PSA COUV page . page RA GB - PEUGEOT Presse

2002 

ANNUAL 

REPORT

S upervisory Board 

Thierry Peugeot 

Chairman 

Jean Boillot 

Jean-Philippe Peugeot 

Vice-Chairmen 

Pierre Banzet 

Jean-Louis Dumas 

Marc Friedel 

Jean-Louis Masurel 

François Michelin 

Jean-Paul Parayre 

Marie-Hélène Roncoroni 

Ernest-Antoine Seillière de Laborde 

Joseph F. Toot Jr. 

Roland Peugeot 

Bertrand Peugeot 

Advisors to the Supervisory Board 

Managing Board 

Jean-Martin Folz 

Chairman of the Managing Board 

Frédéric Saint-Geours 

Peugeot Marque 

Claude Satinet 

Citroën Marque 

E xecutive Committee 



Yann Delabrière 

Finance, Control and Performance 

Gilles Michel 

Platforms, Technical Affairs, 

Purchasing 

Jean-Marc Nicolle 

Group Strategy and Products 

Robert Peugeot 

Innovation and Quality 





Roland Vardanega 

Manufacturing 

and Components 

Jean-Luc Vergne 

Employee Relations and 

Human Resources 

Senior Management 

Xavier Fels 

External Relations 

Jean-Louis Grégoire 

Executive Development 

Jean-Claude Hanus 

Legal Affairs 

Liliane Lacourt 

Corporate Communications 

S tatutory Auditors 

Coopers & Lybrand Audit 

Constantin Associés 

Auxiliary Auditors 

Louis-Pierre Schneider 

François-Xavier Ameye 

As of March 1, 2003 

Executive Committee 

and Senior Management 

From left to right: Roland Vardanega, Liliane Lacourt, 

Jean-Louis Grégoire, Jean-Luc Vergne, Frédéric Saint-Geours, 

Gilles Michel, Robert Peugeot, Jean-Martin Folz, Yann Delabrière, 

Jean-Claude Hanus, Claude Satinet, Jean-Marc Nicolle, Xavier Fels

K ey figures 

Worldwide sales Automobile Division Net sales 

(in units) operating margin (in € millions) 

(as % of sales) 

Automobile Division 

Other businesses 

3,132,800 3,267,500 

4.8 

5.0 

51,663 

54,436 

2,815,700 

4.2 

44,181 

10,139 

10,485 

6,745 

37,436 

41,524 

43,951 

2000 2001 2002 

2000 2001 2002 

2000 2001 2002 

Consolidated operating Return on capital Balance sheet structure 

margin employed (in € millions) 

(in € millions) 

(after tax) 

Stockholders’ equity 

Net financial position of the 

manufacturing and sales companies 

2,652 

2,913 

11.1% 11.0% 

12.4% 

9,361 

10,282 

10,984 

2,121 

1,407 

-511 

594 

2000 2001 2002 

2000 2001 2002 

2000 2001 2002

Operating margin Net income Working capital provided 

(in € millions) (in € millions) from operations and 



capital expenditure 

(manufacturing and sales companies) 


2,913 

1,691 1,690 

Working capital provided from operations 

Capital expenditure 

4,059 

2,121 

660 

2,652 

730 

1,312 

3,221 

2,898 

3,440 

2,938 

2,790 

542 

1,992 

2,183 

1,579 

2000 2001 2002 

2000 2001 2002 

2000 2001 2002 

Capital employed Earnings per share Workforce at December 31 


Dividend 

(in €) 



Earnings per share 

Dividend 



15,654 

15,407 

6.42 

6.65 

192,500 

198,600 

172,400 

12,988 

5,826 

5,720 

5.02 

44,800 

62,800 

65,300 

4,087 

8,901 

9,828 

9,687 

0.83 

1.15 

1.35 

127,600 

129,700 

133,300 

2000 2001 2002 2000 2001 2002 

2000 2001 2002

Contents 

2 

A Tribute to Pierre Peugeot 

4 

Message from the Chairmen 

6 

Supervisory Board Report 

With its two broadline marques, PSA Peugeot Citroën 

is the world’s sixth largest automobile company, with 

5.8% of the global market. It ranks second in Europe, 

where its markets share rose to 15.5% in 2002. 

During the year, the Group sold 3.27 million vehicles 

in the more than 140 countries in which it operates, 

generating net sales of €54.4 billion. It is committed 

to selling four million vehicles a year by 2006. 

8 

Managing Board Report 

10 Growth Strategy 

16 Corporate Governance 

28 Business Review 

60 Corporate Policies 

PSA Peugeot Citroën also encompasses the Banque 

PSA Finance group of automotive finance companies, 

Gefco, a transportation and logistics company, and 

Faurecia, an automotive equipment manufacturer. 

96 

120 

131 

207 

Management’s Discussion and Analysis 

Statistics 

Appendices to the Managing Board Report 

Statutory Auditors’ Report 

217 

208 

Information about Peugeot S.A. 

Resolutions 

220 

The Vice Presidents Committee 

Combined Annual and Extraordinary Stockholders’ Meeting - May 28, 2003

2 

PSA PEUGEOT CITROËN

A Tribute to Pierre Peugeot 

Our Group was greatly bereaved by the death of the Chairman of its Supervisory 

Board, Pierre Peugeot, who passed away on December 1, 2002. 

Mr. Peugeot was born in 1932 in Valentigney, near Montbéliard in eastern France, 

a region he remained very attached to all his life. He began his career in 1957 

in Sochaux as a special advisor to plant management. Two years later, he was 

called to company headquarters in Paris, where he was put in charge of 

international expansion. In 1966, he joined the senior management team 

of the new Peugeot S.A. holding company, becoming a member of the Managing 

Board and Managing Director in 1972. In this position, he played a vital role in 

the Group’s business activities, and notably in all of the major stages in its 

development, including the merger with Citroën, the acquisition of Chrysler 

Corp.’s European subsidiaries and the creation of Faurecia. On July 1, 1998, 

he was elected Chairman of the Supervisory Board. 

Mr. Peugeot was therefore directly involved in our transformation into a worldclass 

corporation. At the same time, he demonstrated a firm commitment to 

preserving our unique identity and maintaining a strong core of family 

stockholders, which he felt was a guarantee of stability and sustainable growth. 

He was convinced that the future should be built on the human and technical culture 

developed over succeeding generations. The “Aventure Peugeot” association, which 

he created in 1982, illustrates his belief that history can inform the future. 

He was rigorous and demanding with himself and others, and his personal 

ethics commanded respect. While seemingly austere, he was profoundly human. 

The finest honor we can pay his memory is to resolutely pursue our commitment 

to growth, along the course that he himself set. 

PSA PEUGEOT CITROËN 3




Chairman of the Supervisory Board 

In 2002, for the fifth year in a row, 

PSA Peugeot Citroën met all its objectives 

for the year. Despite generally weaker 

automobile markets, especially in Europe 

and Latin America, the success of newlyintroduced 

Peugeot and Citroën models 

drove a 4.3% increase in worldwide unit 

sales, to 3.27 million vehicles. At 5% of 

Automobile Division sales and a consolidated 

€2,913 million, operating margin met the 

targets set in the scenario based on stable 

demand, clearly reflecting the progress 

achieved in every aspect of our business. 

This is the now-solid foundation on which 

we plan to build our long-term growth, 

based on model ranges responding to 

customer expectations and on the potential 

of our two marques. 

PSA Peugeot Citroën is now well on the 

road to sustainable growth in unit sales, 

with the goal of selling more than four 

million vehicles in 2006. This realistic 

objective is based on the growing strength 

of the Peugeot and Citroën marques, on 

the automotive expertise that underpins 

our products’ success, on the cooperation 

strategy that is accelerating the development 

of our model lineup, and on the significant 

room for expansion in Europe and the rest 

of the world. 

We are the only global carmaker whose 

growth is supported by two broadline 

marques, each with a worldwide presence 

and a clearly defined personality. Peugeot 

is currently one of the top four marques 

in Europe, with extensive operations in 

Eastern Europe and Latin America and a 

fast growing presence in Asia. In early 

2003, Citroën is enjoying strong growth 

in Western and Eastern Europe, which is 

bringing it closer to the four leaders. It is 

also well established in Latin America and 

is capitalizing on the surge in Chinese 

demand. Both marques will now be able 

to market much broader lineups and can 

count on a steadily widening base of loyal 

customers, offering them a deep reservoir 

of growth as well. Peugeot and Citroën 

models share similar, yet uniquely personal 

conceptual and stylistic identities. When 

combined with their staggered market 

launches, this means that the marques 

complement each other, enabling them 

to sustain strong, parallel growth trajectories 

despite flat demand. 

This seamless fit was illustrated by the 

October signature of the contracts securing 

the second phase of our development in 

China, whose principles were defined with 

our local partner and announced in late 

2001. Alongside the Citroën network, which 

4 PSA PEUGEOT CITROËN

M essage from the Chairmen 

is already well established nationwide, 

Peugeot is going to develop its own dealer 

base to market cars built on the shared 

platforms produced at the Dong Feng 

Peugeot Citroën plant in Wuhan. 

Our expertise lies in the ability to make 

each car a successful blend of style, 

innovation and useful technology. 

Innovating without shocking, renewing 

without imitating, changing without 

upsetting—these are the benefits of 

listening closely to customers and then 

offering them more, thanks to careful cost 

control, innovative, attractive models like 

the 307 and the C3, dramatic styling, and 

technological innovations like the HDI 

diesel engines and the particle filter. 

The strategy of targeted cooperative 

ventures, a potential that we leverage more 

than any other carmaker, is strengthening 

our growth momentum and production 

capacity by enabling us to capitalize on the 

engineering skills, financial contributions, 

technological capabilities and production 

volumes of each of our partners. These 

aspects are all illustrated by our cooperation 

with BMW, which was announced in July 

and confirmed in December 2002. The 

venture will enable us quickly to develop 

and produce one million small new 

gasoline engines a year, whose advanced 

technology will deliver better performance 

and lower fuel consumption. In addition to 

their impact on our offer, these cooperative 

ventures are an extraordinary opportunity 

for our teams to enhance their expertise 

and to broaden their vision of the 

automotive world. 

We have room to grow in Europe, where 

there is still a lot of potential for market 

share gains, as seen in our early 2003 sales 

performance, and in the rest of the world, 

where we are continuing to expand in 

markets where our European models 

correspond to local demand, such as in 

Central and Eastern Europe, the Middle 

East, Latin America and China. 

PSA Peugeot Citroën’s strategy is designed 

to respond to the expectations and 

aspirations of its customers, stockholders 

and employees alike. 

For customers, the strategy enables us to 

offer diversified model lines, each with an 

array of high-performance, innovative, 

safe, environmentally-friendly, affordable 

cars. Most importantly, it guarantees that 

we’ll always deliver more and better quality, 

so that we deserve the trust our marques 

inspire in our loyal customers. That’s our 

priority today, and here too, we intend 

to strengthen our position among the 

industry leaders. 

For stockholders, the strategy provides a 

clear, medium-term view of the future of 

the company in which they have invested, 

as well as the security they want for their 

investment and the steady growth they 

expect in their dividends, which has been 

the case for the past five years. Quality in 

this area is also a priority—in particular, 

the quality and transparency of the financial 

and strategic information that we owe to 

everyone who invests in our stock. 

Implementation of this strategy is driven 

entirely by the skills and commitment of 

our employees across the organization. 

In return, it enables the Group to deploy 

an active hiring policy and to give every 

employee around the world an opportunity 

for professional fulfillment, an attractive 

compensation package, directly linked to 

corporate results, and a comprehensive, 

participatory retirement system. 

Much is still uncertain about 2003, but 

PSA Peugeot Citroën intends to stay 

its course, focused on the reality of its 

operational objectives, and to continue 

building its future on a clear foundation. 




S upervisory Board Report 

Stricken and saddened by the death of its Chairman, the Supervisory Board 

wholeheartedly shares the sentiments expressed in the tribute above. Pierre Peugeot 

was imbued with our Group’s history and was directly involved in leading the 

major events that have shaped it over the past forty years. He was deeply 

attached to the humanistic and technical values that he constantly wanted to 

preserve and instill. On the Board, he pursued his priority objective of preparing 

for the future and creating the conditions that would secure the Group’s long-term 

sustainability and growth, while protecting its independence and identity. He 

passed away at the end of a year during which PSA Peugeot Citroën strengthened 

its position as Europe’s second largest carmaker and narrowed the gap with the 

market leader. 

This sales performance was led by the lineups of our two marques and supported 

by a large number of launches during the year. The growth enabled full utilization 

of production capacity and improved profitability. The Managing Board and all Group 

employees are to be commended for their critical role in achieving this successful 

new phase in our development. 

The Supervisory Board was regularly informed of the Group’s business activities and 

their financial results. 

The Finance Committee, created by the Board last autumn, examined the financial 

statements for the year and met with the Chairman of the Managing Board and 

the Chief Financial Officer to discuss the financial situation and, more generally, 

the Group’s financial strategy. In line with the Committee’s opinion, the Board has 

no matters to bring to your attention concerning the financial statements submitted 

for your approval. 

The Strategy Committee met to review issues of importance for the future, notably 

the different cooperative manufacturing ventures and the medium/long-term 

6 

PSA PEUGEOT CITROËN - SUPERVISORY BOARD REPORT

plan defined by the Managing Board. As every year, the Compensation Committee 

finalized the recommended compensation for the Managing Board and submitted 

it to the Supervisory Board for approval. 

The Supervisory Board examined the Managing Board’s report and has no matters 

to bring to your attention concerning it. As regards the resolutions submitted for 

your approval, the Board has the following comments: 

The proposed dividend amounts to €1.35 per share, an increase of 17.4% from 

the previous year. It reflects the 9.8% growth in operating margin. Payout amounts 

to 20.7% of consolidated net income, versus 17.6% last year. 

Thierry Peugeot was appointed to the Supervisory Board to replace Pierre Peugeot 

for the remainder of his term, which runs until the Annual Stockholders’ Meeting 

to be called in 2004 to approve the accounts for the year ended December 31, 

2003. You are invited to ratify this appointment. 

The financial resolutions concern the renewal of authorizations that have expired 

and that have been updated with only minor changes. The authorizations to buy 

back shares and to reduce issued capital through the cancellation of shares renew 

the same authorizations as previously. Their use will depend on market opportunities 

and the net financial position of the manufacturing and sales companies. 

Concerning the future, the Board shares the Managing Board’s confidence in the Group’s 

ability to drive further growth in sales of the two marques and in the Group’s earnings. 

In the very short term, the events in the Middle East could have an impact on demand 

but no one can measure how much or for how long. The Supervisory Board nevertheless 

believes that PSA Peugeot Citroën has the products and resources to weather a 

temporary downturn in the economy. 

PSA PEUGEOT CITROËN - SUPERVISORY BOARD REPORT 7


Report 

8 

PSA PEUGEOT CITROËN - MANAGING BOARD REPORT

10 

Growth Strategy 

16 

Corporate Governance 

28 

Business Review 

60 

Corporate Policies 

120 

96 

Management’s Discussion 

and Analysis 

Statistics 

PSA PEUGEOT CITROËN - MANAGING BOARD REPORT 9

10 



12 

• One Group, two marques 

12 

• A long-term vision of the future 

13 

• Human resources 

13 

• Sustainable development 

14 

• Costs, platforms and cooperative ventures 

15 

• A focus on profitability 

15 

• Outlook for 2003 


ONE GROUP, TWO MARQUES 

PSA Peugeot Citroën is building its 

development on two strong broadline 

marques, each with a global presence and 

a clearly defined personality, as part of 

coordinated international strategies and 

an aligned product plan. The plan 

organizes a comprehensive model lineup 

for each marque, designed to support the 

consistency of each one’s conceptual and 

stylistic identity. It also defines a product 

launch schedule that ensures the steady 

renewal of the Group’s offer in each 

market segment. 

Both marques enjoy the independence 

needed to lead separate and often 

competitive strategies in the area of 

marketing, sales and, more generally, 

customer relations. On the other hand, 

the Automobile Division’s technological, 

manufacturing, administrative and 

financial structures have been combined 

into a single unit to create greater 

efficiency and economies of scale. 

In addition to its core business of making 

automobiles, PSA Peugeot Citroën is 

involved in three other major activities: 

financing for the two marques’ dealers 

and customers, transportation and 

logistics, and the design and manufacture 

of automotive components and systems. 

Banque PSA Finance finances new vehicle 

and replacement part inventory for dealers 

and offers a comprehensive array of 

financing and related services for Peugeot 

and Citroën carbuyers. It operates in 

thirteen countries, corresponding to the 

two marques’ leading markets, and plays 

a key role in the Group’s strategic vision. 

Gefco is France’s second largest 

transportation and logistics company and 

ranks among the top ten in Europe. While 

continuing its traditional activities of 

supplying Group plants and distributing 

Peugeot and Citroën cars and replacement 

parts, Gefco represents a long-term 

growth business for the Group and 

is actively expanding its base of other 

customers. 

PSA Peugeot Citroën is also the majority 

stockholder of Faurecia, Europe’s second 

largest original automotive equipment 

manufacturer and a world leader in each 

of its businesses: vehicle interiors, exhaust 

systems and front-end modules. An 

independently managed company, Faurecia 

supplies not only the Group but also most 

of the world’s leading carmakers. 

A LONG-TERM VISION OF THE FUTURE 

PSA Peugeot Citroën is strategically 

focused on driving sustained, long-term 

12 



Corporate 

Governance 



Management’s 

Discussion 

and Analysis 

Statistics 

growth in Europe and around the world, 

based on satisfying customers, expanding 

the model lines, innovating and achieving 

excellence in core automotive technologies, 

enhancing employee capabilities, 

demonstrating flexibility, and carefully 

managing costs. 

The Group is firmly engaged in a 

sustainable sales dynamic, with the goal 

of selling four million vehicles and CKD 

units a year by 2006. Sales are expected to 

expand both in Western Europe, where 

the Group enjoys a considerable margin 

for improvement, particularly in countries 

where its market share is still below 

potential, and in the rest of the world, 

notably in Central and Eastern Europe, 

Latin America and China. 

PSA Peugeot Citroën’s strategy is shaped 

by the conviction that in an increasingly 

segmented and diversified market, a 

world-class automobile manufacturer’s 

future success depends on the ability to 

rapidly design and introduce a wide range 

of vehicles to satisfy an increasingly 

demanding and diverse customer base. 

Today’s customers want cars that are 

attractive, efficient, stylish, comfortable, 

innovative and fun to drive, and yet allow 

them to respond as responsible citizens 

to the challenges of road safety, air 

pollution, recycling and the quality of 

urban life. 

The Group is continuously developing 

innovative products that significantly 

enhance brand image and customer 

appeal, while sustaining its leadership 

positions in critical automotive 

technologies in the areas of environmental 

protection, safety and the driving 

experience. 

Diesel technology is now recognized as 

environmentally friendly, thanks in particular 

to the Group’s development of highpressure, 

direct-injection engines—for 

which the HDI engine sets the market 

standard—and its launch of the world’s 

first particle filter. The range of diesel 

engines using these technologies is being 

expanded, and recent developments have 

confirmed the Group’s leadership in this area. 

Based on its unique experience in electric 

vehicles, the Group is developing hybrid 

vehicle technologies and confirms that a 

range of hybrid vehicles will be introduced 

in Europe in 2004. 

HUMAN RESOURCES 

In every host country and at every level of 

the organization, the Group’s strategic 

vision demands skilled, motivated teams 

capable of generating and supporting 

sustained growth and international 

development. In response, continuous 

social dialogue is encouraged with 

employee representatives, so that all 

employees worldwide have the 

opportunity of participating in the 

Group’s strategy and financial results, in 

particular through profit-sharing systems 

and defined contribution retirement plans. 

Another priority concerns training to 

prepare employees in all countries for the 

fast changes in the Group’s business and 

markets. 

SUSTAINABLE DEVELOPMENT 

PSA Peugeot Citroën is committed to 

manufacturing vehicles whose features 

and performance help to safeguard the 

environment while delivering the styling, 

safety and drivability that customers want. 

Group research primarily focuses on 

reducing automotive CO2 emissions. Its 

findings and their application in series 

production are helping to efficiently 

attenuate the greenhouse effect. 

So that cars can be used safely for 

everyone, major programs are underway 

to guarantee the active and passive safety 

performance that customers deserve from 

the Peugeot and Citroën marques. 

Another PSA Peugeot Citroën commitment 

concerns the harmonious interaction of 

cars and the urban environment. 

11 


As a carmaker, the Group wants to 

contribute to the sustainable development 

of urban mobility without compromising 

either the quality of air or the quality of 

life in modern cities. 

COSTS, PLATFORMS AND COOPERATIVE 

VENTURES 

To help control costs, PSA Peugeot Citroën 

has deployed an ambitious platform 

strategy. Three new platforms introduced 

at the end of 2001 serve as the floorplans 

for all new vehicles, and common parts 

account for 60% of the production cost 

of vehicles made on the same platform. 

Gradually, each assembly plant in Europe 

is being organized around a single 

platform, with the exception of the facility 

in Vigo, Spain, which is dedicated to high 

vehicles. As it helps diversify the model 

portfolio, this strategy is also substantially 

reducing development costs, shortening 

time-to-market cycles and cutting process 

engineering outlays, production costs, and 

purchasing prices for parts and systems. 

In particular, it is now allowing the Group 

to control R&D budgets and stabilize 

capital expenditure, while shortening new 

model development cycles. In 2006, 90% 

of all models will be produced on the 

three new platforms. 

To speed growth and reduce costs beyond 

what is being done internally with the 

platforms, the Group implements strategic 

cooperation agreements involving specific, 

ongoing programs to share, with other 

independent carmakers, the development 

and production of components for which 

scale economies make sense. In this area, 

PSA Peugeot Citroën has for decades 

demonstrated an ability to forge 

technological and manufacturing 

agreements that respect each partner’s 

personality and independence. It has 

worked with Renault on V6 engines and 

automatic transmissions for roughly 30 

years, with Fiat on MPVs and light 

commercial vehicles for some 20 years and 

with the Ford Motor Company on diesel 

engines since 1998. The Ford alliance will 

enable PSA Peugeot Citroën to become 

the world’s leading manufacturer of diesel 

engines by 2004 and to benefit from 

related economies of scale. 

After the 2001 agreement with Toyota to 

develop and manufacture entry-level 

vehicles in a jointly-owned plant in the 

Czech Republic, a new cooperative 

venture was formed with BMW in 2002 

to jointly develop and produce a new 

family of small diesel engines, which will 

equip cars made by both partners. 

These agreements let the partners share 

development costs and pool skills and 

14 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

resources, thereby generating the scale 

economies a carmaker needs to be 

competitive. For PSA Peugeot Citroën, this 

type of alliance, in which each partner 

remains independent, is the best way to 

respond to the challenges and opportunities 

offered by market globalization and 

changing customer expectations. 

A FOCUS ON PROFITABILITY 

Return on capital employed has been 

selected as the relevant indicator for 

measuring the efficiency of manufacturing 

and marketing operations. Regardless of 

business conditions, the Group is 

committed to achieving an after-tax return 

on capital employed of at least 8.5%. This 

covers the cost of capital employed and 

corresponds to a 3% operating margin in 

the Automobile Division. 

remain flat or to contract by a slight 2%. 

Based on this projection, the Group is 

aiming to sustain its expansion in 2003, 

selling 3,350,000 cars worldwide, thanks 

to the growing sales of existing lines and 

the launch of several new models. 

The Automobile Division operating margin 

is targeted at between 5% and 5.2% 

of sales, and the consolidated operating 

margin at between €3.0 billion and 

€3.1 billion. 

However, the Group’s goal is to report an 

after-tax return of at least 13.5%, 

corresponding to a 6% operating margin 

in the Automobile Division. 

OUTLOOK FOR 2003 

Early 2003 has been shaped by serious 

geopolitical and economic uncertainty. 

Assuming that this uncertainty does not 

lead to a serious recession, the Group 

expects the European automobile market to 


16 


Corporate 

Governance 

18 

21 

22 

• The Supervisory Board 

• Executive Management 

• Auditors 

23 

• Investor Relations 

25 

• Annual Stockholders’ Meeting of May 28, 2003 


C orporate Governance 

Since 1972, Peugeot S.A. has been governed by a two-tier management structure, comprising 

a Managing Board, responsible for strategic and operational management, and a Supervisory 

Board, responsible for oversight and control. This separation is especially effective in addressing 

the concern for a balance of power between the executive and oversight functions, as 

reflected in the principles of good corporate governance. 

THE SUPERVISORY BOARD 

The Supervisory Board has twelve members 

plus two non-voting advisors, all of whom 

are elected by stockholders for six-year 

terms. The other functions exercised by 

Supervisory Board members and advisors 

are listed in the Appendices to the 

Managing Board Report, as well as the 

dates when they were elected and when 

their terms on the Board end. 

The Supervisory Board believes that its 

membership appropriately reflects the 

percentage of capital held by the 

Company’s main stockholder, the Peugeot 

family. The Board comprises three family 

members, Thierry Peugeot, Jean-Philippe 

Peugeot and Marie-Hélène Roncoroni, and 

two relatives, Pierre Banzet and Marc Friedel. 

Jean-Louis Dumas, Jean-Louis Masurel and 

Joseph F. Toot, Jr. have no ties with the 

Company, its Group or its management 

and contribute their international financial 

experience to the Board’s deliberations. 

Jean Boillot was Chairman of Automobiles 

Peugeot until 1990 and has since 

contributed to the Board his experience in 

automotive manufacturing and marketing. 

François Michelin, former legal manager 

of Compagnie Générale des Etablissements 

Michelin, contributes his experience in 

expansion in the global marketplace. 

Ernest-Antoine Seillière de Laborde, 

Chairman of Wendel Investissements, 

contributes his in-depth knowledge of 

manufacturing. Wendel is a major 

stockholder of Valeo, an automotive 

equipment manufacturer. Jean-Paul Parayre, 

former Chairman of the Peugeot S.A. 

Managing Board and Chairman of Vallourec, 

contributes his knowledge of cars and the 

Group’s operations. 

No member of the Board exercises any 

senior executive responsibilities or is a 

salaried employee of a Group company. 

• Board deliberations in 2002 

The Supervisory Board met five times in 

2002. Four meetings were devoted mainly 

to reviewing the Managing Board’s 

quarterly reports on the operations and 

results of the Group’s businesses, 

examining the consolidated and compagny 

financial statements, preparing the Annual 

Stockholders’ Meeting, discussing strategic 

transactions and authorizing commitments. 

The fifth meeting was held on December 

19 following the death of the Board’s 

Chairman, Pierre Peugeot. At the 

meeting, Thierry Peugeot was appointed 

to the Board and elected Chairman. In 

addition, Jean-Philippe Peugeot was 

appointed Vice Chairman of the Board, 

alongside Jean Boillot, and Chairman of 

the Strategy Committee, while the 

membership of all the Board committees 

was confirmed. 

18 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

FOCUS: THIERRY PEUGEOT 

Born on August 19, 1957, Thierry Peugeot is the oldest son of Pierre Peugeot. After working in the 

United States, he joined PSA Peugeot Citroën, where he successively served as regional South East 

Asia manager for Peugeot, Managing Director of Peugeot do Brasil, Managing Director of SLICA 

(Peugeot’s primary marketing company in France), Vice President, Citroën Large International Accounts, 

and Vice-President, Citroën Services and Spare Parts. His career has been shaped by extensive 

international experience, focused on the product, on sales and marketing, and on an in-depth 

understanding of the Peugeot and Citroën marques. 

Since his appointment to the Supervisory Board, Mr. Peugeot has relinquished all operational 

responsibilities in the Group. 

• Board procedures 

At its meeting on April 15, 2003 the 

Supervisory Board adopted internal rules 

setting out its stewardship responsibilities. 

The Supervisory Board is responsible for 

reviewing the Managing Board’s quarterly 

reports, as well as the annual financial 

statements of the Company and the Group 

and the Managing Board’s report to the 

Annual Stockholders’ Meeting. The internal 

rules also stipulate that the Supervisory 

Board is required to authorize, in advance, 

the following actions by the Managing Board 

as provided for in Article 9 of the bylaws: 

• Stockholder-approved share issues 

(whether paid up in cash or by capitalizing 

retained earnings) and capital reductions. 

• Stockholder-approved issues of ordinary 

or convertible bonds. 

• The drafting of any merger agreements 

or agreements for the sale of a business. 

• The signature or termination of any 

manufacturing and sales agreements 

representing a future commitment for 

Peugeot S.A., with companies whose 

corporate purpose is similar or related to 

that of Peugeot S.A., and generally the 

execution of any major transaction which 

substantially alters the business or financial 

structure of the Company or the Group. 

Certain other actions exceeding financial 

limits set by the Supervisory Board may 

be carried out only with the unanimous 

backing of all the members of the Managing 

Board or, failing that, with the prior 

authorization of the Supervisory Board. 

These include the purchase or sale for cash 

or for shares of any building and business 

rights used by Peugeot S.A., involving an 

amount in excess of €50 million, the 

purchase or sale of any equity interest in 

any other company directly or indirectly 

representing an immediate or deferred 

investment, expense, credit guarantee or 

seller's warranty involving an amount in 

excess of €50 million, and any borrowings 

by Peugeot S.A. other than in the form of 

bonds, involving an amount in excess of 

€100 million. 

The internal rules describe the information 

to be made available to the Supervisory 

Board, the process to be followed to 

determine the issues to be discussed at 

Supervisory Board meetings, the terms of 

reference of each Board committee as well 

as the obligations of Supervisory Board 

members, especially those arising from 

their constant access to insider information. 

• Supervisory Board committees 

The Supervisory Board has created three 

specialized committees: the Strategy 

Committee, the Compensation and 

Appointments Committee and the 

Finance Committee. 



Created in 1998, the Strategy Committee 

had seven members at year-end 2002: 

Jean-Philippe Peugeot (Chairman), Jean 

Boillot, Jean-Louis Dumas, François Michelin, 

Jean-Paul Parayre, Thierry Peugeot and 

Ernest-Antoine Seillière de Laborde. It deals 

with issues relating to the Group’s long-term 

future and its major strategic orientations. 

It issues opinions and makes proposals 

and recommendations to the Supervisory 

Board to prepare for the review of strategic 

projects, while tracking significant 

transactions already underway. In particular, 

the Strategy Committee meets whenever 

a project likely to engage the Company’s 

future or to substantially modify the scope 

of business or financial structure of the 

Company or the Group is submitted to the 

Board’s prior approval. 

The Strategy Committee met twice in 

2002, when in particular, it reviewed the 

operation of the Group’s cooperative 

ventures with other carmakers, as well 

as the medium-term outlook for the 

Automobile Division. 

The Compensation and Appointments 

Committee. Created in 1998, the 

Compensation Committee’s duties were 

broadened on February 11, 2003 to include 

preparing the Board’s decisions concerning 

the appointment of new members and 

members of the Managing Board. At yearend, 

it comprised Thierry Peugeot 

(Chairman), François Michelin and Ernest- 

Antoine Seillière de Laborde. 

The committee makes recommendations 

to the Board concerning compensation for 

members of the Managing Board, the 

Supervisory Board and the Board 

committees, as well as the grant of any 

stock options to members of the 

Managing Board. It also prepares the 

procedure for selecting members of the 

Supervisory Board and Managing Board, 

determining the criteria to be used and 

recommending people for appointment 

or renewal. The Committee met once in 

2002 and again in February 2003 to 

prepare Supervisory Board decisions 

concerning the determination of fixed 

salaries and bonuses for members of the 

Managing Board. 

The Finance Committee, set up in 2002, 

has three members: Marc Friedel (Chairman), 

Jean-Louis Masurel and Marie-Hélène 

Roncoroni. It is responsible for informing 

the Board of its opinion on the parent 

company and consolidated accounts of 

Peugeot S.A. during the presentation of 

the interim and annual financial statements. 

It may be requested to review any project 

requiring prior approval by the Board, 

particularly in the case of corporate actions. 

The finance committee met for the first 

time on December 9 to examine the Group’s 

entire financing strategy and its financial 

management organization. It also met on 

February 4, 2003 to examine the procedures 

for closing the Group’s 2002 accounts 

before their presentation to the Supervisory 

Board on February 11, and again on April 

3, 2003 to review, among other issues, the 

Group’s current control procedures. 

• Compensation of Supervisory Board 

members 

Supervisory Board members and advisors 

are paid annual attendance fees in an 

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aggregate amount of €192,500 a year, 

distributed equally. The Chairman, Vice- 

Chairmen and Committee members also 

receive additional compensation voted by 

the Board under regulated agreements 

between directors. The amount paid to 

individual Board members and advisors 

is disclosed in the Appendices to the 

Managing Board Report. 

EXECUTIVE MANAGEMENT 

The Peugeot S.A. Managing Board has 

three members: Jean-Martin Folz, Chairman; 

Frédéric Saint-Geours, Chief Executive 

Officer of Automobiles Peugeot; and 

Claude Satinet, Chief Executive Officer of 

Automobiles Citroën. 

The nine-member Executive Committee is 

responsible for the executive management 

of the PSA Peugeot Citroën Group. At 

January 1, 2003, the Executive Committee 

was made up of the three members of the 

Managing Board, plus Yann Delabrière 

(Finance, Control and Performance), Gilles 

Michel (Platforms, Technical Affairs and 

Purchasing), Jean-Marc Nicolle (Group 

Strategy and Products), Robert Peugeot 

(Innovation and Quality), Roland Vardanega 

(Manufacturing and Components) and 

Jean-Luc Vergne (Employee Relations and 

Human Resources). It is supported by a Senior 

Management team, whose four members 

report directly to the Chairman of the 

Managing Board. They are Xavier Fels (External 

Relations), Jean-Louis Grégoire (Executive 

Development), Jean-Claude Hanus 

(Legal Affairs) and Liliane Lacourt 

(Corporate Communications). 

The Executive Committee and the Senior 

Management team meet on a weekly basis 

to discuss issues concerning the day-today 

management of the Group and the 

Automobile Division. Specific committees 

have been set up for each of the other 

businesses, which meet once a month to 

discuss issues related to the management 

of the business concerned. 

The day-to-day management of the 

Group is the responsibility of the Vice 

Presidents Committee made up of 

senior line executives. As of March 1, 

2003, the Vice Presidents Committee 

comprised 52 senior executives, as well as 

the members of the Executive Committee 

and the Senior Management team. It 

meets on a monthly basis. 

• Executive compensation 

The compensation paid to members of 

the Executive Committee, the Senior 

Management team and the Vice Presidents 

Committee is determined on a similar basis 

to that of all Group managers. It includes 

both a fixed salary and a variable bonus, 

based on the achievement of personal 

objectives and the Group’s operating 

margin and quality targets for the year. 

The operating margin target corresponds 

to the figure publicly announced at the 

beginning of each year. The target was 

€2.9 billion for 2002 and has been set at 

€3.1 billion for 2003. 

In 2002, the members of the Managing board 

were paid the following compensation: 

• Jean-Martin Folz: €1,904,765, of which 

53.74% as bonus. 

• Frédéric Saint-Geours: €810,825, of 

which 43.74% as bonus. 

• Claude Satinet: €809,825, of which 

43.76% as bonus. 

Aggregate compensation awarded to the 

members of the Executive Committee and 

the Senior Management team for 2002 

amounted to €7.8 million, of which the 

variable bonus accounted for 40%. The 

variable compensation awarded to members 

of the Vice Presidents Committee serving 

as of December 31, 2002 amounted to 28% 

of the total. 

• Stock options 

In 1999, 2000, 2001 and 2002, the members 

of the Managing Board, the Executive 

Committee, the Senior Management team 

and the Vice Presidents Committee were 

granted options to purchase existing 

shares of Peugeot S.A. stock, in accordance 

with the general principles underlying the 

four plans. 

The Managing Board, in full agreement 

with the Supervisory Board and in 

compliance with stockholder-approved 

limits, decided that starting in 2002, the 

benchmark price for options to purchase 

existing shares granted in a given year to 

executives or employees of the Company 

or related companies would be equal to 

the average of the opening share price 

during the 20 trading days following 

the publication of the Group’s first-half 

consolidated earnings, without any discount. 

On August 20, 2002, the Managing Board 

used the authorization granted by the 

Annual Stockholders’ Meeting of May 15, 

2002 to issue 860,100 options to purchase 

existing shares of Peugeot S.A. stock for 



€46.28 per share. Under this plan, the 

Supervisory Board granted 126,000 stock 

options to members of the Managing Board, 

as follows: Jean-Martin Folz 60,000 options, 

Frédéric Saint-Geours 33,000 options and 

Claude Satinet 33,000 options. 

As of December 31, 2002, members of the 

Managing Board, the Executive Committee 

and the Senior Management team held 

1,085,000 of the 2,830,800 options 

outstanding at that date. 

Details of stock option plans in effect at 

December 31, 2002, the aggregate number 

of options granted to the eleven employees 

other than corporate officers receiving the 

largest number of stock options under the 

2002 plan, and the number of options 

exercised in 2002 are presented in the 

Appendices to the Managing Board Report. 

Faurecia grants its own stock options. In 

2003, at its meeting to review the resolutions 

to be submitted to stockholder approval 

at the annual meeting, the Board of 

Directors agreed on the principle of 

eventually deciding to grant options to 

purchase new or existing shares of company 

stock. It also decided to no longer offer a 

discount to the average share price used 

to determine option prices. 

AUDITORS 

In accordance with French company law, 

the financial statements of Peugeot S.A. 

and the consolidated financial statements 

are audited by two firms of auditors. The 

two firms jointly audit all of the accounts 

and examine the processes used to prepare 

the financial statements, as well as the 

Group's internal control processes and 

procedures. The two statutory auditors, 

Coopers & Lybrand Audit SARL, member 

of PricewaterhouseCoopers, and Constantin 

Associés, member of Constantin, were 

appointed by stockholders at the Annual 

Meeting on June 2,1999, based on the 

recommendation of the Managing Board. 

The choice of auditors was made after an 

open bidding process. Their appointment 

expires at the Annual Stockholders’ Meeting 

to be called to approve the 2004 financial 

statements. 

Through the members of their networks 

in all the countries where the Group 

operates, PricewaterhouseCoopers and 

Constantin act as contractual auditors of all 

the Group’s fully consolidated subsidiaries, 

with the exception of the companies in the 

Faurecia sub-group. They therefore have 

access to the information required to audit 

the consolidated financial statements of the 

PSA Peugeot Citroën Group. 

The auditors of Faurecia, which is listed on 

the Euronext Paris market, are appointed by 

the Annual Meeting of Faurecia stockholders. 

The two firms of auditors, Coopers & Lybrand 

Audit, member of PricewaterhouseCoopers, 

and Ernst & Young Audit, member of Ernst 

& Young, were appointed by stockholders 

at the Annual Meeting on June 1, 2001, 

for a period expiring at the Annual 

Meeting to be called to approve the 2006 

accounts. 

The auditors of cooperative ventures set 

up with other automakers, which are 

accounted for by the equity method, are 

appointed by the venture partners. 

Following the internal reorganization of 

PricewaterhouseCoopers, Pricewaterhouse 

Coopers Audit will replace Coopers & 

Lybrand Audit for the remainder of its term. 

The total fees paid to the auditors in respect 

of 2002 amounted to €11.6 million, 

including €9.5 million for Pricewaterhouse 

Coopers, €1.1 million for Ernst & Young 

and €0.9 million for Constantin. In addition, 

members of the PricewaterhouseCoopers 

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network and the Ernst & Young network 

were paid €1.6 million and €0.5 million 

respectively for non-audit services, 

consisting mainly of legal and tax advice. 

INVESTOR RELATIONS 

• Stockholder Information 

PSA Peugeot Citroën is committed to 

providing clear, regular information to all 

individual and institutional stockholders, 

in France and abroad. It is constantly 

improving the effectiveness of all aspects 

of the investor relations process, including 

stockholder publications, other sources of 

investor information, and investor meetings 

and special events. 

All stockholders have access to the 

following sources of information: 

• The Annual Report, available in French 

and English. 

• The Interim Report, also available in 

French and English. 

• Press releases and financial notices. 

• The Stockholders’ Newsletter. 

• The Stockholders’ Guide. 

All of these publications are available online 

at www.psa-peugeot-citroen.com, which 

also displays the Peugeot S.A. share price 

in real time. 

To forge and maintain effective relations 

with investors, PSA Peugeot Citroën 

organizes a growing number of events for 

its stockholders and the entire financial 

community. Three major meetings are 

held for the presentation of interim 

earnings, the presentation of annual 

earnings and the Annual Stockholders’ 

Meeting. In addition, the Group regularly 

interacts with investors by inviting them 

to meetings or plant visits in Europe, the 

United States and Asia, and invites financial 

analysts to theme meetings to help 

improve their understanding of its business 

operations. The Group also participates in 

industry presentations by financial 

institutions active in the capital markets. 

Stockholders wishing to receive financial 

information on a regular basis may register 

at Company headquarters: 

Peugeot S.A. – Investor Relations 

75 avenue de la Grande Armée - 75116 Paris 

Phone: +33 (0) 1 40 66 37 60 

Fax: +33 (0) 1 40 66 51 99 

E-mail:communication.financiere@psa.fr 

• Share buyback programs 

PSA Peugeot Citroën believes buying back 

its own shares represents an attractive 

investment opportunity for both itself and 

its stockholders until such time as its 

strategic objectives are fully reflected in 

the share price. In addition, the Group has 

enough recurring cash flow from operations 

and cash holdings to carry out the 

buybacks while maintaining its capital 

expenditure commitment at €3 billion a 

year, in order to rapidly renew and extend 

its model lineups and support expansion 

in the global marketplace. 

As a result, the share buyback program 

launched in 1999 was pursued in 2002, 

when a net total of 12,231,422 Peugeot S.A. 

shares were bought back, at an average 

price of €45.42, under authorizations 

granted at the Annual Stockholders’ 

Meetings on May 16, 2001 (seventh 

resolution) and May 15, 2002 (seventh 

resolution). 

At December 31, 2002, Peugeot S.A. held 

15,208,709 shares of its own stock in 

treasury, of which 2,783,200 were 

allocated to stock option plans. 

• Capital Structure and Ownership 

The Company’s capital stock amounted 

to €259,109,146 at December 31, 2002, 

represented by 259,109,146 shares with a 

par value of €1.00 each. These figures 

were unchanged from the previous year. 

The interests held by the main stockholders 

identified by the Company are presented 

in the “Ownership Structure” table in the 

section entitled “Information About the 

Company’s Capital” in the Appendices to 

the Managing Board Report. 

In addition to the impact of the share 

cancellations on the percentage of voting 

rights held by each stockholder, these 

interests changed in 2002 when Société 

Générale reduced its interest to 0.92% of 

shares outstanding, corresponding to 

1.08% of the voting rights, from 3.13% 

of shares outstanding and 4.22% of the 

voting rights at December 31, 2001. 

The bylaws of Peugeot S.A. stipulate that 

any stockholder that acquires or raises its 

interest to 2% of the Company’s capital 

or raises or reduces its interest by any 

multiple of 1% in excess of the 2% threshold 



THE PEUGEOT S.A. SHARE 

The Peugeot S.A. share declined 18.62% in 2002, ending the year at €38.86 versus €47.75 on December 28, 2001. This compared with 

a 33.75% drop in the benchmark CAC 40 index and a 29.62% decline in the Dow Jones Euro Stoxx Auto index over the same period. 

2002 PRICE PERFORMANCE OF THE PEUGEOT S.A. SHARE VERSUS THE CAC 40 INDEX AND THE DJ EURO STOXX AUTO INDEX (in euros, base 100) 

2002 2003 

Source : Euronext 

MONTHLY HIGH AND LOW PRICES OF THE PEUGEOT S.A. SHARE OVER FIVE YEARS (in euros) 

1998 1999 2000 2001 2002 2003 

Source : Euronext 

AGENDA 

April 24, 2003 

May 28, 2003 

June 4, 2003 

July 24, 2003 

October 22, 2003 

First-quarter 2003 sales released 

Annual Stockholders’ Meeting 

2002 dividend paid 

Interim sales and earnings released 

Nine-month sales released 

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is required to notify the Company. In the 

case of non-disclosure, at the request of 

one or several stockholders together 

holding at least 5% of the capital, the 

undisclosed shares will be stripped of 

voting rights for a period of two years from 

the date on which the omission is remedied. 

There are no other bylaw clauses limiting 

voting rights. 

• Voting rights at Annual Meetings 

Each share carries one vote that may be 

cast at the Annual Stockholders’ Meeting. 

However, fully paid-up shares registered in 

the name of the same stockholder for at 

least four years carry double voting rights. 

The double voting rights system was 

maintained following the 1972 change in 

Peugeot S.A.’s governance structure, with 

double rights attached to shares held for 

at least two years. This period was 

increased to four years at an Extraordinary 

Stockholders’ Meeting on June 29, 1987. 

As of December 31, 2002, the 259,109,146 

outstanding Peugeot S.A. shares represented 

a total of 313,211,826 voting rights. 

Note that Peugeot S.A. shares held in 

treasury do not carry voting rights. 

ANNUAL STOCKHOLDERS’ MEETING 

OF MAY 28, 2003 

• Income appropriation 

In light of the consolidated results for 2002 

and the targets set for 2003, the Managing 

Board has again recommended an increase 

in the dividend, to €1.35 per share before 

tax credit, compared with €1.15 per share 

last year. Including the tax credit, the 2002 

amount represents total revenue of €2.025. 

Based on the number of shares outstanding 

at December 31, 2002, the 2002 dividend 

will total €350 million, for a payout ratio 

of 20.7% of consolidated net income. 

In compliance with article 47 of the Law 

of July 12, 1965, dividends paid in the last 

three years were as follows: 

• Financial authorizations 

At the Annual Stockholders’ Meeting, 

the Managing Board will seek six financial 

authorizations. 

The first, granted in the eighth resolution, 

concerns an authorization to buy back up 

to 25,000,000 Peugeot S.A. shares, or 

nearly 10% of total Peugeot S.A. shares 

outstanding. The Group intends to use 

the authorization to take advantage of price 

opportunities to buy back shares, within 

the specified limits and while maintaining 

control over its net financial position. 

The next three authorizations, granted in 

the ninth, tenth and eleventh resolutions, 

renew existing authorizations to issue new 

shares and securities conferring a right to 

acquire equity, with or without pre-emptive 

subscription rights, and, if necessary, while 

a public offer to acquire or exchange the 

Company’s shares is in progress. The shares 

issued under these authorizations may not 

have the effect of increasing the Company’s 

capital stock to more than a nominal 

€400,000,000, compared with a current 

€259,109,146. 

The fifth authorization, granted in 

the twelfth resolution, is submitted 

in compliance with the Employee 

Savings Act of February 19, 2001, 

as extended by the Social Modernization 

Act of January 2002, which requires limitedliability 

companies to authorize an 

employee share issue. 

1999 2000 2001 

Number of shares 273,056,760 282,559,146 255,409,004 

Dividend before tax credit 0.45 € 0.83 € 1.15 € 

Tax credit 0.23 € 0.42 € 0.58 € 

Total revenue per share 0.68 € 1.25 € 1.73 € 

The Managing Board recommends that 

stockholders vote against this resolution. 

The last authorization, granted in the 

thirteenth resolution, authorizes the 

Managing Board to cancel shares held 

in treasury, representing up to 10% of 

total Peugeot S.A. shares outstanding 

per 24-month period. Ultimately, the 

Company intends to cancel almost all of 

the shares acquired. 



C ORPORATE ETHICS 

In March 2003, PSA Peugeot Citroën adopted a Code of Ethics defining 

standards of conduct and behavior that have always guided its executives 

with the support of all employees. An Ethics Delegate has also been appointed. 

CODE OF ETHICS 

PSA Peugeot Citroën has built its business on 

the basis of values and standards of conduct 

and behavior applied by senior management 

and employees. They form the foundation of 

the trustworthy relationships that the Group 

nurtures with its customers, suppliers and 

stockholders, and that employees foster 

among themselves. 

The purpose of this Code of Ethics is to formally 

express these important shared values and 

standards, so that everyone can refer to them 

and comply with them in all circumstances. 

The Code of Ethics is not an exhaustive set of 

rules. But when combined with each person’s 

sense of responsibility and accountability, it 

provides a useful framework for every member 

of the corporate community and for all the 

Group’s partners. 

STANDARDS OF CONDUCT 

Compliance with the law 

In every aspect of their operations, 

PSA Peugeot Citroën member companies 

comply with applicable laws and regulations in 

the countries where they do business. They 

adhere to the international conventions of the 

International Labor Organization, notably those 

concerning worker rights, the abolition of 

forced labor and the elimination of child labor. 

They also observe international conventions 

against corruption of public officials. 

Honesty and transparency 

Group companies are fair and honest in their 

dealings with customers and suppliers, in 

a commitment to fostering sustainable, 

trustworthy relationships. 

PSA Peugeot Citroën provides stockholders 

with comprehensive, transparent information 

and gives a fair presentation of its business 

operations in its financial statements. 

Compliance with occupational health and 

safety rules 

PSA Peugeot Citroën member companies are 

committed to implementing active policies to 

prevent health and safety risks in the 

workplace and to monitoring their consistant 

application. They require that subcontractors 

working on their premises pay the same 

careful attention to these issues. 

Respect for worker rights 

PSA Peugeot Citroën member companies 

ensure that worker rights are respected. They 

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do not engage in discriminatory hiring or 

work practices of any kind. All employees 

are treated with dignity, and their privacy is 

always respected. 

Group companies pursue an active social 

dialogue with employee representatives and 

recognize the independence of labor unions 

and the right for more than one union to be 

represented. 

Environmental stewardship 

PSA Peugeot Citroën is engaged in a 

continuous process of improving its production 

facilities to make them safer for the 

environment. Performance is constantly 

monitored using reliable control systems. 

The Group is especially careful to ensure that 

its vehicles conform to the highest 

environmental standards, regardless of the 

country concerned, and is committed to 

developing and promoting innovative, 

technological solutions to enhance the ability 

to meet these standards. 

STANDARDS OF BEHAVIOR 

Employees of PSA Peugeot Citroën member 

companies perform their jobs with integrity 

and honesty in order to preserve trustworthy 

relationships with all the Group’s partners and 

to foster a sense of mutual support and unity 

among employees. 

Professional commitment 

Employees perform their jobs to the best of 

their ability and effectively help everyone 

comply with the Group’s standards of conduct 

in a spirit of mutual support. 

Protection of company property – 

Confidentiality 

Employees of PSA Peugeot Citroën member 

companies must not divulge confidential 

business information to outsiders or to other 

Group employees who are not authorized to 

have such information. Employees refrain from 

directly or indirectly using privileged information 

obtained in their jobs for personal gain. 

CONFLICTS OF INTERESTS 

Employees avoid any situation of conflict 

between the Group’s interests and the interests 

of themselves or their families or friends. 

In particular, employees refuse to acquire a 

financial interest in a supplier or customer, 

except in the case of listed shares purchased 

as part of the management of a securities 

portfolio, in compliance with rules against 

insider trading. 

Relations with customers and suppliers 

Employees act with integrity and honesty in 

their dealings with customers and suppliers, 

refraining from directly or indirectly soliciting 

gifts and refusing to accept gifts of any 

significant value. 

Political activities 

The Group does not contribute to any 

political parties. 

Employees exercising political activities do so 

on a personal basis, outside of working hours 

and not on Group premises, and without 

mentioning that they work for the Group. 

Should an employee have any difficulty in 

interpreting these standards of conduct and 

behavior, or have any doubts about how they 

are to be applied in a given situation, they 

should contact their manager or the Ethics 

Delegate appointed by the Managing Board. 


28 


Business 

Review 

30 

34 

44 

48 

52 

56 

Operating Highlights 

The Automobile Division 

Finance Companies 

Transportation and Logistics 

Automotive Equipment 

Other Businesses 



30 



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February 

2002 

March 

2002 

20 millionth engine rolls off the 

Trémery line 

Since August 1979, the plant in Eastern 

France has produced 14,000,300 diesel 

engines and 5,999,700 gasoline engines. 

Market launch of 

the Peugeot 206 SW 

Designed to appeal to a young 

clientele, the Peugeot 206 SW 

combines the compactness of a city 

sedan and the charm and appeal of 

the 206. 

March 

2002 

Inauguration of the new engine plant 

in Porto Real, Brazil 

The plant, located in the Porto Real 

production center, has begun 

manufacturing the 1.6-liter 16V gasoline 

engine, the Group’s latest generation 

powerplant, introduced in 2001. 

February 

2002 

April 

2002 


the Peugeot 307 SW 

The 307 SW offers unrivalled modularity 

and a new approach to automobile 

interiors, with a panoramic glass roof, 

while retaining the style, road handling 

and driving pleasure of a sedan. 


the Citroën C3 

The new C3’s strong, original 

personality and elegant styling drives 

strong sales in the months following 

its market introduction. 

PSA PEUGEOT CITROËN - MANAGING BOARD REPORT 25 31


April 10, 

2002 

June 27, 

2002 

Cornerstone laid on joint 

PSA Peugeot Citroën/Toyota 

plant in the Czech Republic 

Located in Kolin, the new Toyota Peugeot 

Citroën Automobile Czech (TPCA) plant 

will be able to produce 300,000 cars 

a year based on the same platform. 

Beginning in 2005, it will manufacture 

three Peugeot, Citroën 

and Toyota compacts and employ some 

3,000 people. 

June 

2002 

Cornerstone laid on the future 

PSA Peugeot Citroën Design Center 

Located on the grounds of the 

Group’s engineering center in 

Vélizy, south of Paris, the new 

facility will be a creative incubator, 

where, beginning in 2004, 800 

people will be creating future 

Peugeot and Citroën models. 

Citroën Elysée introduced in China 

The locally designed notchback 

has enjoyed strong sales since launch 

and is now positioned as the marque’s 

new flagship model in China. 

July 23, 

2002 

June 

2002 

Market launches of the Peugeot 807 

and Citroën C8 

The two new executive MPVs combine 

driving pleasure and plush, feature-rich 

interiors. 

Cooperative venture announced with BMW 

to jointly develop and manufacture 

a new family of small gasoline engines 

Produced at Douvrin in northern France 

beginning in late 2005, the new powerplants 

will equip low and mid-range Peugeot and 

Citroën vehicles and future BMW models. 

Eventually, a million vehicles 

will be powered by the new engines. 

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October 25, 

2002 

November 18, 

2002 

Agreement signed with Dong Feng 

Motors to implement the next phase 

in the Group’s development in China 

In partnership with Dong Feng Motors, 

this second phase will drive strong 

growth in Group production and sales 

in China, through the launch of new 

Citroën models and the local 

introduction of the Peugeot marque. 

November 12, 

2002 

Peugeot wins World Rally 

Championship 

For the third year in a row, Peugeot 

wins the manufacturer’s title of 

the World Rally Championship, 

and Marcus Grönholm, driving 

a Peugeot 206 WRC, takes 

his second driver’s championship. 

3 millionth Peugeot 206 assembled 

in Mulhouse 

Four years after launch, production 

of the Peugeot 206 topped 

three million units. Sold in more than 

121 countries worldwide, the model 

was Europe’s best-selling car in both 

2001 and 2002. 

October 28, 

2002 

December 1, 

2002 

A new assembly plant to be built in Europe 

Citroën wins both French and 

Spanish Rally Championships 

To extend the Group’s manufacturing base after 2006, a new assembly 

plant will be built in Trnava, Slovakia. Dedicated to the production of small, 

platform-1 vehicles, the plant will have annual capacity of 300,000 cars 

and will employ 3,500 people. 

Citroën wins both the marque and driver titles 

in the French Rally Championship, with the 

Saxo Super 1600, and in the Spanish Rally 

Championship with the Citroën Xsara WRC. 


T he Automobile 

Division 

34 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

SLIGHTLY HIGHER GLOBAL DEMAND 

In 2002, the world automobile market 

edged up by 0.3% to 55.8 million 

passenger cars and light commercial 

vehicles. The two largest markets, Western 

Europe and North America, both declined, 

with Europe contracting 3.0% to 

16,191,800 new vehicle registrations and 

North America easing 1.1% to 18,547,700 

new vehicle registrations. 

Markets in Asia recorded an aggregate 

gain of 8.3%. In particular, demand in China 

continued its steep upward trend, as car 

sales surged 53% to more than 1,098,200 

units. In Japan, the market shrank for the 

second year in a row, ending 2002 down 

1.9% at 5,704,800 registrations. 

Demand in South America declined by an 

overall 6.7%, with the Argentine market 

falling 53% under the impact of persistent 

recession, and the Brazilian market 

retreating 7.0%. Auto markets in Central 

Europe and Turkey continued to weaken, 

losing a further 3.0% after declining 

sharply in 2001. 

WORLDWIDE SALES EXCEED TARGETS 

PSA Peugeot Citroën’s worldwide sales 

rose 4.3% during the year to 3,267,500 

units, from 3,132,800 units in 2001, 

thereby exceeding the 2002 target of 

3,250,000 units. The year’s increase 

means that sales have grown by 55% in 

the past five years. 

Growth was driven by the popularity of 

Citroën and Peugeot models and the 

performance of the two marques, which 

both set new sales records in 2002. 

Peugeot sold 1,955,400 cars and light 

commercial vehicles, an increase of 3.0% 

from 2001, while Citroën gained 6.4% to 

1,312,100 units. 

These unit sales gave the Group a 5.8% 

share of the global market. 


T he Automobile Division 

GROWTH IN PSA PEUGEOT CITROËN’S SHARE OF THE WESTERN 

EUROPEAN PASSENGER CAR AND LIGHT COMMERCIAL VEHICLE 

MARKET, 1998-2002 

16 

15 

14 

13 

12 

11 

10 

1998 1999 2000 2001 2002 

GERMANY 

In 2002, sustained restructuring of 

the dealership networks helped 

drive further strong growth in 

Germany. In a market down 2.9%, 

Group registrations rose 8.8% to 

186,400 cars and light commercial 

vehicles, thereby raising market 

share to 5.4% from 4.8% the 

year before. The environmental 

performance of Group vehicles, in 

particular the new diesel-powered 

models equipped with the particle 

filter, offers a powerful marketing 

argument, which enhances the 

appeal of Peugeot and Citroën 

concepts, styling and road handling. 

MARKET SHARE GAINS IN 

WESTERN EUROPE 

In a Western European market down by 

3.0%, registrations of PSA Peugeot Citroën 

cars and light commercial vehicles rose 

0.3% to 2,511,000 units, lifting market 

share by half a point to 15.5% in the 

17-country Europe. 

The Group was Europe’s leading producer 

of light commercial vehicles, with 348,000 

registrations and a market share that held 

steady at 19.3%. It was also once again 

Europe’s second largest manufacturer of 

passenger cars, increasing registrations by 

1.1% to 2,163,000 units, and widening 

market share to 15.0% from 14.5% the 

year before. 

In all, PSA Peugeot Citroën strengthened 

its position as Europe’s second largest 

carmaker, ranking number one in France, 

Spain, Belgium, Portugal and Denmark, 

and second in the United Kingdom, the 

Netherlands and Greece. 

In the 17-country Western European 

market, the Group’s market share now 

exceeds 10% in 11 countries and totals 

between 8.7% and 10% in five others. It 

is therefore approaching the target of 

holding at least a 10% share of each 

European market by 2004. The only 

exception is Germany, where the goal is 

6.5% and the 2002 figure was 5.4%. 

UP SHARPLY IN 2002, UNIT SALES 

OUTSIDE WESTERN EUROPE NOW 

ACCOUNT FOR MORE THAN 20% OF 

THE CONSOLIDATED TOTAL 

Sales outside Western Europe rose 21.0% 

to 710,500 vehicles in 2002, comprising 

ITALY 

Citroën enjoyed a surge in sales in Italy, where registrations rose 21.0% in a passenger 

car and light commercial vehicle market that declined by 4.5%. Elected automobile 

piu bella del mondo, the C3 played a key role in this successful performance, with 

28,400 registrations during the year. As well, unit sales of the Peugeot 307 tripled 

during the year, helping to increase Group market share to 9.7% from 7.9% in 2001. 

36 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

POLAND 

PSA Peugeot Citroën began operating in Poland only recently, with Peugeot and Citroën subsidiaries 

being created in 1992 and 1994, respectively. However, the marques quickly set up strong, assertive, 

highly skilled dealership networks and soon attracted the interest of Polish carbuyers. The latter are 

highly sensitive to the latest models, with expectations similar to those of other European consumers. 

This has helped drive very strong sales of the Peugeot 206, Peugeot 307 and Citroën Xsara. Market 

share, which rose to 9.1% in 2001 from 4.8% in 1998, further widened to 11.9% in 2002, making 

the Group Poland’s fourth-ranked carmaker. 

493,600 Peugeots and 216,900 Citroëns. 

For the first time, they accounted for more 

than 20% of total unit sales, at an 

aggregate 21.7% compared with 18.8% 

the year before. 

In South America, sales increased by 1.3% 

to 109,300 units despite difficult economic 

conditions. In Brazil, the Porto Real plant 

inaugurated in 2001 continued to ramp 

up production of the Peugeot 206 and 

Citroën Picasso. Group sales surged 

33.7% in a market down by 7%, raising 

market share to 4.6% from 3.2% the year 

before. The economic crisis in Argentina 

caused demand to collapse 53%, dragging 

down local Group sales by a similar 

percentage. As a result market share held 

steady at 18%. 

In Mexico, after setting up an import 

subsidiary in 2001, Peugeot broadened 

its local model lineup, expanded its 

dealership network and now serves 1% 

of the market. 

In the Central European markets of Poland, 

Hungary, the Czech Republic, Slovenia, 

Croatia and Slovakia, overall demand 

eased by a slight 3% after two years of 

steep declines. Led by the introduction of 

strong dealership networks, PSA Peugeot 

Citroën enjoyed another year of growth, 

with sales gaining 21.1% to 132,900 

units. Over the past five years, market 

share has widened from 5.1% to 12.6%, 

nearing the goal of a figure equivalent to 

the Group’s current share in Western Europe. 

In China, sales climbed 57.3% to 85,500 

units, of which 84,400 were Citroëns. 

Growth was led by the launch of the 

Citroën Xsara Picasso and the new Citroën 

Elysée, both locally produced. In October, 

the final contracts were signed with Dong 

Feng Motors to implement the agreements 

signed with the company in November 

2001. These contracts will enable the 

start-up of the second phase in the 

Group’s development in China, which will 

involve both marques and lead to a sharp 

SWEDEN 

In Sweden, where one in three cars sold is an executive model, the market is 

dominated by national marques. Nevertheless, in 2002, Peugeot and Citroën 

improved their aggregate market share by 2.2 points, to 9.7% from 7.5% in 2001. 

The gain was led by the sustained introduction of exciting, innovative models 

delivering the comfort and styling Swedish carbuyers expect. Enjoying strong market 

debuts were the Peugeot 206, Peugeot 307 and Citroën C5 with, respectively, 5,700, 

5,600 and 3,600 registrations. 

increase in their output and sales. Six new 

Peugeot and Citroën models will be 

manufactured locally and brought to 

market between 2002 and 2004, when 

Peugeot will begin marketing its first 

model produced in China. Designed 

especially for the local market, it will be built 

on the same platform as the Peugeot 307. 

Citroën, which already has an extensive 

network of 460 dealers and served nearly 

8% of the market at year-end 2002, will 

maintain its sales momentum. The 

objective in China is to sell 150,000 

vehicles in 2004, with sales eventually 

rising to 300,000 units. 

Demand for imported cars was flat In 

Japan, but PSA Peugeot Citroën maintained 

its momentum, with sales increasing 

18.1% to 16,900 vehicles including 

15,300 Peugeots during the year. 

Citroën’s import subsidiary began 

operations in April. 

In Iran, CKD billings increased sharply to 

156,500 units from 102,600 in 2001. 

GROWTH LED BY SUCCESSFUL MODELS 

• Peugeot 206 

Supported by the SW version, sales of the 

Peugeot 206 continued to rise in 2002, 

gaining 0.4% to 832,000 units. It was 

again the year’s best-selling car in Western 

Europe, and more than three million units 

have been produced since its rollout in 



1998. Sustained sales momentum was also 

led by the 206 CC, whose 89,000 units 

sold made it the European leader in the 

coupe and convertible segment. 

• Citroën Xsara Picasso 

Strengthened by growing sales in 

international markets—particularly China 

and Brazil, where it has been locally 

manufactured since 2001—the Citroën 

Xsara Picasso continued to enjoy firm 

demand during the year, with sales rising 

9% to 251,000 units. Three years after 

launch, more than 625,000 units have 

already been sold worldwide. 

• Citroën C5 

The C5 contributed significantly to the 

growth in Citroën sales, with 160,900 

units sold. 

• Peugeot 307 

Voted European Car of the Year 2002, the 

Peugeot 307 has won many awards since 

its market launch in May 2001. Some 

543,200 units were sold in 2002, 

exceeding the target of 500,000. The 

lineup was expanded in March with the 

highly popular SW version, which 

accounted for more than 15% of the year’s 

sales. The SW offers a new approach to 

automobile interiors, with a fully modular 

passenger compartment and a panoramic, 

heat-absorbing glass roof that provides 

exceptional luminosity. 

• Citroën C3 

For Citroën, the highlight of 2002 was the 

successful introduction of the C3, which 

enabled the marque to extend its lineup 

to a younger clientele. Launched in April, 

the C3 sold 181,800 units during the year, 

exceeding its target of 150,000. The strong 

momentum received a further boost a few 

months after launch, when the model was 

offered with the new 92bhp 1.4-liter HDI 

16V powerplant and the robotized 

SensoDrive manual transmission. The C3 

has also won numerous awards, including 

the prize for Japan’s best import model. 

Citroën expects to sell 330,000 C3s over 

the full year. 

