Atari 2010 Annual Report Download - page 23

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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Online:
The online segment is comprised primarily of revenues and costs associated with the digital distribution of interactive
entertainment and subscription revenue from MMO.
Revenue:
Online revenue, comprised primarily of subscription and digital distribution revenue, was €12.5 million for fiscal year
2009/2010 – 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.
Gross Profit:
Costs of revenues associated with online revenue are comprised primarily of direct expenses to host and operate the
MMO subscription business. Costs associated with digital distribution revenue are negligible.
Gross profit improved to €9.7 million in fiscal year 2009/2010, €7.1 million better than the €2.6 million from the prior year.
Gross profit in the prior year was comprised entirely of digital distribution revenue with negligible costs of revenue. As
per above, the MMO commenced operations in fiscal 2009/2010.
Current Operating Income (“COI”)
Operating costs of the online segment mainly include substantially all costs of the development studios, costs of to
develop online MMO games and marketing and selling costs. Total operating costs for the fiscal year 2009/2010 were
€30.0 million, as compared to €6.7 million in the previous year.
Current operating income for the fiscal year ended 2009/2010 was -€20.3 million, a decrease of €16.2 million from the
-€4.1 million in the prior year. The current year included intangible asset write-downs totaling €14.9 million, primarily
from Champions Online (MMO) and Test Drive Unlimited 2 (unreleased). In addition, the current year includes a full year
of Cryptic studio operations, as Cryptic was acquired in December 2008.
RETAIL:
The retail segment is comprised primarily of revenues and costs associated with the publishing and physical distribution
of interactive entertainment.
Revenue:
Retail revenue, comprised primarily of sales to retail stores and licensing revenue, decreased by €31.1 million to €102.2
million in fiscal year 2009/2010, due primarily to a lower number of titles and price pressure in a weak economic
environment. Retail and other revenues were 88% of total net revenue as compared to 98% in the prior fiscal year
Gross Profit:
Costs of revenues associated with retail revenue are comprised primarily of product cost and royalty expenses.
Gross profit improved to €46.9 million, €1.5 million better than the €45.4 million from the prior year. Gross margin for
fiscal year 2009/2000 was 46% versus 34% in the prior year. This improvement was primarily due to better performing
titles, decreased third party low-margin revenue and increased higher-margin licensing revenue.
Current Operating Income (“COI”)
Operating costs of the retail segment primarily include research and development costs of retail product, marketing,
selling and distribution and general and administrative expenses. Total operating costs for the fiscal year 2009/2010
were €44.6 million, as compared to €90.3 million in the previous year, an improvement of €5.7 million.
COI for the fiscal year ended 2009/2010 was €2.3 million, an increase of €47.2 million from the -€44.9 million in the prior
year. The prior year included €31.0 million in write-downs on games and licenses related to the reorganization of the US
publishing business. Fiscal year 2009/2010 development and marketing costs were lower in the current fiscal year
versus the prior year as a result of large budget games developed in the prior year. Finally, general and administrative
expenses were lower in the current year as compared to last year as a result of the continuing cost containment
programs implemented across the Group and the restructuring of the European operations.