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

May 3, 2010

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.

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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

Condensed Interim Consolidated Financial Statements

Notes

Supervisory Board and Managing Board

Responsibility statement

Review report

Quarterly summary

Siemens financial calendar

      

Introduction

     Siemens AG’s Interim Report for the Siemens Group complies with the applicable legal requirements of the German Securities Trading Act (Wertpapierhandelsgesetz — WpHG) regarding half-year financial reports, and comprises Condensed Interim Consolidated Financial Statements, an Interim group management report and a Responsibility statement in accordance with § 37w WpHG. The Condensed Interim Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU). The Condensed Interim Consolidated Financial Statements also comply with IFRS as issued by the IASB. This Interim Report should be read in conjunction with our Annual Report for fiscal 2009, which includes detailed analysis of our operations and activities.

     Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

Key figures1		Q2 and first six months of fiscal 20102

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

1		New orders and order backlog; adjusted or organic growth rates of Revenue and new orders; book-to-bill ratio; ROE; ROCE; Free cash flow; cash conversion rate; EBITDA (adjusted); EBIT (adjusted); earnings effect from purchase price allocation (PPA effects) and integration costs; net debt and adjusted industrial net debt are or may be non-GAAP financial measures. A definition of these supplemental financial measures, a reconciliation to the most directly comparable IFRS financial measures and information regarding the usefulness and limitations of these supplemental financial measures are available on our Investor Relations website under www.siemens.com/nonGAAP.
2		January 1, 2010 — March 31, 2010 and October 1, 2009 — March 31, 2010.
3		Adjusted for portfolio and currency translation effects.
4		Earnings per share — attributable to shareholders of Siemens AG. For fiscal 2010 and 2009 weighted average shares outstanding (basic) (in thousands) for the second quarter amounted to 867,968 and 864,415 respectively and for the first six months to 867,403 and 863,210 shares respectively.
5		Discontinued operations primarily consist of former Com activities, comprising carrier networks, enterprise networks and mobile devices activities.
6		Continuing and discontinued operations.
7		Profit margin including PPA effects for Healthcare is 16.6% and for Diagnostics 12.8%.
8		Return on equity is calculated as annualized Income before income taxes of Q2 divided by average allocated equity for Q2 of fiscal 2010 (€1.473 billion).

Interim group management report

Overview of financial results for the second quarter of fiscal 2010
(Three months ended March 31, 2010)

	•		Total Sectors profit for the quarter rose 16% year-over-year, to €2.138 billion, on higher profit in all Sectors.
	•		Income from continuing operations was €1.484 billion (basic EPS €1.69), up 55% from the second quarter a year earlier, and net income of €1.498 billion (basic EPS €1.70) was 48% higher.
	•		Revenue of €18.227 billion was down 4% compared to the prior-year period, on single-digit declines in Energy and Industry and stable revenue in Healthcare.
	•		Second-quarter orders of €17.844 billion came in 14% below the prior-year period primarily because that quarter included an exceptionally high volume from large orders. Nevertheless, a majority of Siemens Divisions posted higher orders compared to the prior-year period.
	•		Free cash flow from continuing operations was €1.251 billion compared to €1.138 billion in the second quarter a year ago.

     Management’s perspective on second-quarter results and full-year outlook. Siemens has again demonstrated its profitability, profiting in particular from measures initiated early on to strengthen competitiveness. In times of crisis we very intentionally maintained our innovation power and are asserting our strength in the market. We expect Total Sectors profit for fiscal 2010 above the prior-year level. For further information see “Outlook.”

     Revenue is stabilizing, order development is still uneven. Market development was again mixed for Siemens in the second quarter. While the Industry Sector saw signs of improving market conditions in its short-cycle businesses, some energy and industrial infrastructure businesses experienced further market contraction. As a result, orders came in 14% below the prior-year period, which included a peak volume from major orders. Due in part to the cushioning effect of strong order backlogs in a number of infrastructure businesses, revenue came in only 4% below the prior-year period and rose compared to the first quarter of fiscal 2010 in all three Sectors. The combined book-to-bill ratio for the Sectors was 0.98, and the combined order backlog increased slightly, to €84 billion, due to currency translation effects.

     Revenue declines modestly and includes growth in emerging markets. Revenue in Industry fell 4% on double-digit decreases at Drive Technologies and Industry Solutions, partly offset by increases in other Divisions led by OSRAM. Energy reported a decline of 3%, due primarily to lower revenue at its power grid businesses. Revenue in Healthcare came within 1% of the prior-year period. On a geographic basis, revenue declined in the Americas and the region comprising Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East. The general trend of stronger sales in emerging markets in the quarter was particularly evident in Asia, Australia, which posted 10% revenue growth.

     Orders decline due to a lower volume of large orders in Energy and Industry. In comparison with the prior-year period, which included the high volume from major orders mentioned above, orders came in 26% lower at Energy and 9% lower at Industry. The Divisions Industry Automation and Drive Technologies recorded their first year-over-year order increases in more than a year. Healthcare orders came in level with the same quarter a year earlier. On a geographic basis, Europe, C.I.S., Africa, Middle East and Asia, Australia saw double-digit order declines due primarily to Energy and Industry as mentioned above. Growth in the Americas was due to higher order intake in Industry and Healthcare.

     Profit rises in all three Sectors. Total Sectors profit for the second quarter rose to €2.138 billion, on increases in all three Sectors. The Sectors’ profit benefited from €180 million in gains related to curtailment of pension plans in the U.S., with the largest gains recorded at Healthcare and Industry. The pension gains were offset by €125 million in charges for capacity adjustments, most notably in Energy and Industry. Energy’s profit growth came primarily from the Fossil Power Generation Division, which improved its business mix. Healthcare improved its business mix and cut functional costs compared to the prior-year period, and also continued to benefit from a favorable currency hedge. The Industry Sector demonstrated the success of measures taken to address the economic downturn, profiting from improving markets for its short-cycle businesses.

     Income rises on higher Total Sectors profit and lower costs below Total Sectors. Income from continuing operations was €1.484 billion, up 55% compared to the second quarter a year earlier. The two major factors in the increase were higher Total Sectors Profit and a significant improvement in Corporate items and pension expense, which were reduced to a negative €156 million from a negative €451 million in the prior-year period. In particular, Corporate items benefited from income resulting from resolution of compliance-related matters. The increase in income from continuing operations also included improved results from Centrally managed portfolio activities and higher income from Siemens Real Estate compared to the prior-year period. The pre-tax gains on the pension plan curtailment mentioned above totaled €192 million for Siemens as a whole. Net income in both periods under review was generated almost entirely by income from continuing operations. Net income was €1.498 billion, up 48% from €1.013 billion in the same period a year earlier. Corresponding basic EPS was €1.70 compared to €1.11 for the prior-year period.

     Sectors generate strong Free cash flow. Free cash flow at the Sector level climbed 35% compared to the prior-year quarter, to €2.572 billion, due mainly to a reduced build-up of net working capital, tight control of capital expenditures and also benefited from the pension curtailment, which had no cash impact for Siemens overall. Free cash flow from continuing operations was €1.251 billion compared to €1.138 billion in the same period a year earlier. The current period includes approximately €0.2 billion in outflows related to severance charges and substantially higher payments related to income taxes, cash outflows for treasury activities and supplemental pension funding in the UK. For comparison, the prior-year quarter includes approximately €0.3 billion in outflows stemming from charges related to project reviews and structural initiatives as well as to SG&A reduction.

