Siemens 2008 Annual Report Download - page 157

Management’s discussion and analysis 61
Gross prot for scal 2008 increased 1% year-over-year, well under the rate of revenue growth. The slower
growth in gross prot was due to a number of factors, chief among them the total of more than €1 billion in
project charges at Fossil Power Generation and Mobility mentioned earlier. Gross prot growth was also held
back by expenses in connection with the Mobility in Motion restructuring program, primarily including sever-
ance charges and asset impairments. In combination, the factors just mentioned contributed to a decline in
gross prot margin, which came in at 27.2% for scal 2008 compared to 28.8% a year earlier.
Research and development (R&D) expenses increased to €3.784 billion, or 4.9% of revenue, from €3.399 billion
or 4.7% of revenue in scal 2007. R&D expenses rose most notably at Industry Automation and Diagnostics, both
of which made major acquisitions in the periods under review.
Marketing, selling and general administrative (SG&A) expenses rose to €13.586 billion, or 17.6% of revenues,
from €12.103 billion or 16.7% of revenue in the prior year. The difference is due primarily to our SG&A reduc-
tion program, as the majority of the €1.081 billion in severance charges mentioned earlier were recorded as
SG&A expenses. SG&A expenses for the year were also driven higher by the acquisitions at Industry Automation
and Diagnostics.
Other operating income rose to €1.047 billion in scal 2008, compared to €680 million a year earlier. This
increase is due mainly to higher gains from sales of real estate and sales of businesses, including a pre-tax net
gain of €131 million on the sale of the wireless modules business at Industry Automation and a €130 million
pre-tax net gain on the sale of the Global Tungsten & Powders unit at OSRAM. The current year beneted also
from the release of an accrual of €38 million following reversal of a previous judgment related to Italian electri-
cal utility Enel. A year earlier, other operating income beneted from a net gain of €76 million on the sale of the
locomotive leasing business at Mobility.
Year ended
September 30,
% Change(€ in millions) 2008 2007
Gross prot on revenue 21,043 20,876 1%
as percentage of revenue 27.2% 28.8%
Year ended
September 30,
% Change(€ in millions) 2008 2007
Research and development expenses (3,784) (3,399) 11%
as percentage of revenue 4.9% 4.7% –
Marketing, selling and general administrative expenses (13,586) (12,103) 12%
as percentage of revenue 17.6% 16.7% –
Other operating income 1,047 680 54%
Other operating expense (2,228) (1,053) 112%
Income from investments accounted for using the equity method, net 260 108 141%
Financial income (expense), net 122 (8) n.a.