2010Annual Report - Schneider Electric CZ, s.r.o.

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5 CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 190 Leveraged plans 2010 2009 % Value % Value Plan characteristics Maturity (years) 5 5 Reference price (euros) Subscription price (euros): 79.34 53.59 between 67.44 45.55 and Discount 65.86 44.48 (5) : between 15.0% 15.0% and 17.0% 17.0% Amount subscribed by employees 9.9 8.5 Total amount subscribed 105.4 85.7 Total number of shares subscribed (millions of shares) Valuation assumptions 1.6 1.9 Interest rate available to market participant (bullet loan) (1) 4.1% 5.0% Five year risk-free interest rate (euro zone) 2.1% 3.0% Annual dividend rate 3.0% 3.0% Annual interest rate (repo) 1.0% 1.0% Retail/institutional volatility spread (a) Value of discount: 5.0% 5.0% between 15.0% 11.7 15.0% 9.4 and (b) Value of the lock-up period for market 17.0% 8.0 17.0% 5.9 participant 15.0% 18.8 14.9% 14.4 (c) Value of the opportunity gain (2) 1.9% 2.4 1.7% 1.7 Total expense for the Group (a - b + c) Sensitivity 1.89% to 3.89% 3.3 1.85% to 3.85% 2.5 • decrease in interest rate for market participant (3) (0.5%) 3.3 (0.5%) 2.5 • increase in retail/institutional volatility spread (4) 0.5% 0.2 0.5% 0.2 Amounts in millions of euros, unless otherwise stated. (1) Average interest rate charged on an ordinary, non-revolving personal loan, with a fi ve-year maturity to an individual with an average credit rating. (2) Calculated using a binomial model. (3) A decline in the interest rate for market participants reduces the lock-up cost and increases the expense booked by the issuer. (4) An increase in the retail/institutional volatility spread increases the opportunity gain for the employee and increases the expense booked by the issuer. (5) In some countries, due to local law, employees subscribe for undiscounted sums while the bank subscribes at a discount to provide the leverage. 21.6 - Schneider Electric SA shares At December 31, 2010, the Group held 4,583,005 Schneider Electric shares in treasury stock, which have been recorded as a deduction from retained earnings. 2010 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
21.7 - Tax on equity CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Total income tax recorded in Equity amounts to EUR200 million as of December 31, 2010 and can be analysed as follows: Dec. 31, 2010 Dec. 31, 2009 Change in tax Cash-fl ow hedges 69 72 (3) Available-for-sale fi nancial assets (14) (19) 5 Actuarial gains (losses) on defi ned benefi ts 146 145 1 Other (1) (1) - TOTAL 200 197 3 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 2010 2009 2010 2009 Discount rate 5.0% 5.2% 5.5% 5.8% Rate of compensation increases 2.0% 3.1% NA 4.5% Expected return on plan assets (1) 7.0% 7.1% 8.3% 8.3% (1) Corresponding to the 2009 and 2010 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 4.33% in the euro zone, 5.5% in the United States and 5.4% in the United Kingdom. A 0.5 point increase in the discount rate would reduce pension and termination benefi t obligations by around EUR130 million and the service cost by EUR1 million. A 0.5 point decrease would increase pension and termination benefi t obligations by EUR146 million and the service cost by EUR1 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 EUR45 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 EUR38 million and the sum of the service cost and interest cost by EUR2 million. In 2010, the rate of healthcare cost increases in the United States is based on a decreasing trend from 9% in 2011 to 5% in 2015. This compares with the previous year’s forecast of 9% in 2010 to 5% in 2014. The rate in France was estimated at 4% in 2010 as in 2009. 2010 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 191 5
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2010 Annual Report Schneider Electr
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Registration Document Annual Report
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A signifi cant improvement in profi
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Interview with 2010 marks the retur
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Supervisory Board (as of February 1
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Sales by geographical area 18% Rest
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2010 in brief Growth and acquisitio
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On October 1, 2010 IBM and Schneide
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1 Description of the Group, and its
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1. 3 The emergence of new economies
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DESCRIPTION OF THE GROUP, AND ITS S
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Utilities and Infrastructures: ensu
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2. 3 Leadership in our five sectors
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The Buildings business Number 4 wor
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Panel builders and systems integrat
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3. Innovation and R&D: DESCRIPTION
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3. 4 Partnerships to accelerate pro
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DESCRIPTION OF THE GROUP, AND ITS S
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Rationalisation and optimisation of
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4. 4 Global, selective purchasing P
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The Group’s human resources strat
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on our increased costs to customers
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Insurance Schneider Electric’s st
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2 Sustainable development 1. Sustai
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2 SUSTAINABLE DEVELOPMENT SUSTAINAB
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2 SUSTAINABLE DEVELOPMENT 50 > Zoom
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2 SUSTAINABLE DEVELOPMENT SUSTAINAB
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2 SUSTAINABLE DEVELOPMENT RESPECT F
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2 SUSTAINABLE DEVELOPMENT SCHNEIDER
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2 SUSTAINABLE DEVELOPMENT COMMITTED
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2 SUSTAINABLE DEVELOPMENT METHODOLO
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SUSTAINABLE DEVELOPMENT 2 INDICATOR
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3 CORPORATE GOVERNANCE SUPERVISORY
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3 CORPORATE GOVERNANCE ORGANISATION
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3 CORPORATE GOVERNANCE ORGANISATION
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3 CORPORATE GOVERNANCE MANAGEMENT I
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3 CORPORATE GOVERNANCE INTERNAL CON
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3 CORPORATE GOVERNANCE APPLICATION
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6 COMPANY FINANCIAL STATEMENTS SUBS
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6 COMPANY FINANCIAL STATEMENTS THE
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7 GENERAL PRESENTATION OF SCHNEIDER
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GENERAL PRESENTATION OF SCHNEIDER E
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GENERAL PRESENTATION OF SCHNEIDER E
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8 ANNUAL AND EXTRAORDINARY SHAREHOL
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ANNUAL AND EXTRAORDINARY SHAREHOLDE
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288 PERSONS RESPONSIBLE FOR THE REG
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Schneider Electric SA Headquarters:
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2010Annual Report - Schneider Electric CZ, s.r.o.

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