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Table of contents

  • Page 1

  • Page 2
    ... Overview of the Group's strategy, markets and businesses 1. Schneider Electric strategy and market opportunities 2. Businesses, end-markets and customer channels 3. Ambitious long term financial targets for attractive shareholder returns 4. Company history and development 5. Research & Development...

  • Page 3
    2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 1

  • Page 4
    ...have strengthened our leadership position in operation management software and we now combine a new wealth of possibilities in process and manufacturing automation with franchises like Wonderware, Advantis, SimSci, Citec and Struxureware. Closing Connect, company program...In 2014 we closed Connect...

  • Page 5
    ... AND CEO This change is happening fast; agility and speed are key. The new company program Schneider is On focuses on 5 main areas: more value-creation for our customers with increasingly targeted services and enlarged business proposition; enhanced digitization of systems and products; higher...

  • Page 6
    ... billion. Net profit was up 3%, c. 11% at constant FX at â,¬1.9 billion. Invensys also contributed strongly to the Group performance. This solid performance enabled us to propose a â,¬1.92 dividend per share, up 3% compared to last year. Schneider Electric launched its new company program, what are...

  • Page 7
    ...-President, North America Operations 3 Olivier Blum Executive Vice-President, Global Human Resources 11 ZHU Hai Executive Vice-President, China Operations 4 Annette Clayton Executive Vice-President, Global Supply Chain 5 Hervé Coureil Executive Vice-President, Information Systems Businesses...

  • Page 8
    LEADERSHIP TEAM 6 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 9
    ...IT business returned to growth and Infrastructure declined, but showed signs of improvement at the end of the year. From a geographic standpoint, both mature countries and new economies contributed to growth. North America benefited from favorable construction and data center markets, Western Europe...

  • Page 10
    ...26% Western Europe 25% North America 28% Asia-Pacific 19% North America 34% Asia-Pacific (1) Spot headcount, including employees under fixed-term and open-ended contracts, on December 31 2014 Net income (in millions of euros) 1,888 1,941 1,720 1,793 1,813 The Group share in net income reached...

  • Page 11
    ... 60 50 40 30 20 2000 10 0 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 1000 0 12/31/2014 Share price in euros Schneider Electric share Index CAC 40 (1) Historic figures adjusted for the two-for-one share split (September 2, 2011). 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 9

  • Page 12
    ...already existing Product Category Rules (PCR) and good quality life cycle data. On February 6, 2014, Schneider Electric and AREVA announced the signature of a strategic partnership agreement to develop energy management and storage solutions based on hydrogen fuel cell technology. Under the terms of...

  • Page 13
    ..., integrating and installing the storage solution while Schneider Electric will design, manufacture and install the complementary power conversion system. On November 5, 2014, ERDF and Schneider Electric joined forces, as part of a partnership launched over a year ago, to develop and test innovative...

  • Page 14
    ..., its energy access program for communities at the base of the pyramid. Schneider Electric has far exceeded its initial objective to train 40,000 people by the end of 2014, set as part of the Planet & Society Barometer, the company's dashboard to monitor its sustainable development performance. On...

  • Page 15
    ...end-markets and customer channels 3. Ambitious long term financial targets for attractive shareholder returns 4. Company history and development 5. Research & Development 6. Organizational simplicity and efficiency 7. Risk Factors 14 19 23 25 28 31 35 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 16
    .... Schneider Electric strives to help its customers achieve the most efficient and sustainable use of their resources, assets, processes and infrastructures with innovative technologies, solutions and services. 1.1 Our mission guarantee ultra-secure, ultra-pure and - reliable: uninterrupted power...

  • Page 17
    ...and access of real-time information is changing our personal and professional life: companies are digitizing their operations, often times through SaaS providers; customers are expecting to have everything online, from e-training to e-ordering and digital care centers; and employees are increasingly...

  • Page 18
    ... as mining, oil & gas, food-processing or cement plants improve their productivity and operational efficiency, reduce their energy consumption and optimize their use of resources. Schneider Electric also helps machine manufacturers in markets such as material handling or packaging develop reliable...

  • Page 19
    ...long-term commitment to, and investment in, these economies. As of December 31, 2014, we had over 93,395 employees in new economies and, during 2014, our new economies-based purchasing and manufacturing costs accounted for approximately 53% of our industrial costs. Schneider Electric currently holds...

  • Page 20
    ... automation and control, critical power and cooling. We design products and solutions that we believe offer the best levels of safety, reliability and efficiency in our markets. This is achieved through consistently high investment in research and development, which supports our innovative product...

  • Page 21
    ... centers & networks. The Group manages multiple channels to markets built on strong partnerships. 1 2.1 Leadership positions in our businesses Schneider Electric operations are organized in four businesses: Buildings & Partner, Infrastructure, Industry and IT. logic controllers (« PLC »), push...

  • Page 22
    ... to reduce investment costs and optimize maintenance and operating costs. Schneider Electric's non-residential customers include end-users, property developers, design firms, systems integrators, panel builders and installers, electrical equipment distributors and building management companies. In...

  • Page 23
    ...for access control and security products. Schneider Electric assists its distributors in advising their customers and helping them to benefit from technical innovations. To maintain a high performance network, the Group works hand in hand with distributors on supply chain issues, technical training...

  • Page 24
    ... companies that install equipment and systems. These partners bring value for end customers, first by advising them on the choice of solutions that best suit their needs, and then by installing efficient systems. The main objective for Schneider Electric is to support them in the rapid development...

  • Page 25
    ...& grid automation: ABB, Siemens; 3. Ambitious long term financial targets for attractive shareholder returns Schneider Electric's opportunities, strategy and business positioning have led its management to define ambitious long-term targets for the company. Over the long term, the key priorities...

  • Page 26
    ... remain c.50% of Net income. The base of calculation will exclude one offs such as capital gains or losses and, or assets impairments. (4) Share buyback of EUR1.5 to EUR2 billion including share buyback for neutralization of employees share plans. 24 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 27
    .... In 2013, we acquired full ownership of this company, transforming Russia into a key market for the Group and enhancing our capacity to be a key player in the oil, gas and mining industry, as well as to develop energy efficiency and smart grid. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 25

  • Page 28
    ..., a provider of software that monitors the energy consumption of buildings in real time, and D5X, a specialist in solutions optimizing the use of commercial buildings. l The acquisitions of Summit Energy (2011) and M&C Energy Power Conversion (APC) in 2007, the US-based world leader in group (2012...

  • Page 29
    ...the operations for increased efficiency Simplifying work and operations makes the difference to the customers. The Group targets to simplify its management set-up to make the company leaner, further increase supply-chain productivity, optimize R&D efficiency and solution execution and increase sales...

  • Page 30
    ... Beyond personal devices, IoT is a huge opportunity in industrial systems. It enables significant increase in the number of measure and control points and, as a consequence, further optimization of these systems. Since 2000, Schneider Electric has invested in research programs to develop low power...

  • Page 31
    ... and diagnose your installation in real-time from any location using your standard tablet and smart phone, greatly improving the efficiency of your maintenance teams In automation projects enhanced with Foxboro Control Systems and Triconex Safety Instrumented Systems, Schneider Electric is leading...

  • Page 32
    ... both the cost and lead time of bringing new products to market, this new complexity requires an upgrade of development methods and tools. To address this challenge, a very ambitious program has been launched to deploy Model Based Systems Engineering (MBSE) throughout Schneider Electric's R&D. This...

  • Page 33
    ..., customer needs and new market segments. The work is shared at three levels: l by identifying emerging trends and weak signals which may An innovative element introduced this year is that the Aster Capital teams have made a dedicated web platform available to all Schneider Electric employees...

  • Page 34
    ... in order to define given country or business are gradually globalized to increase experience and leverage a significant scale effect around cost and service. Manufacturing and supply chain operations, areas of shared services or expertise (such as finance or Human Resources), information systems...

  • Page 35
    ... production and supply chain units and reducing the number of sites. supported by the extension of Six Sigma and Quality and Value Analysis programs across the Group. By deploying these optimization methods globally and sharing best practices, the Group intends to raise the operational performance...

  • Page 36
    ...ranked Schneider Electric's supply chain 22nd in Europe and 67th worldwide, an improvement of 34 places in two years. The Group's aim for the next few years is to turn this into a competitive advantage through customer recognition that we offer the best logistics solutions. The new 2015-2020 company...

  • Page 37
    ...to the Group's business Schneider Electric operates worldwide, in competitive and cyclical markets The worldwide markets for the Group's products are competitive in terms of pricing, quality of products, systems and services, development and introduction time for new offers. Schneider Electric faces...

  • Page 38
    ... manager who reports to a Steering Committee that initially meets at monthly intervals and then on a quarterly basis. The unit that presents the acquisition project is accountable to the Group's senior management for meeting clearly defined business plan targets covering future performance...

  • Page 39
    .... At the end, we want our employees to feel accountable of their development and success at Schneider Electric. During 2014 further steps were taken to reinforce the active management of talent at all levels and in all parts of the company. A state-of-the-art talent management system was introduced...

  • Page 40
    ... commercial and supply chain efficiency. In view of these projects' complexity, extensive functionalities and their worldwide deployment, the Group has set up dedicated governance and cost control structures to manage these issues and limit the related risks. However, despite the Group's policy of...

  • Page 41
    ... customers any such increased costs, this could have an adverse impact on our financial results. The Group has, however, implemented certain procedures to limit exposure to rising non-ferrous and precious raw material prices. The purchasing departments of the operating units report their purchasing...

  • Page 42
    ...The business reputation of Schneider Electric could also be negatively impacted. To prevent these risks, Schneider Electric has implemented quality procedures at the level of design, development and production of its products, systems and solutions. In case of product returns, the type and source of...

  • Page 43
    ..., court or arbitration proceedings, which are pending or which threaten the company, that are liable to have or, during the last 12 months have had, a material effect on the financial position or profitability of the company and/or the Group. 1 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 41

  • Page 44
    ... each year. The cost of self-insured claims is not material at the Group level. Cost of insurance programs The cost (including tax) of the Group's main insurance plans, excluding premium paid to captives, totaled around EUR25 million in 2014. 42 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 45
    ... economic performance 3. Schneider Electric's commitment to environmental performance 4. Committed to and on behalf of employees 5. Schneider Electric, an eco-citizen company 6. Methodology and audit of indicators 7. Indicators 44 56 66 76 91 101 109 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 46
    ..., based on the Group's employees: l principles governing ethics and responsibility; l sites and products that respect the environment; l employee development; l policies that support and develop the communities in which Schneider Electric operates. Schneider Electric uses its global Human Resources...

