UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Private Issuer

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

August 10, 2007

Commission File Number: 1-15174

Siemens Aktiengesellschaft

(Translation of registrant’s name into English)

Wittelsbacherplatz 2
D-80333 Munich
Federal Republic of Germany
(Address of principal executive offices)

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

Form 20-F þ		Form 40-F o

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

Yes o		No þ

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

Yes o		No þ

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

Yes o		No þ

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

 

 

Table of contents

Key figures
Management’s discussion and analysis
Consolidated Financial Statements
Notes
Quarterly summary
Supervisory Board and Managing Board changes
Financial calendar
Signatures

Introduction

     Effective with the first quarter of fiscal 2007, Siemens prepares its primary financial reporting according to International Financial Reporting Standards (IFRS). For fiscal year end 2006, our primary financial reporting was still under United States Generally Accepted Accounting Principles (U.S. GAAP). In addition, we published our first IFRS Consolidated Financial Statements as supplemental information in December 2006. We generally prepare the Interim Report as an update of our Annual Report, with a focus on the current period. The supplemental IFRS Consolidated Financial Statements serve as a basis for our primary IFRS reporting beginning with the first quarter of fiscal 2007 and as such, the Interim Report should be read in conjunction with these IFRS Consolidated Financial Statements and our Annual Report.

Key figures ⁽¹⁾

		3rd quarter (2)								first nine months (3)
(in millions of €, except where otherwise stated)		2007				2006				2007				2006
Income from continuing operations			716				1,341				2,826				2,845
Income from discontinued operations, net of income taxes			1,349				3				1,286				361
Net income			2,065				1,344				4,112				3,206
attributable to:
Minority interest			39				49				151				152
Shareholders of Siemens AG			2,026				1,295				3,961				3,054
Basic earnings per share (4)
(in euros)
Income from continuing operations			0.75				1.45				3.01				3.04
Net income			2.25				1.45				4.43				3.43
Diluted earnings per share (4)
(in euros)
Income from continuing operations			0.74				1.11				2.91				3.03
Net income			2.18				1.11				4.26				3.39
Free cash flow (5)(6)			908				850				3,258				958
Group profit from Operations (6)			1,504				1,231				5,099				3,622
New orders (6)			22,147				19,656				70,198				64,852
Revenue (6)			20,176				18,689				59,870				55,489

		June 30, 2007								September 30, 2006
		Continuing								Continuing
		operations				Total (7)				operations				Total (7)
Employees (in thousands)			445				461				424				475
Germany			145				151				143				161
International			300				310				281				314

(1)		Unaudited, focused on continuing operations. Discontinued operations consist of carrier networks, enterprise networks and mobile devices activities.
(2)		April 1 — June 30, 2007 and 2006, respectively.
(3)		October 1, 2006 and 2005 — June 30, 2007 and 2006, respectively.
(4)		Earnings per share — attributable to shareholders of Siemens AG.
(5)		Free cash flow represents net cash provided by operating activities less additions to intangible assets and property, plant and equipment, which are presented on the table “Segment information.”
(6)		Continuing operations.
(7)		Continuing and discontinued operations.

Note: “Group profit from Operations” is reconciled to “Income before income taxes” of Operations under “Reconciliation to financial statements” on the table “Segment information.”

Management’s discussion and analysis

Overview of financial results for the third quarter of fiscal 2007

	•		Orders were €22.147 billion, a 13% increase compared to the third quarter a year earlier, and revenue rose 8% year-over-year, to €20.176 billion.
	•		Group profit from Operations for the quarter climbed 22% year-over-year, to €1.504 billion, despite negative equity investment income of €371 million related to Nokia Siemens Networks (NSN).
	•		Income from continuing operations was €716 million, including the negative equity investment income related to NSN. For comparison, income from continuing operations of €1.341 billion in the third quarter a year earlier benefited from a substantial, non-recurring positive effect at Corporate Treasury.
	•		Net income was €2.065 billion and basic earnings per share were €2.25, compared to €1.344 billion and €1.45, respectively, in the third quarter a year earlier. Discontinued operations contributed €1.349 billion to net income in the current quarter, primarily due to a gain resulting from the transfer of assets into NSN.
	•		On a continuing basis, Free cash flow in the third quarter increased to €908 million compared to €850 million in the prior-year period, despite payment of €419 million related to a previously disclosed European Commission antitrust investigation.

     Siemens’ third quarter demonstrates that the Company is on track, and we believe that Siemens is off to a good start on the new Fit for 2010 program, which includes ambitious new targets for profitability, cash, and return on capital employed as well as leadership in corporate responsibility.

     In the third quarter, ended June 30, 2007, Siemens’ net income rose to €2.065 billion, an increase of 54% compared to €1.344 billion in the third quarter a year earlier. Basic earnings per share (EPS) rose to €2.25 from €1.45 in the prior-year quarter, and diluted EPS increased to €2.18 from €1.11 a year earlier. Discontinued operations contributed €1.349 billion to net income in the third quarter, compared to €3 million a year earlier. The difference is due primarily to a preliminary pre-tax non-cash gain of €1.702 billion generated by the transfer of our carrier-related businesses into a new entity, NSN, which began operations in the third quarter. This gain was partially offset by an impairment of the enterprise networks business, in the pre-tax amount of €355 million. Net income for the current period includes €125 million in expenses for outside advisors in connection with investigations into alleged violations of anti-corruption laws and related matters as well as remediation activities.

     In the third quarter, income from continuing operations was €716 million compared to €1.341 billion a year earlier. While the current period was burdened with negative equity investment income of €371 million associated with NSN, the prior-year period benefited from a pre-tax €429 million positive effect at Corporate Treasury related to a convertible bond. Basic earnings per share on a continuing basis were €0.75 compared to €1.45 in the prior-year quarter, and diluted earnings per share were €0.74 compared to €1.11 a year earlier.

     Group profit from Operations was also adversely affected by the negative equity earnings related to NSN, yet still rose 22% year-over-year, to €1.504 billion. Every Group in Operations increased its Group profit compared to the third quarter a year earlier, with most Groups delivering strong double-digit profit growth.

Leading earnings contributors included Automation and Drives (A&D), Medical Solutions (Med), Power Generation (PG), Siemens VDO Automotive (SV), Power Transmission and Distribution (PTD), and Osram.

     The other two components of Siemens, Financing and Real Estate and Corporate Treasury activities, contributed €183 million in income before income tax in the third quarter compared to €563 million a year earlier. The change year-over-year was due primarily to the €429 million convertible bond effect, which raised Corporate Treasury earnings to €528 million in the prior-year period. In the current period, Corporate Treasury activities earned €57 million. Financing and Real Estate generated earnings of €126 million, up from €35 million in the prior-year period.

     In a favorable macroeconomic environment, third-quarter orders increased 13%, to €22.147 billion, and revenue of €20.176 billion was up 8% compared to the prior-year quarter. Excluding currency translation and portfolio effects, third-quarter orders rose 12% and revenue was up 7%. A majority of Groups in Operations increased both orders and revenue year-over-year, with particularly strong growth at A&D, Med, PTD and PG. On a regional basis, Asia-Pacific and Europe outside Germany posted double-digit growth in both orders and revenue compared to the prior-year period.

     Free cash flow from continuing operations for the third quarter was €908 million, up from €850 million in the same quarter a year earlier. The current period was adversely affected by a €419 million payment related to a European Commission investigation of past anti-competitive behavior by providers of gas-isolated switchgear. In contrast, the prior-year period benefited from significant higher cash inflows at Corporate Treasury from foreign currency derivatives.

Results of Siemens

Results of Siemens — Third quarter of fiscal 2007 compared to third quarter of fiscal 2006

     The following discussion presents selected information for Siemens for the third quarter:

		Three months ended June 30, 2007
		New Orders												Revenue
						% Change												% Change
		Location of				vs. previous year								Location of				vs. previous year
(€ in millions)		customer				Actual				Adjusted*				customer				Actual				Adjusted**
Germany			3,488				0	%			(3	)%			3,589				0	%			(3	)%
Europe (other than Germany)			6,558				14	%			11	%			6,226				11	%			8	%
Americas			6,275				10	%			13	%			5,468				4	%			7	%
Asia-Pacific			3,762				43	%			40	%			3,140				19	%			17	%
Africa, Middle East, C.I.S.***			2,064				(2	)%			0	%			1,753				11	%			12	%
Siemens			22,147				13	%			12	%			20,176				8	%			7	%

     Revenue in the third quarter of fiscal 2007 was €20.176 billion, an 8% increase from €18.689 billion in the prior-year period. Orders were €22.147 billion, 13% higher than €19.656 billion a year earlier. On an organic basis, excluding currency translation effects and the net effect of acquisitions and dispositions, revenue climbed 7% and orders rose 12%.

