Atari 2011 Annual Report Download

Download and view the complete annual report

Please find the complete 2011 Atari annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

ANNUAL FINANCIAL
REPORT/REGISTRATION DOCUMENT
Fiscal Year 2010/2011

Table of contents

  • Page 1
    ANNUAL FINANCIAL REPORT/REGISTRATION DOCUMENT Fiscal Year 2010/2011

  • Page 2
    ...09-0600. CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEAR ENDED MARCH 31, 2011 Note to the reader: The English language version of this report is a free translation from the original, which was prepared in French and is available on the company's corporate website (http://corporate.atari.com). In the...

  • Page 3
    ... FOR THE YEAR ENDED MARCH 31, 2011 44 CONTENTS 44 STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 93 INFORMATION CONCERNING THE PARENT COMPANY 95 ANNUAL FINANCIAL STATEMENTS 95 NOTES TO THE FINANCIAL STATEMENTS 96 STATUTORY AUDITORS' REPORT ON THE FINANCIAL STATEMENTS 95...

  • Page 4
    ... of Slime, Play Atari, Atari Arcade Classics (such as Haunted House, Missile Command and Centipede) as well as the re-engineered version of the classic Atari game Haunted House; The continuation of cost control. • • FINANCIAL HIGHLIGHTS For the year ended March 31, 2011, the Company's total...

  • Page 5
    .... 2009/2010 and 2010/2011 Group sales and current operating income exclude Cryptic Studios business. STRAT EGY The major development in Fiscal Year 2010/2011 was the accelerated implementation of the strategy to focus Atari on future growth areas, specifically social/casual online and mobile gaming...

  • Page 6
    ... to Namco Bandai Games Europe, which closed in the summer of 2009. In May, the Board implemented the Company's corporate name change from Infogrames Entertainment to Atari and took a significant impairment of legacy activities. In January 2010, the Group completed a successful rights issue, raising...

  • Page 7
    ... generation console when it released its PlayStation 2 platform in 2000. The following year, Nintendo came out with the GameCube and Game Boy Advance. That generation of consoles also featured the market entry of Microsoft, with the Xbox console. Near the end of 2005, the next generation of consoles...

  • Page 8
    ...In Europe and certain parts of Asia, Atari distributes its products through Namco Bandai Partners. FRANCHISES AND LICENSES The Group's strategy consists in publishing and distributing products for all mass-market interactive systems (game consoles, PCs, online), based on its own original franchises...

  • Page 9
    ... console manufacturers is governed by agreements entered into by the Company and/or its subsidiaries with Nintendo, Sony Computer Entertainment and Microsoft. The agreements concretely authorize the Company to use these manufacturers' technology for the purpose of manufacturing products compatible...

  • Page 10
    ... with the Company's own cash and/or through the use of credit facilities. In Fiscal Year 2010/2011, the Group's research and development expenditures amounted to â,¬13.8million. The Board of Directors' report on the Group's management, section 2.1, contains detailed information regarding research...

  • Page 11
    ...used, based on the degree of risk exposure and the countries concerned. In France and elsewhere in Europe, Atari works closely with the anti-piracy unit set up by institutions such as SELL (the French association of entertainment software manufacturers), the Entertainment Leisure Software Publishing...

  • Page 12
    ... on the Company's financial statements. The material legal risks to which the Group is exposed are described in this Registration Document, in the "Legal risks" section of "Information on management and the financial statements". HUM AN RESOURCES AND PERSONNEL For Fiscal Year 2010/2011, average...

  • Page 13
    ... FINANCIAL STATEMENTS Year ended March 31, 2011 BOARD OF DIRECTORS' REPORT ON THE GROUP'S MANAGEMENT 1. ECONOMIC ENVIRONMENT AND HIGHLIGHTS OF THE YEAR 1.1. ECONOMIC ENVIRONMENT Atari ("the Company" or "the Group") is one of the world's famous developers and publishers of interactive game software...

  • Page 14
    ... and Administration of Atari, was appointed interim Chief Financial Officer. Pascal Cagni resigned from the Board. Change in the headquarter location As authorized by the September 30, 2010 AGM, the Company's headquarter was moved from Lyon, France to Paris, France. Credit line maturity extended As...

  • Page 15
    ... â,¬49 million to December 30, 2011. Cryptic Studios divestiture: In line with the previously stated strategy of fewer but more profitable releases and further expansion into casual online and mobile games, the Company has determined that external development creates more flexibility in the changing...

  • Page 16
    ... product pipeline as the Company continues to focus on fewer profitable releases with reduced research and development investments. The current year amortization includes write-downs of capitalized development projects of â,¬0.1 million versus â,¬9.3 million in the prior year. Marketing and selling...

  • Page 17
    ... balances in the current year as compared to the prior year. The Company used the proceeds from the January 2010 equity raise to reduce debt levels and did not requiring borrowings until the end of the first half of the Fiscal Year. Other financial income (expenses) Other financial income (expense...

  • Page 18
    ... costs of the online segment mainly includes cost to develop games and marketing and selling expenses. Total operating costs for the Fiscal Year 2010/2011 were â,¬11.6 million, as compared to â,¬12.1 million in the previous year. Current operating loss for the Fiscal Year ended 2010/2011 was...

  • Page 19
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT 2.3. CONSOLIDATED BALANCE SHEETS SIMPLIFIED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2011 AND MARCH 31, 2010 Atari March 31, 2011 5.4 12.7 2.7 2.1 22.9 16.0 42.3 16.4 74.7 97.6 (3.9) 0.1 (3.8) 3.4 4.8 8.2 49.0 32.8 11.4 93.2 97.6 Atari March 31, ...