  • Page 47
    ..., over the period 2012-2014, using quantitative indicators and three-year objectives, partly covers the issues identified as significant by this analysis: energy efficiency, access to energy, developing countries, eco-design, sustainable purchases, employee engagement and attraction, raising...

  • Page 48
    ... 49) and the « sustainability leaders » appointed by each member of the Executive Committee. Operation and monitoring of the Planet & Society Barometer The Planet & Society Barometer 2012-2014 is part of the Connect company program. It comprises 14 key performance indicators scored out of 10. The...

  • Page 49
    ... on key sustainability topics. The non-financial annual results are presented together with the Group's financial results by Jean-Pascal Tricoire, in order to demonstrate the Group's commitment to making sustainable development part of the Company's long-term strategy. In addition, from 2014, the...

  • Page 50
    ... corporate brochure (strategy and sustainable development report), new progress plans throughout the Company program as well as during the design of the Planet & Society Barometer every three years. (1) Source: CSR Sector Reporting Guide, 2013. 48 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 51
    ... Community programs â- Partnerships with local NGOs Department Quality, Customer Satisfaction, R&D, Sales, Eco-design Finance, Board's Secretary, Sustainable Development Financial 2 Purchasing, Environment, R&D, Activities, Sustainable Development Partners Social Human Resources, Sustainable...

  • Page 52
    ... offset fund for biodiversity and rural communities. For many years, Schneider Electric has actively supported ADMICAL (Association pour le développement du mécénat industriel et commercial, member of the European network CERES) and IMS-Entreprendre pour la Cité. Energy/Energy efficiency Smart...

  • Page 53
    ...'s Advisory Committee for Environmental Aspects (ACEA). The ACEA works to advise and coordinate the CEI's efforts to tackle environmental issues. The Group also participates in the Advisory Committee for Energy Efficiency (ACEE) created in 2013. 2 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 51

  • Page 54
    ... policies & practices Executive Committee: Sustainability Executive Committee Strategy, Global Supply Chain, Human Resources > Challenge, align with strategy & decide Strategy Executive Vice-President Sustainability department > Set the sustainability strategy > Manage innovation projects...

  • Page 55
    ...The Sustainable Development Executive Committee Since 2010, the three members of the Executive Committee in charge of Human Resources, Global Supply Chain and Strategy have met two to three times per year with the Sustainable Development Director to monitor and steer the Group's action plans in this...

  • Page 56
    ... service solutions. It applies to the Group and is accompanied by global action plans. ensure full compliance with the laws of all the countries in which Schneider Electric is present; l the code of ethics that all employees must follow in line with the Social The Group's Human Resources policies...

  • Page 57
    ... development received in 2014, the Group highlights the following: l Global 100 most sustainable corporations: Schneider Electric 2 Climate Performance Leadership Index (CPLI): member of « The A list » Schneider Electric remains in the CPLI for the fourth consecutive year as one of 187 companies...

  • Page 58
    ... to end customers or through partner networks, therefore without any control over their final destination and end-of-life processing. To limit the impact of its end-of-life products, Schneider Electric has established a system to recover equipment containing SF6, a powerful greenhouse gas. The Group...

  • Page 59
    ...782 million Cash Variation ¤2,924 million Revenue distribution to our stakeholders Investments * Borrowings, share issues and sale of treasury stock. (1) Including ¤355 million in R&D. (2) Including ¤121 million for long term pension assets. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 57

  • Page 60
    ... the reliability, safety and performance of their homes, buildings, sites and equipment. In order to insure that energy efficiency targets are achieved, and the energy mix moves to more renewables, Schneider Electric provides an innovative and competitive portfolio of products, systems, services and...

  • Page 61
    ...% of total energy production in 2011 to 18% in 2035 - representing an 83% increase. Schneider Electric serves and connects power plants and large buildings to the electricity grid, provides equipment to turbine manufacturers and supplies the residential end-market through its network of partners and...

  • Page 62
    ..., power, control and security systems integration, stormwater management, urban flooding management; l solutions for smart water: distribution management system, leak l solutions for smart buildings: energy efficiency and security solutions and services for high-performance buildings, home energy...

  • Page 63
    ... a monthly or pluri-annual basis depending on the severity of the action plan. 2 Promotion of a continuous improvement process based on the ISO 26000 standard A statement on the importance of sustainable development is made to each major supplier of Schneider Electric by its Group purchasing pilot...

  • Page 64
    ... DRIVING ECONOMIC PERFORMANCE In addition to the external assessments, we have defined « off-limit » situations which are: l environmental pollution; l employee safety risks; l child labor. Schneider Electric has also made available for all its customers and stakeholders, its position regarding...

  • Page 65
    ... be taken. 1. contacting a manager, or 2. using existing in-house outlets (legal, financial, HR, environment, etc.), or 3. contacting the Group Fraud Committee via the professional alert system (accessible via Internet or multilingual telephone line). 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 66
    ...Committee Board Once a year Corporate Level Upon Request (at least once a month) Responsibility & Ethics Committee Define, explain and communicate the rules Fraud Committee Detect and manage non compliance Zone Level Principles of Responsibility Advisers Awareness Enablers Compliance Officers...

  • Page 67
    ... the Group; 2. define best practices to prevent illegal actions, strengthen management's major role and promote use of the professional alert system; 3. ensure that all policies comply with Our Principles of Responsibility; 4. inform employees of new standards and procedures; 5. implement monitoring...

  • Page 68
    ... Chain »). The products, services and solutions offered by Schneider Electric which help reduce the environmental impacts of its customers' activities are described in part 2 (page 58). 3.1 Overview Context and aims Schneider Electric does not produce nor distribute energy. It conceives and builds...

  • Page 69
    ... corporate level, the Environment Director, ranked below the Senior Vice-President of the Global Supply Chain Management (member of the Executive Committee), determines the Group's environmental strategy. The environmental manager network consists of: l for product management: environmental managers...

  • Page 70
    .... After the success of the Company program 2009-2011, Schneider Electric worked on defining its new carbon emission reduction targets for the 2012-2014 period. The Group's approach is based on measuring, controlling and reducing CO2 emissions, starting with the most direct ones upon which the...

  • Page 71
    ... to reduce energy consumption over all sites as a result of the Energy Action audits. The Schneider Energy Action program uses Schneider Electric energy service activities to identify opportunities in key areas which are HVAC (Heating, Ventilation, and Air Conditioning), certain equipment (such as...

  • Page 72
    ... to all stakeholders in its extended all the appropriate information; l reduce management costs of end-of-working-life installations for the customer by optimizing recycling. supply chain about the environmental impact of the Company's offer. 70 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 73
    ... taken for the RoHS compliant offers and with the REACH information available, Schneider Electric's target was to consolidate this in 2014 with 75% of global product sales made through Green Premium offers, based on 2013 sales. The Group achieved 79%. As part of its new 2015-2017 company program...

  • Page 74
    ...management within Schneider Electric's information systems, was finalized in 2012 and implemented in 2013. The automation of REACH and RoHS reports enables the Group to continue to provide complete and up-to-date SVHC information to its customers despite the growing of the SVHC list every six months...

  • Page 75
    SCHNEIDER ELECTRIC'S COMMITMENT TO ENVIRONMENTAL PERFORMANCE SUSTAINABLE DEVELOPMENT Carried out in close cooperation with all Group partners, the approach is deployed at the national level in each EU Member State. This involves identifying, certifying and in some cases organizing solutions for ...

  • Page 76
    ...assessments also help the Group identify areas for improvement. For more information on the Schneider Electric global action plan relating to PEP and end-of-life instructions, see the Green Premium chapter on pages 70-72. Also see the Green Plastic program on page 73. 74 2014 REGISTRATION DOCUMENT...

  • Page 77
    ... As a result of developments in legislation, retention systems are being designed more and more to compensate in the event of malfunctions or emergencies, such as fires. In 2014 Schneider Electric conducted its annual review of pollution risks at all manufacturing sites as part of ISO 14001 tracking...

  • Page 78
    ... manager and using the digital tools provided. This allows each employee to play a key role in their own performance and in their advancement. Three key performance indicators were set in the Planet and Society Barometer for the duration of the Connect program (2012-2014): Objectives for Year-End...

  • Page 79
    ... shared service centers designed to optimize efficiency and costs. setting out their business strategies and in assessing the human resource requirements needed to meet their business targets. HR Business Partner also plays a pivotal role in anticipating skill requirements and employee development...

  • Page 80
    ... sites (sites with more than 50 people and within two years of creation or acquisition). The deployment of this program is 78 percent complete at end of 2014. Training and Communication Training and communication are key components of the Health & Safety program at Schneider Electric. The Group...

  • Page 81
    ... Schneider Electric. The Group constantly strives to be one of the best companies to work for, providing the environment and motivation for its employees to take control of their own career progression - through simple to access training and development resources, while the latest job opportunities...

  • Page 82
    ... with their team in order to foster dialogue and build relevant action plans. A key performance indicator for the Group is the Employee Engagement Index, which is also registered in the Planet & Society Barometer. This Index enables Schneider Electric to compare itself with the best employers in the...

  • Page 83
    ...growing services business or customized supply chain, etc., also require ongoing adaptation and skills enhancement. Learning and career development is therefore at the heart of Schneider Electric's Human Resources policy. The following indicators have been defined to track progress in this direction...

  • Page 84
    ... convenient and flexible learning experience. Only a small part of the catalog is currently available offline, but this list will extend as time goes by. Mobile devices: the Group has finalized studies to define action plans to increase the number of learning offers accessible through mobile devices...

  • Page 85
    ... in reaching the Group's objective of one day of training per employee per year, which is part of the Planet & Society Barometer. My Learning Link is also used to deliver online training programs to Schneider Electric customers. In 2014, the Partner Relationship Management (PRM) program has been...

  • Page 86
    ...All action plans serve to make workforce planning part of Schneider Electric's management DNA. This means that the deployment to new functions, businesses and countries is continued and that existing workforce plans are continuously refreshed and subsequently implemented. In 2013 and 2014, the Group...

  • Page 87
    ... and should be a corporate priority. Communication, education and further developments A company-wide communication campaign was deployed to raise awareness on the new global policy and promote the value of having a diverse and inclusive culture. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 85

  • Page 88
    ... Committees of the main entities and main countries; this cascading process started in Asia at the end of 2012 with 150 leaders; in 2013 and 2014, 180 leaders have attended this workshop, including leaders from Italy, Turkey, US, Purchasing, Global Supply Chain leadership teams, and Partners team...

