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Building a New Electric World
Schneider Electric SA
Registration document
2006 annual
report

Table of contents

  • Page 1
    Schneider Electric SA 2006 annual report Registration document Building a New Electric World

  • Page 2

  • Page 3
    ...APC accounting principles 4 - Auditors' report on the pro forma financial statements 169 170 172 174 3 General presentation of Schneider Electric SA 1 - General information 2 - Capital 3 - Ownership structure 4 - Employee profit sharing, stock ownership, stock option and stock grant plans 5 - Stock...

  • Page 4
    2

  • Page 5
    ... a high quality power supply and manage building utilities and communication networks. By leveraging the deep commitment of its 105,000 team members in 106 countries, Schneider Electric gives the best of the New Electric World to everyone, everywhere, at any time. The Company's shares are traded on...

  • Page 6
    ...? To start, a growing number of customers are turning to us to meet their needs for comfort, productivity, safety and energy efficiency. Second, we have exceptionally energetic teams, who are making growth happen. Third, we've expanded our lineup of products and services and developed new businesses...

  • Page 7
    ...grids in mature countries or developing them in emerging countries. At the same time, automation is showing up everywhere-in plants, offices, homes and even cars. A growing number of customers are turning to us to meet their needs for comfort, productivity, safety and energy efficiency. Jean-Pascal...

  • Page 8
    ... distribution. The acquisition was finalized on February 14, 2007. We've created a critical power and cooling services business unit that combines APC's resources with those of Schneider Electric subsidiary MGE UPS Systems. Their people have been brought together under a single management team. We...

  • Page 9
    ... as well as for return on investment and value creation. The Supervisory Board pays close attention to ensure that each acquisition is integrated smoothly and carefully tracks the business plan approved at the time of acquisition. We were twice as attentive for a structuring acquisition as large and...

  • Page 10
    ..., the Group's growing presence in high-growth emerging countries and investments in promising new activities such as services and energy management. The year's acquisitions added 6.9%, while the currency effect had virtually no impact. up 27.8% Operating profit rose sharply again in 2006, growing...

  • Page 11
    ...: a historic year for Schneider Electric In 2006, Schneider Electric actively pursued its strategy to increase its growth potential. Thanks to action plans deployed as part of the new2 company program, the Group energetically repositioned itself towards emerging markets and in new activities, with...

  • Page 12
    ...Dépôts et Consignations Employees Treasury stock - Schneider Electric shares held via Cofibel/Cofimines Public up 31% up 33% * Recommended for shareholder approval at the Annual Meeting of April 26, 2007. The dividend will be paid as from May 2, 2007. The Schneider Electric SA share vs. the CAC...

  • Page 13
    ... Control and Data Acquisition (SCADA) solutions and Manufacturing Execution Systems (MES). Va Tech Elin EBG Elektronik, an Austrian company that develops and manufactures high-power speed drive products and solutions. Workplace health and safety A health policy deployed across the entire Group...

  • Page 14
    ... 62, American Former Executive Vice President of Schneider Electric's North American Division James Ross* 68, British Chairman of the Leadership Foundation for Higher Education, Corporate Director Piero Sierra* 72, Italian Special Advisor for the administration of Pirelli's international companies...

  • Page 15
    ... Building Automation Business Unit 03 Laurent Vernerey Executive Vice President Critical Power & Cooling Services Business Unit 10 Russell Stocker Executive Vice President Asia-Pacific Operating Division 04 Claude Graff 11 Pierre Bouchut Member of the Management Board Chief Financial Officer...

  • Page 16
    14

  • Page 17
    ... achievements of Schneider, Merlin Gerin and Telemecanique in France, Square D in the United States, and many other companies that have joined the Group around the world. All are fully devoted to controlling and optimizing electricity and automation management to build the new electric world. Each...

  • Page 18
    .... Electrical Distribution Building automation The Group is a major player in this market. In 2003, it acquired Sweden's TAC, which was joined in 2004 by Tour Andover Control and Abacus Engineered Systems in the US. ABS (Advanced Buildings Systems) EMEA, which operates in Europe and the Middle East...

  • Page 19
    ...the difference. Human resources evaluation and management resources are being harmonized worldwide so that all team members can fully express their potential and help execute Group strategy. Schneider Electric is enhancing its forward-looking management, deploying competency plans to match new needs...

  • Page 20
    ... energy efficient and highly reliable, as well as flexible, open and easy to install automation solutions and remote management services via the Internet. Buildings This market covers all types of service, commercial and industrial buildings, including offices, hotels, hospitals, shopping centers...

  • Page 21
    ... in new activities strategically related to its core businesses, such as critical power, building automation and custom sensors. At the same time, it has developed a vast range of services. Schneider Electric's lineup comprises market-leading global brands (Merlin Gerin, Square D, Telemecanique...

  • Page 22
    ...low voltage equipment, and installation systems and control used in industrial and commercial buildings and homes. Asia-Pacific Rest of the World 27 % *Asia-Pacific, Rest of the world, Eastern Europe. The only player who complies with all national and international standards Schneider Electric is...

  • Page 23
    ... data acquisition (SCADA) software, packaging machine automation systems and motion control solutions. Schneider Electric is also active in the fast-growing market for customized automation devices and sensors, thanks to acquisitions of such technological leaders as BEI. At the same time, the Group...

  • Page 24
    ..., systems integrators, contractors and specifiers. These partners provide strong, strategically related value, and extend and amplify the Group's commercial and technical resources. Distributors: a daily partnership Electrical equipment distributors account for around 50% of our total sales and...

  • Page 25
    ... prices and technical information, place orders and download installation manuals around the clock. Systems integrators: a dedicated alliance Systems integrators, the Group's historical customers, install automation devices for end users. The Group has developed the "Schneider Electric Alliance...

  • Page 26
    ... focused on growth and efficiency Schneider Electric's organization is designed to put customers at the center of the product design process, speed growth and execution, leverage all the benefits of the Group's global scope, and make it easier to integrate acquisitions and deploy new activities. 24

  • Page 27
    ... be used in industrial applications, buildings, homes and water treatment. November 2006: Schneider Electric Ventures invests in Semisouth, an American start-up specializing in silicon carbide (SiC) materials and electrical components that will drive very high yield power conversion products in the...

  • Page 28
    ... promote eco-design, integrate customer expectations into the Group's environmental protection approach and raise awareness among all employees and partners about environmental protection and energy savings. Worldwide redeployment of production and supply chain resources Schneider Electric has more...

  • Page 29
    ... 2005. More than 400 customers worldwide were interviewed as part of these programs. The Commercial Institute offers training for team members in customer relations departments and centers. The new Industrial Operations Institute held its first sessions for 91 plant managers from around the world...

