Siemens 2005 Annual Report Download - page 155

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ab) Acquisitions in fiscal 2004
Effective in the fourth quarter of fiscal 2004, the Company acquired USFilter Corporation (USFil-
ter), a group offering products and services in the municipal and industrial water and waste
water treatment and supply market. The primary reason for the acquisition was to enter the water
treatment and supply business in the North American market. The business is integrated into I&S
and was consolidated as of August 1, 2004. The acquisition costs amount to €793, net of cash
acquired. Based on the final purchase price allocation, approximately €205 was allocated to intan-
gible assets subject to amortization, €16 was allocated to permits representing intangible assets
having an indefinite useful life, and €244 was recorded as I&S goodwill. Of the €205 intangible
assets, €171 was allocated to customer relationships and €29 to technology. Customer relation-
ships and technology are amortized over weighted-average useful lives of 17 years and 12 years,
respectively. Goodwill of €185 is deductible for tax purposes.
In fiscal 2004, the Company acquired three entities – Trench Electric Holdings BV, Nether-
lands, a power engineering company and designer of specialized electrical products; BBC Tech-
nology Holdings Ltd., UK, an IT services business for the media industry primarily serving BBC;
and the Huntsville, Alabama, USA business group of an automotive electronics manufacturer.
The combined purchase price of the three entities amounts to €352.
The Company made certain other acquisitions during the years ended September 30, 2005
and 2004, which did not have a significant effect on the Consolidated Financial Statements.
b) Dispositions
In September 2004, SBS sold a 74.9% interest in its banking software company KORDOBA Gesell-
schaft für Bankensoftware mbH & Co. KG, Munich (Kordoba) to Fidelity Information Systems, Inc.
The transaction resulted in a pre-tax gain of €93 reported in Other operating income (expense),
net. In fiscal 2005, the remaining 25.1% interest in Kordoba was sold which resulted in a pre-tax
gain of €26 reported in Income (loss) from investments in other companies, net.
c) Discontinued operations
In June 2005, Siemens signed an agreement to sell its Mobile Devices (MD) business which was
part of Com, to BenQ Corporation (BenQ) based in Taiwan (the Agreement). The Agreement also
provides for the sale of MD’s operation included in Siemens Shanghai Mobile Communications
Ltd. in the Peoples Republic of China (SSMC), subject to the consent of the Company’s minority
shareholders which was obtained in July 2005. The MD transaction, excluding SSMC and activities
in certain countries (Deferred Countries), was completed on September 30, 2005. In fiscal 2005,
the loss recognized on the sale of MD (excluding SSMC), amounts to €546 and is composed of
€413 losses directly attributable to BenQ and €133 additional exit related charges. As part of the
Agreement, Siemens will purchase €50 in BenQ shares, representing a less than five percent
investment in BenQ based on the share price as of September 30, 2005. Future net cash outflows
relating to the disposal are currently anticipated to amount to approximately €500.
As of September 30, 2005, the Company has reported its MD business (including SSMC) as
discontinued operations. Assets and liabilities related to transactions not yet closed as of the
balance sheet date (Deferred Countries and SSMC) are classified as held for sale and measured
at the lower of their carrying amount or fair value less cost to sell.
Notes to Consolidated Financial Statements
Consolidated Financial Statements Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated
and per share amounts)