Siemens 2009 Annual Report Download - page 260

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 Reports Supervisory Board /
Managing Board  Corporate Governance  Management’s discussion and analysis  Consolidated Financial Statements
 Consolidated Statements of Income  Consolidated Statements of Income
and Expense Recognized in Equity
 Consolidated Balance Sheets  Consolidated Statements of Cash Flow
With respect to the Hanau facility, the process of setting up in-
termediate storage for radioactive waste has nearly reached
completion; on September 21, 2006, the Company received of-
ficial notification 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 deci-
sion of the federal government on the location of the final
storage facility and the date of its availability. Consequently,
the provision is based on a number of significant estimates
and assumptions. Those significant estimates and assump-
tions may be substantiated since the federal government is in
the process of establishing a final storage for radioactive waste
with negligible heat generation approximately in the next de-
cade. The requirements for waste acceptance, administration
regulations as well as the financial restrains for the so-called
“Konrad Repository” are not yet defined. 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, 2009 and 2008, the provision totals €780 and €648, respec-
tively, and is recorded net of a present value discount of €1,163
and €1,323, respectively. The total expected payments for each
of the next five fiscal years and the total thereafter are €16, €14,
€12, €10, €4 and €1,887 which includes €1,834 for the esti-
mated costs associated with final storage in 2033.
The Company recognizes the accretion of the provision for as-
set retirement obligations using the effective interest method
applying current interest rates prevailing at the balance sheet
date. During the year ended September 30, 2009 and 2008 the
Company recognized €33 and €32, respectively in accretion
expense in Financial income (expense), net. Changes in dis-
count rates increased the carrying amount of provisions by
€128 and €21 as of September 30, 2009 and 2008, respectively.
Other included approximately €1 billion in estimated fines in
connection with ongoing settlement negotiations of legal
matters with authorities in Germany and the U.S., provided for
in fiscal 2008 and settled in fiscal 2009.
Order related losses and risks are provided for anticipated
losses and risks on uncompleted construction, sales and leas-
ing 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 environ-
mental clean-up costs which amounted to €780 and €648, re-
spectively, as of September 30, 2009 and 2008 (the non-current
portion thereof being €764 and €617, respectively) and to costs
primarily associated with the removal of leasehold improve-
ments at the end of the lease term amounting to €36 and €34,
respectively as of September 30, 2009 and 2008 (the non-cur-
rent portion thereof being €29 and €30, respectively).
Environmental clean-up costs are mainly related to remedia-
tion and environmental protection liabilities which have been
accrued based on the estimated costs of decommissioning fa-
cilities for the production of uranium and mixed-oxide fuel ele-
ments in Hanau, Germany (Hanau facilities), as well as a nu-
clear research and service center in Karlstein, Germany (Karl-
stein 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 following steps: clean-out, decontamination and disas-
sembly of equipment and installations, decontamination of
the facilities and buildings, sorting of radioactive materials,
and intermediate and final storage of the radioactive waste.
This process will be supported by continuing engineering
studies and radioactive sampling under the supervision of Ger-
man federal and state authorities. The decontamination, dis-
assembly and sorting activities are planned to continue until
2015; thereafter, the Company is responsible for intermediate
storage of the radioactive materials until a final storage facility
is available. The final location for all kinds of radioactive waste
is not expected to be available before approximately 2030.