Siemens 2009 Annual Report Download - page 166

8
 Reports Supervisory Board /
Managing Board  Corporate Governance  Management’s discussion and analysis  Consolidated Financial Statements
44 Business and operating environment 63 Fiscal 2009 – Financial summary 66 Results of operations 84 Financial position
Workflow & Solutions posted a loss of €53 million, including
the charges of €169 million mentioned above related to signifi-
cant technical development challenges and delays associated
with particle therapy contracts. In fiscal 2008, the Division de-
livered a profit of €66 million despite €81 million of the nega-
tive profit impacts, mainly related to the particle therapy con-
tracts mentioned above for the Sector. Fiscal 2009 revenue
was up 2%. Orders came in below the prior-year level.
Profit at Diagnostics was €338 million, up 36% from the prior-
year level. The increase was driven by higher revenue and the
reduction in integration costs mentioned above. PPA effects
were €181 million and integration costs were €67 million in fis-
cal 2009, reducing the Division’s profit margin by 7.1 percent-
age points. A year earlier, PPA effects were €176 million (includ-
ing €7 million of inventory step-up charges) and integration
costs were €168 million, reducing Diagnostics’ profit margin by
10.8 percentage points. Fiscal 2009 revenue and orders rose
10% and 9%, respectively, from prior-year levels, benefiting
strongly from positive currency translation and portfolio effects.
Equity Investments
Equity Investments includes investments accounted for using
the equity method or at cost and available-for-sale financial
assets not allocated to a Sector or Cross-Sector Business for
strategic reasons. As of September 30, 2009, the reportable
segment Equity Investments mainly comprised our invest-
ments in NSN, BSH, our stake in EN and our investment in KMW.
In fiscal 2009, Equity Investments recorded a loss of €1.851 bil-
lion compared to a profit of €95 million a year earlier. The major
factor in this decline was NSN that has been tested for impair-
ment. The main triggering events were NSN’s loss of market
share as well as a decrease in the product business operations
resulting in significantly adjusted financial forecasts of future
cash flows of NSN. As a result, we took an impairment of €1.634
billion on our investment in NSN at the end of fiscal 2009. Fur-
thermore, NSN took restructuring charges and integration
costs of €507 million as well as an additional charge of €432
million to tax expense to provide a valuation allowance on
NSN’ deferred tax assets during the current period. These fac-
tors led to an equity investment loss related to our stake in
NSN of €2.177 billion in fiscal 2009. In the prior-year period,
NSN incurred restructuring charges and integration costs of
€480 million. The equity investment loss related to our stake in
NSN was €119 million in fiscal 2008. In fiscal 2009, EN incurred
an operating loss and took restructuring charges. As a result,
we incurred a loss of €171 million from our investment in EN.
The increasing equity investment loss from our investment in
NSN and the loss from our stake in EN were only partly offset
by a gain of €327 million from the sale of our stake in FSC in the
current period. In fiscal 2009, equity investment income re-
lated to our stakes in BSH and KMW was €195 million, down
from €242 million a year earlier. We expect profit from Equity
Investments to remain volatile including due to effects stem-
ming from NSN’s announced measures to reduce operating
expenses and production overheads in the coming two years.