  • Page 89
    ... compensation and benefits offering that is cost effective in each market and country in which the Group operates in order to attract, motivate and retain talents. Schneider Electric ensures that all compensation and benefits decisions and policies are based on the principles of fairness...

  • Page 90
    ... Business Development) in the Global Operations. For all the other Country Presidents, it is not a personal objective in their bonus, but it is part of their key objectives for their annual performance. Employee share ownership plan 2014 Schneider Electric has ramped up its in-house communication...

  • Page 91
    ... taken into consideration by our social reporting system, where local HR teams report the presence of trade unions, works councils and Health and Safety Committees every year. While changing the corporate form of its parent company, Schneider Electric SA, into a European Company (« Société Europ...

  • Page 92
    ... employees. Schneider Electric keeps them informed of internal and external issues impacting the company's results, listens to their concerns and looks for alignment with the company strategy and challenges. Schneider Electric and the Unions review the collective contract every year. In 2014...

  • Page 93
    ... long-term oversight of projects in which Schneider Electric is involved. The main areas targeted by the program are India, Bangladesh, China, South Asia, Sub-Saharan Africa and South America. manage an investment development in the electricity sector; disadvantaged people; fund l Offer: design...

  • Page 94
    ... and business partners around the world to play an active role in this commitment. This social welfare investment structure, designed by Schneider Electric to promote responsible development, constitutes a response to new French legislation on employee savings plans. At the end of 2014, 5,000 Group...

  • Page 95
    ... or meet domestic needs. Products and solutions are developed to meet a range of both individual and community needs across the energy chain, from lighting systems and charging equipment to decentralized small power plants and water pumping systems. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 93

  • Page 96
    ... product distribution service to improve their income. The program guarantees them a logistics network necessary for their activity and provides them with technical and entrepreneurial training throughout the subcontinent. Based on this success, in 2014, Schneider Electric partnered with Golden Key...

  • Page 97
    ... training in the energy trades and tackling energy poverty, presenting them to employees in their units, and to the Foundation and tracking projects once they are launched. Each project proposed is subject to a review process based on administrative and financial data by the Schneider Electric...

  • Page 98
    ... Foundation's Program Director and Director of the Access to Energy Vocational Training Program. It meets once per month. and its equipment, or support of families. This program accounts for 19% of the Schneider Electric Foundation's commitments. 96 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 99
    ... investment fund, or - who began work after training; l management control, finance, communication, fundraising, management, Human Resources, technical, etc. For more information visit: www.fondation.schneider-electric.com and www.teachers.schneider-electric.org 2014 REGISTRATION DOCUMENT SCHNEIDER...

  • Page 100
    ...funding to various charitable and community organizations, employee match and employee giving programs; l due to the volunteer efforts of thousands of North American support of young people, trained by Schneider Electric Access to energy program, to create their own business; l Employment: support...

  • Page 101
    ...actions to support local economic development, proposing and supporting volunteer employees in reliable career paths that are external to the Group. SIE provides support for Schneider Electric employees at all stages of business creation, as well as afterwards, with a follow-up period of three years...

  • Page 102
    ...CNEI) is part of the desire to learn more about companies providing jobs for the unemployed and involve them in the Group purchasing policy. Employment clauses are included on new markets (or renewals of markets), especially in the purchase of services and the construction of new sites, based on the...

  • Page 103
    ...under the Global Human Resources and the Global Supply Chain functions. Energy is managed with the Group's own solutions, Resource Advisor and Energy Operation. Data reliability checks are conducted at the time of consolidation (review of variations, inter-sites comparison, etc.). The Safety data of...

  • Page 104
    ... activities, measured quarterly year-to-date. The program provides end users access to: l a network of local partners accredited by Schneider Electric; l energy efficiency and renewable energy solutions based on tested, validated and documented architectures; 102 2014 REGISTRATION DOCUMENT...

  • Page 105
    ...employees, environments that are not only safe and effective, but that are also based on reflection on the values of Schneider Electric. The « great place to work » program of the Connect company program defines the criteria for Cool Sites: l as in a village, we gather around activities and events...

  • Page 106
    ... Schneider Electric Teachers ». It works closely with Access to Energy training teams, the Schneider Electric Energy Access fund and Human Resources. It develops partnerships with local NGOs (Planet Emergency, ESF, etc.). This indicator was audited by Ernst & Young. 104 2014 REGISTRATION DOCUMENT...

  • Page 107
    ... conditions in the workplace List of agreements signed with unions or employee representatives regarding health and safety in the workplace Work accidents, particularly their frequency and their seriousness...as well as occupational illnesses e) Training Training policies implemented Total number...

  • Page 108
    ... Anti-corruption actions taken Measures taken towards consumer health and safety e) Other actions taken towards human rights, within the scope of this third indicator 65-66 70-73, 14 44, 62-65, 90 61-62 61-62 48-49 95-98 91-95, 99-100 91-95, 99-100 106 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 109
    ...sustainable development based on the social and environmental consequences linked to the activities of the company and its societal commitments, as well as, where appropriate, resulting actions or programs. We have compared the information presented in the management report with the list as provided...

  • Page 110
    ... basis, the calculations and the compilation of the information, and also verified their coherence and consistency with the other information presented in the management report; l at the level of the representative selection of sites that we selected(2), based on their activity, their contribution...

  • Page 111
    ... 70% in 2013. This decrease is mainly due to the acquisition of Invensys, consolidated in the Group's workforce and not integrated in the environmental reporting. Schneider Electric provides readers two pieces of information so that environmental performance can be compared from one year to the next...

  • Page 112
    ...Two sites taken into account in 2012, four sites in 2013 and 2014. In 2012, Schneider Electric changed methodology to distinguish the water used for consumption and water used for cooling (and restituted to the environment). Schneider Electric plans to expand this differential reporting to all sites...

  • Page 113
    ... and/or subcontractors on site are indicated by footnotes. The calculation methodology of the absenteeism rate varying from a country to the other, in this domain Schneider Electric communicates at Group level the number of lost days and the number of hours worked (Safety data). The comments on...

  • Page 114
    ... North America Rest of the world Breakdown of workforce by country (the most significant countries)(2) France United States of America China India Mexico Spain Brazil G4-10 11% 12% 15% 9% 5% 3% 3% 12% 13% 10% 9% 6% 4% 4% 14% 13% 11% 9% 5% 4% 4% 112 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 115
    ...5/14 years 15/24 years 25/34 years > 34 years G4-10 Breakdown of workforce by function(2) Marketing Sales Services and projects(6) Support Technical Industrial Direct variable costs (cost of employees under production or business costs)(7) G4-10 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 113

  • Page 116
    2 SUSTAINABLE DEVELOPMENT INDICATORS GRI G4-LA1 Indicators Hires (4) 2014 2013 2012 Breakdown by type of contract Permanent contract Fixed-term contract 68% 32% 37% 63% 66% 34% 42% 36.1% 14.1%... by age 14/24 years 25/34 years 35/44 years 114 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 117
    ... Lost-Time Day Rate (LTDR)(9) of which Schneider Electric employees of which subcontractors G4-LA6 Number of lost days of which Schneider Electric employees of which subcontractors G4-LA6 Number of hours worked of which Schneider Electric employees of which subcontractors 2014 REGISTRATION DOCUMENT...

  • Page 118
    ... 2013 44% 51.3% 69.1% 265 UP UP 2012 47.6% 50% 76.7% 315 UP UP G4-LA5 G4-11 G4-11 G4-LA5 Health and Safety Committee Number of collective agreements(5) Employees covered by collective bargaining agreements Employees represented in Health and Safety Committees Talent development and training GRI...

  • Page 119
    ... not taken into account in the calculation. (5) The data relates to over 90% of the Group's workforce at the end of December 2014 (annual survey). (6) Part of the VDC services on total workforce: 12.1% in 2014; 11.5% in 2013; 11.8% in 2012. VDC, variable direct costs are Schneider Electric employees...

  • Page 120
    ... From partners Financial contribution per region (in %) Africa & Middle East America Asia Europe DONATIONS IN PRODUCTS OR SERVICES FOR A PARTNER/PROJECT OF THE FOUNDATION (in euro) Number of employees involved in the Foundation's actions * Of which Square D/Schneider Electric North America. 5,494...

  • Page 121
    ... Pyramid trained in energy management 3. 300 missions with « Schneider Electric Teachers » NGO 2014 1,095,806 â-² 60,232 â-² 460 â-² 2013 695,685 32,602 228 2012 344,441 10,517 66 2011 - The 2011 performance serves as a starting value for the Planet & Society Barometer of the Connect program...

  • Page 122
    2 SUSTAINABLE DEVELOPMENT INDICATORS 120 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 123
    ...Corporate Governance 1. The board of directors 2. Organizational and operating procedures of the board of directors 3. Board meetings 4. Board committees (composition,operating procedures and meetings) 5. Senior Management 6. Declarations concerning the situation of the members of the administrative...

  • Page 124
    ... functions of Chairman and Chief Executive Officer. The company applies the AFEP/MEDEF corporate governance guidelines, except for the few exceptions, which are described below (see section 10). The guidelines are available online at www.medef.fr. 122 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 125
    ...2014 2007 Year current term expires 2017 2016 2015 2016 2016 Independent under AFEP/MEDEF criteria NO (performing executive duties at the head of the Group) YES YES YES YES 3 2016 YES 2017 NO (bound by an employment contract with the company) 2015 YES 2016 NO (board member for more than 12 years...

  • Page 126
    ... » session between the directors and the members of the Executive Committee; l organize an information/training session for directors dealing with Human Resources and CSR issues; l improve reporting on the committees' work to the board by showing presentations in support of each chair's oral...

  • Page 127
    ...); Director of New E.A. (United States) and Intelius (United States). l Previous directorships and functions held in the past five years: Manager of « Efficiency Capital » fund; Vice-Chairman of Schneider Electric SA's supervisory board; member of the supervisory board of Steria, President and CEO...

  • Page 128
    ... of the board of directors until the beginning of 2012. Note: bold indicates the names of companies listed on a regulated market. * An independent director within the meaning of the AFEP/MEDEF corporate governance guidelines for listed companies. 126 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 129
    ... 2013, he became a partner at BDGS Associés law firm. Note: bold indicates the names of companies listed on a regulated market. * An independent director within the meaning of the AFEP/MEDEF corporate governance guidelines for listed companies. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 127

  • Page 130
    ... global technology. Note: bold indicates the names of companies listed on a regulated market. (1) Held directly or through a FCPE. * An independent director within the meaning of the AFEP/MEDEF corporate governance guidelines for listed companies. 128 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 131
    ... Resources Officer and member of the Group Executive Council of FIAT CHRYSLER AUTOMOBILES N.V. l Previous directorships and functions held in the past five years: Interim President of CNH Parts & Service. Member of the supervisory board of Schneider Electric SA; member of the board of directors...

