Faurecia 2006 annual report

Transcription

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Safety
Environment
REGISTRATION
DOCUMENT
0705136_Faurecia_Ra2006GB_couv.QXD
06
Comfort & convenience
Design & perceived quality
A force for automotive progress
Technical perfection, automotive passion
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Board of Directors,
Executive Committee and Auditors
Page 2
Board of Directors
as of February 16, 2007
Yann Delabrière
Chairman and Chief Executive Officer
Contacts
Directors:
Louis Defline
Daniel Dewavrin
Patrick Duverger
Frank Esser
Jean-Louis Gérondeau
Jean-Claude Hanus
Gérard Hauser
Thierry Peugeot
Christian Streiff
Group Communications
Executive Committee
+33 (0)1 72 36 70 05
Financial information available online at www.faurecia.com (“Finance & Shareholders” section)
Yann Delabrière
Faurecia headquarters
Arnaud de David-Beauregard
2, rue Hennape
92735 Nanterre Cedex - France
EVP Group Development
Jean-Marc Hannequin
EVP Exhaust Systems Product Group
Max Hodeau
EVP Structures & Mechanisms Product Group
Frank Imbert
Chief Financial Officer
Patrick Koller
EVP Automotive Seating Product Group
Thierry Lemâne
EVP Group Communications
Jacques Le Morvan
EVP Group Purchasing
2007 Financial agenda
FEBRUARY 5
Publication of full-year and second half 2006 results, presentation in Paris
APRIL 18
Publication of first quarter 2007 sales figures
MAY 29
Annual General Meeting, Nanterre
JULY 18
Publication of first half 2007 results, presentation in Paris
OCTOBER 24
Publication of third quarter 2007 sales figures
Jacques Mauge
EVP Group Customer Development
Bruno Montmerle
EVP Group Strategy
James C. Orchard
EVP North America
Christophe Schmitt
EVP Interior Systems Product Group
Jean-Pierre Sounillac
EVP Group Human Resources
Guy Talbourdet
EVP Modules & Systems Product Group
Auditors
Members of the Compagnie
Régionale de Versailles
Photo credits: S. de Bourgies; A. Gonin; S. Muratet; Nick Parsons; Larry Peplin;
C. Peus; B. Schittny; Getty Images; Studio Rauzier – Rivière; Faurecia Photobank.
This registration document
(document de référence) was filed
with the Autorité des marchés
financiers (AMF) on April 24,
2007 pursuant to article 212-13
of 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.
PricewaterhouseCoopers Audit
Represented by Guy-Alain Sitbon
63, rue de Villiers
92220 Neuilly-sur-Seine
France
Edition: 146 & Compagnie
Design and publication:
Ernst & Young Audit
Represented by Laurent Miannay
Tour Ernst & Young
11, allée de l’Arche
92037 Paris La Défense cedex
France
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With world-class automotive industry expertise, Faurecia pursues a steadfast
policy of continuous progress, improvement and innovation in all six of the
automotive modules it designs, develops, manufactures and delivers to all
major automakers. Faurecia’s dedicated workforce of 60,000 people, at 180 sites
in 28 countries, is constantly developing the seats, doors, cockpits, acoustic
packages, front ends and exhaust systems that will be appearing in tomorrow’s
vehicles. All Faurecia teams worldwide take up this task with priority attention
to environmental protection, safety (for drivers, passengers and pedestrians),
comfort, perceived quality (in vehicle build and design), and the constant pursuit
of operational excellence. When you consider all this together, Faurecia
represents a genuine force for automotive progress.
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Chairman’s message
Yann Delabrière
CHAIRMAN’S MESSAGE
2
It was with great enthusiasm that I took up
Faurecia has equipped itself with
my duties as Chairman and Chief Executive
the capabilities to position itself as a worldwide
Officer of Faurecia on February 16, 2007.
automotive equipment supplier, with a customer
Following on from the initial phase, during
portfolio that includes all the world’s major
which Faurecia took shape, my mission will
automakers. Strong business development
now be to lead the Group into a second phase
is proceeding in Asia, America and Europe,
marked by growth across all its businesses
to provide a sound basis for long-term organic
and profitability among the highest
growth. With its worldwide production system,
in the industry.
Faurecia is able to serve its customers
On an industrial timescale, Faurecia is still
a young company, just approaching maturity.
After gradually forming over the 1997 to 2001
period from a merger between Ecia and
Bertrand Faure, followed by acquisitions
of AP Automotive Systems and Sommer
Allibert, Faurecia has grown into a world-class
player with strong international coverage and
industry-leading technological expertise
in all six major automotive modules:
seats, instrument panels & cockpits,
door panels, front ends, acoustic packages
and exhaust systems.
wherever the demand arises, with consistent
design, production and service quality.
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Faurecia teams must now build on this strong
development latitude, especially outside
position to achieve lasting profitable growth
Europe, and to strengthen its position as a
across all businesses. The starting point for
strategic partner to the worldwide automotive
profitable growth is the highest level of quality
industry.
in all the services Faurecia offers its customers.
The Breakthrough Quality Plan, launched in
late 2006, aims to achieve this by 2008.
Another prerequisite is operational excellence
in the design, development and launch of
new products, through the Faurecia Program
Acquisition & Management System. In addition,
Faurecia will be able to offer its customers
competitive prices, by optimizing its
production network and improving industrial
efficiency.
With motivated, highly skilled personnel,
Faurecia will be amplifying its product
innovation capacities to achieve greater
After a difficult year in 2006, when profitability
suffered serious erosion under the effects
of increased competition and rising raw
materials costs, 2007 should mark
the first signs of an upswing for quality,
products and operational efficiency across
all Faurecia’s businesses.
3
CHAIRMAN’S MESSAGE
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In all six of the modules it designs, Faurecia factors
in the high expectations of automakers and their end customers
regarding safety (for vehicle occupants and pedestrians),
onboard comfort and convenience, perceived quality,
and respect for the environment, all of which must be achieved
under reasonable economic conditions.
Our rationale: becoming a force for automotive progress
4
Safety
Faurecia develops integrated systems and materials
to provide the best possible protection for vehicle
occupants, pedestrians and cyclists. Two of the
many safety-related patents filed by Faurecia in 2006
exemplify the Group’s flair for innovation: the SBR
(Seat Belt Reminder) system, and the active headrest
that automatically moves in closer to the neck under
collision conditions. Another very significant Faurecia
innovation appears on today’s Citroën C6, the first
European car to achieve four-star ranking in
the EuroNCAP pedestrian impact test: a bumpermounted radar that triggers a hood rise mechanism a
couple of milliseconds before impact, to absorb
collision energy and prevent pedestrian contact with
the engine. These kinds of innovation have proved
instrumental in the wide-reaching take-up of Faurecia
solutions by many automakers in 2006.
A vehicle’s market success is increasingly
determined by the sense of well-being experienced
by its occupants. The vehicle interior must be
capable of adapting to different needs at different
times. As an automotive seating and vehicle interior
architect, Faurecia factors in these shifting
expectations to develop seats that are more modular,
easier to fold down, and capable of producing a flat
floor surface at the rear of the vehicle. Other major
improvements in 2006 concern enhanced trunk
functionality and more ergonomic controls.
Faurecia experts seek constant improvements
to interior ergonomics through developments such
as innovative glovebox design and ingenious new
seat mechanisms, all governed by priority attention
to safety and comfort.
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Environment
Faurecia approaches environment issues from
a number of angles, including lightweight vehicle
design, the use of natural and recyclable materials,
emissions control, and the elimination of hazardous
substances. There were two major exhaust system
innovations in 2006, with a lightweight complete
exhaust line for the Peugeot 207 and an exhaust
heat recovery system that accelerates heating of
the vehicle interior without increasing pollutant
emissions. Indeed, emissions control is one of Faurecia’s
main R&D priorities, with specific focuses including
adaptation to biofuel and flex-fuel engines. In 2006,
Faurecia also made considerable headway in the use
Economy
of natural materials in its modules (door panels, in the
main). Wood and wood fibers are making a comeback
in vehicle interior applications, as a supplement or
replacement for oil-derived products. Progress was
also made in end-of-life vehicle disposal, with major
efforts in floor mat and rear shelf design.
Design &
perceived quality
As consumers become increasingly demanding and
critical, design and perceived quality become
fundamentally important criteria. As well as designing
vehicles to be spacious, automakers also need to make
sure the vehicle interior gives an impression of
spaciousness. And this kind of overall impression
covers a multitude of more specific perceptions.
To address these issues, Faurecia has developed
a fully-fledged methodology for analyzing perceived
quality, in instrument panels, door panels, and extended
functionalities such as storage space, decoration,
control integration and modularity management. Other
current focuses for work along these lines include
fit and finish, the use of special tactile materials
(for a distinctive upmarket feel), indirect lighting,
and transparency effects.
To support automakers’ development initiatives,
Faurecia has set up a production system matched
to today’s global cost structures. Around 40%
of Faurecia’s production facilities are just-in-time
plants capable of meeting incoming demand in less
than three hours. The other sites – components plants
– are located to optimize an economic equation
whose terms include production cost, supplier’s
transport modes, and capacities for carrying finished
products to the automakers’ assembly lines.
Through this strategy, Faurecia significantly diversified
its customer portfolio in 2006 and strengthened
its positions in Central Europe, North America
and Asia. Faurecia opened 15 new sites in 2006,
and set up components platforms under a program
to standardize products for application to different
vehicle models.
5
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An innovation-rich year
No fewer than 800 new ideas,
on processes and products,
were evaluated under Faurecia’s
ongoing innovation program
in 2006. The R&D budget reached
5.2% of Group sales,
at €610.6 million.
Techdays –
encounters of
a new kind
6
Faurecia’s marketing, sales and
communications teams ran nine
Techday product-focus events
in 2006, spotlighting Faurecia
innovations for the benefit of
customers’ engineering and
purchasing teams. The outcome
was customer take-up of more
than 80 new products and
processes.
2
n
s
2
R
c
15
new sites opened
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7
200
new innovation projects
started in 2006
28
R&D and D&D
centers worldwide
Faurecia
took part in
15 major product
launches
Faurecia started production on many
major automaker programs in 2006,
including: Audi Q7 and TT,
Citroën C4 Picasso, Peugeot 207,
Opel Corsa, BMW Mini, Ford Galaxy,
Toyota Corolla, Skoda Roomster,
Chrysler Sebring and Dodge Nitro,
and Kia Carens.
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Contents
09_
11_
12_
14_
22_
114_
History
Overview of Faurecia in 2006
Key figures
Businesses
Financial report
Shareholders information
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History
An industrial history spanning two centuries
Faurecia’s present-day expertise reflects a long heritage, stretching back to the beginning of French industrialization. Though Faurecia’s
founding company Ecia (for Équipements et Composants pour l’Industrie Automobile) was formed in 1987 from the merger of Cycles
Peugeot and Aciers & Outillages Peugeot, its industrial tradition dates far back to 1810. In its present configuration, Faurecia is formed
from the three French companies Ecia, Bertrand Faure and Sommer Allibert. The first two merged in 1998, and the third joined the Group
in 2001. With net sales of €11 billion and a workforce of 60,000 in 28 countries, Faurecia stands as the second biggest automotive
equipment supplier in Europe and the ninth largest worldwide (1).
ROOTS
1810. Jacques Maillard-Salins and the Peugeot brothers Jean-Pierre and Frédéric set up a steel foundry to make saw blades
at Hérimoncourt, a village in eastern France, a few kilometers from the Swiss border.
1891. The first automobiles, in the modern sense, are made, powered by petrol engines. The first steel tubes follow, patented by Peugeot
and made at sites including Audincourt, in the Doubs region of eastern France.
1914. At Levallois-Perret to the west of Paris, Bertrand Faure opens his first workshop, making seats for Paris trams and underground trains.
1929. Bertrand Faure licenses the Epéda process, to improve the seats he makes for the automotive industry and develop a new
product that will make a lasting contribution to the comfort of millions of people: the spring mattress. Both businesses will take off in
a big way 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 hay merchant Joseph Allibert, who had founded the Allibert company in Isère (eastern France)
in 1910, decides to invest in a huge injection press, imported from the USA, to mould large plastic parts in a single piece. He turns away
from refrigerator manufacturers and towards the automotive industry.
1955. The Frères Peugeot company, one of whose subsidiaries is Peugeot et Cie, starts production of automotive equipment, diversifying
over time to make products such as seats, exhaust systems and steering columns. Operations extend outside France, and some products
are dropped to concentrate on new production lines.
1972. François Sommer, grandson of Alfred Sommer, merges his automotive floor coverings company with that of Bernard Deconinck
– 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 major automakers.
International expansion follows, with acquisition of Spanish company Lignotock, and stronger coverage of Germany, from 1993.
1987. Ecia (Équipements et Composants pour l’Industrie Automobile) is formed from the merger of Cycles Peugeot with Aciers
& Outillages Peugeot and undergoes ten years of intense industrial and geographical development. The company Bertrand Faure steps
up international development at the same time, rounding out the acquisitions made in 1977 in Spain and Portugal, with, for example, the
Rentrop Group in Germany. This makes Bertrand Faure European number one in automotive seating techniques and components.
Through the 1990 up to 1998, Bernard Faure concentrates on its automotive equipment business, selling off its other businesses in
bedding (Epéda and Mérinos), aeronautics (Ratier-Figeac) and luggage (Delsey).
1992. Ecia sells its bicycles business, followed by its tooling business in 1993, and makes significant acquisitions in exhaust systems
– Tubauto and Eli Échappement in France, Leistritz Abgastechnik in Germany and Silenciadores PCG in Spain – to become European number
one in exhaust systems. Its Seats division joins forces with the Spanish automotive equipment supplier Irausa to form the first
non-French subsidiary, Ardasa. Clients for exhaust systems, seats, interior fittings and front ends include Volkswagen, Renault,
Daimler Chrysler, Opel, Honda and Mitsubishi.
(1) Internal source
Faurecia – Registration document 2006
9
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FORMATION
December 11, 1997. Ecia launches a friendly bid for Bertrand Faure, bringing its direct and indirect stake in the Group to 99%.
The Faurecia Group, formed in 1998, focuses 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 above €4 billion, with a workforce of 32,000. As well as boosting size and leading to a worldwide position
in automotive seating, Bertrand Faure brings Ecia extended geographical and commercial coverage, especially in Germany, where the
company has strong links with manufacturers like Volkswagen and BMW.
Late 1999. The Faurecia Group extends its exhaust systems coverage in North America with acquisition of the US company
AP Automotive Systems.
October 2000. Faurecia purchases Sommer Allibert, with PSA Peugeot Citroën finance bringing its stake up to 71.5%. With good coverage
of Germany and Spain, the Group commands high market shares for vehicle interior fittings in Europe, especially for door panels, instrument
panels and acoustic packages.
2001. The Sommer Allibert acquisition is finalized through a buyback bid addressing Sommer Allibert minority shareholders. The resulting
group posts net sales of €9.6 billion. Faurecia then buys the remaining minority shares held by external shareholders in Sommer Allibert’s
German subsidiary SAI Automotive AG.
INTERNATIONAL EXPANSION AND PRODUCTION SYSTEM DEVELOPMENT
HISTORY
10
2002. The Faurecia Group acquires a 49% stake in the South Korean catalytic converter maker Daeki Industrial, number two
on 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 Precision, which
holds a 20% share of its market. This brings Faurecia’s Exhaust Systems division coverage of all continents. Faurecia is selected by the
Chrysler Group to supply complete seats, seat frames, instrument panels, central consoles, door panels and exhaust systems for
various forthcoming models. In Europe, the Group finalizes an agreement with Siemens-VDO on strengthening and extending their joint
venture (SAS) assembling cockpit interiors for BMW, DaimlerChrysler, the Ford group, Renault-Nissan and the Volkswagen Group.
2004. Faurecia again achieves growth above the European average, with high performance owing much to a significant rise in industrial
efficiency. Growth also arises from business development in North America and Asia. Across the Atlantic, Faurecia’s automotive seating and
exhaust systems businesses benefit from startup and build-up of various production programs. Faurecia opens a site at Auburn Hills, Michigan,
making complete seat units for General Motors’ Pontiac G6. At Wuxi in China, Faurecia starts making seat mechanisms and components for
clients addressing the Chinese and other Asian markets. And a just-in-time site opens in Changchun, delivering seats to FAW - VW.
In September, Faurecia opens a new development center at Shin-Yokohama in Japan, covering all Group businesses and demonstrating
the Group’s intention to strengthen ties with Japanese carmakers. Faurecia pushes ahead with industrial redeployment, opening ten new sites
in 2004: two in Central Europe, two in Western Europe and six outside Europe (in the USA, China, Mexico and South Africa).
2005. Faurecia adjusts its production system to match the shifting needs of the worldwide automotive industry more closely, and opens
nine new sites, four in Central Europe, three in China, one in Germany and one in the USA. Innovation and R&D operations are stepped
up at three French R&D centers, a world seat mechanisms center at Flers, a world complete seats center at Brières-les-Scellés and
a center specializing in seat foams at Magny-en-Vernois. To step up Korean operations, Faurecia raises its stake in Daeki (specializing
in exhaust systems for Hyundai) to 100%, and signs a co-enterprise agreement with South Korean company Kwang Jin Sang Gong,
specializing in door modules for Hyundai Motor and Kia Motors.
2006. With 15 new sites opened, 2006 is an exceptional year in Faurecia’s industrial development. Along with seven new sites opening
in North America, four in Central Europe and two in Asia, there is a new UK site making seats for BMW’s Mini, and an Iranian site
supplying Logan.
Since 2001, the Faurecia Group has achieved organic growth averaging 4% per year, as well as making various acquisitions to bolster
its competitive positions. Over the last three years, the Faurecia production system has proved highly vigorous, with 34 new sites
opening, mainly in North America, Central Europe and Asia.
Faurecia’s annual net sales today exceed €11 billion. Through a strategy focused on the design and production of six major vehicle
modules, with a strong emphasis on innovation and tight adjustment to the needs of automaker clients in Europe and the rest of the
world, the Faurecia Group today ranks among the world’s top ten automotive equipment suppliers.
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Overview of Faurecia in 2006
With a workforce of 60,000 at 180 sites in 28 countries, Faurecia is currently as a key partner to all major automakers, and holds leading
market positions for all six of the major vehicle modules it designs, develops, manufactures and delivers.
Automotive seating
N° 2 in Europe, N° 3 worldwide (1).
Cockpits and instrument panels
Doors and door panels
OVERVIEW OF FAURECIA IN 2006
11
Acoustic packages
N° 2 in Europe (1).
Front ends
Exhaust systems
Faurecia’s production system is specifically geared to supporting the development initiatives of its automaker clients. From the front line
of automotive industry innovation, Faurecia meets the requirements of today’s globalized cost structures while addressing strong
demand for distinctive vehicle features, as expressed by a large majority of motorists. At the same time, it pursues standardization, both
in response to automakers’ needs and as demanded to solve the increasingly tough economic equations facing equipment suppliers,
who today bear the full weight of development costs. To take up these challenges, Faurecia fields a worldwide network of 28 R&D
centers, located close to client sites and staffed by a highly skilled workforce of over 4,000 engineers and technicians. In 2006, Faurecia
allocated an R&D budget of €610.6 million, amounting to 5.2% of sales.
Over one third of Faurecia production facilities are just-in-time plants capable of responding within three hours to demand coming
in from client assembly lines. Then there are component sites, in Western Europe and low-cost countries, run for optimized purchasing,
manufacturing and transport costs. In 2006, Faurecia opened 15 new production sites, in locations consistent with the Group’s
expansion plans for new geographical regions, namely Eastern Europe, North America and China.
Of Faurecia’s 189 production facilities worldwide, 103 are in Western Europe, 27 in Central Europe, 22 in North America, 11 in South
America and 19 in Asia. This distribution reflects the Group’s international coverage and industrial redeployment over the last few years.
In today’s global automotive sector, Faurecia is Europe’s second biggest equipment supplier, and the ninth largest worldwide. Building
on top-class expertise, the Group has achieved rapid development outside Europe, especially in North America (19.7% growth in 2006)
and Asia (27.2%), through cooperation with US and Asian manufacturers such as General Motors, DaimlerChrysler, Ford Motor
Company and Hyundai.
(1) Internal source.
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Key figures
(in
€ millions)
2006
%
2005
%
2004
%
Sales
KEY FIGURES
12
Vehicle Interior modules
8,270.8
71.0
8,277.1
75.4
8,285.6
77.3
Other modules
3,377.9
29.0
2,701.4
24.6
2,433.9
22.7
11,648.7
100.0
10,978.5
100.0
10,719.5
100.0
69.2
0,6
267.2
2.4
Total
Operating income
Amortization of contractual customers relationship
Impairment of assets
(1)
Restructuring costs
Other operating income and (expenses), net
–
–
402.9
3.8
(119.4)
(1.1)
(233,5)
(2,0)
(180,0)
(1,6)
–
–
(169.2)
(1.5)
(137.6)
(1.3)
(58.6)
(0,5)
16.7
0,1
2.6
–
46.8
0,4
(437.6)
(3.7)
(172.8)
(1.6)
142.2
1.3
(447.9)
(3.8)
(182.5)
(1.7)
130.7
1.2
EBITDA (2)
587.5
5.0
758.6
6.9
883.2
8.2
Cash flow
330.6
2.8
521.1
4.7
700.1
6.5
Capital expenditure
302.2
2.6
433.9
4.0
399.4
3.7
Capitalized development costs
208.3
1.8
215.8
2.0
209.0
2.0
Gross R&D expenditure
610.6
5.2
628.1
5.7
594.9
5.6
Consolidated net income (loss)
Net income (loss) attributable to equity holders
of the parent
Employees (3)
65,682
61,722
62,507
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Shareholders’ equity
1,026.4
1,475.9
1,640.0
Net financial debt
1,698.5
1,604.2
1,543.3
(1) Includes impairment losses on the Vehicule Interior business of €197.8 million in 2006 and € 180 million in 2005 and in 2006 relates to goodwill (€125.0 million) and non-current assets
(€72.8 million).
(2) Operating income + depreciation, amortization and depreciation in value of property, plant and equipment and intangible assets.
(3) Including temporary staff.
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2006 sales
(in
€ millions)
2006
2005
Automotive Seating
at constant exchange rates
4,812.8
4,794.4
0,4
(0,2)
4,784.7
Vehicle Interior
3,458.0
3,482.7
(0,7)
(1.0)
3,500.9
Vehicle Interior modules
8,270.8
8,277.1
(0,1)
(0,5)
8,285.6
Exhaust Systems
excluding monoliths sales
2,659.4
1,278.6
1,961.3
1,111.2
35.6
15.1
14.4
1,714.9
1,020.0
Front-end modules
718.5
740.1
(2.9)
(2.9)
719.0
3,377.9
1,997.1
2,701.4
1,851.3
25.0
7.9
2,433.9
1,739.0
11,648.7
10,978.5
6.1
10,719.5
10,267.9
10,128.4
1.4
0,9
10,024.6
Other modules
Excluding monoliths
% change
2006/2005
2004
7.5
excluding monoliths sales
2006 SALES BREAKDOWN BY CUSTOMER
2.7%
Others
6.0%
BMW
7.4%
GM Group
2.0%
Toyota
2.4%
Hyundai-Kia
24.4%
PSA
Peugeot Citroën
2.5%
China
2.1%
South America
22.6%
VW Group
2.4%
Korea
2.6%
Other countries
12.8%
North America
25.6%
Germany
10.8%
Other European
countries
9.1%
DaimlerChrysler
10.9%
Ford Group
2006 SALES BREAKDOWN BY REGION(1)
2.6%
United Kingdom
12.4%
Spain/Portugal
26.3%
France
12.5%
Renault-Nissan
(1) CA total.
(1) Sales by destination country.
2006 SALES BREAKDOWN BY BUSINESS
41.3%
Automotive Seating
22.8%
Exhaust systems
71%
Vehicle Interior
Modules
29.7%
Vehicle Interior
29%
Other modules
6.2%
Front-end
13
KEY FIGURES
Total
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Businesses
15_ Business highlights
• Vehicle interior modules
– Automotive seating
– Vehicule interior
• Others modules
– Exhaust systems
– Front-end
20_ Research and Innovation
Page 14
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Page 15
Business highlights
Faurecia posted net sales of €11.6 billion in 2006, with a workforce of 60,000 across 28 countries. It is one of the world’s leading
automotive equipment suppliers, fielding expert know-how in the design, development, manufacture and delivery of six major vehicle
modules: seats, instrument panels, acoustic packages, door panels, front ends and exhaust systems. These product lines are divided
into two main segments: Vehicle Interior Modules (seats, door panels, instrument panels, acoustic packages) and Other Modules
(exhaust systems and front ends).
Throughout 2006, Faurecia maintained its strong emphasis on innovation, with 200 new projects emerging from the Group’s worldwide
network of 28 Research and Development and Design and Development centers. One of the new developments from the Automotive
Seating unit (which posted net sales of €4.8 billion for 2006 and employs around 33,000 people at 76 plants) in 2006 was a ventilated
seat offering optimum temperature under all conditions, for enhanced driver and passenger comfort. Another was the high-performance
foam that enables designers to maximize vehicle interior space without penalizing seat performance. Then the Exhaust Systems division
(net sales of €2.6 billion for 2006, with a workforce of 8,000 at 33 plants) made further advances in diesel particulate filter technology, an
area pioneered by Faurecia, as well as developing an innovative exhaust heat recovery system.
A new polyurethane skin developed by the Vehicle Fittings unit (net sales of €3.5 billion in 2006) was largely taken up by carmakers for
their top-end models in 2006. The Door Panels business developed an advanced-integration door module that dispenses with the need
for a window lift rail. This innovative system has been selected for use on several vehicles. The Acoustic Packages business developed
new soundproofing materials in 2006. The main innovation priorities for the Front Ends division in 2006 were cooling, structure, pedestrian safety and perceived quality. In 2006, Faurecia’s R&D budget reached 5.2% of net sales, at €610.6 million.
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2006 was characterized by the launch of a wide range of programs by Faurecia, addressing all major automotive manufacturers. Seven
of the new models unveiled at the 2006 Paris Motor Show featured equipment from Faurecia, including the Citroën C4 Picasso, advertised under the “Visiospace” signature. Opel’s new Corsa, BMW’s new Mini and Audi’s new TT are also equipped by Faurecia, as are
DaimlerChrysler’s Sebring sedan and new Dodge Nitro SUV. On a wider scale, Faurecia contributes to several vehicles from Ford,
General Motors and Volkswagen. In 2006, Faurecia significantly increased its market share in Asia, primarily with Hyundai-Kia. And 2006
was an exceptional year for worldwide development: consistent with its growth strategy, Faurecia opened 15 sites, most notably in North
America, Central Europe and Asia, whilst pushing ahead with improvements in industrial performance especially as regards quality,
safety and productivity.
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Vehicle Interior Modules
AUTOMOTIVE SEATING
Net sales
€4.8 billion
Workforce
Sites
Countries
R&D centers
32,200
76
17
7
Faurecia is number one in Europe and number three worldwide for automotive seats and seating mechanisms. Faurecia sales of
automotive seating modules reached €4.8 billion in 2006, little change on 2005. Sales to French carmakers sagged, while business with
German makers remained steady. The resulting downswing in Europe was balanced by a significant rise in sales in the rest of the world,
with slight growth in North America and a more pronounced increase in China.
For the Automotive Seating unit, 2006 saw successful launch of ten new programs: Peugeot 207 and Citroën C4 Picasso for the PSA
Peugeot Citroën Group, the new Mini and the new BMW X5 for the BMW Group, Galaxy and S-Max for Ford, the Chrysler Sebring, the
Mitsubishi Colt CC, the Skoda Roomster, and the Logan in Brazil. In all, Faurecia ran 56 automotive seating programs in 2006, making
and delivering over 120 million assembled units (reclining mechanisms, rails, and frames for front and rear structures) to all major
carmakers, along with 36 million seat elements in the form of full seats, covers, foam parts and headrests.
To support the development initiatives of its automotive clients, Faurecia also opened four new plants (two in the USA, one in China and
one in Iran), all operating to just-in-time principles. The Automotive Seating unit today has 76 plants (34 running on a just-in-time basis),
in 17 countries. In 2006, cost structures were optimized by new location arrangements for components plants, and design capacities
were stepped up in low-cost countries.
Wide-reaching product and process standardization was undertaken to improve quality through optimized management of investments
in product development and manufacture. At the same time, a number of improvements were made to the Faurecia purchasing policy,
to reinforce commodities management, cut back the number of suppliers, and step up supplies from certain low-cost countries.
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16
On the sales front, 2006 was rich in new programs, with the new Renault Mégane and Renault Scénic, the Nissan Teana in China,
the Peugeot 206 in Brazil, and the BMW 5 and 7 Series. Results here were obtained through significant improvements in industrial
performance, backed by the Automotive Seating unit’s farsighted R&D policy. Innovation is driven by a quest to enhance perceived
value, meet automakers’ requirements and reduce production costs, an essential factor given the heavy downward price pressure from
clients in 2006. Faurecia’s Automotive Seating unit ranked close to the top of the industry charts for patent applications in 2006, with 160
new innovations, including a passenger SeatBelt Reminder system (SBR), an active headrest that moves in closer to the neck under
impact conditions and a rear cushion concept featuring polyurethane foam instead of certain metallic parts, to help carmakers bring
down total vehicle weight.
As well as designing new products, the Automotive Seating unit also develops new technologies, such as a laser welding technique
for assembling metal parts without adding extra material to the join. This, again, contributes to lightweight vehicle design and makes
it possible to use new steels, without penalizing quality or safety. Faurecia consistently meets new regulatory requirements by discontinuing the use of chrome and by complying with product recyclability standards. In 2006, Faurecia’s Automotive Seating division
allocated 5.7% of sales to R&D.
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VEHICLE INTERIOR
Sales
€3.5 billion
Workforce
Sites
Countries
R&D centers
Client platforms
22,300
67
15
5
20
Instrument Panels & Door Panels
Acoustic Packages & Interior Linings
As European number two(1) in vehicle acoustic packages and interior textile linings, with 12 production sites, this Faurecia division
reported 2006 sales of €0.3 billion, on the rise from 2005. These good results, from business with most of the carmakers on the
European market, are explained by startup of many new programs, including trunk linings for the Ford S-Max, floor mats for the Audi A6
Allroad, soundproofing and trunk mats for the Peugeot 207 in Slovakia, trunk linings for the new Citroën C4 Picasso, full interior linings
for the new Dacia Logan estate, shelves for the Opel Corsa, and mats for the new Nissan Qashqai crossover. Outside Europe, the
division formed new partnerships in India, Russia, Korea, Turkey and Japan, on supplies for forthcoming vehicles including new models
from Renault and Nissan.
(1) Internal source.
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BUSINESS REVIEW
The vehicle interior fittings market in 2006 saw continued financial difficulties for several of Faurecia’s rivals, arising chiefly from the rising
costs of plastics raw materials, indexed to crude oil prices, and mounting pressure on sale prices. Against this backdrop, Faurecia kept
its positions as European(1) and worldwide number one in instrument panels, and worldwide(1) number one in door panels. Other salient
features of 2006 were the appearance of a new high-growth door panels business, and sustained automotive industry demand for
supplier support on international development platforms. Sales by Faurecia’s Vehicle Fittings unit in 2006 totaled €3.2 billion, a slight rise
on 2005. In Europe, sales to French manufacturers were significantly down, though demand was up from German makers on
the Mercedes Class S, Audi Q7 and Volkswagen Passat programs. There were further changes to Faurecia’s business scope in France,
Spain and Germany in 2006. A new site was opened at Písek in the Czech Republic, supplying door panels to several carmaker clients.
Outside Europe, 2006 was a transitional year in North America, with the release of the new BMW X5 and the opening of four new
Faurecia plants for the Chrysler program, at Fraser, Toledo, Puebla and Sterling Heights. On a buoyant Asian market, Faurecia made
considerable inroads, achieving strong growth in China and opening two plants for Ford.
Overall, 2006 was a very eventful year, with the launch of 39 production programs. European launches included Peugeot 207, Citroën C4
Picasso, Skoda Fabia, Skoda Roomster, Dacia Logan and Opel Corsa. In North America, in addition to the new BMW X5, Faurecia also
took part in the Chrysler Sebring and Dodge Stratus programs. For the Sebring, DaimlerChrysler took up two recent Faurecia innovations, the new TPO instrument panel skin and new door panel system. The Dodge Nitro will be the first vehicle from a US maker to
feature the new HIM advanced-integration door module, which features a rail-free window lift. Main launches in Asia were the S40 from
Volvo and the Galaxy and Mondeo from Ford.
The year was also rich in acquisitions, mainly addressing General Motors and Ford, a fact that confirms the strong ongoing
development of Faurecia’s business with these manufacturers. Indeed, Faurecia won Ford’s Team Value Management (TVM) award
for its “remarkable results and contribution” to productivity and cost control in Europe. For Ford’s TVM manager Alan Draper,
Faurecia was “a champion of proactivity”, putting forward improvement ideas capable of generating annual savings estimated
at over €15 million. New contracts were also signed with DaimlerChrysler, Volkswagen, PSA Peugeot Citroën, Renault and BMW.
Very significant quality improvements were achieved in 2006, bringing tighter control over production, better compliance with
program milestones, and closer involvement from suppliers. In 2006, Faurecia further narrowed its suppliers panel and stepped up
the shift of its suppliers base toward low-cost countries. With four worldwide R&D centers providing direct input to 55 plants,
Faurecia’s Instrument Panels & Door Panels division pursued improvements in perceived quality and new features such as stowage
space, decoration and versatility. Progress was also made in environment and material recycling issues, through research into the
use of natural fibers (wood, in the main) with a view to replacing petrochemical-based products. Safety was another major research
focus, and progress in this field included a specially reinforced airbag flap.
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In 2006, Faurecia broadened the scope of its acoustic engineering operations by developing a vehicle acoustics analysis method
that performs digital modeling to probe vehicle-wide acoustic phenomena and optimize performance to the three criteria of acoustics,
weight and cost. The new system implements products patented by Faurecia Light Weight, and has met with a very positive reception
from manufacturers including Ford and Toyota.
In 2006, the Faurecia Acoustic Packages&Interior Linings division also pushed ahead with reorganization, concentrating needlepunched carpet production at the Mouzon plant in France and closing the German plant at Hameln. All engineering teams in Germany
have now been brought together at Cologne.
Other modules
EXHAUST SYSTEMS
Sales (including monoliths)
€2.7 billion
BUSINESS REVIEW
18
Workforce
Sites
Countries
R&D centers
D&D centers
8,200
33
14
1
6
For Faurecia’s Exhaust Systems division, strong growth continued in 2006, with sales reaching €2.7 billion. Results confirm Faurecia’s
position as number one in Europe and number two worldwide for exhaust systems. The division’s 23 plants, plus 10 further just-in-time
sites, supply components and full exhaust systems to all major automotive manufacturers, on four continents. In all, Faurecia equips
around 13 million vehicles per year.
The world exhaust systems market is growing, under the combined effect of rising precious metal prices, implementation of the Euro 4
standard, and preparation for the Euro 5 standard, under which all new diesel engines will require particulate filters by September 2009.
Other factors include sustained efforts by most automakers on acoustic comfort and optimized useful vehicle volume. With its advanced
technologies and competitive performance, Faurecia significantly increased its share of the exhaust systems market in 2006, especially
in the USA, with the launch of new models by Ford and DaimlerChrysler, and on the Korean and Chinese markets. Major European
launches in 2006 were with PSA Peugeot Citroën, on the Citroën C4 Picasso, and with Ford, on the S-Max and new Galaxy. In the USA,
DaimlerChrysler selected full Faurecia exhaust lines for its Dodge Compass, Caliber and Patriot Jeep models, and Ford did likewise
for its Fusion model. In Asia, the Hyundai-Kia Group chose Faurecia technology for its Kia Carens and Hyundai Terracan models.
New just-in-time sites were opened at Trnava in Slovakia, supplying full exhaust lines for the Peugeot 207, and at Vigo in Spain,
supplying full exhaust lines for the diesel Citroën C4 Picasso. Outside Europe, two other sites were opened, at Wuhan in China and
Toledo in the USA. Faurecia Exhaust Systems also stepped up operations in China, with a new Shanghai development center addressing
manufacturers in Asia. In 2006, Faurecia introduced two major innovations in exhaust systems. The first, already featured as standard
on the Peugeot 207, was a full exhaust line 30% lighter than its predecessor, making an active contribution to fuel economy. The second,
used on the diesel Citroën C4 Picasso, as unveiled at the Paris Motor Show, was a heat recovery system that uses heat from the exhaust
system to achieve a rapid rise in passenger compartment temperature under cold weather conditions, and thus enhance interior
comfort. In anticipation of forthcoming US and European standards, Faurecia is also innovating in the treatment of nitrogen oxides
in diesel exhaust fumes, with its SCR (Selective Catalyst Reduction) system. With sustained R&D investment at 5.5% of sales (excluding
monoliths) in 2006, Faurecia Exhaust Systems continued to develop fresh capabilities to take up emerging technological challenges and
effectively tap into growing value in the exhaust systems market.
Pollution control continues to be one of Faurecia’s main research focuses, addressing intensifying demand from the automotive industry,
legislators and consumers.
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FRONT ENDS
Sales
€0.7 billion
Workforce
Sites
Countries
R&D centers
D&D centers
2,400
17
7
1
2
Sales for Faurecia’s Front Ends division reached €0.7 billion in 2006, driven by launch of several programs and by positive volume
effects, especially in Germany. As European number one and worldwide number two in front ends, Faurecia achieved sustained growth
in this sector in 2006, with new orders and startup of production in the USA, where potential is expected to run high. A number of innovations were introduced, building on the division’s prime know-how in function integration, production processes, energy absorption and
safety. A Faurecia-developed hybrid injection process combining plastic and aluminum materials made its first appearance on the new
Audi TT program. And the Citroën C6, the first European car to achieve four-star rating in the EuroNCAP pedestrian impact test, features
a bumper-mounted radar that triggers a bonnet rise mechanism a couple of seconds before impact, to absorb collision energy and
prevent pedestrian contact with the engine.
Faurecia’s Front Ends division stepped up industrial development in 2006, to keep pace with its clients’ international expansion
programs and address new markets. In 2006, the division moved into three new countries: Iran, Romania and Russia. The Hlolovec plant
in Slovakia, opened in late 2005, ran at full capacity, making front and rear bumpers and front ends for the Peugeot 207. In the USA,
Faurecia opened a new front ends facility at Sterling Heights (Michigan), supplying DaimlerChrysler’s new Sebring. This is the first
DaimlerChrysler program involving full outsourcing of front ends to a supplier site.
The division also pushed ahead with its plan on ongoing improvement to production performance. An upgrade program to bring paint
booths at bumper production sites into compliance with new environmental standards on emissions of volatile organic compounds had
begun 2005, and was completed in 2006. And quality targets set with clients were met.
In 2007, Faurecia’s front ends business will focus primarily on the startup of new programs and the integration of the bumper businesses
acquired from Cadence Innovation in France, under an external growth initiative that reinforces operations at the four production sites
in France (Audincourt, Bains-sur-Oust, Marles-les-Mines, Marines).
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BUSINESS REVIEW
Through orders obtained in 2006, the division will continue to win market shares for bumper products with the PSA Peugeot Citroën and
Renault Groups, and for front ends with Audi. Industrial expansion through new plants and signature of production partnerships will
enable the division to meet the growing market for front ends in markets such as the USA, and to satisfy service expectations
for manufacturers worldwide.
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Research and innovation
Faurecia places a fundamental emphasis on research and innovation, harnessing group-wide know-how through a determined strategy
that draws appropriate investment and is geared to meeting the needs of automotive manufacturers, eager for innovation in design,
performance, quality and cost. This strategy applies across all six of the vehicle product lines developed and manufactured by Faurecia.
Research and innovation are recognized as key prerequisites to successful Company performance. In a highly fragmented market, with
customer choice broadening and prices falling, automakers need innovative solutions capable of affording distinctive vehicle features.
But, above all in areas not directly perceptible to the end user, they are also looking for standardized products to help them solve the
tough economic equations imposed by market conditions. Standardization also means that production and delivery capacities can be
constantly adapted to client demand, with consistent reliability and quality regardless of plant location.
BUSINESS REVIEW
20
To address this need, Faurecia is stepping up its “component platform policy”, targeting maximum standardization for non-visible
vehicle parts. Product plans and market offerings are structured accordingly, and standards defined for both components and assembly
processes. One example of this approach is a seat frame for the worldwide General Motors platform, and a common cockpit structure
across different Ford Group models. In all, 200 new projects were started up in 2006, and 50 projects reached completion.
Along with its component platforms policy, Faurecia has also built firmly on the strong reputation it enjoys within the automotive industry
to develop closer cooperation at early stages in the vehicle development process, when the main vehicle design decisions are taken.
This means vehicle integration for Faurecia modules can be optimized during parallel coordinated design phases. This is a very valuable
opportunity for Faurecia, which is today able to cover all segments of the automotive market. Through this kind of arrangement, Faurecia
has been able to develop a wide-reaching range of simulation and virtual reality tools, cutting out the need for costly successive waves
of physical prototypes. For Faurecia, these new techniques open the way to faster and more reliable product development at lower cost,
without penalizing innovative capacity.
The year 2006 brought opportunities for extensive communications on these new development processes. For example, Faurecia’s
marketing, sales and communications teams worked together on the Techdays series of automotive industry product events throughout
the year. One of the communications highlights of 2006 was the Expertise and Development event, at which Faurecia demonstrated
its capacity to operate on a sound partnership basis, working with the manufacturer on joint innovation and development initiatives.
Products and demonstrations provided client engineering and purchasing teams with insights into Faurecia’s developments in digital
simulation, product validation and virtual reality. This kind of interface proved instrumental in take-up of over 80 new products and
processes in client development programs.
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On a broader scale, Faurecia’s strategic innovation approach, across all product lines, nurtures a wealth of ideas, which will then
undergo rigorous selection to feed specific innovation projects addressing all vehicle functions. Examples include new stowage
solutions, with high-functionality trunks, and enhanced seat modularity, with more accessible controls. By constantly fine-tuning the
human-machine interface in this way, these kinds of developments help generate a positive state of mind from the driver.
Another major research goal is perceived quality, of critical importance in determining purchase decisions. An increasingly important
factor here is the impression of interior spaciousness, along with part fits, acoustics, colors, lighting and materials. Today’s consumers
are becoming more educated and thus more critical with regard to visual and audible phenomena. Faurecia gives the greatest possible
attention to the quality of the materials it uses, and to environment issues. In 2006, the use of natural materials such as wood and wood
fibers was stepped up. Forthcoming developments might well see the emergence of plastics derived from vegetable matter.
Exhaust systems are naturally a major environment consideration, and Faurecia takes an instrumental role here, with its particulate filter.
Future developments will concern adaptation to emerging bio-fuel and flex-fuel engines. Another major environment issue is recycling
of scrap material, and substantial progress has been achieved here, primarily with floor mats and rear shelves.
Faurecia innovations received a number of industry awards in 2006. In January 2006, Faurecia door panels for DaimlerChrysler’s new
Dodge Nitro (featuring the world’s first application of advanced-integration design with rail-free window lift) won an Automotive
Innovation Award from the American Society of Plastic Engineers. The German Plastic Foam Industry Association awarded Faurecia first
prize in the industry category for its PUR Cast interior lining, using innovative polyurethane skin technology. Then in September 2006,
Faurecia won the French Design Institute’s Janus 2006 award for its Happy Attitude showcar, demonstrating a new approach to vehicle
interior linings.
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BUSINESS REVIEW
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Financial report
23_ Group Management Report
52_ Consolidated financial statements
91_ Parent company financial statements
In accordance with article 28 of European regulation no. 809/2004, the following information is included by reference in this registration document:
– the consolidated financial statements, the parent company financial statements, the corresponding Statutory Auditors’ reports, the comments on the consolidated financial
statements and the significant events of the year by business, set out respectively on pages 30 to 79, 87 to 103, 80, 104 and 6 to 11 in the 2005 Registration document filed
with the AMF on April 24, 2006 under no. D.06-0312;
– the consolidated financial statements, the parent company financial statements, the corresponding Statutory Auditors’ reports, the comments on the consolidated financial
statements and the significant events of the year by business, set out respectively on pages 25 to 61, 85 to 101, 62, 102 and 6 to 11 in the 2004 Registration document filed
with the AMF on April 26, 2005 under no. D.05-0552.
The sections not included in the 2005 and 2004 registration documents are either not applicable for the investor, or covered by another section in the registration document.
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Financial report
23_ Group Management report
24_ Comments on the consolidated financial statements
27_ Outlook
MANAGEMENT REPORT
30/05/07
28_ Risk factors
31_ Human resources and employee data
42_ Environmental data
23
46_ Environmental protection
FINANCIAL REPORT
51_ Subsequent events
52_ Consolidated financial statements
91_ Parent company financial statements
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Group management report
MANAGEMENT REPORT
Comments on the consolidated financial statements
OVERVIEW OF 2006
The year 2006 was marked by five key factors:
1. sustained sales growth despite lower sales volumes in France;
2. lower operating income due to declining sales volumes in Western Europe and persistent pressure on sales prices in a period of rising
raw material costs;
3. the recording of non-recurring provisions for restructuring operations and a non-recurring impairment loss in relation to the Vehicle
Interior business;
4. significant start-up costs in the United States;
5. contained net debt.
SIGNIFICANT EVENTS OF THE YEAR
FINANCIAL REPORT
24
Faurecia’s operating climate was particularly difficult in 2006. There was a major contraction in sales volumes with French automakers
and the price of raw materials remained high, notably for plastics. Despite this unfavorable backdrop, Faurecia’s sales rose year-on-year,
powered by robust contributions from Asia and North America. In addition, the Group continued to enhance its manufacturing performance, which in turn enabled it to improve its quality indicators, and October 2006 saw the launch of the “Breakthrough Quality Plan”,
aimed at raising the bar even higher.
In terms of results, however, operating income decreased considerably during the year and the Group had to record an additional
impairment loss for the Vehicle Interiors business. At the same time, Faurecia’s restructuring plan led to a high level of related costs,
primarily concerning the Seating Frame business in France and Germany and the adaptation of facilities to new workloads.
These restructuring costs peaked in 2006, particularly in France in order to counteract a fall in sales with French automakers. In tandem,
Faurecia speeded up the pace of shifting its manufacturing base to low-cost production areas. Since 2004, the Group’s headcount has
been reduced in “high cost” Western Europe by 19.0%, whereas in “low cost” Central Europe it has been increased by 94.0%.
The year 2006 saw the launch of an exceptional number of new sites, with a total of 15 coming on stream during the year. These included:
• one in Banbury in the United Kingdom for BMW, dedicated to manufacturing seats for the Mini;
• two in Central Europe, in Písek and Trnava:
– the Písek site, in the Czech Republic, comprises three multi-customer plants specialized in the production of seat structures,
instrument panels, door panels and exhaust lines,
– the Trnava site, based in Slovakia, is dedicated to manufacturing complete seat units and exhaust lines for PSA Peugeot Citroën;
• one in Russia, at Nijni - Novgorod, which will produce bumpers, instrument panels and door panels for Renault’s Logan;
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• seven in North America, in addition to the ten facilities already operating in the region. Faurecia will now produce:
– interior systems modules at new sites in Fraser and Sterling Heights, Michigan, and in Northwood, Ohio,
– seats on a just-in-time basis in Sterling Heights, Michigan and Fountain Inn, South Carolina,
– exhaust systems at a just-in-time facility at Toledo, Ohio and seating foam and head rests at another just-in-time plant at Shelby, Michigan,
– one in China, in Chongqing, dedicated to manufacturing just-in-time seating and interior systems modules for Ford,
– one in Tehran, Iran, which will house manufacturing facilities for the Logan.
