Siemens 2009 Annual Report Download - page 227

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 Managing Board statements, Independent auditors’ report, Additional information
 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise
stated and per share amounts)
the future due to new developments in the particular matter.
Revisions to estimates may significantly impact future net in-
come. Upon resolution, Siemens may incur charges in excess
of the recorded provisions for such matters. It can not be ex-
cluded, that the financial position or results of operations of
Siemens will be materially affected by an unfavorable outcome
of legal or regulatory proceedings or government investiga-
tions. See Note 30 Legal Proceedings for further information.
 ACQUISITIONS, DISPOSITIONS
AND DISCONTINUED OPERATIONS
a) Acquisitions
During the years ended September 30, 2009 and 2008, the
Company completed a number of acquisitions. These acquisi-
tions have been accounted for under the purchase method and
have been included in the Company ’s Consolidated Financial
Statements since the date of acquisition.
aa) Acquisitions in fiscal 2009
In fiscal 2009, Siemens acquired various entities, which were
not material, either individually or in aggregate.
ab) Acquisitions in fiscal 2008
At the beginning of November 2007, Siemens completed the
acquisition of Dade Behring Holdings, Inc. (Dade Behring),
USA, a leading manufacturer and distributor of diagnostic
products and services to clinical laboratories. Dade Behring,
which was consolidated as of November 2007, has been inte-
grated into Sector Healthcare’s Diagnostics division and com-
plements the acquisitions of Diagnostic Products Corporation
and Bayer Diagnostics. The aggregate consideration, including
the assumption of debt, amounts to €4.9 billion (including €69
cash acquired). Based on the final purchase price allocation,
€1,171 was allocated to intangible assets subject to amortiza-
tion and €3,353 was recorded as goodwill at Healthcare. Of the
€1,171 intangible assets, €957 relate to customer relationships
with weighted average useful lifes of 15 years, €116 to trade-
marks with a weighted average useful life of 9 years and €74 to
patented and unpatented technology with a weighted average
useful life of 11 years.
Termination Benefits – Siemens has implemented the SG&A
program announced in fiscal 2008 and will continue to run re-
structuring projects on a more individualized basis. The SG&A
program results in a reduction of primarily administrative
workforce. Costs in conjunction with terminating employees
and other exit costs are subject to significant estimates and as-
sumptions. See Note 5 for further information.
Provisions – Significant estimates are involved in the determi-
nation of provisions related to onerous contracts, warranty
costs and legal proceedings. A significant portion of the busi-
ness of certain operating divisions is performed pursuant to
long-term contracts, often for large projects, in Germany and
abroad, awarded on a competitive bidding basis. Siemens re-
cords a provision for onerous sales contracts when current es-
timates of total contract costs exceed expected contract reve-
nue. Such estimates are subject to change based on new infor-
mation as projects progress toward completion. Onerous sales
contracts are identified by monitoring the progress of the proj-
ect and updating the estimate of total contract costs which
also requires significant judgment relating to achieving cer-
tain performance standards, for example in the IT service busi-
ness, the Mobility Division and the Energy Sector as well as es-
timates involving warranty costs.
Siemens is subject to legal and regulatory proceeding in vari-
ous jurisdictions. Such proceedings may result in criminal or
civil sanctions, penalties or disgorgements against the Com-
pany. If it is more likely than not that an obligation of the Com-
pany exists and will result in an outflow of resources, a provi-
sion is recorded if the amount of the obligation can be reliably
estimated. Regulatory and legal proceedings as well as govern-
ment investigations often involve complex legal issues and are
subject to substantial uncertainties. Accordingly, manage-
ment exercises considerable judgment in determining
whether there is a present obligation as a result of a past event
at the balance sheet date, whether it is more likely than not
that such a proceeding will result in an outflow of resources
and whether the amount of the obligation can be reliably esti-
mated. The Company periodically reviews the status of these
proceedings with both inside and outside counsel. These judg-
ments are subject to change as new information becomes
available. The required amount of a provision may change in