Siemens 2008 Annual Report Download - page 146

50 Management’s discussion and analysis
ROCE for scal 2008 was 4.8%. Return on capital employed (ROCE) measures income from continuing opera-
tions (before interest) as a percent of the average capital employed in those operations. Income from continuing
operations in scal 2008 was signicantly lower than in the prior year, as explained above, while average capital
employed increased substantially due to major acquisitions in both scal years under review. As a result, ROCE
came in lower than in scal 2007, when it was measured at 12.7%. The provision of approximately €1 billion
(pre-tax) mentioned earlier cut approximately 220 basis points from ROCE. The effect of transformation costs
took approximately 330 basis points from ROCE for the scal year 2008. The Siemens foundation endowment
of €390 million (pre-tax) mentioned earlier reduced ROCE by approximately 70 basis points.
Expenses for compliance investigations reect progress regarding settlement. Expenses for outside advisors
engaged in connection with investigations into alleged violations of anti-corruption laws and related matters as
well as remediation activities were €510 million in scal 2008 compared to €347 million in the prior year. On
a quarterly basis, these expenses reached a peak in the second quarter of scal 2008 and then declined signi-
cantly in the two subsequent quarters. For scal 2008, expenses within continuing operations were €430 million
and the remaining €80 million came within discontinued operations. A year earlier, expenses within discontin-
ued operations were €195 million. For more information regarding these matters see “Notes to Consolidated
Financial Statements.”
Siemens’ share buyback plan reduced outstanding shares by approximately 53 million. The rst tranche of
the program, in the amounts of €2.0 billion and 24,854,541 shares, was completed on April 8, 2008. The second
tranche totaled €2.0 billion in purchases for 27,916,664 shares, and was completed on July 22, 2008. For further
information, see “Liquidity and capital resources” below.
Dividend. The Siemens Managing Board and Supervisory Board have proposed a dividend of €1.60 per share.
The prior year dividend was also €1.60 per share.
Strategic overview
Siemens’ strategy aims to achieve leading, protable positions in regional and technological markets where
major global trends (so-called megatrends) are creating strong demand for our solutions. Those trends are
urbanization, demographic change, climate change and globalization. Our Fit42010 strategic program species
performance targets for effectively meeting market demand related to megatrends. For example, one of our per-
formance targets is to shape our business portfolio so that we are one of the top two companies in each of our
businesses as measured by market share. For more information on Fit42010, see “Non-nancial performance
measures.”
In scal 2008 we completed or launched a number of major management initiatives to better enable us to reach
our performance targets and execute our strategy. One of the most fundamental was to realign our operating
businesses into a new organizational structure with three Sectors and two Cross-Sector Businesses. The three
Sectors are Industry, Energy, and Healthcare. The Cross-Sector Businesses support the Sectors in the areas of
nance and information technology. For further information on this structure, see “Basis of presentation”
below.