     International revenue was up 10% and international orders for the third quarter increased 15% year-over-year, to €16.587 billion and €18.659 billion, respectively. In Germany, revenue and orders of €3.589 billion and €3.488 billion, respectively, were level with third quarter a year earlier. Within international results, Asia-Pacific was the leading contributor to growth. Revenue rose 19% compared to the third quarter a year earlier, to €3.140 billion, and orders rose 43% year-over-year, to €3.762 billion. Both China and India generated high double-digit growth in revenue and orders compared to the prior-year period. Europe (other than Germany) was also a strong contributor to growth, with third-quarter revenue rising 11%, to €6.226 billion, and orders climbing 14% year-over-year, to €6.558 billion. In the Americas, revenue of €5.468 billion and orders of €6.275 billion were 4% and 10% higher, respectively, than in the third quarter a year ago. Excluding currency translation and portfolio effects, revenue and orders in this region were up 7% and 13%. The region comprising Africa, Middle East, and the Commonwealth of Independent States (C.I.S.) contributed €1.753 billion to revenue in the third quarter, an 11% increase year-over-year. Order volume was higher than revenue, at €2.064 billion but came in 2% lower than the prior-year level which included a higher number of large orders.

		Three months ended
		June 30,
(€ in millions)			2007				2006
Gross profit			5,600				4,774
as percentage of revenue			27.8	%			25.5	%

     Gross profit for the third quarter increased 17% year-over-year to €5.600 billion, rising faster than revenue. Almost all Groups increased their gross profit, led by Med and A&D. The gross profit margin climbed to 27.8% in the third quarter compared to 25.5% a year earlier.

		Three months ended
		June 30,
(€ in millions)		2007				2006
Research and development expenses			(995	)			(848	)
as percentage of revenue			4.9	%			4.5	%
Marketing, selling and general administrative expenses			(3,226	)			(2,988	)
as percentage of revenue			16.0	%			16.0	%
Other operating income			197				108
Other operating expense			(218	)			(94	)
Income (loss) from investments accounted for using the equity method, net			(207	)			129
Financial income (expense), net			(59	)			603

     Research and development (R&D) expense rose to €995 million from €848 million in the third quarter a year earlier. As revenue between the two periods increased, R&D expenses as percentage of revenue grew only slightly to 4.9% from 4.5% a year ago. Marketing, selling and general administrative expenses rose to €3.226 billion, as Med and A&D made major acquisitions between the periods under review while Siemens IT Solutions and Services (SIS) substantially reduced its Marketing, selling and general administrative expenses year-over-year. As percentage of revenue, Marketing, selling and general administrative expenses remained unchanged year-over-year at 16.0%. Other operating income increased to €197 million from €108 million, mainly due to higher earnings from disposals of businesses and sales of real estate. Other operating expense increased to €218 million from €94 million in the third quarter of the prior year, due primarily to expenses related to legal and regulatory matters and €31 million primarily to fund job placement companies for former Siemens employees affected by the bankruptcy of BenQ Mobile GmbH & Co. OHG (BenQ).

     Income (loss) from investments accounted for using the equity method, net was a negative €207 million in the third quarter of fiscal 2007 compared to a positive €129 million in the prior-year period. The change year-over-year is primarily due to €371 million in negative equity investment income related to NSN. Financial income, net was a negative €59 million, including higher interest expense related primarily to bonds issued between the periods under review. Financial income, net in the prior-year period was a positive €603 million, benefiting from a €429 million positive effect related to mark-to-market valuation of a cash settlement option associated with the €2.5 billion convertible bond issued in 2003. This option was irrevocably waived in the third quarter of fiscal 2006, effectively eliminating subsequent earnings effects.

		Three months ended
		June 30,
(€ in millions)		2007				2006
Income from continuing operations before income taxes			1,092				1,684
Income taxes			(376	)			(343	)
as percentage of income from continuing operations before income taxes			34	%			20	%
Income from continuing operations			716				1,341
Income from discontinued operations, net of income taxes			1,349				3
Net income			2,065				1,344
Net income attributable to Minority interest			39				49
Net income attributable to shareholders of Siemens AG			2,026				1,295

     Income from continuing operations before income taxes was €1.092 billion compared to €1.684 billion in the third quarter a year ago. The change year-over-year is due primarily to the negative effect in the current year noted above in Income (loss) from investments accounted for using the equity method, net and the positive effect noted above for the prior year in financial income (expense), net. Despite lower pre-tax income from continuing operations, income taxes were higher in the current quarter mainly due to the negative swing in Income (loss) from investments accounted for using the equity method, net and non-taxable earnings in the prior-year period. In combination with the effects noted above, this resulted in significantly lower income from continuing operations compared to the prior-year period.

     Discontinued operations contributed income, net of income taxes of €1.349 billion. This result was due to a €1.702 billion preliminary pre-tax non-cash gain associated with the transfer of Siemens’ carrier-related assets into NSN, partially offset by a €355 million impairment relating to the enterprise networks business. A year earlier, discontinued operations earned income, net of income taxes of €3 million in the third quarter. Net income of €2.065 billion in the current quarter was 54% higher than in the third quarter a year earlier, and net income attributable to shareholders of Siemens AG was €2.026 billion, up 56% compared to the prior-year period.

Results of Siemens — First nine months of fiscal 2007 compared to first nine months of fiscal 2006

     The following discussion presents selected information for Siemens for the first nine months:

		Nine months ended June 30, 2007
		New Orders												Revenue
						% Change												% Change
		Location of				vs. previous year								Location of				vs. previous year
(€ in millions)		customer				Actual				Adjusted*				customer				Actual				Adjusted**
Germany			12,185				4	%			4	%			11,349				3	%			3	%
Europe (other than Germany)			22,469				14	%			13	%			18,959				10	%			9	%
Americas			18,991				12	%			18	%			15,792				3	%			8	%
Asia-Pacific			10,250				6	%			9	%			8,729				14	%			17	%
Africa, Middle East, C.I.S.***			6,303				(8	)%			(6	)%			5,041				18	%			20	%
Siemens			70,198				8	%			10	%			59,870				8	%			10	%

     In the first nine months of fiscal 2007, revenue and orders both climbed 8% compared to the same period a year earlier. Revenue rose to €59.870 billion from €55.489 billion, and orders increased to €70.198 billion from €64.852 a year earlier. On an organic basis, excluding currency translation effects and the net effect of acquisitions and dispositions, revenue and orders both rose 10%.

     International revenue and orders for the first nine months were both up 9% year-over-year, at €48.521 billion and €58.013 billion, respectively. In Germany, revenue for the first nine months rose 3%, to €11.349 billion, and orders increased 4%, to €12.185 billion. On a regional basis, Europe other than Germany was the strongest contributor to international volume growth, with revenue rising 10%, to €18.959 billion, and orders climbing 14%, to €22.469 billion. Both revenue and orders grew in the Americas as well, where revenue for the first nine months was €15.792 billion, up 3% compared to the prior-year period, and orders of €18.991 billion were 12% higher year-over-year. On an organic basis, revenue rose 8% in this region and orders climbed 18%. Within the region, the U.S. showed a similar pattern. Revenue rose 1% to €12.279 billion and orders increased 6% to €13.836 billion. Organic growth in the U.S. for the nine-month period included a 7% increase in revenue and 13% rise in orders.

     Revenue in Asia-Pacific for the first nine months grew 14%, to €8.729 billion, and orders of €10.250 billion grew 6% compared to the prior-year period. Both periods included a similar level of major orders. Within Asia-Pacific, revenue in China rose 10%, to €3.193 billion for the first nine months, while orders of €3.742 billion came in 2% lower than a year earlier due in part to currency translation effects. The Africa, Middle East, C.I.S. region showed a similar development. Though nine-month orders of €6.303 billion were well above nine-month revenue of €5.041 billion, orders were 8% lower than a year earlier and revenue was 18% higher.

		Nine months ended
		June 30,
(€ in millions)		2007				2006
Gross profit			16,066				14,072
as percentage of revenue			26.8	%			25.4	%

     Gross profit for the first nine months rose to €16.066 billion from €14.072 billion in the same period a year earlier. This represents 14% growth year-over, clearly exceeding revenue growth of 8% on a nine-month basis. Most Groups increased their gross profit. Gross profit margin for the first nine months of fiscal 2007 rose year-over-year as well, to 26.8% from 25.4%.

