Edgar Filing: SIEMENS AKTIENGESELLSCHAFT

Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

May 9, 2014

Commission File Number: 1-15174

Siemens Aktiengesellschaft

(Translation of registrant’s name into English)

Wittelsbacherplatz 2

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 x Form 40-F ¨

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 ¨ No x

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 ¨ No x

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 ¨ No x

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

TABLE OF CONTENTS


A. Introduction			1
B. Key figures Q2 and first six months of fiscal 2014			2
C. Interim Group Management Report			3
C.1 Overview for the second quarter of fiscal 2014			3
C.2 Results of operations			6
C.3 Financial position			18
C.4 Net assets position			20
C.5 Subsequent events			21
C.6 Siemens - Vision 2020			21
C.7 Outlook			21
C.8 Risks and opportunities			22
C.9 Notes and forward-looking statements			23
D. Condensed Interim Consolidated Financial Statements			24
D.1 Consolidated Statements of Income			24
D.2 Consolidated Statements of Comprehensive Income			24
D.3 Consolidated Statements of Financial Position			25
D.4 Consolidated Statements of Cash Flows			26
D.5 Consolidated Statements of Changes in Equity			27
D.6 Notes to Condensed Interim Consolidated Financial Statements			28
E. Additional information			49
E.1 Responsibility statement			49
E.2 Review report			50
E.3 Quarterly summary			51
E.4 Financial calendar			52

A. INTRODUCTION

Siemens AG’s Interim Report for the Siemens Group complies with the applicable legal requirements of the German Securities Trading Act (Wertpapierhandelsgesetz - WpHG) regarding half-year financial reports, and comprises Condensed Interim Consolidated Financial Statements, an Interim group management report and a Responsibility statement in accordance with section 37w WpHG. The Condensed Interim Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations issued by the International Accounting Standards Board (IASB), as adopted by the European Union (EU). The Condensed Interim Consolidated Financial Statements also comply with IFRS as issued by the IASB. This Interim Report should be read in conjunction with our Annual Report for fiscal 2013, which includes a detailed analysis of our operations and activities.

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

B. Key figures Q2 and first six months of fiscal 2014^1,2

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


Volume
										% Change			1^stsix months									% Change
	Q2 2014			Q2 2013			Actual			Adjusted³			2014			2013			Actual			Adjusted³
Continuing operations
Orders		18,430			21,235			(13	)%		(10	)%		39,266			40,408			(3	)%		0	%
Revenue		17,449			17,779			(2	)%		1	%		34,774			35,705			(3	)%		0	%

Profitability and Capital efficiency
	Q2 2014			Q2 2013						% Change			1^stsix months									% Change
													2014			2013

Total Sectors
Adjusted EBITDA		2,013			1,867						8	%		4,263			4,015						6	%
Total Sectors profit		1,566			1,348						16	%		3,355			2,909						15	%
in % of revenue (Total Sectors)		8.8	%		7.5	%								9.5	%		8.1	%
Continuing operations
Adjusted EBITDA		1,982			1,957						1	%		4,431			4,196						6	%
Income from continuing operations		1,163			980						19	%		2,550			2,130						20	%
Basic earnings per share (in €)⁴		1.34			1.14						18	%		2.95			2.48						19	%
Return on capital employed (ROCE (adjusted))		14.7	%		12.7	%								16.4	%		13.9	%
Continuing and discontinued operations
Net income		1,153			1,030						12	%		2,610			2,243						16	%
Basic earnings per share (in €)⁴		1.33			1.20						11	%		3.03			2.61						16	%
Return on capital employed (ROCE (adjusted))		14.5	%		12.3	%								16.6	%		13.5	%

Capital structure and Liquidity
							March 31, 2014												September 30, 2013
Cash and cash equivalents											8,585												9,190
Total equity (Shareholders of Siemens AG)											27,856												28,111
Adjusted industrial net debt											4,775												2,805

					Q2 2014						Q2 2013			1^stsix months 2014						1^stsix months 2013
Continuing operations
Free cash flow					1,390						1,360						732						(56	)
Continuing and discontinued operations
Free cash flow					1,402						1,335						703						(61	)

Employees
	March 31, 2014												September 30, 2013
	Continuing Operations						Total⁶						Continuing Operations						Total⁶
Employees (in thousands)		359						359						362						367
Germany		117						117						118						119
Outside Germany		243						243						244						248

Orders; Adjusted or organic growth rates of revenue and orders; Total Sectors profit; ROCE (adjusted); Free cash flow; Adjusted EBITDA; and adjusted industrial net debt are or may be non-GAAP financial measures. Definitions of these supplemental financial measures, a discussion of the most directly comparable IFRS financial measures, information regarding the usefulness of Siemens’ supplemental financial measures, the limitations associated with these measures and reconciliations to the most comparable IFRS financial measures are available on our Investor Relations website under WWW.SIEMENS.COM/NONGAAP.

2	January 1 – March 31, 2014 and October 1, 2013 – March 31, 2014.

3	Adjusted for currency translation and portfolio effects.

4	Basic earnings per share – attributable to shareholders of Siemens AG. For fiscal 2014 and 2013 weighted average shares outstanding (basic) (in thousands) for the second quarter amounted to 845,672 and 843,504 and for the first six months to 844,894 and 844,516 shares, respectively.

5	Calculated by dividing adjusted industrial net debt as of March 31, 2014 and 2013 by annualized adjusted EBITDA.

6	Continuing and discontinued operations.

C. INTERIM GROUP MANAGEMENT REPORT

C.1 OVERVIEW FOR THE SECOND QUARTER OF FISCAL 2014

(THREE MONTHS ENDED MARCH 31, 2014)

•

Second-quarter revenue was 2% lower year-over-year. On an organic basis, excluding currency translation and portfolio effects, revenue rose 1%.

•

Orders declined 13% compared to the prior-year period which included a substantially higher volume from large orders. On an organic basis, orders were 10% lower year-over-year. The book-to-bill ratio was 1.06 for the quarter, and Siemens’ order backlog reached a new high at €103 billion.

•

Total Sectors profit rose 16%, to €1.566 billion, highlighted by a strong profit increase in Infrastructure & Cities, and income from continuing operations climbed 19%.

•

Net income for the second quarter rose 12% year-over-year, to €1.153 billion, and basic earnings per share (EPS) increased to €1.33.

•

Free cash flow from continuing operations was €1.390 billion, up slightly from €1.360 billion in the second quarter a year earlier.

Management’s perspective on second-quarter results. We believe that the second quarter of fiscal 2014 showed that we still have a lot to do to improve our operating performance. Nevertheless we are on course to reach our targets for the fiscal year.

Record backlog, currency translation headwinds continue. Second-quarter revenue came in 2% lower year-over-year, and orders declined 13% compared to the prior-year period due mainly to a lower volume from large orders. The euro remained strong against nearly all other major currencies compared to a year earlier, which took four percentage points from order development and revenue growth. On a comparable basis, excluding currency and portfolio effects, revenue rose 1% year-over-year and orders declined 10%. The book-to-bill ratio for Siemens overall was 1.06. The order backlog (defined as the sum of the order backlogs of the Sectors) increased to a new high of €103 billion.

Lower volume from large orders in Europe, C.I.S., Africa, Middle East. Orders declined compared to the second quarter a year ago, when Energy won two large offshore wind-farm orders and Infrastructure & Cities took in two major rolling stock orders, all in the region comprising Europe, the Commonwealth of Independent States (C.I.S.), Africa and the Middle East. Industry delivered solid order growth year-over-year, and Healthcare orders rose slightly on a comparable basis. While orders fell in Europe, C.I.S., Africa, Middle East for Energy and Infrastructure & Cities as mentioned above, these two Sectors led double-digit order growth in Asia, Australia. Orders rose moderately in the Americas despite strong negative currency translation effects. Orders in emerging markets (according to the International Monetary Fund’s definition of Ermerging Market and Developing Economies) declined 10% to €6.129 billion, representing 33% of total orders for the quarter.

LOGO

Stable organic revenue supported by emerging markets. Infrastructure & Cities and Industry posted revenue growth for the second quarter, and Healthcare revenue rose on a comparable basis. Revenue in Energy in the current period fell due to a combination of soft demand and selective order intake in prior periods. On a geographic basis, revenue rose 3% in Asia, Australia on double-digit growth in China that included all Sectors. Revenue rose in the Americas on a comparable basis. Europe, C.I.S., Africa, Middle East posted a decline compared to the prior-year period, as a double-digit drop in Energy more than offset double-digit growth in Infrastructure & Cities. Revenue from emerging markets was nearly unchanged year-over-year, accounting for €5.912 billion, or 34%, of total revenue for the quarter. Organic revenue growth in emerging markets was 7%.

LOGO

Strong increase in Total Sectors profit. Total Sectors profit for the second quarter rose 16% year-over-year, to €1.566 billion, despite burdens on profit from currency effects, which are expected to continue based on the strength of the euro compared to fiscal 2013. Healthcare made the largest contribution to Total Sectors profit, €531 million, including a positive €66 million effect related to the expected sale of a particle therapy installation. Industry took its second-quarter profit up by nearly one-third year-over-year, to €456 million, despite €75 million in charges at a project in the metals technology business. The strongest increase in profit year-over-year came in Infrastructure & Cities, which delivered a solid operating performance. Profit for the Sector climbed to €325 million, up from €6 million a year earlier when the Sector took €161 million in charges related to high-speed rail projects. Profit in Energy fell to €255 million in the second quarter, due mainly to €310 million in

project charges primarily including two power transmission projects in Canada. This was partly offset by a €73 million gain from the sale of a business. For comparison, profit in Energy in the prior-year period was burdened by €84 million in charges related mainly to grid connections to offshore wind-farms in Germany. In the current period, Total Sectors profit was supported by productivity improvements resulting from the “Siemens 2014” program. In the second quarter a year earlier, Total Sectors profit was burdened by €106 million in “Siemens 2014” charges.

