Leading position through new technologies...Our market position in lamps, electronic ballasts, opto semiconductors! Market leader in the Americas! Strong Number 2 in the U.S., Latin

Leading position through new technologies

Dr. Wolf-Dieter BopstGroup President

Financial Market Days, May 12, 2003

2May 2003

When we think of a light source ...

This good old light bulb accounts for only 4% of our sales.

... we think of this ...

3May 2003

... and our children will think of this!

4May 2003

Agenda

Leading position through new technologies

! Strong performance despite a difficult environment

! Leading market position

! Global presence

! High-tech company in the lighting industry

! Operational excellence

! Achievements and goals

5May 2003

Key figures

in millions of euros HY 2003 HY 2002 FY 2002 FY 2001

Sales 2,186 2,237 4,363 4,522Volume (incl. structure) 11% (1%) 2% 3%Price (3%) (3%) (3%) (2%)Currency effects (10%) 0% (3%) 3%

Group profit 207 168 365 462% of sales 9.5 7.5 8.4 10.2

Net capital employed 2,188 2,642 2,436 2,471

Net cash 314 144 284 349from operating and investing activities

Capital spending 118 157 330 416% of sales 5.4 7.0 7.6 9.2

R&D expenses 102 108 219 217% of sales 4.7 4.8 5.0 4.8

Employees 35.2 36.1 35.3 37.3*(in thousands)

*comparable (including companies that were consolidated for the first time in FY 2002)

Strong performance

Leading market position

Global presence

High-tech company

Operational excellence

Achievements and goals

Strong

performance

6May 2003

Rigorous cost adjustments – also in personnel – even before the downturn.

Rapid response capabilities

*

**

*

* *102

*

**

**

10.39.6

9.0

7.0

7.99.5*

- 3.617

*

*

*

* *

+ 172

--

- 2.512

- 3.242

*- 672

*

9.1* *9.4

Q4 Q1 Q2

FY 2000 FY 2001 FY 2002 FY 2003

*103

*105

- 3.786- 3.982

* * *-3.999

106*

*9.5

106

102*

**

*

* *

105 105

102

*103

**

*

*

7.1

*

-

*

*

*

* *

*

*

*

*

*

* *

--

-

-

*-

9* *9

Sales(rolling 4-quarter average excludingcurrency effects)

Employee development(Sept. 30, 2000 = 0)

Group profit margin

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3

*

1.3631.988

Strong performance


Global presence

High-tech company



Strong

performance

7May 2003

Portfolio focused on lighting technologies

! Number 1 in lamps, electronicballasts, opto semiconductorsMarket shares: OSRAM 20%,Philips 20%, GE 13%

! Number 1� Automotive lamps� Electronic Ballasts

! Number 2� in lamp market� General Lighting� Photo/Optical Lighting� Opto Semiconductors1:

strongest position of big three in light emitting diodes (LED)

Precision Materials and Components

Opto Semiconductors

General Lighting

AutomotiveLighting

Photo/OpticalLighting

Electronic Ballastsand ConsumerLuminaires

Sales FY 2002 � �4.4 billion

55%

17%

4%

10%

7%

7%

Source: own estimates

1 Number 1: Nichia

Strong performance


Global presence

High-tech company




8May 2003

Strong presencein key global markets

Our market position in lamps, electronic ballasts, optosemiconductors

! Market leader in the Americas

! Strong Number 2 in the U.S., Latin America and Europe

! Number 4 in Asia-Pacific(Number 3 in Japan)

Americas

Other

Asia-Pacific

Europe

3%12%

35% 50%

Sales FY 2002 � �4.4 billion

Source: own estimates

Strong performance


Global presence

High-tech company




9May 2003

Strategies to further strengthenour position

Growth throughinnovation(High-tech company

in the lightingindustry)


Extension ofglobal presence(U.S., Asia-Pacific, Eastern Europe)