     ROCE rises on higher income. On a continuing basis, return on capital employed (ROCE) rose to 15.1% from 9.2% in the second quarter a year earlier. The increase was due mainly to higher income from continuing operations. To a lesser extent, ROCE improved on a decline in average capital employed.

     Pension underfunding increases. The estimated underfunding of Siemens’ principal pension plans as of March 31, 2010, amounted to approximately €4.6 billion, compared to an underfunding of approximately €4.0 billion at the end of fiscal 2009 and approximately €4.2 billion at the end of the first quarter.

     The decline in funded status since December 31, 2009 is due to an increase in Siemens’ defined benefit obligation (DBO), which was only partly offset by a positive return on plan assets and the supplemental pension funding in the UK. The DBO rose mainly due to a decrease in the discount rate assumption as of March 31, 2010 which more than offset an effect on the DBO from the pension plan adjustment in the U.S.

Results of Siemens

Results of Siemens — Three months ended March 31, 2010

     The following discussion presents selected information for Siemens for the second quarter of fiscal 2010:

     Orders and revenue

     Market development was again mixed for Siemens in the second quarter of fiscal 2010. While some of the short-cycle businesses, particularly at OSRAM and Industry Automation in the Industry Sector, saw signs of improving market conditions in the aftermath of the global recession, some industrial and energy infrastructure businesses experienced further market contraction. As a result, second quarter orders declined 14% year-over-year, to €17.844 billion. The prior-year period included a peak volume from major orders, including a number of large contract wins at Fossil Power Generation, Renewable Energy and Mobility. Due in part to the cushioning effect of strong order backlogs in a number of infrastructure businesses, revenue came in only 4% below the prior-year period, at €18.227 billion, and rose compared to the first quarter of the fiscal year in all three Sectors. As revenue came in slightly higher than orders in the three Sectors, our book-to-bill ratio was 0.98 for the quarter. The combined order backlog for the Sectors rose slightly on a consecutive-quarter basis, to €84 billion, due to positive currency translation effects. Out of the current backlog, orders of €23 billion are expected to be converted into revenue during fiscal 2010. On an organic basis, excluding the net effect of currency translation and portfolio transactions, revenue declined 4% and orders decreased 14% compared to the same period a year earlier.

		New Orders (location of customer)
		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009(1)				Actual				Adjusted(2)				Currency				Portfolio
Europe, C.I.S.(3), Africa, Middle East			9,889				12,528				(21	)%			(21	)%			1	%			(1	)%
therein Germany			2,626				3,240				(19	)%			(19	)%			0	%			0	%
Americas			4,749				4,667				2	%			4	%			(2	)%			0	%
therein U.S.			3,253				3,452				(6	)%			0	%			(6	)%			0	%
Asia, Australia			3,207				3,669				(13	)%			(13	)%			0	%			0	%
therein China			1,369				1,937				(29	)%			(27	)%			(2	)%			0	%
therein India			532				560				(5	)%			(6	)%			1	%			0	%
Siemens			17,844				20,864				(14	)%			(14	)%			0	%			0	%

     Orders related to external customers decreased 14% in the second quarter of fiscal 2010, due primarily to declines in Energy and Industry. Order intake came in 26% lower in the Energy Sector, as continuing market challenges included customer postponements of new projects and pricing pressure on available tenders. For comparison, an exceptionally high volume from major orders in the prior-year quarter in Energy included a total of €1.5 billion in new contracts for power generation and transmission in Iraq, as well as large offshore wind-farm orders in Europe at Renewable Energy. The Industry Sector – our largest Sector by volume – saw orders decline 9% compared to a high basis of comparison in the second quarter a year earlier, which included a major contract win at Mobility for high-speed trains in China. The year-over-year decline in orders in the Sector also included lower demand at Industry Solutions. All other Divisions in the Sector reported an increase in orders year-over-year. Healthcare orders came in just below the prior-year period, which included a large contract win at Workflow & Solutions.

     In the region Europe, C.I.S., Africa, Middle East – our largest reporting region – orders declined 21% on decreases in all Sectors. Orders in the Energy Sectors declined 36% in the region, largely due to a high basis of comparison in the prior-year period resulting from the large contracts mentioned above at Fossil Power Generation, Renewable Energy and Power Transmission. Lower order intake in Industry in the region Europe, C.I.S., Africa, Middle East was due primarily to a lower volume from major orders at Mobility. Healthcare orders declined 4% in the region. Order intake rose 2% in the Americas, including higher orders in Industry and Healthcare. Due to lower demand at Fossil Power Generation, Energy posted an order decline in the region year-over-year, despite double-digit increases at the other four Divisions of the Sector. Lower order intake for Siemens in the U.S. compared to the prior-year quarter was due to negative currency translation effects.

In Asia, Australia orders declined 13% year-over-year on decreases in Industry and Healthcare, due primarily to a higher volume of major orders in the prior-year period, including the order for high-speed trains in China and the large contract win at Workflow & Solutions mentioned above. Order intake in Energy came in above the prior-year quarter.

     As previously disclosed, Siemens has decided and announced that, as a general rule, it will not enter into new contracts with customers in Iran. Since the announcement, Siemens has issued group-wide policies that establish the details of its general decision. Under these policies, Siemens shall not tender further bids for direct deliveries to customers in Iran. Furthermore, indirect deliveries from Siemens to Iran via external third parties, including companies in which Siemens holds a minority stake, are generally prohibited unless an exception is specifically approved under certain circumstances. Notwithstanding the foregoing, products and services for humanitarian purposes, including the products and services supplied by the Healthcare Sector, and products and services required to maintain the installed base (e.g. spare parts and maintenance and assembly services) may still be provided under the policies. Finally, legally binding bids submitted in the past and existing agreements may be honored.

		Revenue (location of customer)
		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009(1)				Actual				Adjusted(2)				Currency				Portfolio
Europe, C.I.S.(3), Africa, Middle East			10,095				10,608				(5	)%			(5	)%			1	%			0	%
therein Germany			2,731				2,811				(3	)%			(2	)%			0	%			0	%
Americas			4,863				5,362				(9	)%			(7	)%			(3	)%			0	%
therein U.S.			3,601				4,139				(13	)%			(7	)%			(5	)%			0	%
Asia, Australia			3,269				2,985				10	%			8	%			2	%			0	%
therein China			1,266				1,215				4	%			7	%			(3	)%			0	%
therein India			477				402				19	%			16	%			3	%			0	%
Siemens			18,227				18,955				(4	)%			(4	)%			0	%			0	%

     Revenue related to external customers declined 4% compared to the prior-year quarter, including modest decreases in all Sectors. Revenue fell 4% in Industry on double-digit decreases at Drive Technologies and Industry Solutions. Other Divisions in the Sector recorded higher revenues year-over year, led by an 18% increase at OSRAM. The Energy Sector reported a revenue decline of 3% due primarily to decreases at its two power grid businesses, Power Transmission and Power Distribution. In contrast, revenue came in higher at Fossil Power Generation and Renewable Energy year-over-year on conversion from the Divisions’ strong order backlogs. Healthcare revenue came within 1% of the prior-year period, despite a double-digit decline at Workflow & Solutions.

