Siemens Healthcare Focus and deliver

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1 Siemens Healthcare Focus and deliver Erich R. Reinhardt, CEO Healthcare Capital Market Day Siemens Healthcare Munich, February 28, 2008 Page 1 February 28, 2008 Capital Market Day Siemens Healthcare

2 Safe Harbour Statement This document contains forward-looking statements and information that is, statements related to future, not past, events. These statements may be identified by words such as expects, looks forward to, anticipates, intends, plans, believes, seeks, estimates, will, project 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 our 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. For us, particular uncertainties arise, among others, from changes in general economic and business conditions (including margin developments in major business areas); the challenges of integrating major acquisitions and implementing joint ventures and other significant portfolio measures; 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; changes in business strategy; the outcome of pending investigations and legal proceedings, especially the corruption investigation we are currently subject to in Germany, the United States and elsewhere; the potential impact of such investigations and proceedings on our ongoing business including our relationships with governments and other customers; the potential impact of such matters on our financial statements; as well as various other factors. More detailed information about certain of these factors is contained throughout this report and in our other filings with the SEC, which are available on the Siemens website, and on the SEC's website, 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 forwardlooking 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. EBITDA (adjusted), Return on capital employed, Free cash flow, Cash conversion and Net debt are Non-GAAP financial measures. A reconciliation of these amounts to the most directly comparable IFRS financial measures is available on our Investor Relations website under Financial Publications, Quarterly Reports. 'Group profit from operations' is reconciled to 'Income before income taxes' of Operations under 'Reconciliation to financial statements' in the table 'Segment Information'. Page 2 February 28, 2008 Capital Market Day Siemens Healthcare

3 Page 3 February 28, 2008 Capital Market Day Siemens Healthcare What is on our mind?

4 Siemens Healthcare Sector Driving Profitable Growth Munich, February 28, 2008 Erich R. Reinhardt Page 4 February 28, 2008 Capital Market Day Siemens Healthcare What is on our mind?

5 Focus and Deliver Driving profitable growth and cash returns Getting the most out of the integrated diagnostics company Achieving best-in-class cost position incl. SG&A reduction Innovating for fast growth and competitiveness + Drive organic growth above market growth + Deliver target margin + Convert to cash Page 5 February 28, 2008 Capital Market Day Siemens Healthcare

6 Global organization aligned towards delivering financial results Siemens Healthcare + Drive organic growth above market growth + Deliver target margin + Convert to cash Target margin 2010: 14-17% Diagnostics Imaging & IT Workflow & Solutions Target margin 2010: 16-19% Target margin 2010: 14-17% Target margin 2010: 11-14% Page 6 February 28, 2008 Capital Market Day Siemens Healthcare

7 We have built a strong track record in business performance Healthcare sales & profit margin (reported) Highlights Profit Margin (IFRS): 11.7% With Diagnostics pro-forma With Diagnostics pro-rata Sales bn Organic sales growth % 12.0% % 13.2%* 15.0%** Margins increased despite dollar weakness and competitive environment through innovations. Headline revenue progression held back by dollar depreciation (growing above market due to best workflow solutions) Strategic portfolio expansion into IVD to form the world s first Integrated Diagnostic Company Significant acquisition effects 2007 with Diagnostics: PPA and one-time costs Productivity increase of ~ 8% p.a. on average Well balanced regional sales structure Others 10% Europe 34% * Excluding gain on sale in 10% stake in Dräger Medical (23) **Excluding PPA / one-time costs (OTCs) Diagnostics and USA gain on sale in 10% stake in Dräger Medical (23) 41% Page 7 February 28, 2008 Capital Market Day Siemens Healthcare Asia 15%

8 We are committed to reach our goals Organic growth above market growth Group Profit Target Margin Profit Margin: 14-17% Cash Conversion Rate 1 growth rate 5% 6% % 15.0% 1) FY06 FY07 FY06 FY07 FY06 FY07 Market growth 1) Excluding PPA and One Time Costs related to DPC, Bayer acquisition and gain on 10% stake in Dräger Medical (23) Page 8 February 28, 2008 Capital Market Day Siemens Healthcare

