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2009 Annual Report
Schneider Electric: The global specialist in energy management
Registration Document
Schneider Electric SA

Table of contents

  • Page 1
    2009 Annual Report Schneider Electric: The global specialist in energy management Registration Document Schneider Electric SA

  • Page 2
    ...report on certain environmental, safety and human resources indicators 37 38 39 41 45 53 66 70 71 7 General presentation of Schneider Electric SA 1. 2. 3. 4. 5. 6. 7. General information Shareholders' rights and obligations Capital Ownership structure Employee profit-sharing, stock ownership Stock...

  • Page 3
    Registration Document Annual Report All of Schneider Electric's regulated information is available on the corporate website at www.schneider-electric.com, Company and Careers, Finance. The Business and Sustainable Development Report is available at 2009 www.schneider-electric.com, Company and ...

  • Page 4
    ... Group strategy, we rolled out our new company programme, One, launched in January 2009, and focused on three key transformations to make Schneider Electric the global specialist in energy management. First, we stepped up our move towards solutions. Building on our high-quality products and global...

  • Page 5
    ... company programme One. We will accelerate our move in energy management, drive quality in both products and solutions offerings, and all this with the leadership of our five businesses. We will continue to develop Schneider Electric at the centre of the Smart Grid technologies: renewable energies...

  • Page 6
    ... part of Schneider Electric's corporate culture and strategy, as is business performance. Together, responsibility and performance should drive a return to growth in 2010 and allow us to continue creating wealth for our shareholders, customers, employees and host communities. 4 2009 REGISTRATION...

  • Page 7
    ...? Schneider Electric responded to the situation swiftly and effectively. We remained very firm on prices and managed to increase them by 1% on average. In addition, the Group took measures to achieve substantial savings in industrial productivity and support function costs. These measures helped...

  • Page 8
    ... Vernerey EVP, IT 7 Hal Grant EVP, Global Supply Chain 13 Éric Pilaud EVP, CST*** (1) * ** *** Management board. EVP : Executive Vice President. Europe, Middle East, Africa, South America. President & CEO, Custom Sensors & Technologies Inc. 6 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 9
    ... de La Martinière* Corporate Director Non-voting member Claude Bébéar Corporate Director Noël Forgeard* Corporate Director Jérôme Gallot* Chairman of CDC Group Entreprises SAS Board Secretary Philippe Bougon Remunerations, Appointments and Human Resources Committee Audit Committee Henri...

  • Page 10
    ...as of December 31, 2009, better than the 12.0% target set at the beginning of the year (2). Quick deployment of the One company programme's priority action plans helped provide margin support. Measures to simplify the organisation delivered substantial savings in support function costs. Significant...

  • Page 11
    ... 41% Europe 8% Other 43% Europe 21% Asia - Pacific 27% North America 25% Asia - Pacific 24% North America * Total workforce at December 31, 2009 (including employees under fixed-term and open-ended contracts), see page 53. Profit attributable to equity holders of the parent (euro million...

  • Page 12
    ...% Groupe CDC 4.26% Employees 5.07% Capital Research & Management Co.(1) 2.68% Treasury stock - Own shares 83.66% Public (1) As of January 1, 2010, Capital Research & Management Co. held 21,055,211 shares, or 8.02% of the issued capital and 7.55% of the voting rights. The Schneider Electric SA...

  • Page 13
    ... of opportunities in India's buoyant energy efficiency market and extends its energy metering and management line up for international markets. Critical Power On June 22, 2009, Schneider Electric announced the acquisition of Microsol Tecnologia, a Brazilian manufacturer of UPS systems, voltage...

  • Page 14
    ...latest legislation on employee savings. The fund illustrates the shared societal commitment of the entire corporate community. On December 8, 2009, Schneider Electric and the Grenoble chamber of commerce and industry inaugurated a training course on home automation and new energy technologies at the...

  • Page 15
    ... its markets and its businesses 1. From steel to energy management 2. A strategic focus on balancing the energy equation 3. Innovation and R&D: creating intelligent energy solutions for our customers 4. Group organisation 5. Risk factors 14 17 24 27 30 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 16
    ... period, Schneider Electric built an unrivaled line up in terms of breadth, synergy and related services. The Group has promoted and enhanced its leadership in its historical businesses while gaining a forefront position in energy management in just a few years' time. The 2007 acquisition of Pelco...

  • Page 17
    ... greater cohesion among all the units, including recent acquisitions, and make the best use of the advantages of their synergy. To set the standard as the unrivalled leader in energy management, Schneider Electric is leveraging the One company programme 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 18
    ... 1 solution provider: Schneider Electric is accelerating its drive to address end-user needs with customised solutions that deliver strong energy efficiency benefits, thereby capturing a bigger part of the value chain. The Group is leveraging its integrated portfolio of businesses through the use...

  • Page 19
    ... these new challenges; • focus on simple solutions. No matter how technical products or solutions may be, users want them to be easy to install, use and maintain. Over the past five years, Schneider Electric has broadened its business portfolio and line up to make life easier for its customers...

  • Page 20
    ... on energy management since 2000, Schneider Electric has strengthened its leadership in electrical distribution, automation and industrial control while expanding in new markets and high- growth segments such as building automation, critical power and cooling services, grid connection systems for...

  • Page 21
    ... backed by design and supervision software to manage building utilities. The range is based on open, integrated systems that address operators' real needs. These solutions make it possible to optimise installations, modernize them cost effectively, 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 19

  • Page 22
    ...-to-install automation solutions and remote management services via the Internet. The Group works closely with customers to get a thorough understanding of their applications and to help them enhance productivity, ï¬,exibility, process and installation safety as well as energy management. The Group...

  • Page 23
    ...the Group works hand in hand with distributors on supply chain issues, technical training and marketing. Distributors have numerous resources at their fingertips, including the new "eShop" that allows them to link Schneider Electric's product data base to their eCommerce sites so that customers have...

  • Page 24
    ... and services that can help enhance their end product. Selected panelbuilders, chosen for their professionalism and ability to promote Schneider Electric's quality and safety values, receive advanced technical and marketing support. OEMs: partners in performance Original Equipment Manufacturers...

  • Page 25
    ... in buildings and data centres: HP, IBM. • green, by offering innovative solutions for renewable energies and eco-designed products and systems. The One company programme introduced in early 2009 supports Schneider Electric's strategic commitment to becoming: Market-leading brands The Group has...

  • Page 26
    ...among product and service line up and R&D skills management. • Based on reviews of solutions architectures carried out in 2008 and in response to customer demand, Schneider Electric launched a cross-business R&D programme called EcoStruxure during the year to develop software connections based on...

  • Page 27
    ... optimum safety. Schneider Electric has also teamed up with the French Agency for Environment and Energy Management (ADEME), EDF, Renault and Total to support a Prospective Modeling for Sustainable Development Chair at ParisTech. To meet the challenges of sustainable development, both businesses and...

  • Page 28
    ..., equipment, methods and resources at the international level (IEC and ISO) and as a member of several consortiums. It has chosen this active approach to ensure that Schneider Electric's solutions are interoperable with those offered by competitors and to protect customers from low-cost products...

  • Page 29
    ... Cooling Services and two endcustomer segments: Information System Manufacturers and Financial Services; • Buildings, which includes Building Automation and Security and four end-customer segments: Hotels, Hospitals, Office Buildings and Stores; 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 27

  • Page 30
    ... service quality. Drawing on its global scope, the Group has re-balanced and optimised its manufacturing and supply chain resources. The Group launched a new stage in its industrial deployment in 2010. As part of Schneider Electric's new organisation, the Power Business's production and supply chain...

  • Page 31
    ... production processes, promote eco-design, integrate customer expectations into the Group's environmental protection approach and raise awareness among all employees and partners about environmental protection and energy efficiency. In order to limit risks related to the environment generally...

  • Page 32
    ...cost. The Group's business growth depends on its ability to develop, deepen and enhance customer relationships. The Group must constantly offer customers innovative solutions built around high quality products and services incorporating leading-edge technologies that are closely tailored to customer...