  • Page 20
    ... product life-cycle and â,¬4.1 million for trademarks including the Hasbro license. As of March 31, 2010, intangible assets primarily consisted of Cryptic Studio intangible assets for â,¬22.1 million, â,¬3.5 million for games planned for future release including Sandlot Sluggers and Test Drive...

  • Page 21
    ... that of the Group as a whole. The Company used to publish management report on the parent company statutory financial statements. However, due to the new organization of the Group and the way management is analyzing the business, providing such information is not relevant anymore. 4. BUSINESS AND...

  • Page 22
    ... of September 30, 2010 granted the Board of Directors authority, for a period of eighteen months, to buy back up to 10 percent of the Company's shares outstanding, as measured on the date the Board of Directors makes use of this authority, provided, however, that the aggregate number of its own...

  • Page 23
    ...for Cryptic and Eden Games: deliver key Q4 products, create mission statement, product strategy and organizations at the company's two studios, in order for them to contribute meaningfully to the 2012 Fiscal Year in revenue and margin terms. For the Fiscal Year 2010/2011, Jim Wilson received a gross...

  • Page 24
    ..., mobile and casual, and secure co-publishing deals. FREE SHARES At May 13 and 23, 2011 Board meetings, Atari's Board of Directors granted to Mr. Wilson 500,000 free shares. The vesting period applicable to the shares shall end two years from the initial grant date. Vesting rights of the shares...

  • Page 25
    ... when he was employed by Atari, Inc. GRANT OF STOCK OPTIONS Mr. Lapin was granted stock options when he joined the Company as an employee of Atari, Inc. and became the Group's COO. These options were subject to annual performance criteria set by the Board of Directors. As required by article L. 225...

  • Page 26
    ... â,¬75,000 per director per year. In Fiscal Year 2010/2011, the Company paid â,¬327,333 to its Directors for 2009/2010 Board attendance (compared with â,¬255,800 paid in Fiscal Year 2009/2010 for Fiscal Year 2008/2009). Directors' fees received by non-executive corporate officers (â,¬ thousands) Non...

  • Page 27
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT Compensation, stock options and free shares granted to each executive corporate officer (â,¬ thousands) Fiscal Year 2009/2010 Fiscal Year 2010/2011 ** 841 749.4 NA NA NA NA NA NA Jim Wilson, Chief Executive Officer since Dec. 23, 2010, COO from Oct...

  • Page 28
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT SUMMARY OF THE PRINCIPAL FEATURES OF STOCK OPTIONS GRANTED As of March 31, 2011, the aggregate number of shares for which existing options could be exercised represented 7.5% of the Company's shares outstanding on that date. The contingent stock ...

  • Page 29
    ...75 8 years Stock options exercised during the Fiscal Year by each corporate officer Name of the executive N° and date of the plan Number of options exercised during the fiscal year Exercise price Fiscal year 2009/2010 NONE Fiscal year 2010/2011 NONE PERFORMANCE SHARES GRANTED TO ATARI CORPORATE...

  • Page 30
    ... corporate officers, who subscribed the largest number of options No shares were acquired by Company employees in Fiscal Year 2010/2011 through the exercise of stock options granted by the Company or its subsidiaries. Paris, July 13, 2011 The Board of Directors SUMMARY OF THE PRINCIPAL FEATURES...

  • Page 31
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT Performance share plans Date of Shareholders' Meeting authorizing plan Date of the Board of Directors meeting/Grant date Vesting date Total number of shares originally granted Of which to members of the Board and senior management Trading price of ...

  • Page 32
    ... in 2011/2012 (and after) and to improve its capital structure, the Group's strategy focused on 4 main priorities: • Continue the focus on Atari owned franchises and key strategic licenses for fewer but more profitable releases and further expansion into online, digital download, mobile game...

  • Page 33
    ... ORANEs 2010 acquired as part of the financial transaction in January 2010 (exercisable for 4,028,064 shares). During the Fiscal Year 2010/2011, BlueBay Value Recovery (Master) Fund Limited and BlueBay High Yield Investment (Luxembourg) SARL were members of the Company's Board of Directors. BlueBay...

  • Page 34
    ... generation of consoles such as the current Microsoft Xbox 360 and Sony Playstation 3 (PS3), which have increased power and online gaming features, the development of XBLA and PSN, or the Nintendo Wii, which has successfully introduced a new way of playing. Increased production costs are due in part...

  • Page 35
    ... and elsewhere in Europe, Atari works closely with the anti-piracy unit set up by institutions such as SELL (the French association of entertainment software manufacturers), the Entertainment Leisure Software Publishing Association (ELSPA) and customs authorities. The company works with customs...

  • Page 36
    ... the game known as Star Trek Online. The technology allegedly infringed is associated with making and using systems for remote auditing of computer generated outcomes, allowing saving of game outcomes for further use as well as monitoring the amount of time a player spends playing a game. Atari is...

  • Page 37
    ... specific expertise. The Group is currently adapting its corporate structure as it continues to revamp its publishing strategy. It is looking for personnel with key expertise, notably in the online area and in digital operations. Like most companies in the video game sector, the Group is exposed...

  • Page 38
    ...'s overall net currency position. For information purposes, a 1% decline in the value of the US dollar in relation to the euro would have resulted in a â,¬0.6 million decrease in consolidated revenue in the financial statements for the year ended March 31, 2011 and would have had respective positive...

  • Page 39
    ... on new economic regulations. This report covers the entities belonging to the Atari Unité économique et sociale (UES), meaning the holding entity, Atari SA and Atari Europe SAS, exclusive of Eden Games SAS and of corporate officers. As of March 31, 2011, the above French entities had a combined...

  • Page 40
    ... â,¬49 million to December 30, 2011. Cryptic Studios divestiture: In line with the previously stated strategy of fewer but more profitable releases and further expansion into casual online and mobile games, the Company has determined that external development creates more flexibility in the changing...

