ML20135E658

Siemens Annual Rept

ML20135E658
Person / Time
Site:	Framatome ANP Richland
Issue date:	12/31/1995
From:	SIEMENS POWER CORP. (FORMERLY SIEMENS NUCLEAR POWER
To:
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Text

SIEMENS 5

Annua Report'95

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2 Report of the Supervisory Board 4 Letter to our shareholders 8 Managing Board's general review 14 Employees Review of operations 16 Energy 20 Industry 24 Communict.tions 28 information 30 Transportation 34 Health care 36 Components 40 Lightireg 42 Bosch Siemens Hausgerite GmbH 44 Siemens on the financial markets 46 Consolidated financial statements 66 Five-year summary 68 The Company 69 Supervisory Board O

g 5.

Siemens a:a c ance Siemens -

1995 1994 Change g',, :v;;m h: 91900 88,371

+4%

New orders Qs,- Bj

[%)aq',763',

Sales 88 84,598

+5%

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{.[ ;.g. 'i Employees is. 373,000).

376,000

-1%

Capital expenditures and investments 17,4651 '

5,721

+ 30%

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...y Research and development

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7,274 ~. d 7,508

-3%

[y,lW\\y; Net income

. 2,0847 )

1,649

+ 26%

(as a percent of s.les) r-l

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(1.9) 3 l.c

.. g Net income hq,2,084 L ';l 1,993

+5%

induding extraordinary gain

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(as a percent of shareholders' equity)

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.- U;; ;e Totaldividend of Siemens AG lj 728

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' f Dividend per share in DM 13 d0 j 13.00 t

a wa c.4 Amounts in millions of Genr.an rnarks (DM) unless stated otherwise

2 leaor:of :he Su]ervisory 30 arc O

Perhaps as never before in its 150-year history, Siemens faces new and funda-mental changes in its business environment. National markets in the developed world have initiated programs of deregulation and liberalization which will permanently alter traditional purchasing approaches. In production, Central and Eastern Europe have emerged as low-cost alternatives, while Southeast Asian markets have merged high-tech skills with lower pricing. These developments are occurring against a backdrop of an unrelenting demand for productivity gains, accelerating innovation in microelectronics, software and

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engineering, and continuous fluctuations in currency values.

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L At our four regularly scheduled meetings and on numerous f

1-other occasions, we discussed with +he Managing Board the

,g..E' measures needed to meet these daunting challenges.

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Engineering and technological prowess, global market position, comprehensive familiarity with customer and market needs, lNw,

a solid financial base and 370,000 highly skilled and motivated x

employees - these are only a few of the key strengths Siemr possesses for succeeding in this tough business arena. We are confident that 1 Managing Board is using every tool at its aisposal to secure the Company's future global competitiveness.

At our two-day summer meeting in Brussels, we discussed economic, techno-logical and political trends in our European home market, and what consequences these may have for Siemens. We also had opportunities to talk with members of the EU Commission sad the European Parliament. In November 1994, shortly after the meeting of our Corporate Executive Comm ttee in Singapore, we reviewed the Company's general commitment to the Asian markets and all its ramifications.

We examined special status reports on the Company's semiconductor activities.

After years of closing the technological gap with competitors and implementing extensive restructuring measures, the business is generating solid profits. Positive market trends will require additional substantial investments in this sector.

Siemens Nixdorf Informationssysteme AG (SNI) has also made major progress toward recovery. The company has built up a strong base of world-class expertise and professionalism in the field of information technology, a core business for Siemens. We are convinced that SNI is well positioned to overcome further chal-lenges in this difficult industry.

The plant and project-oriented Power Generation (KWU), Power Transmission '

Distribution, Industrial and Building Systems and Transportation Systems Grou.

have been impacted by cost pressure and structural changes in their markets. Tt Managing Board elucidated the specific measures that have been taken to ensure continuing success in these sectors.

O The Presidency of the Supervisory Board directed special attention to the Company's transactions with derivative financial instruments, and was given detailed information by Corporate Finance regarding the rigorous risk ccntrols used in this area.

