Siemens AG
Effective with the first quarter of fiscal 2007, Siemens prepares its primary
financial reporting according to International Financial Reporting Standards
(IFRS) on a retroactive basis.
Siemens in the second quarter 2007 (ended March 31, 2007)
-- Siemens successfully concluded its Fit4More program by achieving the
profitability, growth and portfolio goals planned for April 2007.
-- All Groups reached or exceeded their target earnings margins.
-- Group profit from Operations rose 49% year-over-year, to EUR 1.964
billion.
-- Income from continuing operations climbed 56%, to EUR 1.396 billion.
-- Net income rose 36%, to EUR 1.259 billion.
-- Revenue rose 10% to EUR 20.626 billion, and orders increased 9% to EUR
23.469 billion. Excluding currency translation and portfolio effects,
revenue rose 13% and orders increased 11%.
-- On a continuing basis, operating and investing activities used net cash
of EUR 901 million in the second quarter, including a EUR 3.8 billion
cash payment for the diagnostics division of Bayer AG. A year earlier,
operating and investing activities provided net cash of EUR 538 million.
"Our financial performance in the second quarter is the result of great teamwork
in successfully executing our Fit4More program," said Siemens CEO Klaus
Kleinfeld. "We significantly strengthened our strongest businesses, better
aligned the company to take full advantage of global demographic and
urbanization trends, and reached or exceeded our margin targets at all Groups.
Together these accomplishments are enabling us to outgrow the economy at a
higher level of profitability."
"Going forward, we believe we can do even better. So we are introducing a new
program, 'Fit for 2010,' with ambitious targets for growth, capital efficiency,
and cash conversion at the corporate level, and with higher margin ranges at a
majority of our Groups. We look forward to maintaining the operating momentum we
have built up in the first half of the fiscal year."
In the second quarter of fiscal 2007, ended March 31, 2007, Siemens' net income
rose to EUR 1.259 billion, an increase of 36% compared to EUR 923 million in the
second quarter a year earlier. Basic earnings per share rose to EUR 1.34 from
EUR 0.98 in the prior-year quarter, and diluted earnings per share increased to
EUR 1.28 from EUR 0.98 a year earlier. Income from continuing operations was EUR
1.396 billion, an increase of 56% compared to EUR 897 million in the same period
a year earlier. Basic earnings per share on a continuing basis rose to EUR 1.50
from EUR 0.95 in the prior-year quarter, and diluted earnings per share
increased to EUR 1.44 from EUR 0.95 a year earlier. Discontinued operations
reduced net income by EUR 137 million in the second quarter, due primarily to an
impairment at the enterprise networks business formerly included in
Communications (Com). A year earlier, discontinued operations contributed EUR 26
million to net income in the second quarter.
The dominant driver of income growth was Group profit from Operations, which
rose 49% year-over-year, to EUR 1.964 billion. Every Group in Operations reached
or exceeded its target Group profit margin in the second quarter and a majority
delivered strong double-digit profit growth compared to the same period a year
earlier. Automation and Drives (A&D) and Power Transmission and Distribution
(PTD) hit new highs in quarterly Group profit on an absolute basis. Other
leading earnings contributors included Medical Solutions (Med), Power Generation
(PG), Siemens VDO Automotive (SV) and Osram. Improvement in Group profit from
Operations year-over-year also included a positive result at Siemens Business
Services (SBS), which posted a significant loss in the prior-year period
primarily due to substantial severance charges.
Net income growth also benefited from the other two components of Siemens.
Financing and Real Estate activities earned EUR 179 million in income before
income tax compared to EUR 71 million in the second quarter a year earlier.
Corporate Treasury activities contributed EUR 31 million, compared to a negative
EUR 230 million a year ago. The difference relates primarily to a cash
settlement option on a convertible bond, which resulted in a EUR 257 million
negative effect in the prior-year quarter.
In a favorable macroeconomic environment, Siemens' strengthened business
portfolio generated substantial volume growth compared to the prior-year
quarter. Revenue increased 10% year-over-year, to EUR 20.626 billion, and orders
of EUR 23.469 billion were up 9% compared to the prior-year quarter. Excluding
currency translation and portfolio effects, second-quarter revenue rose 13% and
orders climbed 11%. Europe excluding Germany was the primary driver of revenue
growth, with a 16% increase. Germany expanded by 6%. Order growth was more
balanced regionally, with double-digit increases in Europe, Asia-Pacific and the
Americas. A&D, Med, PG and PTD all delivered strong revenue and order growth to
go along with their margin strength and substantial contributions to Group
profit.