  • Page 41
    ...for Xbox Live Arcade, PlayStation Network and PC download and retail is scheduled for release in Spring 2011; • Warlords for XBLA and PSN is scheduled for release in Summer 2011; • Centipede: Infestation for 3DS and Wii is scheduled for release in October 2011. 13. AT ARI SA FIVE-YEAR FINANCIAL...

  • Page 42
    ... 17 board of directors to issue shares and securities with rights to shares of the Company, without preemptive rights for shareholders, by means of offerings governed by article L.411-2 (II) of the Monetary and financial Code Delegation of authority to the September 30, 2010 board of directors, in...

  • Page 43
    ... by Feb. 12, 2010 Board) and July 2010 plan to 6 employees (approved by July 22, 2010 Board) 1- The shares have a nominal value of 1 euro. As of March 31, 2011 the Company's capital stock amounted to 24,328,970 euros, divided into 24,328,970 shares. 2- The number of shares issued pursuant to...

  • Page 44
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2011 CONTENTS CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2011 ...44 CONSOLIDATED INCOME STATEMENT ...45 GLOBAL CONSOLIDATED INCOME STATEMENT ...46 CONSOLIDATED BALANCE ...

  • Page 45
    ...(see Note 1.5). (*) Cost of stock options, free shares and incentive bonuses paid in shares. During Fiscal Year ended March 31, 2011, the Company recorded a 0.1 million expense (see note 19 Share-based payment). The following notes form an integral part of the consolidated financial statements. 45

  • Page 46
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT GLOBAL STATEMENT OF COMPREHENSIVE INCOME (â,¬ million) GROUP CONSOLIDATED NET RESULT Elements directly incurred in net equity: Translation adjustments Total result directly recognised in net equity GLOBAL RESULT ...

  • Page 47
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT CONSOLIDATED BALANCE SHEET (â,¬ million) Notes March 31, 2011 March 31, 2010 Goodwill Intangible assets Property, plant and equipment Non-current financial assets Deferred tax assets Non-current assets Inventories Trade receivables Current tax ...

  • Page 48
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT CONSOLIDATED CASH FLOW STATEMENT Year ended March 31, 2010 restated (1) (23.3) 9.1 23.7 (1.5) 0.5 4.4 0.7 13.6 0.4 0.7 11.4 5.4 (12.7) 18.7 (21.0) (12.4) (0.2) (0.1) (â,¬ million) Net income (loss) for the year Profit (loss) from discontinued ...

  • Page 49
    ... (3) Sale of 66% of Distribution Partners (4) Other changes At March 31, 2010 Profit (loss) for the year Translation adjustments Global Result Share issues Exercise of stock warrants Issue of ORANE bonds Share-based payments Acquisition of Cryptic Studios (5) Other changes At March 31, 2011 12...

  • Page 50
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT GENERAL INFORM AT ION ABOUT THE GROUP Atari SA (hereinafter referred to as "Atari" or the "Company") designs, produces, publishes and distributes interactive entertainment software for a wide range of media systems (game consoles, PCs, etc.). The ...

  • Page 51
    ... measurement methods used are the same as those applied for the year ended March 31, 2010. These financial statements and the related notes are presented in euros. They were approved by the Board of Directors on May 13, 2011. They will be submitted for approval at Atari's Annual General Shareholders...

  • Page 52
    ... applicable for the 2010/2011 consolidated financial statements did not have a material impact on its results or financial position. New standards and interpretations that have been published but which are effective after the issue date of the 2010/2011 consolidated financial statements Among the...

  • Page 53
    ... unless the entity concerned is sold. The table below sets out the exchange rates for the main foreign currencies used by the Group: Euros March 31, 2010 Closing Average rate for the year March 31, 2009 Closing Average rate for the year USD GBP AUD 1.34790 0.88980 1.47410 1.41372 0.88571 1.66645...

  • Page 54
    ... and contingent assets and liabilities, as reported at the balance sheet date. The consolidated financial statements have therefore been prepared taking into account the current financial and economic crisis and on the basis of market inputs at the balance sheet date. The immediate impacts of the...

  • Page 55
    ... the products concerned. This use of the declining-balance method means that , on average, 90% of a game's value is written off in the year following its release. The Group verifies the recoverable amount of the capitalized sums on a regular basis and performs impairment tests, as explained in Note...

  • Page 56
    ... be impaired. These tests are based on the higher of the following values: • • present value of projected operating cash flows over a four-year period, plus a terminal value; the net sale price if there is an active market for the asset. When the sale price less costs to sell cannot be reliably...

  • Page 57
    ... described in Note 2.2. Treasury shares held by the parent company or fully consolidated subsidiaries are deducted from equity on the basis of their purchase price or initial balance sheet value. Gains or losses on sales of treasury shares are eliminated in the consolidated income statement and...

  • Page 58
    ... of future contractual repayments, discounted using the market rate prevailing on the issue date for standard debt with an identical maturity, plus a margin equal to the credit spread relevant at the issue date for similar bonds. At each balance sheet date this financial liability is measured at...

  • Page 59
    ...has had to revise its accounting methods to recognize the release of online games, which represent new and significant operations for Atari. The information below complements note 2 (Accounting rules and methods) to the 2010 Annual Financial Report. In accordance with IAS 18, Revenue, net revenue is...

  • Page 60
    ... net income for the year by the weighted average number of shares outstanding, plus all potentially dilutive ordinary shares. Potentially dilutive ordinary shares include those to be issued on the exercise of stock options or warrants, grants of free shares and the conversion of convertible...