The Company's accounting procedures, the annual financial statements of Siemens AG and the consolidated financial statements as of September 30,1995, as well as the Managing Board's combined general review of Siemens AG and Siemens worldwide consolidated, have been audited and approved without qualification by KPMG Deutsche Treuhand-Gesellschaft AG Wirtschaftspr0fungsgoellschaf t, Berlin and Frankfurt on Main. We also examined the Company's records ourselves. The KPMG reports were presented to all members of the Supervisory Board and theroughly discussed together with the auditors at the Board's balance sheet meeting. We found no grounds for objec-tion. In view of our approval, the financial statements are definitively confirmed. We endorse the Managing Board's proposal that the net income available for distribution be used to pay a dividend of DM13 per share based on capital stock of DM2.8 billion. We also approve the proposal that the amount attribut-

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able to treasury stock be carried forward.

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Dr. Erwin Hardt, member of the Menaging Board M

f and, until March 31,1995, President of the Public

$ 11] Communication Networks Group, retired on Sep-

'l tember 30,1995. Peter Pribilla took over the Group

' $ presidency effective April 1,1995. We expressed

our appreciation to Dr. Hardt for his long and distin-guished service to the Company. Our thanks also go

! to Karl-Heinz Nolden, who stepped down from the Supervisory Board on September 30,1995, after many years of dedicated service. He was succeed-ed by Ms. Bettina Haller on October 1,1995.

Berlin and Munbh, December 13,1995 For the Supervisory Board Lf 1i o

1 Dr.-Ing. E. Hermann Franz Chairman t

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_eter10 our slarelo cers O

Dear shareholder:

Efm$."'*. ow We set a clear goal for 1995: erase last year's earnings dip as the first step 2.500 Extr. ordinary ca,n in attaining a 15% return on equity over the long term.

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I am pleased to report that we have met our goal. Despite continuing price 1300 -

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pressure and the negative effects of a strong mark, our net income grew to DM2.084 billion, a solid 26% increase over last year's earnings excluding 3no extraordinary gain. In fact, we even surpassed last year's total including its 1991 lb 3 Ib 1995 extraordinary gain on the sale of our cardiac pacemaker business.

top's strong imp Jct This improvemerit in performance is in !arge part due to the continuing suc-cess of our top program. In place since 1993, the initiative is focusing efforts:

to achieve permanent improvements in earnings through four main thrusts:

increasing productivity, speeding innovation, expanding into new geographic and product markets, and fundamentally reshaping our corporate culture.

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e In its first two years alone, the top program helped fuel productivity gains and expansion into new markets in a number of impressive ways:

Total cost productivity gains were almost 15% in the last two fiscal years, gmmm d-,m representing more than DM12 billion in cost savings. This has enhanced om, Avg k h.M m s_aia our compet;tiveness in many crucial businesses.

We die now solidly positioned for further expansim in the dynamic Asia-Pacific region.

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l Innovation as a competitive edge Constant innovation is an absolute must for success in the global electrical engineering and e5ctronics industry. In our drive to sharpen the competitive edge throughout our businesses, we are developing new and more efficient New orders og

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ways to operate. This means picking up the pace of innovation in basic tech-so. #

nologies - such as microelectronics - used across all operations; speeding ues r,ew product generations; and exploiting synergies to meet customer needs.

7 lt also means looking Closely at every one of our business processes and 1991 Q2 1993 19M G5 coming up with new customer solutions, such as innovative services and new operating models.

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O None of the imaginative and successful products, systems and services high-lighted in this year's Annual Report were achieved by chance. They were the result of our systematic coordination of technology and product development throughout Siemens, and reflect the total focus of Corporate Research and Development on customer needs.

Only by reshaping the way we think and do business can we accelera9 this innovation drive throughout all levels of the Company. Our top program focus-es on maximizing customer benefit by eliminating needless organizational bar-riers, giving otr people the greatest possible freedom of action, encouraging individual responsibility, nurturing our employees' strengths and motivating d

them to achieve. We must be ready-and willing-to accept greater challeng-es and risks as we rigorously pursue global market growth. This will be no easy task. To ensure our success, we've put in place initiatives and programs to keep us fast, flexible and responsive.

O Performance-oriented management Last year for the first time, we reported on earnings down to the level of our consolidated eight business segments and five geographic segments. This year we are going into even greater depth by providing the earnings perfor-mance in each of our 17 operating units:

1 Groups which in recent years were generating losses have begun to show their strengths. Our components segment recorded excellent earnings for the year, while the Automation and Private Communication Systems Groups, as well as Osram GmbH, made solid contributions. Notably, after four years of heavy losses, Siemens Nixdorf informationssysteme AG is now in the black.