		Nine months ended
		June 30,
(€ in millions)		2007				2006
Research and development expenses			(2,650	)			(2,496	)
as percentage of revenue			4.4	%			4.5	%
Marketing, selling and general administrative expenses			(9,177	)			(9,098	)
as percentage of revenue			15.3	%			16.4	%
Other operating income			537				502
Other operating expense			(880	)			(163	)
Income from investments accounted for using the equity method, net			143				468
Financial income (expense), net			(50	)			304

     Research and development expenses increased nominally year-over-year but declined slightly as a percentage of revenue due to more rapid business growth. Marketing, selling and general administrative expenses increased modestly on a nine-month basis but declined as a percent of revenue to 15.3%, partly due to a positive development at SIS, reflecting an improved cost position and substantial severance charges in the prior year. Other operating income was higher in the current period, benefiting from a gain on the sale of a locomotive leasing business at Transportation Systems (TS) and gains on disposals of other businesses. A year earlier, other operating income included a positive effect from the settlement of an arbitration proceeding. A number of factors led to the substantial increase in other operating expense in the first nine months compared to the prior year. Most important among these were expenses related to legal and regulatory matters, including the previously disclosed European Commission penalty of €423 million mentioned above. Other operating expense also includes €81 million primarily to fund job placement companies for former Siemens employees affected by the bankruptcy of BenQ and a €52 million goodwill impairment at a regional payphone unit. Nine-month income from investments accounted for using the equity method, net declined year-over-year to €143 million, mainly due to negative equity investment income of €371 million related to NSN. Financial income (expense), net for the first nine months of fiscal 2007 was a negative €50 million compared to a positive €304 million, including a €143 million negative impact at Corporate Treasury from the convertible bond cash settlement option mentioned above. This negative turn is primarily due to higher interest expense associated with bonds issued between the periods under review and lower income from available-for-sale financial assets.

		Nine months ended
		June 30,
(€ in millions)		2007				2006
Income from continuing operations before income taxes			3,989				3,589
Income taxes			(1,163	)			(744	)
as percentage of income from continuing operations before income taxes			29	%			21	%
Income from continuing operations			2,826				2,845
Income from discontinued operations, net of income taxes			1,286				361
Net income			4,112				3,206
Net income attributable to Minority interest			151				152
Net income attributable to Shareholders of Siemens AG			3,961				3,054

     For the first nine months of fiscal 2007, income from continuing operations before income taxes was €3.989 billion. The primary factor in the 11% increase compared to the prior-year period was the 14% increase in Gross profit. The change year-over-year was positively influenced by developments at SIS, where €396 million in severance charges resulted in a significant loss for the prior-year period but helped the Group return to profitability in the first nine months of fiscal 2007. The current year was negatively affected by the €143 million net impact from the convertible bond cash settlement option. The income tax rate for the first nine months increased from 21% a year earlier to 29%, due primarily to the €423 million penalty mentioned above, which was not tax-deductible as well as higher earnings in Germany and the decrease of Income from investments accounted for using the equity method, net. As a result, income from continuing operations in the nine months of €2.826 billion was slightly below the level a year earlier.

     Discontinued operations, net of income taxes increased to €1.286 billion in the first nine months, compared to income of €361 million in the same period of the prior year due to the €1.702 billion preliminary pre-tax non-cash gain associated with the transfer of carrier-related assets into NSN, partially offset by impairments totaling €503 million. The prior-year period benefited from a €356 million gain on the sale of shares in Juniper Networks, Inc. (Juniper), partially offset by €198 million in severance charges. Net income for the first nine months rose 28% year-over-year, to €4.112 billion. Net income attributable to shareholders of Siemens AG rose 30% year-over-year, to €3.961 billion.

Portfolio activities

     On January 2, 2007, Siemens completed the acquisition of the diagnostics division of Bayer. The acquisition which was consolidated as of January 2007, will be integrated into Med together with the recently acquired Diagnostic Products Corporation (DPC). The Bayer diagnostics division will enable Siemens to expand its position in the growing molecular diagnostics market. The estimated purchase price, payable in cash, amounts to €4.5 billion (including €185 million cash acquired). The Company has not yet finalized the purchase price allocation.

     On May 4, 2007, Siemens completed the acquisition of U.S.-based UGS Corp. (UGS), one of the leading providers of product lifecycle management (PLM) software and services for manufacturers. UGS, which was consolidated as of May 2007, will be integrated into A&D. The acquisition will enable Siemens to provide an end-to-end software and hardware portfolio for manufacturers encompassing the complete lifecycle of products and production facilities. The estimated purchase price, including the assumption of debt, amounts to €2.7 billion (including €75 million cash acquired). The company has not yet finalized the purchase price allocation.

     In April 2007, Siemens contributed its carrier-related operations and Nokia Corporation (Nokia), Finland contributed its Networks Business Group into NSN, in exchange for shares in NSN. Siemens and Nokia each own an economic share of approximately 50% of NSN. In the third quarter of fiscal 2007, the transaction resulted in a preliminary pre-tax non-cash gain of €1.702 billion which is included in discontinued operations. Siemens has the ability to exercise significant influence over operating and financial policies of NSN and beginning April 2007 reports its equity interest in NSN in Investments accounted for using the equity method and its share of income (loss) in NSN in Income (loss) from investments accounted for using the equity method, net.

     For further information on our acquisitions and dispositions, see “Subsequent events” and “Notes to Consolidated Financial Statements.”

Segment information analysis

Operations

Information and Communications

Siemens IT Solutions and Services (SIS)

		Third quarter																Nine months ended June 30,
										% Change																% Change
(€ in millions)		2007				2006				Actual				Adjusted*				2007				2006				Actual				Adjusted**
Group profit			66				(92	)											172				(501	)
Group profit margin			5.3	%			(7.6	)%											4.4	%			(11.7	)%
Revenue			1,257				1,218				3	%			5	%			3,922				4,269				(8	)%			6	%
New orders			1,094				1,189				(8	)%			(6	)%			3,561				4,308				(17	)%			(2	)%

     Beginning in the third quarter, SIS combines the former Siemens Business Services (SBS) Group with certain other IT activities within Siemens. Results for SIS are stated on a retroactive basis, to provide a meaningful comparison with prior periods.

     Group profit at SIS was €66 million in the third quarter. The Group benefited from an improved cost structure, in part due to prior-year severance programs. The third quarter a year ago included severance charges as well as negative effects related to divestment of the Group’s Product Related Services (PRS) division at the beginning of the third quarter of fiscal 2006. Revenue for the current period rose 3% year-over-year to €1.257 billion, while orders of €1.094 billion came in below the prior-year level which included a higher number of major orders.

     For the first nine months of fiscal 2007, Group profit at SIS was €172 million. The change year-over-year was due primarily to €396 million in severance charges in the first nine months a year earlier, as well as the adverse effects from the PRS divestment. The severance charges contributed to a significant loss for the prior-year period but helped the Group to return to profitability in the current period. Nine-month revenue and orders came in lower compared to a year earlier due primarily to the PRS divestment between the periods under review. On an adjusted basis, revenue rose year-over-year, while selective order intake held orders 2% below the prior-year level.

Automation and Control

Automation and Drives (A&D)

		Third quarter																Nine months ended June 30,
										% Change																% Change
(€ in millions)		2007				2006				Actual				Adjusted*				2007				2006				Actual				Adjusted**
Group profit			507				404				25	%							1,483				1,148				29	%
Group profit margin			13.1	%			12.4	%											13.5	%			12.2	%
Revenue			3,885				3,259				19	%			16	%			10,986				9,432				16	%			17	%
New orders			4,270				3,590				19	%			16	%			12,443				10,792				15	%			16	%

     A&D continued on pace for record earnings in fiscal 2007, as third-quarter Group profit climbed 25% to €507 million, despite expenses related to the acquisition of lifecycle software provider UGS Corp. Third-quarter revenue and orders each rose 19% year-over-year, to €3.885 billion and €4.270 billion, respectively. Order growth was particularly strong in Asia-Pacific and Europe including Germany. A&D expects additional expenses related to the acquisition in the coming quarters.

     In the first nine months of fiscal 2007, A&D delivered €1.483 billion in Group profit, a 29% increase compared to the same period a year earlier. A&D’s largest divisions all increased their earnings, revenue and orders for the first nine months compared to the same period a year earlier. Growth was also well distributed geographically, as A&D posted double-digit growth in all major regions of the world.

Industrial Solutions and Services (I&S)

		Third quarter																Nine months ended June 30,
										% Change																% Change
(€ in millions)		2007				2006				Actual				Adjusted*				2007				2006				Actual				Adjusted**
Group profit			95				76				25	%							285				221				29	%
Group profit margin			4.4	%			3.4	%											4.5	%			3.5	%
Revenue			2,149				2,232				(4	)%			(3	)%			6,394				6,342				1	%			3	%
New orders			2,502				1,744				43	%			46	%			7,993				6,896				16	%			18	%

     Third-quarter Group profit at I&S rose 25% year-over-year, to €95 million, particularly on higher earnings and margins in the Industrial Services division. Third-quarter revenue was €2.149 billion compared to €2.232 billion a year earlier. I&S won large new contracts at most of its divisions, taking third-quarter orders up 43% year-over-year, to €2.502 billion.

