Siemens 2010 Annual Report Download - page 166

6 To our shareholders 21 Corporate Governance 49 Combined management’s discussion and analysis
50 Business and operating environment
78 Fiscal  – Financial summary
81 Results of operations
98 Financial position
110 Net assets position
113 Overall assessment of the economic position

statistical rating organizations (NRSROs). Siemens does not
have any agreements with other nationally recognized statisti-
cal rating organizations to provide long-term and short-term
credit ratings.
We believe that our high credit rating for our long-term debt
applied by Moody ’s and Standard & Poor’s allows us to raise
funds in the capital markets at attractive conditions or to ob-
tain financing from banks with financial flexibility. A high
credit rating generally leads to lower credit spreads and there-
fore our rating also positively affects our funding costs. Secu-
rity ratings are not a recommendation to buy, sell or hold secu-
rities. Credit ratings may be subject to revision or withdrawal
by the rating agencies at any time and each rating should be
evaluated independently of any other rating.
CAPITAL STRUCTURE
As of September ,  and , our capital structure was
as follows:
(in millions of €)
September , % Change
 
Total equity attributable to
shareholders of Siemens AG 28,346 26,646 6%
As percentage of total capital 59% 58%
Short-term debt and current
maturities of long-term debt 2,416 698
Long-term debt 17,497 18,940
Total debt 19,913 19,638 1%
As percentage of total capital 41% 42%
Total capital
(total debt and total equity) 48,259 46,284 4%
In fiscal , total equity attributable to shareholders of
Siemens AG increased by % compared to fiscal . Total
debt increased by % during fiscal . This resulted in an in-
crease in total equity as a percentage of total capital to %
compared to % in fiscal . Accordingly, total debt as a
percentage of total capital decreased to % from % in the
prior year. For more detailed information on the change in total
equity and on the issuance and repayment of debt, see “Notes
to Consolidated Financial Statements,” “Net assets position”
and “ – Capital resources and requirements.”
We have commitments to sell or otherwise issue common
shares in connection with established share-based compensa-
tion plans. In fiscal , commitments for share-based com-
pensation were fulfilled through treasury shares. In fiscal ,
we may again fulfill commitments for share-based compensa-
tion through treasury shares. For additional information with
respect to share-based compensation and treasury shares, see
“Notes to Consolidated Financial Statements.”
As part of our Fit program, we decided to improve our
capital structure. A key consideration in this regard is mainte-
nance of ready access to the capital markets through various
debt products and preservation of our ability to repay and ser-
vice our debt obligations over time. We therefore set ourselves
a capital structure goal defined as Adjusted industrial net debt
divided by adjusted EBITDA. The calculation of Adjusted indus-
trial net debt is set forth in the table below. Adjusted EBITDA is
defined as adjusted earnings before income taxes (EBIT) before
amortization (defined as amortization and impairments of
intangible assets other than goodwill) and depreciation and
impairments of property, plant and equipment and goodwill.
Adjusted EBIT is defined as Income from continuing operations
before income taxes less Interest income (expense) less Other
financial income (expense), net as well as less Income (loss)
from investments accounted for using the equity method,
net. For further information see “Results of operations – Re-
conciliation to adjusted EBITDA.”
The target range for our capital structure ratio is . – . for
fiscal . We set this target based on normal business cycles,
before global recessionary conditions and the adverse effects
of the financial crisis. As a step toward achieving this target
range, we implemented our previously announced share buy-
back plan to repurchase up to € billion in shares through
. Since the start of the share buyback program on January
, , we have acquired a total of ,, Siemens
shares with a market value at the time of purchase of approxi-
mately €. billion in two tranches under this plan. These
shares could be used in a variety of ways, including but not
limited to cancellation and reduction of our capital stock and
to fulfill obligations arising out of share-based compensation
programs. During fiscal  and fiscal  we did not pur-
chase any shares under this program.