  • Page 61
    ... 31, 2010 Changes in scope of consolidation Increase Impairment for the year Reclassification of assets held for sale Translation adjustments Other changes March 31, 2011 34.9 (0.9) (9.5) 24.5 (19.8) (1.8) 2.5 5.4 Goodwill allocated to the "Online Development / Publishing" cash generating unit was...

  • Page 62
    ...management to project future cash flows are a discount rate, growth rates, expected trends in sale prices and operating costs. The table below sets out the discount rates and perpetuity growth rates used at March 31, 2011 and March 31, 2010: March 31, 2011 Discount rate Online Development Publishing...

  • Page 63
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT NOTE 4 - INTANGIBLE ASSETS Changes in intangible assets for the year ended March 31, 2011 can be analyzed as follows: (â,¬ millions) Gross value Games Tradem arks Licences Softw are Other Total April 1, 2010 Change in scope of consolidation ...

  • Page 64
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT (â,¬ millions) Gross value April 01, 2009 Change in scope of consolidation Acquisitions / Increase Disposals / Decrease Reclassification as assets held for sale Other changes March 31, 2010 Amortization and provisions for impairment value April 01, ...

  • Page 65
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT NOTE 5 - PROPERTY, PLANT AND EQUIPMENT Changes in property, plant and equipment for the year ended March 31, 2011 can be analyzed as follows: Property, plant and equipm ent (â,¬ m illion) Other equipm ent, furniture and fixtures and fittings Total ...

  • Page 66
    ...5.6 5.4 11.3 22.7 0.7 (0.6) (0.6) 22.2 (0.1) (0.2) 0.1 0.2 NOTE 6 - NON-CURRENT FINANCIAL ASSETS Non-current financial assets can be analyzed as follows: (â,¬ million) Deposits Loans Other Total At March 31, 2010 Gross value Impairment Net value at March 31, 2010 Increase Changes in scope of...

  • Page 67
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT NOTE 7 - INVENTORIES Inventories broke down as follows at March 31, 2011 and 2010: (â,¬ million) Finished products Gross value Provisions for impairment in value Reclassification of assets held for sale Net value 2.9 2.4 March 31, 2011 3.3 3.3 (0.4) ...

  • Page 68
    ... changes in value. At March 31, 2011 and 2010, there were no cash balances that could not be freely used. NOTE 11 - EQUITY 11.1. CAPIT AL STOCK COMMON STOCK At March 31, 2011, the Company had 24,328,970 common shares outstanding, fully paid up, with a nominal value of â,¬1 each. All shares are of...

  • Page 69
    ...to Group officers, directors or employees who already own more than 10% of the Company's common stock. 11.5. BASIC AND DILUTED EARNINGS PER SHARE The table below reconciles basic earnings per share with diluted earnings per share: Attributale profit (loss) for the year (â,¬ m illion) 2010-2011 From...

  • Page 70
    ...provision for restructuring costs consisted of: (â,¬ m illions) Employee-related expenses Rent on unused premises Other Total March 31, 2011 1.4 0.5 1.9 March 31, 2010 0.3 2.5 0.2 3.0 During Fiscal Year ended March 31, 2009, the Company announced a restructuring plan on June 17, 2008. The provision...

  • Page 71
    ...2002 to take into account the allocation of free shares on that date. The Company has the option of calling the bonds if, prior to their maturity, the price of Atari common stock rises above a pre-defined level. A prospectus was published in connection with the bond issue and was approved by the COB...

  • Page 72
    ... originally be converted into one Atari share. This conversion ratio was increased to 1.02 shares in December 2004 to take into account the allocation of free stock warrants on that date. The Company has the option of calling the bonds if, prior to their maturity, the price of Atari common stock...

  • Page 73
    ... stock split. The gross and net proceeds of the issue came to â,¬150 million and â,¬144.1 million respectively. The bonds bear interest at an annual rate of 0.5% - representing â,¬0.50 per bond - payable in arrears on April 1 each year. In December 2008, the Company launched a simplified public...

  • Page 74
    .... Pledges of certain trademarks and rights relating to certain video games published by Atari Europe SAS. Pledges of the intragroup receivables of certain Group subsidiaries. The table below summarizes the acceleration clauses and financial ratios relating to the Group's debt at March 31, 2011: 74

  • Page 75
    ...), which can be downloaded from the Company's website (www.atari.com) or obtained on request. Other debt and borrowings BlueBay facility 42.8 (incl. interest and charges) As per amendment 10 to the loan agreement of April 21, 2006, signed on October 1, 2010, the maturity date of the senior credit...

  • Page 76
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT NOTE 14 - OTHER CURRENT AND NON-CURRENT LIABILITIES Other current and non-current liabilities can be analyzed as follows: (â,¬ m illion) March 31, 2011 March 31, 2010 Hasbro guaranteed minimum Other Other non-current liabilities 4.7 0.1 4.8 5.7 7.0...

  • Page 77
    ...-current financial liabilities Other non-current liabilities Current financial liabilities Trade payables Other current liabilities Liabinities 3.2 3.2 - 10.3 10.3 - - - 3.2 9.8 1.7 14.7 10.9 17.8 8.6 28.1 15.5 80.9 - 15.3. RECOGNITION IN THE INCOME ST ATEMENT FOR YEAR ENDED M ARCH 31, 2011...

  • Page 78
    ... analyses. Note that the activity related to Cryptic Studios has been reclassified to the line profit (loss) from discontinued operations for both periods in accordance with IFRS 5. March 31, 2011 Online Publishing Corporate & Other (3.7) (0.3) (4.0) Group Revenue Gross Margin Current Operating...

  • Page 79
    ... and other financial liabilities, deferred tax liabilities, current tax payables NOTE 17 - RESTRUCTURING COSTS Restructuring costs break down as follows: (â,¬ m illion) Year ended March 31, 2011 0.2 0.4 Year ended March 31, 2010 0.7 1.4 0.5 2.6 Employee-related costs Unused office space Assets...