  • Page 30
    ..., strategic alliances, joint ventures and mergers. External growth projects are examined in detail by the business units, country organizations and corporate functions (Strategy, Finance, Legal Affairs and Human Resources) concerned under a rigorous internal process developed and led at Group level...

  • Page 31
    ... question. The Group's goodwill is mainly allocated to cash-generating units (CGU) located in Europe and in the United States. Tests performed on goodwill allocated to European and American CGUs are implemented with a discount rate equal to Schneider Electric's weighted average cost of capital, free...

  • Page 32
    ... plants and products. In 1992, the Group published a formal environmental policy, which was recently redefined to take account of changes both inside and outside Schneider Electric. The policy is designed to improve manufacturing processes, promote eco-design and integrate customer concerns in the...

  • Page 33
    ... without entering into any trading transactions. Hedging decisions are made by the Finance & Control - Legal Affairs department and are reviewed at regular intervals based on changes in financial market conditions. In line with the Group's overall policy of conservatively managing liquidity risk and...

  • Page 34
    ...Insurance The Group's strategy for managing insurable risks is designed to defend the interests of employees and customers and to protect the environment, the Company's assets and its shareholders' investment. This strategy entails: Identifying and quantifying risk using different reporting systems...

  • Page 35
    ... the operations of the Supervisory Board and internal control. A Management Board / Supervisory Board system To achieve a seamless transfer of powers to a new Chairman and support the ongoing implementation of the Group's growth strategy, at the Annual Shareholders' Meeting of May 3, 2006, the Board...

  • Page 36
    ... Malmaison, France 20,648 (1) Schneider Electric shares First elected: 1996 / Current term ends: 2010 Weinberg Capital Partners; Member of the Supervisory Board of Gucci Group; Director of FNAC, RASEC (since February 2006), Team Partners Group (since November 20, 2006), Alliance Industrie (since...

  • Page 37
    ...ère* Age: 63 Business address: Fédération Française des Sociétés d'Assurances 26 Boulevard Haussmann 75008 Paris, France 1,606 Schneider Electric shares First elected: 1998 / Current term ends: 2010 man of the Board of Directors of Tawa UK Ltd (London); Chairman and Chief Executive Officer of...

  • Page 38
    ..., he was Chairman of Unaxis Corporation, also serving as Chairman and Chief Executive Officer from 1998 to 2002. Cathy Kopp * Age: 58 Business address: Accor 33 Avenue du Maine - 75015 Paris, France 250 Schneider Electric shares First elected: 2005 / Current term ends: 2010 Other directorships and...

  • Page 39
    ... 35243 Birmingham, Alabama (USA) 250 Schneider Electric shares First elected: 2004 / Current term ends: 2008 2 Non-voting member Claude Bébéar Age: 71 Business Address: AXA 25 Avenue Matignon, 75008 Paris, France 250 Schneider Electric shares First elected: 2004 / Current term ends: 2010 Other...

  • Page 40
    ..., remove Management Board members from office. Authorize debt and equity financing transactions that will have a substantial effect on the Company's balance sheet structure. Authorize material business acquisitions and disposals. Authorize the creation of stock option plans or stock grant plans...

  • Page 41
    ... with key members of senior management prior to Board meetings. New members attend training and information sessions dealing with the Company's strategy and businesses. Schneider Electric has adopted a code of ethics for Supervisory Board members and employees designed to prevent insider trading...

  • Page 42
    ... of the Management Board. The pension and insurance arrangements for Jean-Pascal Tricoire and the terms and conditions governing the reinstatement and termination of his employment contract with Schneider Electric Industries SAS were adopted under the procedure applicable to related party agreements...

  • Page 43
    ... the Operating Divisions. Neither the Chairman of the Board of Directors nor the Chairman of the Management Board attended Audit Committee meetings in 2006. The Audit Committee reviewed the annual and interim financial statements and the management reports. It also reviewed the work of the internal...

  • Page 44
    ...He joined the Schneider Electric Group (Merlin Gerin) in 1986. Between 1988 and 1999, he held a variety of line positions with international subsidiaries in Italy (five years), China (five years) and South Africa (one year). On his return to France, he joined the headquarters team, serving from 1999...

  • Page 45
    ... France 42,000 Schneider Electric shares First elected: 2006 / Current term ends: 2009 Other directorships and functions in French or foreign companies Currently: Member of the Management Board of Schneider Electric SA; Chairman of the Board of Directors of Schneider Electric Services International...

  • Page 46
    ... that statutory and management accounting data presented to the Supervisory Board and Management Board of Schneider Electric SA and Group senior management present fairly the sales, results of operations and financial position of the Group. No system of internal control designed to fulfill the...

  • Page 47
    ... from senior management. In light of Schneider Electric's core businesses, internal audits focus mainly on revenue recognition and contracts, cash and asset management processes, wages and benefits, financial reporting, information systems, manufacturing operations, purchasing and operating expenses...

  • Page 48
    ... Divisions and Business Units four times a year. The review covers the status of the main action plans in the areas of business growth, operational efficiency and human capital management, as well as year-to-date results and forecasts for the remaining quarters. Monthly management reporting Group...

  • Page 49
    ... and management reporting systems have been developed to guarantee the completeness of transaction data recorded in the accounts. Each subsidiary is responsible for implementing procedures providing an adequate level of internal control. Operating Division management teams assist the units in...

  • Page 50
    ... compliance with local regulations. The Statutory and Management Accounting unit within the Finance & Control - Legal Affairs Department reviews the Group's current and deferred tax position during each quarterly consolidation process. The procedure includes performing analytical reviews of the main...

  • Page 51
    ... to integrate newly-acquired businesses in the Group reporting process. An intercompany reconciliation procedure manual. Account closing instructions. 2 The accounting and reporting system The Corporate Management Control and Accounting unit of the Finance & Control - Legal Affairs Department has...

  • Page 52
    ... Chairman and Chief Executive Officer before the change in the Company's management system) are determined as follows: 60% of the bonus is determined by reference to the Group's overall performance, as measured in terms of operating margin, organic growth and return on capital employed. 40% depends...

  • Page 53
    ...a ten-year life (since 2006). The options are granted at an exercise price that does not include any discount to the Schneider Electric SA share price at the time of grant. Half of the options (performance options) vest only if certain targets are met (value creation, sales or operating margin). The...

  • Page 54
    ...paid a salary Benefits At its meeting on May 3, 2006, the Supervisory Board decided that Mr. Tricoire should continue to be entitled to all the employee benefits provided for in his service contract with Schneider Electric Industries SAS. He is therefore covered by the Schneider Electric Industries...

