthehistoricalcostbasisexceptforthefollowing:•Derivativefinancialinstruments,available-for-salefinan-

cialassets(exceptforinvestmentsincertainequityin-strumentswithoutaquotedmarketprice),andliabilitiesforcash-settledshare-basedpaymentarrangementsaremeasuredatfairvalue

•Foreignexchangereceivablesandpayablesaretrans-latedatperiod-endexchangerates;and

•PensionsaremeasuredaccordingtoIAS19EmployeeBenefits(IAS19)asdescribedinNote(19a)

Whereapplicable,informationaboutthemethodsandas-sumptionsusedindeterminingtherespectivemeasure-mentbasesandfairvaluesisdisclosedintheNotesspecif-ictothatassetorliability.

(3b) Relevant Accounting Policies

ReclassificationsWehavereclassifiedandrenamedcertainitemsinourConsolidatedFinancialStatements,mainlytoshowourre-structuringexpensesseparatelyonthefaceofourCon-solidatedIncomeStatements,toalignourfinancialstatementstotheXBRLtaxonomyforIFRS,andtocombineimmateriallineitems.Wehaveadjustedourprioryearsaccordingly.Wedonotbelievethatthesereclassificationshaveamate-rialimpactonourConsolidatedFinancialStatementsforpriorperiods.

AcquisitionsWeadoptedIFRS3BusinessCombinations(IFRS3(2008))witheffectfromJanuary1,2009.Weaccountforallbusinesscombinationsusingtheacquisitionmethod.Thechangeinaccountingpolicywasappliedprospectivelyandhadnomaterialimpactonearningspershare.Wehaveappliedtheacquisitionmethodforbusinesscombina-tionsdisclosedinNote(4).WemeasuretheacquiredassetsandliabilitiesattheiracquisitiondatefairvalueswithlimitedexceptionsasrequiredbyIFRS3(2008).There-sultsofoperationsofacquiredentitiesareincludedinour

ConsolidatedIncomeStatementsbeginningattherespec-tiveacquisitiondate.Ifwedonotacquireallsharesofanentitywedetermineforeachbusinesscombinationtrans-action,whetherwewillmeasureanynon-controllinginter-estatfairvalueoratthenon-controllinginterest’spropor-tionateshareoftheacquiree’sidentifiablenetassets.

ForeignCurrenciesAssetsandliabilitiesofourforeignsubsidiaries,thatuseafunctionalcurrencyotherthantheeuro,aretranslatedattheexchangerateonthedateoftheStatementofFinancialPosition.Revenuesandexpensesaretranslatedataverageratesofexchangecomputedonamonthlybasis.Transla-tionadjustmentsresultingfromthisprocessarechargedorcreditedtoothercomponentsofequity.Exchangediffer-encesfrommonetaryitemsdenominatedinforeigncurren-cytransactionsthatarepartofalong-terminvestmentarealsoincludedinothercomponentsofequity.

Transactionsinforeigncurrenciesaretranslatedtothere-spectivefunctionalcurrenciesofGroupentitiesattheexchangeratesatthedatesofthetransactions.Monetaryassetsandliabilitiesthataredenominatedinforeigncur-renciesareremeasuredattheperiod-endclosingratewithresultinggainsandlossesreflectedinothernon-operatingincome/expense,netintheConsolidatedIncomeState-ments.Whenaforeignoperationisdisposedof,theforeigncurrencytranslationadjustmentsapplicabletothatentityarerecognizedinprofitorloss.

Operatingcashflowsaretranslatedintoeurosusingaver-ageratesofexchangecomputedonamonthlybasis.In-vestingandfinancingcashflowsaretranslatedintoeurosusingtheexchangeratesineffectatthetimeofthere-spectivetransaction.Theeffectsoncashduetofluctua-tionsinexchangeratesareshowninaseparatelineintheConsolidatedStatementsofCashFlows.


TheexchangeratesofkeycurrenciesaffectingtheCompanywereasfollows:

RevenueRecognitionWederiveourrevenuesfromthesaleorlicenseofoursoftwareproductsandofsupport,subscription,consulting,development,training,andotherservices.Thevastma-jorityofoursoftwarearrangementsincludesupportservicesandmanyalsoincludeprofessionalservicesandotherelements.

Softwareandsoftware-relatedservicerevenueasshowninourConsolidatedIncomeStatementsisthesumofoursoftwarerevenue,supportrevenue,andrevenuefromsubscriptionsandothersoftware-relatedservices.Pro-fessionalservicesandotherservicerevenueasshowninourConsolidatedIncomeStatementsisthesumofourconsultingrevenue,trainingrevenue,andotherservicerev-enue.OtherrevenueasshowninourConsolidatedIncomeStatementsmainlyconsistsofrevenuefromSAPmarket-ingevents.Revenueinformationbysegmentandgeograph-icregionisdisclosedinNote(29).

Softwarerevenuerepresentsfeesearnedfromthesaleorlicenseofsoftwaretocustomers.Supportrevenuerep-resentsfeesearnedfromprovidingcustomerswithun-specifiedfuturesoftwareupdates,upgrades,andenhance-ments,andtechnicalproductsupport.Werecognizesupportrevenuesratablyoverthetermofthesupportar-rangement.Wedonotseparatelyselltechnicalsupportservicesorunspecifiedsoftwareupgrades,updates,andenhancements.Accordingly,wedonotdistinguishwithinsoftwareandsoftware-relatedservicerevenueorwithincostofsoftwareandsoftware-relatedservicesthe

amountsattributabletotechnicalsupportservicesandun-specifiedsoftwareupgrades,updates,andenhancements.

Subscriptionandothersoftware-relatedservicerevenuerepresentsfeesearnedfromsubscriptionandsoftwarerentalarrangements,on-demandsolutions,andothersoft-ware-relatedservices.Subscriptioncontractscombinesoftwareandsupportserviceelements,astheyprovidethecustomerwithcurrentsoftwareproducts,rightstoreceiveunspecifiedfuturesoftwareproducts,andrightstosupportservicesduringthesubscriptionterm.Customerspayanannualfeeforadefinedsubscriptionterm,usuallyfiveyears,andwerecognizesuchfeesratablyoverthetermofthearrangementbeginningwiththedeliveryofthefirstproduct.

Softwarerentalcontractsalsocombinesoftwareandsupportserviceelements.Suchcontractsprovidethecus-tomerwithcurrentsoftwareproductsandsupportbutnottherighttoreceiveunspecifiedfuturesoftwareprod-ucts.Customerspayaperiodicfeeovertherentaltermandwerecognizefeesfromsoftwarerentalcontractsrat-ablyoverthetermofthearrangement.

Revenuefromon-demandsolutionsrelatetosoftwarehostingarrangementsthatprovidethecustomerwiththerighttousecertainsoftwarefunctionalitybutdonotin-cludetherighttoterminatethehostingcontractandtake

Exchange Rates

equivalentto€1 Closing Rate as at December 31, Annual Average Exchange Rate

2009 2008 2009 2008 2007

U.S.dollar USD 1.4406 1.3917 1.3962 1.4662 1.3777

Poundsterling GBP 0.8881 0.9525 0.8901 0.8016 0.6890

Japaneseyen JPY 133.16 126.14 130.66 148.88 161.43

Swissfranc CHF 1.4836 1.4850 1.5097 1.5786 1.6446

Canadiandollar CAD 1.5128 1.6998 1.5832 1.5486 1.4623

Australiandollar AUD 1.6008 2.0274 1.7394 1.7724 1.6368


possessionofthesoftwarewithoutsignificantpenalty.On-demandsolutionrevenuesaregenerallyrecognizedrat-ablyoverthetermofthearrangement.Othersoftware-elatedservicerevenuemainlyconsistsofsoftware-relatedrevenue-sharingagreementswithothersoftwarevendors.

Werecognizeconsulting,training,andotherprofessionalservicesrevenueswhentherespectiveservicesareperformed.Consultingrevenueprimarilyresultsfromimple-mentationsupportcontractstoinstallandconfigureoursoftwareproducts.Consultingcontractsdonotusuallyin-volvesignificantproduction,modification,orcustomizationofsoftwareandarerecognizedusingthepercentageofcompletionmethodofaccounting.Trainingrevenueresultsfromcontractstoprovideeducationalservicestocus-tomersandpartnersregardingtheuseofoursoftwareproducts.

Otherservicerevenueconsistsoffeesfromcancelablehostingcontracts,applicationmanagementservices(AMS),andreferralfees.Cancelablehostingcontractsal-lowthecustomertoterminatethearrangementatanytimeandtotakepossessionofthesoftwarewithoutsignifi-cantpenalty.OurAMScontractsprovidepost-implemen-tationapplicationsupport,optimization,andimprovementstoacustomer’sITsolution.Feesfromreferralservicesarecommissionsfrompartnerstowhichwehavereferredcustomers.Otherservicerevenueisrecognizedwhentherespectiveservicesareperformed.

RevenuefromthesaleofperpetuallicensesisrecognizedinlinewiththerequirementsforsellinggoodsstatedinIAS18Revenue(IAS18)whenpersuasiveevidenceofanarrangementexists,deliveryhasoccurred,therisksandrewardsofownershiphavebeentransferredtothecustomer,theamountofrevenuecanbemeasuredreliably,andcollectionoftherelatedreceivableisreason-ablyassured.Thesaleisrecognizednetofreturnsandallowances,tradediscounts,andvolumerebates.

AsauthorizedbyIAS8AccountingPolicies,ChangesinAccountingEstimatesandErrors(IAS8),wefollowtheguidanceprovidedbyFASBASCSubtopic985-605,SoftwareRevenueRecognition(formerlyStatementofPosi-tion(SOP)97-2SoftwareRevenueRecognition),asamended,inordertodeterminetherecognizableamountoflicenserevenueinmultiple-elementarrangements.Reve-

nuefrommultiple-elementarrangementsisrecognizedusingtheresidualmethodofrevenuerecognitionwhencom-pany-specificobjectiveevidenceoffairvalueexistsforalloftheundeliveredelements(forexample,supportser-vices,consultingservices,orotherservices)inthear-rangement,butdoesnotexistforoneormoredeliveredelements(generallysoftware).Wedeterminethefairvalueofandallocaterevenuetoeachundeliveredelementbasedonitsrespectivecompany-specificobjectiveevidenceoffairvalue,whichisthepricechargedwhenthatelementissoldseparatelyor,forelementsnotyetsoldseparately,thepriceestablishedbyourmanagementifitisprobablethatthepricewillnotchangebeforetheelementissoldseparately.Weallocaterevenuetoundeliveredsupportservicesbasedontherateschargedtorenewthesupportservicesannuallyafteraninitialperiod.Suchrenewalratesgenerallyrepresentafixedpercentageofthediscountedsoftwarelicensefeechargedtothecustomer.Thevastmajorityofourcustomersrenewtheirannualsupportser-vicecontractsattheserates.Weallocaterevenuetofu-tureincrementaldiscountswhenevercustomersaregrant-edtherighttolicenseadditionalsoftwareatahigherdiscountthantheonegivenfortheinitialsoftwarelicensearrangement,ortopurchaseorrenewsupportorser-vicesatratesbelowcompany-specificobjectiveevidenceoffairvalueoftherespectiveservice.


Wedeferrevenueforallundeliveredelementsandrecog-nizetheresidualamountofthearrangementfeeattributabletothedeliveredelements,ifany,whentherevenuecriteriadescribedabovehavebeenmetandcompany-specificobjectiveevidenceoffairvalueexistsfortheundeliveredelements.

Revenuerecognitionformultiple-elementarrangementsconsistingofsoftwareandconsulting,training,orotherprofessionalservicesdependson:•whetherthearrangementinvolvessignificantproduction,

modification,orcustomizationofthesoftwareand•whethertheservicesarenotavailablefromthird-party

vendorsandarethereforedeemedessentialtothesoftware.

Ifnoneofthefeaturesaboveismet,revenueforthesoft-wareelementandtheotherelementarerecognizedsepa-rately.Incontrastifoneorbothofthesefeaturesaremettheelementsofthearrangementarenotaccountedforseparatelybuttheentirearrangementfeeisrecognizedus-ingthepercentageofcompletionmethod,basedoncon-tractcostsincurredtodateasapercentageoftotalestimat-edprojectcostsrequiredtocompletetheservice.Ifwedonothaveasufficientbasistomeasuretheprogressofcompletionortoestimatethetotalcontractrevenuesandcosts,revenueisrecognizedonlytotheextentofcon-tractcostincurredforwhichwebelieverecoverabilitytobeprobable.Ifthearrangementincludesmultipleelements,weexcludethoseelementsfromcontractaccounting(forexamplesupportservicesorhosting)thatmeetthecriteriaforseparaterecognition,providedthattheelementshavestand-alonevalue.Whenitbecomesprobablethattotalcon-tractcostsexceedtotalcontractrevenuesinanarrange-ment,theexpectedlossesarerecognizedimmediatelyasanexpensebasedonthecostsattributabletothecontract.

Ifattheoutsetofanarrangementwedeterminethattheamountofrevenuecannotbemeasuredreliably,wedeferrevenueuntilthearrangementfeebecomesdueandpay-ablebythecustomer.Ifattheoutsetofanarrangementwedeterminethatcollectabilityisnotprobable,wedeferrevenuerecognitionuntiltheearlierofwhencollectabilitybecomesprobableorpaymentisreceived.Ifcollectabil-itybecomesunlikelybeforeallrevenuefromanarrangementisrecognized,westoprecognizingrevenueexcepttotheextentoffeesthathavealreadybeensuccessfullycollected.

Ingeneral,oursoftwarelicenseagreementsdonotincludeacceptancetestingprovisions.Ifanarrangementallowsforcustomeracceptancetestingofthesoftware,wedeferrevenueuntiltheearlierofcustomeracceptanceorwhentheacceptancerightlapses.

Weusuallysellorlicensesoftwareonaperpetualbasis.Occasionally,welicensesoftwareforaspecifiedtime.Revenuefromshort-termtime-basedlicenses,whichusu-allyincludesupportservicesduringthelicenseperiod,isrecognizedratablyoverthelicenseterm.Revenuefrommulti-yeartime-basedlicensesthatincludesupportservices,whetherseparatelypricedornot,isrecognizedratablyoverthelicensetermunlessasubstantivesupportservicerenewalrateexists,inwhichcasetheamountallocatedtothedeliveredsoftwareisrecognizedbasedontheresid-ualapproachassoftwarerevenueoncethebasiccriteriadescribedabovehavebeenmet.

Werecognizerevenuefromarrangementsinvolvingresell-ersonevidenceofsell-throughbytheresellertotheend-customer,becausetheinflowoftheeconomicbenefitsassociatedwiththearrangementstousisnotprobablebeforesell-throughhasoccurred.

Sometimesweenterintojointdevelopmentagreementswithcustomerstoleveragetheirindustryexpertiseandprovidestandardsoftwaresolutionsforselectedverticalmarkets.Thesecustomersgenerallycontributecash,resources,andindustryexpertiseinexchangeforlicenserightsforthefuturesolution.Werecognizesoftwarerevenueinconjunctionwiththesearrangementsbasedonthepercentageofcompletionmethodasoutlinedabove.Weaccountforout-of-pocketexpensesinvoicedbySAPandreimbursedbycustomersassupport,consulting,andtrainingrevenues,dependingonthenatureoftheserviceforwhichtheout-of-pocketexpenseswereincurred.

Ifacustomerisspecificallyidentifiedasabaddebtor,westoprecognizingrevenueexcepttotheextentoffeesthathavealreadybeencollected.


Ourcontributionstoresellersthatallowourresellerstoexecutequalifiedandapprovedmarketingactivitiesarerecognizedasanoffsettorevenueunlessweobtainaseparateidentifiablebenefitforthecontributionandthefairvalueofthebenefitisreasonablyestimable.

CostofSoftwareandSoftware-RelatedServicesCostofsoftwareandsoftwarerelatedservicesincludesthecostincurredinproducingthegoodsandprovidingtheservicesthatgeneratesoftwareandsoftware-relatedser-vicerevenue.Consequentlythislineitemincludesemployeeexpensesrelatingtotheseservices,amortizationofac-quiredintangibles,thirdpartylicenses,shippingandramp-upcost,etc.

CostofProfessionalServicesandOtherServicesCostofprofessionalservicesandotherservicesincludesthecostincurredinprovidingtheservicesthatgenerateprofessionalserviceandotherservicerevenue.Theitemalsoincludessalesandmarketingexpensesrelatedtoourprofessionalservicesandotherservicesthatresultfromsalesandmarketingeffortsthatcannotbeclearlyseparatedfromprovidingtheservices.

ResearchandDevelopmentResearchanddevelopmentincludesthecostsincurredbyactivitiesrelatedtothedevelopmentofsoftwaresolutions(newproducts,updatesandenhancements)includingre-sourceandhardwarecostsforthedevelopmentsystems.

Developmentactivitiesinvolvetheapplicationofresearchfindingsorotherknowledgetoaplanordesignofneworsubstantiallyimprovedsoftwareproductsbeforethestartofcommercialuse.Developmentexpendituresarecapital-izedonlyifallofthefollowingcriteriaaremet:•Thedevelopmentcostcanbemeasuredreliably•Theproductistechnicallyandcommerciallyfeasible•Futureeconomicbenefitsareprobable•Weintendtocompletedevelopmentandmarketthe

product

Wehavedeterminedthatthesecriteriaarenotcumulativelymetuntilshortlybeforetheproductsareavailableforsale.Developmentcostsincurredaftertherecognitioncriteriaaremethavenotbeenmaterial.Consequently,allresearchanddevelopmentcostsareexpensedasincurred.

SalesandMarketingSalesandmarketingincludescostsincurredforthesellingandmarketingactivitiesrelatedtooursoftwaresolutionsandsoftware-relatedserviceportfolio.

GeneralandAdministrationGeneralandadministrationincludescostsrelatedtofinanceandadministrativefunctionsaslongastheyarenotdirectlyattributabletooneoftheotheroperatingexpenselineitems.

GovernmentGrantsandAssistanceWerecordgovernmentgrantswhenitisreasonablyas-suredthatwewillcomplywiththerelevantconditionsandthatthegrantwillbereceived.Ourgovernmentgrantsgenerallyrepresentsubsidiesforactivitiesspecifiedinthegrant.Asaresult,governmentgrantsarerecognizedwhenearnedasareductionoftheexpensesrecordedforthecostthatthegrantsareintendedtocompensate.Govern-mentassistancethattakestheformofataxcreditisrec-ognizedasareductionofincometax.

LeasesWearealesseeofproperty,plant,andequipment,mainlybuildingsandvehicles,underoperatingleasesthatdonottransfertousthesubstantiverisksandrewardsofown-ership.Rentexpenseonoperatingleasesisrecognizedonastraight-linebasisoverthelifeoftheleaseincludingrenewaltermsif,atinceptionofthelease,renewalisreasonablyassured.

Someofouroperatingleasescontainlesseeincentives,suchasup-frontpaymentsofcostsorfreeorreducedperi-odsofrent.Theincentivesareamortizedoverthelifeoftheleaseandtherentexpenseisrecognizedonastraight-linebasisoverthelifeofthelease.Thesameappliestocontractually-agreedfutureincreasesofrents.


IncomeTaxDeferredtaxesareaccountedforundertheliabilitymethod.WerecognizedeferredtaxassetsandliabilitiesforthefuturetaxconsequencesattributabletodifferencesbetweenthecarryingamountsofexistingassetsandliabilitiesintheStatementsofFinancialPositionandtheirrespectivetaxbasesandonthecarryforwardsofunusedtaxlossesandunusedtaxcredits.Deferredtaxassetsarerecognizedtotheextentthatitisprobablethatfuturetaxableincomewillbeavailableagainstwhichthedeductibletemporarydif-ferences,unusedtaxlosses,andunusedtaxcreditscanbeutilized.

Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheperiodwhentheassetisrealizedortheliabilityissettled,basedontaxrates(andtaxlaws)thathavebeenenactedorsubstantivelyenactedbytheendofthereportingperiod.Theeffectondeferredtaxassetsandliabilitiesofachangeintaxratesisrecognizedinprofitorloss,unlessrelatedtoitemsdirectlyrecognizedinequity,intheperiodthatincludestherespec-tiveenactmentdate.

Thecarryingamountofadeferredtaxassetisreviewedattheendofeachreportingperiodandisreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowthebenefitofpartorallofthedeferredtaxassetstobeutilized.

Share-BasedCompensationShare-basedcompensationcoverscash-settledandequity-settledawardsissuedtoemployees.

Thefairvaluesofbothequity-settledandcash-settledawardsaremeasuredatgrantdateusinganoption-pricingmodel.

Thefairvalueofequity-settledawardsisnotsubsequentlyremeasured.Thegrant-datefairvalueofequity-settledawardsisrecognizedaspersonnelexpenseinprofitorlossovertheperiodinwhichtheemployeesbecomeuncondi-

tionallyentitledtotherights,withacorrespondingincreaseinsharepremium.Theamountrecognizedasanexpenseisadjustedtoreflecttheactualnumberofequity-settledawardsoptionsthatultimatelyvest.

Fortheshare-basedpaymentplansthataresettledbypay-ingcashratherthanbyissuingequityinstruments,aliabilityisrecordedfortherightsgrantedreflectingthevestedportionofthefairvalueoftherightsatthereportingdate.Personnelexpense–includingtheeffectsofanychangesinfairvalueoftheawards–isaccruedovertheperiodthebeneficiariesareexpectedtoperformtherelatedservice(vestingperiod),withacorrespondingincreaseinliabili-ties.Cash-settledawardsareremeasuredtofairvalueateachStatementofFinancialPositiondateuntiltheawardissettled.Anychangesinthefairvalueoftheliabilityarerec-ognizedaspersonnelexpenseinprofitorloss.Theamountofunrecognizedcompensationexpenserelatedtonon-vestedshare-basedpaymentarrangementsgrantedunderourcash-settledplansisdependentonthefinalintrinsicvalueoftheawards.Theamountofunrecognizedcompen-sationexpenseisdependentonthefuturepriceofourcommonsharewhichwecannotreasonablypredict.

Intheeventwehedgeourexposuretocash-settledawards,changesinthefairvalueoftherespectivehedginginstrumentsarealsorecognizedaspersonnelexpenseinprofitorloss.Thefairvaluesforhedgedprogramsarebasedonmarketdatareflectingcurrentmarketexpectations.

Formoreinformationaboutourshare-basedcompensationplans,seeNote(28).


OtherComponentsofEquityOthercomponentsofequityincludethefollowing:•Currencyeffectsarisingfromthetranslationofthefinan-

cialstatementsofourforeignoperationsaswellasthecurrencyeffectsfromintercompanylong-termmonetaryitemsforwhichsettlementisneitherplannednorlikelytooccurintheforeseeablefuture

•Unrealizedgainsandlossesonavailable-for-salefinancialassets

•Gainsandlossesoncashflowhedgescomprisedofthenetchangeinfairvalueoftheeffectiveportionoftherespectivecashflowhedgesthathavenotyetimpactedprofitorloss.

EarningsperShareWepresentbasicanddilutedearningspershare(EPS).Basicearningspershareisdeterminedbydividingprofitaftertaxattributabletoequityholdersoftheparentbytheweightedaveragenumberofcommonsharesoutstanding.Dilutedearningspersharereflectthepotentialdilutionthatwouldoccurifall“inthemoney”securitiestoissuecom-monshareswereexercisedorconverted.

FinancialAssetsOurfinancialassetscomprisecashandcashequivalents(highlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorless),loansandreceivables,acquiredequityanddebtinvestments,andderivativefinancialinstruments(derivatives)withpositivefairvalues.

TheseassetsarerecognizedandmeasuredinaccordancewithIAS39FinancialInstruments:RecognitionandMea-surement(IAS39).Accordingly,financialassetsarerecog-nizedintheConsolidatedStatementsofFinancialPositionifwehaveacontractualrighttoreceivecashorotherfinan-cialassetsfromanotherentity.Regularwaypurchasesorsalesoffinancialassetsarerecordedatthetradedate.Financialassetsareinitiallyrecognizedatfairvalueplus,inthecaseoffinancialassetsnotatfairvaluethroughprof-itorloss,directlyattributabletransactioncosts.Interest-freeorbelow-market-rateloansandreceivablesareinitiallyreflectedatthepresentvalueoftheexpectedfuturecash

flows.Thesubsequentmeasurementdependsontheclassificationofourfinancialassetstothefollowingcate-goriesaccordingtoIAS39:•Loansandreceivables:Loansandreceivablesarenon-

derivativefinancialassetswithfixedordeterminablepaymentsthatareneitherquotedinanactivemarketnorintendedtobesoldinthenearterm.Thiscategorycomprisestradereceivables,receivablesandloansinclud-edinotherfinancialassets,andcashandcashequiva-lents.Wecarryloansandreceivablesatamortizedcostlessimpairmentlosses.Interestincomefromitemsas-signedtothiscategoryisdeterminedusingtheeffectiveinterestmethodifthetimevalueofmoneyismaterial.ForfurtherinformationontradereceivablesseetheTradeandotherReceivablessection.

•Available-for-salefinancialassets:Available-for-salefinan-cialassetsarenon-derivativefinancialassetsthatarenotassignedtoanyofthetwoothercategoriesandmainlyincludeequityinvestmentsanddebtinvestments.Ifreadilydeterminablefrommarketdata,available-for-salefinancialassetsareaccountedforatfairvalue,withchangesinfairvaluebeingreportednetoftaxinothercom-ponentsofequity.Fairvaluefluctuationsarenotre-cognizedinprofitorlossuntiltheassetsaresoldorim-paired.Available-for-salefinancialassetsforwhichnomarketpriceisavailableandwhosefairvaluecannotbereliablyestimatedintheabsenceofanactivemarketarecarriedatcostlessimpairmentlosses.

•Financialassetsatfairvaluethroughprofitorloss:Financialassetsatfairvaluethroughprofitorlossonlycomprisethosefinancialassetsthatareheldfortradingaswedonotdesignatefinancialassetsatfairvaluethroughprofitorlossoninitialrecognition.Thiscategorysolelycontainspositivefairvaluesfromembeddedandfreestandingderivatives,exceptwherehedgeaccountingisapplied.Allchangesinthefairvalueoffinancialassetsinthiscategoryareimmediatelyrecognizedinprofitorloss.ForfurtherinformationonderivativesseetheDerivativessection.


Allfinancialassetsnotaccountedforatfairvaluethroughprofitorlossareassessedforimpairmentateachreport-ingdateorifwebecomeawareofobjectiveevidenceofimpairmentasaresultofoneormoreeventsthatindicatethatthecarryingamountoftheassetmaynotberecover-able.Objectiveevidenceincludesbutisnotlimitedtoasignificantorprolongeddeclineofthefairvaluebelowitscarryingamount,ahighprobabilityofinsolvency,oramaterialbreachofcontractbytheissuersuchasasignifi-cantdelayorashortfallinpaymentsdue.Impairmentchargesintheamountofthedifferenceoftheassets’car-ryingamountandthepresentvalueoftheexpectedfuturecashflowsorcurrentfairvalue,respectively,arerecog-nizedinfinanceincome,net.Foravailable-for-salefinancialassetssuchimpairmentchargesdirectlyreducetheas-sets’carryingamountwhileimpairmentsonloansandre-ceivablesarerecordedusingallowanceaccounts.Accountbalancesarechargedoffagainsttherespectiveallowanceafterallcollectioneffortshavebeenexhaustedandthelikelihoodofrecoveryisconsideredremote.Impairmentlossesarereversedifthereasonfortheoriginalimpair-mentlossnolongerexists.Nosuchreversalsaremadeforavailable-for-saleequityinvestments.

Income/expensesandgains/lossesonfinancialassetsconsistofimpairmentchargesandreversals,interestincomeandexpenses,dividends,andgainsandlossesfromthedisposalofsuchassets.Dividendincomeisrecog-nizedwhenearned.Interestincomeisrecognizedbasedontheeffectiveinterestmethod.Neitherdividendnorinter-estincomeareincludedinnetgains/lossesatthetimeofdisposal.Financialassetsarederecognizedwhencontrac-tualrightstoreceivecashflowsfromthefinancialassetsexpireorthefinancialassetsaretransferredtogetherwithallmaterialrisksandbenefits.

InvestmentsinAssociatesCompaniesinwhichwedonothaveacontrollingfinancialinterest,butoverwhichwecanexercisesignificantoper-atingandfinancialinfluence(associates)areaccountedforusingtheequitymethod.

DerivativesWeaccountforderivativesandhedgingactivitiesinaccor-dancewithIAS39atfairvalue.

DerivativeswithoutDesignatedHedgeRelationshipManytransactionsconstituteeconomichedgesandthere-forecontributeeffectivelytothesecuringoffinancialrisksbutdonotqualifyforhedgeaccountingunderIAS39.Forthehedgingofcurrencyrisksinherentinforeigncur-rencydenominated,recognizedmonetaryassetsandliabili-tieswedonotdesignateourheld-for-tradingderivativefinancialinstrumentsasaccountinghedges,astherealizedprofitsandlossesfromtheunderlyingtransactionsarerecognizedinprofitorlossinthesameperiodsasthereal-izedprofitsorlossesfromthederivatives.

EmbeddedDerivativesWeoccasionallyhavecontractsthatrequirepaymentstreamsincurrenciesotherthanthefunctionalcurrencyofeitherpartytothecontract.Suchembeddedforeigncur-rencyderivativesareseparatedfromthehostcontractandaccountedforseparatelyiftheeconomiccharacteristicsandrisksofthehostcontractandtheembeddedderivativearenotcloselyrelated,aseparateinstrumentwiththesametermsastheembeddedderivativewouldmeetthedefinitionofaderivative,andthecombinedinstrumentisnotmeasuredatfairvaluethroughprofitorloss.

DerivativeswithDesignatedCashFlowHedgeRelationship

DerivativeswhicharepartofahedgingrelationshipthatqualifiesforhedgeaccountingunderIAS39arecarriedattheirfairvalue.Wedesignateanddocumentthehedgerelationshipincludingthenatureoftherisk,theidentificationofthehedgeditem,thehedginginstrument,andhowwewillassessthehedgeeffectiveness.Theaccountingforchangesinfairvalueofthehedginginstrumentdependsontheeffectivenessofthehedgingrelationship.Theeffectiveportionoftheunrealizedgainorlossonthederivativeinstrumentdeterminedtobeaneffectivehedgeisrecog-nizedinothercomponentsofequity.Wesubsequently


reclassifytheportionofgainsorlossesintheConsolidat-edStatementsofComprehensiveIncometotheCon-solidatedIncomeStatementswhenthehedgedtransactionaffectsprofitorloss.TheineffectiveportionofgainsorlossesisrecognizedintheConsolidatedIncomeStatementsimmediately.Fordetailedinformationonourhedges,seeNote(26).

ValuationandTestingofEffectivenessThefairvalueofourderivativesiscalculatedbydiscountingtheexpectedfuturecashflowsusingrelevantinterestrates,andspotratesovertheremaininglifetimeofthecon-tracts.

Gainsorlossesonthespotpriceandtheintrinsicvaluesofthederivativesdesignatedandqualifyingascash-flowhedgesarerecognizeddirectlyinothercomponentsofequity,whilegainsandlossesontheinterestelementandonthetimevaluesexcludedfromthehedgingrelationshiparerecognizedinprofitorlossimmediately.

Theeffectivenessofthehedgingrelationshipistestedprospectivelyandretrospectively.Prospectively,weapplythecriticaltermsmatchforourforeigncurrencyhedgesascurrencies,maturities,andtheamountsareidenticalfortheforecastedtransactionsandthespotelementoftheforwardexchangeratecontractorintrinsicvalueofthecur-rencyoptions,respectively.Forinterestrateswaps,wealsoapplythecriticaltermsmatchasthenotionalamounts,currencies,maturities,basisofthevariablelegs(EURI-BOR),resetdates,andthedatesoftheinterestandprinci-palpaymentsareidenticalforthedebtinstrumentandthecorrespondinginterestrateswaps.Therefore,overthelifeofthehedginginstrument,thechangesincashflowsofthehedgingrelationshipcomponentswilloffsettheimpactoffluctuationsoftheunderlyingforecastedtransactions.

Retrospectively,effectivenessistestedonacumulativebasisapplyingtheDollarOffsetMethodbyusingtheHypo-theticalDerivativeMethod.Underthisapproach,thechangeinfairvalueofaconstructedhypotheticalderivativewithtermsreflectingtherelevanttermsofthehedgeditemiscomparedtothechangeinthefairvalueofthehedginginstrumentemployingitsrelevantterms.Thehedgeisdeemedhighlyeffectiveiftheresultsarewithintherange80%to125%.

TradeandOtherReceivablesTradereceivablesarerecordedatinvoicedamountslesssalesallowancesandanallowancefordoubtfulaccounts.Werecordtheseallowancesonaspecificreviewofallsignificantoutstandinginvoices.Whenanalyzingtherecover-abilityofourtradereceivables,weconsiderthefollowingfactors:

–First,weconsiderthefinancialsolvencyofspecificcus-tomersandrecordanallowanceforspecificcustomerbalanceswhenwebelieveitisprobablethatwewillnotcollecttheamountdueaccordingtothecontractualtermsofthearrangement.

–Second,weevaluatehomogenousportfoliosoftradereceivablesaccordingtotheirdefaultriskprimarilybasedontheageofthereceivableandhistoricallossexperience,butalsotakingintoconsiderationgeneralmarketfactorsthatmightimpactourtradereceivableportfolio,suchasthecurrenteconomiccrisis.Werecordageneralbaddebtallowancetorecordimpair-mentlossesforaportfoliooftradereceivableswhenwebelievethattheageofthereceivablesindicatesthatitisprobablethatalosshasoccurredandwewillnotcollectsomeoralloftheamountsdue.

Accountbalancesarechargedoffagainsttheallowanceafterallcollectioneffortshavebeenexhaustedandthelikelihoodofrecoveryisconsideredremote.

InourConsolidatedIncomeStatementsbaddebtallowancesforaportfoliooftradereceivablesarerecordedasotheroperatingexpense,whereasbaddebtallowancesforspe-cificcustomerbalancesarerecordedincostofsoftwareandsoftware-relatedservicesorcostofprofessionalser-vicesandotherservices,dependingonthetransactionfromwhichtherespectivetradereceivableresults.Salesallowancesarerecordedasanoffsettotherespectiverevenueitem.

Includedintradereceivablesareunbilledreceivablesrelatedtofixed-feeandtime-and-materialconsultingarrangementsforcontractworkperformedtodate.


OtherNon-financialAssetsOthernon-financialassetsarerecordedatamortizedcost,whichapproximatesfairvalueduetotheirshort-termnature.

Wecapitalizethediscountofourloanstoemployeesasprepaidexpensesandreleaseitratablytopersonnelexpenses.

GoodwillGoodwillrepresentstheexcessofthefairvalueofthecon-siderationtransferred,theamountofanynon-controllinginterestintheacquiredbusinessandthefairvalueofanypreviouslyheldequityinterestoftheacquiredbusiness,overthefairvalueoftheidentifiablenetassetsacquired.

Wedonotamortizegoodwillbuttestitforimpairmentatleastannuallyandwheneventsoccurorchangesincircumstancesindicatethattherecoverableamountofacash-generatingunitislessthanitscarryingvalue.Inrespecttoat-equityinvestments,thecarryingamountofgoodwillisincludedinthecarryingamountoftheinvest-ment.

IntangibleAssetsPurchasedintangibleassetswithfiniteusefullivesarere-cordedatacquisitioncostandareamortizedeitherbasedonexpectedusageoronastraight-linebasisovertheirestimatedusefullivesrangingfromtwoto16years.Allofourintangibleassets,withtheexceptionofgoodwill,havefiniteusefullivesandarethereforesubjecttoamortization.

Werecognizeacquiredin-processresearchanddevelop-mentprojectsasanintangibleassetseparatefromgoodwillifaprojectmeetsthedefinitionofanasset.Amor-tizationfortheseintangibleassetsstartswhentheprojectsarecompleteandthedevelopedsoftwareistakentothemarket.Wetypicallyamortizetheseintangiblesoverfiveyears.

Property,Plant,andEquipmentProperty,plant,andequipmentarecarriedatacquisitioncostplusthefairvalueofrelatedassetretirementcosts,ifanyandifreasonablyestimable,andlessaccumulateddepreciation.Interestincurredduringtheconstructionofqualifyingassetsiscapitalizedandamortizedovertherelatedassets’estimatedusefullives.

Property,plant,andequipmentaredepreciatedovertheirexpectedusefullives,generallyusingthestraight-linemethod.Landisnotdepreciated.

Leaseholdimprovementsaredepreciatedusingthestraight-linemethodovertheshorterofthetermoftheleaseortheusefullifeoftheasset.Ifarenewaloptionexists,thetermusedreflectstheadditionaltimecoveredbytheoptionifexerciseisreasonablyassuredwhentheleaseholdimprove-mentisfirstputintooperation.

useful lives of Property, Plant, and Equipment

useful lives of Property, Plant, and Equipment

Buildings 25to50years

Leaseholdimprovements Basedupontheleasecontract

Informationtechnologyequipment 3to5years

Officefurniture 4to20years

Automobiles 4to5years


ImpairmentofGoodwillandNon-currentAssetsTherecoverableamountofgoodwillisestimatedeachyearatthesametime.Furthermore,wereviewnon-currentassets,suchasproperty,plant,equipment,andacquiredintangibleassetsforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountofanassetorgroupofassetsmaynotberecoverable.

Forthepurposeofimpairmenttesting,assetsthatcannotbetestedindividuallyaregroupedtogetherintothesmallestgroupofassetsthatgeneratescashinflowsfromcontinu-ingusethatarelargelyindependentofthecashinflowsofotherassetsorgroupsofassets(thecash-generatingunit,orCGU).Therecoverableamountofanassetorcash-generatingunitisthegreaterofitsvalueinuseanditsfairvaluelesscoststosell.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.

