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Building a New Electric World
Schneider Electric SA
Registration document
2006 annual
report

Table of contents

  • Page 1
    Schneider Electric SA 2006 annual report Registration document Building a New Electric World

  • Page 2

  • Page 3
    ... financial statements 169 170 172 174 3 General presentation of Schneider Electric SA 1 - General information 2 - Capital 3 - Ownership structure 4 - Employee profit sharing, stock ownership, stock option and stock grant plans 5 - Stock market data 6 - Investor relations 57 57 59 60 62 64 8 Annual...

  • Page 4
    2

  • Page 5
    ... and communication networks. By leveraging the deep commitment of its 105,000 team members in 106 countries, Schneider Electric gives the best of the New Electric World to everyone, everywhere, at any time. The Company's shares are traded on Eurolist by Euronextâ„¢ Paris. A signatory of the United...

  • Page 6
    ...? To start, a growing number of customers are turning to us to meet their needs for comfort, productivity, safety and energy efficiency. Second, we have exceptionally energetic teams, who are making growth happen. Third, we've expanded our lineup of products and services and developed new businesses...

  • Page 7
    ...grids in mature countries or developing them in emerging countries. At the same time, automation is showing up everywhere-in plants, offices, homes and even cars. A growing number of customers are turning to us to meet their needs for comfort, productivity, safety and energy efficiency. Jean-Pascal...

  • Page 8
    ... created a critical power and cooling services business unit that combines APC's resources with those of Schneider Electric subsidiary MGE UPS Systems. Their people have been brought together under a single management team. We confirm our synergy target of $220 million. If we meet this target-and we...

  • Page 9
    ... of APC will energize this business. In May 2006, Schneider Electric moved to a new governance system with a Management Board and a Supervisory Board of which you are Chairman. Are you satisfied with this organization? We started organizing my succession with the Board of Directors quite some time...

  • Page 10
    ...Asia-Pacific, Rest of the World, Eastern Europe. up 17.6% After two years of strong expansion, organic growth reached a record 10.7%. This performance reflects, in particular, the Group's growing presence in high-growth emerging countries and investments in promising new activities such as services...

  • Page 11
    ...2006, Schneider Electric actively pursued its strategy to increase its growth potential. Thanks to action plans deployed as part of the new2 company program, the Group energetically repositioned itself towards emerging markets and in new activities, with a focus on technological innovation. This new...

  • Page 12
    ... up 31% up 33% * Recommended for shareholder approval at the Annual Meeting of April 26, 2007. The dividend will be paid as from May 2, 2007. The Schneider Electric SA share vs. the CAC 40 index over 5 years (Thomson Financial data) Schneider Electric share 100 CAC 40 Index 97.05 80 75.35 84...

  • Page 13
    ... organization 8 Business Units. 4 Central Functions, including a new Strategy, Customers & Technology function. 4 Operating Divisions. Strengthened innovation resources New Innovation Department. Inauguration of Electropole in France, the leading global design and development center for power...

  • Page 14
    ...of Pirelli's international companies * Independent director, as defined in the Bouton report on corporate governance. The new corporate governance system is wellsuited to the challenges facing Schneider Electric today. Comprising a Supervisory Board and a Management Board, supported by an Executive...

  • Page 15
    ... Building Automation Business Unit 03 Laurent Vernerey Executive Vice President Critical Power & Cooling Services Business Unit 10 Russell Stocker Executive Vice President Asia-Pacific Operating Division 04 Claude Graff 11 Pierre Bouchut Member of the Management Board Chief Financial Officer...

  • Page 16
    14

  • Page 17
    ...refocusing and building on electricity In 1988, Schneider Electric acquired France's Telemecanique, a pioneer in remote control systems for electric motors. In 1991, the Group made a major acquisition in the United States, bringing in Square D, the US electrical equipment market leader with sales of...

  • Page 18
    ... for managing energy supply and consumption. Critical power and cooling services In 2004, Schneider Electric became the European leader in critical power with the acquisition of MGE UPS Systems in France. In October 2006, it made a friendly offer to purchase all outstanding shares of American Power...

  • Page 19
    ... and control, critical power and energy management systems, and automation everywhere. Less exposed to capital spending cycles, they have significant value-added services content and offer excellent prospects. New activities accounted for 42% of revenue in 2006 and have given Schneider Electric the...

  • Page 20
    ...electrical installation management and demand for value added services. Schneider Electric works closely with customers to get a thorough understanding of their applications and to help enhance productivity, flexibility, process safety and product traceability. The Group offers end-to-end electrical...

  • Page 21
    ... and systems for electrical distribution, automation and control.The Group has compiled data on its businesses through formal and informal contacts with industry professionals, especially trade associations. Schneider Electric estimates its market positions based on this data and actual revenue in...

  • Page 22
    ...low voltage equipment, and installation systems and control used in industrial and commercial buildings and homes. Asia-Pacific Rest of the World 27 % *Asia-Pacific, Rest of the world, Eastern Europe. The only player who complies with all national and international standards Schneider Electric is...

  • Page 23
    ... comprises speed drives, human-machine interface (HMI) terminals, supervision, control and data acquisition (SCADA) software, packaging machine automation systems and motion control solutions. Schneider Electric is also active in the fast-growing market for customized automation devices and sensors...

  • Page 24
    ... satisfaction. To enhance its team members' competencies, the Group has set up a sales and marketing institute within Schneider Electric University. More than 7,000 sales people and marketing specialists have attended institute programs over the past two years. Customers also have access to call...

  • Page 25
    ... and safety values, receive advanced technical and marketing support. Energy suppliers: local expectations There are some 11,000 electric companies around the world. They use Schneider Electric products and services in power generation (electricity for power plant equipment, automation and control...

  • Page 26
    ...* Services and projects Installation systems and control. 4 corporate divisions Strategy, Customers & Technology Finance Human Resources and Managerial Communication Globalization & Industry. 4 operating divisions European Operating Division North American Operating Division Asia-Pacific Operating...

  • Page 27
    ... leading power protection and control R&D center opens in Grenoble, France. More than 1,000 people work at Electropole, which offers 35,000 square meters of laboratories and design offices. February 2006: Launch of the Airlink lineup based on radio technology for installation and monitoring systems...

  • Page 28
    ... environmental protection and energy savings. Worldwide redeployment of production and supply chain resources Schneider Electric has more than 200 production sites, of which 45% manufacture for the global market. The other units are located as close as possible to their end markets. Although design...

  • Page 29
    ... at all levels of the organization. Schneider Electric has developed partnerships with prestigious business and engineering schools and targeted universities around the world. In 2006, it stepped up its programs with INSEAD in A global program to promote workplace health and safety Defined in 2005...

