UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

February 1, 2008

Commission File Number: 1-15174

Siemens Aktiengesellschaft

(Translation of registrant’s name into English)

Wittelsbacherplatz 2

D-80333 Munich
Federal Republic of Germany
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F þ     Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes o     No þ

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes o     No þ

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o     No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

 

 

Table of contents

Key figures

Interim group management report

Interim Consolidated Financial Statements

Notes

Supervisory Board and Managing Board changes

Review report

Quarterly summary

Siemens financial calendar

Signatures

Key figures(1)		Q1 2008(2)

(unaudited; in millions of €, except where otherwise stated)

(1)	EBITDA (adjusted), Return on capital employed, Return on equity, Free cash flow and Cash conversion are non-GAAP financial measures. A reconciliation of these amounts to the most directly comparable IFRS financial measures is available on our Investor Relations website under www.siemens.com/ir, Financial Publications, Quarterly Reports. “Group profit from operations” is reconciled to “Income before income taxes” of Operations under “Reconciliation to financial statements” in the table “Segment Information.”
(2)	October 1, 2007 and 2006 -- December 31, 2007 and 2006, respectively.
(3)	Adjusted for portfolio and currency translation effects.
(4)	Discontinued operations consist of Siemens VDO Automotive activities as well as of carrier networks, enterprise networks and mobile devices activities.
(5)	Earnings per share — attributable to shareholders of Siemens AG.
(6)	Continuing and discontinued operations.

Interim group management report

Overview of financial results for the first quarter of fiscal 2008

	•		Net income of €6.475 billion benefited from approximately €5.4 billion related to the sale of Siemens VDO Automotive (SV). Earnings per share (EPS) for the first quarter was €7.04 compared to €0.83 in the same period a year earlier.
	•		Income from continuing operations was €1.078 billion, up 74% from €621 million in the prior-year period. EPS on a continuing basis rose to €1.14 from €0.65.
	•		Group profit from Operations rose 16% year-over-year, to €1.719 billion, as a majority of Groups combined higher profitability with rising revenue.
	•		Revenue climbed 10%, to €18.400 billion, and orders increased 9%, to €24.242 billion. On an organic basis, excluding the net effect of portfolio transactions and currency translation, both revenue and orders rose 8% compared to the prior-year quarter.
	•		Siemens completed two major portfolio transactions, including the sale of SV which generated net proceeds of approximately €11.4 billion within discontinued operations and the purchase of Dade Behring Holdings, Inc. with associated cash outflows of approximately €4.8 billion.

Sale of SV boosts net income and EPS. Net income was €6.475 billion compared to €788 million in the first quarter a year earlier, resulting in EPS of €7.04 compared to €0.83 a year earlier. The increase includes higher income from continuing operations as noted below. Net income also benefited from €5.397 billion in income from discontinued operations, primarily due to the closing of the sale of SV. A year earlier, discontinued operations contributed €167 million to net income in the first quarter. More information on discontinued operations is included below.

Group profit and margins rise in Operations. Income from continuing operations was €1.078 billion, up from €621 million in the first quarter a year earlier. Basic EPS from continuing operations in the first quarter rose to €1.14 from €0.65 in the prior-year period. The two primary factors in this increase were higher Group profit from Operations and lower central costs related to legal and regulatory matters. In particular, the prior-year period included a non-tax-deductible penalty of €423 million related to an earlier EU antitrust investigation involving major manufacturers of gas-isolated switchgear. Financing and Real Estate activities contributed €216 million in income before income tax in the first quarter, up from €152 million a year ago.

The majority of Groups in Operations increased both Group profit and Group profit margin compared to the first quarter a year ago, taking Group profit from Operations up 16% year-over-year, to €1.719 billion. As a general trend, the increase was due to operating leverage combined with rising revenue. Leaders in this regard were Automation and Drives (A&D), Industrial Solutions and Services (I&S) and Power Transmission and Distribution (PTD), which achieved high double-digit growth in Group profit compared to the first quarter a year earlier. Group profit declined at Power Generation (PG) and Transportation Systems (TS), as both Groups took higher charges at major projects compared to the prior-year period. Group profit from Operations in the current period includes a €70 million goodwill impairment within Other Operations, related to a buildings and infrastructure business that is held for disposal.

Discontinued operations included a substantial gain from the sale of SV. Discontinued operations in the first quarter consisted of SV and activities from the former Communications Group (Com). SV was sold during the quarter, leaving the Com activities consisting primarily of enterprise networking activities that are held for disposal. In the current quarter, income from discontinued operations was €5.397 billion compared to €167 million in the same period a year earlier. The difference is due mainly to approximately €5.4 billion related to SV, including operating results along with a substantial gain on the sale of the business.

The result for Com activities in the first quarter was a negative €51 million, including an impairment of long-lived assets as well as expenses for outside advisors engaged in connection with investigations into alleged violations of anti-corruption laws and related matters. The result in the prior-year quarter was a positive €94 million, due primarily to profitable carrier activities from Com that were transferred into Nokia Siemens Networks B.V. (NSN) between the periods under review. In addition, both periods included small amounts related to the Mobile Devices business.

Strong growth is well balanced. Nearly all Groups within Operations increased their revenue on an organic basis compared to the first quarter a year earlier. Groups with double-digit increases included A&D, PTD, PG and I&S. Similarly, a majority of Groups booked a higher level of new orders year-over-year, led by PG and A&D with first-quarter orders of €5.892 billion and €4.783 billion, respectively. From a geographic perspective, topline growth was regionally balanced. The exception was Germany, where revenue and orders came in lower year-over-year primarily due to a high basis of comparison in the prior-year period, particularly involving PG.

Return on capital employed (ROCE) and free cash flow improve. Net proceeds from the sale of SV amounted to approximately €11.4 billion during the first quarter, and cash payments related to Med’s acquisition of Dade Behring Holdings, Inc. (Dade Behring) totaled approximately €4.8 billion (net of €68 million cash acquired). Free cash flow from continuing operations for the first quarter improved to a negative €217 million compared to a negative €360 million in the same quarter a year earlier. Within this change, free cash flow from the Groups in Operations improved to €680 million from €6 million in the prior-year period. The cash conversion rate for continuing operations in the current quarter was a negative 0.20. ROCE from continuing operations for the first quarter was 11.6%. ROCE from continuing operations for fiscal 2007 was 12.7%. As expected, ROCE development in the current period was affected by a substantial increase in capital employed stemming from major acquisitions completed in the current quarter and in fiscal 2007. This effect will continue in coming quarters.

Expenses recorded for compliance activities. We incurred €127 million in expenses in the first quarter for outside advisors engaged in connection with investigations into alleged violations of anti-corruption laws and related matters as well as remediation activities. The total for continuing operations was €93 million, with the remaining €34 million related to discontinued operations. More information regarding these matters is provided in “Legal proceedings” below.

