Annual Report • Apr 28, 2011
Annual Report
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| 1 | 8 | ||
|---|---|---|---|
| Introduction to Faurecia | 3 |
Board of Directors, Executive Committee and Auditors 4 Key fi gures 5
2
| Business review 2010 | 7 | |
|---|---|---|
| 3.1. | Results of operations | 16 |
|---|---|---|
| 3.2. | Financial structure and net debt | 18 |
| 3.3. | Strategic development | 19 |
| 3.4. | Outlook | 20 |
| 3.5. | Risk factors | 21 |
| Safety in the Workplace | 28 |
|---|---|
| Skills development | 30 |
| Strengthening Economic and Social Dialogue |
32 |
| Employee Profi t-Sharing and Incentive Plans |
34 |
| Administrative ET ciency in Human Relations |
36 |
| Other Employee-Related Data | 37 |
| Quality | 45 | |
|---|---|---|
| 5.1. | Quality achievements | 46 |
| 5.2. | Customer awards | 48 |
| 5.3. | Outlook 2011 | 49 |
5
| 6.1. | Market Expectations | 53 |
|---|---|---|
| 6.2. | Research and Innovation | 54 |
| 6.3. | Engineering and Program Management | 58 |
7.1. Faurecia's Products and the Environment 60
7.2. Faurecia's manufacturing sites and the environment 65
9
| fi nancial statements | 101 | |
|---|---|---|
| 9.1. | Consolidated statement | |
| of comprehensive income | 103 | |
| 9.2. | Balance sheet consolidated | 104 |
| 9.3. | Consolidated cash fl ow statement | 106 |
| 9.4. | Consolidated statement of changes | |
| in equity | 107 | |
| 9.5. | Notes to the consolidated fi nancial | |
| statements | 108 | |
| 9.6. | Consolidated Companies | |
| as of Dec. 31, 2010 | 166 | |
| 9.7. | Auditors' report on the Group's |
consolidated fi nancial statements 172
| 10.1. Parent company fi nancial statements | 176 |
|---|---|
| 10.2. Capital and share performance | 207 |
| 10.3. Additional information on Faurecia SA | 211 |
| 11 | |
|---|---|
| 11.1. Agenda | 230 |
|---|---|
| 11.2. Draft resolutions | 231 |
Cross-reference table with the information contained in the annual fi nancial report 239
Cross-reference table 240
The French version of this Registration Document (document de référence) was filed with the Autorité des marchés financiers (AMF) on April 28, 2011 pursuant to Article 212-13 of the AMF's General Regulations.
It may only be used in connection with a financial transaction if it is accompanied by a memorandum approved by the AMF. This document has been prepared by the issuer under the responsibility of its signatories.
The English language version of this Registration Document is a free translation from the original, which was prepared in French. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions expressed therein the original language version of the document in French takes precedence over this translation.
1
BOARD OF DIRECTORS, EXECUTIVE COMMITTEE AND AUDITORS 4 KEY FIGURES 5
Yann Delabrière
Chairman and Chief Executive Officer
Eric Bourdais de Charbonnière Jean-Pierre Clamadieu Frank Esser Lee Gardner Jean-Claude Hanus Hans-Georg Härter Ross McInnes Thierry Peugeot Robert Peugeot Frédéric Saint-Geours Philippe Varin
Represented by Denis Thibon Tour Ernst & Young 11, allée de l'Arche 92037 Paris La Défense Cedex
Represented by Dominique Ménard 63, rue de Villiers 92208 Neuilly-sur-Seine
Executive Committee at April 14, 2011
Yann Delabrière Chairman and Chief Executive Officer
Jean-Marc Hannequin Executive Vice-President, Faurecia Emissions Control Technologies
Frank Imbert Chief Financial Officer
Patrick Koller Executive Vice-President, Faurecia Automotive Seating
Thierry Lemâne Executive Vice-President, Group Communications
Jacques Mauge Executive Vice-President, Faurecia Automotive Exteriors
Bruno Montmerle Executive Vice-President, Group Strategy
Christophe Schmitt Executive Vice-President, Faurecia Interior Systems
Jean-Pierre Sounillac Executive Vice-President, Group Human Resources
Introduction to Faurecia Key fi gures
(1) Definition in Note 1.15 to the consolidated financial statements.
(2) Operating income plus depreciation, amortization and provisions for impairment in value of property, plant and equipment and intangible assets (Note 5.5).
(in €m)
(3) Before capitalized development costs and amounts billed to customers (Note 5.4).
(4) Definition in Note 26.1 to the consolidated financial statements.
2
| 2.1. | THE FAURECIA GROUP | 8 | 2.3. | OTHER MODULES | 13 |
|---|---|---|---|---|---|
| 2.2. | INTERIOR MODULES | 10 | 2.3.1 Faurecia Emissions Control Technologies |
13 | |
| 2.2.1 Faurecia Automotive Seating |
10 | 2.3.2. Faurecia Automotive Exteriors |
14 | ||
| 2.2.2. Faurecia Interior Systems |
11 |
In accordance with Article 28 of European Commission Regulation 809/2004, the following information is incorporated by reference in this Registration Document:
In the first half of 2009, worldwide automobile production fell sharply, then saw a gradual recovery in the second half of the year. This recovery continued in 2010. Annual growth in automobile production in 2010 versus 2009 (in units produced) is estimated at 25% at global level, with figures of 39% for North America, 28% for Asia, and 15% for Europe (source CSM January 2011).
Against this backdrop, Faurecia's consolidated sales totaled €13,795.9 million in 2010, up from €9,292.2 million in 2009. The 2010 figure includes the sales of Emcon Technologies, consolidated from January 1, 2010 (€2,416.1 million), and Plastal Germany and Plastal Spain, consolidated from April 1, 2010 and October 1, 2010 respectively (€386.5 million combined).
The year-on-year growth rate for Faurecia's consolidated sales in 2010 was 48.5% on a reported basis. On a like-for-like basis (2009 figures have been restated to include the sales of Emcon Technologies; 2010 figures exclude Plastal's sales), consolidated sales growth was 17.9% in 2010 versus 2009 (26.9% in the first half; 10.0% in the second).
Product sales (deliveries of parts and components to automakers) amounted to €10,695.8 million, up from €7,590.3 million in 2009, an increase of 40.9% on a reported basis. On a like-for-like basis, sales increased by 19.1% (+33.2% in the first half; +7.2% in the second).
Sales of tooling, R&D and prototypes totaled €795.4 million, up 5.8% on a reported basis. On a like-for-like basis, however, these sales were down 10.2% year-on-year. This figure should be seen in the context of an exceptionally high level of invoicing of US automakers in the first half of 2009 before they filed for bankruptcy protection. Thus, after a decline of 30.1% on a like-for-like basis in the first half of 2010, sales of tooling, R&D and prototypes grew by 17.1% in the second half of the year, compared with the same period of 2009.
Sales of catalytic converter monoliths totaled €2,168.1 million, versus €828.4 million in 2009, representing an increase of 161.7% on a reported basis, and 26.7% on a like-for-like basis (30.4% in the first half; 23.3% in the second).
Excluding catalytic converter monoliths, total sales for 2010 came to €11,627.8 million, up by 37.4% on a reported basis from €8,463.9 in 2009 (+16.4% like-for-like).
Product sales in 2010 break down as follows by geographic region
2
c in other countries, product sales totaled €183.9 million, an increase of 195.7% on a reported basis, and 44.2% like-forlike. These sales were mainly recorded in South Africa.
Product sales to the Volkswagen Group rose by 20.5% in 2010 to €2,595.7 million on a like-for-like basis, and represented 24.3% of Faurecia's total product sales. In Europe, the rise was 15.5%, thanks mainly to the VW Tiguan and the launch of the new Audi A1 and A8. Growth in North America was 27.0%, and in South America, 20.4%. In Asia, product sales climbed 57.3% compared with 2009, boosted by the success of the Golf and Tiguan platforms.
Product sales to the PSA Peugeot Citroën Group rose by 10.4% in 2010 to €1,950.2 million on a like-for-like basis, and represented 18.2% of Faurecia's total product sales. These sales were driven by growth in Asia (+59.6%, primarily in relation to the Citroën C4) and South America (+55.5%, mainly in relation to the Peugeot 207 and Berlingo/Partner utility vehicles). In Europe, growth was 5.7%.
Product sales to the Renault-Nissan Group represented 11.9% of Faurecia's total product sales. On a like-for-like basis, these sales increased by 19.1% compared with 2009, to €1,274.7 million. They rose 12.4% in Europe and 27.2% in South America (Renault Logan/Sandero). In Asia product sales rose 63.2%, benefiting from the first full year of the L43 program (Samsung SM5/Renault Latitude) and the success of the Nissan Teana in China.
Product sales to the BMW Group came to €982.0 million (9.2% of Faurecia's total product sales). This represented an 8.2% increase on a like-for-like basis. The increase mainly related to North America (+17.8% on the back of the recovery in X5 volumes), while growth in Europe was 3.3%.
Product sales to the Ford Group were €1,179.5 million in 2010, representing 11.0% of Faurecia's total product sales (excluding Volvo, which was sold during the year to Chinese automaker Geely). On a like-for-like basis, sales went up by 14.6%, thanks to the strong recovery in North America (+39.9%).
Product sales to General Motors rose by 44.0% in 2010 on a likefor-like basis to €1,053.2 million (9.8% of Faurecia's total product sales). Despite a considerable fall in Europe (-10.2%), sales also benefited from the recovery in North America (+61.9%), and to a lesser extent, from growth in South America and Asia.
Product sales to Daimler came to €456.6 million (4.3% of Faurecia's total product sales), an increase of 38.8% on a like-for-like basis. The increase was mainly attributable to higher sales in Europe (+38.0%), mainly in relation to the Mercedes S-Class.
In 2010, like-for-like product sales to Fiat/Chrysler and Hyundai/ Kia went up 55.0% and 25.6% respectively. Product sales to Toyota fell by 12.0%.
| (in € millions) | 2H 2009 | 2H 2010 | Chg.( ) * |
2009 | 2010 | Chg.( ) * |
|---|---|---|---|---|---|---|
| Total sales | 4,912.1 | 6,970.0 | 7.8% | 9,292.2 | 13,795.9 | 16.4% |
| Interior modules | 3,487.2 | 3,784.6 | 4.6% | 6,602.6 | 7,663.8 | 13.1% |
| Other modules | 1,424.9 | 3,185.4 | 15.1% | 2,689.6 | 6,132.1 | 24.3% |
| Product sales | 4,106.3 | 5,341.4 | 7.2% | 7,590.3 | 10,695.8 | 19.1% |
| Automotive seating | 2,017.4 | 2,140.5 | 2.5% | 3,707.0 | 4,343.2 | 14.5% |
| Interior systems | 1,153.6 | 1,270.5 | 5.6% | 2,142.6 | 2,635.7 | 19.2% |
| Interior modules | 3,171.0 | 3,411.0 | 3.6% | 5,849.6 | 6,978.9 | 16.2% |
| Emissions control | ||||||
| technologies | 520.7 | 1,275.8 | 21.2% | 950.1 | 2,478.0 | 31.2% |
| Automotive exteriors | 414.5 | 654.6 | 2.1% | 790.5 | 1,239.0 | 13.8% |
| Other modules | 935.3 | 1,930.4 | 15.5% | 1,740.6 | 3,716.9 | 25.8% |
* On a like-for-like basis, excluding catalytic converter monoliths.
Overall sales for the Interior Modules segment came to €7,663.8 million in 2010, up 16.1% on a reported basis. On a like-for-like basis, these sales increased by 13.1% (22.6% in the first half; 4.6% in the second).
Product sales amounted to €6,978.9 million in 2010, up from €5,849.6 million in 2009, an increase of 19.3% on a reported basis. On a like-for-like basis, sales increased by 16.2% (31.1% in the first half; 3.6% in the second).
| Sales | Headcount | Sites | Country | R&D Centers |
|---|---|---|---|---|
| €4,571.3 million | 28,587 | 73 | 26 | 8 |
Automotive Seating generated sales of €4,571.3 million in 2010, up by 14.5% year-on-year on a reported basis and 12.0% like-for-like. Product sales totaled €4,343.2 million versus €3,707.0 million in 2009, up by 17.2% on a reported basis and 14.5% like-for-like. The increase in the second half of the year was 6.1% on a reported basis, and 2.5% like-for-like.
In Europe, product sales rose by 5.3% year-on-year on a reported basis to €3,063.0 million (5.1% like-for-like).
Product sales in Asia totaled €427.3 million, a substantial increase of 71.0% year-on-year on a reported basis, with a 59.0% increase in the second half of 2010 compared with the same period of 2009. On a like-for-like basis, sales increased by 61.0% year-on-year (43.1% in the second half of the year).
In North America, product sales increased by 51.5% year-onyear to €635.8 million on a reported basis (41.7% like-for-like), with a 21.3% increase in the second half (8.9% like-for-like).
In South America, product sales amounted to €201.1 million in 2010, up by 68.2% year-on-year on a reported basis (46.7% likefor-like). In the second half of the year, the increase was 59.6% on a reported basis and 41.6% like-for-like.
The rise in product sales in the first half concerned all customers but particularly Renault-Nissan and VW, boosted by the growth in China, and GM and Chrysler, thanks to the growth of the North American market. The deceleration of the rise in Europe in the second half affected all carmakers.
During 2010, volume production started up for the Audi A1, the Peugeot 408 in China and 508 in Europe, the VW Sharan in Europe and the Amarok in Argentina, for which Faurecia supplies complete seat units. The year also saw the continuation of the worldwide rollout of front seating frame platforms developed and produced by Faurecia Automotive Seating for Nissan, General Motors, Volkswagen and PSA with new applications in Europe, North America, South America and Asia. These new generation standard frames (which are now fitted in more than 50 different models) have helped Faurecia bolster its leading position( * in the market for international seating platforms. During the year, Faurecia managed more than 40 complete seat and seating frame programs in total and delivered over 150 million seating components and sub-assemblies, including mechanisms, front and rear frames, covers, foam components and headrests, integrated into over five million complete seat units.
Sales and marketing activities were again strong in 2010, with a record number of new program wins both for complete seat units and seating frames. Over 50% of this new business was won for new vehicles or following a bid process, which led to Faurecia capturing further market share. In North America and China the main growth drivers were VW, BMW, Daimler and Nissan, enabling the Group to spread its sales more evenly between geographic regions in the medium term. New market share was won from the competition in international frame platforms and seating mechanisms at PSA, VW, BMW and Renault-Nissan, strengthening Faurecia's position on these segments. The main contract renewals during the year concerned PSA and VW in Europe for both complete seat units and seating frames. Faurecia's Automotive Seating business now ranks number three worldwide for complete seat units and number one for frames and mechanisms( * .
* Source: Faurecia
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During the year the Group continued to streamline its manufacturing base, closing five facilities in Europe. The Group had 73 factories (including 33 just-in-time sites) located in 26 countries. The process to transfer all of the mechanism production and R&D units from Flers to the new Caligny site continued and is expected to be concluded in 2011.
At the start of 2010 Faurecia Automotive Seating opened its new technical and commercial office in Seoul, enabling it to improve its service for Korean manufacturers. Several pre-development projects were launched with Hyundai-Kia and Renault-Samsung.
Innovation is still a key priority for Faurecia Automotive Seating, with a particular focus on "Premium" solutions, lighter-weight products and standardization. The acquisition of Hoerbiger's seat comfort business in the second half of the year is part of the strategy to bolster Group's portfolio of innovative technologies with high added-value. It complements the Safety and Comfort Modules product line with series production applications and new developments with the premium German manufacturers.
Reducing the weight of products remains a key requirement of automakers and has become an essential element of the product development process. Faurecia offers innovative solutions combining new materials with optimal design concepts that can lighten the weight of each seat unit by several kilograms. Lastly, during the year, Faurecia Automotive Seating pursued its policy of extending standardized solutions to all non-visible seating components – including joints, seat rails, front and back frames, and headrests – enabling development and production costs to be scaled back.
A new generation of seating mechanisms (joints, seat rails, and pump handles) weighing over 30% less has been developed and put on the market. These new mechanisms are now part of the standard range of Faurecia Automotive Seating and are incorporated into all new frame projects.
At K-Fair, the international plastics and rubber fair in Düsseldorf in October, Faurecia Automotive Seating presented its all plastic front seat innovation developed in partnership with BASF, and at the Los Angeles Motor Show in November the Group presented its new SmartFit automatic comfort control slim seat. The automobile community has taken a keen interest in these two major innovations, which aim to reduce weight and improve comfort through the use of cutting edge technologies.
Overall, the Automotive Seating business devoted 2.7% of its sales figure to research and development and 66 new inventions were filed in 2010, representing a total of 103 patents and bringing the total number of active patents to 1,890. Furthermore, some 20 events dedicated to informing customers about new solutions and concepts were organized worldwide.
| Sales | Headcount | Sites | Country | R&D Centers |
|---|---|---|---|---|
| €3,092.6 million | 21,008 | 67 | 21 | 5 |
Faurecia Interior Systems sales totaled €3,092.6 million in 2010, up 18.4% on a reported basis and 14.9% at constant exchange rates. Product sales in 2010 totaled €2,636 million compared with €2,142 million in 2009, up 23% (19.2% at constant exchange rates).
Product sales in Europe came to €1,804 million in 2010, up 11.3% (10.7% at constant exchange rates). After very strong growth in the first half (about 26%), the second half has shown a stabilization of sales, consistent with the upturn in the auto business in the second half of 2009.
In North America, product sales came to €479 million in 2010, up 62.6% (51.3% at constant exchange rates). In the first half, the progression was 90.1%, once again exceeding 2008's level; the second half ended with a 43.7% rise. This strong rise is not only down to the upturn in the US automobile market, it is also due to the increased momentum of the new Chevrolet Malibu and Jetta programs from General Motors and Volkswagen respectively.
In Asia, the Interior Systems business continued along the growth path, especially in China with product sales advancing 57.7% to €138 million in 2010 (46.2% at constant exchange rates).
Product sales in South America in 2010 rose to €163 million, up 49.8% (29.6% at constant exchange rates), notably with good performances from the Peugeot and General Motors accounts.
This was another particularly eventful year in terms of production launches. In Europe there were manufacturing start-ups for instrument panels for the Peugeot 508, Ford Focus, Volvo S40/ V40 S60/V50, Volkswagen New Sharan and Polo (on emerging markets) and the Mercedes Smart, door panels for the Citroën C4 and Ford Focus, and acoustic interiors for the Peugeot 408, Ford New C-Max and the Opel Meriva. North America started production of the Cadillac CTS coupé and Ford Fiesta as well as door panels for the Volkswagen Jetta. South America started production of instrument panels for the Peugeot 308 and Citroën C3. Production of the Ford Fiesta instrument panel also started in Asia during the year.
New contract wins reached a very satisfactory level in 2010, continuing the gains in market share for the Interior Systems business, which maintained its position of European and world leader on the instrument panels and door panels markets( * .
In China, on July 2, 2010 Faurecia Interior Systems concluded a strategic alliance with the Geely and Limin groups with a view to the development, production and delivery of Interior Systems to all Geely brands in China; this alliance involves the creation of several ventures which will be jointly held by Faurecia, Limin and Geely and which will supply the five new Geely plants currently under construction. In October, in Chongqing, Faurecia also signed an agreement with Guangneng, a Chinese supplier of plastic parts, for the creation of a joint-venture within the framework of the Interior Systems activity; the new company will initially concentrate on plastic injection and door panel manufacture activities, with Faurecia maintaining production of instrument panels and cockpits. Guangneng will also start gradually producing injection tools, under Faurecia's supervision. Finally, a partnership agreement was signed in June with the Xuyang group, which will help support FAW's growth in the Changchun region.
The acquisition in 2010 of Incalplast in Spain enabled Faurecia Interior Systems to consolidate its position as a manufacturer of injected plastic components. Finally, the acquisition of part of the activity of the Visteon France plant, in La Touche Tison, significantly strengthens the leading position( * ) of the Interior Systems business in the Rennes region for the group's client PSA.
The Interior Systems business also pursued its rollout of the Faurecia Excellence System (FES), leading to a major shift in its manufacturing performance. This improvement has been recognized by several of the group's clients. Volkswagen awarded its 2010 Group award to Faurecia Interior Systems; Ford Motor Company confirmed Faurecia Interior Systems as one of its ABF (Aligned Business Framework) suppliers and Nissan Europe awarded its "Nissan Europe Quality Award" to our plant in Ourense, Spain.
The year was also fruitful in terms of innovation, with the business filing 108 patents in 2010. The product strategy is now structured around eight main lines of innovation: reduction of costs, surfaces, trim, weight, sustainable development, comfort, safety and service.
Finally, the SAS joint venture with Continental, which is specialized in just-in-time fitting and delivery of full cockpit modules with electronics and circuitry built into the instrument panel (and which is world leader in this activity( * ), enabled Faurecia to deliver 4 million modules - including a significant proportion of Faurecia products – to its customers in 2010. Further information on this company is provided in Note 13 to the consolidated financial statements.
* Source: Faurecia
Overall sales for the Other Modules segment came to €6,132.1 million in 2010, up 128.0% on a reported basis. On a like-for-like basis, and excluding catalytic converter monoliths, sales in this segment increased by 24.3% (35.2% in the first half; 15.1% in the second).
Product sales amounted to €3,716.9 million in 2010, up from €1,740.6 million in 2009, an increase of 113.5% on a reported basis. On a like-for-like basis, and excluding sales of catalytic converter monoliths, sales increased by 25.8% (38.0% in the first half; 15.5% in the second).
| Sales | Employees | Sites | Country | Development center |
|---|---|---|---|---|
| €4,781.4 million | 16,000 | 65 | 23 | 10 |
Emissions Control Technologies generated total sales of €4,781.4 million in 2010, up by 161.8% on a reported basis and 28.6% like-for-like. Product sales (excluding catalytic converter monoliths) totaled €2,478 million in 2010, an increase of 161% on a reported basis and 31% like-for-like. The acquisition of Emcon Technologies at the turn of the year contributed to this significant increase in sales. This acquisition increased Faurecia Emissions Control Technologies' presence on the fast-growing North American and Asian markets. It also strengthened the R&D potential in new technologies and expanded this business' customer portfolio. Moreover, Emcon Technologies allowed Faurecia Emissions Control Technologies to enter the exhaust systems for commercial vehicles market.
For the first half of the year, sales excluding catalytic converter monoliths showed a 40% increase on the previous year, totaling €1,263 million, of which €625 million was attributable to the acquisition of Emcon Technologies. Total sales (including catalytic converter monoliths) amounted to €2,318 million, of which €1,153 was attributable to Emcon Technologies, representing growth of 36% compared with the first half of 2009.
For the second half of the year, product sales excluding catalytic converter monoliths were up 30% on the previous year, coming to €1,276 million, of which €649 million was attributable to the acquisition of Emcon Technologies. Total sales including catalytic converter monoliths amounted to €2,463.7 million, of which €1,263 was attributable to Emcon Technologies, representing growth of 31% compared with the second half of 2009.
By geographic region, product sales (excluding catalytic converter monoliths) rose by 100% in Europe (19% like-for-like), by 316% in North America (53% like-for-like) and by 101% in Asia (42% like-for-like).
For Faurecia Emissions Control Technologies, 2010 was marked by the start of volume production for the Ford Mustang and the new Grand Cherokee Jeep in North America, 1.6l 16V flexfuel Citroën Air Cross in South America and launches for customers such as VW, GM, PSA and Ford in China. In addition, Faurecia developed its relationships with Chinese customers and enjoyed several successful launches this year, with Chery, Chang An and GuangZhou Auto.
On the European market, Faurecia Emissions Control Technologies demonstrated its ability to manage programs for global platforms. At Renault-Nissan, delivery of the complete system for the new premium model, marketed under the name of Renault Latitude in Europe and Samsung SM5 in Korea, is an example for which Faurecia successfully adjusted its products to the expectations of the various markets. Faurecia Emissions Control Technologies also demonstrated its expertise on global platforms thanks to a number of successful launches on the Ford B and new Volkswagen Polo platforms.
The year also saw a strong increase in acquisitions of orders and new contracts for complete systems and components. More than 50 new programs were assigned to Faurecia Emissions Control Technologies. One-third of these are located on developing markets, particularly Brazil, Russia, India and China.
Faurecia Emissions Control Technologies is present on all automotive markets worldwide, with an overall manufacturing presence covering 65 sites and 10 R&D centers. During 2010, Faurecia secured its presence in Russia, a market in which Faurecia expects strong growth over the next few years. In June, Faurecia began the production of emission control systems and complete exhaust lines in its own plant in Kaluga, intended for vehicles produced in Russia by its Volkswagen, Škoda,
Citroën, Peugeot, GM and Ford customers. A new plant, in a joint venture with Metalloprodukcia, of which Faurecia is the majority shareholder, was also opened in Togliatti. Within the next two years, this new joint venture will also begin to deliver emission control systems for Renault and Nissan vehicles. In 2012, Faurecia's production capacity in Russia will allow it to equip around 500,000 vehicles per year.
In China, Faurecia Emissions Control Technologies strengthened its leading position( * and opened a new plant in Chengdu and a "just-in-time" facility in Guangzhou.
In terms of innovation, Faurecia Emissions Control Technologies developed new technologies in the reduction of diesel emissions, energy recovery and weight reduction.
| Sales | Employees | Sites | Country | R&D Centers |
|---|---|---|---|---|
| €1,350.7 million | 5,494 | 23 | 12 | 5 |
Automotive Exteriors sales increased by 56.4% to €1,350.7 million in 2010. After a rise of 45.8% in the first half of the year, business grew by 14.1% in the second half. Product sales amounted to €1,239 million. Product sales rose by 56,7% over the year, 48.7% in the first half and 11.4% in the second.
The year 2010 was marked by the acquisition of Plastal GmbH in April followed by the buyout of Plastal Spain in October. This transaction, which was approved by the European Commission, was made possible thanks to the support of Faurecia's customers and has now allowed the Automotive Exteriors business to become the leader( * in Europe, with a market share of 25%. This acquisition not only strengthens the customer portfolio - expanding it from five to nine major customers - but now provides access to premium automakers (Mercedes, BMW, Audi, and Porsche).
Moreover, this new customer portfolio allows the company to enhance its international presence. Indeed, during the second half of the year, the Automotive Exteriors business confirmed the order of bumpers for the future Audi A6 for FAW-VW in China. Within this context, a joint venture agreement was signed with the Huaxiang Group for a plant located in Changchun (China), where production will begin in early 2011.
Several launches took place in 2010, including the front end modules of the new Audi A6 and the bumpers of the VW Touran, BMW 5 series, Citroën C4 and Peugeot 508.
Innovation work in 2010 focused on a number of key areas, principally weight reduction. The research work that succeeded in bringing about series production applications focused in particular on "Torsional Welding", a new industrial assembly process developed with a view to reducing the thickness of panels without degrading the high level of perceived quality and implemented for the first time on the Audi A7; the "Magnesium – PA hybrid front end", which enabled a weight saving of 40% whilst meeting the extreme high-temperature constraints of parts under the engine hood, implemented on the Audi A6 and Audi A7; the plastic mini-tailgate, also the fruit of weight reduction work and design / simulation expertise and in production on the Ford Kuga; and, finally, for the "Motor-fan" business, the "large diameter" solution, launched in production in 2010 on the Peugeot RCZ to improve acoustic performance.
The Automotive Exteriors business now has a total of 23 plants: 21 in Europe and two in the United States. The R&D centers are located in Audincourt, France, Weissenburg and Gaimersheim, Germany, Barcelona, Spain and Auburn Hills, United States.
* Source: Faurecia
| 3.1. | RESULTS OF OPERATIONS | 16 | 3.4. | OUTLOOK | 20 |
|---|---|---|---|---|---|
| 3.1.1. Operating income |
16 | 3.5. | RISK FACTORS | 21 | |
| 3.1.2. Net income |
17 | 3.5.1. Industrial and environmental risks |
21 | ||
| 3.2. | FINANCIAL STRUCTURE | 3.5.2. Financial risks |
23 | ||
| AND NET DEBT | 18 | 3.5.3 Legal risks |
25 | ||
| 3.3. | STRATEGIC DEVELOPMENT | 19 |
The Group reported operating income of €455.6 million (3.3% of sales) in 2010, compared with an operating loss of €91.7 million in 2009.
In the second half of 2010, operating income was €239.1 million (3.4% of sales), up from €216.5 million (3.2% of sales) in the first half of the year, representing a significant increase compared with the same period of 2009, when operating income was €95.6 million (1.9% of sales).
The increase of €144 million in operating income in the second half of 2010 compared with the same period of 2009 is chiefly attributable to four factors:
The increase of €547 million in operating income in 2010 compared with 2009 is attributable to the same factors:
The variable operating margin improved by 2.1% over the year to 25.8%.
The trend for individual business segments was similar to that for the Group as a whole:
Gross R&D expenditure amounted to €689.1 million and represented 5% of sales, versus €493.2 million in 2009 (5.3% of sales). This increase came to 17% like-for-like. This expenditure originated from the development activity generated by the high number of orders placed in 2009 and 2010.
Excluding amounts billed to customers and capitalized expenses, R&D costs totaled €303.2 million, corresponding to 2.2% of sales, versus €207.9 million in 2009 (2.2% of sales).
Selling and administrative expenses amounted to €443.8 million and represented 3.2% of sales, versus €335.9 million in 2009 (3.6% of sales). Two-thirds of the increase in absolute terms relates to the integration of Plastal and Emcon.
EBITDA – which corresponds to operating income before depreciation, amortization and provisions for impairment in value of property, plant and equipment and capitalized development costs – amounted to €941.2 million (6.8% of sales) compared with €395.3 million (4.2% of sales) in 2009. The increase in EBITDA related essentially to the growth in operating income.
The item "Other operating income" totaled €87.2 million. It comprises profit from bad will related to the acquisition of Plastal Germany and Plastal Spain of €84.3 million. Plastal Germany and Plastal Spain were acquired for the total sum of €49.9 million, whereas the fair value of these companies' net assets acquired totaled €134.2 million.
The item "Other operating expense" totaled €123.2 million in 2010, including €117.0 million relating to restructuring costs. The latter mainly relate to the restructuring of activities in France (€32.9 million), Germany (€59.3 million) and Spain (€14.1 million). These costs concern the implementation of the restructuring plans elaborated in 2009, with the aim of adapting production facilities in Europe to the new market conditions, and generating synergies from the integration of Emcon's activities. The costs also include expenses relating to the redundancy of 2,776 employees.
Cash financial income totaled €8.1 million versus €12.3 million in 2009. Finance expense totaled €98.7 million versus €135.3 million in 2009. The drop in finance costs relates to the reduction in average borrowing costs to 4.54% in 2010, from 5.41% in 2009, and to the lower average borrowings figure. The drop in average borrowing costs relates to the withdrawal of the higher rate of interest charged on the Group's main line of credit when the debt ratio exceeded the contractual limits for this credit facility in June 2009, due to the losses recorded in the first half of the year following the significant contraction in activity (Net debt/EBITDA >3.5). This ratio has improved considerably, moving from 2.14 at end-2009, to 1.75 at end-June 2010, and 1.32 at end-2010.
"Other financial income and expense" amounted to €25.6 million compared with €43.9 million in 2009. The lower net expense figure reflects a reduction in translation adjustments on borrowings, from €14.8 million in 2009 to €4.0 million in 2010, and an increase in the value of interest rate hedging instruments from -€6 million in 2009 to +€3.6 million in 2010.
The tax charge for 2010 was €89.8 million, versus €35.9 million in 2009.
After minority interest of €30.7 million, the Group reported net income for the year 2010 of €201.7 million, versus a net loss of €433.6 million in 2009.
The net earnings per share figure was €1.87, compared with a net loss per share of €6.85 in 2009.
The 2010 financial year was characterized by a sharp recovery in Faurecia's financial position.
Net cash flows corresponding to changes in net debt, restated for changes in sales of derecognized trade receivables and in debt related to the acquisition of the new Plastal and Emcon businesses, and excluding the impact of changes in exchange rates for debt in foreign currencies, represented a net cash inflow of €222 million, made up of €137 million in the first half of the year and €85 million in the second half, compared with a net cash outflow of €168 million in 2009 and a neutral cash flow in the second half of 2009.
The net cash flow balance of €222 million over the year is attributable to the following:
The net cash flow balance of €85 million over the second half of 2010 is attributable to the following:
c the working capital requirement, restated for changes in outstanding amounts under receivables sales programs, rose by €12 million;
c restructuring represented cash outflows of €52 million;
The acquisition of Emcon led to a net debt increase of €41.2 million, representing the debt taken over on the acquisition date.
The acquisition of Plastal Germany and Spain led to a net debt increase of €49.4 million, €26.4 million of which corresponds to the payment of assets and €23 million to the assumption of asset leasing debts.
These two transactions therefore represented a total net debt increase of €90.6 million.
Changes in exchange rates for debt in foreign currencies had a negative impact of €13.8 over the year. Over the second half of the year, there was a positive impact of €15 million.
Trade receivables sold and derecognized rose over the year by €87.2 million, from €290.7 million to €377.9 million. This increase was due mainly to the growth in sales. Receivables under these programs increased by €61 million over the second half of the year.
Net debt over the year fell by €204.4 million, from €1,401.2 million at the end of 2009 to €1,196.8 million at the end of 2010. Over the second half of 2010, net debt fell by €151.7 million.
The Group's shareholders' equity rose sharply owing to net income and the contribution from Emcon's business, increasing from €256.9 million at the end of 2009 to €810.5 million at the end of 2010.
In addition to the consolidation of Emcon and Plastal, the other main external growth transactions and strategic agreements were the following:
Two transactions were completed in China:
Xuyang's sales should amount to €150 million for 2010, with a target of €400 million in sales for 2015.
The joint ventures as a whole aim to generate a total of €300 million in sales in 2015.
The total investment for these transactions was €11 million in 2010.
c on July 2, Faurecia finalized a strategic alliance with Chinese automaker Geely and auto parts supplier Limin to develop, manufacture and deliver interior and exterior automotive systems for all of Geely's brands in China. The first investments made will be determined according to the progress of the customers' projects.
In the field of seating systems, on October 26 Faurecia signed an agreement to acquire Hoerbiger Automotive's seat comfort business. This company develops and manufactures pneumatic seat comfort systems for the premium brand segment. This business generated sales of €20 million in 2009. It forms part of the company's policy to strengthen the technological content of its seating systems. The acquisition was finalized on December 23, 2010, for the amount of €7 million.
In the field of Vehicle Interiors, on November 23, 2010 Faurecia signed an agreement with a view to acquiring the businesses of Angell-Demmel Europe Gmbh, the world leader in metal automotive interior trim parts. This business, which employs almost 800 people, generated sales of €55 million with the leading German automakers over the first nine months of 2010. Faurecia has thus strengthened its presence in relation to premium German customers and expanded its range of technology and products in the field of vehicle interiors. The acquisition was completed on January 17, 2011, for an acquisition price of €12 million (excluding tooling).
Finally, on January 17, 2011, Faurecia acquired a 21.2% stake in the capital of Amminex, a Danish technology company with leading edge expertise in the treatment of nitrogen oxides and the inventor of the Ammonia Storage and Delivery System (ASDS). This strategic acquisition represented an investment of €19.6 million. The contribution of this technology, associated with Faurecia's recognized development and industrial expertise, will lead to another breakthrough in diesel emissions control.
Faurecia will continue to implement its strategy based on six priorities:
Faurecia is expecting 2011 worldwide light vehicle production to grow between 6.5% and 7.0% with production in Europe expanding by 3.0% to 4.0%.
On that basis, Faurecia's objectives for 2011 are as follows:
Specializing in the manufacture of original equipment for its automaker customers, the activity of the Faurecia Group is directly related to the vehicle production levels of these customers in their markets. The cyclical nature that characterizes its customers' business can have a significant impact on the Group's sales and results. The level of sales and automobile output for each of Faurecia's customers depends on numerous parameters, notably the general level of consumption of goods and services in a given market; confidence levels of economic players in that market; the availability of credit for vehicle purchases; and possibly governmental aid programs (such as the recent financial support provided to the automotive sector and incentives introduced for the purchase of vehicles).
Thus, the Group's sales are directly linked to the performance of the automotive industry in the major geographic regions where Faurecia and its customers operate (see Note 4.3. to the consolidated financial statements), especially in Europe (64.8% of consolidated sales in 2010) and North America (18.1% of consolidated sales in 2010).
The main risk for Faurecia is related to the fact that its business levels depend on the commercial success of the models for which it produces components and modules, and at the end of the life cycle of a model, to the uncertainty of whether its products will be taken up again for the replacement model. In addition, the orders placed with the Group are open orders without any guarantees of minimum volumes and are generally based on the life of the vehicle model concerned.
As Faurecia's customers include the majority of the world's major automakers, it is totally dependent on developments in the global automotive industry. However, the Group's exposure to customer risk is naturally attenuated by its market share and its diversified international presence.
Faurecia is exposed to credit risk, notably the risk that its automaker customers will default or go bankrupt in the event of financial difficulties.
In view of the operating context in the automotive sector, Faurecia cannot rule out the possibility that one or more of its customers may not be able to honor certain contracts or suffer financial difficulties. Furthermore, changes in the automotive sector could accelerate the concentration of automakers, ultimately resulting in the disappearance of certain brands or vehicle models for which the Group produces equipment. The occurrence of one or more of these events could have a significant impact on the Faurecia Group's sales, results and future prospects. Detailed accounting information regarding trade accounts receivable is provided in Note 18 to the consolidated financial statements.
The Group's exposure to customer credit risk is attenuated by the structure of its customer portfolio. In 2010, Faurecia's five largest automaker customers accounted for 75.2% of product sales as follows: Volkswagen 24.3%, PSA 18.2%, Renault-Nissan 11.9%, Ford 11%, and GM 9.8%.
As of December 31, 2010, past-due payments represented less than 0.5% of consolidated sales for the year. Additions to provisions for doubtful customer accounts totaled €7.7 million.
The Group uses a large number of suppliers based in different countries for its supplies of raw materials and basic parts. In 2010, out of a total of some €6,064 million worth of production goods purchased from around 3,000 main suppliers, Faurecia's ten largest partners combined accounted for 35% of the purchased goods and 15.5% of consolidated sales.
If one or more of the Group's main suppliers were to go bankrupt, or experience an unforeseen stock-out, quality problems, a strike or any other incident disrupting its supplies for which it were liable, this could impact Faurecia's production output or lead to additional costs that would affect the Group's sales, results and overall financial position.
Faurecia closely monitors the quality and reliability of suppliers' production operations as well as their credit status and sustainability in order to ensure that the Group's supply chain is secure.
The Group's operating and net income can be adversely affected by changes in the prices of the raw materials it uses, notably steel and plastics.
To the extent that the Group's sale contracts with customers do not include price indexation clauses linked to the price of its raw materials, Faurecia endeavors to reduce its risk exposure to unfavorable fluctuations in commodity prices by continually negotiating conditions with customers and strictly managing inventories. Faurecia does not use derivatives to hedge its purchases of raw materials or energy.
The proportion of purchases of steel and plastics managed directly by the Group represented a moderate 7% of consolidated sales in 2010.
If commodity prices were to rise steeply, Faurecia could not guarantee that it would be able to pass on all of such price increases to its customers, which could have an unfavorable impact on the Group's sales, results and overall financial position.
As a components producer and components and systems assembler for the automotive industry and given the high volumes that its customers order, Faurecia constantly has to adapt its business activity to its customers' demands in terms of their supply chain, production operations, services and R&D. If Faurecia or one of its suppliers were to default at any stage of the manufacturing process, it could be held liable, notably for breaching its contractual obligations or for any technical problems that may arise. The Group could also be required to make certain investments, particularly in tooling and research, which may not be offset by customer order volumes. This is due to the fact that the financing of research and development costs can be paid upfront or at the end of the development period, or as the parts are delivered, with no guarantee from the customer that it will pay for the full amount of expenditure incurred.
Volume risk analyses are carried out twice a year with each customer, during which issues relating to price renegotiations and the amount of outstanding research and development costs are addressed. The relevant contracts sometimes contain clauses concerning the renegotiation of research and development financing. Any difference between forecast and actual sales figures for customers represents a direct risk for the business levels of all of the Group's production facilities.
On account of their industrial nature, the Group's operations are subject to increasingly strict environmental laws and regulations in the various countries in which it is present. The Group may be required to incur additional costs and/or capital expenditure in order to remedy a situation, comply with the applicable regulations, or pay any penalties in the event of any malfunction or other incidents affecting the Group's equipment; human error; regulatory non-compliance; or any reinforcement of the applicable regulations.
To date there have been no major cases of loss or damage caused to third parties as a result of accidental environmental harm. However, the related risks are covered by an insurance policy taken out with a leading insurer specialized in the area.
As part of its external growth policy, the Company has made, and plans to make, acquisitions of varying sizes, some of which have and may yet be significant in a Group-wide sense.
These acquisitions entail risks, such as:
Given its level of debt, the Group is exposed to significant risks related to liquidity and changes in interest rates. It is also exposed to currency risks as its production sites are located in a large number of countries outside the euro zone. Faurecia's counterparty risk in relation to its derivatives is not significant as the majority of its derivatives are set up with leading banks with strong ratings that form part of its banking pool. The Group Finance and Treasury Department authorizes any new banking relations and the opening of accounts.
Generally, interest rate and currency risks are managed centrally for the Group as a whole by the Corporate Finance Department.
Before taking into account the impact of interest rate hedges, 80.1% of the Group's borrowings were at variable rates as of December 31, 2010, compared with 80.9% as of year-end 2009. Variable-rate debt mainly corresponds to the Group's €1,170 million syndicated credit facility and the €250 million loan from Peugeot SA, which were both set up on November 28, 2008. The main component of the Group's fixed-rate debt comes from the 2009 issue of OCEANE bonds convertible into and/or exchangeable for new or existing shares.
Faurecia manages the hedging of interest rate risks on a central basis. This management is handled by the Group Finance and Treasury Department, which reports to Group General Management. Hedging decisions are made by a Market Risk Management Committee that meets on a monthly basis.
The aim of the Group's interest rate hedging policy is to reduce the impact of short-term rate changes on earnings, as the majority of its borrowings are at variable rates. The hedges set up primarily comprise euro-and dollar-denominated caps and other option based structures as well as, to a lesser extent, swaps. These hedges cover some of the borrowings due in 2011 and 2012 against a significant rise in rates. The Group's interest rate position with respect to the different types of instruments used is presented in Note 30.2 to the consolidated financial statements.
In view of the short-term rates in 2010, despite a moderate increase in the second half of the year, a number of the Group's option-based interest rate hedges are out of the money. A rise in short-term rates would therefore have an impact on financial expense. In addition, a fluctuation in interest rates would affect "Other financial income and expense" due to the resulting change in the fair value of derivatives set up to hedge interest payable in 2011 and 2012.
The sensitivity tests performed, assuming a 100 basis point increase or decrease in average interest rates compared to the yield curve as of December 31, 2010 show that the positive or negative effect on financial expense can be estimated at €10 million, taking into account the profile of the Group's debt and derivatives in place as of December 31, 2010.
Faurecia is also exposed to risks arising from fluctuations in the exchange rates of certain currencies, particularly due to the location of some of its production sites as well as the fact that certain subsidiaries purchase raw materials and other supplies or sell their products in a currency other than their functional currency.
The sensitivity of the Group's income and equity as of December 31, 2010 to changes in exchange rates of transaction currencies used by Group subsidiaries other than their functional currency (with all other variables remaining constant) are as follows:
| (in millions of euros) | |||||||
|---|---|---|---|---|---|---|---|
| Currency | USD | CZK | CAD | MXN | GBP | PLN | ZAR |
| 1.34 | 25.06 | 1.33 | 16.55 | 0.86 | 3.98 | 8.86 | |
| Currency fl uctuation scenario | |||||||
| (depreciation of currency/EUR) | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% |
| Exchange rate after currency depreciation | 1.40 | 26.31 | 1.40 | 17.37 | 0.90 | 4.17 | 9.31 |
| Impact on pre-tax income | (0.21) | (0.09) | (1.80) | (0.85) | 0.02 | 0.51 | (0.88) |
| Impact on equity | 1.07 | (1.24) | 0.01 | 0.16 | (0.10) | (3.12) | 0.00 |
These impacts reflect (i) the effect on income of changes in exchange rates used for the year-end valuation of assets and liabilities denominated in a foreign currency, net of the impact of the change in fair value of existing hedging instruments; and (ii) the effect on equity of changes in the fair value of hedges of forecast transactions (cash flow hedges).
Currency risks relating to the commercial transactions of the Group's subsidiaries are managed centrally by Faurecia, principally using forward purchase and sale contracts and options as well as foreign currency financing. Faurecia manages the hedging of interest rate risks on a central basis, through the Group Finance and Treasury Department, which reports to Group General Management. Hedging decisions are made by a Market Risk Management Committee that meets on a monthly basis.
Currency risks on forecast transactions are hedged on the basis of estimated cash flows determined in forecasts validated by Group General Management. The related derivatives are classified as cash flow hedges when there is a hedging relationship that satisfies the IAS 39 criteria.
Subsidiaries outside the euro zone are granted inter-company loans in their operating currencies. Although these loans are refinanced in euros and eliminated in consolidation, they contribute to the Group's currency risk exposure and are therefore hedged through swaps.
Details of net balance sheet positions and a breakdown of hedges by currency are provided in Note 30-1 to the consolidated financial statements.
Since November 28, 2008, Faurecia has had access to an €1.42 billion credit facility.
Further details on the Group's debt are provided in Note 26 to the consolidated financial statements.
This facility comprises a syndicated bank loan of €1.17 billion and a €250 million loan from Peugeot SA. The two loans are correlated so that the drawdowns made by Faurecia on the Peugeot SA loan are proportionate to those made on the syndicated bank loan, based on the same rates and periods.
The overall facility is divided into a €710 million tranche expiring in November 2013; a €20 million tranche expiring in November 2011, and a €690 million tranche expiring in November 2013 following the option taken by the banks and PSA to extend a tranche originally expiring in November 2011 to November 2013.
As of December 31, 2010 the undrawn portion of this credit facility amounted to €613 million.
The contracts relating to the credit facility include covenants, notably a change of control clause relating to Peugeot SA and provisions concerning compliance with consolidated financial ratios. In addition, the contracts stipulate that any asset disposal representing over 15% of the Group's total consolidated assets requires the prior approval of banks representing two-thirds of the syndicated credit facility.
In March 2009, all the participating banks signed an addendum to the loan contract providing for temporary amendments to the financial covenants from June 30, 2009 through December 31, 2010. Faurecia obtained a similar agreement from its majority shareholder Peugeot SA providing for the same amendments to the financial covenants contained in the shareholder loan contract.
These agreements include the new ratios indicated below as well as a Faurecia's commitment to maintain total net debt below €1,800,000,000, which is a suitable amount. The ratios applicable under the amended financial covenants are as follows:
| Test date | Net debt/EBITDA | EBITDA/Net fi nancial expense |
|---|---|---|
| December 31, 2010 | 4:1 | 4.25:1 |
| From June 30, 2011 | 3.5:1 | 4.5:1 |
The ratios as of June 30, 2011 correspond to those in force prior to signing the amendment in March 2009, i.e. net debt/EBITDA lower than 3.5 and EBITDA/net finance cost higher than 4.5.
As of December 31, 2010 the Group complied with both ratios, which stood at 1.3 and 10.4 respectively. Also, since ratios from December 31, 2009 fall within the original required ranges, borrowing conditions for the syndicated credit facility and the loan taken out with Peugeot SA have returned to their original conditions since the beginning of 2010. This enabled Faurecia to reduce its annual finance costs in 2010 by around €35 million compared to the conditions in effect in late 2009.
On November 26, 2009 Faurecia issued €211.3 million worth of OCEANE bonds convertible into new shares or exchangeable for existing shares. These bonds bear interest of 4.50% payable on January 1 of each year, beginning January 1, 2011. Each bond has a nominal value of €18.69. Faurecia may redeem the bonds in advance at any time as from January 15, 2013, at a price equal to their nominal value plus accrued interest, provided that all
of the outstanding bonds are redeemed and the product of (i) the conversion/exchange ratio at the date concerned and (ii) the arithmetic mean of the opening quoted prices for the Company's shares on Euronext Paris calculated over 20 consecutive trading days, as selected by the Company from the 40 trading days preceding the date of notice of such early redemption, exceeds 130% of the nominal value of the bonds.
Faurecia also has the option of redeeming all or some of the bonds at any time by repurchasing them either on or off-market or by means of public tender or exchange offers, or all of the bonds, at nominal value plus accrued interest, if the number of outstanding bonds is less than 10% of the total number of bonds issued.
The bonds can be converted by their holders at any time as from their date of issue. The criteria relating to their compulsory early redemption are the same as those described above for the syndicated credit facility.
In accordance with IAS 39, the fair value of the OCEANE bonds is split into two components:
c a liability component calculated based on prevailing market interest rates for similar bonds with no conversion option. This component has been recognized at amortized cost in an amount of €183.7 million net of the related issue costs, based on an effective interest rate of 7.6%;
c an equity component corresponding to the conversion option, calculated based on the difference between the fair value of the OCEANE bonds and the liability component. This component has been recognized in equity in an amount of €23.3 million net of the related issue costs.
On October 5, 2005 Faurecia carried out a €300 million bond issue due in October 2010. As the bond covenants were breached as of June 30, 2009, the bondholders were entitled to request early redemption. Out of the initial amount issued, €291.5 million worth of the bonds were redeemed on August 14, 2009. The balance of €8.5 million was redeemed on the original expiration date on October 5, 2010.
This redemption was partially financed by an €205 million credit facility extended by a pool of French banks. The credit facility, which expires at the end of January 2011, is subject to the same financial ratio covenants as the above-mentioned syndicated credit facility. It was prepaid in full on August 17, 2010.
In addition to the above-described bank and bond debt, part of Faurecia's liquidity requirements is met through receivables sale programs. Proceeds received from receivables sole came to €524.5 million in 2010 (see Note 26-4 to the consolidated financial statements), including €377.9 million from receivables that were sold and derecognized (see Note 18 to the consolidated financial statements).
At the date this Registration Document was drawn up, there were no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Group was aware) that may have, or have had in the past 12 months, a significant impact on the Group's financial position or profitability.
Faurecia believes that in view of the nature and amounts of the claims and litigation that were known or in process at the date of this Registration Document said disputes should not materially affect its consolidated financial position in the event of an unfavorable outcome (see Note 24–2 to the 2010 consolidated financial statements for a description of claims and litigation currently in process). Adequate provisions have been set up by the Group for claims and litigation, based on known facts and information available at the balance sheet date.
However, Faurecia cannot guarantee that in the future Group subsidiaries will not be involved in legal or administrative proceedings, particularly in view of the complex regulatory requirements applicable to the Group; technical failures, or breaches of contract by customers, suppliers or partners. Such a situation could have a significant unfavorable impact on the Group's operations and/or financial position.
The Group has not identified any risk of technological dependence in relation to its products, modules or systems. This reflects Faurecia's proactive strategy of creating its own designs and controlling the patents that are essential for its operations.
Where possible and when justified by strategic technological considerations, Faurecia registers patents to protect the intellectual property relating to industrial know-how and innovations from Group research.
Faurecia also uses third-party patents under license in the normal course of business. None of these licenses represent a major industrial or financial risk.
Faurecia considers that it either owns or may validly use all the intellectual and industrial property rights required for its business operations and that it has taken all reasonable measures to protect its rights or obtain guarantees from the owners of third-party rights. However, the Group cannot rule out the risk that its intellectual and/ or industrial property rights may be disputed by a third party on the grounds of pre-existing rights or for any other reason. Furthermore, for countries outside France the Group cannot be sure of holding or obtaining intellectual and industrial property rights offering the same level of protection as those in France.
As Faurecia does not have any captive insurance entities its system for safeguarding assets is based on the implementation and ongoing adaptation of its risk prevention policy as well as its strategy of transferring its principal risks to the insurance market.
Faurecia's industrial risk prevention policy aims to reduce accidents caused by fire and to encourage Group sites to achieve excellence in fire safety by obtaining the HPR (Highly Protected Risk) label from Faurecia's insurer.
The HPR policy is based on the following priorities:
No significant fires occurred in 2010. A few natural events (hail, lightning) caused limited damage. There was one major fire in 2009 – at the offices of the Neuburg R&D unit – which caused €0.4 million in damage. In 2008 a fire broke out at the Olmedo plant in Spain, which resulted in some €8 million worth of damage, and in 2007 there was a fire in the stock rooms at the Mlada-Boleslav plant in the Czech Republic which caused around €7 million worth of damage. These two incidents were covered by insurance (less the deductible). A sprinkler maintenance and inspection program has been carried out continuously since its introduction in 2008.
Faurecia has set up a fire, property damage and business interruption insurance policy with a number of leading insurers. The increased premiums due to high claims in 2007 and 2008 were wiped out with the renewal of the policy in July 2010, which brought premiums to a reasonable level. In addition, the limit of liability under the policy was increased from €275 million to €400 million. In 2010, the Group paid approximately €7.5 million for property and casualty and business interruption insurance.
The coverage for buildings and equipment is based on replacement value. Coverage is organized around a Master policy, which includes direct coverage for the freedom of services area, with local policies for subsidiaries in countries located outside this area. Special coverage has been set up to cover specific risks in certain countries.
Since July 2010, the premiums applicable to the capital at risk (direct loss and annual gross margin) are directly dependent on the HPR classification given to the site following an audit by the insurance company.
Faurecia renewed its liability insurance policy on January 1, 2011. The new policy includes a slight increase in premiums to cover Emcon and to extend operating liability coverage to the second line. In 2010 the Group paid €4.2 million in premiums for liability coverage, including product liability insurance applicable after delivery to customers. Liability insurance covers operating liability, product liability after delivery and environmental liability. Liability insurance takes the form of a "Master" policy combined with local policies taken out in countries where Faurecia has subsidiaries.
The Group's various acquisitions in 2010 (mainly Emcon and Plastal) are now covered by the Group's insurance plans, including both property damage and business interruption insurance as well as liability insurance.
| 4.1. | SAFETY IN THE WORKPLACE | 28 | |
|---|---|---|---|
| 4.1.1 | Workplace Safety Indicators | 28 | |
| 4.1.2. | Ergonomics and Working Conditions | 29 | |
| 4.1.3. | HSE Breakthrough Plan | 29 | |
| 4.2. | SKILLS DEVELOPMENT | 30 | |
| 4.2.1. | Employee Empowerment | 30 | |
| 4.2.2. | Developing the potential of managers and technical experts |
30 | |
| 4.3. | STRENGTHENING ECONOMIC AND SOCIAL DIALOGUE |
32 | |
| 4.3.1. | Gradual recovery of the automotive industry |
32 | |
| 4.3.2. | Greater social dialogue and consultation with employee |
||
| representatives | 32 | ||
| 4.3.3. | Compensation and benefi ts | 33 |
| 4.4. | EMPLOYEE PROFIT-SHARING AND INCENTIVE PLANS |
34 | |
|---|---|---|---|
| 4.4.1. | Voluntary gain-sharing plans (intéressement) in france |
34 | |
| 4.4.2. | Mandatory profi t-sharing plans (participation) in france |
34 | |
| 4.4.3. | Group employee savings plan in france 34 | ||
| 4.4.4. | Stock options and share grants subject to performance requirements |
35 | |
| 4.5. | ADMINISTRATIVE EFFICIENCY IN HUMAN RELATIONS |
36 | |
| 4.6. | OTHER EMPLOYEE-RELATED DATA | 37 | |
Faurecia's occupational health and safety policy hinges on two main objectives: ensuring the protection of employees' health and improving the safety of employees in the workplace. Safety in the workplace is one of the building blocks of our search for excellence embodied in the Faurecia Excellence System (FES). It forms part of the essential requirement of respecting employees, which every facility must satisfy.
Thanks to our constant commitment to enhancing occupational safety and working conditions, bolstered in 2010 by our deployment of the Breakthrough Safety Plan, we reduced the rate of work-related accidents to a record low with less than two accidents with lost time per million working hours, thus exceeding our targets for the year.
In seven years, Faurecia will have reduced its work-related accident rate ten-fold.
Analyses of changes in the frequency rate of work-related injuries are performed in order to measure the effectiveness of actions carried out in this area. To guarantee the same level of workplace safety for all employees, temporary workers are included in these indicator calculations in the same manner as permanent staff.
FROT FREQUENCY RATE TREND
The frequency rate of work-related accidents with lost time (FR0t) for all Group activities came to 1.5 on a like-for-like basis in 2010, representing a sharp decrease of 38%. The inclusion of the former Plastal and Emcon sites brings this indicator down slightly by 0.2 points for a Group average of 1.7.
c The frequency rate of work-related accidents with or without lost time (FR1t) also shows significant progress, of the same order of magnitude as FR0t, dropping 37% to come in at 5.7 on a like-for-like basis. The inclusion of the former Plastal and Emcon sites brings this indicator down by 0.5 points for a Group average of 6.2.
The Faurecia Excellence System was quickly deployed at the newly acquired Plastal and Emcon, including the Breakthrough Safety Plan. These sites have already been approaching a level of security comparable to that of Faurecia's traditional sites.
Out of a total 227 internal sites, 74% of the units (including the sites acquired in 2010) did not experience an accident with lost time and, therefore have an FR0t of 0 – an 18-point improvement over 2009.
The sites with 0 FR0t are located in 24 different countries in four continents and cover all product groups.
Furthermore, almost one in two sites did not report any accident with or without lost time.
Most occupational illnesses reported by employees involve musculoskeletal disorders. To reduce this, Faurecia has taken steps for several years to take the strain caused by workstations into greater consideration and to remedy the situation as much as possible.
Ergonomic reviews of workstations form part of the Faurecia Excellence System and the Group systematically carries out audits at each of its manufacturing sites on an annual basis.
As a result of these analyses, a variety of solutions have been implemented for manufacturing workstations. The analyses are also used to prepare a list of recommendations that are systematically taken into account during the design of products and manufacturing tools. An increasing number of recommendations from professional ergonomists and Group HSE coordinators are being factored into the Program Management System (PMS).
Ergonomic reviews of workstations form part of the Faurecia Excellence System and the Group systematically carries out audits at each of its manufacturing sites on an annual basis.
All of the Group's operations managers and plant managers have been given training in ergonomics as part of the Faurecia Excellence System acceleration plan, which was launched by the Chairman during the second half of 2009 and continued in 2010. The goal of this program is to ensure that these managers play a real leadership role in the continuous improvement process, notably for ergonomics-related issues.
An "Ergonomics" memorandum is available to all Group process engineers and managers in charge of efficiency in manufacturing systems, to provide additional information on analyzing workloads and how to take into consideration the ergonomic constraints of workstations. This memorandum is aimed at providing basic training in this area for people such as members of health and safety committees, who are involved in organizing work schedules or designing workstations.
In 2010 Faurecia deployed a Breakthrough Safety Plan aiming to reduce its safety indicators by two-thirds in the space of two years, i.e. to bring FR0t to 0.8 and FR1t to 3 by the second half of 2011, and to eradicate serious HSE alerts.
This Plan was directly inspired by the Breakthrough Quality Plan launched in 2006, which enabled Faurecia to rapidly attain world-class quality levels.
It is based on the following principles:
In 2010, eight mandatory safety rules were defined, deployed and audited at all Faurecia sites.
