Siemens AG
Siemens in fiscal 2004 (ended September 30, 2004)
-- Siemens reported net income of 3.405 billion, up 39% from 2.445 billion a
year earlier, resulting in basic earnings per share of 3.82.
-- Net income was up 23% to 3.002 billion on a comparable basis, excluding a
pre-tax gain of 590 million and a reversal of 246 million in deferred tax
liabilities related to the sale of shares of Infineon Technologies AG,
partially offset by a goodwill impairment of 433 million related to
Logistics and Assembly Systems (L&A).
-- Group profit from Operations was 4.998 billion, up 16% from 4.295 billion
in fiscal 2003.
-- Orders rose 8% to 80.830 billion and sales increased 1% to 75.167 billion
year-over-year. On a comparable basis, excluding currency translation
effects and the net effect of acquisitions and dispositions, orders rose 9%
and sales increased 3%.
-- Net cash from operating and investing activities was 3.262 billion, up from
1.773 billion a year earlier.
-- Siemens management proposes a dividend of 1.25 per share, up from 1.10 a
year earlier.
-- At the beginning of fiscal 2005, Siemens made a supplemental cash
contribution to its pension plans of 1.500 billion.
"Fiscal 2004 was a very successful year for Siemens," said CEO Heinrich v.
Pierer upon releasing preliminary full-year results for fiscal 2004. "Most of
our Groups delivered impressive results, including strong volume growth and
double-digit earnings growth, thanks to successful implementation of our 'Go for
profit and growth' initiative."
"We are continuing this initiative in fiscal 2005. We are also pursuing further
operational improvements at our Groups, given that factors such as a weakening
U.S. dollar and rising commodity prices may make the macroeconomic environment
more challenging," Pierer continued. "In addition we will deal with the
particular issues at Transportation Systems (TS), Siemens Business Services
(SBS) and Communications (Com)."
For the fiscal year ended September 30, 2004, Siemens reported net income of
3.405 billion, up 39% compared to fiscal 2003. Basic and diluted earnings per
share rose to 3.82 and 3.66, respectively, compared to 2.75 per share a year
earlier. Net income was 3.002 billion on a comparable basis, excluding the
Infineon and goodwill effects mentioned above. Group profit from Operations rose
16%, to just under 5 billion, as 10 of the 13 Groups in Operations increased
their profits compared to fiscal 2003. Automation and Drives (A&D), Medical
Solutions (Med), and Power Generation (PG) contributed the lion's share of Group
profit from Operations, followed by Siemens VDO Automotive (SV) and Osram.
Despite difficult markets, Information and Communication Networks (ICN),
Logistics and Assembly Systems (L&A), Information and Communication Mobile (ICM)
and Industrial Solutions and Services (I&S) all made significant improvements in
Group profit. At TS, management took decisive steps to address challenges in the
Group's rolling stock business.
Siemens achieved its goal of restoring top-line growth in fiscal 2004, posting
sales of 75.167 billion compared to 74.233 billion a year earlier. Sales were
up 3% year-over-year on a comparable basis, excluding currency translation
effects and the net effect of acquisitions and dispositions. Orders rose to
80.830 billion from 75.056 billion in the prior fiscal year, a 9% increase on
a comparable basis. A majority of the Groups in Operations reported increases in
both sales and orders for the year, despite declining business volume in
Germany, particularly in the fourth quarter.
Net cash from operating and investing activities was 3.262 billion in fiscal
2004, compared to 1.773 billion a year earlier. The difference is due primarily
to net proceeds of 1.794 billion from the sale of Infineon shares in fiscal
2004. Within Operations, operating activities generated 4.008 billion in cash
while investing activities included 822 million used to acquire USFilter, a
water systems and services business in the U.S. For comparison, operating
activities provided 4.123 billion in fiscal 2003, and investing activities
included 929 million used for PG's industrial turbine business. Siemens also
made similar supplemental cash contributions to its pension plans in both years,
totaling 1.255 billion in fiscal 2004 and 1.192 billion a year earlier.
Siemens worldwide results for the fourth quarter of fiscal 2004
Sales rose 5% compared to the fourth quarter a year earlier, to 20.828 billion.
