MICHELIN - 2008 ANNUAL REPORT

COMPLEMENTARY REPORT OF THE MANAGING PARTNERS ON THE
CAPITAL INCREASE RESERVED TO COMPANY AND ITS SUBSIDIARIES
EMPLOYEES
Dear Shareholders,
You will recall that pursuant to its sixteenth resolution, the Joint
Shareholders Meeting of Compagnie Générale des Etablissements
Michelin (hereinafter ’Michelin’ or the ’Company’) of May 12,
2006, authorized the Managing Partners to decide one or several
capital increases by issuing new shares reserved to the Company's
and French or foreign subsidiaries’ employees with subscription
rights being canceled.
Pursuant to provisions of article L.225-16 of the French Commercial
Code, we inform you that by virtue of the above-mentioned
authorization, the Managing Partners of your Company have
decided to carry out a share capital increase reserved to the
employees of the Company and the Company’s French or foreign
subsidiaries that are 50% held or more and who have joined the
Group's Savings Scheme.
This issue is performed with subscription rights being canceled
and for the benefit of employees and former employees who
have joined Michelin Group’s Savings Plan.
The shares are subscribed directly in all countries other than
Colombia and Hungary where they are subscribed via the FCPE
Bib Invest Relais 2008 fund, authorized on March 28, 2008 by
AMF under code number 09873. This FCPE is destined to merge
with the FCPE Bib Invest fund following completion of the capital
increase.
The share subscriptions or FCPE share acquisitions give right to a
contribution by the employer as follows:
1 to 3 shares purchased: 75% of the amount of the reducedprice
share is paid by the employer,
4 to 6 shares purchased: 50% of the amount of the reducedprice
share is paid by the employer,
7 to 9 shares purchased: 25% of the amount of the reducedprice
share is paid by the employer.
In Germany and in Italy, other specific employer contribution rules
are applicable.
The maximum nominal amount of the capital increase was set at
EUR 2,400,000 by issuance of 1,200,000 shares each having a
nominal value of EUR 2.
On May 5, 2008, the Managing Partners set the subscription
price at EUR 51.00. This subscription price was equal to 80% of
the average of the opening prices of the Michelin share at the
Paris Euronext market for the twenty trading days preceding that
date.
The capital increase gave rise to an information document,
pursuant to articles 212-4 (5 th ) and 212-5 (6 th ) of AMF’s general
regulations and to article 14 of instruction N o 2005-11 dated
December 13, 2005. This was circulated in a press release pursuant
to article 221-3 of AMF’s general regulations.
Where total demand be in excess of the number of shares available
for subscription, the number of requested subscriptions will be
reduced based on the following method, subject to application
of the specific legal provisions pertaining to the employees of
companies operating in Japan:
subscription requests will be fully met up to nine shares, either
directly subscribed or via a FCPE,
beyond this level, they will be allocated unit by unit to the
subscribers having requested more than nine shares, either
directly or via an FCPE, within the limit of their request,
successively and based on an equal treatment principle,
employees will be informed on behalf of Compagnie Générale
des Etablissements Michelin, on the one hand, via an allocation
notice sent in early July 2008 by Société Générale, the account
holder bank, indicating the number of shares actually allocated
to them upon completion of the above described share allocation
process; and on the other hand, through a communication from
their employer entity, of the amount to be paid by them and
as per the settlement terms chosen by each employee in his
or her subscription form. For the employees of Colombian and
Hungarian companies, the information on the number of FCPE
shares allocated will be communicated via the “Bib Invest Relais
2008“ FCPE.
The subscription price payment terms are defined locally and
described in the communication documents distributed to the
employees.
The new shares are registered and in the name of each employee,
free of any cost, on an account in their name managed by
Société Générale, for all employees other than the employees of
Colombian and Hungarian entities, whose accounts are registered
within the “Bib Invest Relais 2008“ FCPE.
The new shares, since they belong to the Group’s Employee
Savings Plan are not transferable for a period of five years from
July 1, 2008, except in cases of early recovery. At the end of the
mandatory holding period, they shall be freely negotiable.
Upon closing of the subscription period, the Managing Partners
recorded the following results:
952,733 shares were ultimately subscribed at the unit price
of EUR 51, or a nominal value of EUR 2 plus EUR 49 issue
premium;
The total number of shares being lower than the total number
of shares on offer (1,200,000) there was no need to apply the
reduction rules;
The 952,733 shares were paid for in cash on June 25, 2008, as
certified on the same date by Société Générale in Clermont-
Ferrand, in its capacity as fund holder for the subscription
amount corresponding to said shares;
The creation of the 952,733 shares so subscribed and paid for
represented a capital increase in a nominal amount of EUR
1,905,466;
The balance between the amount paid for the 952,733 shares,
or EUR 48,589,383 and the nominal amount of the shares
issued, or EUR 1,905,466 corresponds to an issue premium of
EUR 46,683,917;
Upon their creation, the new shares will be subject to all
provisions of the Company’s bylaws with effect from January
1st, 2008; they entitle holders, with respect to financial year
2008 and the following years, to the same dividend as will be
allocated to the other shares enjoying the same rights, and
are fully assimilated to the other existing shares upon their
creation;
The new shares were listed in Euronext Paris on July 10, 2008.
The impact of the new share issue on the Group’s share of equity
for the Michelin shareholders prior to the issue (calculated on
the basis of consolidated equity as at December 31, 2007 and
of the number of shares comprising the capital at that date) is as
follows:
Other Information
Additional Information Consolidated Financial Statements The Managing Partners’ Report Michelin at a Glance
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