Any site that is unable to demonstrate that all of these rules have been applied is automatically downgraded to level D, "unsatisfactory" and reported to the Chairman. A new audit is then scheduled within a period of two months until "satisfactory" level is achieved.
This systematic approach is designed to require sites to strictly follow the safety rules to prevent major work-related risks.
After a detailed analysis of any serious accidents that had occurred, 36 preventative measures were set out in the form of a "Group-wide Memo" to be implemented worldwide.
"FES audits" are carried out to verify that these preventative measures, as well as the mandatory safety rules, are applied at each site.
In 2011, the mandatory rules were expanded to thirteen requirements that included the additional major preventative measures identified as a result of the accidents that occurred in 2010.
Faurecia's human resources management helps the Group stand out from the competition and is one of the keys to its success. Our strategy is based on employee empowerment and developing the potential of managers and technical experts.
Driven by the momentum established within the Group, "employee empowerment" indicators continued to show progress:
As part of the newly launched Faurecia Excellence System Acceleration Plan, special attention was given to training and developing the skill sets of the operations managers in 2009. In 2010, these efforts were extended to plant managers and to senior FES specialists who serve as key players in industrial progress.
Based on an individual assessment of their skills in the area of production systems, these employees have been involved in a development program that includes coaching, training and on-site continuous improvement projects.
In this way, more than 400 production managers received two days of internal training on the 7 Basics of Employee Empowerment, the goal being to enable them to better understand the issues to be addressed and to identify the tools to be used to facilitate effective continuous improvement.
Furthermore, a specific training module was developed and integrated into the training program for site-specific human resources managers in early 2010 to enable these HR managers to properly support the managerial teams with regard to employee empowerment. 75 individuals benefited from this program this year.
An "employee empowerment coaching initiative" was also launched, targeting 16 human relations managers working in countries where the Group enjoys a major presence.
Faurecia is committed to building the skills and motivation of its teams and continually adapting its human resources to shortand medium-term requirements. Identifying these requirements is essential in order to ensure that the Group always has bestin-class teams of managers and technical experts, driven by the pursuit of excellent customer service.
In order to achieve this objective, the Group has adopted a strategy based on four key areas, described below.
In 2010, Faurecia was confronted with a dual challenge:
c integrating the various businesses acquired by the Group: Emcon Technologies, Plastal Germany and Plastal Spain, and Faurecia Technology Center India PVT Ltd., an engineering firm based in India that came under Faurecia's management after the Group acquired the stake previously owned by the Tata Group. This meant that 1,523 new managerial employees had to be integrated worldwide – 42% of whom were based in Europe, 29% in North America, 3% in South America, 24% in Asia and 1% in the rest of the world;
c managing a gradual recovery from the economic crisis of 2008-2009. After a major 18-month slowdown in hiring, the Group began to rebuild its talent pools in key areas in order to equip itself with the resources that will be necessary for future growth.
In total, approximately 1,062 managers were hired in 2010, versus 338 in 2009. These new hirings focused on areas of strong growth, such as China, Mexico and Brazil. These three countries represent 35% of all hirings in 2010.
As it happens, the internal hiring rate for 2010 was 58.9%. There is a strong correlation with the growth taking place in each region (Europe: 74.3%, North America: 46.5%, South America: 64.3%, Asia: 50.8%, the rest of the world: 20%).
At any rate, internal hirings remained high for senior-level positions (70%), while external hiring focused on junior-level positions. In this regard, efforts have been made to target young graduates, who represent 14.1% of external hirings; 25% of such graduates come from a select group of target schools.
Additionally, the Group brought in 73 interns under international corporate volunteer (VIE) contracts in 2010.
It is crucial for us to leverage the experience and expertise of our managers and technical experts as we work to recover from the economic crisis. Thanks to our succession and development plans, at least one successor has been identified for over 90% of Senior Management positions and 70% of such vacancies are filled through internal promotion. Similarly, over 67.5% of plant and program manager positions are filled through internal promotions. By applying this strategy we can offer attractive career development opportunities to our managers and technical experts.
The Group's priority is to make sure that it always has the available resources to cover its needs worldwide. To do this, it is essential to anticipate future requirements in terms of staffing, skills and expertise. This is why Faurecia's medium-term plan includes a human resources component every year.
In parallel, career managers are tasked with expanding the talent pool and ensuring that the Group will have the appropriate human resources when it needs them. They achieve this by setting up and monitoring individual career development and mobility plans.
With a view to boosting the Group's technical expertise across all of its businesses, managers and technical experts are encouraged to build their competencies in their original positions before moving on to different departments in order to gain further technical and managerial skills. In 2010, cross-function mobility represented 27% of the Group's total mobility assignments for over 425 managers and technical experts.
It is crucial for an international group to develop, encourage and promote diversity. A total of 42% of the Group's managers and technical experts worked outside Western Europe in 2010, and 78% of hirings took place outside of Western Europe. This means that Faurecia can offer its people international assignments and projects in order to boost the diversity of its teams. We also place great importance on the international dimension of our Senior Management team while taking steps to attract, develop and retain local talent across the globe. In keeping with this strategy, 46% of the Group's Senior Management team is non-French, and 41% of the managers and technical experts identified as high-potential are from non-Western European countries.
Lastly, a stable employee base is essential for safeguarding our investment in human capital. In 2010, the resignation rate was a satisfactory 5.7%; this represents an increase compared to the 2009 rate, which was particularly low due to the economic crisis. The 2010 rate was impacted by the dynamic labor market in the emerging countries and North America. It remains well below the value before the 2008 crisis.
The Group is committed to enhancing and rewarding the performance of its employees through global performance reviews. Employee performance appraisals are based not only on a comparison between actual results and pre-defined objectives, but also on an assessment of technical skills and whether employees have applied the Group's corporate values. The annual performance appraisal is also an opportunity to discuss career prospects, through individual career plans.
Our internal promotion policy revolves around offering career opportunities to employees who succeed and demonstrate their potential. Most promotions come with increased responsibility. In 2010, 39% of internal staffing changes were promotions.
In line with the Group's focus on expertise, Faurecia particularly rewards performance in technical and technological areas. To this end, Faurecia has set up a specific career development program for our technical experts, which has also enabled us to strengthen business-specific skills within each product line. In 2010, 33 new experts and 7 senior experts were appointed to research & development and manufacturing engineering positions, bringing Faurecia's total number of technical experts to 239 at year-end.
In 2010, 70 training sessions were provided as part of the Faurecia University program. A total of 900 employees from 28 countries took part in these sessions, up significantly from 2009.
The key priority of the Group's training policy is developing the skill sets of future senior-level managers, based on the Global Leadership I, II and III programs. In addition, for key positions such as plant manager, program manager, foreman and Autonomous Production Unit manager, Faurecia prepares managers and experts to fully assume their role through dedicated training sessions.
Another focal point is strengthening business-specific expertise, and 2010 was marked by the deployment of two new training programs designed in 2009 to promote the adoption of Faurecia practices: "Site HR Manager" and "Plant Controller." 13 sessions were conducted in 2010 for 148 participants. They are taught mostly by Faurecia managers who have received specific training for trainers to develop their teaching skills.
As for industrial training, which serves as a basis for the Faurecia Excellence System (FES), these training programs focus on industrial tools and the Group's methodologies and are provided in-house at the site level?
After a severe crisis that lasted 18 months, characterized by a pronounced slowdown in auto markets around the world and especially in Western Europe and the United States, 2010 marks the recovery of international automobile production.
During the year, the number of regular employees increased by 12,123, going from 52,066 people at the end of 2009 to 64,189 at year-end 2010.
Downsizing plans implemented in 2010 involved over 35 sites and affected almost 2,605 jobs in 11 countries.
In addition, the acquisitions that took place during the year had a significant impact on the number of people employed within Faurecia.
The number of regular employees increased by 9,336 (13%) as a result of these acquisitions. This includes 6,638 employees related to the acquisition of Emcon Technologies and 2,698 employees related to the acquisitions of Plastal Germany and Plastal Spain.
Change by region encompasses different factors due to the combination of restructuring and acquisitions.
For instance, Europe took full advantage of the acquisitions made in 2010 and saw its employment grow by 11.3%, as opposed to a 3.4% drop on a like-for-like basis.
The increase in employment in North America, which grew by 22.6% on a like-for-like basis and by 54.3% if acquisitions are taken into account, reflects the sharp upturn in auto production within this market since 2009.
In South America as well, the number of regular employees showed significant growth with a total increase of 73.8% and a 42.3% increase on a like-for-like basis, thereby confirming the rebound within this market and Faurecia's commitment to this region.
Faurecia continues to grow in Asia, where the number of regular employees increased by 20.2% on a like-for-like basis and by 35.6% including acquisitions. These numbers confirm the growth potential in this market.
The Group's continued its policy of consulting and negotiating with employee representatives and signed 245 agreements in 20 countries, including 117 in France, 57 in Germany, 10 in Mexico, 10 in Brazil, 5 in Argentina, 6 in Spain, 6 in Slovakia and 4 in Romania.
26% of these agreements were related to wages and benefits, 17% were related to mandatory and discretionary profit-sharing schemes and 29% were related to working conditions.
The European Works Council met in plenary session on May 18, 2010. The Bureau of the Council, made up of representatives from the six largest countries in terms of employment, namely France, Germany, Spain, Portugal, the Czech Republic and Poland, met three times. In order to help the representatives of the European Works Council fulfill their duties under the best possible conditions, it was agreed to launch a training program focusing on modules designed to allow Council members to better understand the challenges and constraints of the automotive industry as they pertain to Faurecia.
Originally made up of representatives from 12 countries, the Council was expanded in April 2010 to include an Italian and a Hungarian representative following the acquisition of Emcon Technologies.
A major player in the economic and social dialogue, the Council discussed, for example, the various phases related to the acquisition of Plastal Germany at the Meeting of May 18, 2010, followed by Plastal Spain at the Bureau Meeting of July 27, 2010.
Total payroll costs for the Group, including social security charges, increased by 25.7% in 2010 to €2,303.5 million from €1,832.8 million in 2009. Likewise, the number of regular employees increased by 23.3%, mainly through acquisitions.
Wage negotiations led to the signature of 64 agreements within the Group in 2010.
The variable compensation system – which is mainly based on collective performance targets – is applied consistently in all countries where the Group has operations. At year-end 2010, approximately 2,500 managers out of a total of 10,500 qualified for this system.
In the United States, a call for tender was issued to change retirement plan (401K) providers; the groundwork was laid during the second half of the year so that the changeover could take effect at the beginning of 2011. Meanwhile, in Germany we continued our efforts to harmonize pension schemes across our product lines. In China, a policy to retain key managers was implemented to adapt to the local market situation.
All of the Group's French companies are covered by a voluntary gain-sharing agreement.
These agreements establish how voluntary gain-sharing payouts are calculated, based on two sets of indicators:
Under these agreements the gain-sharing payout on fulfillment of objectives is capped at 6% of payroll, although in exceptional cases it may be raised to 8% if objectives are exceeded.
Also, these agreements stipulate that part of the gain-sharing allocation shall be proportional to salary and the other part shall be applied on a uniform basis (depending on the hours worked).
The Group paid almost of €19 million in gain-sharing payouts in 2010 (to 1,350 employees), and €1.8 million was invested in the Group Employee Savings Plan (PEG) in France.
The mandatory profit-sharing agreements of the various Group companies stipulate that employee profit sharing calculated in accordance with the legal formula must be allocated among employees pro rata to their compensation for the year in question, subject to compliance with regulatory limits.
The amounts allocated to the profit-sharing reserve may be held in an inaccessible special-purpose account or invested in the corporate mutual funds set up in connection with the Group Employee Savings Plan.
The Group paid €1.1 million in mandatory profit-sharing payouts in 2010, and €0.8 million was invested in the Group Employee Savings Plan in France.
The Faurecia Group Employee Savings plan set up in France in 2004 offers employees the chance to invest in a savings plan by purchasing units in a corporate mutual fund invested in either property or securities. A total of 14 investment funds are available to employees.
The Group savings plan may be funded by the payment of amounts allocated under profit-sharing plans and voluntary gain-sharing plans, as well as voluntary employee contributions.
Voluntary contributions to the "Faurecia Actionnariat" corporate mutual fund, comprised only of Faurecia shares, are supplemented by a contribution from the Company that amounted to €60,000 in 2010 and concerned 175 employees.
Total funds invested in the employee savings plan at year-end 2010 stood at nearly €25 million (9,000 employee savers), of which 14% was invested in the "Faurecia Actionnariat" corporate mutual fund (2,000 employee savers).
In addition, the corporate retirement savings scheme – funded mainly by Faurecia in the form of a defined contribution scheme – had plan assets of almost €40 million as of December 31, 2010. In 2010, this scheme was supplemented by an Inter-Company Savings Plan (PERI) for managerial employees (€100,000 paid out in 2010).
Faurecia has set up stock option grant plans with a view to incentivizing and retaining its senior managers. These plans follow a procedure established by the Board of Directors on February 6, 2003. The Annual Shareholders' Meeting of February 8, 2010 authorized the Board of Directors to grant a maximum of 2,000,000 Faurecia shares in keeping with this procedure. Based on this authorization, the Board granted shares on two occasions: first a maximum of 860,600 shares to 232 shareholders on June 23, 2010, subject to performance requirements; then a maximum of 887,250 shares to 243 shareholders on July 21, 2010, subject to performance requirements.
As of December 31, 2010, a total of 1,523,998 stock options were outstanding.
In 2001, Faurecia granted stock options to the executives of Group companies and their majority-owned subsidiaries. As of December 31, 2010, a total of 25,740 stock options were outstanding.
4 The Group's Human Resources Policy Administrative E` ciency in Human Relations
During the year, Faurecia continued its efforts to streamline and outsource its human relations information systems. To date, the payroll system for 41,000 employees (64% of all regular Faurecia employees) is managed by an outside provider in France, the United States, the Czech Republic, Germany, Portugal and England.
A pilot project focusing on time management was launched in Portugal to enable production managers to directly manage their work teams' presences and absences via an intranet portal.
An automatic interface was also developed between the payroll and reporting systems to make it possible to automatically retrieve quantitative HR data and to significantly reduce the reporting workload. A second interface with the executive management system was deployed at the same time in Portugal, the Czech Republic and France. This interface allows for continuous and automatic updates to the administrative data pertaining to the managers and greatly reduces data entry.
Also of note, at year-end 2010 nearly 25,000 people were being paid from shared service centers in France, the United States and Canada. This initiative has helped to standardize and streamline the payroll process and to optimize personnel management tasks. Spain also launched a similar project in late 2010.
| 2010 | 2009 | Year-on-year change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Registe red head count |
Tempo rary stai |
Total head count |
Of which % CDI* |
Registe red head count |
Tempo rary stai |
Total head count |
Of which % CDI* |
Registe red head count |
Tempo rary stai |
Total head count |
Of which % CDI* (in points) |
|
| Europe | 41,695 | 6,528 | 48,223 | 81.2% | 37,454 | 4,099 | 41,553 | 85.0% | 11.3% | 59.3% | 16.1% | -3.8 |
| North America |
10,975 | 1,596 | 12,571 | 75.2% | 7,113 | 375 | 7,488 | 82.7% | 54.3% | 325.6% | 67.9% | -7.4 |
| South America |
4,500 | 270 | 4,770 | 88.1% | 2,589 | 380 | 2,969 | 81.5% | 73.8% | -28.9% | 60.7% | 6.6 |
| Asia | 3,715 | 2,883 | 6,598 | 50.7% | 2,740 | 1,349 | 4,089 | 60.0% | 35.6% | 113.7% | 61.4% | -9.3 |
| Other | 3,304 | 210 | 3,514 | 61.8% | 2,170 | 145 | 2,315 | 54.7% | 52.3% | 44.8% | 51.8% | 7.1 |
| FAURECIA | 64,189 | 11,487 | 75,676 | 77.1% | 52,066 | 6,348 | 58,414 | 81.6% | 23.3% | 81.0% | 29.6% | -4.5 |
* Open-ended contracts (contrats à durée indéterminée).
Total employees increased by 17,262, or +29.6%, in 2010. Excluding acquisitions, total employees increased by 6,300, or +10.8%.
The proportion of staff employed under open-ended contracts decreased from 81.6% to 77.1%.
The proportion of staff on fixed-term contracts was on par with 2009, increasing slightly from 7.5% to 7.7%, and the proportion of temporary staff rose from 10.9% to 15.2%.
Total employment grew in all geographic regions in 2010.
The number of registered headcount increased by 12,123 in 2010 (+23.3%). This increase was particularly marked in North and South America.
This is mainly due to the acquisitions made in 2010 (Emcon Technologies, Plastal Germany, Plastal Spain). Nearly 9,400 new employees joined the Group as a result of these
acquisitions, including 5,500 in Europe, 2,250 in North America, 815 in South America and 800 in Asia and in other countries. On a likefor-like basis, the number of registered headcount increased by 2,756 (+5.4%). This reflects Faurecia's business growth, especially in North America, in Asia and in other countries.
The number of temporary employees increased by 5,139 (+81.0%) in 2010. Excluding acquisitions, the number of temporary employees increased by 3,544 or +55.8%.
As of December 31, 2010, the proportion of temporary employees to total employees was 15.2%, which is comparable to pre-crisis levels.
| 2010 | 2009 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Operators & workers |
Technicians, foremen & adminis trative stai |
Managers & professio nals |
Total | Operators & workers |
Technicians, foremen & adminis trative stai |
Managers & professio nals |
Total | Year on-year change |
|
| Europe | 26,979 | 7,781 | 6,935 | 41,695 | 24,414 | 6,593 | 6,447 | 37,454 | 11.3% |
| North America | 8,172 | 838 | 1,965 | 10,975 | 5,177 | 570 | 1,366 | 7,113 | 54.3% |
| South America | 3,043 | 1,122 | 335 | 4,500 | 1,586 | 710 | 293 | 2,589 | 73.8% |
| Asia | 1,801 | 664 | 1,250 | 3,715 | 1,383 | 410 | 947 | 2,740 | 35.6% |
| Other | 2,606 | 440 | 258 | 3,304 | 1,758 | 227 | 185 | 2,170 | 52.3% |
| FAURECIA | 42,601 | 10,845 | 10,743 | 64,189 | 34,318 | 8,510 | 9,238 | 52,066 | 23.3% |
The registered headcount increased by 23.3% in 2010. On a like-for-like basis, the registered headcount increased by 5.4%.
c In Europe, the total registered headcount increased by +11.3%, with operators & workers increasing by 10.5%, technicians, foremen & administrative staff increasing by 18.0%, and managers & professionals increasing by 7.6%.
This increase stems from the addition of 5,500 people who joined the Group as the result of the acquisition of Emcon Technologies, Plastal Germany, Plastal Spain and Visteon France. On a like-for-like basis, the registered headcount fell by -3.4% due to the finalization of the restructuring plans launched in this region during the crisis.
c In North America, the total registered headcount increased by 54.3%, with operators & workers increasing by 57.8%, technicians, foremen & administrative staff increasing by 47.0%, and managers & professionals increasing by 43.8%. These figures are directly impacted by the addition of 2,250 employees as a result of the acquisition of Emcon Technologies. On a like-for-like basis, the registered headcount increased by 22.7% due to increased production volumes, mainly in Mexico.
| 2010 | 2009 | Year-on-year change | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| CDI (1) | CDD (2) | Total | CDI (1) | CDD (2) | Total | CDI (1) | CDD (2) | Total | ||
| Europe | 39,175 | 2,520 | 41,695 | 35,320 | 2,134 | 37,454 | 10.9% | 18.1% | 11.3% | |
| North America | 9,459 | 1,516 | 10,975 | 6,192 | 921 | 7,113 | 52.8% | 64.6% | 54.3% | |
| South America | 4,204 | 296 | 4,500 | 2,421 | 168 | 2,589 | 73.6% | 76.2% | 73.8% | |
| Asia | 3,342 | 373 | 3,715 | 2,452 | 288 | 2,740 | 36.3% | 29.5% | 35.6% | |
| Other | 2,172 | 1,132 | 3,304 | 1,266 | 904 | 2,170 | 71.6% | 25.2% | 52.3% | |
| FAURECIA | 58,352 | 5,837 | 64,189 | 47,651 | 4,415 | 52,066 | 22.5% | 32.2% | 23.3% |
(1) Open-ended contracts (contrats à durée indéterminée).
(2) Fixed-term contracts (contrats à durée déterminée).
The number of employees working under open-ended contracts increased by 10,701 (22.5%) and the number of employees working under fixed-term contracts increased by 1,422 (32.2%).
Excluding acquisitions, the number of employees working under open-ended contracts increased by 1,947 (4.1%) and the number of employees working under fixed-term contracts increased by 809 (18.3%).
The overall proportion of employees working under open-ended vs. fixed-term contracts was more or less unchanged from one year earlier, with open-ended employment contracts representing 90.9%, versus 91.5% in 2009.
The acquisitions represent 8,754 employees under open-ended contracts, including 5,116 in Europe, 2,222 in North America, 766 in South America and 650 in Asia and in other countries. This represents 82% of the increase in this type of contract.
Excluding acquisitions, the number of employees working under open-ended contracts decreased by 1,261 in Europe, as a result of finalization of the restructuring plans launched during the crisis. Change in other regions was positive, with +1,045 open-ended contracts in North America, +1,017 in South America, +544 in Asia and +602 in the other countries, thanks to the upturn in business levels. The number of fixedterm contracts increased by 32.2%. The acquisitions represent 613 fixed-term contracts, i.e. 43.1% of the total increase in this category, primarily in Europe. On a like-for-like basis, the number of employees working under fixed-term contracts increased by 809, of which 70% are based in North America (Mexico).
| < 20 | 20 - 29 | 30 - 39 | 40 - 49 | > 50 | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Registered headcount | Men Women | Men Women | Men Women | Men Women | Men Women | Men Women | ||||||
| Operators & workers | 630 | 156 | 8,249 | 3,060 | 9,647 | 3,801 | 7,587 | 2,859 | 4,900 | 1,712 31,013 | 11,588 | |
| Technicians, foremen & administrative sta |
103 | 93 | 1,808 | 889 | 2,555 | 929 | 2,180 | 639 | 1,246 | 403 | 7,892 | 2,953 |
| Managers & professionals |
0 | 0 | 996 | 455 | 3,300 | 1,024 | 2,959 | 466 | 1,352 | 191 | 8,607 | 2,136 |
| TOTAL | 733 | 249 11,053 | 4,404 15,502 | 5,754 12,726 | 3,964 | 7,498 | 2,306 47,512 | 16,677 |
Women accounted for 26.0% of the Group's registered headcount, representing a year-on-year decrease of 2 percentage points.
The Group's staff is relatively young overall, with 58.7% of the registered headcount being under the age of 40 and 25.6% under 30. In 2010, the proportion of staff over the age of 50 rose by 1.8 percentage points to 15.2%, with a total of 9,804 of the registered headcount within this age bracket at year-end.
For all age brackets the breakdown by staff category remained stable year-on-year, with 66% of the registered headcount corresponding to operators & workers and 17% to technicians, foremen, administrative staff, managers & professionals.
| New registered headcount | CDI (1) | CDD (2) | Total | Operators & workers |
Technicians, foremen & administrative stai |
Managers & professionals |
|---|---|---|---|---|---|---|
| Europe | 5,116 | 384 | 5,500 | 3,520 | 1,310 | 670 |
| North America | 2,222 | 28 | 2,250 | 1,662 | 157 | 431 |
| South America | 766 | 49 | 815 | 584 | 186 | 45 |
| Asia | 346 | 75 | 421 | 155 | 67 | 199 |
| Other | 304 | 77 | 381 | 284 | 76 | 21 |
| FAURECIA | 8,754 | 613 | 9,367 | 6,205 | 1,796 | 1,366 |
(1) Open-ended contracts (contrats à durée indéterminée).
(2) Fixed-term contracts (contrats à durée déterminée).
This table summarizes the impact of the acquisitions made in 2010 by contract type and by staff category. 93% of the employees added under these acquisitions work under open-ended contracts. 66% are operators & workers, 19% are technicians, foremen & administrative staff, and 15% are managers & professionals – a breakdown that is relatively similar to Faurecia's staffing situation prior to the acquisitions.
| Registered | 2010 | 2009 | Year-on-year change | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| headcount | CDI (1) | CDI (2) | Total | CDI (1) | CDD (2) | Total | CDI (1) | CDD (2) | Total | |
| Europe | 1,274 | 2,430 | 3,704 | 658 | 1,913 | 2,571 | 93.6% | 27.0% | 44.1% | |
| North | ||||||||||
| America | 1,987 | 3,244 | 5,231 | 2,934 | 1,424 | 4,358 | -32.3% | 127.8% | 20.0% | |
| South | ||||||||||
| America | 1,747 | 264 | 2,011 | 506 | 152 | 658 | 245.3% | 73.7% | 205.6% | |
| Asia | 755 | 410 | 1,165 | 222 | 340 | 562 | 240.1% | 20.6% | 107.3% | |
| Other | 749 | 721 | 1,470 | 108 | 848 | 956 | 593.5% | -15.0% | 53.8% | |
| FAURECIA | 6,512 | 7,069 | 13,581 | 4,428 | 4,677 | 9,105 | 47.1% | 51.1% | 49.2% |
(1) Open-ended contracts (contrats à durée indéterminée).
(2) Fixed-term contracts (contrats à durée déterminée).
The table above shows year-on-year changes in hiring, excluding acquisitions and excluding the impact of transfers from fixed-term to open-ended contracts.
The number of hirings as a whole increased by 49.2% from 2009, with a 47% rise in open-ended contracts and a 51% rise in fixed-term contracts.
This increase follows a drastic reduction in hiring lasting over a year in response to the major crisis in the automotive industry.
In terms of volume, the number of new hires is on par with that of 2008, when 6,592 new employees were hired under open-ended contracts and 6,960 under fixed-term contracts.
In Europe, the new employees were hired mainly in Central Europe under open-ended contracts.
In North America, hirings under fixed-term contracts were on the rise in Mexico.
South America and Asia experienced strong growth in their business levels, resulting in increased hiring, particularly under open-ended contracts, which were up three-fold compared to 2009 for these two regions.
In the other countries, and especially in Russia, the 500 hirings (all contract types included) reflects the strengthening of the Group's industrial sites and their increased workload.
| 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|
| Registered headcount | Operators & workers |
Technicians, foremen & adminis trative stai |
Managers & professionals |
Total | Operators & workers |
Technicians, foremen & adminis trative stai |
Managers & professionals |
Total |
| Europe | 2,613 | 759 | 332 | 3,704 | 2,036 | 457 | 78 | 2,571 |
| North America | 4,515 | 335 | 381 | 5,231 | 4,152 | 93 | 113 | 4,358 |
| South America | 1,487 | 484 | 40 | 2,011 | 363 | 268 | 27 | 658 |
| Asia | 654 | 243 | 268 | 1,165 | 408 | 57 | 97 | 562 |
| Other | 1,176 | 201 | 93 | 1,470 | 861 | 54 | 41 | 956 |
| FAURECIA | 10,445 | 2,022 | 1,114 | 13,581 | 7,820 | 929 | 356 | 9,105 |
Operators & workers represented 77% of external hires in 2010, technicians, foremen & administrative staff 15%, and managers & professionals 8%, compared with 86%, 10% and 4% respectively in 2009.
These figures do not include the 2010 acquisitions. The number of operators & workers hired increased by 34% in 2010. All regions showed an increase; however this growth is most marked in South America and in Asia due to the robust business levels in these two regions.
The number of technicians, foremen, administrative staff, managers and professionals hired, which fell sharply in 2009, more than doubled for technicians, foremen & administrative staff and more than tripled for managers & professionals in 2010. This indicator returned, roughly, to its pre-crisis level for these two groups. Here again, all regions showed strong growth.
| 2010 | 2009 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Registered headcount | Operators & workers |
Techni cians, foremen & admi nistrative stai |
Managers & professio nals |
Total | Operators & workers |
Techni cians, foremen & adminis trative stai |
Managers & professio nals |
Total | |
| Europe | 627 | 109 | 21 | 757 | 595 | 75 | 17 | 687 | |
| North America | 1,043 | 69 | 71 | 1,183 | 530 | 43 | 19 | 592 | |
| South America | 0 | 36 | 0 | 36 | 0 | 32 | 0 | 32 | |
| Asia | 79 | 27 | 9 | 115 | 136 | 7 | 8 | 151 | |
| Other | 252 | 9 | 1 | 262 | 104 | 4 | 2 | 110 | |
| FAURECIA | 2,001 | 250 | 102 | 2,353 | 1,365 | 161 | 46 | 1,572 |
The number of transfers from fixed-term to open-ended contracts was up nearly 50% in 2010 compared to 2009. 47% of this increase pertains to operators & workers.
This increase was in addition to the rise in external hiring in 2010. It was particularly significant in North America and in the other countries.
| 2010 | 2009 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Registered headcount |
Resigna tions (open ended contracts) |
Individual layoi s |
Group layoi s |
Other | Total | Resigna tions (open ended contracts) |
Individual layoi s |
Group layoi s |
Other | Total |
| Europe | 913 | 1,180 | 915 | 1,729 | 4,737 | 1,293 | 2,277 | 2,200 | 1,920 | 7,690 |
| North America |
812 | 1,560 | 122 | 1,106 | 3,600 | 477 | 2,494 | 1,428 | 392 | 4,791 |
| South America |
257 | 519 | 2 | 147 | 925 | 117 | 429 | 35 | 107 | 688 |
| Asia | 265 | 172 | 0 | 239 | 676 | 211 | 200 | 154 | 216 | 781 |
| Other | 243 | 244 | 0 | 231 | 718 | 102 | 51 | 62 | 616 | 831 |
| FAURECIA | 2,490 | 3,675 | 1,039 | 3,452( * ) |
10,656 | 2,200 | 5,451 | 3,879 | 3,251 | 14,781 |
* Including 3,155 on expiration of fixed-term contracts.
The number of employees who left the Group in 2010 totaled 10,656, versus 14,781 the previous year, representing a decrease of almost 28%. Of these departures, 30% corresponded to the expiration of fixed-term contracts. Resignations represented 23.3%, compared to 14.9% in 2009. South America and the other countries, areas with highly dynamic labor markets, recorded the biggest increases. In Europe, on the other hand, the number of resignations fell by almost 30%. Individual and group layoffs accounted for 44.2% of total departures, down from 63.2%. The number of individual layoffs was on par with 2009, the number of collective layoffs fell by 73%, as the majority of the restructuring plans related to the crisis have now been adhered to.
| 2010 | 2009 | ||||
|---|---|---|---|---|---|
| Total training hours |
Training hours per employee |
Total training hours |
Training hours per employee |
||
| Europe | 778,596 | 21 | 789,365 | 22 | |
| North America | 137,665 | 14 | 113,282 | 17 | |
| South America | 54,971 | 15 | 41,271 | 18 | |
| Asia | 106,287 | 32 | 79,849 | 30 | |
| Other | 96,119 | 33 | 57,906 | 29 | |
| FAURECIA | 1,173,638 | 21 | 1,081,673 | 22 |
The average number of training hours remained stable at 21 hours per employee in 2010 at the Group-wide level. The total number of training hours in 2010 increased by 8.4%. Asia and the other countries stepped up their efforts to provide training opportunities, a trend that was already apparent in 2009.
In Europe, North America and South America, the substantial increase in the number of employees due to acquisitions had a negative impact on this ratio.
| 2010 | 2009 | |
|---|---|---|
| Europe | 69 | 61 |
| North America | 34 | 27 |
| South America | 17 | 14 |
| Asia | 54 | 57 |
| Other | 19 | 17 |
| FAURECIA | 193 | 176 |
The number of expatriates increased by 9.7% Group-wide in 2010. Having a large and internationally diverse group of expatriates goes hand-in-hand with the Group's efforts to expand internationally.
| 2010 | 2009 | |
|---|---|---|
| Europe | 1,114 | 928 |
| North America | 6 | 4 |
| South America | 13 | 18 |
| Asia | 7 | 7 |
| Other | 15 | 10 |
| FAURECIA | 1,155 | 967 |
Faurecia employs over 1,100 disabled people in Europe. The criteria used to define disabled employees are those set down in the legislation of each country. In Europe – particularly France – such legislation tends to favor a more proactive approach than in other countries. The increase in the number of disabled employees in Europe in 2010 reflects the overall increase in staff numbers in this region, especially as a result of the acquisitions in Germany and Spain. The proportion of disabled employees in France was more or less unchanged from 2009, representing just over 4% of the Group's workforce in this country.
| Registered headcount | Two 8-hr shifts(1) | Three 8-hr shifts(2) |
Weekend(3) | Other | Total |
|---|---|---|---|---|---|
| Europe | 12,355 | 12,129 | 333 | 16,878 | 41,695 |
| North America | 2,420 | 4,684 | 30 | 3,841 | 10,975 |
| South America | 852 | 2,352 | 0 | 1,296 | 4,500 |
| Asia | 1,024 | 666 | 0 | 2,025 | 3,715 |
| Other | 1,261 | 1,381 | 0 | 662 | 3,304 |
| FAURECIA | 17,912 | 21,212 | 363 | 24,702 | 64,189 |
(1) Two shifts
(2) Three shifts
(3) Reduced weekend hours
Staff work schedules within the Group are aimed at Meeting customer needs, based on production capacity at our sites. Shift work and weekend work mainly concern the production sites and together account for 61.5% of the Group's registered headcount.
| 2010 | 2009 | |
|---|---|---|
| Europe | 727 | 542 |
| North America | 0 | 0 |
| South America | 0 | 0 |
| Asia | 0 | 0 |
| Other | 0 | 0 |
| FAURECIA | 727 | 542 |
Substantially all of the Group's part-time employment contracts are in Europe, particularly France. Part-time staff accounted for 2.7% of the Group's regular employees in France in 2010, versus 2.3% in 2009. The acquisition of Plastal Germany and Plastal Spain also contributed to the increase in this personnel category in 2010.
| 2010 | 2009 | ||||
|---|---|---|---|---|---|
| Overtime (in hours) | % hours worked | Overtime (in hours) | % hours worked | ||
| Europe | 1,818,070 | 2.7% | 1,469,309 | 2.3% | |
| North America | 3,077,584 | 14.2% | 1,074,811 | 7.9% | |
| South America | 427,948 | 6.1% | 212,355 | 5.3% | |
| Asia | 1,299,193 | 18.1% | 911,135 | 15.5% | |
| Other | 418,863 | 6.8% | 131,622 | 3.1% | |
| FAURECIA | 7,041,658 | 6.4% | 3,799,232 | 4.1% |
Overtime hours are determined in accordance with the legislation of each country. The 2.3-point year-on-year increase in overtime as a proportion of total hours worked was mainly due to the economic recovery seen in the global automotive industry, especially in North America, Asia and other countries.
| Absenteeism rate 2010 | Absenteeism rate 2009 | |
|---|---|---|
| Europe | 3.2% | 3.3% |
| North America | 1.7% | 1.2% |
| South America | 2.1% | 2.0% |
| Asia | 0.5% | 0.5% |
| Other | 2.5% | 2.3% |
| FAURECIA | 2.6% | 2.7% |
Absenteeism reported in 2010 and 2009 was due to illness, workplace accidents and various unauthorized absences. The number of hours of employee absence fell by 15% year-on-year from an aggregate of 2.5 million to 2.9 million. At the same time, the number of hours worked increased by 18% from 92.8 million to 109.8 million. As a result, the absenteeism rate decreased by 0.1 points in 2010.
| 2010 | 2009 | ||||||
|---|---|---|---|---|---|---|---|
| One-oi subcontracting projects |
Ongoing subcontracting |
Total | One-oi subcontracting projects |
Ongoing subcontracting |
Total | ||
| Europe | 474 | 1,545 | 2,019 | 311 | 1,196 | 1,507 | |
| North America | 50 | 159 | 209 | 35 | 301 | 336 | |
| South America | 62 | 262 | 324 | 65 | 140 | 205 | |
| Asia | 36 | 435 | 471 | 16 | 209 | 225 | |
| Other | 26 | 160 | 186 | 63 | 111 | 174 | |
| FAURECIA | 648 | 2,561 | 3,209 | 490 | 1,957 | 2,447 |
The use of subcontractors increased by more than 31% in 2010. This variation is mainly explained by the integration of the subcontractors of our different acquisitions into the Group's scope in Europe, North America and South America. Use of subcontractors was also considerable in Asia as a result of our strong activity on the region.
| (in thousands of euros) | Accomomdation | Transport | Catering | Medical care | Supplementary health and personal risk insurance |
Subsidies | Total |
|---|---|---|---|---|---|---|---|
| Europe | 3,124 | 8,383 | 7,302 | 3,872 | 15,547 | 4,258 | 42,486 |
| North America | 1,340 | 2,371 | 1,007 | 9,065 | 2,624 | 101 | 16,509 |
| South America | 637 | 2,642 | 3,947 | 3,933 | 367 | 289 | 11,814 |
| Asia | 2,493 | 2,126 | 1,390 | 3,647 | 2,891 | 200 | 12,747 |
| Other | 159 | 664 | 493 | 192 | 424 | 44 | 1,975 |
| FAURECIA | 7,753 | 16,186 | 14,139 | 20,709 | 21,853 | 4,891 | 85,531 |
The total amount rose over 50% on 2010. As well as the mechanical increase in the item following our acquisitions, supplementary measures of protection (medical services, mutual and risk insurance) were established in North and South America and in Asia, in order to support the development and support of our employees in these regions.
| 5.1. | QUALITY ACHIEVEMENTS | 46 | 5.3. | OUTLOOK 2011 | 49 |
|---|---|---|---|---|---|
| 5.2. | CUSTOMER AWARDS | 48 |
Faurecia's quality performance, measured as the average halfyearly rate of customer rejects per million parts delivered (ppm), deteriorated slightly from 15 to 18 in 2011 due to the integration of sites formerly belonging to Plastal and Emcon.
A plan for the accelerated and exceptional rollout of the Faurecia Excellence System was implemented at the newly acquired Plastal and Emcon sites, with an emphasis on Safety and Quality.
The strict application of the methodologies laid down in the Breakthrough Quality Plan allowed these sites to match Faurecia's quality performance in the first quarter of 2011.
The Breakthrough Quality Plan, launched in 2006, has now reached maturity. Its strict rollout on new sites acquired in 2010 enabled them to align their performances with the Group average by Q1 2011.
Faurecia's major customers now acknowledge that it offers one of the highest levels of quality worldwide.
Detailed monitoring of specific performances with each customer has been introduced in order to ensure that corrective measures are taken immediately to address any quality issues at a given plant.
Every major problem is addressed by means of systematic cross-functional action at the sites in question in order to prevent any recurrence. This methodology and the coordination system have also been picked up by a major customer.
Reducing quality performance differentials between sites remains an overriding goal, with 60% of sites having already reached single-digit customer rejects (up to or equal to 9 ppm), the highest level of excellence worldwide.
The in-house parts scrappage rate stabilized in 2010, after decrease of 30% in 2009.
Faurecia's culture of quality was reinforced in 2010 via major initiatives: QRQC Competition and Faurecia Excellence System (FES) audits.
The objective of the QRQC Competition(1) 8D(2) is not only to select the best site or the best quality practice, but more importantly to train operations managers to steer the problem-solving process effectively.
The educational process is simple: each site manager submits a problem resolution to a jury of peers at the Group and regional levels, and to his or her operations manager, under a standard format. The assessment chart, which receives comments after each submission, allows the depth of analysis and the mainstreaming of corrective measures to be weighed up.
This process, which originally targeted production quality problems in 2010, has been extended, for the 2011 competition, to all problem categories: quality, environment, work safety, logistics, cost reductions, research and development. In addition, each research and development center will also submit its best subject.
The "Faurecia Excellence System" audit of plants and programs continued in 2010.
A total of 130 plants were audited by the Faurecia Group's auditors, 114 of which for the second time, using the 2009 reference framework that provides for simple and structured self-assessment on 13 points. This is aimed at making it easier for individual sites to draw up progress plans.
The A/B/C/D rating awarded after the audit is a tool used to motivate management. It resulted in a 10-point improvement in the result, with the Group average reaching "B" in 2010.
Each site that receives a "D" must submit an immediate adjustment plan to Faurecia's Chairman.
The audit program is a component of the "Plan for the Acceleration of the Faurecia Excellence System," which aims to significantly improve the Group's operational performance.
In 2010, all site managers received comprehensive training on lean manufacturing tools: Quality, Safety, Involvement of Staff, Logistics and Productivity. They have the support of a network of "FES Senior Specialist" operational experts.
Management control (placement under management supervision) was strengthened and expanded in 2010 to ensure that each plant manager grasps at all times the operational priorities of the improvement plan, rolls out appropriate actions in plants, implements them and monitors their progress and results on a daily basis.
The verification of programs under development as part of the FES audit continued in 2010, with audits of 86 programs covering all phases of the program from the process of taking an order to its production.
As is the case for production sites, an A/B/C/D rating can provide management with excellent visibility and help motivate program teams as they progress, but it is most valuable in helping make the backlog more robust.
Applying rigorous and disciplined development methodologies has resulted in a significant improvement in ratings, with D-rated programs almost completely eradicated, and an average score of "B" overall, with more than 56% of programs rated "B" or "A."
In 2010, Faurecia received several customer awards:
At Group level:
Customer awards
5 Quality
At production sites level:
c "Best Supplier" from SVW (Shanghai Volkswagen);
c the Wuhan site (Chine), Emissions Control Technology product group, received the following trophies:
The customer trophies received in China are consistent with the excellent progress made in the Faurecia Excellence System on these sites. In particular, our customers have organized presentations and site tours of the Wuhan and Changchun plants, holding them up as examples to their local suppliers.
Reducing external customer performance differentials between sites and improving the capability of production processes, as measured by the rate of rejects, will be the main objectives in 2011.
These objectives will be achieved by pressing forward with the rollout of the Faurecia Excellence System in all Group plants, with an upgrade of the newly acquired sites.
6
| 6.1. | 53 | 6.2.4. | Maintaining Faurecia's leadership position in the fi eld of innovation |
||||
|---|---|---|---|---|---|---|---|
| 6.2. | 54 | into customer development | |||||
| 6.2.1. | The Group approaches the issue of environmental protection from many dij erent, yet complementary, angles |
54 | management, encompassing all project phases, is key to this endeavor |
56 | |||
| 6.2.2. | Thanks to the high level of integration in all its product lines, Faurecia implements a system approach which makes it possible to create value while Meeting the demands of dij erent markets |
55 | 6.3. | 58 | |||
| 6.2.3. | Product optimization and constant ej orts to improve manufacturing performance with a view to increasing competitiveness require optimization of the use of materials and implementation processes |
56 | |||||
| MARKET EXPECTATIONS RESEARCH AND INNOVATION |
requires fast and reliable integration programs. Rigorous project ENGINEERING AND PROGRAM MANAGEMENT |
R&D is a key strategic topic for Faurecia as it is the starting point for the Group's innovative creations of products and processes and future customer applications. R&D activities are structured around the following main engineering units:
R&D activities represented a gross expenditure of €689 million in 2010 after the strategic acquisitions of Emcon for emissions control systems and Plastal for automotive exterior parts, representing 5% of sales, not including the costs related to managing tooling and capital expenditures. In all, 4,500 engineers and technicians based at Faurecia's 38 R&D centers across the globe control an aggregate annual gross budget of more than €1 billion. 300 patents were filed throughout the year.
Technological development and innovation are key priorities for Faurecia. Technological development is accelerated in two ways.
First, Faurecia redeployed its internal innovation policy with a restructured innovation plan, greater involvement by the company's management through regular "Technology Sessions", and the promotion of technical experts now organized into networks throughout the Group. The first "Forum Experts", involving the Group General Management and bringing together the Group's technological experts, was held at the beginning of 2011.
Second, Faurecia decided to acquire or invest in high-tech companies, in sectors related to one of its four businesses. Three investments were made at the end of 2010 and in early 2011.
Faurecia acquired Angel Demmel Europe, based in Lindau (Germany), leader in metal interior trim parts, which has developed particularly advanced technologies for cutting metals such as aluminum to create premium trim parts.
At the end of 2010, Faurecia also acquired the pneumatic systems business of Hörbiger, based in Schongau (Germany), which developed lumbar support and massage systems for premium car seats.
Lastly, in early 2011, Faurecia acquired a 21% stake in Amminex, a Danish technology company which has developed technology for storing ammonia, the central molecule for systems for reducing nitrogen oxides (exhaust gases), the reduction of which is a key focus of future environmental regulations. This acquisition has strengthened Faurecia's technical abilities in this key sector.
Automakers are swiftly adapting their future product offerings in response to the difficult market conditions experienced in 2010. They continued previous trends by proposing enhanced downsized engine power, new forms of architecture, hybrid and electric solutions, and lighter-weight vehicles, as well as by speeding up the renewal of their entry-level offering. At the same time, they continue to research new functionalities to satisfy customers' increasing expectations, particularly in terms of comfort and perceived quality. Against this backdrop, Faurecia reaffirmed its competitiveness by creating new products to help lighten the weight of vehicles and reduce emissions as well as increasingly incorporating natural materials. The new demands of the Group's automaker customers have not only affected the products themselves but also production technologies and the efficiency and duration of the development processes. Consequently, R&D has taken on even greater importance for the Group, as it enables us to offer new products that are more competitive in terms of cost, weight and performance.
In 2010, Faurecia focused on the following key priorities:
c increased technological content in its premium vehicles, through the integration of new features, improvements to existing features or the use of different finishes;
c innovation and value creation as ways to enhance the product offering. This involves anticipating market demands and playing an active role in major societal and technological developments. Faurecia plays a part by developing and integrating new technologies and by drawing on its pool of experts, which was strengthened in 2010;
The combination of these factors has led to tough market demands on equipment supplier performance. Faurecia nevertheless regards these trends as a major opportunity to boost value in its markets and strengthen its long-term competitive standing. Few of its competitors can meet these intensifying demands, and Faurecia considers that it has the leading technology among the major market players. In order to meet these challenges while complying with tightly imposed budgets and deadlines, Faurecia has stepped up the pace of its product innovation plan and increased its engineering capacity.
Faurecia's innovation drive in 2010 revolved around products and technologies that boost the Group's lead in two major areas: environmental performance and value creation.
A multi-criteria approach is required to reach weight reduction targets, simultaneously addressing the performance of materials used, functional integration of products and the system in which they operate.
By combining different materials such as very high tensile strength steel and lightweight alloys or even composite plastics, hybrid seats can be developed that are both lighter in weight and safer.
A combination of aluminum and fiberglass materials applied to front-end modules gives a gain of 15% over previous technologies. This technology is now used in volume production of the new Audi A6.
Microcellular plastics using Microject technology (injection combining resin and an inflating agent or gas) make it possible to reduce the density of molded parts without affecting performance. When applied to door panel, central console or instrument panel parts, the weight of the parts is reduced by 20% compared with the traditional injection system.
In addition, Lignolight technology (Faurecia patent) applied to door panels improves density by 40% compared to traditional components.
Considerable gains are also achieved thanks to technologies using steel. The Ultima seat track made from ultra high strength steel (Dual Phase 1000) is a first. Durability is improved by 20% and weight is reduced by 15%. The weight of the recliner mechanisms has also been reduced by approximately 30% by combining higher performance materials and different forming and assembling technologies (e.g. laser welding).
Over and above these material and product gains, the only way to achieve new weight reduction thresholds is to apply a systemic approach. Traditionally, noise levels inside vehicles are reduced by layering heterogeneous materials which reflect or absorb sound vibrations and waves. Research into the nature of sound vibrations and waves and the ways in which they propagate has led to development of a range of materials combining acoustic insulation and absorption properties. By carrying out a threedimensional simulation of a vehicle's acoustic and vibration signature, it is possible to define an optimal distribution of acoustic insulation material. This two-pronged approach makes it possible to reduce the weight of soundproofing materials by more than one third, a potential gain of over 10kg per vehicle.
We apply these weight-reduction strategies to all of our products so that we can surpass market objectives and offer products that provide a weight savings of about 70kg out of an average of 200kg.
Reducing product size maximizes passenger room and helps reduce vehicle size. The goal is to provide the users of a certain vehicle class with the interior space of the next highest line.
Development of new, lighter and more compact seat mechanisms and of composite backrests increases capacity by 15 to 20mm.
Faurecia develops all technologies for reducing nitrogen-oxide and particulate emissions for off- and on-road passenger cars and commercial vehicles; these technologies either use systems for recirculating exhaust gas back to the engine intake or autonomous systems, in particular selective catalysis. In partnership with Amminex, Faurecia develops and industrializes the ASDS (Ammonia Storage and Delivery System) process which stores ammonia in a compact gaseous form, giving improved performance over a traditional liquid-form storage system. The first projects to use this technology have begun at a number of automakers.
Faurecia develops technologies for recycling the thermal energy available in exhaust systems, either directly to heat the vehicle's interior, for example, or by transforming the thermal energy into electricity to power accessories. Two technologies are considered for the latter application: thermoelectricity, which uses a semiconducting material crossed by a heat flow to generate electricity; or the generation of mechanical energy from the Rankine cycle, which uses fluid transformed into steam to power a turbine. This mechanical energy is then converted into electricity. These two principles reduce CO2 emissions by 4 to 6 grams.
Equipment suppliers must standardize for individual automakers and between several automakers in order to reduce development time and investment, ensure high levels of robustness at start of production, and increase competitiveness. However, this must not have a negative impact on the diversity of the product offer or on the performance of individual applications.
Faurecia has played a pioneering role in this field and the approaches that it proposes for each module are adapted to the needs of its customers.
When applied to seat frames, the Apollo concept defines those elements of assembly which remain unchanged for the various parts. As these key areas are cross-cutting, the automaker has freedom when it comes to product design, standardizing assembly technology and adapting the level of automation to the cost structure of the production country. This leads to a massive reduction in investment, a reduction in development time and costs, and the ability to supply a reliable, high-performance product under the best economic conditions.
Similarly, the front-end carrier is at the heart of a modular concept which makes it possible to supply a wide range of products just in time. This part both ensures that the front end of the vehicle is rigid and integrates all the cooling and lighting components. These restricting parameters are taken into account both in terms of the part's design, which must adapt to the diversity of the components, and in terms of the production system able to create the desired composition in the time given. In Audi's case, this gives five different vehicles offering five million different module combinations delivered at an average rate of 1,700 units per day.
Decoration is a key element of customization. For Faurecia, it is a strategic focal point. The product offering for vehicle interior parts breaks down into two large families: add-on trim such as painted, filmed, aluminum or wood inserts, and integrated decoration such as DecoSkin (trim integrated into the surface of a part), DecoStitch (stylish sewing lines) applied to series production on the Laguna 3.
Other processes can be used to enhance surfaces, i.e. dual-colored, metallic or mother-of-pearl instrument panels.
The same approach is applied to automotive exterior parts, through specific painting of some elements and add-on films or parts.
Customization cannot be fully applied to the detriment of standardization. For this reason, Faurecia systematically searches for the best balance between these two aspects by optimizing product and process architectures and thereby reducing the diversity of components.
Faurecia has also developed a seat concept called SmartFitTM which makes it possible to customize automatic adjustment for each occupant in line with their measurements. The seat can also adapt to driving conditions (town, highway, sport, etc.) or provide additional wellbeing functions such as massage.
Linked to the seat's electronic system, SmartFitTM's Bluetooth interface simplifies seat commands and optimizes the occupant's comfort and security.
The development of specific plastic formulas leads to new materials that better address market needs and expectations.
The search for metallic materials which meet increasingly advanced requirements and optimize weight is also a focal point for development of new products.
In addition to processing methods for plastic materials, Faurecia focuses on forming processes for metallic materials, such as hydroforming, cold forging or assembly processes such as laser welding which it pioneered, and brazing technologies.
A new concept for exterior-part painting lines (New Tech) was unveiled in March 2011 in Audincourt (France). This new concept gives a significant reduction on the order of 95% in volatile organic compound emissions, a reduction on the order of 25% in energy consumption and increased flexibility, making it possible to adapt investment as closely as possible to automakers' budgets, particularly in emerging markets. This new concept will be widely used for the international expansion of Faurecia Automotive Exteriors.
Marketing teams are in close communication with automakers beginning from the advanced stages in any vehicle development project to ensure that Faurecia's product offering is consistent with trends in the auto industry.
The product/process Pole of competence are involved beginning from the initial development stages. This in-depth collaboration makes it possible to determine the impact of new technologies early on, to validate these developments in real time and to deploy these advances across all of the Group's entities.
Moreover, experts collaborate worldwide through a dedicated interactive network. This platform simultaneously serves as a knowledge base and a collaborative space that pools resources and optimizes turnaround times.
Innovation projects are subject to multi-phase, standardized validation process phases from the moment the idea is conceived up to industrial validation.
This process ensures that each project is in line with market expectations and consolidates priorities and the allocation of resources.
To expand and enhance its expertise, Faurecia is constantly forming new partnership with suppliers as well as research institutes. This approach, which is particularly evident in the field of plastics and metals, makes it possible to achieve lighterweight designs at the best possible cost.
6
Specific cooperative actions are also implemented for innovation projects that require technologies related to Faurecia's core business. For example, incorporating mobile electronics as part of the man-machine interface has led to collaboration with industry players in the fields of connectors, switches and electronics.
Innovation projects, which are managed on a global scale, are handled by different R&D centers, depending on their specific expertise and proximity to the target markets. For instance, the customizable comfort systems for seats are managed by the R&D center located in Germany, nearby the premium automakers.
In 2010, the Group's continuous innovation work resulted in over 300 new patents. On par with previous years, this number demonstrates Faurecia's commitment to innovation, despite heavy economic constraints.
It should also be noted that these patents pertain to products, materials, and manufacturing processes, demonstrating the efforts made by Faurecia to optimize the entire product value chain.
In 2010, the Group's commitment to innovation was embodied by:
Carrying out vehicle innovation and application projects calls for an engineering organization and program that are highly reliable and effective. Faurecia is organized in a way that meets both these requirements.
As of today Faurecia operates 38 R&D Centers around the world. Each Business Group's R&D is spread among our three main geographic areas—Europe, America and Asia. It is run as a separate entity and possesses all the resources necessary to carry out the projects which it is assigned. Since it is structured as a network, it can run worldwide programs—committing as much of its resources as are needed, through its worldwide workforce, and just the right resources, through its roster of experts, particularly for vehicle innovation or application projects.
Vehicle application programs follow a unique process, bringing together all the participants needed to develop and launch a new, mass-produced product. This process, known as PMS (Program Management System), describes all the deliverables to be produced at each phase of the program. Every program is given periodic interim reviews, first by specialists and then at the close of each phase by management, so that its progress can be seen. The PMS includes five phases: obtain and validate customer needs, develop the product, test the product and develop the manufacturing process, plan and validate productive machinery, and increase line speeds and launch mass production.
To track performance throughout the development process and steer it towards excellence, Faurecia has introduced the idea of program management excellence. This new approach involves the foregoing elements plus:
These various tools have made it possible to significantly improve such programs' performance financially and in terms of quality, schedule and mass production launch.
Over 400 programs run by 280 Program Managers are currently being applied. Some are of global scale, from first drawings to final manufacture.
| 7.1. | FAURECIA'S PRODUCTS AND THE ENVIRONMENT |
7.2. | FAURECIA'S MANUFACTURING SITES AND THE ENVIRONMENT |
65 | |||
|---|---|---|---|---|---|---|---|
| 7.1.1. | Product Design | 60 | 7.2.1. | Environmental protection | |||
| 7.1.2. | Reducing Product Weight | 61 | improvement initiatives | 65 | |||
| 7.1.3. | Emissions Reduction Initiatives | 62 | 7.2.2. | Certifi cation and Training | 65 | ||
| 7.1.4. | Recycling Initiatives | 62 | 7.2.3. | Environmental indicators | 66 | ||
| 7.1.5. | Use of natural materials | 63 | |||||
| 7.1.6. | Life cycle analyses | 64 | |||||
| 7.1.7. | Supplier management | 64 |
Structured around environmental excellence centers and networks, Faurecia's teams make every effort to reduce environmental impact throughout the product life cycle.
While the regulations currently and soon to be in force have a direct impact on existing designs, automakers also sometimes strive to exceed these standards and set even more ambitious goals in terms of emissions reduction, the use of "green" materials (recycled or renewable materials) and automotive waste recovery. In such cases, suppliers have no choice but to go the extra mile and meet these objectives.
Faurecia continued to follow the course it set in 2009, devoting a significant portion of its R&D budget to reducing the environmental footprint of the auto industry.
Depending on the type of engine, decreasing the total weight of today's average vehicle by 100kg reduces emissions by 8-10g of CO2 per kilometer driven. Since Faurecia's products can account for up to 20% of a vehicle's total weight, we play a key role in making vehicles lighter and more fuel efficient, thereby reducing greenhouse gas emissions. Through its Emissions Control Technologies Business, Faurecia also makes a significant contribution to lowering CO2 emissions and reducing noise pollution.
This mission represents a major objective for all parties affected by the Group, including:
c customers, i.e., the automakers who rely on Faurecia to help differentiate their brands, by supplying products to make lighter vehicles with lower emissions that enable them to meet their objectives in this area;
In order to grow and to make lighter, cleaner, safer, more spacious vehicles, Faurecia takes environmental factors into account at all stages in the product life cycle, from product design to the environmental impact of its production sites, from supplier collaboration to product end-of-life.
Faurecia's approach focuses on six key areas starting from the product design phase and including the technical expertise we provide to automakers:
A number of countries, representing a considerable portion of the global automotive market, have regulatory frameworks for controlling carbon emissions. In order to reduce fuel consumption and consequently carbon emissions, reducing vehicle weight is a major imperative for automakers and is viewed as a significant means for automotive suppliers to stand out from the competition.
Faurecia is in a leading position to help automakers achieve this new objective, thanks to the diversity and size of the products that it supplies as well as its high level of vertical integration.
Obtaining optimal component weight is a complex balancing act requiring a broad spectrum of skills and approaches to support a wide variety of technological solutions. These approaches include:
c developing a new manufacturing process for exhaust system parts to reduce the thickness of the steel tube;
c developing new high-performance composite materials such as "sandwich" frames and structural foam which can achieve weight savings of between 5% and 30% depending on the application concerned;
Some examples of potential applications in four major vehicle systems are provided below:
The majority of industrialized countries regulate the pollution generated by the exhaust emissions of private and commercial vehicles to some degree, although the scope and stringency of these regulations varies from country to country. Following the widespread introduction of catalytic converters for gasolinepowered vehicles, it is now diesel vehicles and utility vehicles that is increasingly subject to regulatory constraints.
Europe is the leading worldwide market for diesel-run vehicles and has established strict regulations on two major pollutants – NOx and particulate matter (PM). Emissions are currently governed by the Euro 5 standard and will be governed by the Euro 6 standard beginning in 2014. The PM emissions threshold under the Euro 5 standard – which came into force in September 2009 – is five times lower than in Euro 4, which means that diesel vehicles need to use particulate filters. Beginning in September 2010, all diesel vehicles sold must be equipped with such a filter. Within the space of five years, the majority of the world's vehicle producing countries will have adopted comparable standards. South Korea was the first in 2010, and it will be followed by India in 2012 and then China in 2014. For Faurecia, this requirement for particulate filters means an increase in the average value of the lines delivered to customers. In 2014, the Euro 6 standard will cut the limit for nitrogen oxide emissions (NOx) to a third of its current value (0.08g/km).
