Siemens 2015 Annual Report Download

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Annual Report
2015
siemens.com

Table of contents

  • Page 1
    Annual Report 2015 siemens.com

  • Page 2
    ... B.5 p 62 Consolidated Statements of Changes in Equity A.7 p 21 Subsequent events B.6 p 64 Notes to Consolidated Financial Statements A.8 p 22 Report on expected developments and associated material opportunities and risks A.9 p 35 Siemens AG A.10 p 38 Compensation Report A.11 p 53...

  • Page 3
    A. Combined Management Report

  • Page 4
    ... and Renewables; Energy Management; Building Technologies; Mobility; Digital Factory; and Process Industries and Drives as well as the separately managed business Healthcare, which together form our Industrial Business. The Division Financial Services (SFS) supports the activities of our Industrial...

  • Page 5
    ...of Care Diagnostics and Services. The Financial Services (SFS) Division provides business-tobusiness financial solutions. With specialist financing and technology expertise in the areas of Siemens businesses, SFS supports customer investments with leasing solutions and Combined Management Report 3

  • Page 6
    ... than 30 countries: a total of more than 24 million data sets annually. We use this data to provide value for our customers: in 85 % of cases, problems can be corrected and turbines restarted without the need to send out a service team. The R & D activities of our Energy Management Division focus on...

  • Page 7
    ... into a digitalized condition monitoring and controlling system while increasing energy efficiency, reducing material costs and further cutting emissions. The R & D activities of our Healthcare business are directed towards our growth fields in therapy, molecular diagnostics, and services. We want...

  • Page 8
    ... extraction costs. Competitors of the Energy Management Division consist mainly of a small number of large multinational companies. International competition is increasing from manufacturers in emerging countries such as China, India and Korea. Markets for the Building Technologies Division grew...

  • Page 9
    ... in high-speed trains, urban transport and rail infrastructure. The Division's principal competitors are multinational companies. Consolidation among Mobility 's competitors is continuing. In fiscal 2015, markets for the Digital Factory Division grew in all regions. Markets in Asia, Australia grew...

  • Page 10
    ... due to our new strategy "Vision 2020", as described in the ANNUAL REPORT FOR FISCAL 2014 . In line with common practice in the financial services business, our financial indicator for measuring capital efficiency at Financial Services (SFS) is return on equity after tax, or ROE (after tax). ROE is...

  • Page 11
    ... year. Calculation of capital employed Total equity Plus: Long-term debt Plus: Short-term debt and current maturities of long-term debt Less: Cash and cash equivalents Less: Current available-for-sale financial assets Plus: Post-employment benefits Less: SFS Debt Less: Fair value hedge accounting...

  • Page 12
    ... year (in millions of â,¬) 2015 2014 Actual % Change Comp. Revenue (location of customer) Fiscal year (in millions of â,¬) 2015 2014 Actual % Change Comp. Europe, C. I. S., Africa, Middle East therein: Germany Americas therein: U. S. Asia, Australia therein: China Siemens therein: emerging markets...

  • Page 13
    ... the E-Houses and Modules business segment that was previously included within the Process Industries and Drives Division. If this change had already been effective in fiscal 2015, profit margin for Power and Gas would have been 10.5 %. Order intake was down year-over-year, due mainly to a sharply...

  • Page 14
    ... Profit Profit margin 6,099 5,999 553 9.2% 5,587 5,569 511 9.2% 9% 8% 8% 2% 1% every quarter. In contrast, the Division's rolling stock businesses generated lower revenue in the second half of fiscal 2015 due to timing of large rail projects following completion of older projects while new...

  • Page 15
    ... in commodity-related markets and those influenced by low oil prices. As a result, the Division saw a sharp decrease in orders in its oil & gas and marine business and a moderate order decline in its large drives business, due mainly to a lower volume from large orders. Reported revenue increased in...

  • Page 16
    ... Management Building Technologies Mobility Digital Factory Process Industries and Drives Healthcare Industrial Business Profit margin Industrial Business Financial Services (SFS) Reconciliation to Consolidated Financial Statements Income from continuing operations before income taxes Income tax...

  • Page 17
    ... positive currency translation effects of â,¬ 3.6 billion, led by the U. S. dollar. In fiscal 2015, the acquisitions of Dresser-Rand and Rolls-Royce Energy aero-derivative gas turbine and compressor business were the major factors related to the increases in goodwill and other intangible assets with...

  • Page 18
    ...-term debt Post-employment benefits Deferred tax liabilities Provisions Other financial liabilities Other liabilities Total non-current liabilities Total liabilities Debt ratio Total equity attributable to shareholders of Siemens AG Equity ratio Non-controlling interests Total liabilities and equity...

