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www.siemens.com
Annual Report 2008
What will the world
look like in the future?

Table of contents

  • Page 1
    What will the world look like in the future? Annual Report 2008 www.siemens.com

  • Page 2

  • Page 3
    Answers We're tackling the toughest questions of our time. And providing answers.

  • Page 4
    Our vision A world of proven talent, delivering breakthrough innovations, giving our customers a unique competitive edge, enabling societies to master their most vital challenges, creating sustainable value.

  • Page 5
    Our values Responsible Committed to ethical and responsible actions. Excellent Achieving high performance and excellent results. Innovative Being innovative to create sustainable value.

  • Page 6
    " A technical invention only achieves value and importance if industrial art itself has so far progressed that the invention is a practical one and supplies a need." Werner von Siemens Memoirs, 1892

  • Page 7
    ...-efficient products and solutions and our environmental technologies are creating benefits on three fronts. First, for our customers - whose success is being driven by lower energy costs and higher productivity. Second, for the societies of which we're a member - by supporting ecofriendly power and...

  • Page 8
    ... of Book I At a glance 8 10 12 14 Managing Board of Siemens AG* Our employees - A diverse, highly qualified team In dialogue with our investors Our innovators and innovations Products and solutions 24 26 40 54 65 67 68 The Siemens Environmental Portfolio Industry Sector Energy Sector Healthcare...

  • Page 9
    ...years, Siemens has stood for technical excellence, innovation, quality, reliability and internationality. In some 190 countries, we're giving customers a competitive edge by supporting them with innovative technologies and comprehensive know-how. Page 4 Products and solutions Leveraging the future...

  • Page 10

  • Page 11
    At a glance

  • Page 12
    ï,¢ Responsible ï,¢ Excellent ï,¢ Innovative

  • Page 13
    .... Managing Board of Siemens AG Page 8. Our employees - A diverse, highly qualified team Page 10. In dialogue with our investors Page 12. How Siemens innovators are mastering the challenges of the future Page 14. Pioneers in environmental protection Page 16. Interview with Chief Technology Officer...

  • Page 14
    ... Board of Siemens AG Managing Board of Siemens AG Peter Y. Solmssen Corporate Legal and Compliance Siegfried Russwurm Corporate Human Resources Barbara Kux Supply Chain Management Peter Löscher President and Chief Executive Officer Corporate Development Corporate Communications and Government...

  • Page 15
    ...glance - Managing Board of Siemens AG 9 Joe Kaeser Corporate Finance and Controlling Heinrich Hiesinger Industry Wolfgang Dehen Energy Hermann Requardt Healthcare Siemens Financial Services Siemens IT Solutions and Services Siemens Real Estate Corporate Information Technology Asia, Australia...

  • Page 16
    ..., it gives us tremendous competitive advantages in the global arena. Training activities in Germany As one of Germany's largest private providers of vocational education, we're currently training some 10,000 secondary school graduates - including 3,400 for external business partners. Every year, we...

  • Page 17
    ... our worldwide Generation21 program. For more information, see: www.siemens.com/generation21 New hires In fiscal 2008, our global workforce grew a solid seven percent. Worldwide, we hired around 74,600 new employees. Some 60 percent are employed in important fields like supply chain management and...

  • Page 18
    ... the Siemens share as well as our debt and credit ratings are available on our Investor Relations webpage. Share price Stock market information (in euros) Stock price range (XETRA closing prices, Frankfurt) High Low Year-end Number of shares (year-end, in millions) Market capitalization (year-end...

  • Page 19
    ... information on various environment-related issues and other relevant non-financial matters. Fiscal 2008 marks the ninth successive year that Siemens has been listed on the SAM Dow Jones Sustainability Index (see Book II, pages 14, 31). The Siemens share As of September 30, 2008, the capital stock...

  • Page 20
    ...-breaking, high-efficiency gas-and-steam turbine power plants, high-capacity wind turbines and super-low-loss power transmission technologies. We're also developing solutions to ensure tomorrow's energy supplies. Our innovations include floating wind turbines for operation on the high seas, where...

  • Page 21
    ... high energy-saving potential. Here, too, we specialize in ecofriendly technologies - from energy-saving lamps and intelligent building management systems to the financing models of efficiency-enhancing performance contracting, which enables customers to pay off investments through energy savings...

  • Page 22
    ..., working at 150 R&D centers around the world, submitted 8,200 invention reports during the year. We honor our best innovators with Inventor of the Year awards for outstanding patents and with Top Innovator awards for promising technologies that have been transformed into marketable products...

  • Page 23
    ..., Teichman developed a completely new traction concept for powering the vehicles used in metro and regional rail systems. The Syntegra bogie is far smaller than conventional drive systems and weighs about two metric tons less. Equipped with this unique system, a four-car subway train can transport...

  • Page 24
    ... energized ever since 1982. That's when he began driving the development of two key technologies: high-voltage direct-current (HVDC) power transmission and flexible alternating-current transmission systems (FACTS). HVDC systems allow asynchronous networks to be linked as needed and large amounts of...

  • Page 25
    ... innovators and innovations 19 Interview with Chief Technology Officer Hermann Requardt Innovations are one of our key success factors - and being innovative is one of our three Company values. Hermann Requardt, member of the Managing Board and Chief Technology Officer (CTO), explains why it's so...

  • Page 26

  • Page 27
    Auf einen Blick Products and solutions

  • Page 28
    ï,¢ Responsible ï,¢ Excellent ï,¢ Innovative

  • Page 29
    ... energy conversion chain are providing us with excellent opportunities for growth - particularly in renewable energies. As the market leader in healthcare imaging, healthcare IT and laboratory diagnostics, our Healthcare Sector is helping customers deliver top-quality, cost-effective patient care...

  • Page 30
    ... Business Council for Sustainable Development and World Resource Institute. For fiscal 2008, we will again commission an independent review of the figures and methodology relating to our Environmental Portfolio. Detailed information on the goals of the Siemens Environmental Portfolio, the products...

  • Page 31
    ...) Healthcare Refurbished systems CT scanners: SOMATOM Definition Magnetic resonance imaging: MAGNETOM Avanto Magnetic resonance imaging: MAGNETOM ESSENZA Environmental technologies Water treatment systems Air pollution control systems IT solutions and services Green data centers Thin client networks

  • Page 32
    26 Products and solutions - Industry Sector Industry Integrated technologies for greater productivity, energy efficiency and flexibility www.siemens.com/industry

  • Page 33
    ... and building management systems. With our IT-based integration of product planning and production, we're the only supplier worldwide that can accelerate manufacturers' processes at every stage of the value chain. For many products, we reduce time-to-market up to 50 percent, boosting customer...

  • Page 34
    How can we meet consumer demands as fast as they arise?

  • Page 35
    ... engineering for more flexibility and lower costs. What businesses need today is the ability to react to market needs - quickly and flexibly. We are the only company worldwide providing products and solutions that cover the whole product lifecycle: from virtual product design and development right...

  • Page 36
    ..., author "Growing numbers of people around the world are inextricably linked in today's global economy. Urban areas are exploding, with over half of the world's population already living in cities. Increasing urbanization has huge implications for everything from manufacturing and trade to mobility...

  • Page 37
    ... how well the PLM solution works. The extra-light aircraft was completely designed, constructed and optimized in virtual space. Digital planning of each individual development step minimized design errors, production defects and delays - all before the jet's successful real-world debut. What's more...

  • Page 38
    ... treatment - A long-term solution As global population grows, supplies of drinking water are dwindling - particularly in the world's arid regions. One solution is water recycling. We offer high-tech water treatment systems for agricultural and industrial applications and - indirectly - for providing...

  • Page 39
    Products and solutions - Industry Sector 33 Perfect teamwork Cutting-edge technologies for a spectacular stadium in Germany At Munich's Allianz Arena, technology and soccer are closely intertwined - and not just on the playing field. As Official Technology Partner to FC Bayern Munich, Siemens is ...

  • Page 40
    ... most often asked by manufacturers today: how can we respond faster and more flexibly to new customer requirements at cost levels that are competitive worldwide? By acquiring UGS Corp. - a provider of product lifecycle management (PLM) software - in 2007 and innotec GmbH in 2008, we've created an...

  • Page 41
    ..., systems and services for complete power trains. Our high-performance controls, drives and simulation software for machine tools and manufacturing machines are boosting customer productivity. We're also a leading global supplier of electric drive concepts and industrial drives for equipment used in...

  • Page 42
    ... years by deploying innovative building management technologies. Available since the 1990s, our product and solutions portfolio for cutting primary energy consumption in commercial buildings has been continuously augmented and improved. Today, rising energy costs - coupled with government programs...

  • Page 43
    ...halogen lamps and advanced high-pressure discharge lamps, which are used primarily for commercial applications. To further expand our production capacities for energy-saving lighting solutions - particularly for the high-growth markets of Asia-Pacific and Latin America - we're building new plants to...

  • Page 44
    ... Sector Industry Solutions We're a leading provider of systems for industrial plants and infrastructure systems worldwide. Leveraging innovative products and process technologies, we not only build and commission state-of-the-art plants and systems for end customers but also operate and maintain...

  • Page 45
    ... from control systems for rail and road traffic, airport logistics solutions and postal automation systems to rail electrification, rail vehicles for rapid transit, regional and long-distance networks, and future-oriented services. Hans-Jörg Grundmann www.siemens.com/mobility CEO Increasing...

  • Page 46
    40 Products and solutions - Industry Sector Energy Outstanding growth opportunities for renewable energies www.siemens.com/energy

  • Page 47
    ... our control technologies for high-voltage direct-current transmission lines. Conversely, technologies from the Energy Sector are creating added value in the Industry and Healthcare Sectors. A prime example is the Mobility Division's use of our power transformers and other electrical equipment in...

  • Page 48
    How can we deliver cleaner energy today?

  • Page 49
    ... company worldwide that offers solutions covering the entire energy conversion chain, we develop innovative ways to reduce emissions: for instance our newest gas turbine which will enable the combined cycle plant in Irsching, Germany to save up to 40,000 tons of COâ,, per year while powering a city...