  • Page 33
    .... The Group's expatriates help prepare the future of its business, build local teams and assemble the necessary skill-sets in targeted regions. The Group places considerable emphasis on training to deepen its skills base and retain employees. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 31

  • Page 34
    ... set up to manage relations with service providers responsible for outsourced IT systems operations. Problems may also be encountered during the deployment of new applications or software. In particular, a project was launched in 2004 to design, develop and build a Group-wide SAP-based ERP system...

  • Page 35
    ... position could suffer, which could have an adverse effect on its business. To mitigate this risk, the patents developed or purchased by the Group are tracked by the Industrial Property team within the Finance & Control - Legal Affairs Department. All industrial property information for the main...

  • Page 36
    ...ficant effects on the Group's business, assets, financial position or profitability. Insurance Schneider Electric's strategy for managing insurable risks is designed to defend the interests of employees and customers and to protect the Company's assets, the environment, employees, customers and...

  • Page 37
    ...established by specialists and available capacity in the insurance market. Assets are insured at replacement value. Specialized engineers from the programme's main insurance companies visit the Group's largest sites. Self insurance To optimise costs, Schneider Electric self insures certain frequent...

  • Page 38
    1 DESCRIPTION OF THE GROUP, ITS MARKETS AND ITS BUSINESSES 36 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 39
    ... development organisation 4. Environmental performance 5. Social performance 6. Societal performance 7. Rating 8. Methodology 9. Statutory Auditors' report on certain environmental, safety and human resources indicators 38 39 41 45 53 66 70 71 73 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 40
    ... the talk Energy and environmental responsibility are an integral part of Schneider Electric's corporate culture and strategy. What's more, sustainable development offers a critical opportunity for unleashing employees' enthusiasm, speeding growth and differentiating the Company. A new balance needs...

  • Page 41
    ... (environment, quality, purchasing and the different social policies). Across the Group, human resources policies are deployed governing diversity, hiring, international mobility, training, leadership competencies, total compensation and health. Commitments In 2009, Schneider Electric confirmed its...

  • Page 42
    ... gas emissions by managing energy consumption in buildings more effectively. Global Compact Launched in 1999 by UN Secretary-General Kofi Annan, the Global Compact brings companies and non-governmental organizations together under the aegis of the United Nations to "unite the power of market...

  • Page 43
    ... of work accidents, employee training in energy management and growth in the Group's energy efficiency business. Indicator-by-indicator results are presented on pages 46 to 72. For further information, go to www.barometer.schneider-electric.com. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 41

  • Page 44
    ...4 3.72 2 Q2/S1 Q3 Q4/S2 Q1 Q2/S1 Q3 Q4/S2 2009 2010 2011 Frequency rate of accidents Employee Net Promoter Score Training in energy management solutions Training in electricity (BipBop programme) Entrepreneurs' support (BipBop programme) 42 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 45
    ...: Health/Safety, Diversity, Social Innovation, Environmental Management, Sustainable Line-up, RoHS and Reach programmes, Purchasing, Supply Chain, Ethics, Energy Access programme, Communication and Stakeholder Relations. The Societal Performance Committee The President of Schneider Electric France...

  • Page 46
    ... DEVELOPMENT ORGANISATION The Health Committee Committee members include representatives from each Global Function, the Businesses and the Operating Divisions (North America, Europe, International and Asia-Pacific). Each quarter, the Committee meets to guide the Group's health and safety strategy...

  • Page 47
    ...in energy management. The Group neither generates nor distributes electricity. It designs and builds electrical and electronic products and offers integrated solutions for numerous market segments. The vast majority of Schneider Electric's products are installation components that manage energy used...

  • Page 48
    ... 2 accounts for GHG emissions from the generation of purchased electricity. Scope 3 covers all other indirect emissions from sources not owned or controlled by the Company. Examples include transportation and the use of sold products and services. 46 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 49
    ...In 2009, Schneider Electric's units focused on continuing to streamline the supply chain, a clear source of carbon emissions. Measures included: closing 29 distribution centres; concentrating 70% of shipping costs with 60 main suppliers; significantly improving the fill rate of trucks used in...

  • Page 50
    ...representatives. On-line information for our partners To make its partners' work easier, Schneider Electric makes documents available for downloading with REACH and/or RoHS data for specific products. OEMs, for example, can consult a spreadsheet with REACH data for different group products and use...

  • Page 51
    ... from. The Group has developed design tools for managing thermal and electrical constraints so that it can optimise the amount of materials required in production. Each device's Product Environmental Profile lists the materials used. To facilitate end-of-life processing, Schneider Electric chooses...

  • Page 52
    ...natural gas and oil, and thereby reducing costs; • deploying Schneider Electric's energy efficiency solutions at its own sites so that customers can see them in operation; • raising employees' awareness about new energy efficiency devices and their own contribution to product development. The...

  • Page 53
    ... corrective action plans are based on an analysis of non-standard situations and their potential End-of-life products A number of political commitments and regulations address the issue of waste from electrical products. One example is the European 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 51

  • Page 54
    ... emerging market and technology trends ahead of the curve and develops partnerships with promising start-ups. One example is the fund's acquisition of a 20% stake in SolaireDirect, a company that designs and installs photovoltaic systems of all sizes. More generally, the Renewable Energies business...

  • Page 55
    ...Schneider Electric's people are critical to its success. The Group motivates its employees and promotes involvement by making the most of diversity, supporting professional development, and ensuring safe, healthy working conditions. The human resources function is now organised to fulfil three main...

  • Page 56
    ...Health and safety Planet & Society Barometer improvement plans • 10% annual decrease in the frequency rate of accidents Performance at Jan. 1, 2009 4.00 Dec. 31, 2009 10.00 Accidents by category Total accidents 2009 609 544 65 2 2008 929 740 189 0 2007 2,335 N/A N/A 4 • Schneider Electric...

  • Page 57
    ... plan. A Schneider Electric Emergency Coordination Centre (SECC) was set up to facilitate management of local situations, notably concerning health measures. Managers, who play a key role in plant safety, serve as change catalysts. The number of days lost due to work accidents was halved in 2009...

  • Page 58
    ....00 Developing human capital through training To move successfully towards a Solutions-based business model, Schneider Electric must continuously enhance and strengthen its team members' skills. This strategic shift puts training at the very centre of the Group's human resources policy. As part of...

  • Page 59
    ...fic skill-sets through courses developed by the Group's global skills centres (marketing and sales, human resources, finance, manufacturing and supply chain operations), as well as to more general training. All of these programmes are offered according to the same basic format, combining standard...

  • Page 60
    ...part of human resources policy Schneider Electric's strategy hinges on continuously monitoring and developing its employee base of several thousands of people worldwide, while also identifying new talent, particularly in new economies. The global Talent Acceleration programme is designed to increase...

  • Page 61
    ... in 2009 The Group took action and made a number of commitments in 2009: > TOWARDS A RESPONSIBLE EMPLOYEE SAVINGS PLAN • On November 13, 2009, Schneider Electric and 31 other CAC 40 companies signed a charter to promote job opportunities for disabled persons with France's Secretary of State for...

  • Page 62
    ... job training during cross-border reorganization. In this way, Schneider Electric offers tangible support for career development. This agreement and the related measures are designed to make change a positive experience through social dialogue, prepare team members for the new skill-sets Schneider...

  • Page 63
    SUSTAINABLE DEVELOPMENT SOCIAL PERFORMANCE Areas covered by the agreements Terms and mandates of trade union delegations (1). Continuation of employee representative bodies and trade unions in Schneider Electric companies (1). Forward planning of jobs, occupations and skills on the French territory...

  • Page 64
    ....4%* 4.9%* 16.1%* 7.1%* 9.2%* 43.7%* Marketing Sales Services and Projects* Support Technical Production Direct variable costs/employees linked directly to production of range core and adapted products * 2007 data for functions have been restated. 62 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 65
    ...cover 94% of the French workforce. New hires Breakdown by type of contract (in %) 2009 56.6% 43.4% 2008 65% 35% 2007 63% 37% Open-ended Fixed-term Breakdown by category (in %) 2009 40% 60% 2008 47% 53% 2007 52% 48% White collar Blue collar 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 63

  • Page 66
    ... about these changes; • coordinate and optimise resources in an individual and collective approach to ensure more efficient job and skills management; • take longer careers into account to respond effectively to the needs of older employees; 64 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 67
    ... requirements to ensure mutual support among all the Group's corporate communities in France. The agreement took effect in April 2008. Procedures for implementation will be defined more precisely and enhanced over time. Schneider Electric has taken active measures to manage the social aspects of...

