Flojomojo #1 Posted February 10, 2005 This is the first official word I've seen... http://www.redkeyreddoor.com/index.php?p=52 Press release here: Overview Overview FAQs FAQs History History Management Management Strategy Strategy Press Releases Press Releases European Press Clips European Press Clips US Press Clips US Press Clips Press Kit Press Kit Financial Statements Financial Statements Stock Information Stock Information Financial Releases Financial Releases Events Events Auditors Auditors SEC Filings SEC Filings Overview Overview Apply at Atari Apply at Atari Current Job Openings Current Job Openings Job Openings by Location Job Openings by Location HR Contacts HR Contacts Benefits Information Benefits Information Register Register Contacts Contacts Technical Support Technical Support Return to home page View English language version View French language version View German language version Return to the home page. Investor Relations Home Board and Management News Releases Event Calendar Webcasts Stock Information Estimates Analysts Annual and Quarterly Reports SEC Filings Fundamentals Information Request and Contacts E-mail Alerts News Release << Back Atari Outlines First Phases of Strategic Plan Company Reports Fiscal 2005 Third Quarter and Nine-Month Financial Results NEW YORK, Feb 09, 2005 /PRNewswire-FirstCall via COMTEX/ -- Atari, Inc. (Nasdaq: ATAR), a leader in interactive entertainment, today announced financial results for the fiscal 2005 third quarter and nine-month period ended December 31, 2004, and outlined the first phases of its strategic plan since the installation of its new President and Chief Executive Officer, Jim Caparro, at the end of November 2004. "Over the course of the last eight weeks, we've done an in-depth analysis of all aspects of our Company, realistically assessing our organizational complexity, identifying a multitude of untapped opportunities, and mapping out the strategy for realizing our primary objectives: to strengthen Atari's competitive position in the marketplace and enhance shareholder value," said Mr. Caparro. "In a short time, we've begun taking aggressive steps to address structural, operational and financial issues which we anticipate will better position the Company." Mr. Caparro stated, "Leading Atari's structural changes and driving its new strategic mandate will be a complete transformation of the senior management team and a realignment of responsibilities in order to bring greater focus and establish stricter procedures and practices throughout all of the Company's operations. The team has been strengthened and deepened by the recent addition of senior executives, including a new Chief Financial Officer with significant financial expertise and experience to provide the Company with improved fiscal discipline, and help address the financial and structural realities of, and evaluate alternatives for, Atari. "Operationally, we've initiated a complete redirection of our product portfolio, giving our focus and resources to those intellectual properties that -- based on market trends, consumer base growth, and emerging technologies -- have the greatest potential to deliver a significant return on investment," continued Mr. Caparro. "As part of this redirection, we're assessing the continued value that certain non-core assets bring to the Company, and anticipate divestitures that will further focus our product mix and strengthen our balance sheet." The Company has made decisions which reflect its commitment to redefine its cost structure with a stronger emphasis on product development and marketing, while reducing general and administrative expenses. The Company has elected to close its publishing studios located in Santa Monica, CA and Beverly, MA, and will relocate the functions handled by those studios to Atari's corporate headquarters in New York. The Company anticipates that these closures, recent senior management changes and potential divestitures will result in a reduction in annualized general and administrative expenses. The Company expects it will take a restructuring reserve during the 2005 fiscal fourth quarter to reflect severance packages, lease obligations and other related items. Mr. Caparro continued, "We are extremely optimistic about Atari's future, while also being realistic about the challenges that lay ahead. We've begun to evaluate and execute several strategic initiatives that mark the first steps towards simplifying Atari's global operations. Additionally, we believe there is enormous potential to unlock and create added value between Atari and its majority shareholder, Infogrames Entertainment, SA." Net revenue for the third quarter ended December 31, 2004, was $161.8 million compared to $190.6 million in the comparable year-earlier period. Publishing net revenue was $143.3 million compared to $174.4 million in the prior December quarter, while distribution revenue was $18.5 million compared to $16.2 million in the comparable year-earlier quarter. Decreased revenue for the period was attributable