Siemens 2005 Annual Report Download - page 224

Management’s discussion and analysis
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D
E
F
Accumulated benefit A measure to determine a company’s pension-related “additional minimum liability.” The ABO is
obligation (ABO) based on the same computational methodologies as the projected benefit obligation (PBO),
except for compensation levels. The ABO applies to past and current compensation levels. It
does not incorporate compensation increases.
American depositary Negotiable share certificates issued by major U.S. banks, related to non-American shares
receipts (ADRs) deposited with them. ADRs are generally issued in a ratio of 1:1.
Asset management The process of managing corporate assets in order to enhance operational efficiency while
minimizing costs and associated risks.
Benchmarking A technique used to compare the products, services, processes and financials within an
organization, in relation to “best of practice” in other similar organizations.
Business portfolio The aggregate total of business areas in which Siemens is active.
Captive finance unit A financial services unit organized as a business within an industrial enterprise that offers
financial solutions primarily to customers of the operating units of that enterprise.
Cash flow The net cash inflow or outflow for a specific time period.
Cash management The management of cash and cash equivalents within an organization to optimize financial
activities.
Commercial paper Short-term loan issued in the open market by companies with strong credit ratings. Maturities
typically range from 2 to 270 days.
Consolidated financial Financial statements that bring together all assets, liabilities, net worth, results of operations
statements and cash flows of two or more affiliated companies, as though the business were in fact a single
economic entity.
Corporate Treasury A corporate function responsible for ensuring the availability of company-wide financing and
cash management, including consulting services involving issues of corporate finance, interest
rates and currencies, liquidity management and all other questions related to the financial man-
agement of operations.
Cost of capital The rate that a company must pay for its capital.
Debt-to-equity ratio Total long-term debt divided by total shareholders’ equity.
Deferred taxes Assets and liabilities arising from the different treatment of transactions for financial and tax
reporting purposes.
Derivative A financial instrument that derives its value from the price or expected price of an underlying
asset (e.g. a security, currency or bond).
Discontinued operations A separate unit of an enterprise (clearly distinguishable from the rest of the entity) that has been
disposed of or is classified as held for sale, if the unit’s operations and cash flows are eliminated
from the ongoing operations and the ongoing operations will not have any significant continu-
ing involvement in the unit.
Equity method Valuation method used to account for interests in companies in which the investor has the abil-
ity to exercise significant influence over the investee’s operating and financial policies (associ-
ated companies).
EVA Abbreviation for “economic value added.” EVA equals net operating profit after taxes (NOPAT)
less a charge for capital employed in the business (cost of capital).
Expected long-term rate The average rate of earnings expected on plan assets.
of return on pension
plan assets
Financing and Real Estate The worldwide leasing, lending, financing and real estate activities of Siemens Financial Services
(SFS) and Siemens Real Estate (SRE).
Fully diluted Earnings per share are fully diluted when they reflect the effects of an assumed conversion or
the exercise of all potentially dilutive securities or stock options.
Functional costs Functional costs include cost of sales, R&D expenses, marketing and selling expenses, and gen-
eral administration expenses.
Funded status of The difference between a pension plan’s projected benefit obligation (PBO) and the fair market
a pension plan value of assets designated to the pension plan (plan assets) as of a specific date.
Glossary