ATARI October 2015 7- 8th, 2015 Summary
1. Atari today 2. Market / Products / Opportunities 3. Organization 4. Finances
October 2015 2 Atari Today
1. Atari Today
October 2015 3 Atari at a Glance
With an Atari is a Globally Unparalleled, Recognized, Iconic Rich Library Of Brand Popular Games
October 2015 4 Iconic Brands
More than $2 Billion of Historical Revenue
$456 $391 Million Million
$154 $525 $265 Million Million Million
$85 $92 Million Million
October 2015 5 2013-2015: Turnaround
A London-based hedge fund (BlueBay) started building a 2006 position in the Atari group. They ultimately ended up owning 30% of the Company, while also being the largest lender.
2012 Atari ran into significant financial difficulties.
2013 Early 2013, the . A few days later, Mr. Chesnais and US subsidiaries BlueBay sold their stake Alden managed the filed for to Frédéric Chesnais and exit of Chapter 11. Alden. bankruptcy . Chesnais is the former Deputy- protection COO and CFO of the Atari Group, and was the CEO of Atari (Chapter 11). Interactive. He left Atari in 2007. . Alden Capital is a New York- based investment fund.
2014 Relaunch of game production, and completion of the financial restructuring of the Atari Group.
October 2015 6
Atari Today
Atari is a company implementing a turnaround phase; the company owns iconic brands in the videogame industry and can capitalize on new opportunities outside of the gaming market.
Simplified organization Turnaround, improved (external studios, financial structure
digital distribution…)
Cap table simplified, Opportunities outside of the videogame with only ordinary industry: casinos, shares drones, tv, licensing…
October 2015 7 A Simple and Efficient Structure
Atari SA
French-listed entity
Atari Europe Atari US 100%-owned subsidiaries
The production team Products are sold Atari no longer is based in New York digitally, on a manufactures and City, with 3rd-party worldwide basis. distributes boxes studios in the US and (partnership with in Europe. industrial partners).
October 2015 8
Turnaround Achieved
(€ million) 2012-2013 2013-2014 2014-2015 Revenue 1,2 3,3 7,6
Current operating income 0,6 0,9 0,2
Operating income (2,0) 1,3 1,5
Net income (loss) (35,8) (2,5) 1,2
Shareholders' equity (34,9) (31,3) (13,1)
Net financial debt (31,4) (24,8) (11,0) March 2013 -> March 2015 : From 1,2 M€ From a net loss From a net Equity from revenue to 7,6 M€ of -35,8 M€ to a debt of -31,4 -34,9 M€ to net profit of 1,2 M€ to -11,0 -13,1 M€ M€ M€
October 2015 9 Cap Table Simplified, Only Ordinary Shares
September 30th, 2015 shares % ownership
Ker Ventures, LLC 41 021 916 22,4% F Chesnais CEO & Director
Alden Capital 11 599 000 6,3%
Alex Zyngier 12 013 615 6,6% Director
Public 98 729 470 53,9%
Treasury shares 19 821 573 10,8%
TOTAL 183 185 574 100% Double voting rights: 249 607 (no impact)
Dilution Océane 2020 : Stock options : 3 384 732 5 481 472 (€0,35 per océane) (€0,20 per share)
October 2015 10 Atari
2 - Market / Products/ Opportunities
October 2015 11 Evolution of the Videogame Market
Atari has evolved as the gaming market has shifted to digital and mobile platforms Mobile Gaming / Online Gaming Continued social evolution Mobile gaming expansion: iOS, Android Casual Mid-core and Core players
Digital Transaction & Community Management Rise of: Free-to-play / Freemium / Paymium Item selling (add-on) Subscription
Social Gaming Socialization of casual gaming Social Networks explosion Continued casual game growth Casual Gaming Beginning of Free-to-Play Impulse by Wii Launch PC & Console Gaming Handheld consoles: PSP/DS Freemium Mostly Hardcore Gamers Beginning of mobile gaming Item selling Hardware Equipment (Java & Brew) Ad supported Packaged Goods In-game Advertising MMO Retail / Digital Transaction Beginning of digitalization of transactions (mobile) October 2015 12
Game Strategy
Adaptation to the Selectives licences digital model (hardware, Casino,…).
