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Financial and
Sustainable
Development
Annual Report
Registration Document 2013
Registration Document
Schneider Electric SA
Schneider Electric is committed to the full
energy equation — from efficiency
solutions to energy access. This equation
drives Schneider Electric innovations,
including these portable, solar-powered
lamps for use in off-grid areas. The
company invests in solutions that make
the goal the international community
agreed on in Copenhagen in 2009
achievable and concrete: limit the global
temperature increase to 2° C by cutting
greenhouse emissions. The 21st
Conference of the Parties on Climate
Change in Paris, 2015, will highlight
further discussions of this
imperative.

Table of contents

  • Page 1
    ... to energy access. This equation drives Schneider Electric innovations, including these portable, solar-powered lamps for use in off-grid areas. The company invests in solutions that make the goal the international community agreed on in Copenhagen in 2009 achievable and concrete: limit the global...

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

  • Page 3
    Registration Document 2013 Financial and Sustainable Development Annual Report All of Schneider Electric's regulated information is available on the corporate website at www.schneider-electric.com, Finance section. The Business and Sustainable Development Report is available at www.schneider-...

  • Page 4
    ... programs such as Energy University, Solar Decathlon and our local training facilities. Our performance in sustainable development measured by our Planet and Society Barometer is progressing in advance of our objective. This completeness of our engagement is recognized in major international ratings...

  • Page 5
    ...in process, safety and energy. The acquisition reinforces our industrial automation capabilities and boosts our position in key electro-intensive segments. The acquisition brings along a large installed base and leading capabilities in the fast growing market of industrial software. 2014 opens a new...

  • Page 6
    ... half. End-market trends in China continue to be solid. Uncertainty remains in several new economies due to currency volatility. Based on this, the Group targets low single-digit organic growth in revenue and 0.4 point to 0.8 point improvement of the adjusted EBITA margin vs. the 2013 proforma level...

  • Page 7
    ... strategic move? With Invensys, we enhance our business portfolio and position ourselves for further growth. The company will make us a unique industrial automation player, boost our positions in key electro-intensive segments and strengthen our software business for customer operational efficiency...

  • Page 8
    ... Vice-President, Global Marketing 13 Philippe Delorme Executive Vice-President, Buildings & Partner 14 Daniel Doimo Executive Vice-President, IT 15 Eric Pilaud * President and CEO, Custom Sensors & Technologies Inc. Executive Vice-President, CST* 6 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 9
    ... Lévêque Internal Audit Director Secretary Philippe Bougon Human resources and social responsibility committee Serge Weinberg* Chairman Strategy committee Xavier...according to the definition defined by AFEP-MEDEF corporate governance guidelines. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 7

  • Page 10
    ... in OEM demand across regions. From a geographic standpoint, Asia-Pacific drove growth, followed by North America and Rest of the World. On the other hand, Western Europe was down. The Group continued to benefit from its strong presence in new economies, accounting for 43% of its 2013 revenue. 09...

  • Page 11
    ... Europe Rest of the World 28% Western Europe 25% North America 20% 27% Asia Pacific North America 30% Asia-Pacific (1) Spot headcount, including employees under fixed-term and open-ended contracts, at December 31, 2013. Net income (in millions of euros) 1,888 1,720 1,793 1,813 The Group share...

  • Page 12
    ... 13 (1) 2012 figures restated for the application of IAS 19 Revised (pension accounting). (1) Subject to shareholders' approval at the Annual Meeting of May 6, 2014, for payment on May 19, 2014. Ownership structure on December 31, 2013 3.4% CDC Group 4.2% Employees 5.4% Capital Group Companies...

  • Page 13
    ... margin in line with the Group's Infrastructure business. Bond issues and sale of treasury stock On August 29, 2013, Schneider Electric launched a EUR600 million EMTN (Euro Medium Term Note) issue maturing in 8 years. Schneider Electric benefited from low interest rates, with a coupon rate for this...

  • Page 14
    ... Energy and Social System Demonstration Projects 2013 call for tenders by the New Energy Promotion Council (NEPC). This project, launched in partnership with TEPCO, is a first in Japan. Governance In the meeting held on February 20, 2013, the supervisory board of Schneider Electric detailed...

  • Page 15
    ... solutions (developed specifically to meet the needs of disadvantaged populations), technical expertise and experience in providing access to energy gained since the launch of its BipBop program in 2009. On November 18, 2013, Schneider Electric employees supported by the Group Foundation mobilized...

  • Page 16
    14 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 17
    ... of the Group's strategy, markets and businesses 1. Schneider Electric strategy and market opportunities Businesses, end-markets and customer channels Ambitious long term financial targets for attractive shareholder returns Company history and development Research & Development Organizational...

  • Page 18
    ... 35% of world GDP in 2012 and should reach close to 58% by 2030. Their share of global energy demand will continue to rise - from 55% in 2010 to close to 65% by 2035 - because of demographics, industrialization, urbanization, and growing affluence. 16 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 19
    ...in 2000 to 43% in 2013, has enabled Schneider Electric to seize the opportunities in these new markets and will continue to do so in years to come. Schneider Electric currently holds significant presence in new economies in Asia, Africa, Middle East, Latin America, Eastern Europe and Russia (now the...

  • Page 20
    ... savings from purchasing and manufacturing and through improving operational efficiency by reducing selling, general and administrative expenses, while maintaining best-in-class standards in environmental sustainability and social responsibility. 18 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 21
    ... user base We work with many types of partners, such as distributors, system integrators, contractors, panel builders, electricians, machine manufacturers and others, as well as with our end customers. Schneider Electric has developed the widest network 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 22
    ... sensors, and customized sensors, as well as software applications for operations management and supervisory control. With the acquisition of Invensys in 2014, Industry business is expanding in the Process Automation space, gaining a strong installed base of DCS (Distributed Control Systems, notably...

  • Page 23
    ... and operating costs. Our non-residential customers include end-users, property developers, design firms, systems integrators, panel builders and installers, electrical equipment distributors and building management companies. In the context of single-family homes and apartment buildings, our market...

  • Page 24
    ... position for sales, and above all, provide up-to-date information. Through the e-Shop, distributors can link Schneider Electric's product database to their e-commerce sites so that customers have reliable 24/7 access to information. As part of a program to develop energy efficiency solutions...

  • Page 25
    ...-sales service worldwide; l a dedicated program for multi-site and/or global OEMs that enhances their ability to offer superior solutions on an international level. Other large end-users and global strategic accounts Schneider Electric also addresses customers directly in a number of end-markets...

  • Page 26
    ... for attractive shareholder returns Schneider Electric's opportunities, strategy and business positioning have led its management to define ambitious long-term targets for the company. Over the long term, the key priorities remain focused on profitable growth, cash conversion and capital efficiency...

  • Page 27
    ...public works distribution, automation and industrial control) with adjacent and synergetic businesses in order to boost its organic growth potential; and l anticipating the future energy requirements of companies and individuals. This strategy led Schneider Electric to conduct a number of strategic...

  • Page 28
    1 OVERVIEW OF THE GROUP'S STRATEGY, MARKETS AND BUSINESSES COMPANY HISTORY AND DEVELOPMENT 4.2 From Power & Control to Energy Management Creating a major player in Building Automation & Security l As the result of several acquisitions, TAC in 2003, Andover l With the acquisition of Areva D (Areva...

  • Page 29
    ... of productivity savings and increased operational efficiency by reducing our support functions costs to revenues ratio by 1.5 points. 2012: Connect, our new company program Following our successful strategic transformation, we designed and launched Connect, our new company program for the 2012-2014...

  • Page 30
    ... and development to support future growth. Total R&D expenses to revenues ratio is expected to move towards 5% of revenues going forward. - Planet & Society Barometer: maintain best-in-class standard in environmental sustainability and social responsibility. Management compensation is partly tied...

  • Page 31
    ... STRATEGY, MARKETS AND BUSINESSES COMPANY HISTORY AND DEVELOPMENT Connect: Key financial targets for 2012-2014 With Connect, Schneider Electric expects Group performance to reach a new level of excellence by 2014. Key targets Services growth Solutions profitability Industrial productivity Support...

  • Page 32
    ...sites. Schneider Electric's R&D strategy is based on two pillars: the consolidation of its global leadership in critical technologies, thanks to long term research programs, and fast paced market-driven innovation to leverage these technologies into segment specific products and solutions. Schneider...

  • Page 33
    ... an environment where most companies have reached the limit of the benefits they could extract out of their enterprise level systems (ERP type applications), the ability of these new systematically connecting products to cloud based analytics, Schneider Electric can provide its customers a range of...

  • Page 34
    ... 30%. Cyber-security As the level of automation increases, the security of control systems will become even more critical. Secure development practices have been deployed across all Schneider Electric R&D entities, and cyber-security is a major area of joint development with industry partners, such...

  • Page 35
    ... businesses and corporate departments; and l by publishing market reviews that are presented to Schneider Electric teams. In 2013, eight various topics related to the energy and environment sectors have been covered and shared within Schneider Electric. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 36
    ... products, that support the Group's solution strategy. Agility Competences Worldwide networks of experts are in charge of constantly developing the Group's intellectual capital in the key technologies and techniques of its portfolio. The Edison program, providing technical employees a specific...

  • Page 37
    ... scope covers critical power and cooling technologies for data centers. Each of the business segment manages its R&D, marketing and sales teams and is responsible for its global results. In 2014, Buildings business has moved under the Partner business to build synergies and accelerate growth, as 70...

  • Page 38
    ... operations for all subsidiaries. 6.2 A more modular approach to information systems Schneider Electric is in the middle of a 3-year strategic IT plan in line with the company strategy and Connect company program. The IT Strategy for Schneider Electric is comprised of four strategic directions...

  • Page 39
    ...-making processes and organizational structure. l supply This led to the announcement of a new Industrial Organization for 2013, operating around eight regions (Europe, CIS, China, India, Pacific, Asia, North America, South America) which groups all of Schneider Electric Industrial activities...

  • Page 40
    ... suppliers and plants through distribution centers and carriers to improve service to customers. Many programs have been launched in order to offer new features and improve the responsiveness in relation to market demand supported by new technologies. Supply chain optimization will benefit from the...

  • Page 41
    ...to the Group's business Schneider Electric operates worldwide, in competitive and cyclical markets The worldwide markets for the Group's products are competitive in terms of pricing, quality of products, systems and services, development and introduction time for new offers. Schneider Electric faces...

  • Page 42
    ... External growth projects are examined in detail by the businesses and corporate functions (strategy, finance, legal affairs, tax and human resources) concerned, under a rigorous internal process developed and led at Group level. A launch committee is responsible for initiating the review process to...