  • Page 55
    ... Europe, Asia-Pacific, International & Iberia), the four Central Functions (Customers & Markets, Products & Technology, Globalization & Industry and Strategic Deployment & Services) and the two Corporate Functions (Finance & Control - Legal Affairs and Human Resources). Following adoption of the new...

  • Page 56
    ... sales. Operating margin, with no bonus being paid if the 2005 margin rate was 12.5% or less. Stock options and stock grants The members of senior management other than the Management Board members (and the Chairman and Chief Executive Officer before the change in management system) received a total...

  • Page 57
    ... proof of ownership: Registered shares: an entry in the Company's share register, made at least five days prior to the date of the Meeting. Bearer shares: a certificate issued by the custodian stating that the shares have been placed in a blocked account, to be deposited at the address indicated in...

  • Page 58
    .... To the payment of a dividend. The Annual Meeting may decide to offer shareholders the opportunity to receive the dividend in cash or in the form of new shares of common stock. Dividends not claimed within five years from the date of payment become time-barred and are paid over to the State in...

  • Page 59
    ...Capital ...3. Ownership structure ... p. 57 p. 57 p. 59 4. Employee profit sharing, stock ownership, stock option and stock grant plans ...5. Stock market data ...6. Investor relations ... p. 60 p. 62 p. 64 1. General information Schneider Electric SA is a Société Anonyme (jointstock corporation...

  • Page 60
    ...issued capital, in payment for shares or share equivalents of an unlisted company. The following authorizations were also given to the Management Board at the Annual Shareholders' Meeting of May 3, 2006: Authorization to issue new shares to members of the Employee Stock Purchase Plan, within a limit...

  • Page 61
    ... Annual Shareholders' Meeting of May 3, 2006 authorized the Management Board to buy back shares on the open market. Pursuant to this authorization, the Company set up a liquidity contract with a broker, under which the broker purchased 2,292,219 shares at an average unit price of â,¬85.29 and sold...

  • Page 62
    ... the Management Board to carry out a new worldwide employee share issue during 2007, within a limit of 1% of the Company's issued capital at December 31, 2006. As of December 31, 2006, employees held a total of 7,029,981 Schneider Electric SA shares through the corporate mutual funds or directly...

  • Page 63
    ... Exercise price (in â,¬) Expiry date 138,300 282,900 82.14 54.11(1) 2016 NA 3 Stock grants made to the top ten employees during the year Number of shares Grants made in 2006 to the top ten employee grantees (not including corporate officers) Plan 1 Stock option plan details Plan no. Plan date...

  • Page 64
    ... 5. Stock market data In France, Schneider Electric is listed on the Eurolist of the Euronext Paris market, where it is traded in lots of one under ISIN code FR0000121972. It is part of the market's benchmark CAC 40 index of France's largest stocks. Five-year Summary of Share-Price Performance 2006...

  • Page 65
    ... March April May June July August September October November December Total 2006 2007 January February (1) During the trading session. The Schneider Electric SA share vs. the CAC 40 index over 5 years (Thomson Financial data) Schneider Electric share 100 CAC 40 Index 97.05 80 75.35 84...

  • Page 66
    ...July 2006, Schneider Electric issued â,¬500 million worth of 4.5% bonds due January 2014. These bonds are traded on the Luxembourg stock exchange under code numbers XS0260903348 and XS0260896542. In August 2005, Schneider Electric issued â,¬1.5 billion worth of bonds as part of its EMTN program. The...

  • Page 67
    ... Systems' IBS business in North America and Asia. With this acquisition, building automation and control represented full year revenue of nearly â,¬900 million. In automation and industrial control, Schneider Electric expanded its high-power speed drive lineup by acquiring Austria-based Va Tech...

  • Page 68
    Business review With the acquisition of Citect (Australia), the Group is now the uncontested leader in Supervision Control and Data Acquisition (SCADA) software and Manufacturing Execution Systems (MES). Altivar 71 and 61, speed drives that are particularly well-suited for high performance ...

  • Page 69
    ... new manufacturing operations institute has been created at the Group level and a training institute has been opened in China. Occupational health and safety action plans have led to a significant decline in the lost time injury rate per employee. Lastly, a new worldwide employee share purchase plan...

  • Page 70
    ... This acquisition will expand Schneider Electric's Installation Systems and Control lineup with wiring devices for the UK and British Standard export markets. Industrial automation On February 15, 2006, the Group acquired the assets of US-based Silicon Power Corporation's Crydom brand Custom Sensors...

  • Page 71
    ... Asia-Pacific division totaled â,¬2,514 million, up 23.8% on a current basis and 15.7% on a constant basis. The region's contribution continued to be driven by high growth in China (over 15%), India and Southeast Asia. These countries are benefiting from the powerful momentum generated by investment...

  • Page 72
    ... Operating margin in the Critical Power business reached 12.9% in 2006, an increase from 0.8 point from 2005. Earnings per share The 30.5% increase from â,¬4.56 to â,¬5.95 reflects growth in profit for the period. 3. Change in financial situation Balance sheet and cash flow statement items Total...

  • Page 73
    ... revenue in 2006. Acquisitions used a total of â,¬898 million, net of the cash acquired. Cash proceeds from the sale of treasury stock on exercise of stock options amounted to â,¬53 million (the Group bought back Company shares in a net amount of â,¬73 million in 2005). Dividends paid totaled â,¬517...

  • Page 74
    ... account 2006 profit, dividend payments, and shares issued on the exercise of stock options in an amount of â,¬60.7 million. Provisions Current and non-current provisions totaled â,¬1,729 million, or 9.1% of the balance sheet total. Of this, â,¬287 million covered items that are expected to be paid...

  • Page 75
    ..., building automation and critical power, that will drive growth in the years ahead as it supports customers in a way that is mindful of the environment. The Group's acquisitions strategy, R&D processes and sales approach are designed to support this objective. More than ever, Schneider Electric is...

  • Page 76
    ... department, the Business Units and the Operating Divisions (North America, Europe, International and Iberia and Asia-Pacific). Each quarter, the Committee meets to guide the Company's health and safety strategy and validate action plans. It leads the Group's health and safety approach and manages...

  • Page 77
    ... per production site employee by 10% (in MWh/year). Community Donate â,¬1 million worth of Schneider Electric equipment. Ensure that 90% of our sites have a lasting commitment with the Schneider Electric Foundations in the area of youth opportunities. Corporate governance Make 60% of total purchases...

  • Page 78
    ... - UK and MGE UPS Systems - outside France). Non-consolidated units: Companies that are less than 51%-owned by Schneider Electric. Ensure that all employees have basic health insurance. 2005 Rating 10 / 10 2006 10 / 10 Diversity Ensure that 20% of people under international mobility program are...