Results of Siemens

Results of Siemens — First quarter of fiscal 2008

The following discussion presents selected information for Siemens for the first quarter of fiscal 2008:

Despite somewhat less favorable macroeconomic conditions in the first quarter, Siemens generated strong international growth. First quarter revenue rose 10%, and orders climbed 9% year-over-year. On an organic basis, excluding the net effect of currency translation and portfolio transactions, revenue and orders both rose 8%. Europe outside Germany, Siemens’ largest regional market, was also one of its fastest growing. The Asia-Pacific region continued its robust growth, fueled by ongoing infrastructure investments. The Americas delivered 9% expansion on an organic basis. The region comprised of Africa, the Near and Middle East and the Commonwealth of Independent States (C.I.S.) continued to post strong growth. Revenue and orders in Germany both came in lower year-over-year, primarily due to PG which saw a substantial swing in volume from Germany in the prior-year quarter to the rest of Europe in the current quarter.

		New Orders (location of customer)
										% Change
		First quarter								vs. previous year								therein
(€ in millions)		2008				2007				Actual				Adjusted*				Currency				Portfolio
Germany			3,505				4,222				(17	)%			(20	)%			0	%			3	%
Europe (other than Germany)			8,261				7,071				17	%			14	%			(1	)%			4	%
Americas			6,102				5,768				6	%			9	%			(10	)%			7	%
Asia-Pacific			3,824				2,804				36	%			32	%			(3	)%			7	%
Africa, Near and Middle East, C.I.S.**			2,550				2,379				7	%			9	%			(3	)%			1	%
Siemens			24,242				22,244				9	%			8	%			(3	)%			4	%

Asia-Pacific and Europe outside Germany both posted double-digit order growth compared to the first quarter a year earlier. Within the Asia-Pacific region, I&S, A&D and TS achieved the fastest growth. The strongest increases in Europe outside Germany came at PG, PTD, A&D and Med. Within Asia-Pacific, orders jumped 69% in India and 61% in China compared to the prior-year period. First-quarter orders in the United States, which included new volume from acquisitions at Med and A&D and a substantial increase in new contracts at PG, climbed 21% year-over-year despite strong negative currency translation effects. Orders in the Africa, Near and Middle East and C.I.S. region rose despite a high basis of comparison in the first quarter a year earlier, when PTD obtained an order worth €700 million. Expansion in the current quarter included strong growth at TS, PG and I&S. The decline in orders in Germany compared to the prior-year three-month period involved especially PG and TS, while A&D saw rising order activity.

		Revenue (location of customer)
										% Change
		First quarter								vs. previous year								therein
(€ in millions)		2008				2007				Actual				Adjusted*				Currency				Portfolio
Germany			3,155				3,240				(3	)%			(6	)%			0	%			3	%
Europe (other than Germany)			6,183				5,226				18	%			14	%			0	%			4	%
Americas			4,663				4,329				8	%			9	%			(10	)%			9	%
Asia-Pacific			2,732				2,402				14	%			10	%			(3	)%			7	%
Africa, Near and Middle East, C.I.S.**			1,667				1,532				9	%			10	%			(2	)%			1	%
Siemens			18,400				16,729				10	%			8	%			(3	)%			5	%

Double-digit revenue growth in Europe outside Germany was broad-based, as all Groups within Operations posted increases compared to the first quarter a year earlier. In Asia-Pacific, growth was nearly as well balanced, with all groups, except PG and PTD, showing higher first quarter revenue year-over-year. From a geographic perspective, India and China were on pace with the region as a whole, delivering revenue growth of 15% and 13%, respectively. Revenue rose more modestly in the Americas, as new volume from the acquisitions mentioned above was more than offset by considerable weakening of the U.S. dollar against the euro between the periods under review. A&D, Med and PG were the highlights for the region, and U.S. revenues were up 9% on an organic basis. The Africa, Near and Middle East and C.I.S. region achieved 10% organic growth in the first quarter, benefiting from large infrastructure orders in prior periods. The pace-setter for the region was Russia, where a majority of Groups recorded at least double-digit increases in revenue compared to the same period a year ago.

		First quarter
(€ in millions)		2008				2007				% Change
Gross profit on revenue			5,305				4,465				19	%
as percentage of revenue			28.8	%			26.7	%

Gross profit for the first quarter of fiscal 2008 climbed 19% year-over-year, as nearly all Groups in Operations increased their gross profit. Only PG posted a small decrease due primarily to project charges. Gross profit margin overall increased to 28.8% from 26.7% a year earlier, including higher gross profit margins at most Groups. Margins increased substantially at A&D and PTD, which combined strong revenue growth with increased operating leverage, and at SIS, which benefited from an improved cost position. The increased A&D and Med proportion of the Siemens business volume also contributed to a higher gross profit margin.

		First quarter
(€ in millions)		2008				2007				% Change
Research and development expenses			(847	)			(725	)			17	%
as percentage of revenue			4.6	%			4.3	%			—
Marketing, selling and general administrative expenses			(3,055	)			(2,672	)			14	%
as percentage of revenue			16.6	%			16.0	%			—
Other operating income			190				213				(11	)%
Other operating expense			(206	)			(498	)			(59	)%
Income from investments accounted for using the equity method, net			108				143				(24	)%
Financial income (expense), net			22				11				100	%

Research and development expenses increased to €847 million, led by higher outlays due to growth at Med and A&D. R&D expenses as a percent of revenue were 4.6%, higher than 4.3% in the prior-year quarter, which resulted from the increased A&D and Med proportion of the Siemens business volume.

Marketing, selling and general administrative (SG&A) expenses in the first quarter increased year-over-year, particularly marketing and selling outlays due to growth at Med and A&D. SG&A expenses as a percentage of revenue were 16.6%, higher than 16.0% in the prior-year quarter due to the increased A&D and Med proportion of the Siemens business volume.

Other operating income was €190 million in the first quarter of fiscal 2008, compared to €213 million a year earlier. Gains on sales of property, plant and equipment and intangibles were €112 million compared to €57 million in the same quarter a year earlier. Gains on disposals of businesses in the current quarter were €45 million, benefiting from a €36 million gain at A&D. A year earlier, gains of €110 million included €76 million on the sale of a locomotive leasing business at TS.

Other operating expense fell significantly year-over-year, to €206 million. Major items in the current quarter were the €93 million in expenses for external advisors mentioned above and €73 million in goodwill impairments, including goodwill impairment of €70 million related to a buildings and infrastructure business that is held for disposal. Other operating expense of €498 million in the prior-year quarter included the €423 million antitrust penalty mentioned above, as well as €50 million in funding primarily for job placement companies for former Siemens employees affected by the bankruptcy of BenQ GmbH & Co. OHG (BenQ).

Income from investments accounted for using the equity method, net was €108 million compared to €143 million in the same period a year earlier. The change was due mainly to an equity investment loss of €37 million in the current period related to our equity stake in NSN, which was formed between the periods under review.