LOGO

Higher net income driven by Total Sectors profit. Income from continuing operations for the second quarter rose 19% year-over-year, to €1.163 billion. The increase was due predominantly to higher Total Sectors profit. In addition, income from continuing operations in the current period was supported by a positive contribution from outside the Sectors. Second-quarter net income increased to €1.153 billion, up from €1.030 billion in the same period a year earlier. Corresponding basic EPS rose to €1.33 compared to €1.20 in the prior-year period. Within these numbers, discontinued operations posted a loss of €10 million compared to income of €49 million in the prior-year period, which included €57 million in income from discontinued operations related to OSRAM.

LOGO

Second-quarter Free cash flow higher year-over-year. Free cash flow from continuing operations for the second quarter increased modestly to €1.390 billion compared to €1.360 billion a year earlier, even though the current period included cash outflows of €0.2 billion corresponding to charges to income taken for the “Siemens 2014” program. The current quarter included cash inflows totaling €0.5 billion from a decrease in operating net working capital, compared to inflows of €0.4 billion in the prior-year period. In the current period the decrease in operating net working capital was due mainly to Energy, which received significant advance payments.

LOGO

Higher income lifts ROCE. On a continuing basis, ROCE (adjusted) for the second quarter increased to 14.7%, up from 12.7% in the same period a year earlier. This increase was due to higher income from continuing operations.

Pension plan underfunding increases. The underfunding of Siemens‘ pension plans as of March 31, 2014 amounted to €8.9 billion, compared to an underfunding of €8.0 billion as of December 31, 2013. A substantial decrease in the discount rate assumption and accrued service and interest costs were only partly offset by a positive actual return on plan assets and employer contributions.

Sale of Water Technologies closed. In January 2014, Siemens closed the sale of its business for treating and processing municipal and industrial water and wastewater that was bundled in the Water Technologies Business Unit and is reported as discontinued operations, to funds managed by AEA Investors LP, U.S. for a preliminary consideration of €612 million.

C.2 RESULTS OF OPERATIONS

C.2.1 SIEMENS GROUP

C.2.1.1 Orders and revenue

While macroeconomic conditions in the first half of fiscal 2014 were generally more favorable compared to a year earlier, currency translation effects held back reported revenue and orders. In addition, ongoing challenges in energy markets held back order development. Moreover, orders in the prior-year period included a higher volume from large orders. As a result, both orders and revenue came in 3% lower year-over-year. The euro remained strong against nearly all major currencies compared to a year earlier, which took four percentage points from both order and revenue development.

The book-to-bill ratio for Siemens overall was 1.13. The order backlog (defined as the sum of the order backlogs of the Sectors) climbed to €103 billion.


	Orders (location of customer)
	Six months ended March 31,				% Change						therein
	2014		2013		Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Europe, C.I.S.⁽²⁾, Africa, Middle East		20,755		22,859		(9	)%		(8	)%		(2	)%		1	%
therein Germany		5,617		6,776		(17	)%		(17	)%		0	%		0	%
Americas		10,989		10,486		5	%		10	%		(8	)%		2	%
therein U.S.		7,646		6,657		15	%		17	%		(5	)%		3	%
Asia, Australia		7,522		7,063		7	%		12	%		(7	)%		1	%
therein China		3,634		2,990		22	%		23	%		(1	)%		0	%
Siemens		39,266		40,408		(3	)%		0	%		(4	)%		1	%

(1)	Excluding currency translation and portfolio effects.

(2)	Commonwealth of Independent States.

Orders related to external customers decreased 3% compared to the prior-year period, as a double-digit drop in Energy more than offset double-digit growth in Infrastructure & Cities. In a stabilizing market environment, Industry reported moderate order growth year-over-year. Primarily due to negative currency translation effects, orders in Healthcare came in below their prior-year level.

In the region comprising Europe, C.I.S., Africa, and the Middle East, six-month orders came in €2.1 billion below the prior-year level. The decline is mainly due to a high basis of comparison in the prior-year period that included a higher volume of large orders. In addition, order development in the region reflected a decrease in demand for large gas turbines, leading to a much lower order intake compared to the prior-year period. Double-digit order growth in China was due mainly to a sharp increase in Infrastructure & Cities, while Industry’s orders rose substantially, in part due to restocking by customers. Both Sectors contributed strongly to the 7% increase in orders in Asia, Australia. Orders rose in the Americas largely due to a robust recovery in the U.S. wind business compared to a year earlier, when uncertainty about continuation of production tax incentives led to a sharp drop in order intake. Emerging markets grew faster than orders overall, at 6%, and increased to €14.615 billion, representing 37% of total orders for the period. Organic orders in emerging markets rose 12% year-over-year.


	Revenue (location of customer)
	Six months ended March 31,				% Change						therein
	2014		2013		Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Europe, C.I.S.⁽²⁾, Africa, Middle East		18,515		18,883		(2	)%		(1	)%		(2	)%		1	%
therein Germany		5,095		5,090		0	%		0	%		0	%		0	%
Americas		9,280		9,947		(7	)%		(2	)%		(6	)%		1	%
therein U.S.		6,472		6,914		(6	)%		(4	)%		(4	)%		2	%
Asia, Australia		6,980		6,875		2	%		7	%		(7	)%		1	%
therein China		3,046		2,671		14	%		15	%		(1	)%		0	%
Siemens		34,774		35,705		(3	)%		0	%		(4	)%		1	%

(1)	Excluding currency translation and portfolio effects.

(2)	Commonwealth of Independent States.

Revenue related to external customers declined 3% compared to the same period a year earlier. Infrastructure & Cities posted clear revenue growth year-over-year, due to the execution of large rolling-stock projects and its acquisition of Invensys Rail between the periods under review. The other Sectors reported declines compared to the first six-month a year earlier, including negative currency translation effects as mentioned above. On a comparable basis, six-month revenue came in higher year-over-year for Healthcare and Industry.

Revenue declined slightly in the region Europe, C.I.S., Africa, Middle East, where a significant decline in Energy was partially offset by increases in Infrastructure & Cities and Industry year-over-year. In the Americas, revenue declined in all Sectors, including the negative currency translation effects mentioned above. A double-digit revenue increase in China, including contributions from all Sectors, supported a slight increase in six-month revenue in Asia, Australia compared to the prior-year period. Emerging markets reported a 2% decline year-over-year and accounted for €11.603 billion, or 33%, of total revenue for the period. Organic six-month revenue growth in emerging markets was 4% year-over-year.

C.2.1.2 Consolidated Statements of Income


	Six months ended March 31,
	2014			2013			% Change
	(in millions of €)
Gross profit		10,219			10,202			0	%
as percentage of revenue		29.4	%		28.6	%		—
Research and development expenses		(2,023	)		(2,030	)		0	%
as percentage of revenue		5.8	%		5.7	%		—
Selling and general administrative expenses		(5,207	)		(5,320	)		2	%
as percentage of revenue		15.0	%		14.9	%		—
Other operating income		467			196			139	%
Other operating expenses		(254	)		(191	)		(33	)%
Income from investments accounted for using the equity method, net		349			163			114	%
Interest income		510			458			11	%
Interest expenses		(373	)		(375	)		0	%
Other financial income (expenses), net		(113	)		(70	)		(60	)%
Income from continuing operations before income taxes		3,577			3,033			18	%
Income tax expenses		(1,027	)		(902	)		(14	)%
as percentage of income from continuing operations before income taxes		29	%		30	%		—
Income from continuing operations		2,550			2,130			20	%
Income from discontinued operations, net of income taxes		61			113			(46	)%
Net income		2,610			2,243			16	%
Net income attributable to non-controlling interests		54			37			—
Net income attributable to shareholders of Siemens AG		2,556			2,207			16	%

Income from continuing operations before income taxes for the first six months of fiscal 2014 increased to €3.577 billion from €3.033 billion in the first six months of fiscal 2013.

Gross profit was slightly higher than in the first six months of fiscal 2013. As explained in C.2.1.1 Orders and revenue, revenue declined year-over-year due mainly to the appreciation of the euro against nearly all other major currencies between the periods under review, with an adverse effect on gross profit. The resulting decrease in gross profit was partially offset by substantially lower project charges compared to the prior-year period which are explained in more detail in C.2.2 Segment information. In addition, the first six months of fiscal 2013 included charges for the “Siemens 2014” program in all Sectors totaling €154 million, which were recorded mainly in cost of sales and accordingly influenced gross profit.

Selling and general administrative expenses were lower year-over-year on declines in all Sectors. The prior-year amount included a portion of the charges for the “Siemens 2014” program mentioned above.

Other operating income more than doubled year-over-year, due in part to substantially higher gains from disposals of real estate at Siemens Real Estate (SRE) and a gain from the disposal of Power Generation’s turbo fan business. Other operating expenses were higher year-over-year due mainly to higher expenses related to legal and regulatory matters.

Income from investments accounted for using the equity method, net more than doubled compared to the prior-year period. This improvement was due mainly to two factors. Beginning with the second quarter of fiscal 2014, we report results related to our stake in Bosch Siemens Hausgeräte GmbH (BSH) in phase with results of the Siemens Group, rather than with the lag of one quarter. Due to the one-time catch-up effect associated with this change, profit for the first six months of fiscal 2014 therefore includes results related to BSH for three quarters rather than the usual two. In addition, the prior-year amount included impairments in the solar business in the Energy Sector.

Other financial income (expenses), net was lower year-over-year, including higher expenses resulting from changes in the fair value of warrants issued together with US$3 billion bonds in fiscal 2012.

Including the developments described above, Income from continuing operations before income taxes increased 18% year-over-year. With a lower effective tax rate compared to the first six months of fiscal 2013, Income from continuing operations increased 20% year-over-year.

Income from discontinued operations, net of income taxes in the first six months of fiscal 2014 was €61 million compared to €113 million in the same period a year earlier. While Income from discontinued operations in the current period benefited from a positive €66 million tax effect related to former Communications activities, the prior-year period included Income from discontinued operations of €136 million related to OSRAM, which was spun off in the fourth quarter of fiscal 2013.

As a result of the changes in both Income from continuing operations and Income from discontinued operations, Net income and Net income attributable to shareholders were 16% higher than in the same period a year earlier.