     In Europe, C.I.S., Africa, Middle East, second-quarter revenue decreased 5% year-over-year due primarily to lower sales in the Industry Sector. As in the first quarter, within the Industry Sector only OSRAM recorded higher revenue in the region compared to the prior-year period, and the Drive Technologies Division again posted the sharpest decline. Healthcare also reported lower revenue in the region comprising Europe, C.I.S., Africa, Middle East year-over-year, while revenue in the Energy Sector came in above the prior-year quarter. In the Americas, revenue fell 9% on declines in all Sectors, including negative currency translation effects from the U.S. Revenue rose 10% in Asia, Australia, as double-digit revenue increases in Healthcare and Industry were only partly offset by a decline in the Energy Sector. Higher revenue in India included double-digit increases in all Sectors compared to the second quarter a year earlier.

Consolidated Statements of Income

		Three months
		ended March 31,
(in millions of €)		2010				2009				% Change
Gross profit on revenue			5,267				4,961				6	%
as percentage of revenue			28.9	%			26.2	%

     Gross profit for the second quarter rose 6% compared to the same period a year earlier. All Sectors reported higher gross profit margins as well as a modest increase in gross profit year-over-year despite a decline in revenues. The higher contribution from the Industry Sector included volume-driven increases at OSRAM and Industry Automation, while other Divisions, primarily Industry Solutions and Drive Technologies, posted gross profit decreases year-over-year, driven by lower revenues. Gross profit increases in Energy and Healthcare resulted from higher gross profit margins in all Divisions compared to the prior-year period. In all Sectors, gross profit development benefited from most of the pension gain mentioned above. In combination, these factors resulted in a gross profit margin of 28.9% for Siemens overall, up from 26.2% in the second quarter a year earlier.

		Three months
		ended March 31,
(in millions of €)		2010				2009				% Change
Research and development expenses			(920	)			(972	)			(5	)%
as percentage of revenue			5.0	%			5.1	%			—
Marketing, selling and general administrative expenses			(2,527	)			(2,520	)			0	%
as percentage of revenue			13.9	%			13.3	%			—
Other operating income			299				99				> 200	%
Other operating expense			(34	)			(168	)			(80	)%
Income (loss) from investments accounted for using the equity method, net			(64	)			(49	)			31	%
Interest income			530				529				0	%
Interest expense			(470	)			(562	)			(16	)%
Other financial income (expense), net			(49	)			17				—

     Research and development (R&D) expenses decreased to €920 million or 5.0% of revenues, from €972 million or 5.1% of revenues in the prior-year period, due primarily to lower outlays in the Industry Sector. Marketing, selling and general administrative (SG&A) expenses rose slightly to €2.527 billion, from €2.520 billion in the prior-year period. Due to lower revenues, the SG&A expense ratio rose to 13.9% compared to 13.3% a year earlier.

     Other operating income increased to €299 million in the second quarter, compared to €99 million in the same period a year earlier. The current period benefited from higher gains in connection with compliance-related matters, including a gain of €84 million related to an agreement with the provider of the Siemens’ directors and officers liability insurance, a net gain related to settlements with former members of Siemens’ Managing Board and Supervisory Board, and a gain of €38 million related to the agreed recovery of funds frozen by authorities. In addition, gains related to the disposal of real estate were also higher year-over-year, including a gain of €69 million on a transaction in the current quarter at Siemens Real Estate (SRE).

     Other operating expense was €34 million, down from €168 million in the second quarter of fiscal 2009. Expenses for outside advisors engaged in connection with investigations into alleged violations of anti-corruption laws and related matters as well as remediation activities amounted to €33 million in the prior-year period.

     Income (loss) from investments accounted for using the equity method, net was a negative €64 million, compared to a negative €49 million in the second quarter a year earlier. The difference was due in part to a higher equity investment loss in the current period related to Nokia Siemens Networks B.V. (NSN).

     Interest income was nearly unchanged at €530 million in the second quarter, compared to €529 million in the same period a year earlier. Interest expense was €470 million, reduced from €562 million in the second quarter a year earlier. The reduction in interest expense was driven by substantially lower interest rates compared to the prior-year period.

     Other financial income (expense), net was a negative €49 million in the second quarter, compared to a positive €17 million in the same period a year earlier. The current quarter included higher expenses related to the interest component from measuring provisions.

		Three months
		ended March 31,
(in millions of €)		2010				2009				% Change
Income from continuing operations before income taxes			2,032				1,335				52	%
Income taxes			(548	)			(380	)			44	%
as percentage of income from continuing operations before income taxes			27	%			28	%			—
Income from continuing operations			1,484				955				55	%
Income from discontinued operations, net of income taxes			14				58				(76	)%
Net income			1,498				1,013				48	%
Net income attributable to non-controlling interests			20				51				—
Net income attributable to shareholders of Siemens AG			1,478				962				54	%

     Income from continuing operations before income taxes was €2.032 billion in the second quarter, compared to €1.335 billion in the same period a year earlier. The change year-over-year was due to the factors mentioned above, primarily including improved gross profit margins in all Sectors, which led to an increase in gross profit on an absolute basis despite lower revenues. The increase also includes higher gains in connection with compliance-related matters in the current quarter. The effective tax rate was 27%, down from 28% in the prior-year period. The current-quarter rate was positively affected by a decision on appeal related to non-deductible expenses in connection with certain foreign dividends. As a result, Income from continuing operations after taxes was €1.484 billion in the second quarter of fiscal 2010, up from €955 million in the prior-year period.

     Discontinued operations primarily include former Com activities, comprising telecommunications carrier activities transferred into NSN in the third quarter of fiscal 2007; the enterprise networks business, 51% of which was divested during the fourth quarter of fiscal 2008; and the mobile devices business sold to BenQ Corporation in fiscal 2005. Income from discontinued operations in the current quarter was a positive €14 million, compared to a positive of €58 million in the second quarter a year earlier. The prior-year period benefited from a positive effect from the settlement of legal matters related to the former Com activities. For additional information regarding discontinued operations, see “Notes to Condensed Interim Consolidated Financial Statements” within this Interim Report.

     Net income for Siemens in the second quarter was €1.498 billion compared to €1.013 billion in the same period a year earlier. Net income attributable to shareholders of Siemens AG was €1.478 billion, up from €962 million in the second quarter of fiscal 2009.

Results of Siemens — Six months ended March 31, 2010

     The following discussion presents selected information for Siemens for the first six months of fiscal 2010:

     Orders and revenue

     In the first six months of fiscal 2010, revenue declined 8% year-over-year, to €35.579 billion, while orders came in at €36.820 billion, down 15% from the prior-year period. This resulted in a book-to-bill ratio of 1.03 for the first half. On an organic basis, revenue declined 6% and orders decreased 12% compared to the same period a year earlier.

		New Orders (location of customer)
		Six months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009(1)				Actual				Adjusted(2)				Currency				Portfolio
Europe, C.I.S.(3), Africa, Middle East			20,712				25,893				(20	)%			(19	)%			0	%			(1	)%
therein Germany			5,532				7,170				(23	)%			(22	)%			0	%			0	%
Americas			9,883				10,165				(3	)%			2	%			(5	)%			0	%
therein U.S.			7,051				7,710				(9	)%			0	%			(8	)%			0	%
Asia, Australia			6,226				7,026				(11	)%			(10	)%			(1	)%			0	%
therein China			2,529				3,113				(19	)%			(15	)%			(3	)%			0	%
therein India			999				1,145				(13	)%			(9	)%			(3	)%			0	%
Siemens			36,820				43,084				(15	)%			(12	)%			(2	)%			0	%

     Orders related to external customers in the first six months of fiscal 2010 decreased 15% compared to the prior-year period, including declines in all three Sectors. Order intake declined 22% in the Energy Sector due primarily to market contraction, including a lower volume from major orders as compared to the prior-year period, particularly at Fossil Power Generation, and increased pricing pressure. Orders also decreased by double digits in the Industry Sector, due mainly to a high volume from major orders at Mobility a year earlier. The decline year-over-year also included weaker demand at Industry Solutions and Drive Technologies. OSRAM was the only Division in the Industry Sector reporting an order increase year-over-year for the six-month period. Healthcare orders came in 1% below the prior-year level in the first six months. On an organic basis, excluding currency translation effects, first-half orders for Healthcare rose year-over-year.