On a continuing basis, operating and investing activities within Operations in
the second quarter used EUR 1.921 billion in cash compared to cash provided of
EUR 269 million in the same period a year earlier. The current period included
an approximately EUR 3.8 billion cash payment for the diagnostics division of
Bayer AG. Within Financing and Real Estate and Corporate Treasury activities,
net cash provided by operating and investing activities in the second quarter
was EUR 1.020 billion compared to EUR 269 million in the prior-year quarter. The
difference was due primarily to lower receivables at Siemens Financial Services
(SFS), including substantial receivables related to telecommunications carrier
activities. For Siemens on a continuing basis, operating and investing
activities used net cash of EUR 901 million compared to net cash provided of EUR
538 million in the same period a year earlier.
As planned, Siemens brought its Fit4More strategic program to a successful close
in the second quarter. In addition to reaching or exceeding target margins
throughout Operations and at SFS, Siemens also achieved Fit4More's April 2007
growth and portfolio goals. To deliver top-line growth at twice the rate of
global expansion in gross domestic product ("2X global GDP"), Siemens continued
to invest for organic growth while making major acquisitions at its largest and
most profitable Groups. For example, A&D increased its capabilities in large
drives, gears, and software, PG added wind power and other clean energy
offerings, and Med acquired a world-class in vitro diagnostics business.
Fit4More further focused Siemens' business portfolio goal by reorienting the
Information and Communications (I&C) businesses and Logistics and Assembly
Systems Group (L&A). Among the notable results is a telecommunications
infrastructure joint venture with Nokia, called Nokia Siemens Networks (NSN).
This joint venture launched its operations on April 1, 2007. Other businesses
were divested or discontinued, including the enterprise networks business which
is held for sale.
Operations in the second quarter fiscal 2007
Information and Communications
Siemens Business Services (SBS)
Second Quarter
--------------------------------------------------
% Change
(EUR in millions) 2007 2006 Actual Adjusted (a)
----------------------------------------------------------------------------
Group profit 63 (199)
Group profit margin 5.2% (14.3)%
----------------------------------------------------------------------------
Revenue 1,206 1,393 (13)% 5%
New orders 964 1,360 (29)% (14)%
----------------------------------------------------------------------------
(a) Excluding currency translation effects of (1)% on revenue and orders,
and portfolio effects of (17)% and (14)% on revenue and orders,
respectively.
SBS posted Group profit of EUR 63 million on revenue of EUR 1.206 billion in the
second quarter. A year earlier, the Group's second-quarter result included
substantial severance charges. SBS recorded no major orders during the quarter,
and both revenue and orders were reduced by divestment of the Product Related
Services (PRS) division between the periods under review.
Automation and Control
Automation and Drives (A&D)
Second Quarter
-------------------------------------------------
% Change
(EUR in millions) 2007 2006 Actual Adjusted(a)
---------------------------------------------------------------------------
Group profit 526 385 37%
Group profit margin 14.2% 12.0%
---------------------------------------------------------------------------
Revenue 3,711 3,205 16% 18%
New orders 4,154 3,520 18% 20%
---------------------------------------------------------------------------
(a) Excluding currency translation effects of (3)% on revenue and orders,
and portfolio effects of 1% on revenue and orders.
A&D's second-quarter Group profit grew 37% year-over-year, to a new high of EUR
526 million. Orders climbed 18% compared to the prior-year period, to EUR 4.154
billion, and revenue grew 16%, to EUR 3.711 billion. A&D's results for the
quarter showed good balance both on a regional level and among the divisions.
During the current quarter, A&D announced an agreement to acquire UGS Corp., a
leading supplier of product lifecycle management software. The Group expects to
complete the acquisition for an aggregate consideration of approximately
U.S.$3.5 billion (EUR 2.6 billion) in the third quarter and incur
acquisition-related costs.
Industrial Solutions and Services (I&S)
Second Quarter
-------------------------------------------------
% Change
(EUR in millions) 2007 2006 Actual Adjusted(a)
---------------------------------------------------------------------------
Group profit 100 81 23%
Group profit margin 4.6% 3.8%
---------------------------------------------------------------------------
Revenue 2,172 2,132 2% 5%
New orders 2,434 2,447 (1)% 0%
---------------------------------------------------------------------------
(a) Excluding currency translation effects of (3)% and (4)% on revenue and
orders, respectively, and portfolio effects of 3% on orders.
