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

Table of contents

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

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

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

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

  • Page 5
    ... the way people distribute and control energy, from power plant to plug. More than ever, we are committed to helping our customers make the most of their energy. With them, all over the world, we are pioneering the era of Intelligent Energy. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 3

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

  • Page 7
    ...MEMBER OF THE MANAGEMENT BOARD with > Interview Emmanuel Babeau EXECUTIVE VICE PRESIDENT FINANCE, MEMBER OF THE MANAGEMENT BOARD 2009 will go down in the history as the year of the Great Recession. How did Schneider Electric's revenue hold up during the year? Schneider Electric saw a steep decline...

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

  • Page 9
    ... Management Board and Executive Vice President, Finance Auditors Statutory Auditors Ernst & Young et Autres Mazars Substitute Auditors Philippe Diu Charles Vincensini * Independent member according to the definition contained in the AFEP-MEDEF corporate governance guidelines. 2009 REGISTRATION...

  • Page 10
    ... and fourth quarters. Operations in the new economies outperformed those in mature economies by ten points, reï¬,ecting the growing momentum in emerging markets like China. The revenue performance of Solutions and Services, another growth driver, was six points higher than the Group average. 05 06...

  • Page 11
    ... Consolidated revenue by region Workforce by region 104 853 employees * 11% Other 41% Europe 8% Other 43% Europe 21% Asia - Pacific 27% North America 25% Asia - Pacific 24% North America * Total workforce at December 31, 2009 (including employees under fixed-term and open-ended contracts...

  • Page 12
    ... for shareholder approval at the Annual Meeting of April 22, 2010. The Dividend will be paid on June 1st, 2010. Dividend ex-date on May 4, 2010. Ownership structure at December 31, 2009 4.33% Groupe CDC 4.26% Employees 5.07% Capital Research & Management Co.(1) 2.68% Treasury stock - Own shares...

  • Page 13
    ... extends its energy metering and management line up for international markets. Critical Power On June 22, 2009, Schneider Electric announced the acquisition of Microsol Tecnologia, a Brazilian manufacturer of UPS systems, voltage regulators and accessories for power protection with 2008 revenue of...

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

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

  • Page 16
    ... the global industrial speed drive market. That same year, the Group launched the Schneider Electric Ventures fund with a capital of EUR50 million to acquire interests in innovative start-ups with technologies that can enhance the line up. The Group acquired installation systems and control leader...

  • Page 17
    ... to the promising energy efficiency and critical power market. The plan to acquire Areva Distribution, announced in late November 2009, aims to make Schneider Electric one of the world leaders in medium voltage (MV) and electrical distribution automation systems by creating a new business combining...

  • Page 18
    ... means improving industrial productivity. Building on its strong track record, Schneider Electric is committed to improving supply chain productivity to drive down costs by a total gross EUR600 million over three years. The One company programme's objective is to put Schneider Electric in a position...

  • Page 19
    ... ENERGY EQUATION A strategic focus on balancing > 2. the energy equation A critical challenge for our planet In a world undergoing profound changes and facing a global economic and financial crisis, Schneider Electric has identified six major trends that it intends to leverage to drive long-term...

  • Page 20
    ... energy monitoring and control Number 2 worldwide in installation systems and control Schneider Electric's Power solutions transform and manage high voltage electricity from the distribution grid. The medium voltage power is then transformed into low voltage power for delivery to end users. The line...

  • Page 21
    ... its line up, which comprises speed drives, human-machine interface (HMI) terminals, supervision, control and data acquisition (SCADA) software, packaging machine automation systems and motion control solutions. Schneider Electric supplies programmable logic controllers and automation platforms...

  • Page 22
    ...management of one or several sites; surveillance and security; critical power and cooling services. Specific, dedicated solutions are also available for certain markets and segments. Energy & Infrastructure: ensuring a safe, reliable power supply and controlling operating costs Schneider Electric...

  • Page 23
    ... and attractive solutions for electrical distribution, electrical wiring, home automation, Voice-Data-Image networks, critical power and cooling services, surveillance and security make homes safe and comfortable while facilitating communication. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 21

  • Page 24
    ... solutions for new machines; • international customer support to deliver high-performance aftersales service worldwide; • a dedicated programme for multi-site and global OEMs that Contractors: indispensable partners for building dedicated solutions To devise customised solutions to end...

  • Page 25
    ... One company programme introduced in early 2009 supports Schneider Electric's strategic commitment to becoming: Market-leading brands The Group has begun to converge its brands by migrating the Merlin Gerin and Telemecanique brands towards the Schneider Electric name. Since the end of 2008, product...

  • Page 26
    ... on Internet technologies between electrical distribution, data centre, automation, building control and security solutions developed and sold by the Group. The programme's ultimate goal is to provide a single interface for managing and monitoring energy use. With EcoStruxure, Schneider Electric is...

  • Page 27
    ..., medium and long-term needs and the interface between business, resource management and climate. In line with this approach, Schneider Electric opened a side event at the Copenhagen Climate Change Conference on the relationship between regional energy policies and global carbon emission constraints...

  • Page 28
    ... on video surveillance systems. Schneider Electric is currently looking at how to integrate the related software in its line up. In January 2010, Alstom and Schneider Electric join forces to launch a new venture capital fund to finance innovative start-ups in the fields of energy and environment...

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

  • Page 30
    ... chain resources Schneider Electric has more than 200 production sites and 140 distribution centres around the world for whom customer satisfaction is the top priority. While working constantly to improve occupational health and safety and environmental protection, the Group's manufacturing policy...

  • Page 31
    ...optimisation methods globally and sharing best practices, the Group intends to lift the operational performance of all its plants to the same high standard. Schneider Electric's plants and products comply with increasingly extensive and stringent European regulations and with international standards...

