Siemens 2008 Annual Report Download - page 273

Notes to Consolidated Financial Statements 177
(in millions of €, except where otherwise stated and per share amounts)
Standard & Poor’s rates Siemens’ 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 Siemens’ 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.
Siemens’ 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.
29 Commitments and contingencies
Guarantees and other commitments
The following table presents the undiscounted amount of maximum potential future payments for each major
group of guarantee:
Credit guarantees cover the nancial obligations of third parties in cases where Siemens is the vendor and/or
contractual partner. These guarantees generally provide that in the event of default or non-payment by the pri-
mary debtor, Siemens will be required to settle such nancial obligations. In addition, Siemens provides credit
guarantees generally as credit-line guarantees with variable utilization to joint ventures and associated and
related companies. The maximum amount of these guarantees is subject to the outstanding balance of the credit
or, in case where a credit line is subject to variable utilization, the nominal amount of the credit line. These
guarantees usually have terms of between one and ve years. Except for statutory recourse provisions against
the primary debtor, credit guarantees are generally not subject to additional contractual recourse provisions.
As of September 30, 2008 and 2007, the Company has accrued €23 and €13, respectively, relating to credit
guarantees.
Furthermore, Siemens issues Guarantees of third-party performance, which include performance bonds and
guarantees of advanced payments in cases where Siemens is the general or subsidiary partner in a consortium.
In the event of non-fulllment of contractual obligations by the consortium partner(s), Siemens will be required
to pay up to an agreed-upon maximum amount. These agreements span the term of the contract, typically rang-
ing from three months to seven years. Generally, consortium agreements provide for fallback guarantees as a
recourse provision among the consortium partners. No signicant liability has been recognized in connection
with these guarantees.
September 30,
2008 2007
Guarantees
Credit guarantees 480 386
Guarantees of third-party performance 1,726 1,995
Herkules obligations 3,890 4,200
Other 3,435 1,882
9,531 8,463