I&S raised its second-quarter Group profit to EUR 100 million, a 23% increase
compared to the prior-year period led by higher earnings and margins in the
Industrial Services and Metal Technologies divisions. Revenue for the quarter
rose to EUR 2.172 billion, and orders were stable at EUR 2.434 billion.
Siemens Building Technologies (SBT)
Second Quarter
-------------------------------------------------
% Change
(EUR in millions) 2007 2006 Actual Adjusted(a)
---------------------------------------------------------------------------
Group profit 100 54 85%
Group profit margin 7.5% 4.6%
---------------------------------------------------------------------------
Revenue 1,335 1,169 14% 19%
New orders 1,364 1,318 3% 8%
---------------------------------------------------------------------------
(a) Excluding currency translation effects of (5)% on revenue and orders.
SBT's Group profit for the second quarter climbed 85% year-over-year, to EUR 100
million, as all divisions within the Group increased their earnings.
Second-quarter revenue rose 14%, to EUR 1.335 billion, and orders of EUR 1.364
billion were up 3% compared to the prior-year period.
Power
Power Generation (PG)
Second Quarter
-------------------------------------------------
% Change
(EUR in millions) 2007 2006 Actual Adjusted(a)
---------------------------------------------------------------------------
Group profit 330 260 27%
Group profit margin 10.7% 10.6%
---------------------------------------------------------------------------
Revenue 3,072 2,453 25% 26%
New orders 5,017 3,259 54% 54%
---------------------------------------------------------------------------
(a) Excluding currency translation effects of (4)% and (5)% on revenue and
orders, respectively, and portfolio effects of 3% and 5% on revenue and
orders, respectively.
PG generated EUR 330 million in Group profit in the second quarter, a 27% rise
compared to the prior-year period. Revenue rose 25%, to EUR 3.072 billion, as PG
fulfilled strong demand for fossil, wind, and industrial power systems. Order
growth was even more robust, with new contract wins totalling EUR 5.017 billion
in the quarter. Highlights included an order for two offshore wind farms in
Europe, large fossil power generation systems in Europe and the U.S., and
significant demand for maintenance service for new and existing fossil power
systems.
Power Transmission and Distribution (PTD)
Second Quarter
-------------------------------------------------
% Change
(EUR in millions) 2007 2006 Actual Adjusted(a)
---------------------------------------------------------------------------
Group profit 143 77 86%
Group profit margin 8.1% 5.1%
---------------------------------------------------------------------------
Revenue 1,756 1,496 17% 22%
New orders 2,476 1,797 38% 43%
---------------------------------------------------------------------------
(a) Excluding currency translation effects of (5)% on revenue and orders.
PTD delivered Group profit of EUR 143 million, up 86% compared to the second
quarter a year earlier, as the Group significantly increased capacity
utilization on expanded business volume. As with Group profit, revenue and
orders in the current quarter rose on a Group-wide basis. Revenue climbed 17%
year-over-year, to EUR 1.756 billion. Orders surged 38%, to EUR 2.476 billion,
including major orders in Asia-Pacific and the Middle East.
Transportation
Transportation Systems (TS)
Second Quarter
-------------------------------------------------
% Change
(EUR in millions) 2007 2006 Actual Adjusted(a)
---------------------------------------------------------------------------
Group profit 58 19 205%
Group profit margin 5.0% 1.9%
---------------------------------------------------------------------------
Revenue 1,161 1,001 16% 19%
New orders 714 1,803 (60)% (58)%
---------------------------------------------------------------------------
(a) Excluding currency translation effects of (1)% on revenue, and
portfolio effects of (2)% on revenue and orders.
TS recorded Group profit of EUR 58 million compared to EUR 19 million in the
second quarter a year earlier. Revenue rose 16% year-over-year, to EUR 1.161
billion, while orders of EUR 714 million included a low number of major new
contracts.
Siemens VDO Automotive (SV)
Second Quarter
-------------------------------------------------
% Change
(EUR in millions) 2007 2006 Actual Adjusted(a)
---------------------------------------------------------------------------
Group profit 169 178 (5)%
Group profit margin 6.3% 6.8%
---------------------------------------------------------------------------
Revenue 2,687 2,615 3% 4%
New orders 2,678 2,612 3% 4%
---------------------------------------------------------------------------
(a) Excluding currency translation effects of (3)% on revenue and orders,
and portfolio effects of 2% on revenue and orders.