  • Page 30
    ... in detail by the business units, country organizations and corporate functions (Strategy, Finance, Legal Affairs and Human Resources) concerned under a rigorous internal process developed and led at Group level. A launch committee is responsible for initiating the review process to identify the...

  • Page 31
    ...who reports to a Steering Committee that initially meets at monthly intervals and then on a quarterly basis. The unit that presents the external growth project is accountable to Group senior management for meeting clearly defined business plan targets covering the performance of the new business and...

  • Page 32
    ..., payables and operating cash flows, which are generally hedged by means of forward sales. Depending on market conditions, risks in the main currencies may be hedged based on recurring forecast flows using contracts that expire in 12 months or less. The Group's currency hedging policy is to protect...

  • Page 33
    ...costs to customers, this could have an adverse impact on its financial results. The Group has, however, implemented certain procedures to limit its exposure to rising non-ferrous raw material prices. The purchasing departments of the operating units report their purchasing forecasts to the Corporate...

  • Page 34
    ...Insurance The Group's strategy for managing insurable risks is 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...

  • Page 35
    ... report on the operations of the Supervisory Board and internal control. A Management Board / Supervisory Board system To achieve a seamless transfer of powers to a new Chairman and support the ongoing implementation of the Group's growth strategy, at the Annual Shareholders' Meeting of May 3, 2006...

  • Page 36
    ...: 56 Business address: Capital Partners 40 rue de la Boétie - 75008 Paris, France 500 Schneider Electric shares First elected: 2005 / Current term ends: 2010 Other directorships and functions in French or foreign companies Currently: Member of the Supervisory Boards of Schneider Electric and the...

  • Page 37
    ...ère* Age: 63 Business address: Fédération Française des Sociétés d'Assurances 26 Boulevard Haussmann 75008 Paris, France 1,606 Schneider Electric shares First elected: 1998 / Current term ends: 2010 man of the Board of Directors of Tawa UK Ltd (London); Chairman and Chief Executive Officer of...

  • Page 38
    ... Officer from 1998 to 2002. Cathy Kopp * Age: 58 Business address: Accor 33 Avenue du Maine - 75015 Paris, France 250 Schneider Electric shares First elected: 2005 / Current term ends: 2010 Other directorships and functions in French or foreign companies Currently: Member of the Supervisory Boards...

  • Page 39
    ... member Claude Bébéar Age: 71 Business Address: AXA 25 Avenue Matignon, 75008 Paris, France 250 Schneider Electric shares First elected: 2004 / Current term ends: 2010 Other directorships and functions in French or foreign companies Currently: Member of the Supervisory Board of Schneider Electric...

  • Page 40
    ...Company's shares. Article 3 defines the procedures for organizing and conducting Board meetings (notice of meeting, methods of participation, minutes, etc.). Article 4 defines the role and powers of the Supervisory Board's Chairman. The Chairman leads the work of the Board and is regularly informed...

  • Page 41
    ... management prior to Board meetings. New members attend training and information sessions dealing with the Company's strategy and businesses. Schneider Electric has adopted a code of ethics for Supervisory Board members and employees designed to prevent insider trading. Under the terms of this code...

  • Page 42
    ... Schneider Electric Industries SAS were adopted under the procedure applicable to related party agreements. The Supervisory Board conducted an in-depth review of the Company's strategy in a one-day meeting devoted entirely to this topic, held at the Electropole R&D center in Grenoble. At the close...

  • Page 43
    ... management issues. In line with these terms of reference, it: Prepares the Supervisory Board's review of the annual and interim financial statements presented by the Management Board, in particular by: - Ensuring that accounting policies used to prepare the consolidated and parent company financial...

  • Page 44
    ... Age: 43 Business address: Schneider Electric 43-45 bd Franklin Roosevelt - 92500 Rueil Malmaison, France 2,580 (1) Schneider Electric shares First elected: 2006 / Current term ends: 2009 Other directorships and functions in French or foreign companies Currently: Chairman of the Management Board of...

  • Page 45
    ... 52 Business address: Schneider Electric 43-45 bd Franklin Roosevelt - 92500 Rueil Malmaison, France 42,000 Schneider Electric shares First elected: 2006 / Current term ends: 2009 Other directorships and functions in French or foreign companies Currently: Member of the Management Board of Schneider...

  • Page 46
    ... that statutory and management accounting data presented to the Supervisory Board and Management Board of Schneider Electric SA and Group senior management present fairly the sales, results of operations and financial position of the Group. No system of internal control designed to fulfill the...

  • Page 47
    .... In light of Schneider Electric's core businesses, internal audits focus mainly on revenue recognition and contracts, cash and asset management processes, wages and benefits, financial reporting, information systems, manufacturing operations, purchasing and operating expenses. The internal...

  • Page 48
    ...the main action plans in the areas of business growth, operational efficiency and human capital management, as well as year-to-date results and forecasts for the remaining quarters. Monthly management reporting Group senior management holds monthly meetings to review the monthly management accounts...

  • Page 49
    ... and management reporting systems have been developed to guarantee the completeness of transaction data recorded in the accounts. Each subsidiary is responsible for implementing procedures providing an adequate level of internal control. Operating Division management teams assist the units in...

  • Page 50
    ...are reviewed and analyzed when the company joins the Group. Financial guarantees are issued by the Finance & Control - Legal Affairs Department. A consolidated statement of off-balance sheet commitments is produced at six-month intervals by the Corporate Management Control and Accounting unit, which...

  • Page 51
    ...-acquired businesses in the Group reporting process. An intercompany reconciliation procedure manual. Account closing instructions. 2 The accounting and reporting system The Corporate Management Control and Accounting unit of the Finance & Control - Legal Affairs Department has launched a project...

  • Page 52
    ... in terms of operating margin, organic growth and return on capital employed. 40% depends on the attainment of measurable personal performance targets set by the Supervisory Board (previously the Board of Directors). Senior management may also be granted stock options. The main characteristics...

  • Page 53
    ... 2006). The options are granted at an exercise price that does not include any discount to the Schneider Electric SA share price at the time of grant. Half of the options (performance options) vest only if certain targets are met (value creation, sales or operating margin). The Supervisory Board...

  • Page 54
    ... to set the annual salary of the Chairman of the Management Board at â,¬600,000 and his target variable bonus at 100% of this amount, with a maximum of 200%. Sixty percent of his bonus is based on Group performance targets in terms of operating profit, organic growth and return on capital employed...

  • Page 55
    ...Globalization & Industry and Executive Vice President, Strategy, Customers & Technology, Services & Projects Business Unit The Executive Vice Presidents of the Power, Automation, Secured Power and Building Automation Business Units. The Executive Vice President, Human Resources. Compensation In 2006...