Relaunch of the classical franchises :
Roller Coaster Tycoon ;
Asteroids ;
Simulation games;
Etc.
October 2015 13 Intellectual Property Portfolio
3D Asteroids Atari Greatest Hits: Vol. 1 Meebzork 3D Tic-Tac-Toe Atari Greatest Hits: Vol. 2 Millipede A Game of Concentration Backgammon Mind Maze Act of War: Direct Action Barroom Baseball Minimum Act of War: High Treason Black Belt Missile Command Adventure Breakout Night Driver Adventure II Canyon Bomber Ninja Golf Agent X Centipede Pong Airborne Ranger Circus Atari RollerCoaster Tycoon Air-Sea Battle Combat Franchise Akka Arrh Countermeasure Solaris Alien Brigade Crystal Castles Super Breakout Alone In the Dark Dark Chambers Swordquest: Earthworld Alpha 1 Fatal Run Swordquest: Fireworld Anti-Aircraft Food Fight Swordquest: Waterworld Aquaventure Gravitar Test Drive Unlimited Series Asteroids Haunted House Warlords Atari Classics: Evolved Lunar Battle Yar's Return Atari Greatest Hits Lunar Lander Yar's Revenge Major Havoc October 2015 14
And More…
3D Asteroids Backgammon Flyball * Outlaw Stunt Cycle * 3D Tic-Tac-Toe Barroom Baseball Food Fight (Charley Outlaw * Submarine A Game of Basic Programming Chuck's) Peek-A-Boo Commander Concentration Basketball Football Pin Pong * Subs * Act of War: Direct Action Basketbrawl Frisky Tom Planet Smashers Super Asteroids & Act of War: High Bionic Breakthrough Frog Pond Pong * Missile Command Treason Black Belt Fun With Numbers Pong Doubles * Super Baseball Adventure Black Jack Gerry the Germ Goes Pong Tournament Super Breakout Adventure II Black Widow * Body Poppin Pong World Super Bunny Breakout Agent X * Boogie Demo Goal 4 * Pong: The Next Level Super Football Airborne Ranger Booty, Golf Pool Shark * Superbug * Air-Sea Battle Bowling Gotcha * Pursuit * Surround Akka Arrh * Boxing * Gran Trak 10 * Quadra Pong * Swordquest: Alien Brigade Brain Games Gran Trak 20 * Quadrun Earthworld Alone In the Dark Breakout Gravitar Quantum * Swordquest: Fireworld Alpha 1 * Breakout * Hangman Quiz Show * Swordquest: Anti-Aircraft * Breakout Boost Haunted House Qwak! * Waterworld Aquaventure Canyon Bomber HiWay * Radar Lock Tank * Asteroids Casino Holey Moley Realsports Baseball Tank II * Asteroids Deluxe * Castles and Catapults Home Run Realsports Basketball Tank III * Asteroids On-line - Atari Caverns of Mars Human Cannonball Realsports Boxing Telepathy GO version Centipede Hunt & Score Realsports Football Tempest Asteroids: Gunner Centipede: Infestation I, Robot Realsports Soccer Tempest 2000 Asteroids: Gunner+ Centipede: Origins Indy 4 * Realsports Tennis Tempest: Menace of Atari 80 Classic Games Championship Soccer Indy 500 Realsports Volleyball the Arcade Dwellers - in One! Circus Atari Jet Fighter * Rebound * Online version Atari Anniversary Cloak & Dagger * LeMans * Red Baron * Test Drive Series Advance Cloud 9 * Liberator * Retro Atari Classics Tournament Table * Atari Anniversary Edition Codebreaker Lunar Battle * Return to Haunted House Triple Hunt * Atari Anthology Combat Lunar Lander * Roadrunner Tubes * Atari Arcade Hits: Cops 'N Robbers * Major Havoc * RollerCoaster Tycoon Typo Attack Volume 1 Countermeasure Maze Craze Runaway * Ultra Tank * Atari Arcade Hits: Crash 'N Score * Meebzork Saboteur Video Checkers Volume 2 Crystal Castles Meltdown Save Mary* Video Chess Atari Baseball * Dark Chambers