TIDMSIE
Earnings Release Q4 2010July 1 to September 30, 2010
SIEMENS' GROWTH GAINS MOMENTUMOrders and revenue rise again in
all Sectors and regions.Strong Q4 completes record year for
cash
Peter Löscher, President and Chief Executive Officer of Siemens
AG
We completed fiscal 2010 very successfully. We are coming out of
the economic downturn with full momentum. Our growth is gaining
speed. Operationally, we achieved record profit twice in a row. We
expect to take this positive momentum into the next fiscal year. We
have to keep winning, order by order. We expect clear growth in new
orders compared to fiscal 2010. Also, revenue should again grow
moderately. We expect to continue the positive trend in earnings
growth.
FINANCIAL HIGHLIGHTS:
-- For the second straight quarter, Siemens delivered order and revenue
growth both year-over-year and on a sequential basis, in all
three
Sectors.
-- Revenue rose 8% and orders climbed 25%, including growth in all
reporting regions and double-digit increases in emerging
economies.
The book-to-bill ratio was 1.11 and the backlog for the
Sectors
totaled EUR87 billion.
-- Total Sectors profit of EUR1.064 billion included impairment charges of
EUR1.204 billion at Diagnostics.
-- Net income (loss) was a negative EUR396 million due primarily to the
impairment charges at Diagnostics and charges of EUR383 million
for
completing previously announced staff reductions at Siemens
IT
Solutions and Services. Basic EPS was a negative EUR0.54.
-- Free cash flow from continuing operations was EUR2.990 billion for the
quarter and EUR7.111 billion for the fiscal year.
-- For fiscal 2010, orders rose 3% to EUR81.163 billion and revenue of
EUR75.978 billion was nearly level with the prior year. Total
Sectors
profit of EUR7.789 billion exceeded the prior-year level even
after the
impairment charges mentioned above. Net income climbed 63%, to
EUR4.068
billion. Siemens proposes a dividend of EUR2.70 per share
compared to
EUR1.60 per share in fiscal 2009.
ORDERS AND REVENUE
Strong order growth in a recovering economy
For the second straight quarter, all three Sectors posted strong
sequential order growth. Orders climbed in all Sectors, and revenue
growth was supported by Siemens' strong order backlog. Order and
revenue growth benefited from overall positive currency translation
effects between the periods under review, as well as tailwinds from
a recovering global economy. Currency translation effects turned
negative within the fourth quarter, taking EUR3.5 billion from the
Sectors' combined order backlog. As a result the backlog decreased
compared to the end of the third quarter, to EUR87 billion, despite
a book-to-bill well above 1.
Revenue up in all Sectors and regions, with lift from
currency
Revenue in Industry rose 9% compared to the prior-year period,
led by shorter-cycle businesses. Healthcare revenue increased at
all Divisions. The Energy Sector returned to organic revenue growth
(adjusted for currency translation and portfolio effects),
including a strong contribution from Renewable Energy. Revenue
increases in all Sectors benefited from currency translation
effects.
Revenue rose in all three of Siemens' reporting regions. Revenue
from emerging markets rose 21%, to EUR7.055 billion, accounting for
most of the increase in the quarter as well as nearly a third of
revenue overall.
Higher volume from major orders in Energy drives order
growth
Energy led all Sectors with 40% order growth, as global energy
markets continued to improve and the volume from major orders
increased substantially. Industry orders grew more than 20%,
including double-digit increases in all Divisions except Mobility.
Healthcare orders rose 14% with contributions from all
Divisions.
Orders grew by double digits in all three reporting regions. All
regions included a higher volume from major orders compared to the
prior-year period. High double-digit growth in India included a
large order at Fossil Power Generation.
INCOME AND PROFIT
Total Sectors profit burdened by impairment charges
Total Sectors profit in the fourth quarter declined to EUR1.064
billion, as a negative result at Healthcare due to substantial
impairment charges more than offset higher Sector profit at Energy
and Industry. Sector profit at Energy climbed both year-over-year
and on a consecutive basis throughout the fiscal year, reaching a
new high at EUR953 million. Industry's Sector profit of EUR883
million was held back by charges of EUR125 million at Industry
Solutions related to current cost estimates for a project
engagement with a local partner in the U.S. and charges of EUR122
million for staff reduction measures. Healthcare posted a loss of
EUR772 million, after charges of EUR1.204 billion for impairments
and EUR96 million associated with particle therapy contracts at
Workflow & Solutions.
