Siemens 2009 Annual Report Download - page 174

86
 Reports Supervisory Board /
Managing Board  Corporate Governance  Management’s discussion and analysis  Consolidated Financial Statements
44 Business and operating environment 63 Fiscal 2009 – Financial summary 66 Results of operations 84 Financial position
CREDIT RATINGS
A key factor in maintaining a strong financial profile is our
credit rating which is affected among other factors by the capi-
tal structure, the profitability, the ability to generate cash flow,
geographic and product diversification as well as our competi-
tive market position. Our current corporate credit ratings from
Moody ’s Investors Service and Standard & Poor’s are noted
below:
During fiscal 2009 Moody ’s Investors Service made no rating
changes. Moody ’s applied a long-term credit rating of “A1,”
outlook stable, on November 9, 2007. The rating classification
A is the third highest rating within the agency ’s debt ratings
category. The numerical modifier 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 direc-
tion of an issuer’s rating over the medium-term. Rating out-
looks fall into the following six categories: positive, negative,
stable, developing, ratings under review and no outlook.
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 financial 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 opin-
ion for us. The most recent credit opinion as of June 10, 2009
classified the liquidity profile as “very healthy.”
On June 5, 2009, Standard & Poor’s downgraded our corporate
long-term credit rating from AA– to A+. At the same time Stan-
dard & Poor’s revised its outlook from “negative” to “stable” and
announced that the rating action followed weaker cash flows
and a rising pension deficit. Within Standard & Poor’s ratings
definitions an obligation rated “A” has the third highest long-
term rating category. The modifier “+” indicates that our long-
term debt ranks in the upper end of the A category. The Stan-
dard & Poor’s rating outlook assesses the potential direction of
a long-term credit rating over the medium-term. Rating out-
looks fall into the following four categories: “positive,” ”nega-
tive,” ”stable” and “developing”. Furthermore, Standard &
Poor’s downgraded our corporate short-term credit rating from
“A-1+” to “A–1.” This is the second highest short-term rating
within the S&P rating scale.
We expect no significant impact on our funding costs as a con-
sequence of the downgrade by Standard & Poor’s.
(in millions of €)
September 30,
2009 2008
Short term debt 698 1,819
Plus: Long term debt
118,940 14,260
Less: Cash and cash equivalents (10,159) (6,893)
Less: Current available for sale financial assets (170) (152)
Net debt 9,309 9,034
Less: SFS Debt excluding internally purchased
receivables (9,521) (9,359)
Plus: Funded status pension plan 4,015 2,460
Plus: Funded status other post employment
benefits 646 650
Plus: Credit guarantees 313 480
Less: approx. 50% nominal amount hybrid bond (862) (901)
Less: Fair value hedge accounting adjustment
2(1,027) (180)
Adjusted industrial net debt 2,873 2,184
EBITDA (adjusted) (continuing operations) 9,219 5,585
Adjusted industrial net debt/EBITDA
(adjusted) (continuing operations) 0.31 0.39
1 Long term debt including fair value hedge accounting adjustment of €1,027 million
and €180 million for the fiscal year ended September 30, 2009 and 2008,
respectively.
2 The fair value hedge accounting adjustment has been included in fiscal 2009 in our
definition of adjusted industrial net debt and therefore the financial information
for the prior period in this table has been adjusted accordingly. The fair value hedge
accounting adjustment is representing the change in the fair value of derivatives
relating to fixed-rate long-term debt attributable to the interest rate risk being
hedged. We believe that deducting the fair value hedge accounting adjustment from
Net debt in addition to the adjustments presented above provides to investors more
meaningful information to our scheduled debt service obligations. For further
information on fair value hedges see “Notes to Consolidated Financial Statements.”
B25T024_E
Moody’s Investors
Service
Standard &
Poor’s
Long-term debt A1 A +
Short-term debt P-1 A –1
B25T025_E