  • Page 79
    ...2% 2% 2% France USA China Mexico Spain Australia UK Germany Italy Indonesia Sweden India Function (percent) 2004 4% 16% 21% 6% 10% 2005 4.1% 18.3% 15.7% 7.5% 10.8% 2006 4.4% 18.3% 15.7% 8.3% 10.2% Marketing Sales Support Technical Production (Direct variable costs employees linked directly to...

  • Page 80
    ...34% 9% Asia-Pacific Europe North America Rest of the World Dismissals Change Type of contract (percent) 2004 96.9% 3.1% 2005 95.4% 4.6% 2006 2005 2006 3,795 620 94.4% Number 4,460 5.6% o/w layoffs for economic reasons 1,070 Open-ended Fixed-term Individuals on work-study programs account for...

  • Page 81
    ... issued capital through corporate mutual funds. A new employee share issue is planned in 2007 with a matching payment by the Company. Social dialogue and relations Sites declaring employee representation (percent) 2005 47% 55% 68% 2006 51% 55% 69% Unions Works council Health and safety committee...

  • Page 82
    ... the creation of a Group negotiating body, mutualized profit-based incentive programs and profit sharing plans (Schneider Electric Industries and Schneider Electric France) and apprenticeships. Health and retirement coverage 2006 Supplementary coverage offered by the Company * Unemployment Social...

  • Page 83
    ... deployed programs. Training (France) Main topics (percent) Breakdown (percent) 2006 Men / women Women Men Category Engineers and managers Supervisors, administrative and technical staff Line employees 28% 40% 32% 28% 72% 4 The Schneider Electric Industries/Schneider Electric France corporate...

  • Page 84
    ... Schneider Electric makes 92% of its purchases from 3,000 suppliers and sub-contractors. As part of the program to internationalize the purchasing function, the Group continued to recruit and develop skills in emerging markets during the year, primarily in Asia and Eastern Europe. Training new team...

  • Page 85
    ...help build 12 schools, equip a training center, an orphanage and a medical center. 4 A Foundation to encourage action and federate energies One of the Schneider Electric Youth Opportunities Foundation's flagship programs is the Luli international mobilization campaign. Launched in 2002, the annual...

  • Page 86
    ...partnerships with schools and associations to financial support for young students and participation in technical or general training courses. These programs dovetail with the partnerships forged through the Schneider Electric Youth Opportunities Foundation (see "Community outreach" page 82). Other...

  • Page 87
    ... as energy efficiency, speed drives, energy metering and lighting management. In medium voltage, it is doing work on new sensors and software to give devices advanced diagnostic functions. Group teams are also designing new electrical distribution products to feed energy from solar power, micro...

  • Page 88
    ...to data published in 2005, primarily as concerns North America. Customers Provide an environmental profile for 120 products representing more than 50% of total product revenue. 2005 2006 Rating 2.3 / 10 5.4 / 10 Water, energy and raw materials consumption Water and energy Since 2006, the Group has...

  • Page 89
    ...per production site employee by 10% by the end of 2008. The program focuses on five key areas: heating, air conditioning, equipment (notably for data processing), lighting and specific manufacturing processes. As of December 2006, 50 sites had launched action plans, including 26 in the United States...

  • Page 90
    ... energy sources The Group is also making wider use of renewable energy sources. For example, the corporate restaurant at the Electropole R&D Center in Eybens, France is powered by solar energy. The International and Iberian Operating Division's new headquarters is equipped with a photovoltaic system...

  • Page 91
    ...; the international distribution center in Hong Kong; and Schneider Electric Logistics Asia in Singapore. An environmental management system has also been deployed on an experimental basis at non-production sites, with 13 now certified. These include all the sales agencies in Germany. In France, the...

  • Page 92
    ....com. Benchmark: company/industry sector 100 75 50 25 0 Human Environment Customers Corporate Community resources & suppliers governance involvement Human rights Bank Sarasin Schneider Electric is included in a number of Bank Sarasin's ethical investment funds. The Switzerlandbased bank rates...

  • Page 93
    ..., Schneider Electric asked Ernst & Young to conduct a review in order to obtain a moderate level of assurance for certain human resources, safety and environment indicators. Calculation methods Environmental data CO2: The Group uses the method endorsed by the International Energy Agency in 2006 to...

  • Page 94
    ...") for 2006 identified in the annual report by the symbol. Schneider Electric's Sustainable Development Department was responsible for preparing the indicators in accordance with the frame of reference applicable in 2006. This frame of reference, which may be consulted at Group headquarters, is...

  • Page 95
    ....com Postal address: Schneider Electric Industries SAS Sustainable Development Department 89, boulevard Franklin-Roosevelt 92500 Rueil-Malmaison, France The amortization charge for intangibles resulting from acquisitions came to â,¬13 million in 2005 and â,¬18 million in 2006. Measured in terms...

  • Page 96
    ... have been properly compiled on the stated basis. The basis of accounting used for the profit forecast is compatible with the accounting policies of Schneider Electric SA. This report is issued solely in connection with the offering made to the public in France and other countries of the European...

  • Page 97
    .... 31, 2006 1. Consolidated statement of income ...2. Consolidated statement of cash flows ...3. Consolidated balance sheet ...4. Consolidated statement of changes in equity and minority interests ... 5 p. 96 p. 97 p. 98 p. 100 5. Notes to the consolidated financial statements ...6. Report of the...

  • Page 98
    ... (116.0) 2,000.7 (104.0) (16.9) (120.9) 1.9 1,881.7 Finance costs and other financial income and expense, net (note 26) Share of profit /(losses) of associates Profit before tax Income tax expense Profit of continuing operations Discontinued operations Profit for the period - Attributable to equity...

  • Page 99
    ... in long-term pension assets Sub-total Total II III - Cash flows from financing activities: Issuance of long-term debt (note 17) Repayment of long-term debt Sale/(purchase) of treasury shares Increase/(reduction) in other financial debt Issuance of shares Dividends paid: Schneider Electric SA...

  • Page 100
    ...for-sale financial assets Other financial assets Total non current financial assets Deferred taxes Total non-current assets Current assets Inventories and work in process Trade accounts receivable Other receivables and prepaid expenses Current financial assets Cash and cash equivalents Total current...

  • Page 101
    ...for pensions and other post-employment benefits Provisions for contingencies Total long-term provisions Non-current liabilities Ordinary and convertible bonds Perpetual bonds Other long-term debt Total non-current financial liabilities Deferred tax liabilities Other non-current liabilities Total non...