  • Page 43
    ... by Schneider Electric in the context of product recalls are covered by the liability insurance program described in the "Insurance" section below. Provisions for product risk totaled EUR429 million as of December 31, 2013 (see note 23 to the consolidated financial statements). The Group's plants...

  • Page 44
    ... in interest rates are described in note 26 to the consolidated financial statements for the year ended December 31, 2013. The Group's international operations expose it to currency exchange risk Due to the fact that a significant proportion of transactions of Schneider Electric are denominated...

  • Page 45
    ... material prices are described in note 26 to the consolidated financial statements for the year ended December 31, 2013. In 2013, purchases of raw materials totaled around EUR2 billion, including around EUR1 billion for non-ferrous and precious metals, 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 46
    ... the remaining risks, based on management's best estimate of the expected financial impact. Nevertheless, certain new files implicating the Group for Spie Batignolles' past activities could still arise and result in costs. Schneider Electric, in addition to other sector companies, has been involved...

  • Page 47
    ... on the financial position or profitability of the company and/or the Group. 1 Insurance policy Schneider Electric's general policy for managing insurable risks is designed to defend the interests of employees and customers and to protect the company's assets, the environment and its shareholders...

  • Page 48
    ..., regulations or the requirements of certain risks, projects and businesses. Cost of insurance programs The cost (including tax) of the Group's main insurance plans, excluding premium paid to captives, totaled around EUR23 million in 2013. 46 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 49
    2 Sustainable development 1. Sustainable development at the heart of our strategy Green and responsible growth driving economic performance Schneider Electric's commitment to environmental performance Committed to and on behalf of employees Schneider Electric, an eco-citizen company Methodology and...

  • Page 50
    ... Group's employees: l responsible, ethical governance; l sites and products that respect the environment; l employee development; l policies that support and develop the communities in which Schneider Electric operates. (1) Source: International Energy Agency - World Energy Outlook 2012. 48 2013...

  • Page 51
    ... in industry and building, sustainable cities, smart grids, sustainable innovation, access to energy, eco-design, sustainable purchases, employee engagement and attraction. The Planet & Society Barometer, over the period 2012-2014, partly covers the issues identified as significant by this review...

  • Page 52
    ... Group's industrial and human activity. Operation and monitoring of the Planet & Society Barometer The Planet & Society Barometer 2012-2014 is part of the Connect company program. It comprises 14 key performance indicators scored out of 10. These 14 indicators replace the 13 objectives for the 2009...

  • Page 53
    ... be monitored internally with the same objective. (6) This program, launched with the Planet & Society Barometer 2009-2011, continues to be monitored internally with new objectives (10 countries in 2012, 12 countries in 2013, 15 countries in 2014). 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 51

  • Page 54
    ... development policy and programs. This feedback is integrated into new progress plans throughout the company program and during the establishment of the Planet & Society Barometer every three years. (1) Source: CSR Sector Reporting Guide, 2013. 52 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 55
    ... NGOs â- Quarterly Planet & Society Barometer newsletter Department Quality, Customer Satisfaction, Eco-design Investor Relations and Sustainable Development Partners Purchasing, Energy Efficiency & Solutions and Sustainable Development 2 Social Technical Human Resources R&D and Activities...

  • Page 56
    ...: World Business Council for Sustainable Development (WBCSD), United Nations Global Compact. In 2013, Jean-Pascal Tricoire, Chairman and CEO of Schneider Electric, is Chairman of the Global Compact France. France: member of the board of directors of ORSE (French study center for corporate social...

  • Page 57
    ... fellows community Given Schneider Electric business and level of responsibility, the company reckons that all of its employees should be aware of major sustainability stakes and ambassadors of its sustainability story. To achieve this goal, a new initiative has been launched in January 2013: The...

  • Page 58
    ... > Purchasing > Investor Relations BOP > Access to Energy (BipBop) > Human Resources > Foundation > Ethics All Employees (Sustainability Fellows) Business > Implement relative action plans > Support awareness B I P External Stakeholders 56 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 59
    .... To achieve this, Schneider Electric works with a network of 15,000 employees, comprised of certified solution sales and marketing teams and supported by technical experts and over 60 Solution Centers aligned to supporting customers in local geographies and key global end user segments, where our...

  • Page 60
    ..., international mobility, training, human capital development, talent identification, total remuneration, social benefits and health and safety. These apply to the Group and are accompanied by global processes. The Responsibility & Ethics Dynamics program As a global corporation, Schneider Electric...

  • Page 61
    ... stock market indices A key performance indicator was set in the Planet & Society Barometer for the duration of the 2012-2014 Connect Program: to ensure Schneider Electric's presence in the three major SRI (Socially Responsible Investing) indices - the DJSI World, the DJSI Europe, and since 2013...

  • Page 62
    ...Planet & Society Barometer for the duration of the Connect Program (2012-2014): Objectives for year end 2014 1. +7 points of growth with EcoXperts above Group growth 2. 90% of our recommended suppliers comply with ISO 26000 3. Three major ethical stock market indices choose Schneider Electric 2013...

  • Page 63
    ...314 million Cash Variation ¤1,990 million Revenue distribution to our stakeholders Investments * Borrowings, share issues and sale of treasury stock. (1) Including ¤326 million in R&D. (2) Including ¤65 million for long term pension assets. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 61

  • Page 64
    ... their energy management. Schneider Electric offers a range of products, systems, services and software such as: l products: dimmer switches, timers, heating and air conditioning control, variable speed drives, etc.; l systems: building management systems, lighting control, process supervision...

  • Page 65
    ... control systems, SCADA, engineering and maintenance. According to the International Energy Agency's World Energy Outlook 2012, renewable energies could grow from 13% of total energy production in 2010 to 18% in 2035 - representing an 83% increase. Schneider Electric serves and connects power plants...

  • Page 66
    ..., security systems and management, intelligent weather forecasting, energy and environment management information system. Recovery service for equipment containing SF6 Since 2009, Schneider Electric has been looking to create SF6 gas recovery processes for end-of-life products in Europe and Asia...

  • Page 67
    ... encouraging its suppliers to commit to a sustainable development process. A key performance indicator was defined in the Planet & Society Barometer for the duration of the 2009-2011 One program: at the end of 2011, more than 50% of Schneider Electric purchases were from suppliers who had signed the...

  • Page 68
    ...schneider-electric.com/sites/corporate/en/group/ sustainable-development-and-foundation/social-commitments/ conflict-minerals.page Furthermore, Schneider Electric launched an update in 2013 to the carbon impact analysis of company purchases (as part of the Group carbon footprint). Schneider Electric...

  • Page 69
    ... or her job. At the end of 2013, more than 50,000 employees participated in the module: 94% rate it as good or excellent. This training is ranked number one in the Top 10 e-learning modules. Once a year Executive Level Executive Committee Board Once a year Corporate Level Upon request (at least...

  • Page 70
    ... communication into the Schneider Electric University training programs and to use supplementary action for the job posts where the result is weakest. Personal data protection Building a global organization requires the pooling of our information systems (human resources, customer relationship...

  • Page 71
    ... been developed for a number of functions, such as the Purchasing function; l in France, Schneider Electric is involved in defining ethical 2 standards as part of the Business Ethics Commission of Gimélec, a grouping of manufacturers of electrical equipment, control systems and related services...

  • Page 72
    ... product revenue from products that have a life-cycle analysis and controlled and limited chemical substance usage (Green Premium eco-mark). For this section, three key performance indicators were set in the Planet & Society Barometer for the duration of the Connect program (2012-2014): reporting...

  • Page 73
    ...: environmental managers in each In 2013, the organization within Global Supply Chain evolved from three regions to the following regions: EMEA (Europe - Middle East - Africa), North America, South America, India, China, EAJP (East Asia - Japan - Pacific). For each region, a Safety & Environment VP...

  • Page 74
    ...Barometer a specific objective of a 10% reduction in CO2 in transportation paid by the Group. 74% Purchases All CO2 savings indicators and results are presented p. 113-115 Action plans As a reminder and to highlight the trend, during the previous company program over 2009-2011, Schneider Electric...

  • Page 75
    ...and per employee was also achieved overall at the end of 2011. The 2012-2014 company program, Connect, includes the following objectives: l reduction of energy consumption by 10% over three years Resource Advisor is Schneider Electric's enterprise-level StruxureWare software application and part of...

  • Page 76
    ... for the end of 2014 is to be greater than 80 percent across the entire region covering 25 sites. l In Asia Pacific, customized power option settings have been l aligning Air/Sea Ratio targets with Inventory Management teams to ensure common goals (EMEA); l collaborative processes internally and...

  • Page 77
    ...Schneider Electric employees had passed one of these e-learning modules. One of the modules was also recognized by an e-learning trade association in Asia Pacific. A third module, consisting of an on-site training day was designed to help managers of the transport activity to establish action plans...

  • Page 78
    ... to generalize the application of RoHS to all its products worldwide has helped anticipate developments in regulations all over the world and Schneider Electric is able to offer products which comply with RoHS directives on all its markets (China, India, South Korea, Japan, etc.). REACH program...

  • Page 79
    ... consolidated its Eco-design strategy in line with its Environment policy in 2012. Schneider Electric, by enforcing its EcoDesign policy, is committed to: l reduce the environmental impact of its products and solutions as to minimize environmental footprint in order to offer products and solutions...

  • Page 80
    ... impact on water quality. Nevertheless, in 2011 the Group initiated an analysis of industrial site positions relative to water stress in different regions throughout the world using the WBCSD tool (World Business Council for Sustainable Development). The company's "Everblue" project was launched...

  • Page 81
    ... Electric conducted its annual review of pollution risks at all manufacturing sites as part of ISO 14001 tracking. No major incidents were reported in 2013. Discharge into the water and air Because Schneider Electric is mainly an assembler, its discharge into the air and water is very limited...

  • Page 82
    ... conditions. Human Resources play a key role in supporting the development of Schneider Electric in the changing context of its activity. This growth is characterized by a sustained internationalization, numerous acquisitions, the increase of headcounts dedicated to selling solutions and services...

  • Page 83
    SUSTAINABLE DEVELOPMENT COMMITTED TO AND ON BEHALF OF EMPLOYEES Three key performance indicators were set in the Planet and Society Barometer for the duration of the Connect program (2012-2014): Objectives for Year-End-2014 1. 30% reduction in the Medical Incident Rate (MIR) 2. 63%* result in our ...

  • Page 84
    ... and communication are key components of the Health & Safety program at Schneider Electric. The Group is committed to providing awareness level and task specific training for its employees and contractors to ensure a strong knowledge base to work safely. In 2013, a new emphasis has been placed on...

  • Page 85
    ...socially and commercially. By constantly defining the "essence" of Schneider Electric, careers can be enhanced and potential delivered in line with corporate objectives and values. tools to manage motivated employees and provides Human Resources to play a strategic role in building a thriving global...

