Siemens 2013 Annual Report Download - page 196

92 A. To our Shareholders
117 B. Corporate Governance 155 C. Combined Management Report
156 C. Business and economic environment
173 C. Financial performance system
179 C. Results of operations
192 C. Financial position
204 C. Net assets position
207 C. Overall assessment of the economic position
209 C. Subsequent events
210 C. Sustainability
227 C. Report on expected developments and
associated material opportunities and risks

C.. Cash flows
The following discussion presents an analysis of our cash
flows from operating, investing and financing activities for fis-
cal  and  for both continuing and discontinued opera-
tions. Discontinued operations include primarily OSRAM and
Siemens IT Solutions and Services, which were classified as
discontinued operations during the second quarter of fiscal
, and the Water Technologies Business Unit, which was
classified as discontinued operations during the fourth quarter
of fiscal . Siemens IT Solutions and Services was sold to
AtoS in the fourth quarter of fiscal . In July , Siemens
successfully completed its spin-off and listing of OSRAM.
The cash flows from operating activities are presented using
the indirect method, i.e. cash flows are determined by adjust-
ing net income by using a reconciliation, considering the
effects of non-cash items, changes during the period in assets
and liabilities, particularly in operating net working capital,
and all other items for which cash effects are investing or
financing activities. Cash flows from investing and financing
activities are determined on the basis of the direct method,
whereby major classes of cash flows are disclosed.
We report Free cash flow as a supplemental liquidity measure,
which is defined as cash flows from operating activities less
cash used for additions to intangible assets and property, plant
and equipment. We believe that a positive Free cash flow en-
ables us to maintain a healthy capital structure, and that the
presentation of Free cash flow also provides useful information
to investors because it gives an indication of the long-term
cash-generating ability of our business and of our ability to pay
for discretionary and non-discretionary expenditures not includ-
ed in the measure, such as dividends, debt repayment or acqui-
sitions. We also use Free cash flow to compare cash generation
among the segments of our business. Free cash flow should not
be considered in isolation or as an alternative to measures of
cash flow calculated in accordance with IFRS. For further infor-
mation about the usefulness and limitations of this measure,
see C. NOTES AND FORWARD-LOOKING STATEMENTS.
Cash flows from operating activities – Continuing opera-
tions provided cash for operating activities of €. billion in
fiscal , compared to cash provided of €. billion in the
prior-year period. In both periods, the major component of
cash inflows was income from continuing operations, which
was €. billion in fiscal  compared to €. billion in
fiscal . Included therein were amortization, depreciation
and impairments of €. billion and €. billion, in fiscal
 and fiscal , respectively. A build-up of operating net
working capital led to cash outflows of €. billion in fiscal
, compared to cash outflows of €. billion in the pri-
or-year. In both periods the increase in operating net working
capital was due mainly to a decrease in billings in excess of
costs and estimated earnings on uncompleted contracts and
related advances primarily in the Energy Sector. Fiscal 
benefited from positive cash flow effects relating to the change
of other assets and liabilities including the increase of person-
nel-related liabilities compared to a decrease in the prior year.
Fiscal  included cash outflows of approximately €. bil-
lion corresponding to charges to income taken for the
“Siemens ” program. For comparison fiscal  included
cash outflows of approximately €. billion related to the re-
valuation of Healthcare’s particle therapy business for general
patient treatment as well as Healthcare’s “Agenda ” initia-
tive. Both fiscal years included interest received of €. billion.
Cash flows
Continuing operations Discontinued operations Continuing and
discontinued operations
Year ended September , Year ended September , Year ended September ,
(in millions of €)      
Cash flows from:
Operating activities 7,126 6,923 214 188 7,340 7,110
Investing activities (4,836) (5,029) (240) (656) (5,076) (5,685)
therein: Additions to intangible assets and
property, plant and equipment (1,869) (2,195) (142) (215) (2,012) (2,410)
Free cash flow 5,257 4,727 71 (27) 5,328 4,700
Financing activities (3,422) (3,523) 26 468 (3,396) (3,055)
1 The closest comparable financial measure of Free cash
flow under IFRS is the line item Cash flows from operat-
ing activities. Cash flows from operating activities from
continuing operations as well as from continuing and
discontinued operations is reported in D. CONSOLI-
DATED STATEMENTS OF CASH FLOWS. Other companies
that report Free cash flow may define and calculate this
measure differently.