  • Page 56
    ... purchase Sale of financial instruments Share purchase Exercise of options Exercise of options Share sale Share purchase 10. Regulated agreements At its meeting of January 6, 2006, the Board of Directors authorized the signature of a shareholders' agreement between AXA and Schneider Electric SA...

  • Page 57
    ... or by the Chief Financial Officer. 12. Shareholders' rights and obligations Annual Shareholders' Meetings (article 18 of the bylaws) All shareholders are entitled to attend Annual Meetings, regardless of the number of shares held. The notice of meeting is sent directly by the Company to holders of...

  • Page 58
    ... Code) directly or indirectly, shares or voting rights representing at least 0.5% of the total number of shares or voting rights outstanding, or a multiple thereof, is required to disclose said interest to the Company by registered letter with return receipt requested, within five trading days...

  • Page 59
    ... profit sharing, stock ownership, stock option and stock grant plans ...5. Stock market data ...6. Investor relations ... p. 60 p. 62 p. 64 1. General information Schneider Electric SA is a Société Anonyme (jointstock corporation) governed by the French Commercial Code, with issued capital of...

  • Page 60
    ... the Annual Shareholders' Meeting of May 3, 2006: Authorization to issue new shares to members of the Employee Stock Purchase Plan, within a limit of 5% of the Company's share capital over 5 years. Authorization to issue new shares to entities set up to purchase shares of the Company under programs...

  • Page 61
    ...2006 authorized the Management Board to buy back shares on the open market. Pursuant to this authorization, the Company set up a liquidity contract with a broker, under which the broker purchased 2,292,219 shares at an average unit price of â,¬85.29 and sold 2,172,219 shares at an average unit price...

  • Page 62
    ... Company's issued capital at December 31, 2006. As of December 31, 2006, employees held a total of 7,029,981 Schneider Electric SA shares through the corporate mutual funds or directly, representing 3.09% of the capital and 5.22% of the voting rights, taking into account double voting rights. Stock...

  • Page 63
    ... Exercise price (in â,¬) Expiry date 138,300 282,900 82.14 54.11(1) 2016 NA 3 Stock grants made to the top ten employees during the year Number of shares Grants made in 2006 to the top ten employee grantees (not including corporate officers) Plan 1 Stock option plan details Plan no. Plan date...

  • Page 64
    General presentation of Schneider Electric SA Stock grant plan details Plan no. Plan date Type (1) Expiration date Price in euros Number of options outstanding (2) Options granted to corporate officers (2) Options exercised in 2006 Options cancelled in 2006 Number of options outstanding at ...

  • Page 65
    ... March April May June July August September October November December Total 2006 2007 January February (1) During the trading session. The Schneider Electric SA share vs. the CAC 40 index over 5 years (Thomson Financial data) Schneider Electric share 100 CAC 40 Index 97.05 80 75.35 84...

  • Page 66
    ... Board, Chief Financial Officer 43-45, boulevard Franklin-Roosevelt 92500 Rueil-Malmaison - France Phone: +33 (0)1 41 29 71 34 A Shareholders' Letter (three times a year). General, economic and financial information (presentations, press releases). A corporate website (www.schneider-electric...

  • Page 67
    ...GET in the United Kingdom; and Clipsal Asia. Full-year revenue from installation systems and control amounted to â,¬1.5 billion. During the year, Schneider Electric also created a critical power subsidiary in India to serve a market that is growing by 20% a year. In automation and control, the Group...

  • Page 68
    ... develops chip-based embedded intelligence technologies that will be a core part of the intelligent electrical distribution and automation systems of the future. Innovative new products and services The productivity of our R&D teams, who work in close cooperation with marketing to meet customers...

  • Page 69
    ... new manufacturing operations institute has been created at the Group level and a training institute has been opened in China. Occupational health and safety action plans have led to a significant decline in the lost time injury rate per employee. Lastly, a new worldwide employee share purchase plan...

  • Page 70
    ... Schneider Electric's Installation Systems and Control lineup with wiring devices for the UK and British Standard export markets. Industrial automation On February 15, 2006, the Group acquired the assets of US-based Silicon Power Corporation's Crydom brand Custom Sensors business. On March 27, 2006...

  • Page 71
    ... with Chinese partner Delixi Group. The 50-50 joint venture will manufacture, market and distribute low-voltage products in China, pending approval from local authorities. dential building market offsets the decline in the residential market. Revenue from the Asia-Pacific division totaled â,¬2,514...

  • Page 72
    ... set aside to cover delays and difficulties in deploying information systems. The Group recorded gains of â,¬46 million on the disposal of property assets in 2006, notably with the sale of the historic Telemecanique site in the Paris area. At December 31, 2006, capitalization of development costs...

  • Page 73
    ... in 2005. These investments represented 3.5% of revenue in 2006. Acquisitions used a total of â,¬898 million, net of the cash acquired. Cash proceeds from the sale of treasury stock on exercise of stock options amounted to â,¬53 million (the Group bought back Company shares in a net amount of â,¬73...

  • Page 74
    ...at the previous year-end, after taking into account 2006 profit, dividend payments, and shares issued on the exercise of stock options in an amount of â,¬60.7 million. Provisions Current and non-current provisions totaled â,¬1,729 million, or 9.1% of the balance sheet total. Of this, â,¬287 million...

  • Page 75
    .... Schneider Electric has staked out positions in new markets, such as energy efficiency, building automation and critical power, that will drive growth in the years ahead as it supports customers in a way that is mindful of the environment. The Group's acquisitions strategy, R&D processes and sales...

  • Page 76
    ... time to monitoring environmental issues at both the eco-design and ecoproduction levels. The Health Committee Committee members include representatives from each corporate department, the Business Units and the Operating Divisions (North America, Europe, International and Iberia and Asia-Pacific...

  • Page 77
    ... per production site employee by 10% (in MWh/year). Community Donate â,¬1 million worth of Schneider Electric equipment. Ensure that 90% of our sites have a lasting commitment with the Schneider Electric Foundations in the area of youth opportunities. Corporate governance Make 60% of total purchases...

  • Page 78
    ... units for compensation data: Senior management, subsidiaries (Elim - Austria, GET - UK and MGE UPS Systems - outside France). Non-consolidated units: Companies that are less than 51%-owned by Schneider Electric. Ensure that all employees have basic health insurance. 2005 Rating 10 / 10 2006...

  • Page 79
    ... 10.2% Marketing Sales Support Technical Production (Direct variable costs employees linked directly to production of range core and adapted products 43% 43.6% 43.1% 2004 2005 2006 Men / women (percent) 2004 63.7% 36.3% 2005 65% 35% 2006 64% 36% Flexibility rate (temporary staff/ total...