  • Page 50
    ... challenges we're facing today is the increasing number of megacities with more than 25 million inhabitants each. There, energy is needed in huge quantities and has to be transported to the right place at the right time. The energy transmission systems of the future are absolutely critical for this...

  • Page 51
    Products and solutions - Energy Sector 45 A record-setting turbine The world's largest gas turbine in Irsching, Germany As worldwide demand for energy soars, increasing amounts of electricity must be generated - and the processes used must be as ecofriendly, economical and efficient as possible. ...

  • Page 52
    ... on Tasmania. Thanks to our outstanding technological expertise, the island is now linked to Victoria via Basslink, one of the world's longest undersea power cable connections. The link uses a high-voltage direct-current (HVDC) transmission system developed by Siemens. As the project's consortium...

  • Page 53
    ... impact worldwide, the share of renewables in the energy mix will have to be increased. Since wind power is a key source of renewable energy, we're ideally positioned for success. Our pioneering technologies and comprehensive know-how have made us the world leader in offshore wind turbines. We...

  • Page 54
    ... turbines, generators and instrumentation and control systems - to fuel gasifiers. Michael Süß CEO www.siemens.com/energy Efficient, reliable, climate-friendly power generation is vital for continued global economic development, and demand is soaring around the world. By the year 2030, annual...

  • Page 55
    ... 7,000 turbines installed worldwide. Our core competencies include the development of rotor blades, which we produce using our unique, patented IntegralBlade technology. A complete range of turbine services rounds out our wind power portfolio. In the field of photovoltaics, we provide solar farms...

  • Page 56
    ... and processing oil and gas. We also supply automation and control technologies, power distribution and water management systems, and integrated IT solutions. In addition, our offerings include components and systems for generating electricity for industrial companies and public utilities...

  • Page 57
    ... turbines, generators, compressors and entire power plants as well as air pollution control systems and services. Randy H. Zwirn CEO www.siemens.com/energy Using state-of-the-art systems diagnostics and technologies, we ensure the operating reliability of our customers' components and complete...

  • Page 58
    ... complete solutions for high-voltage power transmission, products and systems for high-voltage switchgear, and transformers. In direct-current and alternating-current transmission systems, our innovations are shaping industry developments. Udo Niehage CEO www.siemens.com/energy Efficient high...

  • Page 59
    ... market leader in energy automation systems, we support customers with innovative protection and automation technology for all types of power transmission and distribution grids. With our air- and gas-insulated medium-voltage switchgear and equipment, we're a preferred partner to utility companies...

  • Page 60
    54 Produkte und Lösungen_Industry Sector Healthcare Integrated solutions are advancing patient care www.siemens.com/healthcare

  • Page 61
    ...Healthcare Sector CEO We provide innovative products, comprehensive solutions and highly responsive services across the entire healthcare continuum, including prevention, early diagnosis, therapy and ongoing care. By combining the most advanced laboratory diagnostics, imaging systems and healthcare...

  • Page 62
    How can we get a rapid diagnosis right here?

  • Page 63
    The Siemens answer: The world's first pocket ultrasound system. For instant insight. With our highly efficient and innovative imaging systems, we provide what modern medicine needs. And we offer it when and where it's needed most. The ACUSON P10â„¢ ultrasound system provides visual information at ...

  • Page 64
    ... illnesses could be saved. In medicine and biology, completely new ideas for innovative solutions are being developed - on a molecular level. Thanks to these innovative technologies, illnesses can be diagnosed at an earlier stage so that many medical interventions and treatments will no longer...

  • Page 65
    ... to determining the right therapy and avoiding unnecessary medical interventions. Often, it's imaging techniques that provide doctors with vital diagnostic information. That's why Siemens developed the ACUSON P10, a handheld ultrasound system that makes it possible to initiate treatment quickly in...

  • Page 66
    ... consulting services. We're improving patient outcomes by providing solutions that optimize workflow across the entire healthcare continuum in hospitals of all sizes. For the numerous hospitals belonging to Rhön-Klinikum AG in Germany, for instance, we cooperated with the clinic-operating company...

  • Page 67
    ... the first fully integrated diagnostics company in the world, bringing together in-vitro laboratory diagnostics, in-vivo medical imaging and healthcare information technology solutions. The key to improving diagnoses and treatment is molecular medicine, which enables processes inside the human body...

  • Page 68
    ... to operate healthcare institutions can be handled only using state-of-the-art information technology that manages, distributes and analyzes the information as required. That's why the success of our customers depends on having the most efficient imaging and IT solutions available. And in the end...

  • Page 69
    ...and other illnesses submit to annual audits and provide continuous quality data reporting. This increased scrutiny is not limited to the industry and peer review. Consider the US Government's 2008 landmark decision to provide consumers with hospital outcomes rankings for diseases including pneumonia...

  • Page 70
    ...from point-of-care applications to hospital, specialty and reference laboratory systems, producing high-quality outcomes that save time, money and lives. www.siemens.com/healthcare Clinical laboratory diagnostics is a stable and growing industry. Due to multi-year customer contracts and proprietary...

  • Page 71
    ... Kollatz CEO www.siemens.com/it-solutions Since production processes can consume vast amounts of power, efficient energy use is vital if companies are to cut costs and reduce CO2 emissions. Our decentralized energy management systems enable customers to tailor the planning and control of power...

  • Page 72
    ... as a provider and purchaser of financial services. Our offerings include everything from sales, investment and working capital financing to treasury services, fund and pension management, insurance solutions and venture capital financing. Like our customers, we aim to create value and enhance...

  • Page 73
    ... Chinese Regional Company's newly opened headquarters in Beijing, for instance, we've installed an automation and energy management system to optimize the control of all building systems. Equipped with a climate control solution based on high-efficiency heat recovery technology, the building uses 28...

  • Page 74
    ... profile and occupy leading market positions in their home countries. Innovation and quality are our key business drivers. In developing new products, we focus on improving performance, convenience and user-friendliness. But boosting competitiveness and increasing customer value are not our only...

  • Page 75
    ... in remote villages. Nokia Siemens Networks collaborates closely with both Siemens and Nokia to offer end-to-end solutions for communications service providers as well as public and corporate customers in various industries. Working together, we combine our reliable, secure communications products...

  • Page 76

  • Page 77
    Auf einen Blick Fit 42010

  • Page 78
    ï,¢ Responsible ï,¢ Excellent ï,¢ Innovative

  • Page 79
    ... our capital structure. Our Company-wide Fit42010 program is helping us achieve these goals by paving the way for: ï,¢Â„ a portfolio strategy focused on our strengths in the areas of Industry, Energy and Healthcare, corporate culture that empowers our employees to maximize their performance, global...

  • Page 80
    ... Company-wide at least twice as fast as world GDP. This normally means growth of about seven to eight percent, depending on global economic conditions. ï,¢Â„ To close the profitability gap to our best competitors, we introduced a new management and organizational structure on January 1, 2008 and set...

  • Page 81
    ...our managers for leadership, we're creating a high-performance culture that will ensure our Company's future success (see page 80-81). ï,¢Â„ Operational Excellence: We aim to remain a leading global player, offering innovative products and solutions while expanding our market presence and increasing...

  • Page 82
    ... climate change and globalization - are creating major business opportunities that we fully intend to leverage. With our wide-ranging portfolio of innovative, energy-efficient products and solutions, we're already better positioned than virtually any other company worldwide to provide answers to the...

  • Page 83
    ... a substantial increase in capital employed due to major acquisitions in fiscal years 2007 and 2008. Other factors that burdened our ROCE in fiscal 2008 include our restructuring program for the long-term reduction of our sales, general and administrative (SG&A) costs, provisions associated with the...

  • Page 84
    ... consolidating our market position, generating attractive returns on capital and remaining a world leader with innovative products and solutions. We've set clear priorities for the future. Having extensively restructured our portfolio in the last few years, we're now placing special emphasis on...

  • Page 85
    ...Industry Automation Drive Technologies Urbanization Building Technologies OSRAM Industry Solutions Mobility Climate change Fossil Power Generation Renewable Energy Oil & Gas Energy Service Power Transmission Power Distribution Imaging & IT Workflow & Solutions Diagnostics Cross-Sector Businesses...

  • Page 86
    ... a major contribution to sustainable Company success. To safeguard our long-term future, we have to plan ahead. And that means driving People Excellence by constantly fostering the movers and shakers of tomorrow. At Siemens, we refer to outstanding achievers with high leadership potential as our top...

  • Page 87
    ... the future. The Siemens Leadership Excellence (SLE) program prepares up-and-coming managers for their future tasks by teaching them valuable strategies and familiarizing them with useful management tools, methods and procedures. What makes the SLE program special is that leaders develop leaders...

  • Page 88
    ... part of our Company processes. Setting technology trends In some 190 countries, our innovations are making customers more competitive. Whether we're engineering the world's first system to fully merge the virtual factory with real-world manufacturing processes, developing gas turbines with an...

  • Page 89
    ... are also key growth drivers. With the help of our global supply chain management system, we're expanding our market presence and market penetration, for example, by moving production close to our customers - an approach guaranteed to increase the efficiency of our cost structures worldwide. Our...

  • Page 90
    ... a sustainable and more equitable world economy, the UN is aiming to bring about tangible improvements in social and economic conditions worldwide by 2015. Leveraging our core competencies as a supplier of public infrastructure systems in the areas of water treatment, energy, mobility and healthcare...

  • Page 91
    ... purifying drinking water and treating process water, industrial wastewater and municipal wastewater - technologies that are already key factors in worldwide efforts to make better use of water resources. But it's not only large-scale industrial solutions for water and wastewater treatment that make...

  • Page 92
    ... services to people in isolated regions. The air-conditioned buses carry their own water supplies and generators, enabling them to operate even in areas where power and water connections are unavailable. Fifteen of our hospital buses - each capable of providing free, high-quality medical care...

  • Page 93
    ...priced, high-quality products are door openers to markets in Venezuela, India, Vietnam and Pakistan, for instance. A strategy for success We're fostering sustainable development around the world while tapping new markets with our products and systems. This strategy is not only powering our business...

  • Page 94
    ... worldwide charitable program, Siemens Caring Hands encompasses employee volunteer projects, disaster relief measures and support for nonprofit organizations. Assisting disadvantaged people in some 60 countries, the program focuses on activities in the areas of water supply, healthcare and education...

