Siemens 2007 Annual Report Download - page 144

144 Management’s discussion and analysis
On November 9, 2007, Moody’s Investors Service downgraded Siemens’ long-
term corporate credit rating from Aa3 to A1 and set our outlook from “negative” to
“stable.” The rating action followed our announcements regarding the share-buy-
back program and capital structure target mentioned above. The rating classifi ca-
tion of A1 is the third highest rating within the agency’s debt ratings category. The
numerical modifi er 1 indicates that our long-term debt ranks in the higher end of
the A category. The Moody’s rating outlook is an opinion regarding the likely
direction of an issuer’s rating over the medium-term. Rating outlooks fall into the
following six categories: positive, negative, stable, developing, ratings under
review and no outlook.
Moody’s Investors Service’s rating for our short-term corporate credit and com-
mercial paper is P-1, the highest available rating in the prime rating system,
which assesses issuers’ ability to honor senior fi nancial obligations and contracts.
It applies to senior unsecured obligations with an original maturity of less than
one year.
In addition, Moody’s Investors Service published a credit opinion. The most
recent credit opinion for Siemens as of November 13, 2007 classifi ed the liquidity
profi le of the Company as “very healthy.”
Standard & Poor’s rates our long-term corporate credit AA– . On June 15, 2007
Standard & Poor’s resolved the “CreditWatch negative,” dated April 26, 2007 and
kept a “negative” outlook. Within Standard & Poor’s long-term issue and issuer
credit ratings, an obligation rated AA has the second highest rating category
assigned. The modifi er “ – ” indicates that our long-term debt ranks in the lower
end of the AA category. The Standard & Poor’s rating outlook is an opinion regard-
ing the likely direction of an issuer’s rating over the medium-term. Rating out-
looks fall into the following four categories: Positive, Negative, Stable and Devel-
oping. Outlooks have a time frame of typically two years. Ratings appear on
CreditWatch when an event or deviation from an expected trend has occurred or is
expected, and additional information is necessary to take a rating action. A rating
review will normally be completed within approximately 90 days, unless the out-
come of a specifi c event is pending.
Our short-term debt and commercial paper is rated A-1+ within Standard &
Poor’s short-term issue credit ratings, giving Siemens the highest-ranking short-
term rating.
Siemens has no other agreements with nationally recognized statistical rating
organizations to provide long-term and short-term credit ratings.