  • Page 19
    ...the financial management see NOTE 24 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . For further information about our debt see Capital structure ratio Our capital structure ratio as of September 30, 2015 increased to 0.6 from 0.1 a year earlier...

  • Page 20
    ... the acquisition of Dresser-Rand and â,¬ 1.3 billion related to the acquisition of Rolls-Royce Energy aero-derivative gas turbine and compressor business. The cash outflows for other purchases of assets primarily included additions of assets eligible as central-bank-collateral and additional funding...

  • Page 21
    ... projects, such as new corporate office buildings in Germany. SRE is responsible for uniform and comprehensive management of Company real estate worldwide, and supports the Industrial Business and corporate activities with customer-specific real estate solutions. With regard to capital expenditures...

  • Page 22
    ... Healthcare, Digital Factory, Mobility and Building Technologies continued to operate very successfully in their markets and increased their profits compared to fiscal 2014. The Energy Management Division achieved the largest profit improvement year-over-year, following a loss on substantial project...

  • Page 23
    ... the sale of our hearing aid business and the above-mentioned gain from the sale of our stake in BSH. Basic EPS from net income also benefited from execution of our share buyback program. Overall, our continuous efforts to increase our productivity contributed positively. Our total cost productivity...

  • Page 24
    ... in growth in China may impact investment activities in the minerals and mining industry. For the markets served by the Building Technologies Division, we expect solid growth in fiscal 2016. On a geographic basis, we expect the U. S., China, India and the Middle East to be the main growth drivers...

  • Page 25
    ... result in greater demand for public transport solutions. For fiscal 2016, we expect markets for the Digital Factory Division to be slow, with momentum picking up in the second half of the fiscal year. Differences in growth rates between Siemens' reporting regions are expected to be less pronounced...

  • Page 26
    ... acquisition of Dresser-Rand at the end of the third quarter of fiscal 2015, to add approximately 2 percentage points to our revenue growth rate in fiscal 2016. Furthermore, we assume that momentum in the market environment for our high-margin short-cycle businesses will pick up in the second half...

  • Page 27
    ...authorization granted at the Annual Shareholders' Meeting on January 27, 2015. Shares repurchased may be used for cancelling and reducing capital stock; for issuing shares to employees, to members of the Managing Board and board members of affiliated companies; and for meeting obligations from or in...

  • Page 28
    ... relate to all of our segments. A.8.3.1 STRATEGIC RISKS Competitive markets and technology changes: The worldwide markets for our products and solutions are highly competitive in terms of pricing, product and service quality, product development and introduction time, customer service, financing...

  • Page 29
    ... purchases or contracts already executed. Furthermore, prices may decline as a result of adverse market conditions to a greater extent than currently anticipated. In addition, contracted payment terms, especially regarding the level of advance payments by our customers relating to longterm projects...

  • Page 30
    ... 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. Operational failures in our value chain processes could result in quality problems or potential...

  • Page 31
    ...the project. The profit margins realized on fixed-priced contracts may vary from original estimates as a result of changes in costs and productivity over their term. We sometimes bear the risk of unanticipated project modifications, shortage of key personnel, quality problems, financial difficulties...

  • Page 32
    ...these countries. Due to the political agreement based on the Joint Comprehensive Plan of Action (JCPOA) regarding the Iranian nuclear program, Siemens has revised its internal guidelines in October 2015 which stated that apart from certain limited exceptions no new business activities with customers...

  • Page 33
    ... to review future business practices and we may otherwise be required to further modify our business practices and our compliance program. A considerable part of our business activities involve governments and companies with a public shareholder. We also participate in a number of projects funded by...

  • Page 34
    ... efficient. Data-driven services, software and IT solutions are of decisive importance as they have a substantial influence on all of our future growth fields. Success from innovation: Innovation is a central part of Siemens "Vision 2020", an entrepreneurial concept, leading Siemens into the future...

  • Page 35
    ... year. The overarching objective of our accounting-related internal control and risk management system is to ensure that financial reporting is conducted in a proper manner, such that the Consolidated Financial Statements and the Combined Management Report of Siemens group as well as the Annual...

  • Page 36
    ... them from unauthorized access. The manual and system-based control mechanisms referred to above generally also apply when reconciling the IFRS closing data to the Annual Financial Statements of Siemens AG. On a quarterly basis, an internal certification process is executed. Management of different...

  • Page 37
    ... the Siemens Healthcare GmbH. As of September 30, 2015, the number of employees was 100,900. A.9.1 Results of operations Statement of Income of Siemens AG in accordance with German Commercial Code (condensed) Fiscal year (in millions of â,¬) 2015 2014 % Change Revenue Cost of Sales Gross profit as...

