Profit and Growth

Heinrich v. Pierer, CEOHeinz-Joachim Neubürger, CFO

Analyst conferenceNovember 12, 2004

s

2

sSafe Harbor Statement

This presentation contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified either orally or in writing by words as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will” or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect its operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens worldwide to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products or technologies by other companies, lack of acceptance of new products or services by customers targeted by Siemens worldwide, changes in business strategy and various other factors. More detailed information about certain of these factors is contained in Siemens’ filings with the SEC, which are available on the Siemens website, www.siemens.com and on the SEC’s website, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as anticipated, believed, estimated, expected,intended, planned or projected. Siemens does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

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3

sKey figures – FY04

Group profit from Operations

New orders

Sales

Net income

EPS (in euros)

in billions of euros FY

Net cashfrom operating and investing activities

Q4

21.6

20.8

1.322

0.654

0.73

0.609

80.8

75.2

4.998

3.405

3.82

3.262

Dividend (proposed; in euros) 1.25--

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4

sPerformance – FY04

Success stories: A&D, Med, PG, Osram, SFS, SV, PTD

Turnaround at SBT, I&S, L&AWell on track

I&C groups in the blackOutstanding results at ICM NChallenges for ICM MP

TS results affected by high provisions and charges

s

5

sStepping forward within the Siemens Management System

Innovation:Outstanding examples in FY04:

Med: Magnetom Espree with Total Image Matrix (TIM)

SV: Tire Guard II; Gasoline Fuel Injection

ICM: IP Multimedia System (IMS)

International R&D competence network and rigorous patent strategy

Customer Focus:Siemens ONE – setting up worldwide coordinating unit and expanding the approach to more than 40 countries

Increasing market share in Germany through reshaping of sales and service forces – enhanced cross selling activities and a boosted campaign for medium-sized business customers

Global Competitiveness: Tackling German cost base

Ongoing build up of capacities in growth regions

s

6

sGlobal presence

Americas

Asia-Pacific

Middle East,Africa, C.I.S.

Europe(excl.Germany)

Germany

Employees by region (in thousands)

250

300

150

200

FY 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 20042003 2005

Germany

International

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7

sTwelve Points for Profit and Growth in China

CHINAFY04: btb ratio >1

Expansion of China‘s role in the Global Network of Innovation:

10) Expansion of R&D activities11) Further build-up of software

developing capabilities12) Use China as global sourcing base

Market penetration:

1) Increase of regional officesfrom 28 to 60

2) "One Siemens" concept for market clusters

9) Use of China‘s talent potential

Siemens as a preferred employer90 percent of Siemens managers in the country are Chinese nationals1,000 new engineers at SLC alone

Growth strategies for all business areas:

3) I&C with focus on ICN and ICM4) A&C5) Power6) Transportation7) Medical8) Lighting

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sStrategic goals of M&A activities …

Complement existing business portfolio adjacencies

Create growth platforms by broadening the existing portfolio

Enhance regional presence fitting to worldwide strategy

Speed up consolidation / market penetration

Gain selected specific R&D competence

… support our profitable growth strategy

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9

sTrack record of major M&A activities

Transactions have been proven to be successful !

YearSignificant

strategic goalPurchase price (EV) Assessment

write-off1,6Strengthening position in DSL broadband access market

2001Efficient

on-track0,8Strengthening position in ultrasound2000Acuson

success6,8 Strengthening position in Automotive, Logistics and industrial turbines

2000Atecs

success1,0Strengthening position in fossil-fired power plants, equipment and services worldwide

1998Westinghouse

on-track2,1Expansion into healthcare IT2000Shared Medical

on-track1,6Strengthening position in the Building Systems Division

1998Electrowatt

success0,75Strengthening position in the US-market

1993Sylvania

success0,9Strengthening position in industrial turbines

2003Alstom

in billions of euros

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sRecent M&A activities hit all goals (I)

Trench:Important step to add new High Voltage products to PTD’s portfolioImproved regional positioning, e.g. China, NAFTA and South America