  • Page 102
    Consolidated financial statements at December 31, 2006 Consolidated statement of changes in equity and minority interests (in millions of euros except for number of shares) 4. Number of shares (thousands) Share capital Share premium account Retained earnings Treasury stock Other Translation ...

  • Page 103
    ... 31, 2006 were approved by the Management Board of Schneider Electric on February 16, 2007 and reviewed by the Supervisory Board on February 20, 2007. They will be submitted to shareholders for approval at the Annual General Meeting of April 26, 2007. The Group's main businesses are described...

  • Page 104
    ... currency conversion are recorded in the income statement under "Other financial income and expense, net". Foreign currency hedging is described below, in note 1.21. Software implementation External and internal costs for the programming, coding and testing of enterprise resource planning (ERP...

  • Page 105
    ...that are largely independent of those cash flows from other assets or groups of assets. At Schneider Electric, CGUs generally correspond to the Operating Divisions (Europe, North America, Asia-Pacific and Rest of the World). Each of the Growth Platform businesses is also a CGU. Goodwill is allocated...

  • Page 106
    ... to the plan. Changes resulting from periodic changes in actuarial assumptions regarding general financial and business conditions or demographics (i.e., changes in the discount rate, annual salary increases, return on plan assets, years of service, etc.) are immediately recognized in the Group...

  • Page 107
    ... interest rate. 1.18 - Share-based payment The Group grants different types of share-based payment to senior executives and certain employees. These include: Options to buy existing Schneider Electric shares and to subscribe new shares. Shares granted without consideration. Stock Appreciation...

  • Page 108
    ... from revenue when the products are sold to the distributor. Certain subsidiaries also offer cash discounts to distributors. These discounts are deducted from sales. Total sales are presented net of these discounts and rebates. Service contracts Revenue from service contracts is recorded over the...

  • Page 109
    ... on the main balance sheet items affected by the application of IAS 32 and IAS 39. Dec. 31, 2004 Treasury IFRS before stock IAS 32 and 39 Goodwill Available-for-sale financial assets Deferred tax assets Other accounts receivable Cash and cash equivalents Other assets Total Assets Retained earnings...

  • Page 110
    ... Austria-based VA Tech Elin EBG Elektronik, a company that develops and manufactures high-power speed drive products and solutions. Lastly, on November 23, 2006, the Group acquired UK-based GET Group PLC. This acquisition will expand Schneider Electric's Installation Systems and Control lineup with...

  • Page 111
    ... made on January 1, 2006). 2006 2006 Incl. Reported acquisitions over the full year Revenue Operating profit 13,729.7 2,000.7 14,058.5 2,015.9 APC On October 30, 2006, Schneider Electric announced a friendly offer to purchase all outstanding shares of USbased American Power Conversion (APC), the...

  • Page 112
    ... North American Operating Division, APOD: Asia-Pacific Operating Division, IIOD: International Operating Division, CST: Custom Sensors & Technologies, BA: Building Automation, CP: Critical Power. (2) Of which â,¬32.0 million related to the put option granted to minority shareholders at Dec. 31, 2006...

  • Page 113
    ...Acquisitions primarily included Invensys Building Systems (IBS) and Silicon Power Corporation (Crydom) in North America, Clipsal Asia and Citect in Asia-Pacific, and OVA Bargellini SpA., AEM SA, GET Group Plc, and Merten GmbH & Co Kg in Europe. Other changes Adjustments to the provisional accounting...

  • Page 114
    ..., 2006 In relation to the year's acquisitions and following the final valuation of BEI Technologies Inc, the Group recognized the BEI trademark and other intangible assets, consisting primarily of patents and customer lists (notes 4 and 5.2). In 2006, costs totaling â,¬52.3 million were capitalized...

  • Page 115
    ...7 - Investments in associates Investments in associates can be analyzed as follows: % interest at Dec. 31 2006 Clipsal Asia Holdings Ltd ELAU Administration GmbH (1) Delta Dore Finance VA Tech Schneider HV GmbH (2) Entivity (2) Other Total (1) Notes 3 and 4. (2) Companies sold in 2004. Share in net...

  • Page 116
    ... available for sale financial assets AXA Gold Peak Industries Holding Ltd Legrand Other listed AFS (1) Total listed AFS II - Unlisted available for sale financial assets SE Relays LLC (2) Eb@se France (3) Abacus Engineered Systems (2) Comipar Easy Plug SAS (3) Paramer (4) SE Venture Simak (5) Other...

  • Page 117
    8.3 - Current financial assets Dec. 31, 2006 Short-term investments (1) Pension assets (2) Total current financial assets 48.2 25.3 73.5 Substantially all pension assets concern plans in the United States which had a surplus at December 31, 2006 (note 15). (1) These investments were previously ...

  • Page 118
    ...tax returns. Schneider Electric SA files a consolidated tax return with its French subsidiaries held directly or indirectly through Schneider Electric Industries SAS. 12.1 - Analysis of income tax expense for the year 2006 Current taxes France International Total Deferred taxes France International...

  • Page 119
    ... (14.3) 24.4 1.2 12.1 (365.2) 29.76% 5 12.3 - Deferred taxes by type Dec. 31, 2006 Dec. 31, 2005 Jan. 1, 2005 Deferred tax assets Tax credits and tax loss carryforwards Provisions for pensions and other post-retirement benefit Impairment of receivables and inventory Non deductible provisions for...

  • Page 120
    ...fully paid up. As at December 31, 2006, a total of 247,190,648 voting rights were attached to the 227,698,348 shares outstanding. Changes in share capital The following table shows changes in Schneider Electric SA's share capital since December 31, 2003 through the exercise of stock options: Capital...

  • Page 121
    ....5 - Share-based payment Current stock option plans The Board of Directors of Schneider Electric SA and later the Management Board have set up stock option plans for senior executives and certain employees. The main features of these plans were as follows at December 31, 2006: Plan no. Date of board...

  • Page 122
    ... employee or corporate officer of the Group. In addition, exercise of half the options is conditional on the achievement of annual objectives based on revenue and operating margin rate. In 2006, 1,079,121 new Schneider Electric SA shares were issued on the exercise of currently vested stock options...

  • Page 123
    ... set up a liquidity contract under which the financial intermediary bought 2,292,219 shares at an average price of â,¬85.29 and sold 2,172,219 shares at an average price of â,¬85.32. At December 31, 2006, the Group holds 6,876,123 Schneider Electric shares in treasury stock, acquired at a cost of...

  • Page 124
    ... plan payments totaled â,¬30.7 million in 2006 and â,¬32.3 million in 2005. Other post-employment benefits, including healthcare and life insurance, and other long-term benefits The North American subsidiaries pay certain healthcare costs and provide life insurance benefits to retired employees...

