<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the periods ended December 31, 1998
SAP AKTIENGESELLSCHAFT SYSTEME,
ANWENDUNGEN, PRODUKTE IN DER DATENVERARBEITUNG
(Exact name of registrant as specified in its
charter)
SAP CORPORATION
SYSTEMS, APPLICATIONS AND PRODUCTS IN DATA PROCESSING
(Translation of registrant's name into English)
Neurottstrasse 16
69190 Walldorf
Federal Republic of Germany
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-_______.
1
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SAP AKTIENGESELLSCHAFT
SYSTEME, ANWENDUNGEN, PRODUKTE IN DER DATENVERARBEITUNG
FORM 6-K
SAP Aktiengesellschaft Systeme, Anwendungen, Produkte in der Datenverarbeitung,
a stock corporation organized under the laws of the Federal Republic of Germany
(the "Company"), issued a press release dated January 26, 1999 (the "Press
Release") announcing certain information for the periods ended December 31,
1998. The Press Release is attached as Exhibit 99.1 hereto and is incorporated
by reference herein.
Any statements contained in the Press Release that are not historical facts are
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995. Words such as "believe," "expect," and "project," as they
relate to the Company, are intended to identify such forward-looking statements.
The Company undertakes no obligation publicly to update or revise any
forward-looking statements. All forward-looking statements are subject to
various risks and uncertainties that could cause actual results to differ
materially from expectations. The factors that could affect the Company's future
financial results are discussed more fully in the Company's most recently filed
Form 20-F and Form F-1, as filed with the Securities and Exchange Commission on
June 22, 1998.
2
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EXHIBITS
Exhibit No. Exhibit
- ----------- -------
99.1 Press Release, dated
January 26, 1999
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SAP AKTIENGESELLSCHAFT SYSTEME,
ANWENDUNGEN, PRODUKTE IN DER
DATENVERARBEITUNG
(Registrant)
By: /s/ Prof. Dr. Henning Kagermann
---------------------------
Name: Prof. Dr. Henning Kagermann
Title: Co-Chairman and CEO
By: /s/ Dieter Matheis
--------------
Name: Dieter Matheis
Title: Chief Financial Officer
Date: January 29, 1999
4
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EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
99.1 Press Release, dated
January 26, 1999
5
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EXHIBIT 99.1
[SAP LOGO]
Press
Information
FOR IMMEDIATE RELEASE
Contact: Kevin S. McKay
SAP America
610-355-4060
-or-
Michael Pfister
SAP AG
011-49-6227-74-1758
-or-
James P. Prout
Taylor Rafferty Associates
212-889-4350
SAP REPORTS RESULTS FOR 1998; REVENUES INCREASE 41% TO DM 8.5 BILLION
SYSTEMATIC EXPANSION STRATEGY - NEARLY 6,500 NEW EMPLOYEES HIRED
WALLDORF, Germany - January 26, 1999 -- SAP AG (NYSE: SAP), the world's leading
provider of client/server business applications, today announced that its sales
for 1998 grew 41% to DM 8.47 billion ($5.05 billion*). Currency fluctuations had
a negative effect on the Company's reported revenue growth figures of about 4
percentage points. While the Company continued its outstanding performance in
the Americas and Europe, profit growth was strongly affected by a sales decline
in Japan. Earnings per share for 1998 rose 14% to DM 10.07 ($6.00) (1997:
DM 8.87).
During 1998, SAP further strengthened its leadership position in the market for
enterprise business software by executing its aggressive expansion strategy. The
Company added almost 6,500 new staff worldwide, primarily in the areas of
research and development, sales and implementation consultants. These
longer-term investments will enable SAP to double revenues over the next three
years.
SAP's sales and earnings were impacted particularly hard by a steep decline in
Japanese revenues, which accelerated unexpectedly fast in the fourth quarter.
