strategic opportunities

STRATEGIC OPPORTUNITIES
January 2016
Disclosure
In this strategic presentation, the terms "Atari“ and/or the "Company" mean Atari. The term "Group"
means the group of companies belonging to the parent Company and all companies within its
consolidation’s scope.
This strategic presentation contains statements relating to ongoing or future projects, future financial
and operating results, and other statements about Atari’s managements’ future expectations, beliefs,
goals, plans or prospects that are based on current expectations, estimates, forecasts and projections
about Atari, as well as company’s future performance and the industries in which Atari operate will
operate, in addition to managements’ assumptions. Words such as “expects,” “anticipates,” “targets,”
“goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and
similar expressions are intended to identify such forward-looking statements which are not statements
of historical facts.
These forward-looking statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to assess. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such forward-looking statements. These risks
and uncertainties are based upon a number of important factors including, among others: political and
economic risks of our respective global operations; changes to existing regulations or technical
standards; existing and future litigation; difficulties and costs in protecting intellectual property rights
and exposure to infringement claims by others summarized in chapter 8 of the company’s annual
report registered to the AMF under the number D15-0825 on August 4, 2015.
For a more complete list and description of such risks and uncertainties, refer to Atari’s annual report
in its chapter 8 for the year ended March 31, 2015. Except as required the rules and regulations of the
AMF, Atari disclaim any intention or obligation to update any forward-looking statements after the
distribution of this document, whether as a result of new information, future events, developments,
changes in assumptions or otherwise.
January 2016
2
Table of Contents
1. Atari at a glance – Much more than video games
2. 2013-2015 Turnaround
3. Summary Financials / Cap Table
4. Key Investment Considerations
5. Exhibits:

Games: A strong portfolio of games and IP ownership

RollerCoaster Tycoon

Licensing
January 2016
3
1 – Atari at a glance Much more than video games
January 2016
4
Atari at a Glance
A Globally
Recognized, Iconic
Brand
January 2016
With an
Unparalleled
Catalog of
Popular Games
5
Iconic Brands (Refer to full deck of games)
More than $2 Billion of Historical Revenue
$456
$391
Million
Million
$154
$525
$265
Million
Million
Million
$85
$92
Million
Million
January 2016
6
There is Much More Than Video Games
Time Magazine’s, “50 Best Websites 2012”
“Pong! Atari Marks almost 40 Years of
Gaming”
7
Opportunities Across Media Categories
 Online casinos
 Hardware / consoles, drones, …: Atari is exploiting replicas of
the Atari 2600 and is looking at other licensing or business
opportunities, such as drones.
 TV scripted series: On-going project with Alone in the Dark
 TV unscripted series: TV games “à la“ Wipe Out, …
 Web series
 Movies: Pixels with Sony – Ongoing deal with a Hollywood
major - Representation by Creative Artists Agency for additional
licensing deals
 Comic books
 Merchandising on a broad scale
January 2016
8
2 – 2013-2015 Turnaround
January 2016
9
2013-2015 Turnaround
2012
Atari ran into significant financial difficulties.
2013
Early 2013, the A few days later, Frédéric
US subsidiaries Chesnais and the Alden
Capital fund took over.
filed for
• F. Chesnais, is the former
bankruptcy
Deputy-COO of the Atari Group,
protection
and CEO of Atari Interactive. He
(Chapter 11).
left Atari in 2007-2008.
• Alden Capital is a New Yorkbased investment fund. Alden is
not involved in the management of
the Atari Group.
2014
In 2013-2014,
F. Chesnais
managed the
exit of the US
subsidiaries out
of the Chapter
11 in the US
From mid-2014, the new team relaunched game
production and began implementation of a robust
turnaround strategy.
Janvier 2016
10
2013-2015 Turnaround
Atari is a company implementing a turnaround phase.
Atari owns iconic brands in the video game industry and can capitalize
on new opportunities outside of the videogaming market.
Simplified organization
(external studios, digital
distribution…)
Turnaround, improved
financial structure
Cap table simplified
Opportunities outside of
the videogame industry
(casinos, drones, TV,
licensing…)
Atari is Back to Profitability
January 2016
11
Today: A Simple and Very Efficient Structure
Atari SA
French-listed entity
Atari Europe
100%-owned subsidiaries
Atari US
 Chesnais owns approximately 25% of the Atari Group, is Chairman of the
Board and CEO. He is the largest shareholder in Atari.
 The production team is based in New York City, with 3rd-party development
studios in the US and abroad.
 Products are primarily sold digitally, on a worldwide basis.
 The group uses 3rd parties to manufacture and distribute physical boxes.
January 2016
12
Old Value Chain
 Integration of key functions;
limited use of third party studios
Rights
 Great dependence on physical
distribution
Prod / Dev
 Limited level of ancillary
revenue (digital, licenses,
merchandising,…)
Publishing
Distribution
Atari is No Longer Operating Like This
January 2016
13
Current Business Model
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:
• A huge IP portfolio
• Efficient production and
operations
• Effective digital marketing
management
• An experienced Management
Team
January 2016
To Maximize Profits:
• Fixed costs are at the lowest
levels and the production
management is externalized
• Co-investments are favored
with studios or third party
• Digital distribution is fully
implemented and deployed
14
The New Value Chain
The New Atari
 Intensification of
externalization