In addition, in early January 2007, the Group took over part of the bumper business operated by Cadence Innovation, a company that
was placed in liquidation in late 2006. This involved Faurecia taking over Cadence Innovation’s operations at the Nœux-les-Mines site in
northern France, which supplies Renault and PSA Peugeot Citroën, and the Burnhaupt facility in the east of France, which supplies PSA
Peugeot Citroën. This acquisition fits with the Group’s goal of ensuring a long-term future for its four bumper manufacturing plants in
France. Also in 2007 Faurecia acquired the 50% interest held by the Portuguese automotive supplier Simoldes Plasticos in the Romaniabased company Euro Auto Plastic Systems (Euro APS). Euro APS manufactures and delivers instrument panels, door panels, bumpers,
trimmings, carpeting, and acoustic components for the Dacia plant in Pitesti, Romania, which works mainly on the Dacia Logan. Through
this acquisition Faurecia has significantly expanded the scope of its business with the Renault Group.
Faurecia’s consolidated sales totaled €11,648.7 million in 2006, up 6.1% on 2005, or 5.6% at constant exchange rates. Excluding sales
of catalytic converter monoliths and the currency effect, the increase was 0.9%.
Automobile production was generally flat in Europe, although it declined in Western Europe. Against this backdrop, Faurecia’s European
sales figure for the year (excluding catalytic converter monoliths) contracted by 2.8%. Sales with French automakers fell by 10.3%.
Outside Europe the Group continued down the growth path, posting sales rises of 19.7% in North America and 27.2% in Asia (based
on constant exchange rates and excluding catalytic converter monoliths).
The sales pattern for 2006 reflects Faurecia’s continued drive to diversify its customer base and rebalance its international structure.
For example, sales with the majority of the Group’s non-French customers were higher than the previous year – they increased with
Volkswagen for the Automotive Seating business, with Ford for Automotive Seating and Exhaust Systems, with Daimler for Interior
Modules, with BMW and Toyota for Automotive Seating, with Chrysler for all business lines, and with Hyundai for Exhaust Systems.
The Group also pursued its strategy of moving to areas with lower production costs in 2006.
MANAGEMENT REPORT
BUSINESS REVIEW
SALES BY BUSINESS SEGMENT
25
FINANCIAL REPORT
Sales for the Automotive Seating business edged up 0.4% year-on-year, to €4,812.8 million, while at constant exchange rates they
dipped by 0.2%. The figure dropped 3.9% in the first half of the year but then rose 4.0% in the second half. This second-half performance was fueled by the ramp-up in Europe of the Peugeot 207, the Ford Galaxy, the Citroën C4 Picasso, the Audi Q7 and the Toyota
Yaris, as well as by the launch of the BMW Mini.
Sales to French automakers slipped 14.5% in the second half of 2006 and 16.5% over the full year.
On the other hand, North American sales climbed 12.9%, spurred by business with Chrysler (Sebring) and General Motors
(Malibu, Pontiac G6 and Saturn Aura), as well as the start-up in the second half of the year of sales for the BMW X5. Growth in Asia was
10.3%, led by sales to the Volkswagen Group.
Sales for Vehicle Interiors came in at €3,458.0 million, a decrease of 0.7%, or 1.0% at constant exchange rates. Currency adjusted sales
rose 1.4% during the first six months of the year, but declined 3.4% in the second half.
In Europe, following a decline in the first half of the year, sales to French automakers slipped by an even stronger 8.9% in the second
half. This impact could not be offset by the ramp-up of the Mercedes-Benz S-Class, Peugeot 207, Volkswagen Passat and Audi Q7.
Sales grew 21.6% in North America, boosted by business with Chrysler thanks to the ramp-up of the PT Cruiser and the launch
of the Chrysler Sebring and Dodge Nitro.
Overall, the Interior Modules segment posted sales of €8,270.8 million in 2006, down 0.1% on 2005, or 1.0% excluding the currency
impact.
Sales for Exhaust Systems continued to climb steeply, increasing 35.6% to €2,659.4 million. This rise was partly due to a 61.9% jump
in sales of catalytic converter monoliths (at constant exchange rates), reflecting a hike in precious metal prices – especially during the
first half of the year – with platinum, palladium and rhodium up 27%, 59%, and 122% respectively.
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Other contributors to sales of catalytic converter monoliths included (i) the impact of Faurecia’s market share gains, particularly for Hot
End assemblies in North America, China and South Korea, and (ii) as the requirement for all European vehicles to adopt the Euro IV
standard at the beginning of 2006, leading to an increased quantity of precious metals used in pollution abatement equipment.
Excluding catalytic converter monoliths and the negative 0.7% impact of exchange rates, sales of Exhaust Systems advanced 14.4%.
Excluding catalytic converter monoliths, sales for this business line climbed 21.8% in North America – boosted by an increase
in business with Ford (Fusion, Explorer and Edge at the end of the year) – and rose 48.3% in Asia, spurred by higher sales of exhaust
lines for various Hyundai-Kia vehicles in South Korea and for Ford, Mazda, PSA Peugeot Citroën and Volkswagen in China.
In Europe, sales of Exhaust Systems rose 4.1% excluding catalytic converter monoliths, buoyed by the Audi A6 and Mercedes-Benz
A-Class and B-Class.
Over full-year 2006, Front End sales dipped 2.9% to €718.5 million at constant exchange rates. However, the second half saw growth of
2.0% thanks to the start-up of operations with Chrysler in the United States and the ramp-up of the Peugeot 207 and Renault Clio.
Altogether, the Other Modules segment reported sales of €3,377.9 million in 2006, up 25.0% on the previous year. Excluding sales of
catalytic converter monoliths, overall growth totaled 7.5%.
RESULTS
MANAGEMENT REPORT
Operating income for 2006 amounted to €69.2 million – compared with €267.2 million one year earlier – and represented 0.6% of sales,
down 1.8 point on the 2.4% recorded in 2005. For the second half of the year the Group recorded an operating loss of €15.9 million.
FINANCIAL REPORT
26
The overall decrease in operating income was attributable to the following factors:
• a drop in business with French automakers;
• persistent pressure on sales prices in a period of rising raw material and energy costs;
• start-up costs related to the opening of new sites, particularly in the United States.
Interior Modules (Automotive Seating and Vehicle Interiors) bore the brunt of the decline in profitability.
However, commercial negotiations – which are often difficult – are progressing in line with objectives and manufacturing performance
is showing signs of improvement.
Further to impairment tests carried out during the year, the Group recorded a €233.5 million impairment loss for certain intangible assets
and property, plant and equipment. Of this total, €197.8 million concerned Vehicle Interiors, breaking down as €125.0 million relating
to goodwill and €72.8 million for other assets. These impairment losses reflect i) the difficulties encountered by the Group in passing on
to automakers rises in raw material costs, especially plastics, and ii) forecast business volumes in Europe. The remaining €35.7 million
in asset impairment losses primarily concerned assets allocated to a loss-making program of the Automotive Seating business in
the United States and reflect manufacturing issues specific to that program.
EBITDA came to €587.5 million, or 5.0% of sales, versus €758.6 million (6.9% of sales) in 2005.
Operating margin for Interior Modules fell from 1.9% to a negative 0.5% during the year. The Automotive Seating business – which has
the Group’s largest and oldest manufacturing base – was particularly hit by the decrease in sales volumes in Western Europe.
Meanwhile, Vehicle Interiors margins were weighed down by the impact of start-ups in the United States, but this was partially offset
by operational improvements in Europe.
Operating margin for Other Modules fell back from 4.1% to 3.4%, mainly due to the dilutive impact of the strong growth in sales
of catalytic converter monoliths.
Gross research and development costs decreased 2.9% to €610.6 million, corresponding to 5.2% of sales, compared with €628.1 million
(5.7% of sales) in 2005. Excluding amounts billable to customers, R&D costs totaled €285.1 million, or 2.4% of sales, against €259.5 million
(2.4% of sales) one year earlier. The increase in net R&D costs was primarily due to the reduction in Vehicle Interiors sales.
Selling and administrative expenses totaled €357.1 million, representing 3.1% of sales, versus €320.5 million (2.9% of sales) in 2005.
Half of this increase stemmed from an unfavorable basis of comparison in 2006 due to the positive impact of non-recurring reductions in
pension costs in 2005, while the other half reflects the costs incurred in connection with the Group’s expansion outside Europe.
10:59
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“Other operating income and expense” – which represented a net expense of €386.0 million – mainly comprised:
• an impairment loss of €197.8 million recorded in relation to the Vehicle Interiors business (excluding Automotive Seating), breaking
down as follows:
– €125.0 million in goodwill impairment, and
– €72.8 million in impairment of other assets;
• an additional charge of €35.7 million, primarily corresponding to impairment of assets relating to an Automotive Seating program
in the United States;
• a €20.9 million gain on disposal of assets, principally generated by the sale of manufacturing buildings in Spain;
• an expense of €169.2 million for restructuring measures compared with €137.5 million in 2005. This amount corresponds to the costcutting and manufacturing reorganization plans previously announced, which mostly concern operations in France and Germany.
Net finance costs stood at €86.6 million, or 0.7% of sales, versus €65.5 million in 2005. This increase essentially stems from the impact
of higher interest rates, with the average interest rate on the Group’s borrowings rising to 3.9% from 3.2% one year earlier.
“Other financial income and expense” represented a net expense of €3.4 million, compared with a net expense of €12.6 million in 2005.
This line primarily includes:
• the impact of discounting pension benefit obligations, representing an expense of €9.5 million in 2006 (on a par with the year-earlier figure);
• income of €7.9 million arising from mark-to-market adjustments of currency and interest-rate hedging instruments whose value
increased due to the rise in interest rates.
The tax charge for 2006 was €35.2 million, compared with €52.8 million for the previous year. This amount does not directly reflect
the level of consolidated pre-tax income for the year as no deferred tax assets have been recognized for the majority of tax losses made
by Group subsidiaries. The tax charge is primarily based on the income of profit-making subsidiaries.
Equity in net income of companies accounted for by the equity method came to €4.4 million, versus €5.9 million in 2005.
The Group ended the year with a consolidated net loss of €437.6 million, or €447.9 million after deducting minority interests of €10.3 million.
The loss per share came to €18.72.
FINANCIAL STRUCTURE AND NET DEBT
Despite the decrease in operating income there was no significant change in the Group’s debt, mainly thanks to well managed capital
expenditure. After a €48.6 million climb in debt during the first half of the year, the rise in the second half was limited to €45.7 million,
resulting in an overall increase of €94.3 million for the full twelve months.
Cash flow from operations totaled €330.6 million (2.8% of sales), down €190.5 million on the prior-year figure of €521.1 million (4.7% of
sales). This decline is mainly attributable to the Group’s lower operating income.
Working capital requirement decreased by €64.6 million.
Capital expenditure for the year amounted to €302.2 million, or 2.6% of sales, €131.7 million lower than the 2005 figure of €433.9 million,
or 4.0% of sales. This reduction reflects the Group’s highly selective capital expenditure strategy, which focuses on the least capital
intensive solutions.
Capitalized development costs were also slightly lower in 2006, coming in at €208.3 million versus €215.8 million one year earlier.
Overall, net debt as of December 31 stood at €1,698.5 million, compared with €1,604.2 million as of end-2005.
Due to the significant net loss reported for the year, shareholders’ equity decreased to €1,026.4 million from €1,475.9 million
as of December 31, and the gearing ratio was 1.65, compared with the 31 December figure of 1.09.
Outlook
In 2007, Faurecia expects sales to grow at the same pace as in 2006, and operating income to improve as from the second half of the
year. In addition, the Group is aiming to significantly reduce its restructuring costs and keep a tight control over debt.
MANAGEMENT REPORT
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27
FINANCIAL REPORT
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Page 28
Risk factors
FINANCIAL RISKS
Faurecia is essentially exposed to financial risks relating to fluctuations in interest rates and the ensuing impact on financial expense.
Interest - and exchange-rate risks
A 1% increase or decrease in average short-term interest rates would have an impact on net financial expense of approximately €19.5 million
before tax and the effect of any interest-rate hedging.
As of December 31 2006, 86.4% of the Group’s long-term debt was at variable rates, compared with 86.1% at end-2005.
The main component of the Group’s fixed-rate debt is the €300 million bond issue carried out in October 2005.
The table below provides a schedule of maturities of financial assets and liabilities, according to the interest repricing date.
REPRICING DATE
(in € millions)
Intraday to 1 year
MANAGEMENT REPORT
Beyond 5 years
Total
1,940.5
586.6
4.0
340.6
0.0
2,285.1
586.6
Net balance sheet position
1,353.9
4.0
340.6
0.0
1,698.5
4.0
4.0
1,357.9
0.0
Net position after hedging
0.0
340.6
0.0
1,698.5
Interest rates are managed centrally at General Management level, with the aim of reducing the volatility of net interest expense.
Caps, swaps and other options in euros and US dollars continued to be taken out in 2006 to hedge interest on debt payable. In addition,
floors were purchased in order to benefit from any lowering of medium-term interest rates on fixed rate debt.
This policy has enabled the Group to hedge the majority of flows of interest payable in 2007 and 2008 and boost its interest cover ratio
for 2009.
(in € millions)
FINANCIAL REPORT
1 to 5 years
Borrowings
Cash and cash equivalents
Fixed rate/variable rate swaps
28
Within 1 year
Fixed rate
Caps and other options
Variable rate/fixed rate swaps
Floors
2007
2008
2009
2,940
132
639
1,508
76
75
795
263
225
3,711
1,659
1,283
Faurecia is also exposed to fluctuations in the exchange rates of certain currencies, particularly due to the location of some
of its production sites. Faurecia’s exchange-rate risk mainly arises from the translation of results recorded by consolidated companies
outside the euro zone. These companies, which accounted for 32.2% of Group sales in 2006, generally purchase and manufacture
components in their own currency without being exposed to exchange-rate risks other than the translation impact at the level of the
Faurecia Group. For example, based on 2006 results, a 1% change in the euro exchange rate against any other currency would have had
an impact of some €0.7 million on consolidated operating income.
The Group has set up a centralized exchange-rate risk management system for companies that carry some degree of exposure through
the purchasing of raw materials or other goods, or through the sale of their production in a currency other than their own. The Group
hedges these risks using futures or options, or loans in foreign currencies, applying strict internal control guidelines under the supervision of General Management.
In addition, subsidiaries outside the euro zone have been granted inter-company loans in their functional currencies, totaling €321.9 million
as of December 31, 2006. As such loans are refinanced in euros, exchange-rate risk is hedged through swaps. Details of net balance sheet
positions and currency hedges are provided in note 27.1 to the consolidated financial statements.
The off-balance-sheet commitments described above or mentioned in the notes to the consolidated financial statements include
all significant information required to assess the Group’s financial position.
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Liquidity risks
For its financing, Faurecia has access to a medium-term syndicated line of credit of up to €1.6 billion which can be drawn down
for renewable periods of one to six months. This line of credit was set up in 2004 and will expire in November 2009. In addition, in
October 2005, Faurecia issued €300 million-worth of bonds, maturing in October 2010. This bond issue enabled the Group to diversify
its sources of financing.
The syndicated line of credit is also used to guarantee liquidity for Faurecia’s commercial paper program, which is capped at €850 million.
As of December 31, 2006, Faurecia had issued commercial paper representing a total amount of €484.3 million with maturities ranging
from one month to one year.
The bond indenture and the contract relating to the syndicated line of credit contain covenants based on consolidated financial ratios.
These ratios are disclosed each half-year. Their value as of December 31, 2006 is presented in the table below.
Type of ratio
Adjusted net debt (1)/EBITDA
EBITDA/net interest
Dec. 31, 2006
Value as of
June 30, 2006
Dec. 31, 2005
Ratio
Amount
Ratio
Ratio
Ratio
2.97
6.78
1,743.6/587.4
587.5/86.6
2.44
9.27
2.19
11.58
2.19
9.51
Contractual ceiling/floor
3.50 ceiling
4.50 floor
Dec. 31, 2004
COMMERCIAL, LEGAL AND TECHNICAL RISKS
As a manufacturer and assembler of parts and components for the automotive industry, Faurecia is exposed to the risk of technical
or commercial disputes. Adequate provisions are set aside to cover the risks relating these operations based on known factors and information available at the balance sheet date. None of these risks are sufficiently material on an individual basis to warrant further specific
disclosures.
Although the risks of environmental damage caused by the Group are low, Faurecia pays particular attention to environmental issues
when carrying out its business. The information on environmental protection provided in this report demonstrates the Group’s pro-active
policy of controlling the impact of its equipment and products, as well as its constant drive to implement an environmental monitoring
system tailored to the requirements of each site.
Priority is also given to personal ethical conduct as part of the Group’s overall risk management approach, and will be even more closely
monitored in light of the behavior of certain individuals in Germany during the year. The Group could not avoid the media backlash that
came after prosecutors in Frankfurt and Munich launched proceedings against certain of its employees. Internal and external audits
were performed further to these events which confirmed that they were isolated non-material incidents and that they did not have a
significant effect on the financial statements of the Company or the Group. A provision of €3.9 million has been set aside in relation to
these proceedings. The case brought in Munich has been closed and all of the individuals involved have left the Group. Against this
backdrop, Faurecia has overhauled its Code of Ethics which has been widely communicated throughout the Group. In addition,
employees have been provided with specific personalized training courses, particularly in Germany.
Lastly, the Group has not identified any risk of technological dependence in relation to its products, modules and systems. This reflects
Faurecia’s pro-active strategy – implemented at its 28 R&D centers – to create its own designs and control the patents that are essential
for its operations.
29
FINANCIAL REPORT
Failure to comply with the above-mentioned ceiling/floor at a given reference date would entitle the lenders or bondholders to demand
the repayment of the borrowings concerned in advance of term.
Each lender participating in the syndicated line of credit may individually demand the early repayment of its share of any drawdowns
and terminate its participation in the contract, which would remain in force for the other lenders. Concerning the bond issue,
bondholders are entitled to redemption at par of all or some of their bonds plus the accrued interest outstanding at the date on which
the application for early redemption is made.
MANAGEMENT REPORT
(1) Adjusted net debt = consolidated net debt + adjustments for certain commitments given, based on definitions provided in the credit contract (e.g. mortgages or collateralized liabilities).
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INSURANCE
Faurecia’s system for safeguarding its assets is based on the implementation and ongoing adaptation of its risk prevention policy as well
as its strategy of transferring high-level risks to the insurance market.
MANAGEMENT REPORT
Industrial risk-prevention policy
FINANCIAL REPORT
30
Faurecia’s industrial risk prevention policy is part of the Group’s Health, Safety and Environment strategy. The aim is to reduce accidents
caused by fire and encourage Group sites to achieve excellence in fire safety by obtaining the HPR (Highly Protected Risk) label from
Faurecia’s insurer. Since 2005, the insurance premiums for sites that have been HPR certified have been reduced by 20%.
The HPR policy is based on the following priorities:
• regular safety audits, carried out every two years on average by the Group’s insurer. Some 80 fire safety audits were performed
in 2006. Approximately half of the Group’s sites are classified as HPR or pre-HPR. Four new sites – Deeside, East London, Pulversheim
and Sandouville IS – were HPR certified in 2006 and substantially all of the sites audited during the year had their ranking either
renewed or upgraded. Some 100 further audits are planned for 2007. 90% of Faurecia’s plants and technical centers have been
audited since the HPR policy was launched. The audit process for the Group’s Chinese sites began in 2005 and continued into 2006;
• incorporating fire safety factors into the early stages of any plant design or major refurbishing of existing sites, through compartmentalizing and ensuring that adequate fire safety equipment is available;
• experience feedback: incidents are systematically analyzed and the findings circulated throughout the HSE network;
• an Intranet-based fire safety management system developed by Faurecia, through which the HPR policy is relayed to the entire Group.
This system provides online information including audit findings, technical specifications, feedback and best practices.
Three averagely serious incidents occurred in 2006 – (i) a storage warehouse for bumpers was destroyed by arson in Audincourt, France,
(ii) a site used by a sub-contractor for injecting plastic parts produced by the Ourense site in Spain was burned down, and (iii) a fire broke
out on an injection molding machine in Méru, France.
The two fires at Audincourt and Ourense were caused by factors beyond Faurecia’s control but the Group intends to boost its preventative measures in order to better protect its assets due to events involving suppliers or external parties working at our sites.
Risk transfer policy
FIRE, PROPERTY AND CASUALTY, AND BUSINESS INTERRUPTION INSURANCE
On July 1, 2006, Faurecia renewed its fire, property and casualty, and business interruption insurance policy for two years with a leading
insurance company.
The premium payable under the renewed policy was reduced by 7% and the coverage conditions were improved. These changes reflect
both a downward trend in the insurance market as well as recognition by the insurance company of Faurecia’s risk prevention and
reduction policy.
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 in certain countries for specific risks such as natural disasters or terrorism.
LIABILITY INSURANCE
Faurecia renewed its liability coverage on January 1, 2007. The premium has been raised under this renewed policy due to a significant
number of product liability claims in 2006.
The Group’s liability insurance breaks down as follows:
• operational liability;
• product liability;
• liability for environmental damage.
Liability insurance takes the form of a “Master” policy combined with local policies taken out in countries where Faurecia has
subsidiaries.
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Human resources and employee data
SKILLS DEVELOPMENT
Reflecting the Group’s strategy of providing excellent customer service, human resource management is a considerable competitive
advantage for Faurecia and one of the keys to its success. The Group’s strategy in this area is based on two pillars: employee
empowerment and developing the potential of engineers and managers.
Employee empowerment
Employee empowerment is a fundamental lever for Faurecia’s industrial performance. Forming the basis of the Faurecia Excellence
System (FES), it underpins the whole approach by building on the role of management and the skills of the Group’s teams, as well as
working methods that ensure changes are embedded over the long term. It is structured around six priorities:
TRANSFERRING SKILLS TO OPERATORS
Enhancing efficiency requires a reactive organizational structure, which is essential to the Group’s competitiveness. This entails reducing
the size of the Group’s teams, enabling managers to closely monitor and encourage team performance. Priority is given to identifying
and resolving problems as rapidly as possible and in close proximity to where they occur. Faurecia trains its operators to be flexible
and multi-skilled in order to increase responsiveness and the ability to adapt to changing customer needs. In line with this strategy,
the Group has also concentrated on having smaller teams at the manufacturing sites – an organizational structure that continued to be
rolled out in 2006. By the year-end, 88% of the Group’s teams were structured along these lines.
This is a necessity for Faurecia as it determines the Group’s ability to satisfy its customers’ requirements. In order to optimize the contribution of each team member and enhance team efficiency, we have standardized tasks. Implementing tried and tested work methods
such as QRQC (Quick Response Quality Control) and focusing on continuous improvement strengthens the bond between team
members, thus helping to make them more efficient. Pilot projects were set up in Saint-Michel, Bains-sur-Oust (France) and Valencia
(Spain) to encourage greater involvement from teams in designing and improving the sites’ standards. These projects were successful,
both in terms of their impact on performance and input from the employees concerned.
MANAGEMENT REPORT
PROMOTING TEAMWORK
ENCOURAGING OPERATING INFORMATION FLOWS
Operating efficiency hinges on the ability to communicate quickly. By communicating daily with each team, problems can be dealt with
more swiftly. Operators at each level are responsible for solving problems and for informing their line manager if they cannot reach
a solution on their own. Regular daily communication with management is now firmly established at 88% of the Group’s sites and has
proved its worth in terms of problem solving.
Employee empowerment makes continuous improvement the responsibility of teams and individuals. At Faurecia, each team is responsible for defining its performance indicators (QCDP: Quality, Cost, Delivery, People), measuring them and improving them. Each manager
is responsible for orchestrating this process. The Group’s pilot site at Auchel in France has already made significant progress in terms
of setting and monitoring objectives through changes in its organizational structure.
ENHANCING EMPLOYABILITY
Faurecia hones the technical and behavioral skills of employees by making them responsible and providing them with methods for
working as a team. Faurecia is a group that promotes the development of its personnel and therefore helps to increase their employability.
TRAINING EMPLOYEES
Training at all of Faurecia’s sites focuses on improving its industrial performance through the following:
1. prioritizing costs, quality, deadlines, and safety;
2. deploying the Faurecia Excellence System (FES);
3. increasing product/process technical expertise;
4. developing skills throughout all functions;
5. strengthening managerial skills;
6. reinforcing skills for working in an international environment.
Employee training measures were stepped up in 2006, with the number of hours of training received per employee climbing to 28 compared
with 22 in 2005.
This focus on employee training is a key factor in constantly boosting the Group’s industrial performance and enhancing individual
employability.
FINANCIAL REPORT
31
ENSURING CONTINUOUS PROGRESS
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Developing the potential of engineers and managers
In order to succeed both now and in the future, Faurecia needs the best teams of managers and experts, driven by the pursuit
of excellent customer service. Consequently, the Group is committed to continually building the skills and motivation of its teams
and identifying future needs.
CHANGING IN LINE WITH GROUP DEVELOPMENTS
MANAGEMENT REPORT
Faurecia is keenly aware of the importance of constantly adapting resources in line with both changes in customer requirements
and developments in the Group’s organization. In order to ensure that we keep up our standards of excellence while implementing these
changes, during the year we continued to roll out our network of career management specialists for both managers and technical experts.
FINANCIAL REPORT
32
TAILORING RESOURCES TO CHANGING NEEDS
Patterns adopted in 2005 in terms of engineering and managerial employees continued into 2006. Out of a total of 9,550 engineers and
managers employed by the Group, some 40% work outside Western Europe. 70% of engineering and managerial recruitments were
made in the Group’s growth regions of North America, Central Europe, Asia and South America. At the same time, we continued
to implement our policy of strengthening skill-sets in Western Europe by recruiting 44 technical experts brought in to work in new areas
or to bolster our know-how of specific technologies.
Over 79% of vacancies in Western Europe were filled internally. Mobility between product lines represented 20% of the total
1,700 employee mobility programs carried out. Some 80% of program manager positions and 72% of plant manager vacancies were
filled through in-house promotions. In 2006, we also reaped the initial benefits of our policy of building up talent pools, with 75%
of senior management vacancies filled internally. At the same time, 55% of junior management positions were taken up by internal
candidates and we maintained our policy of hiring young graduates. We signed 66 contracts under the “VIE” international voluntary
internship system during the year and 90% of VIE interns were recruited at the end of their internship contracts. We also extended
our targeted graduate recruitment scheme to Germany, Poland, the United States and China and during the second half of the year,
69% of our graduate hires came from our selected universities and colleges, compared with 33% in the first half.
PERSONALIZED AND PRO-ACTIVE CAREER MANAGEMENT
Faurecia first and foremost encourages its engineers and managers to deepen their skills in their core discipline in order to hone their
expertise and enhance the value of their experience. Within the Group’s support functions such as Purchasing, Human Resources,
Finance and IT, as well as in Research and Development, over 85% of career moves are made within the domain of expertise of the
employees concerned.
The possibility of moving into a different domain subsequently allows them to learn new technical expertise and acquire managerial
skills. Over 450 engineers and managers worldwide moved into a new technical area in 2006, representing almost a third of the Group’s
employee mobility figure.
The Group has made internal promotion a priority and has set very high standards with a stated objective of promoting the next
generation of top managers and experts from within. In line with this aim, our promotion rate rose to almost 10% in 2006 compared with
8% the previous year.
Opportunities for personal development are available to everybody within the Group based on demonstrated individual performance
and potential.
Consequently particular focus is placed on managing internal staff career moves to ensure that employees hold suitable positions both
in the short and medium-term. Almost 75% of people identified as ready to change posts were effectively given new positions in 2006.
Faurecia considers its experts and managers to be of vital importance to the Company and strives to ensure that both categories receive
equal recognition and are offered the same opportunities.
2006 marked the second year of our process of identifying and rewarding the expertise of our employees, as a result of which we
appointed 57 new specialists during the year. We also appointed five new senior experts, demonstrating our ability to strengthen the
business-specific skills required for each product line. We now have 174 experts, including 63 industrial specialists.
Our intranet-based careers communication tool, Career Path, was visited 21,000 times during the year and was particularly popular at the
time of annual appraisals and career interviews. This interactive site has enhanced the communication process between engineers and
managers concerning the best way to build their professional skills either within their current business or by moving to another position.
MANAGEMENT – KEY MEASURES FOR STRENGTHENING OUR RESOURCES
All of Faurecia’s managers play a key role in the development of the Group’s teams.
In 2006, 1,200 managers attended training courses on assessing individual performance with a view to deepening their understanding of
the procedures and aims of this annual process which is intended to raise employees’ awareness of their strengths and weaknesses.
At the same time, the Group implemented the 360° assessment procedure for its senior managers, which paved the way for further
enhancing managerial practices and leadership skills.
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In addition, we have drawn up new skills appraisal scales for sales, manufacturing methods, production and program management
to round out those that already exist within other areas such as purchasing, human resources and finance. The Human Resources
department is responsible for coordinating the overall career management process and over 4,500 engineers and managers met individually with their career manager during the year.
We have also created a brochure entitled “Your career at Faurecia” for all managers, which was downloaded 5,500 times during its first
month of availability. This document provides the Group’s engineers and managers with a deeper understanding of the career
management objectives applicable to their category of personnel, and what Faurecia expects of them, as well as giving a clear description
or roles and responsibilities.
BUILDING FOR THE FUTURE TODAY
At the 2006 Staffing Review, 5% of the Group’s top 900 engineers and managers were identified as high-potential employees. The collective
nature of the review process, from the shop floor right up to the Chairman, ensures the consistency of the whole procedure.
Consolidating the two assessments – performance and potential – enables the Group to define succession plans for its management
teams at each level of the organization. In 2006, we were able to identify 76% of the successors for our management employees
(173 people), compared with 66% in 2005. Out of the 2006 figure, 45% are available within a one-year timeframe.
A SPECIFIC PROCESS FOR ANTICIPATING FUTURE NEEDS
A CONSISTENT TRAINING APPROACH
As well as defining the Group’s leadership profile and seven key behavioral values, we have designed and implemented a training system
aimed at developing the career paths of our young talent, providing strategic training for senior managers, and building team
management skills. The system will be rounded out in 2007 through additional training modules concerning communication and team
management.
Faurecia University
MANAGEMENT REPORT
In 2006, the Group’s medium-term plan included for the first time an analysis of the impact on human resources of changes in our operations. This assessment was carried out for four key positions – plant manager, program manager, quality manager and sales manager –
in the four countries undergoing the most rapid changes, namely the United States, Germany, Poland and China.
This approach should enable us to better leverage the individual skills and experience acquired by our employees within the Group and,
in parallel, effectively measure and forecast our requirements.
TRAINING PROGRAMS SERVING GROUP NEEDS
33
FINANCIAL REPORT
In 2006, the Group continued to focus on personal skill development for its employees via the training courses provided by Faurecia
University. During the year 3,651 employees from 20 countries attended at least one of the 251 courses given by the University.
In tandem, by working in close cooperation with the Group’s Industrial Management department, the University has taken measures
to structure its training courses, particularly concentrating on providing internal trainers and on-site programs and workshops geared
to the Group’s equipment and methodology. These programs, combined with those offered under in-house training courses as part
of the Faurecia Excellence System (FES), have helped the FES to take root throughout the Group and at the same time have significantly
contributed to our operating performance. Faurecia University has also developed a sales team program in conjunction with the Group
Customer Development department which will be delivered by sales and marketing managers. This new program will complement
the existing Purchasing and Human Resources programs and will focus on the roles and responsibilities, processes and key objectives
of the sales function within the Group.
During the year, we also pushed forward with our drive to enhance the skill-sets of employees identified as holding key positions. Building
on existing programs for both current and future production and program managers, we set up a new program in 2006 for managers
of Autonomous Production Units and production supervisors. These positions are considered essential for the Group as they concern
managers who are responsible for constantly improving our production performance. In 2007, this new program will be simultaneously
launched in seven of the Group’s main host countries.
Lastly, we continued to invest in our current and future leaders through the Global Leadership Program (GLP). In 2006, 181 employees
participated in GLP programs including 29 who followed the GLP III in partnership with the prestigious INSEAD Business School.
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NUMBER OF PARTICIPANTS
2006
2005
% change
Leadership development
Replacement of key positions
Job-specific development
Foundational skills
Manufacturing training
181
70
324
2,268
808
111
73
231
3,691
620
63%
–4%
40%
–39%
30%
Total
3,651
4,726
–23%
Talent sourcing within the Group
MANAGEMENT REPORT
ATTRACTING AND RETAINING THE NECESSARY RESOURCES AND SKILLS
In 2006, the Group recruited a total of 1,650 managers on fixed-term and open-ended contracts throughout the world. As expected,
the breakdown of these new hires reflects the Group’s expansion in Eastern Europe (which accounted for 16% of the new managerial
recruits), Asia (12%) and the Unites States (30%) as well as the restructuring measures in progress in Western Europe (38%).
This shift in our hiring requirements led to increased recruitment difficulties but at the same time contributed to reducing employee
turnover. Candidates with the right skills are becoming rare in numerous countries where the Group operates – a trend that looks set
to amplify in coming years.
Recruiting the right talent is a major strategic issue for Faurecia and with this in mind the Group has decided to set up Talent Sourcing
functions in its main host countries of China, France, Germany, Poland, Slovakia and the United States. The aim of this process is
to significantly increase both the volume and quality of recruitment candidates through measures such as developing partnerships with
targeted universities and colleges, improving employee integration processes and using a selected panel of recruitment agencies and
consultancies. In addition, the Talent Sourcing function contributes to reducing HR costs.
Through all these measures, the Talent Sourcing function – in conjunction with the Management Development network – plays a key role
in building up the Group’s talent pool and facilitates internal mobility. The Group’s priority in this area is to attract, promote and retain the
best talent, which it intends to achieve by initiatives such as recruiting graduates (34% of external recruitments in France) from selected
institutions (20% of graduate recruits in France), as well as keeping down the number of external hires and providing career opportunities
to existing employees (61% of the internal mobility figure in 2006).
STRENGTHENING ECONOMIC AND SOCIAL DIALOG
A focus on contractual negotiations
FINANCIAL REPORT
34
In 2006, the Group made further strides in applying its policy of consulting and negotiating with employee representatives, with some
184 agreements signed during the year, versus 130 in 2005. 30% of these new agreements concerned salaries and benefits, compared
with 53% in 2005; 30% related to work organization (23% in 2005); 13% dealt with the employee-related aspects of restructuring
measures (6% in 2005); and 26% involved other issues (18% in 2005). France accounted for 99 of these agreements in 2006 and
Germany 47. By negotiating and consulting with employee representatives in these two countries, we were able to maintain jobs and
contain employee-related expenses.
Faced with a considerable drop in business from our customers in France, we negotiated changes in employee working hours and shorttime working systems in order to limit the impact of this situation on our employees. In France we also entered into industrial dispute
prevention agreements which provide that periods of social dialog and discussions with employee representatives must take place
before any strikes or similar measures may be launched. The overriding aim of these agreements is to protect the combined interests
of both our customers and our employees.
Relocating manufacturing facilities and employees
After opening ten new sites in 2004 and nine in 2005, the Group opened fifteen new sites in 2006 including seven in the United States,
four in Eastern Europe, two in Asia, one in the United Kingdom and one in Iran.
Faurecia continually adapts its structure and processes based on the life cycle of vehicles (launch, development and end-of-life)
and the degree of their success. We also need to be present in certain areas to partner our customers in their international
expansion. All of these factors mean that the Group constantly has to relocate manufacturing facilities and employees. 2005 and
2006 were particularly important years in terms of reorganization due to the difficulties encountered by global automakers and their
shift towards “low-cost” countries.
In the United Kingdom, we ceased operations at our Coventry site due to the closure by PSA of its site at Ryton. As a result
of Volkswagen’s announcement that it is stopping production of the Golf in Belgium, we will have to consider similar measures for our
Brussels site which specializes in Vehicle Interiors and makes parts exclusively for the Golf.
We also had to significantly reorganize our plants in Spain (Madrid and Valladolid) and the United Kingdom (Deeside) in order to scale
down our production in line with capacity reductions made by our customers.
Further to the €137.5 million spent in 2005 to finance the restructuring of manufacturing facilities, the Group incurred a total
30/05/07
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Page 35
Total payroll costs for the Group, including social security charges, climbed 7.6% in 2006, from €1,954.6 million to €2,104.3 million,
while headcount rose 5.2%. The Group complies with minimum wage legislation in force in each country. In most countries, salary
increases and changes in other components of compensation or benefits are determined on the basis of negotiations. Such negotiations
led to the signature of more than 74 agreements within the Group in 2006.
The Group has set up a variable compensation system for personnel in key positions, which is applied in an identical manner
in all countries where the Group operates. The applicable eligibility criteria were amended for managerial employees in 2006, and around
2,000 managers out of a total of 8,500 were covered by the system during the year. Variable compensation – corresponding to a bonus –
is calculated by reference to both collective and individual performance targets.
In 2006, Faurecia clarified the eligibility rules for granting company cars in Central Europe and China and drew up a formal policy
concerning both company cars and national mobility.
Amounts paid to employees in the form of incentive bonuses and profit-sharing came to approximately €12 million in France, on a par with
2005, although the incentive bonus portion accounted for the bulk of the 2006 figure (66% of the total amount paid versus 23%
in 2005). Voluntary payments into the profit-sharing scheme continued to rise, representing €0.7 million, of which €81,000 corresponded
to top-up payments for investments in Faurecia shares.
At the same time, the Group Employee Savings Plan set up in 2004 was once again highly successful, with some €3.8 million paid into
its various funds. Voluntary payments held firm in 2006, after increasing 30% in 2005.
The available forms of investment under this plan were enhanced during the year to include a real-estate fund. Also in 2006, a new
supplementary pension scheme was set up for managers in France. Amounts paid into this scheme totaled almost €5 million during
the year, mainly funded by the Company.
Lastly, the Group continued with its project to harmonize employee benefits throughout its entities, notably concerning the simplification
of mobility conditions.
The European Works Committee
In 2006, the European Works Committee was provided with information concerning measures undertaken to relocate manufacturing
facilities, as well as the Group’s financial results and strategic objectives. Part of the work undertaken during the year was devoted
to preparing the renewal of the agreement related to organizing the Committee’s procedures. This agreement was signed in 2003
for a four-year period and is scheduled to be reviewed during the course of 2007.
35
FINANCIAL REPORT
Compensation and benefits
MANAGEMENT REPORT
of €169.2 million in 2006, for measures affecting over 3,000 jobs, primarily in Western Europe (46% in France, 21% in Germany and
7% in Spain and Portugal). Each restructuring operation followed even greater in-depth discussions with employee representatives than
in previous years, with a view to i) restricting the number of redundancies by finding other positions within the Group; and ii) reducing the
impact of the redundancies that were necessary by providing employees with outplacement assistance and encouraging voluntary
departures for employees who had found an alternative solution. In line with this aim, negotiations in France led to the signature
of framework agreements for managing restructuring operations and the employee assistance measures provided.
Framework agreements enable the Group to define and oversee the information, consultation and negotiation processes that go handin-hand with restructuring operations. They also provide employee representatives with a better understanding of the overall process.
The Group also uses employment and skills forecasting and planning agreements (GPEC) to determine and organize the measures
it needs to implement due to inevitable changes and developments in skill-sets and employment requirements. These agreements deal
with the quantative and qualitative aspects of forward-looking planning. For example, the GPEC agreement signed within FSA provided
for a 387 person reduction in the company’s workforce and more than 90% of that figure was achieved through voluntary redundancies.
Other companies, such as FAI and FBA, have also reaped the benefits of GPEC agreements.
Lastly, framework agreements were signed during the year in relation to employee assistance measures provided for as part
of compulsory layoff plans including worker adjustment and retraining plans agreed with employee representatives at FI (for its HéninBeaumont and Audincourt sites), EAK in Valentigney, FSA (for its sites at Brières, Nogent-sur-Vernisson and Cercy-la-Tour), and Sotexo
(for its Brebières site).
Wherever possible, the Group carries out its relocation and restructuring measures in a way that is aimed at limiting the impacts
on its employees. With this objective in mind it has set up multi-year adaptation plans, notably within FSA in France (GPEC 2005-2008),
as well as at Stadthagen in Germany where a framework agreement was signed concerning 364 departures between 2006 and 2008.
30/05/07
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Page 36
EMPLOYEE DATA
YEAR-ON-YEAR CHANGES IN TOTAL HEADCOUNT
2006
2005
Faurecia
headcount
Temporary
Total
staff headcount
Of which
% CDI*
Faurecia
headcount
Temporary
Total
staff headcount
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
35,583
17,551
8,563
8,191
1,935
2,343
1,195
4,716 40,299
2,725 20,276
1,371
9,934
1,171
9,362
99
2,034
431
2,774
84
1,279
82.4%
84.5%
71.0%
80.2%
88.9%
61.7%
84.8%
37,306
18,797
6,466
6,379
1,890
1,793
1,122
5,199
3,351
526
579
34
275
153
Faurecia
57,810
7,872 65,682
79.8%
54,956
6,766
Year-on-year change
Of which
% CDI*
Faurecia
headcount
Temporary
Total Change in
headcount headcount proportion
of CDI* (%)
42,505
22,148
6,992
6,958
1,924
2,068
1,275
82.4%
83.2%
60.3%
85.5%
92.8%
35.8%
70.1%
–4.6%
–6.6%
32.4%
28.4%
2.4%
30.7%
6.5%
–9.3%
–18.7%
160.6%
102.2%
191.2%
56.7%
–45.1%
–5.2%
–8.5%
42.1%
34.6%
5.7%
34.1%
0.3%
0.1
1.3
10.7
–5.2
–3.8
25.8
14.7
61,722
78.7%
5.2%
16.3%
6.4%
1.0
* Employees on an open-ended contract (contrat à durée indéterminée).
Total headcount grew by 3,690, or 6.4%, mainly due to an additional 2,854 people on Faurecia’s payroll.
The number of staff employed on open-ended contracts increased in value terms but in proportional terms only rose from 78.7%
in 2005 to 79.8% in 2006, as a result of higher numbers of temporary contracts during the year.
MANAGEMENT REPORT
YEAR-ON-YEAR CHANGES IN FAURECIA HEADCOUNT
2006
Operators
& workers
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
Faurecia
TFA*
2005
Managers &
professionals
Total
Operators
& workers
TFA*
Managers &
professionals
Total
Year-onyear change
22,260
6,824
6,499
35,583
23,146
7,356
6,804
37,306
10,489
3,339
3,723
17,551
11,402
3,504
3,891
18,797
6,337
5,756
1,228
1,228
892
1,409
838
442
447
208
817
1,597
265
668
95
8,563
8,191
1,935
2,343
1,195
4,690
4,192
1,313
1,048
815
1,134
896
347
351
204
642
1,291
230
394
103
6,466
6,379
1,890
1,793
1,122
–4.6%
–6.6%
32.4%
28.4%
2.4%
30.7%
6.5%
37,701
10,168
9,941
57,810
35,204
10,288
9,464
54,956
5.2%
* Technicians, foremen and administrative staff.
FINANCIAL REPORT
36
Faurecia headcount rose 5.2% in 2006 compared with 1.0% the previous year. Year-on-year changes were mixed across geographic
regions, however, reflecting trends in the global automotive market as well as in the industry of automotive equipment suppliers.
• In Western, Europe Faurecia headcount decreased by 4.6% (down 6.6% in France).
• In all of the other major geographic regions, headcount increased significantly, particularly in Central Europe, North America and Asia
(up 32.4%, 28.4% and 30.7% respectively).
YEAR-ON-YEAR CHANGES IN FAURECIA HEADCOUNT BY TYPE OF CONTRACT
2006
2005
Year-on-year change
CDI*
CDD**
Total
CDI*
CDD**
Total
CDI*
CDD**
Total
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
33,221
17,128
7,052
7,513
1,809
1,711
1,085
2,362
423
1,511
678
126
632
110
35,583
17,551
8,563
8,191
1,935
2,343
1,195
35,005
18,431
4,217
5,949
1,785
741
894
2,301
366
2,249
430
105
1,052
228
37,306
18,797
6,466
6,379
1,890
1,793
1,122
–5.1%
–7.1%
67.2%
26.3%
1.3%
130.9%
21.4%
2.7%
15.6%
–32.8%
57.7%
20.0%
–39.9%
–51.8%
–4.6%
–6.6%
32.4%
28.4%
2.4%
30.7%
6.5%
Faurecia
52,391
5,419
57,810
48,591
6,365
54,956
7.8%
–14.9 %
5.2 %
* Open-ended contracts (contrats à durée indéterminée).
** Fixed-term contracts (contrats à durée déterminée).
The proportion of staff on fixed-term contracts fell 14.9% from 11.6% in 2006 to 9.4% in 2005.
The form of a number of contracts was switched from fixed-term to open-ended in 2006, including 2,365 in Central Europe and 1,060
in Asia. These changes were due to amendments to the classification rules for such contracts in these regions, providing that fixed-term
contracts of more than two years must be treated as contracts with an indefinite term. The data for 2005 has been adjusted accordingly
to facilitate year-on-year comparisons. The increase in the number of fixed-term contracts in Western Europe is primarily attributable
to the fact that an additional 82 apprentices were taken on in France compared with 2005.
Meanwhile, the number of open-ended contracts was up 7.8%, with all regions except Western Europe contributing to the rise.
30/05/07
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Page 37
AGE DISTRIBUTION BY GENDER IN 2006
Faurecia headcount
< 20
20 – 29
30 – 39
40 – 49
> 50
Total
M
F
M
F
M
F
M
F
M
F
M
F
Operators & workers
575
TFA*
93
Managers & professionals
1
307
42
2
8,239
1,850
1,413
3,001
774
554
8,721
2,615
3,479
3,201
1,025
920
6,265
1,856
2,143
2,528
586
314
3,460
993
998
1,404
334
117
27,260
7,407
8,034
10,441
2,761
1,907
Total
351
11,502
4,329
14,815
5,146
10,264
3,428
5,451
1,855
42,701
15,109
669
AGE DISTRIBUTION BY GENDER IN 2006
16,000
14,815
14,000
12,000
11,502
10,264
10,000
8,000
6,000
5,451
5,146
4,329
4,000
3,428
669 351
M
F
< 20
M
F
20 – 29
M
F
30 – 39
M
F
40 – 49
M
F
> 50
Women account for 26.1% of all Group employees, representing a year-on-year increase of 1 percentage point.
The number of female workers rose 9.6% in 2006.
Faurecia is a relatively youthful Group, with approximately 63% of staff under the age of 40 and 30% under 30. A total of 7,306
employees are over 50, accounting for 12.6% of the overall headcount.
For all age brackets the breakdown by staff category remained stable year-on-year, with 65% of headcount corresponding to manual
workers, 17% to technicians, foremen and administrative staff, and 17% to managers.