The shortfall from Japan of around DM 200 million in software sales revenue
directly affected SAP's profit for the quarter. SAP's sales organization in
Japan has been restructured, and the Board is confident that the accuracy and
quality of sales forecasts will improve substantially. The company also
implemented more stringent accounting for Russian sales, which impacted profits
by DM 40 million.
* US dollar equivalents are provided for reader convenience at the December 31,
1998 exchange rate of US $1 = DM 1.6770.
<PAGE> 2
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SOUND BASIS FOR FUTURE GROWTH
"Despite several adverse factors, 1998 was a very successful year for SAP,
primarily because we were able to extend our competitive lead in our key
markets," said Hasso Plattner, Co-Chairman of SAP AG. "We continue to develop
innovative products, focus closely on software users' needs, successfully
implement our industry-specific strategy and intensify our global direct and
indirect sales efforts -- all of which create solid platforms for continued
growth," Plattner continued.
Sales in the fourth quarter of 1998 rose to DM 2.59 billion, an increase of 18%
against the fourth quarter of 1997. If currency rates had remained constant
year-on-year, revenue growth would have been 8 percentage points higher. Pre-tax
profits slipped 15% to DM 712 million. Product revenues grew 2% to DM 1.62
billion. Consulting and training revenues rose 73% to DM 713 million and 30% to
DM 234 million, respectively. Revenues in the Americas sales region increased
28% to DM 1.20 billion, while sales in Europe, the Middle East and Africa (EMEA)
grew 20% to DM 1.17 billion. In the Asia-Pacific region (APA) revenues fell 22%
to DM 228 million.
While sales in 1998 grew 41% to DM 8.47 billion ($5.05 billion), costs increased
51% to DM 6.77 billion ($4.04 billion). The pre-tax profit therefore increased
15% to DM 1.92 billion ($1.14 billion). Provisions for the employee bonus
program (STAR, Stock Appreciation Right) totaled DM 47 million. Net income for
the year increased 14% to DM 1.05 billion ($626 million). An overall tax rate of
45.2% is anticipated, as against 44.5% in the previous year. Taking the
increased number of shares issued into account (104.6 million as of December 31,
1998 compared with 104.3 million as of December 31, 1997), earnings per share
rose 14% to DM 10.07 ($6.00).
Currency shifts in SAP's key markets adversely affected SAP's reported growth
rates. Had exchange rates remained constant at 1997 levels, SAP's revenues would
have increased by 4 percentage points more than the reported figure. The rate of
cost growth would have been 1 percentage point higher and pre-tax profit 3
percentage points higher.
For the year, product sales rose 28% to DM 5.26 billion. Product sales figures
broke out as follows: software revenue, which consists of license sales and
sales of new software releases, increased 25% to DM 4.69 billion; maintenance
revenues grew to DM 574 million, an increase of 67%. R/3 accounted for the
largest proportion of total product revenues, growing 31% to DM 5.05 billion.
Consulting revenues were up 75% to DM 2.19 billion, and training revenues
increased 54% to DM 0.89 billion. Growth was strongest in the Americas sales
region, where revenues increased 52% to DM 3.91 billion. In the EMEA region,
sales rose 44% to DM 3.80 billion. Due to the decline in Japanese sales,
revenues in the APA region decreased 5% to DM 0.77 billion.
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"We are extremely excited about the opportunities that lie ahead for SAP, our
new dimension product offerings combined with our EnjoySAP release will enable
us to expand our footprint and become the strategic platform for companies of
all sizes," said Kevin McKay, CEO, SAP America. "The focus of our entire
organization and especially product development is directly aligned with the
needs of our customers by their specific industry."
SALES TO DOUBLE IN THREE YEARS
In 1998, SAP continued to make significant investment in new staff in order to
be positioned to leverage future growth opportunities as they arise. As of
year-end 1998, the company's headcount totaled 19,308 worldwide, an increase of
50% over the level at the end of 1997. Research & Development staffing grew
faster than any other area, up 68% to 4,818. This effort reflects SAP's strategy
of investing in new products and product enhancements. Per capita sales based on
the average number of employees for the year (17,323) decreased 6% to DM 489,000
(1997: DM 521,000).
