APC 2003 Annual Report Download - page 120

a) In 1998, the €381,313.2 thousand merger differ-
ence recognized on the 1997 merger of Merlin Gerin
and Telemecanique – two wholly-owned or substan-
tially wholly-owned subsidiaries – into Schneider
Electric SA, originally recorded under "Intangible
assets", was reclassified.
This difference, corresponding to the difference
between the historical cost of the Merlin Gerin and
Telemecanique shares in the accounts of Schneider
Electric SA and the book value of the two companies'
net assets, was primarily attributable to an interest in
Schneider Electric Industries SAS.
The 1997 merger difference has been added to the
historical cost of the Schneider Electric Industries
SAS portfolio in order to maintain continuity in the
valuation process. The difference, which is equivalent
to a fair value adjustment, is reported on a separate
line of the Portfolio Analysis.
The carrying value of the Schneider Electric
Industries SAS portfolio has been tested for impair-
ment at each year end since 1998, based on future
cash flows discounted over 10 years or a compara-
ble method. An impairment loss would be recognized
if discounted future cash flows represented less than
the cumulative historical cost of the Schneider
Electric Industries SAS portfolio, amounting to
€1.49 billion at December 31, 1997. At December
31, 2003, discounted future cash flows amounted to
at least €12 billion.
b) At December 31, 2003, Schneider Electric SA
held 4,772,907 shares in treasury stock, acquired at
a total cost of €224.4 million.
Note 3 : Allowances for
impairment in value of investments
Allowances for impairment in value are recorded or
adjusted at each year end based on a comparison
between the historical cost of investments and their
estimated fair value. Fair value corresponds to the
Company's equity in the underlying net assets plus
any unrealized gains. For recently-acquired invest-
ments, account is also taken of goodwill, the invest-
ment yield and the earnings outlook of the issuer. For
listed investments, fair value is also based on market
price. Unrealized gains on investments are not rec-
ognized.
Note 4 : Other receivables
Other receivables break down as follows:
1) Receivables taken
over from Spie Batignolles:
Receivables related to:
- the Pinglin contract 45,290.7
- the Speichim current account 2,972.9
Receivables on real
estate transactions 352.9
48,616.5
2) Tax receivables 111,826.0
Including:
- Carryback credits 97,005.3
- Income tax prepayments 13,124.6
3) Other receivables 1,565.1
Total 162,007.6
Note 5 : Prepaid expenses
Prepaid expenses include:
Prepaid operating expenses 215.6
Prepaid interest on
commercial paper and rate swaps 879.3
Total 1,094.9
Note 6 : Marketable securities
Marketable securities include:
Certificates of deposit
and mutual funds 24.5
Schneider Electric SA shares
purchased in connection with
the 14th Stock Option Plan and
to stabilize the share price 90,672.5
Total 90,697.0
Consolidated and Parent Company Financial Statements
118