Huntsville:Increasing NAFTA sales for SV by some 50 percent – joining the group of first tier supplierRegional sales split much more balanced Boosting the interior & infotainment business

US Filter:Investing into the fast growing water market, I&S growth platformTechnical round-up of our industry process solution portfolioLeveraging synergy potential by expanding the US market leader’sbusiness through our global network

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11

sRecent M&A activities hit all goals (II)

Bonus Energy: Round-up of PG’s portfolio by entering the growth market of wind generationCombining turnkey know-how and financial strength with market leadership for offshore wind parksFocus on traditional customers’ new strategic approach – wind business changes from smaller projects to big offshore farms

VA Tech:First step done by becoming the company’s biggest shareholderFurther Roadmap set and under executionStarting the consolidation of T&D business in EuropeTechnological enhancement of PTD and I&SRegional strengthening of the portfolio in Eastern Europe, Middle East and Asia

Power Machines:First step via JV for power generation with Russian market leaderNext steps defined Penetrating the regional market with interesting growth potential

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12

sBack on growth track

48.245.4

9796 98

54.760.2

68.6

87.0

78.4

02 03

84.0

FY95

6%11%

10%6%

15%6%

0% (4)% 3%

74.2

Organic growth rates before currency and consolidation effects

04

75.2

target

0599 00 01

CAGR: ~6%

Sales as reported in billions of euros

s

13

s

Gross Margin from Operations

27

28

2001 2002 2003 2004

Portfolio changes effect profits positively

Gross margin improvements:

Rigorous cost reductions

Volume increase

Revenue split by market position

28% 22%

20%13%

52%65%

1998 2004

strongmediumweak

Improvements due to:

Innovation drives

Portfolio activities

+150 bps%

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14

sAdjusted WACC due to changesin the economic environment

Parameters have changed (interest rates, equity risk premium, betas, tax rate and capital structure)

After more than six years of stability adjustmentsare appropriate

Material changes in Groups' product / businessportfolio and improved overall performance have improved risk profiles

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15

sChanges in EVA WACC, however margin targets remain unchanged

WACC

until 2004 from 2005 onwards

WACCFlat tax rate 35%

ICNICMSBS

A&DI&SL&ASBT

PGPTD

TSSV

Med

Osram

SFS1)

SRE1)

10%10%10%

9%9%9%8%

9%9%

9%9%

9%

8%

9.75%8%

8.5%

7.5%6.5%7.0%7.0%7.0%

7.0%7.0%

7.0%7.0%

7.0%

6.5%

7.5%6.5%

Siemens 9% 7,1%

1) Cost of Equity

Flat tax rate 30%

COM

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16

sOther considerations

M&A market: competitive environment

Investment criteria faced: • Private Equity – Treasury bond +500 bps or pay-back• EPS• EVA

Conclusion:

Siemens will continue its disciplined M&A approach but has to consider changed market environment.

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sSiemens will adopt IFRS by end of FY06

Our US-GAAP financial statements are compatible with most IFRS standards

The effect on earnings is expected to be positive

Areas requiring adjustments are few (e.g. pension, R&D)

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18

s

Projected benefit obligation (PBO) 1)

Accumulated benefit obligation (ABO) 1)

Discount rate 2)

Fair Value of plan assets

Funded status 1)

Additional contribution

Regular funding

Non allocated pension related income 3)

Expected return on plan assets (EROPA) 4)

Asset allocation of pension assets

Equities

– therein Infineon shares

Fixed income

Real estate

Cash

19.5

17.8

6.0%

14.5

(5.0)

1.8

0.2

33%

3%

46%

8%

13%

(0.250)

8.0%

(0.828)

6.7%

20.9

19.8

5.4%

15.9

(5.0)