		First quarter
(€ in millions)		2008				2007				% Change
Income from continuing operations before income taxes			1,517				937				62	%
Income taxes			(439	)			(316	)			39	%
as percentage of income from continuing operations before income taxes			29	%			34	%			—
Income from continuing operations			1,078				621				74	%
Income from discontinued operations, net of income taxes			5,397				167				>200	%
Net income			6,475				788				>200	%
Net income attributable to minority interest			43				49				—
Net income attributable to shareholders of Siemens AG			6,432				739				>200	%

Income from continuing operations before income taxes climbed 62% compared to the prior-year quarter, to €1.517 billion. The primary factors in this increase were higher revenue combined with higher margins and lower expenses related to legal and regulatory matters as mentioned above. The effective tax rate was 29% in the current quarter of fiscal 2008 compared to 34% in the prior-year period, which included the non-tax deductible antitrust penalty. As a result, income from continuing operations in the first quarter was €1.078 billion, up 74% from €621 million a year earlier.

Discontinued operations include the enterprise networks business, which is held for disposal, the carrier-related business, which was transferred into NSN, the Mobile Devices business sold to BenQ Corporation, and SV, which was transferred to Continental AG in the first quarter of fiscal 2008. SV is included within discontinued operations on a retroactive basis to provide a meaningful comparison with prior periods. In the current quarter, income from discontinued operations was €5.397 billion compared to €167 million in the same period a year earlier. The difference is due mainly to approximately €5.4 billion related to SV, including operating results along with a substantial gain on the sale of the business. The result for Com activities in the first quarter was a negative €51 million, including an impairment charge of long-lived assets as well as expenses for outside advisors engaged in connection with investigations into alleged violations of anti-corruption laws and related matters. The result in the prior-year quarter was a positive €94 million, due primarily to profitable carrier activities from Com that were transferred into NSN between the periods under review. In addition, both periods included small amounts related to the Mobile Devices business. For additional information with respect to discontinued operations, see “Notes to Interim Consolidated Financial Statements.”

Net income for Siemens in the first quarter was €6.475 billion compared to €788 million in the same period a year earlier. Net income attributable to Shareholders of Siemens AG was €6.432 billion, up from €739 million in the prior-year quarter.

Portfolio activities

At the beginning of November 2007, we completed our acquisition of Dade Behring. Med is now integrating Dade Behring into its Diagnostics division together with two other acquisitions made in prior years: Diagnostic Products Corporation (DPC) and the diagnostics division of Bayer AG (Bayer). The acquisition in the current quarter expands Med’s position in the growing laboratory diagnostics market and is strongly complementary to the prior Diagnostics acquisitions. The aggregate consideration, including the assumption of debt, amounts to approximately €4.8 billion (including €68 cash acquired). We have not yet finalized the purchase price allocation (PPA) for this transaction. More information on PPA and integration costs related to the acquisitions mentioned here are described in more detail below in “Segment Information Analysis.”

At the beginning of December 2007, we closed the sale of SV to Continental AG of Germany. Aggregate consideration was approximately €11.4 billion net of cash sold.

We completed certain other portfolio transactions during the first quarter which did not have a significant effect on our Interim Consolidated Financial Statements. For further information on acquisitions and dispositions, see “Notes to Interim Consolidated Financial Statements.”

 

Segment information analysis

Operations

Automation and Drives (A&D)

		First quarter
										% Change
(€ in millions)		2008				2007				Actual				Adjusted*
Group profit			655				450				46	%
Group profit margin			16.0	%			13.3	%
Revenue			4,088				3,390				21	%			16	%
New orders			4,783				4,019				19	%			15	%

Group profit at A&D jumped 46% over the prior-year first quarter, to €655 million, including a €36 million gain on the sale of a business. The Group achieved significant operating leverage on expanded revenue, resulting in particularly strong earnings increases at divisions including Industrial Automation, Motion Control Systems, Large Drives, Mechanical Drives, and Low Voltage Controls and Distribution. Group profit includes purchase price accounting (PPA) effects and integration costs associated with UGS Corp. (UGS), which A&D acquired between the periods under review, and Flender Holding GmbH (Flender), acquired in fiscal 2005. PPA effects amounted to €58 million and integration costs totaled €5 million in the current period. These impacts together sliced 150 basis points from Group profit margin for the quarter. For comparison, PPA and integration costs associated with Flender in the prior-year quarter totaled €10 million. A&D’s competitive strength was evident in topline growth, including a 21% increase in revenue year-over-year and orders of €4.783 billion, up 19% to a record high. These results include new volume from UGS.

Industrial Solutions and Services (I&S)

		First quarter
										% Change
(€ in millions)		2008				2007				Actual				Adjusted*
Group profit			121				90				34	%
Group profit margin			5.4	%			4.3	%
Revenue			2,251				2,073				9	%			12	%
New orders			3,292				3,057				8	%			10	%

I&S opened fiscal 2008 with a strong first quarter. Group profit of €121 million was 34% higher than in the same period a year earlier, highlighted by higher earnings in the Metal Technologies, Industrial Services, Oil, Gas, Marine Solutions and Infrastructure Logistics divisions. The latter division includes the Group’s airport logistics and postal automation businesses, which were merged effective with the beginning of the current quarter. For I&S overall, first-quarter revenue rose 9% year-over-year. Orders increased 8% compared to the strong first quarter a year earlier, as both periods included a number of major contract wins.

Siemens Building Technologies (SBT)

		First quarter
										% Change
(€ in millions)		2008				2007				Actual				Adjusted*
Group profit			78				72				8	%
Group profit margin			6.5	%			5.9	%
Revenue			1,201				1,213				(1	)%			4	%
New orders			1,295				1,386				(7	)%			(2	)%

SBT delivered higher Group profit and improved its Group profit margin compared to the first quarter a year earlier. Revenue was nearly level year-over-year despite strong negative currency translation effects, while orders reflected both the currency effects and a weaker environment in the United States.

Osram

		First quarter
										% Change
(€ in millions)		2008				2007				Actual				Adjusted*
Group profit			126				123				2	%
Group profit margin			10.6	%			10.5	%
Revenue			1,193				1,174				2	%			7	%
New orders			1,193				1,174				2	%			7	%

Osram contributed €126 million in Group profit in the first quarter, primarily on strong performances in the General Lighting and Automotive Lighting divisions. Demand for energy-efficient lighting solutions contributed to topline growth, taking first-quarter revenue and orders higher year-over-year despite negative currency translation effects. During the quarter Osram received regulatory approval to expand its manufacturing capacity in China, which is expected to enable the Group to better meet growing demand from high-growth markets in Asia-Pacific and Latin America.