  • Page 68
    ... purchase. In late 2009, 36.54% of these 947 partners have signed the Global Compact or EICC. Monitoring working conditions among subcontractors and suppliers Schneider Electric uses a certification process called Schneider Supplier Quality Management to select new suppliers. The process is based...

  • Page 69
    ... 100 businesses in 2009. Schneider Electric's French sales division has also created a pack with dedicated technical training resources combined with support from a local sales representative to help these entrepreneurs. • One million households from the base of the pyramid have acces to energy...

  • Page 70
    ... projects that promote training and job opportunities for young people- primarily in the energy industry-and encourages Schneider Electric employees to participate. The Foundation's objective is to support collective and associationsupported projects to help the most disadvantaged groups, who can...

  • Page 71
    ...SIE is represented directly or indirectly in local business networks. To enhance the quality of services offered, it has teamed up with various local associations involved in job and business creation. Example in 2009 In France, the annual "100 opportunities - 100 jobs" campaign targets low-skilled...

  • Page 72
    ...Jones Sustainability Index World and the DJSI Euro Stoxx. This family of indices bases its decisions on research provided by Sustainable Asset Management (SAM), an independent asset manager headquartered in Switzerland. www.sustainability-index.com 70 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 73
    ... of contract cover 80% of the total workforce. All ISO 14001-compliaint units must report environmental data. All production and supply chain sites with 50 or more employees must obtain ISO 14001 certification before the end of the third full calendar year of operation or membership in the Group...

  • Page 74
    ... but at 2009 business levels. The indicator calculates the change in performance. Human resources, safety and environmental data Frequency rate The lost time injury frequency rate corresponds to the number of accidents resulting in more than one day of lost work over a period of twelve months per...

  • Page 75
    ... of the new reporting tool One led to new ways of entering the safety data. The data extractions performed at group level revealed several anomalies which require reinforced controls. • Efforts made in the sites and operational units to inform the persons in charge of environmental and social...

  • Page 76
    2 SUSTAINABLE DEVELOPMENT Conclusion We have a qualification about "Lost-Time Injury Frequency Rate (LTIFR)" and "Lost-Time Injury Severity Rate (LTISR)" due to a lack of traceability in the IT reporting system and to the incompleteness of the reporting scope. Based on our review and except for ...

  • Page 77
    ... Supervisory Board and Management Board 8. Management interests and compensation 9. Regulated Agreements 10. Internal Control and Risk Management 11. Application of the AFEP-MEDEF corporate governance guidelines 76 81 82 83 86 87 87 88 95 96 103 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 78
    ...71 Business address: Schneider Electric 35, rue Joseph-Monier - 92500 Rueil-Malmaison, France 27,128 Schneider Electric SA shares (1) First elected: 1996/Term ends: 2010 Note: Boldface type indicates companies whose shares trade on a regulated market. (1) Held directly or through a corporate mutual...

  • Page 79
    ... Business address: Weinberg Capital Partners 20, rue Quentin-Bauchart - 75008 Paris, France 500 Schneider Electric SA shares First elected: 2005/Term ends: 2010 Other directorships and functions in French or foreign companies • Currently: Member of the Supervisory Board of Schneider Electric SA...

  • Page 80
    ... SA shares (1) First elected: 2008/Term ends: 2012 Noël Forgeard* Other directorships and functions in French or foreign companies • Currently: Member of the Supervisory Boards of Schneider Electric SA and the "Schneider France-Germany" corporate mutual fund; responsible for trading in Europe...

  • Page 81
    ...voting director of Schneider Electric SA; Vice President, Corporate Human Resources and member of the Executive Committee of LVMH; Human Resources General Manager and member of the Executive Commitee of Accor; Member of the Board of Haute Autorité de Lutte contre les Discriminations (Halde), France...

  • Page 82
    ...* Age: 65 Business address: Corporate Perspectives, LLC 126 East 56th Street, 9th Floor - New York NY 10022 United States 250 Schneider Electric SA shares First elected: 2007/Term ends: 2012 Other directorships and functions in French or foreign companies • Currently: Non-voting member of the...

  • Page 83
    ... with strict rules governing transactions in Company stock (in particular, no transactions may be carried out during the month before the annual or interim results are announced); • attend Shareholders'Meetings. Article 7 states that non-voting members, who attend Supervisory Board meetings in...

  • Page 84
    ... opportunity to meet informally with key members of Senior Management prior to Board meetings. New members attend training and information sessions dealing with the Company's strategy and businesses. Schneider Electric has adopted a code of ethics for Supervisory Board members and employees designed...

  • Page 85
    ...The Board monitored the development and deployment of the Group's new organisation. It was also informed of the Group's 2009 targets. At its meeting on February 18, 2009, the Supervisory Board reviewed the 2008 accounts, based on the Audit Committee's report and 2009 Annual Shareholders'Meeting The...

  • Page 86
    ... the Company's internal control system, the Audit Committee is responsible for preparing the decisions of the Supervisory Board, making recommendations to the Board and issuing opinions on financial, accounting and risk management issues. In line with these terms of reference, it: Meetings in 2009...

  • Page 87
    ... policy (long-term profitbased incentives) for senior executives; • its review of compensation of Executive Committee members; The Committee also monitored the deployment of the Group's new organisation and discussed corporate governance. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 85

  • Page 88
    ... term expired on May. 2, 2009. Member of the Management Board Chairman of the Management Board and CEO Jean-Pascal Tricoire Age: 42 Age: 46 Business address: Schneider Electric 35, rue Joseph-Monier - 92500 Rueil-Malmaison, France 17,786 Schneider Electric SA shares (1) Emmanuel Babeau Business...

  • Page 89
    ... rules and procedures are invalid against claims from third parties. The Management Board met 20 times in 2009. • approves the annual and interim financial statements and related management reports; • calls Shareholders' Meetings; 3 > 7. Declarations concerning the situation of the members...

  • Page 90
    ... of the executive's unit, as measured on the basis of business targets and on the attainment of measurable personal performance targets. The compensation of the Management Board members is set by the Supervisory Board based on the recommendations of 88 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 91
    ... car and may also use the chauffeur-driven Company cars made available to Group Senior Management. This benefit in kind can be estimated for the 2009 fiscal year at EUR5,090. Compensation of the Supervisory Board members The Annual Shareholders'Meeting set total attendance fees at EUR800,000...

  • Page 92
    ... was appointed to the Management Board on May 3, 2009 and joined the Group as Executive VP Finance under a service contract for executives with Schneider Electric Industries SAS. At its meeting of April 23, 2009, the Supervisory Board decided to set Mr Babeau's total fixed annual salary for 2009 at...

  • Page 93
    ... is based on Group performance targets in terms of organic revenue growth, operating profit, cash generation ratio and customer satisfaction rates and 40% is based and on measurable personal targets. At its meeting of February 17, 2010, the Supervisory Board set Mr Babeau's variable bonus for 2009...

  • Page 94
    ... shares granted to members of the Management Board during the year by the issuer and by any other Group affiliate Plan no. (1) Jean-Pascal Tricoire 30 31 33 Pierre Bouchut (3) Plan date Dec. 19, 2007 Jan. 5, 2009 Dec. 21, 2009 Dec. 19, 2007 Jan. 5, 2009 Aug. 21, 2009 Dec. 21, 2009 Unit value...

  • Page 95
    ... Industries SAS employee benefit plan, which offers health, disability and death coverage; - the supplementary health, disability and death coverage available to the Group's senior executives; - the top-hat pension plan for Schneider Electric senior executives described in the Supervisory Board...

  • Page 96
    ... Chain; Strategy & Innovation; IT, Process & organisation; Global Marketing and Global Human Resources); 4) • the Executive Vice Presidents of the businesses (Power EMEA, Power North America & Buildings, Power Asia Pacific, Industry, IT and Custom Sensors & Technologies. Senior Management...

