Siemens 2010 Annual Report Download - page 206

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

Research and development expenses declined only slightly
compared with fiscal . More information on these ex-
penses can be found in “– Research and development.”
Marketing, selling and general administrative expenses in-
creased by € million to €, million. This increase results
from the above-mentioned merger of subsidiaries into Siemens
AG effective with the start of the current year. Furthermore,
the prior-year amount benefited from the reversal of provi-
sions. The ratio of marketing, selling and general administra-
tive expenses to revenue was up by . percentage points to
.%.
The improvement in net other operating income (expense)
was the result of a rise in other operating income combined
with a decline in other operating expenses compared with the
previous fiscal year.
The rise in other operating income year-over-year was the
outcome of a decrease of € million in the indirect pension
obligation to Siemens Pensionsfonds AG, largely attributable
to fair value increases related to the assets of Siemens Pen-
sionsfonds AG. Further, the current period included higher
gains in connection with compliance-related matters, includ-
ing a gain of € million related to an agreement with the
provider of the Siemens’ directors and officers liability insur-
ance, a net gain related to settlements with former members
of Siemens’ Managing Board and Supervisory Board, and total
gains of € million related to the recovery of funds frozen by
authorities, as well as a gain from the reversal of a litigation
provision. The prior year included higher gains related to the
sale of real estate, including income of € million from the
disposal of land and buildings held by Siemens Wohnungs-
baugesellschaft, a company that was first merged into Siemens
AG, as well as income of € million due to an associated re-
versal of the special reserve with an equity portion.
The decline in other operating expenses was due primarily to
expenses of € million incurred in fiscal  for outside advi-
sors in connection with resolving compliance issues, and the
recognition in fiscal  of a provision of € million for pay-
ments to certain anticorruption organizations within the next
 years.
Financial income (expense), net increased €, million year-
over-year, due mainly to an increase in Income from invest-
ments of €, million. Net interest income improved by €
million, but this was more than offset by an increase of €
million in Net other financial expenses.
Income from investments benefited from a dividend from
Siemens Beteiligungsverwaltung GmbH & Co. OHG of €,
million and lower write-downs on investments year-over-year.
In fiscal , the investment in NSN was impaired by €
million, while the current period includes an impairment of
€ million related to the Greek regional company. Other
contributing factors in the improvement included higher in-
come from investments and from profits transferred from
subsidiaries.
Net other financial expenses increased as a result of charges
related to a provision for fair value changes of interest-rate
derivatives and higher charges related to the realization of cur-
rency and interest-rate derivatives. In fiscal , the figure
included losses of € million related to optimization and
disposal of investment fund units.
Other financial income included growth in dividend income of
€ million, whereas the figure in fiscal  included an
amount of € million derived from the streamlining of fund
assets and from the disposal of investment fund units. In the
year under review, only very low write-downs were required on
lending and marketable securities, whereas in fiscal  the
write-downs of marketable securities included € million
related to a re-valuation of treasury shares.
Income from ordinary operations showed an overall improve-
ment of €, million to €, million.
Extraordinary result include expenses in connection with a
provision for an expected loss amounting to € million and
expenses of € million relating to staff reduction measures,
both in connection with a strategic reorientation and establish-
ment of Siemens IT Solutions and Services as a separate legal
entity wholly owned by Siemens AG as of October , . They
also include the effects from the first-time adoption of BilMoG
amounting to € million, primarily related to changes in ac-
counting for other provisions as well as for liabilities for pen-
sion plans and similar commitments. Accordingly, net ex-
penses of € million resulted from additions to provisions
following the now required consideration of price and cost
increases for provision measurement. These expenses related
primarily to a provision for decommissioning facilities for the
production of uranium and mixed-oxide fuel elements in
Hanau, Germany, as well as a nuclear research and service
center in Karlstein, Germany. Further, Siemens AG recorded
expenses totaling € million related to an increase of the li-
ability for pension plans and similar commitments, following
new measurement principles under BilMoG. These measure-