Atari 2012 Annual Report Download - page 61

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
61
2.26. FINANCIAL INCOME AND EXPENSES
Cost of debt
Net debt is the aggregate of current and non-current borrowings and other financial liabilities, less cash and cash
equivalents. The cost of debt is the excess of expenses over income generated by items making up the net debt over the
period, including income and expense from related interest-rate and currency hedges. The cost of debt includes:
 Interest expense on consolidated debt, consisting of bond debt, the debt portion of dual financial
instruments, other financial liabilities (including obligations under finance leases), and interest income from
cash and cash equivalents;
 Fees paid to banks on financial transactions.
As described on note § 2.10, Atari does not capitalize financial interest related to the acquisition of tangible and
intangible assets and believes the impact to be immaterial to the Consolidated Financial Statement of the Group.
Other financial income (expense)
The following items are included under "Other financial income (expense)":
 Dividends received from non-consolidated entities
 The effect of discounting provisions
 Foreign-exchange gains and losses
2.27. TAXES
Deferred taxes are recognized in the income statement and balance sheet to reflect temporary differences between the
accounting and tax value of certain assets and liabilities.
Deferred taxes are accounted for in accordance with the liability method and are measured taking into account tax rates
(and tax laws) that have been enacted or substantively enacted at the balance sheet date. The impact of changes in tax
rates on deferred taxes previously recognized in the income statement or in equity are recognized in the income
statement or in equity, respectively, in the period in which the rate changes become effective.
Deferred taxes are recognized either in income or in equity, depending on whether they pertain to items that are
recognized in income or in equity.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against
which the deferred tax asset can be utilized. The carrying amount of deferred tax assets is reviewed at each balance
sheet date and is reduced if it is no longer probable that sufficient taxable profit will be available to allow the benefit of
part or all of the deferred tax asset to be utilized. Any such reduction is reversed if it becomes probable that sufficient
taxable profit will be available.
Deferred tax assets and deferred tax liabilities are offset if, and only if, subsidiaries have a legally enforceable right to set
off current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied
in the same period by the same taxation authority.
Deferred tax assets and liabilities are not discounted.
2.28. EARNINGS PER SHARE
The Group reports both basic and diluted earnings per share.
Basic earnings per share correspond to attributable net income for the period divided by the weighted average number of
shares outstanding, net of any treasury shares.
Diluted earnings per share are calculated by dividing the adjusted attributable net income for the year by the weighted
average number of shares outstanding, plus all potentially dilutive ordinary shares. Potentially dilutive ordinary shares
include those to be issued on the exercise of stock options or warrants, allocation of rights to performance shares and
the conversion of convertible bonds and bonds redeemable in shares (equity notes) issued by the Group.
2.29. BUSINESS TAX – TERRITORY ECONOMIC TAX
The law of Finance for 2010 has created the Territory Economic Tax (“Contribution Economique Territoriale – CET “) in
order to replace, from Fiscal Year 2010 the Business Tax (“Taxe Professionnelle –TP”).
The « CET » is composed of two taxes: Business Land Tax (“Cotisation Foncière des Entreprises – CFE") based on the
real estate goods and the Business Value Added Tax (“Cotisation sur la Valeur Ajoutée des Entreprises – CVAE”). The
Company considers that these two taxes are, by nature, related to its activity and to the different entities of the Group
and recognizes, from the first calendar quarter of Fiscal Year 2010 both in the line “operating expenses” of its income
statement.
NOTE 3 – GOODWILL
3.1. CHANGES DURING THE PERIOD
Goodwill arising on business combinations is recognized in the currency of the acquired entity as prescribed in IAS 21
and allocated to cash-generating units (CGUs) at the acquisition date.