Orders climbed 16%, to 21.547 billion, despite a 9% decline in orders in
Germany. Broad-based margin improvements in Operations fueled a 20% rise in
Group profit from Operations year-over-year, to 1.322 billion. Net income for
the quarter was 654 million. For comparison, fourth-quarter net income of 724
million a year earlier included a positive effect related to Corporate items and
higher income from Corporate Treasury activities. Basic and diluted earnings per
share were 0.73 and 0.70, respectively, compared to 0.81 in the same period a
year earlier. Net cash from operating and investing activities was 609 million
in the fourth quarter. Investing activities included USFilter, which used 822
million, as well as additional smaller acquisitions. Net cash of 1.246 billion
in the same period a year earlier included a 424 million payment for PG's
industrial turbine acquisition and a supplemental cash pension contribution of
750 million.
Operations in fiscal 2004
Information and Communications
Information and Communication Networks (ICN)
Fourth quarter ended September 30, Fiscal Year ended September 30,
---------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(b)
------------------------------------------------------------------------------------------------------------------------
Group profit 83 57 46% 222 (366)
Group profit margin 4.2% 2.9% 3.2% (5.1)%
------------------------------------------------------------------------------------------------------------------------
Sales 1,998 1,952 2% 1% 6,994 7,122 (2)% 0%
New orders 1,781 1,685 6% 4% 7,011 7,070 (1)% 1%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects of (2)% on sales and orders, and portfolio effects of 3% and 4% on sales
and orders, respectively.
(b) Excluding currency translation effects of (3)%, and portfolio effects of 1% on sales and orders.
ICN posted profits in all four quarters and delivered Group profit of 222
million for the full fiscal year. The loss of 366 million a year earlier
included significant charges for severance as well as write-downs of venture
capital and other investments. ICN's Carrier Networks and Services businesses
accounted for much of the profit improvement year-over-year. While sales
remained virtually unchanged year-over-year, at 3.426 billion, carrier
activities delivered 98 million in earnings compared to a loss of 439 million
a year earlier. The Enterprise Networks division earned 208 million on sales of
3.578 billion, close to prior-year levels. For ICN overall, sales of just under
7.0 billion for the fiscal year were level with the prior year on a comparable
basis. Orders also remained stable year-over-year. In the fourth quarter, ICN
increased Group profit to 83 million on sales of 1.998 billion. Orders of
1.781 billion were up 6% year-over-year.
Information and Communication Mobile (ICM)
Fourth quarter ended September 30, Fiscal Year ended September 30,
---------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(a)
------------------------------------------------------------------------------------------------------------------------
Group profit 51 49 4% 347 180 93%
Group profit margin 1.7% 1.9% 3.1% 1.8%
------------------------------------------------------------------------------------------------------------------------
Sales 2,978 2,619 14% 16% 11,042 9,964 11% 13%
New orders 2,873 2,838 1% 3% 11,459 9,960 15% 17%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects.
In fiscal 2004, ICM substantially increased its Group profit compared to fiscal
2003 and also achieved double-digit growth in sales and orders. The improvement
was due primarily to the Mobile Networks division, which delivered 396 million
in earnings on sales of 4.979 billion. Both figures were up strongly from the
prior year, when the division earned 116 million on 4.311 billion in sales.
The Cordless Products division also contributed increases in both earnings and
sales year-over-year. ICM's Mobile Phones division sold 51.1 million handsets
during the year, well above the 39.1 million handsets sold a year earlier.
Competitive pressures reduced average selling price per unit, however, and
quality issues delayed both the rollout and full profitability of the division's
new 65 series of mobile handsets. As a result, Mobile Phones posted a loss of
152 million on sales of 4.979 billion compared to earnings of 27 million on
sales of 4.474 billion in the prior year. In the fourth quarter, ICM's Group
profit was up 4% year-over-year and revenues were up 14%. Mobile Networks
increased earnings substantially year-over-year, to 161 million, on
significantly higher sales of 1.474 billion. In contrast, the impacts from the
65 series mentioned above contributed to a loss of 141 million at Mobile Phones
compared to earnings of 14 million a year earlier. While fourth-quarter handset
volume rose year-over-year from 12.0 million to 12.7 million units, revenues at
Mobile Phones were nearly unchanged at 1.254 billion.