• Citroën Berlingo/Peugeot Partner 

Still well positioned, the Citroën Berlingo 

and Peugeot Partner sold 283,500 units in 

2002. Buyers responded favorably to the 

end-of-the-year restyling, which offered a 

completely redesigned front end, new 

interior arrangements, and enhanced 

comfort and safety features. 

• Peugeot 807/Citroën C8 

Carbuyers also saluted the market launch 

of the new Peugeot 807 and Citroën C8 

executive multi-purpose vehicles, purchasing 

21,300 units as they were gradually 

introduced in European markets in the 

second half. The models offer a whole 

new dimension in safety, driving pleasure, 

interior comfort and elegant styling. 

CITROËN ELYSEE LAUNCHED 

IN CHINA 

Citroën’s new flagship model, the 

Elysée, is a notchback designed in 

China based on the experience of the 

ZX Fukang and the marque’s latest 

developments. Unveiled at the 2002 

Beijing Auto Show, the model 

enjoyed strong sales right from its 

June 2002 launch and quickly gained 

4% of the market. It has expanded 

the Citroën lineup, which had 

already been enhanced in 2001 with 

the local production of the Xsara 

Picasso, a highly innovative car in 

the Chinese market. 

38 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

THE GROUP’S PRODUCT STRATEGY 

PSA Peugeot Citroën’s strategy is product-driven. As such, it is supported by frequent new model 

introductions that enable the Peugeot and Citroën marques to rapidly renew their core lineups and 

to continually have a large number of models positioned early on the growth curve. In addition, the 

marques are constantly developing new, architecturally and technologically innovative automobile 

concepts, boldly styled and capable of attracting new customers. Compelling examples of this vision 

include the Peugeot 206CC, the Citroën C3 Pluriel and the Peugeot 307 SW. 

To drive the harmonious development of Peugeot, Citroën and their model lineups in each of the 

Group’s market segments, the two marques stagger their launches in a given segment. This ongoing, 

balanced product development process enables the marques to attract an ever expanding customer base, 

continually refresh their offer and attenuate the impact of model life cycles on consolidated results. 

STRONG PEUGEOT 307 SW 

SALES PROMPT FOURTH 

SHIFT AT SOCHAUX PLANT 

In response to stronger-thanexpected 

sales of the new SW 

version of the Peugeot 307, the 

Sochaux plant introduced a fourth 

weekend shift in October 2002. 

Every week, the new team builds an 

additional 1,400 Peugeot 307s, 

raising total weekly output to 12,500 

units. The increase will enable the 

marque to meet demand and 

achieve its target of selling 600,000 

units in 2003. 

• Diesel engines and the particle filter 

European demand for diesel-powered cars 

and light commercial vehicles continued 

its strong upward trend in 2002. In 

response, the Group’s high-pressure, direct 

injection (HDI) diesel powerplants were 

extended across almost the entire Peugeot 

and Citroën lineup. More than 1.3 million 

HDI-powered vehicles were sold during 

the year, a 30% increase over 2001. In all, 

diesels accounted for 49% of consolidated 

sales, while registrations of diesel-powered 

Peugeots and Citroëns rose 9.5% in Europe, 

for a combined regional market share of 

nearly 19%. PSA Peugeot Citroën remains 

the only carmaker to equip its diesel 

engines with a particle filter, an innovation 

that makes them much more environmentally 

friendly. The particle filter is now available 

on the Citroën C5 and C8 and the Peugeot 

307, 406, 607 and 807. By year-end 2002, 

nearly 400,000 Group vehicles had been 

fitted with the new technology. 

THE PLATFORM STRATEGY 

The Group pursued its platform strategy 

in 2002, with the objective of having 

common parts account for 60% of the 

cost of vehicles made on the same 

platform. The strategy is helping to lower 

production costs, reduce unit research 

and development expenses, keep capital 

expenditure under control and shorten 

time-to-market cycles. It entered a new 

phase in 2002, when all three new 

platforms were successfully deployed, but 

nearly half of the resulting economic 

impact has yet to be felt. As new models 

based on the common platforms are 

introduced, the Group expects to generate 

some €800 million in additional savings 

between 2002 and 2006. 

A MANUFACTURING BASE SIZED FOR 

GROWTH 

PSA Peugeot Citroën has world-class 

manufacturing facilities, whose capacity 

was extensively used in 2002. According 

to the Harbour index, which measures a 

plant’s utilization based on hourly capacity, 

an average 16-hour workday, and 235 

workdays a year, assembly capacity 

utilization in Western Europe has risen 

steadily, from 76% in 1998 to 117% in 

2002. The latest rate reflects the growth 

in unit output as plant operating hours 

have been extended with new production 

schedules. All of the European plants are 

now working partially or entirely in three 

or four shifts, while the non-stop 

production system, without any summer 

shutdown, remained in effect at the 

Mulhouse, Ryton and Vigo plants. 

Assertively engaged in a long-term growth 

dynamic, the Group intends to produce 

more than four million vehicles in 2006, 

after increasing sales by 55% from 1998 

to 2002. To secure an optimum balance 

between high capacity utilization and the 

resulting technical, financial and laborrelated 

constraints, the Group has decided 

to build a new assembly plant in Trnava, 



THE NEW PLANT IN 

TRNAVA, SLOVAKIA 

The site chosen for the new 

assembly plant in Trnava, Slovakia, 

scheduled to begin operations in 

2006, offers a number of important 

advantages. It is located in the 

center of Europe, with easy access 

by rail, highway and navigable 

waterway, and a supplier park can 

to be created nearby. The region 

has a long manufacturing tradition 

and the local labor force is plentiful 

and well-educated. Lastly, the site 

is positioned near major markets in 

which the Group is rapidly 

expanding. 

Slovakia. Dedicated to small platform-1 

vehicles and scheduled to come on stream 

in 2006, the new unit will employ 3,500 

people and be able to build 300,000 cars 

a year. The total investment will amount 

to €700 million. 

The Trnava plant will position production 

capacity closer to markets where the 

Group is rapidly strengthening its presence. 

The two marques already hold 12.6% of 

the market in the six Central European 

countries of Croatia, Hungary, Poland, the 

Czech Republic, Slovakia and Slovenia, 

compared with 5.1% five years ago. The 

choice of Slovakia will also reduce logistics 

costs for vehicles sold in the region, while 

enabling the Group to benefit from Eastern 

European production costs. 

The new plant will expand the Group’s 

manufacturing base, which comprises 

nine assembly plants in Western Europe, 

other facilities in Latin America and China, 

and plants operated in cooperation with 

other carmakers. 

After the strong growth of the past five 

years, PSA Peugeot Citroën has embarked 

on a program to enhance the efficiency of 

its manufacturing facilities. This objective 

is being pursued both through the 

sustained deployment of the platform 

strategy and through action plans focused 

on two new improvement drivers. The first 

is a series of measures, already underway, 

to improve manufacturing efficiency based 

on 1) the Convergence Plan, which aims to 

align every plant with global best practices; 

2) the modernization of industrial processes 

and logistics, for which the capital budget 

is €1 billion a year; and 3) the improvement 

in general plant organization, with an 

emphasis on maintenance and procurement 

processes. The second action plan is driving 

significant progress in the assemblability 

of new models and in working conditions. 

Easier parts assembly, fewer components 

and enhanced workstation ergonomics 

will lead to major improvements in 

manufacturing performance. 

Together, these two new action plans are 

expected to generate additional savings 

of around €350 million a year by 2006. 

Capital expenditure committed by the 

Automobile Division totalled €2,357 million 

in 2002, versus €2,398 million in 2001. 

Outlays corresponded primarily to the startup 

of production of the restyled Citroën 

Berlingo and Peugeot Partner, the Peugeot 

307 CC, the Citroën C3 Pluriel, the Citroën 

C3 in Brazil and a new model at the Rennes 

plant. They also concerned the ongoing 

construction of the new PSA Peugeot 

Citroën Design Center in Vélizy, near Paris. 

40 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

1.4-LITER HDI CAPACITY DOUBLED AT TREMERY PLANT 

In response to robust demand, a new 1.4-liter HDI diesel engine production line was brought on 

stream in November 2002 at the Trémery plant in eastern France. Developed as part of the cooperative 

venture with the Ford Motor Company. and introduced in April 2001, the engine uses the latest 

generation common rail injection system. It already equips the Peugeot 206, the Peugeot 307, the 

Citroën C3 and a number of Ford vehicles. 

Programs to renovate and update the 

manufacturing base were also pursued 

during the year, with the completion of 

the new primer line at the Poissy paint 

shop, the first phase of the modernization 

of the Poissy passenger car assembly line, 

the new stamping facilities at the Poissy 

and Rennes plants, and the final phase in 

the modernization of the Sochaux 

assembly facility. Lastly, at the Trémery 

plant, work was completed on the first 

manufacturing module for the small diesel 

engines to be produced by the cooperative 

venture with the Ford Motor Company. 

Over the medium term, the platform 

strategy will help to stabilize Automobile 

Division capital expenditure and to 

maintain consolidated capital outlays at 

around €3 billion, most of which will be 

earmarked for investment in new models, 

strategic technical systems, such as 

powertrains and transmissions, and 

international expansion. 

AN ASSERTIVE COOPERATION STRATEGY 

During the year, PSA Peugeot Citroën 

pursued its strategy of forming cooperative 

ventures with other manufacturers. These 

ventures speed the development of a 

broader range of new models and improve 

responsiveness to customer expectations. 

They are also a way to share, and thereby 

reduce, capital outlays and development 

costs, while leveraging the economies of 

scale generated by the partner’s production 

volumes. Lastly, cooperative ventures with 

world-renowned manufacturers offer an 

opportunity to enhance the Group’s image 

and to draw upon valuable, broad-based 

experience, in terms of both corporate 

culture and technological and manufacturing 

capabilities. 

In February 2002, the cooperation in light 

commercial vehicles with Fiat was extended 

until 2017. The latest phase will entail the 

investment of around €1.7 billion to develop 

and manufacture two new lineups for 

introduction after 2005. They will be built 

at the plants in Val di Sangro, Italy 

(Sevelsud) and Valenciennes, France 

(Sevelnord). 

The venture has strengthened both 

partners’ positions in the light commercial 

vehicle market, with more than 3.5 million 

units being produced by the two plants 

since start-up in 1978. In addition, their 

technical and industrial cooperation in the 

area of executive MPVs was recently 

confirmed with the launch of the Peugeot 

807, the Citroën C8 and similar Fiat models. 

After introducing the new 1.4-liter and 

1.4-liter Turbo HDI diesel powertrains in 

the autumn of 2001, in February 2003, 

PSA Peugeot Citroën and the Ford Motor 

Company unveiled two new 1.6-liter and 

2-liter common rail direct injection diesels 

developed in the second phase of their 

cooperative venture. Scheduled to 

gradually equip both partners’ model lines 

in the second half of the year, the engines 

represent another step towards improving 

fuel economy, environmental impact and 

technical performance. Bringing them to 

market required an aggregate investment 

of nearly €1 billion. Production capacity 

will ultimately exceed 1,600,000 engines 

a year, providing most of the diesel 

powerplants for the core model lines of 

each partner. In addition, the two 

companies are pursuing the joint 

development of other families of direct 



injection, common-rail diesels, including 

a 2.7-liter V6 and engines for light 

commercial vehicles. By 2004, cooperation 

with Ford will make PSA Peugeot Citroën 

the world’s leading diesel engine 

manufacturer, with around three million 

units produced in its plants every year. 

In 2001, a cooperative venture was formed 

with Toyota Motor Corporation to jointly 

develop a platform and then to use it to 

jointly manufacture small entry-level cars 

for each partner. Designed primarily for 

the European market, the new models will 

be powered by 1-liter gasoline engines or 

1.4-liter diesel engines. The plant, whose 

cornerstone was laid in April 2002 in Kolin, 

Czech Republic, is scheduled to come on 

stream in 2005 with capacity of 300,000 

units a year (200,000 Peugeots and 

Citroëns and 100,000 Toyotas). 

In July 2002, PSA Peugeot Citroën and 

BMW announced their intention to jointly 

develop and manufacture a new family of 

small gasoline engines to equip their entrylevel 

and midrange models. Benefiting 

from the latest technologies, the new 

powerplants will deliver excellent 

performance while reducing fuel 

consumption and CO2 emissions. They will 

be designed by a joint project team based 

in Munich and managed by BMW, while 

PSA Peugeot Citroën will be in charge of 

process engineering, procurement and 

production at its plant in Douvrin, France. 

Ultimately, one million vehicles a year will 

be equipped with the new engines, for a 

total investment estimated at €750 million. 

FINANCIAL TARGETS MET 

Automobile Division sales amounted to 

€43,951 million, a 5.8% increase in line 

with the 4.3% growth in unit sales. 

The year’s operating margin targets were 

set in February 2002 on the basis of two 

possible scenarios for the European auto 

market, with demand either remaining 

stable or declining by a slight 2 to 4%. In 

the first case, the target was 5% of Division 

sales; in the second, 4.8%. 

Even though the market actually declined 

3%, in line with the second scenario, the 

Division met the targets for the first 

scenario, with an operating margin of 5% 

of sales, or €2,183 million, an increase of 

9.6% for the year. 

The Division after-tax return on capital 

employed further improved to 16% from 

14.4% in 2001, led by ongoing gains in 

operating margin and increasingly efficient 

use of capital employed. 

42 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

C2 Citroën Sport 

By world premiering the new C2 Citroën Sport at the last Geneva Motor Show, Citroën clearly 

demonstrated its long-term commitment to motorsports. The new model shows the form a future 

racing vehicle might take, in light of Citroën Sport’s continued involvement in customer sport. 

Developed on a shorter wheelbase C3 platform, the C2 Citroën Sport expresses a concentration of 

strength energy and fun. It is equipped with a 1.6-liter, 225bhp engine and a six-speed sequential 

gearbox. 

OUTLOOK FOR 2003 BRIGHTENED 

BY NEW MODELS 

At a time of limited economic growth in 

Europe, PSA Peugeot Citroën is committed 

to pursuing its expansion, with the target 

of selling 3,350,000 vehicles in 2003 

thanks to growing sales of its lineups and 

the introduction of several new models. 

The year will be the first full year of sales for 

several models launched in 2002, including 

the Peugeot 307 SW, the Citroën C3, the 

Peugeot 206 SW, the Citroën C8 and the 

Peugeot 807. In addition, demand for the 

Citroën Berlingo and Peugeot Partner will 

be spurred by last autumn’s restyling. 

Presented at the 2002 Paris Auto Show, 

the Citroën C3 Pluriel offers unrivalled 

versatility, with the ability to be configured 

as a 3-door sedan, a panoramic sedan, a 

cabriolet, a 4-seater spyder or a spyder 

pick-up. Introduced in the first-half of 

2003, it will provide an additional boost 

to the 300,000 C3s that Citroën expects 

to sell this year. 

The Peugeot 206 RC will be launched in 

early 2003 in a sporty new design, featuring 

dual exhaust pipes, 17-inch wheels and 

an aerodynamic spoiler. The version will 

further enhance the reputation of the 

entire 206 line, whose sales volumes will 

probably be similar to last year’s. 

Also unveiled at the Paris Auto Show 

was the coupe-cabriolet version of the 

Peugeot 307, whose silhouette offers a 

flowing, uninterrupted waistline rising 

from the hood to the sloping windshield 

pillars. Its retractable hard top/trunk lid 

gives it a split personality, as both a true 

coupe and a true cabriolet, whose spacious 

interior easily holds four people in either 

configuration. With its lineup now newly 

extended, Peugeot expects to sell more 

than 600,000 307s in 2003. 


F inance Companies 

44 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

In 2002, Banque PSA Finance completed several major steps in the implementation of its 

strategy. It continued to expand in Central Europe, where it is supporting Peugeot and 

Citroën’s fast growth with an offer of financing solutions and related services similar to those 

marketed in Western Europe. The Polish subsidiary created in 2001 enjoyed a satisfactory 

first full year of operations, financing 24.2% of the two marques’ local sales. Late in the 

year, the Bank opened subsidiaries in the Czech Republic and Slovakia, while preparing to enter 

Hungary in 2003. 

In early 2002, Banque PSA Finance took over direct control of its activities in the United 

Kingdom, which were previously conducted with a local partner. This was an important 

development, because the UK market is the Bank’s second largest after France, and because 

with the changeover, all of its operations in Europe are managed by wholly-owned branches 

or subsidiaries. The Bank can now mesh more seamlessly with Peugeot and Citroën’s 

marketing strategies and tighten its organization, with information systems and certain back 

office processes integrated across Europe. In this way, it intends to drive fast, consistent 

growth in all product lines in each national market, while improving productivity through 

economies of scale. Management systems are already being extensively revamped, in a 

process that will be completed in Western Europe in 2005. 

BUSINESS REVIEW 

Banque PSA Finance provided new retail 

financing for 803,500 Peugeot and 

Citroën vehicles in 2002, almost unchanged 

from the 801,100 financed in 2001. 

It demonstrated strong resistance to 

aggressive competition in certain 

countries, thanks to a portfolio of 

customer-driven products, which now 

comprise a high percentage of 

comprehensive service packages combining 

car insurance, service warranties, extended 

warranties and vehicle and fleet 

management services. 

New vehicle loans rose by 0.5% to 

622,800 units. The increase, which slightly 

outpaced growth in Group registrations 

in Europe, enabled the Bank to maintain 

its penetration rate—i.e. the number of 

vehicles financed by the Bank as a 

percentage of total Peugeot and Citroën 

vehicle registrations in the Bank’s country 

markets—at 25.3%. This performance 

was led by the deployment of financing 

PSA PEUGEOT CITROËN - MANAGING BOARD REPORT 39 45

F inance Companies 

solutions and services supporting vehicle 

use and responding to the characteristics 

and expectations of a variety of customer 

demographics. For retail customers, the 

Bank continued to develop products 

offering greater flexibility in financing 

arrangements, service options and 

repayment schedules, while for corporate 

customers, the focus was on developing 

effective fleet management applications. 

The number of financing contracts for 

previously owned vehicles dipped 0.4% 

to 180,700, as the Bank continued to limit 

risks to preserve the quality of the loan 

book while fostering customer loyalty. 

In all, new retail loans rose by 2.2% to 

€8 billion at December 31, 2002. 

In the wholesale segment, Banque 

PSA Finance financed 2,132,600 new 

vehicles. Business was lifted by 

replacement parts inventory financing, a 

service that the Bank now offers on a 

more systematic basis. 

Supported by firm business levels in 2002 

and the increase in average loan amounts 

over the past three years, total outstandings 

continued to enjoy strong growth, ending 

the year at €18.7 billion including 

securitized loans. This represents a rise of 

8.6% for the year, compared with increases 

of 17.3% in 2001 and 15.8% in 2000. 

FINANCIAL RESULTS 

Net banking income rose 14.6% to 

€913 million, led by sustained growth in 

outstandings, an improvement in the 

financial margin on new business and the 

16% increase, to €79 million, in the 

contribution from financing-related services. 

46 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

EXPANDING THE SERVICES PORTFOLIO 

Sales of financing-related services rose sharply in 2002, in particular those responding 

to growing customer demand for services that support vehicle use, like service warranties 

and driver assistance. Customers increasingly want to fold into a single budget the total 

cost of owning a car. 

Growth in number of services sold 

Financing-related services Automobile-related services Total 

2001 2002 2001 2002 2001 2002 

522,704 363,802 886,506 

+4.9 % +94.6 % +29.4 % 

498,304 186,933 685,237 

Operating margin for the finance business 

rose sharply to €319 million from 

€248 million in 2001. It was adversely 

affected in 2001 by the lower margins on 

new contracts signed in 2000 and early 

2001 after heightened competition in the 

European consumer lending market 

prevented higher refinancing rates from 

being fully passed along to customers. In 

2002, however, lending margins rebounded, 

while outstandings continued to grow. At 

the same time, allowances for credit losses, 

which were low by industry standards, 

were further improved and general 

operating expenses continued to rise more 

slowly than outstandings, reflecting the 

initial impact of organizational integration 

at the European level. 


T ransportation 

and Logistics 

48 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

Despite a worsening economic environment, Gefco maintained its strategic emphasis on 

acting as a tier-one logistics integrator, capable of offering its industrial customers performanceenhancing, 

end-to-end solutions. 

Customers have responded favorably to the progress made in recent years in the three 

core businesses: Automotive (vehicle preparation and distribution), Network (part and 

full-load transport) and Supply (logistics and sea and air freight). Two satisfaction surveys 

conducted at the beginning and end of 2002 by UK consultancy Datamonitor showed that 

1,500 customer companies rated Gefco number one among European companies in its industry. 

The performance criteria used in the ranking are the same as the ones that constantly guide 

Gefco: broadening its service range and geographic coverage, innovating in services and 

upgrading information and communication systems, enhancing the quality and flexibility 

of delivered services, and continually improving competitiveness with its customer partners. 


In 2002, Gefco continued to broaden its 

range of services, while expanding its 

geographic coverage of strategic growth 

markets. New transportation lines were 

opened in Europe, via sea (Belgium–United 

Kingdom; Spain–Poland; France–Italy), 

roadway (links to and from Germany), and 

air (a partnership with Emo-Trans to enhance 

coverage of the North America–Europe 

network). New logistics platforms were set 

up for cars and motorbikes, raising 

capacity to 500,000 square meters. The 

Polish subsidiary opened three package 

delivery agencies and transport lines to the 

United Kingdom, France and Germany. 

Gefco moved into Turkey, where the 

new subsidiary is already operating its 

first domestic and international lines. 

The Europe-North Africa network was 

strengthened with the acquisition of the 

Euromed lines serving Morocco and Tunisia. 

Outside Europe, development continued 

in the Mercosur countries with the opening 

of five package delivery agencies in Brazil 

and new car transportation lines between 

Argentina and neighboring countries. 

Operations were also expanded in China. 

During the year, several innovations were 

deployed to enhance Gefco’s capabilities 

as a logistics integrator. A new operating 

unit was created to manage handling 

equipment, such as plastic boxes, plastic 

pallets, metal containers and durable new 

sea and air freight packaging. A state-ofthe-art 

international maritime freight 

management platform was brought on 

stream in France, enabling suppliers and 


T ransportation and Logistics 

partners to electronically interchange parts 

descriptions, customs declarations and 

other data. An experimental railcar fleet of 

40 GPS-equipped car-carriers, linked to an 

innovative map management system, was 

deployed early in the year. New used-car 

refurbishment shops began operating in 

Spain, Italy and Germany, with capacity to 

process 150 vehicles a day at an average 

turnaround time of two weeks. An ambitious 

program to upgrade information and 

communication systems using the latest 

technologies was successfully undertaken 

in the second half. 

Service quality and flexibility were also 

improved in 2002. Bureau Veritas Quality 

International (BVQI) recertified to 

ISO 9001:2000 standards the quality 

systems in place in all the roadway, 

maritime, railway and air transportation 

operations in the integrated European 

network. At year-end, the same certification 

was extended to operations in Brazil and 

Argentina. A system to measure customer 

satisfaction was implemented, while a 

quality charter was signed with the main 

suppliers of roadway, maritime and railway 

services to enhance their integration into 

Gefco’s service lineup. All of the company’s 

information systems successfully transitioned 

to 24/7/365 operation. In addition, services 

were delivered without interruption 

despite a number of external disruptions 

due to strikes in France and Spain, floods 

in Germany and Austria, storms in the 

Alps, railway breakdowns between France 

and Italy, and labor unrest in Poland. 

Throughout, Gefco teams demonstrated 

flexibility and responsiveness, ensuring 

that customers did not suffer any significant 

delays or damages. 

Lastly, Gefco pursued its commitment to 

continually improving its competitiveness 

in close partnership with customers. It 

revamped the car distribution process 

between France and Italy, the freight 

transportation process between France and 

Spain, and coastal shipping lines between 

the North Sea, the Atlantic seaboard and 

the Mediterranean. It also improved the 

50 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

GEFCO’S INTERCONTINENTAL LOGISTICS PLATFORM IN LE HAVRE 

Gefco has built a new intercontinental logistics platform in Le Havre to serve a full range of customers. 

The first, however, has been PSA Peugeot Citroën, which is using the 32,000 square-meter facility to ship 

automotive parts to Group plants outside Europe. 

Known as PLIP, the platform currently manages 5,000 different parts, collected from around 500 European 

suppliers and shipped by sea to assembly plants in Porto Real, Brazil and Buenos Aires, Argentina. 

It represents the latest generation of an integrated international supply chain, supported by the 

new Geolog information system offering real-time dialogue between Latin American production centers, 

European suppliers, Gefco Le Havre and the major Automobile Division corporate services, such as 

Purchasing and Accounting. 

PLIP uses the cross-docking technique with zero inventory stored on the platform itself. Any order 

from Brazil or Argentina for a European supplier is immediately notified to Gefco Le Havre, so that PLIP 

can order packaging materials, obtain the right number of containers and prepare for shipping, 

so that when the parts arrive, everything is in place for their immediate reshipment. 

This real-time management of information and parts flows has yielded both financial and qualitative 

benefits. The cycle time from parts order in Latin America to final delivery from Europe has been 

reduced on average by a full week. In addition, all parts are systematically inspected on the platform 

before reshipment and invoicing. 

By 2004, PLIP will be handling enough parts to build 500,000 vehicles. 

efficiency of customs procedures in dealing 

with the Mercosur countries, Eastern 

Europe and China, in particular as regards 

the operation of bonded warehouses. A 

larger number of joint groups were formed 

with customers to improve competitiveness 

based on Kaizen principles. The resulting 

gains were significant and the groups are 

continuing their work in 2003. 


Net sales were stable for the year, at 

€2,646 million. At comparable scope 

of consolidation, reflecting the sale of 

Transauto in May 2001, sales were up 0.7% 

despite a significant decline in the European 

transportation market. 

Although the European car market 

contracted by 3%, Gefco’s Automotive 

business rose by 1.9% during the year, as 

billings outside France and the growing 

contribution from the used car refurbishing 

shops offset lower volumes in France and 

Argentina. Thanks to faster development in 

the Mercosur countries and central Europe, 

the Network business held stable despite 

weaker demand in Western Europe. The 

Supply business was also unchanged at 

comparable scope of consolidation, since 

the major projects initiated in 2002 will not 

have a full-year impact until 2003. 

Operating margin totaled €135 million, 

or 5.1% of sales, an increase of 13% from 

the €119 million and 4.5% of sales 

reported the year before. The improvement 

was led by careful control over business 

development in light of the uncertain 

economic outlook, by sustained productivity 

gains and by the continuing ramp-up of 

high value-added businesses. 


Automotive 

Equipment 

52 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

Following the major acquisition of Sommer Allibert’s automotive operations in 2001, Faurecia 

spent 2002 implementing an optimized organization for its new scope of business. 

The strategy now being implemented is designed to meet three objectives: 

• Drive over-market growth with a focus on six critical automotive modules: seats, cockpits, door 

panels, acoustic systems, front-end assemblies and exhaust systems. 

• Enable the company to consolidate the position of each of these businesses among the 

global leaders, thanks to superior innovative capabilities, a global manufacturing base and the 

balanced development of business among the world’s top carmakers. 

• Restore margins and maintain them among the highest in the industry, by leveraging scale 

economies from recent acquisitions, enhancing industrial efficiency and carefully managing 

new product development programs. 


2002 was another year of strong business 

growth, particularly in car seats. At a time 

of declining carmaker production volumes, 

the growth reflected further market share 

gains among Faurecia’s main customers 

and the high percentage of its products 

on popular models. 

In car seats, where Faurecia is the European 

leader and number three worldwide, sales 

rose 14.6% to €4,032 million, lifted by the 

growing output of recent models and 

production start-ups in Europe and the 

United States. In addition to the Deeside 

plant to serve General Motors, five other seat 

module facilities were opened during the 

year, in Vigo, Spain; Neuerstadt, Germany; 

Wuhan, China; Vesoul, France; and Golçuk, 

Turkey. The year also saw the ramp-up of 

manufacturing operations in Poland and the 

creation of a 51%-owned joint venture with 

GSK, a Taiwanese OEM, to produce seats in 

Wuhan, China. 

Sales of other vehicle interior modules rose 

5% to €3,463 million, also led by the 

strong growth in sales or the start-up of 

production of the cars they equip. These 

modules include cockpits, door panels and 

components—three areas in which 


Automotive Equipment 

INNOVATION-DRIVEN 

LEADERSHIP 

By investing the equivalent of more 

than 6% of sales in research and 

development, Faurecia delivers unrivalled 

expertise that creates value for 

customers. Based in 22 R&D and D&D 

centers, 5,000 Faurecia engineers are 

helping to create the car of tomorrow 

by working closely with their carmaker 

counterparts, as well as with universities 

and research laboratories. 

Every year, Faurecia experts file patents 

for innovations in safety, comfort, 

soundproofing, lighter components, 

pollution control and recyclability—all 

of which provide powerful marketing 

arguments. This R&D leadership enables 

the company to anticipate end-user 

expectations and help improve its own 

customers’ reputation for technological 

expertise. 

Faurecia ranks first in Europe and among 

the top three worldwide—as well as acoustic 

systems. Three new cockpit plants were 

opened in Palencia, Spain; Sao Bernardo da 

Campo, Brazil; and Douai, France, while an 

acoustic systems facility came on stream late 

in the year in Legnica, Poland. 

With sales of €593 million, the front-end 

assembly business expanded with contracts 

from two new carmakers, as well as with 

large orders from existing customers and 

a leading European specialty carmaker. 

Excluding the impact of precious metals 

on catalytic converter prices and changes 

in exchange rates, exhaust system sales 

were unchanged at €1,004 million. 

Growth was especially strong in Asia, 

where Faurecia was already present with 

three joint ventures in China, and where 

the local manufacturing base and 

customer portfolio were strengthened 

during the year with an acquisition of an 

equity interest in South Korea’s Daeki 

Industrial. In the United States, new orders 

for integrated exhaust systems enabled the 

company to deepen its presence. It also 

continued to develop certain strategic 

plants, such as the one in South Africa, 

whose catalytic converter output doubled 

during the year. 


Consolidated sales rose 2.7% to €9,866 

million in 2002, including a 1.4% negative 

currency effect and the impact of lower 

prices for the precious metals used in 

catalytic converters. Excluding converter 

sales and changes in exchange rates, sales 

ended the year up 9.3% to €9,092 million. 

Operating margin came to €256 million, 

representing 2.6% of sales. The margin 

was stable for the year, but rose during the 

second half on the substantial increase in 

business, the sustained productivity gains 

achieved through the 10/10 plan and 

redeployment of the production base, the 

implementation of the procurement plan 

and the initial impact of application of the 

Program Management System. For the full 

year, these improvements were partially 

offset by two factors: start-up costs 

remained high and the terms of certain 

contracts implemented between 2000 and 

2002 weighed on the operating margin. 

54 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

Faurecia anticipates that automobile 

production in Europe and North America 

will contract by 4 to 5% in 2003. However, 

it expects that its sales will outpace the 

market and that margins on contracts 

started up during the year will be higher 

than on programs initiated between 2000 

and 2002. 

FAURECIA, A GLOBAL 

PRESENCE … 

France: 38 plants, o/w 14 just-intime 

capable 

12 R&D and D&D centers 

• Germany: 25 plants, o/w 14 justin-time 

capable 


• Spain: 23 plants, o/w 11 just-intime 

capable 

1 R&D and D&D center 

• United Kingdom: 4 plants, o/w 4 

just-in-time capable 

• Other European countries: 25 

plants, o/w 13 just-in-time capable 

1 R&D and D&D center 

• North America: 13 plants, o/w 

2 just-in-time capable 


• Latin America: 14 plants, o/w 

8 just-in-time capable 

FAURECIA AND SAFETY INNOVATIONS 

Innovations that protect us all 

Already on the road, the Spinal Care and Comfort System (SCCS) is designed to prevent whiplash. 

Activated by pelvic pressure in the event of an impact, the seat back and headrest automatically 

move up to restrain the head. Selected even before its market launch by General Motors Europe, 

SCCS is now standard on a large number of cars, particularly Peugeots and Citroëns. 

With its electronic sensors and algorithms developed by Faurecia, the BioVolume seat is able to 

determine whether its occupant is an adult or a child, and whether he or she is sitting back or 

leaning forward. In this way, its safety response can be tailored to each passenger’s body type and 

position. In case of impact, the speed and force with which the airbag deploys is adjusted to the 

seat occupant and actual accident conditions. The seats comply with US standard FMVSS 208, which 

requires the possibility of deactivating the passenger side airbag in certain cases. 

When the airbag deploys, its casing flap can break the windshield or hit the passenger. In response, 

Faurecia has also developed the Low Risk Deployment Flap, which retracts inside the dashboard 

during deployment. Competitive compared with conventional flaps, the new system is also FMVSS 

208-compliant. 

While head, chest and abdominal injuries are now less frequent, accidents still present a high risk 

of lower back and leg injuries. Using its proprietary biomechanical analysis resources, Faurecia 

studied body movements known as submarining to develop the Lower Limbs & Lumbar Care System 

(L3CS). In case of a frontal collision, a crossways bar lifts the seat for at least 20 milliseconds, slowing 

forward motion and preventing the pelvis from sliding out from under the seat belt. 

Other Faurecia systems are improving the protection of lower limbs, such as the Knee Care System 

(KCS) for the driver and the Glovebox Integration Knee Care System for the front passenger. 

Comparable to a mini-airbag installed in the glovebox door, the GIKCS restrains the knees while 

dissipating impact energy. Its effectiveness complies with US and European safety standards. Compact 

and inexpensive, the system can also be retrofitted to existing cars. 

… AND A WELL BALANCED CUSTOMER BASE 

% of 2002 sales 

Toyota 1.3 

BMW 4.5 

DaimlerChrysler 6.3 

General Motors 7.2 

Ford 10.0 

Renault/Nissan 16.2 

Volkswagen 23.4 

PSA Peugeot Citroën 25.7 

Others 5.4 


Other 

Businesses 

56 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

PEUGEOT MOTOCYCLES 

The European motorcycle and scooter 

market contracted for the third year in a 

row in 2002, declining 12% to 1,230,000 

units from nearly 1,400,000 in 2001. 

While continuing to fall in Italy and Spain, 

demand began to weaken in France, the 

United Kingdom and Germany—all very 

important markets for Peugeot Motocycles 

(PMTC). 

The softer markets pulled PMTC sales 

volumes down 9.5%, to 162,000 vehicles 

from 179,000 the year before. Sales 

remained almost unchanged at €257.3 

million, however, due to a more favorable 

product mix following higher sales of 

premium scooters requiring registration 

like the Elystar. Unit sales did not decline 

as far as the overall European market, 

enabling PMTC to widen its share to nearly 

13% from 12.2% in 2001. On a country 

basis, the improvement was especially 

strong in Italy (3% versus 1.9%), France 

(30.1% versus 26.4%), Germany (17.4% 

versus 13.4%) and Belgium (29.4% versus 

28.1%). However, the drop-off in demand 

caused the company to report an 

operating loss of €12 million. 

During the year, PMTC pursued its 

strategic focus on developing products 

and modernizing facilities. Highlights 

included: 

• Market launch of the Elystar, a GT 

scooter with, in a world first, a fuelinjected 

engine and ABS-assisted 

braking. The 7,000 units sold exceeded 

objectives by 50%. 

• Presentation of JetForce, a new sports 

scooter that was voted Scooter of the 

Year. Offering a large number of 

technological innovations, the new bike 

is now being delivered to dealers. 

• Implementation of the Downstream 

Project to upgrade assembly lines and 

install a new, fully-computerized parts 

warehouse. 

PMTC expects demand to edge up slightly 

in 2003, when new product introductions 

should drive stronger growth in sales. 



JET FORCE 

Peugeot Motocycles grabbed all the media attention at the 2002 Munich Intermot Show 

with its new Jet Force scooter. The sports bike will be available with a supercharged 125cc 

engine, a first in its category and a worldwide exclusive from Peugeot Motocycles. It will 

also come in a 50cc version, with a new horizontal, two-stroke, fuel-injected engine, and 

in a naturally aspirated 125cc version. All models are compliant with future emissions 

standards. 

Jet Force’s architecture draws its inspiration from motorbikes, with a perimeter frame, 

centralized shock absorber, and strut suspension providing flawless road-handling. Its 

particularly exciting styling received the 2002 Motorcycle Design Association award in the 

scooter category. 

SOCIETE DE CONSTRUCTIONS MECANIQUES 

PANHARD & LEVASSOR (SCMPL) 

stood at €97 million at December 31, 

2002, up 20% on the previous year. 

SCMPL designs and builds wheeled 

armored vehicles. In 2002, sales rose 7% 

to €64.7 million, while operating margin 

amounted to €1.5 million. The year was 

shaped by sustained delivery of VBL light 

armored vehicles to the French Army and 

various export customers, notably Greece, 

as well as by continued production of 

diesel powertrains for retrofit on French 

Army ERC Sagaie armored reconnaissance 

vehicles and the start-up of a VBL rebuilding 

program for the French Army. 

The award of a new contract from the 

French Army for 500 VBLs (of which 202 

under a firm order) has enhanced the 

company’s medium-term outlook. Backlog 

Supported by these favorable medium-term 

prospects in France and in export markets, 

SCMPL also strengthened its strategy of 

developing new products. At the Eurosatory 

trade show, it presented the first prototypes 

of two new armored vehicles that are 

expected to secure its long-term future. 

PROCESS CONCEPTION INGENIERIE (PCI) 

PCI designs and manufactures industrial 

equipment for four industrial processes: 

assembly, stamping, body-in-white and 

machining. Sales totaled €395 million in 

2002, while order intake amounted to 

€374 million at December 31, up 8% from 

the year before. 

58 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

Operating margin sharply improved to 

€20.2 million, reaffirming the company’s 

position as a tier-one supplier to its main 

customers. In addition, a series of quality 

audits conducted during the year led to 

ISO 9001:2000 certification for PCI and 

its subsidiary SCEMM. 

The company expects to see further 

growth in 2003, led by the adaptation of 

engines for a Japanese carmaker and the 

consolidation of the Indian market. 

PEUGEOT CITROËN MOTEURS (PCM) 

PCM increased sales 2.2% to €110.1 million 

from €107.7 million in 2001, despite the 

challenging environment caused by the 

decline in its customer base following 

recent restructuring in the automobile 

industry. The number of engines sold rose 

6.8% to 39,150 from 36,676 in 2001. 


60 


Corporate 

Policies 

62 


72 

Environmental Stewardship 

80 

Corporate Citizenship 

90 

Research and Development 


H uman 

Resources 

62 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

PSA Peugeot Citroën’s employee relations and human resources policies are designed to 

anticipate changes in the Company and its businesses, and to implement innovative 

systems and processes as part of an ongoing social dialogue. 

They are applied in all operations worldwide and are organized around four major 

components: an active hiring policy, organizational flexibility adapted to the specific 

requirements of the automobile industry, compensation linked to Group earnings and 

sustained, open dialogue with employee representatives. 

AN ACTIVE HIRING POLICY 

Employees by Business and Region in 2002 

Europe 

France outside France outside Europe Total 

Automobile 96,160 33,800 3,920 133,880 

Finance Companies 930 1,190 40 2,160 

Transportation and Logistics 4,690 3,110 250 8,050 

Automotive Equipment 19,700 25,850 6,680 52,230 

Other Businesses 2,200 50 30 2,280 

Total 123,680 64,000 10,920 198,600 (1) 

(1) Including the Automotive Equipment Division 

PSA Peugeot Citroën hired 16,740 people 

in 2002, increasing the number of 

employees by more than 6,000 for the year. 

Over the past five years, headcount has risen 

by more than 58,000 people, including 

16,100 in the Automobile Division. Some 

70,500 people have been hired since 

January 1, 1998. Excluding acquisitions 

and disposals, a net 25,000 jobs have 

been created over the past five years, 

primarily outside France. Of these, 14,000 

have been in the Automobile Division. 

RECRUITING TO MEET GROWTH OBJECTIVES 

To meet the Group’s organic growth 

targets, people have been recruited in a 

broad range of disciplines, in a 

commitment to integrating a variety of 

educational, cultural, professional and 

international backgrounds. Over the past 

four years, nearly 60,000 people 2 have 

been hired under permanent contracts 

around the world, including 34,000 in 

France. 

(2) Including the Automotive Equipment Division, excluding 

fixed-term contracts. 



Hiring Under Permanent Contracts 

Hired under 

permanent contracts 

in 2002 

Hired under permanent 

contracts, 1999 - 2002 

Automobile 9,800 38,080 

Finance Companies 250 710 

Transportation and Logistics 1,100 4,500 

Automotive Equipment 5,500 15,380 

Other Businesses 90 760 

Total 16,740 59,430 

Of which France 8,130 34,640 

BRAZIL: TRAINING DEALER 

EMPLOYEES IN AFTER-SALES 

SERVICE 

In 2001, PSA Peugeot Citroën, 

Brazil’s national education system 

for industry (SENAI) and France’s 

National Education Ministry set up a 

training center in São Paulo to offer 

courses in after-sales service. In two 

years, nearly 1,600 employees have 

been trained in customer service, 

automobile maintenance and repair, 

and new automotive technologies. 

In 2002, nearly 900 Brazilian 

employees received some 29,000 

person-hours of training in such 

areas as product knowledge, basic 

mechanics, quality methods and 

safety procedures. The commitment 

will be stepped up in 2003, with a 

more than 30% increase planned in 

the number of training hours. 

ATTRACTING YOUNG GRADUATES 

According to a survey conducted by the SOFRES public opinion firm, French business and 

engineering students spontaneously ranked PSA Peugeot Citroën as France’s best company 

to work for. This reputation is one reason 48,000 people applied for managerial positions 

with the Group in 2002. 

BUILDING A STRONGER, MORE 

STRUCTURED PRESENCE OUTSIDE FRANCE 

Following start-up of the Porto Real plant 

in Brazil in February 2001, the global 

manufacturing base will be expanded in 

2005 and 2006 by two new facilities: one 

in Kolin, Czech Republic in association with 

Toyota, and the other in Trnava, Slovakia. 

A total of 1,200 people have been hired 

at the Brazilian site, of which 250 in 2002, 

while 3,000 hires are planned in the Czech 

Republic and 3,500 in Slovakia. In all cases, 

the focus is on recruiting locally. 

The same human resources management 

principles are applied in all operations 

worldwide, with adjustments to local 

characteristics as required. In particular, 

more socially advanced employee benefits, 

such as operating margin-based incentives, 

are offered in all subsidiaries around the 

world. 

Global expansion has also fostered the 

embrace of cultural diversity and the 

emergence of an international culture. 

Long-term foreign assignments and intercountry 

transfers are being developed, 

with 8,400 people accepting such 

assignments in 2002. Cooperative ventures 

with Italian, German, US and Japanese 

carmakers are also supporting the 

development of an international mindset. 

64 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

JOB SEARCH SUPPORT 

PROGRAMS 

In 2001 and 2002, the Rennes and 

Sochaux plants offered programs 

designed to certify the professional 

skills acquired by people hired for 

fixed-term assignments. 

In Rennes, as part of the Citroën 

C5 launch, a training program was 

organized in partnership with the 

Regional Council, the related 

government employment agencies 

(DDTE, ANPE, PLIE, Mission locale), 

temporary employment agencies 

and the National Association for 

Adult Vocational Education. In 

addition, 1,000 people found 

employment during a job fair 

organized by the Rennes plant to 

facilitate the professional 

orientation of the people concerned, 

in association with the National 

Employment Agency, local companies 

and temporary employment agencies. 

In Sochaux, fixed-term employees 

were offered support from local 

companies, the National Employment 

Agency and temporary employment 

agencies. The initiative enabled 

several hundred people to find jobs 

upon completion of their assignment. 

SUPPORTING CAREER OPPORTUNITIES 

FOR WOMEN 

Despite the small percentage of 

women graduating with engineering 

or other industry-related degrees, 

PSA Peugeot Citroën has been hiring a 

growing proportion of women. This was 

particularly the case in 2002, when 

women accounted for nearly 20% of 

engineers and managers hired worldwide, 

versus less than 15% in 2001. In France, 

women accounted for more than 20% of 

new hires in 2002. 

New initiatives have been taken to 

encourage the hiring of women in all host 

countries. Programs are underway to train 

women in jobs previously held mainly by 

men, such as installation manager or 

production unit manager. 

RESPONSIBLY MANAGING FIXED- 

TERM CONTRACTS 

Employees are sometimes hired under 

fixed-term contracts in order to adjust the 

workforce to fluctuations in demand, to 

manage new product introduction 

processes and to prepare capital programs 

and the related productivity gains. These 

employees are integrated where they have 

been recruited, under the same conditions 

as people hired under permanent 

contracts. Temporary workers participate 

in orientation sessions devoted to safety, 

quality and environmental issues and 

are offered training corresponding to 

their duties. 

Many temporary or fixed-term employees 

are offered permanent jobs, depending 

on local staffing needs. In 2002, for 

example, 2,500 employees in France were 

hired under permanent contracts 

following a temporary or fixed-term 

assignment. In Spain, the 2001-2003 

convenio calls for the permanent 

hiring of 1,300 eventuales employees. 

Temporary workers are also supported 

through programs to certify their acquired 

professional skills and to assist them in 

finding employment. 

In France, PSA Peugeot Citroën was one 

of the first companies to offer job 

opportunities to unqualified young 

people. 



MANAGING THE LABOR IMPACT OF 

A CHANGING BUSINESS 

information technology and management 

practices. 

MAINTAINING THE EMPLOYABILITY 

OF FEMALE STAFF AT THE RENNES 

PLANT 

At the production plant in Rennes, 

the development of new onboard 

electronics required the conversion 

of the wiring shops, where around 

85% of the workers were women. 

In 1999, to prepare for the changeover, 

plant management extensively 

reconfigured the workstations and 

set up training programs to help the 

workers learn new skills. By the end 

of 2002, more than 80% of the 

workers had been transferred to 

other jobs, such as forklift driver, 

automotive electrician, mechanic or 

shopfloor logistics manager. 

Transfers will continue in 2003. 

The Group’s commitment to 

retraining the wiring operators and 

offering them new job opportunities 

was reflected in two contractual 

arrangements. One, which covered 

the above programs, was a plantwide 

agreement on gender equality 

in the workplace signed with the 

plant’s unions on November 27, 

2001. The other was a gender 

equality contract signed on January 

30, 2002 by plant management and 

the French Ministry of Social Affairs, 

Labor and Solidarity. 

• Supporting employees in the event of 

job eliminations 

Changing technology and markets are 

causing the loss of jobs at a number of sites. 

In each case, internal placement and other 

support programs are implemented to identify 

the best solution for each employee concerned. 

CONTINUALLY ENHANCING SKILLS TO 

PREPARE FOR TOMORROW’S JOBS AND 

MAINTAIN EMPLOYABILITY 

Training is a primary tool of employee 

relations and human resources management. 

By fostering skills development, training 

contributes to the Group’s success, while 

enabling employees to fulfill their career 

aspirations. As such it supports their 

employability, prepares their career 

development and anticipates the Group’s 

future needs. 

Excluding Faurecia, which manages its 

own programs, nearly four million hours 

of training were provided in 2002, with a 

focus on new employee orientation 

programs, automotive production and 

product launch-related techniques, 

• Anticipating and supporting corporate 

change 

Because it provides critical support for 

successful project deployment, training is 

implemented to anticipate and facilitate 

changes in the Group’s organization, 

business, processes and socio-economic 

environment. Training programs are 

designed upstream from projects to 

improve organizations or systems, so that 

people are prepared for their implementation. 

Many courses are led by employees who 

are experts in the related subject. 

• Exchanging expertise across borders 

Deployed with the same objectives and 

principles in France and abroad, training 

programs are supported by crossfertilization 

of experience gained in many 

countries. Programs are also adapted to 

local requirements and expectations. 

• Training and integrating young people 

Half of all employees have been on the 

job less than five years, and by helping to 

train young people, the Group is 

preparing the capabilities it will need in 

CHINA: SHARING EXPERTISE 

Under a program to develop employee capabilities and raise the level of vocational education 

in China, Dong Feng Peugeot Citroën Automobile (DPCA) has actively participated in assessing 

its training needs. 

European instructors, all experts in their fields, trained Chinese facilitators, who then led 

their own courses, applying the methods they had learned. Since 2001, 457 DPCA employees 

have attended 70 courses led by facilitators trained by the European program in such diverse 

subjects as quality, sales and maintenance. 

In 2002, DPCA also welcomed 40 technical assistants from France, who trained 170 people 

over several weeks. What’s more, 130 Chinese employees have participated in training 

assignments in PSA Peugeot Citroën plants in France. 

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Statistics 

the future. On every site, programs are 

underway to provide jobs to students on 

work-study programs, to help define basic 

training courses in response to anticipated 

changes in job skills, and to help implement 

training curricula. In 2002, 6,740 students 

served as interns in the Group’s 

manufacturing, marketing, transportation 

and logistics operations, while in France 

another 670 young people served as 

apprentices or earned on-the-job training 

certificates. 

Hiring and motivating young employees 

are major challenges for the Group’s 

future performance. There are 34,000 

Group employees under 30, and to respond 

more effectively to their expectations and 

enhance their contribution to corporate 

objectives, management has undertaken 

an in-depth study of the integration 

of young people, in association with 

the European Works Council’s liaison 

committee. Initiated in spring 2002, the 

WORK-STUDY PROGRAMS IN FRANCE 

In partnership with the French national 

education system, Group units in Caen, 

La Garenne, Meudon, Saint-Ouen, Vélizy 

and many other locations have signed 

Local Initiative Supplementary Training 

(FCIL) agreements. 

FCIL programs are designed to facilitate 

the acquisition of initial job experience 

by young graduates with vocational, 

technological or liberal arts diplomas. 

Because they are locally based, they 

reflect local socio-economic conditions 

and help young people find their first 

jobs in their own community. 

The resulting work-study programs, 

delivered in close cooperation with 

schools, are focused on electronics, 

robotics, network systems and industrial 

maintenance. 

HELPING YOUNG JOB-SEEKERS FIND MEANINGFUL EMPLOYMENT 

In 2002, several French plants helped set up programs to assist young job-seekers in finding meaningful 

employment. 

On April 28, 2000, the Sochaux plant signed an on-the-job training agreement with the French State 

and regional authorities, while forming a three-year partnership that also included the government 

employment agency and local schools. The agreement prepares young job-seekers for the labor market 

by providing training in skills needed by companies. The main focus was job-seekers without any 

qualifications or job experience, who were often young people in disadvantaged situations. In all, 

785 people, including 328 women, participated in internships and courses at the Sochaux site. As of 

December 31, 2002, application of the agreement had led to 280 people being hired under permanent 

contracts, 232 under fixed-term contracts, and 273 for temporary assignments. 

Offered in partnership with the National Employment Agency, on-the-job training sessions at the Aulnay 

plant are assisting job-seekers experiencing serious difficulty in accessing the labor market, the longterm 

unemployed and people benefiting from France’s guaranteed minimum income program. 

The Rennes plant has joined with the local government employment agency to hire, under orientation 

contracts, disadvantaged young people having problems joining the labor force. 

study covers the plants in Mulhouse and 

Poissy in France, Vigo in Spain and Ryton 

in the United Kingdom. 

OFFERING REAL OPPORTUNITIES FOR 

CAREER DEVELOPMENT AND MOBILITY 

The Group’s steady growth and highly 

diversified business base means that it can 

offer employees extensive opportunities 

for career development and mobility. 

Career development is guided not only by 

an employee’s supervisor but also by a 

career manager and career committees 

organized at every level and in every unit. 

In 2002, 18.5% of engineers and 

managers accepted transfers, while 

another 4% or so changed their job or 

activity following changes in the business 

base or job enrichments. In addition, more 

than 18% of employees were promoted 

or changed job category in 2002. 



ORGANIZATIONAL FLEXIBILITY 

ADAPTED TO THE SPECIFIC 

REQUIREMENTS OF THE 

AUTOMOBILE INDUSTRY 

Responding to the diversity of the 

automobile market and meeting customer 

demand involves constant adjustments in 

working hours and organization. These 

adjustments are carried out with careful 

regard for the expectations and requirements 

of employees. 

NEGOTIATING NEW ORGANIZATIONAL 

ARRANGEMENTS 

Two new vacation systems adapted 

to production requirements have been 

negotiated with unions in France and the 

rest of Europe. A key to enhancing flexibility 

and competitiveness, non-stop operation 

was introduced at the Mulhouse facility and 

the mechanical component plants in 2001, 

then applied at the Ryton and Vigo plants 

in 2002. To meet strong demand, a fourth 

shift was introduced at Ryton in August, 

enabling the hiring of nearly 800 people, 

while the negotiated implementation of 

new working hours at Sochaux in May led 

to the creation of a Friday-Saturday-Sunday 

shift. In most host countries, working hours 

are now calculated on an annual basis. 

IMPROVING SAFETY AND WORKING 

CONDITIONS 

• Improving working conditions and 

ergonomics 

Programs are underway in every Division 

and manufacturing project to improve 

workstation ergonomics, in a commitment 

to attenuating physical and environmental 

impairments and broadening access to 

the largest possible number of operators. 

A dedicated method for assessing 

workstation strain called METEO or 

“Méthode d’Evaluation du Travail et des 

Organisations”is being used by project 

teams across the manufacturing base. This 

innovative process underscores the 

Group’s dedication to improving working 

conditions through a realistic approach 

designed to enhance efficiency and preserve 

operator health. 

• Constant concern for operator safety 

and protection from bodily injury 

As part of the Group’s commitment to 

managing workplace risks, employees, 

managers, employee representatives, 

medical staff and specialized outside 

consultants are all helping to improve 

working conditions, safety and risk 

prevention. In every country, risk assessment 

procedures are applied to installations, 

workstation components, infrastructure, 

production processes, employee movements 

and professional equipment. Employees 

also receive safety training designed to 

attenuate workplace risks. 

• A commitment to occupational 

healthcare 

In France, the Group’s occupational 

medical offices examined 112,000 

employees and received 283,000 infirmary 

visits. Based on exam results, actions were 

taken to protect the concerned employee’s 

health, for example, by reconfiguring the 

workstation or ordering more tests to detect 

or cure certain illnesses. The medical offices 

regularly conduct training and employee 

information sessions in areas like movement 

and posture and food hygiene. They are also 

involved in reassigning impaired or disabled 

employees or reconfiguring their workstations. 

OFFERING THE DISABLED FULFILLING JOB 

OPPORTUNITIES 

While helping to prevent disabilities in the 

first place, Group policies are designed to 

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GEFCO ARGENTINA: PROCEDURES TO 

ENSURE EVERYONE’S SAFETY 

At Gefco’s Argentina operations, health, 

safety and environmental issues are 

handled by a process based on the BVQI 

ISO 9000:2000 quality management 

system. An independent expert 

specialized in industrial safety and health 

analyzes every aspect of the business to 

detect any anomalies or potential risks, 

while assessing the need for personal 

protective equipment (PPE). 

In addition to measures designed to 

guarantee the best possible working 

conditions, such as studies to determine 

heat load, noise volume and light 

intensity, employee training courses have 

been organized in such areas as manual 

loading, PPE, fires and accident 

prevention, forklift operation, and 

evacuation and first-aid drills. Medical 

examinations are also regularly performed 

to prevent and detect any physical 

problems due to occupational activities. 

enable the disabled to make a contribution 

to society, by providing them with job 

opportunities and supporting their career 

development. In France, the agreement 

on jobs for the handicapped signed with 

employee representatives on March 17, 

2000 demonstrated the Group’s 

commitment to pursue programs 

underway to hire and retain disabled 

employees and to configure workstations 

to enable their operation by the 

handicapped. These programs are being 

implemented in partnership with AGEFIPH, 

which manages funds for hiring the 

handicapped, and ANACT, the national 

agency for improving working conditions. 

Disabled workers are involved in the 

Group’s automobile manufacturing 

business through partnerships between the 

production plants and work-based 

assistance centers and sheltered workshops. 

Worldwide, the Group directly employs 

nearly 5,300 disabled people. In France, 

including sheltered workers under contract, 

9.28% of employees are classified as 

handicapped, compared with the legally 

required 6%. 

PROVIDE COMPENSATION LINKED 

TO GROUP EARNINGS AND 

ENCOURAGE INDIVIDUALLY- 

FUNDED PENSION PLANS 

In all businesses worldwide, compensation 

policy is designed to offer competitive 

compensation and to share value with 

those who help create it. 

SIGNING WAGE AGREEMENTS IN ALL UNITS 

The Group’s wage policy led to the signing 

of a large number of agreements in most 

countries in 2002. In France, the wage 

agreement signed by five unions on January 

28 reflected a commitment to raising the 

lowest salaries and increasing the annual 

guaranteed minimum wage. In 2002, 

compensation paid worldwide totalled 

€4.466 millions, while employer taxes and 

social security contributions amounted to 

€1.700 millions. 1. 

REWARDING INDIVIDUAL MANAGER 

PERFORMANCE 

A manager’s compensation depends on 

individual performance, the ability to carry 

out his or her responsibilities and local 

salary levels. Pay for performance reflects 

a commitment to ensuring consistency 

across the organization while retaining 

the possibility of assessing and rewarding 

individual achievement. Performancerelated 

annual bonuses paid to senior 

executives depend on their ability to meet 

personal targets, as well as corporate 

operating margin and quality targets set 

at the beginning of each year. 

PMTC SIGNS AN AGREEMENT 

WITH AGEFIPH 

In 2002, Peugeot Motocycles 

initiated an extensive project to 

renovate its production facilities in 

Mandeure, France. One part of the 

project focused on improving 

workstation ergonomics and the 

employability of persons with 

disabilities. 

An agreement signed in July with 

AGEFIPH will reserve jobs for 30 

people certified by a government 

commission as handicapped. 

AGEFIPH is helping to fund the 

workplace audit, the project’s 

handicapped-related aspects, and 

the reconfiguration of the workstations. 

Workstations have been created or 

reconfigured on the assembly line, as 

well as in the purchasing office and the 

preparation room. The process is 

continuing in 2003, with the Mandeure 

facility employing 80 people certified 

by a government commission as 

handicapped. 

(1) Paid in the Automobile Division, the finance companies, 

the Transportation and Logistics Division and other businesses, 

excluding Sevelnord and Française de Mécanique. 



ENCOURAGING EMPLOYEES TO EMBRACE 

GROUP OBJECTIVES AND ENABLING THEM 

TO SHARE IN GROUP EARNINGS 

To manifest every employee’s membership 

in the corporate community, incentive 

bonuses based on operating margin are 

paid to all employees around the world. 

For 2002, the total amount represented 

3.6% of payroll, including employer taxes 

and social security contributions paid in 

each country. In all, more than €249 

million will be allocated worldwide in 

2003, under both this incentive system and 

the legally-mandated French profit-sharing 

on 2002 income. 

DEVELOPING EMPLOYEE SAVINGS 

Employees in France can participate in 

two corporate savings plans, one invested 

in Company shares, blocked for five 

years, and the other a retirement savings 

plan. Company matching payments 

into these plans totalled €15.9 million (1) 

in 2002, versus €12.7 million the 

year before. Similar employee savings 

incentives are being introduced outside 

France, with the creation of savings plans 

in Spain in 2002 and the United Kingdom 

in 2003. 

RESPONDING TO EMPLOYEE CONCERNS 

ABOUT RETIREMENT BENEFITS 

In response to employee concerns about 

their future retirement benefits, supplemental 

defined contribution retirement plans were 

set up in a number of countries in 2001. 

These plans supplement social security 

pensions to offset the forecast decline in the 

replacement rate. In Spain, length-of-service 

awards to managers have been transformed 

into a defined contribution plan with the 

initial capital financed by the Company. For 

other categories of personnel, provisions 

corresponding to length-of-service awards 

have been paid into a group insurance plan. 

In the United Kingdom, the new defined 

contribution stakeholder plan introduced 

for new hires offers more favorable benefits 

than the average plan on the market. 

Employees can elect to contribute between 

1 and 5% of their salary to the fund of their 

choice. In response to the new Riester 

pension act, the German subsidiaries have 

set up two systems: a pension fund and an 

insurance contract that lets certain 

employees benefit from tax subsidies in 

addition to their contributions. 

IN FRANCE, AN INNOVATIVE AGREEMENT AND A NEW SUPPLEMENTAL RETIREMENT 

PLAN 

Applicable to the more than 30,000 employees of the main French companies in the 

Automobile and Logistics and Transportation and Finance Divisions whose compensation 

exceeds the social security ceiling on contributions, the new plan will provide 

supplemental retirement benefits to offset the forecast decline in replacement rates. 

The defined contribution system, which came into effect on July 1, 2002, replaces the 

former defined benefits plan. It is financed two-thirds by the Company and one-third by 

the employees, with employee savings invested in mutual funds managed by a joint 

Company-employee commission. The approach taken by all parties demonstrates a 

commitment to implementing measures today to maintain the level of future employee 

pensions. It supports PSA Peugeot Citroën’s employee relations policy by strengthening 

the employee savings plans already in place, and especially the Long-Term Employee 

Stock Ownership Plan introduced in 1999. 

(1) 

Excluding the finance companies 

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SIGNIFICANT AGREEMENTS 

IN THE AUTOMOBILE DIVISION 

IN 2001 AND 2002 

France: Eight agreements signed, 

concerning wages, working hours, 

vacation time, incentive systems, 

union rights, supplemental 

retirement plans and working 

conditions. 

Spain: 2001-2003 convenio signed, 

concerning wage increases for nonmanagerial 

staff, shorter working 

hours on an annual basis, the 

convergence of employee categories 

and the redundancy plan for the 

Madrid and Vigo plants. 

Argentina: Agreements concerning 

adjustments to economic conditions 

and flexible working hours. Renewal 

of the “social peace” agreement. 

United Kingdom: Agreements 

concerning negotiation and 

consultation, with changes in 

committee membership and in 

negotiation processes. Other 

agreements on increases in wages 

and employee contributions to 

pension plans, on the organization 

of work and the introduction of the 

stakeholder plan. Continuous running 

agreements and introduction of a 

fourth shift. 

Brazil: Collective agreements 

concerning a general wage increase, 

shorter workdays and improved 

living conditions, a 2002 profitsharing 

program, and agreements on 

collective vacations and flexible 

working hours. 

Germany: Agreements on a code of 

ethics concerning the use of new 

information systems, and on 

guidelines for managing geographic 

transfers in the Peugeot marketing 

subsidiary. Agreements on holidays 

and procedures governing working 

hours. 

ENCOURAGE INVOLVEMENT IN 

THE COMPANY BY EMPLOYEES 

AND EMPLOYEE REPRESENTATIVES 

WORLDWIDE 

SUSTAINED, REVAMPED SOCIAL DIALOGUE 

The quality of social dialogue in a company 

is based on a commitment to working 

together and on an affirmation of the role 

and mission of employee representatives. 

The signature in France of two agreements 

on union rights in 1999 and 2001 reflects 

this commitment to involving employee 

representatives in the life of the company. 

The Group intends to pursue social dialogue 

by working with independent unions. 

Agreements on the exercise of union rights 

concern such areas as recognizing that 

employees can be union representatives 

while retaining their professional 

responsibilities, providing information and 

training for employee representatives and 

ensuring sufficient resources for the smooth 

functioning of union organizations. In France 

as in other countries, every employee 

working in a production plant, service facility 

or major marketing organization is 

represented by independent unions or 

employee representatives. Employees in all 

of the Group’s European units are 

represented by a European Works Council 

created in 1996. 

BUILDING CONTRACTUAL RELATIONS 

A large number of agreements on major 

corporate issues were signed worldwide 

in 2002, in particular concerning wages, 

working hours, incentive systems and 

supplementary retirement plans. Where 

necessary, implementation is being tracked 

by a special commission that enables 

signatory unions to verify agreement 

application. Depending on national and 

local conditions, all of the Group’s 

member companies and plants contribute 

to social and cultural activities and help to 

improve the quality of worklife, with food 

services, transportation and employee 

welfare benefits. In France, more than 

1.5% of gross payroll is directly or indirectly 

allocated to employee-related activities 

and programs. 

LISTENING TO EMPLOYEE OPINIONS 

In France, four employee opinion surveys 

have been conducted by the ESTEL polling 

organization since 1998. In 2002, the 1,370 

respondents generally said they were 

satisfied and confident. In particular, they 

found their jobs interesting and appreciated 

the working hours and working conditions. 

The large majority remains confident in the 

outlook for jobs in the industry in general 

and their own job in particular. Lastly, 82% 

felt that their personal objectives and 

assignments were clearly defined, and 78% 

believed they were realistic. In absolute 

terms, these were very good numbers, and 

higher than in previous years. 


E nvironmental 

Stewardship 

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Statistics 

PSA Peugeot Citroën is committed to an ambitious policy of environmental stewardship, 

seaming integrated with its industrial strategy and based on the principles of sustainable 

development. 

The policy covers both vehicles, to curb their environmental impact, and production facilities, 

to safeguard the environment and preserve the quality of life of neighboring communities. 

CARS AND THE ENVIRONMENT 

For PSA Peugeot Citroën, the major 

environmental challenge is to harmoniously 

integrate vehicles into their environment 

and, in particular, to abate the greenhouse 

effect. The Group believes that, as a 

carmaker, it should make a proactive 

commitment to reducing carbon dioxide 

emissions, and that one way of achieving 

this is to develop technologies that reduce 

fuel consumption. It also assertively 

promotes the use of biofuels, sponsors 

environmental initiatives and invests to 

make its vehicles as recyclable as possible. 

HELPING TO ABATE CO 2 EMISSIONS 

According to the OECD 2001 Outlook, cars 

account for just 5.5% of CO 2 emissions 

generated by human activity, far behind 

manufacturing operations. This figure is 

nonetheless of concern as the global 

automobile fleet continues to expand. 

