Connect - Schneider Electric

5 CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL
21.6 – Schneider Electric SA shares
At December 31, 2011, the Group held 9,164,952 Schneider Electric shares in treasury stock, which have been recorded as a deduction
from retained earnings.
21.7 – Tax on equity
Total income tax recorded in Equity amounts to EUR329 million as of December 31, 2011 and can be analysed as follows:
190 2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
Dec. 31, 2011 Dec. 31, 2010 Change in tax
Cash-fl ow hedges 100 69 31
Available-for-sale fi nancial assets (3) (14) 11
Actuarial gains (losses) on defi ned benefi ts 233 146 87
Other (1) (1) -
TOTAL 329 200 129
Note 22 Pensions and other post-employment benefit obligations
The Group has set up various post-employment benefi t plans for
employees covering pensions, termination benefi ts, healthcare, life
insurance and other benefi ts, as well as long-term benefi t plans
for active employees, primarily long service awards and similar
benefi ts, mainly in France.
Actuarial valuations are generally performed each year. The assumptions used vary according to the economic conditions prevailing in the
country concerned, as follows:
Weighted average rate Of which US plans
2011 2010 2011 2010
Discount rate 4.3% 5.0% 4.6% 5.5%
Rate of compensation increases 2.5% 2.0% N/A N/A
Expected return on plan assets (1) 6.9% 7.0% 8.0% 8.3%
(1) Corresponding to the 2010 and 2011 rates.
The discount rate is determined on the basis of the interest rate
for investment-grade (AA) corporate bonds or, in the event a
liquid market does not exist, government bonds with a maturity
that matches the duration of the benefi t obligation (reference:
Bloomberg). In the United States, the average discount rate is
determined on the basis of a yield curve for investment-grade (AA
and AAA) corporate bonds.
These benchmarks, which are the same as those used in previous
years, comply with IAS 19.
The expected return on plan assets is determined on the basis of
the weighted average expected return of the total asset value.
The discount rate currently stands at 4.00% in the euro zone,
4.59% in the United States and 4.90% in the United Kingdom.
A 0.5 point increase in the discount rate would reduce pension and
termination benefi t obligations by around EUR155 million and the
service cost by EUR2 million. A 0.5 point decrease would increase
pension and termination benefi t obligations by EUR165 million and
the service cost by EUR2 million.
The post-employment healthcare obligation mainly concerns the
United States. A one point increase in the healthcare costs rate
would increase the post-employment healthcare obligation by
EUR38 million and the sum of the service cost and interest cost
by EUR3 million. A one point decrease in healthcare costs rate
would decrease the post-employment healthcare obligation by
EUR33 million and the sum of the service cost and interest cost by
EUR2 million.
In 2011, the rate of healthcare cost increases in the United States
is based on a decreasing trend from 8% in 2012 to 4.5% in 2023.
This compares with the previous year’s forecast of 9% in 2011 to
5% in 2015. In 2009, the forecast was based on a decreasing trend
from 9% in 2010 to 5% in 2014. The rate in France was estimated
at 4% in 2011, as in 2010 and in 2009.