Micro-gammon Space War Video Olympics Atari Basketball * Demons to Diamonds Millipede Space War 2000 Video Pinball * Atari Casino Desert Falcon Mind Maze Spike * Warlords Atari Classics: Evolved Destroyer * Miniature Golf Spitfire Wizard Atari Football * Doctor Pong "aka Minimum Sprint * Wolf Pack * Atari Greatest Hits Puppy Pong" Missile Command Sprint 4 * Xari Arena Atari Greatest Hits: Dodge ’Em Missile Command 2 * Sprint 8 * Yar's Return Volume 1 Dominos * Missile Command 3D Sprintmaster Yar's Revenge Atari Greatest Hits: Double Dunk Monstercise Star Raiders Zulu Volume 2 Drag Race * Monte Carlo * Star Raiders II Atari Mini Golf * Fast Freddie * Moto Psycho Star Ship Atari Outlaw Fatal Run MotoRodeo Steeplechase Atari Revival Final Legacy Night Driver Steeplechase * Atari Soccer * Fire Truck * Ninja Golf Stellar Track Atari Video Cube Firefox * Off the Wall Stock Car * Aquaventure Flag Capture Orbit * Street Racer Avalanche *
October 2015 15
RollerCoaster Tycoon Franchise RollerCoaster Tycoon
Popular management simulation franchise that allows players to construct the theme park of their wildest dreams
The franchise The franchise popularity has generated extends to Europe and over $220 has a strong presence in million in the UK and Germany, North America with more than 4.6 million sales units sold in Europe
Sales with over RollerCoaster Tycoon 4 14.4 million units Mobile: 15 millions sold worldwide download since April 2014
License extends through 2019
October 2015 17 RollerCoaster Tycoon
1999 2002 2004 2014 Aggregate total sales: 14.4m Units 1
PC PC PC Launch of Edited by Edited by Launched on PC mobile Hasbro Infogrames Edited by ATARI version Interactive 6.7m sold units 3.7m sold units 4.0m sold units Excellent feedback from press • GameSpot: 8.6/10 • IGN: 8.5/10 • Jeuxvideo.com: 15/20 • Global: 87% Multi-revenue Next sequel: “Rollercoaster streams Tycoon World” - release scheduled for 2015
RCT licensed until 2019 Note: (1)includes total sales, add-ons, Source: Vgchartz, Internet , international sales and digital October 2015 proprietary data 18 Opportunities
Development opportunities outside of the videogames market . Casino online – real and virtual money gambling, casinos in virtual currency now available in 2015
. Transmédia opportunity ( Movies, TV, etc…)
Other licensing opportunities: hardware, drones, etc.
October 2015 19 The Atari Spirit
Time Magazine’s, “50 Best Websites 2012”
October 2015 “Pong! Atari Marks 40 Years of Gaming” 20 Atari
3. Organization
October 2015 21 Strong Management Team
Fred Chesnais - Chief Executive Officer, Member of the Board of Directors • Largest shareholder of Atari, Chairman of the Board and CEO. • Deputy-COO and CFO of the Atari Group 2001-2004, CEO of Atari Interactive until 2007 • Brings recent experience with online MMOs;
Todd Shallbetter – Chief Operating Officer • Key executive at Atari, managing multiple business lines including digital distribution, rev share/royalty management; solid knowledge of Atari’s global business • Expertise in business development
Philippe Mularski – Chief Financial Officer • Certified accountant and Auditor • Joined Atari Group in 2014
October 2015 22
Organization
Atari is a content production company aiming at maximizing the value of its brands and IP portfolio in the interactive entertainment industry.