New regulations relative to NOx and PM, applicable to utility vehicles, have required that emissions be reduced by more than 90% over the last decade in Europe, the United States and Japan. Brazil, China and India will soon follow the same path. Beginning in 2011, similar standards will apply to "off-highway" vehicles.
These emissions standards will require the development of new post-treatment solutions for the exhaust line that are able to reduce NOx emissions. Several technologies are under development:
These technologies are already being used in European and North American utility vehicles. Particulate filters and SCR are required in commercial vehicles that operate in areas subject to strict regulations. In addition, some applications require innovations like the Thermal RegeneratorTM. These NOx treatment technologies have already been incorporated into Faurecia's product offering and are already included in several models that are looking ahead to the Euro 6 standard or similar regulations. Such vehicles include the BMW 5 Series 5 3.0l, which offers LNT as an option; the Audi Q7; the VW Touareg 3.0l V6 TDI; or the new Mercedes S350 V6, each equipped with its own type of SCR system.
Faurecia's latest developments and newest concepts include:
This trend towards stricter emissions standards requires exhaust systems to be fitted with highly specific equipment, and as such represents a significant growth opportunity for the Group in all of its markets.
In view of the increasingly strict regulations in this area, automakers are making ever more stringent demands on their equipment suppliers in terms of recycling end-of-life products. All of Faurecia's businesses are affected by these obligations and, depending on the characteristics of the component in question, have implemented plans and solutions to ensure that end-of-life products will be processed as efficiently as possible in the future.
The Automotive Seating Business, for instance, conducted a product/process LCA (life cycle analysis) on an innovative front seat, comparing it to the current model, with a view to improve its performance and to reduce its environmental footprint. The initial results of this study indicate a potential reduction in CO2 equivalent emissions of approximately 10% for some of the key components of this seat.
In 2009, the Interior Systems Business kicked off a project, in conjunction with the French government's Energy and Environmental Agency (ADEME), promoting the recycling of complex interior components with a heterogeneous chemical
makeup (instrument panels, door panels, etc.) by dismantling, crushing and separating the materials. Recyclability studies and tests have also been launched with certain car shredding establishments in relation to current products and materials being developed.
In a similar vein, in 2009 the Automotive Exteriors Business is finalizing a project launched in 2008 in conjunction with the ADEME to optimize the treatment of materials from end-of-life vehicles and produce cradle-to-cradle designs. Specific extrusion processes and chemical treatments have been developed in order to enhance the quality of materials and thereby optimize their performance.
The outcome of the Group's work in this area should enable us to draw up financial and technical models tailored to Faurecia's business operations. We are studying all possibilities for recovering materials at the end-of-life phase with a view to integrating best-in-class solutions right from the design stage; reducing the environmental impact of our products, and taking into account all stages of the vehicle's life cycle. We also use life cycle analyses to "eco-design" our products, integrating all of the above criteria as early as possible into the innovation and development processes.
Faurecia proposes an increasing number of recycled plastic parts.
In the Automotive Seating Business, depending on the type and category of vehicle, various components are now partly made of recycled polypropylene. Taking all these components together, recycled plastics can now account for 15-20% of the materials comprising the seats manufactured by Faurecia.
In the Interior Systems Business, various tests and projects are currently underway in collaboration with industrial partners in the European automotive recycling industry.
In addition, Faurecia maximizes the incorporation of recycled natural fibers (mainly cotton) in its vehicle soundproofing systems.
The Automotive Exteriors Business offers a wide range of applications that can use recycled plastics, particularly nonvisible applications such as energy absorbers and bumper frames or spoilers. Thanks to recent research work we can now offer the option of incorporating recycled materials into decorative parts, such as bumper surfaces, for upcoming vehicle models. Lastly, we are also looking into new sources of materials from end-of-life products in order to enlarge the range of available second-life materials.
Life cycle analyses show that the use of recycled materials can reduce the environmental impact of manufactured products. Faurecia, like its automaker customers, has considerably extended its panel of suppliers of recycled materials with a view to integrating recycled parts into increasingly technical applications.
Bio-based materials and natural fiber composites are forming an ever-larger part of new car models. Faurecia offers customers a wide array of lower cost alternatives to petroleum-based products, a market in which it has a high degree of involvement and one it has pioneered.
In particular, Faurecia Interior Systems designs and manufactures door panels using composite materials that combine wood fibers and resins. Natural fibers account for between 50% and 88% of the materials developed for this application. We also manufacture instrument panels that combine a polypropylene matrix with linen fibers, comprising between 40% and 60% fibers, depending on the mechanical properties required.
We have also developed a number of injection-based applications which we are currently proposing to customers for future projects. These composite materials made from natural fibers can be used to replace current materials and are 25% lighter.
The Automotive Exteriors business has approved the use of compounds based on polyolefin and fibers such as hemp and sisal for making semi-structural parts to replace glass fibers in order to offer customers solutions that are competitive in terms of weight and cost. Natural fibers used as reinforcement in plastic parts generate weight savings of up to 20%.
The use of these materials also makes the Group less dependent on oil prices and allows it to reduce its overall environmental footprint. Wood, linen, hemp and sisal are entirely renewable materials, are locally available, and require much less start-up energy than traditional solutions such as glass fibers.
Faurecia has developed all these materials to enhance processing methods by increasing resistance and improving technical performance and esthetic appeal. The materials are used in both premium vehicles such as the Audi A4, Volvo C70 Coupé and Citroën C6 and volume-production models including the Citroën C4, Toyota Corolla and Avensis, Ford C-Max and Nissan Qashqai (wood fibers), and the Opel Astra and Zafira and the SmartForTwo (linen).
In 2007, Faurecia Interior Systems launched a research project called Biomat aimed at replacing fossil-based materials with materials derived from fully renewable resources.
Faurecia's objective is to develop a biopolymer for vehicle interior applications. These are technical materials, which meet the strict requirements of the automotive industry in terms of safety, regulatory compliance, heat resistance, dynamic fatigue, odors, VOC (volatile organic compound) emissions, etc. They can be processed using traditional, low-investment processes, and the price per kilogram is competitive compared to more conventional materials used for vehicle interiors. This research should eventually result in an industrial application with high volumes of materials derived from renewable and non-food resources.
At the same time, the Automotive Exteriors business is in the process of testing biopolymer compounds for semi-structural applications, and the Seating and Acoustics businesses have joined forces to carry out a research project with the aim of being able to use plant-based polyols in foam for seating and acoustic components by 2011. Biomass would make up around 5% of this foam.
Faurecia is increasingly using life cycle analyses at various levels to steer its strategic decisions and those of automakers. These analyses are carried out on its products, on the entire vehicle, from the extraction of materials to delivery to automakers, and to the entire life cycle of the car (including customer use and recycling).
Framed by international standards SO 14040 and ISO 14044, this methodology consists of assessing the environmental impact of products designed and manufactured by Faurecia for use in automobiles. It involves the fullest possible impact assessment, including global warming (including CO2 ), the consumption of non-renewable resources (oil and coal) and eutrophication.
These life cycle analyses allow both Faurecia and automakers to:
Faurecia's components purchasing policy factors in environmental protection at every step in the product supply chain. Since July 1, 2007, the Group has asked its main suppliers to comply with its corporate social responsibility and environmental requirements. These requirements mainly concern compliance with various regulations, including those on occupational health and safety, certification of the environmental management system (e.g., ISO 14001), the development of eco-friendly products and not using prohibited products and substances. It is a request that follows on from the initiative started in 2006, concerning ISO 14001 certification for the Group's 400 largest external suppliers in terms of revenues.
Specific measures have also been undertaken with all of Faurecia's suppliers with respect to implementing the REACH directive on the production and use of chemical substances. In accordance with the recommendations of the various automotive industry committees and working groups of which it is a member, Faurecia ensures that suppliers are aware of and comply with the Directive's requirements in terms of registration, evaluation and authorization of chemical substances for the European market, and, where applicable, take steps to initiate the withdrawal of certain substances from the market.
Faurecia is constantly seeking to limit the impact of its industrial activities on the natural habitat surrounding its sites, particularly in terms of the emission of hazardous substances into the air and water, energy consumption, the generation of greenhouse gas emissions and waste generation. With this aim in mind, in 2010 the Group continued its strategy of putting in place pollution abatement equipment at the end of its manufacturing processes or modifying processes to limit the quantity and harmful effects of their emissions and waste. The Group's sites invested a total of €12.855 million in environmental protection measures in 2010 (three times as much as in 2009). Investments dedicated exclusively to environmental protection alone accounted for €2.480 million in 2010 (twice as much as in 2009). These investments – some of which were necessary due to regulatory changes and compliance requirements – form part of the Group's overall capital expenditure plan which is reviewed on a six-monthly basis.
In line with the Group's environmental policy, Faurecia's sites are gradually implementing environmental management systems based on the ISO 14001 standard within the overall framework of the Faurecia Excellence System (FES). ISO 14001 certification is often required by the Group's customers.
The number of ISO 14001-certified sites rose once again in 2010, reaching 136 by the year-end. Moreover, 61 sites currently have an action plan to set up a certified management system. New or recently consolidated sites with more than 50 employees are required to obtain this certification within three years.
As well as implementing ISO 14001 management systems, Faurecia organizes environmental training and awarenessraising sessions for its employees. In 2010, over 17,400 environmental training hours were provided to 16,974 Group employees. This 53% rise on 2009 reflects Faurecia's willingness to place environmental issues at the heart of the everyday practices of all employees.
NUMBER OF ISO 14001-CERTIFIED SITES AND SITES WITH AN ISO 14001 CERTIFICATION PLAN OF ACTION NUMBER OF PERSONS TRAINED IN ENVIRONMENTAL
The Group's estimated total water consumption for 2010 was 2.89 million cubic meters, representing a year-on-year rise of 9%. This rise was mainly due to the increased number of sites (28 additional sites compared to 2009, i.e. a 15% rise in the number of sites) and to the stepping up of output in a number of sites. Group-wide, the number of hours worked rose 34% year-on-year.
It should be noted that of the 173 sites in operation in 2009, total water consumption fell 6% between 2009 and 2010, a drop of 154,617 cubic meters, despite the increase in output over all sites. Thus, on the relevant sites, water consumption per number of hours worked fell 19% year-on-year, falling from 30.7 to 24.7 liters per hour worked. The drop in this indicator was even more significant on ISO 14001 certified sites (down 26%).
The sources of water used by the Group's plants break down as follows: 56.5% was drawn from municipal water networks, 28.9% from surface water and 14.6% from groundwater. The proportion of water taken directly from the natural environment (surface water and groundwater) fell significantly, by 43.5% compared to 57% in 2009. This trend was due in particular to improved performance in sites that use the most water.
This water is mainly used for cooling purposes. Some 50% of the water used can be released directly into the natural environment (of which 13% require on-site treatment), while the remainder is discharged to wastewater networks.
Of the Group's 217 sites surveyed, 111 are required to report self-monitoring data to the local authorities on the quality of their wastewater discharges. Soil and groundwater pollution checks are also regularly carried out on most sites and when sites are purchased or disposed of, as part of environmental due diligence audits.
Total energy consumption for 2010 was estimated at 1.98 million MWh, up 39% year-on-year. This trend is mostly due to Faurecia' purchase of new sites in 2010 (28 additional sites compared to 2009, a 15% rise in the number of sites) and to increased output over a number of sites. Group-wide, the number of hours worked rose 34% year-on-year.
On a like-for-like basis, taking only the 173 sites already in operation in 2009 into account, energy consumption rose just 13% between 2009 and 2010, up 175,680 MWh. Moreover, in terms of hours worked, this energy consumption fell 3% year-onyear, with most of the fall coming from ISO 14001 certified sites (down 7%). It should also be noted that the overall rise in energy consumption related mostly to electricity (up 13% or 105,472 MWh) and natural gas (up 11% or 48,684 MWh).
In conclusion, 61% of energy consumed in 2010 was electricity, 33% natural gas, 4% liquefied petroleum gas (LPG), 1% fuel oils and 1% steam.
Atmospheric emissions from Faurecia sites result mainly from natural gas, liquefied petroleum gas and fuel oils. These 3 sources generated about 158,000 tons of CO2 in 2010, while the electricity consumption of Faurecia sites in 2010 represented about 444,000 tons of CO2 . On a like-for-like basis, CO2 emissions rose by about 13% between 2009 and 2010, in line with the rise in energy consumption (see opposite).
Of the Group's 217 sites surveyed, 154 are required to report self-monitoring data to the local authorities on the quality of their atmospheric emissions.
| CO2 (t) | N2O (t) | CH4 (t) | SO2 (t) | NO2 (t) | |
|---|---|---|---|---|---|
| Natural gas | 133,455 | 5.84 | 9.34 | 1.30 | 140.24 |
| Liquefi ed petroleum gas | 18,443 | 0.72 | 0.29 | 0.63 | 17.29 |
| Heavy industrial fuel oil (sulfur content ≈ 4%) | 10 | 0 | 0 | 0.25 | 0.02 |
| Low-sulfur industrial fuel oil (sulfur content ≈ 2%) |
181 | 0.02 | 0.01 | 2.32 | 0.39 |
| Very low-sulfur industrial fuel oil (sulfur content ≈ 1%) |
951 | 0.02 | 0.04 | 6.10 | 2.07 |
| Light fuel oil (sulfur content ≈ 0.3%) | 4,915 | 0.10 | 0.10 | 6.26 | 6.57 |
| TOTAL IN TONS | 157,955 | 6.70 | 9.78 | 16.85 | 166.59 |
Faurecia sites occupy a total surface area of 883.86 hectares worldwide, over 21% more than in 2009 following Faurecia's purchase of new sites in 2010. 65% of this is sealed against rainwater (compared to 67% in 2009).
On a like-for-like basis, taking only the 173 sites already in operation in 2009 into consideration, total waste rose just 9.7% between 2009 and 2010, up 12,300 tons. In terms of hours worked, the amount of waste produced by these sites also fell by 6% to 1.420kg per hour worked (compared to 1.510kg per hour worked in 2009). The drop in this indicator was even more significant on ISO 14001 certified sites (down 9%).
A large portion of this waste consisted of metals (69,547 metric tons), which are released into the metals recycling circuit. The amount of landfilled waste fell significantly, to 22% in 2010 compared to 28% in 2009. As regards other waste, 31% was recovered externally, for energy or raw materials, 8% was eliminated in other ways (incineration without energy recovery or physico-chemical or biological treatment). Finally, 22,786 tons of byproducts in 2010 were directly reused internally as raw materials, representing a rise in tonnage by a 2.5 multiple on 2009.
The Group generated 178,570 metric tons of waste in 2010 (including hazardous and non-hazardous waste and metals waste not recycled internally). Total waste rose almost 30% year-on-year, due mainly to the inclusion of new sites (28 additional sites compared to 2009) and to increased output in 2010 following relatively significant falls in some sites in 2009. Group-wide, the number of hours worked rose 34% year-on-year.
Pursuing its regulatory compliance policy, the number of Group sites that received notices of violation or other notices of non-compliance fell, with 14 sites receiving 17 notices of violation or non-compliance (compared to 27 last year), including 7 relating to the environment and 10 relating to working conditions and health and safety. Environment-related notices issued by the authorities mostly concerned non-compliance with thresholds for volatile organic compounds (VOCs), waste management or odor pollution. Health and safety notices related to issues such as the absence of protective equipment or workplace accident files. A number of sites were ordered to pay penalties totaling €12,630 exclusively for health and safety issues.
Five disputed cases are still pending worldwide on issues relating to the environment 14 fourteen concerning health and safety and working conditions.
8
| 8.1. | BOARD OF DIRECTORS | 72 | 8.4.3. | Risk analysis and risk management procedures |
94 | |
|---|---|---|---|---|---|---|
| 8.1.1. | Members, roles and responsibilities of the Board of Directors |
72 | 8.4.4. | Internal control procedures: participants and organization |
94 | |
| 8.1.2. | Members of Faurecia'S Board of Directors |
76 | 8.4.5. | Description of internal control procedures |
95 | |
| 8.2. | EXECUTIVE COMMITTEE | 91 | 8.4.6. | Internal control procedures relating | ||
| 8.2.1. | Executive Committee members | 91 | to quality risk management | 96 | ||
| 8.2.2. | Mission and structure | 91 | 8.4.7. | Internal control procedures for the preparation and processing of |
||
| 8.2.3. | Compensation of the Executive | accounting and fi nancial information | 97 | |||
| Committee | 92 | 8.4.8. | Key trends | 99 | ||
| 8.3. | SENIOR MANAGEMENT | 93 | 8.4.9. | Statutory Auditors' report, prepared in accordance with article L. 225- 235 of the French Commercial Code |
||
| 8.4. | INTERNAL CONTROL | 93 | (Code de commerce) on the report | |||
| 8.4.1. | Internal control: defi nition and objectives 93 | prepared by the Chairman of the Board of Directors of Faurecia |
100 | |||
| 8.4.2. | Reference framework used by Faurecia 94 | |||||
Sections 8.1, 8.4 and 10.3.2.1 of this chapter in this Registration Document constitute the Chairman's report to the Meeting as provided for in Article L. 225-37 of the French Commercial Code. This report was approved by Faurecia's Board of Directors at its February 7, 2011 meeting and was sent to the AMF at the same time as this registration document. It can be viewed on Faurecia's website: http://www.faurecia.com.
It was prepared in accordance with French Act no. 2008-649 of July 3, 2008 which amended various provisions of French corporate law to align them with European Community law and the consolidated version of the AFEP-MEDEF Corporate Governance Code of April 2010 applicable to listed companies which the Board of Directors has adopted as its reference framework for defining and implementing the Group's corporate governance rules (hereinafter referred to as the "Corporate Governance Code"). The English language version of this Code can be viewed on the website of the European Corporate Governance Institute at http://www.ecgi.org/codes/documents/afep_medef_code_ dec2008_en.pdf.
According to the applicable legal and regulatory requirements and the company's bylaws, the Board of Directors comprises at least three and no more than fifteen members elected at the Annual Shareholders' Meeting for a six-year term.
In 2010 the number of members on the Board of Directors rose from 9 to 12. Following the purchase of Emcon Technologies, the Annual Shareholders' Meeting of February 8, 2010 appointed Lee Gardner as a director of Faurecia. At the same meeting, Éric Bourdais de Charbonnière was appointed a director of Faurecia. Finally, Hans-Georg Härter was appointed as a director at the Annual Shareholders' Meeting of May 26, 2010.
Since the changes brought about at these meetings and at the date this Registration Document was drawn up, the Board of Directors now has 12 members:
| Mr. Yann Delabrière | Director, Chairman and Chief Executive Od cer |
|---|---|
| Mr. Éric Bourdais de Charbonnière | Director |
| Mr. Jean-Pierre Clamadieu | Director |
| Mr. Frank Esser | Director |
| Mr. Lee Gardner | Director |
| Mr. Jean-Claude Hanus | Director |
| Mr. Hans-Georg Härter | Director |
| Mr. Ross McInnes | Director |
| Mr. Robert Peugeot | Director |
| Mr. Thierry Peugeot | Director |
| Mr. Frédéric Saint-Geours | Director |
| Mr. Philippe Varin | Director |
Six of these members are considered to be independent within the meaning of the Corporate Governance Code. They are Mr. Éric Bourdais de Charbonnière, Mr. Jean-Pierre Clamadieu, Mr. Frank Esser, Mr. Lee Gardner, Mr. Hans-Georg Härter and Mr. Ross Mc Innes.
Five directors – Messrs. Jean-Claude Hanus, Robert Peugeot, Thierry Peugeot, Frédéric Saint-Geours and Philippe Varin – hold executive management or supervisory positions within the PSA Peugeot Citroën Group, Faurecia's majority shareholder which owns 57.43% of the company's capital.
8
Lastly, Mr. Yann Delabrière has been Faurecia's Chairman and Chief Executive Officer since February 16, 2007.
The Board considers that its membership adequately reflects the proportionate ownership interest of its major shareholders.
The members of the Board bring together a range of premier quality managerial, industrial and financial skills. Faurecia's directors come from a broad spectrum of professional backgrounds, including not only the automotive industry but also business sectors that differ from Faurecia's. They enhance the work and discussions of the Board and its committees through their diverse capabilities and the expert input they can give both from an international perspective as well as in terms of their specific experience in finance, manufacturing and management. They act in the best interests of all shareholders and are fully involved in defining Faurecia's corporate strategy so that they can actively contribute to and support the decisions of the Board.
Apart from the Chairman and Chief Executive Officer, no member of the Board of Directors holds an executive management or salaried position within a Group company.
In accordance with the applicable legal and regulatory requirements and the company's bylaws, the term of office of directors is currently six years. This term of office, which is longer than recommended by the Corporate Governance Code, is considered more appropriate because it more closely reflects the average production and marketing cycles for automakers' vehicle ranges. However, in order to reconcile the Corporate Governance Code and the requirements of the automobile sector, the board intends to submit a resolution to the Shareholders' Meeting to change the term of office to five years.
Further information on each director and details of directorships and other positions held by them are provided in section 8.1.2 of this registration document.
The Board of Directors is responsible for determining the overall business, financial and economic strategies of the company and the Faurecia group, and oversees their implementation.
Except for the powers directly vested in shareholders and within the scope of the corporate purpose, at the Chairman's initiative the Board deals with all matters concerning the efficient running of the company and are responsible for making all related decisions, particularly for strategic issues concerning the company and the Group.
The internal rules of the Board of Directors – which may be consulted by shareholders at the company's headquarters or on Faurecia's corporate website at www.faurecia.com – govern how the work of the Board is organized.
They describe the Board's modus operandi and its role in the management of the company and the Group as carried out in accordance with the law and the company's bylaws. They also specify the rights and responsibilities of Board members, particularly regarding the prevention of conflicts of interest, the holding of multiple directorships and the need for strict confidentiality as well as diligence in taking part in the Board's work. In addition they set out rules governing transactions involving Faurecia's shares, as recommended by the Autorité des Marchés Financiers.
In order for it to be able to properly exercise its functions the Board of Directors has included the following requirements in its internal rules:
The Board of Directors decides which type of management structure the company applies. The company's management may be placed under the responsibility of either the Chairman of the Board of Directors or another person appointed by the Board who holds the title of Chief Executive Officer. Since the Board meeting of September 8, 2006, the positions of Chairman and Chief Executive Officer have been combined. The Board of Directors confirmed this management structure at its meeting of February 16, 2007.
The Board of Directors is convened by its Chairman, who sets the agenda for each meeting. To prepare as best as possible the decisions falling under its responsibilities, Faurecia's Board of Directors has set up three committees:
The Board of Directors met six times in 2010 with an average attendance rate of 94.20%.
At each of its meetings in 2009, the Board was informed of the Group's operating results and sales and earnings outlook. The budgets for 2010 (as revised at the end of the first-half) and 2011 were presented at the Board meetings of July 21, 2010 and December 16, 2010 respectively. The Board examined and approved the 2009 parent company and consolidated financial statements, at its meeting of February 8, 2010; and the 2010 consolidated interim financial statements, at its July 21, 2010 meeting. One of the Board's priorities in 2009 was the Group's financing structure and strategy. Both of these subjects were regularly reviewed during Board meetings. The February 8, 2010 meeting discussed changes to be made to its bylaws after the purchase of Emcon. It also reviewed the finalization of the purchase of Plastal Germany's assets.
The April 14, 2010 meeting examined the Emcon integration process and studied the principles of a share grant plan. It also determined directors' remuneration.
It also adopted proposed changes to its internal rules for the purpose of:
The Board meeting of April 14, 2010 adopted the Registration Document and convened an Ordinary and Extraordinary Shareholders' Meeting for May 26, 2010.
The Board meeting of June 23, 2010 examined the 2010-2014 medium-term business plan and decided to grant shares (plan no. 1).
The Board meeting of July 21, 2010 approved Faurecia's consolidated financial statements dated June 30, 2010 and the interim management report. It also discussed the Group's financing plan. Finally, it satisfied itself that the consolidation of Plastal Germany and Plastal Spain was being properly implemented and decided on a second share grant (plan 2).
The Board meeting of October 26, 2010 examined the updated budget for the second half of 2010. It reviewed the state of progress of the strategic plan and turned its attention to directors' terms of office and renewal thereof. Finally, the Board decided to launch a process to assess its work and to entrust this process to an external consultant.
Finally, the Board meeting of December 16, 2010 adopted the 2011 budget. It took stock of the state of progress of the Group's strategic plan and satisfied itself that operations to consolidate recent acquisitions were being properly implemented.
The Audit Committee is governed by its internal rules which provide that committee members are all directors and that these may not use proxies. The term of office of committee members is the same as that of their directorships.
All committee members must be members of the company's Board of Directors, excluding those in executive management positions.
Committee members must show evidence of specific skills in the area of finance or accounting and must be independent as defined in the Corporate Governance Code.
The Audit Committee currently has three members, Éric Bourdais de Charbonnière, Ross McInnes and Fréderic Saint-Geours.
It is chaired by Ross McInnes.
The Committee includes two independent directors, one of whom is its Chairman. The number of independent directors is therefore two-thirds of the Committee members as recommended in the Corporate Governance Code.
The general remit of the Audit Committee to assist the Board of Directors in monitoring issues relating to the preparation and verification of accounting and financial information.
More specifically, its role is to conduct an in-depth review of the interim and annual financial statements, the Group's most significant financial transactions and its reporting schedules. It also monitors off-balance sheet commitments and factors that enable the Group's risks to be assessed.
In particular, the Committee is responsible for preparing the Board Meetings held to review the interim and annual financial statements and for informing the Board on these subjects. To that end, it reviews the financial statements before they are submitted to the Board and issues an opinion on:
As part of its review of the company's parent company and consolidated financial statements, the Committee ensures that Senior Management and the statutory auditors formally approve accounting policies that have a significant impact on the presentation of the financial statements and that these accounting policies are presented to the Board of Directors; Senior Management explains and substantiates to the Board the main accounting options that are selected and that the statutory auditors review these options; and the statutory auditors have access to all the information they require for performing their duties and are given the means to relay any significant observations.
8
As part of its internal control remit, the Audit Committee also monitors the effectiveness of internal control systems and is given a presentation by the Head of Internal Audit once a year on this issue.
The Audit Committee meets at least twice a year, prior to the closing of the annual and interim financial statements. In 2010, it met four times with an average attendance rate of 90.9%.
The main aims of the Audit Committee meeting held on February 8, 2010 were to (i) prepare and examine the 2009 parent company and consolidated financial statements, and (ii) review the Group's cash position and bank covenants included in the Group's main bank credit facilities.
The April 14, 2010 Committee meeting was devoted to a presentation of the work carried out by the Internal Audit department, as well as discussing the implementation of the Group's ERP system and the organizational structure of the shared accounting Services Centers.
In its July 20, 2010 meeting, the Committee examined the interim financial statements and the Group's bank covenants and financing plan.
Lastly, the December 15, 2010 Audit Committee meeting focused on the accounting options used for the 2010 financial statements and a presentation given by the statutory auditors on their work carried out during the year.
At each of its meetings the Committee members reviewed the Group's cash position, financing and liquidity.
During its various meetings, the Audit Committee was also given presentations by the Group's Chief Financial Officer, the heads of the Accounting and Tax departments, and the statutory auditors, who gave the Committee members their observations.
The Chairman of the Committee submitted reports on the Committee's work to the Board of Directors on February 8, April 14, July 21 and December 16, 2010.
Following Faurecia's announcement on November 2, 2009 concerning the acquisition of Emcon Technologies, the Board decided to set up a Strategy Committee on October 15, 2009. The internal rules of this new Committee were adopted by the Board on December 17, 2009.
Committee members are all directors. The term of office of committee members is the same as that of their directorships.
The internal rules of the Strategy Committee stipulate a minimum of three members. The Chairman of the Board of Directors is automatically a member of the Strategy Committee as is the Chief Executive Officer, provided he is a director.
The Board of Directors appoints a Committee Chairman from among its members for a term identical to that of his directorship.
Finally, at least one Committee member must be independent as defined in the Corporate Governance Code.
The Strategy Committee currently has four members, Messrs. Yann Delabrière, Lee Gardner, Hans-Georg Härter and Philippe Varin. It is chaired by Mr. Philippe Varin. The Strategy Committee therefore includes two independent directors. The number of independent directors is therefore in line with the threshold recommended in the Corporate Governance Code.
As part of its general remit to analyze the Group's overall strategic vision, the Strategy Committee prepares the matters to be discussed by the Board of Directors. To this end, it issues proposals, opinions and recommendations on:
To fulfill its remit, the Strategy Committee may call on external auditors or any other experts internal or external to the Group and on the Chairman of Faurecia's Audit Committee to report on any issue relating to investments, risks and the impact on the Group's financing in relation to projects submitted to it.
The Committee meets at least twice a year. In 2010, it met four times with an average attendance rate of 90.9%.
During its meetings, the Strategy Committee analyzed the Group's strategic position, both as regards each of the Group's four business lines on their respective markets and the Group's overall position, and in particular its financing strategy. As part of this process, it examined planned acquisitions, including the acquisition of Plastal.
The members of the Appointments and Compensation Committee are all members of Faurecia's Board of Directors. They are appointed in a personal capacity and may not use proxies. They are appointed for the term of their directorships.
The composition of the Committee may be changed at any time as decided by the Board.
Since February 8, 2010, the Appointments and Compensation Committee has three members, Messrs. Jean-Pierre Clamadieu, Chairman, Jean-Claude Hanus and Frank Esser It therefore includes two independent directors, one of whom is its Chairman.
The role of the Appointments and Compensation Committee is to prepare matters for the Board's discussion, notably regarding:
The Appointments and Compensation Committee meets at least twice a year. In 2010, it met four times with an average attendance rate of 83.3%.
At its meeting held on January 27, 2010 the Committee examined the compensation payable to the Chairman and Chief Executive Officer, together with the factors taken into account to determine the variable portion of his compensation; assessed the membership structure and the operating procedures of the Board, and reviewed whether any stock options or shares should be granted during the year.
The Committee meetings of April 07, 2010 and July 19, 2010 notably focused on a share grant plan for executives and key managers, on the Group's medium-term performance and on a review of the Group's Senior Management.
Finally, at its October 15, 2010 meeting, the Appointments and Compensation Committee examined the issue of the assessment of the work of the Board of Directors as recommended by the Corporate Governance Code. It suggested that the Board call on external experts. The Appointments and Compensation Committee also examined the issue of the reappointment of members of the Board of Directors whose terms of office expire at the next Annual Shareholders' Meeting and the duration of such terms of office.
The work of Faurecia's Board of Directors has already been self-assessed through a questionnaire completed by each member. On October 26, 2010, based on a recommendation by the Appointments and Compensation Committee, the Board of Directors decided that an assessment of its work in 2010 should be carried out with the assistance of an external consultant.
On February 7, 2011, the Board of Directors was informed of this assessment carried out for the first time by KPMG consultants. This assessment approved the work carried out within the Board and the quality of the discussions held during meetings. The balance between Board members representing the majority shareholder and independent directors was found to be fair. The composition, organization and operation of the Board enable it to fulfill its roles effectively.
The company has no employee-elected or non-voting directors.
Each Board member must hold at least 20 Faurecia shares throughout his or her term of office.
Apart from the Chairman and Chief Executive Officer, no member of the Board of Directors holds an executive management or other salaried position within Faurecia or a company that is directly or indirectly controlled by Faurecia.
The only directors with a family connection were Messrs. Thierry Peugeot and Robert Peugeot. There is no other family relationships between Faurecia's other corporate officers.
In the past five years no director has been convicted of any fraudulent offence; managed a company that has filed for bankruptcy or gone into receivership or liquidation; received an official public incrimination or sanction by statutory or regulatory authorities; been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of an issuer, or from acting in the management or conduct of the affairs of an issuer.
8
Mr. Yann Delabrière, has been Chairman and Chief Executive Officer of Faurecia since February 16, 2007.
His term of oj ce will expire at the Annual Shareholders' Meeting to be held in 2013. Aged 60, Mr. Yann Delabrière has been a director of Faurecia since November 18, 1996. He occupied various positions within the Finance departments of major manufacturing groups before joining the PSA Peugeot Citroën Group in 1990 where he held the position of Chief Financial Officer and member of the Executive Committee from 1998 to 2007.
As of December 31, 2010, Mr. Yann Delabrière held 6,294 Faurecia shares.
Business address:
FAURECIA
2, rue Hennape
92735 Nanterre cedex
Chairman and Chief Executive Oj cer of Faurecia
As of December 31, 2010, Mr. Yann Delabrière also held the following directorship:
c Director of Capgemini
Over the last fi ve years, Mr. Yann Delabrière has also held the following directorships and positions, which he no longer holds:
c Director of Faurecia
As of December 31, 2010, Mr. Éric Bourdais de Charbonnière also held the following directorships and positions:
Over the last fi ve years, Mr. Éric Bourdais de Charbonnière has also held the following positions, which he no longer holds:
His term of oj ce will expire at the Annual Shareholders' Meeting to be held in 2016. Aged 71, Mr. Éric Bourdais de Charbonnière joined JP Morgan in 1965 and went on to hold various positions in the bank. From 1987 to 1990 he was the Executive Vice-President, Head of Europe. In 1990, he joined Michelin as Chief Financial Oj cer, then later became member of the Group Executive Council. He has been Chairman of the Supervisory Board since September 2000. Mr. Éric Bourdais de Charbonnière holds 100 Faurecia shares.
Éric BOURDAIS DE CHARBONNIÈRE
Mr. Éric Bourdais de Charbonnière, has been a director of Faurecia since February 8, 2010.
Business address: MICHELIN 46, Avenue de Breteuil 75324 Paris cedex 07
Mr. Jean-Pierre Clamadieu, has been a director of Faurecia since May 29, 2007. Aged 52, Mr. Jean-Pierre Clamadieu was appointed Chief Executive Officer of Rhodia in October 2003 and has been Chairman and Chief Executive Oj cer since March 2008, having previously held various divisional executive positions. His term of oj ce will expire at the Annual Shareholders' Meeting to be held in 2013. At December 31, 2010 Mr. Jean-Pierre Clamadieu held 364 Faurecia shares. Business address: RHODIA Immeuble Cœur Défense tour A, 110 Esplanade Charles de Gaulle La Défense 4 92931 La Défense cedex
Mr. Frank Esser, has been a director of Faurecia since May 23, 2005.
His term of oj ce will expire at the Annual Shareholders' Meeting to be held in 2011. Mr. Frank Esser, 52, joined SFR as Chief Executive Officer in September 2000 and was appointed Chairman and Chief Executive Oj cer of SFR in 2002.
As of December 31, 2010, Mr. Frank Esser held 2,020 Faurecia shares.
Business address: SFR – Tour Séquoia
1, place Carpeaux
92915 Paris La Défense
c Director of Faurecia
As of December 31, 2010, Mr. Jean-Pierre Clamadieu also held the following directorships and positions:
c Director of Faurecia
As of December 31, 2010, Mr. Frank Esser also held the following directorships and positions:
Over the last fi ve years, Mr. Frank Esser has also held the following directorships and positions, which he no longer holds:
8
Mr. Lee Gardner, has been a director of Faurecia since February 8, 2010. His term of oj ce will expire at the Annual Shareholders' Meeting to be held in 2016. Aged 64, Mr. Lee Gardner joined One Equity Partners as a Partner. In 2008, he became Chairman and Chief Executive Officer of Emcon Technologies. He is currently a director of Precision Gear. As of December 31, 2010, Mr. Lee Gardner held 27,310 Faurecia shares. Business address: One Equity Partners Suite 170 100 Bloomfi eld Hills Parkway Bloomfi eld Hills Michigan 48304 USA
Mr. Jean-Claude Hanus, has been a director of Faurecia since February 21, 2000. His term of oj ce will expire at the Annual Shareholders' Meeting to be held in 2011. Aged 64, Mr. Jean-Claude Hanus has spent his entire career with the PSA Peugeot Citroën Group and is currently Director of Legal Affairs, Institutional Relations and Internal Audit of Peugeot SA. As of December 31, 2010, Mr. Jean-Claude Hanus held 100 Faurecia shares. Business address: PEUGEOT SA 75, avenue de la Grande-Armée 75116 Paris
c Director of Faurecia
As of December 31, 2010 Mr. Lee Gardner is also:
c Director of Precision Gear.
Over the last fi ve years, Mr. Lee Gardner has also held the following directorships and positions, which he no longer holds:
c Director of Faurecia
As of December 31, 2010, Mr. Jean-Claude Hanus also held the following directorships and positions:
Over the last fi ve years, Mr. Jean-Claude Hanus has also held the following directorships and positions, which he no longer holds:
Mr. Hans-Georg Härter is a director.
Aged 65, Mr. Hans-Georg Härter has been a director of Faurecia since May 26, 2010. Hans-Georg Härter has spent his entire career with the ZF Group which he joined in 1973.
He was appointed Chairman of the Managing Board of ZF Friedrichshafen AG in January 2007.
As of 12/31/2010 Mr. Hans-Georg Härter held 720 Faurecia shares.
Business address:
ZF Friedrichshafen AG
88038 Friedrichshafen
Germany
c Director of Faurecia
As of December 31, 2010, Mr. Jean-Claude Hanus also held the following directorships and positions:
Over the last fi ve years, Mr. H-G. Härter has also held the following directorships and positions, which he no longer holds:
Mr. Frédéric Saint-Geours has been a director of Faurecia since July 20, 2009. His term of oj ce will expire at the Annual Shareholders' Meeting to be held in 2013. Aged 60, Mr. Frédéric Saint-Geours has held various positions within the PSA Peugeot Citroën Group, including Group Finance Director and Senior Vice-President of Automobiles Peugeot. From July 1998 to the end of December 2007 he was Chief Executive Officer of Automobiles Peugeot and a member of the Managing Board. Following this, he has been Adviser to the Chairman and a member of the Managing Board of the PSA Peugeot Citroën Group. As of December 31, 2010, Mr. Frédéric Saint-Geours held 100 Faurecia shares. Business address:
Peugeot SA
75, avenue de la Grande-Armée 75116 Paris
c Director of Faurecia
As of December 31, 2010, Frédéric Saint-Geours also held the following directorships and positions:
Over the last fi ve years, Frédéric Saint-Geours has also held the following directorships and positions, which he no longer holds:
Mr. Ross McInnes has been a director of Faurecia since May 29, 2007.
His term of oj ce will expire at the Annual Shareholders' Meeting to be held in 2013. Aged 57, Mr. Ross McInnes held the position of Chief Financial Oj cer of Eridania Beghin-Say from 1991 to 2000, and became a director in 1999, and became a director in 1999. He joined Thomson-CSF (Thales) in 2000 as Senior Vice-President and Chief Financial Officer before joining the PPR group in 2005 as Senior Vice-President Finance and Strategy. From 2007 to 2009 he held the position of Vice Chairman of Macquarie Capital Europe. Mr. Ross McInnes has been the Executive Vice-President responsible for Economic and Financial Au airs of Safran group since May 28, 2009 and has been a member of its Managing Board since July 29, 2009. As of 12/31/2010, Mr. Ross McInnes held 100
Faurecia shares.
Business address:
SAFRAN,
2, boulevard du Général Martial Valin 75015 PARIS
c Director of Faurecia
Over the last fi ve years, Mr. Ross McInnes has also held the following directorships and positions, which he no longer holds:
Mr. Robert Peugeot has been a director of Faurecia since May 29, 2007. His term of oj ce will expire at the Annual
Shareholders' Meeting to be held in 2013. Aged 60, Mr. Robert Peugeot is a member of the Supervisory Board of Peugeot SA. He has held a number of executive positions, primarily in the PSA Peugeot Citroën Group. He was previously a member of the Executive Committee of PSA Peugeot Citroën and held the position of Vice-President, Innovation and Quality between 1998 and 2007. He has also been Chairman and Chief Executive Oj cer of Société Foncière, Financière et de Participations (F.F.P.) since 2002.
As of 12/31/2010, Mr. Robert Peugeot held 100 Faurecia shares.
Business address:
F.F.P.
75, avenue de la Grande-Armée 75116 PARIS
c Director of Faurecia
As of December 31, 2010, Mr. Robert Peugeot also held the following directorships and positions:
Over the last fi ve years, Mr. Robert Peugeot has also held the following directorships and positions, which he no longer holds:
Mr. Thierry Peugeot has been a director of Faurecia since April 17, 2003. His term of oj ce will expire at the Annual Shareholders' Meeting to be held in 2011. Mr. Thierry Peugeot has been Chairman of the Supervisory Board of Peugeot S.A. since the end of 2002. He previously held executive positions within the PSA Peugeot Citroën Group in Europe and South America. As of 12/31/2010, Mr. Thierry Peugeot held 293 Faurecia shares. Business address: PEUGEOT SA 75, avenue de la Grande-Armée 75116 Paris
Mr. Philippe Varin has been a director of Faurecia since April 9, 2009.
His term of oj ce will expire at the Annual Shareholders' Meeting to be held in 2011. Aged 58, Mr. Philippe Varin held different positions of responsibility within Pechiney group prior to his appointment as Director of the Rhenalu Division in 1995 and then as Director of the Aluminium Sector and member of the Executive Board in 1999. He was appointed as Chief Executive of the Anglo-Dutch steel group Corus in 2003. He has been the Chairman of the Managing Board of Peugeot SA since June 1, 2009. As of December 31, 2010, Mr. Philippe Varin
held 20 Faurecia shares.
Business address:
PEUGEOT SA 75, avenue de la Grande-Armée 75116 Paris
c Director of Faurecia
As of December 31, 2010, Mr. Thierry Peugeot also held the following directorships and positions:
Over the last fi ve years, Mr. Thierry Peugeot has also held the following directorships and positions, which he no longer holds:
c Director of Faurecia
Over the last fi ve years, Mr. Philippe Varin has also held the following directorships, which he no longer holds:
As provided for in the Board of Directors' internal rules, each director must disclose to the Board any conflicts of interest (including any potential conflicts of interest) relating to issues on the agendas of Board meetings and must refrain from taking part in the vote on the matters in question. No such situations arose in 2010.
Aside from regulated agreements which are the subject of a report to the Shareholders' Meeting no service agreement has been entered into between a member of the Board of Directors and Faurecia or any of its subsidiaries.
The Board strengthened its rules relating to conflicts of interest by adopting a procedure regarding the use of insider information. This procedure provides that no transactions may be carried out involving the company's shares until the related information has been made public. Directors and certain categories of personnel, who are all included in a regularly updated list, must disclose any trades they carry out in Faurecia's shares to the company which then informs the markets.
More specifically, on April 14, 2010, the Board of Directors adopted proposed changes to its internal rules for the purpose of:
c setting up an ethical officer position to facilitate the handling of securities transactions and sensitive information discussed by the Board.
Independent directors who are members of Faurecia's Board of Directors are independent as defined by the Corporate Governance Code.
Six of them are considered to be independent within the meaning of the Code. These are Messrs. Éric Bourdais de Charbonnière, Jean-Pierre Clamadieu, Frank Esser, Hans-Georg Härter, Ross Mc Innes and Lee Gardner. Mr. Lee Garder, appointed to the Board after the acquisition of the Emcon Group and who holds positions in One Equity Partners (JP Morgan Chase group), a major shareholder of Faurecia up to October 20, 2010, only became an independent director once the Board had noted that he no longer had relations with the company or a shareholder that were likely call his independence into question after the disposal by One Equity Partner, of its 13% holding in Faurecia's capital.
Therefore, as recommended by the Corporate Governance Code, over one third of Faurecia's Board of Directors is made up of independent directors.
Directors' compensation is paid in the form of attendance fees freely allocated by the Board of Directors. Total attendance fees were decided by the Ordinary Shareholders' Meeting of May 27, 2003 and are shared out among Board members.
At its April 14, 2010 meeting, the Board decided that as of January 1, 2010:
At the meeting, Mr. Thierry Peugeot indicated that he would waive attendance fees for Faurecia.
Members of the Board of Directors in office on December 31, 2010 received the following gross attendance fees set out in the table below:
| (in €) Directors |
Amount of attendance fees paid in 2010 |
lncluding the variable portion paid in 2010 |
Amount of attendance fees paid in 2009 |
lncluding the variable portion paid in 2009 |
|---|---|---|---|---|
| Éric BOURDAIS DE CHARBONNIÈRE | 33,500 | 14,500 | 0 | 0 |
| Mr. Jean-Pierre CLAMADIEU | 35,500 | 16,500 | 21,000 | 6,000 |
| Mr. Yann DELABRIÈRE | 0 | 0 | 13,000 | 6,000 |
| Mr. Frank ESSER | 34,000 | 15,000 | 12,250 | 5,250 |
| Mr. Hans-Georg HÄRTER | 26,000 | 7,000 | 0 | 0 |
| Mr. Jean-Claude HANUS | 0 | 0 | 21,000 | 6,000 |
| Mr. Lee GARDNER | 24,500 | 5,500 | 0 | 0 |
| Mr. Ross McINNES | 35,000 | 16,000 | 18,750 | 3,750 |
| Mr. Frédéric SAINT-GEOURS | 0 | 0 | 16,500 | 1,500 |
| Mr. Thierry PEUGEOT | 0 | 0 | 13,000 | 6,000 |
| Mr. Robert PEUGEOT | 24,000 | 12,000 | 11,500 | 4,500 |
| Mr. Philippe VARIN | 0 | 0 | 18,000 | 3,000 |
| TOTAL | 212,500 | 86,500 | 232,750 | 54,750 |
TABLE NO. 3 (Numbering in line with the amf recommendation of December 22, 2008)
Directors are not entitled to any termination benefits or deferred compensation for loss of their corporate office.
In 2009, the controlling company, Peugeot SA paid fixed and variable compensation as well as benefits in kind to a number of officers who also hold a corporate office within Faurecia.
In his capacity as Chairman of the Managing Board of Peugeot SA as from June 1, 2009, Mr. Philippe Varin received €3,251,000 for 2010.
Mr. Frédéric Saint-Geours received €1,263,300 in his capacity as member of the Peugeot SA Managing Board in 2010. In his capacity as Chairman of the Supervisory Board of Peugeot SA, Thierry Peugeot received €470,000 in 2010. In his capacity as member of the Supervisory Board of Peugeot SA, Robert Peugeot received €65,000 in 2010. Faurecia does not have any information concerning the compensation of people who hold a corporate office within Faurecia but not within Peugeot SA. Faurecia specifies that no compensation other than the attendance fees mentioned above was paid in 2010 to any of its directors by the company or its subsidiaries.
Mr. Yann Delabrière has been Faurecia's Chairman and Chief Executive Officer since February 16, 2007. He is the only corporate officer of the company.
The Board of Directors has entrusted its Chairman with responsibility for the company's general management. The Board's internal rules, which are available (in French only) on the company's website at www.faurecia.fr, specify the terms and conditions of performance of the Board's own responsibilities as well as the duties of the Chairman. These rules also state that the Board should be consulted on all company and Group strategic decisions at the Chairman's initiative. At its meeting of July 21, 2010, the Board of Directors authorized the Chairman and Chief Executive Officer to give endorsements or guarantees subject to an overall ceiling of €50 million, with a limit of €10 million per transaction. If the Group is required to provide advance payment guarantees or performance bonds for contracts with successive performance commitments, the Chief Executive Officer is authorized to provide guarantees representing a maximum of €5 million per transaction, subject to the same overall ceiling. Through its internal rules and within the scope of the applicable laws governing its activities, the Board has the powers to deal with all matters required for the efficient running of the company.
At its meeting of December 17, 2009 the Board amended its internal rules to include the express requirement that the Chairman must obtain approval from the Board before carrying out any acquisition, disposal or joint venture project representing a total asset value of over €100 million and/or revenue in excess of €300 million.
8
Faurecia is in line with the Corporate Governance Code as regards the compensation of corporate officers of listed companies.
In 2010, Mr. Yann Delabrière, Faurecia's Chairman and Chief Executive Officer, received €610,000 in fixed compensation. This amount was set by the Board of Directors on February 8, 2010 based on a recommendation by the Appointments and Compensation Committee on January 27, 2010. On February 8, 2010 the Board of Directors also decided that the variable portion of the Chairman's compensation would, in principle represent 100% of his fixed compensation and decided that for 2010 it would be subject to the achievement of targets relating to operating results, net Group cash flow, the success of the Emcom and Plastal incorporation and the quality of strategic decision-making.
On the recommendation of the Appointments and Compensation Committee, and taking into account the Company's excellent performance in 2010, with results far exceeding targets set, at its February 7, 2011 meeting, the Board of Directors set Mr. Yann Delabrière's variable compensation at €700,000 for 2010. The Board also determined Mr. Delabrière's fixed compensation for 2011. Lastly, it decided which portion of his variable compensation for this same year would be based on operating results, cash flow and the implementation of the Group's strategic policy.
Having waived any compensation in his capacity as member of the Board of Directors and member of the Strategy Committee, Mr. Yann Delabrière received no attendance fees for 2010.
Mr. Yann Delabrière did not receive or exercise any company stock options in 2010.
At its December 17, 2009 meeting the Board reviewed its share grant plans and decided that any shares granted to the Chairman will henceforth be subject to the same performance conditions as share grants for other members of Faurecia's Senior Management. Therefore, on June 23 and July 21, 2010, the Board of Directors decided to make the share grant plans 1 and 2 subject to performance conditions related to net income before tax and before the recognition of asset disposals and changes in scope of consolidation on 12/31/2011 and 12/31/2012 respectively. The Board also decided that the Chairman and Chief Executive Officer should keep 30% of his allocation until the expiry of his term of office, regardless of the number of times it is renewed. If the performance conditions set out in plans 1 and 2 are achieved by the end of 2011 and 2012, Mr. Yann Delabrière will be allocated a maximum of 37,050 shares per plan.
The benefits in kind granted to Mr. Yann Delabrière correspond to a company car for business use as well as the services of a chauffeur.
Mr. Yann Delabrière is a member of the supplementary pension scheme set up for all Faurecia's managerial employees in France, which comprises:
The Chairman and Chief Executive Officer is not entitled to any deferred compensation in the event that he loses his corporate office. The Chairman and Chief Executive Officer does not receive any other form of compensation from Faurecia.
The tables below provide an analysis of Mr. Yann Delabrière's compensation.
Only applicable tables are shown.
| (in €) | 2009 | 2010 |
|---|---|---|
| Compensation due for the year (see Table no. 2) | 926,771 | |
| Value of stock options granted during the year (see Table no. 4) | - | - |
| Value of performance shares granted during the year | - | 688,613 |
| TOTAL | 926,771 |
| 2009 | 2010 | ||||
|---|---|---|---|---|---|
| (gross in €) | Amount due | Amount paid | Amount due | Amount paid | |
| Fixed compensation | 566,500 | 568,071 | 610,000 | 612,496 | |
| Variable compensation | 339,900 | 226,600 | 700,000 | 339,900 | |
| Exceptional bonus | 0 | 0 | 0 | 0 | |
| Attendance fees | 13,000 | 13,000 | - | - | |
| Benefi ts in kind | 7,371 | 7,371 | 7,371 | 7,371 | |
| TOTAL | 926,771 | 815,042 | 1,317,371 | 959,767 |
| Mr. Yann DELABRIÈRE | Plan number and date |
Type of options (purchase or subscription) |
Value of options based on the method used in the consolidated fi nancial statements |
Number of options granted (adjusted) |
Adjusted exercise price( * ) |
Exercise period |
|---|---|---|---|---|---|---|
| No. 17 – | 4/16/2011 – | |||||
| April 16, 2007 | Subscription | 911,090 | 48,000 | 44.69 | 4/16/2017 | |
| No. 18 – | 4/10/2012 – | |||||
| April 10, 2008 | Subscription | 603,624 | 60,000 | 28.38 | 4/10/2016 | |
| TOTAL | - | - | 1,514,714 | 108,000 | - | - |
As far as the company is aware:
there are no hedges on the company's stock subscription options.
TABLE NO. 6 (Numbering in line with the AMF recommendation of December 22, 2008)
| Mr. Yann DELABRIÈRE |
Number and date of the plan |
Max. number of shares granted during the period |
Valuation of stock by the method used for the consolidated fi nancial statements |
Acquisition date |
Vesting date | Performance conditions |
|---|---|---|---|---|---|---|
| Plan n°1 | Plan n°1 of the June 23, 2010 |
37,050 | 383,468 | 6/23/2012 | 6/23/2014 | Pretax net income of the Group at December 31, 2011 before gains on asset disposals and change in the scope of consolidation |
| Plan n°2 | Plan n°2 of the July 21, 2010 |
37,050 | 399,514 | 7/21/2013 | 7/21/2015 | Pretax net income of the Group at December 31, 2012 before gains on asset disposals and change in the scope of consolidation |
| TOTAL | - | 74,100 | 782,982 | - | - |
TABLE NO. 7: NOT APPLICABLE
| Disclosures regarding stock purchase or subscription options | Plan no. 17 | Plan no. 18 |
|---|---|---|
| Date of ASM/Board Meeting authorizing stock option grants | Shareholders Mtg of May 23, 2005 Board meeting of April 16, 2007 |
Shareholders Mtg of May 29, 2007 Board meeting of April 10, 2008 |
| Number of shares to be issued on exercise of options | 48,000 | 60,000 |
| Start of exercise period | 4/16/2011 | 4/10/2012 |
| Expiration date | 4/16/2017 | 4/10/2016 |
| Adjusted exercise price | 44.69 | 28.38 |
| Exercise conditions (where the plan includes more than one tranche) | - | - |
| Number of shares purchased on exercise of stock options at April 14, 2010 | 0 | 0 |
| Total stock options canceled or forfeited | 0 | 0 |
| Stock options outstanding at the year-end | 48,000 | 60,000 |
No other corporate officer received stock options.
| Yann Delabrière | Employment Contract | Supplementary pension plan |
Compensation or benefi ts due or potentially due because of leaving or changing o] ce |
Compensation due under a non competition clause |
||||
|---|---|---|---|---|---|---|---|---|
| YES | NO | YES | NO | YES | NO | YES | NO | |
| Position: Chairman and Chief | ||||||||
| Executive Oj cer | ( * ) |
|||||||
| Start of term: February 16, 2007 | ||||||||
| End of term: 2013 Annual Meeting |
* Supplementary pension plan applicable to all of Faurecia's managerial employees (see section 8.1.2.2).
8
Faurecia's executive management function is performed under the responsibility of the Chairman and Chief Executive Officer by the Group Executive Committee that meets every month to review the Group's results and consider general matters concerning the Group.
Its members as of April 14, 2011 were as follows:
| Name | Position |
|---|---|
| Yann DELABRIÈRE | Chairman of the Board of Directors and Chief Executive Oj cer |
| Jean-Marc HANNEQUIN | Executive Vice-President, Emissions Control Technologies |
| Frank IMBERT | Chief Financial Oj cer |
| Patrick KOLLER | Executive Vice-President, Automotive Seating |
| Thierry LEMÂNE | Executive Vice-President, Group Communications |
| Jacques MAUGE | Executive Vice-President, Automotive Exteriors |
| Bruno MONTMERLE | Executive Vice-President, Group Strategy |
| Christophe SCHMITT | Executive Vice-President, Interior Systems |
| Jean-Pierre SOUNILLAC | Executive Vice-President, Group Human Resources |
The Faurecia Group is organized into Business Groups dedicated to managing and developing Faurecia's activities worldwide.
They are responsible for the operating results of their individual businesses, as well as investments and the management of operating cash flow.
Faurecia comprises four Business Groups:
center consoles, door panels, door modules, sound insulation solutions, soft trim and acoustic modules;
c Faurecia Automotive Exteriors, which is responsible for front-end modules and exterior equipment operations.
The corporate staff departments include:
The total compensation paid or allocated to members of the Executive Committee for 2010 amounted to €6,080,592.
The compensation of the Executive Committee includes a variable bonus. Performing on target can result in a bonus worth between 35% or 45% of the base salary. Should objectives be exceeded, this percentage can rise to 70% or 90%, respectively, of base salary. 80% of the bonus depends on collective objectives for operating income and cash generation within the scope of responsibility, and 20% on the same objectives measured group-wide.
If the employment contract of an Executive Committee member is terminated, he or she may receive contractual severance pay of up to 12 months' compensation, depending on their position. This amount is not payable in the event of gross or willful misconduct.
Details on the number of stock options and shares of restricted stock granted to Executive Committee members are provided in section 10.3.2.2 of this Registration Document.
Each of the four core businesses is organized into geographic divisions – Europe, divided when appropriate into Northern and Southern Europe, North America, South America, and Asia (China) – which manage operations in their region and also coordinate operations with customers headquartered in their region.
The four businesses also have a central staff that handles the main operating functions (sales and marketing, programs, manufacturing support, purchasing, human relations and finance). These functions are also managed within the geographic divisions by equivalent teams. Additionally, some specialized areas are managed by worldwide product lines within the four businesses, such as seat mechanisms, acoustic treatments and interior decorative trim.
Senior Management at Faurecia consists of all the aforementioned management teams along with the Executive Committee and the key headquarters managers of the manufacturing and quality staff, the Human Relations department and the Financial departments.
Faurecia Senior Management at December 31, 2010 included 246 members. This is Faurecia's operational management, responsible for the company's operations, growth and performance. As such, the members of this team are linked with short term results through a system of variable bonuses based 80% on operating income and cash generation within their direct scope of authority and 20% on the scope immediately above them.
The members of this team also benefit from a restricted stock plan instituted by the Board of Directors, which voted two initial rounds of awards at its meetings of June 23, 2010 and July 21, 2010 (see section 4.4.4 of this Registration Document).
Internal control comprises a set of resources, patterns of conduct, procedures and actions adapted to the individual characteristics of each company which:
The underlying aim of internal control is to ensure:
Nevertheless, internal controls cannot give an absolute guarantee that the company's objectives shall be achieved. Any internal control system has inherent limitations. These limitations are due to several factors, notably the uncertainties in the outside world, the exercise of people's judgment or the cost/benefit relationship of setting up new controls.
In its capacity as the Group's parent company, Faurecia SA verifies that internal control procedures have been set up within its subsidiaries. These procedures are adapted to the specific characteristics of the subsidiaries and to relations between the parent company and the companies included in the scope of consolidation.
The Faurecia Group continues to develop its internal control system by making use of the AMF Reference Framework and its Application Guide, as updated to July 22, 2010. This system applies to processes relating to the preparation of accounting and financial information intended for publication and the general organization of the Group's operating divisions and the risk management procedures set up by the company.
The Group's internal control system is implemented with regard both to its operations and to its legal structure.
It affects all the Group's fully consolidated subsidiaries.
The summarized information provided in this report on Faurecia's internal control procedures is focused on the main areas that could have an impact on the financial and accounting information published by the Group.
The Group's objectives are set by the Board of Directors. They relate not only to financial performance but also to areas in which the Group aims to achieve a particular level of excellence, such as human resources management, quality, innovation, working conditions and environmental performance.
The Group also carefully tracks that its operating risks are properly managed. These risks are classified into ten main categories: personal safety, quality, program management, financial risks, information systems, purchasing, asset protection (fire risks), reliability of financial information, fraud, and the environment.
Operations managers are responsible for identifying and controlling the risks of their entity.
The company has undertaken a risk review and considers that it is not exposed to any material risks other than those described in section 3.5 of this Registration Document.
Internal control processes are implemented by both Senior Management and all of the Group's other employees on a daily basis.
