Siemens 2007 Annual Report Download - page 110

110 Management’s discussion and analysis
Completion of Fit4More. Many of our fi nancial and operating highlights dur-
ing fi scal 2007 stem directly from our multi-year Fit4More program, which we
brought to a successful close in the second quarter. In addition to setting the
growth and profi tability targets mentioned above, Fit4More also focused our
business portfolio on strategic global markets such as industrial infrastructure,
energy, and healthcare. In fi scal 2007, we exited the automotive market via the
carve-out of SV, with a sale to Continental expected to close in the fi rst quarter of
fi scal 2008. We also transferred our former telecommunications infrastructure
businesses into NSN, and are in the process of divesting our enterprise network-
ing business which is reported within discontinued operations. Meanwhile, we
completed or announced major acquisitions that add a successful in-vitro health-
care diagnostics business to complement our existing portfolio of diagnostics
imaging solutions. In our factory automation business, we added important prod-
uct life-cycle management (PLM) software capabilities. We also reoriented our IT
consulting and outsourcing business, combining it with other strategic IT units
within Siemens, and moving it into the SIS Group.
At the completion of Fit4More we announced Fit42010, a new program that is
founded on the same performance pillars as Fit4More, including goals for profi t-
ability and growth. The new program adds the free cash fl ow, cash conversation
rate, and return on capital employed (ROCE) targets mentioned above. As part of
Fit42010, we decided to improve our capital structure. We therefore set a capital
structure target that is measured by adjusted industrial net debt divided by
EBITDA (adjusted). The target range for our capital structure ratio is 0.8 – 1.0 to be
achieved by 2010. As a step toward achieving the new target ratio we announced a
share buyback program in the amount of up to €10 billion by 2010.
Progress with legal and regulatory matters. We made substantial progress
during the year in addressing issues related to investigations of past misconduct
by Siemens employees. We take these matters very seriously and engaged them
vigorously as a top priority throughout the year. We gave signifi cant management
attention and retained highly regarded outside experts to help us cooperate fully
with outside investigations, conduct our own internal investigations, and act upon
the results of these investigations. We also issued detailed, comprehensive public
disclosures on these topics at various points during the year. Taking continuing
and discontinued operations together, expenses for outside advisors engaged by
Siemens in connection with the investigations as well as remediation activities
totaled €347 million in fi scal 2007, and we expect further expenses in fi scal 2008.