     Nine-month Group profit at I&S of €285 million was up 29% compared to the same period a year earlier. Most of the Group’s divisions increased their earnings year-over-year, with the strongest contributions coming from Industrial Services. Growth was broad-based within I&S, as its largest divisions posted increases in revenue and orders compared to the first nine months a year earlier. Overall, revenue rose 1% and orders grew 16%. On a geographic basis, the Group’s volume growth was highlighted by solid increases in revenue and orders in Europe and double-digit order growth in the Americas and Asia-Pacific.

Siemens Building Technologies (SBT)

		Third quarter																Nine months ended June 30,
										% Change																% Change
(€ in millions)		2007				2006				Actual				Adjusted*				2007				2006				Actual				Adjusted**
Group profit			80				36				122	%							252				146				73	%
Group profit margin			6.9	%			3.2	%											6.8	%			4.3	%
Revenue			1,161				1,122				3	%			8	%			3,709				3,393				9	%			12	%
New orders			1,269				1,142				11	%			15	%			4,019				3,833				5	%			8	%

     SBT’s Group profit for the third quarter was €80 million, benefiting from the sale of a business in Germany. The Fire Safety & Security Products division and the HVAC Products division contributed higher earnings year-over-year. Third-quarter revenue rose 3%, to €1.161 billion, and orders of €1.269 billion were 11% higher than in the prior-year period.

     Group profit at SBT for the first nine months climbed 73%, to €252 million, including the gain on the sale of a business mentioned above. All divisions increased their earnings and margins compared to the same period a year earlier. Revenue and orders also rose on a Group-wide basis, and SBT posted a 9% increase in revenue and a 5% increase in orders year-over-year.

Power

Power Generation (PG)

		Third quarter																Nine months ended June 30,
										% Change																% Change
(€ in millions)		2007				2006				Actual				Adjusted*				2007				2006				Actual				Adjusted**
Group profit			290				219				32	%							789				657				20	%
Group profit margin			10.1	%			8.3	%											9.1	%			9.2	%
Revenue			2,863				2,635				9	%			8	%			8,661				7,162				21	%			20	%
New orders			3,942				2,475				59	%			57	%			13,976				9,794				43	%			43	%

     PG’s Group profit of €290 million in the third quarter was positively influenced by non-operating effects. A year earlier, Group profit of €219 million was burdened by project charges. Third-quarter revenue for PG rose 9% year-over-year, to €2.863 billion. The Group’s fossil power, wind and industrial divisions all won significant new business, generating overall order growth of 59% compared to the third quarter a year earlier. PG expects continued volatility in equity investment earnings in the fourth quarter.

     Group profit at PG for the first nine months was €789 million, up 20% compared to the same period a year earlier. PG’s industrial and wind power businesses contributed solid earnings and margin increases along with rising revenues and orders, as did the Group’s fossil power services business. These positive operating developments were partly offset by challenges in PG’s fossil power generation business, including charges related to cost overruns and delays on a major project in Finland. In the prior-year period, the project charges mentioned above and an adverse result in arbitration related to a turnkey project in the Philippines were partially offset by cancellation gains. Group profit for the first nine months included lower earnings from equity investments compared to the first nine months a year earlier. Revenue for PG rose 21%, to €8.661 billion, and orders climbed 43% for the first nine months, to €13.976 billion. Volume growth was well distributed among the Group’s divisions. On a regional basis, revenue and order growth for the first nine months was strongest in the Americas and Europe including Germany.

Power Transmission and Distribution (PTD)

		Third quarter																Nine months ended June 30,
										% Change																% Change
(€ in millions)		2007				2006				Actual				Adjusted*				2007				2006				Actual				Adjusted**
Group profit			152				102				49	%							425				261				63	%
Group profit margin			7.9	%			5.9	%											7.9	%			5.6	%
Revenue			1,922				1,718				12	%			13	%			5,406				4,670				16	%			19	%
New orders			2,392				2,075				15	%			17	%			8,014				6,345				26	%			31	%

     PTD maintained its momentum in the third quarter, again increasing earnings, volume and profit margin compared to the same period a year earlier. Third-quarter Group profit surged 49% year-over-year, to €152 million, as all divisions in the Group posted higher earnings and improved profitability. Revenue and order growth were also broad-based. Revenue for the third quarter was €1.922 billion, up 12% compared to the prior-year period. A large new contract in China fueled a 15% rise in orders which reached €2.392 billion.

     For the first nine months of the fiscal year, PTD’s Group profit rose to €425 million, an increase of 63% compared to the prior-year period. Benefiting from higher capacity utilization and other operating efficiencies, all divisions within the Group contributed higher earnings and margins year-over-year. PTD’s nine-month revenues rose 16% compared to the prior-year period, to €5.406 billion, and orders climbed 26%, to €8.014 billion. All divisions within PTD contributed to business growth, and the Group achieved good regional balance as well with particular strength in Asia-Pacific, Europe including Germany, and the Africa, Middle East, C.I.S. region.

Transportation

Transportation Systems (TS)

		Third quarter																Nine months ended June 30,
										% Change																% Change
(€ in millions)		2007				2006				Actual				Adjusted*				2007				2006				Actual				Adjusted**
Group profit			24				17				41	%							129				53				143	%
Group profit margin			2.4	%			1.7	%											4.0	%			1.7	%
Revenue			1,006				986				2	%			4	%			3,240				3,047				6	%			9	%
New orders			658				1,550				(58	)%			(56	)%			2,591				5,430				(52	)%			(50	)%

     Group profit was €24 million at TS in the third quarter, including €29 million in charges for Combino. Third-quarter revenue rose to €1.006 billion. Orders came in well below the level a year earlier, when TS won an exceptionally large order for trains and maintenance in Russia.

     Nine-month Group profit for TS rose to €129 million. While the Group realized a net gain of €76 million on the sale of its locomotive leasing business, the gain was more than offset by charges related to major projects, including charges for Combino. Revenue rose 6%, to €3.240 billion. In contrast, the current period included fewer major orders, resulting in a corresponding drop in overall orders for TS on a nine-month basis.

Siemens VDO Automotive (SV)

		Third quarter																Nine months ended June 30,
										% Change																% Change
(€ in millions)		2007				2006				Actual				Adjusted*				2007				2006				Actual				Adjusted**
Group profit			214				155				38	%							529				489				8	%
Group profit margin			7.8	%			6.0	%											6.8	%			6.4	%
Revenue			2,731				2,604				5	%			7	%			7,836				7,667				2	%			3	%
New orders			2,719				2,600				5	%			7	%			7,811				7,660				2	%			3	%

     Group profit at SV increased to €214 million, benefiting from divestment of a business and an intra-company sale of real estate related to the Group’s carve-out. Third-quarter revenue and orders rose year-over-year on a Group-wide basis, increasing 5% overall to €2.731 billion and €2.719 billion, respectively.

     For the first nine months of the fiscal year, Group profit at SV was €529 million, 8% higher than in the same period a year earlier. While the current period benefited from the divestment and real estate gains mentioned above, the prior-year period included gains on sales of investments related to joint ventures. Revenue and orders in the current period rose to €7.836 billion and €7.811 billion. For information with respect to the sale of the SV activities to Continental AG, see “Subsequent Events.”

Medical

Medical Solutions (Med)

		Third quarter																Nine months ended June 30,
										% Change																% Change
(€ in millions)		2007				2006				Actual				Adjusted*				2007				2006				Actual				Adjusted**
Group profit			307				234				31	%							943				737				28	%
Group profit margin			12.6	%			12.7	%											13.5	%			12.6	%
Revenue			2,431				1,837				32	%			9	%			7,003				5,868				19	%			6	%
New orders			2,517				2,088				21	%			0	%			7,272				6,340				15	%			3	%

     Group profit at Med rose 31% to €307 million for the third quarter, led by the Diagnostics division and Med’s imaging businesses. The Diagnostics division was formed between the periods under review from the acquisitions of Diagnostic Products Corp. and the diagnostics division of Bayer AG which led to acquisition-related costs during the third quarter. Revenue for the period was €2.431 billion and orders were €2.517 billion, both benefiting substantially from the Diagnostics division. Med expects further costs related to the acquisitions in coming quarters.

     For the first nine months of the fiscal year, Group profit at Med rose to €943 million, up from €737 million in the prior-year period. Earnings growth was due primarily to consolidation of the Group’s Diagnostics division and gains on divestments, including a stake in the Group’s Draeger Medical joint venture. In addition, Med’s imaging businesses increased their earnings and margins year-over-year. The Diagnostics division brought significant new volume to Med for the first nine months, raising revenue 19%, to €7.003 billion, and increasing orders 15%, to €7.272 billion.

