Siemens 2009 Annual Report Download - page 292

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 Reports Supervisory Board /
Managing Board  Corporate Governance  Management’s discussion and analysis  Consolidated Financial Statements
 Consolidated Statements of Income  Consolidated Statements of Income
and Expense Recognized in Equity
 Consolidated Balance Sheets  Consolidated Statements of Cash Flow
Beginning with the first quarter of fiscal 2010, segment infor-
mation will include a new line item, Centrally managed portfo-
lio activities, mainly comprising centrally managed activities
intended for divestment or closure as well as activities remain-
ing from previously divested businesses. The electronics as-
sembly systems business will be included in Centrally man-
aged portfolio activities.
Measurement – Segments
Accounting policies for Segment Information are generally
the same as those used for Siemens, which are described in
Note 2. Lease transactions, however, are classified as operat-
ing leases for internal and segment reporting purposes. Corpo-
rate overhead is generally not allocated to segments. Interseg-
ment transactions are based on market prices.
Profit of the Sectors, Equity Investments,
and Siemens IT Solutions and Services:
Siemens’ Managing Board is responsible for assessing the per-
formance of the segments. The Company ’s profitability mea-
sure for the Sectors, Equity Investments, and Siemens IT Solu-
tions and Services is earnings before financing interest, certain
pension costs, and income taxes (Profit) as determined by
Management as the chief operating decision maker. Profit ex-
cludes various categories of items, which are not allocated to
the Sectors, Equity Investments, and Siemens IT Solutions and
Services since Management does not regard such items as in-
dicative of their performance. Profit represents a performance
measure focused on operational success excluding the effects
of capital market financing issues. The major categories of
items excluded from Profit are presented below.
Financing interest, excluded from Profit, is any interest income
or expense other than interest income related to receivables
from customers, from cash allocated to the Sectors, Equity In-
vestments, and Siemens IT Solutions and Services and interest
expense on payables to suppliers. Financing interest is ex-
cluded from Profit because decision-making regarding financ-
ing is typically made at the Corporate level.
Siemens Financial Services (SFS)
SFS provides a variety of financial products and services both
to third parties and to other Siemens’ entities and their cus-
tomers.
Reconciliation to Consolidated Financial Statements
Reconciliation to Consolidated Financial Statements contains
businesses and items not directly related to Siemens’ report-
able segments:
Other Operations. Other Operations consist primarily of oper-
ating business activities not allocated to a Sector or Cross-Sec-
tor Business which are to be integrated into a Siemens Sector
or Cross-Sector Business, divested, moved to a joint venture, or
closed. Siemens completed these streamlining actions in the
fourth quarter and therefore will discontinue reporting Other
Operations in future periods.
Siemens Real Estate (SRE), which is no longer a segment, owns
and manages a substantial part of Siemens’ real estate portfo-
lio and offers a range of services encompassing real estate de-
velopment, real estate disposal and asset management, as
well as lease and services management. SRE started to bundle
additional real estate in the second half of fiscal 2009.
Corporate items and pensions include corporate charges such
as personnel costs for corporate headquarters, corporate proj-
ects and non-operating investments or results of corporate-re-
lated derivative activities. Pensions includes the Company ’s
pension related income (expense) not allocated to the seg-
ments, SRE or Other Operations.
Eliminations, Corporate Treasury and other reconciling items
comprise consolidation of transactions within the segments,
certain reconciliation and reclassification items and the activi-
ties of the Company ’s Corporate Treasury. It also includes in-
terest income and expense, such as, for example, interest not
allocated to segments or Other Operations (referred to as fi-
nancing interest), interest related to Corporate Treasury activi-
ties or resulting consolidation and reconciliation effects on in-
terest.