  • Page 32
    ...for each acquisition varies depending on whether The growth and success of Schneider Electric's products depends on its ability to develop new products and services and adapt to the market and to customer needs The markets in which the Group operates experience rapid and significant changes due to...

  • Page 33
    ... on management's economic assumptions and operating forecasts. The discount rate corresponds to Schneider Electric's weighted average cost of capital (WACC) at the measurement date plus a risk premium depending on the region in question. The Group's WACC stood at 8.1% at December 31, 2009 compared...

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

  • Page 35
    ... Group are tracked by the Industrial Property team within the Finance & Control - Legal Affairs Department. All industrial property information for the main Group subsidiaries is transmitted to this team, which is responsible for managing and protecting these intangible assets throughout the world...

  • Page 36
    ... Pursuant to this agreement, the parties are currently terminating all legal proceedings in the countries involved. Schneider Electric, along with other companies in the industry, was involved in an investigation concerning Gas Insulated Switchgear launched by New Zealand's Commerce Commission. The...

  • Page 37
    .... Specialized engineers from the programme's main insurance companies visit the Group's largest sites. Self insurance To optimise costs, Schneider Electric self insures certain frequent risks through two captive insurance companies: • outside North America, a captive reinsurance company offers...

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

  • Page 39
    ... development organisation 4. Environmental performance 5. Social performance 6. Societal performance 7. Rating 8. Methodology 9. Statutory Auditors' report on certain environmental, safety and human resources indicators 38 39 41 45 53 66 70 71 73 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 37

  • Page 40
    ... by a strategically repositioned business portfolio, R&D plan and sales and marketing strategy, the Group is committed to providing innovative, efficient responses for: • continuously raising Schneider Electric's overall corporate social responsibility performance; • deploying new commitments...

  • Page 41
    ..., Schneider Electric executives at the United Nations Climate Change Conference in Copenhagen, Denmark actively encouraged public debate by presenting the Group's unique competencies and innovative solutions with the potential to dramatically improve energy management in buildings, homes, industry...

  • Page 42
    ... publicly expressed its support for universal values by joining the Compact in December 2002. The Group has primarily worked to share this commitment with its partners since 2003. Other associations Schneider Electric is a member of the Board of Directors of the French study centre for corporate...

  • Page 43
    ... plans (see table on page 43). Two critical indicators remain: Schneider Electric's presence in the four major socially responsible investment index families and the percentage of purchases from suppliers who support the Global Compact or equivalent. • in a quarterly newsletter that informs...

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

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

  • Page 46
    ... of eco-design policy among product environment managers. • environmental data: reporting tables from the Group Environmental Affairs Department, based on an annual manufacturing site survey. This data is then reconciled with information from accounting and purchasing reporting systems to ensure...

  • Page 47
    ... emissions generated by industrial and human activity. > 4. Environmental performance Framework Schneider Electric is the global specialist in energy management. The Group neither generates nor distributes electricity. It designs and builds electrical and electronic products and offers integrated...

  • Page 48
    ...supply chain sites; Climate change is one of the major challenges of our time. Schneider Electric is committed to reducing greenhouse gas emissions from its own businesses and from its clients' operations, notably with its solutions to enhance energy efficiency. Schneider Electric reports publicly...

  • Page 49
    ... (number of manufacturing and supply chain sites) Total end 2008 Including 3 sites in the process of being certified end 2008 New sites certified in 2009 Total number of certified in 2009 Certified sites closed in 2009 Total end 2009 â-² 2009 audited indicators In 2009, the One company programme...

  • Page 50
    ... account in its internal action programmes. The directives are applied to products made in Europe, with the goal of deploying them across Schneider Electric's entire global supply chain. Two dedicated programmes have been set up to ensure compliance and respond to customer expectations. Schneider...

  • Page 51
    ... materials required in production. Each device's Product Environmental Profile lists the materials used. To facilitate end-of-life processing, Schneider Electric chooses materials that are easy to recycle and clip-together systems that are easy to disassemble. Life cycle analyses and recyclability...

  • Page 52
    ... intranet site keeps the corporate community informed of Energy Action's progress and results. Events and symposiums have been organised in France, the UK, South Korea, Turkey, South Africa, Singapore and the US for customers and partners. Problem: managing the air conditioning and lighting systems...

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

  • Page 54
    ...financed by the International Polar Foundation. Schneider Electric is responsible for the station's energy management, with transformer and distribution solutions, automation devices and supervision systems that can withstand harsh weather conditions. The Group also seconded two team members to the...

  • Page 55
    ... Enhancing effectiveness by transforming human resources With the deployment of the One Schneider Electric programme, the Human Resources Department underwent a transformation in 2009 as part of the new strategic push to globalize support functions. • 22,000 additional employees in 2012 with the...

  • Page 56
    ... in the company's employee recommendation Performance at Jan. 1, 2009 2.00 Dec. 31, 2009 2.00 • 2,000 employees trained on energy management solutions Performance at Jan. 1, 2009 2.00 Dec. 31, 2009 10.00 Health and safety Planet & Society Barometer improvement plans • 10% annual decrease in...

  • Page 57
    ... number of work accidents, the manufacturing team in Italy set up a system to track micro-accidents in 2009 using an analysis and processing method inspired by the Six Sigma quality methodology applied in the Company for many years. The action plan primarily involved training operators and managers...

  • Page 58
    ... a Solutions-based business model, Schneider Electric must continuously enhance and strengthen its team members' skills. This strategic shift puts training at the very centre of the Group's human resources policy. As part of this policy, the 3E programme was developed in 2009. As its name suggests...

  • Page 59
    ... and Grenoble in France, Beijing in China and Bangalore in India. As part of the One Team initiative, customised e-learning modules were launched in 2009 to provide employees and managers with training-on-demand solutions for such strategic topics as energy efficiency, the Group's values, gender...

