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Annual Report 2014

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Annual Report 2014 siemens.com

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Siemens at a glance Fiscal siemens.com

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Company Report 2014 We make real what matters by setting the benchmark in the way we electrify, automate and digitalize the world around us. To learn more, please read on.

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...a lived ownership culture shared by all our people and a consisÂ tent strategy. Page 30 Page 5 1 Power generation Flexible and small gas turbines will be an imporÂ tant growth field in the years ahead. Find out how our SGTÂ750 in Lubmin, Germany, is helping secure Europe's power supply. Page...

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... her best, each individual makes a vital contribution to our Company's overall success. Page 41 4 3 Energy application Our intelligent software solutions are setting new standards - for example, in Qatar, where a new elevated conveyor system for the Hamad International Airport in Doha was planned...

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...Siemens has stood for engineering excellence and innovation, for quality and reliability, for human creativity and drive, for stability and financial solidity and, last but not least, for good corporate citizenship. Our Vision 2020 fully embraces this legacy while moving us forward into a successful...

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Our path Making real what matters

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6 Our path WHAT do we stand for? WHAT sets us apart? HOW can we achieve long-term success? Joe Kaeser President and CEO of Siemens AG

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...which every employee takes personal responsibility for our Company's success. "Always act as if it were your own Company" - this maxim applies to everyone at Siemens, from Managing Board member to trainee. 3. A consistent strategy With our positioning along the electriï¬cation value chain, we have...

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Our path

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... our customers, our owners and our employees as well as to the values of society. I personally intend to ensure that the next generation will inherit a better Company. That's my vision. That's my responsibility. That's my promise. Joe Kaeser President and CEO of Siemens AG Vision 2020 We make real...

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Our path Mission We make real what matters by setting the benchmark in the way we electrify, automate and digitalize the world around us. Ingenuity drives us and what we create is yours. Together we deliver.

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... our customers to set benchmarks - with our power of innovation, our leading technologies, our global presence and, last but not least, our financial solidity. We generate value by transforming the value chain of electrification, reaching across both the digital and physical worlds. Our highly...

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... with our competitive environment and with the requirements of customers, partners and societies. Focused on the long term, it stands for what all our business activities have in common. Electrification We're positioned along the value chain of electrification. Our products are designed to generate...

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Our path Digitalization Automation Power generation Energy application Electrification Power transmission, power distribution and smart grid Imaging and in-vitro diagnostics

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... a successful future. We're not only focusing on the next one or two quarters or the next reporting season but on the years and, perhaps, even decades to come. With this future in view, we now have to take all the right steps to create value - for the short, medium and long term. Short term: Drive...

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Our path 15 Value Scale up Strengthen core Drive performance 2015 2016 2017 2018 2019 2020 Vision 2020 Stages

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... strengthening our corporate governance functions. In this way, we plan to reduce our costs by roughly â,¬1 billion. The savings are expected to be mainly effective in 2016. Goal: Cut costs by ~ â,¬1 billion Create value sustainably Goal: Tap growth fields and get underperforming businesses back...

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... are the basis of our success. We are - and want to remain - an attractive employer. That's why we conduct a global engagement survey to measure employee satisfaction. In the categories Leadership and Diversity, we aim to achieve an approval rating of over 75% on a sustainable basis. Goal: > 75...

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...needs more than concrete financial targets. It also requires a comprehensive strategic framework that closely aligns the central fields of company management. Vision 2020 defines this frameÂ work for Siemens. Ownership culture The most important guarantee for the longÂterm success of our strategy...

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Our path 19 Customer and business focus Ownership culture Siemens Gov ernance Management model Strategic framework

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... by the turbine is fed into the public grid. This two-fold benefit is further enhanced by the turbine's high efficiency and low emissions, which make the SGT-750 one of the most ecofriendly turbines in its class. + 60% Experts expect global demand for electricity to increase signiÂ ficantly...

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... placed great importance on the turbine's future ease of service as well as its efficiency." Anders Hellberg, Siemens sales manager, product manager and development engineer Less is more To boost efficiency, you have to eliminate unnecessary losses. Intelligent solutions can cut these to a minimum...

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...can be achieved with combined heat and power (CHP) systems. True greatness lies in the details Efficiency, cost effectiveness and reliability are the three main requirements for gas turbines. Improvements to details make it possible to constantly push the limits of what is feasible. A prime example...

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... supply security according to plan Ensuring the continued successful provision of energy in the future will require sophisticated energy management. To get a grip on rising energy costs, power generation must become more efficient. Our online monitoring system performs tasks such as controlling...

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...the new turbine would have the least downtime in its class. And our engineers have kept their word: the SGT-750 has just 17 scheduled maintenance days over a period of 17 years. That's the standard we've set - a benchmark made possible by a design that offers ease of service and ready access to all...

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...cause the pipelines to become iced. That's where our SGT-750 gas turbine comes in, helping ensure the smooth provision of gas to Europe with its exhaust heat. The fact that the power generated by the turbine is fed into the grid and can supply up to 50,000 households with electricity rounds off this...

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... of energy is needed to heat the gas in order to prevent icing. In the past, gas-fired boiler plants with a heat output of 40 megawatts each were used for this purpose. The SGT-750 offers technology that is both more efficient and more ecofriendly: exhaust heat produced during power generation is...

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... an intelligent power mix. An increasing number of companies maintain their own power plants that, using a combined heat and power system, supply valuable process heat that can be used in manufacturing or for building services - all at competitive electricity prices. Our portfolio of gas turbines is...

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... presente vember 2010 d to the gene , the benefits ral public for of our SGTÂ75 the very first 0 gas turbines time in Finsp Ã¥ng, Sweden . SGTÂ750 | Lu bmin, Germ any Doubly ef ficie nt: in Lubmin , our SGTÂ750 grid and safe feeds electricit guards Europe y into the loca 's gas supply l power...

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... in-vitro diagnostics Everything under control - Thanks to reliable power grids Brazil's social and economic structure has been transformed in the past few years, strengthening the country's domestic market and increasing the supply of and demand for goods and services. To prevent power blackouts...

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97 % The grid supplies nearly all the country's electricity. > 120 gigawatts Total grid capacity 31

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... 80 % of the country 's electricity comes from renewable energy sources, mainly 32 from hydropower plants. Monitoring this huge and complex system is the role of ONS, Brazil's national grid operator. As part of a strategic plan, ONS invested in a unique solution to increase the reliability and...

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... trust and respect among all partners, were key to the project's major success." Albert Melo, General Director of CEPEL "Our new system places the country in the global vanÂ guard of energy management technology - thanks to the close cooperation and outstanding competence of Siemens, CEPEL and ONS...

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...And if one regional control center becomes very busy, another can always back it up. The new energy management system utilizes available resources better than the heterogeneous grid monitoring system that preceded it - thereby reducing operating costs and making Brazil's energy system more reliable...

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... to natural fluctuations. Declines must be compensated for in real time. Grid operators also have to plan for foreseeable demand peaks - at midday, for example, when large numbers of air conditioners are switched on - and make additional power plant capacity available as quickly as possible. 35

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...Brazil's power grid covers around five million square kilometers or about two-thirds of the country and supplies 97 % of the nation's electricity requirements. Developed by Siemens and CEPEL, the proven hardware and software that control and monitor the grid combine high performance with outstanding...

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..., the causes can be identified, impacts minimized and power restored much faster than ever before. And smart grids hold even more potential for the future. They 're a prerequisite for making power grids more intelligent and thus simplifying the management and control of tomorrow's energy flows. 37

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Power transmission, power distribution and smart grid 38

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... software are becoming increasingly integrated, opening up new business models for utiliÂ ties. Siemens offers the energy industry a complete range of products, solutions and services from a single source - from grid protection, automation, planning, control, monitoring and diagnostics systems...

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A culture can't be dictated or imposed: a culture must be lived. All around the world, we want to foster a culture that appeals to the commitment, creative drive and entrepreneurial spirit of every individual - in short, an ownership culture. 0

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Our culture Acting entrepreneurially

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... and foster an ownership culture - a culture that encourages every individual in our Company to give his or her best in his or her position in order to help build Siemens' long-term success. We've asked employees to explain what they understand by an ownership culture. You'll meet some of them on...

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Our culture 43 Always act as if it were your own Company. Joe Kaeser President and CEO of Siemens AG

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44 Our culture It is genuinely demonstrating commitment and responsibility to do my best and what is best for the Company. Lena Ikejiri de Medeiros Human Resources Manager

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Our culture 45 Mariel von Schumann Head of Governance & Markets

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46 Our culture Together with my team, I work hard and with dedication to ease the workload for the colleagues who take over where we've left off. Rickard Olsson Workshop Test Manager

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Our culture 47 Janina Kugel Chief Diversity Officer Head of HR People & Leadership

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48 Our culture Ownership culture is an asset as well as a prerequisite for our global success. Georgia Davari Apprentice Europeans@Siemens

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Our culture 49 For me, ownership culture is having both feet on the ground, knowing the local context like the back of my hand and creating a culture for the people around me that will motivate them to do their best. Hamad Al Khayyat General Manager Oil & Gas

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50 Our culture Ownership culture It's not just strategy that makes the difference; it's also a company's culture, its values and what it stands for. Leadership Equity Ownership culture Behaviors Values People orientation Our culture

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...to foster an ownership culture worldwide that includes all of our people. We believe the following principles are especially important here: Owners ensure our business success Our managers should serve as role models for the Company's strategic direction and ensure the sustainable and efficient use...