>, Three units posted losses in 1995: the special Network Systems division, which is still in its startup phase, the Power Transmission and Distobution and the Transportation Systems Groups. Othu operating units, in particular Power Generation (KWU), Industrial and Building Systems, and Public Com-mtrnication Networks, faced major changes in their competitive environ-ments and are not generating satisfactory results at present. KWU is Mso suffering from the politically initiated closing of its fuel element processing plant in Hanau, Gerrnany. Restructuring efforts are underway to ensure that these groups recover their earlier earning power as quickly as possible.

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Building a more competitive Siemens There is no doubt that Siemens has the size, technological prowess and worldwide presence to be a major force in the global electrical engineering and electronics industry. But we know that these attributes alone can lead to

=-"""'q complacency, inflexibility and bureaucracy. To win in our fast-paced, fiercely competitive world, we have to combine the benefits of scale with the nimbie-

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ness and market responsiveness which typify smaller, leaner organizations.

In 1989, we began to transform Siemens by decentralizing operations and p

creating streamlined vertical businesses. Today most of our approximately

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260 business activities are now leaner, more independent units where km management rewards are closely tied to how well their individual businesses 4x ej perform and add to the overall success of Siemens. In short, we are pushing j$ -

competitive responsibility onto those closest to where the competition is

'7 T i fiercest -confident that their greater agility, market knowledge and customer proximity are the keys to success. Many of these units are already mastering Ekw their part of the global competitive field, while others are still improving their fitness and sharpening their skills to meet our ambitious goals.

i As this effort continues, we are working hard to rebalance our geographic value-added structure and sales profile. At present, nearly 60% cf our busi-ness is with customers 2

outside Germany-and this percentage is grow-ing. However, roughly two-thirds of our value-adding work is still undertaken in Germany.

Market leade" in the light rail 4

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O We intend to correct this imbalance by speeding our global market growth, and are confident this should help preserve jobs in Germany.

Fascinating opportunities Electrical engineering and electronics are among the world's most exciting industries, with virtually unlimited potential for those able to compete suc-cessfully. We are determined to grow by seizing entrepreneurial opportu-nities:

We have the know-how and experience in communications and information technology to help shape tomorrow's multimedia world.

We are pacesetters in power generation and transmission systems which meet and exceed growing environmental demands. In a world of expand-ing population and limited resources, efficiency is the key element in our solutions for providing energy and lighting in industry and the private sector.

We offer advanced environmental solutions, and the highest levels of safety and comfort in road, rail and air e

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We are making it possible for health n

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p care providers worldwide to offer cost-effective state-of-the-art diagnostics 0

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and therapy.

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conductor business, and are part of an international alliance c1 chip tech-

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nology to prepare for the needs of the next century.

These are ambitious plans-but we are confident that you, our shareholders, will profit from our success.

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l Dr. Heinrich v. Pierer President and Chief Executive Officer Siemens AG

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,Jenera review O

in a generally favorable global economic climate, growth in the world's electrical markets remained stable. Although the strong German mark and high wage settlements dampened the economy in Germany, these factors did not yet have an impact on the domestic electrical market. Most markets in Western Europe and in the reforming countries of Central and Eastern Europe also showed an upward swing. Although double-digit growth was again recorded in the U,S., the boom in the electrical market seems to have peaked. While Japan's economy continued to suffer under the powerful yen and the effects of the nation's bank crisis, the Asia-Pacific region, and particularly Southeast Asia, continued to II outpace the rest of the world.

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As South America's economy recovers, we at taMn3 part in the upswing with numerous invest-

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Growth on target International business Despite unfavorable currency

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Worldwide, sales were up sustained parities, orders in Western

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1995 1994 more than 13%. The etfects in the international arana, the Europe rose to DM23.5 (1994:

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+ 9.5% + 8 5%

of the strong German mark, unwavering German mark and DM21.7) billion. Substantial Europe

+ 6 7% + 5.4%

however, pared growth by a drop in the volume of major growth was recorded in the (Germany) 7.6% + $ 8%

three percentage points, and projects depressed growth.

