|
|
|
|
Business at SAP
|
| |
Operating income grows
SAP again succeeded in increasing operating income. The
recruitment of many new employees, increased expenses for
outsourced services, and more business travel drove total
operating expenses up 4% (6 % on pro-forma numbers). However,
the increase in total revenue was steeper, resulting in a
17 % rise in operating income to €2,018 million in 2004. Proforma
operating income (that is, excluding expenses for stock-based
compensation and acquisition-related charges) rose
11 % to €2,086 million.
SAP secures financial income
In 2004, the Company secured financial income of €41 million,
an increase of 141% on the 2003 figure. Net interest income
increased 30% to €56 million, chiefly as a result of the Company’s
higher level of liquidity. Another factor in the increase
was the gain on sales of marketable equity securities. Unrealized
losses on the hedge of anticipated cash flow exposures
associated with the employee stock appreciation rights (STAR)
plan, which are recorded in financial income, were €15 million,
the same level as in the previous year.
Steep rises in pretax income and net income
Like operating income, income before income taxes increased
17 %. SAP’s income before income taxes in 2004 was €2,073 million.
At the same time, the effective tax rate decreased from
39.0 % in 2003 to 36.5 % in 2004, so net income grew 22 % to
€1,311 million. Derived from the net income result is the figure
for basic earnings per share, which is of importance to
investors. In 2003, basic earnings per SAP share were €3.47; the
corresponding 2004 figure was €4.22, an increase of 22 %.
SAP regards the related pro-forma figures as providing
meaningful information because they neutralize the impact
of expenses for stock-based compensation, acquisition-related
charges, and impairment charges associated with minority
investments. This assists certain comparisons between companies
and between years. SAP’s pro-forma net income for 2004 was €1,358 million, an increase of 14 % on the previous year.
Pro-forma earnings per share climbed 14 % from €3.84 in 2003
to €4.37 in 2004, better even than the initial forecast range
of €4.20 – €4.30. |
|