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52 Our culture Be a role model and follow safe routines for a safer future. Jesper RÃ¶nnbÃ¤ck Electrician

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Our culture 53 Ownership culture is being selfÂmotivated by continuous improvement for sustainable success, whatever your position is. Juliana Furlanetto Odoni Sales Support Manager

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54 Our culture Devina Pasta Corporate Strategies

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Our culture 55 Michael Cheng Senior Manager Engineering for Angiography

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56 Our culture Creating a good working environment, trusting and respecting one another - that's what ownership culture means to me. Elena Rubio LÃ³pez Apprentice Europeans@Siemens

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Our culture 57 Ownership culture is exercising a sense of belonging, taking the responsibility for doing your best, unconditionally, every day. Sergio Souza Program Manager Transformation Program Siemens Brazil

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... the external view from the capital market. This includes, for instance, communicating with the shareholder community, coordinating remuneration of Siemens' Managing Board and top executives, and managing the Company's organizational structure and internal equity programs. In addition, she orches...

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...been involved in the Company's developÂ ment in various capacities. From 2012 to 2013, Janina headed the global HR organization at OSRAM and prepared the business for the IPO that was completed in July 2013. Since 2014, she's been Chief Diversity Officer at Siemens AG. Georgia Davari | Elena Rubio...

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..., she's been working as a sales support manager. Always motivated to improve processes, Juliana has participated in several projects and programs focused on making Siemens Brazil a benchmark in leadership, productivity and customer satisfaction. Very committed to sustainability issues, she's also...

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... control - first in product management, later in business development. There, she launched a product for the Asian market and created new business models. After driving business in Asia, she now works at Corporate Strategies in Munich, managing aspects of digital transformation - such as a Siemens...

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62 Our culture Owners identify themselves with their Company and thus give their best. Joe Kaeser President and CEO of Siemens AG

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... its positive development. We're proud that around 140,000 of our employees are today expressing these feelings by owning Siemens shares. We intend to increase this figure by at least 50%. Therefore, we want employees below the management level to participate in their Company's success on an annual...

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... automated electrified monorail system that enables the trolleys to be transported within the airport's huge logistics center. The engineers from southern Germany relied on industry software from Siemens that allowed them to plan, test and optimize the entire system in a virtual environment before...

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20,000 deliveries a day 1.6 km Total length of electrified monorail system 65

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...time and cost pressures. The key to mastering these challenges is intelligent planning and meticulous preparation from the very beginning - with the help of innovative software. "Just a few years ago, we would've had to send a team of engineers to Qatar for on-site testing of the system in order to...

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... Siemens' Tecnomatix software solution, which enables engineers to fully visualize, simulate and analyze a system using a "digital twin" model. Potential faults or weaknesses can be detected early on and corrected before the system is actually installed. For the Hamad International Airport project...

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...International Airport project, engineers working at computers in BÃ¶blingen, Germany, pushed fully loaded flight-service carts onto waiting trolleys, transported them to the supply... the real electrified monorail system for the first time, everything worked just as we'd planned in the virtual world."

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...before a system goes into actual operation, Tecnomatix offers decisive advantages for mid-sized Eisenmann. "Development times were shortened. There was no need for tedious, labor-intensive on-site work, and we were able to quantify our business risks, because the possibility of project delays could...

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... production lifecycle - from product design to services." Magnus Edholm, Siemens software developer 70 In a world full of questions, software provides the answers In a globalized world, the question is always the same: How can companies boost their productivity and flexibility while cutting costs...

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... from sales to service - worldwide. For example, the crossborder exchange of data within the company 's international project teams will be significantly simplified. Product developers and system designers are now using Siemens software solutions: Teamcenter (PLM) as a shared engineering data...

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Energy application 72

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... system. The future of industry - Linking the virtual and real worlds New competitors, global value chains and highly transparent markets are all increasing competitive pressures. Industrial companies have to boost their productivity - using innovative technologies that make production more cost...

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... with Siemens Hospital operators around the world are faced with the challenge of delivering the best possible healthcare, based on state-of-the-art technology, at affordable prices. And Rush University Medical Center in Chicago, Illinois, is no exception. That's why the facility 's management team...

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...to clarify product-specific questions but also to discuss the project as a whole. He concurs with Peter Butler, President and Chief Operating Officer of Rush, who says, " I was very involved in the selection of Siemens. We knew a lot about their culture and their impact on healthcare worldwide, and...

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... opportunity was tackled with great determination at Rush University Medical Center. Once the decision to implement the project had been made, a team was formed to address fundamental questions relating to the planned changes. How can a building be designed to minimize the distances walked by staff...

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... enhancing clinical workflow, the project team always returned to the key priority: optimizing patient treatment and outcomes. In the case of a medical emergency like a stroke, patients need to obtain medical treatment as quickly as possible. Here, too, Siemens is a competent partner for Rush: we've...

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... example, to examine internal organs: Siemens supplied the systems and adapted them to the facility 's requirements. That's one of the reasons why the medical center chose Siemens, as the facility's CEO Larry Goodman, MD, confirms: " When we pick a technology, we also pick the company and the people...

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Imaging and in-vitro diagnostics 80 Information is the key to success In healthcare, as in many other areas, information technology now plays a vital role. That's why IT experts from Siemens helped Rush University Medical Center intelligently integrate its medical systems and optimize the flow of ...

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... courses held at the Siemens training center and on-site at Rush. Around 150 Rush employees have taken part in training sessions so far, thus ensuring that all equipment is optimally utilized. Dr. Goodman is thrilled with his employees' learning curve and commitment. "The key was that the entire...

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Imaging and in-vitro diagnostics 82

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... for healthcare continually increasing worldwide, solutions that offer better treatment at lower cost are needed. At Siemens, we've been working for years to improve medical care around the globe with our imaging and laboratory diagnostics systems and related IT solutions. We partner with hospital...

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Successful company management demands more than financial targets - it requires a comprehensive strategic framework that integrates the key fields of corporate governance: a strategy that sets the course.

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Our strategy Setting the course

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...diverse opportunities of our complex world, a company needs a clear direction, a strong internal setup, and people who follow the set course and turn plans and ideas into reality. And that's exactly what our strategy does: it includes a sharper customer and business focus, streamlined governance and...

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Our strategy 87 To leverage the diverse opportunities of our complex world, a company needs a strategy to point the way forward and set clear priorities. Joe Kaeser President and CEO of Siemens AG

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... technolÂ ogy, transportation and industry. Imaging and in-vitro diagnostics Siemens Healthcare is responsible for our medical imaging and inÂvitro diagnostics businesses. Financial Services In all areas related to project financing, Financial Services is a reliable partner to our customers.

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... market growth Digitalization Automation 7-9% 4-6% 2-3% Imaging and in-vitro diagnostics - Financial Services Electriï¬cation Power generation Power transmission, power distribution and smart grid Energy application - Power and Gas - Energy - Building - Healthcare Management Technologies...

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... to access the fields that promise to provide us with longÂterm profitable growth. On this double page, we present selected growth fields. Flexible and small gas turbines In the area of power generation, the trend is increasingly toward decentralized energy supply. Customers worldwide are relying...

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... our related portfolio of products and software solutions. Image-guided therapy and molecular diagnostics The increasing use of molecular biological methods and progress in the life sciences are accelerating technological change in healthcare. To improve quality and efficiency, societies worldwide...

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...to customers and key markets. We replaced our 14 Regional Clusters with 30 Lead Countries. These Countries, which generate more than 85% of our business, now report directly to our Managing Board. We've also eliminated the Sector level and consolidated our business activities into nine Divisions and...

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Our strategy 93 Customers and markets Regions Businesses Managing Board Governance

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... the Company. Financial framework To measure and compare our development visÂÃ Âvis the market and in our competitive environment, we use a system of defined key indicators. We've now refined and expanded this financial target system. SEE PAGE 96 Operating system and Corporate Memory We manage...

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Our strategy 95 One Siemens 1. Financial framework Management model 2. Operating system and Corporate Memory 3. Sustainability and citizenship Management model

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96 Our strategy 1. Financial framework We've set out to increase our Company's value on a sustainable basis. To measure our progress, we use a balanced system of defined financial performance indicators. We've further refined the range of the One Siemens indicators we've reported to date: Growth...

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Our strategy 97 One Siemens 1. Financial framework Growth Management model Capital efï¬ciency Total cost productivity Capital structure Dividend payout ratio Proï¬t margin ranges of businesses One Siemens Financial framework

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...To manage a company effectively, efficiently and thus successfully, you've got to set clear priorities, have the right tools and base your work on clear goals and rules. Our One Siemens operating system delivers these prerequisites and sets the priorities for: Customer proximity Innovation Business...

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Our strategy 99 One Siemens Management model 2. Operating system and Corporate Memory People excellence and care Customer proximity Innovation Business excellence One Siemens Operating system and Corporate Memory

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... meet and exceed our customers' expectations, we invest in local sales presence and support for specific groups of market partners. Our key account management approach is just one successful example of this. We're represented in virtually every country in the world by Regional Companies that operate...

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... attractive working environment, we promote lifelong learning and personal development. Integ rity - supported by a well-established compliance system - remains the principle that guides our conduct. Our share programs are enabling us to increase employee participation in our Company's success while...

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... integrity at the center of our Company's activities. As good corporate citizens, we're also contributing to the sustainable development of society through our portfolio, our local presence worldwide and our role as a thought leader. What we create is yours. For the benefit of our customers and for...

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Our strategy 103 One Siemens 3. Sustainability and citizenship Management model Planet Profit People One Siemens Sustainability and citizenship

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Company Report 2014

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Financial Report 2014

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... 12% 26% Page 202 Page 202 Capital structure and Liquidity September 3 , September 30, 2013 Further information Cash and cash equivalents Total equity (Shareholders of Siemens AG) Industrial net debt Industrial net debt / adjusted EBITDA (continuing operations) in millions of â,¬ in millions of...

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... in fiscal year. Number of inventions reported by the Business Units in an internal report. First filings as part of inventions submitted to patent offices. 5 6 7 Commonwealth of Independent States. Continuing and discontinued operations. Employee turnover rate is defined as the ratio of voluntary...

