Siemens 2007 Annual Report Download - page 145

Management’s discussion and analysis 145
Management’s discussion and analysis
Cash Flow – Fiscal 2007 Compared to Fiscal 2006
The following discussion presents an analysis of Siemens’ cash fl ows for fi scal
2007 and 2006. The fi rst table presents cash fl ows for continuing and discontinued
operations. The latter category includes cash fl ows relating to Siemens’ enterprise
networks business, which is held for sale, the carrier-related business, which was
transferred into NSN, the Mobile Devices business sold to BenQ Corporation, and
SV, which is held for sale pending the closing of its sale to Continental AG. For fur-
ther information on discontinued operations, see “Notes to Consolidated Financial
Statements.” The second table focuses on cash fl ows from continuing operations
for the components of Siemens.
Since the third quarter of fi scal 2007, Siemens reports free cash fl ow, defi ned
as net cash provided by (used in) operating activities less cash used for additions
to intangible assets and property, plant and equipment. We believe this measure
is helpful to our investors as an indicator of our ability to generate cash from
operations and to pay for discretionary and non-discretionary expenditures not
included in the measure, such as dividends, debt repayment or strategic invest-
ments. We also use free cash fl ow to compare cash generation among the seg-
ments (for further information, refer to “Consolidated Financial Statements –
Segment Information”).
Continuing
operations
Discontinued
operations
Continuing and
discontinued
operations
Year ended September 30,
(€ in millions) 2007 2006 2007 2006 2007 2006
Net cash provided by
(used in):
Operating activities A 9,822 5,003 (2,494) 656 7,328 5,659
Investing activities (10,068) (4,315) (1,289) (381) (11,357) (4,696)
Herein: Additions to
intangible assets and
property, plant and
equipment B (3,067) (3,183) (684) (869) (3,751) (4,052)
Free cash fl ow* A+B 6,755 1,820 (3,178) (213) 3,577 1,607
* The closest comparable fi nancial measure under IFRS is “Net cash provided by (used in) operating activities.”
“Net cash provided by (used in) operating activities” from continuing operations as well as from continuing and
discontinued operations is reported within the “Consolidated Statements of Cash Flow” for Siemens as a whole
as well as for the components of Siemens (see table below). Refer to “Notes to Consolidated Financial State-
ments” for information on the reconciliation of cash fl ow used for “Additions to intangible assets and property,
plant and equipment” as reported in this table and the table below into the line item “Additions to intangible
assets and property, plant and equipment” as reported within the “Consolidated Statements of Cash Flow”.
Other companies that use free cash fl ow may defi ne and calculate free cash fl ow differently.