Siemens 2009 Annual Report Download - page 266

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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
Other include indemnifications issued in connection with dis-
positions of business entities. Such indemnifications protect
the buyer from tax, legal and other risks in conjunction with
the purchased business entity. Indemnifications primarily re-
late to NSN, disposed of in fiscal 2007, as well as to SV and EN,
disposed of in fiscal 2008 (see Note 4). A decrease of €1.1 bil-
lion relates to indemnifications which expired in fiscal 2009.
As of September 30, 2009 and 2008, the total amount accrued
for guarantees in Other is €211 and €397, respectively.
As of September 30, 2009 and 2008, future payment obliga-
tions under non-cancellable operating leases are as follows:
Total operating rental expense for the years ended September
30, 2009 and 2008 was €1,198 and €954, respectively.
As of September 30, 2009 and 2008, the Company has commit-
ments to make capital contributions to various companies of
€294 and €241, respectively. The September 30, 2009 and 2008
balance, includes a conditional commitment to make capital
contributions to EN of €172, representing our proportionate
share in EN. The committed amount is due upon EN making
acquisitions or investments.
The Company is jointly and severally liable and has capital con-
tribution obligations as a partner in commercial partnerships
and as a participant in various consortiums.
Furthermore, Siemens issues Guarantees of third-party perfor-
mance, which include performance bonds and guarantees of
advanced payments in cases where Siemens is the general or
subsidiary partner in a consortium. In the event of non-fulfill-
ment of contractual obligations by the consortium partner(s),
Siemens will be required to pay up to an agreed-upon maxi-
mum amount. These agreements span the term of the con-
tract, typically ranging from three months to seven years.
Generally, consortium agreements provide for fallback guaran-
tees as a recourse provision among the consortium partners.
As of September 30, 2009 and 2008, the Company accrued €50
and €46, respectively, relating to credit guarantees.
The Federal Republic of Germany commissioned a consortium
consisting of Siemens IT Solutions and Services and IBM
Deutschland GmbH (IBM) to modernize and operate the non-
military information and communications technology of the
German Federal Armed Forces (Bundeswehr). This project is
called HERKULES. A project company, BWI Informationstech-
nik GmbH (BWI), will provide the services required by the
terms of the contract. Siemens IT Solutions and Services is a
shareholder in the project company. The total contract value
amounts to a maximum of approximately €6 billion. In connec-
tion with the consortium and execution of the contract be-
tween BWI and the Federal Republic of Germany in December
2006, Siemens issued several guarantees connected to each
other legally and economically in favor of the Federal Republic
of Germany and of the consortium member IBM. The guaran-
tees ensure that BWI has sufficient resources to provide the re-
quired services and to fulfill its contractual obligations. These
guarantees are listed as a separate item HERKULES obligations
in the table above due to their compound and multilayer na-
ture. Total future payments potentially required by Siemens
amount to €3.49 billion as of September 30, 2009 and will be
reduced by approximately €400 per year over the remaining
8-year contract period. Yearly payments under these guaran-
tees are limited to €400 plus, if applicable, a maximum of €90
in unused guarantees carried forward from the prior year.
B27T080_E
September ,
 
2009 631
2010 742 484
2011 519 361
2012 378 286
2013 290 262
2014 240
After 2014 in fiscal 2009
(after 2013 in fiscal 2008) 682 691