Siemens 2013 Annual Report Download - page 202

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

Operating leases – As of September , , Siemens had
a total of €. billion in total future payment obligations
under non-cancelable operating leases, mainly relating to SRE
activities.
Other – Siemens is subject to asset retirement obligations
related to certain items of property, plant and equipment. Such
asset retirement obligations are primarily attributable to envi-
ronmental clean-up costs related to remediation and environ-
mental protection, which amounted to €. billion as of Sep-
tember , . The environmental clean-up costs related to
remediation and environmental protection liabilities have
been accrued based on the estimated costs of decommission-
ing 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). For additional information with respect to
asset retirement obligations, see NOTE  in D. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
Our liquidity may be adversely affected in future periods by
regular or special contributions to fund our post-employment
benefits. As of September , , our liability for post-em-
ployment benefits as recognized in the Consolidated State-
ments of Financial Positions amounted to €. billion. How-
ever, the recognized liability may fluctuate significantly in fu-
ture periods due to changes in assumptions used in calculat-
ing the defined benefit obligations (DBO), in particular the
discount rates, compensation increase rates, pension progres-
sion rates and mortality rates. Actual developments may differ
from assumptions due to changing economic and other condi-
tions of the country in which the retirement plans are situated,
thereby resulting in an increase or decrease of the liability. Em-
ployer contributions expected to be paid to the funded pen-
sion plans during fiscal  amount to € million, including
contributions due to contractual and legal obligations of ap-
proximately €. billion. Additional contributions to our pen-
sion benefit plans may be made or contractually agreed at the
discretion of our management after the end of the reporting
period. The latest funding valuation in the U.K. in calendar
year  resulted in a technical underfunding of £ (€,)
million, based on the assumptions at that date. As a result
Siemens entered in fiscal  into an agreement with the
trustees to provide an annual payment of £ (€) million for
the next  years, beginning in fiscal . In addition to these
payments the Company is obliged to pay £ (€) million until
the next funding valuation, when the funding requirements
will be updated based on new assumptions. This valuation will
take place approximately at the end of calendar year . For
additional information regarding contributions to the fund our
post-employment benefits, see NOTE  in D. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.
For further information with respect to contractual obligations,
see NOTE  in D. NOTES TO CONSOLIDATED FINANCIAL STATE-
MENTS.
C... OFF-BALANCE SHEET ARRANGEMENTS
Guarantees – Siemens guarantees are principally credit guar-
antees and guarantees of third-party performance. As of Sep-
tember , , the undiscounted maximum amount of poten-
tial future payments for guarantees was €. billion, including
guarantees relating to discontinued operations. Credit guaran-
tees cover the financial obligations of third-parties in cases
where Siemens is the vendor and / or contractual partner. In
addition, Siemens provides credit guarantees generally as credit-
line
guarantees with variable utilization to joint ventures and
associated and other companies accounted for using the equity
method. Total credit guarantees were € million as of Sep-
tember , . Furthermore, Siemens issues guarantees of
third-party performance, 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-fulfillment of contractual obligations by the con-
sortium partner(s), Siemens will be required to pay up to an
agreed-upon maximum amount. Guarantees of third- party per-
formance amounted to €. billion as of September , .
In fiscal , The Federal Republic of Germany commissioned
a consortium consisting of Siemens and IBM Deutschland 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 proj-
ect company, BWI Informationstechnik GmbH (BWI), provides
the services required by the terms of the contract. Siemens is a
shareholder in the project company. The total contract value
amounts to a maximum of approximately € billion. In connec-
tion with this project, Siemens issued several guarantees con-
nected to each other legally and economically in favor of the
Federal Republic of Germany and of the consortium member
IBM in December . The guarantees ensure that BWI has
sufficient resources to provide the required services and to ful-
fill its contractual obligations. Total future payments that we
could potentially be required to make amounted to €. bil-
lion as of September , , and will be reduced by approxi-
mately € million per year over the remaining four-years
of the contract period as of September , . Yearly pay-
ments under these guarantees are limited to € million
plus, if applicable, a maximum of € million in unused guar-
antees carried forward from the prior year.