     In the region Europe, C.I.S., Africa, Middle East orders declined 20% on decreases in all Sectors. Orders in the Energy Sector declined by a third, largely due to a lower volume from large orders at Fossil Power Generation and Renewable Energy. The Industry Sector reported an 11% order decline in the region, due primarily to the high basis of comparison at Mobility and the market contraction at Industry Solutions and Drive Technologies mentioned above. Healthcare orders declined 4% in the region, including lower demand in all Divisions compared to the first six months a year earlier. Order intake fell 23% in Germany, due in part to large contract wins at Mobility and Renewable Energy in the prior-year period. In the Americas orders declined 3%, driven by strong negative currency translation effects from the U.S. While Energy’s order intake in the Americas came in above the prior-year level due to a higher volume from major orders, Industry and Healthcare reported order declines in the region. In Asia, Australia orders declined 11% year-over-year, due primarily to a strong decrease in Industry, including lower volume from large orders at Mobility and Industry Solutions. Energy also reported lower orders year-over-year, while the Healthcare Sector posted an order increase in the region despite a high basis of comparison in the prior-year period due to the large contract win at Workflow & Solutions mentioned earlier. A strong prior-year period in China, including the above-mentioned major contract for high-speed trains, was the primary reason first-half orders in that country came in lower year-over-year.

		Revenue (location of customer)
		Six months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009(1)				Actual				Adjusted(2)				Currency				Portfolio
Europe, C.I.S.(3), Africa, Middle East			20,065				21,848				(8	)%			(7	)%			0	%			(1	)%
therein Germany			5,412				5,976				(9	)%			(9	)%			0	%			(1	)%
Americas			9,239				10,732				(14	)%			(10	)%			(4	)%			0	%
therein U.S.			6,768				8,202				(17	)%			(11	)%			(7	)%			0	%
Asia, Australia			6,274				6,009				4	%			5	%			0	%			0	%
therein China			2,497				2,415				3	%			7	%			(4	)%			0	%
therein India			875				763				15	%			16	%			(1	)%			0	%
Siemens			35,579				38,589				(8	)%			(6	)%			(1	)%			0	%

     Revenue related to external customers declined 8% compared to the first six months of fiscal 2009, including decreases in all Sectors. The Industry Sector was the primary factor in lower revenue year-over-year, reporting a 9% decline in the first half, mainly at Drive Technologies, Industry Solutions and Building Technologies. The Energy Sector posted a revenue decline of 6% on lower revenue in all Divisions, led by Power Transmission, Renewable Energy and Power Distribution. Due primarily to negative currency translation effects from the U.S., Healthcare revenue declined modestly compared to the prior-year period.

     In Europe, C.I.S., Africa, Middle East, first-half revenue decreased 8% year-over-year due largely to lower sales in the Industry Sector. Apart from OSRAM, all Divisions in the Sector reported lower revenues compared to the first six months of the prior fiscal year, including a steep decline at Drive Technologies. Healthcare revenue also decreased in the region. Energy revenue was level in the region, as higher sales at Fossil Power Generation and Renewable Energy offset revenue declines at the two power grid businesses. In the Americas, revenue fell 14% compared to the prior-year period on double-digit declines in Energy and Industry and a 9% decrease in Healthcare, including strong negative currency translation effects from the U.S. In Asia, Australia, first-half revenue rose 4%, as a decline in the Energy Sector was more than offset by increases in Industry and Healthcare. Most notably, revenue in the Healthcare Sector came in 20% above the prior-year period in the region, including strong revenue growth at Imaging & IT as well as double-digit increases in China and India for Healthcare.

Consolidated Statements of Income

		Six months
		ended March 31,
(in millions of €)		2010				2009				% Change
Gross profit on revenue			10,561				10,601				0	%
as percentage of revenue			29.7	%			27.5	%

     Gross profit for the first six months of fiscal 2010 came in level with the prior-year period, as a decline in the Industry Sector offset increases in Healthcare and Energy. Lower gross profit in the Industry Sector included revenue-driven declines at the majority of Divisions particularly including Drive Technologies and Industry Solutions. OSRAM delivered strong gross profit development, and gross profit also rose at Mobility. Gross profit growth in Healthcare reflected a positive effect from currency hedging and a favorable revenue mix in the current period, as well as charges at Workflow & Solutions in the prior-year period. Despite lower revenues in all Divisions, Energy increased its gross profit year-over-year on a more favorable revenue mix. In addition, gross profit development for Siemens included a positive swing in the effects from commodity hedging that was most notable in Energy and Industry. Further, gross profit in all three Sectors benefited from most of the pension gain mentioned above for the second quarter. In combination, these factors resulted in a gross profit margin of 29.7% for Siemens overall in the first half of fiscal 2010, up from 27.5% in the same period a year earlier.

		Six months
		ended March 31,
(in millions of €)		2010				2009				% Change
Research and development expenses			(1,742	)			(1,886	)			(8	)%
as percentage of revenue			4.9	%			4.9	%			—
Marketing, selling and general administrative expenses			(5,070	)			(5,388	)			(6	)%
as percentage of revenue			14.2	%			14.0	%			—
Other operating income			468				284				65	%
Other operating expense			(90	)			(285	)			(68	)%
Income from investments accounted for using the equity method, net			51				68				(25	)%
Interest income			1,047				1,106				(5	)%
Interest expense			(936	)			(1,191	)			(21	)%
Other financial income (expense), net			(63	)			(239	)			(74	)%

     R&D expenses decreased to €1.742 billion from €1.886 billion in the prior-year period, due to lower expenses in Industry and Healthcare. R&D expenses as a percentage of revenue remained at the prior-year level of 4.9%. SG&A expenses declined to €5.070 billion, from €5.388 billion in the first half of fiscal 2009, including lower expenses in all Sectors. As revenue fell even more than SG&A expenses in the current period, the SG&A expense ratio rose slightly to 14.2% compared to 14.0% a year earlier.

     Other operating income increased to €468 million in the first six months of fiscal 2010, compared to €284 million in the same period a year earlier. The current period included higher gains related to the disposal of real estate, including the net gain mentioned above for the second quarter and a gain on the sale of the Mobility Division’s airfield lighting business. In addition, the first half benefited from higher gains recognized in the second quarter in connection with compliance-related matters, including a gain of €84 million related to an agreement with the provider of the Siemens’ directors and officers liability insurance, a net gain related to settlements with former members of Siemens’ Managing Board and Supervisory Board, and a gain of €38 million related to the agreed recovery of funds frozen by authorities. For comparison, the prior-year period included lower income related to legal and regulatory matters.