to a lower number of titles released in the quarter, strong competition and a shortage of console hardware in the marketplace. Top-selling titles for the quarter included, Atari Anthology (PS2 and Xbox), Dragon Ball Z: Budokai 3 (PS2), Pirates! (PC), RollerCoaster Tycoon 3 (PC) and the Company's stand-alone, plug-and-play Atari Flashback Classic Game Console. Net income for the quarter was $19.6 million, or $0.16 per share, compared with $23.0 million, or $0.19 per share, in the year-earlier period. Net revenue for the nine-month period ended December 31, 2004, was $343.4 million versus $402.5 million in the comparable year-earlier period. Publishing net revenue was $301.0 million versus $355.0 million in the prior nine-month period, while distribution revenue was $42.4 million versus $47.5 million in the comparable year-earlier period. Net income for the nine-month period was $14.8 million, or $0.12 per share, compared to $18.1 million, or $0.20 per share, in the year-earlier period, before a $39.4 million, or $0.44 per share, one-time non-cash dividend relating to the Company's September 2003 recapitalization and public offering. Including the $39.4 million dividend, loss attributable to common shareholders for the nine-months ended December 31, 2003, was $21.3 million, or a loss of $0.24 per share. Atari's product lineup for the remainder of fiscal 2005 and its preliminary fiscal 2006 lineup is expected to include the following new releases: * For the fourth quarter ending March 31, 2005: Act of War: Direct Action (PC), Backyard Baseball 2006 (GBA), Dragon Ball Z: Sagas (PS2, Xbox and GameCube), DRIV3R (PC), and Retro Atari Classics (DS). * For Fiscal 2006 ending March 31, 2006: Pirates! (Xbox), Boiling Point (PC), Dragon Ball GT: Transformation (GBA), Dragonshard (PC), Dungeons & Dragons Online (PC), Marc Ecko's Getting Up: Contents Under Pressure (PS2), RollerCoaster Tycoon 3: Soaked (PC), Timeshift (PC, Xbox), Tycoon City: New York (PC) among others. Primarily as a result of the negative affect of the console hardware shortage in the holiday season, an unusually competitive fiscal fourth quarter retail environment, and delays in product development which resulted in new management's decisions to move release dates, the Company is revising its 2005 fiscal fourth quarter and year-end guidance. Product rollout initiatives undertaken include: 1) a reduction of Flashback expectations based on retailers' demand for an accelerated launch of a newly configured plug-and-play product in the early summer; 2) holding the release of Dragon Ball Z: Sagas until the last week of the 2005 fiscal fourth quarter to ensure a high-quality product, and maximum marketing support; and 3) moving Dragonshard and Boiling Point to fiscal 2006 to maximize each title's revenue potential. For the 2005 fiscal fourth quarter ending March 31, 2005, Atari anticipates net revenue in the range of $70 million to $80 million. The Company expects to report a net loss in the range of breakeven to $10 million, or $0.00 to $0.08 per share, prior to any restructuring charges associated with, among other things, the closing of offices in Santa Monica, CA and Beverly, MA. For the fiscal year ending March 31, 2005, Atari anticipates full-year net revenue in the range of $413 million to $423 million. The Company anticipates net income to be in the range of $4 million to $15 million, or $0.03 to $0.12 per share, prior to any restructuring charges. Atari will host a teleconference with a simultaneous webcast at 4:45 p.m. Eastern Time today to discuss the Company's third quarter and nine-month results. To access the teleconference, please dial 1-800-706-7741 (domestic) or 1-617-614-3471 (international), access code 50019468, or listen to it live via the Internet by accessing the Company's Web site (http://www.atari.com). For those unable to listen to the live broadcast, a replay will be available on the Company's Web site or by dialing 1-888-286-8010 (domestic) or 1-617-801-6888 (international), playback access code 14529120, beginning approximately one hour after the conclusion of the call and available through February 14, 2005. About Atari New York-based Atari, Inc. (Nasdaq: ATAR) develops interactive games for all platforms and is one of the largest third-party publishers of interactive entertainment software in the U.S. The Company's 1,000+ titles include hard-core, genre-defining games such as DRIV3R, Enter the Matrix, Neverwinter Nights, Stuntman, Test Drive®, Unreal® Tournament 2004, and Unreal® Championship; and mass-market and children's games such as Backyard Sports, Nickelodeon's Blue's Clues and Dora the Explorer, Dragon Ball Z® and RollerCoaster Tycoon®. Atari, Inc. is a majority-owned subsidiary of France-based Infogrames Entertainment SA (Euronext - ISIN: FR- 0000052573), the largest interactive games publisher in Europe. For more information, visit http://www.atari.com. Safe Harbor Statement With the exception of the historical information contained in this release, the matters described herein contain