MANAGEMENT REPORT
1,855
2,000
YEAR-ON-YEAR CHANGES IN EXTERNAL RECRUITMENT BY TYPE OF CONTRACT
2006
2005
37
Year-on-year change
CDI*
CDD**
Total
CDI*
CDD**
Total
CDI*
CDD**
Total
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
1,005
472
1,806
2,885
390
332
206
2,268
377
2,507
2,077
104
583
227
3,273
849
4,313
4,962
494
915
433
1,554
906
517
2,140
486
116
121
1,886
315
1,449
1,890
99
702
204
3,440
1,221
1,966
4,030
585
818
325
–35.3%
–47.9%
249.3%
34.8%
–19.8%
186.2%
70.2%
20.3%
19.7%
73.0%
9.9%
5.1%
–17.0%
11.3%
–4.9%
–30.5%
119.4%
23.1%
–15.6%
11.9%
33.2%
Faurecia
6,624
7,766
14,390
4,934
6,230
11,164
34.3%
24.7%
28.9%
* Open-ended contracts (contrats à durée indéterminée).
** Fixed-term contracts (contrats à durée déterminée).
The above table shows year-on-year changes in external recruitment, excluding the impact of switches from fixed-term to openended contracts.
In 2006, the number of external hires rose 34.3% for open-ended contracts, 24.7% for fixed-term contracts, and 28.9% overall.
There were significant contrasts across the geographic regions, however, with external recruitment in Western Europe and South
America down 4.9% and 15.6% respectively, while Central Europe, North America and Asia posted rises of 119.4%, 23.1% and 11.9%.
FINANCIAL REPORT
Faurecia headcount
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10:59
Page 38
YEAR-ON-YEAR CHANGES IN EXTERNAL RECRUITMENT BY STAFF CATEGORY
Faurecia headcount
2006
2005
Operators
& workers
TFA*
Managers &
professionals
Total
Operators
& workers
TFA*
Managers &
professionals
Total
2,127
202
3,516
4,097
249
528
374
541
219
540
362
184
183
39
605
428
257
503
61
204
20
3,273
849
4,313
4,962
494
915
433
2,050
468
1,420
3,132
326
489
235
605
207
359
394
188
157
64
785
546
187
504
71
172
26
3,440
1,221
1,966
4,030
585
818
325
10,891
1,849
1,650
14,390
7,652
1,767
1,745
11,164
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
Faurecia
The total number of external hires climbed by 3,226 to 14,390 in 2006 from 11,164 one year earlier, mainly due to the recruitment
of 3,239 additional manual workers.
This category of staff accounted for 76% of the aggregate number of external hires in 2006 versus 68% the previous year. Technicians,
foremen and administrative staff represented 13% and managers 11%, compared with 16% for both of these categories in 2005.
Overall, the picture was extremely mixed between (i) Western Europe and South America, where external hires retreated by 6.4% for
both regions and (ii) Central Europe, North America and Asia, where recruitment levels were 49.5% higher than in 2005.
MANAGEMENT REPORT
SWITCHES FROM FIXED-TERM TO OPEN-ENDED CONTRACTS – YEAR-ON-YEAR COMPARISON
FINANCIAL REPORT
38
Faurecia headcount
2006
2005
Operators
& workers
TFA*
Managers &
professionals
Total
Operators
& workers
TFA*
Managers &
professionals
Total
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
692
15
1,952
711
0
513
145
96
10
339
55
16
222
8
68
30
74
24
0
325
1
856
55
2,365
790
16
1,060
154
418
41
407
555
6
9
33
100
16
77
55
1
33
1
44
19
62
22
0
59
0
562
76
546
632
7
101
34
Faurecia
4,013
736
492
5,241
1,428
267
187
1,882
* Technicians, foremen and administrative staff
The number of transfers from fixed-term to open-ended contracts increased from 1,882 to 5,241 in 2006. The rises mainly occurred in
Central Europe and Asia, up by 1,919 and 959 respectively.
DEPARTURES (BROKEN DOWN BY REASON) – YEAR-ON-YEAR COMPARISON
Faurecia headcount
2006
2005
Resignations
(open-ended
contracts)
Individual
dismissals
Collective
redundancies
Other
Total
Resignations
(open-ended
contracts)
Individual
dismissals
Collective
redundancies
Other
Total
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
1,077
420
960
928
69
148
113
1,118
485
460
1,267
321
80
40
945
465
1
30
0
69
0
1,689
551
801
946
64
235
207
4,829
1,921
2,222
3,171
454
532
360
1,059
413
497
719
91
84
111
1,452
654
395
1,283
283
88
31
859
138
5
10
0
31
94
1,968
506
388
584
37
212
352
5,338
1,711
1,285
2,596
411
415
588
Faurecia
3,295
3,286
1,045
3,942*
11,568
2,561
3,532
999
3,541
10,633
* Of which 3,446 on expiry of fixed-term contracts.
The number of employees who left the Group in 2006 totaled 11,568 against 10,633 the previous year, representing an increase
of 8.8%.
Of these departures, 30% corresponded to the expiry of fixed-term contracts while resignations and individual dismissals each
represented almost 28%. There was a 10.0% rise in collective redundancies in Western Europe during the year.
The number of resignations also increased significantly, especially in North America (up by 209) and Central Europe (up by 463).
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Page 39
TRAINING HOURS – YEAR-ON-YEAR COMPARISON
Faurecia headcount
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
Faurecia
2006
2005
Total
training hours
Training hours
per employee
Total
training hours
Training hours
per employee
695,767
292,227
392,359
197,429
56,136
85,904
37,155
21
18
54
28
33
42
32
761,011
367,259
152,114
162,024
48,108
76,887
17,280
20
20
24
25
25
43
15
1,464,750
28
1,217,424
22
Group policy is to significantly increase training programs for all staff categories, especially for operators at its sites.
Training hours per employee came to 28 in 2006, compared with 22 in 2005 and 20 in 2004.
In Western Europe the number of hours remained more or less the same in 2006 as the previous year, apart from France which
experienced a slight decline due to disruption of business during the year. This issue will be a priority in 2007, however.
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
Faurecia
2006
2005
81
34
57
60
4
52
12
84
32
48
58
3
58
11
266
262
MANAGEMENT REPORT
EXPATRIATES BY DESTINATION – YEAR-ON-YEAR COMPARISON
The steady high levels of expatriate numbers and their widely diverse backgrounds reflect the Group’s international expansion policy.
DISABLED EMPLOYEES – YEAR-ON-YEAR COMPARISON
2005
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
1,048
712
13
9
12
0
12
1,076
761
16
12
10
0
15
Faurecia
1,094
1,129
Faurecia employs more than 1,100 disabled people in Western Europe.
The criteria used to define disabled employees are those established in the legislation of each country. In Western Europe – particularly
France – such legislation tends to favor a more proactive approach than in other countries.
The slight 2.6% decrease in disabled employees in France during 2006 was less than the 4.6% decline in overall headcount for
the country.
Year-on-year, the proportion of disabled workers in France increased from 4.1% to 4.2%.
39
FINANCIAL REPORT
2006
30/05/07
10:59
Page 40
WORK SCHEDULE IN 2006
Faurecia headcount
Two 8-hr shifts (1)
Three 8-hr shifts (2)
Weekend (3)
Other
Total
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
11,785
6,723
1,596
2,120
61
803
381
8,719
2,835
4,433
2,780
1,099
339
371
187
149
520
147
0
169
9
14,892
7,844
2,014
3,144
775
1,032
434
35,583
17,551
8,563
8,191
1,935
2,343
1,195
Faurecia
16,746
17,741
1,032
22,291
57,810
Faurecia headcount
(1) Work based on two teams.
(2) Work based on three teams.
(3) Reduced weekend hours.
The Group’s work schedule is aimed at meeting customer needs, based on production capacity at our sites. Shift working or weekend
working mainly concern the production sites and accounts for 61.4% of Faurecia’s headcount.
MANAGEMENT REPORT
PART-TIME STAFF – YEAR-ON-YEAR COMPARISON
Part-time
staff – 2006
Part-time
staff – 2005
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
624
395
2
0
0
0
0
654
427
0
0
0
0
8
Faurecia
626
662
Substantially all of the Group’s part-time employment contracts concern Western Europe, particularly France.
Part-time staff accounted for 2.2% of all of the Group’s employment contracts in 2006, versus 2.3% in 2005.
OVERTIME – YEAR-ON-YEAR COMPARISON
FINANCIAL REPORT
40
2006
2005
Overtime
(in hours)
% hours
worked
Overtime
(in hours)
% hours
worked
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
1,041,643
288,237
1,011,732
1,672,647
206,096
655,973
239,708
1.7%
1.0%
7.0%
11.1%
6.6%
14.6%
9.1%
1,160,358
317,233
756,457
1,350,329
188,176
310,471
229,372
1.8%
1.0%
6.4%
11.0%
5.7%
9.4%
8.3%
Faurecia
4,827,798
4.7%
3,995,163
4.0%
The criteria for overtime are established in accordance with the legislation of each country.
The overall 0.7 percentage point rise between 2005 and 2006 mainly stems from high increases in Central Europe (0.6 point), South
America (0.9 point) and Asia (5.2 points). Overtime hours worked in the other regions remained stable.
30/05/07
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Page 41
ABSENTEEISM – YEAR-ON-YEAR COMPARISON
Absenteeism
rate 2006
Absenteeism
rate 2005
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
3.4%
3.3%
3.2%
1.8%
2.4%
0.7%
3.4%
3.7%
3.8%
3.2%
2.0%
2.6%
0.6%
3.8%
Faurecia
3.0%
3.3%
Absenteeism reported in 2005 and 2006 was due to illness, workplace accidents and various unauthorized absences. The absenteeism
rate fell by a sharp 9% year-on-year, reflecting an improvement in all geographic regions except for Asia, where the rate rose slightly but
still remains at a very low level.
Ongoing subcontracting
Total
743
314
127
357
165
22
52
1,204
518
353
136
222
61
94
1,947
832
480
493
387
83
146
1,466
2,070
3,536
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
Faurecia
SOCIAL AND CULTURAL ACTIVITIES IN 2006
(in € thousands)
Western Europe
of which France
Central Europe
North America
South America
Asia
Other
Faurecia
Accommodation
Transport
Catering
Medical
services
Supplementary
health
insurance
and personal
risk
Subsidies
Total
7,767
7,352
160
189
1,341
1,829
1
5,489
3,919
1,513
542
817
996
209
5,976
2,961
1,361
174
1,212
337
255
2,890
1,925
413
521
986
985
78
11,626
10,247
291
164
25
112
28
4,762
4,641
12
34
70
79
0
38,510
31,044
3,750
1,625
4,452
4,338
571
11,287
9,567
9,315
5,873
12,247
4,956
53,245
41
FINANCIAL REPORT
One-off subcontracting projects
MANAGEMENT REPORT
SUBCONTRACTING IN 2006
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Page 42
Environmental data
HEALTH AND SAFETY AND WORKING CONDITIONS
MANAGEMENT REPORT
Health, Safety and Environment organization (HSE)
The Faurecia Group’s policy in terms of health and safety and working conditions hinges on three main objectives – ensure the protection
of employees’ health and improve the safety of employees at their workstations; reduce the risk of fire; and minimize the environmental
impact of its operations.
In order to implement this policy, a Group Health, Safety and Environment (HSE) unit has been set up within the Group Quality Department.
The roles of this unit are to (i) recommend HSE strategies and goals to Senior Management; (ii) monitor new legislation and regulations that
concern the Group’s businesses; (iii) define and relay the applicable rules and procedures; (iv) provide self-assessment tools; (v) orchestrate, advise and help the HSE network; (vi) coordinate HSE site audits; and (vii) consolidate the HSE data of Group entities.
An Eco-design team has been attached to this unit since the end of 2005, tasked with monitoring changes in regulations and customer
requirements, as well as with promoting new techniques focused on saving natural resources and protecting the environment. This team
is also responsible for detecting any obstacles to Faurecia’s eco-design strategy and putting forward appropriate solutions to
Management. Some 20 coordinators for the various business segments oversee the rollout of the adopted measures to each site, where
an HSE coordinator is appointed by site management. There must be one professional HSE coordinator per 500 employees at any given
site. An Intranet site provides a link between these various players ensuring that the HSE policy is consistently applied at all sites across
all countries.
This report presents the overall results of HSE measures taken during 2006. The information shown is collected from every site on a
twice-yearly basis, and the response rate usually corresponds to over 90% of employees. The survey process was audited in early 2007
by PricewaterhouseCoopers on behalf of Faurecia’s majority shareholder. The auditors concluded that the process provided a moderate
level of assurance concerning the validity of the related data.
The Group’s HSE policy
The Group’s HSE policy is clearly outlined in two documents that define Faurecia’s core principles, namely the Mission Statement and
the Code of Ethics. These principles provide the basis for HSE policies in all Faurecia sites worldwide.
LEGAL COMPLIANCE (CODE OF ETHICS):
FINANCIAL REPORT
42
“Faurecia companies must comply with all applicable laws and regulations in the countries in which they conduct business. It is the
personal responsibility of all our employees to be aware of these laws in the context of their job, location and environment.”
The Faurecia Group is strongly committed to complying with the relevant laws and requires its employees to be aware of their legal duties.
ETHICAL TRADING STANDARDS (CODE OF ETHICS):
“Faurecia employees shall act with integrity and honesty in the conduct of business with suppliers. Faurecia shall submit a fair, externally
audited presentation of its business operations and accounts in its annual financial statements.”
The Faurecia Group does not work with any suppliers that practice social or environmental dumping.
ETHICAL STANDARDS WITHIN THE GROUP (CODE OF ETHICS):
“Faurecia companies are committed to implementing pro-active policies and measures to prevent health and safety risks in the
workplace, as well as to monitoring their correct application and measuring their effectiveness. In addition, all subcontractors working on
any Faurecia Group company’s premises are required to adhere to the same health and safety policies and regulations.”
ETHICAL STANDARDS WITHIN THE COMMUNITY (CODE OF ETHICS):
“The following environmental protection principles must be respected by Faurecia personnel worldwide in the conduct of their daily
business:
• We are committed to reducing waste and pollutants, conserving natural resources, and recycling materials at every stage of the
production cycle;
• We will continue to actively pursue our policy to develop and implement technologies for minimizing pollutant emissions;
• We will continually assess the impact of our products and operations on the environment and our host communities, with a goal of
constant improvement.”
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Page 43
FAURECIA’S EXPERTISE (MISSION STATEMENT):
“We are experts in the development, design, manufacture and delivery of major modules for light vehicles.”
In terms of recyclability and the materials used, the Faurecia Group is committed to designing and developing modules that minimize
environmental impacts, in accordance with applicable regulations and our customers’ needs.
ENVIRONMENTAL PROTECTION (MISSION STATEMENT):
“We are committed to environmental preservation and social responsibility.”
PROTECTING EMPLOYEE HEALTH AND ENSURING SAFE WORKING CONDITIONS (MISSION STATEMENT):
“We are committed to providing a motivating, healthy and safe working environment for all employees worldwide.”
Workplace safety indicators
The results of initiatives in this area are measured using the frequency rate of workplace injuries.
• The Group’s excellence indicator is the FR0t, which corresponds to the number of workplace accidents with lost time/hours worked
x 106. This represents the number of workplace accidents per million hours worked (e.g. a FROt of 5 corresponds to 5 workplace
accidents per million hours worked).
• With a view to providing more comprehensive information, this indicator has been extended at operating level to take into account
accidents with and without lost time, and is now referred to as FR1t.
• First aid processes are now monitored across the board at the level of “UAP” (Autonomous Production Units), with a view to further
increasing responsiveness and promoting production teams’ responsibility for post-accident reviews.
In order to guarantee the same level of workplace safety for all employees, temporary workers are included in calculations of the
indicators in the same manner as permanent staff.
The steady decline in the frequency of workplace accidents – down 25% during 2006 – for all Group activities, and a corresponding
decrease in the severity of injuries, are extremely encouraging.
Frequency rate
Group
December 2001
December 2002
December 2003
December 2004
December 2005
December 2006
2006-2005
28.1
20.8
16.1
8.7
5.6
4.2
–25%
CHANGES IN FREQUENCY RATE
FR0t
30
28.1
25
20.8
20
16.1
15
10
8.7
5.6
5
4.2
0
2001
2002
2003
2004
2005
2006
43
FINANCIAL REPORT
Safety in the workplace is one of the building blocks of the Group’s search for excellence embodied in the Faurecia Excellence System
(FES). It is an absolute requirement for the respect of employees, which every facility must satisfy. In order to achieve the new goal set in
2005 of reducing the rate of accidents within the Group to three per million working hours by the end of 2008, Faurecia continued to
strengthen its commitment to safety and better working conditions throughout the year:
• At Group level, the HSE Intranet site presents the Group’s HSE standards within the scope of the Faurecia Excellence System, thus
highlighting the strategic fit of HSE activities with other ongoing projects.
• At business unit level, the enhancement of ergonomic know-how has resulted in the design and roll-out of additional innovative tools.
• At Production Division level, the HSE network has been further strengthened through the creation of several HSE coordinator positions,
enabling new projects to be monitored from an HSE perspective.
• At the industrial sites, training of management committees and line management on civil and criminal liability issues, and the
implementation of HSE core teams on the shop floor has already led to an increase in on-site risk prevention measures.
MANAGEMENT REPORT
SAFETY
30/05/07
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Page 44
In 2006 the Group had 247 internal reporting units (a site can comprise one or more entities) and 150 of these units have already
achieved the goal set for 2008, meaning that they are below the threshold of three accidents with lost working time per million hours
worked (including temporary employees).
A total of 39 production sites with over 100 employees achieved the goal of zero workplace accidents with lost working time. The fact
that these sites are spread throughout the world proves that the objective is within reach for all plants, regardless of business segment
or whether the facility is based in a developed or developing country.
MANAGEMENT REPORT
Site
FINANCIAL REPORT
44
Puebla
Walbrzych
Talmaciu
Fountain Inn
Geiselhöring
Vigo
Stadthagen
Fradley
São João Da Madeira
Port Elizabeth
Troy East
Leipzig
Audincourt
Wuhan
Port Elizabeth
Wuxi Slides
Camaçari
Chongqing
Riverside
Kosice
Porriño
Vigo
Almussafes
Bad Abbach
Sittard
Banbury
Jelcz
Changchun
Sterling Heights
Audincourt
Neuenstadt
Stadthagen
Bains-sur-Oust
Wuxi
Neutraubling
Changchun
Sterling Heights
Bruxelles
Fountain Inn
Business
Country
Number of employees
Vehicle Interiors
Frames & Mechanisms
Automotive Seating
Vehicle Interiors
Frames & Mechanisms
Automotive Seating
Frames & Mechanisms
Vehicle Interiors
Automotive Seating
Vehicle Interiors
Exhaust Systems
Automotive Seating
Vehicle Interiors
Automotive Seating
Exhaust Systems
Frames & Mechanisms
Vehicle Interiors
Vehicle Interiors
Automotive Seating
Vehicle Interiors
Vehicle Interiors
Exhaust Systems
Vehicle Interiors
Automotive Seating
Automotive Seating
Automotive Seating
Automotive Seating
Frames & Mechanisms
Automotive Seating
Modules & Systems
Automotive Seating
Frames & Mechanisms
Modules & Systems
Frames & Mechanisms
Modules & Systems
Automotive Seating
Vehicle Interiors
Vehicle Interiors
Automotive Seating
Mexico
Poland
Romania
USA
Germany
Spain
Germany
United Kingdom
Portugal
South Africa
USA
Germany
France
China
South Africa
China
Brazil
China
USA
Slovakia
Spain
Spain
Spain
Germany
Netherlands
United Kingdom
Poland
China
USA
France
Germany
Germany
France
China
Germany
China
USA
Belgium
USA
1,267
889
817
740
578
541
499
494
489
374
367
352
338
308
301
296
285
272
272
255
244
229
205
201
196
195
176
164
157
153
142
141
138
131
111
108
105
102
100
Safety training
Having set the basic conditions for ongoing safety improvements, the Group has focused on providing different types of training and
education programs to raise awareness and guarantee effective implementation of all aspects of safety management. In 2006, over
89,059 hours of training were provided for 28,170 people within the Group, representing an investment of €1.74 million.
Safety certification
As part of the drive to optimize its HSE organization on a long-term basis, Faurecia’s sites are gradually implementing workplace safety
management systems based on the OHSAS 18000 standard or local equivalents.
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Page 45
WORK SAFETY TRAINING
SAFETY CERTIFICATION (OHSAS 18001)
Number of sites
Number of hours/persons
In € thousand
40
2,000
35
120,000
110,000
100,000
80,000
1,750
1 ,750
1,800
30
1 ,550
1 ,500
41
95,000
29
1,600
90,000
1,400
25
1,200
20
22
75,000
60,000
1,000
15
14
800
40,000
29 ,000
27 ,000
20,000
600
10
400
5
8
28,000
18 ,000
3
200
2003
2004
Training hours
2005
2001
2006
Number of persons concerned
2003
2002
2004
2005
2006
Cost in € thousand
In 2006, 238 cases of occupational illness were reported throughout the Group, primarily corresponding to repetitive strain disorder. To
help combat this problem, Faurecia has taken steps over the past several years to more effectively take into account the strains caused
by workstations and offset them to the greatest degree possible. The industrial sites declared total payments of €46 million to public or
private insurance providers in 2006 in respect of employee healthcare.
An ergonomic review of 77 sites was carried out within the Automotive Seating business in 2006, using the AGREPT method (Analysis of
High-Risk Movements and their Impact on Work-Related Strain Injuries).
Solutions have been identified and implemented at manufacturing workstations. These solutions need to be rolled out throughout
production operations and will now be more systematically taken into account from the outset of the product and tool design phase. In
addition, an increasing number of recommendations from professional ergonomists and HSE coordinators is being factored into the
“Program Management System” (PMS).
An “Ergonomics” memorandum is now available to all Group process engineers and managers in charge of efficiency in manufacturing
systems, to provide additional information on analyzing workloads and taking 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.
MANAGEMENT REPORT
Ergonomics and working conditions
Over the past several years the Group has applied increasingly rigorous controls to ensure that fire prevention is a priority for site
management and various training and awareness-raising programs have been put in place. In 2006, 20,434 training hours on managing
fire risks were provided for 13,721 people within the Group, representing an investment of €305 thousand.
The Group’s insurance companies continued to carry out fire safety audits and their findings showed that the overall protection of
manufacturing processes is well on its way to achieving the level of excellence represented by the HPR (Highly Protected Risk) ranking.
FIRE PREVENTION TRAINING
ANNUAL RESULTS OF FIRE SAFETY AUDITS
In € thousand
Number of sites
62
60
59
400
335
25,000
350
50
20,000
22,000
300
20,000
40
15,000
16,000
14,000
250
35
20
100
2005
Training hours
26
22
22
16
25
24
22
20
18 18
15
10 10
10
6
Not audited
2006
Persons concerned
44
30
26
150
5,000
44
36
30
200
10,000
42 42
39
305
Insufficient
Requiring
improvement
Pre-HPR
Response rate
2002 (78%)
2003 (94%)
2004 (92%)
2005 (91%)
HPR
2006 (98%)
FINANCIAL REPORT
45
Fire prevention
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Page 46
Environmental protection
The Faurecia Group takes environmental issues into account at every stage in the product life cycle, from the design phase to the
end-of-life stage.
PRODUCT DESIGN
Regulations concerning environmental issues and automotive products have been gradually consolidated during recent years. Although
Europe has been the frontrunner in drawing up such regulations, other industrialized regions have not lagged far behind. For example,
following in the footsteps of Japan in 2005, in 2006 China passed a law similar to the recycling section of the European Directive on endof-life vehicles, and South Korea is expected to follow suit in 2007. To date, the United States has not followed this trend at federal level,
although regulations are increasingly being put in place on an individual state basis.
Having worked towards eradicating four heavy metals in previous years (cadmium, hexavalent chromium, mercury and lead), the Group’s
purchasing quality processes were consolidated in 2006.
Faurecia has invested heavily in areas relating to end-of-life products and recycling, as well as in using recycled plastic materials during
the design phase. The recycling quotas set in the 2000/53/EC directive on end-of-life vehicles and reiterated in European directive
2005/64/EC on the type-approval of motor vehicles are set out below.
Date
MANAGEMENT REPORT
January 1, 2006
January 1, 2015
FINANCIAL REPORT
46
Rate of reuse and recovery
Rate of reuse and recycling
> 85%/vehicles/year
> 95%/vehicles/year
> 80%/vehicles/year
> 85%/vehicles/year
Lastly, in order to encourage lower fuel consumption, Faurecia continued to work on vehicle weight savings by reducing the weight of its
products.
Strengthening purchasing quality processes
In 2006, Faurecia’s Purchasing department posted online all of its contractual documents setting out the requirements that all
of the Group’s suppliers must meet in order to comply with environmental regulations concerning products and the supply of
materials and components containing no heavy metals. Compliance with these requirements is now an essential part of the
supplier selection process.
In addition, a new unit has been set up within the Purchasing department in order to identify, showcase and relay best practices
across the Group in the area of recycling and reusing waste products and scrap plastic materials from the production process.
By combining both external and internal best practices, a systematic process for recycling plastics has been put in place underpinned
by an ambitious action plan and with the ultimate aim of rolling out the process to all of the Group’s plastic processing sites.
Anticipating the end-of-life phase
In line with regulations and with a view to contributing to the automotive industry’s efforts to recycle end-of life vehicle components, in
2006 Faurecia undertook specific measures relating to components containing a high proportion of plastics. The underlying objective of
this plan is to prepare for the future reuse of these components in the manufacture of automotive parts.
An economic and technical study is under way in the Vehicle Interiors business in order to determine whether currently available
processes and infrastructures are suited to processing end-of-life instrument panels.
In the French market, instrument panels are primarily composed of a sandwich material comprising a load-bearing polypropylene frame,
a vinyl polychoride cladding and a polyurethane foam spacer which is intricately connected with the two other materials. Processing
such components at the end-of-life phase is a complex process involving the following stages:
• extracting the instrument panel from the vehicle;
• dismantling the components;
• collecting and grouping the panels (i.e. logistical issues);
• delaminating the sandwich structures by separating the three materials;
• recycling the materials after the delamination process.
Faurecia’s research in this area is based on two trial campaigns (initially using production scrap components and subsequently
components from end-of-life vehicles). It entails assessing each of the above stages in conjunction with recyclers and players in the
end-of-life vehicles sector. Until now, these components were crushed at the same time as the frame of the vehicle and the
plastics could not be recycled. The objective, therefore, is to determine the feasibility of current processes and analyze by the end
of first-half 2007 the points that need to be improved in order introduce a specific end-of-life processing procedure.
The same type of approach was adopted at the end of 2006 for the Front-End business, as bumpers are identified in the
European Directive as key components for boosting the recycling/reuse rate for end-of-life vehicles. This will be a priority area
for Faurecia as it does not have a unit dedicated to recycling bumpers. The aim of the process is to extend the use of the
materials concerned for as long as possible, and to reach the point where ISO-function bumpers can be recycled from one generation
30/05/07
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Page 47
of vehicles to another, without any need for using new components. The outcome of the Group’s research should enable its teams
to draw up an economic and technical model that is the most suited to Faurecia for recycling end-of-life bumpers.
Using recycled plastics
In addition to the studies carried out on developing appropriate solutions for end-of-life products, in 2006 Faurecia undertook a policy to
initiate widespread use of recycled plastic grades. At present, such recycling mainly concerns polypropylene (either talc-filled or non
talc-filled).
Depending on the type and category of the vehicle, various automotive seating components are now made of recycled polypropylene.
For all components combined, it is now possible to use almost three kilograms of recycled plastics in seating activities alone. Tests are
in progress in order to develop new applications, particularly for vehicle interior parts that are not highly visible.
At the same time, research into the use of recycled polyolefin grades is currently being conducted within the Vehicle Interiors business.
In the long-term, the tests and validations resulting from this research should enable the Group to incorporate these materials into the
design of several non-visible components of instrument panels.
Reducing the weight of products has long been an important concern for Faurecia, as this can help to cut down on fuel consumption and
in turn lower atmospheric emissions.
An exemplary step forward in this area was the design in 2006 of a 100% stainless steel exhaust line, which has led to a 25% weight
saving compared with the previous generation model, by significantly reducing the thickness of the materials used.
The Group has also taken measures to bring down the weight of its products in other business lines. For example, Fiber-molded Process
technology is used in the Acoustics division, resulting in an almost 30% weight saving, by making felt acoustic components with adjustable proportions of thickness in the fibers used.
Lastly, the products manufactured by the Vehicle Interiors business have been redesigned in order to incorporate the full potential of
these new materials, resulting in weight savings varying between 10% and 50% in the design of intermediate parts.
MANUFACTURING PROCESSES
When products have been designed with the aim of minimizing environmental damage, the manufacturing processes used to make them
should also be geared towards preserving natural resources and protecting the environment.
MANAGEMENT REPORT
Reducing the weight of products
Supplier management
Environmental management and training as part of the production process
In line with the Group’s drive to achieve the best possible environmental management structure, 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). As of December 31, 2006, 82 sites out of 175 had implemented environmental management systems that are ISO 14001compliant.
Two major environmental audit firms have worked in partnership with Faurecia on this issue since 2005, with a view to enhancing the
organization of environmental management assessments and the way in which they are carried out – SGS, which is responsible for
ISO 14001 certification at all of the Group’s sites, and Bureau Veritas, which is in charge of performing internal HSE audits alongside
Faurecia’s internal audit team. The partnership program is being gradually rolled out to all of the Group’s sites to ensure the consistency
and relevance of its performance measurement tools.
As well as implementing ISO 14001 management systems, in 2006 Faurecia organized environmental training and awareness-raising
sessions targeted at all employees. During the year, 14,071 people within the Group received 17,249 hours of training, representing an
investment of €224,000.
Environmental protection expenses
The Group’s sites invested a total of €2.6 million in environmental protection measures in 2006. These investments included pollution
abatement equipment for use at the end of the manufacturing process, as well as steps taken to enhance manufacturing processes in
order to reduce the quantity and harmful effects of waste emissions.
47
FINANCIAL REPORT
The components purchasing policy was rounded out in 2006 to factor in environmental protection at every step in the product supply
chain. Faurecia now requires that the facilities of its 400 largest suppliers in terms of sales volume be ISO 14001 certified; 30% of these
sites had such certification at the end of 2006, and the aim is to reach 100% in 2007.
30/05/07
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Page 48
ENVIRONMENTAL CERTIFICATION (ISO 14001)
ENVIRONMENTAL PROTECTION TRAINING
Number of sites
In € thousand
82
80
82
18,000
73
18,000
16,000
60
40
19,000
18,000
224
18,000
15,500
14,000
50
250
234
20,000
14,800
184
12,000
17,000
150
168
10,000
37
100
8,000
27
20
6,000
17
1998
1999
50
4,000
9
5
200
14,100
2,000
2000
2001
2002
2003
2004
2005
2003
2006
Training hours
2004
2005
Persons concerned
2006
MANAGEMENT REPORT
Environmental penalties and disputes
FINANCIAL REPORT
48
Faurecia’s 175 sites received a total of 47 informal complaints in 2006 concerning noise and odor emissions, as well as miscellaneous
issues such as vehicles entering sites.
The Group was served with two official complaints from the French authorities: one concerning noise at the Mouzon site, and the other
relating to odor pollution from the Méru site.
Several notices of violation were received in 2006 by the following sites.
Site
Description of notice / required action
Audincourt
Granger
Hlohovec
Hordain
Jelcz
Mlada Bodeslav
Mouzon
Olmédo
Palmela
Shelby
Tabor
Vipond
Formal notice served following a fire.
Carry out a groundwater pollution diagnostic.
Change the solvent base used for gluing operations.
Comply with the site operations permit.
File an application for an emissions permit.
Compliance with regulations on atmospheric emissions.
Formal notice served by the local authorities for noise.
Take back waste collected by an unlicensed service provider.
Carry out a study on volatile organic compound emissions.
File an application for an atmospheric emissions permit.
Adopt action plans following site visits from the authorities.
Rehabilitate the site further to a pollutant spillage.
The Group was ordered to pay one fine in 2006.
Site
Amount
Abrera
€200
Total
€200
14 disputes or proceedings are still in progress against Faurecia worldwide for environmental issues.
Site
Cause
Abrera
Fountain Inn
Granger
Hénin-Beaumont
Hermosillo
Hlohovec
Hordain
Jelcz
Kosice
Mouzon
Nompatelize
Palmela
São João Da Madeira
Scheuerfeld
Failure to renew a permit for wastewater emissions.
Lack of reporting on air-borne emissions.
Requirement to monitor groundwater pollution.
Failure to comply with site operations permit.
Requirement to monitor environmental issues following a visit from the local inspection authorities.
Requirement to change the solvent used for gluing operations.
Failure to comply with site operations permit.
Failure to measure emissions.
Failure to measure atmospheric emissions.
Excessive noise from operations.
Spillage of a polymer in the water supply network.
No official site operation permit.
Compliance with Seveso rules and atmospheric emission caps.
Failure to comply with VOC emission limits.
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ENVIRONMENTAL INDICATORS
Since the end of 2003, the Faurecia Group has assessed the environmental impact of its operations on a half-yearly basis through an
extensive global survey of all its sites. The reliability of the results increases each year, which has led to greater in-depth awareness of
the impacts caused by the Group’s operations.
Water consumption and discharges to water
The Group’s total water consumption for 2006 is estimated at 3 million cubic meters. Of this total, 37% was drawn from rivers, 44% from
municipal water networks and 19% from groundwater. This consumption mainly concerns cooling water: 62% of the water consumed
can be recycled internally or released directly into the natural environment, while the remainder is discharged to wastewater networks.
Of the Group’s 175 sites, 70 are required to file self-monitoring data with the local authorities on the quality of their wastewater
discharges.
SOURCES OF WATER CONSUMED IN 2006
TYPE OF EFFLUENT DISCHARGES IN 2006
19%
Groundwater
57%
Natural environment
38%
Wastewater network
44%
Municipal network
Energy consumption and atmospheric emissions
The Group’s total energy consumption for 2006 is estimated at 1.7 million MWh, broken down as follows: 34% natural gas, 59%
electricity, 4% liquefied petroleum gas (LPG), 1% fuel oil and 2% steam. During the year, 97 sites reported that they had put in place
plans to manage energy consumption at a local level. At Group level, the Purchasing Department has appointed a manager responsible
for energy cost control, who is tasked with optimizing the services delivered by energy suppliers from both a technical and a financial
standpoint, as well as with developing the use of performance diagnostics by external experts.
Atmospheric emissions from energy consumption result mainly from natural gas, liquefied petroleum gas and fuel oils.
Sources of atmospheric emissions
CO2
N2O
CH4
SO2
NO2
Natural gas
Liquefied petroleum gas
Heavy fuel oil (sulfur content 4%)
Low-sulfur industrial fuel oil (sulfur content 2%)
Very low sulfur industrial fuel oil (sulfur content 1%)
Light fuel oil (sulfur content 0.3%)
116,419
12,784
1
8
301
2,481
5.2
0.5
0.0
0.0
0.0
0.1
8.2
0.8
0.0
0.0
0.0
0.1
1.1
0.1
0.0
0.1
1.9
4.8
123.5
12.0
0.0
0.0
0.7
3.3
Total in metric tons
131,994
5.7
9.1
8.1
139.5
Of the Group’s 175 sites, 72 are required to file self-monitoring data with the local authorities on the quality of their atmospheric
emissions.
BREAKDOWN OF ENERGY CONSUMPTION IN 2006
2%
Steam
59%
Electricity
4%
LPG
1%
Fuel oil
34%
Natural gas
49
FINANCIAL REPORT
37%
Rivers
MANAGEMENT REPORT
5%
Recycled internally
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Use of ground surfaces (watertight surfaces and total surfaces)
The Group’s sites occupy a total surface area of 644 hectares worldwide, 68% of which is sealed against rainwater.
BREAKDOWN OF SURFACES USED BY THE GROUP IN 2006
32%
Porous surfaces
68%
Watertight surfaces
MANAGEMENT REPORT
Waste generation
The Group generated 208,000 metric tons of waste in 2006, consisting mainly of metals (41%), which are released into the metals
recycling circuit. As regards other waste, 16% was recycled externally, 10% was reused as an energy source, 27% was landfilled,
3% was destroyed and 3% was recycled internally.
WASTE GENERATION IN 2006, IN METRIC TONS
10%
Reused as an
energy source
41%
Metals
50
27%
Landfilled
3%
Destroyed
3%
Recycled internally
FINANCIAL REPORT
16%
Recycled externally
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Since the 2006 year-end Faurecia has continued to carry out its activities for major automakers worldwide, with respect to all modules
analyzed above. No material changes have occurred regarding the financial and commercial conditions governing these Group operations centered on customer needs, as described in this registration document.
Consolidated sales for the first quarter of 2007 came to €3,243.4 million, 11.5% up on the comparable prior-year period. This rise was
driven by the start-up of new models in North America and Europe.
Two acquisitions have taken place which had only a limited impact on the Group’s activities:
● In January 2007, Faurecia acquired the 50% interest held by the Portuguese automotive equipment supplier Simoldes Plasticos in the
Romania-based company Euro Auto Plastic Systems (Euro APS). Faurecia and the Croatian automotive equipment supplier AD Plastik
now each own 50% of the capital of Euro APS, and Faurecia has full responsibility for the operational management of the joint venture.
Through this acquisition Faurecia has significantly expanded the scope of its business with the Renault Group, particularly concerning
the Dacia Logan. Euro APS manufactures and delivers instrument panels, door panels, bumpers, trimmings, carpeting, and acoustic
components for the Dacia plant in Pitesti in Romania, which works mainly on the Dacia Logan. In 2006 Euro APS generated sales of
€58 million and had 680 employees.
● In early January 2007, the Group took over part of the bumper business operated by Cadence Innovation, a company that was placed
in liquidation in late 2006. This involved Faurecia taking over certain of Cadence Innovation’s operations at the Nœux-les-Mines site in
northern France, which supplies Renault and PSA Peugeot Citroën, and the Burnhaupt facility in the east of France, which supplies PSA
Peugeot Citroën. The businesses acquired represent annual sales in the region of €80 million and a workforce of approximately 150. This
external growth transaction was supported by Cadence Innovation’s customers – PSA Peugeot Citroën and Renault – and was carried
out in line with the Group’s objective of developing and ensuring the long-term future of its bumper manufacturing business conducted
at four sites in France.
Lastly, on February 16, 2007 Yann Delabrière was appointed as Faurecia’s Chairman and Chief Executive Officer to take over from
Grégoire Olivier.
MANAGEMENT REPORT
Subsequent events
FINANCIAL REPORT
51
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Consolidated financial statements
53_ Consolidated income statements
54_ Consolidated balance sheets
56_ Consolidated cash flow statements
57_ Statement of changes in consolidated shareholders’ equity
58_ Notes to the consolidated financial statements
85_ Consolidated companies
FINANCIAL REPORT
52
88_ Simplified organizational chart
90_ Statutory Auditors’ report on the consolidated
financial statements
30/05/07
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Page 53
(in € millions)
Notes
2006
2005
2004
Sales
4
11,648.7
10,978.5
10,719.5
Cost of sales
5
(10,937.3)
(10,131.3)
(9,740.5)
Research and development costs
5
(285.1)
(259.5)
(264.2)
Selling and administrative expenses
5
(357.1)
(320.5)
(311.9)
69.2
267.2
402.9
Operating income before amortization of contractual
customer relationships
Amortization of contractual customer relationships
(119.4)
Other operating income and (expense), net
267.2
283.5
(386.0)
(315.0)
(11.8)
Income from loans, cash investments and marketable securities
10.9
9.1
8.7
Finance costs
(97.5)
(74.6)
(76.0)
53
(3.4)
(12.6)
(22.6)
(406.8)
(125.9)
181.8
(35.2)
(52.8)
(46.9)
(442.0)
(178.7)
134.9
4.4
5.9
7.3
(437.6)
(172.8)
142.2
Net income (loss) attributable to equity holders
of the parent company
(447.9)
(182.5)
130.7
10.3
9.7
11.5
(18.72)
(18.72)
(7.64)
(7.64)
5.48
5.45
Other financial income and expense
6
69.2
FINANCIAL REPORT
Operating income after amortization of contractual
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statements
7
Income (loss) before tax of fully consolidated companies
Corporate income tax
8
Net income (loss) of fully consolidated companies
Equity in net income of companies accounted
for by the equity method
13
Net income attributable to minority interests
Basic earnings (loss) per share (in €)
Diluted earnings (loss) per share (in €)
9
9
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Consolidated balance sheets
Assets
(in € millions)
Notes
Goodwill
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
10
1,289.3
1,414.5
1,546.0
Intangible assets
11
575.7
600.3
536.6
Property, plant and equipment
12
1,452.9
1,620.8
1,534.4
Investments in companies accounted for by the equity method
13
40.1
34.8
33.1
Other equity interests
14
1.3
2.3
1.6
Other non-current financial assets
15
29.9
26.5
19.8
Other non-current assets
16
9.1
7.4
6.9
54.8
111.6
147.3
3,453.1
3,818.2
3,825.7
Deferred tax assets
Total non-current assets
FINANCIAL REPORT
54
Inventories, net
17
581.4
543.8
490.7
Trade accounts receivable
18
1,759.4
1,742.4
1,762.5
Other operating receivables
19
268.0
239.3
210.4
Other receivables and prepaid expenses
20
62.8
49.3
69.0
Currency and interest rate derivatives
27
28.7
18.1
11.6
2,700.3
2,592.9
2,544.2
586.6
623.3
746.6
6,740.0
7,034.4
7,116.5
Total current assets
Total assets
21
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Page 55
Liabilities and shareholders’ equity
(in € millions)
Notes
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
169.8
169.6
169.5
Additional paid-in capital
359.6
723.2
722.5
Treasury stock
(12.5)
(13.6)
(14.1)
Retained earnings
917.0
733.2
625.8
40.4
46.0
5.6
(447.9)
(182.5)
130.7
Capital stock
22
Translation adjustment
Net income (loss)
Total shareholders’ equity
22
1,026.4
1,475.9
1,640.0
Minority interests
23
64.2
64.4
60.9
1,090.6
1,540.3
1,700.9
Total equity
Provisions for pensions and other employee benefits
24
193.3
201.1
239.9
Other provisions
25
283.7
217.1
201.4
Long-term debt
26
1,065.6
599.0
521.0
Other non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Short-term debt
26
Prepayments from customers
Trade payables
2.8
3.2
3.6
16.6
89.0
103.3
1,562.0
1,109.4
1,069.2
1,234.3
1,622.4
1,762.0
133.5
84.1
67.8
2,128.9
2,088.0
2,008.2
Accrued taxes and payroll costs
28
460.7
440.8
397.8
Other payables
29
118.3
130.6
99.3
Currency and interest rate derivatives
27
11.7
18.7
11.3
Total current liabilities
4,087.4
4,384.7
4,346.4
Total liabilities and shareholders’ equity
6,740.0
7,034.4
7,116.5
30/05/07
55
FINANCIAL REPORT
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Page 56
Consolidated cash flow statements
(in € millions)
FINANCIAL REPORT
56
I – Operating activities
Depreciation and amortization
Deferred tax (benefits) charges
Increase (decrease) in provisions and other long-term liabilities
Equity in net income of companies accounted for by the equity method,
net of dividends received
Capital (gains) losses on disposals of assets
Other
2006
2005
2004
(437.6)
754.9
(12.9)
67.1
(172.8)
682.6
21.2
(15.5)
142.3
609.9
3.2
(4.8)
(1.6)
(20.9)
(18.4)
(1.8)
(0.3)
7.7
(1.6)
(47.6)
(1.3)
Cash flow from operations
330.6
521.1
700.1
Change in inventories
Change in trade accounts receivable
Change in trade payables
Change in other operating receivables and payables
Change in other receivables and payables
(31.5)
(24.8)
42.0
38.3
40.6
3.1
63.5
18.7
28.8
29.6
19.3
66.3
130.2
73.7
(69.2)
(Increase) decrease in working capital requirement
64.6
143.7
220.3
395.2
664.8
920.4
(302.2)
(208.3)
(1.6)
52.3
(433.9)
(215.8)
(9.2)
9.2
(42.4)
(15.6)
37.9
(19.9)
(399.4)
(209.0)
(29.0)
35.1
90.4
(13.7)
(11.7)
Net cash used by investing activities
(517.8)
(631.7)
(537.3)
Net cash (used) provided by operating and investing activities (I)+(II)
(122.6)
33.1
383.1
1.1
(6.2)
552.0
(452.9)
1.5
(26.3)
(11.6)
316.1
(452.4)
1.2
(21.7)
(3.5)
370.1
(506.5)
Net cash provided (used) by financing activities
94.0
(172.7)
(160.4)
IV – Other changes in cash and cash equivalents
Impact of exchange rate changes on cash and cash equivalents
(8.0)
16.3
12.7
Net increase (decrease) in cash and cash equivalents
(36.6)
(123.3)
235.4
Cash and cash equivalents at beginning of year
623.3
746.6
511.2
Cash and cash equivalents at end of year
586.6
623.3
746.6
Net cash provided by operating activities
II – Investing activities
Additions to property, plant and equipment
Capitalized development costs
Acquisitions of investments
Proceeds from disposals of property, plant and equipment
Proceeds from disposals of financial assets
Change in investment-related receivables and payables
Other movements
III – Financing activities
Issuance of shares by Faurecia and fully-consolidated companies
Dividends paid by the parent company
Dividends paid to minority interests in consolidated subsidiaries
Issuance of debt securities and increase in borrowings
Repayments of debt and other financial liabilities
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Page 57
Balance as of Jan. 1, 2004
before appropriation
Number
of shares
(2)
Capital
stock
Additional
paid-in
capital
24,206,751
169.4
722.4
Net income for the year
Currency translation adjustments
Total income and expense
recognized directly in equity
Issue of share capital (1)
2003 dividend
Share-based payments
Sales of treasury stock
Changes in scope of consolidation
Balance as of Dec. 31, 2004
Translation
Total
adjustment shareholders’
equity
Minority
interests
Total
equity
645.1
1,521.8
62.1
1,583.9
130.6
5.6
11.5
(1.7)
142.1
3.9
136.2
0.2
(21.7)
1.7
1.8
9.8
(7.5)
146.0
0.2
(25.2)
1.7
1.8
(7.5)
5.6
130.6
5,300
0.1
24,212,051
169.5
5.6
0.1
1.0
722.5
(14.1)
(21.7)
1.7
0.8
756.5
1,640.0
60.9
1,700.9
40.4
(182.5)
40.4
9.7
5.7
(172.8)
46.1
(0.6)
(183.1)
21,550
0.1
169.6
(0.6)
40.4
0.7
0.5
723.2
(13.6)
(26.3)
2.4
1.2
550.7
(448.7)
24,259,236
(364.5)
169.8
359.6
64.4
1,540.3
(5.6)
10.3
(4.3)
(437.6)
(9.9)
(0.8)
(5.6)
2.3
0.3
364.5
(12.5)
469.1
(1.0)
(127.3)
1.5
(37.9)
2.4
1.7
(1.0)
(447.9)
(5.6)
0.9
1.1
15.4
0.7
(11.6)
1,475.9
(0.8)
0.2
(142.7)
0.8
(26.3)
2.4
1.7
0.0
(0.6)
46.0
(447.9)
25,635
(3.5)
5.6
(182.5)
24,233,601
Net loss for the year
Changes in fair value of currency
hedging instruments
Total income and expense recognized
directly in equity
Issue of share capital(1)
2005 dividend
Recognition of 2005 losses
of the parent company
(15.1)
Retained
earnings
130.6
Changes in fair value of currency
hedging instruments
Total income and expense recognized
directly in equity
Issue of share capital(1)
2004 dividend
Treasury
stock
(454.3)
1.1
0.0
2.3
1.4
0.0
(0.8)
6.0
(6.2)
0.0
40.4
1,026.4
(448.3)
1.1
(6.2)
2.3
1.4
0.0
0.0
64.2
1,090.6
(1) Shares issued on exercise of stock options.