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...we'd originally set for the year and exceeded our goal for profit development while making subÂ stantial progress in strengthening our portfolio. These achievements will enable us to propose a dividend of â,¬ 3.30 to the Annual Shareholders' Meeting. Siemens is and will remain a good investment. We...

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Joe Kaeser President and CEO of Siemens AG

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...Company. Cooperation with the employee representatives was also characterized by a spirit of mutual trust. In addiÂ tion, Dr. Gerhard Cromme and the members of the Supervisory Board diligently assisted the work of the Managing Board, providing outstanding support for all our activities and projects...

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and control technology, power grids, and factory and rail automation. We aim to achieve an equally strong position in the field of digitalization, in which we're already a key player: our worldwide installed customer base gives us not only access to an enormous volume of data but also an inÂdepth ...

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... very good results overall in the past quarters, an accomplishment we're proud of. However, over the long term, we anticipate funÂ damental changes and new business models in healthcare markets and technologies. With the aim of continuing the success story of Siemens' medical engineering activities...

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... and makes a difference. In 2014, we defined our strategic direction and aligned our organization accordingly. In 2015, we'll consolidate our operations. We're increasing expenditures for research and development and for our goÂtoÂmarket activities in selected areas and regions. Operational...

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... .2 Managing Board of Siemens AG Ralf P. Thomas Controlling and Finance, Financial Services, Global Services Roland Busch Asia, Australia Energy Management, Building Technologies, Mobility Joe Kaeser President and Chief Executive Officer Corporate Development, Governance & Markets, Communications...

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... to our Shareholders A.2 Managing Board of Siemens AG A.3 Report of the Supervisory Board A.4 The Siemens Share / Investor Relations 132 B.1 Corporate Governance Report B.2 Corporate Governance statement pursuant to Section 289a of the German Commercial Code (part of the Combined Management Report...

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... PUBLICATION REFERENCE TO THE INTERNET 249 341 250 D.3 Consolidated Statements of Financial Position 342 251 D.4 Consolidated Statements of Cash Flows D.5 Consolidated Statements of Changes in Equity D.6 Notes to Consolidated Financial Statements D.7 Supervisory Board and Managing Board 344...

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... at Supervisory Board meetings by members was around 91 %. Regular topics of discussion at our plenary meetings were revenue, profit and employment development at Siemens AG, at the Company 's operating units and at the Siemens Group as well as the Company's financial situation, profitability and...

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Dr. Gerhard Cromme Chairman of the Supervisory Board

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... remuneration system for the Managing Board members for fiscal 2014. At our meeting on November 6, 2013, we also approved the sale of major businesses at the Water Technologies Business Unit and our share buyback program. The ManagÂ ing Board reported to us on the current status of acquisitions and...

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... DresserÂRand Group, which is listed on the New York Stock Exchange, and to sell our 50 % stake in BSH Bosch und Siemens HausgerÃ¤te GmbH (BSH) to coÂowner Robert Bosch GmbH. At our meeting on September 24, 2014, the Managing Board reported to us on the state of the Company shortly before the end...

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...assumption by Managing Board members of positions at other companies and institutions. The Nominating Committee met once in fiscal 2014 and made one decision by written circulation. The members of the Committee concerned themselves with longerÂterm succession planning for the Supervisory Board also...

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... Report for Siemens AG and the Siemens Group. In addition, the Audit Committee addressed the halfÂyear and quarterly financial reports and, in the presence of the independent auditors, discussed their audit reviews. The Committee recommended that the Supervisory Board propose to the Annual Share...

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... weaknesses in the Company 's internal control or risk management systems were reported. At this meeting, the Managing Board explained the financial statements of Siemens AG and the Siemens Group as well as the Company 's risk management system. The Supervisory Board concurs with the results of the...

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... Board appointed Lisa Davis a full member of the Managing Board, effective August 1, 2014. On behalf of the Supervisory Board, I would like to thank the members of the ManagÂ ing Board as well as the employees and employee representatives of Siemens AG and all Group companies for their outstanding...

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... the end of fiscal 2014. This annual return of 7.9 % is above the results for MSCI World (7.1 %) but below those for the DAX 30 (9.3 %). 108 A. A .1 A.2 A.3 A.4 To our Shareholders Letter to our Shareholders Managing Board of Siemens AG Report of the Supervisory Board The Siemens Share / Investor...

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... year FY 2014 FY 2013 FY 2012 FY 2011 FY 2010 Dividend per share Dividend yield 2 ExÂdividend date Net income (as reported) Total dividend payout Payout ratio 4 1 To be proposed to the Annual Shareholders' Meeting. 2 Dividend payout / Siemens share price on day of Annual Shareholders' Meeting...

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...CAPITAL DISCLOSURES in D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on pages 290 - 292 of this Annual Report. Credit ratings September 30, 2014 Moody 's Investors Service Standard & Poor's Ratings Services September 30, 2013 Moody 's Investors Service Standard & Poor's Ratings Services LongÂterm...

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... of the Siemens Group to hold an interest in Siemens equal in value to between 50 % and 300 % of their base compensation for the period in which they hold office. Siemens stock price (Xetra closing price) High Low Fiscal yearÂend Number of shares issued (September 30) Market capitalization 2 Basic...

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Good corporate governance comprises responsible, value-based management and monitoring focused on long-term success. In this chapter, we present Siemens' Corporate Governance Report, discuss the Company 's management and control structure, explain the remuneration of the Managing Board and the ...

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... 161 of the German Stock Corporation Act Management and control structure Share ownership and share transactions by members of the Managing and Supervisory Boards Annual Shareholders' Meeting and investor relations 144 B.4 Compensation Report (part of the Combined Management Report) 132 B.1.2 135...

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... of Siemens' activities. > Taking the Company's international orientation into account, care shall also be taken to ensure that the Supervisory Board has an adequate number of members with extensive international experience. Our goal is to make sure that the present considerable share of Supervisory...

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..., the Supervisory Board discusses business development, planning, strategy and the strategy 's implementation. It reviews the Annual Financial Statements of Siemens AG and the Consolidated Financial Statements of the Siemens Group, the Combined Management Report of Siemens AG and the Siemens Group...

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... Supervisory Board approval of the Annual Financial Statements of Siemens AG and the Consolidated Financial Statements of the Siemens Group. In addition to the work performed by the independent auditors, the Audit Committee discusses the Company 's quarterly financial statements and half-year...

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... of business policy and corporate strategy as well as on the Company's annual and multi-year plans. The Managing Board prepares the Company 's quarterly financial statements and the half-year financial reports, the Annual Financial Statements of Siemens AG, the Consolidated Financial Statements of...

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... investor relations activities, we inform our investors comprehensively about developments within the Company. For communication purposes, Siemens makes extensive use of the Internet. We publish quarterly, half-yearly and annual reports, earnings releases, ad hoc announcements, analyst presentations...

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... expression to our corporate values of being "Responsible - Excellent - Innovative." The Business Conduct Guidelines can be downloaded from the WWW.SIEMENS.COM/289A . Internet on: 171 C. Combined Management Report 247 D. Consolidated Financial Statements 337 E. Additional Information 137

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... involved in the Global Compact. At the end of 2013, our Chief Compliance Officer was elected Chairman of the Task Force on Anti-Bribery / Corruption of the Business and Industry Advisory Committee to the OECD. Siemens Compliance System Our activities in the World Economic Forum include the Company...

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... - and the results of case-related investigations. The Corporate compliance risks are derived from these consolidated results, which are then shared with the Company's businesses. As in the CRA process, relevant risks are reported to Siemens' Enterprise Risk Management (ERM), and measures to reduce...

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... may also be reported directly via the Managing Board or via supervisors to the Compliance Organization and, in particular, to the Compliance Officers in our individual company units. Our employees regularly make use of this reporting channel. In fiscal 2014, the total number of compliance cases...

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... level of data protection in the EEA. As a result, the instrument of Binding Corporate Rules (BCR) was developed at European Union level to allow multinational groups of companies, such as Siemens, to make transfers of personal data across borders and between group companies that implement the BCR...

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...status of the 31 projects funded within the first funding round - based upon the settlement with the World Bank -, with a total contractual funding volume of US$ 37.7 million, was presented to the World Bank in April 2014, together with the Siemens Integrity Initiative Annual Report 2013. The second...

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... ON EXPECTED DEVELOPMENTS AND ASSOCIATED MATERIAL on pages 225 - 241 and NOTE 28 LEGAL in D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on pages 293 - 295 of this Annual Report. OPPORTUNITIES AND RISKS PROCEEDINGS WWW.SIEMENS.COM/COMPLIANCE Foster Integrity Support business management to meet its...

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...may benefit from any sustained increase in the Company's value. In the interest of that aim, a substantial portion of their total remuneration is linked to the long-term performance of Siemens stock. A further aim is Remuneration system for Managing Board members for fiscal 2014 Target compensation...

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... ends at the close of the second day after publication of the preliminary operating results for the fourth calendar year after the date of the award. In the event of extraordinary unforeseen developments that have an impact on the stock price, the Supervisory Board may decide to reduce the number...

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... the Managing Board and for senior managers; these principles are discussed in more detail in NOTE 32 SHARE-BASED PAYMENT in D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . That note also includes further information about the stock-based employee investment plans. Maximum amount for compensation...

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... for the Company to terminate the employment relationship. In the event of a change of control that results in a substantial change in the position of the Managing Board member - for example, due to a change in corporate strategy or a change in the Managing Board member's duties and responsibilities...

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.... B.4.1.2 REMUNERATION OF THE MEMBERS OF THE MANAGING BOARD FOR FISCAL 2014 On the basis of the financial framework in the context of One Siemens, at the beginning of the fiscal year the Supervisory Board set the targets and weighting for the parameters of return on capital employed (ROCE) and Free...