  • Page 97
    ...presented on page 227. • Benefits from the top-hat pension plan for Schneider Electric senior executives, the Schneider Electric SA employee benefit plan and the supplementary health, disability and death coverage available to the Group's senior executives; 2009 REGISTRATION DOCUMENT SCHNEIDER...

  • Page 98
    ... issued by Senior Management are effectively applied; • resources are acquired economically, used efficiently and adequately protected. Annual internal audit plans are drawn up based on risk and control concerns identified by management, taking into account the results of past audits, the work...

  • Page 99
    ... information. The unit drafts and updates: 2.6. Global Functions (Human Resources, Purchasing, Manufacturing, Supply Chain, Information Systems, etc.) Schneider Electric centralises decision making and risk management at the corporate level through specific bodies such as the Group Acquisitions...

  • Page 100
    ... and authorizations Commitment limits have been set for executives from Group level down to the individual units. Under this system, contracts for the purchase or sale of products or services exceeding EUR10 million must be approved by the Chairman of the Management Board, while those exceeding...

  • Page 101
    ... of Functions, Business Continuity Plans and Retention of Records); • operating processes (purchases, sales, inventories, etc.); • accounting and financial cycles; • Human Resources, IT, Legal and Tax cycles. The Key Internal Controls are available to all units on the Group intranet, along...

  • Page 102
    ... the Key Internal Controls throughout the Operating Divisions and businesses, with training and requests for self-assessments.The self-assessment process will be repeated in 2010 and will include new units. Results of the action plans drawn up in 2009 will be monitored. The internal control self...

  • Page 103
    ... and, in cooperation with the Legal Affairs Department, the Group's interest and voting rights are calculated for each subsidiary based on the method of consolidation; • the Management Control and Accounting unit performs checks and analyses. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 101

  • Page 104
    ... French Commercial Code (Code de commerce) for the year ended December 31, 2009. It is the Chairman's responsibility to prepare and submit for the supervisory board's approval a report on the internal control and risk management procedures implemented by the Company and to provide other information...

  • Page 105
    ...before they are reviewed by the Board. Schneider Electric practice At Schneider Electric, the Audit Committee reviews the financial statements the day before the Board meeting because one of the Committee members lives outside France. However, the Committee members receive a meeting file with the...

  • Page 106
    3 CORPORATE GOVERNANCE 104 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 107
    4 Business Review 1. Trends in Schneider Electric's core markets 106 2. Review of the consolidated financial statements 3. Review of the parent company financial statements 4. Review of subsidiaries 5. Outlook 107 111 112 112 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 105

  • Page 108
    ... and production more effectively, for the good of the planet. In the oil & gas segment, excess production capacity has prompted operators to postpone exploration outlays in relation to the very high levels of previous years. The decline was very significant in the United States but relatively...

  • Page 109
    ... and solutions for energy audits and energy management systems, the company generates sales in excess of EUR10 million and employs 337 people. On June 19, 2009, Schneider Electric acquired Microsol Tecnologia, a Brazilian manufacturer of UPSs, voltage regulators and accessories for Power protection...

  • Page 110
    ... measures taken in response to the economic and financial crisis. These expenses were primarily recorded in Europe (EUR240 million) and North America (EUR55 million). Operating profit and EBITAR Presentation of the interest component of defined benefit pension plan costs Through 2008, all costs...

  • Page 111
    ... on exercise of stock options represented a net inflow of EUR22 million compared with a net outflow of EUR70 million in 2008 related to net purchases. Dividends paid Review of balance sheet and cash flow statement items Total assets stood at EUR25,649 million at December 31, 2009, up 3% from the...

  • Page 112
    ... million; • fair value adjustments to hedging instruments and available-forsale financial assets, in an amount of EUR141 million; • changes in actuarial gains and losses on employee benefit obligations, which reduced equity by EUR14 million. 110 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 113
    ... versus EUR8,613 million at the previous year-end, after taking into account 2009 profit, dividend payments of EUR317 million, and share issues in an amount of EUR158 million. All trade payables are due before end-January. Schneider Electric SA posted total portfolio revenues of EUR541 million in...

  • Page 114
    ... taking into account corporate income tax, net profit stood at EUR1.4 million versus EUR1.6 million in 2008. > 5. Profitability Outlook Outlook for 2010 Assuming current economic conditions, Schneider Electric anticipates for 2010 : Business trends The industry and data centre end markets should...

  • Page 115
    ... statement of cash flows 3. Consolidated balance sheet 4. Consolidated statement of changes in equity 5. Notes to the consolidated financial statements 6. Statutory Auditors' report on the consolidated financial statements 114 116 118 120 121 181 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 116
    ... of purchase accounting intangibles and Restructuring costs. *** EBITA: Earnings Before Interests, Taxes and amortisation of purchase accounting intangibles. The accompanying notes are an integral part of the consolidated financial statements. 114 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 117
    ...: • to owners of the parent • to minority interests The accompanying notes are an integral part of the consolidated financial statements. (2) 117 24 (15) 21.7 (37) 14 101 995 957 38 18 (88) (116) (425) 215 (10) (406) 1,317 1,266 51 5 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 115

  • Page 118
    ...intangible assets Proceeds from disposals of intangible assets Net cash used by investment in operating assets Purchases of financial investments, net Purchases of other long-term investments Increase in long-term pension assets Sub-total Total II 116 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 119
    ...: Issuance of long-term debt Repayment of long-term debt Sale/(purchase) of treasury shares Increase/(reduction) in other financial debt Issuance of shares Dividends paid: Schneider Electric SA* Minority interests Total III IV - Net effect of exchange rate: Net increase/(decrease) in cash and...

  • Page 120
    ... held for sale Current financial assets Cash and cash equivalents Total current assets TOTAL ASSETS The accompanying notes are an integral part of the consolidated financial statements. 17 18 19 15.3 20 2,174 3,071 897 77 3,512 9,731 25,649 118 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 121
    ...liabilities TOTAL EQUITY AND LIABILITIES The accompanying notes are an integral part of the consolidated financial statements. 22 23 1,378 375 1,753 24 24 3,608 1,305 4,913 16 25 916 17 7,599 2,203 1,266 5 23 24 773 509 1,411 6,162 25,649 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 119

  • Page 122
    ..., EUR3 million in connection with the employee share purchase plan and a negative EUR17 million for the JV East no longer consolidated in the Group perimeter. The accompanying notes are an integral part of the consolidated financial statements. 120 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 123
    ... the year ended December 31, 2009 were reviewed by the Management Board of Schneider Electric on February 12, 2010 and by the Supervisory Board on February 17, 2010. They will be submitted to shareholders for approval at the Annual General Meeting of April 22, 2010. The Group's main businesses are...

  • Page 124
    ... Financial Reporting Standards (additional exemptions for first-time adopters); • IFRS 2 A - Share-based Payment (Group cash-settled sharebased payment transactions); • IFRS improvements (April 2009); • IAS 32 A - Financial Instruments: Presentation (classification of rights issues...

  • Page 125
    ... FINANCIAL STATEMENTS expense, the Group has decided to present the interest component of these costs and the expected return on plan assets in finance costs and other financial income and expense, net as from January 1, 2009. As a result of this change, EUR19 million recorded under operating...

  • Page 126
    ... assets acquired separately or as part of a business combination Intangible assets acquired separately are initially recognised in the balance sheet at historical cost. They are subsequently measured using the cost model, in accordance with IAS 38 - Intangible Assets. Trademarks, customer lists...

  • Page 127
    ... independent of those cash ï¬,ows from other assets or groups of assets. At Schneider Electric, CGUs generally correspond to the Operating Divisions (Europe, North America, International and Asia-Pacific) and Business Units, customised Sensors & 5 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 125

  • Page 128
    ... to actuarial assumptions regarding general financial and business conditions or demographics (i.e., changes in the discount rate, annual salary increases, return on plan assets, years of service, etc.) as well as experience adjustments are immediately recognised in the Group's balance sheet and as...

  • Page 129
    ... recorded at fair value, taking into account any direct transaction costs, and subsequently measured at amortised cost based on their effective interest rate. • stock options; • stock grants; • stock Appreciation Rights ("SARs"). IFRS 2 - Share-based Payment - applies only to plans set...