Impairment and staff reduction charges burden income from
continuing operations
Continuing operations showed a loss of EUR339 million in the
current period compared to a loss of EUR982 million a year earlier.
Corresponding basic EPS in the current period was a negative
EUR0.47 compared to a negative EUR1.21 a year earlier. The current
period includes the EUR1.204 billion in charges mentioned above for
Healthcare and a loss of EUR463 million at Siemens IT Solutions and
Services resulting primarily from EUR383 million in charges for
completing previously announced staff reductions. The current
period also included EUR310 million related to special remuneration
for non-management employees worldwide.
Positive factors for continuing operations included a lower loss
from Equity Investments compared to the prior-year period and
higher income from Siemens Financial Services. For comparison, the
fourth quarter a year ago included impairments of EUR1.850 billion
related to Siemens' equity stake in Nokia Siemens Networks B.V.
(NSN).
Net income (loss) was a negative EUR396 million in the current
period compared to a negative EUR1.063 billion in the fourth
quarter a year earlier. Basic EPS was a negative EUR0.54 in the
current period compared to a negative EUR1.31 in the prior-year
period. The primary driver of net income in both periods was
continuing operations and the related factors discussed above.
CASH, RETURN ON CAPITAL EMPLOYED (ROCE), PENSION FUNDED
STATUS
Sectors deliver another strong year-end cash performance
Free cash flow at the Sector level climbed 7% compared to the
prior-year quarter, to EUR 3.881 billion, driven by strong
operating performances in the Sectors. The impairment charges of
EUR1.204 billion at Diagnostics had no impact on free cash
flow.
Free cash flow from continuing operations was EUR2.990 billion
compared to EUR3.158 billion in the strong year-end quarter a year
earlier. The current period included higher payments related to
income taxes and lower cash inflows from Siemens IT Solutions and
Services, which continued to face operational challenges in highly
competitive markets. Both periods included approximately EUR0.2
billion in outflows related to staff reduction measures.
Burdens on income affect capital efficiency metric in fourth
quarter
ROCE in the fourth quarter did not reflect Siemens' overall
progress with capital efficiency during fiscal 2010, due to the
substantial burdens on income from continuing operations in the
quarter. On a continuing basis, ROCE was a negative 4.4%, compared
to a negative 10.4% in the fourth quarter a year earlier. Negative
income from continuing operations in both periods included
substantial impairments, including the EUR1.204 billion (pretax) in
impairment charges in Healthcare in the current period and
impairments of EUR1.850 billion (pretax) related to NSN in the
prior-year period. The current period also includes EUR417 million
(pretax) in costs associated with the previously announced
strategic reorientation of Siemens IT Solutions and Services.
Pension plan underfunding increases
The underfunding of Siemens' principal pension plans as of
September 30, 2010 amounted to EUR6.4 billion, compared to EUR6.1
billion as of June 30, 2010. Siemens' defined benefit obligation
(DBO) increased during the quarter due to a further decrease in the
discount rate assumption, as well as accrued service and interest
costs. These factors were largely offset by a particularly strong
return on plan assets. As of September 30, 2009 the underfunding of
Siemens' principal pension plans amounted to EUR4.0 billion.
INDUSTRY SECTOR
Broad-based growth, strong profit performance
Industry produced strong increases in profit, revenue and orders
compared to the fourth quarter a year ago, on successful
implementation of profitability initiatives throughout the fiscal
year as well as improved market conditions. Profit climbed to
EUR883 million, with all Divisions except Industry Solutions
contributing strong increases. Both periods under review included
net charges for staff reduction measures, amounting to EUR122
million in the current period and EUR173 million in the prior-year
period. In addition, profit in the current period was held back by
charges of EUR125 million at Industry Solutions related to current
cost estimates for a project engagement with a local partner in the
U.S.