  • Page 38
    ... due mainly to higher deferred tax assets resulting from provisions. This was partly offset by prior-year tax effects. A.9.2 Net assets and financial position Statement of Financial Position of Siemens AG in accordance with German Commercial Code (condensed) Sep 30, (in millions of â,¬) 2015 2014...

  • Page 39
    ... companies as a result of intra-group financing activities. A.9.3 Corporate Governance statement The Corporate Governance statement pursuant to Section 289a of the German Commercial Code is an integral part of the Combined Management Report and is presented in C.4.2 CORPORATE GOVERNANCE STATEMENT...

  • Page 40
    ... the German Corporate Governance Code (Code) and the requirements of the German Commercial Code (Handelsgesetzbuch), the German Accounting Standards (Deutsche Rechnungslegungs Standards) and the International Financial Reporting Standards (IFRS). A.10.1 Remuneration of Managing Board members A.10...

  • Page 41
    ... impact the share price. In the event of 100 % target achievement, the annual target amount for the monetary value of the Stock Awards commitment is â,¬ 1,950,000 for the President and CEO (effective October 1, 2014) and â,¬ 1,040,000 for each of the other members of the Managing Board. Since fiscal...

  • Page 42
    ... annually. If the value of a Managing Board member's accrued holdings declines below the required minimum due to fluctuations in the market price of Siemens stock, he or she must acquire additional shares. Pension benefit commitments Like employees of Siemens AG, the members of the Managing Board...

  • Page 43
    ... German Stock Corporation Act (Aktiengesetz) or if Siemens AG is to be merged into an existing corporation or other entity. If this right of termination is exercised, the Managing Board member is entitled to a severance payment in the amount of not more than two years' compensation. The calculation...

  • Page 44
    ...These targets take account of business-related targets such as market coverage and business performance as well as targets such as customer and employee satisfaction, innovation and sustainability. An internal review of the appropriateness of Managing Board compensation for fiscal 2015 has confirmed...

  • Page 45
    ... the closing price of Siemens stock in Xetra trading on the date of award less the present value of dividends expected during the restriction period. The share price used to determine the number of stock commitments was â,¬ 72.30 for 2015 as well as for 2014. Benefits related to the termination of...

  • Page 46
    ... value according to the Code for one-year variable compensation. Service costs for pension benefits are not included. Performance-based components Total compensation without long-term incentive effect, non-stock-based One-year variable compensation (Bonus) - Cash component Managing Board members...

  • Page 47
    ..., 2015: fixed compensation of â,¬673,600, fringe benefits of â,¬68,203, variable compensation (Bonus) of â,¬902,624 and Siemens Stock Awards in the amount of â,¬665,258. In accordance with the provisions of his contract, his Stock Awards will be settled in cash at the closing price of Siemens stock...

  • Page 48
    ... 2 Multi-year variable compensation 3 Siemens Stock Awards (restriction period: 2010 - 2013) Share Matching Plan (vesting period: 2012 - 2014) Share Matching Plan (vesting period: 2011 - 2013) Other 4 Total Service cost Total (Code) Performance-based components Managing Board members serving as...

  • Page 49
    ... of the day on January 31, 2015. His employment contract ended effective September 30, 2015. In addition to the total compensation shown above for his work as a member of the Managing Board, Prof. Dr. Requardt received the following compensation for the remaining term of his contract from February...

  • Page 50
    ... of the German Commercial Code totaling â,¬ 30.5 million (2014: â,¬ 24.2 million). This figure includes the compensation for former Managing Board member Peter Y. Solmssen for the remaining period of his employment contract from October 2014 through March 2015, the cash compensation for Bonus Awards...

  • Page 51
    ... in NOTE 16 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . Other No loans or advances from the Company are provided to members of the Managing Board. A.10.1.3 ADDITIONAL INFORMATION ON STOCK-BASED COMPENSATION INSTRUMENTS IN FISCAL 2015 Stock commitments The following table shows the changes...

  • Page 52
    ... of Siemens stock for every three Siemens shares acquired and continuously held under the plan, provided the participants were employed without interruption at Siemens AG or a Siemens company until the end of the vesting period. At the beginning of fiscal 2015, the following members of the Managing...

  • Page 53
    ... the Supervisory Board were authorized at the Annual Shareholders' Meeting held on January 28, 2014, and are effective as of fiscal 2014. Details are set out in Section 17 of the Articles of Association of Siemens AG. The remuneration of the Supervisory Board consists entirely of fixed compensation...