  • Page 86
    ... universities, trade, water and hospitals. The best proposals reconciled the increased demand for energy, social progress and environmental protection. Flagship program: Cool Sites The Group is making a positive impact on employees with its Cool Sites program which helps the Group's offices develop...

  • Page 87
    .... In 2013, the Group started to work on enhancing these processes through the design and deployment of a new HR information system which will be implemented for talent management processes during the course of 2014. Innovation in training Collaborative Learning: A number of learning communities...

  • Page 88
    ... to increase the number of Learning offers accessible through mobile devices. Our Learning & Development organization Global academies The academies' curriculums are built using the outcome of workforce planning (see page 87). Schneider Electric benefits of a network of Learning Solution internal...

  • Page 89
    ... business leader, the human resource business partner and the finance controller. This collaboration enables a high quality translation of the business strategy into the most important workforce priorities and ensures financially sustainable decisions. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 90
    ...Committee and their management teams; l online training program dedicated to the promotion of Gender diversity, launched globally in 2009. Action plans Diversity & Inclusion policy In 2013, a new Diversity & Inclusion policy has been launched. At Schneider Electric, all our employees can expect us...

  • Page 91
    ... at the end of the 2013 People Review process, 27% are located within the new economies. This indicator is a key performance indicator established in the company program for the 2012-2014 period. responsibility; l ensuring equal access to training and developing the conditions for genuine...

  • Page 92
    ... Health Department, Communication Department, corporate partners and specialist agencies) with local rollout by "Disability Officers". In France, Schneider Electric recruits through work-study programs for positions that are predominantly technical, and also for service sector positions ranging...

  • Page 93
    ... long term incentive plan that will be definitely granted at time of vesting is subject to the achievement of a sustainable development target. This target is defined as the Planet & Society Barometer score at the end of the year following the annual grant (i.e. score at the end of 2014 for 2013...

  • Page 94
    ... by our social reporting system, where local HR teams report the presence of trade unions, works councils and Health and Safety Committees every year. Action plans in major localizations European Works Council (EWC) Schneider Electric senior management and the employee representatives of...

  • Page 95
    ... economic, financial and social dialogue between senior management and the representatives of the employees from all French subsidiaries. In 2013, the Group Works Council for France enhanced its transversal information and understanding of business stakes and strategy of Schneider Electric, through...

  • Page 96
    ... (Business, Innovation & People at the Base of the Pyramid) internal energy access program illustrates Schneider Electric's desire to create a virtuous circle combining business, innovation and social responsibility. The "BipBop"program Business Create an investment fund for business development in...

  • Page 97
    ... France and India: l a BipBop solutions Business Development Director; l an Offering Creation Director based in Bangalore (India); For this section, three key performance indicators were set in the Planet & Society Barometer for the duration of the Connect Program (2012-2014): Objectives for year...

  • Page 98
    ...players; l never take a majority shareholding; l always ensure sustained company support (help develop a business plan, technical advice, etc.) to deliver the optimum social efficacy while minimizing risk. > SEEA FUND INVESTMENT POLICY International projects Sectorial specialization ‡$FFHVVWR...

  • Page 99
    .... Products and solutions are developed to meet a range of both individual and community needs across the energy chain, from lighting systems and charging equipment to decentralized small power plants and water pumping systems. Action plans Offer a wide range of services for all energy access needs...

  • Page 100
    ... development of energy services helps bring added value to the users in a community. With its range of charging equipment for the Homaya In-Diya lighting systems, Schneider Electric has extended its offering with solar water pumping solutions. The Villaya Water of the Sun solution, launched in 2012...

  • Page 101
    ... access to energy in new economies through the development of vocational training in energy management trades for the most underprivileged. Supporting local initiatives within the framework of mobilization campaigns The Schneider Electric Foundation focuses on the involvement of company employees...

  • Page 102
    ... the Planet & Society Barometer through a key performance indicator: For the 2009-2011 period, the objective was to train 10,000 young adults at the Base of the Pyramid in energy management professions. The objective was surpassed, with more The Executive Committee The Schneider Electric Foundation...

  • Page 103
    ... of access to energy; - who have supported the Energy Access social welfare investment fund, - or who began work after training; l management control, finance, communication, fundraising, management, human resources, technical, etc. For more information visit: www.fondation.schneider-electric.com...

  • Page 104
    ... to 40 hours per employee per year; 5.3 Territorial positioning and impact on economic and social development Wherever it operates, Schneider Electric makes a strong commitment to community partners and civil society through positioning itself in a way that is indispensable for a global enterprise...

  • Page 105
    ... in structured and strategic development projects for SMEs; l support for organizations that open the way to creation of activities and companies (Réseau Entreprendre, France Initiative, etc.); l financial aid for learning within the energy sector. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 106
    ... (CNEI) is part of the desire to learn more about companies providing jobs for the unemployed and involve them in our purchasing policy. Employment clauses are included on new (or renewal) processes, especially in the purchase of services and the construction of new sites, based on the example...

  • Page 107
    ... Human Resources Division and the Group's Global Supply Chain Management. Energy is managed with the Group's own solutions, Resource Advisor and Energy Operation. Data reliability checks are conducted at the time of consolidation (review of variations, inter-sites comparison, etc.). The Safety data...

  • Page 108
    ... Group growth by seven points with the EcoXperts activities, measured quarterly year-to-date. The program provides end users access to: l a network of local partners accredited by Schneider Electric; l energy efficiency and renewable energies solutions based on Three major ethical stock market...

  • Page 109
    ...funding of electrical products and didactical equipment, knowledge transfer through trainers training, and a support to future entrepreneurs training. As a technical partner, Schneider Electric does not pay long-term operating expenses. This indicator was audited by Ernst & Young. 63% of the result...

  • Page 110
    ...". It works closely with BipBop training teams (BipBop People), the Schneider Electric Energy Access fund and the Human Resources. It develops partnerships with local NGOs (Planet Emergency, ESF, etc.). This indicator was audited by Ernst & Young. 108 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 111
    ...2° Environmental information a) General environmental policy Organization of the company to take into account environmental questions and, when necessary, environmental evaluation or certification approaches Employee training and information actions regarding environmental protection Environmental...

  • Page 112
    ... within the company's purchasing policy of social and environmental issues The importance of subcontracting and the consideration within relations with subcontractors and suppliers of their social and environmental responsibility d) Loyalty of practices Anti-corruption actions taken Measures...

  • Page 113
    ... on sustainable development based on the social and environmental consequences linked to the activities of the company and its societal commitments, as well as, where appropriate, resulting actions or programmes. We have compared the information presented in the management report with the list as...

  • Page 114
    ... of the company, its social and environmental issues, its strategy in relation to sustainable development and industry best practices. Concerning the CSR Information that we deemed most important(1): l at the level of the consolidated entity, we consulted documentary sources and conducted interviews...

  • Page 115
    ... with the scope of financial consolidation. The scope of environmental reporting covers about 70% of the Group headcount. Schneider Electric provides readers two pieces of information so that environmental performance can be compared from one year to the next: l one part publishing constant scope...

  • Page 116
    ... for consumption and water used for cooling (and returned to the environment). Schneider Electric plans to expand this differential reporting to all sites concerned. From 2013, only the sites that emit more than 1,000kg of VOC a year are reporting. The CO2 emissions linked to energy consumption are...

  • Page 117
    SUSTAINABLE DEVELOPMENT INDICATORS Key performance indicators from the Planet & Society Barometer Objectives for year end 2014 1. 10% CO2 savings on transportation 2. 75% of our product revenues achieved with Green Premium 3. 10% energy consumption savings 2013 16.7% â-² 68.7% â-² 8% â-² 2012 14...

  • Page 118
    ... workforce by region (5) Asia-Pacific Europe North America Rest of the world LA1 Breakdown of workforce by country (the most significant countries) (5) France United States of America China India Mexico Spain Brazil Germany Australia Indonesia United Kingdom Russia LA1 Annual change in workforce...

  • Page 119
    .../24 years 25/34 years > 34 years LA1 Breakdown of workforce by function Marketing Sales Services and projects** Support Technical Industrial LA1 LA2 Direct variable costs* (cost of employees under production or business costs) Hires (6) Breakdown by type of contract Permanent contract Fixed-term...

  • Page 120
    ...Breakdown by Region Asia-Pacific Europe North America Rest of the world Dialogue and social relations GRI LA4-6 Indicators Sites stating they benefit from employee representation (2) Unions Works Council Health and Safety Committee 2013 44% 51.3% 69.1% 265 2012 47.6% 50% 76.7% 315 2011 52.4 56...

  • Page 121
    ...35.7% 14.3% 36.8% UA UA UA 12.4% 20% LA10 Breakdown of hours by category (2) White collar Blue collar* LA10 Breakdown of hours by training type (2) Health, safety and environment Technical Languages IT Solutions Management and Leadership Others 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 119

  • Page 122
    ... all VDC in 2013; 33% in 2012; 23% in 2011. ** Part of the VDC services on total workforce: 11.5% in 2013; 11.8% in 2012; 10.4% in 2011. UA = Unavailable/UP = Unpublished. VDC, variable direct costs are Schneider Electric employees whose costs impact directly on the completion of business. They are...

  • Page 123
    ... actions 2013 TOTAL FINANCIAL CONTRIBUTION (IN EURO) From employees Of the Schneider Electric entity From partners Financial contribution per region (in %) Africa & Middle East America Asia Europe DONATIONS IN PRODUCTS OR SERVICES FOR A PARTNER/PROJECT OF THE FOUNDATION (in euro) Number of employees...

  • Page 124
    ... Total budget for 2013 for the Foundation's actions Foundation budget, financial contributions and donations in kind (in euro) 10,486,723 Key performance indicators from the Planet & Society Barometer Objectives for year end 2014 1. 1 million households at the Base of the Pyramid have access...

  • Page 125
    SUSTAINABLE DEVELOPMENT INDICATORS 2 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 123

  • Page 126
    2 SUSTAINABLE DEVELOPMENT INDICATORS 124 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 127
    ... of Group Senior Management Regulated agreements and obligations Internal control and risk management** Application of the AFEP/MEDEF corporate governance guidelines** 127 136 138 3. 4. 140 144 5. 6. 145 7. 146 158 160 8. 9. 10. 169 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 125

  • Page 128
    ...the conditions applicable for the preparation and organization of the work carried out by the board of directors, and the internal control and risk management procedures implemented by the company. The sections governance structure, 1, 2, 3, 4, 7 (Group senior management compensation policy, Pension...

  • Page 129
    ... the board may co-opt a new member. This appointment is then subject to ratification by the next Annual Shareholders' Meeting. Throughout their term, pursuant to the internal regulations, each Director must hold at least 1,000 Schneider Electric SA shares. Directors are appointed for four-year terms...

