##### Table of Contents



As filed with the Securities and Exchange Commission on
December 11, 2006








UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 20-F




|  |                                                                                                         
|- | --------------------------------------------------------------------------------------------------------
|o | REGISTRATION STATEMENT
    PURSUANT TO SECTION 12(b) OR (g) 
     OF THE SECURITIES EXCHANGE ACT OF 1934

OR




|  |                                                                                           
|- | ------------------------------------------------------------------------------------------
|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 
     OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2006.


OR




|  |                                                                                               
|- | ----------------------------------------------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 
     OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________.


OR




|  |                                                                                                  
|- | -------------------------------------------------------------------------------------------------
|o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) 
     OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company
report ________


Commission file number: 1-15174


Siemens Aktiengesellschaft


(Exact name of Registrant as specified in its charter)


Federal Republic of Germany


(Jurisdiction of incorporation or organization)


Wittelsbacherplatz 2


D-80333 Munich


Federal Republic of Germany


(Address of principal executive offices)




|                                                  |  |                                          
|------------------------------------------------- |  | -----------------------------------------
|Title of each class                               |  | Name of each exchange on which registered
|                                                  |  |                                          
|American Depositary Shares, each representing one |  |                                          
|Common Share, no par value                        |  | New York Stock Exchange                  
|Common Shares, no par value*                      |  | New York Stock Exchange                  






|  |                                                                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Listed, not for trading or quotation purposes, but only in
    connection with the registration of American Depositary Shares
    pursuant to the requirements of the Securities and Exchange
    Commission.





















þ o




o þ




þ o o


12b-2


þ o o




o þ




o þ










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##### 










TABLE OF CONTENTS


|          |  |                                                                                  |  |      |       | 
|--------- |  | -------------------------------------------------------------------------------- |  | ---- | ----- | 
|          |  |                                                                                  |  | Page |      
|          |  |                                                                                  |  |      |      
|Item 1:   |  | Identity of Directors, Senior Management
    and Advisers                        |  |      | 1     | 
|Item 2:   |  | Offer Statistics and Expected Timetable                                          |  |      | 1     | 
|Item 3:   |  | Key Information                                                                  |  |      | 1     | 
|Item 4:   |  | Information on the Company                                                       |  |      | 8     | 
|Item 4A:  |  | Unresolved Staff Comments                                                        |  |      | 39    | 
|Item 5:   |  | Operating and Financial Review and
    Prospects                                 |  |      | 39    | 
|Item 6:   |  | Directors, Senior Management and
    Employees                                   |  |      | 79    | 
|Item 7:   |  | Major Shareholders and Related Party
    Transactions                            |  |      | 94    | 
|Item 8:   |  | Financial Information                                                            |  |      | 95    | 
|Item 9:   |  | The Offer and Listing                                                            |  |      | 95    | 
|Item 10:  |  | Additional Information                                                           |  |      | 97    | 
|Item 11:  |  | Quantitative and Qualitative Disclosure
    About Market Risk                    |  |      | 110   | 
|Item 12:  |  | Description of Securities Other than Equity
    Securities                       |  |      | 113   | 
|Item 13:  |  | Defaults, Dividend Arrearages and
    Delinquencies                              |  |      | 113   | 
|Item 14:  |  | Material Modifications to the Rights of
    Security Holders and Use of Proceeds |  |      | 113   | 
|Item 15:  |  | Controls and Procedures                                                          |  |      | 113   | 
|Item 16A: |  | Audit Committee Financial Expert                                                 |  |      | 117   | 
|Item 16B: |  | Code of Ethics                                                                   |  |      | 117   | 
|Item 16C: |  | Principal Accountant Fees and Services                                           |  |      | 117   | 
|Item 16D: |  | Exemptions from the Listing Standards for
    Audit Committees                   |  |      | 119   | 
|Item 16E: |  | Purchases of Equity Securities by the
    Issuer and Affiliated Purchasers       |  |      | 120   | 
|Item 18:  |  | Financial Statements                                                             |  |      | F-1   | 
|Item 19:  |  | Exhibits                                                                         |  |      | III-1 | 
|Exh-1.1  
|Exh-8.1  
|Exh-12.1 
|Exh-12.2 
|Exh-13.1 
|Exh-13.2 
|Exh-14.1 



FORWARD LOOKING STATEMENTS


20-F


20-F,


i



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##### Table of Contents



PART I





ITEM 1:      IDENTITY OF
DIRECTORS, SENIOR MANAGEMENT AND ADVISERS







ITEM 2:      OFFER STATISTICS
AND EXPECTED TIMETABLE







ITEM 3:      KEY INFORMATION


Selected Consolidated
Financial and Statistical Data




Income Statement
Data


|                                                                                                     |                                                                                     |                                        |        |       |         |  |        |         |   |  |         |       |   |         |        |      |  |  |        |      | 
|---------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | -------------------------------------- | ------ | ----- | ------- |  | ------ | ------- | - |  | ------- | ----- | - | ------- | ------ | ---- |  |  | ------ | ---- | 
|                                                                                                     |                                                                                     | Year ended September 30,               |       
|                                                                                                     |                                                                                     |                                        |       
|                                                                                                     |                                                                                     | 2006(1)                                |        |       | 2005(1) |  |        | 2004(1) |   |  | 2003(1) |       |   | 2002(2) |       
|                                                                                                     |                                                                                     |                                        |        |       |         |  |        |         |   |  |         |       |   |         |       
|                                                                                                     |                                                                                     | ( in millions, except per share data) |       
|Net sales                                                                                            |                                                                                     |                                        | 87,325 |       |         |  | 75,445 |         |   |  | 70,237  |       |   |         | 69,775 |      |  |  | 84,016 |     
|Income from continuing operations before income taxes and
    cumulative effect of accounting change |                                                                                     |                                        | 4,371  |       |         |  | 4,185  |         |   |  | 4,369   |       |   |         | 3,320  |      |  |  | 3,475  |     
|Income from continuing operations before cumulative effect of
    accounting change                  |                                                                                     |                                        | 3,087  |       |         |  | 3,058  |         |   |  | 3,450   |       |   |         | 2,355  |      |  |  |       |     
|Income (loss) from discontinued operations, of income taxes                                          |                                                                                     |                                        | (54    | )     |         |  | (810   | )       |   |  | (45     | )     |   |         | 54     |      |  |  |       |     
|Net income                                                                                           |                                                                                     |                                        | 3,033  |       |         |  | 2,248  |         |   |  | 3,405   |       |   |         | 2,445  |      |  |  | 2,597  |     
|Basic earnings per share                                                                             |                                                                                     |                                        |        |       |         |  |        |         |   |  |         |       |   |         |        |      |  |  |        |     
|                                                                                                     | Income from continuing operations before cumulative effect of
    accounting change |                                        |        | 3.47  |         |  |        | 3.43    |   |  |         | 3.87  |   |         |        | 2.65 |  |  |        |     | 
|                                                                                                     | Income (loss) from discontinued operations                                          |                                        |        | (0.07 | )       |  |        | (0.91   | ) |  |         | (0.05 | ) |         |        | 0.06 |  |  |        |     | 
|                                                                                                     | Net income                                                                          |                                        |        | 3.40  |         |  |        | 2.52    |   |  |         | 3.82  |   |         |        | 2.75 |  |  |        | 2.92 | 
|Diluted earnings per share                                                                           |                                                                                     |                                        |        |       |         |  |        |         |   |  |         |       |   |         |        |      |  |  |        |     
|                                                                                                     | Income from continuing operations before cumulative effect of
    accounting change |                                        |        | 3.31  |         |  |        | 3.29    |   |  |         | 3.71  |   |         |        | 2.61 |  |  |        |     | 
|                                                                                                     | Income (loss) from discontinued operations                                          |                                        |        | (0.05 | )       |  |        | (0.87   | ) |  |         | (0.05 | ) |         |        | 0.06 |  |  |        |     | 
|                                                                                                     | Net income                                                                          |                                        |        | 3.26  |         |  |        | 2.42    |   |  |         | 3.66  |   |         |        | 2.71 |  |  |        | 2.92 | 

1



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##### Table of Contents



Balance Sheet
Data


|                     |  |                  |        |  |      |  |        |      |  |  |        |  |  |      |        |     |  |  |        |    
|-------------------- |  | ---------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ------ | --- |  |  | ------ | ---
|                     |  | At September 30, |       
|                     |  |                  |       
|                     |  | 2006             |        |  | 2005 |  |        | 2004 |  |  | 2003   |  |  | 2002 |       
|                     |  |                  |        |  |      |  |        |      |  |  |        |  |  |      |       
|                     |  | ( in millions)  |       
|Total assets         |  |                  | 90,973 |  |      |  | 86,117 |      |  |  | 79,430 |  |  |      | 77,517 | (3) |  |  | 77,890 | (3)
|Long-term debt       |  |                  | 13,399 |  |      |  | 8,436  |      |  |  | 9,785  |  |  |      | 11,433 |     |  |  | 10,243 |    
|Shareholders equity |  |                  | 29,306 |  |      |  | 27,022 |      |  |  | 26,760 |  |  |      | 23,620 | (3) |  |  | 23,465 | (3)
|Common stock         |  |                  | 2,673  |  |      |  | 2,673  |      |  |  | 2,673  |  |  |      | 2,673  |     |  |  | 2,671  |    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Companys Mobile Devices business is presented as
    discontinued operations. The financial information for fiscal
    2006, 2005, 2004 and 2003 presents comparable amounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(2) | Information for fiscal 2002 adjusted to reflect discontinued
    operations could not be provided without unreasonable effort or
    expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(3) | In connection with the investigation launched by German state
    prosecutors on November 15, 2006, Siemens initiated an
    internal investigation into certain transactions and payments
    which led to adjustments to its October 1, 2003
    Shareholders equitybalance to correct for income
    tax related misstatements in years prior to fiscal 2004 and
    recognized charges in its fiscal 2006 Consolidated Statements
    of Incometo correct for income tax related misstatements in
    the fiscal years 2005 and 2004, respectively. The charges
    recognized for fiscal 2005 and 2004 had the effect of reducing
    both Income from continuing operationsand Net incomeby
    42 million
    in the 2006 Consolidated Statements of Income(thereof
    17 million
    refers to fiscal 2005 and
    25 million
    to fiscal 2004). The total adjustments relating to years prior
    to fiscal 2004 had the effect of decreasing
    Shareholders equityas of October 1, 2003 by
    95 million
    (thereof
    39 million
    refers to fiscal 2003 and
    28 million
    refers to fiscal 2002). For further information see
    Notes 2, 8 and 32 of the Notes to Consolidated
    Financial Statements.

Total assets Shareholders equity




Dividends




|                         |  |               |      |   |        |  |      | 
|------------------------ |  | ------------- | ---- | - | ------ |  | ---- | 
|                         |  | Dividend paid |     
|                         |  | per share     |     
|                         |  |               |     
|Year ended September 30, |  | Euro          |      |   | Dollar | 
|                         |  |               |      |   |        | 
|2002                     |  |               | 1.00 |   |        |  | 1.08 | 
|2003                     |  |               | 1.10 |   |        |  | 1.40 | 
|2004                     |  |               | 1.25 |   |        |  | 1.63 | 
|2005                     |  |               | 1.35 |   |        |  | 1.65 | 
|2006                     |  |               | 1.45 | * |        |  |     | 






|  |                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Proposed by the Managing Board and the Supervisory Board; to be
    approved by the shareholders at the shareholders annual
    meeting on January 25, 2007.

Exchange Rate
Information





2



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##### Table of Contents







|                                |  |         |        | 
|------------------------------- |  | ------- | ------ | 
|Fiscal year ended September 30, |  | Average |       
|                                |  |         |       
|2002                            |  |         | 0.9208 | 
|2003                            |  |         | 1.0919 | 
|2004                            |  |         | 1.2199 | 
|2005                            |  |         | 1.2727 | 
|2006                            |  |         | 1.2361 | 



|          |  |      |        |  |     |  |        | 
|--------- |  | ---- | ------ |  | --- |  | ------ | 
|2006      |  | High |        |  | Low | 
|          |  |      |        |  |     | 
|June      |  |      | 1.2953 |  |     |  | 1.2522 | 
|July      |  |      | 1.2822 |  |     |  | 1.2500 | 
|August    |  |      | 1.2914 |  |     |  | 1.2735 | 
|September |  |      | 1.2833 |  |     |  | 1.2648 | 
|October   |  |      | 1.2773 |  |     |  | 1.2502 | 
|November  |  |      | 1.3261 |  |     |  | 1.2705 | 






Risk Factors




Our business is affected by the uncertainties of economic
and political conditions:




3



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We operate in highly competitive markets, which are
subject to price pressures and rapid changes:


Our businesses must keep pace with technological changes
and develop new products and services to remain competitive:


We may have difficulty in identifying and executing
portfolio measures:


Our financial results and cash flows may be adversely
affected by cost overruns or additional payment obligations
particularly with respect to our long-term contracts:


4



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We face operational risks in our value chain processes:


We are dependent upon the ability of third parties to
deliver parts, components and services on time:


We may be adversely affected by rising raw material
prices:


We are exposed to currency risks and interest rate risks:


Our financing activities subject us to various risks
including credit and interest rate risk: third-party


5



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Downgrades of our ratings may increase our cost of capital
and could negatively affect our businesses:


The funded status of our off-balance sheet pension benefit
plans and its financial statement impact is dependent on several
factors:


We are dependent upon hiring and retaining highly
qualified management and technical personnel:


We are subject to risks associated with our international
operations: long-term


We are subject to environmental and other government
regulations:


6



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##### Table of Contents





Changes in tax regulations could result in lower earnings
and cash flows:


Prosecutorial investigations are being conducted in
Germany and certain other European countries with respect to
whether certain transactions and payments arranged by some
current or former officials of our Com business Group violated
applicable law. Other governmental authorities may also launch
investigations. As a result of existing or future governmental
investigations, or other alleged violations of law by Siemens or
its current or former employees elsewhere, governmental
authorities could take action against us or some of our
employees, which may have a material adverse effect on the
development of future business opportunities, our financial
results, the price of our shares and ADSs and our
reputation:


We have concluded that our internal control over financial
reporting was not effective as of September 30, 2006. As a
result, our ability to report our results of operations
accurately and in a timely manner, including our ability to make
required filings with government authorities, may be adversely
affected. In addition, the trading price of our shares and ADSs
may be adversely affected by a related negative market
reaction:


7



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##### Table of Contents



20-F,


Our business could suffer as a result of current or future
litigation:





ITEM 4:      INFORMATION ON THE
COMPANY


Overview


D-80333





8



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Performance and Portfolio, Operational Excellence, People
Excellence Corporate Responsibility.




Fit4More
program


Performance and Portfolio long-term


Operational Excellence back-office


People Excellence


Corporate Responsibility


9



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##### Table of Contents



Portfolio
Activities




Acquisitions




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Meds acquisition of the immunodiagnostics provider
    Diagnostics Products Corporation (DPC), USA, in the fourth
    quarter of fiscal 2006;                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Acquisition of a number of entities in fiscal 2006, which are
    also not significant individually: the coal gasification
    business of the Swiss Sustec-Group, Wheelabrator Air Pollution
    Control, Inc., USA, a supplier of air pollution control and
    reduction products and solutions for the
    coal-fired power and
    industrial market, both at PG, Electrium, UK, vendor of
    electrical installation systems at A&D and Bewator, Sweden,
    a supplier of products and systems for access control solutions
    at SBT;
|
| |  | Acquisition completed in July 2005 of the Austrian engineering
    group VA Technologie AG (VA Tech), primarily integrated into
    I&S and PTD; in May 2006, in order to comply with a European
    antitrust ruling, the Company sold the majority of the VA Tech
    power generation business, including the hydropower activities,
    to Andritz AG, Austria;                                                                                                                                                                            
|
| |  | A&Ds acquisition in July 2005 of Flender Holding GmbH,
    Germany (Flender), a supplier of gear systems;                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Meds acquisition of CTI Molecular Imaging, Inc., U.S.
    (CTI) in May 2005 to strengthen Siemens commitment to
    molecular imaging development;                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Acquisition of two entities at Power Generation (PG) and
    A&D in fiscal 2005, which are not significant individually:
    Bonus Energy A/ S (Bonus), Denmark, a supplier of wind energy
    systems, and Robicon Corporation (Robicon), U.S., a manufacturer
    of medium-voltage converters for AC motors;                                                                                                                                                                                                                                
|
| |  | I&S acquisition in the fourth quarter of fiscal 2004
    of USFilter Corporation (USFilter), which offers water systems
    and services in the municipal and industrial water treatment and
    supply market; and                                                                                                                                                                                                                                                                                                                           
|
| |  | Acquisition of three entities in fiscal 2004, which are not
    significant individually: Trench Electric Holdings BV (Trench),
    Netherlands at PTD, BBC Technology Holdings Ltd. (BBC), U.K. at
    SBS and the Huntsville, Alabama, U.S. business group of an
    automotive electronics manufacturer at SV.                                                                                                                                                                                                                              




Dispositions




| |   |                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In August 2006, Siemens sold the majority of its Dematic
    business, which consisted of the Distribution and Industry
    Logistics (DI) and Material Handling Products
    (MHP) divisions, formerly of the Logistics and Assembly
    Systems Group (L&A) to Trition Managers II Limited, Jersey;
|
| |  | At the beginning of April 2006, SBS closed the sale of its
    Product Related Services (PRS) business to Fujitsu Siemens
    Computers (Holding) BV; and                                                                                                                                            
|
| |  | In the fourth quarter of fiscal 2004, Siemens divested a 74.9%
    interest in SBS banking software company KORDOBA
    Gesellschaft für Bankensoftware mbH & Co. KG (Kordoba);
    in fiscal 2005, the remaining 25.1% interest in Kordoba was sold.                                               



10



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Discontinued Operations




| |   |                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In September 2005, we sold our Mobile Device business, which
    lacked the necessary scale to compete effectively in a
    consolidating market. These business activities are reported in
    discontinued operations for both the current and prior periods.



Economic Value Added
(EVA)




11



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Description of
Business










|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | L&A was dissolved as of October 1, 2005. As of this
    date, Postal Automation and Airport Logistics were integrated
    into I&S and Electronics Assembly Systems became part of
    A&D. 
     Effective April 1, 2007, the activities of SBS will be
    bundled with other corporate IT activities within a new Group
    called Siemens IT Solutions and Services (SIS). 
     A new segment called Strategic Equity Investments
    (SEI) was created as of October 1, 2006. SEI will
    include centrally managed at equity investments and will
    initially consist of BSH Bosch und Siemens Hausgeräte GmbH
    and Fujitsu Siemens Computers (Holding) BV. NSN will also be
    part of SEI, once the transaction is closed. 
     In fiscal 2006, Siemens announced significant changes that will
    result in dissolving Com as a Group and reportable segment
    during fiscal 2007.

12



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##### Table of Contents



Information and
Communications


Communications (Com)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 13.080 billion   
|External sales as percentage of Siemens net sales |  | 14.60%            
|Group profit                                      |  | 283 million      





Siemens Home and Office
Communication Devices Wireless Modules


Siemens Home and Office Communication Devices Customer Premises Equipment
Devices end-consumers set-top


Wireless Modules


Enterprise Systems Enterprise Solutions and
Services


Enterprise Systems


13



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Enterprise Solutions and Services


Mobile
Networks, Fixed Networks Carrier Services


Mobile Networks


Fixed Networks


Carrier Services








14



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##### Table of Contents









Siemens Business Services (SBS)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 5.157 billion    
|External sales as percentage of Siemens net sales |  | 4.20%             
|Group profit                                      |  | (549) million    









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Solution Businessoffers project-oriented consulting,
    design and implementation services. These include selecting,
    adapting and introducing new solutions to support business
    processes, as well as integration of systems and enterprise
    applications.                                                                                                                                                                                                           
|
| |  | Operation-Related Servicesprovides outsourcing services
    (full-scale IT operations spanning hosting, call center, network
    and desktop services) as well as operation of selected business
    processes (e.g. financial services back-office operations). In
    fiscal 2005 such later operations were a separate division
    called Business Process Outsourcing. This division has been
    included in Operation-Related Services as of October 1,
    2005.         
|
| |  | Product-Related Servicesoffered infrastructure
    maintenance, including hardware and software maintenance and
    infrastructure service solutions. Effective April 1, 2006,
    the Product-Related Services Division was sold to Fujitsu
    Siemens Computers (Holding) BV. For further information with
    respect to the sale of this division, see Item 7:
    Major Shareholders and Related Party Transactions
    and Notes to Consolidated Financial Statements.

15



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| |   |                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | customer relationship management, to assist businesses in
    aligning their organizations to better serve the needs and
    requirements of their customers;                                                                          
|
| |  | business information management, to improve our customers
    business processes, including services and solutions for
    business information, document and product data management;                                                
|
| |  | supply chain management, to facilitate the efficient interplay
    of all of a business operational processes with those of
    its suppliers;                                                                                        
|
| |  | enterprise resource management, to optimize a customers
    internal management and production processes; and                                                                                                                         
|
| |  | e-commerce systems and solutions in a range of industries, to
    allow customers to offer a variety of Internet-based services
    through design and implementation of software for communications
    and transactions applications.













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Automation and
Control


Automation and Drives (A&D)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 12.848 billion   
|External sales as percentage of Siemens net sales |  | 12.92%            
|Group profit                                      |  | 1.572 billion    



Manufacturing automation Process
automation Electrical instrumentation for buildings












17



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two-thirds Asia-Pacific.










18



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Industrial Solutions and Services (I&S)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 8.819 billion    
|External sales as percentage of Siemens net sales |  | 8.88%             
|Group profit                                      |  | 289 million      





Industrial Plants


Industrial Services


Water Technologies


Intelligent Traffic Systems


Siemens VAI. (VOEST-ALPINE


Airport Logistics check-in


19



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##### Table of Contents





Postal Automation


long-term, high-value


long-term






Siemens Building Technologies (SBT)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 4.796 billion    
|External sales as percentage of Siemens net sales |  | 5.35%             
|Group profit                                      |  | 234 million      





Security Systems


Fire Safety and Security Products non-water


20



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##### Table of Contents





Building Automation non-residential


HVAC Products








Asia-Pacific.


low-cost


Power


Power Generation (PG)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 10.086 billion   
|External sales as percentage of Siemens net sales |  | 11.53%            
|Group profit                                      |  | 782 million      



21



---



##### Table of Contents







so-called


Fossil Power Generation co-generation


Industrial Applications


Instrumentation and Control


Wind Power










22



---



##### Table of Contents













Power Transmission and Distribution (PTD)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 6.509 billion    
|External sales as percentage of Siemens net sales |  | 6.90%             
|Group profit                                      |  | 390 million      









| |   |                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | power systems controlequipment and information
    technology systems, including computerized power management
    systems used to operate power transmission networks, determine
    customer needs and regulate the flow of power from power plants
    to the distribution network (offered through our Energy
    Automation division);

23



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | transformersincluding both the power transformers used
    at the beginning of the transmission process to step-up the
    voltage of the power generated by power plants to a voltage that
    can be carried efficiently on the power network, and the
    distribution transformers and their components used at the end
    of the distribution process to step-down power from high voltage
    to lower voltage levels for the end-user;                                                  
|
| |  | high voltage productsand ready-to-use systems, in both
    alternating and direct current, used in the physical
    transmission of power from power plants to the distribution
    network before the voltage is stepped-down for distribution in
    populated areas, including ready-to-operate indoor and outdoor
    high voltage substations and the switchgear and protection
    systems required to control the flow of power and prevent damage
    to the power transmission network;
|
| |  | protection and substation control systemsincluding
    equipment and systems used at power distribution network
    substations, such as relays and computerized protection and
    control equipment (offered through our Energy Automation
    division); and                                                                                                                                                                                                                                 
|
| |  | medium voltage equipmentincluding circuit breakers and
    distribution switchgear systems and components that regulate the
    flow of power on the distribution network before it is
    stepped-down to a low voltage level for the end-user.                                                                                                                                                                                                                                                







 




24



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##### Table of Contents







Transportation


Transportation Systems (TS)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 4.502 billion    
|External sales as percentage of Siemens net sales |  | 5.08%             
|Group profit                                      |  | 80 million       







| |   |                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Mass TransitOur products include subway and
    suburban rapid transit trains, subway cars, as well as their
    subsystems and components and streetcars, light rail vehicles
    and their components.                                                                                                                                                
|
| |  | LocomotiveOur products include electric and
    diesel-electrical locomotives for passenger or freight rail. In
    addition to our manufacturing operations, we also refurbish and
    maintain locomotives and locomotive pools and provide locomotive
    leasing services tailored to meet the requirements of
    deregulated local rail operators.
|
| |  | TrainsOur products comprise rail vehicles with
    traction equipment integrated into the running gear and
    distributed over the entire train, including high speed trains,
    tilting trains, regional and rapid transit units and passenger
    coaches, as well as subsystems and components.                                                    





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Rail AutomationFor passenger and freight railway
    operations, we develop, manufacture and sell central control
    systems, signaling systems and equipment, interlockings and
    automated train control systems that regulate a trains
    speed through automatic application of its brakes when it
    exceeds speed limits or fails to respond to a signal. We sell
    entire systems and networks, as well as individual products for
    integration into existing signaling systems. For mass transit,
    we develop, manufacture and sell operation control centers for
    the operation of signals and switches in rail yards and between
    destinations, and signaling and vehicle control systems
    (including automated, driverless systems).
|
| |  | ElectrificationFor high speed, main line and mass
    transit, we supply products and systems for contact line and
    rail power supply.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

25



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Turnkey Systems






Asia-Pacific two-third Asia-Pacific








Siemens VDO Automotive (SV)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 10.017 billion   
|External sales as percentage of Siemens net sales |  | 11.45%            
|Group profit                                      |  | 669 million      







| |   |                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Powertrain, including components, modules and systems for
    use in diesel and gasoline fuel injection handling, drive train
    transmission management and air intake systems, fuel pumps and
    supply units, as well as engine actuators and emissions controls
    and sensors;

26



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Chassis & Carbody, including active and passive
    electronic safety systems such as crash and occupant sensors for
    controlling airbags and seatbelts and for monitoring air
    pressure in tires; chassis electronics used in steering and
    braking; electric motor drives for use in antilock brakes,
    heating, ventilation and engine cooling systems and power
    windows and sunroofs; drive systems for electric and hybrid
    vehicles; access control and security systems with electric door
    and seat controls and radio receivers within the vehicle;
    intelligent switching units and climate control units;
|
| |  | Interior & Infotainment, including complete cockpit
    systems, drivers workplace systems in commercial vehicles,
    instrument clusters, tachographs, human-machine interface
    displays, heads-up displays for passenger and commercial
    vehicles; car audio, navigation and telematics and complex
    multimedia systems; and                                                                                                                                                                                                                                                                                                   
|
| |  | Service & Special Solutions, which offers spare parts
    and accessories for passenger and commercial vehicles, fleet
    management systems and hardware and software products for car
    audio, navigation, and telematics.                                                                                                                                                                                                                                                                                                                                                                                                             



high-end






two-third one-third one-third




Asia-Pacific


27



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##### Table of Contents





first-tier


Medical


Medical Solutions (Med)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 8.227 billion    
|External sales as percentage of Siemens net sales |  | 9.35%             
|Group profit                                      |  | 1.061 billion    







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | medical imaging systems, representing a full range of
    systems including
    x-ray, computed
    tomography, magnetic resonance, molecular imaging and
    ultrasound, as well as related computer-based workstations
    enabling the health care professional to retrieve and process
    relevant information. Our imaging systems are used to generate
    morphological and functional images of, and related information
    concerning, the human body, such as internal organs. This
    information is used both for diagnostic purposes and in
    preparation for potential treatment, including interventional
    and minimally-invasive procedures;
|
| |  | information technology systems,which are used to
    digitally store, retrieve and transmit medical images and other
    clinical and administrative information, facilitating efficient
    workflows in health care environments;                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | oncology care systems, including linear accelerators,
    which are used for cancer treatment;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | hearing aidsand related products and supplies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | electromedical systems, which are primarily used in
    critical care situations and during surgery for the purpose of
    patient transport, monitoring vital functions via body sensors,
    supporting breathing and administering anesthetic agents. Our
    product portfolio also includes respiratory machines designed
    for systems for intensive neonatal care and home care. We
    provide such electromedical systems primarily through our joint
    venture Dräger Medical of Lübeck, Germany, in which we
    hold a 35% share.                                                                                                                   

in-vitro In-vitro in-vivo 


28



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




one-third Asia-Pacific






Lighting


Osram


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 4.563 billion    
|External sales as percentage of Siemens net sales |  | 5.14%             
|Group profit                                      |  | 481 million      





| |   |                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | General Lighting:incandescent, halogen, compact
    fluorescent, fluorescent and
    high-intensity
    discharge lamps for household and commercial applications, and
    public buildings, spaces and streets;

29



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Automotive Lighting:halogen, incandescent and xenon
    discharge lamps for use in motor vehicle headlights, brake
    lights, turn signals and instrument panels, and, through an
    equal joint venture with Valeo, completed
    head- and
    tail-light assemblies
    for distribution in North America;                                                                                                                                                                                                                  
|
| |  | Display/ Optic:special purpose halogen and
    high-intensity discharge lamps for lighting airport runways,
    film studios, microchip manufacturing plants, video and overhead
    projectors and medical and other applications requiring very
    intense lighting;                                                                                                                                                                                                                                                          
|
| |  | Opto-Semiconductors/ LED systems: light emitting diodes
    (LED), organic light emitting diodes (OLED), high power laser
    diodes and other semiconductor devices and LED systems that
    generate visible light and ultraviolet and infrared radiation
    for use in interior and exterior automotive lighting and other
    applications, electronic equipment displays, traffic and signal
    lighting, signs and decorative lighting and infrared
    transmitters and sensors for industrial and consumer electronics;
|
| |  | Ballasts and Luminaires: electronic ballasts for
    optimized operation of compact fluorescent, fluorescent,
    high-intensity discharge low-voltage halogen lamps and LED
    modules, as well as consumer fixtures and, increasingly,
    lighting control systems; and                                                                                                                                                                                                                                                      
|
| |  | Precision Materials and Components: glass for bulbs,
    phosphor powders for fluorescent lamps, computer monitors and
    television screens, tungsten and other metals for filaments in
    incandescent lamps and heavy duty tools and electronic
    components and materials for lamps and applications in the
    automotive industry, as well as equipment used in the production
    of lighting products.                                                                                                               













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Financing and Real
Estate


Siemens Financial Services (SFS)


|                                             |  |                   
|-------------------------------------------- |  | ------------------
|                                             |  | Year ended        
|                                             |  | September 30, 2006
|                                             |  |                   
|Total assets                                 |  | 10.522 billion   
|Total assets as percentage of Siemens assets |  | 11.57%            
|Income before income taxes                   |  | 307 million      



 


Equipment and Sales Financing.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Midmarket Financeour principal product is equipment lease
    financing, where we typically purchase equipment supplied by
    various Siemens Groups or third-party manufacturers and lease it
    to the customer for a specified term, generally with an option
    for the customer to purchase the equipment or renew the lease at
    the end of the term. Capital leases account for the largest
    portion of our leasing business (78% of the total book value of
    our leased assets at September 30, 2006). We also offer our
    clients services complementary to our leasing business,
    including services relating to the management of their leased
    equipment base and product upgrade services. Other products
    include asset-based lending, underwriting and syndication for
    larger credits.
|
| |  | Credit Portfolio Managementwe purchase, without recourse,
    receivables from other Siemens Groups, as well as from third
    parties. The selling companies remain responsible for collection
    and documentation. Our portfolio consists primarily of trade
    receivables. Centralizing a portion of the Siemens Groups
    receivables risk allows Siemens to more effectively manage its
    overall receivables exposure.                                                                                                                                                                                                                                                                                                                                                                                           



31



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Equity.


Project and Export Financing.


Treasury and Financing Services.


Investment Management.


Insurance.






Siemens Real Estate (SRE)


|                                                  |  |                   
|------------------------------------------------- |  | ------------------
|                                                  |  | Year ended        
|                                                  |  | September 30, 2006
|                                                  |  |                   
|Total sales                                       |  | 1.705 billion    
|External sales as percentage of Siemens net sales |  | 0.29%             
|Income before income taxes                        |  | 122 million      



Real Estate Management


32



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Development, Projects & Sales





SRE Balance Sheet and Statistical Data


|                                               |  |                      |       |  |      |  |       | 
|---------------------------------------------- |  | -------------------- | ----- |  | ---- |  | ----- | 
|                                               |  | At September 30,     |      
|                                               |  |                      |      
|                                               |  | 2006                 |       |  | 2005 | 
|                                               |  |                      |       |  |      | 
|                                               |  | ( and square meters |      
|                                               |  | in millions)         |      
|Total assets (in euros)                        |  |                      | 3,234 |  |      |  | 3,496 | 
|Real estate assets under management (in euros) |  |                      | 2,733 |  |      |  | 2,912 | 
|Total site area (in square meters)             |  |                      | 19.5  |  |      |  | 19.1  | 
|Total building area (in square meters)         |  |                      | 9.9   |  |      |  | 9.9   | 



33



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Employees and Labor
Relations




Employees by Business
Group(1)


|                                         |  |                  |     |  |      |  |     |      |  |  |     | 
|---------------------------------------- |  | ---------------- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                                         |  | At September 30, |    
|                                         |  |                  |    
|                                         |  | 2006             |     |  | 2005 |  |     | 2004 | 
|                                         |  |                  |     |  |      |  |     |      | 
|                                         |  | (in thousands)   |    
|Communications(2)                        |  |                  | 51  |  |      |  | 51  |      |  |  | 50  | 
|Siemens Business Services                |  |                  | 34  |  |      |  | 39  |      |  |  | 36  | 
|Automation and
    Drives(3)             |  |                  | 71  |  |      |  | 63  |      |  |  | 54  | 
|Industrial Solutions and
    Services(3) |  |                  | 36  |  |      |  | 36  |      |  |  | 33  | 
|Siemens Building Technologies            |  |                  | 29  |  |      |  | 28  |      |  |  | 28  | 
|Power Generation                         |  |                  | 36  |  |      |  | 34  |      |  |  | 31  | 
|Power Transmission and Distribution      |  |                  | 28  |  |      |  | 26  |      |  |  | 19  | 
|Transportation Systems                   |  |                  | 19  |  |      |  | 18  |      |  |  | 18  | 
|Siemens VDO Automotive                   |  |                  | 53  |  |      |  | 51  |      |  |  | 48  | 
|Medical Solutions                        |  |                  | 36  |  |      |  | 33  |      |  |  | 32  | 
|Osram                                    |  |                  | 40  |  |      |  | 38  |      |  |  | 37  | 
|Siemens Financial Services               |  |                  | 2   |  |      |  | 2   |      |  |  | 2   | 
|Siemens Real Estate                      |  |                  | 2   |  |      |  | 2   |      |  |  | 2   | 
|Other(4)                                 |  |                  | 38  |  |      |  | 40  |      |  |  | 34  | 
|                                         |  |                  |     |  |      |  |     |      | 
|Total                                    |  |                  | 475 |  |      |  | 461 |      |  |  | 424 | 
|                                         |  |                  |     |  |      |  |     |      | 






|    |                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Continuing Operations.                                                                                                                                                                                                                                                                                                                                       
|   
|(2) | Coms division Siemens Home and Office Communication
    Devices was reclassified to Other Operations in the third
    quarter of fiscal 2006. Prior year information was reclassified
    for comparability purposes.                                                                                                                                       
|   
|(3) | The divisions of the dissolved L&A Group were allocated as
    follows for all periods presented: Electronic Assembly Systems
    were reclassified to A&D, Postal Automation and Airport
    Logistics were reclassified to I&S and Distribution and
    Industry Logistics as well as Material Handling Products were
    reclassified to Other Operations.
|   
|(4) | Includes employees in corporate functions and services and
    business units not allocated to any business Group.                                                                                                                                                                                                                                           

Employees by Geographic
Region*


|                            |  |                  |     |  |      |  |     |      |  |  |     | 
|--------------------------- |  | ---------------- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                            |  | At September 30, |    
|                            |  |                  |    
|                            |  | 2006             |     |  | 2005 |  |     | 2004 | 
|                            |  |                  |     |  |      |  |     |      | 
|                            |  | (in thousands)   |    
|Germany                     |  |                  | 161 |  |      |  | 165 |      |  |  | 161 | 
|Europe (other than Germany) |  |                  | 127 |  |      |  | 125 |      |  |  | 109 | 
|The Americas                |  |                  | 104 |  |      |  | 101 |      |  |  | 95  | 
|Asia-Pacific                |  |                  | 70  |  |      |  | 58  |      |  |  | 50  | 
|Africa, Middle East, CIS    |  |                  | 13  |  |      |  | 12  |      |  |  | 9   | 
|                            |  |                  |     |  |      |  |     |      | 
|Total                       |  |                  | 475 |  |      |  | 461 |      |  |  | 424 | 
|                            |  |                  |     |  |      |  |     |      | 






|  |                       
|- | ----------------------
|* | Continuing operations.

Betriebsverfassungsgesetz


34



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Environmental
Matters




clean-out, 






35



---



##### Table of Contents









Property










Intellectual
Property




Legal
Proceedings




36



---



##### Table of Contents





 


 












37



---



##### Table of Contents



.




38



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##### Table of Contents






ITEM 4A:      UNRESOLVED STAFF
COMMENTS







ITEM 5:      OPERATING AND
FINANCIAL REVIEW AND PROSPECTS


Introduction


20-F


39



---



##### 



TABLE OF CONTENTS







|                                               |                                                   |      |    |    | 
|---------------------------------------------- | ------------------------------------------------- | ---- | -- | -- | 
|                                               |                                                   | Page |   
|                                               |                                                   |      |   
|Business Overview and Economic
    Environment |                                                   |      | 41 |   
|Basis of Presentation                          |                                                   |      | 44 |   
|Fiscal 2006 Compared to Fiscal 2005            |                                                   |      | 46 |   
|                                               | Consolidated Operations of Siemens                |      |    | 46 | 
|                                               | Segment Information Analysis                      |      |    | 48 | 
|Fiscal 2005 Compared to Fiscal 2004            |                                                   |      | 55 |   
|                                               | Consolidated Operations of Siemens                |      |    | 55 | 
|                                               | Segment Information Analysis                      |      |    | 57 | 
|Liquidity and Capital Resources                |                                                   |      | 63 |   
|                                               | Cash FlowFiscal 2006 Compared to
    Fiscal 2005 |      |    | 63 | 
|                                               | Cash FlowFiscal 2005 Compared to
    Fiscal 2004 |      |    | 65 | 
|                                               | Capital Resources and Capital
    Requirements    |      |    | 66 | 
|Overview Financial Position                    |                                                   |      | 72 |   
|Subsequent Events                              |                                                   |      | 74 |   
|Critical Accounting Estimates                  |                                                   |      | 76 |   
|Recent Accounting Pronouncements               |                                                   |      | 78 |   
|Outlook                                        |                                                   |      | 78 |   







40



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Business overview and
Economic Environment


Fiscal
2006  Highlights




                  


   


       


  


Strategic
Overview






41



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##### Table of Contents







| |   |                                                                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In October 2005 (the first quarter of fiscal 2006), we
    expanded our offerings for clean power generation infrastructure
    with the acquisition of Wheelabrator Air Pollution
    Control Inc. (Wheelabrator) in the U.S.                                                                                                                                      
|
| |  | In April 2006, we sold our Product Related Services (PRS)
    business unit to Fujitsu Siemens Computers (Holding) BV
    (Fujitsu Siemens), our joint venture with Fujitsu Limited of
    Japan.                                                                                                                                                                   
|
| |  | In June 2006, we expanded our alternative energy portfolio by
    acquiring the coal gasification business of the Swiss
    Sustec-Group, a leading provider of products and solutions for
    clean conversion of coal to electricity.                                                                                                                             
|
| |  | In June 2006, we announced an agreement to contribute our
    carrier networks business to a joint venture with Nokia
    Corporation (Nokia). Closing for this transaction is expected
    for the first half of fiscal 2007. Coms carrier
    networks and its enterprise business are being held for disposal.                                                  
|
| |  | In June 2006, we announced an agreement to acquire the
    Diagnostics division of Bayer AG, headquartered in the U.S.
    Upon closing, which is scheduled to occur in the first half of
    fiscal 2007, we expect this transaction to significantly
    strengthen our position in molecular diagnostics, a
    high-growth segment of
    the healthcare market.
|
| |  | In July 2006, we entered a complementary segment of the medical
    diagnostics market by acquiring Diagnostic Products Corporation
    (DPC) in the U.S., a leading provider of in vitro
    immunodiagnostics solutions.                                                                                                                                          
|
| |  | In August 2006, we divested a significant portion of our Dematic
    business, which consisted of nearly all of the distribution and
    industry logistics businesses carved out of L&A effective
    with the beginning of fiscal 2006.                                                                                                                           



 Asia-Pacific oil-producing




Worldwide Economic
Environment




42



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cash-rich, oil-producing oil-dependent


Market
Development




oil-producing Asia-Pacific, off-shoring


Market Trends




web-based


Asia-Pacific






43



---



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Asia-Pacific lower-cost,


Research and
Development


two-thirds x-ray





Basis of
Presentation








Prior-year


44



---



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non-manufacturing









45



---



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Fiscal 2006 Compared to
Fiscal 2005





Consolidated Operations
Of Siemens


Results of Siemens




|           |                          |                 |        |        |      |  |        |        | 
|---------- | ------------------------ | --------------- | ------ | ------ | ---- |  | ------ | ------ | 
|           |                          | 2006            |        |        | 2005 | 
|           |                          |                 |        |        |      | 
|           |                          | ( in millions) |       
|New orders |                          |                 | 96,259 |        |      |  | 83,791 |       
|           | New orders in Germany    |                 |        | 16,523 |      |  |        | 16,333 | 
|           | New international orders |                 |        | 79,736 |      |  |        | 67,458 | 
|Sales      |                          |                 | 87,325 |        |      |  | 75,445 |       
|           | Sales in Germany         |                 |        | 16,245 |      |  |        | 15,685 | 
|           | International sales      |                 |        | 71,080 |      |  |        | 59,760 | 

      year-over-year,  


  Asia-Pacific,   Asia-Pacific,        


|                      |                        |                 |        |      |      |  |        |      |  
|--------------------- | ---------------------- | --------------- | ------ | ---- | ---- |  | ------ | ---- | -
|                      |                        | 2006            |        |      | 2005 | 
|                      |                        |                 |        |      |      | 
|                      |                        | ( in millions) |       
|Gross profit on sales |                        |                 | 23,513 |      |      |  | 21,299 |     
|                      | as percentage of sales |                 |        | 26.9 | %    |  |        | 28.2 | %

year-over-year, year-over-year


46



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|                                                            |                        |                 |         |      |      |  |         |      |  
|----------------------------------------------------------- | ---------------------- | --------------- | ------- | ---- | ---- |  | ------- | ---- | -
|                                                            |                        | 2006            |         |      | 2005 | 
|                                                            |                        |                 |         |      |      | 
|                                                            |                        | ( in millions) |        
|Research and development expenses                           |                        |                 | (5,024  | )    |      |  | (4,511  | )   
|                                                            | as percentage of sales |                 |         | 5.8  | %    |  |         | 6.0  | %
|Marketing, selling and general administrative expenses      |                        |                 | (15,470 | )    |      |  | (13,684 | )   
|                                                            | as percentage of sales |                 |         | 17.7 | %    |  |         | 18.1 | %
|Other operating income (expense), net                       |                        |                 | 205     |      |      |  | (9      | )   
|Income from investments in other companies, net             |                        |                 | 647     |      |      |  | 584     |     
|Income from financial assets and marketable securities, net |                        |                 | 337     |      |      |  | 297     |     
|Interest income (expense) of Operations, net                |                        |                 | (39     | )    |      |  | (32     | )   
|Other interest income, net                                  |                        |                 | 202     |      |      |  | 241     |     

  year-over-year,  


   year-over-year,    


   


|                                                                    |                                                                            |                 |        |    |      |  |       |    |  
|------------------------------------------------------------------- | -------------------------------------------------------------------------- | --------------- | ------ | -- | ---- |  | ----- | -- | -
|                                                                    |                                                                            | 2006            |        |    | 2005 | 
|                                                                    |                                                                            |                 |        |    |      | 
|                                                                    |                                                                            | ( in millions) |       
|Income from continuing operations before income taxes               |                                                                            |                 | 4,371  |    |      |  | 4,185 |   
|Income taxes                                                        |                                                                            |                 | (1,078 | )  |      |  | (979  | ) 
|                                                                    | as percentage of income from continuing operations before
    income taxes |                 |        | 25 | %    |  |       | 23 | %
|Minority Interest                                                   |                                                                            |                 | (206   | )  |      |  | (148  | ) 
|Income from continuing operations                                   |                                                                            |                 | 3,087  |    |      |  | 3,058 |   
|Income (loss) from discontinued operations, net of income
    taxes |                                                                            |                 | (54    | )  |      |  | (810  | ) 
|Net income                                                          |                                                                            |                 | 3,033  |    |      |  | 2,248 |   

   


 


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##### Table of Contents



     





Segment Information
Analysis


Operations


Information and Communications


Communications (Com)


|                    |  |                 |        |   |          |  |        |        |  |  |           |    |  |  |   |  
|------------------- |  | --------------- | ------ | - | -------- |  | ------ | ------ |  |  | --------- | -- |  |  | - | -
|                    |  | Year ended      |        |   |         
|                    |  | September 30,   |        |   | % Change | 
|                    |  |                 |        |   |          | 
|                    |  | 2006            |        |   | 2005     |  |        | Actual |  |  | Adjusted* |   
|                    |  |                 |        |   |          |  |        |        |  |  |           |   
|                    |  | ( in millions) |        |   |          |  |       
|Group profit        |  |                 | 283    |   |          |  | 421    |        |  |  | (33       | )% |  |  |   |  
|Group profit margin |  |                 | 2.2    | % |          |  | 3.5    | %      |  |  |           |    |  |  |   |  
|Sales               |  |                 | 13,080 |   |          |  | 12,201 |        |  |  | 7         | %  |  |  | 4 | %
|New orders          |  |                 | 13,571 |   |          |  | 12,869 |        |  |  | 5         | %  |  |  | 2 | %






|  |                                                                                                                       
|- | ----------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of 2% on sales and
    orders, and portfolio effects of 1% on sales and orders.



           




48



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##### Table of Contents



Siemens Business Services (SBS)


|                    |  |                 |       |    |          |  |       |        |  |  |           |    |  |  |     |   
|------------------- |  | --------------- | ----- | -- | -------- |  | ----- | ------ |  |  | --------- | -- |  |  | --- | --
|                    |  | Year ended      |       |    |         
|                    |  | September 30,   |       |    | % Change | 
|                    |  |                 |       |    |          | 
|                    |  | 2006            |       |    | 2005     |  |       | Actual |  |  | Adjusted* |   
|                    |  |                 |       |    |          |  |       |        |  |  |           |   
|                    |  | ( in millions) |       |    |          |  |      
|Group profit        |  |                 | (549  | )  |          |  | (690  | )      |  |  | 20        | %  |  |  |     |   
|Group profit margin |  |                 | (10.6 | )% |          |  | (12.8 | )%     |  |  |           |    |  |  |     |   
|Sales               |  |                 | 5,157 |    |          |  | 5,373 |        |  |  | (4        | )% |  |  | 2   | % 
|New orders          |  |                 | 5,014 |    |          |  | 6,531 |        |  |  | (23       | )% |  |  | (16 | )%






|  |                                                                                                                                                    
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of 1% on sales and
    orders, and portfolio effects of (7)% and (8)% on sales and
    orders, respectively.

      




Automation and Control


Automation and Drives (A&D)


|                    |  |                 |        |   |          |  |        |        |  |  |           |   |  |  |    |  
|------------------- |  | --------------- | ------ | - | -------- |  | ------ | ------ |  |  | --------- | - |  |  | -- | -
|                    |  | Year ended      |        |   |         
|                    |  | September 30,   |        |   | % Change | 
|                    |  |                 |        |   |          | 
|                    |  | 2006            |        |   | 2005     |  |        | Actual |  |  | Adjusted* |  
|                    |  |                 |        |   |          |  |        |        |  |  |           |  
|                    |  | ( in millions) |        |   |          |  |       
|Group profit        |  |                 | 1,572  |   |          |  | 1,253  |        |  |  | 25        | % |  |  |    |  
|Group profit margin |  |                 | 12.2   | % |          |  | 12.1   | %      |  |  |           |   |  |  |    |  
|Sales               |  |                 | 12,848 |   |          |  | 10,366 |        |  |  | 24        | % |  |  | 9  | %
|New orders          |  |                 | 14,108 |   |          |  | 10,674 |        |  |  | 32        | % |  |  | 13 | %






|  |                                                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of 2% on sales and
    orders, and portfolio effects of 13% and 17% on sales and
    orders, respectively.



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##### Table of Contents



Industrial Solutions and Services (I&S)


|                    |  |                 |       |   |          |  |       |        |  |  |           |   |  |  |    |   
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | -- | --
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2006            |       |   | 2005     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 289   |   |          |  | 167   |        |  |  | 73        | % |  |  |    |   
|Group profit margin |  |                 | 3.3   | % |          |  | 2.6   | %      |  |  |           |   |  |  |    |   
|Sales               |  |                 | 8,819 |   |          |  | 6,307 |        |  |  | 40        | % |  |  | 14 | % 
|New orders          |  |                 | 9,025 |   |          |  | 7,189 |        |  |  | 26        | % |  |  | (2 | )%






|  |                                                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of 2% on sales and
    orders, and portfolio effects of 24% and 26% on sales and
    orders, respectively.



  


Siemens Building Technologies (SBT)


|                    |  |                 |       |   |          |  |       |        |  |  |           |   |  |  |    |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | -- | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2006            |       |   | 2005     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 234   |   |          |  | 181   |        |  |  | 29        | % |  |  |    |  
|Group profit margin |  |                 | 4.9   | % |          |  | 4.1   | %      |  |  |           |   |  |  |    |  
|Sales               |  |                 | 4,796 |   |          |  | 4,415 |        |  |  | 9         | % |  |  | 7  | %
|New orders          |  |                 | 5,235 |   |          |  | 4,518 |        |  |  | 16        | % |  |  | 13 | %






|  |                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of 1% and 2% on sales and
    orders, respectively, and portfolio effects of 1% on sales and
    orders.

  


Power


Power Generation (PG)


|                    |  |                 |        |   |          |  |        |        |  |  |           |    |  |  |    |  
|------------------- |  | --------------- | ------ | - | -------- |  | ------ | ------ |  |  | --------- | -- |  |  | -- | -
|                    |  | Year ended      |        |   |         
|                    |  | September 30,   |        |   | % Change | 
|                    |  |                 |        |   |          | 
|                    |  | 2006            |        |   | 2005     |  |        | Actual |  |  | Adjusted* |   
|                    |  |                 |        |   |          |  |        |        |  |  |           |   
|                    |  | ( in millions) |        |   |          |  |       
|Group profit        |  |                 | 782    |   |          |  | 951    |        |  |  | (18       | )% |  |  |    |  
|Group profit margin |  |                 | 7.8    | % |          |  | 11.8   | %      |  |  |           |    |  |  |    |  
|Sales               |  |                 | 10,086 |   |          |  | 8,061  |        |  |  | 25        | %  |  |  | 19 | %
|New orders          |  |                 | 12,532 |   |          |  | 10,964 |        |  |  | 14        | %  |  |  | 5  | %






|  |                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of 1% on sales and
    orders, and portfolio effects of 5% and 8% on sales and orders,
    respectively.

 


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##### Table of Contents



  


Power Transmission and Distribution (PTD)


|                    |  |                 |       |   |          |  |       |        |  |  |           |   |  |  |    |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | -- | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2006            |       |   | 2005     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 390   |   |          |  | 212   |        |  |  | 84        | % |  |  |    |  
|Group profit margin |  |                 | 6.0   | % |          |  | 5.0   | %      |  |  |           |   |  |  |    |  
|Sales               |  |                 | 6,509 |   |          |  | 4,250 |        |  |  | 53        | % |  |  | 27 | %
|New orders          |  |                 | 8,028 |   |          |  | 5,283 |        |  |  | 52        | % |  |  | 29 | %






|  |                                                                                                                                                                       
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of 3% and 4% on sales and
    orders, respectively, and portfolio effects of 23% and 19% on
    sales and orders, respectively.

