Siemens 2007 Annual Report Download - page 111

Management’s discussion and analysis 111
Management’s discussion and analysis
We booked a number of penalties related to the completion of outside investi-
gations during the year. These include European Commission antitrust penalties
related to gas-insulated switchgear and a fi ne from German authorities related to
past actions at Com. Meanwhile we conducted our own internal investigations
throughout Siemens, particularly to identify questionable payments made to out-
side parties under Business Consulting Agreements (BCAs). We identifi ed a sub-
stantial sum of these payments, determined how much of the total of these pay-
ments had been incorrectly booked as tax-deductible business expenses, and
adjusted the comparative amounts for fi scal 2005 and 2006 in the Consolidated
Financial Statements included in this report. Including the expenses associated
with internal and external investigations and the penalties mentioned above, the
total expense within Corporate items associated with legal and regulatory matters
during fi scal 2007 was €843 million. For more information with respect to these
legal and regulatory matters, see “Legal Proceedings.”
Dividend. The Siemens Managing Board and Supervisory Board have proposed
a dividend of €1.60 per share. The dividend in the prior year was €1.45.
Strategic Overview
Our competitive strategy is to innovate through research and development (R&D),
improve our business portfolio to bring that innovation to market on a global
basis, and back these efforts with a strong fi nancial condition.
We continually balance our business portfolio to maintain our leadership in
established markets while penetrating new markets. In some cases this involves
acquiring complementary technology that enables us to offer more complete solu-
tions. We also use acquisitions to gain scale in both established and new regional
markets. In fi scal 2007, we pursued both strategies, and also exited or reduced our
participation in markets that did not belong to our focus areas. Major transactions
included the following:
¢ In January 2007, we acquired the Diagnostics division of Bayer AG, headquar-
tered in the U.S. We integrated this business into our own Diagnostics division
at Med, following the fi scal 2006 acquisition of Diagnostic Products Corporation
(DPC) in the U.S., a leading provider of in vitro immunodiagnostics solutions.
We expect the Bayer transaction to signifi cantly strengthen our position in in-
vitro diagnostics, a high-growth segment of the healthcare market.
¢ In April 2007, we transferred our mobile and fi xed-line carrier networks busi-
nesses into NSN. Our enterprise networks business is held for disposal.
¢ In May 2007, we acquired U.S.-based UGS Corp., one of the leading providers of
product lifecycle management (PLM) software and services for manufacturers.
We expect this transaction to complement and extend our existing software
capabilities in the factory automation industry, which increasingly integrates
information technology (IT) into manufacturing facilities and processes.
¢ In July 2007, we announced an agreement to acquire U.S.-based Dade Behring
Holdings, Inc. (Dade Behring), a leading clinical laboratory diagnostics com-
pany. The transaction closed in the fi rst quarter of fi scal 2008. We intend to
integrate this acquisition into the Diagnostics division at Med, making Siemens
the world’s fi rst fully integrated diagnostics provider with solutions for in-vitro
diagnostics, in-vivo imaging, and data- and image-management software.