Corresponding basic EPS rose 16% to €3.03 compared to €2.61 in the prior-year period, reflecting higher Net income attributable to shareholders of Siemens AG.

C.2.2 SEGMENT INFORMATION

C.2.2.1 Energy


Sector	Six months ended March 31,						% Change						therein
	2014			2013			Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Profit		761			961			(21	)%
Profit margin		6.7	%		7.7	%
Orders		13,322			15,835			(16	)%		(11	)%		(4	)%		0	%
Revenue		11,382			12,562			(9	)%		(5	)%		(4	)%		0	%

(1)	Excluding currency translation and portfolio effects.

In fiscal 2013, the markets served by Energy recovered from the depressed levels of fiscal 2012 but the weak economic environment and significant manufacturing overcapacities in the power plant industry remained. The improvement trend has continued in the first half of fiscal 2014, led mainly by wind power markets, followed by power transmission markets. Nevertheless, price pressure remains fierce.

The long-term market for gas-fired power plants will be supported by the increasing use of natural gas in the U.S. and strong demand from China. In the short term, the market for large gas turbines remains difficult, and we expect demand to decline from the level of fiscal 2013. There is a trend towards larger and more efficient units for base-load power generation, such as in the U.S., China and South-East Asia. At the same time, we see higher demand for smaller gas turbines used for distributed power generation. We expect demand in Europe to remain weak.

We expect wind power markets in fiscal 2014 to return to the record levels of fiscal 2011. This applies to the onshore and offshore markets, even though both will continue to get more competitive. We expect markets for high-voltage products and transformers to remain stable in fiscal 2014, while transmission solutions show moderate growth particularly from grid access projects in North-West Europe.

Energy profit of €761 million in the first six months of fiscal 2014 was down substantially year-over-year, due in part to a revenue decline and a less favorable business mix compared to the prior-year period. For comparison, six-month profit a year ago was burdened by a loss of €178 million for Siemens’ solar activities and €46 million in charges for the “Siemens 2014” program. In addition, both the current and prior reporting periods included impacts mentioned below for the Sector’s Divisions. The Power Generation Division increased its six-month profit year-over-year, benefiting from a gain on the sale of the Division’s turbo fan business and a positive effect from a successful project completion. For comparison, the Division’s profit development in the prior-year period was held back by charges related to compliance with sanctions on Iran. Profit at Wind Power fell sharply, due in part to charges related to onshore wind turbines. Power Transmission posted a higher loss due mainly to continuing project execution challenges. In the current period, the Division took charges totaling

€297 million related to two HVDC transmission line projects in Canada. Both periods included charges related mainly to grid connections to offshore wind-farms in Germany, amounting to €90 million in the current six months and €111 million in the same period a year earlier.

In the first six months of fiscal 2014, revenue for the Sector came in 9% lower than a year ago, reflecting weak order entry development at Power Generation and selective order intake at Power Transmission in prior periods. On a regional basis, revenue declined in Europe, C.I.S., Africa, Middle East and the Americas region. Power Generation and Power Transmission posted revenue declines compared to the prior-year period, while Wind Power increased its revenue significantly. Orders came in 16% below the prior-year period, when a substantially higher volume from large orders included several offshore wind-farm contracts in Europe, C.I.S., Africa, Middle East. The resulting order decline in that region more than offset order growth in the Americas and Asia, Australia. Order development year-over-year reflected Energy’s challenging market environment, particularly a decrease in demand for large gas turbines. Negative currency translation effects took four percentage points from both revenue and order development during the period. The book-to-bill ratio for Energy was 1.17, and its order backlog was €55 billion at the end of the period.


Businesses	Orders
	Six months ended March 31,				% Change						therein
	2014		2013		Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Power Generation		6,856		8,383		(18	)%		(13	)%		(4	)%		(1	)%
Wind Power		3,937		4,451		(12	)%		(8	)%		(4	)%		0	%
Power Transmission		2,635		2,807		(6	)%		(1	)%		(5	)%		0	%

(1)	Excluding currency translation and portfolio effects.


Businesses	Revenue
	Six months ended March 31,				% Change						therein
	2014		2013		Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Power Generation		6,445		7,468		(14	)%		(9	)%		(4	)%		(1	)%
Wind Power		2,466		2,183		13	%		17	%		(4	)%		0	%
Power Transmission		2,495		2,891		(14	)%		(9	)%		(5	)%		0	%

(1)	Excluding currency translation and portfolio effects.


Businesses	Profit									Profit margin

	Six months ended March 31,									Six months ended March 31,
	2014			2013			% Change			2014			2013
	(in millions of €)
Power Generation		1,128			1,087			4	%		17.5	%		14.6	%
Wind Power		13			105			(88	)%		0.5	%		4.8	%
Power Transmission		(381	)		(65	)		>(200	)%		(15.3	)%		(2.2	)%

Profit at Power Generation for the first six months of fiscal 2014 increased moderately year-over-year to €1.128 billion. The current period benefited from a €73 million gain on the sale of the Division’s turbo fan business and a €72 million effect from a successful project completion in the turnkey business. For comparison, profit development in the prior-year period was held back by €46 million in charges related to compliance with sanctions on Iran. Six-month revenue for the Division decreased 14% year-over-year on declines in all three reporting regions, due to a number of factors including a global shift in the markets for gas turbines to low-price countries with fewer turnkey opportunities. Order intake was significantly below the level of the prior-year period on a decline in Europe, C.I.S., Africa, Middle East where Power Generation had taken in a higher volume from large orders in the first six months of fiscal 2013, particularly including a combined-cycle power plant in Germany. Six-month orders were also lower in the Americas.

Profit at Wind Power for the first six months of fiscal 2014 fell to €13 million. An unfavorable business mix included an unusually low contribution from the higher-margin offshore business in the second quarter. This was due to lower capacity utilization combined with production costs that were higher than average during the quarter. In addition, the Division recorded charges of €48 million for inspecting and replacing defective main bearings in onshore wind turbines. For comparison, profit in the prior-year period benefited from positive effects

related to project completions and the settlement of a claim related to an offshore wind-farm project. Revenue was up 13% on increases in the Americas and Asia, Australia reporting regions. Order intake was down significantly in the first six months of fiscal 2014 compared to the prior-year period, when the Division took in a higher volume from large orders, particularly including several major offshore contracts in Europe, C.I.S., Africa, Middle East. In contrast, order intake in the Americas region more than doubled, including a recovery in the U.S., the Division‘s largest national market for onshore wind power, from a low basis of comparison in the prior year that resulted from uncertainty about continuation of production tax incentives.

Power Transmission reported a loss of €381 million in the first six months of fiscal 2014, significantly higher than in the same period a year earlier, due mainly to continuing project execution challenges. In the current period, the Division took charges totaling €297 million related to the two HVDC transmission line projects in Canada mentioned above, resulting from revised estimates for civil engineering and infrastructure provided by suppliers as well as penalties for associated project delays, among other factors. In addition, the Division took charges of €90 million related mainly to grid connections to offshore wind-farms in Germany. In the same period a year earlier, the Division’s loss included grid-connection project charges of €111 million. Finally, profit development in the current period was also held back by a high proportion of projects with low or negligible profit margins. Revenue was down 14% on decreases in all reporting regions, due mainly to selective order intake in prior periods primarily in the solutions business. Order intake was down 6% year-over-year, as declines in the Americas and Asia, Australia regions more than offset growth in Europe, C.I.S., Africa, Middle East. The Division expects continuing challenges in coming quarters.

C.2.2.2 Healthcare


Sector	Six months ended March 31,						% Change						therein
	2014			2013			Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Profit		1,002			948			6	%
Profit margin		15.8	%		14.5	%
Orders		6,395			6,616			(3	)%		2	%		(6	)%		0	%
Revenue		6,350			6,530			(3	)%		3	%		(6	)%		0	%

(1)	Excluding currency translation and portfolio effects.

On balance, markets for Healthcare are expected to grow slightly in the second half of fiscal 2014. Emerging markets will continue to be a growth driver, as they seek to build up healthcare infrastructure and provide ubiquitous access to modern medical technology. In contrast, countries in the developed world seek to limit the growth of spending associated with providing high levels of care, for example through outcome-based incentives.

For the first six months of fiscal 2014, profit in the Healthcare Sector rose to €1.002 billion. Profit development in the first half of fiscal 2014 benefited from a €66 million positive effect related to the expected sale of a particle therapy installation, but was held back by unfavorable currency translation effects based on the strength of the euro compared to fiscal 2013. Reported profit in the same period a year earlier was held back by €22 million in charges for the Sector’s “Agenda 2013” initiative.

Diagnostics contributed €202 million to Sector profit, up moderately from €195 million in the prior-year period which included €12 million in “Agenda 2013” charges. Purchase price allocation (PPA) effects related to past acquisitions at Diagnostics were €82 million in the first six months. A year earlier, Diagnostics recorded €85 million in PPA effects.

Currency translation effects reduced reported revenue and orders for Healthcare moderately compared to the prior-year period, with most businesses posting declines. Geographically, the reported decline in revenue and orders came from Asia, Australia and the Americas. On a comparable basis, revenue rose 3% and orders were up 2% compared to the prior-year period. The book-to-bill ratio was 1.01, and Healthcare’s order backlog was €7 billion at the end of the first six months.

The Diagnostics business reported revenue of €1.847 billion in the first half of fiscal 2014, a 4% decrease from €1.924 billion a year earlier including a clear decline in the Americas due primarily to headwinds from currency translation mentioned above. On a comparable basis, Diagnostics revenue was up 2% compared to the prior-year period.

C.2.2.3 Industry


Sector	Six months ended March 31,						% Change						therein
	2014			2013			Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Profit		938			851			10	%
Profit margin		10.7	%		9.7	%
Orders		9,394			8,691			8	%		11	%		(4	)%		1	%
Revenue		8,749			8,796			(1	)%		2	%		(3	)%		0	%

(1)	Excluding currency translation and portfolio effects.