Benelux and Scandinavian

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ongoing priCO erosion in our orders edged up 1% to countries.

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world markets cut another five DM53.9 billion, and sales rose AssPac4c1

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percentage points from the 4% to DM50.9 bilhon Inter-rieflecting the further stabiliza-1 Southeast Asia) + 12 6% +14.0%

total, leaving a 5% increase national sales and orders tion of economic develop-AW.a. Meddle

+ 12 %.- 4 194 to DM88.8 bilkon. New orders accounted for 57% and 59%

ments in Central and Eastern East, C ts.

rose 4% to DM91.9 bilhon.

of the respective totals.

Europe, orders from the Estimated real growth in pertent region, including the C i S.,

Sales and orders in our stan-Growth in Europe increased to DM3.3 (1994:

dard products business, which Business expanded in Germa-DM2.6) bilhon.

surged throughout the world, ny again af ter a two-year slow-were a key factor in this down. Spurred above all by growth. Major project activ-a recovery in our industrial ities, in contrast, fell below business, orders jumped 8%

the high level recorded in the to DM38.0 bilhon and sales previous year.

climbed 6% to DM37.9 bilkon O

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U.S. business up in dollars, a decline to DM10.8 (1994:

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down in marks DM11.6) bilhon.

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advantage of the strong econ-With over 47,000 employees yn EMe omy to boost sales to US$7.5 in the U.S., more than 80%

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lated into German marks, was local content, helping to

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ness in the Asia-Pacific region, and sales rose to DM8.6 (1994: DM7.4) bilhon. Normal

bilhon, h included the sales by business segment fluctuations in the billing of extraord ary gain from the (includine intersegment shipment)

Energy 14 %

major projects led to a decline sale of our pacemaker activ-ities.

in orders to DM8.4 (1994:

N DM9.7) billion. The region now 2

i contnbutes around 10% of our Productivity-enhancing Communicatons 20 %

total business volume.

measures in our top program informaton 13 %

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g m de a vital contribution to f_ ' '

O Markets in Southeast Asia improved earnings, and will Transputaten e%

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be rigorously pursued in our Health care 7%

h 2i ly dynamic growth. Benefiting ongoing drive to secure long-Comoonents 7% g from higher local content, stra, term global competitiveness.

e tegic alhances, cooperations, nlthough restructunng 6*

joint ventures and increasing measures led to a charge of

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technology transfers, we are DM2.173 billion, the figure lay Cuer 2%

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targeting 15-20% annual sales considerably below last year's.

grow *h in the region.

Mixed segment Solid increase in earnings performance Earnings improved signifi.

The busir.ess segments deal-cantly, following last / ear's ing in products and systems dip. At DM2.084 billion, net profited from the worldwide income jumped 26% over the economic recovery and postod previous year's figure before above-average growth in sales.

extraordinary gain, exceeding our original 20% target. We also surpassed last year's total net income of DM1.993

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,, a.u t 1 Our components segment showed an impressive 25%

Pr. tax income by business segment surge in growth for the year, 0""" "DW fueled in large part by the per-formance of the Semiconduc-E nergy I--

M tors Group With its 36%

Jump in sales and substantial hdustry N

improvements in productmty, the Group pushed its earnings Communcations g

11.134 to DM793 mdhon.

Informaaon I

e2 lL (319 The industry segment also Transportation (18l 9

showed robust growth in sa!es and earnings, generated Health care E

by a number of mapr projects g..,,

in Germany and a booming components 6-1.018 339 business in standard products.

Ugnting 340 Enpying double-digit growth 291 and massive productrvity g 1995 gains, the Automadon Group

'1934 made the largest contnbution to the increase in segment The information segment also Trends in our communications earnings.

recorded doi'ble-dig:t growth segment were down for the Despite accelerating pnce year. A dechne in domestic g

detenoration and continued business impacted sales and high restructunng costs, earnings in the Pubhc Com-S(mens Nadorf Informations-munication Networks Group.

systeme AG showed a profit af ter four years of operating in the red

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1 while startup losses burdened property, plant and equip-4' ' 4g" M

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the new independent Network ment, which had declined in Systems division. The Private the past two years, increased

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Communication Systems to DMS.5 (1994: DM4.5)

Group was a bright spot, how-billion, primarily as a result of ever, recording a further rise investments in our new Micro-i in sales and earnings.

electronics Center in Dresden.