  • Page 95
    ... Solar power systems supplied by Siemens Pakistan are providing some 40 families in the remote Kashmiri village of Sharda Maidan with access to electricity and enabling the nearby health center to deliver aroundthe-clock medical care. Further information on Siemens' corporate responsibility program...

  • Page 96

  • Page 97
    Report 2008

  • Page 98
    ... Siemens Financial Services (SFS) is an international provider of financial solutions in the business-to business area. SFS supports Siemens as well as non-affiliated companies, focusing on the three Sectors Industry, Energy, and Healthcare. SFS finances infrastructure, equipment and working capital...

  • Page 99
    ... 2008 Industry Industry Automation Drive Technologies Building Technologies OSRAM Industry Solutions Mobility Energy Fossil Power Generation Renewable Energy Oil & Gas Power Transmission Power Distribution Healthcare Imaging & IT Workflow & Solutions Diagnostics Siemens Financial Services* * Return...

  • Page 100
    ...analysis Sectors Industry Energy Healthcare Equity Investments Cross-Sector Businesses Reconciliation to Consolidated Financial Statements Reconciliation to EBITDA Financial performance measures Dividend Liquidity and capital resources Financial strategy and capital structure Cash Flow - Fiscal 2008...

  • Page 101
    Corporate Governance Page 18 Management's discussion and analysis Page 48 Consolidated Financial Statements Page 118

  • Page 102
    ... year was a successful one for Siemens. In fiscal 2008, the Supervisory Board performed the duties assigned to it by law, the Siemens Articles of Association and the Bylaws for the Supervisory Board. We regularly advised the Managing Board on the management of the Company and monitored the Managing...

  • Page 103
    ... and Chief Executive Officer, the Chief Financial Officer and the General Counsel, the Audit Committee discussed the Annual Financial Statements and Management's discussion and analysis (MD&A) of Siemens AG and the Consolidated Financial Statements and consolidated MD&A of Siemens worldwide, the...

  • Page 104
    ...the Managing Board's dividend proposal as well as the stock buyback program proposed by the Managing Board. At our meeting on November 28, 2007, we primarily discussed the financial statements and MD&A of Siemens AG and Siemens worldwide as of September 30, 2007 as well as the Company's planning and...

  • Page 105
    ... CEO of the Siemens Healthcare Sector, Professor Dr. Erich R. Reinhardt, resigned from the Managing Board on April 30, 2008. At our meeting on July 29, 2008, we dealt with the Company's business and financial position as well as the status of compliance-related measures and a report on the work...

  • Page 106
    ...to shares of stock of Siemens AG held in treasury by the Company as of the date, as well as attributable to treasury stock retired by the date, of the Annual Shareholders' Meeting be carried forward. Changes in the composition of the Supervisory and Managing Boards The five-year term of the members...

  • Page 107
    ... the Managing Board of Siemens AG on April 30, 2008. The Supervisory Board would like to thank the members of the Managing Board as well as the employees and employee representatives of all Siemens companies for their work. Together, they made fiscal 2008 another successful year for Siemens. For...

  • Page 108
    ...local business activities worldwide by forming 20 Regional Clusters, and launched a program to reduce our general, sales and administrative (SG&A) costs. In short, in fiscal 2008 we successfully implemented the most extensive Company-wide restructuring program ever executed in the history of Siemens...

  • Page 109
    ...our program to reduce sales, general and administrative (SG&A) costs. Also included in this reporting period is our â,¬390 million endowment for the Siemens Stiftung, the new foundation we've established under German civil law to support national and international projects in the areas of technology...

  • Page 110
    ... employees worldwide. More than 120,000 employees throughout all levels of the Company have successfully completed face-to-face or online compliance training courses. Over 100,000 documents, some 127 million transactions and at least 40 million bank statements were examined by the Company last year...

  • Page 111
    ... company management, excellent and highly motivated employees and the power of innovation - to address challenges in the areas of energy, the environment, industry and healthcare. A first in the history of our Company, the Siemens Answers campaign is implementing an integrated global communications...

  • Page 112
    16 Letter to our Shareholders The global economy in 2009 - A difficult business environment The international financial crisis increasingly impacted the real economy over the course of fiscal 2008. We assume that the world economy will continue to be affected by this crisis for some time to come....

  • Page 113
    ...is strong. And we're building on our strengths - a clear focus on customer requirements, an innovative product portfolio, financial clout and highly committed and motivated people - to continue achieving sustainable, profitable growth. Peter Löscher President and Chief Executive Officer Siemens AG

  • Page 114
    Corporate Governance

  • Page 115
    A clearly structured and fully implemented corporate governance system is our highest priority. Corporate Governance is the basis for all our decision-making and control processes and comprises: ï,¢ responsible, value-based management and monitoring focused on long-term success goal-oriented and ...

  • Page 116
    ... on the Supervisory Board must be independent. Some Supervisory Board members hold, or held in the past year, high-ranking positions at other companies with which Siemens does business; nevertheless, our sales and purchases of products and/or services to or from such companies are transacted on...

  • Page 117
    ...'s external and internal accounting processes. Together with the independent auditors, it also reviews the Company's financial statements prepared quarterly, half-yearly and annually by the Managing Board. On the basis of the independent auditors' report on the annual financial statements, the Audit...

  • Page 118
    ..., planning, business development, financial position, earnings, compliance and risks. Directors' dealings Pursuant to § 15a of the German Securities Trading Act (WpHG), members of the Managing and Supervisory Boards are required to disclose purchases or sales of shares of Siemens AG or financial...

  • Page 119
    Corporate Governance Report 23 The following transactions were executed in fiscal year 2008 and reported to Siemens: Form and place of transaction Date of First and transaction family name 04/11/2008 04/09/2008 03/17/2008 03/17/2008 03/17/2008 02/01/2008 02/01/2008 Peter Y. Solmssen Peter Y. ...

  • Page 120
    ... vSV has voting control under a power of attorney. Mr. Gerd von Brandenstein is authorized to vote these shares as a representative of the founder's family. Shareholder relations Four times each year, Siemens AG reports to its shareholders regarding its business development, financial position and...

  • Page 121
    ... governance practices and those of U.S. domestic NYSE issuers are as follows: Two-tier board The German Stock Corporation Act requires Siemens AG to have a two-tier board structure consisting of a Managing Board and a Supervisory Board. The two-tier system provides a strict separation of management...

  • Page 122
    ...Board of Siemens AG has a Finance and Investment Committee and a Mediation Committee, the latter of which is required by German law. Neither of these two committees is required under the NYSE Standards. Shareholder approval of equity compensation plans; stock repurchases The NYSE Standards generally...

  • Page 123
    ...Code (Code) in the version of June 6, 2008. Since making its last Declaration of Conformity dated November 28, 2007, Siemens AG has fully complied with the recommendations of the Code in the version of June 14, 2007. Berlin and Munich, November 28, 2008 Siemens Aktiengesellschaft The Managing Board...

  • Page 124
    ...the Company's size, role and special situation ï,¢ to establish a compliance control system designed to detect and remedy weaknesses ï,¢ to create an awareness for the dangers of corruption and provide managers and the so-called sensitive functions worldwide with a working knowledge of international...

  • Page 125
    ..., and for payments, cash and bank accounts. In a first phase, we introduced this system by late March 2008 in designated high-risk units - over 100 companies with large business volumes, public-sector customers and/or locations in countries that Transparency International ranks as particularly...

  • Page 126
    ... key objective here is to provide employees with a working knowledge of international anticorruption laws and regulations and the related Siemens guidelines. Local laws and regulations in the various Regions are also included in the training. Emphasis is placed on the discussion and solution of case...

  • Page 127
    ... of fiscal 2009 and backed by an online training course to familiarize employees with their contents. Increasing external contacts Maintaining close interaction with compliance experts and institutions outside the Company is an ongoing challenge. To support this networking, Siemens has joined...

  • Page 128
    ... Board member's responsibilities and performance. The level of Board compensation is designed to be competitive in the market for highly qualified executives and to provide incentives for successful work. In fiscal year 2008, the Managing Board remuneration had four components: (i) a fixed annual...

  • Page 129
    ... former Employee Share Purchase Program. Under the uniform Share Ownership Guidelines applicable worldwide within the Company, from 2012 on the members of the Managing Board are required to hold Siemens shares equal to a multiple of their base salary (300 percent in the case of the President and CEO...

  • Page 130
    ...12, 2008, the Chairman's Committee of the Supervisory Board resolved, in view of the damage claims asserted against former Managing Board members, to exercise a right of lien or retention on the payment of annual and long-term bonuses to Dr. Jürgen Radomski. 15,494 stock awards with a fair value of...

  • Page 131
    ...relate to the settlement of bonus payments, and â,¬1.5 million, or â,¬3.0 million in the case of Mr. Montes, to the settlement of stock-based compensation. It was agreed in each case to perform a recalculation of the severance payments due to Managing Board members after the close of the fiscal year...

  • Page 132
    ... from the Managing Board effective April 30, 2008. On November 12, 2008, the Chairman's Committee of the Supervisory Board resolved, in view of the damage claims asserted against former Managing Board members, to exercise a right of lien or retention on the payment of annual and long-term bonuses to...

  • Page 133
    ... fiscal year 2007 on November 9, 2010). Under the stock award agreement, the eligible recipients will receive a corresponding number of Siemens shares without additional payment. Wolfgang Dehen and Dr. Siegfried Russwurm were elected full members of the Managing Board effective January 1, 2008. Jim...

  • Page 134
    ...34 of the "Notes to Consolidated Financial Statements"). Stock awards (Amounts in number of units or â,¬) Awards Balance at beginning of fiscal year 2008 Weighted average grant-date fair value Awards Granted during fiscal year Weighted average grant-date fair value Managing Board members serving as...

  • Page 135
    Corporate Governance Report: Compensation Report 39 Vested during fiscal year Awards Weighted average grant-date fair value Awards Forfeited during fiscal year Weighted average grant-date fair value Awards Balance at end of fiscal year 2008 (1) Weighted average grant-date fair value...