  • Page 130
    ... of the board of directors and Chief executive officer Jean-Pascal Tricoire Vice-chairman Lead Director Henri Lachmann Age: 50 Business address: Schneider Electric 35, rue Joseph-Monier 92500 Rueil-Malmaison, France 179, 155 (1) Schneider Electric SA shares First appointed: 2013/Term ends: 2017...

  • Page 131
    ... shares First appointed: 2011/Term ends: 2015 Directorships and other functions l Currently: Directorships and other functions l Currently: Director of Schneider Electric SA. - Other directorships at a listed company: Member of the supervisory board of Steria; Director of the company NICE-Systems...

  • Page 132
    3 CORPORATE GOVERNANCE THE BOARD OF DIRECTORS** Xavier Fontanet* Noël Forgeard* Age: 65 Business address: 3, rue Charles-Lamoureux 75016 Paris, France 1,000 Schneider Electric SA shares First appointed: 2011/Term ends: 2016 Age: 67 Business address: Arjil, 84 Avenue d'Iéna 75116 Paris, France...

  • Page 133
    CORPORATE GOVERNANCE THE BOARD OF DIRECTORS** Antoine Gosset-Grainville* Magali Herbaut Age: 47 Business address: BDGS Associés 44, Avenue des Champs Élysées 75008 PARIS, France 1,000 Schneider Electric SA shares First appointed: 2012/Term ends: 2016 Age: 42 Business address: Schneider ...

  • Page 134
    3 CORPORATE GOVERNANCE THE BOARD OF DIRECTORS** Jeong H. Kim* Willy R. Kissling* Age: 53 Business address: Jurie Holdings LLC 7735 Old Georgetown Road, Suite 1200 Bethesda, MD 20814, USA 1,000 Schneider Electric SA shares First appointed: 2011/Term ends: 2015 Age: 69 Business address: ...

  • Page 135
    ... Director of Schneider Electric SA. - Other directorships at a listed company: Director of Air Liquide. - Other directorships or functions: Director of Standard & Poor's Credit Market Services France SAS; Director of Monfinancier; Chairman of the Managing Committee of the Charte du Don en Confiance...

  • Page 136
    ... BOARD OF DIRECTORS** G. Richard Thoman* Serge Weinberg* Age: 69 Business address: Corporate Perspectives, LLC 485 Park Avenue New York NY 10022, USA 1,000 Schneider Electric SA shares First appointed: 2007/Term ends: 2014 Directorships and other functions l Currently: Age: 62 Business address...

  • Page 137
    ...AXA. Age: 78 Business address: GIE AXA 25, avenue Matignon 75008 Paris, France 528 Schneider Electric SA shares First appointed: 2004/Term ends: 2014 Directorships and other functions l Currently: Non-voting member of Schneider Electric SA. - Other functions at a listed company: Non-voting member...

  • Page 138
    ...of directors as provided for in article L. 225-37 of the French Commercial Code; l decide on the use of authorizations granted at Annual Shareholders' Meetings, more particularly for increasing Company capital, buying back the company's own shares, carrying out employee shareholding operations and...

  • Page 139
    ... committee. For new Directors, training and information sessions are organized on the strategy and businesses of the Group. Schneider Electric has adopted an Ethics Code for members of the board of directors and employees of the Group designed to prevent insider trading. Under the terms of these...

  • Page 140
    ...shares granted to the senior corporate officers; l validated the ca lculation of the level of achievement of performance criteria No. 10 and 11. applicable to stock grant plans Strategy The board of directors conducted an in-depth review of the Group's strategy at a one-and-a-half-day meeting...

  • Page 141
    ... by the Senior Management. At each meeting, the board also tracked business performance. It also examined the company's financial position. The board was informed of the Group's 2013 objectives. On February 20, 2013, the supervisory board reviewed the 2012 financial statements based on the audit...

  • Page 142
    ... of the Group's internal control system and acknowledges the outcome of entities' self-assessment Responsibilities A cornerstone of the Group's Internal Control system, the Audit and Risk Committee is responsible for preparing the work of the 140 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 143
    ... of goodwills, the Group fiscal position, provisions and pension obligations or similar obligations, - review of investor relations documents concerning the annual and interim financial statements; 3 Remuneration, Human Resources and CSR Committee Composition in 2013 The internal regulations and...

  • Page 144
    ... plans for key Group executives. The committee shall prepare the board of directors' deliberations on (i) employee shareholder development, (ii) reviews made by the board on social and financial impacts of major re-organization projects and major human resource policies, (iii) monitoring management...

  • Page 145
    ... attendance rate was 100%. The committee, which has set its work program nased on requests from all of the directors, has primarily focused its work on: l the review of the Invensys acquisition project; l the in-depth review of the distribution; 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 143

  • Page 146
    ... Age: 46 Business address: Schneider Electric 35, rue Joseph-Monier 92500 Rueil-Malmaison, France 31,208 (1) Schneider Electric SA shares First appointed: 2009/Term ends: 2015 The Chairman and CEO The board of directors was appointed by the Annual Shareholders' Meeting of April 25, 2013, which...

  • Page 147
    ... no restrictions on the disposal of their Company shares aside from those stipulated in stock option and performance share plans (see page 284 and following) for senior corporate officers and a minimum 1,000 shareholding requirement for Directors. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 145

  • Page 148
    ... charge of a business are determined as follows: l 70% based on the Group's economic performance (operating margin, organic growth, cash generation ratio) as well as on the completion of the Connect Company program (customer satisfaction rate, solutions development, employee development) and social...

  • Page 149
    ...,000 (calculated, where appropriate, on a pro rata basis for the term that begins or ends during the year); l a share of: - EUR6,000 for attending board meetings, - EUR4,000 for attending the meetings of the Committees of which they are members; 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 147

  • Page 150
    ... Jean-Pascal Tricoire waived payment of his attendance fees, attendance fees paid in 2012 and 2013 were as follows: Corporate officers who are not directors Mr LACHMANN Attendance fees Other compensation: Chairman of the supervisory board Vice-chairman Lead Director Pension Mr APOTHEKER Attendance...

  • Page 151
    .... (3) The supervisory board of December 18, 2012 decided to double the amount Mr. Xavier Fontanet's attendance fees of to take into account the time that he dedicated to deepening his knowledge of the Group and its strategy, and the travel that he undertook to that end (China, United States, Spain...

  • Page 152
    ... in line with the Connect Company program and social and environmental responsibility, evaluated among other things through customer satisfaction, solutions development and trends in the Planet & Society Barometer. 2. Individual objectives for 30%: individual performance is rated based on specific...

  • Page 153
    ... in line with the Connect Company program and on social and environmental responsibility, evaluated among other things through customer satisfaction, solution development and trends in the Planet & Society Barometer targets. 2) Individual objectives for 30%: individual performance is rated based on...

  • Page 154
    ...line with the company program Connect and social and environmental responsibility, evaluated in particular through the Planet & Society Barometer. 2) Individual objectives for 30%: these objectives remain confidential as they might bring strategic information to the competition. Long-term incentive...

  • Page 155
    ... 1,162,012 500,000 516,150 5,012 1,021,162 Mr.Babeau travel and business expenses are covered by the Group. Mr.Babeau may use the cars made available to Group Senior Management with chauffeur services. In addition, he has the use of a Company car. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 153

  • Page 156
    ... Date of availability 03/28/2017 03/28/2017 03/28/2017 Plans 15 and 16 100% of the shares - 2013 and 2014 adjusted EBITA margin excluding restructuring costs and change in the Planet & Society Barometer at the end of 2014 Performance conditions Benefits granted to executive directors Payments...

  • Page 157
    ... director Number of shares made available during Plan date the financial year and for Group employees Malakoff-Médéric (see page 146). in Name Jean-Pascal TRICOIRE Emmanuel BABEAU Plan no. - Date of availability France, Acquisition conditions managed by 3 Commitments made to the benefit...

  • Page 158
    ... - Information Systems - Strategy - Marketing - Global Human Resources; l the Executive Vice-presidents of Operations: Global Operations - North America Operations - China Operations; l the Executive Vice-presidents of Business Sectors: Partner - End-User Business Group - Industry - IT - Customer...

  • Page 159
    ...,757 Long-term incentive plans Performance shares were granted in 2013. It should be noted that Schneider Electric's practice since 2005 was to implement, in are conditional. Transactions in Schneider Electric SA shares by corporate officers during the 2013 financial year Transactions disclosed...

  • Page 160
    ... board in 2012 subject to a number of adjustments primarily related to the new governance and the new recommendations of the AFEP/MEDEF code. Under the terms of his renewed or amended status, Mr Tricoire: 1°) is covered under the Schneider Electric SA and Schneider Electric Industries SAS employee...

  • Page 161
    ... at the General Meeting of April 25, 2013. Under this status, Jean-Pascal Tricoire, Chairman and CEO: l benefits from the top-hat pension benefits for Group Senior following a material change in Schneider Electric's shareholder structure or a re-orientation of the strategy pursued and promoted by...

  • Page 162
    ...9.2 Organization and management: Internal Control key participants In 2013, the Group's organizational chart rests on Senior Management for Global Functions and Operating Divisions; defined in terms of businesses, geographical location, logistical or industrial responsibility. The Group's corporate...

  • Page 163
    ... Department, which reports to the Internal Audit Department, is responsible particularly for: l defining and updating the list of Key Internal Controls in close l the integrity of the consolidation system database; l the quality of accounting and financial processes and data; l training for finance...

  • Page 164
    ...site. Lastly, the internal control teams offer suggestions for enhancing and updating the Key Internal Controls. Global Functions (Human Resources, Purchasing, Manufacturing, Supply Chain, Information Systems, etc.) Schneider Electric centralizes decision-making and risk management at the corporate...

  • Page 165
    ... on purchases and sales of Schneider Electric SA shares by persons who have access to price-sensitive information in the course of their work (see "Organizational and operating procedures of the board of directors", Chapter 3 Section 2). As a result, product or service purchase and sale contracts...

  • Page 166
    ... 2011). It brings its methodology to develop emergency plans (evacuation plans, crisis management plans, business continuity plans, etc.) and coordinates the corporate crisis team (SEECC - Schneider Electric Emergency Coordination Center) each time that it is activated. The Security Department...

  • Page 167
    ... Accounting Unit to control the quality of accounting data provided by consolidated units (see "Internal Control organization and Management - Senior Management" and "Internal control procedures governing the production and processing of accounting and financial information"). In 2013, the Operating...

  • Page 168
    3 CORPORATE GOVERNANCE INTERNAL CONTROL AND RISK MANAGEMENT Internal Control Department Internal Control continued to deploy the Key Internal Controls - training and requests for self-assessments - throughout the Operating Divisions, with the scope extended to cover new units: more than 50% of the...