(2) Including 302,154 treasury shares as of December 31, 2006, compared with 335,804 as of December 31, 2005 and 380,089 as of December 31, 2004 (see note 22.3).
57
FINANCIAL REPORT
(in € millions)
Statement of changes in consolidated shareholders’ equity
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Notes to the consolidated financial statements
Faurecia SA and its subsidiaries form one of the world’s leading suppliers of six major vehicle modules: seats, cockpits, doors, acoustics
modules, front ends and exhaust systems. The Group has operations in 28 countries, spanning 180 sites. Faurecia’s registered office is
located in Nanterre, in the Hauts-de-Seine region in France. The Company is quoted on the Eurolist market of Euronext Paris.
The consolidated financial statements were approved by Faurecia’s Board of Directors on February 2, 2007.
NOTE
FINANCIAL REPORT
58
[1]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of the Faurecia Group have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union, including International Accounting Standards (IASs) and related interpretations
issued by the International Financial Reporting Interpretations Committee (IFRIC).
The standards used to prepare the 2006 financial statements and comparative data for 2005 and 2004 are those published in the Official
Journal of the European Union (OJEU) as of December 31, 2006, and whose application was mandatory at that date.
In fiscal 2004 the Group opted for early adoption of the amendment to IAS 39 – Cash Flow hedge accounting of forecast intragroup
transactions – issued by the International Accounting Standards Board (IASB) on April 14, 2005, and endorsed by the European
Commission as of December 31, 2005. This amendment modifies IAS 39 to permit hedge accounting in consolidated financial statements
of the foreign currency risk of certain forecast intragroup transactions.
The Group has not opted for early adoption of any other standards published in the OJEU.
In accordance with IFRS 1, First-time adoption of International Financial Reporting Standards, Faurecia elected the following exemptions:
• translation adjustments arising on consolidation were taken to consolidated retained earnings at January 1, 2004;
• unrecognized actuarial gains and losses on employee benefit obligations as of January 1, 2004 were recorded under consolidated
retained earnings.
The Group also used the possibility offered by IFRS 1 permitting companies to restate business combinations that occurred prior to
January 1, 2004.
The accounting policies used for the 2006 financial statements are consistent with those applied by the Group for the prior fiscal year.
The new standards, interpretations and amendments issued by the IASB whose application was mandatory as of January 1, 2006 have
been applied where appropriate. However, as they did not have a material impact on the financial statements comparative prior-year
data were not restated.
The Group has not elected to apply the option available under IAS 19 permitting actuarial gains and losses on pension benefit obligations to be recorded directly in equity. Consequently, such gains and losses are still recognized according to the corridor method over
the expected average remaining working lives of the employees participating in the plans concerned.
1.1 ] CONSOLIDATION PRINCIPLES
Companies which are at least 20%-owned are consolidated when 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 over 50% of a
company’s voting rights, and may also arise as a result of shareholders’ agreements.
Companies that are between 20% and 50%-owned are carried at equity when the Group exercises significant influence.
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 their income statement items are translated at the average exchange rate for the year.
The resulting translation adjustments are recorded within equity.
Certain companies located outside the euro zone which carry out the majority of their transactions in euros may, however, use euros as
their functional currency.
For companies located in high-inflation countries, non-monetary assets and liabilities and the corresponding income statement items
are translated at historical exchange rates, after restatement for the effects of hyperinflation. Translation gains and losses on other items
are recognized in the income statement.
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1.2 ] GOODWILL
Goodwill represents the difference between the cost of shares in consolidated subsidiaries and the Group’s equity in the fair value of the
identifiable underlying net assets at the time of acquisition. In accordance with IFRS 3, 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:
• Automotive Seating;
• Vehicle Interiors;
• Exhaust Systems;
• Front End.
The carrying amount of these assets is then compared with the higher of their value in use and their market value.
Research and development expenditure
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:
• its intention to complete the project as well as the availability of adequate technical, financial and other resources to complete the
development;
• how the customer contract will generate probable future economic benefits and the Company’s ability to measure these reliably;
• its ability to measure reliably 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 to exceed five years
except under exceptional circumstances. Research costs, and development costs that do not meet the above criteria are expensed as
incurred.
1.3 ] INTANGIBLE ASSETS
Other intangible assets
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. Maintenance and repair costs are expensed as incurred, except where they serve to increase productivity or to prolong the useful
life of an asset.
Borrowing costs are not included in the cost of assets.
Property, plant and equipment are depreciated by the straight-line method over their estimated useful lives, as follows:
• Buildings
20 to 30 years
• Leasehold improvements, fixtures and fittings 10 to 20 years
• Machinery, tooling and furniture
3 to 10 years
Certain tooling is produced or purchased 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 due to 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 of ownership of the
asset to the lessee are recorded under assets at their purchase price at the inception of the lease and depreciated as described above.
An obligation of the same amount is recorded as a liability.
FINANCIAL REPORT
59
1.4 ] PROPERTY, PLANT, AND EQUIPMENT
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Page 60
1.5 ] CASH GENERATING UNITS AND IMPAIRMENT TESTS
Impairment tests are carried out where there is an indication that the asset may be impaired. Goodwill is tested for impairment at least
once a year. 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 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). In line
with this principle, tests are performed on each group of intangible assets (development costs) and property, plant and equipment attributable to a customer contract to compare their aggregate carrying amount with the present value of the expected economic benefits to
be received under the contract, net of the expected expenses.
1.6 ] FINANCIAL ASSETS AND LIABILITIES EXCLUDING DERIVATIVES
FINANCIAL REPORT
60
Loans and receivables are stated at amortized cost calculated by the effective interest method and are regularly tested for impairment.
Marketable securities consist mainly of units in mutual funds. They are stated in the balance sheet at fair value with changes in fair value
recorded under “Other financial income and expense”.
Cash and cash equivalents correspond to highly liquid investments with maturities of less than three months which are not exposed to
significant risks of impairment in value in the event of a rise in interest rates.
Financial liabilities include borrowings and other forms of financing. They are measured at amortized cost using the effective interest
method. Borrowing costs may be expensed as incurred if the amounts concerned are not material.
Financial assets and liabilities are broken down into current and non-current components for maturities of less than and more than one
year, respectively, at the balance sheet date.
1.7 ] INVENTORIES AND WORK-IN-PROGRESS
Inventories of raw materials and supplies are stated at cost, determined by the FIFO method (First-In, First-Out). Finished and semifinished products, as well as work-in-progress, are stated at production cost, determined by the FIFO method. Production cost includes
the cost of raw materials and supplies as well as direct and indirect production costs, excluding overheads 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.
Provisions are booked for inventories for which the probable realizable value is lower than cost.
1.8 ] RECEIVABLES
Receivables are recorded at cost.
Provisions are booked on a case-by-case basis where there is a risk of non-recovery.
1.9 ] FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currency are converted at the exchange rate prevailing on the transaction date. Receivables and payables are
reconverted at the year-end exchange rate and the resulting gain or loss is recorded in the income statement as part of operating income
for trade receivables and payables, and under “Other financial income and expense” for other receivables and payables.
1.10 ] DERIVATIVES
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.
Currency hedges:
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 expenses.
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.
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Interest rate hedges:
Changes in the fair value of interest rate hedges are recorded directly in “Other financial income and expense” when a hedging
relationship cannot be demonstrated under IAS 39, or where the Group has elected not to apply hedge accounting principles.
1.11 ] MINORITY INTERESTS
This item corresponds to minority shareholders’ interests in the net assets of consolidated subsidiaries. In the case of subsidiaries with
a negative net worth, minority interests are deducted from consolidated shareholders’ equity except where an agreement has been
signed requiring minority shareholders to contribute to financing the Company pro rata to their stake in the capital.
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. Changes in the present value of external funds are also recorded under this item.
1.13 ] STOCK OPTION PLANS
Stock options are granted to the management executives of Group companies and their over 50%-owned subsidiaries, allowing them to
subscribe to new Faurecia shares or to purchase existing shares. 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 increase in equity.
1.14 ] RESTRUCTURING AND REORGANIZATION PROVISIONS
1.12 ] PROVISIONS FOR PENSIONS AND OTHER EMPLOYEE BENEFITS
A provision for restructuring is booked when Group General Management has decided to rationalize the organization structure and
announced the program to the employees concerned or their representatives.
1.15 ] REVENUE RECOGNITION
1.16 ] OPERATING INCOME
Operating income is the Faurecia Group’s principal performance indicator. It corresponds to net income of fully consolidated companies
before:
• other operating income and expense which includes rationalization and early retirement costs, the impact of exceptional events such
as the discontinuation of a business, the closure or sale of an industrial site, disposals of non-operating buildings or shares in subsidiaries, and goodwill impairment losses;
• net finance costs;
• other financial income and expense, which includes the impact of discounting the pension benefit liability and the return on related
external funds, the ineffective portion of gains and losses on interest rate and currency hedges, as well as changes in value of interest
rate and currency instruments for which a hedging relationship cannot be demonstrated under IAS 39;
• corporate income tax.
1.17 ] CORPORATE INCOME TAX
Deferred taxes are recognized by the liability method for all temporary differences between the carrying amount of assets and liabilities and
their tax base. Temporary differences arise mainly from consolidation adjustments to subsidiaries’ accounts and tax loss carryforwards.
Deferred tax assets resulting from deductible temporary differences and tax loss carryforwards are not recorded when their recovery is
deemed uncertain.
61
FINANCIAL REPORT
Sales are recognized when the risks and rewards of the ownership of the modules or parts produced are transferred. This generally
corresponds to when the goods are shipped, or – in the case of development contracts or the sale of tooling – when the technical stages
are validated by the customer.
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Where appropriate, an accrual is booked to cover taxes payable on the distribution of retained earnings of subsidiaries and affiliates
which are not considered as having been permanently reinvested.
1.18 ] USE OF ESTIMATES
The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions when measuring certain
assets, liabilities, income, expenses and commitments. These estimates and assumptions are primarily used when calculating the
impairment of intangible assets, goodwill and deferred tax assets, as well as for measuring pension and other post-employment 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.
1.19 ] EARNINGS PER SHARE
Basic earnings per share are calculated by dividing net income attributable to equity holders of the parent company 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. This method consists of multiplying the number of outstanding
stock options by the ratio between the average exercise price of outstanding stock options and the average share price for the year.
FINANCIAL REPORT
62
NOTE
[2]
CHANGES IN SCOPE OF CONSOLIDATION
2.1 ] 2006
In first-half 2006, Faurecia purchased the US assets held by the Copo Ibérica Group which is 50%-owned by Faurecia and accounted
for by the equity method. Also during the year, Kwang Jin Faurecia was accounted for by the equity method for the first time. Formed in
2005, this South Korea-based company is 50%-owned by Faurecia.
2.2 ] 2005
No significant acquisitions took place during 2005. Faurecia did, however, purchase for €3.5 million the 50% interest held by a third
party in Faurecia Riverside LLC, a US-based company. The Group also acquired for €4 million the 49.2% stake it did not already own in
the South Korean company Daeki Faurecia Corporation.
Also in 2005, Faurecia bought out the minority interests in Faurecia Lecotex, based in the Czech Republic, for €0.5 million.
These three transactions generated goodwill in the amount of €6.9 million, of which €6.2 million related to Daeki Faurecia Corporation.
The companies concerned were already fully consolidated.
2.3 ] IMPACT ON CONSOLIDATED DATA OF CHANGES IN SCOPE OF CONSOLIDATION
Changes in scope of consolidation did not have a material impact on the Group’s consolidated data.
NOTE
[3]
EVENTS AFTER THE BALANCE SHEET DATE
No significant post-balance sheet events have occurred.
NOTE
[4]
INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHIC AREA
IAS 14 defines a business segment as a distinguishable component of an entity that is engaged in providing an individual product
or service or a group of related products or services and that is subject to risks and returns that are different from those of other business
segments.
Faurecia has distinguished two separate business segments: Interior modules and Other modules, which present different risk profiles.
The segments defined reflect Faurecia’s organization and internal reporting structure.
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4.1 ] KEY FIGURES BY BUSINESS SEGMENT
Interior modules
Net sales
8,305.8
Inter-segment eliminations
(35.0)
Consolidated sales
8,270.8
Operating income (loss)
(44.5)
Segment income (loss)
(433.1)
Net financial expense
Equity in net income of companies accounted for by the equity method
Other modules
3,393.6
(15.7)
3,377.9
113.7
87.9
Holding companies
144.3
(144.3)
0.0
0.0
25.0
Segment assets
Property, plant and equipment, net
Other
Total segment assets
Short- and long-term financial assets
Tax assets (current and deferred)
(437.6)
1,146.6
3,464.3
4,610.9
40.1
296.3
1,021.5
1,317.8
10.0
23.4
33.4
Total assets
Segment liabilities
Borrowings
Tax liabilities (current and deferred)
Shareholders’ equity and minority interests
2005 (in € millions)
2,503.6
767.5
(1.4)
234.3
(262.9)
(80.2)
Interior modules
69.2
(60.7)
(3.9)
Other modules
2,711.7
(10.3)
2,701.4
109.6
105.2
2.7
(2.8)
Holding companies
99.3
(99.3)
0.0
5.7
Net loss
1,305.8
3,682.5
4,988.3
306.2
889.3
1,195.5
8.8
19.5
28.3
Total
11,121.5
(143.0)
10,978.5
267.3
(60.4)
(65.5)
(52.8)
5.9
1,620.8
4,591.3
6,212.1
34.8
2.3
662.4
122.8
7,034.4
2,491.1
627.3
25.3
Total liabilities
Capital expenditure
Depreciation of property, plant and equipment
Impairment in value of property, plant and equipment
306.2
(326.4)
(84.1)
(172.8)
Total assets
Segment liabilities
Borrowings
3,269.7
2,314.4
65.3
1,090.6
6,740.0
Net sales
8,310.5
(33.4)
Consolidated sales
8,277.1
Operating income
157.7
(171.3)
Segment assets
Other
1,452.9
4,509.2
5,962.1
40.1
1.3
654.3
82.2
6,740.0
Total liabilities
Capital expenditure
11,843.7
(195.0)
11,648.7
69.2
(320.2)
(86.6)
(35.2)
4.4
3,143.7
2,240.1
110.3
1,540.3
7,034.4
340.0
(266.2)
(52.7)
93.0
(55.9)
(1.3)
7.8
(2.2)
Net loss
Total
440.8
(324.3)
(54.0)
63
FINANCIAL REPORT
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Interior modules
Other modules
Net sales
8,334.6
(49.0)
Consolidated sales
8,285.6
Operating income before amortization of contractual
289.7
Operating income after amortization of contractual
170.3
97.2
Holding companies
Total
2,450.8
(16.9)
2,433.9
77.9
(77.9)
0.0
10,863.3
(143.8)
10,719.5
117.9
(4.7)
402.9
117.9
158.1
(4.7)
(6.2)
283.5
249.1
(67.3)
(46.9)
7.3
Net income
Segment assets
Other
FINANCIAL REPORT
1,268.4
3,637.2
4,905.6
256.7
842.7
1,099.4
9.4
134.4
143.8
1,534.5
4,614.3
6,148.8
33.1
1.6
770.8
162.2
Total assets
Segment liabilities
Borrowings
7,116.5
2,393.2
600.8
(1.1)
2,992.9
2,294.3
128.4
1,700.9
Total liabilities
Capital expenditure
64
142.2
7,116.5
317.7
(261.5)
(2.6)
84.2
(52.0)
(2.6)
1.8
(2.0)
403.7
(315.5)
(5.2)
Sales by business segment break down as follows:
(in € millions)
Interior modules
– Automotive Seating
– Vehicle Interiors
Other modules
– Exhaust Systems
– Front End
Total
2006
%
2005
%
2004
%
4,812.8
3,458.0
41
30
4,794.4
3,482.7
44
32
4,784.7
3,500.9
44
33
8,270.8
71
8,277.1
75
8,285.6
77
2,659.4
718.5
23
6
1,961.3
740.1
18
7
1,714.9
719.0
16
7
3,377.9
29
2,701.4
25
2,433.9
23
11,648.7
100
10,978.5
100
10,719.5
100
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4.2 ] KEY FIGURES BY GEOGRAPHIC AREA
Sales
Capital expenditure
Number of employees as of December 31
Sales
Capital expenditure
2004 (in € million)
Sales
Capital expenditure
NOTE
[5]
France
Germany
Other
European
countries
North
America
South
America
Asia
Other
countries
Total
3,066.5
449.6
88
20,276
2,977.8
189.6
13.2
9,364
2,913.2
492.7
113.6
20,593
1,485.9
172.1
61.9
6,867
246.7
71.4
11.2
4,529
634.4
61.9
16.1
2,774
324.2
15.7
2.2
1,279
11,648.7
1,452.9
306.1
65,682
France
Germany
Other
European
countries
North
America
South
America
Asia
Other
countries
Total
3,382.6
508.8
139.2
22,148
2,892.0
241.8
68.6
10,050
2,583.1
521.4
125.9
17,299
1,234.7
185.1
51.2
5,072
221.6
80.3
19.6
3,810
404.2
62.5
31.8
2,067
260.2
20.9
4.5
1,275
10,978.5
1,620.8
440.8
61,721
France
Germany
Other
European
countries
North
America
South
America
Asia
Other
countries
Total
3,610.9
530.2
143.3
24,504
2,715.2
269.5
83.4
10,304
2,769.0
488.7
94.0
17,503
1,028.4
140.5
32.6
5,386
162.9
57.2
25.1
1,770
307.7
29.0
19.3
1,529
125.4
19.3
6.0
1,511
10,719.5
1,534.4
403.7
62,507
OPERATING EXPENSES
Sales are analyzed by the country of sale; the other items are presented by location of the companies concerned.
5.1 ] ANALYSIS BY FUNCTION
2006
2005
2004
Cost of sales
Research and Development costs
Selling and administrative expenses
(10,937.3)
(285.1)
(357.1)
(10,131.3)
(259.5)
(320.5)
(9,740.5)
(264.2)
(311.9)
Total
(11,579.5)
(10,711.3)
(10,316.6)
5.2 ] ANALYSIS BY NATURE
(in € millions)
Purchases used in production
External expenses
Payroll costs
Taxes other than on income
Other income and expense(1)
Depreciation, amortization and provisions for impairment in value of non-current asset
Charges to and releases of other provisions
Total
(1) Including production taken into inventory or capitalized (development and tooling).
2006
2005
2004
(7,808.4)
(1,307.5)
(2,104.3)
(66.3)
242.6
(518.3)
(17.3)
(7,232.4)
(1,236.9)
(1,954.6)
(60.5)
253.7
(491.4)
10.8
(6,664.5)
(1,357.4)
(1,944.5)
(60.1)
155.8
(480.3)
34.4
(11,579.5)
(10,711.3)
(10,316.6)
223.1
256.4
168.7
5.3 ] PAYROLL COSTS
(in € millions)
2006
2005
2004
Wages and salaries
Payroll taxes
(1,622.6)
(481.7)
(1,488.4)
(466.2)
(1,496.4)
(448.1)
Total
(2,104.3)
(1,954.6)
(1,944.5)
65
FINANCIAL REPORT
(in € millions)
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10:59
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5.4 ] RESEARCH AND DEVELOPMENT COSTS
(in € millions)
2006
2005
(628.1)
303.9
215.8
(142.6)
2004
Research and Development costs, gross
– amounts billed to customers and changes in inventories
– capitalized development costs
– amortization of capitalized development costs
– charges to and releases of provisions for impairment in value of capitalized
development costs
(610.6)
296.3
208.3
(161.5)
(594.9)
257.1
209.0
(145.6)
(17.6)
(8.5)
10.2
Net expense
(285.1)
(259.5)
(264.2)
5.5 ] DEPRECIATION, AMORTIZATION AND PROVISIONS FOR IMPAIRMENT IN VALUE OF NON-CURRENT ASSETS
(in € millions)
FINANCIAL REPORT
66
2006
2005
2004
Amortization of development costs
Amortization of other intangible assets
Depreciation of specific tooling
Depreciation of other items of property, plant and equipment
Provisions for impairment in value of capitalized development costs
(161.5)
(12.8)
(13.8)
(312.6)
(17.6)
(142.6)
(15.9)
(14.6)
(309.8)
(8.5)
(145.6)
(11.4)
(13.7)
(319.8)
10.2
Total
(518.3)
(491.4)
(480.3)
NOTE
[6]
OTHER OPERATING INCOME AND EXPENSE
(in € millions)
2006
2005
2004
(3.2)
Releases of (charges to) provisions for contingencies and charges
and for impairment in value of non-current assets, net
Provisions for impairment in value of goodwill and other
non-current assets – Vehicle Interior (1)
Other provisions for impairment in value of non-current assets
Reorganization expenses(2)
Early-retirement costs
Gains (losses) on disposals of assets, net
Other
(0.1)
7.8
(197.8)
(35.7)
(168.7)
(0.5)
20.9
(4.1)
(180.0)
(136.2)
(1.4)
0.3
(5.5)
(55.5)
(3.1)
48.4
1.6
Total
(386.0)
(315.0)
(11.8)
(1) In 2006, these provisions concerned goodwill in the amount of €125.0 million and non-current assets in the amount of €72.8 million, compared with respective amounts of
€138.4 million and €41.6 million in 2005.
(2) In 2006, this item included €165.5 million worth of restructuring costs, and €3.2 million in provisions for impairment in value of non-current assets (versus respective amounts of
€123.8 million and €12.4 million in 2005 and €50.3 million and €5.2 million in 2004).
Restructuring operations
Total reorganization expenses came to €168.7 million in 2006 and early retirement costs totaled €0.5 million. These amounts concerned
3,346 employees and break down as follows by country:
In € millions
France
Germany
Spain
Other
Number of
employees
(91.6)
(44.4)
(6.2)
(27.0)
1,607
799
209
731
(169.2)
3,346
NOTE
[7]
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Page 67
OTHER FINANCIAL INCOME AND EXPENSE
(in € millions)
2006
2005
2004
Impact of discounting pension benefit obligations
Changes in the ineffective portion of gains and losses on currency hedges
Changes in fair value of currency hedges on debt
Changes in fair value of interest rate instruments
Other
(9.5)
(0.5)
0.1
7.9
(1.4)
(10.0)
(1.1)
(3.9)
(0.9)
3.3
(9.7)
(8.3)
(4.6)
Total
(3.4)
(12.6)
(22.6)
2006
2005
2004
(37.0)
(11.1)
(27.3)
(4.8)
(41.9)
(48.1)
(32.1)
(41.9)
44.1
(31.2)
4.3
(25.0)
(5.0)
NOTE
[8]
CORPORATE INCOME TAX
(in € millions)
Current taxes
– corporate income tax currently payable
– tax on intercompany dividends, tax reassessments
Deferred taxes
– deferred taxes for the year
– impairment of deferred tax assets recognized in prior periods
Deferred taxes
12.9
(20.7)
(5.0)
Total
(35.2)
(52.8)
(46.9)
Corporate income tax can be analyzed as follows:
8.1 ] ANALYSIS OF THE TAX CHARGE
The effective corporate income tax charge can be reconciled with the theoretical tax charge as follows:
Income (loss) before tax of fully consolidated companies
Tax at standard French tax rate (34.43% at end-2006, 34.93% at end-2005 and
35.43% at end-2004)
Impact of income taxable at a reduced rate in France and Spain
Impact on deferred taxes of changes in tax rates
Impact of different tax rates applicable to foreign subsidiaries
Tax credits
Utilization of previously unrecognized tax loss carryforwards
Tax loss carryforwards arising during the year for which no deferred
tax asset was recognized
Impairment of previously recognized tax assets
Permanent differences
Effective corporate income tax charge
2006
(406.9)
2005
(125.9)
2004
181.7
67
140.1
44.0
(64.4)
9.1
1.6
19.1
49.2
8.1
1.1
(0.5)
11.8
22.3
7.5
5.0
(0.9)
14.6
11.8
6.0
(188.6)
(31.2)
(42.6)
(50.4)
(25.0)
(63.5)
(23.7)
(35.2)
(52.8)
(46.9)
4.7
8.2 ] DEFERRED TAXES
(in € millions)
Current taxes
– Assets
– Liabilities
Deferred taxes
– Deferred tax assets resulting from tax loss carryforwards
– Deferred tax assets resulting from consolidation adjustments
– Liabilities
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
26.0
(47.3)
11.2
(21.3)
15.0
(25.1)
(21.3)
(10.1)
(10.1)
28.9
25.9
(16.6)
63.2
48.4
(89.0)
66.8
80.5
(103.3)
38.2
22.6
44.0
FINANCIAL REPORT
(in € millions)
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Page 68
Changes in deferred taxes recorded in the balance sheets can be analyzed as follows:
(in € millions)
2006
2005
Net as of January 1
– Deferred taxes for the year recorded in the income statement (1)
– Deferred taxes recognized directly in equity
– Impact of exchange rate changes
– Impairment of deferred tax assets recognized in prior periods
22.6
44.1
0.0
2.7
(31.2)
44.0
4.3
(0.6)
(0.1)
(25.0)
Net as of December 31
38.2
22.6
(1) Including subsidies in the form of tax credits.
20
8.3 ] UNRECOGNIZED DEFERRED TAX ASSETS
(in € millions)
FINANCIAL REPORT
68
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Y+1
Y+2
Y+3
Y+4
Y + 5 and beyond
Available indefinitely
13.0
3.0
2.6
3.1
122.4
350.3
2.3
1.9
2.3
3.1
52.0
239.1
1.8
1.7
2.9
1.7
20.1
162.8
Total
494.4
300.7
191.0
2006
2005
2004
Number of shares outstanding at the year end(1)
Adjustments:
– Treasury stock
– Impact of share issues weighted based on the period between the date
of the share issue and the year-end
24,259,236
24,233,601
24,212,051
(302,154)
(335,804)
(380,089)
(24,968)
(6,276)
(3,092)
Basic weighted average number of shares
23,932,114
23,891,521
23,828,870
NOTE
[9]
EARNINGS (LOSS) PER SHARE
(in € millions)
Weighted impact of dilutive instruments (stock options)(2)
Weighted average number of shares after dilution
90,358
184,537
166,729
24,022,472
24,076,058
23,995,599
(1) Changes in the number of shares outstanding during 2005 and 2006 can be analyzed as follows:
As of December 31, 2004: number of Faurecia shares outstanding
• Faurecia stock options exercised in 2005
24,212,051
21,550
• Faurecia stock options exercised in 2006
24,233,601
25,635
24,259,236
(2) As of December 31, 2006, a total of 1,265,715 stock subscription options were outstanding and exercisable, compared with 1,176,550 as of December 31, 2005 and 1,011,100 as of
December 31, 2004. In the above table, the weighted impact of dilutive instruments was calculated using the treasury stock method. This method consists of multiplying the number of
outstanding stock options by the ratio between the average exercise price of outstanding stock options and the average share price for the year, i.e. €49.75 for 2006.
Basic earnings per share
Basic earnings per share are calculated by dividing net income by the weighted average number of shares outstanding during the year,
excluding treasury stock.
(in € millions)
Basic earnings (loss) per share
Diluted earnings (loss) per share
2006
(18.72)
(18.72)
2005
2004
(7.64)
(7.64)
5.48
5.45
NOTE
[10]
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GOODWILL
(in € millions)
Gross
Net goodwill as of January 1, 2004
Acquisitions and minority interest buyouts
Tax benefits related to unrecognized tax losses of acquired companies
Translation adjustment and other movements
Net goodwill as of December 31, 2004
Acquisitions and minority interest buyouts
Impairment of goodwill (Vehicle Interiors)
Impairment of goodwill (Vehicle Interiors)
1,530.2
26.8
(1.8)
(9.2)
1,546.0
6.8
0.1
1,552.7
1,552.9
(0.2)
Impairment
Net
0.0
(125.0)
1,530.2
26.8
(1.8)
(9.2)
1,546.0
6.8
0.1
(138.4)
1,414.5
(0.2)
(125.0)
(263.4)
1,289.3
0.0
(138.4)
(138.4)
Automotive Seating
Vehicle Interiors
Front End
Exhaust Systems
Total
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
792.5
239.3
96.1
161.4
792.7
364.3
96.1
161.4
792.0
502.7
96.1
155.2
1,289.3
1,414.5
1,546.0
In accordance with the accounting policy described in note 1.5, the carrying amount of each CGU – representing the lowest aggregation
of assets that generate largely independent cash flows within the business segment – including goodwill allocated to that unit, has been
compared with its value in use, corresponding to the present value of future cash flows based on the most recent estimates of Group
Management for each cash-generating unit concerned. The most recent estimate used was the business plan drawn up for 2007-2010.
The calculation was performed by projecting to perpetuity projected cash flows for the last year of the business plan (i.e. 2010), applying
a growth rate of 1.5%. This rate, which was the same for 2006 as that for the previous year, was determined based on analysts’ forecast
trends for the automotive market.
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 12 companies operating in the automotive equipment
sector (six in Europe and six in the US). On the basis of these parameters and a market risk premium of 5%, the weighted average cost
of capital used to discount future cash flows was set at 7.9%, unchanged since 2004.
As of December 31, 2005, the impairment test described above resulted in the recognition of a goodwill impairment loss in the amount
of €138.4 million, relating to the Vehicle Interiors business. A further €41.6 million worth of impairment losses were recorded on other
assets of this CGU, not including impairment related to restructuring. The total asset impairment figure of €180 million for 2005 was
recorded under “Other operating income and expense”.
As of December 31, 2006, this same impairment test resulted in the recognition of an additional goodwill impairment loss of
€125 million, relating to the Vehicle Interiors business. A further €72.8 million worth of impairment losses were recorded on other
non-current assets of this business, not including impairment related to restructuring. The total €197.8 million asset impairment figure
for 2006 was recorded under “Other operating income and expense”.
The impairment recorded reflects a decline in operating profitability in the Vehicle Interiors business since end-2005, as well as a time lag
before effects of the profitability improvement plan begin to feed through, and the impact on forecast sales of a more selective marketing
strategy.
The table below shows the sensitivity of the test results to changes in the assumptions used to determine the value in use of this CGU.
(in € millions)
Sensitivity(1)
+1 pt
Rate used to discount future cash flows
Growth rate used to project cash flows to perpetuity
(145.5)
165.6
– 1 pt
199.8
(120.8)
(1) Impact on value in use of the impaired group of assets allocated to the Vehicle Interiors business.
69
FINANCIAL REPORT
(in € millions)
Net goodwill breaks down as follows by business:
NOTE
[11]
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INTANGIBLE ASSETS
Intangible assets can be analyzed as follows:
(in € millions)
Development costs
FINANCIAL REPORT
Total
426.6
209.0
(140.0)
4.6
13.8
139.2
8.8
(125.7)
0.0
0.3
565.8
217.8
(265.7)
4.6
14.1
Net as of December 31, 2004
Additions
Amortization
Provisions
514.0
215.8
(142.6)
(8.5)
(5.0)
22.6
7.3
(15.9)
0.0
12.6
536.6
223.1
(158.5)
(8.5)
7.6
Additions
Amortization
Provisions (1)
573.7
208.3
(161.5)
(40.5)
(26.4)
26.6
5.3
(12.8)
0.0
3.0
600.3
213.6
(174.3)
(40.5)
(23.4)
553.6
22.1
575.7
(1) Including a non-recurring impairment loss of €22.9 million, of which €15.1 million related to Automotive Seating and €7.8 million to Vehicle Interiors.
NOTE
[12]
PROPERTY, PLANT AND EQUIPMENT
(in € millions)
Net at beginning of year
70
Software and other
Net as of January 1, 2004
Additions
Amortization
Provisions
Additions (including own work capitalized)
Disposals
Depreciation and provisions for impairment in value
Non-recurring impairment losses(1)
Other movements
Net at end of year
2006
2005
2004
1,620.8
1,534.4
1,516.3
306.2
(29.9)
(331.0)
(84.0)
(23.1)
(6.1)
440.8
(9.2)
(335.3)
(41.5)
58.9
(27.3)
403.7
(32.0)
(338.9)
1,452.9
1,620.8
1,534.4
(65.0)
(15.1)
(3.9)
(41.5)
8.9
(23.6)
(1) Including:
Vehicle Interiors
Automotive Seating
Front End
(in € millions)
Dec. 31, 2006
Gross
Depreciation
Dec. 31, 2005
Dec. 31, 2004
Net
Gross
Net
Net
Land
Buildings
Plant and equipment
Specific tooling
Other and assets under construction
66.3
840.6
2,699.1
105.9
605.3
(7.4)
(493.3)
(1,936.8)
(78.1)
(348.7)
58.9
347.3
762.3
27.8
256.6
79.5
820.5
2,683.1
86.2
586.4
74.9
389.8
851.2
30.4
274.5
70.5
361.0
818.3
30.2
254.4
Total
4,317.2
(2,864.3)
1,452.9
4,255.7
1,620.8
1,534.4
93.6
(51.0)
42.6
104.3
52.5
53.7
Including assets held under finance leases
NOTE
[13]
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INVESTMENTS IN COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD
As of December 31, 2006, this item breaks down as follows:
(in € millions)
% interest(1)
Vanpro Assentos Lda
Teknik Malzeme
Copo Ibérica SA
Componentes de Vehiculos de Galicia SA
Faurecia Japon NHK Kyushi Co. Ltd
Faurecia Japon NHK Co. Ltd
Arsed d.o.o.
Kwang Jin Faurecia Co Ltd
SAS Group
Total
Group
share of
equity
Dividends
received by
the Group
50
50
50
50
50
50
50
50
50
2.1
7.2
1.9
3.7
(7.6)
2.0
0.6
0.8
29.4
(1.0)
(1.6)
–
40.1
(2.8)
(0.2)
Group
share of
sales
Group share
of total assets
21.4
68.8
20.4
15.1
14.5
41.7
13.4
6.9
1,704.4
5.9
21.9
15.9
12.2
7.8
16.1
5.4
6.0
372.7
1,906.6
463.9
SAS is a joint venture with Siemens-VDO which manufactures full cockpit modules with electronics and circuitry built into the instrument
panels.
The accounts of the SAS Group used for the preparation of Faurecia’s consolidated financial statements were those for the period
ending September 30, 2006.
13.1 ] CHANGE IN INVESTMENTS IN COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD
(in € millions)
2006
2005
2004
Group equity in the underlying net assets at beginning of year
Dividends
Group equity in net income
Capital increase
34.8
(2.8)
4.4
1.0
1.5
1.2
33.1
(4.0)
5.9
48.3
(5.7)
7.3
(17.3)
(0.2)
0.5
Group equity in the underlying net assets at end of year
40.1
34.8
33.1
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Non-current assets
Current assets
42.0
400.6
21.3
34.6
380.0
32.2
38.3
313.8
23.7
Total assets
463.9
446.8
375.8
Borrowings
Other non-current liabilities
Non-financial current liabilities
40.5
33.2
14.9
375.3
34.8
25.5
48.5
338.0
33.1
13.2
58.4
271.1
463.9
446.8
375.8
NOTE
[14]
OTHER EQUITY INTERESTS
(in € millions)
SCI Messei
Kwang Jin Faurecia Co Ltd (1)
Taco-Faurecia
Other
% interest
100
50
50
–
Total
Dec. 31, 2005
Dec. 31, 2004
Gross
Dec. 31, 2006
Net
Net
Net
0.4
0.1
0.1
0.4
1.4
0.4
0.8
0.1
1.0
0.4
0.8
0.4
1.1
2.2
1.3
2.3
1.6
(1) A South-Korean company accounted for by the equity method for the first time in 2006
FINANCIAL REPORT
71
13.2 ] GROUP EQUITY IN THE NET ASSETS OF COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD
(in € millions)
(1) Percent interest held by the Company that owns the shares.
NOTE
[15]
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OTHER NON-CURRENT FINANCIAL ASSETS
This item includes:
(in € millions)
Dec. 31, 2006
Gross
Provisions
Dec. 31, 2005
Dec. 31, 2004
Net
Net
Net
Long-term loans
Other
21.4
13.9
(3.9)
(1.5)
17.5
12.4
20.9
5.6
16.8
3.0
Total
35.3
(5.4)
29.9
26.5
19.8
Dec. 31, 2004
NOTE
[16]
OTHER NON-CURRENT ASSETS
This item includes:
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Pension plan surpluses
Guarantee deposits and other
0.1
9.0
0.1
7.3
6.9
Total
9.1
7.4
6.9
Dec. 31, 2005
Dec. 31, 2004
NOTE
[17]
INVENTORIES
(in € millions)
Dec. 31, 2006
Gross
Provisions
Net
Net
Net
Raw materials and other supplies
Work-in-progress
Finished and semi-finished products
262.5
247.3
143.5
(20.8)
(35.4)
(15.7)
241.7
211.9
127.8
206.4
213.8
123.6
223.6
159.6
107.5
Total
653.3
(71.9)
581.4
543.8
490.7
Work-in-progress as of December 31, 2006 included €42.1 million in Research and Development costs billable to customers (December 31, 2005: €62.2 million; December 31, 2004:
€33.8 million).
FINANCIAL REPORT
72
NOTE
[18]
TRADE ACCOUNTS RECEIVABLE
In 2000, Faurecia and certain of its French subsidiaries entered into a one-year agreement with a Group bank providing for the sale
of receivables. Under this agreement, which was renewable through November 2005, the bank’s right of recourse was limited to the
amount of the related subordinated deposit. The agreement was renegotiated in 2004 and replaced by a one-year factoring agreement
renewable through December 2007, providing for the no-recourse sale of receivables without a security deposit.
In order to further diversify its financial resources, in December 2002 Faurecia entered into a second one-year agreement with another
Group bank, extending the receivables securitization program to other French and non-French subsidiaries in Europe. The agreement,
which is renewable through December 2007, is based on the same subordinated deposit principle.
In 2004, a Spanish subsidiary of the Group entered into a factoring agreement with one of its banks, and in 2006 certain of the Group’s
French subsidiaries signed additional factoring agreements with their banks.
The receivables sold under the initial and renewable factoring programs have been derecognized as follows:
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Initial factoring program
Renewable factoring program
120.0
126.5
90.5
122.0
20.8
152.4
Total
246.5
212.5
173.2
NOTE
[19]
OTHER OPERATING RECEIVABLES
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Prepayments to suppliers
Other receivables(1)
61.4
206.6
66.3
173.0
42.0
168.4
Total
268.0
239.3
210.4
195.9
165.5
159.8
(1) Including recoverable VAT and other taxes.
NOTE
[20]
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OTHER RECEIVABLES AND PREPAID EXPENSES
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Current maturities of long-term loans
Prepaid expenses
Other receivables
0.1
18.1
44.6
0.1
16.3
32.9
0.0
21.6
47.4
Total
62.8
49.3
69.0
NOTE
[21]
CASH AND CASH EQUIVALENTS
[22]
SHAREHOLDERS’ EQUITY
22.1 ] CAPITAL STOCK AND ADDITIONAL PAID-IN CAPITAL
As of December 31, 2006, the Company’s capital stock amounted to €169,814,652, divided into 24,259,236 fully paid-up common
shares with a par value of €7 each. Shares which have been registered in the name of the same holder for at least two years carry double
voting rights.
22.2 ] EMPLOYEE STOCK OPTIONS
Stock subscription options
The Company has a policy of issuing stock options to the management of Group companies and their over 50%-owned subsidiaries,
allowing them to subscribe for newly-issued Faurecia shares.
As of December 31, 2006, a total of 1,265,715 stock subscription options were outstanding.
Exercising these options would result in:
• capital stock being increased by €8.9 million;
• additional paid-in capital being increased by €57.2 million.
Details of the stock subscription option plans as of December 31, 2006 are set out in the table below:
Date of
Shareholders’
Meeting
Date of
Board
Meeting
Exercise
price
(in €)
Number of
options
granted
Of which
granted to
senior
executive
management/
Executive
Committee
members
Start of
exercise
period
Expiry date
of exercise
period
Options
exercised
Options
forfeited
Number of
options
outstanding
as of
Dec. 31, 2006
June 18, 1992
April 7, 1994
25.06
115,000
75,000
April 8, 1999
April 6, 2009
73,200
–
41,800
May 31, 1994
Oct. 20, 1994
23.84
125,000
30,000
Oct. 21, 1999
Oct. 19, 2009
110,000
–
15,000
May 31, 1994
May 3, 1995
26.07
71,000
15,000
May 4, 2000
May 2, 2010
63,000
1,000
7,000
May 3, 1995
Sept. 12, 1996
24.39
125,000
40,000
Sept. 13, 2001
Sept. 11, 2011
81,500
–
43,500
May 31, 1994
June 26, 1997
40.25
54,000
15,000
June 27, 2002
June 25, 2012
28,500
1,500
24,000
June 5, 1997
June 26, 1997
42.38
35,500
15,000
June 27, 2002
June 25, 2007
14,285
7,000
14,215
June 5, 1997
June 1, 2001
Feb. 22, 2002
55.00
351,700
69,500
Feb. 23, 2006
Feb. 22, 2012
5,600
75,400
270,700
June 1, 2001
May 14, 2002
Nov. 28, 2002
41.71
269,500
101,000
Nov. 29, 2006
Nov. 27, 2012
23,000
88,500
158,000
May 14, 2002
April 14, 2004
58.18
268,000
109,000
April 14, 2008
April 13, 2014
–
73,000
195,000
May 25, 2004
April 19, 2005
63.7
275,000
122,000
April 18, 2009
April 18, 2015
–
39,500
235,500
May 23, 2005
April 13, 2006
53.80
284,000
140,000
April 12, 2010
April 12, 2016
–
23,000
Total
261,000
1,265,715
73
FINANCIAL REPORT
NOTE
As of December 31, 2006, cash and cash equivalents included current account balances of €530.1 million (December 31, 2005:
€558.8 million; December 31, 2004: €393.0 million) and marketable securities of €56.5 million (December 31, 2005: €64.5 million;
December 31, 2004: €353.6 million).
The carrying amount of marketable securities is almost identical to market value as they are held on a very short term basis.
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In accordance with IFRS 2, the four 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:
Plan of Nov. 28, 2002
Plan of April 14, 2004
€41.71
€41.82
4 years
2%
3.57%
40%
€58.18
€58.45
4 years
2%
3.33%
40%
€63.70
€62.05
4 years
2%
2.93%
40%
€53.80
€53.15
4 years
1,5%
3.50%
30%
Option exercise price (as of grant date)
Share price as of grant date
Vesting period
Expected share dividend
Zero coupon rate
Expected share price volatility
Changes in fair value are recorded under payroll costs over the vesting period, with a corresponding adjustment to equity. The related
expense in 2006 totaled €2.3 million, compared with €2.4 million in 2005.
Stock purchase options
Between 1999 and 2001, the Company granted stock options to the management of Group companies and their over 50%-owned
subsidiaries, allowing them to purchase existing Faurecia shares.
As of December 31, 2006, a total of 293,570 stock purchase options were outstanding.
Details of the stock purchase option plans as of December 31, 2006 are set out in the table below:
Date of
Shareholders’
Meeting
Date of
Board
Meeting
Exercise
price
(in €)
Number of
options
granted
Of which
granted to
senior
executive
management/
Executive
Committee
members
Start of
exercise
period
Expiry date
of exercise
period
Options
exercised
Options
forfeited
Number of
options
outstanding
as of
Dec. 31, 2006
June 1, 1999
Sept. 6, 1999
52.0
200,000
53,100
Sept. 6, 2004
Sept. 5, 2009
37,250
17,250
145,500
June 1, 1999
May 22, 2000
Sept. 4, 2000
40.0
254,000
54,900
Sept. 4, 2005
Sept. 3, 2010
96,930
41,000
116,070
May 22, 2000 April 26, 2001
54.5
43,500
40,000
April 26, 2005
April 25, 2011
6,500
5,000
Total
32,000
293,570
22.3 ] TREASURY STOCK
FINANCIAL REPORT
74
As of December 31, 2006, Faurecia held 302,154 shares in treasury stock, reflecting the following transactions:
• 200,000 shares contributed by ECTRA in 1999;
• 19,613 shares purchased in 2000 for €0.8 million;
• 32,745 shares sold in 2004 for €1 million;
• 74,285 shares sold in 2005 for €2.3 million;
• 33,650 shares sold in 2006 for €1.3 million.
The cost of the shares held in treasury stock as of December 31, 2006 totaled €12.5 million, representing an average cost of €41.31
per share.
At the year-end, Faurecia’s share price was €49.08. A 10% fall in the share price would represent a decrease of €4.91 per share,
corresponding to a share price of €44.17 – above the average cost per share.
These shares are being held for allocation on the exercise of stock options granted to directors and managers of the Group further
to decisions of the Board of Directors on September 6, 1999, September 4, 2000 and April 26, 2001. The options outstanding as of
December 31, 2006 are exercisable for 293,570 shares (see note 22.2 b)
NOTE
[23]
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MINORITY INTERESTS
Changes in minority interests were as follows:
(in € millions)
2006
2005
2004
Balance as of January 1
Minority interests in share issues by subsidiaries
Other changes in scope of consolidation (1)
Minority interests in net income for the year
Dividends paid to minority shareholders
Translation adjustments
64.4
62.1
10.3
(6.2)
(4.3)
60.9
0.7
(1.0)
9.7
(11.6)
5.7
Balance as of December 31
64.2
64.4
60.9
(1) Including:
2004: buyout of minority interests in Faurecia Automotive GmbH
Other minority interests in companies consolidated in 2004
2005: buyout of minority interests in Daeki, Faurecia Lecotex and Faurecia Riverside
PROVISIONS FOR PENSIONS AND OTHER EMPLOYEE BENEFITS
24.1 ] PROJECTED BENEFIT OBLIGATION
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
291.1
34.9
328.0
30.4
305.5
24.2
326.0
358.4
329.7
Funded status:
– Provisions booked in the accounts
– External funds (market value)
– Plan surpluses(1)
– Actuarial gains and losses
193.3
97.2
(0.1)
35.6
201.1
106.5
(0.1)
50.9
239.9
89.9
0
(0.1)
Total
326.0
358.4
329.7
Projected benefit obligation
– Pension benefit obligations
– Healthcare costs
75
(1) Plan surpluses are included in “Other non-current assets”.
24.2 ] CHANGE IN THE PROVISION FOR PENSIONS AND EMPLOYEE BENEFITS
Movements in the provision in 2004, 2005 and 2006 were as follows:
(in € millions)
2006
2005
Balance at beginning of year
Effect of changes in Group structure (provision net of plan surpluses)
Allocations for the year
Expenses charged to the provision
Payments to external funds
Other movements
201.1
239.9
19.9
(13.7)
(11.5)
(2.5)
(21.3)
(14.7)
(10.4)
7.6
242.1
(2.1)
20.5
(9.4)
(8.5)
(2.6)
Balance at end of year
193.3
201.1
239.9
165.2
28.1
170.2
30.8
215.3
24.6
193.3
201.0
239.9
The overall provision includes:
provision for pension benefit obligations
provision for healthcare costs
[24]
(11.0)
3.2
2004
FINANCIAL REPORT
NOTE
(7.8)
11.5
(3.7)
(1.2)
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Page 76
24.3 ] PENSION LIABILITY
Description of the plans
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.
