Siemens 2006 Annual Report Download - page 129

Management’s discussion and analysis 125
Debt for Siemens at September 30, 2006 consisted of the following:
Our notes and bonds contain no specific financial covenants such as rating triggers or
interest coverage, leverage or capitalization ratios that could trigger a requirement for early
payment or additional collateral support.
Our Corporate Treasury has primary responsibility for raising funds in the capital markets
for the entire Company, including the Financing and Real Estate component, except in coun-
tries with conflicting capital market controls. In these countries, the relevant Siemens sub-
sidiary companies obtain financing primarily from local banks. Corporate Treasury lends
funds via intracompany financing to the Operations and Financing and Real Estate compo-
nents. This intracompany financing, together with intracompany liabilities between the com-
ponents, is shown under intracompany liabilities in the balance sheets. Under this approach,
at September 30, 2006, €9.415 billion of such intracompany financing was directly attributable
to the Financing and Real Estate component and the remainder to the Operations component.
At September 30, 2006, the Financing and Real Estate component additionally held €212 mil-
lion in short-term and €432 million in long-term debt from external sources.
In fiscal 2006, we issued two tranches of U.S. dollar-denominated bonds totaling $1.0 bil-
lion as well as four tranches of U.S. dollar-denominated notes totaling $5.0 billion. Further, in
fiscal 2006, we issued a hybrid bond in two tranches, one denominated in euros (€900 million)
and one denominated in British pounds (£750 million). Further information about the notes
and bonds is provided under “Capital Resources and Capital Requirements” as well as in the
“Notes to Consolidated Financial Statements.”
In fiscal 2006, Siemens redeemed the outstanding amount of €1.6 billion of the 5% euro-
denominated bond, which was due on July 4, 2006.
The capital structure of the Financing and Real Estate component at September 30, 2006
and 2005 consisted of the following:
Management’s discussion and analysis
Short- Long-
(€ in millions) Term Term Total
Notes and bonds 1,149 12,285 13,434
Loans from banks 659 342 1,001
Other financial indebtedness 314 508 822
Obligations under capital leases 53 264 317
Total debt 2,175 13,399 15,574
September 30, 2006 September 30, 2005
(€ in millions) SFS SRE SFS SRE
Assets 10,522 3,234 10,148 3,496
Allocated equity 1,131 920 983 920
Total debt 8,819 1,239 8,529 1,349
Therein intracompany financing 8,487 928 8,041 930
Therein debt from external sources 333 311 488 419
Debt to equity ratio 7.80 1.35 8.68 1.47