CONTENTS - Capgemini

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80 ANNUAL GROUP CONSOLIDATED FINANCIAL STATEMENTS Capgemini NOTE 10 – SHAREHOLDERS’ EQUITY A) Stock option plans and share grants At the May 24, 1996, May 23, 2000 and May 12, 2005 Annual Shareholders’ Meetings, the Directoire and the Board of Directors, respectively, were given a five-year authorization in respect of the The main features of these plans and their bases of calculation are set out in the table below: REPORT 2006 Capgemini 1996 Plan 2000 Plan 2005 Plan Total Date of Shareholders’ Meeting May 24, 1996 May 23, 2000 May 12, 2005 Maximum number of shares to be issued on exercise of options 6,000,000 12,000,000 6,000,000 Date options first granted under the plan July 1, 1996 September 1, 2000 October 1, 2001 October 1, 2005 Deadline for exercising stock options after their grant date (based on progressive tranches) 6 years 6 years 5 years 5 years Exercise price as a % of the average share price over the twenty stock market trading days preceding the grant date 80% 80% 100% 100% Exercise price (per share and in euros) of the various stock option grants: May 24, 1996 plan (1996 plan) and the May 23, 2000 plan (2000 plan), and an authorization period of 38 months in respect of the May 12, 2005 plan (2005 plan), to grant stock options to a certain number of Group employees on one or several occasions. Low - 139.00 21.00 30.00 High - 139.00 40.00 43.00 Maximum number of shares to be issued on exercise of outstanding options at December 31, 2005 559,000 10,627,300 1,915,500 13,101,800 Number of new stock options granted during the year Plan expired Plan expired 2,067,000 2,067,000 Number of options forfeited or canceled during the year 559,000 3,188,197 112,500 3,859,697 Number of options exercised in 2006 Maximum number of shares to be issued on exercise of outstanding options at December 31, - 773,838 (1) 16,555 (2) 790,393 2006 - 6,665,265 (3) 3,853,445 (4) 10,518,710 Residual weighted average life (in years) - 2.22 4.29 - (1) At December 31, 2006, the following stock options had been exercised: 498,441 stock options granted at a price of €24; 16,300 stock options granted at a price of €40; 21,802 stock options granted at a price of €31; 206,845 stock options granted at a price of €21; and 30,450 stock options granted at a price of €27. (2) Representing 16,555 stock options purchased at a price of €30. (3) Representing 486,500 shares purchased at a price of €139; 892,359 shares at €24; 917,300 shares at €40; 240,101 shares at €31; 2,814,155 shares at €21; and 1,314,850 shares at €27. (4) Representing 1,787,945 shares purchased at a price of €30 and 2,065,500 shares purchased at a price of €43. The Group has no contractual or implicit obligations to purchase or settle the options in cash. In the event of a notice of authorization of a tender offer or public exchange offer for some or all of the Company’s shares published by Euronext, option holders would be entitled, if they so wish, to exercise all of their remaining unexercised options immediately.
Fair value of options granted and impact on the financial statements In accordance with IFRS 1 – “First-time Adoption of International Financial Reporting Standards”, only stock options granted after November 7, 2002 with a vesting date after January 1, 2005, are measured at fair value and recognized within “Other operating income and expense, net”. Recognition and measurement of stock options granted prior to November 7, 2002 is not required. Summary 2000 Plan 2005 Plan Dates of the stock option grants impacted October 1, April 1, October 1, April 1, October 1, October 1, by restatements in accordance with IFRS 2 2003 2004 2004 2005 2005 2006 Number of stock options initially granted Exercise price (per share and in euros) of 1,406,000 566,000 3,634,500 1,623,000 1,915,500 2,067,000 the various stock option grants 40 31 21 27 30 43 Share price at the grant date 35.88 31.19 19.09 27.06 32.59 41.84 Number of shares subscribed at December 31, 2006 Principal market conditions at the grant date 16,300 21,802 235,645 30,450 16,555 - Volatility Average length of the option exercise period 37-38% 38.1-38.8% 37.5-38.5% 32.4-33.8% 27.4-29.4% 32.4-35.9% (years) 3.5-4.25 3.5-4.25 3-4.25 3-4.25 3-4.25 3-4.25 Risk-free interest rate 2.7-3.1% 2.8-3% 3-3.3% 2.2-2.9% 2.3-2.7% 3.5-3.6% Expected dividend rate 1% 1% 1% 1% 1% 1% Off-market conditions Employee presence within the Group at the exercise date yes yes yes yes yes yes Other no yes (1) no no no no Pricing model used to calculate stock option fair values Black & Scholes model Range of fair values in euros Maximum number of shares to be issued 8.7-10.3 9.2-10.3 4.5-5.7 6.2-7.8 7.6-9.4 10.7-11.7 on exercise of outstanding options at December 31, 2006 917,300 240,101 2,814,155 1,314,850 1,787,945 2,065,500 (1) Certain Transiciel employees were granted stock options whose final number was subject to the Sogeti entity attaining a target adjusted gross operating profit, set out in a prospectus which was approved by the Commission des Opérations de Bourse under reference number 03-935 on October 29, 2003. Based on the calculation parameters used to determine fair value under the Black & Scholes option pricing model (see Note 1.P. – “Stock options granted to employees”), the expense to be recorded between 2007 and 2010 with respect to the six option grants falling within the scope of IFRS 2 totals €25 million. The expense recorded in 2006 in “Other operating income and expense, net” amounts to €15 million. Share grants made in connection with agreements signed on the May 2000 acquisition of Ernst & Young’s consulting business These agreements included an employee-retention scheme applicable over a maximum five-year period for the key employees of Ernst & Young’s consulting business who joined the Group. This scheme was based on the gradual acquisition of ownership of shares granted to the sellers of Ernst & Young’s consulting business. If a person covered by this scheme left the Group he or she could be required to return a portion of the shares received in May 2000. The