Siemens 2006 Annual Report Download - page 170

Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
166
In June 2006, the FASB issued FASB Interpretation (FIN) 48, Accounting for Uncertainty in
Income Taxes, an Interpretation of FAS 109, Accounting for Income Taxes, to create a single
model to address accounting for uncertainty in tax positions taken or expected to be taken in
a tax return. Under FIN 48, the tax benefit from an uncertain tax position may be recognized
only if it is more likely than not that the tax position will be sustained, based solely on its tech-
nical merits. The Company plans to adopt FIN 48 beginning October 1, 2007. The cumulative
effect of adopting FIN 48 will be recorded in retained earnings. The Company is currently
evaluating the potential impact, if any, that the adoption of FIN 48 will have on the Company’s
Consolidated Financial Statements.
In September 2006, the FASB issued SFAS 157, Fair Value Measurements. This Statement
defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP), and expands disclosures about fair value measurements. This
Statement applies under other accounting pronouncements that require or permit fair value
measurements, the FASB having previously concluded in those accounting pronouncements
that fair value is the relevant measurement attribute. Accordingly, this Statement does not
require any new fair value measurements. The Company plans to early adopt this Statement
beginning October 1, 2006.
In September 2006, the FASB issued SFAS 158, Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans, which amends SFAS 87, Employers’ Accounting for
Pensions, SFAS 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits, SFAS 106, Employers’ Accounting for Postretire-
ment Benefits Other Than Pensions and SFAS 132 (revised 2003), Employers’ Disclosures about
Pensions and Other Postretirement Benefits – an amendment of FASB Statements No. 87, 88,
and 106. SFAS 158 requires an employer to recognize the funded status of a defined benefit
plan, measured as the difference between plan assets and the projected benefit obligation, in
its Consolidated Balance Sheet. Actuarial gains or losses and prior service cost or benefits that
have not yet been recognized through earnings as net periodic benefit cost will be recognized
as a component of other comprehensive income, net of tax, until they are amortized as a com-
ponent of net periodic benefit cost. The application of SFAS 158 will be effective for the Compa-
ny as of September 30, 2007. As of September 30, 2006, for the principal pension benefit plans
and other postretirement plans, the net amount of actuarial gains and losses and prior service
cost and benefits not recognized in equity, before related taxes, totaled €916. See Note 21 for
further information.
3 Acquisitions, dispositions and discontinued operations
a) Acquisitions
During the years ended September 30, 2006 and 2005, the Company completed a number of
acquisitions. These acquisitions have been accounted for under the purchase method and have
been included in the Company’s Consolidated Financial Statements since the date of acquisi-
tion.
In fiscal 2006, Siemens signed an agreement to acquire the diagnostics division of Bayer
Aktiengesellschaft, Germany for an expected purchase price of approximately €4.2 billion.
The acquisition will enable Medical Solutions (Med) to expand its position in the growing
molecular diagnostics market. The transaction, which has already received European Union
and U.S. regulatory approval, is expected to close in the first half of fiscal 2007.