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

Commission File Number: 1-15174

Siemens Aktiengesellschaft

(Translation of registrant’s name into English)

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

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

Form 20-F þ      Form 40-F o

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

Yes o      No þ

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

Yes o      No þ

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

Yes o      No þ

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

 

 

introduction

     We prepare the Interim Report as an update of our Annual Report, with a focus on the current period. As such, the Interim Report should be read in conjunction with the Annual Report, which includes detailed analysis of our operations and activities.

table of contents

Key Figures	2
Management’s discussion and analysis	3
Consolidated Financial Statements	21
Notes	30
Quarterly summary	42
Supervisory Board and Managing Board changes	43
Financial calendar	44

						3rd quarter (2)								first nine months (3)
							2006				2005				2006				2005
Income from continuing operations							804				618				2,520				2,561
(in millions of euros)
Loss from discontinued operations, net of income taxes							(12	)			(229	)			(28	)			(390	)
(in millions of euros)
Net income							792				389				2,492				2,171
(in millions of euros)
Earnings per share from continuing operations (4)							0.90				0.69				2.83				2.88
(in euros)
Loss per share from discontinued operations (4)							(0.01	)			(0.25	)			(0.03	)			(0.44	)
(in euros)
Earnings per share (4)							0.89				0.44				2.80				2.44
(in euros)
Net cash from operating and investing activities (5)							1,768				(284	)			1,349				(2,148	)
(in millions of euros)
therein:		Net cash provided by operating activities					1,530				1,366				2,637				1,273
		Net cash provided by (used in) investing activities					238				(1,650	)			(1,288	)			(3,421	)
New orders (5)							22,442				19,764				73,643				60,195
(in millions of euros)
Sales (5)							21,173				18,583				63,402				53,339
(in millions of euros)

		June 30, 2006				September 30, 2005
Employees (5) (in thousands)			475				461
Germany			162				165
International			313				296

(1)		Unaudited, focused on continuing operations. (Discontinued operations consist of discontinued mobile devices activities).
(2)		April 1 — June 30, 2006 and 2005, respectively.
(3)		October 1, 2005 and 2004 — June 30, 2006 and 2005, respectively.
(4)		Earnings per share — basic.
(5)		Continuing operations.

Management’s discussion and analysis

Overview of financial results for the third quarter of fiscal 2006

	•		Net income was €792 million and earnings per share were €0.89, both more than double the level in the third quarter a year earlier. Income on a continuing basis was €804 million, up 30% compared to the prior-year period.
	•		Orders and sales each rose 14%, to €22.442 billion and €21.173 billion, respectively.
	•		On a continuing basis, net cash from operating and investing activities was €1.768 billion, including €1.127 billion in net proceeds from the sale of Siemens’ remaining shares in Infineon Technologies AG. For comparison, operating and investing activities in the third quarter a year earlier used net cash of €284 million, including €731 million in net cash used to acquire CTI Molecular Imaging, Inc.

     We believe that the third quarter continued the overall momentum of Siemens, with higher income, sales and orders compared to a year earlier. It was a particularly successful quarter in terms of reshaping the company’s business portfolio. In addition to announcing a new joint venture for the company’s carrier communications business with an outstanding partner in Nokia Corporation (Nokia), the company also initiated strategic acquisitions that would make Siemens an important player in clinical diagnostics, one of the most dynamic sectors of medicine.

     For the third quarter of fiscal 2006, ended June 30, 2006, Siemens reported net income of €792 million, up 104% compared to €389 million in the same period a year earlier. Basic and diluted earnings per share rose to €0.89 and €0.85, respectively, from €0.44 and €0.42 in the third quarter a year earlier. Discontinued operations lost €12 million in the third quarter, compared to a loss of €229 million in the same period a year earlier. Income from continuing operations in the third quarter was €804 million, a 30% increase from €618 million a year earlier. Basic and diluted earnings per share from continuing operations were €0.90 and €0.86, respectively. A year earlier, basic and diluted earnings per share from continuing operations in the third quarter were €0.69 and €0.67, respectively.

     A majority of the Groups in Operations posted higher earnings year-over-year. Major earnings contributions came from Automation and Drives (A&D), Medical Solutions (Med), Power Generation (PG), Siemens VDO Automotive (SV), Power Transmission and Distribution (PTD), and Osram. Severance charges at Communications (Com) and Siemens Business Services (SBS) totaled €69 million, somewhat more than in the prior-year period but less than the level expected for the fourth quarter of fiscal 2006. Corporate items benefited from the sale of Infineon shares mentioned above, which resulted in a €33 million gain.

     Income before income taxes from the other two components of Siemens worldwide, Financing and Real Estate and Corporate Treasury, rose to €185 million from €162 million in the third quarter a year earlier.

     Third-quarter orders of €22.442 billion were up 14% compared to the third quarter a year earlier, led by strong order growth at A&D, Transportation Systems (TS) and PTD. Sales increased 14% as well, to €21.173 billion. International markets were the primary source of top-line growth, as sales in Germany edged up 1% and orders in Germany declined 2% compared to the prior-year level. Currency translation effects in the quarter were negligible. Organic growth in the third quarter included a 9% rise in orders and a 7% increase in sales for Siemens overall, despite declines in Germany of 4% in orders and 1% in sales. Portfolio effects included divestment of the Product Related Services (PRS) business at SBS at the beginning of the current quarter, and a number of major acquisitions in the fourth quarter of the prior year including VA Technologie AG (VA Tech). Beginning with the fourth quarter, these acquisitions will contribute to sales and orders on an organic basis rather than as new volume, with a corresponding effect on reported growth rates.

     On a continuing basis, net cash provided from operating and investing activities within Operations in the third quarter was €1.510 billion compared to €101 million provided in the prior-year period. The current period included €1.127 billion in net proceeds from the Infineon share sale, while the prior-year period included €731 million used to acquire CTI Molecular Imaging, Inc. (CTI). Cash payments for severance at Com and SBS were higher in the current period, totaling €81 million compared to €24 million in the prior-year period. Both periods included significant cash used for inventories and capital expenditures associated with business growth. Within

Financing and Real Estate and Corporate Treasury activities, net cash from operating and investing activities in the third quarter was €258 million compared to a negative €385 million a year earlier. For Siemens on a continuing basis, net cash from operating and investing activities in the third quarter was €1.768 billion compared to a negative €284 million a year earlier.