9 We hold #1 positions in each of our markets and will leverage the strategically best position Workflow-oriented IT Prevention and Early Detection Diagnosis In Vitro Diagnostics (IVD) In Vivo Diagnostics (Imaging) Therapy Care Diagnostics Imaging & IT Workflow & Solutions IVD Ultrasound Health- Care IT Comput. Tomogr. Magnetic Reson. Angio & X-ray Molecul. Imaging Women s Health Audio Oncol. Urology Surgery #1 #2 #3 Siemens Roche Abbott Siemens McK Cerner GE Siemens Tosh. Siemens GE Philips Siemens Philips GE Siemens GE Philips GE Philips Siemens Hologic GE Siemens Dornier SiemensStorz Siemens Demant Phonak Varian Elekta SiemensGE Siemens Philips #1 #1 #1 Page 9 February 28, 2008 Capital Market Day Siemens Healthcare

10 Trends in Healthcare determine our customers goals Market trends create demand and define... our customers goals Growing and aging population Emerging rural healthcare Cost pressure/varying reimbursements Disease orientation Patient education Increased demand for healthcare services Products for healthcare delivery in rural areas Solutions that reduce overall cost and/or grow top-line New applications and clinical pathways Patient-centered offerings and processes Increase efficiency/ productivity Ensure profitability Guarantee high quality of care Prevention and early Detection Diagnosis Therapy Care Page 10 February 28, 2008 Capital Market Day Siemens Healthcare

11 Our customers goals are our goals We help our customers to provide: high-quality and patient-centered care along the healthcare continuum with best processes and with proven outcomes To grow our business profitably as preferred partner we generate growth from workflow advantages and clinical excellence and turn best solutions into margin + Drive organic growth above market growth + Deliver target margin + Convert to cash Quality Cost of healthcare delivery Prevention and early Detection Diagnosis Therapy Care Page 11 February 28, 2008 Capital Market Day Siemens Healthcare

12 Our customers success is based on improving workflow Top 10 priorities by facility type in 2007 Hospitals in the United States Imaging centers Over 500 beds: beds: < 200 beds: 1. Improving workflow 2. Reimbursement Reimbursement 2. Improving workflow Reimbursement 2. Increasing procedure volume 3. Improving workflow 1. Increasing procedure volume 2. Improving workflow These institutions must become efficient along clinical, financial and operational dimensions Source: HealthImaging&IT, October 2007 (US market survey) Page 12 February 28, 2008 Capital Market Day Siemens Healthcare

13 Growing our business as we solve our customers specific workflow needs best Workflow-oriented IT Prevention and Early Detection Diagnosis In Vitro Diagnostics (IVD) In Vivo Diagnostics (Imaging) Therapy Care How can I accept more patients on my schedule to compensate for reimbursement cuts? Head of Radiology How can I get an increasing number of tests done before the rounds? Head of Laboratory How can I get all my services correctly invoiced and in time to the payor? CFO How can I ensure that all clinicians practice within our defined clinical pathways consistently? CMO How can I reduce inpatient days at fixed reimbursement and get my accreditation level? CEO Page 13 February 28, 2008 Capital Market Day Siemens Healthcare

14 Early Detection has clear financial and clinical benefits Example: Breast cancer Early detection increases survival rate and reduces treatment cost % alive 15 years after diagnosis Treatment cost ($000) 80% % 60% 50% 40% 30% 20% % 20 0% No cancer Stage 0 Stage I Stage II Stage III Stage IV 0 Survival by stage of diagnosis; American Cancer Society Page 14 February 28, 2008 Capital Market Day Siemens Healthcare

15 Siemens is the only diagnostics company offering a full portfolio Example: Breast cancer Prevention and Early Detection In Vitro Diagnostics (IVD) Diagnosis In Vivo Diagnostics (Imaging) Therapy Care Physical examination Genetic marker panel Mammography Assay sensitive to protein expression Mammography; sonography; breast MRI Molecular imaging PET CT, SPECT CT Molecular diagnostics for therapy selection Resection, imageguided radiation therapy, chemoand/or hormontherapy Physical examination DNA- and proteomic tumor markers I.e. imaging (e.g. liver sonography) Page 15 February 28, 2008 Capital Market Day Siemens Healthcare