  • Page 130
    ...products are sold to the distributor and recognised as a deduction from revenue. Certain subsidiaries also offer cash discounts to distributors. These discounts are deducted from sales. Total revenue is presented net of these discounts and rebates. 128 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 131
    ... reduced the Group's cash position by a net EUR63 million, as described below: 2009 Acquisitions Cash and cash equivalents paid Cash and cash equivalents acquired Disposals Other operations NET FINANCIAL INVESTMENTS (95) (94) (1) 24 8 (63) 5 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 129

  • Page 132
    ... of purchase accounting intangibles and Restructuring costs (EBITAR). Share-based payment is presented under "Holding Company". The Management Board does not review assets and liabilities by Business. The same accounting principles governing the consolidated financial statements apply to segment...

  • Page 133
    ... 14.5% Critical Power 2,655 393 14.8% 378 14.2% Holding (317) (301) - Total 18,311 2,937 16.0% 2,773 15.1% 3.3 - Information by region The geographic regions covered by the Group are: • EMEAS: Europe, Middle East, Africa and South America; • North America: United States, Canada and Mexico...

  • Page 134
    ...the loss on disposal of a Wibe business for EUR6 million and to an R&D project being terminated for EUR6 million. (12) 11 (17) 92 14 88 2008 (9) 17 (7) 26 27 The gain of EUR92 million on the US pension plan curtailment is commented on in note 22. 132 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 135
    ... expenses totalled EUR313 million and mainly concerned measures taken in response to the economic and financial crisis. These expenses were primarily recorded in Europe (EUR240 million) and North America (EUR55 million). Note 8 Amortisation and impairment of purchase accounting intangibles 2009...

  • Page 136
    ... Group entities file consolidated tax returns. Schneider Electric SA files a consolidated tax return with its French subsidiaries held directly or indirectly through Schneider Electric Industries SAS. 10.1 - Analysis of income tax expense for the year 2009 Current taxes France International Total...

  • Page 137
    ... European Operating Division; NAOD: North American Operating Division; APOD: Asia-Pacific Operating Division; IOD: International Operating Division. CST: customised Sensors & Technologies, BA: Building Automation, CPCS: Critical Power & Cooling System. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 138
    ...adjustments to the provisional accounting. RAM and Wessen were acquired at the end of 2008. The main exchange rate changes concerned goodwill in USD. Impairment Impairment losses recognised during the year totalled EUR90 million, for CST (note 8). 136 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 139
    ..., has been aligned with their value in use. This led to the recognition of an additional impairment loss on the trademark, in an amount of EUR10 million, and on other intangible assets related to the business, in an amount of EUR18 million. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 137

  • Page 140
    ... Juno Digital Xantrex BEI Merten Kavlico Autres TOTAL NET Trademarks are not amortised as they are considered to have indefinite lives. 1,277 343 200 159 108 79 41 25 8 18 11 19 2,288 Dec. 31, 2008 1,321 369 200 126 104 82 43 26 19 18 11 12 2,331 138 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 141
    ...FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 13 Property, plant and equipment 13.1 - Change in property, plant and equipment Machinery and equipment Land GROSS VALUE Dec. 31, 2007 Acquisitions...368) 1,856 1,970 1,965 5 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 139

  • Page 142
    ... at December 31, 2009: Minimum payments Less than one year Between one and five years Five years and more TOTAL RENTAL COMMITMENTS Discounting effect Discounted minimum payments 93 205 107 405 (38) 367 Discounted minimum payments 93 189 85 367 - 140 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 143
    ..., totalled EUR77 million as of December 31, 2009. 15.2 - Other non-current financial assets The agreement for the acquisition of Clipsal includes a seller's warranty providing for part of the acquisition price to be withheld (see note 25). 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 141

  • Page 144
    ... Semi-finished and finished products Goods INVENTORIES AND WORK IN PROCESS, NET 823 302 993 56 2,174 (124) (15) (131) (11) (281) 947 317 1,124 67 2,455 Dec. 31, 2008 1,041 344 1,376 87 2,848 (112) (15) (128) (9) (264) 929 329 1,248 78 2,584 142 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 145
    ... NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 18 Trade accounts receivable Dec. 31, 2009 Accounts receivable Notes receivable Advances to suppliers Accounts receivable at cost Impairment Accounts receivable, net Of which: On time Less than one month past due One to two months past due Two to...

  • Page 146
    ... par value of EUR8, all fully paid up. At December 31, 2009, a total of 280,369,861 voting rights were attached to the 262,752,025 shares outstanding. Schneider Electric's capital management strategy is designed to ensure liquidity, optimise the balance sheet and the weighted average cost of capital...

  • Page 147
    ... THE CONSOLIDATED FINANCIAL STATEMENTS 21.2 - Ownership structure Dec. 31, 2009 Capital % Dec. 31, 2008 Capital % Number of shares Voting rights % Number of voting rights Voting rights % Capital Research and Management Company (1) CDC Group Employees Own shares (2) Treasury stock Public TOTAL...

  • Page 148
    ...-based payment Current stock option and stock grant plans The Board of Directors of Schneider Electric SA and later the Management Board have set up stock option and stock grant plans for senior executives and certain employees. The main features of these plans were as follows at December 31, 2009...

  • Page 149
    ...the Group. In addition, exercise of some options is generally conditional on the achievement of annual objectives based on financial indicators. In 2009, 870,491 new Schneider Electric SA shares were issued on the exercise of currently vested stock options. Change in number of stock grants: Number...

  • Page 150
    ..., the amount recorded under "Selling, general and administrative expenses" for stock grant plans set up after November 7, 2002 breaks down as follows: 2009 Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Plan 6 Plan 7 Plan 8 Plan 9 1 1 2 2 6 2008 1 2 1 4 148 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 151
    ...the share during the 20 days preceding the Management Board's decision to launch the employee share issue. In all, 2.5 million shares were subscribed, increasing the Company's capital by EUR114 million as of July 10, 2009. The issue represented a total cost of EUR2.6 million, taking into account the...

  • Page 152
    ... by employees Total amount subscribed Total number of shares subscribed (millions of shares) Valuation assumptions Interest rate available to market participant (bullet loan) (1) Five year risk-free interest rate (euro zone) Annual interest rate (repo) (a) Value of discount between and (b) Value of...

  • Page 153
    ... spread increases the opportunity gain for the employee and increases the expense booked by the issuer. 5 21.6 - Treasury stock The liquidity contract set up with a broker to purchase and sell Schneider Electric SA shares was terminated on December 31, 2009. At December 31, 2009, the Group held...

  • Page 154
    ... average expected return of the total asset value. In the United States, the expected return on plan assets for 2010 is 8.3%. The discount rate currently stands at 4.6% in the euro zone, 5.8% in the United States and 5.4% in the United Kingdom. A 0.5 point increase in the discount rate would reduce...

  • Page 155
    ... contribution plan payments totalled EUR39 million in 2009 and EUR42 million in 2008. criteria in terms of age and years of service. These post-employment benefit obligations are unfunded. Healthcare coverage for North American employees represents 82% of this obligation. The assumptions used to...

  • Page 156
    ...discounting) Expected return on plan assets Past service cost Curtailments and settlements NET COST RECOGNISED IN THE STATEMENT OF INCOME 55 109 (74) (92) (2) 18 57 (50) (91) 54 102 (104) 5 (2) 55 Dec. 31, 2008 o/w US plans 17 52 (73) 5 - (66) 1 154 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 157
    ... PROJECTED BENEFIT OBLIGATION AT END OF YEAR Actuarial gains and losses have been fully recognised in Other Comprehensive Income. They stem mainly from changes in actuarial assumptions (primarily discount rates) used to measure obligations in the United States, the United Kingdom and the euro zone...

  • Page 158
    ... TO THE CONSOLIDATED FINANCIAL STATEMENTS Dec. 31, 2009 o/w US plans 5. Funded status Projected benefit obligation Fair value of plan assets Surplus/ (Deficit) Effect of the asset ceiling Deferred items: Unrecognized past service cost NET ASSET/(LIABILITY) RECOGNISED IN THE BALANCE SHEET 0 (944...