Curbing CO 2 emissions by the marques’ 

vehicles is therefore a priority avenue of 

improvement, in particular through the 

Group’s long-standing commitment to 

diesel engines. These powerplants deliver 

equivalent performance, yet use less fuel 

and therefore emit less CO 2 than gasoline 

engines, all while reducing other emissions 

thanks to the development of Group 

technologies. They are also widely accepted 

in Europe, as seen in the steady increase, 

to a current 43%, in the percentage of 

diesels among cars sold in the region. 

In 2002, for example, PSA Peugeot Citroën 

was the world’s largest manufacturer 

of common-rail, direct-injection HDI 

engines, with output of 1.4 million units. 

The latest generation of this powerplant 

reduces CO 2 emissions by 20% compared 

with a conventional injection diesel and 

by 30% compared with a gasoline 

engine. Plus the widespread use of 

turbochargers and high pressure direct 


E nvironmental Stewardship 

WITH DELPHI SYSTEMS, HFC-FREE AIR CONDITIONING 

As a growing number of carbuyers opt for the comfort of air conditioning, the proportion 

of factory-equipped vehicles has surged from 5% in 1995 to 65% in 2000. Current air 

conditioning systems use fluorinated gases, which have an adverse impact on the 

stratospheric ozone layer. Their use will ultimately be banned. 

In partnership with original equipment manufacturer Delphi Systems, PSA Peugeot 

Citroën has attenuated these systems’ environmental impact by replacing the 

hydrofluorocarbon (HFC) coolant gas used today with carbon dioxide. Carbon dioxide 

does not harm the ozone layer and its contribution to the greenhouse effect is half that 

of HFC. 

A “green” Peugeot 206 demonstration car equipped with the innovative new system 

was acclaimed by the public at the last Frankfurt Auto Show. 

In addition, all air conditioning systems in Peugeot and Citroën vehicles are equipped 

with variable displacement compressors, which are more energy efficient than their 

fixed counterparts. To further reduce fuel consumption, and with it CO 2 emissions, 

electronically-controlled air conditioning is being extended across both model lineups. 

Depending on weather conditions, this can reduce fuel consumption by two to three 

liters over a 1,000-kilometer trip. 

injection (1,250 to 1,600 bar at present) 

have increased engine efficiency through 

finer fuel spray in the combustion 

chamber, without increasing fuel 

consumption. 

These gains are also being driven by the 

Group’s sustained commitment to 

“downsizing”, so that smaller, and 

therefore more fuel efficient, engines 

deliver equivalent performance as the 

preceding larger models. The new 1.4-liter 

HDI, for example, consumes 10% less fuel 

than the previous generation 2-liter 

powerplant, while continuing to provide 

equivalent torque and power. 

These technological innovations aimed at 

lowering CO 2 emissions are being 

supported by projects to decreasing vehicle 

weight while maintaining optimum safety 

performance. 

Today, the Group’s model lineups include 

cars that emit fewer than 120 grams of 

CO 2 per kilometer, outperforming hybrid 

vehicles currently on the market. 

Even as advances are made with internal 

combustion engines, ongoing research is 

aimed at developing efficient, affordable 

alternative vehicles. Both Peugeot and 

Citroën have confirmed that their lineups 

will be expanded in 2004 to include 

efficient hybrid vehicles. 

IMPROVING AIR QUALITY 

Over the past 30 years, new vehicle 

emissions have declined by 95%. 

The final link in the emissions control chain, 

the particle filter has further enhanced the 

environmental performance of diesel 

engines. PSA Peugeot Citroën is the only 

carmaker in the world to offer particle filter 

technology, in a clear demonstration of its 

commitment to improving the quality of 

air in urban environments. The filter, an 

74 



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WHAT ARE BIOFUELS? 

Derived from cereals, sugar beets (ethanol and its ETBE derivative), or oilseeds such as rapeseed or 

soybeans (in the case of biodiesels), biofuels are exceptionally well suited to combating the 

greenhouse effect. They reduce emissions of pollutants such as particulates and, by their very nature, 

prevent an increase in carbon dioxide content in the atmosphere, since the plants from which they 

are made trap atmospheric CO 2 through photosynthesis. Biofuels are therefore fully renewable 

energies, although their production cost remains high. 

SERVICE FLEETS: 

PSA PEUGEOT CITROËN 

LEADS THE WAY 

The European Commission has 

specified that by 2020, 20% of 

automotive fuels must contain 

products of plant origin. 

PSA Peugeot Citroën is already 

setting an example in meeting this 

goal by encouraging its service fleet 

to run on biofuels. For example, 82% 

of the diesel fleet at the Sochaux 

plant—or close to 58% of the entire 

service fleet—ran on biofuel in 2002. 

Consisting of 30% vegetable oil 

methyl ester and 70% diesel, the 

fuel is already richer in plant matter 

than required by EU legislation. 

The Sochaux plant used 330,000 

liters of Diester ® in 2002. It intends 

to maintain this level in 2003, since 

the fuel has a favorable net impact 

on the environment and is suitable 

for use in conventional internal 

combustion engines, which still 

power most of the fleet. 

aftertreatment system that eliminates 

emissions of particulate matter, is now 

available on the Peugeot 307, 406, 607 

and 807 and the Citroën C5 and C8. 

The particle filter has been a popular 

success since it was introduced in May 

2000, and is already installed on 400,000 

diesel vehicles. By 2005, one million 

particle filter-equipped vehicles will be 

marketed a year. Already in 2003, 

PSA Peugeot Citroën is offering filterequipped 

vehicles compliant with the 

stricter Euro IV emissions standards 

scheduled for application in 2005. 

The particle filter has also won a number 

of awards, including four in 2001. In 

2002, Italy’s Quattroruote automotive 

magazine presented its Environment Prize 

to the filter-equipped Peugeot 607. 

PROMOTING BIOFUELS 

Another way to attenuate vehicle CO 2 

emissions is through the efficient use of 

alternative energies and new propulsion 

technologies. A pioneer in the field, 

PSA Peugeot Citroën is strongly committed 

to promoting biofuels that can be used in 

diesel or gasoline engines. Biodiesels, such 

BIODIESEL PERFORMANCE 

as the Group’s trademarked Diester ® , consist 

of vegetable oil methyl esters (VOMEs) 

blended with automotive diesel fuel, while 

ethanol or its derivative ethyl tertiary butyl 

ether (ETBE) is used with gasoline. 

These biofuels can be used directly in any 

Peugeot or Citroën vehicle, without any 

technical modifications. In this way, the 

Group’s service fleet is encouraged to run 

on Diester ® 30, a fuel combining 30% 

VOME and 70% automotive diesel that 

reduces CO 2 emissions by 18% and particle 

emissions by up to 22% in comparison 

with ordinary diesel fuel. What’s more, 

Diester ® 30 lubricates the engine system 

more efficiently, enhances protection from 

injection system wear, and ensures smoother 

operation of catalytic converters. 

PSA Peugeot Citroën also supports the 

development of biofuels by validating 

potential applications under local energy 

policies. It regularly shares its experience as 

a carmaker by taking part in discussions on 

the technical, business and political issues 

raised by biofuels. 

30% VOME Diester® 100% VOME Diester® 

Engine Precombustion Naturally HDI Precombustion Naturally HDI 

technology chamber aspirated chamber aspirated 

Reduction in 

particle emissions -9% -22% -22% -35% -60% -46% 

Reduction in 

CO 2 emissions -18% -60% 



OPTIMIZING RECYCLING 

AND REUSE THROUGH 

ECODESIGN PRINCIPLES 

Ecodesign is a process that builds 

environmental concerns into projects 

from the design phase. Embraced by 

PSA Peugeot Citroën engineers, it 

has led to the use of new materials, 

in particular thermoplastics such 

as polyethylene, polyurethane, 

polypropylene and polyamide that 

are easy to recover and recycle. 

Today, materials used to make cars 

have to meet increasingly stringent 

criteria. The latest developments 

include: 

- Using a single family of plastics per 

major function, so that an entire 

sub-assembly can be recycled 

without prior disassembly. 

- Reducing the variety of plastics in 

a car, to optimize the related 

recovery processes and ensure 

their profitability. 

- Marking plastic parts with 

standardized codes, to ensure 

identification, sorting and 

traceability. 

- Using recycled materials. 

DESIGNING FOR DISASSEMBLY AND REUSE 

PSA Peugeot Citroën’s environmental 

stewardship commitment covers the entire 

product life cycle, from design to 

disassembly. A European Union directive 

stipulates that as of January 1, 2006, at 

least 85% of a scrap vehicle’s average 

weight must be capable of recovery and 

reuse, with the rate rising to at least 95% 

by January 1, 2015. Peugeot and Citroën 

vehicles will comply with the 95% 

recyclable rate from 2005. 

In response to the July 1, 2003 ban on the 

use of mercury, cadmium, lead and 

hexavalent chromium in new vehicles, the 

Group in 2002 deployed a wide-ranging 

initiative that required its 800 suppliers to 

provide compliance certificates for all their 

deliveries or for each part supplied for 

forthcoming vehicles. The response rate 

by year-end demonstrated an assertive 

commitment to compliance in this area. 

In addition, substitutes for parts and 

materials containing heavy metals were 

developed by the Group’s engineering teams 

to ensure that Peugeot and Citroën models 

are free from any heavy-metal content. 

PRODUCTION PLANTS AND THE 

ENVIRONMENT 

GLOBAL PRINCIPLES 

Safeguarding the environment at 

manufacturing plants and protecting the 

quality of life in neighboring communities 

have long been critical priorities for 

PSA Peugeot Citroën. Guided by the principles 

of continuous improvement, risk prevention 

and regulatory compliance, this commitment 

is deployed at all Group facilities worldwide. 

The corporate risk prevention and 

management department includes an 

environmental section with its own capital 

plan. In addition, on each Automobile 

Division site, an environmental manager 

is backed by a dedicated organization and 

correspondents appointed in each 

workshop and facility. In 2002, around 

500 people were involved in managing 

the Group’s industrial environment. 

CURBING GREENHOUSE GAS EMISSIONS 

• Reducing VOC emissions 

In France, automobile plants account for 

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roughly 0.5% of total volatile organic 

compound (VOC) emissions produced by 

human activity, with Group facilities 

accounting for half this total. To reduce 

these emissions, the Group is leading a 

proactive, three-pronged policy: 

- Optimizing paint shops, by reducing the 

use of conventional paints and related 

solvents, introducing low-solvent paints 

and recycling used solvents. 

- Deploying clean technologies like waterbased 

paints and powder primers in new 

facilities. 

- Installing air treatment equipment to 

incinerate VOCs. 

NEW TECHNOLOGIES CUT PAINT SHOP VOC EMISSIONS IN POISSY, MULHOUSE 

AND PORTO REAL 

In 1997, to reduce VOC emissions from its paint shop, the Poissy plant implemented the ambitious 

RAPPY program, comprising water-based primer and enamel lines and incinerators for VOCs released 

in the drying ovens. The resulting process, which is already compliant with the most stringent 

environmental standards, has helped cut VOC emissions by two-thirds, from 3,500 metric tons in 1988 

to 1,180 tons in 2002, even though production increased by around 30% over the same period. 

Improved versions of these technologies are being installed at the Mulhouse plant, where VOC emissions 

are currently estimated at around 6.5 kilograms per vehicle. 

Now under construction, the new shop is expected to halve this figure, to 3.3 kilograms per vehicle. 

The total cost will be €230 million, of which €45 million dedicated to environmental safeguards. 

The Porto Real plant in Brazil, inaugurated in January 2001, is also equipped with a paint shop compliant 

with the latest environmental standards. 

These measures have helped reduce VOC 

emissions from the French paint shops to 

an average 5.4 kilograms per vehicle in 

2002, from a range of 10 to 13 kilograms 

per vehicle, depending on the site, in 

1988. Worldwide, VOC emissions totalled 

5.7 kilograms per vehicle in 2002. 

Continued systematic implementation of 

the best, most cost-effective solutions will 

enable the Group to meet the limits set 

for 2007 in the European Union directive 

on reducing VOC emissions. 

• A steady decline in other regulated 

emissions 

By substituting natural gas—or low or very 

low-sulfur fuel oil—for conventional fuel 

oil, sulfur dioxide (SO 2 ) emissions from the 

Group’s power plants have been reduced 

by 65% over the past ten years. At the 

Vigo plant, SO 2 emissions dropped from 

13,500 metric tons a year to zero when 

natural gas replaced fuel oil as the main 

source of energy. 

Nitrogen oxide (NO x ) emissions have been 

curbed by installing high-tech burners in 

new facilities. Volumes have declined by 

around 20% in Europe since 1995, according 

to data from the Industrial Environment 

Observatory set up by the Group to track the 

environmental performance of its facilities. 

LOWERING ENERGY CONSUMPTION 

All automotive processes are energy 

intensive, whether foundry work, the 

cooling of machine tools, paint drying or 

heat treatment processes. The Group is 

committed to developing action plans to 

reduce energy consumption at all its 

automobile plants. Among the most 

remarkable initiatives undertaken in recent 

years has been the installation of waste- 



CHARLEVILLE COMMITS NEW 

INVESTMENT FOR CLEANER 

RELEASES 

A new €1.7 million wastewater 

treatment facility was commissioned 

at the Charleville plant in November 

2002. The unit, financed by PSA 

Peugeot Citroën with the support of 

the Rhin-Meuse Water Agency and 

the Ardennes Regional Council, 

treats waste process water before it 

is released to the natural 

environment. 

to-energy units at the Rennes, Mulhouse 

and Sochaux facilities. 

REDUCING WATER CONSUMPTION 

Conserving water is a key objective at all 

plants, in particular through the use of 

metering systems and the display of the 

least water-intensive operating parameters 

for each workstation. These measures 

helped to reduce water consumption by 

5% between 1995 and 2002, even though 

output increased 65% over the same period. 

Production facilities are either connected to 

the public wastewater treatment network 

or equipped with their own integrated 

RECYCLING USED CASTING SAND TO REDUCE WASTE AND CONSERVE 

RESOURCES 

Since December 2002, the Charleville plant has been testing a new process for 

recycling the some 100,000 metric tons of used casting sand it produces each year. 

Once cleaned by a heat process, the sand can be reused on site or sold to third 

parties. The fine sand waste produced by the heat treatment, for example, can be 

used in cement plants or to make tires. 

The new process, which cost €8 million, saves on raw material purchases and 

produces less waste. The ultimate objective is to divert all the waste formerly sent 

to landfills to value recovery processes. 

A similarly broad-based program was implemented at the Sept-Fons foundry, with 

a mechanical treatment process that delivered conclusive results. Some 39,000 

metric tons of sand were recycled, equivalent to 54% of the total. 

treatment plant. They also systematically 

track releases using indicators, defined on 

a case-by-case basis, to estimate, for 

example, the amount of suspended solids 

and the chemical oxygen demand (COD). 

Between 1989 and 2002, daily releases of 

suspended solids and COD were each 

halved. The risk of eutrophication and 

acidification caused by emissions from the 

Group’s car plants is negligible. 

REDUCING AND EFFICIENTLY RECOVERING 

WASTE FROM AUTOMOBILE PLANTS 

Programs in place for the past ten years 

to reduce, reuse, recover and recycle 

automotive process waste enabled the 

production plants to recover and reuse a 

full 74% of their worldwide waste in 2002 

(excluding metal waste, which is nearly 

100% recycled). This extensive recycling 

has resulted in a steep decline in waste 

disposed of in landfills, from around 66% 

in 1989 to just 17% in 2002. 

Nearly all scrap sheet metal, turnings and 

other metal waste is recovered and reused 

in steelmaking or in the Group’s foundries. 

Managing this category of waste, 

estimated at around 700,000 metric tons 

a year, is therefore not only environmentally 

beneficial, it also makes business sense. 

When this category of waste is taken into 

account, Group plants reclaim and recycle 

around 90% of their process waste. 

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CLEAN ENGINES FROM A GREEN PLANT 

At the Tremery plant, the 1.4-liter HDI engine, which produces very little CO 2 , is manufactured in a 

“clean factory”. The engine line uses new overhead systems to transport cutting fluids, which are 

conveyed directly to the filtering unit after use. As a result, even minor leaks are immediately visible, 

ensuring that none of the liquid seeps into the ground. 

UNDERSTANDING SOILS TO IMPROVE 

PROTECTION 

Soil pollution is not yet covered by any 

international regulations, but depending 

on local expectations, the Group is 

committed to identifying any contamination 

pre-existing at its sites. In France, at the 

instigation of public authorities and in 

compliance with the procedure developed 

by the Geological and Mining Research 

Bureau (BRGM), soil contamination was 

assessed at the Sochaux, Mulhouse, Poissy, 

Caen, Asnières-sur-Seine, Saint-Ouen, 

Sept-Fons and Valenciennes sites. As a 

precaution, similar investigations were also 

carried out at the Trémery and Borny 

plants. After in-depth surveys conducted 

between 1999 and 2002, the experts 

concluded that only self-monitoring was 

required at the ten facilities. As part of this 

process, strict procedures are in place 

to prevent soil pollution, in particular 

through the use of retention basins for 

liquid storage. 

AN ACTIVE CERTIFICATION POLICY 

Environmental management systems have 

been introduced at all production facilities 

worldwide, with the aim of earning ISO 

14001 certification, the internationally 

recognized standard in this area. By end- 

2002, 20 plants had been certified and 

four others were engaged in the 

certification process. 

As part of that process, the sites have 

developed procedures for communicating 

transparently with their host communities. 

Data pertaining to plant self-monitoring 

is transmitted to the public authorities, 

while requests for information from 

neighbors are answered and, where 

necessary, corrective actions are taken, 

such as changing a stack noise suppressor 

or replacing a fan. 

RAISING ENVIRONMENTAL AWARENESS AND CAPABILITIES AMONG ALL EMPLOYEES 

ISO 14001 is an internationally recognized standard for environmental management and organization. 

It enables a company to express an environmental strategy, describe the procedures used to 

implement it, guarantee compliance and drive continuous improvement, the foundation of good 

environmental management. 

As part of the ISO 14001 process, every employee receives training in environmental skills or 

awareness tailored to his or her job and business. This is true as well for interns, temporary employees 

and employees hired under fixed-term contracts, who are familiarized with environmental issues 

during their orientation process. 


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MANUFACTURING CARS AND 

IMPROVING ROAD SAFETY 

PSA Peugeot Citroën’s overriding priority 

is the safety of drivers and other road users, 

with 10% of the research and development 

budget allocated to programs in this area 

in 2002. While continuing to assertively 

develop technological solutions that avoid 

accidents (active safety) and reduce their 

impact when they do occur (passive safety), 

the Group is now also addressing the major 

challenge of improving driver behavior. This 

is why programs are underway to deepen 

understanding of the human factors at 

play in accidents and awareness-building 

initiatives are being deployed to promote 

more safety-conscious behavior. 

DESIGNING SAFE VEHICLES IS THE VERY 

HEART OF A CARMAKER’S BUSINESS 

The Group does everything it can to 

optimize the active and passive safety 

features that drivers expect from Peugeot 

and Citroën vehicles. Nevertheless, driver 

training, information and accountability 

are equally as important, as is the quality 

of the road infrastructure. 

• Accident avoidance, a critical challenge 

Despite the significant advances in passive 

safety systems, accidentology studies 

show that 50% of passenger fatalities 

could not have been avoided. Human 

bodies and automotive materials just 

cannot withstand the force of certain 

impacts. In addition, automotive safety 

innovations spread only gradually. In 

France, for example, it takes 13 years to 

replace 90% of all cars on the road. 

• Making the system driver-centric 

No car can be safe without increasing 

driver empowerment. This means the 

challenge is to improve active safety, 

which enables drivers to control their 

vehicles and make the right decision at 

the right time. 

Developing systems that facilitate driving 

under all circumstances has therefore long 

been a priority for PSA Peugeot Citroën. 

In an area generally deemed to be 

“unquantifiable”, the Group has 

substantively improved test procedures 

that can be used to objectively identify 

risk factors and then deliver effective 

technological solutions. 



PSA PEUGEOT CITROEN EXCELS 

IN ACTIVE SAFETY 

To ensure that the Group’s cars meet its 

ambitious safety objectives, close attention 

is paid to every component that might 

affect active safety. 

• Visibility and lighting 

Automobile safety depends on “seeing 

well and being seen.” PSA Peugeot Citroën 

has been a trailblazer in this area since 

1989, when it introduced innovative 

complex surface headlights on the Citroën 

XM. Today, discharge lamps that generate 

more intense light beams are used on 

models such as the Peugeot 607 and 807 

and the Citroën C5 and C8. 

In 1995, the Group was also the first 

carmaker to install auto rain-sensing systems 

as standard equipment on several of its 

models. The sensors automatically adjust 

wiper speed so that drivers don’t have to 

take their hands off the steering wheel. 

To warn other drivers automatically of 

potential danger, the Peugeot 206, 307 

and 807 and the Citroën C3, C5 and C8 

are factory-equipped with a system that 

automatically causes hazard flashers to 

blink during sharp braking. 

• Ergonomics 

Postural ergonomics help to minimize 

driver fatigue. An example is positioning 

the gearshift knob near the steering wheel 

of the Citroën Picasso, Citroën C8 and 

Peugeot 807, which also makes the 

passenger compartment more modular 

and easier to move around in. Cognitive 

ergonomics focus on making a car’s 

“human-machine interfaces”—like control 

stalks, multi-purpose screens, and 

dashboard buttons—immediately 

understandable to minimize driver 

distraction. 

• Braking systems 

PSA Peugeot Citroën rapidly introduced 

ABS systems as standard equipment on 

almost all lines. Ideally, training courses 

should teach drivers to use the full 

potential of the ABS system and in 

particular to learn how it can help them 

maintain control in emergency situations. 

Another improvement is the electronic 

brake control valve and brake-assist 

system, which adjusts rear-brake pressure, 

thereby preventing wheel lock and any 

resulting loss of steering control. This 

system is currently offered as standard 

equipment on the Citroën C3 and C5 and 

the Peugeot 307. 

• Driver assistance systems (ESP, ASR) 

The electronic stability program (ESP) and 

acceleration skid control (ASR) are two 

innovations currently offered on high-end 

models. While ESP and ASR-equipped 

vehicles are still subject to physical laws, 

these systems do help to rectify minor 

driving errors and decrease the probability 

of losing control of the vehicle. 

• Tire pressure sensors 

Low tire pressure increases the risk of a 

loss of trajectory stability. Pressure sensors 

installed on tire valves alert the driver 

when pressure falls too low. The system 

is already available on the Peugeot 607 

and Citroën C5 and will gradually be 

extended to other models. 

• Programmable speed alert systems 

PSA Peugeot Citroën has developed 

programmable speed alert systems that 

enable drivers to choose a maximum 

speed (for example, 50 kilometers an hour 

in town). An audio signal sounds each 

time the vehicle exceeds the chosen speed. 

The system is standard equipment on the 

Citroën C3, C5 and C8 and the Xsara, 

the Xsara Picasso, and the Peugeot 807, 

launched in 2002. 

THE PSA PEUGEOT CITROËN/ 

RENAULT LAB: SCIENTIFIC 

EXPERTISE SERVING THE 

PUBLIC GOOD 

For more than 30 years, the 

Laboratory of Accidentology and 

Biomechanics (LAB), a joint undertaking 

of PSA Peugeot Citroën and Renault, 

has been acquiring invaluable 

knowledge in these two disciplines, 

whose complexity, costs and findings 

deserve to be shared in a “noncompetitive” 

environment. In 2002, 

LAB was a key participant in the 

European Accident Causation Survey 

(EACS) and international Cooperative 

Crash Injury Study (CCIS) consortium. 

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conditions and to test ABS-equipped 

vehicles in actual road conditions. 

structural integrity and front-end crumpling 

in the event of frontal impact. 

• Suspension systems and stiff body shells 

A decisive factor in roadholding, metal 

suspensions (Peugeot) and electronically 

controlled hydraulic suspensions (Citroën) 

are two technologies that demonstrate 

the Group’s expertise. 

The Citroën C5 executive sedan debuted the 

new, exclusive Hydractive III electronically 

controlled hydraulic suspension system. This 

third generation technology has further 

improved the balance between guidance to 

follow the intended line of travel and filtering 

for a more comfortable ride. Smaller vehicles 

such as the Citroën C3, feature a rear axle 

with deformable crossbeams that ensure 

excellent handling in all situations. 

Suspension system performance is also 

directly related to the stiffness of the 

bodywork to which it is attached. The 

Group’s body shells rank among the best in 

the world in terms of torsional stiffness. This 

integrated architecture interacts with the 

entire vehicle’s active safety performance. 

• Track tests 

In 1991, PSA Peugeot Citroën became the 

first global carmaker to acquire a multigrip 

track to simulate winter driving 

The Belchamp Test Center in eastern France 

recently opened a new roadhandling test 

track to help develop vehicles equipped 

with electronic stability programs (ESP) and 

acceleration skid control (ASR) systems. 

The facility simulates different adhesion 

conditions on the left and right side of the 

vehicle (the cause of a large number of 

accidents) using a dry track and a wet 

track. The latter has a spray system that 

can cover the surface with a sheet of water 

between 0.8 and 1 millimeter deep. In this 

way, vehicle improvements can be validated 

under any road conditions. 

PASSIVE SAFETY: STATE-OF-THE ART 

PASSENGER PROTECTION SYSTEMS 

PSA Peugeot Citroën believes that drivers 

and passengers are entitled to state-ofthe-art 

protection in the event of an 

accident, and builds the latest technological 

innovations into every one of its vehicles. 

• Energy-absorbing front-end 

crumple zones 

To protect the passenger compartment, 

vehicle front ends have to be able to 

withstand high-energy impacts. However, 

they should also gradually crumple over 

the duration of the impact, which lasts 

100 milliseconds at most, in order to 

dissipate the crash’s kinetic energy and 

prevent the occupants from being subjected 

to the full force of the sudden deceleration. 

Rapid advances in seatbelts and airbags 

have also led to a better balance between 

The new platform strategy has provided an 

opportunity to completely resize the front 

ends of small, medium and large models 

on the three basic platforms. The Citroën 

C3, Citroën C5 and Peugeot 307 were the 

first to have their front-end impact strength 

doubled and their load resistance tripled 

through side beams. 

• The passenger compartment, 

a survival cell 

In an accident, the passenger compartment 

can play a critical role as a survival cell. 

Architecturally, raising the seat level not 

only makes the car roomier and improves 

visibility, but also heightens side impact 

protection by distancing vital body parts 

(head, chest and pelvis) from the impact 

area. Higher seats are found in the Citroën 

Picasso, the Peugeot 807 and Citroën C8 

MPVs, as well as the Peugeot Partner and 

Citroën Berlingo mini-MPVs. 

The sides of all recent vehicles have been 

strengthened by using very high yield 

strength sheet metal, which allows the side 

body panels to crumple extensively, yet 

gradually without ripping apart. Equipping 

recent models with side airbags as a standard 

option further reduces injury in the event 

of side impact. The Peugeot 307, 607 and 

807 and the Citroën C5 and C8 also have 

side curtain airbags to protect front and 

backseat passengers. These advances are 

especially important since accidentology 

shows that the severity score is greater for 

side than for frontal impact accidents. 



AUTOMOTIVE SAFETY FACTS & FIGURES 

• Two road test centers: Belchamp and La Ferté-Vidame. 

• 18 million kilometers of road tests in 2002 (409 times around the world). 

• A patented multi-grip track for braking tests. 

• A roadhandling track for ESP/ASR. 

• A passive safety center with a full-size catapult, reverse catapult, pedestrian impact 

bench, etc. 

• 600 complete crash tests and 500 physical tests on automotive subsystems in 2002. 

• 3,000 digital crash simulations a year (entire vehicles and subsystems). 

• 175,000 hours of simulation on a Cray supercomputer (complete crash simulations). 

• Aggregate computation capacity of 1,013 gigaflops, up from 160 gigaflops at end-1999 

(1 gigaflop = 1 billion operations per second). 

• 60 crash test dummies (unit value: €150,000). 

Improving safety accounts for 10% of the Automobile Division’s R&D budget 

• Active restraint systems, a major 

technological breakthrough 

A study of 1,250 serious accidents found 

that the use of active restraint systems, 

such as seatbelts and airbags, resulted in 

an 80% reduction in head and chest injuries. 

Fastening the seatbelt, even for short trips, 

delivers effective protection. 

Seatbelt reminder system 

A light warns drivers that seatbelts have 

not been fastened and stays on until all 

seatbelts are buckled. Just wearing a seatbelt 

would reduce the number of fatalities in 

French car wrecks by 25%, saving 1,250 lives 

a year. 

Improving seatbelt-airbag calibration, 

based on the full range of passenger 

compartment parameters 

All PSA Peugeot Citroën vehicles are 

equipped with three-point seatbelts, 

pretensioners and load limiting retractors. 

Before the airbag deploys in a collision 

sequence, the passenger is pulled tight 

to the seat by a traction force of 80 to 

100 kilograms, compatible with rib cage 

strength, even in the elderly. This action 

restricts the passenger’s movement by a 

few precious centimeters in the event of an 

impact. 

Airbags “dampen” violent contact between 

occupants and passenger compartment 

components. Airbag deployment significantly 

reduces the deceleration that such contact 

might inflict on the brain, possibly causing 

serious, even fatal, injury. 

The vast majority of the crash tests conducted 

during model development are dedicated 

to determining passenger compartment 

parameters and to the crucial process of 

calibrating the seatbelt/airbag system to 

make it effective in a wide variety of accident 

configurations. 

Active headrests and footrests 

These innovative devices have been 

introduced as standard equipment on the 

Peugeot 307. The active headrest is designed 

to prevent whiplash. The active footrest 

moves back at the same time as the 

bulkhead crosspiece (the part separating 

the engine compartment from the 

passenger compartment) to prevent often 

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YOUNG PEOPLE AND ROAD SAFETY IN GALICIA, SPAIN 

In 2002, the Vigo plant organized, in partnership with the government of Galicia, a campaign to teach 

people under 30 how to drive more responsibly. As part of the “Safe Driving” program, the Group 

supplied vehicles, including one equipped for the disabled, to a team of instructors that during 

the year taught more than 4,000 young people in Galicia’s seven largest cities. 

seriously incapacitating injuries such as 

sprained ankles. 

• Protecting children, a vital obligation 

Since 2000, nearly all Group vehicles have 

been equipped with Isofix attachment 

points for easy, fast, reliable installation of 

child seats in cars. However, “conventional” 

manufacturer-recommended seats can also 

offer excellent protection, provided they 

are properly installed. 

PROMOTING SAFER DRIVING 

Accidents are often attributable to speeding, 

especially in cities, to alcohol and drug use 

and, more generally, to risk-taking. This is 

why the Group has undertaken a number 

of road safety awareness initiatives. 

• Commitment to responsible advertising 

Under the terms of a code of practice 

voluntarily adopted by the auto industry in 

1988 and signed by PSA Peugeot Citroën, 

automotive professionals have agreed to 

ban references to speed in advertising and 

to ensure that their messages do not 

encourage aggressive driver behavior or 

behavior that runs counter to the elementary 

principles of caution. The French Advertising 

Verification Bureau (BVP) ensures that the 

code is respected. 

• Promoting initiatives to encourage 

more responsible driving 

Although young people are more likely to 

drive unsafely or to speed, messages 

aimed at encouraging more courteous, 

law-abiding and people-sensitive driving 

are generally addressed to all drivers. This 

is the objective of a variety of awareness 

programs initiated or continued in 2002 

by the Group in France, Spain, Brazil 

and other countries. They include an 

awareness campaign run jointly by the 

Porto Real plant and the city of Resende 

in Brazil, safe driving courses arranged by 

the Vesoul plant in France, and Group 

support for the driving school run by 

former Formula 1 driver J. P. Beltoise, and 

the Voiture & Co association that informs 

students of the effect alcohol has on 

drivers and organizes car pools to take 

people home from parties. 



REDUCING URBAN TRAFFIC 

WITH ELCIDIS 

The Group is also helping to ease 

urban traffic. In addition to 

developing onboard guidance 

systems, it participated with other 

carmakers in the European Union’s 

ELCIDIS (Electric Vehicle City 

Distribution System) project, 

supplying electric light commercial 

vehicles such as the Peugeot 

Partner and Citroën Berlingo. 

Implemented in seven European 

cities and completed in November 

2002, ELCIDIS enabled the testing, 

over a significant period of time, 

of a new system for collecting 

goods in the suburbs and delivering 

them downtown in electric vehicles. 

• Enhancing employee awareness of road 

safety 

In 2002, the Group’s largest plants also 

organized road safety awareness seminars. 

Designed in close cooperation with local 

road safety experts, the seminars enabled 

Group employees to test their driving skills 

with professionals, practice emergency 

braking and first aid, and discuss issues with 

road safety representatives. Similar programs 

were conducted at other plants and 

subsidiaries. Examples include Gefco, which 

extended its “Good Driver Competition” 

to all its drivers, rewarding the best 

performance in obeying road regulations and 

preventing accidents, and the Vélizy plant, 

which offered employees comprehensive 

courses on managing motorcycle risks. 

PROMOTING MOBILITY TO SUPPORT 

DEVELOPMENT 

The mobility of goods and people is a key 

driver of economic and social development, 

offering access to work, healthcare, 

employment and culture. Today, mobility is 

perceived as an inalienable right, whose 

accessibility and quality must be continuously 

improved. This is particularly true in cities, 

currently home to 80% of Europeans and, 

in the future, to a majority of the world’s 

population. PSA Peugeot Citroën contributes 

to the kind of mobility that is both sustainable 

and a source of progress by: 

- Designing safe, environmentally-friendly 

vehicles. 

- Promoting a balance among transportation 

modes and supporting urban mobility 

innovations. 

- Supporting initiatives facilitating access for 

the mobility-impaired. 

ENCOURAGING DISCUSSIONS 

AND EXPERIMENTS IN THE AREA 

OF URBAN MOBILITY 

As demand diversifies and becomes more 

individual, cities have to offer a greater 

variety of mobility resources. Most experts 

agree that this requires a closer fit and 

coordination between transportation 

modes, supported by research into a wide 

range of innovative solutions. This is why 

PSA Peugeot Citroën is developing new 

ways to use automobiles that improve 

traffic flow while protecting the environment. 

• More seamless transportation modes 

Electric cars are particularly well suited to 

urban environments 

With more than 8,000 units sold to date, 

PSA Peugeot Citroën is the world’s leading 

manufacturer of electric vehicles, the only 

cars that are quiet and emission-free. EVs 

are the ideal response for carrying people 

and delivering goods in city centers. They 

are particularly well suited to fleets run by 

government agencies, cities and urban 

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HOMERE HELPS THE VISUALLY IMPAIRED 

Homère is a prototype service to help blind and partially-sighted people identify routes. It was 

presented by the IVM at the Cité des Sciences et de l’Industrie in Paris in May 2002. Developed with 

the aid of visually-impaired ergonomics experts, it allows users to find their way around a place by 

exploring a computer-modeled virtual environment beforehand using multi-sensory perceptions. 

communities. In 2002, a cooperation 

agreement was signed with national utility 

Electricité de France (EDF) to work jointly 

on the development of electric and hybrid 

vehicles and to expand research in related 

technologies. The Group also donated 

electric vehicles to the Chinese Ministry of 

Science and Technology for a trial program 

in southern China. 

The Liselec self-service EV initiative 

Deployed by PSA Peugeot Citroën and a 

number of partners in La Rochelle, France, 

Liselec is a successful illustration of new 

ways of using automobiles. Fifty electric 

Peugeot 106s and Citroën Saxos are 

available 24/24 at seven recharging stations 

located near high-use locations. Subscribers 

use a smart card and a PIN to activate the 

cars, which for a small extra fee can be 

dropped off anywhere in the city. Liselec 

has been used for 78,000 trips over the 

past four years and welcomed its 500th 

subscriber at end-2002. 

Promoting car-pooling at Group plants 

PSA Peugeot Citroën is particularly 

committed to car-pooling. Nearly 10% of 

the 4,000 employees at the Vélizy technical 

center use the car-pooling system introduced 

via the plant intranet, which has improved 

local traffic conditions. Other Group 

facilities, including the new office complex 

in Poissy, are planning to introduce or 

increase the use of employee car-pooling. 

• Encouraging innovative actions 

The Institut pour la Ville en Mouvement 

Created in June 2000, PSA Peugeot 

Citroën’s Institut pour la Ville en 

Mouvement (IVM) is a non-profit 

association with a multi-disciplinary 

scientific council that develops innovative 

social, organizational and technical 

programs to improve urban mobility. It 

serves as a forum where stakeholders in 

urban mobility, such as researchers, 

urban planners, jobs associations, 

government agencies and companies, 

can interact and work in partnership on 

practical initiatives. 

The IVM is implementing ten projects 

focused on three main issues: improving 

mobility for people with special needs, 

increasing the efficiency and quality of city 

travel, and developing an urban mobility 

culture and knowledge base. 

PROMOTING SOCIAL INTEGRATION 

THROUGH MOBILITY 

For PSA Peugeot Citroën, meeting new 

mobility challenges also means helping as 

many as people as possible gain access to 

mobility to support social integration of 

the disadvantaged and a better quality of 

life for the disabled. That’s why in France 

and abroad, the Group is working with a 

number of organizations and associations 

dedicated to achieving these two goals. 

In 2002, the Group provided mobility 

resources to a number of organizations 

active in a variety of fields, such as 

reintegration programs involving jobs and 

driving lessons, social inclusion of street 

children and the prevention of juvenile 

delinquency, programs to improve the 

quality of life of disabled children, and 

services for the disabled, elderly and injured. 

SUPPORTING PARIS’ 

EMERGENCY SOCIAL 

SERVICES THROUGH 

MOBILITY 

In 2002, an agreement was signed 

with the Paris emergency social 

services agency, whereby 

PSA Peugeot Citroën will gradually 

replace the organization’s vehicle 

fleet. Medical and social assistance 

teams patrol the streets of Paris 

every night to bring socially 

excluded people to shelter or care. 

The Group is a signatory of the 

organization’s Patronage Charter 

and also sits on its Board of 

Directors. 



PROMOTING ACCESS 

TO HEALTHCARE IN 

PARTNERSHIP WITH THE 

PORTO REAL FOUNDATION 

IN BRAZIL 

The Porto Real production plant in Rio 

state supports a foundation that leads 

development projects for the poor 

districts of the city of Porto Real 

(13,000 inhabitants). In particular, the 

plant sponsors a medical team that 

provides healthcare to 600 families. 

This team, whose salaries, equipment 

and management costs are borne by 

the plant, comprises six doctors, 

nurses and social assistants. It 

provides medical and nursing care 

to the needy, and surveys and tracks 

health and social conditions in a city 

neighborhood. 

CLOSE RELATIONS WITH 

NEIGHBORING COMMUNITIES 

In addition to initiatives promoting 

mobility for all and enhanced road safety, 

PSA Peugeot Citroën also works closely 

with its host communities. Attentive to 

their needs, the Group tailors support to 

each individual situation, investing in local 

development and deploying measures in 

favor of jobs for the disadvantaged. 

SUPPORTING LOCAL DEVELOPMENT 

The Group’s manufacturing plants and 

marketing subsidiaries interact with local 

stakeholders in the major host regions. 

• Meeting an array of needs 

These initiatives take the form of 

partnerships, as in Brazil with the Porto 

Real Foundation, which works in poor 

districts of the city, and the Confiar 

Foundation, which provides food and 

education for children in the city of 

Resende. They also include aid for broader 

groups of local organizations, as in 

Argentina, where the PSA Peugeot Citroën 

production plant supports a number of 

schools and associations through regular 

donations of materials. The Vigo plant, 

particularly concerned by the oil spill that 

followed the sinking of the Prestige off the 

Galician coast, provided volunteers with 

more than 10,000 protective suits and is 

now working with local authorities on 

long-term programs. 

• Developing technical expertise 

Peugeot Citroën also cooperates with the 

French Ministry of Education through a 

national and international partnership that 

involves the Group’s production facilities 

and regional marketing departments. 

The related programs enable young 

people to discover the working world 

and to broaden their knowledge, while 

teachers can track technological 

developments and determine what 

training and equipment are best suited 

to preparing students for employment. 

Since 1999, this partnership has been 

extended to other countries, with the 

opening of automotive maintenance 

training centers in China, Brazil and Mexico 

in cooperation with local school systems. 

The centers also train teachers, using 

equipment and know-how donated by 

the Group. Other projects are under study 

for 2003. 

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In 2002, the partnership between PSA Peugeot Citroën and the French Ministry of Education led to 

plant visits by more than 16,000 high school and university students and teachers, day-long 

seminars and courses for more than 700 inspectors, principals and teachers, training for more than 

7,700 students and apprentices, the involvement of 200 Group employees as teachers, donations 

of 584 vehicles for training and the hiring of 5,870 graduates under 30. 

PROMOTING JOBS FOR THE DISADVANTAGED 

The Group’s plants deploy various 

initiatives to help the disadvantaged find 

jobs, working in partnership with public 

organizations and charitable associations. 

In addition to subcontracting work to 

sheltered workshops or work-based 

assistance centers that employ the 

handicapped, many plants have 

agreements with local, regional and 

national employment and integration 

agencies to promote the integration of 

the disabled, unqualified young people, 

and the long-term unemployed (“ANPE, 

ASSEDIC, Missions locales, Maisons de 

l’emploi, Programme Local pour l’Insertion 

et l’Emploi”). 

THE GROUP IS A MEMBER OF A NUMBER OF FRENCH ORGANIZATIONS THAT 

PROMOTE ENVIRONMENTAL STEWARDSHIP AND MUTUALLY RESPONSIBLE 

DEVELOPMENT 

• Comité 21: Integrates sustainable development into managerial practices. 

• EPE - Entreprises pour l’Environnement: Develops efficient environmental stewardship 

processes, engaging companies and promoting their capabilities in this area. 

• APPA - Association pour la Prévention de la Pollution Atmosphérique: A scientific and 

technical association dedicated to improving the understanding and prevention of air 

pollution and its impact on health and the environment. 

• CITEPA - Centre Interprofessionnel Technique d’Etudes de la Pollution Atmosphérique: 

Provides research, information and consulting on regulatory and technological 

developments concerning air pollution. 

• IMS - Institut du Mécénat de Solidarité: Supports companies in implementing their 

social responsibility strategies. 

• Admical: Provides consulting, information and training services to promote corporate 

sponsorship. 

THE GLOBAL COMPACT 

The Global Compact brings companies together with United Nations agencies, international 

labor organizations, NGOs and other parties in order to promote nine universal principles 

in the areas of human rights, labor standards and the environment. 

By embracing the Global Compact, PSA Peugeot Citroën has demonstrated its dedication 

to ensuring that its present and future actions, in every country where it operates around 

the world, contribute to sustainable development, in line with good ethical, 

social and environmental practices. 


Research and 

Development 

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MORE ENVIRONMENTALLY- 

FRIENDLY DIESEL ENGINES 

PSA Peugeot Citroën’s research is focused 

on optimizing emissions at source, i.e. 

during combustion, and on developing 

aftertreatment systems. 

MORE EFFICIENT COMBUSTION 

In conventional diesel combustion, the 

injected fuel-air mixture is heterogeneous. 

This means that some parts of the mixture 

are very rich in fuel, which favors the 

formation of particulate matter (eliminated 

very efficiently by the Group’s exclusive 

particle filter) and other parts contain 

higher amounts of hot air, which 

encourages the formation of nitrogen 

oxides. That’s why PSA Peugeot Citroën is 

investigating Homogeneous Charge 

Compression Ignition (HCCI), a form of 

combustion that reduces gross emissions 

of particulate matter and NOx by 90%. 

With injection quality playing such a critical 

role, the Group is working with the world’s 

leading original equipment manufacturers 

to develop very high-pressure direct 

injection technology. When combined with 

smaller diameter injector holes, this 

pressure, which is much higher than 

current levels, delivers finer spray, resulting 

in more efficient evaporation and 

optimized mixture preparation in the 

engine cylinder. Injection pressure in the 

new HDI 1.6 and 2.0-liter engines has risen 

to 1,600 bar from 1,300 bar in firstgeneration 

diesels. 

TRAPPING AND TREATING NOX 

While particle filters sharply reduce emissions 

of particulate matter, PSA Peugeot Citroën 

is exploring a number of avenues for 

treating nitrogen oxides, including cold 

plasma catalysis, DeNOx catalysis, and 

selective catalytic reduction. 

Unlike conventional catalysis, cold plasma 

catalysis offers effective treatment for 

exhaust gases at both high and low 

temperatures. This is a significant 

advantage, since nitrogen oxide emissions 

produced during the low-temperature 

ignition phase cannot be treated by 



VEHICLE AERODYNAMICS 

Fuel consumption is linked to vehicle weight and air resistance, making lighter, more 

aerodynamic vehicles critical to reducing fuel consumption and emissions. In partnership 

with Renault and France’s Conservatoire National des Arts et Métiers (CNAM), 

PSA Peugeot Citroën has installed two automotive aero-acoustic wind tunnels in Saint- 

Cyr-l’Ecole in the Paris region to conduct aerodynamic and aero-acoustic tests in the 

areas of safety, vehicle noise and CO 2 emission abatement. The €35-million investment, 

financed two-thirds by the two carmakers and one-third by the French government, 

positions the partnership as the European leader in aero-acoustics for ground vehicles. 

The facility is scheduled to open in summer 2003. 

conventional catalysis. Bench tests in the 

laboratory demonstrated that nitrogen 

oxide (NOx) emissions are reduced by more 

than 70%. 

In DeNOx catalysis, the NOx is trapped by 

a catalyst impregnated with NOx–absorbing 

compounds during conventional engine 

operating phases on a lean fuel mixture. 

When the trap is saturated, the NOX is 

reduced and returned safely to the 

atmosphere in the form of nitrogen by 

running the engine for several seconds with 

a rich mixture. When used in combination 

with certain HDI engines, this catalyst will 

further improve conversion rates. 

IMPROVED GASOLINE ENGINES 

Conventional internal combustion engines 

must also continue to improve their 

emissions control performance until 

alternate technologies are mature enough 

to replace them. 

MORE FLEXIBLE VALVES FOR LESS CO 2 

Improving distribution systems to enhance 

the efficiency of spark ignition engines 

entails modifications to valve timing, which 

at present is permanently set in the factory. 

PSA Peugeot Citroën is preparing for the 

widespread introduction of variable timing 

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systems. These systems—known as variable 

valve timing (VVT), variable valve lift system 

and timing (VVL), or Valvetronic—adjust 

the timing and degree of valve opening 

instantly to optimize cylinder filling and 

increase engine efficiency. 

Longer-term, the logical outcome of this 

research will be the camless engine, in 

which throttle valves will be operated by a 

computer-controlled electromagnetic or 

electrohydraulic system, instead of a 

camshaft. With this technology, the throttle 

valve and related pumping losses will be 

eliminated, thereby directly reducing fuel 

consumption—and with it CO 2 emissions— 

by as much as 10% compared with existing 

engines. 

DIRECT GASOLINE INJECTION FOR 

INCREASED FUEL ECONOMY 

PSA Peugeot Citroën is also conducting 

research into direct gasoline engine injection 

that, like the camless engine, would 

eliminate pumping losses linked to the 

throttle valve. Another area of study is 

stratified combustion, based on the 

observation that a slightly richer air-fuel 

mixture is needed for ignition than in other 

parts of the combustion chamber. If 

differentiated combustion regions can be 

created on a sustainable basis, the fuel 

mixture could be kept as lean as possible 

to minimize fuel consumption. These 

technologies could reduce consumption by 

around 5%. 

HYBRID VEHICLES, AN EMERGING 

TECHNOLOGY 

To reduce fuel consumption, hybrid vehicles 

combine two sources of energy, an internal 

combustion engine and an electric motor. 

In June 2002, PSA Peugeot Citroën and 

Electricité de France (EDF) signed a 

cooperation agreement to develop electric 

and hybrid vehicles and to step up research 

into associated technologies. Both partners 

place great importance on expanding the 

use of environmentally friendly automobiles, 

in particular among owners of electric 

vehicle fleets, such as public authorities, 

communities, and companies. 

The main challenge for the future is 

batteries, whose size, cost and volume can 

all be improved. The next hybrid electrical 

applications will be based on nickel-metalhydride 

batteries. In the longer term, 

though, lithium-ion batteries will overtake 

them, since they potentially offer a better 

energy/power ratio for equivalent volume 

and a lower objective cost, after adjustments 

to vehicle architecture. 

The Group is taking a pragmatic, prudent 

approach to three types of hybrid vehicle: 

- Stop and Start vehicles, which cut the 

engine whenever the car stops. By 

eliminating the idling phase, this solution 



NETWORKED CARS AND THE DOMOBILE 

PSA Peugeot Citroën has developed new wireless systems that provide access to 

emerging telematic services in Europe, such as traffic information and SMS. Their 

purpose is to help improve traffic control and safety by enriching dialogue with the 

driving environment (road conditions, traffic, traffic conditions, etc.). Services include 

visual and voice information to guide drivers using a GPS locator, a CD-ROM with 

local maps supported by a navigational computer, etc... 

Sustainable mobility also has to integrate the fact that passengers should be able 

to surf the Web, read their e-mail, connect their laptop, listen to Internet radio or 

watch streaming videos, just like they do at home or in the office. The Group is 

working on a new concept responding to this emerging trend. Known as the 

Domobile, it is being developed with a constant focus on ensuring that the humanmachine 

interface guarantees easy, user-friendly access to these high-tech 

applications, without jeopardizing the safety of road users. 

lowers fuel consumption and emissions, 

and since the engine shuts down only if 

a number of criteria are met, it does not 

endanger safety or inconvenience the 

driver. Another advantage for vehicle 

occupants and the surrounding area is 

that engine noise is eliminated during 

shutdown. 

- Mild Hybrids optimize cost effectiveness 

with an integrated generator-starter. At a 

price that compares favorably with 

conventional solutions, the electric system 

provides extra power, Stop and Start 

capability, and anti-stall protection that 

significantly enhances environmental 

performance. 

- Full Hybrids optimize powertrain output 

by electronically managing the electric 

and internal combustion engines, 

automatically switching from one to the 

other depending on which one is more 

efficient. PSA Peugeot Citroën is developing 

such hybrids with a driver-activated zero 

emission vehicle (ZEV) option. 

FUEL CELLS, A BREAKTHROUGH 

TECHNOLOGY 

Fuel cells make the introduction of longrange 

electric vehicles theoretically 

possible. The challenge is to convert the 

chemical energy into electricity directly on 

board. The Group is exploring a variety of 

options for developing an affordable, 

reasonably sized onboard fuel cell that can 

be used safely. At present, for the same 

range, a hydrogen fuel tank is five to ten 

times bigger than a gasoline tank. 

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THE CAR AND OUR FIVE SENSES 

Research is also being conducted on the automobile’s role as a multi-sensory 

environment. The most obvious perceptions are visual and tactile, and many 

programs are concerned with passenger compartment brightness, textile and plastic 

quality, and seat comfortableness. Other projects are working on auditory 

perceptions, to harmonize the growing number of electronic sounds and achieve a 

better balance between a quiet ride and the information needed for driving. Research 

into olfactory perceptions aims to offer personalized fragrances that match the car’s 

personality. These and similar programs are moving in the direction of “profiled” 

model lines corresponding to each driver’s sense of well-being. 

PSA Peugeot Citroën is already working on 

two specific applications: 

- The first is the Taxi PAC demonstrator, 

which stores pressurized hydrogen in a 

removable Plug and Drive rack. This 

corresponds to the fuelling practices of 

the target users, drivers of city fleets. Taxi 

PAC also operates in range extender 

mode, where the hydrogen fuel cell 

backs up the battery-driven powertrain. 

- The second manufactures hydrogen on 

board, on demand, from a sodium 

borohydride aqueous solution and a 

catalyst. This solution resolves the 

problem of storing hydrogen safely and 

in sufficient quantities on board a 

reasonably sized car. The Peugeot H 2 O 

demonstrator, which also operates in 

extended range mode, was presented at 

the Paris Auto Show in September 2002. 


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98 

Consolidated results 

108 

114 

Group financing 

Return on capital employed 

116 

119 

Management of operational and 

financial risks 

First-quarter 2003 sales 


Consolidated results 

1. CHANGES IN SCOPE OF CONSOLIDATION 

Implementation of the Group’s strategy 

led to several changes in the scope of 

consolidation in 2002 and 2001. The most 

significant in 2002 concerned Dong Feng 

Citroën Automobile Company (DCAC), 

which was accounted for by the equity 

method for the first time. The Group owns 

27% of the capital of DCAC, a Chinese 

company set up in 1992 to manufacture 

and sell Citroën automobiles in the local 

market. The decision to account for 

DCAC by the equity method was made 

following the signature of a series of 

agreements between the Group and its 

Chinese partner, Dong Feng Motors 

(DFM), which owns 31% of DCAC. These 

agreements heralded the beginning of a 

new phase in the Group’s development 

in China. The most important agreements, 

which were signed on October 25, 2002 

and approved by the Chinese government 

on December 11, 2002, provide for the 

development of a Peugeot dealer network 

alongside the existing Citroën network, 

as well as the launch of local production 

of six new Peugeot and Citroën models 

for the Chinese market between 2002 and 

2004. In recognition of this major 

extension of its activities, on January 23, 

2003, DCAC changed its name to Dong 

Feng Peugeot Citroën Automobile (DPCA). 

These agreements provide for a change in 

DPCA’s ownership structure during 2003 

that will give the PSA Peugeot Citroën 

Group 50% of the capital. The first step in 

the process will be for DPCA to carry out a 

CNY 1,000 million (€115 million) share 

issue, underwritten in the amount of CNY 

624 million (€72 million) by the Group 

and CNY 376 million (€43 million) by 

DFM. This will be followed by the buyout 

of the Chinese and French partner 

banks, representing an investment of 

CNY 1,264 million (€146 million) for the 

Group. Lastly, a new management structure 

will be set up allowing the PSA Peugeot Citroën 

Group and DFM to share management 

control of DPCA on a 50/50 basis. 

In October 2002, the Automobile division 

sold the Villers la Montagne aluminium 

foundry to the Manzoni Bouchot group. 

The transaction supports the Group’s 

industrial strategy, which consists of focusing 

capital expenditure on developing the vehicle 

offering and buying in components from 

suppliers who specialize in the operations 

concerned and are better equipped to 

develop the requisite technical expertise 

and reduce unit costs. 

In early 2002, Banque PSA Finance, the 

Group’s Finance division, took over direct 

control of retail financing and leasing 

operations in the United Kingdom, as well as 

the supply of the related services, through 

a local branch. Until the end of 2001, these 

activities were conducted by a joint subsidiary 

of Banque PSA Finance and a local partner, 

which is continuing to manage the existing 

loan and leasing portfolios on a run-off basis. 

This change supports Banque PSA Finance’s 

strategy of proposing services closely aligned 

with the marketing strategy of the Peugeot 

and Citroën marques. It also reflects the 

division’s drive to integrate the management 

of these services into operating systems 

shared by all the bank’s European subsidiaries 

and branches. 

During 2001, Faurecia, the Group’s 

Automotive Equipment division, acquired 

the automobile businesses of Sommer 

Allibert, a French designer and manufacturer 

of instrument panels, cockpits, door 

panels and soundproofing. The transaction, 

which is described in detail in the 2001 

annual report, represented a total 

investment of €1,495 million. The first 

step consisted of the acquisition, by 

Peugeot S.A., of the entire capital of SIT, 

the company that held Sommer Allibert’s 

automobile businesses. Peugeot S.A. 

subsequently exchanged the SIT shares 

for Faurecia shares, raising its interest in 

Faurecia to 71.6%. The acquisition has 

made Faurecia one of the world’s top 

three players in each of its markets, with a 

broad customer base. Its direct and indirect 

sales to the Automobile division represented 

only 25.7% of total sales in 2002. 

In May 2001, Gefco, the Group’s 

Transportation and Logistics division, sold 

its Transauto-Stur subsidiary to the Via 

Location group. Transauto-Stur is a road 

transportation company with a fleet of 

around 900 trucks. The divestment was 

in line with Gefco’s strategy of focusing 

on high value-added transportation and 

logistics services and outsourcing actual 

transportation operations. 

Detailed information about changes in 

the scope of consolidation is provided 

in note 3 to the consolidated financial 

statements. 

2. SALES 

2.1. Consolidated sales 

Consolidated net sales rose 5.4% to 

€54,436 million in 2002. In 2001, 

reported sales increased by 16.9% to 

€51,663 million from €44,181 million 

the previous year, including the contribution 

of the Sommer Allibert automobile 

business acquired by Faurecia during the 

year. Based on a comparable scope of 

consolidation, 2001 sales growth came to 

11.3%. Also in 2001, the cost of certain 

sales incentive programs was recorded as 

a deduction from sales, and not under 

operating expense as was previously the 

case. This change was decided in order to 

follow the practice adopted by the other 

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major automobile manufacturers worldwide. 

Excluding the effect of this change of 

presentation and based on a comparable 

scope of consolidation, sales rose 13.7% 

compared with 2000. 

2.2. Sales by business - manufacturing 

and sales companies 

The contribution of the manufacturing 

and sales companies to consolidated sales 

breaks down as follows: 

(in millions of euros) 2002 2001 2000 

Automobile 43,951 41,524 37,436 

Transportation and Logistics 2,646 2,643 2,329 

Automotive Equipment 9,866 9,611 5,840 

Other businesses 1,003 976 983 

Inter-company eliminations (4,560) (4,466) (3,610) 

Total PSA Peugeot Citroën 52,906 50,288 42,978 

Automobile division sales totaled €43,951 

million, up 5.8% on 2001. Peugeot and 

Citroën’s global sales volume expanded by 

4.3% to 3,267,500 vehicles and CKD units, 

a total in line with the 3.25 million unit target 

announced by the Group in February 2002. 

In 2001, the division’s sales climbed 10.9% 

(13.9% based on comparable presentation 

methods), reflecting 11.3% volume growth 

to 3,132,800 units. 

In Western Europe, a total of 2,557,000 

passenger cars and light commercial 

vehicles were sold in 2002, compared 

with 2,545,500 in 2001. The modest 

increase was achieved in a market down 

3%, leaning towards the low-end of the 

scenarios envisaged by the Group at the 

start of 2002 when forecasts ranged from 

flat to a 4% decline. The higher volumes 

boosted the Group’s market share to 

15.5%, from 15% in 2001 and 13.7% 

in 2000. This performance consolidated 

PSA Peugeot Citroën’s position as 

Europe’s second largest carmaker and the 

number one manufacturer of light 

commercial vehicles. Highlights of the year 

included the successful launch of the 

Citroën C3 and C8, the Peugeot 307 SW, 

206 SW and 807, restyled versions of the 

Peugeot Partner and Boxer and the 

Citroën Berlingo and Jumper. Sales of the 

Peugeot 307 increased sharply, and 

demand for the Peugeot 206 and the 

Citroën Picasso remained strong. Sales of 

all the Group’s model ranges were 

boosted by the continuing success of the 

common rail high-pressure direct injection 

(HDI) diesel engine, including the new 

1.4-liter turbo-charged version launched 

in 2002. Diesel-powered passenger car 

sales climbed 9.5%, fueling a further rise 

in the Group’s share of this market 

segment to 18.9%. 

Outside Western Europe, sales of Peugeot 

and Citroën cars and CKD units expanded 

by 21% to 710,500 units from 587,300 

the previous year, building on the 22.5% 

gain in 2001. Volumes were higher in all 

strategic geographic markets. In Central 

and Eastern Europe, including Turkey, sales 

rose 24.9% to 168,700 units, delivering 

significant market share gains in last year’s 

slightly more buoyant market in Poland 

and Turkey, as well as in the region as a 

whole. In Latin America, Group sales 

increased 1.3% to 109,300 units despite 

the collapse of the Argentina market and 

weaker demand in Brazil. The performance 

was led by a 33.7% surge in sales (to 63,700 

units) in Brazil, where the Peugeot 206 and 

Citroën Picasso have been produced locally 

since summer 2001. In China, where the 

market soared 53% to 1,098,200 units, the 

Group raised its sales volume by 57.3% to 

85,500 cars, thanks in particular to the 

success of the Citroën Elysée, the launch of 

the Citroën Picasso and the first local sales of 

Peugeot models. Lastly, sales of CKD units 

to Iran for local assembly by Iran Khodro 

and Saipa totaled 156,500 units, an increase 

of 46.7% on 2001. 

Sales by the Transportation and Logistics 

business inched up 0.1% to €2,646 million. 

Based on a comparable scope of 

consolidation, the increase was 0.8%. This 

subdued growth, on the back of a strong 

14.9% rise in 2001 (excluding Transauto- 

Stur which was divested in May 2001), 

stemmed in part from the lackluster 

economic conditions in Europe. In 

addition, Gefco adopted a more selective 

approach to managing its customer 

portfolio, as part of its ongoing drive 

to improve profit margins. 

Automotive Equipment sales rose 2.7% to 

€9,866millionfrom€9,611million in 2001. 


Management’s discussion and analysis 

Excluding the effect of changes in 

exchange rates and in the price of 

precious metals used in the manufacture 

of exhaust systems, year-on-year sales 

growth came to 9.3%. This performance, 

achieved in a year when automobile 

production in Europe contracted by an 

estimated 2%, reflected a further increase 

in Faurecia’s penetration rate among its 

main customers and the success of 

automobile models equipped with 

Faurecia products. It built on a 64.6% 

rise in sales in 2001, including the 

contribution of the Sommer Allibert 

automobile business from January 2001, 

and a 14.5% increase in comparable sales. 

2.3. Finance company revenues 

In 2002, new retail financing was 

provided for 803,500 Peugeot and Citroën 

vehicles, compared with 801,100 vehicles 

the previous year. New vehicle retail 

financing edged up 0.5% to 622,800 units, 

slightly exceeding the rate of growth in 

Group registrations in Europe where 

Banque PSA Finance carries out the bulk 

of its lending activities. The finance 

companies provided financing for 25.3% 

of the Peugeot and Citroën vehicles sold 

during the year, the same penetration rate 

as in 2001. The volume of used vehicle 

financing granted during the year 

declined 0.4% to 180,700 units, reflecting 

the finance companies’ selective approach 

designed to preserve the low risk profile 

of the loan portfolio. 

In 2001, new retail financing was provided 

for 801,100 vehicles, an increase of 13.9% 

on the previous year. Financing volumes 

rose 17.7% for new vehicles and 2.6% for 

used vehicles. 

As of December 31, 2002, outstanding 

loans stood at €18,687 million, including 

securitized loans which have been removed 

from Banque PSA Finance’s balance sheet. 

In June 2001, Crédipar, the Bank’s French 

subsidiary, sold €1,000 million worth of 

automobile loans to a special purpose 

entity which in turn issued asset-backed 

securities to international institutional 

investors. The asset pool has been kept at 

this level since June 2001, through the 

sale of new automobile loans to replace 

the original loans when they reach 

maturity. In July 2002, Crédipar and 

Banque PSA Finance’s spanish branch sold 

€1,500 million worth of automobile loans 

to the special purpose entity. The asset 

pool is regularly topped up in the same 

way as for the first securitization. As 

a result of these top-up sales, as of 

December 31, 2002, automobile loans 

totaling €2,500 million were securitized. 

These securitization operations form part 

of the financing strategy of the Group and 

Banque PSA Finance (see Group Financing, 

1. Financing strategy). 

Outstanding loans, including securitized 

loans, at December 31, 2002 were 8.6% 

above the year-earlier total of €17,215 

million, which in turn was 17.3% above 

the year-end 2000 figure. As shown in the 

following table, growth over the threeyear 

period was primarily driven by strong 

sales of retail and lease financing. 

(in millions of euros) Dec. 31, 2002 Dec. 31, 2001 Dec. 31, 2000 

Outstanding loans, including securitized loans 

- Retail and lease financing 13,878 12,863 10,857 

- Wholesale financing 4,809 4,352 3,822 

Total Banque PSA Finance 18,687 17,215 14,679 

After deducting automobile loans sold under the two securitization programs described above, year-on-year increases were as follows: 


Outstanding loans, excluding securitized loans 

- Retail and lease financing 11,378 11,863 10,857 

- Wholesale financing 4,809 4,352 3,822 


Financing revenues from loans carried 

on Banque PSA Finance’s balance sheet 

correspond to gross interest income on 

the loans. For the securitized loans 

removed from the balance sheet, 

financing revenues correspond to 

revenues on the Bank’s retained interest, 

i.e. interest income net of financing costs 

and credit losses. Total financing 

revenues also include interest earned on 

the permanent cash reserves carried in 

Banque PSA Finance’s balance sheet as 

part of the financing strategy described 

below (see Group Financing, 1. Financing 

strategy). 

100 



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Discussion 

and Analysis 

Statistics 

Total financing revenues break down as follows: 


From third parties 1,530 1,375 1,203 

Intercompany 170 212 184 


Revenues climbed 7.1% in 2002, after rising 

14.4% in 2001. These strong rates of 

growth were directly attributable to 

expansion of the loan portfolio and rapidly 

growing revenues from sales of maintenance, 

insurance and other financing-related 

services. Revenues from these services 

climbed 13% in 2002 to €111 million, 

building on a 19% gain in 2001. 

3. OPERATING MARGIN 

The Group’s business and earnings targets 

for 2002 were set in February 2002 based 

on two possible scenarios for the European 

automobile market – flat or a 2-4% decline 

compared with 2001. Assuming a flat 

market, the Group set as its target an 

operating margin of €2,900 million, 

including a 5% margin for the Automobile 

Division. Assuming a 2-4% decline, the 

targets were set at €2,800 million and 

4.8% respectively. Although the European 

automobile market contracted by 3% - 

corresponding to the second scenario – 

the Group succeeded in achieving the 

targets set under the first, more optimistic 

scenario. Total operating margin came in 

at €2,913 million, while the Automobile 

Division margin represented 5% of sales. 

Operating Margin 

Consolidated operating margin increased by 

9.8% in 2002 compared with the 2001 total 

of €2,652 million, which in turn was up 

25% on the 2000 figure of €2,121 million. 