Siemens Business Services (SBS)
Fourth quarter ended September 30, Fiscal Year ended September 30,
---------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(b)
------------------------------------------------------------------------------------------------------------------------
Group profit (28) (41) 32% 40 13 208%
Group profit margin (2.2)% (3.1)% 0.8% 0.2%
------------------------------------------------------------------------------------------------------------------------
Sales 1,245 1,317 (5)% (5)% 4,716 5,205 (9)% (9)%
New orders 2,342 1,244 88% 34% 6,293 5,226 20% 8%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects of 1%, and portfolio effects of 53% on orders.
(b) Excluding portfolio effects of 12% on orders.
SBS posted Group profit of 40 million compared to 13 million a year earlier.
The current year includes a 93 million gain from the sale of 74.9% of SBS'
Kordoba unit, largely offset by charges for severance. The prior year included
significant charges for risks associated with a long-term business process
outsourcing contract. Declining demand for IT solutions, particularly in
Germany, resulted in sales of 4.716 billion compared to 5.205 billion a year
earlier. SBS won two major outsourcing contracts in England, which pushed orders
up 20% year-over-year, to 6.293 billion. The fourth quarter includes the
Kordoba gain, severance charges, and outsourcing orders mentioned above.
Automation & Control
Automation and Drives (A&D)
Fourth quarter ended September 30, Fiscal Year ended September 30,
----------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(b)
----------------------------------------------------------------------------------------------
Group profit 313 240 30% 1,077 806 34%
Group profit
margin 12.7% 10.5% 12.2% 9.6%
----------------------------------------------------------------------------------------------
Sales 2,469 2,285 8% 9% 8,829 8,375 5% 7%
New orders 2,310 2,009 15% 16% 8,980 8,476 6% 8%
----------------------------------------------------------------------------------------------
(a) Excluding currency translation effects of (2)%, and portfolio effects of 1% on sales
and orders.
(b) Excluding currency translation effects of (3)%, and portfolio effects of 1% on sales
and orders.
A&D exemplified the success of Siemens' profit and growth initiative in fiscal
2004, driving Group profit up to 1.077 billion for the year on solid gains in
sales and orders. A&D further improved its earnings margin, as a result of
increased productivity and higher capacity utilization. Stronger demand in
international markets, including 25% growth with customers in Asia-Pacific,
increased sales to 8.829 billion for the year. Orders rose 6% year-over-year,
to 8.980 billion. In the fourth quarter, orders increased 15%, to 2.310
billion. Sales rose 8%, to 2.469 billion, leading to higher Group profit of
313 million.
Industrial Solutions and Services (I&S)
Fourth quarter ended September 30, Fiscal Year ended September 30,
----------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(b)
------------------------------------------------------------------------------------------------------------------------
Group profit 35 (17) 95 (41)
Group profit margin 2.7% (1.5)% 2.2% (1.0)%
------------------------------------------------------------------------------------------------------------------------
Sales 1,309 1,134 15% 5% 4,290 4,012 7% 7%
New orders 1,190 959 24% 9% 4,356 3,955 10% 9%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects of (3)% on sales and orders, and portfolio effects of 13% and 18% on sales
and orders, respectively.
(b) Excluding currency translation effects of (3)% on sales and orders, and portfolio effects of 3% and 4% on sales
and orders, respectively.
I&S contributed 95 million in Group profit for the year, on broad-based
earnings improvement. Group profit also benefited from positive effects related
to capacity reduction programs. In contrast, severance charges contributed to a
loss a year earlier. Sales at I&S were up 7% year-over-year, to 4.290 billion,
and orders rose 10%, to 4.356 billion. The fourth quarter confirmed the trend,
as I&S reported Group profit of 35 million and a higher earnings margin.
Fourth-quarter sales and orders grew 15% and 24%, respectively, benefiting from
the USFilter acquisition between the periods under review.