Lighting

Osram

		Third quarter																Nine months ended June 30,
										% Change																% Change
(€ in millions)		2007				2006				Actual				Adjusted*				2007				2006				Actual				Adjusted**
Group profit			116				111				5	%							364				370				(2	)%
Group profit margin			10.3	%			10.2	%											10.4	%			10.7	%
Revenue			1,124				1,089				3	%			7	%			3,487				3,453				1	%			6	%
New orders			1,124				1,089				3	%			7	%			3,487				3,453				1	%			6	%

     Osram was again among Siemens’ earnings leaders, with €116 million in third-quarter Group profit. Demand for energy-efficient lighting supported volume growth, as revenue and orders for Osram rose to €1.124 billion for the period.

     Nine-month Group profit at Osram was €364 million, including negative currency effects related to the strength of the euro. Revenue and orders in the current period were €3.487 billion compared to 3.453 billion in the prior year.

Strategic Equity Investments (SEI)

     SEI includes results at equity from three companies in which Siemens holds a strategic equity stake: NSN, BSH Bosch und Siemens Hausgeräte GmbH (BSH), and Fujitsu Siemens Computers (Holding) BV (FSC). NSN began operations in the third quarter. BSH and FSC were included within Other Operations in the prior-year quarter, and their results are included here on a retroactive basis to provide a meaningful comparison with prior periods. For SEI overall, earnings were a negative €301 million in the third quarter compared to a positive €49 million a year earlier. The change year-over-year was due to NSN which took €905 million in charges for previously announced restructuring and integration, including €646 million for severance. Siemens’ equity investment income related to NSN in the quarter was a negative €371 million. On a nine-month basis, results for SEI were a negative €150 million, again due to NSN. A year earlier, before consolidation of NSN, positive earnings of €150 million from SEI were due primarily to BSH.

Other Operations

     Other Operations consist of centrally held operating businesses not related to a Group, including Siemens Home and Office Communication Devices (SHC). Third-quarter Group profit from Other Operations was a negative €46 million. A year earlier, a negative €80 million in Group profit from Other Operations included a loss in the distribution and industry logistics (Dematic) businesses carved out of the former Logistics and Assembly Systems Group. The Dematic businesses were divested between the periods under review.

     For the first nine months of fiscal 2007, Group profit from Other Operations was a negative €122 million compared to a negative €109 million a year earlier. While the current period included a goodwill impairment of €52 million at a regional payphone unit, the prior-year period was negatively impacted by losses at SHC and the Dematic businesses.

Reconciliation to financial statements

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

Corporate items, pensions and eliminations

     Corporate items, pensions and eliminations totaled a negative €421 million in the third quarter compared to negative €31 million in the prior-year period. The major factor in the change year-over-year was significantly higher expenses for legal and regulatory matters, including the investigations and other items mentioned earlier as well as funding for job placement companies for former Siemens employees affected by the bankruptcy of BenQ. Another factor in the change was higher expense related to a major asset retirement obligation. The current period also included a negative consolidation effect from a real estate transaction related to the carve-out of SV. A year earlier, Corporate items, pensions and eliminations benefited from positive effects including a €33 million gain on the sale of Siemens’ remaining shares in Infineon Technologies AG (Infineon).

     In the first nine months of fiscal 2007, Corporate items, pensions and eliminations totaled a negative €1.273 billion compared to a negative €50 million in the first nine months a year earlier. These include the factors described above for the third quarter, as well as the €423 million antitrust penalty mentioned earlier, negative effects related to commodity hedging activities not qualifying for hedge accounting and €81 million primarily to fund job placement companies for former Siemens employees affected by the bankruptcy of BenQ. In contrast, the prior-year period benefited from a €95 million gain on the sale of an investment as well as a positive effect related to the settlement of an arbitration proceeding, the gain of €33 million on the sale of Infineon shares mentioned above and a gain on the sale of Siemens’ remaining interest in Epcos AG of €15 million.

Other interest expense

     Other interest expense of Operations for the third quarter of fiscal 2007 was €174 million compared to interest expense of €79 million a year earlier, mainly due to increased intra-company financing of Operations by Corporate Treasury year-over-year. This factor had a similar effect on a year-to-date basis, as interest expense of Operations for the first nine months rose to €428 million from €257 million.

Financing and Real Estate

Siemens Financial Services (SFS)

		Third quarter												Nine months ended June 30,
(€ in millions)		2007				2006				% Change				2007				2006				% Change
Income before income taxes			57				64				(11	)%			277				186				49	%
														June 30,				Sept. 30,
															2007				2006
Total assets															8,705				10,543				(17	)%

     Income before income taxes at SFS was €57 million compared to €64 million in the third quarter a year earlier. For the first nine months, income before income taxes was €277 million. The increase compared to the prior-year nine-month period includes special dividends resulting from divestment gains by a company in which SFS holds an equity position, and also from sales of shares by the Equity division. Total assets declined compared to the end of fiscal 2006, due to a significant reduction in accounts receivable related to the carve-outs of SV and carrier activities that were transferred into NSN.

Siemens Real Estate (SRE)

		Third quarter												Nine months ended June 30,
(€ in millions)		2007				2006				% Change				2007				2006				% Change
Income before income taxes			69				(29	)							180				102				76	%
Revenue			416				419				(1	)%			1,251				1,259				(1	)%
														June 30,				Sept. 30,
															2007				2006
Total assets															3,242				3,221				1	%

     Income before income taxes at SRE was €69 million, which benefited from higher gains on sales of real estate. A year earlier, SRE’s third-quarter result included higher vacancy charges. For the first nine months, income before income taxes rose to €180 million from €102 million a year earlier, due primarily to reduced vacancy charges.

Eliminations, reclassifications and Corporate Treasury

     Income before taxes from eliminations, reclassifications and Corporate Treasury in the third quarter was €57 million compared to €528 million a year earlier. The difference resulted primarily from a €429 million positive effect under IFRS in the prior-year quarter, related to mark-to-market valuation of the cash settlement option associated with the €2.5 billion convertible bond issued by Siemens in 2003. This option was irrevocably waived at the end of the third quarter of fiscal 2006, effectively eliminating further earnings effects. In the current year, nine-month income before income taxes for eliminations, reclassifications and Corporate Treasury was a positive €134 million compared to a negative €14 million a year earlier, when the net effect related to the cash settlement option was a negative €143 million.

Liquidity, capital resources and capital requirements

Cash flow — First nine months of fiscal 2007 compared to first nine months of fiscal 2006

     The following discussion presents an analysis of Siemens’ cash flows for the nine-month period ended

     June 30, 2007 and 2006. The first table presents cash flow for continuing and discontinued operations. The latter category includes Siemens’ enterprise networks business, which is held for sale, as well as cash flows related to the carrier-related business, which was transferred into NSN and to the Mobile Devices business sold to BenQ Corporation. For further information on discontinued operations, see “Notes to Consolidated Financial Statements.” The second table focuses on cash flow from continuing operations for the components of Siemens.

     Beginning in the third quarter of fiscal 2007, we are reporting Free cash flow, defined as “Net cash provided by (used in) operating activities” less cash used for “Additions to intangible assets and property, plant and equipment”. We believe this measure is helpful to our investors as an indicator of our ability to generate cash from operations and to pay for discretionary and non-discretionary expenditures not included in the measure, such as dividends, debt repayment or strategic investments. We also use Free cash flow to compare cash generation among the segments (for further information, refer to “Consolidated Financial Statements — Segment Information”).

																						Continuing and
						Continuing operations								Discontinued operations								discontinued operations
						Nine months ended June 30,
(€ in millions)						2007				2006				2007				2006				2007				2006
Net cash provided by (used in):
Operating activities			A				5,573				3,410				(1,596	)			(551	)			3,977				2,859
Investing activities							(9,448	)			(1,624	)			(729	)			159				(10,177	)			(1,465	)
Herein: Additions to intangible assets and property, plant and equipment			B				(2,315	)			(2,452	)			(184	)			(264	)			(2,499	)			(2,716	)
Free cash flow*			A+B				3,258				958				(1,780	)			(815	)			1,478				143

     Operating activities provided net cash of €3.977 billion in the first nine months, compared to €2.859 billion in the same period of the prior year. These results include both continuing operations and discontinued operations. Within the total, continuing operations provided net cash of €5.573 billion, up from €3.410 billion a year earlier. Discontinued operations used net cash of €1.596 billion in the current period, including a build-up of net working capital, particularly receivables. A year earlier, discontinued operations used net cash of €551 million in the first nine months.

     Investing activities in continuing operations and discontinued operations used net cash of €10.177 billion in the first nine months, a substantial increase from €1.465 billion cash used in the prior-year period. Within these results, continuing operations were the primary factor in the change year-over-year, using net cash of €9.448 billion compared to net cash used of €1.624 billion in the same period a year earlier. Discontinued operations used net cash of €729 million compared to net cash provided of €159 million in the prior-year period, which included €465 million in proceeds from the Juniper share sales.

