APC 2006 Annual Report Download - page 163

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Note 8: Provisions for contingencies and pension accruals
Dec. 31, 2005 Increases Decreases Dec. 31, 2006
Provisions for contingencies
Stock option plan no. 24 3,760 - - 3,760
Other 2,853 15 (1,898) 970
6,613 15 (1,898) 4,730
Provisions for pension accruals
Pension accruals 30,395 2,192 (1,361) 31,226
37,008 2,207 (3,259) 35,956
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 Batignolles) that have not yet entirely
disappeared. One of these identified risks was elimi-
nated in 2006.
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 par-
ticular, 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 2006, the
provision for these obligations was increased to 31.2
million.
The Company applied the corridor method to actuarial
gains and losses arising from this valuation (see
Accounting Principles). At December 31, 2006, the
amount to be recognized in the income statement over
10 years came to 6.0 million.
Note 9: Bonds
Amount Interest rate* Maturity
Dec. 31, 2005 Dec. 31, 2006
Schneider Electric SA 2007 450,000 450,000 6.125% F Oct. 19, 2007
Schneider Electric SA 2008 750,000 750,000 3.875% F Oct. 31, 2008
Schneider Electric SA 2010 900,000 900,000 3.125% F Aug. 11, 2010
Schneider Electric SA 2011 - 500,000 Eur + 0.2% V July 18, 2011
Schneider Electric SA 2014 - 500,000 4.500% F Jan. 17, 2014
Schneider Electric SA 2017 600,000 600,000 4.000% F Aug. 11, 2017
2,700,000 3,700,000
*F: Fixed - V:Variable.
On July 17, 2006, Schneider Electric SA issued
1.0 billion worth of bonds. The issue comprises a
500 million five-year tranche at the Euribor 3-
month rate + 0.20%, issued at a price corresponding
to 99.814% of par, and a 500 million 7.5-year
tranche at 4.5%, issued at a price corresponding to
99.36% of par. These bonds are traded on the Lux-
embourg stock exchange. The issue premium and
issue costs are amortized according to the effective
interest method.
161
6
Previous bond issues are as follows:
In 2005, Schneider Electric SA issued 1.5 billion
worth of bonds. The issue comprised a 900 million
tranche at 3.125% due August 11, 2010 and a 600
million tranche at 4.0% due August 11, 2017.
In 2003, Schneider Electric SA issued 750 million
worth of 3.875% bonds due October 31, 2008.
In 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.