Transportation Systems (TS)

		First quarter
										% Change
(€ in millions)		2008				2007				Actual				Adjusted*
Group profit			22				47				(53	)%
Group profit margin			2.1	%			4.4	%
Revenue			1,048				1,073				(2	)%			(1	)%
New orders			1,440				1,219				18	%			20	%

Group profit at TS in the first quarter included charges of €32 million for Combino. For comparison, charges at major projects in the prior-year quarter were more than offset by a €76 million net gain on the sale of the Group’s locomotive leasing business. Revenue of €1.048 billion came in 2% lower than the prior-year level. First-quarter orders climbed 18% year-over-year, to €1.440 billion, on a higher number of major orders.

Power Generation (PG)

		First quarter
										% Change
(€ in millions)		2008				2007				Actual				Adjusted*
Group profit			135				169				(20	)%
Group profit margin			4.5	%			6.2	%
Revenue			2,969				2,726				9	%			11	%
New orders			5,892				5,017				17	%			20	%

First-quarter Group profit at PG was €135 million compared to €169 million in the prior-year quarter. Revenue rose 9% year-over-year and orders reached €5.892 billion, a 17% increase from an already high basis of comparison in the prior-year period. PG’s fossil services, wind power, and oil, gas and industrial applications businesses each delivered higher earnings and higher profit margins compared to the first quarter a year earlier. They also accounted for the Group’s topline growth, highlighted by PG’s largest-ever offshore wind farm order, in Denmark, and a major power modernization project in Russia. In contrast, the fossil power solutions business posted a substantial loss on lower revenue. This was due primarily to more than €200 million in charges involving a number of large projects, including a new power generation system in Finland. For comparison, the fossil solutions business posted a smaller loss on lower charges in the same period a year earlier. Equity investment income contributed €15 million to PG’s Group profit compared to €21 million in the prior-year quarter, with the portion related to Areva NP unchanged year-over-year. PG expects volatility in equity investment earnings in coming quarters.

Power Transmission and Distribution (PTD)

		First quarter
										% Change
(€ in millions)		2008				2007				Actual				Adjusted*
Group profit			204				130				57	%
Group profit margin			10.4	%			7.5	%
Revenue			1,956				1,728				13	%			15	%
New orders			2,809				3,146				(11	)%			(9	)%

PTD delivered Group profit of €204 million for the first quarter, a 57% jump year-over-year. Higher revenue enabled all divisions within PTD to increase their earnings, and increased operating leverage lifted Group profit margin into double-digit territory. In a strong global market for secure, high-efficiency power transmission and distribution, PTD posted a 13% increase in revenue compared to the prior-year quarter. Orders for the quarter came in well above revenue, but below the prior-year level which included a €700 million contract in the Middle East.

Medical Solutions (Med)

		First quarter
										% Change
(€ in millions)		2008				2007				Actual				Adjusted*
Group profit			332				304				9	%
Group profit margin			12.5	%			14.5	%
Revenue			2,653				2,102				26	%			2	%
New orders			2,806				2,211				27	%			5	%

Med’s Group profit grew to €332 million in the first quarter, a rise of 9% compared to the prior-year period. The increase benefited from the Diagnostics division, which closed its acquisition of Dade Behring and reported earnings of €67 million on revenue of €712 million in the first quarter. Group profit includes PPA effects totaling €51 million and integration costs of €35 million associated with Dade Behring and other Diagnostics acquisitions. These effects in turn sliced 320 basis points from Med’s Group profit margin for the quarter. For comparison, PPA and integration costs associated with the Diagnostics division in the prior-year quarter totaled €14 million. Med’s imaging and IT business sustained its profitability year-over-year. Revenue and orders rose 26% and 27%, respectively, as Med more than offset strong negative currency translation effects and a significantly weaker market in the U.S. with substantial new volume from acquisitions.

Siemens IT Solutions and Services (SIS)

		First quarter
										% Change
(€ in millions)		2008				2007				Actual				Adjusted*
Group profit			70				26				169	%
Group profit margin			5.2	%			2.0	%
Revenue			1,340				1,314				2	%			4	%
New orders			1,225				1,361				(10	)%			(11	)%

SIS posted €70 million in Group profit, benefiting from an improved cost structure. Revenue rose compared to the first quarter a year earlier. Orders came in below the prior-year level, which contained a higher number of large contracts.

Strategic Equity Investments (SEI)

SEI includes results from investments accounted for under the equity method from three companies in which Siemens holds a strategic equity stake: NSN, BSH Bosch und Siemens Hausgeräte GmbH (BSH), and Fujitsu Siemens Computers (Holding) B.V. (FSC). SEI contributed equity investment income of €26 million in the first quarter compared to €52 million in the same period a year earlier. The change year-over-year was due largely to NSN, which was formed between the periods under review and therefore not included in the prior-year result. Restructuring and integration programs resulted in €120 million in charges at NSN. As a result, Siemens incurred an equity investment loss of €37 million related to NSN.

Other Operations

Other Operations consist of centrally held business activities, shared services and other costs not allocated to a Group. The result of Other Operations in the current period was a negative €50 million compared to a positive €22 million in the first quarter a year earlier. The difference is due primarily to a goodwill impairment of €70 million related to a buildings and infrastructure business that is held for disposal. Siemens Home and

Office Communication Devices (SHC) posted first-quarter Group profit of €14 million, up slightly year-over-year. Revenue for Other Operations declined to €708 million from €800 million in the first quarter a year earlier, including lower revenue at SHC year-over-year and the sale of a business between the periods under review.

Reconciliation to financial statements

Reconciliation to financial statements includes various categories of items which are not allocated to the Groups because the Managing Board has determined that such items are not indicative of Group performance.

Corporate items, pensions and eliminations

Corporate items, pensions and eliminations totaled a negative €307 million in the first quarter, compared to a negative €658 million in the prior-year quarter. The major factor in the change was Corporate items, which improved to a negative €328 million from a negative €631 million a year ago due primarily to lower costs for legal and regulatory matters. In particular, the prior-year period included a non-tax-deductible penalty of €423 million related to an earlier EU antitrust investigation involving major suppliers of gas-isolated switchgear, and also charges primarily for job placement companies for former Siemens employees affected by the bankruptcy of BenQ. The current period included €93 million in costs for outside advisors engaged by Siemens in connection with investigations into alleged violations of anti-corruption laws and related matters as well as remediation activities. Centrally carried pension expense swung to a positive €23 million from a negative €25 million in the first quarter a year ago, which included a one-time charge resulting from a change in German law.

Other interest expense

Other interest expense of Operations for the first quarter of fiscal 2008 was €121 million compared to €88 million in the same quarter a year earlier. The change was mainly due to increased intra-company financing of Operations by Corporate Treasury year-over-year.

Financing and Real Estate

Siemens Financial Services (SFS)

		First quarter
(€ in millions)		2008				2007				% Change
Income before income taxes			77				83				(7	)%
		Dec. 31,				Sept. 30,
		2007				2007
Total assets			8,933				8,912				0	%

Income before income taxes (IBIT) at SFS was €77 million compared to €83 million in the first quarter a year earlier, which benefited from a gain on the sale of an investment in the Equity division.