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The energy and transportation For the first time in years, segments, largely involved in high capital expenditures and major projects, were affected investments, as wel as the by sharply eroding prices and expansion of business, caused substantial restructuring charg-a net increase in funds used 2

es. The Power Generation that was covered by a reduc-ple of this drive is the consoli-Group (KWU) had to bear an tion of miscellaneous assots.

dation and focusing of our additional charge for decom-The Company's assets and know-how for new markets

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missioning its fuel element capital structure remained such as multimedia.

plant in Hanau, Germany.

virtually unchang3d from the Strong 7% grow

• a the Auto-previous year.

Product and technology innovation powered by our

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improved its earnings, was in the spring of 1995, we research and development not able to fully compensate received triple-A long-term efforts, in which we invested for the first-ever loss posted bond ratings from the two DM7.3 billion, or over 8% of

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by the Transportation Systems leading intemational rating our worldwide sales, further

Group, agencies, Moody's and

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enhanced our position as a Standard & Poor's, as a con-leading global player in the Declining prices, the strong firmation of our "very strong electrical and electronics 1)rman mark, and the loss of business position and solid industry.

business resulting from last financial standing.

year's sale of our pacemaker

" Synapse", our neural com-activities put pressure on Workforce resizing slows puter, won the Innovation sales and eamings in the The number of employees Prize of German industry. Used Medical Engineering Group.

dechned by 3,000 to 373,000.

n the increasingly important for 16,000 pages of text.

Cutbacks of 7,000 jobs in Ger-sector of image processing.

Our strong international team, The lighting segment, on the many resulted from restructur-the machine works roughly which has recently been other hand, managed to sus-ing measures, and were par' 8,000 times faster than joined by Motorola, will coop-tain its sales level and improve tially offset by the addition of conventional workstations.

erate on developing the four-earnings despite falling pnces 4,000 employees outside the fold more powerful 1-gigabit and the weak dollar.

country; 3,000 of this total in the field of rnicroelectron-DRAM.

were attributable to the con-ics, which is becoming a deci-

, Financial strength solidation of new companies.

sive competitiva factor in ever We are technology leaders remains high j

more industnes, we and our in the highly dynamic GSM Capital spending chmbed Pace of innovation partners are leaders in devel-cellphone market. In another DMt8 bilhon to DM7.5 bilhon.

accelerated oping new chip generations sector, Siemens supphed Spending on acquisitions As the transformation of our such as the 256-megabit the state-of-the-art switching rose to DM2.0 (1994: DM1.2)

Company proceeds, innova-DRAM with storage capacity systems now being used in billion, largely due to the pur-tion processes are being Germany's infobahn. And we chase of Pyramid Technology speeded up. Encompassing were the first to successfully Corporation, San Jose, Cali-all stages of the value cdded market a multimedia terminal fornia, and a stake in newly chain, our comprehensive combining PC, communica-formed ITALTEL SIT S.p.A.,

program includes innovations tions svstem and television.

Milan, Italy. Expenditure on in basic technologies and products, and in the very way we do our systems and major projects business. One exam-

1 Water pumps in Africa's Sahel zone are powered by solar cells.

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h; VA Q Environmental protection Sk g, officers in our plants ensure strict h @h 7 vit adherence to all regulations.

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currently the world's smallest and q

fastest memories of their liind.

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. fM In the energy sector, our latest 800 telephone family and DM13 dividend ments. Little change is expect-generation of environmentally Peen PCs, for example, can At the Annual Shareholders' ed in the other business seg-friendly gas-turbine power be almost completely recy-Meeting on February 22, ments.

plants has set a world record cled, and increasing numbers 1996, we will propose that a for efficiency. Our advanced of our products are receiving dividend of DM13 be paid on Unrelenting pressure to instrumentation and control environmental awards.

each share with a par value improve productivity across all systems for power plants and of DM50 from the DM728 mil-operations will lead to further transmission grids were well Advanced environmental tech-lion net ir.come of Siemens reductions in the workforce, received by the market. A nologies, including systems AG, based on the capital stock particularly in Germany.

second Japanese firm has and plants for waste disposal er. titled to the dividend, and hcensed our environmentally and the monitonng and clean-that the amount attributable Above all, the increasing suc-compatible therrnal waste ing of air, water and soil, to treasury stock be carried cess of our Company-wide top recycling process, and a pilot are an important part of our forward.

projects should make a posi-plant has begun operations in program.

tive contnbution to earnings.

that country.