1.6

0.2

31%

–

50%

10%

9%

6.7%

1.5

0.6

Key figures – pension

FY02 FY03

1) As of September, 302) Basis for calculation for PBO and ABO as of September, 303) Net periodic benefit costs for pension plans and other postretirement benefits excluding service cost component of

foreign pension costs which are allocated to Groups until FY03; beginning FY04 service cost component of allpension plans is allocated to the groups

4) Basis for calculation of net periodic benefit costs of the corresponding year

FY04 FY05in billions of euros

20.8

20.0

5.5%

17.7

(3.1)

1.3

0.5

26%

–

56%

9%

9%

(0.730)

6.7%

s

19

sPension – BSAV effect 1)

1) BSAV = Betriebliche Siemens Alterversorgung = new, defined contribution pension scheme

Curtailment gain amortized over 15 years

Defined contributions initially higher than past year service cost (about €50 mill.); breakeven expected from 2012 onward, ceteris paribus

NPPC carried centrally reduced to about €630 mill. in fiscal 2005 from €730 mill. in 2004

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20

sRaw Material:Impacts on Siemens Groups

Raw Material

ICNICMSBS

A&DI&SL&ASBT

PGPTDTSSVMedOsram

5-7%5-7%

-

> 10%-

> 10%< 40%

10%< 40%

1%5-7%

< 40%

~ 15%

PlasticsPlastics

-Steel

-Steel

Copper

SteelCopper

AluminumPlastics

Copper

Wolfram

Impacton Group costs

Price Change*

oooooooooooo

o

*Market Prices o negligible– negative+ positive

COM

s

21

sFinancial assumptions for FY05

Cash flow of Financial Services in line with growth opportunities

Tax rate: ~ 25 percent

Ongoing adjustments to pension asset allocation

Capex: ~ 100 percent ball-park

Cash flow from Operations lower

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22

sOutlook 2005

Challenges:

TS: resolving technical issues

SBS: tackling earnings weakness

COM: preparing budget; we want to put COM on a profitable growth trajectory

Business Environment:

Weakening USD (€ > 1,35)

Rising commodity prices create challenge

Geopolitical uncertainties

Pursuing further operational improvements at our Groups

s

23

sGo for Profit and Growth –directive in 2005

Growth in regions likeGermany, U.S., China, Russia, India as well as Central and Eastern Europe

Leverage of top+ programs: Innovation, CustomerFocus and Global Competitiveness

More specific outlook with Q1-FY05 release

NOV-04

Appendix

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sKey figures – 2004

Group profit from Operations

New orders

Sales

Net income

EPS (basic; in euros)

in billions of euros

Net cashfrom operating and investing activities

Q1

20.5

18.3

1.361

0.726

0.82

(1.191)

Q2 Q3 Q4 FY

19.7

17.8

1.076

1.210

1.36

3.565

19.1

18.2

1.239

0.815

0.91

0.279

21.6

20.8

1.322

0.654

0.73

0.609

80.8

75.2

4.998

3.405

3.82

3.262

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26

s

Customer Focus- End to end solution provider for pure play as

well as converged play- Cross selling initiatives within COM and Siemens- Enhancing sales channels- Global presence in over 160 countries

Lead in Innovation- Enhancing feature rich and multifunctional

devices- NGN carrier control based on IMS architecture- Leading mobile infrastructure technologies

(Edge, UMTS, HSDPA)- Siemens Home Entertainment Solutions- Leading in Access solutions such as Carrier

grade Ethernet and OFDM based air interfaces- Innovative Enterprise solutions such as HiPath

and Openscape- Innovative service offerings for Enterprises and

Service Providers

Global Competitiveness- Increasing investments in low cost countries

(40% of R&D employees)- Reducing working capital- Leverage €10 bn buying power globally- Maximize synergies of Devices, Carrier and

Enterprise

Siemens Communications (COM)

End2End powerhouse

Performance and growth drivers

Enterprise Communications # 2

Digital Cordless Phones # 1

Mobile Phones # 4

Wireless Modules # 1

Enter-prise

Leading market positions in 2004

*) in Q4/04: # 2

Salesin billions of euros, not consolidated

Group profitmargin

24.220.7

17.1 18.0

Fixed Networks # 3

Mobile Networks # 3 *)

