Siemens 2007 Annual Report Download - page 147

Management’s discussion and analysis 147
Management’s discussion and analysis
Investing activities in continuing operations used €9.262 billion within Oper-
ations in fi scal 2007. Thereof, net cash outfl ows for acquisitions amounted to
€7.334 billion, including approximately €4.2 billion spent for the Bayer acquisi-
tion at Med and approximately €2.7 billion spent for the acquisition of UGS Corp.
at A&D. During the prior period, investing activities in continuing operations used
net cash of €2.995 billion, benefi ting from €1.127 billion in net proceeds from the
sale of our shares in Infi neon Technologies AG (Infi neon). Net cash outfl ows for
acquisitions amounted to €2.049 billion in fi scal 2006, including the acquisition
of DPC at Med with approximately €1.3 billion net of €94 million cash acquired, as
well as Electrium at A&D, Bewator at SBT, and the coal gasifi cation business of Sus-
tec-Group and Wheelabrator at PG with a combined preliminary purchase price of
approximately €0.4 billion. Investing activities on a continuing basis at Corporate
Treasury and Financing and Real Estate used net cash of €806 million in fi scal
2007 compared to €1.320 billion in the prior period. The change year-over-year is
mainly related to available-for-sale fi nancial assets. For Siemens overall, net cash
used in investing activities in continuing operations increased to €10.068 billion
in fi scal 2007 from €4.315 billion in fi scal 2006.
Free cash fl ow from continuing operations for Siemens was €6.755 billion for
fi scal 2007, a signifi cant increase from €1.820 billion in the same period a year
earlier. The change year-over-year is due to the increase in net cash provided by
operating activities mentioned above, combined with lower capital expenditures
(CAPEX), defi ned as spending for additions to intangible assets and property,
plant and equipment. Accordingly, cash fl ow used for CAPEX decreased to €3.067
billion, down from €3.183 billion a year before, especially due to reduced spend-
ings at TS, SIS and PG. Siemens’ cash conversion rate, calculated as free cash fl ow
from continuing operations divided by income from continuing operations,
improved to 1.73 in fi scal 2007 from 0.69 a year earlier.
Financing activities from continuing and discontinued operations in fi scal
2007 used net cash of €1.187 billion compared to net cash provided of €1.206 bil-
lion in fi scal 2006.
In the current period, changes in short-term debt provided net cash of €4.386
billion, mainly due to the issuance of commercial paper and medium term notes.
These cash infl ows were compensated by cash outfl ows for the repayment of long-
term debt amounting to €4.595 billion in the current period, including approxi-
mately €3.2 billion in cash used for the redemption of the outstanding notes of the
convertible bond mentioned earlier as well as by cash used for the redemption of a
CHF250 million bond and a €991 million bond. Dividends paid to shareholders
increased in the current period to €1.292 billion.
Financing activities in fi scal 2006 were characterized by substantial raising of
long-term debt, totaling €6.701 billion. This included the issuance of two tranches
of U.S. dollar-denominated bonds totaling U.S.$1.0 billion (€0.8 billion). Further
we issued four tranches of U.S. dollar-denominated bonds totaling U.S.$5.0 billion
(€3.9 billion), as well as a hybrid bond in two tranches, one denominated in euros
(nominal €900 million) and one denominated in British pounds (nominal £750
million, or €1.1 billion). Repayment of long-term debt used €1.710 billion in cash
in fi scal 2006, including a €1.6 billion payment for a bond, which was due on