Siemens 2008 Annual Report Download - page 196

100 Management’s discussion and analysis
control in the area of anti-corruption controls. At the end of scal 2007 the identied ineffectiveness relating to
internal control in the area of anti-corruption had not yet been fully remediated. For scal 2008, the implemen-
tation of the Company’s remediation plan has now far enough advanced that management concluded that
Siemens’ internal control over nancial reporting is effective as of September 30, 2008.
The Company will integrate and further harmonize existing control activities under the governance of the
Managing Board.
Below we describe the risks which could have a material adverse effect on our business, nancial results and
condition, the price of our shares and American Depository Shares (ADS) and our reputation. The risks we
describe here are not necessarily the only ones we face. Additional risks not known to us or that we currently
consider immaterial may also impair our business operations.
Strategic risks
Market dynamics
Our business environment is inuenced by conditions in the domestic and global economies. During scal
2008, the capital and credit markets experienced extended volatility and disruption that have reached unprece-
dented levels. If as a consequence of the credit market crisis these levels of market volatility and disruption con-
tinue or worsen, there can be no assurance that we will not experience an adverse effect that may be material
to our revenues, results of operations, nancial condition and ability to access capital. For example, the current
tightening of credit in the nancial markets may make it more difcult for our customers to obtain nancing
and as a result, they may modify, delay or cancel plans to purchase our products and services or to execute
transactions. Additionally, if customers are not successful in generating sufcient revenue or securing access
to the capital markets they may not be able to pay, or may delay payment of, the amounts they owe us, which
may adversely affect our results of operations and cash ows.
Numerous other factors, such as uctuation of energy and raw material prices as well as global political con-
icts, including situations in the Middle East and other regions, continue to impact macroeconomic parameters
and the international capital and credit markets. The uncertainty of economic and political conditions can have
a material adverse impact on our nancial condition or results of operations and can also make our budgeting
and forecasting more difcult.
In addition, our Sectors and Cross-Sector Businesses are affected by market conditions. For example the Industry
Sector would be affected considerably by unfavorable market conditions in segments of the industry market. The
Healthcare Sector is dependent on the healthcare markets, particularly in the United States. Our Energy Sector in
particular is affected considerably by the markets in Asia as well as the Middle East.
We are in the process of strategic reorientations and constantly perform cost-cutting initiatives, including head-
count reduction such as the previously announced SG&A cost reduction program, capacity adjustments through
consolidation of business activities and manufacturing facilities, as well as streamlining product portfolios.
These measures impact our earnings results, and any future contribution of these measures to our protability
will be inuenced by the actual savings achieved and by our ability to sustain these ongoing efforts.
The worldwide markets for our products are highly competitive in terms of pricing, product and service quality,
development and introduction time, customer service and nancing terms. We face strong competitors, some of
which are larger and may have greater resources in a given business area and some from emerging markets