  • Page 125
    ... for pensions and termination benefit obligations Annual changes in obligations, the market value of plan assets and the corresponding assets and provisions recognized in the consolidated financial statements can be analyzed as follows: 1. Reconciliation of balance sheet items Dec. 31, 2006 Dec...

  • Page 126
    ... United States and the United Kingdom. 4. Change in fair value of plan assets Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004 o/w US plans Fair value of plan assets at beginning of year 1,395.4 Expected return on plan assets Plan participants' contributions Employer contributions Benefits paid Actuarial...

  • Page 127
    ...They stem from changes in actuarial assumptions (primarily the discount rate). Substantially all plan changes concern the United States. 3. Funded status Projected benefit obligation Deferred items: Unrecognized past service cost Provision recognized in the balance sheet Dec. 31, 2006 477.2 39.7 516...

  • Page 128
    ... were identified during site reviews in 2006. (e) Restructuring New provisions were set aside during the year to cover the costs of restructuring plans in Europe (France, United Kingdom, Italy) and in Australia (note 25). Note 17 - Long and short-term debt Non current financial liabilities breaks...

  • Page 129
    ... the Paris and Luxembourg stock exchange. 17.4 - Other information At December 31, 2006, Schneider Electric had unused confirmed credit lines of â,¬1,038 million. These lines of credit are available for the period. As part of the financing package for the APC acquisition, Schneider Electric SA has...

  • Page 130
    ... of a current dispute in Belgium involving former senior executives and managers of the Group. The loan agreements related to the Group's long-term debt do not include any rating triggers. The Group has also signed an agreement concerning statutory employee training rights in France (DIF). Because...

  • Page 131
    ... comparisons. The Group actively manages its exposure to currency risk to reduce the sensitivity of earnings to changes in exchange rates. Hedging programs mainly concern foreign currency receivables, payables and operating cash flows, which are generally hedged by means of forward sales. Depending...

  • Page 132
    ... of operating cash flows. Note 21 - Related party transactions 21.1 - Associates These are primarily companies over which the Group has significant influence. They are accounted for by the equity method. Transactions with these related parties are carried out on arm's length terms. In 2006, related...

  • Page 133
    ... allocating Critical Power data in 2006 and data for the Growth Platforms (Building Automation, Critical Power and Custom Sensors) in 2005 and 2004. Details are provided in chapter 4 of the Annual Report (Business Review). Europe December 31, 2006 Revenue (1) EBIT Capital employed (2) December 31...

  • Page 134
    ... stemmed from the reorganization of the Building Automation business in Europe, for â,¬16 million, continued industrial reorganization in the Group's core businesses in Europe (France, the UK and Italy), for â,¬67 million, and reorganization of operations in Australia for â,¬7 million. In addition...

  • Page 135
    ... number of employees By region: Europe North America Asia-Pacific Rest of the World The increase in employee numbers primarily reflects acquisitions for the year. 27.2 - Employee benefits expense 2006 Payroll costs (1) Profit-sharing and incentive bonuses Stock options Total employee benefits...

  • Page 136
    ...-for-sale financial assets Other financial assets Total investments Deferred taxes Other non-current assets Total non-current assets Current assets Inventories and work in process Trade accounts receivable Other receivables and prepaid expenses Cash and cash equivalents Total current assets Total...

  • Page 137
    ... 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 138
    ...-for-sale financial assets Other financial assets Total investments Deferred taxes Other non-current assets Total non-current assets Current assets Inventories and work in process Trade accounts receivable Other receivables and pre-paid expenses Cash and cash equivalents Total current assets Total...

  • Page 139
    ... 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 140
    ... expense, net Profit before tax Exceptional items Income tax expense Profit of continuing operations Amortization of goodwill Group share in income/loss of equity investments Net income before minority interests Minority interests Net income (attributable to Schneider Electric SA) Basic earnings per...

  • Page 141
    ... IAS 38. Systems were set up to track and capitalize these costs only in 2004. As a result, only development costs for new products launched since 2004 are capitalized in the IFRS accounts. Development costs capitalized in 2004 amounted to â,¬46 million at December 31, 2004, before tax. These costs...

  • Page 142
    ... process engineering costs and amortization of capitalized development costs. The part of process engineering costs corresponding to the industrialization and the adaptation of products as well as amortization of capitalized projects are now included in the unit cost of products sold. This change...

  • Page 143
    ... of the control criteria set out in IAS 27 - Consolidated Financial Statements And Accounting For Investments In Subsidiaries - did not lead to any change in the companies fully consolidated in the Group accounts, except for consolidation of the special purpose entity that holds the perpetual...

  • Page 144
    Consolidated financial statements at December 31, 2006 Note 30 - Consolidated companies The main companies included in the Schneider Electric Group scope of consolidation are listed below. % interest % interest % interest Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004 Europe Fully consolidated Asentics...

  • Page 145
    ... Elau SARL Electro Porcelaine Elkron France Euromatel Financiere MGE France Transfo Infra + JCN Participations Le Moule Métallique Machines Assemblage Automatique Mafelec Materlignes Merlin Gerin Alès Merlin Gerin Alpes Merlin Gerin Loire MGE Finances SAS Bulgaria Croatia Denmark Denmark Denmark...

  • Page 146
    ... 31, 2006 Dec. 31, 2005 Dec. 31, 2004 MGE UPS MGE UPS Systems SAS Muller & Cie Napac Newall France Newlog SAS Normabarre Num SA Prodipact Rectiphase SA2E SAEI SAE Gardy Sarel Appareillage Electrique Satchwell SAS Scanelec Schneider Automation SA Schneider Electric Industries SAS Schneider Electrique...

  • Page 147
    ... (UK) Ltd Schneider Electric Ltd TAC Regional Ltd TAC UK Ltd Thorsman Ltd Tower Manufacturing Ltd Tower Forged Products Ltd Walker Mainstay Ltd Westinghouse Systems Yorshire Switchgear Group Ltd MGE UPS Systems Hellas Abe Schneider Electric AE BEI Automative Hungary Manufacturing Inc Merlin Gerin...

  • Page 148
    ... Holding BV Pro Face HMI (sous-groupe) Sandas Montage BV Sarel BV Schneider Electric BV Schneider Electric Logistic Centre BV Stago BV Andover Controls Sp Zo.o Elda Eltra SA (ex Eltra SA) ELDA Szczecinek SA MGE UPS Systems Polska Sp.z.o.o Schneider Electric Industries Polska SP Schneider Electric...

