Siemens 2012 Annual Report Download - page 161

135 D. Consolidated Financial Statements
239 E. Additional Information
130 C. Siemens AG (Discussion on basis of
German Commercial Code)
134 C. Notes and forward-looking statements
129 C. Compensation Report, Corporate Governance
statement pursuant to Section a of the
German Commercial Code, Takeover-relevant
information and explanatory report

...    
Year ended September , % Change
(in millions of €)  
Gross profit 22,204 22,229 0%
as percentage of revenue 28.4% 30.3% –
Research and development
expenses (4,238) (3,899) 9%
as percentage of revenue 5.4% 5.3% –
Marketing, selling and general
administrative expenses (11,162) (10,239) 9%
as percentage of revenue 14.3% 14.0% –
Other operating income 516 547 (6)%
Other operating expense (276) (374) (26)%
Income (loss) from invest-
ments accounted for using
the equity method, net (266) 210 n/a
Interest income 2,234 2,200 2%
Interest expense (1,728) (1,716) 1%
Other financial income
(expense), net (5) 649 n/a
Income from continuing
operations before income
taxes 7,279 9,608 (24)%
Income taxes (2,094) (2,232) (6)%
as percentage of income
from continuing operations
before income taxes 29% 23% –
Income from continuing
operations 5,184 7,376 (30)%
Loss from discontinued
operations, net of income
taxes (595) (1,055) (44)%
Net income 4,590 6,321 (27)%
Net income attributable to
non-controlling interests 132 176 –
Net income attributable to
shareholders of Siemens AG 4,458 6,145 (27)%
In fiscal , we achieved Income from continuing opera-
tions of €. billion. While this was one of our highest re-
sults ever, it was substantially lower than in the prior year. The
primary factors in the decline were cost of goods sold; research
and development expenses; marketing, selling and general ad-
ministrative expenses; and income (loss) from investments ac-
counted for using the equity method, net. In addition, the pri-
or year included substantially higher financial income associ-
ated with a major divestment. Each of these factors is described
in more detail below. Other line items in the Consolidated
Statements of Income are discussed in  ,    
.     .
While revenue for fiscal  rose % year-over-year as dis-
cussed earlier, gross profit was nearly unchanged from the pri-
or-year level and declined as a percent of revenue. Industry,
Energy and Infrastructure & Cities all dealt with a less favorable
revenue mix year-over-year, which reduced their gross profit
margins. Gross profit in Energy included € million in proj-
ect charges related to offshore grid-connection projects. The
majority of Healthcare’s charges for its Agenda  initiative
also impacted gross profit. In fiscal , Healthcare’s € mil-
lion in charges in the third quarter related to particle therapy
were included in gross profit.
Furthermore, all Sectors increased their spending for market-
ing, selling and administrative expenses and research and de-
velopment expenses in anticipation of an improving global
economic environment in the second half of the fiscal year. In
fact, global economic growth slowed instead of picking up in
the second half, leaving the Sectors with cost positions that
adversely affected income. For more details on our research
and development activities, including a split of research and
development expenses for the Sectors, see .. 
 .
Income (loss) from investments accounted for using the equity
method, net swung from a positive € million in fiscal 
to a negative € million in fiscal . The primary factor
was Nokia Siemens Networks B.V. (NSN), which took substan-
tial restructuring charges in connection with repositioning its
business. This in turn led to an equity investment loss of €
million associated with NSN, compared to a loss of € mil-
lion in the prior year. For additional information, see  
 .     .
Income from continuing operations in fiscal  benefited
from a gain of €. billion on the sale of Energy ’s interest in
Areva NP S.A.S. (Areva NP), partly offset by the negative im-
pact of € million related to an adverse arbitration decision
associated with our decision to exit our nuclear power joint
venture with Areva S.A. (Areva). The net effect of these factors
is included in Other financial income (expense) net. For addi-
tional information, see    .   
 .
In the current period, Income from continuing operations
included € million in gains related to changes in other
post-employment benefits (OPEB) in the U.S., more than off-
set by profit impacts of € million, primarily in the Energy
Sector, related to a change in credit risk assessment for Iran.
These gains and impacts were distributed among various
line items.