Siemens 2005 Annual Report Download - page 167

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In fiscal 2005, goodwill increased by €2,454. The increase of €152 in foreign currency transla-
tion and other adjustments results primarily from the strengthening of the U.S.$ against the
Euro. The VA Tech acquisition resulted in additions to goodwill of €1,027. Med’s acquisition of CTI,
and A&D’s acquisition of Flender increased goodwill by €525 and €452, respectively. For further
information on acquisitions, dispositions and discontinued operations see Note 3.
During the fourth quarter of fiscal 2005, the Company recorded a goodwill impairment of
€262. Based on the results of the Company’s analysis of current projects at SBS’s reporting unit
Operation-Related Services (ORS) in connection with changing markets and competition in out-
sourcing business and structural challenges to attaining originally targeted profitability, the
Company revised its related business plan and concluded that goodwill of ORS was impaired. Sig-
nificant cost pressure due to excess capacity, the necessity for restructuring efforts and the need
for new investments in order to achieve a competitive market position caused the Company to
reassess its estimated future cash flows from its ORS business to a level materially below earlier
estimates. The fair value of the reporting unit was estimated using the present value of expected
future cash flows.
During the second quarter of fiscal 2004, the Company recorded a goodwill impairment of
€433 relating to Distribution and Industry Logistics (DI), a former reporting unit of L&A and to
L&A’s reporting unit Airport Logistics (AL) (see Note 30 and 33 on changes relating to L&A). Based
on the results of the Company’s analysis of current projects at L&A in conjunction with changing
markets, new competition and structural challenges to attaining originally targeted profitability,
the Company revised its related business plan and concluded that goodwill was impaired. Rapid
market deterioration followed by excess capacity and significant margin declines caused the
Company to reassess its estimated future cash flows from its DI business at a level materially
below earlier estimates, resulting in an impairment charge of €293. In the AL business, increas-
ing competition, particularly in the U.S., led to reductions in estimated future cash flows and
resulted in a goodwill impairment of €140. The fair values of the reporting units were estimated
using the present value of expected future cash flows.
15 Other intangible assets, net
Amortization expense for the year ended September 30, 2004 was €640.
Notes to Consolidated Financial Statements
Consolidated Financial Statements Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated
and per share amounts)
Amorti-
Accu- zation
Trans- Accu- Net book mulated Net book during
lation mulated value amorti- value fiscal
adjust- Addi- Retire- amorti- as of zation as of year
10/1/04 ment tions ments 9/30/05 zation 9/30/05 10/1/04 10/1/04 2005
Software 1,880 34 480 141 2,253 1,312 941 949 931 410
Patents, licenses and
similar rights 2,778 29 1,006 138 3,675 1,509 2,166 1,195 1,583 306
Other intangible assets 4,658 63 1,486 279 5,928 2,821 3,107 2,144 2,514 716