Technical Glossary


Commercial / General Glossary

Accruals
Liability items in the balance sheet. The purpose of accruals is to take into account demands for payment that are already identifiable at the balance sheet date but for which the amount and/or due date are still uncertain.

Aftermarket
Sale of products to independent market: in spare part business parallel with or following series production.

Asset-backed security (ABS)
In an asset-backed security transaction, a company sells parts of its receivables portfolio to a company, which, in turn, refinances itself by issuing marketable securities (asset-backed securities).

Base rate
An interest rate set by the central bank to be used as a basis for refinancing in the interbank money market and credit business with non-banks.

Best practice
Method for success: Anglo-American business term. When a company acts according to best practice, it uses proven, cost-effective processes, technical systems, and business processes, which make it an industrial model for others, at least in the major fields of activity.

BRIC countries
Acronym for Brazil, Russia, India, and China. These countries are generally regarded as major emerging growth markets.

Collective agreement
Umbrella term for works and labor agreements.

Consolidation group
Comprises the parent company and all subsidiaries and participations that must be considered in accordance with the regulations of the HGB on the date on which the consolidated financial statements are drawn up.

Due diligence process
This refers to the due diligence with which equity holdings or real estate are audited prior to their acquisition. It includes, in particular, a systematic analysis of strengths and weaknesses and an in-depth valuation of the equity holding or real estate. In addition, the risks connected with the purchase are analyzed. The audits cover, for example, balance sheets, human and material resources, strategic positioning, legal and financial risks, and environmental liabilities.

Emerging markets
Group of countries that are traditionally still regarded as developing countries but, because of their economic performance, no longer exhibit the typical characteristics of developing countries, yet cannot be classed among the industrialized countries. Therefore a separate term is used.

Executive Excellence Program (EEP)/
International Development Program (IDP)
MAHLE internal personnel development programs for executives.

First consolidation
First consideration of Group member companies in the balance sheet of the absorbing subsidiary (usually if holding exceeds 50%).

German Corporate Governance Code
Basic statutory standards for the management and for monitoring of German companies listed on the Stock Exchange corporate governance). It comprises internationally and nationally recognized standards of good and responsible corporate governance.

Gross domestic product (GDP)
Measure of the economic performance of a national economy during a specified period. It measures the value of the goods and services (added value) produced within the country, except those treated as intermediate consumption for the production of other goods and services.

Gross investments into fixed assets
They consist of the acquisition of new assets and the net of purchases and sales of used assets. The fixed assets include produced property, plant, and equipment (buildings, machines, vehicles, etc.) and produced intangible fixed assets (software, copyrights, etc.) that are used in the production process repeatedly or continuously for more than a year.

Investment ratio
Ratio of investments to consolidated sales.

Joint venture/majority joint venture
Business entity which is operated jointly by two or more companies on the basis of a cooperation agreement. In a majority joint venture, one company holds a higher percentage of the shares in the joint venture than the other partners.

Lead buyer concept
Concept in which one buyer is globally responsible for a certain material group.

Memorandum of Understanding
Document signed by the parties for a contract yet to be concluded, which establishes its key points. Normally, it is only a statement of intent without binding legal force.

NAFTA
Acronym for the free trade zone founded on January 1, 1994—North American Free Trade Agreement. Its members are the United States of America, Canada, and Mexico.

Organic growth
Part of the growth (of a company) resulting from internal forces and not from acquisitions.

Price adjustment clause
Contractual agreement in which the establishment of the final price to be paid is made dependent on the price development of certain cost elements (e.g., raw material prices, labor costs, etc.).

Profit center
Organizational subdivision for which the profit for the period is calculated separately. Profit centers usually operate as independent companies, with the aim of earning as high a profit as possible (profit responsibility).

Return on investment
Earning power calculated as the ratio of profit to fixed capital.

Synergy effects
Positive effect arising from the merger or collaboration of companies or the interaction of production factors.

Value-at-risk
Method for risk quantification. This is used to calculate the expected value of a loss that may occur, in the event of an unfavorable market.


Technical Glossary