Fourth-quarter revenue grew 9% year-over-year, with the
strongest growth coming from Industry Automation, OSRAM and Drive
Technologies. Orders climbed 21% compared to the prior-year period,
including double-digit increases in all Divisions except Mobility,
where orders came in below the prior-year period. On a geographic
basis, revenue rose on double-digit growth in the Americas and
Asia, Australia. Orders climbed strongly in all three regions,
including 35% growth in emerging markets worldwide. For Industry as
a whole, currency translation effects added 7 percentage points to
order growth and 6 percentage points to revenue growth. The
positive effect on revenue growth was driven primarily by
Industry's shorter-cycle businesses. The Sector's book-to-bill
ratio was slightly above 1, and its order backlog was EUR28
billion.
Profit climbs on double-digit revenue growth
Fourth-quarter profit at Industry Automation climbed 61%
year-over-year, to EUR334 million, driven by increased demand and
higher capacity utilization. For comparison, the current period
benefited from a EUR19 million gain from the sale of a business
while the prior-year period included EUR22 million in net charges
for staff reduction measures. Revenue and orders grew 21% and 25%,
respectively, on growth in all business units and in all regions.
Purchase price accounting (PPA) effects related to the Division's
fiscal 2007 acquisition of UGS Corp. were EUR39 million in the
current period compared to EUR33 million a year earlier.
Longer-cycle businesses see signs of stabilization
Drive Technologies delivered a strong fourth-quarter
performance, driven primarily by its shorter-cycle businesses.
Profit of EUR281 million was up sharply from the prior-year period
due to higher revenue, increased capacity utilization and an
improved business mix. Net charges for staff reduction measures in
the current period amounted to EUR28 million, compared to EUR30
million in the prior-year period. Revenue rose in all regions,
including increasing signs of stabilization in the Division's
longer-cycle businesses. Orders climbed 20%, with all three regions
reporting strong increases in demand.
Typically strong year-end quarter
Building Technologies more than doubled its fourth-quarter
profit, to EUR148 million, on higher earnings in all businesses.
Net charges for staff reduction measures in the current period
amounted to EUR20 million, while the prior-year period included net
charges for staff reduction measures of EUR29 million as well as
losses on divestments. Broad-based topline growth of 7% in revenue
and 10% in orders included strong demand for energy efficiency
solutions and from emerging markets.
Broad-based profit increase, steady demand growth
OSRAM swung to a profit of EUR137 million in the fourth quarter
from a loss in the same period a year earlier. All business units
contributed to the profit performance, which was due in large part
to higher revenue and associated increases in capacity utilization.
For comparison, the Division's turn-around program in the
prior-year period included net charges for staff reduction measures
of EUR18 million and EUR40 million in charges for major impairments
and inventory write downs.
Fourth-quarter revenue climbed 18% year-over-year on strong
demand for LEDs and automotive solutions. OSRAM intends to continue
investing in market expansion and production capacity in coming
quarters.
Profit burdened by project charge
Industry Solutions posted a loss of EUR119 million in the fourth
quarter, due primarily to a EUR125 million charge related to
current cost estimates for a project engagement with a local
partner in the U.S. Net charges for staff reduction measures in the
current period amounted to EUR62 million, compared to EUR69 million
in the prior-year period. Orders came in sharply higher compared to
the prior-year period, when the Division saw a sharp drop in orders
in its metals technologies business. In contrast, the current
period included two major contract wins for this business in the
Americas. As expected, fourth-quarter revenue for the Division came
in lower year-over-year due primarily to low levels of order intake
in prior periods.
Stable Revenue and Profit
Fourth-quarter profit at Mobility rose to EUR114 million on
stable revenue, as the Division continued to benefit from the
execution of programs to improve performance in its project
business.
ENERGY SECTOR
Strong profit performance, robust order growth
The Energy Sector delivered higher fourth-quarter profit and
revenue along with a 40% jump in new orders compared to the
prior-year period. Profit rose 9%, to EUR953 million, driven
primarily by increased earnings at Fossil Power Generation and
Renewable Energy. In strengthening global energy markets, the
Sector recorded increased expenses for R&D, marketing and
selling associated with growth.
