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SAP by the Numbers: U.S. GAAP and IFRS Financial Measures

Presenting correct figures is something that is important to every company. However, consolidated financial statements are complicated. To ensure the comparability of annual reports and numbers, all quarterly and annual financial statements must comply with certain legal standards. In the case of the SAP Group, these standards are the United States Generally Accepted Accounting Principles (U.S. GAAP) and the International Financial Reporting Standards (IFRS).

This blog looks at U.S. GAAP and IFRS, explains why they are important and describes the SAP approach to producing financial reports using them.


What are U.S. GAAP and IFRS?

Since SAP is listed on the U.S. stock exchange, it prepares its consolidated financial statements in accordance with U.S. GAAP. The purpose of these principles is to make the annual financial statements of listed companies transparent and comparable.

Since 2007, SAP is also obliged by German law to prepare a set of consolidated financial statements in accordance with IFRS in addition to the U.S. GAAP-compliant reports. IFRS were created in response to globalization. In many areas, they are identical to U.S. GAAP. Since the U.S. Securities and Exchange Commission (SEC) now permits companies that are not based in the United States to prepare their consolidated financial statements in accordance with IFRS, from 2010, this will be the only set of standards SAP will use. SAP will therefore no longer prepare its consolidated financial statements in accordance with U.S. GAAP.


Why are U.S. GAAP and IFRS important?

U.S. GAAP and IFRS are two sets of standards for financial reporting. Financial reporting includes accounting – the complete and orderly recording of all business transactions in a company – and consolidated annual financial statements following the end of the fiscal year. This information is collected and presented in the annual report.


What are our non-GAAP and non-IFRS financial measures?

In addition to the measures reported in accordance with U.S. GAAP and IFRS, SAP also publishes non-GAAP figures and – since the fourth quarter of 2008 – non-IFRS measures. Why is this?

The non-GAAP and non-IFRS figures eliminate certain nonrecurring effects that resulted from the acquisition of Business Objects from the U.S. GAAP and IFRS measures. This makes it easier to draw comparisons with our past operating performance and with the operating expenses of peer companies in our industry that have a different history to our own with respect to acquisitions.

The figures from 2007 illustrate the reconciliation of non-GAAP measures to U.S. GAAP measures:


€ millions, except operating margin

U.S.-GAAP Measure

BusinessObjects Support Revenue Not Recorded Under U.S. GAAP

Acquisition-Related Changes

Non-U.S. GAAP Measure

Software and software related service revenue



Total revenue



Total operation expenses

– 7.510


– 7.449

Operating income




Operating margin on continuing operations

26,7 %


27,3 %


Why do we use non-GAAP and non-IFRS measures?

We use the non-GAAP measures internally to manage SAP. This means that management is evaluated using the non-GAAP figures and that these results are used as the basis for the budget and planning, for example. By eliminating the non-recurring effects described above from our non-GAAP and non-IFRS measures, we want to create a true basis for comparing results with previous years and future periods.


To what extent do the non-U.S. GAAP and non-IFRS results differ?

In the consolidated financial statements for 2008, the difference between the two measures is minimal at €1 million. However, effects could work either way, which means that, in the future, the overall difference between the two measures could be more significant. For this reason, it is important to look at both sets of figures in detail.



U.S. GAAP and IFRS are important accounting standards. To accurately measure success and ensure direct comparability with competitors’ financial statements, companies must be compared on a like-for-like basis. This is why it is essential to have a standard set of accounting principles, such as U.S. GAAP and in the future IFRS, for all financial measures. In some circumstances, it makes sense to use non-GAAP figures to remove exceptional or non-recurring effects from annual financial reports. In all cases, however, it is essential to specify what set of accounting standards were used to calculate the figures and how they were prepared.

It is always important, therefore, to check what kind of figures you are looking at.        

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