agreements also provided that ownership of a portion of the shares thus returned would automatically be transferred to Cap Gemini S.A. (to be subsequently canceled or sold) with the balance to be held within the local entities to which employees having left the group were attached (trusts and bank accounts) as part of the employee-retention scheme, in order to be subsequently reallocated to other employees in the countries concerned. As certain shares were sold, in accordance with the provisions of the agreements, prior to their ownership fully vesting in the beneficiaries concerned and who subsequently left the Group, cash amounts were also paid to these entities. These cash amounts corresponded to the disposal gain on the shares returned, which could, where appropriate, be granted to employees in the countries concerned in the form of exceptional remuneration. The reallocations of Cap Gemini shares under this scheme are based on the gradual acquisition of ownership of the shares – i.e., vesting conditions – for which the timeframe is similar to that applicable to the stock options granted by Cap Gemini S.A. In application of the amendment to Interpretation 12 of the Standing Interpretations Committee (SIC 12) issued in November 2004, the Cap Gemini shares and cash corresponding to the proceeds from the sale of Cap Gemini shares held in the trusts and bank accounts set up at the time of the May 2000 acquisition of Ernst & Young’s consulting business were consolidated as from January 1, 2005. ANNUAL REPORT 2006 Capgemini 81
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CONTENTS 02 Financial highlights 03
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THE CAPGEMINI GROUP I - COMPANY HIS
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Prospects for 2007. Demand should r
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is beginning to produce a European
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Professional IT Services Market Sha
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Simplified organization chart for t
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ut also on local issues, in partner
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the investment slowdown led to down
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BREAKDOWN OF WORKFORCE BY AGE: EVOL
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in 2005. Overall satisfaction with
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same content management platform an
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committed to delivering a truly col
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urgent health crises, which an empl
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7.5 The group and the environment E
Page 29 and 30: principles into its offers and to r
Page 31 and 32: this trend is set to increase in th
Page 33 and 34: Economic conditions The Group’s g
Page 35 and 36: STOCK MARKET CAPITALIZATION From Ja
Page 37 and 38: MANAGEMENT REPORT PRESENTED BY THE
Page 39 and 40: 1.5 Profitability Operating margin
Page 41 and 42: €193 million in actuarial gains r
Page 43 and 44: paragraph 3 of article 158 of the F
Page 45 and 46: As is the case for all the Group’
Page 47 and 48: VI - FINANCING POLICY AND MARKET RI
Page 49 and 50: of the countries in which beneficia
Page 51 and 52: under French corporate governance g
Page 53 and 54: is based on the percentage of attai
Page 55 and 56: internal control procedures cannot
Page 57 and 58: specific issues relating to the fol
Page 59 and 60: Management and, above all, the Chai
Page 61 and 62: GROUP CONSOLIDATED FINANCIAL STATEM
Page 63 and 64: CONSOLIDATED STATEMENTS OF INCOME F
Page 65 and 66: CONSOLIDATED STATEMENTS OF CASH FLO
Page 67 and 68: (1) Restated in accordance with IFR
Page 69 and 70: Exchange differences arising on mon
Page 71 and 72: term growth rates for the period be
Page 73 and 74: Other financial liabilities With th
Page 75 and 76: NOTE 3 - CHANGES IN GROUP STRUCTURE
Page 77 and 78: In 2004 and 2005, restructuring cos
Page 79: The difference between the French s
Page 83 and 84: Dilutive impact of the June 24, 200
Page 85 and 86: Net value of goodwill At December 3
Page 87 and 88: Reconciliation of the acquisition c
Page 89 and 90: Deferred tax liabilities at Decembe
Page 91 and 92: Total accounts receivable net of ad
Page 93 and 94: Upon early redemption, the bonds ma
Page 95 and 96: The facility agreement includes cov
Page 97 and 98: Cap Gemini S.A. pays a variable rat
Page 99 and 100: B) Analysis of movements in provisi
Page 101 and 102: F) Contributions to plans in 2007 T
Page 103 and 104: NOTE 20 - CURRENT AND NON-CURRENT P
Page 105 and 106: At December 31, 2006, commitments r
Page 107 and 108: Results for 2004 break down as foll
Page 109 and 110: At December 31, 2005, assets and li
Page 111 and 112: NOTE 27 - NUMBER OF EMPLOYEES A) Av
Page 113 and 114: NOTE 29 - LIST OF CONSOLIDATED COMP
Page 115 and 116: Country Consolidated company % inte
Page 117 and 118: FIVE-YEAR FINANCIAL SUMMARY in mill
Page 119 and 120: STATUTORY AUDITORS’ SPECIAL REPOR
Page 121 and 122: STATUTORY AUDITORS’ SPECIAL REPOR
Page 123 and 124: TEXT OF THE DRAFT RESOLUTIONS PRESE
Page 125 and 126: Ninth resolution Authorization to b
Page 127 and 128: Meeting may decide to appropriate a
Page 129 and 130: Proposed renewals of financial auth
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Changes in the Company’s capital
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CORPORATE GOVERNANCE To avoid repet
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MEMBERS OF THE BOARD Yann DELABRIÈ
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MEMBERS OF THE BOARD Phil LASKAWY D
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DIRECTORS’ INTERESTS This informa
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Fees paid by the Group to the Statu
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CROSS-REFERENCE TABLE To facilitate
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CONTENTS - Capgemini

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