Logistics and Assembly Systems (L&A)
Fourth quarter ended September 30, Fiscal Year ended September 30,
---------------------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(b)
------------------------------------------------------------------------------------------------------------------------
Group profit 55 (178) 2 (218)
Group profit margin 7.6% (26.2)% 0.1% (8.4)%
------------------------------------------------------------------------------------------------------------------------
Sales 725 680 7% 11% 2,338 2,600 (10)% (5)%
New orders 552 802 (31)% (28)% 2,687 2,599 3% 9%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects of (4)% and (2)% on sales and orders, respectively, and portfolio effects
of (1)% on orders.
(b) Excluding currency translation effects.
A particularly strong fourth quarter enabled L&A to finish in the black
following a loss in fiscal 2003. Fiscal 2004 included charges related to excess
capacity and cost overruns, while the prior year included substantial loss
provisions related to two large contracts. The Electronics Assembly division was
the Group's leading earnings contributor, and also increased its sales, orders,
and earnings margin year-over-year. Completion of major projects led to lower
sales, at 2.338 billion. Orders of 2.687 billion were up 3% year-over-year.
L&A's Group profit of 55 million in the fourth quarter included earnings from
project incentives and also benefited from successful pursuit of a patent
infringement claim. Electronics Assembly also made a substantial contribution to
the improvement in earnings year-over-year.
Siemens Building Technologies (SBT)
Fourth quarter ended September 30, Fiscal Year ended September 30,
------------------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(b)
------------------------------------------------------------------------------------------------------------------------
Group profit 39 38 3% 108 101 7%
Group profit margin 3.2% 2.7% 2.5% 2.0%
------------------------------------------------------------------------------------------------------------------------
Sales 1,214 1,400 (13)% (4)% 4,247 4,990 (15)% (4)%
New orders 1,153 1,146 1% 12% 4,358 4,775 (9)% 2%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects of (2)% and (3%) on sales and orders, respectively, and portfolio effects
of (7)% and (8)% on sales and orders, respectively.
(b) Excluding currency translation effects of (4)%, and portfolio effects of (7)% on sales and orders.
SBT increased Group profit to 108 million despite lower sales following the
divestment of its facility management business early in the year. Group profit
of 101 million a year earlier included substantial severance charges. On a
comparable basis, SBT's sales of 4.247 billion for fiscal 2004 were 4% below
the prior-year level and orders of 4.358 billion were up 2% year-over-year. For
the fourth quarter, SBT's Group profit reflected higher margins from an improved
revenue mix. On a comparable basis, sales came in 4% lower than the prior-year
quarter while orders climbed 12% year-over-year.
Power
Power Generation (PG)
Fourth quarter ended September 30, Fiscal Year ended September 30,
----------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(b)
------------------------------------------------------------------------------------------------------------------------
Group profit 206 221 (7)% 961 1,171 (18)%
Group profit margin 10.4% 11.3% 12.8% 16.8%
------------------------------------------------------------------------------------------------------------------------
Sales 1,979 1,961 1% (5)% 7,527 6,967 8% 0%
New orders 2,124 1,223 74% 68% 9,243 7,302 27% 14%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects of (2)% and (4)% on sales and orders, respectively, and portfolio effects
of 8% and 10% on sales and orders, respectively.
(b) Excluding currency translation effects of (4)% on sales and orders, and portfolio effects of 12% and 17% on sales
and orders, respectively.
PG contributed 961 million in Group profit for the year. Excluding the net
effect of cancellation gains of 267 million in fiscal 2003 and 47 million in
fiscal 2004, Group profit was stable year-over-year. Sales at PG rose 8%
year-over-year, to 7.527 billion. Orders climbed 27%, to 9.243 billion, driven
in part by full-year inclusion of the industrial turbine businesses PG acquired
in the second half of fiscal 2003. Order growth was regionally widespread, as PG
won new business in Africa, Asia, Europe, the Near East, and Latin America. PG's
service business also continued to grow year-over-year. In the fourth quarter,
PG generated Group profit of 206 million on sales of 1.979 billion. Orders
were 2.124 billion, up strongly from the prior-year level.
