APC 2006 Annual Report Download - page 165

Note 15: Net non-recurring
income/(expense)
Dec. 31, 2006 Dec. 31, 2005
Net gains/(losses)
on fixed and financial
asset disposals 10,866 2,938
Provisions net
of reversals (1,212) (26,686)
Other non-recurring
income - net 5,789 4,642
Net non-recurring
income/(expense) 15,443 (19,106)
As in 2005, capital gains stemmed primarily from the
sale of Schneider Electric SA shares held under
"Other investment securities" for allocation on exercise
of stock options. Capital gains on the sale of Schneider
Electric SA shares held under “Marketable securities”
are recorded under "Other non-recurring income –
net". Aggregate income from the sale of Schneider
Electric SA shares amounted to 10.1 million in 2006
compared with 6.8 million in 2005.
The Company also recorded a material capital gain on
the sale of Euronext shares in 2006 (see note 2a).
In 2005, net allocations to provisions included 22.9
million for impairment of receivables related to the
Pinglin contract (see notes 3) and 3.8 million for
contingencies related to stock option plan 24 (see
note 8a).
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 201.6 million, up
sharply from 68.1 million the year before, reflecting
non-recurring items in subsidiary Schneider Electric
Industries SAS’ income statement.
Schneider Electric SA is the parent company of the tax
group comprising all French subsidiaries that are over
95%-owned. Tax loss carryforwards available to the
Company in this capacity totaled 139.5 million at
December 31, 2006.
Note 17: Off-balance sheet
commitments
17a - Partnership obligations
Share of the liabilities of "SC" non-trading companies
attributable to Schneider Electric SA as partner of the
companies concerned: not material.
Share of the liabilities of "SNC" flow-through entities
attributable to Schneider Electric SA as partner of the
entities concerned: not material.
17b - Guarantees given and received
Commitments given:
Counterguarantees of bank guarantees: . . . . None
Other guarantees given: . . . . . . . . . . . 6.7 million
Commitments received:
Bank counterguarantees: . . . . . . . . . . . . . . . None
17c - Financial instruments
As a general practice, the Company does not pur-
chase or sell any financial instruments. Hedging trans-
actions are carried out by the manager of the Group
cash pool, Boissière Finance, a wholly-owned sub-
sidiary of Schneider Electric Industries SAS, which in
turn is wholly-owned by Schneider Electric SA. How-
ever, in 2006, Schneider Electric SA set up three inter-
est rate swaps to hedge one of the bond issues made
during the year.
17d - Exchange of Legrand shares
As part of its public exchange offer for Legrand SA,
Schneider Electric SA made a commitment to
exchange shares held upon exercise of options grant-
ed by Legrand for Schneider Electric shares. When
Legrand SA was sold to KKR/Wendel Investissement,
Schneider Electric SA set up a call and put system for
the Legrand shares created through the exercise of
said options.These shares are re-sold to Legrand SAS
(formerly known as FIMAF), an investment vehicle of
the KKR/Wendel Investissement consortium.
The stock option plans in question are fully covered.
Note 18: Other information
18a - Number of employees
At December 21, 2006, the Company had two
employees.
18b - Consolidated financial
statements
Schneider Electric SA is the parent company of the
Group and therefore publishes the consolidated finan-
cial statements of the Schneider Electric Group.
Note 19: Subsequent events
On October 30, 2006, Schneider Electric announced a
friendly offer to purchase all outstanding shares of US-
based American Power Conversion (APC), the world
leader in critical power. The Group also announced its
intention to finance the acquisition through borrowing
and a share issue.
The anti-trust regulatory review in the United States
ended on December 12, 2006 when the waiting period
under the Hart-Scott-Rodino Antitrust Improvements
Act expired.
APC’s shareholders approved the proposed merger in
Extraordinary Meeting on January 16, 2007 and the
European Commission's competition authorities grant-
ed final clearance on February 8, 2007 pending certain
divestments.
On February 14, 2007, Schneider Electric announced
that the acquisition had been finalized for around $6.1
billion.
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