Siemens 2008 Annual Report Download - page 168

72 Management’s discussion and analysis
project nance business in scal 2007 also included gains on the sales of investments. Total assets as of Sep-
tember 30, 2008 increased signicantly to €11.328 billion compared to €8.912 billion at the prior year end,
primarily due to growth in the commercial nance business including asset purchases in secondary markets.
The following table provides further information on the capital structure of SFS as of September 30, 2008
and 2007:
Both Moody’s and Standard & Poor’s view SFS as a captive nance company. These ratings agencies generally
recognize and accept higher levels of debt attributable to captive nance subsidiaries in determining long-term
and short-term credit ratings.
The allocated equity for SFS is determined and inuenced by the size and quality of its portfolio of commercial
nance assets (primarily leases) and equity investments. This allocation is designed to cover the risks of the
underlying business and is oriented at common credit risk management standards in banking. The actual risk
prole of the SFS portfolio is evaluated and controlled monthly and is reected in the quarterly (commercial
nance) and annual (equity investments) adjustments of allocated equity.
Reconciliation to Consolidated Financial Statements
Reconciliation to Consolidated Financial Statements includes Other Operations, Siemens Real Estate (SRE) and
various categories of items which are not allocated to the Sectors and Cross-Sector Businesses because Manage-
ment has determined that such items are not indicative of the Sectors’ and Cross-Sector Businesses’ perfor-
mance.
Other Operations
Other Operations consist primarily of operating business activities not allocated to a Sector or Cross-Sector Busi-
nesses. Under the previously announced transformation program for Other Operations, by the end of scal 2009
all business activities are to be integrated into an existing Siemens Sector or Cross-Sector Business, divested,
moved to a joint venture, or closed. By the end of scal 2008, Siemens reached or concluded the implementation
phase for a majority of business activities. The loss from Other Operations increased to €367 million from €232
million a year earlier. A signicant factor in the change are transformation costs in the amount of €271 million
in the current period. These include expenses related to the divestment of a 50% stake in a building and infra-
structure business, including a goodwill impairment of €70 million, as well as costs related to the closure of
a regional payphone unit in Europe, primarily for severance. The divestment of SHC resulted in transformation
September 30,
(€ in millions) 2008 2007
Allocated equity 1,113 1,041
Total debt 9,359 7,081
Therein intragroup nancing 9,233 6,822
Therein debt from external sources 126 259
Debt to equity ratio 8.41 6.80
SFS internally purchased receivables – 406
SFS debt excluding SFS internally purchased receivables 9,359 6,675
Cash and cash equivalents 28 66