  • Page 80
    ... March 31, 2011 202 152 354 119 28 147 March 31, 2010 228 152 380 138 16 154 NOTE 19 - SHARE-BASED PAYMENTS 19.1. VALUAT ION MODEL As prescribed by IFRS 2, Share-based Payment, the fair value of employee stock options is recognized in the financial statements at the grant date and corresponds to...

  • Page 81
    ... date, the options' exercise price is set close to the trading price of the Company's shares. The options granted have an eight-year life and a vesting period of between zero and three years. The table below summarizes the information concerning the Company's current stock option plans: 2010-2011...

  • Page 82
    ... at the end of the year The fair value of free shares granted is based on the trading price of the Company's shares at the grant date. The weighted fair value of shares granted in Fiscal Year 2008/2009 was â,¬7.96 per share. The related expense recognized in the years ended March 31, 2011 and 2010...

  • Page 83
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT NOTE 21 - INCOME TAX 21.1. ANALYSIS OF T HE T AX CHARGE By destination Year ended March 31, Year ended March 31, 2011 2010 (â,¬ mi ll i on) Current income tax benefit (expense) French enti ti es Forei gn enti ti es Deferred tax benefit (expense) ...

  • Page 84
    ...currently examining. 21.3. T AX PROOF Corporate income tax for the year was calculated by applying the effective tax rate at the balance sheet date to pre-tax profit for the year ended March 31, 2011. In France, deferred taxes were calculated based on a tax rate of 33.33% at March 31, 2011 and 2010...

  • Page 85
    ... and 2011 and the results all of the Group's video game retail distribution activities in Europe, Asia, Africa, the Middle East and South America only for the year ended March 31, 2010. The income statements of these activities are included in "Profit (loss) from discontinued operations" in Atari SA...

  • Page 86
    ... losses Current financial liabilities Trade payables Tax liabilities payable Other current liabilities Current liabilities Liabilities held for sale 22.3. SEGMENT INFORM ATION ON DISCONTINUED OPERAT IONS AND ASSETS AND LIABILITIES HELD FOR SALE March 31, 2011 (â,¬ m illions) Online Retail Corporate...

  • Page 87
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT March 31, 2010 (â,¬ m illions) Online Retail Corporate & other Total Revenue from discontinued operations Current operating incom e (loss) - Discontinued operations Profit (loss) from discontinued operations Balance sheet Goodw ill Segment fixed ...

  • Page 88
    ... for debt is disclosed in Note 13. NOTE 24 - M ANAGEMENT OF M ARKET RISKS 24.1. RISK M ANAGEMENT Risk exposure is handled by the Group's parent company based on conditions in the financial markets and in accordance with procedures set by management. Foreign currency transactions are carried...

  • Page 89
    ... made during the Fiscal Year 2010/2011.The preliminary audience's court started in September 2010. The audience has been postponed to the summer of 2011 and no court decision is expected before end of 2011. Based on pending proceedings and the available information, the Company considers the dispute...

  • Page 90
    ... the game known as Star Trek Online. The technology allegedly infringed is associated with making and using systems for remote auditing of computer generated outcomes, allowing saving of game outcomes for further use as well as monitoring the amount of time a player spends playing a game. Atari is...

  • Page 91
    ... seat on Atari's Board of Directors. During the period ended March 31, 2011, BlueBay and its affiliated funds performed the following transactions: • • Pursuant to the amendment number 11 of the loan agreement signed on April 21th 2006, signed on October 1, 2010, the maturity date of the credit...

  • Page 92
    ... million to December 30, 2011. 27.4 CRYPTIC STUDIOS DIVESTITURE In line with the previously stated strategy of fewer but more profitable releases and further expansion into casual online and mobile games, the Company has determined that external development creates more flexibility in the changing...

  • Page 93
    ... hereby report to you for the year ended March 31, 2011 on: • the audit of the accompanying consolidated financial statements of ATARI; • the justification of our assessments; • the specific verification required by law. The consolidated financial statements have been approved by the Board of...

  • Page 94
    ...having an indefinite useful life The Company tests intangible assets having an indefinite useful life for impairment under the methods described in Note 2.12 to the financial statements. The results of these tests are set out in Note 4 to the financial statements. We have reviewed these methods, the...

  • Page 95
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT INFORMATION CONCERNING THE PARENT COMPANY ANNUAL FINANCIAL STATEMENTS 1. BALANCE SHEET (â,¬ thousands) Assets Intangible assets Property, plant and equipment Financial assets Total fixed assets Down payments and advances made Trade receivables Other ...

  • Page 96
    ... statements for the year ended March 31, 2011 of Atari (hereinafter the "Company"), which had total assets of â,¬290 million and reported a loss of â,¬21.8 million in its income statement, presented in list form. The annual financial statements for the periods ended March 31, 2011 and March 31, 2010...

  • Page 97
    ...its parent company financial statements, based on the following assumptions Disposal of the Cryptic Studios; Extension of the credit facility line granted by BlueBay until December 30, 2011 for â,¬49 million (for more information, refer to note 27.3), and Operating cash flows for of the Fiscal Year...

  • Page 98
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT • Grants of shares to be issued Atari recognizes free shares to which beneficiaries' rights have vested at the time those shares are issued, by deducting an amount equal to the nominal value of the shares issued from available reserves. • ...

  • Page 99
    ... came mainly from the impact of exchange rate between $US and â,¬ (for â,¬13 m) concerning the loan to Atari Interactive Inc. All receivables from subsidiaries are due in more than one year. As of March 31, 2011, the Company holds 2,470 treasury shares. 4.2. Provisions for impairments of financial...