8-11%

targetFY 2001

(4.8%)

2002

(2.9%)

2003

(1.1%)

2004

3.2

Devices

Carrier

s

27

sSiemens Business Services (SBS)

6.0 5.8

1.7%

5.2

5-6%

Group profit margin

Sales breakdownFY04

... by region

Solutionservices

Operation-related services Europe

Germany

Product-related services

... by services

Asia-Pacific,Africa & M.E. 4%

Americas9%

39%

48%28%

46%

26%

Growth- Europe: Improve market presence - USA: Growth focused on IT outsourcing- Portfolio: Expand Business Process

Outsourcing (BPO) with an initial focus on Human Resources and Financial Services in Germany and UK

Customer focus- Intensify international account

management- Improve share of wallet with

existing customers- Leverage "One Siemens" market

approach- Focus industries: manufacturing,

financial services, public sector

Global competitiveness- Operational excellence - Further cost optimization, e.g.

Purchasing initiativeGlobal sourcing

Performance drivers

2004 target

0.8%

(4.3%)

0.2%

FY 2001 2002 2003

Salesin billions of euros

Moving SBS forward

4.7

s

28

s

> # 3

8.9

11.0%

8.6

8.4%

8.4

9.6%

8.8

12.2%

FY 2001 2002 2003 target2004

Automation & Drives (A&D)

11-13%

Sales within Market Position

FY04

FY99 # 1 # 2

# 1 # 2

> # 3

World leader in Factory Automation

Leading supplier for discrete, hybrid and continuous process automation and electrical equipment for buildings

Focus on high margin portfolio

Global Competitiveness – Launch ofGlobal Manufacturing Concept

Customer focus – Strengthen the established Sector Development Board approach by extending it to additional sectors (e.g. semiconductors)

Innovation – Increase market shareswith new Simotion systems, Sinamicsdrive platform and MES business(Manufacturing Execution Systems)

Strengthen regional coverage in Asia, USA, India and Russia

Performance and growth driversSalesin billions of euros

Group profit margin

World leader in automation

s

29

s

4.6

2.1%

4.5 4.3

2.2%

4-6%

Mission StatementI&S develops, builds, and upgrades plants for industry and infrastructure facilities. I&S combines various drive-, automation-, IT-, and maintenance-solutions from other Siemens Groups to form an integrated complete offering for the life cycle of a plant. I&S thus optimises the production and operational processes of our customers in the sectors water, metals, traffic control, marine solutions, oil and gas, paper and mining.

Impacts in FY04 - portfolio adjustments (SEAR, FEAG) - profit oriented order selection

Development of product families for the industry sectors which comprise integrated and modular standards for plant engineering, IT solutions and maintenance services and close the gap between automation standards and customer specific needs

Water Technologies was established as a new division in August 2004 with the acquisition of USFilter Corporation, a leading supplier of products and services with a broad customer base for municipal and industrial water treatment in North America. With the acquisition, we expect to position ourselves as a leader in the growing global water and wastewater market

Industrial Solutions and Services (I&S)

4.0

Performance drivers

target

(4.4%)

FY 2001 2002 2004

(1.0%)

2003

Salesin billions of euros

Group profit margin

Improving customer productivity

s

30

s

1st half of FY:Extraordinary project and quality costs –mostly stemming out of the pre-merger phase

Weak markets primarily in Logistics-Automation for Distribution and Industry

Forming new divisional Group structure

2nd half of FY:Turnaround in 2nd Half Year – crisis projects and quality problems mainly solved

Recovery of market for electronics assembly

Performance impacts in FY04

Implement the SMS with a ten point program to go for profit and growth and enhance :