Goodwillacquiredinabusinesscombinationisallocatedtosegmentsthatareexpectedtobenefitfromthesynergiesofthecombination.Thisallocationrepresentsourmanage-mentapproach.Asaresult,wemeasureimpairmentforgoodwillatthesegmentlevel.

TheGroup’scorporateassetsdonotgenerateseparatecashinflows.Ifthereisanindicationthatacorporateassetmaybeimpaired,thentherecoverableamountisdeter-minedfortheCGUtowhichthecorporateassetbelongs.

AnimpairmentlossisrecognizedifthecarryingamountofanassetoritsCGUexceedsitsestimatedrecoverableamount.Impairmentlossesarerecognizedinprofitorloss.

Impairmentlossesfornon-currenttangibleandintangibleassetsrecognizedinthepriorperiodsareassessedateachreportingdateforindicatorsthatthelosshasde-creasedornolongerexists.Accordingly,ifthereisanindicationthatthereasonsthatcausedtheimpairmentnolongerexistwewouldconsidertheneedtoreversealloraportionoftheimpairmentthroughprofitorloss.

ContingentAssetsWecarryinsurancepoliciestooffsettheexpensesassoci-atedwithdefendingagainstlitigationmatters.Werecog-nizethesereimbursementsinprofitorlosswhenitisvirtu-allycertainthatthereimbursementwillbereceivedandretainedbyuswhenwesettletherelatedobligation.

Liabilities

FinancialLiabilitiesFinancialliabilitiesincludetradeandotherpayables,bankloansandotherfinancialliabilitieswhichcomprisederiva-tiveandnon-derivativefinancialliabilities.

TheyarerecognizedandmeasuredinaccordancewithIAS39.Accordingly,financialliabilitiesarerecognizedintheConsolidatedFinancialStatementsifwehaveacontractualobligationtotransfercashoranotherfinancialassettoan-otherparty.Financialliabilitiesareinitiallyrecognizedatfairvalue,whichinthecaseoffinancialliabilitiesnotatfairvaluethroughprofitorlossincludesdirectlyattributabletransactioncosts.Ifmaterial,financialliabilitiesarediscount-edtopresentvaluebasedonprevailingmarketratesad-justedforcreditrisk,withthediscountbeingrecognizedovertimeasinterestexpense.Thesubsequentmeasurementdependsontheallocationoffinancialliabilitiestothefollow-ingcategoriesaccordingtoIAS39:•Financialliabilitiesatfairvaluethroughprofitorlossonly

comprisethosefinancialliabilitiesthatareheldfortradingaswedonotdesignatefinancialliabilitiesatfairvaluethroughprofitorlossoninitialrecognition.Thiscategorysolelycontainsnegativefairvaluesfromembeddedandotherderivatives,exceptwherehedgeaccountingisapplied.Allchangesinthefairvalueoffinancialliabilitiesinthiscategoryareimmediatelyrecognizedinprofitorloss.Forfurtherinformationonderivatives,seetheDerivativessection.

•Financialliabilitiesatamortizedcostincludeallnon-deriv-ativefinancialliabilitiesnotquotedinanactivemarketwhicharemeasuredatamortizedcostusingtheeffectiveinterestmethod.


Expensesandgains/lossesonfinancialliabilitiesconsistofinterestexpenses,andgainsandlossesfromthedisposalofsuchliabilities.Interestexpenseisrecognizedbasedontheeffectiveinterestmethod.

Financialliabilitiesarederecognizedwhenthecontractualobligationisdischarged,canceledorhasexpired.

Non-financialLiabilitiesOthernon-financialliabilitieswithfixedordeterminablepay-mentsthatarenotquotedinanactivemarketaremainlytheresultofobligationstoemployeesandfiscalauthoritiesandaregenerallymeasuredatamortizedcost.

ProvisionsProvisionsarerecordedwhenitismorelikelythannotthatwehavealegalorconstructiveobligationtothirdpartiesasaresultofapastevent,theamountcanbereasonablyestimated,anditisprobablethattherewillbeanoutflowoffutureeconomicbenefits.Weregularlyadjustprovisionsasfurtherinformationdevelopsorcircumstanceschange.Non-currentprovisionsarereportedatthepresentvalueoftheirexpectedsettlementamountsasatthedateofState-mentofFinancialPosition.Discountratesareregularlyad-justedtocurrentmarketinterestrates.

Oursoftwarecontractsusuallycontaingeneralwarrantyprovisionsguaranteeingthatthesoftwarewillperformac-cordingtoSAP’sstatedspecificationsforsixtotwelvemonths.Atthetimeofthesaleorlicenseofoursoftwarecoveredbysuchwarrantyprovisions,werecordaprovi-sionforwarrantyobligationsbasedonthehistoricalaver-agecostoffulfillingourobligations,whichweclassifyasacurrentobligation.

Aprovisionforrestructuringisrecognizedwhenwehaveapprovedadetailedandformalrestructuringplanandtherestructuringhascommencedorhasbeenannounced.

Post-EmploymentBenefitsWemeasureourpension-benefitliabilitiesandotherpost-employmentbenefitsbasedonactuarialcomputationsus-ingtheprojected-unit-creditmethodinaccordancewithIAS19.TheassumptionsusedtocalculatepensionliabilitiesandcostsareshowninNote(19a).Asaresultoftheactu-arialcalculationforeachplanwerecognizeanassetorliabilityfortheoverfundedorunderfundedstatusofthere-spectivedefinedbenefitplan.Weclassifyaportionoftheliabilityascurrent(determinedonaplan-by-planbasis)iftheamountbywhichtheactuarialpresentvalueofbene-fitsincludedinthebenefitobligationpayablewithinthenext12monthsexceedsthefairvalueofplanassets.Changesintheamountofthedefinedbenefitobligationorplanas-setsresultingfromdemographicandfinancialdatadifferentthanoriginallyassumedandfromchangesinassumptionscanresultinactuarialgainsandlosses.Werecognizeallactuarialgainsandlossesdirectlyinretainedearnings.

SAP’spensionbenefitsareclassifiedasdefinedcontribu-tionplansifthepaymenttoaseparatefundrelievesSAPofallobligationsfromthepensionplan.Obligationsforcontributionstodefinedcontributionpensionplansarerecognizedasanexpenseinprofitorlosswhenpaidordue.

DeferredIncomeDeferredincomeisrecognizedassoftwarerevenue,sup-portrevenue,professionalservicerevenue,orotherrevenue,dependingonthereasonsforthedeferral,oncethebasicapplicablerevenuerecognitioncriteriahavebeenmet,forexample,whentherelatedservicesareper-formedorwhenthediscountsareused.


TreasurySharesTreasurysharesarerecordedatacquisitioncostandarepresentedasadeductionfromtotalequity.Gainsandloss-esonthesubsequentreissuanceoftreasurysharesarecreditedorchargedtosharepremiumonanafter-taxbasis.Oncancellationoftreasurysharesanyexcessoverthecalculatedparvalueischargedtoretainedearnings.

PresentationintheConsolidatedStatementsofCashFlowsWeclassifyinterestandtaxespaidaswellasinterestanddividendsreceivedascashflowsfromoperatingactivities.Dividendspaidareclassifiedasfinancingactivities.

(3c) Management Judgments and Sources of Estimation uncertainty ThepreparationoftheConsolidatedFinancialStatementsinconformitywithIFRSrequiresmanagementtomakejudgments,estimates,andassumptionsthataffecttheap-plicationofaccountingpoliciesandthereportedamountsofassets,liabilities,revenues,andexpenses,aswellasdis-closureofcontingentassetsandliabilities.

Webaseourjudgments,estimates,andassumptionsonhistoricalandforecastinformation,aswellasregionalandindustryeconomicconditionsinwhichweorourcustom-ersoperate,changestowhichcouldadverselyaffectourestimates.Althoughwebelievewehavemadereason-ableestimatesabouttheultimateresolutionoftheunderly-inguncertainties,noassurancecanbegiventhatthefinaloutcomeofthesematterswillbeconsistentwithwhatisreflectedinourassets,liabilities,revenues,andexpenses.Actualresultscoulddifferfromoriginalestimates.

Theaccountingpoliciesthatmostfrequentlyrequireustomakejudgments,estimates,andassumptions,andthereforearecriticaltounderstandingourresultsofoperations,are:

•Revenuerecognition•Valuationoftradereceivables•Accountingforshare-basedcompensation•Accountingforincometax•Accountingforbusinesscombinations•Subsequentaccountingforgoodwillandotherintangibles•Accountingforlegalcontingencies•Recognitionofinternallygeneratedintangibleassets

fromdevelopment

OurmanagementperiodicallydiscussesthesecriticalaccountingpolicieswiththeAuditCommitteeoftheSuper-visoryBoard.

Revenue RecognitionAsdescribedintheRevenueRecognitionsectionofNote(3b),wedonotrecognizerevenuebeforepersuasiveevi-denceofanarrangementexists,deliveryhasoccurred,therisksandrewardsofownershiphavebeentransferredtothecustomer,theamountofrevenuecanbemeasuredreli-ably,andcollectionoftherelatedreceivableisreasonablyassured.Thedeterminationofwhethertheamountofreve-nuecanbemeasuredreliablyorwhetherthefeesarecol-lectibleisinherentlyjudgmentalasitrequiresestimatesastowhetherandtowhatextentsubsequentconcessionsmaybegrantedtocustomersandwhetherthecustomerisexpectedtopaythecontractualfees.Thetimingandamountofrevenuerecognitioncanvarydependingonwhatassessmentshavebeenmade.


Inmostofourrevenue-generatingarrangementsweselltothecustomermorethanoneproductsolutionorservice.Additionally,wehaveongoingrelationshipswithmanyofourcustomersandoftenenterintoseveraltransactionswiththesamecustomerwithincloseproximityintime.Wethereforehavetodetermine:•Whicharrangementswiththesamecustomeraretobe

accountedforasonearrangement•Whichdeliverablesunderonearrangementaretobe

accountedforseparatelyand•Howtoallocatethetotalarrangementfeetotheindi-

vidualelementsofonearrangement

Thedeterminationofwhetherdifferentarrangementswiththesamecustomeraretobeaccountedforasonear-rangementishighlyjudgmentalasitrequiresustoevaluatewhetherthearrangementsarenegotiatedtogetherorlinkedinanyotherway.Thetimingandamountofrevenuerecognitioncanvarydependingonwhethertwoarrange-mentsareaccountedforseparatelyorasonearrangement.

Wedonotaccountseparatelyforsoftwareandotherdeliv-erablesunderanarrangementifoneoftheotherdeliver-ables(suchasconsultingservices)isdeemedtobeessen-tialtothefunctionalityofthesoftware.Thedeterminationwhetheranundeliveredelementisessentialtothefunction-alityofthedeliveredelementrequirestheuseofjudgment.Thetimingandamountofrevenuerecognitioncanvarydependingonhowthatjudgmentisexercisedbecausesoft-warerevenuewhichmayotherwisehavebeenrecognizedupfrontisrecognizedoverthetermofprovidingtheessen-tialdeliverable.

Wealsodonotaccountseparatelyfordifferentdeliver-ablesunderanarrangementifwehavenobasisforallocat-ingtheoverallarrangementfeetothedifferentelementsofthearrangement.Webelievethatsuchallocationbasisexistsifwecandemonstrateforeachundeliveredelementofthearrangementacompany-specificobjectiveevidenceoffairvalueasfurtherdefinedintheRevenueRecognition

sectionofNote(3b).Judgmentisrequiredinthedetermi-nationofcompany-specificevidenceoffairvaluewhichmayimpactthetimingandamountofrevenuerecognizeddependingon:•Whethercompany-specificevidenceoffairvaluecanbe

demonstratedfortheundeliveredelementsofasoftwarearrangement

•Theapproachesusedtodemonstratecompany-specificevidenceoffairvalue

Additionally,ourrevenueswouldbesignificantlydifferentifweappliedarevenueallocationpolicyotherthantheresidualmethod.

Revenuesfromconsulting,otherprofessionalservice,aswellascustomsoftwaredevelopmentprojectsarede-terminedbyapplyingthepercentageofcompletionmethodofrevenuerecognition.Thepercentageofcompletionmethodrequiresustomakeestimatesabouttotalrevenues,totalcosttocompletetheproject,andthestageofcom-pletion.Theassumptions,estimates,anduncertaintiesinher-entindeterminingthestageofcompletionaffectthetimingandamountsofrevenuesrecognizedandexpensesreport-ed.Ifwedonothaveasufficientbasistomeasuretheprogressofcompletionortoestimatethetotalcontractrev-enuesandcosts,revenuerecognitionislimitedtotheamountofcontractcostsincurred.Thedeterminationofwhetherasufficientbasistomeasuretheprogressofcompletionexistsisjudgmental.Changesinestimatesofprogresstowardscompletionandofcontractrevenuesandcontractcostsareaccountedforascumulativecatch-upadjustmentstothereportedrevenuesfortheapplica-blecontract.

ValuationofTradeReceivablesAsdescribedintheTradeandOtherReceivablessectioninNote(3b),weaccountforimpairmentsoftradereceivablesbyrecordingsalesallowancesandallowancesfordoubt-fulaccountsonanindividualreceivablebasisandonaport-foliobasis.Theassessmentofwhetherareceivableis


collectibleisinherentlyjudgmentalandrequirestheuseofassumptionsaboutcustomerdefaultsthatcouldchangesignificantly.Judgmentisrequiredwhenweevaluateavail-ableinformationaboutaparticularcustomer’sfinancialsituationtodeterminewhetheritisprobablethatacreditlosswilloccurandtheamountofsuchlossisreasonablyesti-mableandthusanallowanceforthatspecificaccountisnecessary.Basingthegeneralallowancefortheremainingreceivablesonourhistoricallossexperience,too,ishighlyjudgmentalashistorymaynotbeindicativeoffuturedevelopment,particularlyintheunusualandextremeglobaleconomiccircumstancesresultingfromtheglobalfinancialcrisis.Changesinourestimatesabouttheallow-ancefordoubtfulaccountscouldmateriallyimpactthereportedassetsandexpensesinourfinancialstatements,andournetincomecouldbeadverselyaffectedifactualcreditlossesexceedourestimates.

AccountingforShare-BasedCompensationAsdescribedinNote(28),wehaveissuedbothequity-settledaswellascash-settledshare-basedcompensationplans.

Weusecertainassumptionsinestimatingthefairvaluesforourshare-basedcompensationplans,includingexpect-edfuturestockpricevolatilityandexpectedoptionlife(whichrepresentsourestimateoftheaverageamountoftimeremaininguntiltheoptionsareexercisedorexpireunexercised).Inaddition,finalpayoutfortheseplansalsodependsonoursharepriceattherespectiveexercisedates.Alltheseassumptionsmaysignificantlyimpactthefairvaluedeterminationandthustheamountandtimingofourshare-basedcompensationexpenses.Furthermore,thefairvaluesoftheoptionsgrantedunderour2009plans(STARPPandSOPPP)aredependentonouroutperfor-manceagainsttheTechPeerGroupIndex(TechPGI)sincegrantdate,thevolatilityandtheexpectedcorrelationbe-tweenthemarketpriceofthisindex,andourshareprice.

Forthepurposeofdeterminingtheestimatedfairvalueofourstockoptions,webelieveexpectedvolatilityisthemostsensitiveassumption.Regardingfuturepayoutundertheplans,thedevelopmentofoursharepricewillbethemostrelevantfactor.Inrespecttoourplansgrantedin2009(SOPPPandSTARPP),webelievethatfuturepay-outwillbesignificantlyimpactednotonlybyoursharepricebutalsobytherequirementtooutperformtheTechPGI.Changesinthesefactorscouldsignificantlyaffecttheestimatedfairvaluesascalculatedbytheoption-pricingmodelrespectivelyfuturepayout.

AccountingforIncomeTaxWeconductoperationsandearnincomeinnumerousfor-eigncountriesandaresubjecttochangingtaxlawsinmultiplejurisdictionswithinthecountriesinwhichweoper-ate.Ourordinarybusinessactivitiesalsoincludetransac-tionswheretheultimatetaxoutcomeisuncertain,suchasthoseinvolvingrevenuesharingandcostreimbursementarrangementsbetweenSAP Groupentities.Inaddition,theamountofincometaxwepayisgenerallysubjecttoon-goingauditsbydomesticandforeigntaxauthorities.Asaresult,judgmentsarenecessaryindeterminingourworld-wideincometaxprovisions.Wehavemadereasonableestimatesabouttheultimateresolutionofourtaxuncertain-tiesbasedoncurrenttaxlawsandourinterpretationthereof.Suchjudgmentscanhaveamaterialeffectonourincometaxexpense,incometaxprovision,andnetincome.

Thecarryingamountofadeferredtaxassetisreviewedattheendofeachreportingperiodandisreducedtotheex-tentthatitisnolongerprobablethatsufficienttaxableprof-itwillbeavailabletoallowthebenefitofpartorallofthedeferredtaxassetstobeutilized.Thisassessmentrequiresmanagementjudgments,estimates,andassumptions.Inevaluatingourabilitytoutilizeourdeferredtaxassets,weconsiderallavailablepositiveandnegativeevidence,in-cludingourpastoperatingresultsandourforecastoffuturetaxableprofit.Ourjudgmentsregardingfuturetaxableprofitarebasedonexpectationsofmarketconditionsandotherfactsandcircumstances.Anyadversechangetotheunderlyingfactsorourestimatesandassumptionscouldrequirethatwereducethecarryingamountofournetdeferredtaxassets.

Forfurtherinformationonourincometax,seeNote(11).


AccountingforBusinessCombinationsInouraccountingforbusinesscombinations,judgmentisrequiredinidentifyingwhetheranintangibleassetisidenti-fiable,i.e.toberecordedseparatelyfromgoodwill.Addi-tionally,estimatingtheacquisitiondatefairvaluesoftheidentifiableassetsacquiredandliabilitiesassumedin-volvesconsiderablemanagementjudgment.Thenecessarymeasurementsarebasedoninformationavailableattheacquisitiondateandarebasedonexpectationsandassump-tionsthathavebeendeemedreasonablebymanagement.Thesejudgments,estimates,andassumptionscanmateri-allyaffectourresultsofoperationsforseveralreasons,amongwhicharethefollowing:•Fairvaluesassignedtoassetssubjecttodepreciation

andamortizationaffectstheamountsofdepreciationandamortizationtoberecordedinoperatingprofitintheperiodsfollowingtheacquisition.

•Subsequentnegativechangesintheestimatedfairvaluesofassetsmayresultinadditionalexpensefromimpair-mentcharges.

•Subsequentchangesintheestimatedfairvaluesoflia-bilitiesandprovisionsmayresultinadditionalexpense(ifincreasingtheestimatedfairvalue)oradditionalincome(ifdecreasingtheestimatedfairvalue).

SubsequentAccountingforGoodwillandOtherIntangiblesAsdescribedintheIntangibleAssetssectioninNote(3b),allourintangibleassetsotherthangoodwillhavefiniteuse-fullives.Consequently,thedepreciableamountofthein-tangibleassetsisallocatedonasystematicbasisovertheirusefullives.Judgmentisrequiredin:•Thedeterminationoftheusefullifeofanintangibleasset

asthisdeterminationisbasedonourestimatesregard-ingtheperiodoverwhichtheintangibleassetisexpectedtoproduceeconomicbenefitstous.

•ThedeterminationoftheamortizationmethodasIFRSrequiresthestraight-linemethodtobeusedunlesswecanreliablydeterminethepatterninwhichtheasset’sfutureeconomicbenefitsareexpectedtobeconsumedbyus.

Both,theamortizationperiodandtheamortizationmethodhaveanimpactontheamortizationexpensesthatarere-cordedineachperiod.

Inmakingimpairmentassessmentsforourintangibleassetsandgoodwill,weusecertainassumptionsandestimatesaboutfuturecashflows,whicharecomplexandrequiresig-nificantjudgmentandassumptionsaboutfuturedevelop-ments.Theycanbeaffectedbyavarietyoffactors,includ-ingchangesinourbusinessstrategy,ourinternalforecastsandestimationofourweighted-averagecostofcapital.Duetothesefactors,actualcashflowsandvaluescouldvarysignificantlyfromtheforecastedfuturecashflowsandrelatedvaluesderivedusingthediscountedcashflowmethod.Althoughwebelievetheassumptionsandesti-mateswehavemadeinthepasthavebeenreasonableandappropriate,differentassumptionsandestimatescouldmateriallyaffectourreportedfinancialresults.

Additionally,theresultsofgoodwillimpairmenttestsmaydependontheallocationofgoodwilltocash-generatingunits.Thisallocationisjudgmentalasitisbasedonoures-timatesregardingwhichcash-generatingunitsareexpect-edtobenefitfromthesynergiesoftherespectivebusinesscombination.

Wedidnotrecordanysignificantimpairmentchargesonourgoodwillorintangibleassetsduringfiscalyear2009.Althoughwedonotcurrentlyhaveanindicationofanysig-nificantimpairment,therecanbenoassurancethatim-pairmentchargeswillnotoccurinthefuture.Formorein-formation,seeNote(16).


AccountingforLegalContingenciesAsdescribedinNote(24),currentlyweareinvolvedinvari-ousclaimsandlegalproceedings.Wereviewthestatusofeachsignificantmatteronatleastaquarterlybasisandassessourpotentialfinancialandbusinessexposuresre-latedtosuchmatters.Significantjudgmentisrequiredinthedeterminationofwhetheraprovisionistoberecordedandwhattheappropriateamountforsuchprovisionshouldbe.Thisjudgmentisparticularlyrequiredin:•Thedeterminationwhetheranobligationexists,•Thedeterminationoftheprobabilityofoutflowofeco-

nomicbenefits,•Thedeterminationwhethertheamountofobligationis

estimable,and•Theestimateoftheobligation.

Duetouncertaintiesrelatingtothesematters,provisionsarebasedonthebestinformationavailableatthetime.

Attheendofeachreportingperiod,wereassessthepoten-tialobligationsrelatedtoourpendingclaimsandlitigationandadjustourrespectiveprovisionstoreflectthecurrentbestestimate.Inaddition,wemonitorandevaluatenewinformationthatwereceiveaftertheendoftherespectivereportingperiodbutbeforetheConsolidatedFinancialStatementsareauthorizedforissuetodeterminewhetherthisprovidesadditionalinformationregardingconditionsthatexistedattheendofthereportingperiod.Suchrevisionstoourestimatesofthepotentialobligationscouldhaveamaterialimpactonourresultsofoperationsandfinancialposition.Theeffectsofchangesinestimatesofpotentialliabilitiesrelatedtoourlegalcontingencieshadnomaterialimpacton2009,2008,or2007results.

RecognitionofInternallyGeneratedIntangibleAssetsfromDevelopmentUnderIFRS,internallygeneratedintangibleassetsfromthedevelopmentphasearerecognizedifcertainconditionsaremet.Theseconditionsincludethetechnicalfeasibility,intentiontocomplete,theabilitytouseorselltheassetunderdevelopmentandthedemonstrationhowtheassetwillgenerateprobablefutureeconomicbenefits.Thecostofarecognizedinternallygeneratedintangibleassetcomprisesalldirectlyattributablecostnecessarytomaketheassetcapableofbeingusedasintendedbyman-agement.Incontrast,allexpendituresarisingfromtheresearchphaseareexpensedasincurred.

Webelievethatthedeterminationwhetherinternallygen-eratedintangibleassetsfromdevelopmentaretoberecog-nizedasintangibleassetsrequiressignificantjudgment,particularlyinthefollowingareas:•Thedeterminationwhetheractivitiesshouldbeconsid-

eredresearchactivitiesordevelopmentactivities;•Thedeterminationwhethertheconditionsforrecognizing

anintangibleassetaremetrequiresassumptionsaboutfuturemarketconditions,customerdemandandotherdevelopments;

•Theterm‘technicalfeasibility’isnotdefinedinIFRS,andthereforethedeterminationwhethercompletinganassetistechnicallyfeasiblerequiresacompany-specificandnecessarilyjudgmentalapproach;

•Thedeterminationofthefutureabilitytouseorselltheintangibleassetarisingfromthedevelopmentandthedeterminationofprobabilityoffuturebenefitsfromsaleoruse,and

•Thedeterminationwhetheracostisdirectlyorindirectlyattributabletoanintangibleassetandwhetheracostisnecessaryforcompletingadevelopment.

(3d) New Accounting Standards Adopted/Early Adopted in the Current PeriodInMarch2007,theIASBissuedanamendmenttoIAS23BorrowingCosts(IAS23).Theamendmentmainlyrelatestotheeliminationoftheoptiontoimmediatelyrecognizeborrowingcostsasanexpenseattributabletotheacquisi-tion,construction,orproductionofaqualifyingasset.Anentityis,therefore,requiredtocapitalizeborrowingcostsaspartofthecostofsuchqualifyingassetsdefinedasassetsthattakeasubstantialperiodoftimetogetreadyforuseorsale.IAS23doesnotrequirethecapitalizationofborrowingcostsrelatingtoassetsmeasuredatfairvalue,andinventoriesthataremanufacturedorproducedinlargequantitiesonarepetitivebasis,eveniftheytakeasubstantialperiodoftimetogetreadyforuseorsale.IAS23appliestoborrowingcostsrelatingtoqualifyingas-setsforwhichthecommencementdateforcapitalizationisonorafterJanuary1,2009.Wehavehistoricallycapital-izedborrowingcostsforqualifyingassets.Therefore,theadoptionofIAS23hadnoimpactonourConsolidatedFinancialStatements.


InJune2007,theIFRICissuedIFRICInterpretation13CustomerLoyaltyProgrammes(IFRIC13),whichaddress-esaccountingbyentitiesthatgrantloyaltyawardcredits(suchaspointsortravelmiles)tocustomerswhobuygoodsorservices.Specifically,itexplainshowsuchentitiesshouldaccountfortheirobligationstoprovidefreeordis-countedgoodsorservicestocustomerswhoredeemawardcredits.IFRIC13iseffectiveforfiscalyearsbeginningonorafterJanuary1,2009andrequiredtobeappliedretrospectively.Asaresultoftheretrospectivefirst-timeapplication,weadjustedtheJanuary1,2007retainedearningsbalanceby€12 million.TheeffectontheConsoli-datedIncomeStatementsaswellasearningspersharewasimmaterialfortheyearsendedDecember31,2009,2008,and2007.

InSeptember2007,theIASBissuedarevisiontoIAS1PresentationofFinancialStatements(IAS1).Thestandardseparatesownerandnon-ownerchangesinequity.There-fore,thestatementofchangesinequitywillincludeonlydetailsoftransactionswithowners,withallnon-ownerchangesinequitypresentedinareconciliationofeachcomponentofequity.IAS1setsoverallrequirementsforthepresentationoffinancialstatements,guidelinesfortheirstructureandminimumrequirementsfortheircontent.Therevisionsincludenon-mandatorychangesinthetitlesofsomeofthefinancialstatementstoreflecttheirfunctionmoreclearly(forexample,thebalancesheetisrenamedtostatementoffinancialposition,thecashflowstatementisrenamedtothestatementofcashflowsandthestatementofcomprehensiveincomehasbeenintro-duced).Thestatementofcomprehensiveincomepresentsallitemsofrecognizedincomeandexpense,eitherinonesinglestatement,orintwolinkedstatements.Therevi-sionofIAS1iseffectiveforfiscalyearsbeginningonorafterJanuary1,2009.TheadoptionofIAS1didnotsignif-icantlychangethecurrentpresentationofourConsoli-datedFinancialStatements.

InJanuary2008,theIASBissuedIFRS2(revised2008)VestingConditionsandCancellations(IFRS2).IFRS2amendsIFRS2Share-BasedPaymenttoclarifytheterms“vestingcondition”and“cancellations.”IFRS2iseffec-tiveforfiscalyearsbeginningonorafterJanuary1,2009.TheadoptionofIFRS2didnothaveasignificantimpactonourConsolidatedFinancialStatements.

InJanuary2008,theIASBissuedtherevisedstandardsIFRS3BusinessCombinations(IFRS3(2008))andIAS27ConsolidatedandSeparateFinancialStatements(IAS27).Therevisionsresultinseveralchangesintheaccountingforbusinesscombinations.Oneofthosechangesrequiresustoexpenseacquisition-relatedchargesimmediately,whereasthepreviousversionofIFRS3requiredcapitaliza-tionofthesecharges.IFRS3(2008)andIAS27areeffectiveforfiscalyearsbeginningonorafterJuly1,2009,withearlyadoptionpermitted.SAPhasdecidedtoadopttheserevisionsasofJanuary1,2009.TheadoptionoftheserevisionsdidnothaveasignificantimpactonourConsoli-datedFinancialStatements.

InFebruary2008,theIASBissuedanamendmenttoIAS32FinancialInstruments:DisclosureandPresentation–PuttableInstrumentsandObligationsArisingonLiquidation(IAS32).ThepurposeoftheamendmentistoprovidedetailedguidanceonthepresentationofputtablefinancialinstrumentsandobligationsarisingonlyonliquidationintheStatementofFinancialPosition.TheamendmentofIAS32iseffectiveforfiscalyearsbeginningonorafterJanu-ary1,2009.TheadoptionofIAS32didnothaveanimpactonourConsolidatedFinancialStatements.


InMay2008,theIASBissuedImprovementstoIFRSs–acollectionofamendmentstoseveralInternationalFinancialReportingStandards–aspartofitsprogramofannualimprovementstoitsstandards,whichisintendedtomakenecessary,butnon-urgent,amendmentstostandardsthatwillnotbeincludedaspartofanothermajorproject.TheamendmentsresultingfromthisstandardaremainlyeffectiveforannualperiodsbeginningonorafterJanuary1,2009.TheadoptionoftheseamendmentsdidnothaveasignificantimpactonourConsolidatedFinancialStatements.

InJuly2008,theIFRICissuedIFRICInterpretation16HedgesofaNetInvestmentinaForeignOperation(IFRIC16),whichprovidesinterpretativeguidanceonseveralaspectsofhedgeaccounting.IFRIC16iseffectiveforfiscalyearsbeginningonorafterOctober1,2008.TheadoptionofIFRIC16didnothaveanimpactonourConsolidatedFinancialStatements.

InOctober2008,theIASBissuedanamendmenttoIAS39FinancialInstruments:RecognitionandMeasurement:ReclassificationofFinancialAssets(IAS39).Theamend-mentpermitsreclassificationofsomefinancialinstrumentsoutofthefair-value-through-profit-or-losscategory(FVTPL)andoutoftheavailable-for-salecategory.Intheeventofreclassification,additionaldisclosuresarerequiredunderIFRS7.IAS39iseffectiveforfiscalyearsbeginningonorafterJuly1,2008.Wedidnotreclassifyanyfinancialin-strumentsbasedontheapplicationoftheamendment;thereforetheadoptionoftheamendmenttoIAS39didnothaveanimpactonourConsolidatedFinancialStatements.

InJanuary2009,theIFRICissuedIFRICInterpretation18TransfersofAssetsfromCustomers(IFRIC18),whichclarifiestherequirementsofIFRSsforagreementsinwhichanentityreceivesfromacustomeranitemofproperty,plant,andequipmentthattheentitymustthenuseeithertoconnectthecustomertoanetworkortoprovidethecustomerwithongoingaccesstoasupplyofgoodsorser-vices.IFRIC18mustbeappliedprospectivelytotransfersofassetsfromcustomersreceivedonorafterJuly1,2009.TheadoptionofIFRIC18didnothaveanimpactonourConsolidatedFinancialStatements.

InMarch2009,theIASBissuedanamendmenttoIFRS7ImprovingDisclosuresaboutFinancialInstruments(IFRS7).Theamendmentsrequireenhanceddisclosuresaboutfairvaluemeasurementsandliquidityrisk.Amongotherthings,thenewdisclosurerequirements:•ClarifythattheexistingIFRS7fairvaluedisclosures

mustbemadeseparatelyforeachclassoffinancialinstrument

•Adddisclosureforanychangeinthemethodofdetermin-ingfairvalueandthereasonsforthechange

•Establishathree-levelhierarchyformakingfairvaluemeasurements:1.Quotedprices(unadjusted)inactivemarketsforiden-

ticalassetsorliabilities(Level1)2.InputsotherthanquotedpricesincludedwithinLevel1

thatareobservablefortheassetorliability,eitherdirectly(thatis,asprices)orindirectly(thatis,derivedfromprices)(Level2)

3.Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs)(Level3)

•Adddisclosure,foreachfairvaluemeasurementinthestatementoffinancialposition,ofwhichlevelinthehierarchywasusedandanytransfersbetweenlevels,withaddi-tionaldisclosureswheneverlevel3isusedincludingameasureofsensitivitytoachangeininputdata

•Clarifythatthecurrentmaturityanalysisfornon-derivativefinancialinstrumentsshouldincludeissuedfinancialguar-anteecontracts

•Adddisclosureofamaturityanalysisforderivativefinan-cialliabilities


TheamendmentiseffectiveforfiscalyearsbeginningonorafterJanuary1,2009.Earlierapplicationispermitted.Theadoptionresultedinadditionaldisclosuresbutdidnothaveaneffectonanyassets,liabilities,revenues,ex-penses,orcashflows.

InMarch2009,theIASBissuedEmbeddedDerivatives:AmendmentstoIFRIC9andIAS39(IFRIC9).IFRIC9amendsIFRIC9ReassessmentofEmbeddedDerivativesandIAS39FinancialInstruments:RecognitionandMea-surementtoclarifytheaccountingtreatmentofembeddedderivativesforentitiesthatmakeuseofthereclassificationamendmentissuedbytheIASBinOctober2008FinancialInstruments:RecognitionandMeasurement:Reclassifica-tionofFinancialAssets,whichisdescribedabove.IFRIC9alsoclarifiesthat,onreclassificationofafinancialassetoutofthefairvaluethroughprofitorlosscategory,allem-beddedderivativeshavetobeassessedand,ifnecessary,separatelyaccountedforinfinancialstatements.TheamendmentsapplyretrospectivelyandarerequiredtobeappliedforannualperiodsendingonorafterJune30,2009.TheadoptionoftheseamendmentsdidnothaveanimpactonourConsolidatedFinancialStatementssincewehavenotmadeuseofthereclassificationamendment.

(3e) New Accounting Standards Not yet AdoptedInJuly2008,theIASBissuedanamendmenttoIAS39Fi-nancialInstruments:RecognitionandMeasurement:Eligi-bleHedgedItems(IAS39).Theamendmentaddressesthedesignationofaone-sidedriskinahedgeditemandthedesignationofinflationinparticularsituations.Theamend-mentappliestohedgingrelationshipsinthescopeofIAS39.TheamendmentiseffectiveforfiscalyearsbeginningonorafterJuly1,2009.Earlierapplicationispermitted.WedonotexpectthattheamendmentofIAS39willhaveasignificantimpactonourConsolidatedFinancialState-ments.

InApril2009,theIASBissuedImprovementstoIFRSs–acollectionofamendmentstoseveralInternationalFinancialReportingStandards–aspartofitsprogramofannualimprovementstoitsstandards,whichisintendedtomakenecessary,butnon-urgent,amendmentstostandardsthatwillnotbeincludedaspartofanothermajorproject.TheamendmentsresultingfromthisstandardmainlyhaveeffectivedatesforannualperiodsbeginningonorafterJanuary1,2010,althoughentitiesarepermittedtoadoptthemearlier.TheEuropeanUnionhasnotyetendorsedtheseimprovements.WedonotexpecttheseamendmentstohaveasignificantimpactonourConsolidatedFinancialStatements.

InOctober2009,theIASBissuedamendmentstoIAS32FinancialInstruments:Presentation(IAS32),whichad-dressestheaccountingforrightsissues(rights,options,orwarrantstoacquireafixednumberoftheentity’sownequityinstrumentsforafixedamountofcurrencies)thataredenominatedinacurrencyotherthanthefunctionalcurrencyoftheissuer.Previouslysuchrightsissueswereaccountedforasderivativeliabilities.However,theamend-mentissuedrequiresthat,providedcertainconditionsaremet,suchrightsissuesareclassifiedasequityregardlessofthecurrencyinwhichtheexercisepriceisdenominated.TheamendmentsareeffectiveforannualperiodsbeginningonorafterFebruary1,2010,withearlierapplicationper-mitted.WedonotexpectthisamendmenttohaveanimpactonourConsolidatedFinancialStatements.

InNovember2009,theIASBissuedanamendmenttoIAS24(revised2009)RelatedPartyDisclosures(IAS24).Thepurposeoftherevisionistosimplifythedefinitionofarelatedparty,clarifyingitsintendedmeaningandeliminatingin-consistenciesfromthedefinition.Inaddition,IAS24providesapartialexemptionfromthedisclosurerequirementsforgovernment-relatedentitiesbyfocusingdisclosureonsig-nificanttransactions.TherevisioniseffectiveforfiscalyearsbeginningonorafterJanuary1,2011.Earlierap-plicationispermitted.IAS24hasnotyetbeenadoptedbytheEuropeanUnion.WedonotexpecttherevisionofIAS24tohaveasignificantimpactonourConsolidatedFinancialStatements.


InNovember2009,theIASBissuedIFRS9FinancialInstru-mentsontheclassificationandmeasurementoffinancialassets.Thenewstandardrepresentsthefirstpartofathree-partprojecttoreplaceIAS39FinancialInstruments:Rec-ognitionandMeasurement(IAS39)withIFRS9FinancialInstruments(IFRS9).IFRS9usesasingleapproachtodeterminewhetherafinancialassetismeasuredatamortizedcostorfairvalue,replacingthemanydifferentrulesinIAS39.TheapproachinIFRS9isbasedonhowanentitymanagesitsfinancialinstruments(itsbusinessmodel)andthecontractualcashflowcharacteristicsofthefinancialassets.IFRS9iseffectiveforfiscalyearsbeginningonorafterJanuary1,2013.Earlierapplicationispermitted.IFRS9hasnotyetbeenadoptedbytheEuropeanUnion.WearecurrentlydeterminingwhatimpacttheadoptionofIFRS9willhaveonourConsolidatedFinancialStatements.