Leading world market position

Strong performance


Global presence

High-tech company




10May 2003

From a European companyto a global player

Sales by region 1990 and 2002

EuropeEurope

Germany

35%

11%

AmericasAmericas

43%

50%

OtherOther3%

U.S. Asia-PacificAsia-Pacific12%

77%

30%

20021990

4%

20021990

20021990

3%

16%

200219905%

Strong performance


Global presence

High-tech company



Global presence

11May 2003

Expansion by opening up new markets

! Formation of over 30 new companies in the last 12 years

! Acquisition of Sylvania* North America (1993)

! Establishing presence in Far East �currently 16 companies in 10 countries

! Two major acquisitions in Eastern Europe �Slovakia and Czech Republic

! Our goals � Number 1 in the U.S. in 2004 and increased market share in Asia-Pacific (China) and Eastern Europe (incl. Russia)

*OSRAM holds the worldwide rights to the name �SYLVANIA� for automotive lamps and precisionmaterials and components. In the general lighting product sector, OSRAM holds the rights to the name�SYLVANIA� in the U.S., Canada and Mexico, while SLI, Europe, holds the rights for all other countries.

We more than tripled global sales from € 1.4 billionin 1990 to € 4.4 billion in 2002 and nearly doubledmarket share (from 11% to 20%).

Strong performance


Global presence

High-tech company



Global presence

12May 2003

Success stories

! Greater China (production and sales locations in Foshan, Panyu , Shanghai, Hong Kong, Taiwan) � Basis for further expansionestablished. Sales generated in Greater China increased five-foldin the last 5 years to � 272 million in FY 2002.

! Japan � Number 1 of the big three, successful automotivebusiness (above-average growth of 14%), strong partnerships withMitsubishi and Toshiba

! Korea � Number 1 position

! U.S. � Strengthened Number 2 position

! Eastern Europe � Doubling sales in the last 5 years

Strong performance


Global presence

High-tech company



Global presence

13May 2003

Expected market development by region

2002 2007

Major growth in Asia-Pacific and Eastern Europe

(CAGR)

+ 6.8%

4%38%

34%

29%

4%

33%

30%

28%

�25.3 billion

�18.2 billion

+4.4

%+1

0.2%

+4.5%

+5.9%

(Eastern

Europe

+9.4%)

Europe

Americas

Asia-Pacific

Other

Figures do not include Precision Materials and Components, automotive lighting assemblies and consumer luminaires

Strong performance


Global presence

High-tech company



Global presence

14May 2003

+3.7%

+2.1%

Expected market development by segment

2002 2007

Opto Semiconductors

Electronic BallastsPhoto/Optic LightingAutomotive Lighting1

General Lighting

(CAGR)

Major growth in electronics

15%

9%4%

60%

12%

28%

12%4%

8%

48%

�25.3 billion

�18.2 billion

+17%

+8.1%

+ 6.8%

1excluding automotive lighting assemblies

+4.7%

Strong performance


Global presence

High-tech company



High-tech company

15May 2003

High innovation rates

! Continuous R&D investment � Prerequisite for innovative strength

! Innovative products � 40% of total sales

! Innovation, a trigger for above-average profitability in FY 2002

! Nearly 30% of sales generated with electronic ballasts, electronically operated lamps and opto semiconductorsGoal � Increase this share of electronics to about 50 percent in the medium term

! OSRAM, a high-tech company in the lighting industry � across all divisions

Strong performance


Global presence

High-tech company



High-tech company

16May 2003

General Lighting

! Number 2 position

! HY 2003 � Volume growth of 5%

! Trend toward better light quality � POWERBALL®

! Trend toward miniaturization � Slim new fluorescent lamps (T5), HALOPIN®, LED

! Trend toward increased efficiency � energy-saving halogen lamps (up to 45% less power consumption and 65% cost savings)

! Trend toward more environmentally friendly lampsMercury-free discharge lamps already available Goals � Develop mercury-free lighting systems and use lead-free glass

