Siemens 2011 Annual Report Download - page 211

153 D. Consolidated Financial Statements
273 E. Additional information
143 C. Additional information for supplemental
financial measures
145 C. Siemens AG (Discussion on basis of
German Commercial Code)
151 C. Notes and forward-looking statements
140 C. Information required pursuant to Section  ()
and Section  () no.  of the German Commer-
cial Code (HGB) and explanatory report
142 C. Compensation report and Corporate Governance
statement pursuant to Section a of the German
Commercial Code (HGB)

Our liquidity may be adversely affected in future periods by
regular or special contributions to fund our pension plans and
similar commitments. As of September , , our liability
for pension plans and similar commitments as recognized in
the Consolidated Statements of Financial Positions amounted
to €. billion. However, the recognized liability may fluctu-
ate significantly in future periods due to changes in assump-
tions, in particular the discount rate, expected rate of return
on plan assets, rate of future compensation increases and
pension progression. Actual developments may differ from
assumptions due to changing market, economic and govern-
mental regulatory conditions, thereby resulting in an increase
or decrease of the liability. Employer contributions expected
to be paid to the funded pension plans during fiscal  due
to contractual and legal obligations are approximately €.
billion. Additional contributions to our pension benefit plans
may generally be made at the discretion of our management
in future periods. In fiscal , Siemens reached an agree-
ment with the trustees of its largest pension plan in the U.K.,
which may lead to contributions of up to approximately €.
billion in coming years. For additional information regarding
contributions to the funded pension benefit plans and pay-
ments to our pension benefit plans and other post employ-
ment benefit plans, see C... Funding of pension plans
and similar commitments and D. Notes to Consolidated
Financial Statements.
C... OFF-BALANCE SHEET ARRANGEMENTS
Guarantees – Our guarantees are principally credit guaran-
tees and guarantees of third-party performance. As of Sep-
tember , , the undiscounted maximum amount of po-
tential future payments for guarantees was €. billion.
Credit guarantees cover the financial obligations of third-par-
ties 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 companies 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 commit-
ments in consortia where Siemens may be the general or sub-
sidiary partner. In the event of non-performance under a con-
tract by a consortium 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 Sep-
tember , , which included outstanding guarantees re-
lating to the Siemens IT Solutions and Services business, yet to
be transferred to AtoS. In case a beneficiary raises a claim un-
der these guarantees AtoS is required to indemnify Siemens.
In fiscal , The Federal Republic of Germany commis-
sioned a consortium consisting of Siemens and IBM Deutsch-
land 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 Informationstechnik
GmbH (BWI), will provide the services required by the terms
of the contract. Siemens is a shareholder in the project com-
pany. The total contract value amounts to a maximum of ap-
proximately € billion. In connection with the consortium and
execution of the contract between BWI and the Federal Re-
public of Germany in December , Siemens issued several
guarantees legally and economically connected to each other
in favor of the Federal Republic of Germany and IBM, the con-
sortium member. The guarantees ensure that BWI has suffi-
cient resources to provide the required services and to fulfill
its contractual obligations. Total future payments potentially
required by Siemens amounted to €. billion and €. bil-
lion as of September ,  and , respectively and will
be reduced by approximately € million per year over the
remaining six-year contract period as of September , .
Yearly payments under these guarantees are limited to €
million plus, if applicable, a maximum of € million in un-
used guarantees carried forward from the prior year.
Other guarantees amounted to €. billion as of September
,  and include indemnification in connection with dispo-
sitions of business entities, if customary to the relevant trans-
actions, that may protect the buyer from potential tax, legal
and other risks in conjunction with the purchased business
entity. Indemnifications primarily relate to NSN, disposed
of in
fiscal , EN, disposed of in fiscal , and to Siemens IT
Solutions and Services disposed of in fiscal , which might
reach a high triple-digit million € amount. In the event that it
becomes probable that Siemens will be required to satisfy
these guarantees, provisions are established. Such provisions
are established in addition to the liabilities recognized for the
non-contingent component of the guarantees.
Capital commitments – As of September , , the Com-
pany had commitments to make capital contributions to vari-
ous companies of € million. The September ,  bal-
ance includes a conditional commitment, proportional to our