InNovember2009,theIASBissuedanamendmenttoIFRIC14IAS19–TheLimitonaDefinedBenefitAsset,MinimumFundingRequirementsandtheirInteraction(IFRIC14).Theamendmentsapplywhenanentityissub-jecttominimumfundingrequirementsandmakesanearlypaymentofcontributionstocoverthoserequirements.

Theamendmentsrequiresuchanentitytotreatthebenefitofsuchanearlypaymentasanasset.TheamendmentsareeffectiveforannualperiodsbeginningonorafterJanu-ary1,2011,withearlyadoptionpermitted.Theamend-mentsmustbeappliedretrospectively.TheEuropeanUnionhasnotyetendorsedIFRIC14.WedonotexpectthisamendmenttohaveanimpactonourConsolidatedFinancialStatements.

InNovember2009,theIFRICissuedExtinguishingFinan-cialLiabilitieswithEquityInstruments(IFRIC19),whichprovidesguidanceonhowtoaccountfortheextinguishmentofafinancialliabilitybytheissuanceofequityinstruments.IFRIC19iseffectiveforannualperiodsbeginningonorafterJuly1,2010,withearlyadoptionpermitted.TheEuro-peanUnionhasnotyetendorsedtheseamendments.WedonotexpectthisamendmenttohaveanimpactonourConsolidatedFinancialStatements.

(4) Business CombinationsIn2009,weconcludedthefollowingbusinesscombina-tionswhichareimmaterialindividuallyandintheaggregatetoSAP:

Acquired Businesses

Business Acquired Sector Acquisition Type Acquired

Voting Interest

Acquisition Date

SkyDataSystemsInc.,SanMateo,

CA,USA

Privatelyheldcompanyspecializedinmobile

CRMsoftwaresolutions

Assetpurchase – May28,2009

ClearStandardsInc.,Sterling,VA,USA Privatelyheldcompanyspecializedinsoftwaresolutions

forthemanagementofcarbonemissions

Sharepurchase 100% June2,2009

HighdealS.A.,Caen,France Privatelyheldcompanyspecializedinpricing,charging,and

ratingsoftwaresolutionsforthetelecommunicationsindustry

Sharepurchase 100% June2,2009

SAFAG,Tägerwilen,Switzerland Publiclylistedcompanyspecializedinorderingandforecasting

softwaresolutionsfortheretail,logistics,andindustrialsectors

Sharepurchase 71% Sept.4,2009

SOALogixInc.,Reston,VA,USA Privatelyheldcompanyspecializedinsoftwaresolutionswhich

managetheflowofinformationamongpeople,businesspro-

cesses,andapplicationsandwhichintegrateindustryspecific

projectmanagementsolutionswithSAP'sPortfolioand

ProjectManagementsolutions

Assetpurchase – Dec.1,2009

Theresultsoftheseacquiredbusinesseshavebeeninclud-edinourConsolidatedIncomeStatementssincethere-spectiveacquisitiondates.Alloftheacquiredbusinessesdevelopand/orsellsoftwareinspecificareasofstrategic


interesttous.Theaggregateconsiderationtransferredofallacquisitionsamountedto€68 millionnetofcashre-ceived,andwaspaidincash.Theacquisition-relatedcostrecognizedingeneralandadministrationexpenseis€2 million.

Theamountsrecognizedasoftheacquisitiondatesforeachmajorclassofassetsacquiredandliabilitiesassumedwereasfollows:

Purchase Price Allocation

€millions Pre- Acqui sition

Carrying Amount

Fair Value Adjustment

Fair Value of Assets

Acquired and liabilities Assumed

Cashandcashequivalents 27 0 27

Otherfinancialassets 1 0 1

Tradeandotherreceivables

(netof€240,000reserves)

5 0 5

Othernon-financialassets 2 2 4

Property,plant,andequipment 1 0 1

Intangibleassets 0 32 32

Goodwill 0 42 42

Currentanddeferredtaxassets 0 9 9

Total assets 36 85 121

Tradeaccountspayable 1 2 3

Currentanddeferredtaxliabilities 3 4 7

Provisionsandother

non-financialliabilities

3 2 5

Deferredrevenues 2 –1 1

Total liabilities 9 7 16

Net assets 27 78 105

thereofattributableto

ownersofparent

95

thereofattributableto

non-controllinginterest10

Acquisitioncost 95

Cashacquired 27

Acquisition cost net of cash 68

Totalchangestogoodwillamountto€41 million,ofwhich€42 millionareattributableto2009acquisitions.Duetoalowerthanexpectedcontingentconsiderationpaymentthegoodwillforanacquisitioninpreviousyearswasre-ducedby€1 million.

Thenon-controllinginterestrelatedtoouracquisitionofSAFAGhasbeenrecognizedattheproportionateshareoftheidentifiableassetsandliabilities.Wehavethereforeelectednottorecognizegoodwillforthenon-controllingin-terestsofSAFAG.

Duetothefactthatweintegrateouracquiredbusinessesintoouroveralloperationsveryquicklyandthatsomebusinesscombinationswereconcludedintheformofassetdeals,theadditionalrevenueandnetoperatingresultat-tributabletotheseentitiessincetheacquisitiondateandincludedintheConsolidatedIncomeStatementsisnotrepresentativeofthebenefittheseentitiesprovidetoSAP.Ourrevenueandprofitaftertaxwouldnothavebeenmate-riallydifferentfromthenumberspresentedinourCon-solidatedIncomeStatementshadJanuary1,2009,beentheacquisitiondateforallbusinesscombinationsthatoccurredin2009.

Wehavenotyetfinalizedthepurchasepriceallocationofourbusinesscombinationsconcludedduringthesecondhalfof2009,becauseweacquiredintangibleassetsandcon-tingentliabilitiesforwhichwearestillevaluatingouracqui-sitiondatefairvalueassumptions.

Weassignedthefollowingamountstoidentifiableintangi-bleassets:

Identifiable Intangible Assets Acquired as Part of Business Combinations in 2009

€millions Total Intangible Assets Acquired

Estimated useful lives

(in years)

Customercontracts 3 6to7

Intellectualproperty 28 5to6

Tradename 0 2

In-processresearchanddevelopment 1 5yearsafter

completion

Identifiable intangible

assets acquired

32


Factorsthatmakeupthegoodwillrecognizedincludesyn-ergiesfromcombiningtheacquirees’operationswithouroperationsandtheworkforceoftheacquirees,whichdonotqualifyforseparaterecognitionasintangibleassets.Weexpect€3 millionofthegoodwillrecognizedin2009tobedeductiblefortaxpurposes.

Prior year Business CombinationsIn2008,weacquiredtheoutstandingsharesoftwounrelat-edcompaniesandthenetassetsoftwootherunrelatedbusinesses.TheresultsoftheseacquiredbusinesseshavebeenincludedinourConsolidatedIncomeStatementssincetherespectiveacquisitiondates.Businesscombina-tionsin2008wereasfollows:

Prior year Business Combinations

Business Acquired Sector Acquisition Type Acquisition Date

BusinessObjectsS.A.,Levallois-Perret,France Publicentity(NASDAQ:BOBJ;EuronextParisISIN:

FR0004026250),specializedinbusinessintelligence

softwaresolutions

Sharepurchase Jan.21,2008

AnalyticsInc.,NewHaven,CT,USA Privatelyheldentityspecializedine-procurementand

procurement-relatedanalysissoftware

Assetpurchase June13,2008

VisipriseInc.,Alpharetta,GA,USA Privatelyheldentityspecializedinmanufacturing

executionsoftwaresolutions

Sharepurchase July22,2008

NessTechnologies,TelAviv,Israel Publicentity(NASDAQ:NSTC)whichisaglobalprovider

ofITservicesandsolutions.NesssolditsIsraelsalesand

distributiondivisiontoSAP

Assetpurchase Aug.14,2008

Alltransactions,excepttheacquisitionofBusinessObjects,wereimmaterialtoSAPindividuallyandintheaggregate.Alloftheacquiredbusinessesdevelopedand/orsoldsoft-wareinspecificareasofstrategicinteresttous.Theag-gregatepurchasepriceofallbusinesscombinations,exclud-ingBusinessObjects,amountedto€91 millionnetofcashreceived.Thiswaspaidincashexceptforearn-outconditionswhichwererecognizedasliabilities.Thepur-chasepricewasallocatedasfollows:

Therewerenoidentifiableintangibleassetsthathavenotbeenseparatelyrecorded.

Goodwillrecognizedforour2009businesscombinationswereassignedtoourProduct,Consulting,andTrainingsegmentasfollows:

Assignment of Acquired Goodwill to Segments

€millions

Product 38

Consulting 2

Training 1

Sum 41


Duetothefactthatweintegrateouracquiredbusinessesintoouroveralloperationsveryquicklyandthatsomebusi-nesscombinationswereconcludedintheformofassetdeals,wecannotdeterminetheadditionalrevenueandnetoperatingprofitattributabletotheseentitiessincetheac-quisitiondateorforthefullyear.

AcquisitionofBusinessObjectsBusinessObjectsisaproviderofbusinessintelligencesolu-tions.Throughacombinationoftechnology,consulting,edu-cationservices,anditspartnernetwork,BusinessObjectsprovidesinformationandbusinessdecision-makingre-sourcestosmallandlargecompanies.BusinessObjectshaddualheadquartersinSanJosé,California,andLevallois-Perret,France.Beforeouracquisition,itsstockwastradedonboththeNASDAQ(intheformofAmericandepositary

Purchase Price Allocation Prior year (excl. Business Objects)


Carrying Amount






Tradeaccountsreceivable 3 0 3

Othernon-financialassets 1 1 2



Goodwill 6 53 59

Currentanddeferredtaxassets 0 12 12

Total assets 28 93 121

Accountspayable 1 0 1

Financialliabilities 0 0 0

Tax,deferredtaxandrelatedliabilities 0 9 9

Othernon-financialliabilitiesand

provisions

8 0 8


Total liabilities 15 6 21

Net assets 13 87 100

Acquisitioncost 100

Cashacquired 9

Acquisition cost net of cash 91

receipts-ADRs)andtheEuronextParisstockexchanges.WeacquiredsubstantiallyalloftheoutstandingsharesofBusinessObjectsduringthefirsttwomonthsof2008,exceptaverysmallnumberofshares(0.02%ofthesharecapital)thatwereheldbyemployeesandwererestrictedunderlocallaw.OuracquisitiontooktheformofatenderofferunderFrenchandU.S.lawforallBusinessObjects’commonstock,allADRsrepresentingBusinessObjects’commonstock,andallconvertiblebondsandwarrantsissuedbyBusinessObjects.

Underthetermsofthetenderofferagreement,wemadeacashofferof€42.00pershareofcommonstockandtheU.S.dollarequivalentof€42.00perBusinessObjectsADR,determinedusingtheeurotoU.S.dollarexchangerateonsettlementofthetenderoffers,of€50.65percon-vertiblebond,andarangeof€12.01to€24.96perwar-rant,dependingonthewarrantgrantdate.Afterreachingtheinitialminimumtenderconditionofmorethan50%onJanuary21,2008,thetenderofferperiodwasreopenedunderthesameconditionsuntilJanuary29,resultinginanownershiplevelofmorethan95%.ThisallowedSAPtocommenceanimmediatesqueeze-outacquisitionoftheout-standingsharesoftheremainingshareholders.Theacqui-sitioncostof€4.2 billionnetofcashacquiredwaspartlyfinancedbyasyndicatedbankloan.

Thefollowingtableshowsthecomponentsofouracquisi-tioncostforBusinessObjects:

Business Objects Acquisition Cost

€millions 2008

Costofsharesoutstanding 4,241

Costofwarrantsoutstanding 11

Costofconvertiblebondsoutstanding 541

Fairvalueofconvertedstockoptions 86

Acquisition-relatedtransactioncost 22

Total 4,901

Cashacquired 716

Acquisition cost net of cash acquired 4,185


Aspartofthebusinesscombination,wepurchasedsub-stantiallyallsharesoutstanding,allwarrants,andallcon-vertiblebonds.Theconvertiblebondshavebeenconvertedandthefacevalueofthebond(€450 million)hasbeenpaidtoSAPsincetheacquisition.Inaddition,weassumedBusinessObjects’employeeshare-basedpaymentpro-gramswithoutchangingtheparametersoftheseprograms.Thefairvalueofemployeestockoptionsassumedandawardsexchangedwasdeterminedusingabinomialbasedvaluationmodelwiththefollowingassumptions:Arisk-freeinterestrateof3.42%to3.74%,anexpectedvolatilityof29%,andadividendyieldof1.3%.Forthepurposesofpurchaseaccounting,weusedthecashofferpriceof€42todeterminethefairvalueoftheexchangedBusinessObjectsstockoptionawards.ThefairvalueofunvestedBusinessObjectsoptionsandrestrictedstockawardsrelatedtofutureserviceisbeingamortizedbasedontheacceleratedattributionmethodovertheremainingserviceperiod,whilethevalueofvestedoptionsisincludedinthetotalpurchaseprice.Acquisition-relatedtransactioncostsincludeinvestmentbankingfees,legalfees,andotherfeesforexternaladvisorsdirectlyrelatedtotheacquisition.

TheassetsacquiredandliabilitiesassumedwererecordedintheaccompanyingConsolidatedStatementofFinancialpositionattheirestimatedfairvaluesasoftheacquisitiondate,January21,2008.Theexcessoftheacquisitioncostofthebusinesscombinationovertheestimatedfairvaluesoftheidentifiablenetassetsacquiredwererecog-nizedingoodwill.Factorsthatcontributedtotherecognitionofgoodwillof€3.5 billionwereexpectedsynergiesfromcombiningtheactivitiesofSAPandBusinessObjects,aswellasassets,whichcannotberecognizedseparatelyapartfromgoodwillbecausetheyarenotidentifiable(suchasthequalityandlevelofeducationoftheworkforce).

ThefollowingtableshowstheallocationoftheacquisitioncoststothefairvaluesoftheassetsacquiredandliabilitiesassumedasoftheacquisitiondateandtherespectivecarryingamountsdeterminedinaccordancewithIFRSim-mediatelybeforetheacquisitiondate:

In2009,newfactsandcircumstancesarosethatledustochangeestimatesunderlyingouroriginaldeterminationofthefairvaluesofcertainliabilitiesassumedin2008.Weconsequentlyadjustedthecarryingamountsoftheseliabili-tiestoreflecttheupdatedestimates.Theseadjustmentsresultedintherecognitionoftaxgainsfromreducingprovi-sionsrelatingtotaxuncertainties(€48 millionexcludingaccruedinterest)whichwerecordedasareductionintaxexpenseandoperatinggainsfromreducingemployee-re-latedliabilities(€18 millionexcludingaccruedinterest)whichwerecordedasareductioninoperatingexpenses.Thereleaseofrelatedaccruedinterestof€13 millionreducedourinterestexpense.

Purchase Price Allocation of Business Objects


Carrying Amount





Financialassets 8 0 8

Tradereceivables 341 –4 337Otherassets 46 24 70



Goodwill 1,123 2,364 3,487

Deferredtaxassets 88 1 89

Total assets 2,564 3,154 5,718

Tradepayables 27 –5 22

Loansandborrowings 362 –362 0

Deferredtaxliabilities 15 210 225

Otheraccruedliabilitiesand

provisions

550 –66 484


Total liabilities 1,218 – 401 817

Net assets 1,346 3,555 4,901

Acquisitioncost 4,901

Cashacquired 716

Acquisition cost net of cash 4,185


Inconnectionwiththeacquisitionweincurredrestructuringcostsresultingfromseveranceandworkforcerelocationcosts(€18 million),eliminationofduplicatefacilities(€35 million),andsettlementswithvendorstoendservicecontracts(€2 million).Thosecostswererecognizedinoperatingprofitin2008.

Thefollowingpro-formafinancialinformationpresentsSAP’sresultsasiftheacquisitionhadoccurredatthebe-ginningof2008.Thesepro-formaresultshavebeenpre-paredforcomparativepurposesonly.Thepro-formaresultsarenotnecessarilyindicativeeitheroftheresultsofoper-ationsthatactuallywouldhaveoccurredhadtheacquisi-tionbeenineffectatthebeginningoftherespectiveperiodsoroffutureresults.

AlossaftertaxoftheBusinessObjectsgroupincludedinourprofitaftertaxfor2008amountedto€32 million.ThisamountdoesnotincludeanyrevenueandresultsthatSAPentitieshavegeneratedwithBusinessObjectsproducts.ThelossaftertaxcontainedtheamortizationofallacquiredBusinessObjectsintangibles,deferredrevenuewrite-downs,andotherimpactsresultingfromtheacquisition.

Business Objects Pro-Forma Information

€millions Fiscal 2008 as Reported

Pro-Forma

Revenue 11,575 11,624

Profitaftertax 1,848 1,847

ThisamountdoesnotincludetheresultsofBusinessObjectsentitiesthathavebeenlegallymergedintoSAPentitiessincetheacquisitiondate.

Inconnectionwiththe2008transactionsdiscussedabove,weassignedthefollowingamountstoidentifiableintangibleassets:

Therewerenoidentifiableintangibleassetsthathavenotbeenseparatelyrecorded.Allin-processresearchanddevelopmentassetswerecompletedin2008andarenowsubjecttoamortization.

Identifiable Intangible Assets Acquired as Part of Business Combinations in 2008

€millions,unless

otherwisestated

Total thereof Business

Objects

Estimated useful lives

in years

Customercontracts 580 573 7to16

Intellectualproperty 332 308 6to7

Distributionright 3 0 2

Tradename 36 36 1to7

Otherintangibleassets 28 28 4to7

In-processresearchand

development

14 13 amortizedover

usefullifeafter

completion

Identifiable intangible

assets acquired

993 958


Goodwilladditionsin2008(including€–35 millionadjust-mentsforacquisitionsofprioryears)wereassignedtoourProduct,Consulting,andTrainingsegmentasfollows:

Factorsthatmadeupthegoodwillrecognizedincludedsyn-ergiesfromcombiningtheacquirees’operationswithouroperationsandtheworkforceoftheacquirees,whichdoesnotqualifyforseparaterecognitionasintangibleassets.

(5) RevenueDetailedinformationonourrevenuerecognitionpoliciesisdisclosedinNote(3).

RevenueinformationbysegmentandgeographicregionisdisclosedinNote(29).

Assignment of Acquired Goodwill to Segments

€millions Thereof Business

Objects

Product 3,126 3,103

Consulting 280 279

Training 105 105

Sum 3,511 3,487

Revenuesfromconstruction-typecontracts(contractreve-nues)areincludedinsoftwarerevenueandconsultingrevenuedependingonthetypeofproject.Duringfiscalyears2009,2008,and2007werecognized€635 million,€634 million,and€559 millionofcontractrevenue,respec-tively.Thestatusofourconstructionprojectsinprogressattheendofthereportingperiodwasasfollows:

(6) Expenses by Nature and Headcount

Employee CompensationEmployeecompensationcomprisesthefollowing:

Construction Projects in Progress

€millions 2009 2008 2007

Aggregatecostincurred(multi-year) 551 497 540

Recognizedresult(+profit/-loss) 92 83 3

Advancepaymentsreceived 8 0 0

Grossamountsduefromcustomers 124 94 90

Grossamountsduetocustomers 66 101 81

Recognizedlosses/lossprovisions 5 7 18

Retentions 2 2 1

Employee Compensation

€millions 2009 2008 2007

Salaries 4,007 4,168 3,480

Socialsecurityexpense 554 509 447

Pensionexpense 147 127 123

Share-basedpaymentexpense 54 63 106

Terminationbenefits 14 27 35

Personnel expenses 4,776 4,894 4,191

Employee-relatedrestructuring

expenses

187 23 1

Employee compensation 4,963 4,917 4,192


Number of EmployeesTheaveragenumberofemployees,measuredinfull-timeequivalentsandpresentedaccordingtotheirfunctioninSAP,wasasfollows:

Depreciation and AmortizationTotaldepreciationandamortizationexpensefor2009,2008,and2007was€499 million,€539 million,and€262 million,respectively.

Government GrantsDuringfiscalyear2009wereceived€38 million(2008:€32 million;2007:€16 million)ofgovernmentgrantsandsimilarassistance,whichwehaveoffsetagainsttherelatedexpenses.Allconditionsrequiredtoobtainthesegrantshaveeitherbeenmetorarereasonablyassuredofbeingmet.

Inaddition,wereceivedconditionalpromisesofafurther€36 million,relatingmostlytoresearchanddevelopmentexpenses,thatwehavenotrecordedonDecember31,2009,becausetheconditionsrequiredtoobtainthemarenotyetreasonablyassuredofbeingachieved.

Number of Employees (in Full-Time Equivalents)

2009 2008 2007

EMEA Americas APJ Total EMEA Americas APJ Total EMEA Americas APJ Total

Softwareandsoftware-relatedservices 3,228 1,264 1,868 6,360 3,284 1,405 1,912 6,601 3,006 999 1,759 5,764

Professionalservicesandotherservices 6,857 3,574 2,346 12,777 7,236 4,304 2,538 14,078 6,476 3,724 2,125 12,325

Researchanddevelopment 8,606 2,566 3,869 15,041 8,542 2,710 4,034 15,286 7,624 1,700 3,113 12,437

Sales &marketing 4,315 3,600 1,800 9,715 4,649 4,143 2,014 10,806 3,578 3,040 1,320 7,938

General &administration 1,950 743 421 3,114 2,006 834 478 3,318 1,738 554 380 2,672

Infrastructure 877 409 178 1,464 914 455 180 1,549 758 279 129 1,166

SAP Group 25,833 12,156 10,482 48,471 26,631 13,851 11,156 51,638 23,180 10,296 8,826 42,302

(7) RestructuringInJanuary2009,weannouncedthatwewouldcontinuewithourcost-savingmeasuresinitiatedinOctober2008andwouldreducetheworkforcefrom51,544positionsto48,500byyear-end2009.

Asaresult,westartedtoimplementtherestructuringplaninthefirstquarterof2009andcontinuedwithitthroughouttheyear.Althoughpartoftheworkforcereductionwasachievedthroughattritionweeliminated2,983positionsin2009byterminationsandearlyretirementplans.Duetothereducednumberofemployees,wealsoconsolidatedcertainfacilities.

Employee-andfacility-relatedrestructuringexpensesof€55 millionthatwererecognizedin2008relatedtore-structuringactivitiesincurredasaresultoftheacquisitionofBusinessObjects.Theremaining€5 millionrelatedtoemployee-relatedrestructuringactivitiesinconnectionwithdiscontinuingourTomorrowNowactivities.

Foradditionalinformationontheroll-forwardofourrestruc-turingprovision,seeNote(19b).


Asrestructuringexpenseswerematerialtoouroperationsin2009,wehavepresentedthoseexpensesseparatelyinourConsolidatedIncomeStatementsinaccordancewithIAS1.97.Ifnotpresentedseparately,theseexpenseswouldbreakdownasfollows:

Restructuring Expenses

€millions 2009 2008 2007

Employee-relatedrestructuringexpenses 187 23 1

Facility-relatedrestructuringexpenses 11 37 1

Total 198 60 2

Restructuring Expenses

€millions 2009 2008 2007

Costofsoftwareandsoftware-

relatedservices

17 11 0

Costofprofessionalservicesand

otherservices

60 9 2

Researchanddevelopment 48 15 0

Salesandmarketing 59 20 0

Generalandadministration 14 5 0

Total 198 60 2

(8) Other Operating Income/Expense, NetOtheroperatingincome/expensefortheyearsendedDecember31,wasasfollows:

(9) Other Non-Operating Income/Expense, NetOthernon-operatingincome/expensefortheyearsendedDecember31,wasasfollows:

Other Operating Income/Expenses

€millions 2009 2008 2007

Generalbaddebtincome/expenses 7 –9 3

Miscellaneousother

operatingexpenses

–3 –2 0

Rentalincome 7 7 5

Receiptofinsuranceproceeds 3 4 3

Gainondisposalsof

non-currentassets

11 0 0

Miscellaneousother

operatingincome

8 11 7

Other operating income/

expense, net

33 11 18

Other Non-Operating Income/Expense, Net

€millions 2009 2008 2007

Foreign currency gain/loss, net –73 2 6

thereofrealizedgain/loss 89 –32 76

thereofunrealizedgain/loss –168 66 –71

thereofembeddedderivatives 6 –32 1

Other non-operating income 8 5 12

Other non-operating expenses –8 –34 –16

Other non-operating income/

expense

–73 –27 2


(10) Financial Income, NetFinanceincomeandfinancecostsin2009amountedto€32 million(€72 millionin2008;€142 millionin2007)and€101 million(€123 millionin2008;€7 millionin2007),respectively.Wederivefinanceincomeprimarilyfromcashandcashequivalentsandotherfinancialassets.Theincreaseinfinancecostsin2008wasmainlyduetothecreditfacilityweenteredintoinconnectionwiththeacquisitionofBusinessObjects.

Otherfinancialgains/losses,netfortheyearsendedDecember31wereasfollows:

Thelineitemsincome/expensefromsecuritiesandincome/expensefromloansandotherfinancialassetsrelateto€241 millionofcollateralheldtosecurefinancinginvest-mentsin2007.

Foradditionalinformationaboutgainsandlossesfromfinancialassetsandfinancialliabilitiesrecognizedinprofitorlossandothercomponentsofequity,seeNote(27).Forinformationaboutourhedgingactivities,seeNote(26).

Other Financial Gains/losses, Net

€millions 2009 2008 2007

Income/expensefromsecurities 0 –2 240

Income/expensefromloansand

otherfinancialassets

–1 0 –244

Gains/lossesfromequityinvestments –11 2 –6

Shareofresultsofassociates 1 1 –1

Other financial gains/losses, net –11 1 –11

(11) Income TaxIncometaxexpensefortheyearsendedDecember31comprisedthefollowingcomponents:

Currenttaxexpenseincludes€–59 millionforprioryears(2008:€14 million;2007:€36 million).

Ofthedeferredtaxexpense(income)in2009,2008and2007,respectively,€–48 million,€–109 millionand€9 mil-lionrelatetotheoriginationandreversaloftemporarydif-ferencesand€9 million,€18 millionand€–1 millionrelatetounusedtaxlosses.

In2009,2008,and2007,theGermangovernmentenactedseveralnewtaxlaws.Forus,themostsignificanteffectresultedfromthe2008BusinessTaxReformwhichwasenactedin2007andledtoareductionoftheGermancor-porateincometaxratefrom25%to15%,effectiveJanuary1,2008.Theimpactoftheremainingtaxlawchangesenactedin2007,andofthetaxlawsenactedin2008and2009,wasnotmaterialtoourConsolidatedFinancialState-mentsfortheyearsendedDecember31,2009,2008,and2007.

Income Tax Expense

€millions 2009 2008 2007

Currenttaxexpense–Germany 344 404 498

Currenttaxexpense–foreign 380 463 410

724 867 908

Deferredtaxexpense/income–

Germany

–16 11 36

Deferredtaxincome–foreign –23 –102 –28

–39 –91 8

Income tax expense 685 776 916


Profitbeforetaxconsistedofthefollowing:

TheeffectiveincometaxratefortheyearsendedDecem-ber31,2009,2008,and2007,was28.1%,29.6%and32.4%,respectively.Thefollowingtablereconcilestheex-pectedincometaxexpensecomputedbyapplyingourcombinedGermancorporatetaxrateof26.21%(2008:26.33%;2007:35.49%)totheactualincometaxexpense.Our2009combinedGermancorporatetaxrateincludesacorporateincometaxrateof15.00%(2008:15.00%;2007:21.91%;2007afterthebenefitoftradetaxdeduct-ibilitywhichceasedin2008),plusasolidaritysurchargeof5.5%thereon,andtradetaxesof10.38%(2008:10.50%;2007:12.38%).

Profit Before Tax

€millions 2009 2008 2007

Germany 1,324 1,636 1,641

Foreign 1,111 988 1,183

2,435 2,624 2,824

Reconciliation of Tax Expense

€millions 2009 2008 2007


Taxexpenseatapplicabletaxrate 638 691 1,002

Taxeffectofforeigntaxrates 57 49 –44

Taxeffectonnon-deductibleexpenses 94 56 49

Prior-yeartaxes –45 14 –18

Taxeffectontaxexemptincome –52 –49 –77

Other –7 15 4

Total tax expense 685 776 916

DeferredtaxassetsandliabilitiesonagrossbasisasatDecember31,2009and2008,aresummarized(referringtotheunderlyingitems)asfollows:

Deferred Tax Assets and liabilities

€millions 2009 2008

Deferred tax assets

Intangibleassets 69 49

Property,plant,andequipment 15 19

Otherfinancialassets 13 33

Tradeandotherreceivables 120 111

Netoperatinglosscarryforwards 29 44

Pensionprovisions 37 37

Share-basedcompensation 23 20

Otherprovisionsandobligations 171 187

Deferredincome 30 35

Other 78 60

Deferred tax assets 585 595

Deferred tax liabilities

Intangibleassets 178 191

Property,plant,andequipment 34 37

Otherfinancialassets 36 63

Tradeandotherreceivables 38 22

Pensionprovisions 59 57

Share-basedcompensation 0 1

Otherprovisionsandobligations 5 6

Deferredincome 0 4

Other 27 12

Deferred tax liabilities 377 393

Deferred tax assets, net 208 202


Inassessingtherealizabilityofdeferredtaxassets,weconsiderwhetheritisprobablethatsomeportionorallofthedeferredtaxassetswillnotbeutilized.Theultimateutilizationofdeferredtaxassetsdependsonthegenerationoffuturetaxableincomeduringtheperiodsinwhichthosetemporarydifferencesbecomedeductible.Basedonthelevelofhistoricaltaxableincomeandprojectionsforfuturetaxableincomeovertheperiodsinwhichthedeferredtaxassetsarerecoverable,webelieveitisprobablethatwewillrealizethebenefitsofthesedeductibledifferences,netoftheexistingvaluationallowancesatDecember31,2009.Theamountofthedeferredtaxassetconsideredrealiz-able,however,couldbereducedintheneartermifoures-timatesoffuturetaxableincomeduringthecarryforwardperiodarereduced.

AtDecember31,2009,wehadnetoperatinglosscarry-forwardsamountingto€301 million(2008:€395 million;2007:€138 million).Deferredtaxassetshavenotbeenrecognizedfortaxlosscarryforwardsintheamountof€147 million(2008:€188 million;2007:€51 million).AsatDecember31,2009,€1 million(2008:€4 million;2007:€1 million)oftheunrecognizedtaxlosscarryforwardsexpireinthefollowingperiodand€138 million(2008:€176 mil-lion;2007:€45 million)expireafteroneuptotwentyyears.Theremainingunrecognizedtaxlosscarryforwardsintheamountof€8 million(2008:€8 million;2007:€5 million)donotexpire.

Werecognizeddeferredtaxliabilitiesof€6 million(2008:€14 million)forincometaxonfuturedividenddistributionsfromforeignsubsidiaries,whichisbasedon€368 million(2008:€696 million)ofcumulativeundistributedprofitsofthoseforeignsubsidiariesbecausesuchprofitsareintend-edtoberepatriated.Wehavenotrecognizedadeferredtaxliabilityonapproximately€3.60 billion(2008:€2.76 bil-lion)forundistributedprofitsofourforeignsubsidiariesthatarosein2009andprioryearsbecauseweplantoindefi-nitelyreinvestthoseundistributedprofits.Itisnotpractica-bletoestimatetheamountofunrecognizedtaxliabilitiesfortheseundistributedforeignprofits.

Theproposeddividendpaymentof€0.50persharefortheyearendedDecember31,2009,willnothaveanyeffectsontheincometaxofSAPAG.

Totalincometaxincludingtheitemschargedorcrediteddi-rectlytorelatedcomponentsofequityfortheyearsendedDecember31,2009,2008,and2007,consistsofthefol-lowing:

Theincometaxrecordedinsharepremiumisrelatedtoourequity-settledshare-basedcompensation.

(12) Earnings per ShareConvertiblebondsandstockoptionsgrantedtoemployeesunderourshare-basedcompensationprogramsarein-cludedinthedilutedearningspersharecalculationstotheextenttheyhaveadilutiveeffect.Thedilutiveimpactiscalculatedusingthetreasurysharemethod.Thecomputa-tionofdilutedearningspersharedoesnotincludecertainconvertiblebondsandstockoptionsissuedinconnectionwiththeSAPAG2000LongTermIncentivePlan(LTI2000Plan)andtheSAPStockOptionPlan2002(SAPSOP2002)becausetheireffectisantidilutive.Suchconvertiblebondsandstockoptions,ifconvertedorexercised,represented35.8 millionSAPcommonsharesin2009(2008:43.6 millionSAPcommonshares;2007:37.3 millionSAPcommonshares).ThenumberofoutstandingstockoptionsandconvertiblebondsispresentedinNote(28).

Total Income Tax

€millions 2009 2008 2007

Incometaxrecordedinprofit 685 776 916

Incometaxrecordedinsharepremium 0 –13 0

Incometaxrecordedinother

componentsofequity:

–unrealizedgains/losseson

marketablesecurities

1 0 0

–gains/lossesonhedges 11 –18 –1

Incometaxrecordedto

retainedearnings:

–unrecognizedpensioncosts 0 –21 –3

697 724 912


(13) Other Financial Assets

Earnings per Share

€millions,unlessotherwisestated 2009 2008 2007

Profit attributable to owners

of parent

1,748 1,847 1,906

Weightedaverageshares–basic

(numberofsharesinmillions)

1,188 1,190 1,207

Dilutiveeffectofstockoptions/

convertiblebonds(numberof

sharesinmillions)

1 1 3

Weighted average shares – diluted

(number of shares in millions)

1,189 1,191 1,210

Basic earnings per share, in € 1.47 1.55 1.58

Diluted earnings per share, in € 1.47 1.55 1.58

Other Financial Assets


Current Non-Current Total Current Non-Current Total

Loansandotherfinancialreceivables 422 168 590 23 159 182

Debtinvestments 0 0 0 382 0 382

Equityinvestments 0 87 87 0 74 74

Available-for-salefinancialassets 0 87 87 382 74 456

Derivatives 64 2 66 183 8 191

Investmentsinassociates 0 27 27 0 21 21

Total 486 284 770 588 262 850


loans and Other Financial ReceivablesLoansandotherfinancialreceivablesmainlyconsistoftimedeposits(2009:€405 million;2008:€0 million),invest-mentsininsurancepoliciesrelatingtopensionassets(2009:€91 million;2008:€81 million),loanstoemployees(2009:€50 million;2008:€53 million)andotherreceivables(2009:€39 million;2008:€44 million).Thesespreadoverthegeographicareasasfollows:

Mostofourtimedepositshaveamaturityoflessthansixmonths.

Investmentsininsurancepoliciesrelatetosemiretirementandtimeaccountsforwhichthecorrespondingliabilityisincludedinemployee-relatedobligations(seeNote19b).

Loanstothirdpartiesarepresentednetofallowancesforcreditlosses.Changesintheallowanceforcreditlossesofthird-partyloanswerenotsignificantinanyperiodpre-sented.

AsatDecember31,2009,therewerenoloansandotherfinancialreceivablespastduebutnotimpaired.Wehavenoindicationsasatthereportingdateofimpairmentsofloansandotherfinancialreceivablesthatarenotpastdueandnotimpaired.Forgeneralinformationonfinancialriskandthenatureofrisk,seeNote(25).


Germany 542 135

RestofEMEA 17 16

UnitedStates 1 2

RestofAmericas 7 2

Japan 14 16

RestofAsiaPacificJapan 9 11

Total 590 182

Available-for-Sale Financial AssetsThedeclineindebtinvestments,whichatDecember31,2008consistedmainlyofinvestmentsinmoneymarketfundsof€193 millionandinvestmentgradebondsof€189 million,isduetotheseinvestmentsreachingtheirmaturityandbeingpaidbackinfull.

Ourequityinvestmentsconsistofsecuritieswithandwithoutquotedmarketprices.Ourequityinvestmentswith-outquotedmarketpricesprimarilyconsistofventurecapitalinvestmentswithacarryingvalueof€62 millionand€63 millionasatDecember31,2009and2008,respec-tively.

Available-for-salefinancialassetsaredenominatedinthefollowingcurrencies:

Salesofequityinvestmentsaccountedforatcostwereimmaterialinallperiodspresented.AsofDecember31,2009,wedonotintendtodisposeofanyequityinvestmentsatcostinthenearfuture.Forinformationonfairvaluemeasure-mentwithregardtoourequityinvestmentsatcost,seeNote(27).

Inallperiodspresented,impairmentchargesrelatingtoequitysecuritiesatfairvaluewereimmaterial.Forourequityinvestmentsatcost,werecorded€11 million,€12 million,and€6 million,respectively,inlossesrelatedtoimpairmentsduring2009,2008,and2007.

DerivativesDetailedinformationaboutourderivativefinancialinstru-mentsispresentedinNote(26).


Euros 34 303

U.S.dollars 52 134

Other 1 19

87 456


(14) Trade and Other Receivables

Tradereceivables,netincludeunbilledreceivablesrelatedtofixed-feeandtime-and-materialconsultingservicesof€211 millionand€221 millionasatDecember31,2009,and2008,respectively.

