Siemens 2010 Annual Report Download - page 174

6 To our shareholders 21 Corporate Governance 49 Combined management’s discussion and analysis
50 Business and operating environment
78 Fiscal  – Financial summary
81 Results of operations
98 Financial position
110 Net assets position
113 Overall assessment of the economic position

regarding contributions to the principal funded pension ben-
efit plans and payments to our principal pension benefit plans
and principal other post-employment benefit plans, see “− Pen-
sion plan funding” and Note  in “Notes to Consolidated Fi-
nancial Statements.” In fiscal , Siemens reached an agree-
ment with the trustees of its largest pension plan in the United
Kingdom, which may lead to gross contributions of up to ap-
proximately € million by . Additional contributions to
our pension benefit plans may generally be made at the discre-
tion of our Management in future periods.
Off-Balance sheet arrangements
Guarantees – Our guarantees are principally credit guarantees
and guarantees of third-party performance. As of September
, , the undiscounted maximum amount of potential fu-
ture payments for guarantees was €. billion. Credit guar-
antees cover the financial obligations of third-parties in cases
where Siemens is the vendor and / or contractual partner. In
addition, Siemens provides credit line guarantees with variable
utilization to joint ventures and to associated and other com-
panies we held an investment in. Our total credit guarantees
were € million as of September , . Performance
bonds and guarantees of advanced payments guarantee the
fulfillment of partners contractual commitments in consortia
where Siemens may be the general or subsidiary partner. In
the event of non-performance under a contract by a consor-
tium partner(s), Siemens will be required to pay up to an
agreed-upon maximum amount. Guarantees of third-party
performance amounted to €. billion as of September ,
.
In fiscal , 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 proj-
ect is called HERKULES. A project company, BWI Informations-
technik 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 € billion. In con-
nect ion with the consortium and execution of the contract
between BWI and the Federal Republic of Germany in Decem-
ber , Siemens issued several guarantees legally and eco-
nomically connected to each other in favor of the Federal Re-
public of Germany and IBM, the consortium member. The
guarantees ensure that BWI has sufficient resources to provide
the required services and to fulfill its contractual obligations.
These guarantees are listed as a separate item HERKULES obli-
gations due to their compound and multilayer nature. Total
future payments potentially required by Siemens amounted to
€. billion and €. billion as of September ,  and
, respectively and will be reduced by approximately €
million per year over the remaining seven-year contract period
as of September , . Yearly payments under these guar-
antees are limited to € million plus, if applicable, a maxi-
mum of € million in unused guarantees carried forward
from the prior year.
Other guarantees amounted to €. billion as of September
,  and include indemnification in connection with dis-
positions of business entities, if customary to the relevant
transactions, may protect the buyer from any potential tax, le-
gal and other risks in conjunction with the purchased business
entity. In the event that it becomes probable that Siemens will
be required to satisfy these guarantees, provisions are estab-
lished. Such provisions are established in addition to the liabil-
ities recognized for the non-contingent component of the
guarantees. Most of the guarantees have fixed or scheduled
expiration dates.
Capital commitments – As of September ,  and ,
the Company had commitments to make capital contributions
to various companies of € million and € million, respec-
tively. The September ,  and  balances include a
conditional commitment to make capital contributions to EN
of € million, representing our proportionate share in EN.
The committed amount is due upon EN making acquisitions or
investments.
For additional information with respect to our guarantees and
our other commitments, see “Notes to Consolidated Financial
Statements.”
Pension plan funding
The defined benefit obligation (DBO) of Siemens’ principal pen-
sion benefit plans, which considers future compensation and
pension increases, amounted to €. billion on September ,
, compared to €. billion on September , . The
fair value of plan assets as of September ,  was €.
billion, compared to €. billion on September , . Ac-
cordingly, the combined funding status of Siemens’ principal