  • Page 80
    ... 6% 2006 15% 27% 50% 8% Asia-Pacific Europe North America New hires Type of contract Rest of the World Reasons for dismissals (percent) 2004 58.3% 41.7% 2005 65.2% 34.8% 2006 68% 32% Open-ended Fixed-term As part of the redeployment of resources carried out to re-balance costs and revenues...

  • Page 81
    ... (% of total absences) 4.5% 5.0% 4.4% This council, which supports the various works councils in Schneider Electric's French subsidiaries, provides a setting for information and discussion with employee representatives of the Group's French units. The members' terms were renewed for a period...

  • Page 82
    ...of the Company and a good understanding of its business, Schneider Electric offers training, provides access to electronic resources and organizes plant tours, among other things. A fiveday training session is organized for all new members to provide a panorama of the Group's operations and business...

  • Page 83
    ... to the Group's development. Not only does the program leverage this capital, but it also gives team members new ways to fulfill their potential. Three new institutes were created in 2006 dedicated to product design, human resources and budget control, with the goal of deploying shared resources for...

  • Page 84
    ...to recruit and develop skills in emerging markets during the year, primarily in Asia and Eastern Europe. Training new team members in internal processes and methods is critical to maintaining a uniform purchasing strategy worldwide. In 2006, the training programs were adjusted to meet the challenges...

  • Page 85
    ... Group's new2 company program. 3. Reconstruction (primarily of schools and orphanages): projects to build or help build 12 schools, equip a training center, an orphanage and a medical center. 4 A Foundation to encourage action and federate energies One of the Schneider Electric Youth Opportunities...

  • Page 86
    ...corporate sponsorship issues that is a member of the Ceres European network, and Institut du mécénat social (IMS), an association that helps companies implement their corporate social responsibility policies. Standards organizations Schneider Electric plays an active role within AFNOR, the French...

  • Page 87
    ... Electric. A positive outcome target of 60% has been set, meaning that participants obtain a fixed-term contract of more than six months, an open-ended contract or a skills-qualification training contract. The first "100 opportunities - 100 jobs" campaign was held in January 2005 in Chalon sur Sa...

  • Page 88
    ... representing more than 50% of total product revenue. 2005 2006 Rating 2.3 / 10 5.4 / 10 Water, energy and raw materials consumption Water and energy Since 2006, the Group has provided a more detailed breakdown of water consumption that takes into account groundwater and water from the public...

  • Page 89
    ... Schneider Electric applies its solutions in its own operations through the "Energy Action" program to reduce consumption. The objective is to reduce energy consumption per production site employee by 10% by the end of 2008. The program focuses on five key areas: heating, air conditioning, equipment...

  • Page 90
    .... In Europe, Schneider Electric offers a service to take back end-of-life products. In 2006, MGE UPS Systems launched the "Swap pac" program so that customers would not have to manage electrical and electronic waste from outdated uninterruptible power supplies. The program comprises an environmental...

  • Page 91
    ... international distribution center in Hong Kong; and Schneider Electric Logistics Asia in Singapore. An environmental management system has also been deployed on an experimental basis at non-production sites, with 13 now certified. These include all the sales agencies in Germany. In France, the Metz...

  • Page 92
    ...used to select the listed stocks, in keeping with ASPI Eurozone® guidelines. www.vigeo.com Investor-solicited rating - July 2006 Market sector: Electrical components and equipment. (Companies in panel sector: 9) Component (min -- / max ++) Human Resources Environment Customers & Suppliers Corporate...

  • Page 93
    ..., Schneider Electric asked Ernst & Young to conduct a review in order to obtain a moderate level of assurance for certain human resources, safety and environment indicators. Calculation methods Environmental data CO2: The Group uses the method endorsed by the International Energy Agency in 2006 to...

  • Page 94
    ... month of each six-month period. The data is not adjusted at the end of the year. Environmental data is transmitted for the manufacturing operations, which represent around 55% of the Group's total workforce. Nature and scope of our review We performed a limited review to provide a moderate level...

  • Page 95
    ... been used for 2007. Anticipated revenue growth has been calculated based on world economic growth projections (GDP). 4 5. Outlook for 2007 Revised targets for the new2 Company Program In light of the success of the new2 company program's action plans, the Group has set new financial targets for...

  • Page 96
    ...with the accounting policies used to prepare Schneider Electric SA's historical financial information. We also interviewed members of Schneider Electric SA's senior management to obtain the information and explanations we deemed necessary to have reasonable assurance that the forecasts were properly...

  • Page 97
    ... p. 152 The consolidated and parent company financial statements for the years ended December 31, 2004 and 2005 are presented in the registration documents registered with Autorité des marchés financiers (AMF) under number D.06-0158 and D.05-0309 on March 27, 2006 and March 31, 2005, respectively...

  • Page 98
    ...286.4 (64.4) 5.1 (59.3) (3.6) 1,223.5 (365.2) 858.3 Revenue Cost of sales Gross profit Research and development expenses Selling, general and administrative expenses Other operating income and expenses Operating profit Finance costs, net Other financial income and expenses 13,729.7 (8,050.6) 5,679...

  • Page 99
    ...assets Sub-total Total II III - Cash flows from financing activities: Issuance of long-term debt (note 17) Repayment of long-term debt Sale/(purchase) of treasury shares Increase/(reduction) in other financial debt Issuance of shares Dividends paid: Schneider Electric SA (1) Minority interests Total...

  • Page 100
    ...sheet Assets (in millions of euros) Dec. 31, 2006 Dec. 31, 2005 Jan. 1, 2005* Dec. 31, 2004 Non-current assets Goodwill, net Intangible assets, net Property, plant and equipment, net Assets held for sale Total tangible and intangible assets Investments in associates Available-for-sale financial...

  • Page 101
    ...-term debt Total non-current financial liabilities Deferred tax liabilities Other non-current liabilities Total non-current liabilities Current liabilities Trade accounts payable Accrued taxes and payroll costs Short-term provisions Other current liabilities Short-term debt Total current liabilities...

  • Page 102
    ... holders of the parent Total December 31, 2004 IFRS excluding IAS 32/39 IAS 32/39 adjustments (note 2) - Treasury stock - Currency hedges - Revaluation of available-for-sale financial assets - Metal price hedges - Interest rate swaps - Put option granted to MGE minority shareholders - Translation...

  • Page 103
    ... year ended December 31, 2006 were approved by the Management Board of Schneider Electric on February 16, 2007 and reviewed by the Supervisory Board on February 20, 2007. They will be submitted to shareholders for approval at the Annual General Meeting of April 26, 2007. The Group's main businesses...

