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www.siemens.com
Annual Report 
Our path to
sustainable value creation
noch deutsche Texte

Table of contents

  • Page 1
    Our path to sustainable value creation Annual Report www.siemens.com

  • Page 2
    ... New or2ers (continuing operations) Revenue (continuing operations) Profit Total Sectors Income from continuing operations Return on capital employe2 (ROCE) (continuing operations) Capital structure 2 Free cash flow (continuing operations) Divi2en2 per share (in euros) 1 FY 2010 FY 2009 81,163 75...

  • Page 3
    ... 28 Climate change an2 energy supply 29 Globalization an2 competitiveness 30 A strong structure Directions 41 Focus on innovation-2riven growth markets 43 Get closer to our customers 46 Use the power of Siemens One Siemens 57 One Siemens: Overview 59 Framework for sustainable value creation 60...

  • Page 4
    ... the company strategy that's now enabling more than 400,000 Siemens employees around the world to channel their knowledge and skills into providing answers to the challenges of our time. In this year's Annual Report, we'd like to present three projects that showcase our pioneering role in addressing...

  • Page 5
    ... advanced drives are launching a new era in transportation. We're also building smart grids that permit the low-loss, long-distance transmission of green electricity to urban areas and developing innovative concepts for batteries that help offset power supply fluctuations by serving as mobile power...

  • Page 6
    ... Boar2 of Siemens AG From left to right: Siegfried Russwurm In2ustry, Corporate Information Technology, Africa, Mi22le East Barbara Kux Corporate Supply Chain Management, Corporate Sustainability, Global Share2 Services Hermann Requardt Healthcare, Corporate Technology Wolfgang Dehen Energy, Asia...

  • Page 7
    ... an2 Controlling, Financial Services, Siemens IT Solutions an2 Services, Equity Investments, Siemens Real Estate Peter Löscher - President and Chief Executive Officer Corporate Communications an2 Government Affairs, Corporate Development Peter Y. Solmssen Corporate Legal an2 Compliance, Americas...

  • Page 8
    ... But we don't just want to maintain our position; we want to expand it. That's why we're: > focusing on innovation- and technology-driven growth markets > strengthening our global presence to be a strong local partner to our customers around the world and > teaming up to use the power of Siemens. 8

  • Page 9
    ...company's sustainable development and capital-efficient growth. Within this framework, focus areas specify the fields we'll concentrate on in the years ahead. Our overriding aim is to continuously improve our performance vis-Ã -vis the markets and our competitors while increasing our long-term value...

  • Page 10
    ... comprising our values, sustainability, an2 market an2 technology lea2ership. For more information, see pages 14 -17. Economy, environment and society Sustainability - Our guiding principle Responsible - Excellent - Innovative Our values High-quality businesses Market and technology leadership 9

  • Page 11
    ...2emographic change, urbanization, climate change an2 globalization - that 2eman2 practical solutions. We 2rew the strategic consequences early on, rigorously orienting our portfolio towar2 these megatren2s. For further information, please turn to pages 26-31. Energy Industry Healthcare Megatrends...

  • Page 12
    ... 2oing to fully unleash the power of Siemens is provi2e2 on pages 40-47 an2 56-63. Get closer to our customers worldwide - through local entrepreneurship and local value creation Focus on innovation- and technology-driven growth markets Use the power of Siemens to further outpace our competitors...

  • Page 13
    ..., we're working every 2ay to make this vision a reality. Our vision forms the apex of our strategy pyrami2 an2 sets the course for all our activities. For more information, please turn to pages 64-65. The pioneer in Energy efficiency Industrial productivity Affordable and personalized healthcare...

  • Page 14
    ...trails. Now, as in Werner von Siemens' day, we need a strong foundation, a basis that we can build on. This foundation comprises our values, our guiding principle of sustainability and our aim to achieve market and technology leadership all around the world. 4 Introduction 64 65 66 67 Foundation...

  • Page 15
    ... pioneering spirit of our employees continues to drive our success today. Our solutions to the major challenges of our time have made us one of the world's leading technology companies. Our system of values and our strategy provide us with a framework for profitable, sustainable growth while guiding...

  • Page 16
    ... also helping give people everywhere access to a complete range of advanced medical technologies. What's more, our infrastructure solutions in the areas of mobility, power supply and water are making major contributions to improving living conditions around the world. Our Sustainability Program is...

  • Page 17
    ... a high-level panel of experts, the Siemens Sustainability Advisory Board. www.siemens.com/sustainability Market and technology leadership Size alone is no guarantee of sustainable growth. Only a company that's also a technology leader can achieve business success and profitable growth in the long...

  • Page 18
    ... the earth's deserts to meet the electricity needs of all the people on our planet for an entire year. Thanks to solar thermal technology, this energy can now be reaped without producing CO2 emissions. Siemens' first solar thermal plant will start feeding electricity into Spain's power grid in 2011.

  • Page 19

  • Page 20
    ..., CEO of our Solar Thermal Energy Business Unit, is a pioneer in the field of solar thermal power. He and several other leading experts are now working for Siemens to optimize this technology. "Siemens is focusing on innovation- and technology-driven growth markets. One prime example here is solar...

  • Page 21
    ... of the mirrors installed at the Lebrija power plant is calculated down to a fraction of a degree, maximizing the amount of solar energy that can be captured. Siemens engineer Moshe Shtamper notes, "The more precisely we work, the higher the plant's efficiency and the greater the CO2 reduction...

  • Page 22
    400 degrees Celsius That's the temperature that can be reached by the thermal oil in the receiver tubes where the sun's heat is concentrated. The hotter the oil, the more efficient the plant.

  • Page 23
    .... In addition, our electrical and automation technologies enable the efficient production of high-quality mirrors and receivers for the solar collectors. Today, there's no question that solar thermal power is a viable technology; the challenge now is to cut costs. Siemens has greatly expanded its...

  • Page 24
    50 megawatts of carbon-free electricity That's enough ecofriendly power to meet the needs of about 50,000 Spanish households.

  • Page 25
    ... business within only a few years. Now we're poised to do the same in the field of solar energy," says René Umlauft, CEO of Siemens' Renewable Energy Division. And there's no doubt that the market for solar thermal power plants is just as abuzz with activity as the plants themselves. www.siemens...

  • Page 26
    ...company strategy on the megatrends of our time, we're now well positioned to continue generating sustainable, profitable growth in the years ahead. 4 Introduction 14 Foundation 26 27 28 28 29 30 Structure Demographic change and healthcare Urbanization and sustainable development Climate change...

  • Page 27
    ...'re rising to the challenge. www.siemens.com/demographic-change Demographic change and healthcare There are now more people on earth than ever before, and life expectancy has reached an all-time high. The world's population will increase from nearly seven billion today to nine billion in 2050, and...

  • Page 28
    ... the highest level in 800,000 years. Climate change is closely linked to shifting demographics. Due to world population growth and ongoing globalization, the amount of power generated worldwide will increase more than 60 percent by 2030. Emerging and developing countries will account for two-thirds...

  • Page 29
    ... internationally. We support customers in some 190 countries, and we've had operations in the BRIC countries for over 100 years. Our aim is to manufacture cost-efficient, affordable, high-quality, customized products all over the world. We can supply global customers with simple solutions worldwide...

  • Page 30
    ... Regional Clusters. CrossSector businesses offering efficient IT and financial solutions round out our global portfolio. www.siemens.com/structure Our Energy Sector is a world-leading supplier of a wide range of products, solutions and services in the field of energy technology. We enable customers...

  • Page 31
    ... Systems, Clinical Products, Diagnostics and Customer Solutions. Our hearing instruments business will be operated as a separate unit in the future. Siemens Healthcare has about 49,000 employees worldwide and activities in more than 130 countries. In fiscal 2010, the Sector generated total revenue...

  • Page 32
    ... - A success story from China Special report 2 Get closer to our customers Shanghai is where we manufacture our entry-level SOMATOM Spirit CT scanner, and one-third of these systems are sold directly to customers in China. Some 600 SOMATOM Spirits are already in operation throughout the country...

  • Page 33

  • Page 34
    ... year of training in Beijing. Two years ago, Jiang County People's Hospital acquired the first SOMATOM Spirit CT scanner in its region. Head radiologist Dr. Zheng Jie Hua explains, "Brain scans used to take ten minutes. Thanks to the SOMATOM Spirit, the whole process - including patient positioning...

  • Page 35
    ... SOMATOM Spirit was installed at Jiang County People's Hospital two years ago, 10,000 scans have been performed without a single system failure. Regular maintenance by our service personnel ensures that we'll be able to keep up this outstanding track record in the future. "The SOMATOM Spirit is our...

  • Page 36
    99.6 percent reliability The SOMATOM Spirit is a real radiology workhorse. What sets the system apart is its user friendliness and nearly 100 percent reliability.

  • Page 37
    ..., affordable, reliable and timely-to-market. In the years ahead, about half the world's economic growth will be generated in the BRIC countries (Brazil, Russia, India and China) and the Middle East. A local value chain and direct, on-site business responsibility are vital success factors in these...

  • Page 38
    11 km2 That's how big the Shanghai International Medical Zone is. It's here, in the western part of Shanghai, that the new local headquarters of Siemens Healthcare are situated. About 700 employees, including 350 researchers and developers, work at the 35,000-squaremeter facility, where we produce ...

  • Page 39
    ... Belohlavek, product manager for the SOMATOM Spirit. "While most hospitals in Beijing are equipped with high-end systems, the focus in rural areas is on basic care." And that's exactly the kind of market we're aiming to serve with our SMART strategy (see page 43-44). www.siemens.com/healthcare We...

  • Page 40
    ... value locally - all around the world. Our vision for the future is to generate sustainable, profitable growth while outperforming our competitors. And we're poised to realize this vision - with our innovative products, solutions and services, our outstanding partners and a supply chain geared...

  • Page 41
    ... 27, 2010 stake a claim www.siemens.com/obama Focus on innovation-driven growth markets A high level of investment in research and development is essential for sustainable business growth. In fiscal 2010, we invested â,¬3.846 billion, or 5.1 percent of our total revenue, in R&D activities. About...

  • Page 42
    ...drive profitability and growth in order to achieve a sustainable increase in our company's value. In the field of solar technology, for instance, we're a major supplier of steam turbines, electrical and control technology and inverters as well as generators and cooling systems for solar power plants...

  • Page 43
    ... in highly competitive markets, our complete package of products and services is a unique selling point and a crucial decision-making factor for our local customers. Get closer to our customers In many countries around the world, we're considered a local company by customers and the general public...

  • Page 44
    ...was highly impressed by our world-class products and production processes. He called Siemens a Chinese company. to boost our growth worldwide by supplying products, solutions and services tailored to the booming entry-level market segments. Another way to strengthen long-term customer partnerships...

  • Page 45
    ... market and technology positions in all our regions and segments, we also have to benchmark our performance against that of local providers. Supplying products and services tailored to the dynamic growth markets of the emerging countries is becoming increasingly crucial to our success. While cost is...