Page 151
...Awards) granted was based on the closing price of Siemens stock in Xetra trading on the date of award less the present value of dividends expected during the holding period, because 171 C. Combined Management Report 247 D. Consolidated Financial Statements 337 E. Additional Information 149

Page 152
...094,560 230,055 5,324,615 Total compensation of all Managing Board members for fiscal 2014, according to the applicable reporting standards, amounted to â,¬28.57 (2013: â,¬34.58 9) million. The granted payout amount presented below is to be used instead of the target value according to the GCGC for...

Page 153
...the associated tax of â,¬ 241,373, in accordance with the commitÂ ment he received when he took office. 15 Dr. Michael SÃ¼ÃŸ resigned from the Managing Board effective at the end of the day on May 6, 2014; his contract ended effective as of September 30, 2014. In addition to his total compensation...

Page 154
... component 2 MultiÂyear variable compensation Siemens Stock Awards (restriction period: 2010 - 2013) Siemens Stock Awards (restriction period: 2009 - 2012) Share Matching Plan (vesting period: 2011 - 2013) Share Matching Plan (vesting period: 2010 - 2012) Other 3 Total Service cost Total (GCGC) 34...

Page 155
... to the compensation for fiscal 2014 for his activity as member of the Managing Board presented above, Dr. SÃ¼ÃŸ received the following compensation for the remaining term of his employment agreement from May 7 to September 30, 2014: fixed compensation of â,¬ 399,897, fringe benefits of â,¬12...

Page 156
...former Managing Board members and their surviving dependents received no (2013: 5,615) Stock Awards. 108 A. To our Shareholders 131 132 136 B. B.1 B.2 Corporate Governance Corporate Governance Report Corporate Governance statement pursuant to Section 289a of the German Commercial Code (part of...

Page 157
...in NOTE 22 POST-EMPLOYMENT BENEFITS in D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . B.4.1.3 ADDITIONAL INFORMATION ON STOCK-BASED COMPENSATION INSTRUMENTS IN FISCAL 2014 This section provides information concerning the stock commitments held by members of the Managing Board that were components...

Page 158
...Report Corporate Governance statement pursuant to Section 289a of the German Commercial Code (part of the Combined Management Report) Compliance Report (part of the Combined Management Report) 144 165 B.4 B.5 Compensation Report (part of the Combined Management Report) TakeoverÂrelevant information...

Page 159
... as part of the Share Matching Plan were provided with a Company subsidy (for additional information on the Base Share Program NOTE 32 SHARE-BASED PAYMENT in D.6 NOTES see TO CONSOLIDATED FINANCIAL STATEMENTS ). 3 Lisa Davis was elected a full member of the Managing Board effective August 1, 2014...

Page 160
... Percentage of base compensation 1 Due date for initial measurement of adherence (Amounts in number of units or â,¬) Value 1 Number of shares 2 Managing Board members required to show proof in subsequent years Dr. Roland Busch Lisa Davis Klaus Helmrich Dr. Ralf P. Thomas Total 1 The amount of...

Page 161
..., the Supervisory Board retained incentives for successful corporate management with an emphasis on sustainability and ensured that the system would remain consistent with other remuneration offered in the market. The Supervisory Board has maintained the time-tested division of compensation into...

Page 162
...-term commitment to and on behalf of the Company as well as Managing Board members' participation in a sustained increase in the Company's value. Remuneration system for Managing Board members as of fiscal 2015 Target compensation Maximum amounts of compensation Share Ownership Guidelines Stock...

Page 163
...â,¬ 433,500, but not the total compensation of â,¬232,222 for former Supervisory Board members JeanÂLouis Beffa, Werner MÃ¶nius, HÃ¥kan Samuelsson and Lord Iain Vallance of Tummel. 171 C. Combined Management Report 247 D. Consolidated Financial Statements 337 E. Additional Information 163

Page 164
...to an office with secretarial support and the use of a carpool service. No loans or advances from the Company are provided to members of the Supervisory Board. B.4.3 Other The Company provides a group insurance policy for Board and Committee members and certain employees of the Siemens organization...

Page 165
... who hold shares of employee stock may exercise their control rights in the same way as any other shareholder directly in accordance with applicable laws and the Articles of Association. 171 C. Combined Management Report 247 D. Consolidated Financial Statements 337 E. Additional Information...

Page 166
... 200 million registered shares of Siemens AG of no par value, representing a pro rata amount of up to â,¬ 600 million of the capital stock. Additionally, by resolution of the Annual Shareholders' Meeting of January 28, 2014, the Managing Board is authorized until January 27, 2019 to issue bearer or...

Page 167
... approval of the Supervisory Board, to third parties against payment in cash if the price at which such Siemens shares are sold is not significantly lower than the market price of Siemens stock at the time of selling (exclusion of subscription rights, limited to 10 % of the capital stock, by mutatis...

Page 168
... and reduce the capital stock, issue shares to employees, board members of affiliated companies and members of the Managing Board of Siemens AG, or service convertible bonds and warrant bonds. As of September 30, 2014, the Company held 45,745,147 (2013: 37,997,595) shares of stock in treasury. For...

Page 169
... apply only to the portion of the severance payment that was calculated without taking account of the first six months of the remaining term of the Managing Board member's contract. 171 C. Combined Management Report 247 D. Consolidated Financial Statements 337 E. Additional Information 169

Page 170
... the reporting year as well as the current state of Siemens worldwide and Siemens AG. Starting from a description of our business, economic environment and strategy, we present our financial target system and a detailed explanation of our results of operations as well as our financial and net assets...

Page 171
...citizenship Sustainability at Siemens Employees Research and development Supply chain management Distribution and customer relations Environmental Portfolio Environmental protection Corporate citizenship C. Combined Management Report 179 C.1.2 Economic environment Financial performance system 187...

Page 172
... revenue of â,¬ 71.920 billion in fiscal 2014. We operate 289 major production and manufacturing plants worldwide. In addition, we have office buildings, warehouses, research and development facilities or sales offices in almost every country in the world. Siemens comprises Siemens AG, a stock...

Page 173
... Sustainability and citizenship Report on expected developments and associated material opportunities and risks 242 242 C .10 Compensation Report and legal disclosures C.11 Siemens AG (Discussion on basis of German Commercial Code) D. E. Consolidated Financial Statements Additional Information...

Page 174
... and Drives Healthcare Financial Services 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets...

Page 175
...; Corporate Technology; and Controlling and Finance and by our Corporate Services, which consist of the units Information Technology; Supply Chain Management; Export Control and Customs; Business Process Services; and Siemens Real Estate. The Corporate Core issues binding company-wide guidelines in...

Page 176
... and consulting services, and, together with SFS, financing to assist customers in purchasing our products. In August 2014, we announced our plan to sell our hospital information system business to the U.S.-based company Cerner Corp. Since the fourth quarter of fiscal 2014, these activities formerly...

Page 177
...gears, couplings, and drive solutions are partly also in high demand in other Divisions of the Siemens Group, mainly for rail transport and wind turbines. With our e-Car business, we develop motors and inverters for electric cars and thereby address an additional future growth market. The industries...

Page 178
... activities, which are part of the Reconciliation to Consolidated Financial Statements. The principal customers of the businesses included in our former Rail Systems and Mobility and Logistics Divisions are public and state-owned companies in the transportation and logistics sectors. Markets...

Page 179
... the same business activities as it did at the end of fiscal 2014. Financial Services Financial Services (SFS) provides business-to-business financial solutions. With its specialist financing and technology expertise in the areas of Siemens businesses, SFS supports customer investments with leasing...

Page 180
... 2013, global value added in manufacturing grew by only 3.5 % and not by the expected 4.0 %, hurting Siemens' industrial and energy-related businesses in particular. From a geographical perspective, the region Europe, C.I.S., Africa, Middle East was the only of our three reporting regions delivering...

Page 181
... in logistics costs). Siemens employs various strategies 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. C.1.2.2 MARKET DEVELOPMENT In fiscal 2014, the addressed...

Page 182
... and market access challenges, which increase development costs and the importance of risk sharing in offshore wind power. Markets addressed by our Power Transmission Division grew slightly in fiscal 2014 compared to fiscal 2013, due mainly to strong demand from parts of Europe and the Middle East...

Page 183
... power grid solutions and products remained challenging. Markets served by the Transportation & Logistics Business grew moderately in fiscal 2014, fueled e.g. by large contract awards in the U.K. and in Saudi Arabia within the Europe, C.I.S., Africa, Middle East region. Europe remained the largest...

Page 184
... in building technology, transportation and industry. > Imaging and in-vitro diagnostics: Healthcare is responsible for our medical imaging and in-vitro diagnostics businesses. In all areas related to project financing, Financial Services is a reliable partner to our customers. We want to set clear...

Page 185
... to customers and key markets. We replaced our 14 Regional Clusters with 30 Lead Countries. The CEOs of these countries now report directly to our Managing Board. > We have also eliminated the Sector level and consolidated our business activities into nine Divisions and one separately managed unit...

Page 186
...meet and exceed our customers' expectations, we invest in local sales presence and support for specific groups of market partners. Our key account management approach is just one successful example of this. We are represented in virtually every country in the world by Regional Companies that operate...

Page 187
C.2 Financial performance system C.2.1 Overview Within One Siemens, we have established a financial framework - for revenue growth, for profitability and capital efficiency, for our capital structure, and for our dividend policy. Energy FY 2014 FY 2013 Healthcare FY 2014 FY 2013 Adjusted EBITDA ...

Page 188
...5 % for Total cost productivity. 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets position 188

Page 189
... Capital structure Sustainable revenue and profit development is supported by a healthy capital structure. A key consideration within the framework of One Siemens is to maintain ready access to the capital markets through various debt products and preserve our ability to repay and service our debt...