  • Page 136
    ... Governance Report: Compensation Report Stock options (Amounts in number of units or â,¬) Options Balance at beginning of fiscal year 2008 Weighted average exercise price Options Granted during fiscal year Weighted average exercise price Managing Board members serving as of September 30, 2008...

  • Page 137
    Corporate Governance Report: Compensation Report 41 Exercised during fiscal year Options Weighted average exercise price Options Forfeited during fiscal year Weighted average exercise price Options Balance at end of fiscal year 2008 (1) Weighted average exercise price - 17,295 - 6,000 - - 18,...

  • Page 138
    ... units or in â,¬) Exercise Price Options outstanding at September 30, 2008 Number of options outstanding Weighted average remaining life (in years) Options exercisable at September 30, 2008 Number of options outstanding Weighted average remaining life (in years) Managing Board members serving as of...

  • Page 139
    ... following the close of the fiscal year, with value date on January 1. Until the beneficiary's time of retirement, the pension account is credited on January 1 each year with an annual interest payment (guaranteed interest). For fiscal year 2008, the members of the Managing Board were granted...

  • Page 140
    ... contributions (additions) under the BSAV attributable to the members of the Managing Board for fiscal year 2008. Defined Contribution Benefit Plan (BSAV) Information pursuant to Section 4.2.5 para. 2, 2nd sentence of the German Corporate Governance Code (Amounts in â,¬) Balance of BSAV account at...

  • Page 141
    ... services in fiscal year 2008. The current remuneration policies for the Supervisory Board were authorized at the Annual Shareholders' Meeting of January 27, 2005. Details are set out in § 17 of the Articles of Association of Siemens AG. As a result, the remuneration of Supervisory Board members...

  • Page 142
    ... compensation (based on the length of service in the case of Dr. Hans Michael Gaul, John David Coombe, Dieter Scheitor and Lord Iain Vallance of Tummel). With effect as of the conclusion of the Annual Shareholders' Meeting of Siemens AG on January 24, 2008, Jean-Louis Beffa, Gerd von Brandenstein...

  • Page 143
    ... law. For this purpose, the Company provides a group insurance policy for board and committee members and employees of the Siemens organization which is taken out for one year and renewed annually. The insurance covers the personal liability of the insured in the case of a financial loss associated...

  • Page 144
    ... position, in part through long-term debt transactions in capital markets, under favorable conditions ahead of the global financial crisis. We also reduced the number of outstanding shares by approximately 53 million shares through our share buyback plan. A number of the steps mentioned above took...

  • Page 145
    ... Automation, Drive Technologies and Industry Solutions. Profit declined in the Energy Sector due to the project charges at Fossil Power Generation. All other Divisions in Energy generated higher profits year-over-year. Healthcare saw strong profit growth in its Diagnostics Division, benefiting...

  • Page 146
    ... our operating businesses into a new organizational structure with three Sectors and two Cross-Sector Businesses. The three Sectors are Industry, Energy, and Healthcare. The Cross-Sector Businesses support the Sectors in the areas of finance and information technology. For further information on...

  • Page 147
    ... of their base salary in Siemens shares; awards stock for performance; and rewards employees who hold Siemens shares for a defined period with one free share per three held. The incentive program also pays out financial bonuses based on achievement of personal and organizational targets. The entire...

  • Page 148
    ... are based upon a report dated November 14, 2008 prepared by Global Insight, Inc. and have not been independently verified by Siemens. Due to effects on the world economy resulting from the financial market crisis, figures for 2008 might deviate significantly. Market trends The most important...

  • Page 149
    ... products designed in one country from components made in a number of other countries. Globalization is important to Siemens because we operate in approximately 190 countries with common solutions, technologies, logistics, information systems, and business processes across all regions. This global...

  • Page 150
    ...world economy resulting from the financial market crisis, figures for 2008 might deviate significantly. Research and development In fiscal 2008, Siemens increased its research and development (R&D) expenses to â,¬3.784 billion from â,¬3.399 billion in the prior year. The average number of employees...

  • Page 151
    ... to the Sectors, Cross-Sector Businesses and central functions as well as to the regional Clusters, in order to manage this global project effectively. During fiscal 2008, a number of key drivers were identified to support the achievement of the overall cost reduction target. The following chart...

  • Page 152
    ... Power Generation Division and the Oil & Gas Division. The three Sectors, as well as Equity Investments, Siemens IT Solutions and Services and Siemens Financial Services (SFS), constitute reportable segments in accordance with International Financial Reporting Standards (IFRS). This new structure...

  • Page 153
    ...IT Power Transmission and Distribution (PTD) Energy Sector Medical Solutions (Med) Workflow & Solutions Diagnostics Healthcare Sector Strategic Equity Investments (SEI) Siemens IT Solutions and Services Siemens Financial Services Siemens Real Estate Cross-Sector Businesses: Equity Investments...

  • Page 154
    ...year figures were adjusted for purposes of comparison. Equity Investments includes equity investments not allocated to a Sector, Cross-Sector Business, SRE, Pensions or Treasury for strategic reasons; assets held for disposal; and available-for-sale financial assets. As of September 30, 2008, equity...

  • Page 155
    ... to Siemens. In particular, some Divisions reported lower orders in the second half of the fiscal year or in the fourth quarter compared to the same period a year earlier. New Orders (location of customer) Year ended September 30, (â,¬ in millions) Europe, C.I.S.**, Africa therein Germany Americas...

  • Page 156
    ... related to external customers for Siemens in 2008 rose 7% year-over-year, on double-digit growth in Healthcare and Energy. Industry delivered 6% revenue growth, including double-digit increases at Industry Automation and Drive Technologies which more than offset declines at Mobility, Building...

  • Page 157
    ... a year earlier. Year ended September 30, (â,¬ in millions) Research and development expenses as percentage of revenue Marketing, selling and general administrative expenses as percentage of revenue Other operating income Other operating expense Income from investments accounted for using the equity...

  • Page 158
    ... business at which 50% were divested during fiscal 2008. A year earlier, other operating expense included the â,¬440 million in sanctions related to an European antitrust investigation mentioned earlier, â,¬81 million primarily to fund job placement companies for former Siemens employees...

  • Page 159
    ... of anti-corruption laws and related matters were â,¬80 million in fiscal 2008, considerably down from â,¬195 million a year earlier. For additional information regarding discontinued operations, see "Notes to Consolidated Financial Statements." Net income for Siemens in fiscal 2008 was â,¬5.886...

  • Page 160
    ...39.095 billion a year earlier, and revenue increased 6% year-over-year, to â,¬38.085 billion. The Drive Technologies, Industry Automation and Industry Solutions Divisions were the major contributors to revenue and order growth on a fiscal-year basis. Nevertheless, the book-to-bill ratios for these...

  • Page 161
    ... Profit at Industry Automation increased 46% year-over-year, to â,¬1.606 billion. The Division's profitability benefited from high capacity utilization and economies of scale. Both periods under review included purchase price accounting (PPA) effects and integration costs related to acquisition of...

  • Page 162
    ... in fiscal 2008 and in the prior year. Fiscal 2007 also included integration costs of â,¬7 million. Profit at Building Technologies rose to â,¬466 million, a 9% increase compared to â,¬429 million in fiscal 2007, which had benefited from a gain on the sale of a business in Germany. Both profit...

  • Page 163
    ...region posted a 4% increase in revenue, while slower demand in China and India contributed to a 6% decline in orders for the year for this region. Divisions Year ended September 30, (â,¬ in millions) Fossil Power Generation Renewable Energy Oil & Gas Power Transmission Power Distribution * Excluding...

  • Page 164
    ...Management's discussion and analysis Orders at Renewable Energy climbed 81% year-over-year, to â,¬4.434 billion, including large contracts for wind turbines in Europe and the U.S. Revenue rose 53% compared to fiscal 2007. The Oil & Gas Division, benefiting from market conditions favoring increased...

  • Page 165
    ... Independent States. Healthcare posted Sector profit of â,¬1.225 billion in fiscal 2008, compared to â,¬1.323 billion a year earlier. The primary factors in the decline year-over-year were â,¬174 million in transformation costs associated primarily with refocusing of certain business activities in...

  • Page 166
    ... by â,¬81 million in transformation costs related primarily to the strategic review of certain business activities. Profit rose sharply at Diagnostics, to â,¬248 million for the fiscal year, benefiting from acquisitions. The Division's profit margin in both fiscal 2008 and fiscal 2007 was influenced...

  • Page 167
    ...in fiscal 2007, turned negative in fiscal 2008. Cross-Sector Businesses Siemens IT Solutions and Services Year ended September 30, (â,¬ in millions) Profit Profit margin New orders Total revenue External revenue Therein: Europe, C.I.S.**, Africa Therein Germany Americas Asia, Australia, Middle East...

  • Page 168
    ... prior year end, primarily due to growth in the commercial finance business including asset purchases in secondary markets. The following table provides further information on the capital structure of SFS as of September 30, 2008 and 2007: September 30, (â,¬ in millions) Allocated equity Total debt...

  • Page 169
    ... of lower indebtedness in Siemens' operating businesses as well as lower interest rates on U.S. dollar denominated debt compared to the prior fiscal year. These positive factors were partly offset by charges of approximately â,¬50 million in the fourth quarter of fiscal 2008 related to counter-party...

  • Page 170
    ... Energy Oil & Gas Power Transmission Power Distribution Healthcare Sector Imaging & IT Workflow & Solutions Diagnostics Total Sectors Equity Investments Cross-Sector Businesses Siemens IT Solutions and Services Siemens Financial Services (SFS) Reconciliation to Consolidated Financial Statements...

  • Page 171
    ... taxes less Financial income (expense), net and Income (loss) from investments accounted for using the equity method, net. Amortization and impairments of intangible assets other than goodwill. Includes impairments of goodwill of â,¬78 and â,¬60 for the fiscal years ended September 30, 2008 and 2007...

  • Page 172
    ... Fit42010 strategic program includes both financial and non-financial performance measures. We believe that our financial performance measures will help us increase the value and competitiveness of our company and thereby strengthen our leadership positions or close the gap to our top competitors by...

