Siemens 2007 Annual Report Download - page 143

Management’s discussion and analysis 143
Management’s discussion and analysis
The target range for our capital structure ratio is 0.8 – 1.0, to be achieved by
2010. As a step toward achieving this target range, we have announced a program
to repurchase up to €10 billion in Siemens shares over the next three years.
Beginning in fi scal 2008, we will establish a “Siemens Credit Warehouse” in
order to increase transparency on credit risk and centralize our credit risk man-
agement within Corporate Treasury. Siemens Credit Warehouse is managed by
SFS as operating service provider on behalf of Corporate Treasury. Our operating
units will transfer their current trade receivables including the inherent credit
risk to the Siemens Credit Warehouse but remain responsible for the servicing
such as collections and receivables management. Siemens Credit Warehouse will
actively manage credit risk in its portfolio, i.e. sell or hedge exposure to specifi c
customers, countries and industries. It can also transfer the receivables to third
parties through securitization structures and thus explore an additional funding
source for Siemens.
Ratings
A key factor in maintaining a strong fi nancial profi le is Siemens’ credit rating,
which is affected among other factors by the capital structure, the ability to gen-
erate cash fl ow, geographic and product diversifi cation, as well as our competitive
market position. Our current corporate credit ratings from Moody’s Investors
Service and Standard & Poor’s are noted below:
September 30,
(€ in millions) 2007 2006
Short term debt 5,637 2,175
Plus: Long term debt 9,860 13,122
Less: Cash and cash equivalents (4,005) (10,214)
Less: Current available for sale fi nancial assets (193) (596)
Net debt 11,299 4,487
Less: SFS Debt excl. internally purchased receivables (6,675) (6,058)
Plus: Funded status pension plan 1,039 2,941
Plus: Funded status other post employment benefi ts 779 842
Plus: Credit guarantees 386 666
Less: approx. 50% nominal amount hybrid bond (1,000) (1,000)
Adjusted industrial net debt 5,828 1,878
Moody’s
Investors
Service
Standard
& Poor’s
Long-term debt A1 AA –
Short-term debt P-1 A–1+