What will the world look like in the future? Annual Report 2008 www.siemens.com Answers We’re tackling the toughest questions of our time. And providing answers. Our vision A world of proven talent, delivering breakthrough innovations, giving our customers a unique competitive edge, enabling societies to master their most vital challenges, creating sustainable value. Our values Responsible Committed to ethical and responsible actions. Excellent Achieving high performance and excellent results. Innovative Being innovative to create sustainable value. A technical invention only achieves value and “ importance if industrial art itself has so far progressed that the invention is a practical one and supplies a need.” Werner von Siemens Memoirs, 1892 Climate change, soaring energy costs, limited resources – these are only a few of the challenges now facing humankind. By the mid-21st century, our planet will be home to nine billion people, most of whom will be living in large cities. This development raises questions that we have to answer now. How can we meet the growing worldwide demand for energy? How can we maximize the reliability of energy supplies while minimizing their environmental impact? The list goes on and on. For over 160 years, Siemens has been working to answer such questions. And although the chal- lenges and needs have changed over time, the source of our inspiration has always remained the same: responsible people dedicated to creating outstanding innovations. Today, the Siemens Environmental Portfolio exemplifies how, as a global player, we’re honoring our commitment to sustainable development. Our renewable energy technologies, our exceptionally energy-efficient products and solutions and our environmental technologies are creating benefits on three fronts. First, for our customers – whose success is being driven by lower energy costs and higher productivity. Second, for the societies of which we’re a member – by supporting ecofriendly power and environmental protection and enhancing the quality of life for future generations. And third, for our own Company – which we’re positioning for profitable growth in attractive markets. These are just a few of the ways we’re creating lasting value for our shareholders and customers while providing answers to the toughest questions of our time. Peter Löscher President and Chief Executive Officer Siemens AG Contents of Book I At a glance 8 Managing Board of Siemens AG* 10 Our employees – A diverse, highly qualified team 12 In dialogue with our investors 14 Our innovators and innovations Products and solutions 24 The Siemens Environmental Portfolio 26 Industry Sector 40 Energy Sector 54 Healthcare Sector 65 Cross-Sector Businesses 67 Cross-Sector Services 68 Equity Investments Fit42010 74 Unleashing the potential of an integrated technology company 76 Performance 78 Portfolio 80 People Excellence 82 Operational Excellence 84 Corporate Responsibility * The Siemens Corporate Structure is shown on the foldout inside the back cover. For over 160 years, Siemens has stood for tech- At a glance nical excellence, innovation, quality, re liability and internationality. In some 190 coun tries, we’re giving customers a competitive edge by supporting them with innovative technolo- gies and comprehensive know-how. Page 4 Leveraging the future-oriented technologies Products and and solutions of our three Sectors Industry, Energy and Healthcare, we’re answering the solutions toughest questions of our time. For instance, we offer a broad spectrum of products and solutions that benefit the environment and help combat climate change. Page 20 Our values – responsible, excellent, innova- Fit42010 tive – are the foundation of our Fit42010 pro- gram. Building on these values, we’re imple- menting a strategy to unleash our potential as an integrated technology company and achieve world-class performance. Page 70 At a glance Responsible Excellent Innovative Our values guide us in everything we do. For us, responsi- bility means managing the Company on the basis of the highest ethical standards and practices. We do not tolerate behavior that violates laws or regulations. A keen sense of responsibility pervades all levels of our corporate culture: The members of our Managing Board have clearly defined responsibilities. Our employees contribute to the development and welfare of the societies in which they work and live. Continuous and open dialogue with our investors fosters transparency in our entrepreneurial decisions. The ideas and solutions of our innovators play a vital role in our success. By upholding our responsibilities, we’re creating lasting value for our share- holders and customers while providing answers to the toughest questions of our time. Managing Board of Siemens AG Page 8. Our employees – A diverse, highly qualified teamPage 10. In dialogue with our investors Page 12. How Siemens innovators are mastering the challenges of the future Page 14. Pioneers in environmental protection Page 16. Interview with Chief Technology OfficerPage 19. 