APC 2006 Annual Report Download - page 130

Note 18 - Other non-current liabilities
Dec. 31, 2006 Dec. 31, 2005 Jan. 1, 2005 Dec. 31, 2004
MGE UPS acquisition debt 35.1 135.5 121.9 48.6
Clipsal acquisition debt 47.0 41.5 35.6 35.6
Magnecraft assets acquisition debt - - 16.2 16.2
A
pplied Control Technology acquisition debt 1.8 - - -
Other 6.3 1.8 4.0 4.0
Other non-current liabilities 90.2 178.8 177.7 104.4
MGE UPS acquisition debt corresponds to the put
option granted to minority shareholders of MGE UPS.
The amount of the debt declined to 35.1 million at
December 31, 2006 from 72 million at December 31,
2005 mainly as a result of the increase in Schneider
Electric’s interest in MGE UPS during the year (note 3).
The agreement for the acquisition of Clipsal includes a
seller’s warranty providing for part of the acquisition
price to be withheld until December 2007. This amount
has been placed in escrow (note 8.2).
Note 19 - Commitments and contingent liabilities
19.1 - Guarantees given and received
Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004
Contract counterguarantees (1) 176.0 173.8 171.0
Mortgages and collateral (2) 20.1 17.8 33.4
Guarantees 0.5 1.0 4.2
Other commitments given (3) 187.2 209.4 209.1
Guarantees given 383.8 402.0 417.7
Other guarantees received 41.8 35.4 33.6
Guarantees received 41.8 35.4 33.6
(1) On certain contracts, customers require a guarantee from a bank that the contract will be fully executed by the Group.
For these contracts, the Group gives a counterguarantee to the bank. If a claim occurs, the risk linked to the commitment is
assessed and a provision for contingencies is recorded when the risk is considered probable and can be reasonably estimated.
(2)Certain loans are secured by property, plant and equipment and securities lodged as collateral.
(3)Other guarantees given primarily comprise letters of credit issued by Square D, as well as guarantees to certain lessors that
rental payments will be made until the end of the lease.
19.2 - Purchase commitments
Equity investments
Commitments to purchase equity investments corre-
spond to put options given to minority shareholders in
consolidated companies or relate to earn-out pay-
ments. The amount of these commitments was not
material at December 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 the IT function, which was previously managed
internally. Schneider Electric initially had a ten-year
reciprocal agreement with Cap Gemini that has been
extended by two years.
In 2006, the expense related to this outsourcing agree-
ment contractually amounted to 136.5 million (148.3
million in 2005).
19.3 - Contingent liabilities
Management is confident that balance sheet provi-
sions for known disputes in which the Group is
involved are sufficient to ensure that these disputes do
not have a material impact on its financial position or
profit. This is notably the case for the potential conse-
quences of a current dispute in Belgium involving for-
mer senior executives and managers of the Group.
The loan agreements related to the Group’s long-term
debt do not include any rating triggers.
The Group has also signed an agreement concerning
statutory employee training rights in France (DIF).
Because the vested rights cannot be reliably estimat-
ed, no corresponding provision has been set aside in
the financial statements.
Consolidated financial statements at December 31, 2006
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