  • Page 159
    CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Dec. 31, 2009 2. Change in projected benefit obligation Projected benefit obligation at beginning of year Service cost Interest cost (effect of discounting) Plan participants' contributuion Benefits paid Actuarial (...

  • Page 160
    ... of EUR11 million. These provisions are primarily set aside to cover potential reclamation costs. (e) Restructuring New provisions were set aside during the year to cover the costs of restructuring plans in Europe and the United States (note 7). 158 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 161
    ... FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 24 Long and short-term debt Non-current financial liabilities break down as follows: Dec. 31, 2009 Convertible and non-converstible bonds Bank and other borrowings Lease liabilities Employees profit sharing Short-term...

  • Page 162
    ... 26 752 3,477 Effective interest rate 3.375% TF 3.125% TF EUR +0.200% TV CMS 10+1.000% and 6.750% 4.500% TF 5.375% TF EUR + 0.600% TV 4.000% TF Maturity Jan 2009 Aug 2010 Jul 2011 Jul 2013 Jan 2014 Jan 2015 Jul 2016 Aug 2017 Schneider Electric SA has made several bond issues as part of its Euro...

  • Page 163
    ... Comprehensive Income". The market value of financial instruments, which corresponds to their carrying amount, is estimated either internally by discounting future differential cash ï¬,ows at current market interest rates or by third party banks. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 161

  • Page 164
    ...-for-sale financial assets Loans and accounts receivable Financial liabilities measured at amortised cost Derivative instruments TOTAL Impact on financial income and expense 5 26 (323) (16) (308) Translation adjustment (2) 52 (55) 9 4 Others - 162 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 165
    ... CONSOLIDATED FINANCIAL STATEMENTS Dec. 31, 2008 Available-for-sale financial assets Loans and accounts receivable Financial liabilities measured at amortised cost Derivative instruments TOTAL Impact on financial income and expense 33 59 (321) (12) (241) Impact on Equity Fair value Translation...

  • Page 166
    ... on March 5, 2009, is as follows: Dec. 31, 2009 Level 1 Available-for-sale financial assets Net derivative instruments Marketable securities NET ASSETS AT FAIR VALUE 179 2,681 2,860 Level 2 (66) (66) Level 3 66 66 Total 245 (66) 2,681 2,860 164 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 167
    ... NUMBER OF EMPLOYEES By region: EMEAS North America Asia-Pacific The change in average number of employees primarily reï¬,ects the effect of restructuring plans in 2009. 27.2 - Employee benefits expense 2009 Payroll costs (1) Profit-sharing and incentive bonuses Stock options WESOP TOTAL EMPLOYEE...

  • Page 168
    ...-voltage teams to create a new Energy Business with revenue of around EUR4.6 billion and 22,000 employees. 30.2 - Acquisition of Cimac On January 21, 2010, Schneider Electric announced the signature of an agreement to acquire Cimac, the leading systems integrator for industrial automation solutions...

  • Page 169
    ...treatment used and the amount of deferred taxes recorded if the Company chooses to treat the CVAE as income tax. Because both the new law and the CNC press release were issued very close to the date when the Group's financial statements were due to be drawn up and published, Schneider Electric has...

  • Page 170
    5 CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 32 Consolidated companies The companies included in the Schneider Electric Group scope of consolidation are listed below. % interest Dec. 31, 2009 Europe Fully consolidated APC Deutschland GmbH Berger Lahr ...

  • Page 171
    ... FINANCIAL STATEMENTS % interest Dec. 31, 2009 Orbaekvej 280 A/S Schneider Electric Buildings Denmark A/S Schneider Electric Denmark A/S Schneider Electric IT Denmark ApS Schneider Nordic Baltic A/S APC Spain S.L. EFI Electronics Europe SL Hispano Mecano-Electrica SA Manufacturas Electricas SA MGE...

  • Page 172
    ... FINANCIAL STATEMENTS % interest Dec. 31, 2009 Merlin Gerin Alpes SAS MGE Finances SAS MGE UPS Systems Muller & Cie Newlog Normabarre Prodipact Rectiphase Rectiphase SAS SA2E SAE Gardy Sarel Appareillage Électrique Scanelec Schneider Automation Schneider Electric Consulting Schneider Electric...

  • Page 173
    ... Limited Schneider Electric Buildings Ireland Limited Schneider Electric Ireland Schneider Electric IT Logistics Europe Ltd Square D Company Ireland Ltd Thorsman Sales Ireland Ltd APC Italia S.r.l. Controlli Srl Crouzet Componenti Srl Elau Systems Italia Srl Et.Ts. Entreprise Technologies Srl MGE...

  • Page 174
    ... FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS % interest Dec. 31, 2009 UPS Systems MGE B.V. APC Poland Sp. z.o.o. Elda Eltra S.A. (ex Eltra SA) Merten Polska Sp. z o.o. Schneider Electric Buildings Polska Sp. z o.o. Schneider Electric Industries Polska SP Schneider Electric...

  • Page 175
    ... FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS % interest Dec. 31, 2009 Schneider Electric IT UK Ltd Schneider Electric Ltd Tac Satchwell Northern Ireland Ltd Thorsman Ltd Tower Forged Products Ltd Tower Manufacturing Ltd Xantrex Technology Ltd Yorkshire Switchgear Group...

  • Page 176
    ... FINANCIAL STATEMENTS % interest Dec. 31, 2009 Sarel AG Schneider Electric Finances Schneider Electric Motion AG Schneider Electric Suisse AG Selectron Systems AG Schneider Electric Ukraine Smart Electric Accounted for by the equity method Delta Dore Finance SA (sous-groupe) Möre Electric Group...

  • Page 177
    .... Schneider Electric Vermont Ltd SNA Holdings Inc. Square D Holdings One, Inc. Square D Investment Company ST Inverter Americas Inc. Veris Industries LLC Xantrex Technology Inc. Asia-Pacific Fully consolidated APC Australia Pty. Limited Australian Electrical Supplies Pty. Ltd Citect Corporation Ltd...

  • Page 178
    ... Co., Ltd APC Gutor Power & Cooling Shanghai Co., Ltd Beijing Merlin Great Wall Computer Room Equipment & Engineering Co. Ltd Citect Controls Systems (Shanghai) Ltd Clipsal China Company Limited Clipsal Manufacturing (Huizhou) Ltd Custom Sensors & Technologies Asia (Shangai) Ltd East Electric System...

  • Page 179
    ...Limited GET Santai Limited Invensys Building System Hong Kong Ltd Jansweet Ltd Schneider Busway Limited Schneider Electric (Hong Kong) Ltd Schneider Electric Asia Pacific Limited Schneider Electric IT Hong Kong Ltd APC India Private Limited CST Sensors India Private Limited LK India Private Ltd MGE...

  • Page 180
    ...Limited American Power Conversion Land Holdings Inc. American Power Conversion, Inc. Clipsal Philippines MGE UPS Systems Philippines Inc. Schneider Electric (Philippines) Inc. Citect PTE Clipsal International PTE Ltd Clipsal Singapore Technology PTE Ltd TAC (IBS) PTE Ltd KSLA Energy & Power Solution...

  • Page 181
    ... Schneider Electric Algeria EPS Electrical Power Distribution Board & Switchgear Ltd MGE UPS Systems Argentina SA Schneider Electric Argentina SA Clipsal Middle East Xantrex Holding Ltd Xantrex International Partnership Xantrex International SRL Palatine Ridge Insurance Company Ltd Standard Holdings...

  • Page 182
    ... A.S. MGE UPS Systems Bilgisayar Sistemleri Ticaret A.S. Profiluks Plastik ve Elektrik San. Tic. A.S. Schneider Elektrik Sanayi Ve Ticaret A.S. APC Uruguay SA Schneider Electric Venezuela SA Brazil Brazil Chile Chile Chile Colombia Costa Rica Egypt Egypt Egypt United Arab Emirates United Arab...

  • Page 183
    ... Shareholders, In compliance with the assignment entrusted to us by your Annual Shareholders' Meeting, we hereby report to you, for the year ended December 31, 2009, on: II. Justification of our assessments In accordance with the requirements of article L. 823-9 of the French Commercial Code (Code...