  • Page 169
    ... 90% of the Group's consolidated sales (training managers in internal control practices, defining and implementing remedial action plans if needed). 9.6 Internal control procedures governing the production and processing of consolidated and individual company accounting and financial information In...

  • Page 170
    ... users. This report should be read in conjunction with and construed in accordance with, French law and professional standards applicable in France. Information on the internal control and risk management procedures relating to the preparation and processing of accounting and financial information...

  • Page 171
    ... company is delayed by two years in this case. in the short term. Allocation of options or performance shares The valuation of options and performance shares allocated must not depart from previous business practices. Given the significant fluctuations in the market price of Schneider Electric stock...

  • Page 172
    3 CORPORATE GOVERNANCE APPLICATION OF THE AFEP/MEDEF CORPORATE GOVERNANCE GUIDELINES 170 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 173
    4 Business review 1. Trends in Schneider Electric's core markets Review of the consolidated financial statements Review of the parent company financial statements Review of subsidiaries Outlook 172 2. 174 3. 179 179 179 4. 5. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 171

  • Page 174
    ...new economies as a whole, residential market continued to grow in 2013, notably in South America and Africa. India, Russia and some East Asian countries were impacted by the financial turmoil in emerging markets, higher interest rates and fiscal tightening. 172 2013 REGISTRATION DOCUMENT SCHNEIDER...

  • Page 175
    ..., with application focus on energy management and infrastructure optimization. The Invensys acquisition further reinforces Software and Process Automation capabilities, in particular in downstream and petrochemicals. Data centers and Networks In 2013, the Global IT markets (Information Technologies...

  • Page 176
    ... to financial year 2012. Changes in revenue by operating segment The Partner business generated revenues of EUR8,476 million, or 36% of the consolidated total. This represents a decrease of -3.0% on a reported basis and +0.2% on a like-for-like basis. The Product business was slightly up, supported...

  • Page 177
    ... of revenues for the year ended December 31, 2013 (2.1% for the year ended December 31, 2012). Total research and development expenses, including capitalized development costs and development costs reported as cost of sales (see note 4 to the Audited Consolidated Financial Statements) increased by...

  • Page 178
    4 BUSINESS REVIEW REVIEW OF THE CONSOLIDATED FINANCIAL STATEMENTS Restructuring costs For the year ended December 31, 2013, restructuring costs amounted to EUR176 million compared to EUR164 million for the year ended December 31, 2012. These costs related to industrial and support functions ...

  • Page 179
    ...the year ended December 31, 2012, thanks to positive pricing and good control of commercial costs. IT business reported an adjusted EBITA margin of 18.9% for the year ended December 31, 2013, down 0.1% in line with 19.0% margin for the year ended December 31, 2012, at all time high level. Buildings...

  • Page 180
    ... Net capital expenditure, which included capitalized development projects, decreased by 0.6% to EUR714 million for the year ended December 31, 2013, compared to EUR719 million for the year ended December 31, 2012, and represented 3.0% of revenues. 178 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 181
    ... year-end, after taking into account 2013 loss, dividend payments of EUR1,024 million and share issues in an amount of EUR230 million. 4. Review of subsidiaries Schneider Electric Industries SAS Revenue totaled EUR3.5 billion in 2013 (EUR3.6 billion in 2012). The subsidiary posted an operating...

  • Page 182
    4 BUSINESS REVIEW OUTLOOK 180 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 183
    ... statement of cash flows Consolidated balance sheet Consolidated statement of changes in equity Notes to the consolidated financial statements Statutory auditors' report on the consolidated financial statements 182 184 186 188 5. 189 6. 250 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 184
    ... intangibles) EBITA corresponds to operating profit before amortization and impairment of purchase accounting intangible assets and before goodwill impairment. The accompanying notes are an integral part of the consolidated financial statements. 182 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 185
    ...-controlling interests * The 2012 figures were restated for the application of IAS 19 Revised disclosed in note 22 of the consolidated financial statements. The accompanying notes are an integral part of the consolidated financial statements. 5 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 183

  • Page 186
    ... activities Issuance of bonds Repayment of bonds Sale/(purchase) of own shares Increase/(reduction) in other financial debt Proceeds from issuance of shares Dividends paid: Schneider Electric SA Non-controlling interests Total III - Cash flows from/(used in) financing activities 24 24 2 12 13 13 12...

  • Page 187
    ...AT DECEMBER 31 20 5,388 * The 2012 figures were restated for the application of IAS 19 Revised disclosed in note 22 of the consolidated financial statements. The accompanying notes are an integral part of the consolidated financial statements. 5 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 185

  • Page 188
    ...368 28 5,528 15,040 36,988 * The 2012 figures were restated for the application of IAS 19 Revised disclosed in note 22 of the consolidated financial statements. The accompanying notes are an integral part of the consolidated financial statements. 186 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 189
    ... disclosed in note 22 of the consolidated financial statements. The Group also decided a reclassification from some trade payables to other current liabilities. The accompanying notes are an integral part of the consolidated financial statements. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 187

  • Page 190
    ... of IAS 19 Revised disclosed in note 22 of the consolidated financial statements. ** Reclassification from additional paid-in capital to retained earnings. The accompanying notes are an integral part of the consolidated financial statements. 188 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 191
    ... The Schneider Electric Group's consolidated financial statements for the financial year ended December 31, 2013 were drawn up by the board of directors on February 19, 2014. They will be submitted to shareholders for approval at the Annual General Meeting of May 6, 2014. The Group's main businesses...

  • Page 192
    ... in practice between the standards applied by Schneider Electric as of December 31, 2013 and the IFRS issued by the International Accounting Standards board (IASB), except for: l IAS 28 revised - Investments in associates and joint-ventures, l IFRS 10 - Consolidated Financial Statements, l IFRS...

  • Page 193
    ...by the Group. Companies acquired or sold during the year are included in or removed from the consolidated financial statements as of the date when effective control is acquired or relinquished. Intra-group balances and transactions are eliminated. The list of consolidated subsidiaries and associates...

  • Page 194
    ... project and to use or sell the resulting products; l the Group has allocated the necessary technical, financial and other resources to complete the development; l it is probable that the future economic benefits attributable to the project will flow to the Group. Development costs that do not meet...

  • Page 195
    ... capacity and the portion of research and development costs that are directly related to the manufacturing process (corresponding to the amortization of capitalized projects in production and product and range of products maintenance costs). 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 193

  • Page 196
    ... or reductions in future plan contributions. Changes resulting from periodic adjustments to actuarial assumptions regarding general financial and business conditions or demographics (i.e., changes in the discount rate, annual salary increases, return on plan assets, years of service, etc.) as well...

  • Page 197
    CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1.20 - Share-based payments The Group grants different types of share-based payments to senior executives and certain employees. These include: l Schneider Electric SA stock options; l stock grants...

  • Page 198
    ...include cash and cash equivalents, comprised of marketable securities, (note 1.20) net of bank overdrafts and facilities. 1.24 - Revenue recognition The Group's revenues primarily include merchandise sales and revenues from services and contracts. 196 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 199
    ...Comparative data in 2012 did not require a change in 2013 because the impacts related to changes in fair value recognized as part of the acquisition price were not significant across the Schneider Electric Group balance sheet and income statement. 2.2 - Acquisitions during the year The total amount...

  • Page 200
    .... Share-based payment is presented under "Corporate costs". The board of directors does not review assets and liabilities by Business. The same accounting principles governing the consolidated financial statements apply to segment data. Details are provided in Chapter 4 of the Registration Document...

  • Page 201
    ... amounts to 39% of total revenue in 2012. 3.2 - Information by region The geographic regions covered by the Group are: l Western Europe; l North America: United States, Canada and Mexico; l Asia-Pacific; l Rest of the World (Eastern Europe, Middle East, Africa, South America). Non-current assets...

  • Page 202
    ... and separation related to major acquisitions in 2012 and 2013. The line "Pension plan curtailments" includes mainly provision releases in the United States, in France and in Norway. (11) 39 (41) (52) 173 (35) 73 Full year 2012 (16) 8 (10) (52) 21 39 (10) The line "Others" includes in particular...

  • Page 203
    ... EUR61 million over the year. The Buildings business segment faced challenging trading environment in 2012 following the construction downturn in its key mature markets, affecting its financial performance. When conducting the annual impairment tests at December 31, 2012, the Group had to book...

  • Page 204
    ... French subsidiaries it controls directly or indirectly through Schneider Electric Industries SAS. 10.1 - Analysis of income tax expense Full year 2013 Current taxes France International Total Deferred taxes France International Total INCOME TAX (EXPENSE)/BENEFIT * Full year 2012* (19) (657) (676...

  • Page 205
    ...2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 11 Goodwill 11.1 - Main items of goodwill Group goodwill is broken down by business as follows: Dec. 31, 2013, net Partner Industry Buildings IT Infrastructure TOTAL Square D goodwill was allocated to each business in proportion to operating...

  • Page 206
    ... 31, 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 12 Intangible assets 12.1 - Change in intangible assets Trademarks GROSS VALUE Dec. 31, 2011 Acquisitions Disposals Translation adjustments Reclassification Changes in scope of consolidation and other Dec. 31, 2012 Acquisitions Disposals...

  • Page 207
    CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Trademarks NET VALUE Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 2,529 2,433 2,246 Software Development projects (R&D) Other Total 211 167 168 809 945 1,053 1,155 974 779 4,704 4,519 4,246 ...

  • Page 208
    ... 21 (4,224) (408) 182 129 9 (32) (4,344) Land NET VALUE Dec. 31, 2012 Dec. 31, 2013 Reclassifications primarily correspond to assets put into use. 185 179 Machinery Buildings and equipment Other Total 948 908 1,047 1,027 442 460 2,622 2,574 206 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 209
    ... 31 2 (41) 23 Dec. 31, 2012 1 45 31 2 (68) 11 Minimum payments Less than one year Between one and five years Five years and more TOTAL COMMITMENTS Discounting effect Discounted minimum payments 4 6 10 5 15 Discounted minimum payments 5 10 15 5 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 207

  • Page 210
    ...& Systems Other TOTAL 20.0% 40.0% 36.8% N/A 20.0% 50.0% 50.0% 36.8% N/A 15 78 74 5 172 16 303 100 86 6 511 1 4 5 12 22 1 17 5 12 (1) 34 (1) Electroshield - TM Samara is fully consolidated by Schneider Electric Group since the acquisition of the additional 50% shares on March 28, 2013. The impact on...

  • Page 211
    ... FCPR SEV1 SCL Elements Inc. (1) SE Buildings Energy Efficiency FCPR Aster II (part A and B) (2) Inversion FCPR SESS Others (3) Total unlisted AFS TOTAL AVAILABLE-FOR-SALE FINANCIAL ASSETS (1) Companies purchased in 2012. (2) Included in line FCPR SEV1 in 2012. (3) Gross unit value of less than EUR5...