16 The market requires workflow-oriented IT to reach highest productivity, clinical and financial results Workflow-oriented IT Prevention and Early Detection In Vitro Diagnostics (IVD) Diagnosis In Vivo Diagnostics (Imaging) Therapy Care Lab and radiology data for diagnosis and staging Quantitative result assessment of therapy outcome Orchestrated financial and clinical patient data Care guidance and follow-up orchestration Page 16 February 28, 2008 Capital Market Day Siemens Healthcare

17 Our customers decisions are both product and solution oriented Workflow-oriented IT Prevention and Early Detection In Vitro Diagnostics (IVD) Diagnosis In Vivo Diagnostics (Imaging) Therapy Care Automation Chemistry Blood gas Immuno-assay Magnetic Resonance Computed Tomography Molecular Imaging Radiography/Angiography Ultrasound Healthcare IT Oncology Cardiology Neurology Page 17 February 28, 2008 Capital Market Day Siemens Healthcare

18 Organization designed to focus on all business opportunities Siemens Healthcare Erich R. Reinhardt CFO Klaus Stegemann Diagnostics Jim Reid-Anderson Imaging & IT Bernd Montag Workflow & Solutions Tom Miller Automation Chemistry Blood gas Immuno-assay Magnetic Resonance Computed Tomography Molecular Imaging Radiography/Angiography Ultrasound Healthcare IT Oncology Cardiology Neurology Organization mirrors customer needs Page 18 February 28, 2008 Capital Market Day Siemens Healthcare

19 Growing and well diversified market 3-4% Diagnostics 5-6% 5-6% 5 5 Workflow & Solutions 5-6% 6-7% Imaging & IT 2-3% 5-6% (in billions, currency adjusted) Page 19 February 28, 2008 Capital Market Day Siemens Healthcare

20 US Market: Temporary effect on current spending US market currently weak Previous example: MRI in the 90 s DRA (1) currently slows down investments into new imaging systems Conclusion for healthcare provider Postponing capex Cost reduction Increasing # of patients to maintain top line ( workflow) US market likely to recover a year after elections (2) units CAGR 8% Example: global market [units] for magnetic resonance: CAGR ( 91-01): 8% despite US market decline around 94 (also based on reimbursement reductions) (1) DRA = Deficit Reduction Act (2) Current further uncertainties about future reimbursement changes in imaging lead to reluctance in capex decisions Page 20 February 28, 2008 Capital Market Day Siemens Healthcare

21 Growing faster than the market: Executing on the business model Attractive follow-on business New placement drives growing revenue stream Imaging Healthcare IT In-vitro diagnostics Year 1 new placement revenue Year 2-5 followon revenue + ++ Growing market share in placements is driving growth in the installed base and follow-on revenues Placement market share > installed base share = future growth Profitable market share growth in placements is prime lever Margin Margin + Page 21 February 28, 2008 Capital Market Day Siemens Healthcare

22 We leverage business drivers to spur organic growth Solving our customers workflow needs best. Innovations and workflow solutions provide financial, clinical and operational results. Opening up new markets and new customer groups Leveraging broad installation footprint and customer satisfaction for follow-on new sales and cross-selling + Drive organic growth above market growth Page 22 February 28, 2008 Capital Market Day Siemens Healthcare

23 We will grow our margin to 14-17% in 2010 Command higher margins for the unique solutions and innovations we bring to our customers time-to-market is critical Increase profit conversion by turning volume growth into margin growth - rigorous productivity, cost and synergy programs Expand profits by follow-on sales to a growing installed base + Drive organic growth above market growth + Deliver target margin Page 23 February 28, 2008 Capital Market Day Siemens Healthcare

24 We will generate cash as we grow Improve quality of earnings to better cash flow Make disciplined choices around capital investment opportunities Optimize working capital + Drive organic growth above market growth + Deliver target margin + Convert to cash Page 24 February 28, 2008 Capital Market Day Siemens Healthcare

25 Innovations and optimized workflow drives profitable organic growth Workflow-oriented IT Prevention and Early Detection In Vitro Diagnostics (IVD) Diagnosis In Vivo Diagnostics (Imaging) Therapy Care Market Share gain +500 bp bp +700 bp Computed Tomography Magnetic Resonance Interventional Radiology Page 25 February 28, 2008 Capital Market Day Siemens Healthcare