  • Page 173
    ... Automation Drive Technologies Building Technologies OSRAM Industry Solutions Mobility Energy Fossil Power Generation Renewable Energy Oil & Gas Power Transmission Power Distribution Healthcare Imaging & IT Workflow & Solutions Diagnostics Siemens IT Solutions and Services Siemens Financial Services...

  • Page 174
    ... in the Notes to Consolidated Financial Statements is defined as net cash provided by (used in) operating activities (continuing operations) minus Additions to intangible assets and property, plant and equipment (PPE) (continuing operations). Our 2010 target for CCR is 1 minus our annual organic...

  • Page 175
    ... substantial share buyback plan in November 2007. For further information, see "Liquidity and capital resources" and "Notes to Consolidated Financial Statements." Global SG&A program We launched a global program for reducing selling, general and administrative expenses (SG&A) on January 1, 2008. It...

  • Page 176
    ... to shares of stock of Siemens AG held in treasury by the Company as of the date, as well as attributable to treasury stock retired by the date, of the Annual Shareholders' Meeting shall be carried forward. Liquidity and capital resources Financial strategy and capital structure Financial strategy...

  • Page 177
    ... treasury shares, see "Notes to Consolidated Financial Statements." As part of our Fit42010 program, we decided to improve our capital structure. A key consideration is to maintain ready access to capital markets through various debt products and to preserve our ability to repay and service our debt...

  • Page 178
    ... in order to increase transparency on credit risk and centralize our credit risk management within Corporate Treasury. Siemens Credit Warehouse is managed by SFS as operating service provider on behalf of Corporate Treasury. Over time our operating units will transfer their current trade receivables...

  • Page 179
    ..., including the enterprise networks business, transferred into EN in fiscal 2008, and the carrier-related business which was transferred into NSN in fiscal 2007. For further information on discontinued operations, see "Notes to Consolidated Financial Statements." Siemens reports Free cash flow...

  • Page 180
    ... in the prior-year period included â,¬4.2 billion related to the acquisition of Bayer's diagnostic business at Healthcare, â,¬2.7 billion for the UGS acquisition at Industry as well as a payment to acquire AG Kühnle, Kopp & Kausch at Energy. Discontinued operations provided â,¬9.582 billion in...

  • Page 181
    ...relates to our commercial papers, medium-term notes, bonds, loans from banks and other financial indebtedness such as obligations under finance leases. Total liquidity refers to the liquid financial assets we had available at the respective balance sheet dates to fund our business operations and pay...

  • Page 182
    ... 30, 2008. None of our credit facilities contain a material adverse change provision of the type often found in facilities of such nature and none of our global commercial paper and medium-term note programs nor our credit facilities contain specific financial covenants such as rating triggers or...

  • Page 183
    ...-year dividend was also â,¬1.60 per share. The amount attributable to shares of stock of Siemens AG held in treasury by the Company as of the date, as well as attributable to treasury stock retired by the date, of the Annual Shareholders' Meeting shall be carried forward. Other capital requirements...

  • Page 184
    ... - At September 30, 2008, Siemens had a total of â,¬2.715 billion in total future payment obligations under non-cancelable operating leases. For additional information, see "Notes to Consolidated Financial Statements." Siemens is subject to asset retirement obligations related to certain items of...

  • Page 185
    ... as of September 30, 2008. The Federal Republic of Germany has commissioned a consortium consisting of Siemens IT Solutions and Services and IBM Deutschland GmbH (IBM) to modernize and operate the non-military information and communications technology of the German Federal Armed Forces (Bundeswehr...

  • Page 186
    ... extent only. We expect to continue to review the need for the implementation of similar plan designs outside Germany in the coming years to better control future benefit obligations and related costs. For more information on Siemens pension plans, see "Notes to Consolidated Financial Statements."

  • Page 187
    .... For information on acquisitions and dispositions, see "Notes to Consolidated Financial Statements." The following table shows current assets at the end of fiscal 2008 and fiscal 2007: September 30, (â,¬ in millions) Cash and cash equivalents Available-for-sale financial assets Trade and other...

  • Page 188
    .... For further information see "Notes to Consolidated Financial Statements." The increase in other financial assets results mainly from SFS' growth in the commercial finance business including asset purchases in secondary markets. For further information see "Segment information analysis." The table...

  • Page 189
    Management's discussion and analysis 93 Further information with respect to short- and long-term debt is also provided under "Capital Resources and Requirements" as well as in the "Notes to Consolidated Financial Statements." Shareholders' equity and total assets were as follows: September 30, ...

  • Page 190
    ..., Siemens completed the transfer of an 80.2% stake in Siemens Home and Office Communication Devices GmbH & Co. KG (SHC), reported in Other Operations, to ARQUES Industries AG. Effective November 17, 2008, Barbara Kux was appointed to the Siemens Managing Board. Barbara Kux will head the Supply Chain...

  • Page 191
    ...that motivates our employees to deliver high-performance results. Our practical approach to people excellence includes the following focus initiatives: Global diverse talents (Top Talents), Siemens Leadership Excellence (SLE) Programs, our Performance Management Process (PMP) and Expert careers (Key...

  • Page 192
    ... because it enables us to effectively move production close to our customers. Supply chain management is also a vital capability for increasing the efficiency of our overall global value chain, which includes R&D, product development, sourcing and production. A key initiative in all these regards is...

  • Page 193
    ... law and our internal regulations. We also train our employees with regard to corruption and other legal compliance issues. We offer both webbased training and in-person training. The following table shows the cumulative number of employees who participated in both types of training programs: Year...

  • Page 194
    ... generated by products and solutions installed for our customers from the beginning of fiscal 2002 to the present is shown below: Year ended September 30, (in million metric tons CO2) Overall annual CO2 reduction Thereof by products/solutions installed in current fiscal year 2008 148 34 2007...

  • Page 195
    ... we plan and execute our business strategies, our risk management policy is set by the Managing Board. Siemens' organizational and accountability structure requires each of the respective managements of Corporate Units, operating units and Regional Companies to execute risk management programs that...

  • Page 196
    ... 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 financing terms. We face strong competitors, some of which are larger...

  • Page 197
    ... markets, new products must be developed and introduced rapidly in order to capture available opportunities, and this can lead to quality problems. Our operating results depend to a significant extent on our abilities to adapt to changes in markets and to reduce the costs of producing high-quality...

  • Page 198
    ... costs to customers, such price increases could have a material adverse impact on our financial results. Product lifecycle management Our value chain comprises all steps, from research and development to production, marketing, sales and services. Operational failures in our value chain processes...

  • Page 199
    ... as those undertaken by the Energy Sector. We finance a large number of smaller customer orders, for example the leasing of medical equipment, in part, through Siemens Financial Services (SFS). SFS also incurs credit risk by financing third-party equipment, its factoring business or by taking direct...

  • Page 200
    ... or actual downgrades by rating agencies may increase our cost of capital, may reduce our potential investor base and may negatively affect our businesses. Capital structure The funded status of our pension plans may be affected by an increase or decrease in the Defined Benefit Obligation (DBO), as...

  • Page 201
    ... we engage in a substantial amount of business with governments and government-owned enterprises around the world. We also participate in a number of projects funded by government agencies and nongovernmental organizations such as the World Bank and other multilateral development banks. If we or our...

  • Page 202
    ... of the legal environment in some regions could limit our ability to enforce our rights. We expect that sales to emerging markets will continue to be an increasing portion of total sales, as our business naturally evolves and as developing nations and regions around the world increase their demand...

  • Page 203
    ... et seq., and §186 of the German Stock Corporation Act. Restrictions on voting rights or transfer of shares Shares of stock issued by Siemens AG under its employee stock scheme are subject to a Company-imposed private law lock-up period of five years if the share issue occurred prior to or during...

  • Page 204
    ... the voting rights. Shares with special rights conferring powers of control There are no shares with special rights conferring powers of control. System of control of any employee share scheme where the control rights are not exercised directly by the employees Shares of stock issued by Siemens AG...

  • Page 205
    ... than their stock market price and the total of the shares issued in accordance with §186 (3), 4th sentence, of the German Stock Corporation Act does not exceed 10 percent of the capital stock at the date of using this authorization. Furthermore, the Managing Board is authorized to increase, with...

  • Page 206
    ...nor fall below the market price of the Siemens stock on the trading day, as determined at the opening auction of XETRA trading (or a comparable successor system), by more than 10 percent. If the shares are acquired through a public share purchase offer, the purchase price or purchase price range per...

  • Page 207
    ...for purchase to members of the Managing Board of Siemens AG under the same terms and conditions as those offered to employees of the Company, or to grant and transfer them with a lockup period of at least two years. As of September 30, 2008, the Company held 52,645,665 (2007: 383) shares of stock in...

  • Page 208
    ... (12) months prior to a Managing Board member's retirement. It is the Company's intention when entering into or extending Managing Board members' employment contracts to limit severance payments in the event of a change of control to the amount recommended by the German Corporate Governance Code.

  • Page 209
    ... Corporate Governance Report, included in this Annual Report for fiscal year 2008. Outlook Siemens' focus in fiscal 2009 is advancing toward fulfillment of our Fit42010 strategic program. This program includes goals for business growth; income, profitability and other financial goals; leadership in...

  • Page 210
    ... new orders of approximately â,¬93.5 billion and a book-to-bill ratio of 1.21 in fiscal 2008. As noted above, most of our business is less exposed to short-term economic cycles. In addition, we are investing in new solutions and supply-chain capabilities to address opportunities in lower-end market...

  • Page 211
    ...business or service, divested, moved to a joint venture, or closed. Reducing SG&A. During fiscal 2008, we initiated a global program for the reduction of selling, general and administrative expenses (SG&A program) as part of Siemens' transformation programs, with the goal of securing our competitive...

  • Page 212
    ... fossil power generation systems. We also provide solutions for increasing energy efficiency and reducing emissions in the other broad markets just mentioned. We anticipate that public policy initiatives in many countries will lead to greater demand for such solutions in the years ahead. Another...

  • Page 213
    ... changes in general economic and business conditions (including margin developments in major business areas); the behavior of financial markets, including fluctuations in interest and exchange rates, commodity and equity prices, debt prices (credit spreads) and financial assets generally; continued...