Results of Siemens

Results of Siemens – Third quarter of fiscal 2006 compared to third quarter of fiscal 2005

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

		June 30,
(€ in millions)		2006				2005
New orders			22,442				19,764
New orders in Germany			3,717				3,791
New international orders			18,725				15,973
Sales			21,173				18,583
Sales in Germany			3,797				3,759
International sales			17,376				14,824

     Third-quarter orders increased 14% year-over-year, to €22.442 billion, led by strong order growth at A&D, TS, and PTD. Sales were up to €21.173 billion, which also represents a 14% increase compared to the third quarter a year earlier. On aggregate, currency translation effects in the quarter were negligible. Excluding the net effect of acquisitions and dispositions, third-quarter orders rose 9% and sales were up 7% year-over-year. International markets were the primary source of growth, as orders in Germany declined 2% year-over-year, to €3.717 billion, while sales edged up 1%, to €3.797 billion. International orders and sales were each up 17% compared to the prior-year period, at €18.725 billion and €17.376 billion, respectively.

     Within international growth in the third quarter, Asia-Pacific posted orders of €3.399 billion, a 22% increase, and sales rose 30% year-over-year, to €3.199 billion. Within Asia-Pacific, orders in China increased 15%, to €1.111 billion, while sales in China climbed 41%, to €1.126 billion. In Europe outside Germany, orders increased 19%, to €6.699 billion, mainly on organic growth. Sales in Europe outside Germany rose 9% year-over-year, to €6.463 billion, on the strength of acquisitions. Growth in the Americas was robust, with the region as a whole generating order and sales growth of 12% and 15%, respectively. Orders strongly benefited from portfolio effects, while sales grew on a balance of both organic growth and portfolio effects. Within the Americas, the U.S. posted orders of €4.712 billion, an increase of 21%, and sales of €4.518 billion were 22% higher than in the prior-year period.

		June 30,
(€ in millions)		2006				2005
Gross profit on sales			5,927				5,300
as percentage of sales			28.0	%			28.5	%

     Gross profit increased 12% year-over-year, due to a significant increase in sales compared to the prior-year period. Gross profit as a percentage of sales for the third quarter came in lower, at 28.0% compared to 28.5% a year earlier. This is partly due to a changed sales mix at a number of Groups, including A&D and PG.

		June 30,
(€ in millions)		2006				2005
Research and development expenses			(1,408	)			(1,251	)
as percentage of sales			6.6	%			6.7	%
Marketing, selling and general administrative expenses			(3,617	)			(3,374	)
as percentage of sales			17.1	%			18.2	%
Other operating income, net			4				44
Income from investments in other companies, net			109				78
Income (expense) from financial assets and marketable securities, net			67				(27	)
Interest income (expense) of Operations, net			(12	)			2
Other interest income, net			58				65

     Research and development (R&D) expenses increased to €1.408 billion from €1.251 billion a year earlier, including higher outlays at SV. Due to the significant increase in sales year-over-year, R&D nevertheless declined to 6.6% of sales from 6.7% in the prior-year quarter. Marketing, selling and general administrative expenses also increased but declined as a percentage of sales, from 18.2% to 17.1%, due to significantly higher sales year-over-year. Income from investment in other companies, net, increased to €109 million from €78 million in the prior-year period, primarily due to higher equity earnings from a major joint venture. Income from financial assets and marketable securities, net of €67 million benefited from a €33 million gain from sale of Infineon shares and positive effects from derivative activities not qualifying for hedge accounting at Corporate Treasury. A year earlier, income from financial assets and marketable securities, net was a negative €27 million.

		June 30,
(€ in millions)		2006				2005
Income from continuing operations before income taxes			1,128				837
Income taxes			(276	)			(186	)
as percentage of income from continuing operations before income taxes			24	%			22	%
Minority interest			(48	)			(33	)
Income from continuing operations			804				618
Loss from discontinued operations, net of income taxes			(12	)			(229	)
Net income			792				389

     In the third quarter, income from continuing operations was €804 million compared to €618 million in the same period a year earlier. While severance charges at Com and SBS were higher at €69 million compared to €58 million a year earlier, strong sales growth generated significantly higher gross profit compared to the third quarter a year earlier. Dominated by domestic tax free income, income taxes on Siemens’ income from continuing operations were 24% in the third quarter of fiscal 2006, up from 22% in the same period a year earlier. In the prior year period our income tax rate benefited from a reorganization of certain businesses in the U.S. generating previously unrecognized tax deductions. Discontinued operations consist solely of activities related to the previously divested mobile phone business. Discontinued operations had a loss, net of income taxes of €12 million in the current period, down sharply from €229 million a year earlier. This change is reflected directly in third-quarter net income, which rose to €792 million from €389 million in the same period a year earlier.

Results of Siemens – First nine months of fiscal 2006 compared to first nine months of fiscal 2005

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

		June 30,
(€ in millions)		2006				2005
New orders			73,643				60,195
New orders in Germany			12,567				12,154
New international orders			61,076				48,041
Sales			63,402				53,339
Sales in Germany			11,833				11,505
International sales			51,569				41,834

     Orders in the first nine months were €73.643 billion, a 22% increase from €60.195 billion in the prior-year period. Sales of €63.402 billion were up 19% from €53.339 billion a year earlier. Excluding currency translation effects and the net effect of acquisitions and dispositions (organics growth), orders climbed 10% and sales rose 8%. Growth was driven by international markets, where major orders were both numerous and well-distributed. International orders for the first nine months were up 27% year-over-year, to €61.076 billion. Sales rose 23%, to €51.569 billion. In Germany, both orders and sales increased 3% year-over-year, to €12.567 billion and €11.833 billion, respectively, primarily due to acquisitions between the periods under review.

     Within international growth, Asia-Pacific posted orders of €11.668 billion and sales of €9.233 billion, both up 35% year-over-year. Within Asia-Pacific, orders in China for the first nine months climbed 34%, to €4.109 billion, while sales surged 56%, to €3.201 billion. In the Americas order and sales grew by 22% and 24%, respectively, including strong portfolio and currency translation effects. Within this trend, the U.S. posted orders of €13.634 billion and sales of €12.726 billion, both 22% higher than in the first nine months a year earlier. In Europe outside Germany, orders for the first nine months increased 19%, to €22.614 billion, and sales were up 14% year-over-year, at €19.881 billion, both strongly benefiting from portfolio effects.

		June 30,
(€ in millions)		2006				2005
Gross profit on sales			17,514				15,986
as percentage of sales			27.6	%			30.0	%

     Gross profit for the first nine months increased 10% year-over-year, as a majority of the Groups in Operations increased their earnings. Gross profit margin for the first nine months was 27.6% compared to 30.0% a year earlier. Factors that reduced gross profit margin year-over-year were primarily a changed sales mix at a number of Groups, particularly at A&D and PG and higher severance charges at SBS and Com.