Looking ahead At the same time, restructur-In our drive to minimize We expect the effects of the ing costs are expected to Further innovative products impact on the environment, strong German mark and high decline again. In view of these and processes, such as faster we again reduced the volume domestic wage settlements to factors, we expect net income full-body computed tomo-of waste by 15% and held impact our business situation to increase for the year.

graphs, new generations of water consumption and to a greater extent this year machine-tool controls, or more square-footage energy con-than last. On the other hand, etficient processes for manu-sumption constant despite important customer industries factunng steel and paper higher production output for both in Germany and abroad underscore our position as a the year. Although our produc-should enjoy further growth.

world-class technology leader. tion technologies scarcely burden the environment, we Our components and industry initiatives for spent DM225 milhon in the business segments, which the environment continuing ques: o optimize showed the highest growth Reflecting the total commit-environmental protection at in fiscal 1995, should sof ten ment to environmental protec-Siernens AG.

somewhat this year. In con-tion anchored in our corporate trast, we anticipate sohd mission, we are one of the expansion in the communica-very few industrial companies tions and information seg-to set ugorous mandatory j

environmental and recycling standards for our eng:neers The Managing Board s general revmw and developers. Our Euroset covers botn seemens AG and Semons woddude conschdared

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15 imaoyees O

To enhance our competitiveness, we are reshaping our corporate culture to ensure that creativity and commitment thrive, that productivity is a natural priority, and that our global tearn is totally focused on attaining customer satisfaction. As we nurture this culture, we are spreading the message that accomplishing our goals takes precedence over corporate titles or rank.

Our culture is based on teamwork, stream!ining decisions and speeding our

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response to market needs. Trusting people to strive and achieve on their own initiative, we are aiming at empowering our employees in a highly cooperative climate which reaches across all departments and operations.

Our employees' talents and their ability to suggest the best possible cus-tomer solutions have made us one of the industry's strongest global players.

Support and motivation for this talent comes from our managers, who are increasingly being selected from our rich international pool of human resources.

Success is ultimately determined by the ability to anticipate and adapt to changing business conditions. To secure our competitiveness, we rely on flexib!e work schedules to reduce costs. With more than 100 different work schedules being used throughout the Company, we have achieved new levels of market responsive-Ut.JOr h.'3$"

ness. As part of our program, we offer part-time employment wherever appropriate. Over the past decade, the proportion of people working part-time at u europ.

77 %

Siemens AG has nearly doubled S$"n'y 57 %

to around 10%.

a Amencas 17 %

lill Asia Pacific 5%

S As of September 30,1995, we G ggga,

employed 373,000 people world-wide, roughly 3,000 fewe: than the previous year. Workfc rce reductions continued in Germany, where 7,000 jobs were phased out during the year. Our nternational workforce grew by 4,000, including 3,000 attributable to the consoi dation of new companies.

i This reflects the growing need to adapt our global value-added structure to regional demand and to serve our international markets and customers more efficiently.

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17 Enercy Meeting the energy needs of a growing worldwide population while reducing the impact on the environment requires creative power generation and trans-mission solutions. We continue to develop power supply systems that use fewer natural resources, operate cleaner, and transmit as well as distribute power with the highest possible efficiency. Bold new concepts, such as fuel cells for generating power in isolated locations and superconducting power storage systems, are carrying us beyond the limits of existing technology.

By rigorously boosting productivity, we now provide our customers with energy systems at lower cost

_m, and faster than ever before. And

' 1 AmM in response to market demand j~ 7h J L -s" for lower investment costs and innovative financing models, we are participating as co-investor in an increasing number of power projects.

Static reactive power compensators reduce power transmission losses and voltage fluctuations.

