APC 2006 Annual Report Download - page 159

(All amounts in thousands of euros
unless otherwise specified)
Significant events of the year
In 2006, Schneider Electric SA issued bonds worth
1.0 billion in two tranches, 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 142.3 million.
Lastly, Schneider Electric SA implemented a 40 mil-
lion liquidity contract to maintain a liquid market for its
shares.
Accounting principles
The financial statements for the year ended December
31, 2006 have been prepared in accordance with the
1999 Plan Comptable Général and French generally
accepted accounting principles.
Non-current assets
Non-current assets are stated at cost.
Intangible assets
Intangible rights are amortized over a maximum of five
years.
Property, plant and equipment
Property, plant and equipment are depreciated by the
straight-line method over their estimated useful lives,
ranging from 3 to 10 years.
Shares in subsidiaries and affiliates
Shares in subsidiaries and affiliates are stated at cost.
Allowances for impairment in value are recorded if the
3. Notes to the financial
statements of Schneider Electric SA
carrying value is higher than the estimated value in
use at the end of the financial year. Value in use is esti-
mated primarily on the basis of underlying net assets,
earnings outlook and economic forecasts. For recent-
ly-acquired investments, account is also taken of the
acquired business goodwill. For listed investments,
value in use is also based on the average stock price
over the last month. Unrealized gains on investments
are not recognized.
Treasury stock
Treasury stock is stated at cost. The unit cost of treas-
ury stock removed from the portfolio is calculated
according to the average weighted cost method.
In the case of treasury stock held for allocation on the
exercise of stock options, a provision is recorded if the
exercise price is lower than the carrying value of the
related treasury shares.
Pension obligations
The present value of pension obligations is determined
using the projected unit credit method.
Supplementary pension benefits are accrued for
based on the contractual terms of top-hat agreements.
The Company applies the corridor method to actuarial
gains and losses arising from changes in estimates.
Under this method, the portion of net cumulative actu-
arial gains and losses that exceeds 10% of the project-
ed benefit obligation is gradually amortized.
Currency risk
Unrealized exchange losses are reserved for when
necessary. Where unrealized exchange gains and
losses exist on investments and the related financing
in the same currency and with the same maturity, the
amount of the reserve is limited to the net loss.
Bonds
Call premiums and issue costs are amortized over the
life of the bonds.
Dec. 31, 2005 Additions Disposals Dec. 31, 2006
Cost 5,363 17 (197) 5,183
Depreciation (716) (1) 34 (683)
Net 4,647 16 (163) 4,500
Note 1: Non-current assets
1a - Intangible assets
This item primarily comprises share issue and merger expenses, which are fully amortized.
1b - Property, plant and equipment
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