Over the three-year period, the margin rate 

climbed from 4.8% of sales in 2000 to 5.1% 

in 2001 and 5.4% in 2002. The consolidation 

of the Sommer Allibert automobile business 

acquired by Faurecia added €134 million 

to 2001 operating margin. 

(in millions of euros – as % of sales) 

3.1. Operating margin by businesses - manufacturing and sales companies 


Automobile 2,183 1,992 1,579 

Transportation and Logistics 134 119 100 

Automotive Equipment 251 262 176 

Other businesses 26 31 2 

Total 2,594 2,404 1,857 

Automobile Division operating margin 

stood at €2,183 million, representing 5% 

of sales, versus €1,992 million (4.8% of 

sales) in 2001 and €1,579 million (4.2% 

of sales) in 2000. The increase between 

2001 and 2002 was 9.6%. 

The main factors underlying the growth 

in operating margin in 2002 are as follows: 

- higher unit sales, a shift in the sales mix 

following the launch of new models and 

a shift in the geographic mix had a net 

positive impact of €73 million. Volume 

growth excluding the effect of mix changes 

contributed €268 million to the increase, 

while higher margins on the new models 

launched in 2001 and 2002 improved the 

product mix, adding €54 million. These 

gains were partly offset, however, by the 

€249 million negative impact of changes 

in the geographic mix, resulting from the 

contraction of the European market and 

lower margins in Brazil. 

-the price effect had a positive impact 

of €29 million, reversing the traditional 

trend towards lower prices that trimmed 

€201 million from operating margin in 

2001 and €445 million in 2000. 

The favorable price impact testifies to 

the benefits of the Group’s strategic 

commitment to innovation and to 

extending and rapidly renewing the model 

line-up, as well as to the success of the 

two marques’ vehicles. Sales growth and 

market share gains were achieved without 

resorting to excessive sales incentives and 



prices were successfully adjusted in most 

of its markets. These adjustments more 

than offset the cost of extending the 

standard warranty period from one to 

two years in most Western European 

countries, between the end of 2001 and 

the beginning of 2002; 

- production cost savings totaled €773 

million, including some €106 million 

attributable to lower raw materials prices. 

This further demonstrated the Group’s 

ability to steadily reduce production 

costs, excluding raw materials, by around 

an aggregate €600 million a year; 

- changes in exchange rates had a negative 

impact of €71 million, mainly attributable 

to the British pound and the Polish zloty; 

- increases in employee compensation had 

an estimated impact of €236 million, 

including a €19 million rise in statutory 

profit-sharing and incentive bonus 

programs. In all, €232 million was 

granted to Automobile Division employees 

under these two programs in 2002 

(€249 million for the Group as a whole); 

- higher research and development 

spending had a €170 million impact; 

- capital spending-related increases in 

depreciation expense and operating costs 

reduced operating margin by €130 million; 

- lastly, a €43 million charge was recorded 

in connection with the new European 

regulations governing end-of-life vehicles, 

primarily related to vehicles in the 

Netherlands. 

Operating margin in the Transport and 

Logistics business amounted to €134 million, 

representing 5.1% of sales, versus 

€119 million (4.5% of sales) in 2001 and 

€100 million (4.3% of sales) in 2000. 

The 12.6% increase in 2002 – achieved in 

a period of economic weakness and 

subdued sales growth – was attributable to 

the increased proportion of sales generated 

by higher value-added services (logistics, 

warehousing and car preparation services) 

coupled with ongoing productivity gains. 

Automotive Equipment operating margin 

came to €251 million after eliminating 

transactions with the Automobile Division 

or €256 million including these transactions, 

representing 2.6% of sales. The comparative 

figures for 2001 and 2000 were respectively 

€260 million (2.7% of sales) and €182 

million (3.1% of sales). 

The change in operating margin in 2002 

reflects the net impact of the following 

developments: 

- strong growth in sales (up 7.8% excluding 

catalytic converters), with all businesses 

except exhaust systems contributing to 

the increase; 

- sustained productivity gains achieved 

under the 10/10 Plan, as well as through 

the redeployment of manufacturing 

resources and the implementation of a 

new purchasing plan; 

- the initial benefits of the new program 

management system (PMS); 

- significantly lower margins compared with 

earlier generations under programs that 

went into production between 2000 and 

2002 and accounted for 50% of 2002 

sales; a limited number of these programs 

are currently generating negative margins; 

- high production start-up costs, due in part 

to the large number of launches in 2002 

but also performance levels that still fall 

short of expectations; 

- tight control over research and 

development costs, which, excluding 

costs billed to customers, declined 

16.1% to €215 million in 2002; 

- an increase in administrative and selling 

expenses, to the equivalent of 2.9% of 

sales versus 2.6% the previous year, in 

order to enhance the management 

resources needed to cope with Faurecia’s 

increased size. 

3.2. Research and development costs - 


R&D costs totaled €1,865 million 

versus €1,733 million in 2001. Spending 

increased by 7.6% in 2002 and 6.6% 

in 2001. 

Automobile Division R&D spending came 

to €1,631 million, an increase of 11.6% 

compared with 5.3% in 2001. Controlled 

growth in these costs, which currently 

increase at roughly the same rate as sales, 

is attributable to the platform strategy, 

which has been applied to all new vehicle 

development since 2001. That was when 

the three platforms that serve as the basis 

for the majority of the Group’s vehicles 

became fully available, leading to a 

significant decrease in the R&D costs of 

vehicles to be launched. 

The strategy of cooperation with other 

carmakers is also delivering increasing 

benefits in terms of R&D costs. This strategy 

allows the Group to share development 

and process engineering costs with its 

partners on a 50/50 basis for new 

mechanical components (Ford, BMW, 

Renault) or platforms (Fiat, Toyota). In 

2002, R&D costs shared with partners 

totalled €428 million. 

Automobile Division R&D spending for 

2002 represented 3.7% of division sales. 

Including development costs related to 

existing models, covering new versions, 

new engine offers and restyles, the total 

was €2,019 million, corresponding to 

4.6% of sales. These latter costs are 

included in cost of sales, rather than R&D 

costs, in order to present production costs 

more fairly and measure sales margins 

more accurately. The current contained 

growth in R&D spending means that both 

percentages are close to those for 2001 

(3.5% and 4.5% respectively). 

102 



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Discussion 

and Analysis 

Statistics 

Automotive Equipment R&D spending 

totaled €616 million in 2002, representing 

6.2% of sales. Excluding costs invoiced 

to customers, the net amount was 

€215 million, representing 2.2% of sales. 

Net R&D spending was down by 16.1% 

on the 2001 figure of €255 million, 

corresponding to 2.7% of the division’s sales. 

3.3. Operating margin - finance 

companies 

The finance companies’ operating margin 

rose sharply in 2002 to €319 million, 

marking the end of three years of flat 

margins with €248 million in 2001, 

€264 million in 2000 and €242 million 

in 1999. Profitability was weakened in 

2001 by the lower margins on new 

contracts booked in 2000 and early 2001, 

caused by the higher refinancing rates 

that could not be fully passed on to 

customers due to the stiff competition in 

the European consumer loans market. 

Lending margins improved rapidly in 

2002, adding €35 million to operating 

margin, while outstanding loans continued 

to increase, adding a further €59 million. 

Credit losses were reduced to 0.40% of 

outstanding loans before securitizations 

from 0.43% the previous year, representing 

a low rate compared with the industry as 

a whole and increasing operating margin 

by €8 million. Overheads rose by €32.5 

million, including €23.8 million attributable 

to a change in the allocation of headquarters 

expenses within the Group, and €8.7 million 

corresponding to a 3.2% increase in costs 

on a comparable allocation basis. This rate 

of growth, which was significantly less than 

the increase in outstanding loans, reflects 

the initial benefits of the restructuring plan 

that will gradually lead to the creation of an 

integrated organization across Europe. 

Operating margin also improved significantly 

as a percentage of outstanding loans, rising 

to 1.8% versus 1.6% in 2001 and coming 

close to the 1.9% achieved in 2000. 

3.4. Personnel costs 

Personnel costs break down as follows: 


Automobile 5,569 5,339 5,031 




Total manufacturing and sales companies 7,920 7,538 6,575 

Finance companies 115 111 105 


Personnel costs rose by 5% in 2002, after 

increasing 14.5% the previous year. 

Excluding the €593 million in personnel 

costs of Sommer Allibert, which was 

consolidated for the first time in 2001, 

the increase compared with 2000 would 

have been 5.6%. These rises reflect higher 

employee compensation (see 3.1 above) 

and growth in employee numbers. 

Employee numbers at December 31, 

2002, 2001 and 2000 were as follows: 

2002 2001 2000 

Automobile 133,300 129,700 127,600 

Transportation and Logistics 8,000 7,700 7,500 


Other businesses 2,900 3,300 3,400 


Finance companies 2,200 2,100 2,000 




Employee numbers at December 31, 2001 

include the employees of Sommer Allibert 

for the first time (18,700 people). 

As of the same date, 747,329 convertible 

bonds were outstanding, representing 

4,483,974 potential shares. 

used in prior years and the effect of discounting 

the reserves set up in 1999 when the initial 

agreements were signed. 

4. NET INCOME 

Net income for the year came to €1,690 

million, unchanged compared with 

€1,691 million in 2001 and up by 28.9% 

on the 2000 figure of €1,312 million. Net 

margin stood at 3.1% of sales, versus 

3.3% in 2001 and 3.0% in 2000. Net 

income for 2001 included a non-recurring 

after-tax gain of €139 million (representing 

0.3% of sales) on the sale of a real estate 

complex just outside Paris. 

Earnings per share for 2002 stood at 

€6.65 compared with €6.42 in 2001 and 

€5.02 in 2000, representing increases of 

3.6% in 2002 and 27.9% in 2001. There 

were no dilutive instruments outstanding 

in 2002 and diluted earnings per share 

would therefore also amount to €6.65, 

versus €6.40 in 2001 and €4.84 in 2000, 

representing increases of 3.9% and 32.2% 

respectively. 

During 2002, the Group bought back 

12,231,442 Peugeot S.A. shares (net of 

shares sold during the year) at an average 

price of €45.42 per share. The transactions 

were carried out under the stockholder 

authorization given at the General Meeting 

of May 16, 2001 and May 15, 2002. As of 

December 31, 2002, the capital stock of 

Peugeot S.A. was made up of 259,109,146 

shares of common stock, unchanged from 

year-end 2001. Of the total, 15,208,709 

shares were held in portfolio. As of 

December 31, 2001, the Company held 

2,994,287 shares in treasury stock. As of 

December 31, 2000, capital stock was 

made up of 278,223,630 shares of 

common stock with a par value of €1, of 

which 16,044,378 were held in portfolio. 

The average number of shares outstanding 

during the year (excluding treasury stock) 

used to compute earnings per share was 

254,201,332 shares in 2002,263,357,148 

shares in 2001 and 261,283,962 in 2000. 

4.1. Early-termination plan costs - 


Income for 2002 is stated net of a €158 million 

charge related to the early-termination plan 

for older employees of the Automobile Division 

and Automotive Equipment companies in 

France. The charge includes the additional 

future costs arising from the broadening of 

eligibility criteria under the Automobile Division 

plan, which is based on a corporate agreement 

dated March 4, 1999, an industry-wide 

agreement signed on July 26, 1999 and French 

government decree no. 2000-105 dated 

February 9, 2000. The PSA Peugeot Citroën 

Group initially decided to implement the 

measures provided for in these agreements 

through February 2005 for front-line workers 

in the Automobile Division aged 57 and over, 

and through to the end of 2002 for technical 

and plant supervisory staff aged 58 as well as 

for disabled employees aged 55 and over. The 

plan has now been extended, allowing 

technical and plant supervisory staff to benefit 

from the measures until February 2005. In 

addition, front-line workers at the Sochaux 

plant will be entitled to benefit from the 

measures as from the age of 56. The aim of 

plan is to speed up the pace of improvement 

in manufacturing efficiency within the 

Automobile Division while maintaining jobs in 

a time of steady business growth. There will 

be no further extensions of the measures. The 

reserve booked to cover the cost of the revised 

plan amounts to €123 million. In addition, 

existing reserves have been increased to take 

account of adjustments to the assumptions 

In 2001, a €31 million charge was recorded, 

including a discounting adjustment and 

a €22 million reserve set aside following 

the extension of the plan to Faurecia 

employees. In 2000, the discounting 

adjustment represented a €32 million credit. 

As of December 31, 2002, total earlytermination 

plan reserves carried on the 

balance sheet amounted to €486 million, 

including €470 million for the Automobile 

division and €16million for the Automotive 

Equipment division. Including Faurecia, 

by February 2005 a total of 13,978 employees 

are expected to have left the Group. 

4.2. Restructuring costs - manufacturing 


In 2002, restructuring costs amounted to 

€124 million. Faurecia incurred costs of 

€74 million in connection with the 

second phase of the plan to enhance 

manufacturing efficiency, mainly at the 

Sonta plant in Germany and within the 

Exhaust Systems Division in France. Costs 

associated with the plan launched in 

January 2002 to adapt Automobile Division 

operations in Argentina to current local 

economic conditions amounted to 

€9 million. The plan led to the elimination 

of 588 jobs, reducing the number of 

employees to 1,564 at year-end 2002. 

Group operations are now compatible 

with the level of local automobile demand 

observed since the end of 2001. Lastly, 

the downsizing plan was completed at 

the Automobile Division’s Villaverde plant 

in Spain, representing costs of €30 million. 

In 2001, restructuring costs amounted to 

€115 million. The main costs concerned 

the initial series of capacity reduction 

104 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

measures at certain Faurecia plants, 

including the closure of the Toledo plant 

in the United States, the Sassenburg plant 

in Germany, the Senones and Crevin plants 

in France and the Roermond plant in the 

Netherlands; initial downsizing measures 

in Argentina, implemented in May 2001, 

and a downsizing plan at the Automobile 

division’s Villaverde plant in Spain. 

Restructuring costs for 2000 amounted 

to €41 million and concerned the closure 

of three Faurecia plants at Nogent-sur- 

Seine, Tredegar and Northampton. 

4.3. Net interest expense - manufacturing 


In 2002, the Group had net interest 

expense of €25 million, compared with 

net interest expense of €48 million in 2001 

and net interest income of €86 million in 

2000. The sharp reduction in interest 

expense in 2002 stems from the use of 

the substantial free cash flow generated by 

the manufacturing and sales companies 

to pay off debt. Following the acquisition 

by Faurecia of Sommer Allibert’s automobile 

business, the manufacturing and sales 

companies had net debt of €102 million 

as of June 30, 2001 and €511 million as of 

December 31, 2001. By June 30, 2002, the 

situation had been reversed and the 

manufacturing and sales companies had 

net cash reserves of €362 million, rising to 

€594 million at the year-end. The industrial 

and financial restructuring measures taken 

in Argentina at the end of 2001 and in 

early 2002 enabled Peugeot Citroën 

Argentina to pay off its debt, which had 

become very expensive in the second half 

of 2001 due to the extremely high local 

interest rates. 

Interest expense increased in 2001 

compared with 2000 primarily due to the 

cost of financing Faurecia’s acquisition of 

Sommer Allibert’s automobile business. 

In addition, the cost of financing the 

Automobile division’s operations in 

Argentina and Brazil rose by €53 million. 

In Brazil, the higher interest costs were 

due to the investment in the new Porto 

Real plant, 50% of which was financed 

by borrowings in real. In Argentina, the 

increase was due to soaring interest rates 

in the second half of the year. Lastly, 

significantly lower money market rates in 

euros in the second half of 2001 led to a 

drop in interest income from the investment 

of the surplus cash generated by the 

Automobile Division in Europe. 

4.4. Other income and expense 

Other income and expense represented 

income of €19 million in 2002, versus 


in 2000. These amounts break down as 

follows: 


Manufacturing and sales companies 22 193 21 

Finance companies (3) (4) (3) 

Total PSA Peugeot Citroën 19 189 18 

The net amount for 2002 includes a €101 

million charge to cover the impact of 

decisions concerning supplementary 

pension benefits for employees in France 

other than in the Automotive Equipment 

division. Details of these decisions are 

provided below (see Group Financing 5. 

Supplementary pension and other postretirement 

benefits). The charge results 

from the decision that employees covered 

by the defined benefit plan would cease 

earning benefit entitlements under the 

plan effective from June 30, 2002 except 

for employees aged over 59. It corresponds 

to the immediate recognition of the 

portion of pension obligations previously 

included in deferred items and amortized 

over the remaining service lives of the 

employees concerned, together with the 

related income tax and payroll tax effects. 

Other income and expenses also include a 

€89 million gain on sales of marketable 

securities. 

Income for 2001 corresponds mainly 

to the €228 million pre-tax gain realized 

on the sale of a real estate complex in the 

Paris area that was surplus to the Group’s 

requirements. In additional, €27 million 

were released from the reserve for 

redemption premiums on the 1994 

convertible debenture issue, following 

conversion at maturity of 722,586 

debentures into Peugeot S.A. shares, 

during the first quarter of 2001. This 

income was partly offset by a €14 million 

loss on the divestment of Transauto-Stur 

by Gefco. 

In 2000, the Group realized €95 million 



worth of gains on the sale of marketable 

securities. These gains were partly offset by 

a €104 million loss on the buyback of 

2,380,632 convertible debentures issued 

in 1994. After taking into account the 

reversal of reserves for debenture redemption 

premiums, the net loss was €104 million. 

4.5. Incomes taxes on income of fullyconsolidated 

companies 

Income taxes on income of fully-consolidated 

companies are presented by combining 

the tax due by both the manufacturing 

and sales companies and the finance 

companies. The reason for this is that the 

tax group set up in application of French 

group relief rules comprises companies 

from all of the Group’s businesses in France, 

i.e. the Automobile Division, Finance, 

Transportation and Logistics and “Other” 

businesses. The tax charge breaks down 

as follows: 

Income taxes on income of fully-consolidated 

companies amounted to €777 million, 

representing 29.6% of pre-tax income of 

€2,625 million. In 2001, the tax charge 

was €835 million representing 31.5% of 

pre-tax income of fully-consolidated 

companies of €2,647 million. The lower 

effective rate of tax in 2002 reflects the 

reduction in the French statutory tax rate 

and an increase in income taxed at 

reduced rates relative to total taxable income. 

Income taxes in 2000 amounted to 

€713 million, representing 32.2% of pretax 

income of fully-consolidated companies 

of €2,216 million. 

4.6. Net earnings of companies at equity 

In 2002, net earnings of companies at 

equity came to €22 million, versus 

€9 million in 2001 and €19 million in 

2000. Companies at equity primarily consist 

of entities set up to manage cooperation 

agreements between PSA Peugeot Citroën 

and other carmakers. These include the joint 

venture with Renault for the manufacture 

of engines and transmissions, and with Fiat 

for the manufacture of light commercial 

vehicles and multi-purpose vehicles. The 

2002 figure also includes Toyota Peugeot 

Citroën Automobiles (TPCA). This project is 

still in the start-up phase and the impact on 

Group earnings for 2002 was not material. 

The joint venture has been set up to 

manufacture entry-level Toyota, Peugeot and 

Citroën vehicles based on a common platform. 

Production is scheduled to begin in 2005. 

The Chinese joint venture, DCAC, was also 

accounted for by the equity method for the 

first time in 2002, based on the Group’s 27% 

interest. DCAC contributed €10 million to 

Group income for the year. In order to ensure 

that accounting data restated in accordance 




Total PSA Peugeot Citroën 777 835 713 

with Group accounting policies are reliable, 

DCAC is accounted for by the equity method 

based on accounts closed at September 30. 

The company’s contribution to 2002 income 

therefore corresponds to its results for the 

period October 2001 to September 2002. 

Sales for this period totaled €976 million, an 

increase of 30% on the previous twelve 

month period. Operating margin came to 

€119 million, representing 12.2% of sales. 

This high margin rate is attributable to last 

year’s strong business growth, the success of 

the models sold by DCAC in the local market 

and the reduction in the joint venture’s 

production costs. DCAC incurred interest 

expense of €42 million and net exchange 

losses of €7 million. After deducting income 

tax of €32 million, the company’s net income 

for the period came to €38 million. 

In the last three months of calendar 2002, 

DCAC enjoyed a further rise in sales. 

Selling prices remained stable, driving a 

further improvement in operating margin. 

106 



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Discussion 

and Analysis 

Statistics 

4.7. Amortization of goodwill 

Amortization of goodwill amounted to 

€163 million in 2002 versus €140 million 

in 2001 and €199 million in 2000. In the 

Finance division, goodwill amortization 

concerning Crédipar amounted to €5 million 

in 2002. Goodwill amortization in the 

Automotive Equipment business included 

€42 million related to Bertrand Faure, 

€11 million concerning Faurecia Exhaust 

Systems and €69 million concerning the 

Sommer Allibert automobile business. In 

all of these cases, amortization is calculated 

over 20 years. The 2002 total also includes 

€34 million corresponding to annual 

amortization and an impairment loss 

recorded to write off the entire amount 

of goodwill recognized at the end of 2001 

following the buyout of the Rio de Janeiro 

state government’s minority stake in 

Peugeot Citroën do Brasil in connection 

with the renegotiation of the Group’s 

agreements with the state government. 

The impairment loss was recorded following 

an analysis showing that, following the 

drop in value of the Brazilian currency in 

2002, the future cash flow expected to 

be generated by the automobile business 

in Brazil would not be sufficient to 

guarantee recovery of the value of the 

goodwill. A series of measures is underway 

to restore the profitability of the Brazilian 

operation, including by significantly 

increasing local vehicle content. 

The Group also compared the book value 

of goodwill for the main companies 

acquired with the estimated future cash 

flow from the businesses concerned. 

Based on the assumptions used to 

perform this analysis, in each case the 

comparison showed that future cash 

flows would be sufficient to permit the 

recovery of the goodwill. Consequently, 

these amounts of goodwill are being 

amortized on a straight-line basis over 

20 years in the normal way. 

The 2001 charge corresponds to the 

amortization of goodwill on Crédipar 

(€5 million), Peugeot Citroën Argentina 

(€21 million including recognition of an 

impairment loss to write off the unamortized 

balance), Bertrand Faure (€43 million), 

Faurecia Exhaust Systems (€12 million) 

and Sommer Allibert (€52 million, 

prorated from the date of acquisition to 

the year-end). The 2000 charge corresponds 

to the amortization of goodwill on 

Crédipar (€5 million), Bertrand Faure 

(€42 million), Faurecia Exhaust Systems 

(€12 million) and Peugeot Citroën 

Argentina (€138 million including 

recognition of an initial impairment loss 

due to the economic outlook in Argentina). 



1. FINANCING STRATEGY 

The PSA Peugeot Citroën Group comprises 

both manufacturing and sales companies 

and finance companies, whose financial 

characteristics are very different. They 

therefore require the use of specific, yet 

strategically coordinated financing strategies. 

The Group’s financing strategy for the 


focuses on consistently generating 

sufficient cash flow from operating 

activities to finance the capital spending 

required to support the development of 

these businesses and to achieve worldclass 

manufacturing efficiency. The 

businesses also need to generate sufficient 

free cash flow to finance dividend growth, 

steadily improve the companies’ net 

financial position and fund the Group’s 

share buyback policy. 

In addition to a net cash position, the 

strategy is designed to provide the 

manufacturing and sales companies with 

substantial cash reserves to overcome any 

difficulties that may come their way. To 

this end, the Group raises long-term 

borrowings, whenever this can be done 

on attractive terms, either on the financial 

markets or from national or supranational 

lending institutions dedicated to financing 

investments of the type made by the 

Group. Faurecia also has specific financing 

obtained primarily to pay for the 

acquisitions made in recent years. Reflecting 

this strategy, as of December 31, 2002, 

the manufacturing and sales companies 

had cash and cash equivalents, net of 

bank overdrafts, totaling €3,887 million. 

To top up these cash reserves as needed, 

Peugeot S.A. also has unused confirmed 

lines of credit, which are regularly 

renewed and are available for use by all 

Group companies. These lines amounted 

to €2,400 million as of December 31, 

2002. Faurecia has additional sources of 

financing, in the form of €1,545 million 

worth of confirmed lines of credit, of 

which only €605 million had been 

drawn down at end-2002. 

Banque PSA Finance’s strategy is also 

designed to ensure that the bank has 

sufficient financial resources to pursue its 

business in all circumstances, whatever the 

conditions on the financial markets. These 

resources consist primarily of liquidity 

reserves representing at all times more 

than €2 billion, to cover the bank’s shortterm 

liquidity risk. As of December 31, 

2002, these reserves stood at €2,936 

million. Financing strategies also focus on 

ensuring that retail loans and the related 

financing are matched in terms of 

maturities. The bank maintains, at all times 

and across all maturities, financial resources 

in excess of the assets to be financed, 

thereby covering its longer-term liquidity 

risk. Lastly, Banque PSA Finance also has 

undrawn confirmed lines of credit totaling 

€4,850 million at end-2002, including 

€1,850 million expiring in March 2004 

and €3,000 million expiring in July 2005. 

The bank’s strategy also focuses on 

achieving the broadest possible spread of 

financing sources, including the interbank, 

commercial paper, certificate of deposit, 

bond and medium-term notes markets. 

Considerable emphasis is also placed on 

diversifying the investor base. This strategy 

of diversification shelters the bank’s 

operations from the effects of any upsets 

on a given financial market. Since the 

beginning of 2001, the bank has 

increased the volume of financing raised 

on the European asset-backed securities 

market. This market is now highly liquid 

and spreads are comparable to those 

obtained from other financing sources. 

In June 2001 and July 2002, the bank sold 

pools of automobile loans totaling €1,000 

million and €1,500 million respectively to 

a special purpose entity which issued assetbacked 

securities placed with a broad 

range of European investors. 

Lastly, the bank’s capital, as determined for 

capital adequacy purposes, is kept at around 

7.5% of total outstanding loans, including 

securitized loans. This is a high ratio given the 

quality of the loan book. As of December 

31, 2002, Banque PSA Finance’s European 

capital adequacy ratio was 9.3%. During 

the year, the bank carried out a €100 million 

share issue, underwritten in full by 

Peugeot S.A., to keep pace with the rapid 

growth in outstandings in recent years 

and the increased capital requirement in 

the United Kingdom as from January 

2002, when the bank’s UK branch took 

over direct responsibility for lending 

activities in this market. Until the end of 

2001, these activities were conducted by 

a joint venture with a UK partner that 

contributed to meeting the business’s 

capital requirements. 

To safeguard all of the sources of financing 

available to Banque PSA Finance, 

PSA Peugeot Citroën and Faurecia, 

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Statistics 

including undrawn facilities, the Group 

imposes strict limits on clauses in loan 

agreements allowing lenders to require 

payments to be rescheduled or to modify 

the financial terms of the agreement. 

None of its loan agreements contain any 

rating triggers and the only agreements 

containing material adverse change 

clauses are with certain supranational 

lenders that insist on this type of 

protection. Currently, only five loan 

agreements covering €300 million worth 

of financing include material adverse 

change clauses. Similarly, none of the loan 

agreements contain any financial 

covenants whereby the loans would 

become immediately repayable if certain 

financial ratios were not met. Presently, 

none of the clauses would restrict the 

availability of undrawn financing. In the 

case of Banque PSA Finance and Faurecia, 

additional safeguards are provided by the 

absence of any cross-default clauses, 

between the companies in these divisions 

and the other divisions of the PSA Peugeot 

Citroën Group. 

2. RATING 

Peugeot S.A. and Banque PSA Finance 

have obtained ratings from Standard & 

Poor’s and Moody’s Investor Service for 

their short- and long-term debt issuance 

programs and the debt issuance programs 

of subsidiaries backed by Peugeot S.A. or 

Banque PSA Finance guarantees. 

On June 25, 2002, Standard & Poor’s 

confirmed the A- long-term rating and A2 

short-term rating attributed to debt issues 

by Peugeot S.A., Banque PSA Finance 

and their subsidiaries. Standard & Poor’s also 

changed the outlook from stable to positive. 

The agency stated that assuming the 

Group’s operating margin remains above 

5% of sales and the net cash reserves of the 

manufacturing and sales companies increase 

to more than €1 billion, it may decide to 

upgrade the ratings in the future, provided 

that Banque PSA Finance’s capital adequacy 

ratio remains satisfactory. 

On May 28, 2002, Moody’s Investor 

Service upgraded Banque PSA Finance’s 

long-term rating from A3 to A2 and its 

short-term rating from P2 to P1. On 

November 15, 2002, Moody’s Investor 

Service confirmed the A3 long-term 

rating and P2 short-term rating 

attributed to Peugeot S.A. and to its 

subsidiaries for debt issues guaranteed 

by Peugeot S.A. It also changed the 

outlook from stable to positive. 

3. ANALYSIS OF CASH FLOWS 

Net cash provided by operations of the 


totaled €4,389 million in 2002. Capital 

expenditure for the year by these 

companies, net of the proceeds from asset 

disposals, represented a net cash outflow 

of €2,618 million. These expenditures to 

support the development of their businesses 

and modernize their plant and equipment, 

were entirely financed by cash flow from 

operations, leaving free cash flow of 

€1,771 million. Free cash flow was more 

than enough to finance the €337 million 

worth of dividends paid by Peugeot S.A. 

and Faurecia, as well as the Group’s €517 

million share buyback program and other 

cash outflows from financing activities, 

leading to a very significant improvement 

in the manufacturing and sales companies’ 

net financial position. As of December 31, 

2002, these companies had positive net 

cash and cash equivalents of €594 million 

as opposed to a negative balance of 

€511 million at the previous year-end. 

3.1. Cash flows from operating activities 

– manufacturing and sales companies 


manufacturing and sales companies came 

to €4,389 million in 2002 versus €3,018 

million in 2001 and €2,983 million in 2000. 



Working capital provided by operations and 

gross capital expenditure – manufacturing 


Working capital provided by operations 

of the manufacturing and sales 

companies rose 18% to €4,059 million 

in 2002, representing 7.7% of sales. 

In 2001 and 2000, respectively, working 

capital provided by operations totaled 

€3,440 million and €3,221 million, 

representing 6.8% and 7.5% of sales. 

Working capital of the manufacturing 

and sales companies was reduced by 

€330 million. Comparable working 

capital increased by €422 million in 

2001and by €238 million in 2000. 

Changes in working capital by business 

were as follows: 

Automobile Division working capital was 

reduced by €372 million, after rising by 


in 2000. The decrease in 2002 stemmed 

primarily from an increase in supplier 

credit, due to normal production levels in 

the last quarter of 2002 as opposed to 

below-average production in the same 

period of 2001. In the three months from 

October to December 2002, a total of 

835,800 vehicles rolled off the production 

line. In the same period of 2001, 

production was scaled back to 

764,800 units, due to the uncertain 

outlook following the events of 

September 2001. 


Automobile 372 (367) (474) 

Transportation and Logistics 27 17 (220) 

Automotive Equipment 84 (127) (37) 

Other businesses (153) 55 493 

Total manufacturing and sales companies 330 (422) (238) 

New vehicle inventories at end-2002 were 

1% down on their year-earlier level, 

despite the sharp rise in sales to markets 

outside Western Europe. Delivery times to 

these markets are longer than in Western 

Europe, with the result that average 

inventories are larger. The low inventories 

of the last three years are the direct result 

of strong demand for Peugeot and 

Citroën vehicles and improved Automobile 

Division supply chain management: 

(in units) 

New vehicles inventories 

Manufacturer Dealer network Total 

December 31, 2000 217,300 48,400 266,300 

June 30, 2001 271,000 55,200 326,400 

December 31, 2001 222,200 49,400 272,300 

June 30, 2002 229,000 51,000 280,000 

December 31, 2002 216,500 53,000 269,500 

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Automotive Equipment working capital 

declined by €84 million in 2002, after 

increasing by €127 million in 2001 (on a 

comparable basis) and €37 million in 2000. 

3.2. Cash flows from operating activities 

– finance companies 

Net cash provided by operating activities 

of the finance companies totaled 

€796 million in 2002 versus €1,820 million 

in 2001. 

Working capital provided by operations – 

corresponding more or less to net income 

– amounted to €239 million in 2002, 

€160 million in 2001 and €222 million in 

2000. Changes in operating assets and 

liabilities had a positive impact of 

€557 million in 2002 and €1,660 million 

in 2001. These figures correspond to the 

combined effect of changes in outstanding 

loans and the related refinancing, and to a 

lesser extent, to changes in other operating 

receivables and payables. As such, they 

primarily reflect Banque PSA Finance’s drive 

to build up cash reserves, in accordance 

with its financing strategy (see section 

1 above). 

3.3. Cash flows from investing activities 

In 2002, gross capital expenditure amounted 

to €2,802 million. This was slightly below 

the 2001 amount of €2,947 million, which 

in turn was close to the 2000 figure of 

€2,932 million. Capital expenditure over 

the last three years is in line with the 

Group’s medium-term target of capping 

capital budgets at €3,000 million per year. 

The main programs concern new product 

launches and the extension of the Group’s 

international presence. Capital expenditure, 

like R&D spending, has been contained 

thanks to the effectiveness of the platform 

strategy, which allows plant and tooling 

dedicated to a platform to be reused for 

all vehicles developed on the platform 

concerned. 

Capital expenditure breaks down as 

follows by business: 

Gross capital expenditure 


Automobile 2,357 2,398 2,497 


Automotive Equipment 351 436 290 





At €177 million, proceeds from disposals 

of fixed assets returned to their recurring 

level in 2002, after peaking at €450 million 

in 2001. In 2000, fixed asset disposals 

generated a cash inflow of €103 million. 

The 2001 figure included the €271 

million proceeds from the sale of 

a real estate complex in the Paris area, 

which had become surplus to requirements. 

Cash outlays for acquisitions of shares in 

consolidated and non-consolidated 

companies represented a low €81 million. 

Most of this amount consisted of the 

Group’s contribution to the initial capital 

of Toyota Peugeot Citroën Automobiles 

(TPCA). Cash outlays in 2001, totaling 

€1,608 million, included the €1,495 million 

acquisition of Sommer Allibert’s 

automobile business and €63 million 

used to buy out the Rio de Janeiro state 

government’s stake in Peugeot Citroën do 

Brasil. The 2000 total of €182 million 

primarily corresponded to the Group’s 

€137 million contribution to a share issue 

by Dong Feng Citroën Automotive 

Company (DCAC). 

3.4. Cash flows from financing activities 

Including the finance companies, 

financing activities generated a net cash 

outflow of €2,474 million. In 2001 and 

2000, these activities generated net cash 

inflows of €3,416 million and €696 

million respectively. 

Cash outflows include dividend payments 

by Peugeot S.A., in the amount of 

€294 million in 2002, versus €217 million 

in 2001 and €118 million in 2000. Net 

cash outflows related to share buybacks 

totaled €556 million, corresponding to 

the buyback of 12,231,422 shares at an 

average price of €45.42. Of the total, 

€517 million are included in stockholders’ 

equity, under “Treasury stock” and 

€39 million – corresponding to shares 

acquired for allocation on exercise of stock 



options – are included in assets under 

“Short-term investments”. In 2001, a total 

of 10,424,509 Peugeot S.A. shares were 

bought back (net of shares sold during 

the period) at an average price of €46.40, 

representing a total cash outflow of €484 

million. In 2000, 7,802,226 Peugeot S.A. 

shares were bought back at an average 

price of €32.93, representing a cash 

outlay of €257 million. During 2000, the 

Group also bought back €555 million 

worth of 1994-2001 2% convertible 

debentures. 

4. CONSOLIDATED FINANCIAL POSITION 

4.1. Stockholders’ equity 

Net income for 2002 helped to further 

increase the Group’s stockholders’ equity, 

which rose to €10,984 million as of 

December 31, 2002 from €10,282 million 

a year earlier. 

Net assets per share, based on the number 

of shares outstanding excluding treasury 

stock, rose 12.2% to €45.03 as of 

December 31, 2002, from €40.15 at the 

previous year-end. The end-2001 figure was 

12.4% above net assets per share of 

€35.70 as of December 31, 2000. As of 

December 31, 2002, net assets per share 

represented 109% of the share price. 

4.2. Net financial position – 


The net financial position of the 

manufacturing and sales companies, 

which is described in detail in note 42 to 

the consolidated financial statements, 

represents the best indicator of the 

Group’s financial position with regard to 

outside sources of financing. For 

the manufacturing and sales companies, 

it represents net cash and cash equivalents 

– corresponding to cash and short-term 

investments less short-term financing – 

and the difference between long-term 

borrowings and long-term loans. 

As of December 31, 2002, the 


had net cash of €594 million versus net 

debt of €511 million as of December 31, 

2001 and net cash of €1,407 million at 

end-2000. 

The negative swing in 2001 was due to 

Faurecia’s €1,495 million acquisition of 

Sommer Allibert’s automobile business. 

It also reflects the assumption of the 

€290 million in net debt of this business. 


manufacturing and sales companies, 

in the amount of €3,018 million, more 

than covered net capital expenditure of 

€2,495 million, dividend payments of 

€217 million and €484 million worth of 

share buybacks. 

In 2002, the swing from net debt to 

significant net cash reflects the sharp rise 

in net cash provided by operations of the 

manufacturing and sales companies, to 

€4,389 million. This amount was more 

than enough to cover net capital 

expenditure of €2,618 million, dividend 

payments of €337 million and share 

buybacks. The net cash position was also 

boosted by the €307 million positive 

effect of exchange rate changes on debt 

– primarily concerning the local currency 

debt taken on to finance part of the cost 

of the new automobile assembly plant in 

Brazil – and the €89 million in proceeds 

from sales of marketable securities carried 

on the balance sheet at historical cost. 

5. SUPPLEMENTARY PENSION AND OTHER 

POST-RETIREMENT BENEFIT OBLIGATIONS 

PSA Peugeot Citroën Group employees 

in certain countries are entitled to 

pension or supplementary pension 

benefits, payable annually, or lump sum 

retirement bonuses paid at the time of 

retirement. Some of these plans are 

defined benefit plans, under which 

benefit payments are determined based 

on a range of criteria including the 

employee’s age, years of service, salary 

level and benefit entitlements under the 

social security system. Others are defined 

contribution plans entitling employees 

to fixed benefits determined by reference 

to the capital built up through employee 

and employer contributions to external 

funds, including the reinvested yield from 

the investment of these funds on the 

financial market. 

Group policy emphasizes defined 

contribution plans, which are more 

effective in guaranteeing future benefits 

and also avoid exposing the Group to 

financial risks related to its benefit 

obligations. In 2002, the Group set up 

defined contribution plans in Spain and 

Brazil. In France, the Group has curtailed 

its defined benefit plan. Under the terms 

of the curtailment, participating 

employees no longer acquire any further 

benefit entitlements under the plan 

beyond June 30, 2002 except for those 

employees who were over 59 years old at 

that date. The plan has been replaced by 

a defined contribution plan set up for all 

employees whose compensation exceeds 

the ceiling for French social security 

contributions. The plan will be funded by 

employer and employee contributions set 

at 4% and 2% respectively of the portion 

of salary in excess of the social security 

ceiling. The Group’s benefit obligations 

under the former defined benefit plan at 

June 30, 2002, towards employees who 

were less than 59 years of age at that 

date, have been transferred in full to a 

leading insurance company, in exchange 

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Statistics 

for a lump sum payment of €384 million. 

This amount was financed by a €228 

million transfer from external funds set 

up in prior years and a cash payment 

covering the balance. The effect of this 

transaction on the Group’s results of 

operations and balance sheet is presented 

in detail in note 46 to the consolidated 

financial statements. 

Along with this major change in pension 

benefit arrangements in France, the 

defined benefit plans set up by the Group 

for the employees of its UK subsidiaries 

have been closed to new entrants effective 

from May 2002. Employees recruited after 

the plans were closed are covered by a 

new defined contribution plan whereby 

the employer will add to contributions 

paid by each employee. Other employees 

continue to be covered by the former 

defined benefit plans. In 2002, employee 

contributions to these plans were increased 

to 4% of salary from 3% previously. 

The present value of the Group’s benefit 

obligations under the remaining defined 

benefit plans is calculated in accordance 

with Statement of Financial Accounting 

Standards (SFAS) 87. 

The obligations are funded by contributions 

to external institutions responsible for 

managing the funds set up to finance future 

benefit payments. The type of institution 

depends on the applicable legislation in each 

country concerned. The level of funding is 

adjusted at regular intervals to take account 

of changes in the amount of related benefit 

obligations, in line with the Group’s policy 

of externally funding its obligation except in 

cases where this is not possible or desirable 

from a legal, financial or tax standpoint. In 

these cases, reserves have been booked in 

the consolidated balance sheet to cover any 

shortfall in funds. 

The total benefit obligation is calculated at 

the end of each year as explained above. 

The periodic pension cost, determined 

after taking into account funds managed 

by external institutions, corresponds to: 

- the service cost, representing the 

additional rights acquired by employees 

during the year, generally based on their 

period of service with the Group; 

- interest cost, corresponding to 

adjustments to the present value of the 

opening vested rights of employees to 

take account of the fact that the period to 

the future benefit payment date has been 

reduced by one year; 

- amortization of the transition obligation 

resulting from changes in certain 

assumptions underlying each threeyearly 

actuarial valuation, and the 

difference between the actual return on 

external funds and the standard return 

on long-term investments; 

- less the estimated yield on the external 

funds for the following year. 

In 2002, the Group reviewed the 

assumptions used to calculate benefit 

obligations and periodic pension cost, in 

the light of the major changes in the 

economy and financial markets during the 

year. The discount rate applied to future 

benefit obligations under French plans 

was lowered by 0.5 points to 5.25% and 

was maintained at 6% for UK plans. The 

inflation rate applied for UK plans was 

raised by 0.25 points to 2.25% and the 

rate for French plans was maintained at 

1.75%. Lastly, the expected yield on 

external funds was lowered from 7.50% to 

6.50% for French plans and kept at 7.25% 

for UK plans, for the calculation of 2003 

periodic pension costs. The reduction in 

expected yields was based on an analysis 

of historical yields over a long period. In 

France, external funds generated negative 

actual yields of 2.6% in 2002 and 0.9% 

in 2001, and a positive yield of 3.3% 

in 2000. The average yield over the last 

12 years was a positive 7.6%. In the 

United Kingdom, external funds generated 

negative actual yields of 13% in 2002, 

9.9% in 2001 and 4.6% in 2000. The 

average yield over the last 12 years was a 

positive 8.3%. In both countries, the 

period of 12 years corresponds to the 

average duration of benefit obligations. 

As of December 31, 2002, the discounted 

present value of future benefit obligations 

stood at €2,725 million versus €2,879 

million at end-2001. The decrease 

primarily reflects benefit payments of 

€105 million and the €384 million 

curtailment impact resulting from the 

transfer to an insurance company of the 

total benefit obligation towards 

employees less than 59 years of age under 

the French defined benefit plan. These 

reductions were partly offset by the 2002 

service cost, which is now essentially 

limited to benefit entitlements acquired 

under UK plans, and the adjustment to 

opening benefit obligations. Together, 

these two items totalled €235 million. 

Changes in actuarial assumptions – mainly 

discount rates and inflation rates, as 

explained above – had the effect of 

increasing the benefit obligation 

by €199 million. 

As of December 31, 2002, deferred items 

amortized over the average remaining 

service lives of employees, amounted to 

€980 million, compared with €638 million 

at end 2001. The increase includes 

€199 million in actuarial differences 

arising from the change in actuarial 

assumptions at the end of 2002, and the 

€300 million difference between standard 

and actual yields on the external funds 

used to finance benefit payments. The 

impact of these items was partly offset by 



the recognition in the income statement 

of €95 million worth of actuarial 

differences related to benefit obligations 

towards employees less than 59 years of 

age under the French defined benefit plan, 

as well as by the €35 million amortization 

of deferred items at year-end 2001. 

External funds used to finance benefit 

payments contracted to €1,668 million as 

of December 31, 2002 from €2,108 million 

at end-2001. The decline was primarily 

attributable to the withdrawal of €228 

million from these funds to finance part of 

the €384 million lump sum payment made 

to an insurance company in exchange for 

the transfer to this company of the Group’s 

entire obligation towards employees less 

than 59 years of age under the defined 

benefit plan. It also reflected a €160 million 

fall in the value of the external funds. 

Reserves carried on the balance sheet in 

respect of the portion of benefit obligations 

not covered by external funds amounted 

to €247 million as of December 31, 2002 

and €244 million at end-2001. 

The Group has no obligation to pay 

additional contributions to external funds, 

other than in the United Kingdom, apart 

from the obligation to pay benefits when 

they fall due. In the United Kingdom, 

based on the present value of external 

funds, the Group may be required by local 

regulations to pay a maximum of €70 

million in additional contributions in each 

of the next three years. 

The charge recorded in accordance with 

the standards described above amounted 

to €130 million, excluding the effect of the 

exceptional amortization of deferred items 

related to employees in France under 59 

years of age. Charges for 2001 and 2000 

stood at €90 million and €85 million 

respectively. The estimated charge for 

2003 is €164 million. 

Return on capital employed 

1. DEFINITION AND METHODS 

Return on capital employed (ROCE) has 

been selected as the standard indicator of 

the Group’s overall financial performance. 

Capital employed includes the value of all 

operating assets and liabilities used by the 

Group in its business operations. Return 

on capital employed is measured on the 

basis of income generated by capital 

employed, which corresponds mainly to 

operating margin plus or minus the other 

income and expense items included in the 

ROCE calculation. 

Pre-tax ROCE corresponds to the ratio of 

income generated by capital employed to 

total capital employed at December 31 of 

each year. The definition and the 

calculation of capital employed, income 

generated by capital employed and return 

on capital employed are presented in note 

44 to the consolidated financial statements. 

After-tax ROCE is calculated on the basis 

of a standard income tax rate of 33 1/3%, 

corresponding to the average tax rate 

applied to the Group’s recurring results 

of operations. 

2. CAPITAL EMPLOYED 

Capital employed stood at €15,407 

million as of December 31, 2002, slightly 

down on the end-2001 figure. The 

accounting for DCAC had an impact of 

€259 million. Based on a comparable 

scope of consolidation, capital employed 

contracted by 3.2%, reflecting the 

Group’s success in containing capital 

expenditure, which is increasingly covered 

by depreciation of operating assets. The 

decrease also reflects tight control over 

inventories, which were virtually 

unchanged at December 31, 2002 

compared with the previous year-end, and 

even slightly lower in the case of new 

vehicle inventories. Lastly, capital 

employed was favorably impacted by the 

increase in supplier credit to a more 

normal level. This item dropped sharply 

at the end of 2001, due to the scaling 

down of production in the fourth quarter 

(see Group Financing, 3.1 above). 

Capital employed amounted to €15,654 

million as of December 31, 2001, up 

€2,666 million on the end-2000 figure. 

The increase stemmed from Faurecia’s 

acquisition of Sommer Allibert’s automobile 

business, which had capital employed of 

€1,986 million at the date of acquisition. 

Based on a comparable scope of 

consolidation, capital employed rose by 

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Statistics 

€680 million or 5.2% compared with 

end-2000. This increase, which was 

significantly below the rate of sales 

growth, was due to the same factors as 

in 2002, except for the late-2001 

reduction in supplier credit (due to low 

production output in the final months of 

the year), which had the effect of 

increasing capital employed. 

Capital employed 


Automobile 9,687 9,828 8,901 

Finance companies 1,680 1,490 1,327 



Other businesses and consolidation adjustments (307) (165) 163 


3. RETURN ON CAPITAL EMPLOYED 

After-tax ROCE rose sharply to 12.4% in 

2002 from 11.0% in 2001 and 11.1% in 

2000, reflecting the combined benefits of 

higher operating margin and slightly 

lower capital employed. Automobile 

division after-tax return on capital 

employed improved to 16.0% from 

14.4% in 2001. 

(in %) 


Management of operational 

and financial risks 

The PSA Peugeot Citroën Group is exposed 

to various risks in the normal course of 

business. These risks are managed and 

hedged by applying procedures that are 

defined and monitored at Group level. 

They include both operational and 

financial risks. In addition, the Group is 

exposed to specific risks on the activities 

of the finance companies. 

1. OPERATIONAL RISKS 

The Group has created a risk prevention 

and management organization charged 

with implementing appropriate measures 

to limit the consequences of events 

affecting Group operations and prevent, 

to the extent possible, the risk of project 

management failures or organizational 

dysfunctions. 

The corporate Risk Prevention and 

Management Department guarantees the 

consistency of operational risk management 

initiatives and their cross-functional 

implementation. It defines risk identification 

and assessment methods, and helps to 

define and control risk management 

plans. It is supported by a network of 

correspondents or experts working in the 

Group’s various departments and facilities, 

who are responsible for deploying Group 

risk prevention policies in their units and 

monitoring the status of preventive and 

corrective action plans. Risks are assessed 

in detail using a Group-wide method and 

annual programs are implemented to 

manage them. This means that potential 

vulnerabilities are identified early and that 

protective or preventive measures are 

commensurate with the risks involved. 

The main operational risks are risks likely 

to disrupt or halt the Group’s design, 

production or distribution activities, or to 

pose a threat to the Group’s employees 

or its tangible or intangible assets. They 

include the risk of damage to research 

facilities, data processing centers, production 

or distribution units, as well as incidents 

affecting the integrity, confidentiality and 

use of Group information systems and 

computerized data, and damage to the 

Group’s reputation. 

Systematic prevention programs deal, in 

particular, with fire risks, risks concerning 

the supply of components and the 

protection of vehicle inventories. The 

Group invests in data protection and 

back-up programs, data processing center 

security programs and training in data 

control techniques for employees. Special 

attention is paid to the environmental 

impact of manufacturing facilities. The 

design specifications of plant and 

equipment include processes and devices 

to control pollution and environmental 

risks. The corporate Risk Management and 

Prevention Department centrally manages 

environmental risks related to manufacturing 

operations and regularly publishes Grouplevel 

environmental reports. 

The structures dedicated to managing 

environmental risks, at the Automobile 

Division’s production plants and elsewhere 

in the organization, comply with ISO 14001 

environmental management standards. 

Worldwide, the Group’s 20 main production 

plants all earned ISO 14001 certification 

between 1999 and 2002 and a further 

four sites will be certified in 2003. The ISO 

certification program is supported by 

annual capital expenditure budgets for 

environmental projects. All industrial projects 

are reviewed by the design department, the 

plant concerned, technical department 

experts and Group environmental specialists 

in order to identify the potential risks and 

devise appropriate responses. 

Group policy in the area of insurance 

focuses on risk prevention. All major risks 

are insured and deductibles are set at 

appropriate levels. All insurance cover is 

taken out with leading insurers and 

reinsurers based on the recommendations 

of top ranking insurance advisors specialized 

in major risks. The Group’s global insurance 

programs cover the following main risks: 

• Damage to property and resulting 

operating losses, up to a maximum of 

€1,500 million, excluding the Automotive 

Equipment business, and €228 million 

for the Automotive Equipment business. 

• Liability claims resulting from personal 

injury or tangible or intangible losses 

arising from the use of the Group’s 

products or otherwise, up to amaximum 

of €150 million excluding the Automotive 

Equipment business, which has taken 

out specific cover for these risks. 

• Theft or damage to new vehicles held 

on storage lots, up to a maximum of 

€46 million. 

• Theft or damage to vehicles and 

components during transport, up to a 

maximum of €45 million. 

Thanks to its good insurance record, the 

Group has been able to renew the cover 

provided by its insurance programs for 

2003 without having to pay significantly 

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Statistics 

higher premiums, despite the sharp rise 

in rates in the global insurance market. 

2. LEGAL AND REGULATORY RISKS 

The PSA Peugeot Citroën Group is exposed 

to legal risks as an employer and in 

connection with the design and 

distribution of vehicles, the purchase of 

components and the supply of services. 

To manage these risks, the Group 

implements preventive policies in 

the areas of workplace hygiene and safety, 

the manufacturing environment, industrial 

and intellectual property. Priority is also 

given to vehicle safety and the quality of 

the Group’s products and services. 

The Automobile Division may become 

involved in claims and litigation arising 

from its dealings with the dealer network 

and customers. Motor vehicle distribution 

and after-sales services in Europe are 

subject to the new European Union Block 

Exemption Regulation 1400/02 dated 

July 31, 2002. The Group does not expect 

its Automobile Division to be exposed to 

any specific legal or regulatory risks as 

a result of the new regulations. 

As of December 31, 2002, no Group 

company was involved in any claims or 

litigation that had or were likely to have a 

material impact on the Group’s accounts. 

3. FINANCIAL RISKS 

PSA Peugeot Citroën is exposed to financial 

risks in connection with its automobile 

business and other manufacturing 

activities, including the risk of losses due 

to unfavorable changes in exchange rates 

affecting the currencies of countries where 

it manufactures products—primarily in 

the euro zone—and the countries in 

which these products are sold. The 

introduction of the euro at the beginning 

of 1999 has had the effect of reducing 

these risks, which now primarily concern 

the British pound and, to a lesser extent, 

the Argentine peso, the Brazilian real, the 

Polish zloty and the Japanese yen. 

Currency risks of the Automobile Division 

are managed primarily by having the 

manufacturing companies bill the sales 

companies in the sales companies’ local 

currency, except in those rare cases where 

the sales company’s local currency is not 

convertible. Currency risks on these intercompany 

billings are systematically hedged 

by means of forward contracts maturing 

on the invoice settlement date, which is 

determined based on the subsidiaries’ 

operating cycle. The hedges are set up by 

a specialized subsidiary, PSA International, 

or on PSA International’s instructions in 

the case of non-convertible currencies. 

In accordance with these principles, 

currency risks on future sales are not hedged, 

with the result that future operating 

margin may vary depending on exchange 

rates. As of December 31, 2002, however, 

the Group had purchased Japanese yen 

put options in a total nominal amount of 

€765 million to guarantee a minimum 

exchange rate for its vehicle sales in Japan 

until the end of 2005. 

On the basis of the 2002 figures, the 

Group estimates that a 1% fluctuation in 

the euro against all other currencies 

would have an impact of around 

€70 million on consolidated operating 

margin. A 1% change in the pound-euro 

exchange rate would have an impact of 

around €38 million on consolidated 

operating margin. 

The exposure of the Group’s manufacturing 

and sales activities to changes in interest 

rates is not material. 

The Group places significant emphasis on 

guaranteeing the security of payments for 

the goods and services delivered to 

customers. Relations with Peugeot and 

Citroën dealers are managed within the 

framework of the sales financing system 

described below. Appropriate mechanisms 

have been set up to guarantee the security 

of payments from other Group customers. 

Inter-company settlements are systematically 

covered against political risks whenever 

necessary. 

4. RISKS ASSOCIATED WITH THE ACTIVITIES 

OF THE FINANCE COMPANIES 

The Group finance companies provide 

financing for dealer vehicle and 

replacement parts inventories and offer a 

wide range of loans and lease financing 

solutions to customers, together with 

related services. As a result, they are 

exposed to credit risks. Wholesale financing 

credit risks are spread across a large 

number of dealers and are managed 

internally by Credit Committees set up in 

each country as well as by a Group Credit 

Committee, based on clearly defined, 

closely monitored credit limits. Retail 


Management of operational and financial risks 

financing credit risks, which are spread 

across an even larger number of 

customers, are managed using creditscoring 

procedures. In addition, significant 

individual credit risks are managed using 

procedures similar to those applied to 

manage wholesale financing credit risks. 

Reserves are booked for residual risks, on 

a statistical basis, as soon as the financing 

is granted. The percentage of the total 

risk covered by a reserve is adjusted at 

regular intervals based on the Group’s loss 

experience, determined country-bycountry. 

Specific allowances are booked 

for significant individual risks, as soon as 

they are identified. 

The bulk of the finance companies’ 

refinancing needs are covered by the 

equity capital allocated to these 

companies, the issuance of debt securities 

and bank borrowings. The finance 

companies are therefore exposed to the 

risk of mismatches between assets and 

liabilities, in terms of maturities, currencies 

and interest rates. The Group’s policy 

consists of neutralizing the impact of 

changes in interest rates and exchange 

rates on the finance companies’ operating 

margin by using appropriate financial 

instruments to match interest rates and 

currencies between assets and liabilities. 

The permanent need to have sufficient 

resources to refinance the finance 

business also exposes the Group to 

liquidity risks. These risks are covered as 

part of the financing strategy (see Group 

Financing 1. above), by matching financing 

maturities to the related assets, by using 

free cash flow and unused confirmed lines 

of credit, by extensively diversifying financing 

resources and by maintaining adequate 

capital ratios at Banque PSA Finance. 

The Group is exposed to counterparty risks 

on transactions carried out on financial 

markets in connection with the management 

of currency and interest rate risks and 

payment flows. It keeps these risks to a 

minimum through internal control 

procedures that restrict the choice of 

counterparties to leading banks and 

financial institutions. 

118 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

First-quarter 2003 sales 

Consolidated sales for the first three months 

of 2003 amounted to €13,841 million, a 

3.0% increase from the €13,439 million 

reported in first-quarter 2002. 

Automobile Division sales rose by 3.1% 

during the quarter to €11,222 million, while 

worldwide unit sales were up 1.7% to 

823,800 vehicles. 

In the Central and Eastern Europe and Turkey 

region, where overall demand has started to 

recover, sales were up 31.5% to 46,000 units. 

Sales in Latin America declined 10.8% to 

26,900 units. In Brazil, sales retreated 8.5% 

to 15,200 units, in line with the market, but 

market share rose to 4.9% from 4.5% in the 

prior-year period. 

exhaust systems, sales were up 10.7%, 

reflecting sustained demand for Faurecia’s 

products, particularly car seats. 

Sales by the other businesses amounted to 

€218 million, versus €238 million in firstquarter 

2002. 

In Western Europe, where demand for 

passenger cars and light commercial vehicles 

contracted by 2.6% in the first quarter, 

PSA Peugeot Citroën increased registrations 

by 2.5%, driving further gains in market 

share, to an aggregate 16.4% from 15.5% 

at March 31, 2002. Compared to the prioryear 

period, Group market share increased 

in France (35.2%, versus 33.9%), Spain 

(23.3%, versus 22.3%) and Germany (5.9%, 

versus 5.5%), as well as, to a greater extent, 

in Italy (11.8%, versus 9.2%) and the rest of 

Europe (16.3%, versus 14.9%). 

Unit sales in Western Europe (i.e., vehicles 

invoiced to dealers) rose by 1.4% during the 

period to 660,000 units. 

Outside Western Europe, first-quarter sales 

increased by 2.9% to 163,800 units. 

Demand continued to surge in China, rising 

94% year-on-year, while Group sales climbed 

120.6% to 26,500 units. Market share 

reached 7.2% at March 31, 2003. 

The finance companies reported a 3.6% 

increase in revenues, to €431 million, while 

Banque PSA Finance’s total loans outstanding 

rose 6.6% to €18.9 billion. A total of 

220,700 new loans were originated during 

the quarter, up 7% from the prior-year period. 

Sales by the transportation and logistics 

business rose 6.8% to €695 million from 

€651 million at March 31, 2002. 

The automotive equipment business reported 

sales of €2,582 million, versus €2,391 million 

in the prior-year period. Excluding the impact 

of lower prices for the catalysts used in 


120 


Statistics 


Statistics 

PASSENGER CAR REGISTRATIONS IN EUROPE BY COUNTRY 

2002 2001 2000 

France 2,145,100 2,254,700 2,133,900 

Austria 279,500 293,500 309,400 

Belgium-Luxemburg 511,000 531,500 557,100 

Denmark 111,600 96,200 112,700 

Finland 116,900 109,500 134,600 

Germany 3,252,900 3,341,700 3,378,300 

Greece 268,500 280,200 290,200 

Ireland 156,100 164,700 230,800 

Italy 2,270,900 2,413,500 2,423,100 

Netherlands 510,700 530,200 597,600 

Norway 88,700 92,000 97,400 

Portugal 226,100 255,200 257,900 

Spain 1,331,900 1,425,600 1,381,300 

Sweden 254,600 246,600 290,500 

Switzerland 296,100 316,600 316,500 

United Kingdom 2,563,600 2,458,800 2,221,700 

TOTAL WESTERN EUROPE (17 countries) 14,384,200 14,810,500 14,733,000 

Source : C.C.F.A. 