certain "forward-looking statements" that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this release are not promises or guarantees and are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. These statements are based on management's current expectations and assumptions and are naturally subject to uncertainty and changes in circumstances. We caution you not to place undue reliance upon any such forward-looking statements. Actual results may vary materially from those expressed or implied by the statements herein. Some of the factors which could cause our results to differ materially include the following: the loss of key customers, such as Wal-Mart, Best Buy and Target; fluctuations in the Company's quarterly net revenues and results of operations based on the seasonality of our industry; delays in product development and related product release schedules; maintaining relationships with leading independent video game software developers; adapting to the rapidly changing industry technology, including new console technology; maintaining or acquiring licenses to intellectual property; the termination or modification of our agreements with hardware manufacturers; and other factors described in our SEC filings, including our Annual Report on Form 10-K for the year ended March 31, 2004 and our quarterly reports on Form 10-Q. The Company undertakes no duty to update any forward-looking statements to conform the statement to actual results or changes in the Company's expectations. ATARI, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) For the Three Months For the Nine Months Ended December 31, Ended December 31, 2003 2004 2003 2004 (unaudited) (unaudited) (unaudited) (unaudited) Net revenues $190,607 $161,759 $402,540 $343,446 Cost of goods sold 93,916 89,638 202,712 182,519 Gross profit 96,691 72,121 199,828 160,927 Selling and distribution expenses 37,339 20,553 71,270 53,560 General and administrative expenses 8,067 10,155 25,377 28,311 Research and development 26,928 18,462 72,734 54,508 Gain on sale of development project to a related party (3,744) -- (3,744) -- Depreciation and amortization 2,811 3,053 6,757 8,434 Operating income 25,290 19,898 27,434 16,114 Interest (expense) income, net (453) 94 (7,215) (608) Other (expense) income (1,737) (10) (2,077) 23 Income before provision for income taxes 23,100 19,982 18,142 15,529 Provision for income taxes 81 376 63 758 Net income $23,019 $19,606 $18,079 $14,771 Dividend to parent -- -- (39,351) -- Income (loss) attributable to common stockholders $23,019 $19,606 $(21,272) $14,771 Basic and diluted income (loss) attributable to common stockholders per share $0.19 $0.16 $(0.24) $0.12 Basic weighted average shares outstanding 121,170 121,283 88,981 121,269 Diluted weighted average shares outstanding 121,325 121,376 88,981 121,412 ATARI, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) March 31, December 31, 2004 2004 (unaudited) ASSETS Current assets: Cash $9,621 $14,710 Receivables, net 37,707 78,782 Inventories, net 27,520 28,622 Income taxes receivable 2,320 1,514 Due from related parties 4,175 1,007 Prepaid expenses and other current assets 12,465 14,965 Related party notes receivable 8,571 20,830 Total current assets 102,379 160,430 Property and equipment, net 13,267 9,661 Goodwill, net of accumulated amortization of $26,116 in both periods 70,224 70,224 Other intangible assets, net of accumulated amortization of $1,294 and $1,800, at March 31, 2004 and December 31, 2004, respectively 1,406 900 Other assets 6,680 9,026 Total assets $193,956 $250,241 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $37,837 $43,355 Accrued liabilities 15,886 32,831 Royalties payable 14,481 20,048 Income taxes payable 450 1,089 Short-term deferred income 2,107 77 Due to related parties 6,704 22,368 Total current liabilities 77,465 119,768 Deferred income 555 497 Other long-term liabilities 873 880 Total liabilities 78,893 121,145 Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value, 5,000 shares authorized, none issued or outstanding -- -- Common stock, $0.01 par value, 300,000 shares authorized, 121,231 and 121,295 shares issued and outstanding at March 31, 2004 and December 31, 2004, respectively 1,212 1,213 Additional paid-in capital 735,964 736,190 Accumulated deficit (625,436) (610,665) Accumulated other comprehensive income 3,323 2,358 Total stockholders' equity 115,063 129,096 Total liabilities and stockholders' equity $193,956 $250,241 Supplemental Table Three Months Ended December 31, 2003 2004 Publishing Revenue Mix PC 27.9% 30.9% PlayStation 2 40.5% 38.3% PlayStation 1.3% 0.7% Xbox 8.7% 4.6% GameBoy 16.5% 12.2% GameCube 5.1% 3.7% Plug-and-Play 0.0% 9.6% Supplemental Table Nine Months Ended December 31, 2003 2004 Publishing Revenue Mix PC 27.1% 25.7% PlayStation 2 36.3% 40.6% PlayStation 2.9% 1.1% Xbox 13.3% 11.4% GameBoy 12.9% 13.3% GameCube 7.5% 3.2% Plug-and-Play 0.0% 4.7% Ryan Barr Atari, Inc. 212-726-6996 [email protected] © 2003 Atari Quote Share this post Link to post Share on other sites
