APC 2002 Annual Report Download - page 47

Business review
46
had located and repaired approximately 14% of the 2.2 million
installed pushbuttons. The Group reserved a total of  18.3
million for the entire product recall program. At December 31,
2002, a reserve of  4.4 million remained to cover
replacement costs until the end of 2004, when the program
will expire. Part of this cost, not to exceed  3 million,
will be borne by the insurance companies.
VA Technologie AG, VA Tech T&D GmbH & COKEG
and VA Tech Schneider High Voltage GmbH have initiated
an arbitration procedure against Schneider Electric SA
and Schneider Electric Industries SAS in connection with
claims against the seller’s guarantee granted during the
creation of a high-voltage joint venture. Schneider Electric
considers that most of the claims covered by the arbitration
procedure are either time-barred or without any clearly
demonstrated legal basis.
Belgium has initiated proceedings against former Schneider
Electric executives in connection with the former Empain-
Schneider Group’s management of its Belgian subsidiaries.
The proceedings began in 1993, when SPEP (the Group
holding company at the time) launched public offers for its
Belgian subsidiaries Cofibel and Cofimines. Certain minority
shareholders filed suit. Schneider Electric is paying the legal
expenses not covered by insurance of the former executives
involved.
In connection with the divestment of Spie Batignolles,
Schneider Electric SA booked contingency reserves to cover
the risks associated with certain major contracts and projects.
Most of the risks were extinguished during 1997. Reserves for
the remaining risks were booked to cover management’s
estimate of the risk involved.
To the best of the Company’s knowledge, no other
exceptional event has occurred and no claims or litigation
are pending or in progress that are likely to have a material
adverse impact on the Group’s business, assets and liabilities,
financial position or results.
6 – Insurance
Schneider Electric has a pro-active risk management strategy
designed to defend the interests of employees and customers
and to protect the environment, the Company’s assets and its
shareholders’ investment.
This strategy entails:
Identifying and quantifying risk using different reporting
systems.
Preventing risks. Schneider Electric has always sought to
prevent major accidents at its industrial sites and has
reviewed its systems and procedures to reduce risk even
further. The new Triple A approach applied since January 1,
2003 aims to enhance processes to control and monitor risk
by identifying vulnerable areas and implementing appropriate
solutions to preserve the long-term sustainability of the
Company’s manufacturing resources and business.
This approach builds on preventive measures already in
place such as regular inspections, danger and vulnerability
studies, safety management for people and equipment and
security plans. The Company also has ongoing programs to
prevent traffic accidents and reduce transportation risk.
Organizing and deploying crisis management resources,
notably for technical risks and natural disasters.
Ensuring the necessary insurance cover. The main risks
facing Group companies (civil liability, property damage
and operating losses, environmental accidents, automobile
accidents and transportation risk) are covered by global
contracts with insurance and reinsurance companies of
good standing, with the same type of terms and limits
applied to companies of similar size.
In addition, Schneider Electric has taken out specific cover in
response to certain local conditions, regulations or the
requirements of certain risks, projects and businesses.