LIGHT COMMERCIAL VEHICLE REGISTRATIONS IN EUROPE BY COUNTRY 

2002 2001 2000 

France 404,900 433,900 415,000 

Austria 22,400 24,100 27,200 

Belgium-Luxemburg 54,000 64,400 57,200 

Denmark 32,200 31,500 33,100 

Finland 15,300 15,100 15,100 

Germany 192,600 206,300 212,300 

Greece 18,800 20,600 23,000 

Ireland 34,700 38,700 41,500 

Italy 254,700 230,700 225,500 

Netherlands 81,100 84,200 96,600 

Norway 24,700 33,800 31,600 

Portugal 79,400 98,900 152,800 

Spain 269,100 287,700 299,200 

Sweden 28,900 29,200 31,800 

Switzerland 23,000 25,400 24,100 

United Kingdom 271,800 259,800 245,200 

TOTAL WESTERN EUROPE (17 countries) 1,807,600 1,884,300 1,931,200 


122 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

PASSENGER CAR AND LIGHT COMMERCIAL VEHICLE REGISTRATIONS IN EUROPE BY MANUFACTURER 

2002 2001 2000 

Market Market Market 

Units share (%) Units share (%) Units share (%) 

Peugeot Marque 1,437,100 8.9 1,443,600 8.7 1,318,900 7.9 

Citroën Marque 1,073,900 6.6 1,060,400 6.3 959,600 5.8 

PSA Peugeot Citroën 2,511,000 15.5 2,504,000 15.0 2,278,500 13.7 

Volkswagen Group 2,797,800 17.3 2,965,100 17.8 2,956,400 17.7 

Renault 1,827,600 11.3 1,863 100 11.2 1,830,300 11.0 

Ford Group 1,823,500 11.3 1,863,400 11.2 1,795,900 10.8 

General Motors Group 1,545,700 9.6 1,688,600 10.1 1,683,300 10.1 

Fiat Group 1,455,600 9.0 1,686,200 10.1 1,737,000 10.4 

Daimler-Chrysler 1,118,500 6.9 1,121,000 6.7 1,085,100 6.5 

Toyota Group 709,900 4.4 635,000 3.8 645,700 3.9 

BMW 617,700 3.8 545,000 3.3 499,900 3.0 

Other Japanese marques 1,147,400 7.1 1,137,300 6.8 1,309,300 7.9 

Korean Marques 422,900 2.6 449,800 2.7 558,600 3.4 

Other Marques 214,200 1.3 236,300 1.5 284,100 1.7 


PSA PEUGEOT CITROËN GROUP - PASSENGER CAR REGISTRATIONS IN EUROPE BY COUNTRY 

2002 2001 2000 



France 720,200 33.6 761,900 33.8 659,100 30.9 

Austria 24,300 8.7 23,300 7.9 21,000 6.8 

Belgium-Luxemburg 109,700 21.5 104,400 19.7 98,400 17.7 

Denmark 30,400 27.2 24,500 25.4 21,900 19.5 

Finland 14,500 12.4 12,200 11.1 12,500 9.3 

Germany 174,600 5.4 158,400 4.7 150,500 4.5 

Greece 39,600 14.8 36,600 13.0 37,900 13.1 

Ireland 13,500 8.7 12,100 7.3 14,700 6.4 

Italy 225,600 9.9 195,400 8.1 183,100 7.6 

Netherlands 75,100 14.7 69,300 13.1 65,100 10.9 

Norway 10,100 11.4 9,200 10.0 7,800 8.0 

Portugal 41,500 18.4 42,500 16.7 40,000 15.5 

Spain 295,200 22.2 311,900 21.9 306,100 22.2 

Sweden 22,500 8.9 16,400 6.7 12,600 4.3 

Switzerland 26,900 9.1 26,600 8.4 24,900 7.9 

United Kingdom 339,300 13.2 334,800 13.6 273,600 12.3 

TOTAL WESTERN EUROPE (17 countries) 2,163,000 15.0 2,139,500 14.5 1,929,200 13.1 


Statistics 

PSA PEUGEOT CITROËN GROUP - LIGHT COMMERCIAL VEHICLE REGISTRATIONS IN EUROPE BY COUNTRY 

2002 2001 2000 



France 144,400 35.7 151,500 34.9 152,000 36.6 

Austria 2,000 8.9 2,400 10.1 2,500 9.1 


Denmark 6,500 20.1 6,800 21.7 6,200 18.6 

Finland 2,000 12.6 1,700 11.3 1,500 10.1 

Germany 11,800 6.2 12,900 6.3 11,700 5.5 

Greece 1,400 7.4 1,700 8.1 1,200 5.1 

Ireland 4,700 13.5 5,500 14.1 6,300 15.2 

Italy 18,200 7.2 14,200 6.2 11,200 5.0 

Netherlands 12,100 15.0 14,400 17.1 14,300 14.9 

Norway 3,400 13.5 5,700 16.8 3,400 10.7 

Portugal 15,900 20.0 17,100 17.3 20,300 13.3 

Spain 66,100 24.6 70,400 24.5 68,800 23.0 

Sweden 4,900 17.0 4,300 14.6 3,500 10.9 

Switzerland 2,000 8.6 2,100 8.2 2,000 8.5 


TOTAL WESTERN EUROPE (17 countries) 348,000 19.3 364,500 19.4 349,300 18.1 

PSA PEUGEOT CITROËN GROUP - PASSENGER CAR AND LIGHT COMMERCIAL VEHICLE REGISTRATIONS IN EUROPE BY COUNTRY 

2002 2001 2000 



France 864,600 33.9 913,400 34.0 811,100 31.8 

Austria 26,300 8.7 25,700 8.1 23,400 7.0 


Denmark 36,900 25.6 31,300 24.5 28,100 19.3 

Finland 16,400 12.4 13,900 11.2 14,000 9.3 

Germany 186,400 5.4 171,300 4.8 162,200 4.5 

Greece 41,000 14.3 38,200 12.7 39,000 12.5 

Ireland 18,200 9.5 17,600 8.6 21,000 7.7 

Italy 243,900 9.7 209,600 7.9 194,300 7.4 

Netherlands 87,200 14.7 83,600 13.6 79,400 11.4 

Norway 13,400 11.9 14,900 11.8 11,200 8.7 

Portugal 57,400 18.8 59,700 16.8 60,300 14.7 

Spain 361,400 22.6 382,300 22.3 374,900 22.3 

Sweden 27,400 9.7 20,700 7.5 16,100 5.0 

Switzerland 28,800 9.0 28,700 8.4 27,000 7.9 



124 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

PEUGEOT MARQUE - PASSENGER CAR AND LIGHT COMMERCIAL VEHICLE REGISTRATIONS IN EUROPE BY COUNTRY 

2002 2001 2000 



France 507,800 19.9 543,400 20.2 472,500 18.5 

Austria 17,600 5.8 17,200 5.4 14,800 4.4 


Denmark 21,200 14.8 18,500 14.5 17,200 11.8 

Finland 8,500 6.5 7,900 6.3 8,600 5.7 

Germany 113,200 3.3 106,200 3.0 106,200 3.0 

Greece 22,700 7.9 18,100 6.0 17,500 5.6 

Ireland 10,700 5.6 10,400 5.1 12,500 4.6 

Italy 143,100 5.7 126,400 4.8 112,200 4.2 

Netherlands 55,900 9.4 55,400 9.0 52,800 7.6 

Norway 8,700 7.6 10,200 8.1 7,500 5.9 

Portugal 31,900 10.4 32,500 9.2 34,400 8.4 

Spain 171,900 10.7 182,300 10.6 169,000 10.1 

Sweden 17,200 6.1 13,100 4.8 11,400 3.5 

Switzerland 18,100 5.7 18,700 5.5 18,300 5.4 



CITROËN MARQUE - PASSENGER CAR AND LIGHT COMMERCIAL VEHICLE REGISTRATIONS IN EUROPE BY COUNTRY 

2002 2001 2000 



France 356,800 14.0 370,000 13.8 338,600 13.3 

Austria 8,700 2.9 8,500 2.7 8,700 2.6 


Denmark 15,600 10.9 12,800 10.0 10,900 7.5 

Finland 7,900 6.0 6,000 4.9 5,400 3.6 

Germany 73,200 2.1 65,200 1.8 55,900 1.6 

Greece 18,200 6.4 20,000 6.7 21,600 6.9 

Ireland 7,500 3.9 7,100 3.5 8,500 3.1 

Italy 100,800 4.0 83,300 3.2 82,100 3.1 

Netherlands 31,300 5.3 28,300 4.6 26,600 3.8 

Norway 4,800 4.2 4,700 3.7 3,600 2.8 

Portugal 25,500 8.4 27,100 7.7 25,800 6.3 

Spain 189,500 11.8 200,100 11.7 205,900 12.3 

Sweden 10,300 3.6 7,600 2.8 4,700 1.5 

Switzerland 10,700 3.4 9,900 2.9 8,700 2.6 


TOTAL WESTERN EUROPE (17 countries) 1,073,900 6.6 1,060,400 6.4 959,600 5.8 


Statistics 

PSA PEUGEOT CITROËN GROUP - PRODUCTION BY MODEL 

(passenger cars and light commercial vehicles) 2002 2001 2000 

PEUGEOT MARQUE 

106 69,500 112,400 137,500 

206 843,900 820,100 737,400 

306 15,500 124,900 278,300 

307 534,500 308,200 500 

405 124,000 80,000 57,400 

406 125,500 192,100 259,500 

504 3,100 4,900 5,800 

607 27,200 37,800 23,500 

806 - 20,000 22,400 

807 14,800 - - 

Expert 28,600 32,300 29,500 

Partner 118,100 130,000 110,600 

J9 - - 3,000 

Boxer 42,500 43,600 44,400 

TOTAL 1,947,200 1,906,300 1,709,800 

(of which diesel-powered versions) (888,700) (852,000) (767,700) 

(of which passenger cars) (1,764,500) (1,720,100) (1,528,900) 

(of which light commercial vehicles) (182,700) (186,200) (180,900) 

CITROËN MARQUE 

Saxo 155,600 242,800 289,300 

C3 204,300 300 - 

ZX 79,400 52,900 53,900 

Xsara 449,800 459,600 453,700 

C5 157,100 157,100 800 

Xantia - 26,300 79,600 

XM - - 2,400 

Synergie - 17,500 17,500 

C8 11,900 - - 

Dispatch 24,900 26,700 24,100 

C15 30,600 34,600 40,100 

Berlingo 162 300 170,400 168,400 

Relay 39,000 41,800 37,800 

TOTAL 1,314,900 1,230,000 1,167,600 

(of which diesel-powered versions) (735,300) (689,300) (637,100) 

(of which passenger cars) (1,129,500) (1,037,600) (981,300) 


TOTAL PSA Peugeot Citroën 3,262,100 3,136,300 2,877,400 

(of which diesel-powered versions) (1,624,000) (1,541,300) (1,404,800) 

(of which passenger cars) (2,894,000) (2,757,700) (2,510,200) 


126 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

PSA PEUGEOT CITROËN GROUP - WORLDWIDE SALES 

(passenger cars and light commercial vehicles) 2002 2001 2000 

WESTERN EUROPE 

France: 

Peugeot 513,300 550,500 486,400 

Citroën 358,000 364,700 346,400 

PSA Peugeot Citroën 871,300 915,200 832,800 

Other Western European countries: 

Peugeot 948,500 934,500 863,600 

Citroën 737,200 695,800 639,900 

PSA Peugeot Citroën 1,685,700 1,630,300 1,503,500 

TOTAL WESTERN EUROPE 

Peugeot 1,461,800 1,485,000 1,350,000 

Citroën 1,095,200 1,060,500 986,300 


REST OF THE WORLD 

Central and Eastern Europe and Turkey: 

Peugeot 109,100 89,700 92,800 

Citroën 59,600 45,400 51,100 


Africa: 

Peugeot 55,400 53,000 37,700 

Citroën 17,300 18,500 13,000 


The Americas: 

Peugeot 90,700 89,200 86,200 

Citroën 30,200 29,800 20,100 


Asia-Pacific: 

Peugeot 212,800 156,800 83,500 

Citroën 105,600 76,500 68,300 


Other: 

Peugeot 25,600 25,500 23,600 

Citroën 4,200 2,900 3,100 


TOTAL SALES, REST OF THE WORLD 

Peugeot 493,600 414,200 323,800 

Citroën 216,900 173,100 155,600 


TOTAL WORLDWIDE SALES 

Peugeot 1,955,400 1,899,200 1,673,800 

Citroën 1,312,100 1,233,600 1,141,900 



Statistics 

WORKFORCE 

2002 2001 

AUTOMOBILE DIVISION 133,300 129,700 

Of which: 

* France 95,600 95,000 

* Other countries 37,700 34,700 

FINANCE COMPANIES 52,200 49,700 

TRANSPORTATION AND LOGISTICS 8,000 7,700 

AUTOMOTIVE EQUIPMENT 52,200 49,700 

OTHER BUSINESSES 2,900 3,300 

TOTAL PSA Peugeot Citroën 198,600 192,500 

Of which: 

* France 123,700 123,700 

* Other countries 74,900 68,800 

MANUFACTURING FACILITIES 

Assembly plant Models produced as of January 1, 2003 2002 Output 

MANUFACTURING CENTERS 

Aulnay (France) Saxo, 106, C3 382,600 

Madrid (Spain) Xsara, C3 123,100 

Mangualde (Portugal) Citroën Berlingo, Peugeot Partner 50,900 

Mulhouse (France) 206, 206 CC, 307 470,700 

Palomar (Argentina) 206, Citroën Berlingo, Peugeot Partner 17,800 

Poissy (France) 206 353,100 

Porto Real (Brazil) 206, Xsara Picasso 48,200 

Rennes (France) Xsara, C5 272,900 

Ryton (United Kingdom) 206, 206 SW 199,200 

Sochaux (France) 307, 307 SW, 406, 607 434,100 

Vigo (Spain) Xsara Picasso, C15, Citroën Berlingo, Peugeot Partner 496,100 

MECHANICAL COMPONENT 

PLANTS AND FOUNDRIES 

Asnières (France) Free-cutting, hydraulic systems - 

Caen (France) Wheels, axles suspension systems, transmissions - 

Charleville (France) Aluminium and iron castings - 

Melun-Sénart (France) Replacement parts - 

Metz (France) Gear boxes 1,691,400 

Saint-Ouen (France) Stamping - 

Sept-Fons (France) Iron castings - 

Trémery (France) EW gasoline engines and DV, DW diesel engines 1,615,700 

Valenciennes (France) Gear boxes 1,524,900 

Vesoul (France) CKD shipments, replacement parts - 

128 



Corporate 

Governance 




Discussion 

and Analysis 

Statistics 

JOINT PLANTS WITH OTHER MANUFACTURERS 

(AS AT DECEMBER 31, 2002) 

Facility Production Annual output 

FRANÇAISE DE MECANIQUE 

50% Peugeot Citroën Automobiles Iron castings 

50% Renault Engines: *TU + TUF + TUD 1,204,100 

*DV 334,800 

*D (Renault) 445,500 

*ES 19,800 

SEVELNORD Peugeot 807 Total output: 

50% Peugeot Citroën Automobiles Peugeot Expert 125,700 

50% Fiat Citroën C8 

Citroën Jumpy 

Fiat Ulysse 

Fiat Scudo 

Lancia Phedra 

OTHER COUNTRIES 

SOCIETÁ EUROPEA VEICOLI LEGGERI - (ITALY) Peugeot Boxer Total output: 

50% Peugeot Citroën Automobiles Citroën Relay 179,300 

50% Fiat Fiat Ducato 


130 


Appendices to the Managing Board Report 

Consolidated financial statements 133 

Notes to consolidated financial statements 138 

Five-year consolidated financial statements 181 

List of consolidated companies 185 

Employee Relations and Environmental Indicators 

Employee Relations Indicators 192 

Environmental Indicators – Automobile fuel consumption and emissions 196 

Environmental Indicators – Production plant consumption and emissions 199 

Management and Administration 202 

Information about the Company’s capital 205 

Statutory Auditors’ Report 207 

Information about Peugeot S.A. 

Information about Peugeot S.A. 208 

Organization 210 

Stockholder information 212 

Financial authorizations 214 

Resolutions 217 

The Vice Presidents Committee 220 


132 

PSA PEUGEOT CITROËN

C onsolidated statements of income 


MANUFACTURING AND SALES COMPANIES 

Net sales 52,906 50,288 42,978 

Operating expenses 

Cost of goods and services sold (40,196) (38,647) (31,946) 

Selling, general and administrative expenses (8,251) (7,504) (7,550) 

Research and development costs (1,865) (1,733) (1,625) 

(50,312) (47,884) (41,121) 

Operating margin 2,594 2,404 1,857 

Early-termination plan costs (158) (31) 32 

Other income and (expenses) 

Restructuring costs (note 9) (124) (115) (41) 

Interest income (expense), net (note 10) (25) (48) 86 

Other income and (expense), net (note 11) 22 193 21 

(127) 30 66 

Income before tax of fully-consolidated companies 2,309 2,403 1,955 

Income taxes (note 13) (666) (750) (601) 

Net income of fully-consolidated manufacturing and sales companies 1,643 1,653 1,354 

FINANCE COMPANIES 

Revenues 

From third parties 1,530 1,375 1,203 

From Group manufacturing and sales companies 170 212 184 

1,700 1,587 1,387 

Operating expenses (note 12) (1,381) (1,339) (1,123) 

Operating margin 319 248 264 

Other income and (expenses), net (3) (4) (3) 

Income before tax of fully-consolidated companies 316 244 261 

Income taxes (note 13) (111) (85) (112) 

Net income of fully-consolidated finance companies 205 159 149 

Net income of fully-consolidated companies 1,848 1,812 1,503 

Net earnings of companies at equity (note 18-c) 22 9 19 

Amortization of goodwill (163) (140) (199) 

Net income before minority interests 1,707 1,681 1,323 

(Income) loss attributable to minority interests (17) 10 (11) 

Net income 1,690 1,691 1,312 

Basic earnings per €1 par value share (note 52) 

- average number of common shares outstanding* 254,201,332 263,357,148 261,283,962 

- in euros, per share 6.65 6.42 5.02 

Diluted earnings per €1 par value share (note 52) 

- average potential number of shares* 254,201,332 264,479,453 273,086,352 

- in euros, per share 6.65 6.40 4.84 

* The average number of shares for 2000 has been adjusted for the 2001 six-for-one stock-split. 

The notes on pages 139 to 179 are an integral part of the consolidated financial statements. 

PSA PEUGEOT CITROËN - APPENDICES TO THE MANAGING BOARD REPORT 133

C onsolidated balance sheets - Assets 



Goodwill (note 14) 2,120 2,225 1,054 

Intangible assets (note 15) 194 183 136 

Property, plant and equipment (note 16) 11,545 11,461 10,359 

Investments 

Receivables and investment securities (note 17) 929 624 1,110 

Investments in companies at equity (note 18) 351 215 203 

Shares in non-consolidated companies (note 19) 85 238 254 

Loans to Group finance companies - - 339 

1,365 1,077 1,906 

Other non-current assets 

Long-term deferred income taxes 308 184 86 

Other non-current assets (note 20) 257 204 176 

565 388 262 

Current operating assets 

Inventories (note 21) 6,167 6,218 5,171 

Accounts and notes receivable (note 22) 3,381 3,451 2,962 

Short-term income tax assets (note 25) 980 935 485 

Other receivables (note 26) 2,619 2,585 2,207 

Receivables from Group finance companies 238 306 311 

13,385 13,495 11,136 

Current financial assets 

Loans 397 260 207 

Short-term investments (note 27) 1,089 1,013 1,246 

Cash and cash equivalents (note 28) 4,532 5,520 3,143 

Current account balances from Group finance companies 97 123 1,077 

6,115 6,916 5,673 



Goodwill (note 14) 80 86 90 

Non-current assets 

Intangible assets (note 15) 30 21 20 

Property and equipment (note 16) 51 52 131 

Long-term deferred income tax assets 47 29 28 

Others 202 206 225 

330 308 404 

Accounts receivable 

Finance receivables (note 23) 15,732 15,740 14,155 

Other customer loans (note 24) 295 242 205 

Receivables from manufacturing and sales companies 208 241 299 

16,235 16,223 14,659 

Other operating assets 

Short-term income tax assets (note 25) 63 53 16 

Other receivables (note 26) 923 742 550 

Receivables from manufacturing and sales companies 65 41 99 

1,051 836 665 


Short-term investments 87 71 31 

Cash and cash equivalents (note 28) 2,936 2,146 251 

Receivables from manufacturing and sales companies - 1 13 

3,023 2,218 295 

Total finance companies 20,719 19,671 16,113 

TOTAL ASSETS 56,008 55,416 46,639 


134 

PSA PEUGEOT CITROËN - APPENDICES TO THE MANAGING BOARD REPORT

C onsolidated balance sheets - Liabilities and stockholders’ equity 


Stockholders’ equity (note 29) 

Common stock 259 259 278 

Capital in excess of par value of stock - - 276 

Retained earnings 11,875 10,479 9,515 

Treasury stock (568) (51) (507) 

Cumulative translation adjustment (582) (405) (201) 

10,984 10,282 9,361 


Minority interests (note 30) 640 689 579 

Non-current liabilities 

Long-term deferred income tax liabilities 1,104 1,163 1,129 

Reserves for contingencies and liabilities (note 31) 1,727 1,394 1,322 

Other long-term liabilities (note 32) 95 69 70 

2,926 2,626 2,521 

Long-term debt (note 34) 3,499 3,635 1,977 

Current liabilities 

Accounts and notes payable 9,912 9,173 8,503 

Short-term income tax liabilities (note 37) 646 808 625 

Other payables (note 38) 5,228 5,409 4,413 

Due to Group finance companies 84 86 117 

15,870 15,476 13,658 

Short-term debt 

Convertible debentures (note 33) - - 113 

Current portion of long-term debt (note 34) 311 299 408 

Short-term financing and bank overdrafts (note 35) 2,451 3,920 2,924 

Bank overdrafts from Group finance companies 189 197 293 

2,951 4,416 3,738 



Minority interests (note 30) 91 103 79 


Long-term deferred income tax liabilities 150 122 119 

Reserves for contingencies and liabilities (note 31) 53 45 31 

Other long-term liabilities - 14 - 

203 181 150 

Financing liabilities 

Borrowings (note 36) 17,085 16,143 11,585 

Other financing liabilities 111 120 386 

Bank overdrafts 86 125 68 

Current account advances from Group manufacturing and sales companies 45 14 1,438 

17,327 16,402 13,477 

Customer deposits 

Customer deposits 113 85 99 

Deposits from Group manufacturing and sales companies 52 109 - 

165 194 99 

Other operating liabilities 

Short-term income tax liabilities (note 37) 64 106 43 

Other payables (note 38) 1,050 1,000 667 

Due to Group manufacturing and sales companies 238 306 290 

1,352 1,412 1,000 

Total finance companies 19,138 18,292 14,805 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 56,008 55,416 46,639 



C onsolidated statements of cash flow 




Adjustments to reconcile net income to net cash provided by operations 

- Depreciation and amortization 2,165 1,974 1,877 

- Net increase (decrease) in allowances and reserves 352 8 (158) 

- Change in long-term deferred income taxes (80) (107) (32) 

- (Gains) losses on disposals of assets and other (17) (88) 186 

Dividends received from companies at equity (4) - (6) 

Working capital provided by operations 4,059 3,440 3,221 

Change in operating assets and liabilities (note 39) 330 (422) (238) 

Net cash provided by operations - manufacturing and sales companies 4,389 3,018 2,983 

Proceeds from disposals of investments in non-consolidated companies 5 23 23 

Proceeds from disposals of subsidiaries - - 30 

Proceeds from disposals of property, plant and equipment 172 443 100 

Capital expenditure (2,790) (2,938) (2,898) 

Acquisitions of shares in subsidiaries (56) (1,575) (18) 

Investments in non-consolidated companies (25) (33) (164) 

Effect of changes in scope of consolidation and other (note 40) (268) 54 (134) 

Net cash used by investing activities – manufacturing and sales companies (2,962) (4,026) (3,061) 


Net income of fully-consolidated companies 205 159 149 

Adjustments to reconcile net income to net cash provided by operations 34 1 73 

Working capital provided by operations 239 160 222 

Change in operating assets and liabilities (note 39) 557 1,660 (887) 

Net cash provided (used) by operations - finance companies 796 1,820 (665) 

Net cash provided by investing activities – finance companies 80 68 104 

GROUP 

Dividends paid: 

- to Peugeot S.A. stockholders (294) (217) (118) 

- to minority stockholders of consolidated companies (43) (13) (12) 

Issuance of shares - 109 132 

Purchases of treasury stock (517) (458) (257) 

Buybacks of convertible debentures - - (555) 

Change in other financial assets and liabilities (note 41) (1,666) 3,872 1,468 

Others 46 123 38 

Net cash provided (used) by financing activities (2,474) 3,416 696 

Effect of exchange rate changes (27) (24) (12) 

Increase (decrease) in cash and cash equivalents (198) 4,272 45 

Cash and cash equivalents at beginning of period 7,666 3,394 3,349 

Cash and cash equivalents at period-end 7,468 7,666 3,394 


136 


C onsolidated statements of stockholders’ equity 

Stockholders’ Common Capital in Retained Treasury Cumulative 

(in millions of euros) equity stock excess of par earnings stock translation 

value of stock 

adjustment 

Balance as of December 31, 1999 8,332 273 149 8,383 (250) (223) 

2000 net income 1,312 - - 1,312 - - 

Dividend (€2.7 per €6 par value share) (118) - - (118) - - 

Issuance of shares 132 5 127 - - - 

Purchases of treasury stock (257) - - - (257) - 

Translation adjustment 22 - - - - 22 

Unrealized gains canceled on 

sale of marketable securities (62) - - (62) - - 

Balance as of December 31, 2000 9,361 278 276 9,515 (507) (201) 

2001 net income 1,691 - - 1,691 - - 

Dividend (€5 per €6 par value share) (217) - - (217) - - 

Issuance of shares 109 4 105 - - - 

Purchases of treasury stock (458) - - - (458) - 

Cancellations of treasury stock - (23) (381) (510) 914 - 

Translation adjustment (204) - - - - (204) 

Balance as of December 31, 2001 10,282 259 - 10,479 (51) (405) 

2002 net income 1,690 - - 1,690 - - 

Dividend (€1.15 per €1 par value share) (294) (294) 

Purchases of treasury stock (517) (517) 

Translation adjustment (177) (177) 

Balance as of December 31, 2002 10,984 259 - 11,875 (568) (582) 



N otes to the consolidated financial statements 

for the years ended December 31, 2002, 2001 and 2000 

General information 

Note 1 Accounting policies 139 

Note 2 Effect of applying US GAAP 141 

Note 3 Scope of consolidation 144 

Note 4 Segment information 145 

Note 5 Key financial data for the Group 149 

Statements of income 

Note 6 Quarterly sales and revenues 150 

Note 7 Payroll costs 150 

Note 8 Depreciation of property, plant and equipment manufacturing and sales companies 150 

Note 9 Restructuring costs – manufacturing and sales companies 150 

Note 10 Interest income (expense) net manufacturing and sales companies 150 

Note 11 Other income and (expense), net – manufacturing and sales companies 150 

Note 12 Operating expenses – finance companies 151 

Note 13 Income taxes 151 

Balance sheet – Assets 

Note 14 Goodwill 152 

Note 15 Intangible assets 153 

Note 16 Property, plant and equipment 153 

Note 17 Receivables and investment securities 154 

Note 18 Investments in companies at equity 155 

Note 19 Shares in non-consolidated companies 156 

Note 20 Other non-current assets 156 

Note 21 Inventories 157 

Note 22 Accounts and notes receivable 157 

Note 23 Finance receivables 157 

Note 24 Other customer receivables – finance companies 158 

Note 25 Short-term income tax assets 159 

Note 26 Other receivables 159 

Note 27 Short-term investments – manufacturing and sales companies 159 

Note 28 Cash and cash equivalents 159 

Balance sheet – Liabilities and stockholders’ equity 

Note 29 Common stock, capital in excess of par value of stock 159 

Note 30 Minority interests 161 

Note 31 Reserves for contingencies and liabilities 162 

Note 32 Other long-term liabilities – manufacturing and sales companies 162 

Note 33 Convertible debentures 162 

Note 34 Other long-term debt – manufacturing and sales companies 163 

Note 35 Short-term financing and bank overdrafts – manufacturing and sales companies 163 

Note 36 Financing liabilities – finance companies 164 

Note 37 Short-term income tax liabilities 165 

Note 38 Other payables 165 

Statement of cash flows 

Note 39 Change in operating assets and liabilities 165 

Note 40 Effect of changes in scope of consolidation and other 166 

Note 41 Change in other financial assets and liabilities – finance companies 166 

Other information 

Note 42 Net financial position – manufacturing and sales companies 167 

Note 43 Lines of credit 167 

Note 44 Return on capital employed 167 

Note 45 Early-termination plan 168 

Note 46 Pension and other post-retirement benefits 169 

Note 47 Foreign exchange and interest rate risk management 172 

Note 48 Equity risk 175 

Note 49 Fair value of financial instruments 175 

Note 50 Commitments and contingencies 177 

Note 51 Maturities and commitments 178 

Note 52 Earnings per share 178 

Note 53 Directors’ compensation 179 

Note 54 Statutory auditors’ fees 179 

Note 55 Subsequent events 179 

138 


➔ Note 1 - Accounting policies 

The consolidated financial statements are presented in accordance with 

French generally accepted accounting principles. 

The impact on the consolidated financial statements of adopting 

standard CRC 2000-06 concerning liabilities, effective from 2002, was 

not material. 

Group accounting policies, described in notes 1(a) to 1(s) below, are 

consistent, in all material respects, with accounting principles generally 

accepted in the United States of America (US GAAP) except as 

explained in note 2. 

a) Consolidation 

The financial statements of significant subsidiaries in which Peugeot S.A. 

holds directly or indirectly a majority interest are fully consolidated. 

Companies in which Peugeot S.A. holds directly or indirectly an 

interest of 20% to 50% and exercises significant influence over 

operating and financial policies are included in the consolidated 

financial statements on an equity basis. 

Certain companies meeting the above criteria have not been 

consolidated as they are considered not material in relation to the 

Group as a whole. Investments in these companies are recorded under 

“Shares in non-consolidated companies” (note 19). 

All significant intercompany transactions are eliminated. 

Newly-acquired subsidiaries are consolidated as from the date of 

acquisition. 

b) Translation of foreign currencies 

Foreign currency amounts are translated as follows: 

- transactions in foreign currency are translated at the hedging rate, 

except for the limited number of transactions that are not hedged; 

- at the balance sheet date, monetary assets and liabilities denominated 

in foreign currency which are not hedged are translated at the yearend 

exchange rate; 

- gains and losses resulting from the translation of foreign currency 

transactions are included in earnings, with the exception of those 

related to transactions representing an investment of a permanent 

nature in a subsidiary, which are included in stockholders’ equity 

under “Retained earnings”; 

- balance sheets of foreign subsidiaries are translated at the year-end 

exchange rate; 

- income statements of foreign subsidiaries are translated on a monthly 

basis at the average rates of each month; 

- gains and losses resulting from the translation of financial statements 

of foreign subsidiaries are recorded in stockholders’ equity under 

“Cumulative translation adjustment”. 

c) Use of estimates 

The preparation of financial statements and related disclosures in 

accordance with generally accepted accounting principles requires 

management to make estimates and assumptions that affect amounts 

reported therein. 

d) Sales and revenues 

1. Manufacturing and sales companies 

Sales of the manufacturing and sales companies include revenues from 

the sale of vehicles and other goods and services. 

Vehicle sales 

New vehicle sales are recognized on the date of transfer of the risks and 

rewards of ownership. This corresponds generally to the date when the 

vehicles are made available to non-group dealers or the delivery date, 

in the case of direct sales. The amount recognized is stated net of the 

cost of certain sales incentive programs. 

New vehicle sales with a buyback commitment expiring within a 

maximum of three years are not recognized at the time of delivery but 

accounted for as operating leases. The difference between the sale price 

and the buyback price is recognized over the leasing period. The profit 

corresponding to the difference between the resale value of the vehicle 

on the used car market and the cost of the new vehicle is recognized in 

the period when the vehicle is sold. If the difference is a loss, an 

allowance is booked when the buyback contract is signed. 

2. Finance companies 

Finance company revenues correspond to interest income, mainly from 

sales financing, and financing-related service revenues. 

Sales financing revenue 

The activity of finance companies is to provide wholesale financing to 

Group dealer networks and to finance sales of vehicles to customers. 

Financing may take the form of conventional loans, finance leases, 

buyback contracts or long-term leasing and is treated in the same way 

as loans. Outstanding principal is recorded in the balance sheet, 

together with interest due up to the loan repayment date (note 23-b). 

Income from the financing of sales is recognized on an actuarial basis 

at a constant rate of interest over the life of the loan. 

Revenues from retained interests in asset-backed securities issued by 

funds set up in connection with the securitization of automobile loans 

are included in sales financing revenue. 

Commissions and other fees paid to referral agents are included in cost 

of sales over the loan period. 

Other business acquisition and loan administration costs are expensed 

when incurred. 

e) Sales incentive programs 

The cost of sales incentive programs is charged against earnings for the 

period in which the corresponding sales are recognized. It is accrued on 

the basis of historical costs for the previous three months, determined 

country by country. 

Effective from 2001, in cases where the cost of the program varies 

based on sales volume, it is deducted from sales (note 4-a)2). 

Incentive programs established by the Group include the granting of 

retail financing at rates significantly below market rates. The 

corresponding cost is recognized at the time of the sale. 

f) Product warranty costs 

A reserve is recorded to cover the estimated cost of vehicle warranties 

at the time of sale to dealer networks or to the end customer. Revenues 

from the sale of extended warranties and maintenance contracts are 

recognized over the period during which the service is to be provided. 

g) Research and development costs 

All research and development costs, including research into production 

methods, are expensed as incurred. Automotive Equipment development 


costs which are to be billed to customers do not meet the criteria for 

classification as research and development costs, and are included 

in inventory. 

h) Operating margin 

Operating margin, which represents the main performance indicator 

used by the Group, corresponds to net income of fully-consolidated 

companies before: 

- early-termination plan costs, 

- restructuring costs, 

- net interest income and expense of manufacturing and sales companies, 

- gains and losses on disposals of fixed assets other than automobiles, 

- revenues from investments in non-consolidated companies, 

- exchange gains and losses of manufacturing and sales companies, 

- net gains and losses and movements in reserves related to nonrecurring 

items, 

- income taxes. 

i) Goodwill 

Goodwill, representing the excess of the purchase price (including 

transaction expenses) of shares in consolidated companies over the fair 

value of the net assets acquired at the date of acquisition, is amortized 

on a straight-line basis over a period not exceeding 20 years. 

j) Intangible assets 

Internal and external costs for the development and upgrading of 

software intended for internal use are capitalized and amortized on a 

straight-line basis over a period not exceeding 4 years. Other software 

acquisition and development costs are expensed as incurred. 

Other intangible assets, consisting principally of patents and 

trademarks, are amortized on a straight-line basis over the estimated 

period of benefit, not to exceed 20 years. 

k) Property, plant and equipment 

Property, plant and equipment are carried at cost, including capitalized 

interest expense. The French legal revaluations and foreign 

revaluations are not reflected in the consolidated financial statements. 

Maintenance and repair costs are expensed as incurred, except 

for those which enhance the productivity or prolong the useful life 

of an asset. 

Depreciation is calculated on a straight-line basis over the estimated 

useful lives of the respective assets as follows: 

Useful lives, in number of years 

Buildings 20 to 30 

Plant and equipment 6.66 to 16 

Computer equipment 3 to 4 

Vehicles and handling equipment 4 to 7 

Fixtures and fittings 10 to 20 

Assets acquired under capital leases are recorded under assets at 

their fair value at the inception of the lease and depreciated by the 

method and at the rates indicated above. A corresponding obligation 

is recorded as a liability (note 34-d). 

Special tools are depreciated over the estimated lives of the 

corresponding models, which are generally shorter than the useful lives 

of the tools concerned, due to the frequency of model changes. 

l) Long-lived assets 

An impairment loss is recognized whenever events or changes in 

circumstances indicate that the carrying amount of a long-lived asset 

may not be recoverable. 

In the case of goodwill, the impairment test is based on the difference 

between the carrying amount and the sum of discounted future cash flows. 

For other assets, it is based on the sum of undiscounted expected future 

cash flows, taking into account the assets’ planned future use. 

The impairment loss is determined on the basis of the fair value of 

the asset, measured by reference to discounted future cash flows 

or market value. 

m) Securities 

1. Investment securities 

Investment securities held by Group companies consist solely of debt 

securities acquired with the intention of holding them to maturity. They 

are stated at their redemption value. Premiums and discounts are 

amortized over the life of the securities. Investment securities are recorded 

under “Receivables and investment securities” in the balance sheet. 

2. Shares in non-consolidated companies 

Shares in non-consolidated companies are stated at cost and are written 

down in the case of a permanent impairment in value. Allowances for 

permanent impairment in value are determined based on the most 

appropriate financial criteria, including the Group’s equity in the 

underlying net assets, the earnings outlook of the company and, in the 

case of listed companies, the share price. 

3. Marketable securities 

Securities that the Group intends to hold on a long-term basis 

are recorded under “Receivables and investment securities” and 

securities that are intended to be sold in the short-term are classified as 

“Short-term investments”. 

Marketable securities are recorded at cost, net of transaction expenses 

and accrued interest. They are written down at year-end in the case of 

a permanent impairment in value. 

Unrealized gains and losses recorded under stockholders’ equity 

further to the revaluation carried out in 1999 were reversed in 2000. 

n) Deferred taxes 

1. On recognized transactions and contingencies 

Deferred taxes are recognized by the liability method for temporary 

differences between the book value and tax basis of assets and 

liabilities and also in respect of tax loss carryforwards. A valuation 

allowance is booked for net deferred tax assets where the related tax 

benefit is not likely to be realized (note 13-d). 

2. On future dividend distributions 

A deferred tax liability is recorded for the estimated tax payable on 

intercompany dividends planned to be distributed by consolidated 

companies (note 13-a). 

140 


No reserve is booked for taxes payable on intercompany dividends, 

where the distribution of consolidated companies’ retained earnings is 

not planned, as these amounts are considered as having been 

permanently reinvested. 

o) Inventories 

Finished goods and work-in-progress are stated at the lower of cost or 

market. Market is defined as current replacement cost, by purchase or 

reproduction, provided that said cost does not exceed net realizable 

value. Cost is determined by the First-In First-Out (FIFO) method and 

includes direct and indirect production costs based on normal activity 

levels. 

p) Credit losses 

Credit losses are analyzed by the manufacturing and sales companies at 

each period end and allowances are booked, where appropriate, to 

cover the estimated risk of non-recovery. 

Allowances for credit losses recorded by the finance companies are 

charged to income as follows: 

- retail financing: an allowance is booked when a retail installment 

contract is obtained, based on a historical and prospective evaluation 

of risk, and is periodically adjusted to take account of changes in the 

estimated risk; 

- wholesale financing: an allowance based on historical statistics is 

booked on average outstanding balances during the year and is 

increased in the case of specifically identified risks. 

As soon as a finance receivable is deemed irrecoverable, it is written off 

against the previously booked allowance for credit losses after taking into 

consideration the potential recovery from the guarantor and the value at 

which the repossessed vehicle is recorded in the balance sheet (at the 

lower of the net investment in the receivable and its estimated market 

value). In addition, recognition of financing revenue is suspended. 

q) Cash and cash equivalents 

This item consists solely of current account balances, trading securities 

(securities quoted on organized markets that are acquired with the 

intention of being held for periods not exceeding three months), units 

in money market funds which can be sold at short notice and 

marketable securities with maturities of less than three months. 

Effective from 2002, cash advances granted to companies accounted 

for by the equity method, which were previously reported under “Cash 

and cash equivalents”, are included in “Short-term loans”. The 

corresponding amounts reported under “Cash and cash equivalents” in 

2001 and 2000 have not been reclassified as the amounts involved are 

not material (note 28-a). 

r) Pension and other retirement benefits 

In addition to pension benefits paid in accordance with the laws and 

regulations of the countries in which they operate, Group companies are 

liable for the payment of supplementary pensions and retirement benefits. 

The related accounting policy and calculations are provided in note 46. 

Retirement benefit obligations funded by reserves concern: 

- long-service awards payable by French subsidiaries (note 46-b) 

- healthcare costs paid by certain subsidiaries in the United States 

(note 46-c). 

s) Own shares 

1. Shares held for allocation on exercise of employee 

stock options 

Peugeot S.A. shares and the shares of subsidiaries that are being held 

for allocation on exercise of employee stock options are carried at cost 

under “Short-term investments”. An allowance is booked where 

required to cover the difference between the cost of these shares and 

the lower of the exercise price of the related options and the market 

value at year end. 

2. Peugeot S.A. treasury stock 

Own shares acquired by the Group for any purpose other than for 

allocation on exercise of stock options are recorded as a reduction in 

stockholders’ equity, at cost, under “Treasury stock”. 

The proceeds from sales of treasury stock are credited directly to 

stockholders’ equity and any disposal gains or losses therefore have no 

impact on the statement of income. 

➔ Note 2 - Effect of applying US GAAP 

a) Effect on stockholders’ equity and net income 

Certain principles generally accepted in the United States of America 

(US GAAP) are not acceptable under French accounting principles and 

have therefore not been applied by the Group. The effect on stockholders’ 

equity and net income of applying US GAAP is presented below: 

1. Main differences 

Early-termination plan costs 

The cost of the early-termination plan was recognized in full in the 

consolidated statement of income for the year ended December 31, 1999, 

in accordance with French accounting standards. The plan did not 

meet certain of the criteria for recognition of the related cost in 

1999 under US GAAP. 

Additional minimum pension liability 

Statement of Financial Accounting Standards (SFAS) no. 87 requires 

the recognition of an additional minimum liability if the sum of the 

reserves recorded in the balance sheet and the fair value of plan assets 

represent less than the accumulated benefit obligation. The portion of 

the additional minimum liability corresponding to prior service cost 

and the unamortized transition obligation is debited to “Intangible 

assets” and any remaining balance is recorded as a reduction in 

stockholders’ equity, under “Other comprehensive income”, net of tax. 

At December 31, 2002, 2001 and 2000, the pre-tax amounts involved 



Contra entry 

- Intangible assets 54 33 - 

- Stockholders’ equity 587 80 - 

Total additional minimum liability 641 113 - 

Recognition of restructuring reserves 

A reserve for restructuring costs is booked when the restructuring plan 

is decided by management and its implementation is not subject to 

certain conditions being met. 


Certain restructuring measures do not fulfil the more stringent recognition 

criteria contained in American accounting standard EITF 94.3. 

Write-off of restructuring costs against goodwill 

Under French GAAP (CRC 99-02), reserves to cover the cost of 

restructuring newly-acquired subsidiaries can be charged against the 

related goodwill in some circumstances. 

This alternative accounting treatment of restructuring reserves is 

specific to France and does not exist in US GAAP. 

Development costs to be billed to customers included 

in inventory 

Certain Automotive Equipment development costs that are to be billed 

to customers are included in the cost of inventory. 

Under US accounting standard EITF 99-05, effective from 2000, these 

types of costs may not be capitalized if certain conditions are not met. 

EITF 99-05 did not require prior years’ financial statements to be 

restated to take account of this change of method. The effect of the 

change of method on the 2000 financial statements was therefore 

limited to the restatement of goodwill in the opening balance sheet of 

the Sommer Allibert Group. 

Goodwill 

- Recognition 

Under French accounting standards, adjustments to goodwill may be 

made up to the end of the fiscal year following the year of acquisition. 

Under US GAAP, the maximum period is twelve months. 

- Amortization 

Under French accounting standards, goodwill is amortized over a 

maximum of twenty years and an impairment loss is recognized where 

necessary. 

Effective from January 1, 2002, goodwill and certain intangible assets 

may not be amortized under US GAAP (SFAS 142). SFAS 142 requires 

companies to identify reporting units and to test goodwill for 

impairment at least annually using a two-step process. The first step is 

a screen for potential impairment and the second step measures the 

amount of impairment, if any. 

At December 31, 2002, the Group screened its principal reporting 

units. The screening process did not reveal any potential impairment of 

the related goodwill at that date. 

Securitization 

During the year, the Group sold portfolios of automobile loans through 

securitization operations described in note 23. The impact of these 

transactions on earnings for the year was not material. 

Under US GAAP applicable to transfers of financial assets, the retained 

interest must be recorded under assets at fair value. Fair value is 

determined based on estimated discounted future cash flows from the 

retained interest, taking into account experience-based expected early 

repayment and credit loss rates. Early repayment and credit loss 

assumptions are based on the least favorable rates observed over the 

past four or five years. The discount rate applied includes a risk 

premium reflecting the variability of these parameters. The gain on the 

sale of the finance receivables takes into account the retained interest 

carried in the balance sheet and the original net book value of the assets 

and liabilities corresponding to the transferred assets. 

Derivative instruments and hedging activities 

Under French GAAP, derivative instruments that qualify for hedge 

accounting may not be valued by the mark-to-market method. 

Statement of Financial Accounting Standards (SFAS) no. 133 

“Accounting for Derivative Instruments and Hedging Activities” is 

applicable effective from fiscal 2001. 

The procedures applied by the Group to manage currency and interest 

rate risks are described in note 47. 

The effect of applying SFAS 133 on opening stockholders’ equity as of 

January 1, 2001 is shown separately from the effects on the accounts 

for the years ended December 31, 2001 and 2002. 

The €22 million effect on 2002 income includes a €3 million loss 

related to the ineffective portion of fair value hedges, and a €25 million 

profit corresponding to changes in the fair value of instruments that do 

not qualify for hedge accounting under SFAS 133. The total effect on 

2001 income was €13 million, including, respectively, a €3 million loss 

and a €16 million profit. 

Reserve for debenture redemption premiums 

Amounts released from this reserve in respect of debentures converted 

into common stock during the year are credited to income. Under US 

GAAP, the net-of-tax amount should be credited directly to 

stockholders’ equity, without impacting the statement of income. 

Unrealized gains and losses on marketable securities 

Marketable securities are stated at cost and an allowance is booked to 

cover any permanent impairment in value. 

Under US GAAP, marketable securities for which there is a liquid 

market are marked to market and the resulting unrealized gain or loss, 

net of tax is posted directly to stockholders’ equity without impacting 

the statement of income. 

Own shares held in connection with stock option plans 

Own shares that are being held for allocation on exercise of employee 

stock options are carried at cost under “Short-term investments”. 

Under US GAAP these shares are deducted from stockholders’ equity 

at cost under “Treasury stock”. 

142 


2. Effect on stockholders’ equity 


Stockholders’ equity according to 

French GAAP 10,984 10,282 9,361 

Additional minimum pension liability (587) (80) - 

Restructuring costs 

- Recognition of reserves 43 21 - 

- Restructuring costs written off 

against goodwill (12) (12) - 

Development costs to be billed to 

customers included in inventory 

- Internal developments (143) (91) (16) 

- Acquired developments (1) (1) - 

Goodwill 

- Additional goodwill recognized 

during the year on prior year 

acquisitions (94) - - 

- Amortization of goodwill 128 - - 

Securitization 46 23 - 

Derivative instruments and 

hedging activities 

- Effect on balance sheet at 

January 1, 2001 (13) (13) N/A 

- Effect on the financial statements 

for 2001 and 2002 35 13 N/A 

Unrealized gains and losses on 

marketable securities 292 483 - 

Own shares held in connection with 

stock option plans (112) (64) - 

Income taxes 41 (130) 3 

Minority interests 34 17 6 

Stockholders’ equity according 

to US GAAP 10,641 10,448 9,354 

3. Impact on net income 


Net income according to 

French GAAP 1,690 1,691 1,312 

Reserve for early-termination costs - - (431) 

Restructuring costs 

- Recognition of reserves 22 21 - 

- Restructuring costs written off 

against goodwill - (12) - 

Development costs to be billed to 

customers included in inventory 

- Internal developments (52) (75) (16) 

- Acquired developments - (1) - 

Goodwill 

- Additional goodwill recognized 

during the year on prior year 

acquisitions (94) - - 

- Amortization of goodwill 128 - - 

Securitization 23 23 - 

Reserve for debenture redemption 

premiums - (27) (26) 

Derivative instruments and 

hedging activities 

- Effect on balance sheet at 

January 1, 2001 - (13) N/A 

- Effect on the financial statements 

for 2001 et 2002 22 13 N/A 

Income taxes (60) 21 175 

Minority interests 9 9 6 

Net income according to US GAAP 1,688 1,650 1,020 

Basic earnings per €1 

par value share* 6.70 6.29 3.91 

Diluted earnings per €1 

par value share* 6.70 6.27 3.74 

* 2000 earnings per share figures have been adjusted for the six-for-one stock-split. 

The average number of shares outstanding (note 50) excludes own shares recorded 

under “Short-term investments”. 

b) Comprehensive income 

Comprehensive income is calculated in accordance with SFAS 130 

as follows: 


Net income according to US GAAP 1,688 1,650 1,020 

Translation adjustment (177) (204) 22 

Additional minimum pension liability (507) (80) - 

Reserve for debenture redemption 

premiums - 27 26 

Unrealized gains and losses on 

marketable securities (191) 483 (62) 

Deferred taxes 232 (155) (10) 

Minority interests 8 - - 

Comprehensive income 1,053 1,721 996 


➔ Note 3 - Scope of consolidation 

a) Number of consolidated companies 

1. At year-end 

2002 2001 2000 

Fully consolidated 



315 293 243 

Equity method 


29 24 14 

Consolidated companies 

at December 31 344 317 257 

2. Changes during the year 

2002 2001 2000 

Consolidated companies at January 1 317 257 222 

Newly-consolidated companies 

- Automobile manufacturers 2 - 1 

- Automobile importers 4 3 4 

- Automobile dealers 4 5 22 

- Automotive equipment companies 12 57 4 

- Transportation and logistics 

companies - 2 5 

- Other manufacturing and sales 

companies 14 1 3 

- Finance companies 1 2 2 

Deconsolidated companies (4) (6) (3) 

Merged companies and other (6) (4) (3) 

Consolidated companies 

at December 31 344 317 257 

b) Main changes in the scope of consolidation in 2002 

1. Inclusion of Dongfeng Citroën Automotive Corp. – DCAC 

In connection with the latest phase in the development of the Group’s 

operations in China, announced on November 14, 2001, Dongfeng 

Citroën Automotive Corp. – DCAC – which is 27%-owned by the 

Group has been accounted for by the equity method effective from 

January 1, 2002. 

The financial statements used have been adjusted to comply with 

Group accounting policies and cover the 12-month period ended 

September 30. 

The effect of this change in scope of consolidation on the consolidated 

balance sheet at January 1, 2002 was not material. 

2. Inclusion of Toyota Peugeot Citroën Automobile Czech – TPCA 

Toyota Peugeot Citroën Automobile Czech – TPCA – is a 50/50 

joint-venture set up on March 8, 2002 by Toyota and the 

PSA Peugeot Citroën Group to act as a vehicle for the implementation 

of the cooperation agreements between the two automobile 

manufacturers. Starting in 2005, it will manufacture entry-level 

Peugeot, Citroën and Toyota vehicles in the Czech Republic. 

TPCA is accounted for by the equity method. 

3. Reorganization of Group operations in the United Kingdom 

In 2002, the Group carried out a legal restructuring of its Automobile 

division in the United Kingdom to align the legal structure with the 

division’s management structure. 

The Automobile division in the United Kingdom is now organized 

around three main entities: 

- a manufacturing entity, Peugeot Citroën Automobiles UK, whollyowned 

by Peugeot Citroën Automobiles, 

- a sales entity for the Peugeot marque, Peugeot Motor Co. Ltd., 

- a sales entity for the Citroën marque, Citroën UK. 

The reorganization had no impact on the consolidated financial 

statements. 

4. Legal reorganization of the financing business in France 

In order to streamline the legal structure of the Group’s financing 

business in France, the decision was made to combine all the 

automobile financing businesses of the Crédipar subsidiaries – Din, 

Sofi, Locadin and CLV – within Crédipar S.A., a wholly-owned 

subsidiary of Banque PSA Finance. 

The two retail financing subsidiaries, Din and Sofi, were merged 

into Crédipar S.A. on December 31, 2002 with retroactive effect to 

January 1, 2002. 

The two leasing subsidiaries, Locadin and CLV are managing the leases 

signed up to December 31, 2002 on a run-off basis and new lease 

financing business is being written by Crédipar S.A. under a businesslease 

arrangement. 

5. Divestment of the Villers la Montagne foundry 

On October 1, 2002, the Group spun off its Villers la Montagne plant – 

specialized in pressure casting of light aluminium alloy casings – into a 

subsidiary. 

The same day, the Group sold this new subsidiary to the Manzoni- 

Bouchot Group. The company has been renamed MB Automotive 

Fonderie Villers la Montagne and has signed a five-year component 

supply contract with Peugeot Citroën Automobile. 

6. Adjustment of consolidation criteria 

Following an adjustment of the criteria used to determine whether a 

company controlled by the Group should be included in the scope of 

consolidation, ten additional companies were fully consolidated in 

2002. These companies are included under the caption “Other 

manufacturing and sales companies” in the table in note 3-a 2. 

The effect of these changes in scope of consolidation on consolidated 

stockholders’ equity was not material. 

c) Main changes in the scope of consolidation in 2001 

1. Acquisition of a controlling interest in the Sommer 

Allibert group 

On January 3, 2001, Peugeot S.A. acquired the entire capital of SIT, 

whose sole assets were a 37.9% interest in Sommer Allibert 

representing 52.9% of voting rights. Prior to this acquisition, 

the former controlling stockholders of SIT purchased Sommer 

144 


Allibert’s non- automotive businesses, corresponding primarily to the 

Tarkett Sommer group. The acquisition of SIT represented an 

investment of €470 million, corresponding to a price per Sommer 

Allibert share of €57.5. 

On January 4, 2001, Faurecia and SIT jointly made a public offer to 

purchase all outstanding shares of Sommer Allibert not already held by 

the group at a price per share of €57.5. At the close of the offer period, 

each of the two companies had acquired a further 30.12% of Sommer 

Allibert’s capital at a total cost of €379 million. 

On January 10, 2001, Faurecia made a public offer for the shares of 

SAI Automotive AG not already held by the group, at a price per share 

of €15. SAI Automotive AG, a company quoted on the Frankfurt stock 

exchange, combined most of Sommer Allibert’s automotive equipment 

businesses. At the close of the offer period, the group had acquired 

27.31% of SAI Automotive AG’s capital at a cost of €209 million. 

On June 1, 2001, Peugeot S.A. contributed its interest in SIT to 

Faurecia, giving Faurecia control over Sommer Allibert’s automotive 

equipment business. 

On October 16, 2001, Faurecia launched a public buyout offer for 

Sommer Allibert shares followed by the compulsory buyout of all 

remaining shares, at a price of €57.5 per Sommer Allibert share. The 

buyout was completed on October 30, 2001. 

Following these transactions, which represented a total investment of 

€1,495 million, Peugeot S.A. held 71.6% of the capital of Faurecia 

which in turn owned, directly or indirectly, the entire capital of 

Sommer Allibert and 96.8% of the capital of SAI Automotive A.G. 

Goodwill arising on these acquisitions totaled €1,278 million, including 

€166 million related to the Faurecia shares received by Peugeot S.A. in 

exchange for SIT shares and €1,112 million related to the shares of 

Sommer Allibert and its subsidiaries acquired by the Group. 

2. Divestment of Transauto-Stur 

In connection with the refocusing on its core businesses, during 

2001 Gefco sold the Transauto-Stur vehicle leasing business to the 

VIA Location group. The loss on the sale amounted to €14 million 

after tax. 

3. Reorganization of Group operations in Spain 

In 2001, the Group carried out a legal restructuring of its Automobile 

division in Spain to align the legal structure with the division’s 

management structure. 

The automobile division in Spain is now organized around three main 

entities: 

- a manufacturing entity, Peugeot Citroën Automobiles España, 

wholly-owned by Peugeot Citroën Automobiles, 

- a sales entity for the Peugeot marque, Peugeot España, wholly-owned 

by Automobiles Peugeot, 

- a sales entity for the Citroën marque, Automobiles Citroën España, 

wholly-owned by Automobiles Citroën. 

The reorganization had no impact on the consolidated financial 

statements. 

4. Buyout of minority interests in Peugeot Citroën do Brasil 

In accordance with the terms of an agreement signed on 

December 20, 2001, the Group acquired the Rio de Janeiro state 

government’s 31.82% interest in Peugeot Citroën do Brasil. Goodwill 

on the acquisition of these shares amounted to €57 million. 

d) Main changes in the scope of consolidation in 2000 

The impact of the changes in the scope of consolidation in 2000 on the 

consolidated financial statements was not material. The main changes 

in the scope of consolidation were as follows: 

1. Divestiture of steering systems business 

As part of the strategy to refocus on its core businesses, the Group spun 

off its steering systems business (Dijon and Saint-Etienne plants), and 

subsequently sold the newly-created company. 

2. Acquisition of remaining interest in Peugeot Japan 

On February 3, 2000 the Group purchased the remaining 50% interest 

held by its partner in the Inchcape Peugeot Japan joint venture, which 

has been renamed Peugeot Japon KK. This acquisition has provided 

Automobiles Peugeot with a platform for accelerated business 

expansion in Japan. 

3. Increase in the Group’s interest in Gefco KN 

The PSA Peugeot Citroën Group increased its interest in its German 

transport subsidiary, Gefco KN GmbH, to 74.86%. Goodwill arising 

on the acquisition of the additional interest amounted to €10.7 million. 

4. Divestiture of the Formula 1 engines business 

Automobiles Peugeot completed its withdrawal from motor racing by 

selling the Formula 1 engines business to DJ33. This company was sold 

on December 28, 2000 without having been consolidated prior to its sale. 

e) Impact of changes in scope of consolidation on consolidated 

net sales 

2002 

The increase in consolidated net sales in 2002 compared with 

2001 resulting from changes in the scope of consolidation was not 

material. 

2001 

Consolidation of the Sommer Allibert group added €2,234 million 

to 2001 net sales, compared with the previous year. 

f) Impact of changes in scope of consolidation on other 

consolidated data 

The impact of changes in the scope of consolidation on 2002 

consolidated data other than sales was not material. 

In 2001, the consolidation of the Sommer Allibert group at the level of 

the Faurecia group had a material impact on consolidated data. 

Pro forma performance indicators for the Automotive Equipment 

division are provided in note 4.a.3, determined as if Sommer Allibert 

had been consolidated from the beginning of the periods presented. 

➔ Note 4 - Segment information 

a) Industry segments 


The PSA Peugeot Citroën Group’s manufacturing and sales operations 

are organized around three main industry segments: 


- Automotive Activities covering the design, manufacture and sale of 

cars and commercial vehicles under the Peugeot and Citroën marques. 

- Automotive Equipment, corresponding to the Faurecia group, 

which specializes mainly in the vehicle interior, automobile seating, 

front-end and exhaust systems sectors. 

- Transportation and Logistics, corresponding to the Gefco group, 

which specializes in vehicle and goods transportation. 

Manufacturing and sales also includes the activities of the holding 

company, Peugeot S.A., directly related activities, motorcycle 

manufacturing, engine sales and plant and equipment design. 

The main manufacturing and sales performance indicators, by business segment, are as follows: 

2002 

(in millions of euros) 

Automotive Transportation 

Automobile Equipment & Logistics Other Eliminations Total 

Net sales 

- to third parties 43,727 7,662 979 538 - 52,906 

- intercompany, intersegment 224 2,204 1,667 465 (4,560) - 

Total 43,951 9,866 2,646 1,003 (4,560) 52,906 

Operating expense (41,544) (7,406) (845) (512) (5) (50,312) 

Operating margin 2,183 256 134 26 (5) 2,594 

Interest income (expense), net 59 (93) (11) 20 - (25) 

Income before tax of fully-consolidated companies 2,002 92 114 106 (5) 2,309 

Pre-tax earnings of companies at equity 8 8 - 16 

Intangible assets 138 22 34 - - 194 

Property, plant and equipment 9,636 1,516 266 127 - 11,545 

Capital expenditure 2,357 351 51 31 - 2,790 

Depreciation of property, plant and 

equipment and special tools 1,801 310 33 21 - 2,165 

Research and development 1,631 215 - 19 - 1,865 

Working capital provided by operations 3,650 265 112 36 (4) 4,059 

2001 




Net sales 

- to third parties 41,306 7,452 983 547 - 50,288 


Total 41,524 9,611 2,643 976 (4,466) 50,288 

Operating expense (39,314) (7,192) (864) (516) 2 (47,884) 

Operating margin 1,992 260 119 31 2 2,404 

Interest income (expense), net 33 (92) (14) 25 - (48) 

Income before tax of fully-consolidated companies 1,918 74 92 317 2 2,403 

Pre-tax earnings of companies at equity (2) 4 - - - 2 


Property, plant and equipment 9,509 1,570 255 127 - 11,461 

Capital expenditure 2,398 436 85 19 - 2,938 


equipment and special tools 1,636 285 33 20 - 1,974 


Working capital provided by operations 2,963 346 104 26 1 3,440 

146 


2000 




Net sales 

- to third parties 37,242 4,279 932 525 42,978 


Total 37,436 5,840 2,329 983 (3,610) 42,978 

Operating expense (35,663) (4,097) (832) (523) (6) (41,121) 

Operating margin 1,579 182 100 2 (6) 1,857 

Interest income (expense), net 135 (64) (6) 21 86 

Income before tax of fully-consolidated companies 1,755 86 93 27 (6) 1,955 

Pre-tax earnings of companies at equity 14 8 - - - 22 


Property, plant and equipment 8,974 991 229 165 10,359 

Capital expenditure 2,497 290 74 37 2,898 


equipment and special tools 1,631 188 37 21 1,877 


Working capital provided by operations 2,757 244 91 131 (2) 3,221 

2. Automobile division 

Up until 2000, the cost of certain sales incentive programs, as defined 

in note 1-e, was included in operating expense rather than being 

recorded as a deduction from sales. 

This presentation difference had no impact on operating margin and 

the impact on sales was not material. Consequently, 2000 net sales 

have not been recalculated based on the rule applied in 2002 

and 2001 (note 1-d). 

3. Automotive Equipment division – pro forma figures 

The following table provides a comparison between published 

Automotive Equipment division data for 2001 and 2000 and pro forma 

2000 data including Sommer Allibert as if it had been consolidated 

from the beginning of the period. 


2000 2000 

2001 Pro forma Published 

Net sales 

- to third parties 7,452 6,513 4,279 

- intercompany, intersegment 2,159 1,878 1,561 

Total 9,611 8,391 5,840 

Operating expense (7,192) (6,216) (4,097) 

Operating margin 260 297 182 

Interest expense, net (92) (97) (64) 

Income before tax of fullyconsolidated 

companies 74 103 86 

Pre-tax earnings of companies at equity 4 4 8 

Intangible assets at December 31 25 37 23 

Property, plant and equipment 

at December 31 1,570 1,449 991 


The finance companies, corresponding to the Banque PSA Finance 

group, finance sales of Peugeot and Citroën marque vehicles to 

customers and provide wholesale financing to the two marques' 

distribution networks. 

This business is significantly different from that of the Group's other 

divisions and the corresponding data are therefore shown separately in 

the consolidated financial statements, in order to present more clearly 

the performance of the various businesses. 


) Geographic areas 

In the tables below, sales are presented by destination of products sold and other information by geographic location of the subsidiary concerned. 



Western Rest of Latin Rest of 

Europe Europe America world Total 

2002 

Net sales 45,374 2,174 1,246 4,112 52,906 

Intangible assets 179 2 2 11 194 



2001 

Net sales 43,394 1,670 1,522 3,702 50,288 




2000 

Net sales 37,540 1,602 1,268 2,568 42,978 





Finance companies operate primarily in Western Europe. 

148 


➔ Note 5 - Key financial data for the Group 


Net sales 

Manufacturing and sales companies 52,906 50,288 42,978 

Finance companies (excluding intercompany) 1,530 1,375 1,203 

Consolidated net sales (note 6) 54,436 51,663 44,181 

- Western Europe 46,874 44,750 38,743 

- Rest of Europe 2,174 1,670 1,602 

- Latin America 1,276 1,541 1,268 

- Rest of world 4,112 3,702 2,568 

Operating margin 


Finance companies (excluding intercompany) 319 248 264 

Consolidated operating margin 2,913 2,652 2,121 

Income before tax of fully-consolidated companies 


Finance companies (excluding intercompany) 316 244 261 

Income before tax of fully-consolidated companies 2,625 2,647 2,216 

Income taxes (Group) (777) (835) (713) 


Intangible assets 224 204 156 

Property, plant and equipment 11,596 11,513 10,490 

Total assets 

Combined – manufacturing and sales companies and finance companies 56,008 55,416 46,639 

Elimination of inter-business accounts (608) (712) (2,138) 

Total assets (Group) 55,400 54,704 44,501 

Capital expenditure 



Capital expenditure (Group) 2,802 2,947 2,932 

Proceeds from disposals of property, plant and equipment 



Proceeds from disposals of property, plant and equipment (Group) 177 450 103 

Depreciation of property, plant and equipment 2,174 1,980 1,904 

Working capital provided by operations 



Working capital provided by operations (Group) 4,298 3,600 3,443 


➔ Note 6 - Quarterly sales 

Consolidated net sales break down as follows by quarter: 


1 st quarter 13,439 12,746 11,641 

2 nd quarter 13,932 13,466 10,849 

3 rd quarter 12,804 11,917 10,134 

4 th quarter 14,261 13,534 11,557 

Total 54,436 51,663 44,181 

➔ Note 7 - Payroll costs 

Group payroll costs are as follows: 

a) Manufacturing and sales companies 


Automobile 5,569 5,339 5,031 


Transportation & Logistics 290 276 256 

Other 184 178 177 

Total 7,920 7,538 6,575 

b) Finance companies 


115 111 105 

➔ Note 8 - Depreciation expense - 


Depreciation expense included in operating expense breaks down 

as follows: 


Special tools 681 518 679 

Other property, plant and equipment 1,491 1,468 1,207 

Investment grants (7) (12) (9) 

Total 2,165 1,974 1,877 

➔ Note 9 - Restructuring costs - 


a) Analysis by type 


Workforce reductions 114 104 22 

Discontinued production operations 10 11 19 

Total 124 115 41 

b) Number of employees affected by workforce reductions 

(number of employees) 2002 2001 2000 

France 500 339 443 

Spain 583 279 22 

United Kingdom 87 - 427 

Rest of Europe 840 541 78 

United States 31 373 - 

Argentina 588 444 - 

Total 2,629 1,976 970 

➔ Note 10 - Interest income (expense) net 

- manufacturing and sales companies 

Interest income (expense), net of manufacturing and sales companies 

can be analyzed as follows: 


Interest expense (516) (502) (369) 

Interest income 447 404 379 

Capitalized interest 44 50 76 

Total (25) (48) 86 

➔ Note 11 - Other income and (expense), net - manufacturing and sales companies 

Other income and expense include the following amounts: 


Changes to supplementary pension benefit plans (note 46) (101) - - 

Net gains on disposals of assets 89 214 134 

Net loss on retirement of convertible debentures - - (125) 

Reversals of reserves for convertible debenture redemption premiums - 27 26 

Exchange gain (loss), net 22 (24) (6) 

Net additions to contingency reserves and allowances for impairment in value of long-lived assets (8) (15) (11) 

Income from shares in non-consolidated companies 20 5 5 

Other - (14) (2) 

Total 22 193 21 

Net gains on disposals of assets include: 

- In 2002, €89 million in profits on sales of short-term investments. 

- In 2001, a €228 million profit on the sale of a real estate complex in the Paris area. 

- In 2000, €95 million in profits on sales of short-term investments. 

150 


➔ Note 12 - Operating expenses - finance companies 


Interest expense and bank charges (783) (791) (644) 

Commission expense (212) (192) (152) 

Other business acquisition costs (21) (18) (22) 

Other operating expenses (303) (270) (253) 

Credit losses (62) (68) (52) 

Total (1,381) (1,339) (1,123) 

➔ Note 13 - Income taxes 

a) Income taxes of fully consolidated companies can be analyzed as follows: 


Current taxes (note 13-b) 

- Corporate income taxes (726) (982) (741) 

- Tax on intercompany dividends (8) (3) (9) 

Deferred taxes 

- Deferred taxes for the period (30) 135 44 

- Tax on planned intercompany distributions 4 4 (10) 

- Valuation allowances – deferred tax assets (note 13-d) (17) (16) (31) 

- Effect of change in the French tax rate (note 13-c) - 27 34 

(777) (835) (713) 

Manufacturing and sales companies (666) (750) (601) 

Finance companies (111) (85) (112) 

b) Income taxes currently payable represent the amounts paid or currently 

due to the tax authorities for the year, calculated in accordance with the 

tax regulations and rates in effect in the various countries. Effective from 

January 1, 2000, Peugeot S.A. and its French subsidiaries that are at least 

95%-owned have renewed their election to determine French income taxes 

on a consolidated basis according to Article 223 A of the French Tax Code. 

c) Deferred taxes are determined as described in note 1-o. 

The French statutory income tax rate is 33.33%. The December 30, 2000 

Finance Act (Act no. 2000.1352) reduced the 10% surtax to 6% in 2001 

and 3% as from 2002. Net deferred taxes at December 31, 2000 and 

December 31, 2001 have been reduced to reflect the new rates. 

Act no. 99-1140 of December 29, 1999 dealing with the financing of 

the social security system provided for the introduction of a surtax equal 

to 3.3% of the corporate income tax liablity of French companies. 

This surtax had the effect of raising the French corporate income tax 

rate by 1.1 points. 

d) Deferred tax assets corresponding to tax loss carryforwards break 

down as follows at December 31, 2002, 2001 and 2000: 


Gross 419 263 136 

Less: valuation allowances (165) (132) (115) 

Net 254 131 21 

Valuation allowances are recorded against deferred tax assets that are 

not certain to be utilized in the foreseeable future. 

e) Deferred taxes recognized on undiscounted bases represent a net 

liability. They have not been discounted because of the high level of 

uncertainty concerning the period in which the related temporary 

differences are likely to reverse. 

f) The following table reconciles the statutory tax rate in France to the 

effective rate of tax paid by the Group: 

2002 2001 2000 

French statutory 

income tax rate (35.4) (36.4) (37.8) 

- Change in French tax rate 

(note 13-c) - 1.0 1.6 

- Permanent differences (0.9) (0.5) 1.3 

- Income taxable at 

reduced rates (France) 1.4 0.6 0.7 

- Tax credits 0.9 0.8 0.6 

- Effect of differences in 

foreign tax rates and others 5.1 3.6 2.8 

- Deferred tax assets 

covered by valuation 

allowances (note 13-d) (0.7) (0.6) (1.4) 

(29.6) (31.5) (32.2) 


➔ Note 14 - Goodwill 


1. Breakdown by company 

2002 

(in millions of euros) Cost Amortization Net 

Faurecia 

- Bertrand Faure acquisition 839 (213) 626 

- Sommer Allibert acquisition 166 (12) 154 

Sommer Allibert group (*) 1,211 (110) 1,101 

Faurecia Exhaust Systems 206 (31) 175 

Other Faurecia subsidiaries 39 (16) 23 

Peugeot Citroën do Brasil Automoveis 34 (34) - 

Gefco KN GmbH & Co 36 (7) 29 

Automotiv Pazarlama AS (Popas) 12 - 12 

Total 2,543 (423) 2,120 

* In 2002, additional fair adjustments of €99 million were made to identifiable assets 

and liabilities. These adjustments increase the gross amount of goodwill arising on 

the acquisition by the Group of the shares in Sommer Allibert and its subsidiaries 

to €1,211 million. 