  • Page 104
    Consolidated financial statements at December 31, 2006 Companies over which the Group has significant influence ("associates") are accounted for by the equity method. Significant influence is presumed to exist when more than 20% of outstanding voting rights are held. Companies acquired or sold ...

  • Page 105
    ... generated by the tested assets, generally over a period of not more than five years. Estimated future cash flows are based on management's economic assumptions and operating forecasts. The discount rate corresponds to Schneider Electric's weighted average cost of capital (7.5% at December 31, 2006...

  • Page 106
    ... periodic changes in actuarial assumptions regarding general financial and business conditions or demographics (i.e., changes in the discount rate, annual salary increases, return on plan assets, years of service, etc.) are immediately recognized in the Group's obligation and as a separate component...

  • Page 107
    ... are designated as hedges of operating receivables and payables carried in the balance sheets of Group companies. The Group does not apply hedge accounting to these instruments because at year-end, foreign currency contracts are marked to market and gains or losses are recorded in other financial...

  • Page 108
    ... exercise of stock options outstanding at the balance sheet date. The dilutive effect of stock options is determined by applying the "treasury stock" method, which consists of taking into account the number of shares that could be purchased, based on the average share price for the year, using the...

  • Page 109
    ... Electric shares held by the parent company and subsidiaries to be recorded as a deduction from equity, whatever the purpose for which the shares are held. In accordance with this standard, Schneider Electric shares with a value of â,¬87 million carried in assets in the French GAAP balance sheet...

  • Page 110
    ... 15, 2006, the Group acquired the assets of US-based Silicon Power Corporation's Crydom brand Custom Sensors business. On February 28, 2006, the Group acquired AEM SA, a Spanish company that designs, manufactures and markets low voltage electrical products and installation systems and control. On...

  • Page 111
    ... Revenue Operating profit 13,729.7 2,000.7 14,058.5 2,015.9 APC On October 30, 2006, Schneider Electric announced a friendly offer to purchase all outstanding shares of USbased American Power Conversion (APC), the world leader in critical power. By combining APC with its subsidiary MGE UPS Systems...

  • Page 112
    ...Cash Generating Unit to which goodwill has been allocated. EOD: European Operating Division, NAOD: North American Operating Division, APOD: Asia-Pacific Operating Division, IIOD: International Operating Division, CST: Custom Sensors & Technologies, BA: Building Automation, CP: Critical Power. (2) Of...

  • Page 113
    ... Building Systems (IBS) and Silicon Power Corporation (Crydom) in North America, Clipsal Asia and Citect in Asia-Pacific, and OVA Bargellini SpA., AEM SA, GET Group Plc, and Merten GmbH & Co Kg in Europe. Other changes Adjustments to the provisional accounting for the BEI Technologies Inc business...

  • Page 114
    ... valuation of BEI Technologies Inc, the Group recognized the BEI trademark and other intangible assets, consisting primarily of patents and customer lists (notes 4 and 5.2). In 2006, costs totaling â,¬52.3 million were capitalized in connection with an ongoing project to develop a Groupwide SAP core...

  • Page 115
    ... Investments in associates can be analyzed as follows: % interest at Dec. 31 2006 Clipsal Asia Holdings Ltd ELAU Administration GmbH (1) Delta Dore Finance VA Tech Schneider HV GmbH (2) Entivity (2) Other Total (1) Notes 3 and 4. (2) Companies sold in 2004. Share in net assets at Dec. 31 2006 13...

  • Page 116
    ... held at December 31, 2006, which were acquired under the mechanism for exchanging Schneider Electric shares for Legrand shares set up when Schneider Electric sold Legrand in 2002, were sold back to Legrand SAS in January 2007. 8.2 - Other non-current financial assets Cost Vendor loan to buyer of...

  • Page 117
    ...-term investments (1) Pension assets (2) Total current financial assets 48.2 25.3 73.5 Substantially all pension assets concern plans in the United States which had a surplus at December 31, 2006 (note 15). (1) These investments were previously classifed under "Available-for-sale financial assets...

  • Page 118
    ..., Group entities file consolidated tax returns. Schneider Electric SA files a consolidated tax return with its French subsidiaries held directly or indirectly through Schneider Electric Industries SAS. 12.1 - Analysis of income tax expense for the year 2006 Current taxes France International Total...

  • Page 119
    ... (expense)/benefit Goodwill impairment Minority interests Share of profit of associates Profit before tax and goodwill impairment Statutory tax rate Income tax expense calculated at the statutory Reconciling items Difference between French and foreign tax rates Impact of tax rate reduction in France...

  • Page 120
    ... shares outstanding. Changes in share capital The following table shows changes in Schneider Electric SA's share capital since December 31, 2003 through the exercise of stock options: Capital at Dec. 31, 2003 Cancellation of shares Worldwide employee stock purchase Exercise of stock options Capital...

  • Page 121
    ...-based payment Current stock option plans The Board of Directors of Schneider Electric SA and later the Management Board have set up stock option plans for senior executives and certain employees. The main features of these plans were as follows at December 31, 2006: Plan no. Date of board meeting...

  • Page 122
    ... employee or corporate officer of the Group. In addition, exercise of half the options is conditional on the achievement of annual objectives based on revenue and operating margin rate. In 2006, 1,079,121 new Schneider Electric SA shares were issued on the exercise of currently vested stock options...

  • Page 123
    ..., the company set up a liquidity contract under which the financial intermediary bought 2,292,219 shares at an average price of â,¬85.29 and sold 2,172,219 shares at an average price of â,¬85.32. At December 31, 2006, the Group holds 6,876,123 Schneider Electric shares in treasury stock, acquired at...

  • Page 124
    ... plan payments totaled â,¬30.7 million in 2006 and â,¬32.3 million in 2005. Other post-employment benefits, including healthcare and life insurance, and other long-term benefits The North American subsidiaries pay certain healthcare costs and provide life insurance benefits to retired employees...

  • Page 125
    ... in the balance sheet (616.8) 2. Components of net cost recognized in the statement of income Service cost Interest cost (impact of discounting) Expected return on plan assets Past service cost Curtailments and settlements Net cost recognized in the statement of income Dec. 31, 2006 Dec. 31...

  • Page 126
    ... items: Unrecognized past service cost Net Asset/(Liability) recognized in the balance sheet 0.9 (616.8) 0.6 (30.2) (1.9) (600.0) 1.1 (52.2) 1.9 (8.8) 15.3 - Provision for other post-employment benefits Changes in provisions for other post-employment and long-term benefits were as follows...

  • Page 127
    ...from changes in actuarial assumptions (primarily the discount rate). Substantially all plan changes concern the United States. 3. Funded status Projected benefit obligation Deferred items: Unrecognized past service cost Provision recognized in the balance sheet Dec. 31, 2006 477.2 39.7 516.9 Dec. 31...