		June 30,
(€ in millions)		2006				2005
Research and development expenses			(4,117	)			(3,608	)
as percentage of sales			6.5	%			6.8	%
Marketing, selling and general administrative expenses			(11,168	)			(9,898	)
as percentage of sales			17.6	%			18.6	%
Other operating income, net			179				38
Income from investments in other companies, net			546				434
Income from financial assets and marketable securities, net			439				309
Interest expense of Operations, net			(24	)			(23	)
Other interest income, net			164				206

     R&D investments and marketing, selling and general administrative expenses in the first nine months of fiscal 2006 increased compared to the first nine months a year earlier, but declined as a percentage of sales due primarily to significant sales growth between the two periods under review. Other operating income, net was €179 million in the current period up from €38 million a year earlier. The increase was due mainly to beneficial effects related to settlement of an arbitration proceeding, and also higher disposals of real estate property in the current period. Income from investment in other companies, net increased to €546 million from €434 million in the prior-year period, mainly due to increased gains from sales of investments. Income from financial assets and marketable securities rose year-over-year, primarily due to higher gains on sale of shares in Juniper Networks, Inc., which amounted to €356 million in the current period and €208 million in the prior-year period.

		June 30,
(€ in millions)		2006				2005
Income from continuing operations before income taxes			3,533				3,444
Income taxes			(867	)			(787	)
as percentage of income from continuing operations before income taxes			25	%			23	%
Minority interest			(146	)			(96	)
Income from continuing operations			2,520				2,561
Loss from discontinued operations, net of income taxes			(28	)			(390	)
Net income			2,492				2,171

     Income from continuing operations before income taxes in the first nine months was €3.533 billion compared to €3.444 billion in the same period a year earlier, despite a substantial increase in severance charges at SBS and Com that was only partially offset by higher gains from sales of Juniper shares mentioned above. The severance charges at SBS and Com totaled €596 million compared to €165 million in the prior-year period.

     Income from continuing operations in the first nine months was €2.520 billion, slightly below €2.561 billion in the same period a year earlier, due to a higher tax rate. The tax rate in the current year of 25% was dominated by domestic tax free income, while in the prior year period our income tax rate of 23% benefited from a reorganization of certain businesses in the U.S. generating previously unrecognized tax deductions. The loss from discontinued operations, net of income taxes was €28 million in the current period, down from a loss of €390 million in the first nine months a year earlier. This change had a corresponding effect on nine-month net income, which rose 15% year-over-year, to €2.492 billion.

Portfolio activities

     During the third quarter, Med announced two acquisitions that would strengthen its competitive position in the strategically important medical diagnostics market. The first acquisition involves Diagnostics Products Corporation (DPC), USA. The preliminary purchase price amounts to approximately €1.5 billion (see “Subsequent event” for further information). Med also signed an agreement to acquire the diagnostics division of Bayer AG, Germany for a preliminary purchase price of approximately €4.2 billion. The transaction, which is subject to regulatory approval and other customary closing conditions, is expected to close early in fiscal 2007.

     Also in the third quarter, the Company sold the majority of the VA Tech power generation business, including the hydropower activities, to Andritz AG, Austria. The sale was completed in May 2006 for a purchase price of approximately €185 million.

     At the beginning of April 2006, SBS closed the sale of its Product Related Services (PRS) business to Fujitsu Siemens Computers (Holding) BV.

     In June 2006, Siemens agreed to divest the distribution and industry logistics as well as material handling products (Dematic) businesses, pending regulatory approval. The assets and liabilities of Dematic-related operations of Siemens are classified on the balance sheet as held for disposal. The transaction is expected to close in the fourth quarter of fiscal 2006.

     Also in June 2006, Siemens and Nokia announced to contribute the carrier-related operations of Siemens, which are part of Com, and the Networks Business Group of Nokia into a new company, to be called Nokia Siemens Networks (NSN), in exchange for shares in NSN. Siemens and Nokia will each own 50% of NSN. The assets and liabilities of carrier-related operations of Siemens are classified on the balance sheet as held for disposal. The transaction is expected to close by the second quarter of fiscal 2007 at the latest.

     The assets and liabilities of the enterprise networks business, which is part of Com, were also reclassified on the balance sheet as held for disposal as of June 30, 2006. The Company expects to divest the enterprise networks business within one year.

     For a detailed discussion of our acquisitions and dispositions, see “Notes to Consolidated Financial Statements.”

Segment information analysis

Operations

Information and Communications

Communications (Com)

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			3				(81	)												365				364				0	%
Group profit margin			0.1	%			(2.7	)%												3.9	%			4.2	%
Sales			2,972				2,955				1	%			(1	)%				9,362				8,706				8	%			4	%
New orders			3,258				3,099				5	%			4	%				10,279				9,551				8	%			4	%

*		Excluding portfolio effects of 2% and 1% on sales and orders, respectively.
**		Excluding currency translation effects of 3% on sales and orders, and portfolio effects of 1% on sales and orders.

     Following an intensive analysis by the Managing Board associated with the strategic reorientation of Com’s operations, the carved out Siemens Home and Office Communication Devices business (SHC) was reclassified to Other Operations effective in the third quarter. Results for both Com and Other Operations have been recast on a retroactive basis, to present meaningful comparisons between current and prior periods.

     Third-quarter sales for Com edged up 1% year-over-year, to €2.972 billion, and orders rose 5%, to €3.258 billion. Group profit at Com was positive compared to a loss in the third quarter a year earlier. Severance charges of €34 million were nearly unchanged compared to the prior-year quarter. The carrier business posted higher sales and also increased its earnings contribution year-over-year. Sales at the enterprise networks business declined year-over-year, and its loss widened. Com expects higher severance charges in the fourth quarter compared to the third quarter.

     In the first nine months of fiscal 2006, sales at Com were €9.362 billion and orders were €10.279 billion, both 8% higher than in the first nine months a year earlier. Nine-month Group profit was nearly unchanged at €365 million. While severance charges were higher in the current period, at €198 million compared to €62 million, the current period also included higher gains on sales of Com’s shares in Juniper Networks, Inc., totaling €356 million compared to €208 million in the first nine months a year earlier. Com’s carrier networks activities delivered higher sales and earnings compared to the first nine months of the prior year. While year-to-date sales at the enterprise networks business declined slightly, losses widened significantly year-over-year.

     Execution of the strategic reorientation of Com’s operations is expected to continue in coming quarters. Effective with the end of the third quarter, on June 30, 2006, Com’s carrier networks business and its enterprise networks business are held for disposal. In June of 2006, Siemens reached an agreement to merge the carrier networks business into a joint venture with Nokia, and this transaction is expected to close by the second quarter of fiscal 2007 at the latest. For further information see “Notes to the Consolidated Financial Statements”. In addition, A&D will assume operational control of Com’s Wireless Modules division at the beginning of fiscal 2007.

Siemens Business Services (SBS)

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			(99	)			(109	)			9	%								(522	)			(263	)			(98	)%
Group profit margin			(9.2	)%			(8.2	)%												(13.5	)%			(6.8	)%
Sales			1,081				1,331				(19	)%			(1	)%				3,880				3,871				0	%			2	%
New orders			1,054				1,331				(21	)%			2	%				3,919				4,730				(17	)%			(13	)%

*		Excluding portfolio effects of (18)% and (23)% on sales and orders, respectively.
**		Excluding currency translation effects of 1% on sales and orders, and portfolio effects of (3)% and (5)% on sales and orders, respectively.