Assumptions used
The Group’s obligations under these plans are determined on an actuarial basis, using the following assumptions:
• retirement age – generally between 60 and 65 for employees in France;
• staff turnover assumptions, based on the economic conditions specific to each country and/or Group company;
• mortality assumptions specific to each country;
• estimated future salary levels, based on inflation assumptions and forecasts of individual salary increases for each country;
• the expected return on external funds;
• discount and inflation rates based on local conditions.
The main actuarial assumptions used in the past three years to measure the pension liability are as follows:
(in %)
Discount rate
2006
2005
2004
Inflation rate
2006
2005
2004
Expected return on external funds
2006
2005
2004
Euro zone
United Kingdom
United States
4.50%
4.00%
4.50%
5.50%
5.00%
5.30%
5.75%
5.70%
6.00%
2.00%
2.00%
2.00%
2.80%
2.50%
2.50%
–
4.00%
4.00%
4.00%
4.00%
4.00%
8.00%
8.00%
8.00%
8.25%
8.25%
9.00%
Information on external funds
External funds are invested as follows:
FINANCIAL REPORT
76
(in %)
2006
2005
2004
Equities
Bonds
Equities
Bonds
Equities
Bonds
16%
89%
63%
84%
11%
37%
15%
72%
60%
85%
28%
40%
15%
72%
60%
85%
28%
40%
France
United Kingdom
United States
Provision for the pension liability recorded in the balance sheet
(in € millions)
Balance of provision at beginning
of year
Effect of changes in Group structure
(provision net of plan surpluses)
Allocations for the year
Expenses charged to the provision
Payments to external funds
Other movements
Balance of provision at end of year
2006
2005
2004
France
Outside
France
Total
France
Outside
France
Total
France
Outside
France
Total
90.3
79.9
170.2
134.1
81.1
215.2
132.1
82.6
214.7
10.4
(7.7)
(6.6)
5.3
(2.1)
(4.9)
0.6
15.7
(9.8)
(11.5)
0.6
(31.4)
(8.2)
(4.2)
7
(2.1)
(6.3)
0.2
(24.4)
(10.3)
(10.5)
0.2
(4.2)
12.3
(3.5)
(2.6)
2.1
6.5
(3.1)
(5.9)
(1.0)
(2.1)
18.8
(6.6)
(8.5)
(1.0)
86.4
78.8
165.2
90.3
79.9
170.2
134.1
81.2
215.3
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Changes in the pension liability
Projected benefit obligation
At beginning of year
Service cost
Interest cost
Benefits paid
Change in fair value of external funds
– amount
– as a % of the projected benefit obligation
Other movements (including translation adjustment)
Curtailment - Settlement
Impact of plan closures and amendments
At end of year
Funded status
Expected return on external funds
Change in fair value of external funds
– amount
– as a % of the projected benefit obligation
Employer contributions
Benefits paid
At end of year
Deferred items
New deferred items
Amortization of deferred items
143.0
9.1
6.1
(15.6)
(7.5)
Outside
France
185.0
5.5
7.8
(6.0)
(7.1)
2005
Total
France
328.0
14.6
13.9
(21.6)
(14.6)
145.9
11.1
6.0
(13.0)
36.3
2004
Outside
France
Total
France
Outside
France
Total
159.7
4.3
9.2
(2.3)
305.5
15.4
15.2
(15.3)
151.4
10.9
7.4
(8.3)
151.5
4.9
6.9
(5.7)
302.9
15.8
14.2
(14.0)
(2.9)
(1.4)
4.2
17.0
33.4
0.0
17.0
(8.1)
(35.1)
(5.5)
(8.6)
(2.1)
2.8
0.0
(7.6)
(8.6)
0.0
(7.6)
(7.5)
(14.1)
(7.5)
(21.7)
0.0
(8.1)
(35.1)
127.5
163.6
291.1
143.0
185.0
328.0
145.9
159.7
305.5
15.7
0.6
90.8
5.6
106.5
6.2
15.9
0.6
74.0
6.3
89.9
6.9
19.3
0.7
68.4
5.2
87.6
5.9
(0.2)
1.8
1.6
(0.2)
(9.5)
(0.8)
(1.0)
6.6
(7.9)
(7.3)
4.9
(3.7)
(9.7)
(7.3)
11.5
(11.6)
(9.7)
4.2
(4.8)
13.9
6.3
(0.2)
(9.7)
0.0
13.9
10.4
(5.0)
(1.2)
(2.6)
0.5
(1.8)
(5.9)
9.2
(1.8)
0.0
(3.0)
(8.5)
9.7
0.0
0.0
0.0
0.0
14.8
82.4
97.2
15.7
90.8
106.5
15.9
74.0
89.9
37.0
(7.3)
(2.0)
14.2
(9.1)
(0.3)
(0.8)
(1.6)
51.2
(16.4)
(2.3)
(0.8)
(3.0)
(4.1)
36.5
(1.1)
4.4
6.6
0.3
2.9
0.3
43.1
(0.8)
2.9
0.9
4.9
0.0
(0.6)
0.0
(0.1)
(3.5)
0.0
0.6
5.2
0.0
(1.3)
0
0.0
0.6
4.6
0.0
(1.4)
(3.5)
0.0
(1.4)
0.9
4.9
At end of year
26.3
2.4
28.7
37.0
14.2
51.2
(4.1)
4.5
0.4
Balance of provision at end of year
86.4
78.8
165.2
90.3
80.0
170.3
134.1
81.2
215.2
Periodic pension cost
Periodic pension cost is recognized:
- in “Operating income” for the portion relating to service cost and amortization of deferred items;
- in “Other financial income and expense” for the portion relating to the expected return on external funds and interest cost.
Periodic pension cost can be analyzed as follows:
(in € millions)
2006
France
Service cost
Interest cost
Change in top-up scheme
Actual return on external funds
Other
Total
Outside
France
2005
Total
France
(11.1)
(6.0)
39.9
0.6
9.0
(1.1)
(4.3)
(9.2)
0.0
6.3
31.3
(9.1)
(6.1)
(5.5)
(7.8)
0.6
6.2
(2.0)
5.6
2.7
(0.3)
0.0
(14.6)
(13.9)
0.0
6.2
8.9
(2.3)
0.0
(10.4)
(5.3)
(15.7)
Outside
France
2004
Total
France
Outside
France
Total
(7.3)
(7.4)
(4.9)
(6.9)
0.7
5.1
(3.4)
5.2
0.3
(15.4)
(15.2)
39.9
6.9
9.0
(0.8)
0.0
(12.3)
(14.2)
0.0
5.9
5.1
(3.4)
(6.9)
24.4
(12.3)
(6.6)
(18.9)
2006
France
77
FINANCIAL REPORT
(in € millions)
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a) The defined benefit plan provided to certain employee categories in a number of Group companies in France was discontinued
in 2005 and a new supplementary pension scheme was set up for all managerial employees in France. This scheme comprises:
• a defined contribution plan relating to salary tranches A and B, whose contribution rate varies depending on the employee’s seniority
within Faurecia;
• a defined benefit plan relating to salary tranche C.
The benefits under the previous plan were maintained for managers aged over 53 with at least ten years’ seniority as of
December 31, 2005.
The above changes in 2005 led to a settlement and/or significant definitive curtailment of future entitlements. In accordance with
IAS 19, the related impact – amounting to €39.9 million – was deducted from payroll costs. At the same time, actuarial losses
in the amount of €22.8 million were recognized. The net impact on the total liability was therefore a decrease of €17.1 million.
b) Under the French Social Security financing act for 2007, as from January 1, 2010 collective agreements may no longer provide the
possibility for employers to require an employee to retire before the age of 65 even if the employee is already entitled to a full-rate
pension. Employees may still elect for voluntary retirement as from the age of 60 but they will receive a lower statutory retirement bonus
which will be subject to tax and social security charges.
The act does however provide that between January 1, 2010 and January 1, 2014 employees may retire before the age of 65 if the
decision is taken jointly with their employer. In such a case the employee will be entitled to a statutory retirement indemnity which
is eligible for tax and social security exemptions.
The assumption used to calculate the Group’s pension liability as of December 31, 2006 was based on voluntary retirement from the age
of 60 rather than compulsory retirement for employees covered by the collective bargaining agreement applicable in the metallurgical
industry. The impact of this change will be a reduction in the projected benefit obligation of €5.3 million, or 7.4%. This amount will be
recorded under actuarial gains and losses in 2007 and will have no impact on net income for the year.
c) The defined benefit plan that existed within one of the Group’s US subsidiaries has been closed to new participants and the benefits
of existing participants have been frozen.
24.4 ] HEALTHCARE COSTS
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)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Foreign companies
28.1
30.8
24.6
Total
28.1
30.8
24.6
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Expenses recognized in connection with this liability break down as follows:
FINANCIAL REPORT
78
(in € millions)
Service cost
Interest cost(1)
(2.3)
(1.8)
(0.1)
(1.3)
(1.7)
(0.1)
(0.1)
(1.5)
0.0
Total
(4.2)
(3.1)
(1.6)
(1) Interest cost is recorded under “Other financial income and expense”.
The impact of a one percentage point increase in medical cost trend rates would be 10% rises in service cost, financial expenses and
the projected benefit obligation.
The impact of a one percentage point decrease in medical cost trend rates would be 9% reductions in service cost, financial expenses and
the projected benefit obligation.
NOTE
[25]
OTHER PROVISIONS
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Restructuring
Early-retirement
Employee profit-sharing
Long-term contract losses and customer warranties
Claims and litigation
Long-service awards
Other
161.6
6.2
1.8
47.5
20.9
21.2
24.5
89.0
6.4
3.8
46.2
16.9
21.6
33.2
61.6
9.2
9.7
43.0
16.7
18.7
42.5
Total
283.7
217.1
201.4
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Movements in these provisions in 2006 were as follows:
(in € millions)
Restructuring
Early-retirement
Employee profit-sharing (2)
Long-term contract losses and customer warranties
Long-service awards
Other
Total
Expenses
charged to
provisions
Reversals (1)
Balance as of
Dec. 31, 2005
Allocations
Effect of
changes in
Group structure
and other
movements
Balance as of
Dec. 31, 2006
89.0
6.4
3.8
46.1
17.0
21.6
33.2
164.9
0.8
2.1
22.4
8.7
1.1
7.7
(87.8)
(3.8)
(0.5)
(18.6)
(4.7)
(1.5)
(14.4)
(1.5)
(3.0)
2.8
(3.6)
(2.4)
(0.1)
(1.5)
(0.5)
161.6
6.2
1.8
47.5
20.9
21.2
24.5
217.1
207.7
(131.3)
(3.0)
(6.8)
283.7
(1) Surplus provisions.
(2) The provision for employee profit-sharing concerns French companies of the Group.
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.
To the best of the Group’s knowledge, no claims or litigation are in progress or pending that are likely to have a material impact on the
Group’s consolidated financial position.
Long-service awards
The Group calculates its liability for the payment of long-service awards using the same method and assumptions as for its pension
liability. A provision has been set aside for long-service awards, as follows:
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
French companies
Foreign companies
10.7
10.5
11.2
10.4
9.5
9.2
Total
21.2
21.6
18.7
[26]
NET DEBT
26.1 ] DETAILED BREAKDOWN
79
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
–
300.0
725.1
9.2
31.3
–
300.0
251.9
9.5
37.6
5.3
466.8
6.3
42.6
Sub-total – long-term debt
1,065.6
599.0
521.0
Current portion of long-term debt
Short-term debt
Derivatives (net)
83.9
1,150.4
(14.8)
47.9
1,574.5
6.1
60.2
1,701.8
6.9
Total
2,285.1
2,227.5
2,289.9
Perpetual notes (TDI)
Bonds
Bank borrowings
Other borrowings
Obligations under finance leases
Net debt
(586.6)
(623.3)
(746.6)
1,698.5
1,604.2
1,543.3
26.2 ] MATURITIES OF LONG-TERM DEBT
(in € millions)
2008
2009
2010
2011
2012
and beyond
Bonds
Bank borrowings
Other borrowings
Obligations under finance leases
15.3
0.3
7.6
703.8
1.6
7.9
300.0
2.4
4.8
5.7
1.7
2.0
3.6
1.9
0.5
6.5
300.0
725.1
9.2
31.3
Total as of December 31, 2006
23.2
713.3
312.9
7.3
8.9
1,065.6
Total
FINANCIAL REPORT
NOTE
30/05/07
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26.3 ] PERPETUAL NOTES
On October 15, 1991, Faurecia (formerly Bertrand Faure) issued subordinated perpetual notes amounting to FRF900 million
(€137.2 million) paying interest at the six-month Pibor plus 1.1% through October 15, 2006 and a symbolic rate of interest thereafter.
The notes were repackaged in 1996 and the subordination clause was eliminated. In the pro forma balance sheet as of December 31,
1997, the notes were stated at their estimated discounted present value on that date of €50 million, determined on the basis of the value
of future cash flows discounted at a rate of 4.21%, corresponding to the six-month Pibor at the end of 1997 plus a 0.4% margin.
As from 1998, the residual value was amortized on the basis of the repayments that would have been due on a fixed-rate loan bearing
interest of 4.21% over the period remaining to October 15, 2006.
26.4 ] EUROBOND AND SYNDICATED LINE OF CREDIT
On October 5, 2005, Faurecia issued €300 million worth of bonds redeemable in October 2010.
In addition, since November 2004, Faurecia has had access to a medium-term syndicated line of credit of up to €1,600 million which can
be drawn down for renewable periods of one, three or six months through November 2009. As of December 31, 2006, the undrawn
portion of this credit line amounted to €900 million.
The contracts relating to these two forms of borrowings include covenants, certain of which concern financial ratios.
As of December 31, 2006, the Group complied with all of these ratios, as shown in the table below:
Type of ratio
Adjusted net debt (1) EBITDA(2)
EBITDA (2) net interest
Contractual ceiling/floor
3,50 ceiling
4,50 floor
Value as of Dec. 31, 2006
Ratio
Amount
2.97
6.78
1,743.6/587.4
587.4/86.6
(1) Adjusted net debt = consolidated net debt + adjustments for certain commitments given, based on definitions provided in the credit contract (e.g. mortgages or collateralized liabilities).
(2) Earnings before interest, tax, depreciation and amortization = operating margin + depreciation, amortization and provisions for impairment in value of property, plant and equipment and
intangible assets.
26.5 ] SECURITIZATION AND FACTORING PROGRAMS
Part of Faurecia’s financing requirements is met through receivables securitization and factoring programs (see note 18). As of
December 31, 2006, financing under these programs totaled €628.9 million (€749 million as of December 31, 2005). Of this amount
€248.9 million came from the sale of receivables with a subordinated deposit and €380 million from factoring programs.
26.5.1 Securitization program
FINANCIAL REPORT
80
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
248.9
78.6
370.0
85.7
370.0
81.9
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
120.0
90.5
20.8
260.0
126.5
288.5
122.0
299.0
152.4
Financing
Subordinated deposit, deducted from the related liability
26.5.2 Factoring program
Only the receivables sold under the initial and renewable factoring programs have been derecognized.
(in € millions)
Initial factoring program
Renewable factoring program
– Financing
– Receivables sold and derecognized
26.6 ] ANALYSIS OF LONG- AND SHORT-TERM DEBT BY INTEREST RATE AND MATURITY
As of December 31, 2006, 86.4% of the Group’s borrowings were at variable rates, taking into account swap transactions.
The Group has set up derivatives to hedge the interest rate risk on the interest payable on its borrowings between January 2007 and
December 2009 (see note 27.2).
(in € millions)
Before swaps
After swaps
Variable rate borrowings
Fixed rate borrowings
1,969.8
315.3
1,973.8
311.3
Total
2,285.1
2,285.1
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Borrowings (taking into account currency swaps) break down as follows by repayment currency:
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Euro
US dollar
Other currencies
1,902.5
184.2
198.4
83.3%
8.1%
8.7%
1,895.7
230.5
101.3
85.1%
10.4%
4.5%
2,114.2
138.5
37.2
92.3%
6.0%
1.6%
Total
2,285.1
100%
2,227.5
100.0%
2,289.9
100.0%
As of December 31, 2006, the weighted average interest rate on outstanding borrowings was 3.85%.
NOTE
[27]
HEDGING OF CURRENCY AND INTEREST RATE RISKS
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.
Subsidiaries outside the euro zone are granted inter-company loans in their operating currencies. As such loans are refinanced in euros,
exchange-rate risk is hedged through swaps.
Trade receivables
(net of payables)
Financial assets
(net of liabilities)
Net position before hedging
Hedging
after hedging
Hedging of future receivables
and payables
USD/
EUR
USD/
CAD
GBP/
EUR
CAD/
EUR
EUR/
JPY
EUR/
CZK
Other/
ZAR
EUR
SEK
EUR/
PLN
7.5
6.9
6.9
0.2
3.1
20.8
19.2
(1.8)
64.4
(0.2)
0.0
7.5
(2.6)
2.5
9.4
(9.1)
(3.9)
2.9
0.0
0.0
0.2
0.0
0.0
3.1
(3.2)
0.2
20.9
0.0
1.7
20.9
(15.7)
3.5
1.7
0.0
(31.0)
33.5
0.0
4.9
0.2
2.9
0.2
(0.1)
20.9
5.2
1.7
(6.5) (27.3)
0.0
0.0
(4.0)
0.0
(4.5)
GBP
CAD
JPY
CZK
ZAR
USD
Inter-company loans in foreign
currencies swapped for euros 160.0
EUR/
RON
EUR/
SKK
EUR/
TND
Other/
BRL
Other/
MXN
TOTAL
(3.0)
1.3
4.5
4.9 134.5
0.6
0.4
(0.3)
0.0
(3.0)
0.0
(3.3)
(2.0)
0.0
0.0
4.5
0.0
(28.3) (58.0)
(23.4) 76.6
0.0 (31.0)
33.5
0.1
(3.0)
(2.0)
4.5
(23.4)
0.0
(84.0)
(2.7)
0.0
0.0
0.0
SEK
PLN
KRW
Total
45.5
0.0 (129.0)
81
48.8
19.6
8.2
28.7
4.4
(6.6)
76.4
(2.0) 337.4
Forward purchase and sale contracts (excluding swaps relating to the refinancing of inter-company loans) and call and put options
are as follows:
(in € millions)
Forward sales
Forward purchases
Call options
Put options
USD/EUR
USD/CAD
EUR/ZAR
0.2
12.1
16.5
(8.3)
9.0
24.3
12.0
EUR/PLN
84.0
EUR/JPY
EUR/RON
5.2
3.0
2.0
TOTAL
37.0
(8.3)
0
131.3
160.0
Hedging instruments are recorded in the balance sheet at fair value. Calculations of fair value are based on measurements confirmed
by banks.
(in € millions)
Fair value of currency hedges of operating receivables and payables
– Assets
– Liabilities
Fair value of instruments used to hedge financial assets and liabilities
– Assets
– Liabilities
Total
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
2.1
–
5.5
–
7.2
–
0.6
–
–
(2.3)
1.5
–
2.7
3.2
8.7
FINANCIAL REPORT
(in € millions)
Currency sold/
currency purchased
27.1 ] HEDGING OF CURRENCY RISKS
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Changes in fair value break down as follows:
Effective portion of gains and losses on hedges of commercial receivables and payables recorded
under operating margin (1)
Effective portion of gains and losses on hedges of forecast transactions recorded in equity
Ineffective portion of gains and losses on hedges, recorded under other financial income and expense
Change in fair value of hedges of financial assets and liabilities
2006
2005
(1.3)
(0.8)
(0.2)
(0.3)
(1.9)
0.3
(1.1)
(3.9)
(2.6)
(6.6)
(1) The impact corresponding to the effective portion of gains and losses on hedges of forecast transactions was recorded in equity as of December 31, 2005, for €4.1 million. This amount was
written back to the income statement in 2006.
The impact of cash flow hedges on income and equity was as follows in 2006 and 2005:
(in € millions)
2006
2005
Fair value at beginning of year
Effective portion of gains and losses recorded in equity
Derecognition on exercise or disposal of instruments
4.1
3.3
(4.1)
3.8
4.1
(3.8)
Fair value at year-end
3.3
4.1
Ineffective portion of hedges recorded in the income statement
Amounts taken to the income statement – hedge accounting no longer applied
(2.1)
(2.7)
–
Pre-tax impact
(2.1)
(2.7)
Net impact on equity
3.3
4.1
27.2 ] INTEREST RATE HEDGES
Fixed rate borrowings of €4.0 million due in more than one year have been swapped for variable rate debt with the same maturity.
The table below provides a schedule of maturities of financial assets and liabilities, according to the interest repricing date.
(in € millions)
Repricing date
Within 1 year
FINANCIAL REPORT
82
1 to 5 years
Beyond 5 years
Total
4.0
340.6
0
2,285.1
586.6
1,353.9
4.0
340.6
4.0
(4.0)
1,357.9
0.0
Intraday to 1 year
Fixed rate
Borrowings
1,940.5
586.6
Fixed rate / variable rate swaps
Net position after hedging
1,698.5
0.0
340.6
0
1,698.5
Caps and other options in euros and US dollars have been taken out to hedge interest rate risk on the interest payable on the Group’s
borrowings between January 2007 and December 2009. Variable rate / fixed rate swaps in euros and US dollars have also been set up
as hedges in relation to interest payable over the same period. In addition, floors have been purchased in order to benefit from any
lowering of medium-term interest rates on fixed rate debt.
(in € millions)
Variable rate / fixed rate swaps
Floors
2007
2008
2009
2,940
132
639
1,508
76
75
795
263
225
3,711
1,659
1,283
Interest rate hedging instruments are recorded in the balance sheet at fair value. Calculations of fair value are based on measurements
confirmed by banks. As of December 31, 2006 the fair value of hedging instruments amounted to €25.9 million. Premiums payable
as of December 31, 2006 totaled €11.7 million, and will be paid in instalments between 2007 and 2009. As these hedges are not
accounted for in accordance with the hedge accounting principles set out in IAS 39, changes in their fair value are recorded directly in
“Other financial income and expense”. In 2006, these changes represented a net gain of €7.9 million.
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The related instruments are recognized in the balance sheet as follows:
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Fair value of interest rate instruments
Premiums payable through 2010
25.9
(11.7)
12.6
(16.4)
2.9
(11.3)
Net value
14.2
(3.8)
(8.4)
[28]
ACCRUED TAXES AND PAYROLL COSTS
(in € millions)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Accrued payroll costs
Accrued payroll taxes
Other
183.2
116.0
161.5
173.3
122.4
145.1
160.0
115.3
122.5
Total
460.7
440.8
397.8
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
50.3
11.3
56.7
90.9
5.7
34.0
53.9
4.8
40.6
118.3
130.6
99.3
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
81.1
108.5
91.9
17.2
19.5
22.0
16.1
118.3
0.5
22.6
246.7
284.9
233.1
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
31.1
16.1
24.6
20.6
19.4
15.9
11.5
10.0
12.4
16.1
12.9
34.3
12.1
10.4
34.1
81.1
108.5
91.9
NOTE
[29]
OTHER PAYABLES
(in € millions)
Due to suppliers of non-current assets
Deferred income
Other
Total
NOTE
[30]
COMMITMENTS GIVEN AND CONTINGENT LIABILITIES
NOTE
30.1 ] COMMITMENTS GIVEN
Future minimum lease payments under operating leases
Debt collateral:
– Pledged shares of Group companies
– Mortgages
Guarantees for the return of prepayments
Other debt guarantees
Firm orders for property, plant and equipment
Other
Total
83
27.9
120.5
17.0
95.0
6.6
Future minimum lease payments under operating leases break down as follows:
(in € millions)
Y+1
Y+2
Y+3
Y+4
Y + 5 and beyond
Expiry dates of mortgages and guarantees:
(in € millions)
– Within 1 year
– In 1 to 5 years
– Beyond 5 years
Dec. 31, 2006
13.3
17.5
14.3
45.1
FINANCIAL REPORT
(in € millions)
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30.2 ] CONTINGENT LIABILITIES
Individual training entitlement
In accordance with the provisions of French Act no. 2004-391 dated May 4, 2004 relating to professional training, employees of the
Group’s French companies are entitled to at least twenty hours - 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 2006, the average utilization rate of
this entitlement was 2%.
The number of unused accumulated training hours at the year-end totaled 923,000. No provision was recorded in the financial
statements for these individual training entitlements.
NOTE
[31]
RELATED PARTY TRANSACTIONS
31.1 ] TRANSACTIONS WITH PSA PEUGEOT CITROËN
The Faurecia Group is managed independently and transactions with the PSA Peugeot Citroën Group are conducted on arm’s length
terms.
Related party transactions with the PSA Peugeot Citroën Group were as follows in 2006, 2005 and 2004:
(in € millions)
Sales
Purchases of products, services and materials
Receivables
Payables
2006
2005
2004
2,701.2
31.8
776.1
55.4
2,721.9
32.0
735.7
21.2
2,847.0
24.9
739.5
31.1
31.2 MANAGEMENT COMPENSATION
Total compensation for 2006 awarded to the members of the Board of Directors and the Group Executive Committee amounted
to €7,088,269 including directors’ fees of €188,574, compared with the year-earlier figures of €6,951,510 and €192,000, respectively.
In addition to this compensation, 140,000 Faurecia stock subscription options were awarded to management during the year, and the
amount recognized with respect to share-based payments to management was €980,000.
NOTE
[32]
EMPLOYEES
The number of employees of fully-consolidated companies as of December 31, 2006, 2005 and 2004 was as follows:
FINANCIAL REPORT
84
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Europe
– France
– Germany
– Other European countries
20,276
9,364
20,593
22,148
10,050
17,299
24,504
10,304
17,503
Sub-total Europe
50,233
49,497
52,311
Outside Europe
15,449
12,225
10,196
Total
65,682
61,722
62,507
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Interior modules
Other modules
Holding companies
54,506
10,657
519
51,395
10,073
254
52,606
9,666
235
Total
65,682
61,722
62,507
The number of employees by business segment was as follows:
NOTE
[33]
INFORMATION ON THE CONSOLIDATING COMPANY
The consolidated accounts of the Group are included in the consolidated financial statements of the PSA Peugeot Citroën Group,
75 avenue de la Grande-Armée, 75116 Paris, France.
As of December 31, 2006, Peugeot SA held 71.25% of the capital and 83.75% of the voting rights of Faurecia SA, the parent company
of the Faurecia Group.
NOTE
[34]
DIVIDENDS
The Board of Directors proposes that no dividend be paid with respect to the 2006 fiscal year.
30/05/07
10:59
Page 85
AUTOMOTIVE SEATING AND VEHICLE INTERIORS
Faurecia Sièges d’Automobile SAS
Faurecia Industries
EAK Composants pour l’Automobile SAS
EAK Composants pour l’Automobile SNC
Trecia
Siebret
Siemar
Sienor
Sieto
Sieval
Sotexo
Siedoubs
Sielest
ECSA-Études et Construction de Sièges pour l’Automobile
Faurecia Intérieur Industrie SNC
Faurecia Automotive Industrie SNC
Automotive Sandouville
Société Automobile du Cuir de Vesoul
Faurecia Autositze GmbH & Co KG
Faurecia Deutschland Holding GmbH & Co-KG
Faurecia Automotive GmbH
Faurecia Innenraum Systeme GmbH
Industriepark Sassenburg GmbH
Faurecia Industrie NV
Faurecia Asientos Para Automóvil Espana SA
Asientos de Castilla Leon SA
Asientos del Norte SA
% interest
% control(1)
France
”
”
”
”
”
”
”
”
Germany
Belgium
Netherlands
Sweden
USA
Parent company
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
France
”
”
”
”
”
”
”
”
”
”
”
”
”
”
”
”
”
Germany
”
”
”
”
Belgium
Spain
”
”
100.00
100.00
51.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
(1) Total interest of fully-consolidated companies.
85
FINANCIAL REPORT
I – FULLY-CONSOLIDATED COMPANIES
Faurecia
Financière Faurecia
SFEA – Société Foncière pour l’Équipement Automobile
Faurecia Investments (merged with Sieloir)
Faurecia Automotive Holdings (merged with Faurecia Automotive Intérieur France)
Blériot Investissements
Faurecia Services Groupe
Faurecia Global Purchasing
Faurecia Exhaust International
Faurecia Werwaltungs GmbH
Société Internationale de Participations (SIP)
Faurecia Netherlands Holding BV
United Parts Exhaust Systems AB
Faurecia USA Holdings, Inc
Country
Consolidated companies
as of December 31, 2006
FINANCIAL REPORT
86
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Industrias Cousin Frères SL
Tecnoconfort
Faurecia Automotive España SL
Faurecia Interior Systems España SA
Faurecia Interior Systems SALC España SL
Cartera e inversiones Enrich SA
Asientos de Galicia SL
Valencia Modulos de Puerta SL
Faurecia AST Luxembourg SA
Faurecia Automotive Seating BV
Faurecia Assentos de Automóvel, Lda
Sasal
Faurecia Sistemas de Interior de Portugal. Componentes para Automóvel SA
(formerly SAI Automotive Portugal)
EDA – Estofagem de Assentos Lda
Faurecia Automotive Seating UK Ltd
Faurecia Midlands Ltd
SAI Automotive Telford Ltd
SAI Automotive Fradley Ltd
SAI Automotive Washington Ltd
Faurecia Interior Systems Sweden AB
Faurecia Fotele Samochodowe SpZoo
Faurecia Walbrzych SpZoo
Faurecia Legnica SpZoo (formerly SAI Automotive Polska SpZoo)
Faurecia Systemy Kierownicze SpZoo
Faurecia Gorzow SpZoo
Faurecia Lecotex AS
Faurecia Interior Systems Bohemia (formerly SAI Automotive Bohemia Sro)
Faurecia Components Písek Sro
Faurecia Seating Talmaçiu Sro
Faurecia Leather Kosice Sro
Faurecia Slovakia Sro
Faurecia Interior Systems Bratislava Sro
Faurecia Polifleks Otomotiv Sanayi Ve Ticaret Anonim Sirketi
Faurecia Interior Systems South Africa (Proprietary) Ltd
Société Tunisienne d’Équipements Automobiles
Faurecia Automotive Seating Canada Ltd
Faurecia Canada Investment Company
Faurecia Automotive Seating Inc.
Faurecia Interior Systems Inc.
Faurecia Automotive do Brasil Ltda
Faurecia Duroplast México, SA de CV
Servicios Corporativos de Personal Especializado, SA de CV
Faurecia Interior Systems México, SA de CV
CFXAS (Changchun Faurecia Xuyang Automotive Seating Co. Ltd)
Faurecia (Changchun) Automotive Systems Co. Ltd
Faurecia-GSK (Wuhan) Automotive Seating Co. Ltd
Faurecia (Wuxi) Seating Components Co. Ltd
Faurecia (Shanghai) Management Cy, Ltd
Faurecia Automotive Seating India Private Ltd
Faurecia Japon KK (merged with Faurecia Interior Systems KK)
Country
% interest
% control(1)
”
”
”
”
”
”
”
”
Luxembourg
Netherlands
Portugal
”
50.01
50.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
50.01
50.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
”
”
United Kingdom
”
”
”
”
Sweden
Poland
”
”
”
”
Czech Republic
”
”
Romania
Slovakia
”
”
Turkey
South Africa
Tunisia
Canada
”
USA
”
Brazil
Mexico
”
”
China
”
”
”
”
India
Japan
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
50.00
50.00
100.00
60.00
100.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
50.00
50.00
100.00
60.00
100.00
51.00
100.00
100.00
100.00
100.00
10:59
Page 87
EXHAUST SYSTEMS AND FRONT ENDS
Faurecia Systèmes d’Échappement
Faurecia Bloc Avant
Faurecia Cooling System
Faurecia Abgastechnik GmbH
Faurecia Kunststoffe Automobilsysteme GmbH
Leistritz Abgastechnik Stollberg GmbH
Faurecia Sistemas de Escape España, SA
Faurecia Sistemas de Escape Portugal Lda
Faurecia Exhaust Systems AB
Faurecia Magyarorszag Kipufogo-Rendszer Kft
Faurecia Exhaust Systems Sro
Faurecia Automotive Czech Republic Sro
Faurecia Exhaust Systems South Africa (Proprietary), Ltd
Faurecia Exhaust Systems, Inc.
Faurecia Sistemas de Escape Argentina SA
Faurecia Sistemas de Escapamento do Brasil Ltda
Faurecia Exhaust Mexicana SA de CV
Exhaust Services Mexicana SA de CV
Faurecia Honghu Exhaust Systems Shanghai Co. Ltd (formerly SHEESC)
Faurecia Tongda Exhaust System (Wuhan) Co. Ltd (formerly TEEC)
Faurecia Exhaust Systems Changchun
Faurecia (Shanghai) Business Consulting Cy
FESK (Faurecia Exhaust Systems Korea)
Daeki Faurecia Corporation
II – COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD
AUTOMOTIVE SEATING AND VEHICLE INTERIORS
Componentes de Vehiculos de Galicia
Copo Ibérica SA
Vanpro Assentos Lda
ARSED
Teknik Malzeme Ticaret Ve Sanayi AS
WBF Technologies
Bertrand Faure Argentina SA
PAB SA
Kwang Jin Faurecia Co. Ltd
Faurecia NHK Co. Ltd
Faurecia NHK Kyushu Ltd
EXHAUST SYSTEMS AND FRONT END
SAS Group
SAS Automotive France
Cockpit Automotive Systems Douai SNC
SAS Autosystemtechnik Verwaltungs GmbH
SAS Autosystemtechnik GmbH & Co. KG
SAS Autosystemtechnik SA
SAS Autosystemtechnik de Portugal Unipessoal Ltda
SAS Autosystemtechnik Sro
SAS Automotriz Argentina SA
SAS Automotive do Brasil Ltda
Country
% interest
% control(1)
France
”
France
Germany
”
”
Spain
Portugal
Sweden
Hungary
Czech Republic
”
South Africa
USA
Argentina
Brazil
Mexico
”
China
”
”
”
South Korea
South Korea
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.00
50.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51.00
50.00
51.00
100.00
100.00
100.00
30/05/07
87
Spain
”
Portugal
Slovenia
Turkey
Canada
Argentina
”
South Korea
Japan
”
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
France
France
Germany
”
Spain
Portugal
Czech Republic
Argentina
Brazil
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
FINANCIAL REPORT
30/05/07
10:59
Page 88
Organizational structure
Simplified organization chart of operating companies as of December 31, 2006 (direct and indirect holdings)
Faurecia
100%
(France)
100%
100%
Faurecia Services
Groupe
(France)
100%
50%
100%
Faurecia Industries
Faurecia Bloc avant
(France)
(France)
Faurecia Cooling
Systems
(France)
100%
Faurecia Automotive
Holdings
Trecia
(France)
(France)
50%
50%
Servicios Corporativos
de Personal
Especializado, SA de CV
(Mexico)
50%
Faurecia Duroplast
Mexico, SA de CV
(Mexico)
ORGANIZATIONAL STRUCTURE
51%
EAK SNC
(France)
(France)
100%
100%
82.55%
Faurecia Interior
Systems, Inc.
Faurecia Automotive
Seating, Inc.
Faurecia USA
Holdings, Inc.
(USA)
(USA)
(USA)
100%
100%
17.45%
100%
Faurecia Exhaust
Systems AB
Faurecia Automotive
Seating BV
Faurecia Netherlands
Holding BV
Faurecia Exhaust
Systems, Inc.
(Sweden)
(Netherlands)
(Netherlands)
(USA)
Faurecia
Abgastechnik GmbH
Leistritz Abgastechnik
Stollberg GmbH (LAS)
(Germany)
(Germany)
27.96%
Faurecia Autositze
GmbH
100%
(Germany)
100%
Faurecia Investiments
(France)
100%
(France)
100%
Sieto
(France)
FINANCIAL REPORT
Faurecia Interior
Systems Mexico SA
de CV (Mexico)
100%
51%
EAK SAS
Faurecia Sièges
d’Automobile
88
100%
100%
13%
(Germany)
55.8%
100%
100%
Siedoubs
Sielest
Siemar
Sienor
(France)
(France)
(France)
(France)
100%
Société Automobile
du Cuir de Vesoul
(France)
100%
100%
100%
Sotexo
(France)
100%
SASAL
(Portugal)
(Czech Republic)
(Poland)
(Poland)
100%
100%
Faurecia Automotive
SeatIng Canada Ltd
(Canada)
100%
50.01%
Industrias Cousin
Frères, SL
(Spain)
100%
Faurecia Sistemas
de Escape Portugal
Lda (Portugal)
100%
Faurecia Walbrzych
SpZoo
(United Kingdom)
100%
Faurecia Sistemas de
Interior de Portugal.
Componentes Para
Automóvel SA (Portugal)
50%
50%
Vanpro Assentos Lda
(Portugal)
100%
Teknik Malzeme
BFTC
(Slovenia)
(Turkey)
(Turkey)
50%
50%
WBF Technologies
PAB SA
(Canada)
(Argentina)
100%
50%
Bertrand Faure
Argentina SA
(Argentina)
60%
Faurecia Midlands Ltd
Faurecia Japan KK
CFXAS
(United Kingdom)
(Japan)
(China)
50%
Somil SA
(Uruguay)
51%
Faurecia GSK
(Wuhan) Automotive
Seating Co. Ltd
50%
Faurecia NHK Co. Ltd
(FNK) (Japan)
(China)
100%
100%
100%
100%
Faurecia Exhaust
Systems Sro
Faurecia Sistemas de
Escape Argentina SA
Faurecia Systèmes
d’Échappement
Exhaust Services
Mexicana, SA de CV
(South Africa)
(Czech Republic)
(Argentina)
(France)
(Mexico)
100%
50%
ARSED d.o.o.
Faurecia Exhaust
Systems South Africa
Faurecia Automotive
Seating India Private
Ltd (India)
100%
(France)
Faurecia Fotele
Samochodowe SpZoo
Faurecia Automotive
Seating UK Ltd
100%
Siebret
Faurecia Components
Pisek Sro
100%
100%
(France)
(Portugal)
(Tunisia)
100%
(Germany)
ECSA
(Portugal)
100%
51%
Faurecia Kunststoffe
Automobilsysteme
GmbH (Germany)
100%
EDA - Estofagem
de Assentos Lda
Société Tunisienne
d’Équipements
d’Automobile
100%
72.04%
Faurecia Automotive
GmbH
31.2%
Faurecia Deutschland
Holding GmbH & Co.KG
Faurecia - Assentos
de Automóvel Lda
100%
Faurecia Exhaust
Systems Changchun
Co. Ltd (China)
100%
50%
Faurecia Lecotex a.s.
Tecnoconfort
(Czech Republic)
(Spain)
50%
Faurecia NHK Kyushu
Co. Ltd
(FNQ) (Japan)
51%
50%
Faurecia Honghu
Exhaust Systems
Shanghai Co. Ltd
Faurecia Tongda
Exhaust System
(Wuhan) Co. Ltd
(China)
(China)
100%
30/05/07
100%
10:59
Page 89
100%
100%
100%
100%
Automotive
Sandouville
Faurecia Automotive
Industrie
Faurecia Global
Purchasing
Faurecia Intérieur
Industrie
SAI Automotive
Fradley Ltd
SAI Automotive
Washington Ltd
(France)
(France)
(France)
(France)
(United Kingdom)
(United Kingdom)
100%
100%
100%
Faurecia
Argentina SA
Faurecia Industrie
NV
(Argentina)
(Belgium)
100%
51%
Faurecia Interior
Systems South Africa
(Pty) Ltd
Faurecia Interior
Systems Bohemia
Sro
Faurecia AD Plastik
Automotive Romania
s.r.l.
(South Africa)
(Czech Republic)
(Romania)
50%
Taco-Faurecia
Design Center Pvt Ltd
(India)
63.88%
Faurecia Automotive
España, SL
Faurecia Leather
Kosice Sro
(Spain)
(Slovakia)
100%
100%
100%
100%
Cartera e Inversiones
Enrich SA
Valencia Modulos de
Puerta, SL
Faurecia Interior
Systems España, SA
Faurecia Automotive
do Brasil Ltda
(Spain)
(Spain)
(Spain)
(Brazil)
100%
Faurecia Sistemas
de Escapamento
do Brasil Ltda (Brazil)
49.95%
ORGANIZATIONAL STRUCTURE
100%
Faurecia Interior
Systems SALC
Espana, SL (Spain)
50.05%
100%
100%
100%
Faurecia Legnica
SpZoo
Faurecia Gorzow
SpZoo
Faurecia Automotive
Czech Republic Sro
(Poland)
(Poland)
(Czech Republic)
Daeki Faurecia
Corporation
Faurecia Sistemas
de Escape España SA
(South Korea)
(Spain)
100%
Faurecia Asientos
Para Automovil
España, SA (Spain)
100%
(Spain)
(Slovakia)
50%
Faurecia Exhaust
Systems Korea
Kwang Jin Faurecia
Co, Ltd
(South Korea)
(South Korea)
60%
Faurecia (Shanghai)
Business Consulting
Company Ltd (China)
100%
50.77%
100%
100%
Asientos del Norte SA
Asientos de Galicia SL
(Spain)
(Spain)
100%
Faurecia (Changchun)
Automotive Systems
Co. Ltd (China)
Faurecia Interior
Systems Bratislava
Sro
100%
100%
49.23%
Asientos de Castilla
Leon SA
100%
68.75%
100%
Faurecia Seating
Talmaçiu Sro
(Romania)
Faurecia Exhaust
Mexicana, SA de CV
Faurecia Technoplast
Automotive
(Mexico)
(Russia)
100%
100%
Faurecia (Wuxi)
Seating Components
Co. Ltd (China)
100%
Faurecia (Shanghai)
Management Co. Ltd
89
(China)
FINANCIAL REPORT
10.66%
50%
Copo Ibérica, SA
(Slovakia)
(Spain)
31.24%
50%
Componentes de
Vehiculos de Galicia
SA (Spain)
100%
100%
100%
Faurecia Innenraum
Systeme GmbH
Faurecia Interior
Systems Sweden AB
Faurecia AST
Luxembourg SA
(Germany)
(Sweden)
(Luxembourg)
50%
100%
100%
SAS
Autosystemtechnik
GmbH & Co. KG
SAS
Autosystemtechnik
Verwaltungs GmbH
SAS
Autosystemtechnik
SA
(Germany)
(Germany)
(Spain)
100%
SAS
Autosystemtechnik de
Portugal, Unipessoal
Lda (Portugal)
100%
SAS Automotive Ltd
(United Kingdom)
100%
100%
SAS Automotive
USA, Inc.
(USA)
100%
Faurecia Polifleks
Otomotiv Sanayi Ve
Ticaret AS (Turkey)
100%
(Turkey)
100%
100%
SAS Automotive
Belgium NV
SAS Automotive
France
Cockpit Automotive
Systems Douai SNC
(Belgium)
(France)
(France)
100%
SAS
Autosystemtechnik
Sro
(Czech Republic)
100%
100%
Dempo Otomotiv
Sanayi Ve Ticaret AS
100%
SAS Automotive RSA
(Pty) Ltd
SAS Automotive
Sro
SAS Automotive
Systems SA de CV
(South Africa)
(Slovakia)
(Mexico)
100%
100%
SAS Automotriz
Argentina SA
SAS Automotive
do Brasil Ltda
(Argentina)
(Brazil)
100%
SAS Automotive
Systems & Services
SA de CV (Mexico)
Europe
Asia
South America & Africa
North America
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Statutory Auditors’ report on the consolidated financial
statements for the year ended December 31, 2006
This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely for the convenience of English speaking readers.
The Statutory Auditors’ report includes information specifically required by French law in all audit reports, whether qualified 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.
To the Shareholders,
FINANCIAL REPORT
90
In compliance with the assignment entrusted to us by the Annual Shareholders’ Meeting, we have audited the accompanying
consolidated financial statements of Faurecia SA and its subsidiaries for the year ended December 31, 2006.
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.
I – Opinion on the consolidated financial statements
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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our 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 as at December 31, 2006 and the results of its operations for the year then ended in accordance with IFRS as adopted
by the European Union.
II – Justification of our assessments
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:
• The Company performs impairment tests on goodwill at each balance sheet date, and also assesses whether fixed assets show
any indication of impairment, based on the methods described in notes 1-2, 1-5 and 10 to the consolidated financial statements.
We reviewed the methods applied to carry out these impairment tests, as well as the cash flow projections and assumptions used.
We also verified that note 10 discloses appropriate information in this regard.
• Note 1-17 to the consolidated financial statements, concerning corporate income taxes, specifies that deferred tax assets are not
recognized in the accounts when it is deemed uncertain that they will be recovered in the future. Our work consisted in verifying that this
method had been correctly applied and assessing whether the forecast data and assumptions supporting the probability of recovery
for these deferred tax assets were reasonable.
• As part of our assessment of the accounting rules and principles applied by your Company, we reviewed the criteria used for
capitalizing and amortizing development expense and measuring the recoverable amount. We also ensured that note 1-3 discloses
appropriate information.
These assessments were made in the context 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.
III – Specific verification
In accordance with professional standards applicable in France, we have also verified the information given in the Group’s Management
Report. We have no matters to report regarding its fair presentation and consistency with the consolidated financial statements.
Neuilly-sur-Seine and Paris-La Défense, February 5, 2007
The Statutory Auditors
Guy A. Sitbon
Ernst & Young Audit
Laurent Miannay
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PARENT COMPANY FINANCIAL STATEMENTS
30/05/07
Parent company
92_ Management report of the parent company
95_ Income statements
96_ Balance sheets
98_ Cash flow statements
99_ Notes to the 2006 financial statements
107_ Appropriation of 2006 net loss
91
108_ Subsidiaries and investments as of December 31, 2006
110_ Five-year financial summary
111_ Securities portfolio as of December 31, 2006
112_ Statutory Auditors’ report
FINANCIAL REPORT
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Management report of the parent company
FINANCIAL REPORT
92
The parent company, Faurecia, is a holding company which directly and indirectly provides financial, accounting, general management
and administrative services to companies in the Group.
Sales for 2006 amounted to €87.1 million versus €82.8 million in 2005. Payroll costs rose slightly to €13.6 million versus
€12.7 million in 2005.
The operating profit amounted to €1.7 million, which represents a return to break-even when compared to previous years: an operating
loss of €3.2 million was incurred in 2005 and a loss of €10.3 million was incurred in 2004.
Faurecia incurred a net financial loss of €205.3 million.
This item mainly comprised:
• net charges to provisions for impairment of investments of €382.3 million, including a charge of €230.6 million for investments relating
to the Group’s Vehicle Interiors business (excluding the US business) and a charge of €140 million relating to the investment in Faurecia
USA Holdings Inc. Impairment losses relating to the Vehicle Interiors business result from updating the valuations of these investments.
They are in line with the impairment tests carried out in the context of preparation of the Group’s consolidated financial statements.
The impairment loss relating to the investment in Faurecia USA Holdings, which holds investments in Group subsidiaries in the Seats,
Vehicle Interiors and Exhaust Systems businesses, results from start-up costs in the Seats and Vehicle Interiors businesses.
