Siemens 2010 Annual Report Download - page 271

147 Consolidated Financial Statements
148 Consolidated Statements of Income
149 Consolidated Statements of Comprehensive Income
150 Consolidated Statements of Financial Position
151 Consolidated Statements of Cash Flow
152 Consolidated Statements of Changes in Equity
154 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated
and per share amounts)
261 Additional information

Credit guarantees cover the financial obligations of third par-
ties in cases where Siemens is the vendor and / or contractual
partner. These guarantees generally provide that in the event
of default or non-payment by the primary debtor, Siemens will
be required to settle such financial obligations. In addition,
Siemens provides credit guarantees generally as credit-line
guarantees with variable utilization to joint ventures and as-
sociated and other companies (defined in Note  and ). The
maximum amount of these guarantees is subject to the out-
standing balance of the credit or, in case where a credit line is
subject to variable utilization, the nominal amount of the
credit line. These guarantees usually have terms of between
one and five years. Except for statutory recourse provisions
against the primary debtor, credit guarantees are generally not
subject to additional contractual recourse provisions. As of
September ,  and , the Company accrued € and
€, respectively, relating to credit guarantees.
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 ,  and , the Company accrued €
and €, respectively, relating to performance guarantees.
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 connec-
tion with the consortium and execution of the contract be-
tween BWI and the Federal Republic of Germany in December
, 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
required services and to fulfill its contractual obligations.
These guarantees are listed as a separate item HERKULES obli-
gations in the table above due to their compound and multi-
layer nature. Total future payments potentially required by
Siemens amount to €. and €. billion as of September ,
 and , respectively and will be reduced by approxi-
mately € per year over the remaining -year contract period
as of September , . Yearly payments under these guar-
antees are limited to € plus, if applicable, a maximum of
€ in unused guarantees carried forward from the prior year.
Other includes indemnifications issued in connection with
dispositions of business entities. Such indemnifications, if
customary to the relevant transactions, may protect the buyer
from any potential tax, legal and other risks in conjunction
with the purchased business entity. Indemnifications primar-
ily relate to NSN, disposed of in fiscal , as well as to EN,
disposed of in fiscal , respectively, see Note . As of Sep-
tember ,  and , the total amount accrued for guar-
antees in Other is € and €, respectively.
As of September ,  and , future payment obliga-
tions under non-cancellable operating leases are as follows:
September ,
 
2010 – 692
2011 721 516
2012 552 378
2013 417 290
2014 331 240
2015 281 –
After  in fiscal 
(after  in fiscal ) 824 682
Total operating rental expense for the years ended September
,  and  was €, and €,, respectively.
As of September ,  and , the Company has commit-
ments to make capital contributions to the equity of various
companies of € and €, respectively. The September ,
 and  balance, includes a conditional commitment to
make capital contributions to EN of €, 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
contribution obligations as a partner in commercial partner-
ships and as a participant in various consortiums.