The main participants in the internal control system are as follows:
c the Group Executive Committee, which orchestrates the Group's strategy, allocates the resources required to implement this strategy, sets the objectives for all Group entities and verifies that these objectives are met;
c monthly operations committee meetings are held between Group Senior Management and the executive team of each business in order to review management indicators. This Committee particularly focuses on the various key aspects of development programs relating to quality, financial performance and respecting deadlines;
8
it has remote offices in the United States and Germany. Its work is approved and supervised by the Chairman of the Board and the Audit Committee. The role of the Internal Audit department is to ensure continuous improvement in the effectiveness of all systems of internal financial control, by applying a systematic and methodical approach. It is authorized to take action where required in relation to any Group process throughout the world. It conducts its assignments in a wholly objective manner and systematically supports its findings with precise facts and figures that have been duly verified. All of the Internal Audit department's work is made available to Group Senior Management, to which it reports regularly on the progress of its assignments and the measures taken to reach its objectives. Tracking the recommendations sent by the internal audit to the audited sites is accomplished by:
In 2004, the department drew up an Internal Audit Charter which defines its roles and remit, as well as the purpose and methods of its assignments.
The work of the Group's internal departments is rounded out by the actions of external parties, including:
c the statutory Auditors. The latter are not directly involved, through their statutory duty, in the internal control or risk management systems. They are aware of them, make use of the internal audit reports to improve their understanding of the company and give a wholly independent opinion as to their usefulness. They perform an audit of the Group every year within the scope of their statutory audit engagement on the Group's consolidated financial statements and other audit engagements regarding the financial statements of Group entities. In accordance with French company law, the financial statements of the company and the Group are certified by two audit firms which undertake a joint review of the full accounts and the procedures used for preparing them and also examine certain Group internal control processes concerning the preparation of accounting and financial information. Backed by members of their networks in each of the Group's host countries, these two audit firms perform statutory or contractual audit engagements for all of the Group's fully consolidated companies. The statutory auditors present their comments on the Chairman's report with respect to those internal control procedures which have to do with preparing and processing financial and accounting data, and certify that other disclosures required by law have been made;
The Group's internal control system is underpinned by a set of procedures that can be accessed by all employees via the intranet. These procedures form part of the Faurecia Excellence System (FES) which defines the way in which the Group's employees work across the globe and structures the Group's identity.
The related FES Core Procedures (FCP) is organized around the following six processes:
c development, which includes the applicable procedures for defining the Group's product offering, innovation strategy and program control measures;
c production, corresponding to the various production process stages within the Group's plants: preparing for the start-up of new programs or units; planning and controlling the production process; and managing flows;
These procedures are developed by each Group function while respecting a common general framework, and apply to all Faurecia entities throughout the world. They are regularly updated and enhanced. In late September 2009, the Group launched an FES intranet portal which continues to be extremely well received by users.
An annual audit is carried out by the Group at each plant to ensure that the FES is correctly implemented. Following these audits each site is given a rating of Insufficient, Acceptable, Excellent or Benchmark. Where a site is rated Insufficient it is required to prepare a remedial action plan, which is presented directly to Faurecia's Chairman, with a view to reaching an Acceptable level within a maximum period of three months.
Program control measures are subject to specific procedures in light of the Group's core business of designing and manufacturing parts, sub-assemblies and modules for the automotive industry. Each contract signed with a customer represents a program and corresponds to a project which:
The life of a program can stretch to ten years, from the beginning of the development phase (including the order-placing phase and start-up of industrial production) to the end of series life (production).
Every program is subject to control procedures and tools throughout its life. The program management system (PMS) lays out a strict succession of steps for the entire duration of a program. Each program involves various milestones from the bid processing stage to the end of product life. As part of this control system, program reviews are carried out once a month by the Business Group concerned. Formal reports of these reviews are required and a certain number of documents must be submitted, including the Business Plan. This process is designed to identify program risks on an ongoing basis, in order to draw up and implement the necessary action plans.
Right from its inception – i.e. during the filing of the bid – each program is subject to a forward-looking financial analysis in the form of a Business Plan (BP). BPs are prepared in accordance with a standard method developed and monitored by Group management. The BP is regularly updated as assumptions are changed. Therefore, it contains all the information required to assess a program at every stage, from the preparation of the quotation, through contract negotiations, to the development phase.
To improve program effectiveness, an excellence plan for program management has been put in place. It covers methodology, quality, profitability and the program manager's individual development The aim of this plan is ensure that development procedures are strictly applied and that deadlines are met, right from the business acquisition phase through to series production. As part of the plan the Group monitors progress indicators on a monthly basis. An audit process has been set up to ensure the plan is complied with and to identify and standardize best practices for program teams.
The Faurecia Group is deeply committed to respecting the fundamental principles of accountability, integrity and ethical conduct. The Group's Code of Ethics form an integral part of the FCPs. It defines the general rules on ethical behavior applicable on a day-to-day basis to all of Faurecia's employees in their relations both inside and outside the Group, as well as to the Group's partners. The Code also describes how the Group seeks to implement its core values of respecting customers, shareholders, the people it works with and the environment. In addition to strengthening the measures already in place, the Code introduced a whistle-blowing procedure enabling employees to notify Faurecia, in confidence, of any breaches of the law or Group procedures. A reinforced warning procedure, restricted to matters that relate to serious risks to the company in terms of its accounting, financial auditing and anti-corruption measures, has been established and allows Faurecia to refer to an outside organization which gathers and initially processes the alert procedures. If circumstances warrant, the organization contacts the Faurecia Group through its Chairman and CEO, who can ask the Group's Internal Audit department to carry out the necessary investigation. The Code of Ethics has been widely relayed throughout the Group – notably via intranet – so that all employees can access it and comply with it at all times and in all circumstances. At the same time, it is aimed at developing a sense of accountability and involvement among the Group's staff.
Quality risks are measured based on precise indicators and are detailed in both monthly reports and continuous improvement plans. A specific Group-wide monitoring system has been put in place to trigger warnings if any safety or regulatory requirements are breached and corrective measures are subsequently taken. Each safety warning is systematically followed up by a quality audit in the subsequent month. The objective for 2011 is once again to ensure that there are no safety or regulatory warnings triggered with an impact on customers.
The Breakthrough Quality Plan launched in October 2006 has enabled the Group to significantly improve its management of quality and program risks. The plan is based on seven straightforward practical rules, including QRQC (Quick Response on Quality Control) – an approach designed to correct
8
development and production problems rapidly and which must be carefully and strictly applied by each employee.
The risk prevention and protection system is based on:
c a highly practical quality validation review system for critical program phases;
c a training plan for all participants involved in the program development phase;
The Board of Directors is collectively responsible for publishing reliable financial and accounting information.
The Audit Committee is expected to study and prepare certain of the Board's deliberations. It issues proposals, opinions and recommendations within its sphere of competence. The committee has a consultative role only and acts under the authority of the Board, to whom it reports whenever necessary.
It is the Audit Committee's assignment to review the yearly and half-yearly parent company financial statements of the Faurecia Group.
It may hear from outside auditors, without the Financial department necessarily being present, as well as from the Group Chief Financial Officer, who may be supported by any employee he or she chooses.
Group Senior Management relies on input from the Accounting, Consolidation, Financial Control and Financial Communications departments.
The Accounting Department prepares monthly consolidated financial statements and the interim and annual financial information that is issued publicly. It ensures that local financial managers properly prepare the subsidiaries' financial statements and that they do so in compliance with local regulations. It defines the Group's accounting principles in accordance with IFRS norms and sees that all subsidiaries follow them. It also prepares the financial statements of Faurecia SA
The internal control procedures necessary to produced reliable accounting data are implemented at the local level. These include, among others, physical inventorying, a separation of tasks and reconciliations with independent sources of information.
The following principles are implemented across the Group regarding the preparation of financial statements:
c periodically reviewing the value of assets.
Ensuring consistency between financial reporting tools and the Group's operating systems is vital for the preparation of reliable financial and accounting information. The volume of information involved, the quality and integrity required to process the information and ever-tighter financial reporting deadlines – enabling management to respond quickly and to efficiently control operations – require the use of effective information systems. The major systems upgrade program that began in July 2008 at sites in France was rolled out to Europe, Asia and South America in 2010. It will continue to be gradually implemented across the Group's various sites.
The Group's financial statements are prepared using information provided by each subsidiary and integrated into the Magnitude reporting and consolidation system. The accounting data submitted by each subsidiary are prepared in accordance with the Group's accounting policies, which since 2004 comply with IFRS as adopted by the European Union. An IFRS accounting manual is included in the FES Core Procedures system, which can be accessed via the intranet.
Each subsidiary's accounting information comprises income statements prepared by nature and by function, as well as a breakdown by business segment, an analysis of current and deferred taxes, a balance sheet, a cash flow statement, and a statement of commitments and contingent liabilities.
Inter-company transactions are entered monthly using the ICS software.
The Finance Department also uses (i) short- and medium-term forecasts to verify the value of cash-generating units; actuarial reports to assess pension and other employee benefit obligations; and fair-value measurements of derivatives confirmed by the Group's banking counterparties.
In each subsidiary, the head of accounting and the financial controller have access to all the information they require in order to draw up accurate financial statements in compliance with local GAAP for the statutory accounts and with the Group's accounting policies for reporting purposes.
At every interim and annual close the heads of all subsidiaries are required to prepare an IFRS/local GAAP reconciliation for equity and income and expenses.
Every month instructions are sent to the accountants and financial controllers specifying the closing procedures to be followed. In addition, training sessions on the BO Finance systems are regularly provided to newly recruited accounting and financial staff.
The preparation of monthly reporting packages requires each entity to ensure it has the appropriate resources to draw up quality information.
Off-balance sheet commitments are handled in accordance with a specific identification and valuation process.
Each commitment is tracked by nature. Currency and interest-rate risks, as well as inter-company financing in foreign currencies, are managed at Group level under the supervision of the Group Finance department. Foreign currency hedges are set up where required. Any sureties or guarantees granted by Faurecia SA are issued and monitored at Group level.
The preparation of full monthly financial statements greatly reduces risks at interim and annual closes, particularly regarding meeting financial reporting deadlines. Any problems are anticipated, inter-company accounts are reconciled each month, specific transactions are accounted for without waiting for the yearly close, and tax calculations are regularly substantiated.
By preparing and reviewing monthly financial statements and reconciling them with the budget each entity can detect any anomalies in the accounts, such as in relation to inventories or cash flows. Implemented in tandem with specific procedures, this process is intended to reduce the risk of errors and fraud.
A hard close is carried out on October 31 each year aimed at anticipating, evaluating and validating the main accounting options for the yearly close. Similarly a hard close is carried out in May for the interim financial statements as of June 30.
The Group has drawn up procedures for preparing and processing financial and accounting information. These procedures comply with applicable accounting principles and standards and, like all the other internal control procedures, are available on the company's intranet. The following figure among the most important Group procedures:
Since 2008 the Group has been gradually reorganizing its financial services with the overall aim of segregating "accounting" functions from "financial control" functions and creating shared accounting services centers for each country, with these centers reporting to the Finance Director of the country concerned. Under this new organizational structure the Group Finance Department is responsible for drawing up accounting and financial rules and procedures as well as for consolidation processes, audits and managing the Group's cash position and financing.
This new organization makes it possible to handle the variety of businesses within the Group, to enhance the applicability and consistency of the Group's procedures and therefore the effectiveness of the internal control system. The underlying aim is to gradually strengthen the roles and responsibilities of the accounting function and enhance reporting processes, as well as to increase the effectiveness of information systems and reinforce financial controls relating to programs. In addition, it is intended to help build the skill sets of the employees involved and boost their motivation as their tasks will be more interesting and rewarding than previously.
The Group's financial reporting processes are aimed at providing systems for informing and steering the Group and ensuring maximum responsiveness to any risks that may arise. A "reporting glossary" describes the content of all reporting data and procedures explain how reporting should be carried out.
Since 2004, the Group has used the BO Finance consolidation system for its monthly reporting process. This tool provides for the reporting of both financial information (income statement and balance sheet data) and non-financial information (such as indicators relating to quality, production, purchasing, safety and human resources).
The level of control over the process for consolidating results at Group level has been reinforced by applying blocking controls upstream in reporting schedules, and intermediate controls for the reporting system.
Monthly reporting data include estimated sales and operating profit for each business unit within three days of the month-end, and definitive data five days after the month-end prepared in accordance with the Group's accounting policies. Every month, the Operations Committee reviews the operating performance and action plans of each Group business.
8
Faurecia's budget is drawn up on an annual basis and updated half-yearly.
The Group Finance Department provides the economic and financial assumptions to be used in the budget, and sets specific objectives for each operating unit. The budget is then tailored to each plant, R&D center and administrative center. Finally, it is converted to monthly periods using standard schedules, and then consolidated.
In order to effectively anticipate short-term changes and improve responsiveness, the monthly reporting package includes a rolling three-month forecast (current and subsequent quarters) for the income statement and cash flow statement.
As Faurecia's contracts span several years, the Group needs a medium-term overview of its financial position in order to effectively manage risks. To this end, the Group draws up a five-year plan (known as the medium-term plan) each year in which the program-related dimension plays an essential part. This plan makes it possible to clarify the Group's outlook in terms of profitability and required resources. It is consolidated on the same basis as the monthly reporting process, by applying the same stringent procedures, and is used to define the targets set in the budget.
The Group's Finance and Communications departments are responsible for drawing up and relaying all of the Group's financial information to the financial markets. Financial communication is transmitted through two main vehicles:
Preparation of the Annual Report/Registration Document is coordinated by the Legal Affairs department. A wide number of people who are experts in their field contribute to the process, ensuring that the document contains in-depth, high-quality and broad-ranging information. The Registration Document is then reviewed and approved by the Board of Directors before it is published.
Financial press releases are systematically reviewed by the Finance department, and annual and half-yearly earnings announcements are also approved by the Board of Directors.
During the year the Group continued to improve its internal control procedures:
The objective of this project is for The Faurecia Group to employ best practices in accounting and administrative management, together with uniform tools and processes for approving and monitoring management's actions, from requisition to payment of the supplier, from order received to final payment from the customer.
Throughout the project an emphasis is placed on consistency and uniformity of financial information. All the control processes and quality checks of financial data, from their creation to their publication in the monthly or yearly consolidated statements, receive particular attention.
The FCS project has been an opportunity to clarify the roles and responsibilities of those involved in the management process: accounting management centers, controllers of profit centers, purchasing and sales administration offices.
Another outcome has been the development of shared services for accounting, sales and purchasing as a way of optimizing support staff and improving the quality of teams by recombining skill sets.
At the close of 2010 some one hundred Faurecia sites had seen implementation of both the data processing software and the operation to improve management processes. The majority of worldwide shared service centers and all of the product development centers, save Brazil, are also involved.
The plan is to continue the implementation of the project on approximately 60 additional sites in 2011.
To check the quality of what has been accomplished, the Group has performed audits.
Finally, with regard to managing the authorizations to access the data processing tools, Faurecia has developed and implemented a policy of managing user account profiles and having these profiles validated by the managers to whom employees report, using an IAM (identity access management) application. These profiles employ a strict definition of roles and responsibilities and a strict separation of tasks in order to comply with the company's rules of internal control.
These procedures are also audited by independent outside parties.
This is a free translation into English of a report issued in French and it is provided solely for the convenience of Englishspeaking readers. This report should be read in conjunction with and construed in accordance with French law and professional standards applicable in France.
In our capacity as Statutory Auditors of Faurecia, and in accordance with article L. 225 235 of the French Commercial Code (Code de commerce), we hereby report on the report prepared by the Chairman of your company in accordance with article L. 225-37 of the French Commercial Code (Code de commerce) for the year ended December 31, 2010.
It is the Chairman's responsibility to prepare and submit for the Board of Directors' approval a report on internal control and risk management procedures implemented by the company and to provide the other information required by article L. 225-37 of the French Commercial Code (Code de commerce) relating to matters such as corporate governance.
Our role is to:
We conducted our work in accordance with professional standards applicable in France.
The professional standards require that we perform the necessary procedures to assess the fairness of the information provided in the Chairman's report in respect of the internal control and risk management procedures relating to the preparation and processing of the accounting and financial information. These procedures consist mainly in:
On the basis of our work, we have no matters to report on the information relating to the company's internal control and risk management procedures relating to the preparation and processing of the accounting and financial information contained in the report prepared by the Chairman of the Board of Directors in accordance with article L. 225-37 of the French Commercial Code (Code de commerce).
We confirm that the report prepared by the the Chairman of the Board of Directors also contains the other information required by article L. 225-37 of the French Commercial Code (Code de commerce).
Neuilly-sur-Seine and Paris–La Défense, April 14, 2011
The Statutory Auditors French original signed by
PricewaterhouseCoopers Audit Ernst & Young Audit Dominique Ménard Denis Thibon
9
| 9.1. | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
103 | 9.5. | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
108 |
|---|---|---|---|---|---|
| 9.2. | BALANCE SHEET CONSOLIDATED | 104 | 9.6. | CONSOLIDATED COMPANIES AS OF DEC. 31, 2010 |
166 |
| 9.3. | CONSOLIDATED CASH FLOW STATEMENT |
106 | 9.7. | STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL |
|
| 9.4. | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
107 | STATEMENTS | 172 |
| (in € millions) | Notes | 2010 | 2009 | 2008 |
|---|---|---|---|---|
| SALES | 4 | 13,795.9 | 9,292.2 | 12,010.7 |
| Cost of sales | 5 | (12,593.3) | (8,840.1) | (11,296.8) |
| Research and development costs | 5 | (303.2) | (207.9) | (269.9) |
| Selling and administrative expenses | 5 | (443.8) | (335.9) | (352.8) |
| OPERATING INCOME | 455.6 | (91.7) | 91.2 | |
| Other non-operating income | 6 | 87.2 | 6.9 | 0.1 |
| Other non-operating expenses | 6 | (123.2) | (141.0) | (444.4) |
| Income on loans, cash investments and marketable securities |
8.1 | 12.3 | 14.5 | |
| Finance costs | (98.7) | (135.3) | (110.8) | |
| Other fi nancial income and expenses | 7 | (25.6) | (43.9) | (98.9) |
| INCOME (LOSS) OF FULLY CONSOLIDATED COMPANIES |
303.4 | (392.7) | (548.3) | |
| Current taxes | 8 | (85.9) | (42.2) | (34.1) |
| Deferred taxes | 8 | (3.9) | 6.3 | 5.4 |
| NET INCOME (LOSS) OF FULLY CONSOLIDATED COMPANIES |
213.6 | (428.6) | (577.0) | |
| Share of net income of associates | 13 | |||
| Before tax | 26.7 | 14.8 | 15.4 | |
| After tax | 18.8 | 11.3 | 7.7 | |
| CONSOLIDATED NET INCOME (LOSS) | 232.4 | (417.3) | (569.3) | |
| Attributable to owners of the parent | 201.7 | (433.6) | (574.8) | |
| Attributable to minority interests | 30.7 | 16.3 | 5.5 | |
| Basic earnings (loss) per share (in €) | 9 | 1.87 | (6.85) | (23.83) |
| Diluted earnings (loss) per share (in €) | 9 | 1.79 | (6.85) | (23.83) |
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| CONSOLIDATED NET INCOME (LOSS) | 232.4 | (417.3) | (569.3) |
| Gains (losses) arising on fair value adjustments to cash fl ow hedges |
(1.3) | 4.2 | (22.4) |
| Of which recognized in equity | (0.8) | 1.9 | (13.7) |
| Of which recycled to income | (0.5) | 2.3 | (8.7) |
| Exchange diu erences on translation of foreign operations | 53.8 | 8.6 | (2.4) |
| TOTAL INCOME (EXPENSE) RECOGNIZED IN EQUITY | 284.9 | (404.5) | (594.1) |
| Attributable to owners of the parent | 250.3 | (419.0) | (602.7) |
| Attributable to minority interests | 34.6 | 14.5 | 8.6 |
| (in € millions) | Notes | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|---|
| Goodwill | 10 | 1,230.8 | 1,039.9 | 1,040.2 |
| Intangible assets | 11 | 435.2 | 396.9 | 469.8 |
| Property, plant and equipment | 12 | 1,575.5 | 1,224.6 | 1,360.8 |
| Investments in associates | 13 | 43.6 | 31.0 | 40.1 |
| Other equity interests | 14 | 15.3 | 11.2 | 1.6 |
| Other non-current fi nancial assets( * ) |
15 | 27.8 | 23.5 | 26.5 |
| Other non-current assets | 16 | 14.5 | 18.9 | 8.5 |
| Deferred tax assets | 8 | 86.2 | 72.0 | 91.4 |
| TOTAL NON-CURRENT ASSETS | 3,428.9 | 2,818.0 | 3,038.9 | |
| Inventories, net | 17 | 734.0 | 438.6 | 526.1 |
| Trade accounts receivables | 18 | 1,387.7 | 1,025.9 | 954.0 |
| Other operating receivables | 19 | 223.3 | 171.0 | 197.3 |
| Other receivables | 20 | 100.7 | 79.9 | 79.8 |
| Other current fi nancial assets( * ) |
30 | 0.0 | 1.7 | 6.0 |
| Cash and cash equivalents | 21 | 605.8 | 357.8 | 425.7 |
| TOTAL CURRENT ASSETS | 3,051.5 | 2,074.9 | 2,188.9 | |
| TOTAL ASSETS | 6,480.4 | 4,892.9 | 5,227.8 |
* ) In accordance with IAS 1, currency and interest rate derivatives that were recognized in other financial assets have been reclassified to other non-current financial assets for fiscal year 2008.
| (in € millions) | Notes | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|---|
| SHAREHOLDERS' EQUITY | ||||
| Capital | 22 | 772.6 | 626.1 | 170.8 |
| Additional paid-in capital | 282.4 | 130.1 | 198.9 | |
| Treasury stock | (10.4) | (10.4) | (11.5) | |
| Retained earnings | (529.8) | (99.4) | 385.8 | |
| Translation adjustments | 94.0 | 44.1 | 33.7 | |
| Net income (loss) | 201.7 | (433.6) | (574.8) | |
| TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT |
22 | 810.5 | 256.9 | 202.9 |
| Minority interests | 23 | 87.7 | 45.8 | 40.6 |
| TOTAL SHAREHOLDERS' EQUITY | 898.2 | 302.7 | 243.5 | |
| Long-term provisions | 24 | 214.5 | 193.9 | 193.6 |
| Non-current fi nancial liabilities( * ) |
26 | 1,114.9 | 1,232.2 | 1,491.7 |
| Other non-current liabilities | 1.3 | 2.3 | 1.9 | |
| Deferred tax liabilities | 8 | 29.2 | 7.1 | 38.2 |
| TOTAL NON-CURRENT LIABILITIES | 1,359.9 | 1,435.5 | 1,725.4 | |
| Short-term provisions | 24 | 416.6 | 320.3 | 317.3 |
| Current fi nancial liabilities( * ) |
26 | 687.7 | 528.1 | 546.2 |
| Prepayments from customers | 87.8 | 80.8 | 118.8 | |
| Trade payables | 2,419.9 | 1,730.6 | 1,695.2 | |
| Accrued taxes and payroll costs | 27 | 452.8 | 371.7 | 366.1 |
| Sundry payables | 28 | 157.5 | 123.2 | 215.3 |
| TOTAL CURRENT LIABILITIES | 4,222.3 | 3,154.7 | 3,258.9 | |
| TOTAL LIABILITIES | 6,480.4 | 4,892.9 | 5,227.8 |
* In accordance with IAS 1, currency and interest rate derivatives that were recognized in current financial liabilities have been reclassified to non-current financial liabilities for fiscal year 2008.
| Notes (in € millions) |
Year 2010 | Year 2009 | Year 2008 |
|---|---|---|---|
| I- OPERATING ACTIVITIES | |||
| Consolidated net income (loss) | 232.5 | (417.3) | (569.3) |
| Depreciation and amortization | 497.8 | 496.6 | 734.4 |
| Deferred tax (benefi ts) charges | 3.9 | (6.3) | (5.4) |
| Increase (decrease) in long-term provisions | (5.9) | (1.4) | (12.1) |
| Share of net income of associates net of dividends received | (3.8) | 13.7 | 12.3 |
| Capital (gains) losses on disposals of non-current assets | (0.4) | (2.4) | (0.6) |
| Other( * ) |
(86.4) | 15.9 | 15.5 |
| CASH FLOW FROM OPERATIONS | 637.7 | 98.8 | 174.8 |
| Increase (decrease) in current provisions | (35.3) | (5.1) | 21.2 |
| Change in inventories | (80.7) | 100.2 | 38.5 |
| Change in trade accounts receivable | (33.6) | (66.8) | 668.6 |
| Change in trade payables | 298.6 | 18.7 | (423.5) |
| Change in other operating receivables and payables | (47.8) | (14.2) | (83.6) |
| Changes in other receivables and payables | (14.8) | (44.2) | 52.6 |
| (Increase) decrease in working capital requirements | 86.4 | (11.4) | 273.8 |
| CASH FLOWS PROVIDED BY OPERATING ACTIVITIES | 724.1 | 87.4 | 448.6 |
| II- INVESTING ACTIVITIES | |||
| Additions to property, plant and equipment 12 |
(304.3) | (169.1) | (328.7) |
| Capitalized development costs | (154.3) | (104.4) | (144.7) |
| Acquisitions of investments (net of cash and cash equivalents) | 30.2 | (12.0) | (6.6) |
| Proceeds from disposal of property, plant and equipment | 17.3 | 20.1 | 19.3 |
| Proceeds from disposal of fi nancial assets | 31.0 | ||
| Change in investment-related receivables and payables | 25.9 | (24.8) | 0.9 |
| Other changes | (39.8) | (19.0) | (13.3) |
| CASH FLOW PROVIDED BY INVESTING ACTIVITIES | (394.0) | (309.2) | (473.1) |
| NET CASH (USED) PROVIDED BY OPERATING AND INVESTING ACTIVITIES (I)+(II) |
330.1 | (221.8) | (24.5) |
| III- FINANCING ACTIVITIES | |||
| Issuance of shares by Faurecia and fully-consolidated companies (net of costs) |
4.2 | 446.1 | |
| Option component of convertible bonds | 23.3 | ||
| Dividends paid to shareholders of the parent company | |||
| Dividends paid to minority interests in consolidated subsidiaries | (6.0) | (9.3) | (12.3) |
| Issue of debt and new fi nancial liabilities | 77.6 | 214.4 | 1,142.3 |
| Repayment of debt and other fi nancial liabilities | (188.0) | (502.7) | (1,209.6) |
| CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES | (112.2) | 171.8 | (79.6) |
| IV- OTHER CHANGES IN CASH AND CASH EQUIVALENTS | |||
| Impact of exchange rate changes on cash and cash equivalents | 30.1 | (17.9) | (13.7) |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 248.0 | (67.9) | (117.8) |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 357.8 | 425.7 | 543.5 |
| CASH AND CASH EQUIVALENTS AT END OF YEAR 26 |
605.8 | 357.8 | 425.7 |
( * ) O/W badwill from Plastal Germany and Plastal Spain acquisition €84.3 million (see Note10A).
| Retained | Evaluation adjustments | Equity | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| earnings | attribu | |||||||||
| and net | Transla | table to | ||||||||
| Additional | income | tion | equity | |||||||
| (in € millions) | Number of shares (1) |
Capital stock |
paid-in capital |
Treasury stock |
(loss) for the year |
adjust ments |
Cash fl ow hedges |
owners of the parent |
Minority interests |
Total |
| SHAREHOLDERS' EQUITY AS | ||||||||||
| OF DECEMBER 31, 2007 BEFORE | ||||||||||
| APPROPRIATION OF NET INCOME | ||||||||||
| (LOSS) | 24,395,048 170.8 | 198.9 (11.5) | 395.9 | 39.2 | 8.7 | 802.0 | 44.3 | 846.3 | ||
| Net income (loss) | (574.8) | (574.8) | 5.5 | (569.3) | ||||||
| Translation adjustments | (5.5) | (5.5) | 3.1 | (2.4) | ||||||
| Changes in fair value of hedging instruments | (22.4) | (22.4) | (22.4) | |||||||
| TOTAL INCOME (EXPENSE) | ||||||||||
| RECOGNIZED IN EQUITY | (574.8) | (5.5) | (22.4) | (602.7) | 8.6 | (594.1) | ||||
| Capital increase | 0.0 | 0.0 | ||||||||
| 2007 dividend | 0.0 | (12.3) | (12.3) | |||||||
| Measurement of stock options | 3.6 | 3.6 | 3.6 | |||||||
| Purchases and sales of treasury stock | 0.0 | 0.0 | ||||||||
| Changes in scope of consolidation | 0.0 | 0.0 | ||||||||
| Recognition of 2007 losses of the parent company | 0.0 | 0.0 | ||||||||
| SHAREHOLDERS' EQUITY AS | ||||||||||
| OF DECEMBER 31, 2008 BEFORE | ||||||||||
| APPROPRIATION OF NET INCOME | ||||||||||
| (LOSS) | 24,395,048 170.8 | 198.9 (11.5) (175.3) | 33.7 | (13.7) | 202.9 | 40.6 | 243.5 | |||
| Net income (loss) | (433.6) | (433.6) | 16.3 | (417.3) | ||||||
| Translation adjustments | 10.4 | 10.4 | (1.8) | 8.6 | ||||||
| Changes in fair value of hedging instruments | 4.2 | 4.2 | 4.2 | |||||||
| TOTAL INCOME (EXPENSE) | ||||||||||
| RECOGNIZED IN EQUITY | (433.6) | 10.4 | 4.2 | (419.0) | 14.5 | (404.5) | ||||
| Capital increase | 65,053,456 | 455.3 | (9.3) | 446.1 | 446.1 | |||||
| 2008 dividend | 0.0 | (9.3) | (9.3) | |||||||
| Measurement of stock options | 3.4 | 3.4 | 3.4 | |||||||
| Purchases and sales of treasury stock | 1.1 | (0.9) | 0.2 | 0.2 | ||||||
| Option component of convertible bonds | 23.3 | 23.3 | 23.3 | |||||||
| Changes in scope of consolidation | 0.0 | 0.0 | ||||||||
| Recognition of 2008 losses of the parent company | (59.5) | 59.5 | 0.0 | 0.0 | ||||||
| SHAREHOLDERS' EQUITY AS | ||||||||||
| OF DECEMBER 31, 2009 BEFORE | ||||||||||
| APPROPRIATION OF NET INCOME | ||||||||||
| (LOSS) | 89,448,504 626.1 | 130.1 (10.4) (523.6) | 44.1 | (9.5) | 256.9 | 45.8 | 302.7 | |||
| Net income (loss) | 201.7 | 201.7 | 30.7 | 232.4 | ||||||
| Translation adjustments | 49.9 | 49.9 | 3.9 | 53.8 | ||||||
| Changes in fair value of hedging instruments | (1.3) | (1.3) | (1.3) | |||||||
| TOTAL INCOME (EXPENSE) | ||||||||||
| RECOGNIZED IN EQUITY | 201.7 | 49.9 | (1.3) | 250.3 | 34.6 | 284.9 | ||||
| Capital increase | 20,918,224 | 146.4 | 152.3 | 298.7 | 4.2 | 302.9 | ||||
| 2009 dividend | 0.0 | (6.0) | (6.0) | |||||||
| Measurement of stock options | 4.6 | 4.6 | 4.6 | |||||||
| Purchases and sales of treasury stock | 0.0 | 0.0 | ||||||||
| Option component of convertible bonds | 0.0 | 0.0 | ||||||||
| Changes in scope of consolidation | 0.0 | 9.1 | 9.1 | |||||||
| SHAREHOLDERS' EQUITY AS OF | ||||||||||
| DECEMBER 31, 2010 BEFORE | ||||||||||
| APPROPRIATION OF NET INCOME | ||||||||||
| (LOSS) | 110,366,728 772.5 | 282.4 (10.4) (317.3) | 94.0 | (10.8) | 810.5 | 87.7 | 898.2 | |||
(1) Including 270,814 treasury shares as of Dec. 31, 2008, Dec 31, 2009 and Dec 31, 2010 (see Note 22.3).
| NOTE 1 | Summary of signifi cant accounting policies 109 | NOTE 19 | Other operating receivables | 136 | |
|---|---|---|---|---|---|
| NOTE 2 | Changes in scope of consolidation | 114 | NOTE 20 | Other receivables | 137 |
| NOTE 3 | Events after the balance sheet date | 114 | NOTE 21 | Cash and cash equivalents | 137 |
| NOTE 4 | Information by operating segment | 114 | NOTE 22 | Shareholders' equity | 137 |
| NOTE 5 | Analysis of operating expenses | 120 | NOTE 23 | Minority interests | 140 |
| NOTE 6 | Other income and expense | 121 | NOTE 24 | Long and short term provisions | 141 |
| NOTE 7 | Other fi nancial income and expense | 123 | NOTE 25 | Provisions for pensions and other post | |
| NOTE 8 | Corporate income tax | 123 | employment benefi ts | 142 | |
| NOTE 9 | Earnings per share | 126 | NOTE 26 | Net debt | 148 |
| NOTE 10A | Business combinations | 127 | NOTE 27 | Accrued taxes and payroll costs | 152 |
| NOTE 10B | Goodwill | 130 | NOTE 28 | Sundry payables | 152 |
| NOTE 11 | Intangible assets | 131 | NOTE 29 | Financial instruments | 153 |
| NOTE 12 | Property, plant and equipment | 132 | NOTE 30 | Hedging of currency and interest rate risks 157 | |
| NOTE 13 | Investments in associates | 133 | NOTE 31 | Commitments given and contingent liabilities 162 | |
| NOTE 14 | Other equity interests | 134 | NOTE 32 | Related party transactions | 164 |
| NOTE 15 | Other non current fi nancial assets | 135 | NOTE 33 | Fees paid to the Statutory Auditors | 165 |
| NOTE 16 | Other non current assets | 135 | NOTE 34 | Information on the consolidating company | 165 |
| NOTE 17 | Inventories and work in progress | 135 | NOTE 35 | Dividends | 165 |
| NOTE 18 | Trade accounts receivable | 136 | |||
The consolidated financial statements of the Faurecia Group have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union and available on the European Commission website:
They can be viewed on the European Commission's website at http://ec.europa.eu/internal_market/accounting/ias_ fr.htm#adopted-commission
These standards include International Financial Reporting Standards and International Accounting Standards (IAS), a well as the related International Financial Reporting Interpretations Committee (IFRIC) interpretations.
The standards used to prepare the 2010 consolidated financial statements and comparative data for 2009 and 2008 are those published in the Official Journal of the European Union (OJEU) as of December 31, 2010, whose application was mandatory at that date.
The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all of the years presented.
Faurecia has applied the following new standards and amendments to existing standards since January 1, 2010:
The Group applied the revised version of IFRS 3 in accounting for its acquisitions in 2010 and in particuler its acquisitions of Emcon and Plastal Germany and Spain. See Note 10 for further information;
The amendments adopted provide additional guidance on applying hedge accounting. They did not affect the presentation of the consolidated financial statements;
c IAS 17: the amendments to this standard – which concern the classification of the land element of leases as an operating or finance lease – did not have any impact on the interim consolidated financial statements.
The other standards, interpretations and amendments whose application was required beginning in 2010 had no material impact on the accounts as from December 31, 2010.
Companies which are at least 20%-owned are consolidated where one or more of the following criteria are met: annual sales of over €20 million, total assets of over €20 million, and/ or debt of over €5 million.
Non-consolidated companies are not material, either individually or in the aggregate.
Subsidiaries controlled by the Group are fully consolidated. Control is presumed to exist where the Group holds more than 50% of a company's voting rights, and may also arise as a result of shareholders' agreements.
Subsidiaries are fully consolidated as of the date on which control is transferred to the Group. They are deconsolidated as of the date that control ceases.
Companies over which the Group exercises significant influence but not control -generally through a shareholding representing between 20% and 50% of the voting rights are accounted for by the equity method.
The Faurecia Group's financial statements are presented in euros.
The functional currency of foreign subsidiaries is generally their local currency. The assets and liabilities of these companies are translated into euros at the year-end exchange rate and income statement items are translated at the average exchange rate for the year. The resulting currency translation adjustments are recorded in equity.
Certain companies located outside the eurozone which carry out the majority of their transactions in euros may, however, use euros as their functional currency.
All material intercompany transactions are eliminated in consolidation, including intercompany gains.
The accounting policies of subsidiaries and companies accounted for by the equity method are not significantly different from those applied by the Group.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired entity as of the date of acquisition.
In accordance with IAS 36, goodwill is not amortized but is tested for impairment at least once a year and more often if there is an indication that it may be impaired. For the purpose of impairment testing, goodwill is allocated to cash-generating units (CGUs). A CGU is defined as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
The CGU to which goodwill is allocated represents the lowest level within the business segment at which goodwill is monitored for internal management purposes. The Group has identified the following CGUs:
The carrying amount of an asset thus grouped is compared to the higher of its market value and value in use, which is equal to the present value of the net future cash flows expected, and their net market value including costs of disposal.
The Faurecia Group incurs certain development costs in connection with producing and delivering modules for specific customer orders which are either a) not sold to the customer, or b) paid for by the customer on delivery of each part, without the customer guaranteeing full financing of the costs incurred. In accordance with IAS 38, these development costs are recorded as an intangible asset where the company concerned can demonstrate:
c its ability to measurewliably the expenditure attributable to the contracts concerned (costs to completion).
These capitalized costs are amortized to match the quantities of parts delivered to the customer, over a period not exceeding five years except under exceptional circumstances.
Research costs, and development costs that do not meet the above criteria, are expensed as incurred.
Other intangible assets include development and purchase costs relating to software used within the Group – which are amortized on a straight-line basis over a period of between one and three years – as well as patents and licenses.
Property, plant and equipment are stated at acquisition cost, or production cost in the case of assets produced by the Group for its own use, less accumulated depreciation.
Maintenance and repair costs are expensed as incurred, except when they increase productivity or prolong the useful life of an asset, in which case they are capitalized.
In accordance with the amended version of IAS 23, borrowing costs on qualifying assets arising subsequent to January 1, 2009 are included in the cost of the assets concerned.
Property, plant and equipment are depreciated by the straightline method over the estimated useful lives of the assets, as follows:
| Buildings | 20 to 30 years |
|---|---|
| Leasehold improvements, fi xtures | |
| and fi ttings | 10 to 20 years |
| Machinery, tooling and furniture | 3 to 10 years |
Certain tooling is produced or purchased specifically for the purpose of manufacturing parts or modules for customer orders, which are either a) not sold to the customer, or b) paid for by the customer on delivery of each part, without the customer guaranteeing full financing of the costs incurred. In accordance with IAS 16, this tooling is recognized as property, plant and equipment.
It is depreciated to match the quantities of parts delivered to the customer over a maximum of three years, in line with the rate at which models are replaced.
Investment grants are recorded as a deduction from the assets that they were used to finance.
Property, plant and equipment acquired under finance leases which transfer substantially all the risks and rewards incidental to ownership of the asset to the lessee are recorded under assets at the fair value of the leased asset or, if lower, the present value of the minimum lease payments. The recognized assets are subsequently depreciated as described above. An obligation of the same amount is recorded as a liability.
9
Impairment tests are carried out whenever there is an indication that an asset may be impaired. Impairment testing consists of comparing the carrying amount of an asset, or group of assets, with the higher of its market value and value in use. Value in use is defined as the present value of the net future cash flows expected to be derived from an asset or group of assets.
The assets are grouped at the lowest levels for which there are separately identifiable cash flows (Cash Generating Units, or CGUs).
Impairment tests are performed on each group of intangible assets (development costs) and property, plant and equipment attributable to a customer contract. This is done by comparing the aggregate carrying amount of the group of assets concerned with the present value of the expected net future cash flows to be derived from the contract.
An impairment loss is recorded when the assets' carrying amount is higher than the present value of the expected net future cash flows. A provision is also recorded for losses to completion on loss-making contracts.
Impairment testing is also carried out on general and corporate assets grouped primarily by type of product and geographic area.
The cash inflows generated by the assets allocated to these CGUs are largely interdependent due to the high overlap among the various manufacturing flows, the optimization of capacity utilization, and the centralization of research and development activities.
Manufacturing assets whose closure is planned are tested independently for impairment.
In accordance with IAS 39, the Group classifies its financial assets in the following categories: loans and receivables, available-for-sale financial assets, and financial assets at fair value through profit or loss. They are recorded on the following balance sheet items: "Other equity interests" (Note 14), "Other non-current financial assets" (Note 15), "Trade account receivables" (Note 18), "Other operating receivables" (Note 19), "Other receivables excluding taxes" (Note 20) and "Cash and cash equivalents" (Note 21).
The Group does not use the IAS 39 categories of "Held-tomaturity investments" or "Financial assets held for trading".
The Group's financial liabilities fall within the IAS 39 categories of (i) financial liabilities at fair value through profit or loss, and (ii) other financial liabilities measured at amortized cost.
They are recorded on the following balance sheet items: "Shortterm debt" and "long-term debt" (Note 26), "Accrued taxes and payroll costs" (Note 27) and "Other payables" (Note 28).
Financial assets and liabilities are broken down into current and non-current components for maturities at the balance sheet date: under or over a year.
Equity interests correspond to the Group's interests in the capital of non-consolidated companies. They are carried on the balance sheet at cost. This value is subject to impairment testing based on the most appropriate financial analysis criteria. An impairment loss is recognized where appropriate. The criteria generally applied are the Group's equity in the underlying net assets and the earnings outlook of the company concerned.
Loans and other financial assets are stated at nominal value which corresponds to amortized cost, calculated using the effective interest method.
Provisions are booked on a case-by-case basis where there is a risk of non-recovery.
Cash and cash equivalents include current account balances and units in money market funds that are readily convertible to a known amount of cash and are not subject to a significant risk of impairment in the event of changes in interest rates. They are measured at fair value
The Group's financial liabilities are generally measured at amortized cost using the effective interest method.
Inventories of raw materials and supplies are stated at cost, determined by the FIFO method (First-In, First-Out).
Finished and semi-finished products, as well as work-inprogress, are stated at production cost, determined by the FIFO method. Production cost includes the cost of materials and supplies as well as direct and indirect production costs, excluding overhead not linked to production and borrowing costs.
Work-in-progress includes the costs of internally-manufactured specific tooling or development work which is sold to customers, i.e. where the related risks and rewards are transferred. These costs are recognized in the income statement over the period in which the corresponding sales are made, as each technical stage is validated by the customer, or when the tooling is delivered if the contract does not provide for specific technical stages.
Provisions are booked for inventories for which the probable realizable value is lower than cost.
Transactions in foreign currency are converted at the exchange rate prevailing on the transaction date. Receivables and payables are converted at the year-end exchange rate. resulting gain or loss is recorded in the income statement as operating income or expenses for operating receivables and payables, and under "Other financial income and expense" for other receivables and payables.
Faurecia uses derivative instruments traded on organized markets or purchased over-the-counter from first-rate counterparties to hedge currency and interest rate risks.
They are recorded at fair value in the balance sheet.
The effective portion of changes in the fair value of instruments used to hedge future revenues is recorded in equity and taken to operating income when the hedged revenues are received.
Changes in the fair value of instruments used to hedge trade receivables and payables are recorded as operating income or expense.
The portion of the change in fair value of these hedges that is ineffective (time value of the hedges) is recorded under "Other financial income and expense" together with changes in the fair value of instruments used to hedge other receivables and payables.
Changes in the fair value of interest rate hedges are recorded directly in "Other financial income and expense" when the hedging relationship cannot be demonstrated under IAS 39, or where the the Group has elected not to apply hedge accounting principles.
This item corresponds to minority shareholders' interests in the equity of consolidated subsidiaries.
The Group's liability for pensions and other employee benefits is determined on an actuarial basis using the projected unit credit method. The valuation takes into account the probability of employees staying with the Group up to retirement age and expected future salary levels. Benefit obligations are partially funded by contributions to external funds. In cases where the funds are permanently allocated to the benefit plan concerned, their value is deducted from the related liability.
Actuarial gains and losses are recognized according to the corridor method over the expected average remaining working lives of the employees participating in the plans.
Periodic pension and other employee benefit costs are recognized as operating expenses over the benefit vesting period, except for the interest cost, which is recorded under "Other financial income and expense" in accordance with the alternative method under IAS 19. The impact of changes in the present value of external funds is also recorded under this item.
Stock options and share grant plans for managers of Group companies. Options granted after November 7, 2002 that had not vested as of January 1, 2005 are measured at fair value as of the grant date using the Black & Scholes option pricing model. The fair value of stock options is recognized in payroll costs on a straight-line basis over the vesting period (the period between the grant date and the vesting date), with a corresponding adjustment to equity.
Free shares are measured at fair value by reference to the market price of Faurecia's shares at the grant date, less (i) an amount corresponding to the expected dividends due on the shares but not paid during the vesting period and (ii) an amount reflecting the cost of the shares being subject to a lock-up period. The fair value is recognized in payroll costs on a straight-line basis over the vesting period, with a corresponding adjustment to equity.
A provision is booked when Group General Management has decided to streamline the organization structure and announced the program to the employees affected by it or their representatives.
9
Sales are recognized when the risks and rewards incidental to ownership of the modules or parts produced are transferred. This generally corresponds to when the goods are shipped.
For development contracts or the sale of tooling, sales are recognized when the technical stages are validated by the customer. If no such technical stages are provided for in the contract, sales are recognized when the related study is completed or the tooling is delivered.
Operating income is the Faurecia Group's principal performance indicator.
It corresponds to net income of fully consolidated companies before:
Deferred taxes are recognized using the liability method for temporary differences arising between the tax bases for assets and liabilities and their carrying amounts on the consolidated financial statements. Temporary differences mainly arise from tax loss carryforwards and consolidation adjustments to subsidiaries' accounts.
Deferred taxes are measured using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available in the short or medium term against which the temporary differences can be utilized.
Where appropriate, an accrual is booked to cover taxes payable on the distribution of retained earnings of subsidiaries and associates which are not considered as having been permanently reinvested.
The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions when measuring certain assets, liabilities, income, expenses and obligations. These estimates and assumptions are primarily used when calculating the impairment of property, plant and equipment, intangible assets and goodwill, as well as for measuring pension and other employee benefit obligations. They are based on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates and assumptions.
The results of the sensitivity tests carried out on the carrying amounts of goodwill, property, plant and equipment and provisions for pensions and other employee benefits are provided in Notes 10, 12 and 25, respectively. In addition, Note 11 "Intangible Assets" describes the main assumptions used for measuring intangible assets.
Basic earnings per share are calculated by dividing net income attributable to owners of the parent by the weighted average number of shares outstanding during the year, excluding treasury stock.
Diluted earnings per share are calculated by the treasury stock method, which consists of multiplying the number of outstanding stock options by the ratio of the average exercise price for outstanding stock options and the average share price for the year. For the purpose of calculating diluted earnings per share, the Group adjusts net income attributable to owners of the parent and the weighted average number of shares outstanding for the effects of all dilutive potential ordinary shares (including stock options, free shares and convertible bonds).
The entities of the Emcon Group were integrated as part of Faurecia's Emissions Control Technology business following the transfer of all of the shares in the Emcon Technologies Group to Faurecia by Emcon Holdings. This transaction was approved by Faurecia's shareholders at an Extraordinary General Meeting held on February 8, 2010. Faurecia's 50% ownership interest in Arvin Sango held since the Emcon acquisition was sold in June 2010.
On March 31, 2010 and September 30, 2010, respectively, Faurecia acquired the German and Spanish operations of Plastal, a leading supplier of plastic exterior parts for the automotive industry. They were consolidated as of the acquisition date.
Faurecia also acquired, as part of the Interior Systems business, part of the operations of the Rennes Visteon France plant on December 17, 2010 and the company Incalplas in August 2010; and, as part of the Automotive Seating business, the seating comfort operations of Hoerbiger Automotive Komfortsysteme on December 23, 2010.
In addition, Faurecia consolidated the following companies as from January 1, 2010: South Korea-based Faurecia Shin Sung, established in 2007, as part of the Interior Systems business, Russia-based Faurecia Metalloprodukcia and France-based Faurecia Metalloprodukcia Holding, as part of the Emissions Control Technologies business, and Faurecia Informatique Tunisie, established in 2009. The Turkey-based company Orcia, which was acquired in 2008, is consolidated by the equity method as from January 1, 2010. Faurecia sold 40% of Faurecia ADP Holding during the first half of 2010.
Faurecia JIT and Sequencing in Korea (Emissions Control Technologies) and Faurecia Automotive Development in Russia (Interior Systems), both incorporated in 2008, have been fully consolidated in the Group's 2009 financial statements.
The impact related to Emcon and Plastal acquisitions are described in Note 10a.
The other changes in scope of consolidation during the period did not have a material impact on the presentation of the Group's consolidated financial statements.
Faurecia acquired the assets of Angell-Demmel Europe GmbH on January 17, 2011, after it received authorisation to do so by the German and Austrian antitrust authorities. Faurecia acquired a 21.2% share of the company Aminex A/S on January 17, 2011.
For internal reporting purposes the Group is structured into the following four business units based on the type of products and services provided:
These business units are managed on an independent basis in terms of reviewing their individual performance and allocating resources. The tables below show reconciliation between the indicators used to measure the performance of each segment – notably operating income – and the consolidated financial statements. Borrowings, other operating income and expense, financial income and expense, and taxes are monitored at Group level and are not allocated to the various segments.
In accordance with the option available under IFRS 8, the Automotive Seating and Interior Systems business units have been aggregated into the Interior Modules segment and the Emissions Control Technologies and Automotive Exteriors units have been aggregated into the Other Modules segment.
These business units have similar economic characteristics, notably in terms of medium-term earnings outlook, type of customer and manufacturing processes.
| (in € millions) | Interior Modules | Other modules | Other | Total |
|---|---|---|---|---|
| Sales | 7,708.0 | 6,153.7 | 239.0 | 14,100.7 |
| Inter-segment eliminations | (44.2) | (21.6) | (239.0) | (304.8) |
| Consolidated sales | 7,663.8 | 6,132.1 | 0.0 | 13,795.9 |
| Operating income (loss) before allocation of costs |
284.2 | 216.7 | (45.3) | 455.6 |
| Allocation of costs | (29.1) | (16.2) | 45.3 | 0.0 |
| Operating income (loss) | 255.1 | 200.5 | 0.0 | 455.6 |
| Other operating income | 87.2 | |||
| Other operating expenses | (123.2) | |||
| Financial costs net | (90.6) | |||
| Other fi nancial income and expenses | (25.6) | |||
| Corporate income tax | (89.8) | |||
| Share of net income of associates | 18.8 | |||
| NET INCOME (LOSS) | 232.4 | |||
| Segment assets | ||||
| Net property, plant and equipment | 947.3 | 620.1 | 8.1 | 1,575.5 |
| Other segment assets | 2,460.6 | 1,582.8 | 33.1 | 4,076.5 |
| Total segment assets | 3,407.9 | 2,202.9 | 41.2 | 5,652.0 |
| Investments in associates | 43.6 | |||
| Equity interests | 15.3 | |||
| Short- and long-term fi nancial assets | 648.1 | |||
| Tax assets (current and deferred) | 121.4 | |||
| TOTAL ASSETS | 6,480.4 | |||
| Segment liabilities | 2,153.7 | 1,464.3 | 100.5 | 3,718.5 |
| Borrowings | 1,802.6 | |||
| Tax liabilities (current and deferred) | 61.1 | |||
| Equity and minority interests | 898.2 | |||
| TOTAL LIABILITIES | 6,480.4 | |||
| Capital expenditure | 172.5 | 124.4 | 7.4 | 304.3 |
| Depreciation of items of property plant and equipment |
(208.0) | (96.2) | (3.3) | (307.6) |
| Impairment of property, plant and equipment |
(6.7) | (2.0) | (8.7) | |
| Headcount | 51.385 | 22.868 | 1.423 | 75.676 |
| (in € millions) | Interior Modules | Other modules | Other | Total |
|---|---|---|---|---|
| Sales | 6,649.3 | 2,712.4 | 205.4 | 9,567.1 |
| Inter-segment eliminations | (46.7) | (22.8) | (205.4) | (274.9) |
| Consolidated sales | 6,602.6 | 2,689.6 | 0.0 | 9,292.2 |
| Operating income (loss) before allocation of costs |
(91.6) | 50.0 | (50.1) | (91.7) |
| Allocation of costs | (38.7) | (11.4) | 50.1 | 0.0 |
| Operating income (loss) | (130.3) | 38.6 | 0.0 | (91.7) |
| Other operating income | 6.9 | |||
| Other operating expenses | (141.0) | |||
| Financial costs, net | (123.0) | |||
| Other fi nancial income and expenses | (43.9) | |||
| Corporate income tax | (35.9) | |||
| Share of net income of associates | 11.3 | |||
| NET INCOME (LOSS) | (417.3) | |||
| Segment assets | ||||
| Net property, plant and equipment | 951.2 | 261.8 | 11.6 | 1,224.6 |
| Other segment assets | 2,374.1 | 726.1 | 37.5 | 3,137.7 |
| Total segment assets | 3,325.3 | 987.9 | 49.1 | 4,362.3 |
| Investments in associates | 31.0 | 31.0 | ||
| Equity interests | 11.2 | |||
| Short- and long-term fi nancial assets | 401.9 | |||
| Tax assets (current and deferred) | 86.5 | |||
| TOTAL ASSETS | 4,892.9 | |||
| Segment liabilities | 2,039.4 | 667.0 | 89.3 | 2,795.7 |
| Borrowings | 1,760.3 | |||
| Tax liabilities (current and deferred) | 34.2 | |||
| Equity and minority interests | 302.7 | |||
| TOTAL LIABILITIES | 4,892.9 | |||
| Capital expenditure | 114.6 | 45.9 | 8.6 | 169.1 |
| Depreciation of items of property, plant and equipment |
(230.7) | (61.6) | (3.4) | (295.7) |
| Impairment of property, plant and equipment |
(9.8) | (1.2) | (11.0) | |
| Headcount | 47.407 | 9.877 | 1.130 | 58,414 |
| (in € millions) | Interior Modules | Other modules | Other | Total |
|---|---|---|---|---|
| Sales | 8,332.6 | 3,718.5 | 219.6 | 12,270.7 |
| Inter-segment eliminations | (23.6) | (16.8) | (219.6) | (260.0) |
| Consolidated sales | 8,309.0 | 3,701.7 | 0.0 | 12,010.7 |
| Operating income (loss) before allocation of costs |
3.7 | 124.1 | (36.6) | 91.2 |
| Allocation of costs | (28.3) | (8.3) | 36.6 | |
| Operating income (loss) | (24.6) | 115.8 | 0.0 | 91.2 |
| Other income and expenses | (444.3) | |||
| Financial costs net | (96.3) | |||
| Other fi nancial income and expenses | (98.9) | |||
| Corporate income tax | (28.7) | |||
| Share of net income of associates | 7.7 | |||
| NET INCOME (LOSS) | (569.3) | |||
| Segment assets | ||||
| Net property, plant and equipment | 1,058.1 | 278.3 | 24.4 | 1,360.8 |
| Other segment assets | 2,517.7 | 699.0 | 20.8 | 3,237.5 |
| Total segment assets | 3,575.8 | 977.3 | 45.2 | 4,598.3 |
| Investments in associates | 40.1 | 0.0 | 0.0 | 40.1 |
| Equity interests | 1.6 | |||
| Short- and long-term fi nancial assets | 466.8 | |||
| Tax assets (current and deferred) | 121.0 | |||
| TOTAL ASSETS | 5,227.8 | |||
| Segment liabilities | 2,166.2 | 678.9 | (11.5) | 2,833.6 |
| Borrowings | 2,079.6 | |||
| Tax liabilities (current and deferred) | 71.1 | |||
| Equity and minority interests | 243.5 | |||
| TOTAL LIABILITIES | 5,227.8 | |||
| Capital expenditure | 253.7 | 63.1 | 11.9 | 328.7 |
| Depreciation of items of property, plant and equipment |
(236.4) | (63.7) | (3.3) | (303.4) |
| Impairment of property, plant and equipment |
(10.5) | (10.5) | ||
| Headcount | 50.720 | 9.787 | 850 | 61.357 |
Sales by operating segment break down as follows:
| (in € millions) | 2010 | % | 2009 | % | 2008 | % |
|---|---|---|---|---|---|---|
| Interior Modules | ||||||
| - Automotive Seating | 4,571.2 | 33 | 3,990.9 | 43 | 5,004.3 | 42 |
| - Interior systems | 3,092.6 | 23 | 2,611.7 | 28 | 3,304.7 | 27 |
| 7,663.8 | 56 | 6,602.6 | 71 | 8,309.0 | 69 | |
| Other modules | ||||||
| - Emissions Control Technologies | 4,781.4 | 34 | 1,826.1 | 20 | 2,755.4 | 23 |
| - Automotive Exteriors | 1,350.7 | 10 | 863.5 | 9 | 946.3 | 8 |
| 6,132.1 | 44 | 2,689.6 | 29 | 3,701.7 | 31 | |
| TOTAL | 13,795.9 | 100 | 9,292.2 | 100 | 12,010.7 | 100 |
Sales by major customer break down as follows:
| (in € millions) | 2010 | % | 2009 | % | 2008 | % |
|---|---|---|---|---|---|---|
| VW Group | 2,767.7 | 20 | 1,824.7 | 20 | 2,156.9 | 18 |
| PSA Peugeot Citroën | 2,300.9 | 17 | 2,049.4 | 22 | 2,733.9 | 23 |
| Ford Group | 1,487.7 | 11 | 875.1 | 9 | 1,114.1 | 9 |
| Renault-Nissan | 1,442.1 | 10 | 1,164.3 | 13 | 1,273.9 | 11 |
| GM | 1,231.9 | 9 | 506.1 | 5 | 820.8 | 7 |
| BMW | 1,037.0 | 8 | 857.8 | 9 | 1,070.4 | 9 |
| Other | 3,528.6 | 25 | 2,014.8 | 22 | 2,840.7 | 23 |
| TOTAL | 13,795.9 | 100 | 9,292.2 | 100 | 12,010.7 | 100 |
* Sales invoiced.
Sales invoiced may differ from sales by end customer when products are transferred to intermediary assembly companies.