Page 190
...30 of the previous fiscal year. 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets position 19 0

Page 191
...09/30/2013 Capital employed Fiscal Total equity Plus: LongÂterm debt Plus: ShortÂterm debt and current maturities of longÂterm debt Less: Cash and cash equivalents Less: Current availableÂforÂsale financial assets Plus: PostÂemployment benefits Less: SFS Debt Less: Fair value hedge accounting...

Page 192
... future without previous notice. 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets position 192

Page 193
... Sustainability and citizenship Report on expected developments and associated material opportunities and risks 242 242 C .10 Compensation Report and legal disclosures C.11 Siemens AG (Discussion on basis of German Commercial Code) D. E. Consolidated Financial Statements Additional Information...

Page 194
... into revenue in fiscal 2015 and the remainder in the periods thereafter. 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations...

Page 195
... of production tax incentives. Power Transmission reported a loss of â,¬ 636 million, substantially wider than the loss a year earlier mainly due to project execution challenges. In the current year, the Division took charges totaling â,¬ 298 million related to two high voltage direct current...

Page 196
...Diagnostics revenue was up 1 % year-over-year. 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets...

Page 197
.... On a geographic basis, order and revenue development was supported largely by growth in Asia, Australia, driven by China, and by a slight increase in Europe, C.I.S., Africa, Middle East. Reported orders and revenue in the Americas region were lower compared to the prior-year period, held back by...

Page 198
...slight increase in Europe, C.I.S., Africa, Middle East. Reported revenue in the Americas showed a slight decline due to unfavorable currency translation effects. Profit at Drive Technologies in fiscal 2014 increased to â,¬ 843 million on contributions from most of its businesses. Profit development...

Page 199
... a double-digit increase at Transportation & Logistics. This business continued to execute large rolling stock projects won in prior periods, and also recorded four quarters of revenue from the acquisition of Invensys Rail which closed during the third quarter of the prior year. Large orders in the...

Page 200
...Division's higher-margin product and service businesses. For comparison, profit in fiscal 2013 was held back by â,¬ 100 million in "Siemens 2014" charges. Both revenue and orders declined 3 % year-overyear. On a regional basis, lower volume was due mainly to the Americas. C.3.2.5 EQUITY INVESTMENTS...

Page 201
... Year ended September 30, (in millions of â,¬) 2014 2013 % Change Energy Healthcare Industry Infrastructure & Cities Total Sectors profit Equity Investments Financial Services (SFS) Reconciliation to Consolidated Financial Statements Income from continuing operations before income taxes Income tax...

Page 202
...Sector therein: Transportation & Logistics Power Grid Solutions & Products Building Technologies Total Sectors Equity Investments Financial Services (SFS) Reconciliation to Consolidated Financial Statements Centrally managed portfolio activities Siemens Real Estate (SRE) Corporate items and pensions...

Page 203
... Sustainability and citizenship Report on expected developments and associated material opportunities and risks 242 242 C .10 Compensation Report and legal disclosures C.11 Siemens AG (Discussion on basis of German Commercial Code) D. E. Consolidated Financial Statements Additional Information...

Page 204
... 2014 2013 2014 Profit margin Year ended September 30, 2013 Power and Gas Wind Power and Renewables Energy Management Building Technologies Mobility Digital Factory Process Industries and Drives Healthcare Industrial business Financial Services Reconciliation to Consolidated Financial Statements...

Page 205
..., currency and credit risk exposures We believe that sustainable revenue and profit development is supported by a healthy capital structure. A key consideration of our capital structure management is to maintain ready access to the capital markets through various debt products and to preserve...

Page 206
... TO CONSOLIDATED FINANCIAL STATEMENTS . Healthcare's investments are mainly driven by the medical imaging and therapy systems and laboratory diagnostics businesses. Large parts of the additions are related to intangible assets, such as licenses as well as developing and implementing software and...

Page 207
... Sustainability and citizenship Report on expected developments and associated material opportunities and risks 242 242 C .10 Compensation Report and legal disclosures C.11 Siemens AG (Discussion on basis of German Commercial Code) D. E. Consolidated Financial Statements Additional Information...

Page 208
... obligations under finance leases. 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C.1 C. 2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets position 8

Page 209
...-sale financial assets, as stated in the Consolidated Statements of Financial Position. Management uses the Net debt measure for internal finance management, as well as for external communication with investors, analysts and rating agencies. September 30, (in millions of â,¬) 2014 2013 ShortÂterm...

Page 210
C.5 Net assets position Structure of Consolidated Statements of Financial Position (in millions of â,¬) Total liabilities and equity 3% (in millions of â,¬) September 30, 2014 2013 Total assets 3% Cash and cash equivalents AvailableÂforÂsale financial assets Trade and other receivables Other ...

Page 211
... Sustainability and citizenship Report on expected developments and associated material opportunities and risks 242 242 C .10 Compensation Report and legal disclosures C.11 Siemens AG (Discussion on basis of German Commercial Code) D. E. Consolidated Financial Statements Additional Information...

Page 212
..., plan assets increased by â,¬ 2.427 billion due mainly to a positive return, primarily driven by fixed-income and equity investments. Total equity attributable to shareholders of Siemens AG increased from â,¬ 28.111 billion at the end of fiscal 2013 to â,¬ 30.954 billion at the end of fiscal 2014...

Page 213
... "Siemens 2014" program, which helped to increase our cost productivity. Furthermore, we initiated "Vision 2020," a long-term and comprehensive concept for sustainable value creation. With this concept we aim to achieve profitable growth through greater customer proximity and accelerated innovation...

Page 214
... first quarter of fiscal 2015. 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets position 214

Page 215
... Conduct Guidelines are binding for all companies controlled by Siemens. Furthermore, we believe that close collaboration with stakeholders supports us in addressing complex, interlocking sustainability challenges and topics. Maintaining an intensive dialogue with partners along the supply chain...

Page 216
.... Healthcare: 48 (14%) 343 Financial Services: 3 (1%) Industry: 90 (26%) Infrastructure & Cities: 88 (26%) 1 Continuing operations. Siemens believes that employee engagement is a key driver for sustainable company performance. An engaged workforce drives innovation, growth and profitability...

Page 217
... Company's sustainable strategy and an integral part of our business processes. We therefore develop central programs and processes that are applied locally and adapted to the respective business needs. Occupational safety and health management are an integral part of our Business Conduct Guidelines...

Page 218
... of automation, data to business or system integration. With its global network of experts, our corporate research unit serves as a strategic partner for Siemens' operating units. CT makes important contributions along the entire value chain, from research and development to production technology...

Page 219
... Sustainability and citizenship Report on expected developments and associated material opportunities and risks 242 242 C .10 Compensation Report and legal disclosures C.11 Siemens AG (Discussion on basis of German Commercial Code) D. E. Consolidated Financial Statements Additional Information...

Page 220
...support its implementation in their own supply 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets...

Page 221
... part of our training program. C.8.6 Environmental Portfolio Indicators 1 Year ended September 30, 2014 2013 C.8.5 Distribution and customer relations Our Divisions have global responsibility for their business, sales and results. They are able to support customers around the world directly...

Page 222
... product and system design." This internal 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets...

Page 223
..., to fulfill growing international requirements with regard to environmental protection, to increase customer benefits, and to proactively strengthen our position as a sustainable company will be kept. The two reconfirmed programs will run from 2015 to 2020. management systems. Due to this...

Page 224
... local units in each country. This ensures that we provide support where it is needed most. In doing so, we apply high management standards and strategically focus our corporate citizenship activities in areas where our company competencies, resources and employee volunteering can make a meaningful...

Page 225
... in oil prices since summer 2014. On the one hand, the oil price decline is a symptom of slack global demand relative to supply. On the other hand it is a stabilizing factor for oil importing countries, because it increases purchasing power for consumers and reduces costs for many businesses. The...

Page 226
... the markets served by our Building Technologies Division, we expect moderate growth in fiscal 2015. On a regional basis, we expect growth in Europe, C.I.S., Africa, Middle East to pick up in fiscal 2015. Within the region, we expect growth rates in Europe including Germany to increase slightly year...

Page 227
... for innovation. As part of our One Siemens framework, we target a total cost productivity increase of 3 % to 4 %. Furthermore, we expect a significant reduction in project charges compared to fiscal 2014. C.9.1.3 SIEMENS GROUP We are basing our outlook for fiscal 2015 for the Siemens Group and...

Page 228
... Wind Power and Renewables Energy Management Building Technologies Mobility Digital Factory Process Industries and Drives Healthcare SFS (ROE (after taxes)) 11 - 15% 5 - 8% 7 - 10% 8 - 11% 6 - 9% 14 - 20% 8 - 12% 15 - 19% 15 - 20% Capital efficiency Our primary measure for managing and controlling...

Page 229
... our business strategies, our risk management policy is set by the Managing Board. Our organizational and accountability structure as of September 30, 2014 requires each of the respective managements of our Sectors, SFS, SRE, regions and Corporate Units to implement risk management programs that...

Page 230
... Committee (CRIC) Reports to and supports the Managing Board in matters relating to the implementation, operation and oversight of an effective Risk and Internal Control System. Chief Risk & Internal Control Officer Chairman of the CRIC. Defines and monitors application of ERM strategy, policy...

Page 231
... Sustainability and citizenship Report on expected developments and associated material opportunities and risks 242 242 C .10 Compensation Report and legal disclosures C.11 Siemens AG (Discussion on basis of German Commercial Code) D. E. Consolidated Financial Statements Additional Information...

Page 232
...the largest amount of goodwill is allocated to 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets...

Page 233
... Sustainability and citizenship Report on expected developments and associated material opportunities and risks 242 242 C .10 Compensation Report and legal disclosures C.11 Siemens AG (Discussion on basis of German Commercial Code) D. E. Consolidated Financial Statements Additional Information...

