Gemplus originally classified these charges as goodwill that was immediately written off, consistent with the classification used in the French prospectus filed with the COB, in accordance with customary French practice. In France, goodwill amortization is excluded from the calculation of operating income, while in the US it is included in this calculation. In contrast, expenses are included in the calculation of operating income in both countries. Gemplus determined, in consultation with the SEC, that the difference of classification between the French and US prospectuses should be highlighted in the audit opinion of Gemplus' accountants and in the notes to the company's financial statements in its US prospectus. The reclassification had no impact on the net income or cash flow of Gemplus.
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