MICHELIN - 2008 ANNUAL REPORT

Supervisory Board Report
Ladies and Gentlemen,
Michelin at a Glance
The Managing Partners’ Report and accounting and financial
statements communicated to you show developments in Group
operations and results for Financial Year 2008.
We have no comments on the Statutory Auditors General Report
for the year.
The consolidated financial statements show net income of EUR
357 million versus EUR 772 million in 2007. This 54% drop results
mainly from the degradation of operating income before non
recurring items, while the restructuring charges (non-recurring)
and corporate tax were lower than in 2007.
Group net sales were up 1.1% at constant scope and exchange
rates.
Operating income before non-recurring income and expenses
dropped 44.1% to EUR 920 million and, at 5.6%, operating
margin was down 4.2 points versus 2007. At 84%, the net-debtto-equity
ratio rose 14 points versus December 31, 2007.
In these circumstances, the Supervisory Board agrees with your
Managing Partner’s recommendation to set at 1 euro per share
the amount of the dividend distribution.
With reference to the other resolutions, an amendment of the
bylaws is submitted to your vote, providing for a reduction of the
Supervisory Board members’ term of office from five to four years.
This shorter term will apply to renewals and appointments made
starting on the Joint Shareholders Meeting of May 15, 2009.
Your Supervisory Board is in favor of this amendment which
will improve its governance and align it fully with the current
standards.
Regarding the make-up of the Supervisory Board, you will be
asked to vote on the renewal for a four year term, of the mandates
of Messrs François Grappotte and Eric Bourdais de Charbonnière
that are due to expire at the end of this Meeting.
Assuming that their terms are renewed, and in line with good
governance principle, in order to ensure a proper timing of future
appointments and seamless transition, Mr. François Grappotte
has indicated that he did not wish to extend his term of office
beyond the Annual Shareholders Meeting to be held in 2011 to
decide upon the financial statements of the financial year ending
December 31, 2010.
You will also be asked to vote on the renewal, in similar terms
to those granted on May 12, 2006, of the authorization to
grant, without discount, share subscription or purchase options
reserved to Group employees, with the only change being that
the corporate directors will be excluded from the scope of the
potential beneficiaries.
Finally, the Company wishes to renew its share buyback program
with a EUR 100 purchase price ceiling per share, identical to the
price set under the current authorization.
In these circumstances, we recommend you to adopt the proposals
submitted for your approval and, accordingly, to vote in favor of
the corresponding resolutions.
The Supervisory Board enjoys full independence to fulfill its control
mission and benefits from exhaustive, reliable and transparent
information on the Company, with respect, in particular, to its
financial statements and commitments, its operational and
environmental risks, as well as to the Group’s strategy.
The Managing Partners’ Report
Consolidated Financial Statements
February 09, 2009
Eric Bourdais de Charbonnière
Chairman of the Supervisory Board
Additional Information
Other Information
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