Atari 2011 Annual Report Download - page 16

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ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
16
Online revenue, comprised primarily of digital distribution revenue, was €11.1 million – an increase of €3.1 million over
the prior year. This increase was primarily due to continued expansion of digital distribution and online console revenue.
Online revenues were 19.6% of total net sales as compared to 7.2% in the prior Fiscal Year.
Retail and other revenues, comprised primarily of sales to retail stores, decreased by €57.6 million to €45.6 million, since
Atari’s focus continues to be on fewer but more profitable releases and has exited from the majority of its lower margin
third party distribution business. Retail and other revenues were 80.4% of total net revenue as compared to 92.8% in the
prior Fiscal Year.
Gross margin
Gross margin for the year ended March 31, 2011 was 60.8% as a percentage of revenue, compared with 49.9% for the
previous year. This increase was due to higher margin revenue due to better performing releases and the reduction of
lower margin third party distribution business in its product.
Research and development expenses
Research and development expenses decreased €17.2 million to €13.8 million, as compared with €31.0 million for the
previous period. This improvement was primarily due
to lower amortization in relation to the products released and
lower investment requirements of the current 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 €0.1 million versus €9.3 million in the prior year.
Marketing and selling expenses
Marketing and selling expenses were €9.8 million, compared with €17.0 million for the previous period. This decrease
was primarily due to prior year’s spend to support major publishing releases such as Ghostbusters, The Chronicles of
Riddick and others. As a percentage of net revenue, external marketing and selling costs were up by approximately 2.0
ppt. due to marketing plans executed in the fourth quarter for Test Drive Unlimited 2 and higher internal marketing costs
due to the re-staffing of the marketing department.
General and administrative expenses
General and administrative expenses decreased approximately 32.7% from €15.3 million in the prior year to €10.3
million. These savings are primarily attributable to the continuing cost containment programs implemented across the
Company and the results of previous period restructuring of our European operations.
Share-based incentive payment expense
Share-based payments were €0.1 million versus -€1.6 million in the prior year, an increase of €1.7 million. This increase
in expense is primarily due to the reversal of expenses from the departure of the former management team and their
related share-based expenses in current period was considerably less as compared to the prior periods. This increase
also included additional expenses associated with the issuance of new shares as part of the hiring of new employees.
Restructuring expenses
Restructuring costs for the year ended March 31, 2011 decreased approximately by €2.2 million from €2.6 million to €0.4
million in the current year. This decrease was primarily due to the implementation of restructuring plans including leased
facilities and employee related restructures in the US in previous periods. Current period expenses primarily relate to
continued impact from leased facilities.
Operating income (loss)
There was an operating loss at the consolidated level of €0.4 million, compared with €8.9 million the previous year, an
improvement of €8.5 million. This improvement is primarily a result of the combined impacts of income from ordinary
operations of €0.5 million as discussed above and incremental restructuring charges of €0.4 million.
€ millions
Online 11.1 19.6% 8.0 7.2%
Retail & Other 45.6 80.4% 103.2 92.8%
Total 56.7 100.0% 111.2 100.0%
March 31, 2011 March 31, 2010