Flojomojo #2 Posted February 10, 2005 Ack, sorry about the formatting there. I just pasted without looking ... Quote Share this post Link to post Share on other sites
NovaXpress #3 Posted February 10, 2005 1) a reduction of Flashback expectations based on retailers' demand for an accelerated launch of a newly configured plug-and-play product in the early summer I suspect the real reduction of Flashback expectations is based on the fact that it sucks. We'll see if they do any better with this next unit, which could be anything at all. Quote Share this post Link to post Share on other sites
Stingray #4 Posted February 10, 2005 I think we can safely assume that if the next one is just another non-expandable $40 console with only a few games, it will very likely flop as well. -S Quote Share this post Link to post Share on other sites
NovaXpress #5 Posted February 10, 2005 We won't see a repeat, the creators of the Flashback know how the old school crowd feels. Boy do they know. And it must not be selling well to the mainstream either. I said all along that the casual gamer likes the Jakks sticks, no one wants a mini-system unless it a REAL one, at leats one with the ability to tweak since putting out a line of carts for such a system is extremely unlikely to happen. Quote Share this post Link to post Share on other sites
sku_u #6 Posted February 10, 2005 We won't see a repeat, the creators of the Flashback know how the old school crowd feels. Boy do they know. And it must not be selling well to the mainstream either. The new corporate executives could give 2 shits about how the old school crowd feels. All they are concerned with is how well it sells. A billion dollar publicly traded corporation does not think like that. I said all along that the casual gamer likes the Jakks sticks, no one wants a mini-system unless it a REAL one, at leats one with the ability to tweak since putting out a line of carts for such a system is extremely unlikely to happen. The original Flashback unit outsold all its competitors despite only being offered through a few retailers. While the console was lackluster to anyone in the know about older games, the feedback I read from people who purchased this one seemed to be pretty positive for the most part. The average gamer does not care about what chip technology was being used or whether or not it can be hacked and enhanced by the amateur electronics crowd. While I did see quite a few of these at the local retailer dumping ground Goodwill recently, it looks like Atari considers this one of their successes. I do not expect to see a big leap from Flashback 1 to Flashback 2. In all likelihood, they'll remodel the shell to look like an older VCS, keep the specs and technology the same and put together a few games not on the original to keep the buying public pacified. The only surprise to me is that retailers want a new system for the Spring/Summer season as that's typically the slowest time of the year for retailers. Quote Share this post Link to post Share on other sites
n8littlefield #7 Posted February 10, 2005 I think sales could have also been hurt by it's price. The majority of those plug and plays can be found for about 15 bucks, great to buy a little kid without giving it much though. The Flashback was about 40 bucks at most places, for that much you can find an original GBA/PSone/N64, kind of a hard sell. It's even harder when for 20 you can buy the Atari Anthology on current systems. Also, the 7800 isn't that recognizable to most - a redesign to a woody would likely benefit for general consumer appeal. Quote Share this post Link to post Share on other sites
George Gray #8 Posted February 11, 2005 1) a reduction of Flashback expectations based on retailers' demand for an accelerated launch of a newly configured plug-and-play product in the early summer I suspect the real reduction of Flashback expectations is based on the fact that it sucks. We'll see if they do any better with this next unit, which could be anything at all. I think you misunderstand. The Flashback sold very well. As it stated earlier in the release, it was a top selling product. What your quote means is that Atari had announced the new product so retailers do not want more inventory for a product that has already, more than likely, ended it's run. Hence, future sales expectations are not as high. BTW, I saw a pile of six or so at a local Gamestop for $20. The line 'accelerated launch' should be troublesome to anyone hoping for a better product. Quote Share this post Link to post Share on other sites
cimerians #9 Posted February 11, 2005 To Atarigrames: SPARE us (or me at least) any more garbage products to simply target Atari maniacs who must own everything, or commoners who buy it and throw it at their 3 year olds. I love (old)Atari but PLEASE, spare me the torture of another useless 'rock' to take up shelfspace. Spare me the complete exploitation of what once was a fun brand. Another Warner I do smell.... Quote Share this post Link to post Share on other sites
