Atari 2012 Annual Report Download - page 59

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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2.20. PROVISIONS FOR PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS
Defined contribution plans
Group subsidiaries are subject to certain obligations under local laws and practices with respect to employee pensions,
life and disability insurance plans and health insurance and other types of employee benefits. Contributions to defined
contribution plans are expensed as the contributions fall due.
The Group records accrued contributions as an expense when they relate to operating costs based on the plan
beneficiaries.
Defined benefit plans
The Group's estimated obligations under defined benefit plans are calculated on a yearly basis using the projected unit
credit method, as prescribed by IAS 19. This method takes into account estimated years of service at retirement, future
salary levels, life expectancy, a discount rate, and staff turnover, based on actuarial assumptions.
After initial recognition, if the accumulated unrecognized actuarial gains and losses exceed 10% of the greater of the
defined benefit obligation or the fair value of the plan assets, a portion of that net gain or loss is recognized as income or
expense (the "corridor" method"). The portion recognized is the excess divided by the expected average remaining
working lives of the participating employees.
2.21. FINANCIAL LIABILITIES AND INSTRUMENTS
Financial liabilities include bonds and other borrowings, as well as finance lease liabilities and trade payables.
Bonds and other borrowings
Bonds and other interest-bearing borrowings are initially recognized at the fair value of the consideration received, which
corresponds to their cost, net of expenses directly attributable to the debt issue. These financial liabilities are
subsequently measured at amortized cost, applying the effective interest method. The effective interest rate corresponds
to the internal rate of return that exactly discounts estimated future cash flows through the expected life of the borrowings
to the net carrying amount of the financial liability.
Some financial instruments – e.g. convertible bonds such as OCEANE bonds and bonds redeemable for new or existing
shares (ORANE bonds) – are treated as dual financial instruments with a debt component and an equity component. The
two components must be measured on the issue date and recognized separately in the balance sheet.
The debt component is included in debt based on the present value 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
amortized cost using the effective interest method.
The value of the equity component is calculated as the difference between the bonds' nominal value on the issue date
and their debt component as defined above. Costs are allocated to the two components based on the proportion of the
total nominal amount represented by each component.
The renegotiations of credit facility agreements do not cause the initial debt to be extinguished and a new debt to be
recognized unless there are material differences between the old and the new agreement. Whenever this is the case,
renegotiation costs are included in financial expenses for the period in which the renegotiation took place.
Trade payables
Trade payables are recognized initially at fair value and are subsequently measured at amortized cost.
2.22. REVENUE RECOGNITION
In accordance with IAS 18, Revenue, net revenue is recognized after deducting:
 certain sales incentives such as participation in advertising and promotion;
 certain rebates granted for early payment.
Sales of entertainment software
Revenue from Retail sales of game software is recognized on the date products are delivered to customers. A provision
is recognized against sales for estimated returns to determine net sales. Under the Group’s agreements with its
customers, it is not required to accept returns but may agree to exchange products sold to certain customers. In addition,
the Group may agree to allow returns or grant credits or other benefits for unsold products to certain customers. In such
instances, the Group estimates the amount of future credits and sets aside a provision, which is recognized in “Trade
receivables” in the consolidated balance sheet. The Group also reassesses its customers’ solvency on a regular basis
and, if needed, sets aside provisions in “Sales and marketing expenses” and in “Trade receivables”.