  • Page 128
    ... costs. No new risks were identified during site reviews in 2006. (e) Restructuring New provisions were set aside during the year to cover the costs of restructuring plans in Europe (France, United Kingdom, Italy) and in Australia (note 25). Note 17 - Long and short-term debt Non current financial...

  • Page 129
    ... bonds at the Euribor 3-month rate + 0.20%, due July 18, 2011. Also on July 17, 2006, Schneider Electric issued â,¬500 million worth of 4.5% bonds due January 17, 2014. These bonds are traded on the Luxembourg stock exchange. On August 11, 2005, Schneider Electric SA issued â,¬1,500 million worth of...

  • Page 130
    ... 31, 2006. Information technology services In 2004, the Group signed an agreement with Cap Gemini to outsource its European IT functions and deploy shared management applications using SAP. The agreement is currently being implemented in the subsidiaries. Payments to Cap Gemini replace the cost of...

  • Page 131
    ..., payables and operating cash flows, which are generally hedged by means of forward sales. Depending on market conditions, risks in the main currencies may be hedged based on recurring forecast flows using contracts that expire in 12 months or less. The Group's currency hedging policy is to protect...

  • Page 132
    ... of operating cash flows. Note 21 - Related party transactions 21.1 - Associates These are primarily companies over which the Group has significant influence. They are accounted for by the equity method. Transactions with these related parties are carried out on arm's length terms. In 2006, related...

  • Page 133
    ... segment information is presented after allocating Critical Power data in 2006 and data for the Growth Platforms (Building Automation, Critical Power and Custom Sensors) in 2005 and 2004. Details are provided in chapter 4 of the Annual Report (Business Review). Europe December 31, 2006 Revenue...

  • Page 134
    ... the Group's core businesses in Europe (France, the UK and Italy), for â,¬67 million, and reorganization of operations in Australia for â,¬7 million. In addition, provisions of â,¬38 million were set aside to cover costs arising from certain delays and problems in bringing new information systems on...

  • Page 135
    ... number of employees By region: Europe North America Asia-Pacific Rest of the World The increase in employee numbers primarily reflects acquisitions for the year. 27.2 - Employee benefits expense 2006 Payroll costs (1) Profit-sharing and incentive bonuses Stock options Total employee benefits...

  • Page 136
    ... to purchase all outstanding shares of USbased American Power Conversion (APC), the world leader in Critical Power. By combining APC with its subsidiary MGE UPS Systems, Schneider Electric will become the global benchmark in Critical Power. The anti-trust regulatory review in the United States ended...

  • Page 137
    ...-term debt Total non-current financial liabilities Deferred taxes Other non-current liabiilities Total non-current liabilities Current liabilities Trade accounts payable Accrued taxes and payroll costs Short-term provisions Other current liabilities Short-term debt Total current liabilities Total...

  • Page 138
    ... assets Property, plant and equipment Assets held for sale Total Investments in associates Available-for-sale financial assets Other financial assets Total investments Deferred taxes Other non-current assets Total non-current assets Current assets Inventories and work in process Trade accounts...

  • Page 139
    ...long-term debt Total non-current financial liabilities Deferred taxes Other non-current liabilities Total non-current liabilities Current liabilities Trade accounts payable Accrued taxes and payroll costs Short-term provisions Other current liabilities Short-term debt Total current liabilities Total...

  • Page 140
    ... holders of the parent Net cash provided by operating activities before changes in operating assets and liaiblities Change in working capital 824 1,282 (98) Net cash provided by operating activities Cash used by investment in operating assets Cash used by financial and other investments 1,122...

  • Page 141
    ... in both the French GAAP and the IFRS accounts. 29.3 - Main adjustments recorded in 2004 29.3.1 - Intangible assets Intangible assets generated by development activities Development costs for new products and comprehensive product upgrades may be capitalized under IAS 38. Systems were set up to...

  • Page 142
    ... February 5, 2007) and plan no. 24 dated May 6, 2004 (2,060,700 options exercisable as from May 6, 2008). The Group has chosen to value options using the Cox Ross Rubinstein binomial option pricing model. Based on market data at the grant dates, the total stock option expense came to â,¬9 million...

  • Page 143
    ... by the French securities regulator (COB, now renamed AMF), the Group elected for early adoption - starting in 2002 - of standard CRC 200210 concerning asset impairments. The method used to test assets for impairment complies with IAS 36 - Impairment Of Assets and the level (Cash Generating Unit) at...

  • Page 144
    Consolidated financial statements at December 31, 2006 Note 30 - Consolidated companies The main companies included in the Schneider Electric Group scope of consolidation are listed below. % interest % interest % interest Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004 Europe Fully consolidated Asentics...

  • Page 145
    ...Invensys Bygnings JO-EL Electric A/S Schneider Electric Danmark (ex Lauritz Knudsen) Schneider Electric Danmark A/S Schneider Nordic Baltic (ex Lexinvest A/S) TAC A/S AEM SA EFI Electronics Europe SL Himel SA Mesa SA MGE UPS Espana SA Schneider Electric Espana Telenum Schneider Electric EESTI AS (ex...

  • Page 146
    ... 31, 2006 Dec. 31, 2005 Dec. 31, 2004 MGE UPS MGE UPS Systems SAS Muller & Cie Napac Newall France Newlog SAS Normabarre Num SA Prodipact Rectiphase SA2E SAEI SAE Gardy Sarel Appareillage Electrique Satchwell SAS Scanelec Schneider Automation SA Schneider Electric Industries SAS Schneider Electrique...

  • Page 147
    ... Systems Yorshire Switchgear Group Ltd MGE UPS Systems Hellas Abe Schneider Electric AE BEI Automative Hungary Manufacturing Inc Merlin Gerin Zala Prodax Elektromos Schneider Electric Hungaria Villamassagi RT Schneider Electric Ireland Ltd Schneider Electric Manufacturing Celbridge Square D Company...

  • Page 148
    ... 31, 2006 Dec. 31, 2005 Dec. 31, 2004 Polam Holding BV Pro Face HMI (sous-groupe) Sandas Montage BV Sarel BV Schneider Electric BV Schneider Electric Logistic Centre BV Stago BV Andover Controls Sp Zo.o Elda Eltra SA (ex Eltra SA) ELDA Szczecinek SA MGE UPS Systems Polska Sp.z.o.o Schneider Electric...

  • Page 149
    ...Power Measurement Ltd Schneider Canada Inc. MGE Systems Mexico SA de CV Crouzet Automatismo Crouzet Mexique Custom Sensors & Technologies Mexico Industrias Electronicas Pacifico SA de CV Schneider Electric Mexico SA de CV Square D Company Mexico SA de CV Abacus Andover Controls Corp BEI Export Sales...

