Siemens 2012 Annual Report Download - page 296

1 A. To our Shareholders 49 C. Combined Management Report 21 B. Corporate Governance

each particular settlement date of an instrument. The amounts
disclosed are undiscounted net cash outflows for the respec-
tive upcoming fiscal years, based on the earliest date on which
Siemens could be required to pay. Cash outflows for financial
liabilities (including interest) without fixed amount or timing
are based on the conditions existing at September , .
Year ended September ,
 
 to

 and
thereafter
(in millions of €)
Non-derivative
financial liabilities
Notes and bonds 2,712 2,030 8,296 8,456
Loans from banks 1,549 66 369 11
Other financial
indebtedness 265 9 44 1
Obligations under
finance leases 36 19 43 148
Trade payables 8,072 22 20 3
Other financial liabilities 1,017 39 353 6
Derivative
financial liabilities 469 181 244 193
Irrevocable loan
commitments 2,389 113 257 78
The risk implied from the values shown in the table above re-
flects the one-sided scenario of cash outflows only. Obliga-
tions under finance leases, trade payables and other financial
liabilities mainly originate from the financing of assets used in
Siemens’ ongoing operations such as property, plant, equip-
ment and investments in working capital – e.g. inventories
and trade receivables. These assets are considered in the Com-
pany ’s overall liquidity risk management. A considerable por-
tion of the irrevocable loan commitments result from asset-
based lending transactions meaning that the respective loans
can only be drawn after sufficient collateral has been provided
by the borrower. To monitor existing financial assets and liabil-
ities as well as to enable an effective controlling of future risks,
Siemens has established a comprehensive risk reporting cov-
ering its worldwide business units.
The balanced view of liquidity and financial indebtedness is
stated in the calculation of the Net debt. Net debt results from
total debt less total liquidity. Total debt comprises line item
Short-term debt and current maturities of long-term debt as
well as line item Long-term debt, as stated on the Consolidated
Statements of Financial Position. Total debt comprises items
Notes and bonds, Loans from banks, Obligations under finance
leases and Other financial indebtedness such as commercial
paper. Total liquidity refers to the liquid financial assets, which
Siemens had available at the respective period-end dates to
fund its business operations and to pay for near-term obliga-
tions. Total liquidity comprises line items Cash and cash
equivalents as well as line item Available-for-sale financial as-
sets, as stated on the Consolidated Statements of Financial Po-
sition. Management uses the Net debt measure for internal
corporate finance management, as well as for external com-
munication with investors, analysts and rating agencies.
September ,
(in millions of €)  
Short-term debt and current
maturities of long-term debt 3,826 3,660
Long-term debt 16,880 14,280
Total debt 20,707 17,940
Cash and cash equivalents (10,891) (12,468)
Available-for-sale financial assets (current) (524) (477)
Total liquidity (11,415) (12,945)
Net debt (Total debt less Total liquidity) 9,292 4,995
Siemens’ capital resources consist of a variety of short- and
long-term financial instruments including, but not limited to,
loans from financial institutions, commercial paper, notes and
bonds as well as credit facilities. In addition to cash and cash
equivalents and to available-for-sale financial assets, liquid re-
sources consist of future cash flows from operating activities.
Siemens’ capital requirements include, among others, sched-
uled debt service, regular capital spending, ongoing cash re-
quirements from operating and SFS financing activities, in-
cluding higher cash outflows related to the announced growth
strategy of SFS, dividend payments, pension plan funding,
portfolio activities, and cash outflows in connection with re-
structuring measures.
 
Credit risk is defined as an unexpected loss in cash and earn-
ings if the customer is unable to pay its obligations in due time
or if the value of collateral declines.
Siemens provides its customers with various forms of direct and
indirect financing particularly in connection with large projects.
Siemens finances a large number of smaller customer orders,
for example the leasing of medical equipment, in part through
SFS. SFS is also exposed to credit risk by financing third-party
equipment or by taking direct or indirect participations in fi-