APC 2007 Annual Report Download - page 131

5
Consolidated financial statements at December 31, 2007
Worldwide Employee Stock Purchase Plan
As part of its commitment to employee share ownership,
Schneider Electric gave its employees the opportunity to
purchase shares at a price of 88.06 per share during the
year. This represented a discount of 15% to the average
price quoted for the share between May 3 and May 30,
2007.
Employees in countries that met legal and fiscal require-
ments had the choice between a nonleveraged and a
leveraged plan. Under the nonleveraged plan, employees
purchased Schneider Electric shares at a preferential price.
Under the leveraged plan, a third-party bank topped up the
employee's initial investment, essentially multiplying the
amount paid by the employee. The total was invested in
Schneider Electric shares at a preferential price. After a
period of five years, the employee may withdraw a per-
centage of his or her gains, as long as his or her initial con-
tribution remains invested in the plan.
The plan's cost has been measured taking into account
the five-year lock-up period for the employee, in accor-
dance with the recommendations of France's national ac-
counting board (CNC). For the leveraged plan, the cost
includes the implicit opportunity gain obtained by Schnei-
der Electric in offering its employees institutional (rather
than retail) prices for derivative instruments.
Employees subscribed 0.7 million shares under the non-
leveraged plan and 1.7 million under the leveraged plan.
The related cost recognized during the period was 2.4
million for the nonleveraged plan and 9.5 million for the
leveraged plan. This cost was calculated on the basis of a
risk-free interest rate of 4.47% and a 5.97% rate for five-
year loans for general corporate purposes, resulting in a
notional rate reflecting the lock-up period of 11.85%. The
opportunity gain offered to employees investing in the
leveraged plan was estimated at 2.54%.
The shares were issued in July 2007 (note 14.1).
14.6 - Treasury stock
A share buyback program was authorized by sharehold-
ers at the Annual Meeting on May 6, 1999, and renewed at
the Annual Meetings held on May 5, 2000, June 11, 2001,
May 27, 2002, May 16, 2003, May 6, 2004, May 12, 2005,
May 3, 2006 and April 26, 2007.
The purpose of the program is to reduce dilution, optimize
the management of capital and cover stock option plans.
The latest authorized program provides for the purchase
of a maximum of 10% of the share capital within a period
of up to eighteen months from April 26, 2007.
The Annual Shareholders’ Meeting of April 26, 2007 au-
thorized the Management Board to buy back shares on the
open market. Acting on this authorization, the company set
up a liquidity contract under which the financial intermedi-
ary bought 4,335,408 shares at an average price of
95.79 and sold 4,335,408 shares at an average price of
96.07.
At December 31, 2007, the Group held 6,345,057 Schneider
Electric shares in treasury stock, acquired at a cost of
290.3 million, which has been recorded as a deduction
from retained earnings.
The main changes for the period stemmed from differences in hedging instruments (note 20), reevaluation of AXA shares
(note 8) and differences in actuarial gains and losses (note 15).
14.7 - Other reserves
Changes in other reserves were as follows:
Gains and losses from Actuarial Total
remeasurement at fair value gains and
Currency Hedges
Available-
losses
instruments of metal for-sale
and interest purchases financial
rate hedges assets
December 31, 2006 (136.1) (3.0) 161.1 (31.4) (9.4)
Unrealized net gains (losses)
on available-for-sale financial assets - - (20.5) - (20.5)
Net gains (losses) on currency instruments (38.3) - - - (38.3)
Net gains (losses) on interest rate hedges 1.5 - - - 1.5
Net gains (losses) on metal purchases - (3.4) - - (3.4)
Net gains (losses) on post-retirement benefits - - - 73.8 73.8
Other ----(0.8)
December 31, 2007 (172.9) (6.4) 140.6 42.4 2.9
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