W

" " CM The closing of our nuclear fuel As part of our efforts to Our new Teleperm XP instru-5%

.. cucM production in Hanau, Germany, bolster and expand our market mentation and control system New eders DM9.0 bilhon - 6%

and restructuring measures positions in the Far East and for power plants is proving sales DMs4 binon + 11%

to boost productivity across all Eastern Europe, we formed a success in all market seg-hmome DM79 nwon.

divisions once again burdened joint ventures for engineering ments, from small cogenera-Capita

earnings, and manufacturing turbines tion plants to large coal-fired spendino DM253 miniod and generators, as well as for power plants. More than Empbyees 20,200 Orders for gas turbines and producing equipment for 60 orders have been rece'ved combined-cycle (GUD) power hydroelectric power plants.

from 20 countries.

While sa!es were pushed plants came in from Europe, We also acquired minority up by expanding business in Asia and both North and stakes in two companies Working with electncal util-Asia and the billing of major South America. These includ-specializing in the production ities, we are developing a new projects in eastern Germany, ed contracts for all three out-of turbines and generators in generation of nuclear power orders failed to reach the put ranges of our new gas St. Petersburg, Russia. Major plants. We received orders for previous year's level due to turbine family, launc> led at investments were also made the basic design phase of the substantially lower prices and the beginning of the year. The in upgrading our domestic European Pressurized Water the postponement of some new models are marked by facilities, including the addition Reactor (EPR), e joint Franco-projects.

improved efficiency, perfor-of a newintegrated production German project, and for a mance and cost-effectiveness. line for turbine blades in Berlin. medium-sized boiling water We are currently developing reactor (SWR 1000L Numer-large coal-fired power plants ous orders were won for ser-with advanced technologies vicing nuclear power plants in for China and Indonesia.

Belgium and the Netherlands.

and will be delivering four Our nuclear fuel business generators for China's largest has been restructured or' an pumped-storage power plant international basis, in Guangzhou.

18 Enerc We sold a second license to International competition is Em~m"] 1 Japan for our thermal waste expected to intensify during and elselbumengg j

system for the environmen-the current fiscal year. The New orders.

DM6.1 bAo.9 + 13%

tally friendly recycling and worldwide volume of power sales DM5 9 tumon f+ 7%

disposal of household and plant contracts is likely to stag-Loss DM15 million industrial waste. The first nate, affected in part by the Capital commercial plant using this long pre-contractual planning spending DM151 million system is being built in FUrth, for privately financed projects.

Employees 22,500 Germany, and will be com-Despite these factors, we pleted by late 1996. Further expect to sustain orders and in a year marked by ups and project and planning orders sales at roughly last year's downs, we boosted new have also been received for level. Long-term programs to orders and sales, helped in contracts in Germany and enhance competitiveness part by the consolidation of Switzerland.

hase improved our cost posi-two cable-producing subsidiar-tion and further shortened the ies in Hungary and Italy.

We are moving ahead on time needed for engineering, developing fuel cells as a manufacturing components Responding to a tougher com-promising future altemative for and on-site assembly.

petitive environment marked generating power in isolated by falling prices, we launched locations.

additional cost-cutting initia-tives designed to adapt and ffg%Q' Z"'"~~ " "" ~~~"

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The Teleperm instrumentation and M - M control system boosts power plant "P

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This plant is under construction in pg ',.

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consolidate production capac-Together with the Danish ity; these led to a high restruc-electric utility Elsam, the

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turing charge. Earnings shpped Technical University of Copen-into the red for the first time.

hagen, and the University of Manchester, we developed a Our transformer and power new electronic control system cable divisions were hard hit for Denmark's largest wind by eroding prices, and busi-power plant, Rejsby Hede.

ness in medium-voltage tech-nology, electricity meters and Af ter the Slymar East high-substation control systems voltage substation in Los

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failed to meet expectations.

Angeles, Cahfornia, was gut-ted by fire in 1993, we rebuilt

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switchgear in Hangzhou; and nomic Development Zone.

for power transformers in

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4'y. 7 lished a joint venture with accelerate the innovation pro-

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3G Croatia.

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We demonstrated our exper-Thanks to advanced GUD technology, tise in power network controls the new Dresden district heating g

plant reduces emissions 97% compared by Consolidatin9 six substa-y -

i to its predecessor, tions spread throughout 3

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,g m Malaysia's Paka GUD power plant into one joint station for power is the first private tecility to feed the

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distribution, network monitor-ing and interference suppres-sion.

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