  • Page 132
    ... until May 2014. Note: bold indicates the names of companies listed on a regulated market. * An independent director within the meaning of the AFEP/MEDEF corporate governance guidelines for listed companies. (1) Held directly or through a FCPE. 130 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 133
    ...became President and CEO of Wallenius Lines, a company specializing in sea RORO, terminals and logistics, offices that she held until 2010. At present, she is a company director. Note: bold indicates the names of companies listed on a regulated market. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 134
    ...: Age: 79 Business address: GIE AXA 25, Avenue Matignon 75008 Paris 528 Schneider Electric SA shares First appointed: 2004/Term ends: 2014 Directorships and other functions l Currently: Director of Schneider Electric SE and member of the Governance and Remuneration Committee. - Other directorships...

  • Page 135
    ... that position and that of a member of the Board of Directors until his departure in 2012. Since 2012 Mr. Spierkel has been providing advisory and consulting services to private equity firms with investments in the information technology sector. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 133

  • Page 136
    ...the functioning of the board and that of the CEO, proposes each year to the board to continue the unified functions of Chairman and Chief Executive Officer or to separate them and, as needed, make proposals for a successor in one or both functions; 134 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 137
    ... Management between the board meetings. Each year, a one-to-one session is organized between directors and members of the Executive Committee. For new directors, training and information sessions may be organized on the Group's strategy and businesses. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 138
    3 CORPORATE GOVERNANCE ORGANIZATIONAL AND OPERATING PROCEDURES OF THE BOARD OF DIRECTORS** Insider ethics code Schneider Electric has adopted an ethics code for members of the board of directors and Group employees designed to prevent insider trading. Under these provisions, both directors and ...

  • Page 139
    ...of this committee, which met four times during the year. It also monitored the integration of Invensys through the updates that were presented on this issue at each of its meetings. The board has been informed of the moves and changes of competitors of Schneider Electric. 2014 REGISTRATION DOCUMENT...

  • Page 140
    ... systems, R&D effectiveness, and monitoring of accounting standards and the independence of the statutory auditors. It reviewed developments in the supply chain as well as on the Group's brand policy. It reviewed the new company program (see page [27]). It ensured consistent compliance with market...

  • Page 141
    ... securities regulator, the AMF), member of the Executive board and Director of Finance, Control and Strategy of the AXA Group, and member of EFRAG (European Financial Reporting Advisory Group). He brings to the committee his vast financial expertise and excellent knowledge of accounting standards...

  • Page 142
    ... current terms; 4) Corporate Governance: - recommended dividend for 2014, - study of the relationship between the work of the Audit committee and that of the board on major risks, - review of the financial authorizations, whose renewal was presented to the Annual Shareholders' Meeting of May 6, 2014...

  • Page 143
    ... status of the corporate officers; l the 2015 long-term incentive plan; l the launch in 2015 of a new Group employee share issue (Wesop 2015); The committee also reported to the board on: l the performance reviews of Executive Committee members; l the review of succession plans for members of the...

  • Page 144
    ... proposals on the results of the self-assessment questionnaire (see p. [124]). The rate of attendance of members of the committee was 100%. It reported on its work to the board at the February 19, May 6, June 10-11, and December 16, 2014 meetings. 142 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 145
    ... committee, which set its work program based on requests from all of the directors, primarily focused its work on: l the review of the Buildings business segment; l the review of the US region; l examining the issues of digitization with a focus on customer Operating procedures The committee meets...

  • Page 146
    ... 43,315 (1) Schneider Electric SE shares First appointed: 2009/Term ends: 2015 Directorships and other functions l Currently: The Chairman and CEO On April 25, 2013, the board of directors decided to unify the functions of Chairman and Chief Executive Officer, and to appoint Jean-Pascal Tricoire as...

  • Page 147
    ... officers have no restrictions on the disposal of their Company shares aside from those stipulated in stock option and performance share plans (see page 284 et seq) for corporate officers and a minimum 1,000 shareholding requirement for directors. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 148
    ... to performance conditions. The level of performance achievement is controlled by the statutory auditors and reviewed by the Human Resources and CSR committee and the Audit Committee. Details of these performance shares are set out on page 283. In 2014, the variable part of executive directors is...

  • Page 149
    ...of the committees of which they are members; (1) The maximum amount is defined as follows: 50% if the number of years of service is less than or equal to five years, plus 1% per year starting in the sixth year of service for Senior Manager status. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 147

  • Page 150
    ...GROUP SENIOR MANAGEMENT On this basis, and noting that Jean-Pascal Tricoire waived payment of his attendance fees, attendance fees paid in 2013 and 2014 were as follows: Corporate officers who are not directors... for fiscal year 2014(1) EUR109,000 Amounts paid/due for fiscal year 2013(1) EUR117,000...

  • Page 151
    ...EUR91,000 EUR31,178 EUR95,000 (1) Attendance fees for the year are paid at the beginning of the following year. (2) Non-voting member. (3) Magali Herbaut, who is also employed by a Group subsidiary, receives compensation for that employment. 3 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 149

  • Page 152
    ... based upon decisions taken by Group's entities in which they perform their mandate/functions, was set by the board of directors during its meetings dated February 19, 2014 and May 6, 2014 for 2014 and February 18, 2015 for 2015, on the proposal of its remuneration committee. Mr. Jean-Pascal...

  • Page 153
    ...284). The portion of shares allocated to Mr. Tricoire represents 2.1% of the number of performance shares granted by the board of directors and 0.01% of capital at the date of this allocation. Year 2015 As part of the long-term incentive plan for 2015, the board of directors agreed on an allocation...

  • Page 154
    ...of these shares is entirely dependent on attaining Group performance criteria, in accordance with the AFEP/MEDEF recommendations. They are also subject to a lock-up period. These shares will be allocated by the board of directors on March 27, 2015. 152 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 155
    ... are covered by the Group as well as, in 2014, the relocation costs linked to his professional mobility. Mr. Babeau may use the cars made available to Group Senior Management with chauffeur services. In addition, he has the use of a Company car. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 153

  • Page 156
    ... average ROCE (Return on Capital employed) for the years 2014 and 2015 at current perimeter and level of the Planet & Society Barometer at the end of 2015 Performance conditions Benefits granted to executive directors (situation on February 18, 2015) Payments or benefits may be due in the event of...

  • Page 157
    ... Tricoire (see Registration Document 2013 page 295). The General Assembly of May 6, 2014 approved Mr. Babeau's new status. However, Mr. Babeau having been brought to resign from his employment contract with Schneider Electric Industries SAS, the board of directors of February 18, 2015 renewed Mr...

  • Page 158
    ...INTERESTS AND COMPENSATION OF GROUP SENIOR MANAGEMENT under the Group's personal accident insurance policies is subject to the achievement of either of the two following performance conditions: (i) the average net profit for the last five financial years preceding the event is positive or (ii) the...

  • Page 159
    ..., 2014 as part of the annual long term incentive plan, Group Senior Management other than senior corporate officers held: l 499,038 shares, of which 352,075 are conditional; l 131,266 options; l 263,363 Stock Appreciation Rights (SARs). North America Operations - China Operations; l Executive Vice...

  • Page 160
    ...employment contract with Schneider Electric Industries SAS at the level of Schneider Electric SE. The board of directors, on that occasion, totally aligned Mr. Babeau's status with that of Jean-Pascal Tricoire. Agreements signed during previous years and approved by the Annual Shareholders' Meeting...

  • Page 161
    ... implemented in 1995 (closed plan) and the new top-hat pension plan for Directors who are members of the Executive Committee (new plan), two agreements have been signed with AXA and approved by General Meetings of May 3, 2012 and April 25, 2013. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 159

  • Page 162
    ...the exception of self-assessments of the implementation of Key Internal Controls (see « Operating Units » below). Management; l the proper functioning of the company's internal processes, Internal control reference documents The Group's internal control system complies with the legal obligations...

  • Page 163
    ... in the business environment or organization. risk; l monitoring of Group trade account receivable risk and the definition of the hedging policy to be implemented; l the distribution of rules for financial risk management and the security of incoming and outgoing payments; l the annual review of...

  • Page 164
    ...drawn up at the time of the self-assessments and control assignments on site. Lastly, the internal control teams offer suggestions for enhancing and updating the Key Internal Controls. Global Functions (Human Resources, Purchasing, Manufacturing, Supply Chain, Information Systems, etc.) In addition...

  • Page 165
    ... their managers. Within this framework, business segment executives have the power to authorize the signature of product or service, purchase or l accounting and financial cycles; l Human Resources, Information Systems, Legal and Tax cycles. The Key Internal Controls are available to all units on...

  • Page 166
    ... to the company's business are managed first and foremost by the units in liaison with the Operating Divisions, based on Group guidelines (in particular via the Key Internal Controls). Each subsidiary is responsible for implementing procedures that provide an adequate level of internal control. The...

  • Page 167
    ...cycles, documentation, scope definition, work programs etc.); l completed more than 80 on-site inspection missions in 2014 to assess the level of internal control and the adequacy of action plans, issuing the necessary recommendations when needed. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 165

  • Page 168
    ... points. The internal controls used to confirm the existence, completeness and value of assets and liabilities are based on: finalized a few weeks after the annual and half-year balance sheet date, subsidiaries perform a hard close at May 31, and 166 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 169
    ... Commercial Code (Code de commerce) for the year ended December 31, 2014. It is the Chairman's responsibility to prepare and submit for the Board of Directors' approval a report on the internal control and risk management procedures implemented by the company and to provide the other information...

  • Page 170
    ... the possibility to carry out a calculation of consistency in value for a certain length of time. Stock options and performance shares The valuation of options and performance shares allocated must not depart from previous business practices. 168 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 171
    4 Business review 1. Trends in Schneider Electric's core markets 2. Review of the consolidated financial statements 3. Review of the parent company financial statements 4. Review of subsidiaries 5. Outlook 170 173 179 179 179 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 169

  • Page 172
    ... pace, increase in office and health buildings more than offset the fall recorded by commercial and industrial buildings. Saudi Arabia's market returned to growth, thanks to government investment focused on developing new cities. Residential In the US, residential market growth slowed down in 2014...

  • Page 173
    ... support of governments and populations. Looking for diversifying their revenues beyond sales of electricity, and with their customer base as an asset, utilities explore new services. Be it multi-utility, energy efficiency, home and life services, or enabling demand response to play in power markets...

