Siemens 2007 Annual Report Download - page 268

268 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
Warranties
Warranties mainly relate to products sold. See Note 2 for further information con-
cerning our policy for estimating warranty provisions. Additions to provisions
already existing at the beginning of the period amounted to €446 in fi scal 2007.
Order related losses and risks
Provisions for order related losses and risks are recognized for anticipated losses
and risks on uncompleted construction, sales and leasing contracts.
Asset retirement obligations
The Company is subject to asset retirement obligations related to certain items of
property, plant and equipment. Such asset retirement obligations are primarily
attributable to environmental clean-up costs which amounted to €597, and €658,
respectively, as of September 30, 2007 and 2006 (thereof non-current portion of
€575 and €635, respectively) and to costs primarily associated with the removal of
leasehold improvements at the end of the lease term amounting to €38, and €46,
respectively as of September 30, 2007 and 2006 (thereof non-current portion of
€27 and €31, respectively).
Environmental clean-up costs are mainly related to remediation and environ-
mental protection liabilities which have been accrued for the estimated costs of
decommissioning facilities for the production of uranium and mixed-oxide fuel
elements in Hanau, Germany (Hanau facilities), as well as in Karlstein, Germany
(Karlstein facilities). According to the German Atomic Energy Act, when such a
facility is closed, the resulting radioactive waste must be collected and delivered
to a government-developed fi nal storage facility. In this regard, the Company has
developed a plan to decommission the Hanau and Karlstein facilities in the follow-
ing steps: clean-out, decontamination and disassembly of equipment and installa-
tions, decontamination of the facilities and buildings, sorting of radioactive mate-
rials, and intermediate and fi nal storage of the radioactive waste. This process will
be supported by continuing engineering studies and radioactive sampling under
the supervision of German federal and state authorities. The decontamination,
disassembly and sorting activities are planned to continue until 2011; thereafter,
the Company is responsible for intermediate storage of the radioactive materials
until a fi nal storage facility is available. The fi nal location for all kinds of radioac-
tive waste is not expected to be available before approximately 2030. With respect
to the Hanau facility, the process of setting up intermediate storage for radioactive
waste has neared completion; on September 21, 2006, the Company received offi -
cial notifi cation from the competent authorities that the Hanau facility has been
released from the scope of application of the German Atomic Energy Act and that
its further use is unrestricted. The ultimate costs of the remediation are contin-
gent on the decision of the federal government on the location of the fi nal storage
facility and the date of its availability. Consequently, the provision is based on a
number of signifi cant estimates and assumptions. The Company does not expect
any recoveries from third parties and did not reduce the provisions for such
recoveries. The Company believes that it has adequately provided for this expo-
sure. As of September 30, 2007 and 2006, the provision totals €597 and €658,