ThecarryingamountsofourtradereceivablesasatDecember31areasfollows:

Changesintheallowancefordoubtfulaccountswereasfollows:

Trade and Other Receivables


Current Non-current Total Current Non-current Total

Tradereceivables,net 2,507 1 2,508 3,128 2 3,130

Otherreceivables 39 51 90 50 39 89

Total trade and other receivables 2,546 52 2,598 3,178 41 3,219

Carrying Amounts of Trade Receivables


Grosscarryingamount 2,698 3,263

Salesallowanceschargedtorevenue –142 –82

Allowancefordoubtfulaccountschargedtoexpense –48 –51

Carrying amount trade receivables, net 2,508 3,130

Increase (Decrease) in Allowance for Doubtful Accounts

€millions 2009 2008 2007

Beginningbalance 51 21 25

Utilization –5 –3 –8

Addition 11 30 11

Release –11 –1 –5

Exchangerateeffectsand

otherchanges

2 4 –2

Ending balance 48 51 21

Concentrationsofcreditrisksarelimitedduetoourlargecustomerbaseanditsdistributionacrossmanydifferentindustriesandcountriesworldwide.Nosinglecustomerac-countedfor10%ormoreoftotalrevenueortotaltradereceivables,netin2009,2008,or2007.TheagingoftradereceivablesasatDecember31was:

Aging of Trade Receivables


Notpastdueandnotindividuallyimpaired 1,861 2,276

Past due but not individually impaired

Pastdue1–30days 264 363



Pastdueover365days 60 33

Total past due and not individually impaired 547 812

Individuallyimpaired,netofallowances 100 42

Carrying amount of trade receivables, net 2,508 3,130


Totalpastdueandnotindividuallyimpairedtradereceiv-ablesof€547 millionand€812 millionasatDecember31,2009,and2008,respectively,consistofpastduetradereceivableswhicharenotimpairedonanindividualreceivablebasisasoutlinedunderNote(3b).Individuallyimpairedtradereceivables,netofallowancesof€100 millionand€42 millionasatDecember31,2009,and2008,respectively,consistofpastdueandnotpastduetradereceivablesthatarefullyorpartlyimpairedonanindividualreceivablesbasis.

Webelievethattherecordedsalesandbaddebtallowancesadequatelyprovideforthecreditriskinherentintradere-ceivables.

Formoreinformationaboutfinancialriskandhowweman-ageit,seeNote(25)and(26).

(15) Other Non-financial Assets

Prepaidexpensesprimarilyconsistofprepaymentsforoperatingleases,supportservicesandsoftwareroyaltiesthatwillbechargedtoexpenseinfutureperiods.

Other Non-financial Assets



Prepaidexpenses 91 35 126 84 32 116

Othertaxassets 35 0 35 27 0 27

Advancepayments 8 0 8 8 0 8

Inventories 11 0 11 5 0 5

Miscellaneousotherassets 2 0 2 2 0 2

Total other non-financial assets 147 35 182 126 32 158


(16) Goodwill and Intangible Assets

Theadditionstogoodwillresultfromouracquisitions(€42 million)andadjustmentstogoodwillofpreviousac-quisitions(€–1 million).Formoreinformationaboutacquisitions,seeNote(4).Wedonothavecontractualcommitmentsfortheacquisitionofintangibles.

Goodwill and Intangible Assets

€millions Goodwill Software and Database licenses

Acquired Technology

Other Intangibles

Total

Purchase cost

Dec.1,2009 5,070 323 646 763 6,802

Exchangeratedifferences –23 1 –6 –4 –32

Additionsfrombusinesscombinations 41 0 29 3 73

Otheradditions 0 19 0 0 19

Retirements/disposals 0 –9 –6 –4 –19

Dec. 31, 2009 5,088 334 663 758 6,843

Accumulated amortization

Dec.1,2009 95 191 250 151 687

Exchangeratedifferences –1 1 –3 –2 –5

Additionsdepreciation 0 36 135 121 292

Retirements/disposals 0 –9 –6 –4 –19

Dec. 31, 2009 94 219 376 266 955

Carrying value Dec. 31, 2009 4,994 115 287 492 5,888

Purchase cost

Dec.1,2008 1,521 264 286 121 2,192

Exchangeratedifferences 38 –1 13 12 62

Additionsfrombusinesscombinations 3,511 16 347 630 4,504

Otheradditions 0 50 0 0 50

Retirements/disposals 0 –6 0 0 –6

Dec. 31, 2008 5,070 323 646 763 6,802

Accumulated amortization

Dec.1,2008 95 151 96 19 361

Exchangeratedifferences 0 0 1 4 5

Additionsdepreciation 0 44 153 128 325

Retirements/disposals 0 –4 0 0 –4

Dec. 31, 2008 95 191 250 151 687

Carrying value Dec. 31, 2008 4,975 132 396 612 6,115

Softwareanddatabaselicensesconsistprimarilyoftech-nologyforinternalusewhereasacquiredtechnologyconsistsprimarilyofpurchasedsoftwaretobeincorporat-edintoourproductofferingsandin-processresearchanddevelopment.Theadditionstosoftwareanddatabaselicensesin2009and2008wereindividuallyacquiredfromthirdpartiesandincludecrosslicenseagreements


andpatents,whereastheadditionstoacquiredtechnologyandotherintangiblesprimarilyresultfromourbusinesscombinationsdiscussedinNote(4).

Otherintangiblesconsistprimarilyofacquiredtrademarklicensesandcustomercontracts.

Wecarrythefollowingsignificantintangibleassets:

Amortizationexpensesofintangibleassetsareincludedincostofsoftwareandsoftware-relatedservices,costofprofessionalservicesandotherservices,researchandde-velopment,salesandmarketingaswellasgeneralandadministrationbasedonusage.Impairmentchargesarere-cognizedinotheroperatingincome.

Forthepurposeofimpairmenttesting,goodwillisallocatedtoourreportablesegmentsProduct,ConsultingandTrain-ingwhichrepresentthelowestlevelofcash-generatingunitswithintheGroupatwhichthegoodwillismonitoredforinternalmanagementpurposes.

ThecarryingamountofgoodwillbyreportablesegmentatDecember31,2009,and2008,wasasfollows:

Significant Intangible Assets

Description Carrying Amount in € Millions

Remaining useful life

in years

Businessobjectsmaintenance

relatedcustomerrelationship270 14

OtherBusinessObjectscustomerrelationship 95 6–9

Total customer relationship value

Business Objects

365

Goodwill by Segments

€millions 12/31/2009 Thereof Additions

in 2009

12/31/2008 Thereof Additions

in 2008

Segment

Product 4,160 38 4,136 3,126

Consulting 687 2 692 280

Training 147 1 147 105

Total 4,994 41 4,975 3,511

FormoreinformationaboutoursegmentsseeNote(29).

Therecoverableamountofourcash-generatingunits,whichequaloursegments,hasbeendeterminedbasedonthevalueinusecalculation.Thesegmentsareincomple-mentarybusinessesandconsequentlytherecoverableamountsarebasedtoacertainextentonthesamekeyas-sumptions.

Thekeyassumptionsthatwehaveusedforpurposesofgoodwillimpairmenttestingin2009areasfollows:

Thecalculationsusecashflowprojectionsbasedonactualoperatingresultsandafive-yearbusinessplan(2008:two-yearbusinessplan)approvedbymanagement.Cashflowsforperiodsbeyondthisfive-yearbusinessplanwereextrapolatedusingasegment-specificgrowthrate.Thisgrowthratedoesnotexceedthelong-termaveragegrowthrateforthemarketinwhichourcash-generatingunitsoperate.Ourestimatedcashflowprojectionsarediscount-edtopresentvaluebymeansofapre-taxdiscountratebetween10.75%and11.15%(2008:10.78%and10.86%).Thediscountrateisbasedonaweightedaveragecostofcapitalapproach(WACC).

Managementbelievesthatnoreasonablypossiblechangeinanyoftheabovekeyassumptionswouldcausethecar-ryingvalueofanycash-generatingunittoexceeditsrecov-erableamount.Evenifweappliedagrowthrateofonly0%forextrapolatingcashflowprojectionsbeyondtheyearscoveredbyour2009businessplan(2008:valueinusebasedongrowthratesof0%)forcalculatingthevalue-in-useforallcash-generatingunits,thecalculatedamountswouldstillexceedthecarryingamounts.

Product Consulting Training

Discountrates 11% 11.15% 10.75%

Growthrateassumedfor

thebusinessplan

10–15% 8–9% 8–9%


(17) Property, Plant, and Equipment

Theadditionsanddisposalsinotherproperty,plant,andequipmentrelateprimarilytothereplacementandpurchaseofcomputerhardwareandcarsacquiredinthenormalcourseofbusiness.

Property, Plant, and Equipment

€millions land and Buildings

Other Property,

Plant, and Equipment

Advance Payments and Construction

in Progress

Total

Purchase cost

Dec.1,2009 1,165 1,260 76 2,501

Exchangeratedifferences –2 2 0 0

Additionsfrombusinesscombinations 0 1 0 1

Otheradditions 91 150 –35 206

Retirements/disposals –10 –136 0 –146

Transfers 8 0 –8 0

Dec. 31, 2009 1,252 1,277 33 2,562

Accumulated depreciation

Dec.1,2009 348 748 0 1,096

Exchangeratedifferences 0 1 0 1

Additionsdepreciation 41 162 0 203

Impairments 1 2 0 3


Dec. 31, 2009 382 809 0 1,191

Carrying value Dec. 31, 2009 870 468 33 1,371

Purchase cost

Dec.1,2008 1,108 1,213 32 2,353

Exchangeratedifferences 7 –7 0 0

Additionsfrombusinesscombinations 25 29 0 54

Otheradditions 45 186 59 290


Transfers –2 17 –15 0

Dec. 31, 2008 1,165 1,260 76 2,501

Accumulated depreciation

Dec.1,2008 311 726 0 1,037

Exchangeratedifferences 2 –5 0 –3

Additionsdepreciation 42 172 0 214

Impairments 0 0 0 0


Dec. 31, 2008 348 748 0 1,096

Carrying value Dec. 31, 2008 817 512 76 1,405

Interestcapitalizedwasnotmaterialtoanyperiodpre-sented.


(18) Trade and Other Payables, Financial liabilities and Other Non-financial liabilitiesTradeandotherpayables,financialliabilitiesandothernon-financialliabilitiesclassifiedbasedonduedatesasatDecember31wereasfollows:

Liabilitiesareunsecured,exceptfortheretentionoftitleandsimilarrightscustomaryinourindustry.Effectiveinter-estratesonbankloanswere4.32%in2009,4.30%in2008and8.03%in2007.

Trade and Other Payables, Financial liabilities and Other Non-Financial liabilities

2009Term

2008Term

€millions LessThan1Year

Between1and5Years

MoreThan5Years

Balanceon12/31/2009

LessThan1Year

Between1and5Years

MoreThan5Years

Balanceon12/31/2008

Tradepayables 479 0 0 479 507 3 0 510

Advancepaymentsreceived 88 0 0 88 32 2 0 34

Miscellaneousotherliabilities 71 30 5 106 60 22 15 97

Trade and other payables 638 30 5 673 599 27 15 641

Bankloans 4 699 0 703 2,319 1 1 2,321

Otherfinancialliabilities 142 17 13 172 244 38 0 282

Financial liabilities 146 716 13 875 2,563 39 1 2,603

Otheremployee-relatedliabilities 1,343 8 4 1,355 1,161 7 6 1,174

Othertaxes 234 0 0 234 267 0 0 267

Other non-financial liabilities 1,577 8 4 1,589 1,428 7 6 1,441

2,361 754 22 3,137 4,590 73 22 4,685

(19) ProvisionsProvisionsbasedonduedatesasatDecember31wereasfollows:

Provisions



Pensionplansandsimilarobligations(seeNote(19a)) 2 49 51 2 60 62

Otherprovisions(seeNote(19b)) 330 149 479 246 172 418

332 198 530 248 232 480


(19a) Pension Plans and Similar ObligationsWemaintainseveraldefinedbenefitanddefinedcontribu-tionplansforouremployeesinGermanyandatforeignsubsidiaries,whichprovideforoldage,disability,andsurvi-vors’benefits.ThemeasurementdatesforthedomesticandforeignbenefitplansareDecember31.Individualben-efitplanshavealsobeenestablishedformembersofourExecutiveBoard.Furthermore,incertaincountrieswepro-videterminationindemnitybenefitstoemployeesregard-lessofthecausefortermination.Thesetypesofbenefitsaretypicallydefinedbylawintheseforeigncountries.

Theliabilitiesaccruedforpensionsandothersimilarobliga-tionsonDecember31consistofthefollowing:

DefinedBenefitPensionPlansandSimilarObligationsTheConsolidatedStatementsofFinancialPositionincludethefollowingsignificantcomponentsrelatedtodefinedbenefitpensionplansasatDecember31,2009and2008,respectively:

liabilities Accrued for Pensions and Other Similar Obligations


Domesticbenefitpensionplans 1 0

Foreignbenefitpensionplans 34 47

Otherpost-employmentbenefitplans 16 15

Total defined benefit plans 51 62

Significant Components Related to Defined Benefit Pension Plans


Presentvalueoffundedbenefitobligations 671 599

Presentvalueofunfundedbenefitobligations 38 39

Total present value of benefit obligations 709 638

Fair value of plan assets 660 578

Net amount recognized –49 –60

Pensionliability(un-/underfunded) –51 –62

Prepaidpensionasset(overfunded) 2 2

Ourdomesticdefinedbenefitplansprovideparticipantswithpensionbenefitsthatarebasedonthelengthofserviceandcompensationofemployees.

Thereisalsoadomesticemployee-financedpensionplanforwhichSAPguaranteesaminimumreturnoninvestmentwhichisequivalenttothereturnguaranteedbytheinsurer.EventhoughtheriskthatSAPwouldbeliableforareturnthatcannotbemetbytheinsurancecompanyisveryre-mote,theseemployee-financedplansdonotqualifyasde-finedcontributionplansunderIFRSandareincludedindomesticplanassetsandplanliabilities.

Foreigndefinedbenefitplansprovideparticipantswithpen-sionbenefitsthatarebasedoncompensationlevels,age,andlengthofservice.

Certainofourforeignsubsidiariesarerequiredtoprovidetotheiremployeesterminationindemnitybenefitsregard-lessofthereasonfortermination(retirement,voluntary,orifthesubstanceofthepost-employmentplanisapension-typearrangement.Mostofthesearrangementsprovidetheemployeewithaone-timepayoutbasedoncompensa-tionlevels,age,andyearsofserviceonterminationinde-pendentofthereason(retirement,voluntary,orinvoluntary).

OursubsidiariesintheUnitedStatesdecidedin2008tofreezetheirdefinedbenefitplaneffectiveDecember31,2008,andinsteadofferedadditionalandimprovedbenefitsundertheirdefinedcontributionplan(401k-Planregulations).Asaresult,werecognizedacurtailmentgainintheamountof€9 millionrelatedtothereductionofthedefinedbenefitobligationin2008.

Thefollowingtableshowsthedevelopmentofthepresentvaluesofthedefinedbenefitobligationsandthefairvalueoftheplanassetswithareconciliationofthefundedstatustonetamounts:


Thefollowingweightedaverageassumptionswereusedfortheactuarialvaluationofourdomesticandforeignpensionliabilitiesaswellasotherpost-employmentbenefitobligationsasattherespectivemeasurementdate:

Change in the Present Value of the DBO and the Fair Value of the Plan Assets

€millions Domestic Plans Foreign Plans Other Post- Employment

Plans

Total

2009 2008 2009 2008 2009 2008 2009 2008

Change in benefit obligation

Benefitobligationatbeginningofyear 314 274 306 287 18 13 638 574

Servicecost –6 1 15 38 2 2 11 41

Interestcost 18 15 15 14 1 1 34 30

Employeecontributions 35 36 4 4 0 0 39 40

Actuarialloss(+)/gain(–) –13 –10 31 –45 0 0 18 –55

Benefitspaid –2 –2 –21 –9 –1 –1 –24 –12

Businesscombinations 0 0 2 0 0 4 2 4

Curtailments/settlements 0 0 –1 –9 0 –2 –1 –11

Otherchanges 0 0 0 0 0 2 0 2

Foreigncurrencyexchangeratechanges 0 0 –8 26 0 –1 –8 25

Benefit obligation at year-end 346 314 343 306 20 18 709 638

Thereoffullyorpartiallyfundedplans 346 314 317 277 8 8 671 599

Thereofunfundedplans 0 0 26 29 12 10 38 39

Change in plan assets

Fairvalueofplanassetsatbeginningofyear 314 272 261 311 3 0 578 583

Expectedreturnonplanassets 15 14 14 21 0 0 29 35

Employercontributions 1 2 29 14 2 1 32 17

Employeecontributions 35 36 4 4 0 0 39 40

Benefitspaid –2 –2 –21 –9 –1 –1 –24 –12

Businesscombinations 0 0 2 0 0 1 2 1

Settlements 0 0 0 0 0 0 0 0

Otherchanges 0 0 0 0 0 2 0 2

Actuarialloss(–)/gain(+) –18 –8 28 –99 0 0 10 –107

Foreigncurrencyexchangeratechanges 0 0 –6 19 0 0 –6 19

Fair value of plan assets at year-end 345 314 311 261 4 3 660 578

Funded status at year-end –1 0 –32 –45 –16 –15 –49 –60

Amounts recognized in the Consolidated

Statement of Financial Position:

Noncurrentpensionassets 0 0 2 2 0 0 2 2

Accruedbenefitliability(current) 0 0 –2 –2 0 0 –2 –2

Accruedbenefitliability(non-current) –1 0 –32 –45 –16 –15 –49 –60

–1 0 –32 –45 –16 –15 –49 –60


Actuarial Assumptions for Defined Benefit liabilities

€millions Domestic Plans Foreign Plans Other Post- Employment Plans

2009 2008 2007 2009 2008 2007 2009 2008 2007

Discountrate 5.1 5.8 5.5 4.7 4.8 4.9 5.7 6.4 5.9

Rateofcompensationincrease 2.5 2.1 2.1 2.3 2.4 4.6 6.9 5.6 5.1

Theassumeddiscountratesarederivedfromratesavailableonhigh-qualitycorporatebondsandgovernmentbondsforwhichthetimingandamountsofpaymentsmatchthetimingandtheamountsofourprojectedpensionpayments.

Thecomponentsoftotalexpenseofdefinedbenefitplansfortheyears2009,2008,and2007recognizedinoperatingexpensewereasfollows:

Duetothefactthatourdomesticdefinedbenefitplanspri-marilyconsistofanemployeefinancedpost-retirementplanthatisfullyfinancedwithqualifyinginsurancepolicies,currentservicecostmayturnintoacredit.Thisresultsfromthefactthatinitiallytheplanassetsandbenefitliabilityareindependentlycalculatedbasedonactuarialassump-tions,butthenIAS19.104isappliedandadjuststhedefinedbenefitliabilitytothefairvalueofthequalifyingplanassets.Thisadjustmentisreflectedasservicecost.

Total Expense of Defined Benefit Plans


Total

2009 2008 2007 2009 2008 2007 2009 2008 2007 2009 2008 2007

Servicecost –6 1 5 15 38 37 2 2 1 11 41 43

Interestcost 18 15 11 15 14 11 1 1 1 34 30 23

Expectedreturnonplanassets –15 –14 –12 –14 –21 –21 0 0 0 –29 –35 –33

Curtailment 0 0 0 –1 –9 0 0 0 0 –1 –9 0

Other 0 0 0 0 0 0 0 0 –1 0 0 –1

Total expense –3 2 4 15 22 27 3 3 1 15 27 32

Actualreturnonplanassets –3 6 –18 42 –78 11 0 0 0 39 –72 –7


Wehaverecognizedthefollowingamountsofactuarialgainsandlossesforourdefinedbenefitplansasothercompre-hensiveincomedirectlyinretainedearnings:

Forthecalculationofthetotalexpensefortheyears2009,2008,and2007,theprojectionofthedefinedbenefitobli-gationandthefairvalueoftheplanassetsasatDecember31,2009,2008,and2007,ouractuaryhasusedthefol-lowingprincipalactuarialassumptions(expressedasweightedaveragesforourforeignandpost-employmentbenefitplans):

Actuarial Gains (losses) on Defined Benefit Plans


Total

2009 2008 2007 2009 2008 2007 2009 2008 2007 2009 2008 2007

Beginningbalanceofactuarial

gains(–)andlosses(+)on

definedbenefitplans

–18 –16 –9 57 0 –10 –2 –2 –1 37 –18 –20

Actuarialgains(–)andlosses(+)

ondefinedbenefitplans

recognizedduringtheperiod

5 –2 –7 3 54 10 0 0 –1 8 52 2

Otherchanges 3 0 0 –5 0 0 0 0 0 –2 0 0

Foreigncurrencyexchange

ratechanges0 0 0 –2 3 0 0 0 0 –2 3 0

Ending balance of actuarial

gains (–) and losses (+) on

defined benefit plans

–10 –18 –16 53 57 0 –2 –2 –2 41 37 –18

Actuarial Assumptions for Total Expense

% Domestic Plans Foreign Plans Other Post- Employment Plans

2009 2008 2007 2009 2008 2007 2009 2008 2007

Discountrate 5.8 5.5 4.5 5.0 4.8 4.4 6.5 6.1 4.8

Expectedreturnonplanassets 4.5 4.9 4.3 5.3 6.5 6.9 6.5 6.2 4.5

Rateofcompensationincrease 2.1 2.1 2.1 2.3 4.5 4.6 6.3 4.0 4.9


PensionAssetsOurinvestmentstrategyondomesticbenefitplansistoin-vestallcontributionsinstableinsurancepolicies.Theex-pectedrateofreturnonplanassetsforourdomesticbenefitplansiscalculatedbyreferencetotheexpectedreturnsachievableontheinsuredpoliciesgiventheexpectedassetmixofthepolicies.

Theexpectedreturnassumptionsforourforeignplanas-setsarebasedonweightedaverageexpectedlong-termratesofreturnforeachassetclass,estimatedbasedonfactorssuchashistoricalreturnpatternsforeachassetclassandforecastsforinflation.Wereviewhistoricalreturnpat-ternsandotherrelevantfinancialfactorsforappropriatenessandreasonablenessandmakemodificationstoeliminatecertaineffectswhenconsiderednecessary.OurforeignbenefitplanassetallocationatDecember31,2009,andourtargetassetallocationfortheyear2010areasfollows:

Theinvestmentstrategiesforforeignbenefitplansvaryaccordingtotherespectiveconditionsinthecountryinwhichthebenefitplansaresituated.Generally,along-terminvest-menthorizonhasbeenadoptedforallmajorforeignbenefitplans.Ourpolicyistoinvestinarisk-diversifiedportfolioconsistingofamixofassetswithintheabovetargetassetallocationrange.

Plan Asset Allocation for Foreign Plans and Other Post-Employment Obligations

% Target Asset Allocation 2010

Actual % of 2009 Plan Assets

Target Asset Allocation 2009

Actual % of 2008 Plan Assets

Asset Category

Equity 43 44 31 45

Fixedincome 49 45 64 47

Realestate 3 4 4 3

Other 5 7 1 5

Total 100 100 100 100

ExpectedFutureContributionsandBenefitsOurexpectedcontributionin2010is€1 millionfordomesticdefinedbenefitplansand€31 millionforforeigndefinedbenefitplans,allofwhichisexpectedtobepaidincash.

Theestimatedfuturepensionbenefitpaymentstobemadeoverthenext10yearsbyourdomesticandforeignbenefitplansfortheyearsendedDecember31areasfollows:


Theamountsforthecurrentyearandthreeprecedingyearsofpensionobligation,planassets,fundedstatus,andexperienceadjustmentsareasfollows:

DefinedContributionPensionsPlansWealsomaintaindomesticandforeigndefinedcontributionplans.Amountscontributedbyusundersuchplansarebasedonapercentageoftheemployees’salariesortheamountofcontributionsmadebyemployees.Theexpensesasso-ciatedwithdefinedcontributionplanswere€132 millionin2009,€100 millionin2008,and€91millionin2007.

Estimated Future Pension Benefit Payments

€millions Domestic Plans

Foreign Plans

Other Post- Employment

Plans

Total

2010 5 16 1 22

2011 13 16 1 30

2012 14 16 1 31

2013 21 17 1 39

2014 21 16 1 38

2015–2019 106 89 7 202

Pension Obligation, Plan Assets, Funded Status and Experience Adjustments


Total

2009 2008 2007 2006 2009 2008 2007 2006 2009 2008 2007 2006 2009 2008 2007 2006

Definedbenefitobligation 346 314 274 261 343 306 287 275 20 18 13 16 709 638 574 552

Liabilityexperienceadjustments –13 –10 –37 –17 31 –45 0 –5 0 0 –1 1 18 –55 –38 –21

Planassets 345 314 272 255 311 261 311 288 4 3 0 1 660 578 583 544

Assetexperienceadjustments –18 –8 –30 –10 28 –99 –10 10 0 0 0 0 10 –107 –40 0

Funded status –1 0 –2 –6 –32 –45 24 13 –16 –15 –13 –15 –49 –60 9 –8

StatePlansInGermany,aswellassomeothercountries,thelegislatorhasestablishedpensionbenefitarrangementsthatareoperatedbynationalorlocalgovernmentorasimilarinsti-tution.Theexpensesassociatedwiththeseplanswere€120 millionin2009,€118 millionin2008,and€96 millionin2007.


(19b) Other ProvisionsOtherprovisionsdevelopedinthereportingyearasfollows:

Additionstoourprovisionsalsoincludeinterestcomponentswhicharenotmaterialindividuallyandintheaggregate.

Provisionsrelatedtoshare-basedcompensationprogramscomprisetheobligationsforourcash-settledshare-basedcompensationwhicharedescribedindetailinNote(28).

Otheremployee-relatedprovisionsprimarilycompriseobli-gationsfortimecredits,severancepayments,jubileeex-penses,andsemiretirement.Whilemostoftheseemployee-relatedprovisionscouldbeclaimedwithinthenext12months,wedonotexpecttherelatedcashflowswithinthistimeperiod.

Customer-relatedprovisionsincludeperformanceobliga-tionsaswellasexpectedcontractlosses.Theassociatedcashoutflowsaresubstantiallyshort-terminnature.

Other Provisions

€millions Balance 1/1/2009

Addition Accretion utilization Release Currency Impact

Balance 12/31/2009

Employee-related provisions

Provisionsshare-basedcompensations 90 73 0 –16 –33 0 114

Otheremployee-relatedprovisions 157 73 0 –40 –52 0 138

Customer-related provisions 37 88 0 –60 –30 0 35

Restructuring provisions

Employeeterminationbenefits 13 205 0 –184 –19 1 16

Facility-relatedexitliabilities 38 18 1 –23 –7 1 28

Warranty provisions 3 2 0 –2 –1 0 2

litigation-related provisions 67 80 0 –23 0 –1 123

Other provisions 13 14 0 –1 –3 0 23

Total 418 553 1 –349 –145 1 479

Thereofcurrent 246 330

Thereofnon-current 172 149

Restructuringprovisionsprimarilyincludepersonnelcosts,whichresultfromseverancepaymentsforemployeetermi-nations,andcontractterminationcosts,includingthoserelatingtotheterminationofleasecontracts.Formorede-tails,seeNote(7).PrioryearrestructuringbalancesrelatetorestructuringactivitiesincurredinconnectionwithouracquisitionofBusinessObjects(seeNotes(4)and(7))andtheabandoningofTomorrowNow.Thecashoutflowsas-sociatedwithemployee-relatedrestructuringcostsaresub-stantiallyshort-terminnature.Thetimingofthecashflowsassociatedwithfacility-relatedprovisionsisdepen-dentontheremainingtermoftheassociatedlease.

Warrantyprovisionsrepresenttheestimatedfuturecostoffulfillingourcontractualobligationsassociatedwithsalesofoursoftware.Wedeterminethewarrantyaccrualbasedonthehistoricalaveragecostoffulfillingourobligationsunderthesecommitments.Therelatedoutflowofeconomicbenefitsisofshort-termnature.


Litigation-relatedprovisionsrelateprimarilytolitigationmattersdescribedinNote(24).Aftertakinglegaladvice,wehaveestablishedprovisionstakingintoaccountthefactsofeachcase.Thetimingofthecashoutflowsassociatedwithlegalclaimscannotbereasonablydeterminedinallcases.Weanticipatethatpartofthelitigation-relatedexpenseswillberecoveredthroughinsurance.AsofDecember31,2009,wehavereceived€14 millionfrominsurancepoli-cies(December31,2008:€6 million)whichwillberecog-nizedwhenitisvirtuallycertainthattheseamountsdonothavetoberepaid.

Otherprovisionsrelatemainlytoassetretirementobliga-tionsassociatedwithleasedfacilitiesandonerouscon-tracts.Forassetretirementobligationswerecordthepres-entvalueoftheseobligationsintheperiodinwhichtheobligationisincurred.Theassociatedcashoutflowsaregenerallyexpectedtooccuratthedatesofexitofthefacili-tiestowhichtheyrelate,whicharetypicallylong-terminnature.

(20) Deferred IncomeDeferredincomeconsistsmainlyofprepaymentsmadebyourcustomersforsupportservicesandprofessionalservices,feesfrommultipleelementarrangementsallocat-edtoundeliveredelements,andamountsrecordedinpurchaseaccountingatfairvalueforobligationstoperformunderacquiredsupportcontractsinconnectionwithacqui-sitions.

(21) Total Equity

Issued CapitalThefollowingtableshowsthechangesinthenumberandthevalueofissuedsharesandtreasuryshares.Eachshareofno-parissuedcapitalhasanominalvalueof€1pershare.

Number of Shares

Number of Shares (000) Value in € Millions

IssuedCapital TreasuryShares IssuedCapital TreasuryShares

January 1, 2007 1,267,537 –49,251 1,268 –1,742

Sharesissuedtoserviceconvertiblebondsandstockoptionsexercised 1,721 0 1 0

Acquisitionoftreasuryshares 0 –27,266 0 –1,005

Cancellationoftreasuryshares –23,000 23,000 –23 819

Transferofsharestoemployees 0 5,452 0 194

December 31, 2007 1,246,258 –48,065 1,246 –1,734

Sharesissuedtoserviceconvertiblebondsandstockoptionsexercised 505 0 1 0

Acquisitionoftreasuryshares 0 –14,602 0 –487

Cancellationoftreasuryshares –21,000 21,000 –21 744


December 31, 2008 1,225,763 –38,457 1,226 –1,362

Sharesissuedtoserviceconvertiblebondsandstockoptionsexercised 277 0 0 0


December 31, 2009 1,226,040 –37,262 1,226 –1,320


Thechangeinissuedcapitalduetoconvertiblebondsandstockoptionsexercisedrelatestotheexerciseofawardsgrantedtoemployeesundercertainshare-basedpaymentplans.

Authorized SharesTheArticlesofIncorporationauthorizetheExecutiveBoardofSAPAG(theExecutiveBoard)toincreasetheissuedcapital:•Uptoatotalamountof€60 millionthroughtheissuanceofnewcommonsharesinreturnforcontributionsincashuntilMay11,2010(AuthorizedCapitalI).Theissuanceissubjecttothestatutorysubscriptionrightsofexistingshareholders.•Uptoatotalamountof€180 millionthroughtheissu-

anceofnewcommonsharesinreturnforcontributionsincashuntilMay8,2011(AuthorizedCapitalIa).Theissu-anceissubjecttothestatutorysubscriptionrightsofexist-ingshareholders.

•Uptoatotalamountof€60 millionthroughtheissuanceofnewcommonsharesinreturnforcontributionsincashorinkinduntilMay11,2010(AuthorizedCapitalII).SubjecttocertainpreconditionsandtheconsentoftheSupervisoryBoard,theExecutiveBoardisauthorizedtoexcludetheshareholders’statutorysubscriptionrights.

•Uptoatotalamountof€180 millionthroughtheissuanceofnewcommonsharesinreturnforcontributionsincashorinkinduntilMay8,2011(AuthorizedCapitalIIa).SubjecttocertainpreconditionsandtheconsentoftheSupervisoryBoard,theExecutiveBoardisauthorizedtoexcludetheshareholders’statutorysubscriptionrights.

Contingent SharesSAPAG’sissuedcapitalissubjecttoacontingentincreaseofcommonshares.Thecontingentincreasemaybeef-fectedonlytotheextentthattheholdersoftheconvertiblebondsandstockoptionsthatwereissuedbySAPAGun-dercertainshare-basedpaymentplans(seeNote28)exer-cisetheirconversionorsubscriptionrights.Contingentsharesamountedto€208 millionasatDecember31,2009,whichisunchangedcomparedtotheprioryear.

Share PremiumSharepremiumrepresentsallcapitalcontributedtoSAPwiththeproceedsresultingfromtheissuanceofissuedcapitalinexcessoftheircalculatedparvalue.Sharepremiumarisesmainlyfromissuanceofissuedcapital,treasurysharestransactionsandshare-basedcompensationtransactions.

Retained EarningsRetainedearningscontainprioryears’undistributedprofitaftertaxandunrecognizedpensioncosts.Unrecognizedpensioncostscompriseactuarialgainsandlossesrelatingtodefinedbenefitpensionplansandsimilarobligations.

Treasury SharesByresolutionofSAPAG’sAnnualGeneralMeetingofShareholdersheldonMay19,2009,theExecutiveBoardofSAPAGwasauthorizedtoacquire,onorbeforeOcto-ber31,2010,upto120 millionsharesintheCompanyontheconditionthatsuchsharepurchases,togetherwithanypreviouslyacquiredshares,donotaccountformorethan10%ofSAPAG’sissuedcapital.Althoughtreasurysharesarelegallyconsideredoutstanding,therearenodividendorvotingrightsassociatedwithsharesheldintreasury.WemayredeemorresellsharesheldintreasuryormayusetreasurysharesforthepurposeofservicingsubscriptionrightsandconversionrightsundertheCompany’sshare-basedpaymentplans.Also,wemayusethesharesheldintreasuryasconsiderationinconnectionwiththeacquisi-tionofothercompanies.

TheCompanypurchasednoSAPADRsin2009,2008,or2007(eachADRrepresentsonecommonshareofSAPAG).TheCompanyheldnoSAPADRsasatDecember31,2009,2008,and2007respectively.

MiscellaneousUndertheGermanStockCorporationAct(Aktiengesetz),thetotalamountofdividendsavailablefordistributiontoSAPAG’sshareholdersisbasedontheearningsofSAPAGasreportedinitsstatutoryfinancialstatementswhicharedeterminedundertheaccountingrulesstipulatedbytheGermanCommercialCode(Handelsgesetzbuch).FortheyearendedDecember31,2009,theExecutiveBoardandtheSupervisoryBoardofSAPAGintendtoproposeadividendof€0.50pershare(estimatedtobe594 million€).

Dividendspershareforboth2008and2007were€0.50andwerepaidinthesucceedingyear.


(22) Additional Capital DisclosuresTheprimaryobjectiveofourcapitalmanagementistoensurethatwemaintainastablecapitalstructurewiththefocusontotalequitytoupholdinvestor,creditor,andcustomercon-fidenceandtoensurefuturedevelopmentofourbusiness.Wearefocusedonkeepingourtotalequitybasesolidtoensureindependence,security,aswellasahighfinancialflexibilitythroughafavorableimpactontheconditionsofpotentialfutureborrowings,ifrequired.

Wecurrentlydonothaveacreditratingwithanyratingagency.Ourdebtratioisat37%(2008:48%),andwedonotbelievethataratingwouldhaveasubstantialeffectonourcurrentorfutureborrowingconditionsandfinancingoptions.

Ourgoalistocontinuetobeabletoreturnexcessliquiditytoourshareholdersbydistributingannualdividendsaswellasrepurchasingtreasurysharesinfutureperiods.Theamountoffuturedividendsandtheextentoffuturepur-chasesoftreasuryshareswillbebalancedwithourefforttocontinuetomaintainanadequateliquiditystatus.

Furthermore,wemanageourfinancialliabilities,forexam-plebyenteringintointerestrateswapsonourborrowings.

Thecapitalstructureatthestatementoffinancialpositiondatewasasfollows:

Capital Structure

2009 2008 % change

€millions %ofEquity

andLia-bilities

€millions %ofEquity

andLia-bilities

Totalequity 8,491 63 7,171 52 18

Totalcurrentliabilities 3,416 26 5,824 42 –41

Totalnoncurrentliabilities 1,467 11 905 7 62

Totalliabilities 4,883 37 6,729 48 –27

Equity and liabilities 13,374 100 13,900 100 –4

In2009,repaymentoftheloanweenteredintotofinancetheacquisitionofBusinessObjectsdecreasedourtotallia-bilities.Inthecontrary,a“Schuldscheindarlehen”(SSD–aprivateplacementtransaction)totaling€697 millionwasplacedontheeuro-denominatedcapitalmarketsinthefirsthalfof2009.

Wearepredominantlyequity-financed.Thisisalsoevi-dentfromthefactthatbankloansandoverdraftsrepre-sentedonly5%oftotalassetsasofDecember31,2009(2008:17%).

In2009and2008,respectively,wewereabletodistribute€594 millionindividendsfromour2008and2007profitcomparedto€556 milliondistributedin2007.Asidefromthedistributeddividend,in2008wealsoreturned€487 milliontoourshareholdersbyrepurchasingourownshares,comparedto€1,005 millionin2007.

Commitmentsexisttoreissuetreasurysharesorissuecommonsharesinconnectionwithourequity-settledshare-basedpaymentplansasdescribedinNote(28).Inallyearspresentedwehavesatisfiedandweexpecttocontinuetosatisfycommitmentsresultingfromourequity-settledshare-basedpaymentplansthroughbothreissu-anceoftreasurysharesandcapitalincreases.

(23) Other Financial Commitments and Contingent liabilities

Other Financial Commitments

OperatingLeasesOtherfinancialcommitmentswere€974 million,€1,112 mil-lion,and€850 millionasatDecember31,2009,2008and2007,respectively,andprimarilycomprisecommitmentsunderrentalcontractsandoperatingleasesof€727 mil-lion,€863 millionand€649 millionasatDecember31,2009,2008and2007,respectively.Thosecommitmentsrelateprimarilytotheleaseofofficespace,cars,andofficeequipment.


PurchaseCommitmentsInaddition,contractualcommitmentsforacquisitionofproperty,plant,andequipmenttotaling€24 millionin2009(€79 millionin2008;€97 millionin2007)exist.Thesecommitmentsrelateprimarilytoconstructiononnewandexistingfacilities,officeequipmentandcarpurchasecommitments.Theremainingcommitmentstotaling€223 mil-lionin2009(€170 millionin2008;€104 millionin2007)relatetomarketing,consulting,maintenance,licenseagree-mentsandotherthird-partyagreements.Historically,themajorityofsuchpurchasecommitmentshavebeenrealized.