Overall, the Industry Sector’s markets showed further signs of stabilization in the first half of fiscal 2014. The growth so far was supported by long-cycle businesses and restocking by customers in China. Global growth dynamics have improved in the infrastructure and automotive industries. We expect more broad-based demand in our short-cycle businesses in the second half of fiscal 2014, supporting moderate comparable growth if customers continue to increase their capacity utilization and machinery production. On a geographic basis, we expect the strongest comparable growth for Industry to come from advanced economies, particularly including Germany and the U.S., and from China.

Due in part to the improving market conditions for the Sector’s short-cycle businesses, mainly during the second quarter, Industry reported a profit of €938 million in the first half of fiscal 2014, up from €851 million in the prior-year period. Profit development in the current six months was held back by a loss at the metals technologies business which took €77 million in charges related to a project in the U.S. For comparison, profit in the prior-year period included €54 million in charges related to the “Siemens 2014” productivity improvement program. Six-month revenue came in 1% below the prior-year level, including unfavorable currency translation effects. Order growth of 8% year-over-year was supported mainly by a higher volume from major orders in the Sector’s long-cycle businesses compared to the prior-year period. On a comparable basis, six-month revenue increased 2% year-over-year and orders rose 11%.

On a geographic basis, revenue rose in Asia, Australia, including double-digit growth in China, due in part to restocking by customers, and in Europe, C.I.S., Africa, Middle East. These increases were more than offset by a decline in the Americas compared to the prior-year period, including negative currency translation effects. Order growth for the Sector came from Asia, Australia, driven by China, and from Europe, C.I.S., Africa, Middle East. The Sector’s book-to-bill ratio was 1.07 and its order backlog was €10 billion at the end of the period.


Businesses	Orders
	Six months ended March 31,				% Change						therein
	2014		2013		Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Industry Automation		4,276		3,982		7	%		9	%		(4	)%		2	%
Drive Technologies		4,792		4,483		7	%		10	%		(3	)%		0	%

(1)	Excluding currency translation and portfolio effects.


Businesses	Revenue
	Six months ended March 31,				% Change						therein
	2014		2013		Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Industry Automation		4,016		3,941		2	%		4	%		(4	)%		1	%
Drive Technologies		4,247		4,277		(1	)%		3	%		(3	)%		0	%

(1)	Excluding currency translation and portfolio effects.


Businesses	Profit							Profit margin

	Six months ended March 31,							Six months ended March 31,
	2014		2013		% Change			2014			2013
	(in millions of €)
Industry Automation		655		510		28	%		16.3	%		12.9	%
Drive Technologies		343		316		8	%		8.1	%		7.4	%

Six-month profit for Industry Automation rose to €655 million on higher profit in all businesses and a more favorable business mix. The Division recorded PPA effects of €22 million related to LMS International NV (LMS), acquired in the second quarter of fiscal 2013. For comparison, PPA effects related to LMS were €11 million while deferred revenue adjustments and inventory step-ups totaled €14 million in the prior-year period. PPA effects related to the acquisition of UGS Corp. in fiscal 2007 were €70 million in the current period compared to €75 million a year earlier. Revenue for Industry Automation came in 2% higher year-over-year, mainly on a double-digit increase in Asia, Australia, including restocking in China, as mentioned above. Six-month orders rose 7% compared to the prior-year period, on double-digit growth in Asia, Australia and a moderate increase in Europe, C.I.S., Africa, Middle East.

Profit at Drive Technologies came in at €343 million in the first six months of fiscal 2014, including contributions from most of its businesses. While profit was lower in the same period a year earlier, it was burdened by the majority of the Sector’s charges for the “Siemens 2014” program mentioned above. Due to unfavorable currency translation effects, revenue declined slightly year-over-year, primarily including a decline in the Americas and Asia, Australia. Orders for the Division increased 7%, driven mainly by a higher volume of large orders compared to the prior-year period. On an organic basis, six-month revenue was up 3% and orders grew 10% year-over-year.

C.2.2.4 Infrastructure & Cities


Sector	Six months ended March 31,						% Change						therein
	2014			2013			Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Profit		654			147			>200	%
Profit margin		7.4	%		1.8	%
Orders		10,985			9,574			15	%		14	%		(4	)%		5	%
Revenue		8,786			8,202			7	%		6	%		(4	)%		5	%

(1)	Excluding currency translation and portfolio effects.

We expect growth for the markets served by the Transportation & Logistics Business to remain strong in Europe, C.I.S, Africa, Middle East and in Asia, Australia. The first of these two regions remains the world’s largest geographic market for the Business, with continued investment in large rail orders. We expect the markets served by our Power Grid Solutions & Products Business to show a modest volume decline in fiscal 2014, including weaker demand in some emerging market countries and utility customers choosing to delay or reduce the scale of their investments. We expect a continuing recovery in non-residential construction markets, with our Building Technologies Division beginning to benefit from this development toward the end of fiscal 2014.

In the first half of fiscal 2014, profit for Infrastructure & Cities rose to €654 million with all Businesses contributing to the improvement. The primary factor in the increase was improved project execution and higher revenue at Transportation & Logistics, which delivered a profit in the current period compared to a loss in the first six months a year earlier, when it recorded project charges of €277 million related mainly to high-speed trains. Sector profit also rose on a more favorable business mix, particularly within Power Grid Solutions & Products. Positive results from the execution of the “Siemens 2014” program were most evident at the Building

Technologies Division. Sector profit also benefited from a €39 million net effect due to the release of accruals related to “Siemens 2014,” primarily at Transportation & Logistics. In contrast, the prior-year period was burdened by €32 million in charges for the program.

Orders for the first six months rose 15% compared to the prior-year period. While the Sector won a number of major orders in both periods, the volume from such orders was substantially higher in the current period due mainly to a contract worth €1.6 billion for two driverless subway lines in Saudi Arabia. This order will be delivered by the Transportation & Logistics and the Power Grid Solutions & Products Businesses. Revenue for the Sector was up 7% year-over-year driven by a double-digit increase in Transportation & Logistics, including execution of large rolling-stock projects and the acquisition of Invensys Rail between the periods under review. Revenue declines at the Sector’s two other Businesses included negative currency translation effects, which were particularly strong at Power Grid Solutions & Products. On a geographic basis, Infrastructure & Cities achieved double-digit increases in orders in all three reporting regions. Significantly higher revenue year-over-year in Europe, C.I.S., Africa, Middle East and Asia, Australia was partly offset by a decrease in the Americas. The Sector’s book-to-bill ratio was 1.25 and its order backlog at the end of the first half of fiscal 2014 was €30 billion.


Businesses	Orders
	Six months ended March 31,				% Change						therein
	2014		2013		Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Transportation & Logistics		5,120		3,713		38	%		29	%		(4	)%		13	%
Power Grid Solutions & Products		3,318		3,169		5	%		10	%		(6	)%		0	%
Building Technologies		2,685		2,823		(5	)%		(2	)%		(3	)%		0	%

(1)	Excluding currency translation and portfolio effects.


Businesses	Revenue
	Six months ended March 31,				% Change						therein
	2014		2013		Actual			Adjusted⁽¹⁾			Currency			Portfolio
	(in millions of €)
Transportation & Logistics		3,463		2,686		29	%		16	%		(3	)%		17	%
Power Grid Solutions & Products		2,771		2,878		(4	)%		2	%		(6	)%		0	%
Building Technologies		2,666		2,777		(4	)%		(1	)%		(3	)%		0	%

(1)	Excluding currency translation and portfolio effects.


Businesses	Profit								Profit margin

	Six months ended March 31,								Six months ended March 31,
	2014		2013			% Change			2014			2013
	(in millions of €)
Transportation & Logistics		210		(210	)		n/a			6.1	%		(7.8	)%
Power Grid Solutions & Products		238		198			20	%		8.6	%		6.9	%
Building Technologies		206		152			36	%		7.7	%		5.5	%

Transportation & Logistics posted a profit of €210 million in the first six months of fiscal 2014, following a loss in the same amount a year earlier, when the Business took €277 million in project charges related mainly to high-speed trains as mentioned above. The Business recorded PPA effects of €26 million related to its acquisition of Invensys Rail which closed in the third quarter of fiscal 2013. First-half orders for Transportation & Logistics rose 38% year-over-year due mainly to a higher volume from major orders including a large share of the Saudi Arabia order mentioned above. Revenue grew by 29% year-over-year, as the Business is executing a number of large rolling-stock orders. Orders and revenue grew in all regions year-over-year and benefited from the acquisition of Invensys Rail between the periods under review.

First-half profit at Power Grid Solutions & Products rose to €238 million from €198 million a year earlier. The improvement was due mainly to a more favorable business mix year-over-year. Revenue was down 4% year-over-year as a decline in the Americas more than offset higher revenue in Europe, C.I.S., Africa, Middle East and Asia, Australia. Order growth of 5% included a share in the Saudi Arabia order mentioned above. As a result, orders were up in the region Europe, C.I.S., Africa, Middle East. Revenue and order development was strongly affected by negative currency translation effects. On a comparable basis, revenue was up 2% and orders rose 10% year-over-year.

Profit at Building Technologies rose to €206 million, up from €152 million a year earlier. The major factors in the increase were productivity improvements from successful implementation of the “Siemens 2014” program and a more favorable business mix year-over-year. The Division’s reported declines in revenue and orders, of 4% and 5% year-over-year, respectively, were due to the Americas region and included negative currency translation effects.

C.2.2.5 Equity Investments

In the first half of fiscal 2014, profit at Equity Investments rose to €203 million, up from €151 million a year earlier, when profit was burdened by a loss of €11 million related to Siemens’ stake in Nokia Siemens Networks B.V. This stake was sold between the periods under review. Beginning with the second quarter of fiscal 2014, we report results related to our stake in BSH in phase with results of Siemens, rather than with the lag of one quarter. Due to the one-time catch-up effect associated with this change, profit for the first six months of fiscal 2014 therefore includes results related to BSH for three quarters rather than the usual two.

