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Key figures⁽¹⁾

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

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		Earnings Release Munich, November 10, 2005

Siemens in fiscal 2005 (ended September 30, 2005)

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“Fiscal 2005 was a very dynamic year for Siemens,” said Siemens CEO Klaus Kleinfeld in presenting preliminary results for the year. “We saw healthy growth, notably double-digit growth in orders, and many of our Groups produced strong profit performances.

We also completed one of our busiest years of portfolio changes, gaining new strength in power, medical solutions and industrial automation. Furthermore, we took important steps with respect to our Information and Communications businesses. Overall, we delivered €3.1 billion in income from continuing operations, in line with our earlier guidance, despite significant charges.”

“Looking forward, we will continue to rigorously execute on our Fit4More program with fiscal 2007 in view. We expect that the necessary strategic reorientation measures will affect, positively and negatively, our income and cash flow throughout fiscal 2006. We are on track in making Siemens fit for the future, including a further strengthening of our leadership in strategic markets.”

For the fiscal year ended September 30, 2005, Siemens reported income from continuing operations of €3.058 billion, including a goodwill impairment. For comparison, income from continuing operations of €3.450 billion a year earlier included the €403 million net benefit mentioned above. Discontinued operations in fiscal 2005 were a negative €810 million due to divestment of Com’s mobile devices business. Net income, which includes discontinued operations, was €2.248 billion. More information on discontinued operations is included later in this release. Net income of €3.405 billion a year earlier includes the €403 million net benefit mentioned above. Basic and diluted earnings per share were €2.52 and €2.42, respectively, compared to €3.82 and €3.66 a year earlier. Based on income from continuing operations, basic and diluted earnings per share were €3.43 and €3.29, respectively, compared to €3.87 and €3.71 a year earlier.

Group profit from Operations was €4.687 billion compared to €5.136 billion a year earlier. Most Groups continued on track toward their fiscal 2007 earnings objectives, with particularly strong earnings coming from Automation and Drives (A&D), Medical Solutions (Med), Power Generation (PG), Siemens VDO Automotive (SV) and Osram. In contrast, Group profit at Communications (Com) was lower year-over-year. Siemens Business Services (SBS) posted a substantial loss, including €228 million in capacity adjustment charges and a fourth-quarter goodwill impairment of €262 million. In addition, Group profit from Operations in fiscal 2005 includes charges at the Distribution and Industry Logistics (DI) and Material Handling Products (MHP) divisions. These businesses are accounted for in Other Operations and the Logistics and Assembly Systems (L&A) Group is dissolved effective October 1, 2005. Along with Com and SBS, DI and MHP also expect further charges in coming quarters.

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Orders for the year rose 11%, to €83.791 billion, and sales increased 7%, to €75.445 billion. Excluding currency translation effects and the net effect of acquisitions and dispositions, orders rose 7% and sales were up 3% year-over-year. Orders were higher at every Group in Operations, and sales also rose across the board except at Transportation Systems (TS). Sales growth was driven by international expansion, while orders climbed both domestically and internationally. Most major acquisitions for the year closed in the second half of the year, including CTI Molecular Imaging, Inc. (CTI), a nuclear medicine diagnostics company; Flender Holding GmbH, an industrial gear manufacturer; Robicon Corp., a maker of industrial voltage converters in the U.S.; and VA Technologie AG (VA Tech), a power and industrial solutions company.

On a continuing basis, net cash from operating and investing activities was a negative €1.489 billion in fiscal 2005. Net cash included a significant increase in cash used for acquisitions and investments to €3.102 billion and €1.496 billion in supplemental cash contributions to Siemens pension plans. For comparison, net cash provided by operating and investing activities of €3.015 billion a year earlier included lower supplemental cash pension contributions of €1.255 billion, more than offset by €1.794 billion in net proceeds from the Infineon share sales.

Siemens results for the fourth quarter of fiscal 2005

Orders rose 16% compared to the fourth quarter a year earlier, to €23.596 billion, and sales climbed 13%, to €22.106 billion. Excluding currency effects and the net effect of acquisitions and dispositions, orders rose 9% and sales were up 4%. Group profit from Operations was €926 million, down from €1.474 billion a year earlier due largely to results at Com and SBS and also to asset impairments and project charges at DI and MHP. Income from continuing operations was €497 million compared to €736 million in the prior-year period. Based on income from continuing operations, basic and diluted earnings per share were €0.56 and €0.54, respectively, compared to €0.82 and €0.79 a year earlier. Fourth-quarter net income including discontinued operations was €77 million compared to €654 million a year earlier. Earnings per share for the fourth quarter were €0.09, compared to basic and diluted earnings per share of €0.73 and €0.70, respectively, a year earlier. On a continuing basis, net cash provided by operating and investing activities was €659 million in the fourth quarter. Investing activities used €2.285 billion, as a number of major acquisitions for the year closed in the fourth quarter. A year earlier, fourth-quarter net cash provided by operating and investing activities was €477 million, including €822 million used to acquire USFilter.

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Operations in fiscal 2005

Information and Communications

Communications (Com)

Com closed the sale of its mobile devices business to BenQ Group (BenQ) of Taiwan in the fourth quarter. In the following discussion, discontinued mobile devices operations are excluded from both fiscal 2005 and fiscal 2004, in order to present a meaningful comparison of continuing operations over time.

Fiscal 2005 orders at Com rose 6%, to €13.802 billion, and sales increased 3%, to €13.141 billion. The Mobile Networks division accounted for much of Com’s growth for the year, and also made a strong earnings contribution. Group profit was €454 million for the year, down from €707 million a year earlier due predominantly to margin pressure in the enterprise business and severance charges, largely in the Fixed Networks division. The charges were offset by a gain of €208 million on the sale of a portion of Com’s shares in Juniper Networks, Inc.