Strong performance


Global presence

High-tech company



High-tech company

17May 2003

Automotive lighting

! Number 1 position


! Outpacing competition with high innovation rate (e.g. sophisticated clean-room manufacturing technology for top-quality xenon headlamps required by OEM

! Now responsible for sale of LED for automotive applications. LED can be used for all automotive lighting purposes � evenheadlamps

! Offering system solutions (e.g. small-sized xenon headlamp withintegrated starters)

Strong performance


Global presence

High-tech company



High-tech company

18May 2003

Electronic Ballasts

! Number 1 position


! Combination with innovative lamps in one system to save energy(up to 30%), to extend lamp lifetime (+50%) and to provide high-quality light

! Required for peak performance by most innovative light sourcesSignificant growth potential

! Trend � Electronic ballasts will be digitally integrated in buildingmanagement systems

! Governmental initiatives in Europe and U.S. � Far-reaching ban on older conventional control gear in favor of electronic ballastsstarting in 2005

Strong performance


Global presence

High-tech company



High-tech company

19May 2003

Opto Semiconductors

! Number 2 position


! Division with strongest medium-term growth potential

! Strong commitment to this business segment � Fully-ownedsubsidiary Osram Opto Semiconductors

! LED used in an increasing number of areas requiringminiaturization, long service life and colored light

! Major growth opportunities in the automotive and communications sectors

! Lamp modules used primarily in traffic lights, railway signals and general lighting

! Improved brightness will open more markets in this decade �from general room lighting to car headlamps

Strong performance


Global presence

High-tech company



High-tech company

20May 2003

Opto Semiconductors

! April 7,2003 � Opening of most modern opto-chip factory in theworld in Regensburg, Germany

! New production facility for organic light-emitting diodes (OLED) in Penang, Malaysia � Luminescent plastic layers allow design of brilliant, extremely flat and bright displays with a broad viewingangle. Unlike LCD, no backlighting is required � Big advantage in mobile phones and cars. Rapid growth expected

! In the medium-term (i.e. up to 5 years) share of OptoSemiconductors in total sales expected to more than double OLED should account for about a quarter of division sales

Strong performance


Global presence

High-tech company



High-tech company

21May 2003

Strict managementof production costs

! Currently 50 cost-cut and 27 design-to-cost projects worldwide. Aggressive and early benchmarking with Chinese competitors

! Expansion and transfer of products to low-cost countries

! Eastern Europe � Transfer part of lamp component production from Germany and U.S. to Czech Republic, expand lamp production in Slovakia, further locations under consideration

Americas � Production in Mexico, Brazil and China for the American markets

Asia-Pacific � Expansion of production in China, India and Indonesia

! Global purchasing with focus on low-cost countries

Average productivity improvement of 5% p.a.

Strong performance


Global presence

High-tech company




22May 2003

In-house machine production

! Simultaneous engineering of products and manufacturing equipmentreduces costs and permits a quicker market entry for innovations

! In-house development of high-tech production processes protects againstcopying (very few independent manufacturers offer equipment forproduction of innovative lamps)

! Manufacturing of standard equipment in low-cost country (Slovakia) Only high-tech components in Germany and U.S.

! For standard products, rigorous make-or-buy management of equipmentvia permanent benchmarking

! Degree of automation and speed of line depend on local wage levels.

! Continuous improvement of in-house equipment leads to greater reliability, short changeover and down times, higher efficiency => advantages in manufacturing costs, quality and delivery service

Strong performance


Global presence

High-tech company




23May 2003

Efficient business processes

Project Europe 2005

! Anticipating the changing economic and political environment to become a pan-European company. Goals � Optimize customer orientation and cut distribution and administration costs by centralizing functions

! Standardizing and integrating structures and processes (e.g. common IT platform to simplify planning and procurement process)

! Rollout in Europe is continuing

! Know-how transfer to new Project Asia 2005

E-Business

! Solid approach from the start

! Stepped-up involvement in multi-company portals (Voltimum, lightxchange)