C.2.2.6 Financial Services (SFS)


	Six months ended March 31,
	2014		2013		% Change
	(in millions of €)
Income before income taxes		223		230		(3	)%

	March 31, 2014		Sep. 30, 2013
Total assets		19,385		18,661		4	%

SFS made a solid contribution to profit in the first half of fiscal 2014, with €223 million in income before income taxes compared to €230 million in the prior-year period. SFS continued to execute its growth strategy, with increases in total assets leading to higher interest income and associated expenses. In contrast, results related to investments accounted for using the equity method came in below the level of the prior-year period. Despite substantial early terminations of financings and negative currency translation effects, total assets rose to €19.385 billion at the end of the first half of fiscal 2014, compared to €18.661 billion at the end of fiscal 2013.

C.2.2.7 Reconciliation to Consolidated Financial Statements

Reconciliation to Consolidated Financial Statements includes Centrally managed portfolio activities, Siemens Real Estate and various categories of items which are not allocated to the Sectors and to SFS because Management has determined that such items are not indicative of the operating performance of the Sectors and SFS.

Centrally managed portfolio activities

Centrally managed portfolio activities reported a profit of €45 million in the first six months of fiscal 2014, compared to a profit of €23 million in the same period a year earlier.

Siemens Real Estate (SRE)

Income before income taxes at SRE was €150 million in the first six months of fiscal 2014, compared to €43 million in the same period a year earlier. As in the past, income from SRE continues to be highly dependent on disposals of real estate.

Corporate items and pensions

Corporate items and pensions reported a loss of €435 million in the first six months of fiscal 2014, compared to a loss of €318 million in the same period a year earlier. Within these figures, the loss at Corporate items was €239 million, compared to a loss of €113 million in the prior-year period. Results for the first six months of fiscal 2014 included expenses resulting from changes in the fair value of warrants issued together with US$3 billion in bonds in fiscal 2012, and negative effects related to legal and regulatory matters. Centrally carried pension expense totaled €196 million in the first six months of fiscal 2014, compared to €205 million in the same period a year earlier.

Eliminations, Corporate Treasury and other reconciling items

Income before income taxes from Eliminations, Corporate Treasury and other reconciling items was a positive €35 million in the first half of fiscal 2014 compared to a negative €5 million in the same period a year earlier. The primary factor in the improvement was higher income from Corporate Treasury activities due mainly to changes in the fair value of interest rate derivatives not qualifying for hedge accounting.

C.2.3 Reconciliation to adjusted EBITDA

The following table gives additional information on topics included in Profit and Income before income taxes and provides a reconciliation to adjusted EBITDA based on continuing operations.

For the six months ended March 31, 2014 and 2013 (in millions of €)


	Profit⁽¹⁾						Income (loss) from investments accounted for using the equity method, net⁽²⁾					Financial income (expenses), net⁽³⁾						Adjusted EBIT⁽⁴⁾						Amortization⁽⁵⁾				Depreciation and impairments of property, plant and equipment and goodwill⁽⁶⁾						Adjusted EBITDA						Adjusted EBITDA margin
	2014			2013			2014		2013			2014			2013			2014			2013			2014		2013		2014			2013			2014			2013			2014			2013
Sectors
Energy Sector		761			961			57		(67	)		(20	)		(15	)		724			1,043			52		56		193			218			969			1,317			8.5	%		10.5	%
therein:
Power Generation		1,128			1,087			24		20			(12	)		(9	)		1,116			1,076			29		34		99			108			1,244			1,218
Wind Power		13			105			3		(7	)		(6	)		(3	)		16			115			16		15		50			45			82			175
Power Transmission		(381	)		(65	)		15		10			(4	)		(5	)		(392	)		(70	)		7		7		43			50			(343	)		(13	)
Healthcare Sector		1,002			948			2		4			21			4			979			941			141		160		162			159			1,281			1,260			20.2	%		19.3	%
therein:
Diagnostics		202			195			—		—			21			6			181			190			93		99		103			106			377			395
Industry Sector		938			851			2		5			1			(3	)		935			849			144		149		144			165			1,223			1,163			14.0	%		13.2	%
therein:
Industry Automation		655			510			—		—			2			(1	)		652			511			118		114		52			56			823			681
Drive Technologies		343			316			2		5			(1	)		(2	)		342			313			23		31		86			103			450			446
Infrastructure & Cities Sector		654			147			16		18			(8	)		(10	)		646			139			63		55		81			80			790			274			9.0	%		3.3	%
therein:
Transportation & Logistics		210			(210	)		9		13			(6	)		(4	)		206			(219	)		33		7		27			21			266			(191	)
Power Grid Solutions & Products		238			198			5		5			(1	)		(5	)		235			198			10		18		32			35			277			250
Building Technologies		206			152			2		—			(1	)		(1	)		205			152			20		30		20			23			245			205
Total Sectors		3,355			2,909			77		(40	)		(6	)		(24	)		3,283			2,973			399		421		580			621			4,263			4,015

Equity Investments		203			151			194		139			8			12			1			—			—		—		—			—			1			—
Financial Services (SFS)		223			230			37		44			273			214			(86	)		(29	)		2		3		100			117			17			90
Reconciliation to Consolidated Financial Statements
Centrally managed portfolio activities		45			23			42		22			(1	)		—			4			1			—		1		1			1			6			3
Siemens Real Estate (SRE)		150			43			—		—			(54	)		(56	)		203			99			1		1		123			139			326			238
Corporate items and pensions		(435	)		(318	)		—		—			(306	)		(166	)		(129	)		(151	)		9		9		28			46			(92	)		(97	)
Eliminations, Corporate Treasury and other reconciling items		35			(5	)		—		(3	)		110			34			(75	)		(36	)		—		—		(15	)		(18	)		(90	)		(54	)

Siemens		3,577			3,033			349		163			25			13			3,202			2,856			412		434		817			906			4,431			4,196

(1)

Profit of the Sectors as well as of Equity Investments and Centrally managed portfolio activities is earnings before financing interest, certain pension costs and income taxes. Certain other items not considered performance indicative by Management may be excluded. Profit of SFS and SRE is Income before income taxes. Profit of Siemens is Income from continuing operations before income taxes.

For a reconciliation of Income from continuing operations before income taxes to Net income see Consolidated Statements of Income.

(2)	Includes impairments and reversals of impairments of investments accounted for using the equity method.

(3)	Includes impairment of non-current available-for-sale financial assets. For Siemens, Financial income (expenses), net comprises Interest income, Interest expenses and Other financial income (expenses), net as reported in the Consolidated Statements of Income.

(4)	Adjusted EBIT is Income from continuing operations before income taxes less Financial income (expenses), net and Income (loss) from investments accounted for using the equity method, net.

(5)	Amortization and impairments, net of reversals, of intangible assets other than goodwill.

(6)	Depreciation and impairments of property, plant and equipment, net of reversals. Includes impairments of goodwill of €4 million and €— million for the six months ended March 31, 2014 and 2013, respectively.

C.3 FINANCIAL POSITION

C.3.1 CAPITAL STRUCTURE

As of March 31, 2014 and September 30, 2013 the capital structure ratios were as follows:


	March 31, 2014			September 30, 2013
	(in millions of €)
Short-term debt and current maturities of long-term debt⁽¹⁾		3,757			1,944
Plus: Long-term debt⁽¹⁾		18,587			18,509
Less: Cash and cash equivalents		(8,585	)		(9,190	)
Less: Current available-for-sale financial assets		(799	)		(601	)

Net debt		12,960			10,663
Less: SFS Debt⁽²⁾		(16,428	)		(15,600	)
Plus: Post-employment benefits⁽³⁾		9,614			9,265
Plus: Credit guarantees		666			622
Less: 50% nominal amount hybrid bond⁽⁴⁾		(903	)		(899	)
Less: Fair value hedge accounting adjustment⁽⁵⁾		(1,134	)		(1,247	)


Adjusted industrial net debt		4,775			2,805


Adjusted EBITDA (continuing operations)		4,431			8,215


Adjusted industrial net debt / adjusted EBITDA (continuing operations)⁽⁶⁾		0.54			0.34

(1)	The item Short-term debt and current maturities of long-term debt as well as the item Long-term debt included in total fair value hedge accounting adjustments of €1,134 million as of March 31, 2014 and €1,247 million as of September 30, 2013.

(2)

The adjustment considers that both Moody’s and S&P view SFS as a captive finance company. These rating agencies generally recognize and accept higher levels of debt attributable to captive finance subsidiaries in determining credit ratings. Following this concept, we exclude SFS Debt in order to derive an adjusted industrial net debt which is not affected by SFS’s financing activities.

(3)	To reflect Siemens’ total pension liability, adjusted industrial net debt includes line item Post-employment benefits as presented in D.3 Consolidated Statements of Financial Position.

(4)

The adjustment for our hybrid bond considers the calculation of this financial ratio applied by rating agencies to classify 50% of our hybrid bond as equity and 50% as debt. This assignment reflects the characteristics of our hybrid bond such as a long maturity date and subordination to all senior and debt obligations.

(5)

Debt is generally reported with a value representing approximately the amount to be repaid. However, for debt designated in a hedging relationship (fair value hedges), this amount is adjusted by changes in market value mainly due to changes in interest rates. Accordingly we deduct these changes in market value in order to end up with an amount of debt that approximately will be repaid. We believe this is a more meaningful figure for the calculation presented above. For further information on fair value hedges see Note 31 in D.6 Notes to Consolidated Financial Statements in our Annual Report for fiscal 2013.

(6)	In order to calculate this ratio, adjusted EBITDA (continuing operations) for the current period needs to be annualized.

C.3.2 CASH FLOWS

The following discussion presents an analysis of our cash flows from operating, investing and financing activities for the first six months of fiscal 2014 and 2013 for both continuing and discontinued operations.

