Siemens 2012 Annual Report Download - page 215

135 D. Consolidated Financial Statements
239 E. Additional Information
130 C. Siemens AG (Discussion on basis of
German Commercial Code)
134 C. Notes and forward-looking statements
129 C. Compensation Report, Corporate Governance
statement pursuant to Section a of the
German Commercial Code, Takeover-relevant
information and explanatory report

in connection with such investigations and proceedings, includ-
ing potential tax penalties. Moreover, any findings related to
public corruption that are not covered by the  and 
corruption charge settlements which were concluded with
American and German authorities may endanger these, further
monitors could be appointed to review future business practices
and we may otherwise be required to further modify our busi-
ness practices and our compliance program.
Our involvement in ongoing and potential future corruption
proceedings could damage our reputation and have an adverse
impact on our ability to compete for business from public and
private sector customers around the world. If we or our subsid-
iaries are found to have engaged in certain illegal acts or not to
have taken effective steps to address allegations or findings of
corruption in our business, this may impair our ability to par-
ticipate in business with governments or intergovernmental
organizations and may result in our formal exclusion from
such business. Even if we are not formally excluded from par-
ticipating in government business, government agencies or
intergovernmental or supranational organizations may infor-
mally exclude us from tendering for or participating in certain
contracts. For example, legislation of member states of the
European Union could in certain cases result in our mandatory
or discretionary exclusion from public contracts in case of a
conviction for bribery and certain other offences or for other
reasons. As described in more detail in    . 
   , we or our subsidiaries
have in the past been excluded or currently are excluded from
some contracting, including with governments, development
banks and multilateral financial institutions, as a result of find-
ings of corruption or other misconduct. Ongoing or potential
future investigations into allegations of corruption could also
impair existing relationships with, and our ability to acquire
new, private sector business partners. For instance, such in-
vestigations may adversely affect our ability to pursue poten-
tially important strategic projects and transactions, such as
strategic alliances, joint ventures or other business combina-
tions, or could result in the cancellation of certain of our exist-
ing contracts and third parties, including our competitors,
could initiate significant third-party litigation.
In addition, future developments in ongoing and potential
future investigations, such as responding to the requests of
governmental authorities and cooperating with them, could
divert management’s attention and resources from other is-
sues facing our business. The materialization of any of these
risks could have a material adverse effect on our business, fi-
nancial condition and results of operations, the price of our
shares and ADS and on our reputation.
Our business, financial condition and results of opera-
tions could suffer as a result of current or future litiga-
tion: We are subject to numerous risks relating to legal, gov-
ernmental and regulatory proceedings to which we are cur-
rently a party or to which we may become a party in the future.
We routinely become subject to legal, governmental and regu-
latory investigations and proceedings involving, among other
things, requests for arbitration, allegations of improper deliv-
ery of goods or services, product liability, product defects, qual-
ity problems, intellectual property infringement, non-compli-
ance with tax regulations and / or alleged or suspected viola-
tions of applicable laws. In addition, we may face further claims
in connection with the circumstances that led to the corruption
charges. For additional information with respect to
specific pro-
ceedings see    .    
. There can be no assurance that the results of
these or any other proceedings will not materially harm our
business, reputation or brand. Moreover, even if we ultimately
prevail on the merits in any such proceedings, we may have to
incur substantial legal fees and other costs defending our-
selves against the underlying allegations. Under certain cir-
cumstances we record a provision for risks arising from legal
disputes and proceedings. In addition, we maintain liability in-
surance for certain legal risks at levels our management be-
lieves are appropriate and consistent with industry practice.
Our insurance policy, however, does not protect us against rep-
utational damage. Moreover, we may incur losses relating to
legal proceedings beyond the limits, or outside the coverage,
of such insurance. Finally, there can be no assurance that we
will be able to maintain adequate insurance coverage on com-
mercially reasonable terms in the future. Each of these risks
may have a material adverse effect on our business, financial
condition and results of operations, and our provisions for le-
gal proceedings-related losses may not be sufficient to cover
our ultimate losses or expenditures.
Examinations by tax authorities and changes in tax reg-
ulations could adversely affect our business, financial
condition and results of operations: We operate in around
 countries and therefore are subject to different tax regula-
tions. Changes in tax law
could result in higher tax expense
and payments. Furthermore, legislative changes could materi-
ally impact our tax receivables and liabilities as well as deferred
tax assets and deferred tax liabilities. In addition, the uncertain
tax environment in some regions could limit our ability to en-
force our rights. As a globally operating organization, we con-
duct business in countries subject to complex tax rules, which
may be interpreted in different ways. Future interpretations or
developments of tax regimes may affect our tax liability, return
on investments and business operations. We are regularly ex-
amined by tax authorities in various jurisdictions.