Siemens Real Estate (SRE)

		First quarter
(€ in millions)		2008				2007				% Change
Income before income taxes			139				69				101	%
Revenue			394				421				(6	)%
		Dec. 31,				Sept. 30,
		2007				2007
Total assets			3,145				3,091				2	%

Income before income taxes at SRE rose to €139 million in the first quarter from €69 million in the same period a year earlier, due primarily to increased gains from sales of real estate. Real estate disposals are expected to continue in coming quarters.

Eliminations, reclassifications and Corporate Treasury

Income before income taxes from Eliminations, reclassifications and Corporate Treasury was €10 million in the first quarter compared to €46 million in the same period a year earlier. The difference was mainly due to negative results from hedging activities not qualifying for hedge accounting.

Reconciliation to EBITDA

The following table gives additional information on topics included in Group profit and Income before income taxes and provides a reconciliation to EBITDA (adjusted):

For the three months ended December 31, 2007 and 2006 (in millions of €)

										Income (loss)																																Depreciation
										from investments																																and impairments
										accounted for																																of property, plant
										using the equity								Financial income								EBIT																and equipment								EBITDA
		Group profit								method, net(1)								(expense), net(2)								(adjusted)(3)								Amortization(4)								and goodwill(5)								(adjusted)
		2008				2007				2008				2007				2008				2007				2008				2007				2008				2007				2008				2007				2008				2007
Operations Groups
Automation and Drives (A&D)			655				450				—				1				(1	)			1				656				448				53				18				59				52				768				518
Industrial Solutions and Services (I&S)			121				90				3				7				(3	)			(1	)			121				84				6				10				16				17				143				111
Siemens Building Technologies (SBT)			78				72				—				—				1				—				77				72				15				13				16				14				108				99
Osram			126				123				1				—				—				—				125				123				6				7				51				54				182				184
Transportation Systems (TS)			22				47				2				—				(3	)			(3	)			23				50				1				1				12				12				36				63
Power Generation (PG)			135				169				15				20				(1	)			(1	)			121				150				14				17				39				36				174				203
Power Transmission and Distribution (PTD)			204				130				7				3				—				4				197				123				6				7				19				19				222				149
Medical Solutions (Med)			332				304				6				6				7				5				319				293				71				38				79				39				469				370
Siemens IT Solutions and Services (SIS)			70				26				11				—				6				(1	)			53				27				13				16				44				55				110				98
Strategic Equity Investments (SEI)			26				52				26				52				—				—				—				—				—				—				—				—				—				—
Other Operations			(50	)			22				10				4				10				9				(70	)			9				9				13				85				19				24				41
Total Operations Groups			1,719				1,485				81				93				16				13				1,622				1,379				194				140				420				317				2,236				1,836
Reconciliation to financial statements
Corporate items, pensions and eliminations			(307	)			(658	)			9				33				66				(28	)			(382	)			(663	)			2				3				(10	)			(10	)			(390	)			(670	)
Other interest income/expense			(121	)			(88	)			—				—				(121	)			(88	)			—				—				—				—				—				—				—				—
Total Operations			1,291				739				90				126				(39	)			(103	)			1,240				716				196				143				410				307				1,846				1,166
		Income before
		income taxes
Financing and Real Estate Groups
Siemens Financial Services (SFS)			77				83				18				17				46				67				13				(1	)			1				1				70				63				84				63
Siemens Real Estate (SRE)			139				69				—				—				(14	)			(23	)			153				92				—				—				39				40				192				132
Total Financing and Real Estate			216				152				18				17				32				44				166				91				1				1				109				103				276				195
Eliminations, reclassifications and Corporate Treasury			10				46				—				—				29				70				(19	)			(24	)			—				—				—				—				(19	)			(24	)
Siemens			1,517				937				108				143				22				11				1,387				783				197				144				519				410				2,103				1,337

 

Liquidity, capital resources and capital requirements

Cash flow — First three months of fiscal 2008 compared to first three months of fiscal 2007

The following discussion presents an analysis of Siemens’ cash flows for the first quarter of fiscal 2008 and 2007. The first table below presents cash flows for both continuing and discontinued operations. The latter category includes SV which was sold to Continental AG as well as the former Com activities, in particular the enterprise networks business which is held for sale, and cash flows related to the carrier-related business which was transferred into NSN. For further information on discontinued operations, see “Notes to Interim Consolidated Financial Statements.” The second table below focuses on continuing operations.

Siemens reports as a performance measure, Free cash flow, which is defined as “Net cash provided by (used in) operating activities” less cash used for “Additions to intangible assets and property, plant and equipment.” We believe this measure is helpful to our investors as an indicator of our ability to generate cash from operations and to pay for discretionary and non-discretionary expenditures not included in the measure, such as dividends, debt repayment or strategic investments. We also use Free cash flow to compare cash generation among the segments (for further information, refer to “Notes to Interim Consolidated Financial Statements — Segment Information”).

																						Continuing and
						Continuing operations								Discontinued operations								discontinued operations
						First quarter
(€ in millions)						2008				2007				2008				2007				2008				2007
Net cash provided by (used in):
Operating activities			A				487				253				(480	)			(829	)			7				(576	)
Investing activities							(5,267	)			(1,370	)			10,896				(264	)			5,629				(1,634	)
Herein: Additions to intangible assets and property, plant and equipment			B				(704	)			(613	)			(104	)			(146	)			(808	)			(759	)
Free cash flow*			A+B				(217	)			(360	)			(584	)			(975	)			(801	)			(1,335	)

Operating activities provided net cash of €7 million in the first three months, compared to net cash used of €576 million in the same period of the prior year. These results include both continuing operations and discontinued operations. Within the total, continuing operations provided net cash of €487 million, up from €253 million a year earlier. Discontinued operations improved to net cash used of €480 million in the current period, compared to net cash used of €829 million in the prior period, which included higher cash outflows related to the carrier activities that were transferred into NSN between the periods under review. In addition, the current period includes a €201 million payment for a previously disclosed fine imposed by the Munich district court, which is related to the investigation of Com activities by the Munich Office of Public Prosecution.

Investing activities in continuing operations and discontinued operations provided net cash of €5.629 billion in the first three months of fiscal 2008 compared to net cash used of €1.634 billion in the prior-year period. Within the total, continuing operations used net cash of €5.267 billion, up from €1.370 billion a year earlier. Discontinued operations provided €10.896 billion in net cash during the current period, due primarily to proceeds of approximately €11.4 billion from the sale of SV.