"The nearly 6,500 new employees worldwide represent a significant investment
which will help us to roughly double our sales in the next three years,"
emphasized Henning Kagermann, Co-Chairman of SAP AG. "Taking into account
possible exchange rate fluctuations and other factors impacting global economic
developments, we are anticipating sales growth of between 20% and 25% for 1999,"
continued Kagermann. The Board expects 1999 pre-tax profit margin to increase by
up to one percentage point.
HIGHLIGHTS OF 1998
Highlights from the year include:
- - On schedule development and delivery of innovative products: The first "New
Dimension" products met with success with their introduction to the market.
More than 300 sales of the Business Information Warehouse (BW) have been
made since their August 1998 shipment date. BW is the analytical SAP
software solution that supports management decision-making processes. The
Advanced Planner and Optimizer (APO), a solution created in connection with
the SAP initiative for Supply Chain Management, has already been sold to
over 100 customers, although it has only been available since December
1998. The large-scale initiative for Customer Relationship Management (CRM)
products will be further developed with the more recently initiated sales
support products. This initiative comprises three products: SAP Sales and
SAP Service, scheduled for shipping in the second quarter of 1999, and SAP
Marketing, scheduled for the fourth quarter. More than two million people
already use SAP's employee self-service applications based on Internet
technology. SAP will ship its E-Commerce product SAP B2B Procurement at the
end of the first quarter of 1999. B2B Procurement enables businesses to
procure goods and semi-finished materials via the Internet.
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- - Strategic focus on users' requirements: SAP launched its EnjoySAP
initiative which is designed to enhance the efficiency and productivity of
new and existing users of SAP software, allowing them to have more fun with
the system. The improved design of SAP products will make them easier to
learn, faster to use, and more adaptable to specific operating
requirements.
- - The restructuring of development operations: SAP's objective of
consolidating its vertical focus, begun at the end of 1997, has continued
successfully with the 13 Industry Business Units (IBUs). SAP now has 17
industry solutions that are being developed and enhanced by the IBUs. A
Solution Map has been designed for each industry solution, which is an
innovative method of representing the functional software requirements of
that industry in different levels of detail. SAP is the first software
solution provider to offer such Solution Maps.
- - Intensified worldwide sales through both direct and indirect channels:
Concurrent with the creation of the IBUs to focus development efforts, SAP
formed dedicated sales and service teams specifically to support its
industry strategy. These teams of experts liaise closely with customers to
tailor the industry solutions even more tightly to client needs and prepare
them for faster market launch. In 1998, SAP won nearly 800 new customers
through indirect sales, doubling the figure from the prior year.
- - Impressive growth in R/3 installations: As of the beginning of the 1999,
850 new R/3 installations successfully went live, a testament to the high
degree of stability of SAP products and underlining SAP's ability to
complete a large number of implementation projects efficiently and on
schedule. Roughly 4,000 customer installations successfully transitioned to
the euro, enabling them to invoice in both local currencies and the new
euro. In addition, on January 3 all nine state central banks in the Federal
Republic of Germany converted both their transaction currencies and their
local currencies to euros without any problems. They were the first SAP
users to do so.
- - New York Stock Exchange listing: SAP stocks were quoted on the Big Board
and began trading for the first time on August 3, 1998. This was one of the
most prominent listings in the over 200-year history of the New York Stock
Exchange.
- - Record number of attendees at international user conferences: SAP again
attracted huge numbers of customers, prospects and partners to its
international SAPPHIRE events, setting new records with over 15,000
attendees in Los Angeles and over 8,000 participants in Madrid, the two
largest events in 1998. The other regional SAPPHIREs in Yokohama and
Melbourne were equally successful. Users' overwhelming response
demonstrates the exceptionally high levels of acceptance of SAP products
and further illustrates the long-term relationships SAP enjoys with its
customers.