An increase of $300 million in the capital stock of Faurecia USA Holdings was decided on at the end of 2006 in order to re-balance the
subsidiary’s financial structure;
• dividends from subsidiaries of €153.6 million, including a dividend of €83.9 million from Faurecia Automotive GmbH
(Vehicle Interiors business);
• income of €64.6 million on the extinguishment of the accounting debt related to the perpetual notes, which matured in October 2006;
• net borrowing costs of €40.6 million (versus €34.8 million the previous year).
At December 31, 2006, net debt, corresponding to borrowings net of cash and cash equivalents, marketable securities and net intercompany cash advances, amounted to €1,468.1 million, compared to €1,497.4 million at the end of 2005.
The Company’s sources of financing comprise the following:
• a €300 million bond issued in October 2005 which matures in October 2010;
• a syndicated line of credit of €1.6 billion which can be drawn down for renewable periods of one to six months,
expiring in November 2009, of which €700 million had been used at December 31, 2006;
• a commercial paper program issued on the French domestic market for a total amount of €850 million of which €484,3 million had
been used at December 31, 2006; the syndicated line of credit guarantees the liquidity of this program: the two financing contracts
(syndicated credit and bond) contain restrictive clauses, particularly relating to certain consolidated financial ratios, which were all
complied with at December 31, 2006. At that date, 80.2% of Faurecia’s debt was at variable rates and was hedged through interest
rate caps.
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Page 93
Net non-recurring income for the year amounted to €27.8 million and reflects two main transactions:
• the sale of Faurecia Automotive Intérieur France shares to FAH for €9.1 million (capital loss on sale of €21.7 million);
• contribution of the investment in Faurecia Sístemas de Escape to Faurecia Automotive España for €76.4 million (capital gain
on contribution of €49.0 million).
Tax income, recognized as a result of profits made by French subsidiaries in the consolidated tax group, amounted to €10.5 million
in 2006 (€16.9 million in 2005).
The net loss for the year was €165.2 million, taking account of the impact of provisions for impairment of investments recognized.
As the Company does not have retained earnings, the loss for the year will be deducted from the “Additional paid-in capital” caption,
which will be reduced to an amount of €194.3 million. Shareholders’ equity at December 31, 2006 amounted to €390.0 million.
The documents accompanying this report, which are included within Faurecia’s registration document (document de référence),
supplement the information provided to shareholders, particularly concerning compensation received by directors and officers. In this
respect, following Pierre Levi’s resignation from his functions as a Director, as Chairman of the Board of Directors and as Chief Executive
Officer, Grégoire Olivier was coopted as a Director by decision of the Board of Directors on September 8, 2006.
During the same meeting, the Board appointed Grégoire Olivier as its Chairman and decided that the role of Chief Executive Officer
would be assumed by the Chairman of the Board of Directors.
Subsequently, having been called to fill other functions within the PSA Peugeot Citroen Group, Grégoire Olivier was replaced in his
functions as Chairman of the Board of Directors by Yann Delabriere on February 16, 2007. During the same meeting, the Board
confirmed that the role of Chief Executive Officer is assumed by the Chairman of the Board of Directors and, in addition,
Grégoire Olivier resigned as a Director.
The Company’s capital stock only underwent minor changes in the years arising from the exercise of stock options by the Company’s
senior managers. The Board of Directors did not use the authorization given by the Shareholders’ Meeting of May 22, 2006 to increase
the capital stock up to a maximum amount of €61,000,000.
The risks that the Company faces are explained in the Management report of the Board of Directors on the consolidated
The draft resolutions presented below are an integral part of this document and complete the information provided to shareholders.
In the ordinary resolutions, the shareholders are asked to approve the financial statements of the Company and the Group, as well as to
appropriate the net loss for the year. The shareholders are asked to renew the appointment of Yann Delabrière as a Director for a period
of six years. The shareholders are asked to appoint Sylvie Rucar, Ross Mc Innes, Jean-Pierre Clamadieu and Robert Peugeot as new
Directors. Lastly, shareholders as asked to ratify the Board’s decision of February 2, 2007 to coopt Christian Streiff as a Director.
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93
FINANCIAL REPORT
FINANCIAL REPORT
94
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Page 94
As the period of appointment of the Statutory Auditors ends on completion of this General Meeting, the Board proposes that the
shareholders renew, for the six-year legal period, the appointment of Ernst & Young as principal Statutory Auditor (and that of the deputy
Statutory Auditor for Ernst & Young) and the appointment of PricewaterhouseCoopers as principal Statutory Auditor (and that of the
deputy Statutory Auditor for PricewaterhouseCoopers).
In the extraordinary resolutions, the Board of Directors requests the authorization to issue stock options that could potentially represent
600,000 Faurecia shares. These stock-options would be granted by the Board to directors, officers and employees of the Group within
a period of thirty-eight months from the date of your decision.
The details of the stock options granted by the Company during the year, the beneficiaries thereof and the number of shares subscribed
to or purchased, are provided to you in a special report. Part of this information is dealt with or completed in the section of Faurecia’s
registration document providing general information on your Company.
In the extraordinary resolutions it is also proposed to harmonise article 17 of the Company’s bylaws with the decree of December 11,
2006, and to state in the bylaws that the right to participate in Shareholders’ Meetings is justified by the accounting registration of the
shares in the shareholders’ name, or that of the intermediary acting on behalf of the shareholder, three working days before the
Shareholders’ Meeting.
The manner in which the Board of Directors and its specialized Committees operate, together with key information concerning
the Group’s internal control system, are described in the Chairman’s report on this matter.
The Chairman’s report on internal control and the accompanying Statutory Auditors’ report are presented in greater detail in
the corporate governance section of the registration document.
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Page 95
(in € thousands)
Notes
2006
2005
2004
Services sold
87,108
82,779
67,592
Sales
87,108
82,779
67,592
155
185
555
(78,498)
(63,742)
(61,837)
Taxes other than on income
(2,172)
(1,123)
(593)
Wages and salaries
(9,785)
(9,307)
(8,666)
Payroll taxes
(3,841)
(3,373)
(3,212)
provisions (less reversals)
(7,669)
(8,469)
(3,985)
Other income and expenses
16,418
(164)
(149)
Total operating expenses
(85,392)
(85,993)
(77,887)
1,716
(3,214)
(10,295)
Capitalized production
External services
Income statements
Depreciation, amortization and
Financial income
3
305,536
100,338
108,526
Interest and other financial expenses
3
(510,798)
(522,413)
(105,762)
Net financial income (loss)
3
(205,262)
(422,075)
2,764
(203,546)
(425,289)
(7,531)
Operating income (loss) after financial income (loss)
Non-recurring income
4
86,536
157,435
1,226
Non-recurring expense
4
(58,737)
(164,822)
(1,280)
Net non-recurring income (expense)
4
27,799
(7,387)
(54)
5
10,522
16,918
41,076
(165,225)
(415,758)
33,491
Employee profit-sharing
Net income (loss)
95
FINANCIAL REPORT
Operating income (loss)
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Page 96
Balance sheets
FINANCIAL REPORT
96
Assets
(in € thousands)
Dec. 31, 2006
Notes
Intangible assets
Dec. 31, 2005
Dec. 31, 2004
Cost
Depreciation,
amortisation
and provisions
Net
Net
Net
13,706
10,899
2,807
5,935
3,373
Property, plant and equipment
6
11,495
6,026
5,469
5,909
7,366
Investments
7
2,650,035
908,069
1,741,966
1,944,722
2,313,620
Total fixed assets
2,675,236
924,994
1,750,242
1,956,566
2,324,359
Trade receivables
56,163
56,163
27,210
20,547
783,765
811,112
812,136
16,942
16,296
19,233
856,870
854,618
851,916
16,176
18,156
14,635
0
0
9
2,206
3,175
5,678
2,625,494
2,832,515
3,196,597
Other receivables
8
783,826
9
16,942
Total current assets
Prepaid expenses
856,931
10
61
61
16,176
Conversion losses
Deferred charges
Total assets
2,206
3,550,549
925,055
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Page 97
Liabilities and shareholders’ equity
(in € thousands)
Notes
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Capital stock
169,815
169,635
169,484
359,566
723,184
722,515
16,948
16,948
16,945
8,939
8,939
12,024
Legal reserve
Untaxed reserves
Other reserves
3,020
Retained earnings
(165,225)
48,232
40,936
(415,758)
33,491
Untaxed provisions
108
Total shareholders’ equity
11
390,043
554,200
995,503
Provisions for contingencies and charges
12
6,140
4,730
5,221
65,734
67,028
1,532,612
1,364,385
1,295,156
1,532,612
1,430,119
1,362,184
Long and short-term debt
Perpetual notes
13
Other debt
14
Total debt
Operating payables
15
33,749
25,650
24,290
Other payables
15
661,830
815,889
807,382
695,579
841,539
831,672
745
1,927
2,017
2,832,515
3,196,597
Total payables
Deferred income
Conversion gains
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16
375
2,625,494
97
FINANCIAL REPORT
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Page 98
Cash flow statements
(in € millions)
2006
2005
2004
I – Operating activities
Net income (loss)
(165.2)
(415.8)
33.4
5.7
7.6
7.2
Increase (decrease) in provisions and other long-term liabilities
383.7
432.2
35.9
Capital (gains) losses on disposals of assets
(27.4)
7.8
(0.2)
Cash flow
196.8
31.8
76.3
(Increase) decrease in working capital requirement
(14.6)
13.5
10.5
Net cash provided (used) by operating activities
182.2
45.3
86.8
Depreciation and amortization
II – Investing activities
Acquisitions of intangible assets and property, plant and equipment
Acquisitions of investments in subsidiaries and affiliates
FINANCIAL REPORT
98
(1.2)
(6.2)
(1.8)
(76.4)
(155.2)
(34.8)
Other investments
Divestments of property, plant and equipment
Disposals of financial investments
0.3
85.7
155.5
Other decreases in property, plant and equipment
Net cash provided (used) by investing activities
Net cash provided by operating and investing activities (I)+(II)
0.5
8.1
(5.9)
(35.8)
190.3
39.4
51.0
1.0
0.8
0.2
(26.3)
(21.6)
III – Financing activities
Issuance of shares
Dividends paid
Issuance of debt securities and increase in borrowings
540.7
304.4
401.0
Repayments of borrowings and perpetual notes
(438.2)
(236.4)
(451.6)
Changes in intercompany borrowings
(293.2)
(84.9)
17.7
Net cash (used) by financing activities
(189.7)
(42.4)
(54.3)
0.6
(3.0)
(3.3)
Cash and cash equivalents at beginning of year
16.3
19.3
22.6
Cash and cash equivalents at end of year
16.9
16.3
19.3
Net increase (decrease) in cash and cash equivalents
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Page 99
NOTE
[1]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with French generally accepted accounting principles.
The main policies applied are as follows:
1.1 ] PROPERTY, PLANT AND EQUIPMENT
Property 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:
• buildings: 25 to 30 years;
• leasehold improvements, fixtures and fittings: 7 to 10 years;
• other fixtures and fittings: 10 years;
• office equipment and computers: 3 to 5 years;
• software: 1 to 3 years;
• furniture: 10 years.
Notes to the 2006 financial statements
1.2 ] INVESTMENTS
1.3 ] MARKETABLE SECURITIES
Marketable securities are stated at acquisition cost or market value, whichever is lower.
1.4 ] FOREIGN CURRENCY TRANSACTIONS
Unhedged payables and receivables in foreign currency are translated at the exchange rate prevailing on the transaction date. At 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.
1.5 ] PROVISION FOR PENSION AND RETIREMENT BENEFITS
The vested rights of employees under supplementary pension and retirement bonus plans are determined on an actuarial basis using
the projected benefit obligation 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.
1.6 ] NON RECURRING ITEMS
Unusual or non-recurring items are included under “Non-recurring income and expense”.
99
FINANCIAL REPORT
A provision is set aside if the fair value of an investment falls below its cost on initial recognition. Fair value is based on the subsidiary’s
revalued net assets, profitability and future prospects.
For investments intended to be sold, fair value estimates also take into account prices at which prior transactions were carried out,
if any.
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Page 100
1.7 ] FINANCIAL INSTRUMENTS
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.
NOTE
[2]
SUBSEQUENT EVENTS
No significant post-balance sheet events have occurred.
NOTE
[3]
NET FINANCIAL INCOME (LOSS)
Net financial income (loss) breaks down as follows:
(in € thousands)
2006
2005
2004
163,916
110,856
48,302
33,105
30,764
18,931
78,341
26,460
3
3,722
Total
305,536
100,338
108,526
Interest and other financial expenses
Interest expense
Charges to provisions for impairment of investments(4)
Charges to other provisions(5)
(97,718)
(413,080)
(71,916)
(450,497)
(66,482)
(38,011)
(1,269)
Total
(510,798)
(522,413)
(105,762)
Net financial income (loss)
(205,262)
(422,075)
2,764
Financial income
Income from investments in subsidiaries and affiliates(1)
Other interest and similar income(2)
Net gains from sales of marketable securities
Reversals of provisions(3)
(1) This item corresponds to dividends and similar income from subsidiaries and affiliates.
In 2004, it includes a dividend received from Faurecia Automotive GmbH in the form of Faurecia Automotive Intérieur France shares, amounting to €30,753 thousand.
In 2006, it includes a dividend received from Faurecia Automotive GmbH amounting to €83,880 thousand.
(2) including:
– income on maturity of perpetual notes
64,567
FINANCIAL REPORT
100
(3) including:
– reversals of provisions for impairment of investments
– reversals of provisions for financial contingencies and charges
(4) including:
• in 2004
– a provision against the Faurecia Automotive GmbH investment to offset the dividend received from the Company
• in 2005
– Faurecia Automotive Holding investment
– Faurecia Industries investment
– Faurecia Automotive Intérieur France investment
– Faurecia Automotive GmbH investment
• in 2006
– Faurecia Automotive Holding investment
– Faurecia Industries investment
– Faurecia USA Holdings Inc. investment
– Faurecia Automotive GmbH investment
– Trecia investment
– Faurecia Honghu Exhaust Systems Shanghai investment
– Sté Internationale de Participation (SIP) investment
(5) Including:
– provisions for currency risks
– provisions for financial contingencies and charges
30,764
17,662
1,269
1,400
2,322
30,753
(343,300)
(57,000)
(30,753)
(15,300)
(140,000)
(14,000)
(140,000)
(102,880)
(4,500)
(200)
(11,500)
(9)
(1,260)
NOTE
[4]
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NET NON-RECURRING INCOME (EXPENSE)
Net non-recurring income (expense) breaks down as follows:
(in € thousands)
2006
2005
2004
86,005
156,632
682
531
798
544
86,536
157,435
1,226
(431)
(911)
(659)
(58,306)
(163,336)
(90)
(575)
(531)
Non-recurring income
From management transactions
5
Proceeds from the disposal of assets(1)
Reversals of provisions(2)
Total
On management transactions (3)
Book value of assets and investments sold(4)
Depreciation, amortisation and charges to provisions
Total
(58,737)
(164,822)
(1,280)
Net non-recurring income (expense)
27,799
(7,387)
(54)
(1) including:
proceeds from the sale of investments
85,611
(Faurecia Automotive Holdings Inc. shares sold in 2005 to Faurecia USA Holdings Inc. for 155,133)
(Faurecia Automotive Intérieur France shares sold to FAH for 9,081 and Faurecia Sístemas de Escape shares contributed
to Faurecia Automotive España for 76,449 in 2006)
(2) including:
– reversals of untaxed provisions
– reversals of provisions for contingencies and charges
531
(3) restructuring costs in 2004
expenses following tax audit in 2005 and 2006
109
435
(806)
(163,336)
CORPORATE INCOME TAX
Faurecia has elected to file consolidated tax returns. The tax group includes the parent company and its main French subsidiaries.
This election allows Faurecia to obtain a tax benefit by offsetting its tax losses, and those of some of its subsidiaries,
against the taxable income of other subsidiaries in the tax group:
(in € thousands)
2006
2005
2004
Tax income from subsidiaries in the tax group
Tax income (expense)
10,419
103
17,500
(582)
41,076
Total
10,522
16,918
41,076
NOTE
[6]
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment can be analyzed as follows:
(in € thousands)
Dec. 31, 2005
Dec. 31, 2004
Cost
Dec. 31, 2006
Net
Net
Net
Land
Buildings
Other property, plant and equipment
55
288
11,152
55
0
5,414
56
1
5,852
56
7
7,303
Total
11,495
5,469
5,909
7,366
Capital expenditure amounted to €1,191 thousand in 2006, including €108 thousand on fixtures and fittings, €118 thousand on furniture,
€365 thousand on other intangible assets and €600 thousand on assets under construction.
101
FINANCIAL REPORT
[5]
109
689
(630)
(313)
(4) book value of assets and investments sold or contributed
(58,304)
(of which Faurecia Automotive Holdings Inc. shares for 146,303 in 2005)
(of which Faurecia Automotive Intérieur France shares for 30,753 and Faurecia Sístemas de Escape shares contributed for 27,442 in 2006)
NOTE
155,553
Non-recurring expense
NOTE
[7]
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INVESTMENTS
(in € thousands)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Gross
Provisions
Net
Net
Net
Investments in subsidiaries and affiliates
Loans to subsidiaries and affiliates
Other
2,359,252
290,783
908,069
1,451,183
290,783
0
1,815,302
129,367
53
2,256,286
57,296
38
Total
2,650,035
908,069
1,741,966
1,944,722
2,313,620
Loans to subsidiaries and affiliates, which include the advance made prior to the increase in capital stock of Faurecia USA Holdings Inc.
in an amount of €188 milllion, are due for payment more than one year after the balance sheet date.
NOTE
FINANCIAL REPORT
RECEIVABLES
These mainly comprise:
• cash advances to various Group companies totaling €694.8 million as of December 31, 2006 (December 31, 2005: €712.2 million;
December 31, 2004: €699.3 million);
• taxes due by subsidiaries in the tax group, in an amount of €2.1 million (December 31, 2005: €4.1 million; December 31, 2004:
€22.5 million);
• corporate income tax receivables in an amount of €3.9 million as of December 31, 2006 (December 31, 2005: €2.9 million;
December 31, 2004: €2.3 million);
• a securitization deposit in an amount of €78.6 million as of December 31, 2006 (December 31, 2005: €85.7 million; December 31,
2004: €81.9 million);
• recoverable VAT of €1.1 million compared to €3.5 million in 2005.
Receivables due within one year amount to €780.5 million; those due after one year amount to €3.3 million.
NOTE
102
[8]
[9]
CASH AND CASH EQUIVALENTS
At December 31, 2006, this item corresponds mainly to 302,154 Faurecia shares with a carrying value of €12.5 million compared to
335,804 Faurecia shares with a carrying value of €13.5 million at December 31, 2005:
• 200,000 were contributed by Ectra in 1999;
• 19,613 were purchased in 2000;
• 32,745 were sold in 2004;
• 74,285 were sold in 2005;
• 33,650 were sold in 2006.
The shares are being held for allocation on exercise of stock options granted to directors and managers of the Group.
At the Meetings held on September 6, 1999, September 4, 2000 and April 26, 2001, the Board of Directors decided to grant, respectively,
200,000 stock options with an exercise price of €52 each, 254,000 stock options with an exercise price of €40 each and 43,500 stock
options with an exercise price of €54.5 each.
NOTE
[10]
PREPAID EXPENSES
Prepaid expenses mainly comprise:
(in € thousands)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Premiums on currency and interest rate instruments
Commissions and bank charges
Rent
Other
14,551
162
1,360
103
17,863
200
93
13,028
271
1,261
75
Total
16,176
18,156
14,635
NOTE
[11]
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SHAREHOLDERS’ EQUITY
11.1 ] CHANGES IN SHAREHOLDERS’ EQUITY
Balance as of
Dec. 31, 2005
Capital stock
Legal reserve
Untaxed reserves
Other reserves
Retained earnings
Untaxed provisions
169,635
723,184
16,948
8,939
3,020
48,232
(415,758)
0
Total
554,200
Appropriation
decision at
the AGM of
May 26, 2006
(364,506)
Increase in
capital stock
180
888
(3,020)
(48,232)
415,758
0
Other
movements
in the year
(165,225)
1,068
(165,225)
Balance as
of Dec. 31, 2006
169,815
359,566
16,948
8,939
0
0
(165,225)
0
390,043
11.2 ] ADDITIONAL PAID-IN CAPITAL
• As of December 31, 2006, the Company’s capital stock amounted to €169,814,652, divided into 24,259,236 fully paid-up common
shares with a par value of €7 each. Shares which have been registered in the name of the same shareholder for at least two years carry
double voting rights (17,322,326 shares as of December 31, 2006).
• The exercise of all the stock options granted to directors and managers that were outstanding as of December 31, 2006, i.e.,
1,265,715 options exercisable at an average price of €52.21, would result in:
– capital stock being increased by €8.9 million corresponding to 1,265,715 shares with a par value of €7 each;
– additional paid-in capital being increased by €57.2 million.
[12]
PROVISIONS FOR CONTINGENCIES AND CHARGES
(in € thousands)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Provisions for contingencies
Foreign exchange losses
Impairment in value of financial instruments
Other
2,356
2,037
9
1,260
3,941
Sub-total
2,356
2,037
3,941
Provisions for charges
Provisions for pensions and retirement benefits(1)
Other
3,650
134
2,542
151
1,091
189
Sub-total
3,784
2,693
1,280
Total
6,140
4,730
5,221
(1) The provision for pensions and retirement benefits covers the costs that the Company must bear on retirement of employees:
– statutory lump-sum bonuses payable to employees on retirement;
– supplementary pension benefits payable to certain employees.
The Company’s obligations for supplementary pension benefits are fully funded under an insured plan. 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 4.5% and an inflation rate of 2%.
NOTE
[13]
PERPETUAL NOTES
On October 15, 1991, Faurecia (formerly Bertrand Faure) issued perpetual subordinated notes amounting to €137.2 million bearing
interest at the six-month Pibor plus 1.10% through October 15, 2006 and a symbolic rate of interest thereafter.
At the time of issue of the notes, Faurecia signed an agreement with a third party providing for the payment by Faurecia of an initial sum
of €38.7 million to be invested in zero coupon bonds. In exchange, the third party gave a commitment to note holders to buy back
the perpetual notes after fifteen years.
In 1996, Faurecia entered into an agreement with a bank to restructure the perpetual notes to reflect the consequences of the fall
in interest rates and the improvement in the financial situation of the Company and its subsidiaries.
103
FINANCIAL REPORT
NOTE
(in € thousands)
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Page 104
On July 30, 1996, the bank purchased the perpetual notes from the holders at their face value (€137.2 million) plus the interest accrued
since the last half-yearly interest due date. Then it recovered full ownership of the zero coupon bonds, which were sold on July 30,
1996 at their market value.
Once the subordination clause was eliminated, the bank sold the notes to a securitization fund created for this purpose. The fund issued
securities to new subscribers to finance the purchase of the debt. The €8.6 million profit on the entire transaction was recognized
on a straight line basis over the period between July 30, 1996 and October 15, 2006.
This operation was approved by the French tax administration (Service de la législation fiscale) and the deductibility of interest based
on the actual proceeds received from the issue (i.e. €98.5 million) authorized when the notes were issued in 1991 was maintained.
However article 238 bis al. 01 of the French General Tax Code (CGI) provided for the inclusion in taxable income of the amount of interest
capitalized over the last three years, on the share of funds transferred outside France.
As the perpetual notes matured in October 2006, their net amount (€64.6 million) was reversed through the income statement.
NOTE
[14]
OTHER DEBT
(in € thousands)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Bonds
Bank borrowings
Other
300,000
1,228,907
3,705
299,919
1,060,359
4,107
1,293,354
1,802
Total
1,532,612
1,364,385
1,295,156
Maturities of other debt are as follows:
(in € thousands)
As of Dec. 31, 2006
Maturing in 2007
Maturing in 2008
Maturing in 2009
Maturing in 2010
2011 and beyond
532,404
700,034
300,059
115
Total
FINANCIAL REPORT
104
1,532,612
On October 5, 2005, Faurecia issued €300 million of bonds redeemable in October 2010.
Faurecia has access to a medium-term syndicated line of credit of up to €1,600 million which can be drawn down for renewable periods
of one, three or six months through November 2009. As of December 31, 2006 the undrawn portion of this credit line amounted
to €900 million.
The two financing contracts (syndicated credit and bond) contain restrictive clauses, particularly relating to certain consolidated financial
ratios, which were all complied with at December 31, 2006.
Taking into account a swap relating to fixed-rate borrowings of €4 million, 80.2% of the Company’s borrowings are at variable rates.
These borrowings are hedged using interest rate options as described in note 19.1.
NOTE
[15]
OPERATING PAYABLES AND OTHER PAYABLES
(in € thousands)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Trade payables
Other operating payables
28,880
4,869
19,383
6,267
20,339
3,951
Sub-total operating payables
33,749
25,650
24,290
647,187
14,643
795,780
20,109
792,961
14,421
Cash advances from subsidiaries
Other
Sub-total other payables
661,830
815,889
807,382
Total
695,579
841,539
831,672
NOTE
[16]
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Page 105
DEFERRED INCOME
As of December 31, 2005 this caption primarily corresponded to the deferred income arising on the restructuring of the perpetual notes
in an amount of €0.7 million (December 31, 2004: €1.5 million). This amount was taken to income in 2006 (see note n° 13).
NOTE
[17]
UNRECOGNIZED DEFERRED TAXES
(in € thousands)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
Deferred tax liabilities on temporary differences
Deferred tax liabilities corresponding to tax savings arising from the
use of the tax losses of companies in the tax group
(760)
(1,093)
(1,997)
(204,339)
(124,097)
(75,727)
Sub-total deferred tax liabilities
(205,099)
(125,190)
(77,724)
Tax paid on taxable income that is not yet recognized
Charges recognized that are deductible for tax purposes in future years
Future tax savings on tax loss carry forwards of the tax group
1,543
1,369
202,778
964
1,347
106,384
522
1,802
73,621
Sub-total deferred tax assets
205,690
108,695
75,945
591
(16,495)
(1,779)
Unrecognized deferred tax (liabilities) assets
[18]
FINANCIAL COMMITMENTS
As of December 31, 2006 guarantees consist solely of those given to direct and indirect subsidiaries and affiliates, in an amount of
€30.8 million (December 31, 2005: €36.1 million; December 31, 2004: €30.4 million).
NOTE
[19]
FINANCIAL INSTRUMENTS USED TO HEDGE MARKET RISKS
19.1 ] INTEREST RATE HEDGES
Fixed rate borrowings of €4 million due in more than one year have been swapped for variable rate debt with the same maturities.
Furthermore, swaps, caps and other options in euros and USD have been taken out to hedge interest payable on debt between
January 2007 and December 2009. Floors were purchased in order to be in a position to gain from a possible medium-term reduction in
interest rates on fixed-rate debt.
Positions for 2007 to 2009 can be analyzed as follows by type of financial instrument:
(in € thousands)
Variable rate / fixed rate swaps
Floors
2007
2008
2009
2,940
132
639
1,508
76
75
795
263
225
3,711
1,659
1,283
Premiums reported under assets in the balance sheet as of December 31, 2006 stood at €14.6 million, including €11.7 million to be paid
in installments between 2007 and 2009.
105
FINANCIAL REPORT
NOTE
Unrecognized deferred taxes correspond to:
• temporary differences between book income and taxable income;
• tax loss carryforwards of the tax group;
• tax savings arising from the use of tax losses of companies in the tax group which will have to be restored to them if and when they
return to profit.
They are computed based on the tax rate for the year in which they are expected to reverse (i.e. 34.43% for 2007 and beyond).
Unrecognized deferred taxes can be analyzed as follows:
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19.2 ] CURRENCY HEDGES
Although such loans are referenced in euros, currency risk on intercompany loans to subsidiaries outside the Euro zone, in their
operating currency is hedged through swaps.
As of December 31, 2006 currency swaps in place concerned ZAR 40.2 million, CAD 30 million and USD 193.9 million.
NOTE
FINANCIAL REPORT
106
[20]
EMPLOYEES
2006
2005
2004
Management
Other
46
2
47
2
41
4
Total
48
49
45
2006
2005
2004
NOTE
[21]
DIRECTORS’ COMPENSATION
In 2006, total attendance fees paid to directors amounted to €188,574 (2005: €192,000).
NOTE
[22]
RELATED PARTY TRANSACTIONS
(in € thousands)
In the income statement
Services invoiced to subsidiaries
Income from subsidiaries and affiliates
Interest income
Services invoiced by subsidiaries
Interest expense
103,718
183,562
7,980
(58,419)
(16,445)
80,755
63,129
5,531
(47,152)
(15,296)
66,542
94,813
2,143
(41,356)
(15,068)
In the balance sheet
Loans to subsidiaries and affiliates
Trade and other receivables
Trade and other payables
290,781
753,655
671,279
129,366
741,462
811,125
57,296
741,164
810,214
Related companies are companies that are fully consolidated in the Faurecia Group consolidated accounts.
NOTE
[23]
INFORMATION ON THE CONSOLIDATING ENTITY
Peugeot SA – 75, avenue de la Grande-Armée – 75116 Paris – France.
30/05/07
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Page 107
(in euros)
(165,225,090)
Recommended appropriation:
1 – Source
Retained earnings carried over from prior years
–
(165,225,090)
(165,225,090)
Appropriation of 2006 net loss
2 – Appropriation
Legal reserve
–
(165,225,090)
–
(165,225,090)
Dividends for the last three years were as follows:
Year
Number of
shares(1)
Net dividend
distributed
(in euros)
Tax
credit
(in euros)
Total revenue
from share
(in euros)
2003
2004
2005
24,206,751
24,212,051
24,233,601
0.910
1.100
–
0.455
–
1.365
1.100
–
Proposal for 2006
24,259,236
–
–
(1) Including treasury stock.
FINANCIAL REPORT
107
Retained earnings
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Page 108
Subsidiaries and investments as of December 31, 2006
(in € thousands)
Capital stock
Reserves and retained
earnings before
appropriation of profit
or loss
Share of
capital stock
held
in %
Gross
value
of investments
Faurecia Investments (formerly Bertrand Faure SP)
75,660
602,272
100.00
452,488
33,000
30,590
100.00
53,841
9,274
1,276
100.00
30,196
16
221,942
82.55
287,568
I. DETAILED INFORMATION
A. Subsidiaries (at least 50%-owned)
Sté Internationale de Participations (SIP)
Faurecia USA Holdings Inc.
Eak SAS
4,668
1,253
51.00
2,420
7,138
409,767
10.66
76,449
451
5,994
98.00
25,975
Faurecia Industries
24,498
(21,668)
100.00
138,152
84,730
83,075
100.00
110,316
Faurecia Sistemas de Escape Argentina
SFEA – Société Foncière pour l’Équipement Automobile
9,637
760
100.00
9,947
EAK SNC
1,515
1,776
51.00
785
Faurecia Exhaust Systems SRO (Czech republic)
6,549
7,616
100.00
5,001
23,423
317,405
100.00
918,260
4,691
(2,251)
100.00
5,002
Faurecia Honghu Exhaust Systems Shanghai (formerly SHEESC)
1,634
1,413
51.00
1,212
543
10,227
100.00
1,073
150,000
129,460
27.96
225,020
4,436
11,695
50.00
2,217
203
20,378
50.00
8,556
Faurecia Automotive Holdings
Faurecia Exhaust Systems South Africa Ltd
FINANCIAL REPORT
108
B. Investments (10% to 50%-owned)
Faurecia Automotive GmbH (formerly SAI Automotive AG)
Faurecia Tongda Exhaust System Co, Ltd (formerlyTEEC)
Trécia
II. OTHER INFORMATION
Subsidiaries and investments not included in section A
4,676
Subsidiaries and investments not included in section B
97
TOTAL
2,359,252
Outstanding
loans and
advances
10:59
Guarantees
given by
the Company
Page 109
Last published
sales
452,488
53,841
Dividends received or
receivable by
the Company in
the year
Translation rate
used for non-French
subsidiaries
and investments
189,341
573,671
16,096
147,568
Last published
net income
(loss)
228,957
2,605
4,158
586
5,319
€1 = USD 1.317
1,001
2,420
807
627
76,449
331,466
16,449
7,328
26,894
1,713
42,152
159,374
(20,481)
110,316
709,154
10,724
209
328
785
63,637
(4,098)
1,983
5,002
211,542
4,517
434,960
11,333
(23,095)
9,947
2,751
889
2,046
€1 = ARS 4.0781
39,541
€1 = CZK 27.485
Net carrying
amount
of investments
30/05/07
62
1,012
473
10,947
16
1,073
4,402
3,146
8,786
€1 = CNY 10.2793
12,858
€1 = ZAR 9.2124
76,087
(62,131)
83,880
1,938
2,217
50,688
6,464
4,056
63,321
1,555
4,631
7
142
4
810
7
1,451,183
€1 = CNY 10.2793
153,089
FINANCIAL REPORT
109
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Page 110
Five-year financial summary
FINANCIAL REPORT
110
(in euros)
2006
2005
2004
2003
2002
169,814,652
169,635,207
169,484,357
169,447,257
169,219,757
24,259,236
24,233,601
24,212,051
24,206,751
24,174,251
1,265,715
1,176,550
1,011,100
782,100
817,900
87,107,622
82,779,088
67,592,049
56,335,224
51,199,132
b) Income before tax, depreciation, amortization
and provisions, and employee profit-sharing
213,707,224
7,136,829
35,508,672
45,430,754
9,683,878
c) Corporate income tax(1)
(10,521,688)
(16,918,749)
(41,076,147)
(23,741,720)
(7,267,778)
d) Employee profit sharing
0
0
0
0
48,301
(165,225,090)
(415,757,607)
33,490,721
35,775,918
25,156,645
–
–
26,633,256
22,028,143
21,998,568
a) Income after tax and employee profit sharing and
before depreciation, amortization and provisions
9.24
0.99
3.16
2.86
0.70
b) Net income after tax, employee profit sharing,
depreciation, amortization and provisions
(6.81)
(17.16)
1.38
1.48
1.04
–
1.10
0.91
0.91
48
49
45
46
46
b) Total payroll
9,784,935
9,307,516
8,666,414
8,057,569
10,158,717
c) Total benefits paid during the year
(including social security, etc.)
3,840,829
3,372,568
3,212,143
3,198,762
4,016,113
1 – Capital stock at year-end
a) Capital stock
b) Number of common shares
c) Maximum number of shares to be created:
• Through exercise of stock options
2 – Results of operations
a) Net sales
e) Net income after tax, employee profit sharing,
depreciation, amortization and provisions
f) Total dividend
3 – Earnings per share
c) Dividend per share (net)
4 – Employee data
a) Average number of employees
(1) The amounts in brackets represent tax benefits arising from group relief.
30/05/07
10:59
Page 111
1. Main securities
Faurecia Investments
Faurecia Industries
Faurecia USA Holdings Inc.
Sté Internationale de Participations (SIP)
SFEA - Société Foncière pour l’Équipement Automobile
Trécia
Faurecia Exhaust Systems Sro
Faurecia Magyarorszag Kipufogo-Rendszer Kft
Faurecia Systemy Kierownicze SpZoo
Faurecia Sístemas de Escape Argentina SA
EAK – Composants pour l’Industrie Automobile SAS
Faurecia Tongda Exhaust System (Wuhan) Co. Ltd
Faurecia Exhaust Systems South Africa Ltd
EAK – Composants pour l’Industrie Automobile SNC
Faurecia Honghu Exhaust Systems Shanghai Co. Ltd
Faurecia Automotive Holdings
Faurecia Automotive GmbH (formerly SAI Automotive AG)
Faurecia Services Groupe
Faurecia Global Purchasing
Faurecia Sístemas de Escape Portugal Lda
Flamant jaune
Flamant bleu
Toucan participations SA
Toucan investissements SA
Faurecia Leather Kosice Sro
Goeland Vert SAS
Number
Nature and par
value
Net book
value
5,648,700
5,043,998
2,899,200
3,600
1,168,999
126,859
642,499
2,200,000
6,762
1
24,900,000
33,639
1,802,379
158,722
22,800,340
100
51,510
8,568,000
23,422,554
1
2,500
312,750
1
1
2,500
2,500
2,494
2,494
1
1
2,315
€15 per share
€15 per share
€8.45 per share
USD 0.001 per share
Share
€6 per share
€15 per share
€15 per share
€15 per share
Share
HUF 1
PLN 500
Peso 1
€15 per share
Share
Rand 1 per share
€15 per share
Share
€1 per share
Share
€16 per share
€15 per share
€1,000 per share
Share
€16 per share
€16 per share
€16 per share
€16 per share
Share
Share
€16 per share
110,316
452,488
42,152
147,568
16,096
76,449
9,947
53,841
4,056
5,002
0
4,433
7,328
2,420
2,217
1,073
785
1,012
434,960
76,087
1
2,751
1
1
40
40
40
40
1
1
37
Total shares
2. Other long-term investments
Faurecia
Overall total
1,451,183
302,154
€7 per share
12,483
1,463,666
111
FINANCIAL REPORT
(in € thousands)
Securities portfolio as of December 31, 2006
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Page 112
Statutory Auditors’ report on the annual financial statements
for the year ended December 31, 2006
This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely for the convenience of English speaking readers. The
Statutory Auditors’ report includes information specifically required by French law in all audit reports, whether qualified or not, and this is presented below the opinion on the annual
financial statements. This information 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 annual financial statements taken as a whole and not to provide separate assurance on individual
account captions or on information taken outside of the annual financial statements.
This report, together with the Statutory Auditors’ report addressing financial and accounting information in the President’s report on internal control, should be read in conjunction
with, and construed in accordance with, French law and professional auditing standards applicable in France.
To the shareholders,
FINANCIAL REPORT
112
In compliance with the assignment entrusted to us by the Annual Shareholders’ Meeting, we hereby report to you, for the year ended
December 31, 2006, on:
• the audit of the accompanying annual financial statements of Faurecia SA;
• the justification of our assessments;
• the specific verifications and information required by law.
These annual financial statements have been approved by the Board of Directors. Our role is to express an opinion on these annual financial
statements based on our audit.
I – Opinion on the annual financial statements
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 annual financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the annual financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the annual financial statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the annual financial statements give a true and fair view of the Company’s financial position and its assets and liabilities
as of December 31, 2006, and of the results of its operations for the year then ended, in accordance with the accounting rules and
principles applicable in France.
II – Justification of our assessments
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 matter:
Note 1.2 to the annual financial statements presents the rules and methods applied to investments. A provision for impairment is set
aside if the fair value of an investment falls below its gross value, corresponding to its value on initial recognition. Fair value is based on
the subsidiary’s revalued net assets, profitability and future outlook. As part of our assessment of the accounting principles and
methods, we verified the appropriateness of the accounting methods mentioned above, ensured that they had been correctly applied
and that reasonable estimates had been used.
The assessments were thus made in the context of our audit of the annual financial statements, taken as a whole, and therefore contributed to the formation of the opinion expressed in the first part of this report.
III – Specific verifications and information
We have also performed the specific verifications required by law, in accordance with professional standards applicable in France.
We have no matters to report as to:
• the fair presentation and the consistency with the annual financial statements of the information given in the Directors’ report and in
the documents addressed to the shareholders with respect to the financial position and the annual financial statements;
• the fair presentation of the information given in the Directors’ report regarding the remuneration and benefits paid to corporate officers
and any other commitments made in their favor in connection with, or subsequent to, their appointment, termination or change in
function. We also bring to your attention the fact that your Company states in its report that it possesses no information relating to
remuneration and benefits paid by the controlling Company to corporate officers of the Company who are not simultaneously
corporate officers of the controlling Company.
As required by law, we have also verified that details of the principal shareholders are disclosed in the Directors’ report.
Guy A. Sitbon
Ernst & Young Audit
Laurent Miannay
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Statutory Auditors’ special report on regulated agreements
and commitments with third parties
This is a free translation into English of the Statutory Auditors’ special report on regulated agreements and commitments issued in the French language and is provided solely for
the convenience of English speaking readers. This report on regulated agreements and commitments should be read in conjunction with, and construed in accordance with,
French law and professional auditing standards applicable in France.
In our capacity as Statutory Auditors of Faurecia SA, we hereby present our report on regulated agreements and commitments with third parties.
In accordance with article L. 225-40 of the French Commercial Code (Code de commerce), we have been advised of the following agreements and
commitments which were authorized by the Board of Directors.
Our responsibility does not include identifying any undisclosed agreements or commitments. We are required to report to shareholders, based on the
information provided, on the main terms and conditions of the agreements and commitments that have been disclosed to us, without commenting on
their relevance or substance. Under the provisions of article 92 of the March 23, 1967 decree, it is the responsibility of shareholders to determine
whether the agreements are appropriate and should be approved.
We carried out our work in accordance with the professional standards applicable in France. These standards require that we perform procedures to
verify that the information given to us agrees with the underlying documents.
• On September 7, 2006, the Company sold its 14.64% interest in Faurecia Automotive Intérieur France SA to Faurecia Automotive Holdings SAS for
€9,080,802, an amount arising from the valuation of the company based on its projected future cash flows. As the carrying amount of the securities
sold had been completely written down at December 31, 2005, the sale price was recognized as profit in the 2006 financial statements.
• On September 14, 2006, in exchange for the allocation of 126,859 shares created by the capital increase of Faurecia Automotive Espana SLP, the
Company contributed the entire capital of Faurecia Sistemas de Escape España SA to Faurecia Automotive España SLP. This contribution was valued,
based on the report of an independent expert at €76,449,039, representing a gain on contribution of €49,007,403 for the Company in the 2006
financial statements.
Agreements and commitments authorized in 2006
These two transactions had been previously authorized by the Board of Directors at its meeting of July 21, 2006.
At December 31, 2006 this authorization had not been used.
Agreements and commitments entered into in prior years which remained in force during the year
In application of the decree of March 23, 1967 decree we were informed of the following agreements and commitments entered into in prior years,
which remained in force during the year.
• In accordance with the loan agreement entered into with various French, German and Spanish subsidiaries, said companies provide Faurecia with a
credit line of a maximum amount of €315 million.
At December 31, 2006, an amount of €215.7 million was outstanding, representing credit granted by: Faurecia Autositze, Faurecia Abgastechnik,
Faurecia Innenraum System GmbH, Asientos de Castilla Leon, Asientos del Norte, Faurecia Systemas de Escape España, Faurecia Automotive
España, Faurecia Interior Systems España, Valencia Modulos de Puerta, ECSA, Siedoubs, Sienor, Sieto, Trecia, and Automotive Sandouville.
• In accordance with the loan agreement entered into with various operating subsidiaries of the Group, said companies provide Faurecia SA with a
credit line of a maximum amount of €300 million.
At December 31, 2006, an amount of €260 million was outstanding, representing credit granted by: Faurecia Industries, Faurecia Sièges d’Automobile,
Faurecia Intérieur Industrie, Faurecia Automotive Industrie, Faurecia Systèmes d’Échappement, Sotexo, Siemar and Sielest.
• The Company has given a guarantee to Agence de l’Eau Loire-Bretagne covering a loan for an initial amount of €237,820 made to Faurecia Sièges
d’Automobile. At December 31, 2006, the outstanding balance due from Faurecia Sièges d’Automobile was €38,906.
Guy A. Sitbon
Ernst & Young Audit
Laurent Miannay
113
FINANCIAL REPORT
• Faurecia USA Holdings Inc and its subsidiaries benefit from a credit line of USD491 million at December 31, 2006. At its meeting of December 21,
2006, the Board of Directors authorized the inclusion of a portion of this credit line in the capital of Faurecia USA Holdings Inc based on the Company’s
interest, i.e. USD247.6 million for a capital increase of USD300 million.
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Shareholder information
115_ Information on the company and capital
121_ Stock market information
125_ Corporate governance
143_ Combined shareholders’ general meeting of May 29, 2007
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Information on the Company and capital
COMPANY NAME AND HEADQUARTERS
• Company name: Faurecia
• Headquarters: 2, rue Hennape, 92000 Nanterre, France
• Tel.: 33 (0) 1 72 36 70 00
• Fax: 33 (0) 1 72 36 70 07
• www.faurecia.com
LEGAL FORM
Listed société anonyme (joint-stock corporation) governed by the French Commercial Code and the related implementing decrees.
AUDITORS
The Company’s accounts are audited by two principal Statutory Auditors, appointed in accordance with section L. 225-228 of the
French Commercial Code.
INFORMATION ON THE COMPANY AND CAPITAL
General
DATE OF INCORPORATION AND TERM
Incorporated on: July 1, 1929.
Term expires on: December 31, 2027.
INCORPORATION DETAILS
The Company is registered with the Nanterre Trade and Companies Registry under number 542 005 376.
APE (business identifier) code 741 J (company administration).
CONSULTATION OF CORPORATE DOCUMENTS
During the period of validity of this registration document, the following documents (or copies thereof):
a. The Company’s bylaws;
b. Financial information on Faurecia SA and its subsidiaries for each of the two fiscal years prior to publication of the registration document
can be obtained from:
FAURECIA
Dominique Laulan
General Counsel
2, rue Hennape
92000 Nanterre, France
SHAREHOLDER INFORMATION
115
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CORPORATE PURPOSE
The Company’s purpose, as set out in article 3 of the bylaws, is summarized below:
• To establish, acquire, operate directly or indirectly or invest in any and all industrial, trading or service companies in France or abroad;
• To provide administrative, financial and technical assistance to subsidiaries and affiliates;
• To manufacture and sell any and all products, accessories or equipment for the automotive and other industries, and generally
to conduct any and all related commercial, industrial, securities and real estate transactions.
THE COMPANY’S ROLE IN RELATION TO ITS SUBSIDIARIES AND AFFILIATES
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.
Group subsidiaries are financed on a centralized basis, primarily through Faurecia and Financière Faurecia – which performs a cash
pooling role – in order to enable the subsidiaries to benefit from the favorable market conditions obtained from lenders by Faurecia.
As of December 31, 2006, the net debt of the Company, corresponding to borrowings net of cash and cash equivalents and net
inter-company cash advances, amounted to €1,468.1 million, compared with consolidated net debt for the Group which stood at a total
of €1,698.5 million.
FISCAL YEAR
The Company’s fiscal year covers the twelve-month period from January 1 to December 31.
INCOME APPROPRIATION
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 fraction 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 an ordinary dividend
or increase the dividend or pay an exceptional 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.
GENERAL SHAREHOLDERS’ MEETINGS
116
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 financial notices provided for by
the applicable laws issued by the relevant banks and brokers.
Faurecia’s financial events, in particular the date of its Shareholders’ Meetings, are continually updated on its website at the following
address: 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.
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VOTING RIGHTS
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.
DOUBLE VOTING RIGHTS
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.
Any share converted into a bearer share or the ownership of which is transferred loses the double voting right. Nevertheless, transfers
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 does not entail the loss of the acquired right and does not interrupt the period provided for in the above paragraph.
When an individual or corporate shareholder, acting alone or in concert, within the meaning of section L. 233-10 of the French
Commercial Code, crosses the disclosure threshold of 2% of the voting rights, whether above or below the 5% provided for by section
L. 233-7 of the French Commercial Code, the 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.
The shareholder must also inform the Autorité des marchés financiers within the same time-frame, 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 section 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.
DISCLOSURE THRESHOLDS (ARTICLE 24 OF THE BYLAWS)
117
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Capital
As of December 31, 2006, the Company’s capital amounted to €169,814,652, divided into 24,259,236 shares of €7 each, all of the same
class, subscribed and paid up in full. These shares represent 41,279,408 voting rights. No shares have been issued that do not represent
the Company’s capital.