  • Page 214
    ... years ended September 30, 2008 and 2007 (in millions of â,¬, per share amounts in â,¬) Fiscal years Note Revenue Cost of goods sold and services rendered Gross profit Research and development expenses Marketing, selling and general administrative expenses Other operating income Other operating...

  • Page 215
    ...Statements of Income and Expense Recognized in Equity For fiscal years ended September 30, 2008 and 2007 (in millions of â,¬) Fiscal years 2008 Net income Currency translation differences Available-for-sale financial assets Derivative financial instruments Actuarial gains and losses on pension plans...

  • Page 216
    ...-term debt Pension plans and similar commitments Deferred tax liabilities Provisions Other financial liabilities Other liabilities Total liabilities Equity Common stock, no par value(1) Additional paid-in capital Retained earnings Other components of equity Treasury shares, at cost(2) Total equity...

  • Page 217
    ...-sale financial assets (Increase) decrease in receivables from financing activities Proceeds from sales of investments, intangibles and property, plant and equipment(1) Proceeds from disposals of businesses Proceeds from sales of current available-for-sale financial assets Net cash provided by (used...

  • Page 218
    ... Notes to Consolidated Financial Statements Consolidated Changes in Equity For the fiscal years ended September 30, 2008 and 2007 (in millions of â,¬) Common stock Balance at October 1, 2006 Income and expense recognized in equity Dividends Issuance of common stock and share-based payment Purchase...

  • Page 219
    Notes to Consolidated Financial Statements 123 Other components of equity Availablefor-sale financial assets 96 30 - - - - - 126 126 (122) - - - - - 4 Total equity attributable to shareholders of Siemens AG 25,193 4,607 (1,292) 1,663 (101) 94 (1,168) 28,996 28,996 3,336 (1,462) (1) (4,350) 281 (26...

  • Page 220
    ... Information (continuing operations) As of and for the fiscal years ended September 30, 2008 and 2007 (in millions of â,¬) New orders (unaudited) 2008 Sectors Industry Energy Healthcare Total Sectors Equity Investments Cross-Sector Businesses Siemens IT Solutions and Services Siemens Financial...

  • Page 221
    ...assets and property, plant and equipment. Free cash flow of the Sectors, Equity Investments, Siemens IT Solutions and Services and Other Operations primarily exclude income tax, financing interest and certain pension related payments and proceeds. Free cash flow of SFS, a financial services business...

  • Page 222
    ... Financial Statements using the equity method of accounting. Companies in which Siemens has joint control are also recorded using the equity method. Business combinations - All business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair value...

  • Page 223
    ... share amounts) Associated companies - Companies in which Siemens has the ability to exercise significant influence over operating and financial policies (generally through direct or indirect ownership of 20% to 50% of the voting rights) are recorded in the Consolidated Financial Statements using...

  • Page 224
    ...are capitalized if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and Siemens intends, and has sufficient resources, to complete development and to use or sell the asset. The costs capitalized include...

  • Page 225
    ...Costs of construction of qualifying long-term assets include capitalized interest, which is amortized over the estimated useful life of the related asset. The following useful lives are assumed: Factory and office buildings Other buildings Technical machinery & equipment Furniture & office equipment...

  • Page 226
    130 Notes to Consolidated Financial Statements (in millions of â,¬, except where otherwise stated and per share amounts) applied as their recoverable amount. The assets' value in use is measured by discounting their estimated future cash flows. If there is an indication that the reasons which ...

  • Page 227
    ...-sale financial assets as these financial instruments are not subject to value fluctuation within the company. Siemens does not make use of the category held to maturity. Financial liabilities of the Company mainly comprise notes and bonds, loans from banks, commercial paper, trade payables, finance...

  • Page 228
    ... each reporting date until the award is settled. Siemens uses an option pricing model to determine the fair value of its share-based payment plans. See Note 34 for further information on share-based payment transactions. Prior year information - The presentation of certain prior year information has...

  • Page 229
    ... on or after January 1, 2009. However, Siemens decided to early adopt IFRS 8 in the first quarter of fiscal 2007. In November 2006, International Financial Reporting Interpretation Committee (IFRIC) 12 Service Concession Arrangements was issued, which provides guidance to private sector entities on...

  • Page 230
    ... a credit analysis performed by Siemens Financial Services (SFS), which performs such reviews on behalf of the Company's Managing Board. At a minimum, a customer's credit rating must be single B from external rating agencies, or an equivalent SFS-determined rating. In cases where the credit quality...

  • Page 231
    ...Consolidated Financial Statements 135 (in millions of â,¬, except where otherwise stated and per share amounts) credit agencies, in order to be awarded supply contracts. In addition, the Company provides direct vendor financing and grants guarantees to banks in support of loans to Siemens customers...

  • Page 232
    ...'s Consolidated Financial Statements since the date of acquisition. aa) 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...

  • Page 233
    ...AG, Hanover, Germany for a sales price of approximately â,¬11.4 billion. The transaction resulted in a preliminary gain, net of related costs of â,¬5,522, which is included in discontinued operations. The historical results of SV are reported as discontinued operations in the Consolidated Statements...

  • Page 234
    ... accounted for using the equity method, net (see Note 8). At the end of September 2008, Siemens sold a 51% stake in SEN to The Gores Group, a U.S.-based financial and operational management firm. The Gores Group will contribute two businesses into Enterprise Networks Holdings B.V., The Netherlands...

  • Page 235
    ... consist of the following components: Year ended September 30, 2008 Revenue Costs and expenses Loss on measurement to fair value less costs to sell Gain (loss) related to the contribution of the carrier-related operations to NSN Loss on disposal of the SEN business Income (loss) from discontinued...

  • Page 236
    ... projectrelated costs. SG&A project-related termination benefits, incurred in fiscal 2008, are reported in Corporate items and pensions. 6 Other operating income Year ended September 30, 2008 Gains on sales of property, plant and equipment and intangibles Gains on disposals of businesses Other 314...

  • Page 237
    ... the disposal of the Global Tungsten & Powders unit, both at the Industy Sector. Fiscal 2007, includes a gain on the sale of Siemens Dispolok GmbH (see Note 4 for further information). 7 Other operating expense Year ended September 30, 2008 Losses on disposals of businesses Impairment of goodwill...

  • Page 238
    ... costs (Cost of goods sold and services rendered, Research and development expenses, Marketing, selling and general administrative expenses). The components of Income from available-for-sale financial assets, net were as follows: Year ended September 30, 2008 Dividends received Gains on sales...

  • Page 239
    ... continuing operations before income taxes is attributable to the following geographic regions: Year ended September 30, 2008 Germany Foreign (449) 3,323 2,874 2007 1,556 3,545 5,101 Income tax expense (benefit) consists of the following: Year ended September 30, 2008 German corporation and trade...

  • Page 240
    ...: September 30, 2008 Assets: Financial assets Other intangible assets Property, plant and equipment Inventories Receivables Pension plans and similar commitments Provisions Liabilities Tax loss and credit carryforward Other Deferred tax assets Liabilities: Other intangible assets Property, plant and...

  • Page 241
    ...expense (benefit) consists of the following: Year ended September 30, 2008 Continuing operations Discontinued operations Income and expense recognized directly in equity Other changes in equity* * Tax effect of reclassification on conversion right (see Notes 23 and 27 for further information). 2007...

  • Page 242
    ...- (6) September 30, 2007 Cost Equity instruments Debt instruments Fund shares 44 94 34 172 Fair Value 65 94 34 193 Gain 21 - - 21 Unrealized Loss - - - - Proceeds from sales of available-for-sale financial assets traded in an active market for the years ended September 30, 2008 and 2007 were â,¬49...

  • Page 243
    ... allowance on the Company's current and long-term receivables (see Notes 12 and 20), which belong to the class of financial assets and liabilities measured at (amortised) cost, changed as follows: Year ended September 30, 2008 Valuation allowance as of beginning of fiscal year Increase in valuation...

  • Page 244
    ...in finance leases primarily relate to equipment for information technology and office machines, industrial machinery, medical equipment and transportation systems. Actual cash flows will vary from contractual maturities due to future sales of finance receivables, prepayments and write-offs. See Note...

  • Page 245
    ... Note 4 for further information on Inventories reclassified to Assets held for disposal. 15 Other current assets September 30, 2008 Other tax receivables Prepaid expenses Other 742 322 304 1,368 2007 635 345 342 1,322 16 Goodwill Goodwill has changed as follows: Year ended September 30, 2008 Cost...

  • Page 246
    ... tax assets. Net book Acquisitions value as Translation and purchase of differences accounting 10/1/2006 and other adjustments* Sectors Industry Energy Healthcare Cross-Sector Businesses Siemens IT Solutions and Services Siemens Financial Services (SFS) Other Operations Siemens VDO Automotive...

  • Page 247
    ...71) reported in Income (loss) from discontinued operations, net of income taxes. Amortization expense on intangible assets is included in Cost of goods sold and services rendered, Research and development expenses or Marketing, selling and general administrative expenses, depending on the use of...

  • Page 248
    ... plant and equipment reclassified to Assets classified as held for disposal (see Note 4). ** Includes Impairments of â,¬(213). Gross carrying amount as of 10/1/06 Land and buildings Technical machinery and equipment Furniture and office equipment Equipment leased to others Advances to suppliers and...

  • Page 249
    ... has been ceased from that date on. Summarized financial information for FSC, not adjusted for the percentage of ownership held by Siemens is presented below: September 30, 2008 Total assets Total liabilities 3,063 2,771 2007 3,352 2,960 Year ended September 30, 2008 Revenue Net income (loss) 6,169...

  • Page 250
    ... Financial Statements (in millions of â,¬, except where otherwise stated and per share amounts) 20 Other financial assets September 30, 2008 Receivables from finance leases (see Note 12) Loans receivable Available-for-sale financial assets Trade receivables from sale of goods and services...

  • Page 251
    ... 30, 2008, weighted-average interest rates for loans from banks, other financial indebtedness and obligations under finance leases were 4.9% (2007: 5.7%), 3.5% (2007: 4.9%) and 5.7% (2007: 5.8%), respectively. In some countries, the Company has pledged securities and executed promissory notes to...

