Siemens 2010 Annual Report Download - page 145

113 Report on post-balance sheet date events
114 Report on expected developments and associated
material opportunities and risks
128 Information required pursuant to § () and
§ () HGB and explanatory report
133 Information required pursuant to § () and
§ () no.  HGB and explanatory report
135 Compensation and declaration pursuant to §a HGB
135 Additional information for supplemental
financial measures
138 Siemens AG (Discussion on basis of HGB)
147 Consolidated Financial Statements
261 Additional information

We increased Total Sectors profit to €. billion. The Sec-
tors’ combined profit came in % higher than the prior year,
even after €. billion in impairment charges at Healthcare’s
Diagnostics Division in the fourth quarter. Industry took
its profit up % year-over-year, as successful profitability ini-
tiatives improved capacity utilization and reduced costs. En-
ergy generated a % profit increase compared to the prior fiscal
year on strong project execution. Profit at Healthcare was sig-
nificantly lower due to the impairment charges mentioned
above.
During the fourth quarter of fiscal  we completed a strate-
gic review that reassessed the medium-term growth prospects
and long-term market development of the laboratory diagnos-
tics business, and subsequently announced a preliminary esti-
mate of goodwill impairment charges. Following completion of
the annual impairment test, Diagnostics took impairment
charges at the close of the fourth quarter of €. billion, in-
cluding €. billion for goodwill, below the previously an-
nounced estimate primarily due to currency translation effects.
In fiscal , Corporate items included expenses of € mil-
lion related to special remuneration for non-management
employees. Once the allocation of the remuneration is deter-
mined in the first quarter of fiscal , the expenses will be
allocated primarily to the Sectors in fiscal .
Income from continuing operations rose substantially. Total
Sectors profit in fiscal  came in higher despite the above-
mentioned impairment charges related to Healthcare’s Diag-
nostics Division while burdens below the Sectors were lower in
the current fiscal year than in fiscal . These factors com-
bined to increase income from continuing operations to €.
billion. Basic earnings per share (EPS) from continuing opera-
tions rose to €.. A year earlier, income from continuing
operations was €. billion and basic EPS from continuing
operations was €.. The difference year-over-year was due
mainly to Equity Investments, which had a loss of € million
in fiscal  compared to a loss of €. billion in fiscal .
The loss in the prior-year period included impairment charges
related to NSN of €. billion, primarily involving the €.
billion impairment of our stake in NSN. The lower loss from
Equity Investments in fiscal  was partly offset by a loss of
€ million (pre-tax) at Siemens IT Solutions and Services,
which posted a profit of € million (pre-tax) a year earlier. The
loss in the current period stemmed from a strategic reorienta-
tion aimed at strengthening the competitive position of the
business in preparation for operating on a standalone basis,
including reorganization of solutions, outsourcing and soft-
ware activities. Completing previously announced staff reduc-
tions occasioned charges of € million (pre-tax) in fiscal
, and we also took charges of € million (pre-tax) within
Corporate items, primarily relating to the carve-out of Siemens
IT Solutions and Services as a separate legal entity which is a
wholly owned consolidated subsidiary of Siemens as of Octo-
ber , . Net Income rose to €. billion, up from €.
billion. Basic EPS was €. compared to €. in fiscal .
We generated substantial cash flow from continuing opera-
tions. A strong cash performance in the Sectors, particularly in
the second half of the fiscal year, drove Free cash flow from
continuing operations up to €. billion. Besides a strong
operating performance in the Sectors, cash flow from operat-
ing activities also benefited from positive changes in net work-
ing capital including substantially higher billings in excess of
costs, particularly in the Energy Sector, compared to a decrease
Profit Sectors (in millions of €)
Total Sectors
Profit
Industry
Sector
Energy
Sector
Healthcare
Sector
FY 2010 FY 2009
7,789 7,466 3,478 2,701 3,562 3,315 748 1,450
7%
(48)%
4%
29%
Income and Profit (in millions of €)
Total
Sectors Profit
Income from
continuing operations
Net income
FY 2010 FY 2009
2,4574,112 2,497
4,068
7,789 7,466
4%
67% 63%