  


Transportation


Transportation Systems (TS)


|                    |  |                 |       |   |          |  |       |        |  |  |           |   |  |  |    |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | -- | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2006            |       |   | 2005     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 80    |   |          |  | 45    |        |  |  | 78        | % |  |  |    |  
|Group profit margin |  |                 | 1.8   | % |          |  | 1.1   | %      |  |  |           |   |  |  |    |  
|Sales               |  |                 | 4,502 |   |          |  | 4,190 |        |  |  | 7         | % |  |  | 5  | %
|New orders          |  |                 | 6,173 |   |          |  | 4,599 |        |  |  | 34        | % |  |  | 32 | %






|  |                                                                                                                                  
|- | ---------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of 1% on orders, and
    portfolio effects of 2% and 1% on sales and orders, respectively.

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##### Table of Contents



Siemens VDO Automotive (SV)


|                    |  |                 |        |   |          |  |       |        |  |  |           |   |  |  |    |   
|------------------- |  | --------------- | ------ | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | -- | --
|                    |  | Year ended      |        |   |         
|                    |  | September 30,   |        |   | % Change | 
|                    |  |                 |        |   |          | 
|                    |  | 2006            |        |   | 2005     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |        |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |        |   |          |  |      
|Group profit        |  |                 | 669    |   |          |  | 630   |        |  |  | 6         | % |  |  |    |   
|Group profit margin |  |                 | 6.7    | % |          |  | 6.6   | %      |  |  |           |   |  |  |    |   
|Sales               |  |                 | 10,017 |   |          |  | 9,610 |        |  |  | 4         | % |  |  | 1  | % 
|New orders          |  |                 | 10,014 |   |          |  | 9,787 |        |  |  | 2         | % |  |  | (1 | )%






|  |                                                                                                                       
|- | ----------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of 2% on sales and
    orders, and portfolio effects of 1% on sales and orders.

  


Medical


Medical Solutions (Med)


|                    |  |                 |       |   |          |  |       |        |  |  |           |   |  |  |   |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | - | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2006            |       |   | 2005     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 1,061 |   |          |  | 976   |        |  |  | 9         | % |  |  |   |  
|Group profit margin |  |                 | 12.9  | % |          |  | 12.8  | %      |  |  |           |   |  |  |   |  
|Sales               |  |                 | 8,227 |   |          |  | 7,626 |        |  |  | 8         | % |  |  | 5 | %
|New orders          |  |                 | 9,334 |   |          |  | 8,641 |        |  |  | 8         | % |  |  | 6 | %






|  |                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of 2% and 1% on sales and
    orders, respectively, and portfolio effects of 1% on sales and
    orders.

  


 


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##### Table of Contents



Lighting


Osram


|                    |  |                 |       |   |          |  |       |        |  |  |           |   |  |  |   |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | - | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2006            |       |   | 2005     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 481   |   |          |  | 465   |        |  |  | 3         | % |  |  |   |  
|Group profit margin |  |                 | 10.5  | % |          |  | 10.8  | %      |  |  |           |   |  |  |   |  
|Sales               |  |                 | 4,563 |   |          |  | 4,300 |        |  |  | 6         | % |  |  | 4 | %
|New orders          |  |                 | 4,563 |   |          |  | 4,300 |        |  |  | 6         | % |  |  | 4 | %






|  |                                                                  
|- | -----------------------------------------------------------------
|* | Excluding currency translation effects of 2% on sales and orders.

 


Other Operations


    


Reconciliation to Financial Statements




Corporate items, pensions and eliminations


          


Other interest expense


 


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##### Table of Contents



Financing and Real Estate


Siemens Financial Services (SFS)


|                           |  |                 |        |  |      |  |        |          |  |  |      | 
|-------------------------- |  | --------------- | ------ |  | ---- |  | ------ | -------- |  |  | ---- | 
|                           |  | Year ended      |        |  |     
|                           |  | September 30,   |        |  |     
|                           |  |                 |        |  |     
|                           |  | 2006            |        |  | 2005 |  |        | % Change | 
|                           |  |                 |        |  |      |  |        |          | 
|                           |  | ( in millions) |        |  |     
|Income before income taxes |  |                 | 307    |  |      |  | 319    |          |  |  | (4)% | 
|Total assets               |  |                 | 10,522 |  |      |  | 10,148 |          |  |  | 4%   | 

 


Siemens Real Estate (SRE)


|                           |  |                 |       |  |      |  |       |          |  |  |       | 
|-------------------------- |  | --------------- | ----- |  | ---- |  | ----- | -------- |  |  | ----- | 
|                           |  | Year ended      |       |  |     
|                           |  | September 30,   |       |  |     
|                           |  |                 |       |  |     
|                           |  | 2006            |       |  | 2005 |  |       | % Change | 
|                           |  |                 |       |  |      |  |       |          | 
|                           |  | ( in millions) |       |  |     
|Income before income taxes |  |                 | 122   |  |      |  | 144   |          |  |  | (15)% | 
|Sales                      |  |                 | 1,705 |  |      |  | 1,621 |          |  |  | 5%    | 
|Total assets               |  |                 | 3,234 |  |      |  | 3,496 |          |  |  | (7)%  | 

 


Eliminations, reclassifications and Corporate Treasury


 


Economic Value
Added




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##### Table of Contents






Fiscal 2005 Compared to
Fiscal 2004





Consolidated Operations
Of Siemens


Results of Siemens




|           |                          |                 |        |        |      |  |        |        | 
|---------- | ------------------------ | --------------- | ------ | ------ | ---- |  | ------ | ------ | 
|           |                          | 2005            |        |        | 2004 | 
|           |                          |                 |        |        |      | 
|           |                          | ( in millions) |       
|New orders |                          |                 | 83,791 |        |      |  | 75,789 |       
|           | New orders in Germany    |                 |        | 16,333 |      |  |        | 15,173 | 
|           | New international orders |                 |        | 67,458 |      |  |        | 60,616 | 
|Sales      |                          |                 | 75,445 |        |      |  | 70,237 |       
|           | Sales in Germany         |                 |        | 15,685 |      |  |        | 16,223 | 
|           | International sales      |                 |        | 59,760 |      |  |        | 54,014 | 

   


           


|                      |                        |                 |        |      |      |  |        |      |  
|--------------------- | ---------------------- | --------------- | ------ | ---- | ---- |  | ------ | ---- | -
|                      |                        | 2005            |        |      | 2004 | 
|                      |                        |                 |        |      |      | 
|                      |                        | ( in millions) |       
|Gross profit on sales |                        |                 | 21,299 |      |      |  | 20,128 |     
|                      | as percentage of sales |                 |        | 28.2 | %    |  |        | 28.7 | %



|                                                            |                        |                 |         |      |      |  |         |      |  
|----------------------------------------------------------- | ---------------------- | --------------- | ------- | ---- | ---- |  | ------- | ---- | -
|                                                            |                        | 2005            |         |      | 2004 | 
|                                                            |                        |                 |         |      |      | 
|                                                            |                        | ( in millions) |        
|Research and development expenses                           |                        |                 | (4,511  | )    |      |  | (4,133  | )   
|                                                            | as percentage of sales |                 |         | 6.0  | %    |  |         | 5.9  | %
|Marketing, selling and general administrative expenses      |                        |                 | (13,684 | )    |      |  | (12,828 | )   
|                                                            | as percentage of sales |                 |         | 18.1 | %    |  |         | 18.3 | %
|Other operating income (expense), net                       |                        |                 | (9      | )    |      |  | (172    | )   
|Income from investments in other companies, net             |                        |                 | 584     |      |      |  | 1,031   |     
|Income from financial assets and marketable securities, net |                        |                 | 297     |      |      |  | 69      |     
|Interest income (expense) of Operations, net                |                        |                 | (32     | )    |      |  | 20      |     
|Other interest income, net                                  |                        |                 | 241     |      |      |  | 254     |     

55



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##### Table of Contents



  


 


       


     


|                                                                    |                                                                            |                 |       |    |      |  |       |    |  
|------------------------------------------------------------------- | -------------------------------------------------------------------------- | --------------- | ----- | -- | ---- |  | ----- | -- | -
|                                                                    |                                                                            | 2005            |       |    | 2004 | 
|                                                                    |                                                                            |                 |       |    |      | 
|                                                                    |                                                                            | ( in millions) |      
|Income from continuing operations before income taxes               |                                                                            |                 | 4,185 |    |      |  | 4,369 |   
|Income taxes                                                        |                                                                            |                 | (979  | )  |      |  | (767  | ) 
|                                                                    | as percentage of income from continuing operations before
    income taxes |                 |       | 23 | %    |  |       | 18 | %
|Income from continuing operations                                   |                                                                            |                 | 3,058 |    |      |  | 3,450 |   
|Income (loss) from discontinued operations, net of income
    taxes |                                                                            |                 | (810  | )  |      |  | (45   | ) 
|Net income                                                          |                                                                            |                 | 2,248 |    |      |  | 3,405 |   




            


56



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##### Table of Contents






Segment Information
Analysis


Operations


Information and Communications


Communications (Com)


|                    |  |                 |        |   |          |  |        |        |  |  |           |    |  |  |   |  
|------------------- |  | --------------- | ------ | - | -------- |  | ------ | ------ |  |  | --------- | -- |  |  | - | -
|                    |  | Year ended      |        |   |         
|                    |  | September 30,   |        |   | % Change | 
|                    |  |                 |        |   |          | 
|                    |  | 2005            |        |   | 2004     |  |        | Actual |  |  | Adjusted* |   
|                    |  |                 |        |   |          |  |        |        |  |  |           |   
|                    |  | ( in millions) |        |   |          |  |       
|Group profit        |  |                 | 421    |   |          |  | 642    |        |  |  | (34       | )% |  |  |   |  
|Group profit margin |  |                 | 3.5    | % |          |  | 5.5    | %      |  |  |           |    |  |  |   |  
|Sales               |  |                 | 12,201 |   |          |  | 11,770 |        |  |  | 4         | %  |  |  | 3 | %
|New orders          |  |                 | 12,869 |   |          |  | 12,048 |        |  |  | 7         | %  |  |  | 6 | %






|  |                                                       
|- | ------------------------------------------------------
|* | Excluding portfolio effects of 1% on sales and orders.



    


Siemens Business Services (SBS)


|                    |  |                 |       |    |          |  |       |        |  |  |           |   |  |  |    |   
|------------------- |  | --------------- | ----- | -- | -------- |  | ----- | ------ |  |  | --------- | - |  |  | -- | --
|                    |  | Year ended      |       |    |         
|                    |  | September 30,   |       |    | % Change | 
|                    |  |                 |       |    |          | 
|                    |  | 2005            |       |    | 2004     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |    |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |    |          |  |      
|Group profit        |  |                 | (690  | )  |          |  | 40    |        |  |  |           |   |  |  |    |   
|Group profit margin |  |                 | (12.8 | )% |          |  | 0.8   | %      |  |  |           |   |  |  |    |   
|Sales               |  |                 | 5,373 |    |          |  | 4,716 |        |  |  | 14        | % |  |  | 5  | % 
|New orders          |  |                 | 6,531 |    |          |  | 6,293 |        |  |  | 4         | % |  |  | (6 | )%






|  |                                                                                 
|- | --------------------------------------------------------------------------------
|* | Excluding portfolio effects of 9% and 10% on sales and orders,
    respectively.

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Automation and Control


Automation and Drives (A&D)


|                    |  |                 |        |   |          |  |       |        |  |  |           |   |  |  |   |  
|------------------- |  | --------------- | ------ | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | - | -
|                    |  | Year ended      |        |   |         
|                    |  | September 30,   |        |   | % Change | 
|                    |  |                 |        |   |          | 
|                    |  | 2005            |        |   | 2004     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |        |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |        |   |          |  |      
|Group profit        |  |                 | 1,253  |   |          |  | 1,151 |        |  |  | 9         | % |  |  |   |  
|Group profit margin |  |                 | 12.1   | % |          |  | 12.3  | %      |  |  |           |   |  |  |   |  
|Sales               |  |                 | 10,366 |   |          |  | 9,372 |        |  |  | 11        | % |  |  | 7 | %
|New orders          |  |                 | 10,674 |   |          |  | 9,593 |        |  |  | 11        | % |  |  | 8 | %






|  |                                                                                                               
|- | --------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of (1)% on orders, and
    portfolio effects of 4% on sales and orders.



  


Industrial Solutions and Services (I&S)


|                    |  |                 |       |   |          |  |       |        |  |  |           |   |  |  |    |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | -- | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2005            |       |   | 2004     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 167   |   |          |  | 62    |        |  |  | 169       | % |  |  |    |  
|Group profit margin |  |                 | 2.6   | % |          |  | 1.2   | %      |  |  |           |   |  |  |    |  
|Sales               |  |                 | 6,307 |   |          |  | 5,166 |        |  |  | 22        | % |  |  | 7  | %
|New orders          |  |                 | 7,189 |   |          |  | 5,542 |        |  |  | 30        | % |  |  | 19 | %






|  |                                                                                                                                                    
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of (1)% on sales and
    orders, and portfolio effects of 16% and 12% on sales and
    orders, respectively.



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Siemens Building Technologies (SBT)


|                    |  |                 |       |   |          |  |       |        |  |  |           |   |  |  |   |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | - | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2005            |       |   | 2004     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 181   |   |          |  | 108   |        |  |  | 68        | % |  |  |   |  
|Group profit margin |  |                 | 4.1   | % |          |  | 2.5   | %      |  |  |           |   |  |  |   |  
|Sales               |  |                 | 4,415 |   |          |  | 4,247 |        |  |  | 4         | % |  |  | 3 | %
|New orders          |  |                 | 4,518 |   |          |  | 4,358 |        |  |  | 4         | % |  |  | 4 | %






|  |                                                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of (1)% on sales and
    orders, and portfolio effects of 2% and 1% on sales and orders,
    respectively.

  


Power


Power Generation (PG)


|                    |  |                 |        |   |          |  |       |        |  |  |           |    |  |  |    |  
|------------------- |  | --------------- | ------ | - | -------- |  | ----- | ------ |  |  | --------- | -- |  |  | -- | -
|                    |  | Year ended      |        |   |         
|                    |  | September 30,   |        |   | % Change | 
|                    |  |                 |        |   |          | 
|                    |  | 2005            |        |   | 2004     |  |       | Actual |  |  | Adjusted* |   
|                    |  |                 |        |   |          |  |       |        |  |  |           |   
|                    |  | ( in millions) |        |   |          |  |      
|Group profit        |  |                 | 951    |   |          |  | 961   |        |  |  | (1        | )% |  |  |    |  
|Group profit margin |  |                 | 11.8   | % |          |  | 12.8  | %      |  |  |           |    |  |  |    |  
|Sales               |  |                 | 8,061  |   |          |  | 7,527 |        |  |  | 7         | %  |  |  | 3  | %
|New orders          |  |                 | 10,964 |   |          |  | 9,243 |        |  |  | 19        | %  |  |  | 14 | %






|  |                                                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of (1)% on sales and
    orders, and portfolio effects of 5% and 6% on sales and orders,
    respectively.

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Power Transmission and Distribution (PTD)


|                    |  |                 |       |   |          |  |       |        |  |  |           |    |  |  |    |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | -- |  |  | -- | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2005            |       |   | 2004     |  |       | Actual |  |  | Adjusted* |   
|                    |  |                 |       |   |          |  |       |        |  |  |           |   
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 212   |   |          |  | 238   |        |  |  | (11       | )% |  |  |    |  
|Group profit margin |  |                 | 5.0   | % |          |  | 6.6   | %      |  |  |           |    |  |  |    |  
|Sales               |  |                 | 4,250 |   |          |  | 3,611 |        |  |  | 18        | %  |  |  | 3  | %
|New orders          |  |                 | 5,283 |   |          |  | 3,863 |        |  |  | 37        | %  |  |  | 26 | %






|  |                                                                                                                                          
|- | -----------------------------------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of (1)% on orders, and
    portfolio effects of 15% and 12% on sales and orders,
    respectively.

  


Transportation


Transportation Systems (TS)


|                    |  |                 |       |   |          |  |       |        |  |  |           |    |  |  |    |   
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | -- |  |  | -- | --
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2005            |       |   | 2004     |  |       | Actual |  |  | Adjusted* |   
|                    |  |                 |       |   |          |  |       |        |  |  |           |   
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 45    |   |          |  | (434  | )      |  |  |           |    |  |  |    |   
|Group profit margin |  |                 | 1.1   | % |          |  | (10.1 | )%     |  |  |           |    |  |  |    |   
|Sales               |  |                 | 4,190 |   |          |  | 4,310 |        |  |  | (3        | )% |  |  | (3 | )%
|New orders          |  |                 | 4,599 |   |          |  | 4,321 |        |  |  | 6         | %  |  |  | 6  | % 






|  |                                        
|- | ---------------------------------------
|* | Excluding currency translation effects.

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Siemens VDO Automotive (SV)


|                    |  |                 |       |   |          |  |       |        |  |  |           |   |  |  |   |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | - | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2005            |       |   | 2004     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 630   |   |          |  | 562   |        |  |  | 12        | % |  |  |   |  
|Group profit margin |  |                 | 6.6   | % |          |  | 6.2   | %      |  |  |           |   |  |  |   |  
|Sales               |  |                 | 9,610 |   |          |  | 9,001 |        |  |  | 7         | % |  |  | 2 | %
|New orders          |  |                 | 9,787 |   |          |  | 9,029 |        |  |  | 8         | % |  |  | 3 | %






|  |                                                       
|- | ------------------------------------------------------
|* | Excluding portfolio effects of 5% on sales and orders.

  


Medical


Medical Solutions (Med)


|                    |  |                 |       |   |          |  |       |        |  |  |           |    |  |  |   |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | -- |  |  | - | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2005            |       |   | 2004     |  |       | Actual |  |  | Adjusted* |   
|                    |  |                 |       |   |          |  |       |        |  |  |           |   
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 976   |   |          |  | 1,046 |        |  |  | (7        | )% |  |  |   |  
|Group profit margin |  |                 | 12.8  | % |          |  | 14.8  | %      |  |  |           |    |  |  |   |  
|Sales               |  |                 | 7,626 |   |          |  | 7,072 |        |  |  | 8         | %  |  |  | 9 | %
|New orders          |  |                 | 8,641 |   |          |  | 8,123 |        |  |  | 6         | %  |  |  | 8 | %






|  |                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------
|* | Excluding currency translation effects of (2)% on sales and
    orders, and portfolio effects of 1% on sales.

   


Lighting


Osram


|                    |  |                 |       |   |          |  |       |        |  |  |           |   |  |  |   |  
|------------------- |  | --------------- | ----- | - | -------- |  | ----- | ------ |  |  | --------- | - |  |  | - | -
|                    |  | Year ended      |       |   |         
|                    |  | September 30,   |       |   | % Change | 
|                    |  |                 |       |   |          | 
|                    |  | 2005            |       |   | 2004     |  |       | Actual |  |  | Adjusted* |  
|                    |  |                 |       |   |          |  |       |        |  |  |           |  
|                    |  | ( in millions) |       |   |          |  |      
|Group profit        |  |                 | 465   |   |          |  | 445   |        |  |  | 4         | % |  |  |   |  
|Group profit margin |  |                 | 10.8  | % |          |  | 10.5  | %      |  |  |           |   |  |  |   |  
|Sales               |  |                 | 4,300 |   |          |  | 4,240 |        |  |  | 1         | % |  |  | 3 | %
|New orders          |  |                 | 4,300 |   |          |  | 4,240 |        |  |  | 1         | % |  |  | 3 | %






|  |                                                                        
|- | -----------------------------------------------------------------------
|* | Excluding currency translation effects of (2)% on sales and
    orders.

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 


Other Operations


    


Corporate items, pensions and eliminations


       


Financing and Real Estate


Siemens Financial Services (SFS)


|                           |  |                 |        |  |      |  |       |          |  |  |    |  
|-------------------------- |  | --------------- | ------ |  | ---- |  | ----- | -------- |  |  | -- | -
|                           |  | Year ended      |        |  |     
|                           |  | September 30,   |        |  |     
|                           |  |                 |        |  |     
|                           |  | 2005            |        |  | 2004 |  |       | % Change | 
|                           |  |                 |        |  |      |  |       |          | 
|                           |  | ( in millions) |        |  |     
|Income before income taxes |  |                 | 319    |  |      |  | 250   |          |  |  | 28 | %
|Total assets               |  |                 | 10,148 |  |      |  | 9,055 |          |  |  | 12 | %

 


Siemens Real Estate (SRE)


|                           |  |                 |       |  |      |  |       |          |  |  |    |  
|-------------------------- |  | --------------- | ----- |  | ---- |  | ----- | -------- |  |  | -- | -
|                           |  | Year ended      |       |  |     
|                           |  | September 30,   |       |  |     
|                           |  |                 |       |  |     
|                           |  | 2005            |       |  | 2004 |  |       | % Change | 
|                           |  |                 |       |  |      |  |       |          | 
|                           |  | ( in millions) |       |  |     
|Income before income taxes |  |                 | 144   |  |      |  | 106   |          |  |  | 36 | %
|Sales                      |  |                 | 1,621 |  |      |  | 1,578 |          |  |  | 3  | %
|Total assets               |  |                 | 3,496 |  |      |  | 3,455 |          |  |  | 1  | %

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##### Table of Contents



  


Eliminations, reclassifications and Corporate Treasury


 





Liquidity and Capital
Resources





Cash FlowFiscal
2006 Compared to Fiscal 2005




|                                                                      |                      |                          |     |        |              |                |        |              |   |  |      |      |   |      |        |        |      |  |     |        |   |  |        |        |  
|--------------------------------------------------------------------- | -------------------- | ------------------------ | --- | ------ | ------------ | -------------- | ------ | ------------ | - |  | ---- | ---- | - | ---- | ------ | ------ | ---- |  | --- | ------ | - |  | ------ | ------ | -
|                                                                      |                      |                          |     |        |              | Continuing and |       
|                                                                      |                      | Continuing               |     |        | Discontinued |                |        | discontinued |  
|                                                                      |                      | operations               |     |        | operations   |                |        | operations   |  
|                                                                      |                      |                          |     |        |              |                |        |              |  
|                                                                      |                      | Year ended September 30, |    
|                                                                      |                      |                          |    
|                                                                      |                      | 2006                     |     |        | 2005         |                |        | 2006         |   |  | 2005 |      |   | 2006 |        |        | 2005 | 
|                                                                      |                      |                          |     |        |              |                |        |              |   |  |      |      |   |      |        |        |      | 
|                                                                      |                      | ( in millions)          |    
|Net cash provided by (used in):                                       |                      |                          |     |        |              |                |        |              |   |  |      |      |   |      |        |        |      |  |     |        |   |  |        |       
|                                                                      | Operating activities |                          |     | 5,174  |              |                |        | 4,217        |   |  |      | (193 | ) |      |        | (1,096 | )    |  |     | 4,981  |   |  |        | 3,121  |  
|                                                                      | Investing activities |                          |     | (4,435 | )            |                |        | (5,706       | ) |  |      | (179 | ) |      |        | (118   | )    |  |     | (4,614 | ) |  |        | (5,824 | )
|                                                                      |                      |                          |     |        |              |                |        |              |   |  |      |      |   |      |        |        |      | 
|Net cash provided by (used in) operating and investing
    activities |                      |                          | 739 |        |              |                | (1,489 | )            |   |  | (372 | )    |   |      | (1,214 | )      |      |  | 367 |        |   |  | (2,703 | )     
|                                                                      |                      |                          |     |        |              |                |        |              |   |  |      |      |   |      |        |        |      | 

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|                                                                      |                      |                          |     |           |           |              |        |         |   |  |      |        |   |      |      |      |      |  |     |        |   |  |        |        |  
|--------------------------------------------------------------------- | -------------------- | ------------------------ | --- | --------- | --------- | ------------ | ------ | ------- | - |  | ---- | ------ | - | ---- | ---- | ---- | ---- |  | --- | ------ | - |  | ------ | ------ | -
|                                                                      |                      |                          |     |           |           | SFS, SRE and |        |         |   |  |     
|                                                                      |                      |                          |     | Corporate |           |              |       
|                                                                      |                      | Operations               |     |           | Treasury* |              |        | Siemens |  
|                                                                      |                      |                          |     |           |           |              |        |         |  
|                                                                      |                      | Year ended September 30, |    
|                                                                      |                      |                          |    
|Continuing operations                                                 |                      | 2006                     |     |           | 2005      |              |        | 2006    |   |  | 2005 |        |   | 2006 |      |      | 2005 | 
|                                                                      |                      |                          |     |           |           |              |        |         |   |  |      |        |   |      |      |      |      | 
|                                                                      |                      | ( in millions)          |    
|Net cash provided by (used in):                                       |                      |                          |     |           |           |              |        |         |   |  |      |        |   |      |      |      |      |  |     |        |   |  |        |       
|                                                                      | Operating activities |                          |     | 3,738     |           |              |        | 3,565   |   |  |      | 1,436  |   |      |      | 652  |      |  |     | 5,174  |   |  |        | 4,217  |  
|                                                                      | Investing activities |                          |     | (3,115    | )         |              |        | (4,787  | ) |  |      | (1,320 | ) |      |      | (919 | )    |  |     | (4,435 | ) |  |        | (5,706 | )
|                                                                      |                      |                          |     |           |           |              |        |         |   |  |      |        |   |      |      |      |      | 
|Net cash provided by (used in) operating and investing
    activities |                      |                          | 623 |           |           |              | (1,222 | )       |   |  | 116  |        |   |      | (267 | )    |      |  | 739 |        |   |  | (1,489 | )     
|                                                                      |                      |                          |     |           |           |              |        |         |   |  |      |        |   |      |      |      |      | 






|  |                                                  
|- | -------------------------------------------------
|* | Also includes eliminations and reclassifications.

          


               


 


         


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##### Table of Contents



   





Cash
Flow  Fiscal 2005 Compared to Fiscal
2004




|                                                                      |                      |                          |        |        |              |                |       |              |   |  |        |        |   |      |     |      |      |  |        |        |   |  |       |        |  
|--------------------------------------------------------------------- | -------------------- | ------------------------ | ------ | ------ | ------------ | -------------- | ----- | ------------ | - |  | ------ | ------ | - | ---- | --- | ---- | ---- |  | ------ | ------ | - |  | ----- | ------ | -
|                                                                      |                      |                          |        |        |              | Continuing and |      
|                                                                      |                      | Continuing               |        |        | Discontinued |                |       | discontinued |  
|                                                                      |                      | operations               |        |        | operations   |                |       | operations   |  
|                                                                      |                      |                          |        |        |              |                |       |              |  
|                                                                      |                      | Year ended September 30, |       
|                                                                      |                      |                          |       
|                                                                      |                      | 2005                     |        |        | 2004         |                |       | 2005         |   |  | 2004   |        |   | 2005 |     |      | 2004 | 
|                                                                      |                      |                          |        |        |              |                |       |              |   |  |        |        |   |      |     |      |      | 
|                                                                      |                      | ( in millions)          |       
|Net cash provided by (used in):                                       |                      |                          |        |        |              |                |       |              |   |  |        |        |   |      |     |      |      |  |        |        |   |  |       |       
|                                                                      | Operating activities |                          |        | 4,217  |              |                |       | 4,704        |   |  |        | (1,096 | ) |      |     | 376  |      |  |        | 3,121  |   |  |       | 5,080  |  
|                                                                      | Investing activities |                          |        | (5,706 | )            |                |       | (1,689       | ) |  |        | (118   | ) |      |     | (129 | )    |  |        | (5,824 | ) |  |       | (1,818 | )
|                                                                      |                      |                          |        |        |              |                |       |              |   |  |        |        |   |      |     |      |      | 
|Net cash provided by (used in) operating and investing
    activities |                      |                          | (1,489 | )      |              |                | 3,015 |              |   |  | (1,214 | )      |   |      | 247 |      |      |  | (2,703 | )      |   |  | 3,262 |       
|                                                                      |                      |                          |        |        |              |                |       |              |   |  |        |        |   |      |     |      |      | 

      


|                                                                                            |                      |                          |        |           |           |              |       |         |   |  |      |      |   |      |     |       |      |  |        |        |   |  |       |        |  
|------------------------------------------------------------------------------------------- | -------------------- | ------------------------ | ------ | --------- | --------- | ------------ | ----- | ------- | - |  | ---- | ---- | - | ---- | --- | ----- | ---- |  | ------ | ------ | - |  | ----- | ------ | -
|                                                                                            |                      |                          |        |           |           | SFS, SRE and |       |         |   |  |     
|                                                                                            |                      |                          |        | Corporate |           |              |      
|                                                                                            |                      | Operations               |        |           | Treasury* |              |       | Siemens |  
|                                                                                            |                      |                          |        |           |           |              |       |         |  
|                                                                                            |                      | Year ended September 30, |       
|                                                                                            |                      |                          |       
|Continuing operations                                                                       |                      | 2005                     |        |           | 2004      |              |       | 2005    |   |  | 2004 |      |   | 2005 |     |       | 2004 | 
|                                                                                            |                      |                          |        |           |           |              |       |         |   |  |      |      |   |      |     |       |      | 
|                                                                                            |                      | ( in millions)          |       
|Net cash provided by (used in):                                                             |                      |                          |        |           |           |              |       |         |   |  |      |      |   |      |     |       |      |  |        |        |   |  |       |       
|                                                                                            | Operating activities |                          |        | 3,565     |           |              |       | 3,635   |   |  |      | 652  |   |      |     | 1,069 |      |  |        | 4,217  |   |  |       | 4,704  |  
|                                                                                            | Investing activities |                          |        | (4,787    | )         |              |       | (1,394  | ) |  |      | (919 | ) |      |     | (295  | )    |  |        | (5,706 | ) |  |       | (1,689 | )
|                                                                                            |                      |                          |        |           |           |              |       |         |   |  |      |      |   |      |     |       |      | 
|Net cash provided by (used in) operating and investing
    activitiescontinuing operations |                      |                          | (1,222 | )         |           |              | 2,241 |         |   |  | (267 | )    |   |      | 774 |       |      |  | (1,489 | )      |   |  | 3,015 |       
|                                                                                            |                      |                          |        |           |           |              |       |         |   |  |      |      |   |      |     |       |      | 






|  |                                                  
|- | -------------------------------------------------
|* | Also includes eliminations and reclassifications.

   


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##### Table of Contents



prior-year   


            


     





Capital Resources and
Capital Requirements




Ratings




|                |  |                   |     |  |            |  |      | 
|--------------- |  | ----------------- | --- |  | ---------- |  | ---- | 
|                |  | Moodys           |     |  | Standard & | 
|                |  | Investors Service |     |  | Poors     | 
|                |  |                   |     |  |            | 
|Long-term debt  |  |                   | Aa3 |  |            |  | AA  | 
|Short-term debt |  |                   | P-1 |  |            |  | A-1+ | 







66



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A-1+






Capital Resources





 


 


 


67



---



##### Table of Contents










 











Capital Requirements


   


 


68



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##### Table of Contents










| |   |                                                              
| | - | -------------------------------------------------------------
| |  | U.S.$750 million Floating Rate Notes due August 14,
    2009,
|
| |  | U.S.$750 million 5.5% Notes due February 16, 2012,           
|
| |  | U.S.$1.750 billion 5.75% Notes due October 17, 2016,
    and 
|
| |  | U.S.$1.750 billion 6.125% Notes due August 17, 2026.         











Contractual Obligations






|                                   |  |                 |        |                        |        |  |        |           |       |  |           |  |  |         |       |  |  |  |       | 
|---------------------------------- |  | --------------- | ------ | ---------------------- | ------ |  | ------ | --------- | ----- |  | --------- |  |  | ------- | ----- |  |  |  | ----- | 
|                                   |  |                 |        | Payments due by period |       
|                                   |  |                 |        |                        |       
|                                   |  |                 |        | Less than              |        |  |        |           | After | 
|                                   |  | Total           |        |                        | 1 year |  |        | 1-3 years |       |  | 4-5 years |  |  | 5 years |      
|                                   |  |                 |        |                        |        |  |        |           |       |  |           |  |  |         |      
|                                   |  | ( in millions) |       
|Debt                               |  |                 | 15,574 |                        |        |  | 2,175  |           |       |  | 1,808     |  |  |         | 4,852 |  |  |  | 6,739 | 
|Purchase obligations               |  |                 | 12,652 |                        |        |  | 11,161 |           |       |  | 1,202     |  |  |         | 239   |  |  |  | 50    | 
|Operating leases                   |  |                 | 2,589  |                        |        |  | 647    |           |       |  | 926       |  |  |         | 521   |  |  |  | 495   | 
|                                   |  |                 |        |                        |        |  |        |           |       |  |           |  |  |         |      
|Total contractual cash obligations |  |                 | 30,815 |                        |        |  | 13,983 |           |       |  | 3,936     |  |  |         | 5,612 |  |  |  | 7,284 | 
|                                   |  |                 |        |                        |        |  |        |           |       |  |           |  |  |         |      

Debt   


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|                                 |  |                 |       |  |           |  |        |       |  |  |        | 
|-------------------------------- |  | --------------- | ----- |  | --------- |  | ------ | ----- |  |  | ------ | 
|                                 |  | Short-Term      |       |  | Long-Term |  |        | Total | 
|                                 |  |                 |       |  |           |  |        |       | 
|                                 |  | ( in millions) |      
|Notes and bonds                  |  |                 | 1,149 |  |           |  | 12,285 |       |  |  | 13,434 | 
|Loans from banks                 |  |                 | 659   |  |           |  | 342    |       |  |  | 1,001  | 
|Other financial indebtedness     |  |                 | 314   |  |           |  | 508    |       |  |  | 822    | 
|Obligations under capital leases |  |                 | 53    |  |           |  | 264    |       |  |  | 317    | 
|                                 |  |                 |       |  |           |  |        |       | 
|Total debt                       |  |                 | 2,175 |  |           |  | 13,399 |       |  |  | 15,574 | 
|                                 |  |                 |       |  |           |  |        |       | 



  










|                     |                                    |                 |        |       |               |  |       |     |  |  |        |       |  |  |       |     | 
|-------------------- | ---------------------------------- | --------------- | ------ | ----- | ------------- |  | ----- | --- |  |  | ------ | ----- |  |  | ----- | --- | 
|                     |                                    | September 30,   |        |       | September 30, | 
|                     |                                    | 2006            |        |       | 2005          | 
|                     |                                    |                 |        |       |               | 
|                     |                                    | SFS             |        |       | SRE           |  |       | SFS |  |  | SRE    |      
|                     |                                    |                 |        |       |               |  |       |     |  |  |        |      
|                     |                                    | ( in millions) |       
|Assets               |                                    |                 | 10,522 |       |               |  | 3,234 |     |  |  | 10,148 |       |  |  | 3,496 |    
|Allocated equity     |                                    |                 | 1,131  |       |               |  | 920   |     |  |  | 983    |       |  |  | 920   |    
|Total debt           |                                    |                 | 8,819  |       |               |  | 1,239 |     |  |  | 8,529  |       |  |  | 1,349 |    
|                     | Therein intracompany financing     |                 |        | 8,487 |               |  |       | 928 |  |  |        | 8,041 |  |  |       | 930 | 
|                     | Therein debt from external sources |                 |        | 333   |               |  |       | 311 |  |  |        | 488   |  |  |       | 419 | 
|Debt to equity ratio |                                    |                 | 7.80   |       |               |  | 1.35  |     |  |  | 8.68   |       |  |  | 1.47  |    





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Purchase obligations 


Operating leases 


 


Off-Balance Sheet Arrangements


Guarantees    


Variable Interest Entities


Pension Plan Funding


       




71



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Overview Financial
Position


 








|                          |                      |                 |        |        |      |  |        |        | 
|------------------------- | -------------------- | --------------- | ------ | ------ | ---- |  | ------ | ------ | 
|                          |                      | September 30,   |       
|                          |                      |                 |       
|                          |                      | 2006            |        |        | 2005 | 
|                          |                      |                 |        |        |      | 
|                          |                      | ( in millions) |       
|Cash and cash equivalents |                      |                 | 10,214 |        |      |  | 8,121  |       
|Marketable securities     |                      |                 | 596    |        |      |  | 1,789  |       
|Accounts receivable, net  |                      |                 | 15,149 |        |      |  | 17,122 |       
|Inventories, net          |                      |                 | 12,790 |        |      |  | 12,812 |       
|Deferred income taxes     |                      |                 | 1,468  |        |      |  | 1,484  |       
|Assets held for disposal  |                      |                 | 7,189  |        |      |  | 245    |       
|Other current assets      |                      |                 | 4,205  |        |      |  | 5,230  |       
|                          |                      |                 |        |        |      | 
|                          | Total current assets |                 |        | 51,611 |      |  |        | 46,803 | 

 


72



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




|                                   |                                     |                 |        |        |      |  |        |        | 
|---------------------------------- | ----------------------------------- | --------------- | ------ | ------ | ---- |  | ------ | ------ | 
|                                   |                                     | September 30,   |       
|                                   |                                     |                 |       
|                                   |                                     | 2006            |        |        | 2005 | 
|                                   |                                     |                 |        |        |      | 
|                                   |                                     | ( in millions) |       
|Long-term investments              |                                     |                 | 3,922  |        |      |  | 3,768  |       
|Goodwill                           |                                     |                 | 9,776  |        |      |  | 8,930  |       
|Other intangible assets, net       |                                     |                 | 3,243  |        |      |  | 3,107  |       
|Property, plant and equipment, net |                                     |                 | 12,072 |        |      |  | 12,012 |       
|Deferred income taxes              |                                     |                 | 4,983  |        |      |  | 6,233  |       
|Other assets                       |                                     |                 | 5,366  |        |      |  | 5,264  |       
|                                   |                                     |                 |        |        |      | 
|                                   | Total long-term assets Other assets |                 |        | 39,362 |      |  |        | 39,314 | 




long-term


|                                                         |                             |                 |        |        |      |  |        |        | 
|-------------------------------------------------------- | --------------------------- | --------------- | ------ | ------ | ---- |  | ------ | ------ | 
|                                                         |                             | September 30,   |       
|                                                         |                             |                 |       
|                                                         |                             | 2006            |        |        | 2005 | 
|                                                         |                             |                 |        |        |      | 
|                                                         |                             | ( in millions) |       
|Short-term debt and current maturities of long-term debt |                             |                 | 2,175  |        |      |  | 3,999  |       
|Accounts payable                                         |                             |                 | 8,444  |        |      |  | 10,171 |       
|Accrued liabilities                                      |                             |                 | 9,126  |        |      |  | 10,176 |       
|Deferred income taxes                                    |                             |                 | 516    |        |      |  | 1,938  |       
|Liabilities held for disposal                            |                             |                 | 5,545  |        |      |  | 289    |       
|Other current liabilities                                |                             |                 | 13,151 |        |      |  | 13,058 |       
|                                                         |                             |                 |        |        |      | 
|                                                         | Total current liabilities   |                 |        | 38,957 |      |  |        | 39,631 | 
|Long-term debt                                           |                             |                 | 13,399 |        |      |  | 8,436  |       
|Pension plans and similar commitments                    |                             |                 | 4,101  |        |      |  | 4,917  |       
|Deferred income taxes                                    |                             |                 | 450    |        |      |  | 427    |       
|Other accruals and provisions                            |                             |                 | 4,058  |        |      |  | 5,028  |       
|                                                         |                             |                 |        |        |      | 
|                                                         | Total long-term liabilities |                 |        | 22,008 |      |  |        | 18,808 | 

Short-term long-term   year-end.  euro-denominated long-term   non-current


Long-term  


73



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




|                           |              |                 |        |        |      |  |        |        | 
|-------------------------- | ------------ | --------------- | ------ | ------ | ---- |  | ------ | ------ | 
|                           |              | September 30,   |       
|                           |              |                 |       
|                           |              | 2006            |        |        | 2005 | 
|                           |              |                 |        |        |      | 
|                           |              | ( in millions) |       
|Total shareholders equity |              |                 | 29,306 |        |      |  | 27,022 |       
|Equity ratio               |              |                 | 32     | %      |      |  | 31     | %     
|                           | Total assets |                 |        | 90,973 |      |  |        | 86,117 | 

    







Subsequent
Events














74



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Within Com there exist a number of Business Consultant
    Agreements. We have identified a multitude of payments made in
    connection with these contracts over the course of approximately
    a seven-year period for
    which we have either not been able to establish a valid business
    purpose or clearly identify the recipient. These payments raise
    concerns under the legislation of the U.S., Germany and other
    countries.                                             
|
| |  | The payments identified were recorded as deductible business
    expenses in prior periods in determining income tax provisions.
    Our investigation determined that certain of these payments are
    nondeductible under German tax regulations, and accordingly, we
    have recorded additional income tax charges in our financial
    statements to reflect the correct tax treatment of these
    expenses. The Company has already reported this issue to the
    German tax authority.



  Consolidated
Statements of Income  Shareholders equity






| |   |                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Managing Board has engaged an external attorney to act as an
    independent ombudsman and to provide a protected
    communication channel for Siemens employees and third parties.
|
| |  | In cases where suspicions of illegal behavior have been
    substantiated, the involved employees will immediately be
    suspended.                                                      

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| |   |                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Companys audit and compliance departments and an
    internal task force have been instructed to continue their
    internal investigation activities and the examination of our
    compliance and internal control system for gaps and any
    possibilities of circumvention.










Critical Accounting
Estimates




Revenue Recognition on Construction
Contracts


Accounts Receivable


76



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 


Goodwill  


Pension and Postretirement Benefit
Accounting


     


Accruals long-term


77



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Recent Accounting
Pronouncements


05-5, Accounting for Early Retirement or Postemployment Programs
with Specific Features (such as Terms Specified in
Altersteilzeit Early Retirement Arrangements). 05-5 05-5


Accounting for Uncertainty in Income Taxes, an Interpretation
of FAS 109, Accounting for Income Taxes,


Fair Value
Measurements


Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans, Employers Accounting for Pensions, Employers Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination
Benefits, Employers Accounting for
Postretirement Benefits Other Than Pensions Employers Disclosures
about Pensions and Other Postretirement Benefitsan
amendment of FASB Statements No. 87, 88, and 106 





Outlook




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ITEM
6:                         DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES


Management


Aktiengesetz






one-tenth


Supervisory
Board




two-thirds






| |   |                                                      
| | - | -----------------------------------------------------
| |  | to monitor the management of the Company;            
|
| |  | to appoint and dismiss members of our Managing Board;

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| |   |                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to represent the Company in its dealings with the Managing Board
    or when its interests are adverse to those of the Managing
    Board, for example, when the Company enters into an employment
    agreement with a Managing Board member, the Supervisory Board
    determines the salary and other compensation components,
    including pension benefits; and
|
| |  | to approve matters in any areas that the Supervisory Board has
    made subject to its approval, either generally or in a specific
    case.                                                                                                                                                                                                                         





|                             |  |         |           |  |         |  |           |                      |  |                                                                                                |  |                                                                                                                                                                                       
|---------------------------- |  | ------- | --------- |  | ------- |  | --------- | -------------------- |  | ---------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                             |  |         |           |  |         |  |           | Companies at which  
|                             |  | Date of |           |  | Term    |  |           | Board position and   |  | Supervisory Board and similar                                                                 
|Name                         |  | birth   |           |  | expires |  |           | principal occupation |  | positions were held                                                                           
|                             |  |         |           |  |         |  |           |                      |  |                                                                                               
|Prof. Dr. Heinrich v. Pierer |  |         | 1/26/1941 |  |         |  | 1/24/2008 |                      |  | Chairman of the Supervisory Board                                                              |  | Deutsche Bank AG; Hochtief AG; Münchener
    Rückversicherungs- Gesellschaft AG; ThyssenKrupp AG;
    Volkswagen AG                                                                   
|Ralf
    Heckmann(1)         |  |         | 7/19/1949 |  |         |  | 1/24/2008 |                      |  | First Deputy Chairman; Chairman of the Central Works Council,
    Siemens AG                   |  |                                                                                                                                                                                      
|Dr. Josef Ackermann          |  |         | 2/07/1948 |  |         |  | 1/24/2008 |                      |  | Second Deputy Chairman; Chairman of the Management Board,
    Deutsche Bank AG                 |  | Bayer AG                                                                                                                                                                              
|Lothar
    Adler(1)          |  |         | 2/22/1949 |  |         |  | 1/24/2008 |                      |  | Member; Deputy Chairman of the Central Works Council, Siemens AG                               |  |                                                                                                                                                                                      
|Gerhard
    Bieletzki(1)     |  |         | 5/16/1947 |  |         |  | 1/24/2008 |                      |  | Member; Chairman of the Works Council, Siemens AG, Dortmund
    facility                       |  |                                                                                                                                                                                      
|John David Coombe            |  |         | 3/17/1945 |  |         |  | 1/24/2008 |                      |  | Member; Chartered Accountant (FCA)                                                             |  | GUS plc; Hogg Robinson Group plc; HSBC Holdings plc                                                                                                                                   
|Hildegard
    Cornudet(1)    |  |         | 4/16/1949 |  |         |  | 1/24/2008 |                      |  | Member; Chairperson of the Central Works Council, Siemens
    Business Services GmbH & Co. OHG |  |                                                                                                                                                                                      
|Dr. Gerhard Cromme           |  |         | 2/25/1943 |  |         |  | 1/24/2008 |                      |  | Member; Chairman of the Supervisory Board, ThyssenKrupp AG                                     |  | Allianz AG (since October 13, 2006 Allianz SE); Axel Springer
    AG; Deutsche Lufthansa AG; E.ON AG; ThyssenKrupp AG; BNP Paribas
    S.A.; Compagnie de Saint-Gobain S.A.; SUEZ S.A.
|Birgit
    Grube(1)          |  |         | 8/21/1945 |  |         |  | 1/24/2008 |                      |  | Member; Office clerk                                                                           |  |                                                                                                                                                                                      

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|                             |  |         |           |  |         |  |           |                      |  |                                                                                               |  |                                                                                                              
|---------------------------- |  | ------- | --------- |  | ------- |  | --------- | -------------------- |  | --------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------
|                             |  |         |           |  |         |  |           | Companies at which  
|                             |  | Date of |           |  | Term    |  |           | Board position and   |  | Supervisory Board and similar                                                                
|Name                         |  | birth   |           |  | expires |  |           | principal occupation |  | positions were held                                                                          
|                             |  |         |           |  |         |  |           |                      |  |                                                                                              
|Heinz
    Hawreliuk(1)       |  |         | 3/20/1947 |  |         |  | 1/24/2008 |                      |  | Member, Labor Union Secretary, IG Metall                                                      |  | DaimlerChrysler Aerospace AG; DaimlerChrysler Luft- und
    Raumfahrt Holding AG; Eurocopter Deutschland GmbH
|Berthold
    Huber(1)        |  |         | 2/15/1950 |  |         |  | 1/24/2008 |                      |  | Member; Deputy Chairman, IG Metall                                                            |  | Audi AG                                                                                                      
|Prof. Dr. Walter Kröll       |  |         | 5/30/1938 |  |         |  | 1/24/2008 |                      |  | Member; Consultant                                                                            |  | MTU Aero Engines GmbH; Wincor Nixdorf AG                                                                     
|Wolfgang
    Müller(1)       |  |         | 1/14/1948 |  |         |  | 1/24/2008 |                      |  | Member; Labor Union Secretary, IG Metall                                                      |  |                                                                                                             
|Georg
    Nassauer(1)        |  |         | 3/08/1948 |  |         |  | 1/24/2008 |                      |  | Member; Steel casting constructor                                                             |  |                                                                                                             
|Thomas
    Rackow(1)(2)      |  |         | 2/06/1952 |  |         |  | 1/24/2008 |                      |  | Member; Industrial manager                                                                    |  |                                                                                                             
|Dr. Albrecht Schmidt         |  |         | 3/13/1938 |  |         |  | 1/24/2008 |                      |  | Member; Bank Director (ret.)                                                                  |  | Münchener Rückversicherungs- Gesellschaft AG;
    Thyssensche Handelsgesellschaft m.b.H.                    
|Dr. Henning Schulte-Noelle   |  |         | 8/26/1942 |  |         |  | 1/24/2008 |                      |  | Member; Chairman of the Supervisory Board, Allianz AG (since
    October 13, 2006 Allianz SE) |  | Allianz AG (since October 13, 2006 Allianz SE); E.ON AG;
    ThyssenKrupp AG                                 
|Peter von Siemens            |  |         | 8/10/1937 |  |         |  | 1/24/2008 |                      |  | Member; Industrial manager                                                                    |  |                                                                                                             
|Jerry I. Speyer              |  |         | 6/23/1940 |  |         |  | 1/24/2008 |                      |  | Member; President, Tishman Speyer                                                             |  |                                                                                                             
|Lord Iain Vallance of Tummel |  |         | 5/20/1943 |  |         |  | 1/24/2008 |                      |  | Member; Chairman, Nations Healthcare Ltd.                                                     |  |                                                                                                             






|    |                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Elected by employees.                                                                                                                                                                                                          
|   
|(2) | Klaus Wigand ceased to be a member of the Supervisory Board
    effective January 26, 2006. The substitute member of the
    Supervisory Board, Thomas Rackow, succeeded Klaus Wigand as a
    member of the Supervisory Board.

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|                           |  |                                                                                                                            
|-------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------
|Name of committee          |  | Current members                                                                                                            
|                           |  |                                                                                                                            
|Chairmans Committee       |  | Chairman Prof. Dr. Heinrich v. Pierer, First Deputy Chairman
    Ralf Heckmann,* Second Deputy Chairman Dr. Josef Ackermann
|Audit Committee            |  | Chairman Dr. Gerhard Cromme, Prof. Dr. Heinrich v. Pierer, Ralf
    Heckmann,* Heinz Hawreliuk,* Dr. Henning Schulte-Noelle
|Ownership Rights Committee |  | Chairman Prof. Dr. Heinrich v. Pierer, Dr. Josef Ackermann, Dr.
    Albrecht Schmidt                                       
|Mediation Committee        |  | Chairman Prof. Dr. Heinrich v. Pierer, Ralf Heckmann,* Dr. Josef
    Ackermann, Heinz Hawreliuk*                           






|  |                      
|- | ---------------------
|* | Elected by employees.



Managing
Board






| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | preparation of the annual financial statements;                                                          
|
| |  | the calling of the Annual Shareholders Meeting and
    preparation and execution of the resolutions; and
|
| |  | reports to the Supervisory Board and the Annual
    Shareholders Meeting concerning certain matters.    