Revenue rose 7% year-over-year, to EUR7.260 billion, on positive
currency translation effects as well as particularly strong
conversion of orders from the backlog. On a regional basis, revenue
grew in the Americas and the region comprising Europe, the
Commonwealth of Independent States, Africa and the Middle East
(Europe/CAME). Revenue declined modestly in Asia, Australia. The
high double-digit increase in Energy orders for the quarter
included demand growth at all Divisions and in all three regions,
confirming improved conditions in global energy markets. For
comparison, the prior-year quarter included significantly lower
volume from larger orders, particularly at Fossil Power Generation.
The book-to-bill ratio in the current period was 1.25, and the
Sector's order backlog at the end of the quarter was EUR53
billion.
Large projects drive high double-digit order growth
Fossil Power Generation continued its strong profit performance
in improving global markets for power generation, increasing
fourth-quarter profit to EUR389 million. Revenue came in below the
prior-year period. In the current period, the Division improved its
business mix with a higher proportion of revenue from its service
business and conversion of higher-margin orders in its product
business. Orders climbed 59% compared to the prior-year quarter,
fueled by a number of large projects in the solutions and service
business in Europe/CAME and Asia, Australia.
Strong performance in wind, continuing build-up in solar
Renewable Energy remained on its profitable growth path in the
fourth quarter. The Division's strong order backlog lifted revenue
to a new high, at EUR977 million. Profit also rose year-over-year,
even after significant expenses and investments to expand the
Division's wind business and build up its solar business. Large
contract wins in Europe/CAME and the Americas took orders up
strongly compared to the prior-year period. The Division expects
impacts on profitability in the first half of fiscal 2011 related
to the build-up of its solar business and seasonal effects in the
wind business.
Growth in turbines business, less favorable revenue mix
Revenue and orders at Oil & Gas were up 8% compared to the
same period a year earlier, due primarily to growth in the
industrial turbines business. A less favorable revenue mix and
higher functional costs reduced fourth-quarter profit to EUR126
million.
Strong growth, stable profit contribution
Fourth-quarter profit at Power Transmission rose to EUR226
million on the strength of increased revenue. Profit was held back
in part by higher marketing and selling expenses associated with
growth and by pricing pressure due mainly to new market entrants.
Revenue increased 15% year-over-year, most notably in the
transformers business. Orders rose 16%, including a large off-shore
grid access project for a wind-farm in Germany.
Distribution orders climb as markets stabilize
Power Distribution posted fourth-quarter profit of EUR123
million, close to the prior-year level despite increased expenses
for marketing, selling and new technologies such as smart grids.
All business units contributed to a 9% increase in revenue. The
Division's markets showed stronger signs of stabilization,
particularly compared to the prior-year period which included a
sharp drop in orders in the medium-voltage business. As a result,
reported fourth-quarter orders came in 44% above the level a year
earlier.
HEALTHCARE SECTOR
Goodwill impairment outweighs strong results at Imaging &
IT
In the Healthcare Sector, strong year-end results at Imaging
& IT were more than offset by charges at other Divisions.
Impairment charges at Diagnostics totaled EUR1.204 billion. An
additional impact came from EUR96 million in charges associated
with current cost estimates for completion of particle therapy
contracts at Workflow & Solutions. As a result, Healthcare
posted a loss of EUR772 million for the quarter. PPA effects
related to past acquisitions at Diagnostics were EUR47 million. In
addition, Healthcare recorded EUR36 million of integration costs
associated with the next phase of integration activities at
Diagnostics. In the fourth quarter a year earlier, PPA effects and
integration costs totaled EUR66 million.
Fourth-quarter orders for Healthcare climbed 14% and revenue
rose 9%. Order growth came primarily from the Americas, offsetting
softness in Europe/CAME, while revenue growth was led by Asia,
Australia. In addition to organic growth, volume benefited from
currency translation effects amounting to nine percentage points
for orders and eight percentage points for revenue. Healthcare's
book-to bill ratio was 1.11 for the quarter, and its order backlog
was EUR7 billion.