     Effective at the beginning of the third quarter on April 1, 2006, SBS closed the previously announced sale of its Product Related Services (PRS) business to Fujitsu Siemens Computers (Holding) BV.

     Sales and orders for SBS in the third quarter decreased and reflect the PRS divestment, coming in at €1.081 billion and €1.054 billion, respectively. On an adjusted basis, excluding portfolio effects, sales came within 1% of the prior-year level and third-quarter orders were up 2% year-over-year. Group profit was again negative, but improved compared to the same quarter a year earlier. The current period included higher severance charges compared to the prior year, at €35 million, as well as adverse effects related to the divestiture of PRS.

     In the first nine months of fiscal 2006, sales of €3.880 billion were nearly level year-over-year. Orders of €3.919 billion were lower due to a more selective order intake, the PRS divestiture, and a smaller number of major orders compared to the first nine months a year earlier. The Group’s loss of €522 million for the first nine months included severance charges totaling €398 million, a significantly higher level than in the same period a year earlier.

Automation and Control

Automation and Drives (A&D)

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			396				333				19	%								1,121				909				23	%
Group profit margin			12.3	%			13.2	%												12.1	%			12.6	%
Sales			3,214				2,515				28	%			10	%				9,297				7,196				29	%			8	%
New orders			3,541				2,692				32	%			11	%				10,640				7,727				38	%			13	%

*		Excluding portfolio effects of 18% and 21% on sales and orders, respectively.
**		Excluding currency translation effects of 3% on sales and orders, and portfolio effects of 18% and 22% on sales and orders, respectively.

     Beginning in fiscal 2006, A&D includes the Electronics Assembly Systems division on a retroactive basis, to present a meaningful comparison with prior periods. The division was formerly part of the Logistics and Assembly Systems Group (L&A), which was dissolved as of the beginning of fiscal 2006.

     In the third quarter A&D posted a quarterly profit of €396 million, up 19% year-over-year. A&D’s Group profit margin remained high for the quarter, despite a changing sales mix and increased selling costs associated with strategic expansion of the Group’s business base. Both sales and orders included a combination of double-digit organic growth and new volume from acquisitions between the periods under review. As a result, sales climbed to €3.214 billion, up 28% year-over-year, and orders rose to €3.541 billion, 32% higher than the prior-year period. A&D’s continued expansion in Asia-Pacific included particularly rapid growth in China.

     For the first nine months, Group profit at A&D reached €1.121 billion, a new high and a 23% increase compared to the first nine months a year earlier. Sales for the first nine months climbed to €9.297 billion and orders reached €10.640 billion, both up strongly from the same period a year earlier. These increases followed

the same pattern as in the third quarter, as new volume from acquisitions joined a solid base of organic growth and regionally broad demand was highlighted by rapid growth in Asia-Pacific. In the fourth quarter, the acquisitions of Flender and Robicon, both acquired in the fourth quarter of fiscal 2005, will contribute to sales and orders on an organic basis rather than as new volume, with a corresponding effect on reported growth rates.

     Beginning in fiscal 2007, A&D will assume operational responsibility for the Wireless Modules division currently included within Com.

Industrial Solutions and Services (I&S)

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			78				13				500	%								207				107				93	%
Group profit margin			3.5	%			0.9	%												3.3	%			2.6	%
Sales			2,232				1,401				59	%			17	%				6,342				4,161				52	%			12	%
New orders			1,744				1,384				26	%			10	%				6,896				5,005				38	%			(2	)%

*		Excluding portfolio effects of 42% and 16% on sales and orders, respectively.
**		Excluding currency translation effects of 4% on sales and orders, and portfolio effects of 36% on sales and orders.

     Beginning in fiscal 2006, I&S includes the Airport Logistics and Postal Automation divisions, formerly of L&A, on a retroactive basis.

     Third-quarter Group profit at I&S was €78 million, including a substantial positive contribution from the VA Tech acquisition. For comparison, Group profit in the prior-year period included project-related charges. Sales of €2.232 billion in the third quarter were 59% higher than in the prior-year period, and included increases in all lines of business. Orders for the quarter rose 26% year-over-year, to €1.744 billion. The growth in both sales and orders in the third quarter benefited strongly from the VA Tech acquisition which took place at the beginning of the fourth quarter of fiscal 2005.

     Results at I&S for the first nine months also show the influence of VA Tech, which helped push Group profit to €207 million on sales of €6.342 billion. Order growth for the first nine months was due primarily to VA Tech, as the Group’s Postal Automation and Airport Logistics divisions posted lower orders compared to the first nine months a year earlier. In the fourth quarter, the VA Tech acquisition will contribute to sales and orders on an organic basis rather than as new volume, with a corresponding effect on reported growth rates.

Siemens Building Technologies (SBT)

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			45				26				73	%								147				97				52	%
Group profit margin			4.0	%			2.4	%												4.3	%			3.1	%
Sales			1,122				1,075				4	%			3	%				3,393				3,115				9	%			5	%
New orders			1,142				1,139				0	%			(1	)%				3,833				3,355				14	%			10	%

*		Excluding portfolio effects of 1% on sales and orders.
**		Excluding currency translation effects of 3% on sales and orders, and portfolio effects of 1% on sales and orders.

     SBT posted Group profit of €45 million in the third quarter, up from €26 million in the same period a year earlier. The increase resulted in part from increased capacity utilization combined with higher sales, which rose 4% to €1.122 billion. Profitability in the third quarter also benefited from greater emphasis on higher-margin activities based on products and services. Third-quarter orders were level with the prior-year period, at €1.142 billion.

     In the first nine months of fiscal 2006, the factors mentioned above lifted SBT’s Group profit by 52% year-over-year, to €147 million. Sales in the first three quarters were €3.393 billion, up from €3.115 billion in the

same period a year earlier. Broad-based demand for SBT’s security, safety, building comfort and building automation solutions boosted orders to €3.833 billion for the first nine months from €3.355 billion in the prior-year period.

Power

Power Generation (PG)

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			213				224				(5	)%								637				695				(8	)%
Group profit margin			8.1	%			10.6	%												8.9	%			12.2	%
Sales			2,635				2,114				25	%			22	%				7,162				5,716				25	%			18	%
New orders			2,475				2,646				(6	)%			(11	)%				9,794				7,646				28	%			17	%

*		Excluding portfolio effects of 3% and 5% on sales and orders, respectively.
**		Excluding currency translation effects of 2% on sales and orders, and portfolio effects of 5% and 9% on sales and orders, respectively.