  • Page 174
    ... data center market with the integration of AST Modular. Secure power industrial markets achieved steady growth along with improved outlook for infrastructure investments in power generation, chemical production, and semiconductor fabrication. 172 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 175
    ... to the dates on which the Group gained control of the acquired companies. (1) Adjusted EBITA is EBITA before restructuring costs and before other operating income and expenses, which includes acquisition, integration and separation costs. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 173

  • Page 176
    ... EUR5,407 million for the year ended December 31, 2013, an increase of 9.9%, mainly due to Invensys. The support functions costs to sales ratio increased from 23.1% for the year ended December 31, 2013 to 23.8% for the year ended December 31, 2014. 174 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 177
    ... the positive impact of Invensys consolidation. As a percentage of revenue, EBITA decreased to 12.7% in 2014 compared with 13.9% in 2013, in line with the lower Adjusted EBITA margin and with integration and restructuring costs higher than in 2013. 4 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 178
    ... financial statements), mainly due to the dilutive effect of Invensys consolidation, partly offset positive pricing and operational leverage. Infrastructure business recorded an adjusted EBITA margin of 8.6% for the year ended December 31, 2014, down 0.8% compared to 9.8% for the year ended...

  • Page 179
    ... Schneider Electric US operations. 4 Discontinued operations The net effect of discontinued activities totaled EUR169 million for the year ended December 31, 2014, including profit over six-months from the Appliance activity of Invensys, sold in June 2014, and over nine-months from CST business...

  • Page 180
    ... consolidated financial statements), mainly due to the decrease of accounts payables, on a high comparison base in 2013. In all, net cash provided by operating activities decreased 11.6% from EUR2,866 million in the year ended December 31, 2013 (restated for the effect of discontinued operations and...

  • Page 181
    ... year-end, after taking into account 2014 loss, dividend payments of EUR1,069 million and share issues in an amount of EUR1,228 million. 4. Review of subsidiaries Schneider Electric Industries SAS Revenue totaled EUR3.4 billion in 2014 (EUR3.5 billion in 2013). The subsidiary posted an operating...

  • Page 182
    4 BUSINESS REVIEW OUTLOOK 180 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 183
    ...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 182 184 186 188 189 248 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 181

  • Page 184
    ... intangibles) EBITA corresponds to operating profit before amortization and impairment of purchase accounting intangible assets and before goodwill impairment. The accompanying notes are an integral part of the consolidated financial statements. 182 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 185
    ... (losses) on available-for-sale financial assets Income tax effect of net gains (losses) on available-for-sale financial assets Actuarial gains (losses) on defined benefits plans Income tax effect of Actuarial gains (losses) on defined benefits plans Other comprehensive income for the year, net of...

  • Page 186
    ...-term pension assets Sub-total Total II - Cash flows from/(used in) investing activities Issuance of bonds Repayment of bonds Sale/(purchase) of own shares Increase/(reduction) in other financial debt Proceeds from issuance of shares Dividends paid: Schneider Electric SE Non-controlling interests...

  • Page 187
    ... equivalents at January 1 Increase/(decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS AT DECEMBER 31 * 20 2,438 The 2013 figures were restated from discontinued operations and change in consolidation method disclosed in note 1. 5 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 185

  • Page 188
    ...and equipment, net Total tangible and intangible assets Investments in associates Available-for-sale financial assets Other non-current financial assets Non-current financial assets Deferred tax assets Total non-current assets Current assets Inventories and work in progress Trade and other operating...

  • Page 189
    ... 23 24 977 1,158 2,645 11,228 4 41,158 5 * The 2013 figures were restated from discontinued operations and change in consolidation method disclosed in note 1. The accompanying notes are an integral part of the consolidated financial statements. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 187

  • Page 190
    ... paid-in capital to retained earnings. *** The 2013 figures were restated from discontinued operations and change in consolidation method disclosed in note 1. The accompanying notes are an integral part of the consolidated financial statements. 188 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 191
    ... Schneider Electric Group's consolidated financial statements for the financial year ended December 31, 2014 were drawn up by the board of directors on February 18, 2015. They will be submitted to shareholders for approval at the Annual General Meeting of April 21, 2015. The Group's main businesses...

  • Page 192
    .... CST was reported in the Industry business of Schneider Electric. The CST activity was reclassified as discontinued operations in Group financial statements on full year 2014 (for EUR24 million net income) and on full year 2013 (for EUR443 million of revenues, EUR83 million of profit before tax and...

  • Page 193
    ... sheet at historical cost. They are subsequently measured using the cost model, in accordance with IAS 38 - Intangible Assets. Intangible assets (mainly trademarks and customer lists) acquired as part of business combinations are recognized in the balance sheet at fair value at the combination date...

  • Page 194
    ... operating leases. The related payments are recognized as an expense on a straight-line basis over the lease term. other resources to complete the development; l it is probable that the future economic benefits attributable to the project will flow to the Group. Development costs that do not meet...

  • Page 195
    ...groups of assets. The cash-generating units in 2013 were Partner, Infrastructure, Industry, IT, Buildings and CST CGUs. In 2014, Schneider Electric decided to regroup its Buildings and Partner businesses into a single business to provide its customers a complete offer to address the buildings market...

  • Page 196
    ... plans Defined benefit plans are measured using the projected unit credit method. Expenses recognized in the statement of income are split between operating income (for service costs rendered during the period) and net financial income/(loss) (for financial costs and expected return on plan assets...

  • Page 197
    ... In the case of stock appreciation rights, a liability is recorded corresponding to the amount of the benefit granted, re-measured at each balance sheet date. As part of its commitment to employee share ownership, Schneider Electric gave its employees the opportunity to purchase shares at a discount...

  • Page 198
    ...Group's revenues primarily include merchandise sales and revenues from services and contracts. Merchandise sales Revenue from sales is recognized when the product is shipped and risks and benefits are transferred (standard shipping terms are FOB). 196 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 199
    ... value recognized as part of the acquisition price were not significant across the Schneider Electric Group balance sheet and income statement. Dec. 31, 2014 Acquisitions Cash and cash equivalents paid* Cash and cash equivalents acquired/(paid) Disposals Other operations NET FINANCIAL INVESTMENT...

  • Page 200
    ... to solutions integrating the offers of several activities from the Group; l IT, which covers Critical Power & Cooling Services and three Until 2013, Schneider Electric operations were organized in five businesses (Partner, Infrastructure, Industry, IT and Buildings), built around key technologies...

  • Page 201
    ... Other operating income and expenses (of which Costs of acquisition, integration and separation). Revenue related to solutions amounts to 41% of total revenue in 2013 . 3.2 - Information by region The geographic regions covered by the Group are: l Western Europe; l North America: United States...

  • Page 202
    ... United States, in France and in the United Kingdom. The line « Others » includes in particular provisions for litigation or claims at December 31, 2014. In 2013, the line « Others » includes mainly provision for litigation or claims as well. 200 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 203
    ... decrease of margin rate. Note 9 Other financial income and expense Full year 2014 Full year 2013* (12) (69) 7 (50) (35) (159) Exchange gains and losses, net Financial component of defined benefit plan costs Dividends received Net gains/(losses) on disposal of assets available for sale Fair value...

  • Page 204
    ... expense Whenever possible, Group entities file consolidated tax returns. Schneider Electric SE has chosen this option for the French subsidiaries it controls directly or indirectly through Schneider Electric Industries SAS. 10.1 - Analysis of income tax expense Full year 2014 Current taxes France...

  • Page 205
    ...to operating income: Partner Square D Company 82% Industry 18% 11.2 - Movements during the year The main movements during the year are summarized as follows: Full year 2014 Net goodwill at opening Acquisitions Disposals Impairment Translation adjustment Reclassifications Net goodwill at year end...

  • Page 206
    ...(910) (919) (145) (13) 44 12 (1,021) (189) (14) (84) (2) 88 (1,222) (2,455) (408) 21 92 2 2 (2,746) (486) 6 (122) (6) 118 (3,236) The 2013 figures were restated from discontinued operations and change in consolidation method disclosed in note 1. 204 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 207
    ... assets from purchase price allocation for EUR259 million for the year 2014 and EUR218million for the year 2013 (disclosed in note 8). 12.2 - Trademarks At December 31, 2014, the main trademarks recognized were as follows: Dec. 31, 2014 APC (IT) PELCO (Buildings & Partner) Clipsal (Building...

  • Page 208
    ...43 (28) (7) (52) (608) Total (4,224) (401) 182 129 9 (40) (4,345) (414) 297 (157) 11 (182) (4,790) (25) (1) (26) (3) 1 (1) 1 (28) The 2013 figures were restated from discontinued operations and change in consolidation method disclosed in note 1. 206 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 209
    ... 1 29 32 2 (40) 24 Dec. 31, 2013 1 30 31 2 (41) 23 5 Minimum payments Less than one year Between one and five years Five years and more TOTAL COMMITMENTS Discounting effect Discounted minimum payments 3 3 6 3 9 Discounted minimum payments 3 6 9 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 207

  • Page 210
    ... statement of income for December 2013 corresponds to the share in net profit until March 28, 2013. (2) On October 1, 2014 the Group has reinvested approximately USD100m alongside Carlyle, PAI and CST management to own a shareholding of 30% of CST. 208 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 211
    ...-FOR-SALE FINANCIAL ASSETS (1) Companies purchased in 2014. (2) Gross unit value of less than EUR5 million. (4) (9) (7) (7) (79) 14 10 1 12 24 276 333 The fair value of investments quoted in an active market corresponds to the price on the balance sheet date. NVC Lighting investment was acquired...

  • Page 212
    ... the United States (EUR152 million). Note 17 Inventories and work in progress Inventories and work in process changed as follows: Dec. 31, 2014 Cost: Raw materials Production work in process Semi-finished and finished products Goods Solution work in process INVENTORIES AND WORK IN PROCESS AT COST...

  • Page 213
    ...In addition, the Group takes out substantial credit insurance and uses other types of guarantees to limit the risk of losses on trade accounts receivable. Changes in provisions for impairment of short and long-term trade accounts receivable were as follows: Full year 2014 Provisions for impairment...

  • Page 214
    ... average cost of capital. The strategy must also ensure the Group has access to different capital markets under the best possible conditions. Factors taken into account for decision-making purposes include objectives expressed in terms of earnings per share, ratings or balance sheet stability...