SV was again among Siemens' earnings leaders, with EUR 169 million in Group
profit. A year earlier, the Group posted a higher Group profit and profit margin
due to a gain on the sale of an investment. Revenue and orders for the quarter
rose 3% year-over-year, to EUR 2.687 billion and EUR 2.678 billion,
respectively.
Medical
Medical Solutions (Med)
Second Quarter
-------------------------------------------------
% Change
(EUR in millions) 2007 2006 Actual Adjusted(a)
---------------------------------------------------------------------------
Group profit 332 260 28%
Group profit margin 13.4% 12.7%
---------------------------------------------------------------------------
Revenue 2,470 2,047 21% 4%
New orders 2,544 2,096 21% 5%
---------------------------------------------------------------------------
(a) Excluding currency translation effects of (7)% on revenue and orders,
and portfolio effects of 24% and 23% on revenue and orders, respectively.
Med's second-quarter Group profit climbed 28% year-over-year, to EUR 332
million. The increase is partly attributable to earnings from the Group's
Diagnostics division, which Med formed between the periods under review by
acquiring Diagnostic Products Corp. and the diagnostics division of Bayer AG.
Group profit benefited also from divestments as well as from the sale of a
portion of Med's stake in a joint venture, Draeger Medical AG & Co. KG. These
gains offset purchase price accounting effects and integration costs associated
with the acquisitions. Revenue and orders rose to EUR 2.470 billion and EUR
2.544 billion, respectively, including substantial new volume from the
Diagnostics division.
Lighting
Osram
Second Quarter
-------------------------------------------------
% Change
(EUR in millions) 2007 2006 Actual Adjusted(a)
---------------------------------------------------------------------------
Group profit 125 138 (9)%
Group profit margin 10.5% 11.4%
---------------------------------------------------------------------------
Revenue 1,189 1,206 (1)% 4%
New orders 1,189 1,206 (1)% 4%
---------------------------------------------------------------------------
(a) Excluding currency translation effects of (5)% on revenue and orders.
Osram posted Group profit of EUR 125 million in the second quarter on revenue of
EUR 1.189 billion. The Group's results in the quarter reflect negative currency
effects arising from the strength of the euro.
Strategic Equity Investments
Strategic Equity Investments (SEI) in the second quarter consisted of BSH Bosch
und Siemens Hausger�te GmbH (BSH) and Fujitsu Siemens Computers (Holding) BV.
These joint ventures were included within Other Operations in the prior-year
quarter. SEI earnings were primarily attributable to BSH, and rose to EUR 99
million from EUR 55 million in the same period a year earlier. Beginning in the
third quarter, SEI will include Siemens' portion of NSN.
Other Operations
Other Operations consist of centrally held operating businesses not related to a
Group, including Siemens Home and Office Communication Devices (SHC). Group
profit from Other Operations in the second quarter was a negative EUR 81
million, primarily due to a EUR 52 million goodwill impairment at a regional
payphone unit. A year earlier, Other Operations posted Group profit of EUR 6
million in the second quarter.
Corporate items, pensions and eliminations
Corporate items, pensions and eliminations totaled a negative EUR 189 million in
the second quarter compared to a positive EUR 72 million a year earlier. The
change year-over-year is due primarily to effects in the prior-year quarter,
including a EUR 95 million gain on the sale of an investment as well as a
positive effect related to the settlement of an arbitration proceeding. The
current quarter includes EUR 14 million in expenses for outside advisors whom
Siemens has engaged in connection with the investigations into alleged
violations of anti-corruption laws and related matters as well as remediation
activities. These expenses are expected to increase in coming quarters.
Financing and Real Estate
Siemens Financial Services (SFS)
Second Quarter
--------------------------------------------
(EUR in millions) 2007 2006 % Change
--------------------------------------------------------------------------
Income before income taxes 137 44 211%
--------------------------------------------------------------------------
March 31, Sept. 30,
2007 2006
--------------------------------------------------------------------------
Total assets 9,583 10,543 (9)%
--------------------------------------------------------------------------
Income before income taxes at SFS was EUR 137 million in the second quarter.