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1998 PRELIMINARY RESULTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1998 US$* 1998 DM 1997 DM % Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues (mil) 5,052 8,472 6,017 + 41
- --------------------------------------------------------------------------------
Income before taxes (mil) 1,145 1,920 1,667 + 15
- --------------------------------------------------------------------------------
Net profit (mil) 627 1,052 924 + 14
- --------------------------------------------------------------------------------
Earnings per share 6.00 10.07 8.87 + 14
- --------------------------------------------------------------------------------
Headcount average for year 17,323 11,558 + 50
- --------------------------------------------------------------------------------
</TABLE>
* US dollar equivalents are provided for reader convenience at the December 31,
1998 exchange rate of US $1 = DM 1.6770.
Any statements contained in this document that are not historical facts are
forward-looking statements as defined in the Private Securities Litigation
reform Act of 1995. Words such as "believe", "expect" and "project" as they
relate to the company are intended to identify such forward-looking statements.
The company undertakes no obligation publicly to update or revise any
forward-looking statements. All forward-looking statements are subject to
various risks and uncertainties that could cause actual results to differ
materially from expectations. The factors that could affect the company's future
financial results are discussed more fully in the company's most recently filed
Form 20-F and Form F-1 as filed with the Securities and Exchange Commission on
June 22, 1998.
SAP AG preference and common shares are listed on the Frankfurt Stock Exchange
as well as a number of other exchanges. In the US, SAP's American Depositary
Receipts (ADRs), each worth one-twelfth of a preference share, trade on the New
York Stock Exchange under the symbol 'SAP'. SAP is a component of the DAX, the
index of 30 German blue chip companies.
Information on the SAP AG preference shares is available on Bloomberg under the
symbol SAP3 GR, on Reuters under SAPG_p.F or DE and on Quotron under SAGVD.EU.
Information on the SAP common shares is available on Bloomberg under the symbol
SAP GR, on Reuters under SAPG.F and on Quotron under SAGR.EU. Additional
information is available on SAP AG's home page: http://www.sap.com.
# # #
(Tables to follow)
<PAGE> 6
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1998 REVENUES BY QUARTER (IN DM MILLIONS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Q1 1998 Q2 1998 Q3 1998 Q4 1998 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TOTAL REVENUES 1,682 2,175 2,021 2,594 8,472
- --------------------------------------------------------------------------------
Product revenues 1,065 1,396 1,180 1,623 5,264
- --------------------------------------------------------------------------------
Consulting revenues 408 513 559 713 2,193
- --------------------------------------------------------------------------------
Training revenues 197 229 233 234 893
- --------------------------------------------------------------------------------
Other revenues 12 37 49 24 122
- --------------------------------------------------------------------------------
PRETAX PROFIT 311 521 376 712 1,920
- --------------------------------------------------------------------------------
</TABLE>
FOURTH QUARTER REVENUES COMPARISON 1998/1997 (IN DM MILLIONS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Q4 1998 Q4 1997 Change % Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOTAL REVENUES 2,594 2,198 396 + 18
- --------------------------------------------------------------------------------
Product revenues 1,623 1,585 38 + 2
- --------------------------------------------------------------------------------
Consulting revenues 713 412 301 + 73
- --------------------------------------------------------------------------------
Training revenues 234 180 54 + 30
- --------------------------------------------------------------------------------
Other revenues 24 21 3 + 14
- --------------------------------------------------------------------------------
