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72
3.2 - Movements of the period
The main movements between December 31, 2003
and December 31, 2004 are summarized in the fol-
lowing table:
2004 2003
Net goodwill at January 1 3,512.8 3,371.9
Acquisitions 1,001.9 513.6
Disposals (6.3)
Reclassifications (92.0) (59.1)
Amortization for the year (217.1) (190.7)
Impact of exchange
rate fluctuations (121.6) (241.1)
Net goodwill
at December 31 4,077.7 3,512.8
Acquisitions primarily included Clipsal, MGE UPS
Systems, Andover Controls, Kavlico and minority
interests in Infra +.
The only disposal concerned the VA Tech Schneider
High Voltage GmbH joint venture, sold on June 18,
2004.
Goodwill recognized on the first-time consolidation of
TAC was reduced by 92 million following reclassifi-
cation of the TAC trademark in the same amount.
The main exchange rate fluctuations are due to good-
will related to Square D, Andover, Kavlico and TAC
Americas (all in US dollars), Clipsal (in Australian dol-
lars) and Elda SE (in Polish zlotys).
Goodwill was tested for impairment at December 31,
2004 using the discounted free cash flow method, as
described in note 1.10. No exceptional amortization
charge was recorded in 2004.
3.3 - Acquisitions
Clipsal goodwill
Clipsal was consolidated for the first time as of
January 1, 2004. The related goodwill has been cal-
culated on the basis of the financial statements at that
date.
All of Clipsal's businesses were covered by an agree-
ment with the Gerard family. Under this agreement:
Clipsal's Ultra Terminal business, retained by
Schneider Electric, was valued at 445 million (enter-
prise value). This includes adjustments to the initial
acquisition price of 11 million.
The Non Core Business activities, which were trans-
ferred back to the Gerard family, were valued at 149
million (enterprise value). This includes a 3 million
adjustment to the initial estimated value.
Clipsal's total net debt of 259 million was assumed
by Schneider Electric.
The total acquisition cost for Clipsal's Ultra Terminal
business came to 347 million, including acquisition
expenses of 12 million.
The acquisition was paid for in cash, for 165 million,
and through the transfer of the Non-Core Business
activites, for 149 million. The remaining 33 million
is being held in escrow for payment in 2007.
Goodwill arising on the first-time consolidation of
Clipsal has been determined as follows:
In millions In millions
of Australian of euros*
dollars
Acquisition price 583.8 347.5
Fair value of the assets
and liabilities acquired
Net assets acquired
at January 1, 2004 104.0 61.9
Fair value adjustments to
assets and liabilities acquired (114.5) (68.1)
Trademarks 254.6 151.5
Fair value of net assets
at January 1, 2004 244.1 145.3
Goodwill 339.7 202.2
*On the basis of the exchange rate on January 1, 2004:
AUD 1.00 =
0.595167
Infra + goodwill
Goodwill arising on the acquisition of additional
shares in Infra +, raising the Group's stake to 100%
from 38.1%, totalled a gross 29.3 million, as calcu-
lated on the basis of the financial statements at
January 1, 2004.