82



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|                                   |  |               |            |  |              |  |            |                               |  |                                  |  |                                                                 
|---------------------------------- |  | ------------- | ---------- |  | ------------ |  | ---------- | ----------------------------- |  | -------------------------------- |  | ----------------------------------------------------------------
|                                   |  |               |            |  |              |  |            | Companies at which           
|                                   |  |               |            |  |              |  |            | Supervisory Board and similar
|Name                               |  | Date of birth |            |  | Term expires |  |            | Current position              |  | positions were held             
|                                   |  |               |            |  |              |  |            |                               |  |                                 
|Dr. Klaus Kleinfeld                |  |               | 11/06/1957 |  |              |  | 9/30/2007  |                               |  | President and CEO                |  | Bayer AG; Alcoa Inc.; Citigroup Inc.                            
|Prof. Johannes Feldmayer           |  |               | 10/16/1956 |  |              |  | 9/30/2007  |                               |  | Executive Vice-President         |  | ExxonMobil Central Europe Holding GmbH; Infineon Technologies AG
|Dr. Thomas
    Ganswindt(1)        |  |               | 11/18/1960 |  |              |  | 9/30/2007  |                               |  | Executive Vice-President         |  |                                                                
|Joe
    Kaeser(2)                  |  |               | 6/23/1957  |  |              |  | 3/31/2011  |                               |  | Executive Vice-President and CFO |  | Bayerische Börse AG                                             
|Prof. Dr. Edward G. Krubasik       |  |               | 1/19/1944  |  |              |  | 9/30/2006  |                               |  | Executive Vice-President         |  | Dresdner Bank AG                                                
|Rudi Lamprecht                     |  |               | 10/12/1948 |  |              |  | 3/31/2009  |                               |  | Executive Vice-President         |  |                                                                
|Eduardo
    Montes(3)              |  |               | 10/02/1951 |  |              |  | 3/31/2011  |                               |  | Senior Vice-President            |  |                                                                
|Dr. Jürgen Radomski                |  |               | 10/26/1941 |  |              |  | 12/31/2007 |                               |  | Executive Vice-President         |  | ALBA AG; Deutsche Krankenversicherung AG; Dräger Medical AG     
|Prof. Dr. Erich R. Reinhardt       |  |               | 10/03/1946 |  |              |  | 3/31/2011  |                               |  | Senior Vice-President            |  | BioMAG; Dräger Medical AG                                       
|Prof. Dr. Hermann Requardt
    (3) |  |               | 2/11/1955  |  |              |  | 3/31/2011  |                               |  | Senior Vice-President
    (4)    |  |                                                                
|Dr. Uriel J. Sharef                |  |               | 8/19/1944  |  |              |  | 3/31/2008  |                               |  | Executive Vice-President         |  |                                                                
|Prof. Dr. Claus Weyrich            |  |               | 1/06 /1944 |  |              |  | 9/30/2006  |                               |  | Senior Vice-President            |  | HERAEUS Holding GmbH                                            
|Prof. Dr. Klaus Wucherer           |  |               | 7/09/1944  |  |              |  | 3/31/2008  |                               |  | Executive Vice-President         |  | Deutsche Messe AG; Infineon Technologies AG                     






|    |                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Dr. Thomas Ganswindt resigned from the Managing Board
    effective October 1, 2006.                                                                                                                                                                
|   
|(2) | Heinz-Joachim Neubürger ceased to be a member of the
    Managing Board and the Corporate Executive Committee effective
    May 1, 2006. Joe Kaeser succeded Heinz-Joachim
    Neubürger as CFO and member of the Corporate Executive
    Committee.
|   
|(3) | Eduardo Montes and Prof. Dr. Hermann Requardt have been
    appointed members of the Managing Board effective May 1,
    2006.                                                                                                                      
|   
|(4) | The Supervisory Board appointed Prof. Dr. Hermann Requardt
    Executive Vice-President and member of the Corporate Executive
    Committee effective October 1, 2006.                                                                              

D-80333


Compensation




83



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##### Table of Contents







Managing Board Remuneration












| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The fixed compensation is paid as a monthly salary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | The variable bonus is based on the level of the Companys
    attainment of certain Economic Value Added (EVA) targets
    and other financial goals, if any, that are set at the start of
    the fiscal year by the Chairmans Committee of the
    Supervisory Board (for details on EVA as a performance measure,
    see Item 5: Operating and Financial Review and
    ProspectsFiscal 2006 Compared to Fiscal 2005Economic
    Value Added). One half of the bonus is paid as an annual
    bonus and is contingent upon achieving the Company-wide EVA
    target established for the fiscal year. The other half is
    granted as a long-term bonus (LT bonus), the amount of which
    depends on the average attainment of EVA targets over a
    three-year period. In any year, the annual bonus and the LT
    bonus may not exceed 250 percent of the base amount
    applicable to the variable compensation component. In addition
    to the EVA- oriented targets, in fiscal 2006 a target relating
    to net cash from operating and investing activities was
    established. For fiscal year 2005 for the last time, one half of
    the LT bonus was paid in the form of a commitment to issue or
    transfer shares of Siemens AG (stock awards) while the other
    half was paid in cash. Beginning with the fiscal year 2006, the
    LT bonus is paid entirely in cash.

84



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##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The same principles for determining the bonus apply to Managing
    Board members who are not members of the Corporate Executive
    Committee. Their targets, however, may additionally depend on
    the financial performance of the corporate units they lead. The
    LT bonus was already paid out fully in cash in fiscal 2005.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The stock-based compensation consists of stock options issued
    under the terms of the 2001 Siemens Stock Option Plan as
    authorized by shareholders at the Annual Shareholders
    Meeting of Siemens AG on February 22, 2001 (for
    details on the Siemens Stock Option Plans, see
    Stock-Based Compensation) and a commitment to
    issue or transfer shares of Siemens AG (stock awards). The
    Chairmans Committee of the Supervisory Board may restrict
    or cap the exercise of stock options in the event of
    extraordinary, unforeseen changes in the market price of the
    Siemens stock. The Chairmans Committee of the Supervisory
    Board has decided that only stock awards will be granted for
    fiscal year 2006 and with effect from fiscal year 2007 onwards.
|
| |  | Under the Siemens Defined Contribution Benefit Plan (BSAV),
    members of the Managing Board receive contributions, the
    individual amounts of which are determined annually on the basis
    of a percentage of their respective target annual compensation
    established by the Chairmans Committee of the Supervisory
    Board. A portion of these contributions is accounted for by
    funding of pension commitments earned prior to transfer to the
    BSAV. In addition, special contributions may be granted on the
    basis of individual decisions.                                                                                                                                                                                                                                     



one-year


non-monetary




   


85



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##### Table of Contents








|                                       |  |                   |            |                      |                    |  |            |       |  |  |           |  |  |      |           |  |      |  |            |  |  |  |            | 
|-------------------------------------- |  | ----------------- | ---------- | -------------------- | ------------------ |  | ---------- | ----- |  |  | --------- |  |  | ---- | --------- |  | ---- |  | ---------- |  |  |  | ---------- | 
|                                       |  |                   |            | Fair value of stock- |                    |  |           
|                                       |  | Cash compensation |            |                      | based compensation |  |            | Total | 
|                                       |  |                   |            |                      |                    |  |            |       | 
|                                       |  | 2006              |            |                      | 2005               |  |            | 2006  |  |  | 2005      |  |  | 2006 |           |  | 2005 | 
|                                       |  |                   |            |                      |                    |  |            |       |  |  |           |  |  |      |           |  |      | 
|                                       |  | (Amounts in )(1) |           
|Prof. Dr. Heinrich v. Pierer
    (2)   |  |                   |           |                      |                    |  | 958,389    |       |  |  |          |  |  |      | 244,414   |  |      |  |           |  |  |  | 1,202,803  | 
|Dr. Klaus
    Kleinfeld(2)             |  |                   | 3,248,462  |                      |                    |  | 2,323,193  |       |  |  | 375,058   |  |  |      | 946,911   |  |      |  | 3,623,520  |  |  |  | 3,270,104  | 
|Prof. Johannes Feldmayer               |  |                   | 2,363,217  |                      |                    |  | 1,821,301  |       |  |  | 250,016   |  |  |      | 716,666   |  |      |  | 2,613,233  |  |  |  | 2,537,967  | 
|Dr. Thomas Ganswindt                   |  |                   | 2,420,147  |                      |                    |  | 1,764,948  |       |  |  |          |  |  |      | 641,515   |  |      |  | 2,420,147  |  |  |  | 2,406,463  | 
|Joe
    Kaeser(3)                      |  |                   | 963,983    |                      |                    |  |           |       |  |  | 300,046   |  |  |      |          |  |      |  | 1,264,029  |  |  |  |           | 
|Prof. Dr. Edward G. Krubasik           |  |                   | 2,453,825  |                      |                    |  | 1,832,685  |       |  |  |          |  |  |      | 716,666   |  |      |  | 2,453,825  |  |  |  | 2,549,351  | 
|Rudi Lamprecht                         |  |                   | 2,272,986  |                      |                    |  | 1,730,431  |       |  |  | 250,016   |  |  |      | 625,190   |  |      |  | 2,523,002  |  |  |  | 2,355,621  | 
|Heinz-Joachim
    Neubürger(4)         |  |                   | 1,422,636  |                      |                    |  | 1,822,925  |       |  |  |          |  |  |      | 716,666   |  |      |  | 1,422,636  |  |  |  | 2,539,591  | 
|Dr. Jürgen Radomski                    |  |                   | 2,351,448  |                      |                    |  | 1,818,389  |       |  |  | 250,016   |  |  |      | 716,666   |  |      |  | 2,601,464  |  |  |  | 2,535,055  | 
|Dr. Uriel J. Sharef                    |  |                   | 2,360,975  |                      |                    |  | 1,831,833  |       |  |  | 250,016   |  |  |      | 716,666   |  |      |  | 2,610,991  |  |  |  | 2,548,499  | 
|Prof. Dr. Klaus Wucherer               |  |                   | 2,350,989  |                      |                    |  | 1,822,218  |       |  |  | 250,016   |  |  |      | 716,666   |  |      |  | 2,601,005  |  |  |  | 2,538,884  | 
|Eduardo
    Montes(5) (6)              |  |                   | 1,071,137  |                      |                    |  |           |       |  |  | 200,054   |  |  |      |          |  |      |  | 1,271,191  |  |  |  |           | 
|Prof. Dr. Erich R. Reinhardt
    (6)   |  |                   | 2,038,914  |                      |                    |  | 1,756,836  |       |  |  | 200,054   |  |  |      | 200,034   |  |      |  | 2,238,968  |  |  |  | 1,956,870  | 
|Prof. Dr. Hermann Requardt
    (5) (6) |  |                   | 913,559    |                      |                    |  |           |       |  |  | 200,054   |  |  |      |          |  |      |  | 1,113,613  |  |  |  |           | 
|Prof. Dr. Claus
    Weyrich(6)         |  |                   | 1,606,982  |                      |                    |  | 1,381,990  |       |  |  |          |  |  |      | 150,007   |  |      |  | 1,606,982  |  |  |  | 1,531,997  | 
|                                       |  |                   |            |                      |                    |  |            |       |  |  |           |  |  |      |           |  |      | 
|Total                                  |  |                   | 27,839,260 |                      |                    |  | 20,865,138 |       |  |  | 2,525,346 |  |  |      | 7,108,067 |  |      |  | 30,364,606 |  |  |  | 27,973,205 | 
|                                       |  |                   |            |                      |                    |  |            |       |  |  |           |  |  |      |           |  |      | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The amounts for 2006 shown in this table are those obtained
    after reducing the variable cash bonus and the stock-based
    compensation in connection with the transfer of Managing Board
    remuneration to the hardship fund for BenQ Mobile employees in
    Germany. The fair value of stock-based compensation relates to
    stock options and stock awards granted in November 2006 and 2005
    for fiscal years 2006 and 2005, respectively.
|   
|(2) | On January 27, 2005, Prof. Dr. Heinrich v. Pierer was
    elected to the Supervisory Board of Siemens AG. Dr. Klaus
    Kleinfeld was appointed to succeed Prof. Dr. Heinrich v.
    Pierer as CEO and President of the Managing Board of Siemens AG,
    effective January 27, 2005.                                                                                                                                                                     
|   
|(3) | Joe Kaeser was appointed a full member of the Managing Board of
    Siemens AG, effective May 1, 2006.                                                                                                                                                                                                                                                                                                                                                    
|   
|(4) | Heinz-Joachim Neubürger resigned from the Managing Board on
    April 30, 2006.                                                                                                                                                                                                                                                                                                                                                                           
|   
|(5) | Eduardo Montes and Prof. Dr. Hermann Requardt were
    appointed deputy members of the Managing Board of Siemens AG,
    effective May 1, 2006.                                                                                                                                                                                                                                                                                                           
|   
|(6) | Deputy members of the Managing Board. Prof. Dr. Hermann
    Requardt was appointed a full member of the Managing Board of
    Siemens AG, effective October 1, 2006.                                                                                                                                                                                                                                                                                      

86



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|                                       |  |                   |           |  |              |  |           |          |  |  |           |  |  |       |           |  |         |  |           |      |  |  |           |  |  |      |         |  |      |  |         |  |  |  |            |  |  |  |            | 
|-------------------------------------- |  | ----------------- | --------- |  | ------------ |  | --------- | -------- |  |  | --------- |  |  | ----- | --------- |  | ------- |  | --------- | ---- |  |  | --------- |  |  | ---- | ------- |  | ---- |  | ------- |  |  |  | ---------- |  |  |  | ---------- | 
|                                       |  | Cash compensation |          
|                                       |  |                   |          
|                                       |  | Salary            |           |  | Annual bonus |  |           | LT bonus |  |  | Other(2)  |  |  | Total |          
|                                       |  |                   |           |  |              |  |           |          |  |  |           |  |  |       |          
|                                       |  | 2006              |           |  | 2005         |  |           | 2006     |  |  | 2005      |  |  | 2006  |           |  | 2005(3) |  |           | 2006 |  |  | 2005      |  |  | 2006 |         |  | 2005 | 
|                                       |  |                   |           |  |              |  |           |          |  |  |           |  |  |       |           |  |         |  |           |      |  |  |           |  |  |      |         |  |      | 
|                                       |  | (Amounts in )(1) |          
|Prof. Dr. Heinrich v.
    Pierer(4)    |  |                   |          |  |              |  | 405,000   |          |  |  |          |  |  |       | 299,257   |  |         |  |          |      |  |  | 244,445   |  |  |      |        |  |      |  | 9,687   |  |  |  |           |  |  |  | 958,389    | 
|Dr. Klaus
    Kleinfeld(4)             |  |                   | 1,160,480 |  |              |  | 950,040   |          |  |  | 1,055,707 |  |  |       | 768,794   |  |         |  | 998,721   |      |  |  | 571,883   |  |  |      | 33,554  |  |      |  | 32,476  |  |  |  | 3,248,462  |  |  |  | 2,323,193  | 
|Prof. Johannes Feldmayer               |  |                   | 845,520   |  |              |  | 755,040   |          |  |  | 747,819   |  |  |       | 571,280   |  |         |  | 728,408   |      |  |  | 466,627   |  |  |      | 41,470  |  |      |  | 28,354  |  |  |  | 2,363,217  |  |  |  | 1,821,301  | 
|Dr. Thomas Ganswindt                   |  |                   | 755,040   |  |              |  | 755,040   |          |  |  | 835,790   |  |  |       | 571,280   |  |         |  | 715,529   |      |  |  | 391,452   |  |  |      | 113,788 |  |      |  | 47,176  |  |  |  | 2,420,147  |  |  |  | 1,764,948  | 
|Joe
    Kaeser(5)                      |  |                   | 325,000   |  |              |  |          |          |  |  | 337,448   |  |  |       |          |  |         |  | 291,460   |      |  |  |          |  |  |      | 10,075  |  |      |  |        |  |  |  | 963,983    |  |  |  |           | 
|Prof. Dr. Edward G. Krubasik           |  |                   | 755,040   |  |              |  | 755,040   |          |  |  | 835,790   |  |  |       | 571,280   |  |         |  | 817,839   |      |  |  | 466,627   |  |  |      | 45,156  |  |      |  | 39,738  |  |  |  | 2,453,825  |  |  |  | 1,832,685  | 
|Rudi Lamprecht                         |  |                   | 845,520   |  |              |  | 755,040   |          |  |  | 747,819   |  |  |       | 571,280   |  |         |  | 651,022   |      |  |  | 375,136   |  |  |      | 28,625  |  |      |  | 28,975  |  |  |  | 2,272,986  |  |  |  | 1,730,431  | 
|Heinz-Joachim
    Neubürger(6)         |  |                   | 440,440   |  |              |  | 755,040   |          |  |  | 487,544   |  |  |       | 571,280   |  |         |  | 477,073   |      |  |  | 466,627   |  |  |      | 17,579  |  |      |  | 29,978  |  |  |  | 1,422,636  |  |  |  | 1,822,925  | 
|Dr. Jürgen Radomski                    |  |                   | 845,520   |  |              |  | 755,040   |          |  |  | 747,819   |  |  |       | 571,280   |  |         |  | 728,408   |      |  |  | 466,627   |  |  |      | 29,701  |  |      |  | 25,442  |  |  |  | 2,351,448  |  |  |  | 1,818,389  | 
|Dr. Uriel J. Sharef                    |  |                   | 845,520   |  |              |  | 755,040   |          |  |  | 747,819   |  |  |       | 571,280   |  |         |  | 728,408   |      |  |  | 466,627   |  |  |      | 39,228  |  |      |  | 38,886  |  |  |  | 2,360,975  |  |  |  | 1,831,833  | 
|Prof. Dr. Klaus Wucherer               |  |                   | 845,520   |  |              |  | 755,040   |          |  |  | 747,819   |  |  |       | 571,280   |  |         |  | 728,408   |      |  |  | 466,627   |  |  |      | 29,242  |  |      |  | 29,271  |  |  |  | 2,350,989  |  |  |  | 1,822,218  | 
|Eduardo
    Montes(7) (8)              |  |                   | 325,000   |  |              |  |          |          |  |  | 400,416   |  |  |       |          |  |         |  | 330,411   |      |  |  |          |  |  |      | 15,310  |  |      |  |        |  |  |  | 1,071,137  |  |  |  |           | 
|Prof. Dr. Erich R.
    Reinhardt(8)    |  |                   | 714,990   |  |              |  | 525,030   |          |  |  | 658,513   |  |  |       | 506,841   |  |         |  | 633,237   |      |  |  | 692,671   |  |  |      | 32,174  |  |      |  | 32,294  |  |  |  | 2,038,914  |  |  |  | 1,756,836  | 
|Prof. Dr. Hermann
    Requardt(7)  (8) |  |                   | 291,750   |  |              |  |          |          |  |  | 321,558   |  |  |       |          |  |         |  | 292,633   |      |  |  |          |  |  |      | 7,618   |  |      |  |        |  |  |  | 913,559    |  |  |  |           | 
|Prof. Dr. Claus
    Weyrich(8)         |  |                   | 505,500   |  |              |  | 450,000   |          |  |  | 543,031   |  |  |       | 344,205   |  |         |  | 531,368   |      |  |  | 562,285   |  |  |      | 27,083  |  |      |  | 25,500  |  |  |  | 1,606,982  |  |  |  | 1,381,990  | 
|                                       |  |                   |           |  |              |  |           |          |  |  |           |  |  |       |           |  |         |  |           |      |  |  |           |  |  |      |         |  |      | 
|Total                                  |  |                   | 9,500,840 |  |              |  | 8,370,390 |          |  |  | 9,214,892 |  |  |       | 6,489,337 |  |         |  | 8,652,925 |      |  |  | 5,637,634 |  |  |      | 470,603 |  |      |  | 367,777 |  |  |  | 27,839,260 |  |  |  | 20,865,138 | 
|                                       |  |                   |           |  |              |  |           |          |  |  |           |  |  |       |           |  |         |  |           |      |  |  |           |  |  |      |         |  |      | 






|    |                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The amounts for 2006 shown in this table are those obtained
    after reducing the variable cash bonus in connection with the
    transfer of Managing Board remuneration to the hardship fund for
    BenQ Mobile employees in Germany.                                                                                            
|   
|(2) | Other compensation includes non-cash benefits in the form of
    company cars of
    300,753 (2005:
    282,112),
    subsidized insurance of
    80,527 (2005:
    85,665),
    accommodation and moving expenses of
    10,500 (2005:
    0.00), and a
    cash settlement of stock awards of
    78,823 (2005:
    0.00).
|   
|(3) | LT bonus cash portion.                                                                                                                                                                                                                                                                                                              
|   
|(4) | On January 27, 2005, Prof. Dr. Heinrich v. Pierer was
    elected to the Supervisory Board of Siemens AG. Dr. Klaus
    Kleinfeld was appointed to succeed Prof. Dr. Heinrich v.
    Pierer as CEO and President of the Managing Board of Siemens AG,
    effective January 27, 2005.                                               
|   
|(5) | Joe Kaeser was appointed a full member of the Managing Board of
    Siemens AG, effective May 1, 2006.                                                                                                                                                                                                                              
|   
|(6) | Heinz-Joachim Neubürger resigned from the Managing Board on
    April 30, 2006.                                                                                                                                                                                                                                                     
|   
|(7) | Eduardo Montes and Prof. Dr. Hermann Requardt were
    appointed deputy members of the Managing Board of Siemens AG,
    effective May 1, 2006.                                                                                                                                                                                     
|   
|(8) | Deputy members of the Managing Board. Prof. Dr. Hermann
    Requardt was appointed a full member of the Managing Board of
    Siemens AG, effective October 1, 2006.                                                                                                                                                                

 





87



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##### Table of Contents





|                                     |  |                   |      |                      |             |  |                     |            |  |                                        |          |  |  |             |         |  |            |  |           |       |  |  |           |  |  |  |           |  |  |  |           | 
|------------------------------------ |  | ----------------- | ---- | -------------------- | ----------- |  | ------------------- | ---------- |  | -------------------------------------- | -------- |  |  | ----------- | ------- |  | ---------- |  | --------- | ----- |  |  | --------- |  |  |  | --------- |  |  |  | --------- | 
|                                     |  |                   |      |                      |             |  |                     |            |  | Fair value of stock-based compensation |         
|                                     |  |                   |      | Stock                |             |  |                     |            |  |                                        |          | 
|                                     |  |                   |      | awards               |             |  |                     |            |  |                                        | Stock    |  |  |            
|                                     |  | from              |      |                      | Other stock |  |                     |            |  | awards                                 |          |  | 
|                                     |  | Stock-based)compe |      |                      | nsation(2)  |  |                     | Stock      |  |                                        | from LT  |  |  | Other stock |         |  | Stock      |  |           |      
|                                     |  |                   |      |                      |             |  |                     | options(3) |  |                                        | bonus(2) |  |  | awards(2)   |         |  | options(3) |  |           | Total | 
|                                     |  |                   |      |                      |             |  |                     |            |  |                                        |          |  |  |             |         |  |            |  |           |       | 
|                                     |  |                   |      | (Number of units)(1) |             |  | (Expressed in )(1) |           
|Prof. Dr. Heinrich v.
    Pierer(4)  |  |                   | 2006 |                      |             |  |                    |            |  |                                        |         |  |  |             |        |  |            |  |          |       |  |  |          |  |  |  |          |  |  |  |          | 
|                                     |  |                   | 2005 |                      |             |  | 4,267               |            |  |                                        |         |  |  |             |        |  |            |  | 244,414   |       |  |  |          |  |  |  |          |  |  |  | 244,414   | 
|Dr. Klaus
    Kleinfeld(4)           |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 5,540    |  |  |             |        |  |            |  |          |       |  |  | 375,058   |  |  |  |          |  |  |  | 375,058   | 
|                                     |  |                   | 2005 |                      |             |  | 9,984               |            |  |                                        | 3,470    |  |  |             | 43,415  |  |            |  | 571,884   |       |  |  | 198,762   |  |  |  | 176,265   |  |  |  | 946,911   | 
|Prof. Johannes Feldmayer             |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 3,693    |  |  |             |        |  |            |  |          |       |  |  | 250,016   |  |  |  |          |  |  |  | 250,016   | 
|                                     |  |                   | 2005 |                      |             |  | 8,146               |            |  |                                        | 2,314    |  |  |             | 28,945  |  |            |  | 466,603   |       |  |  | 132,546   |  |  |  | 117,517   |  |  |  | 716,666   | 
|Dr. Thomas Ganswindt                 |  |                   | 2006 |                      |             |  |                    |            |  |                                        |         |  |  |             |        |  |            |  |          |       |  |  |          |  |  |  |          |  |  |  |          | 
|                                     |  |                   | 2005 |                      |             |  | 6,834               |            |  |                                        | 2,314    |  |  |             | 28,945  |  |            |  | 391,452   |       |  |  | 132,546   |  |  |  | 117,517   |  |  |  | 641,515   | 
|Joe
    Kaeser(5)                    |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 4,432    |  |  |             |        |  |            |  |          |       |  |  | 300,046   |  |  |  |          |  |  |  | 300,046   | 
|                                     |  |                   | 2005 |                      |             |  |                    |            |  |                                        |         |  |  |             |        |  |            |  |          |       |  |  |          |  |  |  |          |  |  |  |          | 
|Prof. Dr. Edward G. Krubasik         |  |                   | 2006 |                      |             |  |                    |            |  |                                        |         |  |  |             |        |  |            |  |          |       |  |  |          |  |  |  |          |  |  |  |          | 
|                                     |  |                   | 2005 |                      |             |  | 8,146               |            |  |                                        | 2,314    |  |  |             | 28,945  |  |            |  | 466,603   |       |  |  | 132,546   |  |  |  | 117,517   |  |  |  | 716,666   | 
|Rudi Lamprecht                       |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 3,693    |  |  |             |        |  |            |  |          |       |  |  | 250,016   |  |  |  |          |  |  |  | 250,016   | 
|                                     |  |                   | 2005 |                      |             |  | 6,549               |            |  |                                        | 2,314    |  |  |             | 28,945  |  |            |  | 375,127   |       |  |  | 132,546   |  |  |  | 117,517   |  |  |  | 625,190   | 
|Heinz-Joachim
    Neubürger(6)       |  |                   | 2006 |                      |             |  |                    |            |  |                                        |         |  |  |             |        |  |            |  |          |       |  |  |          |  |  |  |          |  |  |  |          | 
|                                     |  |                   | 2005 |                      |             |  | 8,146               |            |  |                                        | 2,314    |  |  |             | 28,945  |  |            |  | 466,603   |       |  |  | 132,546   |  |  |  | 117,517   |  |  |  | 716,666   | 
|Dr. Jürgen Radomski                  |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 3,693    |  |  |             |        |  |            |  |          |       |  |  | 250,016   |  |  |  |          |  |  |  | 250,016   | 
|                                     |  |                   | 2005 |                      |             |  | 8,146               |            |  |                                        | 2,314    |  |  |             | 28,945  |  |            |  | 466,603   |       |  |  | 132,546   |  |  |  | 117,517   |  |  |  | 716,666   | 
|Dr. Uriel J. Sharef                  |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 3,693    |  |  |             |        |  |            |  |          |       |  |  | 250,016   |  |  |  |          |  |  |  | 250,016   | 
|                                     |  |                   | 2005 |                      |             |  | 8,146               |            |  |                                        | 2,314    |  |  |             | 28,945  |  |            |  | 466,603   |       |  |  | 132,546   |  |  |  | 117,517   |  |  |  | 716,666   | 
|Prof. Dr. Klaus Wucherer             |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 3,693    |  |  |             |        |  |            |  |          |       |  |  | 250,016   |  |  |  |          |  |  |  | 250,016   | 
|                                     |  |                   | 2005 |                      |             |  | 8,146               |            |  |                                        | 2,314    |  |  |             | 28,945  |  |            |  | 466,603   |       |  |  | 132,546   |  |  |  | 117,517   |  |  |  | 716,666   | 
|Eduardo
    Montes(7)(8)             |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 2,955    |  |  |             |        |  |            |  |          |       |  |  | 200,054   |  |  |  |          |  |  |  | 200,054   | 
|                                     |  |                   | 2005 |                      |             |  |                    |            |  |                                        |         |  |  |             |        |  |            |  |          |       |  |  |          |  |  |  |          |  |  |  |          | 
|Prof. Dr. Erich R.
    Reinhardt(8)  |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 2,955    |  |  |             |        |  |            |  |          |       |  |  | 200,054   |  |  |  |          |  |  |  | 200,054   | 
|                                     |  |                   | 2005 |                      |             |  |                    |            |  |                                        | 1,851    |  |  |             | 23,155  |  |            |  |          |       |  |  | 106,025   |  |  |  | 94,009    |  |  |  | 200,034   | 
|Prof. Dr. Hermann
    Requardt(7)(8) |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 2,955    |  |  |             |        |  |            |  |          |       |  |  | 200,054   |  |  |  |          |  |  |  | 200,054   | 
|                                     |  |                   | 2005 |                      |             |  |                    |            |  |                                        |         |  |  |             |        |  |            |  |          |       |  |  |          |  |  |  |          |  |  |  |          | 
|Prof. Dr. Claus
    Weyrich(8)       |  |                   | 2006 |                      |             |  |                    |            |  |                                        |         |  |  |             |        |  |            |  |          |       |  |  |          |  |  |  |          |  |  |  |          | 
|                                     |  |                   | 2005 |                      |             |  |                    |            |  |                                        | 1,388    |  |  |             | 17,365  |  |            |  |          |       |  |  | 79,505    |  |  |  | 70,502    |  |  |  | 150,007   | 
|                                     |  |                   |      |                      |             |  |                     |            |  |                                        |          |  |  |             |         |  |            |  |           |       |  |  |           | 
|                                     |  |                   | 2006 |                      |             |  |                    |            |  |                                        | 37,302   |  |  |             |        |  |            |  |          |       |  |  | 2,525,346 |  |  |  |          |  |  |  | 2,525,346 | 
|Total                                |  |                   | 2005 |                      |             |  | 76,510              |            |  |                                        | 25,221   |  |  |             | 315,495 |  |            |  | 4,382,495 |       |  |  | 1,444,660 |  |  |  | 1,280,912 |  |  |  | 7,108,067 | 
|                                     |  |                   |      |                      |             |  |                     |            |  |                                        |          |  |  |             |         |  |            |  |           |       |  |  |           | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The amounts for 2006 shown in this table are those obtained
    after reducing the stock-based compensation in connection with
    the transfer of Managing Board remuneration to the hardship fund
    for BenQ Mobile employees in Germany. The fair value of
    stock-based compensation relates to stock options and stock
    awards granted in November 2006 and 2005 for fiscal years 2006
    and 2005, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(2) | After a holding period of four years, the stock awards will be
    settled on November 10, 2010 (awards granted for fiscal
    2005 on November 11, 2009). Under the stock award
    agreement, the eligible recipients will receive a corresponding
    number of Siemens shares without additional payment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) | The stock options granted for fiscal 2005 will be exercisable
    after a holding period of two years between November 19,
    2007 and November 18, 2010 at a price of
    74.59 per share
    under the terms and conditions specified in the 2001 Siemens
    Stock Option Plan (for details see Notes to Consolidated
    Financial Statements). The fair value of the stock options
    was determined using the Black-Scholes option pricing model.
    Because a cap was placed on stock options granted to Managing
    Board members, disclosure of stock options in the financial
    statements depends on their intrinsic value, which was zero on
    the grant date. Without a cap, the fair value of the stock
    options granted for fiscal 2005 would have been
    4.06 per option,
    which amount was taken as the basis in this table.
|   
|(4) | On January 27, 2005, Prof. Dr. Heinrich v. Pierer was
    elected to the Supervisory Board of Siemens AG. Dr. Klaus
    Kleinfeld was appointed to succeed Prof. Dr. Heinrich v.
    Pierer as CEO and President of the Managing Board of Siemens AG,
    effective January 27, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(5) | Joe Kaeser was appointed a full member of the Managing Board of
    Siemens AG, effective May 1, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(6) | Heinz-Joachim Neubürger resigned from the Managing Board on
    April 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(7) | Eduardo Montes and Prof. Dr. Hermann Requardt were
    appointed deputy members of the Managing Board of Siemens AG,
    effective May 1, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(8) | Deputy members of the Managing Board. Prof. Dr. Hermann
    Requardt was appointed a full member of the Managing Board of
    Siemens AG, effective October 1, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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Pension benefit commitments


   


 


 


 




Supervisory Board Remuneration












| |   |                                                                         
| | - | ------------------------------------------------------------------------
| |  | a fixed compensation component,                                         
|
| |  | a short-term compensation component based on earnings per share,
    and
|
| |  | a long-term compensation component based on earnings per share.         

    


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 out-of


|                                         |  |                |           |            |              |  |           |              |  |  |       |  |       |              |           |          |              |  |           |              |  |  |         |  |  |  |   |  |  |  |           | 
|---------------------------------------- |  | -------------- | --------- | ---------- | ------------ |  | --------- | ------------ |  |  | ----- |  | ----- | ------------ | --------- | -------- | ------------ |  | --------- | ------------ |  |  | ------- |  |  |  | - |  |  |  | --------- | 
|                                         |  | 2006           |           |            | 2005         | 
|                                         |  |                |           |            |              | 
|                                         |  |                |           | Short-term |              |  | Long-term |              |  |  |       |  |       | Short-term   |           |          | Long-term    |  |           |             
|                                         |  | Fixed          |           |            | variable     |  |           | variable     |  |  |       |  | Fixed |              |           | variable |              |  | variable  |              |  | 
|                                         |  | compensation   |           |            | compensation |  |           | compensation |  |  | Total |  |       | compensation |           |          | compensation |  |           | compensation |  |  | Total   | 
|                                         |  |                |           |            |              |  |           |              |  |  |       |  |       |              |           |          |              |  |           |              |  |  |         | 
|                                         |  | (Amounts in ) |          
|Dr. Karl-Hermann
    Baumann(1) (2)      |  |                |          |            |              |  |          |              |  |  |      |  |       |              |          |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Prof. Dr. Heinrich v.
    Pierer(1)  (2) |  |                | 125,000   |            |              |  | 86,250    |              |  |  |      |  |       |              | 211,250   |          |              |  | 93,750    |              |  |  | 42,750  |  |  |  |  |  |  |  | 136,500   | 
|Ralf
    Heckmann(2)                     |  |                | 100,000   |            |              |  | 69,000    |              |  |  |      |  |       |              | 169,000   |          |              |  | 100,000   |              |  |  | 45,600  |  |  |  |  |  |  |  | 145,600   | 
|Dr. Josef
    Ackermann(2)               |  |                | 75,000    |            |              |  | 51,750    |              |  |  |      |  |       |              | 126,750   |          |              |  | 83,333    |              |  |  | 38,000  |  |  |  |  |  |  |  | 121,333   | 
|Lothar Adler                             |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Gerhard Bieletzki                        |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|John David Coombe                        |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Hildegard Cornudet                       |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Dr. Gerhard
    Cromme(2)                |  |                | 100,000   |            |              |  | 69,000    |              |  |  |      |  |       |              | 169,000   |          |              |  | 87,500    |              |  |  | 39,900  |  |  |  |  |  |  |  | 127,400   | 
|Birgit Grube                             |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Heinz
    Hawreliuk(2)                   |  |                | 75,000    |            |              |  | 51,750    |              |  |  |      |  |       |              | 126,750   |          |              |  | 75,000    |              |  |  | 34,200  |  |  |  |  |  |  |  | 109,200   | 
|Berthold Huber                           |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Prof. Dr. Walter Kröll                   |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Wolfgang Müller                          |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Georg Nassauer                           |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Thomas
    Rackow(3)                     |  |                | 37,500    |            |              |  | 25,875    |              |  |  |      |  |       |              | 63,375    |          |              |  |          |              |  |  |        |  |  |  |  |  |  |  |          | 
|Dr. Albrecht Schmidt                     |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Dr. Henning
    Schulte-Noelle(2)        |  |                | 75,000    |            |              |  | 51,750    |              |  |  |      |  |       |              | 126,750   |          |              |  | 75,000    |              |  |  | 34,200  |  |  |  |  |  |  |  | 109,200   | 
|Peter von Siemens                        |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Jerry I. Speyer                          |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Lord Iain Vallance of Tummel             |  |                | 50,000    |            |              |  | 34,500    |              |  |  |      |  |       |              | 84,500    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|Klaus
    Wigand(3)                      |  |                | 16,667    |            |              |  | 11,500    |              |  |  |      |  |       |              | 28,167    |          |              |  | 50,000    |              |  |  | 22,800  |  |  |  |  |  |  |  | 72,800    | 
|                                         |  |                |           |            |              |  |           |              |  |  |       |  |       |              |           |          |              |  |           |              |  |  |         | 
|Total                                    |  |                | 1,254,167 |            |              |  | 865,375   |              |  |  |      |  |       |              | 2,119,542 |          |              |  | 1,264,583 |              |  |  | 576,650 |  |  |  |  |  |  |  | 1,841,233 | 
|                                         |  |                |           |            |              |  |           |              |  |  |       |  |       |              |           |          |              |  |           |              |  |  |         | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Prof. Dr. Heinrich v. Pierer, former CEO and President
    of the Managing Board of Siemens AG, succeeded
    Dr. Karl-Hermann
    Baumann as Chairman of the Supervisory Board, effective
    January 27, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | Each of Prof. Dr. Heinrich v. Pierer as Chairman of
    the Supervisory Board and a member of the Audit Committee;
    Dr. Josef Ackermann as Deputy Chairman of the Supervisory
    Board; Dr. Gerhard Cromme as Chairman of the Audit
    Committee; Ralf Heckmann as Deputy Chairman of the Supervisory
    Board and a member of the Audit Committee; and Heinz Hawreliuk
    and Dr. Henning
    Schulte-Noelle as
    members of the Audit Committee, received higher fixed and
    variable compensation. For his period of office on the
    Supervisory Board,
    Dr. Karl-Hermann
    Baumann, as former Chairman of the Supervisory Board and the
    Audit Committee, also received higher compensation on a pro-rata
    basis in the prior year. The same applies to Dr. Josef
    Ackermann as a former member of the Audit Committee.
|   
|(3) | Thomas Rackow, formerly a substitute member of the Supervisory
    Board of Siemens AG, became a member of the Supervisory Board as
    a successor to Klaus Wigand with effect from January 26,
    2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            





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Other




Stock-Based
Compensation


Stock Option Plan








|                          |  |                    |   |  |                    |  |                   |                    |  |  |                   | 
|------------------------- |  | ------------------ | - |  | ------------------ |  | ----------------- | ------------------ |  |  | ----------------- | 
|                          |  | With respect to    |   |  | With respect to    |  |                   | With respect to    | 
|                          |  | options granted in |   |  | options granted in |  |                   | options granted in | 
|                          |  | fiscal 2007        |   |  | fiscal 2006        |  |                   | fiscal 2005        | 
|                          |  |                    |   |  |                    |  |                   |                    | 
|Number of options granted |  |                    |  |  |                    |  | 315,495           |                    |  |  | 296,270           | 
|Exercise price            |  |                    |  |  |                    |  | 74.59            |                    |  |  | 72.54            | 
|Expiration date           |  |                    |  |  |                    |  | November 18, 2010 |                    |  |  | November 19, 2009 | 





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Stock Awards












|                                    |  |                         |               |  |                         |  |               |                         |  |  |               | 
|----------------------------------- |  | ----------------------- | ------------- |  | ----------------------- |  | ------------- | ----------------------- |  |  | ------------- | 
|                                    |  | With respect to         |               |  | With respect to         |  |               | With respect to         | 
|                                    |  | stock awards granted in |               |  | stock awards granted in |  |               | stock awards granted in | 
|                                    |  | fiscal 2007             |               |  | fiscal 2006             |  |               | fiscal 2005             | 
|                                    |  |                         |               |  |                         |  |               |                         | 
|Number of stock awards granted      |  |                         | 1,232,893     |  |                         |  | 1,076,860     |                         |  |  | 1,152,508     | 
|Value per stock award at grant date |  |                         | 67.70        |  |                         |  | 57.28        |                         |  |  | 55.63        | 
|Total value of stock awards granted |  |                         | 83.5 million |  |                         |  | 61.7 million |                         |  |  | 64.1 million | 





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Share
ownership







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|        |            |      |  |                          |  |                                   |  |               |  |       |         |            |  |       |  |         |        |  |  |  |       |  |  |                                                          
|------- | ---------- | ---- |  | ------------------------ |  | --------------------------------- |  | ------------- |  | ----- | ------- | ---------- |  | ----- |  | ------- | ------ |  |  |  | ----- |  |  | ---------------------------------------------------------
|        |            |      |  | Function/                |  |                                   |  |               |  |       |         |            |  |       |  |        
|        |            |      |  | Status at                |  |                                   |  |               |  |       |         |            |  |       |  |        
|Trading |            |      |  | Time of                  |  |                                   |  | WKN/          |  |       |         | Number of  |  | Price |  |        
|Day     |            | Name |  | Transaction              |  | Security                          |  | ISIN          |  | Trade |         | Securities |  | in   |  | Comment
|        |            |      |  |                          |  |                                   |  |               |  |       |         |            |  |       |  |        
|        | 11/18/2005 |      |  | Thomas Ganswindt         |  | Managing Board Member             |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 20,000 |  |  |  | 64.99 |  |  | Sale in the context of the Siemens Stock Option Plan 2001
|        | 11/25/2005 |      |  | Claus Weyrich            |  | Managing Board Member             |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 10,500 |  |  |  | 65.01 |  |  | Sale in the context of the Siemens Stock Option Plan 1999
|        | 11/25/2005 |      |  | Claus Weyrich            |  | Managing Board Member             |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 10,000 |  |  |  | 65.01 |  |  | Sale in the context of the Siemens Stock Option Plan 2001
|        | 12/07/2005 |      |  | Jürgen Radomski          |  | Managing Board Member             |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 11,250 |  |  |  | 66.47 |  |  | Sale in the context of the Siemens Stock Option Plan 1999
|        | 12/16/2005 |      |  | Klaus Wigand             |  | Supervisory Board Member          |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 200    |  |  |  | 70.44 |  |  | Regular Sale of Siemens Shares                           
|        | 02/01/2006 |      |  | Heinz- Joachim Neubürger |  | Managing Board Member             |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 30,000 |  |  |  | 75.40 |  |  | Sale in the context of the Siemens Stock Option Plan 2001
|        | 02/02/2006 |      |  | Heinrich v. Pierer       |  | Chairman of the Supervisory Board |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 17,250 |  |  |  | 73.96 |  |  | Sale in the context of the Siemens Stock Option Plan 1999
|        | 02/14/2006 |      |  | Klaus Wucherer           |  | Managing Board Member             |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 11,250 |  |  |  | 75.15 |  |  | Sale in the context of the Siemens Stock Option Plan 1999
|        | 09/13/2006 |      |  | Edward G. Krubasik       |  | Managing Board Member             |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 17,250 |  |  |  | 67.15 |  |  | Sale in the context of the Siemens Stock Option Plan 1999
|        | 09/15/2006 |      |  | Erich R. Reinhardt       |  | Managing Board Member             |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 8,775  |  |  |  | 67.42 |  |  | Sale in the context of the Siemens Stock Option Plan 1999
|        | 09/15/2006 |      |  | Klaus Kleinfeld          |  | President of Managing Board       |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 3,900  |  |  |  | 67.42 |  |  | Sale in the context of the Siemens Stock Option Plan 1999
|        | 09/15/2006 |      |  | Uriel J. Sharef          |  | Managing Board Member             |  | Siemens Share |  |       | 7236101 |            |  | Sale  |  |         | 7,875  |  |  |  | 67.42 |  |  | Sale in the context of the Siemens Stock Option Plan 1999






ITEM
7:                         MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS


Major
Shareholders




94



---



##### Table of Contents







Related Party
Transactions













ITEM
8:                         FINANCIAL
INFORMATION







ITEM
9:                         THE
OFFER AND LISTING


Trading
Markets




Market Price
Information




95



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|                         |  |                |       |  |     |  |       |               |         |  |         |  |  |           |         |  |  |  |       | 
|------------------------ |  | -------------- | ----- |  | --- |  | ----- | ------------- | ------- |  | ------- |  |  | --------- | ------- |  |  |  | ----- | 
|                         |  | Price per      |       |  |     |  |      
|                         |  | ordinary share |       |  | DAX |  |       | Average       |        
|                         |  |                |       |  |     |  |       | daily trading |        
|                         |  | High           |       |  | Low |  |       | High          |         |  | Low     |  |  | volume(1) |        
|                         |  |                |       |  |     |  |       |               |         |  |         |  |  |           |        
|                         |  |                |       |  |     |  |       | (millions of  |        
|                         |  | ()            |       |  |     |  |       |               | shares) | 
|Annual highs and lows    |  |                |       |  |     |  |       |               |         |  |         |  |  |           |         |  |  |  |       | 
|2002                     |  |                | 78.52 |  |     |  | 32.05 |               |         |  | 5,462.6 |  |  |           | 2,597.9 |  |  |  | 6.226 | 
|2003                     |  |                | 64.85 |  |     |  | 32.55 |               |         |  | 3,965.2 |  |  |           | 2,203.0 |  |  |  | 6.274 | 
|2004                     |  |                | 68.30 |  |     |  | 53.40 |               |         |  | 4,261.8 |  |  |           | 3,647.0 |  |  |  | 4.783 | 
|2005                     |  |                | 73.78 |  |     |  | 56.20 |               |         |  | 5,458.6 |  |  |           | 4,178.1 |  |  |  | 4.728 | 
|2006                     |  |                | 79.77 |  |     |  | 61.37 |               |         |  | 6,476.1 |  |  |           | 5,292.1 |  |  |  | 5.321 | 
|Quarterly highs and lows |  |                |       |  |     |  |       |               |         |  |         |  |  |           |         |  |  |  |       | 
|2004                     |  |                |       |  |     |  |       |               |         |  |         |  |  |           |         |  |  |  |       | 
|First quarter            |  |                | 68.30 |  |     |  | 57.30 |               |         |  | 4,151.8 |  |  |           | 3,726.1 |  |  |  | 5.426 | 
|Second quarter           |  |                | 65.05 |  |     |  | 54.95 |               |         |  | 4,134.1 |  |  |           | 3,754.4 |  |  |  | 4.885 | 
|Third quarter            |  |                | 61.06 |  |     |  | 53.40 |               |         |  | 4,035.0 |  |  |           | 3,647.0 |  |  |  | 4.564 | 
|Fourth quarter           |  |                | 62.54 |  |     |  | 57.50 |               |         |  | 4,261.8 |  |  |           | 3,854.4 |  |  |  | 4.266 | 
|2005                     |  |                |       |  |     |  |       |               |         |  |         |  |  |           |         |  |  |  |       | 
|First quarter            |  |                | 63.60 |  |     |  | 59.08 |               |         |  | 4,428.1 |  |  |           | 4,201.8 |  |  |  | 4.697 | 
|Second quarter           |  |                | 63.20 |  |     |  | 56.20 |               |         |  | 4,627.5 |  |  |           | 4,178.1 |  |  |  | 4.625 | 
|Third quarter            |  |                | 66.18 |  |     |  | 60.28 |               |         |  | 5,048.7 |  |  |           | 4,530.2 |  |  |  | 4.760 | 
|Fourth quarter           |  |                | 73.78 |  |     |  | 60.08 |               |         |  | 5,458.6 |  |  |           | 4,806.1 |  |  |  | 4.829 | 
|2006                     |  |                |       |  |     |  |       |               |         |  |         |  |  |           |         |  |  |  |       | 
|First quarter            |  |                | 79.25 |  |     |  | 70.00 |               |         |  | 5,984.2 |  |  |           | 5,334.3 |  |  |  | 4.940 | 
|Second quarter           |  |                | 79.77 |  |     |  | 61.37 |               |         |  | 6,140.7 |  |  |           | 5,292.1 |  |  |  | 6.600 | 
|Third quarter            |  |                | 68.80 |  |     |  | 61.90 |               |         |  | 6,004.3 |  |  |           | 5,396.9 |  |  |  | 4.558 | 
|Fourth quarter           |  |                | 76.27 |  |     |  | 66.91 |               |         |  | 6,476.1 |  |  |           | 5,992.2 |  |  |  | 5.283 | 
|Monthly highs and lows   |  |                |       |  |     |  |       |               |         |  |         |  |  |           |         |  |  |  |       | 
|2006                     |  |                |       |  |     |  |       |               |         |  |         |  |  |           |         |  |  |  |       | 
|June                     |  |                | 68.50 |  |     |  | 61.37 |               |         |  | 5,707.6 |  |  |           | 5,292.1 |  |  |  | 7.415 | 
|July                     |  |                | 68.57 |  |     |  | 62.51 |               |         |  | 5,729.0 |  |  |           | 5,396.9 |  |  |  | 4.999 | 
|August                   |  |                | 66.63 |  |     |  | 61.90 |               |         |  | 5,867.5 |  |  |           | 5,596.7 |  |  |  | 4.437 | 
|September                |  |                | 68.80 |  |     |  | 65.53 |               |         |  | 6,004.3 |  |  |           | 5,773.7 |  |  |  | 4.137 | 
|October                  |  |                | 71.55 |  |     |  | 66.91 |               |         |  | 6,284.2 |  |  |           | 5,992.2 |  |  |  | 4.841 | 
|November                 |  |                | 76.27 |  |     |  | 69.65 |               |         |  | 6,476.1 |  |  |           | 6,223.3 |  |  |  | 5.745 | 






|    |                                    
|--- | -----------------------------------
|(1) | Data from Datastream International.




Trading on the New York
Stock Exchange




96



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|                         |  |               |       |  |     |  |       | 
|------------------------ |  | ------------- | ----- |  | --- |  | ----- | 
|                         |  | Price per ADS |      
|                         |  |               |      
|                         |  | High          |       |  | Low | 
|                         |  |               |       |  |     | 
|                         |  | ($)           |      
|Annual highs and lows    |  |               |       |  |     |  |       | 
|2002                     |  |               | 70.45 |  |     |  | 30.85 | 
|2003                     |  |               | 79.98 |  |     |  | 36.61 | 
|2004                     |  |               | 87.50 |  |     |  | 65.48 | 
|2005                     |  |               | 87.02 |  |     |  | 71.73 | 
|2006                     |  |               | 98.76 |  |     |  | 76.66 | 
|Quarterly highs and lows |  |               |       |  |     |  |       | 
|2004                     |  |               |       |  |     |  |       | 
|First quarter            |  |               | 87.50 |  |     |  | 69.75 | 
|Second quarter           |  |               | 77.35 |  |     |  | 65.71 | 
|Third quarter            |  |               | 75.66 |  |     |  | 65.48 | 
|Fourth quarter           |  |               | 85.00 |  |     |  | 72.48 | 
|2005                     |  |               |       |  |     |  |       | 
|First quarter            |  |               | 84.67 |  |     |  | 77.19 | 
|Second quarter           |  |               | 80.40 |  |     |  | 71.73 | 
|Third quarter            |  |               | 80.00 |  |     |  | 72.55 | 
|Fourth quarter           |  |               | 87.02 |  |     |  | 72.50 | 
|2006                     |  |               |       |  |     |  |       | 
|First quarter            |  |               | 94.05 |  |     |  | 84.23 | 
|Second quarter           |  |               | 98.76 |  |     |  | 76.66 | 
|Third quarter            |  |               | 87.64 |  |     |  | 78.80 | 
|Fourth quarter           |  |               | 98.04 |  |     |  | 83.98 | 
|Monthly highs and lows   |  |               |       |  |     |  |       | 
|2006                     |  |               |       |  |     |  |       | 
|June                     |  |               | 86.95 |  |     |  | 76.66 | 
|July                     |  |               | 87.64 |  |     |  | 78.80 | 
|August                   |  |               | 85.54 |  |     |  | 79.39 | 
|September                |  |               | 87.37 |  |     |  | 83.49 | 
|October                  |  |               | 91.15 |  |     |  | 83.98 | 
|November                 |  |               | 98.04 |  |     |  | 89.12 | 






ITEM
10:                          ADDITIONAL
INFORMATION


Articles of Association
and Relevant Provisions of German Law


Satzung


Organization


Aktiengesetz Handelsregister


97



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Corporate
Governance








Management and Control
StructureThe Supervisory Board


Mitbestimmungsgesetz








98



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Chairmans Committee


Audit Committee 10A-3(b)(1)(iv)(C) 10A-3.