CommitmentsunderoperatingleasingcontractsandpurchaseobligationsasatDecember31,2009,wereasfollows:

AsatDecember31,2009,thefutureminimumsubleasepaymentswere€13 million,€16 million,and€16 millionfortheyears2009,2008,and2007,respectively.Oursubleasepaymentsreceivedwereimmaterialforallyearsreported.

Ourrentalandoperatingleaseexpensewas€264 million,€274 million,and€210 millionfortheyears2009,2008and2007,respectively.

Contingent liabilities Inthenormalcourseofbusiness,weusuallyindemnifyourcustomersagainstliabilitiesarisingfromaclaimthatoursoftwareproductsinfringeathirdparty’spatent,copyright,tradesecret,orotherproprietaryrights.Inaddition,weoccasionallygrantfunctionorperformanceguaranteesinrou-tineconsultingcontractsordevelopmentarrangements.

Other Financial Commitments

€millions Operating leases

Purchase Commitments

Due2010 221 192

Duefrom2011to2014 374 53

Duethereafter 132 2

Also,oursoftwarelicenseagreementsgenerallyincludeaclauseguaranteeingthatthesoftwaresubstantiallycon-formstothespecificationsasdescribedinapplicabledocu-mentationforaperiodofsixto12monthsfromdelivery.Ourproductandservicewarrantyliability,whichismea-suredbasedonhistoricalexperienceandevaluation,isin-cludedinotherobligations(seeNote(19b)).

Forcontingentliabilitiesrelatedtolitigationmatters,seeNote(24).

(24) litigation and ClaimsWearesubjecttoavarietyofotherclaimsandlawsuitsthatarisefromtimetotimeintheordinarycourseofourbusiness,includingproceedingsandclaimsthatrelatetocompanieswhichwehaveacquired,andclaimsthatrelatetocustomersdemandingindemnificationforproceedingsinitiatedagainstthembasedontheiruseofSAPsoftware.Wewillcontinuetovigorouslydefendagainstallclaimsandlawsuitsagainstus.Werecordaprovisionforsuchmat-terswhenitisprobablethatwehaveapresentobligationthatresultsfromapastevent,isreliablyestimableandthesettlementofwhichisprobabletorequireanoutflowofresourcesembodyingeconomicbenefits.Forfurtherinfor-mationregardingthedevelopmentoftheprovisionsrecord-edforlitigationspleaserefertonote(19b).Wecurrentlybelievethatresolvingallclaimsandlawsuitsagainstus,in-dividuallyorinaggregate,didnotandwillnothaveamaterialadverseeffectonourbusiness,financialposition,income,orcashflows.

However,allclaimsandlawsuitsinvolveriskandcouldleadtosignificantfinancialandreputationaldamagetothepar-tiesinvolved.Becauseofsignificantinherentuncertaintiesrelatedtothesematters,therecanbenoassurancethatourbusiness,financialposition,incomeorcashflowswillnotbemateriallyadverselyaffectednorcanwereliablyestimatethemaximumpossiblelossincaseofanunfavor-ableoutcome.


Intellectual Property litigationInOctober2006,U.S.-basedSkyTechnologiesLLC(Sky)institutedlegalproceedingsintheUnitedStatesagainstSAPandOracle.SkyallegesthatSAP’sproductsinfringeoneormoreoftheclaimsineachoffivepatentsheldbySky.Initscomplaint,Skyseeksunspecifiedmonetarydamagesandpermanentinjunctiverelief.Thelegalpro-ceedingshavebeenre-activatedandtrialisscheduledforOctober2010.

InJanuary2007,German-basedCSB-SystemsAG(CSB)institutedlegalproceedingsinGermanyagainstSAP.CSBallegesthatSAP’sproductsinfringeoneormoreoftheclaimsofaGermanpatentandaGermanutilitymodelheldbyCSB.Initscomplaint,CSBhassettheamountindisputeat€1 millionandisseekingpermanentinjunctiverelief.WithintheseproceedingsCSBisnotprecludedfromrequestingdamagesinexcessoftheamountindispute.InJuly2007,SAPfileditsresponseinthelegalproceed-ingsincludinganullityactionandcancellationproceedingagainstthepatentandutilitymodel,respectively.ThenullityhearingontheGermanpatentwasheldinJanuary2009andtheGermanCourtdeterminedthatthepatentisinvalid.ThecancellationhearingfortheutilitymodelwasheldinMay2009andtheCourtdeterminedthattheutilitymodelwasinvalid.CSBisappealing,however,theinfringe-menthearinghasbeenstayedpendingtheappeals.

InMarch2007,U.S.-basedOracleCorporationandcertainofitssubsidiaries(Oracle)institutedlegalproceedingsintheUnitedStatesagainstTomorrowNow,Inc.anditsparentcompany,SAPAmerica,Inc.andSAPAmerica’sparentcompanySAPAG(SAP).OraclefiledanamendedcomplaintinJune2007,asecondamendedcomplaintinJuly2008andathirdamendedcomplaintinOctober2008andafourthamendedcomplaintinAugust2009.SAPandTomorrowNowhaveansweredthefourthamendedcomplaint,subjecttoandasrevisedbytheCourt’srulingonmotiontodismisstheprecedingthirdamendedcomplaint.Asamended,thelawsuitallegescopyrightinfringement,violationsoftheFed-eralComputerFraudandAbuseActandtheCaliforniaComputerDataAccessandFraudAct,unfaircompetition,intentionalandnegligentinterferencewithprospectiveeconomicadvantage,andcivilconspiracy.ThelawsuitallegesthatSAPunlawfullycopiedandmisappropriatedproprie-

tary,copyrightedsoftwareproductsandotherconfidentialmaterialsdevelopedbyOracletoserviceitsowncustomers.Thelawsuitseeksinjunctivereliefandmonetarydamagesincludingpunitivedamagesinthe billionsofU.S.dollars.Thetrialhasbeenre-scheduledforNovember2010.Addi-tionally,inJune2007,SAPbecameawarethattheUnitedStatesDepartmentofJusticehadopenedaninvestigationconcerningrelatedissuesandhadissuedsubpoenastoSAPandTomorrowNow;SAPandTomorrowNowareco-operatingwiththeinvestigationandarerespondingtotheoriginalsubpoenasandadditionalsubpoenasissuedbytheDepartmentofJustice.InNovember2009asettle-mentconferencewasheld.Nosettlementwasreached.ThenextsettlementconferenceisscheduledforJune2010.SAPhasrecordedaprovisionfortheselegalproceedingsintheamountofUS$100 millionpluslegalexpensesasofDecember31,2009.

InApril2007,U.S.-basedVersataSoftware,Inc.(formerlyTrilogySoftware,Inc.)(Versata)institutedlegalproceed-ingsintheUnitedStatesagainstSAP.VersataallegesthatSAP’sproductsinfringeoneormoreoftheclaimsineachoffivepatentsheldbyVersata.Initscomplaint,Versataseeksunspecifiedmonetarydamagesandpermanentinjunctiverelief.ThetrialwasheldinAugust2009.ThejuryreturnedaverdictinfavorofVersataandawardedVersataUS$138.6Mforpastdamages.Withprejudgmentinterest,approxi-mately167Mio.USDisindispute.Thepartieshavefiledpost-trialmotionsandahearinghasbeenscheduledforMarch2010.

InAugust2007,U.S.-basedelcommerce.com,Inc.(elcom-merce)institutedlegalproceedingsintheUnitedStatesagainstSAP.elcommerceallegesthatSAP’sproductsinfringeoneormoreoftheclaimsinonepatentheldbyelcommerce.Initscomplaint,elcommerceseeksunspecifiedmonetarydamagesandpermanentinjunctiverelief.TheCourtinEastTexasgrantedSAP’srequesttotransferthelitigationfromEastTexastoPennsylvania.ThetrialinPennsylvaniahasnotyetbeenscheduled.


InAugust2007,Canadian-basedJuxtaComm,Inc.(Juxta-Comm)institutedlegalproceedingsintheUnitedStatesagainstBusinessObjectsandseveralotherdefendants.JuxtaCommallegesthatBusinessObjects’productsinfringeoneormoreoftheclaimsinonepatentheldbyJuxtaComm.Initscomplaint,JuxtaCommseeksunspecifiedmonetarydamagesandpermanentinjunctiverelief.SAPandJuxta-CommhaveresolvedthisdisputeforanamountimmaterialtoSAP’sbusiness,financialposition,resultsofoperations,andcashflows.

InNovember2007,U.S.-basedDiagnosticSystemsCorp.(DSC)institutedlegalproceedingsintheUnitedStatesagainstSAPandseveralotherdefendants.Amongthede-fendantsisBusinessObjects,whichwassuedbyDSCpriortoitbeingacquiredbySAP.DSCallegesthatSAP’sproductsinfringeoneormoreoftheclaimsinonepatentheldbyDSC.InitscomplaintagainstSAP,DSCseeksunspecifiedmonetarydamagesandpermanentinjunctiverelief.InitscomplaintagainstBusinessObjects,whichalsoallegesinfringementofoneormoreclaimsinoneDSCpatent,DSCseeksunspecifiedmonetarydamagesandpermanentinjunctiverelief.ThetrialwasscheduledforFeb-ruary2010.SAPandDSChaveresolvedthisdisputeforanamountimmaterialtoSAP’sbusiness,financialposition,resultsofoperations,andcashflows.

InMay2008,U.S.-basedInfoMentis,Inc.(InfoMentis)insti-tutedlegalproceedingsintheUnitedStatesagainstSAP.InfoMentisallegescopyrightinfringementandunfaircompe-tition.Thelawsuitseeksunspecifiedmonetarydamagesandapermanentinjunction.SAPfileditsresponseinAugust2008.TheMarch2010trialdatehasbeentakenoffthecalendarandnonewtrialdatehasbeenset.

InJuly2008,U.S.-basedImplicitNetworks(Implicit)insti-tutedlegalproceedingsintheUnitedStatesagainstSAPandseveralotherdefendants.ImplicitallegesthatSAP’sproductsinfringeoneormoreoftheclaimsoftwopatentsheldbyImplicit.Initscomplaint,Implicitseeksunspecifiedmonetarydamagesandpermanentinjunctiverelief.SAPfileditsresponseinNovember2008.ThelegalproceedingshavebeentransferredfromSeattle,WashingtontoSanFrancisco,California.SAPandImplicithaveresolvedthisdisputeforanamountimmaterialtoSAP’sbusiness,financialposition,resultsofoperations,andcashflows.

InJuly2008andJuly2009,U.S.-basedAloftMedia(Aloft)institutedlegalproceedingsintheUnitedStatesagainstSAPandseveralotherdefendants.Intheproceedingsin-stitutedinJuly2008AloftallegesthatSAP’sproductsinfringeoneormoreoftheclaimsoftwopatentsheldbyAloft.Initscomplaint,Aloftseeksunspecifiedmonetarydamagesandpermanentinjunctiverelief.SAPfileditsre-sponseinOctober2008.ThetrialwasscheduledforJune2010.IntheproceedingsinstitutedinJuly2009,AloftallegesthatSAP’sproductsinfringeoneormoreoftheclaimsofonepatentheldbyAloft.Initscomplaint,Aloftseeksunspecifiedmonetarydamages.SAPandAlofthaveresolvedthisdisputeforanamountimmaterialtoSAP’sbusiness,financialposition,resultsofoperations,andcashflows.

InFebruary2010,U.S.-basedTecSec,Inc.institutedlegalproceedingsintheUnitedStatesagainstSAP.TecSecallegesthatSAP’sproductsinfringeoneormoreoftheclaimsinfivepatentsheldbyTecSec.Initscomplaint,TecSecseeksunspecifiedmonetarydamagesandpermanentin-junctiverelief.Thetrialhasnotyetbeenscheduled.

OtherLitigationInApril2008,SouthAfrican-basedSystemsApplicationsConsultants(PTY)Limited(Securinfo)institutedlegalproceedingsinSouthAfricaagainstSAP.SecurinfoallegesthatSAPhascausedoneofitssubsidiariestobreachasoftwaredistributionagreementwithSecurinfo.Initscom-plaint,Securinfoseeksdamagesofapproximately€610 millioneuroplusinterest.InSeptember2009,SAPfiledamotiontodismiss.Atrialdatehasnotyetbeenset.


InApril2008,U.S.-basedWellogix,Inc.(Wellogix)institut-edlegalproceedingsintheUnitedStatesagainstSAPaswellasseveralotherdefendants.Wellogixallegessev-eralcausesofactionincluding,butnotlimitedto,breachofjointventure/partnershipagreement,breachoffiduciaryduty,fraud,negligentmisrepresentation,andmisappro-priationofconfidentialinformation.Thelawsuitseeksun-specifiedmonetarydamages.SAPfileditsrespondsinMay2008.InDecember2008,theCourtgrantedSAP’smotiontodismissindicatingthelegalproceedingswereimproperlyinitiatedinTexas.Wellogixhasappealed.Wellogixhasdroppeditsappeal.

InMarch2008,U.S.-basedWasteManagement,Inc.andUSAWasteManagementResources,LLC.(WasteMan-agement)institutedlegalproceedingsintheUnitedStatesagainstSAPallegingseveralcausesofaction,includingbutnotlimitedto,fraud,negligentmisrepresentation,andbreachofcontract.SAPfiledananswerdenyingplaintiffs’allegationsandfiledacounterclaimallegingbreachofcon-tract.InDecember2009theCourtdismissedplaintiffs’claimfornegligentmisrepresentation.InFebruary2010,SAPfiledtwomotionsforpartialsummaryjudgment.Inre-sponse,WasteManagementfiledanamendedpetitionre-writingtheirfraudallegations,assertingnewclaims,in-cludingbutnotlimitedto,civilconspiracyandjointenter-prise,re-fileditsclaimfornegligentmisrepresentationtopreserveitsappealrights,andfiledvariousmotionsforpartialsummaryjudgment.Initsamendedpetition,plain-tiffsallegeactualdamagesexceedingUS$400 millionandseeksanawardofexemplarydamagesexceedingUS$800 million.InMarch2010,SAPfiledspecialex-ceptionsunderTexasRulesofCivilProceduretotheamend-edpetition.ThepartiescontinuetoengageinmotionpracticeandthetrialiscurrentlyscheduleforMay2010.

(25) Financial Risk FactorsWeareexposedtovariousfinancialrisks,suchasmarketrisks,includingchangesinforeigncurrencyexchangerates,interestrates,andequityprices,aswellascreditriskandliquidityrisk.

Foreign Currency Exchange Rate RiskForeigncurrencyexchangerateriskistheriskoflossduetoadversechangesinforeigncurrencyexchangerates.UnderIFRS,foreigncurrencyexchangeraterisksariseonaccountofmonetaryfinancialinstrumentsdenominatedincurrenciesotherthanthefunctionalcurrencywherethenon-functionalcurrencyistherespectiveriskvariable;translationrisksarenottakenintoconsideration.

Asagloballyactiveenterprise,wearesubjecttorisksas-sociatedwithfluctuationsinforeigncurrencieswithregardtoourordinaryoperations.SincetheGroup’sentitiesmainlyconducttheiroperatingbusinessintheirrespectivefunctionalcurrencies,ourriskofexchangeratefluctua-tionsfromongoingordinaryoperationsisnotconsideredsignificant.However,occasionallywegenerateforeigncurrency-denominatedreceivables,payables,andothermon-etarystatementoffinancialpositionitemsbytransactinginacurrencyotherthanthefunctionalcurrencywiththemajoritythenbeinghedgedasdescribedinNote(26).

Inrarecircumstances,transactinginacurrencyotherthanthefunctionalcurrencyalsoleadstoembeddedforeigncurrencyderivativesbeingseparatedandmeasuredatfairvaluethroughprofitorloss.

Inaddition,SAPAGisexposedtoriskassociatedwithforecastedintercompanycashflowsinforeigncurrenciesresultingfromintercompanyroyaltypaymentsbytheSAPGroup’sentitieslinkedtotheirexternalrevenue.ThisleadstoacentralizationoftheforeigncurrencyexchangerateriskwithSAPAGinGermany,astheroyaltiesaremost-lydenominatedintherespectivesubsidiary’slocalcurrencywhilethefunctionalcurrencyofSAPAGistheeuro.Here,thehighestforeigncurrencyexchangerateexposurerelatestocurrenciesofsubsidiarieswithsignificantoperationsforexampletheU.S.dollar,thepoundsterling,theJapaneseyen,theSwissfranc,theCanadiandollar,andtheAustraliandollar.

Withregardtoourinvestingandfinancingactivitieswearenotexposedtoanysignificantforeigncurrencyexchangeraterisk,asallsuchactivitiesareconductedintherespec-tivefunctionalcurrency.


Interest-Rate RiskInterest-raterisksresultfromchangesinmarketinterestrateswhichcancausechangesinthefairvaluesoffixed-rateinstrumentsandintheinteresttobepaidorreceivedforvariable-rateinstruments.Thisinterest-rateriskarisesforourinvestingandfinancingactivities.

AsatDecember31,2009,ourliquiditywasmainlyinvest-edincurrenttimedepositswithfixedyieldsandmoneymarketfundswithvariableyields,heldascashequivalentsandotherfinancialassets.Sincewedonotaccountforthefixed-yieldinvestmentsheldatyear-endatfairvalue,weareonlyexposedtoacashflowinterest-rateriskwithregardtoourvariable-rateinvestments,namelymoneymar-ketfunds,intheeurozoneandintheUnitedStatesofAmerica.

In2009,financingactivitiesfocusedonaninterest-bearingprivateplacementtransaction(Schuldscheindarlehen,SSD),whichclosedinthesecondquarterof2009,totaling€697 millionwithmaturitiesofthreeandfiveyears.TheSSDhasa€149.5 millionfixed-ratetrancheexposingustoafairvalueriskoftheliabilityanda€547.5 millionvari-able-ratetranche,whichgivesrisetoacash-flowrisk,astheinterestpaymentsarebasedontheprevailingEURIBORrates.Hence,onthefinancingside,weareexposedtoin-terest-raterisksmainlyintheeurozone.

Equity-Price RiskEquity-priceriskistheriskoflossduetoadversechangesinequitymarketswhichweareexposedtowithregardtoourinvestmentsinequitysecuritiesandourshare-basedcompensationplans.

Ourinvestmentsconsistofequitysecuritieswithandwith-outquotedmarketpricesinactivemarketsclassifiedasavailable-for-sale.Ourinvestmentsinequityinstrumentswithquotedmarketpricesinactivemarketsaremonitoredbasedonthecurrentmarketvaluethatisaffectedbythefluctuationinthevolatilestockmarketsworldwide.

Also,weareexposedtorisksresultingfromfuturecashflowsassociatedwithshare-basedcompensationgrantedtoemployees,whichisdescribedindetailinNote(28).

Credit RiskCreditriskistheriskofeconomiclossofprincipalorfinan-cialrewardsstemmingfromcounterparty’sfailuretorepayorservicedebtaccordingtothecontractualobligations.In2009,weenteredintoanagreementtoinsurepartofourtradereceivablesagainstcreditlosses.Exceptforthis,wehavenotconcludedsignificantagreementsreducingtheoverallcreditriskexposure,suchasmasternettingar-rangements.Therefore,thetotalamountsrecognizedascashandcashequivalents,short-terminvestments,loansandotherfinancialreceivablesandderivativefinancialassetsrepresentourmaximumexposuretocreditrisks.

liquidity RiskLiquidityriskresultsfromthepotentialinabilitytomeetfinancialobligations,suchaspaymentstosuppliersorem-ployees.AmaturityanalysisthatprovidestheremainingcontractualmaturitiesofallourfinancialliabilitiesheldatDecember31,2009,isshowninthetablebelow.ThecashflowsforunrecognizedbutcontractuallyagreedfinancialcommitmentsareshowninNote(23).Financialliabilitiesforwhichrepaymentcanberequestedbythecontractpartneratanytimeareassignedtotheearliestpossibleperiod.VariableinterestpaymentswerecalculatedusingthelastrelevantinterestratefixedbeforeDecember31,2009.Aswesettleourderivativecontractsgross,weshowthepayandreceivelegsseparatelyforallourcurrencyandinterestratederivatives,whetherornotthefairvalueofthederivativeisnegative.Thecashoutflowsforthecurrencyderivativesaretranslatedusingtherespectiveforwardrate.


Contractual Maturities of Financial liabilities

€millions Carrying Amount

Contractual cash flows

12/31/2009 2010 2011 2012 2013 2014 Thereafter

Non-derivative financial liabilities

–Tradepayables –479 –479 0 0 0 0 0

–Financialliabilities

Bankloansandoverdrafts –703 –4 –2 –423 0 –274 0

Otherfinancialliabilities –46 –56 –24 –18 –11 –7 0

Derivative financial liabilities and assets

–Derivativefinancialliabilities

Currencyderivativeswithoutdesignatedhedgerelationship –109

–cashoutflows –2,136 –3 –3 –3 –2 –13

–cashinflows 2,053 0 0 0 0 0

Currencyderivativeswithdesignatedhedgerelationship –12

–cashoutflows –384 0 0 0 0 0

–cashinflows 371 0 0 0 0 0

Interestratederivativeswithoutdesignatedhedgerelationship 0

–cashoutflows 0 0 0 0 0 0


Interestratederivativeswithdesignatedhedgerelationship –5

–cashoutflows –12 –12 –9 –5 –3 0


–Derivativefinancialassets

Currencyderivativeswithoutdesignatedhedgerelationship 41

–cashoutflows –1,853 0 0 0 0 0

–cashinflows 1,890 0 0 0 0 0

Currencyderivativeswithdesignatedhedgerelationship 3




Theoveralldecreaseofcashoutflowsforournon-deriva-tivefinancialliabilitiescomparedtoyear-end2008isduetothefullrepaymentofasyndicatedtermloanin2009.

Theoverallincreaseofcashoutflowsandinflowsforourderivativefinancialliabilitiesisduetohedginganintercom-panyshort-termloaninU.S.dollars.

Contractual Maturities of Financial liabilities

€millions Carrying Amount

Contractual cash flows

12/31/2008 2009 2010 2011 2012 2013 Thereafter

Non-derivative financial liabilities

–Tradepayables –544 –539 –5 0 0 0 0

–Financialliabilities

Bankloansandoverdrafts –2,321 –2,319 –1 0 0 0 –1

Otherfinancialliabilities –71 –142 –5 –1 0 0 0

Derivative financial liabilities and assets

–Derivativefinancialliabilities

Currencyderivativeswithoutdesignatedhedgerelationship –124

–cashoutflows –1,203 –1 –1 –1 –1 –17

–cashinflows 1,104 0 0 0 0 0

Currencyderivativeswithdesignatedhedgerelationship –64



Interestratederivativeswithoutdesignatedhedgerelationship –7



Interestratederivativeswithdesignatedhedgerelationship –16



–Derivativefinancialassets

Currencyderivativeswithoutdesignatedhedgerelationship 132

–cashoutflows –1,658 0 0 0 0 0

–cashinflows 1,803 0 0 0 0 0

Currencyderivativeswithdesignatedhedgerelationship 29




(26) Financial Risk ManagementWemanagecredit,liquidity,interestrate,equityprice,andforeigncurrencyexchangeraterisksonaGroup-widebasis.Selectedderivativesareexclusivelyusedforthispurposeandnotforspeculation,whichisdefinedasenter-ingintoderivativeinstrumentswithoutacorrespondingunderlyingtransaction.Financialriskmanagementisdonecentrally.TheriskmanagementandhedgingstrategyissetbyourTreasuryguidelineandotherinternalguidelinesandissubjecttocontinuousinternalriskanalysis.

Inthefollowingsectionsweprovidedetailsonthemanage-mentofeachrespectivefinancialriskandourriskexpo-sure.Forthepresentationofmarketriskexposure,IFRS7requiressensitivityanalysesthatshowtheeffectsofhypo-theticalchangesofrelevantriskvariablesonprofitorothercomponentsofequity.Theperiodiceffectsaredeterminedbyrelatingthehypotheticalchangesintheriskvariablestothebalanceoffinancialinstrumentsatthereportingdate.

Foreign Currency Exchange Rate Risk ManagementWecontinuallymonitorourexposuretocurrencyfluctua-tionrisksbasedonmonetaryitemsandforecastedtransactionsandpursueaGroup-wideforeigncurrencyex-changeraterisk-managementstrategyusingderivativefinancialinstruments,primarilyforeignexchangeforwardcontracts,asappropriate,withtheprimaryaimofreduc-ingprofitorlossvolatility.

CurrencyHedgeswithoutDesignatedHedgeRelationshipForeignexchangeforwardcontractsenteredintobyustooffsetexposurerelatingtoforeigncurrency-denominatedmonetaryassetsandliabilitiesfromouroperatingactivitiesarenotdesignatedasbeinginahedgeaccountingrelation-ship,becausetherealizedcurrencygainsandlossesfromtheunderlyingtransactionsarerecognizedinprofitinthesameperiodsasthegainsandlossesfromthederivatives.

Inaddition,currencyhedgeswithoutadesignatedhedgerelationshipalsocontainforeigncurrencyderivativesembeddedinnon-derivativehostcontractsthataresepa-ratedandaccountedforasderivativesaccordingtotherequirementsofIAS39.

CurrencyHedgeswithDesignatedHedgeRelationship(Cash-FlowHedges)Weenterintoderivativeinstruments,primarilyforeignex-changeforwardcontracts,tohedgesignificantforecastedcashflows(royalties)fromforeignsubsidiariesdenominat-edinforeigncurrencies,generallywithina40%to80%rangeoftheforecastedexposureoutto15months.Spe-cifically,weexcludetheinterestcomponentandonlydesignatethespotrateoftheforeignexchangeforwardcontractsasthehedginginstrumenttooffsetanticipatedcashflowsrelatingtothesubsidiarieswithsignificantoperations,includingtheUnitedStates,theUnitedKingdom,Japan,Switzerland,Canada,andAustralia.Wegenerallyuseforeignexchangederivativesthathavematuritiesof15monthsorless,whichmayberolledovertoprovidecontin-uouscoverageuntiltheapplicableroyaltiesarereceived.

In2009,netlossestotaling€18 million(2008:netlossesof€32 million;2007:netgainsof€48 million)resultingfromthechangeinthecomponentofthederivativesdesig-natedashedginginstrumentsweretakendirectlytoothercomponentsofequity.

FortheyearsendedDecember31,2009,and2008,nohighlyprobabletransactiondesignatedasahedgediteminaforeigncurrencycashflowhedgerelationshipceasedtobeprobableofoccurring.Therefore,wedidnotdiscontinueanyofourcashflowhedgerelationships.Also,weonlyidentifiedimmaterialineffectivenessforthesehedgesin2009andnoineffectivenessin2008and2007.In2009,wereclassifiednetlossesof€37 million(2008:netlossesof€16 million;2007:netlossesof€38 million)outofothercomponentsofequitytoprofitorlossduetothehedgeditemsaffectingincome.Generally,thecashflowsoftheforecastedtransactionsareexpectedtooccurandaffectprofitorlossmonthlywithinatimeframeof15monthsfromthestatementoffinancialpositiondate.Itisestimatedthat€7 millionofthenetlossesrecognizeddirectlyinothercomponentsofequityatDecember31,2009,willbereclassifiedintoprofitduringfiscalyear2010.


ForeignCurrencyExchangeRateExposureInlinewithourinternalriskreportingprocess,weusethevalue-at-riskmethodtoquantifyourriskpositionsandtomanageforeigncurrencyexchangeraterisk.Ourcalcu-lationofthevalue-at-risknotonlyincludesallforeigncur-rency-denominatedfinancialinstrumentsbutalsoforecast-edintercompanytransactionsthatarescopedoutofIFRS7.Asourinternalcalculationofvalue-at-riskisnotinlinewiththerequirementsofIFRS7,wehaveoptedtodiscloseourriskexposurebasedonasensitivityanalysisconsider-ingthefollowing:•SincetheSAPGroup’sentitiesgenerallyoperatein

theirfunctionalcurrencies,themajorityofournon-deriva-tivemonetaryfinancialinstrumentssuchascash,tradereceivables,tradepayables,loanstoemployeesandthirdparties,bankliabilities,andotherfinancialliabilities,aredenominatedintherespectiveentities’functionalcurrency.Thus,aforeigncurrencyexchangerateriskinthesetransactionsisnon-existent.Inexceptionalcasesandlimitedeconomicenvironments,operatingtransac-tionsaredenominatedincurrenciesotherthanthefunc-tionalcurrency,leadingtoacurrencyriskfortherelatedmonetaryinstruments.Wherewehedgeagainstcurrencyimpactsoncashflows,theseforeigncurrency-denomi-natedfinancialinstrumentsareeconomicallyconvertedintothefunctionalcurrencybytheuseofforwardex-changecontractsoroptions.Therefore,fluctuationsinforeigncurrencyexchangeratesneitherhaveasignifi-cantimpactonprofitnoronothercomponentsofequitywithregardtoournon-derivativemonetaryfinancialin-struments.

•Incomeorexpensesonthenon-derivativemonetaryfinancialinstrumentsdiscussedabovearealwaysrecog-nizedintherelevantentity’sfunctionalcurrency.There-fore,fluctuationsinforeigncurrencyexchangeratesneitherhaveasignificantimpactonprofitnoronothercomponentsofequityinthisregard.

•Ourfree-standingderivativesdesignedforhedgingcur-rencyrisksalmostcompletelybalancethechangesinthefairvaluesofthehedgeditemattributabletoexchangeratemovementsintheconsolidatedincomestatementsinthesameperiod.Asaconsequence,thehedgeditemsandthehedginginstrumentsarenotexposedtocurrencyriskswithaneffectonprofitorothercom-ponentsofequity.

Consequently,weareonlyexposedtoforeigncurrencyexchangeratefluctuationswithregardto:•Derivativesheldwithinadesignatedcash-flowhedging

relationship,and•Foreigncurrencyembeddedderivatives.

Withrespecttothenominalamounts,thedataatyear-endisnotrepresentativeoftheyearasawhole.Onaverage,ourexposuretoforeigncurrencyexchangerateriskin2009wasbasedonnominalamountsof€898 million,witharangeofexposureonnominalamountsfromalowof€819 milliontoahighof€960 million,whichwasalsotheyear-endexposure.

Theinterestelementwhichisnotpartoftheassignedcashflowhedgingrelationshipandispostedtoprofitisnotaf-fectedbycurrencyfluctuations.Aswedonothaveasignif-icantexposuretoasinglecurrency,wediscloseourexpo-suretoourmajorcurrencies(asdescribedinNote(25))intotal.If,atDecember31,2009,theeurohadgained(lost)10%againstallourmajorcurrencies,theeffectiveportionoftheforeigncurrencycash-flowhedgeinothercompo-nentsofequitywouldhavebeen€55 millionhigher(lower)(December31,2008:€68 millionhigher(lower);December31,2007:€64 millionhigher(lower))thanpresented.

Anychangeinthevalueofourforeign-currencyembeddedderivativesisrecordedinprofitorloss.If,atDecember31,2009,theeurohadgained(lost)10%againsttheSwissfranc(whichisthecurrencyaccountingforthemajorityofourrespectiveexposure),theeffectonothernon-oper-atingincomewouldhavebeen€38 millionhigher(lower)(December31,2008:€40 millionhigher(lower);December31,2007:€37 millionhigher(lower))thanpresented.


Oursensitivitytoforeigncurrencyexchangeratefluctua-tionshasdecreasedduringthecurrentperiod,mainlyduetothereductionofthenominalamountshedgedinacash-flowhedgingrelationshipandthereductionofthevolumeoftheunderlyingexecutorycontractsofforeign-currencyembeddedderivatives.

Interest-Rate Risk ManagementTheprimaryaimofourinterest-rateriskmanagementistoreduceprofitorlossvolatility.

Inordertohedgethecash-flowriskresultingfromfluctua-tionsinfutureinterestpaymentsrelatedtothevariable-rateSSD,weenteredintointerestratepayerswaps,thuseco-nomicallyconvertingtheunderlyingfloatingrateoftheSSDintoafixedrate,asthechangesinthecashflowsofthehedgeditemsresultingfromchangesinEURIBORareoffsetagainstthechangesinthecashflowsofthein-terestrateswaps.AtDecember31,2009,thenominalvolumeoftheinterestratederivativescoveredthetotalvolumeofthevariable-rateSSD.Hence,virtuallyallofourinterestratesensitiveliabilitiesdenominatedineurosandofthetotalofourinterestratesensitiveliabilitieshadafixedinterestrate.

DerivativeswithDesignatedHedgeRelationship(Cash-FlowHedges)AtDecember31,2009,weheldinterestratederivativeswithadesignatedhedgerelationshipthathadanegativefairvalueof€5 million(2008:€16 million)forwhichnetlossesof€14 millionofthe2009financialyear(2008:€15 millionnetlossesofthe2008financialyear;2007:€0 million)wererecordedinothercomponentsofequityduetothedesignationascash-flowhedginginstruments.In2009,wereclassifiednetlossesof€26 million(2008:€0 million;2007:€0 million)outofothercomponentsofequitytointerestexpenseduetothehedgeditemsaf-fectingincome.Wedidnotrecordanyineffectivenessforthesehedgesforthefiscalyears2009,2008,and2007.

ThefollowingtableshowsthecontractualmaturitiesofthecashflowsfortheSSDinterestpayments:

InterestRateExposureInordertoreduceprofitorlossvolatility,wemanageinterest-rateriskbyaddinginterest-rate-relatedderivativeinstrumentstoagivenportfolioofdebtfinancing.

Duetotheshortmaturitiesofourinvestments,wedonothaveasignificantinterest-raterisk-relatedtofinancialassets(seeNote(13)).

Asnotedabove,weenteredintoderivativefinancialinstrumentstohedgetheinterestrateriskresultingfromthevariableinterest-rateSSD.

Asensitivityanalysisisprovidedtoshowourinterestrateriskexposureatthestatementoffinancialpositiondateconsideringthefollowing:•Changesininterestratesonlyaffectnon-derivativefixed-

ratefinancialinstrumentsiftheyarerecognizedatfairvalue.AsatDecember31,2009wedidnothavenon-de-rivativefixed-ratefinancialassetsclassifiedasavailable-for-saleornon-derivativefixed-ratefinancialliabilitiesdesignatedasatfairvaluethroughprofitorloss,anequi-ty-relatedsensitivitycalculationisnotnecessary.Asourinvestmentportfolioalsocontainedfixed-ratefinancialassetsfromtheeurozoneduring2009,thedataatyear-endisnotrepresentativeoftheentireyearof2009.Onaverage,ourexposuretofairvalueriskin2009withregardstoinvestingactivitieswasbasedoninvestmentsof€77 million,witharangeofexposureoninvestmentsfromahighof€199 milliontoalowof€0 million,whichwasalsotheyear-endexposure.

Start Date End Date Nominal Volume Reference Rate

April9,2009 April9,2012 €359.5million 3-month-EURIBOR

April9,2009 April9,2014 €158million 3-month-EURIBOR

June2,2009 June2,2014 €30million 3-month-EURIBOR


•Incomeorexpensesfornon-derivativefinancialinstru-mentswithvariableinterestaresubjecttointerestrateriskiftheyarenothedgeditemsinaneffectivehedgingrelationship.Wethereforehavenosignificantinterest-rateriskarisingfromourfinancialliabilitiesandconsiderinterestratechangesforourvariableinter-est-rateinvestmentsintheprofit-relatedsensitivitycal-culation.Withrespecttotheinvestedamounts,thedataatyear-endisnotrepresentativeoftheyearasawhole.Onaverage,ourexposuretocashflowinterestrateriskin2009wasbasedoninvestmentsof€847 million,witharangeofexposureoninvestmentsfromahighof€1.0 billiontoalowof€330 million,whichwasalsotheyear-endexposure.

•Duetotheaforementioneddesignationofinterestratederivativestoacashflow-hedgerelationship,therespec-tiveinterestratechangesaffecttherespectiveamountsrecordedinothercomponentsofequity.Themovementsrelatedtotheinterestrateswaps’variablelegarenotreflectedinthesensitivitycalculationastheyoffsetthevariableinterest-ratepaymentsforthecreditfacility.Wethereforeonlyconsiderinterestratesensitivityindis-countingtheinterestrateswaps’fixedlegcashflowsintheequity-relatedsensitivitycalculationfortheinterestswapsinahedgerelationship.Withrespecttothebor-rowingandthereforehedgedamounts,thedataatyear-endisnotrepresentativefortheyearasawhole,assignifi-cantdebtamountsfromasyndicatedtermloanraisedinconnectionwiththeacquisitionofBusinessObjectswerepaidbackin2009.Onaverage,ourexposuretoin-terestrateriskin2009withregardtofinancingactivitieswasbasedonborrowingsof€2.03 billion,witharangeofexposureonborrowingsfromahighof€3.0 billiontoalowof€697 million,whichwasalsotheyear-endex-posure.

Whileinthepreviousyearsweusedayieldcurveshiftof+100/–100basispoints,the2009sensitivityanalysisis–duetothecurrentlowinterestlevel–basedonayieldcurveshiftof+100/–20basispointstoavoidnegativeinterestrates.If,onDecember31,2009,interestrateshadbeen100basispointshigher(20basispointslower)(2008/2007:100basispointshigher(lower)),thiswouldnothavehadamaterialeffecton:•Thegains/lossesonavailable-for-salefinancialassets

positionsinothercomponentsofequity.•Thefinancialincome,netforourvariableinterest-rate

investments.•Theeffectiveportionoftheinterestratecash-flowhedge

inothercomponentsofequity.

Onlythesensitivityanalysisfortheavailable-for-salefinan-cialassetsisnotrepresentativefortheyearasawhole,asduring2009weheldfixedinterest-ratefinancialassets.

Oursensitivitytointerestratefluctuationshasdecreasedduringthecurrentperiodmainlyduetothereductionofvariable-ratedebtinstrumentsandliabilities.

Equity-Price Risk ManagementOurequityinvestmentsinlistedsecuritiesareaffectedbythefluctuationinthevolatilestockmarketsworldwide.Anassumed20%increase(decrease)inequitypricesasatDecember31,2009,wouldonlyhaveaninsignificantimpactonthevalueofourinvestmentsinmarketablesecu-ritiesandthecorrespondingentriesinothercomponentsofequity.