  • Page 215
    ... per share (with a nominal value of EUR4) for fiscal year 2014. At December 31, 2014 Schneider Electric SE had distributable reserves in an amount of EUR7,883 million (versus EUR7,965 million at the previous year-end), not including profit for the year. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 216
    ...31, 2014 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 21.5 - Share-based payments Current stock option and stock grant plans The board of directors of Schneider Electric SE and later the management board have set up stock option and stock grant plans for senior executives and certain employees of...

  • Page 217
    ... corresponding to a 21.5.1 Valuation of performance shares In accordance with the accounting policies described in note 1.20, the stock grant plans have been valued on the basis of risk-free rate over the life of the plans (source: Bloomberg). 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 215

  • Page 218
    ... plan, employees may purchase Schneider Electric shares at a 15% to 20% discount (according to the country) to the price quoted for the shares on the stock market. Employees must then hold their shares for five years, except in certain cases provided for by law. The share-based payment expense...

  • Page 219
    ... ordinary, non-revolving personal loan, with a five-year maturity to an individual with an average credit rating. (2) A decline in the interest rate for market participants reduces the lock-up cost and increases the expense booked by the issuer. 5 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 217

  • Page 220
    ..., with a five-year maturity to an individual with an average credit rating. (2) Calculated using a binomial model. (3) A decline in the interest rate for market participants reduces the lock-up cost and increases the expense booked by the issuer. 218 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 221
    ... for post 65 retirees. The rate of healthcare cost increases in the United States was based on a decreasing trend from 7.33% in 2014 to 4.5% in 2023 at December 31, 2013 for all retirees. The rate in France was estimated at 4% in 2014 and in 2013. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 219

  • Page 222
    ... criteria in terms of age and years of service. The average duration of these North American plans is 11.4 years. These post-employment benefit obligations are unfunded. Healthcare coverage for North American employees represents 73% of this obligation. The main benefits paid in 2014 are primarily...

  • Page 223
    ... of the Invensys subsidiaries which participate in the Scheme, up to a maximum amount of GBP1.75 billion. At December 31, 2014, plan assets exceed the value of obligations subject to this guarantee and thus this guarantee cannot be called. 5 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 221

  • Page 224
    ... arising from financial assumptions Actuarial (gains)/losses on projected benefit obligation from experience effects Actuarial (gains)/losses on plan assets Effect of the asset ceiling Dec. 31, 2014 961 (1) (198) 11 (74) 699 117 908 49 (706) (31) 1,036 Other post-employment and long-term benefits...

  • Page 225
    ... Other PROJECTED BENEFIT OBLIGATION AT END OF YEAR Plans changes occurred in United-Kingdom and United States. Actuarial gains and losses have been fully recognized in other reserves. They stem mainly from changes in financial actuarial assumptions (primarily discount rates) used to measure...

  • Page 226
    ... in other reserves. Full year 2014 Of which SE USA 5. Funded status Projected benefit obligation Fair value on plan assets Surplus/(Deficit) Effect of the asset ceiling Deferred items: Unrecognized past service cost (LIABILITIES)/NET ASSET RECOGNIZED IN THE BALANCE SHEET (1,459) (413) (10,925...

  • Page 227
    ... Group compared to EUR32 million of losses at December 31, 2013. 5 Dec. 31, 2014 3. Funded status Projected benefit obligation Deferred items: Unrecognized past service cost PROVISION RECOGNIZED IN BALANCE SHEET (512) (512) Dec. 31, 2013 (424) (424) 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 228
    .... Provisions for customer risks also integrate the provisions for losses at completion for some of long term contracts, for EUR87 million. identified products. (d) Environmental risks These provisions are primarily funded to cover cleanup costs. 226 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 229
    ... Short-term portion of long-term debt Short-term debt TOTAL CURRENT AND NON-CURRENT FINANCIAL LIABILITIES CASH AND CASH EQUIVALENTS (SEE NOTE 20) NET DEBT * The 2013 figures were restated from the change in consolidation method disclosed in note 1. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 227

  • Page 230
    ...0.846%, 2.875% fixed 4.000% fixed 3.750% fixed 3.500% fixed 3.625% fixed 2.500% fixed 2.950% fixed Maturity January and July 2014 January 2015 July, November, December 2016 August 2017 July 2018 January 2019 July 2020 September 2021 September 2022 228 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 231
    ... information At December 31, 2014 Schneider Electric had confirmed credit lines of EUR2,650 million, all unused. Loan agreements and committed credit lines do not include any financial covenants or credit rating triggers in case of downgrading in Company's long term debt. Note 25 Other non-current...

  • Page 232
    ... cost 333 333 365 365 5,991 5,991 (5,118) (372) (5,490) (751) (1,895) (4,106) (32) (6,784) Fair Value ASSETS Available-for-sale financial assets Other non-current financial assets TOTAL NON-CURRENT ASSETS Trade accounts receivable Other receivables Current financial assets Marketable securities...

  • Page 233
    ... accounted at the fair value, except for the bonds for which the amortized cost represents EUR6,422 million compared to EUR6,039 million reflected in the balance sheet. The 2013 figures were restated from the change in consolidation method disclosed in note 1. 2014 REGISTRATION DOCUMENT SCHNEIDER...

  • Page 234
    ...for the level 1) are directly or indirectly accessible; 3. incoming information non accessible regarding the asset or liability. Dec. 31, 2014 Carrying Amount ASSETS Available-for-sale financial assets Marketable securities Derivative instruments LIABILITIES Bonds Other long-term debt Other current...

  • Page 235
    ..., payables and cash flows, which are primarily hedged by means of forward purchases and sales. Depending on market conditions, risks in the main currencies may be hedged based on cash flow forecasting using contracts that expire in 12 months or less. Schneider Electric's currency hedging policy is...

  • Page 236
    ...interest rates. Interest rate risk on borrowings is managed at the Group level, based on consolidated debt and taking into consideration market conditions in order to optimize overall borrowing costs. At December 31, 2014, most of the Group's bond debt was at fixed rate. As a result, an increase in...

  • Page 237
    ... customers any such increased costs, this could have an adverse impact on our financial results. The Group has, however, implemented certain procedures to limit exposure to rising non-ferrous and precious raw material prices. The purchasing departments of the operating units report their purchasing...

  • Page 238
    ... the 2014 the long term incentive plan. Since December 16, 2011, 100% of performance shares and/or stock options are conditional on the achievement of performance criteria for members of the Executive Committee. Pension obligations net of assets with respect to members of Senior Management amounted...

  • Page 239
    ... that the provisions recognized in the balance sheet, in respect to the known claims and litigation to 5 Note 30 Subsequent events At the date of financial statements approval by the board of directors, there is no material subsequent event. 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 237

  • Page 240
    ... o/w Schneider Electric SE o/w subsidiaries Related services o/w Schneider Electric SE o/w subsidiaries Audit sub-total Other services Legal, tax TOTAL FEES 12% 552 121 431 7% 1,900 97% 3% 100% 8,611 32 8,643 100% 100% 19,411 395 19,806 238 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 241
    ...companies The main companies included in the Schneider Electric Group scope of consolidation are listed below. % Interest Dec. 31, 2014 Europe Fully consolidated Schneider Electric Energy Austria AG Schneider Electric Austria GmbH Schneider Electric Power Drives GmbH Eurotherm GmbH Invensys Systems...

  • Page 242
    ... Automation SAS Schneider Electric Energy France SAS Schneider Electric France SAS Schneider Electric Holding Amérique du Nord SAS Schneider Electric Industries SAS Schneider Electric International SAS Schneider Electric Manufacturing Bourguebus SAS Schneider Electric SE (Holding Company) Schneider...

  • Page 243
    ... de Réassurance SA American Power Conversion Corp (APC) B.V. APC Holdings B.V. APC International Corporation B.V. APC International Holdings B.V. Pelco Europe B.V. Pro-Face HMI B.V. (sub-group) Schneider Electric B.V. Schneider Electric Logistic Centre B.V. Schneider Electric Manufacturing The...

  • Page 244
    ... Energy UK Ltd Schneider Electric IT UK Ltd Schneider Electric Ltd Serck Control and Safety Ltd M&C Energy Group Ltd Samos Acquisition Company Ltd BTR International Ltd BTR Property Holdings Ltd Imserv Europe Ltd Invensys Controls UK Ltd Invensys Holdings Ltd Invensys Systems (UK) Ltd Accounted...

  • Page 245
    ... Systems Mexico SA Adaptive Instruments Corp. Schneider Electric IT America Corp. Schneider Electric IT Corporation APC Holdings Inc. Juno Lighting LLC Juno Manufacturing Inc. Lee Technologies Puerto Rico, LLC Schneider Electric IT Mission Critical Services, Inc. Pelco, Inc. Power Measurement...

  • Page 246
    ... Dec. 31, 2014 AST North America, LLC Invensys LLC Invensys Systems Inc. Siebe Inc. Stewart Warner Corp. Foxboro Controles SA Indusoft, Inc. Instep Software, LLC Schneider Electric Software, LLC Asia-Pacific Fully consolidated Schneider Electric IT Australia Pty. Limited Clipsal Australia Pty...

  • Page 247
    ... Business India Private Ltd Schneider Electric President Systems Ltd Cimac Automation Private Ltd Cimac Software Systems Private Ltd Luminous Power Technologies Private Ltd Luminous Renewable Energy Solutions Private Ltd Schneider Electric India Private Ltd Schneider Electric Infrastructure Limited...

  • Page 248
    ...Co. Ltd Invensys Process Systems (Thailand) Co., Ltd Clipsal Vietnam Co. Ltd Schneider Electric IT Vietnam Ltd Schneider Electric Vietnam Co. Ltd Invensys Vietnam Ltd Accounted for by equity method Sunten Electric Equipment Fuji Electric FA Components & Systems Co., Ltd (sub-group) Foxboro (Malaysia...

  • Page 249
    ... Schneider Electric Maroc Schneider Electric Nigeria Ltd Invensys Systems Nigeria Ltd Schneider Electric Oman LLC Schneider Electric Pakistan (Private) Limited Schneider Electric Peru SA Invensys Process Systems del Peru SA Cimac Electrical and Automation LLC EPS Electrical Power Distribution Boards...

