Atari 2011 Annual Report Download - page 18

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ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
18
The table below shows the contribution by each segment to consolidated revenue and operating results
(1)
.
March 31, 2011
€ million Online
Retail
Corporate and
Other Total
Revenues 11.1 45.6 - 56.7
Gross profit 10.7 23.8 - 34.5
Current operating income (0.9) 5.1 (3.7) 0.5
March 31, 2010
€ million Online
Retail Corporate and
Other Total
Revenues 8.0 102.3 0.9 111.2
Gross profit 7.6 47.0 0.9 55.5
Current operating income (4.5) 2.2 (3.9) (6.2)
(1) The net income of Cryptic Studios business, in the process of being disposed as of March 31, 2011, is reported on the line
“discontinued operations” as of April 1, 2009. 2009/2010 and 2010/2011 Group sales and current operating income exclude
Cryptic Studios business.
Online: The online segment is comprised primarily of digital distribution revenue.
Revenue:
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
Gross Profit:
Costs of revenues associated with the online segment primarily consists of royalties and other minimal digital processing
costs. Costs associated with digital distribution revenue are negligible.
Gross profit improved to €10.7 million in Fiscal Year 2010/2011, €3.1 million better than the €7.6 million from the prior
year.
Current Operating Income (“COI”)
Operating 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 €11.6 million, as compared to €12.1 million in the previous year.
Current operating loss for the Fiscal Year ended 2010/2011 was -€0.9 million, an increase of €3.6 million from the -€4.5
million in the prior year.
Retail: The retail segment is comprised primarily of revenues and costs associated with the publishing and physical
distribution of interactive entertainment.
Revenue:
Retail and other revenues decreased by €56.6 million to €45.6 million, as Atari continues to focus 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 Profit:
Costs of revenues associated with retail revenue are comprised primarily of product cost and royalty expenses.
Gross profit decreased to €23.8 million, €23.2 million less than the €47.0 million from the prior year due to the strategic
reduction in sales volume. Gross margin for Fiscal Year 2010/2011 was 52% versus 46% in the prior year since the
current period contained higher margin revenue due to better performing releases and the reduction of lower margin third
party distribution business in its product.
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 2010/2011
were €18.7 million, as compared to €44.7 million in the previous year, an improvement of €26.0 million.
COI for the Fiscal Year ended 2010/2011 was €5.1 million, an increase of €2.9 million from the €2.2 million in the prior
year. Fiscal Year 2010/2011 development and marketing costs were lower in the current Fiscal Year versus the prior
year as a result of larger volume of games developed and released 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 results of the restructuring of the European operations.