Atari 2009 Annual Report Download - page 123

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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 Rollout as from June 2008 of a worldwide restructuring plan (Atari Transformation), together with an additional
restructuring plan in the fourth quarter of the year in order to limit the impact of falling demand from end-
consumers and facilitate the Group‟s transition to Online business.
 Reorganization of publishing operations with the aim of maximizing revenue generated by non-online
intellectual property through the monetization of licenses and by entering into publishing partnership
agreements. The first stages of this plan have already been implemented, for example through the worldwide
launch program for Ghostbusters: The Video Game, which includes an exclusive agreement with Sony
Computer Entertainment Europe for the launch of the game on the PS3 and PS2 in and the PAL regions.
 Changing the Company‟s corporate name from Infogrames Entertainment to Atari. This move will enable the
Company to more effectively leverage the Atari brand by capitalizing on its worldwide reputation and its
consumer appeal – two factors that are key to implementing the Group's online, product and licensing
strategies.
In order to ensure that it has the requisite funds to finance its operations in 2009-2010, the Company also:
 Secured an additional €15 million credit facility from Banc of America in the fourth quarter of 2008-2009,
expiring on December 31, 2009; and
 Entered into negotiations to extend the expiration date of its €61.7 million Banc of America credit facility from
December 31, 2009 to July 2010. Based on the negotiations that have taken place so far, management
considers it likely that Banc of America will grant this extension.
Based on the above-described measures and assumptions, as well as the forecast for fiscal year 2009-2010 as
approved by the Board of Directors, management believes that the Company‟s financial resources – including the
extension of the Banc of America credit facility – will be sufficient to cover its operating expenses and capital expenditure
for the year ending March 31, 2010.
On this basis, the Company has applied the going concern principle in preparing its parent company financial
statements.
2.2. Accounting principles
The basic method used to measure accounting items is the historical cost method.
The principal approaches used are as follows:
 Intangible assets and property, plant and equipment
Property, plant and equipment and intangible assets are measured at their acquisition cost (purchase price and
incidental expenses) and are depreciated or amortized over a period that varies depending on the nature of the assets
concerned:
- Software 1 to 3 years
- Machinery and tools 1 to 4 years
- Improvements and fittings 10 years
- Furniture 2 to 10 years
Property, plant and equipment is depreciated on a straight-line basis.
 Financial fixed assets
The gross value of investments in subsidiaries and associates corresponds to the historical cost of the corresponding
securities, including costs directly attributable to the acquisition.
Securities acquired subject to an earn-out are estimated provisionally at their cost at the transaction date. This amount is
adjusted at each balance sheet date to take account of changes in the estimated price or the definitive price.
An impairment provision is recognized whenever the carrying amount exceeds the recoverable amount of the assets.
The recoverable amount is calculated using a variety of criteria, including those applied when the asset was originally
acquired (including stock market multiples), market values, expected returns based on discounted future cash flows, and
adjusted net worth.
If applicable, in the event that the recoverable amount is negative, in addition to recognizing an impairment loss, the
other assets held are also written down and, if necessary, a contingency provision is recognized.
 Receivables
Receivables are recognized at their nominal value. The Company recognizes a provision for impairment whenever their
gross carrying amount exceeds fair value.
 Transactions in foreign currencies
Income and expense items denominated in foreign currencies are recognized at their equivalent value in euros at the
transaction date. Liabilities, receivables and cash denominated in foreign currencies are translated using the exchange
rate at the balance sheet date. Differences arising on the translation of liabilities and receivables in foreign currencies
are recorded in the balance sheet under “Unrealized foreign exchange gains (losses)”.
A contingency provision is recognized for unrealized foreign exchange losses not offset by gains.
 Bond issue costs, premiums, discounts and redemptions
Bonds are recognized at the issue‟s nominal value. Costs and premiums are recognized in assets under “Accruals” and
are amortized in financial income over the life of the bonds, unless the redemption risk is hedged.