AUTHORIZED, UNISSUED CAPITAL
At the May 22, 2006 Ordinary and Extraordinary Shareholders’ Meeting, the Board of Directors was given a twenty-six month
authorization to issue, with or without preferential subscription rights for existing shareholders, securities giving direct or indirect access
to the capital of the Company that may have the effect of increasing the capital by a maximum of €61,000,000, with the maximum
amount of debt securities being set at €1,000,000,000 or the foreign currency equivalent.
The Company did not make use of this authorization in 2006.
Authorization to increase capital stock:
Term
Amount authorized
Amount used (1)
Date of the Board Meeting
26 months
€61,000,000
0
N/A
Date of the Shareholders’ Meeting
May 22, 2006
(1) Amount as of April 17, 2007.
DEBT INSTRUMENTS
118
At the May 27, 2003 Shareholders’ Meeting, the Board of Directors was given a five-year authorization to issue bonds up to a maximum
nominal value of €1,000,000,000.
Since the introduction of French ordinance no. 2004-604 of June 24, 2004, the Board of Directors has the sole power to decide on
or authorize the issue of bonds, unless the Shareholders’ Meeting decides to exercise this power (section L. 228-40-1).
POTENTIAL SHARES
As of December 31, 2006, a total of 1,265,715 employee stock options were outstanding. Each option is exercisable for one common
share under the terms and conditions set out below.
No other securities exist giving direct or indirect access to the Company’s capital.
Details of the outstanding stock-subscription option plans are as follows:
As of December 31, 2006
Date of
Shareholders’
Meeting
Date of Board
Meeting
Exercise
price
(in €)
Number of O/w* granted to
options senior executive
granted
management/
Executive
Committee
members
Start
of exercise
period
Expiry date
of exercise
period
Options
exercised
Options
forfeited
Number
of options
outstanding
as of
Dec. 31, 2006
06/18/1992
05/31/1994
05/31/1994
05/03/1995
05/31/1994
06/05/1997
06/05/1997
06/01/2001
06/01/2001
05/14/2002
05/14/2002
05/25/2004
05/23/2005
04/07/1994
10/20/1994
05/03/1995
09/12/1996
06/26/1997
06/26/1997
02/22/2002
25.06
23.84
26.07
24.39
40.25
42.38
55.00
115,000
125,000
71,000
125,000
54,000
35,500
351,700
75,000
30,000
15,000
40,000
15,000
15,000
69,500
04/08/1999
10/21/1999
05/04/2000
09/13/2001
06/27/2002
06/27/2002
02/23/2006
04/06/2009
10/19/2009
05/02/2010
09/11/2011
06/25/2012
06/25/2007
02/22/2012
73,200
110,000
63,000
81,500
28,500
14,285
5,600
0
0
1,000
0
1,500
7,000
75,400
41,800
15,000
7,000
43,500
24,000
14,215
270,700
11/28/2002
41.71
269,500
101,000
11/29/2006
11/27/2012
23,000
88,500
158,000
04/14/2004
04/19/2005
04/13/2006
58.18
63.70
53.80
268,000
275,000
284,000
109,000
122,000
140,000
04/14/2008
04/18/2009
04/14/2010
04/13/2014
04/18/2015
04/14/2016
0
0
0
73,000
39,500
23,000
195,000
235,500
261,000
Total
1,265,715
* Of which
SHARES HELD BY THE COMPANY
As of December 31, 2006, the Company held 302,154 of its own shares, following the sale of 33,650 shares in 2006. These shares were
sold to the beneficiaries of stock option plans on September 4, 2000 at the price of €40 each.
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February 2002
Increase in capital following the exercise of stocksubscription options leading to the creation
of 7,950 shares with a par value of €7 (including
5,950 shares with a cum-dividend date of January 1, 2001)
Amount of capital
increase (reduction)
In €
Par value
Premium
New
capital
stock in €
New
premium
in €
New
number
of shares
55,650
140,314.50
169,163,757
734,912,289.07
24,166,251
July 2002
of 700 shares with a par value of €7
4,900
12,173
169,168,657
734,924,462.07
24,166,951
November 2002
of 7,300 shares with a par value of €7
51,100
150,737
169,219,757
735,075,199.07
24,174,251
July 2003
204,050
708,714.50
169,423,807
735,783,913.57
24,203,401
December 2003
23,450
73,994
169,447,257
735,857,907.57
24,206,751
July 2004
19,600
48,692
169,466,857
735,906,599.57
24,209,551
October 2004
7,000
35,380
169,473,857
735,941,979.57
24,210,551
February 2005
45,500
187,600
169,519,357
736,129,579.57
24,217,051
April 2005
41,650
151,144
169,561,007
736,280,723.57
24,233,001
July 2005
53,200
328,210
169,614,207
736,608,933.57
24,230,601
October 2005
21,000
51,620
169,635,207
736,660,553.57
24,233,601
January 2006
7,000
35,380
169,642,207
736,712,173.57
24,234,601
December 2006
172,445
852,981.30
169,814,652
737,565,154.87
24,259,236
119
Year
and type
of transaction
CHANGES IN FAURECIA’S CAPITAL OVER THE LAST FIVE YEARS:
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Information on the Company’s ownership structure and voting rights
OWNERSHIP STRUCTURE AND VOTING RIGHTS AS OF DECEMBER 31, 2006
Based on information taken from shareholder accounts, Faurecia’s ownership structure and voting rights as of December 31, 2006
were as follows:
Shareholder
Shares
(%)
Voting rights
Double
(%)
Single
Total
71,424
34,570,394
71,424
83.75
0.17
Peugeot SA
Faurecia Actionnariat corporate mutual fund
Treasury stock
Other
17,285,197
71,424
302,154
6,600,461
71.25
0.29
1.25
27.21
17,285,197
37,129
6,563,332
6,637,590
16.08
Total
24,259,236
100
17,322,326
6,634,756
41,279,408
100
According to the information disclosed to the Company and/or the market:
• Richelieu Finance holds 8.55% of Faurecia’s capital, representing 5.03% of the Company’s voting rights;
• No other shareholder holds over 5% of the Company’s capital or voting rights;
• 2,297,500 registered shares are pledged with Natexis Banque Populaire.
Peugeot SA is the only holder of registered shares which reported pledges on the Company’s shares.
Directors’ interests represent approximately 0.003% of the capital and voting rights.
No shareholders’ agreement has been notified to the Company.
As of April 16, 2007, there were no major changes as compared to the situation as of December 31, 2006.
CHANGES IN OWNERSHIP STRUCTURE OVER THE LAST THREE YEARS
Shareholder
Dec. 31, 2004
Dec. 31, 2005
Dec. 31, 2006
Number of
shares
% of
capital
% of
voting
rights
Number of
shares
% of
capital
% of
voting
rights
Number of
shares
% of
capital
% of
voting
rights
Peugeot SA
Faurecia Actionnariat
corporate mutual fund
International
Treasury stock
Other
17,285,197
71.39
83.60
17,285,197
71.32
83.87
17,285,197
71.25
83.75
87,588
380,089
6,459,177
0.36
1.57
26.68
0.22
–
16.19
74,032
335,804
6,538,568
0.31
1.38
26.98
0.18
–
15.95
71,424
302,154
6,600,461
0.29
1.25
27.21
0.17
–
16.08
Total
24,212,051
100
100
24,233,601
100
100
24,259,236
100
100
IDENTIFICATION OF SHAREHOLDERS
120
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 holder and details of any restrictions applicable to
the securities.
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Stock market information
Communication policy
Faurecia notifies the financial markets of all information that may be useful to conduct an objective assessment of its financial position,
growth strategy, management policy and business policy. This financial communication policy aims to provide all private and corporate
shareholders with specific and accurate information in accordance with stock market practice.
Its policy is based, first, on the periodic circulation of compulsory information (periodic publications in the French Bulletin of Compulsory
Legal Announcements, or BALO).
This information is then supplemented by the press releases intended for the financial community and, more generally, the public,
regarding non-recurring matters that are of major importance in understanding the Company’s strategy. Lastly, periodic meetings
are held on an interactive basis for financial analysts and economic journalists with a view to giving details of the challenges facing
the Group, its sales and income.
A useful tool in the provision of such information is the Company’s website (www.faurecia.fr), which is an efficient means of relaying all
of the above information to the shareholders. Furthermore, an e-mail address (shareholders@faurecia.com) and a free subscription
system allow shareholders to receive the documents of their choice directly (annual report, Company brochure, press releases, etc.).
Employee shareholders also have access to a dedicated web space on Faurecia’s Intranet site that provides information on the Group
employee savings plan.
The annual report presented and filed as a registration document with the Autorité des marchés financiers (AMF) and the report on the
interim financial statements are circulated on a wide scale within the financial community.
STOCK MARKET INFORMATION
GENERAL POLICY
2007 TIMETABLE
7h30
Publication of results – H2 2006 and FY 2006
April 18
7h30
Publication of sales – Q1 2007
May 29
10h30
July 18
7h30
Publication of results – H1 2007
October 24
7h30
Publication of sales – Q3 2007
121
February 5
Shareholders’ Meeting
PRESS RELEASES
List of information published or made public on Faurecia and its stock in 2006
Date
Type of information
Publication
January 11, 2006
Faurecia’s growth in North America spurs plans for six new plants in 2006
Press release 2006
January 13, 2006
Slight increase in sales – Q4 and FY
Press release 2006
February 6, 2006
Results – H2 2005 and FY 2005
Press release 2006
February 13, 2006
Sales – Q4 2005
Bulletin des annonces légales
obligatoires (BALO no. 19)
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Page 122
Type of information
Publication
March 22, 2006
Trecia broadens the scope of discussions regarding the 2008 industrial project
Press release 2006
April 13, 2006
Sales increased by 3.4% in Q1 2006
and growth continues outside of Europe
Press release 2006
April 19, 2006
Faurecia contributes to the performance of the Citroën C6 in terms of pedestrian safety
Press release 2006
April 21, 2006
Notice of May 22, 2006 Shareholders’ Meeting
April 21, 2006
Faurecia capital increase
Les affiches parisiennes no. 46
May 2, 2006
Faurecia honored by General Motors as a 2005 Supplier of the year
Press release 2006
May 5, 2006
Notice of May 22, 2006 Shareholders’ Meeting
« Les petites affiches »
no. 90
May 5, 2006
Shareholders notified that the Chairman’s report on internal control
procedures has been put online
La Tribune newspaper
May 10, 2006
Plan for Faurecia’s Evreux plant to focus on vehicle interiors business
Press release 2006
May 12, 2006
Sales-Q1 2006
May 19, 2006
Parent Company and Group financial statements for 2005
May 31, 2006
Declaration of voting rights for the May 23, 2005 Shareholders’ Meeting
June 7, 2006
New positions for employees and regeneration of the Beaugency employment area
Press release 2006
June 15, 2006
Plan for specialization in the airbag business performed on the EAK site in Valentigney
Press release 2006
June 23, 2006
New phase of seat rest plan in France
Press release 2006
June 29, 2006
Faurecia Sotexo competitiveness plan
Press release 2006
July 5, 2006
Approval of 2005 financial statements by the May 22, 2006 Shareholders’ Meeting
July 11, 2006
Faurecia Industries refocuses its tool business on the design
design and maintenance of injection molds
Press release 2006
July 11, 2006
Competitiveness plan for the Hénin-Beaumont site
Press release 2006
July 24, 2006
Results – H1 2006
Press release 2006
August 2, 2006
Board of Directors’ August 2, 2006 meeting: Pierre Lévi resigns as Chairman of Faurecia
Press release 2006
August 4, 2006
Sales – Q2 2006
August 25, 2006
Grégoire Olivier applies for chairmanship of Faurecia
Press release 2006
122
September 8, 2006 Grégoire Olivier appointed Chairman and CEO of Faurecia
Press release 2006
Date
30/05/07
September 11, 2006 Philippe Aumont, Faurecia’s Vice-President Product Plan,
sponsors the promotion of Centrale Nantes
Press release 2006
September 18, 2006 Faurecia receives the Janus de L’industrie 2006 award for its Happy Attitude concept car
Press release 2006
October 12, 2006
Sales stable – Q3 2006
Press release 2006
October 18, 2006
Results – H1 2006
October 20, 2006
Sales – Q3 2006
November 24, 2006 Faurecia does not submit a bid for the Nœux-les-Mines
of Cadence Innovation France
Press release 2006
December 13, 2006 Faurecia submits a bid to take over the Burnhaupt site, saving
153 jobs in Cadence Innovation
Press release 2006
December 20, 2006 Faurecia launches its “Pierrepont – Villers-la-Montagne” industrial project
Press release 2006
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Stock market information
STOCK MARKET DATA
Faurecia shares are traded on the Eurolist market of Euronext Paris SA:
ISIN Code FR 0000121147.
They are included in the SBF 120, MID & SMALL 190 and NEXT 150 indexes.
They are eligible for the PEA equity savings plan and the deferred settlement service (SRD).
REGISTRAR AND PAYING AGENT
The registrar and paying agent for Faurecia shares is Banque Crédit Agricole – Caisse d’Epargne Investor Services (CACEIS).
DIVIDENDS
Faurecia shares
Number of shares carrying dividend rights
Dividend
Paid on
Net
Tax credit
Total revenue
2003
2004
2005
24,206,751
24,212,051
24,233,601
€0.91
€1.10
–
€0.455
–
–
€1.365
€1.10
–
July 12, 2004
June 15, 2005
–
2006
24,259,236
–
–
–
–
DIVIDEND DISTRIBUTION POLICY
The Company distributes dividends in line with the practices of other similar companies, based on the Group’s results for the year.
SHARE PRICE AND TRADING VOLUME (SOURCE: EURONEXT)
Price (in €)
Price and trading volume
Trading volume
High
Average
Low
Number of shares
Amount (in k€)
63.55
63.50
58.30
55.95
58.83
58.99
55.33
53.27
57.60
55.20
51.25
51.00
410,771
520,985
498,577
417,423
24,470
30,490
26,900
22,090
54.90
54.50
57.85
53.95
53.75
51.80
50.50
51.45
50.80
48.51
55.20
52.55
52.73
53.25
53.90
52.56
51.50
49.30
45.35
44.08
49.12
45.39
51.20
50.17
51.10
52.25
52.30
51.45
49.10
47.15
38.50
40.10
47.61
41.70
46.24
47.87
317,499
267,057
334,810
184,096
261,338
205,564
396,318
603,170
307,595
476,784
519,041
281,430
16,680
14,170
18,220
9,700
13,410
10,140
16,880
27,730
15,210
21,160
26,570
14,080
55.35
55.30
54.69
52.88
53.43
52.39
49.21
48.20
49.17
450,145
684,920
369,775
23,960
36,350
19,290
2005
September
October
November
December
Year
2006
2007
January
February
March
123
January
February
March
April
May
June
July
August
September
October
November
December
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CHANGES IN FAURECIA’S SHARE PRICE
Compared with Dec. 31, 2005
Compared with Dec. 31, 2004
Faurecia
SBF 120
DS Autoparts Europe
(4.6)%
19.1%
23.7%
(15.1)%
49.0%
20.2%
Stock market capitalization at period end (in € millions)
Share price (in €)
– highest
– lowest
At period end (in €)
Shareholders’ equity per share (in €)
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
1,190.6
1,246.7
1,399.4
57.85
38.50
49.08
42.56
74.50
51.00
51.45
60.90
69.60
48.00
57.80
67.74
Dec. 31, 2006
Dec. 31, 2005
Dec. 31, 2004
FIGURES PER SHARE
Earnings per share after dilution (in €)
Cash flow per share (in €)
(18.72)
13.76
(7.64)
21.81
5.45
29.18
DIVIDENDS – STATUTE OF LIMITATIONS
Dividends not collected within five years of the payment date will be time-barred and paid over to the French Treasury.
CLAIMS AND LITIGATION
Sufficient provisions have been booked in respect of disputes pending as of December 31, 2006 and will not have a material impact
on the Group’s financial position.
MATERIAL CONTRACTS
To date, Faurecia has not entered into any major agreement that would entail a material obligation or commitment for the Group,
other than those that fall within the ordinary course of business.
RELATIONSHIP OF DEPENDENCE
Faurecia does not currently rely on patents or manufacturing processes owned by third parties or on special supply contracts
to conduct its business.
124
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Corporate governance
Board of Directors
Name
Duties
First appointed to the Board
Current term expires
Yann DELABRIÈRE
Board of Directors’
Meeting of
November 18, 1996
Ordinary
Shareholders’ Meeting 2007
Louis DEFLINE
Director
Board of Directors’ Meeting of November 18, 1996
Ordinary Shareholders’ Meeting 2007
Daniel DEWAVRIN
Director
Board of Directors’ Meeting of July 6, 1992
Patrick DUVERGER
Director
Shareholders’ Meeting of June 1, 1999
Frank ESSER
Director
Shareholders’ Meeting of May 23, 2005
Jean-Louis GÉRONDEAU
Director
Shareholders’ Meeting of May 27, 2003
Jean-Claude HANUS
Director
Board of Directors’ Meeting of February 21, 2000
Gérard HAUSER
Director
Board of Directors’ Meeting of July 22, 2003
Thierry PEUGEOT
Director
Board of Directors’ Meeting of April 17, 2003
Christian STREIFF
Director
Board of Directors’ Meeting of February 2, 2007
CORPORATE GOVERNANCE
Changes in the composition of the Board of Directors are set out in the Board’s report that comments on the Company’s financial
statements. As of April 17, 2007, the Board of Directors was made up of ten members, including four independent Directors as defined
by the Bouton report. The Company has no employee-elected directors or non-voting members of the Board of Directors. Each Director
must hold at least 20 Faurecia shares throughout his or her term of office.
None of the Directors has been sentenced for fraud or has been involved in bankruptcy proceedings during the last five years.
The following table indicates the Board members, the date on which they were first appointed and the date of expiration of their term
of office.
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DETAILED INFORMATION ON THE OFFICE OR DUTIES
OF EACH MEMBER OF THE BOARD OF DIRECTORS
Yann DELABRIÈRE
Yann Delabrière, 56, has been Chairman and Chief Executive Officer of Faurecia since February 16, 2007. He has been a Director of
Faurecia since November 18, 1996. The 2007 Shareholders’ Meeting will be asked to renew his term of office. As of December 31, 2006,
Yann Delabrière held 700 Faurecia shares.
In addition to his duties as Director of Faurecia, he held the following positions and directorships in 2006:
IN FRANCE (WITHIN THE GROUP)
Director
Director
Director
Groupe PSA Peugeot Citroën
Banque PSA Finance
Compagnie Générale de Crédit aux Particuliers – Credipar
Peugeot Citroën Automobiles SA
Automobiles Citroën
Gefco
IN FRANCE (OUTSIDE THE GROUP)
Director
Capgemini
OUTSIDE FRANCE (WITHIN THE GROUP)
Chairman of the Board of Directors
Chairman of the Supervisory Board
Vice-Chairman and Director
Peugeot Citroën Argentina SA (Argentina)
Peugeot Finance International (The Netherlands)
PSA International SA (Switzerland)
During the last five years, Mr. Delabrière has also held the following positions, which he no longer holds:
Chairman
Chairman
Chief Executive Officer
Manager
Permanent representative of
Automobiles Peugeot
on the Board of Directors
Egery
Pergolese Investissements
Grande Armée Participations
PSA Citroën Finance
SIT
Peugeot SA
Member of the Supervisory Board
Sommer Allibert
Manager
126
PSA Services SrL (Italy)
Louis DEFLINE
Louis Defline, 64, has been a Director of Faurecia since November 18, 1996. His term of office will expire at the Shareholders’
Meeting of 2007. Louis Defline is Chairman and Chief Executive Officer of Gefco. As of December 31, 2006, Louis Defline held
81 Faurecia shares.
Director
Gefco SA
Director
Director
Gefco España SA
Gefco-DTW Logistics Co. Ltd. China
Peugeot Motors Company Plc (UK)
Director
Director
Port Autonome du Havre
SNCF
During the last five years, Mr. Defline has also held the following positions, which he no longer holds:
Director
Port Autonome de Nantes Saint-Nazaire
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Daniel DEWAVRIN
Daniel Dewavrin, 70, has been a Director of Faurecia since July 6, 1992. His term of office will expire at the Shareholders’ Meeting
of 2007. Daniel Dewavrin is Honorary Chairman of the Union of Metallurgy Industries and Businesses (Union des Industries et Métiers
de la Métallurgie). As of December 31, 2006, Daniel Dewavrin held 74 Faurecia shares.
Chairman
Director
Chairman
Member of the Supervisory Committee
Astria
Dagard
UESL (Union économique et sociale du logement)
Ratier Figeac
Faurecia Investments
During the last five years, Mr. Dewavrin has also held the following positions, which he no longer holds:
OUTSIDE FRANCE (OUTSIDE THE GROUP)
Chairman
GFI (Groupement des Fédérations Industrielles)
Patrick DUVERGER
Patrick Duverger, 68, has been a Director of Faurecia since June 1, 1999. His term of office, which was renewed at the May 23, 2005
Shareholders’ Meeting, will expire at the Shareholders’ Meeting of 2011. Patrick Duverger is Honorary Chief Executive Officer of Société
Générale. As of December 31, 2006, Patrick Duverger held 163 Faurecia shares.
Rémy Cointreau
Soparexo
Director
During the last five years, Mr. Duverger has also held the following positions, which he no longer holds:
Director
Société Générale on the Supervisory Board of Accor
Aviva Participation
Aviva France
Frank ESSER
Frank Esser, 48, has been a Director of Faurecia since May 23, 2005. His term of office will expire at the Shareholders’ Meeting of 2011.
Frank Esser is Chairman and Chief Executive Officer of SFR. As of December 31, 2006, Franck Esser held 20 Faurecia shares.
Vizzavi France
Neuf Cegetel
127
Director
Permanent representative of SFR
Member of the Management Board
Director
Ltb-R
Vivendi
Vivendi Telecom International
Director
Director
Maroc Telecom
Vodafone D2 GmbH (Germany)
GSM Association (UK)
During the last five years, Mr. Esser has also held the following positions, which he no longer holds:
Chairman
Supervisory Board of Cegetel
SFR Cegetel
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Jean-Louis GÉRONDEAU
Jean-Louis Gérondeau, 63, has been a Director of Faurecia since May 27, 2003. His term of office will expire at the Shareholders’
Meeting of 2009. Jean-Louis Gérondeau is Chairman of the Managing Board of the Zodiac group. As of December 31, 2006,
Jean-Louis Gérondeau held 100 Faurecia shares.
Chairman and Vice-Chairman
of the Supervisory Board
Chairman
Chairman
Chairman
Chairman
Director
Permanent representative of Zodiac SA
Institut de Développement Industriel
Aerazur
Intertechnique
Newco
Zodiac Marine Holding
SICMA Aero Seat
Parachutes de France
Chairman
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Zodiac Airline Equipment LLC (USA)
Avox-Eros Services Inc. (USA)
Avox Systems Inc. (USA)
Marine Holding Corp (USA)
Evac International Oy (Finland)
Evac Oy (Finland)
Zodiac Espagnola (Spain)
Mag Aerospace Industries Inc. (USA)
C&D Zodiac (USA)
C&D Aerospace Canada
Zodiac Automotive UK
Zodiac Automotive US
Zodiac US Corporation
Air Cruisers (USA)
Zodiac Group of Australia
Sicma Aero Seat Services (USA)
During the last five years, Mr. Gérondeau has also held the following positions, which he no longer holds:
Director
Ferma
Optim Actif
Jean-Claude HANUS
128
Jean-Claude Hanus, 60, has been a Director of Faurecia since February 21, 2000. His term of office, which was renewed at the May 23,
2005 Shareholders’ Meeting, will expire at the Shareholders’ Meeting of 2011. Jean-Claude Hanus is Director of Legal Affairs,
Institutional Relations and Internal Audit of Peugeot SA. As of December 31, 2006, Jean-Claude Hanus held 100 Faurecia shares.
Chairman
Chairman
Director
Director
Director
Permanent representative of Peugeot SA
Permanent representative of Peugeot SA
DJ6
Grande Armée Participations
Automobiles Peugeot
Compagnie Générale de Crédit aux Particuliers – Credipar
Peugeot Citroën Automobiles España SA
Board of Banque PSA Finance
Gefco SA
Director
Peugeot Citroën Automobiles España SA
During the last five years, Mr. Hanus has also held the following positions, which he no longer holds:
IN FRANCE
Director
Director
Pergolèse Investissement
Financière Pergolèse
SIT
Sommer Allibert
30/05/07
Peugeot SA on the Board of Directors
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Beaujon Immobilier
Beaujon Immobilier
Gérard HAUSER
Gérard Hauser, 65, has been a Director of Faurecia since July 22, 2003. His term of office will expire at the Shareholders’ Meeting of 2009.
Gérard Hauser is Chairman and Chief Executive Officer of Nexans. As of December 31, 2006, Gérard Hauser held 50 Faurecia shares.
Director
Director
Director
Applix
Alstom
Ipsen
During the last five years, Mr. Hauser has also held the following positions, which he no longer holds:
Director
Electro Banque
Thierry PEUGEOT
Thierry Peugeot, 49, has been a Director of Faurecia since April 17, 2003. His term of office, which was renewed at the May 23, 2005
Shareholders’ Meeting, will expire at the Shareholders’ Meeting of 2011. Thierry Peugeot is Chairman of the Supervisory Board
of Peugeot SA. As of December 31, 2006, Thierry Peugeot held 20 Faurecia shares.
Établissements Peugeot Frères
Foncière, Financière et de Participation
La Française de Participations Financières
Société Anonyme de Participations
Director
Director
Director
Director
Permanent representative
Permanent representative of CID
Director
Compagnie Industrielle de Delle
ANSA
LISI
Air Liquide
Immeubles et Participations de l’Est
During the last five years, Mr. Peugeot has also held the following positions, which he no longer holds:
129
AMC Promotion
SIA Mulhouse
Immeubles et Participations de l’Est
Christian STREIFF
Christian Streiff, 52, has been a Director of Faurecia since February 2, 2007. His term of office will expire at the Shareholders’ Meeting of
2011. Christian Streiff is Chairman of the Managing Board of PSA Peugeot Citroën and holds 100 Faurecia shares.
Chairman
Chairman
Director
Director
Automobiles Peugeot
Banque PSA Finance
Peugeot Citroën Automobiles
Manager
Airbus Holding
Argos Conseil
Société Européenne des Produits Réfractaires – SEPR
Director
Director
Chairman and Director
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During the last five years, Mr. Streiff has also held the following positions, which he no longer holds:
Chief Operating Officer
Compagnie de Saint-Gobain
Airbus Holding
Director
Director
Director
Director
Director
Director
Director
Director
Saint-Gobain Advanced Ceramics Corp
Carborundum Ventures Inc.
Saint-Gobain Ceramics & Plastics Inc
Saint-Gobain Performance Plastics Corp
Saint-Gobain Abrasivos SA
Thyssen-Krupp
Continental AG
PAM Colombia SA
Grindwell Norton Ltd
Kure-Norton Ltd
Saint-Gobain Corporation
Saint-Gobain Pipe Systems Plc.
Saint-Gobain KK
CONFLICTS OF INTEREST
As provided for in the Board of Directors’ internal rules, all Directors must inform the Board of any actual or potential conflicts of interest
and refrain from voting during the corresponding deliberations. This procedure was not implemented in 2006.
Aside from regulated agreements (which are the subject of a report to the Shareholders’ Meeting called to deliberate in that respect)
no service agreement has been entered into between a member of the Board of Directors and Faurecia or one of its subsidiaries.
Operations that may be entered into with a shareholder that holds more than 5% of the Company’s capital constitute day-to-day
operations.
At its meeting of December 16, 2005, the Board strengthened these rules by adopting a procedure regarding the communication
of privileged information within the Group. This procedure applies, in particular, to the Company’s Directors. According to the procedure,
no transactions may be carried out involving the Company’s shares until the related information has been made public. Directors
and certain categories of staff, of whom the list is regularly updated, must declare their transactions to the Company with a view to
informing the markets.
LIST OF THE DIRECTORS’ PROFESSIONAL ADDRESSES
130
Yann Delabrière
Faurecia – 2, rue Hennape – 92735 Nanterre Cedex, France
Louis Defline
Gefco – 77-81, rue des Lilas-d’Espagne – 92402 Courbevoie Cedex, France
Daniel Dewavrin
UIMM – 56, avenue de Wagram – 75017 Paris, France
Patrick Duverger
8, rue des Bouleaux – 78450 Chavenay, France
Frank Esser
SFR – Tour Sequoia – 1, place Carpeaux – 92915 Paris La Défense, France
Zodiac – 2, rue Maurice-Mallet – 92130 Issy-les-Moulineaux, France
Jean-Claude Hanus
Peugeot SA – 75, avenue de la Grande-Armée – 75116 Paris, France
Gérard Hauser
Nexans – 16, rue de Monceau – 75008 Paris, France
Thierry Peugeot
Christian Streiff
COMPENSATION RECEIVED BY DIRECTORS AND OFFICERS
The Board of Directors reviewed the compensation received by Pierre Lévi, Chairman and Chief Executive Officer of Faurecia, at its
February 3, 2006 Meeting in accordance with the report of the Appointments and Compensation Committee. He received gross fixed
compensation of €446,779 between January 1, 2006 and August 3, 2006, the date of his resignation. Gross variable compensation paid
to Pierre Lévi in 2006 for the year 2005 totaled €117,250 including €11,286 in Directors’ attendance fees. It was set based on the
Group’s operating results for the reference year, net debt and the lead times to customers expressed in ppm* and is capped at 70%
of his fixed compensation for the year. Upon expiration of his term of office, in accordance with the decisions taken by the Board of
Directors on February 5, 2004, Mr. Lévi’s employment contract came back into effect.
*: the number of defects per million parts produced
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Grégoire Olivier, called upon by the Board on September 8, 2006 to replace Pierre Lévi, received fixed compensation totaling
€217,715 in 2006 and an exceptional bonus of €250,000. The Board reviewed this compensation and appointed Mr. Olivier upon the
proposal of the Appointments and Compensation Committee. Moreover, the Board decided that Mr. Olivier may receive variable
compensation capped at 80% of his annual fixed compensation. Upon the proposal of the Appointments and Compensation
Committee, the Board of Directors decided to set this variable compensation for 2006 at €190,000 (on a prorata temporis basis) at its
meeting of February 2, 2007. Grégoire Olivier was not granted any special benefit payable in the future.
The benefits in kind granted to Mr. Lévi and Mr. Olivier are those granted to Faurecia’s senior executives. They include a company car
and, for the Chairman, the services of a chauffeur.
Stock-options granted to Mr. Lévi:
40,000
Stock-options granted to Mr. Olivier:
none
Stock-options exercised by Mr. Lévi:
27,900
Stock-options exercised by Mr. Olivier:
none
In 2006, Grégoire Olivier also received €8,715 in Directors’ attendance fees.
The benefits in kind granted to Mr. Olivier are those granted to Faurecia’s senior executives. They include a company car and the
services of a chauffeur.
Stock options granted in 2006: none
Stock options exercised in 2006: none
Lastly, the Directors received the following attendance fees from the Company:
Louis Defline:
€13,000
Yann Delabrière:
€20,143
Daniel Dewavrin:
€10,429
Patrick Duverger:
€20,143
Frank Esser:
€10,429
Jean-Martin Folz:
€21,000
Jean-Louis Gérondeau:
€18,429
Jean-Claude Hanus:
€21,000
Gérard Hauser:
€21,000
Pierre Lévi
€11,286
Grégoire Olivier:
€8,715
Thierry Peugeot:
€13,000
Fixed and variable compensation, as well as all benefits granted by Peugeot SA, the controlling company, to its corporate officers who
also hold a corporate office in Faurecia were the following. The compensation awarded to Jean-Martin Folz in his capacity as Chairman
of the Managing Board of Peugeot SA for 2006 was €1,315,980 and the amount paid in 2006 totaled €1,650,920. The compensation
paid to Thierry Peugeot in his capacity as Chairman of the Supervisory Board of Peugeot SA amounted to €457,000 in 2006. Faurecia
does not have any information on its own corporate officers who are not also officers of the controlling company. Faurecia specifies that
no compensation other than the Directors’ attendance fees mentioned above were paid in 2006 to any of its corporate officers by the
Company or its subsidiaries.
Operation of the Board of Directors and the Internal Audit Department
Pursuant to section L. 225-37 (6) and (7) of the French Commercial Code, the Chairman of the Board of Directors is obligated to present
an additional report, appended to the management report, to describe the way in which the work of the Board is prepared and organized,
as well as the internal control procedures implemented within the Company. Furthermore, the report must indicate any restrictions
imposed by the Board of Directors on the powers of the Chief Executive Officer. It must set out the principles and rules adopted by the
Board of Directors to determine the compensation and any and all benefits granted to corporate officers.
131
REPORT BY THE CHAIRMAN OF THE BOARD OF DIRECTORS ON INTERNAL CONTROL
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Work of the Board of Directors
MEMBERSHIP OF THE BOARD OF DIRECTORS
The Board of Directors consists of eleven members, four of whom are independent Directors under French corporate governance guidelines included in the AFEP-MEDEF report. Five Directors directly represent the interests of the majority shareholder. Daniel Dewavrin chairs
the Supervisory Board of Faurecia Investments. Until February 16, 2007, Grégoire Olivier was Faurecia’s Chairman and Chief Executive
Officer. The Board considers that its membership adequately reflects the weight in Faurecia’s ownership structure of Peugeot SA, its key
shareholder. Members of the Board of Directors are chosen on account of their skills, autonomy and their determination to consider the
interests of all shareholders. Furthermore, all Directors have experience and expertise in at least one of Faurecia’s major business fields.
The independent Directors contribute their varied experience, in terms of international exposure and diverse industrial and managerial
practice, to the Board’s discussions and work. With the exception of the Chairman and Chief Executive Officer, no member of the Board
of Directors holds an executive management or salaried position within a Group company. All members of Faurecia’s Board of Directors
occupy other functions and positions which are detailed in the Group’s registration document (document de référence).
ROLE OF THE BOARD OF DIRECTORS
The Board of Directors determines overall business, financial and economic strategies for the Company and the Group and oversees
their implementation.
Subject to the powers expressly granted to Shareholders’ Meetings and within the limit of the Company’s purpose, the Board deals with
all matters concerning the Company’s affairs and decides on matters involving the Company. The Board is consulted with respect to all
Company or Group strategic decisions at the initiative of its Chairman.
ORGANIZATION OF THE BOARD OF DIRECTORS
132
The internal rules of the Board of Directors, which may be consulted by the shareholders at the Company’s headquarters, are aimed at
organizing the Board’s work systematically in order to make it easier to keep the Directors informed and facilitate their decision-making.
The internal rules describe the operation of the Board and its role in the management of the Company, following on from the provisions
set down by law and the Company’s bylaws. They also provide for the rights and responsibilities of Board members, particularly
as regards 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. They also set out rules governing transactions involving the Company’s shares, as recommended by the Autorité des marchés financiers.
The Board of Directors is free to decide how the general management of the Company shall be carried out. These duties may either
be performed by the Chairman of the Board or by another person appointed by the Board of Directors who holds the position of
Chief Executive Officer.
At its meeting of August 2, 2006, following the resignation of Pierre Lévi, the Board of Directors decided to provisionally separate
the duties of Chairman of the Board of Directors from those of Chief Executive Officer.
This interim period ended at the Board of Directors’ Meeting of September 8, 2006 when Grégoire Olivier was appointed Chairman
of the Board of Directors and Chief Executive Officer of Faurecia. The Board of Directors confirmed this management method at its
meeting of February 16, 2007 when Yann Delabrière was appointed Chairman and Chief Executive Officer to replace Grégoire Olivier.
In 2003, the Board of Directors also set up an Audit Committee and an Appointments and Compensation Committee.
Appointments and Compensation Committee
The main role of this Committee is to present opinions and/or recommendations to the Board of Directors concerning:
• the appointment of future Directors;
• compensation received by corporate officers, including the Chairman;
• the granting of stock options.
The Committee met four times in 2006 and reports on its work to the Board of Directors.
At its meeting of February 2, 2007, the Board of Directors appointed Christian Streiff as member of the Appointments and Compensation
Committee and confirmed the appointments of Jean-Claude Hanus and Gérard Hauser. At the same meeting, the Board appointed
Jean-Claude Hanus as Chairman of the Committee.
Audit Committee
This Committee’s role is to prepare in greater depth the review by the Board of the Company’s financial disclosures. It is thus responsible
for preparing the Board Meetings held to review the interim and annual financial statements and for informing the other Board members
on these subjects. For that purpose, it reviews the financial statements before their submission to the Board and issues an opinion on:
• the application and relevance of the accounting principles and methods used and reviews material risks;
• the appointment, fees and audit program of the Statutory Auditors and issues relating to their independence.
The Committee met four times in 2006 and reports on its work to the Board of Directors.
The Board of Directors has appointed Yann Delabrière, Patrick Duverger and Jean-Louis Gérondeau as members of the Audit
Committee. The Committee is chaired by Yann Delabrière.
OPERATION OF THE BOARD OF DIRECTORS
The Board met six times during the fiscal year ended December 31, 2006, principally to review the Group’s budget, business activities,
results, and Group financing and its major strategies.
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Four meetings that were specifically devoted to the review of the interim and annual financial statements and results forecasts for
the year were prepared by the Audit Committee.
One of the Board meetings focused on the Group’s key medium-term strategies and on its competitive positioning. At several meetings,
the Board of Directors reviewed the organization and commercial impact of recent developments in the legal proceedings brought
against Faurecia in Germany.
In 2006, the rate of attendance of the members of the Board of Directors at Board Meetings was 85.71%.
All members of the specialized Committees attended every Committee meeting.
EVALUATION OF THE BOARD OF DIRECTORS
Following a review by the Appointments and Compensation Committee, the Board implemented a procedure for the evaluation of its
work, using a survey to obtain feedback from each Director on the methods of functioning of the Board and on whether the key issues
for the Company are adequately prepared and reviewed.
Directors’ responses to the survey and suggestions are then analyzed by the Chairman of the Appointments and Compensation
Committee, who reports to the Board on his findings.
This procedure was applied to the Board’s work in 2006.
PROCEDURE FOR COMPENSATING CORPORATE OFFICERS
The amount and method used to determine the compensation and all benefits granted to corporate officers is set out in the management report.
Internal control procedures
GENERAL ORGANIZATION AND DESCRIPTION OF INTERNAL CONTROL PROCEDURES
Stakeholders and the organization of internal control procedures
Internal control is more than just a set of standards and procedures. It is designed to involve everyone throughout the entire Faurecia
Group. In this regard, it concerns not only senior management (the Board of Directors, the Group Executive Committee and executive
managers of operating units) and the functions responsible for control (the Audit Committee, Risk Committee and Internal Audit
department), but also and more importantly, each and every Group employee in his or her daily work.
A large number of internal stakeholders are therefore involved in control activities. They include in particular:
• the Board of Directors, which is responsible for determining the major strategies for the Group’s business activities and overseeing the
deployment of these activities;
• the Group Executive Committee, which makes decisions on all issues involving the Group’s General Management, oversees
and allocates the necessary resources to implementing the Group’s strategy, sets the objectives of the various legal entities within
the Group and supervises their achievement;
• the Audit Committee, described earlier in this report, which is given its responsibilities by the Board of Directors and which plays a vital
role in the performance of internal control and the monitoring of existing procedures;
• the Risk Committee, created in 2004, which meets twice a year before the financial statements are adopted. Meetings are attended
by the Group Chairman, the Chief Financial Officer and the Manager of the Internal Audit department. The Committee may request
the assistance of any internal experts who have specialist knowledge of the operations or specific features of the issues deliberated
by the Committee. The Risk Committee evaluates program-related risks;
• the Group functions, which have a specific role to play in internal control due to their cross-functional competencies, such as the
Financing and Treasury department, the Financial Control department, the Quality Assurance department, the Legal Affairs and
Insurance department or the Country Financial departments;
• the Internal Audit department, which is described in more detail below;
These internal control mechanisms are supplemented by the work of external players, including:
• the Group’s Statutory Auditors, who 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;
• third-party organizations which carry out a triple certification process for the whole Group over a three-year cycle :
– environment (ISO 14001),
– health and safety (OHS AS 18001),
– quality (ISO/TS);
133
Internal control is defined within the Faurecia Group as a process designed to provide reasonable assurance regarding the identification,
control and prevention of risks regarding the achievement of the following aims:
• the effective implementation and optimization of operations;
• the availability, reliability and integrity of the accounting system and financial and operations-related information;
• legal and regulatory compliance;
• balance between risks and anticipated benefits;
• protection of the Group’s property and safeguarding of its assets.
Internal control thus helps Faurecia to attain its strategic objectives, by guarding against the risks and contingencies involved in its
business as far as possible. However, like any other control system, it cannot guarantee an absolute elimination of all risks. Lastly, the
Internal Control department occupies a central function within the Group and may intervene in any of the Group’s subsidiaries or
affiliates. No Faurecia subsidiary has its own Internal Control department.
INTERNAL CONTROL: DEFINITION AND AIMS
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• experts appointed by our insurers carry out controls in two areas for the entire Group every two years:
– fire safety,
– all risks and business interruption.
Description of internal control procedures
The Group’s internal control system consists in particular of a set of procedures that are accessible to all Group employees via
its Intranet. These procedures are regularly updated and are enhanced on an ongoing basis. They currently comprise the following:
• the Faurecia Excellence System (FES), which defines the way in which the Group’s employees work across the globe and describes
the Group’s identity;
• a Code of Ethics was introduced in 2004. It was updated in 2006 following the criminal proceedings brought by the State Prosecutor’s
Offices in Frankfurt and Munich and then circulated in 2007. This Code of Ethics defines the general rules on ethical behavior applicable on a day-to-day basis to all Faurecia employees in their relations both inside and outside the Group, as well as to its partners.
In addition to strengthening the measures already in place, this Code introduces a whistle-blowing procedure enabling employees
to notify Faurecia, in confidence, of any violation of statutory provisions or Group procedures. The Code also provides for the creation
of a Group Ethics Committee. The Code was circulated via Intranet throughout the Group to ensure that all employees can read
and comply with it at all times and in all circumstances;
• a large number of procedures that are specific to each of the Group’s functions and have been developed by such functions within the
scope of a common framework. For example, our supplier policy is based on key procedures that are adopted by all Faurecia entities
worldwide, which focus on four main areas,
– management of the supplier panel,
– supplier integration during the development phase,
– supplier integration during the series phase,
– procurement and billing.
Each phase involves procedures that our suppliers agree to follow with a view to building a sustainable partnership with the Group based
on excellence. A review of the main risks inherent in the Group’s operations is currently in progress.
134
Control of program management
The Group’s core business is designing and manufacturing modules for the automotive industry. Each contract entered into with
a customer constitutes a program.
A program can be defined as a project that:
• responds to a specific request (“Request for Quotation” or RFQ) for the supply of complex automotive equipment to an automaker;
• ensures Quality/cost/leadtime objectives;
• meets the Group’s profitability criteria.
The life of a program can stretch to ten years, from the beginning of the development phase (including the acquisition phase and
industrial production) to the end of series life (production).
Various control tools and procedures mark the life of a program. The Program Management System (PMS) organizes a Program’s life into
rigorous successive stages. Each program involves various milestones from the bid processing stage to the end of product life.
In addition to this control system, program reviews are carried out once a month by the Product Group concerned. These reviews
are formalized and a certain number of documents must be submitted, including the Business Plan (see below). This process is designed
to identify program risks on an ongoing basis, in order to design and implement the necessary action plans.
Business Plan
From its inception, before the bid is filed, 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 change, and it contains all the information needed to assess a program at every stage, during the preparation
of the quotation, contract negotiations, the development phase and finally during series life.
INTERNAL CONTROL PROCEDURES RELATING TO THE PRODUCTION AND PROCESSING OF ACCOUNTING AND FINANCIAL
INFORMATION
Principles applied to the preparation of financial statements
The Group’s Accounting and Tax Management prepares the financial statements for the Faurecia holding company, as well as for other
holding companies, service providers and financial companies within the Group. It also prepares monthly consolidated financial statements and, more particularly, half-yearly and annual financial figures that are to be published. It ensures that local financial managers
prepare the financial statements of subsidiaries in accordance with applicable regulations, defines the Group’s accounting principles
in accordance with IFRS, oversees the application of such principles by all subsidiaries and provides training to the subsidiaries’
accountants and controllers.
The following principles are implemented across the Group with regard to the preparation of financial statements:
• transactions must be exhaustive;
• they must comply with the accounting principles applicable to the Group;
• periodical review of assets.
The key to preparing financial and accounting information is to ensure consistency between financial reporting tools and the Group’s
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operating systems. The volume of information involved, the quality and integrity required to process the information and the shorter
deadlines for the financial reporting package – enabling management to respond quickly and to efficiently control business – require
the use of powerful information systems that can be audited. The Group decided to conduct a major overhaul of these systems, which
will address their technological, administrative and accounting aspects.
Accounting and financial control tools
The Group has designed the procedures required for producing and processing financial and accounting information. These procedures
comply with applicable accounting principles and standards in force and, like all the other internal control procedures, they are available
on the Company’s Intranet. The following figure among the most important Group procedures:
• a capital expenditure authorization procedure, that determines the requirements for justifying the expenditure and identifies authorized
signatories who can commit the Company up to pre-defined thresholds;
• a procedure for requesting subscriptions of shares, share issues, acquisitions of shareholdings and inter-company loans;
• a procedure for drafting Program Business Plans;
• a procedure relating to the purchase of new programs;
• a procedure for consolidating the financial statements.
Medium-term plan
Because its contracts span several years, Faurecia needs a medium-term overview of its financial position for effective risk
management. 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 Group outlook in terms of size of available resources and profitability. It is consolidated on the same basis, by applying the same stringent procedures as for the monthly reporting, and is used
to define budget targets.
• Budget:
Faurecia’s budget is prepared on an annual basis and operates on a half-yearly schedule, exactly like the Group’s external financial
communications.
Group management provides the economic and financial assumptions to be used in the budget, and sets specific objectives for each
operating unit. The budget is then built for each plant, development center or administrative center. Finally, it is converted to monthly
periods using standard schedules, and then consolidated.
As the budget for the upcoming half-year is produced, forecast results for the current half are issued, with explanations for any
variances with respect to the previously set budget for the current half, on a sliding basis.
The budget for the current half-year then serves as a basis for comparisons with current results and performance measurements.
Rolling forecast:
To better anticipate short-term changes and improve responsiveness, the monthly reporting package includes comments and a rolling
three-month forecast for the income statement and cash flows.
• Off-balance sheet commitments:
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 Group general management. If required, currency risks are hedged. Any sureties
or guarantees granted by Faurecia are similarly issued and monitored at Group level.
• Operations Committee:
Each Product Group has an Operations Committee that meets monthly to analyze operating performance and review action plans that
are in progress or have scheduled to meet budget goals.
135
The financial reporting processes are aimed at providing instruments for informing and steering the Group and ensuring maximum
responsiveness to any risks that arise. A “reporting glossary” describes the content of all reporting data and procedures explain
how reporting should be carried out.
• Description of monthly reporting
Since 2004, monthly reporting takes place on the “Magnitude” reporting tool. This tool allows both financial information (income
statement and balance sheet data) and non-financial information (quality, production, purchasing, safety, HR indicators, etc.)
to be reported.
