Siemens 2012 Annual Report Download - page 156

1 A. To our Shareholders
21 B. Corporate Governance 49 C. Combined Management Report
50 C. Business and economic environment
64 C. Financial performance measures
69 C. Results of operations
82 C. Financial position
93 C. Net assets position
95 C. Overall assessment of the economic position
96 C. Subsequent events
97 C. Sustainability
111 C. Report on expected developments and
associated material opportunities and risks

(in millions of €) // // // // //
Capital employed Fiscal 
Total equity 31,302 32,313 32,142 33,947 32,156
Plus: Long-term debt 16,880 15,234 14,731 14,566 14,280
Plus: Short-term debt and current maturities of long-term debt 3,826 5,236 4,799 2,841 3,660
Less: Cash and cash equivalents (10,891) (8,963) (8,424) (8,977) (12,468)
Plus: Pension plans and similar commitments 9,926 9,060 7,492 6,774 7,307
Less: SFS Debt (14,558) (13,644) (13,303) (13,424) (12,075)
Less: Fair value hedge accounting adjustment (1,670) (1,638) (1,474) (1,544) (1,470)
Capital employed (continuing operations and discontinued operations) 234,817 37,597 35,962 34,182 31,391
Less: Assets classified as held for disposal presented as discontinued operations (4,694) (4,696) (4,894) (4,969) (4,667)
Plus: Liabilities classified as held for disposal presented as discontinued operations 2,016 1,925 1,685 1,669 1,756
Capital employed (continuing operations) 32,138 34,825 32,753 30,882 28,479
1 Debt is generally reported with a value representing approximately the amount to
be repaid. However for debt designated in a hedging relationship (fair value hedges),
this amount is adjusted by changes in market value mainly due to changes in interest
rates. Accordingly, we deduct these changes in market value in order to end up with
an amount of debt that approximately will be repaid, which we believe is a more mean-
ingful figure for the calculation presented above. For further information on fair value
hedges see    .     .
 Average capital employed for a fiscal year is determined as a five-point average in
capital employed of the respective quarters starting with the capital employed as of
September  of the previous fiscal year.
contingent upon approval by Siemens shareholders at the
Annual Shareholders’ Meeting on January , . The prior-
year dividend was €..
We intend to provide an attractive return to shareholders. We
previously set a target range for our dividend payout percent-
age of % to % of net income. The proposed dividend of
€. per share for fiscal  represents a total payout of
€. billion based on shares outstanding as of September
, . Based on net income of €. billion for fiscal ,
the dividend payout percentage would be %. The percentage
for fiscal  was %, based on a total dividend payout of
€. billion and net income of €. billion.
We intend in the years ahead to propose a dividend payout
which – combined with outlays for share buybacks during the
fiscal year – results in a sum representing % to % of net in-
come, which for this purpose we may adjust to exclude excep-
tional non-cash effects. As in the past, we intend to fund the
dividend payout from free cash flow.
.. Additional measures
In addition to the financial performance measures discussed
above, we use several other metrics to assess the economic
success of our business activities. To determine whether a par-
ticular investment is likely to generate value for Siemens, we
use net present value or economic value added (EVA™). EVA™
considers the cost of capital in calculating value creation by
comparing the expected earnings of an investment against the
cost of capital employed. EVA™ is also an indicator for measur-
ing capital efficiency in our Sectors and at SFS.
To measure liquidity management of our operating activities,
we analyze net operating working capital turns. In addition,
we set hurdle rates that generally must be considered before
we make acquisitions. In particular, acquisitions should have
the potential to be accretive to EVA™ within three years after
the integration and generate a % cash return within five
years. Cash return is defined as Free cash flow divided by aver-
age capital employed.
.. Additional information
for financial performance measures
...    
() ()
As part of One Siemens, we monitor our capital efficiency us-
ing the indicator return on capital employed ROCE (adjusted)
(continuing operations). The following tables report this finan-
cial indicator as defined under One Siemens.
  
FY  56%
FY  42%
Total dividend payout
× 100%
Net income