Mediation Committee Ownership Rights Committee


The Managing
Board




Shareholder
Relations






99



---



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




Business Conduct
Guidelines and Code of Ethics






Corporate Governance Guidelines




Significant Differences
From NYSE Corporate Governance Standards






100



---



##### Table of Contents





Two-Tier Board two-tier one-half


Independence


Committees






Shareholder Approval of Equity Compensation Plans; Stock
Repurchases


101



---



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Declaration of
Conformity with the Code






Objects and
Purposes






| |   |                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to manufacture, distribute and supply industrial products in the
    fields of electrical engineering and electronics, mechanical
    engineering, precision mechanics as well as related sectors of
    engineering, including research and development in these fields;                               
|
| |  | to develop, plan, distribute, supply, assemble and commission
    trade-specific and customer-specific systems, solutions and
    facilities in the fields of electrical engineering and
    electronics, mechanical engineering, precision mechanics as well
    as related sectors of engineering; and
|
| |  | to render industrial and other business-related services.                                                                                                                                                                                                                                               



Directors










102



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Rights, Preferences and
Restrictions Attaching To Our Shares


Voting Rights













| |   |                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | amendments of our Articles of Association (except amendments
    that would impose an additional duty upon our shareholders or
    change certain rights and obligations attaching to our shares,
    which in addition require the approval of all shareholders
    concerned);
|
| |  | capital increases and decreases;                                                                                                                                                                                                                                                
|
| |  | exclusion of preemptive rights in connection with a capital
    increase;                                                                                                                                                                                                       
|
| |  | the creation of authorized capital or conditional capital or the
    issue of convertible bonds and bonds with warrants attached;                                                                                                                                               
|
| |  | the dissolution of our Company;                                                                                                                                                                                                                                                 
|
| |  | merger or consolidation of our Company with another stock
    corporation or certain other corporate transformations;                                                                                                                                                           
|
| |  | transfer of all or virtually all of our assets; and                                                                                                                                                                                                                             
|
| |  | the approval of any direct control, profit and loss pooling or
    similar intercompany agreements.                                                                                                                                                                             





103



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Dividend
Rights






Liquidation
Rights




Preemptive
Rights








| |   |                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to the extent that we have an obligation to grant new shares to
    holders of warrants or convertible bonds that we or any of our
    subsidiaries have issued;

104



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| |   |                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | if the newly issued shares represent 10% or less of our existing
    share capital at the time we register the authorized capital or
    issue the new shares, and the issue price of the new shares is
    not substantially less than the stock exchange price as defined
    under German law; or
|
| |  | to the extent necessary to avoid fractional amounts that may
    arise in the case of share issuance upon the exercise of
    preemptive rights.                                                                                                                                                    





| |   |                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | if the issue price of the bond is not significantly lower than
    its fair market value determined in accordance with generally
    accepted actuarial methods;                   
|
| |  | if this is necessary with regard to small residual amounts that
    result from the exchange ratio; or                                                                             
|
| |  | to the extent holders of such rights are entitled, upon their
    exercise, to subscribe for our common shares in order to avoid
    dilution of the economic value of such rights.

Disclosure
Requirement


Wertpapierhandelsgesetz Bundesanstalt für
Finanzdienstleistungsaufsicht Wertpapiererwerbs- und Übernahmegesetz





Repurchase of Our Own
Shares






105



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Jurisdiction




Exchange
Controls




    


Taxation


German
Taxation






106



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##### Table of Contents



Taxation of the Company in Germany









Imposition of Withholding Tax






Refund Procedure for U.S. Shareholders








107



---



##### Table of Contents



Capital Gains


Non-German Non-German




Inheritance and Gift Tax






| |       |                                                                                                                                                                                                                                                                                                             
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | the decedent or donor, or the heir, donee or other transferee
    has his residence or habitual abode (gewöhnlicher
    Aufenthalt) in Germany at the time of the transfer;                                                                                                                               
|
| | (ii)  | the shares or ADSs are part of the business property of a
    permanent establishment in Germany;                                                                                                                                                                                                           
|
| | (iii) | the decedent or donor, or the heir, donee or other transferee is
    a citizen of Germany, is not a resident in Germany, but has not
    been continuously outside of Germany for a period of more than
    five years; or                                                                                  
|
| | (iv)  | the shares or ADSs subject to such transfer form part of a
    portfolio that represents 10% or more of the registered share
    capital of the company and has been held, directly or
    indirectly, by the decedent or donor, respectively, actually or
    constructively together with related parties.

Non-German U.S.-German


Other Taxes


Non-German


U.S. Federal
income Taxation






| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | tax-exempt entities;                                                                               
|
| |  | life insurance companies;                                                                          
|
| |  | dealers in securities;                                                                             
|
| |  | traders in securities that elect a mark-to-market method of
    accounting for securities holdings;

108



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| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | investors liable for alternative minimum tax;                                                          
|
| |  | partnerships, or other entities classified as partnerships, for
    U.S. federal income tax purposes;  
|
| |  | investors that actually or constructively own 10% or more of our
    voting stock;                     
|
| |  | investors that hold shares or ADSs as part of a straddle or a
    hedging or conversion transaction; or
|
| |  | investors whose functional currency is not the U.S. dollar.                                            









Taxation of Dividends








109



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Taxation of Sales or Other Taxable Dispositions




Documents on
Display


1-800-SEC-0330.





ITEM
11:              QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK




value-at






| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | a 20% decrease in equity prices of all our investments in
    marketable securities;                                  
|
| |  | a simultaneous, parallel foreign exchange rates shift in which
    the euro appreciates against all currencies by 10%;
|
| |  | a parallel shift of 100 basis points of the interest rate yield
    curves in all currencies                          



110



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Financial Market Risk
Management


Equity Price
Risk




  


 


Foreign Currency
Exchange Rate Risk


Transaction Risk and Currency Management








111



---



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   






|                                                                           |  |     |     |  |     |  |     |       |  |  |     | 
|-------------------------------------------------------------------------- |  | --- | --- |  | --- |  | --- | ----- |  |  | --- | 
|                                                                           |  | USD |     |  | GBP |  |     | Other | 
|                                                                           |  |     |     |  |     |  |     |       | 
|Net foreign exchange transaction exposure as a percentage of the
    total |  |     |     |  |     |  |     |       |  |  |     | 
|September 30, 2006                                                         |  |     | 82% |  |     |  | 3%  |       |  |  | 15% | 
|September 30, 2005                                                         |  |     | 78% |  |     |  | 12% |       |  |  | 10% | 

Effects of Currency Translation




Interest Rate
Exposure




100-basis 100-basis


112



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100-basis   100-basis


100-basis   100-basis









ITEM
12:                          DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES







ITEM
13:                          DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES







ITEM
14:                          MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS







ITEM
15:                          CONTROLS
AND PROCEDURES


Disclosure Controls and
Procedures






113



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Managements
Annual Report on Internal Control Over Financial
Reporting












20-F




114



---



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| |   |                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Managing Board has engaged an external attorney to act as an
    independent ombudsman and to provide a protected
    communication channel for Siemens employees and third parties.                                                                                           
|
| |  | In cases where suspicions of illegal behavior have been
    substantiated, the involved employees will immediately be
    suspended.                                                                                                                                                 
|
| |  | The Companys audit and compliance departments and an
    internal task force have been instructed to continue their
    internal investigation activities and the examination of our
    compliance and internal control system for gaps and any
    possibilities of circumvention.







Attestation Report of
the Registered Public Accounting Firm








115



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| |                                    
| | -----------------------------------
| | KPMG Deutsche Treuhand-Gesellschaft
| | Aktiengesellschaft                 
| | Wirtschaftsprüfungsgesellschaft    





116



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Changes in Internal
Control Over Financial Reporting







ITEM
16A:                           AUDIT
COMMITTEE FINANCIAL EXPERT


10A-3





ITEM
16B:                           CODE
OF ETHICS








ITEM
16C:                           PRINCIPAL
ACCOUNTANT FEES AND SERVICES




|                   |  |                 |      |  |      |  |      | 
|------------------ |  | --------------- | ---- |  | ---- |  | ---- | 
|                   |  | Year ended      |     
|                   |  | September 30,   |     
|                   |  |                 |     
|Type of Fees       |  | 2006            |      |  | 2005 | 
|                   |  |                 |      |  |      | 
|                   |  | ( in millions) |     
|Audit Fees         |  |                 | 55.0 |  |      |  | 56.6 | 
|Audit-Related Fees |  |                 | 17.1 |  |      |  | 13.5 | 
|Tax Fees           |  |                 | 5.1  |  |      |  | 4.3  | 
|All Other Fees     |  |                 | 10.3 |  |      |  | 0.4  | 
|                   |  |                 |      |  |      | 
|Total              |  |                 | 87.5 |  |      |  | 74.8 | 
|                   |  |                 |      |  |      | 



117



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Audit Committee
Pre-Approval Policies









Audit
Services




| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |  | Annual audit of Siemens Consolidated Financial Statements
    and of internal control over financial reporting                   
|
| |  | Quarterly review of Siemens interim financial statements                                                                         
|
| |  | Statutory audits of financial statements of Siemens AG and of
    its subsidiaries under the rules of their respective countries  
|
| |  | Attestation of regulatory filing and other compliance
    requirements, including regulatory advice                               
|
| |  | Opening balance sheet audits in connection with acquisitions
    including audits with regard to the allocation of purchase prices

Audit-Related
Services




| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Accounting advice relating to actual or contemplated
    transactions or events                                                                           
|
| |  | Support in the introduction and review of new or revised
    accounting guidelines or requirements                                                        
|
| |  | Due diligence relating to actual or contemplated acquisitions
    and carve-outs, including consultation in accounting matters and
    post-closing audits
|
| |  | Attestation of compliance with provisions or calculations
    required by agreements                                                                      
|
| |  | Employee benefit plan audits                                                                                                                              
|
| |  | SAS 70 reports                                                                                                                                            
|
| |  | IT system audits that are not part of the annual audit                                                                                                    
|
| |  | Training regarding accounting-related topics                                                                                                              
|
| |  | Audits in connection with the European Community Directive on
    Waste Electrical and Electronic Equipment                                               

118



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| |   |                                   
| | - | ----------------------------------
| |  | Agreed-upon procedures engagements

Tax Services




| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Tax advice relating to actual or contemplated transactions or
    events, including tax compliance
|
| |  | Expatriate employee tax services except for persons in financial
    reporting oversight roles    
|
| |  | Transfer pricing studies                                                                          
|
| |  | Training regarding tax-related issues                                                             

All Other
Services




| |   |                                                                 
| | - | ----------------------------------------------------------------
| |  | Forensic services                                               
|
| |  | Examinations/audits regarding compliance with industry standards







ITEM
16D:                           EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES




119



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##### Table of Contents






ITEM
16E:                           PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS




|                          |  |                     |           |                   |                |                     |                     |                 |                    |                        |                       |  |  |  |     | 
|------------------------- |  | ------------------- | --------- | ----------------- | -------------- | ------------------- | ------------------- | --------------- | ------------------ | ---------------------- | --------------------- |  |  |  | --- | 
|                          |  |                     |           |                   |                | (c) Total number of |                     |                 |                   
|                          |  |                     |           |                   |                | shares purchased    |                     |                 | (d) Maximum number |                       
|                          |  |                     |           | (b) Average price |                |                     | as part of publicly |                 |                    | of shares that may yet |                      
|                          |  | (a) Total number of |           |                   | paid per share |                     |                     | announced plans |                    |                        | be purchased under    | 
|Period                    |  | shares purchased*   |           |                   | (in )         |                     |                     | or programs     |                    |                        | the plans or programs | 
|                          |  |                     |           |                   |                |                     |                     |                 |                    |                        |                       | 
|October 10/1/05-10/31/05  |  |                     | 0         |                   |                |                     | 0.00                |                 |                    |                        | N/A                   |  |  |  | N/A | 
|November 11/1/05-11/30/05 |  |                     | 1,034,282 |                   |                |                     | 64.82               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|December 12/1/05-12/31/05 |  |                     | 1,535,988 |                   |                |                     | 68.38               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|January 1/1/06-1/31/06    |  |                     | 90,588    |                   |                |                     | 74.72               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|February 2/1/06-2/28/06   |  |                     | 2,330,159 |                   |                |                     | 75.54               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|March 3/1/06-3/31/06      |  |                     | 292,833   |                   |                |                     | 76.93               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|April 4/1/06-4/30/06      |  |                     | 17,750    |                   |                |                     | 76.83               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|May 5/1/06-5/31/06        |  |                     | 136,610   |                   |                |                     | 72.80               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|June 6/1/06-6/30/06       |  |                     | 6,608     |                   |                |                     | 64.92               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|July 7/1/06-7/31/06       |  |                     | 10,259    |                   |                |                     | 63.13               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|August 8/1/06-8/31/06     |  |                     | 65,108    |                   |                |                     | 65.03               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|September 9/1/06-9/30/06  |  |                     | 404,850   |                   |                |                     | 67.47               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|                          |  |                     |           |                   |                |                     |                     |                 |                    |                        |                       | 
|Total                     |  |                     | 5,925,035 |                   |                |                     | 71.11               |                 |                    |                        | N/A                   |  |  |  | N/A | 
|                          |  |                     |           |                   |                |                     |                     |                 |                    |                        |                       | 






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Siemens repurchased its own common stock for the purpose of
    issuing them to employees and participants of the stock-based
    compensation plans. Additionally, Siemens repurchased shares to
    accommodate and settle the share offer made to former
    stockholders of Siemens Nixdorf Informationssysteme AG. For
    further information on the Companys authorization to
    repurchase common stock see Notes to Consolidated
    Financial Statements.




120



---



##### 



PART III





ITEM 18:      FINANCIAL
STATEMENTS


Siemens


Index to Consolidated Financial Statements







|                                                                                                                                                                |  |      |      | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | 
|                                                                                                                                                                |  | Page |     
|                                                                                                                                                                |  |      |     
|Report of Independent Registered Public
    Accounting Firm                                                                                                     |  |      | F-2  | 
|Consolidated Financial Statements                                                                                                                               |  |      | F-4  | 
|Consolidated Statements of Income for the
    fiscal years ended September 30, 2006, September 30,
    2005 and September 30, 2004                              |  |      | F-4  | 
|Consolidated Balance Sheets as of
    September 30, 2006 and September 30, 2005                                                                                 |  |      | F-6  | 
|Consolidated Statements of Cash Flow for
    the fiscal years ended September 30, 2006,
    September 30, 2005 and September 30, 2004                           |  |      | F-8  | 
|Consolidated Statements of Changes in
    Shareholders Equity for the fiscal years ended
    September 30, 2006, September 30, 2005 and
    September 30, 2004 |  |      | F-10 | 
|Notes to Consolidated Financial
    Statements                                                                                                                  |  |      | F-14 | 



F-1



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##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















| |                                    
| | -----------------------------------
| | KPMG Deutsche Treuhand-Gesellschaft
| | Aktiengesellschaft                 
| | Wirtschaftsprüfungsgesellschaft    





F-2



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##### Table of Contents





F-3



---



##### Table of Contents



SIEMENS





CONSOLIDATED STATEMENTS OF INCOME


For the fiscal years ended September 30, 2006, 2005 and
2004


(in millions of
, per share
amounts in )


|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |       |   |  |         |       |  
|------------------------------------------------------------------------- | ----------------------------------------------------- | ---- | ---- | ------- | ---- |  | ------- | ----- | - |  | ------- | ----- | - |  | ------- | ----- | -
|                                                                          |                                                       |      |      | Siemens |     
|                                                                          |                                                       |      |      |         |     
|                                                                          |                                                       | Note |      |         | 2006 |  |         | 2005  |   |  | 2004    |      
|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |      
|Net sales                                                                 |                                                       |      |      |         |      |  | 87,325  |       |   |  | 75,445  |       |   |  | 70,237  |      
|Cost of sales                                                             |                                                       |      |      |         |      |  | (63,812 | )     |   |  | (54,146 | )     |   |  | (50,109 | )    
|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |      
|Gross profit on sales                                                     |                                                       |      |      |         |      |  | 23,513  |       |   |  | 21,299  |       |   |  | 20,128  |      
|Research and development expenses                                         |                                                       |      | 2    |         |      |  | (5,024  | )     |   |  | (4,511  | )     |   |  | (4,133  | )    
|Marketing, selling and general administrative expenses                    |                                                       |      |      |         |      |  | (15,470 | )     |   |  | (13,684 | )     |   |  | (12,828 | )    
|Other operating income (expense), net                                     |                                                       |      | 3, 4 |         |      |  | 205     |       |   |  | (9      | )     |   |  | (172    | )    
|Income from investments in other companies, net                           |                                                       |      | 5    |         |      |  | 647     |       |   |  | 584     |       |   |  | 1,031   |      
|Income (expense) from financial assets and marketable
    securities, net |                                                       |      | 6    |         |      |  | 337     |       |   |  | 297     |       |   |  | 69      |      
|Interest expense of Operations, net                                       |                                                       |      | 7    |         |      |  | (39     | )     |   |  | (32     | )     |   |  | 20      |      
|Other interest income (expense), net                                      |                                                       |      | 7    |         |      |  | 202     |       |   |  | 241     |       |   |  | 254     |      
|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |      
|                                                                          | Income from continuing operations before income taxes |      |      |         |      |  |         | 4,371 |   |  |         | 4,185 |   |  |         | 4,369 |  
|Income
    taxes(1)                                                       |                                                       |      | 8    |         |      |  | (1,078  | )     |   |  | (979    | )     |   |  | (767    | )    
|Minority interest                                                         |                                                       |      |      |         |      |  | (206    | )     |   |  | (148    | )     |   |  | (152    | )    
|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |      
|                                                                          | Income from continuing operations                     |      |      |         |      |  |         | 3,087 |   |  |         | 3,058 |   |  |         | 3,450 |  
|Income (loss) from discontinued operations, net of income
    taxes       |                                                       |      |      |         |      |  | (54     | )     |   |  | (810    | )     |   |  | (45     | )    
|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |      
|Net income                                                                |                                                       |      |      |         |      |  | 3,033   |       |   |  | 2,248   |       |   |  | 3,405   |      
|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |      
|Basic earnings per share                                                  |                                                       |      | 29   |         |      |  |         |       |   |  |         |       |   |  |         |      
|                                                                          | Income from continuing operations                     |      |      |         |      |  |         | 3.47  |   |  |         | 3.43  |   |  |         | 3.87  |  
|                                                                          | Loss from discontinued operations                     |      |      |         |      |  |         | (0.07 | ) |  |         | (0.91 | ) |  |         | (0.05 | )
|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |      
|                                                                          | Net income                                            |      |      |         |      |  |         | 3.40  |   |  |         | 2.52  |   |  |         | 3.82  |  
|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |      
|Diluted earnings per share                                                |                                                       |      | 29   |         |      |  |         |       |   |  |         |       |   |  |         |      
|                                                                          | Income from continuing operations                     |      |      |         |      |  |         | 3.31  |   |  |         | 3.29  |   |  |         | 3.71  |  
|                                                                          | Loss from discontinued operations                     |      |      |         |      |  |         | (0.05 | ) |  |         | (0.87 | ) |  |         | (0.05 | )
|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |      
|                                                                          | Net income                                            |      |      |         |      |  |         | 3.26  |   |  |         | 2.42  |   |  |         | 3.66  |  
|                                                                          |                                                       |      |      |         |      |  |         |       |   |  |         |      






|    |                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The income taxes of Eliminations, reclassifications and
    Corporate Treasury, Operations, and Financing and Real
    Estateare based on the consolidated effective corporate tax
    rate applied to income before income taxes.



F-4



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##### Table of Contents







|                                |        |   |            |  |        |                           |  |  |        |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |        |   |  |  |        |   |  |  |        |  
|------------------------------- | ------ | - | ---------- |  | ------ | ------------------------- |  |  | ------ | - |  | ---- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | - |  | ---- | ------ | - |  |  | ------ | - |  |  | ------ | -
|Eliminations, reclassifications |        |   |            |  |       
|and Corporate Treasury          |        |   | Operations |  |        | Financing and Real Estate | 
|                                |        |   |            |  |        |                           | 
|2006                            |        |   | 2005       |  |        | 2004                      |  |  | 2006   |   |  | 2005 |         |   | 2004 |  |         | 2006 |  |  | 2005    |   |  | 2004 |       
|                                |        |   |            |  |        |                           |  |  |        |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |       
|                                | (1,858 | ) |            |  | (1,677 | )                         |  |  | (1,517 | ) |  |      | 86,843  |   |      |  | 74,969  |      |  |  | 69,627  |   |  |      | 2,340  |   |  |  | 2,153  |   |  |  | 2,127  |  
|                                | 1,858  |   |            |  | 1,677  |                           |  |  | 1,517  |   |  |      | (63,703 | ) |      |  | (54,027 | )    |  |  | (49,889 | ) |  |      | (1,967 | ) |  |  | (1,796 | ) |  |  | (1,737 | )
|                                |        |   |            |  |        |                           |  |  |        |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |       
|                                |       |   |            |  |       |                           |  |  |       |   |  |      | 23,140  |   |      |  | 20,942  |      |  |  | 19,738  |   |  |      | 373    |   |  |  | 357    |   |  |  | 390    |  
|                                |       |   |            |  |       |                           |  |  |       |   |  |      | (5,024  | ) |      |  | (4,511  | )    |  |  | (4,133  | ) |  |      |       |   |  |  |       |   |  |  |       |  
|                                | (3     | ) |            |  | (1     | )                         |  |  | (1     | ) |  |      | (15,123 | ) |      |  | (13,395 | )    |  |  | (12,545 | ) |  |      | (344   | ) |  |  | (288   | ) |  |  | (282   | )
|                                | (78    | ) |            |  | (87    | )                         |  |  | (76    | ) |  |      | 116     |   |      |  | (136    | )    |  |  | (192    | ) |  |      | 167    |   |  |  | 214    |   |  |  | 96     |  
|                                |       |   |            |  |       |                           |  |  |       |   |  |      | 538     |   |      |  | 492     |      |  |  | 972     |   |  |      | 109    |   |  |  | 92     |   |  |  | 59     |  
|                                | (50    | ) |            |  | 92     |                           |  |  | 24     |   |  |      | 400     |   |      |  | 255     |      |  |  | 70      |   |  |      | (13    | ) |  |  | (50    | ) |  |  | (25    | )
|                                |       |   |            |  |       |                           |  |  |       |   |  |      | (39     | ) |      |  | (32     | )    |  |  | 20      |   |  |      |       |   |  |  |       |   |  |  |       |  
|                                | 420    |   |            |  | 294    |                           |  |  | 277    |   |  |      | (355    | ) |      |  | (191    | )    |  |  | (141    | ) |  |      | 137    |   |  |  | 138    |   |  |  | 118    |  
|                                |        |   |            |  |        |                           |  |  |        |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |       
|                                | 289    |   |            |  | 298    |                           |  |  | 224    |   |  |      | 3,653   |   |      |  | 3,424   |      |  |  | 3,789   |   |  |      | 429    |   |  |  | 463    |   |  |  | 356    |  
|                                | (71    | ) |            |  | (70    | )                         |  |  | (39    | ) |  |      | (901    | ) |      |  | (801    | )    |  |  | (665    | ) |  |      | (106   | ) |  |  | (108   | ) |  |  | (63    | )
|                                |       |   |            |  |       |                           |  |  |       |   |  |      | (206    | ) |      |  | (148    | )    |  |  | (152    | ) |  |      |       |   |  |  |       |   |  |  |       |  
|                                |        |   |            |  |        |                           |  |  |        |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |       
|                                | 218    |   |            |  | 228    |                           |  |  | 185    |   |  |      | 2,546   |   |      |  | 2,475   |      |  |  | 2,972   |   |  |      | 323    |   |  |  | 355    |   |  |  | 293    |  
|                                |       |   |            |  |       |                           |  |  |       |   |  |      | (45     | ) |      |  | (814    | )    |  |  | (47     | ) |  |      | (9     | ) |  |  | 4      |   |  |  | 2      |  
|                                |        |   |            |  |        |                           |  |  |        |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |       
|                                | 218    |   |            |  | 228    |                           |  |  | 185    |   |  |      | 2,501   |   |      |  | 1,661   |      |  |  | 2,925   |   |  |      | 314    |   |  |  | 359    |   |  |  | 295    |  
|                                |        |   |            |  |        |                           |  |  |        |   |  |      |         |   |      |  |         |      |  |  |         |   |  |      |       

F-5



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##### Table of Contents



SIEMENS





CONSOLIDATED BALANCE SHEETS


As of September 30, 2006 and 2005


(in millions of
)


|                                      |                                                            |                                                                  |    |         |         |  |        |         |        |  |        |        |        | 
|------------------------------------- | ---------------------------------------------------------- | ---------------------------------------------------------------- | -- | ------- | ------- |  | ------ | ------- | ------ |  | ------ | ------ | ------ | 
|                                      |                                                            |                                                                  |    | Siemens |        
|                                      |                                                            |                                                                  |    |         |        
|                                      |                                                            | Note                                                             |    |         | 9/30/06 |  |        | 9/30/05 |       
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|ASSETS                                |                                                            |                                                                  |    |         |         |  |        |         |        |  |        |       
|Current assets                        |                                                            |                                                                  |    |         |         |  |        |         |        |  |        |       
|                                      | Cash and cash equivalents                                  |                                                                  |    |         |         |  |        | 10,214  |        |  |        | 8,121  |       
|                                      | Marketable securities                                      |                                                                  |    | 9       |         |  |        | 596     |        |  |        | 1,789  |       
|                                      | Accounts receivable, net                                   |                                                                  |    | 10      |         |  |        | 15,149  |        |  |        | 17,122 |       
|                                      | Intracompany receivables                                   |                                                                  |    |         |         |  |        |        |        |  |        |       |       
|                                      | Inventories, net                                           |                                                                  |    | 11      |         |  |        | 12,790  |        |  |        | 12,812 |       
|                                      | Deferred income taxes                                      |                                                                  |    | 8       |         |  |        | 1,468   |        |  |        | 1,484  |       
|                                      | Assets held for disposal                                   |                                                                  |    |         |         |  |        | 7,189   |        |  |        | 245    |       
|                                      | Other current assets                                       |                                                                  |    | 12      |         |  |        | 4,205   |        |  |        | 5,230  |       
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|                                      |                                                            | Total current assets                                             |    |         |         |  |        |         | 51,611 |  |        |        | 46,803 | 
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|Long-term investments                 |                                                            |                                                                  | 13 |         |         |  | 3,922  |         |        |  | 3,768  |       
|Goodwill                              |                                                            |                                                                  | 14 |         |         |  | 9,776  |         |        |  | 8,930  |       
|Other intangible assets, net          |                                                            |                                                                  | 15 |         |         |  | 3,243  |         |        |  | 3,107  |       
|Property, plant and equipment, net    |                                                            |                                                                  | 16 |         |         |  | 12,072 |         |        |  | 12,012 |       
|Deferred income taxes                 |                                                            |                                                                  | 8  |         |         |  | 4,983  |         |        |  | 6,233  |       
|Other assets                          |                                                            |                                                                  | 17 |         |         |  | 5,366  |         |        |  | 5,264  |       
|Other intracompany receivables        |                                                            |                                                                  |    |         |         |  |       |         |        |  |       |       
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|                                      |                                                            | Total assets                                                     |    |         |         |  |        |         | 90,973 |  |        |        | 86,117 | 
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|LIABILITIES AND SHAREHOLDERS EQUITY  |                                                            |                                                                  |    |         |         |  |        |         |        |  |        |       
|Current liabilities                   |                                                            |                                                                  |    |         |         |  |        |         |        |  |        |       
|                                      | Short-term debt and current maturities of long-term debt   |                                                                  |    | 20      |         |  |        | 2,175   |        |  |        | 3,999  |       
|                                      | Accounts payable                                           |                                                                  |    |         |         |  |        | 8,444   |        |  |        | 10,171 |       
|                                      | Intracompany liabilities                                   |                                                                  |    |         |         |  |        |        |        |  |        |       |       
|                                      | Accrued liabilities                                        |                                                                  |    | 18      |         |  |        | 9,126   |        |  |        | 10,176 |       
|                                      | Deferred income taxes                                      |                                                                  |    | 8       |         |  |        | 516     |        |  |        | 1,938  |       
|                                      | Liabilities held for disposal                              |                                                                  |    |         |         |  |        | 5,545   |        |  |        | 289    |       
|                                      | Other current liabilities                                  |                                                                  |    | 19      |         |  |        | 13,151  |        |  |        | 13,058 |       
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|                                      |                                                            | Total current liabilities                                        |    |         |         |  |        |         | 38,957 |  |        |        | 39,631 | 
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|Long-term debt                        |                                                            |                                                                  | 20 |         |         |  | 13,399 |         |        |  | 8,436  |       
|Pension plans and similar commitments |                                                            |                                                                  | 21 |         |         |  | 4,101  |         |        |  | 4,917  |       
|Deferred income taxes                 |                                                            |                                                                  | 8  |         |         |  | 450    |         |        |  | 427    |       
|Other accruals and provisions         |                                                            |                                                                  | 22 |         |         |  | 4,058  |         |        |  | 5,028  |       
|Other intracompany liabilities        |                                                            |                                                                  |    |         |         |  |       |         |        |  |       |       
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|                                      |                                                            |                                                                  |    |         |         |  | 60,965 |         |        |  | 58,439 |       
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|Minority interests                    |                                                            |                                                                  |    |         |         |  | 702    |         |        |  | 656    |       
|Shareholders equity                  |                                                            |                                                                  | 23 |         |         |  |        |         |        |  |        |       
|                                      | Common stock, no par value                                 |                                                                  |    |         |         |  |        |         |        |  |        |        |       
|                                      |                                                            | Authorized: 1,116,087,241 and 1,113,295,461 shares, respectively |    |         |         |  |        |         |        |  |        |        |        | 
|                                      |                                                            | Issued: 891,087,241 and 891,085,461 shares, respectively         |    |         |         |  |        |         | 2,673  |  |        |        | 2,673  | 
|                                      | Additional paid-in capital                                 |                                                                  |    |         |         |  |        | 5,175   |        |  |        | 5,167  |       
|                                      | Retained earnings                                          |                                                                  |    |         |         |  |        | 28,320  |        |  |        | 26,488 |       
|                                      | Accumulated other comprehensive income (loss)              |                                                                  |    |         |         |  |        | (6,862  | )      |  |        | (7,305 | )     
|                                      | Treasury stock, at cost 415 and 9,004 shares, respectively |                                                                  |    |         |         |  |        |        |        |  |        | (1     | )     
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|                                      |                                                            | Total shareholders equity                                       |    |         |         |  |        |         | 29,306 |  |        |        | 27,022 | 
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       
|                                      |                                                            | Total liabilities and shareholders equity                       |    |         |         |  |        |         | 90,973 |  |        |        | 86,117 | 
|                                      |                                                            |                                                                  |    |         |         |  |        |         |       



F-6



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##### Table of Contents







|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         |  |        |  |  |  |        | 
|--------------------- | ------- | - | ---------- |  | ------------- | ----------- |  |  | ------- |  |  | ------- | ------ |  | ------- |  | ------ |  |  |  | ------ | 
|Eliminations,         |         |   |            |  |               |             | 
|reclassifications and |         |   |            |  | Financing and |            
|Corporate Treasury    |         |   | Operations |  |               | Real Estate | 
|                      |         |   |            |  |               |             | 
|9/30/06               |         |   | 9/30/05    |  |               | 9/30/06     |  |  | 9/30/05 |  |  | 9/30/06 |        |  | 9/30/05 | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      | 9,072   |   |            |  | 6,603         |             |  |  | 1,109   |  |  |         | 1,471  |  |         |  | 33     |  |  |  | 47     | 
|                      | 417     |   |            |  |              |             |  |  | 159     |  |  |         | 1,772  |  |         |  | 20     |  |  |  | 17     | 
|                      |        |   |            |  | (6            | )           |  |  | 10,886  |  |  |         | 12,758 |  |         |  | 4,263  |  |  |  | 4,370  | 
|                      | (15,736 | ) |            |  | (15,489       | )           |  |  | 15,680  |  |  |         | 15,362 |  |         |  | 56     |  |  |  | 127    | 
|                      | (2      | ) |            |  | (4            | )           |  |  | 12,735  |  |  |         | 12,744 |  |         |  | 57     |  |  |  | 72     | 
|                      | (45     | ) |            |  | (178          | )           |  |  | 1,486   |  |  |         | 1,580  |  |         |  | 27     |  |  |  | 82     | 
|                      | (21     | ) |            |  |              |             |  |  | 7,205   |  |  |         | 245    |  |         |  | 5      |  |  |  |       | 
|                      | 286     |   |            |  | 506           |             |  |  | 2,893   |  |  |         | 3,746  |  |         |  | 1,026  |  |  |  | 978    | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      | (6,029  | ) |            |  | (8,568        | )           |  |  | 52,153  |  |  |         | 49,678 |  |         |  | 5,487  |  |  |  | 5,693  | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      |        |   |            |  |              |             |  |  | 3,601   |  |  |         | 3,463  |  |         |  | 321    |  |  |  | 305    | 
|                      |        |   |            |  |              |             |  |  | 9,644   |  |  |         | 8,799  |  |         |  | 132    |  |  |  | 131    | 
|                      |        |   |            |  |              |             |  |  | 3,227   |  |  |         | 3,092  |  |         |  | 16     |  |  |  | 15     | 
|                      |        |   |            |  |              |             |  |  | 8,310   |  |  |         | 8,217  |  |         |  | 3,762  |  |  |  | 3,795  | 
|                      | 1,197   |   |            |  | 1,541         |             |  |  | 3,695   |  |  |         | 4,655  |  |         |  | 91     |  |  |  | 37     | 
|                      | 246     |   |            |  | 106           |             |  |  | 1,634   |  |  |         | 1,836  |  |         |  | 3,486  |  |  |  | 3,322  | 
|                      | (1,283  | ) |            |  | (1,632        | )           |  |  | 1,283   |  |  |         | 1,626  |  |         |  |       |  |  |  | 6      | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      | (5,869  | ) |            |  | (8,553        | )           |  |  | 83,547  |  |  |         | 81,366 |  |         |  | 13,295 |  |  |  | 13,304 | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      | 1,429   |   |            |  | 3,049         |             |  |  | 534     |  |  |         | 564    |  |         |  | 212    |  |  |  | 386    | 
|                      | 27      |   |            |  | (1            | )           |  |  | 8,142   |  |  |         | 9,965  |  |         |  | 275    |  |  |  | 207    | 
|                      | (16,542 | ) |            |  | (15,998       | )           |  |  | 10,136  |  |  |         | 9,134  |  |         |  | 6,406  |  |  |  | 6,864  | 
|                      | 148     |   |            |  | 115           |             |  |  | 8,816   |  |  |         | 9,905  |  |         |  | 162    |  |  |  | 156    | 
|                      | (363    | ) |            |  | (475          | )           |  |  | 618     |  |  |         | 2,203  |  |         |  | 261    |  |  |  | 210    | 
|                      | (16     | ) |            |  |              |             |  |  | 5,561   |  |  |         | 289    |  |         |  |       |  |  |  |       | 
|                      | 462     |   |            |  | 222           |             |  |  | 12,396  |  |  |         | 12,559 |  |         |  | 293    |  |  |  | 277    | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      | (14,855 | ) |            |  | (13,088       | )           |  |  | 46,203  |  |  |         | 44,619 |  |         |  | 7,609  |  |  |  | 8,100  | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      | 12,224  |   |            |  | 6,937         |             |  |  | 743     |  |  |         | 978    |  |         |  | 432    |  |  |  | 521    | 
|                      |        |   |            |  |              |             |  |  | 4,099   |  |  |         | 4,917  |  |         |  | 2      |  |  |  |       | 
|                      | 151     |   |            |  | (26           | )           |  |  | 185     |  |  |         | 274    |  |         |  | 114    |  |  |  | 179    | 
|                      | 65      |   |            |  | 91            |             |  |  | 3,650   |  |  |         | 4,519  |  |         |  | 343    |  |  |  | 418    | 
|                      | (3,454  | ) |            |  | (2,467        | )           |  |  | 710     |  |  |         | 284    |  |         |  | 2,744  |  |  |  | 2,183  | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      | (5,869  | ) |            |  | (8,553        | )           |  |  | 55,590  |  |  |         | 55,591 |  |         |  | 11,244 |  |  |  | 11,401 | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      |        |   |            |  |              |             |  |  | 702     |  |  |         | 656    |  |         |  |       |  |  |  |       | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      |        |   |            |  |              |             |  |  | 27,255  |  |  |         | 25,119 |  |         |  | 2,051  |  |  |  | 1,903  | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 
|                      | (5,869  | ) |            |  | (8,553        | )           |  |  | 83,547  |  |  |         | 81,366 |  |         |  | 13,295 |  |  |  | 13,304 | 
|                      |         |   |            |  |               |             |  |  |         |  |  |         |        |  |         | 

F-7



---



##### Table of Contents



SIEMENS





CONSOLIDATED STATEMENTS OF CASH FLOW


For the fiscal years ended September 30, 2006, 2005 and
2004


(in millions of
)


|                                                      |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |        |      |        |        |        |      |        |        |  
|----------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ------ | ------ | ------ | ------ | ---- | ------ | ------ | ------ | ---- | ------ | ------ | -
|                                                      |                                                                                                 | Siemens                                                                      |                                                                   
|                                                      |                                                                                                 |                                                                              |                                                                   
|                                                      |                                                                                                 | 2006                                                                         |                                                                    |                                                                                                 | 2005                                                                           |        |        | 2004   |       
|                                                      |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |       
|Cash flows from operating activities                  |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |        |      |        |       
|                                                      | Net income                                                                                      |                                                                              |                                                                    | 3,033                                                                                           |                                                                                |        |        | 2,248  |        |      |        | 3,405  |       
|                                                      | Adjustments to reconcile net income to cash provided                                            |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |        |      |        |        |       
|                                                      |                                                                                                 | Minority interest                                                            |                                                                    |                                                                                                 | 213                                                                            |        |        |        | 158    |      |        |        | 166    |     
|                                                      |                                                                                                 | Amortization, depreciation and impairments                                   |                                                                    |                                                                                                 | 3,012                                                                          |        |        |        | 3,426  |      |        |        | 3,344  |     
|                                                      |                                                                                                 | Deferred taxes                                                               |                                                                    |                                                                                                 | (378                                                                           | )      |        |        | (628   | )    |        |        | (309   | )   
|                                                      |                                                                                                 | Losses (gains) on sales and disposals of businesses and
    real estate, net |                                                                    |                                                                                                 | (77                                                                            | )      |        |        | (226   | )    |        |        | (246   | )   
|                                                      |                                                                                                 | (Gains) on sales of investments, net                                         |                                                                    |                                                                                                 | (188                                                                           | )      |        |        | (49    | )    |        |        | (612   | )   
|                                                      |                                                                                                 | (Gains) on sales and impairments of marketable securities, net               |                                                                    |                                                                                                 | (382                                                                           | )      |        |        | (239   | )    |        |        | (47    | )   
|                                                      |                                                                                                 | (Income) loss from equity investees, net of dividends received               |                                                                    |                                                                                                 | (160                                                                           | )      |        |        | (277   | )    |        |        | (287   | )   
|                                                      |                                                                                                 | Change in current assets and liabilities                                     |                                                                    |                                                                                                 |                                                                                |        |        |        |        |      |        |        |        |     
|                                                      |                                                                                                 |                                                                              | (Increase) decrease in inventories, net                            |                                                                                                 |                                                                                | (2,313 | )      |        |        | (717 | )      |        |        | (941 | )     
|                                                      |                                                                                                 |                                                                              | (Increase) decrease in accounts receivable, net                    |                                                                                                 |                                                                                | (881   | )      |        |        | 27   |        |        |        | (866 | )     
|                                                      |                                                                                                 |                                                                              | Increase (decrease) in outstanding balance of receivables
    sold |                                                                                                 |                                                                                | (153   | )      |        |        | (7   | )      |        |        | 133  |       
|                                                      |                                                                                                 |                                                                              | (Increase) decrease in other current assets                        |                                                                                                 |                                                                                | 466    |        |        |        | 248  |        |        |        | 661  |       
|                                                      |                                                                                                 |                                                                              | Increase (decrease) in accounts payable                            |                                                                                                 |                                                                                | 259    |        |        |        | 89   |        |        |        | 857  |       
|                                                      |                                                                                                 |                                                                              | Increase (decrease) in accrued liabilities                         |                                                                                                 |                                                                                | 85     |        |        |        | (144 | )      |        |        | 302  |       
|                                                      |                                                                                                 |                                                                              | Increase (decrease) in other current liabilities                   |                                                                                                 |                                                                                | 1,758  |        |        |        | 39   |        |        |        | (323 | )     
|                                                      |                                                                                                 | Supplemental contributions to pension trusts                                 |                                                                    |                                                                                                 |                                                                               |        |        |        | (1,496 | )    |        |        | (1,255 | )   
|                                                      |                                                                                                 | Change in other assets and liabilities                                       |                                                                    |                                                                                                 | 687                                                                            |        |        |        | 669    |      |        |        | 1,098  |     
|                                                      |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |       
|                                                      |                                                                                                 |                                                                              |                                                                    | Net cash provided by (used in) operating activities
    continuing and discontinued operations |                                                                                |        | 4,981  |        |        |      | 3,121  |        |        |      | 5,080  |       
|                                                      |                                                                                                 |                                                                              |                                                                    |                                                                                                 | Net cash provided by (used in) operating activities
    continuing operations |        |        | 5,174  |        |      |        | 4,217  |        |      |        | 4,704  |  
|Cash flows from investing activities                  |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |        |      |        |       
|                                                      | Additions to intangible assets and property, plant and equipment                                |                                                                              |                                                                    | (3,970                                                                                          | )                                                                              |        |        | (3,544 | )      |      |        | (2,764 | )     
|                                                      | Acquisitions, net of cash acquired                                                              |                                                                              |                                                                    | (2,055                                                                                          | )                                                                              |        |        | (2,450 | )      |      |        | (1,477 | )     
|                                                      | Purchases of investments                                                                        |                                                                              |                                                                    | (389                                                                                            | )                                                                              |        |        | (652   | )      |      |        | (374   | )     
|                                                      | Purchases of marketable securities                                                              |                                                                              |                                                                    | (1,489                                                                                          | )                                                                              |        |        | (34    | )      |      |        | (106   | )     
|                                                      | (Increase) decrease in receivables from financing activities                                    |                                                                              |                                                                    | (469                                                                                            | )                                                                              |        |        | (511   | )      |      |        | (247   | )     
|                                                      | Increase (decrease) in outstanding balance of receivables
    sold by SFS                       |                                                                              |                                                                    |                                                                                                |                                                                                |        |        |       |        |      |        |       |       
|                                                      | Proceeds from sales of long-term investments, intangibles and
    property, plant and equipment |                                                                              |                                                                    | 1,317                                                                                           |                                                                                |        |        | 977    |        |      |        | 2,639  |       
|                                                      | Proceeds from sales and dispositions of businesses                                              |                                                                              |                                                                    | (260                                                                                            | )                                                                              |        |        | 34     |        |      |        | 325    |       
|                                                      | Proceeds from sales of marketable securities                                                    |                                                                              |                                                                    | 2,701                                                                                           |                                                                                |        |        | 356    |        |      |        | 186    |       
|                                                      |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |       
|                                                      |                                                                                                 |                                                                              |                                                                    | Net cash provided by (used in) investing activities
    continuing and discontinued operations |                                                                                |        | (4,614 | )      |        |      | (5,824 | )      |        |      | (1,818 | )     
|                                                      |                                                                                                 |                                                                              |                                                                    |                                                                                                 | Net cash provided by (used in) investing activities
    continuing operations |        |        | (4,435 | )      |      |        | (5,706 | )      |      |        | (1,689 | )
|Cash flows from financing activities                  |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |        |      |        |       
|                                                      | Proceeds from issuance of common stock                                                          |                                                                              |                                                                    |                                                                                                |                                                                                |        |        |       |        |      |        | 4      |       
|                                                      | Purchase of common stock                                                                        |                                                                              |                                                                    | (421                                                                                            | )                                                                              |        |        | (219   | )      |      |        |       |       
|                                                      | Proceeds from re-issuance of treasury stock                                                     |                                                                              |                                                                    | 313                                                                                             |                                                                                |        |        | 173    |        |      |        |       |       
|                                                      | Proceeds from issuance of debt                                                                  |                                                                              |                                                                    | 6,701                                                                                           |                                                                                |        |        |       |        |      |        |       |       
|                                                      | Repayment of debt                                                                               |                                                                              |                                                                    | (1,710                                                                                          | )                                                                              |        |        | (848   | )      |      |        | (1,564 | )     
|                                                      | Change in short-term debt                                                                       |                                                                              |                                                                    | (1,762                                                                                          | )                                                                              |        |        | 711    |        |      |        | (469   | )     
|                                                      | Dividends paid                                                                                  |                                                                              |                                                                    | (1,201                                                                                          | )                                                                              |        |        | (1,112 | )      |      |        | (978   | )     
|                                                      | Dividends paid to minority shareholders                                                         |                                                                              |                                                                    | (118                                                                                            | )                                                                              |        |        | (108   | )      |      |        | (101   | )     
|                                                      | Intracompany financing                                                                          |                                                                              |                                                                    |                                                                                                |                                                                                |        |        |       |        |      |        |       |       
|                                                      |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |       
|                                                      |                                                                                                 |                                                                              |                                                                    | Net cash provided by (used in) financing activities                                             |                                                                                |        | 1,802  |        |        |      | (1,403 | )      |        |      | (3,108 | )     
|Effect of exchange rates on cash and cash equivalents |                                                                                                 |                                                                              | (76                                                                | )                                                                                               |                                                                                |        | 37     |        |        |      | (113   | )     
|Net increase (decrease) in cash and cash equivalents  |                                                                                                 |                                                                              | 2,093                                                              |                                                                                                 |                                                                                |        | (4,069 | )      |        |      | 41     |       
|Cash and cash equivalents at beginning of period      |                                                                                                 |                                                                              | 8,121                                                              |                                                                                                 |                                                                                |        | 12,190 |        |        |      | 12,149 |       
|                                                      |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |       
|Cash and cash equivalents at end of period            |                                                                                                 |                                                                              | 10,214                                                             |                                                                                                 |                                                                                |        | 8,121  |        |        |      | 12,190 |       
|                                                      |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |       
|Supplemental disclosure of cash paid for:             |                                                                                                 |                                                                              |                                                                    |                                                                                                 |                                                                                |        |        |        |        |      |        |       
|                                                      | Interest                                                                                        |                                                                              |                                                                    | 596                                                                                             |                                                                                |        |        | 441    |        |      |        | 385    |       
|                                                      | Income taxes                                                                                    |                                                                              |                                                                    | 1,191                                                                                           |                                                                                |        |        | 1,093  |        |      |        | 746    |       



F-8



---



##### Table of Contents







| |  |                       |        |   |            |  |        |                           |  |  |        |   |  |      |        |   |      |  |        |      |  |  |        |   |  |      |      |   |  |  |      |   |  |  |       |  
| |  | --------------------- | ------ | - | ---------- |  | ------ | ------------------------- |  |  | ------ | - |  | ---- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | - |  | ---- | ---- | - |  |  | ---- | - |  |  | ----- | -
| |  | Eliminations,         |        |   |            |  |        |                           |  |  |        |   |  |      |       
| |  | reclassifications and |        |   |            |  |       
| |  | Corporate Treasury    |        |   | Operations |  |        | Financing and Real Estate | 
| |  |                       |        |   |            |  |        |                           | 
| |  | 2006                  |        |   | 2005       |  |        | 2004                      |  |  | 2006   |   |  | 2005 |        |   | 2004 |  |        | 2006 |  |  | 2005   |   |  | 2004 |     
| |  |                       |        |   |            |  |        |                           |  |  |        |   |  |      |        |   |      |  |        |      |  |  |        |   |  |      |     
| |  |                       | 218    |   |            |  | 228    |                           |  |  | 185    |   |  |      | 2,501  |   |      |  | 1,661  |      |  |  | 2,925  |   |  |      | 314  |   |  |  | 359  |   |  |  | 295   |  
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | 213    |   |      |  | 158    |      |  |  | 166    |   |  |      |     |   |  |  |     |   |  |  |      |  
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | 2,570  |   |      |  | 3,001  |      |  |  | 2,951  |   |  |      | 442  |   |  |  | 425  |   |  |  | 393   |  
| |  |                       | (23    | ) |            |  | (5     | )                         |  |  | (12    | ) |  |      | (315   | ) |      |  | (614   | )    |  |  | (278   | ) |  |      | (40  | ) |  |  | (9   | ) |  |  | (19   | )
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | 18     |   |      |  | (98    | )    |  |  | (222   | ) |  |      | (95  | ) |  |  | (128 | ) |  |  | (24   | )
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | (175   | ) |      |  | (49    | )    |  |  | (612   | ) |  |      | (13  | ) |  |  |     |   |  |  |      |  
| |  |                       |       |   |            |  |       |                           |  |  | (12    | ) |  |      | (382   | ) |      |  | (239   | )    |  |  | (33    | ) |  |      |     |   |  |  |     |   |  |  | (2    | )
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | (133   | ) |      |  | (263   | )    |  |  | (293   | ) |  |      | (27  | ) |  |  | (14  | ) |  |  | 6     |  
| |  |                       | (2     | ) |            |  |       |                           |  |  |       |   |  |      | (2,321 | ) |      |  | (709   | )    |  |  | (962   | ) |  |      | 10   |   |  |  | (8   | ) |  |  | 21    |  
| |  |                       | 120    |   |            |  | 148    |                           |  |  | (658   | ) |  |      | (1,049 | ) |      |  | (143   | )    |  |  | (208   | ) |  |      | 48   |   |  |  | 22   |   |  |  |      |  
| |  |                       | (80    | ) |            |  | (28    | )                         |  |  | 65     |   |  |      | (73    | ) |      |  | 21     |      |  |  | 68     |   |  |      |     |   |  |  |     |   |  |  |      |  
| |  |                       | 214    |   |            |  | 113    |                           |  |  | 107    |   |  |      | 244    |   |      |  | 140    |      |  |  | 276    |   |  |      | 8    |   |  |  | (5   | ) |  |  | 278   |  
| |  |                       | 15     |   |            |  | (1     | )                         |  |  | (6     | ) |  |      | 180    |   |      |  | 103    |      |  |  | 827    |   |  |      | 64   |   |  |  | (13  | ) |  |  | 36    |  
| |  |                       | 55     |   |            |  | (39    | )                         |  |  |       |   |  |      | 8      |   |      |  | (39    | )    |  |  | 210    |   |  |      | 22   |   |  |  | (66  | ) |  |  | 92    |  
| |  |                       | 340    |   |            |  | (332   | )                         |  |  | 129    |   |  |      | 1,439  |   |      |  | 321    |      |  |  | (409   | ) |  |      | (21  | ) |  |  | 50   |   |  |  | (43   | )
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      |       |   |      |  | (1,496 | )    |  |  | (1,255 | ) |  |      |     |   |  |  |     |   |  |  |      |  
| |  |                       | (76    | ) |            |  | (47    | )                         |  |  | 156    |   |  |      | 820    |   |      |  | 709    |      |  |  | 857    |   |  |      | (57  | ) |  |  | 7    |   |  |  | 85    |  
| |  |                       |        |   |            |  |        |                           |  |  |        |   |  |      |        |   |      |  |        |      |  |  |        |   |  |      |     
| |  |                       | 781    |   |            |  | 37     |                           |  |  | (46    | ) |  |      | 3,545  |   |      |  | 2,464  |      |  |  | 4,008  |   |  |      | 655  |   |  |  | 620  |   |  |  | 1,118 |  
| |  |                       | 781    |   |            |  | 37     |                           |  |  | (46    | ) |  |      | 3,738  |   |      |  | 3,565  |      |  |  | 3,635  |   |  |      | 655  |   |  |  | 615  |   |  |  | 1,115 |  
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | (3,202 | ) |      |  | (2,871 | )    |  |  | (2,328 | ) |  |      | (768 | ) |  |  | (673 | ) |  |  | (436  | )
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | (2,052 | ) |      |  | (2,369 | )    |  |  | (1,472 | ) |  |      | (3   | ) |  |  | (81  | ) |  |  | (5    | )
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | (369   | ) |      |  | (631   | )    |  |  | (367   | ) |  |      | (20  | ) |  |  | (21  | ) |  |  | (7    | )
| |  |                       | (1,409 | ) |            |  | (12    | )                         |  |  | (20    | ) |  |      | (72    | ) |      |  | (8     | )    |  |  | (86    | ) |  |      | (8   | ) |  |  | (14  | ) |  |  |      |  
| |  |                       | (150   | ) |            |  | (81    | )                         |  |  | 569    |   |  |      |       |   |      |  |       |      |  |  |       |   |  |      | (319 | ) |  |  | (430 | ) |  |  | (816  | )
| |  |                       | 80     |   |            |  | 28     |                           |  |  | (65    | ) |  |      |       |   |      |  |       |      |  |  |       |   |  |      | (80  | ) |  |  | (28  | ) |  |  | 65    |  
| |  |                       |       |   |            |  |       |                           |  |  | 19     |   |  |      | 952    |   |      |  | 641    |      |  |  | 2,357  |   |  |      | 365  |   |  |  | 336  |   |  |  | 263   |  
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | (260   | ) |      |  | 12     |      |  |  | 306    |   |  |      |     |   |  |  | 22   |   |  |  | 19    |  
| |  |                       | 986    |   |            |  | 20     |                           |  |  | 104    |   |  |      | 1,709  |   |      |  | 321    |      |  |  | 67     |   |  |      | 6    |   |  |  | 15   |   |  |  | 15    |  
| |  |                       |        |   |            |  |        |                           |  |  |        |   |  |      |        |   |      |  |        |      |  |  |        |   |  |      |     
| |  |                       | (493   | ) |            |  | (45    | )                         |  |  | 607    |   |  |      | (3,294 | ) |      |  | (4,905 | )    |  |  | (1,523 | ) |  |      | (827 | ) |  |  | (874 | ) |  |  | (902  | )
| |  |                       | (493   | ) |            |  | (45    | )                         |  |  | 607    |   |  |      | (3,115 | ) |      |  | (4,787 | )    |  |  | (1,394 | ) |  |      | (827 | ) |  |  | (874 | ) |  |  | (902  | )
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      |       |   |      |  |       |      |  |  | 4      |   |  |      |     |   |  |  |     |   |  |  |      |  
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | (421   | ) |      |  | (219   | )    |  |  |       |   |  |      |     |   |  |  |     |   |  |  |      |  
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | 313    |   |      |  | 173    |      |  |  |       |   |  |      |     |   |  |  |     |   |  |  |      |  
| |  |                       | 6,701  |   |            |  |       |                           |  |  |       |   |  |      |       |   |      |  |       |      |  |  |       |   |  |      |     |   |  |  |     |   |  |  |      |  
| |  |                       | (1,600 | ) |            |  | (596   | )                         |  |  | (1,270 | ) |  |      | (49    | ) |      |  | (231   | )    |  |  | (266   | ) |  |      | (61  | ) |  |  | (21  | ) |  |  | (28   | )
| |  |                       | (1,244 | ) |            |  | 1,065  |                           |  |  | (414   | ) |  |      | (419   | ) |      |  | (270   | )    |  |  | (170   | ) |  |      | (99  | ) |  |  | (84  | ) |  |  | 115   |  
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | (1,201 | ) |      |  | (1,112 | )    |  |  | (978   | ) |  |      |     |   |  |  |     |   |  |  |      |  
| |  |                       |       |   |            |  |       |                           |  |  |       |   |  |      | (118   | ) |      |  | (108   | )    |  |  | (101   | ) |  |      |     |   |  |  |     |   |  |  |      |  
| |  |                       | (1,654 | ) |            |  | (5,112 | )                         |  |  | 1,115  |   |  |      | 1,335  |   |      |  | 4,738  |      |  |  | (765   | ) |  |      | 319  |   |  |  | 374  |   |  |  | (350  | )
| |  |                       |        |   |            |  |        |                           |  |  |        |   |  |      |        |   |      |  |        |      |  |  |        |   |  |      |     
| |  |                       | 2,203  |   |            |  | (4,643 | )                         |  |  | (569   | ) |  |      | (560   | ) |      |  | 2,971  |      |  |  | (2,276 | ) |  |      | 159  |   |  |  | 269  |   |  |  | (263  | )
| |  |                       | (22    | ) |            |  | 3      |                           |  |  | (86    | ) |  |      | (53    | ) |      |  | 33     |      |  |  | (26    | ) |  |      | (1   | ) |  |  | 1    |   |  |  | (1    | )
| |  |                       | 2,469  |   |            |  | (4,648 | )                         |  |  | (94    | ) |  |      | (362   | ) |      |  | 563    |      |  |  | 183    |   |  |      | (14  | ) |  |  | 16   |   |  |  | (48   | )
| |  |                       | 6,603  |   |            |  | 11,251 |                           |  |  | 11,345 |   |  |      | 1,471  |   |      |  | 908    |      |  |  | 725    |   |  |      | 47   |   |  |  | 31   |   |  |  | 79    |  
| |  |                       |        |   |            |  |        |                           |  |  |        |   |  |      |        |   |      |  |        |      |  |  |        |   |  |      |     
| |  |                       | 9,072  |   |            |  | 6,603  |                           |  |  | 11,251 |   |  |      | 1,109  |   |      |  | 1,471  |      |  |  | 908    |   |  |      | 33   |   |  |  | 47   |   |  |  | 31    |  
| |  |                       |        |   |            |  |        |                           |  |  |        |   |  |      |        |   |      |  |        |      |  |  |        |   |  |      |     



