Siemens 2008 Annual Report Download - page 256

160 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
Consolidated Statements of Income
The recognized expense related to pension plans and similar commitments in the Consolidated Statements of
Income is referred to as net periodic benet cost (NPBC) and consists of several separately calculated and pre-
sented components. NPBC is regularly comprised of the service cost, which is the actuarial net present value
of the part of the DBO for the service rendered in the respective scal year; the interest cost for the expense
derived from the addition of accrued interest on the DBO at the end of the preceding scal year on the basis
of the identied discount rate; and the expected return on plan assets in the case of funded benet plans.
Past service cost is amortized on a straight-line basis over the average vesting period of the related benets.
In the Consolidated Statements of Income, interest cost and the income from the expected return on plan assets
are reported as part of Financial income, net. All other regular components of NPBC are allocated among func-
tional costs (Cost of goods sold and services rendered, Research and development expenses, Marketing, selling
and general administrative expenses), according to the function of the employee groups accruing benets.
In the Consolidated Statements of Income, NPBC expenses before income taxes for the Company’s principal
pension and other post-employment benets in scal 2008 aggregated to €293 compared to €461 in scal 2007.
Thereof €(16) and €112 related to discontinued operations in scal 2008 and 2007, respectively.
Consolidated Statements of Income and Expense recognized in Equity
Actuarial gains and losses, resulting for example from an adjustment of the discount rate or from a difference
between actual and expected return on plan assets, are recognized in the Consolidated Statements of Income
and Expense recognized in Equity in the year in which they occur. They are recorded in their entirety directly
in equity.
Consolidated Statements of Cash Flow
The Company makes payments directly to the participants in the case of unfunded benet plans and these pay-
ments 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 contributions result in net cash used in operating activities.
In the Consolidated Statements of Cash Flow, the Company’s principal pension and other post-employment
benets resulted in net cash used in operating activities of €631 in scal 2008, compared to €906 in scal 2007,
respectively.
Principal pension benets
The principal pension benet plans cover approximately 487,000 participants, including 193,000 active employ-
ees, 99,000 former employees with vested benets and 195,000 retirees and surviving dependents. Individual
benets are generally based on eligible compensation levels and/or ranking within the Company hierarchy and
years of service. Retirement benets under these plans vary depending on legal, scal and economic require-
ments in each country. The majority of Siemens’ active employees in Germany participate in a pension scheme
introduced in scal 2004, the BSAV (Beitragsorientierte Siemens Altersversorgung). The BSAV is a funded
dened benet pension plan whose benets are predominantly based on contributions made by the company
and returns earned on such contributions, subject to a minimum return guaranteed by the Company. The BSAV
is funded via the BSAV Trust. In connection with the implementation of the BSAV, benets provided under
dened benet pension plans funded via the Siemens German Pension Trust were modied to substantially
eliminate the effects of compensation increases.