  • Page 60
    ...in the community and the business world. Accordingly, Schneider Electric is committed to promoting diversity within all its teams. That commitment starts with building management teams that reflect the diversity of the Group's customers and end users as much as possible. In 2009, the Group worked to...

  • Page 61
    ...-term partners, Schneider Electric has been building an international employee shareholder base since 1995 that is representative of the Group's diversity. Ultimately, employees should hold roughly 5% of the capital thanks to this programme. In a visibly complex stock market environment, the 2009...

  • Page 62
    ... specific topics. Group Works Council, France This council, created in 1997, supports the various works councils in Schneider Electric's French subsidiaries and provides a setting for information and discussion with employee representatives of the Group's French units. A five-day training session...

  • Page 63
    ...held in the framework of these agreements during the year (or the equivalent to 81.5 days). Indicators Workforce Total workforce Average workforce* Fixed-term and open-ended contracts Average production staff* Average non-production staff New hires*** Departures*** 2 2009 116,065 â-²104,853 55,125...

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

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

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

  • Page 67
    ...& Society Barometer improvement plan • 60% of our total purchases from suppliers who support Global Compact Location of main new suppliers EMEAS Asia-Pacific North America 297 147 40 Performance at Jan. 1, 2009 4.00 Dec. 31, 2009 4.60 Sustainable development holds companies up to stakeholders...

  • Page 68
    ... relations, social accountability (SA8000), environmental protection (ISO 14001), compliance with the Restriction of Hazardous Substances (RoHS) directive and support for the Global Compact. In 2009, 317 new suppliers were evaluated, 125 of them in emerging economies (Asia, India, South America...

  • Page 69
    ... at Jan. 1, 2009 2.00 Dec. 31, 2009 4.00 Examples in 2009 In September 2009, Schneider Electric announced the creation of a global socially responsible venture capital fund called Schneider Electric Energy Access, with an initial capital of EUR3 million. The fund's mission is to support the...

  • Page 70
    ...in automation and electricity. Schneider Electric employees at the Technopole and Electropole sites in France support the school through a project to help develop and update training. The Schneider Electric Foundation has also donated products and technical materials for the training sessions. Funds...

  • Page 71
    ..., as each new business has generated two jobs on average. • For the past two years, SIE has organised a national competition among project sponsors. In 2009, the jury headed by Henri Lachmann, Chairman of the Supervisory Board and Frédéric Abbal, President of Schneider Electric France, honored...

  • Page 72
    ...Europe and the Ethibel Sustainability Index (ESI) Excellence Global. Planet & Society Barometer improvement plans • 4 SRI indexes select Schneider Electric Performance at Janv. 1, 2009 4.00 www.ethibel.com To find out more • www.schneider-electric.com Dec. 31, 2009 8.50 (>Company and Careers...

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

  • Page 74
    ...the number of days lost by temporary incapacity for 1,000 hours worked. Green Premium lineup For Green Premium products, a Product Environmental Profile (PEP), a guide for end-of-life disassembly and disposal and a list of any substances governed by the European REACH directive are provided online...

  • Page 75
    ... is not readjusted at year's end. • At Group and at divisions' levels in France, Asia-Pacific and North America, we conducted interviews with those in charge of the reporting on these Indicators, and we conducted a risk and materiality analysis. • We assessed compliance with the Guidelines and...

  • Page 76
    ... Injury Severity Rate (LTISR)" due to a lack of traceability in the IT reporting system and to the incompleteness of the reporting scope. Based on our review and except for this above qualification, nothing has come to our attention that causes us to believe that the Indicators were not established...

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

  • Page 78
    ... - 92500 Rueil-Malmaison, France 27,128 Schneider Electric SA shares (1) First elected: 1996/Term ends: 2010 Note: Boldface type indicates companies whose shares trade on a regulated market. (1) Held directly or through a corporate mutual fund. 76 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 79
    ... past five years: Non-voting director of Schneider Electric SA; director of Ginger SA, Enigma Inc. (USA), SAP America Inc. (USA), SAP Global Marketing Inc. (USA), SAP Asia Pte. Ltd (Singapore), SAP Japan Co. Ltd (Japan), SAP France SA, SAP Italia Sistemi, applicazioni, prodotti in data processing...

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

  • Page 81
    ... Board of Schneider Electric SA; Member of the Board of directors of Cleantech Invest AG; Note: Boldface type indicates companies whose shares trade on a regulated market. * Independent member according to the definition contained in the AFEP-MEDEF corporate governance guidelines. 2009 REGISTRATION...

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

  • Page 83
    ... the creation of stock option plans or stock grant plans, with or without performance criteria; • authorise the signature of regulated related party agreements; • authorise the issuance of bonds and other guarantees, subject to compliance with French law. The Supervisory Board also authorises...

  • Page 84
    ... terms of this code, both Supervisory Board members and employees are barred from trading Schneider Electric SA shares and shares in companies for which they have information that has not yet been made public. In addition, they may not trade Schneider Electric SA shares during the 30 days preceding...

  • Page 85
    ...in-depth review of the Group's strategy in a one-day meeting devoted entirely to this topic. At each meeting, the Board was informed about the status of acquisition projects. The Supervisory Board authorised the Management Board to proceed with the acquisition of Areva T&D's Distribution business in...

  • Page 86
    ...control and risk management systems. In particular, the Committee: - review of selected disputes and risks. 3) Statutory Auditors: - reviews the internal audit organisation and resources, as well as the annual internal audit programme. Reviews the executive summary of the internal auditors'reports...

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

  • Page 88
    ...and Group Deputy Managing director in charge of Finance in 2006. He joined Schneider Electric in the first half of 2009. Note: Boldface type indicates companies whose shares trade on a regulated market. (1) Held directly or through a corporate mutual fund. 86 2009 REGISTRATION DOCUMENT SCHNEIDER...