Page 234
...affect our business, financial condition, results of operations and reputation. We may face operational failures and quality problems in our value chain processes: Our value chain comprises all steps, from research and development to supply chain management, production, marketing, sales and services...

Page 235
... and interest rates, our hedging activities could have significant effects on our business, financial condition and results of operations. Changes in the fair value of warrants issued together with US$ 3 billion bonds in fiscal 2012 depends mainly on the underlying Siemens and OSRAM share prices as...

Page 236
... risks, including credit, interest rate and foreign exchange risk: We provide our customers with various forms of direct and indirect financing in connection with large projects. We also finance a large number of customer orders, for example, the leasing of medical equipment, mainly through SFS...

Page 237
... and has issued group-wide policies establishing the details of its general decision. We expect that sales to emerging markets will account for an increasing portion of our total revenue, as our business naturally evolves and as developing nations and regions around the world increase their demand...

Page 238
... opportunities described below 108 A. To our Shareholders 131 B. Corporate Governance 171 172 187 193 205 210 C. C .1 C.2 C.3 C.4 C.5 Combined Management Report Business and economic environment Financial performance system Results of operations Financial position Net assets position 238

Page 239
...equity investments or partnerships to complement organic growth. Such activities could help us to strengthen our market position in our existing markets, provide access to new markets or complement our technological portfolio in selected areas. Localizing value chain activities in low-cost countries...

Page 240
... the Consolidated Financial Statements consists of the closing data reported by the operations of Siemens AG and its subsidiaries, which are derived from the various accounting records. The preparation of the closing data of most of our subsidiaries is supported by an internal shared services...

Page 241
... STATEMENTS OF SIEMENS AG (GERMAN COMMERCIAL CODE) 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 information set out above also applies for Annual Financial Statements of Siemens AG...

Page 242
... for Siemens AG is largely the same as for the Siemens Group and is described in detail in C.1.2 ECONOMIC ENVIRONMENT . Cost of sales Gross profit as percentage of revenue Research and development expenses Selling and general administrative expenses Other operating income (expenses), net Financial...

Page 243
... revenue grew 31 % year-over-year in the Asia, Australia region and declined 12 % in the Americas region and 3 % in the Europe, C.I.S., Africa, Middle East region. Exports from Germany accounted for 73 % and 70 % of revenue in fiscal 2014 and 2013, respectively. In fiscal 2014, orders for Siemens AG...

Page 244
... resulted not only from business activities of Siemens AG. The increase in Equity was attributable to net income for the year of â,¬ 3.786 billion and issuance of treasury stock of â,¬ 330 million in conjunction with our share-based compensation program. These factors were partly offset by dividends...

Page 245
...Code is included in C.9.5 SIGNIFICANT CHARACTERISTICS OF THE ACCOUNTING REL ATED INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM . For additional information regarding the use of financial instruments see NOTES TO THE ANNUAL FINANCIAL STATEMENTS OF SIEMENS AG . Employee turnover rate 1 Female employees...

Page 246
...) and full IFRS as issued by the Inter national Accounting Standards Board (IASB). They give a true and fair view of the net assets, financial position and results of operations of the group in accordance with these requirements. WWW.SIEMENS.COM/AR/CONSOLIDATED- FINANCIAL-STATEMENTS 246

Page 247
... - Financial risk management - Share-based payment - Personnel costs - Earnings per share - Segment information - Information about geographies - Related party transactions - Principal accountant fees and services - Corporate Governance - Subsequent events - List of subsidiaries and associated...

Page 248
D.1 Consolidated Statements of Income For the fiscal years ended September 30, 2014 and 2013 (in millions of â,¬, per share amounts in â,¬) Note 2014 2013 Revenue Cost of sales Gross profit Research and development expenses Selling and general administrative expenses Other operating income Other ...

Page 249
... 2014 and 2013 (in millions of â,¬) Note 2014 2013 Net income Remeasurements of defined benefit plans Items that will not be reclassified to profit or loss therein: Expenses from investments accounted for using the equity method Currency translation differences AvailableÂforÂsale financial assets...

Page 250
...LongÂterm debt PostÂemployment benefits Deferred tax liabilities Provisions Other financial liabilities Other liabilities Total nonÂcurrent liabilities Total liabilities Equity Issued capital, no par value Capital reserve Retained earnings Other components of equity Treasury shares, at cost Total...

Page 251
... from operating activities - continuing and discontinued operations Cash flows from investing activities Additions to intangible assets and property, plant and equipment Acquisitions of businesses, net of cash acquired Purchase of investments Purchase of current availableÂforÂsale financial assets...

Page 252
D.5 Consolidated Statements of Changes in Equity For the fiscal years ended September 30, 2014 and 2013 Issued capital (in millions of â,¬) Capital reserve Retained earnings Balance as of October 1, 2012 Net income Other comprehensive income, net of income taxes Dividends ShareÂbased payment ...

Page 253
Currency translation differences AvailableÂforÂsale financial assets Derivative financial instruments Treasury shares at cost Total equity attributÂ able to shareholders of Siemens AG NonÂcontrolling interests Total equity 857 - (1,017 160) (160) - 905 745 245 - 183 428 428 - (56 373...

Page 254
...for issue by the Managing Board on November 26, 2014. The Consolidated Financial Statements are generally prepared on the historical cost basis, except as stated in NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . loses control of the subsidiary. For Consolidated Financial Statements, all assets...

Page 255
... 50 % of the voting rights). These are recorded in the Consolidated Financial Statements using the equity method and are initially recognized at cost. When Siemens holds less than 20 % of the voting power of the investee, other facts and circumstances may result in the Company exercising significant...

Page 256
...lease. Finance income is subsequently recognized based on a pattern reflecting a constant periodic rate of return on the net investment using the effective interest method. A selling profit component on 108 A. To our Shareholders 131 B. Corporate Governance 171 C. Combined Management Report...

Page 257
... operations and net income, all attributable to ordinary shareholders of Siemens AG by the weighted average number of shares outstanding during the year. Diluted earnings per share are calculated by assuming conversion or exercise of all potentially dilutive securities and share-based payment plans...

Page 258
... NOTE 4 ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS that refer to the Consolidated Statements of Income and the Consolidated Statements of Cash Flow relate to continuing operations. 108 A. To our Shareholders 131 B. Corporate Governance 171 C. Combined Management Report 258

Page 259
... Notes to Consolidated Financial Statements outside NOTE 4 ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS that refer to the Consolidated Statements of Financial Position generally relate to assets that are not held for disposal. Siemens reports non-current assets or disposal groups held for...

Page 260
... recognized in the Consolidated Statements of Income. The present value of the recognized obligations associated with the retirement of property, plant and equipment (asset retirement obligations) that result from the acquisition, construction, development or normal use of an asset is added to the...

Page 261
... are re-measured at fair value at the end of each reporting period and upon settlement. The fair value of share-based awards, such as stock awards, matching shares, and shares granted under the Jubilee Share Program, is determined as the market price of Siemens shares, considering dividends during...

Page 262
... of adopting IFRS 9 on the Company's Consolidated Financial Statements. In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers. According to the new standard, revenue is recognized to depict the transfer of promised goods or services to a customer in an amount that reflects the...

Page 263
... average cost of capital and tax rates. These estimates, including the methodology used, can have a material impact on the respective values and ultimately the amount of any goodwill impairment. Likewise, whenever property, plant and equipment, other intangible assets and investments accounted for...

Page 264
... technology developments in the four to 85 megawatt power output range as well as preferred access to supply and engineering services of Rolls-Royce. The regulatory authorities approved the transaction after fiscal year end. Closing is expected in the first quarter of fiscal 2015. Income taxes...

Page 265
..., plant and equipment Investments previously accounted for using the equity method Other financial assets Other assets Assets classified as held for disposal Trade payables Current provisions Other current liabilities Post employment benefits Other nonÂcurrent liabilities Liabilities associated...

Page 266
... tax in fiscal 2014 and 2013 includes â,¬ 64 million and â,¬(80) million, respectively, related to former Communications activities. bc) Discontinued operations Customer Solutions Health Services In August 2014, Siemens announced its plans to sell its hospital information system business (Customer...

Page 267
... and associates in fiscal 2014 in NO TE 41 LIST OF SUBSIDIARIES AND ASSOCIATED COMPANIES PURSUANT TO SECTION 313 PARA. 2 OF THE GERMAN COMMERCIAL CODE and NOTE 4 ACQUISITIONS, DISPOSITIONS AND DIS- CONTINUED OPERATIONS . INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Year ended September...

Page 268
... of customer contracts. Item Other interest income (expense), net includes all other interest amounts primarily consisting of interest relating to corporate debt, and related hedging activities, as well as interest income on corporate assets. Other operating expenses in fiscal 2014 and 2013 include...

Page 269
... and 2013 is mainly related to the utilization of tax loss carryforwards, partly compensated by tax effects in connection with positive appeal proceedings in 2014. 247 248 249 250 251 D. D.1 D.2 D.3 D.4 Consolidated Financial Statements Consolidated Statements of Income Consolidated Statements of...

Page 270
... total tax rate results in 31 %. Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the period when the asset is realized or the liability is settled. For foreign subsidiaries, current taxes are calculated based on the local tax laws and applicable tax rates...

Page 271
... of â,¬) 2014 2013 Trade receivables from the sale of goods and services Receivables from finance leases 12,537 1,988 14,526 12,932 1,921 14,853 247 248 249 250 251 D. D.1 D.2 D.3 D.4 Consolidated Financial Statements Consolidated Statements of Income Consolidated Statements of Comprehensive...

Page 272
... presented in NO TE 11, 12 AND 18 , which belong to the class of financial assets measured at (amortized) cost are as follows (excluding receivables from finance leases): Minimum future lease payments to be received are as follows: September 30, (in millions of â,¬) 2014 2013 Within one year Year...