Sales are broken down by destination region. Other items are presented by the region where the companies involved operate.
| Other | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in € millions) | France | Germany | European countries |
North America |
South America |
Asia | Other countries |
Total | |
| Sales | 2,214.5 | 3,294.1 | 3,426.8 | 2,496.9 | 636.6 | 1,407.7 | 319.3 | 13,795.9 | |
| Net property, plant and equipment | 322.9 | 233.5 | 488.3 | 284.8 | 67.5 | 125.4 | 53.0 | 1,575.4 | |
| Capital expenditure | 63.2 | 27.1 | 52.6 | 72.4 | 23.2 | 42.6 | 23.3 | 304.4 | |
| Number of employees as of | |||||||||
| December 31 | 14.663 | 11.283 | 24.021 | 12.571 | 4.770 | 6.598 | 1.770 | 75.676 |
| Other | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in € millions) | France | Germany | European countries |
North America |
South America |
Asia | Other countries |
Total |
| Sales | 2,059.0 | 2,334.4 | 2,413.1 | 1,077.7 | 335.1 | 827.0 | 245.9 | 9,292.2 |
| Net property, plant and equipment | 359.6 | 104.6 | 443.8 | 173.2 | 43.4 | 73.5 | 26.5 | 1,224.6 |
| Capital expenditure | 68.7 | 18.0 | 43.4 | 23.2 | 10.0 | 15.6 | 11.2 | 190.1 |
| Number of employees as of | ||||||||
| December 31 | 15.530 | 7.410 | 18.613 | 7.488 | 2.969 | 4.185 | 2.219 | 58.414 |
| Other | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in € millions) | France | Germany | European countries |
North America |
South America |
Asia | Other countries |
Total |
| Sales | 2,745.2 | 3,055.4 | 3,015.6 | 1,774.3 | 329.1 | 733.0 | 358.1 | 12,010.7 |
| Net property, plant and equipment | 419.0 | 121.1 | 482.4 | 149.9 | 84.1 | 83.2 | 21.1 | 1,360.8 |
| Capital expenditure | 102.9 | 15.7 | 97.3 | 32.0 | 32.4 | 39.5 | 10.4 | 330.2 |
| Number of employees as of | ||||||||
| December 31 | 16.489 | 8.215 | 20.658 | 7.801 | 2.679 | 3.654 | 1.861 | 61.357 |
NOTE 5 ANALYSIS OF OPERATING EXPENSES
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Cost of sales | (12,593.3) | (8,840.1) | (11,296.8) |
| Research and development costs | (303.2) | (207.9) | (269.9) |
| Selling and administrative expenses | (443.8) | (335.9) | (352.8) |
| TOTAL | (13,340.3) | (9,383.9) | (11 919.5) |
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Purchases consumed | (9,339.0) | (6,049.0) | (8,196.8) |
| External costs | (1,212.6) | (834.5) | (1,075.8) |
| Personnel costs | (2,467.7) | (1,922.3) | (2,257.5) |
| Taxes other than on income | (46.0) | (48.7) | (52.4) |
| Other operating income and expenses (1) | 171.1 | 10.6 | 101.5 |
| Depreciation, amortization and provisions for impairment in value of non-current assets |
(485.6) | (487.0) | (467.1) |
| Charges to and reversals of provisions | 39.5 | (53.1) | 28.6 |
| TOTAL | (13,340.3) | (9,383.9) | (11,919.5) |
| (1) Including inventoried and capitalized production | 208.9 | 78.7 | 126.3 |
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Wages and salaries( * ) |
(1,952.8) | (1,496.5) | (1,784.5) |
| Payroll taxes | (514.9) | (425.8) | (473.0) |
| TOTAL | (2,467.7) | (1,922.3) | (2,257.5) |
| ( * ) Of which temporary employee costs |
(164.4) | (89.5) | (198.2) |
Details of expenses relating to the Group's stock option plans and pension costs are provided in Notes 22.2 and 25, respectively.
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Gross research and development costs | (689.1) | (493.2) | (613.0) |
| amounts billed to customers and changes in inventories | 393.5 | 361.6 | 362.5 |
| capitalized development costs | 154.3 | 104.4 | 144.7 |
| amortization of capitalized development costs | (175.5) | (161.1) | (168.8) |
| charges to and reversals of provisions for impairment of capitalized development costs |
13.6 | (19.6) | 4.7 |
| NET EXPENSE | (303.2) | (207.9) | (269,9) |
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Amortization of capitalized development costs | (175.5) | (161.1) | (168.8) |
| Depreciation of items of property, plant and equipment | (19.5) | (12.1) | (9.3) |
| Depreciation of specifi c tooling | (11.5) | (12.9) | (13.9) |
| Depreciation and impairment of other items of property, plant and equipment items |
(292.7) | (281.3) | (279.8) |
| Provisions for impairment of capitalized development costs | 13.6 | (19.6) | 4.7 |
| TOTAL | (485.6) | (487.0) | (467,1) |
Other non-operating income and expense are analyzed as follows:
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Provisions for contingencies | 0.4 | 0.0 | 0.0 |
| Badwill from the acquisition of Plastal Germany and Plastal Spain |
84.3 | 0.0 | 0.0 |
| Losses on disposals of assets | 2.5 | 6.9 | 0.0 |
| Other | 0.0 | 0.0 | 0.1 |
| TOTAL | 87.2 | 6.9 | 0,1 |
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Provisions for contingencies | 0.0 | 0.0 | (2.5) |
| Provisions for impairment of goodwill (Vehicle Interiors) | 0.0 | 0.0 | (247.9) |
| Provisions for impairment of assets (Vehicle Interiors) | 0.0 | 0.0 | (16.3) |
| Other provisions for impairment of assets | 0.0 | 0.0 | (4.0) |
| Reorganization expenses( * ) |
(117.0) | (129.5) | (165.3) |
| Losses on disposals of assets | 0.0 | 0.0 | (8.2) |
| Other( ** ) |
(6.2) | (11.5) | (0.2) |
* As of December 31, 2010, this item included restructuring costs in the amount of €104.7 million and in the amount of €12.3 million, versus,
TOTAL (123.2) (141.0) (444.4)
respectively, €119.8 million and €9.7 million in 2009 and €162.2 million and €3.0 million in 2008.
** This item includes the cost of acquisition of Emcon and Plastal principally in the amount of € 7.6 million in 2009 and € 5.3 million in 2010
Reorganization costs (€117.0 million) include redundancy and site relocation payments for 2,776 people and breakdown by country as follows:
| in € millions | Employees | |
|---|---|---|
| France | 32.9 | 771 |
| Germany | 59.3 | 977 |
| Spain | 14.1 | 688 |
| Great Britain | 7.6 | 93 |
| Other | 3.1 | 247 |
| TOTAL | 117.0 | 2,776 |
|---|---|---|
| (in € millions) | Year 2010 | Year 2009 | Year 2008 |
|---|---|---|---|
| Impact of discounting the pension benefi t obligation | (9.6) | (10.5) | (9.8) |
| Changes in the inem ective portion of currency hedges (1) | (0.4) | (2.9) | (37.5) |
| Changes in the value of currency hedges relating to debt | 0.0 | (1.7) | 1.4 |
| Changes in the value of interest rate hedges (2) | 3.6 | (6.0) | (23.7) |
| Translation dim erences on borrowings | (4.0) | (14.8) | (20.9) |
| Gains on sales of securities | 0.0 | 0.0 | 0.1 |
| Other | (15.2) | (8.0) | (8.5) |
| TOTAL | (25.6) | (43.9) | (98.9) |
(1) The expense recorded in 2008 includes an expense of €22 million in changes in the intrinsic value of instruments used as economic hedges of currency risks on forecast transactions which do not qualify for hedge accounting under IAS 39. Consequently, this unrealized loss was recorded on the income statement in 2008 as it could not be recognized in equity.
The instruments concerned correspond to options and if they are exercised at maturity any realized loss would result in a symmetrical gain recorded on the realized transactions.
(2) The decrease in the fair value of interest rate instruments relates primarily to changes in the intrinsic value of instruments used as economic hedges of interest rate risks which did not qualify for hedge accounting under IAS 39 as of December 31, 2007. In 2008, a corresponding €20.0 million gain on changes in interest rates was recorded under financial income.
Corporate income tax can be analyzed as follows:
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Current taxes | |||
| Current corporate income tax | (85.9) | (42.2) | (34.1) |
| Taxes on intra-group distributions, tax reassessments, carry back |
|||
| (85.9) | (42.2) | (34.1) | |
| Deferred taxes | |||
| Deferred taxes for the period | (3.9) | 6.3 | 20.7 |
| Impairment of deferred tax assets previously recorded | (15.3) | ||
| Deferred taxes | (3.9) | 6.3 | 5.4 |
| TOTAL | (89.8) | (35.9) | (28.7) |
The 2010 Finance Law passed in December 2009 introduced a "territorial economic contribution" (CET) to replace the business tax (TP). The CET has two components: the corporate real estate tax (CFE) and the corporate value added tax (CVAE). The CFE is calculated on the lease price of the assets subject to the real estate tax. The CVAE is assessed at 1.5% of the value added. The CET is assessed at 3% of the value added.
The overall amount of the CET (i.e. the sum of the value added contribution and the land tax levy) is capped at 3% of the company's value added. The value added generated by the Group's French operations is much higher than their taxable earnings because the French tax group has reported tax losses for the past several years whereas the value added figure is positive. Consequently the Group has classified the CET as an operating expense rather than a component of corporate income tax and the CET due as from 2010 will be included in the operating income line, in the same way as the local business tax levied until 2009.
The effective corporate income tax charge can be reconciled with the theoretical tax charge as follows:
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Pre-tax income of consolidated companies | 303.4 | (392.7) | (548.3) |
| Tax at 34.43% | (104.5) | 135.2 | 188.8 |
| Em ect of rate changes on deferred taxes recognized on the balance sheet |
0.0 | (2.0) | 0.2 |
| Em ect of local rate dim erences | 31.5 | (1.4) | 2.3 |
| Tax credits | 20.4 | 10.1 | 21.8 |
| Use of non-capitalized loss carryforwards | 26.2 | 6.6 | 18.2 |
| Non-capitalized tax losses | (103.7) | (183.9) | (154.2) |
| Impairment of tax asset carryforwards | 0.0 | (15.3) | |
| Permanent dim erences | 40.3 | (0.5) | (90.5) |
| Corporate tax recognized | (89.8) | (35.9) | (28.7) |
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Current taxes | |||
| Assets | 35.2 | 14.5 | 29.6 |
| Liabilities | (31.9) | (27.1) | (32.9) |
| 3.3 | (12.6) | (3.3) | |
| Deferred taxes | |||
| Assets( * ) |
86.2 | 72.0 | 91.4 |
| Liabilities | (29.2) | (7.1) | (38.2) |
| 57.0 | 64.9 | 53.2 | |
| Of which tax assets on tax losses ( * ) |
40.0 | 45.1 | 40,4 |
Changes in deferred taxes recorded on the balance sheet break down as follows:
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Net amount at the beginning of the year | 64.9 | 53.2 | 46.0 |
| Deferred taxes for the period carried to income | (3.9) | 6.3 | 20.7 |
| Deferred taxes recognized directly in equity | 0.0 | ||
| EU ect of currency fl uctuations and other movements | (4.0) | 5.4 | 1.8 |
| Impairment of tax asset carryforwards | 0.0 | (15.3) | |
| Net amount at the end of the year | 57.0 | 64.9 | 53,2 |
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| N+1 | 32.6 | 5.3 | 18.1 |
| N+2 | 7.0 | 4.6 | 3.1 |
| N+3 | 9.5 | 6.7 | 2.8 |
| N+4 | 28.1 | 12.6 | 3.7 |
| N+5 and above | 220.3 | 207.9 | 197.5 |
| Unlimited | 505.8 | 461.2 | 411.6 |
| TOTAL | 803.3 | 698.3 | 636,8 |
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Number of shares outstanding at year end (1) | 110,366,728 | 89,448,504 | 24,395,048 |
| Adjustments: | |||
| treasury stock | (270,814) | (270,814) | (270,814) |
| weighted impact of share issues prorated | (2,235,098) | (25,843,154) | |
| Weighted average number of shares before dilution | 107,860,816 | 63,334,536 | 24,124,234 |
| Weighted impact of dilutive instruments | |||
| stock options (2) | 0 | 4,195 | |
| free shares attributed (3) | 1,344,500 | ||
| Bonds with conversion option (4) | 3,408,805 | 11,306,058 | |
| Weighted average number of shares after dilution | 112,614,121 | 74,640,594 | 24,128,429 |
(1) Changes in the number of shares outstanding as of December 31 are analyzed as follows: As of December 31, 2008: number of Faurecia shares outstanding 24,395,048 Capital increase 65,053,456 As of December 31, 2009: number of Faurecia shares outstanding 89,448,504 Capital increase 20,918,224
As of December 31, 2010: number of Faurecia shares outstanding 110,366,728
(2) As of December 31, 2010 1,523,998 stock options were outstanding and exercisable, compared with 1,594,223 as of December 31, 2009 and 1,435,183 as of December 31, 2008. Taking into account the average Faurecia share price for 2010, none of the stock options have a dilutive impact. (3) The number of free shares to be granted as of December 31, 2010 subject to attendance and performance requirements was 1,344,500
(see Note 22.2 c). (4) Bonds with conversion option have a dilutive effect when the net interest per share deriving from the conversion is less than the basic earnings per share.
The dilutive impact of the bonds was calculated using the treasury stock method.
In relation to stock options, this method consists of comparing the number of shares that would have been issued if all outstanding stock options had been exercised to the number of shares that could have been acquired at fair value (in this case the average Faurecia share price for the year was €15.922 in 2010).
Earnings per share break down as follows:
| (in € millions) | Year 2010 | Year 2009 | Year 2008 |
|---|---|---|---|
| Net income (loss) | 201.7 | (433.6) | (574.8) |
| Basic earnings (loss) per share | 1.87 | (6.85) | (23.83) |
| After dilution | 1.79 | (6.85) | (23.83) |
On October 30, 2009 Faurecia signed an agreement to acquire the Emcon Technologies group – a leading player at that time in emissions control technologies (formerly Arvin Industries) – from One Equity Partners LP11 (OEP), the private equity arm of JPMorgan Chase & Co. The transaction was cleared by the relevant antitrust authorities, notably in Europe and the United States, in early 2010.
The acquisition involved Emcon Holdings transferring to Faurecia all of the shares in the Emcon Technologies group. As consideration for this transfer, Faurecia issued 20,918,224 shares to Emcon Holdings, representing 18.95% of Faurecia's capital and 16.41% of its voting rights. As part of the deal, Faurecia also assumed US\$22.3 million (€15.8 million) worth of Emcon Holdings' liabilities.
The deal was approved by Faurecia's shareholders at an Extraordinary General Meeting held on February 8, 2010.
The main advantages that Faurecia expects to gain from this transaction are as follows:
c additional research and innovation capacities in new technologies for emissions reduction;
c entry into the commercial and off-road vehicles markets; and
Out of the initial purchase price of €314.5 million (excluding acquisition related costs recorded as expenses) €142.2 million has been allocated to the net assets acquired and €172.3 million to goodwill, taking into account the following fair value adjustments:
The goodwill recognized on the acquisition mainly corresponds to human capital and the synergies expected to be generated in terms of revenue and cost reductions.
Acquisition-related costs have been recognized as expenses in an aggregate amount of €9 million of which €6.6 million were recorded in 2009 and the balance in 2010.
The table below shows a breakdown of Emcon Technologies' net assets acquired by Faurecia.
| (in € millions) | IFRS historical values |
Fair value adjustments |
Fair value |
|---|---|---|---|
| Intangible assets | 7.8 | 24.6 | 32.4 |
| Property, plant and equipment | 143.2 | 32.9 | 176.1 |
| Other non-current assets | 48.2 | 1.7 | 49.9 |
| TOTAL NON-CURRENT ASSETS | 199.3 | 59.1 | 258.4 |
| Inventories, net | 125.6 | 125.6 | |
| Trade accounts receivables | 253.1 | 253.1 | |
| Other current assets | 36.1 | 21.8 | 57.9 |
| Cash and cash equivalents | 60.6 | 60.6 | |
| TOTAL CURRENT ASSETS | 475.4 | 21.8 | 497.2 |
| TOTAL ASSETS | 674.6 | 81.0 | 755.6 |
| Provision and non-current liabilities | 117.2 | 40.9 | 158.1 |
| Non-current fi nancial liabilities | 0.8 | 0.8 | |
| TOTAL NON-CURRENT LIABILITIES | 118.0 | 40.9 | 158.9 |
| Trade payables | 282.3 | 282.3 | |
| Other current liabilities | 87.0 | 87.0 | |
| Current fi nancial liabilities | 85.2 | 85.2 | |
| TOTAL CURRENT LIABILITIES | 454.5 | 0.0 | 454.5 |
| TOTAL LIABILITIES | 572.5 | 40.9 | 613.4 |
| Net assets acquired | 142.2 | ||
| Goodwill | 172.3 | ||
| Consideration | 314,5 |
As the business combination did not have a material impact on Faurecia's consolidated financial statements between January 1, 2010 and February 8, 2010, Emcon's accounts have been included in the consolidated financial statements since January 1, 2010. Emcon's total contribution to Faurecia's consolidated revenue and operating income was €2,416.1 million and €32 million respectively in 2010.
On February 3, 2010 Faurecia signed an agreement with a view to acquiring the German operations of Plastal, a firstrate supplier of exterior plastic parts; it included an option to acquire the operations of Plastal Spain and an option to acquire the operations of Plastal France, both subsidiaries of Plastal Germany. The acquisition of the German operations was completed on March 31, 2010, and that of the Spanish operations on September 30, 2010 upon approval by the corresponding antitrust authorities. The option to acquire Plastal France has not been exercised.
The main advantages that Faurecia expects to gain from this transaction are as follows:
The acquisition of Plastal Germany's operations took the form of a asset deal, while that of the Spanish operations was a share purchase. These two acquisitions are considered a business combination under the revised IFRS 3. The German and Spanish Plastal operations have been acquired for a net consideration of €49.9 million net (excluding acquisition related costs recognized as expenses) including the option to buy the Plastal Spain shares valued as of the acquisition of the German assets. This consideration was allocated to net assets acquired and liabilities assumed. Plastal's unique situation (Plastal Germany had been in reorganization proceedings since June 2009) explains the bargain terms obtained for these acquisitions, resulting in the recognition of an €84.3 million gain carried to the line other
income (see Note 6), taking into account the following fair value adjustments:
The business combination was accounted for provisionally as the fair values assigned to the assets acquired and liabilities assumed may be amended within the one-year period following the March 31, 2010 acquisition date for Plastal Germany and September 30, 2010 for Plastal Spain.
Acquisition-related costs have been recognized as expenses in an aggregate amount of €3.8 million of which €1 million were recorded in 2009 and the balance in 2010.
The table below shows a breakdown of Plastal Germany and Plastal Spain net assets acquired by Faurecia.
| (in € millions) | IFRS historical values |
Fair value adjustments |
Fair value |
|---|---|---|---|
| Intangible assets | 3.7 | 6.5 | 10.2 |
| Property, plant and equipment | 156.3 | (17.0) | 139.3 |
| Other non-current assets | 3.9 | 1.8 | 5.7 |
| TOTAL NON-CURRENT ASSETS | 163.9 | (8.7) | 155.2 |
| Current assets | 75.4 | 4.1 | 79.5 |
| Cash and cash equivalents | 18.5 | 0.0 | 18.5 |
| TOTAL CURRENT ASSETS | 93.9 | 4.1 | 98.0 |
| TOTAL ASSETS | 257.8 | (4.6) | 253.2 |
| Non-current liabilities | 35.9 | 0.0 | 35.9 |
| Non-current fi nancial liabilities | 18.6 | 0.0 | 18.6 |
| TOTAL NON-CURRENT LIABILITIES | 54.5 | 0.0 | 54.5 |
| Current liabilities | 56.5 | 0.0 | 56.5 |
| Current fi nancial liabilities | 7.9 | 0.0 | 7.9 |
| TOTAL CURRENT LIABILITIES | 64.5 | 0.0 | 64.5 |
| TOTAL LIABILITIES | 119.0 | 0.0 | 119.0 |
| Net assets acquired | 134.2 | ||
| Badwill | (84.3) | ||
| Consideration | 49,9 |
Plastal's total contribution to Faurecia's consolidated sales and operating income, respectively, was €386.5 million and €19 million for the period from April 1, 2010 to December 31, 2010.
| (in € millions) | Gross amount | Impairment | Net amount |
|---|---|---|---|
| Net carrying amount as of December 31, 2007 | 1,552.0 | (263.4) | 1,288.6 |
| Acquisitions and minority interest buyouts | 1.3 | 1.3 | |
| Impairment of Vehicle Interiors goodwill | (247.9) | (247.9) | |
| Translation adjustments and other movements | (2.5) | 0.7 | (1.8) |
| Net carrying amount as of December 31, 2008 | 1,550.8 | (510.6) | 1,040.2 |
| Acquisitions and minority interest buyouts | 1.6 | 1.6 | |
| Impairment of Vehicle Interiors goodwill | 0.0 | ||
| Translation adjustments and other movements | (1.8) | (0.1) | (1.9) |
| Net carrying amount as of December 31, 2009 | 1,550.6 | (510.7) | 1,039.9 |
| Acquisitions and minority interest buyouts | 178.7 | 178.7 | |
| Impairment of Vehicle Interiors goodwill | 0.0 | ||
| Translation adjustments and other movements | 12.6 | (0.4) | 12.2 |
| Net carrying amount as of December 31, 2010 | 1,741.9 | (511.1) | 1,230.8 |
Breakdown of the net amount of goodwill by operating segment:
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Automotive Seating | 792.4 | 792.6 | 792.6 |
| Emissions Control Technologies | 335.8 | 151.2 | 151.5 |
| Interior Systems | 6.5 | 0.0 | 0.0 |
| Automotive Exteriors | 96.1 | 96.1 | 96.1 |
| TOTAL | 1,230.8 | 1,039.9 | 1,040.2 |
In accordance with the accounting policies described in Notes 1.2 and 1.5, the carrying amount of each CGU to which goodwill has been allocated has been compared to the higher of the CGU's value in use and its market value net of selling costs. Value in use corresponds to the present value of net future cash flows expected to be derived from the CGU's in question.
The cash flow forecasts used to calculate value in use were based on the Group's 2011-2014 medium-term business plan which was drafted in mid-2010 and adjusted at the end of the year based on the latest assumptions in the 2011 budget. The volume assumptions used in the 2011-2014 medium-term plan are based on external information sources.
The main assumption affecting value in use is the level of operating income used to calculate future cash flows and particularly the terminal value. The operating margin assumption for 2014 is 5.5% for the Group as a whole.
Projected cash flows for the last year of the medium-term business plan (2014) have been projected to infinity by applying a growth rate determined based on analysts' trend forecasts for the automotive market. The growth rate applied for the year-end 2010, 2009 and 2008 tests was 1.5%.
Faurecia called on an independent expert to calculate the weighted average cost of capital used to discount future cash flows. The market parameters used in the expert's calculation were based on a sample of 10 companies operating in the automotive supplier sector (seven in Europe and three in the United States). Taking into account these parameters and a market risk premium of 5.25% to 5.75%, the weighted average cost of capital used to discount future cash flows was set at 9.0% (on the basis of a range of values provided by the independent expert) in 2010 (9% in 2009). This rate was applied for the impairment tests carried out on all of the Group's CGU's. They all bear the same specific risks relating to the automotive supplier sector and the CGU'S multinational operation does not justify using geographically different discount rates.
The decrease in the value in use of the Interior Systems business at the end of 2008 resulted in the Group fully writing down the €247.9 million in residual goodwill on the business.
This write-down was the direct consequence of the contraction in both the European and US automotive markets, which Faurecia believed would affect automakers' orders and lead to lower income than originally forecast.
The tests performed at year-end 2010 did not show any indication of further impairment in goodwill.
The table below shows the sensitivity of the impairment test results to changes in the assumptions used as of December 31, 2010 to determine the value in use of the CGU's to which the Group's goodwill is allocated:
| Sensitivity (in € millions) | Test income (value in use - net carrying value) |
Cash fl ow discount rate + 0.5 pt |
Growth rate to infi nity -0.5 pt |
Operating income for a terminal value of -0.5 pt |
|---|---|---|---|---|
| Automotive Seating | 1,420.0 | (165.0) | (135.0) | (172.0) |
| Emissions Control Technologies |
1,296.0 | (138.0) | (115.0) | (201.0) |
| Interior Systems | 1,326.0 | (119.0) | (97.0) | (119.0) |
| Automotive Exteriors | 519.0 | (45.0) | (36.0) | (58.0) |
Intangible assets break down as follows:
| (in € millions) | Development costs | Software and other | Total |
|---|---|---|---|
| NET AS OF JANUARY 1, 2008 | 494.1 | 17.3 | 511.4 |
| Additions | 144.7 | 9.8 | 154.5 |
| Funding of amortization provisions | (168.8) | (9.3) | (178.1) |
| Funding of provisions | 1.8 | 0.0 | 1.8 |
| Translation adjustments and other | (22.3) | 2.5 | (19.8) |
| NET AS OF DECEMBER 31, 2008 | 449.5 | 20.3 | 469.8 |
| Additions | 104.2 | 2.6 | 106.8 |
| Funding of amortization provisions | (161.1) | (12.1) | (173.2) |
| Funding of provisions | (19.6) | 0.0 | (19.6) |
| Translation adjustments and other | (3.6) | 16.7 | 13.1 |
| NET AS OF DECEMBER 31, 2009 | 369.4 | 27.5 | 396.9 |
| Additions | 154.6 | 4.8 | 159.4 |
| Funding of amortization provisions | (175.5) | (19.5) | (195.0) |
| Funding of provisions | 13.6 | 0.0 | 13.6 |
| Translation adjustments and other( * ) |
15.1 | 45.2 | 60.3 |
| NET AS OF DECEMBER 31, 2010 | 377.2 | 58.0 | 435.2 |
* See Note 10A.
The carrying amount of development costs allocated to a customer contract as well as the associated specific tooling is compared to the present value of the expected net future cash flows to be derived from the contract based on the best possible estimate of future sales. The volumes taken into account in Faurecia's business plans are the best estimates by the Group's marketing department based on automakers' forecasts where available.
| Plant, tooling | Specifi c | Other property, plant and equipment and property, plant and equipment in |
||||
|---|---|---|---|---|---|---|
| (in € millions) | Land | Buildings | and equipment | tooling | progress | Total |
| NET AS OF JANUARY 1, 2008 | 57.6 | 348.7 | 718.0 | 27.2 | 257.4 | 1,408.9 |
| Additions (including own work capitalized) (1) | 2.2 | 29.5 | 128.6 | 9.4 | 159.0 | 328.7 |
| Disposals | (1.3) | (42.2) | (175.8) | (8.7) | (41.1) | (269.1) |
| Funding of depreciation, amortization and impairment provisions |
(0.3) | (49.3) | (205.5) | (13.8) | (24.8) | (293.7) |
| Non-recurring impairment losses | 0.1 | (5.1) | (14.9) | (0.3) | (0.3) | (20.5) |
| Depreciation written om on disposals | 1.1 | 38.5 | 168.2 | 8.2 | 38.8 | 254.8 |
| Currency translation adjustments | (2.1) | (12.2) | (26.5) | (0.1) | (2.7) | (43.6) |
| Entry into scope of consolidation & other movements |
0.8 | 35.2 | 110.9 | 2.0 | (153.6) | (4.7) |
| NET AS OF DECEMBER 31, 2008 | 58.1 | 343.1 | 703.0 | 23.9 | 232.7 | 1,360.8 |
| Additions (including own work capitalized)(1) | 1.0 | 20.8 | 78.1 | 15.4 | 74.8 | 190.1 |
| Disposals | (1.7) | (45.2) | (171.7) | (1.9) | (23.4) | (243.9) |
| Funding of depreciation, amortization and impairment provisions |
(0.5) | (49.4) | (216.6) | (13.0) | (16.2) | (295.7) |
| Non-recurring impairment losses | (1.2) | (2.3) | (6.9) | (0.2) | (0.4) | (11.0) |
| Depreciation written om on disposals | 0.3 | 41.9 | 166.6 | 1.3 | 21.5 | 231.6 |
| Currency translation adjustments | 0.4 | 4.4 | 5.2 | 0.2 | 1.4 | 11.6 |
| Entry into scope of consolidation & other movements |
1.1 | 52.5 | 95.6 | (1.0) | (167.1) | (18.9) |
| NET AS OF DECEMBER 31, 2009 | 57.5 | 365.8 | 653.3 | 24.7 | 123.3 | 1,224.6 |
| Additions (including own work capitalized) (1) | 4.3 | 21.0 | 117.1 | 8.0 | 153.9 | 304.3 |
| Disposals | (2.6) | (22.5) | (110.7) | (6.4) | (22.1) | (164.3) |
| Funding of depreciation, amortization and impairment provisions |
(0.2) | (49.3) | (232.6) | (10.8) | (21.2) | (314.1) |
| Non-recurring impairment losses | 0.0 | (1.8) | (7.6) | (0.7) | (3.2) | (13.3) |
| Depreciation written om on disposals | 1.7 | 19.7 | 112.6 | 6.4 | 22.0 | 162.4 |
| Currency translation adjustments | 1.9 | 13.2 | 31.2 | 0.3 | 6.7 | 53.3 |
| Entry into scope of consolidation & other movements( * ) |
24.5 | 66.9 | 284.5 | 1.1 | (54.4) | 322.6 |
| NET AS OF DECEMBER 31, 2010 | 87.1 | 413.0 | 847.8 | 22.6 | 205.0 | 1,575.5 |
( * ) See Note 10A.
(1) Including assets held under finance leases
| in 2008 | 0.1 |
|---|---|
| in 2009 | 21.3 |
| in 2010 | 4.0 |
| Dec. 31, 2010 | Dec. 31, 2009 | |||||
|---|---|---|---|---|---|---|
| (in € millions) | Gross | Depreciation | Net | Gross | Net | Net |
| Land | 95.7 | (8.6) | 87.1 | 64.5 | 57.5 | 58.1 |
| Buildings | 1,018.5 | (605.5) | 413.0 | 945.9 | 365.8 | 343.1 |
| Plant, tooling and technical equipment | 3,123.1 | (2,275.3) | 847.8 | 2,654.7 | 653.3 | 703.0 |
| Specifi c tooling | 129.4 | (106.8) | 22.6 | 123.6 | 24.7 | 23.9 |
| Other property, plant and equipment and property, plant and equipment in progress |
499.0 | (294.0) | 205.0 | 406.7 | 123.3 | 232.7 |
| TOTAL | 4,865.7 | (3,290.2) | 1,575.5 | 4,195.4 | 1,224.6 | 1,360.8 |
| Including assets subject to lease fi nancing |
135.4 | (67.2) | 68.2 | 94.2 | 44.8 | 31.8 |
Property, plant and equipment are often specific and dedicated to client programs. Their utilization rates are primarily dependent on the level of activity, with very few exceptions. The utilization rates for equipment are not monitored centrally or systematically.
| (in € millions) | % of share capital held( * ) |
Faurecia's share of equity |
Dividends received by the Group |
Faurecia's share of sales |
Faurecia's share of equity |
|---|---|---|---|---|---|
| Vanpro Assentos Lda (1) | 50% | 0.0 | 0.0 | 44.6 | 12.5 |
| Teknik Malzeme | 50% | 6.5 | 0.0 | 40.0 | 27.0 |
| Orcia (1) | 50% | 0.0 | 0.0 | 4.3 | 5.2 |
| Copo Ibérica Sa | 50% | 2.7 | 0.0 | 16.8 | 6.6 |
| Componentes de Vehiculos de Galicia SA | 50% | 2.7 | 0.0 | 6.7 | 4.7 |
| Faurecia Japon NHK Co. Ltd (1) | 50% | 0.0 | 0.0 | 185.8 | 56.7 |
| Arsed d.o.o. | 50% | 0.7 | 0.0 | 18.9 | 6.9 |
| Kwang Jin Faurecia Co. Ltd | 50% | 1.2 | 0.0 | 22.2 | 8.6 |
| AD tech Co. Ltd | 50% | 1.1 | 0.0 | 3.0 | 4.5 |
| TOTAL | - | 14.9 | 0.0 | 342.3 | 132.7 |
| SAS Group | 50% | 28.7 | (15.0) | 1,579.9 | 337.9 |
| TOTAL | 43.6 | (15.0) | 1,922.2 | 470.6 |
* Interest held by the company holding the shares.
(1) As the Group's share of this company's net equity is negative it is recorded under liabilities as a provision for contingencies and charges.
SAS is a joint venture with Continental Automotive Gmbh which manufactures full cockpit modules with electronics and circuitry built into the instrument panels.
In order to meet the Faurecia Group's publication deadlines, the consolidated financial statements were prepared using SAS Group's accounts for the twelve months ended September 30. Specific accounts drawn up for the SAS Group as of December 31 would not give rise to any material difference.
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Group share of equity at beginning of period | 31.0 | 40.1 | 44.8 |
| Dividends | (15.0) | (25.0) | (20.0) |
| Share of net income of associates | 18.8 | 11.3 | 7.7 |
| Change in scope of consolidation | 4.8 | 3.9 | 6.6 |
| Capital increase | 0.9 | 0.7 | 2.2 |
| Currency translation adjustments | 3.1 | 0.0 | (1.2) |
| Group share of equity at end of period | 43.6 | 31.0 | 40,1 |
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Fixed assets | 39.7 | 32.0 | 31.4 |
| Current assets | 388.0 | 331.1 | 330.8 |
| Cash and cash equivalents | 42.9 | 33.0 | 40.0 |
| TOTAL ASSETS | 470.6 | 396.1 | 402.2 |
| Equity | 35.1 | 27.1 | 40.1 |
| Borrowings | 18.9 | 18.1 | 21.4 |
| Other non-current liabilities | 33.7 | 24.9 | 24.1 |
| Non-current fi nancial liabilities | 382.9 | 326.0 | 316.6 |
| TOTAL LIABILITIES | 470.6 | 396.1 | 402,2 |
| % of share | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 | ||
|---|---|---|---|---|---|
| (in € millions) | capital | Gross | Net | Gross | Net |
| SCI Messei | 100 | 0.4 | 0.1 | 0.1 | 0.1 |
| Faurecia Technology Center India Ltd | 100 | 3.6 | 3.6 | 3.6 | 0.4 |
| Changchun Xuyang Industrial Group | 19 | 11.0 | 11.0 | ||
| Faurecia Shin Sung( * ) |
4.3 | 0.0 | |||
| Faurecia Metalloprodukcia( * ) |
2.4 | ||||
| Other | - | 2.9 | 0.6 | 0.8 | 1.1 |
| TOTAL | 17.9 | 15.3 | 11.2 | 1.6 |
* ) Companies consolidated as of 1/01/2010.
| Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 | |||
|---|---|---|---|---|---|
| (in € millions) | Gross | Provisions | Net | Net | Net |
| Loans with maturity longer than one year | 26.4 | (7.0) | 19.4 | 17.7 | 19.3 |
| Interest rate derivatives | 0.0 | 0.0 | 0.0 | 0.1 | 1.4 |
| Other | 9.4 | (1.0) | 8.4 | 5.6 | 5.8 |
| TOTAL | 35.8 | (8.0) | 27.8 | 23.4 | 26.5 |
This line includes:
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Pension plan surpluses | 0.2 | 0.0 | 0.0 |
| Guarantee deposits and other | 14.3 | 18.9 | 8.5 |
| TOTAL | 14.5 | 18.9 | 8.5 |
| Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 | |||
|---|---|---|---|---|---|
| (in € millions) | Gross | Provisions | Net | Net | Net |
| Raw materials and supplies | 312.3 | (34.9) | 277.4 | 157.6 | 210.6 |
| Work-in-progress | 316.9 | (24.8) | 292.1 | 183.0 | 190.3 |
| Semi-fi nished and fi nished products | 194.4 | (29.9) | 164.5 | 98.0 | 125.2 |
| TOTAL | 823.6 | (89.6) | 734.0 | 438.6 | 526.1 |
Under an annually renewable trade receivables sale program set up in May 2007, the Group can sell a portion of the receivables of a number of its French subsidiaries to a group of financial institutions, transferring substantially all of the risks and rewards relating to the receivables sold to the financial institutions concerned.
Other receivables sale agreements are in force between certain of the Group's European subsidiaries and a number of their banks, providing for the transfer of substantially all of the risks and rewards of the receivables sold.
The following table shows the amount of receivables sold with maturities beyond December 31, 2010, for which substantially all the risks and rewards have been transferred, and which have therefore been derecognized:
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Receivables sold and derecognized | 377.9 | 290.7 | 388.5 |
Individually impaired trade receivables are as follows:
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Gross total trade receivables | 1,409.6 | 1,047.0 | 972.9 |
| Provision for impairment of receivables | (21.9) | (21.1) | (19.0) |
| TOTAL TRADE ACCOUNTS RECEIVABLE, NET | 1,387.7 | 1,025.9 | 953.9 |
Given the high quality of Group counterparties, late payments do not represent a material risk. They generally arise from administrative issues.
c €9.7 million more than six months past due.
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Down payments | 61.6 | 39.5 | 41.9 |
| Other receivables (1) | 161.7 | 131.5 | 155.4 |
| TOTAL | 223.3 | 171.0 | 197.3 |
| (1) Including the following amounts for VAT and other tax receivables | 154.9 | 127.0 | 149.4 |
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Short-term portion of loans | 3.5 | 0.1 | 0.1 |
| Prepaid expenses | 14.6 | 4.6 | 17.0 |
| Current taxes | 35.3 | 14.5 | 29.6 |
| Other sundry payables | 47.3 | 60.7 | 33.1 |
| TOTAL | 100.7 | 79.9 | 79,8 |
As of December 31, 2010, cash and cash equivalents included current account balances in the amount of €532.5 million (versus €292.2 million as of December 31, 2009 and €374.9 million as of December 31, 2008) and short-term investments in the amount of €73.3 million (versus €65.6 million as of December 31, 2009 and €50.8 million as of December 31, 2008).
The carrying amount of marketable securities is almost identical to market value as they are held on a very short term basis.
Following the capital increase resulting from the issue at par of 20,918,224 new shares, as of December 31, 2010, Faurecia's capital stock totaled €772,567,096 divided into 110,366,728 fully paid-in shares with a par value of €7 each.
The Group's capital is not subject to any external restrictions. Shares which have been registered in the name of the same holder for at least two years carry double voting rights.
As of December 31, 2010, Peugeot SA held 57.43% of Faurecia's capital and 63.26% of the voting rights.
Faurecia has a policy of issuing stock options to the executives of Group companies.
As of December 31, 2010, a total of 1,523,998 stock options were outstanding.
The exercise of these options would result in increasing:
| Date of Board Meetings |
Including | Start of exercise period |
Adjusted number of |
||||
|---|---|---|---|---|---|---|---|
| Date of Shareholders' Meeting |
Adjusted exercise price (in €) |
Number of options granted (adjusted) |
granted to senior executive management |
Last exercise date | Options exercised |
Options cancelled |
options outstanding as of Dec. 31, 2010 |
| September 12, 1996 |
September 13, 2001 |
||||||
| May 3, 1995 | 22.92 | 133,750 | 42,800 | September 11, 2011 |
97,905 | 10,700 | 25,145 |
| June 26, 1997 | June 27, 2002 | ||||||
| May 31, 1994 | 34.40 | 63,180 | 17,550 | June 25, 2012 | 36,855 | 19,305 | 7,020 |
| June 5, 1997 | February 22, 2002 | February 23, 2006 | |||||
| June 1, 2001 | 47.01 | 411,489 | 81,315 | February 22, 2012 | 32,994 | 133,029 | 245,466 |
| June 1, 2001 | November 28, 2002 |
November 29, 2006 |
|||||
| May 14, 2002 | 35.65 | 315,315 | 118,170 | November 27, 2012 |
106,583 | 133,520 | 75,212 |
| April 14, 2004 | April 14, 2008 | ||||||
| May 14, 2002 | 49.73 | 313,560 | 127,530 | April 13, 2014 | - | 139,230 | 174,330 |
| April 19, 2005 | April 18, 2009 | ||||||
| May 25, 2004 | 54.45 | 321,750 | 142,740 | April 18, 2015 | - | 119,925 | 201,825 |
| April 13, 2006 | April 12, 2010 | ||||||
| May 23, 2005 | 45.20 | 340,800 | 168,000 | April 12, 2016 | - | 133,200 | 207,600 |
| April 16, 2007 | April 17, 2011 | ||||||
| May 23, 2005 | 44.69 | 346,200 | 172,800 | April 17, 2017 | - | 84,000 | 262,200 |
| June 10, 2008 | April 10, 2012 | ||||||
| May 29, 2007 | 28.38 | 357,000 | 174,000 | April 10, 2016 | - | 31,800 | 325,200 |
| TOTAL | 1,523,998 |
Details of the stock subscription option plans as of December 31, 2010 are set out in the table below:
Movements in the aggregate number of options under all of the plans in force were as follows:
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| TOTAL AT BEGINNING OF THE PERIOD | 1,594,223 | 1,435,183 | 1,258,303 |
| adjustment related to the capital increase | 0 | 256,093 | |
| Options granted | 0 | 0 | 297,500 |
| Options exercised | 0 | 0 | |
| Options cancelled and expired | (70,225) | (97,053) | (120,620) |
| TOTAL AT THE END OF THE YEAR | 1,523,998 | 1,594,223 | 1,435,183 |
In accordance with IFRS 2, the six plans issued since November 7, 2002 have been measured at fair value as of the grant date. The measurement was performed using the Black & Scholes option pricing model based on the following assumptions:
| November 28, 2002 plan |
April 14, 2004 plan |
April 19, 2005 plan |
April 13, 2006 plan |
April 16, /2007 plan |
April 10, 2008 plan |
|
|---|---|---|---|---|---|---|
| Option exercise price (as of the grant date) (in €)( * ) |
€35.65 | €49.73 | €54.45 | €45.20 | €44.69 | €28.38 |
| Share price as of the grant date (in €) |
€41.82 | €58.45 | €62.05 | €53.15 | €56.15 | €33.10 |
| Option vesting period | 4 years | 4 years | 4 years | 4 years | 4 years | 4 years |
| Expected share dividend | 2% | 2% | 2% | 1.5% | 0.00% | 0.00% |
| Zero coupon rate | 3.57% | 3.33% | 2.93% | 3.50% | 4.41% | 3.86% |
| Expected share price volatility | 40% | 40% | 40% | 30% | 30% | 30% |
( * ) Adjusted following the capital increase.
The fair value of the option is amortized over the vesting period, with a corresponding adjustment to equity. The related expense in 2010 totaled €2 million, compared with €3.4 million in 2009.
From 1999 to 2001, Faurecia granted stock options to executives of Group companies and their over 50%-owned subsidiaries.
As of December 31, 2010, a total of 25,740 stock options were outstanding.
Details of the share grant plans as of December 31, 2010 are set out in the table below:
| Date of Board Meetings |
including granted to |
Start of exercise period |
Number of options |
||||
|---|---|---|---|---|---|---|---|
| Date of Shareholders' Meeting |
Adjusted exercise price (in €) |
Number of options awarded |
senior executive management |
Last exercise date | Options exercised |
Options cancelled |
outstanding as of Dec. 31, 2010 |
| April 26, 2001 | April 26, 2005 | ||||||
| May 22, 2000 | 46.59 | 50,895 | - | April 25, 2011 | 19,305 | 5,850 | 25,740 |
| TOTAL | 25,740 |
In 2010 Faurecia implemented a share grant plan for executives of Group companies. These shares are subject to service and performance conditions.
The fair value of this plan has been measured by reference to the market price of Faurecia's shares at the grant date, less an amount corresponding to the expected dividends due on the shares but not paid during the vesting period and an amount reflecting the cost of the shares being subject to a lock-up period. The corresponding expense will be deferred and recognized over the share vesting period. The amount recognized in expenses for the period is €2.6 million.
Details of the share grant plans as of December 31, 2010 are set out in the table below:
| Maximum number of free shares that can be | ||||
|---|---|---|---|---|
| Date of Shareholders' Meeting |
Date of Board Meetings |
reaching the objective |
exceeding the objective |
Performance conditions |
| 2011 target for pretax | ||||
| June 23, 2010 | 662,000 | 860,600 | income | |
| 2012 target for pretax | ||||
| February 8, 2010 | July 21, 2010 | 682,500 | 887,250 | income |
As of December 31, 2010, Faurecia held 270,814 shares of treasury stock, reflecting the following transactions:
c 74,285 shares purchased in 2005 for €2.3 million;
c 30,000 shares purchased in 2005 for €1.8 million;
The cost of the shares held in treasury stock as of December 31, 2010 totaled €10.4 million, representing an average cost of €38.43 per share.
These shares are held to cover the exercise of stock options granted to Group company executives resolved upon by Board of Directors on April 26, 2001. The number of remaining exercisable stock options on December 31, 2010 covered 25,740 shares (see Note 22.2b).
Changes in minority interests were as follows:
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Balance as of January 1 | 45.8 | 40.6 | 44.3 |
| Increase in minority shareholder interests | 4.2 | 0.0 | |
| Other changes in scope of consolidation | 9.1 | 0.0 | |
| Minority interests in net income for the year | 30.7 | 16.3 | 5.5 |
| Dividends paid to minority interests | (6.0) | (9.3) | (12.3) |
| Translation adjustments | 3.9 | (1.8) | 3.1 |
| BALANCE AS OF DECEMBER 31 | 87.7 | 45.8 | 40.6 |
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Provisions for pension and other post-employment obligations | |||
| Pension obligations | 157.3 | 143.2 | 139.6 |
| Long-service awards | 20.9 | 19.2 | 19.5 |
| Healthcare costs | 33.1 | 26.3 | 27.5 |
| 211.3 | 188.7 | 186.6 | |
| Provisions for early retirement costs | 3.2 | 5.2 | 7.0 |
| TOTAL | 214.5 | 193.9 | 193.6 |
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Balance of provisions at beginning of year | 193.9 | 193.6 | 209.3 |
| Changes in scope of consolidation | 25.8 | 0.0 | 0.0 |
| Other movements | 4.4 | 1.8 | (0.8) |
| Funding (or reversals) of provisions | 26.2 | 22.1 | 13.3 |
| Expenses charged to the provision | (19.5) | (15.4) | (18.3) |
| Payments to external funds | (16.3) | (8.2) | (9.9) |
| BALANCE OF PROVISIONS AT END OF YEAR | 214.5 | 193.9 | 193.6 |
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Restructuring | 169.2 | 157.8 | 200.4 |
| Risks on contracts and customer warranties | 123.5 | 56.7 | 48.9 |
| Litigation | 43.9 | 47.4 | 25.4 |
| Other provisions | 80.0 | 58.4 | 42.6 |
| TOTAL PROVISIONS | 416.6 | 320.3 | 317.3 |
| (in € millions) | Balance as of Dec. 31, 2009 |
Additions | Expenses charged |
Reversals( * ) |
Change in scope of consolidation and other changes |
Balance as of Dec. 31, 2010 |
|---|---|---|---|---|---|---|
| Restructuring | 157.8 | 132.1 | (128.2) | (6.0) | 13.5 | 169.2 |
| Risks on contracts and customer warranties |
56.7 | 29.9 | (56.5) | 0.0 | 93.4 | 123.5 |
| Litigation | 47.4 | 19.0 | (26.4) | (3.0) | 6.9 | 43.9 |
| Other provisions | 58.4 | 25.0 | (19.9) | (0.5) | 17.0 | 80.0 |
| TOTAL | 320.3 | 206.0 | (231.0) | (9.5) | 130.8 | 416.6 |
* ) Surplus provisions.
In the normal course of business, the Group may be involved in disputes with its customers, suppliers, tax authorities in France or abroad, or other third parties.
Faurecia Systèmes d'Échappement, which has long-standing expertise in conventional impregnated ceramic-based filtration technology, is subject to a claim concerning electrostatic filtration that has been brought before the courts following its unsuccessful cooperation with a service provider. This case is continuing before the Paris District Court (Tribunal de Grande Instance) and the Paris Court of Appeal (Cour d'Appel). The Group considers that the residual risks and impact of these proceedings are not material. Provisions have also been funded for a claim concerning the repair of Blackpool (formerly Emcon) buildings at end of lease. The Group has also received a claim from Suzuki that is the subject of a request for arbitration. This claim is provisioned according to the below franchise level costs not covered by insurance.
There are no other claims or litigation in progress or pending that are likely to have a material impact on the Group's consolidated financial position.
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Present value of projected obligations | |||
| Pension benefi t obligations | 270.3 | 222.9 | 226.1 |
| Long-service awards | 20.9 | 19.2 | 19.5 |
| Healthcare costs | 48.4 | 36.5 | 34.8 |
| TOTAL | 339.6 | 278.6 | 280.4 |
| Value of plan assets : | |||
| Provisions booked in the accounts | 211.3 | 188.7 | 186.6 |
| External funds (market value) | 101.6 | 83.6 | 75.2 |
| Plan surpluses (1) | (0.2) | 0.0 | 0.0 |
| Actuarial gains and losses | 26.9 | 6.3 | 18.6 |
| TOTAL | 339.6 | 278.6 | 280.4 |
(1) Pension plan surpluses are included in "Other non-current assets".
In addition to the pension benefits provided under local legislation in the various countries where Group companies are located, Group employees are entitled to supplementary pension benefits and retirement bonuses.
The Group's obligations under these plans are determined on an actuarial basis, using the following assumptions:
c retirement age between 62 and 65 for employees in France;
The main actuarial assumptions used in the past three years to measure the pension liability are as follows:
| (in %) | Euro Zone | United Kingdom | United States |
|---|---|---|---|
| DISCOUNT RATE | |||
| 2010 | 4.15% | 5.54% | 5.35% |
| 2009 | 5.00% | 5.83% | 5.75% |
| 2008 | 5.50% | 5.93% | 6.70% |
| INFLATION RATE | |||
| 2010 | 2.00% | 3.45% | 1.50% |
| 2009 | 2.00% | 3.50% | 2.70% |
| 2008 | 2.00% | 3.00% | 0.09% |
| EXPECTED RETURN ON PLAN ASSETS | |||
| 2010 | 3.09% | 6.85% | 7.50% |
| 2009 | 3.20% | 7.76% | 7.50% |
| 2008 | 2.79% | 7.35% | 7,61% |
External funds are invested as follows:
| 2010 | 2009 | 2008 | ||||
|---|---|---|---|---|---|---|
| (In %) | Equities | Bonds | Equities | Bonds | Equities | Bonds |
| France | 15% | 85% | 11% | 89% | 15% | 85% |
| United Kingdom | 62% | 38% | 69% | 31% | 67% | 33% |
| United States | 64% | 36% | 63% | 37% | 59% | 41% |
| 2010 | 2009 | 2008 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (in € millions) | France | Abroad( * ) |
TOTAL | France | Abroad | TOTAL | France | Abroad | TOTAL |
| Balance of provisions at beginning of year |
77.0 | 66.2 | 143.2 | 71.0 | 68.6 | 139.6 | 78.9 | 76.4 | 155.3 |
| Em ect of changes in scope of consolidation (provision net of plan surpluses) |
0.2 | 17.4 | 17.6 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Additions | 7.7 | 8.7 | 16.4 | 9.8 | 5.9 | 15.7 | 2.4 | 3.9 | 6.3 |
| Expenses charged to the provision |
(1.7) | (7.2) | (8.9) | (1.7) | (3.1) | (4.8) | (4.4) | (4.2) | (8.6) |
| Payments to external funds | (6.5) | (6.7) | (13.2) | (2.1) | (6.1) | (8.2) | (5.9) | (3.9) | (9.8) |
| Other movements | 0.0 | 2.0 | 2.0 | 0.0 | 0.9 | 0.9 | 0.0 | (3.6) | (3.6) |
| BALANCE OF PROVISIONS AT END OF YEAR |
76.7 | 80.4 | 157.1 | 77.0 | 66.2 | 143.2 | 71.0 | 68.6 | 139.6 |
( * ) The provision for €80.4 million on Dec. 31, 2010 relates mainly to Germany (€70.4 million).
| Dec. 31, 2010 Dec. 31, 2009 |
Dec. 31, 2008 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in € millions) | France | Abroad | Total | France | Abroad | Total | France | Abroad | Total |
| PROJECTED BENEFIT OBLIGATION | |||||||||
| At beginning of the period | 80.4 | 142.5 | 222.9 | 97.1 | 129.0 | 226.1 | 114.4 | 146.1 | 260.5 |
| Service cost | 4.5 | 4.0 | 8.5 | 6.7 | 2.2 | 8.9 | 8.5 | 3.0 | 11.5 |
| Annual restatement | 4.2 | 8.5 | 12.7 | 5.7 | 7.5 | 13.2 | 6.4 | 7.7 | 14.1 |
| Benefi ts paid | (5.2) | (11.3) | (16.5) | (8.4) | (6.4) | (14.8) | (13.9) | (7.3) | (21.2) |
| Restatement dim erences | 5.2 | 10.9 | 16.1 | (18.3) | 8.6 | (9.7) | (11.2) | (10.7) | (21.9) |
| Other movements (including translation adjustment) |
0.2 | 27.0 | 27.2 | 0.0 | 1.6 | 1.6 | 0.0 | (9.4) | (9.4) |
| Curtailments and settlements |
(0.6) | 0.0 | (0.6) | (2.4) | 0.0 | (2.4) | (11.7) | (0.4) | (12.1) |
| Em ect of closures and plan amendments |
0.0 | 4.6 | 4.6 | ||||||
| AT END OF THE PERIOD | 88.7 | 181.6 | 270.3 | 80.4 | 142.5 | 222.9 | 97.1 | 129.0 | 226.1 |
| VALUE OF PLAN ASSETS | |||||||||
| At beginning of the period | 12.6 | 71.0 | 83.6 | 17.1 | 58.1 | 75.2 | 20.2 | 81.0 | 101.2 |
| Expected return on plan assets |
0.3 | 5.1 | 5.4 | 0.6 | 3.9 | 4.5 | 0.6 | 5.5 | 6.1 |
| Restatement dim erences | 0.0 | 0.8 | 0.8 | (0.6) | 4.9 | 4.3 | (0.1) | (21.9) | (22.0) |
| Other movements (including translation adjustment) |
0.0 | 6.1 | 6.1 | 0.0 | 1.3 | 1.3 | 0.0 | (7.0) | (7.0) |
| Employer contributions | 6.5 | 6.7 | 13.2 | 2.1 | 6.1 | 8.2 | 5.9 | 4.0 | 9.9 |
| Benefi ts paid | (3.5) | (4.1) | (7.6) | (6.6) | (3.3) | (9.9) | (9.5) | (3.0) | (12.5) |
| Curtailments and settlements |
0.0 | 0.0 | 0.0 | (0.5) | (0.5) | ||||
| Em ect of closures and plan amendments |
0.0 | ||||||||
| AT END OF THE PERIOD | 15.9 | 85.6 | 101.5 | 12.6 | 71.0 | 83.6 | 17.1 | 58.1 | 75.2 |
| DEFERRED ITEMS | |||||||||
| At beginning of the period | (9.2) | 5.3 | (3.9) | 9.0 | 2.3 | 11.3 | 15.2 | (11.3) | 3.9 |
| New deferred items | 5.2 | 10.1 | 15.3 | (17.8) | 3.6 | (14.2) | (11.1) | 11.2 | 0.1 |
| Amortization of deferred items |
(0.4) | (1.4) | (1.8) | (0.2) | (0.1) | (0.3) | (0.6) | 1.3 | 0.7 |
| Other movements (including translation adjustment) |
0.0 | 1.5 | 1.5 | (0.5) | (0.5) | 1.1 | 1.1 | ||
| Curtailments and settlements |
0.5 | 0.1 | 0.6 | (0.2) | (0.2) | 0.9 | 0.9 | ||
| Em ect of closures and plan amendments |
4.6 | 4.6 | |||||||
| AT END OF THE PERIOD | (3.9) | 15.6 | 11.7 | (9.2) | 5.3 | (3.9) | 9.0 | 2.3 | 11.3 |
| BALANCE OF PROVISIONS AT END OF YEAR |
76.7 | 80.4 | 157.1 | 77.0 | 66.2 | 143.2 | 71.0 | 68.6 | 139.6 |
Periodic pension cost is recognized:
c in operating income for the portion relating to service cost and amortization of deferred items;
Periodic pension cost break down as follows:
c in "Other financial income and expense" for restatement of vested rights and the expected return on external funds.
| 2010 | 2009 | 2008 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (in € millions) | France | Abroad | Total | France | Abroad | Total | France | Abroad | Total |
| Service cost | (4.5) | (4.0) | (8.5) | (6.7) | (2.2) | (8.9) | (8.5) | (3.0) | (11.5) |
| Restatement of projected benefi ts |
(4.2) | (8.5) | (12.7) | (5.7) | (7.5) | (13.2) | (6.4) | (7.7) | (14.1) |
| Change in top-up scheme | |||||||||
| Expected return on plan assets |
0.3 | 5.1 | 5.4 | 0.6 | 3.9 | 4.5 | 0.6 | 5.5 | 6.1 |
| Curtailments and settlements |
1.1 | 0.1 | 1.2 | 2.2 | 0.0 | 2.2 | 12.5 | 0.0 | 12.5 |
| Amortization of deferred dim erences |
(0.4) | (1.4) | (1.8) | (0.2) | (0.1) | (0.3) | (0.6) | 1.3 | 0.7 |
| TOTAL | (7.7) | (8.7) | (16.4) | (9.8) | (5.9) | (15.7) | (2.4) | (3.9) | (6.3) |
c €5.2 million relating to lump-sum retirement bonuses and rights to capital for supplementary pension schemes;
c €0.6 million relating to headcount reduction plans in 2010;
The impact of a 0.25 percentage point increase in the discount rate for:
The Group evaluates its liability for the payment of long-service awards, given to employees based on certain seniority requirements. The Group calculates its liability for the payment of long-service awards using the same method and assumptions as for its pension liability. Provisions for long-service awards have been set uside as follows:
| (in € millions) | As of Dec. 31, 2010 | As Dec. 31, 2009 | As Dec. 31, 2008 |
|---|---|---|---|
| French companies | 6.9 | 8.5 | 9.0 |
| Foreign companies | 14.0 | 10.7 | 10.5 |
| TOTAL | 20.9 | 19.2 | 19.5 |
In addition to pension plans, some Group companies – mainly in the United States – cover the healthcare costs of their employees. The related liability can be analyzed as follows:
| (in € millions) | As of Dec. 31, 2010 | As Dec. 31, 2009 | As Dec. 31, 2008 |
|---|---|---|---|
| Foreign companies | 33.1 | 26.3 | 27.5 |
| TOTAL | 33.1 | 26.3 | 27.5 |
The impact of a one percentage point increase in medical cost trend rates would be:
The impact of a one percentage point decrease in medical cost trend rates would be:
Expenses recognized in connection with this liability break down as follows:
| (in € millions) | As of Dec. 31, 2010 | As Dec. 31, 2009 | As Dec. 31, 2008 |
|---|---|---|---|
| Service cost | (3.1) | (2.5) | (3.1) |
| Interest cost( * ) |
(2.4) | (1.9) | (1.7) |
| Curtailment | 0.0 | (0.3) | 0.4 |
| Amortization of deferred dim erences | (1.0) | 0.3 | (0.7) |
| TOTAL | (6.5) | (4.4) | (5.1) |
* Interest cost is recorded under "Other financial income and expense". NOTE 26 NET DEBT
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Bonds | 191.8 | 183.7 | 300.0 |
| Bank borrowings | 726.1 | 869.1 | 956.4 |
| PSA loan | 142.0 | 128.0 | 194.0 |
| Other borrowings | 5.7 | 6.3 | 8.5 |
| Obligations under fi nance leases | 37.0 | 29.4 | 17.0 |
| Non-current derivatives | 12.3 | 15.7 | 15.8 |
| SUBTOTAL – NON-CURRENT FINANCIAL LIABILITIES | 1,114.9 | 1,232.2 | 1,491.7 |
| Current portion of long-term debt | 78.7 | 36.2 | 31.4 |
| Short-term borrowings (1) | 608.0 | 486.6 | 509.9 |
| Payments issued (2) (a) | 0.4 | 0.0 | |
| Current derivatives | 0.6 | 5.4 | 4.9 |
| SUBTOTAL – CURRENT FINANCIAL LIABILITIES | 687.7 | 528.2 | 546.2 |
| TOTAL | 1,802.6 | 1,760.4 | 2,037.9 |
| Derivatives classifi ed under non-current and current assets | 0.0 | (1.4) | (7.4) |
| Cash and cash equivalents (b) | (605.8) | (357.8) | (425.7) |
| NET DEBT | 1,196.8 | 1,401.2 | 1,604.8 |
| Net cash and cash equivalents (b) – (a) | 605.4 | 357.8 | 425.7 |
| (1) Including bank accounts | 162.7 | 128.0 | 112.5 |
(2) Payments awaiting clearance by the bank as they fall due on a non-banking day. The contra-entry is an increase in cash and equivalents under assets.
| 2016 and | ||||||
|---|---|---|---|---|---|---|
| (in € millions) | 2012 | 2013 | 2014 | 2015 | beyond | Total |
| Oceane bond issue | 0.0 | 0.0 | 0.0 | 191.8 | 0.0 | 191.8 |
| Bank borrowings | 24.9 | 667.6 | 4.5 | 2.6 | 26.5 | 726.1 |
| PSA loan | 0.0 | 142.0 | 0.0 | 0.0 | 0.0 | 142.0 |
| Other borrowings | 1.2 | 2.3 | 1.4 | 0.8 | 0.0 | 5.7 |
| Obligations under fi nance leases | 26.5 | 4.6 | 1.7 | 1.4 | 2.8 | 37.0 |
| TOTAL AS OF DEC. 31, 2010 | 52.6 | 816.5 | 7.6 | 196.6 | 29.3 | 1,102.6 |
Since November 28, 2008, Faurecia has had access to an €1.42 billion credit facility.