  • Page 149
    ... Schneider Electric Mexico SA de CV Square D Company Mexico SA de CV Abacus Andover Controls Corp BEI Export Sales Co. Inc BEI International Inc BEI Properties BEI Sensors & Systems BEI Tactical Defense Systems Inc BEI Technologies Inc. Berger Lahr Motion Technology Inc. CSI Acquisition Holding Corp...

  • Page 150
    ... Holding PTY Schneider Investment Holdings Pty Schneider Electric Australia Pty Ltd TAC Pacific Pty Ltd Team Security Solutions Pty Ltd Techrack Pty Ltd Beijing Merlin Great Wall Computer Room Equipment & Engineering Citect Control System (Shanghai) Ltd Clipsal China Clipsal International Trading...

  • Page 151
    ... CVH Industries Ltd GP Electrical HK Invensys Building System Hong-Kong Ltd Jansweet Ltd Full Excel Pty Ltd GET Santai Limited GET Asia Limited Linkpoint Investments MGE China / Hong Kong Ltd Schneider Busway Limited Schneider Electric Business Solutions Schneider Electric Hong Kong Ltd TAC Pacific...

  • Page 152
    ... Building System Pte Ltd KSLA Energy & Power Solution Pte Ltd Merten Asia Pte Ltd MGE Asia Pte Ltd MGE Logistics South East Asia pacific Pte Ltd PDL Electric (S) Pte Ltd TAC Control Asia Schneider Electric Export Services Schneider Electric Industrial Development Singapore Pte Ltd Schneider Electric...

  • Page 153
    ...Ltd Merlin Gerin SA (Pty) Ltd (Activité Conlog) MGE UPS Systems SA Pty Ltd Nu-Lec Africa Pty Schneider Electric South Africa Pty Ltd Schneider Electric Algérie SARL EPS Ltd MGE Argentina Plasnavi SA Schneider Electric Argentina Clipsal Middle East Palatine Ridge Insurance Company Ltd SHL CDI Power...

  • Page 154
    ..., In compliance with the assignment entrusted to us by the Annual Shareholders' Meeting we have audited the accompanying consolidated financial statements of Schneider Electric SA for the year ended December 31, 2006. These consolidated financial statements have been approved by the Management Board...

  • Page 155
    6 Company financial statements at Dec. 31, 2006 1. Balance sheet ...2. Statement of income ...3. Notes to the financial statements of Schneider Electric SA ... 6 p. 154 p. 156 p. 157 4. Auditors' report on the financial statements ...5. List of securities at December 31, 2006 . . 6. Subsidiaries ...

  • Page 156
    ... 2,654,394 4 2,741,444 2,873,450 (note 3) 350,714 350,907 Cash and cash equivalents Marketable securities Other (note 4) 169,012 5,666,443 82 5,835,537 Advances to the Group cash pool (note 5) Total current assets Accruals and other assets: Prepaid expenses Deferred charges Bond call premiums...

  • Page 157
    ...: Accounts payable - trade Accrued taxes and payroll costs Other liabilities 52 3,972 1,769 5,793 Total non-current and current liabilities Deferred income Conversion gains 3,808,833 (note 11) 551 - Total liabilities and shareholders' equity The notes form an integral part of these financial...

  • Page 158
    ...and expense transfers Other Non-recurring income Carrying value of fixed asset disposals Provisions, depreciation and amortization Other Non-recurring expenses Net non-recurring income/(expense) Net income tax benefit Net income The notes form an integral part of these financial statements. (note14...

  • Page 159
    ...six companies comprising Invensys' Advanced Building Systems business in Europe and the Middle East- to two Schneider Electric subsidiaries for a total â,¬142.3 million. Lastly, Schneider Electric SA implemented a â,¬40 million liquidity contract to maintain a liquid market for its shares. carrying...

  • Page 160
    ... to maintain a liquid market for its shares. "Other changes in treasury stock" correspond to share purchases and sales by the contract manager. At December 31, 2006, 1,796,488 Schneider Electric SA shares were recorded under "Other investment securities" at a total cost of â,¬93.1 million, of which...

  • Page 161
    ... to group tax returns for 2006 (see note 16). This item also included a â,¬97.0 million carryback credit and the unrecovered balance of the exceptional 25% Note 4: Marketable securities Dec. 31, 2005 Number Value of shares Plan 16 Plan 24 Plan 26 Total Schneider Electric SA shares Other Total 456...

  • Page 162
    ...at the Annual Meeting of May 3, 2006. At December 31, 2006, 120,000 Schneider Electric SA shares were held under this contract (see note 2b). The total number of shares held in treasury at yearend came to 4,725,771, with a cost of â,¬262.1 million. 7b - Additional paid-in capital Additional paid-in...

  • Page 163
    ... Decreases Dec. 31, 2006 8a - Contingencies A provision was set aside for stock option plan 24 because the exercise price is lower than the carrying value of the underlying treasury shares. Other contingencies correspond to risks transferred to Schneider Electric in connection with divestments...

  • Page 164
    ...2,980,846 138,875 5,666,443 2,980,673 137,890 5,666,443 Net financial income The main dividend received by Schneider Electric SA is paid by subsidiary Schneider Electric Industries SAS. This dividend totaled â,¬537.9 million in 2006 versus â,¬325.5 million in 2005. 2,847 10 2,847 10 548,875 253...

  • Page 165
    ...6 Note 18: Other information 18a - Number of employees At December 21, 2006, the Company had two employees. Note 16: Net income tax benefit In 2006, this item primarily included group tax returns in France recorded by the tax group headed by Schneider Electric SA. They totaled â,¬201.6 million, up...

  • Page 166
    ... to the financial position and the financial statements. The fair information given in the Management Board's report relating to the compensation and benefits paid to the Corporate Officers concerned and the engagement granted to them on the occasion of the arrival, suspension or change of duties...

  • Page 167
    ... List of securities at December 31, 2006 (â,¬ thousands) Number of shares Company Carrying value A. Investments with a carrying value of more than â,¬15,000 27,582,141 9,796,300 44,271 14,079 1,300 5,000 5,000 5,000 5,000 5,000 1,796,488 Schneider Electric Industries SAS AXA S.E.L.F. LEGRAND SAS...

  • Page 168
    Company financial statements at December 31, 2006 6. Subsidiaries and affiliates (â,¬ thousands) Company Capital Reserves and retained earnings before appropriation of income for the year* % interest I. Subsidiaries and affiliates whose carrying value exceeds 1% of Schneider Electric SA's ...

  • Page 169
    Book value of shares Cost Net Outstanding loans and advances Guarantees Net sales for the year Income or loss for the year Dividends received 1,531,981 1,531,981 2,948,439 - 3,028,402 Holding company Holding company 863,161 537,852 6 136,898 136,898 4,830 5,705 82,609 82,609 - - 1,...