Power Transmission and Distribution (PTD)
Fourth quarter ended September 30, Fiscal Year ended September 30,
------------------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(b)
------------------------------------------------------------------------------------------------------------------------
Group profit 62 65 (5)% 238 207 15%
Group profit margin 5.3% 7.4% 6.6% 6.1%
------------------------------------------------------------------------------------------------------------------------
Sales 1,176 882 33% 32% 3,611 3,399 6% 9%
New orders 1,088 798 36% 32% 3,863 3,586 8% 11%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects of (4)% on sales and orders, and portfolio effects of 5% and 8% on sales
and orders, respectively.
(b) Excluding currency translation effects of (4)% and (5)% on sales and orders, respectively, and portfolio effects
of 1% and 2% on sales and orders, respectively.
PTD increased Group profit to 238 million for the year on broad-based earnings
growth within the Group. PTD also achieved solid sales growth, particularly in
Europe and Asia-Pacific. Overall, sales rose 6% year-over-year, to 3.611
billion, and orders were up 8%, at 3.863 billion. For the fourth quarter, Group
profit was stable year-over-year while sales and orders surged, including volume
from PTD's acquisition of Trench Electric Holding and new orders in Africa and
the Middle East.
Transportation
Transportation Systems (TS)
Fourth quarter ended September 30, Fiscal Year ended September 30,
-------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(a)
-----------------------------------------------------------------------------------------------
Group profit (129) 78 (434) 284
Group profit
margin (10.5)% 5.5% (10.1)% 6.0%
-----------------------------------------------------------------------------------------------
Sales 1,225 1,416 (13)% (13)% 4,310 4,697 (8)% (7)%
New orders 1,238 1,418 (13)% (14)% 4,321 4,674 (8)% (7)%
-----------------------------------------------------------------------------------------------
(a) Excluding currency translation effects.
TS responded decisively to the technical problems and associated issues that
affected its rolling stock business, particularly the Combino light rail-car
program, in fiscal 2004. The Group identified technical solutions during the
year and is beginning to implement them. These actions and associated charges,
accompanied by a corresponding slow-down in rolling stock sales, led to a loss
of 434 million. In addition to these factors, TS also faced generally slower
demand for rail transportation systems, particularly in Germany. As a result,
sales and orders at TS were 4.310 billion and 4.321 billion, respectively, 8%
below fiscal 2003 levels. Earnings in the fourth quarter included a significant
portion of the charges mentioned above, mainly for Combino but also for other
rolling stock projects in Europe and the Americas. These factors resulted in a
loss on lower sales compared to a profit and sales growth a year earlier.
Siemens VDO Automotive (SV)
Fourth quarter ended September 30, Fiscal Year ended September 30,
-------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(b)
------------------------------------------------------------------------------------------------------------------------
Group profit 160 115 39% 562 418 34%
Group profit margin 7.0% 5.8% 6.2% 5.0%
------------------------------------------------------------------------------------------------------------------------
Sales 2,298 1,967 17% 7% 9,001 8,375 7% 9%
New orders 2,313 1,967 18% 8% 9,029 8,375 8% 10%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects of (3)%, and portfolio effects of 13% on sales and orders.
(b) Excluding currency translation effects of (3)%, and portfolio effects of 1% on sales and orders.
Group profit of 562 million at SV enabled the Group to break even relative to
its full-year cost of capital for the first time. Earnings improved at all
divisions within SV, with the fastest growth coming at the Interior &
Infotainment division. Revenue growth was also broad-based, as sales rose 7%
compared to the prior year, to 9.001 billion. Orders rose 8%, to 9.029
billion. Fourth-quarter Group profit increased to 160 million on a strong rise
in sales, which benefited from SV's acquisition of a U.S.-based automotive
electronics business between the periods under review. This transaction pushed
top-line growth into double digits in the fourth quarter, with sales reaching
2.298 billion and orders climbing to 2.313 billion.
Medical
Medical Solutions (Med)
Fourth quarter ended September 30, Fiscal Year ended September 30,
-----------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(b)
------------------------------------------------------------------------------------------------------------------------
Group profit 272 286 (5)% 1,046 1,118 (6)%
Group profit margin 13.3% 14.0% 14.8% 15.1%
------------------------------------------------------------------------------------------------------------------------
Sales 2,046 2,040 0% 7% 7,072 7,422 (5)% 6%
New orders 2,497 2,330 7% 14% 8,123 7,835 4% 15%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects of (4)% and (5)% on sales and orders, respectively, and portfolio effects
of (3)% and (2)% on sales and orders, respectively.