														SFS, SRE and Corporate
Continuing operations						Operations								Treasury*								Siemens
						Nine months ended June 30,
(€ in millions)						2007				2006				2007				2006				2007				2006
Net cash provided by (used in):
Operating activities			A				2,505				1,993				3,068				1,417				5,573				3,410
Investing activities							(8,717	)			(869	)			(731	)			(755	)			(9,448	)			(1,624	)
Herein: Additions to intangible assets and property, plant and equipment			B				(1,870	)			(1,927	)			(445	)			(525	)			(2,315	)			(2,452	)
Free cash flow			A+B				635				66				2,623				892				3,258				958

     Within Operations, net cash provided by operating activities from continuing operations was €2.505 billion in the first nine months of fiscal 2007 compared to €1.993 billion in net cash provided in the same period a year earlier. The rise year-over-year is due primarily to a significantly lower increase in net working capital compared to the prior-year period, even with a substantial increase in receivables at SV related to its carve-out. The current period also includes the €419 million penalty payment mentioned earlier. Within Corporate Treasury and Financing and Real Estate, operating activities from continuing operations provided net cash of €3.068 billion in the first nine months of fiscal 2007, compared to net cash provided of €1.417 billion a year earlier. The change year-over-year was due primarily to accounts receivable related to the above mentioned carve-out of SV and the transfer of carrier activities into NSN. For Siemens overall, net cash provided by operating activities from continuing operations was €5.573 billion in the first nine months of fiscal 2007 compared to €3.410 billion in the same period a year earlier.

     Net cash used in investing activities in continuing operations was €8.717 billion within Operations in the first nine months of fiscal 2007, significantly higher compared to €869 million used in the prior-year period. The difference year-over-year is due primarily to the Bayer acquisition at Med for €4.2 billion, the UGS acquisition at A&D for €2.7 billion and the acquisition of AG Kühnle, Kopp & Kausch at PG during the current period, while the prior-year period benefited from €1.127 billion in net proceeds from the sale of Siemens’ remaining shares in Infineon. Corporate Treasury and Financing and Real Estate used net cash in investing activities in continuing operations of €731 million in the current period compared to €755 million cash used a year earlier. Siemens as a whole used net cash in investing activities in continuing operations of €9.448 billion in the first nine months of fiscal 2007 compared to net cash used of €1.624 billion in the same period a year earlier.

     Free cash flow from continuing operations for Siemens was €3.258 billion during the first nine months, a significant increase from €958 million in the same period a year earlier. The change year-over-year is due to the increase in net cash provided by operating activities mentioned above, combined with lower spending for additions to intangible assets and property, plant and equipment. Siemens’ cash conversion rate, calculated as Free cash flow from continuing operations divided by Income from continuing operations, improved to 1.15 for the first nine months of fiscal 2007 from 0.34 in the same period a year earlier.

     Financing activities in the first nine months of fiscal 2007 provided net cash of €1.849 billion compared to net cash used of €2.069 billion a year earlier. In the current period, changes in short-term debt provided net cash of €6.759 billion, mainly due to the issuance of commercial paper, while in the prior-year period the repayment of commercial paper programs contributed to a net decrease in short-term debt of €1.118 billion. The current period includes €2.4 billion (€1.4 billion nominal) in cash used to buy back a portion of the €2.5 billion convertible bond, as well as cash used for the redemption of a CHF250 million bond and a €991 million bond. Redemption of outstanding convertible notes is scheduled for the fourth quarter, see “Subsequent Events” below. Dividends paid to shareholders in the current period amounted to €1.292 billion. A year earlier, dividends paid amounted to €1.201 billion.

Capital resources and capital requirements

Ratings

     Siemens is currently rated ,,AA-“ by Standard & Poor’s. On June 15, 2007 Standard & Poor’s resolved the ,,CreditWatch negative,” dated April 26, 2007 and kept a “negative” outlook. Moody’s Investors Service currently rates Siemens ,,Aa3, negative outlook“ and made no rating changes in the third quarter of fiscal 2007.

Equity

     In the nine months ended June 30, 2007, 1,290,000 shares from Authorized Capital 2006 were issued to employees with respect to our employee share purchase program. As a result, common stock increased by approximately €4 million. In addition, in the nine months ended June 30, 2007, common stock increased by approximately €31 million through the issuance of 10,130,630 shares from conditional capital to service primarily the stock option plans.

     At the Annual Shareholders’ Meeting on January 25, 2007, the Company’s shareholders authorized the Company to repurchase up to 10% of the €2,675 common stock outstanding on the date of the Annual Shareholders’ Meeting until July 24, 2008.

     In accordance with the resolution of the Annual Shareholders’ Meeting on January 25, 2007, we distributed €1.292 billion (€1.45 per share) of the fiscal 2006 earnings of Siemens AG as an ordinary dividend to shareholders. The dividend was paid on January 26, 2007.

Debt

     During the third quarter of fiscal 2007, Siemens combined its U.S.$ 5 billion Commercial Paper and €3 billion Commercial Paper program into a U.S.$9 billion Global Commercial Program. As of June 30, 2007, the amount outstanding under this program was U.S.$8.451 billion (€6.258 billion). As of September 30, 2006, no commercial paper was outstanding.

     In the third quarter of fiscal 2007, the Company decided not to update its €5.0 billion medium-term note program.

     Also in the third quarter of fiscal 2007, the Company bought back a nominal amount of €1.4 billion of its approximately €2.5 billion outstanding convertible notes. The €1.4 billion convertible notes would have been convertible into approximately 25.1 million shares. The convertible notes have a 1.375% coupon and were convertible into approximately 44.5 million shares of Siemens AG at a conversion price of €56.1681 per share, which is subject to change under certain circumstances. The remaining nominal amount of approximately €1.1 billion is convertible into approximately 19.4 million Siemens shares. For additional information on the convertible notes, see “Subsequent Events” and “Notes to Consolidated Financial Statements.”

     In January 2007, Siemens made use of its U.S.$ credit facility by drawing a U.S.$1 billion term loan (€0.8 billion).

     During the first nine months of fiscal 2007, Siemens redeemed a CHF250 million bond (€155 million) and a €991 million bond.

Guarantees

     For information on guarantees and other commitments, see “Note 11 to Consolidated Financial Statements.”

Pension plan funding

     At the end of the first nine months of fiscal 2007, the combined funding status of Siemens’ principal pension plans showed an estimated underfunding of only €0.2 billion, compared to an underfunding of €2.9 billion at the end of fiscal 2006. The significant improvement in funding status was primarily due to an increase in the discount rate assumption at June 30, 2007, reducing Siemens’ estimated defined benefit obligation, and furthermore due to the actual return on plan assets and regular contributions, increasing the fair value of plan assets. Altogether this by far outbalanced the negative effect of service and interest cost on the defined benefit obligation. The negative impact of increases in interest rates on fixed income investments was largely offset by strong performance in equity markets resulting in an actual return on plan assets of €1.096 billion during the last nine months. This represents a 6.3% return on an annualized basis, compared to the expected annual return of 6.5%.

     The fair value of plan assets of Siemens’ principal funded pension plans as of June 30, 2007, was €24.1 billion, compared to €23.8 billion on September 30, 2006. In the first nine months of fiscal 2007, regular employer contributions amounted to €623 million compared to €639 million in the first nine months of the prior fiscal year.

     The estimated defined benefit obligation (DBO) for Siemens’ principal pension plans, which takes into account future compensation increases, amounted to €24.3 billion as of June 30, 2007. This was approximately €2.4 billion lower than the DBO of €26.7 billion on September 30, 2006, due to an increase in the discount rate assumption, reducing Siemens’ estimated defined benefit obligation. The total of all other effects on the DBO was immaterial.

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

Legal proceedings

     As previously reported, Munich public prosecutors are conducting an investigation of certain current and former employees of Siemens AG and its consolidated subsidiaries (Siemens or the Company) on suspicion of embezzlement, bribery and tax evasion. Arrest warrants were issued for former and currently suspended employees of our former Com business Group who were taken into custody, questioned and later released. In December 2006, the former Chief Executive Officer (CEO) of Com was arrested, questioned and released. Siemens’ former Chief Financial Officer (CFO) was interrogated as a suspect by the public prosecutor. Both of these individuals are former members of the Corporate Executive Committee of Siemens.

     On March 26, 2007, the Munich public prosecutors conducted further searches of the Company’s premises and of private residences in Munich and executed additional arrest warrants for a current and a former employee of Com. The individuals were later released and the current employee has since been suspended. On May 6, 2007, arrest warrants were executed for the CEO and CFO of Siemens Nigeria, who were later released. The Munich public prosecutors’ investigation as well as related investigations in Switzerland, Italy, Greece and other countries are ongoing. The Company has learned that Liechtenstein prosecutors have transferred the previously reported investigation to Swiss and Munich prosecutors.

     The Company is also aware of several other investigations by authorities in several jurisdictions relating to allegations that certain former and current employees of Com and other Groups as well as certain regional companies made improper payments.