1. Creation of standardized Mechatronic Products based on A&D control architecture

2. Development of a common SW architecture, Standardized & Modular Functionality

3. Creation of Leading Edge and Modular Industry Segment Solutions

4. Sales Enforcement: Key Account Management, Value Managed Relationship & Cross Selling

5. Service Initiative

6. Asia Initiative

7. Sizing of Capacities

8. Optimized Value Add Structures and Increased Flexibility of Capacities

9. Project Management and Zero-Tolerance for Defects

10. Establish Product Business for Material Handling

Logistics and Assembly Systems (L&A)

2.51.5%3.0 2.6

7-9%

target

2.3

0.1

Restructuring measures

FY 2002 2003

(2.3%)

2001

(8.4%)

2004

Salesin billions of euros

Group profit margin

Worldwide leader in logistics and assembly

s

31

s

7-9%

Germany

Europe

Americas

Asia-Pacific

Sales by regionFY03

28%

37%

31%

FY 2001 2002 2003

5.0

2.4% 3.5%2.0%

5.65.5

Exploit market leadership in fire safety and building automation by focusing on growing the installed base

Grow service business with innovative service offerings

Build position in security systems focusing on high value solutions and services to become market leader

Strengthen sales channels for Fire & Security Products to drive growth

Increase sales to third parties and OEMs in heating, ventilation & air conditioning products business

Continue streamlining product/system portfolio

Extend portfolio for Total BuildingSolutions

Co-locate all global headquarter functions to drive synergies

Rigorously apply -program in all business areas

Siemens Building Technologies (SBT)

4%

target

Performance driversSalesin billions of euros

2004

4.3

2.5%

Group profit margin

Turning market position into profitability

s

32

s

Salesin billions of euros

More than 5000 turbines with >3GW capacity installed

Full-scope product portfolio of reliable wind turbines

Extensive offshore know-how

References:- World’s largest offshore wind farm: Nysted (166 MW)

- World’s largest onshore wind farm: King Mountain (278 MW)

Entering the growing wind energy business to expand PG’s product portfolio

Innovation:- Harmonize GT product line- New large GT family- Optimize steam turbine family

Customer focus: - Partnering + Architect Engineers as

customers- Oil & Gas

Global competitiveness:- Low cost manufacturing- Shared services

Cross program initiatives:- Service initiative:

• Steam Turbine modifications and upgrades

• Total plant maintenance and diagnostics• GT-LTP’s with risk/gain sharing

- Quality and process initiative:• Customer site back quality program

Power Generation (PG)

9.4

7.0 7.5

7.4%

16.7%

16.8%

12.8%

10-13%

Siemens Management System at PG

FY 2001 2002 2003 target2004

8.6

Group profit margin

Meeting the market challenges

s

33

s

Salesin billions of euros

FY 2001 2002 2003 target

5-7%

4.1*

2.4%*

4.2*

2.6%*

6.1%

2004

Germany

Europe

Americas

Asia-Pacific

Sales by regionFY04

Others

12%

27%

18%

25%

18%

Clear No. 2 in T&D with well-balanced global set-up; reliable partner for our customers through utilizing the SMS:

Innovation

- Technological top-performer through focusing R&D on platform concepts and trendsetting technologies

- Continuous portfolio optimization via innovating our technology and supple-menting new products by acquisitions

Customer Focus

- sales channel optimization by consequently applying Key Account Mgmt., Cross Sellingand Customer Relationship Mgmt.

- MI@PTD (market intelligence community)

- Increasing value-added service offerings

Global competitiveness

- PM@PTD (Professional Project Mgmt.)