  • Page 54
    ...the insured in cases of financial loss associated with their activities on behalf of the Company. The insurance policy for fiscal 2015 includes a deductible for the members of the Managing Board and the Supervisory Board that complies with the requirements of the German Stock Corporation Act and the...

  • Page 55
    ... registered shares of no par value against contributions in cash (Authorized Capital 2011). Subscription rights of existing shareholders are excluded. The new shares shall be issued under the condition that they are offered exclusively to employees of Siemens AG and its consolidated subsidiaries...

  • Page 56
    ... to service exercised option rights using either conditional capital or treasury stock, and also enable Siemens to buy back the warrants. The Company may not repurchase its own shares unless so authorized by a resolution duly adopted by the shareholders at a general meeting or in other very limited...

  • Page 57
    ... by the Company or any of its consolidated subsidiaries (exclusion of subscription rights, limited to 10 % of the capital stock, by mutatis mutandis application of Section 186 para. 3 sentence 4 German Stock Corporation Act). Furthermore, the Supervisory Board is authorized to use shares acquired on...

  • Page 58
    ... year been notified of, any shareholder directly or indirectly holding 10 % or more of the voting rights. There are no shares with special rights conferring powers of control. Shares of stock issued by Siemens AG to employees under its employee share program and / or as share-based compensation...

  • Page 59
    B. Consolidated Financial Statements

  • Page 60
    ... Fiscal year (in millions of â,¬, per share amounts in â,¬) Note 2015 2014 Revenue Cost of sales Gross profit Research and development expenses Selling and general administrative expenses Other operating income Other operating expenses Income from investments accounted for using the equity method...

  • Page 61
    B.2 Consolidated Statements of Comprehensive Income Fiscal year (in millions of â,¬) Note 2015 2014 Net income Remeasurements of defined benefit plans therein: Income tax effects Items that will not be reclassified to profit or loss therein: Income (loss) from investments accounted for using the ...

  • Page 62
    ... Long-term debt Post-employment benefits Deferred tax liabilities Provisions Other financial liabilities Other liabilities Total non-current liabilities Total liabilities Equity Issued capital Capital reserve Retained earnings Other components of equity Treasury shares, at cost Total equity...

  • Page 63
    ... financing activities Purchase of treasury shares Other transactions with owners Issuance of long-term debt Repayment of long-term debt (including current maturities of long-term debt) Change in short-term debt and other financing activities Interest paid Dividends paid to shareholders of Siemens AG...

  • Page 64
    B.5 Consolidated Statements of Changes in Equity Issued capital (in millions of â,¬) Capital reserve Retained earnings Balance as of October 1, 2013 Net income Other comprehensive income, net of income taxes Dividends Share-based payment Purchase of treasury shares Re-issuance of treasury shares...

  • Page 65
    ... Available-for-sale financial assets Derivative financial instruments Treasury shares at cost Total equity attributable to shareholders of Siemens AG Non controlling interests Total equity (160) ... 31,514 7,380 1,029 (2,873) 36 (2,703) 256 289 129 35,056 Consolidated Financial Statements 63

  • Page 66
    ...and financial policies (generally through direct or indirect ownership of 20 % to 50 % of the voting rights). These are recorded in the Consolidated Financial Statements using the equity method and are initially recognized at cost. Siemens' share of its associate's post-acquisition profits or losses...

  • Page 67
    ... applied to each separate unit of accounting. Generally, the total arrangement consideration is allocated to the separate units of accounting based on their relative fair values. If the criteria for the separation of units of accounting are not met, revenue is deferred until such criteria are met...

  • Page 68
    ... years for technology. Property, plant and equipment - Property, plant and equipment, is valued at cost less accumulated depreciation and impairment losses. Depreciation expense is recognized using the straight-line method. The following useful lives are assumed: Factor y and office buildings Other...

  • Page 69
    ... the management of plan assets are allocated among functional costs. Past service cost and settlement gains (losses) are recognized immediately in profit or loss. For unfunded plans, the amount of line item Post-employment benefits equals the DBO. For funded plans, Siemens offsets the fair value of...

  • Page 70
    ... estimated. Internal and external counsels are generally part of the determination process. Due to new developments, it may be Termination benefits - Termination benefits are provided as a result of an entity's offer made in order to encourage voluntary redundancy before the normal retirement...

  • Page 71
    ...based on expected credit losses. IFRS 9 also includes new regulations regarding the application of hedge accounting to better reflect an entity's risk management activities especially with regard to managing non-financial risks. The new standard is effective for annual reporting periods beginning on...

