Siemens Toes the U.S. Line.

• Author: Millman, Gregory J.
• Position: Interview with Heinz-Joachim Neuburger of Siemens AG - Interview

On Oct. 1, 2000, Siemens adopted U.S. GAAP accounting in order to prepare for listing its shares on the New York Stock Exchange. The listing was partly motivated by a desire to use its shares as an acquisition currency in the U.S. and partly by consideration of market access and liquidity. Siemens' shares began trading on the Big Board in the form of ADRs on March 12, 2001.

Founded a century and a half ago, Siemens Aktiengsellschaft has long maintained a position as one of the world's leading electrical engineering and electronics companies. The firm employs more than 460,000 people worldwide, 80,000 in the U.S. alone, For the fiscal year ending in 2000, Siemens' worldwide sales were approximately $74 billion -- 22 percent of that in the U.S.

Financial Executive spoke recently with Siemens' EVP and CFO Heinz-Joachim Neuburger to gain perspective on Siemens' thinking and international plans.

Neubuerger, 48, is an FEI member who earned his MBA from Insead in Fontainebleau, near Paris. He joined J.P. Morgan and spent the 1980s as a banker in the U.S., Germany and Japan. In 1989, he joined Siemens, where his first assignment was to build an investor relations function. He took over the treasury in 1993, became the CFO of Siemens' operations in India in 1996, returned to Germany in late 1997 and was appointed to the management board. In February 1998, he became CFO and a member of the executive committee.

Q. What went into Siemens' decision in October 2000 to adopt U.S. GAAP?

U.S. GAAP was required in order to list Siemens' shares in the U.S. Also, U.S. GAAP is better at reflecting the true economic developments of a business. It's very simple, relative to German GAAP. German GAAP used to be driven very much by tax considerations and [as such] did not reflect necessarily the economic developments of a business.

Q. On Siemens' decision to list in the U.S. and accept GAAP, was it at all controversial within the company?

No, there was never an issue. It was a matter of wanting to be listed in the U.S., and the platform for that was to use U.S. GAAP as an accounting standard. I think what others [companies] may have done -- though we deliberately did not -- is continue to run the organization on the back of German GAAP or the International Accounting Standards (IAS) and then centrally convert to U.S. GAAP numbers. We deliberately went for a bottom-up introduction of U.S. GAAP, and that's why the transition took two and a half years from start to finish.

Siemens now lives and...