Cash flows

Continuing operations

Discontinued operations

Continuing and
discontinued operations

Six months ended March 31,

2014

2013

2014

2013

2014

2013

(in millions of €)

Cash flows from:

Operating activities

1,476

669

(24

)

1,452

757

Investing activities

(1,865

)

(1,849

)

446

(115

)

(1,419

)

(1,964

)

therein: Additions to intangible assets and property, plant and equipment

(745

)

(724

)

(93

)

(750

)

(817

)

Free cash flow

732

(56

)

(29

)

703

(61

)

Financing activities

(582

)

(1,798

)

—

(19

)

(582

)

(1,817

)

Cash flows from operating activities—Continuing operations provided cash of €1.476 billion in the first half of fiscal 2014, an improved cash inflow compared to €669 million in the same period a year earlier. In both periods, the major component of cash inflows related to income from continuing operations, which was €2.550 billion in the first half of fiscal 2014 compared to €2.130 billion in the prior-year period. A build-up of operating net working capital led to cash outflows of €0.9 billion in the current period compared to outflows of €2.2 billion in the same period a year earlier. In the current period we recorded positive changes in billings in excess of costs and estimated earnings on uncompleted contracts and related advances, particularly in Energy, as well as in trade and other receivables. These positive changes were more than offset by a significant build-up in inventories and payments of trade payables in all Sectors. The current period included cash outflows of approximately €0.3 billion corresponding to charges to income taken for the “Siemens 2014” program, compared to €0.1 billion in such outflows in the prior-year period.

Discontinued operations used cash of €24 million in the first six months of fiscal 2014, compared to cash provided of €88 million in the prior-year period, which included larger cash inflows at OSRAM.

Cash flows from investing activities—Cash used in investing activities for continuing operations amounted to €1.865 billion in the first half of fiscal 2014, compared to cash used of €1.849 billion in the prior-year period. In the current period cash outflows from investing activities were due mainly to two factors. Firstly, we recorded outflows totaling €1.139 billion for an increase in new business volume at SFS, despite substantial early terminations of financings. Secondly, we had additions to intangible assets and property, plant and equipment of €745 million, which related mainly to investments within the Sectors. For comparison, the prior-year period included cash outflows from the financing business at SFS of €559 million and additions to intangible assets and property, plant and equipment of €724 million. In the prior-year period we recorded also cash outflows of €670 million related to Industry’s acquisitions of LMS International NV and cash inflows of €0.3 billion related to the sale of Atos S.A. convertible bonds.

Discontinued operations provided cash of €446 million in the first six months of fiscal 2014, compared to cash used of €115 million in the prior-year period. The current period included proceeds (excluding cash sold) of €0.5 billion related to the sale of the Water Technologies Business Unit.

Free cash flow from continuing and discontinued operations amounted to a positive €703 million in the first half of fiscal 2014, compared to a negative €61 million a year earlier. The improvement year-over-year resulted primarily from higher cash inflows from operating activities for continuing operations as discussed above.

On a sequential basis, Free cash flow during the first and second quarter of fiscal 2014 and during fiscal 2013 was as follows:

LOGO

Cash flows from financing activities—Financing activities for continuing operations used cash of €582 million in the first half of fiscal 2014, compared to cash used of €1.798 billion in the same period a year earlier. In the current period the major components of cash flows were dividends paid (for fiscal 2013) to shareholders of Siemens AG of €2.533 billion partly offset by cash inflows from the change in short-term debt and other financing activities of €2.101 billion. For comparison, in the prior-year period we paid dividends (for fiscal 2012) to shareholders of Siemens AG of €2.528 billion and received cash inflows of €947 million from the change in short-term debt and other financing activities. In both periods, the changes in short-term debt and other financing activities primarily related to the issuance of commercial paper. As additional major components in the prior-year period, we recorded proceeds of €3.467 billion from the issuance of long-term debt and cash outflows of €2.032 billion for the repayment of long-term debt and €1.320 billion for the purchase of treasury shares.

C.3.3 CAPITAL RESOURCES AND REQUIREMENTS

We have a US$9.0 billion (€6.5 billion) global multi-currency commercial paper program in place. As of March 31, 2014 the nominal amount outstanding in commercial paper was US$2.5 billion (€1.8 billion).

In March 2014, we issued US$300 million (€0.2 billion) privately placed floating-rate instruments due in March, 2019.

In March 2014, our two bilateral US$500 million (totaling €0.7 billion) floating-rate term loans (three months LIBOR + 0.79% p.a.) with an original term of five years were extended by one year until March, 2019 with a remaining one-year extension option.

In April 2014, our €4.0 billion undrawn syndicated multi-currency revolving credit facility, signed in April 2012 with an original term of five years, was extended by one year until April 2019. There are no remaining extension options.

C.3.4 POST-EMPLOYMENT BENEFITS

At the end of the first six months of fiscal 2014, the funded status of Siemens’ defined benefit plans showed an underfunding of €9.4 billion, compared to an underfunding of €9.1 billion at the end of fiscal 2013. Within these figures, underfunding for pension plans amounted to €8.9 billion and €8.5 billion, respectively, as of March 31, 2014 and September 30, 2013. The increase in Siemens’ defined benefit obligation (DBO) was largely offset by an increase in the fair value of plan assets.

The DBO of Siemens’ defined benefit plans, which takes into account future compensation and pension increases, amounted to €34.3 billion on March 31, 2014, compared to €33.2 billion on September 30, 2013. The DBO increased in the first six months of fiscal 2014 due primarily to a substantial decrease in the discount rate assumption and also due to accrued service and interest cost. These factors were partly offset by benefits paid.

The fair value of Siemens’ plan assets as of March 31, 2014 was €24.9 billion compared to €24.1 billion on September 30, 2013. The actual return on plan assets for the first six months of fiscal 2014 amounted to €1.2 billion, resulting mainly from fixed-income investments. Employer contributions amounted to €274 million in the first six months of fiscal 2014. These factors were partly offset by benefits paid.

For more information on Siemens’ post-employment benefits, see Note 6 in D.6 Notes to Condensed Interim Consolidated Financial Statements.

C.4 NET ASSETS POSITION

LOGO

Total current assets decreased by €1.678 billion as of March 31, 2014, compared to September 30, 2013. The largest factors in the decrease within the first half of fiscal 2014 were lower assets classified as held for disposal, primarily due to the sale of the Water Technologies Business Unit, and negative currency translation effects. Total non-current assets increased by €787 million within the first half of fiscal 2014 mainly due to higher other financial assets, particularly higher loans receivable at SFS in connection with its growth strategy, partly offset by negative currency translation effects.

Total current liabilities decreased by €875 million as of March 31, 2014, compared to September 30, 2013. The main factors in the decrease within the first half of fiscal 2014, which include negative currency translation effects, were the following: Firstly, a decrease of €1.215 billion in the line item Other current liabilities due mainly to a decrease in personnel-related liabilities, particularly liabilities related to bonus payments to our employees; secondly, a decrease of €812 million in the line item Trade payables, particularly in our Sectors. The decreases within the first half of fiscal 2014 in these line items were partly offset by an increase of €1.813 billion in the line item Short-term debt and current maturities of long-term debt, which resulted mainly from the issuance of commercial paper. Total non-current liabilities and total equity as of March 31, 2014 remained nearly unchanged from their levels as of September 30, 2013. Within total equity an increase due to the net income of €2.610 billion was offset by a decrease due to dividend payments totaling €2.609 billion.

C.5 SUBSEQUENT EVENTS

At the beginning of May 2014, Siemens announced the acquisition of the Rolls-Royce Energy aero-derivative gas turbine and compressor business of Rolls-Royce plc, U.K. (Rolls-Royce). With the acquisition, Siemens intends to strengthen its position in the growing oil and gas industry as well as in the field of decentralized power generation. The purchase price amounts to £785 million (€950 million). In addition, as part of the transaction, Siemens will pay Rolls-Royce £200 million (€240 million) for a 25 year technology licensing agreement granting exclusive access to future Rolls-Royce aero-turbine technology developments in the four to 85 megawatt power output range as well as preferred access to supply and engineering services of Rolls-Royce. The transaction is subject to approval by regulatory authorities. Closing is expected in the first quarter of fiscal 2015.

At the beginning of May 2014, Siemens announced that it will contribute its Industry Sector’s metallurgical solution business (Metals Technologies Business Unit) including the related electrics and automation business (other than electrical service), into a new global full-line metallurgical solutions business joint venture with Mitsubishi-Hitachi Metals Machinery, Inc. in which Siemens will hold 49%. Mitsubishi-Hitachi Metals Machinery, Inc. is majority owned by Mitsubishi Heavy Industries, Ltd. The transaction is subject to approval by regulatory authorities. Closing is expected in the first quarter of fiscal 2015. Siemens classifies the Business Unit as held for disposal and discontinued operations since the third quarter of fiscal 2014.

C.6 SIEMENS – VISION 2020

In the future, Siemens will position itself along the electrification, automation and digitalization. Along these value chains Siemens has identified several growth fields in which it sees its greatest long-term potential. The company is orienting its resource allocation toward these growth fields and has announced concrete measures in this direction. The measures include the purchase of the major part of Rolls-Royce’s energy business and the contribution of Siemens’ Metals Technologies into a joint venture. For more information on these two transactions, see C.5 Subsequent Events. A public listing of the audiology business will also be prepared. In addition, Siemens is making its organization flatter and more customer-oriented.

As of October 1, 2014, the organization will be streamlined by eliminating the Sector level and bundling business into nine Divisions instead of the current 16. In addition, Healthcare will be separately managed in the future.

Bundling the Divisions and eliminating the Sectors will reduce bureaucracy, cut costs and accelerate decision-making within the company. In addition, the company’s support functions – for example, human resources and communications – are to be streamlined and centrally managed in the future. These measures, which are expected to increase productivity by some €1 billion a year, are to be fully effective by the end of fiscal 2016. To optimize cost development sustainably, the company has set a new target for total cost productivity. Starting in fiscal 2015, it is to total three to five percent a year.

As of fiscal 2015, the Divisions will be assigned target profit margin ranges excluding PPA effects – that is, excluding the acquisition-related amortization of intangibles. These target ranges are oriented on the profit margins of each Division’s main competitors.


Power and Gas		11 – 15%
Wind Power and Renewables		5 – 8%
Energy Management		7 – 10%
Building Technologies		8 – 11%
Mobility		6 – 9%
Digital Factory		14 – 20%
Process Industries and Drives		8 – 12%
Healthcare		15 – 19%
Financial Services		15 – 20% (Return on equity)

In addition, the company wants to expand its share plans for employees below the senior management level and increase the number of employee shareholders by at least 50 percent to well over 200,000. For this purpose, Siemens will make up to €400 million available annually depending on company performance. In addition, the launch of the previously announced share buyback program of up to €4 billion is upcoming.