  • Page 46
    ..., our challenging training and further education programs ensure that expertise in key positions is uniformly conveyed to employees worldwide throughout the course of their careers - because life-long learning is indispensable in a globalized world. As a global integrated technology company, we not...

  • Page 47
    .... Why? Because high ethical standards are a prerequisite for responsible business activity and the foundation of a living culture of integrity. 40 41 43 46 Directions Focus on innovation-driven growth markets Get closer to our customers Use the power of Siemens 56 One Siemens 64 Vision 47

  • Page 48
    ... Special report 3 Use the power of Siemens Electric mobility underscores the potential of a no-holds-barred approach. All across our company, engineers and researchers are working with external partners in the quest for a breakthrough in this up-andcoming field - leveraging innovative technologies...

  • Page 49

  • Page 50
    ... smooth operation. In this picture, a high-voltage power train is being examined on the vehicle test rig in Munich. Andreas Romandi heads the fleet test pilot project at our Corporate Technology Department. As part of a large-scale fleet test, Siemens employees in Erlangen and Munich, Germany are...

  • Page 51
    150 electric mobility specialists While some of our experts research, develop and test vehicle technology, others design and optimize power generation and distribution infrastructures, charging technologies and vehicle-to-grid communication systems.

  • Page 52
    120 kilometers on a single battery charge The centerpiece of each of the 100 test vehicles is an electric motor that weighs only 55 kilograms. Boasting a peak output of 125 kilowatts, the motor generates 50 kilowatts of power during continuous driving.

  • Page 53
    ... transform mobility all around the globe. And we're the only company in the world that's developing solutions for the entire energy conversion chain. Just consider this scenario: electricity generated by Siemens wind turbines could soon be transported via Siemens smart grids and easy-to-use charging...

  • Page 54
    100 Siemens test drivers We're now selecting 100 employees in Munich and Erlangen to testdrive our electric cars. Plans call for expanding the fleet test to additional company locations.

  • Page 55
    ... are no more than three companies in the world capable of successfully implementing such a project. In Europe, only one company comes to mind - and it's headquartered at Wittelsbacher Platz 2 in Munich." www.siemens.com/electromobility Siemens boasts the technology and expertise needed to spark...

  • Page 56
    ... Siemens Siemens occupies outstanding positions all around the world. The company-wide programs we've implemented over the last few years have transformed our organization and progressively strengthened our global competitiveness. Our portfolio is geared to attractive, high-growth markets. In terms...

  • Page 57
    ... capital markets and the servicing of our financial obligations while safeguarding our current credit rating. Taken together, these metrics provide a balanced framework for sustainable value creation. CONTINUOUS IMPROVEMENT The aim of One Siemens is to enhance the value of our company over the long...

  • Page 58
    ... markets One Siemens The integrated technology company Responsible - Excellent - Innovative Intensify our customer focus y ess ilit usin tabout b rofiough y / P thr nc gins cie mar effi / top al yed pit plo Caital em cyc Empower our diverse and engaged people worldwide les Use the power...

  • Page 59
    c b a d e f A h C A-C a-i Framework for sustainable value creation Strategic directions Focus areas 4 Introduction 14 Foundation 26 Structure 58 One Siemens: Overview B i g

  • Page 60
    ... technology company. A strategy rigorously geared to value creation will help us achieve this goal. The path we're following is defined by what we call our three strategic directions: focus on innovation-driven growth markets, get closer to our customers and use the power of Siemens. These strategic...

  • Page 61
    ...and future markets. Indispensible for profitability and growth, these leading positions will enable us to sustainably increase our company's value. Experience has shown that size alone is not enough. To achieve long-term success, we must also remain at the forefront of technological innovation. This...

  • Page 62
    ... system. Our more than 2,000 key account managers are providing these customers worldwide with sustainable solutions encompassing everything from routine deliveries to major infrastructure projects. After all, our success depends on customer satisfaction, which we measure using an internationally...

  • Page 63
    ...Our new Siemens Leadership Framework helps us apply uniform criteria when matching individuals' capabilities and potential with the requirements of job openings. EMPOWER OUR DIVERSE AND ENGAGED PEOPLE WORLDWIDE Global presence is our hallmark. That's why diversity is a key part of our company - and...

  • Page 64
    ... to give their best, shoulder their responsibilities and leverage their strengths can yield true pioneering achievements, whether in 1847 - the year our company was founded - or today. And it's this pioneering spirit that informs our company's vision of the technologies and key markets of tomorrow...

  • Page 65
    ...on the open seas. In the field of innovative lighting technologies, OSRAM is indisputably a pioneer. Its subsidiary OSRAM Opto Semiconductors is currently building the world's first pilot production line for organic LEDs (OLEDs) in Regensburg, Germany - driving the development of OLED technology and...

  • Page 66

  • Page 67
    Revenue growth Capital structure Capital efficiency / Profitability Financial Report

  • Page 68
    ..., Munich, 10:00 a.m. Ex-dividend date Second-quarter financial report / Semiannual Press Conference Third-quarter financial report Preliminary figures for fiscal 2011 / Press conference Annual Shareholders' Meeting for fiscal 2011 1 Provisional. Updates will be posted at www.siemens.com/financial...

  • Page 69
    ...To our shareholders 6 Report of the Supervisory Board 12 Letter to our shareholders 18 The Siemens share / Investor relations Corporate Governance 23 Corporate Governance report 29 Corporate Governance statement pursuant to §289a of the German commercial code (HGB) (part of the Combined management...

  • Page 70
    ...Continuing operations New orders Revenue Total Sectors Profit margin FY 2010 Industry Indusvry Auvomavion Drive Technologies Building Technologies OSRAM Indusvry Soluvions Mobilivy Energy Fossil Power Generavion Renewable Energy Oil & Gas Power Transmission Power Disvribuvion Healthcare 7, 8 Imaging...

  • Page 71
    ... SFS creaves value for ivs cusvomers and helps vhem svrengvhen vheir compeviviveness. As of Ocvober 1, 2010, Siemens Financial Services was renamed Financial Services. Siemens IT Soluvions and Services Revenue Profit â,¬ 4.155 billion â,¬ (537) million Siemens Financial Services Profit Total assets...

  • Page 72
    ... some of our businesses, we can look back on an extraordinarily successful fiscal year, with record results. 6 To our sbarebolders Report of tbe Supervisory Board Letter to our sbarebolders Siemens sbare / Investor relations 21 Corporate Governance 49 Combined management's discussion and...

  • Page 73
    ...the Managing Board's activities. We were directly involved in all major decisions regarding the Company. on written and oral reports, the Managing Board regularly provided us with timely and comprehensive information on Company planning and business operations as well as on the strategic development...

  • Page 74
    ... Siemens worldwide as well as the Company's financial situation and its major investment and divestment projects. The Managing Board reported regularly and comprehensively on Company planning and on the Company's strategic development, business operations and current position. The Supervisory Board...

  • Page 75
    ...the Company's business and financial position at the end of the third quarter of fiscal 2010. We also approved adjustments in the system of Managing Board compensation and corresponding changes in the sample employment contract for Managing Board members. on addition, we approved the updated Code of...

  • Page 76
    ... to treasury stock retired by the date, of the Annual Shareholders' Meeting be carried forward. 6 To our sbarebolders Report of tbe Supervisory Board Letter to our sbarebolders Siemens sbare / Investor relations 21 Corporate Governance 49 Combined management's discussion and analysis 10 6 12...

  • Page 77
    ... and employee representatives of all Siemens companies for their work. Together, they made fiscal 2010 another successful year for Siemens. For the Supervisory Board Dr. Gerhard Cromme Chairman Berlin and Munich, December 1, 2010 147 Consolidated Financial Statements 261 Additional information...

  • Page 78
    ... in fiscal 2010 - despite a business environment that is still difficult in some parts of the world - confirms that we're on the right track. 6 To our sbarebolders Report of tbe Supervisory Board Letter to our sbarebolders Siemens sbare / Investor relations 21 Corporate Governance 49 Combined...

  • Page 79
    ...and the Managing Board will propose to the Annual Shareholders' Meeting in January 2011 a dividend of â,¬2.70 - an almost 70 percent increase compared to fiscal 2009. This corresponds to a payout ratio of 46 percent, excluding the non-cash items at our Healthcare Sector. 147 Consolidated Financial...

  • Page 80
    ...in fiscal 2009 and 2010. Now we're back where we belong: at the top. In many of our businesses, we're the market leader or a very solid No. 2. 6 To our sbarebolders Report of tbe Supervisory Board Letter to our sbarebolders Siemens sbare / Investor relations 21 Corporate Governance 49 Combined...

  • Page 81
    ...orders sustain our business. We have an obligation to earn the respect of all our stakeholders - our shareholders, our employees and our customers. This obligation motivates us in our day-to-day work and promotes the long-term stability of our company. As an infrastructure provider, a major employer...

  • Page 82
    ... positions on this year's Dow Jones Sustainability Index and the Carbon Disclosure Project attest to the success of this approach. 6 To our sbarebolders Report of tbe Supervisory Board Letter to our sbarebolders Siemens sbare / Investor relations 21 Corporate Governance 49 Combined management...

  • Page 83
    ... improvement for the benefit of our customers, employees and shareholders - our new One Siemens financial target system. Charting our company's path for sustainable development in the years ahead, One Siemens defines metrics for revenue growth, capital efficiency and profitability as well as...

  • Page 84
    ... 2010. This was an increase of 22.4% over the closing price a year earlier. For shareholders who reinvested their dividends, the gain amounted to 25.4% (fiscal 2009: 1.3%). The Siemens share clearly outperformed the German and international stock markets, whose leading indices, DAX 30 and MSCI World...

  • Page 85
    ...to our investors. SHAREHOLDER STRUCTURE With some 708,000 shareholders, Siemens AG is one of the world's largest publicly owned companies. An analysis of our shareholder structure conducted in September 2010 showed that shareholders in Germany hold the largest percentage of our share capital, about...

  • Page 86
    ..., Siemens holds Sector Capital Markets Days at which the management of our Sectors informs investors and analysts about the Sectors' business strategies and market environments. PROFIT-SHARING CULTURE / STOCK-BASED COMPENSATION PROGRAMS To encourage employees to become shareholders, Siemens offers...

  • Page 87
    Corporate Governance 23 Corporafe Governance reporf 29 Corporafe Governance sfafemenf pursuanf fo §289a of fhe German commercial code (HGB) (parf of fhe Combined managemenf's discussion and analysis) 30 Compliance reporf 34 Compensafion reporf (parf of Nofes fo Consolidafed Financial Sfafemenfs)

  • Page 88
    ... Governance is the basis for all our decisionmaking and control processes and comprises responsible, value-based management and monitoring focused on long-term success, goal-oriented and efficient cooperation between the Managing and Supervisory Boards, respect for the interests of our shareholders...

  • Page 89
    ... accounting complaints and a Code of Ethics for Financial Matters; the Code of Ethics was approved in its updated version in July 2010. Managemenf and confrol sfrucfure The SuperviSory Board As a German stock corporation, Siemens is subject to German corporate law. It has a two-tier management...

