BoD

1
Schneider Electric Expands In Sensing
TechnologyParis, March 25, 2004
2
Strategy background Components for repetitive
machines OEMs The Sensors Market Kavlico The
Transaction Synergies
3
Our acquisition strategy

• Schneider Electric has defined growth platforms
• Specific segments
• Industrial automation
• Components for repetitive applications
• Building automation
• Residential market
• Secured power
• Value-added services energy, industrial
  productivity

• Over the last months, the Group has deployed its
  strategy by acquiring
• Digital Electronics December 2002
• Kavlico March 2004
• T.A.C August 2003
• Clipsal December 2003
• MGE UPS February 2004
• T.A.C, MGE UPS

4
Strategy Background

• The Components for repetitive machines business
  is one of the growth platforms identified by
  Schneider Electric
• These activities are close to the traditional SE
  Activities (in Automation and partly in
  Electrical Protection)
• Products have similar functions for Control,
  diagnosis and display
• Products are highly industrial
• Customers are OEMs and their tier suppliers
• This market is a new opportunity for Schneider
• Adapted or Specific Products for a One-to-One
  Business
• These products are not easy to design and
  manufacture by a standard products supplier
• The major characteristics of a components
  supplier for repetitive machines are its
  technologies and its ability to understand the
  requests of the customers and to design quickly
  the right answer
• The manufacturing volumes are large enough to
  reach the lowest costs and to use these products
  in several applications and segments with
  competitive advantages

5
Strategy Background

• The accessible market is large with an
  interesting growth (6 to 8)
• supported by the increasing need into repetitive
  machines or equipments in the industrial,
  semi-commercial and commercial markets
• Increase of controls and diagnostics by
  microprocessor leads to a significant potential
  of development for electronic devices in
  opposition to traditional electromechanical
  products
• In this market, components suppliers are very
  numerous, generally national (or regional) and
  small, giving then a fragmented competition
• Crouzet showed the opportunity to go into this
  market with a special Business-Model and adapted
  /specific products

6
Strategy Background

• This market is led by specialized players with a
  product (instead of business) focus
• Schneider Electric is already present inside this
  market
• CROUZET Automation ( 160m of turnover)

7
Strategy Background

•  Sensors  are one of the key elements of
  repetitive machines and our intent was to
  acquire major players in this business
• KAVLICO was a very attracting target in the
  Pressure and Position Sensors business

8
Sensors Market

• From a 35bn Sensors Total Market, 21bn are sold
  to Repetitive OEMs and, considering the types we
  can focus on, the accessible market for Schneider
  Electric is 10bn
• The studies we worked with indicate 50 roughly
  are going to the Automotive market (Embedded
  products)

10Bn
9
Sensors Market

• Among all types of sensor, pressure sensors are
  in the 1st priority group
• They are used in all sectors in a lot of
  different applications
• Embedded Automotive (On Road Vehicles), Off
  Road Machines, Trains, Aerospace
• Appliance, Medical, Industrial, HVAC, Office
  Automation, Building Automation
• Increase of the number of sensors per machine
  around 5 per year
• Increase of Pressure Sensors
• Machining and Automation 1.8
• Process Control 4.2
• Automotive and Repetitive 7.5

10
KAVLICO

• The company has been founded in 1958 and
  generated profits every year. It was independent
  until November 2000 then bought by C-Mac which
  merged with Solectron Corp. in 2002
• Turnover 156m in automotive (36),
  off-road/diesel engine (21), aerospace (24) and
  industrial (19). Marketing through direct sales
  for automotive / aero and through reps and
  distributors for industry / commercial
• Headcount 1 300 employees
• 3 Sites
• Moorpark, CA for HQ, manufacturing, warehouse (28
  000 m²)
• Southfield, MI for sales and marketing
• Minden in Germany for European sales and support,
  light manufacturing (2 500 m²)

11
KAVLICOExamples of Products
General Industrial
HVAC/R
Aerospace / Military
Engine andIndustrial Vehicles
Fluid Power
12
The transaction

• Payment of 195m in cash for 100 of Kavlicos
  shares on a debt-free / cash-free basis.

• 11,7 X estimated 2004 EBITA

13
Synergies

• Commercial synergies
• Make Crouzet benefit from Kavlicos position on
  US Aerospace and Automotive markets
• Make Kavlico benefit from Crouzets position on
  European Aerospace and Automotive markets
• Reach critical mass to increase our presence in
  this business in Asia (Research of Asian
  partners)
• Cost synergies
• Share common back-offices
• Make Kavlico benefit from Schneider Electric
  purchasing conditions
• Technical synergies
• Share RD expertise between Crouzet, Schneider
  Electric and Kavlico

TARGET
Ebit from cost synergies 5m
Ebit from revenue synergies 5m
14
Appendices
15
Components for Repetitive Machines
16
KAVLICO Technologies Mastered
Ceramic Capacitive
Single Chip Micro-Marchined(MEMS)
Piezoresistive
Electromechanical (LVDT / RVDT)
19
6
49

• Current product mix

26

• Low to medium pressure
• Absolute and gage
• Differential pressure

• Characteristics

• Low pressure absolute
• Differential pressure

• Low to medium pressure gage

• High accuracy/reliability
• Harsh environment

• Occupant detection
• Engine oil
• Exhaust Gas Recirculation
• Diesel filter trap
• Turbo boost

• Applications

• Emission control, AC, ABS systems, tire pressure
• MAP, HVAC, compressor
• Blood pressure
• Aerospace pressure control

• Direct injection gasoline/diesel, ABS brakes, oil
  pressure
• General industrial instrumentation application

• Aerospace flight control actuator, servos, stick
  controls, engine controls
• Industrial power generation robotics, actuators
• Automotive applications

• Texas Instruments

• Competitors

• Motorola
• Denso
• Texas Instruments
• Bosch

• Bosch
• Delphi
• Denso

• Lisk
• Penny Giles
• GL Colins
• MPC

• Features future

• Tried and tested technology
• Suitable for hostile environment
• High volumes with customization or low volumes
• Around 35 of product mix

• Most recent technology
• High volume with standardised features
• Around 35 of product mix

• High quality
• Low volume with high level of customisation
• Around 20 of product mix

• Most recent technology
• Competitive for high volume with standardised
  features
• Around 10 of product mix

Sensors solutions for the automotive and
industrial industries
Aerospace industry
17
KAVLICO Key Figures
2003
(in USD M)
Sales
156.1
Gross Margin
30.8
of sales
19.7
Operating
16.5
income
of sales
10.6