Page 273
... of acquisition or production cost and net realizable value. The respective write-downs, as compared to prior year, increased by â,¬ 1 million and â,¬ 39 million as of September 30, 2014 and 2013. 247 248 249 250 251 D. D.1 D.2 D.3 D.4 Consolidated Financial Statements Consolidated Statements of...

Page 274
...Acquisitions and purchase accounting adjustments (in millions of â,¬) Dispositions, reclassifications incl. reclassifications to assets classified as held for disposal Impairments Carrying amount as of 09/30/2014 Sectors Energy Healthcare Industry Infrastructure & Cities Total Sectors Financial...

Page 275
... years based on past experience, actual operating results and management's best estimate about future developments as well as market assumptions. The determined fair value of the Divisions or equivalents is assigned to level 3 of the fair value hierarchy. The fair value less costs to sell is mainly...

Page 276
...at Healthcare. Amortization and impairment on intangible assets is contained in line items Cost of sales, Research and development expenses or Selling and general administrative expenses, depending on the use of the asset. As of September 30, 2014 and 2013, contractual commitments for purchases of...

Page 277
...related to costs incurred and future costs. As of September 30, 2014 and 2013, minimum future lease payments receivable from lessees under operating leases are as follows: Payments from lessees under operating leases primarily relate to buildings, medical equipment and transportation systems. Total...

Page 278
... Other employee related costs primarily includes vacation payments, accrued overtime and service anniversary awards, severance payments, as well as liabilities related to termination benefits. (in millions of â,¬) 2014 2013 Loans receivable Receivables from finance leases, see NOTE 11 TRADE AND...

Page 279
... of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Financial Position Consolidated Statements of Cash Flows 252 254 330 D.5 D.6 D.7 Consolidated Statements of Changes in Equity Notes to Consolidated Financial Statements Supervisory Board and Managing Board 337...

Page 280
... Siemens participates directly or indirectly 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...

Page 281
... as post-employment health care and life insurance benefits to employees in the U.S. and Canada. these plans. However, these frozen plans still expose the Company to actuarial risks such as investment risk, interest rate risk and longevity risk. Furthermore, deferred compensation plans are offered...

Page 282
... of all active employees and retirees. The board of the pension fund is responsible for the investment policy and the asset management, as well as for any changes in the plan rules, in which it determines the necessary contributions to finance the benefits. The Company is required to make total...

Page 283
... financial assumptions Experience (gains) losses Plan participants' contributions Benefits paid Settlement payments Business combinations, disposals and other Foreign currency translation effects Defined benefit obligation at end of year Thereof: Active employees Former employees with vested rights...

Page 284
... income and net interest expenses Employer contributions Plan participants' contributions Benefits paid Settlement payments Business combinations, disposals and other Liability administration costs Foreign currency translation effects Fair value of plan assets at end of year 24,078 802 24,057...

Page 285
... value of the defined benefit obligation calculated with the projected unit credit method) has been applied as when calculating the post-employment benefit obligation recognized in the Consolidated Statement of Financial Position. Increases and decreases in the discount rate, rate of compensation...

Page 286
... plans was 13 years as of September 30, 2014 and 2013. MULTI-EMPLOYER DEFINED BENEFIT PLANS Multi-employer plans mainly exist in the Netherlands and in the U.S. These plans are industry specific plans based on local laws, which are accounted for as defined contribution plans as Siemens has no right...

Page 287
...construction, sales and leasing contracts. In fiscal 2014, the Power Transmission Division of the Energy Sector incurred charges totaling â,¬ 298 million related to two high voltage direct current (HVDC) transmission line projects in Canada, resulting from revised estimates for civil engineering and...

Page 288
... of â,¬) 2014 2013 Employee related liabilities Liabilities due to employees and retirees in the U.S. not qualifying for presentation as PostÂemployment benefits Deferred income Accruals for pending invoices Severance payments German pension insurance association - Pensionssicherungsverein...

Page 289
... September 30, 2014 and 2013, the Company has a total of 1,087,200 thousand and 1,084,600 thousand authorized shares. AUTHORIZED CAPITAL (NOT ISSUED) The Company 's shareholders authorized the Managing Board, with the approval of the Supervisory Board, to increase capital stock through the issuance...

Page 290
..., 2015. NOTE 26 Additional capital disclosures Siemens believes that sustainable revenue and profit development is supported by a healthy capital structure. A key consideration of our capital structure management is to maintain ready access to the capital markets through various debt products and...

Page 291
... derive an industrial net debt which is not affected by SFS's financing activities. To reflect Siemens' total postÂemployment benefit liability, industrial net debt includes line item PostÂemployment benefits as presented in the Consolidated Statements of Financial Position. The adjustment for our...

Page 292
...38 million relating to credit guarantees as of September 30, 2014 and 2013, respectively. Furthermore, Siemens issues guarantees of third-party performance, which include performance bonds and guarantees of advanced payments in cases where Siemens is the general or subsidiary partner in a consortium...

Page 293
...relates to claims of breaches of organizational and supervisory duties in view of the accusations of illegal business practices that occurred in the course of international business transactions in calendar 2003 to 2006 and the resulting financial burdens for the Company. In January 2013, Siemens AG...

Page 294
... transport projects, several Brazilian authorities initiated investigations relating to alleged criminal acts (corruptive payments, anti-competitive conduct, undue influence on public tenders). In March 2014, Siemens Ltda. Brazil signed an agreement with the Public Prosecutor's Office of the State...

Page 295
... of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Financial Position Consolidated Statements of Cash Flows 252 254 330 D.5 D.6 D.7 Consolidated Statements of Changes in Equity Notes to Consolidated Financial Statements Supervisory Board and Managing Board 337...

Page 296
...2014 (in millions of â,¬) Fair value Carrying amount September 30, 2013 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 nonÂderivative financial assets AvailableÂforÂsale...

Page 297
...-sale financial assets quoted in an active market is based on price quotations at the period-end date. The fair value of debt instruments is either based on prices provided by price service agencies or estimated by discounting future cash flows using current market interest rates. The Company limits...

Page 298
... unobservable input used to determine the fair value is the cash flow forecast which is mainly based on the future power generation income. This income is generally subject to future market developments and thus price volatility. Since a long-term power purchase agreement is in place that mitigates...

Page 299
... of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Financial Position Consolidated Statements of Cash Flows 252 254 330 D.5 D.6 D.7 Consolidated Statements of Changes in Equity Notes to Consolidated Financial Statements Supervisory Board and Managing Board 337...

Page 300
... from forecast sales and purchases as well as firm commitments. This risk results mainly from contracts denominated in US$ both from Siemens' operating units entering into long-term contracts, e.g. project business, and from the standard product business. Cash flow hedges - As of September 30, 2014...

Page 301
... its business strategies. Siemens' financial risk management policy is set by the Managing Board. Siemens' organizational and accountability structure as of September 30, 2014 requires each of the respective managements of Siemens Sectors, Financial Services, SRE, regions and Corporate Units to...

Page 302
... rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies as well as production activities and other contributions along the value chain in the local markets. Operating units (total Sectors and SFS) are prohibited from borrowing or investing...

Page 303
...term structure of SFS's financial assets and liabilities. The Company 's interest rate risk results primarily from the funding in U.S. dollar, GBP and euro. If there are no conflicting country-specific regulations, all Siemens operating units generally obtain any required financing through Corporate...

Page 304
..., dividend payments, pension plan funding and portfolio activities. In addition to having implemented effective working capital and cash management, Siemens mitigates liquidity risk by arranged credit facilities with highly rated financial institutions, via a debt issuance program and via a global...

Page 305
... the conditions under which direct or indirect financing will be offered to customers. As part of the process, internal risk assessment specialists determine and continuously update ratings and credit limits for Siemens' public and private customers. For public customers our policy provides...

Page 306
... the Company 's Base Share Program. STOCK AWARDS The Company grants stock awards as a means for providing share-based compensation to members of the Managing Board, members of the senior management of Siemens AG and its domestic and foreign subsidiaries and other eligible employees. Stock awards...

Page 307
...SHARE MATCHING PROGRAM AND ITS UNDERLYING PLANS 1. Share Matching Plan In fiscal 2014 and 2013, the Company issued a new tranche under the Share Matching Plan. Senior managers of Siemens AG and participating Siemens companies may invest a specified percentage of their compensation in Siemens shares...

Page 308
... 2013, the Company issued a new tranche under the Base Share Program. Employees of Siemens AG and participating domestic Siemens companies can invest a fixed amount of their compensation into Siemens shares, sponsored by Siemens with a tax beneficial allowance. The shares are bought at market price...

Page 309
... share. Year ended September 30, (in thousands) 2014 2013 Manufacturing and services Sales and marketing Research and development Administration and general services 213.6 68.6 28.8 33.5 344.4 215.0 71.1 28.1 34.4 348.7 247 248 249 250 251 D. D.1 D.2 D.3 D.4 Consolidated Financial Statements...

Page 310
...Total revenue (in millions of â,¬) 2014 2013 2014 2013 2014 2013 2014 2013 Sectors Energy Healthcare Industry Infrastructure & Cities Total Sectors Equity Investments Financial Services (SFS) Reconciliation to Consolidated Financial Statements Centrally managed portfolio activities Siemens...

Page 311
... of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Financial Position Consolidated Statements of Cash Flows 252 254 330 D.5 D.6 D.7 Consolidated Statements of Changes in Equity Notes to Consolidated Financial Statements Supervisory Board and Managing Board 337...

Page 312
...SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES . Lease transactions, however, are classified as operating leases for internal and segment reporting purposes. Intersegment transactions are based on market prices. Profit of the Sectors and of Equity Investments: Siemens' Managing Board is responsible for...

Page 313
... SFS. Asset measurement principles: Management determined Assets as a measure to assess capital intensity of the Sectors and Equity Investments (Net capital employed). Its definition corresponds to the Profit measure. It is based on Total assets of the Consolidated Statements of Financial Position...