F-9



---



##### Table of Contents



SIEMENS





CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY


For the fiscal years ended September 30, 2006, 2005 and
2004


(in millions of
)


|                                                      |                            |        |       |            |         |  |       |          |  |  |        |       | 
|----------------------------------------------------- | -------------------------- | ------ | ----- | ---------- | ------- |  | ----- | -------- |  |  | ------ | ----- | 
|                                                      |                            |        |       | Additional |         |  |      
|                                                      |                            | Common |       |            | paid-in |  |       | Retained | 
|                                                      |                            | stock  |       |            | capital |  |       | earnings | 
|                                                      |                            |        |       |            |         |  |       |          | 
|Balance at October 1, 2003                            |                            |        | 2,673 |            |         |  | 5,073 |          |  |  | 22,925 |      
|                                                      |                            |        |       |            |         |  |       |          | 
|Net income                                            |                            |        |      |            |         |  |      |          |  |  | 3,405  |      
|Change in currency translation adjustment             |                            |        |      |            |         |  |      |          |  |  |       |      
|Change in unrealized gains and losses                 |                            |        |      |            |         |  |      |          |  |  |       |      
|                                                      |                            |        |       |            |         |  |       |          | 
|                                                      | Total comprehensive income |        |       |           |         |  |       |         |  |  |        | 3,405 | 
|Dividends paid                                        |                            |        |      |            |         |  |      |          |  |  | (978   | )    
|Issuance of common stock and stock-based compensation |                            |        |      |            |         |  | 50    |          |  |  |       |      
|Purchase of common stock                              |                            |        |      |            |         |  |      |          |  |  |       |      
|Re-issuance of treasury stock                         |                            |        |      |            |         |  | (2    | )        |  |  |       |      
|                                                      |                            |        |       |            |         |  |       |          | 
|Balance at September 30, 2004                         |                            |        | 2,673 |            |         |  | 5,121 |          |  |  | 25,352 |      
|                                                      |                            |        |       |            |         |  |       |          | 
|Net income                                            |                            |        |      |            |         |  |      |          |  |  | 2,248  |      
|Change in currency translation adjustment             |                            |        |      |            |         |  |      |          |  |  |       |      
|Change in unrealized gains and losses                 |                            |        |      |            |         |  |      |          |  |  |       |      
|                                                      |                            |        |       |            |         |  |       |          | 
|                                                      | Total comprehensive income |        |       |           |         |  |       |         |  |  |        | 2,248 | 
|Dividends paid                                        |                            |        |      |            |         |  |      |          |  |  | (1,112 | )    
|Issuance of common stock and stock-based compensation |                            |        |      |            |         |  | 60    |          |  |  |       |      
|Purchase of common stock                              |                            |        |      |            |         |  |      |          |  |  |       |      
|Re-issuance of treasury stock                         |                            |        |      |            |         |  | (14   | )        |  |  |       |      
|                                                      |                            |        |       |            |         |  |       |          | 
|Balance at September 30, 2005                         |                            |        | 2,673 |            |         |  | 5,167 |          |  |  | 26,488 |      
|                                                      |                            |        |       |            |         |  |       |          | 
|Net income                                            |                            |        |      |            |         |  |      |          |  |  | 3,033  |      
|Change in currency translation adjustment             |                            |        |      |            |         |  |      |          |  |  |       |      
|Change in unrealized gains and losses                 |                            |        |      |            |         |  |      |          |  |  |       |      
|                                                      |                            |        |       |            |         |  |       |          | 
|                                                      | Total comprehensive income |        |       |           |         |  |       |         |  |  |        | 3,033 | 
|Dividends paid                                        |                            |        |      |            |         |  |      |          |  |  | (1,201 | )    
|Issuance of common stock and stock-based compensation |                            |        |      |            |         |  | 44    |          |  |  |       |      
|Purchase of common stock                              |                            |        |      |            |         |  |      |          |  |  |       |      
|Re-issuance of treasury stock                         |                            |        |      |            |         |  | (36   | )        |  |  |       |      
|                                                      |                            |        |       |            |         |  |       |          | 
|Balance at September 30, 2006                         |                            |        | 2,673 |            |         |  | 5,175 |          |  |  | 28,320 |      
|                                                      |                            |        |       |            |         |  |       |          | 



F-10



---



##### Table of Contents







| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       |  |  |      |   |  |  |        |  
| |  | --------------------------- | ------ | - | ---------- |  | ---- | ----------- |  | ------- | --------- | - |  | ----- | -------- | - | ------- |  | ------ | ----- |  |  | ---- | - |  |  | ------ | -
| |  | Accumulated other           |        |   |            |  |     
| |  | comprehensive income (loss) |        |   |            |  |     
| |  |                             |        |   |            |  |     
| |  | Cumulative                  |        |   | Available- |  |      |             |  | Minimum |           |   |  |       | Treasury |   |         | 
| |  | translation                 |        |   | for-sale   |  |      | Derivative  |  |         | pension   |   |  | AOCI  |          |   | shares  |  |        |      
| |  | adjustment                  |        |   | securities |  |      | instruments |  |         | liability |   |  | Total |          |   | at cost |  |        | Total | 
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 
| |  |                             | (827   | ) |            |  | 83   |             |  |         | 83        |   |  |       | (6,390   | ) |         |  | (7,051 | )     |  |  |     |   |  |  | 23,620 |  
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  |     |   |  |  | 3,405  |  
| |  |                             | (249   | ) |            |  |     |             |  |         |          |   |  |       |         |   |         |  | (249   | )     |  |  |     |   |  |  | (249   | )
| |  |                             |       |   |            |  | 77   |             |  |         | (28       | ) |  |       | 865      |   |         |  | 914    |       |  |  |     |   |  |  | 914    |  
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 
| |  |                             | (249   | ) |            |  | 77   |             |  |         | (28       | ) |  |       | 865      |   |         |  | 665    |       |  |  |     |   |  |  | 4,070  |  
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  |     |   |  |  | (978   | )
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  |     |   |  |  | 50     |  
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  | (106 | ) |  |  | (106   | )
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  | 106  |   |  |  | 104    |  
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 
| |  |                             | (1,076 | ) |            |  | 160  |             |  |         | 55        |   |  |       | (5,525   | ) |         |  | (6,386 | )     |  |  |     |   |  |  | 26,760 |  
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  |     |   |  |  | 2,248  |  
| |  |                             | 483    |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  | 483    |       |  |  |     |   |  |  | 483    |  
| |  |                             |       |   |            |  | (13  | )           |  |         | (144      | ) |  |       | (1,245   | ) |         |  | (1,402 | )     |  |  |     |   |  |  | (1,402 | )
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 
| |  |                             | 483    |   |            |  | (13  | )           |  |         | (144      | ) |  |       | (1,245   | ) |         |  | (919   | )     |  |  |     |   |  |  | 1,329  |  
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  |     |   |  |  | (1,112 | )
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  |     |   |  |  | 60     |  
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  | (219 | ) |  |  | (219   | )
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  | 218  |   |  |  | 204    |  
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 
| |  |                             | (593   | ) |            |  | 147  |             |  |         | (89       | ) |  |       | (6,770   | ) |         |  | (7,305 | )     |  |  | (1   | ) |  |  | 27,022 |  
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  |     |   |  |  | 3,033  |  
| |  |                             | (330   | ) |            |  |     |             |  |         |          |   |  |       |         |   |         |  | (330   | )     |  |  |     |   |  |  | (330   | )
| |  |                             |       |   |            |  | (218 | )           |  |         | 58        |   |  |       | 933      |   |         |  | 773    |       |  |  |     |   |  |  | 773    |  
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 
| |  |                             | (330   | ) |            |  | (218 | )           |  |         | 58        |   |  |       | 933      |   |         |  | 443    |       |  |  |     |   |  |  | 3,476  |  
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  |     |   |  |  | (1,201 | )
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  |     |   |  |  | 44     |  
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  | (421 | ) |  |  | (421   | )
| |  |                             |       |   |            |  |     |             |  |         |          |   |  |       |         |   |         |  |       |       |  |  | 422  |   |  |  | 386    |  
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 
| |  |                             | (923   | ) |            |  | (71  | )           |  |         | (31       | ) |  |       | (5,837   | ) |         |  | (6,862 | )     |  |  |     |   |  |  | 29,306 |  
| |  |                             |        |   |            |  |      |             |  |         |           |   |  |       |          |   |         |  |        |       | 

F-11



---



##### Table of Contents



SIEMENS


SEGMENT INFORMATION (continuing operations)


As of and for the fiscal years ended September 30, 2006,
2005 and 2004


(in millions of
)


|                                                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |        |        |       |  |        |        |       |  |        |        |       | 
|------------------------------------------------------ | -------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | ------ | ------ | -------------- |  | ------ | ------------------ | ------ |  | ------ | ------ | ------ | ---- | ------ | ------ | ------ |  | ------ | ------ | ------ |  | ------ | ------ | ------ | ---- | ------ | ------ | ----- |  | ------ | ------ | ----- |  | ------ | ------ | ----- | 
|                                                       |                                                          | New orders (unaudited)                                                                                               |        |        | External sales |  |        | Intersegment sales |       
|                                                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |       
|                                                       |                                                          | 2006                                                                                                                 |        |        | 2005           |  |        | 2004               |        |  | 2006   |        |        | 2005 |        |        | 2004   |  |        | 2006   |        |  | 2005   |        |        | 2004 |       
|                                                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |       
|Operations Groups                                      |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |        |        |       |  |        |        |       |  |        |       
|                                                       | Communications
    (Com)(5)                              |                                                                                                                      |        | 13,571 |                |  |        | 12,869             |        |  |        | 12,048 |        |      |        | 12,752 |        |  |        | 11,901 |        |  |        | 11,420 |        |      |        | 328    |       |  |        | 300    |       |  |        | 350    |      
|                                                       | Siemens Business Services (SBS)                          |                                                                                                                      |        | 5,014  |                |  |        | 6,531              |        |  |        | 6,293  |        |      |        | 3,667  |        |  |        | 3,964  |        |  |        | 3,598  |        |      |        | 1,490  |       |  |        | 1,409  |       |  |        | 1,118  |      
|                                                       | Automation and Drives
    (A&D)(6)                       |                                                                                                                      |        | 14,108 |                |  |        | 10,674             |        |  |        | 9,593  |        |      |        | 11,285 |        |  |        | 9,018  |        |  |        | 8,028  |        |      |        | 1,563  |       |  |        | 1,348  |       |  |        | 1,344  |      
|                                                       | Industrial Solutions and Services
    (I&S)(6)           |                                                                                                                      |        | 9,025  |                |  |        | 7,189              |        |  |        | 5,542  |        |      |        | 7,752  |        |  |        | 5,255  |        |  |        | 3,985  |        |      |        | 1,067  |       |  |        | 1,052  |       |  |        | 1,181  |      
|                                                       | Siemens Building Technologies (SBT)                      |                                                                                                                      |        | 5,235  |                |  |        | 4,518              |        |  |        | 4,358  |        |      |        | 4,670  |        |  |        | 4,301  |        |  |        | 4,174  |        |      |        | 126    |       |  |        | 114    |       |  |        | 73     |      
|                                                       | Power Generation (PG)                                    |                                                                                                                      |        | 12,532 |                |  |        | 10,964             |        |  |        | 9,243  |        |      |        | 10,068 |        |  |        | 8,042  |        |  |        | 7,505  |        |      |        | 18     |       |  |        | 19     |       |  |        | 22     |      
|                                                       | Power Transmission and Distribution (PTD)                |                                                                                                                      |        | 8,028  |                |  |        | 5,283              |        |  |        | 3,863  |        |      |        | 6,025  |        |  |        | 3,930  |        |  |        | 3,292  |        |      |        | 484    |       |  |        | 320    |       |  |        | 319    |      
|                                                       | Transportation Systems (TS)                              |                                                                                                                      |        | 6,173  |                |  |        | 4,599              |        |  |        | 4,321  |        |      |        | 4,434  |        |  |        | 4,146  |        |  |        | 4,284  |        |      |        | 68     |       |  |        | 44     |       |  |        | 26     |      
|                                                       | Siemens VDO Automotive (SV)                              |                                                                                                                      |        | 10,014 |                |  |        | 9,787              |        |  |        | 9,029  |        |      |        | 10,003 |        |  |        | 9,591  |        |  |        | 8,987  |        |      |        | 14     |       |  |        | 19     |       |  |        | 14     |      
|                                                       | Medical Solutions (Med)                                  |                                                                                                                      |        | 9,334  |                |  |        | 8,641              |        |  |        | 8,123  |        |      |        | 8,163  |        |  |        | 7,577  |        |  |        | 6,969  |        |      |        | 64     |       |  |        | 49     |       |  |        | 103    |      
|                                                       | Osram                                                    |                                                                                                                      |        | 4,563  |                |  |        | 4,300              |        |  |        | 4,240  |        |      |        | 4,487  |        |  |        | 4,222  |        |  |        | 4,143  |        |      |        | 76     |       |  |        | 78     |       |  |        | 97     |      
|                                                       | Other
    Operations(5)(6)(7)                            |                                                                                                                      |        | 4,964  |                |  |        | 4,325              |        |  |        | 4,198  |        |      |        | 3,129  |        |  |        | 2,692  |        |  |        | 2,888  |        |      |        | 1,699  |       |  |        | 1,528  |       |  |        | 1,343  |      
|                                                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |       
|                                                       |                                                          | Total Operations Groups                                                                                              |        |        | 102,561        |  |        |                    | 89,680 |  |        |        | 80,851 |      |        |        | 86,435 |  |        |        | 74,639 |  |        |        | 69,273 |      |        |        | 6,997 |  |        |        | 6,280 |  |        |        | 5,990 | 
|Reconciliation to financial statements                 |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |        |        |       |  |        |        |       |  |        |       
|                                                       | Corporate items, pensions and eliminations               |                                                                                                                      |        | (6,837 | )              |  |        | (6,421             | )      |  |        | (7,202 | )      |      |        | 87     |        |  |        | 77     |        |  |        | 208    |        |      |        | (6,676 | )     |  |        | (6,027 | )     |  |        | (5,844 | )    
|                                                       | Other interest expense                                   |                                                                                                                      |        |       |                |  |        |                   |        |  |        |       |        |      |        |       |        |  |        |       |        |  |        |       |        |      |        |       |       |  |        |       |       |  |        |       |      
|                                                       | Other assets related and miscellaneous reconciling items |                                                                                                                      |        |       |                |  |        |                   |        |  |        |       |        |      |        |       |        |  |        |       |        |  |        |       |        |      |        |       |       |  |        |       |       |  |        |       |      
|                                                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |       
|                                                       |                                                          | Total Operations (for columns Group profit/ Net capital
    employed, i.e. Income before income taxes/ Total assets) |        |        | 95,724         |  |        |                    | 83,259 |  |        |        | 73,649 |      |        |        | 86,522 |  |        |        | 74,716 |  |        |        | 69,481 |      |        |        | 321   |  |        |        | 253   |  |        |        | 146   | 
|                                                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |       
|                                                      
|Financing and Real Estate Groups                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |        |        |       |  |        |        |       |  |        |       
|                                                       | Siemens Financial Services (SFS)                         |                                                                                                                      |        | 645    |                |  |        | 542                |        |  |        | 562    |        |      |        | 548    |        |  |        | 464    |        |  |        | 453    |        |      |        | 97     |       |  |        | 78     |       |  |        | 109    |      
|                                                       | Siemens Real Estate (SRE)                                |                                                                                                                      |        | 1,705  |                |  |        | 1,621              |        |  |        | 1,578  |        |      |        | 255    |        |  |        | 265    |        |  |        | 303    |        |      |        | 1,450  |       |  |        | 1,356  |       |  |        | 1,275  |      
|                                                       | Eliminations                                             |                                                                                                                      |        | (10    | )              |  |        | (10                | )      |  |        |       |        |      |        |       |        |  |        |       |        |  |        |       |        |      |        | (10    | )     |  |        | (10    | )     |  |        | (13    | )    
|                                                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |       
|                                                       |                                                          | Total Financing and Real Estate                                                                                      |        |        | 2,340          |  |        |                    | 2,153  |  |        |        | 2,140  |      |        |        | 803    |  |        |        | 729    |  |        |        | 756    |      |        |        | 1,537 |  |        |        | 1,424 |  |        |        | 1,371 | 
|                                                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |       
|Eliminations, reclassifications and Corporate Treasury |                                                          |                                                                                                                      | (1,805 | )      |                |  | (1,621 | )                  |        |  |       |        |        |      |       |        |        |  |       |        |        |  |       |        |        |      | (1,858 | )      |       |  | (1,677 | )      |       |  | (1,517 | )     
|                                                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |       
|Siemens                                                |                                                          |                                                                                                                      | 96,259 |        |                |  | 83,791 |                    |        |  | 75,789 |        |        |      | 87,325 |        |        |  | 75,445 |        |        |  | 70,237 |        |        |      |       |        |       |  |       |        |       |  |       |       
|                                                       |                                                          |                                                                                                                      |        |        |                |  |        |                    |        |  |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |      |       






|    |                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Group profit of the OperationsGroups is earnings before
    financing interest, certain pension costs and income taxes.                                                                                                                                                                                                                                      
|   
|(2) | Net capital employed of the OperationsGroups represents
    total assets less tax assets, certain accruals and non-interest
    bearing liabilities other than tax liabilities.                                                                                                                                                                              
|   
|(3) | Intangible assets, property, plant and equipment, acquisitions,
    and investments.                                                                                                                                                                                                                                                                         
|   
|(4) | Includes amortization and impairments of intangible assets,
    depreciation of property, plant and equipment, and write-downs
    of investments.                                                                                                                                                                                                           
|   
|(5) | Coms division Siemens Home and Office Communication
    Devices was reclassified to Other Operationsin fiscal
    2006. Prior year information was reclassified for comparability
    purposes.                                                                                                                                                             
|   
|(6) | The divisions of the dissolved L&A Group were allocated as
    follows for all periods presented: Electronic Assembly Systems
    were reclassified to A&D, Postal Automation and Airport
    Logistics were reclassified to I&S and Distribution and
    Industry Logistics as well as Material Handling Products were
    reclassified to Other Operations.
|   
|(7) | Other Operationsprimarily refer to certain
    centrally-held equity investments and other operating activities
    not associated with a Group.                                                                                                                                                                                                             
|   
|(8) | Includes (for Eliminationswithin Financing and Real
    Estate consists of) cash paid for income taxes according to
    the allocation of income taxes to Operations, Financing and
    Real Estate, and Eliminations, reclassifications and
    Corporate Treasuryin the Consolidated Statements of Income.                                                 

F-12



---



##### Table of Contents



|            |        |   |                 |  |        |                         |  |  |                          |   |                  |                     |        |   |                |  |        |         |  |  |         |   |  |         |        |               |      |  |        |      |  |  |        |   |  |      |       |       |      |  |        |       |  |  |        |       |  |      |       |  |      |  |       |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |       | 
|----------- | ------ | - | --------------- |  | ------ | ----------------------- |  |  | ------------------------ | - | ---------------- | ------------------- | ------ | - | -------------- |  | ------ | ------- |  |  | ------- | - |  | ------- | ------ | ------------- | ---- |  | ------ | ---- |  |  | ------ | - |  | ---- | ----- | ----- | ---- |  | ------ | ----- |  |  | ------ | ----- |  | ---- | ----- |  | ---- |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|            |        |   |                 |  |        |                         |  |  |                          |   |                  |                     |        |   |                |  |        |         |  |  |         |   |  |         |        | Amortization, |     
|            |        |   |                 |  |        | Net cash from operating |  |  |                          |   | depreciation and |                    
|Total sales |        |   | Group profit(1) |  |        | Net capital employed(2) |  |  | and investing activities |   |                  | Capital spending(3) |        |   | impairments(4) | 
|            |        |   |                 |  |        |                         |  |  |                          |   |                  |                     |        |   |                | 
|2006        |        |   | 2005            |  |        | 2004                    |  |  | 2006                     |   |                  | 2005                |        |   | 2004           |  |        | 9/30/06 |  |  | 9/30/05 |   |  | 9/30/04 |        |               | 2006 |  |        | 2005 |  |  | 2004   |   |  | 2006 |       |       | 2005 |  |        | 2004  |  |  | 2006   |       |  | 2005 |       |  | 2004 | 
|            |        |   |                 |  |        |                         |  |  |                          |   |                  |                     |        |   |                |  |        |         |  |  |         |   |  |         |        |               |      |  |        |      |  |  |        |   |  |      |       |       |      |  |        |       |  |  |        |       |  |      |       |  |      | 
|            | 13,080 |   |                 |  | 12,201 |                         |  |  | 11,770                   |   |                  |                     | 283    |   |                |  | 421    |         |  |  | 642     |   |  |         | 1,357  |               |      |  | 1,799  |      |  |  | 2,053  |   |  |      | 355   |       |      |  | 621    |       |  |  | 278    |       |  |      | 388   |  |      |  | 479   |  |  |  | 410   |  |  |  | 280   |  |  |  | 386   |  |  |  | 432   | 
|            | 5,157  |   |                 |  | 5,373  |                         |  |  | 4,716                    |   |                  |                     | (549   | ) |                |  | (690   | )       |  |  | 40      |   |  |         | 458    |               |      |  | 296    |      |  |  | 632    |   |  |      | (681  | )     |      |  | (258   | )     |  |  | (263   | )     |  |      | 284   |  |      |  | 340   |  |  |  | 428   |  |  |  | 290   |  |  |  | 516   |  |  |  | 213   | 
|            | 12,848 |   |                 |  | 10,366 |                         |  |  | 9,372                    |   |                  |                     | 1,572  |   |                |  | 1,253  |         |  |  | 1,151   |   |  |         | 4,249  |               |      |  | 3,691  |      |  |  | 2,093  |   |  |      | 1,041 |       |      |  | 404    |       |  |  | 1,065  |       |  |      | 651   |  |      |  | 1,199 |  |  |  | 322   |  |  |  | 279   |  |  |  | 255   |  |  |  | 218   | 
|            | 8,819  |   |                 |  | 6,307  |                         |  |  | 5,166                    |   |                  |                     | 289    |   |                |  | 167    |         |  |  | 62      |   |  |         | 1,640  |               |      |  | 1,775  |      |  |  | 1,361  |   |  |      | 177   |       |      |  | 474    |       |  |  | (842   | )     |  |      | 252   |  |      |  | 70    |  |  |  | 905   |  |  |  | 132   |  |  |  | 107   |  |  |  | 60    | 
|            | 4,796  |   |                 |  | 4,415  |                         |  |  | 4,247                    |   |                  |                     | 234    |   |                |  | 181    |         |  |  | 108     |   |  |         | 1,834  |               |      |  | 1,453  |      |  |  | 1,359  |   |  |      | (113  | )     |      |  | 122    |       |  |  | 195    |       |  |      | 232   |  |      |  | 149   |  |  |  | 75    |  |  |  | 103   |  |  |  | 104   |  |  |  | 127   | 
|            | 10,086 |   |                 |  | 8,061  |                         |  |  | 7,527                    |   |                  |                     | 782    |   |                |  | 951    |         |  |  | 961     |   |  |         | 2,942  |               |      |  | 2,625  |      |  |  | 1,997  |   |  |      | 336   |       |      |  | 239    |       |  |  | 687    |       |  |      | 603   |  |      |  | 556   |  |  |  | 214   |  |  |  | 215   |  |  |  | 196   |  |  |  | 181   | 
|            | 6,509  |   |                 |  | 4,250  |                         |  |  | 3,611                    |   |                  |                     | 390    |   |                |  | 212    |         |  |  | 238     |   |  |         | 2,142  |               |      |  | 1,869  |      |  |  | 1,162  |   |  |      | 142   |       |      |  | 19     |       |  |  | 102    |       |  |      | 189   |  |      |  | 161   |  |  |  | 228   |  |  |  | 118   |  |  |  | 84    |  |  |  | 73    | 
|            | 4,502  |   |                 |  | 4,190  |                         |  |  | 4,310                    |   |                  |                     | 80     |   |                |  | 45     |         |  |  | (434    | ) |  |         | 649    |               |      |  | 584    |      |  |  | 49     |   |  |      | 13    |       |      |  | (551   | )     |  |  | (495   | )     |  |      | 150   |  |      |  | 185   |  |  |  | 83    |  |  |  | 56    |  |  |  | 57    |  |  |  | 65    | 
|            | 10,017 |   |                 |  | 9,610  |                         |  |  | 9,001                    |   |                  |                     | 669    |   |                |  | 630    |         |  |  | 562     |   |  |         | 4,190  |               |      |  | 3,823  |      |  |  | 3,542  |   |  |      | 439   |       |      |  | 341    |       |  |  | 1,030  |       |  |      | 487   |  |      |  | 623   |  |  |  | 515   |  |  |  | 415   |  |  |  | 427   |  |  |  | 394   | 
|            | 8,227  |   |                 |  | 7,626  |                         |  |  | 7,072                    |   |                  |                     | 1,061  |   |                |  | 976    |         |  |  | 1,046   |   |  |         | 5,336  |               |      |  | 3,685  |      |  |  | 3,173  |   |  |      | (392  | )     |      |  | 396    |       |  |  | 762    |       |  |      | 1,653 |  |      |  | 1,025 |  |  |  | 449   |  |  |  | 242   |  |  |  | 229   |  |  |  | 202   | 
|            | 4,563  |   |                 |  | 4,300  |                         |  |  | 4,240                    |   |                  |                     | 481    |   |                |  | 465    |         |  |  | 445     |   |  |         | 2,056  |               |      |  | 2,065  |      |  |  | 2,011  |   |  |      | 414   |       |      |  | 464    |       |  |  | 453    |       |  |      | 353   |  |      |  | 307   |  |  |  | 256   |  |  |  | 257   |  |  |  | 261   |  |  |  | 264   | 
|            | 4,828  |   |                 |  | 4,220  |                         |  |  | 4,231                    |   |                  |                     | (36    | ) |                |  | 76     |         |  |  | 315     |   |  |         | 1,943  |               |      |  | 1,692  |      |  |  | 1,790  |   |  |      | (133  | )     |      |  | 268    |       |  |  | 386    |       |  |      | 205   |  |      |  | 172   |  |  |  | 120   |  |  |  | 134   |  |  |  | 241   |  |  |  | 141   | 
|            |        |   |                 |  |        |                         |  |  |                          |   |                  |                     |        |   |                |  |        |         |  |  |         |   |  |         |        |               |      |  |        |      |  |  |        |   |  |      |       |       |      |  |        |       |  |  |        |       |  |      |       |  |      | 
|            | 93,432 |   |                 |  | 80,919 |                         |  |  | 75,263                   |   |                  |                     | 5,256  |   |                |  | 4,687  |         |  |  | 5,136   |   |  |         | 28,796 |               |      |  | 25,357 |      |  |  | 21,222 |   |  |      | 1,598 |       |      |  | 2,539  |       |  |  | 3,358  |       |  |      | 5,447 |  |      |  | 5,266 |  |  |  | 4,005 |  |  |  | 2,521 |  |  |  | 2,863 |  |  |  | 2,370 | 
|            | (6,589 | ) |                 |  | (5,950 | )                       |  |  | (5,636                   | ) |                  |                     | (1,248 | ) |                |  | (1,072 | )       |  |  | (1,206  | ) |  |         | (3,983 | )             |      |  | (3,690 | )    |  |  | (3,116 | ) |  |      | (975  | ) (8) |      |  | (3,761 | ) (8) |  |  | (1,117 | ) (8) |  |      | 171   |  |      |  | 470   |  |  |  | 28    |  |  |  | 44    |  |  |  | 29    |  |  |  | 487   | 
|            |       |   |                 |  |       |                         |  |  |                         |   |                  |                     | (355   | ) |                |  | (191   | )       |  |  | (141    | ) |  |         |       |               |      |  |       |      |  |  |       |   |  |      |      |       |      |  |       |       |  |  |       |       |  |      |      |  |      |  |      |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |      | 
|            |       |   |                 |  |       |                         |  |  |                         |   |                  |                     |       |   |                |  |       |         |  |  |        |   |  |         | 58,734 |               |      |  | 59,699 |      |  |  | 49,733 |   |  |      |      |       |      |  |       |       |  |  |       |       |  |      |      |  |      |  |      |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |      | 
|            |        |   |                 |  |        |                         |  |  |                          |   |                  |                     |        |   |                |  |        |         |  |  |         |   |  |         |        |               |      |  |        |      |  |  |        |   |  |      |       |       |      |  |        |       |  |  |        |       |  |      |       |  |      | 
|            | 86,843 |   |                 |  | 74,969 |                         |  |  | 69,627                   |   |                  |                     | 3,653  |   |                |  | 3,424  |         |  |  | 3,789   |   |  |         | 83,547 |               |      |  | 81,366 |      |  |  | 67,839 |   |  |      | 623   |       |      |  | (1,222 | )     |  |  | 2,241  |       |  |      | 5,618 |  |      |  | 5,736 |  |  |  | 4,033 |  |  |  | 2,565 |  |  |  | 2,892 |  |  |  | 2,857 | 
|            |        |   |                 |  |        |                         |  |  |                          |   |                  |                     |        |   |                |  |        |         |  |  |         |   |  |         |        |               |      |  |        |      |  |  |        |   |  |      |       |       |      |  |        |       |  |  |        |       |  |      |       |  |      | 

| |        |   |  |  |        |               |  |  |              |   |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |   |  |  |        |   |  |  |        |   |  |  |      |       |  |  |        |       |  |  |       |       |  |  |       |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |       | 
| | ------ | - |  |  | ------ | ------------- |  |  | ------------ | - |  |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ------ | - |  |  | ------ | - |  |  | ------ | - |  |  | ---- | ----- |  |  | ------ | ----- |  |  | ----- | ----- |  |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
| |        |   |  |  |        | Income before |  |  |              |   |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |   | 
| |        |   |  |  |        | income taxes  |  |  | Total assets |   |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |   |  | 
| |        |   |  |  |        |               |  |  |              |   |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |   |  | 
| | 645    |   |  |  | 542    |               |  |  | 562          |   |  |  | 307   |  |  |  | 319   |  |  |  | 250   |  |  |  | 10,522 |   |  |  | 10,148 |   |  |  | 9,055  |   |  |  | (219 | )     |  |  | (344   | )     |  |  | (159  | )     |  |  | 521   |  |  |  | 563   |  |  |  | 311   |  |  |  | 250   |  |  |  | 221   |  |  |  | 194   | 
| | 1,705  |   |  |  | 1,621  |               |  |  | 1,578        |   |  |  | 122   |  |  |  | 144   |  |  |  | 106   |  |  |  | 3,234  |   |  |  | 3,496  |   |  |  | 3,455  |   |  |  | 187  |       |  |  | 202    |       |  |  | 454   |       |  |  | 270   |  |  |  | 212   |  |  |  | 137   |  |  |  | 192   |  |  |  | 203   |  |  |  | 197   | 
| | (10    | ) |  |  | (10    | )             |  |  | (13          | ) |  |  |      |  |  |  |      |  |  |  |      |  |  |  | (461   | ) |  |  | (340   | ) |  |  | (576   | ) |  |  | (140 | ) (8) |  |  | (117   | ) (8) |  |  | (82   | ) (8) |  |  |      |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |      | 
| |        |   |  |  |        |               |  |  |              |   |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |   |  |  |        |   |  |  |        |   |  |  |      |       |  |  |        |       |  |  |       |       |  |  |       |  |  | 
| | 2,340  |   |  |  | 2,153  |               |  |  | 2,127        |   |  |  | 429   |  |  |  | 463   |  |  |  | 356   |  |  |  | 13,295 |   |  |  | 13,304 |   |  |  | 11,934 |   |  |  | (172 | )     |  |  | (259   | )     |  |  | 213   |       |  |  | 791   |  |  |  | 775   |  |  |  | 448   |  |  |  | 442   |  |  |  | 424   |  |  |  | 391   | 
| |        |   |  |  |        |               |  |  |              |   |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |   |  |  |        |   |  |  |        |   |  |  |      |       |  |  |        |       |  |  |       |       |  |  |       |  |  | 
| | (1,858 | ) |  |  | (1,677 | )             |  |  | (1,517       | ) |  |  | 289   |  |  |  | 298   |  |  |  | 224   |  |  |  | (5,869 | ) |  |  | (8,553 | ) |  |  | (343   | ) |  |  | 288  | (8)   |  |  | (8     | ) (8) |  |  | 561   | (8)   |  |  |      |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |      | 
| |        |   |  |  |        |               |  |  |              |   |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |   |  |  |        |   |  |  |        |   |  |  |      |       |  |  |        |       |  |  |       |       |  |  |       |  |  | 
| | 87,325 |   |  |  | 75,445 |               |  |  | 70,237       |   |  |  | 4,371 |  |  |  | 4,185 |  |  |  | 4,369 |  |  |  | 90,973 |   |  |  | 86,117 |   |  |  | 79,430 |   |  |  | 739  |       |  |  | (1,489 | )     |  |  | 3,015 |       |  |  | 6,409 |  |  |  | 6,511 |  |  |  | 4,481 |  |  |  | 3,007 |  |  |  | 3,316 |  |  |  | 3,248 | 
| |        |   |  |  |        |               |  |  |              |   |  |  |       |  |  |  |       |  |  |  |       |  |  |  |        |   |  |  |        |   |  |  |        |   |  |  |      |       |  |  |        |       |  |  |       |       |  |  |       |  |  | 

F-13



---



##### Table of Contents



SIEMENS





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(in millions of
, except where
otherwise stated and per share amounts)




|   |                      
|-- | ---------------------
|1. | Basis of presentation






Financial statement presentation






| |   |                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | SiemensRepresents the Consolidated Financial
    Statements of the Company.                                                                                                                                                                                                                                      
|
| |  | OperationsDefined as Siemens eleven operating
    Groups and certain operating activities not associated with
    these Groups, as well as centrally managed items including
    corporate headquarters, but excluding the activities of the
    Financing and Real EstateGroups and the Corporate
    Treasury.
|
| |  | Financing and Real EstateSiemens Financing
    and Real Estate Groups are responsible for the
    Companys international leasing, finance, credit and real
    estate management activities.                                                                                                                   
|
| |  | Eliminations, reclassifications and Corporate
    TreasuryCaptures separately the consolidation of
    transactions among Operationsand Financing and Real
    Estate, as well as certain reclassifications. This component
    also includes the Companys Corporate Treasury activities.                       

Operations, Financing and
Real Estate Corporate Treasury Siemens Financing and Real Estate Operations Eliminations, reclassifications and Corporate Treasury,
Operations Financing and Real Estate Siemens Operations Financing and Real Estate Eliminations, reclassifications and Corporate Treasury


Siemens




|   |                                           
|-- | ------------------------------------------
|2. | Summary of significant accounting policies



F-14



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Shareholders equity


Consolidated Statements of Income Income from
continuing operations Net income  Consolidated Statements of Income   Shareholders equity  Consolidated Financial Statements Shareholders equity Shareholders equity    




|                                                                                                     |  |                       |     |                              |                               |  |            |             |  |            |             |   |  |  |     |  
|---------------------------------------------------------------------------------------------------- |  | --------------------- | --- | ---------------------------- | ----------------------------- |  | ---------- | ----------- |  | ---------- | ----------- | - |  |  | --- | -
|                                                                                                     |  |                       |     | Effect of 2005 and 2004      |                              
|                                                                                                     |  |                       |     | misstatements on Income from |                              
|                                                                                                     |  | Effect of             |     |                              | continuing operations and Net | 
|                                                                                                     |  | accumulated           |     |                              | income in fiscal 2006         | 
|                                                                                                     |  | misstatements on      |     |                              |                               | 
|                                                                                                     |  | Shareholders equity  |     |                              |                               |  | Related to |             |  | Related to |            
|                                                                                                     |  | as of October 1, 2003 |     |                              | Total                         |  |            | fiscal 2005 |  |            | fiscal 2004 |  
|                                                                                                     |  |                       |     |                              |                               |  |            |             |  |            |             |  
|Income tax adjustment resulting from internal investigation of
    certain transactions and payments |  |                       | (95 | )                            |                               |  | (42        | )           |  |            | (17         | ) |  |  | (25 | )

Research and development expenses Cost of sales Cost of sales Income from continuing operations before income taxes Net income


|                                  |  |            |         |   |            |  |      |          |  |            |          |   |  |            |         |   |          |  |      |   |  |  |         |  
|--------------------------------- |  | ---------- | ------- | - | ---------- |  | ---- | -------- |  | ---------- | -------- | - |  | ---------- | ------- | - | -------- |  | ---- | - |  |  | ------- | -
|                                  |  | 2005       |         |   | 2004       | 
|                                  |  |            |         |   |            | 
|                                  |  | As         |         |   |            |  | As   |          |  |           
|                                  |  | previously |         |   |            |  | As   |          |  | previously |          |   |  |            | As      |  
|                                  |  | reported   |         |   | Adjustment |  |      | adjusted |  |            | reported |   |  | Adjustment |         |   | adjusted | 
|                                  |  |            |         |   |            |  |      |          |  |            |          |   |  |            |         |   |          | 
|Cost of sales                     |  |            | (53,502 | ) |            |  | (644 | )        |  |            | (54,146  | ) |  |            | (49,592 | ) |          |  | (517 | ) |  |  | (50,109 | )
|Research and development expenses |  |            | (5,155  | ) |            |  | 644  |          |  |            | (4,511   | ) |  |            | (4,650  | ) |          |  | 517  |   |  |  | (4,133  | )




Basis of consolidation


F-15



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




Business Combinations


Foreign currency translation




|              |  |          |     |                            |      |  |                            |      |  |  |       |  |  |      |       |  |      |  |       |  |  |  |       | 
|------------- |  | -------- | --- | -------------------------- | ---- |  | -------------------------- | ---- |  |  | ----- |  |  | ---- | ----- |  | ---- |  | ----- |  |  |  | ----- | 
|              |  |          |     | Year-end exchange rate     |      |  | Annual average rate        |     
|              |  |          |     | 1  quoted into currencies |      |  | 1  quoted into currencies |     
|              |  |          |     | specified below            |      |  | specified below            |     
|              |  |          |     | September 30,              |      |  | Fiscal year                |     
|              |  |          |     |                            |      |  |                            |     
|Currency      |  | ISO Code |     |                            | 2006 |  |                            | 2005 |  |  | 2006  |  |  | 2005 |       |  | 2004 | 
|              |  |          |     |                            |      |  |                            |      |  |  |       |  |  |      |       |  |      | 
|U.S. Dollar   |  |          | USD |                            |      |  | 1.266                      |      |  |  | 1.204 |  |  |      | 1.230 |  |      |  | 1.273 |  |  |  | 1.215 | 
|British pound |  |          | GBP |                            |      |  | 0.678                      |      |  |  | 0.682 |  |  |      | 0.685 |  |      |  | 0.688 |  |  |  | 0.680 | 

Revenue recognition




F-16



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




Product-related expenses and contract loss
provisions


Earnings per share


Cash and cash equivalents


Marketable securities and investments Accumulated other comprehensive income AOCI)




Inventories


Goodwill and Other intangible assets


F-17



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Impairment of
long-lived assets


Property, plant and equipment


|                                |  |  |                        | 
|------------------------------- |  |  | ---------------------- | 
|Factory and office buildings    |  |  | 20 to 50 years         | 
|Other buildings                 |  |  | 5 to 10 years          | 
|Technical machinery & equipment |  |  | 5 to 10 years          | 
|Furniture & office equipment    |  |  | generally 5 years      | 
|Equipment leased to others      |  |  | generally 3 to 5 years | 

Impairment of long-lived assets


Discontinued operations


Derivative instruments AOCI,




F-18



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)






AOCI,


Derivative instruments and hedging
activities,


Income taxes Accounting for Income Taxes


Asset retirement obligations


Use of estimates


Accounting changesStandards implemented Share-Based Payment Accounting for Stock-Based Compensation, Accounting for Stock
Issued to Employees,


F-19



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                                                                                                    |             |                          |       |      |      |  |       |      |  |  |       |      | 
|------------------------------------------------------------------------------------------------------------------- | ----------- | ------------------------ | ----- | ---- | ---- |  | ----- | ---- |  |  | ----- | ---- | 
|                                                                                                                    |             | Year ended September 30, |      
|                                                                                                                    |             |                          |      
|                                                                                                                    |             | 2006                     |       |      | 2005 |  |       | 2004 | 
|                                                                                                                    |             |                          |       |      |      |  |       |      | 
|Net income                                                                                                          |             |                          |       |      |      |  |       |      |  |  |       |     
|As reported                                                                                                         |             |                          | 3,033 |      |      |  | 2,248 |      |  |  | 3,405 |     
|Plus: Stock-based compensation expense included in reported
    net income, net of income taxes                     |             |                          | 56    |      |      |  | 60    |      |  |  | 63    |     
|Less: Stock-based compensation expense determined under
    fair value based accounting method, net of income taxes |             |                          | (51   | )    |      |  | (59   | )    |  |  | (115  | )   
|                                                                                                                    |             |                          |       |      |      |  |       |      | 
|Pro forma                                                                                                           |             |                          | 3,038 |      |      |  | 2,249 |      |  |  | 3,353 |     
|                                                                                                                    |             |                          |       |      |      |  |       |      | 
|Basic earnings per share                                                                                            |             |                          |       |      |      |  |       |      |  |  |       |     
|                                                                                                                    | As reported |                          |       | 3.40 |      |  |       | 2.52 |  |  |       | 3.82 | 
|                                                                                                                    | Pro forma   |                          |       | 3.41 |      |  |       | 2.52 |  |  |       | 3.76 | 
|Diluted earnings per share                                                                                          |             |                          |       |      |      |  |       |      |  |  |       |     
|                                                                                                                    | As reported |                          |       | 3.26 |      |  |       | 2.42 |  |  |       | 3.66 | 
|                                                                                                                    | Pro forma   |                          |       | 3.26 |      |  |       | 2.42 |  |  |       | 3.60 | 



Accounting
Changes and Error Correctionsa replacement of APB
No. 20 and FASB Statement No. 3


Accounting changesRecent accounting pronouncements to
be implemented Accounting for Early Retirement or Postemployment
Programs with Specific Features (such as Terms Specified in
Altersteilzeit Early Retirement Arrangements).


Accounting for Uncertainty in Income Taxes, an Interpretation
of FAS 109, Accounting for Income Taxes,


F-20



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




Fair Value
Measurements


Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans, Employers Accounting for Pensions, Employers Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination
Benefits, Employers Accounting for
Postretirement Benefits Other Than Pensions Employers Disclosures
about Pensions and Other Postretirement Benefitsan
amendment of FASB Statements No. 87, 88, and 106 




|   |                                                       
|-- | ------------------------------------------------------
|3. | Acquisitions, dispositions and discontinued operations



|   |             
|-- | ------------
|a) | Acquisitions








| |     |                            
| | --- | ---------------------------
| | aa) | Acquisitions in fiscal 2006

   


F-21



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)







| |     |                            
| | --- | ---------------------------
| | ab) | Acquisitions in fiscal 2005

      


      


     







| |     |                            
| | --- | ---------------------------
| | ac) | Acquisitions in fiscal 2004



F-22



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


       









|   |                                                                      
|-- | ---------------------------------------------------------------------
|b) | Dispositions (including assets and liabilities held for
    disposal)



| |     |                                                                                     
| | --- | ------------------------------------------------------------------------------------
| | ba) | Dispositions in fiscal 2006 (including assets and liabilities
    held for disposal)





F-23



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                      |                               |               |       |       | 
|------------------------------------- | ----------------------------- | ------------- | ----- | ----- | 
|                                      |                               | September 30, |      
|                                      |                               | 2006          |      
|                                      |                               |               |      
|Accounts receivable, net              |                               |               | 2,391 |      
|Inventories, net                      |                               |               | 1,803 |      
|Goodwill                              |                               |               | 216   |      
|Property, plant and equipment, net    |                               |               | 411   |      
|Other assets                          |                               |               | 849   |      
|                                      |                               |               |      
|                                      | Assets held for disposal      |               |       | 5,670 | 
|                                      |                               |               |      
|Accounts payable                      |                               |               | 1,788 |      
|Accrued liabilities                   |                               |               | 896   |      
|Pension plans and similar commitments |                               |               | 198   |      
|Other accruals and provisions         |                               |               | 233   |      
|Payroll and social security taxes     |                               |               | 318   |      
|Other liabilities                     |                               |               | 796   |      
|                                      |                               |               |      
|                                      | Liabilities held for disposal |               |       | 4,229 | 
|                                      |                               |               |      





|                                      |                               |               |     |       | 
|------------------------------------- | ----------------------------- | ------------- | --- | ----- | 
|                                      |                               | September 30, |    
|                                      |                               | 2006          |    
|                                      |                               |               |    
|Accounts receivable, net              |                               |               | 315 |      
|Inventories, net                      |                               |               | 332 |      
|Goodwill                              |                               |               | 152 |      
|Property, plant and equipment, net    |                               |               | 230 |      
|Other assets                          |                               |               | 490 |      
|                                      |                               |               |    
|                                      | Assets held for disposal      |               |     | 1,519 | 
|                                      |                               |               |    
|Accounts payable                      |                               |               | 290 |      
|Accrued liabilities                   |                               |               | 196 |      
|Pension plans and similar commitments |                               |               | 185 |      
|Other accruals and provisions         |                               |               | 130 |      
|Payroll and social security taxes     |                               |               | 132 |      
|Other liabilities                     |                               |               | 383 |      
|                                      |                               |               |    
|                                      | Liabilities held for disposal |               |     | 1,316 | 
|                                      |                               |               |    



F-24



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


 Other operating income (expense), net.




| |     |                            
| | --- | ---------------------------
| | bb) | Dispositions in fiscal 2005

Discontinued Operations




| |     |                            
| | --- | ---------------------------
| | bc) | Dispositions in fiscal 2004

 Other operating income (expense), net  Income (loss) from investments in other companies,
net




|   |                        
|-- | -----------------------
|c) | Discontinued Operations

   






|                                                           |                               |               |     |     | 
|---------------------------------------------------------- | ----------------------------- | ------------- | --- | --- | 
|                                                           |                               | September 30, |    
|                                                           |                               | 2005          |    
|                                                           |                               |               |    
|Inventories, net                                           |                               |               | 104 |    
|Accounts receivable, net                                   |                               |               | 89  |    
|Other (thereof Property, plant and equipment, net
    43) |                               |               | 52  |    
|                                                           |                               |               |    
|                                                           | Assets held for disposal      |               |     | 245 | 
|                                                           |                               |               |    
|Accounts payable                                           |                               |               | 228 |    
|Other liabilities                                          |                               |               | 61  |    
|                                                           |                               |               |    
|                                                           | Liabilities held for disposal |               |     | 289 | 
|                                                           |                               |               |    



F-25



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Income (loss) from discontinued operations, net of income
taxes.