     PG’s Group profit of €213 million in the third quarter included charges related to a major project and a changed sales mix compared to the prior year. In particular, while the Wind Power division doubled its third-quarter sales and earnings compared to a year earlier, its earnings margin is rising from a lower level compared to PG’s fossil power generation business. Third-quarter sales for PG overall climbed 25% year-over-year, to €2.635 billion, as the Group converted strong order growth in recent quarters to current business. Orders were €2.475 billion compared to €2.646 billion in the third quarter a year earlier, which included a higher level of large orders in the fossil power generation business.

     For the first nine months, Group profit of €637 million included the charges mentioned above, as well as an adverse result in arbitration related to a turnkey power generation project in the Philippines. In contrast, Group profit of €695 million in the first nine months a year earlier benefited from higher cancellation gains. In addition, the company expects earnings from joint ventures to be significantly lower in the fourth quarter of fiscal 2006 compared to the same period a year earlier. Sales for PG rose to €7.162 billion from €5.716 billion in the first nine months a year earlier. Nine-month orders at PG climbed to €9.794 billion from €7.646 billion in the same period a year earlier, including a number of major orders in the Middle East, the Americas and Europe. Orders in the Wind Power division in the first nine months jumped 182% year-over-year.

     After the close of the third quarter, PG announced an agreement to acquire AG Kühnle, Kopp & Kausch of Germany, a maker of steam turbines, turbocompressors and fans for industrial applications with fiscal 2005 revenues of approximately €270 million. This transaction, which requires regulatory approval, is expected to close in the fourth quarter.

Power Transmission and Distribution (PTD)

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			113				27				319	%								278				140				99	%
Group profit margin			6.6	%			2.9	%												6.0	%			5.2	%
Sales			1,718				945				82	%			52	%				4,670				2,669				75	%			35	%
New orders			2,075				1,323				57	%			39	%				6,345				3,645				74	%			41	%

*		Excluding currency translation effects of 1% on orders, and portfolio effects of 30% and 17% on sales and orders, respectively.
**		Excluding currency translation effects of 6% and 7% on sales and orders, respectively, and portfolio effects of 34% and 26% on sales and orders, respectively.

     A strong third quarter for PTD included substantial increases in Group profit, sales and orders. The rise in Group profit, to €113 million, was driven by higher sales at every division, led by the High Voltage division. For

comparison, Group profit at PTD a year earlier included severance charges in the Transformers division. New volume from the VA Tech acquisition added to the Group’s exceptionally strong organic growth in the third quarter, particularly including large orders in the Middle East. As a result, third-quarter sales jumped 82%, to €1.718 billion, and orders for the quarter climbed 57% year-over-year, to €2.075 billion.

     In the first nine months of fiscal 2006, Group profit of €278 million at PTD was up strongly compared to the same period a year earlier. Group profit in the prior-year period included the severance charges noted above. Group profit growth for the first nine months benefited from a 75% rise in sales year-over-year, to €4.670 billion, including new volume from VA Tech. Orders climbed to €6.345 billion, up 74% year-over-year on particularly strong demand in the Middle East. While the VA Tech acquisition expanded PTD’s business base, organic growth accounted for much of the increase in sales and the majority of the increase in orders. In the fourth quarter, the VA Tech acquisition will contribute to sales and orders on an organic basis rather than as new volume, with a corresponding effect on reported growth rates.

Transportation

Transportation Systems (TS)

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			18				6				200	%								60				30				100	%
Group profit margin			1.8	%			0.6	%												2.0	%			1.0	%
Sales			987				1,075				(8	)%			(10	)%				3,056				3,029				1	%			(2	)%
New orders			1,550				768				102	%			99	%				5,430				3,009				80	%			76	%

*		Excluding portfolio effects of 2% and 3% on sales and orders, respectively.
**		Excluding currency translation effects of 1% and 2% on sales and orders, respectively, and portfolio effects of 2% on sales and orders.

     Group profit at TS was €18 million in the third quarter, up from €6 million in the same period a year earlier. Orders more than doubled compared to the prior-year period, to €1.550 billion, led by a major new contract for trains and maintenance in Russia. Third-quarter sales of €987 million were below the level a year earlier.

     TS improved Group profit to €60 million for the first nine months even though sales were nearly level with the prior-year period, at €3.056 billion. In contrast, nine-month order growth was robust, rising 80% to €5.430 billion, fueled by strong demand for trains, particularly including major orders in China, Russia, Spain and Austria.

Siemens VDO Automotive (SV)

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			158				178				(11	)%								498				482				3	%
Group profit margin			6.1	%			6.9	%												6.5	%			6.7	%
Sales			2,604				2,566				1	%			(1	)%				7,667				7,199				7	%			3	%
New orders			2,600				2,733				(5	)%			(7	)%				7,660				7,370				4	%			0	%

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

     Group profit at SV was €158 million in the third quarter, including €17 million in charges for capacity adjustments and higher research and development (R&D) investments. Sales and orders were €2.604 billion and €2.600 billion, respectively, in a usually strong period. Orders in the prior-year quarter included a large contract won jointly with SBS.

     For the first nine months, SV’s Group profit of €498 million was up 3% compared to the same period a year earlier despite a significant rise in R&D expenses year-over-year. Group profit in the current period included gains from sales of investments related to joint ventures as well as charges for capacity adjustments. In the current period, broad-based growth lifted sales and orders to €7.667 billion and €7.660 billion, respectively.

Medical

Medical Solutions (Med)

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			233				241				(3	)%								737				674				9	%
Group profit margin			12.7	%			12.5	%												12.6	%			12.6	%
Sales			1,837				1,921				(4	)%			(4	)%				5,868				5,351				10	%			5	%
New orders			2,088				2,119				(1	)%			1	%				6,340				6,072				4	%			1	%

*		Excluding currency translation effects of (1)% on orders, and portfolio effects of (1)% on orders.
**		Excluding currency translation effects of 4% and 3% on sales and orders, respectively, and portfolio effects of 1% on sales.

     Med was one of Siemens’ top earnings contributors, with €233 million in Group profit in the third quarter. The difference compared to the prior year is primarily volume-related, since Med increased its quarterly Group profit margin year-over-year. While sales of €1.837 billion came in lower compared to the strong third quarter a year earlier, orders of €2.088 billion were up slightly on an adjusted basis.

     Group profit at Med for the first nine months rose 9% to €737 million on higher sales. Nine-month sales rose 10% year-over-year, to €5.868 billion, in an increasingly competitive market for medical solutions, particularly diagnostics imaging systems, while orders rose 4%, to €6.340 billion.

     During the third quarter Siemens entered into an agreement to acquire Diagnostic Products Corporation (DPC) of the U.S., a leading provider of in-vitro clinical diagnostics that complement Med’s established strengths in in-vivo diagnostic imaging. Also in the third quarter, Med announced an agreement to acquire the Diagnostics division of Bayer AG, which would expand Med’s position in the fast-growing field of molecular diagnostics. For further information concerning the acquisitions of DPC and the Diagnostics division of Bayer AG see “Portfolio activities” above and “Subsequent event” below as well as “Notes to the Consolidated Financial Statements.”