  • Page 89
    ... of the Supervisory Board and Management Board together hold 0.02% of the Company's capital and 0.02% of the voting rights. Emmanuel Babeau has a service contract with Schneider Electric Industries SAS and is Chairman of the Managing Board of Schneider Electric Services International. He receives...

  • Page 90
    .... The basic principles consist of competitively positioning Schneider Electric in relation to market compensation rates for senior executives of comparable industrial groups in each country concerned, as follows: • cash compensation, comprising a fixed salary and a variable bonus, is set at the...

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

  • Page 92
    ... to the Management Board on May 3, 2009 and joined the Group as Executive VP Finance under a service contract for executives with Schneider Electric Industries SAS. At its meeting of April 23, 2009, the Supervisory Board decided to set Mr Babeau's total fixed annual salary for 2009 at EUR500...

  • Page 93
    ... in terms of organic revenue growth, operating profit, cash generation ratio and customer satisfaction rates and 40% is based and on measurable personal targets. At its meeting of February 17, 2010, the Supervisory Board set Mr Babeau's variable bonus for 2009 at 126.4%.of his base salary, or...

  • Page 94
    ...operating margin and share of revenue generated and 2009-2011 EPS compared in new economies to a benchmark selection Performance stock grants received by members of the Management Board Plan no (1) Jean-Pascal Tricoire 3 5 8 Pierre Bouchut (2) Emmanuel Babeau 3 5 7 (3) 8 Plan date Number of shares...

  • Page 95
    ... Board following a reorientation of the strategy pursued and promoted by him until that time, whether or not in connection with a change in Schneider Electric's shareholder structure, as described above; (ii) - the Schneider Electric SA and Schneider Electric Industries SAS employee benefit plan...

  • Page 96
    ...IT, Process & organisation; Global Marketing and Global Human Resources); 4) • the Executive Vice Presidents of the businesses (Power EMEA, Power North America & Buildings, Power Asia Pacific, Industry, IT and Custom Sensors & Technologies. Senior Management compensation in 2009 In 2009, total...

  • Page 97
    ... Electric SA shares or 1% of Schneider Electric SA's capital. Each group also holds a call option that may be exercised in the event of hostile takeover. The one-year agreement, which is automatically renewed each year unless it is expressly terminated, was approved by shareholders at the Annual...

  • Page 98
    ... to prepare this report This report was prepared on the basis of discussions among the participants in internal control, notably the Group's Internal Audit and Internal Control Departments and the corporate Management Control and Accounting unit. 96 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 99
    ...Chain, Information Systems, etc.) Schneider Electric centralises decision making and risk management at the corporate level through specific bodies such as the Group Acquisitions Committee (see "Risk Factors"), by combining certain functions within the Finance and Control - Legal Affairs Department...

  • Page 100
    ... among the Operating Divisions and businesses for innovation and new products. The Human Resources Department is responsible for deploying and ensuring the application of procedures concerning employee development, occupational health and work safety. The Purchasing Department is responsible...

  • Page 101
    ...of Records); • operating processes (purchases, sales, inventories, etc.); • accounting and financial cycles; • Human Resources, IT, Legal and Tax cycles. The Key Internal Controls are available to all units on the Group intranet, along with appendices with more detailed information, links to...

  • Page 102
    ... the Corporate Treasury centre developed a global payment system that offers both secure access and secure payments. 5.4. Internal Control Department In 2009, Internal Control continued to deploy the Key Internal Controls throughout the Operating Divisions and businesses, with training and requests...

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

  • Page 104
    ... of the Company's internal control and risk management procedures relating to the preparation and processing of accounting and financial information contained in the report prepared by the Chairman of the Supervisory Board in accordance with article L. 225-68 of the French Commercial Code (Code de...

  • Page 105
    ... pension plan for Schneider Electric senior executives (see page 88), most rights are originally acquired. However, the plan complies with the recommendation's intention, given that: • the rights are capped at 25% of average compensation; • the current members still have many years of service to...

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

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

  • Page 108
    ... on a massive scale (both for automation products and machines) and all types of credit dried up, amplifying the recession's impact on world trade and on customers'and suppliers' supply chains. This accelerated the industry market's decline to a level below end-user demand in the first half...

  • Page 109
    ...2009, Schneider Electric announced the acquisition of Meher Capacitors, leader in the Indian Power factor correction market, from Meher Group. Consolidation of jointly controlled entities As from January 1, 2009, investments in operating entities controlled jointly with a limited number of partners...

  • Page 110
    ... centre markets. Revenue from the Rest of the World edged back 1.5% on a current basis, to EUR1,736 million, and 2.4% on a constant basis. Operations in Africa again recorded growth, thanks to energy and infrastructure projects, whereas business contracted in the Middle East and South America, in...

  • Page 111
    ... with 13.7% the year before. Changes in operating working capital generated EUR813 million in cash, reï¬,ecting a contraction in trade receivables in line with the decline in revenue and good inventory management. In all, net cash provided by operating activities totalled EUR2,547 million compared...

  • Page 112
    ...Group ended the year with cash and cash equivalents of EUR3,512 million, of which EUR808 million in cash, EUR2,681 million in marketable securities and EUR23 million in short-term instruments such as commercial paper, money market mutual funds and equivalents. Total current and non-current financial...

  • Page 113
    ...at the previous year-end, after taking into account 2009 profit, dividend payments of EUR317 million, and share issues in an amount of EUR158 million. All trade payables are due before end-January. Schneider Electric SA posted total portfolio revenues of EUR541 million in 2009 compared with EUR952...