														SFS, SRE and
Continuing operations						Operations								Corporate Treasury*								Siemens
						First quarter
(€ in millions)						2008				2007				2008				2007				2008				2007
Net cash provided by (used in):
Operating activities			A				16				(447	)			471				700				487				253
Investing activities							(4,829	)			(912	)			(438	)			(458	)			(5,267	)			(1,370	)
Herein: Additions to intangible assets and property, plant and equipment			B				(506	)			(487	)			(198	)			(126	)			(704	)			(613	)
Free cash flow			A+B				(490	)			(934	)			273				574				(217	)			(360	)

Within Operations, net cash provided by operating activities from continuing operations improved to €16 million in the first three months of fiscal 2008 compared to net cash used of €447 million in the same period a year earlier. The improvement is due primarily to higher net cash provided by PG, TS and I&S related to net working capital management, and by A&D, which had a substantial increase in Group profit. Within Corporate Treasury and Financing and Real Estate, operating activities from continuing operations provided net cash of €471 million in current quarter, compared to net cash provided of €700 million in the same period a year earlier. The change year-over-year was due primarily to reduced cash inflows related to net working capital in the current period. For Siemens overall, net cash provided by operating activities from continuing operations improved to €487 million in the first quarter, up from €253 million in the prior-year quarter.

Net cash used in investing activities in continuing operations was €4.829 billion within Operations in the first three months of fiscal 2008, significantly higher compared to €912 million used in the prior-year period. The difference year-over-year is due primarily to the acquisition of Dade Behring at Med for approximately €4.4 billion net of €68 million cash acquired, while the prior-year period included a first payment of €0.4 billion related to the acquisition of Bayer’s diagnostic business at Med as well as a payment to acquire AG Kühnle, Kopp & Kausch at PG. Corporate Treasury and Financing and Real Estate used net cash in investing activities in continuing operations of €438 million in the current period compared to €458 million cash used a year earlier. Siemens as a whole used net cash in investing activities in continuing operations of €5.267 billion in the first quarter of fiscal 2008 compared to net cash used of €1.370 billion in the same period a year earlier.

Free cash flow from continuing operations for Siemens improved to a negative €217 million in the current period, down from a negative €360 million in the same period a year earlier. The change year-over-year is due to the increase in net cash provided by the Group’s operating activities as mentioned above. Accordingly, free cash flow from the Groups in Operations improved to €680 million from €6 million in the prior-year period. The cash conversion rate for continuing operations, calculated as Free cash flow from continuing operations divided by Income from continuing operations, was a negative 0.20 in the current quarter.

Financing activities from continuing and discontinued operations used net cash of €4.027 billion compared to net cash provided of €850 million in the first quarter a year earlier. In the current period, short-term debt was reduced by €3.573 billion, mainly due to the repayment of commercial paper and medium term notes and the repayment of debt originally raised by Dade Behring in the amount of €0.4 billion, while in the prior-year period the issuance of commercial paper programs contributed to a net increase in short-term debt of €1.022 billion.

Capital resources and requirements

Our capital resources are comprised of cash and cash equivalents, current available-for-sale financial assets, total equity and cash flow from operating activities. Our capital requirements include scheduled debt service, regular capital spending and ongoing cash requirements from operating activities.

Net liquidity results from total liquidity, comprised of Cash and cash equivalents and available-for-sale financial assets, less total debt, comprised of short-term debt and current maturities of long-term debt and long-term debt. Total debt relates to our commercial paper, medium-term notes, bonds, loans from banks and obligations under finance leases as stated on the Consolidated Balance Sheets. We use the net liquidity measure for internal corporate finance management, as well as external communication with investors, analysts and rating agencies. Net liquidity should not be interpreted as signifying that the net liquidity amount is entirely free for discretionary application.

		December 31,				September 30,
(€ in millions)		2007				2007
Cash and cash equivalents			6,158				4,005
Current available-for-sale financial assets			198				193
Total liquidity			6,356				4,198
Short-term debt and current maturities of long-term debt			2,273				5,637
Long-term debt			9,725				9,860
Total debt			11,998				15,497
Net liquidity			(5,642	)			(11,299	)

Net liquidity increased from a negative €11.299 billion as of September 30, 2007 to a negative €5.642 billion as of December 31, 2007. For further information please refer to the Cash flow discussion above.

Pension plan funding

At the end of the first three months of fiscal 2008, the combined funding status of Siemens’ principal pension plans showed an estimated underfunding of €0.5 billion, compared to an underfunding of €1.0 billion at the end of fiscal 2007. The improvement in funding status is due to an increase in the discount rate assumption at December 31, 2007, reducing Siemens’ estimated defined benefit obligation, and furthermore due to contributions, the disposal of Siemens VDO pension liabilities and the actual return on plan assets. Altogether this more than outbalanced the negative effect of service and interest cost on the defined benefit obligation. The actual return on plan assets during the last three months amounted to €99 million. This represents a 1.8% return, compared to the expected return of 6.5%.

The fair value of plan assets of Siemens’ principal funded pension plans as of December 31, 2007, was €23.6 billion, compared to €24.0 billion on September 30, 2007. In the first three months of fiscal 2008, employer contributions amounted to €393 million compared to €316 million in the first three months of the prior fiscal year.

The estimated defined benefit obligation (DBO) for Siemens’ principal pension plans amounted to €24.1 billion as of December 31, 2007. This was approximately €0.9 billion lower than the DBO of €25.0 billion on September 30, 2007. This decrease was due to the disposal of Siemens VDO pension liabilities, an increase in the discount rate assumption at December 31, 2007, and currency translation effects. Altogether this more than outbalanced the negative effect of service and interest cost less benefits paid during the three month period.

For more information on Siemens’ pension plans, see “Notes to Interim Consolidated Financial Statements.”

Risk management

The risk situation and the risk management, as presented in our Annual Report as of September 30, 2007, did not change considerably in the first quarter of fiscal 2008. We do not expect to incur any risks that can jeopardize the continuity of the Company’s business.

For information regarding legal, compliance and regulatory developments, please refer to “Legal proceedings” below. For information concerning forward-looking statements and additional information, please also refer to “Outlook” and the “Disclaimer” at the end of the “Interim group management report.”

Legal proceedings

As previously reported, public prosecutors and other government authorities in jurisdictions around the world are conducting investigations of Siemens and certain of our current and former employees regarding allegations of public corruption, including criminal breaches of fiduciary duty including embezzlement, as well as bribery, money laundering and tax evasion, among others. These investigations involve allegations of corruption at a number of Siemens’ business Groups.

For more information regarding these and other legal proceedings in which Siemens is involved, as well as the potential risks associated with such proceedings and their potential financial impact on the Company, please refer to Siemens’ Annual Report for the fiscal year ended September 30, 2007 (Annual Report) and its annual report on Form 20-F for the fiscal year ended September 30, 2007 (Form 20-F), and, in particular, to the information contained in “Item 3: Key Information — Risk Factors”, “Item 4: Information on the Company — Legal Proceedings”, “Item 5: Operating Financial Review and Prospects”, and “Item 15: Controls and Procedures” of the Form 20-F.