NovaXpress #10 Posted February 11, 2005 I think you misunderstand. The Flashback sold very well. As it stated earlier in the release, it was a top selling product. What your quote means is that Atari had announced the new product so retailers do not want more inventory for a product that has already, more than likely, ended it's run. Hence, future sales expectations are not as high. How many years has the Jakks PacMan stick been in the stores? That hasn't ended its run yet. You can think of many other such items that lasted for more than 4-6 months in the stores. If the Flashback was still a saleable product, it would be staying on the shelves along with its competition. Quote Share this post Link to post Share on other sites
NovaXpress #11 Posted February 11, 2005 Does anyone have real sales figures on the Flashback? I see them collecting dust around here, I just can't believe this performed up to expectations. Quote Share this post Link to post Share on other sites
BydoEmpire #12 Posted February 11, 2005 We won't see a repeat, the creators of the Flashback know how the old school crowd feels. Boy do they know. I'm sure they knew that before - it's a matter of being given the time to create a good product. I'm sure this thing was rushed out the door on as tight a schedule as possible. Perhaps for the next one they can build on what they've done and make it better, but I'm not holding my breath. I don't think the mainstream is buying them because they're forty bucks, which is pretty steep. Probably beyond the "impulse buy" price range that the Jakks sticks are at. Quote Share this post Link to post Share on other sites
Mr Egg #13 Posted February 11, 2005 im sure by now they got a look at how well the commodore stick did and realise that people will wait and pay a premium ($30) for genuine hardware, software , and expandability , not NES on a chip crap that has more in comon with flea market famiclones . they should hire C64 uberbabe jeri elsworth to make a a succesor for the flashback . you know she is into atari . look at her shirt for crying out loud. Quote Share this post Link to post Share on other sites
sku_u #14 Posted February 11, 2005 If you guys are hoping for a marked improvement over the Flashback, don't hold your breath. Quote Share this post Link to post Share on other sites
Mr Egg #15 Posted February 11, 2005 i know it aint going to hapwn cause atari doesnt really need the flashback . but i do feel the success of the C64DTV really got these companies thinking to our advantage . if you must release some nostalgia hardware , it must be the real deal Quote Share this post Link to post Share on other sites
Mock #16 Posted February 11, 2005 Just don't buy the crap they put out until it's worth getting...I didn't get a flashback and I won't be getting anything until they get it right...screw Atari or whatever company owns the name this week. The Atari we all knew and loved is long since dead. Just don't buy this junk...sure we are a small corner of the market...but don't buy in to this crap...don't give them your hard earned money. Quote Share this post Link to post Share on other sites
NovaXpress #17 Posted February 11, 2005 i dont think the C64 was a commerical hit either, or I wouldn't have bought it at $10 when it first hit the stores. The Jakks sticks were hits. They were great cheap toys for kids while having some cute retro value for parents. Nothing more than that. Quote Share this post Link to post Share on other sites
moycon #18 Posted February 11, 2005 I definately think someone should hire Jeri Elsworth...I suggest Maxim or Playboy. Here's hoping the new unit will be better than the old. They are still on the shelves here in GA, Target, TRU etc... I refuse to buy one unless I see it for under $20.00 If I had to guess the second unit will look exactly like the first (saves production costs) Maybe different graphics on the unit itself. It'll probably still be ports of the real games. If they (Atari) were smart, they would double the # of games. The smartest move Atari could make would be to get some of the homebrewers onboard, kick them some cash to included their games. That would be sweet. Anyways, I'll keep a positive attitude until more info is forthcoming. Regardless of the reason, it's nice that companies are releasing these older games. The more cash these units bring in, the more companies will try and jump onboard to get a piece of the pie, could wind up seeing some beloved obscure games showing up. The fact that the Flashback was one of Atari's top 5 sellers is good in my book. Quote Share this post Link to post Share on other sites
Mr Egg #19 Posted February 12, 2005 the c64 DTV made its money form QVC alone . kay bee sold them for 10 simply because they are closing a bunch of stores and need to clear inventories. its no reflection on the c64 DTV unit. the jacks units also sold like pancakes. they were just priced rigth . $40 is not really aimed at impulse retro buyers Quote Share this post Link to post Share on other sites
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