Higher financial income included a special dividend resulting from divestment
gains by a company in which SFS holds an equity position. Total assets declined
compared to the end of fiscal 2006 primarily due to a reduction in accounts
receivable associated with carrier activities carved out of Com.
Siemens Real Estate (SRE)
Second Quarter
--------------------------------------------
(EUR in millions) 2007 2006 % Change
--------------------------------------------------------------------------
Income before income taxes 42 27 56%
--------------------------------------------------------------------------
Revenue 414 429 (3)%
--------------------------------------------------------------------------
March 31, Sept. 30,
2007 2006
--------------------------------------------------------------------------
Total assets 3,168 3,221 (2)%
--------------------------------------------------------------------------
Income before income taxes at SRE was EUR 42 million, in part due to lower
vacancy charges.
Eliminations, reclassifications and Corporate Treasury
Income before taxes from eliminations, reclassifications and Corporate Treasury
in the second quarter was EUR 31 million compared to a negative EUR 230 million
a year earlier. The difference resulted primarily from a negative EUR 257
million effect under IFRS in the prior-year quarter, related to mark-to-market
valuation of the cash settlement option associated with a EUR 2.5 billion
convertible bond issued by Siemens in 2003. This option was irrevocably waived
in the third quarter of fiscal 2006, effectively eliminating subsequent earnings
effects. In the current quarter, higher interest income from cash and cash
equivalents and from intra-company financing was more than offset by higher
interest expense associated with the issuance of bonds between the periods under
review.
Income statement highlights in the second quarter 2007
Gross profit margin for the second quarter rose to 27.4% from 25.4% in the same
period a year earlier. Gross profit climbed significantly on a combination of
higher gross margin and higher revenue, including notable increases in gross
profit at Med and A&D. Research and development (R&D) expense rose to EUR 874
million from EUR 857 million in the second quarter a year earlier. Due to
double-digit revenue growth, R&D declined as percent of sales to 4.2% from 4.6%
in the second quarter a year ago. Rising revenue had a similar effect on
marketing, selling and general administrative expenses, which remained nearly
unchanged at EUR 3.108 billion but fell to 15.1% of sales from 16.5% in the
prior-year period.
Other operating income was EUR 112 million, below the EUR 194 million a year
earlier which included the positive effect from settlement of an arbitration
proceeding mentioned above. Due to the EUR 52 million impairment and EUR 14
million in investigation-related expenses mentioned above, other operating
expense increased to EUR 163 million from EUR 35 million in the second quarter
of the prior year. Financial income, net was a positive EUR 14 million compared
to a negative EUR 37 million a year earlier. While the prior-year period
included the EUR 257 million negative effect related to the convertible bond
option mentioned above, financial income in the current quarter was held back by
higher interest expense, lower income associated with asset retirement
obligations, and lower income from financial assets.
Discontinued operations posted a loss of EUR 137 million in the second quarter
compared to income of EUR 26 million in the prior-year period. The current
quarter included a EUR 148 million impairment and EUR 49 million in pretax
expenses related to the investigations mentioned above.
Income and earnings per share in the first six months
Net income for Siemens in the first six months of fiscal 2007 was EUR 2.047
billion, a 10% increase from EUR 1.862 billion in the first half a year earlier.
The current period included a penalty of EUR 423 million arising from a
previously disclosed European Commission antitrust investigation involving
providers of gas-isolated switchgear in the power transmission and distribution
industry. Group profit from Operations for the first half of the fiscal year
rose 50%, to EUR 3.595 billion, primarily on rising revenue and higher margins
at a majority of the Groups in Operations. The change year-over-year was
positively influenced by developments at SBS as well, where EUR 363 million in
severance charges resulted in a significant loss for the prior-year period but
enabled the Group to return to profitability in the current period. Corporate
Treasury activities contributed income of EUR 77 million in the first half,
compared to a loss of EUR 542 million in the prior-year period resulting
primarily from the convertible bond option. Basic and diluted earnings per share
for the first six months were EUR 2.17 and EUR 2.09, respectively, compared to
EUR 1.98 and EUR 1.97, respectively, in the same period a year earlier.
