Siemens 2011 Annual Report Download - page 246

6 A. To our shareholders
23 B. Corporate Governance 51 C. Combined management’s discussion and analysis
52 C. Business and operating environment
80 C. Fiscal  – Financial summary
83 C. Results of operations
101 C. Financial position
114 C. Net assets position
117 C. Overall assessment of the economic position
118 C. Report on post-balance sheet date events
119 C. Report on expected developments and
associated material opportunities and risks
135 C. Information required pursuant to Section  ()
and Section  () of the German Commercial
Code (HGB) and explanatory report

C.. Results of operations
Condensed Statement of Income of Siemens AG
Year ended September ,
(in millions of €)  
Revenue 29,469 28,214
Cost of sales (21,016) (20,910)
Gross profit 8,453 7,304
Research and development expenses (2,759) (2,351)
Marketing, selling and general
administrative expenses (3,643) (3,731)
Other operating income (expense), net (698) 70
Financial income, net
thereof income from investments
, (prior year 3,596) 1,920 2,992
Result from ordinary operations 3,273 4,284
Extraordinary result 229 (1,652)
Income taxes (717) (71)
Net income 2,785 2,561
Profit carryforward 112 75
Allocation to other retained earnings (154) (168)
Unappropriated net income 2,743 2,468
Gross profit increased % to €. billion and gross profit
margin climbed from % to %. This increase was driven
mainly by a strong increase in the Industry Sector, with partic-
ularly strong increases at Industry Automation and Drive
Technologies due to high capacity utilization. Gross profit
rose in Energy Sector compared to the prior fiscal year, driven
by a strong operating performance at Power Transmission.
The overall increase was partly offset by effects of the Health-
care Sector driven by negative impacts related to the particle
therapy business.
Research and development expenses (R&D) increased sig-
nificantly, rising % to €. billion and increasing as a per-
centage from revenue from % to %. For comparison, the
Sectors managed R&D spending more conservatively during
fiscal , when revenue and profit development were more
strongly influenced by the economic downturn. For additional
information see C... Research and development.
Other operating income declined % to €. billion. This
decrease was due primarily to effects from fiscal  and was
mainly the result of a reduction of € million in the indirect
pension obligation to Siemens Pensionsfonds AG. In addition,
the prior year included gains from settlement agreements
with former Managing Board and Supervisory Board members
in conjunction with compliance matters, including Siemens’
directors and officers insurance of € million; as well as €
million related to the recovery of funds frozen by authorities.
Operating income in the current year benefited from € mil-
lion related to a settlement of legal matters in connection
with portfolio activities and € million gains on the sale of
real estate.
Other operating expenses increased % year-over-year, to
€. billion, mainly as a result of current-year charges relat-
ed to indirect pension obligations to Siemens Pensionsfonds
AG amounting to € million.
Financial income, net was €. billion, down from €.
billion. The main factor in the change was lower income from
investments. Other financial income was € million higher
compared to the prior year, while net interest income came in
€ million lower.
Income from investments decreased % year-over-year, to
€. billion due primarily to lower dividends from Siemens
Beteiligungsverwaltung GmbH & Co. OHG, which was €
million compared to €. billion in fiscal  and from
Siemens Ltd., China, which was € million compared to €
million in fiscal . In the current period, Siemens Beteili-
gungen USA GmbH contributed € million to income from
investments within a profit transfer agreement compared to
€ million in fiscal .
Net other financial income improved from a loss of € mil-
lion to a loss of € million as a result of higher income from
the realization of currency derivatives of € million, a posi-
tive effect of € million related to lower provisions for deriv-
atives, and growth in dividend income from fund shares of
€ million. These positive effects were partly offset by an
impairment of shares in investment funds of € million and
by a write-down of a subsidiary loan of € million.
Extraordinary result swung from €(.) billion a year ago
to a € million in fiscal . The improvement was due to a
gain of €. billion from the disposal of Siemens’ share in
the joint venture Areva NP S.A.S., partly offset by a payment
of € million to Areva S.A. resulting from an adverse arbitra-
tion ruling related to Siemens’ exit from the joint venture. In
fiscal , Siemens AG recognized a provision for contingent
losses of € million expected to arise from the sale of the