Siemens 2010 Annual Report Download - page 165

113 Report on post-balance sheet date events
114 Report on expected developments and associated
material opportunities and risks
128 Information required pursuant to § () and
§ () HGB and explanatory report
133 Information required pursuant to § () and
§ () no.  HGB and explanatory report
135 Compensation and declaration pursuant to §a HGB
135 Additional information for supplemental
financial measures
138 Siemens AG (Discussion on basis of HGB)
147 Consolidated Financial Statements
261 Additional information

global level. Siemens strives to raise efficiency and transpar-
ency through a high level of standardization and continuous
advancement of payment processes. Where permissible, the
execution of intercompany and third party payments is effect-
ed centrally through group-wide tools with central controls to
ensure compliance with internal and external guidelines and
requirements. To ensure efficient management of Siemens’
funds, Corporate Treasury has established a central cash man-
agement approach: to the extent legally or economically fea-
sible, funds are pooled and managed centrally by Corporate
Treasury. Conversely, funding needs within the group are cov-
ered centrally by Corporate Treasury via intercompany current
accounts and / or loans.
Financial risk management
Investments of cash and cash equivalents are subject to credit
requirements and counterparty limits. Corporate Treasury
pools and centrally manages Siemens’ interest rate, certain
commodity and currency risk exposures and uses financial
derivative instruments in transactions with external financial
institutions to offset such concentrated exposures. For more
detailed information about financial risk management at
Siemens see “Notes to Consolidated Financial Statements.“
Management of pension plan funding
Siemens’ funding policy for its pension funds is part of its
overall commitment to sound financial management, which
includes a continuous analysis of the structure of its pension
liabilities. For more detailed information about Siemens’ pen-
sion plan funding see “– Pension Plan Funding.”
Capital structure management and credit rating
To effectively manage its capital structure, Siemens seeks to
maintain ready access to the capital markets through various
debt products and to preserve its ability to repay and service its
debt obligations over time. For more detailed information
about Siemens’ capital structure, see “– Capital Structure,” be-
low.
A key factor in maintaining a strong financial profile is our
credit rating which is affected by, among other factors, our
capital structure, profitability, 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 as
follows:
Moody’s Investors
Service
Standard &
Poor’s
Long-term debt A1 A +
Short-term debt P-1 A–1
During fiscal  Moody ’s Investors Service made no changes
in Siemens’ credit rating. Moody ’s applied a long-term credit
rating of “A,” outlook stable, on November , . The rating
classification A is the third highest rating within the agency ’s
debt ratings category. The numerical modifier  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, nega-
tive, 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-, 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 publishes credit opin-
ions relating to Siemens. The most recent credit opinion as of
June ,  classified our liquidity profile as “very healthy.”
During fiscal  Standard & Poor’s made no changes in
Siemens’ credit ratings. Standard & Poor’s applied a long-term
credit rating of “A+,” outlook stable, on June , . 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 Standard & Poor’s rating outlook assesses the
potential direction of a long-term credit rating over the medi-
um-term. Rating outlooks fall into the following four catego-
ries: “positive,” “negative,” ”stable” and “developing.” On June
, , Standard & Poor’s assigned “A-” for our corporate
short-term credit rating. This is the second highest short-term
rating within the Standard & Poor’s rating scale.
The U.S. Securities and Exchange Commission granted the
registration of Moody ’s Investors Services and Standard &
Poor’s Ratings Services the status of nationally recognized