APC 2007 Annual Report Download - page 77

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Business review
Gross capitalized development costs totaled €429 million
(€340 million net), reflecting the capitalization of costs re-
lated to current projects in an amount of €129 million.
Other intangible assets, net, consisting primarily of cus-
tomer lists recognized on acquisition, software and
patents, rose by €625 million over the year. The increase
is attributable to the recognition of customer lists and
patents in connection with the acquisition of APC (€550
million) and Pelco (€219 million) and capitalization of SAP
system development costs (€25 million net of impairment).
Property, plant and equipment
Property, plant and equipment came to 1,856 million ver-
sus 1,615 million the year before. Acquisitions added
264 million, while the currency effect had a negative im-
pact of 72 million. Net investments totaled 324 million.
Investments in associates
Investments in associates rose by 162 million to 172
million. This includes 121 million in provisional goodwill
following the acquisition of a 50% interest in Delixi Electric
on October 31, 2007.
Non-current financial assets
Non-current financial assets, primarily equity instruments
quoted in an active market and loans and receivables re-
lated to investments, totaled 447 million, on a par with
430 million in December 31, 2006.
Cash and net debt
Net cash provided by operating activities before changes
in operating assets and liabilities rose 15.1% to 2,211
million, representing 12.8% of revenue.
Changes in operating working capital represented a neg-
ative 121 million, reflecting strong business growth over
the year partially offset by reduced inventories. Working
capital to revenue declined by 0.4 point to 16.3% from
16.7% in 2006.
Net cash provided by operating activities totaled 2,090
million, up 31.6% from 1,588 million in 2006.
Capital expenditure, which includes capitalized develop-
ment projects, represented a cash out of 560 million, or
3.2% of revenue, compared with 481 million in 2006.
Acquisitions used a total of 5,291 million, net of the cash
acquired.
Cash proceeds from the sale of treasury stock on exercise
of stock options amounted to 15 million (versus a net
cash out for the repurchase of Company shares in an
amount of 53 million in 2006). Dividends paid totaled
700 million, of which 29 million to minority interests.
At December 31, 2007, net debt totaled 4,936 million or
48.5% of equity attributable to equity holders of the parent.
This represents an increase of 3,101 million from the
year before.
The Group ended the period with cash of 1,269 million,
of which 686 million in cash, 511 million in marketable
securities, and 72 million in short-term instruments such
as commercial paper, monetary mutual funds and equiva-
lents.
Total current and non-current financial liabilities amounted
to 6,204 million. Of this, bonds represented 3,946 mil-
lion and acquisition debt 17 million (net of the amount
held in escrow for Clipsal’s acquisition). Two new bond is-
sues, in an aggregate amount of 710 million, were made
in 2007 and 450 million worth of bonds were redeemed.
Current financial liabilities totaled 2,401 million at De-
cember 31, 2007 and primarily included bridge loans, bank
overdrafts, accrued interest and the current portion of
bonds (750 million).
Equity
Equity attributable to equity holders of the parent came to
10,185 million, or 43.8% of the balance sheet total. The
1,468 million increase over the year is the net result of
the following:
Payment of the 2006 dividend, in an amount of 670
million.
Profit for the year of 1,583 million.
Capital increases in March and July 2007, in an amount
of 1,178 million.
Shares issued on the exercise of stock options, for 96
million.
Changes in treasury stock, which increased equity by
24 million.
The impact of currency fluctuations, which reduced the
translation reserve by 811 million.
Fair value adjustments to hedging instruments and avail-
able-for-sale financial assets, which reduced equity by 61
million.
Changes in actuarial gains and losses stemming from
the measurement of employee benefits, which increased
equity by 74 million.
Minority interests rose by 28 million to 129 million, re-
flecting the 38 million profit for the period, partially offset
by dividend payments of 29 million.
Provisions
Current and non current provisions totaled 1,706 million,
or 7.3% of the balance sheet total. Of this, 446 million
covered items that are expected to be paid out in less than
one year.
This item primarily comprises provisions for pensions and
other post-employment benefits (medical care) in an
amount of 996 million. The decrease over the period cor-
responds to translation adjustments (47 million) and to
the change in actuarial assumptions, recognized net of tax
in equity, for a negative 114 million. Changes in the scope
of consolidation represented an increase of 13 million.
Other provisions totaled 710 million at December 31,
2007. These provisions cover product risks (warranties,
disputes over identified defective products), for 165 mil-
lion, economic risks (tax risks, financial risks generally
corresponding to seller's guarantees), for 309 million,
customer risks (customer disputes and losses on long-
term contracts), for 53 million, and restructuring, for 56
million.
The Group also set aside 72 million in provisions to cover
its IT contracts.
The year’s acquisitions added 68 million to provisions in
the balance sheet, while translation adjustments reduced
provisions by 20 million.