26 Creating mindshare by proven workflow results Solving key workflow needs Example of a US hospital (1) : Substantial improvement in key CMS (2) core measures in CHF Results exceed state averages significantly Technology helps enhance decision making, promote best practices and reduce variability Streamlined processes help to reduce cost 120% 100% 80% 60% 40% 20% 0% 23% 77% Discharge instruction Pre-workflow 63% 100% 98% 91% ACEI/ARBs LVSD Assessment Post-workflow (1) Chester County, 200+ bed hospital (2) Centers for Medicare and Medicaid Services Page 26 February 28, 2008 Capital Market Day Siemens Healthcare

27 We turn mindshare into market share: Growing number of Soarian contracts Many live locations, workflow implementation growing 174 modules live across customers 170 active implementations 135 Soarian workflows at 31 locations in active use number doubled in one year 34,000+ Soarian Clinicals users Great Q1 Soarian orders installed base conversion and new customers Growing number of contracted modules +22% p.a m$ 50 m$ 0 m$ Conversion Conversion Conversion New New New Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 IT orders have strong follow-on business Leading healthcare providers choose Soarian Page 27 February 28, 2008 Capital Market Day Siemens Healthcare

28 We grow above market growth in emerging markets Workflow-oriented IT Prevention and Early Detection In Vitro Diagnostics (IVD) Diagnosis In Vivo Diagnostics (Imaging) Therapy Care China (in RMB bn) Sales to Chinese customers +24% p.a. 3.2 India (in INR bn) Sales to Indian customers +17% p.a Market growth in China: CAGR 18% Market growth in India: CAGR 16% Page 28 February 28, 2008 Capital Market Day Siemens Healthcare

29 We enjoy an attractive innovation pipeline We open up new markets and win share Opening new markets by reaching visionary low price levels Leading technology at low cost Customer price significantly below $1m in the US (up to $500,000 savings) 1500 out of 3000 community hospitals have no or only mobile MRI service Market launch Nov 2007 General availability April 2008 MAGNETOM ESSENZA The most affordable, all-new 1.5T MRI 6% of global market (1) (Jan-Feb) (1) Market in units (orders) Page 29 February 28, 2008 Capital Market Day Siemens Healthcare

30 Rigorous productivity and cost program drives margin improvements MED productivity program Highlights bn Methodology successfully introduced as part of turnaround in 1990s 11% p.a. Productivity program is lifeblood of organization and key in driving profitable organic growth * * excl. DX Page 30 February 28, 2008 Capital Market Day Siemens Healthcare

31 We execute on a Low Cost Country Strategy Americas Europe (incl. GER) 40% 39% 41% 46% Employees (in thsd.) External Sales (in bn) Important Manufacturing Asia Pacific 19% 15% Status: September 30, 2007 Page 31 February 28, 2008 Capital Market Day Siemens Healthcare

32 We execute on a Low Cost Country Strategy Goals Europe (incl. GER) 40% 39% We leverage low cost country opportunities along the complete Americas value chain: Build R&D innovation strength 41% 46% 16.9 Utilize low cost position for manufacturing Attract talent pool 17.5 Tap into 4.5 local 10innovation potential and understand local clinical needs through research collaborations Employees (in thsd.) External Sales (in bn) Important Manufacturing Asia Pacific 19% 15% Status: September 30, 2007 Page 32 February 28, 2008 Capital Market Day Siemens Healthcare

33 We ensure first mover s advantage to build unique solutions that drive higher margins Healthcare IT Siemens: Shared Medical Systems Siemens: GSD Philips: Stentor Philips: Visicu GE: IDX Integrated in-vivo and in-vitro diagnostics Siemens: CTI Siemens: DPC Siemens: Bayer Dx Siemens: Dade GE: Amersham 1) Roche 2) : Life Sci. Roche: Igen 3) -BioVeris 3) - NimbleGen GE: Abbott Roche: Ventana ) Focus on imaging agents and life sciences business, but no clinical in vitro diagnostics 2) Focus on life sciences applications and integration of diagnostics & therapeutics development 3) Include on IP in ECL detection technologies, which Roche requires for its Immuno diagnostics business Page 33 February 28, 2008 Capital Market Day Siemens Healthcare