Theequityinvestmentsinnon-listedsecuritiesaremoni-toredindividually.Thosesecuritiesarerecognizedatcost,becausemarketvaluesaregenerallynotobservable.Theyaresubjecttoanannualimpairmenttest.


Inordertoreduceprofitorlossvolatility,wehedgecertaincashflowexposuresassociatedwithshare-basedcompen-sationthroughthepurchaseofderivativeinstruments,butdonotestablishadesignatedhedgerelationship.Basedonthevaluationoftheshare-basedcompensationhedges,share-basedcompensationexpenseincreased€5 million(2008:increaseof €41 million;2007:increaseof €31 million).

Credit Risk ManagementTomitigatethecreditriskforourinvestingactivities,weconductallouractivitiesonlywithapprovedmajorfinancialinstitutionsandissuersthatcarryhighexternalratings,asrequiredbyourinternaltreasuryguideline.Amongitsstipulations,theguidelinerequiresthatweinvestonlyinassetsfromissuerswithaminimumratingofatleastA–.TheweightedaverageratingofourfinancialassetsisintherangeAA–toA+.Wepursueapolicyofcautiousinvest-mentscharacterizedbypredominantlyshort-terminvest-ments,standardinvestmentinstruments,aswellasawideportfoliodiversificationbydoingbusinesswithavarietyofcounterparties.Thisapproachisassuredbydetailedguide-linesforthemanagementoffinancialrisks,stipulatingthatthebusinessvolumewithindividualcounterpartiesisrestrictedtoadefinedlimitwhichdependsonthelowestofficiallong-termcreditratingavailablebyatleastoneofthemajorratingagencies,orparticipationintheGermanDepositors’GuaranteeFundoranyotherprotectionscheme.Wecontinuouslymonitorstrictcompliancewiththesecounterpartylimits.

Thedefaultriskoftradereceivablesismanagedseparately,mainlybasedonassessingthecreditworthinessofcus-tomersthroughexternalratingsandourhistoricalexperiencewithrespectivecustomers,anditispartiallycoveredbymerchandisecreditinsurance.Outstandingreceivablesarecontinuouslymonitoredlocally.Creditrisksareaccountedforthroughindividualandportfolioimpairments(describedindetailinNote(3)).Theimpactoftradereceivablesfromsinglecustomersismitigatedbyourlargecustomerbaseanditsdistributionacrossmanydifferentindustriesandcoun-triesworldwide.Forinformationaboutthecreditqualityoftradereceivables,seeNote(14).Forinformationonthemaximumexposuretocreditrisk,seeNote(25).

Tomitigatethecreditriskforourderivativefinancialassets,weonlypurchasesuchinstrumentsfromapprovedmajorfinancialinstitutionsthatcarryhighexternalcreditratingsaslaidoutinourinternaltreasuryguideline.Inaddition,theconcentrationofcreditriskthatexistswhencounterpartiesareinvolvedinsimilaractivitiesbyinstrument,sectororgeographicareaisfurthermitigatedbydiversificationofcoun-terpartiesthroughouttheworldandadherencetoaninternallimitsystemforeachcounterpartystipulatingthatthebusinessvolumewithindividualcounterpartiesisrestrictedtoadefinedlimitwhichdependsonthelowestofficiallong-termcreditratingavailablebyatleastoneofthemajorratingagencies,orparticipationintheGermanDepositors’GuaranteeFundoranyotherprotectionscheme.Thelimitutilizationiscontinuouslymonitored.Asthepremiumforcreditdefaultswapsmainlydependsonthemarketpartici-pants’assessmentofthecreditworthinessofadebtor,wealsocloselyobservethedevelopmentofCDSspreadsinthemarkettoevaluateprobableriskdevelopmentstotimelyreacttochangesiftheseshouldmanifest.


liquidity Risk ManagementOurGroup-wideliquidityisgenerallymanagedbyourglob-altreasurydepartmentwiththeprimaryaimofmaintainingliquidityintheGroupatalevelthatisadequatetomeetourfinancialobligations.

Ourprimarysourceofliquidityisfundsgeneratedfromourbusinessoperations,whichhavehistoricallymainlypro-videdtheliquidfundsneededtomaintainourinvestingandfinancingstrategy.Unlessrestrictedbylocalregulations,subsidiariespooltheircashsurplustoourglobaltreasuryde-partment,whichthenarrangestofundothersubsidiaries’requirementsorinvestanynetsurplusinthemarket,seek-ingtooptimizeyields,whileensuringliquidity,byinvestingonlywithcounterpartiesandissuersofhighcreditquality,asexplainedabove.Hence,highlevelsofliquidassetsandmarketablesecuritiesprovideastrategicreserve,helpingkeepSAPflexible,sound,andindependent.

Apartfromeffectiveworkingcapitalandcashmanage-ment,SAPhasreduceditsliquidityriskbyarranginganad-equatevolumeofavailablecreditfacilitieswithvariousfinancialinstitutionsonwhichwecandrawifnecessary.

AsatOctober1,2007,SAPAGenteredintoa€5 billioncreditfacilitywithDeutscheBankAGinconnectionwithouracquisitionofBusinessObjectsS.A.AsatDecember31,2008,therewereborrowingsof€2.3 billionoutstandingunderthefacility.ThecreditfacilitywasfullyrepaidinOcto-ber2009beforematuritydateDecember31,2009.

Asmentionedabove,inthesecondquarterof2009SAPAGplacedanSSDinthetotalvolumeof€697 million.Inaddition,inordertoretainhighfinancialflexibility,asatSeptember15,2009,SAPAGenteredintoa€1.5 billionthree-yearrevolvingcreditfacility,effectivelyreplacingthe€1 billionsyndicatedrevolvingcreditfacilitysignedinNovember2004.Theuseofthefacilityisnotrestrictedbyanyfinancialcovenants.BorrowingsunderthefacilitybearinterestofEURIBORorLIBORfortherespectivecur-rencyplusamarginof110basispointsto160basispoints,dependingontheamountdrawn.Wearealsore-quiredtopayacommitmentfeeof44basispointsperannumontheunusedavailablecredit.AsatDecember31,2009,therewerenoborrowingsoutstandingunderthefacility.

Additionally,asatDecember31,2009and2008,SAPAGhadavailablelinesofcredittotaling€545 millionand€597 million,respectively.AsatDecember31,2009and2008,therewerenoborrowingsoutstandingundertheselinesofcredit.AsatDecember31,2009and2008,certainsubsidiarieshadlinesofcreditavailablethatallowedthemtoborrowinlocalcurrenciesatprevailinginterestratesupto€51 millionand€52 million,respectively.Totalaggre-gateborrowingsundertheselinesofcreditamountedto6 millionand€21 millionasatDecember31,2009and2008,respectively.

(27) Additional Fair Value Disclosures on Financial Instruments

Fair Value of Financial InstrumentsWeusevarioustypesoffinancialinstrumentsintheordi-narycourseofbusinesswhicharegroupedintothefollow-ingcategories:loansandreceivables(L&R),available-for-sale(AFS),heldfortrading(HFT)andamortizedcost(AC).

Thecarryingamountsandfairvaluesofourfinancialinstru-mentsasatDecember31wereasfollows:


Fair Values of Financial Instruments


Book Value 12/31

Measurement categories Fair Value 12/31

Not in Scope of

IFRS 7

Book Value 12/31


Not in Scope of

IFRS 7

Category

AtAmortized

Cost

AtCost AtFairValue

AtAmortized

Cost

AtCost AtFairValue

Assets

Cashandcashequivalents L&R 1,884 1,884 1,884 1,280 1,280 1,280

Tradereceivables L&R 2,598 2,508 2,508 90 3,219 3,130 3,130 89


debt L&R/AFS 382 382

equity AFS/– 62 25 25 27 63 11 11 21

Othernonderivativefinancialassets L&R 499 499 91 101 101 81

Derivatives

–withhedgingrelationship – 3 3 30 30

–withouthedgingrelationship HFT 63 63 161 161

liabilities

Tradepayables AC –673 –479 –479 –194 –641 –510 –510 –131

Bankliabilities AC –703 –703 –705 –2,321 –2,321 –2,321

Otherfinancialliabilities AC –172 –282

Othernonderivativefinancialliabilities AC –45 –45 –1 –69 –69 –2

Derivatives

–withhedgingrelationship – –17 –17 –80 –80

–withouthedgingrelationship HFT –109 –109 –131 –131

Aggregation according to IAS 39

Financialassets

atfairvaluethroughprofitorlossheldfortrading HFT 63 63 63 161 161 161

available-for-sale AFS 87 62 25 25 456 63 393 393

loansandreceivables L&R 4,981 4,891 4,891 90 4,600 4,511 4,511 89

Financialliabilities

atfairvaluethroughprofitorlossheldfortrading HFT –109 –109 –109 –131 –131 –131

atamortizedcost AC –1,421 –1,227 –1,229 –194 –3,031 –2,900 –2,900 –131

OutofIAS39

financialinstrumentsrelatedtoemployeebenefitplans 91 91 81 81

associates 27 27 21 21

derivativeswithhedgingrelationship –14 –14 –14 –50 –50 –50

liabilitiesinconnectionwithIAS17 –1 –1 –2 0 0 –2


Determination of Fair ValuesIAS39definesfairvalueastheamountforwhichanassetcouldbeexchanged,oraliabilitysettled,betweenknowl-edgeable,willingpartiesinanarm’slengthtransaction.Ac-cordingly,bestevidenceoffairvalueisquotedpricesinanactivemarket.Wheremarketpricesarenotreadilyavail-able,valuationtechniqueshavetobeusedtoestablishfairvalue.Wehaveclassifiedourfinancialinstrumentsintothosethataresubsequentlymeasuredatfairvalueandthosewhicharemeasuredatcostoramortizedcost.

FinancialInstrumentsMeasuredatFairValueDependingontheinputsusedfordeterminingfairvalue,wehavecategorizedourfinancialinstrumentsatfairvalueintoathree-levelfairvaluehierarchyasmandatedbyIFRS7.

Thefairvaluehierarchygivesthehighestprioritytoquotedpricesinactivemarketsforidenticalassetsorliabilities(Level1)andthelowestprioritytounobservableinputs(Level3).Theinputsusedtomeasurefairvalueforonesingleinstrumentmayfallintodifferentlevelsofthefairval-uehierarchy.Insuchcases,thelevelinthefairvaluehier-archywithinwhichthefairvaluemeasurementinitsentire-tyfallshasbeendeterminedbasedonthelowestlevelinputthatissignificanttothefairvaluemeasurementinitsentirety.Ourassessmentofthesignificanceofaparticularinputtothefairvaluemeasurementinitsentiretyrequiresjudgment,andconsidersfactorsspecifictotheassetorliability.

Thelevelsofthefairvaluehierarchy,itsapplicationtoourfinancialassetsandliabilitiesandtherespectivedetermina-tionoffairvaluearedescribedbelow:•Level1:Quotedpricesinactivemarketsforidentical

assetsorliabilities.–Available-for-saledebtandequityinvestments:Thefair

valuesofthesemarketablesecuritiesarebasedonquotedmarketpricesasatDecember31.

Fair Values of Financial Instruments


Book Value 12/31


Not in Scope of

IFRS 7

Book Value 12/31


Not in Scope of

IFRS 7

Category

AtAmortized

Cost

AtCost AtFairValue

AtAmortized

Cost

AtCost AtFairValue

Assets

Cashandcashequivalents L&R 1,884 1,884 1,884 1,280 1,280 1,280

Tradereceivables L&R 2,598 2,508 2,508 90 3,219 3,130 3,130 89


debt L&R/AFS 382 382

equity AFS/– 62 25 25 27 63 11 11 21

Othernonderivativefinancialassets L&R 499 499 91 101 101 81

Derivatives

–withhedgingrelationship – 3 3 30 30

–withouthedgingrelationship HFT 63 63 161 161

liabilities

Tradepayables AC –673 –479 –479 –194 –641 –510 –510 –131

Bankliabilities AC –703 –703 –705 –2,321 –2,321 –2,321

Otherfinancialliabilities AC –172 –282

Othernonderivativefinancialliabilities AC –45 –45 –1 –69 –69 –2

Derivatives

–withhedgingrelationship – –17 –17 –80 –80

–withouthedgingrelationship HFT –109 –109 –131 –131

Aggregation according to IAS 39

Financialassets

atfairvaluethroughprofitorlossheldfortrading HFT 63 63 63 161 161 161

available-for-sale AFS 87 62 25 25 456 63 393 393

loansandreceivables L&R 4,981 4,891 4,891 90 4,600 4,511 4,511 89

Financialliabilities

atfairvaluethroughprofitorlossheldfortrading HFT –109 –109 –109 –131 –131 –131

atamortizedcost AC –1,421 –1,227 –1,229 –194 –3,031 –2,900 –2,900 –131

OutofIAS39

financialinstrumentsrelatedtoemployeebenefitplans 91 91 81 81

associates 27 27 21 21

derivativeswithhedgingrelationship –14 –14 –14 –50 –50 –50

liabilitiesinconnectionwithIAS17 –1 –1 –2 0 0 –2


•Level2:Inputsotherthanobservable,eitherdirectlyorindirectly,suchasquotedpricesinactivemarketsforsimilarassetsorliabilities,quotedpricesforidenticalorsimilarassetsorliabilitiesinmarketsthatarenotactive,orotherinputsthatareobservableorcanbecorroborat-edbyobservablemarketdataforsubstantiallythefulltermoftheassetsorliabilities.–Derivativefinancialinstruments:Thefairvalueofforeign

exchangeforwardcontractsisbasedondiscountingtheexpectedfuturecashflowsovertherespectivere-mainingtermofthecontractsusingtherespectivedepositinterestratesandspotrates.Thefairvalueofthederivativesenteredintotohedgeourshare-basedcompensationprogramsarecalculatedconsideringrisk-freeinterestrates,theremainingtermofthederiv-atives,thedividendyields,thestockpriceandthevolatilityofourshare.Fairvaluesofourderivativeinter-est-ratecontractsarecalculatedbydiscountingtheexpectedfuturecashflowsbytakingtheprevailingmarketandfutureratesfortheremainingtermofthecontractsasabasis.

–Available-for-saleequityinvestmentsinpubliccompanies:Certainofourequityinvestmentsinpubliccompaniesarerestrictedfrombeingsoldforalimitedperiod.There-fore,fairvalueisdeterminedbasedonquotedmarketpricesasatDecember31,deductingadiscountforthedisposalrestrictionbasedonthepremiumforarespec-tiveputoption.

•Level3:Unobservableinputsthataresupportedbylittleornomarketactivityandthataresignificanttothefairvalueoftheassetsorliabilities.–Available-for-saleequityinvestmentsinprivatecompa-

nies:Fortheseinvestmentsinequityinstrumentspri-marilyconsistingofventurecapitalinvestmentsfairval-uescouldnotreadilybeobservedastheydonothaveaquotedmarketpriceinanactivemarket.Also,calcu-latingfairvaluebydiscountingestimatedfuturecashflowsisnotpossibleasadeterminationofcashflowsisnotreliable.Therefore,forequityinstrumentsinprivatecompanies,aLevel3valuationtechniqueisnotapplicable;suchinvestmentsareaccountedforatcostapproximatingfairvaluewithimpairmentbeingas-sessedbasedonrevenuemultiplesofsimilarcom-paniesandreviewofeachinvestment’scashposition,financingneeds,earningsandrevenueoutlook,opera-tionalperformance,managementandownershipchanges,andcompetition.

Thefollowingtableallocatesthosefinancialassetsandlia-bilitiesthataremeasuredatfairvalueinaccordancewithIAS39eitherthroughprofitorlossorothercomponentsofequityasofDecember31,2009tothethreelevelsofthefairvaluehierarchyaccordingtoIFRS7.

Classification of Financial Instruments


Level1 Level2 Level3 Total Level1 Level2 Level3 Total

Financial assets

Debtinvestments 0 0 0 0 382 0 0 382

Equityinvestments 1 24 0 25 1 10 0 11

Available-for-salefinancialassets 1 24 0 25 383 10 0 393

Derivativefinancialassets 0 66 0 66 0 191 0 191

Total 1 90 0 91 383 201 0 584

Financial liabilities

Derivativefinancialliabilities 0 126 0 126 0 211 0 211

Total 0 126 0 126 0 211 0 211


FinancialInstrumentsMeasuredatCost/atAmortizedCostThefairvaluesofthesefinancialinstrumentsaredeter-minedasfollows:•Cashandcashequivalents,tradereceivables,othernon-

derivativefinancialassets:Becausethefinancialassetsareprimarilyshort-termitisassumedthattheircarryingvaluesapproximatetheirfairvalues.Non-interest-bear-ingorbelowmarket-rateloanstothirdpartiesoremploy-eesarediscountedtothepresentvalueofestimatedfuturecashflowsusingtheoriginaleffectiveinterestratetherespectiveborrowerwouldhavetopaytoabankforasimilarloan.

•Bankliabilities:Asthemajorityofourbankliabilitiesarevariableinterestdebts,theircarryingvaluesingeneralapproximatetheirfairvalues.

•Accountspayable,andothernon-derivativefinancialliabilities:Becausethesefinancialliabilitiesaremainlyshort-term,theirfairvaluesapproximatetheircarryingvalues.

IncomeandExpenses,GainsandLossesonFinancialInstrumentsIncomeandexpenses,gainsandlossesonfinancialinstru-mentspresentedinthecategoriesdefinedinIAS39areasfollows:

Net Gains/losses on Financial Instruments

€millions 2009 2008 2007

Loans&Receivables

Available-for-Sale

FinancialAssets

FinancialLiabilitiesat

AmortizedCost

Loans&Receivables

Available-for-Sale

FinancialAssets


AmortizedCost

Loans&Receivables

Available-for-Sale

FinancialAssets


AmortizedCost

Interestandsimilarincome 4 30 0 4 71 0 4 141 0

Interestandsimilarexpenses 0 0 –101 0 0 –123 0 0 –7

Impairmentcharges 11 –11 0 –31 –13 0 –14 –7 0

Reversalsofimpairments –11 0 0 1 0 0 5 0 0

Gains/lossesfromdisposals 0 0 0 0 13 0 0 1 0

Feeexpenseandother 0 0 –4 0 0 –1 0 –4 0

Net gain/loss 4 19 – 105 – 26 71 – 124 – 5 131 – 7

Thedifferencebetweenthenetgains/lossesonfinancialinstrumentsandthefinancialincome,netoftherespectiveyearisdueto:•Thefinancialincome,netalsocontainsashareofthe

resultofassociateswhileassociatesarenotfinancialinstrumentsand

•Thenetgains/lossesonfinancialinstrumentscontainingincome/expensesfromthechangesintheallowanceforaccountsreceivableswhicharenotincludedinfinan-cialincome,net.


Fortheunrealizedgains/losseswithregardtoouravailable-for-salefinancialassetsrecognizedinothercomponentsofequityandreclassifiedoutofothercomponentsofequity,respectively,seeourConsolidatedStatementsofCom-prehensiveIncome.

(28) Share-Based Payment PlansSAPhasgrantedawardsundervariousequity-settledandcash-settledshare-basedcompensationplanstoitsem-ployees.Inaddition,theCompanyoffersitsemployeesinvariouscountriestheopportunitytobuyitssharesatadiscount.Alloftheseprogramsaredescribedinthefollow-ingsections.

a) Employee Discounted Stock Purchase Programs (EDSP)TheCompanyoffersitsemployeestheopportunitytopur-chaseitssharesonamonthlybasisatadiscountof15%.Employeesmayinvestupto10%oftheirgrosssalaryinthisplan.Thecompensationexpenserecognizedin2009for

thisplanamountedto€2.8 million(2008:€3.3 million;2007:€3.4 million).Inaddition,employeesinGermanyaregrantedtheopportunitytoreceivea€260discountonthepurchaseofSAPsharesonceayearundertheStockAwardProgram(Vermögensbeteiligung).Thetotalexpenserecordedunderthisprogramin2009was€3.8 million(2008:€3.6 million;2007:€3.3 million).

b) Cash-Settled Share-Based Payment PlansSAP’sstockappreciationrightsarecash-settledshare-basedpaymentplansandincludethefollowingprograms,whicharedescribedindetailbelow:StockAppreciationRights(STAR)program,STARPPSTARPerformancePlan2009(STARPP),Incentive2010,VirtualStockOptionPlan(SOP)program,SOPPerformancePlan2009(SOPPP),andBORights(formerBusinessObjectsawardsassumedinconnectionwithBusinessObjectsacquisitionin2008).

Thefollowingparametersandassumptionswereusedforthecomputationofthefairvalueatgrantdate:

Fair Value and Parameters at Grant Date by Plan

2009 2008 2007

STARPP SOPPP STAR Incentive2010

SOP BORights STAR Incentive2010

SOP

Weightedaveragefairvalue 3.53€ 5.62€ 3.26 4.93€ 7.11€ 20.98€ 2.87€ 10.12€ 8.00€

Expectedlifeinyears 2.3 4.6 2.5 2.9 4.8 3.3 2.4 3.7 4.8

Risk-freeinterestrate 1.55% 2.39% 3.21% 3.54% 3.43% 3.42%to

3.74%

3.93% 3.88% 3.89%

GrantpriceofSAPshare 28.00€ 28.00€ 32.69€ 36.15€ 32.69€ N/A 35.71€ 36.15€ 35.71€

SharepriceofSAPshare 28.23€ 28.23€ 31.61€ 31.45€ 31.61€ 32.28€ 33.92€ 34.27€ 33.92€

Expectedvolatilityof

SAPshares

39.9% 35.0% 31.8% 29.6% 30.0% 29.0% 26.9% 28.6% 30.2%

Expecteddividend

yieldofSAPshares

1.76% 1.76% 1.74% 1.56% 1.74% 1.30% 1.41% 1.40% 1.41%

Grantpriceof

referenceindex

97.54€ 97.54€ N/A 165.59€ N/A N/A N/A 165.59€ N/A

Sharepriceof

referenceindex108.82€ 108.82€ N/A 191.12€ N/A N/A N/A 189.32€ N/A

Expectedvolatility

referenceindex

35.8% 25.2% N/A 15.9% N/A N/A N/A 18.2% N/A

Expecteddividendyield

ofreferenceindex

1.10% 1.06% N/A N/A N/A N/A N/A N/A N/A

ExpectedcorrelationSAP

share/referenceindex

38.1% 36.5% N/A 33.0% N/A N/A N/A 44.0% N/A


AsofDecember31,2009,thevaluationofouroutstandingcash-settledplanswasbasedonthefollowingparametersandassumptions:

ExpectedvolatilitiesoftheSAPsharepricearebasedonimpliedvolatilitiesfromtradedoptionswithcorrespondinglifetimesandexerciseprices.FortheSTARPPandtheSOPPPvaluation,theexpectedvolatilityoftheTechPeerGroupIndex(ISINDE000A0YKR94)(TechPGI)isbasedonthehistoricalvolatilityderivedfromtheindexpricehistory.

Expectedlifeoftheinvestmentsreflectsboththecontrac-tualtermandtheexpected,orhistorical,exercisebehavior.Risk-freeinterestratehasarangethatdependsonthetermandisderivedfromGermangovernmentbonds.Divi-dendyieldisbasedonexpectationsoffuturedividends.

Intotal,werecognizedcompensationexpenseof€49 million,€59 million,and€77 millionfortheyearsendedDecember31,2009,2008,and2007,respectivelyforourcash-settledprograms.

Fair Value and Parameters used at Dec 31, 2009

STAR STAR PP Incentive

2010

SOP SOP PP BO Rights

Optionpricingmodelused Monte-Carlo Monte-Carlo Monte-Carlo Binomial Binomial Binomial

Rangeofgrantdates 03/2007 05/2009 03/2006 03/2007 05/2009 02/1998

04/2008 01/2008 04/2008 01/2008

Quantityofawardsissuedinthousands 37,202 16,029 1,487 15,664 10,321 5,162

WeightedaveragefairvalueasofDec31,2009 0.66€ 1.25€ 0.15€ 4.27€ 4.89€ 14.79€

WeightedaverageintrinsicvalueasofDec31,2009 0.43€ 0.00€ 0.00€ 0.00€ 0.00€ 14.14€

ExpectedlifeasofDec31,2009inyears 0.7 1.7 1.0 2.2to2.9 4.1 2.4

Risk-freeinterestrate(dependingonmaturity) 0.56% 1.15% 0.77% 1.42%to

1,77%

2.21% 1.50%

ExpectedvolatilitySAPshares 30.8% 30.9% 30.7% 28.3%to

29.6%

29.4% 30.0%

ExpecteddividendyieldSAPshares 1.50% 1.50% 1.50% 1.50% 1.50% 1.50%

Sharepriceofreferenceindex N/A 143.05€ 193.71€ N/A 143.05€ N/A

Expectedvolatilityreferenceindex N/A 32.7% 27.5% N/A 26.4% N/A

Expecteddividendyieldreferenceindex N/A 1.36% N/A N/A 1.09% N/A

ExpectedcorrelationSAPshare/referenceindex N/A 31.4% 41.9% N/A 35.4% N/A


ChangesinourplansfortheyearsendedDecember31,2009,2008,and2007wereasfollows:

Changes in Numbers of Outstanding Awards

(000) STAR STAR PP Incentive 2010 SOP SOP PP BO Rights

Outstanding as of 12/31/2006 10,481 N/A 690 0 N/A N/A

Grantedin2007 18,831 N/A 663 7,014 N/A N/A

Exercised/paidin2007 –2,941 N/A 0 0 N/A N/A

Expiredin2007 0 N/A 0 0 N/A N/A

Forfeitedin2007 –1,492 N/A –196 –316 N/A N/A

Outstanding as of 12/31/2007 24,879 N/A 1,157 6,698 N/A N/A

Grantedin2008 18,517 N/A 134 8,650 N/A 5,162

Exercised/paidin2008 –4,037 N/A 0 0 N/A –1,720

Expiredin2008 0 N/A 0 0 N/A 0

Forfeitedin2008 –2,125 N/A –124 –862 N/A –479

Outstanding as of 12/31/2008 37,234 N/A 1,167 14,486 N/A 2,963

Grantedin2009 0 16,029 0 0 10,321 0

Exercised/paidin2009 –2,943 0 0 0 0 –704

Expiredin2009 0 0 0 0 0 0

Forfeitedin2009 –2,620 –518 –66 –998 –243 –372

Outstanding as of 12/31/2009 31,671 15,511 1,101 13,488 10,078 1,887

Additional information

Awardsexercisableasof12/31/2007 N/A N/A 0 0 N/A N/A

Awardsexercisableasof12/31/2008 N/A N/A 0 0 N/A 1,528

Awardsexercisableasof12/31/2009 N/A 0 0 5,965 0 1,390

Aggregateintrinsicvalueofvestedawardsin€million,

asof12/31/2007

N/A N/A 0 0 N/A N/A


asof12/31/2008

N/A N/A 0 0 N/A 9.6


asof12/31/2009

N/A 0 0 0 0 18.5

Weightedaverageexercisepricein€ N/A N/A N/A 37.43 41.06 23.62

Provisionasof12/31/2007in€millions 74.3 N/A 2.9 21.3 N/A N/A

Provisionasof12/31/2008in€millions 14.8 N/A 2.1 35.8 N/A 37.1

Provisionasof12/31/2009in€millions 12.1 5.0 0.1 53.3 14.3 28.9

Expenserecognizedin2007in€millions 53.7 N/A 1.3 21.8 N/A N/A

Expenserecognizedin2008in€millions 27.9 N/A –0.9 23.6 N/A 8.3

Expenserecognizedin2009in€millions 5.9 14.3 –1.9 19.6 5.0 5.9


b.1)STARPlans(STAR)UndertheSTARPlanswegrantedstockappreciationrights,thevalueofwhichwasdependentonthequarterlyperformanceoftheSAPshare.

The2008,2007,and2006STARgrant-basevaluesof€32.69,€35.71,and€42.12,respectively,werebasedontheaveragefairmarketvalueofonecommonshareoverthe20businessdayscommencingthedayaftertheannouncementoftheCompany’spreliminaryresultsfortheprecedingfiscalyear.ThevaluationoftheSTARsiscal-culatedquarterlyoveraperiodoftwoyears.EachoftheeightquarterlyvaluationsisweightedasfollowsindeterminingthefinalSTARvalue:

ThevaluationsforquartersendedDecember31,arecalcu-latedonthebasisoftheamountbywhichthegrantpriceisexceededbytheaveragefairmarketvalueofonecommonshare,asquotedontheFrankfurtStockExchange,overthe20consecutivebusinessdaysfollowingtheannounce-mentdateoftheCompany’spreliminaryannualresults.Theotherquarterlyvaluationsarecalculatedonthebasisoftheamountbywhichthegrantpriceisexceededbytheaveragefairmarketvalueofonecommonshareoverthefiveconsecutivebusinessdaysfollowingtheannounce-mentoftheCompany’squarterlyresults.Becauseeachquarterlyvaluationisconductedindependently,itisunaf-fectedbyanyotherquarterlyvaluation.

ThecashpayoutvalueofeachSTARiscalculatedquarterlyasfollows:(i)100%ofthefirst€12.50valueappreciationforsuchquarter;(ii)50%ofthenext€12.50valueappreci-ation;and(iii)25%ofanyadditionalvalueappreciation.Beneficiarieswillreceivepaymentswithrespecttothe2008STARsasfollows:50%onbothMarch31,2010andJanuary31,2011.Underthetermsofthe2007STARpro-gram,beneficiariesarescheduledtoreceiveaninitialpay-mentof50%onMarch31,2009,andasecondinstallmentonJanuary31,2010.BeneficiarieswillreceiveSTARpay-mentsprovidedthattheyarestillemployeesoftheCompa-nyonthepaymentdates,subjecttocertainexceptions.

Weighting Factor for Valuation Calculation of STAR Awards Quarter Ended

March 31 June 30 Sep. 30 Dec. 31 March 31 June 30 Sep. 30 Dec. 31

5% 5% 10% 20% 10% 10% 10% 30%

ThefairvaluesoftheSTARsgrantedin2007arethesameasthefairvaluesofthederivativesthatareenteredintotohedgethecompensationexpensebecausethetermsoftheSTARawardsandthederivativesarethesame.

b.2)STARPerformancePlan2009(STARPP)UndertheSTARPerformancePlanwegrantedstockappre-ciationrights,thevalueofwhichdependsonthequarterlyperformanceoftheSAPsharerelativetoanindustry-spe-cificsharepriceindex.

TheSTARPPgrantvalueof€28.00isbasedontheaver-agefairmarketvalueofonecommonshareoverthe20businessdayscommencingthedayaftertheannounce-mentoftheCompany’spreliminaryresultsforthepreced-ingfiscalyear.AsfortheSTARplans,thevaluationoftheSTARPPiscalculatedquarterly,overaperiodoftwoyears,withasimilarweightingallocatedtoeachoftheeightquarters.

ThequarterlyvaluationundertheSTARPPisbasedontheoutperformanceoftheSAPstockpricecomparedtotheTechPGI,whichincludes10publiclytradedcompaniesinthesoftwareandhardwareindustry.Forthatpurposes,theSTARPPagreementsetstheinitialvalueoftheindex(€97.54)aswellastheSAPgrantvalue(€28.00pershare).ThequarterlyvaluationwillbeperformedoneightdefinedtargetdatesfromJune10,2009toMarch10,2011.TheoutperformanceofSAPstockpriceovertheTechPGIpriceismeasuredoverthelast10tradingdayspriortothetargetdate.ThefinalSTARPPvaluewillbethesumoftheeightquarterlyappreciations.ThemaximumtotalpayoutperSTARPPiscappedat110%oftheSTARgrantvalue.

BeneficiarieswillreceivepaymentswithrespecttotheSTARsasfollows:50%onbothMarch31,2011andJanuary31,2012,providedthattheyarestillemployeesoftheCompa-nyonthepaymentdates,subjecttocertainexceptions.

b.3)IncentivePlan2010UndertheIncentivePlan2010wegrantedstockappreci-ationrights,thevalueofwhichwasdependentonthemulti-yearperformanceoftheSAPsharerelativetoanindustry-specificsharepriceindex.


Thesestockappreciationrightsweregrantedtotopper-formersandtopexecutivesundertheIncentivePlan2010.Theplanprovidesforamaximumpayoutof€144.60perrightifthemarketcapitalizationofSAPAGdoublesbyDe-cember31,2010.

TherightswillonlybeexercisableifSAP’scommonshareoutperformstheS&PNorthSoftware-SoftwareIndex™(formerlyGSTISoftwareIndex)duringtheperiodbetweentheissueoftherightsandDecember31,2010.Ifthein-creasebetweenthegrantvalueandtherelevantactualmar-ketcapitalizationisbelow200%ofthebasemarketcapi-talization,thepayoutperawardwillbebasedonthefollowingscale:

b.4)SAPStockOptionPlan2007(SOP)UndertheSAPStockOptionPlanwegrantedvirtualstockoptions,thevalueofwhichwasdependentonthemulti-yearperformanceoftheSAPshare.Theawardsweregrantedtotopexecutivesandtopperformers.

Theplanprovidesforcashsettlementonlyandisavailabletotopexecutivesandtopperformers.Theawardsgrantedin2008and2007haveagrant-basevalueof€32.69and€35.71,respectively,whichisbasedontheaveragefairmarketvalueofonecommonshareoverthe20businessdaysfollowingtheannouncementdateoftheCompany’spreliminaryresultsfortheprecedingfiscalyear.

UndertheSOPPlan,beneficiariesreceivestockapprecia-tionrightsbasedontheSAPshareprice,whichgivethemtherighttoreceiveacertainamountofmoneybyexercisingtheoptionsunderthetermsandconditionsofthisplan.Theplanprovidesfor11predeterminedexercisedatesev-erycalendaryear(onedatepermonthexceptinApril)untiltherightslapse.

Payout per Award

Increase in Market Capitalization

Calculation of Payout per

Percentage Point Increase

Incremental Maximum

Payout as % of Grant Value

Incremental Maximum

Payout per Right in €

0to50% 0.00 0% 0.00

>50to80% 0.67 20% 28.92

>80to90% 3.00 30% 43.38

>90to99.99% 5.00 50% 72.30

100% or more 100% 144.60

Rightsgrantedunderthisplanmaybeexercisedafteravestingperiodoftwoyearsstartingonthegrantdate.Thecontractualtermofthevirtualstockoptionsisfiveyears,thatis,therightswillexpirefiveyearsafterthegrantdateifnotexercisedbytheholderbeforethatdate.

Theexercisepriceis110%ofthebasevalue.Thus,therightcanonlybeexercisedifthesharepriceatexerciseex-ceedsthegrantpricebyatleast10%.Monetarybenefitswillbecappedatasharepriceof200%oftheexerciseprice(€78.56foroptionsgrantedin2007,and€71.92foroptionsgrantedin2008).

b.5)SOPPerformancePlan2009(SOPPP)UndertheSOPPerformancePlan2009wegrantvirtualstockoptions,thevalueofwhichdependsonthemulti-yearperformanceoftheSAPsharerelativetoanindustry-specificsharepriceindex.

Theserightsweregrantedtotopexecutivesandtopper-formers.Therightsgrantedunderthisplanmaybeexercisedafteravestingperiodoftwoyearsstartingonthegrantdateandtheircontractualtermisfiveyears.

Thefuturepayoutatexercisedatewillbebasedontheout-performanceoftheSAPsharepricesincethegrantdate,whichiscomparedwiththeTechPGI.Forthatpurpose,theSOPPP2009agreementdefinestheinitialvalueoftheTechPGI(€97.54)aswellastheSAPexerciseprice(€28.00pershare).Asaconsequence,exerciseisonlypossibleiftheperformanceoftheSAPsharepricesincegrantdatehasbeenbetterthantheTechPGIperformance.Theplanprovidesfor12predeterminedexercisedateseverycalen-daryear(onedatepermonth)untiltherightslapse.

Theemployeebenefitiscappedat110%oftheexerciseprice,thatis,€30.80.

b.6)BusinessObjectsCash-SettledAwardsReplacingPre-AcquisitionBusinessObjectsAwards(BORights)PriortobeingacquiredbySAP,theemployeesofBusinessObjectscompaniesweregrantedequity-settledawardsgivingrightstoBusinessObjectsshares.FollowingtheBusinessObjectsacquisitionin2008,theBusinessObjectsshareswerenolongerpubliclytradedandmechanismswereimplementedtoallowtheemployeestocashouttheirawardseitherbyreceivingcashinsteadofBusinessObjectsshares(cashpaymentmechanismorCPM)orbyreceivingBusinessObjectssharesthattheysubsequentlyselltoSAPFrance(liquidityagreementmechanismorLAM).In


substance,theimplementationofCPMandLAMresultedinaconversionoftheequity-settledawardstocash-settledshare-basedpaymentawards(replacingawards)whichreplacedthestockoptionsandRestrictedStockUnits(RSUs)originallygranted(replacedawards).

Thereplacedawardshadvestingperiodsintherangetwotofiveyearsandcontractualtermsintherangetwototenyears.

Thereplacingawardscloselymirrorthetermsofthere-placedawards(includingconditionssuchasexercisepriceandvesting)exceptthat•Thereplacedawardswereplannedtobesettledbyissu-

ingequityinstrumentswhereasthereplacingawardsaresettledincasheitherviatheCPMorviatheLAM.

•ThereplacedawardswereindexedtoBusinessObjects’sharepricewhereasthereplacingawardsareindexedtoSAP’ssharepriceasfollows:SAP’sofferingpriceforBusinessObjectssharesduringthetenderoffer(€42)isdividedbySAPAG’ssharepriceatthetenderofferclosingdate(€32.28)andtheresultismultipliedbytheweightedaverageclosingpriceoftheSAPshareduringthe20tradingdaysprecedingtheexerciseordispositiondate.

