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Atari's Q3 Results

NEW YORK--(BUSINESS WIRE)--Feb. 2, 2004--Atari, Inc. (Nasdaq: ATAR), a leading global publisher and developer of interactive entertainment, today announced results for the fiscal 2004 third quarter and the nine months ended December 31, 2003.

Net revenue for the third quarter ended December 31, 2003, was $190.6 million compared to $210.6 million in the comparable year-earlier period. Publishing net revenue was $174.4 million compared to $179.8 million in the prior December quarter, while distribution revenue was $16.2 million compared to $30.8 million in the comparable year-earlier quarter. Revenue for the quarter was supported by a variety of titles, including Dragon Ball Z: Budokai 2 (PS2), Dragon Ball Z: Taiketsu (GBA), Beyblade: Ultimate Blader Jam (GBA), Backyard Basketball (PS2), Yu Yu Hakusho: Spirit Detective (GBA), and Neverwinter Nights: Hordes of the Underdark (PC), among others. The decline in net revenues was largely attributable to lower replenishment orders over the holiday season and the Company's decision to reduce its third-party distribution operations. Despite a softer than anticipated holiday selling season, Atari improved its market share when compared with the 2002 period, finishing the calendar year as the #4 independent video game publisher, up from #5 in 2002, according to the most recent NPD Funworld(R) data. Additionally, Atari maintained its position as the #3 ranked PC Games publisher in 2003, according to the most recent NPD Techworld(R) data.

Net income for the quarter was $23.0 million, or $0.19 per share, compared to net income of $30.1 million, or $0.43 per share, in the year-earlier period.

Net revenue for the nine-month period ended December 31, 2003, was $402.5 million versus $449.6 million in the comparable year-earlier period. Publishing net revenue was $355.0 million versus $371.7 million in the prior nine-month period, while distribution revenue was $47.5 million versus $77.9 million in the comparable year-earlier period. Net income for the nine-month period was $18.1 million, prior to a one-time non-cash dividend relating to the Company's September recapitalization and public offering. Including the $39.4 million dividend, net loss for the nine-month period was $21.3 million, or $0.24 per share, compared to net income of $30.1 million, or $0.43 per share, in the year-earlier period. Excluding the dividend, net income per share for the nine months was $0.20.

"This was a challenging quarter for us, as some of our titles met our expectations while others fell short. Some of our holiday lineup did not achieve the same success as titles from our Dragon Ball Z franchise or new franchises such as Beyblade and Yu Yu Hakusho, but successful sales are not confined to the holiday season," said Bruno Bonnell, Chairman and CEO of Atari.

Mr. Bonnell continued, "In the coming months, we have a release slate that we believe possesses the high-quality entertainment consumers demand. Unreal 2: The Awakening and Unreal Tournament 2004, coming this month and in March respectively, are the two latest installments in a franchise that has sold more than 4.5 million units to date. Transformers, which we will release exclusively for the PS2 in May, should fulfill the wishes of every fan who has longed for a game worthy of this great brand. And, in June, we'll release DRIV3R, which has already been described as 'a stellar game' and 'bigger and more beautiful than ever before' by the media.

"Our primary goal will remain to develop the highest quality interactive entertainment, which we anticipate will improve profitability and drive an increase in market share," Mr. Bonnell said.

For fiscal 2004 ending March 31, 2004, Atari anticipates full-year net revenue between $460 million and $470 million. The Company expects to report net income and earnings per share of approximately breakeven, prior to a one-time non-cash dividend relating to the Company's recent recapitalization and public offering. Including the dividend, the Company's loss per share guidance is approximately ($0.40) on a GAAP basis.