APC 2006 Annual Report Download - page 70

Consolidated
financial statements
Sector information by geographic region is based on
management’s current vision of Group performance.
Additional analyses are being conducted to bring this
information into compliance with IFRS 8, pending its
adoption.
Changes in the scope
of consolidation
The Group made several acquisitions in 2006 that
expanded its positions in Installation Systems and
Control, Critical Power and Building and Industrial
Automation.
installation systems and control
On January 1, 2006, the Group bought out CIH Ltd’s
interest in the Clipsal Asia joint venture, in accordance
with the terms of the agreement between the two part-
ners. Clipsal Asia was previously accounted for by the
equity method.
On February 28, 2006, the Group acquired AEM SA, a
Spanish company that designs, manufactures and
markets low voltage electrical and installation and con-
trol products.
On April 30, 2006, the Group acquired OVA G.
Bargellini SpA, Italy’s leading emergency lighting com-
pany with operations in the installation systems and
control segment.
On May 31, 2006 the Group acquired Merten GmbH &
Co Kg, a German firm that offers intelligent low voltage
solutions and installation systems and control for the
residential and buildings markets.
Lastly, on November 23, 2006, the Group acquired
UK-based GET Group Plc. This acquisition will expand
Schneider Electric’s Installation Systems and Control
lineup with wiring devices for the UK and British Stan-
dard 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, the Group acquired the entire cap-
ital of Citect, an Australian manufacturer of Supervi-
sion Control and Data Acquisition (SCADA) solutions
and Manufacturing Execution Systems (MES).
On September 26, 2006, the Group finalized the acqui-
sition of Austria-based VA Tech Elin EBG Elektronik, a
company that develops and manufactures high-power
speed drive products and solutions.
Building automation
On July, 27, 2006 the Group acquired the Invensys
Building Systems (IBS) business in North America and
Asia. Following on the acquisition of Invensys'
Advanced Building Systems business (ABS EMEA) in
July 2005, this transaction extends Schneider Electric’s
current positions in Building Automation.
These companies have been fully consolidated from
their respective acquisition dates.
The following companies acquired in 2005 and consol-
idated in 2006 had an impact on the scope of consoli-
dation in relation to 2005:
Power Measurement Inc, consolidated as from April
14, 2005,
ELAU, fully consolidated as from June 1, 2005,
ABS EMEA, consolidated as from July 29, 2005,
Juno Electric Inc, consolidated as from August 24,
2005,
BEI Technologies Inc, consolidated as from October
1, 2005.
Other changes in the scope
of consolidation
On 2006, the Group acquired further stakes in MGE-
UPS group, raising its interest to 95.67% as at Decem-
ber 31, 2006.
On January 31, 2006, the Group announced the sale
of its Num SA numerical control subsidiary.
On February 27, 2006, the Group announced the sale
of Mafelec SAS, a specialty manufacturer of onboard
push-button switches.
Together, these changes in scope of consolidation
added 800 million, or 6.9%, to revenue and 103 mil-
lion, or 6.6%, to operating profit for the year.
The average operating margin of newly consolidated
entities stood at 12.4%. Before amortization of intangi-
ble assets recognized on purchase accounting, the
average operating margin came to 13.3%.
Acquisitions in progress
APC
On October 30, 2006, the Group announced a friendly
offer to purchase all outstanding shares of American
Power Conversion (APC), the world leader in Critical
Power.
By combining APC with its subsidiary MGE-UPS, the
Group will become the global benchmark in Critical
Power.
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.
The European Commission’s competition authorities
granted final clearance under some divestment com-
mitments on February 8, 2007. The Group plans to
divest its MGE-UPS Systems operations in small sys-
tems below 10kVA. With estimated sales around 150
million, the divestment represents 6% of the combined
operations of APC and MGE-UPS in Critical Power.
On February 14, 2007, the Group announced the com-
pletion of the acquisition for approximately $6.1billion.
Since the purchase price allocation to acquired identi-
fiable assets and liabilities has not been completed,
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