  • Page 72
    ... acquisition date). The purchase price was paid in cash. In addition, as part of the transaction, Siemens paid Rolls-Royce £ 200 million (â,¬ 252 million as of the acquisition date) for a 25 year technology licensing agreement granting exclusive access to future Rolls-Royce aero-turbine technology...

  • Page 73
    ... Consolidated Statements of Income also include the results of businesses that have been disposed of prior to fiscal 2015. DISCONTINUED OPERATIONS In January 2015, Siemens completed the sale of its hearing aid business - formerly included in Healthcare - to the investment company EQT and the German...

  • Page 74
    ...income, net of income taxes Total comprehensive income 38 1 20 58 102 22 (52) 71 NO TE 4 Interests in other entities Fiscal year Investments accounted for using the equity method (in millions of â,¬) 2015 2014 Share of profit (loss), net Gains (losses) on sales, net Impairment and reversals...

  • Page 75
    ... include losses on sales of property, plant and equipment and intangible assets, and effects from insurance, legal and regulatory matters. NO TE 7 Income taxes Income tax expense (benefit) consists of the following: Fiscal year (in millions of â,¬) 2015 2014 Current tax Deferred tax Income tax...

  • Page 76
    ... or credited directly to equity and the expense (benefit) from continuing and discontinued operations, the income tax expense (benefit) consists of the following: In fiscal 2015 and 2014, the long-term portion of receivables from finance leases is reported in Other financial assets and amounts...

  • Page 77
    ... of completion method. The aggregate amount of costs incurred and recognized profits less recognized losses for construction contracts in progress, as of September 30, 2015 and 2014 amounted to â,¬ 81,341 million and â,¬ 86,542 million, respectively. Revenue from construction contracts amounted...

  • Page 78
    ... after-tax discount rates of 6.0 % to 9.5 % in fiscal 2015 and 6.5 % to 9.0 % in fiscal 2014. Where possible, reference to market prices is made. For the purpose of estimating the fair value less costs to sell of the groups of cash-generating units, cash flows were projected for the next five years...

  • Page 79
    ... in after-tax discount rates of one percentage point or a reduction in the terminal value growth rate of one percentage point. Siemens concluded that no impairment loss would need to be recognized on goodwill in any of the groups of cash-generating units. Consolidated Financial Statements 77

  • Page 80
    ... generated technology Acquired technology including patents, licenses and similar rights Customer relationships and trademarks Other intangible assets Land and bulidings Technical machinery and equipment Furniture and office equipment Equipment leased to others Advances to suppliers and construction...

  • Page 81
    ... 2015 and 2014. As of September 30, 2015 and 2014, contractual commitments for purchases of property, plant and equipment are â,¬ 474 million and â,¬ 351 million, respectively. Minimum future lease payments under operating leases are: NOTE 15 Debt Current debt Sep 30, Non-current debt Sep 30, 2015...

  • Page 82
    ... 2013/June 2020/US$ floating-rate instruments 2014/March 2019/US$ floating-rate instruments 2014/September 2021/US$ floating-rate instruments Total Debt Issuance Program 5.75%/2006/October 2016/US$ fixed-rate instruments 6.125%/2006/August 2026/US$ fixed-rate instruments US$ 3m LIBOR+0.28%/2015...

  • Page 83
    ... Interest rates ranged from 0.11 % to 0.32 % in fiscal 2015 and from 0.1 % to 0.2 % in fiscal 2014. U. S.: Siemens Corporation sponsors the Siemens Pension Plan, which is vastly frozen to new entrants and accretion of new benefits. Most of the plan participants' benefits are calculated using a cash...

  • Page 84
    ...) Fiscal year 2014 Net defined benefit balance (I - II + III) Fiscal year 2015 2014 Balance at begin of fiscal year Current service cost Interest expenses Interest income Other 1 Components of defined benefit costs recognized in the Consolidated Statements of income Return on plan assets excluding...

  • Page 85
    ...and 2014. Consistent with prior year, the DBO is attributable to active employees 32 %, to former employees with vested rights 14 % and to retirees and surviving dependants 54 %. The remeasurements comprise actuarial (gains) and losses resulting from: The discount rate was derived from high-quality...

  • Page 86
    ...a single fund and aim to stabilize return and reduce volatility. Virtually all equity securities have quoted prices in active markets. The fair value of fixed income securities is based on prices provided by price service agencies. The fixed income securities are traded in highly liquid markets and...

  • Page 87
    ... generally expected to result in cash outflows during the next one to 15 years. Warranties mainly relate to products sold. Order related losses and risks are provided for anticipated losses and risks on uncompleted construction, sales and leasing contracts. The Company is subject to asset retirement...