  • Page 90
    ... for the Supervisory Board, the shareholder representatives 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...

  • Page 91
    ...of Siemens AG and the Consolidated Financial Statements of Siemens. It concerns itself with the Company's risk monitoring system and oversees the effectiveness of the internal control system, in particular as it relates to financial reporting, the risk management system and the internal audit system...

  • Page 92
    ...Securities Trading Act (WpHG), members of the Managing Board and the Supervisory Board are legally obliged to disclose the purchase or sale of shares of Siemens AG or financial instruments based thereon if the total value of such transactions entered into by a board member and any closely associated...

  • Page 93
    ... part of our investor relations activities, we inform our investors comprehensively about developments within the Company. For communication purposes, Siemens AG makes extensive use of the Internet: at www.siemens.com/investor, quarterly, half-yearly and annual reports, ad hoc announcements, analyst...

  • Page 94
    ... creation of a contingent capital or the repurchase and use of Siemens shares for servicing the stock option plan. Under German law, share buybacks generally require the prior authorization by shareholders. Such approval was last given at our January 26, 2010 Annual Shareholders' Meeting, and this...

  • Page 95
    ... can be accessed via the Internet at the following link: www.siemens.com/289a. A general description of the functions and operation of the Managing Board and the Supervisory Board can be found under the heading "Management and control structure" in the Corporate Governance report on pages...

  • Page 96
    ... We generate value for our Company and our stakeholders through our business activities. At the same time, we make an important contribution to sustainable development in the countries where we're key economic players. This means that we strengthen our markets and benefit not only directly from the...

  • Page 97
    ...'s leadership structure. The Chief Compliance Officer is now responsible for all operational and sales-related issues, while the individual occupying the newly created position of Chief Counsel Compliance is responsible for all legal aspects of compliance. Effective July 1, 2010, the Company...

  • Page 98
    ..., which aims to promote ethical business practices in Russia, ever since joining the IBLF in 2009. We're one of the initiative's 46 founding members, most of whom are multinational corporations headquartered in Germany. We've also launched a worldwide Siemens Integrity Initiative, with a budget of...

  • Page 99
    ... www.siemens.com/integrity-initiative. For information on legal proceedings relating to the Company in fiscal 2010, please see the "Notes to the Consolidated Financial Statements" on pages 206-213 of Part II of this Annual Report. 49 Comb)ned management's d)scuss)on and analys)s 147 Consol)dated...

  • Page 100
    ... Board, the detapls of whpch are set forth under Item 4 (page 44) of thps report, became effectpve as of October 1, 2010 and wpll be presented for the approval of the Annual Shareholders' Meetpng pn January 2011. Long-term stock-based compensation. Spnce fiscal 2006, the long-term stock-based...

  • Page 101
    ...held. Pension benefit commitments. Spnce fiscal 2005, members of the Managpng Board have been pncluded pn the Spemens Defined Contrpbutpon Benefit Plan (BSAV), the general condptpons of whpch are unpformly applpcable to all employees of Spemens AG pn Germany. The former retprement benefit system was...

  • Page 102
    ...2010, to set the varpable cash compensatpon component, the Stock Awards to be granted, and the penspon benefit contrpbutpons as follows: 6 To our shareholders 21 23 29 Corporate Governance Corporate Governance report Corporate Governance statement pursuant to §289a of the German commercial code...

  • Page 103
    ... and Alstom. Long-term stock-based compensation. For fiscal 2010, the Supervpsory Board determpned that the decpspon on the grant of Stock Awards would take account of the average earnpngs per share (baspc EPS) from contpnupng operatpons for the past three fiscal years (2008 - 2010). The earnpngs...

  • Page 104
    ... compensation (Stock Awards) and for the Share Matching Plan for current and former members of the Managing Board in accordance with IFRS in fiscal 2010 and 2009 amounted to â,¬8,266,027 and â,¬5,242,845, respectively. The following amounts pertained to the members of the Managing Board in office...

  • Page 105
    Stock-based compensation 1 (Stock Awards) 2010 Shares Fair value Stock-based compensation 1 (Stock Awards) 2009 Shares Fair value 2010 Other compensation 2 Total 2009 2010 2009...Combined management's discussion and analysis 147 Consolidated Financial Statements 261 Additional information 39

  • Page 106
    ... from the Company are provpded to members of the Managpng Board. 6 To our shareholders 21 23 29 Corporate Governance Corporate Governance report Corporate Governance statement pursuant to §289a of the German commercial code (HGB) (part of the Combined management's discussion and analysis) 30 34...

  • Page 107
    ... from the Managing Board effective at the end of the day on September 30, 2010. Stock options. Stock optpons were pssued for fiscal years 1999 through 2005 under the terms and condptpons of the 1999 and 2001 Spemens Stock Optpon Plans approved by the Annual Shareholders' Meetpngs of Spemens AG on...

  • Page 108
    ... end of the day on September 30, 2010. 5 Barbara Kux was elected a full member of the Managing Board effective November 17, 2008. 6 To our shareholders 21 23 29 Corporate Governance Corporate Governance report Corporate Governance statement pursuant to §289a of the German commercial code (HGB...

  • Page 109
    ... years. Brigitte Ederer was elected a full member of the Managing Board effective July 1, 2010. Dr. Heinrich Hiesinger resigned from the Managing Board effective at the end of the day on September 30, 2010. 49 Combined management's discussion and analysis 147 Consolidated Financial Statements...

  • Page 110
    ... to 200%) Long-term stock-based compensation component (variable from 0 to 200%) 6 To our shareholders 21 23 29 Corporate Governance Corporate Governance report Corporate Governance statement pursuant to §289a of the German commercial code (HGB) (part of the Combined management's discussion and...

  • Page 111
    ... to - at present - five competptors (ABB, General Electrpc, Phplpps, Rockwell, 300% 1 200% 1 Managing Board members President and CEO 1 Percentage of base compensation. 49 Combined management's discussion and analysis 147 Consolidated Financial Statements 261 Additional information 45

  • Page 112
    ... Board member's contract. 6 To our shareholders 21 23 29 Corporate Governance Corporate Governance report Corporate Governance statement pursuant to §289a of the German commercial code (HGB) (part of the Combined management's discussion and analysis) 30 34 Compliance report Compensation report...

  • Page 113
    2010 Fixed compensation (Amounts in â,¬) Short-term variable compensation Long-term variable compensation Total Fixed compensation Short-term variable compensation Long-term variable compensation 2009 Total Supervisory Board members serving as of September 30, 2010 Dr. Gerhard Cromme 1 Berthold ...

  • Page 114
    ... loss assocpated wpth employment functpons. The pnsurance polpcy for fiscal 2010 pncludes a deductpble for the members of the Managpng Board and the Supervpsory Board pn complpance wpth the requprements of the German Stock Corporatpon Act (AktG) and the German Corporate Governance Code whpch...

  • Page 115
    ... 2010 - Financial summary 81 Results of operations 98 Financial position 110 Net assets position 113 Overall assessment of the economic position 113 Report on post-balance sheet date events 114 Report on expected developments and associated material opportunities and risks 128 Information required...

  • Page 116
    ... of preSenTaTion We are a globally operating, integrated technology company with core activities in the fields of industry, energy and healthcare, and we occupy leading market positions worldwide in the majority of our businesses. We can look back on a successful history spanning more than 160 years...

  • Page 117
    ... Consolidated financial Statements Centrally managed portfolio activities Siemens Real Estate Corporate Items and Pensions Eliminations, Corporate Treasury and other reconciling items portfolio spans industry automation and drives products and services, building, lighting and mobility solutions...

  • Page 118
    ... IT Solutions and Services and for 14 Divisions of our Sectors. These financial measures include: new orders, revenue, profit and profit margin. For Equity Investments we report profit, and for SFS we report profit and total assets within Combined management's discussion and analysis. Free cash flow...

  • Page 119
    ... company strategy, which guides us in turning our vision into reality. Above all, we are aiming to be a market and technology leader in our businesses, based on our corporate values - to be responsible, excellent and innovative. We believe that this approach will position us to achieve sustainable...

  • Page 120
    ... comprises what we call our three strategic directions: > focusing on innovation-driven growth markets, > getting closer to our customers, and > using the power of Siemens. Through the end of fiscal 2010, we implemented our strategy through the Fit42010 program. In the context of Fit42010, we...

  • Page 121
    ... with measurable value to the customer. Siemens IT Solutions and Services is a reliable and sustainable partner in the transformation of business processes. In fiscal 2010, we launched a strategic reorientation of Siemens IT Solutions and Services aimed at strengthening the competitive position of...

  • Page 122
    ... program entails costs associated with reducing vacancy and consolidating locations, primarily at SRE. For further information, see "Results of operations - Segment information analysis - Reconciliation to Consolidated Financial Statements - Siemens Real Estate." finanCiaL performanCe meaSureS...

  • Page 123
    ... levels. For our Sectors, Divisions and for Siemens IT Solutions and Services, profit margin was calculated as the ratio of profit to revenue; except as indicated below, profit for these businesses was defined consistently with the segment measure for profitability in the "Notes to Consolidated...

  • Page 124
    ...Ã- 100% Average capital employed 1 Target: 1 minus revenue growth rate 1 2 The total of the impairment charges related to Diagnostics and the charges related to the strategic reorientation of Siemens IT Solutions and Services increased the cash conversion rate by 0.44 in fiscal 2010. The impairment...

  • Page 125
    ...introduced one Siemens - our framework for sustainable value creation (for further information, see "- Strategy - Strategy of the Siemens Group"). As part of One Siemens, we have developed a financial target system for capital-efficient growth that we believe will drive the value of our Company. Our...

  • Page 126
    ... to market maturity during fiscal 2010. Examples of successful innovations from Siemens' Environmental Portfolio in fiscal 2010 include the first high voltage direct current (HVDC) trans- 6 To our shareholders 21 Corporate Governance 49 50 78 81 98 110 113 Combined management's discussion...

  • Page 127
    ... of Siemens to highly qualified young people as a potential employer. The Siemens Center of Knowledge Interchange, in particular, is a strategic cooperation program with a global network of selected partner universities around the world that focuses on the long-term promotion of research, innovation...

  • Page 128
    ... supply network and joint product development and innovations with our key suppliers as well as an increased share of sourcing in developing markets (global value sourcing countries), in order to achieve a 6 To our shareholders 21 Corporate Governance 49 50 78 81 98 110 113 Combined management...

  • Page 129
    ... to customers. Employees are actively involved in process design and are therefore the cornerstone of a sustainable change management system. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material opportunities and risks Information...

  • Page 130
    ... Businesses have global responsibility for their business, sales and results. They are able to support customers around the world directly from their respective headquarters, especially for large contracts and projects. However, most of the Siemens customers are small and medium sized companies...

  • Page 131
    ...this program was introduced on a country level involving senior management representatives from our Regional Companies. Building long-lasting and customer-focused strategic partnerships is important for Siemens as our portfolio primarily focuses on capital goods and related services, often with long...