Developments regarding investigations and legal proceedings that have occurred since the publication of Siemens’ Annual Report and Form 20-F include:

	•		Authorities in Nigeria have conducted searches of the premises of Siemens Ltd. Nigeria in connection with an investigation into alleged illegal payments to Nigerian public officials between 2002 and 2005. According to press accounts, the Nigerian government has announced that it will suspend dealings with Siemens pending the results of the investigation.
	•		On December 11, 2007, the Norwegian public prosecutor’s office conducted a search of Siemens AS Norway’s offices as well as several private homes in connection with payments made by Siemens for golf trips in 2003 and 2004, which were attended by members of the Norwegian Department of Defense. In light of this and the previously reported investigation of allegations of bribery and overcharging of the Department of Defense related to the awarding of a contract for the delivery of communication equipment, the Department of Defense has announced that it will not conduct further business with Siemens at this time.
	•		The public prosecutor in Milan is investigating allegations as to whether two employees of Siemens S.p.A. made illegal payments to employees of the state-owned gas and power group ENI. In November 2007, the public prosecutor filed charges against the two employees, Siemens S.p.A. and one of its subsidiaries, as well as against other individuals and companies not affiliated with Siemens.
	•		Authorities in Russia have conducted a search of Siemens premises in Ekaterinenburg and Moscow in connection with an investigation into alleged embezzlement of public funds when awarding contracts to Siemens for the delivery of medical equipment to public authorities in Ekaterinenburg in the years 2003 to 2005. An employee of Siemens Russia has been arrested in connection with this investigation.
	•		The Vienna Public Prosecutors have announced an investigation into payments relating to Siemens AG Austria and its subsidiary VAI for which a valid consideration could not be identified.
	•		On January 22, 2008, the Malaysian Anti-Corruption Agency executed a search warrant at the premises of Siemens Malaysia and requested interviews with several employees of Siemens Malaysia in connection with an investigation into a project involving the PTD group.
	•		Siemens has been contacted by representatives of regional development banks, including the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the European Bank for Reconstruction and Development and the European Investment Bank regarding anti-corruption inquiries and other matters of relevance to them.
	•		As previously reported, in connection with the investigation relating to an agreement entered into by Siemens with an entity controlled by the former head of the independent employee association AUB (Arbeitsgemeinschaft Unabhängiger Betriebsangehöriger), in April 2007, a former member of the Managing Board was arrested and subsequently posted bail in the amount of €5 million and was released from custody. In connection with the posting of bail, a bank issued a bond (Bankbürgschaft) in the amount of €5 million, €4.5 million of which was guaranteed by the Company pursuant to the provisions of German law. The warrant associated with the arrest of the former member of the Managing Board has since been revoked and the bank bond, as well as the Company’s guarantee thereof, has been released.
	•		Debevoise & Plimpton LLP, an independent external law firm engaged by the Company to conduct an independent and comprehensive investigation to determine whether anti-corruption regulations have been violated and to conduct an independent and comprehensive assessment of the Company’s compliance and control systems, has reported that it is investigating leads generated by the Company’s amnesty program, as well as other sources.
	•		On January 4, 2008, the Competition Authority of Slovakia imposed a fine of €3.3 million on Siemens and VA Tech in connection with an investigation into possible anti-trust violations in the market for high-voltage gas-insulated switchgear. We have filed an appeal against this decision.

•

In December 2007, a suit and motion for approval of a class action was filed in Israel to commence a class action based on the fines imposed by the European Commission for alleged anti-trust violations in connection with high-voltage gas-insulated switchgear. Thirteen companies have been named as defendants in the suit and motion, among them Siemens AG Germany, Siemens AG Austria and Siemens Israel Ltd. The class action alleges damages to electricity consumers in Israel in the amount of approximately €575 million related to higher electricity prices claimed to have been paid because of the alleged anti-trust violations. The court has not yet ruled on the motion for approval of the class action.

The Company remains subject to corruption-related investigations in the United States and other jurisdictions around the world. As a result, additional criminal or civil sanctions could be brought against the Company itself or against certain of its employees in connection with possible violations of law, including the Foreign Corrupt Practices Act (FCPA). In addition, the scope of pending investigations may be expanded and new investigations commenced in connection with allegations of bribery and other illegal acts. The Company’s operating activities, financial results and reputation may also be negatively affected, particularly due to imposed penalties, fines, disgorgements, compensatory damages, the formal or informal exclusion from public procurement contracts or the loss of business licenses or permits. In addition to the amounts previously reported, including the fine imposed by the Munich district court, no material charges or provisions for any such penalties, fines, disgorgements or damages have been recorded or accrued as management does not yet have enough information to estimate such amounts reliably. We expect that we will need to record expenses and provisions in the future for penalties, fines or other charges, which could be material, in connection with the investigations. On January 24, 2008, the Company announced, at the Annual Shareholders’ Meeting, that the Securities and Exchange Commission and the Department of Justice have agreed to begin discussions with the Company in the near future regarding a possible settlement of their investigations into possible violations of U.S. law in connection with allegations of corruption. We will also have to bear the costs of continuing investigations and related legal proceedings, as well as the costs of on-going remediation efforts. Furthermore, changes affecting the Company’s course of business or changes to its compliance programs beyond those already taken may be required.

The first quarter of fiscal 2008 included a total of €127 million in expenses for outside advisors engaged by Siemens in connection with the investigations into alleged violations of anti-corruption laws and related matters as well as remediation activities.

Subsequent events

On January 1, 2008, we implemented a new organizational structure, with sectors and subordinated divisions. External financial reporting for the three sectors, which will constitute reportable segments and 14 divisions will begin in the third quarter of fiscal 2008. The Industry sector comprises six divisions: Industry Automation, Drive Technology, Building Technologies, Industry Solutions, Mobility and Osram. The Energy sector will be reported in five divisions: Fossil Power Generation, Renewable Energy, Oil & Gas, Power Transmission, and Power Distribution. Financial results of Service Rotating Equipment will be reflected in Fossil Power Generation and Oil & Gas. The Healthcare sector is composed of three divisions: Imaging & IT, Workflow & Solutions and Diagnostics. All three sectors will be supported by cross-sector organizations that provide IT services (SIS) and financial services (SFS).

Within our strategic Fit₄2010 program, which aims to achieve sustainable and profitable growth and to increase the value of the company, we defined among other goals margin ranges for our businesses. On January 24, 2008, we announced margin ranges for the Industry and Energy sectors and for 14 Divisions. The margin range for the Healthcare sector was previously announced in November 2007 (see Annual Report for fiscal 2007).