     




|   |                                      
|-- | -------------------------------------
|4. | Other operating income (expense), net

|                                                         |  |                          |     |   |      |  |      |      |  |  |      |  
|-------------------------------------------------------- |  | ------------------------ | --- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                         |  | Year ended September 30, |    
|                                                         |  |                          |    
|                                                         |  | 2006                     |     |   | 2005 |  |      | 2004 | 
|                                                         |  |                          |     |   |      |  |      |      | 
|Impairment of goodwill                                   |  |                          |    |   |      |  | (262 | )    |  |  | (433 | )
|Gains on sales of real estate, net                       |  |                          | 136 |   |      |  | 177  |      |  |  | 64   |  
|Gains (losses) on sales and disposals of businesses, net |  |                          | (59 | ) |      |  | 49   |      |  |  | 182  |  
|Other, net                                               |  |                          | 128 |   |      |  | 27   |      |  |  | 15   |  
|                                                         |  |                          |     |   |      |  |      |      | 
|                                                         |  |                          | 205 |   |      |  | (9   | )    |  |  | (172 | )
|                                                         |  |                          |     |   |      |  |      |      | 

Impairment of goodwill  


Gains (losses) on sales and disposals of businesses, net  Gains (losses) on sales and disposals of businesses, net  


Other, net 




|   |                                                           
|-- | ----------------------------------------------------------
|5. | Income (loss) from investments in other companies,
    net

|                                                      |  |                          |     |   |      |  |     |      |  |  |       |  
|----------------------------------------------------- |  | ------------------------ | --- | - | ---- |  | --- | ---- |  |  | ----- | -
|                                                      |  | Year ended September 30, |    
|                                                      |  |                          |    
|                                                      |  | 2006                     |     |   | 2005 |  |     | 2004 | 
|                                                      |  |                          |     |   |      |  |     |      | 
|Share in earnings (losses) from equity investees, net |  |                          | 449 |   |      |  | 499 |      |  |  | 460   |  
|Write-downs on investments                            |  |                          | (85 | ) |      |  | (85 | )    |  |  | (84   | )
|Income from investments                               |  |                          | 78  |   |      |  | 95  |      |  |  | 35    |  
|Gains on sales of investments                         |  |                          | 198 |   |      |  | 58  |      |  |  | 617   |  
|Loss on sales of investments                          |  |                          | (10 | ) |      |  | (9  | )    |  |  | (5    | )
|Other                                                 |  |                          | 17  |   |      |  | 26  |      |  |  | 8     |  
|                                                      |  |                          |     |   |      |  |     |      | 
|                                                      |  |                          | 647 |   |      |  | 584 |      |  |  | 1,031 |  
|                                                      |  |                          |     |   |      |  |     |      | 

Gains on sales of investments,  Gains on sales of investments,  


F-26



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)






|   |                                                                
|-- | ---------------------------------------------------------------
|6. | Income from financial assets and marketable securities,
    net

|                                                     |  |                          |     |   |      |  |     |      |  |  |    | 
|---------------------------------------------------- |  | ------------------------ | --- | - | ---- |  | --- | ---- |  |  | -- | 
|                                                     |  | Year ended September 30, |    
|                                                     |  |                          |    
|                                                     |  | 2006                     |     |   | 2005 |  |     | 2004 | 
|                                                     |  |                          |     |   |      |  |     |      | 
|Gains on sales of available-for-sale securities, net |  |                          | 402 |   |      |  | 243 |      |  |  | 54 | 
|Other financial gains (losses), net                  |  |                          | (65 | ) |      |  | 54  |      |  |  | 15 | 
|                                                     |  |                          |     |   |      |  |     |      | 
|                                                     |  |                          | 337 |   |      |  | 297 |      |  |  | 69 | 
|                                                     |  |                          |     |   |      |  |     |      | 

   


  




|   |                     
|-- | --------------------
|7. | Interest income, net

|                                             |                                       |                          |     |      |      |  |     |      |   |  |     |      |  
|-------------------------------------------- | ------------------------------------- | ------------------------ | --- | ---- | ---- |  | --- | ---- | - |  | --- | ---- | -
|                                             |                                       | Year ended September 30, |    
|                                             |                                       |                          |    
|                                             |                                       | 2006                     |     |      | 2005 |  |     | 2004 |  
|                                             |                                       |                          |     |      |      |  |     |      |  
|Other interest income, net                   |                                       |                          | 202 |      |      |  | 241 |      |   |  | 254 |     
|Interest income (expense) of Operations, net |                                       |                          | (39 | )    |      |  | (32 | )    |   |  | 20  |     
|                                             |                                       |                          |     |      |      |  |     |      |  
|Total interest income, net                   |                                       |                          | 163 |      |      |  | 209 |      |   |  | 274 |     
|                                             |                                       |                          |     |      |      |  |     |      |  
|                                             | Thereof: Interest and similar income  |                          |     | 768  |      |  |     | 720  |   |  |     | 723  |  
|                                             | Thereof: Interest and similar expense |                          |     | (605 | )    |  |     | (511 | ) |  |     | (449 | )

Interest income (expense) of Operations, net Other interest income, net




|   |             
|-- | ------------
|8. | Income taxes



|        |  |                          |       |   |      |  |       |      |  |  |       | 
|------- |  | ------------------------ | ----- | - | ---- |  | ----- | ---- |  |  | ----- | 
|        |  | Year ended September 30, |      
|        |  |                          |      
|        |  | 2006                     |       |   | 2005 |  |       | 2004 | 
|        |  |                          |       |   |      |  |       |      | 
|Germany |  |                          | (78   | ) |      |  | 521   |      |  |  | 1,234 | 
|Foreign |  |                          | 4,449 |   |      |  | 3,664 |      |  |  | 3,135 | 
|        |  |                          |       |   |      |  |       |      | 
|        |  |                          | 4,371 |   |      |  | 4,185 |      |  |  | 4,369 | 
|        |  |                          |       |   |      |  |       |      | 

F-27



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                        |                                    |                          |       |       |      |  |       |      |   |  |      |      |  
|----------------------- | ---------------------------------- | ------------------------ | ----- | ----- | ---- |  | ----- | ---- | - |  | ---- | ---- | -
|                        |                                    | Year ended September 30, |      
|                        |                                    |                          |      
|                        |                                    | 2006                     |       |       | 2005 |  |       | 2004 |  
|                        |                                    |                          |       |       |      |  |       |      |  
|Current:                |                                    |                          |       |       |      |  |       |      |   |  |      |     
|                        | German corporation and trade taxes |                          |       | 328   |      |  |       | 178  |   |  |      | 315  |  
|                        | Foreign income taxes               |                          |       | 1,090 |      |  |       | 931  |   |  |      | 603  |  
|                        |                                    |                          |       |       |      |  |       |      |  
|                        |                                    |                          | 1,418 |       |      |  | 1,109 |      |   |  | 918  |     
|                        |                                    |                          |       |       |      |  |       |      |  
|Deferred:               |                                    |                          |       |       |      |  |       |      |   |  |      |     
|                        | Germany                            |                          |       | (579  | )    |  |       | (11  | ) |  |      | (176 | )
|                        | Foreign                            |                          |       | 239   |      |  |       | (119 | ) |  |      | 25   |  
|                        |                                    |                          |       |       |      |  |       |      |  
|                        |                                    |                          | (340  | )     |      |  | (130  | )    |   |  | (151 | )   
|                        |                                    |                          |       |       |      |  |       |      |  
|Income tax expense, net |                                    |                          | 1,078 |       |      |  | 979   |      |   |  | 767  |     
|                        |                                    |                          |       |       |      |  |       |      |  



Income tax expense, net 




|                            |                                                     |                                                                               |       |  |      |   |       |      |      |   |       |  |      |  
|--------------------------- | --------------------------------------------------- | ----------------------------------------------------------------------------- | ----- |  | ---- | - | ----- | ---- | ---- | - | ----- |  | ---- | -
|                            |                                                     | Year ended September 30,                                                      |      
|                            |                                                     |                                                                               |      
|                            |                                                     | 2006                                                                          |       |  | 2005 |   |       | 2004 |     
|                            |                                                     |                                                                               |       |  |      |   |       |      |     
|Expected income tax expense |                                                     |                                                                               | 1,705 |  |      |   | 1,632 |      |      |   | 1,704 | 
|                            | Increase (decrease) in income taxes resulting from: |                                                                               |       |  |      |   |       |      |      |   |       |  |     
|                            |                                                     | Non-deductible losses and expenses                                            |       |  | 181  |   |       |      | 116  |   |       |  | 101  |  
|                            |                                                     | Goodwill and acquired in-process research and development*                    |       |  |     |   |       |      | (139 | ) |       |  | 139  |  
|                            |                                                     | Tax-free income                                                               |       |  | (94  | ) |       |      | (77  | ) |       |  | (110 | )
|                            |                                                     | Change in tax base of investments                                             |       |  |     |   |       |      |     |   |       |  | 78   |  
|                            |                                                     | Tax-free gains and non-deductible losses from sales of business
    interests |       |  | (237 | ) |       |      | (34  | ) |       |  | (476 | )
|                            |                                                     | Taxes for prior years                                                         |       |  | (51  | ) |       |      |     |   |       |  | 55   |  
|                            |                                                     | Movement in valuation allowance                                               |       |  | 70   |   |       |      | (8   | ) |       |  | (24  | )
|                            |                                                     | Effect of change in German tax rates                                          |       |  |     |   |       |      |     |   |       |  | 6    |  
|                            |                                                     | Foreign tax rate differential                                                 |       |  | (406 | ) |       |      | (448 | ) |       |  | (650 | )
|                            |                                                     | Tax effect of equity method investments                                       |       |  | (133 | ) |       |      | (121 | ) |       |  | (109 | )
|                            |                                                     | Other                                                                         |       |  | 43   |   |       |      | 58   |   |       |  | 53   |  
|                            |                                                     |                                                                               |       |  |      |   |       |      |     
|Actual income tax expense   |                                                     |                                                                               | 1,078 |  |      |   | 979   |      |      |   | 767   | 
|                            |                                                     |                                                                               |       |  |      |   |       |      |     






|  |                                                                                                                                                                                                                                          
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Fiscal 2005 includes
    (233) in tax
    benefits related to previously unrecognized tax deductions
    arising from a partial reorganization of certain businesses for
    which related goodwill was written off in previous periods.

F-28



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                             |                                      |                                                                        |       |       |       |   |       |       |       |  
|-------------------------------------------- | ------------------------------------ | ---------------------------------------------------------------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | -
|                                             |                                      | September 30,                                                          |      
|                                             |                                      |                                                                        |      
|                                             |                                      | 2006                                                                   |       |       | 2005  |  
|                                             |                                      |                                                                        |       |       |       |  
|Current assets:                              |                                      |                                                                        |       |       |       |   |       |      
|                                             | Inventories                          |                                                                        |       | 565   |       |   |       | 733   |      
|                                             | Receivables                          |                                                                        |       | 597   |       |   |       | 226   |      
|                                             | Accrued liabilities                  |                                                                        |       | 811   |       |   |       | 959   |      
|                                             | Liabilities                          |                                                                        |       | 776   |       |   |       | 468   |      
|                                             | Tax loss and credit carryforward     |                                                                        |       | 470   |       |   |       | 52    |      
|                                             | Other                                |                                                                        |       | 445   |       |   |       | 212   |      
|                                             |                                      |                                                                        |       |       |       |  
|                                             |                                      | Total current deferred tax assets, before valuation allowances         |       |       | 3,664 |   |       |       | 2,650 |  
|                                             |                                      |                                                                        |       |       |       |  
|                                             |                                      | Valuation allowances                                                   |       |       | (48   | ) |       |       | (6    | )
|                                             |                                      |                                                                        |       |       |       |  
|                                             |                                      | Current deferred tax assets                                            |       |       | 3,616 |   |       |       | 2,644 |  
|                                             |                                      |                                                                        |       |       |       |  
|Current liabilities:                         |                                      |                                                                        |       |       |       |   |       |      
|                                             | Inventories                          |                                                                        |       | 1,752 |       |   |       | 1,766 |      
|                                             | Receivables                          |                                                                        |       | 299   |       |   |       | 436   |      
|                                             | Accrued liabilities                  |                                                                        |       | 213   |       |   |       | 192   |      
|                                             | Liabilities                          |                                                                        |       | 268   |       |   |       | 51    |      
|                                             | Other                                |                                                                        |       | 132   |       |   |       | 653   |      
|                                             |                                      |                                                                        |       |       |       |  
|                                             |                                      | Current deferred tax liabilities                                       |       |       | 2,664 |   |       |       | 3,098 |  
|                                             |                                      |                                                                        |       |       |       |  
|Current deferred tax (liability) assets, net |                                      |                                                                        | 952   |       |       |   | (454  | )    
|                                             |                                      |                                                                        |       |       |       |  
|Non-current assets:                          |                                      |                                                                        |       |       |       |   |       |      
|                                             | Long-term investments                |                                                                        |       | 814   |       |   |       | 629   |      
|                                             | Intangibles                          |                                                                        |       | 120   |       |   |       | 232   |      
|                                             | Property, plant and equipment        |                                                                        |       | 375   |       |   |       | 285   |      
|                                             | Retirement plans                     |                                                                        |       | 3,694 |       |   |       | 4,565 |      
|                                             | Accrued liabilities                  |                                                                        |       | 757   |       |   |       | 564   |      
|                                             | Liabilities                          |                                                                        |       | 274   |       |   |       | 357   |      
|                                             | Tax loss and credit carryforward     |                                                                        |       | 1,971 |       |   |       | 2,273 |      
|                                             | Other                                |                                                                        |       | 608   |       |   |       | 415   |      
|                                             |                                      |                                                                        |       |       |       |  
|                                             |                                      | Total non-current deferred tax assets, before valuation
    allowances |       |       | 8,613 |   |       |       | 9,320 |  
|                                             |                                      | Valuation allowances                                                   |       |       | (471  | ) |       |       | (619  | )
|                                             |                                      |                                                                        |       |       |       |  
|                                             |                                      | Non-current deferred tax assets                                        |       |       | 8,142 |   |       |       | 8,701 |  
|                                             |                                      |                                                                        |       |       |       |  
|Non-current liabilities:                     |                                      |                                                                        |       |       |       |   |       |      
|                                             | Intangibles                          |                                                                        |       | 506   |       |   |       | 528   |      
|                                             | Property, plant and equipment        |                                                                        |       | 849   |       |   |       | 771   |      
|                                             | Accrued liabilities                  |                                                                        |       | 462   |       |   |       | 292   |      
|                                             | Liabilities                          |                                                                        |       | 55    |       |   |       | 46    |      
|                                             | Other                                |                                                                        |       | 1,737 |       |   |       | 1,258 |      
|                                             |                                      |                                                                        |       |       |       |  
|                                             |                                      | Non-current deferred tax liabilities                                   |       |       | 3,609 |   |       |       | 2,895 |  
|                                             |                                      |                                                                        |       |       |       |  
|                                             | Non-current deferred tax assets, net |                                                                        |       | 4,533 |       |   |       | 5,806 |      
|                                             |                                      |                                                                        |       |       |       |  
|Total deferred tax assets, net               |                                      |                                                                        | 5,485 |       |       |   | 5,352 |      
|                                             |                                      |                                                                        |       |       |       |  

F-29



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


   









AOCI


|                                                           |  |                          |       |   |      |  |      |      |  |  |       |  
|---------------------------------------------------------- |  | ------------------------ | ----- | - | ---- |  | ---- | ---- |  |  | ----- | -
|                                                           |  | Year ended September 30, |      
|                                                           |  |                          |      
|                                                           |  | 2006                     |       |   | 2005 |  |      | 2004 | 
|                                                           |  |                          |       |   |      |  |      |      | 
|Provision for income taxes                                 |  |                          | 1,078 |   |      |  | 979  |      |  |  | 767   |  
|Discontinued operations                                    |  |                          | (38   | ) |      |  | (498 | )    |  |  | (106  | )
|Shareholders equity for other comprehensive income (loss) |  |                          | 405   |   |      |  | (763 | )    |  |  | 588   |  
|                                                           |  |                          |       |   |      |  |      |      | 
|                                                           |  |                          | 1,445 |   |      |  | (282 | )    |  |  | 1,249 |  
|                                                           |  |                          |       |   |      |  |      |      | 

9. Marketable securities




|                  |  |                    |     |            |            |  |     |      |  |  |      |  |  |  |   | 
|----------------- |  | ------------------ | --- | ---------- | ---------- |  | --- | ---- |  |  | ---- |  |  |  | - | 
|                  |  | September 30, 2006 |    
|                  |  |                    |    
|                  |  |                    |     | Unrealized |           
|                  |  |                    |     |            |           
|                  |  | Cost               |     |            | Fair Value |  |     | Gain |  |  | Loss | 
|                  |  |                    |     |            |            |  |     |      |  |  |      | 
|Equity securities |  |                    | 64  |            |            |  | 81  |      |  |  | 17   |  |  |  |  | 
|Debt securities   |  |                    | 498 |            |            |  | 492 |      |  |  |     |  |  |  | 6 | 
|Fund securities   |  |                    | 23  |            |            |  | 23  |      |  |  |     |  |  |  |  | 
|                  |  |                    |     |            |            |  |     |      |  |  |      | 
|                  |  |                    | 585 |            |            |  | 596 |      |  |  | 17   |  |  |  | 6 | 
|                  |  |                    |     |            |            |  |     |      |  |  |      | 

F-30



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


|                  |  |                    |       |            |            |  |       |      |  |  |      |  |  |  |   | 
|----------------- |  | ------------------ | ----- | ---------- | ---------- |  | ----- | ---- |  |  | ---- |  |  |  | - | 
|                  |  | September 30, 2005 |      
|                  |  |                    |      
|                  |  |                    |       | Unrealized |           
|                  |  |                    |       |            |           
|                  |  | Cost               |       |            | Fair Value |  |       | Gain |  |  | Loss | 
|                  |  |                    |       |            |            |  |       |      |  |  |      | 
|Equity securities |  |                    | 1,308 |            |            |  | 1,695 |      |  |  | 388  |  |  |  | 1 | 
|Debt securities   |  |                    | 79    |            |            |  | 80    |      |  |  | 1    |  |  |  |  | 
|Fund securities   |  |                    | 14    |            |            |  | 14    |      |  |  |     |  |  |  |  | 
|                  |  |                    |       |            |            |  |       |      |  |  |      | 
|                  |  |                    | 1,401 |            |            |  | 1,789 |      |  |  | 389  |  |  |  | 1 | 
|                  |  |                    |       |            |            |  |       |      |  |  |      | 

AOCI  AOCI


        


   Accumulated other comprehensive income
(loss) net of income tax


 


 


 


 


 


F-31



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


10. Accounts receivable, net


|                                                           |  |               |        |  |      |  |        | 
|---------------------------------------------------------- |  | ------------- | ------ |  | ---- |  | ------ | 
|                                                           |  | September 30, |       
|                                                           |  |               |       
|                                                           |  | 2006          |        |  | 2005 | 
|                                                           |  |               |        |  |      | 
|Trade receivables from the sale of goods and services, net |  |               | 13,620 |  |      |  | 15,465 | 
|Receivables from sales-type and direct finance leases, net |  |               | 1,482  |  |      |  | 1,488  | 
|Receivables from associated and related companies, net     |  |               | 47     |  |      |  | 169    | 
|                                                           |  |               |        |  |      | 
|                                                           |  |               | 15,149 |  |      |  | 17,122 | 
|                                                           |  |               |        |  |      | 





|                                                                                                       |  |                          |       |   |      |  |       |      |  |  |       |  
|------------------------------------------------------------------------------------------------------ |  | ------------------------ | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                                                                                       |  | Year ended September 30, |      
|                                                                                                       |  |                          |      
|                                                                                                       |  | 2006                     |       |   | 2005 |  |       | 2004 | 
|                                                                                                       |  |                          |       |   |      |  |       |      | 
|Valuation allowance as of beginning of fiscal year                                                     |  |                          | 1,199 |   |      |  | 1,127 |      |  |  | 1,453 |  
|Increase (decrease) in valuation allowances recorded in the
    income statement in the current period |  |                          | 167   |   |      |  | 201   |      |  |  | 15    |  
|Write-offs charged against the allowance                                                               |  |                          | (263  | ) |      |  | (185  | )    |  |  | (363  | )
|Recoveries of amounts previously written-off                                                           |  |                          | 40    |   |      |  | 34    |      |  |  | 41    |  
|Foreign exchange translation adjustment                                                                |  |                          | (22   | ) |      |  | 22    |      |  |  | (19   | )
|Reclassification to Assets held for disposal                                                           |  |                          | (165  | ) |      |  |      |      |  |  |      |  
|                                                                                                       |  |                          |       |   |      |  |       |      | 
|Valuation allowance as of fiscal year-end                                                              |  |                          | 956   |   |      |  | 1,199 |      |  |  | 1,127 |  
|                                                                                                       |  |                          |       |   |      |  |       |      | 



|                                                               |  |               |        |  
|-------------------------------------------------------------- |  | ------------- | ------ | -
|                                                               |  | September 30, |       
|                                                               |  | 2006          |       
|                                                               |  |               |       
|2007                                                           |  |               | 1,679  |  
|2008                                                           |  |               | 1,288  |  
|2009                                                           |  |               | 860    |  
|2010                                                           |  |               | 540    |  
|2011                                                           |  |               | 310    |  
|Thereafter                                                     |  |               | 284    |  
|                                                               |  |               |       
|Minimum future lease payments                                  |  |               | 4,961  |  
|Less: Unearned income                                          |  |               | (605   | )
|Less: Allowance for doubtful accounts                          |  |               | (116   | )
|Plus: Unguaranteed residual values                             |  |               | 211    |  
|                                                               |  |               |       
|Net investment in lease receivables                            |  |               | 4,451  |  
|Less: Long-term portion                                        |  |               | (2,969 | )
|                                                               |  |               |       
|Receivables from sales-type and direct finance leases, current |  |               | 1,482  |  
|                                                               |  |               |       



F-32



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Accounts
receivable, net Assets held for
disposal


11. Inventories, net


|                                                                  |                           |               |        |        |      |  |        |        |  
|----------------------------------------------------------------- | ------------------------- | ------------- | ------ | ------ | ---- |  | ------ | ------ | -
|                                                                  |                           | September 30, |       
|                                                                  |                           |               |       
|                                                                  |                           | 2006          |        |        | 2005 | 
|                                                                  |                           |               |        |        |      | 
|Raw materials and supplies                                        |                           |               | 2,609  |        |      |  | 2,452  |       
|Work in process                                                   |                           |               | 2,975  |        |      |  | 2,724  |       
|Costs and earnings in excess of billings on uncompleted contracts |                           |               | 7,085  |        |      |  | 7,242  |       
|Finished goods and products held for resale                       |                           |               | 2,544  |        |      |  | 2,696  |       
|Advances to suppliers                                             |                           |               | 667    |        |      |  | 558    |       
|                                                                  |                           |               |        |        |      | 
|                                                                  |                           |               | 15,880 |        |      |  | 15,672 |       
|                                                                  | Advance payments received |               |        | (3,090 | )    |  |        | (2,860 | )
|                                                                  |                           |               |        |        |      | 
|                                                                  |                           |               | 12,790 |        |      |  | 12,812 |       
|                                                                  |                           |               |        |        |      | 

Inventories, net Assets held for disposal


12. Other current assets


|                                                        |  |               |       |  |      |  |       | 
|------------------------------------------------------- |  | ------------- | ----- |  | ---- |  | ----- | 
|                                                        |  | September 30, |      
|                                                        |  |               |      
|                                                        |  | 2006          |       |  | 2005 | 
|                                                        |  |               |       |  |      | 
|Taxes receivable                                        |  |               | 1,180 |  |      |  | 1,247 | 
|Loans receivable                                        |  |               | 472   |  |      |  | 535   | 
|Other receivables from associated and related companies |  |               | 239   |  |      |  | 258   | 
|Other                                                   |  |               | 2,314 |  |      |  | 3,190 | 
|                                                        |  |               |       |  |      | 
|                                                        |  |               | 4,205 |  |      |  | 5,230 | 
|                                                        |  |               |       |  |      | 

Other


13. Long-term investments


|                                    |  |               |       |  |      |  |       | 
|----------------------------------- |  | ------------- | ----- |  | ---- |  | ----- | 
|                                    |  | September 30, |      
|                                    |  |               |      
|                                    |  | 2006          |       |  | 2005 | 
|                                    |  |               |       |  |      | 
|Investments in associated companies |  |               | 3,097 |  |      |  | 2,976 | 
|Miscellaneous investments           |  |               | 825   |  |      |  | 792   | 
|                                    |  |               |       |  |      | 
|                                    |  |               | 3,922 |  |      |  | 3,768 | 
|                                    |  |               |       |  |      | 

Miscellaneous investments


F-33



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


14. Goodwill


|                          |                                           |         |       |             |           |              |              |             |                  |                    |          |     |   |             |      |      |           |  |   |   |  |  |       |       | 
|------------------------- | ----------------------------------------- | ------- | ----- | ----------- | --------- | ------------ | ------------ | ----------- | ---------------- | ------------------ | -------- | --- | - | ----------- | ---- | ---- | --------- |  | - | - |  |  | ----- | ----- | 
|                          |                                           |         |       |             |           | Acquisitions |              |             | Dispositions and |                    |          |     |   |            
|                          |                                           |         |       | Translation |           |              | and Purchase |             |                  | reclassifications  |          |     |   |             |     
|                          |                                           |         |       | adjustment  |           |              | Accounting   |             |                  | to Assets held for |          |     |   |             |     
|                          |                                           | 10/1/05 |       |             | and other |              |              | Adjustments |                  |                    | disposal |     |   | Impairments |      |      | 9/30/2006 | 
|                          |                                           |         |       |             |           |              |              |             |                  |                    |          |     |   |             |      |      |           | 
|Operations                |                                           |         |       |             |           |              |              |             |                  |                    |          |     |   |             |      |      |           |  |   |   |  |  |       |      
|                          | Communications (Com)                      |         |       | 385         |           |              |              | (13         | )                |                    |          | (4  | ) |             |      | (368 | )         |  |   |  |  |  |       |      | 
|                          | Siemens Business Services (SBS)           |         |       | 128         |           |              |              |            |                  |                    |          | 1   |   |             |      |     |           |  |   |  |  |  |       | 129   | 
|                          | Automation and Drives (A&D)               |         |       | 936         |           |              |              | (11         | )                |                    |          | 76  |   |             |      |     |           |  |   |  |  |  |       | 1,001 | 
|                          | Industrial Solutions and Services (I&S)   |         |       | 931         |           |              |              | (23         | )                |                    |          | 195 |   |             |      |     |           |  |   |  |  |  |       | 1,103 | 
|                          | Siemens Building Technologies (SBT)       |         |       | 444         |           |              |              | (9          | )                |                    |          | 126 |   |             |      |     |           |  |   |  |  |  |       | 561   | 
|                          | Power Generation (PG)                     |         |       | 1,224       |           |              |              | (21         | )                |                    |          | 212 |   |             |      |     |           |  |   |  |  |  |       | 1,415 | 
|                          | Power Transmission and Distribution (PTD) |         |       | 629         |           |              |              | (4          | )                |                    |          | 31  |   |             |      |     |           |  |   |  |  |  |       | 656   | 
|                          | Transportation Systems (TS)               |         |       | 172         |           |              |              |            |                  |                    |          |    |   |             |      |     |           |  |   |  |  |  |       | 172   | 
|                          | Siemens VDO Automotive (SV)               |         |       | 1,529       |           |              |              | (1          | )                |                    |          | 4   |   |             |      |     |           |  |   |  |  |  |       | 1,532 | 
|                          | Medical Solutions (Med)                   |         |       | 2,100       |           |              |              | (94         | )                |                    |          | 790 |   |             |      |     |           |  |   |  |  |  |       | 2,796 | 
|                          | Osram                                     |         |       | 86          |           |              |              | (3          | )                |                    |          | 3   |   |             |      |     |           |  |   |  |  |  |       | 86    | 
|                          | Other Operations                          |         |       | 235         |           |              |              |            |                  |                    |          | (40 | ) |             |      |     |           |  |   |  |  |  |       | 195   | 
|Financing and Real Estate |                                           |         |       |             |           |              |              |             |                  |                    |          |     |   |             |      |      |           |  |   |   |  |  |       |      
|                          | Siemens Financial Services (SFS)          |         |       | 131         |           |              |              | 1           |                  |                    |          | (2  | ) |             |      |     |           |  |   |  |  |  |       | 130   | 
|                          | Siemens Real Estate (SRE)                 |         |       |            |           |              |              |            |                  |                    |          |    |   |             |      |     |           |  |   |  |  |  |       |      | 
|                          |                                           |         |       |             |           |              |              |             |                  |                    |          |     |   |             |      |      |           | 
|Siemens                   |                                           |         | 8,930 |             |           |              | (178         | )           |                  |                    | 1,392    |     |   |             | (368 | )    |           |  |  |   |  |  | 9,776 |      
|                          |                                           |         |       |             |           |              |              |             |                  |                    |          |     |   |             |      |      |           | 

|                          |                                           |         |       |             |           |              |              |             |  |  |              |     |  |             |   |   |           |  |     |     |  |  |       |       | 
|------------------------- | ----------------------------------------- | ------- | ----- | ----------- | --------- | ------------ | ------------ | ----------- |  |  | ------------ | --- |  | ----------- | - | - | --------- |  | --- | --- |  |  | ----- | ----- | 
|                          |                                           |         |       |             |           | Acquisitions |              |             |  |  |              |     | 
|                          |                                           |         |       | Translation |           |              | and Purchase |             |  |  |              |     |  |            
|                          |                                           |         |       | adjustment  |           |              | Accounting   |             |  |  |              |     |  |            
|                          |                                           | 10/1/04 |       |             | and other |              |              | Adjustments |  |  | Dispositions |     |  | Impairments |   |   | 9/30/2005 | 
|                          |                                           |         |       |             |           |              |              |             |  |  |              |     |  |             |   |   |           | 
|Operations                |                                           |         |       |             |           |              |              |             |  |  |              |     |  |             |   |   |           |  |     |     |  |  |       |      
|                          | Communications (Com)                      |         |       | 315         |           |              |              | 14          |  |  |              | 73  |  |             |   |  |           |  |     | 17  |  |  |       | 385   | 
|                          | Siemens Business Services (SBS)           |         |       | 269         |           |              |              | 4           |  |  |              | 117 |  |             |   |  |           |  |     | 262 |  |  |       | 128   | 
|                          | Automation and Drives (A&D)               |         |       | 388         |           |              |              | 8           |  |  |              | 540 |  |             |   |  |           |  |     |    |  |  |       | 936   | 
|                          | Industrial Solutions and Services (I&S)   |         |       | 381         |           |              |              | 6           |  |  |              | 544 |  |             |   |  |           |  |     |    |  |  |       | 931   | 
|                          | Siemens Building Technologies (SBT)       |         |       | 415         |           |              |              | 8           |  |  |              | 21  |  |             |   |  |           |  |     |    |  |  |       | 444   | 
|                          | Power Generation (PG)                     |         |       | 1,027       |           |              |              | 14          |  |  |              | 183 |  |             |   |  |           |  |     |    |  |  |       | 1,224 | 
|                          | Power Transmission and Distribution (PTD) |         |       | 320         |           |              |              | 15          |  |  |              | 294 |  |             |   |  |           |  |     |    |  |  |       | 629   | 
|                          | Transportation Systems (TS)               |         |       | 111         |           |              |              |            |  |  |              | 61  |  |             |   |  |           |  |     |    |  |  |       | 172   | 
|                          | Siemens VDO Automotive (SV)               |         |       | 1,524       |           |              |              |            |  |  |              | 5   |  |             |   |  |           |  |     |    |  |  |       | 1,529 | 
|                          | Medical Solutions (Med)                   |         |       | 1,514       |           |              |              | 79          |  |  |              | 512 |  |             |   | 5 |           |  |     |    |  |  |       | 2,100 | 
|                          | Osram                                     |         |       | 78          |           |              |              | 4           |  |  |              | 4   |  |             |   |  |           |  |     |    |  |  |       | 86    | 
|                          | Other Operations                          |         |       | 52          |           |              |              |            |  |  |              | 183 |  |             |   |  |           |  |     |    |  |  |       | 235   | 
|Financing and Real Estate |                                           |         |       |             |           |              |              |             |  |  |              |     |  |             |   |   |           |  |     |     |  |  |       |      
|                          | Siemens Financial Services (SFS)          |         |       | 82          |           |              |              |            |  |  |              | 49  |  |             |   |  |           |  |     |    |  |  |       | 131   | 
|                          | Siemens Real Estate (SRE)                 |         |       |            |           |              |              |            |  |  |              |    |  |             |   |  |           |  |     |    |  |  |       |      | 
|                          |                                           |         |       |             |           |              |              |             |  |  |              |     |  |             |   |   |           | 
|Siemens                   |                                           |         | 6,476 |             |           |              | 152          |             |  |  | 2,586        |     |  |             | 5 |   |           |  | 279 |     |  |  | 8,930 |      
|                          |                                           |         |       |             |           |              |              |             |  |  |              |     |  |             |   |   |           | 

F-34



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


    Assets held for disposal 


    





15. Other intangible assets, net


|                                     |  |         |       |             |            |  |      |           |  |  |              |  |             |         |       |       |              |  |              |         |  |       |              |  |               |         |       |  |           |  |       |  |  |  |       |  |  |  |     | 
|------------------------------------ |  | ------- | ----- | ----------- | ---------- |  | ---- | --------- |  |  | ------------ |  | ----------- | ------- | ----- | ----- | ------------ |  | ------------ | ------- |  | ----- | ------------ |  | ------------- | ------- | ----- |  | --------- |  | ----- |  |  |  | ----- |  |  |  | --- | 
|                                     |  |         |       |             |            |  |      |           |  |  |              |  |             | Net     |       |       |              |  | Net          |         |  |      
|                                     |  |         |       |             |            |  |      |           |  |  |              |  |             | book    |       |       |              |  | book         |         |  |      
|                                     |  |         |       |             |            |  |      |           |  |  |              |  |             | value   |       |       | Accumulated  |  |              | value   |  |       | Amortization | 
|                                     |  |         |       | Translation |            |  |      |           |  |  |              |  | Accumulated |         |       | as of |              |  | amortization |         |  | as of |              |  | during fiscal |        
|                                     |  | 10/1/05 |       |             | adjustment |  |      | Additions |  |  | Retirements* |  |             | 9/30/06 |       |       | amortization |  |              | 9/30/06 |  |       | 10/1/05      |  |               | 10/1/05 |       |  | year 2006 | 
|                                     |  |         |       |             |            |  |      |           |  |  |              |  |             |         |       |       |              |  |              |         |  |       |              |  |               |         |       |  |           | 
|Software                             |  |         | 2,253 |             |            |  | (46  | )         |  |  | 565          |  |             |         | 866   |       |              |  | 1,906        |         |  |       | 1,009        |  |               |         | 897   |  |           |  | 1,312 |  |  |  | 941   |  |  |  | 329 | 
|Patents, licenses and similar rights |  |         | 3,675 |             |            |  | (62  | )         |  |  | 649          |  |             |         | 230   |       |              |  | 4,032        |         |  |       | 1,686        |  |               |         | 2,346 |  |           |  | 1,509 |  |  |  | 2,166 |  |  |  | 356 | 
|                                     |  |         |       |             |            |  |      |           |  |  |              |  |             |         |       |       |              |  |              |         |  |       |              |  |               |         |       |  |           | 
|Other intangible assets              |  |         | 5,928 |             |            |  | (108 | )         |  |  | 1,214        |  |             |         | 1,096 |       |              |  | 5,938        |         |  |       | 2,695        |  |               |         | 3,243 |  |           |  | 2,821 |  |  |  | 3,107 |  |  |  | 685 | 
|                                     |  |         |       |             |            |  |      |           |  |  |              |  |             |         |       |       |              |  |              |         |  |       |              |  |               |         |       |  |           | 






|  |                                                                                   
|- | ----------------------------------------------------------------------------------
|* | Includes Other intangible assets, netreclassified to
    Assets held for disposal.

 


Other intangible
assets, net


|            |  |  |     | 
|----------- |  |  | --- | 
|Fiscal year |  | 
|            |  | 
|2007        |  |  | 513 | 
|2008        |  |  | 476 | 
|2009        |  |  | 383 | 
|2010        |  |  | 299 | 
|2011        |  |  | 284 | 

F-35



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


16. Property, plant and equipment, net


|                                                   |  |         |        |             |            |  |      |           |           |  |           |  |  |              |      |             |         |  |             |              |      |              |         |              |            |         |        |               |         |  |        |           |  |  |        |  |  |  |        |  |  |  |       | 
|-------------------------------------------------- |  | ------- | ------ | ----------- | ---------- |  | ---- | --------- | --------- |  | --------- |  |  | ------------ | ---- | ----------- | ------- |  | ----------- | ------------ | ---- | ------------ | ------- | ------------ | ---------- | ------- | ------ | ------------- | ------- |  | ------ | --------- |  |  | ------ |  |  |  | ------ |  |  |  | ----- | 
|                                                   |  |         |        |             |            |  |      |           |           |  |           |  |  |              |      | Net         |         |  |             |              | Net  |              |         | Depreciation |           
|                                                   |  |         |        |             |            |  |      |           |           |  |           |  |  |              |      | book        |         |  |             |              | book |              |         | and          |           
|                                                   |  |         |        |             |            |  |      |           |           |  |           |  |  |              |      | value       |         |  | Accumulated |              |      | value        |         |              | impairment |        
|                                                   |  |         |        | Translation |            |  |      |           | Reclassi- |  |           |  |  |              |      | Accumulated |         |  | as of       |              |      | depreciation |         |              | as of      |         |        | during fiscal |        
|                                                   |  | 10/1/05 |        |             | adjustment |  |      | Additions |           |  | fications |  |  | Retirements* |      |             | 9/30/06 |  |             | depreciation |      |              | 9/30/06 |              |            | 10/1/05 |        |               | 10/1/05 |  |        | year 2006 | 
|                                                   |  |         |        |             |            |  |      |           |           |  |           |  |  |              |      |             |         |  |             |              |      |              |         |              |            |         |        |               |         |  |        |           | 
|Land and buildings                                 |  |         | 9,873  |             |            |  | (102 | )         |           |  | 580       |  |  |              | 200  |             |         |  | 751         |              |      |              | 9,800   |              |            |         | 4,807  |               |         |  | 4,993  |           |  |  | 4,878  |  |  |  | 4,995  |  |  |  | 308   | 
|Technical machinery and equipment                  |  |         | 9,758  |             |            |  | (119 | )         |           |  | 740       |  |  |              | 342  |             |         |  | 941         |              |      |              | 9,780   |              |            |         | 6,709  |               |         |  | 3,071  |           |  |  | 6,757  |  |  |  | 3,001  |  |  |  | 694   | 
|Furniture and office equipment                     |  |         | 9,895  |             |            |  | (122 | )         |           |  | 1,152     |  |  |              | 58   |             |         |  | 2,577       |              |      |              | 8,406   |              |            |         | 6,467  |               |         |  | 1,939  |           |  |  | 7,635  |  |  |  | 2,260  |  |  |  | 1,043 | 
|Equipment leased to others                         |  |         | 1,656  |             |            |  | (45  | )         |           |  | 672       |  |  |              | 11   |             |         |  | 680         |              |      |              | 1,614   |              |            |         | 644    |               |         |  | 970    |           |  |  | 786    |  |  |  | 870    |  |  |  | 196   | 
|Advances to suppliers and construction in progress |  |         | 891    |             |            |  | (15  | )         |           |  | 963       |  |  |              | (611 | )           |         |  | 128         |              |      |              | 1,100   |              |            |         | 1      |               |         |  | 1,099  |           |  |  | 5      |  |  |  | 886    |  |  |  | 1     | 
|                                                   |  |         |        |             |            |  |      |           |           |  |           |  |  |              |      |             |         |  |             |              |      |              |         |              |            |         |        |               |         |  |        |           | 
|Property, plant and equipment                      |  |         | 32,073 |             |            |  | (403 | )         |           |  | 4,107     |  |  |              |     |             |         |  | 5,077       |              |      |              | 30,700  |              |            |         | 18,628 |               |         |  | 12,072 |           |  |  | 20,061 |  |  |  | 12,012 |  |  |  | 2,242 | 
|                                                   |  |         |        |             |            |  |      |           |           |  |           |  |  |              |      |             |         |  |             |              |      |              |         |              |            |         |        |               |         |  |        |           | 






|  |                                                                                                                                 
|- | --------------------------------------------------------------------------------------------------------------------------------
|* | Includes Property, plant and equipment, netreclassified
    to Assets held for disposal(see Note 3 for further
    information).




17. Other assets


|                                                                                 |  |               |       |  |      |  |       | 
|-------------------------------------------------------------------------------- |  | ------------- | ----- |  | ---- |  | ----- | 
|                                                                                 |  | September 30, |      
|                                                                                 |  |               |      
|                                                                                 |  | 2006          |       |  | 2005 | 
|                                                                                 |  |               |       |  |      | 
|Long-term portion of receivables from sales and finance leases
    (see Note 10) |  |               | 2,969 |  |      |  | 2,899 | 
|Prepaid pension assets                                                           |  |               | 534   |  |      |  | 166   | 
|Long-term loans receivable                                                       |  |               | 452   |  |      |  | 736   | 
|Other                                                                            |  |               | 1,411 |  |      |  | 1,463 | 
|                                                                                 |  |               |       |  |      | 
|                                                                                 |  |               | 5,366 |  |      |  | 5,264 | 
|                                                                                 |  |               |       |  |      | 

18. Accrued liabilities




|                                        |  |               |       |  |      |  |        | 
|--------------------------------------- |  | ------------- | ----- |  | ---- |  | ------ | 
|                                        |  | September 30, |      
|                                        |  |               |      
|                                        |  | 2006          |       |  | 2005 | 
|                                        |  |               |       |  |      | 
|Employee related costs                  |  |               | 2,570 |  |      |  | 2,876  | 
|Product warranties                      |  |               | 1,890 |  |      |  | 2,027  | 
|Income and other taxes                  |  |               | 1,559 |  |      |  | 1,599  | 
|Accrued losses on uncompleted contracts |  |               | 898   |  |      |  | 1,185  | 
|Other                                   |  |               | 2,209 |  |      |  | 2,489  | 
|                                        |  |               |       |  |      | 
|                                        |  |               | 9,126 |  |      |  | 10,176 | 
|                                        |  |               |       |  |      | 

Employee related costs


F-36



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                                                                   |  |               |       |   |      |  |        |  
|---------------------------------------------------------------------------------- |  | ------------- | ----- | - | ---- |  | ------ | -
|                                                                                   |  | Year ended    |      
|                                                                                   |  | September 30, |      
|                                                                                   |  |               |      
|                                                                                   |  | 2006          |       |   | 2005 | 
|                                                                                   |  |               |       |   |      | 
|Accrual as of beginning of fiscal year (thereof current
    2,027 and
    2,096) |  |               | 2,823 |   |      |  | 2,824  |  
|Amount charged to expense in current period (additions)                            |  |               | 1,239 |   |      |  | 1,137  |  
|Reduction due to payments in cash or in kind (usage)                               |  |               | (916  | ) |      |  | (1,007 | )
|Foreign exchange translation adjustment                                            |  |               | (26   | ) |      |  | 30     |  
|Changes related to existing warranties and other changes*                          |  |               | (489  | ) |      |  | (161   | )
|                                                                                   |  |               |       |   |      | 
|Accrual as of fiscal year-end (thereof current
    1,890 and
    2,027)          |  |               | 2,631 |   |      |  | 2,823  |  
|                                                                                   |  |               |       |   |      | 






|  |                                                                                                                                                                                                                         
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | In fiscal 2006 and 2005, Changes related to existing
    warranties and other changesincludes
    333 and
    45,
    respectively, reclassified to Liabilities held for disposal(see Note 3 for further information).

19. Other current liabilities


|                                                                                                     |  |               |        |  |      |  |        | 
|---------------------------------------------------------------------------------------------------- |  | ------------- | ------ |  | ---- |  | ------ | 
|                                                                                                     |  | September 30, |       
|                                                                                                     |  |               |       
|                                                                                                     |  | 2006          |        |  | 2005 | 
|                                                                                                     |  |               |        |  |      | 
|Billings in excess of costs and estimated earnings on
    uncompleted contracts and related advances |  |               | 6,174  |  |      |  | 4,752  | 
|Payroll and social security taxes                                                                    |  |               | 1,904  |  |      |  | 2,422  | 
|Bonus obligations                                                                                    |  |               | 1,070  |  |      |  | 1,202  | 
|Sales and other taxes                                                                                |  |               | 1,191  |  |      |  | 953    | 
|Deferred income                                                                                      |  |               | 430    |  |      |  | 724    | 
|Liabilities to associated and related companies                                                      |  |               | 328    |  |      |  | 392    | 
|Accrued interest                                                                                     |  |               | 157    |  |      |  | 136    | 
|Other liabilities                                                                                    |  |               | 1,897  |  |      |  | 2,477  | 
|                                                                                                     |  |               |        |  |      | 
|                                                                                                     |  |               | 13,151 |  |      |  | 13,058 | 
|                                                                                                     |  |               |        |  |      | 

Other liabilities


F-37



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


20. Debt


|           |                                                   |                                                          |        |        |        |  |        |       |       | 
|---------- | ------------------------------------------------- | -------------------------------------------------------- | ------ | ------ | ------ |  | ------ | ----- | ----- | 
|           |                                                   | September 30,                                            |       
|           |                                                   |                                                          |       
|           |                                                   | 2006                                                     |        |        | 2005   | 
|           |                                                   |                                                          |        |        |        | 
|Short-term |                                                   |                                                          |        |        |        |  |        |      
|           | Notes and bonds                                   |                                                          |        | 1,149  |        |  |        | 1,625 |      
|           | Loans from banks                                  |                                                          |        | 659    |        |  |        | 673   |      
|           | Other financial indebtedness                      |                                                          |        | 314    |        |  |        | 1,612 |      
|           | Obligations under capital leases                  |                                                          |        | 53     |        |  |        | 89    |      
|           |                                                   |                                                          |        |        |        | 
|           |                                                   | Short-term debt and current maturities of long-term debt |        |        | 2,175  |  |        |       | 3,999 | 
|Long-term  |                                                   |                                                          |        |        |        |  |        |      
|           | Notes and bonds (maturing 2007-2066)              |                                                          |        | 12,285 |        |  |        | 6,826 |      
|           | Loans from banks (maturing 2007-2016)             |                                                          |        | 342    |        |  |        | 613   |      
|           | Other financial indebtedness (maturing 2007-2018) |                                                          |        | 508    |        |  |        | 733   |      
|           | Obligations under capital leases                  |                                                          |        | 264    |        |  |        | 264   |      
|           |                                                   |                                                          |        |        |        | 
|           |                                                   | Long-term debt                                           |        |        | 13,399 |  |        |       | 8,436 | 
|           |                                                   |                                                          |        |        |        | 
|           |                                                   |                                                          | 15,574 |        |        |  | 12,435 |      
|           |                                                   |                                                          |        |        |        | 



Commercial
paper


   


Credit
facilities


    


Notes and bonds


 


F-38



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


 






| |   |                                                                                   
| | - | ----------------------------------------------------------------------------------
| |  | U.S.$750 million Floating Rate Notes (U.S.$LIBOR + 0.05%)
    due August 14, 2009,
|
| |  | U.S.$750 million 5.5% Notes due February 16, 2012,                                
|
| |  | U.S.$1.750 billion 5.75% Notes due October 17, 2016 and                           
|
| |  | U.S.$1.750 billion 6.125% Notes due August 17, 2026.                              








|                                        |  |                    |     |  |                    |  |       |                   |  |  |        |  |  |  |     |  |  |  |       |  |  |  |       | 
|--------------------------------------- |  | ------------------ | --- |  | ------------------ |  | ----- | ----------------- |  |  | ------ |  |  |  | --- |  |  |  | ----- |  |  |  | ----- | 
|                                        |  | September 30, 2006 |     |  | September 30, 2005 | 
|                                        |  |                    |     |  |                    | 
|                                        |  | Currency           |     |  | Currency           | 
|                                        |  |                    |     |  |                    | 
|                                        |  | (notional amount)  |     |  | *                 |  |       | (notional amount) |  |  | *     | 
|                                        |  |                    |     |  |                    |  |       |                   |  |  |        | 
|5.0% 2001/2006 EUR bonds                |  |                    |    |  |                    |  |      |                   |  |  |       |  |  |  | EUR |  |  |  | 1,595 |  |  |  | 1,625 | 
|2.5% 2001/2007 Swiss franc bonds        |  |                    | CHF |  |                    |  | 250   |                   |  |  | 158    |  |  |  | CHF |  |  |  | 250   |  |  |  | 158   | 
|5.5% 1997/2007 EUR bonds                |  |                    | EUR |  |                    |  | 991   |                   |  |  | 991    |  |  |  | EUR |  |  |  | 991   |  |  |  | 991   | 
|6% 1998/2008 U.S.$ notes                |  |                    | USD |  |                    |  | 970   |                   |  |  | 799    |  |  |  | USD |  |  |  | 970   |  |  |  | 865   | 
|U.S.$ LIBOR+0.05% 2006/2009 U.S.$ notes |  |                    | USD |  |                    |  | 750   |                   |  |  | 592    |  |  |  |    |  |  |  |      |  |  |  |      | 
|1.375% 2003/2010 EUR convertible notes  |  |                    | EUR |  |                    |  | 2,497 |                   |  |  | 2,497  |  |  |  | EUR |  |  |  | 2,500 |  |  |  | 2,500 | 
|11% 2003/2010 EUR senior notes          |  |                    | EUR |  |                    |  | 56    |                   |  |  | 61     |  |  |  | EUR |  |  |  | 74    |  |  |  | 86    | 
|5.75% 2001/2011 EUR bonds               |  |                    | EUR |  |                    |  | 2,000 |                   |  |  | 2,107  |  |  |  | EUR |  |  |  | 2,000 |  |  |  | 2,226 | 
|5.5% 2006/2012 U.S.$ notes              |  |                    | USD |  |                    |  | 750   |                   |  |  | 601    |  |  |  |    |  |  |  |      |  |  |  |      | 
|U.S.$ LIBOR+0.15% 2006/2012 U.S.$ notes |  |                    | USD |  |                    |  | 500   |                   |  |  | 394    |  |  |  |    |  |  |  |      |  |  |  |      | 
|5.75% 2006/2016 U.S.$ notes             |  |                    | USD |  |                    |  | 1,750 |                   |  |  | 1,413  |  |  |  |    |  |  |  |      |  |  |  |      | 
|5.625% 2006/2016 U.S.$ notes            |  |                    | USD |  |                    |  | 500   |                   |  |  | 399    |  |  |  |    |  |  |  |      |  |  |  |      | 
|6.125% 2006/2026 U.S.$ notes            |  |                    | USD |  |                    |  | 1,750 |                   |  |  | 1,428  |  |  |  |    |  |  |  |      |  |  |  |      | 
|5.25% 2006/2066 EUR bonds               |  |                    | EUR |  |                    |  | 900   |                   |  |  | 898    |  |  |  |    |  |  |  |      |  |  |  |      | 
|6.125% 2006/2066 GBP bonds              |  |                    | GBP |  |                    |  | 750   |                   |  |  | 1,096  |  |  |  |    |  |  |  |      |  |  |  |      | 
|                                        |  |                    |     |  |                    |  |       |                   |  |  |        |  |  |  |     |  |  | 
|                                        |  |                    |     |  |                    |  |       |                   |  |  | 13,434 |  |  |  |     |  |  |  |       |  |  |  | 8,451 | 
|                                        |  |                    |     |  |                    |  |       |                   |  |  |        |  |  |  |     |  |  | 






|  |                                                      
|- | -----------------------------------------------------
|* | Includes adjustments for fair value hedge accounting.