Income from continuing operations was EUR 2.110 billion in the first half, up
40% from EUR 1.504 billion a year earlier. On a continuing basis, basic and
diluted earnings per share were EUR 2.26 and EUR 2.17, respectively, compared to
EUR 1.60 and EUR 1.59 in the same period a year earlier. Discontinued operations
lost EUR 63 million compared to income of EUR 358 million in the first half of
the prior year. The current period includes a EUR 148 million impairment. The
prior-year period benefited from a EUR 356 million gain on the sale of shares in
Juniper Networks, Inc. (Juniper), partially offset by EUR 164 million in
severance charges.
Revenue and order trends for the first half 2007
In the first six months of fiscal 2007, revenue was EUR 39.694 billion, an 8%
increase from EUR 36.800 billion in the prior-year period. Orders of EUR 48.051
billion were up 6% from EUR 45.196 billion a year earlier. Excluding currency
translation effects and the net effect of acquisitions and dispositions, revenue
rose 12% and orders climbed 9%.
International revenue for the first six months climbed 9% year-over-year, to EUR
31.934 billion, and orders for the first six months rose 7%, to EUR 39.354
billion. In Germany, revenue for the first half-year was up 4%, at EUR 7.760
billion, and orders increased 5%, to EUR 8.697 billion. On a regional basis,
Europe (excluding Germany) was the strongest contributor to international volume
growth, with revenue climbing 10%, to EUR 12.733 billion, and orders rising 13%,
to EUR 15.911 billion. Both revenue and orders grew in the Americas as well,
where first-half revenue of EUR 10.324 billion was up 3% and orders of EUR
12.716 billion came in 14% above the prior-year level. Adjusting for currency
translation and portfolio effects, revenue and orders in the Americas were up
11% and 23%, respectively.
While revenue in Asia-Pacific for the first six months grew 11%, to EUR 5.589
billion, orders of EUR 6.488 billion came in 7% lower. Both developments stemmed
from a high level of orders in Asia-Pacific in prior periods. This was
particularly evident in China, where revenue of EUR 1.949 billion for the first
half was 4% higher than the prior-year level, but orders of EUR 2.209 billion
were 21% lower than a year earlier. The Africa/Middle East/Commonwealth of
Independent States (CIS) region shared a similar development in the first half.
Though orders of EUR 4.239 billion were substantially higher than revenue of EUR
3.288 billion, revenue was up 22% year-over-year, and orders were 10% below the
prior-year level.
Liquidity for the first six months
Net cash used in operating and investing activities was EUR 3.777 billion in the
first six months of fiscal 2007, including EUR 4.2 billion in cash used to
acquire the diagnostics division of Bayer AG. A year earlier, net cash used was
EUR 417 million. Discontinued operations was another major factor in the
difference year-over-year. In the current period, discontinued operations used
net cash of EUR 1.716 billion, including a build-up of net working capital,
particularly receivables. In the prior-year period, discontinued operations used
net cash of EUR 231 million, benefiting from EUR 465 million in proceeds from
the Juniper share sales. On a continuing basis, Siemens in the first six month
of fiscal 2007 used EUR 2.061 billion in net cash from operating and investing
activities, compared to EUR 186 million used in the same period a year earlier.
SFS, SRE and
Corporate Treasury
Continuing operations Operations (a) Siemens
----------------------------------------- -------------------- -------------------- ---------------------
Six months ended March 31,
(EUR in millions) 2007 2006 2007 2006 2007 2006
----------------------------------------- --------- ---------- --------- ---------- --------- -----------
Net cash provided by (used in):
Operating activities 2,173 865 1,708 867 3,881 1,732
Investing activities (5,496) (1,416) (446) (502) (5,942) (1,918)
----------------------------------------- --------- ---------- --------- ---------- --------- -----------
Net cash provided by (used in) operating
and investing activities - continuing
operations (3,323) (551) 1,262 365 (2,061) (186)
----------------------------------------- --------- ---------- --------- ---------- --------- -----------
(a) Also includes eliminations and reclassifications.
Within Operations, net cash used in operating and investing activities was EUR
3.323 billion in the first six months of fiscal 2007 compared to EUR 551 million
in net cash used in the same period a year earlier. The increase in net cash
provided by operating activities within Operations was due mainly to a
significantly lower increase of net working capital compared to the prior
period, particularly with regard to net inventories at I&S and PG. Cash used in
investing activities within Operations was significantly higher compared to the
first six months a year earlier, primarily due to payments totaling EUR 4.2
billion for Bayer's diagnostics business at Med and cash used to acquire AG
K�hnle, Kopp & Kausch at PG. SFS, SRE and Siemens' Corporate Treasury provided
net cash from operating and investing activities of EUR 1.262 billion compared
to EUR 365 million in net cash provided in the prior-year period. The change
year-over-year is primarily due to higher net cash inflows related to
receivables at SFS.