PRETAX PROFIT 712 834 - 122 - 15
- --------------------------------------------------------------------------------
</TABLE>
EMPLOYEES WORLDWIDE AT YEAR END
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31, 1998 December 31, 1997 % Change
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
GROUP 19,308 12,856 + 50
- --------------------------------------------------------------------------------
EMEA 10,960 7,485 + 46
- --------------------------------------------------------------------------------
- Germany 7,580 5,516 + 37
- --------------------------------------------------------------------------------
Americas 5,984 3,785 + 58
- --------------------------------------------------------------------------------
APA 2,364 1,586 + 49
- --------------------------------------------------------------------------------
RESEARCH & DEVELOPMENT 4,818 2,876 + 68
- --------------------------------------------------------------------------------
SERVICE 9,570 6,557 + 46
- --------------------------------------------------------------------------------
SALES/MARKETING 3,503 2,423 + 45
- --------------------------------------------------------------------------------
</TABLE>
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SAP AG
PRELIMINARY INCOME STATEMENT - YEAR
(IN DM MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997
---------------------
<S> <C> <C>
SALES REVENUES 8,472 6,017
Increase in inventories of finished
goods and work-in process 20 3
Other operating income 168 80
---------------------
8,660 6,100
Supplies and purchased goods (24) (16)
Purchased services (1,139) (590)
---------------------
COST OF MATERIALS (1,163) (606)
Personnel expenses (3,046) (2,075)
Depreciation and amortization (272) (195)
Other operating expenses (2,286) (1,612)
OPERATING EXPENSES (5,604) (3,882)
---------------------
OPERATING RESULT 1,893 1,612
Income from investments (31) 4
Income from marketable securities
and loans of financial assets 1 1
Write-down of financial assets (4) (3)
Net interest income 61 53
---------------------
RESULT FROM ORDINARY OPERATIONS 1,920 1,667
Taxes on income (823) (709)
Other taxes (45) (33)
TOTAL TAXES (868) (742)
---------------------
NET INCOME 1,052 925
</TABLE>
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SAP AG
PRELIMINARY INCOME STATEMENT - FOURTH QUARTER
(IN DM MILLIONS)
<TABLE>
<CAPTION>
3 MONTHS ENDED DECEMBER 31
1998 1997
---------------------
<S> <C> <C>
SALES REVENUES 2,594 2,198
Increase in inventories of finished
goods and work-in process (6) 1
Other operating income 30 25
---------------------
2,618 2,224
Supplies and purchased goods (8) (4)
Purchased services (414) (193)
---------------------
COST OF MATERIALS (422) (197)
Personnel expenses (781) (604)
Depreciation and amortization (82) (54)
Other operating expenses (599) (550)
OPERATING EXPENSES (1,462) (1,208)
---------------------
OPERATING RESULT 734 819
Income from investments (33) 1
Income from marketable securities
and loans of financial assets 0 0
Write-down of financial assets (3) (2)
Net interest income (14) 16
---------------------
RESULT FROM ORDINARY OPERATIONS 712 834
</TABLE>
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SAP GROUP
PRELIMINARY BALANCE SHEET
(IN DM MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997
------------------
<S> <C> <C>
ASSETS
Intangible assets 153 81
Tangible fixed assets 1,262 853
Financial assets 244 228
FIXED ASSETS 1,659 1,162
Accounts receivable and other assets 3,191 2,617
Cash and cash equivalents, marketable
securities 1,311 1,164
CURRENT ASSETS 4,502 3,781
DEFERRED TAXES 85 90
PREPAID EXPENSES AND DEFERRED CHARGES 40 37
TOTAL ASSETS 6,286 5,070
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY 3,760 3,062
RESERVES 1,318 1,162
OTHER LIABILITIES 1,092 819
DEFERRED INCOME 116 27
TOTAL SHAREHOLDERS' EQUITY
AND LIABILITIES 6,286 5,070
</TABLE>
Note: Figures are reported under German accounting principles. The impact of US
GAAP reconciliation on SAP's revenue and profits are now expected to be less
than originally announced. It is now expected that US GAAP reconciliation will
negatively impact revenue figures by less than 1% and net income figures by 1% -
2%.
