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5
Consolidated financial statements at December 31, 2007
Note 23 - Research and Development
Research and development costs break down as follows:
Amortization of capitalized development costs came to 42 million in 2007 and 23 million in 2006. In addition, ex-
ceptional impairment losses of 6 million were recorded on capitalized development costs in 2007.
Note 24 - Depreciation, amortization and provision expense
Depreciation, amortization and provision expenses recognized in operating expenses were as follows:
In 2007, provisions in an amount of 108 million were recorded in other operating income/expense (note 25). Impairment
of other non-current assets represented a net charge of 41 million.
Note 25 - Other operating income and expenses
Other operating income and expenses break down as follows:
In 2007, the Group realized capital gains on sales of real estate assets, including headquarters buildings in the Paris
region.
Operating profit included 138 million in non-recurring expenses related to asset impairment (40 million) and restruc-
turing programs (98 million). Non-recurring expenses primarily stemmed from continued industrial reorganization in
Europe, for 40 million, reorganization of the Critical Power business in Europe and the United States, for 22 million,
and reorganization of the Building Automation business in the United States, for 10 million.
The Group realized a capital gain on the divestment of MGE UPS’s small systems in an amount of 60 million (after tak-
ing into account the write-off of 221 million in goodwill and 100 million in trademark impairment). It also set a side a
provision of 72 million to cover its IT contracts (note 16a). Both of these items are recorded in "Other" above.
2007 2006
Research and development costs recognized as an expense (1) 591.7 488.4
Capitalized development costs (2) 130.9 132.4
Total Research and Development costs of the year 722.6 620.8
(1) Of which
153.0 million recognized in cost of sales,
21.6 million in selling expenses and
417.1 million in R&D costs in 2007.
Of which
149.4 million recognized in cost of sales,
14.6 million in selling expenses and
324.7 million in R&D costs in 2006.
(2) Of which
2.4 million recognized in software in 2007.
Of which
11.6 million recognized in software in 2006.
2007 2006
Included in cost of sales:
Depreciation and amortization (282.6) (254.0)
Provisions (16.1) (10.8)
Included in selling, general and administrative expenses
Depreciation and amortization (139.6) (138.5)
Provisions (27.0) (20.5)
Depreciation, amortization and provision expense (465.3) (423.8)
2007 2006
Restructuring (97.9) (80.7)
Impairment losses on property, plant and equipment and intangible (39.8) (35.2)
Gains on asset disposals 37.9 45.6
Losses on asset disposals (6.3) (7.5)
Other (35.6) (38.2)
Other operating income and expenses (141.7) (116.0)
141