34 We created the world s leading diagnostics company Acquisition of DPC, Bayer, Dade Market leadership Dade Behring Fully integrated platforms; mid/low volume labs Market leader in customer service Siemens Roche bn 3.3 1) 3.2 Bayer Broad portfolio Lab automation Molecular Diagnostics High/mid volume labs Abbott Beckman Coulter OCD (J&J) DPC Leading position in immuno-diagnostics BioMerieux Olympus ) Merger agreement with Ventana announced 22 Jan 08 Ventana (2006 sales: $238m, 193m) Page 34 February 28, 2008 Capital Market Day Siemens Healthcare

35 Significant Synergies in Diagnostics are being realized Workflow-oriented IT Prevention and Early Detection In Vitro Diagnostics (IVD) Diagnosis In Vivo Diagnostics (Imaging) Therapy Care Cost and productivity measures 240m Synergies Identification of synergies well on track 260m Total: 500m Page 35 February 28, 2008 Capital Market Day Siemens Healthcare

36 IVD provides significant additional opportunities for Siemens Healthcare as a whole Workflow-oriented IT Prevention and Early Detection In Vitro Diagnostics (IVD) Diagnosis In Vivo Diagnostics (Imaging) Therapy Care Partner of choice Innovation leadership IT integration Grow market share and installed base Page 36 February 28, 2008 Capital Market Day Siemens Healthcare

37 Partner of choice Winning key institutions and lead market change I was really excited to learn about the Siemens acquisition of the IVD companies. Since industry sources report that 60 to 90% of all medical decisions are based on clinical laboratory and diagnostic modality testing, I believe this move continues to demonstrate Siemens commitment to the vision of integrated diagnostics. Furthermore, the addition of molecular science to our traditional studies and the power of smart clinical information is going to change medicine as we know it. With Siemens as our partner, we believe that we can reach our strategic, clinical, and IT goals. Fred Crowgey, MBA, M(ASCP) Project Director, IS PMO MedCentral Health System MedCentral Health System Largest medical community between Cleveland, Columbus; 351 beds, 2 hospitals, College of Nursing, urgent care center, 3 outreach labs, PainCare, Home Health Care & Hospice Page 37 February 28, 2008 Capital Market Day Siemens Healthcare

38 Innovation leadership drives new business opportunities In vitro diagnostics CA-IX (1) In vivo diagnostics Plasma and tissue (2) based CA-IX test to detect cancer Synergies Bio-medical expertise R&D resource alignment Sharing (pre-)clinical data Clinical trials Intellectual property PET CA-IX test (2) to localize the invasive tumors In Vitro Early detection of invasive tumors and metastases Diagnosis In Vivo Localization Tumor staging Treatment CA-IX targeted treatment Care Therapy monitoring Follow-up 1) Carbonic Anhydrase-IX is a biomarker indicative of invasive, often hypoxic tumors 2) In development Page 38 February 28, 2008 Capital Market Day Siemens Healthcare

39 IT integration enables new quality of clinical and financial results Lab information system Siemens ADVIA Centaur XP ASTM order & result Lab studies ordered to monitor treatment response/disease progression of metastatic breast cancer patient Soarian workflow management system continuously monitor and analyze information to identify critical results for physician follow-up Treatment spending controlled Treatment quality controlled Page 39 February 28, 2008 Capital Market Day Siemens Healthcare

40 Grow market share and installed base By leveraging our footprint Largest Korean laboratory customer Competitive conversion to Siemens in IVD based on Strong customer relationship in vivo diagnostics with Siemens Strong workflow automation Test vol.: 2m tubes/year 12m tests/year Sales amounts: 12m for 7 years Page 40 February 28, 2008 Capital Market Day Siemens Healthcare

41 Creating value based on best portfolio, synergies and leverage of first diagnostics company Margin expansion to 14-17% by 2010 by innovations, best in class cost position and growing installed base business Leveraging best portfolio within overall sector Healthcare Sector EVA in 2010 higher than level before Diagnostics acquistion Full realization of synergies within DX division Integration of IVD businesses Workflow-oriented IT Best portfolio in the industry: Prevention and Early Detection In Vitro Diagnostics (IVD) Diagnosis In Vivo Diagnostics (Imaging) Therapy Care Page 41 February 28, 2008 Capital Market Day Siemens Healthcare