  • Page 170
    ... tax and tax credit Per share data (in euros) Net income before depreciation, amortization and provisions Earnings per share Dividend per share, net of tax credit Employees Average number of employees during the year Total payroll for the year (in thousands of euros) Total employee benefits paid...

  • Page 171
    ... financial statements of Schneider Electric and APC. The pro forma data were prepared by the Schneider Electric Finance Department on the basis of reported information and the unaudited financial statements of APC for the year ended December 31, 2006 provided by APC and available at the time...

  • Page 172
    Unaudited pro forma information related to the 2006 consolidated financial statements 2. Pro forma financial statements 2.1 - Unaudited combined income statement Year ended December 31, 2006 (in millions of euros) Schneider Electric IFRS APC US GAAP unaudited APC adjustments US GAAP to IFRS ...

  • Page 173
    ...-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 receivable Other receivables and prepaid expenses Current financial assets Cash and cash equivalents Total...

  • Page 174
    ...in the United States of America (US GAAP). The adjustments made to APC's US GAAP accounts to prepare the pro forma financial information under IFRS were estimated by Schneider Electric's Finance Department based on the description of accounting policies contained in APC's annual financial statements...

  • Page 175
    ... balance sheet at December 31, 2006 and therefore, no adjustment was recorded in the pro forma financial statements. 3.2 Share-based payments Stock options have been granted to the management and certain employees of APC. Schneider Electric applies IFRS 2 - Share-Based Payment. Accounting policies...

  • Page 176
    ...the share issue intended to finance part of the planned acquisition of APC in the United States. This information is presented in section 11.7 of the Offering Memorandum dated March 7, 2007. The pro forma information was prepared under the supervision of the Schneider Electric SA Management Board in...

  • Page 177
    ... shares carrying rights to the 2006 dividend will amount to â,¬3.00 The dividend will be paid as from May 2, 2007. Shareholders should note that France's 2004 Finance Act eliminated the avoir fiscal tax credit and précompte equalization tax. However, for individual shareholders who pay income tax...

  • Page 178
    ... Annual Meeting in accordance with procedures set by the Board. Under the French Act of December 30, 2006 on the development of employee stock ownership, listed companies in which more than 3% of the issued capital as of December 31, 2006 is held directly or indirectly through corporate mutual funds...

  • Page 179
    ... of employee shareholders on the Supervisory Board must be employed under a contract that qualifies them to sit on the Supervisory Board for a four-year term and must hold at least 25 Schneider Electric SA shares or an equivalent number of units in a mutual fund invested in the Company's shares. The...

  • Page 180
    ... new measures introduced by the French Act of December 30, 2006 on the development of employee stock ownership. This would allow the Management Board to set a vesting period of no less than four years with no lock-up period for employees who do not have France as their tax home and facilitate share...

  • Page 181
    ... contract. Details of the share buyback program submitted for approval at the Annual and Extraordinary Shareholders' Meeting of April 26, 2007 are as follows: Number of shares and percentage of share capital held directly and indirectly by Schneider Electric SA: Treasury stock: 4,546,182 shares...

  • Page 182
    ... and specifying that: - His period as an officer (mandataire social) of Schneider Electric SA will be taken into account for the calculation of his rights - pursuant to his service contract - under the Schneider Electric top hat pension plan for senior executives, as well as for the calculation of...

  • Page 183
    ...of Schneider Electric SA and pursuant to Article L.228-92 et seq., L.225-135-1 and L.225-148 of the Commercial Code, we present below our report on the authorizations sought by the Management Board to increase the Company's capital by issuing, on one or several occasions, shares or share equivalents...

  • Page 184
    ... of Schneider Electric SA and pursuant to Article L.225-135 et seq., L.225-148 and L.228-92 et seq. of the Commercial Code, we present below our report on the authorizations sought by the Management Board to increase the Company's capital by issuing, on one or several occasions, shares or share...

  • Page 185
    ... the Commercial Code, we present below our report on the proposal to authorize the Management Board to issue shares, share equivalents or debt securities, on one or several occasions, to employees who are members of an Employee Stock Purchase Plan set up by French or foreign related companies, with...

  • Page 186
    ..., In our capacity as Statutory Auditors of Schneider Electric SA and pursuant to Article L.225-135 et seq. of the Commercial Code, we present below our report on the proposal to issue shares to entities set up to hold shares on behalf of employees. Shareholders will be asked to waive their...

  • Page 187
    ...225-209 of the French Commercial Code, to buy back Company shares in order to reduce the capital, or in connection with stock option plans, or plans to grant shares without consideration, or to permit the conversion of convertible debt securities, or to finance an acquisition, or for the purpose of...

  • Page 188
    ... of units in a mutual fund invested in the Company's shares, iii) a member of the supervisory board of the mutual fund that proposed him or her as a candidate, or - If employees of the Company and of related companies within the meaning of article L.225-180 of the French Commercial Code hold less...

  • Page 189
    ... be employed under a contract that qualifies them to sit on the Supervisory Board for a four-year term and must hold at least 25 Schneider Electric SA shares or an equivalent number of units in a mutual fund invested in the Company's shares. d) The conditions and procedures for the designation of...

  • Page 190
    ...report, resolves, in accordance with articles L.225-129-2 and L.228-92 of the Commercial Code: To authorize the Management Board, directly or through a representative, to increase the Company's issued share capital on one or several occasions by issuing, in France or abroad, common shares or legally...

  • Page 191
    ...-197-2 of said Code, on one or several occasions, existing or new shares of the Company without consideration. That the Management Board shall draw up the list of recipients of the grants, as well as the conditions and criteria for making said grants. That the total number of shares granted without...

  • Page 192
    ...Purchase Plan at 20% of the average of the opening prices quoted for Schneider Electric shares on Euronext Paris over the twenty trading days preceding the date on which the decision is made to launch the employee share issue. However, the General Meeting specifically authorizes the Management Board...

  • Page 193
    ... foreign law, for the purpose of a stock purchase plan set up for employees of the Schneider Electric Group. 3. That the issue price of shares issued under this resolution will be set by the Management Board based on the price quoted for the Company's shares on the Eurolist market of Euronext...

  • Page 194
    ... on page 174. In this report, the Statutory Auditors draw attention to the fact that APC's financial statements for the year ended December 31, 2006 are unaudited and unpublished and that no assurance is given that a detailed reconciliation of the two groups' accounting policies would not reveal any...

  • Page 195

  • Page 196
    Schneider Electric SA Headquarters 43-45, boulevard Franklin-Roosevelt F-92500 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 â,¬...