  • Page 150
    ... Pty Ltd Power Measurement Ltd Pro Face Australia SE Australia Holding PTY Schneider Investment Holdings Pty Schneider Electric Australia Pty Ltd TAC Pacific Pty Ltd Team Security Solutions Pty Ltd Techrack Pty Ltd Beijing Merlin Great Wall Computer Room Equipment & Engineering Citect Control System...

  • Page 151
    ... HK Invensys Building System Hong-Kong Ltd Jansweet Ltd Full Excel Pty Ltd GET Santai Limited GET Asia Limited Linkpoint Investments MGE China / Hong Kong Ltd Schneider Busway Limited Schneider Electric Business Solutions Schneider Electric Hong Kong Ltd TAC Pacific HK Ltd MGE India MGE Indonésie...

  • Page 152
    ... Building System Pte Ltd KSLA Energy & Power Solution Pte Ltd Merten Asia Pte Ltd MGE Asia Pte Ltd MGE Logistics South East Asia pacific Pte Ltd PDL Electric (S) Pte Ltd TAC Control Asia Schneider Electric Export Services Schneider Electric Industrial Development Singapore Pte Ltd Schneider Electric...

  • Page 153
    ...é Conlog) MGE UPS Systems SA Pty Ltd Nu-Lec Africa Pty Schneider Electric South Africa Pty Ltd Schneider Electric Algérie SARL EPS Ltd MGE Argentina Plasnavi SA Schneider Electric Argentina Clipsal Middle East Palatine Ridge Insurance Company Ltd SHL CDI Power Crouzet Brésil MGE UPS Systems Do...

  • Page 154
    ...with French law and professional auditing standards applicable in France. To the Shareholders, In compliance with the assignment entrusted to us by the Annual Shareholders' Meeting we have audited the accompanying consolidated financial statements of Schneider Electric SA for the year ended December...

  • Page 155
    6 Company financial statements at Dec. 31, 2006 1. Balance sheet ...2. Statement of income ...3. Notes to the financial statements of Schneider Electric SA ... 6 p. 154 p. 156 p. 157 4. Auditors' report on the financial statements ...5. List of securities at December 31, 2006 . . 6. Subsidiaries ...

  • Page 156
    ... 31, 2006 1. Balance sheet Assets Non-current assets: (â,¬ thousands) Cost Depreciation Dec. 31, 2006 amortization and provisions Net Dec. 31, 2005 Dec. 31, 2004 Net Net Intangible assets Intangible rights (note 1a) 27,474 (27,474) - Property, plant and equipment Land Buildings Other (note...

  • Page 157
    ...: Accounts payable - trade Accrued taxes and payroll costs Other liabilities 52 3,972 1,769 5,793 Total non-current and current liabilities Deferred income Conversion gains 3,808,833 (note 11) 551 - Total liabilities and shareholders' equity The notes form an integral part of these financial...

  • Page 158
    Company financial statements at December 31, 2006 2. Statement of income (â,¬ thousands) 2006 1,769 1,711 3,...946) 20,429 558,768 Sales of services and other Reversals of provisions, depreciation and amortization and expense transfers Operating revenues Purchases and external charges Taxes other ...

  • Page 159
    ..., due 2011 and 2014. During the year, the Company sold the companies acquired in 2005-Elau and six companies comprising Invensys' Advanced Building Systems business in Europe and the Middle East- to two Schneider Electric subsidiaries for a total â,¬142.3 million. Lastly, Schneider Electric SA...

  • Page 160
    ...During the year, the Company sold companies acquired in 2005 to subsidiaries of the Schneider Electric Group. Six companies comprising Invensys' Advanced Building Systems business in Europe were sold to T.A.C. AB and Schneider Electric France for â,¬109.4 million, while Schneider Electric SA's 49.05...

  • Page 161
    ... to group tax returns for 2006 (see note 16). This item also included a â,¬97.0 million carryback credit and the unrecovered balance of the exceptional 25% Note 4: Marketable securities Dec. 31, 2005 Number Value of shares Plan 16 Plan 24 Plan 26 Total Schneider Electric SA shares Other Total 456...

  • Page 162
    ...liquidity contract set up to maintain a liquid market in the Company's shares pursuant to the authorization granted by shareholders at the Annual Meeting of May 3, 2006. At December 31, 2006, 120,000 Schneider Electric SA shares were held under this contract (see note 2b). The total number of shares...

  • Page 163
    .... 31, 2006 8a - Contingencies A provision was set aside for stock option plan 24 because the exercise price is lower than the carrying value of the underlying treasury shares. Other contingencies correspond to risks transferred to Schneider Electric in connection with divestments or mergers (Spie...

  • Page 164
    ... bonds issued by the Company. Accrued interest rose to â,¬44.8 million from â,¬30.7 million at end-2005 following the issue of â,¬1.0 billion worth of bonds in 2006. At December 31, 2006, this item also included commercial paper issued on the market by Schneider Electric SA on behalf of the Group in...

  • Page 165
    ...6 Note 18: Other information 18a - Number of employees At December 21, 2006, the Company had two employees. Note 16: Net income tax benefit In 2006, this item primarily included group tax returns in France recorded by the tax group headed by Schneider Electric SA. They totaled â,¬201.6 million, up...

  • Page 166
    ...applicable in France. To the Shareholders, In compliance with the assignment entrusted to us by your shareholders' annual general meeting, we hereby report to you, for the year ended December 31, 2006, on: The audit of the accompanying financial statements of Schneider Electric SA. The justification...

  • Page 167
    ... 45 45 93,054 1,731,698 B. Investments with a carrying value of less than â,¬15,000 C. Investments in real estate companies D. Investments in foreign companies Total Marketable securities 10,080 2,929,283 Geodis Schneider Electric SA shares (stock option plans no. 16, 24 and 26) 25 168,987 1,042 241...

  • Page 168
    Company financial statements at December 31, 2006 6. Subsidiaries and affiliates (â,¬ thousands) Company Capital Reserves and retained earnings before appropriation of income for the year* % interest I. Subsidiaries and affiliates whose carrying value exceeds 1% of Schneider Electric SA's ...

  • Page 169
    Book value of shares Cost Net Outstanding loans and advances Guarantees Net sales for the year Income or loss for the year Dividends received 1,531,981 1,531,981 2,948,439 - 3,028,402 Holding company Holding company 863,161 537,852 6 136,898 136,898 4,830 5,705 82,609 82,609 - - 1,...

  • Page 170
    ... 31 Capital stock (in thousands of euros) Shares in issue Convertible bonds in issue (in thousands) Maximum number of shares to be created (in thousands): - Through conversion of bonds - Through exercise of rights Results of operations (in thousands of euros) Sales net of VAT Investment revenue...