  • Page 88
    ... (fair value hedges), this amount is adjusted for changes in market value mainly due to changes in interest rates. Accordingly, Siemens deducts these changes in market value in order to end up with an amount of debt that approximately will be repaid. 2 86 Consolidated Financial Statements

  • Page 89
    ... of equity as it is mainly allocated based on the risks of the underlying business. Siemens' current corporate credit ratings are: Sep 30, 2015 Moody 's Investors Service Standard & Poor's Ratings Services Moody 's Investors Service Sep 30, 2014 Standard & Poor's Ratings Services Long-term debt...

  • Page 90
    ... The Annual Shareholders' Meeting of Siemens AG approved the proposed settlement between the Company and Mr. Neubürger on January 27, 2015. As previously reported, in July 2008, Hellenic Telecommunications Organization S. A. (OTE) filed a lawsuit against Siemens AG with the district court of Munich...

  • Page 91
    ... Electric Corporation (IEC) filed at the end of December 2013 with an Israeli State Court a separate ILS3.8 billion (approximately â,¬ 864 million as of September 2015) claim for damages against Siemens AG and other companies that allegedly formed a cartel in the Israeli gas insulated switchgear...

  • Page 92
    ... equity instruments classified as available-for-sale, for which a fair value could not be reliably measured and which are therefore recognized at cost. Reported in the following line items of the Statements of Financial Position: Short-term debt and current maturities of long-term debt, Trade...

  • Page 93
    ... by price service agencies at the period-end date (Level 2). The fair value of loans from banks and other financial indebtedness, obligations under finance leases as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt...

  • Page 94
    ...for-sale financial equity instruments 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. Non...

  • Page 95
    ...) other than from post-employment benefits includes interest from financial assets and financial liabilities not at fair value through profit or loss: Fiscal year (in millions of â,¬) 2015 2014 Total interest income on financial assets Total interest expenses on financial liabilities 1,248 (739...

  • Page 96
    ... resulting 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 standard product business. Fair value hedges of fixed-rate debt...

  • Page 97
    ...Increasing market fluctuations may result in significant earnings and cash flow volatility risk for Siemens. The Company 's operating business as well as its investment and financing activities are affected particularly by changes in foreign exchange rates, interest rates and equity prices. In order...

  • Page 98
    ... risk. EQUITY PRICE RISK Siemens' investment portfolio consists of direct and indirect investments in publicly traded companies held for purposes other than trading. The direct participations result mainly from strategic partnerships, strengthening Siemens' focus on its core business activities or...

  • Page 99
    ... from the Siemens Group regularly transfer business partner data as a basis for a centralized rating process. Furthermore, the Siemens Credit Warehouse purchases trade receivables from numerous operating units with a remaining term up to one year. Due to the identification, quantification and active...

  • Page 100
    ...: Commitments to members of the Managing Board In fiscal 2015 and 2014, agreements were entered into which entitle members of the Managing Board to stock awards contingent upon attaining the prospective performance-based target of Siemens stock relative to five competitors. The fair value of these...

  • Page 101
    ...the Base Share Program employees of Siemens AG and participating domestic Siemens companies may invest a fixed amount of their compensation in Siemens shares, sponsored by Siemens with a tax beneficial allowance. The shares are bought at market price at a predetermined date in the second quarter and...

  • Page 102
    ... year 2014 (in millions of â,¬) 2015 2014 Power and Gas Wind Power and Renewables Energy Management Building Technologies Mobility Digital Factory Process Industries and Drives Healthcare Industrial Business Financial Services (SFS) Reconciliation to Consolidated Financial Statements Siemens...

  • Page 103
    ... Energy, Healthcare, Industry and Infrastructure & Cities, and of SFS and Equity Investments, Siemens has nine reportable segments as of October 1, 2014, being: > Power and Gas (PG), which offers products and solutions for generating electricity from fossil fuels and for producing and transporting...

  • Page 104
    ... managed portfolio activities (referred to as financing interest), interest related to Corporate Treasury activities or resulting consolidation and reconciliation effects on interest. MEASUREMENT - SEGMENTS Accounting policies for Segment information are generally the same as those used for Siemens...

  • Page 105
    ... other than tax related liabilities, e. g. trade payables, to derive Assets. In contrast, Assets of SFS is Total assets. RECONCILIATION TO CONSOLIDATED FINANCIAL STATEMENTS Profit Fiscal year (in millions of â,¬) 2015 2014 Centrally managed portfolio activities Siemens Real Estate Corporate items...