  • Page 252
    ... 0.15% above LIBOR and U.S.$500, 5.625% fixed rate notes due March 2016 in addition to the outstanding amount of U.S.$970 (approximately â,¬678) of the 6.0% U.S.$-bond, which was redeemed in fiscal 2008. In fiscal 2008, Siemens updated the program and issued in total additional â,¬4.15 billion fixed...

  • Page 253
    ... 44.5 million shares of Siemens AG at a conversion price of â,¬56.1681 per share, which was subject to change under certain circumstances. Due to the cash settlement option the conversion right component was considered a derivative instrument recognized at fair value, which was reported in Other...

  • Page 254
    ... from the conditional capital (see Note 27 for further information). Other financial indebtedness Other financial indebtedness includes â,¬256, and â,¬469, as of September 30, 2008 and 2007, respectively, for the Company's real estate assets that were sold or transferred and in which Siemens has...

  • Page 255
    ... the Company. In order to fund Siemens' pension obligations, the Company's major pension plans are funded with assets in segregated pension entities. Furthermore, the Company provides other post-employment benefits, which primarily consist of transition payments to German employees after retirement...

  • Page 256
    ... end of the preceding fiscal year on the basis of the identified discount rate; and the expected return on plan assets in the case of funded benefit plans. Past service cost is amortized on a straight-line basis over the average vesting period of the related benefits. In the Consolidated Statements...

  • Page 257
    ... the Consolidated Statements of Income and Expense recognized in Equity, Assumptions used for the calculation of the DBO and NPBC, Sensitivity analysis, Plan assets, Pension plan funding, and Pension benefit payments. The Company had no asset ceiling in its principal pension benefit plans in fiscal...

  • Page 258
    ...pension progression and compensation increase rate as well as by experience adjustments. The following table shows the change in plan assets for fiscal year 2008 and 2007 and additional information by country: September 30, 2008 Total Domestic Foreign Change in plan assets: Fair value of plan assets...

  • Page 259
    ...compensation increase rates and pension progression rates used in calculating the DBO together with long-term rates of return on plan assets vary according to the economic conditions of the country in which the retirement plans are situated or where plan assets are invested as well as capital market...

  • Page 260
    ... years ended September 30, 2009, 2008 and 2007 are shown in the following table: Year ending September 30, 2009 Total Domestic Foreign Discount rate Germany U.S. U.K. Expected return on plan assets Germany U.S. U.K. Rate of compensation increase Germany U.S. U.K. Rate of pension progression Germany...

  • Page 261
    ... Statements 165 (in millions of â,¬, except where otherwise stated and per share amounts) The discount rate assumptions reflect the rates available on high-quality corporate bonds or government bonds of consistent duration and currency at the balance sheet date. The expected return on plan assets...

  • Page 262
    ... Year ended September 30, 2007 Total Domestic Foreign 837 - 837 271 - 271 566 - 566 Regular funding is generally based on the level of service cost incurred. For the BSAV funding is based on the contributions to the beneficiaries' account. Future funding decisions for the Company's pension plans...

  • Page 263
    ... per share amounts) As pension benefit payments for Siemens' principal funded pension benefit plans reduce the DBO and plan assets by the same amount, there is no impact on the funded status of such plans. Principal other post-employment benefits In Germany, employees who entered into the Company...

  • Page 264
    ...-employment benefits: Plan assets The following table shows the change in plan assets for fiscal 2008 and 2007: September 30, 2008 Total Domestic Foreign Change in plan assets: Fair value of plan assets at beginning of year Employer contributions Benefits paid Fair value of plan assets at year end...

  • Page 265
    ... payments in Germany are the same as those utilized for domestic pension benefit plans. The weighted-average assumptions used in calculating the actuarial values for the post-employment healthcare and life insurance benefits are as follows: Year ended September 30, 2008 Discount rate U.S.: Medical...

  • Page 266
    ... Financial Statements (in millions of â,¬, except where otherwise stated and per share amounts) September 30, 2008 One-percentage-point increase Effect on defined benefit obligation Effect on total of service and interest cost components 29 2 decrease (26) (2) Other post-employment benefits...

  • Page 267
    ... asset retirement obligations (see discussion below), the majority of the Company's provisions are generally expected to result in cash outflows during the next 1 to 15 years. Warranties mainly relate to products sold. See Note 2 for further information concerning our policy for estimating warranty...

  • Page 268
    ... stock Siemens common stock is composed of no par value shares with a notional value of â,¬3.00 per share. Each share of common stock is entitled to one vote. The following table provides a summary of outstanding capital and the changes in authorized and conditional capital for fiscal years 2008...

  • Page 269
    ... to the members of the Managing Board of Siemens AG for purchase as stock-based compensation under the same terms and conditions as those offered to employees of the Company or to grant and transfer such shares to members of the Managing Board with a holding period of at least two years. The 2008

  • Page 270
    ... the 1,290,000 shares relating to the capital increase from Authorized Capital 2006, at an average price of â,¬77.00 per share. In fiscal 2007, a total of 1,306,508 shares of Treasury Stock were issued. Thereof, 1,294,159 shares were issued to employees under the employee share purchase program with...

  • Page 271
    ... the earnings of Siemens AG as reported in its statutory financial statements determined in accordance with the German Commercial Code (Handelsgesetzbuch). During the fiscal year ended September 30, 2008, Siemens AG management distributed an ordinary dividend of â,¬1,462 (â,¬1.60 per share) of the...

  • Page 272
    ... shares until 2010. September 30, 2008 Short-term debt Plus: Long-term debt Less: Cash and cash equivalents Less: Current available for sale financial assets Net debt Less: SFS Debt excluding internally purchased receivables Plus: Funded status pension plan Plus: DBO Other post-employment benefits...

  • Page 273
    ... such financial obligations. In addition, Siemens provides credit guarantees generally as credit-line guarantees with variable utilization to joint ventures and associated and related companies. The maximum amount of these guarantees is subject to the outstanding balance of the credit or, in case...

  • Page 274
    ...otherwise stated and per share amounts) The Federal Republic of Germany has commissioned a consortium consisting of Siemens IT Solutions and Services and IBM Deutschland GmbH (IBM) to modernize and operate the non-military information and communications technology of the German Federal Armed Forces...

  • Page 275
    ...) group. To date, the Munich public prosecutor has announced that groups under investigation include Siemens' former Power Transmission and Distribution (PTD) group, in which a former member of the Managing Board is a suspect, the former Power Generation (PG) group, the former Medical Solutions (Med...

  • Page 276
    180 Notes to Consolidated Financial Statements (in millions of â,¬, except where otherwise stated and per share amounts) ï,¢ As previously reported, Milan, Italy and Darmstadt, Germany prosecutors investigated allegations that former Siemens employees provided improper benefits to former employees ...

  • Page 277
    ... and operation of a system for the production of identity cards, border control, collection of data and voters' registers. A search was executed at the premises of Siemens Argentina and Siemens IT Services SA in Buenos Aires in August 2008. The Argentinean investigative judge also requested judicial...

  • Page 278
    ... Siemens AG American Depositary Shares filed a derivative lawsuit with the Supreme Court of the State of New York against certain current and former members of Siemens AG's Managing and Supervisory Boards as well as against Siemens AG as a nominal defendant, seeking various forms of relief relating...

  • Page 279
    ... refer to Notes to the Consolidated Financial Statements for fiscal year ended September 30, 2007. During fiscal year 2008, Debevoise has identified and reported to the Company evidence of payments to business consultants, sales-related intermediaries and cash payments. The Company has analyzed...

  • Page 280
    ... allegations which relate to the German market. Power transformers are electrical equipment used as major components in electric transmission systems in order to adapt voltages. The Company is cooperating in the ongoing investigation with the European Commission and the German Antitrust Authority...

  • Page 281
    ... filed in Israel to commence a class action based on the fines imposed by the European Commission for alleged antitrust violations in the high-voltage gas-insulated switchgear market. Thirteen companies have been named as defendants in the suit and motion, among them Siemens AG Germany, Siemens AG...

  • Page 282
    ... arose in 2006 between the Company and Qisda concerning the calculation of the purchase price. From September 2006 onwards, several subsidiaries in different countries used by Qisda for purposes of the acquisition of various business assets from the Company filed for insolvency protection and failed...

  • Page 283
    ... the significance of financial instruments for Siemens and provides additional information on balance sheet items that contain financial instruments. The following table presents the carrying amounts of each category of financial assets and liabilities: September 30, 2008 Financial assets: Loans and...

  • Page 284
    ... sheet date. The fair value of unquoted notes and bonds, loans from banks and other financial indebtedness, obligations under finance leases as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt of similar terms and...

  • Page 285
    ... on forward exchange rates. Currency options are valued on the basis of quoted market prices or on estimates based on option pricing models. Credit default swaps - The fair value of credit default swaps is calculated by comparing discounted expected future cash flows using current bank conditions...

  • Page 286
    ... 30, 2008, the right to sell or re-pledge the collateral has not been exercised. The Company did not pledge any financial or non-financial assets as collateral during the fiscal year 2008. 32 Derivative financial instruments and hedging activities As part of the Company's risk management program...

  • Page 287
    ... foreign-currency derivatives are reported in Cost of goods sold and services rendered in the Consolidated Statements of Income. Hedging activities The Company's operating units applied hedge accounting for certain significant anticipated transactions and firm commitments denominated in foreign...

  • Page 288
    ... into Cost of goods sold and services rendered during the year ended September 30, 2009, when the hedged forecasted foreign-currency denominated sales and purchases occur. As of September 30, 2008, the maximum length of time over which the Company is hedging its future cash flows associated with...

  • Page 289
    ... and â,¬20, respectively. Fair value hedges of available-for-sale financial assets During the years ended September 30, 2008 and 2007, the Company had applied fair value hedge accounting for certain fixed-rate available-for-sale financial assets. However, fair value hedge accounting was terminated...

  • Page 290
    ... and entities. SFS holds a minor trading portfolio which is subject to tight limits. As of September 30, 2008, it has a value-at-risk close to zero. Within the various methodologies to analyze and manage risk, Siemens implemented a system based on "sensitivity analysis". This tool enables the risk...