  • Page 250
    ... the Group to make these estimates. These assessments were made as part of our audit of the consolidated financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report. 248 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 251
    ... its fair presentation and its consistency with the consolidated financial statements. Courbevoie and Paris-La Défense, February 18, 2015 The statutory auditors French original signed by ERNST & YOUNG et Autre Yvon Salaün MAZARS David Chaudat 5 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 249

  • Page 252
    5 CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2014 STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 250 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 253
    ... the financial statements 4. Statutory Auditors' report on the financial statements 5. List of securities held at December 31, 2014 6. Subsidiaries and affiliates 7. The company's financial results over the last five years 252 254 255 266 268 269 271 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 254
    6 COMPANY FINANCIAL STATEMENTS BALANCE SHEET 1. Balance sheet Assets (in thousands of euros) Notes 1.1 Gross A. & D. or Prov. Dec. 31, 2014 Net Dec. 31, 2013 Net Non-current assets: Intangible assets Intangible rights Property, plant and equipment Land Buildings Other Investments Shares in ...

  • Page 255
    ... Borrowings and financial liabilities Current liabilities: Accounts payable - trade Accrued taxes and payroll costs Other Total non-current and current liabilities Deferred income Translation gains TOTAL EQUITY AND LIABILITIES The notes form an integral part of these Company financial statements...

  • Page 256
    6 COMPANY FINANCIAL STATEMENTS STATEMENT OF INCOME 2. Statement of income (in thousands of euros) Note 2014 643 2013 5,998 - Sales of services and other Reversals of provisions, depreciation and amortization and expense transfers Operating revenues Purchases and external expenses Taxes other ...

  • Page 257
    ...17,207,427 new shares Schneider Electric. The remaining 74% of Invensys were acquired by the company SAMOS, subsidiary of Schneider Electric SE. On January 31, 2014, market funds acquired in 2013 were disposed for EUR1,452 million. Accounting principles As in the prior financial year, the financial...

  • Page 258
    ... shares, acquired through capital increase of Schneider Electric SE, to its subsidiary Samos for EUR999 million; l contribution of the company Samos shares, for its book value of EUR999 million, to Schneider Electric Industries SAS, through capital increase. The main investments at December 31, 2014...

  • Page 259
    ... Shareholders' Meeting dated May 6, 2014, the company proceeded to the share buyback of 5,989,578 shares for a total amount of EUR370 million. These Schneider Electric SE shares were not allocated to performance shares plans and thus were accounted for as other investment securities. 2.3 - Advances...

  • Page 260
    ... Net TOTAL NET Marketable securities primarily represent own shares held by the company for allocation to coming performance shares plans and, if appropriate, of stock-options. Note 5 Advances to the Group cash pool This item consists of interest-bearing advances by Schneider Electric SE to the...

  • Page 261
    ...3,135 2,667 1,477 1,452 39,239 Increases - Decreases (432) (23) (70) (849) (1,983) (4,107) 821 (348) 659 (432) (33) (692) (527) (144) (172) (8,332) Dec. 31, 2014 1,215 2 2,466 5,763 11,999 (18) 561 (1,039) 2,764 2,443 2,140 1,333 1,280 30,907 6 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 259

  • Page 262
    ...Employee Stock Purchase 3,717,865 new shares; l EUR7 million Plan with an issuance of share capital increase for the exercise of performance shares with an issuance of 1,807,827 new shares. Own shares The total number of own shares held at the reporting date stood at 13,296,614, representing...

  • Page 263
    ... position or income. 8.2 - Pension accruals The company has various obligations towards its current and retired senior executives and managers. During 2012, the company closed the previous plan to new comers and implemented a new plan with progressing vesting rights based on seniority in the Group...

  • Page 264
    ...: floating rate. Schneider Electric SE has issued bonds during past years on different markets: l in the Unites States, through a private placement offering following SEC 144A rule, for USD800 million worth of bonds issued in September 2012, at a rate of 2.950%, due in September 2022; l as part of...

  • Page 265
    ... receivables Marketable securities Prepaid expenses Debt Bonds Bank loans Other borrowings Amounts payable to subsidiaries and affiliates Interest-bearing liabilities Accounts payable - trade Accrued taxes and payroll costs Other Deferred income 6 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 263

  • Page 266
    ... assets disposal orresponds to the consideration invoiced for the use of Schneider Electric trademark to Schneider Electric Industries SAS. On December 31, 2014 a EUR18 million loss was booked on marketable securities on treasury shares of plans n°26 and n°27. 264 2014 REGISTRATION DOCUMENT...

  • Page 267
    ... FINANCIAL STATEMENTS Note 16 Net income tax benefit The « income tax expense » line item in the statement of income mainly consists of the Group tax relief recorded by the tax Group headed by Schneider Electric SE, net of 2014 income tax due, for EUR83 million, EUR4 million less than last year...

  • Page 268
    ...' Meeting, we hereby report to you, for the year ended December 31, 2014 on: l the audit of the accompanying financial statements of Schneider Company as at December 31, 2014 and of the results of its operations for the year then ended in accordance with French accounting principles. Without...

  • Page 269
    ...of the shareholders has been properly disclosed in the report of the Board of Directors. Paris-La Défense and Courbevoie, March 13, 2015, The statutory auditors French original signed by ERNST & YOUNG et Autres Yvon Salaün MAZARS David Chaudat 6 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 267

  • Page 270
    ...companies D. Investments in foreign companies Total Marketable securities 5,312,882 TOTAL Schneider Electric SE own shares 162,626 162,626 1,092 141,121 5,904,951 Schneider Electric Industries SAS Schneider Electric SE own shares 5,343,544 419,194 5,762,738 268 2014 REGISTRATION DOCUMENT SCHNEIDER...

  • Page 271
    ...) B. Affiliates not included in Section I: (0-50%) a) French companies (aggregate) b) Foreign companies (aggregate) * Including income or loss in prior financial year. 928,299 7,585,915 100.00 96,884 42,339 99.84 17,965 25,418 4.8 6 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 269

  • Page 272
    ... or loss (-) Dividends received by the company during 2014 5,343,544 5,343,544 3,138,990 - 3,365,739 173,915 - 219,893 139,073 - - Holding company 126 - 15,288 - 1,038 - - - - - 784 - 130 21,249 53 2,049 - - - -2,177 - 270 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 273
    ...) 653 459 1,963 1,170 3,936 (1) Dividends on shares held in treasury on the dividend payment date and the associated withholding are credited to retained earnings. (2) Pending approval by the Annual Shareholders' Meeting of April 21, 2015. 6 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 271

  • Page 274
    6 COMPANY FINANCIAL STATEMENTS THE COMPANY'S FINANCIAL RESULTS OVER THE LAST FIVE YEARS 272 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 275
    ... shareholding 6. Performance shares and stock option 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 274 275 277 281 282 283 290 290 292 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 273

  • Page 276
    ...manufacturing, electrical distribution and secured power supply; l building control, automation and safety; l industrial control and automation, including software; l management of all types of data centers, networks, equipment and other infrastructure; (ii) the acquisition, purchase, sale and use...

  • Page 277
    ... Meeting takes place, subject to compliance with the provisions of the law. In the case of a capital increase by capitalizing reserves, earnings or additional issue premiums, the right to a double vote is conferred, as soon as they are issued, on 7 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 278
    ... these provisions: l the total number of voting rights is calculated on the date of the assimilated to shares owned, as defined by article L.233-7 et seq. of the French Commercial Code; l shareholders' proxies returned to the Company that do not appoint a representative are subject to the above...

  • Page 279
    ..., stock grants, performance shares and warrants would be 1.52% of share capital at December 31, 2014. (plans 11 bis to 18 bis) relating to shares to be issued and to existing shares or shares to be issued whose type will be determined later; 7 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 277

  • Page 280
    ...2014: 1) to issue new shares to members of the Employee Stock Purchase Plan (ESPP), within a limit of 2% of the issued capital on the date of the implementation of the authorization. 2) to issue new shares under programs to promote stock ownership among employees in non-French companies of the Group...

  • Page 281
    ...performance shares at the end of March 2015 within the limit of 2.9 million shares (0.49% of the capital) as part of the long-term incentive plan for 2015. (7) On the date of the 2014 Annual Shareholder's Meeting, i.e., a capital of EUR2,318 million. 7 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 282
    ... and renewed by the General Meeting 2014 between January 1, 2014 and February 27, 2015: - transactions carried out by the Company: - number of shares acquired: 5,989,578, - number of shares transferred since the beginning of the program: 634,093 280 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 283
    ... of the company's knowledge, no shareholders other than Blackrock Inc., listed above, hold, either directly or indirectly, more than 5% of Schneider Electric's capital or voting rights. Changes in holdings (for stake equal to or greater than 5%) Date December 3, 2014 October 22, 2014 September 19...

  • Page 284
    ... the last five years were: (in millions of euros) 2014 63.5 2013 76.7 2012 50.9 2011 59.9 2010 56.5 Profit-based incentive plans and profit-sharing plans In 2014, almost 55% of the total from incentives and profit-sharing was invested in the Schneider Electric shareholder fund and nearly 21...

  • Page 285
    ...for members of the Executive Committee, allocations of performance shares are fully subject to the achievement of performance conditions. Grant policy As part of its overall staff pay policy, each year Schneider Electric sets up a long-term incentive plan. This plan is based on an annual allocation...

  • Page 286
    ... as of March 19, 2015; (iv) 64,838 performance shares are vested and are available under plans 1, 3, 5 and 8. Lock-up period applicable to executive directors The board of directors has set: l a retention target of shares representing three years of base salary for Mr Jean-Pascal Tricoire, and two...

  • Page 287
    ... made in May 2014. Number of options remaining to be exercised after deduction of all cancellations and exercises since plan implementation. Excluding restructuring costs. On the basis of a pre-defined and fixed list of 11 competitor companies. 7 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 285

  • Page 288
    ... Babeau 162,595 23,399 72,455 100,632 30,190 (*) The data above are adjusted for the two-for-one split, effective September 2, 2011, and for the adjustment carried out in May 2014. (1) In the role as executive director at the date of attribution. 286 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 289
    ... 31, tors(2) 2014 grant(5) 2014 criteria reached celled(1) 50% of the shares/100% for the management board and Executive Committee - 2012 and 2013(3) operating margin and change in the Planet & Society barometer at the end of 2013 As plan 11 with no performance conditions 50% of the shares/100% for...

  • Page 290
    7 INFORMATION ON THE COMPANY AND ITS CAPITAL PERFORMANCE SHARES AND STOCK OPTION PLANS Plan 17 bis 18 18 bis Number of beneAcquificiaries Number of sition/ at shares at delivery Lock-up Plan date inception inception period period 10/28/2014 03/31/2014 10/28/2014 1 500 2 years 2 years 2,504 2,177,...

