Siemens 2008 Annual Report Download - page 178

82 Management’s discussion and analysis
In scal 2008, we established a “Siemens Credit Warehouse” in order to increase transparency on credit risk and
centralize our credit risk management within Corporate Treasury. Siemens Credit Warehouse is managed by SFS
as operating service provider on behalf of Corporate Treasury. Over time our operating units will transfer their
current trade receivables, along with the inherent credit risk, to the Siemens Credit Warehouse but remain
responsible for servicing activities such as collections and receivables management. Siemens Credit Warehouse
will actively manage the credit risk in its portfolio, such as by selling or hedging exposure to specic customers,
countries and industries. It can also transfer the receivables to third parties through securitization structures
and thus tap an additional funding source for Siemens. As of September 30, 2008, OSRAM and Industry Automa-
tion had transferred receivables to Siemens Credit Warehouse. We expect that our other operating units will
follow within the next two years, with an initial emphasis on entities in Europe and North America.
Ratings
A key factor in maintaining a strong nancial prole is Siemens’ credit rating, which is affected by, among
other factors, the capital structure, the ability to generate cash ow, geographic and product diversi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:
On November 9, 2007, Moody’s Investors Service downgraded Siemens’ long-term corporate credit rating from
Aa3 to A1 and changed our outlook from “negative” to “stable.” The rating action followed our announcements
regarding the share-buyback plan and capital structure target mentioned above. The rating classication A is the
third highest rating within the agency’s debt ratings category. The numerical modi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.
September 30,
(€ in millions) 2008 2007
Short term debt 1,819 5,637
Plus: Long term debt 14,260 9,860
Less: Cash and cash equivalents (6,893) (4,005)
Less: Current available for sale nancial assets (152) (193)
Net debt 9,034 11,299
Less: SFS Debt excl. internally purchased receivables (9,359) (6,675)
Plus: Funded status pension plan 2,460 1,039
Plus: Funded status other post employment benets 650 779
Plus: Credit guarantees 480 386
Less: approx. 50% nominal amount hybrid bond (901) (1,000)
Adjusted industrial net debt 2,364 5,828
Moody’s
Investors
Service
Standard
& Poor’s
Long-term debt A1 AA–
Short-term debt P-1 A–1+