  • Page 132
    ... Technology head of Corporate development Strategy head of environmental protection, health management and Safety head of Corporate Communications and Government affairs Corporate human resources The Siemens Sustainability board, which is chaired by the Chief Sustainability officer, a member...

  • Page 133
    ... reduced working hour arrangements at facilities in Germany. With the help of job-securing measures, we managed to absorb short-term volume declines fairly well in fiscal 2010. However, if structural changes in our businesses prove to be more permanent and our Company 's short-term employment...

  • Page 134
    ... are shareholders think and act in a responsible and entrepreneurial way - a fundamental prerequisite for the sustainable development of our Company. For further information regarding these programs, see "Notes to Consolidated Financial Statements." Employee rights and relations to works councils...

  • Page 135
    ... second aspect is improving resource efficiency and keeping emissions as low as possible in the conduct of our own business. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material opportunities and risks Information required pursuant to...

  • Page 136
    ... and 11 more employed internally certified systems. As a result, 73% of our locations that are required to deploy a certified management system already had one in place at the end of fiscal 2009, compared to 78% a year earlier. This development was due to the ongoing integration process of recently...

  • Page 137
    ... Initial suspicion that requires further internal investigations in order to determine whether a violation occurred. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material opportunities and risks Information required pursuant to §289...

  • Page 138
    ... in order to clarify the reported incidents (fiscal 2009: 439). In fiscal 2010, Siemens has strengthened its compliance organization by focusing on operations-related tasks. The Chief Compliance Officer will manage all operations-related and sales-related topics. The newly created position of Chief...

  • Page 139
    ...global trade, is benefiting in 2010 from strong international demand for high-quality capital equipment. Despite the end of economic stimulus packages, automotive exports have also seen a substantial upturn in 2010, driven particularly by strong demand from Asia. A number of other European countries...

  • Page 140
    ... fixed investments for 2010 following a fall of 7.1% in real terms in 2009. For europe, C.i.S., africa, middle east, the region that accounts for the greatest proportion of Siemens' revenue, IHS Global Insight is forecasting that gross fixed investments will increase by only 0.6% in 2010 compared...

  • Page 141
    ...FY 2010 Copper Aluminum (HG) Steel HRC Source: London Metal Exchange (LME) for copper and aluminum, CRU HRC Germany for steel; cash prices in â,¬ per ton. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material opportunities and risks...

  • Page 142
    ... in order to reduce the price-risk in its project and product businesses, such as long-term contracting with suppliers, physical and financial hedging and price escalation clauses with customers. market development According to market research published by IHS Global Insight in July 2010, nominal...

  • Page 143
    ... investment by about 5% year-on-year. For financial services, another key sector for Siemens IT Solutions and Services, gross capital expenditure is forecasted to expand by around 6% in 2010. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated...

  • Page 144
    ...to burdens on reported income for the fiscal year. Charges for completion of staff reduction measures resulted in a loss at Siemens IT Solutions and Services, and a substantial goodwill impairment at Diagnostics resulted in lower profit for the Healthcare Sector compared to fiscal 2009. revenue (in...

  • Page 145
    ...FY 2009 Industry Sector Energy Sector Healthcare Sector 2,701 3,562 3,315 748 1,450 FY 2010 During the fourth quarter of fiscal 2010 we completed a strategic review that reassessed the medium-term growth prospects and long-term market development of the laboratory diagnostics business, and...

  • Page 146
    ... â,¬) Total Sectors Continuing operations Continuing and discontinued operations We propose to increase the dividend. The Siemens Managing Board and Supervisory Board propose a dividend of â,¬2.70 per share. The prior-year dividend was â,¬1.60 per share. dividend per share (in â,¬) fY 2010 FY 2009...

  • Page 147
    ... the region, order growth in the U.S. Year ended September 30, (in millions of â,¬) 2010 2009 % Change vs. previous year Actual Adjusted 1 Currency therein Portfolio Europe, C.I.S.2, Africa, Middle East therein Germany Americas therein U.S. Asia, Australia therein China therein India Siemens...

  • Page 148
    revenue (location of customer) Year ended September 30, (in millions of â,¬) 2010 2009 % Change vs. previous year Actual Adjusted 1 Currency therein Portfolio Europe, C.I.S.2, Africa, Middle East therein Germany Americas therein U.S. Asia, Australia therein China therein India Siemens 1 Excluding ...

  • Page 149
    ... Divisions reported double-digit revenue increases year-over-year. The Energy Sector recorded a revenue decline in the region. Higher revenue in India included double-digit increases in all Sectors. Consolidated Statements of income Year ended September 30, (in millions of â,¬) 2010 2009 % Change...

  • Page 150
    Year ended September 30, (in millions of â,¬) 2010 2009 % Change Research and development expenses as percentage of revenue Marketing, selling and general administrative expenses as percentage of revenue Other operating income Other operating expense Loss from investments accounted for using the ...

  • Page 151
    ... to a positive â,¬40 million a year earlier. For additional information regarding discontinued operations, see "Notes to Consolidated Financial Statements." 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material opportunities and risks...

  • Page 152
    .... SeGmenT informaTion anaLYSiS Sectors Industry Sector Year ended September 30, (in millions of â,¬) 2010 2009 Actual % Change Adjusted 1 Currency therein Portfolio Profit Profit margin New orders Total revenue External revenue therein: Europe, C.I.S.2, Africa, Middle East therein Germany Americas...

  • Page 153
    ... of fiscal 2010, the low-voltage switchgear business was transferred from Industry Automation to Building Technologies. Prior-year amounts were reclassified for comparison purposes. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material...

  • Page 154
    ... investing in market expansion and production capacity in coming quarters. industry Solutions reported profit of â,¬39 million in fiscal 2010, well below the prior-year level. The Division took â,¬205 million in charges related to current cost estimates for a project engagement with a local partner...

  • Page 155
    Energy Sector Year ended September 30, (in millions of â,¬) 2010 2009 Actual % Change Adjusted 1 Currency therein Portfolio Profit Profit margin New orders Total revenue External revenue therein: Europe, C.I.S.2, Africa, Middle East therein Germany Americas Asia, Australia 1 Excluding currency ...

  • Page 156
    ...revenue mix, including a higher contribution from the service business. Charges of â,¬57 million for capacity adjustments related to a shift of production capacity within the Americas region were partly offset by the Division's share in the pension curtailment gain. Order development at Fossil Power...

  • Page 157
    ... in the fiscal year. Healthcare Sector Year ended September 30, (in millions of â,¬) 2010 2009 Actual % Change Adjusted 1 Currency therein Portfolio Profit Profit margin New orders Total revenue External revenue therein: Europe, C.I.S.2, Africa, Middle East therein Germany Americas Asia, Australia...

  • Page 158
    ... estate. For further information regarding goodwill at Diagnostics, refer to "Net Assets Position" and see also "Notes to Consolidated Financial Statements." The Division recorded lower expenses related to SG&A, and results also benefited from â,¬22 million of the pension curtailment gain mentioned...

  • Page 159
    ... information on charges related to the strategic reorientation of Siemens IT Solutions and Services see "- Reconciliation to Consolidated Financial Statements - Corporate items and pensions." 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated...

  • Page 160
    ... internal services business. Total assets rose to â,¬12.506 billion, due primarily to currency translation effects. The following table provides further information on the capital structure of SFS as of September 30, 2010 and 2009: reconciliation to Consolidated financial Statements Reconciliation...

  • Page 161
    ... in refinancing costs due to lower interest rates, partly offset by changes in fair market value from interest rate derivatives. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material opportunities and risks Information required pursuant...

  • Page 162
    ...fiscal years ended September 30, 2010 and 2009 Profit 1 Income (loss) from investments accounted for using the equity method, net 2 2010 2009 (in millions of â,¬) 2010 2009 Sectors and divisions industry Sector Industry Automation Drive Technologies Building Technologies OSRAM Industry Solutions...

  • Page 163
    ... years ended September 30, 2010 and 2009, respectively. Due to rounding, numbers presented may not add up precisely to totals provided. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material opportunities and risks Information required...

  • Page 164
    ...Diagnostics Division." Liquidity management Our principal source of financing is cash inflows from operating activities. Corporate Treasury generally manages cash and cash equivalents for the Siemens Group and has primary responsibility for raising funds in the capital markets for the Siemens Group...

  • Page 165
    ... product diversification as well as our competitive market position. Our current corporate credit ratings from Moody 's Investors Service and Standard & Poor's are noted as follows: During fiscal 2010 Moody 's Investors Service made no changes in Siemens' credit rating. Moody 's applied a long-term...

  • Page 166
    ...% in the prior year. For more detailed information on the change in total equity and on the issuance and repayment of debt, see "Notes to Consolidated Financial Statements," "Net assets position" and " - Capital resources and requirements." 6 To our shareholders 21 Corporate Governance 49 50 78...

  • Page 167
    ... management's discussion and analysis. Short-term debt Plus: Long-term debt 1 Less: Cash and cash equivalents Less: Current available for sale financial assets net debt Less: SFS Debt Plus: Funded status principal pension benefit plans Plus: Funded status principal other post-employment benefit...

  • Page 168
    ..."Consolidated Statements of Cash Flow" in the "Notes to Consolidated Financial Statements." Other companies that report Free cash flow may define and calculate this measure differently. 3 Following a change in accounting pronouncements as of the beginning of fiscal year 2010 Additions to assets held...

  • Page 169
    ... balance sheet dates to fund our business operations and pay for near-term obligations. Total liquidity comprises Cash and cash equivalents as well as current Available-for-sale financial assets, as stated on the Consolidated Statements of Financial Position. net debt results from total debt...

  • Page 170
    ... time. The changes in Net debt from fiscal 2009 to 2010 may also be presented as follows: Changes in net debt 1 (in millions of â,¬) 2,823 107 5,560 2,768 9,309 Net debt at September 30, 2009 9,447 Less: Net cash provided by operating activities Plus: Net cash used in investing activities...

  • Page 171
    ...the prior year. â,¬1.724 billion of our investments in intangible assets and PPE relates to our three Sectors and â,¬612 million relates mainly to SRE and our Cross-Sector Businesses. For further information, see "Notes to Consolidated Financial Statements." 1.6 1.82 1.0 0.6 0.3 2011 2012 2013 2014...

  • Page 172
    ..., particularly at Drive Technologies. Healthcare used its capital expenditure of â,¬328 million in fiscal 2010 primarily for development of software and IT solutions, mainly at Imaging & IT. dividends - At the Annual Shareholders' Meeting scheduled for January 25, 2011, the Managing Board, in...

  • Page 173
    ... at the time, accrued service and interest costs, and the investment performance of our pension plan assets. For additional information (in millions of â,¬) Shortterm Longterm Total Notes and bonds Loans from banks Other financial indebtedness Obligations under finance leases Total debt 2,062...

  • Page 174
    ... Consolidated Financial Statements." pension plan funding The defined benefit obligation (DBO) of Siemens' principal pension benefit plans, which considers future compensation and pension increases, amounted to â,¬29.7 billion on September 30, 2010, compared to â,¬25.1 billion on September 30, 2009...