2001 


Faurecia 

- Bertrand Faure acquisition 839 (172) 667 

- Sommer Allibert acquisition 166 (4) 162 

Sommer Allibert group 1,112 (48) 1,064 



Peugeot Citroën Argentina 303 (303) - 

Peugeot Citroën do Brasil Automoveis 57 - 57 


Total 2,796 (571) 2,225 

2000 


Faurecia (Bertrand Faure acquisition) 839 (129) 710 



Peugeot Citroën Argentina 287 (214) 73 


Total 1,424 (370) 1,054 

2. Movements 


Opening balance, net 2,225 1,054 1,215 

Sommer Allibert acquisition 100 1,112 N/A 

Transfer of SIT (Sommer Allibert) 

shares to Faurecia - 166 N/A 

Goodwill on acquisitions for the year 

and translation adjustment (45) 86 97 

Amortization for the year (128) (118) (70) 

Exceptional amortization (32) (75) (188) 

Closing balance, net 2,120 2,225 1,054 

Faurecia 

In 2002, the book value of the assets of each of Faurecia’s businesses, 

including goodwill, was compared to the sum of the discounted future 

cash flows expected to be generated by the assets, based on the latest 

projections. The calculation was performed by extrapolating to perpetuity 

projected cash flows for the last year of the current business plan (2006) 

based on a growth rate of 2%. A discount rate of 7.5% was applied. 

Based on the comparison between the book values of the assets and the 

sum of the corresponding discounted future cash flows, no impairment 

loss was recorded in respect of goodwill. 

Goodwill recognized on acquisition of the Sommer Allibert group in 

2001 amounted to €1,278 million. Details of this amount are provided 

in note 3-c 1. This goodwill is being amortized over 20 years, from the 

date of acquisition of the various blocks of shares. The amortization 

charge for 2001 was €52 million. 

Peugeot Citroën Argentina 

Exceptional amortization of goodwill recorded in 2001 and 2000 

concerned Peugeot Citroën Argentina and included: 

In 2001: 

- Amortization of €56 million offset by the reversal of an equivalent 

amount from contingency reserves, following the favorable outcome 

of a risk that was recorded in the balance sheet of Peugeot Citroën 

Argentina when the company was first consolidated. 

- Additional amortization of €19 million to write off the balance of the 

goodwill in accordance with the principle described in note 1-l. 

In 2000: 

- Amortization of €61 million offset by the reversal of an equivalent 

amount from contingency reserves, following the favorable outcome 

of a risk that was recorded in the balance sheet of Peugeot Citroën 

Argentina when the company was first consolidated; 

- Additional amortization of €127 million recorded in accordance with 

the policy described in note 1-l. 

Peugeot Citroën do Brasil Automoveis 

In 2002, the balance of goodwill arising on acquisition of Peugeot 

Citroën do Brasil Automoveis was written off in accordance with the 

policy described in note 1-l. 


Goodwill concerns Crédipar. 

The gross amount is €100 million, amortized over 20 years. Accumulated 

amortization at December 31, 2002 amounted to €20 million and 

the net book value of goodwill at that date was €80 million. 

The carrying value of goodwill, under assets, is covered by future 

cash flows and it is not necessary to record any impairment. 

152 


➔ Note 15 - Intangible assets 

Intangible assets, including software development costs as described in note 1- j, break down as follows: 



2002 2001 2000 

Cost Amortization Net Cost Amortization Net Cost Amortization Net 

Software 325 (170) 155 265 (107) 158 160 (50) 110 

Other intangible assets 153 (114) 39 60 (35) 25 55 (29) 26 

Total 478 (284) 194 325 (142) 183 215 (79) 136 



2002 2001 2000 

Cost Amortization Net Cost Amortization Net Cost Amortization Net 

Software 36 (7) 29 26 (7) 19 24 (7) 17 

Other intangible assets 6 (5) 1 6 (4) 2 7 (4) 3 

Total 42 (12) 30 32 (11) 21 31 (11) 20 

➔ Note 16 - Property, plant and equipment 


1. Analysis by category 

2002 2001 2000 

(in millions of euros) Cost Depreciation Net Cost Depreciation Net Cost Depreciation Net 

Land 382 (10) 372 364 (9) 355 353 (10) 343 

Buildings 4,376 (2,244) 2,132 4,292 (2,146) 2,146 3,783 (1,989) 1,794 

Plant and equipment 14,020 (8,862) 5,158 13,779 (8,596) 5,183 12,377 (7,774) 4,603 

Vehicles and handling equipment 514 (382) 132 613 (400) 213 722 (474) 248 

Fixtures, fittings and other 844 (548) 296 816 (502) 314 691 (417) 274 

Assets under construction 1,564 - 1,564 1,321 - 1,321 1,936 - 1,936 

21,700 (12,046) 9,654 21,185 (11,653) 9,532 19,862 (10,664) 9,198 

Leased vehicles 306 (72) 234 253 (65) 188 280 (76) 204 

Special tools 7,400 (5,743) 1,657 7,253 (5,512) 1,741 6,442 (5,485) 957 

7,706 (5,815) 1,891 7,506 (5,577) 1,929 6,722 (5,561) 1,161 

Total 29,406 (17,861) 11,545 28,691 (17,230) 11,461 26,584 (16,225) 10,359 

2. Capitalized interest 


44 50 76 


3. Movements for the year 


Cost 

As of January 1 28,691 26,584 25,085 

Acquisitions 2,790 2,938 2,897 

Disposals (1,406) (1,573) (1,371) 

Changes in scope of consolidation and other (43) 993 (85) 


As of December 31 29,406 28,691 26,584 

Depreciation 

As of January 1 17,230 16,225 15,631 

Additions for the year 2,172 1,985 1,886 

Depreciation written off on disposals (1,234) (1,354) (1,264) 

Changes in scope of consolidation and other (58) 502 (59) 


As of December 31 17,861 17,230 16,225 


Property and equipment of Group finance companies can be analyzed as follows: 


2002 2001 2000 

Cost Depreciation Net Cost Depreciation Net Cost Depreciation Net 

Buildings 48 (15) 33 48 (13) 35 48 (15) 33 

Equipment and other 52 (34) 18 52 (35) 17 55 (33) 22 

100 (49) 51 100 (48) 52 103 (48) 55 

Leased vehicles - - - - - - 107 (31) 76 

Total 100 (49) 51 100 (48) 52 210 (79) 131 

Since 2001, the characteristics of PSA Finance Nederland’s portfolio of long-term leases have been analyzed in detail by reference to the criteria applied 

to determine the accounting classification of leases. The analysis shows that the leases fulfill the criteria for classification as direct financing leases. 

➔ Note 17 - Receivables and investment securities 

Receivables and investment securities include: 


Value-added tax credit - - 45 

Investment securities (note 1-m 1.) 6 4 3 

Advances to non-consolidated companies 53 71 87 

Very long-term loans under the Government 

housing scheme (France) 37 29 23 

Other long-term loans and receivables 51 77 60 

147 181 218 

Marketable securities with maturities 

in excess of one year (note 1-m 3.) 

- Restricted stock 66 66 344 

- Other 716 377 548 

Total 929 624 1,110 

154 


Unrealized gains on restricted stock at December 31, 2002, 2001 and 

2000 are as follows: 


67 106 578 

➔ Note 18 - Investments in companies 

at equity 

Companies accounted for by the equity method, as defined in note 1-a 

consist of manufacturers of automotive equipment and companies 

manufacturing and selling vehicles. 

a) Changes in investments in companies at equity 


As of January 1 215 203 194 

Dividends paid and income transfers (17) (9) (13) 

Group equity in net earnings for 

the year 22 9 19 

Inclusion of Dongfeng Citroën 

Automotive Corp. – DCAC 104 N/A N/A 

Formation of Toyota Peugeot 

Citroën Automobile 33 N/A N/A 

Acquisitions 13 15 4 

Disposals - (1) - 

Effect of exchange rate changes (19) (2) (1) 

As of December 31 351 215 203 

b) Equity in net assets of companies at equity 

(in millions of euros) % 2002 2001 2000 

Renault cooperation agreement 

Française de Mécanique 50 93 85 79 

Société de Transmissions 

Automatiques 20 3 3 3 

Société Franco-Suédoise 

wound 

de Moteurs P.R.V. 50 up - 1 

Fiat cooperation agreement 

Société Européenne de Véhicules 

Légers du Nord (Sevelnord) 50 19 35 38 

Gisevel 50 6 5 4 

Sevelind 50 (58) (74) (86) 

Sevel S.p.A. 50 120 130 146 

Toyota cooperation agreement 

Toyota Peugeot Citroën 

Automobile 50 33 N/A N/A 

Dongfeng Citroën Automotive Corp. 27 92 N/A N/A 

Other 

Siemens Automotiv Hydraulics 48 3 3 3 

Faurecia group companies 40 28 15 

Total 351 215 203 

c) Equity in net earnings of companies at equity 





Automatiques 20 - - (1) 

Société Franco-Suédoise 

wound 

de Moteurs P.R.V. 50 up - - 



Légers du Nord (Sevelnord) 50 (15) (3) - 

Gisevel 50 1 1 - 

Sevelind 50 15 12 11 

Sevel S.p.A. 50 (10) (15) (2) 



Automobile 50 - N/A N/A 

Dongfeng Citroën Automotive Corp. 27 10 N/A N/A 

Other 

Siemens Automotiv Hydraulics 48 - - (2) 


Total 22 9 19 

Breakdown: Earnings before tax 16 2 22 

Income taxes 6 7 (3) 

Net earnings 22 9 19 

d) Key combined financial data of companies at equity 

1. Aggregate data 


Capital employed 

- Property, plant and equipment 886 633 590 

- Working capital 383 424 398 

- Other capital employed 6 (31) 7 

Total 1,275 1,026 995 

Capital expenditure 159 145 92 

Financial position 

- Long and medium-term debt (297) (300) (244) 

- Other financial items (435) (287) (259) 

Total (732) (587) (503) 


2. Key data by company 

Total capital employed 





Automatiques 20 14 16 15 



Légers du Nord (Sevelnord) 50 193 213 162 

Gisevel 50 54 56 63 

Sevelind 50 165 207 289 

Sevel S.p.A. 50 218 222 214 




Dongfeng Citroën Automotive 

Corp. 27 259 N/A N/A 

Other 

Siemens Automotiv Hydraulics 48 2 3 (2) 


Total 1,275 1,026 995 

Financial position 



Française de Mécanique 50 (162) (178) (135) 


Automatiques 20 (7) (8) (8) 



Légers du Nord (Sevelnord) 50 (161) (178) (125) 

Gisevel 50 (36) (39) (47) 

Sevelind 50 (108) (137) (198) 

Sevel S.p.A. 50 (74) (52) 6 




Dongfeng Citroën Automotive 

Corp. 27 (168) N/A N/A 

Other 

Siemens Automotiv Hydraulics 48 - (2) 4 

Faurecia group companies (23) 7 - 

Total (732) (587) (503) 

e) Amounts receivable from and payable to companies at equity 


Long-term loans 45 53 61 

Current maturities of long-term loans 118 10 19 

Short-term advances - 83 56 

Accounts and notes receivable 192 134 153 

Accounts and notes payable (945) (776) (809) 

Short-term loans (30) (24) (67) 

➔ Note 19 - Shares in non-consolidated 

companies 

a) Book value 


At cost 131 640 603 

Allowances (46) (402) (349) 

Net 85 238 254 

The decrease in this item in 2002 primarily reflects the fact that 

Dongfeng Citroën Automotive Corp. is now accounted for by the equity 

method (see note 3-b) 1.), as well as the adjustment of consolidation 

criteria (see note 3-b) 6.) 

b) Portfolio breakdown (net of allowances) 

(in millions of euros) % interest 2002 2001 2000 

Dongfeng Citroën 

Automotive Corp. (*) 27 - 109 109 

Financière Pergolèse (*) 100 - 17 28 

Circulos de inversiones - CISA (*) 100 - 7 18 

Peugeot Motors of America (*) 100 - 7 7 

Jeppener 100 5 12 18 

Société industrielle de Poissy N/A Merged 6 6 

Peugeot Automobile Nigéria 40 8 8 8 

Koyo Steering Dijon Saint-Etienne 15 5 11 11 

Non-consolidated dealers 18 14 14 

Faurecia group portfolio 17 14 14 

Other 32 33 21 

Total 85 238 254 

* companies included in the scope of consolidation in 2002. 

c) Movements for the year 


Opening balance, net 238 254 128 

Stock acquired for cash 25 33 164 

Stock acquired in 

stock-for-stock transactions 9 2 22 

Companies included in the scope of 

consolidation for the first time (179) (9) (33) 

Divested stock (6) (10) (23) 

Net increase in allowances (3) (30) (10) 

Translation adjustment and other 1 (2) 6 

Closing balance, net 85 238 254 

➔ Note 20 - Other non-current assets 

Other non-current assets can be analyzed as follows: 


Excess of payments to external 

funds over pension obligations 

(note 46-a) 3.) 167 107 93 

Other 90 97 83 

Total 257 204 176 

156 


➔ Note 21 - Inventories 

Inventories can be analyzed as follows: 


At cost 

Raw materials and supplies 865 864 702 

Semi-finished products and 

work-in-progress 1,298 1,282 1,009 

Goods for resale and used vehicles 1,144 1,153 824 

Finished products and replacement 

parts 3,429 3,446 2,988 

6,736 6,745 5,523 

Less: allowances (569) (527) (352) 

Total 6,167 6,218 5,171 

Movements in inventories are analyzed in note 39-a) 2. 

➔ Note 22 - Accounts and notes receivable 

a) Securitization 

In November 2000, Faurecia and certain of its French subsidiaries 

signed a rolling one-year agreement for the sale of up to €400 million 

worth of receivables to a banking special purpose entity. The agreement 

expires in November 2005. 

In December 2002, a second rolling one-year agreement was signed by 

other French, German and Spanish subsidiaries of Faurecia with 

another banking special purpose entity, for the sale of up to €460 

million worth of receivables. This agreement expires in December 2007. 

In both cases, the receivables are sold without recourse and Faurecia’s 

risk is limited to the amount of the security deposit paid to the special 

purpose entity. 

At December 31, 2002, total financing raised under these programs, 

net of the security deposit, amounted to €651 million, including €281 

million in receivables sold but not yet collected. The corresponding 

amounts at December 31, 2001 were €260 million and €156 million 

respectively. The security deposit, in the amount of €106 million at 

December 31, 2002 and €17 million at December 31, 2001, is included 

in “Other receivables”. 

After taking into account the amount recognized under “Short-term 

debt” – €167 million at December 31, 2002 and €125 million at 

December 31, 2001 – to offset the inclusion of the sold receivables 

under assets, the remaining effect on PSA Peugeot Citroën Group debt 

at these dates is not material. 

b ) Reclassification 

Effective from 2002, “Accounts and notes receivable” include credit 

notes deducted from sales corresponding to confirmed or estimated 

sales incentives on new vehicles held in inventory in the independent 

dealer network, as well as credit notes and accrued credit notes for 

sales incentives on vehicles sold to customers that have not yet been 

settled by the Group. 

These credit notes were previously included in “Other receivables” 

for an amount of €404 million at December 31, 2001 and €324 million 

at December 31, 2000. They have been reclassified under “Accounts 

and notes receivable” to permit meaningful year-on-year comparisons. 

c ) Breakdown 


Accounts and notes receivable 3,520 3,642 3,154 

Credit losses (139) (191) (192) 

Total 3,381 3,451 2,962 

This item does not include receivables from dealers transferred to the 

finance companies which are shown in the consolidated balance sheet 

under “Finance receivables”. 

Movements in this item are analyzed in note 39-a) 2. 

➔ Note 23 Finance receivables 

a) Securitization 

The Banque PSA Finance Group has carried out two securitization 

transactions through “Auto ABS”, a special purpose entity created in 

June 2001: 

- On June 28, 2001, Din and Sofi, two subsidiaries of Crédipar - a 

French subsidiary of the Banque PSA Finance Group - sold €1 billion 

worth of automobile loans to the 2001-1 fund of the Auto ABS special 

purpose entity. The Auto ABS 2001-1 fund issued €950 million worth 

of AAA/Aaa rated preferred asset-backed securities and €50 million 

worth of A/A2 rated subordinated asset-backed securities. Crédipar's 

retained interest amounts to €10,000. The preferred and 

subordinated asset-backed securities are secured by a €20 million 

deposit paid by Crédipar. 

The fund purchases additional loans from Din and Sofi every month, 

to maintain the total asset pool at €1 billion. The asset pool will be 

topped up at monthly intervals through July 2003 and will then be 

wound down over an estimated period of three years. 

- On July 11, 2002, Din and Sofi sold €550 million worth of automobile 

loans and the spanish branch of Banque PSA Finance sold €950 

million worth of automobile loans to the Auto ABS 2002-1 fund. 

The Auto ABS 2002-1 fund issued €1,440 million worth of AAA/Aaa 

rated preferred asset-backed securities and €60 million worth of 

A/A2 rated subordinated asset-backed securities. Banque PSA 

Finance's retained interest amounts to €30,000. The preferred and 

subordinated asset-backed securities are secured by a €30 million 

deposit paid by Banque PSA Finance. 

The fund purchases additional loans from Din, Sofi and the spanish 

branch of Banque PSA Finance every month, to maintain the total 

asset pool at €1.5 billion. The asset pool will be topped up at monthly 

intervals through July 2004 and will then be wound down over an 

estimated period of three years. 

In both cases, the securitized loans are no longer carried in the balance 

sheet. The impact of the operations on earnings for the period was not 

material. Banque PSA Finance's retained interest is included in shortterm 

investments. In accordance with Group accounting policy, 

allowances for credit losses were recorded when the loans were made. 

These allowances have been maintained in the balance sheet to cover 

the risk of losses on the deposits. 

The deposits are carried in the balance sheet under “Other customer 

loans”. 


) Analysis 

1. Total finance receivables 

After taking into account the effects of the securitization, finance 

receivables break down as follows: 


Retail and lease 

finance receivables 12,301 13,000 11,880 

Wholesale receivables 4,653 4,196 3,580 

16,954 17,196 15,460 

Deferred revenue (1,033) (1,197) (1,040) 

Less: allowances (189) (259) (265) 

Total 15,732 15,740 14,155 

Retail and lease finance receivables represent loans made by finance 

companies to Peugeot and Citroën customers for the purchase of cars. 

Wholesale receivables represent amounts due to Peugeot and Citroën 

by their dealer networks which have been transferred to the Group 

finance companies and working capital loans made by the finance 

companies to the dealer networks. 

2. Financing costs born by the Automobile division 

The Automobile division bears the financing costs on the following 

amounts due by its dealer networks, which have been transferred to the 

Group finance companies: 


2,774 2,425 2,315 

The corresponding financing costs are recorded under the 

manufacturing and sales companies’ “Cost of goods and services sold” 

as follows: 


3. Maturities of finance receivables 

2002 


157 190 142 

Subsequent 

2003 2004 2005 years Total 


finance receivables 4,584 3,742 2,464 1,511 12,301 

Wholesale 

receivables 4,582 29 15 27 4,653 

Total 9,166 3,771 2,479 1,538 16,954 

2001 


Subsequent 

2002 2003 2004 years Total 



Wholesale 

receivables 4,174 9 5 8 4,196 

Total 8,460 3,650 3,010 2,076 17,196 

2000 


Subsequent 

2001 2002 2003 years Total 



Wholesale 

receivables 3,555 11 5 9 3,580 

Total 7,664 3,356 2,713 1,727 15,460 

4. Movements in allowances for credit losses 

2002 

Retail and 

(in millions of euros) lease finance Wholesale 

receivables receivables Total 

Opening balance 223 36 259 

Movements for the year (76) 6 (70) 

Closing balance 147 42 189 

2001 

Retail and 




Movements for the year 0 (6) (6) 


2000 

Retail and 




Movements for the year 31 (2) 29 


In 2002, the reversal of allowances for credit losses on retail and lease 

finance receivables concerns the write off by Crédipar of loans more 

than 150 days past due that had been written down in full in the 

accounts. 

➔ Note 24 - Other finance company 

customer receivables 

Other customer receivables at December 31 can be analyzed as follows: 


Within 1 year 131 94 97 

1 to 5 years 151 133 89 

Over 5 years 13 15 19 

Total 295 242 205 

158 


➔ Note 25 - Short-term income tax assets 



Current taxes: prepayments 657 492 161 

Deferred tax assets 323 443 324 

Total 980 935 485 



Current taxes: prepayments 27 13 - 

Deferred tax assets 36 40 16 

Total 63 53 16 

➔ Note 26 - Other receivables 



Prepaid and recoverable taxes 

(other than income taxes) 1,311 1,311 1,043 

Vehicles sold under buyback 

contracts 426 485 376 

Other receivables 882 789 788 

Total 2,619 2,585 2,207 

As explained in note 1-d, new vehicle sales with a buyback commitment 

expiring within a maximum of three years are not recognized at the 

time of delivery but accounted for as operating leases. The amount 

recorded under this caption corresponds to the cost of the vehicles. 



Prepaid expenses 586 503 369 

Other receivables 337 239 181 

Total 923 742 550 

➔ Note 27 - Short-term investments - 



Own shares held for 

allocation on exercise of 

employee stock options 

- Peugeot S.A. shares 97 57 18 

- Faurecia shares 15 11 7 

Other quoted securities 236 277 - 

Other marketable securities 741 668 1,221 

Total 1,089 1,013 1,246 

“Other quoted securities” represent securities previously included in 

long-term loans and investment securities, under “Restricted stock” 

(note 17). 

Unrealized gains on these securities total: 


292 483 - 

➔ Note 28 - Cash and cash equivalents 

Cash and cash equivalents, as defined in note 1-q, break down as follows: 



Investments with maturities 

of less than three months 3,856 4,550 2,540 

Advances to companies 

at equity - 83 56 

Cash and current account 

balances 676 887 547 

Total 4,532 5,520 3,143 

As from 2002, advances to companies at equity are recorded under 

“Short-term loans”. 



Investments with maturities of 

less than three months 2,261 1,406 - 

Central bank current account 

balances 218 282 68 

Cash and current account 

balances 457 458 183 

Total 2,936 2,146 251 

➔ Note 29 - Common stock, capital in 

excess of par value of stock 

a) Common stock 

As of December 31, 2002, the Company’s capital stock amounted to 

€259,109,146, represented by common shares with a par value of €1 

(note 29-c), all fully paid. The shares may be held in bearer or 

registered form, at the choice of stockholders. Shares registered in the 

name of the same holder for at least four years carry double voting 

rights (article 38 of the bylaws). 

b) Changes in the number of shares issued and outstanding 

(in euros) 2002 2001 2000 

As of January 1 259,109,146 278,223,630 272,946,048 

Canceled shares 

(note 29-d) - (23,450,000) - 

Shares issued on 

exercise of 

stock options 

(note 29-e) N/A N/A 84,300 

Shares issued on 

conversion of 

debentures N/A 4,335,516 5,193,282 

As of December 31 259,109,146 259,109,146 278,223,630 


c) 2001 stock-split 

On July 2, 2001 existing €6 par value shares were exchanged for new 

€1 par value shares, on a six-for-one basis. This stock-split was 

authorized by stockholders at the Extraordinary Meeting of May 16, 

2001 (8th resolution). 

d) Capital reduction 

On November 23, 2001, the Group canceled 23,450,000 new €1 

par value shares under a stockholder-approved program (9th resolution 

of the Extraordinary Stockholders’ Meeting of May 16, 2001). The 

difference between the cost of the shares and their par value 

was charged against “Capital in excess of par value of stock” in the 

amount of €381 million (note 29-h) and against “Retained earnings” 

for €510 million. 

e) Employee stock options 

1. Stock subscription options 

In 1995, the Managing Board of Peugeot S.A. granted options to 

certain directors and officers of the Company and its subsidiaries to 

subscribe for new €6 par value common shares at a price of €94.90 per 

share. The options exercised under this plan, which terminated on 

April 5, 2000, are set out in note 29-b. 

2. Stock purchase options 

Each year since 1999, the Managing Board of Peugeot S.A. has granted 

options to the same categories of Group employees allowing them to 

purchase existing shares. Following the 2001 stock-split (note 29-c), 

the current terms of these plans are as follows: 

2002 plan 2001 plan 2000 plan 1999 plan 

Date of Managing Aug. 20, Nov. 20, Oct. 5, March 31, 

Board decision 2002 2001 2000 1999 

Vesting date Aug. 20, Nov. 20, Oct. 5, March 31, 

2005 2004 2002 2001 

Expiry date of Aug. 20, Nov. 19, Oct. 4, March 31, 

exercise period 2009 2008 2008 2007 

Number of 

grantees 178 147 154 97 

Exercise price 

(in euros) 46.28 46.86 35.46 20.83 

Number of 

options granted 860,100 798,600 709,200 462,900 

Changes in the number of options outstanding under these plans 

(exercisable for €1 par value shares) are shown below: 

(number of options) 2002 2001 2000 

As of January 1 1,940,100 1,166,100 456,900 

Options granted 

during the year 860,100 798,600 709,200 

Options exercised 

during the year (17,000) (24,600) - 

As of December 31 2,783,200 1,940,100 1,166,100 

o/w 1999 plan 415,300 432,300 456,900 

2000 plan 709,200 709,200 709,200 

2001 plan 798,600 798,600 

2002 plan 860,100 

f) Share buyback programs 

Transactions under stockholder-approved share buyback programs can be analyzed as follows: 

Authorizations 

Transactions 

2002 2001 2000 

Opening balance 2,994,287 16,044,378 8,332,152 

Shares bought back 

AGM of June 2, 1999 30,000,000 N/A N/A 2,775,786 

AGM of May 24, 2000 29,400,000 N/A 1,249,068 5,026,440 

AGM of May 16, 2001 10% of capital 789,000 9,625,441 N/A 

AGM of May 15, 2002 25,000,000 11,511,167 N/A N/A 

Canceled shares (note 29-d) 

AGM of May 16, 2001 10% of capital - (23,450,000) N/A 

Shares sold 

On exercise of stock options (17,000) (24,600) - 

Other (68,745) (450,000) (90,000) 

At year-end 15,208,709 2,994,287 16,044,378 

- Shares held for allocation on exercise of stock options 

(note 29-d) 2,783,200 1,940,100 1,166,100 

- Treasury stock (note 29-i) 12,425,509 1,054,187 14,878,278 

160 


g) Capital in excess of par value of stock 

Capital in excess of par value of stock recorded in the balance sheet at 

December 31, 2000 does not appear in the balance sheet at December 

31, 2002 following the capital reduction of November 23, 2001. 

h) Retained earnings 

Retained earnings, including net income for the year, are as follows: 


Peugeot S.A. legal reserve 28 28 27 

Other Peugeot S.A. 

statutory reserves and results 4,721 3,825 3,180 

Other retained earnings and 

net income 7,126 6,626 6,308 

Total 11,875 10,479 9,515 

Other Peugeot S.A. statutory reserves break down as follows: 


Reserves available for 

distribution 

- Without taxation 2,062 1,513 700 

- Subject to payment of 

additional tax 961 961 885 

- Subject to payment of the 

“précompte” equalization tax 1,698 1,351 1,595 

4,721 3,825 3,180 

Tax payable in the case of 

distribution (other than the 

“précompte” equalization tax) 210 210 205 

i) Treasury stock 

Treasury stock corresponds to the cost of all the Peugeot S.A. shares 

purchased on the open market, net of canceled shares and shares held 

for allocation on exercise of management and employee stock options 

which are reported under “Short-term investments” (note 27). 

j) Cumulative translation adjustment 

The cumulative translation adjustment, as defined in note 1-b, can be 

analyzed as follows as of December 31, 2002, 2001 and 2000: 


Euroland subsidiaries (249) (249) (249) 

Other foreign subsidiaries (333) (156) 48 

Total (582) (405) (201) 

Translation adjustments related to other foreign subsidiaries include 

adjustments due to the devaluation of the Argentine peso in an amount 

of €373 million in 2002 and €205 million in 2001, and net positive 

adjustments of €40 million in 2002 and €49 million in 2001 

concerning subsidiaries in other countries. 

➔ Note 30 - Minority interests 

Minority interests in retained earnings can be analyzed as follows: 



As of January 1 689 579 585 

Minority interest in 

net income of subsidiaries (4) (26) (4) 

Dividends paid to minority 

stockholders of subsidiaries (12) (13) (12) 

Minority interest in 

share issues by subsidiaries 2 4 2 

Changes in scope of consolidation 

and other movements (8) 146 4 





As of January 1 103 79 64 

Minority interest in net income 

of subsidiaries 21 16 15 

Dividends paid to minority 

stockholders of subsidiaries (31) - - 

Minority interest in share 

issues by subsidiaries - 9 - 

Changes in scope of 

consolidation and other 

movements - - 1 

Translation adjustment (2) (1) (1) 



➔ Note 31 - Reserves for contingencies 

and liabilities 


1. Details of reserves for contingencies and liabilities 


Long-term reserves for 

operating liabilities 

Retirement benefits (note 46) 240 238 228 

Employee benefits 90 91 93 

Claims and litigation 71 77 53 

Warranty costs 279 120 123 

Vehicles sold under 

buyback contracts (*) 60 39 17 

End-of-life vehicles 43 - - 

Operations in Argentina 47 50 - 

Losses on long-term contracts 63 93 26 

Other 232 216 338 

1,125 924 878 

Other reserves for 

contingencies and liabilities 

Early-termination plan (note 45) 400 323 349 

Reserve for debenture 

redemption premiums - - 27 

Restructuring reserves 127 63 13 

Other 75 84 55 

602 470 444 

Total 1,727 1,394 1,322 

* A reserve is recorded for vehicles sold under buyback contracts with a term in excess 

of three years, where the Group expects to make a loss on resale. The Group does not 

expect to incur any additional losses on these contracts. 

2. Movements in reserves for contingencies and liabilities 

(in millions of euros) 2002 2001 2000 (1) 

As of January 1 1,394 1,322 1,459 

Movements charged to income 

- Additions 861 522 

- Reserves utilized (412) (373) 

- Reversals (89) (163) 

360 (14) (190) 

Other movements 

- Translation adjustment (69) (22) 23 

- Effect of changes in scope of 

consolidation and other 42 108 30 

As of December 31 1,727 1,394 1,322 

(1) The breakdown of movements charged to the income statement in 2000 is not 

available in the same form as for 2002 and 2001. 

Reversals of reserves primarily include the following: 

In 2002, €34 million released from the reserve for tax under the Flex 

regime (trade balance) concerning Peugeot Citroën do Brasil. 

In 2001, €84 million released from the reserve for risks relating to the 

Group's operations in Argentina that was originally charged against 

goodwill (note 14-a) 2), and €26 million released from the reserve for 

redemption premiums on Peugeot S.A. convertible debentures which 

matured during the year. 


Reserves for contingencies and liabilities carried in the balance sheets 

of the finance companies can be analyzed as follows: 


Long-term reserves for 

operating liabilities 

Retirement benefits (note 46) 7 6 6 

Other 38 28 25 

45 34 31 

Other reserves for 

contingencies and liabilities 

Other 8 11 0 

Total 53 45 31 

➔ Note 32 - Other long-term liabilities - 


Other long-term liabilities of manufacturing and sales companies 

comprise: 


Investment grants, net 51 45 47 

Other 44 24 23 

Total 95 69 70 

➔ Note 33 - Convertible debentures 

In March 1994, Peugeot S.A. issued convertible debentures for a total of 

€604 million. The four million debentures were issued at a price of €150.92 

and were convertible at any time on the basis of one share per debenture. 

2002 

The debentures no longer have any impact on the consolidated 


2001 

The debentures matured on January 1, 2001. Of the 747,329 debentures 

outstanding as of December 31, 2000, 722,586 were converted into 

shares and 24,743 were redeemed for cash. 

The reserve set up to cover the premium of €35.7 per debenture due on 

any unconverted debentures redeemed at maturity was released. Of the 

total amount released, €26 million concerned converted debentures 

and €1 million concerned debentures redeemed for cash. 

2000 

During 2000, 865,547 debentures were converted. 

In accordance with the applicable early redemption clause, during 2000 

the Group bought back and canceled 2,380,632 debentures. 

The transaction gave rise to a non-recurring loss of €196 million. 

An amount of €71 million was released from the reserve for redemption 

premiums in connection with the cancellation of debentures referred to 

above. In addition, an amount of €26 million was released from the 

reserve in respect of debentures converted during the year. 

162 


➔ Note 34 - Other long-term borrowings - 


a) Maturities of long-term debt 

Maturities of long-term debt other than convertible debentures 

(note 33) are as follows: 

2002 


Other bonds Other 

and debentures borrowings Total 

2004 - 390 390 

2005 - 139 139 

2006 69 146 215 

2007 - 997 997 

Subsequent years 1,490 268 1,758 

1,559 1,940 3,499 

Current portion - 311 311 

Total 1,559 2,251 3,810 

2001 




2003 - 501 501 

2004 - 273 273 

2005 - 125 125 

2006 69 720 789 

Subsequent years 1,490 457 1,947 

1,559 2,076 3,635 


Total 1,559 2,375 3,934 

2000 




2002 - 367 367 

2003 - 315 315 

2004 - 146 146 

2005 - 524 524 

Subsequent years 69 556 625 

69 1,908 1,977 


Total 69 2,316 2,385 

b) Repayment currencies 

The long-term portion of borrowings other than convertible debentures 

can be analyzed as follows by repayment currency: 


Euros 2,892 2,830 1,399 

Pounds sterling 492 421 228 

U.S dollars - 7 - 

Swiss francs - 152 152 

Brazilian reals 100 206 168 

Other 15 19 30 

Total 3,499 3,635 1,977 

c) Average interest rates 

The weighted average interest rate on long-term debt, before taking 

into account the impact of hedges, was as follows as of December 31, 

2002, 2001 and 2000: 

(in %) 2002 2001 2000 

5.03 5.31 5.35 

d) Obligations under capital leases 

The discounted present value of minimum future lease payments 

included in other borrowings in respect of assets acquired under capital 

leases was as follows at December 31: 


2001 - - 31 

2002 - 33 31 

2003 32 32 30 

2004 32 30 29 

2005 30 30 - 

2006 30 - - 

Subsequent years 127 154 178 

251 279 299 

Less: amount representing interest (30) (37) (42) 

Present value of minimum 

future lease payments 221 242 257 

e) Long-term portion of other bonds and debentures 


GIE PSA Trésorerie 

(2001 fixed rate bonds, 

due 2011) 1,490 1,490 - 

Peugeot S.A. (1998 bonds 

indexed to the market price of 

Peugeot S.A. shares) 69 69 69 

Total 1,559 1,559 69 

➔ Note 35 - Short-term financing 

and bank overdrafts - manufacturing 


a) Details of short-term financing and bank overdrafts 


Commercial paper (note 35b) 664 738 533 

Short-term loans 1,142 694 593 

Bank overdrafts 645 2,488 1,798 

Total 2,451 3,920 2,924 


) Commercial paper 


Issue 

currency 2002 2001 2000 

Short-term notes 

- Faurecia EUR 664 718 319 

Commercial paper 

- Peugeot Commercial 

Paper Gmbh EUR - - 195 

- Citroën Polska PLN - 14 14 

- Peugeot Polska PLN - 6 5 

Total 664 738 533 

➔ Note 36 - Financing liabilities - finance 

companies 

a) Maturities of long-term debt 

2002 


Bonds and Other debt Other 

debentures securities borrowings Total 

2004 - 1,142 1,563 2,705 

2005 - 1,199 140 1,339 

2006 91 902 474 1,467 

2007 - 729 146 875 

Subsequent years - 532 100 632 

91 4,504 2,423 7,018 

Current portion - 5,831 4,236 10,067 

Total 91 10,335 6,659 17,085 

2001 




2003 - 1,771 215 1,986 

2004 - 416 980 1,396 

2005 - 577 85 662 

2006 91 710 404 1,205 

Subsequent years - 34 90 124 

91 3,508 1,774 5,373 

Current portion - 7,037 3,733 10,770 

Total 91 10,545 5,507 16,143 

2000 




2002 - 1,093 433 1,526 

2003 - 230 107 337 

2004 - 78 18 96 

2005 - 321 89 410 

Subsequent years 91 102 90 283 

91 1,824 737 2,652 

Current portion 134 5,452 3,347 8,933 

Total 225 7,276 4,084 11,585 

b) Repayment currencies 

The long-term portion of finance company financing liabilities breaks 

down as follows by repayment currency: 


Euros 6,083 3,774 1,853 

Pounds sterling 577 1,173 266 

US dollars 200 261 247 

Japanese Yen 71 30 154 

Other 87 135 132 

Total 7,018 5,373 2,652 

c) Long-term portion of bonds and debentures 


Banque PSA Finance 

(1998 0.57% debentures 

indexed to the CAC 40) 91 91 91 

91 91 91 

d) Other debt securities 

1. Long-term portion 


Issue 

currency 2002 2001 2000 

Domestic MTN due 

in more than one year 

- Peugeot Finance 

International EUR 1 1 1 

- Crédipar EUR 82 124 309 

- Banque PSA Finance EUR 586 496 205 

EMTN due in more 

than one year 


International USD 9 34 32 

EUR 17 32 41 

GBP - - 6 

JPY - - 69 

- Banque PSA Finance USD 191 227 215 

EUR 3,214 2,015 650 

CZK 48 94 29 

JPY 71 30 85 

PLN - - 32 

GBP 31 197 - 

HKD 12 14 - 

Redeemable subordinated 

securities 

- Banque PSA Finance 150 150 150 

- Other 92 94 - 

Total 4,504 3,508 1,824 

164 


2. Short-term portion 


Issue 

currency 2002 2001 2000 

Short-term notes 

- Sofira EUR 1,332 1,349 1,087 

Commercial paper 

- Peugeot Commercial 

Paper EUR - 30 - 



Bills of Exchange 

- PSA Wholesale Ltd. GBP - 202 96 

- PSA Finance Plc GBP - - 819 

Domestic MTN due 

within one year 


International EUR - - - 

- Crédipar EUR 42 173 336 

- Banque PSA Finance EUR 183 105 23 

EMTN due within 

one year 



USD 19 - - 

JPY - 303 441 

GBP - 7 80 

ITL - 15 - 

- Banque PSA Finance EUR 1,516 928 447 

USD 48 - 32 

GBP 154 82 32 

JPY 806 1,858 56 

CZK 47 - - 

PLN - 36 10 

Certificates of deposit 

- Crédipar EUR - - 122 

- Banque PSA Finance EUR 1,620 1,776 1,378 

Other debt securities 

- BPF Brasil BRL 3 - - 

Retail certificates of 

deposit 

- Banque PSA Finance CHF - 1 4 

Total 5,831 7,037 5,452 

➔ Note 37 - Short-term income tax liabilities 



Current taxes payable 633 796 588 

Deferred taxes on planned 

intercompany dividends 3 6 9 

Other deferred taxes 10 6 28 

Total 646 808 625 



Current taxes payable 30 59 - 

Deferred taxes on planned 

intercompany dividends - - 2 

Other deferred taxes 34 47 41 

Total 64 106 43 

➔ Note 38 - Other payables 



Accrued taxes 

(other than income taxes) 986 1,005 691 

Early-termination plan 86 62 40 

Accrued payroll costs 988 897 762 

Due to suppliers of property, 

plant and equipment 525 496 443 

Vehicles sold 

under buyback contracts 584 661 503 

Customer prepayments 537 460 268 

Other payables 1,522 1,828 1,706 

Total 5,228 5,409 4,413 

As explained in note 1-d, new vehicles sold under buyback contracts 

with terms not exceeding three years are not treated as sales but as 

leases. The amount recorded under this caption corresponds to the sale 

price of new vehicles less accrued interest. 

“Other payables” correspond mainly to short-term warranty costs 

reserve, accrued payroll taxes, the portion of payments received under 

customer service contracts that relates to services to be supplied the 

following year and accrued expenses related to sales incentive 

programs. 



Deferred income and 

accrued expenses 456 496 306 

Other payables 594 504 361 

Total 1,050 1,000 667 

➔ Note 39 - Change in operating assets 

and liabilities 


1. Detail of cash flows from operating activities 


- Increase in inventories (129) (802) (1,006) 

- Increase in accounts and 

notes receivable (56) (23) (648) 

- Increase in accounts and 

notes payable 954 177 1,339 

- Change in income taxes (204) (173) (73) 

- Other changes (300) 425 280 

- (Increase) decrease in 

receivables from Group 

finance companies, net 65 (26) (130) 

Total 330 (422) (238) 


2. Detail of changes in assets and liabilities 

2002 

Cash flows Effect of changes 

(in millions of euros) from operating in scope of Translation At 

At January 1 activities consolidation adjustment December 31 

- Inventories (6,218) (129) (61) 241 (6,167) 

- Accounts and notes receivable (3,451) (56) 19 107 (3,381) 

- Accounts and notes payable 9,173 954 35 (250) 9,912 

- Income taxes (127) (204) (5) 2 (334) 

- Other 2,824 (300) 57 28 2,609 

Receivables from Group finance companies, net (220) 65 - - (155) 

Total 1,981 330 45 128 2,484 

2001 

Cash flows Effect of changes 

(in millions of euros) from operating in scope of Translation At 

At January 1 activities consolidation adjustment December 31 

- Inventories (5,171) (802) (300) 55 (6,218) 

- Accounts and notes receivable (2,962) (23) (488) 22 (3,451) 

- Accounts and notes payable 8,503 177 510 (17) 9,173 

- Income taxes 140 (173) (98) 4 (127) 

- Other 2,184 425 147 68 2,824 

Receivables from Group finance companies, net (194) (26) - - (220) 

Total 2,500 (422) (229) 132 1,981 


Cash flows from operating activities can be analyzed as follows: 


- Increase in finance receivables (260) (1,483) (1,469) 

- Increase in financing liabilities 1,172 4,249 1,103 

- Change in income taxes (54) (6) (5) 

- Other changes (217) 82 59 

- Decrease in amounts due to Group manufacturing and sales companies, net (84) (1,182) (575) 

Total 557 1,660 (887) 

➔ Note 40 - Effect of changes in scope of 

consolidation and other 

The “Effect of changes in scope of consolidation and other” caption in 

the statement of cash flows for manufacturing and sales companies 

breaks down as follows: 


Change in cash and cash 

equivalents due to changes 

in scope of consolidation (95) 134 - 

Additions to intangible assets (85) (89) (80) 

Banque PSA Finance share 

issue underwritten 

by Peugeot S.A. (100) - - 

Other 12 9 (54) 

Total (268) 54 (134) 

➔ Note 41 - Change in other financial 

assets and liabilities 


New long and medium-term debt 337 1,868 495 

Repayments of debt and 

conversions of debentures (346) (745) (922) 

(Increase) decrease in long-term 

loans and receivables (430) 100 257 

(Increase) decrease in 

short-term investments 12 510 (164) 

Increase (decrease) in 

short-term financing (1,258) 931 1,096 

Decrease in net financing of the 

finance business provided by 

the manufacturing and 

sales companies 19 1,208 706 

Total (1,666) 3,872 1,468 

166 


➔ Note 42 - Net financial position - 



External loans and borrowings 

Cash and cash equivalents 4,532 5,520 3,143 

Short-term investments 1,089 1,013 1,246 

Short-term financing and 

bank overdrafts (2,451) (3,920) (2,924) 

Current portion of long-term 

debt (311) (299) (521) 

Short-term loans 397 260 207 

Long-term debt (3,499) (3,635) (1,977) 

Receivables loans and 

investment securities 929 624 1,110 

686 (437) 284 

Loans to and borrowings 

from Group finance companies 

Current financial assets 97 123 1,077 

Long-term loans - - 339 

Short-term debt (189) (197) (293) 

(92) (74) 1,123 

Total 594 (511) 1,407 

➔ Note 43 - Lines of credit 

The PSA Peugeot Citroën Group has access to revolving lines of credit 

expiring at various dates through 2007. The amounts available under 

these lines of credit are as follows: 


Peugeot S.A. and 

GIE PSA Trésorerie 2,400 2,400 1,718 

Faurecia 1,545 1,420 1,046 

Banque PSA Finance group 4,850 5,585 5,585 

Confirmed lines of credit 8,795 9,405 8,349 

Drawdowns on these lines of credit at December 31 were as follows: 


Peugeot S.A. and 

GIE PSA Trésorerie - - - 

Faurecia 605 562 622 

Banque PSA Finance group - 94 48 

Drawdowns 605 656 670 

➔ Note 44 - Return on capital employed 

a) Capital employed 

Capital employed includes the value of all the assets employed in the 

Group’s operations. Finance companies use a different definition of 

capital employed from that used by the manufacturing and sales 

companies. 

Manufacturing and sales companies 

Capital employed comprises all non-current assets and reserves 

employed in the business and working capital. 

Non-current assets employed in the business comprise: 

- goodwill, net, before exceptional amortization; 

- intangible assets and property, plant and equipment, net; 

- shares in non-consolidated companies; 

- other non-current assets. 

Working capital includes: 

- inventories; 

- accounts and notes receivable; 

- receivables from independent dealers transferred to Banque 

PSA Finance group companies, for which the financing cost is paid by 

the Automobile division; 

- other receivables; 

- accounts and notes payable; 

- other payables, excluding amounts due under the early-termination plan. 

Capital employed also includes operating reserves, defined as reserves 

where additions or deductions impact operating margin, as well as 

restructuring reserves. 

For companies accounted for by the equity method, which are an 

integral part of the Group’s operations, capital employed corresponds 

to the Group’s equity in the capital employed of those companies. 

Finance companies 

For the finance companies, capital employed corresponds to stockholders’ 

equity of Banque PSA Finance, which includes the net assets of all of the 

finance companies. However as dealer receivables transferred to 

Banque PSA Finance group are included in working capital of the 

manufacturing and sales companies, the amount of Banque PSA Finance’s 

stockholders’ equity representing transferred receivables is deducted for 

the calculation of finance companies’ capital employed. 


Capital employed can be analyzed as follows: 



Goodwill 

- Net book value 2,120 2,225 1,054 

- Cancellation of exceptional amortization 32 19 127 

Intangible assets 194 183 136 

Property, plant and equipment 11,545 11,461 10,359 

Shares in non-consolidated companies 85 238 254 

Other non-current assets 257 204 179 

Inventories 6,167 6,218 5,171 

Accounts and notes receivable 3,381 3,451 2,962 

Receivables from independent dealers transferred to the finance 

companies, for which the financing cost is paid by the Automobile division 2,774 2,425 2,315 

Other receivables 2,619 2,585 2,207 

Reserves for operating liabilities (1,125) (924) (878) 

Investment grants (51) (45) (47) 

Accounts and notes payable (9,912) (9,173) (8,503) 

Other payables, excluding amounts due under the early-termination plan (5,142) (5,347) (4,373) 

Equity in the capital employed of companies accounted 

for by the equity method 1,275 1,026 995 

Restructuring reserves (127) (63) (13) 


Equity in stockholders’ equity of Banque PSA Finance 1,315 1,171 1,043 

Total 15,407 15,654 12,988 

b) Income generated by capital employed 

Return on capital employed is measured on the basis of operating margin plus or minus the other income and expense items corresponding to the 

definition used for capital employed, i.e. finance charges for receivables from independent dealers transferred to Banque PSA Finance group companies 

that are paid by the Automobile division, exchange gains or losses, restructuring costs, amortization of goodwill (excluding exceptional amortization), 

pre-tax earnings of companies at equity (excluding early-termination plan costs) and income from shares in non-consolidated companies. 

Income generated by capital employed can be analyzed as follows: 


Operating margin– manufacturing and sales companies 2,594 2,404 1,857 

Operating margin – finance companies 319 248 264 

Consolidated operating margin 2,913 2,652 2,121 

Finance cost of receivables from independent dealers 

transferred to Banque PSA Finance 157 190 142 

Exchange gains (losses) 22 (24) (6) 

Restructuring costs (125) (120) (43) 

Amortization of goodwill 

- Amortization for the year (163) (140) (199) 

- Cancellation of exceptional amortization (note 14-a) 32 19 127 

Pre-tax earnings of companies at equity (note 18-c) 16 2 22 

Income from shares in non-consolidated companies 20 5 5 

Total 2,872 2,584 2,169 

a) Return on capital employed 

The immediate return on capital employed (before tax), corresponding 

to income generated by capital employed expressed as a percentage of 

total capital employed at December 31, is as follows: 

(in %) 2002 2001 2000 

18.6 16.5 16.7 

➔ Note 45 - Early-termination plan 

a) Internal agreements 

Internal agreements have been signed between the Group and employee 

representatives in France, concerning the implementation of earlytermination 

plans. The plans in question fulfill the criteria laid down in 

Decree no. 2000-105 dated February 9, 2000 related to the earlytermination 

of certain employees over 55 years of age and qualify for 

Government financing covering part of the cost. 

168 


1. Automobile division 

An early-termination plan has been set up for Automobile division 

employees in France, in application of an internal agreement dated 

March 4, 1999 and an industry-wide agreement signed on July 26, 1999 

by UIMM (the industry federation) with the support of the majority of 

trade unions represented within the Group. 

2. Automotive Equipment division 

Following further negotiations between UIMM and the trade unions, in 

March 2001, the plan was extended to additional companies, including 

the Faurecia group. 

b) Estimated liability 

1. Calculation method 

The estimated cost to be financed by the Group corresponds to the 

total benefits payable to the employees concerned, net of government 

funding. The present value of the liability has been calculated by 

applying a discount rate of 4.1% and an inflation rate of 1.75%. The 

short-term portion is included in “Other payables” and the long-term 

portion is reported under “Reserves for contingencies and liabilities”. 

2. Change in estimated liability 

Reserves for 

(in millions of euros) Other contingencies 

payables and liabilities 

Balance as of December 31, 2001 62 323 

Early-termination cost for the year (57) - 

Changes in employee numbers - 118 

Discounting adjustment (5) 45 

Transfer from long-term to short-term 86 (86) 

Balance as of December 31, 2002 86 400 

The €158 million charge recorded in the income statement includes 

€118 million corresponding to the cumulative effect of changes in 

employee numbers and a €40 million discounting adjustment. The €57 

million reversal is offset by a charge recorded under payroll costs 

representing the Group’s contribution to the Unedic fund responsible 

for paying benefits to terminated employees. 

For the Automobile division, the charge for changes in employee 

numbers reflects the reduction in the early-retirement age for certain 

production workers from 57 to 56 and the extension of the plan to 

technical and industrial supervisors through February 2005. 

c) Number of employees concerned 

As of December 31, 2002, 13,978 employees were concerned by the 

plans, including 881 Faurecia group employees. 

➔ Note 46 - Pension and other postretirement 

benefits 

a) Supplementary pensions and retirement bonuses 

Group employees in certain countries – mainly France, the United 

Kingdom and Germany – are entitled to supplementary pension 

benefits, payable annually, or retirement bonuses, representing one-off 

payments made at the time of retirement. 

This note describes the accounting treatment of obligations under 

defined benefit plans as opposed to defined contribution plans under 

which the Group has no future obligations towards employees. 

1. Calculation base 

The Group’s obligation under these supplementary pension and 

retirement bonus plans is calculated on an actuarial basis by independent 

actuaries using models based on the method defined in US standard 

SFAS 87. Actuarial valuations are generally performed at three-yearly 

intervals, or more frequently in cases of a change in actuarial 

assumptions. The most recent actuarial valuations for the principal plans 

were carried out as of December 31, 2002 based on: 

- retirement age assumptions, generally based on retirement at the age of 

60 for employees in France or after 60 in the case of employees who 

have not paid pension contributions over the minimum period required 

to qualify for a full pension under the government-sponsored scheme; 

- an appropriate discount rate; 

- an appropriate inflation rate. 

Deferred items include: 

- unrecognized net gains and losses corresponding to the effect of 

changes in actuarial assumptions, together with the difference 

between the actual return on plan assets held in external funds and 

the return calculated based on the estimated yield on long-term 

investments. These gains and losses, which are not recognized in the 

balance sheet, are amortized over the estimated average remaining 

service lives of employees. 

- unrecognized transition obligations corresponding to gains and losses 

arising on adoption of SFAS 87 and following retroactive plan 

amendments (prior service cost). 

These gains and losses, which are not recognized in the balance sheet, are 

amortized over the estimated average remaining service lives of employees. 

Total pension obligations, including the transition obligation, are intended 

to be funded by contributions to external funds. Any excess of external 

funds over the sum of the projected benefit obligation and the transition 

obligation is recorded as an asset under “Other non-current assets”. 

2. Assumptions used 

The assumptions used to calculate the Group’s obligation for pension 

and other retirement benefits are as follows for 2002, 2001 and 2000: 

(in %) Euro zone United Kingdom 

Discount rate 

Inflation rate 

2002 5.25 5.75 

2001 5.75 6.00 

2000 6.00 6.50 

2002 1.75 2.25 

2001 1.75 2.00 

2000 2.00 2.50 

France United Kingdom 

Return on long-term investments 

2002 7.50 7.25 

2001 7.50 7.25 

2000 7.50 7.25 

Mortality and staff turnover assumptions used are based on the specific 

economic conditions of each Group company or the country in which 

they operate. 


3. Obligations and funded status 

- At December 31 


Present value of projected benefit obligation 

French companies 1,047 1,288 1,154 

Foreign companies 1,678 1,591 1,439 

A 2,725 2,879 2,593 

Funded status 

Market value as of December 31 of prior years’ funding 

French companies 636 909 930 

Foreign companies 947 1,139 1,226 

Total (1) 1,583 2,048 2,156 

Funding to external organizations for the year 


Foreign companies 76 59 46 

Total (2) 85 60 76 

Market value of external funds of December 31 


Foreign companies 1,023 1,198 1,272 

B =(1)+(2) 1,668 2,108 2,232 

Deferred items 

Transition obligation 


Foreign companies (14) (25) (34) 

Total (3) (9) (17) (19) 

Prior service cost 

French companies 13 (81) (106) 


Total (4) 30 (60) (72) 

Unrecognized net actuarial gains and losses 



Total (5) 960 715 314 

Total 



C=(3)+(4)+(5) 981 638 223 

Total, net D=A-B-C 76 133 138 

Amounts recognized in the balance sheet 

Reserves 



Total 247 244 234 

o/w manufacturing and sales companies 240 238 228 

o/w finance companies 7 6 6 

Funding surpluses 

French companies (107) (55) (81) 


Total (171) (111) (96) 

o/w manufacturing and sales companies (167) (107) (93) 

o/w finance companies (4) (4) (3) 

Total, net in balance sheet 76 133 138 

170 


- Changes during the year 


Present value of projected benefit obligation 

As of January 1 2,879 

Reduction in obligation following payment of single premium (384) 

Actuarial gain due to transfer to external funds, taken to income (13) 

Service cost and one-year discounting adjustment 235 

Benefits paid in 2002 (105) 

Change in actuarial assumptions 199 

Translation adjustment and other movements (86) 

As of December 31 A 2,725 

Funded status 

As of January 1 2,108 

Decrease in external funds following payment of part of the single premium (228) 

Expected return on external funds 140 

Benefits paid in 2002 7 

Change in fair value of external funds (300) 


As of December 31 B 1,668 

Deferred items 

As of January 1 638 

Deferred items taken to income relating to obligations covered by external funds (95) 

Amortization for the year (35) 

New deferred items for 2002 499 


As of December 31 C 981 

Balance sheet reserve 

As of January 1 133 

Changes in scope of consolidation 1 

Additions for the year 211 

Payments to external funds (85) 

Payment of the balance of the single premium (156) 


As of December 31 D 76 

- Change in supplementary pension plans 

The supplementary pension plans set up by the main French companies 

in the Group, with the exception of Automotive Equipment division 

entities, were amended by agreements signed with employee 

representatives on May 2 and May 13, 2002. Under the revised plans: 

- Employees born before 1943 continue to be eligible for the 

supplementary pension benefits payable under the original plan. 

- Employees born in or after 1943 are eligible for the supplementary 

pension benefits payable under the original plan when they retire and 

claim their social security pension. However, effective from June 30, 

2002, they no longer acquire any new rights under the plan. 

The Group has taken out a group insurance policy with a licensed 

insurance company to cover the payment of supplementary pension 

benefits to these employees. Benefits will be paid out of a pension fund 

financed by the payment of a single premium of €384 million on behalf 

of all French companies. No further contributions will be made to the 

fund by any Group company. Part of the single premium was paid out of 

external funds amounting to €228 million and the balance of €156 million 

was paid out of the Group’s cash reserves. The related tax cost was €13 

million and the additional payroll taxes payable amounted to €6 million. 

The payment of the single premium on June 28, 2002 had the effect of 

transferring to the insurance company the Group's obligations towards 

the employees concerned. 

The operation led to the immediate recognition of deferred items 

related to the transferred benefit obligation, representing a charge of 

€95 million before tax. The charge was partly offset by an actuarial gain 

of €13 million resulting from the transfer of the obligation to an 

external fund. The charge to the income statement, including the net 

charge of €82 million referred to above and the related income tax and 

payroll tax charges, was €101 million, net (see note 11). 


- A new defined contribution supplementary pension plan was set up 

on July 1, 2002. 

Under this plan, eligible employees will be entitled to supplementary 

pension benefits if their compensation exceeds the ceiling for social 

security contributions during all or part of their remaining service lives 

from the date on which the plan was set up. The rights of eligible 

employees corresponding to the defined contributions will vest 

immediately. Two-thirds of the contributions are paid by the employer 

and one-third by the employee. 

Since it is a defined contribution plan, the Group has no future 

obligations towards employees under the plan. The cost of the plan is 

charged to income when the contributions are paid. 

4. Periodic pension cost 

The total obligation is determined at each year-end as explained above. 

The periodic pension cost each year corresponds to: 

- service cost, representing the benefit entitlements earned by 

employees during the year, 

- interest cost, corresponding to adjustments to the discounted present 

value of the opening projected benefit obligation, 

- amortization of deferred items. 

The periodic pension cost is partially offset by the return on external 

funds, calculated on the basis of a standard rate of return on long term 

investments (8 % up to 1999, 7.5% as from 2000). The difference 

between the standard rate of return and the actual return on external 

funds (for French funds, (2.59%) in 2002, (0.9%) in 2001, 3.3 % in 

2000) is deducted from or added to the unamortized net obligation. 

The periodic pension cost is included in payroll costs except for the 

€82 million net exceptional cost arising from the June 2002 change in 

the Group’s supplementary pension plans. It can be analyzed as follows: 




Service cost (81) (83) (83) 



Interest cost (154) (161) (139) 



Return on external funds 140 157 141 


Foreign companies (14) 13 7 

Amortization of deferred items (35) (3) (4) 

French companies (82) - - 

Foreign companies 1 - - 

Curtailments and settlements (81) - - 



Total (211) (90) (85) 

o/w manufacturing and 

sales companies (208) (89) (82) 

o/w finance companies (3) (1) (3) 

b) Long-service awards 

The Group estimates its liability for long-service awards payable to 

employees who fulfill certain seniority criteria. The calculations are 

performed using the same method and assumptions as for supplementary 

pension benefits and retirement bonuses (note 46-a). The estimated 

liability is reserved for in full in the accounts and amounts to: 




Total 25 21 20 

c) Other post-retirement benefits 

In addition to the retirement obligations described above, Faurecia 

Exhaust Systems Inc., an American subsidiary of Faurecia, pays the 

healthcare costs of retired employees. 

The related obligation is reserved for in full in the consolidated 

financial statements and amounts to: 


24 28 27 

➔ Note 47 - Foreign exchange and 

interest risk management 

a) General principles 

1. Currency risk 

The manufacturing and sales companies manage their foreign exchange 

positions on transactions denominated in foreign currencies with the 

objective of hedging the risk of fluctuations in exchange rates. These 

risks primarily concern the Automobile division. Positions are managed 

primarily by making forward purchases or sales of the currencies 

concerned, as soon as the foreign currency invoice is accounted for, 

through the PSA Peugeot Citroën Group's specialized company, PSA 

International S.A. (PSAI). PSAI also hedges currency risks on firm 

planned transactions to be carried out by the Automobile division in 

yen (note 47-c) 3). 

PSAI also carries out transactions involving currency instruments as 

part of its activities. These transactions, which are subject to very strict 

exposure limits, are closely monitored on a continuous basis. They are 

the only non-hedging transactions carried out by companies in the 

PSA Peugeot Citroën Group and do not have a material impact on 

consolidated net income. 

2. Interest rate risk 

Cash surpluses and short-term financing needs of manufacturing and 

sales companies except Automotive Equipment companies in euroland 

countries and, since 2001, in sterling, are centralized at the level of 

GIE PSA Trésorerie which invests net cash reserves on the financial 

markets, mainly in short-term instruments indexed to floating rates. 

The gross borrowings of manufacturing and sales companies except 

Automotive Equipment companies consist mainly of fixed and 

adjustable rate long-term loans. 

172 


The entire debt is converted to floating rate by means of derivatives, in 

order to match cash surpluses exposure. 

The finance companies provide wholesale financing to dealer networks 

and finance sales of vehicles to customers generally at fixed rates of 

interest. Refinancing is generally at adjustable or floating rates, at all 

points on the yield curve. 

Banque PSA Finance, which centralizes interest rate risks of the finance 

companies operating in the euro zone countries, manages these risks by 

entering into swaps and buying options to match interest rates on 

outstanding loans and the related refinancing. The finance companies 

in the United Kingdom use similar strategies to manage their own 

interest rate risks. 

Faurecia uses caps, swaps and other options to hedge interest rates on 

borrowings payable from January 2003 through December 2007. 

A small proportion of interest rate risks of the manufacturing and sales 

companies and the finance companies is not hedged, in order to take 

advantage of market opportunities. The Value at Risk (VaR) 

represented by these unhedged positions is measured daily. The impact 

on income of gains and losses on these positions is not material. 

3. Counterparty risks on financial instruments 

The Group minimizes counterparty risks through internal control 

procedures which ensure that transactions are carried out only with major 

banks and financial institutions. Exposure limits are set by counterparty, 

based primarily on their credit rating. Internal control procedures include 

daily verification of compliance with these exposure limits. The Group's 

exposure to concentration of counterparty risks is not material. 

b) Accounting treatment 

- Gains and losses on hedging positions related to actual or future 

transactions are accounted for on a symmetrical basis with the loss or 

gain on the underlying transaction. 

- Positions not qualifying as hedges are marked to market at the end of 

each period and the resulting unrealized gain or loss is included in 

income for the period. 

c) Manufacturing and sales companies 

As of December 31, 2002, 2001 and 2000, after eliminating 

intercompany transactions, open forward contracts in foreign 

currencies serving to fix the exchange rate used to record import and 

export transactions in the accounts and financial instruments acquired 

in connection with the management of interest rates on investments 

and borrowings, were as follows: 

1. Hedges of actual transactions 


Currency risk 

Hedges of commercial 

transactions 

- Forward contracts 1,116 1,121 1,290 

- Currency options 164 230 190 

1,280 1,351 1,480 

Hedges of financing 

transactions 

- Forward contracts 261 744 902 

- Currency options - 5 58 

- Currency swaps 647 531 678 

908 1,280 1,638 

Interest rate risk 


transactions 

- Interest rate swaps 9,574 6,919 7,369 

- Purchase of caps 2,229 1,855 1,229 

- Collars 45 30 99 

- FRA 100 - - 

11,948 8,804 8,697 

2. Maturities of hedging instruments as of December 31, 2002 

(in millions of euros) Total Within 1 year 1 to 5 years Beyond 5 years 

Currency risk 

Hedges of commercial transactions 

- Forward contracts 1,116 1,116 - - 

- Currency options 164 164 - - 

1,280 1,280 - - 

Hedges of financing transactions 

- Forward contracts 261 261 - - 

- Currency options - - - - 

- Currency swaps 647 181 266 200 

908 442 266 200 



- Interest rate swaps 9,574 7,401 582 1,591 

- Purchase of caps 2,229 1,129 1,100 - 

- Collars 145 45 100 - 

11,948 8,575 1,782 1,591 


3. Hedges of future transactions 

The Group purchases yen put options to fix the minimum exchange 

rate on vehicle sales in Japan over three years. As of December 31, 

2002, 2001 and 2000, the nominal amounts hedged by put options 



706 453 431 

The Faurecia group uses forward purchase and sale contracts and 

options - all of which mature in 2003 - as hedges of commercial 

transactions in progress at December 31, 2002 and transactions 

planned in 2003. At December 31, 2002, 2001 and 2000, the nominal 

amounts hedged for planned transactions were as follows: 


135 122 89 

4. Non-hedging transactions 

The gains and losses recorded by PSA International, the finance 

subsidiary specialized in managing currency risks on financial 

instruments not qualifying as hedges, generally correspond to gains and 

losses on closed positions – representing foreign exchange purchase and 

sale contracts for the same amount – which serve to fix margins without 

exposing the subsidiary to the risk of losses resulting from an 

unfavorable future movement in exchange rates. Pre-tax profits on these 

trading transactions amounted to €4.6 million in 2002, €5.5 million in 

2001 and €4 million in 2000. 