Funding status of pension plans
The estimated underfunding of Siemens' principal pension plans as of March 31,
2007, amounted to approximately EUR 1.7 billion compared to an underfunding of
approximately EUR 2.9 billion at the end of fiscal 2006. The improvement in
funding status is primarily due to regular contributions and the actual return
on plan assets. The effect of service and interest cost on the defined benefit
obligation was offset by an increase in the discount rate assumption at March
31, 2007, reducing Siemens' estimated defined benefit obligation. The negative
impact of increases in interest rates on fixed income investments was more than
offset by strong performance in equity markets resulting in an actual return on
plan assets of EUR 849 million during the last six months. This represents a
7.3% return on an annualized basis, compared to the expected annual return of
6.5%.
Subsequent event
After the close of the second quarter, Siemens completed the formation of its
NSN joint venture with Nokia and the joint venture commenced operations on April
1, 2007. The transaction is expected to result in a significant non-cash gain in
the third quarter.
Note: Starting today at 9:00 a.m. CEST, we will provide a live video webcast on
the Internet of the semi-annual press conference with CEO Dr. Klaus Kleinfeld
and CFO Joe Kaeser. You can access the webcast at
www.siemens.com/pressconference. You will also be able to download the
presentation. A video of the speeches will be available after the live webcast.
Starting at 5:00 p.m. CEST, Siemens CEO Dr. Klaus Kleinfeld and CFO Joe Kaeser
will hold a conference with analysts and investors. You can follow the
conference live on the Internet by going to www.siemens.com/analystcall.
This Earnings Release should be read in conjunction with information Siemens
published today regarding the investigations mentioned above. An update of
Siemens' annual Form 20-F disclosure regarding legal proceedings is provided in
the Interim Report.
IFRS Conversion
Beginning with the first quarter of fiscal 2007, Siemens prepares its primary
financial reporting according to International Financial Reporting Standards
(IFRS). For the years prior to fiscal 2007, Siemens prepared its primary
financial reporting according to United States Generally Accepted Accounting
Principles (U.S. GAAP). As part of its transition to IFRS, Siemens has published
IFRS Consolidated Financial Statements for fiscal 2006 and fiscal 2005 as
supplemental information to its U.S. GAAP figures. This document is available at
www.siemens.com/investors, where you can also find a presentation explaining
major differences between IFRS and U.S. GAAP in Siemens financial results.
This document contains forward-looking statements and information - that is,
statements related to future, not past, events. These statements may be
identified by words as "expects", "looks forward to", "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," "will" or words of similar meaning.
Such statements are based on our current expectations and certain assumptions,
and are, therefore, subject to certain risks and uncertainties. A variety of
factors, many of which are beyond Siemens' control, affect its operations,
performance, business strategy and results and could cause the actual results,
performance or achievements of Siemens worldwide to be materially different from
any future results, performance or achievements that may be expressed or implied
by such forward-looking statements. For us, particular uncertainties arise,
among others, from: changes in general economic and business conditions
(including margin developments in major business areas); the challenges of
integrating major acquisitions and implementing joint ventures and other
significant portfolio measures; changes in currency exchange rates and interest
rates; introduction of competing products or technologies by other companies;
lack of acceptance of new products or services by customers targeted by Siemens
worldwide; changes in business strategy; the outcome of pending investigations
and legal proceedings; our analysis of the potential impact of such matters on
our financial statements; as well as various other factors. More detailed
information about our risk factors is contained in Siemens' filings with the
SEC, which are available on the Siemens website, www.siemens.com and on the
SEC's website, www.sec.gov. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described in the relevant forward-looking
statement as expected, anticipated, intended, planned, believed sought,
estimated or projected. Siemens does not intend or assume any obligation to
update or revise these forward-looking statements in light of developments which
differ from those anticipated.
Siemens AG Reference number: AXX200704.75 e
Corporate Communications Wolfram Trost
Media Relations 80312 Munich
80312 Munich Tel.: +49 89 636-34794 Fax: -32825
E-mail: wolfram.trost@siemens.com
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From Jul 2023 to Jul 2024
