Siemens 2012 Annual Report Download - page 275

135 D. Consolidated Financial Statements 239 E. Additional Information
140 D. Consolidated Statements of Changes in Equity
142 D. Notes to Consolidated Financial Statements
232 D. Supervisory Board and Managing Board
136 D. Consolidated Statements of Income
137 D. Consolidated Statements of Comprehensive Income
138 D. Consolidated Statements of Financial Position
139 D. Consolidated Statements of Cash Flow

Asset retirement obligations – The Company is subject to asset
retirement obligations related to certain items of property,
plant and equipment. Such asset retirement obligations are
primarily attributable to environmental clean-up costs which
amounted to €, million and €, million, respectively, as
of September ,  and  (the non-current portion there-
of being €, million and €, million, respectively) and to
costs primarily associated with the removal of leasehold im-
provements at the end of the lease term amounting to € mil-
lion and € million, respectively, as of September ,  and
 (the non-current portion thereof being € million and
€ million, respectively).
Environmental clean-up costs relate to remediation and envi-
ronmental protection liabilities which have been accrued based
on the estimated costs of decommissioning facilities for the
production of uranium and mixed-oxide fuel elements in Hanau,
Germany (Hanau facilities), as well as a nuclear research and
service center in Karlstein, Germany (Karlstein facilities). Ac-
cording to the German Atomic Energy Act, when such a facility
is closed, the resulting radioactive waste must be collected and
delivered to a government-developed final storage facility. In
this regard, the Company has developed a plan to decommis-
sion the Hanau and Karlstein facilities in the following steps:
clean-out, decontamination and disassembly of equipment and
installations, decontamination of the facilities and buildings,
sorting of radioactive materials, and intermediate and final stor-
age of the radioactive waste. This process will be supported by
continuing engineering studies and radioactive sampling under
the supervision of German federal and state authorities. The de-
contamination, disassembly and sorting activities are planned
to continue until ; thereafter, the Company is responsible
for intermediate storage of the radioactive materials until a final
storage facility is available. With respect to the Hanau facility,
the process of setting up intermediate storage for radioactive
waste has nearly reached completion; on September , ,
the Company received official notification from the authorities
that the Hanau facility has been released from the scope of ap-
plication of the German Atomic Energy Act and that its further
use is unrestricted. The ultimate costs of the remediation are
contingent on the decision of the federal government on the lo-
cation of the final storage facility and the date of its availability.
Consequently, the provision is based on a number of significant
estimates and assumptions. Several parameters relating to the
development of a final storage facility for radioactive waste are
specified on the so called Schacht Konrad final storage. Param-
eters related to the life-span of the German nuclear reactors
reflect a planned phase-out until . The valuation uses as-
sumptions to reflect the current and detailed cost estimates,
price inflation and discount rates as well as a continuous out-
flow until  related to the costs for dismantling as well as
intermediate and final storage.
Using the input of an independent advisor, management up-
dated its valuation of the liability due to changes in estimates
which resulted in minor adjustments in fiscal  and .
Facts and circumstances of the changes were as follows:
In fiscal , parameters related to the set up cost of the Konrad
final storage were updated by The Federal Office for Radiation
Protection (Bundesamt für Strahlenschutz).
In fiscal , the parameters related to the life-span of the
German nuclear reactors generally changed to a planned
phase-out until . Revised assumptions were applied to re-
flect current and detailed cost estimates as well as a shorter
time span of future cash outflows, reflecting the shorter life-
span of the German nuclear reactors. As of September , 
a continuous outflow until  was assumed as opposed to
 in prior valuations.
The determination of the provisions related to major asset re-
tirement obligations will continue to involve significant esti-
mates and assumptions. Uncertainties surrounding the
amount to be recognized include, for example, the estimated
costs of decommissioning because of the long time frame over
which future cash outflows are expected to occur. Amongst
others, the estimated cash outflows related to the asset retire-
ment obligation could alter significantly if, and when, political
developments affect the government’s plans to develop the so
called Schacht Konrad. As of September ,  and , the
provision totals €, million and €, million, respectively,
and is recorded net of a present value discount of €, mil-
lion and €, million, respectively. The total expected pay-
ments for each of the next five fiscal years and the total there-
after are € million, € million, € million, € million, €
million and €, million.
The Company recognizes the accretion of the provision for en-
vironmental clean-up costs using the effective interest method
applying current interest rates prevailing at the period-end
date. In fiscal  and , the Company recognized € mil-
lion and € million, respectively in accretion expense for en-
vironmental clean-up costs in line item Other Financial income
(expense), net. Changes in discount rates increased the carry-
ing amount of provisions by € million and € million as of
September ,  and , respectively.
Other – Other includes transaction-related and post-closing
provisions in connection with portfolio activities.