Siemens 2006 Annual Report Download - page 118

Management’s discussion and analysis
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Other Operations
Other Operations consist of centrally held operating businesses not related to a Group, such as
joint ventures and equity investments. In fiscal 2006 (retroactively to all periods presented),
Other Operations include SHC, which was carved out of Com, and Dematic, which was carved
out of the former L&A Group. Other Operations also include a portion of the VA Tech acquisi-
tion. In aggregate, sales from Other Operations were €4.828 billion compared to €4.220 billion
in the prior year, with VA Tech accounting for much of the increase. A significant portion of our
Dematic business was divested at a loss of €53 million in the fourth quarter. Group profit from
Other Operations was a negative €36 million compared to a positive €76 million a year earlier.
Equity investments were the main earnings contributors in both the current and prior year,
and Dematic reduced its negative result year-over-year despite the loss on the sale. SHC posted
a loss compared to positive earnings in fiscal 2005.
Reconciliation to Financial Statements
Reconciliation to financial statements includes various categories of items, which are not allo-
cated to the Groups because the Managing Board has determined that such items are not
indicative of Group performance.
Corporate items, pensions and eliminations
Corporate items, pensions and eliminations totaled a negative €1.248 billion in fiscal 2006
compared to a negative €1.072 billion in fiscal 2005. Corporate items were a negative €616 mil-
lion in fiscal 2006 compared to a negative €537 million a year earlier. Within Corporate items,
a significant investment in information technology was the major factor in higher central
costs in fiscal 2006 compared to the prior year. Corporate items benefited in fiscal 2006 from
a gain of €95 million on the sale of an investment and €70 million in positive effects from set-
tlement of an arbitration proceeding. Sales of marketable securities produced gains including
€33 million on the sale of Infineon shares and €15 million on the sale of shares in Epcos AG
(Epcos), partly offset by a €20 million impairment on shares in BenQ Corporation. Centrally
carried pension expense increased to €598 million from €519 million a year earlier primarily
due to a reduction in the discount rate assumption at September 30, 2005.
Other interest expense
Other interest expense of Operations for fiscal 2006 was €355 million compared to interest
expense of €191 million a year earlier. The change was mainly due to increased intra-company
financing of Operations by Corporate Treasury year-over-year.