Siemens 2008 Annual Report Download - page 169

Management’s discussion and analysis 73
costs of €124 million primarily associated with impairments of assets and a loss on the sale. In addition, the SHC
transaction involved costs of €21 million related mainly to carve-out activities. Partly due to reallocation, cen-
trally carried regional costs not allocated to a Sector or Cross-Sector Business declined signicantly compared
to scal 2007. In the prior period, Other Operations also included an impairment of €52 million at the regional
payphone unit mentioned above. Revenue for Other Operations was €2.470 billion for scal 2008, down 14%
from €2.884 billion a year earlier, including negative portfolio effects of 7%.
Siemens Real Estate (SRE)
Income before income taxes at SRE was €356 million in scal 2008, compared to €228 million in the prior year,
mainly due to higher gains from sales of real estate. SRE intends to continue real estate disposals in coming
quarters, depending on market conditions.
Corporate items and pensions
Corporate items and pensions totaled a negative €3.853 billion in scal 2008 compared to a negative €1.684 bil-
lion a year earlier. The major factor in this change was Corporate items, which increased to a negative €3.959 bil-
lion from a negative €1.754 billion in scal 2007. The current period includes factors already discussed above,
including the approximately €1 billion provision related to the ongoing settlement negotiations, €1.081 billion
in charges related to the SG&A reduction program, and the one-time endowment of €390 million to the Siemens
foundation. These factors were partly offset by the release of an accrual of €38 million following reversal of
a previous judgment related to Italian electrical utility Enel. A year earlier, Corporate items included the €440
million related to a European antitrust investigation mentioned earlier and the €81 million primarily to fund job
placement companies for former Siemens employees affected by the bankruptcy of BenQ. Both periods under
review included expenses related to a regional sales organization in Germany. These totaled €128 million in s-
cal 2008 and €108 million in scal 2007, in both periods including an impairment. Both periods also included
expenses for outside advisors engaged in connection with investigations into alleged violations of anti-corrup-
tion laws and related matters as well as remediation activities. These expenses were signicantly higher in scal
2008, totaling €430 million compared to €152 million the year before.
Eliminations, Corporate Treasury and other reconciling items
Income before income taxes from Eliminations, Corporate Treasury and other reconciling items in scal 2008
was a negative €307 million, compared to a negative €358 million a year earlier. The difference year-over-year is
mainly due to an improved interest income (expense), net stemming from a combination of lower indebtedness
in Siemens’ operating businesses as well as lower interest rates on U.S. dollar denominated debt compared to
the prior scal year. These positive factors were partly offset by charges of approximately €50 million in the
fourth quarter of scal 2008 related to counter-party risks, principally involving banks adversely affected by
developments in international nancial markets.