This facility comprises a syndicated bank loan of €1.17 billion and a €250 million loan from Faurecia's majority shareholder, PSA Peugeot Citroën. The two loans are correlated so that the drawdowns made by Faurecia on the PSA Peugeot Citroën loan are proportionate to those made on the syndicated bank loan, based on the same rates and periods.
The overall facility is divided into an €20 million tranche expiring in November 2011, an €690 million expiring in November 2013 following the exercise by the banks and PSA of an option to extend the expiration, and an €710 million expiring in November 2013.
As of December 31, 2010 the undrawn portion of this credit facility was €613 million.
The contracts relating to this credit facility include covenants, notably a change of control clause relating to PSA and provisions concerning compliance with consolidated financial ratios. As of Dec. 31, 2010, the Group complied with all of these ratios, of which the amounts are presented below:
| Adjusted net debt( )/EBITDA( ) * Ceiling |
EBITDA( )/net interest ** Floor |
|
|---|---|---|
| December 31, 2010 | 4 : 1 | 4.25 : 1 |
| June 30, 2011 and subsequent six-month | ||
| periods | 3.5 : 1 | 4.50 : 1 |
* Adjusted net debt = consolidated net debt + adjustments for certain obligations undertaken, based on definitions provided in the credit facility agreement (e.g. mortgages or collateralized liabilities).
( ** ) Operating income plus depreciation, amortization and funding of provisions for impairment of property, plant and equipment and intangible assets, corresponding to the past twelve months.
Furthermore, any asset disposal representing over 15% of the Group's total consolidated assets requires the prior approval of banks representing two-thirds of the syndicate.
On November 26, 2009 Faurecia issued €211.3 million worth of OCEANE bonds convertible into or exchangeable for new or existing shares, due January 1, 2015. The bonds mature on January 1, 2015 and bear annual interest of 4.50% payable on January 1 each year, as from January 1, 2011.
Subject to certain conditions, Faurecia may redeem the bonds early, at any time beginning on January 15, 2013, at a price equal to their par value plus accrued interest, provided that all of the outstanding bonds are redeemed. The bonds can be converted by their holders at any time as from their date of issue. The criteria relating to their compulsory early redemption include a change of control clause relating to PSA.
In conformity with IAS 39, the fair value of Oceane is calculated based on two components, a liability component, calculated based on prevailing market interest rates for similar bonds with no conversion option, and a conversion option component, calculated based on the difference between the fair value of the Oceane [bonds] and the liability component. Upon issue these two components were €184.3 million and €23.3 million, respectively. As of December 31, 2010 the liability component was €189.2 million, before hedging.
On October 5, 2005 Faurecia carried out an €300 million bond issue due in October 2010. As the bond covenants were breached as of June 30, 2009, the bondholders were entitled to require their early redemption. Out of the intial amount issued, €291.5 million worth of the bonds were redemmed on August 14, 2009, the balance was covered on the expiry date on October 5, 2010. The early redemption in August 2009 was partially financed by an €205 million credit facility extended by a pool of French banks. The credit facility, which was to expire at end-January 2011, was subject to the same financial ratio covenants as the syndicated credit facility, and it was prepaid in full on August 17, 2010.
The Group's global contractual maturity schedule as of December 31, 2010 breaks down as follows:
| Carrying Amount | Remaining contractual maturities | |||||||
|---|---|---|---|---|---|---|---|---|
| (in € millions) | Assets | Liabilities | Total | 0-3 months |
3-6 months |
6-12 months |
1-5 years | > 5 years |
| Other non-current fi nancial assets | 27.8 | 27.8 | 27.8 | |||||
| Loans and receivables | 14.5 | 14.5 | 14.5 | |||||
| Other current fi nancial assets | 0.0 | 0.0 | ||||||
| Trade accounts receivables | 1,387.7 | 1,387.7 | 1,384.5 | 2.0 | 1.2 | |||
| Cash and cash equivalents | 605.8 | 605.8 | 605.8 | |||||
| Interest on other long-term borrowings |
||||||||
| Syndicated credit facility | (0.2) | (34.1) | (3.0) | (3.0) | (6.0) | (22.1) | ||
| PSA loan | (0.1) | (7.4) | (0.6) | (0.6) | (1.2) | (5.0) | ||
| 2009 Oceane | (10.4) | (48.6) | (10.4) | 0.0 | (38.2) | |||
| Other | (1.9) | (2.4) | (0.8) | (0.8) | (0.8) | |||
| Obligations under fi nance leases (ST portion) |
(14.1) | (14.1) | (11.9) | (0.8) | (1.4) | |||
| Other current fi nancial liabilities | (640.6) | (640.6) | (632.7) | (7.0) | (0.9) | |||
| Trade accounts payable | (2,419.9) | (2,419.9) | (2,387.6) | (18.0) | (14.3) | |||
| Bonds (excluding interest) | ||||||||
| 2009 Oceane | (191.8) | (211.3) | (211.3) | 0.0 | ||||
| Bank borrowings | ||||||||
| Syndicated credit facility | (665.0) | (665.0) | (20.0) | (645.0) | ||||
| Other | (81.1) | (81.1) | (54.7) | (26.4) | ||||
| PSA loan | (142.0) | (142.0) | 0.0 | 0.0 | 0.0 | (142.0) | 0.0 | |
| Other borrowings | (5.7) | (5.7) | (5.7) | |||||
| Obligations under fi nance leases (LT portion) |
(37.0) | (37.0) | (34.2) | (2.8) | ||||
| Interest rate derivatives | 0.0 | (12.8) | (14.2) | (2.6) | (2.3) | (4.4) | (4.9) | 0.0 |
| c o/w cash fl ow hedges | 0.0 | (8.4) | (9.6) | (1.6) | (1.5) | (3.0) | (3.5) | |
| c o/w derivatives not qualifying for hedge accounting under IFRS |
0.0 | (4.4) | (4.6) | (1.0) | (0.8) | (1.4) | (1.4) | |
| Currency hedges | 0.0 | (1.9) | (1.9) | (0.9) | (0.9) | (0.1) | 0.0 | 0.0 |
| c o/w fair value hedges | (0.2) | (0.2) | (0.2) | |||||
| c o/w cash fl ow hedges | (1.7) | (1.7) | (0.7) | (0.9) | (0.1) | |||
| TOTAL | 2,035.8 | (4,224.5) | (2,289.5) | (1,060.2) | (31.4) | (47.9) | (1,120.8) | (29.2) |
9
Part of Faurecia's financing requirements are met through receivables sale programs (see Note 18).
In December 2010, financing under these programs – corresponding to the cash received as consideration for the receivables sold – totaled €524.5 million, versus €440.8 million as of December 31, 2009.
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Financing | 566.8 | 481.5 | 626.6 |
| Guarantee reserve deducted from borrowings | (42.3) | (40.7) | (22.1) |
| Cash received as consideration for receivables sold | 524.5 | 440.8 | 604.5 |
| Receivables sold and derecognized | (377.9) | (290.7) | (388.5) |
As of December 31, 2010, the floating rate portion was 80.1% of borrowings before taking into account the impact of hedging.
Derivatives have been set up to partially hedge interest payable on variable rate borrowings against increases in interest rates (see Note 30.2).
| (in € millions) | Dec. 31, 2010 | |
|---|---|---|
| Variable rate borrowings | 1,443.5 | 80.1% |
| Fixed rate borrowings | 359.1 | 19.9% |
| TOTAL | 1,802.6 | 100.0% |
Borrowings, taking into account exchange rate swaps, break down by repayment currency as follows:
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 | |||
|---|---|---|---|---|---|---|
| Euros | 1,472.7 | 81.7% | 1,233.2 | 72.9% | 1,533.6 | 75.5% |
| US Dollar | 279.6 | 15.5% | 242.6 | 14.3% | 239.2 | 11.8% |
| Other currencies | 50.3 | 2.8% | 215.8 | 12.8% | 257.6 | 12.7% |
| TOTAL | 1,802.6 | 1,691.6 | 2,030.5 |
In 2010, the weighted average interest rate on outstanding borrowings was 4.54%.
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Accrued payroll costs | 226.2 | 181.7 | 174.5 |
| Payroll taxes | 121.9 | 106.2 | 111.7 |
| Employee profi t-sharing | 2.4 | 1.2 | 2.4 |
| Other accrued taxes and payroll costs | 102.3 | 82.6 | 77.5 |
| TOTAL | 452.8 | 371.7 | 366.1 |
NOTE 28 SUNDRY PAYABLES
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Due to suppliers of non-current assets | 54.0 | 19.2 | 44.0 |
| Prepaid income | 47.4 | 47.2 | 54.1 |
| Current taxes | 32.0 | 27.1 | 32.9 |
| Other | 22.3 | 29.7 | 44.3 |
| Currency derivatives for operations | 1.8 | 0.0 | 40.0 |
| TOTAL | 157.5 | 123.2 | 215.3 |
| Dec. 31, 2010 | Breakdown by category of instrument (1) | ||||||
|---|---|---|---|---|---|---|---|
| (in € millions) | Carrying amount |
Fair value | Financial assets/ liabilities at fair value through profi t or loss(2) |
Financial assets/ liabilities at fair value through equity(2) |
Available for-sale assets |
Loans and recei vables |
Financial liabilities measured at amortized cost |
| Other equity interests | 15.3 | 15.3 | 15.3 | ||||
| Other non-current fi nancial assets | 27.8 | 27.8 | 27.8 | ||||
| Trade accounts receivables | 1,387.7 | 1,387.7 | 1,387.7 | ||||
| Other operating receivables | 223.3 | 223.3 | 223.3 | ||||
| Other receivables and prepaid expenses | 100.7 | 100.7 | 100.7 | ||||
| Currency derivatives | 0.0 | 0.0 | 0.0 | ||||
| Interest rate derivatives | 0.0 | 0.0 | 0.0 | ||||
| Cash and cash equivalents | 605.8 | 605.8 | 605.8 | ||||
| FINANCIAL ASSETS | 2,360.6 | 2,360.6 | 605.8 | 0.0 | 15.3 | 1,739.5 | 0.0 |
| Long-term debt( * ) |
1,102.5 | 1,102.5 | 1,102.5 | ||||
| Short-term debt | 687.1 | 687.1 | 687.1 | ||||
| Prepayments from customers | 87.8 | 87.8 | 87.8 | ||||
| Trade payables | 2,419.9 | 2,419.9 | 2,419.9 | ||||
| Accrued taxes and payroll costs | 452.8 | 452.8 | 452.8 | ||||
| Sundry payables | 155.7 | 155.7 | 155.7 | ||||
| Currency derivatives | 1.9 | 1.9 | 1.3 | 0.6 | |||
| Interest rate derivatives | 12.8 | 12.8 | 3.3 | 9.5 | |||
| FINANCIAL LIABILITIES | 4,920.5 | 4,920.5 | 3.3 | 10.8 | 0.0 | 3,116.2 | 1,790.2 |
(1) No financial instruments were transferred between categories in 2010 or 2009 or 2008.
(2) All of the instruments in this category are financial assets or liabilities designated as measured at fair value through profit or loss on initial recognition, in accordance with the criteria set out in Note 1-6.
* The market value of Oceane was established on the base of the end of year valuation (Dec. 31, 2010) of €24.2, at €273.6 million. In the balance sheet, Oceane is recorded, on the one hand, as an amount of the component for bonds with no conversion option and, on the other, as a registered component of Shareholder's equity that represents the value of the conversion option.
| Dec. 31, 2009 | Breakdown by category of instrument (1) | ||||||
|---|---|---|---|---|---|---|---|
| (in € millions) | Carrying amount |
Fair value | Financial assets/ liabilities at fair value through profi t or loss(2) |
Financial assets/ liabilities at fair value through equity(2) |
Available for-sale assets |
Loans and receivables |
Financial liabilities measured at amortized cost |
| Other equity interests | 11.2 | 11.2 | 11.2 | ||||
| Other non-current fi nancial assets | 23.3 | 23.3 | 23.3 | ||||
| Trade accounts receivables | 1,025.9 | 1,025.9 | 1,025.9 | ||||
| Other operating receivables | 171.0 | 171.0 | 171.0 | ||||
| Other receivables and prepaid expenses |
79.9 | 79.9 | 79.9 | ||||
| Currency derivatives | 1.7 | 1.7 | 1.2 | 0.5 | 0.0 | ||
| Interest rate derivatives | 0.2 | 0.2 | 0.2 | 0.0 | |||
| Cash and cash equivalents | 357.8 | 357.8 | 357.8 | ||||
| FINANCIAL ASSETS | 1,671.0 | 1,671.0 | 359.2 | 0.5 | 11.2 | 1,300.1 | 0.0 |
| Long-term debt( * ) |
1,216.5 | 1,216.5 | 1,216.5 | ||||
| Short-term debt | 528.7 | 528.7 | 528.7 | ||||
| Prepayments from customers | 80.8 | 80.8 | 80.8 | ||||
| Trade payables | 1,730.6 | 1,730.6 | 1730.6 | ||||
| Accrued taxes and payroll costs | 371.7 | 371.7 | 371.7 | ||||
| Sundry payables | 123.2 | 123.2 | 123.2 | ||||
| Currency derivatives | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Interest rate derivatives | 17.7 | 17.7 | 7.6 | 10.1 | |||
| FINANCIAL LIABILITIES | 4,069.2 | 4,069.2 | 7.6 | 10.1 | 0.0 | 2,306.3 | 1,745.2 |
(1) No financial instruments were transferred between categories in 2010 or 2009 or 2008.
(2) All of the instruments in this category are financial assets or liabilities designated as measured at fair value through profit or loss on initial recognition, in accordance with the criteria set out in Note 1–6.
* The market value of Oceane was established on the base of the end of year valuation (12.31.09) of €18.95, at €214.25 million. In the balance sheet, Oceane is recorded, on the one hand, as an amount of the component for bonds with no conversion option and, on the other, as a registered component of Shareholder's equity that represents the value of the conversion option.
| Dec. 31, 2008 | Breakdown by category of instrument (1) | ||||||
|---|---|---|---|---|---|---|---|
| (in € millions) | Carrying amount |
Fair value | Financial assets/ liabilities at fair value through profi t or loss(2) |
Financial assets/ liabilities at fair value through equity(2) |
Available for-sale assets |
Loans and receivables |
Financial liabilities measured at amortized cost |
| Other equity interests | 1.6 | 1.6 | 1.6 | ||||
| Other non-current fi nancial assets | 25.1 | 25.1 | 25.1 | ||||
| Trade accounts receivables | 954.0 | 954.0 | 954.0 | ||||
| Other operating receivables | 197.3 | 197.3 | 197.3 | ||||
| Other receivables and prepaid expenses |
79.8 | 79.8 | 79.8 | ||||
| Currency derivatives | 4.8 | 4.8 | 4.8 | ||||
| Interest rate derivatives | 2.6 | 2.6 | 2.6 | ||||
| Cash and cash equivalents | 425.7 | 425.7 | 425.7 | ||||
| FINANCIAL ASSETS | 1,690.9 | 1,690.9 | 433.1 | 0.0 | 1.6 | 1,256.2 | 0.0 |
| Long-term debt | 1,475.9 | 1,475.9 | 1,475.9 | ||||
| Short-term debt | 541.2 | 541.2 | 541.2 | ||||
| Prepayments from customers | 118.8 | 118.8 | 118.8 | ||||
| Trade payables | 1,695.2 | 1,695.2 | 1,695.2 | ||||
| Accrued taxes and payroll costs | 366.1 | 366.1 | 366.1 | ||||
| Sundry payables | 175.3 | 175.3 | 175.3 | ||||
| Currency derivatives | 40.0 | 40.0 | 37.7 | 2.3 | |||
| Interest rate derivatives | 20.7 | 20.7 | 9.2 | 11.5 | |||
| FINANCIAL LIABILITIES | 4,433.2 | 4,433.2 | 46.9 | 13.8 | 0.0 | 2,355.4 | 2,017.1 |
(1) No financial instruments were transferred between categories in 2010 or 2009 or 2008.
(2) All of the instruments in this category are financial assets or liabilities designated as measured at fair value through profit or loss on initial recognition, in accordance with the criteria set out in Note 1–6.
The main measurement methods applied are as follows:
c items accounted for at fair value through profit or loss, as well as hedging instruments, are measured using a valuation technique based on rates quoted on the interbank market, such as Euribor; and exchange rates set daily by the European Central Bank;
| 2010 | Breakdown by category of instrument | |||||
|---|---|---|---|---|---|---|
| (in € millions) | Impact Income |
Fair value through income |
Financial assets available for sale |
Loans and receivables |
Payables at cost amortized |
Instruments derivatives |
| Translation dim erences on commercial transactions |
0.3 | (0.1) | 0.4 | |||
| Income on loans, cash investments and marketable securities |
8.1 | 8.1 | ||||
| Finance costs | (98.7) | (98.7) | ||||
| Other fi nancial income and expenses | (25.6) | (28.9) | 3.3 | |||
| Net income (expense) | (115.9) | 8.1 | 0.0 | (29.0) | (98.7) | 3.7 |
| 2009 | Breakdown by category of instrument | |||||
|---|---|---|---|---|---|---|
| (in € millions) | Impact Income |
Fair value through income |
Financial assets available for sale |
Loans and receivables |
Payables at cost amortized |
Instruments derivatives |
| Translation dim erences on commercial transactions |
0.1 | 2.4 | (2.3) | |||
| Income on loans, cash investments and marketable securities |
12.3 | 12.3 | ||||
| Finance costs | (135.3) | (135.3) | ||||
| Other fi nancial income and expenses | (10.2) | 0.4 | (10.6) | |||
| Net income (expense) | (133.1) | 12.3 | 0.0 | 2.8 | (135.3) | (12.9) |
| 2008 | Breakdown by category of instrument | |||||
|---|---|---|---|---|---|---|
| (in € millions) | Impact Income |
Fair value through income |
Financial assets available for sale |
Loans and receivables |
Payables at cost amortized |
Instruments derivatives |
| Translation dim erences on commercial transactions |
||||||
| Income on loans, cash investments and marketable securities |
34.0 | 34.0 | ||||
| Finance costs | (130.3) | (130.3) | ||||
| Other fi nancial income and expenses | (63.3) | (3.5) | (59.8) | |||
| Net income (expense) | (159.6) | 34.0 | 0.0 | (3.5) | (130.3) | (59.8) |
| (in € millions) | Balance as of Dec. 31, 2009 |
Additions | Utilizations | Reversals (surplus provisions) |
Change in scope of consolidation and other changes |
Balance as of Dec. 31, 10 |
|---|---|---|---|---|---|---|
| Doubtful accounts | (21.1) | (7.7) | 11.5 | 0.0 | (4.6) | (21.9) |
| Shares in non-consolidated companies |
(2.6) | 0.0 | 0.0 | 0.0 | 0.0 | (2.6) |
| Non-current fi nancial assets | (6.2) | (1.6) | 0.6 | 0.0 | (0.8) | (8.0) |
| Other receivables | (1.2) | 0.0 | 0.2 | 0.0 | (0.5) | (1.5) |
| TOTAL | (31.1) | (9.3) | 12.3 | 0.0 | (5.9) | (34.0) |
As of December 31, 2010, movements in provisions for impairment break down as follows by category of financial asset:
The Group's financial instruments that are measured at fair value break down as follows by level of fair value measurement: Level 1 (prices quoted in active markets) for short-term cash investments and Level 2 (measured based on observable market data) for currency and interest rate instruments.
NOTE 30 HEDGING OF CURRENCY AND INTEREST RATE RISKS
Currency risks relating to the commercial transactions of the Group's subsidiaries are managed centrally by Faurecia using forward purchase and sale contracts and options as well as foreign currency financing. Faurecia manages the hedging of interest rate risks on a central basis, through the Group Finance and Treasury Department, which reports to Group General Management. Hedging decisions are made by a Market Risk Management Committee that meets on a monthly basis.
Currency risks on forecast transactions are hedged on the basis of estimated cash flows determined in forecasts validated by General Management; these forecasts are updated on a regular basis. The related derivatives are classified as cash flow hedges when there is a hedging relationship that satisfies the IAS 39 criteria.
Subsidiaries outside the euro zone are granted inter-company loans in their operating currencies Although these loans are refinanced in euros and eliminated in consolidation, they contribute to the Group's currency risk exposure and are therefore hedged through swaps.
| Currency exposure | |||||||
|---|---|---|---|---|---|---|---|
| (in € millions) | USD | CZK | CAD | MXN | GBP | PLN | ZAR |
| Trade receivables | |||||||
| (net of payables) | 0.0 | 0.0 | 0.0 | 16.2 | 1.4 | (10.3) | 18.3 |
| Financial assets (net of liabilities)( * ) |
279.6 | 1.0 | 35.2 | 17.5 | (39.8) | 0.0 | 36.3 |
| Forecast transactions( ** ) |
28.1 | (39.0) | (8.2) | (25.5) | (9.6) | (72.1) | (42.6) |
| Net position before hedging | 307.7 | (38.0) | 27.0 | 8.2 | (48.0) | (82.4) | 12.0 |
| Currency hedges | (311.9) | 27.0 | (24.4) | (40.4) | 42.0 | 66.3 | (39.1) |
| Net position after hedging | (4.2) | (11.0) | 2.6 | (32.2) | (6.0) | (16.1) | (27.1) |
* Including inter-company financing.
** Commercial exposure anticipated over the next 6 months.
| USD | CZK | CAD | MXN | GBP | PLN | ZAR |
|---|---|---|---|---|---|---|
| 13.4 | (3.4) | (8.4) | (2.3) | 5.4 | (4.1) | (3.2) |
| 242.6 | 89.0 | 22.2 | 17.2 | 58.1 | 0.0 | 14.8 |
| 6.9 | (14.6) | (11.6) | (14.9) | (23.7) | (63.9) | 3.6 |
| 262.9 | 71.0 | 2.2 | 0.0 | 39.8 | (68.0) | 15.2 |
| (256.1) | (78.4) | (11.9) | 5.4 | (43.3) | 45.7 | (15.7) |
| 6.8 | (7.4) | (9.7) | 5.4 | (3.5) | (22.3) | (0.5) |
( * ) Including inter-company financing.
( ** ) Commercial exposure anticipated over the next 6 months.
| Currency exposure | |||||||
|---|---|---|---|---|---|---|---|
| (in € millions) | USD | CZK | CAD | MXN | GBP | PLN | ZAR |
| Trade receivables | |||||||
| (net of payables) | (9.1) | (7.5) | 0.2 | (4.2) | 5.8 | (28.2) | (1.8) |
| Financial assets (net of liabilities)( * ) |
233.1 | 28.1 | 46.5 | 14.7 | 43.9 | 112.1 | 0.0 |
| Forecast transactions | 51.5 | (86.0) | (39.5) | (15.5) | (3.0) | (145.0) | 0.0 |
| Net position before hedging | 275.5 | (65.4) | 7.2 | (5.0) | 46.7 | (61.1) | (1.8) |
| Currency hedges( ** ) |
(278.4) | 37.7 | 32.3 | 15.5 | (40.9) | (1.4) | 1.8 |
| Net position after hedging | (2.9) | (27.7) | 39.5 | 10.5 | 5.8 | (62.5) | 0.0 |
* Including inter-company financing.
** Including tunnels.
Hedging instruments are recognized in the balance sheet at fair value. Said value is determined based on measurements confirmed by banking counterparties.
| Carrying amount | Maturities | ||||||
|---|---|---|---|---|---|---|---|
| As of December 31, 2010 (in € millions) | Assets | Liabilities | Notional amount( ) * |
< 1 years | 1 to 5 years | > 5 years | |
| Fair value hedges | |||||||
| - forward currency contracts | 0.0 | (0.1) | 3.0 | 3.0 | 0.0 | 0.0 | |
| - inter-company loans in foreign currencies swapped for euros |
3.7 | (3.7) | 727.8 | 727.8 | 0.0 | 0.0 | |
| Cash fl ow hedges | |||||||
| - forward currency contracts | 1.0 | (2.7) | 217.2 | 217.2 | 0.0 | 0.0 | |
| Not eligible for hedge accounting | 0.1 | 0.0 | 8.9 | 8.9 | |||
| 4.8 | (6.5) |
* Notional amounts based on absolute values.
| Carrying amount | Maturities | ||||||
|---|---|---|---|---|---|---|---|
| As of December 31, 2009 (in € millions) | Assets | Liabilities | Notional amount( ) * |
< 1 years | 1 to 5 years | > 5 years | |
| Fair value hedges | |||||||
| - forward currency contracts | 0.1 | (0.1) | 4.0 | 4.0 | 0.0 | ||
| - currency options | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
| - inter-company loans in foreign currencies swapped for euros |
2.2 | (1.0) | 523.7 | 523.7 | 0.0 | ||
| Cash fl ow hedges | |||||||
| - forward currency contracts | 1.1 | (0.6) | 114.2 | 114.2 | 0.0 | ||
| - currency options | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
| Not eligible for hedge accounting | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
| 3.5 | (1.7) |
( * ) Notional amounts based on absolute values.
| Carrying amount | Maturities | |||||||
|---|---|---|---|---|---|---|---|---|
| As of December 31, 2008 (in € millions) | Assets | Liabilities | Notional amount( * ) |
< 1 years | 1 to 5 years | > 5 years | ||
| Fair value hedges | ||||||||
| - forward currency contracts | (1.7) | 37.6 | 37.6 | |||||
| - currency options | ||||||||
| - inter-company loans in foreign currencies swapped for euros |
4.8 | 421.0 | 421.0 | |||||
| Cash fl ow hedges | ||||||||
| - forward currency contracts | ||||||||
| - currency options | (2.5) | 280.0 | 280.0 | |||||
| Not eligible for hedge accounting | 44.2 | 50.0 | 50.0 | |||||
| 4.8 | 40.0 | |||||||
| of which currency hedges for operations | 40.0 | |||||||
| of which currency hedges for operations | 4.8 | |||||||
* Notional amounts based on absolute values. The sensitivity of Group income and equity as of December 31, 2010 to a fluctuation in exchange rates against the euro is as follows for the main currencies to which the Group is exposed:
| (in € millions) | |||||||
|---|---|---|---|---|---|---|---|
| Risk Currency | USD | CZK | CAD | MXN | GBP | PLN | ZAR |
| As of Dec. 31,2010 | 1.34 | 25.06 | 1.33 | 16.55 | 0.86 | 3.98 | 8.86 |
| Currency fl uctuation scenario (depreciation of currency/EUR) |
5.0% | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% |
| Exchange rate after currency depreciation |
1.40 | 26.31 | 1.40 | 17.37 | 0.90 | 4.17 | 9.31 |
| Impact on pre-tax income | (0.21) | (0.09) | (1.80) | (0.85) | 0.02 | 0.51 | (0.88) |
| Impact on equity | 1.07 | (1.24) | 0.01 | 0.16 | (0.10) | (3.12) | 0.0 |
These impacts reflect (i) the effect on the income statement of currency fluctuations on the year-end valuation of assets and liabilities recognized on the balance sheet, net of the impact of the change in the intrinsic value of hedging instruments (both those qualifying and not qualifying as fair value hedges) and (ii) the effect on equity of the change in the intrinsic value of hedging instruments for derivatives qualifying as cash flow hedges.
Faurecia manages the hedging of interest rate risks on a central basis. Said management is implemented through the Group Finance and Treasury Department, which reports to Group General Management. Hedging decisions are made by a Market Risk Management Committee that meets on a monthly basis.
The table below shows the Group's interest rate position, with assets, liabilities and derivatives broken down into fixed or variable rates. Financial assets include cash and cash equivalents and interest rate hedges include interest rate swaps as well as in-the-money options.
| Under 1 year | 1 to 2 years | 2 to 5 years | More than 5 years | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in € millions) Dec. 31, 2010 |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
| Financial assets | 0.0 | 606.0 | 0.0 | 606.0 | ||||||
| Financial liabilities | 0.0 | (656.6) | (169.0) | (787.1) | (190.1) | 0.0 | 0.0 | 0.0 | (359.1) | (1,443.7) |
| Net position before hedging |
0.0 | (50.6) | (169.0) | (787.1) | (190.1) | 0.0 | 0.0 | 0.0 | (359.1) | (837.7) |
| Interest rate hedges |
(157.2) | 157.2 | (278.5) | 278.5 | 0.0 | 0.0 | 0.0 | 0.0 | (435.7) | 435.7 |
| Net position after hedging |
(157.2) | 106.6 | (447.5) | (508.6) | (190.1) | 0.0 | 0.0 | 0.0 | (794.8) | (402.0) |
| Under 1 year | 1 to 2 years | 2 to 5 years | More than 5 years | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in € millions) Dec. 31, 2009 |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
| Financial assets | 286.0 | 0.0 | 286.0 | |||||||
| Financial liabilities | (8.5) | (428.7) | (129.7) | (624.0) | (184.7) | (311.0) | 0.0 | 0.0 | (322.9) | (1,363.7) |
| Net position before hedging |
(8.5) | (142.7) | (129.7) | (624.0) | (184.7) | (311.0) | 0.0 | 0.0 | (322.9) | (1,077.7) |
| Interest rate hedges |
(34.7) | 34.7 | (297.8) | 297.8 | 67.5 | (67.5) | 0.0 | 0.0 | (265.0) | 265.0 |
| Net position after hedging |
(43.2) | (108.0) | (427.6) | (326.2) | (117.2) | (378.5) | 0.0 | 0.0 | (587.9) | (812.7) |
| Under 1 year | 1 to 2 years | 2 to 5 years | More than 5 years | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in € millions) Dec. 31, 2008 |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
Fixed Rate |
Variable Rate |
|
| Financial assets | 321.3 | 0.0 | 321.3 | ||||||||
| Financial liabilities | 0.0 | (426.0) | (401.0) | (585.0) | 0.0 | (515.0) | 0.0 | 0.0 | (401.0) | (1,526.0) | |
| Net position before hedging |
0.0 | (104.7) | (401.0) | (585.0) | 0.0 | (515.0) | 0.0 | 0.0 | (401.0) | (1,204.7) | |
| Interest rate hedges |
0.0 | 0.0 | (186.8) | 186.8 | (87.6) | 87.6 | 0.0 | 0.0 | (274.4) | 274.4 | |
| Net position after hedging |
0.0 | (104.7) | (587.8) | (398.2) | (87.6) | (427.4) | 0.0 | 0.0 | (675.4) | (930.3) |
The aim of the Group's interest rate hedging policy is to reduce the impact on earnings of changes in short-term rates as the majority of its borrowings are at variable rates. The hedges arranged comprise euro- and dollar-denominated interest rate swaps, caps and other option-based structures. These hedges cover some of the borrowings due in 2011, 2012 and to a lesser extent in 2013, against a significant rise in rates.
Since 2008, certain of the Group's derivatives have qualified for hedge accounting under IAS39. The other derivatives purchased by the Group constitute economic hedges of interest rate risks on borrowings but do not qualify for hedge accounting under IAS 39. As a result, changes in the fair value of these instruments are recognized directly in income under "Other financial income and expense".
Interest rate hedging instruments are recognized in the balance sheet at fair value. Said value is determined based on measurements confirmed by banking counterparties.
The notional amounts of the Group's interest rate hedges break down as follows:
| Carrying amount | Notional amounts by maturity | ||||
|---|---|---|---|---|---|
| As of Dec. 31, 2010 (in € millions) | Assets | Liabilities | < 1 years | 1 to 5 years | > 5 years |
| Interest rate options | 0.0 | 1,600 | 150 | - | |
| Variable-rate rate/fi xed rate swaps | (12.3) | 157 | 279 | - | |
| Floor | 0 | 0 | - | ||
| Accrued premiums payable | (0.5) | ||||
| 0.0 | (12.8) | 1,757 | 429 | - |
| Carrying amount | Notional amounts by maturity | |||||
|---|---|---|---|---|---|---|
| As of Dec. 31, 2009 (in € millions) | Assets | Liabilities | Assets | Liabilities | Assets | |
| Interest rate options | 0.2 | 1,600 | 150 | - | ||
| Variable-rate rate/fi xed rate swaps | (17.7) | 570 | 843 | - | ||
| Floor | 0.0 | - | ||||
| Accrued premiums payable | (3.5) | |||||
| 0.2 | (21.2) | 2,170 | 993 | - |
| Carrying amount | Notional amounts by maturity | |||||
|---|---|---|---|---|---|---|
| As of Dec. 31, 2008 (in € millions) | Assets | Liabilities | < 1 years | 1 to 5 years | > 5 years | |
| Interest rate options | 1.4 | 1,915 | 1,750 | - | ||
| Variable-rate rate/fi xed rate swaps | (14.3) | 301 | 865 | - | ||
| Floor | 1.2 | 0.0 | 36 | - | ||
| Accrued premiums payable | (6.4) | |||||
| TOTAL | 2.6 | (20.7) | 2,252 | 2,615 | - |
In view of the short-term rates in 2010, despite a moderate increase in the second half of the year, a number of the Group's option-based interest rate hedges are out of the money. A rise in short-term rates would therefore have an impact on financial expense.
In addition, a fluctuation in interest rates would affect "Other financial income and expense" due to the resulting change in the fair value of derivatives arranged to hedge interest due in from 2011 to 2013.
The sensitivity tests performed, assuming a 100 bp increase or decrease in average interest rates compared to the rate curve as of December 13, 2010 show that the positive or negative effect on financial expense can be estimated at €10 million, taking into account the profile of the Group's borrowings and derivatives in place as of Dec. 31, 2010.
Faurecia's counterparty risk connection with its derivatives is not significant as the majority of its derivatives are arranged with banks with strong ratings that form part of its banking pool.
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Future minimum lease payments under operating leases | 232.6 | 104.6 | 109.7 |
| Debt collateral: | |||
| - mortgages | 15.9 | 12.3 | 11.6 |
| Other debt guarantees | 55.0 | 27.5 | 20.1 |
| Firm orders for property, plant and equipment and intangible assets |
79.5 | 83.5 | 108.3 |
| Other | 1.3 | 0.6 | 1.7 |
| TOTAL | 384.3 | 228.5 | 251.4 |
Future minimum lease payments under operating leases break down as follows:
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| N+1 | 51.2 | 26.3 | 29.8 |
| N+2 | 40.7 | 20.4 | 22.7 |
| N+3 | 32.2 | 15.0 | 14.5 |
| N+4 | 24.9 | 11.5 | 11.8 |
| N+5 and above | 83.6 | 31.4 | 30.9 |
| TOTAL | 232.6 | 104.6 | 109.7 |
Expiry dates of mortgages and guarantees:
| (in € millions) | Dec. 31, 2010 |
|---|---|
| Less than a year | 29.5 |
| 1 to 5 years | 18.3 |
| Over fi ve years | 23.1 |
| TOTAL | 70.9 |
In accordance with the provisions of French Act no. 2004-391 dated May 4, 2004 on professional training, employees of the Group's French companies are entitled to at least twenty hours of training per calendar year, which may be carried forward for up to six years. If all or part of the entitlement is not used within six years, it is capped at 120 hours.
In 2010, the average utilization rate of this entitlement was 6.5%.
The number of unused training hours accumulated at year-end totaled 1,607,901. No provision was recorded in the financial statements for these individual training entitlements as the Group does not have sufficiently reliable historical data to accurately estimate the related contingent liability. The potential impact is not, however, considered to be material.
The Faurecia Group is managed independently and transactions with the PSA Peugeot Citroën Group are conducted at arm's length terms.
These transactions (including with companies accounted for by the equity method by the PSA Peugeot Citroën Group) are recognized as follows in the Group's consolidated financial statements:
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Sales | 2,300.9 | 2,049.4 | 2,733.9 |
| Purchases of products, services and materials | 10.2 | 10.6 | 20.9 |
| Receivables( * ) |
457.6 | 447.7 | 488.6 |
| Payables( ** ) |
170.1 | 154.5 | 265.5 |
| ( ) after no-recourse sales of receivables in the amounting to: ( * ) o/w borrowings amounting to: |
197.2 142.0 |
192.4 128.0 |
300.9 194.0 |
Total compensation for 2010 awarded to the members of the Board of Directors and the Group Executive Committee serving in this capacity at Friday, December 31, 2010 amounted to €6,293,092, including directors' fees of €212,500, compared with the year-earlier figures of €5,246,942 and €232,750 respectively.
No Faurecia stock subscription options were awarded to management in 2010.
| PricewaterhouseCoopers | Ernst & Young | |||||||
|---|---|---|---|---|---|---|---|---|
| Amount (excl. VAT) | % | Amount (excl. VAT) | % | |||||
| (in € millions) | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| AUDIT | ||||||||
| Statutory and contractual audits | 2.7 | 1.6 | 100.0% | 100.0% | 3.6 | 3.2 | 94.7% | 100.0% |
| Issuer | 0.6 | 0.3 | 22.2% | 18.8% | 0.3 | 0.3 | 7.9% | 9.4% |
| Fully consolidated companies | 2.1 | 1.3 | 77.8% | 81.3% | 3.3 | 2.9 | 86.8% | 90.6% |
| Other services relating directly to the auditor's duties |
0.0 | 0.0 | 0.0% | 0.0% | 0.2 | 0.0 | 5.3% | 0.0% |
| Issuer | 0.0 | 0.0 | 0.0% | 0.0% | 0.0 | 0.0 | 0.0% | 0.0% |
| Fully consolidated companies | 0.0 | 0.0 | 0.0% | 0.0% | 0.2 | 0.0 | 5.3% | 0.0% |
| SUB-TOTAL | 2.7 | 1.6 | 100.0% | 100.0% | 3.8 | 3.2 | 100.0% | 100.0% |
| OTHER SERVICES PROVIDED BY THE NETWORK TO FULLY CONSOLIDATED COMPANIES |
0.0 | 0.0 | 0.0% | 0.0% | 0.0 | 0.0 | 0.0% | 0.0% |
| Legal and tax advisory services | ||||||||
| Fully consolidated companies | 0.0 | 0.0 | 0.0% | 0.0% | 0.0 | 0.0 | 0.0% | 0.0% |
| Other (disclosure required where > 10% of audit fees) |
0.0 | 0.0 | 0.0% | 0.0% | 0.0 | 0.0 | 0.0% | 0.0% |
| SUB-TOTAL | 0.0 | 0.0 | 0.0% | 0.0% | 0.0 | 0.0 | 0.0% | 0.0% |
| TOTAL | 2.7 | 1.6 | 100.0% | 100.0% | 3.8 | 3.2 | 100.0% | 100.0% |
The consolidated accounts of the Faurecia Group are included in the consolidated financial statements of its parent, the PSA Peugeot Citroën Group, 75 avenue de la Grande Armée, 75116 Paris, France.
As of December 31, 2010, Peugeot SA held 57.43% of the capital and 63.26% of the voting rights of Faurecia SA.
NOTE 35 DIVIDENDS
The Board of Directors has decided to propose at the next shareolders' Meeting a dividend of €0.25 per share.
| Country | Interest of the parent company (in %) |
Stake (in %) (1) | |
|---|---|---|---|
| I – FULLY CONSOLIDATED COMPANIES | |||
| Faurecia | France | parent company | parent company |
| Financière Faurecia | France | 100 | 100 |
| SFEA - Société Foncière pour l'Equipement Automobile | France | 100 | 100 |
| Faurecia Investments | France | 100 | 100 |
| Faurecia Services Groupe | France | 100 | 100 |
| Faurecia Exhaust International | France | 100 | 100 |
| Faurecia Netherlands Holding BV | Netherlands | 100 | 100 |
| United Parts Exhaust Systems AB | Sweden | 100 | 100 |
| Société Internationale de Participations | Belgium | 100 | 100 |
| Faurecia USA Holdings, Inc. | USA | 100 | 100 |
| Faurecia (China) Holding Co. Ltd | China | 100 | 100 |
| Faurecia Informatique Tunisie | Tunisia | 100 | 100 |
| INTERIOR MODULES | |||
| Faurecia Automotive Seating | France | 100 | 100 |
| Faurecia Industries | France | 100 | 100 |
| Faurecia Automotive Holdings | France | 100 | 100 |
| EAK - Composants pour l'Automobile (EAK SAS) | France | 51 | 51 |
| EAK - Composants pour l'Automobile (EAK SNC) | France | 51 | 51 |
| Trecia | France | 100 | 100 |
| Siebret | France | 100 | 100 |
| Siemar | France | 100 | 100 |
| Sienor | France | 100 | 100 |
| Sieto | France | 100 | 100 |
| Sotexo | France | 100 | 100 |
| Siedoubs | France | 100 | 100 |
| Sielest | France | 100 | 100 |
| ECSA - Études et Construction de Sièges pour l'Automobile | France | 100 | 100 |
| Faurecia Intérieur Industrie | France | 100 | 100 |
| Faurecia Automotive Industrie | France | 100 | 100 |
| Automotive Sandouville | France | 100 | 100 |
| Société Automobile du Cuir de Vesoul | France | 100 | 100 |
| Faurecia ADP Holding | France | 60 | 60 |
| Faurecia JIT Plastique | France | 100 | 100 |
| Faurecia Autositze GmbH | Germany | 100 | 100 |
| Faurecia Automotive GmbH | Germany | 100 | 100 |
| Faurecia Innenraum Systeme GmbH | Germany | 100 | 100 |
| Faurecia Industrie NV | Belgium | 100 | 100 |
| Faurecia Asientos Para Automovil España, SA | Spain | 100 | 100 |
9
| Country | Interest of the parent company (in %) |
Stake (in %) (1) | |
|---|---|---|---|
| Asientos de Castilla Leon, SA | Spain | 100 | 100 |
| Asientos del Norte, SA | Spain | 100 | 100 |
| Industrias Cousin Freres, SL | Spain | 50 | 50 |
| Tecnoconfort | Spain | 50 | 50 |
| Faurecia Automotive España, SL | Spain | 100 | 100 |
| Faurecia Interior Systems España, SA | Spain | 100 | 100 |
| Faurecia Interior Systems Salc España, SL | Spain | 100 | 100 |
| Cartera e Inversiones Enrich, SA | Spain | 100 | 100 |
| Asientos de Galicia, SL | Spain | 100 | 100 |
| Valencia Modulos de Puerta, SL | Spain | 100 | 100 |
| Incalplas, SL | Spain | 100 | 100 |
| Faurecia AST Luxembourg SA (ex: SAI Automotive Silux SA) | Luxemburg | 100 | 100 |
| Faurecia Automotive Seating BV | Netherlands | 100 | 100 |
| Faurecia - Assentos de Automovel, Limitada | Portugal | 100 | 100 |
| Sasal | Portugal | 100 | 100 |
| Faurecia Sistemas de Interior de Portugal. Componentes para Automoveis S.A. (ex: SAI Portugal) |
Portugal | 100 | 100 |
| EDA - Estofagem De Assentos, Lda | Portugal | 100 | 100 |
| Faurecia Automotive Seating UK Limited | United Kingdom | 100 | 100 |
| Faurecia Midlands Limited | United Kingdom | 100 | 100 |
| SAI Automotive Fradley Ltd | United Kingdom | 100 | 100 |
| SAI Automotive Washington Limited | United Kingdom | 100 | 100 |
| Faurecia Interior Systems Sweden AB | Sweden | 100 | 100 |
| Faurecia Fotele Samochodowe Sp.Zo.o | Poland | 100 | 100 |
| Faurecia Walbrzych Sp.Zo.o | Poland | 100 | 100 |
| Faurecia Legnica Sp.Zo.o | Poland | 100 | 100 |
| Faurecia Grojec R&D Center Sp.Zo.o | Poland | 100 | 100 |
| Faurecia Gorzow Sp.Zo.o | Poland | 100 | 100 |
| Faurecia Interior Systems Bohemia s.r.o. | Czech Rep. | 100 | 100 |
| Faurecia Components Pisek s.r.o. | Czech Rep. | 100 | 100 |
| Faurecia Seating Talmaciu SRL | Romania | 100 | 100 |
| Euro Auto Plastic Systems SRL | Romania | 50 | 50 |
| Faurecia Slovakia s.r.o. | Slovakia | 100 | 100 |
| Faurecia Polifl eks Otomotiv Sanayi Ve Ticaret Anonim Sirketi | Turkey | 100 | 100 |
| Faurecia Azin Pars Company | Iran | 51 | 51 |
| Faurecia Interior Systems South Africa (PTY) Ltd | South Africa | 100 | 100 |
| AI Manufacturers (PTY) Ltd | South Africa | 100 | 100 |
| Societe Tunisienne d'Equipements D'automobile | Tunisia | 100 | 100 |
Faurecia Automotive Seating Canada Ltd Canada 100 100
| Country | Interest of the parent company (in %) |
Stake (in %) (1) | |
|---|---|---|---|
| Faurecia Automotive Seating, Inc. | USA | 100 | 100 |
| Faurecia Interior Systems, Inc. | USA | 100 | 100 |
| Faurecia Automotive del Uruguay | Uruguay | 100 | 100 |
| Faurecia Argentina SA | Argentina | 100 | 100 |
| Faurecia Automotive do Brasil Ltda | Brazil | 100 | 100 |
| Faurecia Sistemas Automotrices De Mexico, SA de CV (ex: Faurecia Duroplast Mexico, SA DE CV) |
Mexico | 100 | 100 |
| Servicios Corporativos de Personal Especializado, SA DE CV | Mexico | 100 | 100 |
| Faurecia Interior Systems Mexico, SA DE CV | Mexico | 100 | 100 |
| Changchun Faurecia Xuyang Automotive Seat Co., Ltd (CFXAS) | China | 60 | 60 |
| Faurecia (Changchun) Automotive Systems Co., Ltd | China | 100 | 100 |
| Faurecia- Gsk (Wuhan) Automotive Seating Co., Ltd | China | 51 | 51 |
| Faurecia (Wuxi) Seating Components Co., Ltd | China | 100 | 100 |
| Faurecia (Shanghai) Management Company, Ltd | China | 100 | 100 |
| Faurecia (Shanghai) Automotive Systems Co., Ltd | China | 100 | 100 |
| Faurecia (Wuhan) Automotive Seating Co., Ltd | China | 100 | 100 |
| Faurecia (Guangzhou) Automotive Systems Co., Ltd | China | 100 | 100 |
| Faurecia (Nanjing) Automotive Systems Co., Ltd | China | 100 | 100 |
| Faurecia (Shenyang) Automotive Systems Co., Ltd | China | 100 | 100 |
| Faurecia (Wuhan) Automotive Components Systems Co., Ltd | China | 100 | 100 |
| Changchun Faurecia Xuang Interior Systems Company Limited | China | 60 | 60 |
| Faurecia Trim Korea Ltd | South Korea | 100 | 100 |
| Faurecia Automotive Seating India Private Limited | India | 100 | 100 |
| Faurecia Japan K.K. | Japan | 100 | 100 |
| Faurecia Equipements Automobiles Maroc | Morocco | 100 | 100 |
| OOO Faurecia ADP | Russia | 60 | 60 |
| OOO Faurecia Automotive Development | Russia | 100 | 100 |
| Faurecia Shin Sung Co. Ltd | South Korea | 60 | 60 |
| OTHER MODULES | |||
| Faurecia Systèmes d'Echappement | France | 100 | 100 |
| Faurecia Bloc Avant | France | 100 | 100 |
| Emcon Technologies France SAS | France | 100 | 100 |
| Faurecia-Metalloprodukcia Holding | France | 60 | 60 |
| Faurecia Abgastechnik GmbH | Germany | 100 | 100 |
| Faurecia Kunststom e Automobilsysteme GmbH | Germany | 100 | 100 |
| Leistritz Abgastechnik Stollberg GmbH | Germany | 100 | 100 |
| Faurecia Emissions Control Technologies, Germany GmbH | Germany | 100 | 100 |
| Faurecia Emissions Control Technologies, Novaferra GmbH | Germany | 100 | 100 |
| Faurecia Emissions Control Technologies, Finnentrop GmbH | Germany | 100 | 100 |
| Faurecia Exteriors GmbH | Germany | 100 | 100 |
9
| Country | Interest of the parent company (in %) |
Stake (in %) (1) | |
|---|---|---|---|
| Faurecia Sistemas de Escape España, SA | Spain | 100 | 100 |
| Faurecia Emissions Control Technologies, Pampelona, SL | Spain | 100 | 100 |
| Faurecia Automotive Exteriors Espana, SA (ex: Plastal Spain SA) | Spain | 100 | 100 |
| Faurecia - Sistemas De Escape Portugal, Lda | Portugal | 100 | 100 |
| Faurecia Exhaust Systems AB | Sweden | 100 | 100 |
| Faurecia Magyarorszag Kipufogo-rendszer Kft | Hungary | 100 | 100 |
| Faurecia Exhaust Systems S.R.O. | Czech Rep. | 100 | 100 |
| Faurecia Automotive Czech Republic, s.r.o. | Czech Rep. | 100 | 100 |
| Faurecia Emissions Control Technologies, Mlada Boleslav, s.r.o | Czech Rep. | 100 | 100 |
| Faurecia Emissions Control Technologies UK Limited | United Kingdom | 100 | 100 |
| Faurecia Exhaust Systems South Africa LTD | South Africa | 100 | 100 |
| Emission Control Technologies Holdings SA (Pty) Ltd | South Africa | 100 | 100 |
| Emission Control Technologies S.A. (Ga-Rankuwa) (Pty) Ltd | South Africa | 100 | 100 |
| Emission Control Technologies S.A. (CapeTown) (Pty) Ltd | South Africa | 100 | 100 |
| Faurecia Exhaust Systems, Inc. | USA | 100 | 100 |
| Faurecia Emissions Control Technologies, USA, LLC | USA | 100 | 100 |
| Faurecia Emissions Control Technologies, Spartanburg, Inc. | USA | 100 | 100 |
| Emcon Thailand LLC | USA | 100 | 100 |
| Faurecia Sistemas de Escape Argentina S.A. | Argentina | 100 | 100 |
| Faurecia Emissions Control Technologies, Cordoba | Argentina | 100 | 100 |
| Faurecia Sistemas de Escapamento do Brasil Ltda | Brazil | 100 | 100 |
| Faurecia Emissions Control Technologies, Limeira | Brazil | 100 | 100 |
| Faurecia Exhaust Mexicana, SA de CV | Mexico | 100 | 100 |
| Exhaust Services Mexicana, SA de CV | Mexico | 100 | 100 |
| ET Mexico Holdings I, S. de RLde CV | Mexico | 100 | 100 |
| ET Mexico Holdings II, S. de RLde CV | Mexico | 100 | 100 |
| Faurecia Honghu Exhaust Systems Shanghai, Co. Ltd (ex: SHEESC) | China | 51 | 51 |
| Faurecia Tongda Exhaust System (Wuhan) Co., Ltd | China | 50 | 50 |
| Faurecia Exhaust Systems Changchun Co., Ltd | China | 51 | 51 |
| Faurecia Emissions Control Technologies Development (Shanghai) Company Ltd |
China | 100 | 100 |
| Faurecia (Qingdao) Exhaust Systems Co., Ltd | China | 100 | 100 |
| Faurecia (Wuhu) Exhaust Systems Co., Ltd | China | 100 | 100 |
| Faurecia Emissions Control Technologies Consulting (Shanghai) Co., Ltd | China | 100 | 100 |
| Faurecia Emissions Control Technologies (Shanghai) Co., Ltd | China | 100 | 100 |
| Faurecia Emissions Control Technologies (Chongqing) Co., Ltd | China | 100 | 100 |
| Faurecia Emissions Control Technologies (Yantai) Co., Ltd | China | 100 | 100 |
| Country | Interest of the parent company (in %) |
Stake (in %) (1) | |
|---|---|---|---|
| Faurecia Emission Control Technologies Chengdu | China | 100 | 100 |
| Faurecia Emissions Control Systems Korea (ex-Daeki) | South Korea | 100 | 100 |
| Faurecia Jit And Sequencing Korea | South Korea | 100 | 100 |
| Faurecia Interior Systems Thailand Co., Ltd. | Thailand | 100 | 100 |
| Faurecia Emissions Control Technologies, Thailand Co., Ltd | Thailand | 100 | 100 |
| Et (Barbados) Holdings SRL | Barbados | 100 | 100 |
| Emcon Technologies Canada ULC | Canada | 100 | 100 |
| Emcon Technologies Hungary Holdings Kft | Hungary | 100 | 100 |
| Emcon Technologies Kft | Hungary | 100 | 100 |
| Faurecia Emissions Control Technologies, India Private Limited | India | 74 | 74 |
| Faurecia Emissions Control Technologies, Italy SRL | Italy | 100 | 100 |
| ET Dutch Holdings Cooperatie UA | Netherlands | 100 | 100 |
| ET Dutch Holding BV | Netherlands | 100 | 100 |
| ET Dutch Holding II BV | Netherlands | 100 | 100 |
| Faurecia Emissions Control Technologies Netherlands BV | Netherlands | 100 | 100 |
| OOO Faurecia Metalloprodukcia Exhaust Systems | Russia | 60 | 60 |
| II – COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD | |||
| INTERIOR MODULES | |||
| Componentes De Vehiculos De Galicia, SA | Spain | 50 | 50 |
| Copo Iberica, SA | Spain | 50 | 50 |
| Vanpro Assentos Limitada | Portugal | 50 | 50 |
| Arsed, Podjetje Za Proizvodnjo in Trzenje Kovinske Opreme (ARSED Doo) |
Slovenia | 50 | 50 |
| Teknik Malzeme Ticaret Ve Sanayi AS | Turkey | 50 | 50 |
| Orcia Otomotiv Yan Sanayi Ve Ticaret Anonim Sirketi | Turkey | 50 | 50 |
| Kwang Jin Faurecia Co. Limited | Korea | 50 | 50 |
| Faurecia-Nhk Co., Ltd | Japan | 50 | 50 |
| SAS GROUP | |||
| SAS Automotive France | France | 50 | 50 |
| Cockpit Automotive Systems Douai SNC | France | 50 | 50 |
| SAS Autosystemtechnik Verwaltungs GmbH | Germany | 50 | 50 |
| SAS Autosystemtechnik GmbH und Co. KG | Germany | 50 | 50 |
| SAS Automotive NV | Belgium | 50 | 50 |
| SAS Autosystemstechnick, SA | Spain | 50 | 50 |
| SAS Autosystemtechnik de Portugal, Unipessoal, Lda. | Portugal | 50 | 50 |
| SAS Automotive Limited | United Kingdom | 50 | 50 |
| SAS Autosystemtechnik s.r.o. | Czech Rep. | 50 | 50 |
| SAS Automotive s.r.o | Slovakia | 50 | 50 |
| SAS Automotive RSA (Pty) Ltd | South Africa | 50 | 50 |
| SAS Automotive Do Brasil Ltda | Brazil | 50 | 50 |
| Country | of the parent company (in %) |
Stake (in %) (1) | |
|---|---|---|---|
| SAS Automotive Systems S.A. de C.V. | Mexico | 50 | 50 |
| SAS Automotive Systems & Services, SA DE CV | Mexico | 50 | 50 |
| SAS Automotive USA, Inc. | USA | 50 | 50 |
| SAS Automotriz Argentina SA (dormant company) | Argentina | 50 | 50 |
| OTHER MODULES | |||
| AD Tech Co. Ltd | South Korea | 50 | 50 |
This is a free translation into English of the Statutory Auditors' report issued in French and is provided solely for the convenience of English speaking readers. The Statutory Auditors' report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the opinion on the consolidated financial statements and includes an explanatory paragraph discussing the Auditors' assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated financial statements.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
In compliance with the assignment entrusted to us by your Annual Shareholders' Meeting, we hereby report to you, for the year ended December 31, 2010, on:
These consolidated financial statements have been approved by the Board of Directors. Our role is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group at December 31, 2010 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.
Without qualifying our opinion, we draw your attention to Note 1 «Accounting policies» to the consolidated financial statements which describes the new standards and amendments to existing standards applied by the Group since January 1, 2010, in particular IFRS 3 (revised) – Business Combinations.
In accordance with the requirements of Article L.823-9 of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we bring to your attention the following matters:
c As part of our assessment of the accounting principles used by the Group, we verified the methods used to capitalize and amortize development costs. We also verified the recoverable amount of these assets and the appropriateness of the disclosures provided in Notes 1-3 and 1-5 to the consolidated financial statements.
These assessments were made as part of our audit of the consolidated financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report.
As required by law and in accordance with professional standards applicable in France, we have also verified in the information presented in the Group's management report.
We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.
Neuilly-sur-Seine and Paris-La Défense, February 8, 2011
The Statutory Auditors
PricewaterhouseCoopers Audit ERNST & YOUNG Audit
Dominique Ménard Denis Thibon
| 10.1. | PARENT COMPANY FINANCIAL STATEMENTS |
176 | |
|---|---|---|---|
| 10.1.1. | Management report of the parent company |
176 | |
| 10.1.2. | Income statement | 179 | |
| 10.1.3. | Balance sheet at December 31 | 180 | |
| 10.1.4. | Cash fl ow statement | 181 | |
| 10.1.5. | Notes to the 2010 parent company fi nancial statements |
182 | |
| 10.1.6 | Five-year fi nancial summary | 197 | |
| 10.1.7 | Appropriation of income | 198 | |
| 10.1.8 | Securities portfolio at December 31, 2010 |
199 | |
| 10.1.9 | Faurecia subsidiaries and ag liates at December 31, 2010 |
200 | |
| 10.1.10. Statutory Auditors' reports on the fi nancial statements |
202 | ||
| 10.1.11. Report of the Statutory Auditors on certain related party agreements and commitments |
204 | ||
| 10.1.12. Statutory Auditors' special report on the free granting of existing shares or shares to be issued to employees and corporate og cers of the company 206 |
| 10.2.1. | Faurecia and its shareholders | 207 | |
|---|---|---|---|
| 10.2.2. | Faurecia's capital | 207 | |
| 10.2.3. | Changes in Faurecia's share price | 208 | |
| 10.3. | ADDITIONAL INFORMATION |
| ON FAURECIA SA | 211 | |
|---|---|---|
| 10.3.1. | History and development | 211 |
| 10.3.2. | Legal information about the company | 213 |
| 10.3.3. | Information published about |
the company 225
The parent company, Faurecia SA, is a holding company which directly and indirectly provides financial, accounting, information systems, general management and administrative services to companies in the Group.