  • Page 175
    ... 30, 2010, compared to â,¬1.1 billion on September 30, 2009. For more information on Siemens' pension plans, see "Notes to Consolidated Financial Statements." 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material opportunities and risks...

  • Page 176
    ...managed portfolio activities. Long-term assets at the respective balance sheet dates were as follows: (in millions of â,¬) September 30, 2010 2009 Goodwill Other intangible assets Property, plant and equipment Investments accounted for using the equity method Other financial assets 1 Deferred tax...

  • Page 177
    related to our stake in NSN and by the sale of our 25% minority stake in Dräger Medical AG & Co. KG to its majority shareholder Drägerwerk AG & Co. KGaA. The increase in Other financial assets resulted mainly from changes in the non-current portion of the fair market values of derivatives used for...

  • Page 178
    ... assets and Total equity attributable to shareholders of Siemens AG increased year-over-year, our equity ratio excluding non-controlling interests remained at 28%. For additional information on our net assets position, see "Notes to Consolidated Financial Statements." As a result of a strategic...

  • Page 179
    ... of special significance have occurred that are expected to have a material impact on the financial position or results of operations of Siemens. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material opportunities and risks Information...

  • Page 180
    ... each of the two following years. With an increase of 10.1% in 2010, manufacturing value added is recovering rapidly from a sharp downturn during the recession. IHS Global Insight forecasts that growth rates for this key indicator will return to more normal levels in 2011 and 2012, with figures of...

  • Page 181
    ... business activities for fiscal 2011, see "Notes to Consolidated Financial Statements." We expect these steps to help reduce effects on income related to currency in fiscal 2011. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated material...

  • Page 182
    ...-driven wind power market and in major emerging markets, such as India. The Healthcare Sector has a tight control on investment and the main area continues to be the development of software and IT solutions. With our ability to generate positive operating cash flows, our total liquidity of â,¬14...

  • Page 183
    ... in fiscal 2011 results compared to the loss reported for fiscal 2010, we do not expect the business to deliver results typical of its industry within the forecast horizon. We expect that activities at the Corporate level related to establishing Siemens IT Solutions and Services as a legally...

  • Page 184
    ... the worldwide accepted "Enterprise Risk Management - Integrated Framework" developed by the "Committee of Sponsoring Organizations of the Treadway Commission" (COSO). It connects the ERM process with a company 's financial reporting process and is closely integrated into the internal control system...

  • Page 185
    ... our business, our financial condition and results of operations, the price of our shares and American depository shares (ADS), and our reputation. The order in which the risks are presented in each of the four categories reflects the currently estimated relative exposure for Siemens associated with...

  • Page 186
    ... regarding the level of advance payments by our customers relating to long-term projects, may become less favorable, which could negatively impact our cash flows. Additionally, if custom- our businesses must keep pace with technological changes and develop new products and services to remain...

  • Page 187
    ... adverse business developments increases in times of difficult or uncertain macroeconomic conditions. For example, as a result of a strategic review which was finalized in the fourth quarter of fiscal 2010, the Diagnostics Division's medium-term growth prospects and the long-term market development...

  • Page 188
    ...research and development to supply chain management, production, marketing, sales and services. Operational failures in our value chain processes could result in quality problems or potential product, labor safety, regulatory or environmental risks. Such risks are particularly present in relation to...

  • Page 189
    ...or capital markets, such as limited availability of funds (particularly U.S. dollar funds), may increase our overall cost of funding. The worldwide financial market crisis has had a global impact on the capital markets. These developments and the higher risk awareness of investors and of governments...

  • Page 190
    ..., a change in discount rates or in the expected return on plan assets assumptions may result in changes in the net periodic benefit cost in the following financial year. In order to comply with local pension regulations in selected foreign countries, we may face a risk of increasing cash outflows to...

  • Page 191
    ... on our business, financial condition and results of operations, the price of our shares and ADS and our reputation. Additionally, 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...

  • Page 192
    ... research and service center in Karlstein, Germany. For further information, see "Notes to Consolidated Financial Statements." We establish provisions for environmental risks when (1) we have a present obligation as a result of a past event; (2) it is probable that an outflow of resources embodying...

  • Page 193
    ... risk. For further information regarding our supply chain management, see "Business and operating environment - Value chain - Supply chain management." Through selective acquisitions and equity investments we constantly strive to strengthen our leading technology position, access additional market...

  • Page 194
    ...date of birth, or in the case of legal entities, their company name, business address and registered offices. All shares confer the same rights and obligations. At the Annual Shareholders' Meeting, each share of stock has one vote and accounts for the shareholders' proportionate share in the Company...

  • Page 195
    ...directly or indirectly holding 10% or more of the voting rights. ShareS WiTh SpeCiaL riGhTS ConferrinG poWerS of ConTroL There are no shares with special rights conferring powers of control. 147 261 113 114 128 Report on post-balance sheet date events Report on expected developments and associated...

  • Page 196
    ... not fall below 80% of the market price of Siemens stock as quoted by the Xetra trading system (or a comparable successor system). The calculation shall be based on the mean closing price over the ten trading days prior to the date on which the final Managing Board resolution is reached to submit an...

  • Page 197
    ...value shares registered in the names of the holders (Conditional Capital 2010). For further information on the conditional capitals of the Company as of September 30, 2010 see "Notes to Consolidated Financial Statements." Based on a resolution of the Annual Shareholders' Meeting on January 27, 2009...

  • Page 198
    ... of the Managing Board of Siemens AG for purchase under the same terms and conditions as those offered to the Company 's employees, or to grant and transfer them with a vesting period of at least two years. As of September 30, 2010, the Company held 44,366,416 (2009: 47,777,661) shares of stock in...

  • Page 199
    ... code (HGB) and explanatory report The overarching objective of our accounting-related internal control and risk management system is to ensure that financial reporting is conducted in a proper manner such that the Consolidated Financial Statements and the Management's discussion and analysis...

  • Page 200
    ... the Consolidated Financial Statements and Management's discussion and analysis. Where necessary, our Financial Reporting Guidelines and the chart of accounts are adjusted accordingly. In quarterly closing letters, accounting departments of Siemens AG and its subsidiaries are informed about current...

  • Page 201
    ... this Annual Report for the fiscal year 2010. addiTionaL informaTion reLaTed To The SeparaTe finanCiaL STaTemenTS (hGb) of SiemenS aG Siemens AG as the parent company of the Siemens Group is integrated into the company-wide accounting-related internal control system described above. Generally, the...

  • Page 202
    ... One Siemens September 30, 2009 Capital employed Total equity Plus: Long-term debt Plus: Short-term debt and current maturities of long-term debt Less: Cash and cash equivalents Plus: Pension plans and similar commitments Less: Siemens Financial Services (SFS) Debt Less: Fair value hedge accounting...

  • Page 203
    ...â,¬) 2010 2009 2010 One Siemens September 30, 2009 Short-term debt Plus: Long-term debt 1 Less: Cash and cash equivalents Less: Current available for sale financial assets net debt Less: SFS Debt Plus: Funded status principal pension benefit plans Plus: Funded status principal other post-employment...

  • Page 204
    ... result as well as Retained earnings as of October 1, 2009. buSineSS and eConomiC enVironmenT Siemens AG, whose head offices are situated in Berlin and Munich, is the parent company of the Siemens group. The industrial and financial activities of the group are brought together in a large investment...

  • Page 205
    ... GmbH (BSH), Enterprise Networks Holding, B.V. (EN), and GIG Holding GmbH (formerly ARQUES Value Development GmbH). Real estate assets belonging to Siemens are managed by the Siemens Real Estate (SRE) unit and leased to the segments. The group head office with the central corporate units responsible...

  • Page 206
    ... service center in Karlstein, Germany. Further, Siemens AG recorded expenses totaling â,¬190 million related to an increase of the liability for pension plans and similar commitments, following new measurement principles under BilMoG. These measure- 6 To our shareholders 21 Corporate Governance...

  • Page 207
    ... 2009. As the parent company of the Siemens group, Siemens AG is integrated into the group's financial reporting and control systems, which are based on the International Financial Reporting Standards (IFRS). Further information in this regard can be found in "Business and operating environment...

  • Page 208
    ... year 2010 existing at the date of the Annual Shareholders' Meeting, and the remaining amount to be carried forward. The prior-year dividend was â,¬1.60 per share. uSe of finanCiaL inSTrumenTS Siemens AG carries out a central role within the Siemens group in the management of financial market risks...

  • Page 209
    ... projects with universities, research institutes, and partners in industry, as well as in publicly funded programs such as those of the European Union and the German Federal Ministry of Education and Research. More information can be found in "Business and operating environment - Value Chain...

  • Page 210
    ...and associated material opportunities and risks - Report on expected developments." reporT on poST-baLanCe SheeT daTe eVenTS As of October 1, 2010, Siemens IT Solutions and Services was carved out in a separate legal entity wholly owned by Siemens AG. riSK and riSK manaGemenT As the parent company...

  • Page 211
    ... of pension plan assets resulting in unexpected changes in the funded status of Siemens' pension and post-employment benefit plans. Any increase in market volatility, further deterioration in the capital markets, decline in the conditions for the credit business, continued uncertainty related to...

  • Page 212

  • Page 213
    ... Statements of Financial Position 151 Consolidated Statements of Cash Flow 152 Consolidated Statements of Changes in Equity 154 Notes to Consolidated Financial Statements Due to rounding, numbers presented throughout these Consolidated Financial Statements may not add up precisely to the totals...

  • Page 214
    ... per share amounts in â,¬) Note 2010 2009 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 expense Loss from investments accounted for using the equity method...

  • Page 215
    ... Fiscal years ended September 30, (in millions of â,¬) Note 2010 2009 Net income Currency translation differences Available-for-sale financial assets Derivative financial instruments Actuarial gains and losses on pension plans and similar commitments Other comprehensive income, net of tax 1 Total...

  • Page 216
    ... associated with assets classified as held for disposal Total current liabilities Long-term debt Pension plans and similar commitments Deferred tax liabilities Provisions Other financial liabilities 1 Other liabilities Total liabilities Equity Common stock, no par value 2 Additional paid-in capital...

  • Page 217
    ...the current year presentation. 2 Pension related interest income (expense) is reclassified retrospectively to conform to the current year presentation. 3 Investments include equity instruments either classified as non-current available-for-sale financial assets, accounted for using the equity method...

  • Page 218
    Consolidated Statements of Changes in Equity For the fiscal years ended September 30, 2010 and 2009 Common stock (in millions of â,¬) Additional paid-in capital Retained earnings Balance at October 1, 2008 Net income Other comprehensive income, net of tax Dividends Issuance of common stock and ...

  • Page 219
    ... income Other components of equity Currency translation differences Available-for-sale financial assets Derivative financial instruments Total Treasury shares at cost Total equity attributable to shareholders of Siemens AG Non-controlling interests Total equity (789) - (505 1,294) 4 - 72...