Page 314
..., Equity Investments and SFS to Total assets of Siemens' Consolidated Statements of Financial Position: (in millions of â,¬) 2014 2013 September 30, (in millions of â,¬) 2014 2013 Europe, C.I.S.,1 Africa, Middle East Americas Asia, Australia Siemens thereof Germany thereof foreign countries...

Page 315
...in the ordinary course of business whereby Siemens buys and sells a wide variety of products and services generally on arm's length terms. For information regarding our subsidiaries, joint ventures and associated in fiscal 2014 see NOTE 5 NO TE 41 LIST OF SUBSIDIARIES INTERESTS IN OTHER ENTITIES and...

Page 316
... Stock Awards at grant date amounted to â,¬ 11.5 million. In fiscal 2014 and 2013, expense related to share-based payment and to the Share Matching Program amounted to â,¬ 16.1 million (including the above mentioned Stock Awards in connection with the departure from members of the Managing Board...

Page 317
.... CORPORATE SATION REPORT is presented within the chapter GOVERNANCE . In fiscal 2014 and 2013, no other major transactions took place between the Company and the other members of the Managing Board and the Supervisory Board. Some of our board members hold, or in the last year have held, positions...

Page 318
... Siemens Finance & Leasing GmbH, Munich Siemens Financial Services GmbH, Munich Siemens Fonds Invest GmbH, Munich Siemens Fuel Gasification Technology GmbH & Co. KG, Freiberg Siemens Fuel Gasification Technology Verwaltungs GmbH, Freiberg Siemens Global Innovation Partners Management GmbH, Munich...

Page 319
... Center VerwaltungsÂGmbH, ZwÃ¶nitz Siemens Medical Solutions Health Services GmbH, Erlangen Siemens Nixdorf Informationssysteme GmbH, GrÃ¼nwald Siemens Novel Businesses GmbH, Munich Siemens Postal, Parcel & Airport Logistics GmbH, Constance Siemens Power Control GmbH, Langen Siemens Private Finance...

Page 320
... / France Siemens France Holding, SaintÂDenis / France Siemens Healthcare Diagnostics S.A.S., SaintÂDenis / France Siemens Industry Software SAS, VÃ©lizyÂVillacoublay / France Siemens Lease Services SAS, SaintÂDenis / France SIEMENS Postal Parcel Airport Logistics S.A.S., Paris / France Siemens...

Page 321
... of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Financial Position Consolidated Statements of Cash Flows 252 254 330 D.5 D.6 D.7 Consolidated Statements of Changes in Equity Notes to Consolidated Financial Statements Supervisory Board and Managing Board 337...

Page 322
... Gasification Technology Holding AG, Zug / Switzerland Siemens Healthcare Diagnostics AG, Zurich / Switzerland Siemens Industry Software AG, Zurich / Switzerland Siemens Postal, Parcel & Airport Logistics AG, Zurich / Switzerland Siemens Power Holding AG, Zug / Switzerland Siemens Schweiz AG, Zurich...

Page 323
... of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Financial Position Consolidated Statements of Cash Flows 252 254 330 D.5 D.6 D.7 Consolidated Statements of Changes in Equity Notes to Consolidated Financial Statements Supervisory Board and Managing Board 337...

Page 324
... & Airport Logistics LLC, Wilmington, DE / United States Siemens Power Generation Service Company, Ltd., Wilmington, DE / United States Siemens Product Lifecycle Management Software Inc., Wilmington, DE / United States Siemens Public, Inc., Wilmington, DE / United States Siemens USA Holdings, Inc...

Page 325
... Siemens Electrical Drives Ltd., Tianjin / China Siemens Factory Automation Engineering Ltd., Beijing / China Siemens Finance and Leasing Ltd., Beijing / China Siemens Financial Services Ltd., Beijing / China Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai / China Siemens Healthcare Diagnostics...

Page 326
... Private Limited, Mumbai / India Siemens Postal Parcel & Airport Logistics Private Limited, Mumbai / India Siemens Rail Automation Pvt. Ltd., Bangalore / India Siemens Technology and Services Private Limited, Mumbai / India P.T. Siemens Indonesia, Jakarta / Indonesia PT. Siemens Industrial Power...

Page 327
... of Income Consolidated Statements of Comprehensive Income Consolidated Statements of Financial Position Consolidated Statements of Cash Flows 252 254 330 D.5 D.6 D.7 Consolidated Statements of Changes in Equity Notes to Consolidated Financial Statements Supervisory Board and Managing Board 337...

Page 328
... Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou / China Xi'An XÂRay Target Ltd., Xi'an / China Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China Bangalore International Airport Ltd., Bangalore / India Transparent Energy Systems Private Limited, Pune / India P.T. Jawa Power...

Page 329
...nwald OSRAM Licht AG, Munich Siemens Global Innovation Partners I GmbH & Co. KG, Munich Siemens Pensionsfonds AG, GrÃ¼nwald SIM 9. GrundstÃ¼cksverwaltungsÂ und ÂbeteiligungsÂGmbH, Munich Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (5 companies) Dils...

Page 330
...Michael Diekmann Chairman of the Board of Management of Allianz SE Date of birth: December 23, 1954 Member since: January 24, 2008 External positions German supervisory board positions: > Allianz Asset Management AG, Munich (Chairman) > Allianz Deutschland AG, Munich > BASF SE, Ludwigshafen am Rhein...

Page 331
..., 1965 Member since: October 1, 2013 External positions German supervisory board positions: > Allianz SE, Munich > SAP SE, Walldorf Positions outside Germany: > Bang & Olufsen A / S, Denmark (Deputy Chairman) > Danske Bank A / S, Denmark Harald Kern* Chairman of the Siemens Europe Committee Date of...

Page 332
...Â ing Supervisory Board approval of the Annual Financial Statements of Siemens AG and the Consolidated Financial Statements of the Siemens Group. In addition to the work performed by the independent auditors, the Audit Committee discusses the Company's quarterly financial statements and halfÂyear...

Page 333
...ing questions relating to the Company 's financial situation and structure â€' including annual planning (budget) â€' as well as the Company 's fixed asset investments and its financial measures. In addition, the Innovation and Finance Committee has been authorized by the Supervisory Board to decide...

Page 334
...board positions: > BSH Bosch und Siemens HausgerÃ¤te GmbH, Munich Hermann Requardt, Prof. Dr. phil. nat. Date of birth: February 11, 1955 First appointed: May 1, 2006 Term expires: March 31, 2016 External positions German supervisory board positions: > Software AG, Darmstadt Group Company positions...

Page 335
... with the issuance of employee stock as well as the implementation of certain capital measures. It also determines the scope and conditions of the shareÂbased compensation components and / or compensation programs for employees and managers (with the exception of the Managing Board). Joe Kaeser...

Page 336
How have the Company's key business figures developed over the past five years? What are the key financial dates for the next twelve months? How is the Company structured? All this information is available here. WWW.SIEMENS.COM/AR/ADDITIONAL-INFORMATION 336

Page 337
... Statement 339 E.2 Independent Auditor's Report 341 E.3 Statement of the Managing Board 342 E.4 Company structure 344 E.5 Five-year summary 345 E.6 Notes and forward-looking statements 346 E.7 Further information and information resources 347 E.8 Financial calendar 33 7 E. Additional Information

Page 338
...the Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group Management Report, which has been combined with the Management Munich, November 26, 2014 Siemens Aktiengesellschaft The Managing Board Report...

Page 339
... of the group's internal control system. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe...

Page 340
... financial statements and group management report, the group management report is consistent with the consolidated financial statements, and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development. Munich, November 26, 2014...

Page 341
... are conducted correctly and in accordance with the applicable legal requirements. Members of the management of the Company Units have confirmed to us the correctness of the financial data they have reported to Siemens' corporate headquarters and the effectiveness of the related control systems...

Page 342
E.4 Company structure Managing Board of Siemens AG Corporate Core Joe Kaeser President and Chief Executive Officer Roland Busch Lisa Davis Corporate Development Joe Kaeser Governance & Markets Mariel von Schumann Communications and Government Affairs Stephan Heimbach Legal and Compliance ...

Page 343
... Services Roland ChalonsÂBrowne Process Industries and Drives Peter Herweck 247 D. Consolidated Financial Statements 337 338 339 341 342 E. E.1 E.2 E.3 E.4 Additional Information 343 Responsibility Statement Independent AuditorÊ¼s Report Statement of the Managing Board Company structure...

Page 344
... per share Siemens stock price (Xetra closing price) High Low Fiscal yearÂend Siemens stock price performance yearÂoverÂyear Compared to DAXÂ® Compared to MSCI World Number of shares issued (September 30) Market capitalization 5 Credit rating of longÂterm debt Standard & Poor's Ratings Services...

Page 345
... to measures of Siemens' net assets and financial positions or results of operations as presented in accordance with IFRS in its Consolidated Financial Statements. Other companies that report or describe similarly titled financial measures may calculate them differently. Due to rounding, numbers...

Page 346
... at: WWW.SIEMENS.COM/SUSTAINABILIT Y WWW.SIEMENS.COM/SUSTAINABILIT Y-FIGURES Controlling and Finance Dr. Marcus Mayer Layout / Production hw.design GmbH In addition to our Annual Report at the end of each fiscal year, we publish quarterly consolidated financial statements in the form of press...

Page 347
...: WWW.SIEMENS.COM/FINANCIAL-CALENDAR 247 D. Consolidated Financial Statements 337 338 339 341 342 E. E.1 E.2 E.3 E.4 Additional Information 3 47 Responsibility Statement Independent AuditorÊ¼s Report Statement of the Managing Board Company structure 344 345 346 347 E.5 E.6 E.7 E.8 FiveÂyear...

Page 348
siemens.com /annual-report Order no. AR 20 14-E

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