APC 2005 Annual Report Download - page 135

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133
8a) Contingencies
The amount allocated to provisions for contingencies
at end-2004 for the Pinglin contract was transferred to
the provision for impairment of receivables related to
the contract (see note 3).
A provision was set aside for stock option plan 24
because the exercise price is lower than the carrying
value of the related treasury shares.
Other contingencies correspond to risks transferred to
Schneider Electric in connection with divestments or
mergers (Spie Batignolles) which have not yet entire-
ly disappeared.
Management is confident that balance sheet provi-
sions for known disputes in which the Company is
involved are sufficient to ensure that these disputes do
not have a material impact on assets or income. In
particular, sufficient provisions have been set aside to
cover the potential consequences of a current dispute
in Belgium involving former senior executives and
managers of the Company.
8b) Pension accruals
The Company has various obligations towards its cur-
rent and retired senior executives and managers. Fol-
lowing an actuarial valuation performed in 2005, the
provision for these obligations was increased to 30.4
million. The negative impact of the adjustment to pro-
visions stemming from this actuarial valuation was
charged against retained earnings, in an amount of
10,428 thousand.
Note 9 - Bonds
Amount Interest rate Maturity
Dec. 31, 2004 Dec. 31, 2005
Schneider Electric SA 2007 450,000 450,000 6.125% fixed Oct. 19, 2007
Schneider Electric SA 2008 750,000 750,000 3.875% fixed Oct. 31, 2008
Schneider Electric SA 2010 - 900,000 3.125% fixed Aug. 11, 2010
Schneider Electric SA 2017 - 600,000 4.000% fixed Aug. 11, 2017
1,200,000 2,700,000
On August 11, 2005, Schneider Electric SA issued
1.5 billion worth of bonds. The issue comprises a
900 million five-year tranche at 3.125%, issued at a
price corresponding to 99.831% of par, and a 600
million twelve-year tranche at 4%, issued at a price
corresponding to 99.225% of par. These bonds are
traded on the Luxembourg stock exchange. The issue
premium and issue costs are amortized according to
the effective interest method.
On October 31, 2003, Schneider Electric SA issued
750 million worth of 3.875% bonds due October 31,
2008. The bonds were issued at a price corresponding
to 99.643% of par. These bonds are traded on the Lux-
embourg stock exchange.
On October 19 and 20, 2000, Schneider Electric SA
issued two tranches of 6.125% bonds due October 19,
2007, in principal amounts of 400 million and 50
million, respectively. The bonds were issued at a price
corresponding to 99.77% of par. These bonds are trad-
ed on the Luxembourg stock exchange.
Note 10 – Other borrowings
Other borrowings at December 31, 2005 comprised
only accrued interest on bonds issued by the Compa-
ny. Accrued interest rose to 30.7 million from 10.4
million at end-2004 following the issue of 1.5 billion
worth of bonds in 2005.
At December 31, 2004, this item also included com-
mercial paper issued on the market by Schneider
Electric SA on behalf of the Group in the amount of
60 million.
Note 11 – Deferred income
This item includes income from a swap taken out on a
750 million bond issue (see note 9). The income is
deferred over the life of the bonds.
Company Financial Statements