Siemens 2006 Annual Report Download - page 107

Management’s discussion and analysis 103
In this report we include information concerning new orders for each of the years presented.
Under our order recognition policy, we generally recognize a new order when we enter into a
contract that we consider “effective and binding” based on our review of a number of different
criteria. As a general rule, if a contract is considered effective and binding, we recognize the
total contract value as promptly as practicable, where total contract value is defined as the
agreed price for the goods to be delivered and services to be rendered, or the agreed fee, in each
case for the irrevocable term of the contract. For service, maintenance and outsourcing con-
tracts with a contractual term of greater than 12 months, if management determines that there
is a high degree of uncertainty concerning whether the customer will adhere to the full contract
term, the agreed fees for the next 12 months are recognized as new orders on a revolving basis.
In the event an order is cancelled or modified in amount during the ongoing fiscal year, we
adjust our new order total for the current period accordingly, rather than retroactively adjust
previously published new order totals. However, if an order from the previous year is cancelled,
it is generally not adjusted from current period new orders, but instead from existing orders on
hand. There is no standard system among companies in our areas of activity for the compilation
of new order information, with the result that our new order totals may not be comparable with
new order totals published by other companies. Our new order totals are not audited by our
external auditors, but we do subject them to internal documentation and review requirements.
We may change our policies for recognizing new orders in the future without previous notice.
Management’s discussion and analysis
Siemens
Consists of the following three components which include the eleven operating Groups and the two
Groups in Financing and Real Estate
Operations*
■Communications (Com)
■Siemens Business Services (SBS)
■Automation and Drives (A&D)
■Industrial Solutions and Services (I&S)
■Siemens Building Technologies (SBT)
■Power Generation (PG)
■Power Transmission and Distribution (PTD)
■Transportation Systems (TS)
■Siemens VDO Automotive (SV)
■Medical Solutions (Med)
■Osram
Other Operations; Corporate items, pensions and eliminations
Financing and Real Estate
■Siemens Financial Services (SFS)
■Siemens Real Estate (SRE)
Eliminations,
reclassifications and
Corporate Treasury
*L&A was dissolved as of October 1, 2005. As of this date, Postal
Automation and Airport Logistics were integrated into I&S and
Electronic Assembly Systems became part of A&D.
Effective April 1, 2007, the activities of SBS will be bundled with
other corporate IT activities within a new Group called Siemens IT
Solutions and Services (SIS).
A new segment called Strategic Equity Investments (SEI) was
created as of October 1, 2006. SEI will include centrally managed
at equity investments and will initially consist of BSH Bosch und
Siemens Hausgeräte GmbH and Fujitsu Siemens Computers (Hold-
ing) BV. NSN will also be part of SEI, once the transaction is closed.
In fiscal 2006, Siemens announced significant changes that will
result in dissolving Com as a Group and reportable segment during
fiscal 2007.