  • Page 106
    ... has relationships with many joint ventures and associates in the ordinary course of business whereby Siemens buys and sells a wide variety of products and services generally on arm's length terms. Sales of goods and services and other income Fiscal year (in millions of â,¬) 2015 2014 Purchases of...

  • Page 107
    ...Siemens Stock Awards and the remaining 50% as a special contribution to the pension plan. In fiscal 2014, the following settlements have been agreed in connection with termination of Managing Board memberships: As Barbara Kux's appointment to the Managing Board expired regularly on November 16, 2013...

  • Page 108
    ... on an individual basis in the Compensation Report, which is part of the combined management report. In fiscal 2015 and 2014, no other major transactions took place between the Company and the members of the Managing Board and the Supervisory Board. Some of our board members hold, or in the last...

  • Page 109
    ...of financial statements in connection with M & A activities, comfort letters and other attestation services required under regulatory requirements, agreements or requested on a voluntary basis. NOTE 32 Corporate Governance The Managing Board and the Supervisory Board of Siemens Aktiengesellschaft...

  • Page 110
    ... Technology Verwaltungs GmbH, Freiberg Siemens Global Innovation Partners Management GmbH, Munich Siemens Grundstücksmanagement GmbH & Co. OHG, Grünwald Siemens Healthcare Diagnostics GmbH, Eschborn Siemens Healthcare Diagnostics Holding GmbH, Eschborn Siemens Healthcare Diagnostics Products GmbH...

  • Page 111
    ...nitz Siemens Liquidity One, Munich Siemens Medical Solutions Health Services GmbH, Erlangen Siemens Nixdorf Informationssysteme GmbH, Grünwald Siemens Novel Businesses GmbH, Munich Siemens Postal, Parcel & Airport Logistics GmbH, Constance Siemens Power Control GmbH, Langen Siemens Private Finance...

  • Page 112
    ... Industry Software SAS, Vélizy-Villacoublay / France Siemens Lease Services SAS, Saint-Denis / France SIEMENS Postal Parcel Airport Logistics S.A.S., Paris / France 1 Control due to a majority of voting rights. 2 Control due to rights to appoint, reassign or remove members of the key management...

  • Page 113
    ... Federation OOO Siemens Urban Rail Technologies, Moscow / Russian Federation Siemens Finance LLC, Vladivostok / Russian Federation Siemens Healthcare Limited Liability Company, Moscow / Russian Federation Arabia Electric Ltd. (Equipment), Jeddah / Saudi Arabia Dresser-Rand Arabia LLC, Al Khobar...

  • Page 114
    ... Dresser-Rand Sales Company S.A., Freiburg / Switzerland Dresser-Rand Services, S.a.r.l., Freiburg / Switzerland Huba Control AG, Würenlos / Switzerland Siemens Fuel Gasification Technology Holding AG, Zug / Switzerland Siemens Healthcare AG, Zurich / Switzerland Siemens Healthcare Diagnostics GmbH...

  • Page 115
    ... International Limited, Frimley, Surrey / United Kingdom Project Ventures Rail Investments I Limited, Frimley, Surrey / United Kingdom Samtech UK Limited, Frimley, Surrey / United Kingdom SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom Siemens Financial Services...

  • Page 116
    ... Siemens Ltda., São Paulo / Brazil Dresser-Rand Canada, Inc., Calgary / Canada Siemens Canada Limited, Ontario / Canada Siemens Financial Ltd., Oakville / Canada Siemens Healthcare Limited, Oakville / Canada Siemens Industry Software Ltd., Ontario / Canada Siemens Postal, Parcel & Airport Logistics...

  • Page 117
    ... & 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 118
    ...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 (Shanghai) Co. Ltd., Shanghai / China Siemens High Voltage...

  • Page 119
    ... Technologies Private Limited, Mumbai / India Siemens Postal Parcel & Airport Logistics Private Limited, Mumbai / India Siemens Rail Automation Pvt. Ltd., Mumbai / India Siemens Technology and Services Private Limited, Mumbai / India P.T. Siemens Indonesia, Jakarta / Indonesia PT Dresser-Rand...

  • Page 120
    ... China Dresser-Rand (Thailand) Limited, Rayong / Thailand Siemens Healthcare Limited, Bangkok / Thailand Siemens Limited, Bangkok / Thailand Siemens Healthcare Limited, Ho Chi Minh City / Viet Nam Siemens Ltd., Ho Chi Minh City / Viet Nam Associated companies and joint ventures Germany (27 companies...

  • Page 121
    ... Holdings I, LLC, Wilmington, DE / United States PhSiTh LLC, New Castle, DE / United States Power Properties Inc., Boston, MA / United States Powerit Holdings, Inc., Seattle, WA / United States Rether networks, Inc., Berkeley, CA / United States Siemens First Capital Commercial Finance, LLC...