Growth and profit in strong year-end performance
Imaging & IT turned in a strong fourth quarter with EUR392
million in profit, a 10% increase compared to the prior-year period
due in part to higher revenue and a favorable product mix. Revenue
increased 8% and orders climbed 18% year-over-year. Double-digit
order growth in the Americas included strong demand in the U.S. On
an organic basis, orders increased 9% and revenue rose 1% compared
to the prior-year quarter.
Particle therapy charges burden solutions business
Workflow & Solutions posted a loss of EUR62 million in the
fourth quarter after taking EUR96 million of the charges mentioned
above associated with particle therapy contracts. The charges
stemmed from tests of prototype technology, resulting in a revised
assessment of the additional costs required to complete the
projects.
Impairment of goodwill at Diagnostics
Diagnostics recorded a loss of EUR1.135 billion in the fourth
quarter, primarily including the EUR1.204 billion in impairment
charges mentioned earlier. On an operating basis, profit was held
back by a less favorable revenue mix and higher functional costs
compared to the same quarter a year earlier.
PPA effects and integration costs were also higher
year-over-year. In the fourth quarter a year earlier, these impacts
were EUR43 million and EUR23 million, respectively. In the current
period, PPA effects were EUR47 million, and the Division also
recorded EUR36 million in costs for integration activities. Organic
revenue and orders were up 4% year-over-year. As reported, revenue
and orders rose 13% led by double-digit growth in Asia, Australia
and the Americas as well as strong growth in emerging markets
across all regions.
During the fourth quarter Siemens completed a strategic review
that reassessed the medium-term growth prospects and long-term
market development of the laboratory diagnostics business, and
subsequently announced a preliminary estimate of goodwill
impairment charges. Following completion of the annual impairment
test, Diagnostics took impairment charges at the close of the
quarter of EUR1.204 billion including EUR1.145 billion for
goodwill, below the announced estimate due to positive currency
translation effects.
EQUITY INVESTMENTS AND CROSS-SECTOR BUSINESSES
Loss at Equity Investments related to stake in NSN
Equity Investments recorded a loss of EUR181 million in the
fourth quarter, due primarily to a loss of EUR241 million related
to Siemens' stake in NSN. A year earlier, Equity Investments
recorded a loss of EUR1.980 billion due mainly to an impairment of
EUR1.634 billion on Siemens' stake in NSN and an equity investment
loss of EUR328 million related to NSN, including a charge of EUR216
million related to an impairment of deferred tax assets. The
prior-year period also included a loss of EUR52 million related to
Enterprise Networks B.V. Siemens' income from Equity Investments is
expected to be volatile in coming quarters.
Staff reduction impacts at Siemens IT Solutions and Services
Siemens IT Solutions and Services posted a loss of EUR463
million, due primarily to charges of EUR383 million for completing
previously announced staff reductions related to a strategic
reorientation of the business aimed at strengthening its
competitive position. Charges for staff reduction measures in the
same period a year earlier were EUR22 million. Profit in the
current period was also burdened by project charges. The business
continued to face operational challenges in highly competitive
markets.
Exceptional results from Siemens Financial Services
Siemens Financial Services (SFS) delivered EUR137 million in
profit (defined as income before income taxes) in the fourth
quarter, up from EUR34 million in the same period a year earlier.
The increase was due mainly to an improved credit environment,
enabling SFS to generate higher interest results and post
significantly lower loss reserves in its commercial finance
business. Profit benefited also from net gains related to various
investments. Total assets rose to EUR12.506 billion, due primarily
to currency translation effects.
CENTRALLY MANAGED PORTFOLIO ACTIVITIES, CORPORATE ACTIVITIES AND
ELIMINATIONS
Sale announced for electronics assembly systems
Centrally managed portfolio activities posted a loss of EUR83
million in the fourth quarter compared to a loss of EUR138 million
in the prior-year period. The current period includes a net loss of
EUR92 million related to electronics assembly systems, as operating
profit from the business was more than offset by a net loss of
EUR106 million related to its announced sale to ASM Pacific
Technology. A year earlier, a loss of EUR29 million for the
electronics assembly systems business included charges for staff
reduction measures. In addition, the fourth quarter a year earlier
included net expenses related to divested businesses.