  • Page 100
    ... Exercise of 2009 warrants (1) Conversion of 2008, 2009 and 2010 ORANE bonds (2) Equity issue as part of free shares (3) Equity issue (4) Appropriation of 2010 profit Number of shares outstanding 21,113,623 488 2,816,610 14,732 383,517 Capital stock 21,113 0.5 3.4 14.7 383.5 Other paidin capital 168...

  • Page 101
    ... carrying double voting rights. 9.2. Atari stock option plan The Board of Directors has been authorized, until November 29, 2013, to grant options for new or existing common shares of the Company to officers, directors and certain employees of the Group, subject to the ceiling set in Article L.225...

  • Page 102
    ... free share plans are detailed in the "Corporate Officers" section of the "INFORMATION ON MANAGEMENT AND THE FINANCIAL STATEMENTS" section. The table below shows a summary of transactions involving: 2010-2011 Free s hares granted at beginning of year Grants Cancellations Free s hares granted at end...

  • Page 103
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT anymore. Provision for employee risk was reversed as the Company's restructuring is over. 12. BOND DEBT 12.1. Position as of March 31, 2011 Oranes 2008-2014 99.70% 5,253 525 525 525 Oranes Oranes-Bsa Oranes 2009-2014 2009-2014 2010-2015 9.74% 1,335,...

  • Page 104
    ... in the issue of 25,322,805 new shares with a dilutive effect on the Company's capital of 104.1% as of March 31, 2011. 12.6. ORANE 2010 bonds (ISIN code: FR0010833053) In December 2009, Atari launched a financial transaction, which was finalized in January 2010, resulting from the free allocation of...

  • Page 105
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT to 1.02 shares in December 2004 to take into account the allocation of free stock warrants on that date. The Company has the option of calling the bonds if, prior to their maturity, the price of Atari common stock rises above a pre-defined level. A ...

  • Page 106
    ...rights issue the debt will be settled in cash for an amount corresponding to the average of the prices quoted for Atari shares over the ten trading days preceding the March 1, 2011 earn-out payment date, for an amount representing no more than 700% of the â,¬5.90 reference price set for Atari shares...

  • Page 107
    ... staff March 31, 2011 March 31, 2010 4 9 Non-supervisory employees 2 1 Total 6 10 Compensation paid by the Company to the members of its management and governing bodies for the Fiscal Year ended March 31, 2011 included â,¬543 thousand in salary, and â,¬328 thousand in Directors' fees. French Act...

  • Page 108
    ...receivables of: o â,¬ 18 million for Atari Europe, o â,¬6.5 million for shares (â,¬ 4.5 million for Cryptic Studio, â,¬ 2 million for Eden Games), o for subsidiaries' risks related to Atari Japan for â,¬1.2 million. Financial income for the year ended March 31, 2010 reflected: • Interest income of...

  • Page 109
    ...proceeds from the sale of: • The Atari Publishing subsidiary to Atari Europe for 40 k euro and Imusic to Atari Europe for 8 k euro. • Disposal of assets, for 149 k euro. Non-recurring expenses on investment transactions primarily consisted of: • The write-off of Game Nation Texas shares for 18...

  • Page 110
    ..., the pledge of all of the shares of the following subsidiaries: Cryptic Studios, Inc., Eden Games SAS, Atari Interactive, Inc., Atari, Inc. and Atari Europe SAS, pledges of certain trademarks and rights relating to certain video games published by Atari Europe SAS, pledges of the intra-group...

  • Page 111
    ... progress was made during the Fiscal Year 2010/2011.The preliminary audience's court started in September 2010. The audience has been postponed to the summer of 2011, no court decision is expected before end of 2011. 24.2. BVT production funds v. Atari Europe SAS This dispute concerned two German...

  • Page 112
    ... the technology is associated with prepaid cards for gaming credits associated with Champions Online and Star Trek Online. The suit was filed on April 11, 2011 and the company has entered into a joint defense. 25. CONSOLIDAT ING ENTITY The Company publishes consolidated financial statements. 112

  • Page 113
    ... it with control over them and with significant influence over their management. The Company is the parent entity and head of the Atari Group. It generates most of its revenue by charging for services to subsidiaries of Group of companies. It is both a lender to and a borrower from its subsidiaries...

  • Page 114
    .... As of March 31, 2011, the Company has set aside provisions for all of its shares and debt. As of March 31, 2011, the Company has set aside provisions in the financial statements in an amount of â,¬99.9 million for loans and advances made to Atari Interactive Inc. - - 0.1 705.9 0.0 95.9 3.4 273...

  • Page 115
    ... million to December 30, 2011. 27.4 Cryptic Studios divestiture: In line with the previously stated strategy of fewer but more profitable releases and further expansion into casual online and mobile games, the Company has determined that external development creates more flexibility in the changing...

  • Page 116
    ... report to you for the year ended March 31, 2011 on: • the audit of the accompanying financial statements of ATARI SA, • the justification of our assessments; • the specific verifications and disclosures required by law. The financial statements have been approved by the Board of Directors...

  • Page 117
    ... stock company) with a Board of Directors, governed by Articles L. 2101 et seq. of the French Commercial Code (Code de commerce). It is governed by French law. DATE OF INCORPORATION AND CORPORATE LIFE (ARTICLE 5 OF THE ARTICLES OF INCORPORATION) The Company was incorporated for a term of 99 years...

  • Page 118
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT PLACE WHERE LEGAL DOCUMENTS MAY BE EXAMINED The Company's registered office. FISCAL YEAR (ARTICLE 6 OF THE ARTICLES OF INCORPORATION) The Fiscal Year of the Company commences on April 1 and ends on March 31 of each year. FUNCTIONING OF THE BOARD OF ...