  • Page 212
    ... work in process INVENTORIES AND WORK IN PROCESS, NET 1,150 273 1,154 368 89 3,034 (204) (8) (152) (10) (5) (379) 1,354 281 1,306 378 94 3,413 Dec. 31, 2012 1,478 323 1,512 67 106 3,486 (200) (8) (169) (13) (7) (396) 1,279 315 1,342 54 100 3,090 210 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 213
    ... year 2012 (259) (53) 22 2 3 (21) (306) 5 Note 19 Other receivables and prepaid expenses Dec. 31, 2013 Other receivables Other tax credits Derivative instruments Prepaid expenses TOTAL 298 686 190 194 1,368 Dec. 31, 2012 308 641 170 172 1,291 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 211

  • Page 214
    ..., all fully paid up. At December 31, 2013, a total of 609,815,400 voting rights were attached to the 561,958,023 shares outstanding. Schneider Electric's capital management strategy is designed to: l ensure Group liquidity; l optimize its financial structure; l optimize the weighted average cost of...

  • Page 215
    CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 21.2 - Ownership structure Dec. 31, 2013 Capital % Capital Group Companies (1) CDC Employees Own shares (2) Treasury shares Public TOTAL 5.4 3.4 4.2 0.0 1.4 85.6 100.0 Dec. 31, 2012 Number of ...

  • Page 216
    ...TO THE CONSOLIDATED FINANCIAL STATEMENTS 21.5 - Share-based payments 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 of the Group. The...

  • Page 217
    ..., 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Stock grants Plan no. 1 2 3 4 5 6 7 8 9 10 11 10 bis 11 bis 12 13 14 13 ter 14 ter 15 16 15 bis 16 bis TOTAL Rules governing the stock grant plans are as follows: l to receive the stock, the grantee must be an employee or Date of board meeting...

  • Page 218
    ... officer of the Group. In addition, exercise of some options is generally conditional on the achievement of annual objectives based on financial indicators. In respect of subscription vesting conditions for current stock option plans, Schneider Electric SA has created 3,788,938 shares in 2013...

  • Page 219
    ...a maximum maturity of five years granted to an individual with an average credit rating. Under the leveraged plan, employees may also purchase Schneider Electric shares at a 15% to 20% discount from the price quoted on the stock market. However, the leveraged plan offers a different yield profile as...

  • Page 220
    5 CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As regards the first semester 2013, Schneider Electric offers to its employees the opportunity to purchase shares at a price of EUR50.89 or EUR47.90 per share, depending on the country, as part ...

  • Page 221
    ...31, 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Full year 2013 Leveraged plans 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...

  • Page 222
    ... STATEMENTS AT DECEMBER 31, 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 21.6 - Schneider Electric SA shares At December 31, 2013, the Group held 7,941,129 Schneider Electric shares in treasury stock, which have been recorded as a deduction from retained earnings. 21.7 - Tax on equity Total...

  • Page 223
    ... statement in the year of payment and are in full settlement of the Group's liability. Defined contribution plan payments total EUR62 million in 2013, compared with EUR70 million in 2012. Other post-employment and long-term benefits: including healthcare, life insurance and long service awards...

  • Page 224
    ...-employment benefit obligations at January 1, 2012 linked to the recognition of the past services cost unrecognized under IAS 19 (impact of EUR17 million at January 1, 2013, due to the amortizations of the unrecognized past service costs in 2012). 222 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 225
    ... income NET COST RECOGNIZED IN THE STATEMENT OF INCOME 52 (132) (6) 103 (50) (33) 3 49 (27) 25 Full year 2012 IAS 19R Of which SE USA Full year 2012 Published Of which SE USA 48 1 116 (52) 113 3 55 (29) 29 48 1 116 (91) 74 3 55 (60) (2) 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 223

  • Page 226
    ... 31, 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Full year 2013 Of which SE USA 3. Change in projected benefit obligation Projected benefit obligation at beginning of year Service cost Past service cost/Curtailments and Settlements Interest cost (effect of discounting) Plan participants...

  • Page 227
    ... benefits for active employees, notably long service awards in France. The healthcare plan amendment to limit the Group's obligations to current and future retirees in the US decreased the benefit obligation of EUR34 million for the full year 2013. 5 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 228
    ... of experience on healthcare costs, life insurance and other post-employment benefits total EUR32 million for the Group compared to EUR11 million at December 31, 2012. Dec. 31, 2013 3. Funded status Projected benefit obligation Deferred items: Unrecognized past service cost PROVISION RECOGNIZED IN...

  • Page 229
    .... Provisions for customer risks also integrate the provisions for losses at completion for some of long term contracts, for EUR42 million. identified products. (d) Environmental risks These provisions are primarily funded to cover cleanup costs. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 227

  • Page 230
    ...-term portion of convertible and non-convertible bonds Short-term portion of long-term debt Short-term debt TOTAL CURRENT AND NON-CURRENT FINANCIAL LIABILITIES 1,205 147 365 140 717 363 2,937 8,859 Dec. 31, 2012 147 368 120 587 504 1,726 8,132 228 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 231
    CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 24.1 - Breakdown by maturity Dec. 31, 2013 Nominal 2012 2013 2014 2015 2016 2017 2018 2019 and beyond TOTAL 2,937 1,071 758 1,158 773 2,162 8,859 215 167 154 125 83 133 877 5 2 7 Dec. 31, 2012 ...

  • Page 232
    ...THE CONSOLIDATED FINANCIAL STATEMENTS Schneider Electric SA has issued bonds on different markets: l in the United States, through a private placement offering following SEC 144A rule, for USD800 million worth of bonds issued in September 2012, at a rate of 2.950%, due in September 2022; l as part...

  • Page 233
    ... FINANCIAL STATEMENTS Note 26 Financial instruments The Group uses financial instruments to manage its exposure to fluctuations in interest rates, exchange rates and metal prices. 26.1 - Balance sheet exposure Dec. 31, 2013 Breakdown by category Available- Loans and Fair value for-sale account...

  • Page 234
    ... ASSETS Trade accounts receivable Other receivables Current financial assets Marketable securities Derivative instrument - foreign currencies Derivative instrument - interest rates Derivative instrument - commodities Derivative instrument - shares TOTAL CURRENT ASSETS LIABILITIES Long-term portion...

  • Page 235
    ... rate available for the level 1) are directly or indirectly accessible; 3. incoming information non accessible regarding the asset or liability Dec. 31, 2013 Carrying Amount ASSETS Available-for-sale financial assets Marketable securities Derivative instruments LIABILITIES Bonds Other long-term...

  • Page 236
    ... primarily hedged by means of forward purchases and sales. Depending on market conditions, risks in the main currencies may be hedged based on cash flow forecasting using contracts that expire in 12 months or less. Schneider Electric's currency hedging policy is to protect its subsidiaries against...

  • Page 237
    ...) 166 122 118 (117) (109) (87) 60 38 (20) (17) (16) (15) 44 (1,267) The forward contracts in GBP were mainly subscribed to hedge the purchase of Invensys shares. 5 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 235

  • Page 238
    ... on our financial results. The Group has, however, implemented certain procedures to limit exposure to rising non-ferrous and precious raw material prices. The purchasing departments of the operating units report their purchasing forecasts to the Corporate Finance and Treasury Department. Purchase...

  • Page 239
    ...361 Production Administration TOTAL AVERAGE NUMBER OF EMPLOYEES By region: EMEAS* North America Asia-Pacific * Europe, Middle-East, Africa, South America. 5 The increase in the average number of employees is primarily linked to the 2013 acquisitions. 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 240
    5 CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2013 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 27.2 - Employee benefits expense Full year 2013 Payroll costs Profit-sharing and incentive bonuses Stock options WESOP EMPLOYEE BENEFITS EXPENSE (5,976) (64) (66) (6,106) Full year 2012 (5,924)...

  • Page 241
    ...position in industrial and infrastructure end-markets. Invensys reported revenue for continuing operations of £1.8 billion in its Fiscal Year 2013 and has approximately 16,000 employees across the globe. The transaction is remunerated through the issuance of 17,207,427 new Schneider Electric shares...

  • Page 242
    ... o/w Schneider Electric SA o/w subsidiaries Related services o/w Schneider Electric SA o/w subsidiaries Audit sub-total Other services Legal, tax TOTAL FEES 11% 342 342 4% 1,559 188 1,371 98% 2% 100% 7,736 7,736 100% 100% 18,928 233 19,161 240 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 243
    ..., 2013 Europe Fully consolidated Schneider Electric Energy Austria AG Schneider Electric Austria GmbH Schneider Electric Power Drives GmbH Schneider Electric Energy Belgium SA Schneider Electric NV/SA Schneider Electric Services International SPRL Summit Energy International BVBA Schneider Electric...

  • Page 244
    ...2013 Scanelec SAS Schneider Automation SAS Schneider Electric Energy France SAS Schneider Electric France SAS Schneider Electric Holding Amérique du Nord SAS Schneider Electric Holding Europe SAS Schneider Electric Industries SAS Schneider Electric International SAS Schneider Electric Manufacturing...

  • Page 245
    ... CONSOLIDATED FINANCIAL STATEMENTS % Interest Dec. 31, 2013 Schneider Electric Latvija SIA UAB Schneider Electric Lietuva Industrielle de Réassurance SA American Power Conversion Corp. (A.P.C.) B.V. APC Holdings B.V. APC International Corporation B.V. APC International Holdings B.V. Pelco Europe...

  • Page 246
    ... Systems Ltd Schneider Electric (UK) Ltd Schneider Electric Buildings UK Ltd Schneider Electric Energy UK Ltd Schneider Electric IT UK Ltd Schneider Electric Ltd Serck Control and Safety Ltd M&C Energy Group Ltd Samos Acquisition Company Ltd Accounted for by proportionate method Schneider Electric...

  • Page 247
    ... Electric Motion USA, Inc. Schneider Electric USA, Inc. Schneider Electric Vermont Ltd SNA Holdings Inc. Square D Investment Company Summit Energy Services, Inc. Telvent DTN, LLC Telvent USA Corp. Veris Industries LLC Asia-Pacific Fully consolidated Schneider Electric IT Australia Pty Limited...

  • Page 248
    ... NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS % Interest Dec. 31, 2013 Schneider Electric Australia Holdings Pty Limited Schneider Electric Buildings Australia Pty Limited Serck Controls Pty.Ltd Telvent Australia Pty.Limited SolveIT Software Pty.Limited APC (Xiamen) Power Infrastructure Co., Ltd...