Bundling costs outweigh real estate disposal gains
Income before income taxes at Siemens Real Estate (SRE) was a
negative EUR25 million in the fourth quarter, compared to a
positive EUR15 million in the same period a year earlier. The
change includes lower net gains related to sales of real estate. In
addition, both periods included costs associated with Siemens'
program to bundle its real estate assets into SRE, including
impairments. During the current quarter, assets with a book value
of EUR293 million were transferred to SRE as part of the program.
SRE will continue to incur costs associated with the real estate
bundling program in coming quarters, and expects to continue with
real estate disposals depending on market conditions.
Corporate items include special employee remuneration
Corporate items and pensions totaled a negative EUR769 million
in the fourth quarter compared to a negative EUR595 million in the
same period a year earlier. The difference was due primarily to
Corporate items, which were a negative EUR736 million compared to a
negative EUR481 million in the fourth quarter of fiscal 2009. The
current quarter includes higher personnel-related expenses,
including expenses of EUR310 million related to special
remuneration for non-management employees. After allocation of the
remuneration to the Sectors is determined in the first quarter of
fiscal 2011, the expenses will be booked at the Sector level. The
current period also includes charges related to legal and
regulatory matters and costs of EUR34 million related to the
strategic reorientation of Siemens IT Solutions and Services,
primarily for centrally managed carve-out activities. These factors
were partly offset by a gain on the divestment of a business. For
comparison, the prior-year period included net charges of EUR169
million related to the global SG&A program and other
personnel-related restructuring measures. In addition, both periods
included negative results related to an asset retirement
obligation. Centrally carried pension expenses totaled EUR33
million in the fourth quarter, down from EUR114 million in the
prior-year period, due primarily to lower benefit costs related to
Siemens' principal pension plans.
Beginning with fiscal 2011, central infrastructure costs
currently included in Corporate items will be allocated primarily
to the Sectors. Financial information for prior periods will be
reported on a comparable basis. Fiscal 2010 central infrastructure
costs to be allocated totaled EUR585 million.
Centrally managed activities related to establishing Siemens IT
Solutions and Services as a separate legal entity and wholly owned
subsidiary of Siemens are expected to result in substantial charges
in coming quarters.
Increased expenses from Corporate Treasury activities
Income before income taxes from Eliminations, Corporate Treasury
and other reconciling items was a negative EUR158 million in the
fourth quarter compared to a negative EUR100 million in the same
period a year earlier. The current period includes changes in fair
market values for derivatives not qualifying for hedge accounting
from Corporate Treasury activities.
OUTLOOK FOR FISCAL 2011
With continuing improvement in Siemens' markets, we expect
organic order intake to show a clear increase compared to fiscal
2010. Supported also by our already strong order backlog, we expect
revenue to return to moderate organic growth. We further anticipate
income from continuing operations to exceed reported fiscal 2010
results by at least 25% to 35%. This outlook excludes effects that
may arise from legal and regulatory matters.
NOTE AND DISCLAIMER
All figures are preliminary and unaudited. This Earnings Release
should be read in conjunction with information Siemens published
today regarding legal proceedings.
FinancialPublications are available for download at:
www.siemens.com/ir - Publications & Events.
New orders and order backlog; adjusted or organic growth rates
of Revenue and new orders; book-to-bill ratio; Total Sectors
Profit; return on equity, or ROE; return on capital employed, or
ROCE; Free cash flow; cash conversion rate, or CCR; adjusted
EBITDA; adjusted EBIT; earnings effect from purchase price
allocation (PPA effects) and integration costs; net debt and
adjusted industrial net debt are or may be non-GAAP financial
measures. These supplemental financial measures should not be
viewed in isolation as alternatives to measures of Siemens'
financial condition, results of operations or cash flows as
presented in accordance with IFRS in its Consolidated Financial
Statements. Other companies that report or describe similarly
titled financial measures may calculate them differently.
