Siemens 2009 Annual Report Download - page 265

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 Managing Board statements, Independent auditors’ report, Additional information
 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise
stated and per share amounts)
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.
 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 financial obligations of third par-
ties 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 primary debtor, Siemens will
be required to settle such financial obligations. In addition,
Siemens provides credit guarantees generally as credit-line
guarantees with variable utilization to joint ventures and as-
sociated and other companies (defined in Note 12). The maxi-
mum amount of these guarantees is subject to the outstand-
ing balance of the credit or, in case where a credit line is sub-
ject to variable utilization, the nominal amount of the credit
line. These guarantees usually have terms of between one and
five 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, 2009 and 2008, the Company accrued €11 and €23, respec-
tively, relating to credit guarantees.
In 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-
September ,  September , 
Moody’s
Investors
Service
Standard
& Poor’s
Moody’s
Investors
Service
Standard
& Poor’s
Long-term debt A1 A+ A1 A A–
Short-term debt P-1 A-1 P-1 A-1+
B27T078_E
September ,
 
Guarantees
Credit guarantees 313 480
Guarantees of third-party performance 1,092 1,726
HERKULES obligations 3,490 3,890
Other 2,253 3,435
7,148 9,531
B27T079_E