  • Page 249
    ... NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS % Interest Dec. 31, 2013 Cimac Software Systems Private Ltd CST Sensors India Private Limited Luminous Power Technologies Private Ltd Luminous Renewable Energy Solutions Private Ltd Luminous Teleinfra Ltd Schneider Electric India Private Ltd Uniflair...

  • Page 250
    ...TO THE CONSOLIDATED FINANCIAL STATEMENTS % Interest Dec. 31, 2013 Accounted for by equity method Sunten Electric Equipment Fuji Electric FA Components & Systems Co., Ltd (sub-group) Rest of the world Fully consolidated Himel Algerie Schneider Electric Algerie Schneider Electric Argentina SA Telvent...

  • Page 251
    ...CONSOLIDATED FINANCIAL STATEMENTS % Interest Dec. 31, 2013 Cimac Electrical and Control Systems LLC Cimac FZCO Cimac LLC Clipsal Middle East FZC Clipsal Middle East FZCO CLS Systems FZCO Delixi Electric FZE Schneider Electric DC MEA FZCO Schneider Electric FZE Schneider Electric Venezuela SA United...

  • Page 252
    ...our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2013 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as...

  • Page 253
    ... applicable in France the information presented in the Group's management report. We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements. Courbevoie and Paris-La Défense, February 19, 2014 The statutory auditors French original...

  • Page 254
    5 CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2013 6. STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 252 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 255
    ... the financial statements Statutory auditors' report on the financial statements List of securities held at December 31, 2013 Subsidiaries and affiliates The company's financial results over the last five years 254 256 257 268 5. 269 270 6. 7. 272 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 256
    ...,014 1.2 2,934 48 1,468 31,924 (48) (242) (27,764) 2,934 1,226 4,160 2,944 1,226 4,170 27,474 (27,474) - The notes form an integral part of these Company financial statements. 254 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 257
    ... AND LIABILITIES The notes form an integral part of these Company financial statements. 7.3 973,551 (132,771) 2 10,302,505 8 45 45 9 10 11 6,260,659 317,014 13 1,205,375 7,783,061 441 54,571 18,225 73,237 7,856,298 12 829 112,846 18,272,523 6 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 255

  • Page 258
    ... expenses Net non-recurring income/(expense) Net income tax benefit NET INCOME The notes form an integral part of these Company financial statements. 14 (151,571) 3,089 64,058 67,147 6,486 72,420 371 79,276 15 16 (12,130) 44,143 (132,771) 256 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 259
    ... events of the financial year During the financial year, Schneider Electric SA carried out EUR235 million in share capital increases, as follows: l the employee share issue carried out on July 11, 2013 as part of the worldwide EUR134 million; Employee Stock Purchase Plan, for l the exercise...

  • Page 260
    ... at December 31, 2013 were as follows: Shares in subsidiaries and affiliates Schneider Electric Industries SAS Cofimines Schneider Electric Japan Holding Other (less than EUR5 million) TOTAL Carrying value 4,344,481 139,064 3,149 1,038 4,487,732 258 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 261
    ... exercise of certain stock options. Schneider Electric SA has not reclassified own shares allocated to this line item as of December 31, 2004. However, since then, all purchases made for allocation to stock option plans have been classified as marketable securities. 2.3 - Advances to subsidiaries...

  • Page 262
    ... shareholders and blocked during two years. Since 2012, plans 26, 27, 28, 29 and 30 has been determined as stock-options plans. The reallocation of Schneider Electric SA shares, initially allocated to these plans has not been decided yet by the board of directors. Note 5 Advances to the Group...

  • Page 263
    ...792 (25) (338) 642 (375) (136) (692) (161) (141) (54) (7,990) Dec. 31, 2013 1,647 23 72 3,315 7,746 16,106 (839) 909 (1,698) 3,196 33 3,135 2,667 1,477 1,452 39,239 6 The increases in this line item were due to the 2013 bond issues (see note 9). 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 261

  • Page 264
    ... in 2012 distributable earnings was allocated to the legal reserve. EUR1,024 million was paid out in dividends. Own shares The total number of own shares held at the reporting date stood at 7,941,129, representing a net amount of EUR230 million. 262 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 265
    ... have a material impact on its financial position or income. 8.2 - Pension accruals The company has various obligations towards its current and retired senior executives and managers. During 2012, the company closed the previous plan to new comers and implemented a new plan with progressing vesting...

  • Page 266
    ...-rate bonds issued in July 2008 and maturing on July 25, 2016, - EUR180 million worth of bonds issued in April 2008 to top up the EUR600 million 12 year tranche at 4% issued in August 2005, thereby raising the total tranche to EUR780 million, 264 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 267
    ...EUR147 million at end of 2012. The company repaid a EUR213 million on its "Schuldschein" credit line out of which EUR201 million at its maturity date on May 21, 2013 and EUR12 million at its maturity date on June 11, 2013, comprising two tranches: a EUR195 million five-year floating-rate tranche and...

  • Page 268
    ... of plan 26. (3,397) (8,362) (371) (12,130) Dec. 31, 2012 (7,247) (69,107) 6,244 (70,109) The company also booked a EUR63 million reversal of depreciation of Cofibel investment and a EUR72 million increase in depreciation of Cofimines investment. 266 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 269
    ... Electric SA acquired about 26% of Invensys plc through the issuance of 17,207,427 new Schneider Electric shares. The remaining 74% of Invensys was purchased by a subsidiary of Schneider Electric SA. 18.2 - Consolidated financial statements Schneider Electric SA is the parent company of the Group...

  • Page 270
    ... 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, 2013 on: l the audit of the accompanying financial statements of Schneider as the detail of capitalized...

  • Page 271
    ... companies Total Marketable securities 5,946,975 TOTAL Schneider Electric SA own shares (stock option plans 26, 27, 28, 29 and 30) 181,011 181,011 1,092 142,213 4,536,564 Schneider Electric Industries SAS Schneider Electric SA own shares 4,344,481 48,778 4,393,259 6 2013 REGISTRATION DOCUMENT...

  • Page 272
    ... Share interest held (%) I. Detailed information on subsidiaries and affiliates with a carrying amount of over 1% of the share capital of Schneider Electric SA A. Subsidiaries (at least 50% owned) Schneider Electric Industries SAS 35, rue Joseph-Monier 92500 Rueil-Malmaison, France Cofimines Place...

  • Page 273
    ... (-) Dividends received by the company during 2013 Comments 4,344,481 4,344,481 3,139,891 - 3,464,503 Holding company 948,033 - 219,884 139,064 - - 43 10,312 16,382 - 1,038 - - - - - - 130 21,249 53 3,149 - - - (2,824) - 6 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC...

  • Page 274
    ...) 459 1,963 1,170 3,936 2,004 (1) Dividends on shares held in treasury on the dividend payment date and the associated withholding are credited to retained earnings. (2) Pending approval by the Annual Shareholders' Meeting of May 6, 2014. 272 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 275
    ... Employee shareholding Performance shares and stock option plans Disclosure of information required in accordance with article L. 225-100-3 of the French Commercial Code** Stock market data Investor relations 274 275 277 281 282 6. 283 7. 289 289 291 8. 9. 2013 REGISTRATION DOCUMENT SCHNEIDER...

  • Page 276
    ..., sustainable development reports, notice of the General Meeting and other documents are also available on the company's website (http:// www.schneider-electric.com). secure power supply, l building control, automation and safety, l industrial control and automation, including software, 274 2013...

  • Page 277
    ... to call a General Meeting, the board of directors may authorize shareholders to fill out and sign these forms electronically through a secure site set up by the General Meeting organizer using a process that complies with article 1316-4, paragraph 2, line 1 of the French Civil Code, for example by...

  • Page 278
    ... a capital increase); l to discretionary reserves, if appropriate, and to retained The General 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 are...

  • Page 279
    ...to Schneider Electric of common shares in Invensys 1B. This contribution transaction resulted in the issuance of 17,207,427 shares with a nominal value of EUR4 each. Potential capital At December 31, 2013, the potential capital consisted of: l 3,308,230 shares under the stock option plans (plans 28...

  • Page 280
    ... authorizations for the issuance of new shares under programs to promote stock ownership among employees participating in the company saving plan (Plan D'epargne d'Entreprise) or employees of non-French companies of the Group in 5 and 6) and above. 278 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 281
    ... employee share issues (ESPP). (6) The board of directors of December 17, 2013 decided to grant performance shares at the end of March 2014 within the limit of 2.9 million shares (0.52% of the capital) as part of the long-term incentive plan for 2014. (7) On the date of the 2013 Annual Shareholder...

  • Page 282
    ... share buyback program submitted for approval at the general meeting of May 6, 2014 are as follows: l number of shares and percentage of share capital held directly - market making under a liquidity agreement; l maximum number of shares that may be acquired: and indirectly by Schneider Electric SA...

  • Page 283
    ... the AMF general regulations, which includes shares stripped of voting rights. Disclosure thresholds To the best of the company's knowledge, no shareholders other than Capital Group companies, listed above, hold, either directly or indirectly, more than 5 % of Schneider Electric's capital or voting...

  • Page 284
    ... Group's last employee share issue took place in July 2013. This resulted in a subscription of 2.7 million shares. At December 31, 2013, Group employees held a total of 23.5 million Schneider Electric SA shares through the corporate mutual funds (FCPE) or directly, representing 4.19% of the capital...

  • Page 285
    ... achievement of performance conditions. Grant policy As part of its overall staff pay policy, each year Schneider Electric sets up a long-term incentive plan. This plan is based on an annual allocation of performance shares. Stock options, until December 2009, and, for employees who are US citizens...

  • Page 286
    ... Jean-Pascal Tricoire and 15% for Emmanuel Babeau; l mandatory investment in Schneider Electric SA shares of 10% of the selling price (net of taxes and contributions) of performance shares grants acquired through plans set up since 2009. These obligations are suspended once the shareholding targets...

  • Page 287
    INFORMATION ON THE COMPANY AND ITS CAPITAL PERFORMANCE SHARES AND STOCK OPTION PLANS Past stock option plans The data below are adjusted for the two-for-one share split, effective September 2, 2011. Plan 25 Number of beneficiaries Plan date at inception 12/05/2005 157 Number of of which options ...

  • Page 288
    7 INFORMATION ON THE COMPANY AND ITS CAPITAL PERFORMANCE SHARES AND STOCK OPTION PLANS Details on outstanding options (2013) The data below are adjusted for the two-for-one share split, effective September 2, 2011. Plan 25 26 27 28 29 30 31 32 33 Plan date 12/05/2005 28/06/2005 01/12/2005 21/12/...

  • Page 289
    ... revenue growth compared to changes in world GDP over the same period As plan 10 As plan 10 As plan 10 with no performance conditions 50% of the shares/100% for the management board and Executive Committee - 2012 and 2013 (3) operating margin and change in the Planet & Society barometer at the end...