C.7 OUTLOOK

We expect our markets to remain challenging in fiscal 2014. Our short-cycle businesses are not anticipating a sustainable recovery until late in the fiscal year. We expect orders to exceed revenue, for a book-to-bill ratio above 1. Assuming that revenue on an organic basis remains level year-over-year, we expect basic earnings per share (Net Income) for fiscal 2014 to grow by at least 15% from €5.08 in fiscal 2013.

This outlook is based on shares out-standing of 843 million as of September 30, 2013. Furthermore, it excludes impacts related to legal and regulatory matters.

C.8 RISKS AND OPPORTUNITIES

In our Annual Report for fiscal 2013 we described certain risks which could have a material adverse effect on our business, financial condition (including effects on assets, liabilities and cash flows), results of operations and reputation, our most significant opportunities as well as the design of our risk management system.

As previously disclosed, protectionist trade policies and changes in the political and regulatory environment in the markets in which we operate, such as import and export controls, tariffs and other trade barriers and price or exchange controls, could affect our business in several national markets, impact our sales and profitability and make the repatriation of profits difficult, and may expose us to penalties, sanctions and reputational damage. In addition, the uncertainty of the legal environment in some regions could limit our ability to enforce our rights and subject us to continually increasing costs related to designing and implementing appropriate compliance programs and protocols.

As a globally operating organization, we conduct business with customers in countries, such as Iran, Syria and Cuba, that are subject to increasingly expansive export control regulations, embargoes, economic sanctions or other forms of trade restrictions imposed by the U.S., the European Union or other countries or organizations.

Ongoing political disputes, particularly regarding the Ukraine, may result in additional trade restrictions and other negative effects, e.g. on the global economy, impacting our business, financial condition, results of operations and reputation.

During the first six months of fiscal 2014, we identified no further significant risks and opportunities besides those presented in our Annual Report for fiscal 2013 and in C.1 Overview for the second quarter of fiscal 2014 (three months ended March 31, 2014), C.2.2 Segment information, and in legal proceedings in Note 9 in D.6 Notes to Condensed Interim Consolidated Financial Statements. Additional risks and opportunities not known to us or that we currently consider immaterial could also affect our business operations. We do not expect to incur any risks that either individually or in combination could endanger our ability to continue as a going concern. We refer also to C.9 Notes and forward-looking statements.

C.9 NOTES AND FORWARD-LOOKING STATEMENTS

This document includes supplemental financial measures that are or may be non-GAAP financial measures. Orders and order backlog; adjusted or organic growth rates of revenue and orders; book-to-bill ratio; Total Sectors profit; return on equity (after tax), or ROE (after tax); return on capital employed (adjusted), or ROCE (adjusted); Free cash flow, or FCF; adjusted EBITDA; adjusted EBIT; adjusted EBITDA margins, earnings effects from purchase price allocation, or PPA effects; net debt and adjusted industrial net debt are or may be such non-GAAP financial measures. These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens’ net assets and financial positions or results of operations as presented in accordance with IFRS in its Consolidated Financial Statements. Other companies that report or describe similarly titled financial measures may calculate them differently. Definitions of these supplemental financial measures, a discussion of the most directly comparable IFRS financial measures, information regarding the usefulness of Siemens’ supplemental financial measures, the limitations associated with these measures and reconciliations to the most comparable IFRS financial measures are available on Siemens’ Investor Relations website at www.siemens.com/nonGAAP. For additional information, see supplemental financial measures and the related discussion in Siemens’ most recent annual report on Form 20-F, which can be found on our Investor Relations website or via the EDGAR system on the website of the United States Securities and Exchange Commission.

This document contains statements related to our future business and financial performance and future events or developments involving Siemens that may constitute forward-looking statements. These statements may be identified by words such as “expect,” “look forward to,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project” or words of similar meaning. We may also make forward-looking statements in other reports, in presentations, in material delivered to shareholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current expectations and certain assumptions of Siemens’ management, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect Siemens’ operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or anticipated on the basis of historical trends. These factors include in particular, but are not limited to, the matters described in Item 3: Key information—Risk factors of our most recent annual report on Form 20-F filed with the SEC, in the chapter Risks of our most recent annual report prepared in accordance with the German Commercial Code, and in the chapter Risks and opportunities of our most recent interim report.

Further information about risks and uncertainties affecting Siemens is included throughout our most recent annual and interim reports, as well as our most recent earnings release, which are available on the Siemens website, www.siemens.com, and throughout our most recent annual report on Form 20-F and in our other 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, performance or achievements of Siemens may vary materially from those described in the relevant forward-looking statement as being expected, anticipated, intended, planned, believed, sought, estimated or projected. Siemens neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated.

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

For technical reasons, there may be differences between the accounting records appearing in this document and those published pursuant to legal requirements.

SIEMENS

D. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

D.1 CONSOLIDATED STATEMENTS OF INCOME (unaudited)

For the three and six months ended March 31, 2014 and 2013

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


			Three months ended March 31,						Six months ended March 31,
	Note		2014			2013			2014			2013
Revenue				17,449			17,779			34,774			35,705
Cost of sales				(12,469	)		(12,764	)		(24,555	)		(25,502	)

Gross profit				4,980			5,016			10,219			10,202
Research and development expenses				(1,064	)		(1,036	)		(2,023	)		(2,030	)
Selling and general administrative expenses				(2,613	)		(2,719	)		(5,207	)		(5,320	)
Other operating income		3		153			56			467			196
Other operating expenses				(91	)		(55	)		(254	)		(191	)
Income from investments accounted for using the equity method, net				195			68			349			163
Interest income		4		254			225			510			458
Interest expenses		4		(184	)		(185	)		(373	)		(375	)
Other financial income (expenses), net		4		(21	)		(37	)		(113	)		(70	)

Income from continuing operations before income taxes				1,609			1,333			3,577			3,033
Income tax expenses				(446	)		(352	)		(1,027	)		(902	)

Income from continuing operations				1,163			980			2,550			2,130
Income (loss) from discontinued operations, net of income taxes		2		(10	)		49			61			113

Net income				1,153			1,030			2,610			2,243

Attributable to:
Non-controlling interests				29			20			54			37
Shareholders of Siemens AG				1,124			1,009			2,556			2,207

Basic earnings per share		13
Income from continuing operations				1.34			1.14			2.95			2.48
Income (loss) from discontinued operations				(0.01	)		0.06			0.07			0.13

Net income				1.33			1.20			3.03			2.61


Diluted earnings per share		13
Income from continuing operations				1.33			1.13			2.92			2.46
Income (loss) from discontinued operations				(0.01	)		0.06			0.07			0.13

Net income				1.32			1.18			3.00			2.59

D.2 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

For the three and six months ended March 31, 2014 and 2013

(in millions of €)


	Three months ended March 31,						Six months ended March 31,
	2014			2013			2014			2013
Net income		1,153			1,030			2,610			2,243
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans		(607	)		41			(232	)		(55	)
Items that may be reclassified subsequently to profit or loss:
Currency translation differences		(142	)		341			(510	)		(35	)
Available-for-sale financial assets		101			8			324			9
Derivative financial instruments		(33	)		(32	)		(24	)		42

		(74	)		316			(211	)		16

Other comprehensive income, net of income taxes⁽¹⁾		(682	)		357			(442	)		(39	)

Total comprehensive income		471			1,386			2,168			2,205

Attributable to:
Non-controlling interests		29			37			55			38
Shareholders of Siemens AG		442			1,349			2,113			2,166

(1)

Includes income (expenses) resulting from investments accounted for using the equity method of €(24) million and €(48) million, respectively, for the three months ended March 31, 2014 and 2013, and €(72) million and €(114) million for the six months ended March 31, 2014 and 2013, respectively. Thereof €6 million and €(59) million, respectively, for the three months ended March 31, 2014 and 2013, and €7 million and €(117) million for the six months ended March 31, 2014 and 2013, respectively, are attributable to items that will not be reclassified to profit or loss.

The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.

SIEMENS

D.3 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of March 31, 2014 (unaudited) and September 30, 2013

(in millions of €)


	Note		03/31/14			09/30/13
ASSETS
Cash and cash equivalents				8,585			9,190
Available-for-sale financial assets				799			601
Trade and other receivables				14,231			14,853
Other current financial assets				3,002			3,250
Inventories				16,364			15,560
Current income tax assets				579			794
Other current assets				1,281			1,297
Assets classified as held for disposal		2		418			1,393

Total current assets				45,259			46,937

Goodwill				17,673			17,883
Other intangible assets				4,770			5,057
Property, plant and equipment				9,505			9,815
Investments accounted for using the equity method				3,253			3,022
Other financial assets				16,461			15,117
Deferred tax assets				3,152			3,234
Other assets				972			872

Total non-current assets				55,786			54,999

Total assets				101,045			101,936


LIABILITIES AND EQUITY
Short-term debt and current maturities of long-term debt		5		3,757			1,944
Trade payables				6,787			7,599
Other current financial liabilities				1,583			1,515
Current provisions				4,550			4,485
Current income tax liabilities				1,704			2,151
Other current liabilities				18,486			19,701
Liabilities associated with assets classified as held for disposal		2		126			473

Total current liabilities				36,994			37,868

Long-term debt		5		18,587			18,509
Post-employment benefits		6		9,614			9,265
Deferred tax liabilities				506			504
Provisions		7		3,768			3,907
Other financial liabilities				1,289			1,184
Other liabilities				1,952			2,074

Total non-current liabilities				35,715			35,443

Total liabilities				72,709			73,312

Equity		8
Issued capital, no par value⁽¹⁾				2,643			2,643
Capital reserve				5,449			5,484
Retained earnings				22,412			22,663
Other components of equity				56			268
Treasury shares, at cost⁽²⁾				(2,704	)		(2,946	)

Total equity attributable to shareholders of Siemens AG				27,856			28,111

Non-controlling interests				480			514

Total equity				28,336			28,625

Total liabilities and equity				101,045			101,936

(1)	Authorized: 1,087,200,000 (thereof 176,200,000 pending commercial registry entry) and 1,084,600,000 shares, respectively. Issued: 881,000,000 and 881,000,000 shares, respectively.

