obligations as they mature or otherwise become due and payable or to fund our liquidity needs, this could materially
adversely affect our financial condition, results of operations and liquidity.
Credit ratings
On November 12, 2002, our Baa1 senior unsecured and Baa2 subordinated debt ratings were placed on review for
possible downgrade by Moody's. On January 17, 2003, Moody's downgraded our senior unsecured and subordinated debt
ratings two notches to Baa3 and Ba1 respectively. On January 24, 2003, S&P downgraded our long-term local issuer
credit and long-term foreign issuer credit rating from BBB+ to BBB with a stable outlook. After the announcements on
February 24, 2003, S&P downgraded our long-term foreign issuer credit and long-term local issuer credit two notches from
BBB to BB+ with a negative outlook and our short-term foreign issuer credit and short-term local issuer credit were
downgraded from A-2 to B. On the same day, Moody's placed all ratings of our credits on review for possible downgrade
and the following day downgraded our senior unsecured debt to B1 and subordinated notes to B2 and at the same time
assigned us a Ba3 senior implied rating. All ratings remain on review for possible downgrade. On May 8, 2003, S&P
downgraded our long-term foreign issuer credit and long-term local issuer credit each to BB-, and both remain on negative
outlook.
Our 2002 Credit Facility contained a step-up provision that increased the margin component of our interest costs. The
2003 Credit Facility also has a step-up provision that increases the margin for each ratings notch downgrade below Baa3
(Moody's) and BBB- (for S&P). In addition, although currently the costs associated with the sale of instruments under our
accounts receivable securitization programs are based on the A-1+/P-1 asset-backed commercial paper market, in the
event that the purchasers of these instruments refuse or are unable to fund the purchases with asset-backed paper, the
costs associated with the sale of interests to the alternative committed purchasers will be based on the sum of LIBOR and
an additional amount based on our then-current credit rating.
Additional downgrades by either S&P or Moody's could exacerbate our liquidity problems, increase our cost of borrowings,
including the refinancing of our existing debt, result in our being unable to secure new financing, affect our ability to
make payments on outstanding debt instruments and comply with other existing obligations. In addition, some of our
contractual obligations, including operating leases, contain ratings covenants.
Cash flows
In fiscal 2002, our net cash outflow, after operating, investing and financing activities, was EUR 611 million, compared
to a net cash inflow of EUR 459 million in fiscal 2001 and EUR 219 million in fiscal 2000. Net cash used for investing
activities was EUR 2.6 billion, EUR 4.6 billion and EUR 9.2 billion in fiscal 2002, fiscal 2001 and fiscal 2000,
respectively. In fiscal 2002, we had a net cash outflow of EUR 504 million relating to financing activities, compared to
a net cash inflow from financing activities of EUR 3.1 billion in fiscal 2001 and EUR 7.4 billion in fiscal 2000. Our total
debt was approximately EUR 12.9 billion, EUR 13.7 billion and EUR 11.6 billion at fiscal year-end 2002, fiscal year-end
2001 and fiscal year-end 2000, respectively.
We expect that our fiscal 2003 net cash flows from operating activities will be negatively impacted by the weakened
economy and increased competition in many of our operating areas, along with the diversion of our attention from
operations and strategic planning because of the accounting irregularities, errors and other issues that were announced
on February 24, 2003 and those found through the related forensic investigations and external and internal audits. For
additional information about factors that may affect our cash flows, please see "Outlook for Fiscal 2003" and "Results
of Operations" above in this section. However, we expect that cash flows from investing activities in fiscal 2003 will be
positively impacted by the reduction in our capital expenditures, along with the divestment of certain of the operations
within our portfolio, as discussed above. We anticipate that cash outflows from financing activities in fiscal 2003 will
be higher as a result of higher debt repayments and increased borrowing rates resulting from the February 24, 2003
announcement and related developments, including our credit ratings downgrades, as well as a greater amount of maturing
debt in fiscal 2003 as compared to fiscal 2002.
The following table summarizes the sources of our cash flows for the periods indicated:
Fiscal 2002 Fiscal 2001 Fiscal 2000
(in eur millions) (restated) (restated)
Cash flows from operating activities
2,486
1,961
2,063
Cash flows from investing activities
(2,593)
(4,565)
(9,197)
Cash flows from financing activities
(504)
3,063
7,353
Net change in cash
(611)
459
219
74