     Other operating expense was €90 million, down from €285 million in the first six months a year earlier. The difference is due partly to expenses in the first half of fiscal 2009 for outside advisors engaged in connection with investigations into alleged violations of anti-corruption laws and related matters as well as remediation activities, which amounted to €82 million.

     Interest income decreased to €1.047 billion in the first half, compared to €1.106 billion in the same period a year earlier. Interest expense was €936 million, down from €1.191 billion in the first six months of fiscal 2009. The decline in both interest income and interest expense was driven by lower interest rates compared to the prior-year period.

     Other financial income (expense), net was a negative €63 million in the first six months of fiscal 2010, compared to a negative €239 million in the same period a year earlier. The prior-year period included negative results of hedging activities not qualifying for hedge accounting, higher expenses related to the interest component from measuring provisions, and higher expenses as a result of allowances and write offs of finance receivables.

		Six months
		ended March 31,
(in millions of €)		2010				2009				% Change
Income from continuing operations before income taxes			4,226				3,070				38	%
Income taxes			(1,216	)			(855	)			42	%
as percentage of income from continuing operations before income taxes			29	%			28	%			—
Income from continuing operations			3,010				2,215				36	%
Income from discontinued operations, net of income taxes			19				28				(32	)%
Net income			3,029				2,243				35	%
Net income attributable to non-controlling interests			74				78				—
Net income attributable to shareholders of Siemens AG			2,955				2,165				36	%

     Income from continuing operations before income taxes was €4.226 billion in the first half of fiscal 2010, compared to €3.070 billion in the same period a year earlier. The change year-over-year was due to the factors mentioned above, primarily including improved gross profit margins in all Sectors which offset the effect of lower revenue on gross profit on an absolute basis, a reduction in SG&A and R&D expenses, an improved financial result, and a positive impact from compliance-related matters compared to the prior-year period. The effective tax rate was 29%, up from 28% in the first half a year earlier. As a result, Income from continuing operations after taxes was €3.010 billion in the first six months of fiscal 2010, up from €2.215 billion in the prior-year period.

     Discontinued operations primarily include former Com activities, comprising telecommunications carrier activities transferred into NSN in the third quarter of fiscal 2007; the enterprise networks business, 51% of which was divested during the fourth quarter of fiscal 2008; and the mobile devices business sold to BenQ Corporation in fiscal 2005. Income from discontinued operations in the first half was a positive €19 million, compared to €28 million in the prior-year period. For additional information regarding discontinued operations, see “Notes to Condensed Interim Consolidated Financial Statements” within this Interim Report.

     Net income for Siemens in the first six months was €3.029 billion compared to €2.243 billion in the same period a year earlier. Net income attributable to shareholders of Siemens AG was €2.955 billion, up from €2.165 billion in the first half of fiscal 2009.

Portfolio activities

     At the beginning of November 2009, Siemens completed the acquisition of 100% of Solel Solar Systems Ltd. (Solel), a solar thermal power technology company. Solel, which was consolidated as of November 2009, will be integrated into the Energy Sector’s Renewable Energy Division. The aggregate consideration amounts to approximately €279 million (including cash acquired).

     At the beginning of November 2009, Siemens sold its airfield lighting business, which was part of the Industry Sector’s Mobility Division.

     At the end of December 2009, Siemens sold its 25% minority stake in Dräger Medical AG & Co. KG to the majority shareholder Drägerwerk AG & Co. KGaA. The investment was accounted for using the equity method in the Healthcare Sector.

     Siemens completed certain other portfolio transactions during the first six months of fiscal 2010, which did not have a significant effect on its Interim Consolidated Financial Statements. For further information on acquisitions and dispositions, see “Notes to Condensed Interim Consolidated Financial Statements.”

Segment information analysis

Sectors

Industry — Three months ended March 31, 2010

Sector		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Profit			783				671				17	%
Profit margin			9.4	%			7.8	%
New orders			8,023				8,801				(9	)%			(8	)%			0	%			0	%
Revenue			8,298				8,645				(4	)%			(4	)%			0	%			0	%

     Profit in the Industry Sector rose 17%, to €783 million, driven by strong turnarounds at Industry Automation and OSRAM. Capacity and cost reduction measures in prior periods improved profitability, and demand strengthened in short-cycle businesses. Industry took €50 million in severance charges, including related costs, during the quarter.

     Sector profit includes €76 million of the pension gain mentioned earlier, which affected all Divisions within the Sector. This was more than offset by charges related to a project engagement with a local partner in the U.S. and a provision for a supplier-related warranty.

     Revenue came in 4% lower, due primarily to weaker demand for the Sector’s process automation and late-cycle manufacturing businesses compared to the prior-year period. While orders declined 9% overall, this was mainly due to a high basis of comparison at Mobility in the prior-year period which included an exceptionally large order in China. In contrast, all other Divisions except for Industry Solutions posted an increase in second-quarter orders year-over-year. On a geographic basis, revenue growth in the region Asia, Australia partially offset declines in Europe, C.I.S., Africa, Middle East and the Americas. Orders rose in the Americas but came in lower in the regions Europe, C.I.S., Africa, Middle East and Asia, Australia due to lower volume from major orders. The Sector’s book-to-bill ratio was 0.97 and its order backlog remained at €28 billion. Industry is closely monitoring capacity utilization and expects to continue adjusting capacity to the extent necessary.

Divisions		New Orders
		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Industry Automation(2)(3)			1,509				1,328				14	%			14	%			0	%			0	%
Drive Technologies			1,813				1,627				11	%			12	%			0	%			0	%
Building Technologies(2)			1,677				1,628				3	%			3	%			0	%			0	%
OSRAM			1,146				971				18	%			20	%			(1	)%			(1	)%
Industry Solutions			1,427				1,737				(18	)%			(18	)%			0	%			0	%
Mobility			1,141				2,208				(48	)%			(48	)%			0	%			(1	)%

Divisions		Revenue
		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Industry Automation(2)(3)			1,425				1,380				3	%			4	%			0	%			0	%
Drive Technologies			1,620				1,954				(17	)%			(17	)%			0	%			0	%
Building Technologies(2)			1,656				1,695				(2	)%			(2	)%			0	%			0	%
OSRAM			1,146				971				18	%			20	%			(1	)%			(1	)%
Industry Solutions			1,484				1,759				(16	)%			(15	)%			0	%			0	%
Mobility			1,576				1,542				2	%			2	%			1	%			(1	)%

Divisions		Profit												Profit margin
		Three months												Three months
		ended March 31,												ended March 31,
(in millions of €)		2010				2009				% Change				2010				2009
Industry Automation(1)			202				105				93	%			14.2	%			7.6	%
Drive Technologies			189				244				(22	)%			11.7	%			12.5	%
Building Technologies(1)			108				89				21	%			6.5	%			5.3	%
OSRAM			153				8				>200	%			13.4	%			0.8	%
Industry Solutions			2				118				(98	)%			0.1	%			6.7	%
Mobility			127				106				19	%			8.0	%			6.9	%

     The Industry Automation Division generated profit of €202 million, well above the recessionary level of the prior-year period. Cost and capacity measures helped all business units report higher earnings. Restoration of customer demand fueled a broad-based increase in orders and revenue. In particular, the Division’s 14% increase in orders included accelerated growth in emerging markets. Purchase price accounting (PPA) effects related to the purchase of UGS Corp. in fiscal 2007 were €34 million in the current quarter and €36 million in the prior-year period.