Lighting

Osram

		Third quarter																	Nine months ended June 30,
										% Change																	% Change
(€ in millions)		2006				2005				Actual				Adjusted*					2006				2005				Actual				Adjusted**
Group profit			111				111				0	%								368				348				6	%
Group profit margin			10.2	%			10.7	%												10.7	%			11.0	%
Sales			1,089				1,038				5	%			5	%				3,453				3,178				9	%			5	%
New orders			1,089				1,038				5	%			5	%				3,453				3,178				9	%			5	%

*		Excluding currency translation effects.
**		Excluding currency translation effects of 4% on sales and orders.

     Group profit at Osram was €111 million, level with the prior year despite higher costs associated with the market launch of innovative new products. The Group grew in all regions, posting sales of €1.089 billion for the quarter compared to €1.038 billion in the same period a year earlier.

     For the first nine months, Group profit at Osram was up 6%, at €368 million, on a 9% rise in sales. Growth in sales was broad-based within the Group and included increased demand in all regions.

Other Operations

     Other Operations consist of centrally held operating businesses not related to a Group. These businesses include joint ventures, equity investments, a portion of the VA Tech acquisition, and the distribution and industry logistics and material handling products (Dematic) businesses carved out of L&A. Beginning in the third quarter, Other Operations include Siemens’ home and office communications products unit (SHC), which was carved out of Com as a stand-alone business and for which Com management is no longer responsible. Prior year information was reclassified for comparability purposes.

     In the third quarter, Group profit from Other Operations was €9 million compared to €2 million a year earlier. Earnings from joint ventures were higher compared to the prior-year period. Dematic posted similar losses in both periods, while SHC posted a loss following a positive result in the prior-year period. Sales from Other Operations rose to €1.176 billion from €998 million a year earlier, including new volume from VA Tech.

     For the first nine months, Group profit from Other Operations was €109 million compared to €178 million in the same period a year earlier, as higher earnings at joint ventures were more than offset by SHC posting a loss following a positive result in the prior-year period and higher losses and impairments in the Dematic businesses. Sales rose to €3.569 billion from €2.994 billion in the first nine months of the prior year, including a sizable contribution from VA Tech.

     During the third quarter Siemens announced that it would divest the Dematic businesses. The transaction is expected to close in the fourth quarter of fiscal 2006 and will result in a loss for the period.

Reconciliation to Financial Statements

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

Corporate items, pensions and eliminations

     Corporate items, pensions and eliminations were a negative €252 million compared to a negative €248 million in the third quarter a year earlier. Corporate items improved year-over-year, due primarily to a €33 million gain from the sale of Siemens’ remaining Infineon shares, while centrally carried pension expense increased primarily due to a reduction in the discount rate assumption at September 30, 2005.

     In the first nine months of fiscal 2006, Corporate items, pensions and eliminations totaled a negative €765 million compared to a negative €807 million in the first nine months a year earlier. The improvement includes a gain of €95 million on the sale of an investment, the Infineon gain mentioned above, and a positive effect related to the settlement of an arbitration proceeding. These factors were partly offset by higher centrally carried pension expense.

Other interest expense

     Other interest expense of Operations for the third quarter of fiscal 2006 was €83 million compared to interest expense of €48 million a year earlier. For the first nine months of fiscal 2006, other interest expense of Operations was €265 million, up from €112 million a year earlier. The change was mainly due to increased intra-company financing of Operations by Corporate Treasury year-over-year.

Financing and Real Estate

Siemens Financial Services (SFS)

		Third quarter													Nine months ended June 30,
(€ in millions)		2006				2005				% Change					2006				2005				% Change
Income before income taxes			64				80				(20	)%				187				269				(30	)%
															June 30,				Sept. 30,
																2006				2005
Total assets																10,011				10,148				(1	)%

     Income before income taxes at SFS was €64 million in the third quarter. The higher income in the prior-year period resulted from a substantial gain on the sale of a 51% stake in the real estate funds management business of Siemens Kapitalanlagegesellschaft mbH (SKAG).

     For the first nine months, SFS posted income before income taxes of €187 million compared to €269 million in the same period a year earlier. The change year-over-year is primarily due to beneficial effects in the prior-year period which included the SKAG gain mentioned above, a special dividend paid by an investment held by the Equity division, and a gain on the sale of an investment. Total assets at the end of the first nine months were nearly unchanged compared to the end of fiscal 2005.

Siemens Real Estate (SRE)

		Third quarter													Nine months ended June 30,
(€ in millions)		2006				2005				% Change					2006				2005				% Change
Income before income taxes			6				44				(86	)%				92				114				(19	)%
Sales			419				403				4	%				1,259				1,188				6	%
															June 30,				Sept. 30,
																2006				2005
Total assets																3,368				3,496				(4	)%

     In the third quarter, SRE recorded income before income taxes of €6 million compared to €44 million in the same period a year earlier. The current period was affected by higher vacancy costs and lower rental income, due to weaker demand within Siemens in Germany. The prior-year period benefited from higher income from real estate disposals.

     Income before income taxes for the first nine months of fiscal 2006 also declined on higher vacancy costs and lower rental income, only partly offset by higher income from sales of real estate property in the current period compared to the first nine months of fiscal 2005. Total assets at the end of the first nine months were somewhat lower than at the end of fiscal 2005 primarily due to real estate disposals.

Eliminations, reclassifications and Corporate Treasury

     Income before income taxes from Eliminations, reclassifications and Corporate Treasury was €115 million compared to €38 million in the third quarter a year earlier. The difference was mainly due to increased interest income from intra-company financing at Corporate Treasury and positive effects from derivative activities not qualifying for hedge accounting.

     For the first nine months, Income before income taxes from Eliminations, reclassifications and Corporate Treasury was €279 million, compared to €219 million in the same period a year earlier. The increase was

primarily due to higher interest income from intra-company financing, partly offset by reduced income from interest rate hedging activities not qualifying for hedge accounting.

Liquidity, capital resources and capital requirements

Cash flow – First nine months of fiscal 2006 compared to first nine months of fiscal 2005

     The following discussion presents an analysis of Siemens’ cash flows for the nine-month periods ended June 30, 2006 and June 30, 2005. The first table presents cash flow for continuing and discontinued operations. The second table focuses on continuing operations, and breaks out cash flows for Operations separately from the other two components of Siemens. Discontinued operations consist solely of activities related to the previously divested mobile phone business.