Atari capitalizes on: To maximize profits:
• A huge IP’s portfolio • Fixed costs are at the lowest • An efficient and levels and the production operational production management is externalized • A good marketing digital • Co-investment are favored management with studios or third party • An experienced • Digital distribution is fully Management team implemented
October 2015 23 Traditional Value Chain
Rights
. Integration of the key functions; limited use of third party studio
Prod / Dev . Great dependence on the physical distribution
. Limited level of ancillary Edition revenue (digital, licenses,
merchandising,…)
Distribution
October 2015 24
New Value Chain
. Intensification of externalization Team IPs €
. Diversification of the
distribution Executive External Studios Production channel and sources of income
. Digital Distribution
Digital Others (TV Casino) Licensing Box distribution Distribution
October 2015 25 Strong Digital Gaming Platform
Strong positioning
PC Download Console Online Streaming Mobile/Online/ Promotional Partners Partners Partners Casino Partners Partners
October 2015 26 Atari
4 – Finances
October 2015 27 Full Year Consolidated Statements as of March 31st, 2015
An increase of turnover (x)2 compared to the previous year Profitable Company
(€ Million) 2014/2015 2013/2014 Net revenue 7,6 3,3 Gross Margin 6,3 3,2 % of the net revenue 83,8% 96,5% Current operating income 0,2 0,9 % of the net revenue 2,3% 27,7% Operating income 1,5 1,3 Profit (loss) from continuing operations 1,2 -2,5 Net income (loss) 1,2 -2,5
Net revenue : 7,6 M€ Operating income : +1,5 M€ An increase of turnover (x2) compared to the Restructuring costs: +0,4 M€ previous year Other non- recurring revenue: +1,0 M€ More than 15 million downloads of RollerCoaster
Tycoon for mobiles. Net income : + 1,2 M€ Current operating income : + 0,2 M€ Cost of debt : - 1,4 M€ R&D expenses: - 5,2 M€ including 2,8 M€ fixed; Other financial income : +1,1 M€ Marketing costs: - 0,9 M€ Control of overhead costs October 2015 28 Full Year Consolidated Statements as of March 31st, 2015
March 31 March 31 ASSETS (€ million) 2015 2014 Intangible assets 2,8 - Property, plant and equipment - - Non-current financial assets 0,2 0,2 Non-current assets 3,0 0,2 Inventories - - Trade receivables 0,7 0,4 Current tax assets 0,6 0,2 Other current assets 0,9 1,4 Cash and cash equivalents 3,7 5,8 Current assets 5,9 7,8 Total Assets 8,9 8,0
Development cost are • RollerCoaster Tycoon World capitalized for 2,8 M€ • Alone in the Dark : Illumination • Asteroïds • Pridefest
October 2015 29 Full Year Consolidated Statements as of March 31st, 2015
March 31 March 31 Equity & liabilities (€ million) 2015 2014 Total equity -13,0 -31,3 Non-current financial liabilities 1,8 30,5 Other non-current liabilities 0,1 0,6 Non-current liabilities 1,9 31,1 Provisions for current contingencies and losses1,2 1,6 Current financial liabilities 12,8 0,0 Trade payables 4,6 4,4 Current tax liabilities 0,3 0,1 Other current liabilities 1,1 2,1 Current liabilities 19,9 8,2 Total equity and liabilities 8,9 8,0
Equity improved Financial debt from -31,3 M€ in decreased from -30,5 2014 to -13,0 M€ M€ in 2014 to -14,6 M€
October 2015 30 Full Year Consolidated Statements as of March 31st, 2015
Net financial debt March 31 March 31 (€ million) 2015 2014 Non current financial debt 1,8 30,5 Current financial debt 12,8 0,0 Gross financial debt 14,6 30,5 Cash and cash equivalents 3,7 5,8 Net financial debt 11,0 24,7
Net debt significantly reduced from 24,7 M€ to 11,0 M€
Net financial debt Alden’s loan Pending litigation decreased from -24,7 M€ represents12,1M € of the against Alden (cf. as of march 31st, 2014 gross debt with 10,6 M€ annual report) to -11,0 M€ as of March in principal and 1,5 M€ of 31st, 2015. interest.
October 2015 31 Quarterly Revenue
(€ million) 2014-2015 2015-2016 Evolution USD EUR USD EUR % USD % EUR Q1 2,2 1,6 3,1 2,8 42% 76%
Q2 2,5 1,9
Q3 2,9 2,3
Q4 2,0 1,8
Total 9,6 7,6
. Q1: from April 1st, to June 30th Fiscal year from . Q2: from July 1st, to September 30th April 1st to March . Q3: from October 1st to December 31st 31st . Q4: from January 1st to March 31st Atari
Thank you for your attention
www.atari.com
October 2015 33