     Drive Technologies contributed €189 million to Sector profit in the second quarter on lower revenue particularly in Europe, C.I.S., Africa, Middle East and the Americas. The Division’s revenue-driven decline in profit was due mainly to its drives businesses, which typically lag macroeconomic cycles. Order development in the second quarter indicated that markets are stabilizing on a lower level for Drive Technologies. The Division’s 11% order increase compared to the prior-year period included growth in all regions and business units.

     Cost discipline helped Building Technologies increase its profit despite a decline in revenue. Profit was held back by the supplier-related warranty, largely offset by a portion of the pension gain mentioned above. Rapid growth in emerging economies enabled the Division to post a modest increase in second-quarter orders compared to the prior-year period.

     OSRAM’s profit of €153 million benefited from €23 million of the pension gain mentioned above, and from a rebound in revenue compared to the prior-year period which significantly improved capacity utilization. Profit also rose on an improved product mix and streamlined cost structure. All business units reported higher revenues and earnings compared to the prior-year period, and revenue rose in all regions. With increasing demand for next-generation solid-state and LED lighting solutions, OSRAM intends to invest in market expansion and LED production capacity in coming quarters.

     Industry Solutions continued to address the effects of the downturn in global process industries. The Division’s profit of €2 million in the quarter was burdened by €63 million in charges related to a project engagement with a local partner in the U.S. and €38 million in severance charges, including related costs, for ongoing capacity adjustment measures. Both revenue and orders came in lower than the prior-year period.

     Mobility delivered profit of €127 million, benefiting from a portion of the pension gain mentioned above. Earnings rose in all business units, due in part to the strength of Mobility’s order backlog after selective order intake in prior periods. Second-quarter orders came in well below the prior-year level, which included an exceptionally large order for high-speed trains in China.

Industry — Six months ended March 31, 2010

Sector		Six months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Profit			1,695				1,605				6	%
Profit margin			10.4	%			8.9	%
New orders			16,271				18,577				(12	)%			(11	)%			(1	)%			0	%
Revenue			16,369				17,933				(9	)%			(7	)%			(1	)%			0	%

     Capacity adjustment measures and cost management as well as strengthened demand in short-cycle businesses in the last months of the current period enabled Industry to improve profit and profitability in the first six months compared to the same period a year earlier. A majority of the Sector’s Divisions increased their first-half profit year-over-year, with the strongest growth at OSRAM and Mobility. In contrast, profit declined sharply at the Divisions Industry Solutions and Drive Technologies. The Sector took €50 million in severance charges, including related costs in the second quarter of the current period.

     Profit for the Sector included €76 million of the pension gain mentioned earlier, affecting results at all Divisions, as well as a €44 million net gain at Mobility on the sale of its airfield lighting business. These gains were partly offset by charges related to a project engagement with a local partner in the U.S. and a provision for a supplier-related warranty.

     Orders for Industry in the first six months of fiscal 2010 declined 12% mainly due to a sharp downturn at Industry Solutions as well as significantly lower volume from major orders at Mobility compared to the same period a year earlier which included the exceptionally large order in China mentioned above. As a result, first-half orders were down 27% year-over-year for both Divisions. Revenue declined 9% year-over-year due mainly to lower demand in the Sector’s late-cycle manufacturing and process businesses which took revenue down sharply at Drive Technologies and Industry Solutions year-over-year. On a regional basis, higher revenue in Asia, Australia for the first six months was more than offset by lower revenue in the Americas and Europe, C.I.S., Africa, Middle East. Orders were down in all three regions.

Divisions		New Orders
		Six months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Industry Automation(2)(3)			2,915				2,928				0	%			1	%			(1	)%			0	%
Drive Technologies			3,387				3,713				(9	)%			(8	)%			(1	)%			0	%
Building Technologies(2)			3,288				3,467				(5	)%			(3	)%			(2	)%			0	%
OSRAM			2,277				2,068				10	%			12	%			(3	)%			1	%
Industry Solutions			2,661				3,653				(27	)%			(26	)%			(1	)%			0	%
Mobility			3,028				4,132				(27	)%			(25	)%			(1	)%			(1	)%

Divisions		Revenue
		Six months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Industry Automation(2)(3)			2,823				2,989				(6	)%			(4	)%			(1	)%			0	%
Drive Technologies			3,131				4,014				(22	)%			(21	)%			(1	)%			0	%
Building Technologies(2)			3,216				3,528				(9	)%			(7	)%			(2	)%			0	%
OSRAM			2,277				2,068				10	%			12	%			(3	)%			1	%
Industry Solutions			2,921				3,555				(18	)%			(17	)%			(1	)%			0	%
Mobility			3,158				3,106				2	%			3	%			0	%			(1	)%

Divisions		Profit												Profit margin
		Six months												Six months
		ended March 31,												ended March 31,
(in millions of €)		2010				2009				% Change				2010				2009
Industry Automation(1)			436				373				17	%			15.5	%			12.5	%
Drive Technologies			355				504				(30	)%			11.3	%			12.6	%
Building Technologies(1)			215				200				7	%			6.7	%			5.7	%
OSRAM			305				100				>200	%			13.4	%			4.8	%
Industry Solutions			83				237				(65	)%			2.8	%			6.7	%
Mobility			292				191				53	%			9.2	%			6.1	%

     Restocking by customers positively impacted the current period and strong demand from the Asia, Australia region lifted orders at Industry Automation back to the level of the first half of the prior fiscal year. Revenue lagged behind as accelerating growth in Asia, Australia was more than offset by declines in Europe, C.I.S. Africa and the Americas. A favorable revenue mix influenced by customer restocking and Industry Automation’s cost cutting and capacity adjustment measures enabled the Division to improve profit by 17% year-over-year. PPA effects related to the purchase of UGS Corp. were €66 million in the current period compared to €71 million in the prior-year period.

     Orders at Drive Technologies were 9% lower for the first half than a year earlier, as the Division saw signs of stabilization in its markets in the last months of the current period. However, six-month revenue declined by 22% year over-year. The volume development was driven by double-digit declines in Europe, C.I.S., Africa, Middle East and the Americas. Profit at Drive Technologies was down 30% in the first half of fiscal 2010 compared to the prior-year period on declining revenue and lower capacity utilization.

     Growth in both revenue and orders in the Asia, Australia region for Building Technologies was more than offset by volume declines in Europe, C.I.S., Africa, Middle East and the Americas. Tight cost control enabled the Division to improve profit year-over-year despite lower revenue. The Division’s low-voltage switchgear business contributed to the positive profit development year-over-year. Profit in the current period included a charge for the supplier-related warranty mentioned above. This effect was largely offset by a portion of the pension curtailment gain also mentioned above.

     Revenue at OSRAM increased 10% year-over-year, including strong demand for LEDs. Profitability surged on an improved product mix, increased capacity utilization and a streamlined cost structure. In the prior-year six-month period, the Division was heavily affected by the economic downturn. Profit in the current period benefited from €23 million of the pension gain mentioned above while the prior-year period included a positive effect from currency hedging activities not qualifying for hedge accounting.

     Revenue and orders at Industry Solutions for the first half of fiscal 2010 declined in all regions year over year. The sharpest drop in volume came from the Division’s large metal technologies business. Profit development in the current period was affected by lower revenue and declining capacity utilization. Furthermore, profit was burdened by €63 million in charges related to a project engagement with a local partner in the U.S. and €38 million in severance charges, including related costs, for ongoing capacity adjustment measures, both taken in the second quarter of the current period.

