Siemens 2008 Annual Report Download - page 166

70 Management’s discussion and analysis
At the Imaging & IT Division, orders came in 3% lower and revenue was 4% lower compared to scal 2007.
Both results were strongly inuenced by negative currency translation effects. Orders rose 9% at the Workow
& Solutions Division in part due to a major order in the second quarter. Revenue was level with the prior year.
Primarily due to the Dade Behring acquisition, the Diagnostics Division doubled its orders and revenue year-
over-year. From a regional perspective, the Healthcare Sector found its strongest growth in the region compris-
ing Europe, C.I.S., Africa and the region comprising Asia, Australia, Middle East. Both regions combined steady
growth in established markets with faster growth in emerging markets. Overall, the book-to-bill ratio for Health-
care for the scal year was 1.05.
Prot at Imaging & IT was €899 million, down from the prior-year level. The decline was due mainly to €90 mil-
lion in transformation costs, consisting primarily of severance charges, impairments and related costs following
the review of certain business activities. In addition to the market challenges mentioned above for the Sector
overall, the Division also faced challenges in the medical imaging market in the U.S., including the Decit Reduc-
tion Act (DRA) and uncertainty regarding future reimbursements, and a persistently weak market in Japan.
Prot at Workow & Solutions was €66 million compared to €163 million a year earlier. The decline was inu-
enced strongly by €81 million in transformation costs related primarily to the strategic review of certain busi-
ness activities.
Prot rose sharply at Diagnostics, to €248 million for the scal year, beneting from acquisitions. The Division’s
prot margin in both scal 2008 and scal 2007 was inuenced similarly by PPA effects and integration costs
arising from the acquisitions mentioned above. The negative effect on Diagnostics’ prot margin was approxi-
mately 1080 basis points in scal 2008, including PPA effects of €176 million (including €7 million of inventory
step-up charges) and integration costs of €168 million. A year earlier, the negative effect on protability was
approximately 1120 basis points, including €91 million in PPA effects (including €23 million of inventory step-
up charges) and €84 million in integration costs.
Equity Investments
As of September 30, 2007, the reportable segment Strategic Equity Investments (SEI) comprised the Company’s
investments in NSN, BSH and FSC. During the fourth quarter of scal 2008, the scope of the segment was
expanded and SEI was renamed into Equity Investments. Prior-year gures were adjusted for purposes of com-
parison. Equity Investments includes investments accounted for using the equity method; assets held for dis-
posal; and available-for-sale nancial assets not allocated to a Sector, Cross-Sector Business, SRE, Pensions or
Corporate Treasury for strategic reasons. As of September 30, 2008, Equity Investments include NSN and BSH;
our 49% stake in Enterprise Networks Holding, BV (EN); and our 49% investment in Krauss-Maffei Wegmann
GmbH & Co. KG, which was reported within Corporate Items as of September 30, 2007. EN was formed during
the fourth quarter following the divestment of a 51% stake in Siemens Enterprise Communications GmbH & Co.
KG (SEN) to The Gores Group, U.S., which contributed a network equipment and security solutions provider as
Divisions Profit Margin
Year ended
September 30,
Year ended
September 30,
(€ in millions) 2008 2007 % Change 2008 2007
Imaging & IT 899 1,052 (15)% 13.2% 14.9%
Workow & Solutions 66 163 (60)% 4.4% 10.9%
Diagnostics 248 95 161% 7.8% 6.1%