  • Page 171
    ... Schneider Electric and APC accounting principles ...4. Auditors' report on the pro forma financial statements ... p. 172 p. 174 1. Presentation The pro forma income statement and balance sheet data presented below have been prepared as if the business combination between Schneider Electric and APC...

  • Page 172
    ... ended December 31, 2006 (in millions of euros) Schneider Electric IFRS APC US GAAP unaudited APC adjustments US GAAP to IFRS unaudited - APC IFRS unaudited Schneider Electric + APC IFRS unaudited 15,627.0 (9,335.6) 6,291.4 (409.2) (3,686.1) (116.0) 2,080.1 (104.0) (1.4) Revenue Cost of sales...

  • Page 173
    ... Schneider Electric + APC IFRS unaudited (in millions of euros) Non-current assets: Goodwill, net Intangible assets, net Property, plant and equipment, net Assets held for sale Total tangible and intangible assets Investments in associates Available-for-sale financial assets Other financial assets...

  • Page 174
    ... information under IFRS were estimated by Schneider Electric's Finance Department based on the description of accounting policies contained in APC's annual financial statements. 3.1 Financial statement presentation and foreign currency translation The main income statement and balance sheet...

  • Page 175
    ... in APC's balance sheet at December 31, 2006 and therefore, no adjustment was recorded in the pro forma financial statements. 3.2 Share-based payments Stock options have been granted to the management and certain employees of APC. Schneider Electric applies IFRS 2 - Share-Based Payment. Accounting...

  • Page 176
    ... condensed pro forma financial information under IFRS for 2006 (hereafter referred to as "the pro forma information") prepared by Schneider Electric SA in connection with the share issue intended to finance part of the planned acquisition of APC in the United States. This information is presented in...

  • Page 177
    ... 2007 1. Management Board's report to the Annual and Extraordinary Shareholders' Meeting . . p. 175 ...3. Resolutions ... 8 p. 180 p. 185 1. Management Board's report to the Annual and Extraordinary Shareholders' Meeting Resolutions to be voted on in Annual Meeting Approval of the annual financial...

  • Page 178
    ...at the Annual Meeting in accordance with procedures set by the Board. Under the French Act of December 30, 2006 on the development of employee stock ownership, listed companies in which more than 3% of the issued capital as of December 31, 2006 is held directly or indirectly through corporate mutual...

  • Page 179
    ...be employed under a contract that qualifies them to sit on the Supervisory Board for a four-year term and must hold at least 25 Schneider Electric SA shares or an equivalent number of units in a mutual fund invested in the Company's shares. The representative of employee shareholders' term shall end...

  • Page 180
    ...3, 2006 authorized the Management Board to issue shares to employees who are members of an Employee Stock Purchase Plan. In addition, the same General Meeting authorized the Management Board to issue shares to entities set up to purchase shares of the Company under programs to promote employee stock...

  • Page 181
    ..., the Company set up a liquidity contract. Details of the share buyback program submitted for approval at the Annual and Extraordinary Shareholders' Meeting of April 26, 2007 are as follows: Number of shares and percentage of share capital held directly and indirectly by Schneider Electric SA...

  • Page 182
    ..., a management agreement was signed between your Company and Spie Batignolles (renamed Amec Spie SA) covering the administrative and legal management of contract disputes that remained at the level of Schneider Electric SA at the time of the merger. No payments were made in 2006 as the agreement was...

  • Page 183
    .... We carried out our work in accordance with French professional standards. Those standards require that we perform procedures to check the content of the report drawn up by the competent management body concerning these transactions and the method used to determine the share issue price. We have no...

  • Page 184
    ...in this report. We performed our work in accordance with French professional standards. Those standards require that we perform procedures to check the content of the report drawn up by the competent management body concerning this operation and the method used to determine the share issue price. We...

  • Page 185
    ...in this report. We performed our work in accordance with French professional standards. Those standards require that we perform procedures to check the content of the report drawn up by the competent management body concerning this operation and the method used to determine the share issue price. We...

  • Page 186
    ...in this report. We performed our work in accordance with French professional standards. Those standards require that we perform procedures to check the content of the report drawn up by the competent management body concerning this operation and the method used to determine the share issue price. We...

  • Page 187
    ... to trade in the Company's shares - maximum purchase price: â,¬130) The General Meeting, acting with the quorum and majority required for ordinary General Meetings, having heard the report of the Management Board drawn up in accordance with article L.225-209 of the French Commercial Code, authorizes...

  • Page 188
    ...Meeting according to a process determined by the Supervisory Board. If, however, employees of the Company and of related companies (within the meaning of article L.225-180 of the French Commercial Code) hold over 3% of the Company's capital - as evidenced by the disclosures made in the annual report...

  • Page 189
    ... be employed under a contract that qualifies them to sit on the Supervisory Board for a four-year term and must hold at least 25 Schneider Electric SA shares or an equivalent number of units in a mutual fund invested in the Company's shares. d) The conditions and procedures for the designation of...

  • Page 190
    ...-93 of the French Commercial Code, this authorization may be used to issue shares of the Company on conversion, redemption, exchange or exercise of share equivalents issued by companies in which the Company holds more than half of the issued capital either directly or indirectly. This authorization...

  • Page 191
    ...the Commercial Code. The General Meeting also gives the Management Board a 26-month authorization to use the authorization given in the tenth resolution to carry out one or several share issues representing, in the aggregate, a maximum of 10% of the Company's issued capital, in payment for shares or...

  • Page 192
    ... of the issued capital as of the date on which this authorization is used. To set the maximum discount at which shares may be offered under the Employee Stock Purchase Plan at 20% of the average of the opening prices quoted for Schneider Electric shares on Euronext Paris over the twenty trading days...

  • Page 193
    ...the purpose of a stock purchase plan set up for employees of the Schneider Electric Group. 3. That the issue price of shares issued under this resolution will be set by the Management Board based on the price quoted for the Company's shares on the Eurolist market of Euronext Paris. At the discretion...

  • Page 194
    ... on page 174. In this report, the Statutory Auditors draw attention to the fact that APC's financial statements for the year ended December 31, 2006 are unaudited and unpublished and that no assurance is given that a detailed reconciliation of the two groups' accounting policies would not reveal any...

  • Page 195

  • Page 196
    Schneider Electric SA Headquarters 43-45, boulevard Franklin-Roosevelt F-92500 Rueil-Malmaison Cedex (France) Tel. : +33 (0) 1 41 29 70 00 Fax : +33 (0) 1 41 29 71 00 www.schneider-electric.com Incorporated in France, governed by a Management Board and Supervisory Board, with issued capital of â,¬...