  • Page 114
    ...integration of Areva Distribution). The Group should continue to achieve industrial productivity and reduce overheads. Raw material prices are likely to increase. Restructuring costs should amount to between EUR150 and EUR200 million for the year. 112 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 115
    ... of cash flows 3. Consolidated balance sheet 4. Consolidated statement of changes in equity 5. Notes to the consolidated financial statements 6. Statutory Auditors' report on the consolidated financial statements 114 116 118 120 121 181 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 113

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

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

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

  • Page 119
    ...Full year 2009 Full year 2008 III - Cash ï¬,ows from financing activities: Issuance of long-term debt Repayment of long-term debt Sale/(purchase) of treasury shares Increase/(reduction) in other financial debt Issuance of shares Dividends paid: Schneider Electric SA* Minority interests Total III...

  • Page 120
    ..., plant and equipment, net Total tangible and intangible assets Investments in associates Available-for-sale financial assets Other financial assets Total non-current financial assets Deferred tax assets Total non-current assets Current assets Inventories and work in process Trade accounts...

  • Page 121
    ...capital Share premium account Retained earnings Translation reserve Equity attributable to equity holders of the parent Minority interests Total equity Long-term provisions Provisions for pensions and other post-employment benefits Provisions for contingencies Total long-term provisions Non-current...

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

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

  • Page 124
    ... the alternative treatment allowed under IAS 31. This change is designed to provide more meaningful information on the strategic nature of jointly controlled entities and the way in which their operations are tracked by Schneider Electric management. The impact on the 2008 comparative statements is...

  • Page 125
    ...of a majority voting interest, significant minority ownership, and contracts or agreements with other shareholders. As of January 1, 2009, investments in operating entities controlled jointly with a limited number of partners, such as joint ventures and alliances, are proportionally consolidated in...

  • Page 126
    ... related costs are separately identified and reliably tracked; • the project's technical feasibility has been demonstrated and the Group has the intention and financial resources to complete the project and to use or sell the related products; 124 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 127
    ... on management's economic assumptions and operating forecasts. The discount rate corresponds to Schneider Electric's weighted average cost of capital (WACC) at the measurement date plus a risk premium depending on the region in question. The Group's WACC stood at 8.1% at December 31, 2009 compared...

  • Page 128
    ... rates and the portion of research and development costs related to the production process (corresponding to the amortisation of capitalised projects in production and product and range maintenance costs). 1.18 - Schneider Electric SA shares Schneider Electric shares held by the parent company...

  • Page 129
    ...the closing date. As part of its commitment to employee share ownership, Schneider Electric gave its employees the opportunity to purchase shares at a discount during the year (see note 21.5). 1.23 - Financial instruments and derivatives Risk hedging management is centralised. The Group's policy is...

  • Page 130
    ... into account the number of shares that could be purchased, based on the average share price for the year, using the proceeds from the exercise of the rights attached to the options. 1.24 - Revenue recognition The Group's revenues primarily include merchandise sales and revenues from service and...

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

  • Page 132
    ... & Gas; • Industry, which includes Automation & Control and three endcustomer segments: OEMs, Water Treatment and Mining, Minerals & Metals; • IT, which covers Critical Power & Cooling Services and two endcustomer segments: Data Centres and Financial Services; 3.1 - Information by operating...

  • Page 133
    ...FINANCIAL STATEMENTS Electrical Distribution Sales EBITAR* % EBITA* % 9,175 1,631 17.8% 1,490 16.2% Automation & Control 4,252 427 10.0% 308 7.2% Critical Power 2,366 375 15.8% 346 14.6% Holding (297) (321) - Total 15,793 2,136 13.5% 1,823 11.5% * including a non recurring gain on pension plan...

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

  • Page 135
    ... the discount rate would have reduced the loss by EUR50 million. Note 9 Other financial income and expense 2009 2008 (87) (19) 18 11 (10) (87) Exchange gains and losses, net Financial component of defined benefit plan costs Dividend income Net gains/(losses) on disposal of long-term investments...

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

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

  • Page 138
    ... been allocated on the basis of operating profit by region as of the acquisition date: Europe Square D Télémécanique Merlin Gerin 9% 71% 62% North America 80% 0% 10% Asia-Pacific 10% 20% 20% Rest of the world 1% 9% 8% 11.2 - Changes in goodwill The main movements between December 31, 2008...

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

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

  • Page 141
    ...FINANCIAL STATEMENTS Note 13 Property, plant and equipment 13.1 - Change in property, plant and equipment Machinery and equipment Land GROSS VALUE Dec. 31, 2007 Acquisitions Disposals Translation adjustment Reclassification Changes...1,970 1,965 5 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 139

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

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

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

  • Page 145
    ... 3,203 391 63 3,657 (120) 3,537 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: Dec. 31...

  • Page 146
    ... 262,752,025 Total (in euros) 1,979,405,032 6,963,928 95,740,864 19,906,376 2,102,016,200 The share premium account increased by EUR555,380,523, following the exercise of options, the increases in capital and the payment of dividend in shares. 144 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 147
    ..., shareholders will be asked to approve a dividend of EUR2.05 per share for 2009. At December 31, 2009, Schneider Electric SA had distributable reserves in an amount of EUR322 million (versus EUR14 million at the previous year-end), not including profit for the year. 2009 REGISTRATION DOCUMENT...

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

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

  • Page 150
    ... Valuation of share-based payments • expected volatility of between 20% and 28%, corresponding to capped historical volatility; Stock options In accordance with the accounting policies described in note 1.20, the stock option plans have been valued on the basis of an average estimated life of...

  • Page 151
    ... plan. In 2009, as part of its commitment to employee share ownership, Schneider Electric gave its employees the opportunity to purchase on June 2 shares at a price of EUR45.55 or EUR44.48 per share, depending on the country. This represented a discount of 15% to 17% to the average opening price...

  • Page 152
    .... 2009 Classic plan Plan characteristics Maturity (years) Reference price (euros) Subscription price (euros) between and Discount: between and Amount subscribed by employees Total amount subscribed Total number of shares subscribed (millions of shares) Valuation assumptions Interest rate available...