The net position of the manufacturing and sales companies in the main foreign currencies is as follows: 

(in millions of euros) GBP YEN USD PLN CHF BRL Other 

Total assets 362 84 236 104 24 6 407 

Total liabilities (510) (3) (172) - (152) (73) (142) 

Net position before hedging (148) 81 64 104 (128) (67) 265 

Off-balance sheet position 147 (81) (64) (104) 128 67 (260) 

Net position after hedging (1) - - - - - 5 

The above table shows the Group position arising from all transactions recognized in the balance sheet at December 31, 2002. The Group has also 

hedged currency risks on future vehicle sales in Japan (note 47 3). 



intraday 1 to More than 

to 1 year 5 years 5 years Total 

Total assets 6,672 62 40 6,774 

Total liabilities (4,307) (409) (1,734) (6,450) 

Net position 

before hedging 2,365 (347) (1,694) 324 

Off-balance 

sheet position (1,705) 146 1,559 - 

Net position 

after hedging 660 (201) (135) 324 

This table analyzes fixed rate assets and debt by maturity and adjustable 

rate assets and debts based on the next rate adjustement date. 

In the statement of off-balance sheet items, swaps and other derivative 

instruments are reported as positive amounts (lender leg) and negative 

amounts (borrower leg). 

A 1 point decrease in interest rates would have the effect of reducing 

net interest income by €4 million. 

The net position after hedging for assets and liabilities due beyond 

1 year mainly concerns employee profit-sharing reserves (€181 million) 

and obligations under finance leases (€168 million). 

d) Finance companies 

As of December 31, 2002, 2001 and 2000, after eliminating 

intercompany transactions, outstanding contracts on financial 

instruments used to match interest and exchange rates on customer 

loans and the related refinancing were as follows: 

1. Hedges of actual transactions 


Currency risk 

Currency swaps 1,488 2,749 1,718 

Forward contracts 1,253 552 188 

2,741 3,301 1,906 



transactions 

- Interest rate swaps 23,120 17,547 11,317 

- Purchases of caps and collars 192 372 175 

- Sales of floors - - 173 

- FRA - - 20 

- Futures 340 - - 

- Swaptions - 518 - 

23,652 18,437 11,685 

174 


2. Maturities of hedging instruments as of December 31, 2002 

(in millions of euros) Total Within 1 year 1 to 5 years Beyond 5 years 

Currency risk 

Currency swaps 1,488 966 506 16 

Forward contracts 1,253 1,253 - - 

2,741 2,219 506 16 



- Interest rate swaps 23,120 11,153 11,967 - 

- Purchases of caps and collars 192 192 - - 

- FRA 340 340 - - 

23,652 11,685 11,967 - 


The net position of the finance companies in the main foreign 

currencies is as follows: 

(in millions of euros) GBP YEN USD CHF Others 

Total assets 1,184 - 12 291 - 

Total liabilities - (877) (269) - (107) 

Net position 

before hedging 1,184 (877) (257) 291 (107) 

Off-balance 

sheet position (1,184) 877 257 (291) 107 

Net position 

after hedging - - - - - 


(in millions d’euros) 

intraday 1 to More than 

to 1 year 5 years 5 years Total 

Total assets 14,135 5,047 76 19,258 

Total liabilities (14,724) (2,252) (516) (17,492) 

Net position 

before hedging (589) 2,795 (440) 1,766 

Off-balance 

sheet position 861 (1,267) 526 120 

Net position 

after hedging 272 1,528 86 1,886 

This table analyzes fixed rate assets and debt by maturity and 

adjustable rate assets and debts based on the next rate adjustment date. 

In the statement of off-balance sheet items, swaps and other derivative 

instruments are reported as positive amounts (lender leg) and negative 

amounts (borrower leg). 

A 1 point decrease in interest rates would have the effect of reducing 

net interest income by €0.7 million. 

The net position after hedging for assets and liabilities due in 1 to 

5 years corresponds to net assets covered by Banque PSA Finance 

Group shareholders’ equity. 

➔ Note 48 - Equity risk 

Equity risk corresponds to the price rise arising from an unfavorable 

change in the price of equities held by the Group. 


Equities and units 

in equity funds 

Own 

shares 

Net position - 

Assets 329 112 

Off-balance sheet position - - 

Total net position 329 112 

Sensitivity (3) (2) 

The portfolio of equities and units in equity funds includes €66 million 

worth of securities with limited liquidity (note 17), €236 million in 

listed equities carried in the balance sheet under short-term 

investments (note 27) and €27 million in equities under management. 

The portfolio of own shares being held for allocation on exercise of 

employee stock options (note 27). 

Equities are stated at the lower of cost and market. In substantially all 

cases, the market value net of a 10% discount exceeds the securities’ 

book value. Consequently, sensitivity of earnings to a fall in value is 

limited to €3 million. 

➔ Note 49 - Fair value of financial 

instruments 

The fair value of financial instruments held by the Group is estimated 

in accordance with SFAS 107. The fair value of financial instruments 

not intended to be sold is estimated only in cases where this is 

practicable based on market data. 


The main valuation methods applied are as follows: 

- shares in non-consolidated companies: as explained in note 1 n, these 

securities represent Group interests in subsidiaries that are not 

controlled by the Group. Their fair value cannot be estimated due to 

the absence of meaningful market data. 

- marketable securities and fixed rate debentures quoted on organized 

markets are valued at the year-end market price. 

- the fair value of fixed rate loans and borrowings with maturities in 

excess of three months is calculated by discounting future cash flows 

at year-end market rates of interest. The fair value of fixed rate loans 

and borrowings converted into variable rate loans and borrowings by 

means of interest rate swaps is close to their book value. 

- the fair value of variable rate loans and borrowings, cash and shortterm 

financing is considered as being equivalent to their book value. 

- the fair value of finance receivables is estimated by discounting 

future cash flows at the interest rates at which similar loans were 

granted at year-end. 

a) Balance sheet instruments 

As of December 31, the book values and fair values of balance sheet instruments were as follows: 


2002 2001 2000 

Book value Fair value Book value Fair value Book value Fair value 

ASSETS 


Receivables and investment securities 929 996 624 730 1,110 1,688 

Shares in non-consolidated companies 85 85 238 238 254 254 

Short-term loans 397 397 260 260 207 207 

Short-term investments 1,089 1,381 1,013 1,496 1,246 1,246 

Cash and cash equivalents 4,532 4,532 5,520 5,520 3,143 3,143 


Long-term loans and investment securities 196 196 201 201 222 222 

Finance receivables 15,732 15,926 15,740 15,861 14,155 14,201 

Other customer receivables 295 295 242 242 205 205 

Short-term investments 87 87 71 71 31 31 

Cash and cash equivalents 2,936 2,936 2,146 2,146 251 251 

LIABILITIES 


Other long-term borrowings 3,499 3,481 3,635 3,635 1,977 1,977 

Convertible debentures - - - - 113 113 

Current portion of long-term debt 311 311 299 299 408 408 

Short-term financing and bank overdrafts 2,451 2,451 3,920 3,920 2,924 2,924 


Borrowings 17,085 17,085 16,143 16,143 11,585 11,585 

Other financing liabilities 111 111 120 120 386 386 

b) Off-balance sheet instruments 

Derivative instruments not acquired as hedges of balance sheet positions 

consisted mainly of yen put options. The characteristics of these options 

are as follows: 


Nominal amount 765 453 431 

Premiums paid 20 12 13 

Fair value 43 17 12 

The characteristics of forward purchase and sale contracts and options 

entered into by Faurecia as hedges of commercial transactions in 

progress at December 31, 2002 and transactions planned in 2003 are 

as follows: 


Nominal amount 135 122 89 

Premiums paid - - - 

Fair value - (1) 2 

176 


➔ Note 50 - Commitments and contingencies 

a) Specific commitments 

Details of commitments related specifically to the following 

transactions are provided in the corresponding notes: 

- securitization of receivables by the manufacturing and sales 

companies – note 22-a 

- securitization of automobile loans by the finance companies – note 23-a 

- supplementary pension, retirement and other post-retirement 

obligations – note 46 

- management of foreign exchange and interest rate risks – note 47. 

b) Routine commitments 

The Group had routine commitments in the following amounts as of 

December 31, 2002, 2001 and 2000: 


Capital commitments for 

the acquisition of property, 

plant and equipment 2,083 1,961 1,719 

Orders for research and 

development work 40 - - 

Non-cancelable lease 

commitments 416 363 308 

Securities subscription and 

purchase commitments (1) 217 - - 

2,756 2,324 2,027 

Financing commitments to 

customers of finance 

companies 1,012 789 715 

Guarantees given 202 245 114 

Pledged or mortgaged assets (2) 458 973 912 

(1) In 2002, this commitment relates to the Chinese company Dongfeng Citroën 

Automotive Corp. – DCAC, accounted for by the equity method. 

(2) Details of pledged assets : 

Value 

(in millions of euros) Expiry of pledged Total 

date assets assets % 

Intangible assets N/A N/A 

Property, plant 

and equipment Indefinite 22 

Investments 2003 47 

2004 47 

2005 18 

2006 1 

2007 145 

2008 73 

2009 87 

> 2009 18 

436 

Total pledged assets 458 56,008 0.8 

c) Tax audit risks 

Group companies in France and in other countries are subject to 

regular tax audits. Potential reassessments resulting from these audits 

are reserved for. Reassessments by the tax authorities in the European 

Union usually relate to transfer prices. The Group considers that any 

such transfer price problems will be settled under the procedures 

provided for in international tax treaties and it should therefore be 

possible to avoid additional taxation. 

d) End-of-life vehicles 

European Directive 2000/53/EC of September 18, 2000 on end-of-life 

vehicles provides that: 

“Member States shall take the necessary measures to ensure that the 

delivery of the vehicle to an authorized treatment facility (…) occurs 

without any cost for the last holder and/or owner (…). 

Member States shall take the necessary measures to ensure that producers 

meet all, or a significant part of, the costs of the implementation of this 

measure and/or take back end-of life vehicles (…), 

- as from July 1, 2002 for vehicles put on the market as from this date, 

- as from January 1, 2007 for vehicles put on the market before 

July 1, 2002.” 

As of December 31, 2002 only four countries had transposed this 

Directive into national legislation: 

- for Austria and Norway the impact for the Group is not material, 

- for Germany a €6 million reserve has been booked representing the 

discounted value of estimated residual costs for the Group. This takes 

into account a €17 million saving due to the possibility of recycling 

catalytic converters, 

- for the Netherlands, a reserve of €37 million was booked at 

December 31, 2002, corresponding to the discounted value of the net 

residual cost potentially payable by the Group. 

In Spain, the royal decree concerning the transposition of the European 

Directive was signed on January 3, 2003. According to current 

estimates, any residual costs payable by the Group are not expected to 

be material. 

As of December 31, 2002, France had not yet transposed the Directive 

into national legislation. According to current estimates, based on the 

latest available draft of the applicable decree, the final cost to the 

Group will not be material. 

Certain countries such as Belgium, Denmark and Sweden have applied 

specific regulations concerning end-of-life vehicles for several years. 

Current commitments under these regulations do not give rise to any 

material residual costs for the Group. 

The actual costs that will be incurred in the other European Union 

countries cannot yet be reliably determined as no regulations are 

currently available. 


➔ Note 51 - Maturities of commitments 

The Group commitments analysed by maturity in the tables below are reported in the following notes: 

- Other borrowings of manufacturing and sales companies – notes 34 -a, 34-d 

- Financial company borrowings – note 36-a 

- Lines of credit – note 41 

- Off-balance sheet commitments – note 50. 

a) Contractual commitments 



Payments due by period 

Total Within 1 year 1 to 5 years More than 5 years 

Borrowings 3,810 311 1,741 1,758 

Obligations under finance leases 251 32 122 97 

Commitments under operating leases 416 72 167 177 

Irrevocable purchase commitments 2,340 2,340 - - 

Total 6,817 2,755 2,030 2,032 



Payments due by period 


Borrowings 17,085 10,067 6,386 632 

Total 17,085 10,067 6,386 632 

b) Other commercial commitments 



Commitments by period 


Confirmed lines of credit not utilized (commitments received) (8,190) (545) (7,645) - 

Guarantees - commitments given 660 114 278 268 


Financing commitments given to customers by the finance companies in the amount of €1,012 million have no fixed maturity. 

➔ Note 52 - Earnings per share 

a) Basic earnings per share are calculated on the basis of the average 

number of common shares outstanding during the year. 

The average number of shares is calculated by taking into account the 

number of shares issued and canceled during the period and the 

number of shares held in treasury stock (excluding shares acquired for 

allocation on exercise of stock options, which are carried in the balance 

sheet under “Short-term investments” (note 29-i)). 

The average number of shares outstanding in 2000 has been adjusted 

to take into account the July 1, 2001 six-for-one stock-split. 

b) Diluted earnings per share are calculated on the basis of the number 

of common shares that would be outstanding assuming the exercise of 

all stock options as described in note 29-e)1. 

1. Effect on the average number of shares of debenture 

conversions and the exercise of stock options 

2000 

2002 2001 proforma 

Average number of 

€1 par value shares 

outstanding 254,201,332 263,357,148 261,283,962 

Average number 

of 1994 convertible 

debentures outstanding N/A 1,122,305 11,780,178 

Dilutive effect of 

stock options 

determined by the 

treasury stock method N/A N/A 22,212 

Fully diluted average 

number of shares 254,201,332 264,479,453 273,086,352 

178 


2. Effect of debenture conversions and the exercise of stock 

options on net income 


Net income for the year 1,690 1,691 1,312 

Impact of conversion, net of tax - 1 9 

Total 1,690 1,692 1,321 

➔ Note 53 - Directors’ compensation 


Compensation paid to: 

- members of the 

management bodies 7.8 6.7 6.3 

- members of the 

Supervisory Board 0.5 0.5 0.3 

Total 8.3 7.2 6.6 

Members of management bodies include members of the Managing 

Board, the Executive Committee and Senior Management. 

As of December 31, 2002, members of the Group’s management bodies 

held 977,600 options to purchase shares of Peugeot S.A. granted under 

the plans set up since 1999 for certain managers and officers. 

As of December 31, 2001, members of the Group’s management bodies 

held 711,600 options to purchase shares of Peugeot S.A. granted under 

the plans set up in 1999, 2000 and 2001. 

As of December 31, 2000, members of the Group’s management 

bodies held options to purchase the equivalent of 405,600 new shares 

of Peugeot S.A. granted under the plans set up in 1999 and 2000. 

➔ Note 54 - Auditors’ fees 

Fees paid to the Group’s statutory auditors and other audit firms break down as follows for 2002: 


Audit 

Pricewaterhouse 

Coopers Constantin Ernst & Young Other Total 

Statutory audit and contractual audits 7.3 0.9 0.8 0.1 9.1 

Other engagements 2.2 - 0.3 - 2.5 

Sub-total 9.5 0.9 1.1 0.1 11.6 

Other services 

Tax and legal 1.4 - 0.3 - 1.7 

Internal audit 0.1 - 0.1 - 0.2 

Other advisory services 0.1 - 0.1 - 0.2 

Sub-total 1.6 - 0.5 - 2.1 

Total 11.1 0.9 1.6 0.1 13.7 

o/w Automotive Equipment division 5.0 - 1.6 - 6.6 

Other divisions 6.1 0.9 - 0.1 7.1 

➔ Note 55 - Subsequent events 

a) Dongfeng Peugeot Citroën Automobile – DPCA 

Further to the agreements signed on October 25, 2002 between 

PSA Peugeot Citroën and Dongfeng Motors, Dongfeng Citroën 

Automotive Corp. - DCAC was renamed Dongfeng Peugeot Citroën 

Automobile – DPCA on January 23, 2003. The company’s capital was 

increased and each of its majority stockholders raised their stake to 32%. 

During 2003, the Group’s interest should increase to 50%, following 

the buyout of interests currently held by partner banks. 

b) Closure of the La Française de Mécanique foundry 

La Française de Mécanique, a jointly-owned subsidiary of the 

PSA Peugeot Citroën and Renault groups, considers the likelihood of 

discontinuing its foundry business at the beginning of 2006. This 

decision is in line with the scale-up of mechanical engineering 

operations, in preparation for the production of a future gasoline 

engine developed jointly by PSA Peugeot Citroën and BMW. 


180 


F ive-year consolited statement of income 

(in millions of euros) 2002 2001 2000 1999 1998 


Net sales 52,906 50,288 42,978 36,740 33,076 

Operating expenses 

Cost of goods and services sold (40,196) (38,647) (31,946) (27,443) (24,937) 

Selling, general and administrative expenses (8,251) (7,504) (7,550) (6,408) (5,937) 

Research and development costs (1,865) (1,733) (1,625) (1,457) (1,301) 

(50,312) (47,884) (41,121) (35,308) (32,175) 

Operating margin 2,594 2,404 1,857 1,432 901 

Early-termination plan costs (158) (31) 32 (431) - 

Other income and (expenses), net 

Restructuring costs (124) (115) (41) (54) (66) 

Interest income (expense), net (25) (48) 86 (22) (24) 

Other income and (expenses), net 22 193 21 (1) (191) 

(127) 30 66 (77) (281) 

Income before tax of fully-consolidated companies 2,309 2,403 1,955 924 620 

Income taxes (666) (750) (601) (251) (252) 

Net income of fully-consolidated manufacturing 

and sales companies 1,643 1,653 1,354 673 368 


Revenues 

From third parties 1,530 1,375 1,203 1,067 682 

From Group manufacturing and sales companies 170 212 184 127 160 

1,700 1,587 1,387 1,194 842 

Operating expenses (1,381) (1,339) (1,123) (952) (651) 

Operating margin 319 248 264 242 191 

Other income and (expenses), net (3) (4) (3) (7) (1) 

Income before tax of fully-consolidated companies 316 244 261 235 190 

Income taxes (111) (85) (112) (105) (61) 

Net income of fully-consolidated finance companies 205 159 149 130 129 

Net income of fully-consolidated companies 1,848 1,812 1,503 803 497 

Net earnings of companies at equity 22 9 19 31 38 

Amortization of goodwill (163) (140) (199) (60) (41) 

Net income before minority interests 1,707 1,681 1,323 774 494 

(Income) loss attributable to minority interests (17) 10 (11) (45) (10) 

Net income 1,690 1,691 1,312 729 484 

Basic earnings per €1 par value share 

- average number of common shares outstanding 254,201,332 263,357,148 261,283,962 284,425,614 300,675,288 

- in euros, per share 6.65 6.42 5.02 2.56 1.61 


F ive-year consolidated balance sheet - Assets 



Goodwill 2,120 2,225 1,054 1,215 892 


Property, plant and equipment 11,545 11,461 10,359 9,454 9,336 

Investments 

Receivables and investment securities 929 624 1,110 1,172 935 

Investments in companies at equity 351 215 203 194 196 

Shares in non-consolidated companies 85 238 254 128 127 

Loans to Group finance companies - - 339 575 276 

1,365 1,077 1,906 2,069 1,534 

Other non-current assets 

Long-term deferred income taxes 308 184 86 118 297 

Other non-current assets 257 204 176 231 177 

565 388 262 349 474 

Current operating assets 

Inventories 6,167 6,218 5,171 4,100 4,016 

Accounts and notes receivables 3,381 3,451 2,962 2,642 2,390 

Short-term income tax assets 980 935 485 361 253 

Other receivables 2,619 2,585 2,207 1,794 1,119 

Receivables from Group finance companies 238 306 311 162 166 

13,385 13,495 11,136 9,059 7,944 


Loans 397 260 207 186 358 

Short-term investments 1,089 1,013 1,246 1,030 863 

Cash and cash equivalents 4,532 5,520 3,143 3,118 922 

Current accounts balances from Group finance companies 97 123 1,077 1,707 2,190 

6,115 6,916 5,673 6,041 4,333 

Total manufacturing and sales companies 35,289 35,745 30,526 28,292 24,532 


Goodwill 80 86 90 95 104 

Non-current assets 


Property, plant and equipment 51 52 131 126 117 


Other 202 206 225 363 273 

330 308 404 521 432 

Customer receivables 

Finance receivables 15,732 15,740 14,155 12,182 10,393 

Other customer receivables 295 242 205 309 209 

Receivables from manufacturing and sales 208 241 299 323 - 

16,235 16,223 14,659 12,814 10,602 

Other operating assets 

Short-term income tax assets 63 53 16 17 14 

Other receivables 923 742 550 512 367 

Receivables from manufacturing and sales 65 41 99 216 415 

1,051 836 665 745 796 


Short-term investments 87 71 31 99 727 

Cash and cash equivalents 2,936 2,146 251 231 156 

Receivables from manufacturing and sales companies - 1 13 - - 

3,023 2,218 295 330 883 

Total finance companies 20,719 19,671 16,113 14,505 12,817 

Total assets 56,008 55,416 46,639 42,797 37,349 

182 


F ive-year consolidated balance sheet - Liabilities and 

stockholders’ equity 


Stockholders' equity 

Common stock 259 259 278 273 267 

Capital in excess of par value of stock - - 276 149 822 

Retained earnings 11,875 10,479 9,515 8,383 7,698 

Treasury stock (568) (51) (507) (250) - 

Cumulative translation adjustment (582) (405) (201) (223) (285) 

10,984 10,282 9,361 8,332 8,502 


Minority interests 640 689 579 585 493 


Long-term deferred income taxes 1,104 1,163 1,129 1,187 1,377 

Reserves for contingencies and liabilities 1,727 1,394 1,322 1,459 1,118 

Other long-term liabilities 95 69 70 68 72 

2,926 2,626 2,521 2,714 2,567 

Long-term debt 3,499 3,635 1,977 2,653 2,539 

Current liabilities 

Accounts and notes payable 9,912 9,173 8,503 7,117 5,854 

Short-term income tax liabilities 646 808 625 185 126 

Other payables 5,228 5,409 4,413 4,389 3,283 

Due to Group finance companies 84 86 117 97 92 

15,870 15,476 13,658 11,788 9,355 

Short-term debt 

Convertible debentures - - 113 - - 

Current portion of long-term debt 311 299 408 566 232 

Short-term financing and bank overdrafts 2,451 3,920 2,924 2,470 1,568 

Bank overdrafts from Group finance companies 189 197 293 442 323 

2,951 4,416 3,738 3,478 2,123 

Total manufacturing and sales companies 25,886 26,842 22,473 21,218 17,077 


Minority interests 91 103 79 64 42 

Subordinated perpetual securities - - - 183 183 



Reserves for contingencies and liabilities 53 45 31 31 29 

Other long-term liabilities - 14 - - - 

203 181 150 112 90 

Financing liabilities 

Borrowings 17,085 16,143 11,585 9,401 7,547 

Other financing liabilities 111 120 386 261 660 

Bank overdrafts 86 125 68 91 81 

Current account advances from manufacturing and 

sales companies 45 109 1,438 2,041 - 

17,327 16,497 13,477 11,794 8,288 

Customer deposits 

Customer deposits 113 85 99 57 67 

Deposits from Group manufacturing and sales companies 52 14 - - - 

165 99 99 57 67 

Other operating liabilities 

Short-term income tax liabilities 64 106 43 49 52 

Other payables 1,050 1,000 667 585 416 

Due to Group manufacturing and sales companies 238 306 290 403 2,632 

1,352 1,412 1,000 1,037 3,100 

Total finance companies 19,138 18,292 14,805 13,247 11,770 

Total liabilities and stockholders’ equity 56,008 55,416 46,639 42,797 37,349 


F ive-year consolited statement of cash flows 



Net income of fully-consolidated companies 1,643 1,653 1,354 673 368 

Adjustments to reconcile net income to net cash 

provided by operations 

- Depreciation and amortization 2,165 1,974 1,877 1,771 1,805 

- Net increase (decrease) in allowances and reserves 352 8 (158) 264 (102) 

- Change in long-term deferred income taxes (80) (107) (32) (14) 93 

- (Gains) losses on disposals of assets and other (17) (88) 186 (17) (176) 

Dividends received from companies at equity (4) - (6) 5 (13) 

Working capital provided by operations 4,059 3,440 3,221 2,682 1,975 

Change in operating assets and liabilities 330 (422) (238) 1,354 1,079 

Net cash provided by operations - manufacturing and 

sales companies 4,389 3,018 2,983 4,036 3,054 

Proceeds from disposals of non-consolidated companies 5 23 23 5 2 

Proceeds from disposals of subsidiaries - - 30 91 - 

Proceeds from disposals of property, plant and equipment 172 443 100 179 82 

Capital expenditure (2,790) (2,938) (2,898) (1,971) (1,638) 

Acquisitions of shares in subsidiaries (56) (1,575) (18) (259) (1,166) 

Investments in non-consolidated companies (25) (33) (164) (5) (19) 

Effect of changes in scope of consolidation and other (268) 54 (134) (31) 530 

Net cash used by investing activities - manufacturing and 

sales companies (2,962) (4,026) (3,061) (1,991) (2,209) 


Net income of fully-consolidated companies 205 159 149 130 129 

Adjustments to reconcile net income to net cash 34 1 73 84 21 

Working capital provided by operations 239 160 222 214 150 

Change in operating assets and liabilities 557 1,660 (887) (344) 909 

Net cash provided (used) by operations - 

finance companies 796 1,820 (665) (130) 1,059 

Net cash provided (used) by investing activities - 

finance companies 80 68 104 (56) (501) 

GROUP 

Dividends paid: 

- to Peugeot S.A. stockholders (294) (217) (118) (73) (23) 

- to minority stockholders of consolidated companies (43) (13) (12) (37) (12) 

Issuance of shares - 109 132 3 - 

Purchases of treasury stock (517) (458) (257) (953) - 

Buybacks of convertible debentures - - (555) - - 

Change in other financial assets and liabilities (1,666) 3,872 1,468 1,266 (1,773) 

Other 46 123 38 186 146 

Net cash provided (used) by financing activities (2,474) 3,416 696 392 (1,662) 

Effect of exchange rate changes (27) (24) (12) 20 48 

Increase (decrease) in cash and cash equivalents (198) 4,272 45 2,271 (211) 

Cash and cash equivalents at beginning of period 7,666 3,394 3,349 1,078 1,289 

Cash and cash equivalents at period-end 7,468 7,666 3,394 3,349 1,078 

184 


C onsolidated companies as at December 31, 2002 

F : fully consolidated 

Company 

HOLDING COMPANY AND OTHER 

E : accounted for by the equity method 

Percent Percent 

F/E controlled consolidated 

Peugeot S.A. - - 

Paris - France 

Grande Armée Participations 

Paris - France F 100.00 100.00 

PSA International S.A. 

Geneva - Switzerland F 99.87 99.87 

G.I.E. PSA Trésorerie 

Paris - France F 100.00 99.97 

Financière Pergolèse 

Paris - France F 100.00 100.00 

D.J. 06 

Paris - France F 100.00 100.00 

Pergolèse Investissement 

Paris - France F 100.00 100.00 

GIMP 

Paris - France F 100.00 100.00 

D.J. 10 

Paris - France F 100.00 100.00 

Pergolèse Immobilier 

Paris - France F 100.00 100.00 

D.J. 11 

Paris - France F 100.00 100.00 

Pergolèse International 

Paris - France F 100.00 100.00 

Société Anonyme de Réassurance 

Luxembourgeoise - Saral 

Luxemburg - Luxemburg F 100.00 100.00 

Process Conception Ingénierie S.A. 

Paris - France F 100.00 100.00 

Process Conception Ingénierie GmbH 

Wiesbaden - Germany F 100.00 100.00 

PCI do Brasil Ltda 

Rio de Janeiro - Brazil F 100.00 100.00 

PCI Argentina S.A. 

Buenos Aires - Argentina F 100.00 100.00 

Société de Construction d’Equipements de 

Mécanisations et de Machines - SCEMM 

Saint-Etienne - France F 100.00 100.00 

Peugeot Citroën Moteurs 

Nanterre - France F 99.99 99.99 

Société de Constructions Mécaniques 

Panhard & Levassor 


Peugeot Motocycles 

Mandeure - France F 74.99 74.99 

Peugeot Motocycles Italia S.p.A. 

Milan - Italy F 100.00 76.24 

Peugeot Motocycles Deutschland 

Walldorf - Germany F 100.00 74.97 

Company 



AUTOMOBILE DIVISION 

Peugeot Citroën Automobiles S.A. 

Paris - France F 100.00 100.00 

Peugeot Citroën Sochaux S.N.C. 

Paris - France F 100.00 100.00 

Peugeot Citroën Mulhouse S.N.C. 

Paris - France F 100.00 100.00 

Peugeot Citroën Aulnay S.N.C. 

Paris - France F 100.00 100.00 

Peugeot Citroën Rennes S.N.C. 

Paris - France F 100.00 100.00 

Peugeot Citroën Poissy S.N.C. 


Peugeot Citroën Mécanique 

du Nord Ouest S.N.C. 

Paris - France F 100.00 100.00 

Peugeot Citroën Mécanique de l'Est 

S.N.C. 

Paris - France F 100.00 100.00 

Société Mécanique Automobile de l'Est 

Trémery - France F 100.00 100.00 


Légers du Nord - Sevelnord 

Paris - France E 50.00 50.00 

Talbot 


Società Europea Veicoli Leggeri - 

Sevel S.p.A. 

Atessa - Italy E 50.00 50.00 

G.I.E. PSA Peugeot Citroën 

Paris - France F 100.00 100.00 

Gisevel 


Sevelind 


Francaise de Mécanique 

Douvrin - France E 50.00 50.00 

Société de Transmissions Automatiques 

Barlin - France E 20.00 20.00 

Siemens Automotive Hydrolics 

Asnières - France E 48.00 48.00 

Sora S.A. 

Poissy - France F 99.88 99.88 

Peugeot Citroën Logistic Deutschland 

Saarbrucken - Germany F 100.00 100.00 

Peugeot Citroën Automobiles UK 

Coventry - United Kingdom F 100.00 100.00 

Peugeot Citroën Automoviles España S.A. 

Madrid - Spain F 100.00 100.00 

Sogedac España 

Villaverde - Spain F 99.99 99.99 

Toyota Peugeot Citroën Automobile 

Kolin - Czech Republic E 50.00 50.00 


Company 



Peugeot Citroën do Brasil Automoveis 

São Paulo - Brazil F 100.00 100.00 

Peugeot Citroën Argentina S.A. 


Cociar S.A. 


Aupe S.A. 


Cisa 


Dongfeng Citroën Automotive Corp. 

- DCAC 

Wuhan - China E 26.88 26.88 

Automobiles Peugeot 

Paris - France F 100.00 100.00 

Peugeot Motor Company Plc 


Peugeot Securities Ltd 


Société Commerciale Paris Franche-Comté 


Botzaris Automobiles 


Société Commerciale Automobile 

Paris - France F 100.00 100.00 

Parisud S.A. 

Malakoff - France F 99.88 99.86 

Sodexa 

Courbevoie - France F 99.99 99.99 

Seine et Marne Automobile 

Le Vert Saint-Denis - France F 99.99 99.98 

Société Brestoise des Garages de Bretagne 

Brest - France F 100.00 100.00 

Etablissements Boniface 

Saint-Etienne - France F 99.92 99.92 

Société Industrielle Automobile 

de Champagne 

Cormontreuil - France F 99.76 99.76 

Société Industrielle Automobile du Havre 

Le Havre - France F 99.98 99.98 


du Languedoc 

Toulouse - France F 99.89 99.89 


de Lorraine 

Vandoeuvre-Les-Nancy - France F 99.99 99.99 


de Mulhouse 

Mulhouse - France F 100.00 100.00 

Société Industrielle Automobile du Nord 

Lille - France F 99.99 99.99 

Nord Cotentin Automobile 

Tourlaville - France F 100.00 100.00 

Company 



Peugeot Systèmes 

Paris - France F 100.00 100.00 


de Normandie 

Rouen - France F 99.95 99.95 


de l'Ouest 

Orvault - France F 99.99 99.99 


Paris Nord 



de Provence 

Marseille - France F 99.74 99.74 


du Sud-Ouest 

Le Bouscat - France F 99.99 99.99 

Société Lyonnaise d'Industrie 

et de Commerce Automobile 

Vénissieux - France F 99.92 99.91 

Régionale Francaise Automobile 

Cesson Sévigné - France F 99.67 99.67 

Grands Garages de l'Hérault 

Montpellier - France F 99.99 99.99 

Grands Garages de Nice et du Littoral 

Nice - France F 99.90 99.90 

Peugeot Belgique Luxembourg S.A. 

Nivelles - Belgium F 100.00 100.00 

S.A. Peugeot Distribution Service N.V. 

Brussels - Belgium F 100.00 100.00 

Peugeot Nederland N.V. 

Utrecht - Netherlands F 100.00 100.00 

Peugeot Deutschland GmbH 


Peugeot Bayern GmbH 


Peugeot Berlin Brandenburg GmbH 


Peugeot Westfalen GmbH 


Peugeot Niederrhein GmbH 


Peugeot Main / Taunus GmbH 


Peugeot Freiburg GmbH 


Peugeot Hanse GmbH 


Peugeot Nordhessen GmbH 

Nordhessen - Germany F 100.00 99.99 

Peugeot Hannover GmbH 


186 


Company 



Peugeot Rheinland GmbH 


Peugeot Rein-Neckar GmbH 

Rein-Neckar - Germany F 100.00 99.99 

Peugeot Saartal GmbH 


Peugeot Sachsen GmbH 

Sachsen - Germany F 100.00 99.99 

Peugeot Schwaben GmbH 


Peugeot Weser-Ems GmbH 

Weser-Ems - Germany F 100.00 99.99 

Peugeot Mainz Wiesbaden GmbH 


Peugeot Automobili Italia S.p.A. 

Milan - Italy F 100.00 100.00 

Peugeot Milan 

Milan - Italy F 100.00 99.98 

Peugeot Gianicolo S.p.A. 

Rome - Italy F 100.00 99.98 

Talbot Exports Ltd 


Robins and Day Ltd 


Realtal UK Ltd 


Palmer (St Albans) Ltd 


Melvin Motors Ltd 


Robins and Day Investments Ltd 


Boomcite Ltd 


Richard Rhodes (Wigan) Ltd 


Mike Thompson (Stafford) Ltd 


David Kerr (Chelmsford) Ltd 


Peter Ambrose (Castleford) Ltd 


Telford Motors Ltd 


Peugeot España S.A. 

Madrid - Spain F 100.00 100.00 

Urbanizadora Pozo Blanco 

Madrid - Spain F 100.00 100.00 

Hispanomocion S.A. 

Madrid - Spain F 100.00 100.00 

Peugeot Portugal Automoveis S.A. 

Lisbon - Portugal F 100.00 100.00 

Company 



Peugeot (Suisse) S.A. 

Bern - Switzerland F 100.00 100.00 

Lowen Garage AG 

Bern - Switzerland F 99.00 97.00 

Acacias Motors S.A. 


Peugeot Austria GmbH 

Vienna - Austria F 100.00 100.00 

Peugeot Autohaus GmbH 


Peugeot Polska S.p.Z.o.o. 

Warsaw - Poland F 100.00 100.00 

Peugeot Ceska Republica S.r.o. 

Prague - Czech Republic F 100.00 100.00 

Peugeot Slovakia 

Brastislava - Slovakia F 100.00 100.00 

Peugeot Hungaria Kft 

Budapest - Hungary F 100.00 100.00 

Peugeot Slovenija d.o.o. P.Z.D.A. 

Ljubljana - Slovenia F 100.00 100.00 

Peugeot Hrvatska d.o.o. 

Zagreb - Croatia F 100.00 100.00 

Peugeot Otomotiv Pazarlama AS - POPAS 

Istanbul - Turkey F 60.00 60.00 

Peugeot Algerie S.p.A. 

Alger - Algeria F 99.99 99.99 

Peugeot Egypte S.A.E. 

Cairo - Egypt F 90.09 90.09 

Peugeot Motors of America 

Little Falls - United States F 100.00 100.00 

Peugeot Chile 

Santiago of Chile - Chile F 96.92 96.92 

Automotores Franco Chilena S.A. 

Santiago of Chile - Chile F 100.00 99.73 

Peugeot Mexico 

Mexico - Mexico F 100.00 100.00 

Peugeot Japan KK Co Ltd 

Tokyo - Japan F 100.00 100.00 

Peugeot Motors South-Africa 

Johannesburg - South Africa F 100.00 100.00 

Automobiles Citroën 

Paris - France F 100.00 100.00 

Société Commerciale Citroën 


Citroën Champ de Mars 


Citer 


Citroën Paris 

Paris - France F 100.00 100.00 

Citroën Belux S.A. - N.V. 



Company 



Société Belge des Automobiles Citroën 


Citroën Nederland B.V. 

Amsterdam - Netherlands F 100.00 100.00 

Citroën Deutschland AG 

Cologne - Germany F 99.95 99.95 

Citroën Commerce GmbH 

Cologne - Germany F 100.00 99.95 

Citroën Italia S.p.A. 

Milan - Italy F 100.00 100.00 

Citroën U.K.Ltd 


Citroën Sverige AB 

Vallingby - Sweden F 100.00 100.00 

Citroën Danmark A/S 

Copenhagen - Denmark F 100.00 100.00 

Citroën Norge A/S 

Skaarer - Norway F 100.00 100.00 

Citroën (Suisse) S.A. 


Citroën Osterreich GmbH 


Citroën Lusitania S.A. 

Mangualde - Portugal F 84.48 84.39 

Automoveis Citroën S.A. 


Automoviles Citroën España 

Madrid - Spain F 99.62 99.62 

Comercial Citroën S.A. 


Autotransporte Turistico Español S.A. 

(Atesa) 


Garaje Eloy Granollers S.A. 

Granollers - Spain F 100.00 99.41 

Motor Talavera 

Talavera - Spain F 100.00 99.41 

Rafael Ferriol S.A. 

Alboraya - Spain F 100.00 99.41 

Citroën Hungaria Kft 

Budapest - Hungary F 100.00 100.00 

Citroën Polska S.p.Z.o.o. 


Citroën Slovenija d.o.o. 

Komer - Slovenia F 100.00 100.00 

Citroën - Hrvatska d.o.o. 

Zagreb - Croatia F 100.00 100.00 

Citroën Slovakia S.r.o. 

Brastislava - Slovakia F 100.00 100.00 

Citroën Tchéquie 

Prague - Czech Republic F 100.00 100.00 

Company 



Citroën do Brasil 


AUTOMOTIVE EQUIPMENT 

Faurecia 

Boulogne-Billancourt - France F 71.50 71.50 

Faurecia Investments 


Financière Faurecia 


Société Financière pour l'Equipement 

Automobile SFEA 


Faurecia Sièges d'Automobiles S.A. 


Faurecia Systèmes d'Echappement 


Blériot Investissements 


Faurecia Services Groupe 


Siemar 

Sandouville - France F 100.00 71.50 

Faurecia Industries 


Trecia 

Etupes - France F 100.00 71.50 

Siebret 

Redon - France F 100.00 71.50 

Sielest 

Pulversheim - France F 100.00 71.50 

Siedoubs 

Montbeliard - France F 100.00 71.50 

Sienor 

Lieu Saint Amand - France F 100.00 71.50 

Sieval 


Sieto 

Somain - France F 100.00 71.50 

Société de Textile de l'Ostrevant Sotexo 

Somain - France F 100.00 71.50 

Sieloir 

Romorantin - France F 100.00 71.50 

ECSA - Etudes et Construction 

de Sièges pour l'Automobile 

Crevin - France F 100.00 71.50 

EAK - Composants pour l'Automobile S.A. 

Valentigney - France F 51.00 36.47 

EAK - Composants pour l'Automobile S.N.C. 

Valentigney - France F 51.00 36.47 

Faurecia Automotive Interieur France 


188 


Company 



Faurecia Automotive Holding 


Faurecia Intérieur Industrie 


Faurecia Automotive Industrie 


SAI Automotive Sandouville 


SAS Automotive France 

Nanterre - France E 48.41 34.61 

Sté Automobile du Cuir de Vesoul 

Vesoul - France F 100.00 71.50 

Société Internationale 

de Participations S.I.P. 


Faurecia Industrie N.V. 

Gent - Belgium F 96.82 69.23 

SAI Automotive Silux 

Eselborn - Luxemburg F 96.82 69.23 

Faurecia Autositze GmbH & Co KG 

Stadthagen - Germany F 100.00 71.50 

Faurecia Kunstoffe 

Automobilsysteme GmbH 

Ingolstadt - Germany F 100.00 71.50 

Faurecia Abgastechnik GmbH 

Furth - Germany F 100.00 71.50 

Leistritz Abgastechnik Stollberg GmbH 

Pfaffenhain - Germany F 100.00 71.50 

Faurecia Deutschland Holding 

GmbH & Co KG 


Faurecia Innenraum Systeme Köln 

GmbH Cologne - Germany F 96.82 69.23 

Faurecia Innenraum Systeme 

Emden GmbH 

Emden - Germany F 100.00 71.50 

ECIA GmbH 

Furth - Germany F 100.00 71.50 

SIP Verwaltungs GmbH 


A.P. Parts Europe GmbH 

Aachen - Germany F 100.00 71.50 

A.P. Parts Europe Technical Center GmbH 

Aachen - Germany F 100.00 71.50 

SAI Automotive AG 

Frankfurt - Germany F 96.82 69.23 

SAI Automotive Wörth 

Wörth am Rhein - Germany F 96.82 69.23 

SAI Automotive SAL GmbH 

Wörth am Rhein - Germany F 96.82 69.23 

SAI Automotive Peine GmbH 

Peine - Germany F 96.82 69.23 

Company 



SAI Automotive TDW GmbH 

Sassenburg - Germany F 96.82 69.23 

SAI Automotive VWM GmbH 

Hameln - Germany F 96.82 69.23 

SAS Autosystemtechnik GmbH & Co KG 

Karlsrühe - Germany E 48.41 34.61 

SAS Autosystemtechnik Verwaltung 

Karlsrühe - Germany E 48.41 34.61 

Faurecia Netherland Holding B.V. 

Roermond - Netherlands F 100.00 71.50 

Faurecia Exhaust Systems B.V. 

Roermond - Netherlands F 100.00 71.50 

Faurecia Exhaust Systems A.B. 

Torsas - Sweden F 100.00 71.50 

Sai Automotive SAL Sweden A.B. 


United Parts Exhaust Systems A.B. 


Faurecia Asientos para Automovil 

España 


Asientos de Castilla Leon S.A. 


Asientos de Galicia S.L. 

Vigo - Spain F 100.00 71.50 

Asientos del Norte S.A. 

Vitoria - Spain F 100.00 71.50 

Industrias Cousin Frères S.L. 

Burlada - Spain F 50.01 35.76 

Tecnoconfort 

Pamplona - Spain F 50.00 35.75 

Faurecia Sistemas de Escape España S.A. 

Vigo - Spain F 100.00 71.60 

Armaduras de Asientos Ardasa S.A. 

Burgos - Spain E 49.99 35.74 

Faurecia Automotive España S.A. 


SAI Automotive Lignotock 

Valencia - Spain F 96.82 69.23 

SAI Automotive SALC España S.A. 


Cartera Inversiones Enrich S.A. 


Component de Vehicules de Galicia 

Porrino - Spain E 48.41 34.61 

Copo Iberica S.A. 

Vigo - Spain E 34.00 24.31 

Sas Autosystem Technick S.A. 

Pamplona - Spain E 48.41 34.61 

Valencia Modulos de Puerta S.L. 



Company 



Faurecia Assentos de Automovel Limitada 

Sao Jao de Madeira - Portugal F 99.99 71.49 

Faurecia Sistemas de Escape 

Portugal LDA 

Concelho de Bragança - Portugal F 100.00 71.50 

Sasal 

Sao Jao de Madeira - Portugal F 99.99 71.49 

Vanpro Assentos Limitada 

Palmela - Portugal E 50.00 35.75 

SAI Automotive Portugal 

Palmela - Portugal F 96.82 69.23 

SAS Palmela 

Palmela - Portugal E 48.41 34.61 

Faurecia Automotiv Seating UK Ltd 


Faurecia Midlands Ltd 


SAI Automotive Telford Ltd 

Telford - United Kingdom F 96.82 69.23 

SAI Automotive Fradley Ltd 

Fradley - United Kingdom F 96.82 69.23 

SAI Automotive Washington Ltd 

Washington - United Kingdom F 96.82 69.23 

SAI Automotive SAL UK Ltd 

Billericay - United Kingdom F 96.82 69.23 

Faurecia Fotele Samachodowe Sp.Z.o.o. 

Grojec - Poland F 100.00 71.50 

Faurecia Walbrzych Sp.Z.o.o. 

Walbrzych - Poland F 100.00 71.50 

Faurecia Gorzow Sp.Z.o.o. 

Gorzow - Poland F 96.82 69.23 

SAI Automotive Polska Sp.Z.o.o. 

Legntza - Poland F 96.82 69.23 

Faurecia Systemy Klerowricze Sp.Z.o.o. 

Walbrzych - Poland F 100.00 71.50 

SAI Automotive Bratislava S.r.o. 

Bratislava - Slovakia F 96.82 69.23 

Faurecia Magyarorszag 

Kipufogo-Rendszer Kft 

Vasvar - Hungary F 100.00 71.50 

Faurecia Exhaust Systems S.r.o. 

Bakov - Czech Republic F 100.00 71.50 

Faurecia Lecotex 

Tabor - Czech Republic F 95.93 68.59 

SAI Automotive Bohemia S.r.o. 

Mlada Boleslav - Czech Republic F 96.82 69.23 

SAS Autosystemtechnik S.r.o. 

Mlada Boleslav - Czech Republic E 48.41 34.61 

Teknik Malzeme 

Bursa - Turkey E 50.00 35.75 

Sté Tunisienne d'Equipements 

d’Automobile 

Ben Arous - Tunisia F 100.00 71.50 

Company 



SAI Automotive Polifleks 

Istanbul - Turkey F 96.82 69.23 

Faurecia Automotive Seating Canada Ltd 

Mississauga - Canada F 100.00 71.50 

Faurecia Canada Investment Company 

Montreal - Canada F 100.00 71.50 

WBF Technologies 

Mississauga - Canada E 49.99 35.74 

Faurecia USA Holding Inc. 

Wilmington - United States F 100.00 71.50 

Faurecia Automotive Holding Inc. 


Faurecia Automotiv Seating Inc. 

Troy - United States F 100.00 71.50 

Dynamec Inc. 


Faurecia E.S. Holdings 

Dover - United States F 100.00 71.50 

Faurecia Exhaust Systems Inc. 


SAI Automotive USA Inc. 

Farnington Hills - United States F 96.82 69.23 

SAI Automotive Fountain Inn 

Fountain Inn - United States F 96.82 69.23 

SAI Automotive USA SAL Inc. 


Faurecia Bancos para Automoveis Ltda 

Quatro-Barras - Brazil F 100.00 71.50 

Faurecia Sistemas de Escapamento 

do Brasil Ltda 


SAI Automotive do Brasil Ltda 

São Jose Dos Pinhais Pr - Brazil F 96.82 69.23 

SAS Automotive SAL Americana 

Latina Ltd 

Sâo Jose Dos Pinhais Pr - Brazil F 100.00 71.50 

SAS Automotive do Brasil 

Sâo Jose Dos Pinhais Pr - Brazil E 48.41 34.61 

Faurecia Sistemas de Escape Argentina S.A. 


Bertrand Faure Argentina S.A. 

Buenos Aires - Argentina E 50.00 35.75 

PAB S.A. 


SAS Automotriz Argentina 


Sommer Allibert Duroplast 

Puebla - Mexico F 48.41 34.61 

Servicios Sommer Allibert 

Puebla - Mexico F 48.41 34.61 

SAS Automotive Systems S.A. de C.V. 

Mexico - Mexico E 100.00 71.50 

190 


Company 



SAI Automotive SAL de Mexico 

S.A. de C.V. 

Mexico - Mexico F 100.00 71.50 

SAI Automotive SAL Japan KK 

Tokyo - Japan F 90.00 64.35 

Daeki Faurecia Corp. 

Shiheung City - Korea E 49.00 35.04 

Faurecia Automotiv Seating 

India Private Ltd 

Bangalore - India F 100.00 71.50 

Faurecia Exhaust Systems 

South Africa Ltd 

Johannesburg - South Africa F 100.00 71.50 

SAI Autoplastic 

Port Elisabeth - South Africa F 96.82 69.23 

TRANSPORTATION AND LOGISTICS 

Gefco 

Courbevoie - France F 99.96 99.96 

Gefco Benelux S.A. 

Ath - Belgium F 100.00 99.93 

Gefco Deutschland GmbH 

Morfelden - Germany F 100.00 99.95 

Gefco Deutschland GmbH & Co KG 

Morfelden - Germany F 74.86 74.86 

Gefco Suisse S.A. 

Fahy - Switzerland F 100.00 99.95 

Gefco Italia S.p.A. 

Milan - Italy F 100.00 99.93 

Gefco U.K. Ltd 

London - United Kingdom F 100.00 99.93 

Gefco España S.A. 


Gefco Portugal 


Gefco Polska Sp.Z.o.o. 

Warszaw - Poland F 100.00 99.95 

Gefco Maroc 

Casablanca - Morocco F 100.00 99.95 

Gefco Participacoes Ltda 


Gefco do Brasil Ltda 


Gefco Argentina S.A. 


FINANCE COMPANY 

Banque PSA Finance 

Paris - France F 100.00 100.00 

Société Financière de Banque - Sofib 

Paris - France F 100.00 100.00 

Company 



Sofira - Société de Financement 

des Réseaux Automobiles 

Paris - France F 100.00 100.00 

Société Nouvelle de Développement 

Automobile - SNDA 

Paris - France F 100.00 100.00 

Compagnie Générale de Crédit 

aux Particuliers - Crédipar 

Levallois-Perret - France F 100.00 100.00 

Dicoma 


Loca-Din 


Compagnie pour la Location 

de véhicules - CLV 


Assupar 


PSA Finance Belux 


PSA Finance Nederland B.V. 

Rotterdam - Netherlands F 100.00 100.00 

PSA Financial Holding B.V. 


Peugeot Finance International N.V. 


PSA Finance Deutschland GmbH 

Neu-Isenburg - Germany F 100.00 100.00 

Peugeot Commercial Paper GmbH 

Francfort - Germany F 100.00 100.00 

PSA Finance Italia S.p.A. 

Milan - Italy F 100.00 100.00 

PSA Gestcredit Italia S.p.A. 

Milan - Italy F 100.00 100.00 

PSA Wholesale Ltd 


PSA Finance Plc 


Vernon Wholesale Investments Co Ltd 


PSA Finance Suisse S.A. 

Ostermudigen - Switzerland F 100.00 100.00 

PSA Finance Austria Bank AG 


PSA Gestao Comercio e Aluger de Veiculos 


PSA Finance Polska 


Banco PSA Finance Brasil S.A. 


PSA Finance Arrendamiento Comercial 


PSA Finance Argentina 



E mployee Relations Indicators 

1 

The following employee relations indicators comply with French decree 

no. 2002-221 of February 20, 2002. They have been prepared on the 

basis of data from all the companies fully consolidated by 

PSA Peugeot Citroën, other than Faurecia, the Group’s automotive 

equipment division. Faurecia, a listed company that is 72%-owned by 

Peugeot S.A., manages its business independently of the Group and 

therefore prepares and publishes its own indicators in its annual report. 

Employees 

1.1. Number of employees on the payroll (1) 

Employees on Europe Outside 

the payroll in 2002 France outside France Europe Total 

Automobile Division 96,160 33,800 3,920 133,880 

Finance Companies 930 1,190 40 2,160 

Transportation 

and Logistics 4,690 3,110 250 8,050 


Total 103,980 38,150 4,240 146,370 

Automotive 

Equipment 19,700 25,850 6,680 52,230 

The total number of employees increased by more than 6,000 in 2002. 

Over the past five years, headcount has risen by more than 58,000 

people, including 16,100 in the Automobile Division. 

Some 70,500 people have been hired since January 1, 1998, of which 

16,700 in 2002 alone. 

The Group is a source of new employment. Excluding acquisitions and 

disposals, a net 25,000 jobs have been created over the past five years, 

primarily outside France. Of these, 14,000 have been in the 

Automobile Division. 

(1) 

Scope includes all worldwide operations in the Automobile Division, finance 

companies, the Transportation and Logistics business and other businesses. 

Employees on the payroll include around 7,000 people hired under fixed-term 

contracts (see table 1.3). 

1.2. Employees by age 

1.3. Employees hired under fixed-term contracts (1) 

Outside 

France France Total 

Automobile Division 1,800 4,930 6,730 

Finance Companies 10 100 110 


Other Businesses 40 0 40 

Total 1,970 5,200 7,170 

(1) 

Annual average. 

In 2002, there were 2,800 “eventuales” employees in Spain. Most of 

them worked at the Vigo plant, which does not use temporary 

employees. In addition, the three-year “convenio” agreements call for 

the hiring of 1,300 “eventuales” employees under permanent contracts 

at the Vigo and Madrid plants. 

1.4. Temporary employees (2) Outside 


Automobile Division 12,100 350 12,450 


Transportation and Logistics 720 420 1,140 


Total 12,860 790 13,650 

(2) 

Annual average. 

Temporary or fixed-term employees are hired in response to new model 

introductions, fluctuations in demand or the need to replace absent 

employees, particularly during vacation periods. In 2002, more than 

2,500 employees in France were hired under permanent contracts 

following a temporary or fixed-term assignment. The number of hirings 

after a fixed-term assignment has quintupled over the past four years. 

1.5. Part-time employees 

A part-time employee is one who works fewer hours, calculated weekly 

or on the basis of an average over a period of up to one year, than a 

comparable full-time employee. 

Part-time employees 

Outside 

in 2002 France France Total 

Automobile Division 2,190 1,830 4,020 




Total 2,320 2,140 4,460 

The age pyramid is well balanced, with 34,000 employees under 30. 

Of the 1,830 part-time employees outside France, 1,610 work on a 

part-time night shift at the Vigo plant. In the Automobile Division, half 

of all part-time employees work half-time and more than 44% work 

4/5ths time. 

192 


Recruitments (1) 

2 4 

Disabled employees 

2.1. Recruitments in 2002 

Recruitments in 2002 

Europe Outside Outside Total 

France France Europe 

Automobile Division 6,120 2,860 820 9,800 

Finance Companies 130 110 10 250 


and Logistics 510 530 60 1,100 

Other Businesses 80 10 0 90 

Total 6,840 3,510 890 11,240 

Automotive 

Equipment 5,500 

(1) 

Excluding hirings under fixed-term contracts and in the automotive equipment 

division. 

In the past four years, more than 44,000 people (2) have been hired 

across the Group, of which 30% outside France. Nearly 30% of people 

hired in the Automobile Division in France were involved in design and 

engineering. More than 52% were hired in manufacturing, 16% in 

sales and marketing and 2% in support functions. PSA Peugeot Citroën 

has not encountered any major difficulties in attracting applicants to fill 

its staffing needs. In France, 21,160 employees have less than four 

years seniority. Of these, 15,230 are under 30. 

(2) 

59,430 including the automotive equipment division. 

2.2. Recruitments by activity 

5 

Disabled employees 

Outside 


Automobile Division 4,550 520 5,070 




Total 4,725 570 5,295 

Worldwide, the Group employs nearly 5,300 disabled people, as 

defined by local legislation. In France, including sheltered workers 

under subcontracting agreements, 9.28% of employees are classified as 

handicapped, compared with the legally required 6%. 

Turnover 

5.1. Resignations 

In 2002 

Outside 


Manufacturing 760 430 1,190 

Marketing and Sales 730 840 1,570 




Total 1,750 1,740 3,490 

In 2002, resignations represented nearly 2.4% of total headcount, or 

1.3% in the case of engineers and managers alone. 

5.2. Premature terminations or dismissals 

3 

Outsourcing 

PSA Peugeot Citroën’s procurement primarily concerns automotive 

parts and components for its mechanical component and final assembly 

plants. Sourced from 850 suppliers, these parts represent around 70% 

of a vehicle’s unit production cost. The remaining outside purchases 

concern capital equipment and services. 

Purchasing terms and conditions comply fully with sustainable 

development principles. In particular, suppliers are expected to comply 

with all prevailing laws and regulations in every country where they do 

business, to demonstrate the highest standards of environmental 

stewardship and to adhere to the international conventions and 

recommendations of the International Labor Organization. This 

especially applies to conventions regarding worker protection, the 

abolition of forced labor and the elimination of child labor, health and 

safety in the workplace and the preservation of workers’ rights. 

Premature terminations 

Outside 

or dismissals in 2002 France France Total 

Automobile Division 840 610 1,450 




Total 980 700 1,680 

These figures include premature termination of work contracts for 

incapacity, disability and dismissal for personal reasons. 

Redundancies in 2002 

Outside 


Automobile Division 0 1,070 1,070 




Total 55 1,075 1,130 


E mployee Relations Indicators 

6 

600 employees were made redundant as a result of difficult business 

conditions in Argentina, where automobile demand plunged 53% 

during the year. Short-time working schedules, which reduced 

worktime by 800,000 hours, helped the Group to maintain 

manufacturing capacity and to rank among the leading international 

corporations to reinvest in Argentina. Jobs were eliminated at the 

Madrid plant, primarily due to the termination of a military vehicle 

maintenance business. In France, reorganization of the Credipar 

network, which was reduced from 32 to 16 agencies, led to nearly 80 

geographic transfers. Each employee was offered at least two other 

positions in the finance company business or in the rest of the Group. 

Those who didn’t accept these positions were offered jobs with other 

companies through a specialized outplacement bureau. 

Work organization 

6.1. Short-time working hours lost 

Europe outside Outside 

France France Europe Total 

Automobile 

Division 275,750 0 802,350 1,078,100 

Finance Companies 0 370 0 370 


and Logistics 0 670 7,800 8,470 

Other Businesses 10,450 (1) 0 0 10,450 

Total 286,200 1,040 810,150 1,097,390 

In almost every country of operation, working hours are determined on 

an annual basis, meaning that the 1,097,390 short-time hours lost in 

the table above concerned the entire year. They represented 0.4% of 

the estimated total 270 million hours worked in 2002. More than 80% 

of the short-time hours lost resulted from the difficult business 

conditions encountered in Argentina, where the 800,000 short-time 

hours lost helped to avoid 500 redundancies. The short-time hours lost 

in France mainly concerned the Rennes plant. They resulted from a 

decline in demand for upper-middle range vehicles in certain European 

markets and from difficulties in supply. 

(1) Concerns PMTC 

6.2. Overtime 



Automobile 

Division 1,576,360 1,517,800 258,520 3,352,680 

Finance 

Companies 1,920 16,760 0 18,680 


and Logistics 338,640 35,790 15,000 389,430 


Total 1,942,700 1,570,450 273,520 3,786,670 

In almost every country of operation, working hours are determined on an 

annual basis. The number of overtime hours represented 1.5% of the total 

hours worked in the Group during the year. In response to the more than 

40% increase in unit sales in the past four years, a number of structural 

solutions have been implemented, including additional shifts and non-stop 

operation during vacation periods. As a result, Group plants worked 

at 117% capacity compared with the two-shift benchmark. 

6.3. Special work schedules (1) 

Special work schedules France Europe outside France Outside Europe Total 

Double shifts: 29,880 Double shifts: 9,650 Double shifts: 850 (Brazil 852) 40,390 

Automobile Division Triple or night shifts: 16,270 Triple or nights shifts: 4,800 Triple or nights shifts: 10 21,080 

Weekend*: 3,690 Weekend*: 1,230 4,920 

Finance Companies 

No special work shedules 

Double shifts: 860 Double shifts: 120 Double shifts: 20 1,000 

Transportation and logistics Triple or night shifts: 170 Triple or night shifts: 360 530 

Weekend*: 10 Weekend*: 90 100 

Double shifts: 810 810 

Other Businesses Triple or night shifts: 20 20 

Weekend*: 0 0 

*Weekend shifts (generally Friday, Saturday and Sunday) are shorter than regular shifts. 

To meet strong sales demand, special work schedules have been introduced, mainly in the production plants. Sochaux and Ryton, for example, now 

work a weekend shift. 

(1) 

The figures correspond to the number of employees concerned. 

194 


7 

Paid leave other than vacations 



Automobile 

Division 4,631,750 1,787,160 121,870 6,540,780 

Finance Companies 85,080 48,100 0 133,180 


and Logistics 238,540 80,020 1,630 320,190 

Other Businesses 140,390 1,110 0 141,500 

Total 5,095,760 1,916,390 123,500 7,135,650 

These figures correspond to the total hours of absence due to maternity 

leave, illness or occupational or work-related travel accidents. Paid 

leave other than vacations accounted for 2.5% of the 270 million hours 

worked. 

9 

10 

Occupational accidents, safety and 

working conditions 

In 2002, there were 5.8 occupational accidents per million hours 

worked in the Group’s manufacturing operations, incurring 0.35 days 

lost per thousand hours worked. By comparison, in 2000, there were 

27.4 occupational accidents per million hours worked in the French 

metalworking industry, incurring 0.96 days lost per thousand hours 

worked. 

Compensation 

10.1. Payroll 

8 

Training 

Key training data 

% of total 

training hours 

Management 14.4 

Induction and orientation 13.4 

Industrial techniques and machine operation 13.2 

Information technology and systems 11.3 

Automotive technology 9.2 

Safety 8.2 

Educational courses 6.7 

Quality 4.9 

Product technology 3.3 

Communication 3.0 

Other 12.4 

The 2002 training budget represented more than 4% of payroll. During 

the year, the training organization was expanded with the creation of a 

network of part-time internal trainers, all experts in their fields. Under 

this system, nearly 3,000 people around the world regularly help to 

train other Group employees. 

A total of 4,000,000 hours of training were conducted across the 

Group. The last three years have seen a steady increase in the number 

of people in the French manufacturing operations who have attended 

at least one training course: 

2000: 61,403 

2001: 64,862 

2002: 69,922 

In 2002, the number of training hours averaged the equivalent of 24 

working hours for operators and 45 working hours for managers. 

Nearly 7,410 students served in Group units under internships, 

apprentice programs and work-study programs. 

In 2002, compensation paid worldwide totalled €4,465,451,000, while 

employer taxes and social security contributions amounted to 

€1,692,489,000. Total payroll therefore amounted to €6,157,940,000 (1) . 

(1) 

Payroll France: €4,662,481,000 

Payroll Europe outside France: €1,415,349,000 

Payroll outside Europe: €80,110,000 

10.2. Incentive bonuses/profit-sharing 

Based on 2002 financial results, a total of €245 million will be 

allocated to employees in 2003 as incentive bonuses or under legallymandated 

French profit-sharing agreements. 

(in millions of euros) (1) 1998 1999 2000 2001 2002 

Total France 

Group incentive program 

and profit-sharing agreement 18 78 145 196 205 

Incentive or profit-sharing 

programs in other 

French subsidiaries 5 6 6 7 7 

Incentive programs in 

foreign subsidiaries - 12 23 29 33 

Total Group 23 96 174 232 245 

(1) 

Scope includes all worldwide operations except for the automotive equipment 

division, Sevelnord and Française de Mécanique. 

* Data in these appendices relate to the entire PSA Peugeot Citroën 

Group except for the automotive equipment division, Sevelnord and 

Française de Mécanique. 


E nvironmental Indicators 

Automobile fuel consumption and emissions 

The following tables are not exhaustive. The models were selected on the basis of their sales and environmental performance. For each model, the 

table shows data for the gasoline and diesel versions offering the lowest CO 2 

emissions and fuel consumption. Models in boldface are the best-selling 

gasoline or diesel versions, based on total sales in Europe in 2002. In certain cases (gasoline and diesel 106; diesel 206; gasoline 406; gasoline and 

diesel Saxo; diesel C3; diesel C5; gasoline and diesel Berlingo), the best selling model is also the most fuel-efficient. 

Peugeot 

Consumption 

Peugeot 106 Fuel Displacement Horsepower City Highway Combined Emissions CO 2 

Noise 

G/D (cc) (kW) (liters/100km) (liters/100km) (liters/100km) (g/km) (dBa) 

1.1-liters G 1,124 44.1 8 5 6.1 145 74 

1.5-liters D* 1,527 42 6.8 4.3 5.2 138 72.6 

Consumption 


Noise 


1.1-liters G 1,124 44.1 8.2 5.0 6.2 148 73.5 

1.4-liters G 1,360 55 8.4 5.0 6.3 149 71.7 

1.4-liters HDI D 1,398 50 5.5 3.6 4.3 113 71 

Consumption 


Noise 


1.4-liters G 1,360 55 8.7 5.5 6.7 159 71.7 

1.6-liters 16V G 1,587 80 9.5 5.8 7.2 169 72.4 

1.4-liters HDI D 1,398 50 5.5 4.0 4.5 120 71.8 

2.0-liters HDI 90bhp D 1,997 66 6.9 4.3 5.2 138 72.8 

Consumption 


Noise 


1.8-liters G 1,761 66 11.8 6.4 8.4 205 73.2 

2.0-liters HPI G 1,997 103 10.3 6 7.5 177 73.5 

2.0-liters HDI 110bhp 

w/particle filter D 1,997 80 7.5 4.5 5.6 147 72.9 

196 


Consumption 


Noise 


2.2-liters G 2,230 116 12.7 7.2 9.2 219 73.6 

3.0-liters V6 automatic G 2,946 152 14.4 7.8 10.2 245 72.9 

2.0-liters HDI D 1,997 80 7.9 4.7 5.9 157 73.7 

2.2-liters HDI 


Consumption 


Noise 


2.0-liters G 1,997 100 12.3 7.3 9.1 218 71.5 

2.2-liters G 2,230 116 12.9 7.8 9.7 231 72.8 

2.0-liters HDI D 1,997 80 9.2 5.9 7.0 186 72.9 

2.2-liters HDI 


Bold: the best selling vehicle in its category (gasoline or diesel version). 

Light: vehicle emitting the least CO 2 

in its category (gasoline or diesel version). 

*Available only in a diesel version. 