     As previously reported, the U.S. Department of Justice (DOJ) is conducting an investigation of possible criminal violations of U.S. law by Siemens in connection with these matters and other allegations of corruption. During the second quarter of fiscal 2007, Siemens was advised that the U.S. Securities and Exchange Commission’s (SEC) enforcement division had converted its informal inquiry into these matters into a formal investigation.

     As previously reported, the SEC is also investigating possible violations of U.S. law by Siemens in connection with the Oil-for-Food Program. This matter is also a subject of the investigation of the DOJ.

     As previously reported, the Company has engaged Debevoise & Plimpton LLP (Debevoise), an independent external law firm, to conduct an independent and comprehensive investigation to determine whether anti-corruption regulations have been violated and to conduct an independent and comprehensive assessment of the compliance and control systems of Siemens.

Debevoise reports directly and exclusively to the Compliance Committee of the Supervisory Board (formerly the Audit Committee, as described below) and is being assisted by forensic accountants from the international accounting firm Deloitte & Touche. Debevoise’s investigation of allegations of corruption at Com is ongoing. The scope of the independent investigation also includes an investigation of potential anti-corruption violations at the Company’s other Groups and at regional Siemens subsidiaries, which was launched during the third quarter of fiscal 2007.

     As previously reported, on February 2, 2007, an alleged holder of American Depositary Shares of the Company filed a derivative lawsuit with the Supreme Court of the State of New York against certain current and former members of the Company’s Managing and Supervisory Boards as well as against the Company as a nominal defendant, seeking various forms of relief relating to the allegations of corruption and related violations at Siemens. The suit is currently stayed.

     As a result of the above described matters and as a part of its policy of cooperation, Siemens contacted the World Bank and offered to assist the World Bank in any matter that might be of interest to the World Bank. Since that time, Siemens has been in contact with the World Bank Department of Institutional Integrity and intends to continue its policy of cooperation.

     In addition to the independent investigation being conducted by Debevoise, the Company has also continued to conduct its own analysis of issues raised by allegations of violations of anti-corruption legislation. As previously reported, within Com a number of Business Consultant Agreements (BCAs) have been identified. We have identified a multitude of payments made in connection with these contracts for which we have not yet been able either to establish a valid business purpose or to clearly identify the recipient. These payments raise concerns in particular under the Foreign Corrupt Practices Act (FCPA) in the United States, anti-corruption legislation in Germany and similar legislation in other countries. The payments identified were recorded as deductible business expenses in prior periods in determining income tax provisions. As previously reported, our investigation determined that certain of these payments were nondeductible under German tax regulations, and accordingly, we have recorded additional income tax charges in our financial statements for fiscal 2006 to reflect the correct tax treatment of these expenses. See Note 36 to the IFRS Consolidated Financial Statements as of September 30, 2006 for a further discussion. The Company has already reported this issue to the German tax authorities.

     The current status of the Company’s analysis is as follows:

	•		During the third quarter of fiscal 2007, the Company continued to analyze payments under the BCAs identified at year-end of fiscal 2006 and payments under BCAs subsequently identified at Com. The Company is in the process of completing a Company-wide collection of BCAs, and is currently also conducting an analysis of BCAs and related payments at five other Groups (PG, PTD, TS, Med and I&S). The Company has recently commenced the analysis of BCAs and related payments at the remaining Groups and in selected regional companies. As a result, the Company has identified a significant increase in the total amount of BCA payments under review. The Company is currently analyzing the deductibility for tax purposes of these payments.
	•		During the third quarter of fiscal 2007, the Company continued its analysis of cash and check payments at Com which may relate to BCAs, and which may also raise concerns under the FCPA and anti-corruption legislation in Germany and other countries. In the third quarter of fiscal 2007, the Company also commenced internal inquiries regarding similar cash payments at other Groups. As a result of these inquiries, which are ongoing, the Company has to date identified payments which do not relate to Com and for which limited documentation is available, including a significant volume of payments made through a bank account in Liechtenstein. The Company is currently analyzing the deductibility for tax purposes of these payments.
	•		As a result of the investigations and through cooperation with the public prosecutors, the Company has become aware of additional bank accounts and cash funds at various locations that were not recorded in the Company’s balance sheet. The Company is currently investigating the origin and ownership of the assets contained in these bank accounts and cash funds.

     Due to the ongoing status of the Company’s own analyses described above and the investigations, including the extension of the independent investigation to the other Groups, substantial uncertainties remain. The financial statements as of June 30, 2007 do not reflect any substantial change in tax assets and liabilities with respect to the BCAs and other payments under review. However, the total volume of additional BCA and cash payments that raises potential issues of tax deductibility and that is currently under review by the Company is significantly in excess of the amount of BCA payments under review at year-end of fiscal 2006.

Depending on the results of the analyses and investigations, the Company anticipates that changes in tax assets and liabilities, including the recording of additional tax charges in respect of current and prior periods beyond those reflected in our financial statements for fiscal 2006, may be necessary. Such charges, as well as the further results from the ongoing analyses and investigations, could be material both quantitatively and qualitatively for our financial statements.

     Siemens currently cannot exclude the possibility that criminal or civil sanctions may be brought against the Company itself or against certain of its employees in connection with possible violations of law, including the FCPA. In addition, the scope of pending investigations may be expanded and new investigations commenced in connection with allegations of bribery and other illegal acts. The Company’s operating activities may also be negatively affected, particularly due to imposed penalties, compensatory damages or the exclusion from public procurement contracts. To date, no charges or provisions for any such penalties or damages have been accrued as management does not yet have enough information to reasonably estimate such amounts. Furthermore, changes affecting the Company’s course of business or its compliance programs may turn out to be necessary.

     The first nine months of fiscal 2007 include a total of €188 million in expenses for outside advisors engaged by Siemens in connection with the investigations into alleged violations of anti-corruption laws and related matters as well as remediation activities.

     The Company has taken a number of significant steps to improve its compliance procedures and internal controls in response to the allegations of corruption. Among the initiatives the Company has implemented or is in the process of implementing are:

	•		The Supervisory Board of the Company has formed a Compliance Committee of the Supervisory Board, which oversees the ongoing investigations and remediation activities of the Company. The Compliance Committee is composed of the members of the Audit Committee of the Supervisory Board and is chaired by the chairman of the Supervisory Board.
	•		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.
	•		The Company is in the process of establishing a Corporate Disciplinary Committee to consider and impose appropriate disciplinary measures in cases where suspicions of violations of law or Company policies, or other misconduct have been substantiated.
	•		The Company’s office of corporate compliance has been organizationally embedded in the legal department.
	•		The Company’s audit and compliance departments and an internal task force are continuing their internal analysis and the review of our compliance and internal control system for gaps and any possibilities of circumvention, including by conducting internal control remediation visits in selected regions.
	•		The Company is in the process of enhancing internal controls through centralization of its bank accounts and cash payment systems.
	•		The Company has implemented a moratorium on entering into new BCAs as well as new payments under existing BCAs. Any exceptions require the prior written consent of relevant senior management as well as the written consent of the Company’s chief compliance officer based on a review of the agreements in question. As part of this policy, the Company is in an ongoing process of reviewing existing BCAs for purposes of compliance risk in connection with their continued performance. In certain cases, the Company terminated BCAs.
	•		The Company is in the process of enhancing its anti-corruption policies. The Company has adopted, and is in the process of implementing, new policies regarding anti-public-corruption compliance, retention of intermediaries who interact with the government on Siemens’ behalf, compliance in M&A transactions, joint ventures and minority investments, and gifts and hospitality.
	•		The Company is continuing the roll-out of a formal program of anti-corruption and other legal compliance training for management, group and regional compliance officers and other employees.

     As previously announced, the former Chief Compliance Officer resigned his post effective July 1, 2007 and the General Counsel has assumed the role of Chief Compliance Officer. The Company is in the process of recruiting a new Chief Compliance Officer.

     As previously reported, the Company has engaged an independent compliance advisor in order to consult the Managing Board and the Compliance Committee with regard to the future structure of the compliance organization, the execution of compliance reviews, the review of related guidelines and controls including potential improvement measures, and the associated communication and training. The independent compliance advisor provides periodic status reports to the Managing Board and Compliance Committee.

     As previously reported, public prosecutors have been conducting an investigation against certain employees of the Company regarding allegations that they participated in bribery related to the awarding of an EU contract for the refurbishment of a power plant in Serbia. On August 8 and 9, 2007, the public prosecutor in Wuppertal conducted searches of the Company’s premises in Erlangen, Offenbach and Karlsruhe of the Power Generation business Group in relation to this investigation.

