NOTE 2.19 COST OF GOODS SOLD
Cost of goods sold comprises all purchases of raw materials included in the costs of manufacturing, the change in inventory and inventory write-downs, all labor costs included in manufacturing costs which constitute the added value, freight-out costs on equipments sold, and a share of depreciation of the manufacturing facilities. Cost of goods sold does not include salaries and expenses associated with service revenues, which are included under “Selling, General and Administrative Expenses”.
NOTE 2.20 RESEARCH AND DEVELOPMENT
income, then deducted from R&D expenses in the income statement. The research tax credit is treated as a subsidy in the Group ﬁnancial statements and is discounted in light of the probability of future offsetting against income tax and in light of reimbursement of the unused portion after four years (see note 14), if it could not be offset previoulsy.
NOTE 2.22 INCOME FROM OPERATIONS BEFORE NON RECURRING ITEMS
The technical feasibility of software and hardware developed by the Group is generally not established until a prototype has been produced or until feedback is received from its pilot sites, conditioning their commercialization. Consequently, the technical and economic criteria that render the recognition of development costs in assets at the moment they occur are not met, and these, together with research costs, are therefore expensed in the year in which they are incurred. The (French) research tax credit (crédit d’impôt recherche) and the portion of the competitiveness and employment tax credit (crédit d’impôt compétitivité et emploi) relating to R&D personnel is deducted from R&D expenses.
NOTE 2.21 GRANTS
Where applicable, non-recurring items excluded from income from operations before non-recurring items reﬂect the impact on the ﬁnancial statements of events that are either unusual, abnormal and infrequent. There are very few of these and their amounts are signiﬁcant. When the Group identiﬁes non-recurring items, it tracks its operating performance by means of an intermediate balance referred to as “Income from operations before non-recurring items”. This ﬁnancial metric reﬂects income from operations less non-recurring income and plus non-recurring expenses, as set forth in CNC (French National Accouting Council) recommendation 2009-R.03.
NOTE 2.23 BASIC AND DILUTED EARNINGS PER SHARE
Investment grants are deducted from the cost of the ﬁxed assets in respect of which they were received. Consequently they are recognized in the income statement over the period of consumption of the economic beneﬁts expected to derive from the corresponding asset. Operating grants are deducted from their associated charges in the income statement. This applies to subsidies received to ﬁnance research and development projects. The Group receives interest-free reimbursable advances which are recognized at their amortized cost. Beneﬁts arising from the non-remuneration of these advances are initially recognized as operating grants in deferred
Basic net earnings per share are calculated by dividing net income by the weighted-average number of shares outstanding during the ﬁscal year, excluding the weighted average number of treasury shares. Diluted net earnings per share are calculated by dividing net income by the weighted-average number of shares adjusted for the dilutive effect of stock options outstanding during the ﬁscal year and excluding the weighted average number of treasury shares held solely under the Liquidity Agreement. The dilutive effect of stock options is computed in accordance with the share repurchase method provided by IAS 33. The assumed proceeds from exercise of stock options are regarded as having been used to repurchase shares at the average market price during the period. The number of shares thus obtained is deducted from the total number of shares resulting from the exercise of stock options.