- Logistics.excellence@PTD

- Early adjustment of global manufacturing and resources e.g. by adding andextending new factories in China

3.4

Power Transmission and Distribution (PTD)

* incl. Metering

3.6

6.6%

Performance driversGroup profit margin

Sustainable improvement

s

34

s

Salesin billions of euros

Consequent continuation and implementation of TS programIntensification of quality initiative with focus on “fire fighting”, rigorous quality management (technical and commercial), quality gates and Centers of CompetenceMassive build up of technical engineering competenceFurther improvement of competency level through Rolling Stock Academy and five additional Centers of CompetenceFurther enhancement of strong project and risk managementImprovement of bid quality and project start upEstablishment of cross-divisional expert circles, Limits of Authority process and Financial Excellence program

Our goalsReturn to and continue successful course while intensifying the focus on top qualityReach a sustainable and profitable No. 2 position by means of technological leadership, growth and internationalizationMaintain No. 1 position in the rail automation and turnkey markets

SNCF (FKR) 366diesel-electric freight locomotives

Wiener Linien (OES) 255ultra-low-floor (ULF) trams

Significant new orders FY04Siemens order value in millions of euros

5-7%

Transportations System (TS)

Other successes in FY04Commissioning of Siemens’ largest ever interlocking project in Magdeburg

Rolling Stock Excellence Award in UK for the new Desiro UK services

Bavarian Quality Award for locomotive plant in Munich-Allach

-10.1%

Performance drivers

4.74.0

4.6%

FY 2001 2002

4.4

5.7%

2003

6.0%

4.3

Group profit margin

2004 target

Profitable growth with efficient rail solutions

s

35

s

Salesin billions of euros

Cost structure for passenger carsSource: McKinsey/VDA

Today 50% of Siemens VDO’s sales are generated from automotive electronics business. The group aims to achieve a 65% share by 2006

Leverage growth potential

5.7

8.5

0.8%

8.4

5.0%

5-6% Rigorous implementation of WIP lead to further cost savings of almost 1 bn EUR in 2004

- Improve quality and processmanagement

- Improve R+D and manufacturing footprint for global competitiveness

- Enforce asset management

Focus product portfolio

- Enforce standardization and function orientation

- Increase commercial vehicle business by 50 % until end of decade

- Foster strategic acquisitions in systems for Advanced Driver Assistance

Extend business in Asia with focus on Japan and China

Develop new methodology for Global Key Account Management to reach “total customer satisfaction”

Siemens VDO Automotive (SV)

2002 2015

€11,000 €12,000

20%

CAGR

40%

0.7 %

6.2 %Share ofelectrics /electronics

Performance drivers

6.2%

9.0

FY 2002 target2001

(4.6%)

2003 2004

Group profit margin

First-tier supplier of applied automotive electronics & mechatronics

s

36

s

Salesin billions of euros

11.2%13.4%

15.1%

FY 2001 2002 2003

Our Strategy Increase quality and decrease cost of healthcare delivery improve workflow

Innovation LeadershipContinuing high investment in R&D (9 % of sales)Trendsetter in technology and applications:- Sensation 64 – First 64-slice CT in the

market- Magnetom Espree with TIM – The world’s

first open bore MR with TIM (Total Imaging Matrix) and 1.5T

- Symbia – Integrated solution for SPECT and CT – combines functional and anatomical diagnostics

- World market leader in Healthcare IT –Siemens integrated IT-Platform superior to “best of breed”

Global Competitiveness- P3 – People/Process/Products 3.6 bn. cost productivity since 1998- Platform Strategy – syngo/Soarian - Increased software/hardware value added in

low-cost countries - Continuing process optimization

Medical Solutions (Med)

2004

14.8%

+ 11%points

+ 9%points

+ 9%points

Market shareAX* CT MR

7.2 7.6 7.4

1) excl. gains from portfolio transactions2) comparable basis (currency effects and portfolio transactions)

Examples

*Angiography, Fluoroscopic, Radiographic Systems

7.1

target

Group profit margin

FY98FY04Trendsetter in Technologies

Profitable growth path

11-13%

s

37

s

Salesin billions of euros

AutomotiveLighting

Opto Semi-conductors*

Precision Materials andComponents

4.5

10.2%

Ballasts and Luminaires

4.4

8.4%

4.2

9.8%

10.5%

2004FY 2001 2002 2003

Sales by Division*

Display/Optic**

Growth by innovation

- Drive systems business lamps and electronic ballasts

- Expand leading position in opto semi-conductor business

Growth by globalization

- Extend regional sales network (Asia, Eastern Europe)