(b) Excluding currency translation effects of (6)% and (7)% on sales and orders, respectively, and portfolio effects
of (5)% and (4)% on sales and orders, respectively.
Med again delivered more than 1 billion in full-year Group Profit. Fiscal 2004
included 118 million in gains from portfolio transactions, primarily the sale
of Med's Life Support Systems (LSS) business. For comparison, fiscal 2003
included a 63 million gain related to the contribution of a portion of Med's
electromedical systems business to a joint venture with Dr�gerwerk AG. While
these transactions reduced Med's revenue base compared to the prior year, sales
of 7.072 billion were up 6% year-over-year excluding currency translation and
portfolio effects. Orders climbed to 8.123 billion, up 15% on a comparable
basis. In the fourth quarter, Group profit of 272 million on sales of 2.046
billion, almost unchanged year-over-year, reflected increased pressure on
margins. At the same time, orders in the quarter reached a new high, at 2.497
billion, on strong demand for Med's diagnostic imaging solutions and innovative
medical information systems.
Lighting
Osram
Fourth quarter ended September 30, Fiscal Year ended September 30,
-----------------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(a)
------------------------------------------------------------------------------------------------------------------------
Group profit 109 105 4% 445 410 9%
Group profit margin 10.4% 10.3% 10.5% 9.8%
------------------------------------------------------------------------------------------------------------------------
Sales 1,050 1,018 3% 8% 4,240 4,172 2% 8%
New orders 1,050 1,018 3% 8% 4,240 4,172 2% 8%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects.
Osram increased its Group profit 9% for the year, to 445 million, leveraging
higher manufacturing productivity to achieve a double-digit earnings margin for
the year. Sales increased to 4.240 billion, up 8% year-over-year on a
comparable basis. Higher revenue year-over-year was highlighted by particularly
strong growth in Asia-Pacific and Latin America. Results for the fourth quarter
confirmed these trends, as Osram's Group profit, earnings margin, and revenue
all rose compared to the same period a year earlier.
Other Operations
Other Operations consist of centrally held equity investments and other
operating businesses not related to a Group, such as Siemens' joint ventures for
household appliances (BSH Bosch und Siemens Hausger�te GmbH) and computers
(Fujitsu Siemens Computers). Equity earnings from these joint ventures again
were the primary contributor to earnings from Other Operations, which totaled
289 million in fiscal 2004 compared to 212 million in fiscal 2003.
Corporate items, pensions and eliminations
Corporate items, pensions and eliminations were a negative 1.207 billion in
fiscal 2004, compared to a negative 1.576 billion in the same period a year
earlier. Corporate items totaled a negative 450 million for the year compared
to a negative 747 million in fiscal 2003. Corporate items in fiscal 2004
included the pre-tax gain of 590 million from the sale of Infineon shares,
partly offset by the 433 million goodwill impairment related to L&A. This
impairment is taken centrally because the relevant businesses were acquired at
the corporate level as part of Siemens' Atecs Mannesmann transaction. Corporate
items a year earlier benefited from the positive resolution of an arbitration
proceeding. Siemens' equity share of Infineon's net result was a positive 14
million compared to a negative 170 million in fiscal 2003. Centrally carried
pension expense was 730 million in fiscal 2004 compared to 828 million a year
earlier. Domestic pension service costs were carried centrally in fiscal 2003
but are allocated to the Groups beginning in fiscal 2004. The effect of this
change was partly offset by higher amortization of unrealized pension plan
losses in fiscal 2004.
Financing and Real Estate
Siemens Financial Services (SFS)
Fourth quarter ended September 30, Fiscal Year ended September 30,
------------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(a)
------------------------------------------------------------------------------------------------------------------------
Income before
income taxes 60 56 7% 250 269 (7)%
------------------------------------------------------------------------------------------------------------------------
Total assets 9,055 8,445 7%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects.
