Atari 2010 Annual Report Download - page 20

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
20
2. ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.1 SUMMARY ACTUAL CONSOLIDATED INCOME STATEMENT
(€ millions)
Revenue
115.7
136.4
-20.7
-15.2%
Cost of goods sold (58.1) -50.2% (87.9) -64.4% 29.8 -33.9%
Gross margin
57.6
49.8%
48.5
35.6%
9.1
18.8%
Research and development expenses (48.9) -42.3% (67.0) -49.1% 18.1 -27.0%
Marketing and selling expenses (17.0) -14.7% (19.0) -13.9% 2.0 -10.5%
General and administrative expenses (15.3) -13.2% (25.0) -18.3% 9.7 -38.8%
Share-based payment expense 1.6 1.4% (6.4) -4.7% 8.0 -125.0%
Current operating income (loss)
(22.0)
-19.0%
(68.9)
-50.5%
46.9
-68.1%
Restructuring costs (2.6) (13.9) 11.3
Impairment of goodwill 0.0 (40.3) -40.3
Other operating income (expenses) (0.1) (0.1) 0.1
Operating income (loss)
(24.7)
-21.3%
(123.2)
-90.3%
-70.7
134.7%
March 31, 2010
March 31, 2009
Change
Revenue
Revenue was €115.7 million for the year ended March 31, 2010, compared with €136.4 million for the previous fiscal
year, a decrease of 15.2%.
The decrease was primarily due to lower publishing revenue in FY 2009/2010, partially offset by increased online and
licensing revenue. For FY2009/2010, Atari focused on selling fewer but more profitable games. Sales were driven by
Atari’s major releases over the period (Ghostbusters: The Video Game, Backyard Football 2010, Champions Online and
Star Trek Online).
€ millions
Online 12.5 10.8% 2.6 1.9%
Retail & Other 103.2 89.2% 133.8 98.1%
Total
115.7
100.0%
136.4
100.0%
March 31, 2010 March 31, 2009
Online revenue, comprised primarily of subscription and digital distribution revenue, was €12.5 million – an increase of
€9.9 million over the prior year. This increase was primarily due to subscription and digital distribution revenue from the
launch of the Star Trek Online and Champions Online MMO games. Online revenues were 11% of total net sales as
compared to 2% in the prior fiscal year.
Retail and other revenues, comprised primarily of sales to retail stores, decreased by €30.6 million to €103.2 million, due
to a lower number of titles and price pressure in a weak economic environment. Retail and other revenues were 89% of
total net revenue as compared to 98% in the prior fiscal year.
Gross margin
Gross margin for the year ended March 31, 2010 was 49.8% as a percentage of revenue, compared with 35.6% for the
previous year. This increase was due to better performing retail titles and a larger percentage of higher margin online
revenue in the current year.
Research and development expenses
Research and development expenses decreased €18.1 million to €48.9 million, as compared with €67.0 million for the
previous period. This improvement was primarily due to write-downs of €31.0 million in the prior year mostly related to
the reorganization of the publishing business. The current year reflects write-downs of €16.5 million primarily from the
MMO business. Amortization of development costs were lower in the current fiscal year versus the prior year as a result
of large budget, externally developed games in the prior year.
Marketing and selling expenses
Marketing and selling expenses were €17.0 million, compared with €19.0 million for the previous period. This decrease
was primarily due to prior year spend to support major publishing releases such as Alone in the Dark, The Chronicles of
Riddick, Race Pro and others. As a percentage of net revenue, external marketing and selling costs were down
approximately 1.3 ppt. due to improved cost control measures. This decrease was partially offset by higher internal
marketing costs due to the re-staffing of the marketing department.