     Profit at Mobility in the current period increased strongly year-over-year due partly to selective order intake in prior periods. Profit also benefited from the €44 million net gain on the sale of the airfield lighting business and from a portion of the pension gain mentioned above. Profit in the prior-year period included a positive €10 million effect related to the settlement of a claim in the rolling stock business. New orders declined year-over-year due to the high volume from major orders in the first half of the previous fiscal year, including the large train order in China. As a result, order intake was lower in the region Asia, Australia and also declined in Europe, C.I.S., Africa, Middle East. Revenue was up slightly year-over-year on strong growth in Asia, Australia, which was partly offset by lower revenue in the Americas.

Energy — Three months ended March 31, 2010

Sector		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Profit			863				818				5	%
Profit margin			14.0	%			12.9	%
New orders			6,081				8,206				(26	)%			(26	)%			0	%			0	%
Revenue			6,182				6,364				(3	)%			(4	)%			1	%			1	%

     The Energy Sector reported profit of €863 million and was the top contributor to Total Sectors profit. Profitability was burdened by charges of €59 million for capacity adjustments at Fossil Power Generation which more than offset €25 million of the pension gain mentioned earlier. Fossil Power Generation was again the primary driver of Sector profit growth.

     Challenging market conditions included customer postponements of large infrastructure projects and pricing pressure on available tenders. As a result, second-quarter orders fell 26% year-over-year, due mainly to lower volume from major orders. The Sector’s strong order backlog cushioned market effects on revenue, mainly at Fossil Power Generation and Renewable Energy. Revenue still declined 3% for the Sector, due primarily to the power grid businesses. On a geographic basis, orders declined in the regions Europe, C.I.S., Africa, Middle East and the Americas and rose in Asia, Australia. Revenue was higher in Europe, C.I.S., Africa, Middle East and decreased in the Americas and Asia, Australia. The Sector’s book-to-bill ratio was 0.98 in the second quarter, and currency translation effects lifted its order backlog slightly, to €50 billion.

Divisions		New Orders
		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Fossil Power Generation			2,250				3,475				(35	)%			(35	)%			0	%			0	%
Renewable Energy			628				1,587				(60	)%			(61	)%			0	%			1	%
Oil & Gas			1,178				920				28	%			25	%			3	%			0	%
Power Transmission			1,424				1,594				(11	)%			(11	)%			1	%			0	%
Power Distribution			777				757				3	%			1	%			1	%			0	%

Divisions		Revenue
		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Fossil Power Generation			2,447				2,377				3	%			4	%			(1	)%			0	%
Renewable Energy			862				800				8	%			2	%			(1	)%			6	%
Oil & Gas			981				1,040				(6	)%			(9	)%			4	%			0	%
Power Transmission			1,363				1,503				(9	)%			(11	)%			1	%			0	%
Power Distribution			667				846				(21	)%			(23	)%			1	%			0	%

Divisions		Profit												Profit margin
		Three months												Three months
		ended March 31,												ended March 31,
(in millions of €)		2010				2009				% Change				2010				2009
Fossil Power Generation			347				312				11	%			14.2	%			13.1	%
Renewable Energy			107				105				2	%			12.4	%			13.1	%
Oil & Gas			127				121				5	%			13.0	%			11.6	%
Power Transmission			161				168				(4	)%			11.9	%			11.2	%
Power Distribution			100				106				(6	)%			15.0	%			12.5	%

     Fossil Power Generation delivered another strong performance, taking second-quarter profit up 11% year-over-year, to €347 million. An improved business mix compared to the prior-year period included higher-margin projects from the order backlog and an increased revenue contribution from the Division’s products business. Fossil Power Generation took €59 million in charges for capacity adjustments related to a shift of production capacity within the Americas region, including €26 million for severance. This impact was partly offset by the Division’s share of the pension gain mentioned above. Second-quarter revenue rose 3% year-over-year on order conversion from the backlog. In contrast, order intake in the current period was heavily influenced by market contraction. For comparison, second-quarter orders a year earlier included €1.1 billion in contracts in Iraq.

     Renewable Energy continued to face an environment characterized by large orders, tight debt financing markets and adverse consequences from the economic downturn. The Division’s profit rebounded from the low level of the first quarter to €107 million, up slightly compared to the prior-year period. Revenue rose 8% year-over-year, on conversion from the order backlog. Orders came in significantly lower compared to the prior-year period, which included several large off-shore wind-farm orders.

     The Oil & Gas Division contributed €127 million to Sector profit in the second quarter, above the prior-period level despite lower revenue. A favorable revenue mix again included a strong contribution from the service business. Orders climbed from the level of the prior-year quarter, which included relatively low volume from major orders.

     Power Transmission held second-quarter profit near the prior-year level, at €161 million, despite lower revenue most notably in the transformers business. The Division saw an 11% order decline due in part to lower volume from major orders compared to the prior-year period.

     Profit at Power Distribution declined modestly, to €100 million, despite benefiting from higher equity investment income as well as its portion of the pension gain mentioned above. Weak order development during the prior year led to significantly lower revenue conversion in the current period, particularly in the medium-voltage business. With demand stabilizing, Power Distribution was able to record its first year-over-year increase in quarterly orders in more than a year.

Energy — Six months ended March 31, 2010

Sector		Six months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Profit			1,683				1,574				7	%
Profit margin			14.3	%			12.5	%
New orders			13,000				16,740				(22	)%			(21	)%			(2	)%			0	%
Revenue			11,798				12,596				(6	)%			(6	)%			(1	)%			1	%

     The Energy Sector turned in a strong performance in the first six months of fiscal 2010, increasing Sector profit 7% year-over-year to €1.683 billion. Profit growth year-over-year was driven by Fossil Power Generation, which more than offset a short-term drop in profit at Renewable Energy resulting from lower revenue in the first quarter of the current fiscal year.

     Market conditions remained challenging in the Energy Sector, as customers continued to postpone infrastructure projects and market contraction led to increased pricing pressure. In this environment, Energy orders fell 22% from the prior-year period on decreases in all Divisions, particularly at Fossil Power Generation. On a geographic basis, orders declined 33% in the region Europe, C.I.S., Africa, Middle East, including a significantly lower volume from major orders at Fossil Power Generation and Renewable Energy. Energy orders also fell in Asia, Australia, but rose in the Americas due primarily to large contract wins at Renewable Energy. Revenue in the Sector fell 6% in the first half of fiscal 2010, including declines in all Divisions and the regions Americas and Asia, Australia. The Sector’s book-to-bill ratio was 1.10 in the current period.