Income before income taxes at SFS in fiscal 2004 was 250 million compared to
269 million a year earlier. The difference is due in part to higher write-downs
of receivables in the Equipment & Sales Financing (ESF) division compared to the
prior year. Income at SFS for the year also reflects a strategic expansion of
the ESF division in Europe and North America, resulting in a corresponding
increase in total assets compared to fiscal 2003. Results for the fourth quarter
include the positive effect of these activities, with income before income taxes
rising 7% compared to the same period a year earlier.
Siemens Real Estate (SRE)
Fourth quarter ended September 30, Fiscal Year ended September 30,
-------------------------------------------------------------------------------------------------
% Change % Change
( in millions) 2004 2003 Actual Comparable(a) 2004 2003 Actual Comparable(a)
------------------------------------------------------------------------------------------------------------------------
Income before
income taxes (1) 19 108 206 (48)%
------------------------------------------------------------------------------------------------------------------------
Sales 410 410 0% 0% 1,584 1,592 (1)% (1)%
------------------------------------------------------------------------------------------------------------------------
(a) Excluding currency translation effects.
Income before income taxes at SRE in fiscal 2004 was 108 million compared to
206 million a year earlier. While sales were level with the prior year,
weakness in the market for commercial real estate reduced returns. Market
conditions also led the Group to terminate a major development project in
Frankfurt during fiscal 2004, and the associated charges contributed to the
decline in income for the year. Results for the fourth quarter include
concluding charges.
Eliminations, reclassifications and Corporate Treasury
Income before taxes from eliminations, reclassifications and Corporate Treasury
of 224 million for fiscal year 2004 included higher interest income. In
comparison, the prior year amount of 266 million included higher positive
effects from hedging activities not qualifying for hedge accounting, as well as
a 35 million gain related to the buyback of a note exchangeable into Infineon
shares.
Income statement highlights for Siemens worldwide in fiscal 2004
Siemens reported net income for fiscal 2004 of 3.405 billion, up 39% from
2.445 billion a year earlier. Net income benefited from a pre-tax gain of 590
million and 246 million in positive tax effects related to the sale of Infineon
shares, partially offset by a 433 million goodwill impairment related to L&A.
Excluding these effects, net income was 3.002 billion, up 23% year-over-year.
For Siemens worldwide, gross profit margin increased to 28.8% from 28.1%, as
most of the Groups in Operations improved their gross profit year-over-year.
ICM, A&D, and PG were the leaders in this regard, while gross profit was lower
at TS and Med. Research and development expenses were stable at 6.7% of sales.
Marketing, selling and general administrative expenses improved to 18.0% of
sales, compared to 18.2% in the prior year, as sustained efforts at cost control
coincided with rising revenues.
Other operating income (expense), net, was a negative 156 million, as gains
from divestments, particularly Med's sale of LSS, were offset by the goodwill
impairment related to L&A. For comparison, other operating income (expense),
net, in fiscal 2003 was a positive 642 million, including significant net gains
from project cancellations at PG and Med's gain from the contribution of assets
to a joint venture. Income (loss) from investments in other companies, net, was
a positive 1.031 billion, up from 142 million in fiscal 2003. The change is
due primarily to Infineon, including the gain on share sales in the current year
and the equity share of Infineon's net loss in the prior year.
Sales and order trends for fiscal 2004
Sales for Siemens worldwide in fiscal 2004 were 75.167 billion, up from 74.233
billion a year earlier. Orders for Siemens worldwide increased 8% to 80.830
billion compared to 75.056 billion in the prior year. Both sales and orders
increased primarily on the strength of international business. In Germany, sales
of 17.073 billion were level with the prior year and orders of 16.001 billion
came in 5% lower. International sales increased 2% year-over-year, to 58.094
billion, and international orders climbed 11%, to 64.829 billion.
Within international results, sales in the Asia-Pacific region increased 7%
year-over-year, to 9.349 billion, and orders rose 10%, to 10.028 billion.
Within Asia-Pacific, sales in China were up 1% at 2.873 billion and orders rose
12% year-over-year, to 3.134 billion. Sales in the U.S. were 13.621 billion,
11% lower compared to the same period a year earlier. U.S. orders of 14.043
billion, were 4% lower year-over-year. Excluding currency translation effects,
sales were level and orders increased 8% in the U.S.