Sales rose sharply in 2010, to €140.6 million compared with €63.3 million the year before 2009, due to changes in the reinvoicing of costs implemented this year. The parent company now acts as a pivot for all re-invoices of work done for Group entities.
In addition to providing services to Group subsidiaries, since 2006 Faurecia has invoiced trademark royalties to certain French subsidiaries, calculated as a proportion of the subsidiaries' sales. Because of the increased sales at French subsidiaries in 2010, the amounts collected were greater than in 2009. They amounted to €19.3 million in 2010 compared with €12.8 million in 2009.
The company ended 2010 with an operating profit of €3.6 million, compared with an operating loss of €5.5 million in 2009. The improvement in earnings derived largely from the increase in royalties collected.
The company reported net financial income of €548.3 million versus net financial expense of €176.9 million in 2009. This change is primarily attributable to movements in provisions for impairment of investments. It includes:
c net borrowing costs of €30 million compared with €50.7 million in 2009. The decline in financing cost stems primarily from lower spreads being applied by the banks as a result of a return to the ratios of the initial covenants.
Net non-recurring expense for the financial year was €3.3 million. This net expense primarily reflects a payment for terminating a contract plus the income from reclassifying the Ecia South Africa subsidiary within the Group.
Tax income amounted to €8 million. This refers to the tax income recognized from the positive earnings of French subsidiaries that are part of the consolidated tax group and compares with €18.1 million in 2009, to which was added the refund due on a €2.8 million carryback.
The net result for the 2010 financial year showed a profit of €556.5 million. This compares with a profit of €233.2 million in 2009.
Faurecia's financial structure continued to strengthen in 2010, especially with the €305.1 million addition to equity made to pay for the transfer of Emcom Technologies in February 2010.
The company extended the average maturity of its loans in order to improve liquidity and make its financing more secure.
At December 31, 2010 the Shareholders' Equity in the company before distribution of the period's earnings amounted to €1,877 million versus €1,015.4 million at the close of 2009. It thus increased by €861.6 million.
Net debt at December 31, 2010 was unchanged from the close of 2009. Net debt – borrowings net of cash, marketable securities, net inter-company cash advances and loans to subsidiaries – amounted to €720.9 million at December 31, 2010, compared with €714.9 million at year-end the year before. At the close of 2010, 82.7% of the company's debt was at floating rates. The company hedges its exposure to changes in interest rates on this debt through interest rate derivatives.
The company's sources of financing comprise the following:
c €211.3 million of January 1, 2015 OCEANE bonds convertible into new shares and/or exchangeable for existing shares, issued November 26, 2009. These bonds bear annual interest of 4.50% payable on January 1 of each year, starting January 1, 2011. Each bond has a face value of €18.69;
The syndicated bank loan and the loan from PSA Peugeot Citroën contain restrictive clauses, specifically in the event of a change of control by PSA Peugeot Citroën and with respect to consolidated financial ratios. These clauses were all observed at December 31, 2010 (see Note 26–3 to the consolidated financial statements and Note 16 to the separate financial statements). Similarly, the convertible bond issue carried out in November 2009 stipulates that in the event of a change of control the bondholders may request early redemption of all or part of their bonds.
The €205 million bank loan taken out in 2009 was repaid early in August 2010 and the remaining balance of the bonds issued in October 2005 was repaid at maturity in October 2010.
Further details of the company's debt are provided in Note 16 to the parent company financial statements.
Trade accounts payable equaling €17.8 million do not include invoices past due; these break down as follows:
| (in € millions) | Dec. 31, 2010 | Dec. 31, 2009 |
|---|---|---|
| Provision for invoices not yet received |
2.9 | 3.0 |
| Invoices not yet due |
14.9 | 12.9 |
| Invoices between 1 and 30 days past due |
||
| Invoices between 31 and 60 days past due |
||
| Invoices between 61 and 90 days past due |
||
| Invoices more than 90 days past due |
||
| TOTAL | 17.8 | 15.9 |
(*) Source Faurecia.
Cash flows for the year generated net cash inflow of €10.2 million. The total of €39.4 million in equity subscribed in company subsidiaries was covered by funds from operations.
The carrying amount of investments in subsidiaries and affiliates recognized in the balance sheet at December 31, 2010 came to €2,599 million, compared with €1,719 million one year earlier.
The operations and results of the company's subsidiaries are analyzed in detail in the review of the consolidated financial statements.
There was no significant legal reorganization done in 2010. The Group's continued corporate development has led to the creation of new subsidiaries, notably in China and Uruguay.
In addition, several acquisitions and strategic alliances were carried out in the course of the 2010 financial year:
On February 8, 2010 the Emcom Technologies Group, made up of 36 companies, was transferred to Faurecia by One Equity Partners, a private equity arm of JP Morgan Chase & Co. This transaction was paid for by issuing 20,918,224 new shares of company stock.
On March 31, 2010 Faurecia consolidated the German operations of Plastal, a leading supplier of exterior plastic parts for the automotive industry. With this transaction, the Group broadened its customer base, deepened its product line and acquired additional expertise beyond its core business in auto bumpers. Also, it added to its industrial plant and R&D capability in Germany.
The acquisition of Plastal Spain, on top of the Plastal Germany acquisition, on September 30, 2010 enabled the Faurecia Automotive Exteriors business group to round out its European industrial base and consolidate its position of marker leader( * .
On June 30, 2010 Faurecia took an 18.75% ownership position in the Xuyang Group, this becoming the strategic investor in this manufacturer, which is one of the major suppliers to the FAW Group, China's leading automaker, and its international subsidiaries, including FAW-VW (Audi and Volkswagen).
On July 2, 2010 Faurecia entered into a strategic alliance with the Geely and Limin Groups for the purpose of developing, producing and delivering interior and exterior automobile systems to all the Geely brands in China. This alliance includes creating several co-ventures which will be jointly owned by Faurecia, Limin and Geely and will supply the five new Geely factories now under construction in China.
On November 23, 2010 Faurecia signed an agreement with a view to acquiring the assets of Angell-Demmel Europe Gmbh, the leader( * ) in metal automotive interior trim parts. Once the transaction has been finalized, this acquisition will reinforce Faurecia's technological leadership in complete solutions for auto interiors.
Lastly, on January 17, 2011 Faurecia became a strategic investor in Amminex A/S, a Danish company with advanced expertise in the treatment of nitrogen oxides and the inventor of the Ammonia Storage and Delivery System (ASDS), by acquiring 21.2% of its stock. Faurecia also signed a technological cooperation agreement with Amminex for the development and worldwide industrialization of this technology for diesel engines.
This management report concerning Faurecia SA is presented in the form of an AMF Registration Document. It should be read in conjunction with the various sections of that document.
The risks to which the company is exposed are analyzed in the Board of Directors' report on the consolidated financial statements in section 3.5 above.
Research & development activities are detailed in section 6 of this Registration Document.
The company's capital stock underwent changes during the reporting period and these are described in section 10.2.2 of the Registration Document. The number of treasury shares held by the company is also mentioned in section 10.2.2 of the Registration Document.
Information on employees' interests in the company's capital is provided in section 10.3.2.2. Details relating to the fixed, variable and exceptional compensation and benefits in kind paid to Faurecia's Chairman and other corporate officers as well as the fees paid to the Statutory Auditors are provided in sections 8.1.2.1, 8.1.2.2 and 10.3.2.4 of this Registration Document. Provisions recognized by Group companies for pensions and other employee benefits are analyzed in Note 24-1 to the consolidated financial statements.
A list of the directorships and other positions held in 2010 by each member of the Board of Directors is provided in section 8.1.2.1.
Details of the stock options and free shares granted by the company during the year, the principal beneficiaries thereof and the number of shares purchased on exercise of options during the year, are provided in a special report. Information on stock options is also given in section 10.
The operating procedures of the Board of Directors and its Committees, as well as key data concerning the Group's internal control system, are described in the report of the Chairman of the Board of Directors on internal control.
The draft resolutions presented in Chapter 11, including the disclosure of the amount of dividends paid over the last three years, are an integral part of this report and supplement the information provided to shareholders.
With respect to the Extraordinary Shareholders' Meeting:
In the ordinary resolutions (resolutions 4 to 13), the company's shareholders are asked to approve the parent company and consolidated financial statements, as well as to appropriate the parent company's net income for 2009. It is also proposed that a dividend be paid in the amount of €0.25 per share, or a total of €27,591,682. This dividend would be payable as of Friday June 3, 2011.
Resolutions 8 through 11 in the ordinary portion of this meeting deal with the membership of the Board of Directors. In this connection, you are asked to appoint Ms Linda Hasenfratz Newton as Director, for a term of five years. You are also asked to vote on the proposed renewal the terms of Mssrs. Philippe Varin, Thierry Peugeot and Jean-Claude Hanus for a term of five years.
Lastly, in resolution 12 the Board of Directors is seeking an eighteen-month authorization to trade in the company's shares with the maximum number of shares that may be bought back not to exceed the legal ceiling of 10% of the company's capital stock. Under this authorization shares may be bought back for a number of reasons, including maintaining a liquid market for the company's shares and for allocation to employees and/or corporate officers in connection with stock option or share grant plans.
| (in € thousands) | Notes | 2010 | 2009 | 2008 |
|---|---|---|---|---|
| Services sold | 140,575 | 63,260 | 75,142 | |
| Sales | 140,575 | 63,260 | 75,142 | |
| Capitalized production | 0 | 0 | (228) | |
| External services | (142,941) | (71,989) | (76,673) | |
| Taxes other than on income | (1,711) | (1,950) | (1,228) | |
| Wages and salaries | (10,215) | (8,500) | (11,505) | |
| Payroll taxes | (4,234) | (3,286) | (5,445) | |
| Depreciation and provisions for impairment (net of reversals) and expense transfers |
3 | (6,616) | 4,314 | 7,172 |
| Other income and expenses, net | 28,731 | 12,611 | 17,235 | |
| Total operating expenses | (136,986) | (68,800) | (70,672) | |
| OPERATING INCOME (LOSS) | 3,589 | (5,540) | 4,470 | |
| Financial income | 4 | 638,449 | 315,543 | 158,121 |
| Interest and other fi nancial expenses | 4 | (90,142) | (138,597) | (324,792) |
| NET FINANCIAL INCOME (EXPENSE) | 4 | 548,307 | 176,946 | (166,671) |
| OPERATING INCOME (LOSS) AFTER NET FINANCIAL INCOME (EXPENSE) |
551,896 | 171,406 | (162,201) | |
| Non-recurring income | 5 | 1,812 | 44,141 | 195 |
| Non-recurring expense | 5 | (5,157) | (3,334) | (1,186) |
| NET NON-RECURRING INCOME (EXPENSE) |
5 | (3,345) | 40,807 | (991) |
| Employee profi t-sharing | ||||
| Corporate income tax | 6 | 7,988 | 20,950 | 26,683 |
| NET INCOME (LOSS) | 556,539 | 233,163 | (136,509) |
| Dec. 31, 2010 | Dec. 31, 2009 |
Dec. 31, 2008 |
||||
|---|---|---|---|---|---|---|
| ASSETS (in € thousands) |
Notes | Gross amounts |
Depreciation and provisions |
Net amounts |
Net amounts |
Net amounts |
| Intangible assets | 7 | 9,357 | 9,203 | 154 | 195 | 1,967 |
| Property, plant and equipment | 8 | 10,493 | 9,270 | 1,223 | 2,068 | 2,994 |
| Investments | 9 | 2,995,179 | 394,918 | 2,600,261 | 1,720,641 | 1,456,523 |
| TOTAL FIXED ASSETS | 3,015,029 | 413,391 | 2,601,638 | 1,722,904 | 1,461,484 | |
| Trade receivables | 1,186 | 1,186 | 1,850 | 44,730 | ||
| Other receivables | 10 | 748,329 | 849 | 747,480 | 825,022 | 805,755 |
| Marketable securities and equivalent receivables |
11 | 10,429 | 4,548 | 5,881 | 4,263 | 2,676 |
| Cash at bank and in hand | 12,748 | 12,748 | 23,215 | 3,218 | ||
| TOTAL CURRENT ASSETS | 772,692 | 5,397 | 767,295 | 854,350 | 856,379 | |
| Prepaid expenses | 12 | 1,781 | 1,781 | 5,512 | 9,265 | |
| Conversion losses | 5 | 5 | 14 | 24 | ||
| Deferred charges | 13 | 11,137 | 11,137 | 17,875 | 9,367 | |
| TOTAL ASSETS | 3,800,644 | 418,788 | 3,381,856 | 2,600,655 | 2,336,519 |
| EQUITY AND LIABILITIES | ||||
|---|---|---|---|---|
| (in € thousands) | Notes | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
| Capital | 772,567 | 626,139 | 170,765 | |
| Additional paid-in capital | 288,756 | 130,043 | 198,846 | |
| Legal reserve | 28,734 | 17,077 | 17,077 | |
| Untaxed reserves | 8,939 | 8,939 | 8,939 | |
| Other reserves | ||||
| Retained earnings | 221,505 | 77,026 | ||
| Net income for the year | 556,539 | 233,163 | (136,509) | |
| Untaxed provisions | ||||
| TOTAL SHAREHOLDERS' EQUITY | 14 | 1,877,040 | 1,015,361 | 336,144 |
| Provisions for contingencies and charges | 15 | 5,580 | 16,527 | 3,943 |
| TOTAL DEBT | 16 | 1,281,390 | 1,355,878 | 1,552,884 |
| Operating payables | 17 | 24,373 | 20,563 | 25,058 |
| Sundry payables | 17 | 193,334 | 192,088 | 418,043 |
| TOTAL PAYABLES | 217,707 | 212,651 | 443,101 | |
| Prepaid income | 107 | 238 | 398 | |
| Conversion gains | 32 | 49 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
3,381,856 | 2,600,655 | 2,336,519 |
| (in € millions) | 2010 | 2009 | 2008 |
|---|---|---|---|
| I – OPERATING ACTIVITIES | |||
| Net income (loss) | 556.5 | 233.2 | (136.5) |
| Depreciation and amortization | 9.3 | 6.9 | 3.1 |
| Increase (decrease) in provisions and other long-term liabilities |
(538.7) | (181.2) | 188.1 |
| Capital (gains) losses on disposals of fi xed assets | (1.1) | (41.7) | |
| Cash fl ow from operations | 26.0 | 17.2 | 54.7 |
| (Increase) decrease in working capital requirements | 22.5 | 10.1 | 9.5 |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 48.5 | 27.3 | 64.2 |
| II – INVESTING ACTIVITIES | |||
| Acquisitions of intangible assets and property, plant and equipment |
(0.2) | (0.8) | |
| Acquisitions of investments in subsidiaries and a liates | (39.4) | (84.3) | (14.8) |
| Acquisitions of other investments | (0.1) | ||
| Disposals of intangible assets and property, plant and equipment |
1.3 | ||
| Disposals of investments | 1.1 | 42.8 | 0.1 |
| Disposals of other fi nancial assets | 1.1 | ||
| Other reductions in property, plant and equipment | 0.2 | ||
| NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES | (38.3) | (39.4) | (15.3) |
| NET CASH (USED) PROVIDED BY OPERATING AND INVESTING ACTIVITIES (I)+(II) |
10.2 | (12.1) | 48.9 |
| III – FINANCING ACTIVITIES | |||
| Issuance of shares paid up in cash | 455.4 | ||
| Charges posted to additional paid-in capital | (9.0) | (9.3) | |
| Dividends paid | |||
| Issuance of debt securities and increase in borrowings | 139.1 | 469.9 | 1,101.8 |
| Repayments of borrowings | (213.6) | (667.0) | (1,160.4) |
| Changes in inter-company borrowings | 62.8 | (216.9) | 6.2 |
| NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES | (20.7) | 32.1 | (52.4) |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(10.5) | 20.0 | (3.5) |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 23.2 | 3.2 | 6.7 |
| CASH AND CASH EQUIVALENTS AT END OF YEAR | 12.7 | 23.2 | 3.2 |
The parent company financial statements have been prepared in accordance with French generally accepted accounting principles. The main policies applied are as follows:
Property, plant and equipment are stated at acquisition or production cost. Depreciation is calculated by the straight-line method over the estimated useful life of the assets, as follows:
Gross value is equal to contribution value or cost. A provision is made if the value in use of a security is lower than its entry value. Value in use is based on the subsidiary's revalued net assets, profitability and future outlook.
For investments intended to be sold, value-in-use estimates also take into account prices at which prior transactions were carried out, if any.
Marketable securities are stated at the lower of cost and market value.
Unhedged payables and receivables in foreign currency are translated at the exchange rate prevailing on the transaction date. At the year-end, they are translated at the year-end exchange rate and the resulting gain or loss is recorded in the balance sheet under "Conversion losses" or "Conversion gains".
Hedged payables and receivables are translated at the hedging rate.
The vested rights of employees under supplementary pension and retirement bonus plans are determined on an actuarial basis using the projected unit credit method. The valuation takes into account the probability of employees staying with the company up to retirement age and expected future salary levels. Benefit obligations are partially funded by contributions to external funds. In cases where the funds are permanently allocated to the benefit plan concerned, their value is deducted from the related liability.
Unusual or non-recurring items are included under "Nonrecurring income" and "Non-recurring expense".
Interest-rate risks are hedged, where appropriate, using financial instruments traded on organized or over-the-counter markets.
Hedging gains and losses are recognized on a symmetrical basis with the loss or gain on the hedged item.
No significant post-balance sheet events have occurred since the end of the year.
| (in € thousands) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Provision reversals | 1,674 | 341 | 2,280 |
| Expense transfers (1) | 1,695 | 13,801 | 9,598 |
| Depreciation and amortization | (9,310) | (6,894) | (3,109) |
| Provisions for impairment of current assets | |||
| Provisions for contingencies and charges | (675) | (2,934) | (1,597) |
| TOTAL | (6,616) | 4,314 | 7,172 |
| (1) Including: | |||
| Transfer of fees included in "External services" relating to: | |||
| - Syndicated credit facility | 1,695 | 7,891 | 9,598 |
| - Convertible bond loan | 3,706 |
Net financial income (expense) breaks down as follows:
| (in € thousands) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Financial income | |||
| Income from investments in subsidiaries and a liates (1) | 40,531 | 43,712 | 58,974 |
| Interest income | 32,827 | 64,798 | 89,506 |
| Net gains from sales of marketable securities | |||
| Provision reversals (2) | 565,091 | 207,033 | 9,641 |
| TOTAL | 638,449 | 315,543 | 158,121 |
| Interest and other fi nancial expenses | |||
| Interest expense | 62,802 | 115,369 | 126,342 |
| Charges to provisions for impairment of investments (3) | 27,328 | 13,205 | 179,449 |
| Charges to other provisions and other fi nancial expenses | 12 | 10,023 | 19,001 |
| TOTAL | 90,142 | 138,597 | 324,792 |
| NET FINANCIAL INCOME (EXPENSE) | 548,307 | 176,946 | (166,671) |
(1) This item corresponds to dividends received from subsidiaries and affiliates:
It includes:
c in 2010: dividends received from Faurecia Systèmes d'Échappement and Financière Faurecia amounting to €10,168 thousand and €24,816 thousand respectively;
c in 2009: dividends received from Faurecia Systèmes d'Échappement and Faurecia Automotive GmbH amounting to €20,053 thousand and €12,906 thousand respectively;
c in 2008: a dividend received from Faurecia Investments amounting to €40,352 thousand.
(2) Including:
| - reversals of provisions for impairment of Trécia shares | 1,956 | 6,600 | |
|---|---|---|---|
| - reversals of provisions for Faurecia Automotive Holdings shares | 469,200 | 121,800 | |
| - reversals of provisions for Faurecia Automotive GmbH shares | 82,234 | 73,300 | |
| - reversals of provisions for financial contingencies and charges | 11,701 | 11,933 | 2,841 |
| (3) Including: | |||
| - Faurecia Automotive Holding shares | 107,700 | ||
| - Faurecia Industries shares | 42,153 | ||
| - Faurecia USA Holdings Inc shares | 25,000 | ||
| - Faurecia Sistemas de Escape Argentina shares | 7,328 | ||
| - Eak SAS shares | 2,420 | ||
| - Eak SNC shares | 785 | ||
| - Sté Internationale de Participation (SIP) shares | 20,000 | 10,000 | 4,596 |
The net charges to provisions for impairment of investments recorded in the parent company financial statements do not correspond to the asset impairment losses recorded in the consolidated financial statements due to the application of different accounting policies.
Net non-recurring income (expense) breaks down as follows:
| Non-recurring income From management transactions (1) 667 0 120 Proceeds from disposals of fi xed assets (2) 1,145 44,141 75 Provision reversals TOTAL 1,812 44,141 195 Non-recurring expense On management transactions (3) 5,071 34 1,185 Carrying amount of fi xed and fi nancial assets sold (4) 86 3,300 1 Depreciation, amortization and charges to provisions TOTAL 5,157 3,334 1,186 NET NON-RECURRING INCOME (EXPENSE) (3,345) 40,807 (991) (1) Including: Compensation for contract termination 667 (2) Including: 1,145 42,772 - Proceeds from the sale of investments in subsidiaries and affiliates: (Shares of Ecia South Africa sold to Faurecia Exhaust Systems South Africa for 1,121 in 2010) (Shares of Faurecia Exhaust Systems South Africa sold to Faurecia Interior Systems South Africa for 42,772 in 2009) (3) Including: Restructuring costs 365 Compensation for contract termination 4,741 820 Tax arrears other than IT 276 (4) - Carrying amount of shares of investments in subsidiaries and affiliates sold or transferred (including shanes of Faurecia Exhaust Systems South Africa for 1,073 in 2009) 1,073 |
(in € thousands) | 2010 | 2009 | 2008 |
|---|---|---|---|---|
| - Carrying amount of fixed assets sold to Faurecia Sièges d'Automobile | ||||
| in 2009 1325 - Carrying amount of pre-emptive subscription rights sold in 2009 889 |
Faurecia has elected to file a consolidated tax return. The resulting tax group includes the parent company and its main French subsidiaries. This system allows Faurecia to obtain group relief by offsetting any tax losses recorded by the company and certain of its subsidiaries against the taxable income of other subsidiaries in the tax group:
| (in € thousands) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Tax benefi t arising from group relief | 7,988 | 18,100 | 11,221 |
| Repayment of a carry back credit | 2,850 | 15,432 | |
| Other tax income (expense) – tax audit | 0 | 30 | |
| TOTAL | 7,988 | 20,950 | 26,683 |
These may be broken down as follows:
| (in € thousands) | Patents and licenses |
Other intangible assets |
Intangible assets in progress |
Total |
|---|---|---|---|---|
| As of January 1, 2008 | 344 | 393 | 1,347 | 2,084 |
| Additions (including own work capitalized) | 1,855 | 1,855 | ||
| Disposals | 0 | |||
| Funding of depreciation, amortization and impairment provisions |
(188) | (437) | (625) | |
| Depreciation written om on disposals | 0 | |||
| Other movements | (1,347) | (1,347) | ||
| Net as of December 31, 2008 | 156 | 1,811 | 0 | 1,967 |
| Additions (including own work capitalized) | 205 | 205 | ||
| Disposals | (5,191) | (2,411) | (7,602) | |
| Funding of depreciation, amortization and impairment provisions |
(76) | (618) | (694) | |
| Depreciation written om on disposals | 5,191 | 1,128 | 6,319 | |
| Other movements | ||||
| Net as of December 31, 2009 | 80 | 115 | 0 | 195 |
| Additions (including own work capitalized) | 22 | 22 | ||
| Disposals | 0 | |||
| Funding of depreciation, amortization and impairment provisions |
(63) | (63) | ||
| Depreciation written om on disposals | 0 | |||
| Other movements | ||||
| Net as of December 31, 2010 | 80 | 74 | 0 | 154 |
Property, plant and equipment can be broken down as follows:
| Dec. 31, 2010 | Dec. 31, 2009 |
Dec. 31, 2008 |
||||
|---|---|---|---|---|---|---|
| (in € thousands) | Gross | Net | Net | Net | ||
| Land | 53 | 53 | 53 | 53 | ||
| Buildings | 272 | 0 | 0 | 0 | ||
| Other property, plant and equipment | 10,168 | 1,170 | 2,015 | 2,941 | ||
| TOTAL | 10,493 | 1,223 | 2,068 | 2,994 |
| (in € thousands) | Land | Buildings | Other property, plant and equipment |
Property, plant and equipment in progress |
Total |
|---|---|---|---|---|---|
| As of January 1, 2008 | 54 | 0 | 3,872 | 0 | 3,926 |
| Additions (including own work capitalized) | 63 | 63 | |||
| Disposals | (1) | (10) | (11) | ||
| Funding of depreciation, amortization and impairment provisions |
(994) | (994) | |||
| Depreciation written om on disposals | 10 | 10 | |||
| Net as of December 31, 2008 | 53 | 0 | 2,941 | 0 | 2,994 |
| Additions (including own work capitalized) | 22 | 22 | |||
| Disposals | (3) | (336) | (339) | ||
| Funding of depreciation, amortization and impairment provisions |
(906) | (906) | |||
| Depreciation written om on disposals | 3 | 294 | 297 | ||
| Net as of December 31, 2009 | 53 | 0 | 2,015 | 0 | 2,068 |
| Additions (including own work capitalized) | 14 | 14 | |||
| Disposals | (280) | (280) | |||
| Funding of depreciation, amortization and impairment provisions |
(813) | (813) | |||
| Depreciation written om on disposals | 234 | 234 | |||
| Net as of December 31, 2010 | 53 | 0 | 1,170 | 0 | 1,223 |
| Dec. 31, 2010 | Dec. 31, 2009 |
Dec. 31, 2008 |
|||
|---|---|---|---|---|---|
| (in € thousands) | Gross | Provisions | Net | Net | Net |
| Investments in subsidiaries and a liates | 2,993,996 | 394,918 | 2,599,078 | 1,719,550 | 1,454,949 |
| Loans to subsidiaries and a liates | 1,149 | 1,149 | 1,091 | 2,029 | |
| Other long-term investments | 34 | 34 | 0 | 0 | |
| TOTAL | 2,995,179 | 394,918 | 2,600,261 | 1,720,641 | 1,456,523 |
Movements in investments in subsidiaries and affiliates break down as follows:
| (in € thousands) | Gross | Provisions | Net |
|---|---|---|---|
| As of January 1, 2008 | 2,542,603 | 930,226 | 1,612,377 |
| Capital increases | 14,766 | 14,766 | |
| Charges to and reversals of provisions | 172,649 | (172,649) | |
| Net as of December 31, 2008 | 2,557,369 | 1,102,875 | 1,454,494 |
| Capital increases | 84,324 | 84,324 | |
| Charges to and reversals of provisions | (181,895) | 181,895 | |
| Sale of shares | (1,163) | (1,163) | |
| Net as of December 31, 2009 | 2,640,530 | 920,980 | 1,719,550 |
| Acquisitions | 330,000 | 330,000 | |
| Capital increases | 23,507 | 23,507 | |
| Charges to and reversals of provisions | (526,062) | 526,062 | |
| Sale of shares | (41) | (41) | |
| Net as of December 31, 2010 | 2,993,996 | 394,918 | 2,599,078 |
Loans to subsidiaries and affiliates are due in more than one year.
| (in € thousands) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Cash advances | 732,782 | 795,316 | 795,863 |
| Provisions against cash advances | (849) | (842) | (10,150) |
| Tax due by subsidiaries in the tax group | 175 | 10,939 | 1,622 |
| Prepaid and recoverable corporate income tax | 11,502 | 8,127 | 14,577 |
| Securitization deposit | |||
| Recoverable VAT | 3,039 | 2,963 | 924 |
| Sundry receivables | 782 | 1,889 | 2,665 |
| Other | 49 | 6,630 | 254 |
| TOTAL | 747,480 | 825,022 | 805,755 |
All of the company's receivables are due within one year.
As of December 31, 2010, marketable securities corresponded mainly to 270,814 Faurecia shares with a carrying amount of €5.9 million (compared with the same number of shares with a carrying amount of €4.3 million as of December 31, 2009), reflecting the following transactions:
c 30,000 shares purchased in 2005;
c 33,650 shares sold in 2006;
The carrying amount of this item as of December 31, 2010 is presented net of a provision for impairment amounting to €4.5 million (versus €6.2 million as of December 31, 2009.)
The above shares are being held for allocation on exercise of stock options granted to executives and managers of the Group.
At its Meetings held on September 4, 2000 and April 26, 2001, the Board of Directors decided to grant, respectively, 297,180 stock options with an exercise price of €34.19 each and 50,895 stock options with an exercise price of €46.59 each (N.B.: the number of options and their exercise price have been adjusted following the rights issue carried out in May 2009.)
| (in € thousands) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Premiums on currency and interest-rate instruments | 419 | 3,692 | 7,806 |
| Commissions and bank charges | 94 | 61 | 459 |
| Interest on commercial paper | 364 | 401 | |
| Rent | 864 | 1,254 | 934 |
| Other | 40 | 104 | 66 |
| TOTAL | 1,781 | 5,512 | 9,265 |
As of December 31, 2010 deferred charges included the following:
| (in € thousands) | Balance at Dec. 31, 2009 |
Distribution decision at the AGM of May 26, 2010 |
Increase in capital stock |
Result for the year |
Balance at Dec. 31, 2010 |
|---|---|---|---|---|---|
| Capital | 626,139 | 146,428 | 772,567 | ||
| Additional paid-in capital | 130,043 | 158,713 (1) | 288,756 | ||
| Legal reserve | 17,077 | 11,658 | 28,735 | ||
| Untaxed reserves | 8,939 | 8,939 | |||
| Other reserves | 0 | 0 | |||
| Retained earnings | 0 | 221,505 | 221,505 | ||
| Net income for the year | 233,163 | (233,163) | 556,538 | 556,538 | |
| Untaxed provisions | 0 | 0 | |||
| TOTAL | 1,015,361 | 0 | 305,141 | 556,538 | 1,877,040 |
(1) After inclusion of contribution costs totaling €9,025 thousand.
| (in € thousands) | As of Dec. 31, 2010 |
As of Dec. 31, 2009 |
As of Dec. 31, 2008 |
|---|---|---|---|
| Provisions for contingencies | |||
| Foreign exchange losses | 5 | 14 | 24 |
| Other | 2,251 | 13,646 | 2,528 |
| SUB-TOTAL | 2,256 | 13,660 | 2,552 |
| Provisions for charges | |||
| Provisions for pensions and other post employment benefi ts | 3,321 | 2,757 | 1,269 |
| Other provisions for charges | 3 | 110 | 122 |
| SUB-TOTAL | 3,324 | 2,867 | 1,391 |
| TOTAL | 5,580 | 16,527 | 3,943 |
(1) Provisions for pensions and other post-employment benefits cover the following costs payable by the company on retirement of employees: - statutory lump-sum bonuses;
- supplementary pension benefits for certain employees.
For the latter, it is freed of its commitments by a capital deduction that covers the annuity for the insurance company, which is responsible for the service; the deduction is made from a fund established to cover pension benefits which are not yet fully acquired. Consequently, the company has no further pension commitments towards former employees.
The benefit obligation has been estimated by independent actuaries, using a discount rate of 4.15% and an inflation rate of 2%.
| (in € thousands) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Projected benefi t obligation | 5,611 | 5,500 | 6,241 |
| Hedging of obligations | (1,395) | (1,715) | (1,636) |
| Deferred items | (895) | (1,028) | (3,336) |
| PROVISION | 3,321 | 2,757 | 1,269 |
| (in € thousands) | 2010 | 2009 | 2008 |
|---|---|---|---|
| Service cost | (335) | (402) | (561) |
| Restatement of projected benefi ts | (292) | (366) | (399) |
| Return on plan assets | 64 | 74 | (4) |
| Curtailments and settlements | 308 | ||
| Amortization of deferred dim erences | (62) | (794) | (613) |
| Other changes | |||
| TOTAL | (625) | (1,488) | (1,269) |
| (in € thousands) | Balance as of Dec. 31, 2009 |
Additions | Expenses charged |
Reversals (surplus provisions) |
Payments to retirement funds |
Balance as of Dec. 31, 2010 |
|---|---|---|---|---|---|---|
| Provisions for contingencies | 13,660 | 56 | (11,460) | 2,256 | ||
| Provisions for pension and other post-employment obligations |
2,757 | 625 | (61) | 3,321 | ||
| Other provisions for charges | 110 | (107) | 3 | |||
| TOTAL | 16,527 | 681 | (61) | (11,567) | 0 | 5,580 |
| (in € thousands) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Bonds | 8,500 | 300,000 | |
| Convertible bonds | 211,310 | 211,310 | |
| Borrowings from banks | 917,037 | 1,004,354 | 1,053,842 |
| Borrowings from PSA | 142,000 | 128,000 | 194,000 |
| Other | 11,043 | 3,714 | 5,042 |
| TOTAL | 1,281,390 | 1,355,878 | 1,552,884 |
As of December 31, 2010, 82.7% of the company's debt was at floating rates. This debt is hedged through caps as described in Note 20-1.
As of December 31, 2010, the company's debt breaks down as follows by maturity:
| (in € thousands) | As of Dec. 31, 2010 |
|---|---|
| Maturing in 2011 | 282,789 |
| Maturing in 2012 | 58 |
| Maturing in 2013 | 787,112 |
| Maturing in 2014 | 56 |
| Maturing in 2015 | 211,375 |
| TOTAL | 1,281,390 |
Since November 28, 2008, Faurecia has had access to a €1.42 billion credit facility.
This facility comprises a syndicated bank loan of €1.17 billion and a €250 million loan from Faurecia's majority shareholder, PSA Peugeot Citroën. The two loans are correlated so that the drawdowns made by Faurecia on the PSA Peugeot Citroën loan are proportionate to those made on the syndicated bank loan, based on the same rates and periods.
The overall facility is divided into a €20 million tranche expiring in November 2011, a €690 million tranche expiring in November 2013 following the exercise by the banks and PSA of an option to extend the expiration, and a €710 million tranche expiring in November 2013.
As of December 31, 2010 the undrawn portion of this credit facility was €613 million.
The contracts relating to this credit facility include covenants, notably a change of control clause relating to PSA and provisions concerning compliance with consolidated financial ratios. As of December 31, 2010, the Group complied with all of these ratios, of which the amounts are presented below:
| Adjusted net debt( )/ EBITDA( ) * Ceiling |
EBITDA( )/net ** interest Floor |
|
|---|---|---|
| December 31, 2010 | 4:1 | 4.25:1 |
| June 30, 2011 and subsequent six-month periods | 3.5:1 | 4.50:1 |
* Adjusted net debt = consolidated net debt + adjustments for certain obligations undertaken, based on definitions provided in the credit facility agreement (e.g. mortgages or collateralized liabilities).
** Operating income plus depreciation, amortization and funding of provisions for impairment of property, plant and equipment and intangible assets, corresponding to the past twelve months.
Furthermore, any asset disposal representing over 15% of the Group's total consolidated assets requires the prior approval of banks representing two-thirds of the syndicate.
On November 26, 2009 Faurecia issued €211.3 million worth of OCEANE bonds convertible into new shares or exchangeable for existing shares and maturing on January 1, 2015. These bonds bear annual interest of 4.50% and are payable on January 1 each year, as from January 1, 2011. The nominal amount is €18.69 per bond.
Subject to certain conditions, Faurecia may redeem the bonds early, at any time beginning on January 15, 2013, at a price equal to their par value plus accrued interest, provided that all of the outstanding bonds are redeemed. The bonds can be converted by their holders at any time as from their date of issue. The criteria relating to their compulsory early redemption include a change of control clause relating to PSA.
On October 5, 2005 Faurecia carried out a €300 million bond issue due in October 2010. As the bond covenants were breached as of June 30, 2009, the bondholders were entitled to require their early redemption. Out of the initial amount issued, €291.5 million worth of the bonds were redeemed on August 14, 2009, the balance was covered on the expiry date on October 5, 2010. The early redemption in August 2009 was partially financed by a €205 million credit facility extended by a pool of French banks. The credit facility, which was to expire at end-January 2011, was subject to the same financial ratio covenants as the syndicated credit facility, and it was prepaid in full on August 17, 2010.
| (in € thousands) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Trade payables | 17,774 | 15,956 | 21,166 |
| Other operating payables | 6,599 | 4,607 | 3,892 |
| SUB-TOTAL OPERATING PAYABLES | 24,373 | 20,563 | 25,058 |
| Cash advances from subsidiaries | 190,883 | 182,112 | 407,513 |
| Other | 2,451 | 9,976 | 10,530 |
| SUB-TOTAL OTHER PAYABLES | 193,334 | 192,088 | 418,043 |
| TOTAL | 217,707 | 212,651 | 443,101 |
Deferred taxes relate to:
c tax savings arising from the use of tax losses of subsidiaries in the tax group which will have to be restored to them if and when they return to profit.
Deferred taxes are computed based on the tax rate for the year in which they are expected to reverse (i.e. 34.43% for 2010 and beyond.)
Deferred taxes can be analyzed as follows:
| (in € thousands) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Deferred tax liabilities on temporary dim erences | |||
| Deferred tax liabilities corresponding to tax savings arising from the use of the tax losses of companies in the tax group |
(481,653) | (449,212) | (380,830) |
| SUB-TOTAL DEFERRED TAX LIABILITIES | (481,653) | (449,212) | (380,830) |
| Tax paid on taxable income that is not yet recognized | 1,212 | 1,018 | 506 |
| Charges recognized that are deductible for tax purposes in future years |
2,203 | 3,286 | 6,906 |
| Future tax savings on tax loss carry forwards of the tax group | 402,740 | 365,064 | 300,338 |
| SUB-TOTAL DEFERRED TAX ASSETS | 406,155 | 369,368 | 307,750 |
| NET DEFERRED TAX (LIABILITIES) ASSETS | (75,498) | (79,844) | (73,080) |
As of December 31, 2010 this item included €21.6 million in guarantees given on behalf of direct and indirect subsidiaries and affiliates (versus €13.7 million in 2009, and €9.2 million at December 31, 2008.)
Caps, swaps and other options in euros and US dollars have been set up to hedge interest-rate risk on the interest payable on borrowings between January 2010 and December 2013.
Positions for 2011 to 2013 can be analyzed as follows by type of financial instrument:
| Notional amounts by maturity | ||||
|---|---|---|---|---|
| < 1 year | 1 to 5 years | > 5 years | ||
| 1,600 | 150 | - | ||
| 157 | 279 | - | ||
| - | ||||
| 1,757 | 429 | - | ||
Premiums reported under assets as of December 31, 2009 amounted to €416,000 and will be paid in installments between 2011 and 2012.
Currency risk on inter-company loans to subsidiaries outside the eurozone that are denominated in the subsidiaries' functional currency but referenced in euros is hedged through swaps.
As of December 31, 2010 currency swaps in place concerned MXN 170 million, USD 385.9 million, RUB 234 million and ZAR 188 million.
| 2010 | 2009 | 2008 | |
|---|---|---|---|
| Management | 40 | 42 | 44 |
| Other | 1 | 1 | 1 |
| TOTAL | 41 | 43 | 45 |
In 2010, total attendance fees paid to directors amounted to €212,510 compared with €232,750 in 2009.
| (in € thousands) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| In the income statement | |||
| c Services invoiced to subsidiaries | 159,363 | 75,540 | 91,996 |
| c Income from subsidiaries and a liates | 54,263 | 69,373 | 86,761 |
| c Interest income | 11,747 | 19,969 | 10,612 |
| c Services invoiced by subsidiaries | (124,670) | (39,744) | (49,514) |
| c Interest expense | (3,522) | (3,860) | (20,262) |
| In the balance sheet | |||
| c Loans to subsidiaries and a liates | 1,149 | 1,090 | 1,118 |
| c Trade and other receivables | 733,890 | 808,679 | 839,244 |
| c Trade and other payables | 204,787 | 192,823 | 424,290 |
Related companies: Related companies are companies that are fully consolidated in the Faurecia Group consolidated financial statements.
Peugeot SA, 75, avenue de la Grande-Armée – 75116 Paris, France.
| 2010 | 2009 | 2008 | 2007 | 2006 | |
|---|---|---|---|---|---|
| (in €) | (in €) | (in €) | (in €) | (in €) | |
| 1 - Capital stock at year-end | |||||
| a) Capital stock | 772,567,096 | 626,139,528 | 170,765,336 | 170,765,336 | 169,814,652 |
| b) Number of ordinary shares outstanding | 110,366,728 | 89,448,504 | 24,395,048 | 24,395,048 | 24,259,236 |
| c) Maximum number of shares to be issued: on exercise of stock options |
1,523,998 | 1,594,223 | 1,435,183 | 1,258,303 | 1,265,715 |
| 2 – Operations and results | |||||
| a) Net sales | 140,574,549 | 63,259,930 | 75,141,626 | 73,123,665 | 87,107,622 |
| b) Income before tax, employee profi t sharing and depreciation, amortization and provisions for impairment |
19,110,764 | 37,896,293 | 28,051,012 | 81,680,821 | 213,707,224 |
| c) Corporate income tax (1) | (7,988,370) | (20,949,860) | (26,683,576) | (24,197,058) | (10,521,688) |
| d) Employee profi t-sharing | 0 | 0 | 0 | 0 | 0 |
| e) Income after tax, employee profi t-sharing and depreciation, amortization and provisions for impairment |
556,538,732 | 233,163,289 | (136,508,655) | 77,154,196 | (165,255,090) |
| f) Total dividend (2) (3) | 27,591,682 | ||||
| 3 – Per-share data | |||||
| a) Income after tax and employee profi t sharing but before depreciation, amortization and provisions for impairment |
0.25 | 0.66 | 2.24 | 4.34 | 9.24 |
| b) Income after tax, employee profi t-sharing and depreciation, amortization and provisions for impairment |
5.04 | 2.61 | (5.60) | 3.16 | (6.81) |
| c) Dividend per share | 0.25 | ||||
| 4 – Employee data | |||||
| a) Average number of employees | 41 | 43 | 45 | 45 | 48 |
| b) Total payroll | 10,214,816 | 8,500,376 | 11,504,857 | 13,553,151 | 9,784,935 |
| c) Total benefi ts paid during the year (social security, employee benefi t, etc.) |
4,234,177 | 3,285,738 | 5,444,637 | 7,356,994 | 3,840,829 |
(1) The amounts in brackets represent tax benefits arising from group relief.
(2) The 2010 net dividend is pending approval by the AGM of profit distribution for the year.
(3) That part of the 2010 dividend corresponding to shares that the company holds on its own behalf at the payment date will be allocated to "Retained earnings".
| (in €) | |
|---|---|
| Net income for the year | 556,538,732 |
| Recommended appropriation: | |
| 1 – Source | |
| Retained earnings carried forward from prior years | 221,505,125 |
| Net income for the year | 556,538,732 |
| 778,043,857 | |
| 2 – Appropriation | |
| Legal reserve | 27,826,937 |
| Dividend (1) | 27,591,682 |
| Additional paid-in capital | |
| Retained earnings | 722,625,238 |
| 778,043,857 |
(1) That part of the 2010 dividend corresponding to shares that the company holds on its own behalf at the payment date will be allocated to "Retained earnings".
Dividends for the last three years were as follows:
| Number of shares | Dividend paid out | |
|---|---|---|
| Year | (in €) | (in €) |
| 2007 | 24,395,048 | - |
| 2008 | 24,395,048 | - |
| 2009 | 89,448,504 | - |
| Recommended for 2010 (1) | 110,366,728 | 0.25 |
(1) Including treasury stock.
| Number | Type and nominal amount | Net (in € thousands) |
|
|---|---|---|---|
| 1. Main securities | |||
| a) Investments in subsidiaries and a liates | |||
| Faurecia Systèmes d'Échappements | 5,648,700 | Shares – €15 | 110,316 |
| Faurecia Investments | 5,043,998 | Shares – €15 | 452,488 |
| Faurecia Industries | 539,200 | Shares – €8.45 | 53,531 |
| Faurecia USA Holdings Inc. | 3,600 | Shares – USD 0.001 | 310,299 |
| Faurecia Emissions Control Technologies USA, LLC. | 1 | Equities | 125,400 |
| Sté Internationale de Participations (SIP) | 9,999,999 | Equities | 0 |
| Faurecia Automotive España S.L. | 126,859 | Shares – €6 | 76,449 |
| SFEA Société Foncière pour l'Équipement Automobile | 642,499 | Shares – €15 | 9,947 |
| Financière Faurecia | 2,200,000 | Shares – €15 | 53,841 |
| Trécia | 6,762 | Shares – €15 | 8,556 |
| Faurecia Exhaust Systems sro. | 1 | Shares | 19,759 |
| Faurecia Magyarorszag Kipufogo-Rendszer Kft | 24,900,000 | Shares – HUF 1 | 0 |
| Faurecia Systemy Kierownicze SpZoo | 20 | Shares – PLN 500 | 3 |
| Faurecia Sistemas de Escape Argentina SA | 1,802,379 | Shares – Peso 1 | 0 |
| EAK – Composants pour l'Industrie Automobile SAS | 158,722 | Shares – €15 | 0 |
| Faurecia Tongda Exhaust System (Wuhan) Co., Ltd | 1 | Shares | 2,217 |
| EAK – Composants pour l'Industrie Automobile SNC | 51,510 | Shares – €15 | 0 |
| Faurecia Honghu Exhaust Systems Shanghai Co, Ltd | 1 | Shares | 1,212 |
| Faurecia Automotive Holdings | 23,422,554 | Shares – €1 | 918,260 |
| Faurecia Automotive GmbH (formerly SAI Automotive AG) | 1 | Shares | 225,020 |
| Faurecia Services Groupe | 2,500 | Shares – €16 | 0 |
| Faurecia Exhaust International | 1,932,750 | Shares – €15 | 27,051 |
| Faurecia Sistemas de Escape Portugal Lda | 1 | Shares | 1 |
| Flamant bleu | 2,500 | Shares – €16 | 40 |
| Toucan participations SA | 2,494 | Shares – €16 | 40 |
| Toucan investissements SA | 2,494 | Shares – €16 | 40 |
| Faurecia Exhaust Systems Moravia Sro | 200,000 | Shares – CZK 1 | 8 |
| ET Dutch Holdings Cooperatie UA | Contribution of €204,600 thousand |
204,600 | |
| SUB-TOTAL | 2,599,078 | ||
| 2. Marketable securities | |||
| Faurecia | 270,814 | Shares – €7 | 5,881 |
| TOTAL | 2,604,959 |
| (in € thousands) | Capital | Reserves and retained earnings before appropriation of income |
% interest | Gross value of investment |
|
|---|---|---|---|---|---|
| 1. Detailed information | |||||
| A. Subsidiaires (at least 50% owned) | |||||
| Faurecia investments (ex Bertrand Faure SP) | 75,660 | 53,869 | 100 | 452,488 | |
| Faurecia Emissions Control Technologies, USA, LLC | 5,090 | 15,113 | 100 | 125,400 | |
| Financière Faurecia | 33,000 | 43,210 | 100 | 53,841 | |
| Sté Internationale de Participations "SIP" | 10,000 | (5,191) | 100 | 60,196 | |
| Faurecia USA Holdings Inc. | 125 | 612,853 | 83 | 475,299 | |
| Eak SAS | 4,668 | 3,247 | 51 | 2,420 | |
| ET Dutch Holdings Cooperatie UA | 87,543 | (6,280) | 100 | 204,600 | |
| Faurecia Sistemas de Escape Argentina | 352 | 195 | 98 | 25,975 | |
| Faurecia Industries | 4,556 | (4,929) | 100 | 191,683 | |
| Faurecia Systèmes d' Échappements | 84,731 | 39,753 | 100 | 110,316 | |
| SFEA Société Foncière pour l'Equipement Automobile | 9,638 | 664 | 100 | 9,947 | |
| Faurecia Exhaust Systems SRO (Tchéquie) | 21,168 | (8,732) | 100 | 19,759 | |
| Faurecia Automotive Holdings | 23,423 | 222,768 | 100 | 918,260 | |
| Faurecia Exhaust International | 28,991 | (1,831) | 100 | 29,302 | |
| B. Ag liates (10% to 50% owned) | |||||
| Faurecia Automotive Espana SL | 7,138 | 337,459 | 11 | 76,449 | |
| Faurecia Automotive GmbH (ex SAI Automotive AG) | 196,420 | 136,985 | 26 | 225,020 | |
| FaureciaTongda Exhaust System (Wuhan) Co., Ltd (ex TEEC) | 2,584 | 26,011 | 50 | 2,217 | |
| Trecia | 203 | 11,202 | 50 | 8,556 | |
| 2. Aggregate information about other companies | |||||
| Subsidiaries and a liates not included in section A | 2,264 | ||||
| Subsidiaries and a liates not included in section B | 3 | ||||
| TOTAL | 2,993,996 |
| Carrying amount of investment |
Outstanding loans and advances granted by the Company |
Guarantees given by the Company |
Last published sales |
Last published net income (loss) |
Dividends received or to be received by the Company |
Exchange rate used for non-French subsidiaries and as liates |
|---|---|---|---|---|---|---|
| 452,488 | (8,704) | |||||
| 125,400 | (1,673) | 1 euro = 1.3362 USD | ||||
| 53,841 | 395,445 | 13,237 | 24,816 | |||
| 0 | 0 | 0 | 0 | (5,856) | 0 | |
| 310,299 | 233,311 | 0 | 31,804 | 4,218 | 0 | 1 euro = 1.3362 USD |
| 0 | 0 | 0 | 403 | 317 | 0 | |
| 204,600 | 0 | 0 | 0 | 1,329 | 0 | |
| 0 | 6,661 | 0 | 32,775 | (78) | 0 | 1 euro = 5.2305 ARS |
| 53,531 | 0 | 0 | 71,059 | (685) | 0 | |
| 110,316 | 0 | 0 | 502,097 | (14,300) | 0 | |
| 9,947 | 0 | 0 | 0 | 73 | 96 | |
| 19,759 | 0 | 0 | 145,210 | (954) | 0 | 1 euro = 25.061 CZK |
| 918,260 | 0 | 0 | 126,665 | 12,749 | 0 | |
| 27,052 | 0 | 0 | 0 | 1,504 | 0 | |
| 76,449 | 0 | 0 | 240,674 | 41,179 | 0 | |
| 225,020 | 0 | 0 | 4,811 | 373 | 0 | |
| 2,217 | 0 | 0 | 109,895 | 20,580 | 4,558 | 1 euro = 8.822 CNY |
| 8,556 | 0 | 0 | 62,775 | 2,394 | 0 | |
| 1,339 | 796 | 866 | ||||
| 3 | 0 | |||||
| 2,599,077 | 636,211 | 30,432 |
This is a free translation into English of the Statutory Auditors' report on the financial statements issued in French and it is provided solely for the convenience of English-speaking users.
The Statutory Auditors' report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the audit opinion on the financial statements and includes an explanatory paragraph discussing the auditors' assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to provide separate assurance on individual account balances, transactions or disclosures.
This report also includes information relating to the specific verification of information given in the management report and in the documents addressed to the shareholders.
This report should be read in conjunction with and construed in accordance with French law and professional auditing standards applicable in France.
To the Shareholders,
In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year ended December 31, 2010, on:
These financial statements have been approved by the Board of Directors. Our role is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the company as at December 31, 2010 and of the results of its operations for the year then ended in accordance with French accounting principles.
In accordance with the requirements of Article L. 823-9 of the French commercial code (Code de commerce) relating to the justification of our assessments, we bring to your attention the following matters:
c Note 1.2 to the financial statements presents the rules and methods applied to investments. A provision for impairment is set aside if the value in use of an investment falls below its gross value. Value in use is based on the subsidiary's revaluated net assets, profitability and future outlook. As part of our assessment of the accounting principles and methods applied by your company, we have verified the appropriateness of the above-mentioned accounting methods and examined the application methods and the assumptions used by your company.
These assessments were made as part of our audit of the financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report.
We have also performed, in accordance with professional standards applicable in France, the specific verifications required by French law.
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Board of Directors and in the documents addressed to the shareholders with respect to the financial position and the financial statements.
Concerning the information given in accordance with the requirements of Article L. 225-102-1 of the French commercial code (Code de commerce) relating to remunerations and benefits received by the directors and any other commitments made in their favour, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable, with the information obtained by your company from companies controlling your company or controlled by it. Based on this work, we attest the accuracy and fair presentation of this information. We draw your attention to the reasons presented in the management report explaining that your company does not have any information on compensation and benefits granted by the controlling entity to corporate officers of the company who are not corporate officers of the controlling entity.
In accordance with French law, we have verified that the identity of the shareholders and holders of the voting rights has been properly disclosed in the management report.
Neuilly-sur-Seine and Paris-La Défense, April 14, 2011 The Statutory Auditors
French original signed by
PricewaterhouseCoopers Audit Ernst & Young Audit
Dominique Ménard Denis Thibon
10 Legal and fi nancial information Parent company fi nancial statements
This is a free translation into English of a report issued in French and it is provided solely for the convenience of English-speaking users.
This report should be read in conjunction with and construed in accordance with French law and professional standards applicable in France.
To the Shareholders,
In our capacity as statutory auditors of your company, we hereby report on certain related party agreements and commitments.
We are required to inform you, on the basis of the information provided to us, of the terms and conditions of those agreements and commitments indicated to us, or that we may have identified in the performance of our engagement. We are not required to comment as to whether they are beneficial or appropriate or to ascertain the existence of any such agreements and commitments. It is your responsibility, in accordance with Article R. 225-31 of the French commercial code (Code de commerce), to evaluate the benefits resulting from these agreements and commitments prior to their approval.
In addition, we are required, where applicable, to inform you in accordance with Article R. 225-31 of the French commercial code (Code de commerce) concerning the implementation, during the year, of the agreements and commitments already approved by the General Meeting of Shareholders.
We performed those procedures which we considered necessary to comply with professional guidance issued by the national auditing body (Compagnie nationale des commissaires aux comptes) relating to this type of engagement. These procedures consisted in verifying that the information provided to us is consistent with the documentation from which it has been extracted.
We hereby inform you that we have not been advised of any agreements or commitments authorized in the course of the year to be submitted to the General Meeting of Shareholders for approval in accordance with Article L. 225-38 of the French commercial code (Code de commerce).
In accordance with Article R. 225-30 of the French commercial code (Code de commerce), we have been advised that the implementation of the following agreements and commitments which were approved by the General Meeting of Shareholders in prior years continued during the year.
Your Company issued a counter-guarantee to BNP Paribas at the time Faurecia Sièges d'Automobile took over the Caligny site lease.
The terms and conditions of the Caligny lease provide that Flers Invest, the lessor, should receive from BNP Paribas a bank guarantee covering the payment of two years' rent excluding VAT (i.e. € 4,784,000). This guarantee will be updated on a regular basis. BNP Paribas requested that this bank guarantee be counter-guaranteed by your company.
In accordance with the authorization granted by the Board of Directors of March 2, 2009, in 2010 your company cross charged its subsidiary Faurecia Sièges d'Automobiles for the costs relating to the counter-guarantee.
On November 26, 2008, in accordance with the authorization granted by the Board of Directors of October 16, 2008, your Company signed a loan agreement with its parent company Peugeot S.A. by wich Peugeot S.A. makes available to your Company a credit line of M€ 250, concurrently with a renewal of the syndicated bank loan for a global amount of M€ 1,170.
The two loans are correlated so that the drawdowns made on Peugeot S.A. loan are proportionate to those made on the syndicated bank loan, based on the same rates and periods.
At December 31, 2010, M€ 142 of this loan had been used and the related financial interests recorded for 2010 amount to M€ 2,5.
Neuilly-sur-Seine and Paris-La Défense, April 14, 2011 The Statutory Auditors French original signed by
PricewaterhouseCoopers Audit Ernst & Young Audit
Dominique Ménard Denis Thibon
Shareholder's Meeting of May 26th, 2011
This is a free translation into English of a report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
To the Shareholders,
In our capacity as Statutory Auditors of your company and in compliance with Article L. 225-197-1 of the French Commercial Code (Code de commerce), we hereby report on the proposed free allocation of existing shares or shares to be issued, reserved for employees, and/or directors, of the company Faurecia and group companies, within the meaning of Article L. 225-197-2 of the French Commercial Code (Code de commerce).
Your Board of Directors proposes that it be authorised to allocate, for free, existing shares or shares to be issued. It is the responsibility of the Board of Directors to prepare a report on the proposed operation. Our role is to report on any matters relating to the information regarding the proposed operation.
We have performed those procedures which we considered necessary to comply with the professional guidance issued by the French national auditing body (Compagnie Nationale des Commissaires aux Comptes) for this type of engagement. These procedures consisted mainly in verifying that the proposed methods described in the Board of Directors's report comply with the legal provisions governing such operations.
We have no matters to report as to the information provided in the Board of Directors's report relating to the proposed free allocation of shares.
Neuilly-sur-Seine and Paris-La Défense, April 14 2011
The Statutory Auditors
PricewaterhouseCoopers Audit Ernst & Young Audit Dominique Ménard Denis Thibon
206 Faurecia REGISTRATION DOCUMENT 2010
All of Faurecia's shareholders are given full, clear and transparent information which is tailored to their specific needs and provides them with an objective view of the Group's growth strategy and earnings performance. This financial communication policy is aimed at ensuring that all shareholders have access to the information required in accordance with customary market practice.
A broad range of documents covering Faurecia's operations, strategy and financial performance including: regulatory information, registration documents, interim financial reports, shareholders' newsletters, the company's bylaws and the Board's internal rules. All these documents are available in the Shareholders & Investors section of the Group's website at www. faurecia.com under the heading Finance, in French and English, or can be obtained on request from the Investor Relations department. Shareholders can also automatically receive documents such as the annual report, corporate brochures and press releases, through a free subscription service by e-mailing [email protected].
Faurecia regularly publishes the disclosures required by listed companies in the French legal gazette, the BALO (Bulletin des Annonces Légales Obligatoires). This information is rounded out by press releases for both the financial community and the general public regarding matters that are of major importance in understanding the company's strategy. In addition, periodic meetings are held on an interactive basis with financial analysts and business journalists in order to give updates on the Group's goals, products and results.
In 2010, Faurecia organized more than 100 events and meetings, which facilitated direct dialogue with three hundred institutional investors and financial analysts. Themed presentations were also organized for analysts, investors and asset managers.
In addition, employee shareholders have access to a dedicated space on Faurecia's Intranet that provides information on the Group employee savings plan.
Annual reports presented and filed as registration documents with the Autorité des Marchés Financiers (AMF) and interim financial reports are broadly circulated within the financial community.
| February 8, 2011 | 8:00 a.m. | Second-half 2010 and full-year 2010 results announcement |
|---|---|---|
| April 19, 2011 | 8:00 a.m. | First-quarter 2011 sales release |
| May 26, 2011 | 10:00 a.m. | Annual Shareholders' Meeting |
| July 26, 2011 | 8:00 a.m. | First-half 2011 results announcement |
| October 25, 2011 | 8:00 a.m. | Third-quarter 2011 sales release |
No shares have been issued that do not represent the company's capital. As of December 31, 2010, the company's capital amounted to €772,567,096, divided into 110.366,728 fully paid-up shares with a par value of 7 euros, all in the same class. These shares represent 127,507,221 voting rights.