  • Page 119
    ...date and at the location set by the Shareholders' Meeting or, failing which, by the Board of directors, no later than nine months after the end of the Fiscal Year. The Board of Directors may distribute one or more interim dividends prior to approving the financial statements for the year. The Annual...

  • Page 120
    ... five trading days after any such threshold has been crossed and must state the number of securities held with a present or future right to equity and the number of attached voting rights. Mutual fund management companies must report this information for the aggregate number of the Company's shares...

  • Page 121
    ... CARRYING RIGHTS TO SHARES FINANCIAL INSTRUMENTS CARRYING RIGHTS TO SHARES Stock option plans The Board of Directors has used the authorizations granted by the Company's shareholders in Extraordinary Shareholders' Meetings to grant stock options to certain employees and corporate officers of...

  • Page 122
    ...plans were outstanding, representing 0.9% of the Company's total capital on that date. The principal features of Atari share grant plans currently in effect are described in "Corporate officers" section of "Information on management and the financial statements". 2000-2011 bonds convertible into or...

  • Page 123
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT has the option of calling the bonds if, prior to their maturity, the price of Atari common stock rises above a pre-defined level. A prospectus was published in connection with the bond issue and was approved by the COB on November 6, 2003 under No. 03...

  • Page 124
    ....1% as of March 31, 2011. Bonds redeemable for new or existing shares issued in January 2010 in connection with the issue of free warrants to purchase new shares or ORANE ("ORANE 2010 bonds") - ISIN code FR0010833053 In December 2009, Atari launched a financial transaction, which was finalized in...

  • Page 125
    ... • the total number of new Atari shares that may be issued on the automatic conversion of the Category B CBs will be determined based on the online revenue generated by Atari for the Star Trek Online video game during a six-month period commencing in March 2010. In Fiscal Year 2010/2011, Category...

  • Page 126
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT INFORMATION CONCERNING THE POTENTIAL DILUTION OF THE COMPANY'S CAPITAL (As of March 31, 2011) Potentially dilutive securities Stock options Number Exercise outstanding on price in Issue date March 31, euros (1) 2011 (6) Identity of holders Maturity ...

  • Page 127
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT Date and type of trans action Cum ulative num ber of shares outstanding Paym ents in cash or in kind Share pre m ium Paym ents by capitalization Total capital stock (in â,¬) 2008-2009 06/30/2008 Exercise of stock...(2) 13,268,178 80,134 242.966 â,¬...

  • Page 128
    .... The data below were prepared on the basis of information obtained from the registrar. To the best of the Company's knowledge, share ownership and voting rights broke down as follows as of March 31, 2011: Ownership (1) BlueBay Public Total (2) (3) Number of shares 4,216,801 20,112,169 24,328,970...

  • Page 129
    ... of September 30, 2010 granted the Board of Directors authority, for a period of eighteen months, to buy back up to 10 percent of the Company's shares outstanding, as measured on the date the Board of Directors makes use of this authority, provided, however, that the aggregate number of its own...

  • Page 130
    ... 8, 2011, the Company decided to end this contract. TRADING BY CORPORATE OFFICERS IN SHARES AND OTHER SECURITIES (ARTICLE L. 621-18-2 OF THE FRENCH MONETARY AND FINANCIAL CODE) Name and position on the transaction date The BlueBay Value Recovery Fund Limited Member of the Board of Directors The...

  • Page 131
    ... of the capital stock SHAREHOLDER AGREEMENTS To the best of the Company's knowledge, there are no shareholder agreements. RELATED PARTY TRANSACTIONS Related party transactions are described in the notes to the consolidated financial statements for the year ended March 31, 2011 and in the Statutory...

  • Page 132
    .... OTHER GUARANTEES The Company is guarantor of Atari Europe's obligations to production funds; the aggregate amount guaranteed as of March 31, 2010 is â,¬2.2 million (not including any royalties payable). INFORM ATION ON TRADING IN THE COMPANY'S SHARES Paying agent: CACEIS Corporate Telephone: +33...

  • Page 133
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT 2009 STOCK WARRANTS - ISIN CODE: FR0010690099 Monthly highs and lows High (euros) 2010 January February March April May June July August September October November December 2011 January February March April May June (Source: Nyse Euronext) ORANE 2008 ...

  • Page 134
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT ORANE 2009 BONDS (REDEEMABLE FOR FR0010690081 Monthly highs and lows High (euros) 2010 January February March April May June July August September October November December 2011...81.50 76.00 Trading volume Volume of shares traded (â,¬ millions) 0.0375...

  • Page 135
    ..., the maturity date of OCEANE 20032009 bonds not tendered under the public exchange offer by the Company in the period from February 12 to March 9, 2007 was moved back to April 1, 2020. Monthly highs and lows Volume of shares Trading volume traded (â,¬ millions) High (euros) Low (euros) 2010 January...

  • Page 136
    ...for Fiscal Year 2010/2011. CORPORATE GOVERNANCE M ANAGEMENT, SUPERVISORY AND OVERSIGHT BODIES As of the date of the present document, the Board of Directors has the following membership Frank E. Dangeard, Chairman, independent director; Jim Wilson, Chief Executive Officer and director (subject to...

  • Page 137
    ...of the Board of Directors during the period from April 1, 2010 to the date of the filing of the present document: Name Date of appointment Term ends (at the close of the AGM called to approve the financial statements for the year ending 03/31) 2012 Main function in the Company Main currently outside...

  • Page 138
    ... FINANCIAL REPORT - REGISTRATION DOCUMENT Name Date of appointment Term ends (at the close of the AGM called to approve the financial statements for the year ending 03/31) 2013 Main function in the Company Main currently outside Company position held the Age nationality and Other offices...