 


F-39



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


  


  


    -bond    




|            |  |  |        | 
|----------- |  |  | ------ | 
|Fiscal year |  | 
|            |  | 
|2007        |  |  | 2,122  | 
|2008        |  |  | 1,088  | 
|2009        |  |  | 643    | 
|2010        |  |  | 2,191  | 
|2011        |  |  | 2,582  | 
|Thereafter  |  |  | 6,631  | 
|            |  |  |       
|            |  |  | 15,257 | 
|            |  |  |       

Other financial indebtedness


Other financial indebtedness  


F-40



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Obligations
under capital leases




|                                   |  |  |     |  
|---------------------------------- |  |  | --- | -
|Fiscal year                        |  | 
|                                   |  | 
|2007                               |  |  | 73  |  
|2008                               |  |  | 68  |  
|2009                               |  |  | 40  |  
|2010                               |  |  | 37  |  
|2011                               |  |  | 69  |  
|Thereafter                         |  |  | 121 |  
|                                   |  |  |    
|Minimum lease payment obligation   |  |  | 408 |  
|Less: unamortized interest expense |  |  | (91 | )
|                                   |  |  |    
|Obligations under capital leases   |  |  | 317 |  
|Less: current portion              |  |  | (53 | )
|                                   |  |  |    
|                                   |  |  | 264 |  
|                                   |  |  |    

21. Pension plans and similar commitments






Accounting for defined benefit plans


Consolidated
Balance Sheets


accumulated benefit obligation (ABO)


projected benefit obligation (PBO)




F-41



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




AOCI




|                                                            |                                                   |      |        |        |      |  |         |         |  
|----------------------------------------------------------- | ------------------------------------------------- | ---- | ------ | ------ | ---- |  | ------- | ------- | -
|                                                            |                                                   | 2006 |        |        | 2005 | 
|                                                            |                                                   |      |        |        |      | 
|Accumulated other comprehensive income                      |                                                   |      | (9,413 | )      |      |  | (10,879 | )      
|                                                            | thereof principal pension benefit plans           |      |        | (9,122 | )    |  |         | (10,573 | )
|Less income tax effect                                      |                                                   |      | 3,576  |        |      |  | 4,109   |        
|                                                            | thereof principal pension benefit plans           |      |        | 3,372  |      |  |         | 3,824   |  
|Accumulated other comprehensive income, net of income taxes |                                                   |      | (5,837 | )      |      |  | (6,770  | )      
|                                                            | thereof principal pension benefit plans           |      |        | (5,750 | )    |  |         | (6,749  | )
|Principal pension benefit plans                             |                                                   |      | 2,039  |        |      |  | 2,749   |        
|                                                            | Principal other postretirement benefit plans      |      |        | 1,223  |      |  |         | 1,317   |  
|                                                            | Other                                             |      |        | 1,222  |      |  |         | 852     |  
|                                                            | Reclassification to Liabilities held for disposal |      |        | (383   | )    |  |         | (1      | )
|Accruals for pension plans and similar commitments          |                                                   |      | 4,101  |        |      |  | 4,917   |        

Consolidated
Statements of Income


net periodic pension cost (NPPC) service cost, interest cost discount rate; expected return on
plan assets




F-42



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


 


Consolidated
Statements of Cash Flow




   


Principal pension benefits








| |   |                                                                                                
| | - | -----------------------------------------------------------------------------------------------
| |  | Pension obligations and funded status,                                                         
| |  | Recognition of an additional minimum liability (AML),                                          
| |  | Components of NPPC,                                                                            
| |  | Assumptions for the calculation of the PBO and NPPC,                                           
| |  | Sensitivity analysis,                                                                          
| |  | Additional information concerning changes of the AML and the
    actual returns on plan assets,
| |  | Plan assets,                                                                                   
| |  | Pension plan funding, and                                                                      
| |  | Pension benefit payments.                                                                      

F-43



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Pension benefits: Pension obligations and funded
status




|                                                                  |                                      |                    |        |        |                    |  |        |         |   |  |        |      |   |          |        |        |         |  |        |        |   |  |        |        |  
|----------------------------------------------------------------- | ------------------------------------ | ------------------ | ------ | ------ | ------------------ |  | ------ | ------- | - |  | ------ | ---- | - | -------- | ------ | ------ | ------- |  | ------ | ------ | - |  | ------ | ------ | -
|                                                                  |                                      | September 30, 2006 |        |        | September 30, 2005 | 
|                                                                  |                                      |                    |        |        |                    | 
|                                                                  |                                      | Total              |        |        | Domestic           |  |        | Foreign |   |  | Total  |      |   | Domestic |        |        | Foreign | 
|                                                                  |                                      |                    |        |        |                    |  |        |         |   |  |        |      |   |          |        |        |         | 
|Fair value of plan assets                                         |                                      |                    | 23,528 |        |                    |  | 15,023 |         |   |  | 8,505  |      |   |          | 21,479 |        |         |  | 14,349 |        |   |  | 7,130  |       
|Projected benefit obligation (PBO)                                |                                      |                    | 26,245 |        |                    |  | 16,372 |         |   |  | 9,873  |      |   |          | 24,977 |        |         |  | 15,932 |        |   |  | 9,045  |       
|                                                                  |                                      |                    |        |        |                    |  |        |         |   |  |        |      |   |          |        |        |         | 
|Funded
    status(1)                                              |                                      |                    | (2,717 | )      |                    |  | (1,349 | )       |   |  | (1,368 | )    |   |          | (3,498 | )      |         |  | (1,583 | )      |   |  | (1,915 | )     
|                                                                  | Germany                              |                    |        | (1,349 | )                  |  |        |         |   |  |        |      |   |          |        | (1,583 | )       |  |        |        |   |  |        |        |  
|                                                                  | U.S.                                 |                    |        | (435   | )                  |  |        |         |   |  |        |      |   |          |        | (858   | )       |  |        |        |   |  |        |        |  
|                                                                  | U.K.                                 |                    |        | (624   | )                  |  |        |         |   |  |        |      |   |          |        | (779   | )       |  |        |        |   |  |        |        |  
|                                                                  | Other                                |                    |        | (309   | )                  |  |        |         |   |  |        |      |   |          |        | (278   | )       |  |        |        |   |  |        |        |  
|Unrecognized net
    losses(2)                                    |                                      |                    | 10,575 |        |                    |  | 8,653  |         |   |  | 1,922  |      |   |          | 11,835 |        |         |  | 9,198  |        |   |  | 2,637  |       
|Unrecognized prior service cost (benefit)                         |                                      |                    | (133   | )      |                    |  | (251   | )       |   |  | 118    |      |   |          | (285   | )      |         |  | (270   | )      |   |  | (15    | )     
|                                                                  |                                      |                    |        |        |                    |  |        |         |   |  |        |      |   |          |        |        |         | 
|Net amount recognized                                             |                                      |                    | 7,725  |        |                    |  | 7,053  |         |   |  | 672    |      |   |          | 8,052  |        |         |  | 7,345  |        |   |  | 707    |       
|                                                                  |                                      |                    |        |        |                    |  |        |         |   |  |        |      |   |          |        |        |         | 
|Amounts recognized in the Consolidated Balance Sheets consist of: |                                      |                    |        |        |                    |  |        |         |   |  |        |      |   |          |        |        |         |  |        |        |   |  |        |       
|                                                                  | Prepaid pension assets               |                    |        | 534    |                    |  |        |        |   |  |        | 534  |   |          |        | 166    |         |  |        |       |   |  |        | 166    |  
|                                                                  | Accrued pension liability            |                    |        | (2,039 | )                  |  |        | (1,289  | ) |  |        | (750 | ) |          |        | (2,749 | )       |  |        | (1,504 | ) |  |        | (1,245 | )
|                                                                  | Intangible assets                    |                    |        | 108    |                    |  |        |        |   |  |        | 108  |   |          |        | 62     |         |  |        |       |   |  |        | 62     |  
|                                                                  | Accumulated other comprehensive loss |                    |        | 9,122  |                    |  |        | 8,342   |   |  |        | 780  |   |          |        | 10,573 |         |  |        | 8,849  |   |  |        | 1,724  |  
|                                                                  |                                      |                    |        |        |                    |  |        |         |   |  |        |      |   |          |        |        |         | 
|Net amount recognized                                             |                                      |                    | 7,725  |        |                    |  | 7,053  |         |   |  | 672    |      |   |          | 8,052  |        |         |  | 7,345  |        |   |  | 707    |       
|                                                                  |                                      |                    |        |        |                    |  |        |         |   |  |        |      |   |          |        |        |         | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Funded status: The funded status shows the surplus/(deficit) of
    the PBO relative to the plan assets as of the measurement date,
    and, where applicable, fundings between the measurement date and
    the balance sheet date. The PBO is calculated based on the
    projected unit credit method and reflects the net present value
    as of the measurement date of the accumulated pension
    entitlements of active employees, former employees with vested
    rights and of retirees and their surviving dependents with
    consideration of future compensation and pension increases.
|   
|(2) | Unrecognized net losses: The NPPC is determined at the beginning
    of the relevant measurement period based on assumptions for the
    discount rate, compensation increase rate and pension
    progression rate as well as the long-term rate of return on plan
    assets. The cumulative effect of differences between the actual
    experience and the assumed assumptions and changes in the
    assumptions are disclosed in the line item unrecognized net
    losses.                                                                                                                      



F-44



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                            |                                                   |                                        |        |        |                    |   |        |         |      |   |       |       |       |          |        |        |         |   |        |        |       |   |       |       |       |  
|------------------------------------------- | ------------------------------------------------- | -------------------------------------- | ------ | ------ | ------------------ | - | ------ | ------- | ---- | - | ----- | ----- | ----- | -------- | ------ | ------ | ------- | - | ------ | ------ | ----- | - | ----- | ----- | ----- | -
|                                            |                                                   | September 30, 2006                     |        |        | September 30, 2005 |  
|                                            |                                                   |                                        |        |        |                    |  
|                                            |                                                   | Total                                  |        |        | Domestic           |   |        | Foreign |      |   | Total |       |       | Domestic |        |        | Foreign |  
|                                            |                                                   |                                        |        |        |                    |   |        |         |      |   |       |       |       |          |        |        |         |  
|Change in projected benefit obligations:    |                                                   |                                        |        |        |                    |   |        |         |      |   |       |       |       |          |        |        |         |   |        |        |       |   |       |      
|                                            | Projected benefit obligation at beginning of year |                                        |        | 24,977 |                    |   |        | 15,932  |      |   |       | 9,045 |       |          |        | 20,794 |         |   |        | 13,851 |       |   |       | 6,943 |      
|                                            |                                                   | Foreign currency exchange rate changes |        |        | (201               | ) |        |         |     |   |       |       | (201  | )        |        |        | 185     |   |        |        |      |   |       |       | 185   |  
|                                            |                                                   | Service cost                           |        |        | 713                |   |        |         | 388  |   |       |       | 325   |          |        |        | 579     |   |        |        | 307   |   |       |       | 272   |  
|                                            |                                                   | Interest cost                          |        |        | 1,108              |   |        |         | 679  |   |       |       | 429   |          |        |        | 1,121   |   |        |        | 726   |   |       |       | 395   |  
|                                            |                                                   | Settlements and curtailment            |        |        | (1                 | ) |        |         |     |   |       |       | (1    | )        |        |        | (5      | ) |        |        |      |   |       |       | (5    | )
|                                            |                                                   | Plan participants contributions       |        |        | 49                 |   |        |         |     |   |       |       | 49    |          |        |        | 46      |   |        |        |      |   |       |       | 46    |  
|                                            |                                                   | Amendments and other                   |        |        | 1,526              |   |        |         | 443  |   |       |       | 1,083 |          |        |        | (85     | ) |        |        |      |   |       |       | (85   | )
|                                            |                                                   | Actuarial (gains) losses, net          |        |        | (587               | ) |        |         | (196 | ) |       |       | (391  | )        |        |        | 2,897   |   |        |        | 1,736 |   |       |       | 1,161 |  
|                                            |                                                   | Acquisitions                           |        |        | 89                 |   |        |         | 59   |   |       |       | 30    |          |        |        | 624     |   |        |        | 138   |   |       |       | 486   |  
|                                            |                                                   | Divestments                            |        |        | (303               | ) |        |         | (145 | ) |       |       | (158  | )        |        |        | (147    | ) |        |        | (75   | ) |       |       | (72   | )
|                                            |                                                   | Benefits paid                          |        |        | (1,125             | ) |        |         | (788 | ) |       |       | (337  | )        |        |        | (1,032  | ) |        |        | (751  | ) |       |       | (281  | )
|                                            |                                                   |                                        |        |        |                    |   |        |         |      |   |       |       |       |          |        |        |         |  
|Projected benefit obligation at end of year |                                                   |                                        | 26,245 |        |                    |   | 16,372 |         |      |   | 9,873 |       |       |          | 24,977 |        |         |   | 15,932 |        |       |   | 9,045 |      
|                                            |                                                   |                                        |        |        |                    |   |        |         |      |   |       |       |       |          |        |        |         |  
|                                            |                                                   | Germany                                |        |        | 16,372             |   |        |         |      |   |       |       |       |          |        |        | 15,932  |   |        |        |       |   |       |       |       |  
|                                            |                                                   | U.S.                                   |        |        | 3,424              |   |        |         |      |   |       |       |       |          |        |        | 3,921   |   |        |        |       |   |       |       |       |  
|                                            |                                                   | U.K.                                   |        |        | 3,354              |   |        |         |      |   |       |       |       |          |        |        | 3,098   |   |        |        |       |   |       |       |       |  
|                                            |                                                   | Other                                  |        |        | 3,095              |   |        |         |      |   |       |       |       |          |        |        | 2,026   |   |        |        |       |   |       |       |       |  

projected benefit obligation   




F-45



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                         |                                                |                                        |        |        |                    |   |        |         |      |   |       |       |       |          |        |        |         |   |        |        |       |   |       |       |      |  
|---------------------------------------- | ---------------------------------------------- | -------------------------------------- | ------ | ------ | ------------------ | - | ------ | ------- | ---- | - | ----- | ----- | ----- | -------- | ------ | ------ | ------- | - | ------ | ------ | ----- | - | ----- | ----- | ---- | -
|                                         |                                                | September 30, 2006                     |        |        | September 30, 2005 |  
|                                         |                                                |                                        |        |        |                    |  
|                                         |                                                | Total                                  |        |        | Domestic           |   |        | Foreign |      |   | Total |       |       | Domestic |        |        | Foreign |  
|                                         |                                                |                                        |        |        |                    |   |        |         |      |   |       |       |       |          |        |        |         |  
|Change in plan assets:                   |                                                |                                        |        |        |                    |   |        |         |      |   |       |       |       |          |        |        |         |   |        |        |       |   |       |      
|                                         | Fair value of plan assets at beginning of year |                                        |        | 21,479 |                    |   |        | 14,349  |      |   |       | 7,130 |       |          |        | 17,708 |         |   |        | 11,965 |       |   |       | 5,743 |     
|                                         |                                                | Foreign currency exchange rate changes |        |        | (168               | ) |        |         |     |   |       |       | (168  | )        |        |        | 135     |   |        |        |      |   |       |       | 135  |  
|                                         |                                                | Actual return on plan assets           |        |        | 1,291              |   |        |         | 741  |   |       |       | 550   |          |        |        | 2,289   |   |        |        | 1,596 |   |       |       | 693  |  
|                                         |                                                | Acquisitions and other                 |        |        | 1,494              |   |        |         | 440  |   |       |       | 1,054 |          |        |        | 325     |   |        |        |      |   |       |       | 325  |  
|                                         |                                                | Divestments and other                  |        |        | (222               | ) |        |         | (39  | ) |       |       | (183  | )        |        |        | (26     | ) |        |        |      |   |       |       | (26  | )
|                                         |                                                | Employer contributions (supplemental)  |        |        |                   |   |        |         |     |   |       |       |      |          |        |        | 1,496   |   |        |        | 1,380 |   |       |       | 116  |  
|                                         |                                                | Employer contributions (regular)       |        |        | 730                |   |        |         | 320  |   |       |       | 410   |          |        |        | 535     |   |        |        | 159   |   |       |       | 376  |  
|                                         |                                                | Plan participants contributions       |        |        | 49                 |   |        |         |     |   |       |       | 49    |          |        |        | 49      |   |        |        |      |   |       |       | 49   |  
|                                         |                                                | Benefits paid                          |        |        | (1,125             | ) |        |         | (788 | ) |       |       | (337  | )        |        |        | (1,032  | ) |        |        | (751  | ) |       |       | (281 | )
|                                         |                                                |                                        |        |        |                    |   |        |         |      |   |       |       |       |          |        |        |         |  
|Fair value of plan assets at end of year |                                                |                                        | 23,528 |        |                    |   | 15,023 |         |      |   | 8,505 |       |       |          | 21,479 |        |         |   | 14,349 |        |       |   | 7,130 |      
|                                         |                                                |                                        |        |        |                    |   |        |         |      |   |       |       |       |          |        |        |         |  
|                                         |                                                | Germany                                |        |        | 15,023             |   |        |         |      |   |       |       |       |          |        |        | 14,349  |   |        |        |       |   |       |       |      |  
|                                         |                                                | U.S.                                   |        |        | 2,989              |   |        |         |      |   |       |       |       |          |        |        | 3,063   |   |        |        |       |   |       |       |      |  
|                                         |                                                | U.K.                                   |        |        | 2,730              |   |        |         |      |   |       |       |       |          |        |        | 2,319   |   |        |        |       |   |       |       |      |  
|                                         |                                                | Other                                  |        |        | 2,786              |   |        |         |      |   |       |       |       |          |        |        | 1,748   |   |        |        |       |   |       |       |      |  



Pension benefits: Recognition of an Additional Minimum
Liability (AML)


 


F-46



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                               |         |                    |        |        |                    |  |        |         |  |  |       |   |  |          |        |        |         |  |        |   |  |  |        |   | 
|---------------------------------------------- | ------- | ------------------ | ------ | ------ | ------------------ |  | ------ | ------- |  |  | ----- | - |  | -------- | ------ | ------ | ------- |  | ------ | - |  |  | ------ | - | 
|                                               |         | September 30, 2006 |        |        | September 30, 2005 | 
|                                               |         |                    |        |        |                    | 
|                                               |         | Total              |        |        | Domestic           |  |        | Foreign |  |  | Total |   |  | Domestic |        |        | Foreign | 
|                                               |         |                    |        |        |                    |  |        |         |  |  |       |   |  |          |        |        |         | 
|Projected benefit obligation                   |         |                    | 22,966 |        |                    |  | 15,935 |         |  |  | 7,031 |   |  |          | 24,569 |        |         |  | 15,932 |   |  |  | 8,637  |  
|                                               | Germany |                    |        | 15,935 |                    |  |        |         |  |  |       |   |  |          |        | 15,932 |         |  |        |   |  |  |        |   | 
|                                               | U.S.    |                    |        | 950    |                    |  |        |         |  |  |       |   |  |          |        | 3,881  |         |  |        |   |  |  |        |   | 
|                                               | U.K.    |                    |        | 3,354  |                    |  |        |         |  |  |       |   |  |          |        | 3,098  |         |  |        |   |  |  |        |   | 
|                                               | Other   |                    |        | 2,727  |                    |  |        |         |  |  |       |   |  |          |        | 1,658  |         |  |        |   |  |  |        |   | 
|Accumulated benefit obligation                 |         |                    | 22,286 |        |                    |  | 15,870 |         |  |  | 6,416 |   |  |          | 23,686 |        |         |  | 15,853 |   |  |  | 7,833  |  
|                                               | Germany |                    |        | 15,870 |                    |  |        |         |  |  |       |   |  |          |        | 15,853 |         |  |        |   |  |  |        |   | 
|                                               | U.S.    |                    |        | 834    |                    |  |        |         |  |  |       |   |  |          |        | 3,476  |         |  |        |   |  |  |        |   | 
|                                               | U.K.    |                    |        | 2,958  |                    |  |        |         |  |  |       |   |  |          |        | 2,749  |         |  |        |   |  |  |        |   | 
|                                               | Other   |                    |        | 2,624  |                    |  |        |         |  |  |       |   |  |          |        | 1,608  |         |  |        |   |  |  |        |   | 
|Fair value of plan assets                      |         |                    | 20,295 |        |                    |  | 14,581 |         |  |  | 5,714 |   |  |          | 20,935 |        |         |  | 14,349 |   |  |  | 6,586  |  
|                                               | Germany |                    |        | 14,581 |                    |  |        |         |  |  |       |   |  |          |        | 14,349 |         |  |        |   |  |  |        |   | 
|                                               | U.S.    |                    |        | 605    |                    |  |        |         |  |  |       |   |  |          |        | 2,973  |         |  |        |   |  |  |        |   | 
|                                               | U.K.    |                    |        | 2,708  |                    |  |        |         |  |  |       |   |  |          |        | 2,253  |         |  |        |   |  |  |        |   | 
|                                               | Other   |                    |        | 2,401  |                    |  |        |         |  |  |       |   |  |          |        | 1,360  |         |  |        |   |  |  |        |   | 
|                                               |         |                    |        |        |                    |  |        |         |  |  |       |   |  |          |        |        |         | 
|Underfunding of accumulated benefit obligation |         |                    | (1,991 | )      |                    |  | (1,289 | )       |  |  | (702  | ) |  |          | (2,751 | )      |         |  | (1,504 | ) |  |  | (1,247 | )
|                                               |         |                    |        |        |                    |  |        |         |  |  |       |   |  |          |        |        |         | 
|                                               | Germany |                    |        | (1,289 | )                  |  |        |         |  |  |       |   |  |          |        | (1,504 | )       |  |        |   |  |  |        |   | 
|                                               | U.S.    |                    |        | (229   | )                  |  |        |         |  |  |       |   |  |          |        | (503   | )       |  |        |   |  |  |        |   | 
|                                               | U.K.    |                    |        | (250   | )                  |  |        |         |  |  |       |   |  |          |        | (496   | )       |  |        |   |  |  |        |   | 
|                                               | Other   |                    |        | (223   | )                  |  |        |         |  |  |       |   |  |          |        | (248   | )       |  |        |   |  |  |        |   | 

   


     AOCI 


F-47



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Pension benefits: Components of NPPC




|                                         |                                            |                    |        |     |                    |  |      |                    |   |  |       |     |  |          |        |     |         |  |      |       |   |  |          |    |  |         |        |     |   |  |      |     |  |  |      |     |  
|---------------------------------------- | ------------------------------------------ | ------------------ | ------ | --- | ------------------ |  | ---- | ------------------ | - |  | ----- | --- |  | -------- | ------ | --- | ------- |  | ---- | ----- | - |  | -------- | -- |  | ------- | ------ | --- | - |  | ---- | --- |  |  | ---- | --- | -
|                                         |                                            | Year ended         |        |     | Year ended         |  |      | Year ended         |  
|                                         |                                            | September 30, 2006 |        |     | September 30, 2005 |  |      | September 30, 2004 |  
|                                         |                                            |                    |        |     |                    |  |      |                    |  
|                                         |                                            | Total              |        |     | Domestic           |  |      | Foreign            |   |  | Total |     |  | Domestic |        |     | Foreign |  |      | Total |   |  | Domestic |    |  | Foreign |       
|                                         |                                            |                    |        |     |                    |  |      |                    |   |  |       |     |  |          |        |     |         |  |      |       |   |  |          |    |  |         |       
|Service cost                             |                                            |                    | 713    |     |                    |  | 388  |                    |   |  | 325   |     |  |          | 579    |     |         |  | 307  |       |   |  | 272      |    |  |         | 469    |     |   |  | 212  |     |  |  | 257  |    
|Interest cost                            |                                            |                    | 1,108  |     |                    |  | 679  |                    |   |  | 429   |     |  |          | 1,121  |     |         |  | 726  |       |   |  | 395      |    |  |         | 1,105  |     |   |  | 742  |     |  |  | 363  |    
|Expected return on plan assets           |                                            |                    | (1,388 | )   |                    |  | (923 | )                  |   |  | (465  | )   |  |          | (1,291 | )   |         |  | (905 | )     |   |  | (386     | )  |  |         | (1,154 | )   |   |  | (813 | )   |  |  | (341 | )  
|Amortization of:                         |                                            |                    |        |     |                    |  |      |                    |   |  |       |     |  |          |        |     |         |  |      |       |   |  |          |    |  |         |        |     |   |  |      |     |  |  |      |    
|                                         | Unrecognized prior service cost (benefits) |                    |        | (11 | )                  |  |      | (19                | ) |  |       | 8   |  |          |        | (9  | )       |  |      | (19   | ) |  |          | 10 |  |         |        | 10  |   |  |      |    |  |  |      | 10  |  
|                                         | Unrecognized net losses                    |                    |        | 686 |                    |  |      | 531                |   |  |       | 155 |  |          |        | 561 |         |  |      | 475   |   |  |          | 86 |  |         |        | 623 |   |  |      | 520 |  |  |      | 103 |  
|                                         | Unrecognized net transition asset          |                    |        |    |                    |  |      |                   |   |  |       |    |  |          |        |    |         |  |      |      |   |  |          |   |  |         |        | (2  | ) |  |      |    |  |  |      | (2  | )
|Loss due to settlements and curtailments |                                            |                    | 2      |     |                    |  |     |                    |   |  | 2     |     |  |          | 3      |     |         |  |     |       |   |  | 3        |    |  |         |       |     |   |  |     |     |  |  |     |    
|                                         |                                            |                    |        |     |                    |  |      |                    |   |  |       |     |  |          |        |     |         |  |      |       |   |  |          |    |  |         |       
|Net periodic pension cost                |                                            |                    | 1,110  |     |                    |  | 656  |                    |   |  | 454   |     |  |          | 964    |     |         |  | 584  |       |   |  | 380      |    |  |         | 1,051  |     |   |  | 661  |     |  |  | 390  |    
|                                         |                                            |                    |        |     |                    |  |      |                    |   |  |       |     |  |          |        |     |         |  |      |       |   |  |          |    |  |         |       
|                                         | Germany                                    |                    |        | 656 |                    |  |      |                    |   |  |       |     |  |          |        | 584 |         |  |      |       |   |  |          |    |  |         |        | 661 |   |  |      |     |  |  |      |     |  
|                                         | U.S.                                       |                    |        | 253 |                    |  |      |                    |   |  |       |     |  |          |        | 190 |         |  |      |       |   |  |          |    |  |         |        | 217 |   |  |      |     |  |  |      |     |  
|                                         | U.K.                                       |                    |        | 166 |                    |  |      |                    |   |  |       |     |  |          |        | 149 |         |  |      |       |   |  |          |    |  |         |        | 132 |   |  |      |     |  |  |      |     |  
|                                         | Other                                      |                    |        | 35  |                    |  |      |                    |   |  |       |     |  |          |        | 41  |         |  |      |       |   |  |          |    |  |         |        | 41  |   |  |      |     |  |  |      |     |  

expected return on plan assets amortization of
unrecognized net losses    




amortization of unrecognized net losses


Pension benefits: Assumptions for the calculation of the
PBO and NPPC




F-48



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                              |         |                          |       |       |          |  |       |         |  |  |       |  |  |          |      |       |         |  |       |  |  |  |      |  | 
|----------------------------- | ------- | ------------------------ | ----- | ----- | -------- |  | ----- | ------- |  |  | ----- |  |  | -------- | ---- | ----- | ------- |  | ----- |  |  |  | ---- |  | 
|                              |         | Year ended September 30, |      
|                              |         |                          |      
|                              |         | 2006                     |       |       | 2005     | 
|                              |         |                          |       |       |          | 
|                              |         | Total                    |       |       | Domestic |  |       | Foreign |  |  | Total |  |  | Domestic |      |       | Foreign | 
|                              |         |                          |       |       |          |  |       |         |  |  |       |  |  |          |      |       |         | 
|Discount rate                 |         |                          | 4.79% |       |          |  | 4.50% |         |  |  | 5.25% |  |  |          | 4.5% |       |         |  | 4.35% |  |  |  | 4.9% | 
|                              | Germany |                          |       | 4.50% |          |  |       |         |  |  |       |  |  |          |      | 4.35% |         |  |       |  |  |  |      |  | 
|                              | U.S.    |                          |       | 6.49% |          |  |       |         |  |  |       |  |  |          |      | 5.25% |         |  |       |  |  |  |      |  | 
|                              | U.K.    |                          |       | 5.18% |          |  |       |         |  |  |       |  |  |          |      | 4.9%  |         |  |       |  |  |  |      |  | 
|Rate of compensation increase |         |                          | 2.71% |       |          |  | 2.25% |         |  |  | 3.43% |  |  |          | 2.6% |       |         |  | 2.25% |  |  |  | 3.2% | 
|                              | Germany |                          |       | 2.25% |          |  |       |         |  |  |       |  |  |          |      | 2.25% |         |  |       |  |  |  |      |  | 
|                              | U.S.    |                          |       | 3.95% |          |  |       |         |  |  |       |  |  |          |      | 3.25% |         |  |       |  |  |  |      |  | 
|                              | U.K.    |                          |       | 3.74% |          |  |       |         |  |  |       |  |  |          |      | 3.7%  |         |  |       |  |  |  |      |  | 
|Rate of pension progression   |         |                          | 1.22% |       |          |  | 1.00% |         |  |  | 1.78% |  |  |          | 1.2% |       |         |  | 1.0%  |  |  |  | 2.0% | 
|                              | Germany |                          |       | 1.00% |          |  |       |         |  |  |       |  |  |          |      | 1.0%  |         |  |       |  |  |  |      |  | 
|                              | U.K.    |                          |       | 2.82% |          |  |       |         |  |  |       |  |  |          |      | 2.7%  |         |  |       |  |  |  |      |  | 





|                               |         |                    |       |       |                    |  |       |                    |  |  |                    |  |  |          |      |       |         |  |       |       |  |  |          |  |  |         |      |       |       |  |       |          |  |  |         |  |  |  |      |       |  |  |       |  |  |  |      |  | 
|------------------------------ | ------- | ------------------ | ----- | ----- | ------------------ |  | ----- | ------------------ |  |  | ------------------ |  |  | -------- | ---- | ----- | ------- |  | ----- | ----- |  |  | -------- |  |  | ------- | ---- | ----- | ----- |  | ----- | -------- |  |  | ------- |  |  |  | ---- | ----- |  |  | ----- |  |  |  | ---- |  | 
|                               |         | Year ending        |       |       | Year ended         |  |       | Year ended         |  |  | Year ended         | 
|                               |         | September 30, 2007 |       |       | September 30, 2006 |  |       | September 30, 2005 |  |  | September 30, 2004 | 
|                               |         |                    |       |       |                    |  |       |                    |  |  |                    | 
|                               |         | Total              |       |       | Domestic           |  |       | Foreign            |  |  | Total              |  |  | Domestic |      |       | Foreign |  |       | Total |  |  | Domestic |  |  | Foreign |      |       | Total |  |       | Domestic |  |  | Foreign | 
|                               |         |                    |       |       |                    |  |       |                    |  |  |                    |  |  |          |      |       |         |  |       |       |  |  |          |  |  |         |      |       |       |  |       |          |  |  |         | 
|Discount rate                  |         |                    | 4.79% |       |                    |  | 4.50% |                    |  |  | 5.25%              |  |  |          | 4.5% |       |         |  | 4.35% |       |  |  | 4.9%     |  |  |         | 5.5% |       |       |  | 5.25% |          |  |  | 5.9%    |  |  |  | 5.4% |       |  |  | 5.25% |  |  |  | 5.6% | 
|                               | Germany |                    |       | 4.50% |                    |  |       |                    |  |  |                    |  |  |          |      | 4.35% |         |  |       |       |  |  |          |  |  |         |      | 5.25% |       |  |       |          |  |  |         |  |  |  |      | 5.25% |  |  |       |  |  |  |      |  | 
|                               | U.S.    |                    |       | 6.49% |                    |  |       |                    |  |  |                    |  |  |          |      | 5.25% |         |  |       |       |  |  |          |  |  |         |      | 6.5%  |       |  |       |          |  |  |         |  |  |  |      | 6.25% |  |  |       |  |  |  |      |  | 
|                               | U.K.    |                    |       | 5.18% |                    |  |       |                    |  |  |                    |  |  |          |      | 4.9%  |         |  |       |       |  |  |          |  |  |         |      | 5.7%  |       |  |       |          |  |  |         |  |  |  |      | 5.4%  |  |  |       |  |  |  |      |  | 
|Expected return on plan assets |         |                    | 6.49% |       |                    |  | 6.51% |                    |  |  | 6.47%              |  |  |          | 6.7% |       |         |  | 6.7%  |       |  |  | 6.7%     |  |  |         | 6.7% |       |       |  | 6.75% |          |  |  | 6.6%    |  |  |  | 6.7% |       |  |  | 6.75% |  |  |  | 6.6% | 
|                               | Germany |                    |       | 6.51% |                    |  |       |                    |  |  |                    |  |  |          |      | 6.7%  |         |  |       |       |  |  |          |  |  |         |      | 6.75% |       |  |       |          |  |  |         |  |  |  |      | 6.75% |  |  |       |  |  |  |      |  | 
|                               | U.S.    |                    |       | 6.97% |                    |  |       |                    |  |  |                    |  |  |          |      | 6.95% |         |  |       |       |  |  |          |  |  |         |      | 6.95% |       |  |       |          |  |  |         |  |  |  |      | 6.95% |  |  |       |  |  |  |      |  | 
|                               | U.K.    |                    |       | 6.67% |                    |  |       |                    |  |  |                    |  |  |          |      | 6.75% |         |  |       |       |  |  |          |  |  |         |      | 6.85% |       |  |       |          |  |  |         |  |  |  |      | 6.85% |  |  |       |  |  |  |      |  | 
|Rate of compensation increase  |         |                    | 2.71% |       |                    |  | 2.25% |                    |  |  | 3.43%              |  |  |          | 2.6% |       |         |  | 2.25% |       |  |  | 3.2%     |  |  |         | 2.6% |       |       |  | 2.25% |          |  |  | 3.3%    |  |  |  | 2.5% |       |  |  | 2.25% |  |  |  | 2.9% | 
|                               | Germany |                    |       | 2.25% |                    |  |       |                    |  |  |                    |  |  |          |      | 2.25% |         |  |       |       |  |  |          |  |  |         |      | 2.25% |       |  |       |          |  |  |         |  |  |  |      | 2.25% |  |  |       |  |  |  |      |  | 
|                               | U.S.    |                    |       | 3.95% |                    |  |       |                    |  |  |                    |  |  |          |      | 3.25% |         |  |       |       |  |  |          |  |  |         |      | 3.25% |       |  |       |          |  |  |         |  |  |  |      | 3.0%  |  |  |       |  |  |  |      |  | 
|                               | U.K.    |                    |       | 3.74% |                    |  |       |                    |  |  |                    |  |  |          |      | 3.7%  |         |  |       |       |  |  |          |  |  |         |      | 4.0%  |       |  |       |          |  |  |         |  |  |  |      | 3.6%  |  |  |       |  |  |  |      |  | 
|Rate of pension progression    |         |                    | 1.22% |       |                    |  | 1.00% |                    |  |  | 1.78%              |  |  |          | 1.2% |       |         |  | 1.0%  |       |  |  | 2.0%     |  |  |         | 1.3% |       |       |  | 1.0%  |          |  |  | 2.3%    |  |  |  | 1.4% |       |  |  | 1.25% |  |  |  | 2.1% | 
|                               | Germany |                    |       | 1.00% |                    |  |       |                    |  |  |                    |  |  |          |      | 1.0%  |         |  |       |       |  |  |          |  |  |         |      | 1.0%  |       |  |       |          |  |  |         |  |  |  |      | 1.25% |  |  |       |  |  |  |      |  | 
|                               | U.K.    |                    |       | 2.82% |                    |  |       |                    |  |  |                    |  |  |          |      | 2.7%  |         |  |       |       |  |  |          |  |  |         |      | 2.8%  |       |  |       |          |  |  |         |  |  |  |      | 2.6%  |  |  |       |  |  |  |      |  | 



F-49



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




Pension benefits: Sensitivity analysis





|                                    |  |                              |      |   |                 |  |      |  
|----------------------------------- |  | ---------------------------- | ---- | - | --------------- |  | ---- | -
|                                    |  | Effect on NPPC 2007 due to a |     
|                                    |  |                              |     
|                                    |  | one-percentage-              |      |   | one-percentage- | 
|                                    |  | point/500                   |      |   | point/500      | 
|                                    |  | increase                     |      |   | decrease        | 
|                                    |  |                              |      |   |                 | 
|Discount rate                       |  |                              | (226 | ) |                 |  | 291  |  
|Expected return on plan assets      |  |                              | (217 | ) |                 |  | 217  |  
|Rate of compensation increase       |  |                              | 65   |   |                 |  | (56  | )
|Rate of pension progression         |  |                              | 310  |   |                 |  | (256 | )
|Market-related value of plan assets |  |                              | (70  | ) |                 |  | 71   |  



Pension benefits: Additional information concerning
changes of the AML and actual returns on plan assets


|                                                                                             |  |                    |        |   |                    |  |      |                    |  |  |       |   |  |          |       |  |         |  |     |       |  |  |          |  |  |         |        |   |  |  |      |   |  |  |      |  
|-------------------------------------------------------------------------------------------- |  | ------------------ | ------ | - | ------------------ |  | ---- | ------------------ |  |  | ----- | - |  | -------- | ----- |  | ------- |  | --- | ----- |  |  | -------- |  |  | ------- | ------ | - |  |  | ---- | - |  |  | ---- | -
|                                                                                             |  | Year ended         |        |   | Year ended         |  |      | Year ended         | 
|                                                                                             |  | September 30, 2006 |        |   | September 30, 2005 |  |      | September 30, 2004 | 
|                                                                                             |  |                    |        |   |                    |  |      |                    | 
|                                                                                             |  | Total              |        |   | Domestic           |  |      | Foreign            |  |  | Total |   |  | Domestic |       |  | Foreign |  |     | Total |  |  | Domestic |  |  | Foreign |       
|                                                                                             |  |                    |        |   |                    |  |      |                    |  |  |       |   |  |          |       |  |         |  |     |       |  |  |          |  |  |         |       
|Change in the minimum liability adjustment within accumulated
    other comprehensive income |  |                    | (1,451 | ) |                    |  | (507 | )                  |  |  | (944  | ) |  |          | 1,813 |  |         |  | 896 |       |  |  | 917      |  |  |         | (1,432 | ) |  |  | (922 | ) |  |  | (510 | )




|                             |  |                    |       |  |                    |  |     |                    |  |  |       |  |  |          |       |  |         |  |       |       |  |  |          |  |  |         |       |  |  |  |     |  |  |  |     | 
|---------------------------- |  | ------------------ | ----- |  | ------------------ |  | --- | ------------------ |  |  | ----- |  |  | -------- | ----- |  | ------- |  | ----- | ----- |  |  | -------- |  |  | ------- | ----- |  |  |  | --- |  |  |  | --- | 
|                             |  | Year ended         |       |  | Year ended         |  |     | Year ended         | 
|                             |  | September 30, 2006 |       |  | September 30, 2005 |  |     | September 30, 2004 | 
|                             |  |                    |       |  |                    |  |     |                    | 
|                             |  | Total              |       |  | Domestic           |  |     | Foreign            |  |  | Total |  |  | Domestic |       |  | Foreign |  |       | Total |  |  | Domestic |  |  | Foreign |      
|                             |  |                    |       |  |                    |  |     |                    |  |  |       |  |  |          |       |  |         |  |       |       |  |  |          |  |  |         |      
|Actual return on plan assets |  |                    | 1,291 |  |                    |  | 741 |                    |  |  | 550   |  |  |          | 2,289 |  |         |  | 1,596 |       |  |  | 693      |  |  |         | 1,202 |  |  |  | 673 |  |  |  | 529 | 



F-50



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


     


Pension benefits: Plan assets




|             |  |                    |        |                                             |                    |  |      |                    |  |  |         |  |  |       |      |  |          |  |      |         |  |  |      |  |  |  |      | 
|------------ |  | ------------------ | ------ | ------------------------------------------- | ------------------ |  | ---- | ------------------ |  |  | ------- |  |  | ----- | ---- |  | -------- |  | ---- | ------- |  |  | ---- |  |  |  | ---- | 
|             |  |                    |        | Asset allocation as of the measurement date |                   
|             |  |                    |        |                                             |                   
|             |  | Target asset       |        |                                             | September 30, 2006 |  |      | September 30, 2005 | 
|             |  | allocation         |        |                                             |                    |  |      |                    | 
|Asset class  |  | September 30, 2007 |        |                                             | Total              |  |      | Domestic           |  |  | Foreign |  |  | Total |      |  | Domestic |  |      | Foreign | 
|             |  |                    |        |                                             |                    |  |      |                    |  |  |         |  |  |       |      |  |          |  |      |         | 
|Equity       |  |                    | 20-50% |                                             |                    |  | 33%  |                    |  |  | 26%     |  |  |       | 44%  |  |          |  | 31%  |         |  |  | 25%  |  |  |  | 43%  | 
|Fixed income |  |                    | 40-70% |                                             |                    |  | 48%  |                    |  |  | 51%     |  |  |       | 43%  |  |          |  | 56%  |         |  |  | 63%  |  |  |  | 40%  | 
|Real estate  |  |                    | 5-15%  |                                             |                    |  | 8%   |                    |  |  | 7%      |  |  |       | 10%  |  |          |  | 8%   |         |  |  | 7%   |  |  |  | 9%   | 
|Cash         |  |                    | 5-15%  |                                             |                    |  | 11%  |                    |  |  | 16%     |  |  |       | 3%   |  |          |  | 5%   |         |  |  | 5%   |  |  |  | 8%   | 
|             |  |                    |        |                                             |                    |  |      |                    |  |  |         |  |  |       |      |  |          |  |      |         | 
|             |  |                    |        |                                             |                    |  | 100% |                    |  |  | 100%    |  |  |       | 100% |  |          |  | 100% |         |  |  | 100% |  |  |  | 100% | 
|             |  |                    |        |                                             |                    |  |      |                    |  |  |         |  |  |       |      |  |          |  |      |         | 





Pension benefits: Pension plan funding




|                                |  |                    |     |  |                    |  |     |                    |  |  |       |  |  |          |     |  |         |  |     |       |  |  |          |  |  |         |       |  |  |  |       |  |  |  |     | 
|------------------------------- |  | ------------------ | --- |  | ------------------ |  | --- | ------------------ |  |  | ----- |  |  | -------- | --- |  | ------- |  | --- | ----- |  |  | -------- |  |  | ------- | ----- |  |  |  | ----- |  |  |  | --- | 
|                                |  | (Unaudited)        |     |  |                    |  |     |                    |  |  |       |  |  |          |    
|                                |  | Year ending        |     |  |                    |  |    
|                                |  | September 30, 2007 |     |  | Year ended         |  |     | Year ended         | 
|                                |  | (expected)         |     |  | September 30, 2006 |  |     | September 30, 2005 | 
|                                |  |                    |     |  |                    |  |     |                    | 
|                                |  | Total              |     |  | Domestic           |  |     | Foreign            |  |  | Total |  |  | Domestic |     |  | Foreign |  |     | Total |  |  | Domestic |  |  | Foreign |      
|                                |  |                    |     |  |                    |  |     |                    |  |  |       |  |  |          |     |  |         |  |     |       |  |  |          |  |  |         |      
|Regular funding                 |  |                    | 751 |  |                    |  | 317 |                    |  |  | 434   |  |  |          | 730 |  |         |  | 320 |       |  |  | 410      |  |  |         | 535   |  |  |  | 159   |  |  |  | 376 | 
|Supplemental cash Contributions |  |                    |    |  |                    |  |    |                    |  |  |      |  |  |          |    |  |         |  |    |       |  |  |         |  |  |         | 1,496 |  |  |  | 1,380 |  |  |  | 116 | 
|                                |  |                    |     |  |                    |  |     |                    |  |  |       |  |  |          |     |  |         |  |     |       |  |  |          |  |  |         |      
|Total                           |  |                    | 751 |  |                    |  | 317 |                    |  |  | 434   |  |  |          | 730 |  |         |  | 320 |       |  |  | 410      |  |  |         | 2,031 |  |  |  | 1,539 |  |  |  | 492 | 
|                                |  |                    |     |  |                    |  |     |                    |  |  |       |  |  |          |     |  |         |  |     |       |  |  |          |  |  |         |      

  




F-51



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Pension benefits: Pension benefit payments




|                          |  |       |       |  |          |  |       |         |  |  |       | 
|------------------------- |  | ----- | ----- |  | -------- |  | ----- | ------- |  |  | ----- | 
|                          |  | Total |       |  | Domestic |  |       | Foreign | 
|                          |  |       |       |  |          |  |       |         | 
|Pension benefits paid     |  |       |       |  |          |  |       |         |  |  |       | 
|2005                      |  |       | 1,032 |  |          |  | 751   |         |  |  | 281   | 
|2006                      |  |       | 1,125 |  |          |  | 788   |         |  |  | 337   | 
|Expected pension payments |  |       |       |  |          |  |       |         |  |  |       | 
|2007                      |  |       | 1,265 |  |          |  | 829   |         |  |  | 436   | 
|2008                      |  |       | 1,309 |  |          |  | 860   |         |  |  | 449   | 
|2009                      |  |       | 1,353 |  |          |  | 885   |         |  |  | 468   | 
|2010                      |  |       | 1,403 |  |          |  | 907   |         |  |  | 496   | 
|2011                      |  |       | 1,416 |  |          |  | 942   |         |  |  | 474   | 
|2012-2016                 |  |       | 7,885 |  |          |  | 5,104 |         |  |  | 2,781 | 



Other postretirement benefits








| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |  | Obligations and funded status,                                                                                              
|
| |  | Plan assets,                                                                                                                
|
| |  | Components of net periodic benefit cost for other postretirement
    benefits,                                              
|
| |  | Assumptions used in the calculation of the APBO and the net
    periodic benefit cost for other postretirement benefits, and
|
| |  | Benefit payments.                                                                                                           

F-52



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Other postretirement benefits: Obligations and funded
status




|                                              |  |                    |        |   |                    |  |      |         |  |  |       |   |  |          |        |   |         |  |      |   |  |  |      |  
|--------------------------------------------- |  | ------------------ | ------ | - | ------------------ |  | ---- | ------- |  |  | ----- | - |  | -------- | ------ | - | ------- |  | ---- | - |  |  | ---- | -
|                                              |  | September 30, 2006 |        |   | September 30, 2005 | 
|                                              |  |                    |        |   |                    | 
|                                              |  | Total              |        |   | Domestic           |  |      | Foreign |  |  | Total |   |  | Domestic |        |   | Foreign | 
|                                              |  |                    |        |   |                    |  |      |         |  |  |       |   |  |          |        |   |         | 
|Fair value of plan assets                     |  |                    | 3      |   |                    |  |     |         |  |  | 3     |   |  |          | 3      |   |         |  |     |   |  |  | 3    |  
|Accumulated postretirement benefit obligation |  |                    | 822    |   |                    |  | 429  |         |  |  | 393   |   |  |          | 919    |   |         |  | 394  |   |  |  | 525  |  
|                                              |  |                    |        |   |                    |  |      |         |  |  |       |   |  |          |        |   |         | 
|Funded status                                 |  |                    | (819   | ) |                    |  | (429 | )       |  |  | (390  | ) |  |          | (916   | ) |         |  | (394 | ) |  |  | (522 | )
|Unrecognized net gain                         |  |                    | (402   | ) |                    |  | (295 | )       |  |  | (107  | ) |  |          | (357   | ) |         |  | (318 | ) |  |  | (39  | )
|Unrecognized prior service benefits           |  |                    | (2     | ) |                    |  |     |         |  |  | (2    | ) |  |          | (44    | ) |         |  |     |   |  |  | (44  | )
|                                              |  |                    |        |   |                    |  |      |         |  |  |       |   |  |          |        |   |         | 
|Net amount recognized                         |  |                    | (1,223 | ) |                    |  | (724 | )       |  |  | (499  | ) |  |          | (1,317 | ) |         |  | (712 | ) |  |  | (605 | )
|                                              |  |                    |        |   |                    |  |      |         |  |  |       |   |  |          |        |   |         | 



|                                                             |                                                                        |                                        |     |     |                    |   |     |         |     |   |       |     |     |          |     |     |         |   |     |     |     |   |     |     |     |  
|------------------------------------------------------------ | ---------------------------------------------------------------------- | -------------------------------------- | --- | --- | ------------------ | - | --- | ------- | --- | - | ----- | --- | --- | -------- | --- | --- | ------- | - | --- | --- | --- | - | --- | --- | --- | -
|                                                             |                                                                        | September 30, 2006                     |     |     | September 30, 2005 |  
|                                                             |                                                                        |                                        |     |     |                    |  
|                                                             |                                                                        | Total                                  |     |     | Domestic           |   |     | Foreign |     |   | Total |     |     | Domestic |     |     | Foreign |  
|                                                             |                                                                        |                                        |     |     |                    |   |     |         |     |   |       |     |     |          |     |     |         |  
|Change in benefit obligations:                               |                                                                        |                                        |     |     |                    |   |     |         |     |   |       |     |     |          |     |     |         |   |     |     |     |   |     |    
|                                                             | Accumulated postretirement benefit obligation at beginning of
    year |                                        |     | 919 |                    |   |     | 394     |     |   |       | 525 |     |          |     | 939 |         |   |     | 443 |     |   |     | 496 |    
|                                                             |                                                                        | Foreign currency exchange rate changes |     |     | (23                | ) |     |         |    |   |       |     | (23 | )        |     |     | 13      |   |     |     |    |   |     |     | 13  |  
|                                                             |                                                                        | Service cost                           |     |     | 27                 |   |     |         | 15  |   |       |     | 12  |          |     |     | 26      |   |     |     | 14  |   |     |     | 12  |  
|                                                             |                                                                        | Interest cost                          |     |     | 43                 |   |     |         | 18  |   |       |     | 25  |          |     |     | 52      |   |     |     | 23  |   |     |     | 29  |  
|                                                             |                                                                        | Settlements and curtailments           |     |     |                   |   |     |         |    |   |       |     |    |          |     |     | (4      | ) |     |     |    |   |     |     | (4  | )
|                                                             |                                                                        | Plan participants contributions       |     |     |                   |   |     |         |    |   |       |     |    |          |     |     | 2       |   |     |     |    |   |     |     | 2   |  
|                                                             |                                                                        | Plan amendments and other              |     |     | 41                 |   |     |         | 41  |   |       |     |    |          |     |     | (41     | ) |     |     |    |   |     |     | (41 | )
|                                                             |                                                                        | Actuarial (gains) losses, net          |     |     | (65                | ) |     |         | 4   |   |       |     | (69 | )        |     |     | (6      | ) |     |     | (59 | ) |     |     | 53  |  
|                                                             |                                                                        | Divestments                            |     |     | (53                | ) |     |         | (14 | ) |       |     | (39 | )        |     |     | (7      | ) |     |     | (7  | ) |     |     |    |  
|                                                             |                                                                        | Benefits paid                          |     |     | (67                | ) |     |         | (29 | ) |       |     | (38 | )        |     |     | (55     | ) |     |     | (20 | ) |     |     | (35 | )
|                                                             |                                                                        |                                        |     |     |                    |   |     |         |     |   |       |     |     |          |     |     |         |  
|Accumulated postretirement benefit obligation at end of year |                                                                        |                                        | 822 |     |                    |   | 429 |         |     |   | 393   |     |     |          | 919 |     |         |   | 394 |     |     |   | 525 |    
|                                                             |                                                                        |                                        |     |     |                    |   |     |         |     |   |       |     |     |          |     |     |         |  

Other postretirement benefits: Plan assets




|                                      |                                                |                                  |   |   |                    |   |   |         |   |  |       |   |     |          |   |   |         |   |   |   |   |  |   |   |     |  
|------------------------------------- | ---------------------------------------------- | -------------------------------- | - | - | ------------------ | - | - | ------- | - |  | ----- | - | --- | -------- | - | - | ------- | - | - | - | - |  | - | - | --- | -
|                                      |                                                | September 30, 2006               |   |   | September 30, 2005 |  
|                                      |                                                |                                  |   |   |                    |  
|                                      |                                                | Total                            |   |   | Domestic           |   |   | Foreign |   |  | Total |   |     | Domestic |   |   | Foreign |  
|                                      |                                                |                                  |   |   |                    |   |   |         |   |  |       |   |     |          |   |   |         |  
|Change in plan assets                 |                                                |                                  |   |   |                    |   |   |         |   |  |       |   |     |          |   |   |         |   |   |   |   |  |   |  
|                                      | Fair value of plan assets at beginning of year |                                  |   | 3 |                    |   |   |        |   |  |       | 3 |     |          |   | 5 |         |   |   |  |   |  |   | 5 |    
|                                      |                                                | Employer contributions           |   |   | 38                 |   |   |         |  |  |       |   | 38  |          |   |   | 31      |   |   |   |  |  |   |   | 31  |  
|                                      |                                                | Plan participants contributions |   |   |                   |   |   |         |  |  |       |   |    |          |   |   | 2       |   |   |   |  |  |   |   | 2   |  
|                                      |                                                | Benefits paid                    |   |   | (38                | ) |   |         |  |  |       |   | (38 | )        |   |   | (35     | ) |   |   |  |  |   |   | (35 | )
|                                      |                                                |                                  |   |   |                    |   |   |         |   |  |       |   |     |          |   |   |         |  
|Fair value of plan assets at year end |                                                |                                  | 3 |   |                    |   |  |         |   |  | 3     |   |     |          | 3 |   |         |   |  |   |   |  | 3 |  
|                                      |                                                |                                  |   |   |                    |   |   |         |   |  |       |   |     |          |   |   |         |  