  • Page 184
    .... Specific verification As required by law we have also verified in accordance with professional standards applicable in France the information presented in the Group's management report. Mazars Pierre SARDET Ernst & Young et Autres Yvon SALAÃœN 182 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 185
    ... 2. Statement of income 3. Notes to the financial statements 4. Statutory Auditors' report on the financial statements 5. List of securities at December 31, 2009 6. Subsidiaries and affiliates 7. Five-year financial summary 184 186 187 198 199 200 202 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 186
    6 COMPANY FINANCIAL STATEMENTS BALANCE SHEET > 1. Assets (in thousands of euros) Balance sheet Note 1.1 Depreciation amortisation Cost and provisions Dec. 31, 2009 Net Dec. 31, 2008 Net Dec. 31, 2007 Net Non-current assets: Intangible assets Intangible rights Property, plant and equipment ...

  • Page 187
    ...: Accounts payable - trade Accrued taxes and payroll costs Other liabilities 251 3,363 10,013 13,626 Total non-current and current liabilities Deferred income Translation gains TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY The notes form an integral part of these financial statements. 7.3 322...

  • Page 188
    ... Carrying value of fixed asset disposals Provisions, depreciation and amortisation Other Non-recurring expenses Net non-recurring income/(expense) Net income tax benefit NET INCOME The notes form an integral part of these financial statements. 186 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 189
    ..., account is also taken of the acquired business goodwill. For listed investments, value in use is also based on the average stock price over the last month. unrealised gains on investments are not recognised. • the 2008 dividend reinvestment programme, for EUR519 million; • the employee share...

  • Page 190
    ... stock options are recognised under "Marketable securities". In 2009, the EUR2 million provision set aside in 2008 for impairment of Schneider Electric SA shares acquired for allocation on the exercise of stock options was reversed in its totality. 188 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 191
    COMPANY FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS At December 31, 2009, 997,077 Schneider Electric SA shares were recorded under "Other investment securities" at a total cost of EUR49 million. The EUR28 million decrease from the previous year-end reï¬,ects share purchases and sales ...

  • Page 192
    ... 29,423 26,461 Dec. 31, 2009 Value Number of shares 45,129 54,255 57,348 1,797 60,711 219,240 0 219,240 0 219,240 761,313 948,241 1,000,000 31,333 877,586 3,618,473 0 3,618,473 - Plan 26 Plan 27 Plan 28 Plan 29 Plan 30 Total Schneider Electric SA shares Other Cost Provisions NET 761,313 1,000,000...

  • Page 193
    ...857 Decreases (317) (352) (194) (396) (75) (72) (634) (1,476) (2,412) 426 (60) (5,562) Dec. 31, 2009 199 3,208 306 1,856 0 353 6,256 14,605 30,275 (3,734) 270 53,593 6 Increases in this item concern bond issues carried out in 2009 (see note 9). 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 191

  • Page 194
    ... by 262,752,025 shares with a par value of EUR8, all fully paid up. Schneider Electric SA shares In 2009, 51,759 treasury shares acquired at a cost of EUR3 million were allocated to employees on exercise of stock options and stock grants. The total number of shares held in treasury at year...

  • Page 195
    ... was increased to EUR32 million. The Company applied the corridor method to actuarial gains and losses arising from this valuation (see Accounting Principles). At December 31, 2009, actuarial gains and losses totalled EUR4 million and the amount to be recognised in the income statement over...

  • Page 196
    6 COMPANY FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS Schneider Electric SA has made several bond issues as part of its Euro Medium Term Notes (EMTN) programme over the past few years. Issues that were not yet due as of December 31, 2009 were as follows: • EUR600 million worth of 5....

  • Page 197
    ...filiates Accounts receivable Cash and cash equivalents Interest-bearing liabilities Accounts payable Revenues: • Dividends • Interest rate 537,007 129,960 4,605,417 3,139,161 2,142 6,065,867 0 0 Net 4,587,520 3,139,100 1,895 6,065,867 0 0 6 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 195

  • Page 198
    ...the year before. 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 totalled EUR635 million at December 31, 2009. 196 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 199
    ... (14,472) Market value (20,975) (16,055) (12,630) (9,290) 7,035 11,509 (40,406) Note 19 Other information 19.1 - Number of employees At December 31, 2009, the Company had two employees. 19.2 - Consolidated financial statements Schneider Electric SA is the parent company of the Group and therefore...

  • Page 200
    ... professional auditing standards applicable in France. To the Shareholders of Schneider Electric SA, In compliance with the assignment entrusted to us by your Annual Shareholders' Meeting, we hereby report to you, for the year ended December 31, 2009 on: principles and methods used to value shares...

  • Page 201
    COMPANY FINANCIAL STATEMENTS LIST OF SECURITIES AT DECEMBER 31, 2009 > 5. Number of shares (in thousands of euros) List of securities at December 31, 2009 Company Schneider Electric Industries SAS AXA SELF Vigéo SAS Schneider Electric SA treasury stock Carrying value 4,344,481 111,172 2,683 53 ...

  • Page 202
    6 COMPANY FINANCIAL STATEMENTS SUBSIDIARIES AND AFFILIATES > 6. Subsidiaries and affiliates Company (in thousands of euros) I. Subsidiaries and affiliates whose carrying value exceeds 1% of Schneider Electric SA's capital Capital Reserves and retained earnings before appropriation of income for ...

  • Page 203
    ... received Comments 4,344,481 136,940 82,613 3,139,099 - - 2,756,418 Holding company Holding company 671,994 6,750 1,429 526,584 5,188 5,149 21,249 - - - (170) 0 1,038 - - - - - (54) - 113,909 1,200 - - - - 4,058 - 6 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 201

  • Page 204
    ... 2 3,648 1,194 3 4,446 690 (1) Dividends on shares held in treasury on the dividend payment date and the associated précompte tax are credited to retained earnings. (2) Pending approval by shareholders at the Annual Meeting of April 22, 2010. 202 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 205
    ... 5. Employee profit-sharing, stock ownership 6. Stock option and stock grant plans 7. Disclosure of information required in accordance with article L. 225-100-3 of the French Commercial Code 8. Stock market data 9. Investor relations 204 205 207 210 211 211 218 218 221 2009 REGISTRATION DOCUMENT...

  • Page 206
    ... (Management Board secretariat) located at 35 rue Joseph Monier - 92500 RueilMalmaison, France. The bylaws, regulated information, Registration Document, sustainable development reports, calls to meeting and other documents are also available on the corporate website (www.schneider-electric.com...

  • Page 207
    ... made to call a General Meeting, the Management Board may authorise shareholders to fill out and sign these forms electronically through a secure site set up by the General Meeting organizer using a process that complies with article 1316-4, paragraph 2, line 1 of the French Civil Code, for example...

  • Page 208
    ... of a dividend. The Annual Meeting may decide to offer shareholders the opportunity to receive the dividend in cash or in the form of new shares of common stock. Dividends not claimed within five years from the date of payment become time-barred and are paid over to the State in accordance with the...

  • Page 209
    ... French Commercial Code, within a limit of 3% of the issued capital as of April 23, 2009. 5) to issue new shares to members of the Employee Stock Purchase Plan, within a limit of 2.5% of the issued capital as of the date on which the authorisation is used. 6) to issue new shares to entities set up...

  • Page 210
    .... (2) At its meeting on December 17, 2009, the Supervisory Board authorised the Management Board to issue new shares to members of the Employee Stock Purchase Plan (ESPP) during 2010, within a limit of 1% of the Company's issued capital. The Management Board intends to use this authorisation in...

  • Page 211
    ...of the date of the Annual Meeting, representing, on the basis of the issued share capital at January 31, 2009, 26,275,202 shares with a par value of EUR8, - taking into account treasury stock and own shares at January 31, 2009 (7,028,198 shares), the number of shares that could be bought back under...

  • Page 212
    ... in capital Dec. 31, 2009 Capital % Dec. 31, 2008 Capital % Dec. 31, 2007 Capital % Number of shares Voting rights % Number of voting rights Voting rights % Voting rights % Capital Research & Management Co. (1) CDC Group Employees Own shares (2) Treasury stock Public TOTAL 5.07 4.32 4.26...

