Siemens 2011 Annual Report Download - page 317

153 D. Consolidated Financial Statements 273 E. Additional information
158 D. Consolidated Statements of Changes in Equity
160 D. Notes to Consolidated Financial Statements
266 D. Supervisory Board and Managing Board
154 D. Consolidated Statements of Income
155 D.2 Consolidated Statements of Comprehensive Income
156 D. Consolidated Statements of Financial Position
157 D. Consolidated Statements of Cash Flow

antees 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 addi-
tional contractual recourse provisions. As of September ,
 and , the Company accrued € million and € mil-
lion, 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. Gen-
erally, consortium agreements provide for fallback guarantees
as a recourse provision among the consortium partners. The
increase in item Guarantees of third-party performance results
primarily from outstanding guarantees relating to the Siemens
IT Solutions and Services business, yet to be transferred to
AtoS. In case a beneficiary raises a claim under these guaran-
tees AtoS is required to indemnify Siemens. As of September
,  and , the Company accrued € million and €
million, respectively, relating to performance guarantees.
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 connected to each other legally and economically
in favor of the Federal Republic of Germany and of the consor-
tium member IBM. The guarantees ensure that BWI has suffi-
cient resources to provide the required services and to fulfill
its contractual obligations. These guarantees are listed as a
separate item HERKULES obligations in the table above due to
their compound and multilayer nature. Total future payments
potentially required by Siemens amount to €. billion and
€. billion 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 unused guarantees carried forward from the prior year.
Item Other includes indemnifications issued in connection
with dispositions of business entities. Such indemnifications,
if customary to the relevant transactions, may protect the
buyer from potential tax, legal and other risks in conjunction
with the purchased business entity. Indemnifications primar-
ily 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, see
Note 4 Acquisitions, dispositions and discon-
tinued operations. As of September ,  and , the
total amount accrued for guarantees in item Other is €
million and € million, respectively.
As of September ,  and , future payment obliga-
tions under non-cancellable operating leases are as follows:
September ,
(in millions of €)  
Within one year 716 721
After one year but not more than five years 1,526 1,581
More than five years 826 824
3,068 3,126
Total operating rental expense for the years ended September
,  and  was €, million and €, million, re-
spectively.
As of September ,  and , the Company has commit-
ments to make capital contributions to the equity of various
companies of € million and € million, respectively. The
September ,  and  balance, includes a conditional
commitment, proportional to our shareholding, to make capi-
tal contributions to EN of € million and € million. The
committed amount is due upon EN making acquisitions or in-
vestments.
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.