Liquidity for fiscal 2004
In Operations, net cash from operating and investing activities was 2.485
billion, benefiting from 1.794 billion in proceeds from the sale of Infineon
shares. Cash used for acquisitions in fiscal 2004 was 1.472 billion, including
822 million for USFilter. Net cash from operating and investing activities in
Operations in fiscal 2003, 468 million, included higher outflows for investing
activities, including 929 million for PG's industrial turbine business. Both
periods included supplemental cash contributions to Siemens pension plans,
totaling 1.255 billion in fiscal 2004 and 1.192 billion in fiscal 2003.
The two other components of Siemens worldwide, which include Financing and Real
Estate and Corporate Treasury activities, provided net cash from operating and
investing activities of 777 million in fiscal 2004. These components provided
net cash of 1.305 billion in the prior year. Fiscal 2004 included renewed asset
growth in the financing business. Positive net effects from Corporate Treasury
activities, primarily related to the hedging of intra-company financings, were
substantially higher in the prior year. In aggregate, net cash provided by
operating and investing activities for Siemens worldwide was 3.262 billion in
the current year compared to 1.773 billion in fiscal 2003.
Funding status of pension plans
The funding status of Siemens' principal pension plans on September 30, 2004
improved significantly compared to the end of the prior fiscal year, with an
underfunding of approximately 3.1 billion compared to an underfunding of
approximately 5.0 billion at September 30, 2003. The improvement in funding
status is mainly due to supplemental contributions in the first quarter. The
return on plan assets during the last twelve months amounted to 1.128 billion,
close to the expected annualized return of 6.7%.
Economic Value Added
Economic Value Added (EVA) for Siemens worldwide was 1.364 billion in fiscal
2004, up from 449 million a year earlier. EVA benefited from significantly
higher Group profit, and also included the gain on the sale of Infineon shares
and the goodwill impairment mentioned above. Excluding Infineon and the goodwill
impairment, EVA improved from 822 million in fiscal 2003 to 1.188 billion in
fiscal 2004.
Subsequent events
The following events took place or will take place after the close of the fiscal
year:
-- Effective October 1, 2004, ICN and ICM were combined to form a new Group
called Communications (Com).
-- At the beginning of fiscal 2005, Siemens made a supplemental cash
contribution to its pension plans of 1.500 billion.
-- Siemens AG �sterreich has signed on November 7, 2004 an agreement to acquire
Victory Industriebeteiligung AG (Austria), which directly and indirectly
holds an equity share of approximately 16% in VA Technologie AG (VA Tech).
As a result of the Victory acquisition, Siemens has informed the boards of
VA Tech, the boards of �sterreichische Industrie Holding AG (�IAG) and the
Austrian government that it will participate in VA Tech's capital increase
which is expected later this month. In addition, Siemens has informed the
Austrian takeover panel about its plans to shortly submit a voluntary
takeover bid for all of VA Tech outstanding shares. Siemens will offer 55
per share to VA Tech shareholders.
-- On November 28, 2004, the irrevocable non-voting trust that was created to
hold a portion of Siemens' shares in Infineon will be dissolved in
accordance with the trust agreement. This will thereby restore Siemens'
voting interest in its entire holding of Infineon shares, representing
approximately 18.2% of Infineon shares outstanding. Siemens will make prompt
notification to the appropriate regulatory authorities in Germany (BaFin)
and the U.S. (SEC), and to Infineon, following the dissolution of the trust.
Note: The Siemens Annual Press Conference with CEO Heinrich v. Pierer and CFO
Heinz-Joachim Neub�rger will be transmitted live on the Internet beginning at
10:00 a.m. CET on November 11, 2004. You can access the conference at
www.siemens.com/pressconference. At the same location you will find the speeches
and the presentation.
Siemens CEO Heinrich v. Pierer and CFO Heinz-Joachim Neub�rger will hold a
conference with analysts and investors on November, 12, 2004 at 3.00 p.m. CET.
You can follow this conference live on the Internet by going to
www.siemens.com/analystconference.
All figures are preliminary and unaudited. A reconciliation of EVA to net income
is available online at www.siemens.com/investors.
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," "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, 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 and various other factors. More detailed information about certain of
these 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 anticipated,
believed, estimated, expected, intended, planned 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.
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