(2)	34,871,122 and 37,997,595 shares, respectively.

The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.

SIEMENS

D.4 CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

For the six months ended March 31, 2014 and 2013

(in millions of €)


	Six months ended March 31,
	2014			2013
Cash flows from operating activities
Net income		2,610			2,243
Adjustments to reconcile net income to cash flows from operating activities–continuing operations
Income from discontinued operations, net of income taxes		(61	)		(113	)
Amortization, depreciation and impairments		1,229			1,339
Income tax expenses		1,027			902
Interest (income) expenses, net		(137	)		(84	)
(Gains) losses on disposals of assets related to investing activities, net⁽¹⁾		(238	)		(39	)
Other (income) losses from investments⁽¹⁾		(345	)		(146	)
Other non-cash (income) expenses		282			236
Change in assets and liabilities
Inventories		(990	)		(508	)
Trade and other receivables		364			(5	)
Trade payables		(688	)		(1,244	)
Other assets and liabilities		(1,006	)		(942	)
Additions to assets leased to others in operating leases		(175	)		(211	)
Income taxes paid		(984	)		(1,271	)
Dividends received		123			99
Interest received		465			412

Cash flows from operating activities–continuing operations		1,476			669
Cash flows from operating activities–discontinued operations		(24	)		88

Cash flows from operating activities–continuing and discontinued operations		1,452			757
Cash flows from investing activities
Additions to intangible assets and property, plant and equipment		(745	)		(724	)
Acquisitions of businesses, net of cash acquired		(5	)		(718	)
Purchase of investments⁽¹⁾		(148	)		(196	)
Purchase of current available-for-sale financial assets		(216	)		(29	)
Change in receivables from financing activities		(1,139	)		(559	)
Disposal of investments, intangibles and property, plant and equipment⁽¹⁾		261			388
Disposal of businesses, net of cash disposed		90			(42	)
Disposal of current available-for-sale financial assets		37			30

Cash flows from investing activities–continuing operations		(1,865	)		(1,849	)
Cash flows from investing activities–discontinued operations		446			(115	)

Cash flows from investing activities–continuing and discontinued operations		(1,419	)		(1,964	)
Cash flows from financing activities
Purchase of treasury shares		—			(1,320	)
Other transactions with owners		(19	)		4
Issuance of long-term debt		218			3,467
Repayment of long-term debt (including current maturities of long-term debt)		(28	)		(2,032	)
Change in short-term debt and other financing activities		2,101			947
Interest paid		(241	)		(229	)
Dividends paid to shareholders of Siemens AG		(2,533	)		(2,528	)
Dividends attributable to non-controlling interests		(79	)		(108	)

Cash flows from financing activities–continuing operations		(582	)		(1,798	)
Cash flows from financing activities–discontinued operations		—			(19	)

Cash flows from financing activities–continuing and discontinued operations		(582	)		(1,817	)
Effect of changes in exchange rates on cash and cash equivalents		(98	)		17
Change in cash and cash equivalents		(648	)		(3,007	)
Cash and cash equivalents at beginning of period		9,234			10,950

Cash and cash equivalents at end of period		8,586			7,943
Less: Cash and cash equivalents of assets classified as held for disposal and discontinued operations at end of period		1			51

Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)		8,585			7,892

(1)	Investments include equity instruments either classified as non-current available-for-sale financial assets, accounted for using the equity method or classified as held for disposal. Purchase of investments includes certain loans to investments accounted for using the equity method.

The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.

SIEMENS

D.5 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)

For the six months ended March 31, 2014 and 2013

(in millions of €)


						Total comprehensive income
									Other components of equity
									Items that may be reclassified subsequently to profit or loss
	Issued capital		Capital reserve			Retained earnings			Currency translation differences			Available- for-sale financial assets		Derivative financial instruments			Total			Treasury shares at cost			Total equity attributable to shareholders of Siemens AG			Non-controlling interests			Total equity
Balance as of October 1, 2012 (as previously reported)		2,643		6,173			22,756			857			245		(44	)		23,814			(1,897	)		30,733			569			31,302
Effect of retrospectively adopting IAS 19R		—		—			122			—			—		—			122			—			122			—			122

Balance as of October 1, 2012⁽¹⁾		2,643		6,173			22,877			857			245		(44	)		23,936			(1,897	)		30,855			569			31,424

Net income		—		—			2,207			—			—		—			2,207			—			2,207			37			2,243
Other comprehensive income, net of income taxes		—		—			(55	)⁽²⁾		(35	)		9		41			(40	)		—			(40	)		2			(39	)⁽³⁾
Dividends		—		—			(2,528	)		—			—		—			(2,528	)		—			(2,528	)		(80	)		(2,609	)
Share-based payment		—		(32	)		(34	)		—			—		—			(34	)		—			(66	)		—			(66	)
Purchase of treasury shares		—		—			—			—			—		—			—			(1,281	)		(1,281	)		—			(1,281	)
Re-issuance of treasury shares		—		3			—			—			—		—			—			260			263			—			263
Transactions with non-controlling interests		—		—			(11	)		—			—		—			(11	)		—			(11	)		9			(2	)
Spin-off related changes in equity		—		(163	)		(2,600	)		—			—		—			(2,600	)		—			(2,763	)		—			(2,763	)
Other changes in equity		—		(553	)		(11	)		—			—		—			(11	)		—			(564	)		13			(551	)

Balance as of March 31, 2013		2,643		5,428			19,845			821			254		(3	)		20,918			(2,919	)		26,071			549			26,620


Balance as of October 1, 2013		2,643		5,484			22,663			(160	)		428		(1	)		22,930			(2,946	)		28,111			514			28,625

Net income		—		—			2,556			—			—		—			2,556			—			2,556			54			2,610
Other comprehensive income, net of income taxes		—		—			(232	)⁽²⁾		(510	)		324		(25	)		(443	)		—			(443	)		1			(442	)⁽³⁾
Dividends		—		—			(2,533	)		—			—		—			(2,533	)		—			(2,533	)		(75	)		(2,609	)
Share-based payment		—		(60	)		(16	)		—			—		—			(16	)		—			(76	)		—			(76	)
Re-issuance of treasury shares		—		25			—			—			—		—			—			242			267			—			267
Transactions with non-controlling interests		—		—			(17	)		—			—		—			(17	)		—			(17	)		(11	)		(28	)
Other changes in equity		—		—			(10	)		—			—		—			(10	)		—			(10	)		(2	)		(12	)

Balance as of March 31, 2014		2,643		5,449			22,412			(671	)		752		(25	)		22,468			(2,704	)		27,856			480			28,336

(1)	Adjusted for effects of adopting IAS 19R, see Note 1 Basis of presentation in D.6 Notes to Condensed Interim Consolidated Financial Statements.

(2)

Items of Other comprehensive income that will not be reclassified to profit or loss consist of Remeasurements of defined benefit plans of €(232) million and €(55) million, respectively in the six months ended March 31, 2014 and 2013. Remeasurements of defined benefit plans are included in line item Retained earnings.

(3)

In the six months ended March 31, 2014 and 2013, Other comprehensive income, net of income taxes, includes non-controlling interests of €- million and €- million relating to Remeasurements of defined benefit plans, €- million and €1 million relating to Currency translation differences, €- million and €- million relating to Available-for-sale financial assets and €- million and €1 million relating to Derivative financial instruments.

The accompanying Notes are an integral part of these Interim Consolidated Financial Statements.

SIEMENS

D.6 NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT INFORMATION (continuing operations–unaudited)

As of and for the three months ended March 31, 2014 and 2013 and as of September 30, 2013

(in millions of €)


	Orders⁽¹⁾						External revenue				Intersegment revenue						Total revenue						Profit⁽²⁾						Assets⁽³⁾						Free cash flow⁽⁴⁾						Additions to intangible assets and property, plant and equipment					Amortization, depreciation and impairments⁽⁵⁾
	*2014*			*2013*			2014		2013		2014			2013			2014			2013			2014			2013			03/31/14			9/30/13			2014			2013			2014			2013		2014			2013
Sectors
Energy		6,105			8,464			5,545		6,196		55			64			5,600			6,260			255			551			2,259			1,621			799			925			96			71		123			130
Healthcare		3,196			3,330			3,251		3,273		5			5			3,256			3,278			531			445			11,125			11,023			404			450			74			62		151			158
Industry		4,783			4,402			4,026		3,995		404			389			4,430			4,385			456			345			6,989			6,549			297			448			67			75		141			174
Infrastructure & Cities		4,662			5,210			4,268		3,876		154			186			4,422			4,062			325			6			5,437			4,973			226			(37	)		49			50		72			67

Total Sectors		*18,746*			*21,406*			17,089		17,340		619			644			17,708			17,984			1,566			1,348			25,809			24,166			1,726			1,786			285			258		487			529
Equity Investments		—			—			—		—		—			—			—			—			123			29			2,960			2,488			—			5			—			—		—			—
Financial Services (SFS)		236			236			188		221		48			15			236			236			114			113			19,385			18,661			192			301			9			3		51			61
Reconciliation to Consolidated Financial Statements
Centrally managed portfolio activities		55			102			58		66		1			3			59			68			35			21			(249	)		(267	)		(2	)		(6	)		1			2		1			1
Siemens Real Estate (SRE)		602			622			65		69		537			553			602			622			18			(2	)		4,607			4,747			(11	)		16			81			69		62			75
Corporate items and pensions		91			132			50		85		43			48			93			133			(249	)		(152	)		(11,290	)		(11,252	)		(175	)		(75	)		14			21		19			37
Eliminations, Corporate Treasury and other reconciling items		(1,301	)		(1,264	)		—		—		(1,249	)		(1,264	)		(1,249	)		(1,264	)		3			(25	)		59,823			63,393			(340	)		(666	)		(1	)		—		(7	)		(9	)

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