Siemens 2010 Annual Report Download - page 297

147 Consolidated Financial Statements
148 Consolidated Statements of Income
149 Consolidated Statements of Comprehensive Income
150 Consolidated Statements of Financial Position
151 Consolidated Statements of Cash Flow
152 Consolidated Statements of Changes in Equity
154 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated
and per share amounts)
261 Additional information

Commencing fiscal , infrastructure costs, currently re-
ported in Corporate items, will be allocated to the segments,
SRE and Centrally managed portfolio activities; costs for corpo-
rate management and corporate technology remain in Corpo-
rate items. Prior year amounts will be reported on a comparable
basis.
Eliminations, Corporate Treasury
and other reconciling items
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 inter-
est income and expense, such as, for example, interest not al-
located to segments or Centrally managed portfolio activities
(referred to as financing interest), interest related to Corporate
Treasury activities or resulting consolidation and reconciliation
effects on interest.
Measurement – Segments
Accounting policies for Segment Information are generally the
same as those used for Siemens, which are described in Note
. Lease transactions, however, are classified as operating
leases for internal and segment reporting purposes. Corporate
overhead is generally not allocated to segments. Intersegment
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
performance of the segments. The Company ’s profitability
measure of the Sectors, Equity Investments, and Siemens IT
Solutions and Services is earnings before financing interest,
certain pension costs, and income taxes (Profit) as determined
by the chief operating decision maker. Profit excludes various
categories of items, not allocated to the Sectors, Equity Invest-
ments, and Siemens IT Solutions and Services which Manage-
ment does not regard as indicative of their performance. For
fiscal , Company ’s management approved a special remu-
neration presented in Corporate items which will primarily be
allocated to the Sectors in fiscal . Profit represents a perfor-
mance measure focused on operational success excluding the
effects of capital market financing issues (for financing issues
regarding Equity Investments see paragraph below). 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. Equity Investments
include interest and impairments as well as reversals of impair-
ments on long-term loans granted to investments reported in
Equity Investments, primarily NSN.
Similarly, decision-making regarding essential pension items is
done centrally. As a consequence, Profit primarily includes
amounts related to service costs of pension plans only, while
all other regularly recurring pension related costs (including
charges for the German pension insurance association and
plan administration costs) are included in the line item Corpo-
rate items and pensions. Curtailments are a partial payback
with regard to past service costs that affect Segment Profit.
Furthermore, income taxes are excluded from Profit since in-
come tax is subject to legal structures, which typically do not
correspond to the structure of the segments.
The effect of certain litigation and compliance issues is ex-
cluded from Profit, if such items are not indicative of the Sec-
tors, Equity Investments, and Siemens IT Solutions and Ser-
vices’ performance, since their related results of operations
may be distorted by the amount and the irregular nature of
such events. This may also be the case for items that refer to
more than one reportable segment, SRE and / or Centrally man-
aged portfolio activities or have a corporate or central charac-
ter.
Profit of Equity Investments mainly comprises income (loss)
from investments presented in Equity Investments, such as
the share in the earnings of associates or dividends from in-
vestments not accounted for under the equity method, income
(loss) from the sale of interests in investments, impairment of
investments and reversals of impairments. It also includes in-
terest and impairments as well as reversals of impairments on
long-term loans granted to investments reported in Equity In-
vestments, primarily NSN.
Profit of the segment SFS:
Profit of the segment SFS is Income before income taxes. In
contrast to performance measurement principles applied to
the Sectors, Equity Investments, and Siemens IT Solutions and
Services, interest income and expense is an important source
of revenue and expense of SFS.