SAP AG financial statements
As in previous years, SAP is not only filing consolidated financial statements for the SAP Group but also separate annual financial statements for its parent company, SAP AG. Whereas the consolidated financial statements are prepared in accordance with U.S. GAAP, SAP AG standalone financial statements are required to be filed in accordance with the accounting principles defined in the German Commercial Code or Handelsgesetzbuch (HGB).

The SAP AG figures show 2003 total revenue at €2,955 million (2002: €2,774 million). As in the past, the chief source of SAP AG revenue was software license fees paid by SAP subsidiaries. Total revenue rose exceptionally in 2003 because of changes to the licensing arrangements within the Group. SAP AG’s cost of services and materials almost entirely comprises third-party services, including those provided by SAP subsidiaries. Cost of services and materials was 9% higher (€865 million) in 2003 than in the previous year, primarily because of the reintegration of the SAP Portals and SAP Markets subgroups with SAP AG. Personnel expenses, mainly the labor cost of the developers and administration staff employed by SAP AG, increased 23% to €762 million. Major factors in the increase were headcount growth and larger reserves for the employee profit-sharing plan. Depreciation and amortization increased 50% to €331 million, mainly because SAP Portals’ and SAP Markets’ intangible assets revested in SAP AG in 2002 under the reorganization and became subject to a full year’s regular amortization in 2003.

Under a further restructuring measure within the Group in 2003, SAP AG assigned shares of one subsidiary company to another wholly owned indirect subsidiary. The shares did not therefore leave the SAP consolidation group. That transaction resulted in income totaling €315 million from liquidation and realization of hidden reserves, which, like the fair value writeup of treasury shares occasioned by the increase in the price of the SAP share, is disclosed as other operating income. Other operating expenses decreased 27%. The main reasons for this reduction were the reintegration of SAP Markets, which led to reduced software license fees within the Group, and reduced foreign currency effects. SAP AG’s operating income grew 12% to €998 million, primarily as a result of increased revenue and decreased other operating expenses.

Minority investment impairment charges were much lower than for 2002. As a result, SAP AG enjoyed positive financial income of €358 million in 2003, whereas it had suffered a financial loss of €376 million in 2002. This led to a 164% increase in income before income taxes to €1,356 million in 2003, and to a 281% increase in net income from €277 million in 2002 to €1,055 million in 2003.

SAP AG’s total assets closed at €4,717 million in 2003. The major factors in the 13% increase on the 2002 figure were liquid assets and marketable securities. Shareholders’ equity increased 39% to €3,161 million; SAP AG’s equity ratio was 67%.