F-53



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Other postretirement benefits: Components of net periodic
benefit cost




|                                             |                                     |                    |    |     |                    |  |    |                    |   |  |       |    |   |          |    |     |         |  |    |       |   |  |          |     |   |         |    |     |   |  |    |     |   |  |    |    |  
|-------------------------------------------- | ----------------------------------- | ------------------ | -- | --- | ------------------ |  | -- | ------------------ | - |  | ----- | -- | - | -------- | -- | --- | ------- |  | -- | ----- | - |  | -------- | --- | - | ------- | -- | --- | - |  | -- | --- | - |  | -- | -- | -
|                                             |                                     | Year ended         |    |     | Year ended         |  |    | Year ended         |  
|                                             |                                     | September 30, 2006 |    |     | September 30, 2005 |  |    | September 30, 2004 |  
|                                             |                                     |                    |    |     |                    |  |    |                    |  
|                                             |                                     | Total              |    |     | Domestic           |  |    | Foreign            |   |  | Total |    |   | Domestic |    |     | Foreign |  |    | Total |   |  | Domestic |     |   | Foreign |   
|                                             |                                     |                    |    |     |                    |  |    |                    |   |  |       |    |   |          |    |     |         |  |    |       |   |  |          |     |   |         |   
|Service cost                                 |                                     |                    | 27 |     |                    |  | 15 |                    |   |  | 12    |    |   |          | 26 |     |         |  | 14 |       |   |  | 12       |     |   |         | 44 |     |   |  | 17 |     |   |  | 27 |   
|Interest cost                                |                                     |                    | 43 |     |                    |  | 18 |                    |   |  | 25    |    |   |          | 52 |     |         |  | 23 |       |   |  | 29       |     |   |         | 60 |     |   |  | 26 |     |   |  | 34 |   
|Amortization of:                             |                                     |                    |    |     |                    |  |    |                    |   |  |       |    |   |          |    |     |         |  |    |       |   |  |          |     |   |         |    |     |   |  |    |     |   |  |    |   
|                                             | Unrecognized prior service benefits |                    |    | (9  | )                  |  |    |                   |   |  |       | (9 | ) |          |    | (10 | )       |  |    |      |   |  |          | (10 | ) |         |    | (7  | ) |  |    |    |   |  |    | (7 | )
|                                             | Unrecognized net (gains)/losses     |                    |    | (22 | )                  |  |    | (19                | ) |  |       | (3 | ) |          |    | (19 | )       |  |    | (15   | ) |  |          | (4  | ) |         |    | (10 | ) |  |    | (12 | ) |  |    | 2  |  
|Net gain due to settlements and curtailments |                                     |                    |   |     |                    |  |   |                    |   |  |      |    |   |          | (4 | )   |         |  |   |       |   |  | (4       | )   |   |         | (3 | )   |   |  |   |     |   |  | (3 | ) 
|                                             |                                     |                    |    |     |                    |  |    |                    |   |  |       |    |   |          |    |     |         |  |    |       |   |  |          |     |   |         |   
|Net periodic benefit cost                    |                                     |                    | 39 |     |                    |  | 14 |                    |   |  | 25    |    |   |          | 45 |     |         |  | 22 |       |   |  | 23       |     |   |         | 84 |     |   |  | 31 |     |   |  | 53 |   
|                                             |                                     |                    |    |     |                    |  |    |                    |   |  |       |    |   |          |    |     |         |  |    |       |   |  |          |     |   |         |   

Other postretirement benefits: Assumptions used in the
calculation of the APBO and net periodic benefit cost






|                                             |                            |                    |            |             |                    |  |            |                    |  |  |            |             | 
|-------------------------------------------- | -------------------------- | ------------------ | ---------- | ----------- | ------------------ |  | ---------- | ------------------ |  |  | ---------- | ----------- | 
|                                             |                            | Year ended         |            |             | Year ended         |  |            | Year ended         | 
|                                             |                            | September 30, 2006 |            |             | September 30, 2005 |  |            | September 30, 2004 | 
|                                             |                            |                    |            |             |                    |  |            |                    | 
|Discount rate                                |                            |                    | 6.5%       |             |                    |  | 5.25%      |                    |  |  | 6.5%       |            
|Medical trend rates (initial/ultimate/year): |                            |                    |            |             |                    |  |            |                    |  |  |            |            
|                                             | Medicare ineligible pre-65 |                    |            | 10%/5%/2011 |                    |  |            | 9%/5%/2010         |  |  |            | 10%/5%/2010 | 
|                                             | Medicare eligible post-65  |                    |            | 10%/5%/2011 |                    |  |            | 9%/5%/2010         |  |  |            | 10%/5%/2010 | 
|Fixed dollar benefit                         |                            |                    | 4.5%       |             |                    |  | 4.5%       |                    |  |  | 4.5%       |            
|Dental trend rates (initial/ultimate/year)   |                            |                    | 6%/5%/2021 |             |                    |  | 6%/5%/2021 |                    |  |  | 6%/5%/2021 |            



|                                                        |  |                      |    |  |          |  |     |  
|------------------------------------------------------- |  | -------------------- | -- |  | -------- |  | --- | -
|                                                        |  | September 30, 2006   |   
|                                                        |  | One-percentage-point |   
|                                                        |  |                      |   
|                                                        |  | increase             |    |  | decrease | 
|                                                        |  |                      |    |  |          | 
|Effect on accumulated postretirement benefit obligation |  |                      | 45 |  |          |  | (39 | )
|Effect on total of service and interest cost components |  |                      | 4  |  |          |  | (3  | )

Other postretirement benefits: Benefit payments




F-54



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                                    |  |       |     |  |          |  |     |         |  |  |     | 
|--------------------------------------------------- |  | ----- | --- |  | -------- |  | --- | ------- |  |  | --- | 
|                                                    |  | Total |     |  | Domestic |  |     | Foreign | 
|                                                    |  |       |     |  |          |  |     |         | 
|Payments for other postretirement benefits          |  |       |     |  |          |  |     |         |  |  |     | 
|2005                                                |  |       | 55  |  |          |  | 20  |         |  |  | 35  | 
|2006                                                |  |       | 67  |  |          |  | 29  |         |  |  | 38  | 
|Expected payments for other postretirement benefits |  |       |     |  |          |  |     |         |  |  |     | 
|2007                                                |  |       | 52  |  |          |  | 28  |         |  |  | 24  | 
|2008                                                |  |       | 63  |  |          |  | 40  |         |  |  | 23  | 
|2009                                                |  |       | 66  |  |          |  | 42  |         |  |  | 24  | 
|2010                                                |  |       | 55  |  |          |  | 32  |         |  |  | 23  | 
|2011                                                |  |       | 58  |  |          |  | 35  |         |  |  | 23  | 
|2012-2016                                           |  |       | 367 |  |          |  | 253 |         |  |  | 114 | 



22. Other accruals and provisions


|                             |  |               |       |  |      |  |       | 
|---------------------------- |  | ------------- | ----- |  | ---- |  | ----- | 
|                             |  | September 30, |      
|                             |  |               |      
|                             |  | 2006          |       |  | 2005 | 
|                             |  |               |       |  |      | 
|Product warranties           |  |               | 741   |  |      |  | 796   | 
|Asset retirement obligations |  |               | 509   |  |      |  | 499   | 
|Deferred income              |  |               | 326   |  |      |  | 324   | 
|Other long-term accruals     |  |               | 2,482 |  |      |  | 3,409 | 
|                             |  |               |       |  |      | 
|                             |  |               | 4,058 |  |      |  | 5,028 | 
|                             |  |               |       |  |      | 

       




F-55



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


          







|                                                                                                                  |  |               |     |   |               |  |     |  
|----------------------------------------------------------------------------------------------------------------- |  | ------------- | --- | - | ------------- |  | --- | -
|                                                                                                                  |  | Year ended    |     |   | Year ended    | 
|                                                                                                                  |  | September 30, |     |   | September 30, | 
|                                                                                                                  |  | 2006          |     |   | 2005          | 
|                                                                                                                  |  |               |     |   |               | 
|Aggregate carrying amount as of the beginning of fiscal year
    (thereof current portion of
    43 and
    74) |  |               | 542 |   |               |  | 552 |  
|Liabilities incurred in the current period                                                                        |  |               | 9   |   |               |  | 12  |  
|Liabilities settled in the current period                                                                         |  |               | (34 | ) |               |  | (62 | )
|Accretion expense                                                                                                 |  |               | 31  |   |               |  | 28  |  
|Revision in estimated cash flows                                                                                  |  |               | (1  | ) |               |  | 12  |  
|                                                                                                                  |  |               |     |   |               | 
|Aggregate carrying amount as of fiscal year-end (thereof current
    portion of 38
    and 43)                  |  |               | 547 |   |               |  | 542 |  
|                                                                                                                  |  |               |     |   |               | 

23. Shareholders equity


Common stock and Additional paid-in capital


 


 


F-56



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                         |                                                   |                         |           |     |                    |  |         |                     |  |  |          |          |   |           |         |          |          |  |         |          |   |  |         |         |  
|------------------------ | ------------------------------------------------- | ----------------------- | --------- | --- | ------------------ |  | ------- | ------------------- |  |  | -------- | -------- | - | --------- | ------- | -------- | -------- |  | ------- | -------- | - |  | ------- | ------- | -
|                         |                                                   | Common stock            |           |     | Authorized capital |  |         | Conditional capital | 
|                         |                                                   | (authorized and issued) |           |     | (not issued)       |  |         | (not issued)        | 
|                         |                                                   |                         |           |     |                    |  |         |                     | 
|                         |                                                   | in                      |           |     | in                 |  |         | in                  |  |  | in       |          |   | in        |         |          | in       | 
|                         |                                                   | thousands               |           |     | thousand           |  |         | thousands           |  |  | thousand |          |   | thousands |         |          | thousand | 
|                         |                                                   | of                     |           |     | shares             |  |         | of                 |  |  | shares   |          |   | of       |         |          | shares   | 
|                         |                                                   |                         |           |     |                    |  |         |                     |  |  |          |          |   |           |         |          |          | 
|As of October 1, 2003    |                                                   |                         | 2,672,599 |     |                    |  | 890,866 |                     |  |  | 716,630  |          |   |           | 238,877 |          |          |  | 459,616 |          |   |  | 153,206 |        
|                         | Stock options                                     |                         |           | 195 |                    |  |         | 65                  |  |  |          |         |   |           |         |         |          |  |         | (195     | ) |  |         | (65     | )
|                         | Settlement to former SNI shareholders             |                         |           | 433 |                    |  |         | 145                 |  |  |          |         |   |           |         |         |          |  |         | (433     | ) |  |         | (145    | )
|                         | New approved capital                              |                         |           |    |                    |  |         |                    |  |  |          | 600,000  |   |           |         | 200,000  |          |  |         | 733,528  |   |  |         | 244,509 |  
|                         | Expired capital                                   |                         |           |    |                    |  |         |                    |  |  |          | (650,000 | ) |           |         | (216,667 | )        |  |         | (267,000 | ) |  |         | (89,000 | )
|                         |                                                   |                         |           |     |                    |  |         |                     |  |  |          |          |   |           |         |          |          | 
|As of September 30, 2004 |                                                   |                         | 2,673,227 |     |                    |  | 891,076 |                     |  |  | 666,630  |          |   |           | 222,210 |          |          |  | 925,516 |          |   |  | 308,505 |        
|                         | Settlement to former SNI shareholders             |                         |           | 29  |                    |  |         | 9                   |  |  |          |         |   |           |         |         |          |  |         | (29      | ) |  |         | (9      | )
|                         |                                                   |                         |           |     |                    |  |         |                     |  |  |          |          |   |           |         |          |          | 
|As of September 30, 2005 |                                                   |                         | 2,673,256 |     |                    |  | 891,085 |                     |  |  | 666,630  |          |   |           | 222,210 |          |          |  | 925,487 |          |   |  | 308,496 |        
|                         | Conversion 1.375% 2003/2010 EUR convertible notes |                         |           | 6   |                    |  |         | 2                   |  |  |          |         |   |           |         |         |          |  |         | (6       | ) |  |         | (2      | )
|                         | New approved capital                              |                         |           |    |                    |  |         |                    |  |  |          | 75,000   |   |           |         | 25,000   |          |  |         |         |   |  |         |        |  
|                         | Expired capital                                   |                         |           |    |                    |  |         |                    |  |  |          | (66,630  | ) |           |         | (22,210  | )        |  |         |         |   |  |         |        |  
|                         |                                                   |                         |           |     |                    |  |         |                     |  |  |          |          |   |           |         |          |          | 
|As of September 30, 2006 |                                                   |                         | 2,673,262 |     |                    |  | 891,087 |                     |  |  | 675,000  |          |   |           | 225,000 |          |          |  | 925,481 |          |   |  | 308,494 |        
|                         |                                                   |                         |           |     |                    |  |         |                     |  |  |          |          |   |           |         |          |          | 

Capital increases


 





 


Authorized, unissued capital


  





F-57



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)





  


  


 





Conditional capital (unissued)





  





F-58



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


  


   


  


 


Treasury stock





  


F-59



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


  


   


Accumulated other comprehensive income (loss)




|                                                                              |  |                          |       |     |        |  |      |      |  |  |        |   |  |        |        |   |     |     |      |        |  |  |        |   |  |     |       |   |  |  |      |   |  |  |      |  
|----------------------------------------------------------------------------- |  | ------------------------ | ----- | --- | ------ |  | ---- | ---- |  |  | ------ | - |  | ------ | ------ | - | --- | --- | ---- | ------ |  |  | ------ | - |  | --- | ----- | - |  |  | ---- | - |  |  | ---- | -
|                                                                              |  | Year ended September 30, |      
|                                                                              |  |                          |      
|                                                                              |  | 2006                     |       |     | 2005   |  |      | 2004 | 
|                                                                              |  |                          |       |     |        |  |      |      | 
|                                                                              |  |                          |       | Tax |        |  |      |      |  |  | Tax    |   |  |        |        |   |     | Tax |      |        | 
|                                                                              |  | Pretax                   |       |     | effect |  |      | Net  |  |  | Pretax |   |  | effect |        |   | Net |     |      | Pretax |  |  | effect |   |  | Net |      
|                                                                              |  |                          |       |     |        |  |      |      |  |  |        |   |  |        |        |   |     |     |      |        |  |  |        |   |  |     |      
|Changes in unrealized gains (losses) on securities:                           |  |                          |       |     |        |  |      |      |  |  |        |   |  |        |        |   |     |     |      |        |  |  |        |   |  |     |       |   |  |  |      |   |  |  |      |  
|Unrealized holding gains (losses) for the period                              |  |                          | 13    |     |        |  | 21   |      |  |  | 34     |   |  |        | 271    |   |     |     | (108 | )      |  |  | 163    |   |  |     | 218   |   |  |  | (79  | ) |  |  | 139  |  
|Reclassification adjustments for (gains) losses included in
    net income    |  |                          | (396  | )   |        |  | 144  |      |  |  | (252   | ) |  |        | (265   | ) |     |     | 89   |        |  |  | (176   | ) |  |     | (75   | ) |  |  | 13   |   |  |  | (62  | )
|                                                                              |  |                          |       |     |        |  |      |      |  |  |        |   |  |        |        |   |     |     |      |        |  |  |        |   |  |     |      
|Net unrealized gains (losses) on available-for-sale
    securities            |  |                          | (383  | )   |        |  | 165  |      |  |  | (218   | ) |  |        | 6      |   |     |     | (19  | )      |  |  | (13    | ) |  |     | 143   |   |  |  | (66  | ) |  |  | 77   |  
|Changes in unrealized gains (losses) on derivative
    financial instruments: |  |                          |       |     |        |  |      |      |  |  |        |   |  |        |        |   |     |     |      |        |  |  |        |   |  |     |       |   |  |  |      |   |  |  |      |  
|Unrealized gains (losses) on derivative financial
    instruments             |  |                          | 67    |     |        |  | (27  | )    |  |  | 40     |   |  |        | (165   | ) |     |     | 64   |        |  |  | (101   | ) |  |     | 73    |   |  |  | (33  | ) |  |  | 40   |  
|Reclassification adjustments for (gains) losses included in
    net income    |  |                          | 28    |     |        |  | (10  | )    |  |  | 18     |   |  |        | (71    | ) |     |     | 28   |        |  |  | (43    | ) |  |     | (111  | ) |  |  | 43   |   |  |  | (68  | )
|                                                                              |  |                          |       |     |        |  |      |      |  |  |        |   |  |        |        |   |     |     |      |        |  |  |        |   |  |     |      
|Net unrealized gains (losses) on derivative financial
    instruments         |  |                          | 95    |     |        |  | (37  | )    |  |  | 58     |   |  |        | (236   | ) |     |     | 92   |        |  |  | (144   | ) |  |     | (38   | ) |  |  | 10   |   |  |  | (28  | )
|Minimum pension liability                                                     |  |                          | 1,466 |     |        |  | (533 | )    |  |  | 933    |   |  |        | (1,935 | ) |     |     | 690  |        |  |  | (1,245 | ) |  |     | 1,397 |   |  |  | (532 | ) |  |  | 865  |  
|Foreign-currency translation adjustment                                       |  |                          | (330  | )   |        |  |     |      |  |  | (330   | ) |  |        | 483    |   |     |     |     |        |  |  | 483    |   |  |     | (249  | ) |  |  |     |   |  |  | (249 | )
|                                                                              |  |                          |       |     |        |  |      |      |  |  |        |   |  |        |        |   |     |     |      |        |  |  |        |   |  |     |      
|                                                                              |  |                          | 848   |     |        |  | (405 | )    |  |  | 443    |   |  |        | (1,682 | ) |     |     | 763  |        |  |  | (919   | ) |  |     | 1,253 |   |  |  | (588 | ) |  |  | 665  |  
|                                                                              |  |                          |       |     |        |  |      |      |  |  |        |   |  |        |        |   |     |     |      |        |  |  |        |   |  |     |      

Miscellaneous


(Aktiengesetz) (Handelsgesetzbuch)      


F-60



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


24. Commitments and contingencies


Guarantees and other commitments




|           |                                       |               |       |       |      |  |       |       | 
|---------- | ------------------------------------- | ------------- | ----- | ----- | ---- |  | ----- | ----- | 
|           |                                       | September 30, |      
|           |                                       |               |      
|           |                                       | 2006          |       |       | 2005 | 
|           |                                       |               |       |       |      | 
|Guarantees |                                       |               |       |       |      |  |       |      
|           | Credit guarantees                     |               |       | 302   |      |  |       | 362   | 
|           | Guarantees of third-party performance |               |       | 1,489 |      |  |       | 1,456 | 
|           | Other guarantees                      |               |       | 528   |      |  |       | 602   | 
|           |                                       |               |       |       |      | 
|           |                                       |               | 2,319 |       |      |  | 2,420 |      
|           |                                       |               |       |       |      | 

Credit guarantees  


Guarantees of third-party
performance,


Other guarantees Other guarantees  




|           |  |  |     | 
|---------- |  |  | --- | 
|2007       |  |  | 647 | 
|2008       |  |  | 505 | 
|2009       |  |  | 421 | 
|2010       |  |  | 294 | 
|2011       |  |  | 227 | 
|Thereafter |  |  | 495 | 

  


 


F-61



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)








|    |                                              
|--- | ---------------------------------------------
|25. | Derivative instruments and hedging activities



Foreign currency exchange risk management




Derivative
financial instruments not designated as hedges


foreign-currency-denominated Other current asset Other current liability


Cost of sales


Hedging
activities




F-62



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




Cash flow hedges AOCI    AOCI


 AOCI




Fair value hedges Other current asset   Other current liability  


Interest rate risk management






Derivative
financial instruments not designated as hedges


Other current asset Other current
liability


F-63



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Fair
value hedges of fixed rate debt obligations


Income (expense) from financial assets and
marketable securities, net


   


Cash
flow hedges of revolving term deposits


AOCI


Credit risk management






|    |                                    
|--- | -----------------------------------
|26. | Fair value of financial instruments



F-64



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Derivative financial instruments




Derivative interest rate contracts


Derivative currency contracts


Credit default swaps


  Other current assets   Other current liabilities  


Non-derivative financial instruments




Financial assets and securities




|                |  |               |       |  |      |  |       | 
|--------------- |  | ------------- | ----- |  | ---- |  | ----- | 
|                |  | September 30, |      
|                |  |               |      
|                |  | 2006          |       |  | 2005 | 
|                |  |               |       |  |      | 
|Fair value      |  |               | 4,237 |  |      |  | 3,935 | 
|Carrying amount |  |               | 3,922 |  |      |  | 3,768 | 

Financing receivables




F-65



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Debt




|                |  |               |        |  |      |  |        | 
|--------------- |  | ------------- | ------ |  | ---- |  | ------ | 
|                |  | September 30, |       
|                |  |               |       
|                |  | 2006          |        |  | 2005 | 
|                |  |               |        |  |      | 
|Fair value      |  |               | 16,266 |  |      |  | 12,994 | 
|Carrying amount |  |               | 15,574 |  |      |  | 12,435 | 

27. Stock-based compensation


Share-Based Payment Accounting for Stock-Based Compensation, Accounting for Stock
Issued to Employees,


     


I.   Equity
settled awards


  


Stock
Option Plans


Description
of plans1999 Siemens Stock Option Plan








F-66



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




Description
of plans2001 Siemens Stock Option Plan





Share-Based Payment




  


F-67



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##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


|                                 |  |                          |            |          |       |  |             |         |  |           |             |  |  |         |          |          |       |  |            |          |          |  |        |  |  |  |            |   |  |  |        | 
|-------------------------------- |  | ------------------------ | ---------- | -------- | ----- |  | ----------- | ------- |  | --------- | ----------- |  |  | ------- | -------- | -------- | ----- |  | ---------- | -------- | -------- |  | ------ |  |  |  | ---------- | - |  |  | ------ | 
|                                 |  | Year ended September 30, |           
|                                 |  |                          |           
|                                 |  | 2006                     |            |          | 2005  |  |             | 2004    | 
|                                 |  |                          |            |          |       |  |             |         | 
|                                 |  |                          |            | Weighted |       |  |             |         |  |           |            
|                                 |  |                          |            | average  |       |  |             |         |  |           |            
|                                 |  |                          |            | Weighted |       |  | Remaining   |         |  | Aggregate |             |  |  |         |         
|                                 |  |                          |            | average  |       |  | Contractual |         |  | Intrinsic |             |  |  |         | Weighted |          |       |  |            | Weighted |         
|                                 |  |                          |            | exercise |       |  | Term        |         |  | value in  |             |  |  |         | average  |          |       |  |            | average  |         
|                                 |  | Options                  |            |          | price |  |             | (years) |  |           | millions of |  |  |         |          | exercise |       |  |            |          | exercise | 
|                                 |  |                          |            |          |       |  |             |         |  |           |            |  |  | Options |          |          | price |  |            | Options  |          |  | price  | 
|                                 |  |                          |            |          |       |  |             |         |  |           |             |  |  |         |          |          |       |  |            |          |         
|Outstanding, beginning of period |  |                          | 28,611,556 |          |       |  | 71.93      |         |  |           |             |  |  |         |          |          |       |  | 28,054,326 |          |          |  | 70.86 |  |  |  | 20,410,876 |   |  |  | 69.82 | 
|Granted                          |  |                          | 3,023,830  |          |       |  | 74.59      |         |  |           |             |  |  |         |          |          |       |  | 2,945,035  |          |          |  | 72.54 |  |  |  | 8,678,752  |   |  |  | 73.25 | 
|Options exercised                |  |                          | (4,215,508 | )        |       |  | 55.71      |         |  |           |             |  |  |         |          |          |       |  | (1,696,362 | )        |          |  | 54.31 |  |  |  | (65,063    | ) |  |  | 57.73 | 
|Options forfeited                |  |                          | (690,730   | )        |       |  | 76.57      |         |  |           |             |  |  |         |          |          |       |  | (691,443   | )        |          |  | 74.41 |  |  |  | (970,239   | ) |  |  | 71.18 | 
|                                 |  |                          |            |          |       |  |             |         |  |           |             |  |  |         |          |          |       |  |            |          |          |  |        | 
|Outstanding, end of period       |  |                          | 26,729,148 |          |       |  | 74.67      |         |  |           | 1.8         |  |  |         | 65       |          |       |  | 28,611,556 |          |          |  | 71.93 |  |  |  | 28,054,326 |   |  |  | 70.86 | 
|                                 |  |                          |            |          |       |  |             |         |  |           |             |  |  |         |          |          |       |  |            |          |          |  |        | 
|Exercisable, end of period       |  |                          | 20,978,443 |          |       |  | 74.96      |         |  |           | 1.3         |  |  |         | 65       |          |       |  | 17,486,809 |          |          |  | 71.21 |  |  |  | 10,804,159 |   |  |  | 82.91 | 

      




|                    |        |           |                     |  |                |         |          |                |           |  |               |           |         |           |             |          |           |         |           |                |           |  |               |      |     |  |  |  |        |  |  |  |    | 
|------------------- | ------ | --------- | ------------------- |  | -------------- | ------- | -------- | -------------- | --------- |  | ------------- | --------- | ------- | --------- | ----------- | -------- | --------- | ------- | --------- | -------------- | --------- |  | ------------- | ---- | --- |  |  |  | ------ |  |  |  | -- | 
|Options outstanding |        |           | Options exercisable | 
|                    |        |           |                     | 
|                    |        | Aggregate |                     |  |                |         | Weighted |                |           |  |               | Aggregate |        
|                    |        | Weighted  |                     |  | Weighted       |         |          | Intrinsic      |           |  |               |           | average |           |             | Weighted |           |         | Intrinsic |               
|                    |        | Number of |                     |  | average        |         |          | average        |           |  | Value as of   |           |         | Number of |             |          | remaining |         |           | average        |           |  | Value as of   |     
|                    |        | Options   |                     |  | remaining life |         |          | exercise price |           |  | September 30, |           |         | Options   |             |          | life      |         |           | exercise price |           |  | September 30, |     
|Exercise prices     |        |           | outstanding         |  |                | (years) |          |                | per share |  |               | 2006      |         |           | exercisable |          |           | (years) |           |                | per share |  |               | 2006 |    
|                    |        |           |                     |  |                |         |          |                |           |  |               |           |         |           |             |          |           |         |           |                |           |  |               |      |    
|                    | 53.70 |           |                     |  | 4,317,952      |         |          |                | 1.2       |  |               |           | 53.70  |           |             |          | 65        |         |           |                | 4,317,952 |  |               |      | 1.2 |  |  |  | 53.70 |  |  |  | 65 | 
|                    | 57.73 |           |                     |  | 20,625         |         |          |                | 0.1       |  |               |           | 57.73  |           |             |          |           |         |           |                | 20,625    |  |               |      | 0.1 |  |  |  | 57.73 |  |  |  |    | 
|                    | 72.54 |           |                     |  | 2,778,300      |         |          |                | 3.2       |  |               |           | 72.54  |           |             |          |           |         |           |                |          |  |               |      | 3.2 |  |  |  | 72.54 |  |  |  |    | 
|                    | 73.25 |           |                     |  | 7,796,442      |         |          |                | 2.2       |  |               |           | 73.25  |           |             |          |           |         |           |                | 7,796,442 |  |               |      | 2.2 |  |  |  | 73.25 |  |  |  |    | 
|                    | 74.59 |           |                     |  | 2,972,405      |         |          |                | 4.2       |  |               |           | 74.59  |           |             |          |           |         |           |                |          |  |               |      | 4.2 |  |  |  | 74.59 |  |  |  |    | 
|                    | 86.23 |           |                     |  | 2,743,721      |         |          |                | 1.2       |  |               |           | 86.23  |           |             |          |           |         |           |                | 2,743,721 |  |               |      | 1.2 |  |  |  | 86.23 |  |  |  |    | 
|                    | 87.19 |           |                     |  | 6,099,703      |         |          |                | 0.2       |  |               |           | 87.19  |           |             |          |           |         |           |                | 6,099,703 |  |               |      | 0.2 |  |  |  | 87.19 |  |  |  |    | 

Fair
value information




F-68



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                                       |  |                           |          |  |      |  |        |      |  |  |        | 
|------------------------------------------------------ |  | ------------------------- | -------- |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                                       |  | Assumptions at grant date |         
|                                                       |  |                           |         
|                                                       |  | 2006                      |          |  | 2005 |  |        | 2004 | 
|                                                       |  |                           |          |  |      |  |        |      | 
|Risk-free interest rate                                |  |                           | 2.99%    |  |      |  | 2.72%  |      |  |  | 3.22%  | 
|Expected dividend yield                                |  |                           | 2.41%    |  |      |  | 2.07%  |      |  |  | 1.80%  | 
|Expected volatility                                    |  |                           | 18.30%   |  |      |  | 20.38% |      |  |  | 31.85% | 
|Expected option life                                   |  |                           | 3.5 yrs. |  |      |  | 3 yrs. |      |  |  | 3 yrs. | 
|Estimated weighted average fair value per option       |  |                           | 4.06    |  |      |  | 4.54  |      |  |  | 9.62  | 
|Fair value of total options granted during fiscal year |  |                           | 11      |  |      |  | 12    |      |  |  | 81    | 



Stock awards








F-69



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                               |  |                          |           |                  |            |  |        |        |                  |  |            |   |  |  |        | 
|------------------------------ |  | ------------------------ | --------- | ---------------- | ---------- |  | ------ | ------ | ---------------- |  | ---------- | - |  |  | ------ | 
|                               |  | Year ended September 30, |          
|                               |  |                          |          
|                               |  | 2006                     |           |                  | 2005       | 
|                               |  |                          |           |                  |            | 
|                               |  |                          |           | Weighted average |            |  |        |        | Weighted average | 
|                               |  |                          |           | Grant-Date       |            |  |        |        | Grant-Date       | 
|                               |  | Awards                   |           |                  | Fair Value |  |        | Awards |                  |  | Fair Value |  
|                               |  |                          |           |                  |            |  |        |        |                  |  |            |  
|Nonvested, beginning of period |  |                          | 1,136,048 |                  |            |  | 55.63 |        |                  |  |           |   |  |  |       | 
|Granted                        |  |                          | 1,076,860 |                  |            |  | 57.28 |        |                  |  | 1,152,508  |   |  |  | 55.63 | 
|Vested                         |  |                          |          |                  |            |  |       |        |                  |  |           |   |  |  |       | 
|Forfeited                      |  |                          | (58,037   | )                |            |  | 56.17 |        |                  |  | (16,460    | ) |  |  | 55.63 | 
|                               |  |                          |           |                  |            |  |        |        |                  |  |            |  
|Nonvested, end of period       |  |                          | 2,154,871 |                  |            |  | 56.44 |        |                  |  | 1,136,048  |   |  |  | 55.63 | 
|                               |  |                          |           |                  |            |  |        |        |                  |  |            |  
|Exercisable, end of period     |  |                          |          |                  |            |  |       |        |                  |  |           |   |  |  |       | 

   





Employee
share purchase program


        


II.  Liability
settled awards


Stock
appreciation rights (SARs)




F-70



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                 |  |                          |         |                  |                |  |        |       |                  |  |                |   |  |  |        | 
|-------------------------------- |  | ------------------------ | ------- | ---------------- | -------------- |  | ------ | ----- | ---------------- |  | -------------- | - |  |  | ------ | 
|                                 |  | Year ended September 30, |        
|                                 |  |                          |        
|                                 |  | 2006                     |         |                  | 2005           | 
|                                 |  |                          |         |                  |                | 
|                                 |  |                          |         | Weighted average |                |  |        |       | Weighted average | 
|                                 |  | SARs                    |         |                  | exercise price |  |        | SARs |                  |  | exercise price |  
|                                 |  |                          |         |                  |                |  |        |       |                  |  |                |  
|Outstanding, beginning of period |  |                          | 267,720 |                  |                |  | 73.05 |       |                  |  | 198,850        |   |  |  | 73.25 | 
|Granted                          |  |                          | 97,270  |                  |                |  | 74.59 |       |                  |  | 76,670         |   |  |  | 72.54 | 
|SARs exercised                  |  |                          | (2,300  | )                |                |  | 73.25 |       |                  |  |               |   |  |  |       | 
|SARs forfeited                  |  |                          | (12,790 | )                |                |  | 73.20 |       |                  |  | (7,800         | ) |  |  | 73.25 | 
|                                 |  |                          |         |                  |                |  |        |       |                  |  |                |  
|Outstanding, end of period       |  |                          | 349,900 | *                |                |  | 73.47 |       |                  |  | 267,720        |   |  |  | 73.05 | 
|                                 |  |                          |         |                  |                |  |        |       |                  |  |                |  
|Exercisable, end of period       |  |                          | 181,950 |                  |                |  | 73.25 |       |                  |  |               |   |  |  |       | 






|  |                                                                                                                                                                                                                                                                                                                                     
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Thereof 72,420 SARs with a
    72.54 exercise
    price and a weighted average remaining life of 3.2 years,
    181,950 SARs with a
    73.25 exercise
    price and a weighted average remaining life of 2.2 years
    and 95,530 SARs with a
    74.59 exercise
    price and a weighted average remaining life of 4.2 years.





Phantom
stock








|    |                
|--- | ---------------
|28. | Personnel costs

|                                                                                      |  |                          |        |  |      |  |        |      |  |  |        | 
|------------------------------------------------------------------------------------- |  | ------------------------ | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                                                                      |  | Year ended September 30, |       
|                                                                                      |  |                          |       
|                                                                                      |  | 2006                     |        |  | 2005 |  |        | 2004 | 
|                                                                                      |  |                          |        |  |      |  |        |      | 
|Wages and salaries                                                                    |  |                          | 23,656 |  |      |  | 21,680 |      |  |  | 20,261 | 
|Statutory social welfare contributions and expenses for optional
    support payments |  |                          | 3,942  |  |      |  | 3,576  |      |  |  | 3,419  | 
|Expenses relating to pension plans and employee benefits                              |  |                          | 1,798  |  |      |  | 1,390  |      |  |  | 1,416  | 
|                                                                                      |  |                          |        |  |      |  |        |      | 
|                                                                                      |  |                          | 29,396 |  |      |  | 26,646 |      |  |  | 25,096 | 
|                                                                                      |  |                          |        |  |      |  |        |      | 

F-71



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|                                    |  |                |       |  |      |  |       | 
|----------------------------------- |  | -------------- | ----- |  | ---- |  | ----- | 
|                                    |  | Year ended     |      
|                                    |  | September 30,  |      
|                                    |  |                |      
|                                    |  | 2006           |       |  | 2005 | 
|                                    |  |                |       |  |      | 
|                                    |  | (in thousands) |      
|Manufacturing and services          |  |                | 275.3 |  |      |  | 243.1 | 
|Sales and marketing                 |  |                | 110.0 |  |      |  | 110.3 | 
|Research and development            |  |                | 47.2  |  |      |  | 45.7  | 
|Administration and general services |  |                | 40.0  |  |      |  | 40.3  | 
|                                    |  |                |       |  |      | 
|                                    |  |                | 472.5 |  |      |  | 439.4 | 
|                                    |  |                |       |  |      | 

29. Earnings per share


|                                                                                |  |                          |         |  |      |  |         |      |  |  |         | 
|------------------------------------------------------------------------------- |  | ------------------------ | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                                                |  | Year ended September 30, |        
|                                                                                |  |                          |        
|                                                                                |  | 2006                     |         |  | 2005 |  |         | 2004 | 
|                                                                                |  |                          |         |  |      |  |         |      | 
|                                                                                |  | (shares in thousands)    |        
|Income from continuing operations                                               |  |                          | 3,087   |  |      |  | 3,058   |      |  |  | 3,450   | 
|Plus: interest on dilutive convertible debt securities                          |  |                          | 21      |  |      |  | 21      |      |  |  | 21      | 
|                                                                                |  |                          |         |  |      |  |         |      | 
|Income from continuing operations plus effect of assumed
    conversion         |  |                          | 3,108   |  |      |  | 3,079   |      |  |  | 3,471   | 
|Weighted average shares outstandingbasic                                       |  |                          | 890,850 |  |      |  | 890,732 |      |  |  | 890,705 | 
|Effect of dilutive convertible debt securities and stock-based
    compensation |  |                          | 46,770  |  |      |  | 45,798  |      |  |  | 45,510  | 
|                                                                                |  |                          |         |  |      |  |         |      | 
|Weighted average shares outstandingdiluted                                     |  |                          | 937,620 |  |      |  | 936,530 |      |  |  | 936,215 | 
|Basic earnings per share (from continuing operations)                           |  |                          | 3.47    |  |      |  | 3.43    |      |  |  | 3.87    | 
|Diluted earnings per share (from continuing operations)                         |  |                          | 3.31    |  |      |  | 3.29    |      |  |  | 3.71    | 






|    |                    
|--- | -------------------
|30. | Segment information



Operations Operations Other Operations, Reconciliation to
financial statements




F-72



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Other
Operations




Financing and Real Estate Eliminations, reclassifications and
Corporate Treasury Operations Financing and Real Estate,


Siemens Summary of
significant accounting policies




Operations


Operations Operations




Corporate items, pensions and
eliminations


Operations


Operations


F-73



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Other Operations




| |                                       
| | --------------------------------------
| | Reconciliation to financial statements

Reconciliation to financial statements


Corporate items Pensions Eliminations Operations




| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Corporate items, pensions and eliminations in the column
    Group profit consists of:

|                |  |                          |        |   |      |  |        |      |  |  |        |  
|--------------- |  | ------------------------ | ------ | - | ---- |  | ------ | ---- |  |  | ------ | -
|                |  | Year ended September 30, |       
|                |  |                          |       
|                |  | 2006                     |        |   | 2005 |  |        | 2004 | 
|                |  |                          |        |   |      |  |        |      | 
|Corporate items |  |                          | (616   | ) |      |  | (537   | )    |  |  | (450   | )
|Pensions        |  |                          | (598   | ) |      |  | (519   | )    |  |  | (729   | )
|Eliminations    |  |                          | (34    | ) |      |  | (16    | )    |  |  | (27    | )
|                |  |                          |        |   |      |  |        |      | 
|                |  |                          | (1,248 | ) |      |  | (1,072 | )    |  |  | (1,206 | )
|                |  |                          |        |   |      |  |        |      | 

Corporate items   Corporate items   


Pensions


Other interest expense


F-74



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Operations Operations Segment Information


|                                                                                                              |  |               |         |   |      |  |         |  
|------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---- |  | ------- | -
|                                                                                                              |  | September 30, |        
|                                                                                                              |  |               |        
|                                                                                                              |  | 2006          |         |   | 2005 | 
|                                                                                                              |  |               |         |   |      | 
|Total assets of Operations                                                                                    |  |               | 83,547  |   |      |  | 81,366  |  
|Asset-based adjustments:                                                                                      |  |               |         |   |      |  |         |  
|Intracompany financing receivables and investments                                                            |  |               | (16,963 | ) |      |  | (16,987 | )
|Tax related assets                                                                                            |  |               | (5,639  | ) |      |  | (6,691  | )
|Liability-based adjustments:                                                                                  |  |               |         |   |      |  |         |  
|Pension plans and similar commitments                                                                         |  |               | (4,099  | ) |      |  | (4,917  | )
|Accruals                                                                                                      |  |               | (6,191  | ) |      |  | (7,055  | )
|Liabilities to third parties                                                                                  |  |               | (25,649 | ) |      |  | (24,093 | )
|Assets and Liabilities held for disposal                                                                      |  |               | (193    | ) |      |  | 44      |  
|                                                                                                              |  |               |         |   |      | 
|Total adjustments (line item Other assets related
    reconciling items within the Segment Information table) |  |               | (58,734 | ) |      |  | (59,699 | )
|Net capital employed of Corporate items, pensions and
    eliminations                                        |  |               | 3,983   |   |      |  | 3,690   |  
|                                                                                                              |  |               |         |   |      | 
|Net capital employed of Operations Groups                                                                     |  |               | 28,796  |   |      |  | 25,357  |  
|                                                                                                              |  |               |         |   |      | 

Operations Segment Information


|                                                       |  |                          |      |   |                          |  |                            |                          |  |  |       |  |  |      |       |  |      |  |       |      |  |  |       |  |  |      |       |  |  |  |       |  |  |  |       | 
|------------------------------------------------------ |  | ------------------------ | ---- | - | ------------------------ |  | -------------------------- | ------------------------ |  |  | ----- |  |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- |  |  | ---- | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                                       |  | Net cash from operating  |      |   |                          |  | Amortization, depreciation |                         
|                                                       |  | and investing activities |      |   | Capital spending         |  |                            | and impairments          | 
|                                                       |  | Year ended September 30, |      |   | Year ended September 30, |  |                            | Year ended September 30, | 
|                                                       |  |                          |      |   |                          |  |                            |                          | 
|                                                       |  | 2006                     |      |   | 2005                     |  |                            | 2004                     |  |  | 2006  |  |  | 2005 |       |  | 2004 |  |       | 2006 |  |  | 2005  |  |  | 2004 |      
|                                                       |  |                          |      |   |                          |  |                            |                          |  |  |       |  |  |      |       |  |      |  |       |      |  |  |       |  |  |      |      
|Total Operations continuing                           |  |                          | 623  |   |                          |  | (1,222                     | )                        |  |  | 2,241 |  |  |      | 5,618 |  |      |  | 5,736 |      |  |  | 4,033 |  |  |      | 2,565 |  |  |  | 2,892 |  |  |  | 2,857 | 
|Total Operations discontinued                         |  |                          | (372 | ) |                          |  | (1,219                     | )                        |  |  | 244   |  |  |      | 5     |  |      |  | 135   |      |  |  | 134   |  |  |      | 5     |  |  |  | 109   |  |  |  | 94    | 
|                                                       |  |                          |      |   |                          |  |                            |                          |  |  |       |  |  |      |       |  |      |  |       |      |  |  |       |  |  |      |      
|Total Operations                                       |  |                          | 251  |   |                          |  | (2,441                     | )                        |  |  | 2,485 |  |  |      | 5,623 |  |      |  | 5,871 |      |  |  | 4,167 |  |  |      | 2,570 |  |  |  | 3,001 |  |  |  | 2,951 | 
|Total Financing and Real Estate continuing            |  |                          | (172 | ) |                          |  | (259                       | )                        |  |  | 213   |  |  |      | 791   |  |      |  | 775   |      |  |  | 448   |  |  |      | 442   |  |  |  | 424   |  |  |  | 391   | 
|Total Financing and Real Estate discontinued          |  |                          |     |   |                          |  | 5                          |                          |  |  | 3     |  |  |      |      |  |      |  |      |      |  |  |      |  |  |      |      |  |  |  | 1     |  |  |  | 2     | 
|                                                       |  |                          |      |   |                          |  |                            |                          |  |  |       |  |  |      |       |  |      |  |       |      |  |  |       |  |  |      |      
|Total Financing and Real Estate                        |  |                          | (172 | ) |                          |  | (254                       | )                        |  |  | 216   |  |  |      | 791   |  |      |  | 775   |      |  |  | 448   |  |  |      | 442   |  |  |  | 425   |  |  |  | 393   | 
|Eliminations, reclassifications and Corporate Treasury |  |                          | 288  |   |                          |  | (8                         | )                        |  |  | 561   |  |  |      |      |  |      |  |      |      |  |  |      |  |  |      |      |  |  |  |      |  |  |  |      | 
|                                                       |  |                          |      |   |                          |  |                            |                          |  |  |       |  |  |      |       |  |      |  |       |      |  |  |       |  |  |      |      
|Siemens Consolidated Statements of Cash Flow           |  |                          | 367  |   |                          |  | (2,703                     | )                        |  |  | 3,262 |  |  |      | 6,414 |  |      |  | 6,646 |      |  |  | 4,615 |  |  |      | 3,012 |  |  |  | 3,426 |  |  |  | 3,344 | 
|                                                       |  |                          |      |   |                          |  |                            |                          |  |  |       |  |  |      |       |  |      |  |       |      |  |  |       |  |  |      |      

Financing and Real Estate


Financing
and Real Estate Income before income taxes Operations Financing and
Real Estate


Income before income taxes      


F-75



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Income before income taxes   


Income before income taxes      


Eliminations, reclassifications and Corporate Treasury


Income before income taxes


Description of business segments


Operations


Communications (Com) .


Siemens Business Services (SBS)


Automation and Drives (A&D)


Industrial Solutions and Services (I&S)




Power Generation (PG)


Power Transmission and Distribution (PTD)


Transportation Systems (TS)


F-76



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)


Siemens VDO Automotive (SV)


Medical Solutions (Med)


Osram


Financing and Real Estate


Siemens Financial Services (SFS)


Siemens Real Estate (SRE)




|    |                       
|--- | ----------------------
|31. | Geographic information



|                            |  |                               |        |  |                                |  |        |      |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|--------------------------- |  | ----------------------------- | ------ |  | ------------------------------ |  | ------ | ---- |  |  | ------ |  |  | ---- | ------ |  | ---- |  | ------ |  |  |  | ------ | 
|                            |  | Sales by location of customer |        |  | Sales by location of companies | 
|                            |  |                               |        |  |                                | 
|                            |  | 2006                          |        |  | 2005                           |  |        | 2004 |  |  | 2006   |  |  | 2005 |        |  | 2004 | 
|                            |  |                               |        |  |                                |  |        |      |  |  |        |  |  |      |        |  |      | 
|Germany                     |  |                               | 16,245 |  |                                |  | 15,685 |      |  |  | 16,223 |  |  |      | 27,656 |  |      |  | 24,798 |  |  |  | 25,872 | 
|Europe (other than Germany) |  |                               | 27,105 |  |                                |  | 24,429 |      |  |  | 22,787 |  |  |      | 26,755 |  |      |  | 23,684 |  |  |  | 20,869 | 
|U.S.                        |  |                               | 17,388 |  |                                |  | 14,686 |      |  |  | 13,378 |  |  |      | 17,233 |  |      |  | 14,806 |  |  |  | 13,377 | 
|Americas other than U.S.    |  |                               | 5,525  |  |                                |  | 4,414  |      |  |  | 3,522  |  |  |      | 4,523  |  |      |  | 3,651  |  |  |  | 2,899  | 
|Asia-Pacific                |  |                               | 12,871 |  |                                |  | 10,057 |      |  |  | 8,990  |  |  |      | 8,645  |  |      |  | 6,612  |  |  |  | 5,586  | 
|Africa, Middle East, C.I.S. |  |                               | 8,191  |  |                                |  | 6,174  |      |  |  | 5,337  |  |  |      | 2,513  |  |      |  | 1,894  |  |  |  | 1,634  | 
|                            |  |                               |        |  |                                |  |        |      |  |  |        |  |  |      |        |  |      | 
|Siemens                     |  |                               | 87,325 |  |                                |  | 75,445 |      |  |  | 70,237 |  |  |      | 87,325 |  |      |  | 75,445 |  |  |  | 70,237 | 
|                            |  |                               |        |  |                                |  |        |      |  |  |        |  |  |      |        |  |      | 

|                            |  |                   |        |  |      |  |        |      |  |  |        | 
|--------------------------- |  | ----------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                            |  | Long-lived assets |       
|                            |  |                   |       
|                            |  | 2006              |        |  | 2005 |  |        | 2004 | 
|                            |  |                   |        |  |      |  |        |      | 
|Germany                     |  |                   | 4,557  |  |      |  | 4,272  |      |  |  | 4,190  | 
|Europe (other than Germany) |  |                   | 3,536  |  |      |  | 3,530  |      |  |  | 2,886  | 
|U.S.                        |  |                   | 2,378  |  |      |  | 2,551  |      |  |  | 2,295  | 
|Americas other than U.S.    |  |                   | 511    |  |      |  | 592    |      |  |  | 455    | 
|Asia-Pacific                |  |                   | 1,011  |  |      |  | 965    |      |  |  | 778    | 
|Africa, Middle East, C.I.S. |  |                   | 79     |  |      |  | 102    |      |  |  | 79     | 
|                            |  |                   |        |  |      |  |        |      | 
|Siemens                     |  |                   | 12,072 |  |      |  | 12,012 |      |  |  | 10,683 | 
|                            |  |                   |        |  |      |  |        |      | 



F-77



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)




|    |                  
|--- | -----------------
|32. | Subsequent events





















F-78



---



##### Table of Contents



SIEMENS


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


(in millions of
, except where
otherwise stated and per share amounts)








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Within Com there exist a number of Business Consultant
    Agreements. We have identified a multitude of payments made in
    connection with these contracts over the course of approximately
    a seven-year period for which we have either not been able to
    establish a valid business purpose or clearly identify the
    recipient. These payments raise concerns under the legislation
    of the U.S., Germany and other countries.                                                 
|
| |  | The payments identified were recorded as deductible business
    expenses in prior periods in determining income tax provisions.
    Our investigation determined that certain of these payments are
    nondeductible under German tax regulations, and accordingly, we
    have recorded additional income tax charges in our financial
    statements to reflect the correct tax treatment of these
    expenses. The Company has already reported this issue to the
    German tax authority.



  Consolidated Statements of
Income  Shareholders
equity






| |   |                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Managing Board has engaged an external attorney to act as an
    independent ombudsman and to provide a protected
    communication channel for Siemens employees and third parties.                                                                                           
|
| |  | In cases where suspicions of illegal behavior have been
    substantiated, the involved employees will immediately be
    suspended.                                                                                                                                                 
|
| |  | The Companys audit and compliance departments and an
    internal task force have been instructed to continue their
    internal investigation activities and the examination of our
    compliance and internal control system for gaps and any
    possibilities of circumvention.







F-79



---



##### Table of Contents



PART III, CONTINUED





ITEM 19:      EXHIBITS


|        |    |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- | -- | ---------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                       
|Number  |    | Description of Exhibit
|        |    |                       
|        | 1  | .1                     |  | English translation of Articles of Association of Siemens
    Aktiengesellschaft updated as of October 2006                                                                                                                                                                                                                                                                                                                                                                 
|        | 2  | .1                     |  | The total amount of long-term debt securities authorized under
    any instrument does not exceed 10% of the total assets of the
    Company on a consolidated basis. We hereby agree to furnish to
    the Commission, upon its request, a copy of any instrument
    defining the rights of holders of long-term debt of Siemens
    Aktiengesellschaft or of its subsidiaries for which consolidated
    or unconsolidated financial statements are required to be filed.
|        | 8  | .1                     |  | List of Significant Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 12 | .1                     |  | Certification of Chief Executive Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                      
|        | 12 | .2                     |  | Certification of Chief Financial Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                      
|        | 13 | .1                     |  | Certification of Chief Executive Officer pursuant to 18. U.S.C.
    Section 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                  
|        | 13 | .2                     |  | Certification of Chief Financial Officer pursuant to 18. U.S.C.
    Section 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                  
|        | 14 | .1                     |  | Consent of KPMG Deutsche Treuhand-Gesellschaft
    Aktiengesellschaft Wirtschaftsprüfungsgesellschaft                                                                                                                                                                                                                                                                                                                                                                       

III-1



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##### Table of Contents



SIGNATURES


20-F






| |                                                     
| | ----------------------------------------------------
| | Siemens Aktiengesellschaft                          
|
| | /s/ Joe Kaeser                                      
| |                                                     
| | Joe Kaeser                                          
| | Executive Vice President and Chief Financial Officer
|
| | /s/ Dr. Ralf P. Thomas                              
| |                                                     
| | Dr. Ralf P. Thomas                                  
| | Corporate Vice President and Controller             

III-2