Siemens 2008 Annual Report Download - page 179

Management’s discussion and analysis 83
Moody’s Investors Service’s rating for our short-term corporate credit and commercial paper is P-1, the highest
available rating in the prime rating system, which assesses issuers’ ability to honor senior 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 June 12, 2008 classied the liquidity pro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
modi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 regarding the likely direction of an issuer’s rating over the medium-term. Rating
outlooks fall into the following four categories: Positive, Negative, Stable and Developing. 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 outcome of a specic event is pending.
Our short-term debt and commercial paper is rated A–1+ within Standard & Poor’s short-term issue credit rat-
ings, 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.
Please be advised that security ratings are not a recommendation to buy, sell or hold securities. Credit ratings
may be subject to revision or withdrawal by the rating agencies at any time. Also considering the current deteri-
oration of capital markets, you should evaluate each rating independently of any other rating.
Cash Flow – Fiscal 2008 compared to fiscal 2007
The following discussion presents an analysis of Siemens’ cash ows for scal 2008 and 2007. The table below
presents cash ows for both continuing and discontinued operations. In the periods under review the latter cat-
egory includes SV, which was sold to Continental AG in scal 2008, as well as the former Com activities, includ-
ing the enterprise networks business, transferred into EN in scal 2008, and the carrier-related business which
was transferred into NSN in scal 2007. For further information on discontinued operations, see “Notes to Con-
solidated Financial Statements.”
Siemens reports Free cash ow as a performance measure, which is dened as “Net cash provided by (used in)
operating activities” less cash used for “Additions to intangible assets and property, plant and equipment.” We
believe this measure is helpful to our investors as an indicator of our ability to generate cash from operations
and to pay for discretionary and non-discretionary expenditures not included in the measure, such as dividends,
debt repayment or acquisitions. We also use Free cash ow to compare cash generation among the segments of
our business. For further information about this measure, refer to “Notes to Consolidated Financial Statements
– Segment information.”