																		Continuing and
		Continuing operations								Discontinued operations								discontinued operations
		Nine months ended June 30,
(€ in millions)		2006				2005				2006				2005				2006				2005
Net cash provided by (used in):
Operating activities			2,637				1,273				(205	)			(712	)			2,432				561
Investing activities			(1,288	)			(3,421	)			(111	)			(77	)			(1,399	)			(3,498	)
Net cash provided by (used in) operating and investing activities			1,349				(2,148	)			(316	)			(789	)			1,033				(2,937	)

     In the first nine months of fiscal 2006, operating and investing activities from continuing operations provided net cash of €1.349 billion compared to net cash used of €2.148 billion in the prior-year period. Discontinued operations used net cash of €316 million in the first nine months this year, compared to net cash used of €789 million in the same period a year earlier. In aggregate, operating and investing activities provided €1.033 billion in net cash for the first nine months of the current year, while the same period a year earlier used net cash of €2.937 billion.

										SFS, SRE and
Continuing operations		Operations								Corporate Treasury *								Siemens
		Nine months ended June 30,
(€ in millions)		2006				2005				2006				2005				2006				2005
Net cash provided by (used in):
Operating activities			1,286				687				1,351				586				2,637				1,273
Investing activities			(533	)			(2,737	)			(755	)			(684	)			(1,288	)			(3,421	)
Net cash provided by (used in) operating and investing activities — continuing operations			753				(2,050	)			596				(98	)			1,349				(2,148	)

     Within Operations, operating activities provided net cash of €1.286 billion in the first nine months of fiscal 2006, compared to net cash provided of €687 million in the same period a year earlier. The current period included higher cash payouts for severance at Com and SBS, which rose to €503 million from €90 million, while the prior-year period included €1.496 billion in supplemental contributions to Siemens pension plans. In the first nine months of fiscal 2006, broad-based business growth led to an increase in inventories, net, particularly at PG, Com and I&S. The increase in inventories in the current period was partially offset by higher project-related customer payments (billings in excess), particularly at PG. The increase in inventories was also the primary driver for a significant build up of net working capital in both periods.

     Within Corporate Treasury and Financing and Real Estate, operating activities provided net cash of €1.351 billion in the first nine months of fiscal 2006, compared to net cash provided of €586 million a year earlier. The change year-over-year reflects higher cash inflows from foreign currency derivatives, which increased by €466 million compared to the prior year level. For Siemens as a whole, net cash provided by operating activities was €2.637 billion in the first nine months of fiscal 2006 compared to €1.273 billion in the prior-year period.

     Operations used net cash in investing activities of €533 million in the first nine months of the current year, compared to €2.737 billion a year earlier. Investing activities showed the effects of business growth including

higher cash outflows for capital expenditures in the first nine months of the current year compared to the same period a year earlier. Outflows for acquisitions were lower compared to the prior year, which included €731 million for CTI. Proceeds from sales of investments were higher, due to the sale of shares of SMS Demag AG and the divestment of certain portions of VA Tech’s power generation business, including the hydropower activities. Net cash from the sale of marketable securities in the first nine months increased substantially due primarily to €1.127 billion in net proceeds from the Infineon share sale in the third quarter of fiscal 2006. Sales of marketable securities also included higher cash inflows on sales of Juniper shares, totaling €465 million in the current period compared to €263 million a year earlier, and proceeds of €90 million from the sale of Siemens’ remaining shares of Epcos AG in fiscal 2006.

     Corporate Treasury and Financing and Real Estate used net cash in investing activities of €755 million compared to €684 million a year earlier. The difference is due to higher additions to property, plant and equipment year-over-year at SFS and SRE. Siemens as a whole used net cash in investing activities of €1.288 billion in the first nine months of fiscal 2006 compared to net cash used of €3.421 billion in the same period a year earlier.

     Financing activities in the first nine months of fiscal 2006 used net cash of €1.708 billion compared to net cash used of €225 million a year earlier. The difference year over year in the change in short-term debt was a negative €2.148 billion, including repayment of short-term debt under commercial paper programs in the current period. The current period included net proceeds from the issuance of long-term debt of €833 million under a medium-term note program, while the prior year included net proceeds from the issuance of commercial paper. Dividends paid to shareholders for the first nine months of fiscal 2006 increased to €1.201 billion from €1.112 billion in the same period a year earlier.

Pension plan funding

     At the end of the first nine months of fiscal 2006, the combined funding status of Siemens’ principal pension plans showed an estimated underfunding of €3.5 billion, approximately the same amount as at the end of fiscal 2005, as pension service and interest costs were offset by regular employer contributions and the actual return on plan assets in the first nine months.

     The fair value of plan assets of Siemens’ principal funded pension plans on June 30, 2006 was €21.7 billion, compared to €21.5 billion on September 30, 2005. In the first nine months of fiscal 2006, regular employer contributions amounted to €639 million compared to €397 million in the first nine months of the prior year. The prior-year period included supplemental cash contributions of €1.496 billion.

     The estimated projected benefit obligation (PBO) for Siemens’ principal pension plans, which takes into account future compensation increases, amounted to €25.2 billion on June 30, 2006 compared to the PBO of €25.0 billion on September 30, 2005. The increase is due to the net of pension service and interest costs less benefits paid during the nine-month period, less currency translation effects.

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

Capital resources and capital requirements

Ratings

     Following Siemens’ announcement of the planned acquisition of the Diagnostics division of Bayer AG, on June 30, 2006 credit rating agencies changed their rating outlook for Siemens from “stable” to “negative” (Moody’s Investors Service) and from “stable” to “CreditWatch with negative implications” (Standard & Poor’s). Neither agency changed its long-term credit rating or its short-term issuance rating. These remain at Aa3 and Prime-1, respectively, at Moody’s and at AA- and A-1+, respectively, at Standard & Poor’s.

Equity

     At the Annual Shareholders’ Meeting on January 26, 2006, Siemens shareholders gave authorization to repurchase up to 10% of the Siemens’ €2.673 billion common stock. The resolution is valid until July 25, 2007. According to this resolution, shares that are repurchased may be sold via a stock exchange; or (i) retired with the approval of the Supervisory Board; (ii) used to satisfy obligations under the 1999 Siemens Stock Option Plan and the 2001 Siemens Stock Option Plan; (iii) offered for sale to employees or former employees within the

employee share program; or (iv) used to service conversion or option rights granted by the Company in connection with the issuance of bonds. In addition, the Supervisory Board is authorized to offer repurchased shares to the members of the Managing Board of Siemens under the same terms and conditions as those offered to employees of Siemens, or the Supervisory Board may grant and transfer such shares to members of the Managing Board as stock-based compensation with a holding period of at least two years.