Citroën 

Consumption 

Citroën Saxo Fuel Displacement Horsepower City Highway Combined Emissions CO 2 

Noise 


1.1-liters G 1,124 44.1 8.0 5.0 6.1 145 73 

1.5-liters D D* 1,527 42 6.8 4.3 5.2 138 73.8 

Consumption 

Citroën Xsara Fuel Displacement Horsepower City Highway Combined Emissions CO 2 

Noise 


1.4-liters G 1,360 55 9.2 5.4 6.7 159 73.5 

1.6-liters 16V G 1,587 80 9.3 5.5 6.9 160 72.1 

1.4-liters HDI D 1,398 50 5.7 3.8 4.5 120 71.6 

2.0-liters HDI 90bhp D 1,997 66 7.3 4.2 5.4 141 72.2 



Automobile fuel consumption and emissions 

Consumption 

Citroën Xsara Picasso Fuel Displacement Horsepower City Highway Combined Emissions CO 2 

Noise 


1.6-liters G 1,587 70 10.0 6.1 7.5 178 74 

1.8-liters 16V G 1,749 85 10.7 6.0 7.7 184 74 

2.0-liters HDI D* 1,997 66 7.0 4.6 5.5 147 72 

Consumption 

Citroën C3 Fuel Displacement Horsepower City Highway Combined Emissions CO 2 

Noise 


1.1-liters G 1,124 44.1 7.8 5.0 6.0 143 70.8 

1.4-liters G 1,360 54 8.2 5.0 6.2 148 71.8 

1.4-liters HDI D 1,398 50 5.1 3.8 4.2 110 71.9 

Consumption 


Noise 


1.8-liters 16V G 1,749 117 10.6 6.0 7.7 182 73.2 

2.0-liters HPI G 1,997 143 10.3 6.0 7.5 177 73 

2.0-liters HDI 110bhp D 1,997 80 7.4 4.6 5.6 147 74 

Consumption 


Noise 


2.0-liters 16V G 1,997 100 12.3 7.3 9.1 218 71.5 

2.2-liters 16V G 2,230 116 12.9 7.8 9.7 231 72.8 

2.0-liters HDI 16V D 1,997 79 9.4 5.9 7.2 189 73.4 

2.2-liters HDI 16V D 2,179 94 10.1 5.9 7.4 199 73.4 

Consumption 

Citroën Berlingo Fuel Displacement Horsepower City Highway Combined Emissions CO 2 

Noise 


1.6-liters 16V G 1,587 80 9.5 6.2 7.4 175 71.2 

2.0-liters HDI D 1,997 66 7.2 4.9 5.7 152 72.2 

Bold: the best selling vehicle in its category (gasoline or diesel version). 

Light: vehicle emitting the least CO 2 

in its category (gasoline or diesel version). 

*Available only in a diesel version. 

198 



Production plant consumption and emissions 

The following environmental indicators comply with French decree no. 2002-221 of February 20, 2002. They have been prepared on the basis of 

data from all the companies fully consolidated by PSA Peugeot Citroën, other than Faurecia, the Group’s automotive equipment division. Faurecia, 

a listed company that is 72%-owned by Peugeot S.A., manages its business independently of the Group and therefore prepares and publishes its own 

indicators in its annual report. 

1. Consumption of natural resources and main emissions 

PSA Peugeot Citroën consumes two main resources for the needs of its manufacturing operations and its employees: 

- Water, for machining, washing, cooling and sanitary facilities. Depending on local availability, production plants get their water from public water 

companies, private wells or nearby rivers. 

- Energy (fossil fuels and electricity) to power a certain number of processes, such as heat treatment, casting and paint curing, as well as to provide 

heat, light and air conditioning in buildings and offices. 

Water consumption 

City water Surface water Underground water 

Sub-group (cu.m) (cu.m) (cu.m) Total 

Peugeot Citroën Automobiles 3,777,921 8,806,617 10,358,077 22,942,615 

SCMPL 13,490 - - 13,490 

PCI 26,028 - - 26,028 

PMTC 23,748 86,158 - 109,906 

GEFCO 204,023 - 18,480 222,503 

Total 4,045,210 8,892,775 10,376,557 23,314,542 

Self-monitored effluents 

Sub-group COD (kg/d) (1) BOD5 (kg/d) (2) SM (kg/d) (3) 

Peugeot Citroën Automobiles 6,982.09 2,612.07 1,858.49 

SCMPL 0.67 - 0.08 

PCI na na na 

PMTC 0.55 0.08 0.05 

GEFCO na na na 

Total 6,983.31 2,612.15 1,858.62 

(1) Chemical oxygen demand - (2) Biochemical oxygen demand after 5 days - (3) Suspended matter 

na: not applicable. 

NB: Around 80% of this effluent is further treated in a local plant before release into the environment. 

Consumption of energy 

Sub-group Heavy fuel oil (t) LSFO (t) (1) VLSFO (t) (2) HHO (cu.m) (3) 

Peugeot Citroën Automobiles - 23,977 2,115 4,599 

SCMPL - - - - 

PCI - - - - 

PMTC - - - 3 

GEFCO - - - 1,088 

Total 0 23,977 2,115 5,690 

(1) Low-sulfur fuel oil. 

(2) Very low-sulfur fuel oil. 

(3) Home heating oil. 



Production plant consumption and emissions 

Sub-group Nat. gas (MWh ncv) Electricity (MWh) Coal (t) Coke (t) 

Peugeot Citroën Automobiles 2,441,949 2,852,513 5,129 23,560 

SCMPL 6,860 2,714 - - 

PCI 3,632 6,231 - - 

PMTC 13,514 15,609 - - 

GEFCO 18,856 35,013 - - 

Total 2,484,811 2,912,080 5,129 23,560 

Air emissions from combustion plants 

Greenhouse gases 

Sub-group 

CO 2 

(t) N 2 

O (t) CH 4 

(t) 

Peugeot Citroën Automobiles 668,326.93 24.42 40.52 

SCMPL 1,396.54 0.06 0.10 

PCI 739.39 0.03 0.05 

PMTC 2,759.06 0.12 0.20 

GEFCO 6,712.04 0.23 0.33 

Total 679,933.96 24.86 41.2 

(in tonnes of CO 2 

equivalent) 679,934 7,707 865 

For a total of 688,506 tonnes of CO 2 

equivalent 

Other gases 

Sub-group 

SO 2 

(t) NO 2 

(t) HCl (t) 

Peugeot Citroën Automobiles 1,098.69 747.60 17.23 

SCMPL 0.01 1.48 - 

PCI 0.01 0.78 - 

PMTC 0.04 2.93 - 

GEFCO 5.56 7.93 - 

Total 1,104.31 760.72 17.23 

Paintshop VOC (1) releases 

Sub-group VOC releases (t) Ratio (kg/veh.) 

Peugeot Citroën Automobiles 15,862 5.65 

Sub-group 

VOC releases (t) 

PMTC 139 

SCMPL 1 

(1) Volatile organic compounds. 

200 


Waste production 

PEUGEOT CITROËN AUTOMOBILES 

Type of waste 

Disposal methods 

Landfill (t) Recovery (t) Onsite recycling (t) Other treatment (t) Total (t) 

Foundry waste 39,907 121,002 77,473 362 238,744 

Industrial waste 32,158 106,691 4,684 757 144,290 

Sludge + Effluent 

+ Hazardous industrial waste 11,891 33,085 248 36,588 81,812 

Total 83,956 260,778 82,405 37,707 464,846 

SCPML + PCI + PMTC 

Type of waste 

Disposal methods 

Landfill (t) Recovery (t) Other treatment (t) Total (t) 

Foundry waste - - 174 174 

Industrial waste 801 1,318 193 2,312 

Sludge + Effluent + Hazardous industrial waste 9 371 1,033 1,413 

Total 810 1,689 1,400 3,899 

GEFCO 

Type of waste 

Total (t) 

Foundry waste - - 

Industrial waste 5,598 

Sludge + Effluent + Hazardous industrial waste 523 

Total 6,121 

Our manufacturing facilities are committed to carefully managing and reducing the volume of by-products inevitably produced through the 

consumption of natural resources and the use of process products, such as scrap iron in casting and sheet steel and aluminum in stamping, and of 

surface treatment products like paint, cutting liquids, binders and sealants. They have also implemented dedicated processes for managing and 

reducing the volume of their releases into the air, water and soil. 

Other environmental issues 

Respecting the biological balance and managing odors and noise 

Measures required to preserve the natural environment, flora and fauna, as well as to ensure the tranquility of neighboring communities are assessed 

and defined during initial or supplemental environmental impact studies performed before the installation of any new plant facilities or equipment. 

In compliance with legislation, these prior studies are submitted to public hearings and to the approval of administrative authorities. 

Amount of penalties paid following a legal ruling concerning the environment 

The Group did not have to pay any penalties in this regard in 2002. 


M anagement and Administration 

Main functions and directorships held during 2002 

Main functions and directorships held during 2002 by the Members of 

the Supervisory Board and the Members of the Managing Board are as 

follows: 

Supervisory Board: 


Chairman of the Supervisory Board 

Appointed: December 19, 2002 

Term ends: 2004 

Thierry Peugeot, 45, is also Chairman of Immeubles et Participations 

de l’Est, Vice-Chairman of Etablissements Peugeot Frères, Member of 

the Board of Société Foncière, Financière et de Participations–FFP, 

L.F.P.F.-La Française de Participations Financières, Société Anonyme 

de Participations SAPAR, Compagnie Industrielle de Delle and 

Permanent Representative of Compagnie Industrielle de Delle on the 

Board of Directors of Lisi. 

Jean Boillot 

Vice-Chairman of the Supervisory Board 

First elected to the Supervisory Board: April 18, 1990 

Term ends: 2007. 

Jean Boillot, 77, was a Member of the Board of Peugeot Motor 

Company Plc until February 2003. 

Jean-Philippe Peugeot 

Vice-Chairman of the Supervisory Board 

First elected to the Supervisory Board: May 16, 2001 


Chairman of Etablissements Peugeot Frères 

Jean-Philippe Peugeot, 50, is also Chairman of the Board of Nutrition et 

Communication, Vice-Chairman of Société Foncière, Financière et de 

Participations–FFP and Member of the Board of L.F.P.F.-La Française 

de Participations Financières and Immeubles et Participations de l’Est. 

Pierre Banzet 

Member of the Supervisory Board 

First elected to the Supervisory Board: June 23, 1994 


Pierre Banzet, 73, is Honorary Professor of Medicine and member of 

the Académie de Médecine. 

Jean-Louis Dumas 




Managing General Partner of Hermès International 

Jean-Louis Dumas, 65, is also Member of the Board of L'Oréal and 

Member of the Steering Committee of the Banque de France. 

Marc Friedel 




Consultant 

Marc Friedel, 54, is also Member of the Supervisory Board of Presses 

Universitaires de France and permanent representative of SOFINACTION 

(CIC Group) on the Board of Directors of Société Nancéienne Varin- 

Bernier (SNVB). 

Jean-Louis Masurel 


First elected to the Supervisory Board: August 27, 1987 


Jean-Louis Masurel, 62, is Managing Partner of Société des Vins de 

Fontfroide. He is also Chairman of Arcos Investissements S.A., Member 

of the Supervisory Board of Oudart S.A. and Member of the Board of 

Société des Bains de Mer à Monaco (S.B.M.) and Banque du Gothard 

Sam (Monaco). 

François Michelin 


First elected to the Supervisory Board: October 21, 1992 


Former Managing Partner of Compagnie Générale des Etablissements 

Michelin 

François Michelin, 76, is also Chairman of Participation et Développement 

Industriels S.A.–PARDEVI and Managing Partner of Michelin Reifenwerke 

(Germany) and Compagnie Financière Michelin (Switzerland). 

Jean-Paul Parayre 


First elected to the Supervisory Board: December 11, 1984 


Chairman of the Supervisory Board of Vallourec 

Jean-Paul Parayre, 65, is also member of the Steering Committee of 

V & M do Brasil (Brazil), and Member of the Board of Bolloré 

Investissement, Carillion Plc (UK), Sea Invest France, Seabulk 

(France), SDV Cameroun, SDV Congo, SNEF, Stena Line (Sweden), 

Stena Maritime and Stena UK (UK). 

Marie-Hélène Roncoroni 




Marie-Hélène Roncoroni, 42, is also Vice-Chairman of Société Foncière, 

Financière et de Participations–FFP, Member of the Board of L.F.P.F.-La 

Française de Participations Financières, Société Anonyme de 

Participations–SAPAR, Etablissements Peugeot Frères and Immeubles et 

Participations de l’Est, and Permanent Representative of Société 

Anonyme de Participations–SAPAR on the Board of Directors of Société 

des Immeubles de Franche-Comté and Permanent Representative of 

Société des Immeubles de Franche-Comté on the Board of Directors of 

Société Anonyme Comtoise de Participation. 

202 



Main functions and directorships held during 2002 

Ernest-Antoine Seillière de Laborde 




Chairman of Mouvement des Entreprises de France–MEDEF and 

Chairman of the Board of Wendel Investissement 

Ernest-Antoine Seillière de Laborde, 65, is also Vice-Chairman of the 

Supervisory Board of Cap Gemini, Chairman of the Supervisory Board 

of Trader.com N.V., Member of the Supervisory Board of Hermès 

International S.A. and of Oranje – Nassau Groep B.V., Member of the 

Board of Société Lorraine de Participations Sidérurgiques–SLPS and 

Permanent Representative of SOFISERVICE on the Supervisory Board 

of Bureau Veritas. 

Joseph F. Toot Jr 




Joseph F. Toot Jr., 67, is also Member of the Board of Rockwell 

Automation, Rockwell Collins, and the Timken Company. 

Bertrand Peugeot 

Advisor to the Supervisory Board 



Bertrand Peugeot, 79, is also Member of the Board of Etablissements 

Peugeot Frères, Paris Loire, and L.F.P.F.–La Française de 

Participations Financières. 

Roland Peugeot 

Advisor to the Supervisory Board 



Roland Peugeot, 77, is also Honorary Chairman of Etablissements 

Peugeot Frères and Football Club Section Montbéliard–FCSM S.A. and 

Permanent Representative of Etablissements Peugeot Frères on the 

Board of Directors of L.F.P.F.–La Française de Participations 

Financières. 

Every member of the Supervisory Board must own at least 25 

Peugeot S.A. shares. 

In determining the independence of Supervisory Board members, the 

Board bases its conclusions on most of the criteria recommended for 

members of a Board of Directors in the Bouton report on corporate 

governance. The only exceptions concern the twelve-year limit on 

successive terms and the fact of not having served as an officer in a 

consolidated company during the past five years. The Board believes 

that the auto industry experience acquired over several terms on the 

Board is especially desirable in a business based on medium and longterm 

cycles, and that having recently been a company director does not 

pose any risk of the conflict of interest that the independence rules are 

intended to prevent. 

In application of COB recommendation of January 17, 2003, the 

Board examined its membership and considers that Jean Boillot, 

Jean-Louis Dumas, Jean-Louis Masurel and Joseph Toot Jr. qualify as 

independent directors. Note, however, that no member of the Board 

exercises any senior executive responsibilities or is a salaried employee 

of a Group company. 

In the future, when new candidates are proposed for election to the 

Board, they will be carefully selected by the Board, in particular as 

regards the above-mentioned criteria for determining a director’s 

independence and following a review by the Compensation and 

Appointments Committee. 




First elected to the Managing Board: September 30, 1997 

Term ends: April 24, 2004 

Jean-Martin Folz, 56, is also Chairman of Automobiles Peugeot and of 

Automobiles Citroën and Member of the Board of Banque PSA 

Finance, Peugeot Citroën Automobiles, Faurecia, Saint-Gobain and 

Solvay (Belgium). 


Member of the Managing Board 

First elected to the Managing Board: July 1, 1998 


Chief Executive Officer of Automobiles Peugeot 

Frédéric Saint-Geours, 53, is also Chairman of Peugeot Motor 

Company Plc, Member of the Supervisory Board of Peugeot 

Deutschland GmbH, Member of the Board of Peugeot España S.A. 

and Permanent Representative of Automobiles Peugeot on the Board 

of Directors of Gefco and of Automobiles Peugeot on the Board of 

Directors of Banque PSA Finance. 


Member of the Managing Board 

First elected to the Managing Board: July 1, 1998 


Chief Executive Officer of Automobiles Citroën 

Claude Satinet, 58, is also Member of the Supervisory Board of Citroën 

Deutschland AG, Chairman of Citer, Citroën Belux, Société Belge des 

Automobiles Citroën, Citroën Danmark A/S, Citroën Italia, Citroën 

Lusitania, Citroën UK Limited and Citroën (Switzerland) S.A., 

Chairman of the Board of Commissioners at Citroën Nederland B.V., 

Member of the Board of Automoviles Citroën España, Autotransporte 

Turistico Español S.A., Comercial Citroën S.A. and Citroën Sverige 

AB, and Permanent Representative of Automobiles Citroën on the 

Board of Directors of Gefco, of Automobiles Citroën on the Board of 

Directors of Banque PSA Finance and of Automobiles Citroën on the 

Board of Directors of Automoveis Citroën. 



COMPENSATION OF CORPORATE OFFICERS AND EXECUTIVES IN 2002 

Total direct or indirect compensation and benefits paid by Group companies to members of the Supervisory Board and to the Advisors was as follows: 

Title 

Pierre Peugeot Chairman of the Supervisory Board 212,328 € 

Jean Boillot Vice-Chairman of the Supervisory Board 40,420 € 

Pierre Banzet Member of the Supervisory Board 13,750 € 

Jean-Louis Dumas Member of the Supervisory Board 13,750 € 

Marc Friedel Member of the Supervisory Board 13,750 € 

Jean-Louis Masurel Member of the Supervisory Board 13,750 € 

François Michelin Member of the Supervisory Board 21,370 € 

Jean-Paul Parayre Member of the Supervisory Board 17,560 € 

Jean-Philippe Peugeot Member of the Supervisory Board 13,750 € 

Marie-Hélène Roncoroni Member of the Supervisory Board 13,750 € 

Ernest-Antoine Seillière de Laborde Member of the Supervisory Board 21,370 € 

Joseph F. Toot Member of the Supervisory Board 13,750 € 

Roland Peugeot Advisor 13,750 € 

Bertrand Peugeot Advisor 13,750 € 

The above compensation and benefits, paid by Peugeot S.A., comprise directors’ fees paid to members of the Supervisory Board, specific 

compensation paid to Chairman and Vice-Chairman of the Supervisory Board, and specific compensation paid to Chairman and members of the 

Strategy and Compensation Committees. 

Total direct or indirect compensation and benefits paid by Group companies to members of the Managing Board was as follows: 

Total compensation 

Variable portion 

Jean-Martin Folz, Chairman €1,904,765 53.74% 

Frédéric Saint-Geours €810,825 43.74% 

Claude Satinet €809,825 43.76% 

In addition, Jean-Martin Folz was paid €7,625 in compensation for his duties as director of Faurecia. 

TRANSACTIONS WITH CORPORATE OFFICERS AND EXECUTIVES 

As of the date of publication of this Annual Report, no transactions, other than on arm’s length terms, have been undertaken with members of the 

Supervisory Board, members of the Managing Board or any stockholder owning more than 5% of the Company’s capital stock. In particular, the 

Company has granted no loans or guarantees to members of the Supervisory Board or the Managing Board. 

O ptions to purchase existing Peugeot S.A. shares granted and 

exercised in 2002 

Options to purchase existing Peugeot S.A. shares granted to and exercised by members of the Managing Board in 2002: 

Options Granted 

Shares Purchased 

Plan Number Expiry Purchase Plan Number Expiry Purchase 

date price date price 

Jean-Martin Folz, Chairman Aug.20, 2002 60,000 Aug.20, 2009 €46.28 - - - - 

Frédéric Saint-Geours Aug.20, 2002 33,000 Aug.20, 2009 €46.28 - - - - 

Claude Satinet Aug.20, 2002 33,000 Aug.20, 2009 €46.28 - - - - 

Options to purchase existing Peugeot S.A. shares granted to the eleven top employees other than corporate officers in 2002: 

Plan Total number Expiry date Purchase price 

August 20, 2002 227,000 August 20, 2009 €46.28 

Options to purchase existing Peugeot S.A. shares granted in prior years and exercised in 2002 by employees other than corporate officers (four employees): 

Plan Total number Expiry date Purchase price 

March 31, 1999 17,000 March 30, 2007 €20.83 

204 


I nformation about the company’s capital 

Capital stock 

As of December 31, 2002, the Company’s capital stock amounted to 

€259,109,146, divided into 259,109,146 shares with a par value of 

€1.00, all fully paid-up and of the same class. 

Shares may be held in registered or bearer form, at the choice of the 

stockholder. 

Specific provisions of the bylaws concerning changes in 

capital and other stockholder rights 

Not applicable. 

Authorization to buy back Company shares 

At the Annual Stockholders’ Meeting of May 28, 2003, the Managing 

Board will seek an authorization to carry out a share buyback program. 

The purpose of the buybacks will be to: 

- Optimize earnings per share; 

- Stabilize the share price by systematically buying shares against 

market trends; 

- Contribute to the management of stockholders’ equity and the 

Company’s cash position; 

- Acquire shares for issuance on redemption, conversion, exchange or 

exercise of share equivalents; 

- Acquire shares for attribution to employees, executives or officers of 

the Company or related entities on the exercise of stock options. 

The authorization is being sought for a period of 18 months and concerns 

the buyback of a maximum of 25,000,000 shares. The maximum 

purchase price is set at €65 and the minimum sale price at €40. 

Details of the share buyback program will be provided in an 

information memorandum to be approved by the Commission des 

Opérations de Bourse, according to French regulation. 

Securities not conferring a right to acquire equity capital 

Not applicable. 

Securities conferring a right to acquire equity capital 

Employee stock options 

Options to purchase existing shares of Company stock were granted 

to Group executives and senior managers in 2002 and prior years. As 

of December 31, 2002 there were 2,783,200 such options 

outstanding. 

Peugeot S.A. stock option plans in effect at December 31, 2002 

Number of 

shares to be 

purchased 

Options 

(of which those Number of outstanding 

granted to corporate Exercice Exercice Options as of 

Date of Managing corporate officers (1) period period exercised Dec.31, 

Board meeting officers (1) ) concerned begins ends Price in 2002 2002 

March 31, 1999 462,900 14 March 31, 2001 March 30, 2007 €20.83 17,000 415,300 

(183,000) 

October 5, 2000 709,200 13 October 5, 2002 October 4, 2008 €35.45 0 709,200 

(237,000) 

November 20, 2001 798,600 13 November 20, 2004 November 19, 2008 €46.86 0 798,600 

(330,000) 

August 20, 2002 860,100 13 August 20, 2005 August 20, 2009 €46.28 0 860,100 

(335,000) 

(1) Corporate officers are defined as members of the Managing Board, the Executive Committee and the Senior Management team. 


Changes in capital stock 

(in number of shares, adjusted for the stock split) 2002 2001 2000 1999 1998 

Shares outstanding as of January 1 259,109,146 278,223,630 272,946,048 300,687,600 300,664,968 

- Exercise of options - - 84,300 119,520 22,620 

- Conversion of bonds - 4,335,516 5,193,282 38,928 12 

- Cancellation of shares - (23,450,000) - (27,900,000) - 

Shares outstanding as of December 31 259,109,146 259,109,146 278,223,630 272,946,048 300,687,600 

Voting rights outstanding as of December 31 313,211,826 330,352,845 354,896,226 359,047,518 396,637,224 

(in euros) 2002 2001 2000 1999 1998 

Capital stock as of January 1 259,109,146 278,223,630 272,946,048 267,397,253 267,377,127 

- Conversion of the capital into euros - - - 33,290,347 - 

- Exercise of options - - 84,300 119,520 20,115 

- Conversion of bonds - 4,335,516 5,193,282 38,928 11 

- Cancellation of shares - (23,450,000) - (27,900,000) - 

Capital stock as of December 31 259,109,146 259,109,146 278,223,630 272,946,048 267,397,253 

Diluted capital 

There were no share equivalents or options to purchase new shares of Peugeot S.A. stock outstanding at December 31, 2002. 

Identity of stockholders (Article 7 of the bylaws) 

The Company is entitled to request details of the identity of stockholders and holders of securities conferring the right to acquire equity capital, 

including the number of shares or securities held, in accordance with the applicable legislation. 

Ownership structure 

As of December 31, 2002, the capital stock consisted of 93,135,701 registered shares, held by 576 stockholders, and of 165,973,445 bearer shares. 

December 31, 2002 December 31, 2001 December 31, 2000 (1) 

(Main identified stockholders) Number of % % voting Number % % voting Number % % voting 

shares interest rights of shares interest rights of shares interest rights 

Etablissements Peugeot Frères 6,923,760 2.67 4.42 6,923,760 2.67 4.19 6,923,760 2.49 3.90 

La Française de Participations 

Financières - LFPF 9,797,880 3.78 6.26 9,797,880 3.78 5.93 9,797,880 3.52 5.52 

Foncière, Financière 

et de Participations - FFP 51,792,738 19.99 30.99 51,792,738 19.99 29.38 45,601,500 16.39 25.60 

Comtoise de Participation 36,000 0.01 0.01 36,000 0.01 0.01 36,000 0.01 0.01 

Cogevam - - - - - - 6,191,238 2.23 3.49 

Peugeot Family Group 68,550,378 26.46 41.68 68,550,378 26.46 39.52 68,550,378 24.64 38.53 

Michelin Group 2,826,000 1.09 1.80 2,826,000 1.09 1.71 9,590,100 3.45 5.40 

Société Générale Group 2,371,973 0.92 1.08 8,103,600 3.13 4.22 9,302,130 3.34 4.26 

Caisse des Dépôts Group 7,323,494 2.83 2.34 7,939,981 3.06 2.40 8,847,594 3.18 2.49 

Lafarge Group - - - - - - 5,280,750 1.90 2.98 

Treasury stock 15,208,709 5.87 - 2,994,287 1.16 - 16,044,378 5.77 - 

PSA corporate mutual fund 3,614,676 1.40 1.15 2,739,376 1.06 0.83 2,088,726 0.75 0.59 

(1) Number of shares restated for the six-for-one stock split on July 1, 2001. 

Other stockholders 

A survey of banks and brokers holding more than 150,000 shares, commissioned from the Euroclear France clearing organization on 

March 31, 2002 determined that there are approximately 40,935 holders of more than 50 bearer shares. 

There are no stockholders’ pacts in force. 

Directors’ interests 

Directors’ interests in the Company’s capital, held in the form of registered shares or stock options, represent less than 1% of total shares 

outstanding. 

206 


S tatutory Auditors’ Report on the Consolidated 

Financial Statements 

for the years ended December 31, 2002, 2001 and 2000 

To the stockholders, 

In accordance with the terms of our appointment as auditors at the Annual Stockholders’ Meeting, we have audited the accompanying consolidated 

financial statements of Peugeot S.A. and its subsidiaries, stated in euros, for the years ended December 31, 2000, 2001 and 2002. These consolidated 

financial statements are the responsibility of the Managing Board. Our responsibility is to express an opinion on these financial statements based on 

our audits. 

We conducted the audit in accordance with the professional standards applied in France. Those standards require that we plan and perform our 

audits to obtain reasonable assurance that the financial statements are free from material misstatement. An audit includes examining, on a test basis, 

evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and 

significant estimates made in the preparation of the financial statements, as well as evaluating the overall financial statement presentation. 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 consolidated financial position and assets and liabilities of 

Peugeot S.A. and its subsidiaries at December 31, 2000, 2001 and 2002 and of the consolidated results of operations for each of the three years then 

ended, in accordance with French accounting principles and regulations. 

We have also reviewed the information given in the report of the Managing Board. We have no comments as to its fair presentation and its conformity 

with the consolidated financial statements. 

Paris, March 7, 2003 

The Statutory Auditors 

Constantin Associés 

Coopers & Lybrand Audit SARL 

Member of PricewaterhouseCoopers 

Jean-François Serval Laurent Lévesque Pierre-Bernard Anglade Eric Bertier 

PSA PEUGEOT CITROËN - STATUTORY AUDITORS’ REPORT 207

I nformation about Peugeot S.A. 

➔ History of the Company 

Founded in 1896, Peugeot S.A. engaged in manufacturing and sales 

until 1965, when it was transformed into a holding company as part of 

a legal and financial restructuring of the Group. Its operating activities 

were taken over by a subsidiary, Automobiles Peugeot. 

In December 1974, Peugeot S.A. began the process of joining forces 

with Automobiles Citroën, which at the time was suffering from the 

difficult market conditions created by the first oil crisis. The other 

stockholders of Citroën S.A. were gradually bought out and the two 

companies were merged on September 30, 1976. 

Under the terms of an agreement signed on August 10, 1978 and 

approved by stockholders on December 21, 1978, Peugeot S.A. 

acquired the Chrysler Corporation’s European manufacturing and sales 

operations in exchange for shares. At the end of 1980, the newlyacquired 

companies – which continued to do business under the Talbot 

marque - were transferred to Automobiles Peugeot. 

In 1979, Chrysler Financial Corporation’s European commercial 

financing subsidiaries were acquired, making a turning point in the 

development of the Group’s finance business. PSA Finance Holding, 

whose subsidiaries offer financing for Peugeot and Citroën customers 

in Europe, was converted into a bank in June 1995 and renamed 

Banque PSA Finance. 

Aciers et Outillages Peugeot merged with Cycles Peugeot in 1987 and was 

renamed Ecia. It then became Faurecia in 1998 following its friendly 

merger with automotive equipment manufacturer Bertrand Faure en 1998. 

The Automobile division was reorganized on December 31, 1998 to 

align legal structures with the new functional organization 

introduced the previous January. Automobiles Peugeot and 

Automobiles Citroën transferred all their motor vehicle development 

and manufacturing assets to Peugeot Citroën Automobiles, and their 

capital equipment design and manufacturing operations to Process 

Conception Ingénierie. 

In the first half of 2001, Peugeot S.A. supported Faurecia’s acquisition 

of Sommer Allibert’s automotive equipment business. 

➔ Legal Information 

Company name 

Peugeot S.A. The name « PSA Peugeot Citroën » refers to the entire group 

of companies owned by the Peugeot S.A. holding company. 

Registered office and administrative headquarters 

75, avenue de la Grande Armée, 75116 Paris, France. 

Legal form 

A Société Anonyme (joint stock corporation), governed by a Managing 

Board and a Supervisory Board under the terms of the Commercial Code. 

Governing law 

The Company is governed by the laws of France 

Term 

Date of incorporation: 1896 

Date term ends: December 31, 2058, unless extended or the Company 

is dissolved. 

Corporate purpose (summary of Article 3 of the bylaws) 

The Company’s purpose is to participate, directly or indirectly, in any 

and all industrial, commercial or financial activities, in France or 

abroad, related to: 

- the manufacture, sale and repair of all forms of motor vehicles; 

- the manufacture and sale of all steel products, tools and tooling; 

- the manufacture and sale of all manufacturing, mechanical and 

electrical engineering equipment ; 

- the granting of short, medium and long-term consumer loans, the 

purchase and sale of all marketable securities and all financial and 

banking transactions; 

- the provision of all transport and other services; 

- the acquisition of all real property and property rights, by any 

appropriate means; 

and generally to conduct any and all commercial, industrial, financial, 

securities or real estate transactions related directly or indirectly to any 

of the above purposes or any other purpose that contributes to the 

development of the Company’s business. 

Registration 

Registered in Paris, n°. B 552 100 554. 

Business identification (APE) code: 741 J 

Consultation of legal documents 

Legal documents concerning the Company, including the bylaws, the reports 

of Annual Stockholders’ Meetings, the reports of auditors and all other 

documents sent to stockholders may be consulted at the Company’s 

registered office. 

Fiscal year 

January 1 to December 31. 

Income appropriation (Article 12 of the bylaws) 

The Annual Stockholders’ Meeting has full discretionary powers to 

decide the appropriation of net income, except for the appropriations 

required by law. 

Exceptional events, claims and litigation 

No exceptional events, claims or litigation are in progress or pending 

that are likely to have a material impact on the results, business, assets 

and liabillities or financial condition of the Company or the Group. 

208 

PSA PEUGEOT CITROËN - INFORMATION ABOUT PEUGEOT S.A.

➔ Stockholders’ Meetings (Article 11 of the bylaws) 

Notice of Meeting 

Stockholders’ meetings are held either at the Company’s registered 

office or at any other location specified in the Notice of Meeting, which 

is prepared in compliance with the applicable legislation. 

Double voting rights 

Fully paid-up shares registered in the name of the same stockholder for 

at least four years carry double voting rights. 

This system was maintained following the 1972 change in 

Peugeot S.A.’s governance structure, from a company with a Board of 

Directors to one with a Managing Board and a Supervisory Board. The 

vesting period was increased from two to four years at an Extraordinary 

Stockholders’ Meeting on June 29, 1987. In the event of a bonus share 

issue paid up by capitalizing reserves, net income or additional paid-in 

capital, the bonus shares issued in respect of shares carrying double 

voting rights will be eligible for double voting rights from issue. As 

prescribed by law, double voting rights are stripped from all shares 

converted into bearer shares or sold, except when the transfer of 

ownership results from an inheritance, a divorce, or a gift to a spouse 

or other relative in the direct line of succession. 

Disclosure thresholds (Article 7 of the bylaws) 

In addition to complying with the disclosure requirements prescribed by 

law, any company or natural person that becomes the direct or indirect 

holder of shares representing more than 2% of the capital is required to 

disclose their total interest to the Company within five calendar days of 

the date on which the shares are recorded in their account. Each 

additional 1% of the capital acquired must also be disclosed. These 

disclosure rules, which are specified in the bylaws, apply even in the 

case of interests in excess of the first legal disclosure threshold of 5%. 

In the case of non-disclosure, at the request of one or several 

stockholders together holding at least 5% of the capital, the undisclosed 

shares will be stripped of voting rights for a period of two years from 

the date on which the omission is remedied. 

There are no other bylaw clauses limiting voting rights. 

PSA PEUGEOT CITROËN - INFORMATION ABOUT PEUGEOT S.A. 209

O rganization at december 31, 2002 

100% 

PEUGEOT 

CITROËN 

AUTOMOBILES S.A. 

AUTOMOBILES 


100% 

50% 50% 

99.99% 99.99% 

FRANCE 

RENAULT 

FRANÇAISE 

DE MECANIQUE 


CITROËN 

SOCHAUX S.N.C. 


CITROËN 

RENNES S.N.C. 

27 SALES 

COMPANIES 

80% 

20% 

99.99% 

99.99% 

100% 

SOCIETE DE 

TRANSMISSIONS 

AUTOMATIQUES 

SOCIETE 

MECANIQUE 

AUTOMOBILE 

DE L’EST 


CITROËN 

POISSY S.N.C. 

SOCIETE 

COMMERCIALE 

AUTOMOBILE 

99.99% 99.99% 

99.98% 


CITROËN 

AULNAY S.N.C. 

99.99% 


CITROËN 

MULHOUSE S.N.C. 

99.99% 

SOCIETE 

DE DISTRIBUTION 

ET D’EXPLOITATION 

D’AUTOMOBILE 

SODEXA 

FIAT S.p.A. 

50% 

50% 

SOCIETE 

EUROPEENNE 

DE VEHICULES 

LEGERS DU NORD 

SEVELNORD 


CITROËN 

MECANIQUE DE 

L’EST S.N.C. 


CITROËN 

MECANIQUE DU 

NORD OUEST S.N.C. 

EUROPE 

50% 50% 

99.79% 

SOCIETA 

EUROPEA VEICOLI 

LEGGERI - 

SEVEL S.p.A. 

(Italy) 


CITROËN 

AUTOMOVILES 

ESPANA 

(Spain) 

79.72% 

CITROËN 

LUSITANIA S.A. 

(Portugal) 

17.91% 

AUTOMOVEIS 

CITROËN S.A. 

(Portugal) 

100% 

PEUGEOT CITROËN 

AUTOMOBILES UK 

(United Kingdom) 


ESPANA S.A. 

(Spain) 


AUTOMOBILI 

ITALIA S.p.A 

(Italy) 


PORTUGAL 

AUTOMOVEIS S.A. 

(Portugal) 


DEUTSCHLAND 

GmbH 

(Germany) 

99.99% 99.99% 


MOTOR 

COMPANY Plc 


95% 100% 


NEDERLAND N.V. 

(Netherlands) 

99.99% 99.99% 


BELGIQUE 

LUXEMBOURG S.A. 

(Belgium) 

100% 99.90% 


SUISSE S.A. 

(Switzerland) 

100% 100% 


POLSKA 

(Poland) 


AUSTRIA GmbH 

(Austria) 

100% 100% 


SLOVENIJA d.o.o. 

(Slovenia) 


HUNGARIA 

(Hungary) 

100% 100% 


HRVASTSKA d.o.o. 

(Croatia) 


CESKA REPUBLICA 

(Czech Rep.) 

100% 


SLOVAKIA 

(Slovakia) 

100% 

99.90% 96.92% 

91.32% 100% 

67.40% 

32.51% 

OTHER 

CONTINENTS 


DO BRASIL 

AUTOMOVEIS Ltda 

(Brazil) 


CITROËN 

ARGENTINA S.A. 

(Argentina) 


CHILE 

(Chile) 

AUTOMOTORES 

FRANCO CHILENA 

S.A. 

(Chile) 


MOTORS 

OF AMERICA INC. 

(United States) 


CITROËN 

CUKUROVA 

(Turkey) 

100% 

100% 40% 

90.70% 90.08% 

3.73% 

3.73% 

210 

PSA PEUGEOT CITROËN 


AUTOMOTIV 

PAZARLAMA 

(Turkey) 

PEUGEOT JAPAN 

(Japan) 


AUTOMOBILE 

NIGERIA Ltd 

(Nigeria) 


ALGERIE 

(Algeria) 


EGYPTE SAE 

(Egypt) 

DONGFENG 


AUTOMOBILE 

COMPANY Ltd 

(China) 19.42%

PEUGEOT S.A. 

100% 

AUTOMOBILES 

CITROËN 

71.50% 

FAURECIA 

GEFCO 

99.94% 

98.40% 100% 

CITER 

100% 

CITROËN 

CHAMP DE MARS 

SOCIETE 

COMMERCIALE 

CITROËN 

13 SALES 

COMPANIES 

94.82% 99.38% 

99.95% 

95% 

100% 

CITROËN ITALIA 

S.p.A. 

(Italy) 

AUTOMOVILES 

CITROËN ESPANA 

(Spain) 

CITROËN 

DEUTSCHLAND AG 

(Germany) 

GEFCO ITALIA 

S.p.A. 

(Italy) 

GEFCO U.K. Ltd 


99.75% 99.97% 

99.97% 

100% 

70.59% 

CITROËN 

(SUISSE) S.A. 

(Switzerland) 

AUTOMOVEIS 

CITROËN S.A. 

(Portugal) 

CITROËN U.K. Ltd 


GEFCO 

DEUTSCHLAND 

GmbH 

(Germany) 

GEFCO BENELUX 

S.A. 

(Belgium) 

100% 100% 

100% 

97% 

99.99% 

CITROËN 

DANMARK A/S 

(Denmark) 

CITROËN BELUX 

S.A. - N.V. 

(Belgium) 

CITROËN 

NEDERLAND B.V. 

(Netherlands) 

GEFCO PORTUGAL 

TRANSITARIOS 

LIMITADA 

(Portugal) 

GEFCO ESPANA 

S.A. 

(Spain) 

100% 100% 

100% 

100% 

98.64% 

CITROËN 

SVERIGE AB 

(Sweden) 

CITROËN 

OSTERREICH 

GmbH 

(Austria) 

CITROËN 

NORGE A/S 

(Austria) 

GEFCO POLSKA 

Sp. z.o.o. 

(Poland) 

GEFCO (SUISSE) 

S.A. 

(Switzerland) 

100% 100% 

100% 

CITROËN 

SLOVENIJA d.o.o. 

(Slovenia) 

CITROËN 

POLSKA 

(Poland) 

CITROËN 

HUNGARIA 

(Hungary) 

100% 100% 

100% 

CITROËN 

SLOVAKIA 

(Slovakia) 

CITROËN 

HRVATSKA d.o.o. 

(Croatia) 

CITROËN CESKA 

REPUBLICA 

(Czech. Rep) 

51% 

100% 

100% 

100% 

CITROËN 


(Brazil) 

CITROËN JAPON 

(Japan) 

GEFCO 


Ltda 

(Brazil) 

99.99% 

GEFCO 

PARTICIPACOES 

Ltda 

(Brazil) 

GEFCO 


(Argentina) 

87.50% 

GEFCO TASIMACILIK 

VE LOJISTIK ANONIM 

SIRKETI 

(Turkey) 

46% 

GEFCO TUNISIE 

(Tunisia) 

99.92% 

GEFCO MAROC 

(Morocco) 


74.93% 

84.54% 

AUTOMOBILES 

CITROËN 

9.02% 

BANQUE 

PSA FINANCE 

16.05% 

AUTOMOBILES 


15.45% 

PROCESS CONCEPTION 

INGENIERIE S.A. 

CREDIPAR 

99.91% 98% 

99.99% 

SOCIETE 

FINANCIERE DE 

BANQUE-SOFIB 

SOFIRA-SOCIETE 

DE FINANCEMENT 

DES RESEAUX 

AUTOMOBILES 

GIE PSA 

TRESORERIE 

98.67% 99.99% 

STE DE 

CONSTRUCTION 

D’EQUIPEMENTS 

DE MECANISATIONS 

ET DE MACHINES- 

SCEMM 

99.99% 

STE DE 

CONSTRUCTIONS 

MECANIQUES 

PANHARD & LEVASSOR 

100% 


CITROËN MOTEURS 

HONDA 

MOTOR 

25% 

74.98% 


MOTOCYCLES 

100% 

100% 

99.92% 

100% 

PSA WHOLESALE Ltd 


PEUGEOT FINANCE 

INTERNATIONAL N.V. 

(Netherlands) 

PSA 

INTERNATIONAL S.A. 

(Switzerland) 

PROCESS CONCEPTION 

INGENIERIE GmbH 

(Germany) 

ABBEY NATIONAL 


50% 

50% 


Plc 


100% 


DEUTSCHLAND 

GmbH 

(Germany) 

100% 

PSA FINANCIAL 

HOLDING B.V. 

(Netherlands) 

100% 


NEDERLAND B.V. 

(Netherlands) 

100% 


AUSTRIA BANK AG 

(Austria) 

PSA GESTAO- 

COMERCIO 

E ALUGER 

DE VEICULOS 

(Portugal) 

100% 


POLSKA 

(Poland) 

82.35% 


SUISSE S.A. 

(Switzerland) 

97% 57.69% 


BELUX 

(Belgium) 

100% 


ITALIA S.p.A. 

(Italy) 

17.62% 

42.31% 

100% 

100% 


SLOVAKIA 

(Slovakia) 

PSA FINANCE CESKA 

REPUBLICA 

(Czech. Rep) 

Automobile Division: 

Manufacturing companies 

99.98% 

BANCO PSA 

FINANCE BRASIL 100% 

S.A. 

(Brazil) 

50% 

99.94% 

PSA 

ARRENDAMIENTO 100% 

100% 

MERCANTIL S.A. 

(Brazil) 

100% 

PROCESS 

CONCEPTION 

INGENIERIE DO 

BRASIL Ltda 

(Brazil) 

100% 

PROCESS 

CONCEPTION 

INGENIERIE 


(Argentina) 

Automobile Division: 

Sales companies 

Transportation and 

logistics companies 



ARGENTINA 

(Argentina) 

Other businesses

S tockholder Information 

(Euronext data) 

All figures adjusted for the six-for-one stock split on July 2, 2001 

Price data 

2002 2001 % 

change 

(in euros) on 2001 

closing 

High Low Dec 31, 2002 High Low Dec 28, 2001 price 

Peugeot S.A. share 60.80 32.20 38.86 58.27 35.40 47.75 -18.62 

CAC 40 Index 4,720.04 2,612.03 3,063.91 5,998.48 3,463.07 4,624.58 -33.75 

Trading data 

2002 2001 

Daily 

Daily 

Total average Total average 

- Number of shares 336,650,012 1,320,196 351,792,398 1,390,484 

- Value (in millions of euros) 16,159.1 65.1 17,325.3 68.5 

Price and trading volume of the Peugeot S.A. share on the Euronext Paris First Market (Deferred Settlement Service) 

Share price (in euros) 

Trading volume 

Average value 

Low High Last Volume (in thousands of euros) 

2001 

January 39.25 47.17 45.67 32,473,080 65,436.2 

February 44.77 53.55 49.12 29,443,974 71,851.0 

March 44.17 53.67 47.83 28,236,036 62,213.6 

April 44.83 54.33 53.65 26,922,000 71,878.9 

May 51.80 58.27 54.48 30,096,246 74,338.1 

June 52.00 56.48 53.45 38,092,098 102,521.1 

July 51.90 54.60 54.00 28,951,112 70,151.7 

August 51.05 55.10 52.45 25,690,157 59,345.2 

September 35.40 52.70 40.90 38,715,273 86,307.8 

October 40.00 47.74 45.15 29,150,276 56,255.5 

November 44.15 51.10 47.28 24,200,678 53,371.5 

December 44.00 48.40 47.75 19,821,468 51,437.4 

2002 

January 43.42 48.15 45.83 26,726,539 55,239.2 

February 43.50 50.30 50.30 28,419,056 66,966.7 

March 50.05 57.10 56.60 28,873,327 77,086.2 

April 52.40 58.15 55.20 27,325,038 71,394.4 

May 55.55 60.80 56.50 38,009,422 101,388.8 

June 50.35 57.85 52.55 26,515,899 70,876.2 

July 40.18 52.50 49.36 32,139,845 64,706.4 

August 43.30 49.95 45.62 26,291,008 55,546.2 

September 35.52 46.20 37.41 22,641,929 43,950.2 

October 32.20 44.85 42.84 34,282,121 58,766.3 

November 40.55 47.00 45.35 24,285,899 50,453.0 

December 37.56 46.10 38.86 21,139,929 43,552.1 

2003 

January 36.20 41.25 38.92 23,642,388 41,820.1 

February 36.42 41.48 41.00 27,563,032 54,118.6 

March 33.53 41.30 35.84 26,972,150 48,091.3 

212 


L isting 

The Peugeot S.A. share is listed on the Euronext Paris market, where it is eligible for the deferred settlement system, as well as on the 

Brussels Stock Exchange. It is also traded in London on the SEAQ International system and in the United States in the form of 

American Depositary Receipts (ADRs), traded on the New York over-the-counter market. Each share of common stock is represented 

by one ADR. 

C oupons eligible for payment 

Dividends 

Dividend Tax credit 

Payment Time paid for tax Total 

Number Par Coupon as barred before tax already paid to income 

of shares value number from as from credit French Treasury per share 

Shares 50,110,828 FRF35 36 June 10, 1998 June 10, 2003 FRF3.00 FRF1.50 FRF4.50 

50,114,600 €6 37 June 9, 1999 June 9, 2004 €1.50 €0.75 €2.25 

45,491,008 €6 38 June 2, 2000 June 2, 2005 €2.70 €1.35 €4.05 

46,370,605 €6 39 May 23, 2001 May 23, 2006 €5.00 €2.50 €7.50 

259,109,146 €1 40 May 22, 2002 May 22, 2007 €1.15 €0.58 €1.73 

Other rights 

Number Par Coupon Ex-coupon Type 

of shares value value date of transaction 

Share 18,479,370 FRF70 26 July 15, 1987 Bonus share issue 

(1 new share for 

5 existing shares) 


F inancial authorizations in effect 

Financial authorizations in effect 

before the combinated Annual and Extraordinary Stockholders Meeting of May 28, 2003 

Maximum 

Granted Validity Expires capital Debt Authorization 

1 – Annual Stockholders Meeting 

Conventional bonds (1) May 24, 2000 5 years May 24, 2005 €1 billion 

Buyback of shares 

Purchase 

of up to 

25,000,000 

shares 

Maximum 

purchase 

price: €65 

Minimum 

selling 

May 15, 2002 18 months November 15, 2003 price: €40 

2 – Extraordinary Stockholders Meeting 

Issuance of shares for cash, 

with or without pre-emptive 

subscription rights (1) May 16, 2001 26 months July 16, 2003 €400 million (2) 

Convertible bonds, with or without 

pre-emptive subscription rights (1) May 16, 2001 26 months July 16, 2003 €400 million (2) €600 million (3) 

Peugeot S.A. bonds with warrants, 


subscription rights (1) May 16, 2001 26 months July 16, 2003 €400 million (2) €600 million (3) 

Peugeot S.A. shares with warrants, 



Bonds, with or without pre-emptive 


Options to purchase new 

or existing Peugeot S.A. shares May 15, 2002 26 months July 31, 2004 2,000,000 shares 

Issuance of shares when a public 

offer to acquire or exchange the 

Company’s shares is in progress May 15, 2002 May 31, 2003 €400 million (2) 

Cancellation of shares 

10% of 

the capital 

stock per each 

24-month 

May 16, 2001 24 months May 16, 2003 period 

(1) Data in this chart is not exhaustive and is provided solely for information purposes. 

(2) Together, these issues may not have the aggregate effect of increasing the Company’s capital stock to more than €400 million. 

(3) Debt securities may be issued in a maximum nominal amount of €600 million or the equivalent in other currencies. 

214 


Financial authorizations granted in resolutions 

submitted to the combinated Annual and Extraordinary Stockholders Meeting of May 28, 2003 

Maximum 

Granted Validity Expires capital Debt Authorization 

May 24, 2000 5 years May 24, 2005 €1 billion 

Acquisition 

of up 

to 25,000,000 

shares 

Maximum 

purchase 

price: €65 

Minimum 

selling 

May 28, 2003 18 months November 28, 2004 price: €40 

May 28, 2003 26 months July 28, 2005 €400 million (2) 

May 28, 2003 26 months July 28, 2005 €400 million (2) €600 million (3) 




May 15, 2002 26 months July 31, 2004 2,000,000 shares 

May 28, 2003 May 31, 2004 €400 million (2) 

10% of 

the capital 

stock per each 

24-month 

May 28, 2003 24 months May 28, 2005 period 


216 


R esolutions 

Resolutions to be voted on in Annual 

Stockholders’ Meeting 

First resolution 

Approval of the Report of the Managing Board and the 

financial statements 

The Annual Meeting, having reviewed the annual financial statements, 

the Report of the Managing Board, the Report of the Supervisory Board 

and the Auditors’ Report on the annual financial statements, approves 

the Report of the Managing Board. 

The Annual Meeting approves the 2002 financial statements, showing 

net income of €1,189,952,655.03. 

Second resolution 

Approval of the consolidated financial statements 

The Annual Meeting, having reviewed the consolidated financial 

statements, the Report of the Managing Board and the Auditors’ 

Report on the consolidated financial statements, approves the 

consolidated financial statements for the year ended December 31, 

2002, as presented. 

Third resolution 

Appropriation of income for the year 

The Annual Meeting notes that distributable income, representing net 

income for the year of €1,189,952,655.03, plus retained earnings 

brought forward from the prior year in an amount of 

€309,094,914.66, totals €1,499,047,569.69. 

The Annual Meeting resolves to appropriate distributable income as 

follows: 

- To the payment of a dividend €349,797,347.10 

- To untaxed reserves €94,571,545.00 

- To other reserves €600,000,000.00 

- To unappropriated retained earnings €454,678,677.59 

The dividend of €1.35 per share, corresponding to total revenue of 

€2.025 per share including the associated tax credit of €0.675, will be 

paid as from June 4, 2003. 

The Annual Meeting notes that the dividend and corresponding tax credits 

for the years ended December 31, 1999, 2000 and 2001 were as follows: 

Number 

Dividend before 

Year of shares tax credit Tax credit Total 

1999 45,509,460 shares €2.70 €1.35 €4.05 

with a par value of €6 

2000 47,093,191 shares €5.00 €2.50 €7.50 


2001 255,409,004 shares €1.15 €0.58 €1.73 


Fourth resolution 

Approval of the Auditors’ Report on agreements with 

companies that have common directors 

The Annual Meeting, having reviewed the Auditors’ Report on 

agreements with companies that have common directors, approves the 

Report and the transactions referred to therein. 

Fifth resolution 

Ratification of the appointment of a member of the 

Supervisory Board 

The Annual Meeting ratifies the appointment to the Supervisory Board 

of Thierry Peugeot, decided by the Supervisory Board on December 19, 

2002, to replace Pierre Peugeot, deceased. Thierry Peugeot will remain 

in office for the remainder of his predecessor’s term, expiring at the 

close of the Annual Meeting to be held in 2004 to approve the 2003 


Sixth resolution 

Appointment of a Statutory Auditor 

The Annual Meeting appoints PricewaterhouseCoopers Audit SA, 

32 rue Guersant, Paris 17, as statutory auditor to replace Coopers & 

Lybrand Audit, following the latter’s resignation. PricewaterhouseCoopers 

Audit SA is appointed for the remainder of its predecessor’s term, 

expiring at the close of the Annual Meeting to be held in 2005 to 

approve the 2004 financial statements. 

Seventh resolution 

Appointment of an Auxiliary Auditor 

The Annual Meeting appoints Yves Nicolas, 32 rue Guersant, Paris 17, 

as auxiliary auditor for PricewaterhouseCoopers Audit SA, to replace 

Pierre-Louis Schneider, following the latter’s resignation. Yves Nicolas 

is appointed for the remainder of his predecessor’s term, expiring at the 

close of the Annual Meeting to be held in 2005 to approve the 2004 


PSA PEUGEOT CITROËN - RESOLUTIONS 217

R esolutions 

Eighth resolution 

Authorization to launch a share buyback program 

The Annual Meeting, having reviewed the Report of the Managing 

Board, authorizes the Managing Board to buy and sell the Company’s 

shares on the stock market in order to optimize earnings per share or 

stabilize the market price, or for attribution on exercise of stock 

options granted to the employees, management or officers of the 

Company or any related entity, or in connection with the management 

of the Company’s stockholders’ equity, or cash reserves, or for 

attribution on redemption, conversion, exchange or exercise of share 

equivalents. The shares may be purchased and sold by any appropriate 

means and at any time, on or off-market, including through the use of 

put and call options and any and all other derivatives traded on a 

regulated market or over-the-counter. 

The maximum purchase price is set at €65 per share and the minimum 

sale price at €40 per share. As an exception to the foregoing, if any 

shares acquired under this authorization are attributed on exercise of 

stock options, as provided for in articles L 225-179 et seq. of the 

French Commercial Code, the price at which the shares are attributed 

to optionholders will be determined in accordance with the applicable 

legal provisions. 

The Managing Board may acquire up to a maximum of 25,000,000 

issued shares outstanding under this authorization, which is granted for 

a period of eighteen months from May 28, 2003 and replaces with 

immediate effect the previous authorization granted by the Annual 

Meeting held on May 15, 2002. 

Resolutions to be voted on in 

Extraordinary Stockholders’ Meeting 

Ninth resolution 

Authorization to issue equity or securities conferring the right to 

acquire equity directly or indirectly 

The Extraordinary Meeting, having reviewed the Report of the 

Managing Board and the Auditors’ Special Report, resolves, pursuant 

to Article L.225-129, paragraph III-3, of the French Commercial Code: 

I. To grant the Managing Board, under Article 9 of the bylaws, a 26- 

month authorization, with immediate effect: 

a. To issue, in France or abroad, on one or several occasions, shares 

and/or securities conferring the right to acquire equity, directly or 

indirectly, and/or warrants for Peugeot S.A. shares, which may or 

may not be attached to securities issued by Peugeot S.A., and/or 

b. To issue bonus shares or raise the par value of existing shares, to be 

paid up by capitalizing earnings, reserves or additional paid-in capital. 

The Peugeot S.A. shares to be issued pursuant to this authorization 

shall carry the same rights as existing shares, except with regard to the 

cum dividend date. The securities conferring the right to acquire equity 

may be denominated in euros or in foreign currencies. 

II. That: 

a. The aggregate number of shares issued pursuant to the 

authorizations given in a) and b) above (including any shares issued 

to protect the rights of the holders of existing securities) may not 

have the effect of increasing the capital—currently €259,109,146— 

to more than €400,000,000 and 

b. The aggregate nominal value of debt securities issued pursuant to 

this resolution may not exceed €600,000,000 or the equivalent in 

foreign currency, 

not including the value of any issue and/or redemption premiums. 

III. That: 

a. If the Managing Board issues shares with pre-emptive subscription 

rights for existing stockholders, any shares not taken up by 

stockholders exercising this right shall be offered to the other 

stockholders for subscription in a proportion not exceeding their 

existing interests in the capital. 

b. If the total number of shares included in the issue are not taken up 

by stockholders exercising their pre-emptive right, the Managing 

Board may decide either to limit the amount of the issue to the value 

of the shares subscribed, provided that at least three-quarters of the 

shares offered have been taken up, or to freely allocate all or some 

of the unsubscribed shares or to offer the unsubscribed shares for 

subscription by the public. 

c. In the case of a bonus share issue, rights to fractions of shares shall 

be non-transferable. The corresponding shares shall be sold and the 

proceeds from the sale allocated among the holders of said rights 

within 30 days of the date on which the whole number of shares 

allotted to them is recorded in their account. 

d. In the case of issue of compound securities, stockholders shall not 

have any pre-emptive right to subscribe the shares to be issued on 

conversion, redemption, exchange or exercise of the securities. 

IV. To grant full powers to the Managing Board to: 

- Decide on the type of securities to be issued, based on market 

opportunities in France and abroad, determine the characteristics of 

the securities and the terms and conditions subject to compliance with 

the applicable laws and conditions. 

- Carry out any and all publication and other formalities, enter into any 

and all underwriting agreements with any and all banks, amend the 

bylaws as required and generally take any other action that is necessary. 

V. That this authorization cancels and replaces the authorizations to 

issue shares and securities conferring a right to acquire equity 

given to the Managing Board by the Extraordinary Meeting of 

May 16, 2001. 

218 

PSA PEUGEOT CITROËN - RESOLUTIONS

Tenth resolution 

Authorization to issue securities conferring a right to acquire 

equity without pre-emptive subscription rights 


Managing Board and the Auditors’ Special Report, resolves that the 

issues of shares, securities or warrants conferring a right to acquire 

equity, immediately or in the future, as authorized in the ninth 

resolution of the Meeting, may be carried out, at the Managing Board’s 

discretion, in France or abroad, without existing stockholders being 

granted a pre-emptive subscription right, within the monetary limits set 

forth in paragraph II a) of the ninth resolution. 

The Extraordinary Meeting expressly waives stockholders’ pre-emptive 

subscription rights in the event that the Managing Board decides to use 

this authorization, provided that the issue price of the shares created 

directly or on conversion, redemption, exchange or exercise of 

securities, is at least equal to the average of the prices quoted for 

Peugeot S.A. shares on the Paris Bourse over ten consecutive trading 

days selected from among the twenty trading days preceding the 

opening date of the issue. 

Eleventh resolution 

Authorization to issue new shares while a public offer to 

acquire or exchange the Company’s shares is in progress 

The Extraordinary Meeting resolves that the blanket authorization, 

granted to the Managing Board in the ninth and tenth resolutions 

approved by this Annual Meeting, to increase the capital to a maximum 

of €400,000,000 by issuing shares and securities conferring a right to 

acquire equity, with or without pre-emptive subscription rights, may be 

used by the Managing Board while a public offer to acquire or exchange 

the Company’s shares is in progress, provided that subscription of the 

shares is not restricted. This authorization shall expire at the next 

Annual Meeting. 

Twelfth resolution 

Authorization to carry out an employee share issue 


Managing Board and the Auditors’ Special Report, resolves, in 

accordance with Article L.225-129, paragraph VII, of the Commercial 

Code, to authorize the Managing Board to carry out one or several 

employee share issues, as provided for in Article L.443-5 of the Labor 

Code, provided that the aggregate par value of the shares issued under 

this authorization does not exceed €15,000,000. 

The Managing Board shall have full powers to determine the amount of 

any such share issue or issues within the above limit, as well as their 

timing and other terms and conditions. The Managing Board shall also 

determine the issue price of the new shares, subject to compliance with 

Article L.443-5 of the Labor Code, the basis on which such shares are 

to be paid up, the subscription period and the terms governing the 

exercise of employees’ subscription rights. 

The Managing Board shall also have full powers to enter into any and 

all agreements, take any and all measures and carry out any and all 

necessary formalities to render the capital increase or increases 

effective, and to amend the bylaws to reflect the new capital. 

This authorization is given for a period of twenty-six months from the 

date of this Meeting. 

Thirteenth resolution 

Authorization to reduce the capital stock by canceling shares 

bought back by the Company 


Managing Board and the Auditors’ Special Report, authorizes the 

Managing Board to cancel any shares held now or in the future, as 

purchased under the buyback program authorized in the eighth 

resolution of this Meeting, provided that the number of shares canceled 

in any twenty-four month period does not exceed one-tenth of the 

Company’s capital stock. 

The Extraordinary Meeting gives full powers to the Managing Board to 

reduce the capital stock on one or several occasions by canceling shares 

as provided for above, to amend the bylaws to reflect the new capital, 

to carry out any and all publication formalities, and to take any and all 

measures required to effect the capital reduction or reductions, directly 

or indirectly. 

PSA PEUGEOT CITROËN - RESOLUTIONS 219

T he Vice Presidents Committee 

Thierry ARMENGAUD 

Chief Executive, Banque PSA Finance 

Alain BALDEYROU 

Manufacturing and Components, 

Trnava Manufacturing Center 

Vincent BESSON 

Citroën Marque, 

Products and Markets 

Michel BRICOUT 


International Sales and Marketing 

Patrick BRIENS 


Mulhouse Manufacturing Center 

Jean-Marie BROM 


Poissy Manufacturing Center 

Christian CARDOT 

Finance, Control and Performance, 

Automobile Accounting and 

Finance Management Systems 

Alain CORDIER 


Budget Control 

Louis DEFLINE 

Chairman, Gefco 

Yann DELABRIERE 

Executive Vice President, 

Finance, Control and Performance 

Philippe DORGE 

Employee Relations 

and Human Resources, 

Institutional and Labor Relations 

Denis DUCHESNE 

Platforms, Technical Affairs 

and Purchasing, 

Cooperation Platforms 

Xavier FELS 

Group Vice President, 

External Relations 

Jean-Martin FOLZ 


Roger GARNIER 

Peugeot Marque, 

International Development 

Pierre GOSSET 

Innovation and Quality, 

Quality 

Jean-Louis GREGOIRE 


Executive Development 

Bernard GUERREAU 


Institutional Relations 

Bruno de GUIBERT 


Products and Markets 

Hervé GUYOT 



Purchasing 

Alain HAMM 


Sochaux Manufacturing Center 

Pascal HENAULT 


Research and Innovation 

Jean JACQUEMART 


Sales and Marketing France 

Yves JOUCHOUX 


Spare parts Logistics 

Liliane LACOURT 


Corporate Communications 

Véronique LARRIEU-PELEGRY 


Communications 

Norbert LARTIGUE 



Chassis and Powertrains 

Hubert LEHUCHER 


Sales and Marketing Europe 

Jean-Paul LEVEL 



Vehicle Function Activities 

Hubert MAILLARD 



Platform 1 

Christian DELOUS 


International Sales and Marketing 

Jean-Claude HANUS 


Legal Affairs 

Victor MALLO 

Strategy and Group Product Planning, 

Industrial Strategy 

220 

PSA PEUGEOT CITROËN - THE VICE PRESIDENTS COMMITTEE

Daniel MARTEAU 


Manufacturer Relations 

and Cooperation Agreements 

Gilles MICHEL 



and Purchasing 

Jean-Marc NICOLLE 


Strategy and Group Product Planning 

Philippe PELLETIER 


Mechanical Component Plants 

and Foundries 

Bernard PELOUX 


Spare parts and Services 

Christian PEUGEOT 


Marketing and Quality 

Robert PEUGEOT 


Innovation and Quality 

Jacques PINAULT 



Platform 2 

Jean-Claude PLAY 


International Cooperation 

and Manufacturing 

Jean-François POLUZOT 



Platform 3 

Jacques POMPANON 



Human Resources Development 

Corrado PROVERA 


Communications 

Jean-Guy QUEROMES 



Vehicle Subassembly Activities 

Jean-Louis REYNAL 



Chassis and Powertrain Platform 

Javier RIERA NIEVES 


Vigo Manufacturing Center 

Gilles ROBERT 


International Finance 

Alain ROJON 


Corporate Services 

Sylvie RUCAR 


Cash Management 

Frédéric SAINT-GEOURS 



Magda SALARICH 


Sales and Marketing Europe 

Claude SATINET 



Michel SCHREIBER 


Products and Marketing 

Paul SEVIN 


Sales and Marketing France 

François SOULMAGNON 



Training and Working Conditions 

Jean TANGUY 


Aulnay Manufacturing Center 

Claude VAJSMAN 



Control, Information Systems, 

and Design Facilities 

Roland VARDANEGA 


Manufacturing and Components 

Jean-Luc VERGNE 



and Human Resources 

Yvan PLAZANET 


Rennes Manufacturing Center 

Henri SAINTIGNY 

Special Advisor to the Chairman 

of the Supervisory Board 

Daniel ZAMPARINI 


Information Systems 

At March 1, 2003 

PSA PEUGEOT CITROËN - THE VICE PRESIDENTS COMMITTEE 221

12,000 copies of this report were printed 

Design: Department of Communication PSA Peugeot Citroën 

Photolibrary: PSA Peugeot Citroën - Faurecia - Gefco - Peugeot Motocycles - Photo: X - B.Garcin - Gasser 

Layout: Harrison&Wolf 

Publishing: ALTAVIA PRODITY

PEUGEOT S.A. 

Incorporated in France with issued capital of €259,109,146 

Governed by a Managing Board and a Supervisory Board 

Registered office: 75, avenue de la Grande Armée – 75116 Paris, France 

RCS Paris B 552 100 554 – Siret 552 100 554 00021 

Tel : 33 (1) 40.66.55.11 – Fax : 33 (1) 40.66.54.14 

www.psa-peugeot-citroen.com

PSA COUV page . page RA GB - PEUGEOT Presse

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