  • Page 153
    ...by the issuer. 5 21.6 - Treasury stock The liquidity contract set up with a broker to purchase and sell Schneider Electric SA shares was terminated on December 31, 2009. At December 31, 2009, the Group held 7,028,198 Schneider Electric shares in treasury stock, acquired at a cost of EUR324 million...

  • Page 154
    ... obligations primarily concern the Group's North American and European subsidiaries. These plans feature either a lump-sum payment on the employee's retirement or regular pension payments after retirement. The amount is based on years of service, grade and end-of-career salary. They also include top...

  • Page 155
    ... settlement of the Group's liability. Defined contribution plan payments totalled EUR39 million in 2009 and EUR42 million in 2008. criteria in terms of age and years of service. These post-employment benefit obligations are unfunded. Healthcare coverage for North American employees represents 82...

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

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

  • Page 158
    ... gains & losses NET COST RECOGNISED IN THE STATEMENT OF INCOME 4 22 (4) 22 Dec. 31, 2008 6 21 (5) (1) 21 Amortisation of actuarial gains and losses concern long-term benefits for active employees, notably long service awards in France. 156 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 159
    ... only exception concerns long-term benefits for active employees (notably long service awards in France), for which the actuarial gain or loss is recognised in the income statement. Actuarial gains and losses stem from changes in actuarial assumptions (primarily discount rates). 401 4 21 2 (25) 11...

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

  • Page 161
    ...Dec. 31, 2009 Commercial papers Accrued interests Drawdown of funds from lines of credit Bank overdrafts Other short-term borrowings Short-term portion of convertible and non-convertible bonds Short-term portion of long-term debt Current financial liabilities TOTAL CURRENT AND NON-CURRENT FINANCIAL...

  • Page 162
    ... 31, 2009, Schneider Electric had confirmed credit lines of EUR2.8 billion, all unused. Loan agreements and committed credit lines do not include any financial covenants nor credit rating triggers. • EUR26 million corresponding to the discounted present value of future interest payments on...

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

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

  • Page 165
    ...TOTAL NON-CURRENT LIABILITIES Current liabilites Trade accounts payable Other current liabilities Short-term debt TOTAL CURRENT LIABILITIES 2,203 143 1,411 3,757 2,203 143 1,411 3,757 2,203 20 1,411 3,634 123 123 4,913 4,913 5,151 5,151 4,913 4,913 - 5 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 166
    ...-for-sale financial assets Other non-current financial assets TOTAL NON-CURRENT ASSETS Current assets: Trade accounts receivable Other receivables Current financial assets Marketable securities TOTAL CURRENT ASSETS LIABILITIES Non-current liabilities Other long-term debt TOTAL NON-CURRENT...

  • Page 167
    ... Related parties with significant influence No transactions were carried out during the year with members of the Supervisory Board or Management Board. Compensation and benefits paid to the Group's top senior executives are described in note 27.3. 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 165

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

  • Page 169
    ... % 99% 1% 100% 0% 100% TOTAL 14,997 1,258 16,255 401 16,656 Audit Statutory auditing o/w Schneider Electric SA o/w subsidiaries Related engagements o/w Schneider Electric SA o/w subsidiaries Sub-total Other services Legal and tax TOTAL FEES 5 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 167

  • Page 170
    ... are listed below. % interest Dec. 31, 2009 Europe Fully consolidated APC Deutschland GmbH Berger Lahr Positec GmbH Citect GmbH Crouzet GmbH Elau GmbH Elso GmbH Kavlico GmbH Kavlico Technology GmbH Merten GmbH MERTEN Holding GmbH MGE USV-Systeme GmbH Ritto GmbH Schneider Electric Automation...

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

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

  • Page 173
    ...Electric Norge A/S American Power Conversion Corp (A.P.C.) B.V. APC Benelux B.V. APC Europe B.V. APC Holdings B.V. APC International Corporation B.V. APC International Holdings B.V. Citect B.V. Crouzet B.V. ELAU B.V. Pelco Europe B.V. Pro Face HMI (sous-groupe) Sandas Montage B.V. Schneider Electric...

  • Page 174
    ... Motion Systems UK Ltd JO EL Electric Ltd JO JO (UK) Ltd Lexel Holdings (UK) Limited MITA (NW) Ltd MITA (UK) Ltd Nestfarm Limited Newall Measurement Systems Ltd Pelco UK Limited Sarel Ltd Satchwell Controls Systems Ltd Schneider Electric (UK) Ltd Schneider Electric Buildings UK Ltd Netherlands...

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

  • Page 176
    ... Schneider R&D, S.A. de C.V. Schneider Recursos Humanos S.A. de C.V. Square D Company Mexico S.A. de C.V. American Power Conversion Federal Systems, Inc. APC America Inc. APC Corporation APC Holdings Inc. APC Sales & Service Corp. BEI Precisions Systems & Space Co. Inc. BEI Sensors & Systems Company...

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

  • Page 178
    ... Schneider (Suzhou) Drives Company Ltd Schneider (Suzhou) Transformers Co. Ltd Schneider Beijing Medium Voltage Co. Ltd Schneider Busway (Guangzhou) Ltd Schneider Electric (China) Investment Co. Ltd Schneider Automation Solutions (Shanghai) Co., Ltd Schneider Electric International Trading (Shanghai...

  • Page 179
    ... Limited Schneider Electric (Hong Kong) Ltd Schneider Electric Asia Pacific Limited Schneider Electric IT Hong Kong Ltd APC India Private Limited CST Sensors India Private Limited LK India Private Ltd MGE UPS Systems India PVT. Ltd Schneider Electric Conzerv India PTE Ltd Schneider Electric India...

  • Page 180
    ...Sdn Bhd Citect NZ 2005 Ltd Schneider Electric (NZ) Limited American Power Conversion Land Holdings Inc. American Power Conversion, Inc. Clipsal Philippines MGE UPS Systems Philippines Inc. Schneider Electric (Philippines) Inc. Citect PTE Clipsal International PTE Ltd Clipsal Singapore Technology PTE...