  • Page 213
    ... to developing worldwide employee stock ownership. Employees who are members of the Employee Stock Purchase Plan have an opportunity to purchase new or existing Schneider Electric SA shares through corporate mutual funds or directly. The last employee share issue took place in July 2009. A total of...

  • Page 214
    ... Board The Supervisory Board has set the following shareholding targets for members of the Management Board: Description of the stock option plan The option exercise price is equal to the average share price of the twenty trading days prior to the date of grant by the Management Board. No discount...

  • Page 215
    ... options expired at the end of the plan's life (12,118 for plan 20). Plan 30: 471,246 options were cancelled in 2010 because the targets were not met. Based on a predetermined, set list of 11 peer competitors. Excluding restructuring costs. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 213

  • Page 216
    7 GENERAL PRESENTATION OF SCHNEIDER ELECTRIC SA STOCK OPTION AND STOCK GRANT PLANS Details on outstanding options (2009) Total number Options of shares granted that may be subscribed or to corporate officers (3) purchased (3) 561,430 345,769 521,906 23,311 42,454 1,622,713 46,656 1,944,649 1,600,...

  • Page 217
    GENERAL PRESENTATION OF SCHNEIDER ELECTRIC SA STOCK OPTION AND STOCK GRANT PLANS Options held by corporate officers, by plan, at December 31, 2009 (Options in italics are subject to performance criteria) 19 20 21 24 26 27 28 30 31 32 33 Henri Lachmann Henri Lachmann Henri Lachmann ...

  • Page 218
    ...GENERAL PRESENTATION OF SCHNEIDER ELECTRIC SA STOCK OPTION AND STOCK GRANT PLANS Stock grant plan details (at December 31, 2009) Grants Total made to % of grants target Cancelled corporate met grants (1) officers (2) cancelled Grants outstanding at Dec. 31, 2009 Plan no. Plan date Initial number...

  • Page 219
    GENERAL PRESENTATION OF SCHNEIDER ELECTRIC SA STOCK OPTION AND STOCK GRANT PLANS Stock grants held by corporate officers, by plan, at December 31, 2009 (Grants in italics are subject to performance criteria) 1 3 5 7 8 Jean-Pascal Tricoire Pierre Bouchut Jean-Pascal Tricoire Pierre Bouchut Jean-...

  • Page 220
    ...voting rights when a public tender offer is in process. > 8. - thousands of shares - millions of euros Stock market data In France, Schneider Electric is listed on the Eurolist of the Euronext Paris market (compartment A), where it is traded in lots of one under ISIN code FR0000121972. It is part...

  • Page 221
    GENERAL PRESENTATION OF SCHNEIDER ELECTRIC SA STOCK MARKET DATA 18-month trading data Trading volume Year 2008 Value (in millions of euros) Price (in euros) (3) High 73.83 72.35 62.00 52.30 55.44 58.00 55.89 53.13 58.59 56.07 56.98 64.55 67.96 74.05 77.40 76.97 81.85 Month August September ...

  • Page 222
    ...the 2005 issue, are traded on the Luxembourg stock exchange under code number FR0010224337; Ordinary bonds Schneider Electric SA has made several bond issues as part of its Euro Medium Term Notes (EMTN) programme over the past few years. Issues that had not yet come due as of December 31, 2009 were...

  • Page 223
    ...annual report, the Company also publishes: • a summary report entitled "In Brief"; • a letter to shareholders; • general, economic and financial information (presentations, press releases); • a corporate website www.schneider-electric.com. 7 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 224
    7 GENERAL PRESENTATION OF SCHNEIDER ELECTRIC SA 222 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 225
    ...the Annual and Extraordinary Shareholders' Meeting 2. Supervisory Board's comments on the Management Board's report, made in accordance with article L.225-68 of the French Commercial Code 3. Auditors' special reports 4. Resolutions 224 227 227 231 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 223

  • Page 226
    ...Management Board's report to the Annual and Extraordinary Shareholders' Meeting If our recommendation is approved, the price of the shares purchased by reinvesting the dividend will be equal to 90% of the average opening price quoted on the NYSE-Euronext Paris stock exchange over the twenty trading...

  • Page 227
    ...Annual Meeting of April 23, 2009 to buy back its shares by any appropriate method, including through the use of derivatives, in accordance with the provisions of article L.225-209 of the French Commercial Code. The shares could be bought back to reduce the issued capital, or in connection with stock...

  • Page 228
    ... authorizations: • the Management Board decided on May 28, 2009 to issue shares to employees who are members of the Employee Stock Purchase Plan or to entities set up to purchase shares on employees' behalf. The 2009 worldwide employee stock 226 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 229
    ... Board and Management Board work together in a spirit of dialogue and benefit from a very clear, straightforward approach. The financial statements for the year ended December 31, 2009 and the events described in the management review show that Schneider Electric has chosen the right strategy...

  • Page 230
    ... 3, 2009, Mr Jean-Pascal Tricoire benefits from a new status authorised by the Supervisory Board on February 18, 2009. Under the agreement: 1) Mr Tricoire will continue to benefit from: - the Schneider Electric SA and Schneider Electric Industries SAS employee benefit plan, which offers health...

  • Page 231
    ...report, to increase the Company's issued share capital directly or through a representative on one or several occasions by issuing the securities described above without pre-emptive subscription rights, for a period of 14 months. If the resolution is adopted, the Management Board will set the terms...

  • Page 232
    .... of the French Commercial Code, we present our report on the proposal to authorise the Management Board to issue shares or share equivalents, on one or several occasions, to employees who are members of an Employee Stock Purchase Plan set up by French or foreign related companies, with cancellation...

  • Page 233
    ... > 4. Resolutions Resolutions to be voted on in Annual Meeting First resolution (2009 parent company financial statements) The General Meeting, acting with the quorum and majority required for ordinary General Meetings, having heard the reports of the Management Board and the Auditors, and noting...

  • Page 234
    ... required for ordinary General Meetings, re-elects James Ross as a member of the Supervisory Board for a period of two years, expiring at the close of the Annual Shareholders' Meeting to be called in 2012 to approve the 2011 financial statements. 232 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 235
    ...Commercial Code and in accordance with the eighteenth resolution of the General Meeting of April 23, 2009. • The Management Board may adjust the price(s) set above to take into account the effect of any of the following: (i) an issue of bonus shares or increase in the par value of existing shares...

  • Page 236
    ... the Management Board a 26-month authorisation from the date of this Meeting to decide on the share capital increase, directly or through a representative, on one or several occasions at its discretion, by issuing shares and share equivalents to the members of an Employee Stock Purchase Plan set up...

  • Page 237
    ...to those available to other Group employees; 3) that the issue price of shares issued under this resolution will be set by the Management Board based on the price quoted for the Company's shares on the NYSE-Euronext Paris stock exchange. At the discretion of the Management Board, said price will be...

  • Page 238
    8 ANNUAL AND EXTRAORDINARY SHAREHOLDERS' MEETING 236 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 239
    ... 17, 2009, • the annual company financial statements and corresponding Auditors' Reports provided in Chapter 6 of the registration document for the ended December 31, 2007, registered with Autorité des Marchés Financiers (AMF) under number D08-0112 on March 17, 2008, • the business review...

  • Page 240
    ... the Statutory Auditors at the Annual Meeting (see pages 82 and 232). (1) Yvon Salaün replaced Pierre Jouanne as the signing partner on June 30, 2009. Ernst & Young et Autres and Mazars are members of the Auditor's Regional Company of Versailles. 238 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 241
    2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 239

  • Page 242
    240 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 243
    Financial Calendar Main events April 22, 2010 May 4, 2010 Shareholders' annual meeting (Paris) Dividend ex-date Financial releases February 18, 2010 2009 Annual Results April 21, 2010 July 30, 2010 Q1 2010 Sales Half Year Results October 20, 2010 Q3 2010 Sales Investors Relations: Carina Ho Tel. ...

  • Page 244
    Schneider Electric SA Headquarters: 35 rue Joseph Monier - CS 30323 F-92506 Rueil-Malmaison Cedex (France) Tel. : +33 (0) 1 41 29 70 00 Fax : +33 (0) 1 41 29 71 00 www.schneider-electric.com Incorporated in France, governed by a Management Board and Supervisory Board, with issued capital of EUR2,100...