Divisions		New Orders
		Six months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Fossil Power Generation			4,290				7,472				(43	)%			(41	)%			(2	)%			0	%
Renewable Energy			2,204				2,235				(1	)%			2	%			(4	)%			0	%
Oil & Gas			2,209				2,280				(3	)%			(4	)%			0	%			0	%
Power Transmission			3,135				3,509				(11	)%			(9	)%			(1	)%			0	%
Power Distribution			1,504				1,614				(7	)%			(6	)%			(1	)%			0	%

Divisions		Revenue
		Six months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Fossil Power Generation			4,704				4,750				(1	)%			1	%			(2	)%			0	%
Renewable Energy			1,342				1,513				(11	)%			(14	)%			(2	)%			5	%
Oil & Gas			1,977				2,088				(5	)%			(6	)%			1	%			0	%
Power Transmission			2,682				3,003				(11	)%			(10	)%			(1	)%			0	%
Power Distribution			1,362				1,651				(17	)%			(17	)%			(1	)%			0	%

Divisions		Profit												Profit margin
		Six months												Six months
		ended March 31,												ended March 31,
(in millions of €)		2010				2009				% Change				2010				2009
Fossil Power Generation			748				601				24	%			15.9	%			12.7	%
Renewable Energy			136				206				(34	)%			10.2	%			13.6	%
Oil & Gas			253				227				11	%			12.8	%			10.9	%
Power Transmission			332				320				4	%			12.4	%			10.7	%
Power Distribution			197				213				(8	)%			14.4	%			12.9	%

     Fossil Power Generation delivered substantially higher first-half profit year-over-year, combining strong project execution and an improved business mix, including increased revenue contributions from the products and service businesses. As a result, Fossil Power Generation led all Siemens Divisions with €748 million in profit for the first half of fiscal 2010, despite the above-mentioned charges for capacity adjustments in the second quarter. In contrast, order development was heavily influenced by market contraction, as the Division reported a 43% decrease in order intake year-over-year. For comparison, the first six months of fiscal 2009 included a peak volume from major orders, including the above-mentioned contracts in Iraq. Fossil Power Generation’s strong order backlog cushioned the effect of market conditions on revenue for the first six months, which came in within 1% of the prior-year period.

     Profit at Renewable Energy declined significantly compared to the first half of fiscal 2009, due primarily to a short-term revenue drop in the first quarter of the current period and also to transaction and integration costs related to consolidation of the solar company Solel. First-half revenue fell 11% year-over-year despite growth in the second quarter. The Division took in large wind-farm orders in both periods under review, and order intake was nearly unchanged for the first six months. The Division expects a book-to-bill ratio well above one in the second half of the fiscal year.

     The Oil & Gas Division increased first-half profit to €253 million from €227 million a year earlier, due in part to a favorable revenue mix including a strong contribution from the service business. In uncertain market conditions, order intake declined 3% year-over-year despite a higher volume from major orders in the current period. Revenue came in 5% below the prior-year level.

     Profit rose to €332 million at Power Transmission, benefiting from positive effects from commodity hedging. Revenue decreased 11% compared to the first six months a year earlier, due partly to a generally declining order trend in fiscal 2009. First-half orders also declined 11% year-over-year.

     Power Distribution contributed profit of €197 million in the first six months of fiscal 2010, down from €213 million in the prior-year period despite the positive effects on profit mentioned above for the second quarter. Revenue came in 17% below the prior-year level, partly as a consequence of declining order intake throughout fiscal 2009. Orders for the first half also came in lower year-over-year, but increased in the second quarter.

Healthcare — Three months ended March 31, 2010

Sector		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Profit			492				355				39	%
Profit margin			16.6	%			11.9	%
New orders			2,945				2,951				0	%			1	%			(1	)%			0	%
Revenue			2,968				2,984				(1	)%			0	%			(1	)%			0	%

     The Healthcare Sector substantially increased second-quarter profit year-over-year. Passage of healthcare reform legislation in the U.S. removed some uncertainty in the market and contributes to an easing of customer restraint regarding capital expenditures. Strong revenue growth in the region Asia, Australia partly offset declines in other regions, which resulted in part from pressure on public spending for healthcare in developed economies. Profit climbed to €492 million from €355 million in the prior-year quarter, benefiting from €79 million of the pension gain in the U.S. mentioned earlier, which affected all Divisions in the Sector. Sector profit continued to benefit from a favorable currency hedge, which affected results primarily at Imaging & IT. In addition, profit increased due to structural cost savings and a favorable product mix at Imaging & IT. PPA effects related to past acquisitions were €44 million in the second quarter. In addition, Healthcare recorded €26 million of integration costs associated with the next phase of integration activities at Diagnostics. In the same quarter a year earlier, PPA effects and integration costs totaled €64 million.

     Orders came in nearly level with the same quarter a year earlier, even though that period included an unusually large order at Workflow & Solutions. Strong order growth at Imaging & IT included double-digit increases in Asia, Australia and the U.S. Second-quarter revenue was within 1% of the prior-year level, and also included growth in Asia, Australia for Imaging & IT and Diagnostics. Excluding negative currency translation effects, orders rose 1% and revenue remained flat. Healthcare’s book-to-bill ratio was 0.99 in the second quarter.

Its order backlog increased slightly on a consecutive-quarter basis, to €7 billion, due to positive currency translation effects.

Divisions		New Orders
		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Imaging & IT			1,774				1,661				7	%			8	%			(1	)%			0	%
Workflow & Solutions			328				489				(33	)%			(33	)%			0	%			0	%
Diagnostics			900				867				4	%			5	%			(1	)%			0	%

Divisions		Revenue
		Three months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Imaging & IT			1,773				1,774				0	%			1	%			(1	)%			0	%
Workflow & Solutions			350				412				(15	)%			(16	)%			0	%			0	%
Diagnostics			901				867				4	%			5	%			(1	)%			0	%

Divisions		Profit												Profit margin
		Three months												Three months
		ended March 31,												ended March 31,
(in millions of €)		2010				2009				% Change				2010				2009
Imaging & IT			374				265				41	%			21.1	%			14.9	%
Workflow & Solutions			22				30				(26	)%			6.4	%			7.3	%
Diagnostics			116				54				114	%			12.8	%			6.2	%

     Imaging & IT increased second-quarter profit to €374 million from €265 million in the prior-year period. Along with a favorable product mix and structural cost savings, the Division’s profitability benefited from €44 million of the pension gain and from the currency hedge both mentioned above. Imaging & IT achieved double-digit growth in revenue and orders in the region Asia, Australia, particularly including Japan and China. Overall, orders rose 7% and revenue remained level compared to the second quarter a year earlier. On an organic basis, orders rose 8% and revenue increased 1% compared to the prior-year period.

     Workflow & Solutions posted €22 million in profit, benefiting from €7 million of the pension gain mentioned above. Lower profit was due mainly to a decline in revenue, particularly in the region Europe, C.I.S., Africa, Middle East. Orders also came in lower, primarily because the prior-year period included the large order in Asia, Australia mentioned above.

     Revenue at Diagnostics rose 4% compared to the second quarter a year earlier, or 5% on an organic basis, excluding currency translation effects. The increase came primarily from emerging markets in Asia, Australia and the Americas. Revenue was stable in the region Europe, C.I.S., Africa, Middle East. Profitability rose from the prior-year level due in part to volume-driven economies of scale and lower SG&A expenses compared to the prior-year period, and also benefited from €22 million of the pension gain mentioned above. These positive factors more than offset an increase in total PPA effects and integration costs. In the second quarter a year earlier, these impacts were €47 million and €17 million, respectively. In the current period, PPA effects were €44 million, and the Division also recorded €26 million in costs for integration activities.

Healthcare — Six months ended March 31, 2010

Sector		Six months
		ended March 31,								% Change								therein
(in millions of €)		2010				2009				Actual				Adjusted(1)				Currency				Portfolio
Profit			1,015				697				46	%
Profit margin			17.5	%			11.8	%
New orders			5,815				5,847				(1	)%			2	%			(3	)%			0	%
Revenue			5,799				5,920				(2	)%			0	%			(2	)%			0	%