ThebenefitresultingfromthestockoptionexerciseortheRSUvestingiseitherpaiddirectlytotheemployees(incountrieswheretheCPMapplies)ortheemployeescon-tinuetoreceivesharesofBusinessObjectsonstockoptionsexerciseorRSUvesting(incountrieswheretheLAMapplies).Inthesecases,theemployeeshaveaputoptiontoresellthesharestoSAPwithin3monthsfromexercise,whileSAPhasacalloptionontheseshares.

Inbothcases,theseawardsareaccountedforasacash-settledawardbecausetheobligationtotheemployeeisultimatelysettledincash,bothundertheCPMandtheLAMmechanism.

c) Equity-Settled Share-Based Payment PlansEquity-settledplansincludetheStockOptionPlan2002(Note(28)c.1)andtheLongTermIncentivePlan2000(Note(28)c.2).

AsaresultoftheissuanceonDecember21,2006,ofbo-nussharesataone-to-threeratiounderacapitalincreasefromcorporatefunds,onexerciseeachstockoptionis-suedundertheStockOptionPlan2002orundertheLTI2000Plannowentitlesitsbeneficiarytofourshares.ForbettercomparabilitywiththepriceofSAPstocksinceDecember21,2006,thefollowingtableshavebeenad-justedtoshowthenumberofsharestowhichtheoptionsorbondsentitletheholderratherthanthenumberofrights.Consequently,thestrikepricesshownarepricespershareandnotperoption.Thenumberofsharesshowninthetableisfourtimesthenumberofoptions,andtheexercisepriceforanoptionisfourtimesthepricepershareshowninthetable.

c.1)StockOptionPlan2002UndertheStockOptionPlan2002wegrantedstockop-tions,thevalueofwhichwasdependentonthemulti-yearperformanceoftheSAPshare.ThelastgrantsundertheStockOptionPlan2002occurredin2006.Theawardsweregrantedtotopexecutivesandtopperformers.

EachstockoptiongrantedundertheSAPSOP2002planentitlesitsholdertosubscribetofoursharesoftheCom-pany’scommonstockbytenderingpaymentofanexercisepriceperoptionequaltoabasepriceandapremiumof10%ofthebaseprice.ThebasepriceiscalculatedastheaveragemarketpriceofSAPAG’scommonshareontheFrankfurtStockExchangeduringthefivetradingdayspre-cedingtheissueoftherespectivestockoption,calculatedonthebasisofthearithmeticmeanoftheclosingauctionpricesofthestock.Theoptionscannotbeexercisedatanexercisepricethatislessthantheclosingauctionstockpriceonthedaybeforetheissuedate.Thecontractualtermofthestockoptionsisfiveyears.ThefairvalueofsuchoptionswasassessedusingtheBlack-ScholesMertonop-tionpricingmodel.


ForoptionsgrantedtomembersoftheExecutiveBoardduringandafterFebruary2004,theSAPSOP2002termscapthesubscriptionrightsiftheSupervisoryBoarddeter-minesthatanoptionholderwouldmakeawindfallprofitonexercisingtherights.Awindfallprofitisdefinedforthispurposeasaprofitthat,whencombinedwiththeprofitfromearlierexercisesofawardsissuedtotheoptionhold-eratthesameissuingdate,exceedstwicetheproductof(i)thenumberofawardsreceivedbytheoptionholderand(ii)theexerciseprice.

Activitiesin2008and2009underSAPSOP2002wereasfollows:

AsalltheoptionsissuedunderSAPSOP2002werefullyvestedinprioryears,weincurrednoregularlyscheduledcompensationexpenseforthisplanin2009(2008:€0.8 million;2007:€26.0 million).ThetotalintrinsicvalueofoptionsexercisedduringtheyearsendedDecember31,2009,2008,and2007waslessthan€1 million,€21 million,and€59 million,respectively.

InDecember2009,wemodifiedtheexerciseconditionsofSAPSOP2002ofalloftheremainingoutstandingoptions(5,382,780)grantedinMarch2005.ThefinalexercisedateforthistranchewasFebruary1,2010.Atthetimethemodificationwasimplemented,weanticipatedthatthelastexercisenoticehadtobesubmittedbyDecember15duetothequietperiodbeforepublicationofthefourth-quar-terinterimresults.Thetermsoftheoriginalplanrequired

Activities under SAP SOP 2002

Number of Options Outstanding and

Exercisable

Weighted Average Exercise Price per Option

Weighted Average Remaining

Contractual Term

Aggregate Intrinsic Value

(000) € (Years) €millions

12/31/2007 23,252 37.39 2.0 41

Exercised –2,511 25.93 0.0 0

Forfeitedorexpired –895 37.44 0.0 0

12/31/2008 19,846 38.83 1.1 0

Exercised –15 33.55 0.0 0

Forfeitedorexpired –6,575 37.83 0.0 0

12/31/2009 13,256 39.34 0.6 0

thatincaseswhereexercisenoticehadbeengiven,theoptionshadtobeexercisedevenifthestockpricefellbelowtheexercisepricesubsequenttoprovidingsuchno-tice.Participantsriskedtakingalossasaresultofthelongwaitbetweenthepointwhenthenoticewasrequiredtobeprovidedandtheactualexercisedate.Topreventsuchlosses,theprocedureforexercisingtheoptionswasamendedforthefinalexercisedate.Basedontheamend-ment,theseoptionswillonlybeexercisediftheresultingSAPsharescanbesoldforapricenotlowerthan€33.66(strikepriceof€33.55plus0.3%administrationfeesattheexercisedate).BasedontheprovisionsofIFRS2,thisplanamendmentwasmeasuredatfairvalueatthemodi-ficationdateresultinginrecordinganincrementalexpenseof€2.1 millionin2009.


ThefollowingtablesummarizesinformationaboutstockoptionsoutstandingasatDecember31,2009and2008,underSAPSOP2002:

TheweightedaveragesharepriceofSAPAGcommonsharesontheSAPSOP2002exercisedatesin2009,2008,and2007was€34.19,€34.32and€37.87,respec-tively.

c.2)LongTermIncentive2000Plan(LTI2000Plan)UndertheLTI2000Planwegrantedconvertiblebonds,thevalueofwhichweredependentonthemulti-yearperfor-manceoftheSAPshareandstockoptions,thevalueofwhichweredependentonthemulti-yearperformanceoftheSAPsharerelativetoanindustry-specificsharepricein-dex.ThelastgrantsundertheLTI2000Planoccurredin2002.Theawardsweregrantedtotopexecutivesandtopperformers.

TheLTI2000Planofferedachoicebetweenconvertiblebonds,stockoptions,ora50%mixtureofeach.Beneficia-rieswereoffered25%moreunitsiftheychosestockop-tionsthaniftheychoseconvertiblebonds.UndertheLTI2000Plan,eachconvertiblebondhavinga€1nominalvalueisconvertibleintofourcommonsharesoveramaximumof10years,subjecttoservicevestingrequirements.TheconversionpriceisequaltothemarketpriceofacommonshareasquotedontheXetratradingsystemonthedayimmediatelyprecedingthegrant.Eachstockoptionmaybeexercisedinexchangeforfourcommonsharesoveramaximumof10years,subjecttothesamevestingrequire-

Stock Options Outstanding under SAP SOP 2002 as at December 31, 2009, and 2008

Outstanding and Exercisable at Dec, 31, 2009 Outstanding and Exercisable at Dec 31, 2008

ExercisePrice NumberofStockOptions

WeightedAverageRemaining

ContractualLife

IntrinsicValueofVestedAwards

NumberofStockOptions


ContractualLife

IntrinsicValueofVestedAwards

€ (000) years €millions (000) years €millions

33.55 7,326 0.11 0.0 7,776 1.11 0.0

37.50 0 N/A N/A 5,705 0.13 0.0

46.48 5,930 1.10 0.0 6,365 2.10 0.0

33.55 – 46.48 13,256 0.55 0.0 19,846 1.14 0.0

ments.Theexercisepricevarieswiththeoutperformanceofthecommonsharepriceappreciationagainsttheap-preciationoftheS&PNorthSoftware-SoftwareIndexTM(formerlyGSTISoftwareIndex)fromthedayimmediatelyprecedinggranttothedayonwhichtheexercisepriceisdetermined.Boththeconvertiblebondsandstockoptionsvestedasfollows:33%aftertwoyearsfromdateofgrant,33%afterthreeyears,and34%afterfouryears.Forfeitedconvertiblebondsorstockoptionsaredisqualifiedandmaynotbereissued.

Intotal,49.2 millionconversionandsubscriptionrightswereissuedundertheLTI2000PlanthroughMarch14,2002.Atthe2002AnnualGeneralMeetingofShareholders,theCompany’sshareholdersrevokedtheauthorizationtoissuefurtherconvertiblebondsandstockoptionsundertheLTI2000Plan.


AsummaryoftheLTI2000Planactivityforbothcon-vertiblebondsandstockoptionswasasfollowsin2008and2009:

AllconvertiblebondsandstockoptionsoutstandingasatDecember,31,2009areexercisable.

Activities under the lTI Plan 2000

Number of Options

Outstanding

Weighted Average

Exercise Price per Option

Weighted Average Remaining

Contractual Term

Aggregate Intrinsic Value

(000) € Years €millions

Stock options

12/31/2007 3,514 27.48 3.6 28

Exercised –454 17.55 0.0 0

Forfeited –38 19.67 0.0 0

12/31/2008 3,022 17.95 2.7 22

Exercised –763 24.04 0.0 0

Forfeited –24 26.45 0.0 0

12/31/2009 2,235 26.07 1.8 15

Convertible bonds

12/31/2007 24,597 50.65 3.2 0

Exercised –56 37.88 0.0 0

Forfeited –811 53.35 0.0 0

12/31/2008 23,730 50.59 2.2 0

Exercised 0 0.00 0.0 0

Forfeited –1,197 53.10 0.0 0

12/31/2009 22,533 50.46 1.2 0


ThefollowingtablessummarizeinformationaboutstockoptionsandconvertiblebondsoutstandingasatDecember31,2009:

TheweightedaveragesharepriceofSAPAGcommonsharesontheLTI2000Planoptionexercisedatesin2009,2008,and2007was€31.30,€35.59and€37.97,respec-tively.TheweightedaveragepriceofSAPAGcommonsharesontheLTI2000Planconvertiblebondexercisedatesin2008and2007was€37.44and€39.14,respectively(noexercisein2009).

DuetothefactthatallLTI2000Planswerefullyvestedduring2006,werecordednocompensationexpensein2007andthereafter.Thefairvalueoftheoptionsandconvertiblebondsgrantedunderthatplanwasassessedusingthe

lTI 2000 Plan Awards Outstanding as at December 31, 2009

Outstanding Stock Options Exercisable Stock Options

RangeofExercisePrices NumberofStockOptions


ContractualLife

WeightedAverageExercisePrice

NumberofStockOptions


€ (000) Years € (000) €

17.51–18.65 136 0.14 18.59 136 18.59

22.67 558 1.14 22.67 558 22.67

25.30 19 1.56 25.30 19 25.30

28.00 1,522 2.14 28.00 1,522 28.00

17.51 – 28.00 2,235 1.76 26.07 2,235 26.07

Outstanding Convertible Bonds Exercisable Convertible Bonds

RangeofExercisePrices NumberofBonds


ContractualLife


NumberofBonds


€ (000) Years € (000) €

32.95–40.00 8,072 2.13 37.90 8,072 37.90

45.92–47.81 8,862 1.14 47.81 8,862 47.81

58.70–61.75 47 0.75 61.22 47 61.22

72,58 5,414 0.13 72.58 5,414 72.58

83,67 137 0.18 83.67 137 83.67

32.95 – 83.67 22,533 1.24 50.46 22,533 50.46

Black-ScholesMertonoptionpricingmodel.Thetotalintrin-sicvalueofstockoptionsexercisedduringtheyearsendedDecember31,2009,2008,and2007was€8.9 million,€5.1 million,and€4.9 million,respectively.ThetotalintrinsicvalueofconvertiblebondsexercisedduringtheyearsendedDecember31,2008and2007was€0 millionand€0.5 million,respectively(noexercisein2009).


(29) Segment and Geographic InformationOurinternalreportingsystemproducesreportsinwhichbusinessactivitiesarepresentedinavarietyofways,forexample,bylineofbusiness,geographyandareasofresponsibilityoftheindividualExecutiveBoardmembers(Boardareas).Basedonthesereports,theExecutiveBoard,whichisresponsibleforassessingtheperformanceofvariouscompanycomponentsandmakingresourceallocationdecisionsasourChiefOperatingDecisionMaker(CODM),evaluatesbusinessactivitiesinanumberofdif-ferentways.Wehavedeterminedthatourlinesofbusinessconstituteoperatingsegments.Wehavethreereportableoperatingsegmentswhichareorganizedbasedonproductsandservices:Product,Consulting,andTraining.

TheProductsegmentisprimarilyengagedinmarketingandlicensingoursoftwareproducts,performingcustomsoft-waredevelopmentservicesforcustomers,andprovidingsupportservicesforoursoftwareproducts.TheConsultingsegmentperformsvariousprofessionalservices,mainlyimplementationofoursoftwareproducts.TheTrainingseg-mentprovideseducationalservicesontheuseofoursoftwareproductsandrelatedtopicsforcustomersandpartners.

Ourmanagementreportingsystemreportsourinter-seg-mentservicesascostreductionsanddoesnottrackthemasinternalrevenue.Inter-segmentservicesmainlyrepre-sentutilizationofmanpowerresourcesofonesegmentbyanothersegmentonaproject-by-projectbasis.Inter-seg-mentservicesarechargedbasedoninternalcostratesin-cludingcertainindirectoverheadcostsbutwithoutprofitmargin.

TheaccountingpoliciesappliedintheinternalreportingtoourCODMarebasedonaccountingprinciplesgenerallyacceptedintheUnitedStates,U.S.GAAP(continuingop-erations)anddifferfromIFRSaccountingprinciplesde-scribedinNote(3)asfollows:•TheinternalreportingtoourCODMgenerallyattributes

revenuetothesegmentthatisresponsibleforthere-latedtransactionregardlessofrevenueclassificationinourincomestatement.Thus,forexample,theTrainingsegment’srevenueincludescertainamountsclassifiedassoftwarerevenueinourConsolidatedIncomeState-ments.

•TheinternalreportingtoourCODMexcludesshare-basedcompensationexpensesand–since2009–re-structuringcostsonsegmentlevel.TheseexpensesaremanagedandreviewedatGrouplevelonly.

•Differencesinforeigncurrencytranslationsresultindevi-ationsbetweentheamountsreportedinternallytoourCODMandtheamountsreportedintheConsolidatedFinancialStatements.

•TherevenuenumbersintheinternalreportingtoourCODMincludethesupportrevenuethatwouldhavebeenre-flectedbyacquiredentitieshaditremainedastand-aloneentitybutwhicharenotreflectedasrevenueunderIFRSasaresultofpurchaseaccountingforsupportcon-tractsineffectatthetimeofanacquisition.

•TheincomemeasuresintheinternalreportingtoourCODMincludethefullamountofsupportrevenueandexcludethefollowingacquisition-relatedcharges:–Amortizationexpense/impairmentchargesofintangi-

blesacquiredinbusinesscombinationsandcertainstand-aloneacquisitionsofintellectualproperty.

–Expensesfrompurchasedin-processresearchanddevelopment.

–Restructuringexpensesandsettlementsofpre-existingrelationships.

–Acquisition-relatedthird-partycoststhatarerequiredtobeexpensed.

•In2009wehavemodifiedthedisclosureoftheallocationofdepreciationandamortizationexpensetoourseg-ments.Forcomparisonpurposes,the2008and2007figuresinthetablespresentedhavebeenadjustedaccordingly.


Segment RevenuesSinceoursegmentsareorganizedonthebasisofproductsandservices,theamountsofexternalrevenuefortheProduct,Consulting,andTrainingsegmentsaremateriallyconsistentwiththeamountsofSoftwareandsoftware-re-latedservicerevenue,Consultingrevenue,andTrainingrevenue,respectively,asreportedintheConsolidatedIn-comeStatements,exceptforthedifferencesinaccountingpoliciesdiscussedabove.

Externalrevenuefromactivitiesoutsideofthereportablesegments(2009:€7 million;2008:€16 million;2007:€11 million)mainlyrepresentsrevenueincidentaltoourmainbusinessactivitiesandminorcurrencytranslationdifferences.

Reconciliation of Revenues and Segment Results

€millions 2009 2008 2007

External revenue from

reportable segments

10,676 11,715 10,231

Externalrevenuefromactivities

outsideofthereportablesegments

7 16 11

Adjustmentsupportrevenue –11 –166 0

IFRSreconciliationdifference 0 10 14

Total revenue 10,672 11,575 10,256

Segment result from

reportable segments

5,616 5,720 5,147

Externalrevenuefromactivities

outsideofthereportablesegments

7 16 11

Developmentexpense–

managementview

–1,803 –1,634 –1,717

Administrationandothercorporate

expenses–managementview

–656 –736 –553

Restructuring –196 0 0

Share-basedpaymentexpense –54 –63 –95

Adjustmentsupportrevenue –11 –166 0

Acquisition-relatedcharges –264 –297 –61

Lossfromdiscontinuedoperations –57 –96 –31

OtherIFRSreconciliationdifference 6 –43 –3

Operating profit 2,588 2,701 2,698

Othernon-operatingincome/

expense,net

–73 –27 2

Financialincome,net –80 –50 124


Segment Revenue and Results

€millions Product Consul-ting

Training Total

2009

Externalrevenuefrom

reportablesegment

7,846 2,498 332 10,676

Segmentresult 4,726 775 115 5,616

Depreciationandamortizationdirectly

attributabletoeachsegment

–53 –7 –2 –62

2008

Externalrevenuefrom

reportablesegment

8,366 2,824 525 11,715

Segmentresult 4,711 784 225 5,720

Depreciationandamortization

directlyattributabletoeachsegment

–64 –9 –2 –75

2007

Externalrevenuefrom

reportablesegment

7,369 2,369 493 10,231

Segmentresult 4,307 631 209 5,147

Depreciationandamortization

directlyattributabletoeachsegment

–59 –7 –2 –68


Segment ResultSegmentresultreflectsoperatingexpensesdirectlyattrib-utableorreasonablyallocabletothesegments,includingcostsofrevenue,andsalesandmarketingexpenses.Coststhatarenotdirectlyattributableorreasonablyallocabletothesegmentssuchasadministrationandothercorporateexpensesarenotincludedinthesegmentresult.Develop-mentexpenseisexcludedfromthesegmentresultbe-causeourCODMreviewssegmentperformancewithouttakingdevelopmentexpenseintoaccount.

Depreciationandamortizationexpensesreflectedinthesegmentresultincludetheamountsdirectlyattributabletoeachsegment.

Developmentexpenseandadministrationandothercorpo-rateexpensedisclosedinthereconciliationabovearebasedonamanagementviewanddonotequaltheamountsunderthecorrespondingcaptionintheConsolidatedIn-comeStatements.Thedifferencesaremainlyduetothefactthatthemanagementviewfocusesonorganiza-tionalstructuresandcostcentersratherthancostclassi-ficationtofunctionalareas.

Segment Assets/liabilitiesSegmentasset/liabilityinformationisnotprovidedtoourCODM.GoodwillbyreportablesegmentisdisclosedinNote(16).

Geographic InformationThefollowingtablespresentrevenuebylocationofcus-tomersandbylocationofSAPentities,whichreflectsthelocationofoursubsidiaryresponsibleforthesale,andinformationaboutcertainlong-livedassetsdetailedbygeo-graphicregion.

Total Revenue by location

€millions Total Revenue by location of Customers

Total Revenue by location of SAP Entities

2009 2008 2007 2009 2008 2007

Germany 2,029 2,193 2,005 2,149 2,376 2,146

RestofEMEA1) 3,614 4,013 3,387 3,652 3,966 3,328

Total EMEA 5,643 6,206 5,392 5,801 6,342 5,474

UnitedStates 2,695 2,890 2,717 2,627 2,854 2,702

RestofAmericas 925 990 872 898 964 865

Total Americas 3,620 3,880 3,589 3,525 3,818 3,567

Japan 476 515 447 467 509 443

RestofAsiaPacific

Japan

933 974 828 879 906 772

Total Asia Pacific Japan 1,409 1,489 1,275 1,346 1,415 1,215

SAP Group 10,672 11,575 10,256 10,672 11,575 10,256

1)Europe,MiddleEast,Africa

Software and Software-Related Service Revenue by location

€millions Software and Soft- ware-Related Service Revenue by location

of Customers

Software and Soft- ware-Related Service Revenue by location

of SAP Entities

2009 2008 2007 2009 2008 2007

Germany 1,439 1,515 1,433 1,526 1,639 1,526

RestofEMEA1) 2,897 3,062 2,542 2,964 3,065 2,524

Total EMEA 4,336 4,577 3,975 4,490 4,704 4,050

UnitedStates 2,018 1,983 1,849 1,949 1,950 1,837

RestofAmericas 700 748 658 677 725 650

Total Americas 2,718 2,731 2,507 2,626 2,675 2,487

Japan 404 410 340 396 406 336

RestofAsiaPacific

Japan

740 748 619 686 681 568

Total Asia Pacific Japan 1,144 1,158 959 1,082 1,087 904

SAP Group 8,198 8,466 7,441 8,198 8,466 7,441



Property, Plant, and Equipment and Intangible Assets

€millions Property, Plant, and Equipment, Net

Intangible Assets, Net

2009 2008 2007 2009 2008 2007

Germany 904 916 923 187 222 217

RestofEMEA1) 133 147 135 521 661 36

Total EMEA 1,037 1,063 1,058 708 883 253

UnitedStates 228 229 167 178 240 138

RestofAmericas 43 36 13 8 17 14

Total Americas 271 265 180 186 257 152

Japan 3 5 4 0 0 0

RestofAsiaPacific

Japan

60 72 74 0 0 0

Total Asia Pacific Japan 63 77 78 0 0 0

SAP Group 1,371 1,405 1,316 894 1,140 405


Software Revenue by location

€millions Software Revenue by location of Customers

Software Revenue by location of SAP Entities

2009 2008 2007 2009 2008 2007

TotalEMEA1) 1,304 1,844 1,697 1,369 1,905 1,721

TotalAmericas 855 1,184 1,228 816 1,165 1,234

TotalAsiaPacificJapan 449 578 482 422 536 452

SAP Group 2,607 3,606 3,407 2,607 3,606 3,407



(30) Board of Directors Membershiponsupervisoryboardsandothercomparablegoverningbodiesofenterprises,otherthansubsidiariesofSAPonDecember31,2009EXECuTIVE BOARD

Bill McDermott (from February 7, 2010)Co-ChiefExecutiveOfficer BoardofDirectors,ANSYS,Inc.,Canonsburg,PA,USA

BoardofDirectors,UnderArmour,Inc.,Baltimore,MD,USABoardofDirectors,PAETECCommunications,Inc.,Fairport,NY,USA

Jim Hagemann Snabe (from February 7, 2010)Co-ChiefExecutiveOfficer BoardofDirectors,LinkageA/S,Copenhagen,Denmark

BoardofDirectors,MannazA/S,Horsholm,Denmark(untilSeptember23,2009)BoardofDirectors,Thrane&ThraneA/S,Lyngby,DenmarkSupervisoryBoard,CrossgateAG,Munich,Germany

Dr. Werner BrandtChiefFinancialOfficerLaborRelationsDirector(acting)

SupervisoryBoard,DeutscheLufthansaAG,FrankfurtamMain,GermanySupervisoryBoard,QIAGENN.V.,Venlo,theNetherlandsSupervisoryBoard,HeidelbergerDruckmaschinenAG,Heidelberg,Germany

Gerhard OswaldChiefOperatingOfficer

Vishal Sikka (from February 7, 2010)ChiefTechnologyOfficer

Prof. Dr. Claus E. Heinrich (until May 31, 2009)LaborRelationsDirector(untilDecember31,2008)GlobalHumanResources(untilDecember31,2008)InternalSAPITOrganisation(untilDecember31,2008)SAPLabsNetwork(untilDecember31,2008)


Prof. Dr. Henning kagermann (until May 31, 2009)Co-ChiefExecutiveOfficerOverallresponsibilityforSAP’sstrategyandbusinessdevelopment,InternalAudit,TopTalentManagement

SupervisoryBoard,DeutscheBankAG,FrankfurtamMain,GermanySupervisoryBoard,MünchenerRückversicherungs-GesellschaftAG,Munich,GermanyBoardofDirectors,NokiaCorporation,Espoo,FinlandSupervisoryBoard,DeutschePostAG,Bonn,Germany(fromMarch10,2009)BoardofDirectors,WiproLtd.,Bangalore,India(fromOctober27,2009)

Erwin Gunst (until January 31, 2010)ChiefOperatingOfficerLaborRelationsDirectorCompanyOperationsandProcesses,GlobalHumanResources,InternalSAPIT,SAPLabsNetwork

léo Apotheker (until February 7, 2010)ChiefExecutiveOfficerOverallresponsibilityforSAP’sstrategy,Marketing,IndustrySolutions,InternalAudit,GlobalCommunications

SupervisoryBoard,AXA,Paris,FranceSupervisoryBoard,SchneiderElectric,Rueil-Malmaison,France

John Schwarz (until February 11, 2010) SAPBusinessObjectsbusinessunit,GlobalEcosystem&PartnerGroup,CorporateDevelopment

BoardofDirectors,Synopsys,Inc.,MountainView,CA,USA


SuPERVISORy BOARD MembershiponothersupervisoryboardsandcomparablegoverningbodiesofenterprisesotherthanSAPonDecember31,2009

Prof. Dr. h.c. mult. Hasso Plattner (2), (4), (5), (7), (8), (9)

Chairman

lars lamadé (1), (4), (7)

DeputyChairmanProjectManagerService&Support

Pekka Ala-Pietilä (5), (8), (9)

Co-founderandCEOBlykLtd.London,UK BoardofDirectors,PöyryPlc,Vantaa,FinlandBoardofDirectors,CVONGroupLimited,London,UKBoardofDirectors,CVONLimited,London,UKBoardofDirectors,CVONInnovationsLimited,London,UKBoardofDirectors,BlykServicesOy,Helsinki,FinlandBoardofDirectors,CVONInnovationServicesOy,Turku,FinlandBoardofDirectors,CVONFutureLimited,London,UKBoardofDirectors,HelloSoftInc.,SanJosé,USABoardofDirectors,Blyk(NL)Ltd.,London,UKBoardofDirectors,Blyk(DE)Ltd.,London,UKBoardofDirectors,Blyk(ES)Ltd.,London,UKBoardofDirectors,Blyk(BE)Ltd.,London,UKBoardofDirectors,Blyk.nlNV,Amsterdam,NetherlandsBoardofDirectors,Blyk.beSA,Hoeilaart,BelgiumBoardofDirectors,BlykInternationalLtd.,London,UK(fromDecember10,2009)

Thomas Bamberger (1), (3)

COOGlobalService&Support

Panagiotis Bissiritsas (1), (2), (6)

SupportExpert

Willi Burbach (1), (5), (7)

Developer


Prof. Dr. Wilhelm Haarmann (2), (6), (7)

Attorney-at-law,certifiedpublicauditor,certifiedtaxadvisorHAARMANNPartnerschaftsgesellschaft,Rechtsanwälte,Steuerberater,Wirtschaftsprüfer,FrankfurtamMain,Germany

SupervisoryBoard,AareonAG,Mainz,Germany(untilJuly1,2009)SupervisoryBoard,VodafoneHoldingGmbH,Düsseldorf,Germany

Peter koop (1), (5), (7)

IndustryBusinessDevelopmentExpert

Christiane kuntz-Mayr (1), (5)

DeputyChairpersonoftheWorksCouncilofSAPAG

Bernard liautaud (5)

GeneralPartnerBaldertonCapital,London,UK

BoardofDirectors,ClinicalSolutionsHoldingsLtd.,Basingstoke,Hampshire,UKBoardofDirectors,nlyteSoftwareLtd.,London,UKBoardofDirectors,TalendSA,Suresnes,FranceBoardofDirectorsderCapGemini,Paris,France(fromApril30,2009)BoardofDirectors,Quickbridge(UK)Ltd.,London,UKBoardofDirectors,Scansafe,Inc.,Delaware,USA(fromJuly6,2009untilDecember4,2009)

Dr. Gerhard Maier (1), (2), (3)

DevelopmentProjectManager

Dr. h. c. Hartmut Mehdorn (4), (6)

IndependentConsultant SupervisoryBoard,DBNetzAG,FrankfurtamMain,Germany(untilApril30,2009)SupervisoryBoard,DEVKDeutscheEisenbahnVersicherungLebensversicherungsvereina.G.,andDEVKDeutscheEisenbahnVersicherungSach-undHUK-Versicherungsvereina.G.,Cologne,Germany(untilJune5,2009)SupervisoryBoard,DresdnerBankAG,FrankfurtamMain,Germany(untilMay11,2009)BoardofDirectors,AirBerlinPLC,Rickmansworth,UK(fromJuly1,2009)AdvisoryBoard,Fiege-Gruppe,Greven,Germany(fromAugust1,2009)

Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h. Joachim Milberg (2), (3), (5), (7), (8)

ChairmanoftheSupervisoryBoardBMWAG,Munich,Germany

SupervisoryBoard,BertelsmannAG,Gütersloh,GermanySupervisoryBoard,FestoAG,Esslingen,GermanyBoardofDirectors,Deere&Company,Moline,Illinois,USASupervisoryBoard,ZFFriedrichshafenAG,Friedrichshafen,Germany


Dr. Erhard Schipporeit (3), (9)

ManagementConsultant SupervisoryBoard,TalanxAG,Hanover,GermanySupervisoryBoard,DeutscheBörseAG,FrankfurtamMain,GermanySupervisoryBoard,HDIV.a.G.,Hanover,GermanySupervisoryBoard,HannoverRückversicherungAG,Hanover,GermanySupervisoryBoard,CareerConceptAG,Munich,Germany(untilJune9,209)SupervisoryBoard,TUITravelPLC,London,UKSupervisoryBoard,FuchsPetrolubAG,MannheimBoardofDirectors,FidelityAdvisorWorldFunds,Bermuda(fromOctober1,2009)BoardofDirectors,FidelityFundsSICAV,Luxemburg(fromOctober1,2009)

Stefan Schulz (1), (4), (5), (6)

DevelopmentProjectManager

Prof. Dr.-Ing. Dr.-Ing. E. h. klaus Wucherer (5)

ManagingDirectorofDr.KlausWuchererInnovations-undTechnologieberatungGmbH,Erlangen,Germany

SupervisoryBoard,BSHBoschundSiemensHausgeräteGmbH,Munich,GermanySupervisoryBoard,DürrAG,Bietigheim-Bissingen,Germany(fromNovember3,2009)SupervisoryBoard,InfineonTechnologiesAG,Munich,GermanySupervisoryBoard,LEONIAG,Nürnberg,Germany

InformationasatDecember31,2009

(1)Electedbytheemployees(2)MemberoftheCompany’sCompensationCommittee(3)MemberoftheCompany’sAuditCommittee(4)MemberoftheCompany’sMediationCommittee(5)MemberoftheCompany’sTechnologyandStrategyCommittee(6)MemberoftheCompany’sFinanceandInvestmentCommittee(7)MemberoftheCompany’sGeneralCommittee(8)MemberoftheCompany’sNominationCommittee(9)MemberoftheCompany’sSpecialCommittee


ThetotalcompensationoftheExecutiveBoardmembersfortheyears2009,2008,and2007isasfollows:

Theshare-basedcompensationisbasedonthegrantdatefairvalueofthe785,060virtualstockoptions(2008:628,329;2007:486,594),issuedtoExecutiveBoardmem-bersduringtheyear.TheexpenseinaccordancewithIFRS2forinstrumentsheldbyExecutiveBoardmembersinconnectionwithshare-basedcompensationwas€3mil-lionin2009(2008:€1 million;2007:€4 million).In2009,theprojectedbenefitobligationforpensionstoExecutiveBoardmembersincreased€1 millionto€15 million(2008:€14 million;2007:€17 million).TheannualpensionentitlementofthemembersoftheExecutiveBoardonreachingage60basedonentitlementsfromperformance-basedandsalary-linkedplansamountedto€1 millionasatDecember31,2009(€1 millionasatDecember31,2008;€1 millionasatDecember31,2007).

SubjecttotheadoptionofthedividendresolutionbytheshareholdersattheAnnualGeneralMeetingofSharehold-ersonJune8,2010,thetotalannualcompensationoftheSupervisoryBoardmembersamountedto€2 million(2008:€2 million;2007:€2 million).Thisamountincludes€1 million(2008:€1 million;2007:€1 million)fixed,€1 million(2008:€1 million;2007:€1 million)variablecompensation,and€0.09 million(2008:€0.1 million;2007:€0.08 million)committeeremuneration.TheSuper-visoryBoardmembersdonotreceiveanyshare-basedcompensationfortheirservices.AsfarasmemberswhoareemployeerepresentativesontheSupervisoryBoardreceiveshare-basedcompensation:suchcompensationisfortheirservicesasemployeesonlyandisunrelatedtotheirstatusasmembersoftheSupervisoryBoard.

Executive Board Compensation

€thousands 2009 2008 2007

Short-termemployeebenefits 30,470.4 20,605.4 21,085.0

Share-basedpayment 4,412.0 4,467.2 3,892.6

Subtotal 34,882.4 25,072.6 24,977.6

Post-employmentbenefits 1,479.0 998.8 575.2

–thereofdefinedbenefit 1,171.0 432.2 575.2

–thereofdefinedcontribution 308.0 566.6 0.0

Terminationbenefits 2,326.8 4,763.5 4,221.9

Otherlong-termbenefits 0.0 0.0 0.0

Total 38,688.2 30,834.9 29,774.7

Duringfiscalyear2009,paymentstoformerExecutiveBoardmemberswere€1 million(2008:€1 million;2007:€1 million).TheprojectedbenefitobligationofpensionsasatDecember31,2009,forformerExecutiveBoardmemberswas€16 million(2008:€12 million;2007:€12 million).

SAPdidnotgrantanycompensationadvanceorcreditto,orenterintoanycommitmentforthebenefitofanymemberoftheExecutiveBoardorSupervisoryBoardinfiscalyear2009,2008,or2007otherthantheagree-mentsdescribedabove.

OnDecember31,2009,membersoftheExecutiveBoardheldatotalof15,336SAPshares(December31,2008:88,527;December31,2007:86,515),andmembersoftheSupervisoryBoardheldatotalof127,193,136SAPshares(December31,2008:128,995,306;December31,2007:128,993,710).

DetailedinformationonthedifferentelementsofthecompensationaswellasonthenumberofsharesownedbymembersoftheExecutiveBoardandtheSupervisoryBoardaredisclosedinSAP’sCompensationReportwhichispartoftheReviewofSAPGroupOperationsandofSAP’sAnnualReportonForm20-F,bothavailableonSAP’sWebsite.

(31) Related Party TransactionsCertainExecutiveBoardandSupervisoryBoardmembersofSAPAGcurrentlyhold,orheldwithinthelastyear,positionsofsignificantresponsibilitywithotherentitiesaspresentedinNote(30).Wehaverelationshipswithcertainoftheseentitiesintheordinarycourseofbusiness,wherebywebuyandsellawidevarietyofproductsandservicesatpricesbelievedtobeconsistentwiththosenegotiatedatarm’slengthbetweenunrelatedparties.

AfterhismovefromSAP’sExecutiveBoardtoSAP’sSuper-visoryBoardinMay2003,HassoPlattnerenteredintoacontractwithSAPAGunderwhichheprovidesconsultingservicesforSAP.Thecontractprovidesforthereimburse-mentofout-of-pocketexpensesonlywhichwereimmateri-altoSAPinallperiodspresented.

HassoPlattneristhesoleproprietorofH.P.BeteiligungsGmbH,whichitselfholds90%ofBramasol,Inc.,PaloAlto,UnitedStates.BramasolisanSAPpartnerwithwhichwegeneratedrevenueswhichwereimmaterialtoSAPinallperiodspresented.TheamountschargedtoSAPfortheservicesofBramasolwereimmaterialtoSAPinallperiodspresented.


WilhelmHaarmannpracticesasapartnerofthelawfirmHAARMANNPartnerschaftsgesellschaftinFrankfurtamMain,Germany.TheamountschargedtoSAPfortheservicesofHAARMANNPartnerschaftsgesellschaftwereimmaterialtoSAPinallperiodspresented.

(32) Principal Accountant Fees and ServicesAtSAPAG’sAnnualGeneralMeetingofShareholdersheldonMay19,2009,SAP’sshareholdersmandatedKPMGAGWirtschaftsprüfungsgesellschafttoserveasSAPAG’sindependentauditorfor2009.KPMGAGWirtschaftsprüfungsgesellschaftandotherfirmsintheglobalKPMGnetworkbilledthefollowingfeestoSAPforauditandotherprofessionalservicesrelatedto2009andthepreviousyears:

AuditfeesaretheaggregatefeesbilledbyKPMGfortheauditofourConsolidatedFinancialStatementsaswellasauditsofstatutoryfinancialstatementsofSAPAGanditssubsidiaries.Audit-relatedfeesarefeeschargedbyKPMGforassuranceandrelatedservicesthatarereason-ablyrelatedtotheperformanceoftheauditorreviewofourfinancialstatementsandarenotreportedunderauditfees.Thiscategorycomprisesfeesbilledforaccountingadviceonactualorcontemplatedtransactionsandotheragreedprocedures.TaxfeesarefeesforprofessionalservicesrenderedbyKPMGfortaxadviceontransferpric-ing,restructuringandtaxcomplianceoncurrent,pastorcontemplatedtransactions.Theallotherfeescategoryin-cludesothersupportservices,suchastrainingandadviso-ryservicesonissuesunrelatedtoaccountingandtaxes.