The monthly reporting and the statutory consolidation are now prepared on the basis of a single data source.
The reporting process is structured around operating units.
The level of control over the process for consolidating results at Group level has been reinforced by applying blocking controls
upstream in the reporting package process and intermediate controls related to the reporting system structure.
Finally, in order to enable the management teams to react as quickly as possible on the basis of actual quantified data, the monthly
reporting system is fast: after sending estimated sales and operating income data within three days following month-end, operating
units draw up and send in every month – five days after the monthly close – restated financial statements based on Group standards.
These statements are based on a common chart of accounts and include two income statements – presented by function and
by nature – as well as a balance sheet showing changes in each caption.
Accounting and financial reporting processes
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THE INTERNAL AUDIT DEPARTMENT
At the beginning of 2003, the Group created an Internal Audit department. This department is placed under the direct responsibility
of the Group’s Financial Management. In addition, its work is approved and supervised by the Chairman of the Board and the Audit
Committee. The Internal Audit department aims to guarantee an optimum level of efficiency in all systems of internal financial control,
by applying a systematic and methodical approach. It can intervene according to need in all Group processes throughout the world.
This department conducts its assignments, in both the financial and operations-related fields, in a wholly objective fashion and always
supports its findings with precise facts and quantitative data that have been duly verified. All of the department’s work is made available
to General Management, to which it reports regularly on the progress of its assignments and the meeting of its objectives. It presents
a plan for its audit work, the reports produced and details of whether it has met its objectives to the Group Executive Committee twice
a year and to the Audit Committee once a year. Other Company departments can also obtain detailed explanations from the Internal
Audit teams concerning audit findings.
In 2004, the department prepared an Internal Audit Code of Conduct which defines its function, the purpose of its assignments, the remit
of its authority and the methodology used during its assignments. These measures should be strengthened with a view to conducting
more in-depth, complex assignments.
As an example, the Internal Audit department worked on assignments in the following areas in 2006:
• audit of three programs in Europe and North America; Compliance with the Group’s PMS standards during the acquisition and
development phase, to the end of series life. Reliability of the Business Plan and reporting procedures;
• audit of compliance with IFRS with regard to the booking of development costs;
• audit of the reliability of a quality indicator reporting method implemented on 19 production sites belonging to the Group;
• limited audit of three joint ventures in which the Group has a 50% stake;
• audit of production sites in China and Tunisia (internal control, reliability of reporting methods);
• provision of assistance to KPMG in its assignment concerning proceedings implemented in Germany in cases of improper ethical
conduct;
• audit of compliance with Group standards with regard to expenditure commitments.
Any corrective action that may be needed has already been defined. Furthermore, the Internal Audit department has followed up the
implementation of actions identified following the audits carried out in 2005.
MAIN DEVELOPMENTS
In 2007, the Group intends to develop its risk assessment policy and improve its internal control procedures. To this end, on account of
the criminal proceedings brought in Germany in 2006 by the State Prosecutor’s Offices of Frankfurt and Munich against some of the
Group’s employees, management overhauled the procedures for delegating signatory powers, prohibited transfers of cash and centralized the control of expenditure. Furthermore, the Group’s Code of Ethics mentioned above was clarified. A review of the main risks
inherent in the Group’s operations is currently in progress. The Group should be able to anticipate and improve risk management based
on the main risks identified. The aim is to monitor the development of risks in each area and assess them, ensure that appropriate action
plans are put in place by the risk prevention functions and, where necessary, supplement existing control procedures and systems. The
main risk factors are explained in the management report.
Limitations placed by the Board of Directors on the powers of the Chairman and Chief Executive Officer
136
As stated earlier, the Board of Directors has entrusted its Chairman with responsibility for the Company’s General Management.
The internal rules of operation of the Board specify the terms and conditions of performance of the Board’s own role as well as the duties
of the Chairman. These rules also state that the Board is to be consulted on all Company and Group strategic decisions at the
Chairman’s initiative. At its meeting of September 8, 2006, the Board of Directors authorized the Chairman and Chief Executive Officer
to give sureties, security or guarantees up to an overall maximum limit of €50 million, with a limit of €10 million per transaction. If the
Group is required to provide advance repayment guarantees or performance guarantees for contracts with successive performance
commitments, the Chief Executive Officer is authorized to provide, within the same overall maximum limit, guarantees that may not
exceed €5 million per transaction. Through its internal rules of operation and within the scope of the applicable laws governing its
business activities, the Board has the powers to deal with all matters required for the smooth running of the Company.
The Chairman of the Board of Directors
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Statutory Auditors’ report
This is a free translation into English of the Statutory Auditors’ report issued in the French language 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.
Statutory Auditors’ report, prepared in accordance with section L. 225-235 of the French Commercial
Code (Code de commerce), on the report prepared by the Chairman of the Board of Directors of Faurecia
SA, on the internal control procedures relating to the preparation and processing of financial and
accounting information
In our capacity as Statutory Auditors of Faurecia SA, and in accordance with section L. 225-235 of the French Commercial Code (Code
de commerce), we report to you on the report prepared by the Chairman of your Company in accordance with article L. 225-37 of the
French Commercial Code for the year ended December 31, 2006.
It is our responsibility to report to you our observations on the information set out in the Chairman’s report on the internal control procedures relating to the preparation and processing of financial and accounting information.
We performed our procedures in accordance with professional guidelines applicable in France. These require us to perform procedures
to assess the fairness of the information set out in the Chairman’s report on the internal control procedures relating to the preparation
and processing of financial and accounting information. These procedures notably consisted of:
– obtaining an understanding of the objectives and general organization of internal control, as well as the internal control procedures
relating to the preparation and processing of financial and accounting information, as set out in the Chairman’s report;
– obtaining an understanding of the work performed to support the information given in the report.
Guy A. Sitbon
137
On the basis of these procedures, we have no matters to report in connection with the information given on the internal control procedures relating to the preparation and processing of financial and accounting information, contained in the Chairman of the Board’s
report, prepared in accordance with article L. 225-37 of the French Commercial Code.
It is for the Chairman to give an account, in his report, notably of the conditions in which the duties of the Board of Directors are prepared
and organized and the internal control procedures in place within the Company.
ERNST & YOUNG Audit
Laurent Miannay
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Executive Committee
Faurecia’s executive management is performed by the Group Executive Committee, which is made up of 14 members. Its membership
was as follows as of February 16, 2007:
Position
Yann DELABRIÈRE
Chairman of the Board of Directors and Chief Executive Officer
Arnaud de DAVID-BEAUREGARD
Executive Vice-President, Group Development
Jean-Marc HANNEQUIN
Executive Vice-President, Exhaust Systems Product Group
Max HODEAU
Executive Vice-President, Structures and Mechanisms
Frank IMBERT
Executive Vice-President, Chief Financial Officer
Date of appointment
February 16, 2007
July 19, 2000
July 1, 2002
December 22, 2005
June 13, 2005
Patrick KOLLER
Executive Vice-President, Automotive Seating Product Group
Thierry LEMANE
Executive Vice-President, Group Communications
Jacques LE MORVAN
Executive Vice-President Group Purchasing
May 16, 2005
Jacques MAUGE
Executive Vice-President, Customer Development
May 29, 2006
Bruno MONTMERLE
Executive Vice-President Group Strategy
May 10, 2004
James C. ORCHARD
Chairman North American
Christophe SCHMITT
Executive Vice-President, Interior Systems Product Group
Jean-Pierre SOUNILLAC
Executive Vice-President, Group Human Resources
Guy TALBOURDET
Executive Vice-President, Modules and Systems Product Group
December 18, 2006
September 23, 2002
May 16, 2005
December 22, 2005
September 21, 2004
April 1,2005
The full Executive Committee meets twice a month in order to review the principal questions relating to the general organization
of the Group. It discusses and prepares decisions on major operations-related issues concerning the Company and its subsidiaries,
which are then taken and implemented by each of the Committee’s members in line with their functions.
MANAGEMENT COMPENSATION
The total compensation paid or allocated to Directors and officers of the Company and Group in respect of 2006 amounted to
€7,088,269, including a total of €188,574 in Directors’ fees.
Compensation of Directors is paid in the form of attendance fees, which are designed to take into account the Board members’ effective
attendance at Meetings and their attendance at Committee meetings. Directors therefore receive a fixed portion in recognition of their
function and a variable portion based on the number of Board Meetings attended. They also receive additional compensation if they are
a member of one of the Board’s Committees.
The fees paid to Management Committee members include a variable performance bonus. This is equal to 0%-40% of the basic
compensation of most members, but may reach up to 60%. Each bonus depends not only on the level of individual performance, but
also on collective performance indicators, such as quality, operating margin and debt.
138
Name
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Auditors
Appointments of Auditors
Date of first appointment
Term of office expires
May 27, 2003
June 17, 1983
May 27, 2003
May 23, 2005
Statutory Auditors
represented by Guy-Alain Sitbon,
member of the Compagnie Régionale de Versailles
63, rue de Villiers - 92208 Neuilly-sur-Seine, France
Ernst & Young Audit
represented by Laurent Miannay,
member of the Compagnie Régionale de Versailles
11, allée de l’Arche - 92037 Paris-La Défense Cedex, France
Alternate Auditors
Catherine SABOURET
François CARREGA
Fees paid to the Statutory Auditors as of December 31, 2006
Audit services
Statutory and contractual audits,
certification, review of parent company
and consolidated financial statements
Issuing company
Consolidated subsidiaries
Other services relating directly
to the statutory audit engagement
Issuing company
Consolidated subsidiaries
Sub-total
Total
%
2006
2005
2006
2005
2006
2005
2006
2005
3,099
380
2,719
3,490
696
2,794
12.26%
87.74%
19.89%
79.85%
1,906
118
1,788
1,576
474
1,102
6.19%
93.81%
29.61%
68.83%
0
0
0
9
9
0
0.00%
0.00%
0.26%
0.00%
0
0
0
0
0
0
0.00%
0.00%
0.00%
0.00%
3,099
3,499
100.00% 100.00%
1,906
1,576
100.00%
98.44%
0.00%
1.56%
0.00%
0.00%
1.56%
Other services rendered by networks
to consolidated subsidiaries
Tax and legal advisory services
Other (specify if audit fees > 10%)
Sub-total
Amount (excl. tax)
25
0
0
0
3,099
3,499
0.00%
0.00%
0
0.00%
0.00%
0
25
100.00% 100.00%
1,906
1,601
100.00% 100.00%
139
(in € thousands)
Ernst & Young
%
PricewaterhouseCoopers
Amount (excl. tax)
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Page 140
EMPLOYEE INCENTIVE PLANS
Optional profit-sharing plan (“Accord d’intéressement”) and compulsory profit-sharing
(“Accord de participation”)
OPTIONAL PROFIT-SHARING PLAN (“ACCORD D’INTÉRESSEMENT”)
In 2006, nine agreements were signed for a period of three years. These agreements follow on from the agreements relating to FSA, FSE,
FAI, Siedoubs, Sielest, Automotive Sandouille, Siéto and Siebret that expired. A new agreement was signed relating to FCS, which was
set up at the end of 2005.
Numerous supplemental agreements were signed in order to set half-yearly performance indicators. Therefore, all the French companies
are now covered by optional profit-sharing agreements.
In accordance with the Group’s strategy, most of these agreements contain the following provisions:
• the maximum limit on the intéressement (optional employee profit sharing) is set at 6% of payroll in the event that objectives have been
fully achieved, and can in certain exceptional cases be increased to 8% if the objectives are exceeded;
• the calculation of intéressement is defined on the basis of two sets of indicators:
– business indicators at the level of the Company and its various sites.
This represents approximately 40% of the global intéressement and is calculated and paid every year,
– progress indicators calculated at site level and selected from among the Faurecia Excellence System (FES) indicators.
This represents approximately 60% of the global intéressementt and is calculated and paid every six months,
– half of the allocation made between employees is proportional to salary and half is applied uniformly across the board
(depending on the hours worked);
• the agreements signed at the just-in-time (JIT) sites generally accord greater significance to progress indicators. For these sites,
intéressement is spread evenly across the board.
In respect of 2006, the Group paid out €9.3 million in intéressement to 16 companies.
COMPULSORY PROFIT-SHARING PLAN (“ACCORD DE PARTICIPATION”)
• The compulsory profit-sharing agreements of the various Group companies stipulate that employee profit sharing calculated in accordance with the legal formula is allocated among employees pro rata to their compensation for the year in question, subject
to compliance with regulatory limits.
• The amounts in the participation profit-sharing reserve may be either invested in the corporate mutual funds set up in connection with
the Group Employee Savings Plan (PEG) or paid into an escrow account, according to the choice made by each employee.
The principle of the pooling of the participation profit-sharing reserves between Faurecia Bloc Avant (FBA) and Faurecia Cooling
Systems (FCS), set up in 2005 when FBA made a partial contribution of assets to the newly created FCS, was renewed for the last time
for 2006.
The Group profit-share for 2006, paid in 2007, equals €1.6 million for five companies.
Group Employee Savings Plan (PEG)
140
The Faurecia Group employee savings plan set up in 2004 offers employees the chance to invest in a savings plan by purchasing units
in a corporate mutual fund.
The Group savings plan may be funded by securities. Since 2006, it may also be funded by real property, increasing the number
of investment options available to employees to 14.
The Group savings plan may be funded by the payment of the amounts allocated in respect of participation and intéressement employee
profit-sharing, as well as voluntary contributions made by employees.
Voluntary contributions to the “Faurecia Actionnariat” corporate mutual fund comprising solely Faurecia shares give rise once again to
the payment in 2006 of a financial contribution by the Company.
The total amount invested in the corporate mutual funds remains stable (€30 million), in spite of a slight increase in voluntary contributions. Most of the funds are funded in monetary payments. However, there is a certain diversification in the way in which funds are
managed.
Since its creation in 2004, around €4 million has been invested in the Group’s Employee Savings Plan.
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Stock-options
APPLICABLE PROCEDURE FOR THE ALLOCATION OF STOCK SUBSCRIPTION AND PURCHASE OPTIONS
At its February 6, 2003 Meeting, the Board of Directors adopted a strict procedure in relation to the allocation of stock-subscription and
purchase options.
The Board of Directors may only decide upon the principle of granting stock-subscription or purchase options once a year, during
the Board Meeting held in April in order to convene the Annual General Meeting.
The list of beneficiaries, the number of options granted to each beneficiary and the price of the options – which is based on the average
of the opening prices quoted for the Company’s shares over the twenty trading days preceding the effective date of grant – will be determined in April, at the Board Meeting which issues the notice of the Annual General Meeting.
STOCK SUBSCRIPTION AND PURCHASE OPTIONS
Stock subscription options
The May 23, 2005 Ordinary and Extraordinary Shareholders’ Meeting gave the Board of Directors a 38-month authorization to grant,
on one or several occasions, a maximum of 600,000 stock-subscription options to the management and employees of Group
companies and their over 50% owned subsidiaries.
As of December 31, 2006, a total of 1,265,715 stock-subscription options were outstanding.
Details of the stock option plans as of December 31, 2006 can be found on page 118.
Date of
Shareholders’
Meeting
Date of Board
Meeting
Exercise
price (in €)
Number of
options
granted
O/w granted
to senior
executive
management/
Executive
Committee
members
Start of
exercise
period
Expiration
date of
exercise
period
Options
exercised
Options
forfeited
Number of
options
outstanding as
of Dec. 31, 2005
06/01/1999
06/01/1999
05/22/2000
05/22/2000
09/06/1999
09/04/2000
5
40
200,000
254,000
53,100
54,900
09/06/2004
09/04/2005
09/05/2009
09/03/2010
37,250
96,930
17,250
41,000
145,500
116,070
04/26/2001
54.5
43,500
40,000
04/26/2005
04/25/2011
6,500
5,000
32,000
Total
293,570
Total number of
options granted or shares
subscribed/purchased
Average weighted
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)
82,000
53.80
Options exercised during the year by the top ten employee grantees
of the Company and other Group companies entitled to grant options
(total)
28,500
Stock purchase options
Between 1999 and 2001, the Company granted stock options to the management of Group companies and their over 50% owned subsidiaries, allowing them to purchase Faurecia shares.
As of December 31, 2006, a total of 293,570 stock-purchase options granted were outstanding.
Details of the outstanding stock subscription option plans are as follows:
INFORMATION CONCERNING THE TEN EMPLOYEES WHO RECEIVED THE HIGHEST NUMBER OF OPTIONS
141
41.35
Stock options granted to the ten employees who received the highest number of options,
and options exercised by those employees
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STATEMENT BY THE PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT
(Document de référence)
Person responsible for the registration document
Yann DELABRIÈRE
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 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 historical accounts contained therein.
Yann DELABRIÈRE
Nanterre, April 23, 2007
INFORMATION OFFICER
Frank IMBERT
Faurecia
2, rue Hennape
92735 Nanterre Cedex – France
Tel.: + 33 (1) 72 36 70 00
Fax: + 33 (1) 72 36 70 07
142
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Combined shareholders’ general meeting
of May 29, 2007
Agenda
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Approval of parent company and consolidated financial statements and reports of the Board of Directors and the Statutory Auditors.
Appropriation of 2006 net loss.
Approval of the Statutory Auditors’ special report on regulated agreements.
Ratification of the cooptation of a Director.
Appointment of four new Directors.
Renewal of a directorship.
Renewal of the appointment as principal Statutory Auditor of Ernst & Young Audit.
Renewal of the appointment as alternate Statutory Auditor of Ernst & Young Audit.
Renewal of the appointment as principal Statutory Auditor of PricewaterhouseCoopers Audit.
Renewal of the appointment as alternate Statutory Auditor of PricewaterhouseCoopers Audit.
Powers for formalities.
RESOLUTIONS PRESENTED TO THE EXTRAORDINARY SHAREHOLDERS’ MEETING
12. Authorization for the Board of Directors to issue stock options.
13. Amendment of article 17 of the bylaws regarding the participation of shareholders at Shareholders’ Meetings.
14. Powers for formalities.
COMBINED SHAREHOLDERS’ GENERAL MEETING OF MAY 29, 2007
RESOLUTIONS PRESENTED TO THE ORDINARY SHAREHOLDERS’ MEETING:
Draft resolutions
First resolution
(APPROVAL OF PARENT COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS AND REPORTS OF THE BOARD OF DIRECTORS
AND THE STATUTORY AUDITORS)
After having reviewed the Board of Directors’ management report and the Statutory Auditors’ general report, the Shareholders’ Meeting
approves the reports in their entirety, as well as the parent company and consolidated financial statements for the year ended
December 31, 2006, as presented to it. It notes that the Company incurred a loss of €165,225,090.23 during the year.
143
ORDINARY RESOLUTIONS
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Second resolution
(APPROPRIATION OF 2006 NET LOSS)
Based on the proposal made by the Board of Directors, the Shareholders’ Meeting resolves to appropriate the loss for the year ended
December 31, 2006 as follows:
–165,225,090
Appropriation (by deduction from the following items):
165,225,090
Retained earnings
0
In order to comply with the provisions of the law, it is noted that dividends paid in the last three years were as follows:
Year
2003
2004
2005
Number of shares
carrying dividend rights
Net dividend
(in €)
Tax credit
(in €)
Aggregate payment
(in €)
24,206,751
24,212,051
24,233,601
0.910
1.100
–
0.455
–
–
1.365
1.100
–
Third resolution
(APPROVAL OF THE STATUTORY AUDITORS’ REPORT ON REGULATED AGREEMENTS)
After having reviewed the special report drawn up by the Statutory Auditors on the agreements referred to in sections L. 225-38 et seq.
of the French Commercial Code, the Shareholders’ Meeting takes note of this report and approves the terms and conclusion thereof.
Fourth resolution
(RATIFICATION OF THE COOPTATION OF A DIRECTOR)
The Shareholders’ Meeting acknowledges the resignation of Jean-Martin Folz and resolves to ratify the cooptation of Christian Streiff
as Director for the remaining term of Mr. Folz’s office, i.e., until the Ordinary Shareholders’ Meeting held in 2011 to deliberate on the
financial statements for 2010.
Fifth resolution
(APPOINTMENT OF A NEW DIRECTOR)
The Shareholders’ Meeting acknowledges the resignation of Grégoire Olivier at the Board Meeting of February 16, 2007 and resolves
to appoint Sylvie Rucar to replace him as Director, for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013
to deliberate on the financial statements for 2012.
Sixth resolution
The Shareholders’ Meeting resolves to appoint Jean-Pierre Clamadieu as Director, to replace Daniel Dewavrin whose term of office
expires at this Meeting, for a term of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the financial
statements for 2012.
144
Seventh resolution
The Shareholders’ Meeting acknowledges the resignation of Patrick Duverger and resolves to appoint Ross McInnes to replace
him as Director, for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the financial
Eighth resolution
The Shareholders’ Meeting resolves to appoint Robert Peugeot as Director, to replace Louis Defline whose term of office expires
at this Meeting, for a term of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the financial
Ninth resolution
(RENEWAL OF THE TERM OF OFFICE OF A DIRECTOR)
The Shareholders’ Meeting resolves to renew Yann Delabrière’s directorship for a period of six years, i.e., until the Ordinary Shareholders’
Meeting held in 2013 to deliberate on the financial statements for 2012.
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Tenth resolution
(RENEWAL OF THE APPOINTMENT AS PRINCIPAL STATUTORY AUDITOR OF ERNST & YOUNG AUDIT)
Upon the proposal of the Board of Directors, the Shareholders’ Meeting resolves to renew the appointment as principal Statutory Auditor
of Ernst & Young Audit for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the financial
Eleventh resolution
(RENEWAL OF THE APPOINTMENT AS ALTERNATE STATUTORY AUDITOR OF ERNST & YOUNG AUDIT)
Upon the proposal of the Board of Directors, the Shareholders’ Meeting resolves to appoint AUDITEX as alternate Statutory Auditor
alongside Ernst & Young Audit, for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the
Twelfth resolution
Upon the proposal of the Board of Directors, the Shareholders’ Meeting resolves to renew the appointment as principal Statutory Auditor
of PricewaterhouseCoopers Audit for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate on the
Thirteenth resolution
(RENEWAL OF THE APPOINTMENT AS ALTERNATE STATUTORY AUDITOR OF PRICEWATERHOUSECOOPERS AUDIT)
Upon the proposal of the Board of Directors, the Shareholders’ Meeting resolves to appoint Étienne Boris as alternate Statutory Auditor
alongside PricewaterhouseCoopers Audit, for a period of six years, i.e., until the Ordinary Shareholders’ Meeting held in 2013 to deliberate
on the financial statements for 2012.
Fourteenth resolution
(POWERS FOR FORMALITIES)
Full powers are given to the bearer of a copy or extract of these minutes in order to:
• carry out all filings, publications and other formalities;
• sign all instruments and documents and take all other necessary actions.
EXTRAORDINARY RESOLUTIONS
Fifteenth resolution
(RENEWAL OF THE APPOINTMENT AS PRINCIPAL STATUTORY AUDITOR OF PRICEWATERHOUSECOOPERS AUDIT)
(AUTHORIZATION FOR THE BOARD OF DIRECTORS TO ISSUE STOCK OPTIONS)
145
Upon the proposal of the Board of Directors and after having heard the Statutory Auditors’ special report, the Shareholders’ Meeting
resolves to authorize the Board of Directors within the scope of sections L. 225-177 et seq. of the French Commercial Code, to grant,
on one or more occasions, over a period of 38 months as from the date of this Shareholders’ Meeting, the option to subscribe for new
Faurecia shares issued in connection with a capital increase, to Faurecia’s corporate officers and employees, its over 50% owned
subsidiaries and its over 50% directly or indirectly owned sub-subsidiaries, under the conditions provided by law.
The total number of options offered by the Board of Directors within the scope of this authorization must not lead to the issue of more
than 600,000 shares with a par value of €7, corresponding to a capital increase in a nominal amount of €4,200,000. The Board
of Directors will set the subscription price on the date it resolves to allocate the options. The Shareholders’ Meeting resolves that this
price must be at least equal to the minimum price calculated in accordance with the laws in force. The price must not be changed during
the term of validity of the option, other than in the cases provided for by law. By reason of this authorization, the shareholders expressly
waive their preferential right to subscribe to the shares that will be issued as and when the options are exercised.
The options will be allocated in accordance with the procedure adopted by the Board on February 6, 2003 and the provisions of French
law, pursuant to which no option may be granted:
• during the ten trading days immediately before and after the date of publication of the consolidated financial statements;
• between the date on which Faurecia’s governing bodies receive information which, if made public, may have a material impact on the
price of its shares, and the date that falls ten trading days after the information is made public;
• less than twenty trading days before or after a coupon carrying dividend rights or rights to a capital increase is detached.
The deadline for exercising these options set by the Board of Directors must fall within eight years of the date on which the options are
granted by the Board.
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The Shareholders’ Meeting gives full powers to the Board of Directors to determine the beneficiaries of the stock-option plan within
the limits defined by law, to set the terms and conditions for granting stock-option plans and to carry out all the necessary operations
and formalities.
Every year, the Board of Directors will inform the Ordinary Shareholders’ Meeting of the transactions effected within the scope
of this resolution.
Sixteenth resolution
(AMENDING ARTICLE 17 OF THE BYLAWS REGARDING THE PARTICIPATION OF SHAREHOLDERS AT SHAREHOLDERS’ MEETINGS –
BOOKING OF SHARES IN THE NAME OF THE SHAREHOLDER OR INTERMEDIARY REGISTERED TO ACT ON BEHALF OF THE SHAREHOLDER
THREE BUSINESS DAYS BEFORE THE SHAREHOLDERS’ MEETING IN ORDER TO ENTITLE THE SHAREHOLDER TO TAKE PART IN SUCH
MEETING)
After having reviewed the Board of Directors’ report, the Shareholders’ Meeting resolves to amend article 17 of the Company’s bylaws
regarding the participation of shareholders in Shareholders’ Meetings in line with section 136 of the French decree of March 23, 1967,
as amended by the decree of December 11, 2006. As a result, the bylaws are amended as follows:
OLD WORDING
ARTICLE 17
146
Shareholders’ Meetings are convened and held and the shareholders must deliberate and take their decisions under the conditions set by
law. They are held at the registered office or any other place stated in the notice of Meeting.
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 financial intermediary at least five (5) 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.
Shareholders may also, if the Board of Directors agrees when the Meeting is convened, participate and vote at Shareholders’ Meetings using
videoconferencing facilities or by any method of telecommunication that allows them to be identified, in accordance with the terms and
conditions provided by law.
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.
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 does not entail the loss of the acquired right and does not interrupt the period provided for in the above paragraph.
NEW WORDING
ARTICLE 17
Shareholders’ Meetings are convened and held and the shareholders must deliberate and take their decisions under the conditions set by
law. They are held at the registered office or any other place stated in the notice of Meeting.
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.
Shareholders may also, if the Board of Directors agrees when the Meeting is convened, participate and vote at Shareholders’ Meetings
using videoconferencing facilities or by any method of telecommunication that allows them to be identified, in accordance with the terms
and conditions provided for by law.
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.
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 does not entail the loss of the acquired right and does not interrupt the period provided for in the above paragraph.
Seventeenth resolution
(POWERS FOR FORMALITIES)
Full powers are given to the bearer of a copy or extract of these minutes in order to:
• carry out all filings, publications and other formalities;
• sign all instruments and documents and take all other necessary actions.
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Statutory Auditors’ report
This is a free translation into English of the Statutory Auditors’ report issued in the French language 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.
Statutory Auditors’ report on the granting of stock subscription options to corporate officers and
employees (fifteenth resolution of the Ordinary and Extraordinary Shareholders’ Meeting of May 29, 2007)
In our capacity as Statutory Auditors of Faurecia SA, and in accordance with the terms of the assignment provided for in articles L225-177
and R225-144 of the French Commercial Code (Code de commerce), we hereby report to you on the granting of stock subscription
options to corporate officers and employees of Faurecia SA, its more than 50%-owned subsidiaries, and its sub-subsidiaries that are
directly or indirectly more than 50%-owned.
We performed our procedures in accordance with professional standards applicable in France. Those standards require that we verify
that the proposed terms and conditions for setting the subscription price are disclosed in the Board of Directors’ report, that they comply
with the legal provisions with regard to shareholder information and that they do not appear obviously inappropriate.
We have no comment to make regarding the proposed terms and conditions.
Neuilly-sur-Seine and Paris-La Défense, April 16, 2007
Ernst & Young Audit
Laurent Miannay
147
Guy A. Sitbon
STATUTORY AUDITORS’ REPORT
It is the responsibility of the Board of Directors to prepare a report on the reasons for granting stock subscription options and the
proposed terms and conditions for setting the subscription price. Our responsibility is to comment on the proposed terms and conditions for setting the subscription price.
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Cross-reference table
The following cross-reference table is intended to inform the reader of this annual report of the headings under which he may obtain the
information required under section 212-7 of the general regulations of the Autorité des marchés financiers (AMF) and annex I to EC
regulation no. 809/2004 of April 29, 2004 for use as a registration document within the meaning of section 212-13 of the general
regulations of the AMF.
Headings of annex I to EC regulation no. 809/2004
page
1. PERSONS RESPONSIBLE
142
2. STATUTORY AUDITORS
139
3. SELECTED FINANCIAL INFORMATION
12-13, 53-84, 95-111
4. RISK FACTORS
28-30
CROSS-REFERENCE TABLE
5. INFORMATION ABOUT THE ISSUER
5.1. History and development of the issuer
5.2. Investments
6.
6.1.
6.2.
6.3.
6.4.
9-10, 24-27
13, 24-27, 62-65
BUSINESS OVERVIEW
Principal activities
Exceptional factors
Possible dependency: patents, licenses or contracts
The basis for any statements made by the issuer regarding its competitive position
15-19, 24-27, 62-65
n/a
29, 124
11
7. ORGANIZATIONAL STRUCTURE
88-89
8. PROPERTY, PLANTS AND EQUIPMENT
8.1. Existing or planned material tangible fixed assets
8.2. A description of any environmental issues that may affect
the issuer’s utilization of the tangible fixed assets
n/a
n/a
9. OPERATING AND FINANCIAL REVIEW
148
24-27, 53-84, 95-110
10. CAPITAL RESOURCES
55-57, 73-74, 79-81, 102-104, 118-124,
11. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
12, 15, 16, 20-21, 26, 29, 32, 53, 65, 66
12. TREND INFORMATION
n/a
13. PROFIT FORECASTS OR ESTIMATES
n/a
14. ADMINISTRATIVE, MANAGEMENT, AND SUPERVISORY BODIES
AND SENIOR MANAGEMENT
14.1. Members of the administrative, management or supervisory bodies
14.2. Administrative, management, and supervisory bodies and senior management conflicts of interests
15. COMPENSATION AND BENEFITS
15.1. The amount of compensation paid and benefits in kind
15.2. The total amounts set aside or accrued by the issuer or its subsidiaries
to provide pension, retirement or similar benefits
16. BOARD PRACTICES
16.1. Date of expiration of the current term of office
16.2. Service contracts between members of the administrative, management
or supervisory bodies and the Company
16.3. Information about the issuer’s Audit Committee and Remuneration Committee
16.4. Corporate governance regime
125-129, 138
84, 130, 138
75-78
125
133-136
125-139
10:59
Page 149
Headings of annex I to EC regulation no. 809/2004
page
17. EMPLOYEES
17.1. Shareholdings and stock options
17.2. Description of any arrangements for involving the employees in the capital of the issuer
140-141
140-141
18. MAJOR SHAREHOLDERS
18.1. In so far as is known to the issuer, the name of any person other than a member of the administrative,
management or supervisory bodies who, directly or indirectly, has an interest in the issuer’s capital
or voting rights which is notifiable under the issuer’s national law, together with the amount of each
such person’s interest or, if there are no such persons, an appropriate negative statement
18.2. A description of any arrangements, known to the issuer, the operation of which may at a subsequent
date result in a change in control of the issuer
18.3. Control of the Company
18.4. A description of any arrangements, known to the issuer, the operation of which may at a subsequent
date result in a change in control of the issuer
118-120
116, 120
120, 129
120
19. RELATED PARTY TRANSACTIONS
20. FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES,
FINANCIAL POSITION AND PROFITS AND LOSSES
20.1. Historical financial information
20.2. Pro forma financial information
20.3. Financial statements
20.4. Auditing of historical annual financial information
20.5. Age of latest financial information
20.6. Interim and other financial information
20.7. Dividend policy
20.8. Legal and arbitration proceedings
20.9. Significant change in the issuer’s financial or trading position
21.
21.1.
21.2.
21.2.1.
21.2.2.
21.2.3.
84, 106, 113
53-57, 95-98, 110
n/a
53-85, 95-106
90, 112-113
12/31/06
95-106
107, 123
79
51
ADDITIONAL INFORMATION
Share capital
Memorandum and articles of association
A description of the issuer’s objects and purposes
A description of the rights, preferences and restrictions attaching to each class of the existing shares
A description of what action is necessary to change the rights of holders of the shares,
indicating where the conditions are more significant than is required by law
21.2.4. A description of the conditions governing the manner in which Annual General Meetings
and Extraordinary General Meetings of Shareholders are called
21.2.5. An indication of the articles of association, statutes, charter or by law provisions, if any,
governing the ownership threshold above which shareholder ownership must be disclosed
21.2.6. A description of the conditions imposed by the memorandum and articles of association, statutes, charter or
by law governing changes in the capital, where such conditions are more stringent than is required by law
149
118-120
116
117
116
116
116
116
22. MATERIAL CONTRACTS
N/A
23. THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS
AND DECLARATIONS OF ANY INTEREST
N/A
24. DOCUMENTS ON DISPLAY
25. INFORMATION ON HOLDINGS
CROSS-REFERENCE TABLE
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115
85-89, 108-109, 111
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Page 150
Main Group addresses
FAURECIA
MODULES & SYSTEMS
Head office
2, rue Hennape
92735 Nanterre Cedex
Tel.: (33) 1 72 36 70 00
Fax: (33) 1 72 36 70 07
http://www.faurecia.com
Group communication contact:
Thierry Lemâne
Maria Goeppert strasse 3 Halle E/GVZ
85057 Ingolstadt
Tel: (49) 841 490 490
Fax: (49) 841 490 49 49
SOUTH AFRICA
MAIN GROUP ADDRESSES
EXHAUST SYSTEMS
150
Cnr Henry Ford & Nicoll Road
Elmosa Park, Nieve Township
PO Box 995
6000 Port Elizabeth
Tel.: (27) 41 451 0936
Fax: (27) 41 451 0948
INTERIOR SYSTEMS
MODULES & SYSTEMS
Cnr Larch avenue & Wattle square
Holland Park
PO Box 770
6000 Port Elizabeth
Tel.: (27) 41 393 4200
Fax: (27) 41 393 2216
GERMANY
SEATS
Nordsehler Strasse 38
31655 Stadthagen
Tel.: (49) 5721 702 0
Fax: (49) 5721 702 370
CANADA
SEATS
6141 Vipond Drive
ON L5T 2B2, Mississauga-Ontario
Tel.: (1) 905 670 0218
Fax: (1) 905 670 1415
ARGENTINA
EXHAUST SYSTEMS
INTERIOR SYSTEMS
CHINA
Carlos Pellegrini Y Viamonte
Lanus – Placia de Buenos Aires
1824 Lanus
Tel.: (54) 11 4001 8800
Fax: (54) 11 4001 8859
SEATS
BELGIUM
INTERIOR SYSTEMS
Industrielaan 198 Bd Industriel
1070 Bruxelles
Tel: (32) 2 331 06 13
Fax: (32) 2 331 37 75
BRAZIL
SEATS
Avenida Prefeito Domingos
Mocelin Neto, 777
Borda do Campo km 77,
CEP 830420 Quatro Barras
Tel.: (54) 41 4009 8000
Fax: (55) 41 4009 1560
EXHAUST SYSTEMS
3rd Floor, n°91 Building, n°1199
Qinzhou North Road, Caohejing
Hi-Tech Park,
200233 Shanghai
Tel: (86) 21 3401 4588
Fax: (86) 21 6495 9007
EXHAUST SYSTEMS
No. 1 Chuang Ye Road
Wuhan Technical and Economic
Development Zone
430056 Wuhan
Tel.: (86) 27 84 89 1745
Fax: (86) 27 84 89 2261
INTERIOR SYSTEMS
3rd Floor, No. 91 Building,
No. 1122 Qinzhou
North Road, Caohejing Hi-Tech Park
200233 Shanghai
Tel.: (86) 21 3401 4588
Fax: (86) 21 6495 9007
SOUTH KOREA
EXHAUST SYSTEMS
Herboldshofer Strasse 35
90765 Fürth
Tel.: (49) 911 76 100
Fax: (49) 911 76 10 466
Av Nossa senhora do bom sucesso,
3344, Mod 3&4,
Campo Allegre
12420-010 Pindamonhangaba
Tel.: (55) 12 3644 4200
Fax: (55) 12 3644 4201
INTERIOR SYSTEMS
INTERIOR SYSTEMS
Faureciastraße 1
76767 Hagenbach
Tel.: (49) 72 73 80 10
Fax: (49) 72 73 80 15 55
Avenida Dom Pedro II,
288 8° andar – Bairro Jardim
09080-000 Santo Andre
Tel.: (55) 11 4993 7900
Fax: (55) 11 4432 0525
Faurecia Trim Korea LTD
2DA-601 shihwa industrial complex
#1264 Jeongwang-Dong, Shiheungcity, Kyungki-do
EXHAUST SYSTEMS
1264, Jungwang-dong
Shiheung City Kyungi-do,
Tel.: (82) 31 434 6300-4
Fax: (82) 31 434 6305-6
INTERIOR SYSTEMS
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Page 151
SPAIN
FRANCE
THE NETHERLANDS
SEATS
2, rue Hennape
92735 Nanterre Cedex
Tel.: (33) 1 72 36 70 00
Fax: (33) 1 72 36 70 07
SEATS
Calle 2, No.20-22,
Sector A. Pol. Ind. Zona Franca
8040 Barcelona
Tel.: (34) 932 239 970
Fax: (34) 932 234 688
INDIA
EXHAUST SYSTEMS
Camiño do Caramuxo 33
36213 Vigo
Tel.: (34) 986 213 838
Fax: (34) 986 214 600
INTERIOR SYSTEMS
Autovia A-3, Madrid-Valencia,
Km 334,5
Apartado de Correos 180
46930 Quart de Poblet (Valencia)
Tel.: (34) 96 196 00 00
Fax: (34) 96 196 00 69
MODULES & SYSTEMS
Polígono de la Estacion
s/n° 47410 Olmedo (Valladolid)
Tel.: (34) 9 83 60 18 20
Fax: (34) 9 83 60 02 93
UNITED STATES
INTERIOR SYSTEMS
Sai Radhe Building - 3rd floor
Plot n° 100 & 101
Raja Bahadur Mills Road, Behind Hotel
Le Meridian Pune – Sangamwadi
Pune 411001
Tel.: (91) 20 30586700
Fax (91) 20 30586800
JAPAN
SEATS
EXHAUST SYSTEMS
INTERIOR SYSTEMS
MODULES & SYSTEMS
Innotech Bldg., 3F
3-17-6, Shin-Yokohama,
Kohoku-ku Yokohama
222-0033
Tel.: (81) 045 478 7500
Fax: (81) 045 478 7509
INTERIOR SYSTEMS
2050 Auburn Road
Auburn Hills, MI 48326
Tel.: (1) 248 409 3500
Fax: (1) 248 409 3501
EXHAUST SYSTEMS
543 Matzinger Road
Toledo, OH 43612
Tel.: (1) 419 727 5000
Fax: (1) 419 727 5025
MODULES & SYSTEMS
6100 Sims Drive
Sterling Heights, Michigan 48313
Tel.: (1) 248 658 1302
Fax: (1) 248 658 1303
POLAND
SEATS
Ul. Spoldzielcza 4
05-600 Grójec
Tel.: (48) 48 665 01 13
Fax: (48) 48 664 37 11
INTERIOR SYSTEMS
Ul. Szczecinska 31
66-400 Gorzow Wielkopolski
Tel.: (48) 95 72 19 304
Fax: (48) 95 72 19 309
MODULES & SYSTEMS
ul, Jaworzynska 297
59-220 Legnica
Tel: (48) 76 866 53 00
Fax: (48) 76 866 53 01v
PORTUGAL
SEATS
SEATS
2380 Meijer Drive
Troy, MI 48084
Tel.: (1) 248 288 1000
Fax: (1) 248 288 1074
Kleibergweg
7NL 6130 PC Sittard (Born)
Tel.: (31) 46 420 78 78
Fax: (31) 46 420 78 82
LUXEMBOURG
MODULES & SYSTEMS
Op der Sang 14
ZI Eselborn-Lentzweiler
L-9779 Eselborn
Tel.: (352) 94 90 90
Fax: (352) 94 90 81
MEXICO
INTERIOR SYSTEMS
Parque Industrial Finsa Nave 17
Autopista México – Puebla
72710 Puebla
Tel.: (52) 222 219 87 00
Fax: (52) 222 210 54 62
Rua Comendador Rainho 44 –
Apartado 61
3701-953 São João da Madeira
Tel.: (351) 256 839 200
Fax: (351) 256 839 207
MAIN GROUP ADDRESSES
30/05/07
INTERIOR SYSTEMS
Parque Industrial Autoeuropa
Quinta da Marquesa I
CCI 10207
2950 – 678 Palmela
Tel.: (351) 21 213 51 00
Fax: (351) 21 210 80 36
EXHAUST SYSTEMS
Estrada do Aeroporto Santa Maria
5301-902 Bragança
Tel.: (351) 273 310 025
Fax: (351) 273 310 022/3
EXHAUST SYSTEMS
Boulevard Henry Ford #53,
Parque Industrail Dynatech-Sur,
Somora 83200 Hermosillo
Tel.: (52) 662 108 1100
Fax: (52) 662 108 1108
151
30/05/07
10:59
Page 152
CZECH REPUBLIC
SLOVENIA
UNITED KINGDOM
SEATS
SEATS
Mesickà 276
39002 Tàbor
Tel.: (420) 381 494 111
Fax: (420) 381 259 782
Kandijska Cesta 60
8000 Novo Mestro
Tel.: (386) 7391 81 70
Fax: (386) 7391 81 72
INTERIOR SYSTEMS
SEATS
EXHAUST SYSTEMS
Horka 34
29401 Bakov Nad Jizerou
Tel.: (420) 326 799 111
Fax: (420) 326 799 120
EXHAUST SYSTEMS
Faurecia Automotive Czech Republic
s.r.o.
Sedláãkova 6/472
397 01 Písek
Tel.: (420) 389 820 313
Fax: (420) 389 820 220
INTERIOR SYSTEMS
Plazy 100
29301 Mlada Boleslav
Tel.: (420) 326 370 111
Fax: (420) 326 370 100
ROMANIA
SEATS
DN7 km 256 + 836
55570 Talmaçiu
Tel.: (40) 269 208 700
Fax: (40) 269 555 486
INTERIOR SYSTEMS
152
Euro Auto Plastic Systems SRL
2A Uzinei street house 9B
Mioveni
Arges
SWEDEN
INTERIOR SYSTEMS
Kärrlyckegatan 11
418 78 Göteborg
Tel.: (46) 31 758 0100
Fax: (46) 31 758 0199
EXHAUST SYSTEMS
Nya Bergkvaravägen 15-17 Box 501
385-25 Torsas
Tel.: (46) 486 13000
Fax: (46) 486 10401
TUNISIA
SEATS
Route de Mornag km 6
ZI de Bata
2013 Ben Arous
Tel.: (216) 71 38 30 06
Fax: (216) 71 38 40 43
TURKEY
SEATS
Teknik Malzeme
Geçit Köyü Giripi
471 16150 Bursa
Tel.: (90) 224 244 73 00
Fax: (90) 224 244 65 87
INTERIOR SYSTEMS
SLOVAKIA
INTERIOR SYSTEMS
Opletalova 73
84107 Bratislava
Tel.: (421) 2 6930 7714
Fax: (421) 2 6930 7735
INTERIOR SYSTEMS
Modules & Systèmes
Priemyselná 1
920 01 Hlohovec
Tel: (421) 918 712 068
Fax: (421) 33 7302 441
EXHAUST SYSTEMS
Prilohy 50
91 701 Trnava
SAI Automotive Polifleks AS
Hürriyet Mahallesi
Harmansazi mevki
16800 Orhangazi
Tel.: (90) 224 573 60 60
Fax: (90) 224 573 60 65
Common Lane
Fradley Business Park
WS13 8NQ Fradley (Lichfield)
Tel.: (44) 1543 445 200
Fax: (44) 1543 444 434
MODULES & SYSTEMS
Staithes Road – Pattinson South
Industrial Estate – District 8 –
Tyne & Wear, NE38 8NW Washington
Tel: (44) 191 419 7900
Fax: (44) 191 419 4753
30/05/07
10:50
Board of Directors,
Executive Committee and Auditors
Page 2
Board of Directors
Yann Delabrière
Contacts
Directors:
Louis Defline
Daniel Dewavrin
Patrick Duverger
Frank Esser
Jean-Claude Hanus
Gérard Hauser
Thierry Peugeot
Christian Streiff
Group Communications
Executive Committee
+33 (0)1 72 36 70 05
Financial information available online at www.faurecia.com (“Finance & Shareholders” section)
Yann Delabrière
Faurecia headquarters
Arnaud de David-Beauregard
2, rue Hennape
92735 Nanterre Cedex - France
EVP Group Development
Jean-Marc Hannequin
EVP Exhaust Systems Product Group
Max Hodeau
EVP Structures & Mechanisms Product Group
Frank Imbert
Patrick Koller
EVP Automotive Seating Product Group
Thierry Lemâne
EVP Group Communications
Jacques Le Morvan
EVP Group Purchasing
2007 Financial agenda
FEBRUARY 5
Publication of full-year and second half 2006 results, presentation in Paris
APRIL 18
Publication of first quarter 2007 sales figures
MAY 29
Annual General Meeting, Nanterre
JULY 18
Publication of first half 2007 results, presentation in Paris
OCTOBER 24
Publication of third quarter 2007 sales figures
Jacques Mauge
EVP Group Customer Development
Bruno Montmerle
EVP Group Strategy
James C. Orchard
EVP North America
Christophe Schmitt
EVP Interior Systems Product Group
Jean-Pierre Sounillac
EVP Group Human Resources
Guy Talbourdet
EVP Modules & Systems Product Group
Auditors
Members of the Compagnie
Régionale de Versailles
Photo credits: S. de Bourgies; A. Gonin; S. Muratet; Nick Parsons; Larry Peplin;
C. Peus; B. Schittny; Getty Images; Studio Rauzier – Rivière; Faurecia Photobank.
This registration document
(document de référence) was filed
with the Autorité des marchés
financiers (AMF) on April 24,
2007 pursuant to article 212-13
of 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.
Represented by Guy-Alain Sitbon
63, rue de Villiers
92220 Neuilly-sur-Seine
France
Edition: 146 & Compagnie
Design and publication:
Ernst & Young Audit
Represented by Laurent Miannay
Tour Ernst & Young
11, allée de l’Arche
92037 Paris La Défense cedex
France
30/05/07
10:50
Page 1
Safety
Environment
REGISTRATION
DOCUMENT
06
Design & perceived quality
A force for automotive progress

Faurecia 2006 annual report

Transcription

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