  • Page 220
    ... additions to intangible assets and property, plant and equipment. Free cash flow of the Sectors, Equity Investments, Siemens IT Solutions and Services and Centrally managed portfolio activities primarily exclude income tax, financing interest and certain pension related payments and proceeds. Free...

  • Page 221
    ... presentation in the Consolidated Statements of Cash Flow, with the beginning of fiscal year 2010 additions to intangible assets and property, plant and equipment are reported excluding additions to assets held for rental in operating leases. Additions to assets held for rental in operating leases...

  • Page 222
    ... reports its Consolidated Financial Statements in euros (â,¬). Siemens is a German based multinational corporation with a balanced business portfolio of activities predominantly in the field of electronics and electrical engineering (for further information see Note 37). The Consolidated Financial...

  • Page 223
    ...profit or loss. The exchange rates of the significant currencies of non-euro countries used in the preparation of the Consolidated Financial Statements were as follows: Year-end exchange rate â,¬1 quoted into currencies specified below September 30, Currency ISO Code 2010 2009 Annual average rate...

  • Page 224
    ...to be compensated. Government grants for future expenses are recorded as deferred income. Product-related expenses and losses from onerous contracts - Provisions for estimated costs related to product warranties are recorded in Cost of goods sold and services rendered at the time the related sale is...

  • Page 225
    ... 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 the cost of materials, direct...

  • Page 226
    ... course of business, less the estimated costs of completion and selling expenses. Defined benefit plans - Siemens measures the entitlements of the defined benefit plans by applying the projected unit credit method. The approach reflects an actuarially calculated net present value of the future...

  • Page 227
    ... service cost and any asset ceiling, under pension liability or pension asset. Actuarial gains and losses, resulting for example from an adjustment of the discount rate or from a difference between actual and expected return on plan assets, are recognized by Siemens in the Consolidated Statements...

  • Page 228
    ... from the date of acquisition to be cash equivalents. Cash and cash equivalents are measured at cost. Avaplable-for-sale financpal assets - Investments in equity instruments, debt instruments and fund shares are all classified as available-for-sale financial assets and are measured at fair value, if...

  • Page 229
    ... classified as a liability at the acquisition date are recognized in profit and loss. Acquisition-related costs are expensed in the period incurred. Major changes in relation to IAS 27 (2008) relate to the accounting for transactions which do not result in a change of control as well as to those...

  • Page 230
    ... Industry, conduct a significant portion of their business under construction contracts with customers. The Company generally accounts for construction projects using the percentage-of-completion method, recognizing revenue as performance on contract progresses. Certain long-term service contracts...

  • Page 231
    ...In the three months ended September 30, 2009, NSN, presented in the segment Equity Investments was tested for im- Employee benefit accountpng - Pension plans and similar commitments - Obligations for pension and other post-employment benefits and related net periodic benefit costs are determined in...

  • Page 232
    ... number of acquisitions. These acquisitions have been accounted for under the acquisition method and have been included in the Company 's Consolidated Financial Statements since the date of acquisition. aa) Acquisitions in fiscal 2010 At the beginning of November 2009, Siemens acquired a controlling...

  • Page 233
    ...average useful life of 4 years. The acquired Solel business contributed revenues of â,¬92 and a net loss of â,¬53 (including purchase price accounting effects and integration costs) to the group for the period from acquisition to September 30, 2010. If the acquisition had occurred on October 1, 2009...

  • Page 234
    ... (loss) from investments accounted for using the equity method, net, see Note 8. The net results of discontinued operations presented in the Consolidated Statements of Income reflecting the former Com activities consist of the following components: Year ended September 30, 2010 2009 Revenue Costs...

  • Page 235
    ... in transfer companies. In fiscal 2010, restructuring costs comprised termination benefits of â,¬399, which were reported at Siemens IT Solutions and Services. In fiscal 2008, the SG&A program was initiated, which aimed at reducing marketing, selling, general and administrative expense (SG...

  • Page 236
    ... three months ended September 30, 2009, NSN, presented in the segment Equity Investments, was tested for impairment. The main triggering events were NSN's loss of market share as well as a decrease in the product business operations resulting in significantly adjusted financial forecasts of future...

  • Page 237
    ... corporate debt, and related hedging activities, as well as interest income on corporate assets. Interest income (expense) other than pension includes the following with respect to financial assets (financial liabilities) not at fair value through profit or loss: Year ended September 30, 2010 2009...

  • Page 238
    ... Increase (decrease) in income taxes resulting from: Non-deductible losses and expenses Tax-free income Taxes for prior years Change in realizability of deferred tax assets and tax credits Change in tax rates Foreign tax rate differential Tax effect of investments accounted for using the equity...

  • Page 239
    ...30, 2010 2009 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: Financial assets Other intangible assets Property...

  • Page 240
    ... from finance leases), which belong to the class of Financial assets and liabilities measured at (amortized) cost, changed as follows: September 30, 2009 Cost Fair Value Unrealized gain Unrealized loss Year ended September 30, 2010 2009 Equity instruments Debt instruments Fund shares 7 109 38...

  • Page 241
    ...value of minimum future lease payments receivable Within 1 year 1 to 5 years Thereafter 2010 September 30, 2009 5,680 2,187 3,308 185 4,726 1,785 2,790 151 5,732 2,117 3,420 195 4,741 1,707 2,881 153 Investments in finance leases primarily relate to equipment for information technology and office...

  • Page 242
    ...fiscal 2010 and 2009. Raw materials and supplies, work in process as well as finished goods and products held for resale are valued at the lower of acquisition / production cost and net realizable value. The respective write-downs, as compared to prior year, increased by â,¬128 (fiscal 2009 increase...

  • Page 243
    ... Acquisitions and purchase accounting adjustments Dispositions and reclassifications to assets classified as held for disposal Impairments Net book value as of 9 / 30 / 2010 Sectors Industry Energy Healthcare Cross-Sector Buspnesses Siemens IT Solutions and Services Siemens Financial Services...

  • Page 244
    ...in fiscal 2009. Where possible, reference to market prices is made. For the purpose of estimating the fair value less costs to sell of the Divisions and Cross-Sector Businesses, cash flows were projected for the next five years based on past experience, actual operating results and management's best...

  • Page 245
    ...related development activities along with increasing competition. The adjusted business plan resulting from the strategic review was the basis for the annual goodwill impairment test in the three months ended September 30, 2010. The annual test for impairment of goodwill of the Diagnostics Division...

  • Page 246
    ...and services rendered, Research and development expenses or Marketing, selling and general administrative expenses, depending on the use of the asset. As of September 30, 2010 and 2009, contractual commitments for purchases of other intangible assets amount to â,¬44 and â,¬35. 18 - Property, plant...

  • Page 247
    ... leases are as follows: Payments from lessees under operating leases primarily relate to buildings, data processing and phone equipment as well as to medical equipment. Total contingent rent recognized in income in fiscal 2010 and 2009 amounts to â,¬233 and â,¬182. Investment property Investment...

  • Page 248
    ... ownership held by Siemens. 2010 2009 Revenue Net income (loss) 19,257 (861) 19,557 (2,686) Information related to the Statements of Financial Position is presented as of the date used in applying the equity method of accounting. September 30, 2010 2009 Total assets Total liabilities 18,005...

  • Page 249
    ...30, 2010 2009 Other employee related costs primarily includes vacation payments, accrued overtime and service anniversary awards, severance payments, as well as liabilities related to the Siemens IT Solutions and Services restructuring and the SG&A program, see Note 5. 23 - Debt September 30, 2010...

  • Page 250
    ... a maturity of generally less than 90 days. b) Notes and bonds Debt Issuance Program, previously Euro Medium-term note program The Company has agreements with financial institutions under which it may issue medium-term notes up to â,¬15.0 billion as of September 30, 2010 and 2009, respectively. As...

  • Page 251
    ... for general business purposes. As of September 30, 2010 and 2009, the aggregate amounts of indebtedness maturing during the next five years and thereafter are as follows (excluding finance leases which are disclosed separately): 147 148 149 150 151 Consolidated Financial Statements Consolidated...

  • Page 252
    ...in the change in market value of the property. Therefore, these transactions have been accounted for as financing obligations. These real estate properties are carried on the Company 's Consolidated Statements of Financial Position and no sale and profit has been recognized. For the fiscal 2010 real...

  • Page 253
    ... on eligible compensation levels and / or ranking within the Company hierarchy and years of service. Retirement benefits under these plans vary depending on legal, fiscal and economic requirements in each country. The majority of Siemens' active employees in Germany participate in a pension scheme...

  • Page 254
    ... pension benefit plans to the amounts recognized in the Consolidated Statements of Financial Position is as follows: September 30, 2010 Total Domestic Foreign Total September 30, 2009 Domestic Foreign Fair value of plan assets Total defined benefit obligation Defined benefit obligation (funded...

  • Page 255
    ... information by country is provided in the following table: September 30, 2010 Total Domestic Foreign Total September 30, 2009 Domestic Foreign Change in defined benefit obligations: Defined benefit obligation at beginning of year Foreign currency exchange rate changes Service cost Interest cost...

  • Page 256
    ... information by country: September 30, 2010 Total Domestic Foreign Total September 30, 2009 Domestic Foreign Change in plan assets: Fair value of plan assets at beginning of year Foreign currency exchange rate changes Expected return on plan assets Actuarial gains (losses) on plan assets...

  • Page 257
    ..., 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...

  • Page 258
    ...point / â,¬500 increase decrease Discount rate Expected return on plan assets Rate of compensation increase Rate of pension progression Fair value of plan assets 47 (210) 21 159 (32) (67) 210 (20) (124) 32 6 To our shareholders 21 Corporate Governance 49 Combined management's discussion and...

  • Page 259
    ... that may affect asset values in order to initiate appropriate measures at a very early stage. The plan assets include own shares and debt instruments of the Company with a fair value of â,¬68 and â,¬50 as of September 30, 2010 and 2009. As of September 30, 2009 plan assets included domestic real...

  • Page 260
    ... pension benefit plans during the years ended September 30, 2010 and 2009, and expected pension payments for the next five years and in the aggregate for the five years thereafter (undiscounted): Total Domestic Foreign Penspon benefits papd 2009 2010 Expected penspon payments 2011 2012 2013...

  • Page 261
    ... the Consolidated Statements of Financial Position are as follows: September 30, 2010 Total Domestic Foreign Total September 30, 2009 Domestic Foreign Fair value of plan assets Total defined benefit obligation Defined benefit obligation (funded) Defined benefit obligation (unfunded) Funded status...

  • Page 262
    ...plan assets in fiscal 2010 and 2009: September 30, 2010 Total Domestic Foreign Total September 30, 2009 Domestic Foreign Change in plan assets: Fair value of plan assets at beginning of year Actual return on plan assets Employer contributions Benefits paid Fapr value of plan assets at end of year...

  • Page 263
    ... benefits are generally not funded, such payments will impact the current operating cash flow of the Company. 147 148 149 150 151 Consolidated Financial Statements Consolidated Statements of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Financial Position...