  • Page 291
    ... to the entities: forward contracts, currency put and call options and stop-loss orders. Hedging transactions in the global financial markets are carried out by SFS as exclusive service provider for all Siemens entities on behalf of Corporate Treasury. SFS executes hedging instruments for hedge...

  • Page 292
    ... analysis. Effects from currency fluctuations on the translation of net asset amounts into Euro are reflected in the Company's consolidated equity position. Interest rate risk Siemens' interest rate risk exposure is mainly related to debt obligations like bonds, loans, commercial paper programs...

  • Page 293
    ... suppliers and settling finance lease obligations. Beyond effective working capital and cash management, Siemens mitigates liquidity risk by arranged borrowing facilities with highly rated financial institutions, via a medium-term notes program and via an established global commercial papers program...

  • Page 294
    ... amount and is used for internal corporate finance management as well as external communication with investors, analysts and rating agencies. It results from the total amount of cash and cash equivalents as well as current available-for-sale financial assets traded in an active market, less the...

  • Page 295
    ... not successful. The current global financial crisis may cause customer default rates to increase and collateral values to decline. The effective monitoring and controlling of credit risk is a core competency of our risk management system. Corporate Treasury has implemented a binding credit policy...

  • Page 296
    ... the Company's employee share purchase program for the years ended September 30, 2008 and 2007 amounts to â,¬248 and â,¬903, respectively. Stock Option Plans Description of plans - 1999 Siemens Stock Option Plan As part of a stock option plan for members of the Managing Board, key executives and...

  • Page 297
    ...Compensation in cash shall be equal to the difference between the exercise price and the opening market price of the Company's stock on the day of exercising the stock options. The issuance of stock options to members of the Managing Board on or after October 1, 2003, has been subject to the proviso...

  • Page 298
    ...may not be transferred, sold, pledged or otherwise encumbered. Stock awards may be settled in newly issued shares of common stock of Siemens AG, treasury stock or in cash. The settlement method will be determined by the Managing Board and the Supervisory Board. Each fiscal year, the Company decides...

  • Page 299
    ...Employee share purchase program Under an employee share purchase program with compensation character, employees may purchase a limited number of shares in the Company at preferential prices once a year. Up to a stipulated date in the first quarter of each fiscal year, employees may order the shares...

  • Page 300
    ... 18,631 3,076 818 22,525 Expenses relating to pension plans and employee benefits include service costs for the period. Expected return on plan assets and interest cost are included in Financial income (expense), net. The average number of employees in fiscal years 2008 and 2007 was 420,800 and 386...

  • Page 301
    ... segments Automation and Drives (A&D), Industrial Solutions and Services (I&S), Siemens Building Technologies (SBT), OSRAM and Transportation Systems (TS). Energy is primarily combining the previous segments Power Generation (PG) and Power Transmission and Distribution (PTD). Healthcare generally...

  • Page 302
    ..., provides information and communications services primarily to customers in the commercial/industrial sector, in the service and healthcare industry as well as to the public sector. Siemens IT Solutions and Services builds and operates both discrete and large-scale information and communications...

  • Page 303
    ... of the segments. The Company's profitability measure for the Sectors, Equity Investments, and Siemens IT Solutions and Services is earnings before financing interest, certain pension costs, and income taxes (Profit) as determined by Management as the chief operating decision maker. Profit excludes...

  • Page 304
    ... IT Solutions and Services constitutes net cash provided by (used in) operating activities less additions to intangible assets and property, plant and equipment. It excludes Financing interest as well as income tax related and certain other payments and proceeds, in accordance with the Company...

  • Page 305
    ... for establishing the Siemens foundation (see Note 7). In fiscal 2007, Corporate items contains a â,¬440 fine imposed by the European Commission in connection with an antitrust investigation involving suppliers of high-voltage gas-isolated switching systems in the power transmission and distribution...

  • Page 306
    ...operations. 38 Geographic information The following table presents data by geographic region as of and for the years ended September 30, 2008 and 2007: Revenue by location of customer 2008 Europe, C.I.S., Africa Americas Asia, Australia, Middle East Siemens thereof Germany thereof foreign countries...

  • Page 307
    ... the pension plan assets and increases Pension plans and similar commitments. For information regarding the funding of our principal pension plans refer to Note 24. As of September 30, 2008, loans given to related parties amounted to â,¬91. In October 2008, Siemens received a drawdown request by...

  • Page 308
    ... financial risk management, comfort letters, employee benefit plan audits, SAS 70 reports, IT system audits that are not part of the annual audit, attestation services subject to regulatory requirements, including regulatory advice, work related to the investigation by the state prosecutor's office...

  • Page 309
    ..., Siemens completed the transfer of an 80.2% stake in Siemens Home and Office Communication Devices GmbH & Co. KG (SHC), reported in Other Operations, to ARQUES Industries AG. Effective November 17, 2008, Barbara Kux was appointed to the Siemens Managing Board. Barbara Kux will head the Supply Chain...

  • Page 310
    ... Power Holding Ltd., Switzerland (Deputy Chairman) Royal Dutch Shell plc, Netherlands Lothar Adler* Deputy Chairman of the Central Works Council, Siemens AG Date of birth: February 22, 1949 Member since: January 23, 2003 Jean-Louis Beffa (since January 24, 2008) Chairman of the Board of Directors...

  • Page 311
    Notes to Consolidated Financial Statements - Positions held by Supervisory Board members 215 HÃ¥kan Samuelsson (since January 24, 2008) Chairman of the Executive Board, MAN AG Date of birth: March 15, 1951 Member since: January 24, 2008 External positions German supervisory board positions: MAN ...

  • Page 312
    ... compliance investigation, processing reports from the law firm Debevoise & Plimpton LLP on its independent investigation and review of the internal compliance and control systems, and monitoring the Company's adherence to statutory provisions, official regulations and internal company policies.

  • Page 313
    ... of an annual strategy meeting of the Supervisory Board - discussions and resolutions of the Super visory Board on questions relating to the financial situation and structure of the Company as well as on fixed asset and financial investments. In addition, the approval of the Finance and Investment...

  • Page 314
    218 Notes to Consolidated Financial Statements - Positions held by Managing Board members Managing Board Peter Löscher President and Chief Executive Officer, Siemens AG Date of birth: September 17, 1957 First appointed: July 1, 2007 Term expires: March 31, 2012 Rudi Lamprecht (until December 31, ...

  • Page 315
    Notes to Consolidated Financial Statements - Positions held by Managing Board members 219 Managing Board committees Committees Corporate Executive Committee(1) Meetings in fiscal 2008 7 meetings Duties and responsibilities The Corporate Executive Committee comprised the President of the Managing ...

  • Page 316
    ... financial statements and management's discussion and analysis. Siemens employs extensive internal controls, company-wide uniform reporting guidelines and additional measures, including employee training and continuing education, with the intention that its financial reporting is conducted...

  • Page 317
    ... accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of...

  • Page 318
    ...in millions of euros) Net cash provided by operating activities Amortization, depreciation and impairments(4) Net cash used in investing activities Additions to intangible assets and property, plant and equipment Net cash provided by (used in) financing activities Net increase (decrease) in cash and...

  • Page 319
    ...per share from continuing operations Dividend per share Siemens stock price High Low Year-end (September 30) Siemens stock performance over prior year (in percentage points) Compared to DAX index Compared to Dow Jones STOXX index Number of shares (in millions) Market capitalization at period-end (in...

  • Page 320
    ... value of assets designated to the pension plan (plan assets) as of a specific date. B Benchmarking Business portfolio C Captive finance unit Cash conversion rate Cash flow Cash management Commercial paper Consolidated financial statements Corporate Treasury Cost of capital D Debt-to-equity...

  • Page 321
    ...I IFRS J M Joint venture Medium-term note program Moody's Investors Service N Net cash from operating and investing activities Net periodic benefit cost (NPBC) R R&D Rating Return on capital employed (ROCE) Risk management S SEC Standard & Poor's Stock options U V U.S. GAAP Volatility

  • Page 322
    ... German Corporate Governance Code Diagnostics Differences from NYSE Standards Directors' dealings Drive Technologies Earning per share Employees Energy Sector Energy Service Equity-settled awards Equity Investments Finance and Investment Committee Fit42010 Five-year summary Fossil Power Generation...

  • Page 323
    ... Solutions Information required pursuant to §315 (4) HGB and Explanatory Report International Financial Reporting Standards (IFRS) Investor Relations Key figures Legal proceedings Letter to our Shareholders Management and control structure Management's discussion and analysis (MD&A) Managing Board...

  • Page 324
    ... program Shareholder relations Siemens Caring Hands Siemens Environmental Portfolio Siemens Financial Services (SFS) Siemens IT Solutions and Services Siemens Real Estate (SRE) Siemens share Statement of the Managing Board Share-based payment Stock ownership by Managing and Supervisory Board members...

  • Page 325
    ... Annual Shareholders' Meeting - Olympiahalle, Munich, 10:00 a.m. Ex-dividend date Second-quarter financial report and Semiannual Press Conference Third-quarter financial report Annual Press Conference Annual Shareholders' Meeting for fiscal 2009 * Provisional. Updates will be posted at: www.siemens...

  • Page 326

  • Page 327
    ...V75-X-7800 Employees should be sure to include postal address and complete order data (Org-ID and cost center information). In addition to an Annual Report at the end of each fiscal year, Siemens publishes quarterly consolidated financial statements in the form of press releases. Conference calls...

  • Page 328
    ...Structure Managing Board of Siemens AG (1) Peter Löscher President and Chief Executive Officer Joe Kaeser Siegfried Russwurm Peter Y. Solmssen Corporate Development Corporate Communications and Government Affairs Corporate Finance and Controlling Siemens Financial Services Siemens IT Solutions...

  • Page 329
    ...Hermann Requardt Supply Chain Management Global Shared Services Industry Corporate Information Technology Energy Asia, Australia Healthcare Corporate Technology Healthcare Sector Hermann Requardt Cross-Sector Businesses Siemens IT Solutions and Services Christoph Kollatz Healthcare Divisions...

  • Page 330
    www.siemens.com Siemens Aktiengesellschaft Order no. A19100-F-V75-X-7600