Siemens 2008 Annual Report Download - page 175

Management’s discussion and analysis 79
Capital structure management
We adopted a new measure for capital structure management to complement our operational performance meas-
ures. We seek to optimize our capital structure so that we can better manage our debt-equity ratio while ensur-
ing both unrestricted access to debt nancing instruments in the capital markets and our ability to meet sched-
uled debt service obligations.
Following comprehensive analyses of competitive benchmarks, we calculate our capital structure measure as the
ratio of “adjusted industrial net debt” to “EBITDA (adjusted)”. For further information on this calculation, see
“Liquidity and capital resources.” We aim to achieve a ratio in the range of 0.8–1.0 by 2010.
In a move to achieve the target, we have announced the launching of a substantial share buyback plan in Novem-
ber 2007. For further information, see “Liquidity and capital resources” and “Notes to Consolidated Financial
Statements.”
Global SG&A program
We launched a global program for reducing selling, general and administrative expenses (SG&A) on January 1,
2008. It is targeted at improving the efciency in our corporate functions and regional companies as well as our
Sectors, Divisions and Cross-Sector Businesses. This program thus plays an important role in securing our com-
petitive position, particularly against the backdrop of a slowing economy. For further information regarding the
SG&A program, see “Business overview and economic environment.”
Capital structure (continuing operations)
Formula:
Adjusted industrial
net debt
=
EBITDA (adjusted)
Fiscal year 2007Fiscal year 2008
0.760.42
Target
corridor
2010:
0.8 – 1.0