Siemens 2008 Annual Report Download - page 267

Notes to Consolidated Financial Statements 171
(in millions of €, except where otherwise stated and per share amounts)
Except for asset retirement obligations (see discussion below), the majority of the Company’s provisions are
generally expected to result in cash outows during the next 1 to 15 years.
Warranties mainly relate to products sold. See Note 2 for further information concerning our policy for estimat-
ing warranty provisions. Additions to provisions existing at the beginning of the period amounted to €374 in
scal 2008.
Order related losses and risks are provided for anticipated losses and risks on uncompleted construction, sales
and leasing contracts.
Other includes approximately €1 billion in estimated nes in connection with ongoing settlement negotiations
of legal matters with authorities in Germany and the U.S.
Asset retirement obligations
The Company is subject to asset retirement obligations related to certain items of property, plant and equip-
ment. Such asset retirement obligations are primarily attributable to environmental clean-up costs which
amounted to €648, and €597, respectively, as of September 30, 2008 and 2007 (the non-current portion thereof
being €617 and €575, respectively) and to costs primarily associated with the removal of leasehold improve-
ments at the end of the lease term amounting to €34, and €38, respectively as of September 30, 2008 and 2007
(the non-current portion thereof being €30 and €27, respectively).
Environmental clean-up costs are mainly related to remediation and environmental 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 a nuclear research and service center
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 nal storage
facility. In this regard, the Company has developed a plan to decommission the Hanau and Karlstein facilities in
the following steps: clean-out, decontamination and disassembly of equipment and installations, decontamina-
tion of the facilities and buildings, sorting of radioactive materials, and intermediate and 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 2012; thereafter, the Company is responsible for intermediate storage of
the radioactive materials until a nal storage facility is available. The nal location for all kinds of radioactive
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 nearly reached completion; on September 21, 2006,
the Company received ofcial notication from the 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 contingent on the decision of the federal government on the location of the nal
storage facility and the date of its availability. Consequently, the provision is based on a number of signi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 exposure. As of
September 30, 2008 and 2007, the provision totals €648 and €597, respectively, and is recorded net of a present
value discount of €1,323, and €1,353, respectively. The total expected payments for each of the next ve scal
years and the total thereafter are €33, €23, €16, €6, €1, and €1,892 (which includes €1,839 for the estimated
costs associated with nal storage in 2033).