42 Focus and deliver Driving profitable growth and cash returns Getting the most out of the integrated diagnostics company Achieving best-in-class cost position incl. SG&A reduction Innovating for fast growth and competitiveness + Drive organic growth above market growth + Deliver target margin + Convert to cash Page 42 February 28, 2008 Capital Market Day Siemens Healthcare

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44 Reconciliation and Definitions for Non-GAAP Measures (I) Group profit from Operations is reconciled to Income before income taxes of Operations under Reconciliation to financial statements on the table Segment Information. See our Financial Publications at our Investor Relations website under Earnings before interest and taxes (EBIT) (adjusted) is Income from continuing operations before income taxes less Financial income (expense), net and Income (loss) from investments accounted for using the equity method, net. Earnings before interest, taxes, depreciation and amortization (EBITDA) (adjusted) is EBIT before Depreciation and Amortization, defined as amortization and impairments of intangible assets depreciation and impairments of property, plant and equipment. Group profit is reconciled to EBIT and EBITDA on the table Segment Information Analysis (II). See our Financial Publications at our Investor Relations website under Return on Capital Employed (ROCE) is a measure of how capital invested in the Company or the Group yields competitive returns. For the Company, ROCE is calculated as Net income (before interest) divided by average Capital employed (CE). Net income (before interest) is defined as Net income excluding Other interest income (expense), net and excluding taxes on Other interest income (expense), net. Taxes on Other interest income (expense), net are calculated in simplified form by applying the current tax rate which can be derived from the Consolidated Statements of Income, to Other interest income (expense), net. CE is defined as Total equity plus Long-term debt plus Short-term debt and current maturities of long-term debt minus Cash and cash equivalents. Because Siemens reports discontinued operations, Siemens also calculates ROCE on a continuing operations basis, using Income from continuing operations rather than Net income. For purposes of this calculation, CE is adjusted by the net figure for Assets classified as held for disposal included in discontinued operations less Liabilities associated with assets classified as held for disposal included in discontinued operations. For the Operations Groups, ROCE is calculated as Group profit divided by average Net capital employed (NCE). Group profit for the Operations Groups is principally defined as earnings before financing interest, certain pension costs and income taxes. Group profit excludes various categories of items which are not allocated to the Groups since the Managing Board does not regard such items as indicative of the Groups performance. NCE for the Operations Groups is defined as total assets less tax assets, provisions and non-interest bearing liabilities other than tax liabilities. Average (Net) Capital employed for the fiscal year is calculated as a 'five-point average' obtained by averaging the (Net) Capital employed at the beginning of the first quarter plus the final figures for all four quarters of the fiscal year. For the calculation of the average during for the quarters, see below: Page 44 February 28, 2008 Capital Market Day Siemens Healthcare

45 Reconciliation and Definitions for Non-GAAP Measures (II) Average calculation for CE*: NCE for Operations Groups Year-to-Date Q1 2 Point average: (CE ending Q4 Prior year + CE ending Q1) / 2 Q2 3 Point average: (CE ending Q4 Prior year + CE ending Q1 + CE ending Q2) / 3 Q3 4 Point average: (CE ending Q4 Prior year + CE ending Q1 + CE ending Q2 + CE ending Q3) / 4 Quarter-to-Date Q1 2 Point average: (CE ending Q4 Prior year + CE ending Q1) / 2 Q2 2 Point average: (CE ending Q1 + CE ending Q2) / 2 Q3 2 Point average: (CE ending Q2 + CE ending Q3) / 2 Q4 2 Point average: (CE ending Q3 + CE ending Q4) / 2 Our cash target is based on the Cash Conversion Rate (CCR), which serves as a target indicator for the Company s or the Group s cash flow. For the Company, CCR is defined as the ratio of Free cash flow to Net income, where Free cash flow equals the Net cash provided by (used in) operating activities less Additions to intangible assets and property, plant and equipment. Because Siemens reports discontinued operations, this measure is also shown on a continuing operations basis, using Income from continuing operations, Net cash provided by (used in) operating activities continuing operations and Additions to intangible assets and property, plant and equipment for continuing operations for the calculation. For the Groups, CCR is defined as Free cash flow divided by Group profit. All values needed for the calculation of ROCE and CCR can be obtained from the Consolidated Financial Statements and Notes to Consolidated Financial Statements. Group profit, Net capital employed and Free cash flow for the Company and the Groups can be found on the table Segment information. Our Consolidated Financial Statements are available on our Investor Relations website under Siemens ties a portion of its executive incentive compensation to achieving economic value added (EVA) targets. EVA measures the profitability of a business (using Group profit for the Operating Groups and Income before income taxes for the Financing and Real estate businesses as a base) against the additional cost of capital used to run a business (using NCE for the Operating Groups and risk-adjusted equity for the Financing and Real estate businesses as a base). A positive EVA indicates that a business has earned more than its cost of capital, and is therefore defined as value-creating. A negative EVA indicates that a business is earning less than its cost of capital and is therefore defined as value-destroying. Other organizations that use EVA may define and calculate EVA differently. Page 45 February 28, 2008 Capital Market Day Siemens Healthcare

