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ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
93
the Company and BlueBay have agreed to an extension of the maturity of the credit facility of €24.2 million to June 30,
2012.
BlueBay stake: In November 2011, BlueBay direct stake in Atari amounted to 29.2% of the outstanding number of
shares after the conversion by BlueBay of a portion of the ORANEs held by them. At that date, on a fully diluted basis,
BlueBay's stake remained unchanged and represented approximately 63.7% of the share capital of Atari. As specified in
the press release of Atari from November 8, 2011, BlueBay has indicated to Atari that the sole purpose of the conversion
of the ORANEs referred to above is to simplify BlueBay's holding structure of its stake in Atari and that it does not intend
to further increase, directly or indirectly, its shareholding in Atari.
Reduction of capital of Atari S.A.: In November 2011, as permitted by the September 30, 2011 shareholders
meeting, Atari S.A. reduced its capital, not motivated by losses, by reducing the nominal value of the shares from 1 euro
to 0.5 euro. The amount of the reduction, €12.5 million, was allocated to a premium account and the Company’s bylaws
were modified accordingly.
Restructuring at Eden Games: Atari’s France based development studio headquartered in Lyon (France), was
restructured during the 1st quarter 2011/2012. The workforce was reduced to approximately 20 employees, adjusting the
structure to the size of the business and its revenues. The restructuring cost for Eden Games in Fiscal Year 2011/2012
amounted to approximately €3.6 million. As of March 31, 2012 the Company has started a formal disposal process of
Eden Games whose core business is to develop console games, while Atari is mainly focusing on mobile/online games.
Cryptic Studios divestiture: The divestiture of Atari’s 100% equity interest in Cryptic Studios, Inc. was closed in July
2011. As per the stock purchase agreement announced on May 31, 2011, Atari received from the buyer, Perfect World, a
gross cash amount of approximately €35.0 million, of which, €3.4 million was in escrow. Atari used the proceeds of this
sale to reimburse €21.6 million of the BlueBay credit facility, and the balance to finance its operations and continue the
implementation of its strategy.
Resolution of the Dungeons & Dragons rights dispute: On August 15, 2011, Atari, S.A, Wizards of the Coast
LLC and Hasbro, Inc. announced the settlement and resolution of their dispute regarding the Dungeons & Dragons
brand, under a revised agreement, Atari will continue to develop and market several games under license from Hasbro
and Wizards of the Coast, including Dungeons & Dragons: Daggerdale and Heroes of Neverwinter.
Evolution of corporate governance: Following the resignation of Mr. D’Hinnin, Mr. Lamouche and of The BlueBay
High Yield Investment (Luxembourg) SARL, Atari’s Board of Directors is composed by Frank Dangeard, (Chairman,
Independent Director), Tom Virden (Independent Director), The BlueBay Value Recovery (Master) Fund Limited,
represented by Gene Davis, Jim Wilson (Chief Executive Officer, Director), and Alexandra Fichelson, (General
Secretary, Director).
2. ACCOUNTING PRINCIPLES AND METHODS
2.1. Accounting basis
The financial statements of Atari have been prepared in accordance with French law and regulations. The financial
statements have been prepared and are presented in accordance with the General Chart of Accounts 99-03 of April 29,
1999, as amended by the regulations of the Accounting Regulation Committee (Comité de la Réglementation
Comptable).
Going concern assumption
At March 31, 2012 shareholders' equity amounted to €22.0 million, taking into account the €46.8 million loss posted for
2011/2012.
During and prior to Fiscal Year 2009/2010, the Group made significant losses that have eroded its equity and cash
position. In Fiscal Year 2010/2011, the group recorded a loss of €6.2 million compared to €3.7 million in Fiscal Year
2011/2012. As of March 31, 2012, shareholders’ equity (net of minority interests) was negative at minus €7.5 million. On
that same date, the Group’s net debt was €20.8 million and the Group does not have a drawdown capacity under its
credit facility.
In order to ensure that it has the requisite funds to finance its operations in 2012/2013 (and after) and to improve its
capital structure, the Group’s strategy focused on 4 main priorities:
build and monetize Atari’s digital games: Atari’s strategy is focused on the digital segment, the fastest growing
segment of the gaming industry, with a specific focus on mobile games as a core business and also a re-focus
on online games as part of cross platform initiatives
leverage Atari’s brand and IP portfolio through licensing and strategic partnerships
remain opportunistic on the retail market to promote Atari’s IPs
focus on profitability
On this basis, the Group has applied the going concern principle in preparing its consolidated financial statements,
based on the following assumptions:
Extension of the maturity of the credit facility line granted by BlueBay after December 31, 2012 at the then