  • Page 291
    ...Exercise price/ Average weighted price Plans 163,249 EUR37,66 28-30-31-33 Shares awarded to the ten most highly paid employees (non-executive directors) Number 2014 Performance Shares grant (annual allocation on March 31, 2014) 212,500 Plan 18 7 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 292
    ..., Schneider Electric is listed on Euronext Paris (sub-fund A), where it is traded on a per-share basis under ISIN code FR0000121972. Schneider Electric SE shares are included on the CAC 40 index established by Euronext. 18-month trading data in Paris Year 2013 2014 2015 Month August...

  • Page 293
    ... price in euros Schneider Electric share Index CAC 40 MONEP Schneider Electric SE shares have been traded on the MONEP market since December 20, 1996. Ordinary bonds The information is disclosed in note 9 of the company financial statements (pages 262 and 263). 7 2014 REGISTRATION DOCUMENT...

  • Page 294
    ... base and consists of up to eight independent volunteers appointed by Schneider Electric. The Advisory Committee meets three to four times a year to discuss various topics with a strong emphasis on the company's strategy towards individual shareholders (enhancing communication material and defining...

  • Page 295
    ...December 2014) 3. Exhibits to the board of directors's report: internal regulations of the board and charter of the Vice-Chairman Lead Independent Director 4. Special report from statutory auditors 5. Draft resolutions Appendix 294 305 306 313 321 330 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 296
    ... represents a distribution rate of 56.4% of the Group's net income. It will be paid on May 5, 2015 on 584,691,142 shares with dividend rights on January 1, 2014, that made up the capital on December 31, 2014. No dividend will be paid on shares held in treasury by the company on the payment date...

  • Page 297
    ... years prior to the date of disability, less 1.25% per missing quarter to obtain a pension at the full rate and deduction made of the theoretical income which could have been obtained under insurance terms and conditions at the time of disability. 8 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 298
    ... for Jean-Pascal Tricoire, as discussed above, amendments which provide that Mr. Tricoire: (i) loses his entitlement to old and new defined-benefit pension plans (article 39) for French executives of the Group; (ii) retains his entitlement to an income for his surviving spouse in the event of...

  • Page 299
    ... 2017 to 2018 inclusive and which will be unavailable until 2020. These shares represent a value in IFRS of EUR430.000. In the definition of this complementary compensation, your board of directors has ensured its alignment with the shareholders' 8 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 297

  • Page 300
    ...' MEETING REPORT OF THE BOARD OF DIRECTORS TO THE COMBINED ORDINARY AND EXTRAORDINARY SHAREHOLDERS' MEETING Jean-Pascal Tricoire, Chairman and Chief Executive Officer I - Elements of compensation due or awarded for the year Amounts submitted to the vote 1) Fixed portion 2) Annual variable...

  • Page 301
    ...defined-benefit pension plan (article 39) for the Group's senior executives under the French social security system. See Section 3-7 of the 2014 registration document Board decisions of 2009, 2012, and June 18-19, 2013 Date of approval by the Annual Shareholders' Meeting: 2009, 2012, and May 6, 2014...

  • Page 302
    ... activity; this objective was presented in early 2012, as part of the Connect Program. The operating margin objective being based on an average over the 2014-2015 period, it is not disclosed to avoid interfering with the annual guidance communicated to the market; l 15% of the shares are conditioned...

  • Page 303
    ... the defined-contributions plan (article 83) set up for Group senior executives under French contract and managed by Cardif and, for all Group employees, managed by Malakoff-Médéric until July 1, 2014 and by Cardif since that date. See Section 3-7 of the 2014 registration document. board decisions...

  • Page 304
    ...the Annual Shareholders' Meeting of May 6, 2014, Schneider Electric has repurchased 5.99 million shares in order to offset the dilution resulting from capital increases reserved for employees performance share plans and the exercise of stock options. Schneider Electric has announced that it will buy...

  • Page 305
    ...for employees of foreign Group companies or entities set up on their behalf, within the limit of 1% of the share capital. Under these authorizations, at its meeting on December 16, 2014, the board of directors decided to renew the annual employee 8 303 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 306
    ... representing more than 80% of the Group's employees. Your Company carried out capital increases reserved for Group employees in 2014 (WESOP 2014). These transactions are presented in page 282 of this registration document. In order to create a new international employee share ownership plan...

  • Page 307
    ... employees and managers of the Group, as well as with customers. He paid special attention to the integration of new acquisitions, with a particular focus on Invensys during meetings with its software teams. Other duties The Vice-Chairman Independant Lead Director conducted the annual assessment...

  • Page 308
    ... manages the board's works, and reports on these works at the annual general shareholders meeting. 3. The Chairman of the board of directors sets the agenda and the schedule for Board meetings with assistance from the Vice-Chairman-lead director. 306 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 309
    ...-Chairman may attend any meetings of committees of which he is not a member, - In order to complement his knowledge, the Vice-Chairman may meet the Group's leading managers and visit company sites, - The Vice-Chairman carries out annual and biennal assessments of the board of directors and, in this...

  • Page 310
    ... or deputy executive officers of any corporate appointment in a listed company outside the Group. 4. The works of the board of directors and its committees shall be included in the annual report. 3. Any member of the board may appoint another member to represent him at a Board meeting by means of...

  • Page 311
    ...-lead director shall preside over the Governance committee. They shall be appointed in a personal capacity and may not be represented. The terms of office of committee members shall coincide with their terms of office as members of the board of 8 309 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 312
    ...of financial authorizations submitted for approval at annual general shareholders meetings. The Audit committee shall examine all financial and accounting questions and questions related to risk-management submitted to it by the board of directors. 310 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 313
    ... plans for key Group executives. The committee shall prepare the board of directors' deliberations on (i) employee shareholder development, (ii) reviews made by the board on social and financial impacts of major re-organization projects and major human resource policies, (iii) monitoring management...

  • Page 314
    ...Vice-Chairman shall meet any shareholder who wishes so and inform the board of their concerns on governance matters. 4. The Vice-Chairman-lead director must be an independent member of the board, as defined in the criteria published by the company. 312 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 315
    ... Tricoire Person concerned: Mr. Jean-Pascal Tricoire (Chairman & Chief Executive Officer) Your Board of Directors, in its meeting of February 18, 2015, decided that the corporate officers of the company shall no longer benefit from the article 39 top-hat pension plans established in 1995 and 2012...

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    ...of his employment contract with Schneider Electric Industries SAS conditioned upon the execution of the changes necessitated by the termination of the employment contract and of the article 39 plans. These commitments were authorized by your Board of Directors in its meetings of June 18/19, 2013 and...

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    ... Board of Directors (hereinafter "Maximum Amount"). The right to Compensation shall be granted in the following cases: l dismissal, non-renewal or resignation as Chief Executive Officer in the six months following a material change in Schneider 8 315 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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    ... is entitled under his service contract entered into with Schneider Electric Industries SAS (in addition to the article 39 pension plan with defined benefits presented above). The aforementioned plan ensures that in the event Mr. Babeau should leave the Group before his retirement, the contributions...

  • Page 319
    ... contract [article 39 (new plan)] approved by the Shareholders' Meetings of May 3, 2012 and April 25, 2013 Persons concerned: Mr. Jean-Pascal Tricoire (Chairman and Chief Executive Officer) and Mr. Emmanuel Babeau (Executive Vice President in charge of finance and legal ) Your Supervisory Board...

  • Page 320
    ... issue price within the annual legal limit of 10 percent of share capital; l to delegate the board, with the right of subdelegation, for a period of 26 months from the date of this shareholders' meeting, the authority to determine the terms of an issue of ordinary shares or securities giving access...

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    ...we hereby report on the proposal to issue ordinary shares or securities giving access to the share capital of the company, with cancellation of preferential subscription right reserved for: (i) employees and corporate officers of the Schneider Electric Group related to the company under the terms of...

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    ...These procedures consisted in verifying the information provided in the board of director's report relating to this operation and the method used to determine the issue price of the share or of the equity securities to be issued. Subject to subsequent examination of the conditions for the issue that...

  • Page 323
    ... presented in these reports concerning the compensation of the Vice-Chairman for his duties as Lead Director, and takes note of information concerning the agreements and commitments made in prior years and approved by the Shareholders' Meeting. 8 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

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    ..., pursuant to article L.225-209 of the French Commercial Code and of European Regulation no. 2273/2003, dated December 22, 2003, to acquire the Company's shares for the purpose of: l Reducing the share capital within the maximum legal limit; 322 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 325
    ... providing for other adjustment cases, to protect the rights of holders of securities convertible into the Company's shares, stock options, or free or performance shares. This EUR800 million limit in the nominal amount does not apply to capital increases reserved for employees or corporate officers...

  • Page 326
    ... receivables, and (ii) the shares issued confer the same rights as existing shares subject to their effective date; l hereby resolves that the issuance of shares by the Company may result, in accordance with article L.228-93 of the French 324 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 327
    ... that the board of directors shall have full authority, with the power to grant subdelegations of authority, to l hereby resolves to fix at 26 months the period of validity of this authorization starting from this Shareholders' Meeting. 8 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 325

  • Page 328
    ... Fifteenth Resolution of the Extraordinary Meeting of April 25, 2013 for the amounts not used by the board of directors; l hereby resolves to fix at 26 months the period of validity of this authorization starting from this Shareholders' Meeting. 326 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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    ... a period of twenty-six months from and after the date of this Shareholders' Meeting to undertake a capital increase on one or more occasions at its discretion by issuing shares or securities carrying the right to acquire shares of the Company, on the terms and conditions set forth in article L.225...

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    ...on the issue price, dates, time periods, terms and conditions of subscribing to them, paying the paid-in capital, or nominal amount, delivery and effectiveness of the shares and equity securities, within applicable limits of law and regulations, - record and determine the capital increase, undertake...

  • Page 331
    ...-FOURTH RESOLUTION (Powers for formalities) The Shareholders' Meeting confers full powers upon the bearer of a copy or excerpts of the minutes confirming these resolutions for purposes of accomplishing all legal and administrative formalities. 8 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 329

  • Page 332
    ... which it shall determine, which operate under the supervision of the Board of Directors. Each committee shall report its missions at the next board meeting. 7. The board of directors shall adopt its own rules of procedure governing its operation. 330 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 333
    ... Benefits ». The statutory auditors' report on the financial statements for the period ended December 31, 2014 contains an observation referring to the change in accounting standards related to pension obligation. Executed on March 19, 2015 The Chairman and CEO of Schneider Electric SE Jean...

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    ... Courbevoie Represented by David Chaudat Alternate Auditors Auditex Thierry Blanchetier 1992 2004 Appointment expires 2016 2016 2010 2010 2016 2016 Ernst & Young et Autres and Mazars are members of the Auditor's Regional Company of Versailles. 332 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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