     As previously reported, on February 14, 2007, the Company announced that public prosecutors in Nuremberg are conducting an investigation of certain current and former employees of the Company on suspicion of breach of fiduciary duties (Untreue) against Siemens, tax evasion and a violation of the German Works Council Constitution Act (Betriebsverfassungsgesetz). The investigation relates to an agreement entered into by Siemens with an entity controlled by the former head of the independent employee association AUB (Arbeitsgemeinschaft Unabhängiger Betriebsangehöriger). The prosecutors are investigating payments made during the period 2001 to 2006 for which Siemens may not have received appropriate services in return. The former head of AUB was arrested in February 2007. On March 27, 2007, a second search was conducted at the Company’s premises in Munich and an arrest warrant was issued for a member of the Company’s Corporate Executive Committee, in connection with this investigation, who was taken into custody. In addition to the member of the Corporate Executive Committee, other current and former members of the Company’s senior management were named as suspects in this matter. On April 4, 2007, the member of the Corporate Executive Committee posted bail in the amount of €5.0 million and was released from custody. In this connection, a bank issued a bond (Bankbürgschaft) in the amount of €5.0 million, €4.5 million of which was guaranteed by the Company pursuant to provisions of German law. The member of the Corporate Executive Committee has provided the Company a personal undertaking to cooperate with and fully support the independent investigation conducted by Debevoise and to repay all costs incurred and payments made by the Company in connection with the bank guarantee in the event he is found to have violated his obligations to the Company in connection with the facts under investigation by the Nuremberg prosecutors. The investigation into the allegations involving the Company’s relationship with the former head of AUB and AUB has also been included within the scope of the investigation being conducted by Debevoise. On April 2, 2007, the labor union IG Metall lodged a criminal complaint against unknown individuals on suspicion that the Company breached the provisions of Section 119 of the Works Council Constitution Act by providing undue preferential support to AUB in connection with elections of the members of the Company’s works councils.

     As previously reported, Italian and German prosecutors have been investigating allegations that former Siemens employees provided improper benefits to former employees of Enel in connection with Enel contracts. In Italy, legal proceedings against two former employees ended when the patteggiamento by the charged employees and Siemens AG (plea bargaining procedure without the admission of guilt or responsibility) entered into force on November 11, 2006. In March 2006, prosecutors in Germany brought charges against two other former employees not covered by the patteggiamento. The Regional Court of Darmstadt has sentenced one former employee to two years in prison suspended on probation on counts of commercial bribery and violation of the company’s trust. Another former employee, whose employment with Siemens had ended a few years before the events that formed the basis for the bribery, was sentenced to nine months in prison suspended on probation on counts of aiding and abetting commercial bribery. In connection with these sentences, Siemens AG was ordered to disgorge €38 million of profits. The prosecutors and both defendants have appealed the decision of the Regional Court of Darmstadt. Siemens AG has appealed the decision with respect to the calculation of the disgorgement amount only.

     As previously reported, in April 2007, Siemens and VA Tech filed actions before the European Court of First Instance in Luxemburg against the decisions of the European Commission dated January 24, 2007 to fine Siemens and VA Tech for alleged antitrust violations in the European Market of high-voltage gas-isolated switchgear between 1988 and 2004. Gas-isolated switchgear is electrical equipment used as a major component for turnkey power substations. As previously reported, the fine imposed on Siemens amounted to €396.6 million. The fine imposed on VA Tech, which Siemens acquired in July 2005, amounted to €22.1 million. Furthermore, VA Tech was declared jointly liable with Schneider Electric for a separate fine of €4.5 million. More recently, the New Zealand, South African and Slovak competition authorities informed Siemens about investigations regarding possible antitrust violations in their respective local markets for high-voltage gas-isolated switchgear.

     As previously reported, on December 12, 2006, the Japanese Fair Trade Commission (FTC) searched the offices of more than ten producers and dealers of healthcare equipment, including Siemens Asahi Medical Technologies Ltd., in connection with an investigation into possible anti-trust violations. Siemens Asahi Medical Technologies is cooperating with the FTC in the ongoing investigation.

     As previously reported, on February 8, 2007, Siemens Medical Solutions USA, Inc. (SMS) announced that it had reached an agreement with the U.S. Attorney’s Office for the Northern District of Illinois to settle allegations made in an indictment filed in January 2006. The agreement resolves all allegations made against SMS in the Indictment. Under the agreement, SMS has plead guilty to a single federal criminal charge of obstruction of justice in connection with civil litigation that followed a competitive bid to provide radiology equipment to Cook County Hospital in 2000. In addition, SMS agreed to pay a fine of U.S.$1 million and restitution of approximately U.S.$1.5 million.

     As previously reported, in February 2007, the European Commission launched an investigation into possible anti-trust violations involving European producers of power transformers, including Siemens AG and VA Tech, which Siemens acquired in July 2005. Power transformers are electrical equipment used as major components in electric transmission systems in order to adapt voltages. We are cooperating with the ongoing investigation of the European Commission. The European Commission has not announced a schedule for the completion of the investigation.

     As previously reported, in February 2007, the Norwegian Competition Authority launched an investigation into possible anti-trust violations involving Norwegian companies active in the field of fire security, including Siemens Building Technologies AS. We are cooperating with the ongoing investigation of the Authority. The Norwegian Competition Authority has not yet announced a schedule for the completion of the investigation.

     As previously reported, on February 8, 2007, the French Competition Authority (Direction Generale de la Concurrence) searched the offices of at least three producers of suburban trains, including Siemens Transportation Systems S.A.S. in Paris, in connection with an investigation into possible anti-trust violations. Siemens Transportation Systems S.A.S. is cooperating with the French Competition Authority in the ongoing investigation.

     As previously reported, in April 2007, the Polish Competition Authority launched an investigation against Siemens Poland regarding possible anti-trust violations in the market for the maintenance of diagnostic medical equipment. We are cooperating with the ongoing investigation of the Authority.

     As previously reported, we requested arbitration against the Republic of Argentina before the International Center for Settlement of Investment Disputes (ICSID) of the World Bank. We claim that Argentina unlawfully terminated our contract for the development and operation of a system for the production of identity cards, border control, collection of data and voter registers and thereby violated the Bilateral Investment Protection Treaty between Argentina and Germany (BIT). We are seeking damages for expropriation and violation of the BIT of approximately U.S.$500 million. Argentina disputed jurisdiction of the ICSID arbitration tribunal and argued in favor of jurisdiction of the Argentine administrative courts. The arbitration tribunal rendered a decision on August 4, 2004, finding that it has jurisdiction over Siemens’ claims and that Siemens is entitled to present its claims. A hearing on the merits of the case took place before the ICSID arbitration tribunal in Washington in October 2005. A unanimous decision on the merits was rendered on February 6, 2007, awarding Siemens compensation in the amount of U.S.$217.8 million on account of the value of its investment and consequential damages, plus compound interest thereon at a rate of 2.66% since May 18, 2001. The tribunal also ruled that Argentina shall indemnify Siemens against any claims of subcontractors in relation to the Project (amounting to approximately U.S.$44 million) and, furthermore, that Argentina shall pay to Siemens the full amount of the contract performance bond (U.S.$20 million) in the event this bond would not have been returned within the time period set by the tribunal (which period elapsed without delivery). On June 4, 2007, Argentina filed with the ICSID an application for the annulment and stay of enforcement of the award, alleging serious procedural irregularities. An ad hoc committee will probably be appointed to consider Argentina’s application.

     Siemens AG and its subsidiaries have been named as defendants in various other legal actions and proceedings arising in connection with their activities as a global diversified group. Some of these pending proceedings have been previously disclosed. Some of the legal actions include claims for substantial compensatory or punitive damages or claims for indeterminate amounts of damages. Siemens is from time to time also involved in regulatory investigations beyond those described above. Siemens is cooperating with the relevant authorities in several jurisdictions and, where appropriate, conducts internal investigations regarding potential wrongdoing with the assistance of in-house and external counsel. Given the number of legal actions and other proceedings to which Siemens is subject, some may result in adverse decisions. Siemens contests actions and proceedings when it considers it appropriate. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases in which claimants seek substantial or indeterminate damages, Siemens often cannot predict what the eventual loss or range of loss related to such matters will be. Although the final resolution of these matters could have a material effect on Siemens’ consolidated operating results for any reporting period in which an adverse decision is rendered, Siemens believes that its consolidated financial position should not be materially affected by the matters discussed in this paragraph.

“Fit for 2010” program

     In order to further enhance our Company’s value, Siemens has launched a new program designed to ensure sustained Company development. The “Fit for 2010” program is based on the pillars of the successfully concluded “Fit4More” program and continues to include the following key pillars:

	•		development of highly qualified employees (People Excellence)
	•		the ongoing strengthening of the Company’s innovation leadership, and a continued strong focus on customers (Operational Excellence)
	•		building on Siemens’ strengths in the fields of energy and environment, automation and control, industrial and public infrastructure, and healthcare (Portfolio)
	•		becoming an industry leader in Corporate Responsibility