  • Page 264
    ... Provisions Warranties Order related losses and risks Asset retirement obligations Other Total Balance as of October 1, 2009 Additions Usage Reversals Translation differences Accretion expense and effect of changes in discount rates Other changes Balance as of September 30, 2010 Thereof non-current...

  • Page 265
    Warranties Order related losses and risks Asset retirement obligations Other Total Balance as of October 1, 2008 Additions Usage Reversals Translation differences Accretion expense and effect of changes in discount rates Other changes Balance as of September 30, 2009 Thereof non-current 2,744 ...

  • Page 266
    ... 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 2010 and 2009...

  • Page 267
    ... and 1999 Siemens Stock Option Plans. The last tranche of stock options expires in November 2010 and from that date on, no further shares are to be issued - see Note 34 for further information on stock options. c) Conditional Capital provided to issue shares to settle claims offered to former SNI AG...

  • Page 268
    ... of the Supervisory Board sold to third parties against payment in cash if the price (excluding incidental transaction costs) at which such Siemens shares are to be sold is not significantly lower than the market price of the Siemens stock on the trading day, as determined during the opening auction...

  • Page 269
    ... of Siemens AG as reported in its statutory financial statements determined in accordance with the German Commercial Code (Handelsgesetzbuch). In fiscal 2010, Siemens AG management distributed an ordinary dividend of â,¬1,388 (â,¬1.60 per share) of the fiscal 2009 earnings to its shareholders. In...

  • Page 270
    ..., 2010 2009 Short-term debt Plus: Long-term debt 1 Less: Cash and cash equivalents Less: Current available-for-sale financial assets Net debt Less: SFS debt Plus: Funded status principal pension benefit plans Plus: Funded status principal other post employment benefit plans Plus: Credit guarantees...

  • Page 271
    ...equity of various companies of â,¬470 and â,¬294, respectively. The September 30, 2010 and 2009 balance, includes a conditional commitment to make capital contributions to EN of â,¬172, representing our proportionate share in EN. The committed amount is due upon EN making acquisitions or investments...

  • Page 272
    ... Munich, Germany, and in Washington, DC. The Munich public prosecutor announced the termination of legal proceedings alleging the failure of the former Managing Board of Siemens AG to fulfill its supervisory duties. The investigations of former members of the Managing Board, employees of the Company...

  • Page 273
    ... a World Bank-financed project in Russia. On July 2, 2009, the Company entered into a global settlement agreement with the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation and the Multilateral Investment Guarantee...

  • Page 274
    ...'s Healthcare business. It is alleged that the employees colluded with employees of a public hospital to overcharge for the delivery of medical equipment in the period before 2007. On December 30, 2009, the ACC sent a request for information to Siemens Bangladesh Ltd. (Siemens Bangladesh) related to...

  • Page 275
    ... that occurred in the course of international business transactions in the years 2003 to 2006 and the resulting financial burdens for the Company. On December 2, 2009 Siemens reached a settlement with nine out of eleven former members of the Managing and Supervisory Board. As required by law, the...

  • Page 276
    ... 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. On October 7, 2009...

  • Page 277
    ...11, 2010, the Italian Antitrust Authority searched the premises of several healthcare companies, including Siemens Healthcare Diagnostics S.r.l. and Siemens S.p.A., in response to allegations of anti-competitive agreements relating to a 2009 public tender process for the supply of medical equipment...

  • Page 278
    ... access to the public prosecutor's files in Greece. At the end of July 2010, OTE expanded its claim and requested payment of damages by Siemens AG of at least â,¬57.07 to OTE for alleged bribery payments to OTE-employees. Siemens AG is currently preparing its written statement of defense relating...

  • Page 279
    ... U.S. Department of Defense conducted a search at the premises of Siemens Medical Solutions USA, Inc. in Malvern, Pennsylvania, in connection with an investigation relating to a Siemens contract with the U.S. Department of Defense for the provision of medical equipment. In June 2009, Siemens AG and...

  • Page 280
    ..., 2010 Fair value Carrying amount September 30, 2009 Fair value Carrying amount Financial assets measured at cost or amortized cost Trade and other receivables 1 Receivables from finance leases Cash and cash equivalents Other non-derivative financial assets Available-for-sale financial assets 2 14...

  • Page 281
    ...-for-sale financial assets are derived from quoted market prices in active markets. The Company limits default risks in derivative instruments by a careful counterparty selection. Derivative instruments are principally transacted with financial institutions with investment grade credit ratings. The...

  • Page 282
    ...: Year ended September 30, September 30, 2010 Level 1 Level 2 Level 3 Total 2010 2009 Cash and cash equivalents Available-for-sale financial assets Loans and receivables (34) 16 (87) (283) (665) 7 (44) (419) 302 34 Financial assets measured at fair value Available-for-sale financial assets...

  • Page 283
    ...Consolidated Statements of Financial Position, either as Other current financial assets / liabilities or Other financial assets / liabilities, and changes in fair values are charged to net income (loss). The Company also has foreign-currency derivative instruments, which are embedded in certain sale...

  • Page 284
    ... relating to interest rate swaps used in offsetting relationships are also recorded in Financial income (expense), net. Fair value hedges of fixed-rate debt obligations Under the interest rate swap agreements outstanding during the years ended September 30, 2010 and 2009, the Company agrees to pay...

  • Page 285
    ... Consolidated Statements of Financial Position, either as Other current financial assets / liabilites or Other financial assets / liabilities, and changes in fair values are charged to net income (loss). Cash flow hedging activities As of June 2010, the Company 's corporate procurement applies cash...

  • Page 286
    ... policy established by the Managing Board. Increasing market fluctuations may result in significant cashflow and profit volatility risk for Siemens. Its worldwide operating business as well as its investment and financing activities are affected by changes in foreign exchange rates, interest rates...

  • Page 287
    ... in the Company 's consolidated equity position. Interest rate rpsk Siemens' interest rate risk exposure is mainly related to debt obligations like bonds, loans, commercial paper programs and interest-bearing deposits and investments. Siemens seeks to manage this risk through the use of derivative...

  • Page 288
    ... volatile technology-related markets worldwide. The market value of Siemens' portfolio in publicly traded companies as of September 30, 2010 was â,¬138 compared to â,¬141 as of September 30, 2009. Based on historical volatilities and correlations, a ten day holding period and a confidence level of...

  • Page 289
    ... or timing are based on the conditions existing at September 30, 2010. Financial Position. Management uses the Net debt measure for internal corporate finance management, as well as for external communication with investors, analysts and rating agencies. 2011 Year ended September 30, 2012 2013 to...

  • Page 290
    ... projects Siemens has invested in are not successful. As a consequence of the worldwide financial market crisis customer default rates may increase and collateral values may decline. The effective monitoring and controlling of credit risk is a core competency of our risk management system. Siemens...

  • Page 291
    ...were bought at market price at a predetermined date in the second quarter. In fiscal 2010, the Company incurred pre-tax expense of â,¬27. In fiscal 2009, members of the Managing Board and employees of Siemens AG and participating Siemens companies could purchase a limited number of Siemens shares at...

  • Page 292
    ... value at grant date of investment shares resulting from the Share Matching Plan 2010 is â,¬- as the investment shares are offered at market price. In the first quarter of fiscal 2009, the Company introduced the Share Matching Plan 2009 to members of the Managing Board and to employees of Siemens AG...

  • Page 293
    ... fiscal 2009, Siemens changed its jubilee benefit program, which applies to a number of Siemens companies, from cash to share-based compensation. Under the Jubilee Share Program, eligible employees are granted jubilee shares after having been continuously employed by the Company for 25 and 40 years...

  • Page 294
    ... conditions as the 2001 Siemens Stock Option Plan except that SARs are exercisable in cash only. Details on SARs activity and weighted average exercise prices are summarized in the table below: September 30, 2010 Exercise prices Number of Options outstanding Weighted average remaining life (years...

  • Page 295
    ...35 - Personnel costs Year ended September 30, 2010 2009 Income from continuing operations attributable to shareholders of Siemens AG Weighted average shares outstanding - basic Effect of dilutive convertible debt securities and share-based payment Weighted average shares outstanding - diluted Basic...

  • Page 296
    ... to Consolidated Financial Statements contains businesses and items not directly related to Siemens' reportable segments: Centrally managed portfolio activities Beginning with the first quarter of fiscal 2010, Segment Information includes a line item for centrally managed activities generally...

  • Page 297
    ... classified as operating leases for internal and segment reporting purposes. Corporate overhead is generally not allocated to segments. Intersegment transactions are based on market prices. Profit of the Sectors, Equity Investments, and Siemens IT Solutions and Services: Siemens' Managing Board is...

  • Page 298
    ... of SFS is Total assets. A reconciliation of Assets disclosed in Segment Information to Total assets in the Consolidated Statements of Financial Position is presented below. New orders: New orders are determined principally as estimated revenue of accepted purchase orders and order value changes and...

  • Page 299
    ...quarter of fiscal 2011, the expenses will be allocated primarily to the Sectors in fiscal 2011. Fiscal 2010 Corporate items also include â,¬96 gains, net of related costs, from Siemens' directors and officers insurance and from settlement agreements with former Managing and Supervisory Board members...

  • Page 300
    ... customer 2010 2009 Revenue by location of companies 2010 2009 Sales of goods and services and other income from transactions with joint ventures and associates as well as purchases of goods and services and other expense from transactions with joint ventures and associates are as follows: Europe...

  • Page 301
    ... to Consolidated Financial Statements, is presented within the Corporate Governance Report, included in this Annual Report for fiscal year 2010. In fiscal 2010 and 2009, no other major transactions took place between the Company and the other members of the Managing Board and the Supervisory Board...

  • Page 302
    ... 2010, the Audit Committee has generally pre-approved the performance by E&Y of audit and audit-related services, including among others the following: Audit services: > Annual audit of Siemens' Consolidated Financial Statements and its internal control over financial reporting; > Quarterly review...

  • Page 303
    ...-related services unless there is a compelling advantage to the Company in using the principal accountant and it can clearly be shown that there is no impairment of independence. 41 - Corporate governance Siemens Aktiengesellschaft, currently the sole German publicly traded corporation consolidated...

  • Page 304
    ...legal circumstances. Not consolidated due to immateriality. Not accounted for using tbe equity metbod due to immateriality. Exemption pursuant to §264b HGB. Exemption pursuant to §264 (3) HGB. 6 To our shareholders 21 Corporate Governance 49 Combined management's discussion and analysis 238

  • Page 305
    ...nkter Haftung, Tübingen Siemens Global Innovation Partners Management GmbH, Municb Siemens Gusstecbnik GmbH, Cbemnitz Siemens Healtbcare Diagnostics GmbH, Escbborn Siemens Healtbcare Diagnostics Holding GmbH, Escbborn Siemens Healtbcare Diagnostics Products GmbH, Marburg Siemens Immobilien Cbemnitz...

  • Page 306
    ... Europe (without Germany) (292 companies) Oktopus S.A./N.V., Brussels / Belgium SDRC Belgium N.V./S.A., Brussels / Belgium Siemens Healtbcare Diagnostics SA, Brussels / Belgium Siemens Healtbcare Diagnostics Services Sprl, Brussels / Belgium Siemens IT Solutions and Services S.A., Anderlecbt...

