APC 2012 Annual Report Download - page 204

2012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC202
CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER31, 2012
5NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21.6 – Schneider ElectricSA shares
At December31, 2012, the Group held 8,580,080 Schneider Electric shares in treasury stock, which have been recorded as a deduction
from retained earnings.
21.7 – Tax on equity
Total income tax recorded in Equity amounts to EUR414million as of December31, 2012 and can be analyzed as follows:
Dec.31, 2012 Dec.31, 2011 Change in tax
Cash-fl ow hedges 89 100 (11)
Available-for-sale fi nancial assets (8) (3) (5)
Actuarial gains (losses) on defi ned benefi ts 335 233 102
Other (2) (1) (1)
TOTAL 414 329 85
Note22 Pensions and other post-employment benefit obligations
The Group has set up various post-employment benefi t plans for
employees covering pensions, termination benefi ts, healthcare, life
insurance and other benefi ts, as well as long-term benefi t plans
for active employees, primarily long service awards and similar
benefi ts, mainly in France.
Actuarial valuations are generally performed each year. Theassumptions used vary according to the economic conditions prevailing in the
country concerned, as follows:
Weighted average rate Of which US
Dec.31, 2012 Dec.31, 2011 Dec.31, 2012 Dec.31, 2011
Discount rate 3.5% 4.3% 3.75% 4.6%
Rate of compensation increases 2.4% 2.5% N/A N/A
Expected return on plan assets(1) 6.3% 6.9% 7.5% 8.0%
(1) Corresponding to the 2011 and 2012 rates.
The discount rate is determined on the basis of the interest rate
for investment-grade (AA) corporate bonds or, if a liquid market
does not exist, government bonds with a maturity that matches
the duration of the benefi t obligation. In the United States, the
average discount rate is determined on the basis of a yield curve for
investment-grade (AA and AAA) corporate bonds.
The discount rate currently stands at 2.80% for 10 years duration
and 3.10% for 15 years duration in the euro zone, 3.75% in the
United States and 4.30% in the United Kingdom.
A 0.5 point increase in the discount rate would reduce pension and
termination benefi t obligations by around EUR202million and the
service cost by EUR4million. A 0.5 point decrease would increase
pension and termination benefi t obligations by EUR226million and
the service cost by EUR4million.
The post-employment healthcare obligation mainly concerns the
United States. A one point increase in the healthcare costs rate
would increase the post-employment healthcare obligation by
EUR39million and the sum of the service cost and interest cost
by EUR2 million. A one point decrease in healthcare costs rate
would decrease the post-employment healthcare obligation by
EUR33million and the sum of the service cost and interest cost by
EUR2million.
In2012, the rate of healthcare cost increases in the United States is
based on a decreasing trend from 7.67% in2013 to 4.5% in2023.
In2011, the rate of healthcare cost increase is based on a decreasing
trend from 8% in2012 to 4.5% in2023. The rate in France was
estimated at 4% in2012 and estimated at 4.5% in2011.