Fees for Audit and Other Professional Services

€millions 2009 2008 2007

Auditfees 8.0 8.4 8.3

Audit-relatedfees 0.3 0.6 0.2

Taxfees 0.1 0.6 0.0

Allotherfees 0.0 0.7 0.3

8.4 10.3 8.8

ForservicesprovidedbyKPMGAGWirtschaftsprüfungsge-sellschaftanditsaffiliateswerecordedexpensesof€3.1 mil-lionin2009(2008:€4.1million;2007:€2.7million)ofwhich€2.8million(2008:€3.3million;2007:€2.5million)relatetoauditservices,€0.2million(2008:€0.4million;2007:€0.0million)relatetoauditrelatedservices,€0.1mil-lion(2008:€0.2million;2007:€0.0million)relatetotaxservices,and€0.0million(2008:€0.1million;2007:€0.2mil-lion)relatetootherservices.

(33) German Code of Corporate GovernanceTheGermanfederalgovernmentpublishedtheGermanCodeofCorporateGovernanceinFebruary2002.TheCodecontainsstatutoryrequirementsandanumberofrecom-mendationsandsuggestions.OnlythelegalrequirementsarebindingforGermancompanies.Withregardtotherecommendations,theGermanStockCorporationAct,sec-tion161,requiresthateveryyearlistedcompaniespubliclystatetheextenttowhichtheyhaveimplementedthem.Companiescandeviatefromthesuggestionswithouthav-ingtomakeanypublicstatements.

In2009and2008,theExecutiveBoardandSupervisoryBoardofSAPAGissuedtherequireddeclarationsofimplementation.ThesestatementsareavailableonourWebsite:www.sap.com/about/governance

(34) Subsequent EventsAfterDecember31,2009,thefollowingchangestookplaceonourExecutiveBoard:•OnFebruary7,2010,weannouncedthattheSupervisory

BoardhadreachedamutualagreementwithCEOLéoApothekernottoextendhiscontractasamemberoftheExecutiveBoard.LéoApothekerresignedasCEOandfromtheExecutiveBoardwithimmediateeffect.

•Onthesameday,BillMcDermott(headofourglobalfieldorganization)andJimHagemannSnabe(headofbusinesssolutionsandtechnology)wereappointedasCo-CEOs.

•Atthesametime,VishalSikka,ourchieftechnologyofficer,wasappointedtotheExecutiveBoard.

•Shortlythereafter,onFebruary11,2010,SAPannouncedthatGerhardOswald,ExecutiveBoardmemberrespon-sibleforourglobalserviceandsupport,hadalsobeenappointedchiefoperatingofficer,replacingErwinGunst,whosteppeddownforhealthreasons.

•Atthesametime,theSupervisoryBoardacceptedtheresignationofJohnSchwarz,thememberoftheExecu-tiveBoardresponsibleforSAPBusinessObjects,ourecosystem,andcorporatedevelopment,withimmediateeffect.


asofDecember31,2009 Ownership Total revenuein 20091)

Profit/ loss (–) after taxfor 20091)

Total Equity as of

12/31/20091)

Number of employees

as of12/31/20092)

NameandLocationofCompany % €(000) €(000) €(000)

I. Subsidiaries

GERMANy

SAPDeutschlandAG&Co.KG,Walldorf9) 100.0 2,438,214 553,229 1,185,136 4,628

SteebAnwendungssystemeGmbH,Abstatt8),9) 100.0 62,584 2,660 11,984 202

SAPPuertoRicoGmbH,Walldorf7) 100.0 12,694 –1,612 822 31

SAPPassauGmbH&Co.KG,Passau9) 100.0 2,679 93 93 0

SAFGermanyGmbH,Konstanz3),4) 70.9 1,003 80 –421 0

SAPBeteiligungsGmbH,Walldorf 100.0 3 2 44 0

SAPDritteBeteiligungs-undVermögensverwaltungGmbH,Walldorf4),5),9) 100.0 0 48,588 527,070 0

SAPProjektverwaltungs-undBeteiligungsGmbH,Walldorf4),5),9) 100.0 0 19,775 329,179 0

SAPRetailSolutionsBeteiligungsgesellschaftmbH,Walldorf 100.0 0 559 12,915 0

SAPPortalsEuropeGmbH,Walldorf4) 100.0 0 479 123,234 0

SAPForeignHoldingsGmbH,Walldorf 100.0 0 156 183 0

OutlookSoftDeutschlandGmbH,Walldorf4) 100.0 0 38 –128 0

WicommunicationsGmbH,Munich4) 100.0 0 0 50 0

SAPInvestment-undBeteiligungsGmbH,Walldorf 100.0 0 0 33 0

SAPHostingBeteiligungsGmbH,St.Leon-Rot 100.0 0 0 26 0

SAPZweiteBeteiligungs-undVermögensverwaltungGmbH,Walldorf5),9) 100.0 0 0 25 0

SAPVierteBeteiligungs-undVermögensverwaltungGmbH,Walldorf 100.0 0 0 25 0

SAPPortalsHoldingBeteiligungsGmbH,Walldorf4) 100.0 0 –3,761 925,295 0

SAPErsteBeteiligungs-undVermögensverwaltungGmbH,Walldorf5),9) 100.0 0 –29,549 804,562 0

REST OF EuROPE, MIDDlE EAST, AFRICA

BusinessObjectsSoftwareLimited,Dublin,Ireland4) 100.0 595,179 40,365 689,553 165

SAP(UK)Limited,Feltham,UnitedKingdom 100.0 511,257 169,698 53,892 1,040

SAPFranceHoldingS.A.,Paris,France 100.0 430,200 61,954 4,793,481 0

SAP(Schweiz)AG,Biel,Switzerland 100.0 422,569 61,558 95,729 546

S.A.P.NederlandB.V.,s-Hertogenbosch,theNetherlands 100.0 314,003 45,440 285,142 407

SAPItaliaSistemiApplicazioniProdottiinDataProcessingS.p.A.,Milan,Italy4) 100.0 305,545 24,628 213,148 514

SAPFranceS.A.,Paris,France 100.0 248,598 123,188 1,709,117 1,482

SAPEspaña-Sistemas,AplicacionesyProductosenlaInformática,S.A.,Madrid,Spain4) 100.0 225,282 28,221 150,445 362

LimitedLiabilityCompanySAPCIS,Moscow,Russia 100.0 197,626 19,773 109,594 467

SAPBelgium-SystemsApplicationsandProductsNV/SA,Brussels,Belgium4) 100.0 172,912 13,235 85,300 254

SAPÖsterreichGmbH,Vienna,Austria 100.0 171,946 20,087 25,046 369

SystemsApplicationsProductsSouthAfrica(Proprietary)Limited,Johannesburg,SouthAfrica4),8) 89.5 147,018 15,804 23,781 318

SAPDanmarkA/S,Copenhagen,Denmark 100.0 136,501 18,036 42,051 159

SAPSvenskaAktiebolag,Stockholm,Sweden 100.0 99,866 6,005 23,513 123

SAPČR,spol.sr.o.,Prague,CzechRepublic 100.0 93,644 12,784 35,192 221

SAPFinlandOy,Espoo,Finland 100.0 91,828 11,689 54,110 104

SAPNorgeAS,Lysaker,Norway 100.0 59,398 3,071 27,278 93

SAPServiceandSupport(Ireland)Limited,Dublin,Ireland 100.0 54,731 1,639 25,692 639

SAPPolskaSp.zo.o.,Warsaw,Poland 100.0 53,798 5,660 22,317 130

SAPMiddleEastandNorthAfricaL.L.C.,Dubai,UnitedArabEmirates7) 49.0 52,596 –9,148 37,041 102

(35) Subsidiaries, Associates, and Other Equity Investments




Total Equity as of

12/31/20091)

Number of employees

as of12/31/20092)


SAPPortugal-Sistemas,AplicaçõeseProdutosInformáticos,SociedadeUnipessoal,Lda.,

PaçodeArcos,Portugal

100.0 50,632 3,883 22,436 95

BusinessObjects(UK)Limited,London,UnitedKingdom4) 100.0 50,330 31,455 30,600 0

SAPPortalsIsraelLtd.,Ra'anana,Israel4) 100.0 47,084 12,529 60,994 288

SAPHungaryRendszerek,AlkalmazásokésTermékekazAdatfeldolgozásbanInformatikaiKft.,

Budapest,Hungary

100.0 45,634 3,374 17,785 361

SAPLabsIsraelLtd.,Ra'anana,Israel 100.0 42,109 2,129 9,015 350

SAPTürkiyeYazilimÜretimveTicaretA.S.,Istanbul,Turkey 100.0 36,044 2,225 13,711 54

SAPSlovenskos.r.o.,Bratislava,Slovakia 100.0 35,524 2,289 16,865 133

SAPHELLASSYSTEMSAPPLICATIONSANDDATAPROCESSINGS.A,Athens,Greece 100.0 32,566 2,159 5,522 56

SAPLABSFranceS.A.S.,Mougins,France 100.0 25,269 1,597 10,911 181

SystemsApplicationsProductsAfricaRegion(Proprietary)Limited,Johannesburg,SouthAfrica4),8) 100.0 19,276 –187 11,740 11

SAPLabsBulgariaEOOD,Sofia,Bulgaria 100.0 17,804 811 3,568 432

SAPBusinessServicesCenterEurope,s.r.o.,Prague,CzechRepublic 100.0 17,043 1,165 5,547 289

SAPSaudiArabiaSoftwareTradingLimited,Riyadh,KingdomofSaudiArabia 51.0 15,621 810 8,541 11

SAFSimulation,AnalysisandForecastingAG,Tägerwilen,Switzerland3) 70.9 15,342 526 30,070 68

SAPRomaniaSRL,Bucharest,Romania 100.0 15,022 1,943 2,501 77

SAPSaudiArabiaSoftwareServicesLimited,Riyadh,KingdomofSaudiArabia 100.0 12,662 966 25,531 7

SAPIsraelLtd.,Ra'anana,Israel 100.0 12,489 –778 –3,188 71

SAPsistemi,aplikacijeinproduktizaobdelavopodatkovd.o.o.,Ljubljana,Slovenia 100.0 11,667 1,054 5,238 19

LimitedLiabilityCompanySAPUkraine,Kiev,Ukraine 100.0 8,851 –2,369 –1,080 111

HighdealS.A.,Caen,France3) 100.0 8,784 –1,367 24,416 66

SAPEMEAInsideSalesS.L.,Barcelona,Spain 100.0 8,582 442 1,201 70

SAPd.o.o.,Zagreb,Croatia 100.0 8,438 –822 607 18

SAPLabsFinlandOy,Espoo,Finland4),8) 100.0 7,379 860 45,320 48

MerlinSystemsOy,Espoo,Finland4) 100.0 7,246 161 1,401 22

LimitedLiabilityCompanySAPKazakhstan,Almaty,Kazakhstan 100.0 7,152 271 1,102 9

SystemsApplicationsProductsNigeriaLimited,Abuja,Nigeria4) 100.0 6,171 984 822 10

SAPWestBalkansd.o.o.,Belgrade,Serbia 100.0 6,071 38 989 30

SAPIrelandLimited,Dublin,Ireland 100.0 5,719 –262 –1,958 8

SAPCYPRUSLtd,Nicosia,Cyprus4) 100.0 2,893 –14 –1,821 2

SAPBULGARIAEOOD,Sofia,Bulgaria4) 100.0 2,798 369 980 12

CrystalDecisionsFranceS.A.S.,Levallois-Perret,France4) 100.0 2,575 –56 7,324 0

SAPUAB(Lithuania),Vilnius,Lithuania 100.0 1,701 –378 219 4

SAFSimulation,AnalysisandForecastingSlovakias.r.o.,Bratislava,Slovakia3),4) 70.9 1,199 223 730 20

SAPEstoniaOÜ,Tallinn,Estonia 100.0 1,140 –6 –1 1

SAPLatviaSIA,Riga,Latvia 100.0 838 –363 –646 1

SAPPublicServ.Hungary,Budapest,Hungary3) 100.0 101 22 133 5

SystemsApplicationsProducts(Africa)(Proprietary)Limited,Johannesburg,SouthAfrica 100.0 0 3,592 83,945 0

ArmstrongLaingLimited,London,UnitedKingdom4) 100.0 0 2,128 2,885 0

CrystalDecisionsUKLimited,London,UnitedKingdom4) 100.0 0 1,608 671 0

CrystalDecisionsHoldingLimited,Dublin,Ireland4) 100.0 0 276 77,495 0

TomorrowNow(UK)Limited,Feltham,UnitedKingdom4) 100.0 0 261 –392 0

BusinessObjectsHoldingB.V.,s-Hertogenbosch,theNetherlands4) 100.0 0 254 35,973 0

CrystalDecisions(Ireland)Limited,Dublin,Ireland4) 100.0 0 250 44,408 0




Total Equity as of

12/31/20091)

Number of employees

as of12/31/20092)


OutlookSoftEURL,Paris,France4) 100.0 0 103 –1,337 0

SetAnalyzerUKLimited,London,UnitedKingdom4) 100.0 0 78 978 0

Blue-EdgeSoftwareLimited,London,UnitedKingdom4) 100.0 0 77 0 0

EdgewingLimited,London,UnitedKingdom4) 100.0 0 9 –378 0

SAPNederlandHoldingB.V.,s-Hertogenbosch,theNetherlands3) 100.0 0 5 517,988 0

MaxwareAS,Trondheim,Norway4) 100.0 0 0 7,638 0

WicomCommunicationsAB,Enebyberg,Sweden4) 100.0 0 0 9 0

ArmstrongLaing(NorthAmerica)Limited,London,UnitedKingdom4) 100.0 0 –1 1 0

CartesisUKLimited,London,UnitedKingdom4) 100.0 0 –3 1,081 0

VisipriseUKLimited,Aberdeenshire,UnitedKingdom4) 100.0 0 –8 0 0

SAPCommercialServicesLtd.,Valetta,Malta 100.0 0 –14 –5 0

SAPMaltaInvestmentsLtd.,Valetta,Malta 100.0 0 –14 –5 0

InxightSoftwareUKLimited,London,UnitedKingdom4) 100.0 0 –22 138 0

AmbinProperties(Proprietary)Limited,Johannesburg,SouthAfrica4) 100.0 0 –50 –412 0

MaxwareUKLimited,Feltham,UnitedKingdom4) 100.0 0 –85 22 0

TomorrowNowNederlandB.V.,Amsterdam,theNetherlands 100.0 0 –434 –2,901 2

OutlookSoftItaliaS.r.l.,Milan,Italy4) 100.0 –4 –14 621 0

MillsgateHoldingB.V.,Amsterdam,theNetherlands4) 100.0 – – – –

AMERICAS

SAPAmerica,Inc.,NewtownSquare,Pennsylvania,USA 100.0 2,757,437 253,588 –169,097 5,097

SAPCanadaInc.,Toronto,Canada 100.0 484,649 32,494 339,651 1,966

SAPLABS,LLC,PaloAlto,California,USA4) 100.0 356,171 12,799 88,112 1,742

SAPBrasilLtda,SãoPaulo,Brazil 100.0 272,156 16,507 90,085 816

SAPPublicServices,Inc.,Washington,D.C.,USA4) 100.0 269,441 26,918 215,015 218

SAPGlobalMarketing,Inc.,NewYork,USA 100.0 180,515 3,320 15,713 429

SAPMéxicoS.A.deC.V.,MexicoCity,Mexico 100.0 170,809 –11,786 28,385 353

SAPIndustries,Inc.,Scottsdale,Arizona,USA4),7) 100.0 130,072 11,398 330,651 251

SAPARGENTINAS.A.,BuenosAires,Argentina 100.0 88,080 2,450 15,172 432

SAPGovernanceRisk&Compliance,Inc.,PaloAlto,California,USA4) 100.0 54,750 17,192 351,595 95

Visiprise,LLC,Alpharetta,Georgia,USA4) 100.0 44,633 9,496 94,055 151

SAPInternational,Inc.,Miami,Florida,USA4) 100.0 43,687 1,782 10,267 42

SAPColombiaS.A.S.,Bogota,Colombia3) 100.0 40,841 4,408 –14,840 148

SAPAndinaydelCaribeC.A.,Caracas,Venezuela7) 100.0 40,300 –43,232 –18,014 84

BusinessObjectsDataIntegration,Inc.,Wilmington,Delaware,USA4) 100.0 34,037 12,519 77,582 0

OutlookSoftCorporation,Stamford,Connecticut,USA4) 100.0 33,097 8,396 262,273 0

SAPPERUS.A.C.,Inc.,Lima,Peru3) 100.0 16,798 –655 –2,930 43

SAPGovernmentSupport&Services,Inc.,NewtownSquare,Pennsylvania,USA4) 100.0 12,862 2,512 2,247 31

FrictionlessCommerce,Inc.,NewtownSquare,Pennsylvania,USA4) 100.0 4,176 1,135 33,675 0

SAFSimulation,AnalysisandForecastingU.S.A.,Inc.,Grapevine,Texas,USA3),4) 70.9 3,804 76 116 13

Highdeal,Inc.,NewYork,USA3),4) 100.0 2,188 433 –211 14

ClearStandards,Inc.,Sterling,Virginia,USA3),4) 100.0 51 –1,317 16,018 15

HMSSoftware,LLC,Alpharetta,Georgia,USA4) 100.0 541 –275 42,330 0

Maxware,Inc.,NewtownSquare,Pennsylvania,USA4) 100.0 229 145 –72 0

SAPGeorgia,LLC,NewtownSquare,Pennsylvania,USA4) 100.0 91 –107 8,927 0




Total Equity as of

12/31/20091)

Number of employees

as of12/31/20092)


SAPFinancialInc.,Toronto,Canada4) 100.0 0 22,989 6,522 0

SAPInvestments,Inc.,Wilmington,Delaware,USA4) 100.0 0 6,890 561,101 0

110405,Inc.,NewtownSquare,Pennsylvania,USA 100.0 0 5 14,503 0

CartesisCanada,Inc.,Toronto,Canada 100.0 0 2 0 0

BusinessObjectsArgentinaS.R.L.,BuenosAires,Argentina4) 100.0 0 0 81 0

AdvanceInfoSystems,Inc.,Thornhill,Canada4) 100.0 0 0 0 0

BusinessObjectsOption,LLC,Wilmington,Delaware,USA4) 100.0 0 –20 57,006 0

EnterprisePerformanceImprovementOrganizationalSoftwareConsultants,Inc.,

Toronto,Canada4)

100.0 0 –36 33 0

INEACorporationUSA,Wilmington,Delaware,USA4) 100.0 0 –415 –5,519 0

TomorrowNow,Inc.,Bryan,Texas,USA4) 100.0 0 –20,022 –18,899 4

InxightFederalSystemsGroup,Inc.,Wilmington,Delaware,USA4) 100.0 –44 –285 91 0

KhimetricsCanada,Inc.,Montreal,Canada4) 100.0 – – – –

LiberiaLLC,Wilmington,Delaware,USA3),4) 100.0 – – – –

ASIA PACIFIC JAPAN

SAPJAPANCo.,Ltd.,Tokyo,Japan 100.0 494,540 29,251 326,856 1,140

SAPAustraliaPtyLimited,Sydney,Australia 100.0 341,950 34,758 136,889 524

SAP(Beijing)SoftwareSystemCo.,Ltd.,Beijing,China 100.0 195,273 8,563 59,953 1,889

SAPINDIAPRIVATELIMITED,Bangalore,India4) 100.0 180,514 14,212 129,002 1,163

SAPAsiaPteLimited,Singapore 100.0 170,001 10,242 14,136 607

SAPLabsIndiaPrivateLimited,Bangalore,India 100.0 111,079 –6,668 17,358 4,082

SAPKoreaLimited,Seoul,SouthKorea 100.0 74,395 4,422 17,283 181

SAPMalaysiaSdn.Bhd.,KualaLumpur,Malaysia 100.0 44,485 3,829 14,766 129

SAPTAIWANCO.,LTD.,Taipei,Taiwan 100.0 32,696 2,104 12,280 67

SAPHONGKONGCO.LIMITED,HongKong,China 100.0 25,148 –277 4,494 62

SAPNewZealandLimited,Auckland,NewZealand 100.0 23,085 1,894 19,667 36

BusinessObjectsSoftware(Shanghai)Co.,Ltd.,Shanghai,China 100.0 16,019 4,071 3,396 197

SAPSYSTEMS,APPLICATIONSANDPRODUCTSINDATAPROCESSING(THAILAND)LTD.,

Bangkok,Thailand10)

49.0 15,872 –215 24,415 39

PTSAPIndonesia,Jakarta,Indonesia 100.0 14,812 4,473 16,881 45

SAPPHILIPPINES,INC.,Makati,Philippines 100.0 13,543 1,584 5,630 33

BusinessObjectsAustraliaPtyLimited,Sydney,Australia4) 100.0 5,365 –927 13,080 0

SAPR&DCenterKorea,Inc.,Seoul,SouthKorea4) 100.0 4,697 192 13,710 55

TomorrowNowAustraliaPtyLimited,Sydney,Australia4) 100.0 0 280 311 0

BusinessObjectsAsiaPacificPteLimited,Singapore4) 100.0 0 91 33,584 0

BusinessObjectsGreaterChinaLimited,HongKong,China 100.0 0 75 368 0

SAPINDIA(HOLDING)PTELTD,Singapore 100.0 0 3 259 0

CrystalDecisions(HongKong)Limited,HongKong,China4) 100.0 0 0 68 0

EdgewingAustraliaPtyLimited,Sydney,Australia4) 100.0 0 –15 0 0

BusinessObjectsMalaysiaSdn.Bhd.,KualaLumpur,Malaysia4) 100.0 0 –16 217 0

TomorrowNowSingaporePteLimited,Singapore4) 100.0 0 –107 79 0




Total Equity as of

12/31/20091)

Number of employees

as of12/31/20092)


II. Investments in Associates

RIBSoftwareAG,Stuttgart,Germany 7.15 29,900 5,900 42,300 220

ArisGlobalHoldings,LLC,Stamford,Connecticut,USA4) 16.00 28,193 2,190 4,373 659

ProcurementNegóciosEletrônicosS/A,RiodeJaneiro,Brazil4) 17.00 9,693 550 13,101 0

Original1GmbHinGründung,FrankfurtamMain,Germany 40.00 0 0 25 0

GreaterPacificCapital(Cayman),L.P.,GrandCayman,CaymanIslands 5.35 – – – 0

1)ThesefiguresarebasedonourlocalIFRSfinancialstatementspriortoeliminationsresultingfromconsolidationandthereforedonotreflectthecontributionofthesecompaniesincludedintheConsolidatedFinancialStatements.Thetranslationoftheequityintogroupcurrencyisbasedonperiod-endclosingexchangerates,andonaverageexchangeratesforrevenueandnetincome/loss.

2)AsatDecember31,2009,includingmanagingdirectors,inFTE.3)Consolidatedforthefirsttimein2009.4)Whollyormajority-ownedentityofasubsidiary.5)Entitywithprofitandlosstransferagreement.6)Theremainingsharesareheldbyatrustee.7)Restructuredand/orrenamedin2009.8)Entitywithprofitandlosstransferagreement:Statementbeforethepostingofprofit/losstransferforpreviousyear.9)PursuanttoHGB,section264(3)orsection264b,thesubsidiariesareexemptfromapplyingcertainlegalrequirementstotheirstatutory

stand-alonefinancialstatementsincludingtherequirementtopreparenotestothefinancialstatementsandareviewofoperations,therequirementofindependentauditandtherequirementofpublicdisclosure.

10)Theremainingsharesarethepreferenceshareswithouttherighttovote.


asofDecember31,2009

NameandLocationofCompany

III. Other Equity Investments (ownership 5 or more percent)

ABACOMobile,Inc.,Atlanta,Georgia,USA

AprisoCorporation,LongBeach,California,USA

ConnectivaSystems,Inc.,NewYork,USA

CrossgateAG,Munich,Germany

DacosSoftwareGmbH,Saarbrücken,Germany

DeutschesForschungszentrumfürKünstlicheIntelligenzGmbH,Kaiserslautern,Germany

IgniteTechnologies,Inc.,Frisco,Texas,USA

InnovationLabGmbH,Heidelberg,Germany

iTACSoftwareAG,Dernbach,Germany

iYogiHoldingsPvt.Ltd.,PortLouis,Mauritius

MVPStrategicPartnershipFundGmbH&Co.KG,Grünwald,Germany

OnventisGmbH,Stuttgart,Germany

OrbianCorporationLimited,Hamilton,Bermuda,UnitedKingdom

ParticleComputerGmbHi.L.,Karlsruhe,Germany

PostforSystems,Cairo,Egypt

PowersimCorporation,Herndon,Virginia,USA

QCLSCorporation,SanJose,California,USA

Qumu,Inc.,SanBruno,California,USA

RealizeCorporation,Tokyo,Japan

RetailSolutions,Inc.(legalname:T3C,Inc.),Sunnyvale,California,USA

ReturnPath,Inc.,NewYork,USA

SmartCityPlanning,Inc.,Tokyo,Japan

SupplyOnAG,Hallbergmoos,Germany

Venture-CapitalBeteiligungGbRmbH(inLiquidation),Stuttgart,Germany

ZendTechnologiesLtd.,RamatGan,Israel


Walldorf,March10,2010

SAPAGWalldorf,Baden

TheExecutiveBoard

BillMcDermott

WernerBrandt

VishalSikka

JimHagemannSnabe

GerhardOswald


financial statement of sap ag (hgB)sHort version

Income StatementfortheyearsendedDecember31,

€(000) 2009 2008

Total revenue 4,925,864 5,064,808

Other operating income 941,741 524,549

Cost of services and materials – 1,779,503 – 1,603,225

Personnel expenses – 1,129,242 – 1,004,388

Depreciation and amortization – 217,585 – 206,937

Other operating expenses – 1,607,985 – 1,933,172

Finance income 1,395,103 1,299,899

Income from ordinary activities 2,528,393 2,141,534

Extra ordinary results – 6,751 0

Income taxes – 388,884 – 366,457

Net income 2,132,758 1,775,077


Balance sheetasatDecember31,

€(000) 2009 2008

Intangible assets 392,572 414,285

Property, plant and equipment 784,872 796,117

Financial assets 8,407,206 7,342,270

Fixed assets 9,584,650 8,552,672

Inventories 3,571 3,758

Accounts receivable 2,619,578 2,343,241

Marketable securities 270,000 1,249,986

liquid assets 1,083,894 261,760

Short-term assets 3,977,043 3,858,745

Prepaid expenses and deferred charges 49,063 44,714

Deferred taxes 44,621 64,480

Surplus arising from offsetting 1,221 0

Total assets 13,656,598 12,520,611

Shareholders’ equity 6,270,014 5,658,304

Reserves and accrued liabilities 720,278 933,209

Other liabilities 6,661,821 5,923,311

Deferred Income 4,485 5,787

Total shareholders’ equity and liabilities 13,656,598 12,520,611

Thecompletefinancialstatementsandunqualifiedauditor’sreportforSAPAGarefiledwiththeoperatoroftheelectronicversionoftheBundesanzeiger(GermanFederalGazette),whichpublishesthemandforwardsthemtotheUnternehmensregister(GermanCompaniesRegister).TheycanbeobtainedfromSAPAGonrequest.

257FinancialStatementofSAPAG


largest north american oil refiner Uses the sap netweaver technology platform to qUickly integrate the disparate it systems from its acqUisitions.

slick integration

Over the last decade, Valero Energy Corporation has risen to become the largest independent oil refiner in North America by pursuing an aggressive growth-through-acquisitions strategy that targets distressed companies. Valero has expanded from one refinery and US$5 billion in revenue in 1997 to 15 refineries, 10 ethanol plants, 5,800 retail and wholesale sites and US$68.2 billion in revenues today. Incorporating the IT systems of newly acquired assets has been challenging. Some sys-tems had difficulties collaborating with the SAP software running Valero’s core business. Because it was essential for Valero to maintain visibility of both its inventory and financial data to prevent gridlock, the systems had to be integrated in just three months – a process that most companies complete in a year. The only solution was to build a central hub to connect all systems. The organization reached out to SAP for help. SAP NetWeaver now serves as the unified platform for nearly all of Valero’s business. The new infrastructure enables Valero to continue to grow without IT gridlock, expands access to Web and enterprise services, and provides real-time visibility of orders, shipments, and inventories.

fiVe-year sUmmary 1)

SAP Group

€millions,unlessotherwisestated 2005 2006 2007 2008 2009

Revenue and income

Software revenue 2,743 3,003 3,407 3,606 2,607

thereofEMEA 1,368 1,492 1,697 1,844 1,304

thereofAmericas 1,024 1,133 1,228 1,184 855

thereofAsiaPacificJapan 351 378 482 578 449

Software and software related service revenue 5,955 6,605 7,441 8,466 8,198

Total revenue 8,509 9,402 10,256 11,575 10,672

% product revenue 70% 70% 73% 73% 77%

Operating profit 2,337 2,503 2,698 2,701 2,588

Operatingmarginin% 27% 27% 26% 23% 24%

Stock-basedcompensationcharges 45 129 106 63 54

Acquisition-relatedcharges2) 34 43 61 297 264

Financeincome/Financecosts,net 90 120 135 –51 –69

Financialincome,net 10 122 124 –50 –80

Profit before tax 2,323 2,614 2,824 2,624 2,435

Profitsalesratio(profitbeforetaxasapercentageoftotalrevenue) 27% 28% 28% 23% 23%

Returnonequity(netincomeasapercentageofaverageequity) 29% 31% 30% 27% 22%

Incometaxexpense –818 –778 –916 –776 –685

Profit after tax 1,496 1,836 1,908 1,848 1,750

liquidity and Cash flow

Netcashflowsfromoperatingactivities 1,612 1,847 1,932 2,158 3,015

Netcashflowsfrominvestingactivities –574 –134 –1,391 –3,766 –299

Netcashflowsfromfinancingactivities –555 –1,375 –1,287 1,281 –2,166

Cashandcashequivalents 2,064 2,399 1,608 1,280 1,884

Restrictedcash n/a n/a 550 n/a n/a

Short-terminvestments 1,782 483 498 382 400

Group liquidity (cash and cash equivalents/short-term investments/restricted cash) 3,846 2,882 2,656 1,662 2,284

Daysofsalesoutstanding(DSO) 68 68 66 71 79


SAP Group

€millions,unlessotherwisestated 2005 2006 2007 2008 2009

Assets and Equity

Tradeandotherreceivables7) 2,251 2,443 2,898 3,219 2,598

Totalcurrentassets 6,520 5,769 6,184 5,571 5,255

Totalnon-currentassets 2,520 3,563 3,977 8,329 8,119

Totalcurrentliabilities(includingdeferredincome) 2,743 2,762 3,184 5,824 3,416

Totalnon-currentliabilities(includingdeferredincomeandnon-controllinginterests) 515 447 499 905 1,467

Total equity (incl. temporary equity)8) 5,782 6,123 6,478 7,171 8,491

Total assets 9,040 9,332 10,161 13,900 13,374

Equityratio(Totalequityasapercentageofthetotalassets) 64% 66% 64% 52% 63%

Debtratio(Totalliabilitiesasapercentageoftotalassets) 36% 34% 36% 48% 37%

Investments 504 902 1,097 4,898 299

Depreciationandamortization 204 214 262 539 499

Depreciationandamortizationasapercentageofinvestment 40% 24% 24% 11% 167%

Employees3) and personnel expenses

Numberofemployees,year-end 35,873 39,355 44,023 51,544 47,584

Numberofemployees,annualaverage 34,483 38,053 42,302 51,638 48,471

Personnelexpenses 3,365 3,882 4,191 4,894 4,776

Personnelexpenses–excludingstock-basedcompensation 3,320 3,753 4,085 4,831 4,722

Personnelexpensesperemployee–excludingstock-basedcompensationinthousandsof€ 96 99 97 94 97

Research and development expenses

Researchanddevelopmentexpenses 1,089 1,344 1,461 1,627 1,591

asapercentageoftotalrevenue 13% 14% 14% 14% 15%

NumberofemployeesinR&D,year-end3) 10,215 11,801 12,951 15,547 14,813

Financial performance measures

Sharesoutstandingasofyear-endinmillion4) 1,266 1,268 1,246 1,226 1,226

Weightedaverageshares–basicinmillion4) 1,239 1,226 1,207 1,190 1,188

Earningspersharefromcontinuingoperationsin€4) 1.21 1.50 1.58 1.55 1.47

Weightedaverageshares–dilutedinmillion4) 1,243 1,231 1,210 1,191 1,189

Earningspersharefromcontinuingoperations–dilutedin€3) 1.21 1.49 1.58 1.55 1.47

Dividendpercommonsharein€4),5) 0.36 0.46 0.50 0.50 0.50

Dividenddistributions5) 447 556 594 594 594

Dividenddistributionsasapercentageofnetincome5) 30% 30% 31% 32% 34%

Stockpricesatyear-end–commonsharein€4) 38.29 40.26 35.53 25.24 33.00

Stockprices–commonshare–peakin€4) 39.11 46.86 42.27 39.93 35.26

Stockprices–commonshare–lowestin€4) 27.66 34.56 33.37 23.45 25.01

Marketcapitalizationinbillionsof€ 48.5 51.0 44.3 30.9 40.5

ReturnonSAPcommonshares1yearinvestmentperiodin%6) 17.75 6.00 –10.60 –27.90 32.90

ReturnonSAPcommonshares5yearsinvestmentperiodin%6) 4.96 2.60 14.50 –4.40 1.30

ReturnonSAPcommonshares10yearsinvestmentperiodin%6) 15.60 16.90 5.20 –1.10 –1.20

1)Amountsfor2009,2008,2007and2006accordingtoIFRS;amountsfor2005accordingtoU.S.GAAP,unlessotherwisestated.

2)Amountsfor2009,2008and2007accordingtoIFRS;amountsfor2006and2005accordingtoU.S.GAAP.3)Basedonfull-timeequivalents4)Allamountsshownreflecttheissuanceofbonussharesata1-to-3ratiounderthecapitalincreasein2006.

Priorperiodamountshavebeenadjustedaccordingly.5)2009numbersarebasedontheproposeddividendfor2009andon2009closingleveloftreasurystock.6)Assumingalldividendsarereinvested7)IncludesOtherreceivablesin2008andlater8)2008numbersareadjustedforIFRIC13CustomerLoyaltyProgrammes

261Five-YearSummary

Group Headquarters

SAP AGDietmar-Hopp-Allee1669190WalldorfGermany

Tel.+496227747474Fax+496227757575Emailinfo@sap.comInternetwww.sap.com

TheaddressesofallourinternationalsubsidiariesandsalespartnersareontheInternetatwww.sap.com/contactsap/directory.

For more information about the matters discussed in this annual report, please contact:

Investor RelationsEuropeandAsia:Tel.+496227741551Fax+496227740805Emailinvestor@sap.comInternetwww.sap.de/investor

Americas:Tel.+18777277862Fax+12126539602Emailinvestor@sap.comInternetwww.sap.com/investor

PressTel.+496227746315Fax+496227746331Emailpress@sap.comInternetwww.sap.de/press

addresses


ThefollowingpublicationsareavailablefromSAPInvestorRelations:•SAPGroupAnnualReport(IFRS,inEnglishorGerman)•AnnualReportonForm20-F(USGAAP,inEnglish)•SAPAGStatutoryFinancialStatementsandReviewof

Operations(HGB,inGerman)•SAPQuarterlyReports(inEnglishorGerman)•SAPINVESTORmagazine(inEnglishorGerman)

Allofthesedocuments,plusfinancialdataspreadsheetsandothershareholderservices,arealsoavailableontheInternetatwww.sap.com/investor,orinGermanatwww.sap.de/investor.

TheSAPSustainabilityReportisavailableontheInternetatwww.sapsustainabilityreport.com.

FullinformationonthegovernanceofSAPisavailableatwww.sap.com/corpgovernance.Materialsinclude:•SAP’sArticlesofIncorporation•GermanStockCorporationAct,Section161,

DeclarationConcerningSAPAG’sImplementationoftheGermanCorporateGovernanceCode

•SAP’sCorporateGovernanceStatement•SAP’sCodeofBusinessConduct•Informationaboutthemanagementofthecompany,

includingthedirectorsonthegoverningbodies•Detailsofthedirectors’dealingsinSAPshares•Shareholdermeetingpapersandballotresults

pUBlications for shareholders

263PublicationsforShareholders

2010

April 28Preliminaryresultsforthefirstquarterof2010

June 8AnnualGeneralMeetingofShareholders,Mannheim,Germany

June 9Dividendpayment

July 27Preliminaryresultsforthesecondquarterof2010

October 27Preliminaryresultsforthethirdquarterof2010

2011

January 26Preliminaryresultsforfiscalyear2010,pressandanalystconferenceandteleconference

May 25AnnualGeneralMeetingofShareholders,Mannheim,Germany

May 26Dividendpayment

financial calendar


PublisherSAPAGGlobalCommunications

Design and ProductionKuhn,Kammann&KuhnAG,Cologne,Germany

PhotographyWolframScheible,Stuttgart,GermanyAndreasFechner,Dusseldorf,Germany

Photography Reference CustomersAdidasDirectReliefInternationalHansgroheSkullcandyValero

PrintingColorDruckGmbH,Leimen,Germany

Copyright©2010SAPAGDietmar-Hopp-Allee1669190WalldorfGermany

TrademarksSAP,R/3,SAPNetWeaver,Duet,PartnerEdge,ByDesign,ClearEnterprise,SAPBusinessObjectsExplorerandotherSAPproductsandservicesmentionedhereinaswellastheirrespectivelogosaretrademarksorregisteredtrade-marksofSAPAGinGermanyandothercountries.

BusinessObjectsandtheBusinessObjectslogo,BusinessObjects,CrystalReports,CrystalDecisions,WebIntelligence,Xcelsius,andotherBusinessObjectsproductsandservicesmentionedhereinaswellastheirrespectivelogosaretrademarksorregisteredtrademarksofSAPFranceintheUnitedStatesandinothercountries.

Allotherproductandservicenamesmentionedarethetrademarksoftheirrespectivecompany.

pUBlication details

www.natureOffice.com / DE-134-858425

265PublicationDetails

groUp headQUarters

SAP AGDietmar-Hopp-Allee 1669190 WalldorfGermany

www.sap.com

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