  • Page 307
    ... Siemens IT Solutions and Services Ltd, Dublin / Ireland Siemens Ltd., Dublin / Ireland Siemens Medical Solutions Diagnostics Europe Limited, Dublin / Ireland SIIC International Limited, Dublin / Ireland UGS Holdings (Central Europe) Limited, Dublin / Ireland UGS Holdings (Europe) Limited, Dublin...

  • Page 308
    ... den IJssel / Netberlands Siemens International Holding B.V., Tbe Hague / Netberlands Siemens IT Solution and Services B.V., Tbe Hague / Netberlands Siemens Lease B.V., Tbe Hague / Netberlands Siemens Medical Solutions Diagnostics Holding I B.V., Tbe Hague / Netberlands Siemens Nederland N.V., Tbe...

  • Page 309
    ... Holding AG, Zug / Switzerland Siemens Healtbcare Diagnostics AG, Zuricb / Switzerland Siemens Industry Software AG, Urdorf / Switzerland Siemens IT Solutions and Services AG, Zuricb / Switzerland Siemens Leasing AG, Zuricb / Switzerland Siemens Power Holding AG, Zug / Switzerland Siemens Scbweiz AG...

  • Page 310
    ...legal circumstances. Not consolidated due to immateriality. Not accounted for using tbe equity metbod due to immateriality. Exemption pursuant to §264b HGB. Exemption pursuant to §264 (3) HGB. 6 To our sbarebolders 21 Corporate Governance 49 Combined management's discussion and analysis 244

  • Page 311
    ...GA / USA Siemens Capital Company LLC, Iselin, NJ / USA Siemens Corporation, New York, NY / USA Siemens Credit Warebouse, Inc., Iselin, NJ / USA Siemens Demag Delaval Turbomacbinery, Inc., Hamilton, NJ / USA Siemens Diagnostics Finance Co. LLC, Deerfield, IL / USA Siemens Electronics Assembly Systems...

  • Page 312
    ...2010 Equity interest in % Siemens Molecular Imaging, Inc., Knoxville, TN / USA Siemens Power Generation Service Company, Ltd., Orlando, FL / USA Siemens Product Lifecycle Management Software II (US), Plano, TX / USA Siemens Product Lifecycle Management Software Inc., Plano, TX / USA Siemens Public...

  • Page 313
    ... and Services Pvt. Ltd., Mumbai / India Siemens Ltd., Mumbai / India Siemens Nixdorf Information Systems Pvt. Ltd., Mumbai / India Siemens Power Engineering Pvt. Ltd., Gurgaon / India Siemens Product Lifecycle Management Software (India) Private Limited, Neu Delbi / India Siemens Rolling Stock Pvt...

  • Page 314
    ... Assembly Systems Pte. Ltd, Singapore / Singapore Siemens Healtbcare Diagnostics Pte. Ltd., Singapore / Singapore Siemens IT Solutions and Services Operations Pte. Ltd, Singapore / Singapore Siemens Medical Instruments Pte. Ltd., Singapore / Singapore Siemens Product Lifecycle Management Software...

  • Page 315
    ... Siemens Rail Services Bayside Pty. Ltd., Bayside / Australia Siemens Rail Services Swanston Pty. Ltd., Swanston / Australia Siemens (N.Z.) Ltd., Auckland / New Zealand Siemens Healtbcare Diagnostics Limited, Wellington / New Zealand Associated companies and joint ventures Germany (45 companies...

  • Page 316
    ..., Riga / Latvia Solutions & Infrastructure Services Limited, Gzira / Malta Eemsmond Energie B.V., Amsterdam / Netberlands Enterprise Networks Holdings B.V., Amsterdam / Netberlands Infraspeed Maintainance B.V., Zoetermeer / Netberlands Nokia Siemens Networks Holding B.V., Amsterdam / Netberlands...

  • Page 317
    ... / USA 6 7 8 9 10 Significant influence due to contractual arrangements or legal circumstances. Not consolidated due to immateriality. Not accounted for using tbe equity metbod due to immateriality. Exemption pursuant to §264b HGB. Exemption pursuant to §264 (3) HGB. Control due to a majority of...

  • Page 318
    ... % September 30, 2010 Equity interest in % Valeo Sylvania LLC, Seymour, IN / USA WboGlue, Inc., Baltimore, MD / USA XinRay Systems, LLC, Researcb Triangle Park, NC / USA Zargis Medical Corp., Princeton, NJ / USA Innovex Capital En Tecnologia, C.A., Caracas / Venezuela Asia (32 companies) Oil and...

  • Page 319
    ... 34 268 Not consolidated due to immateriality. Not accounted for using tbe equity metbod due to immateriality. Exemption pursuant to §264b HGB. Exemption pursuant to §264 (3) HGB. Values according to tbe latest available local GAAP financial statements; tbe underlying fiscal year may differ from...

  • Page 320
    ...Cbairman of tbe Managing Board and of tbe Group Executive Committee, Deutscbe Bank AG Date of birtb: February 7, 1948 Member since: January 23, 2003 External positions Positions outside Germany: Belenos Clean Power Holding Ltd., Switzerland (Deputy Cbairman) Royal Dutcb Sbell plc, Netberlands Zuricb...

  • Page 321
    ..., Bavarian Regional Headquarters, IG Metall Date of birtb: Marcb 3, 1964 Member since: April 1, 2009 External positions German supervisory board positions: Vaillant GmbH, Remscbeid ZEPPELIN GmbH, Friedricbsbafen Dieter Scbeitor* Pbysicist Trade Union Commissioner for Siemens, IG Metall Date of...

  • Page 322
    ... relating to corporate governance. Tbe Audit Committee's duties include, in particular, preparing Supervisory Board reviews of tbe annual financial statements of Siemens AG and of tbe consolidated financial statements of Siemens worldwide. Tbe Committee also discusses tbe company's quarterly reports...

  • Page 323
    ... tbe company's financial situation and structure, its investments in property, plant and equipment and its financial investments. In addition, tbe Committee decides on bebalf of tbe Supervisory Board wbetber to approve business transactions requiring Supervisory Board approval tbat bave a value of...

  • Page 324
    ... 2008 Term expires: Marcb 31, 2012 External positions German supervisory board positions: TÜV Süd AG, Municb Company positions Positions outside Germany: Siemens Ltd., Cbina (Cbairman) Siemens Ltd., India Siemens Pte. Ltd., Singapore Heinricb Hiesinger, Dr.-Ing. (until September 30, 2010) Date of...

  • Page 325
    ... Siemens Scbweiz AG, Switzerland (Cbairman) VA TECH T & D Co. Ltd., Saudi Arabia Peter Y. Solmssen Date of birtb: January 24, 1955 First appointed: October 1, 2007 Term expires: Marcb 31, 2012 Company positions Positions outside Germany: Nokia Siemens Networks B.V., Netberlands Siemens Canada...

  • Page 326
    ... capital measures. It also determines tbe scope and conditions of tbe stock-based compensation components and / or compensation programs offered to employees and managers (excluding tbe Managing Board). Members as of September 30, 2010 Peter Löscber (Cbairman) Equity and Employee Stock Committee...

  • Page 327
    Additiona l information 262 Statement of the Managing Board 262 Responsibility statement 263 Independent auditorsG report 264 Five-year summary 266 Glossary 269 Index 273 Information resources 275 Company structure

  • Page 328
    ...Annual Share- 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 in accordance with accepted accounting principles. Members...

  • Page 329
    ... of audit procedures. The effectiveness of the 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...

  • Page 330
    ...Dividend per share Siemens stock price 7 High Low Year-end (September 30) Siemens stock performance over prior year (in percentage points) Compared to DAX index Compared to MSCI World Number of shares (in millions) Market capitalization at period-end (in millions of â,¬) 8 Credit rating of long-term...

  • Page 331
    ... data (in millions of â,¬) 2010 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Revenue Net income Quarterly data (in millions of â,¬) 75,978 4,068 2009 21,229 (396) 4th Quarter 19,170 1,435 3rd Quarter 18,227 1,498 2nd Quarter 17,352 1,531 1st Quarter Revenue Net income 76,651 2,497...

  • Page 332
    ... issued by major U.S. banks, related to non-American sbares deposited witb tbem. ADS are traded on U.S. stock excbanges instead of sbares. Tbe process of managing and controlling corporate assets in order to enbance operational efficiency in using tbese assets in business operations. An associate is...

  • Page 333
    ...and tbe fair market value of assets designated to tbe pension plan (plan assets) as of a specific date. Functional costs Funded status of pension plan G German Corporate Governance Code Tbe German Corporate Governance Code presents essential statutory regulations for tbe management and supervision...

  • Page 334
    ... to pay or fund employee benefits. Plan assets are to be used only to pay or fund employee benefits; tbey are not available to tbe reporting entity's general use. R Rating Return on capital employed (ROCE) R&D Risk management Standardized indicator for tbe assessment of issuers' credit ratings...

  • Page 335
    ... statement pursuant to §289a of the German commerciag code (HGB) (part of the Combined management's discussion and anagysis) Corporate Governance report Credit ratings Cross-Sector Businesses Cross-Sector Services F Finance and vnvestment Committee Financiag cagendar Financiag performance measures...

  • Page 336
    ... assets position New orders Nokia Siemens Networks (NSN) Nominating Committee vv 110 vv 81, vv 232 vv 52, vv 167 vv 25 Segment information Share ownership of Managing Board Share-based payment Siemens AG (Discussion on basis of German commerciag code (HGB)) Siemens Financiag Services (SFS) Siemens...

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    2 71

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    2 72

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    Information resources Further inFormation on the contents oF this annual report is available From: Address Siemens AG Wittelsbacherplatz 2 80333 Munich Germany copyright notice Designations used in this document may be trademarks, the use of which by third parties for their own purposes could ...

  • Page 340
    ... Siemens Global Mobile Website can be accessed at m.siemens.com. Employees should be sure to include their 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...

  • Page 341
    ... structure organiZation chart 147 Consolidated Financial Statements 261 262 262 263 264 Additional information 275 Statement of the Managing Board Responsibility statement Independent auditors' report Five-year summary 266 269 273 275 Glossary Index Information resources Company structure

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    Company structure Managing Board of Siemens AG 1 Peter Löscher President and Chief Executive Officer Joe Kaeser Corporate Finance and Controlling Financial Services Siemens IT Solutions and Services Siemens Real Estate Equity Investments Brigitte Ederer Corporate Human Resources Europe, ...

  • Page 343
    ... Businesses Siemens IT Solutions and Services Financial Services Christian Oecking Imaging and Therapy Systems Clinical Products Diagnostics Norbert Gaus Bernd Montag Roland Chalons-Browne Michael Reitermann Tom Miller Customer Solutions Cross-Sector Services Global Shared Services Siemens...

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    www.siemens.com Siemens Aktiengesellschaft Or2er no. A19100-F-V83-X-7600