Siemens 2006 Annual Report Download - page 190

Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
186
Obligations under capital leases
As of September 30, 2006, the minimum lease payments under capital leases for the next five
years and thereafter are as follows:
21 Pension plans and similar commitments
Pension benefits provided by Siemens are currently organized primarily through defined ben-
efit pension plans which cover virtually all of the Company’s domestic employees and many of
the Company’s foreign employees. To reduce the risk exposure to Siemens arising from its
pension plans, the Company has implemented new plans whose benefits are predominantly
based on contributions made by the Company. In order to fund Siemens’ pension obligations,
the Company’s major pension plans are funded with assets in segregated pension entities.
Furthermore, the Company provides other postretirement benefits, which primarily consist of
transition payments to German employees after retirement as well as postretirement health
care and life insurance benefits to U.S. employees. These predominantly unfunded other
postretirement benefit plans are qualified as defined benefit plans under U.S. GAAP.
In addition to the above, the Company has foreign defined contribution plans for pensions
and other postretirement benefits. The recognition of a liability is not required because the
obligation of the Company is limited to the payment of the contributions into these plans.
Accounting for defined benefit plans
Consolidated Balance Sheets
Defined benefit plans determine the entitlements of their beneficiaries. The net present value
of the total fixed benefits for service already rendered is represented by the actuarially calcu-
lated accumulated benefit obligation (ABO).
An employee’s final benefit entitlement at regular retirement age may be higher than the
fixed benefits at the measurement date due to future compensation or benefit increases.
The net present value of this ultimate future benefit entitlement for service already rendered is
represented by the projected benefit obligation (PBO), which is actuarially calculated with
consideration for future compensation increases.
Fiscal year
2007 73
2008 68
2009 40
2010 37
2011 69
Thereafter 121
Minimum lease payment obligation 408
Less: unamortized interest expense (91)
Obligations under capital leases 317
Less: current portion (53)
264