The new margin ranges for the Sectors and Divisions of our strategic Fit₄2010 program are:

Industry Sector: Target range 9 — 13% (previously 9 — 11% on a comparable basis)
	Division			Target range 2010			Former target range*
	Industry Automation			12 — 17%			12 — 15% (A&D)
	Drive Technology			11 — 16%
	Building Technologies			7 — 10%			7 — 9% (SBT)
	Osram			10 — 12%			10 — 12% (Osram)
	Industry Solutions			5 — 7%			5 — 7% (I&S)
	Mobility			5 — 7%			5 — 7% (TS)

Energy Sector: Target range 11 — 15% (previously 9 — 13% on a comparable basis)
	Division			Target range 2010			Former target range*
	Fossil Power Generation			11 — 15%			10 — 14% (PG) 5 — 7% (I&S)
	Renewable Energy			12 — 16%
	Oil & Gas			10 — 14%
	Power Transmission			10 — 14%			7 — 10% (PTD)
	Power Distribution			11 — 15%

Healthcare Sector: Target range 14 — 17% (previously 13 — 15% on a comparable basis)
	Division			Target range 2010			Former target range*
	Imaging & IT			14 — 17%
	Workflow & Solutions			11 — 14%			13 — 15% (Med)
	Diagnostics			16 — 19%

For information regarding the new members of the Company’s Supervisory Board, as elected at the Annual Shareholders’ Meeting on January 24, 2008, see “Notes to Interim Consolidated Financial Statements.”

At the Annual Shareholders’ Meeting on January 24, 2008, the Company’s shareholders authorized the Company to repurchase up to 10% of the common stock existing on the date of the Annual Shareholders’ Meeting. The authorization will become effective as of March 1, 2008, and will remain in force until July 23, 2009. The authorization to acquire Siemens shares as approved at the Annual Shareholders’ Meeting on January 25, 2007 (for further information see Consolidated Financial Statements as of September 30, 2007) will terminate on the effective date of the new authorization.

On January 28, 2008, we launched the first tranche of the share buyback program that we had announced in November 2007. Until the end of April 2008, we intend to acquire shares in the amount of approximately €2 billion for the purpose of cancellation and reduction of capital stock and, to a lesser extent, to fulfill obligations arising out of stock compensation programs. We expect to conduct share repurchases with a total volume of up to €10 billion by 2010.

Outlook

In fiscal 2008, we expect to achieve our previously announced full-year growth targets: increasing our revenue by at least twice the rate of global GDP growth, and increasing Group profit from Operations at a rate at least twice as high as our rate of revenue growth. Potential effects related to compliance matters are not yet quantified. Also effects from our new program to reduce our marketing, selling and administrative expense by 10-20% by the end of 2010 are not yet quantified and are not expected to have a material savings impact already in fiscal 2008.

During fiscal 2008, we intend to continue to sell real estate assets, with corresponding contributions to cash flows and income. We also expect to take measures aimed at streamlining Other Operations. In coming quarters these initiatives may lead to proceeds that affect cash flows, and to charges, gains or losses that affect net income and EPS.

Our business, financial condition or results of operation could suffer material adverse effects as a result of certain other risks. For an overview of the Company’s risk factors as well as its opportunities see our Annual Report for fiscal 2007.

 

 

 

 

Return on capital employed (ROCE), Free cash flow and Cash conversion rate are non-GAAP financial measures. A reconciliation of these amounts to the most directly comparable IFRS financial measures is available on our Investor Relations website under www.siemens.com/ir -> Financial Publications -> Quarterly Reports. “Group profit from operations” is reconciled to “Income before income taxes” of Operations under “Reconciliation to financial statements” in the table “Segment Information.”

This document contains forward-looking statements and information — that is, statements related to future, not past, events. These statements may be identified by words such as “expects,” “looks forward to,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “project” or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect our operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from changes in general economic and business conditions (including margin developments in major business areas); the challenges of integrating major acquisitions and implementing joint ventures and other significant portfolio measures; changes in currency exchange rates and interest rates; introduction of competing products or technologies by other companies; lack of acceptance of new products or services by customers targeted by Siemens; changes in business strategy; the outcome of pending investigations and legal proceedings, especially the corruption investigations we are currently subject to in Germany, the United States and elsewhere; the potential impact of such investigations and proceedings on our ongoing business including our relationships with governments and other customers; the potential impact of such matters on our financial statements; as well as various other factors. More detailed information about certain of these factors is contained throughout this report and in our other filings with the SEC, which are available on the Siemens website, www.siemens.com, and on the SEC’s website, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. Siemens does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

SIEMENS

CONSOLIDATED STATEMENTS OF INCOME (unaudited)
For the three months ended December 31, 2007 and 2006
(in millions of €, per share amounts in €)

										Eliminations,
										reclassifications and																Financing and Real
		Siemens								Corporate Treasury								Operations								Estate
		2008				2007				2008				2007				2008				2007				2008				2007
Revenue			18,400				16,729				(365	)			(368	)			18,193				16,502				572				595
Cost of goods sold and services rendered			(13,095	)			(12,264	)			365				368				(13,006	)			(12,149	)			(454	)			(483	)
Gross profit			5,305				4,465				—				—				5,187				4,353				118				112
Research and development expenses			(847	)			(725	)			—				—				(847	)			(725	)			—				—
Marketing, selling and general administrative expenses			(3,055	)			(2,672	)			(1	)			(1	)			(2,974	)			(2,579	)			(80	)			(92	)
Other operating income			190				213				(18	)			(23	)			76				159				132				77
Other operating expense			(206	)			(498	)			—				—				(202	)			(492	)			(4	)			(6	)
Income from investments accounted for using the equity method, net			108				143				—				—				90				126				18				17
Financial income (expense), net			22				11				29				70				(39	)			(103	)			32				44
Income from continuing operations before income taxes			1,517				937				10				46				1,291				739				216				152
Income taxes (1)			(439	)			(316	)			(3	)			(16	)			(373	)			(249	)			(63	)			(51	)
Income from continuing operations			1,078				621				7				30				918				490				153				101
Income from discontinued operations, net of income taxes			5,397				167				—				—				5,396				167				1				—
Net income			6,475				788				7				30				6,314				657				154				101
Attributable to:
Minority interest			43				49
Shareholders of Siemens AG			6,432				739
Basic earnings per share
Income from continuing operations			1.14				0.65
Income from discontinued operations			5.90				0.18
Net income			7.04				0.83
Diluted earnings per share
Income from continuing operations			1.13				0.64
Income from discontinued operations			5.87				0.16
Net income			7.00				0.80
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSE RECOGNIZED IN EQUITY (unaudited) For the three months ended December 31, 2007 and 2006 (in millions of €)
		Siemens
			2008				2007
Net income			6,475				788
Currency translation differences			(267	)			(167	)
Available-for-sale financial assets			10				42
Derivative financial instruments			44				53
Actuarial gains and losses on pension plans and similar commitments			19				509
Total income and expense recognized directly in equity, net of tax (2) (3)			(194	)			437
Total income and expense recognized in equity			6,281				1,225
Attributable to:
Minority interest			40				37
Shareholders of Siemens AG			6,241				1,188