Siemens 2005 Annual Report Download - page 176

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Consolidated Statements of Cash Flow
The Company makes payments directly to the participants in the case of unfunded benefit plans
and the payments are included in net cash used in operating activities. For funded pension plans,
the participants are paid by the external pension fund and accordingly these payments are cash
neutral to the Company. In this case, the Company’s regular funding and supplemental cash con-
tributions result in net cash used in operating activities.
In the Consolidated Statements of Cash Flow, the Company’s principal pension and other
postretirement benefits resulted in net cash used in operating activities of €2,082 compared to
€1,828 in the previous fiscal year. The separately reported supplemental cash contributions to
pension trusts in fiscal 2005 and 2004 of €1,496 and €1,255, respectively, were included in these
amounts.
Principal pension benefits
The principal pension benefit plans cover approximately 526,000 participants, including 250,000
active employees, 93,000 former employees with vested benefits and 183,000 retirees and sur-
viving dependants. Individual benefits are generally based on eligible compensation levels
and/or ranking within the Company hierarchy and years of service. Retirement benefits under
these plans vary depending on legal, fiscal and economic requirements in each country.
In fiscal 2004, Siemens AG and the majority of its domestic affiliates implemented a new pen-
sion plan covering virtually all active employees in Germany, BSAV (Beitragsorientierte Siemens
Altersversorgung). These benefits are funded by the assets of a new trust. In connection with the
implementation of the BSAV, benefits provided under the pension plans funded via the Siemens
German Pension Trust have been modified to substantially eliminate the effects of compensation
increases. The elimination of the effects of compensation increases resulted in a decrease in the
PBO. Such decrease is treated as an unrecognized prior service benefit which is amortized over
the average remaining service period of the active employees. The pension plans funded via the
Siemens German Pension Trust and the BSAV are reported on a combined basis under domestic
pension plans.
In connection with the acquisition of VA Tech in fiscal 2005, the Company assumed material
pension plans in the UK and Austria which are included in the data for fiscal 2005.
The Company’s principal pension benefit plans are explicitly explained in the subsequent
sections with regard to:
■Pension obligations and funded status,
■Recognition of an additional minimum liability (AML),
■Components of NPPC,
■Assumptions for the calculation of the PBO and NPPC,
■Sensitivity analysis,
■Additional information concerning changes of the AML and the actual returns on plan assets,
■Plan assets,
■Pension plan funding, and
■Pension benefit payments.
Management’s discussion and analysis