  • Page 139
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT Name Date of appointment Term ends (at the close of the AGM called to approve the financial statements for the year ending 03/31) Main function in the Company Main currently outside Company position held the Age nationality and Other offices ...

  • Page 140
    ... other executive officers) to finalize and effect the main transactions of the Company, and approves the annual Budget and the multiannual game publishing plan. The Board of Directors also approves any material change in the Budget or in the publishing plan during the year. The Directors have access...

  • Page 141
    ... of the financial statements, and to verifying that the information provided to shareholders and the financial markets is clear and accurate. During Fiscal Year 2010/2011, the Audit Committee met 5 times (average attendance rate was 90.0%) to address issues such as review of the Company's annual and...

  • Page 142
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT document pertaining to management, supervisory and oversight bodies. The two committees each have specific internal rules that set forth what they do and how they work (see "Report by the Chairman of the Board of Directors on the preparation and ...

  • Page 143
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT ST ATUTORY AUDITORS' SPECIAL REPORT ON REL AT ED PARTY AGREEMENTS AND COMMITMENT YEAR ENDED M ARCH 31, 2011 This is a free translation into English of the statutory auditors' special report on regulated agreements and commitments that is issued in the...

  • Page 144
    ... legal age required to accrue all his retirement entitlements under the applicable regulation and the Company by-laws. Date of the authorization: Board of Directors meeting of December 23, 2010 Person concerned: Mr. Jim Wilson This agreement has not been performed during the fiscal year 2010-2011 as...

  • Page 145
    ...the French Commercial Code and this agreement remained in force during the year ended March 31, 2011. Date of the authorization: Board of Directors meeting of March 15, 2009 Person concerned: Mr. Frank Dangeard During fiscal year 2010-2011, Mr. Frank Dangeard received â,¬360,000 under this agreement...

  • Page 146
    ... This report refers to the Board of Directors' Management Report included in the Company's Registration Document for the year ended March 31, 2011 with regard to the publication of the information mentioned in Article L. 225-100-3 of the French Commercial Code concerning the Company's share capital...

  • Page 147
    ... other executive officers) to finalize and effect the main transactions of the Company, and approves the annual Budget and the multiannual game publishing plan. The Board of Directors also approves any material change in the Budget or in the publishing plan during the year. The Directors have access...

  • Page 148
    ... and on behalf of the Company, except where such powers are vested by law and the Internal Rules in the Board of Directors and the shareholders' meeting. At each Board meeting, the Chief Executive Officer reports on current trading and significant corporate developments. However, the Internal Rules...

  • Page 149
    .... The Board of Directors approves the annual Budget and the multiannual game publishing plan. The Board of Directors also approves any material change in the Budget or in the publishing plan during the year. 3. INTERNAL CONTROL During Fiscal Year 2010/2011, the Group has been working on relying...

  • Page 150
    ..., the consolidated financial statements are submitted to the Group Chief Financial Officer and the Audit Committee for review, prior to their approval by the Board of Directors. (5) Self-assessment of internal control procedures During Fiscal Year 2010/2011, the Group continued to work on a formal...

  • Page 151
    ... paid by the Group (mainly to officers and executives) and the distribution of stock options and free shares. Fees are paid to the Directors on the basis of their participation at Board and committee meetings. Since Fiscal Year 2010/2011, the director fees policy also encourages physical presence in...

  • Page 152
    ... Fiscal Year 2011/2012 (ended June 30, 2011) at â,¬9.2 million, a 36.1% decline at current exchange rates and a 40.3% decline at constant exchange rate. This decrease was mainly due to the Company's continued shift toward digital (online, mobile) revenues, fewer and more profitable retail releases...

  • Page 153
    ... data for Fiscal Year ended March 31, 2010 and March 2009 are incorporated by reference. The report for Fiscal Year ended March 31, 2010 called attention on the ongoing concern in note 2.1 to the annual financial statements in note 2.1 to the consolidated financial statements and to note 16 to the...

  • Page 154
    ... 1, 2009. The report for Fiscal Year ended March 31, 2009 called attention to note 2.1 to the annual and consolidated financial statements for Fiscal Year 2008/2009, which examines the considerations underlying the going-concern assumption. July 28, 2011 Jim Wilson Chief Executive Officer of Atari...

  • Page 155
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT Information on the Company's business and financial position can be found on its website at http://corporate.atari.com TENTATIVE TIMETABLE (FOR INFORMATION) Annual Shareholders' Meeting (first notice): September 16, 2011 The shareholders meeting ...

  • Page 156
    ..., Vote form, "Modèle d'attestation de participation". FINANCIAL REPORTS (http://corporate.atari.com and Company's headquarter) Annual report for fiscal year 2009/2010 Half year report for fiscal year 2010/2011 Notice number 1004703 1005116 1005362 1006185 Date of release 04-08-10 03-09-10 24-09-10...

  • Page 157
    ANNUAL FINANCIAL REPORT - REGISTRATION DOCUMENT No. 1 Headings as listed in Annex 1 of Commission Regulation no. 809/2004 Persons responsible 1.1 Persons responsible for the reference document 1.2 Statement by the persons responsible for the reference document Pages 154 154 2 Statutory ...

  • Page 158
    ... Terms of office of the members of the Board of Directors and senior management 16.2 Board members' service contracts 16.3 Information regarding the committees 16.4 Statement of compliance with corporate governance regime 16.5 Chairman's internal control report 16.6 Statutory Auditors' report on the...

  • Page 159
    ... et financier) 2010/2011 Statutory financial statements 2010/2011 Consolidated financial statements Board of Directors' 2010/2011 management report Statement by the person responsible for the 2010/2011 Annual financial report Statutory Auditors' report on the 2010/2011 Statutory financial report...

  • Page 160
    ATARI 78 8 ru rue Taitbout - 75 009 PARIS - FRANCE