  • Page 290
    ... price/ Average weighted price Plans 263,980 EUR 35.99 26-27-28-29-30-31-33 Shares awarded to the ten most highly paid employees (non-executive directors) Number 2013 Performance Shares grant (allocation on March 28, 2013) 188,000 Plan 16 288 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 291
    ... the non-application of the ceiling on voting rights when a public tender offer is in process. 8. Stock market data In France, Schneider Electric is listed on Euronext Paris (sub-fund A), where it is traded on a per-share basis under ISIN code FR0000121972. Schneider Electric SA shares are included...

  • Page 292
    7 INFORMATION ON THE COMPANY AND ITS CAPITAL STOCK MARKET DATA Five-year trading summary 2013 Average daily trading volume on the Paris stock exchznges (NYSE Euronext): l Number of shares (in thousands) l in million of euros 2012 2011 2010 2009 1,439.54 84.70 66.99 52.49 63.40 2.95 1,886.81...

  • Page 293
    ...annual report and a short form; l a shareholder's guide; l a letter to shareholders; l general, economic and financial information about the Group (in the form of press releases and presentations); l a corporate website - http://www.schneider-electric.com/finance/fr. 7 2013 REGISTRATION DOCUMENT...

  • Page 294
    7 INFORMATION ON THE COMPANY AND ITS CAPITAL INVESTOR RELATIONS 292 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 295
    ... of the Vice-chairman - lead independent director Auditors' special reports Resolutions Appendix to the nineteenth resolution : Draft of the articles of association of Schneider Electric SE, European Company 294 2. 304 305 311 3. 4. 5. 318 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 293

  • Page 296
    ... and financial statements for the year 2013, as presented, which show a loss of EUR132.8 million. This loss results from the ambition of the company, which has more than EUR10 billion in equity, not to receive dividends from its wholly owned subsidiary Schneider Electric Industries SAS. Because...

  • Page 297
    ... REPORT OF THE BOARD OF DIRECTORS TO THE COMBINED ANNUAL AND EXTRAORDINARY SHAREHOLDERS' MEETING Dividend payments authorized by Schneider Electric SA for the last three years were as follows: 2010 Net dividend paid per share restated to reflect division of the par value by 2 (1) (2) 2011 2012...

  • Page 298
    ... of the board of directors, (ii) Mr Tricoire is dismissed, is not reappointed, resigns as a member or Chairman and CEO following 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...

  • Page 299
    ... in line with the Connect company program and social and environmental responsibility, evaluated amount other things through customer satisfaction, solutions development and trends in the Planet & Society barometer targets. 2) with respect to individual objectives, the board set the variable part at...

  • Page 300
    ... benefits top-hat pension plan (article 39) of the Group's senior management subject to the French social security system. See chap. 3-7 of 2013 reference document. Board decisions of 2009, 2012 and June 18 & 19, 2013 Dates of submission to the General Meeting: 2009, 2012 and May 6, 2014 Number...

  • Page 301
    ... are in line with the Connect company program and social and environmental responsibility, evaluated amoung other things through customer satisfaction, solutions development and trends in the Planet & Society barometer. 2) with respect to individual objectives, the board set the variable part at 54...

  • Page 302
    ..., 2013 Dates of submission to the General Meeting: May 06, 2014 Number of resolution in the context of the regulated agreements procedure:4 Mr Babeau is entitled to the defined-benefit top-hat pension plan (article 39) for the Group's senior management subject to the French social security system in...

  • Page 303
    ..., has increasingly become a major market for the company and a significant base for its technological innovation and human capital. Your board of directors therefore proposes to change the legal form of Schneider Electric from that of a French public limited-liability company (société anonyme, SA...

  • Page 304
    ... of a new legal person. It has no impact on the company's term, on its object, on its registered office, or on its corporate fiscal year. Similarly, the company's capital and the number of shares remain unchanged. The approval of the conversion of Schneider Electric SA into a european company is...

  • Page 305
    ... certain countries where the Employee Stock Purchase Plan rules do not easily comply with national legislation. As part of these authorizations, the management board of December 17, 2013, decided to renew the annual employee shareholder operation in 2014, within a limit of 4.3 million shares (almost...

  • Page 306
    ... of criteria published by the company. As a transitional measure, article 12.2 of the articles of association provides for the first Vice-chairman & Lead Director to be the former Chairman of the supervisory board for his remaining term of office. 304 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 307
    ... portion of Mr. TRICOIRE's compensation for the three financial years preceding the date of the board meeting at which the decision is made. Hence, if the Group's performance rate is: - less than 66.67 percent; no compensation shall be awarded; 8 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 305

  • Page 308
    ... of the board of directors of Schneider Electric SA; - dismissal, non-renewal or resignation as Deputy Chief executive officer in the event of a reorientation of the strategy pursued and promoted by him until that time, whether or not in connection with a change in shareholder structure as described...

  • Page 309
    ... your shareholders' meetings of April 23, 2009 and May 3, 2012. In addition, Mr. Emmanuel BABEAU is entitled to an agreement of the same nature by virtue of his employment contract with Schneider Electric Industries SAS. The board of directors, in its meetings of April 25, 2013, June 18/19 2013 and...

  • Page 310
    ... contract for defined benefit company pensions (article L. 137-11 of the Social security code) was signed on February 23, 2012 by Schneider Electric SA and Schneider Electric Industries SAS with AXA France Vie. Pension plan outsourcing contract with defined benefits for the Group's French senior...

  • Page 311
    ...The supervisory board, at its meetings held on April 23 and December 17, 2009, authorised Mr. Emmanuel BABEAU to benefit from the top-hat pension plan with defined contributions (article 83) as he is entitled under his service contract entered into with Schneider Electric Industries SAS (in addition...

  • Page 312
    ... hereby report on the proposal to issue ordinary shares or securities giving access to the share capital of the company, with cancellation of preferential subscription rights reserved for: (i) employees and corporate officers of the Schneider Electric Group related to the company under the terms of...

  • Page 313
    ... of the French Tax Code. Dividends paid by Schneider Electric SA in respect of the three most recent financial years are as follows: 2010 2011 2012 SECOND RESOLUTION (Approval of consolidated financial statements for the 2013 financial year) The Shareholders' Meeting, acting in accordance with...

  • Page 314
    ... for ordinary meetings, hereby resolves to re-elect Mr Willy Kissling for a term of 2 years, expiring at the close of the General Meeting to be held in 2016 to review the financial statements for the financial year ending December 31, 2015. 312 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 315
    ... in 2015 to review the financial statements for the financial year ending December 31, 2014. SIXTEENTH RESOLUTION (Authority granted to the board of directors to buy back Company shares - maximum purchase price per share EUR80) The General Meeting, acting in accordance with the quorum and majority...

  • Page 316
    ... duration of the ongoing financial year will not be modified owing to the adoption of the European Company statute and the financial statements for said financial year will be prepared, presented and audited under the conditions set forth in the 314 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 317
    ... 1, 2014; l hereby resolve to set a maximum discount to be offered in connection with the company Investment Plan at 20% of an average of the trading price of the company's shares on NYSE Euronext in Paris during the twenty trading sessions preceding the date of the action of the board of directors...

  • Page 318
    ...: (i) Employees and officers of companies of the Schneider Electric Group affiliated with the company on the terms and conditions set forth in article L. 225-180 of the French Commercial Code and article L. 3344-1 of the French Labor Code and the registered office of which is located outside France...

  • Page 319
    ... Ordinary meeting TWENTY-SECOND RESOLUTION (Powers for formalities) The General Meeting confers full powers upon the bearer of a copy or excerpts of the minutes stating these resolutions to accomplish all legal and administrative formalities. 8 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 317

  • Page 320
    ...equipment manufacturing, electrical distribution and secured power supply, - building control, automation and safety, - industrial control and automation, including software, - management of all types of data centers, networks, equipment and other infrastructure; (ii) the acquisition, purchase, sale...

  • Page 321
    ... virtue of agreements or financial instruments referred to in point b) of the third paragraph of article L. 233-7 of the French Commercial Code Article 10 All sums remaining due on shares payable in cash are called up by the board of directors. 8 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 319

  • Page 322
    ...the board of directors representing employee shareholders shall take up his/her seat on the board of directors on the date of his/her election by the General Meeting. Where applicable, he/she shall replace the incumbent member elected based on the conditions set by the board of directors, whose term...

  • Page 323
    ... directors. He organizes and directs the work of the latter, which he reports to the General Assembly. He ensures the smooth functioning of the bodies of the company, and in particular ensures that the Directors are able to fulfil their missions. 8 321 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 324
    ... April 25, 2013 without conditions as to time limits; - at least two-thirds of the Directors are present or represented at the meeting. Shareholders and third parties shall be notified of the board's decision in accordance with the applicable regulations. If the general management of the company is...

  • Page 325
    ..., the limit set may be exceeded taking into consideration only the resulting additional voting rights, without the total voting rights thereby held exceeding 15% of the total number of the voting rights conferred by the shares in the company. 8 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 323

  • Page 326
    ... company's accounting period lasts one year starting on 1 January and ending on 31 December. plus profits carried over, is available to General Shareholders Meetings of the shareholders. The board of directors may carry forward all or part of this sum, allocate it to general or special reserve funds...

  • Page 327
    ... this address. Where no address for service is given, summonses and services shall be considered valid if served at the Prosecutor's Office at the Tribunal de Grande Instance (High Court) in the place where the company has its registered office. 8 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 325

  • Page 328
    8 SHAREHOLDERS' MEETING STATUTS 326 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 329
    ... The report on the consolidated financial statements for the period ended 31 December 2013 contains an observation resulting from the application from January 1st, 2013 of IAS 19 revised "Employee Benefits". Executed on 20 March 2014 The Chairman and CEO of Schneider Electric SA Jean-Pascal Tricoire...

  • Page 330
    ... Courbevoie Represented by David Chaudat Alternate Auditors Auditex Thierry Blanchetier Ernst & Young et Autres and Mazars are members of the Auditor's Regional Company of Versailles. Appointment expires 1992 2016 2004 2010 2010 2016 2016 2016 328 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

  • Page 331
    ...' Annual Meeting (Paris) Dividend payment Financial releases February 20, 2014 April 24, 2014 July 30, 2014 October 29, 2014 2013 Annual Results Q1 2014 Sales Half Year Results Q3 2014 Sales Investors Relations: Anthony Song Tél. +33 (0)1 41 39 60 84 Fax +33 (0)1 41 29 71 42 Press Contact...

  • Page 332
    Schneider Electric SA Headquarters: 35, rue Joseph Monier - CS 30323 F-92506 Rueil-Malmaison Cedex (France) Tél. : +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 Board of Directors with issued capital of EUR 2,316,847,784 ...