- Implement e-business worldwide

Cost leadership by optimizing structures and processes

- Expand production in low-cost countries

- Achieve ongoing productivity gains through design-to-cost, benchmarking, supply chain management and total plant maintenance

- Maintain quick reaction to market developments

Cost leadership through asset manage-ment with focus on working capital

Osram

* LED business of all divisions: see Opto Semiconductors** till 09/30/2004: Photo-Optic

4.2

Performance drivers

target

FY04

General Lighting

6%

11%

11%

16%

5%

51%

Leading world market position through new technology

10-11%

Group profit margin

s

38

s

Total assetsin billions of euros

ROE (before taxes)

SFS Divisions

Continuing focus on growth while sustaining high level of profitability- Turnaround in asset growth realized in

FY04; further significant growth expected in FY05

- Sustain and advance position as captive financial services provider to realize synergies and increase competitiveness of Siemens

- Focus on external business to strengthen position as financial services provider in its own right

Sophisticated risk management and central credit portfolio management

Continue to increase operational efficiency, e.g. IT platforms

Expand regional presence along Siemens needs

Focus program on growth

Siemens Financial Services (SFS)

= capital business = fee business

Project & Export Finance- advisory & servicesInvestment Management- asset management and pension advisoryInsurance brokerage- industry and employee businessTreasury & Financing Services- Siemens in-house bank, consulting & applications

FY 2002 2003 2004

18-22%

8.7

23.2%

8.4

24.9%

9.1

24.6%

Equipment & Sales Financing- equipment lease financing- receivables financing- asset-based lendingEquity investments, mainly in infrastructure projects

Future performance drivers

target

Boosting profitable growth in internal and external business

s

39

sFinancial Calendar FY05

April

November

January

July

November 11Press conference

November 12Analyst conference

April 27Semiannual results FY05 – conference call

January 27First quarter results FY05 – conference call – and AGM

July 28Third quarter results FY05 – conference call

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40

sReconciliations and definitions

”Group profit from Operations” is reconciled to ”Income before income taxes” of Operations under ”Reconciliation to financial statements” on the table ”Segment information.” See ”Financial Reports/Fiscal 2004, Quarter 4 / Financial Statements” at our Investor Relations website under www.siemens.com

The allocated equity for SFS is determined and influenced by the respective credit ratings of the rating agencies and by the expected size and quality of its portfolio of leasing and factoring assets and equity investments and is determined annually. This allocation is designed to cover the risks of the underlying business and is in line with common credit risk management standards in banking. The actual risk profile of the SFS portfolio is monitored and controlled monthly and is evaluated against the allocated equity.

”ROE” (Return on equity) margin for SFS was calculated as SFS’ income before income taxes divided by the allocated equity for SFS. Allocated equity for SFS as of September 30, 2004 was €1.015 billion. See also Siemens’ Form 20-F at our Investor Relations website under www.siemens.com

Siemens ties a portion of its executive incentive compensation to achieving economic value added (EVA) targets. EVA measures the profitability of a business (using Group profit for the Operating Groups and income before income taxes for the Financing and Real estate businesses as a base) against the additional cost of capital used to run a business, (using Net capital employed for the Operating Groups and risk-adjusted equity for the Financing and Real estate businesses as a base). A positive EVA means that a business has earned more than its cost of capital, and is therefore defined as value-creating. A negative EVA means that a business is earning less than its cost of capital and is therefore defined as value-destroying. Other organizations that use EVA may define and calculate EVA differently.

A reconciliation of EVA may be found on our Investor Relations website under www.siemens.com

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sSiemens Investor Relations Team

Webpage: http://www.siemens.com Investor Relations

e-mail: investorrelations@siemens.com

Fax: +49-89-636-32830

Marcus Desimoni +49-89-636-32445

Dr. Constantin Birnstiel +49-89-636-36165

Irina Pchelova +49-89-636-33693

Christina Schmöe +49-89-636-32677