8 At a glance – Managing Board of Siemens AG Managing Board of Siemens AG Peter Y. Solmssen Siegfried Russwurm Barbara Kux Peter Löscher Corporate Legal Corporate Human Resources Supply Chain President and Chief and Compliance Management Executive Officer Corporate Development Americas Europe, Commonwealth of Global Shared Corporate Communications Independent States, Africa, Services and Government Affairs Middle East At a glance – Managing Board of Siemens AG 9 Joe Kaeser Heinrich Hiesinger Wolfgang Dehen Hermann Requardt Corporate Finance Industry Energy Healthcare and Controlling Siemens Financial Services Corporate Information Asia, Australia Corporate Technology Technology Siemens IT Solutions and Services Siemens Real Estate As of January 1, 2009 10 At a glance – Our employees Our employees – A diverse, highly qualified team As a global company, we’re continually recruiting and integrating the best and brightest people in all our markets. The ongoing transforma- tion of our employee structure reflects our aspiration to create and maintain a first-class workforce worldwide. Considering that we’re active in about 190 countries, it’s no wonder that we boast one of the world’s most diverse workforces: men and women from different nations, age groups and social backgrounds who represent a rich variety of ethnic backgrounds. In the world’s ten largest coun- tries alone, we employ people belonging to more than 140 nationalities. As well as reflecting our commitment to society, such diversity is good for business: providing an enormous reservoir of skills, experience and qualifications, it gives us tremendous competitive advantages in the global arena. Training activities in Germany As one of Germany’s largest private providers of vocational education, we’re currently training some 10,000 secondary school graduates – including 3,400 for external business partners. Every year, we invest roughly €150 million in these activities. In 2008, we provided around 2,500 new training and student intern positions, of which 250 were allocated to assist disadvantaged young people in acquiring valuable basic skills. We also provided 150 positions for students pursuing bachelor’s degrees in technical fields. And our commitment to youth is not restricted to Germany: about 2,700 young people worldwide are currently enrolled in Siemens apprenticeship programs. Employee qualifications Employee qualifications by region Vocational Unrelated University Regions training or qualifications or degrees apprenticeships no prior training University degrees 156,500 = 37% Europe, C.I.S., Africa 36% 42% 22% Vocational training or apprenticeships Germany 33% 48% 19% 132,200 = 31% Americas 31% 12% 57% Unrelated qualifications or no prior training U.S. 31% 8% 61% 138,300 = 32% Asia, Australia, Middle East 45% 19% 36% China 33% 31% 36% Scientists and engineers account for some 61 percent of all our Siemens 37% 31% 32% university-educated employees. At a glance – Our employees 11 Education – The key to success Only well-educated, highly motivated employees can create the innovations needed to answer the toughest questions of our time. In a globalized world marked by rapid technological change and steadily increasing flows of information, education is not only a key to personal success; it’s also the basis of our innovative strength. We’ve always been intensely committed to the training and education of our employees. In fiscal 2008, we invested €280 million in continuing education alone. In addition, we’re also supporting selected education projects for young people – from pre- school to university level – through our worldwide Generation21 program. For more information, see: www.siemens.com/generation21 New hires In fiscal 2008, our global workforce grew a solid seven percent. Worldwide, we hired around 74,600 new employees. Some 60 percent are employed in important fields like supply chain man- agement and development, and a quarter of these individuals are university graduates. Exceptional qualifications, combined with impressive diversity, are equipping our workforce to excel. Our 427,000 employees around the world made vital contributions to our success in fiscal 2008 – another reason why People Excellence is a key pillar of our Company-wide Fit42010 pro- gram (see page 80). Employees by region Age distribution by region Regions < 35 35 – 44 45 – 54 > 54 Europe, C.I.S., Africa 59% Germany 31% Europe, C.I.S., Africa 29% 31% 29% 11% Germany 24% 32% 32% 12% Americas 23% U.S.