     Authorized Capital 2001/II of €67 million, representing approximately 22 million shares, expired on February 1, 2006. At the Annual Shareholders’ Meeting on January 26, 2006, the Company’s shareholders authorized the Managing Board to increase the common stock by January 25, 2011, with the approval of the Supervisory Board, by up to €75 million, representing 25 million shares of no par value registered in the names of the holders against contributions in cash (Authorized Capital 2006). The authorization may be implemented in installments. Preemptive rights of existing shareholders shall be excluded. The new shares shall be issued under the condition that they are offered exclusively to employees of Siemens AG and its subsidiaries, provided these subsidiaries are not listed companies themselves and do not have their own employee stock schemes. The Managing Board is authorized to determine, with the approval of the Supervisory Board, the further content of the rights embodied in the shares and the terms and conditions of the share issue.

Debt

     The Company updated its €5.0 billion medium-term note program on the basis of a new European Union Directive in March 2006. The amount outstanding under this program was €1.709 billion as of June 30, 2006, compared to €966 million as of September 30, 2005. In the third quarter of fiscal 2006 the U.S.$ commercial paper program was extended from U.S.$3.0 billion to U.S.$5.0 billion. The amount outstanding under the U.S.$5.0 billion and €3.0 billion commercial paper programs declined to €749 million as of June 30, 2006, compared to €1.484 billion as of September 30, 2005.

     After the close of the third quarter, Siemens redeemed a €1.6 billion bond which was due on July 4, 2006.

Capital requirements

     Siemens expects significant cash outflows for portfolio realignments in the fourth quarter and in fiscal 2007. To maintain sufficient financial flexibility Siemens expects to raise additional funds in the coming quarters. For further information see “Portfolio activities” above as well as “Notes to the Consolidated Financial Statements”.

EVA performance

     Siemens ties a portion of its executive incentive compensation to achieving economic value added (EVA) targets. EVA measures the profitability of a business (using Group profit for the Operations Groups and income before income taxes for the Financing and Real Estate businesses as a base) against the additional cost of capital used to run a business (using net capital employed for the Operations Groups and risk-adjusted equity for the Financing and Real Estate businesses as a base). A positive EVA means that a business has earned more than its cost of capital, whereas a negative EVA means that a business has earned less than its cost of capital. Depending on the EVA development year-over-year, a business is defined as value-creating or value-destroying. Other companies that use EVA may define and calculate EVA differently. Economic Value Added (EVA) in the first nine months of fiscal 2006 was positive and improved significantly due to higher earnings compared to the same period a year earlier.

Legal proceedings

     On January 19, 2006, the US Attorney for the Northern District of Illinois charged Siemens Medical Solutions US (SMS) with committing mail and wire fraud in connection with a bid on a public contract for radiological equipment in the year 2000. The charges are based on alleged non-compliance with certain bidding terms and alleged misconduct during a trial related to the fulfillment of such terms. The bidding terms of the public contract were later ruled unconstitutional. SMS, which has cooperated with the government’s investigation, considers the allegations to be unjustified and intends to oppose them in court. The court proceedings are scheduled for March 2007.

     As previously reported, Italian and German prosecutors have been investigating allegations that former Siemens employees provided improper benefits to former employees of Enel in connection with the awarding of

Enel contracts. We are cooperating with the authorities. German prosecutors brought charges against two of the investigated former employees in March 2006. In Italy, Siemens AG has entered into a so-called “patteggiamento” (plea bargaining agreement without the admission of any guilt or responsibility) with the Italian prosecutors. Siemens agreed to pay a €0.5 million fine and to give up €6.121 million of profit relating to the Enel contracts. In addition, Siemens accepted a one-year ban prohibiting it from entering into contracts with the Italian public administration. This part of the patteggiamento has already been discharged through the one-year ban imposed on Siemens by preliminary injunction that expired on May 14, 2005. The patteggiamento is scheduled to enter into force on September 24, 2006.

Report on the United Nations Oil-for-Food Programme

     On February 24, 2006, Siemens received a subpoena from the U.S. Securities and Exchange Commission (SEC) requiring the production of certain documents relating to the Oil-for-Food Programme and to certain other matters. Siemens is cooperating with the SEC. The SEC has not announced a schedule for the completion of its inquiry. Furthermore, a French investigating magistrate has started a preliminary investigation regarding the participation of French companies – among others Siemens France S.A.S. — in the Oil-for-Food Programme.

Outlook for fiscal 2006

     For the full year, the company expects to deliver income from continuing operations at least level with the prior year, despite significantly higher charges at our Information & Communications Groups and substantial changes in our business portfolio.

Subsequent event

     At the end of July 2006, Siemens completed the acquisition of the immunodiagnostics provider Diagnostic Products Corporation (DPC), USA,  for a preliminary purchase price of approximately U.S. $1.9 billion (approximately €1.5 billion) payable in cash. DPC, now a wholly owned subsidiary of Siemens, will be integrated into Med.

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

     

CONSOLIDATED STATEMENTS OF INCOME (unaudited)
For the three months ended June 30, 2006 and 2005
(in millions of €, per share amounts in €)

										Eliminations,
										reclassifications and																Financing and Real
		Siemens								Corporate Treasury								Operations								Estate
		2006				2005				2006				2005				2006				2005				2006				2005
Net sales			21,173				18,583				(478	)			(407	)			21,066				18,463				585				527
Cost of sales			(15,246	)			(13,283	)			478				407				(15,233	)			(13,258	)			(491	)			(432	)
Gross profit on sales			5,927				5,300				—				—				5,833				5,205				94				95
Research and development expenses			(1,408	)			(1,251	)			—				—				(1,408	)			(1,251	)			—				—
Marketing, selling and general administrative expenses			(3,617	)			(3,374	)			—				—				(3,529	)			(3,291	)			(88	)			(83	)
Other operating income (expense), net			4				44				(19	)			(20	)			(7	)			(12	)			30				76
Income from investments in other companies, net			109				78				—				—				97				63				12				15
Income (expense) from financial assets and marketable securities, net			67				(27	)			21				(21	)			52				7				(6	)			(13	)
Interest income (expense) of Operations, net			(12	)			2				—				—				(12	)			2				—				—
Other interest income (expense), net			58				65				113				79				(83	)			(48	)			28				34
Income from continuing operations before income taxes			1,128				837				115				38				943				675				70				124
Income taxes			(276	)			(186	)			(28	)			(8	)			(232	)			(150	)			(16	)			(28	)
Minority interest			(48	)			(33	)			—				—				(48	)			(33	)			—				—
Income from continuing operations			804				618				87				30				663				492				54				96
Income (loss) from discontinued operations, net of income taxes			(12	)			(229	)			—				—				(12	)			(230	)			—				1
Net income			792				389				87				30				651				262				54				97
Basic earnings per share
Income from continuing operations			0.90				0.69
Loss from discontinued operations			(0.01	)			(0.25	)
Net income			0.89				0.44
Diluted earnings per share
Income from continuing operations			0.86				0.67
Loss from discontinued operations			(0.01	)			(0.25	)
Net income			0.85				0.42