46 Reconciliation and Definitions for Non-GAAP Measures (III) Our capital structure target is based on an Adjusted industrial net debt divided by EBITDA (adjusted). For the calculation of Adjusted industrial net debt, we subtract from Net debt (defined as Long-term debt plus Short-term debt and current maturities of long-term debt less Cash and cash equivalents less Available-for-sale financial assets) (1) SFS debt excluding SFS internally purchased receivables and (2) 50% of the nominal amount of our hybrid bond; and add/subtract (3) Funded status of Pension benefits, (4) Funded status of Other post-employment benefits; and add (5) Credit guarantees. The components of Net debt are available on our Consolidated Balance Sheets, SFS debt less internally purchased receivables is available in our Management Discussion & Analysis under Capital Resources and Requirements. The Funded status of our principle pension plans and Other post-employment benefits, the amount of credit guarantees and the nominal amount of our Hybrid bond is available in the Notes to our Consolidated Financial Statements. To measure Siemens achievement of the goal to grow at twice the rate of global GDP, we use GDP on real basis (i.e. excluding inflation and currency translation effects) with data provided by Global Insight Inc. and compare those growth rates with growth rates of our revenue (under IFRS). In accordance with IFRS, our revenue numbers are not adjusted by inflation and currency translation effects. Return on equity (ROE) margin for SFS was calculated as SFS Income before income taxes divided by the allocated equity for SFS. Allocated equity for SFS for the financial year 2007 is billion. The allocated equity for SFS is determined and influenced by the respective credit ratings of the rating agencies and by the expected size and quality of its portfolio of leasing and factoring assets and equity investments and is determined annually. This allocation is designed to cover the risks of the underlying business and is in line with common credit risk management standards in banking. The actual risk profile of the SFS portfolio is monitored and controlled monthly and is evaluated against the allocated equity. Group profit from Operations, EBIT (adjusted), EBITDA (adjusted), ROCE, CCR, EVA and Adjusted industrial net debt are or may be Non-GAAP financial measures as defined in relevant rules of the U.S. Securities and Exchange Commission. Our management takes these measures, among others, into account in its management of our business, and for this reason we believe that investors may find it useful to consider these measures in their evaluation of our performance. None of Group profit from Operations, EBIT (adjusted), EBITDA (adjusted), ROCE and EVA should be viewed in isolation as an alternative to IFRS net income for purposes of evaluating our results of operations; CCR should not be viewed in isolation as an alternative to measures reported in our IFRS cash flow statement for purposes of evaluating our cash flows; and Adjusted industrial net debt should not be viewed in isolation as an alternative to liabilities reported in our IFRS balance sheet for purposes of evaluating our financial condition. Page 46 February 28, 2008 Capital Market Day Siemens Healthcare

47 Siemens Investor Relations Team Michael Sen Florian Flossmann Sabine Groß Dr. Martin Meyer Christof Schwab Dr. Gerd Venzl Susanne Wölfinger Webpage: Telephone: Fax: Page 47 February 28, 2008 Capital Market Day Siemens Healthcare