  • Page 181
    ... (SA) Pty. Ltd Nu-Lec Africa (Pty.) Ltd Pelco Video Security South Africa Ltd RBF Technology (Pty.) Ltd Schneider Electric South Africa Pty. Ltd Schneider Investment Holding (Pty.) Ltd Valortrade 27 (Pty.) Ltd trading as SMSVend Schneider Electric Algeria EPS Electrical Power Distribution Board...

  • Page 182
    ..., 2009 Schneider Electric Brasil LTDA. Schneider Electric Participaçoes Ltda. Inversiones Schneider Electric Uno Limitada Marisio SA Schneider Electric Chile SA Schneider de Colombia SA Schneider Centroamerica SA Delixi Electric Egypt s.a.e Schneider Electric Distribution Company Schneider Electric...

  • Page 183
    ..., French law and professional auditing standards applicable in France. To the Shareholders, In compliance with the assignment entrusted to us by your Annual Shareholders' Meeting, we hereby report to you, for the year ended December 31, 2009, on: II. Justification of our assessments In accordance...

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

  • Page 185
    ...Statement of income 3. Notes to the financial statements 4. Statutory Auditors' report on the financial statements 5. List of securities at December 31, 2009 6. Subsidiaries and affiliates 7. Five-year financial summary 184 186 187 198 199 200 202 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 183

  • Page 186
    ...filiates Other investments Advances to subsidiaries and affiliates Other 2.1 2.2 2.3 2.4 4,608,100 160,081 3,139,168 0 7,907,349 Total non-current assets Current assets: Accounts receivable Accounts receivable - trade Other Cash and cash equivalents Marketable securities Advances to the Group cash...

  • Page 187
    ...gains TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY The notes form an integral part of these financial statements. 7.3 322,373 475,753 425 8,930,145 8 959 31,779 32,738 9 10 11 4,707,565 514,487 13 46,678 5,268,743 5,282,369 12 66 0 14,245,318 6 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 185

  • Page 188
    ... revenues Purchases and external charges Taxes other than on income Payroll costs Depreciation, amortisation and provision expense Other operating expenses and joint-venture losses Operating expenses Operating loss Dividend income Interest income Reversals of impairment provisions for long-term...

  • Page 189
    ... based on the average stock price over the last month. unrealised gains on investments are not recognised. • the 2008 dividend reinvestment programme, for EUR519 million; • the employee share issue carried out on July 10, 2009 as part of the worldwide Employee Stock Purchase Plan, for EUR112...

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

  • Page 191
    ... 31, 2009, 997,077 Schneider Electric SA shares were recorded under "Other investment securities" at a total cost of EUR49 million. The EUR28 million decrease from the previous year-end reï¬,ects share purchases and sales within the framework of the liquidity contract and the contract's termination...

  • Page 192
    ... 29 Plan 30 Total Schneider Electric SA shares Other Cost Provisions NET 761,313 1,000,000 1,000,000 31,333 877,586 3,670,232 0 3,670,232 - Marketable securities primarily include Schneider Electric SA shares held in treasury for allocation on the exercise of stock options. At December 31, 2009...

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

  • Page 194
    ... Electric SA shares In 2009, 51,759 treasury shares acquired at a cost of EUR3 million were allocated to employees on exercise of stock options and stock grants. The total number of shares held in treasury at year-end came to 4,615,550, with a cost of EUR268 million. Changes in share capital...

  • Page 195
    ... Schneider Electric SA 2016 Schneider Electric SA 2013 Schneider Electric SA 2013 Schneider Electric SA 2015 Schneider Electric SA 2017 900,000 600,000 500,000 500,000 0 600,000 125,000 55,000 177,565 100,000 750,000 150,000 250,000 4,707,565 500,000 Euribor +0.2% variable 6 2009 REGISTRATION...

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

  • Page 197
    COMPANY FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS Note 13 Maturities of receivables and payables Total Non-current assets Advances to subsidiaries and affiliates Other investments Current assets Accounts receivable - trade Other receivables Marketable securities Prepaid expenses Debt ...

  • Page 198
    ... in "Other investments") in an amount of EUR2 million, and for Schneider Electric shares held for allocation under stock option plans 26 through 30 (classified in "Marketable securities") in an amount of EUR29 million. These provisions were reversed in their totality as of December 31, 2009. (2,668...

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

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

  • Page 201
    ... value of less than â,¬15,000 C. Investments in real estate companies D. Investments in foreign companies TOTAL Marketable securities 3,670,232 Schneider Electric SA shares (stock option plans 26, 27, 28, 29, and 30) TOTAL 219,240 219,240 6 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 199

  • Page 202
    ... a) French subsidiaries (aggregate) b) International subsidiaries (aggregate) 18,934 - B. Other affiliates a) French companies (aggregate) b) International companies (aggregate) * Including prior-year income or loss. - - - 113,985 1,200 200 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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

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

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

  • Page 206
    ..., electrical distribution and secured power supply; • building control, automation and safety; • industrial control and automation, including software; • management of all types of data centres, networks, equipment and other infrastructure. 204 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 207
    ...legal entity over which the shareholder exercises control, as defined in article L. 233-3 of the French Commercial Code, and those attached to shares assimilated to shares owned, as defined by article L. 233-7 et seq. of the French Commercial Code; 7 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 208
    ...may elect to hold their shares in registered or bearer form. To establish proof of ownership, the shares must be recorded in the shareholder's account in accordance with the procedures and conditions defined by current legislation and regulations. 206 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 209
    ... new shares to employees under a non-leveraged and leveraged stock ownership plan. At the Annual Shareholders' Meeting to be held on April 22 2010 (see pages 234 to 236), the Management Board will ask shareholders to: Share capital and voting rights The Company's share capital at December 31, 2009...