Based on information taken from shareholder accounts, Faurecia's ownership structure and voting rights as of December 31, 2010 were as follows:
| Shareholder | Shares | (%) | Double voting rights |
Single voting rights |
Total | (%) |
|---|---|---|---|---|---|---|
| Peugeot SA | 63,380,509 | 57.43 | 17,285,197 | 46,095,312 | 80,665,706 | 63.26 |
| Faurecia Actionnariat corporate mutual fund |
167,920 | 0.15 | 73,565 | 94,355 | 241,485 | 0.19 |
| Treasury stock | 270,814 | 0.24 | 0 | 0 | 0 | 0 |
| Other | 46,547,485 | 42.18 | 52,545 | 46,494,940 | 46,600,030 | 36.55 |
| TOTAL | 110,366,728 | 100 | 17,411,307 | 92,684,607 | 127,507,221 | 100 |
Changes in ownership structure over the last three years are presented in section 10.3.2.2.
According to the information disclosed to the company and/or the market, as of December 31, 2010:
Peugeot SA is the only holder of registered shares which reported pledges on the company's shares.
The company has not been notified of any shareholders' agreements.
One Equity Partners, which acquired a stake in Faurecia following the acquisition of Emcon Technologies on February 8, 2010, announced the sale on March 9, 2010 of 4,865,641 Faurecia shares, representing 4.4% of the company's share capital. On October 20, 2010, One Equity Partners sold its stake in Faurecia through an equity placement with institutional investors. Prior to this operation, Faurecia agreed to waive the lock-up agreement entered into by One Equity Partners in the acquisition agreement for Emcon Technologies. Following this disposal (and as of this date), One Equity Partners holds no Faurecia shares.
The company's Directors hold approximately 0.04% of the company's capital and voting rights.
Faurecia shares are traded on Euronext Paris (compartment A) of NYSE Euronext.
In 2010, Faurecia's share price rose by 40.5%. At the end of 2010 it stood at €21.63 compared with €15.40 at the end of 2009.
The average price of Faurecia shares during 2010 was €15.92, with a high of €22.30 on December 23, 2010 and a low of €11.09 on May 25, 2010.
Average monthly trading volumes for 2009 as a whole corresponded to 8,975,007 shares or €142.95 million.
| Price (in €) | Trading volume | ||||||
|---|---|---|---|---|---|---|---|
| Share price and trading volumes | High | Average | Low | Close | Number of shares |
Amount (in € thousands) |
|
| 2009 | |||||||
| September | 15.49 | 12.30 | 8.71 | 14.83 | 13.967,635 | 174,850 | |
| October | 17.77 | 15.29 | 12.62 | 13.21 | 13,947,323 | 212,340 | |
| November | 15.84 | 14.42 | 12.90 | 14.00 | 8,393,034 | 120,773 | |
| December | 15.95 | 15.08 | 14.06 | 15.40 | 5,680,806 | 85,871 |
| Price (in €) | Trading volume | |||||
|---|---|---|---|---|---|---|
| Share price and trading volumes | High | Average | Low | Close | Number of shares |
Amount (in € thousands) |
| 2010 | ||||||
| January | 18.20 | 16.39 | 14.91 | 15.31 | 7,671,357 | 125,840 |
| February | 16.22 | 13.55 | 11.83 | 12.79 | 10,431,518 | 140,200 |
| March | 15.56 | 14.38 | 12.56 | 14.88 | 12,421,473 | 177,910 |
| April | 16.90 | 15.91 | 14.42 | 15.27 | 8,852,366 | 141,010 |
| May | 15.47 | 13.16 | 11.04 | 12.65 | 9,844,714 | 129,010 |
| June | 15.39 | 13.80 | 11.87 | 13.22 | 9,520,539 | 130,150 |
| July | 15.94 | 14.78 | 12.84 | 15.07 | 7,485,120 | 111,490 |
| August | 15.42 | 14.18 | 12.90 | 13.70 | 4,057,059 | 57,060 |
| September | 17.45 | 15.82 | 13.54 | 17.20 | 7,526,878 | 119,250 |
| October | 20.28 | 18.50 | 16.56 | 19.36 | 13,285,282 | 248,830 |
| November | 19.64 | 18.91 | 17.89 | 18.27 | 7,160,581 | 135,450 |
| December | 22.49 | 21.32 | 18.47 | 21.63 | 9,443,192 | 199,250 |
| Price (in €) | Trading volume | |||||
|---|---|---|---|---|---|---|
| Share price and trading volumes | High | Average | Low | Close | Number of shares |
Amount (in € thousands) |
| 2011 | ||||||
| January | 26.45 | 24.48 | 21.72 | 25.34 | 16,516,284 | 405,470 |
| February | 30.25 | 27.53 | 23.93 | 28.18 | 15,748,774 | 433,660 |
| March | 28.65 | 26.10 | 23.84 | 25.80 | 11,854,733 | 308,710 |
| 12/31/2010 | 12/31/2009 | 12/31/2008 | |
|---|---|---|---|
| Stock market capitalization at year-end (in € millions) | 2,403.3 | 1,377.5 | 241.05 |
| Share price (in €) | |||
| c High | 22.30 | 17.77 | 48.16 |
| c Low | 11.09 | 5.56 | 7.80 |
| Share price at year-end (in €) | 21.63 | 15.40 | 9.88 |
| Shareholders' equity per share (in €) | 7.3 | 2.87 | 8.32 |
| Year | Number of shares carrying dividend rights |
Dividends paid |
|---|---|---|
| 2008 | 24,395,048 | - |
| 2009 | 89,448,504 | - |
| 2010 | 110,366,728 | 0.25 cents per share |
The company pays dividends in line with the practices of other similar companies, based on the Group's results for the year.
| (in €) | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2008 |
|---|---|---|---|
| Diluted earnings (loss) per share | 1.79 | (6.85) | (23.83) |
| Cash fl ow per share | 6.1 | 1.32 | 7.25 |
The method used to calculate the weighted average number of shares after dilution to determine per share data is explained in Note 9 to the consolidated financial statements.
1891. The first automobiles, in the modern sense, are made, powered by gasoline engines. The first steel tubes follow, patented by Peugeot. They are produced mainly at Audincourt, in the Doubs region of eastern France.
1914. Bertrand Faure opens his first workshop, making seats for Paris trams and underground trains, at Levallois-Perret.
1929. Bertrand Faure acquires the license for the Epeda process enabling the company to fine-tune its seats for the automotive industry and develop a new product, the spring mattress. Both businesses take off significantly after the Second World War. Bertrand Faure clients include Renault, Peugeot, Citroën, Talbot, Panhard-Levassor, Berliet and Simca.
1950. Bernard Deconinck, son-in-law of Joseph Allibert, who had founded the Allibert Company in Isère in eastern France in 1910, decides to invest in a huge injection press, imported from the United States: this permits the molding of large plastic parts in a single piece. He then turns from refrigerator manufacturers to automotive industry customers.
1955. The Frères Peugeot company, one of whose subsidiaries is Peugeot et Cie, starts production of automotive equipment. Over the years, the companies diversifies into making seats, exhaust systems, and steering columns, extends operations outside France, dropping some products to concentrate on new production lines.
1972. François Sommer, grandson of Alfred Sommer, merges his automotive floor coverings company with that of Bernard Deconinck's company, Allibert, to found the Sommer Allibert Group, combining know-how in textiles and plastics.
In the early 1980s, Sommer Allibert invests heavily to meet the needs of the automotive industry and becomes a leading specialist in interior vehicle fittings for all of the major automakers. International expansion follows, with the acquisition of Spain-based Lignotock, and an extended presence in Germany from 1993.
1987. Cycles Peugeot merges with Aciers & Outillages Peugeot to form Ecia (Équipements et Composants pour l'Industrie Automobile), the PSA Peugeot Citroën Group's specialist automotive equipment subsidiary. Ecia then undergoes ten years of intense industrial and geographical development.
1990. Epeda Bertrand Faure draws on its experience in manufacturing seating for transport vehicles: cars, trains, trams, etc. to diversify gradually into other business segments. It first branches out into bedding through the Epeda and Mérinos brands, then, in 1982, luggage with Delsey and finally the aeronautics sector through Ratier-Figeac in 1987. Automotive seating components remain, nevertheless, its core business and the French market still accounts for a significant portion of revenues. After carrying out acquisitions in Portugal, Spain and Canada as from 1977, and gaining a modest foothold in Germany, the company's international expansion takes off, with the acquisition in 1990 of Germany-based Rentrop. Epeda Bertrand Faure then becomes European leader in the automotive seating business. Throughout the 1990s until 1998, the company concentrates on its automotive equipment expertise, selling off its other businesses in bedding (Epeda and Mérinos), aeronautics (Ratier-Figeac) and luggage (Delsey).
1992. Ecia sells its cycle business, followed by its tooling business in 1993, and makes significant acquisitions of exhaust systems specialists - Tubauto and Eli Échappement in France, Leistritz Abgastechnik in Germany and Silenciadores PCG in Spain. Ecia becomes the leading European manufacturer of exhaust systems. Its Seating division joins forces with the Spanish automotive equipment supplier Irausa to form Ardasa. Clients for exhaust systems, seats, interior fittings and front ends include Volkswagen, Renault, Daimler Chrysler, Opel, Honda and Mitsubishi.
December 11, 1997. Ecia launches a friendly bid for Bertrand Faure, bringing its direct and indirect stake in the group to 99%. The acquisition leads to the formation of the Faurecia Group in 1998 with the underlying aim of focusing on the automotive equipment business. At the same time as Bertrand Faure sells its luggage business (Delsey) and aeronautics business (Ratier-Figeac), Ecia sells its motorcycles business (Peugeot Motocycles) to the PSA Peugeot Citroën Group in 1998.
June 1999. Ecia and Bertrand Faure merge, resulting in the PSA Peugeot Citroën Group holding a 52.6% stake in Faurecia by the end of 1999. Faurecia reports sales of over €4 billion, with a workforce of 32,000. As well as boosting its size and helping it gain a worldwide position in automotive seating, Bertrand Faure gives Ecia a broader geographical and commercial reach, especially in Germany, where the company has strong links with manufacturers such as Volkswagen and BMW.
End of 1999. The Faurecia Group extends its exhaust systems coverage in North America with the acquisition of the US company AP Automotive Systems.
October 2000. Faurecia purchases Sommer Allibert. By financing this transaction, the PSA Peugeot Citroën Group raises its stake in Faurecia to 71.5%. With good coverage of Germany and Spain, the Group commands high market share for vehicle interior fittings in Europe, especially for door and instrument panels and acoustic modules.
2001. The Sommer Allibert acquisition is finalized through a public offer to buy out Sommer Allibert's minority shareholders. The resulting Group posts sales of €9.6 billion. Faurecia then buys out the remaining minority shares held by external shareholders in Sommer Allibert's German subsidiary SAI Automotive AG.
2002. The Faurecia Group acquires 49% of the South Korean catalytic converter maker Daeki Industrial, number two in its market. The same year, Faurecia forms a joint venture with the Taiwanese automotive equipment company GSK, with a view to making seats at Wuhan, in China.
2003. Faurecia follows up these acquisitions by buying the South Korean exhaust systems company Chang Heung Précision, which holds market share of over 20%. This gives Faurecia's Exhaust Systems business a manufacturing presence in all continents. In Europe, the Group finalizes an agreement with Siemens-VDO on strengthening and extending their joint venture (SAS), assembling cockpits for BMW, Daimler Chrysler, the Ford group, Renault-Nissan and the Volkswagen group.
2005. To step up Korean operations, Faurecia raises its stake in Daeki (specializing in exhaust systems for Hyundai) to 100%, and sets up a joint venture with the South Korean company Kwang Jin Sang Gong, to produce door modules for Hyundai Motors and Kia Motors.
2007. Faurecia takes over the bumper operations of Cadence Innovation France, enabling the Group to strengthen its market positioning in this sector in France.
2009. Faurecia acquires Emcon Technologies (formerly Arvin Industries), becoming the world leader in the exhaust systems market. This business combination strengthens Faurecia's position with automakers in Germany (as Arvin Industries acquired Zeuna Stärker in 1998), the USA (particularly Ford), South America, India and Thailand. It also enables Faurecia to enter the commercial vehicles market (trucks and off road). With this all-equity acquisition, One Equity Partners, (JP Morgan Chase & Co's private equity arm) holds a 17.3% stake in Faurecia and PSA Peugeot Citroën's interest is reduced to 57.4%.
Faurecia buys out joint venture partner Tata to become the sole owner of Taco Faurecia Design Center. The company is renamed Faurecia Automotive Engineering India and becomes Faurecia's development center in India.
2010. Faurecia becomes the European leader in automotive exterior parts by acquiring the German activities of Plastal, and subsequently Plastal Espagne SA. Through these operations, Faurecia Automotive Exteriors widens its client base, especially with Ford and the four "premium" German brands, enhances its product offer and strengthens its industrial implantation as well as its research and development capabilities. This acquisition gives it the capacity to develop internationally, put into practice by the setting up of a joint company in China with Huaxiang, supplier of exterior parts to Faw-Volkswagen.
Acquiring an 18.75% stake in Xuyang Group in China, enables the Faurecia Group to widen the range of products and services it provides in the following strategic segments: whole seating systems, vehicle interior systems, acoustic modules and interior upholstery. A strategic alliance with the Geely and Limin groups marks a significant new development stage for Faurecia Systèmes d'Intérieur and Faurecia Extérieurs d'Automobile in China.
To diversify its technological offer in seating systems, Faurecia Automotive Seating acquired the "seat comfort technology" of the German company Hoerbiger Automotive Komfortsysteme GmbH in the fourth quarter of 2010.
Finally, to strengthen the technological prowess of Faurecia Interior Systems, the Faurecia Group acquired Angell-Demmel Europe GmbH, the world leader in decorative metal parts for automobile interiors.
Faurecia is a société anonyme (joint-stock corporation) listed on NYSE Euronext Paris governed by the French Commercial Code and the related implementing regulations. It complies with generally accepted corporate governance principles for companies in France, notably the AFEP-MEDEF Corporate Governance Code of Listed Corporations.
Faurecia abides by the legal and regulatory provisions that apply to the governing bodies of listed companies and reports in this Registration Document on the application of the recommendations made in relation to said Code.
The company's accounts are audited by two Statutory Auditors, appointed in accordance with Article L. 225-228 of the French Commercial Code.
Incorporated on: July 1, 1929.
Term expires on: December 31, 2027.
The company is registered with the Nanterre Trade and Companies Registry under number: 542 005 376.
APE (Business Identifier Code) is: 7010Z (company administration).
During the period of validity of this Registration Document, the following documents (or copies thereof) can be consulted at the company's headquarters:
Faurecia Philippe McAllister Director of Legal Affairs 2, rue Hennape – 92000 Nanterre – France Or
The above documents can also be viewed on the company's website at www.faurecia.fr.
The company's purpose, as set out in Article 3 of the bylaws, is summarized below:
Faurecia is a holding company, whose assets are primarily made up of investments in subsidiaries and affiliates. The Group's industrial assets are held by the operating subsidiaries.
Faurecia provides direct and indirect financial, accounting, management, administrative and other services to Group companies.
A list of consolidated companies as of December 31, 2010 is provided in section 9 and a simplified organization chart of the Group's operating companies is set out in section 10.3.2.3 of this Registration Document.
Group subsidiaries are financed on a centralized basis, primarily through Faurecia and Financière Faurecia, which performs a cash pooling role. This way of functioning enables the subsidiaries to benefit from the favorable market conditions obtained from lenders by Faurecia and compensates for the borrowing and lending positions of the different entities.
As of December 31, 2010, the company's net debt, corresponding to borrowings less cash and cash equivalents, securities investments and net intercompany cash advances, amounted to €720.9 million, compared with €1,196.8 million in consolidated net debt for the Group as a whole.
The company's fiscal year covers the 12 month period from January 1 to December 31.
Income available for distribution corresponds to net income for the year, less any losses carried forward from prior years and any amounts appropriated to reserves in compliance with the law or the bylaws, plus any retained earnings.
Out of this income, the Shareholders' Meeting determines the portion attributed to shareholders in the form of dividends and deducts the amounts it considers appropriate to allocate to any reserve funds or to carry forward.
However, except in the case of a capital reduction, no distributions may be made to shareholders if the company's shareholders' equity represents – or would represent after the planned distribution – less than its capital stock plus any reserves which, according to the law or the bylaws, are not available for distribution.
The Shareholders' Meeting may also decide to distribute amounts deducted from optional reserves in order to pay or increase a dividend or pay a special dividend.
The company's bylaws provide that the Ordinary Shareholders' Meeting approving the financial statements for the year may also decide to offer each shareholder the option between the payment of the dividend or the interim dividend in cash or in shares.
Dividends not collected within five years of the payment date will be time-barred and paid over to the French Treasury.
The registrar and paying agent for Faurecia shares is Crédit Agricole – Caisse d'Épargne Investor Services (CACEIS), 14, rue Rouget de Lisle, 92862 Issy-les-Moulineaux Cedex 9, France.
Faurecia shares are listed on Euronext Paris (compartment A) of NYSE Euronext: ISIN Code FR 0000121147.
They are included in the SBF 80, MID & SMALL 190 and NEXT 150 indexes.
They are eligible for inclusion in personal equity plans (PEA) and the deferred settlement service (SRD).
The particular rules governing the participation of shareholders in the general meetings are described in Articles 17 and 18 of the company's bylaws, and may be consulted on our website (www.faurecia.fr).
Shareholders' Meetings are held at the company's headquarters or at any other venue specified in the notice of Meeting.
Holders of registered shares are notified by mail; the other shareholders are notified via the relevant banks and brokers through the financial notices provided for by the applicable regulations.
A continually updated schedule of all of the Group's financial events, including the date of the Shareholders' Meeting, is available on Faurecia's website at www.faurecia.com.
To be entitled to attend Shareholders' Meetings in person or to be represented by proxy, holders of registered shares must have their shares recorded in the registered share account kept by the company and holders of bearer shares must have their shares recorded in a share account kept by their bank or broker at least three (3) days prior to the date of the Meeting. The person who issues the notice of Meeting may, however, reduce this period if he or she sees fit.
The rights of shareholders, which may only be amended in accordance with the conditions laid down by French law, are not affected by any other provision of the bylaws.
The company's bylaws do not provide for any restrictions on voting rights. Voting rights at Ordinary, Extraordinary and Special Shareholders' Meetings are exercisable by the beneficial owner of the shares.
All fully paid-up shares that have been registered in the name of the same holder for at least two (2) years carry double voting rights. In the case of a bonus share issue paid up by capitalizing retained earnings, income or additional paid-in capital, the bonus shares allotted in respect of registered shares carrying double voting rights will also carry double voting rights as from the date of issue. This double voting right may be cancelled following a decision of the Extraordinary Shareholders' Meeting and after having informed a Special Meeting of the beneficiary shareholders.
Shares that are transferred or converted to bearer form are stripped of double voting rights. However, double voting rights are not lost and the above-mentioned two-year period continues to run when shares are transferred following the liquidation of a marital estate, or by way of an inheritance or in the form of an inter vivos gift to a spouse or a relative in the direct line of succession.
When an individual or corporate shareholder, acting alone or in concert within the meaning of Article L. 233-10 of the French Commercial Code, raises their interest to above 2% of the company's voting rights, said shareholder must inform the company of the total number of shares and voting rights held by the shareholder, within five trading days of the threshold being crossed, by registered letter with return receipt requested. This 2% disclosure threshold applies in addition to the 5% threshold provided for in Article L. 233-7 of the French Commercial Code.
The shareholder must also inform the Autorité des Marchés Financiers within the same timeframe, so that the latter can disclose this information to the public, in accordance with its General Regulations.
In the case of failure to comply with these disclosure rules, at the request of one or several shareholders present or represented at the Meeting with combined holdings representing at least 2% of the capital or voting rights, the undisclosed shares will be stripped of voting rights. Said request must be recorded in the minutes of the Shareholders' Meeting.
This procedure is in addition to the legal requirements concerning disclosure thresholds set out in Article L. 233-7 of the French Commercial Code.
The rights of shareholders, which may only be amended in accordance with the conditions laid down by French law, are not affected by any other provision of the bylaws.
To the best of the company's knowledge there are no arrangements in place whose operation could result in a change in control of the company at a future date.
There are currently no deeds, bylaws, charters, regulations or contractual provisions in place that could postpone or prevent a change in control of the company.
The syndicated loan agreement entered into by the company on November 27, 2008 includes an acceleration clause under which – subject to certain conditions – each bank may require immediate payment of outstanding sums in the event of a change in control of the company.
Furthermore, the bond issue carried out on November 26, 2009 stipulates that bondholders may request the early redemption of all or part of their bonds, under the conditions of the memorandum issued on November 18, 2009 having been approved by the AMF under no. 09–337.
The measures taken by the company to ensure that control is not exercised in an abusive manner are described in the following sections of this Registration Document:
To date, Faurecia has not entered into any material contracts that would entail a significant obligation or commitment for the Group, other than those that fall within the ordinary course of business.
Faurecia is not currently dependent on any patents or manufacturing processes owned by third parties or on any specific supply contracts to conduct its business.
In the automotive industry sector in which Faurecia operates subcontractors do not generally define the technical specifications for subcontracted parts. When on rare occasions subcontractors are in a position to do this, the Group's policy is to contractually arrange for the subcontractor concerned to transfer the relevant design work in order for it to be used in conjunction with other services.
The Group's 238 manufacturing sites and 38 research and development centers spanning 33 countries enable it to maximize its local presence and implement its just-in-time delivery strategy. None of its manufacturing equipment taken on an individual basis represents a material value in relation to the property, plant and equipment of the Group as a whole. They are mostly dedicated to client programs. As a result, utilization rates are largely dependent on business levels. With very few exceptions, utilization rates for equipment and facilities are not monitored centrally or systematically.
Note 12 to the consolidated financial statements provides further information on the Group's property, plant and equipment.
Information required under Article L. 225-100-3 is set out in sections 8.1.1.2 (appointment/renewal of directors), 8.1.2.1 to 8.1.2.2, 8.4, 10.2.2, 10.3.2, 10.3.2.2 of this Registration Document.
As of December 31, 2010 the company's capital amounted to €772,567,096, divided into 110,366,728 fully paid-up shares with a par value of 7 euros each, all of the same class. These shares represent 127,507,221 voting rights. No shares have been issued that do not represent the company's capital.
It is recalled that according to the terms and the exercise of authority given by the Shareholders' Meeting of April 23, 2009 to the Board of Directors to issue shares and/or securities giving right to shares, either with or without pre-emptive subscription rights for existing shareholders, in case of over-allocation of options, the Board of Directors meeting of October 15, 2009 decided to set up a public issue, without pre-emptive subscription rights for existing shareholders or a priority subscription period, of OCEANE's convertible/exchangeable bonds for a maximum normal amount of €265 million (including any additional bonds issued on the exercise of a greenshoe option by the financial institutions underwriting the issue) and the maximum amount of any capital increases arising on conversion of the OCEANE's bonds was set at €150 million. On November 24, 2009, the amount of the OCEANE issue was increased to €211.3 million, representing 11,306,058 bonds.
As of December 31, 2010, no bonds had been converted into shares.
c At the Ordinary and Extraordinary Shareholders' Meeting of May 26, 2010, the Board of Directors was given a 26 month authorization to issue shares and/or securities carrying rights to shares, with pre-emptive subscription rights for existing shareholders. The maximum amount of any capital increases carried out under this authorization was set at €300,000,000 and the nominal amount of debt securities issued not to exceed €1,000,000,000.
This authorization cancels and replaces that given in the eight resolution of the Ordinary and Extraordinary Shareholders' Meeting of April 23, 2009.
At the Ordinary and Extraordinary Shareholders' Meeting of May 26, 2010, the Board of Directors was given a 26 month authorization to issue shares and/or securities carrying rights to shares, without pre-emptive subscription rights for existing shareholders. The maximum amount of any capital increase carried out under this authorization was set at €110,000,000 and the nominal amount of debt securities issued not to exceed €1,000,000,000.
This authorization cancels and replaces that given in the ninth resolution of the Ordinary and Extraordinary Shareholders' Meeting of April 23, 2009.
The company did not use these authorizations during the 2010 fiscal year.
| Date of Shareholders' Meeting | Term | Authorized amount |
Amount used (1) | Date of Board Meeting and Chairman's decisions |
|---|---|---|---|---|
| May 26, 2010 | 26 months | €300,000,000 | €0 | - |
| May 26, 2010 | 26 months | €110,000,000 | €0 | - |
(1) As of April 14, 2011.
As of December 31, 2010, a total of 1,523,998 employee stock options were outstanding.
Please see the table below and also Note 22.2 of the consolidated financial statements for details of the stock option plans approved as of December 31, 2010.
On November 24, 2009, Faurecia issued 11,306,058 OCEANE bonds. As of December 31, 2010, none of these bonds had been converted into shares.
Following the authorization given by the Shareholders' Meeting of February 8, 2010, to the Board of Directors to grant free shares:
| Plan number and date |
Date of Shareholders'/ Board of Directors Meeting |
Maximum number of shares granted in 2010 |
Acquisition date |
Date available |
Performance criteria |
|---|---|---|---|---|---|
| Plan no. 1 of June 23, 2010 |
c SM of February 8, 2010 c Board of Directors of June 23, 2010 |
860,600 | 06/23/2012 | 06/23/2014 | Pre-tax income of the Group at December 31, 2010 before taking account of gains on asset sales and changes in perimeter |
| Plan no. 2 of July 21, 2010 |
c SM of February 8, 2010 c Board of Directors of July 21, 2010 |
887,250 | 07/21/2013 | 07/21/2015 | Pre-tax income of the Group at December 31, 2012 before taking account of gains on asset sales and changes in perimeter |
As of December 31, 2010 the company held 270,814 shares in treasury (see Note 11 to the parent company financial statements).
Since April 27, 2009, Faurecia has set up a liquidity agreement that complies with the AMAFI Code of Ethics. This agreement is valid for one year and is automatically renewable. Share buybacks are used for a number of reasons, including to maintain a liquid market for the company's shares and to purchase shares for allocation to employees or corporate officers, notably under stock option or share grant plans.
The maximum amount that may be invested by the company in a share buyback program may not exceed 10% of the company's capital. The maximum authorized per-share purchase price is 30 euros.
In accordance with the law, when treasury shares are purchased in order to maintain a liquid market, the calculation of the above-mentioned 10% ceiling is based on the number of shares purchased less the number of shares sold during the term of the buyback program.
In compliance with Article L. 225-210 of the French Commercial Code, the value of all of the treasury shares owned by the company does not exceed the amount of available reserves, other than the legal reserve, as recorded in the parent company financial statements for the year ended December 31, 2010.
During 2010, in connection with the liquidity agreement the company purchased a total of 699,963 shares, representing 0.63% of the Faurecia's capital for €11,149,710.66 and sold an aggregate 705,194 shares for €11,236,410.77.
As of December 31, 2010, the following amounts figured in the liquidity account: 1,319 Faurecia shares, €28,529.97. Gains recorded in relating to the liquidity agreement in 2010 totaled €14,388.94. Management fees came to €40,000 (excluding VAT).
It is recalled that on November 24, 2009, Faurecia issued 11,306,058 bonds totaling €211.3 million gross, payable on January 1, 2015.
Each bond has a nominal value of €18.69. The bonds bear annual interest of 4.50% (i.e. €0.841 per bond) payable on January 1 each year, as from January 1, 2011.
The bonds will be reimbursed in full on January 1, 2015.
They are convertible into and/or exchangeable for new or existing Faurecia shares on a one-for-one basis, subject to future modifications. Faurecia may redeem the bonds in advance, provided certain conditions are met.
None of these bonds had been converted or redeemed as of December 31, 2010.
| Amount of capital increase/ reduction (in €) |
New capital stock (in €) |
New additional paid-in capital (in €) |
New number of shares |
||
|---|---|---|---|---|---|
| Year and type of transaction | Par value | Premium | |||
| February 2005 Capital increase following the exercise of stock options leading to the issue of 6,500 shares |
45,500 | 187,600 | 169,519,357 | 736,129,579.57 | 24,217.051. |
| April 2005 Capital increase following the exercise of stock options leading to the issue of 5,950 shares |
41,650 | 151,144 | 169,561,007 | 736,280,723.57 | 24,233,001. |
| July 2005 Capital increase following the exercise of stock options leading to the issue of 7,600 shares |
53,200 | 328,210 | 169,614,207 | 736,608,933.57 | 24,230,601. |
| October 2005 Capital increase following the exercise of stock options leading to the issue of 3,000 shares |
21,000 | 51,620 | 169,635,207 | 736,660,553.57 | 24,233,601 |
| January 2006 Capital increase following the exercise of stock options leading to the issue of 1,000 shares |
7,000 | 35,380 | 169,642,207 | 736,712,173.57 | 24,234,601 |
| December 2006 Capital increase following the exercise of stock options leading to the issue of 24,635 shares |
172,445 | 852,981.30 | 169,814,652 | 737,565,154.87 | 24,259,236 |
| April 2007 Capital increase following the exercise of stock options leading to the issue of 1,000 shares |
240,800 | 1,191,084.50 | 170,055,452 | 738,756,239.37 | 24,293,636 |
| October 2007 Capital increase following the exercise of stock options leading to the issue of 24,635 shares |
693,224 | 3,231,303.27 | 170,748,676 | 741,987,542.64 | 24,392,668 |
| February 2008 Capital increase following the exercise of stock options leading to the issue of 2,380 shares |
16,660 | 82,609.80 | 170,765,336 | 742,070,152.44 | 24,395,048 |
| May 2009 Capital increase representing a gross amount of €455,374,192, through the issue of 65,053,456 |
|||||
| new shares | 455,374,192 | - | 626,139,528 | 742,080,152.44 | 89,448,504 |
| February 2010 Capital increase representing a gross amount of €146,427,568, through the issue of 20,918,224 new shares |
146,427,568 | 772,567,096 | 742,080,152.44 110,366,728 | ||
| February 2011 Capital increase following the conversion of bonds leading to the creation of 69 new shares |
69 | 806.61 | 772,567,579 | 742,080,959.1 110,366,797 | |
| April 2011 Capital increase following the conversion of bonds leading to the creation of 1,006 new shares |
1006 | 11,760.14 | 772,574,621 | 742,092,719.2 110,367,803 |
| Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2009 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Shareholder | Number of shares |
% capital |
% voting rights |
Number of shares |
% capital |
% voting rights |
Number of shares |
% capital |
% voting rights |
|
| Peugeot SA | 63,380,509 | 57.43 | 63.26 | 63,380,509 | 70.86 | 75.69 | 17,285,197 | 70.85 | 83.25 | |
| Faurecia Actionnariat corporate mutual fund |
167,920 | 0.15 | 0.19 | 127,689 | 0.14 | 0.18 | 73,969 | 0.31 | 0.34 | |
| Treasury stock | 270,814 | 0.24 | 0 | 270,814 | 0.30 | - | 270,814 | 1.11 | - | |
| Other | 46,547,485 | 42.18 | 36.55 | 25,669,492 | 28.70 | 24.13 | 6,765,068 | 27.73 | 16.41 | |
| TOTAL | 110,366,728 | 100 | 100 | 89,448,504 | 100 | 100 | 24,395,048 | 100 | 100 |
At April 14, 2011, Peugeot SA holds 57.43% of Faurecia's share capital. Peugeot SA, a company that forms part of an international automotive group present in 150 countries and which has three main sub-groups: Banque PSA Finance, dedicated to automobile financing: Faurecia, an automotive equipment supplier; and Gefco, a transport and logistics business.
The company is entitled to obtain from the organization responsible for clearing securities transactions the names of holders of shares carrying voting rights at Shareholders' Meetings and of securities convertible, redeemable, exchangeable or otherwise exercisable for shares with voting rights, as well as the number of securities held by each such person or entity and details of any restrictions applicable to the securities. Such information requests may be made at any time.
It is recalled that following the rights issue carried out in April/May 2009, the exercise price and number of shares under option were adjusted for the company's stock option plans set up between October 20, 1994 and April 10, 2008, in order to preserve the rights of the option holders. These adjustments were calculated in accordance with Articles L. 228-99 and R. 228-91 of the French Commercial Code.
Details of outstanding options exercisable for newly-issued shares (stock subscription options) are set out in the table below:
As of December 31, 2010:
| Date of Shareholders' Meeting |
Date of Board Meeting/ adjusted exercise price (in €) |
Number of options granted (adjusted) |
Of which granted to senior executive management/ Executive Committee members |
Start of exercise Expiry of exercise period |
Options exercised |
Options forfeited |
Number of options outstanding as of Dec. 31, 2010 |
|---|---|---|---|---|---|---|---|
| September 13, | |||||||
| September | 2001 | ||||||
| March 5, | 12, 1996 | September 11, | |||||
| 1995 | 22.92 | 133,750 | 42,800 | 2011 | 97,905 | 10,700 | 25,145 |
| June 26, | |||||||
| 1997 | June 27, 2002 | ||||||
| May 31, 1994 | 34.40 | 63,180 | 17,550 | June 25, 2012 | 36,855 | 19,305 | 7,020 |
| February 23, | |||||||
| February | 2006 | ||||||
| June 5, 1997 | 22, 2002 | February 22, | |||||
| June 1, 2001 | 47.01 | 411,489 | 81,315 | 2012 | 32,994 | 133,029 | 245,466 |
| November 29, | |||||||
| November | 2006 | ||||||
| June 1, 2001 | 28, 2002 | November 27, | |||||
| May 14, 2002 | 35.65 | 315,315 | 118,170 | 2012 | 106,583 | 133,520 | 75,212 |
| April 14, | |||||||
| 2004 | April 14, 2008 | ||||||
| May 14, 2002 | 49.73 | 313,560 | 127,530 | April 13, 2014 | 0 | 139,230 | 174,330 |
| April 19, 2005 |
April 18, 2009 | ||||||
| May 25, 2004 | 54.45 | 321,750 | 142,740 | April 18, 2015 | 0 | 119,925 | 201,825 |
| April 13, | |||||||
| 2006 | April 14, 2010 | ||||||
| May 23, 2005 | 45.20 | 340,800 | 168,000 | April 14, 2016 | 0 | 133,200 | 207,600 |
| April 16, | |||||||
| 2007 | April 17, 2011 | ||||||
| May 23, 2005 | 44.69 | 346,200 | 172,800 | April 17, 2017 | 0 | 84,000 | 262,200 |
| April 10, | |||||||
| 2008 | April 10, 2012 | ||||||
| May 29, 2007 | 28.38 | 357,000 | 174,000 | April 10, 2016 | 0 | 31,800 | 325,200 |
| TOTAL | 1,523,998 |
No stock subscription options were granted in 2010.
Details of outstanding options to purchase existing shares (stock purchase options) are listed in the table below:
As of December 31, 2010:
| Date of Shareholders' Meeting |
Date of Board Meeting/ adjusted purchase price (in €) |
Number of options granted (adjusted) |
Of which granted to senior executive management/ Executive Committee members |
Start of exercise period/expiry of exercise period |
Options exercised |
Options forfeited |
Number of options outstanding as of Dec. 31, 2009 |
|---|---|---|---|---|---|---|---|
| April 26, | |||||||
| 2001 | April 26, 2005 | ||||||
| May 22, 2000 | 46.59 | 50,895 | 46,800 | April 25, 2011 | 19,305 | 5,850 | 25,740 |
| Total | 25,740 |
| Stock options granted to/exercised by the ten employees who received the highest number of options |
Total number of options granted/exercised |
Weighted average price (in €) |
|---|---|---|
| Options granted to the top ten employee grantees during the year, by the company and other Group companies entitled to grant options. (Total) |
0 | 0 |
| Options exercised during the year by the top ten employee grantees of the company and other Group companies entitled to grant options. (Total) |
0 | 0 |
No stock subscription options were granted in 2010.
10 Legal and fi nancial information Additional information on Faurecia SA
In accordance with French company law, Faurecia's Statutory Auditors certify the parent company and Group financial statements and review the situation of its fully consolidated subsidiaries through members of their networks.
The Statutory Auditors are appointed by shareholders in a General Meeting. At the Shareholders' Meeting of May 29, 2007 the terms of office of Ernst & Young Audit and PricewaterhouseCoopers Audit were renewed for a six-year period.
The engagement of Ernst & Young Audit, which was first appointed at the Shareholders' Meeting of June 17, 1983, and that of PricewaterhouseCoopers Audit, which was first appointed at the Shareholders' Meeting of May 27, 2003, will expire at the Ordinary Shareholders' Meeting to be held in 2013.
In 2010, Ernst & Young Audit and PricewaterhouseCoopers received €3.8 million and €2.7 million respectively for their audit assignments.
A breakdown of the total fees paid in 2010 by Faurecia and its fully consolidated subsidiaries to its Statutory Auditors is provided in Note 33 to the consolidated financial statements.
| Date of fi rst appointment |
Expiry of current term |
|
|---|---|---|
| AUDITORS | ||
| Ernst & Young Audit represented by Denis Thibon member of the Compagnie Régionale de Versailles 11, allée de l'Arche – 92037 Paris La Défense Cedex – France |
June 17, 1983 | 2013 AGM |
| PricewaterhouseCoopers Audit represented by Dominique Ménard member of the Compagnie Régionale de Versailles 63, rue de Villiers – 92208 Neuilly-sur-Seine – France |
May 27, 2003 | 2013 AGM |
| ALTERNATES | ||
| Auditex | May 27, 2003 | 2013 AGM |
| Étienne Boris | May 23, 2005 | 2013 AGM |
The terms of office of the Statutory and Alternate Auditors were renewed for a period of six years at the Shareholders' Meeting of May 29, 2007.
| Date | Type of information | Publication |
|---|---|---|
| January 7, 2010 | Faurecia opens its seating mechanisms R&D center in Caligny (Orne, France) |
2010 press release |
| January 20, 2010 | Formal notice of Ordinary and Extraordinary Shareholders' Meeting |
2010 press release |
| January 22, 2010 | Formal notice of Shareholders' Meeting | Bulletin des annonces légales obligatoires ("BALO no. 10") |
| January 22, 2010 | Formal notice of Shareholders' Meeting | La Tribune |
| February 3, 2010 | Faurecia acquires the German business of Plastal and becomes European number one in exterior automobile parts |
2010 press release |
| February 8, 2010 | Ordinary and Extraordinary Shareholders' Meeting: Transfer of all shares of Emcon Technologies to Faurecia and new governance for Faurecia |
2010 press release |
| February 9, 2010 | 2009 annual results | 2010 press release |
| February 10, 2010 | Increase in the number of shares in issue | NYSE Euronext |
| February 12, 2010 | Voting rights | Bulletin des annonces légales obligatoires ("BALO no. 19") |
| March 9, 2010 | One Equity Partners and Mr. Lee Gardner announce their disposal of its 4.8% holding of Faurecia's capital |
2010 press release |
| April 1, 2010 | Faurecia integrates Plastal into its operating organization |
2010 press release |
| April 2, 2010 | Faurecia inaugurates its worldwide exhaust systems R&D innovation center in Bavans, France |
2010 press release |
| April 6, 2010 | Eric-Alain Michelis appointed Vice President of Investor Relations of Faurecia |
2010 press release |
| April 19, 2010 | First-quarter 2010 results | 2010 press release |
| April 19, 2010 | Notice of Annual Shareholders' Meeting | Bulletin des annonces légales obligatoires ("BALO no. 47") |
| April 28, 2010 | Sielest launches the "Mobilité – Emplois" project |
2010 press release |
| April 29, 2010 | Notice of website publication of Chairman's report on internal control and related Statutory Auditors' Report |
La Tribune |
| May 5, 2010 | Ordinary and Extraordinary Shareholder's Meeting of May 26, 2010 |
2010 press release |
| May 7, 2010 | Formal notice of Shareholder's Meeting of May 26, 2010 |
Bulletin des annonces légales obligatoires ("BALO no. 55") |
| Date | Type of information | Publication |
|---|---|---|
| May 27, 2010 | Faurecia's Annual Shareholders' Meeting: Hans-Georg Harter, Chairman of the ZF Managing Board, Friedrichshafen AG, appointed director |
2010 press release |
| Approval of the fi nancial statements at | ||
| June 9, 2010 | the 2010 Annual Shareholders' Meeting | Bulletin des annonces légales obligatoires ("BALO N° 69") |
| June 9, 2010 | Voting rights | Bulletin des annonces légales obligatoires ("BALO N° 69") |
| June 14, 2010 | Faurecia aims for sales totaling €16 billion in 2014 |
2010 press release |
| June 14, 2010 | Faurecia aims for sales totaling €16 billion and an operating margin rate of 5% to 6% in 2014 |
2010 press release |
| June 21, 2010 | Faurecia receives the "Group Award 2010" from Volkswagen Group |
2010 press release |
| June 24, 2010 | Vacation departures, adjust your seat | 2010 press release |
| June 29, 2010 | Faurecia acquires Plastal Espagne | 2010 press release |
| June 30, 2010 | Faurecia takes a 18.75% stake in Xuyang Group in China (Changchun, Jilin province) |
2010 press release |
| July 7, 2010 | Strategic alliance between Faurecia, Geely and Limin in China |
2010 press release |
| July 22, 2010 | Strong progression of half-yearly results, 2010's objectives raised |
2010 press release |
| October 4, 2010 | Faurecia integrates Plastal into its operating organization |
2010 press release |
| October 18, 2010 | Strong third-quarter growth, 2010's objectives raised |
2010 press release |
| October 19, 2010 | Launch of placement of Faurecia shares held by One Equity Partners |
2010 press release |
| October 20, 2010 | Sale of Faurecia shares held by One Equity Partners Signifi cant increase in Faurecia free fl oat |
2010 press release |
| October 26, 2010 | Acquisition of HOERBIGER Automotive Komfortsysteme GmbH's "seat comfort technologies" business |
2010 press release |
| November 8, 2010 | Faurecia strengthens its Bains-sur-Oust site and creates 60 new jobs |
2010 press release |
| November 17, 2010 | New Faurecia products unveiled at the 2010 Los Angeles Automobile Salon, "Clean cars become a reality" |
2010 press release |
| November 23, 2010 | Faurecia acquires Angell-Demmel Europe GmbH |
2010 press release |
| Date | Type of information | Publication |
|---|---|---|
| Faurecia strengthens its R&D center and completes its industrial transfer |
||
| December 2, 2010 | to Caligny | 2010 press release |
| Faurecia strengthens its diesel emission control technologies by taking equity |
||
| January 17, 2011 | interests in Amminex A/S | 2011 press release |
| Faurecia develops its activities in China with a new joint venture for automobile |
||
| January 24, 2011 | exteriors | 2011 press release |
| February 8, 2011 | Faurecia's 2010 annual results Net income of €202 million |
2011 press release |
| February 22, 2011 | Faurecia to Supply Extensive Content for the 2012 Volkswagen Passat |
2011 press release |
| March 17, 2011 | NewTech: a new production process for Faurecia Automotive Exteriors |
2011 press release |
| April 12, 2011 | China: new R&D center for emissions control technologies |
2011 press release |
| April 19, 2011 | Sustained growth in fi rst quarter 2011 | 2011 press release |
| April 19, 2011 | Faurecia at the Shanghai Auto Show | 2011 press release |
| April 20, 2011 | Combined Shareholders' Meeting on May 26, 2011 |
2011 press release |
| April 20, 2011 | Formal notice of Shareholders' Meeting | Bulletin des annonces légales obligatoires ("BALO no. 47") |
| 11.1. | AGENDA | 230 | 11.2. | DRAFT RESOLUTIONS | 231 | |
|---|---|---|---|---|---|---|
| Resolutions presented to the Extraordinary shareholders' Meeting |
230 | I - | Resolutions presented to the Extraordinary and Ordinary Shareholders' Meeting |
231 | ||
| Resolutions presented to the Ordinary Shareholders' Meeting |
230 | II - | Resolutions presented to the Ordinary Shareholders' Meeting |
232 |
Changes to the length of Directors' terms of office – changes to bylaws
The shareholders authorize the Board of Directors to change the length of Directors' terms of office to five years.
Article 11 of the company's bylaws is hereby amended:
"The company is run by a Board of Directors composed of at least three members and a maximum of 15 members.
Each of the directors must hold at least 20 (twenty) shares for the whole of his or her term of office.
The Directors' term of office is five years. They are eligible for re-election.
The number of Directors or permanent representatives of corporations aged over 70 may not exceed one-third of the total number of Directors, this limit being noted and taking effect during each Ordinary Shareholders' Meeting.
When this limit has been reached, the oldest Director is considered to have resigned his or her office at the end of the Ordinary Shareholder's Meeting at which the limit occurred."
Authorization to be given to the Board of Directors to grant free shares
The Shareholders' Meeting, having reached the quorum and majority required for an Extraordinary Shareholders' Meeting, having considered the Board of Directors' report and the special report of the Statutory Auditors, and in accordance with Articles L. 225-197-1 et seq. of the French Commercial Code:
This authorization is given for a period of 29 months as from the date of this Meeting. It cancels and replaces the authorization given for the same purpose by the Ordinary and Extraordinary Shareholders' Meeting of February 8, 2010 in the seventh resolution.
The shareholders delegate all powers to the Board of Directors, which may be subdelegated under the conditions set out by the law and in the company's bylaws, in order to implement this authorization. The Board of Directors shall have full powers, notably to determine the identity of beneficiaries, or the category or categories of beneficiaries, the attribution of shares and the number of shares granted to each of them; to set the conditions and, where necessary, the criteria for granting shares and suspending provisionally the granting rights under the applicable laws and regulations; to name the dates of final grants and the dates by which the shares may be freely disposed; to register the shares freely granted in an account with the name of their owner, mentioning, where necessary, the nonavailability period and its duration, and to remove the non-availability of shares in each circumstance where allowed by this resolution or by the applicable regulations; to proceed, where it considers necessary, to an adjustment of the number of shares freely granted necessary to preserve the rights of beneficiaries, according to possible operations on the company's capital during the acquisition period, such as set out in paragraph 2 of Article L. 225-181 of the French Commercial Code, in the conditions it shall determine; in the case of new share issues, to charge, where necessary, against the reserves, profits or issue premiums, as it chooses, the amounts necessary for the release of such shares, record the capital increases carried out pursuant to this authorization and amend the bylaws to reflect the new capital.
Powers to carry out formalities
Full powers are given to the bearer of a copy or an extract of the minutes of this Meeting to:
Approval of the parent company and consolidated financial statements and of the Board of Directors' and the Statutory Auditors' reports
Having considered the Board of Directors' management report and the Statutory Auditors' general report, the shareholders approve said reports in their entirety, as well as the parent company and consolidated financial statements for the year ended December 31, 2010, as presented.
Based on the Board of Directors' recommendation, the Annual Shareholders' Meeting decided to appropriate the Faurecia company's income for the year end December 31, 2010 as follows (in euros):
| 1 – Source | ||
|---|---|---|
| Retained earnings carried forward from prior years | 221,505,124.65 |
|---|---|
| Net income for the year | 556,538,731.62 |
| 778,043,856.27 | |
| 2 – Appropriation | |
| Legal reserve | 27,826,936.58 |
| Dividend (€0.25 per share) | 27,591,682.00 |
| Additional paid-in capital | |
| Retained earnings | 722,625,237.69 |
| 778,043,856.27 |
Dividend payment
In accordance with the preceding resolution, the Annual Shareholders' Meeting decides that the net dividend of €0.25 per nominal share of €7 will be paid from June 3, 2011.
The proportion of dividends corresponding to company shares held by the company, on the payment date, will be allocated to Retained Earnings.
As required by law, it is hereby noted that dividends paid over the last three years were as follows:
| Number of shares carrying dividend | ||||
|---|---|---|---|---|
| Year | rights | Net dividend | ||
| 2007 | 24,395,048 | None | ||
| 2008 | 89,448,504 | None | ||
| 2009 | 110,366,728 | None |
Approval of the Statutory Auditors' special report on regulated agreements
The Annual Shareholders' Meeting, having considered the Statutory Auditors' special report on agreements governed by Articles L. 225-38 et seq. of the French Commercial Code, takes note of this report and approves the content and conclusions therein.
The Annual Shareholders' Meeting decides it will elect Ms. Linda Newton as a Director, in place of Mr. Frank Esser whose term of office expires at this Meeting, for a five-year term, i.e. until the 2016 Ordinary Shareholders' Meeting called to approve the financial statements for the year ending December 31, 2015.
The Annual Shareholders' Meeting decides it will renew the term of Mr. Jean-Claude Hanus whose term of office expires at this Meeting, for a five-year term, i.e. until the 2016 Ordinary Shareholders' Meeting called to approve the financial statements for the year ending December 31, 2015.
The Annual Shareholders' Meeting decides it will renew the term of Mr. Thierry Peugeot whose term of office expires at this Meeting, for a five-year term, i.e. until the 2016 Ordinary Shareholders' Meeting called to approve the financial statements for the year ending December 31, 2015.
The Annual Shareholders' Meeting decides it will renew the term of Mr. Philippe Varin whose term of office expires at this Meeting, for a five-year term, i.e. until the 2016 Ordinary Shareholders' Meeting called to approve the financial statements for the year ending December 31, 2015.
The Annual Shareholders' Meeting, having fulfilled the quorum and the required majority for an Ordinary Shareholders' Meeting, and having considered the report of the Board of Directors:
a) to maintain a liquid market for the company's shares through an investment service provider acting under a liquidity agreement that complies with the AMAFI Code of Ethics recognized by the AMF,
b) to purchase shares to be held and subsequently used in connection with external growth transactions (as consideration or in exchange for shares in another company), as permitted by the AMF,
c) to purchase shares for allocation to employees and/or corporate officers (subject to the conditions and according to the methods provided for by law), notably by way of stock option, share grant and employee share ownership plans,
d) to allocate shares to holders of securities that confer a right to company shares, by any means, immediately or on maturity, upon exercise of rights attached to such securities (including any hedging transactions relating to obligations of the company with respect to such securities) and in accordance with applicable regulations;
11
a) implement this authorization,
b) place any and all stock market orders and enter into any and all agreements, including recording share purchases and sales, in accordance with the applicable regulations,
Powers to carry out formalities
Full powers are given to the bearer of a copy of extract of the minutes of this Meeting in order to:
| STATEMENT BY THE PERSON RESPONSIBLE |
238 | CROSS-REFERENCE TABLE | 240 | |
|---|---|---|---|---|
| CROSS-REFERENCE TABLE WITH THE INFORMATION CONTAINED IN THE ANNUAL FINANCIAL REPORT |
239 |
Mr. Yann Delabrière
Chairman and Chief Executive Officer
I hereby declare that, having taken all reasonable care to ensure that such is the case, the information contained in the Registration Document is, to the best of my knowledge, in accordance with the facts and contains no omission likely to affect its import.
I further declare that, to the best of my knowledge, the financial statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets and liabilities, the financial position and the results of Faurecia and the consolidated companies making up the Group, and that the attached management report, the contents of which are shown on page 239, provides a fair view of the business, results and financial position of Faurecia and its consolidated companies, as well as a description of the main risks and uncertainties they face.
I obtained a statement from the Statutory Auditors at the end of their engagement affirming that they have read the whole of the Registration Document and examined the information about the financial position and the accounts contained therein.
The historical financial information for the year ended December 31, 2010, presented in the Registration Document, were the object of Statutory Auditors' reports. They appear on pages 172-173 and 202-203 of said document, which contains a number of observations.
The consolidated and parent company financial statements for the year ended December 31, 2008, presented in the Registration Document filed with the AMF under the visa number D.09-0200, were the object of Statutory Auditors' reports. They appear, respectively, on pages 140–141 and 169-170 of said document, which includes one observation.
Yann Delabrière
Nanterre, April 27, 2011
Mr. Frank Imbert Chief Financial Officer Faurecia 2, rue Hennape 92735 Nanterre cedex – France Tel.: + 33 (1) 72 36 70 00 Fax: + 33 (1) 72 36 70 07
For ease of reference, the following table presents the requirements for the Annual Financial Report which are included in this Registration Document in accordance with Article L. 451-1-2 of the French Monetary and Financial Code and Article 22-3 of the AMF's General Regulations.
| STATEMENT BY THE PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT | 238 | |
|---|---|---|
| MANAGEMENT REPORT | ||
| Analysis of the results, fi nancial position, risks and list of authorizations concerning capital increases of the parent company and the consolidated group |
8-26, 176-179 | |
| (Article L. 225-100 and L. 225-100-2 of the French Commercial Code) | 213-219 | |
| Disclosures required pursuant to Article L. 225-100-3 of the French Commercial Code concerning | ||
| factors that could at ect a public tender ot er | 215 | |
| Information on share buyback programs (paragraph 2 of Article L. 225-211. of the French | ||
| Commercial Code) | 217 | |
| FINANCIAL STATEMENTS | ||
| Parent company fi nancial statements | 179-201 | |
| Statutory Auditors' report on the parent company fi nancial statements | 202-203 | |
| consolidated fi nancial statements | 103-171 | |
| Statutory Auditors' report on the consolidated fi nancial statements | 172-173 |
| 1. | PERSONS RESPONSIBLE | 238 |
|---|---|---|
| 2. | STATUTORY AUDITORS | 4, 224 |
| 3. | SELECTED FINANCIAL INFORMATION | 5 |
| 21-26, | ||
| 4. | RISK FACTORS | 93-99 |
| 5. | INFORMATION RELATING TO THE ISSUER | |
| 114, | ||
| 5.1 | History and development of the company | 211-212 |
| 5.1.1 | Legal and commercial name of the company | 213 |
| 5.1.2 | Place of registration and registration number of the company | 213 |
| 5.1.3 | Date of incorporation and term of the company | 213 |
| 5.1.4 | Registered ou ce and legal form of the company | 213 |
| 5, 18, | ||
| 54-58, 115-117, |
||
| 119, | ||
| 131-133, | ||
| 5.2 | Investments | 186-187 |
| 6. | BUSINESS OVERVIEW | |
| 6.1 | Principal activities | 8-14, 53-58 |
| 8-9, 10-14, | ||
| 6.2 | Principal markets | 114-117 |
| 6.3 | Exceptional factors | 13-14, 19, 141-142 |
| Possible dependency of the issued as regards patents, licenses, and industrial, commercial | ||
| 6.4 | or fi nancial contracts | 21, 22, 215 |
| 6.5 | The basis for any statements made by the issuer regarding its competitive position | 10-14 |
| 7. | ORGANIZATIONAL STRUCTURE | 222-223 |
| 8-14, 91, | ||
| 207-208, | ||
| 7.1 | Brief description of the group | 211-212, 219 |
| 166-171, | ||
| 200-201, | ||
| 7.2 | List of signifi cant subsidiaries | 222-223 |
| 8. | PROPERTY, PLANT AND EQUIPMENT | |
| 8.1 | Existing or planned material tangible fi xed assets | 215 |
| A description of any environmental issues that may at ect the issuer's utilization | ||
| 8.2 | of tangible fi xed assets | 60-69 |
| 9. | OPERATING AND FINANCIAL REVIEW | 16-18 |
| 9.1 | Financial position | 18 |
| 9.2 | Operating results | 16, 17 |
| 10. | CAPITAL RESOURCES |
|---|---|
| 137-140, 207-210, |
||
|---|---|---|
| 10.1 | Information concerning the issuer's capital resources | 215-221 |
| 10.2 | Sources and amounts of cash fl ows | 18, 106 |
| 23-25, | ||
| 10.3 | Information on borrowing requirements and funding structure | 136-137, 148-151 |
| Information regarding any restrictions on the use of capital resources that have materially | 23-24, | |
| 10.4 | aH ected, or could materially aH ect the issuer's operations | 148-151 |
| 10.5 | Information regarding the anticipated sources of funds required for planned investments | 20, 23-25 |
| 11. | RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES | 51-58 |
| 12. | INFORMATION ON TRENDS | 20, 49, 53 |
| 13. | INCOME FORECASTS OR ESTIMATES | N/A |
| 14. | ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES AND GROUP GENERAL MANAGEMENT |
|
| 14.1 | Members of the administrative, management or supervisory bodies | 4, 72-91 |
| 14.2 | Administrative, management, and supervisory bodies and Senior Management confl icts of interests |
85 |
| 15 | REMUNERATION AND BENEFITS | |
| 85-90, 92, | ||
| 15.1 | The amount of remuneration paid and benefi ts in kind | 164, 195 |
| 15.2 | The total amounts set aside or accrued by the issuer or its subsidiaries to provide pension, retirement or similar benefi ts |
87, 142-147 |
| 16. | EXECUTIVE AND MANAGEMENT BOARD PRACTICES | |
| 16.1 | Expiry date of current terms of oQ ce | 77-84 |
| 16.2 | Service contracts between members of the administrative, management or supervisory bodies and the company |
85 |
| 16.3 | Information about the issuer's Audit Committee and Remuneration Committee | 74-76 |
| 16.4 | Corporate governance regime | 72, 213 |
| 17. | EMPLOYEES | |
| 17.1 | Number of employees | 5, 37-44 |
| 17.2 | Shareholdings and stock options | 34-35, 137- 140, 219-221 |
| 17.3 | Description of any arrangements for involving the employees in the capital of the issuer | 34-35 |
| 18. | PRINCIPAL SHAREHOLDERS | |
| 18.1 | Any shareholder owning over 5% of capital | 208, 219 |
| 208, 214, | ||
| 18.2 | DiH erent voting rights | 219 |
| 18.3 | Control of the company | 72, 215, 219 |
| A description of any arrangements, known to the issuer, the operation of which may | ||
| 18.4 | at a subsequent date result in a change in control of the issuer | 215 |
| 19. | RELATED PARTY TRANSACTIONS | 164, 196, 204-205 |
| 20.1 Historical fi nancial information |
5, 103-171, 179-197 |
|---|---|
| 20.2 Pro forma fi nancial information |
n/a |
| 20.3 Financial statements |
179-201 |
| 172-173, | |
| 20.4 Auditing of historical annual fi nancial information |
202-203 |
| 20.5 Age of latest fi nancial information |
12/31/2010 |
| 20.6 Interim and other fi nancial information |
225-227 |
| 165, 198, 214, 233, |
|
| 20.7 Dividend policy |
210 |
| 20.8 Legal and arbitration proceedings |
25, 142 |
| 18, 23-25, 114, |
|
| 20.9 Signifi cant change in the issuer's fi nancial or trading position |
149-151 |
| 21. ADDITIONAL INFORMATION |
|
| 137-140, 207-208, |
|
| 21.1 Capital stock |
215-221 |
| 21.1.2 Shares not representing capital |
N/A |
| 21.2 Articles of incorporation and bylaws |
213 |
| 21.2.1 A description of the issuer's corporate purpose |
213 |
| 21.2.2 A description of the rights, preferences and restrictions attached to each class of existing shares |
214 |
| A description of what action is necessary to change the rights of holders of shares, 21.2.3 indicating where the conditions are more signifi cant than is required by law |
214 |
| 21.2.4 Conditions governing the manner in which General Shareholders' Meetings are convened |
214 |
| An indication of the articles of incorporation, statutes, charter or bylaw provisions, if any, 21.2.5 governing the ownership threshold above which shareholder ownership must be disclosed |
214 |
| A description of the conditions imposed by the memorandum and articles of association, statutes, charter or bylaws governing changes in the capital, where such conditions |
|
| 21.2.6 are more stringent than is required by law |
214 |
| 22. MATERIAL CONTRACTS |
215 |
| 23. THIRD PARTY INFORMATION, STATEMENTS BY EXPERTS AND DECLARATIONS OF INTEREST |
N/A |
| 24. DOCUMENTS ON DISPLAY |
213 |
| 25. INFORMATION ON HOLDINGS |
166-171, 200-201 |
Faurecia REGISTRATION DOCUMENT 2010 243
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