Definitions of these supplemental financial measures, a discussion
of the most directly comparable IFRS financial measures,
information regarding the usefulness of Siemens' supplemental
financial measures, the limitations associated with these measures
and reconciliations to the most comparable IFRS financial measures
are available on Siemens' Investor Relations website at
www.siemens.com/nonGAAP. For additional information, see
"Supplemental financial measures" and the related discussion in
Siemens'
annual report on Form 20-F, which can be found on Siemens'
Investor Relations website or via the EDGAR system on the website
of the United States Securities and Exchange Commission.
Starting today at 9.00 a.m. CET, we will provide a live video
webcast of the annual press conference with CEO Peter Löscher and
CFO Joe Kaeser. You can access the webcast at
www.siemens.com/pressconference.
The accompanying slide presentation can also be viewed here, and
a recording of the conference will subsequently be made available
as well. Also today at 4.00 p.m. CET, you can follow a conference
in English with analysts and investors live on the Internet by
going to www.siemens.com/analystconference
This document contains forward-looking statements and
information - that is, statements related to future, not past,
events. These statements may be identified by words such as
"expects," "looks forward to," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," "will," "project" or words of
similar meaning. Such statements are based on the current
expectations and certain assumptions of Siemens' management, and
are, therefore, subject to certain risks and uncertainties. A
variety of factors, many of which are beyond Siemens' control,
affect Siemens' operations, performance, business strategy and
results and could cause the actual results, performance or
achievements of Siemens to be materially different from any future
results, performance or achievements that may be expressed or
implied by such forward-looking statements. In particular, Siemens
is strongly affected by changes in general economic and business
conditions as these directly impact its processes, customers and
suppliers. This may negatively impact our revenue development and
the realization of greater capacity utilization as a result of
growth. Yet due to their diversity, not all of Siemens' businesses
are equally affected by changes in economic conditions;
considerable differences exist in the timing and magnitude of the
effects of such changes. This effect is amplified by the fact that,
as a global company, Siemens is active in countries with economies
that vary widely in terms of growth rate. Uncertainties arise from,
among other things, the risk of customers delaying the conversion
of recognized orders into revenue or cancellations of recognized
orders, of prices declining as a result of continued adverse market
conditions by more than is currently anticipated by Siemens'
management or of functional costs increasing in anticipation of
growth that is not realized as expected. Other factors that may
cause Siemens' results to deviate from expectations include
developments in the financial markets, including fluctuations in
interest and exchange rates (in particular in relation to the U.S.
dollar), in commodity and equity prices, in debt prices (credit
spreads) and in the value of financial assets generally. Any
changes in interest rates or other assumptions used in calculating
pension obligations may impact Siemens' defined benefit obligations
and the anticipated performance of pension plan assets resulting in
unexpected changes in the funded status of Siemens' pension and
post-employment benefit plans. Any increase in market volatility,
further deterioration in the capital markets, decline in the
conditions for the credit business, continued uncertainty related
to the subprime, financial market and liquidity crises, or
fluctuations in the future financial performance of the major
industries served by Siemens may have unexpected effects on
Siemens' results. Furthermore, Siemens faces risks and
uncertainties in connection with certain strategic reorientation
measures; the performance of its equity interests and strategic
alliances; the challenge of integrating major acquisitions and
implementing joint ventures and other significant portfolio
measures; the introduction of competing products or technologies by
other companies; changing competitive dynamics (particularly in
developing markets); the risk that new products or services will
not be accepted by customers targeted by Siemens; changes in
business strategy; the outcome of pending investigations, legal
proceedings and actions resulting from the findings of, or related
to the subject matter of, such investigations; the potential impact
of such investigations and proceedings on Siemens' business,
including its relationships with governments and other customers;
the potential impact of such matters on Siemens' financial
statements, and various other factors. More detailed information
about certain of the risk factors affecting Siemens is contained
throughout this report and in Siemens' other 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 neither intends to, nor assumes any obligation
to, update or revise these forward-looking statements in light of
developments which differ from those anticipated.
For tables omitted, please go to
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For the full report, please go to
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becker.alexander@siemens.com
Dr. Constantin BirnstielPhone: +49 89 636-33032E-mail:
constantin.birnstiel@siemens.comSiemens AG,80333 Munich,
Germany
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