  • Page 210
    ... during 2010, within a limit of 1% of the Company's issued capital. The Management Board intends to use this authorisation in early June 2010 to issue new shares to employees under a non-leveraged and leveraged stock ownership plan. (3) Issues of shares to entities set up to hold shares on behalf of...

  • Page 211
    ... OF SCHNEIDER ELECTRIC SA CAPITAL Three-year summary of changes in capital The following table shows changes in Schneider Electric SA's share capital and share premium account since December 31, 2006 through share issues and the exercise of stock options: Number of shares Aggregate number issued...

  • Page 212
    ... OF SCHNEIDER ELECTRIC SA OWNERSHIP STRUCTURE > 4. Ownership structure Three-year summary of changes in capital Dec. 31, 2009 Capital % Dec. 31, 2008 Capital % Dec. 31, 2007 Capital % Number of shares Voting rights % Number of voting rights Voting rights % Voting rights % Capital Research...

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

  • Page 214
    ...shareholding targets for members of the Management Board: Description of the stock option plan The option exercise price is equal to the average share price of the twenty trading days prior to the date of grant by the Management Board. No discount is applied. Since 2006, the options have a ten year...

  • Page 215
    ... PRESENTATION OF SCHNEIDER ELECTRIC SA STOCK OPTION AND STOCK GRANT PLANS Stock option plan details Initial number of grantees 1,050 180 433 Plan no. Plan date 19 20 21 Apr. 4, 2001 Dec. 12, 2001 Feb. 5, 2003 Initial number of options 1,557,850 1,600,000 2,000,000 Options granted to corporate of...

  • Page 216
    ...to subscribe new shares. P = Options to purchase existing shares. Equal to the average share price of the twenty trading days prior to the date of grant. No discount or premium is applied. As of January 1, 2009. Assuming vesting conditions are met. 214 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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

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

  • Page 219
    ... made to the top ten employee grantees (not including corporate officers) during the year Number Grants with respect to 2009 (granted in January) Grants made with respect to 2010 (granted in December) 23,188 35,038 Plan no. 5 and 6 8 and 9 7 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 217

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

  • Page 221
    GENERAL PRESENTATION OF SCHNEIDER ELECTRIC SA STOCK MARKET DATA 18-month trading data Trading volume Year 2008 Value (in millions of euros) Price (in euros) (3) High 73.83 72.35 62.00 52.30 55.44 58.00 55.89 53.13 58.59 56.07 56.98 64.55 67....

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

  • Page 223
    ... from shareholders to the Company. It gives an opinion and makes suggestions on investor relations actions and resources. The Committee met two times in 2009 to discuss various topics, including: Person responsible for financial information Executive VP Finance, Member of the Management Board 35...

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

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

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

  • Page 227
    ... for French senior executives provided for in his service contract with Schneider Electric Industries SAS. The plan is presented on page 88. In accordance with article L.225-88 of the French Commercial Code, the Statutory Auditors have prepared a special report on these agreements (see pages 227...

  • Page 228
    ... the issue pricing date; or (ii) the average price weighted by trading volume on the NYSE Euronext Paris stock exchange on the trading day preceding the issue pricing date. Less in both cases and if appropriate, a discount of up to 5%. The Management Board will be authorised to select either (i) or...

  • Page 229
    ... report to shareholders, based on the information provided, about the main terms and conditions of agreements that have been disclosed to us, without commenting on their relevance or substance. Under the provisions of article R.225- • Benefit from the top-hat pension plan for Schneider Electric...

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

  • Page 231
    ... NYSE Euronext Paris stock exchange on the trading day preceding the issue pricing date. Less, if appropriate, a discount of up to 5 percent. The Management Board will be authorised to select either (i) or (ii) at its discretion. The Management Board is responsible for reporting to shareholders on...

  • Page 232
    ... is used. The maximum discount at which shares may be offered is set at 20% of the average of the opening or closing prices quoted for Schneider Electric shares over the twenty trading sessions preceding the date on which the decision is made to launch the employee share issue. The amount of...

  • Page 233
    ... in France provided for in article 158-3-2 of the French Tax Code. This deduction will not apply if the shareholder has chosen to pay the ï¬,at-rate withholding tax on his or her dividends, as provided for in article 117 quater of the French Tax Code. 8 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 234
    ...% of the average opening price quoted on the NYSE-Euronext Paris stock exchange over the twenty trading sessions preceding the date of this Meeting, less the amount of the dividend. If the amount of the reinvested dividend does not correspond to a whole number of shares, the shareholder may: Eighth...

  • Page 235
    ... in exchange for shares in another company as part of an external growth transaction, or for the purpose of market making under a liquidity agreement. • The maximum number of shares that may be acquired pursuant to this authorisation shall not exceed 10% of the issued share capital as of the date...

  • Page 236
    ...April 23, 2009; 2) to set the maximum discount at which shares may be offered under the Employee Stock Purchase Plan at 20% of the average of the opening prices quoted for Schneider Electric shares on the NYSE Euronext Paris stock exchange over the twenty trading sessions preceding the date on which...

  • Page 237
    ... of the French labour Code that have their headquarters outside France; and/ or (ii) corporate mutual funds or other employee stock ownership vehicles, which may or may not be legal entities, whose assets are invested in Schneider Electric SA shares and whose units or shares are held by the persons...

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

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

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

  • Page 241
    2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 239

  • Page 242
    240 2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 243
    ... events April 22, 2010 May 4, 2010 Shareholders' annual meeting (Paris) Dividend ex-date Financial releases February 18, 2010 2009 Annual Results April 21, 2010 July 30, 2010 Q1 2010 Sales Half Year Results October 20, 2010 Q3 2010 Sales Investors Relations: Carina Ho Tel. +33 (0)1 41 39 60 84...

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