Fourth-quarter Group profit was €53 million, down from €286 million a year earlier due to severance charges and market-driven margin pressures. Fourth-quarter sales of €3.707 billion were up 2% compared to the prior-year period, and fourth-quarter orders of €3.553 billion were 7% higher year-over-year.

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Siemens Business Services (SBS)

SBS posted a loss of €690 million in fiscal 2005, including a goodwill impairment of €262 million in its Operation Related Services division and charges of €228 million for severance and capacity adjustments. Group profit in the prior year included a €93 million gain on the sale of 74.9% of Kordoba KG. Sales rose 14%, to €5.373 billion, on an increase in both internal and external sales. Orders of €6.531 billion were up 4% from a year earlier, which included major outsourcing contracts in the U.K., partly involving acquisitions.

In the fourth quarter of fiscal 2005, the charges noted above accounted for most of the loss of €427 million. For comparison, the prior-year period included the Kordoba gain mentioned above. Fourth-quarter sales at SBS rose significantly compared to the same period a year earlier. Fourth-quarter orders clearly out-paced sales, but came in below the level a year earlier, which included the outsourcing contracts mentioned above.

Automation and Control

Automation and Drives (A&D)

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A&D delivered double-digit growth in earnings, sales and orders in fiscal 2005. Group profit rose 12% to €1.210 billion. A&D also significantly expanded its business base with fourth-quarter acquisitions, including Flender Holding GmbH, a leading industrial gear maker, and Robicon Corp., a leading U.S. manufacturer of motor voltage converters. Fiscal 2005 sales for A&D climbed 11% year-over-year, to €9.844 billion, and orders increased 13%, to €10.190 billion. Effective with the beginning of fiscal 2006, A&D includes Siemens’ Electronics Assembly Systems division, which was formerly part of L&A.

Fourth-quarter Group profit at A&D rose 10% compared to the same quarter a year earlier, despite amortization effects related to the acquisitions mentioned above. Sales and orders each jumped 23%, to €3.041 billion and €2.840 billion, respectively, due primarily to the acquisitions.

Industrial Solutions and Services (I&S)

I&S contributed Group profit of €139 million in fiscal 2005, up 46% from €95 million a year earlier. Profit growth was due primarily to a full-year contribution from the Group’s water systems business, acquired in the fourth quarter of fiscal 2004, backed by Group-wide earnings improvements. Sales climbed 26% for the year, to €5.390 billion, including the water systems business and revenues from the portion of the VA Tech acquisition allocated to I&S. The acquisitions also contributed strongly to the year’s 31% growth in orders, which reached €5.686 billion. Effective with the beginning of fiscal 2006, I&S includes Siemens’ Postal Automation and Airport Logistics divisions, which were formerly part of L&A.

The fourth quarter at I&S followed the pattern of the full year. Group profit rose to €52 million from €35 million a year earlier on broad-based earnings improvement, which more than offset amortization

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effects related to VA Tech. Acquisitions drove 42% growth in fourth-quarter sales and 39% growth in fourth-quarter orders.

Logistics and Assembly Systems (L&A)

In the fourth quarter of fiscal 2005, Siemens announced that DI and MHP will be carved out as a separate entity, called Dematic, and L&A is dissolved effective October 1, 2005. Results for L&A for fiscal 2005 and prior years have been recast to exclude the Dematic businesses, whose results are reported in Other Operations.

Group profit of €69 million in fiscal 2005 was up 53% from €45 million a year earlier, which included excess capacity and project cost overruns. The Electronics Assembly Systems division was the leading earnings performer in both years, with earnings margins well above those for the Group as a whole. Sales rose 4% to €1.472 billion, and orders climbed 12%, to €2.015 billion. Effective October 1, 2005, Airport Logistics and Postal Automation divisions are included in I&S, and the Electronics Assembly Systems division is included in A&D.

Fourth-quarter Group profit and sales were both lower than in the same period a year earlier, which included earnings from project incentives and also benefited from successful pursuit of a patent infringement claim. Orders in the fourth quarter were higher than in the prior-year period due to a large postal automation order in the U.S.

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Siemens Building Technologies (SBT)

SBT posted €181 million in Group profit in fiscal 2005, a 68% improvement built on greater capacity utilization. All divisions at SBT contributed improved earnings, and Group profit rose in all four quarters compared to the corresponding period a year earlier. Sales and orders both rose 4%, to €4.415 billion and €4.518 billion, respectively, particularly including growth in the Security Systems division.

In the seasonally strong fourth quarter, Group profit and earnings margin rose sharply compared to the prior-year period, when SBT was adjusting capacity. Fourth-quarter sales of €1.300 billion and orders of €1.163 billion were up 7% and 1%, respectively, compared to the prior-year period.

Power

Power Generation (PG)

Fiscal 2005 orders climbed 19% at PG, to €10.964 billion for the year, fueled by PG’s acquisition of a wind power business in the first quarter and a number of large power plant orders booked through

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the year. The Group’s 7% increase in sales, to €8.061 billion, also benefited from the acquisition. PG delivered €951 million in Group profit in fiscal 2005, close to the level a year earlier. Equity income from joint ventures in China contributed to Group profit. PG’s earnings margin reflected rising R&D investments as well as on-going changes in sales mix, including faster growth in the Group’s industrial business relative to its fossil power generation business.

In the fourth quarter, orders surged 56%, to €3.318 billion, including major orders in the Middle East, Germany, the Commonwealth of Independent States (CIS) and Africa. Sales climbed 18%, to €2.345 billion. Group profit rose 24%, to €256 million, on higher sales.

Power Transmission and Distribution (PTD)

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Transportation

Transportation Systems (TS)