! Established extranet (www.myOSRAM.com, www.mySYLVANIA.com) focusing on B2B

! More than one-third of sales (more than half in the U.S.) are already processed via electronic media. Goal � 50% in the medium term

Strong performance


Global presence

High-tech company




24May 2003

Marketing strength

! Strong brands � OSRAM, SYLVANIA (North America), MITSUBISHI OSRAM (Japan)

! The only worldwide brand focused exclusively on lighting

! Global distribution network � 57 subsidiaries and sales offices for 96 countries, 50 additional countries supported by local agencies or OSRAM GmbH

! Traditionally close relationship with OEM channel (not in competition withluminaire manufacturers) � A great advantage for introduction of innovative products

! Strong long-term ties with trade channel (55% of sales)

! Top position in do-it-yourself segment because of innovative strength

! Worldwide contract with METRO Group

Strong performance


Global presence

High-tech company




25May 2003

Ongoing asset management activitiesfor strong cash generation

Strong performance


Global presence

High-tech company




FY 2001FY 2002HY 2002HY 2003

349

284

Net cash from operatingand investing activities

144

314

Fixed assets

! Focus capex on innovation (e.g. opto semiconductors) and productivity improvement

! Reduction capex by- increased outsourcing- maximizing capacity load (e.g.

machine running times andmachine efficiency)

! Transfer of production with highlabour content to low-cost countries

! Reduction of number of productionlocations

! Divestiture of non-core assets

Inventories

! Continue centralization of warehouses

! Supply Chain Managementimplemented

! Factory planning on weekly basis(synchronize with short-term salesforecast)

! Increase consignment stock

Receivables

! Proactive receivables management(introduction of process-orienteddispute management system)

! Elimination of pastdues fromcustomers

! Renegotiation of contractualpayment terms

Fixed assets

FY 2002 FY 2001

Turnover ratio 2.5 2.5

Inventories

FY 2002 FY 2001

5.7 5.2

Receivables

FY 2002 FY 2001

5.3 5.1

Ongoing activities

26May 2003

Achievements and Goals

Our achievements

! In 1990, OSRAM was Number 4 on the world market with an 11% marketshare. Today, we are a joint Number 1 with 20%. This extraordinary increaseis the result of a strong globalization initiative and the entrance into theopto semiconductor business. It required significant expenditure programsfor investment and modernization. Excluding depreciation, OSRAM achieved a margin of 15% in 2002.

Our goals

! Remain innovation driver

! Asset management goals to strengthen cash generation

! Number 1 in the U.S. in 2004 and increased market share in Asia-Pacific and Eastern Europe

! Number 1 in Opto Semiconductors

! Sole Number 1 in lamps, electronic ballasts and opto semiconductors

Strong performance


Global presence

High-tech company


Achievements and goalsAchievements and goals

27May 2003

Webpage: http://www.siemens.com Investor Relations e-mail: [email protected]: +49-89-636-32830

Marcus Desimoni +49-89-636-32445

Eckhard von Münchow +49-89-636-33173

Christina Schmöe +49-89-636-32677

Andreas Schwab +49-89-636-36165

Claudia Wagner +49-89-636-33693

Disclaimer:

This presentation contains forward-looking statements based on beliefs of Siemens' management. Such statements reflect the company's current views with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results to be materially different, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products, lack of acceptance of new products or services and changes in business strategy.Actual results may vary materially from those projected here. Siemens does not intend or assume any obligation to update these forward-looking statements.

Group profit definition:

Group profit is defined as earnings before financing interest, certain pensions costs, income taxes and certain one-time items, which do not relate to the business performance of the Groups. See "Financial Reports/Fiscal 2003, Quarter 2/Financial Statements" at our Investor Relations website under www.siemens.com

Siemens Investor Relations Team

Documents

Leading position through new technologies...Our market position in lamps, electronic ballasts, opto semiconductors! Market leader in the Americas! Strong Number 2 in the U.S., Latin