  • Page 122
    ...Innovation Partners I GmbH & Co. KG, Munich Siemens Pensionsfonds AG, Grünwald SIM 9. Grundstücksverwaltungs- und -beteiligungs-GmbH, Munich Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (6 companies) SMATRICS GmbH & Co KG, Vienna / Austria Dils Energie...

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    C. Additional Information

  • Page 124
    ...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 30, 2015 Siemens Aktiengesellschaft The Managing Board Report...

  • Page 125
    ... of the group's internal control system. An audit also includes evaluating the appropriateness of accounting policies used and the reason­ ableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe...

  • Page 126
    ...combined with the management report of Siemens Aktiengesellschaft, for the business year from October 1, 2014 to September 30, 2015. The management of the company is responsible for the preparation of the group management report in compliance with the applicable requirements of German commercial law...

  • Page 127
    ...Board reported on the Company's business and financial position following the conclusion of the third quarter. We also dealt with the business situation and strategic orientation of the Building Technologies Division and of the separately managed Healthcare business. At the Supervisory Board meeting...

  • Page 128
    ... AG and the Siemens Group. In addition, the Audit Committee addressed the half­year and quarterly financial reports and, in the presence of the indepen­ dent auditors, discussed their audit reviews. The Committee recommended that the Supervisory Board propose to the An­ nual Shareholders' Meeting...

  • Page 129
    ... in the Company 's internal control or risk management systems were reported. At this meeting, the Managing Board explained the financial state­ ments 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...

  • Page 130
    C.4 Corporate Governance C.4.1 Management and control structure Siemens AG is subject to German corporate law. Therefore, it has a two­tier board structure, consisting of a Managing Board and a Supervisory Board. C.4.1.1 SUPERVISORY BOARD The Supervisory Board of Siemens AG has 20 members. As stip...

  • Page 131
    ... Healthcare GmbH, Munich Positions outside Germany: > Unify Holdings B. V., Netherlands Michael Sigmund* Chairman of the Committee of Spokespersons of the Siemens Group; Chairman of the Central Committee of Spokespersons of Siemens AG Supervisory Board Member September 13, 1957 March 1, 2014...

  • Page 132
    ...Board in its management of the Company's business. At regular intervals, the Supervisory Board discusses business develop­ ment, planning, strategy and strategy implementation. It re­ views the Annual Financial Statements of Siemens AG and the Consolidated Financial Statements of the Siemens Group...

  • Page 133
    .... The Audit Committee oversees, in particular, the accounting process and conducts a preliminary review of the Annual Fi­ nancial Statements of Siemens AG, the Consolidated Financial Statements of the Siemens Group and the Combined Manage­ ment Report. On the basis of the independent auditors...

  • Page 134
    ...the basic issues of business policy and corporate strategy as well as on the Com­ pany's annual and multi­year plans. The Managing Board prepares the Company 's interim reports, the Annual Financial Statements of Siemens AG, the Consoli­ dated Financial Statements of the Siemens Group and the Com...

  • Page 135
    ... controlling bodies of business enterprises External positions (as of September 30, 2015) Group Company positions (as of September 30, 2015) Joe Kaeser President and Chief Executive Officer June 23, 1957 May 1, 2006 July 31, 2018 German positions: > Allianz Deutschland AG, Munich > Daimler AG...

  • Page 136
    ...and press releases as well as the financial calen­ dar for the current year, which contains the publication dates of significant financial communications and the date of the Annual Shareholders' Meeting, at: WWW.SIEMENS.COM/INVESTORS Our Articles of Association, the Bylaws for the Supervisory Board...

  • Page 137
    ... ber 1, 2014, Siemens AG has complied with the recommen­ dations of the Code in the prior version of June 24, 2014. Berlin and Munich, October 1, 2015 Siemens Aktiengesellschaft The Managing Board The Supervisory Board " Our Company 's values and Business Conduct Guidelines In the 168 years of its...

  • Page 138
    ... or as alternatives to measures of Siemens' net assets and financial positions or results of operations as pre­ sented 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...

  • Page 139
    ... : Address Siemens AG Wittelsbacherplatz 2 80333 Munich Germany + 49 89 636 - 33443 (Media Relations) + 49 89 636 - 32474 (Investor Relations) + 49 89 636 - 30085 (Media Relations) + 49 89 636 - 32830 (Investor Relations) [email protected] [email protected] COPIES OF THE ANNUAL REPORT...

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    siemens.com Order no. CGXX-C 10013-00-7600