Team
Diversification
of the
distribution
channel and
sources of
income
Digital
Distribution
IPs
€
Executive
Production
Others
Digital
(Casino, ...) Distribution
January 2016
External
Studios
Licensing
Box
distribution
15
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.
January 2016
16
Broad, Diversified Platforms
Strong positioning enables worldwide operations with a small team
PC Download
Digital Console
January 2016
Streaming
Online Casino
Advertising
17
3 – Summary Financials – Cap Table
January 2016
18
2013-2015 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)
(Year end as at March 31)
March 2013 to March 2015
Revenue:
From 1,2 M€
to 7,6 M€
January 2016
From a net loss
of (35,8) M€ to a
net profit of 1,2 M€
From a net debt
of (31,4) M€
to (11,0) M€
Equity:
From (34,9) M€
to (13,1) M€
19
Full Year Consolidated Statements as of March 31, 2015
An increase of turnover (x)2 compared to the previous year
Profitable Company
2014/2015
2013/2014
Net revenue
Gross Margin
% of the net revenue
Current operating income
% of the net revenue
Operating income
Profit (loss) from continuing operations
Net income (loss)
7,6
6,3
83,8%
0,2
2,3%
1,5
1,2
1,2
3,3
3,2
96,5%
0,9
27,7%
1,3
-2,5
-2,5
Net revenue: 7,6 M€
 An increase of turnover (x2) compared to the
previous year
 More than 15 million downloads of RollerCoaster
Tycoon for mobile.
Operating income: +1,5 M€
 Restructuring costs: +0,4 M€
 Other non- recurring revenue: +1,0 M€
(€ Million)
Current operating income: + 0,2 M€
 R&D expenses: - 5,2 M€ including 2,8 M€ fixed;
 Marketing costs: - 0,9 M€
 Control of overhead costs
January 2016
Net income: + 1,2 M€
 Cost of debt: - 1,4 M€
 Other financial income: +1,1 M€
20
Full Year Consolidated Statements as of March 31, 2015
ASSETS (€ million)
Intangible assets
Property, plant and equipment
Non-current financial assets
Non-current assets
Inventories
Trade receivables
Current tax assets
Other current assets
Cash and cash equivalents
Current assets
Total Assets
March 31
2015
March 31
2014
2,8
-
0,2
3,0
0,2
0,2
-
0,7
0,6
0,9
3,7
5,9
8,9
0,4
0,2
1,4
5,8
7,8
8,0
Development costs are
capitalized for 2,8 M€
January 2016
21
Full Year Consolidated Statements as of March 31, 2015
Equity & liabilities (€ million)
Total equity
Non-current financial liabilities
Other non-current liabilities
Non-current liabilities
Provisions for current contingencies and
Current financial liabilities
Trade payables
Current tax liabilities
Other current liabilities
Current liabilities
Total equity and liabilities
Equity improved
from -31,3 M€ in
2014 to -13,0 M€
January 2016
March 31
2015
March 31
2014
-13,0
1,8
0,1
1,9
1,2
12,8
4,6
0,3
1,1
19,9
8,9
-31,3
30,5
0,6
31,1
1,6
0,0
4,4
0,1
2,1
8,2
8,0
Net cash position excluding
Alden loan: +1,1 M€ as at
March 31, 2015
(pending litigation Alden – cf
annual report)
22
Key Figures as at September 30, 2015
Sept. 30, 2015 Sept. 30, 2015 March 31,2015
(6 months)
(6 months)
(12 months)
4,2
3,5
7,6
(€ million)
Revenue
Current operating income
(0,4)
(1,6)
0,2
Operating income
(1,1)
(1,6)
1,5
Net income (loss)
(1,4)
(2,3)
1,2
Shareholders' equity
(13,6)
(15,4)
(13,1)
Net cash (Net financial debt) excluding Alden loan
(0,8)
2,8
1,1
Net cash (Net financial debt)
(13,2)
(9,2)
(11,0)
Financial results in line with Group’s targets
Revenue:
from 3,5 M€ to 4,2 M€
January 2016
Excluding from revenues:
• Signed casino licences: 1,8M€
• Pre-orders for RCT World:
more than 2,0 M€
Contribution to net income
for subsequent periods:
• Casino + 1,2 M€,
• RCTW + 1,6 M€
23
A Very Significant Reduction of the Net Debt
March 31, 2014 March 31, 2015 Sept. 30, 2015
(€ million)
OCEANEs 2003-2020
(0,6)
(0,6)
(0,6)
OCEANEs 2019
(18,4)
(1,2)
(1,2)
(0,7)
(0,8)
(19,0)
(2,5)
(2,6)
5,8
3,7
1,9
Net cash (Net financial debt) excluding Alden
(13,3)
1,1
(0,8)
Alden loan
(11,5)
(12,1)
(12,4)
Net cash (Net financial debt)
(24,8)
(11,0)
(13,2)
OCEANEs 2020
-
Others
Gross financial debt excluding Alden
Cash and cash equivalents
Net debt significantly reduced
Net financial debt excluding
Alden decreased from
13,3 M€ as at March, 2014
to 0,8 M€ as at March, 2015
January 2016
Alden’s loan represents
12,4 M€ with:
• 10,6 M€ in principal
• and 1,8 M€ in interest
Pending litigation
against Alden
(cf. annual report)
24
Deferred Income Taxes
The Group has incurred significant losses in the past, resulting in cumulative
losses in excess of euro 745 million for Atari, SA, head of the tax
consolidation in France.
These losses would translate into potential tax savings in an amount of up to
euro 245 million, subject to prevailing conditions that may be in effect at the
time of use of these deficits.
These tax savings represent circa euro 1.45 par share (calculated as at
December 31, 2015 on the basis of the goal number of shares outstanding
less treasury shares).
Tax loss carryforwards as at March 31, 2015
Deferred income taxes as at March 31, 2015
735 732 824 €
245 244 275 €
Outstanding shares as at March 31, 2015
Treasury shares as at March 31, 2015
Outstanding shares excluding treasury shares
183 185 874
14 615 535
168 570 339
Deferred income taxes per share
January 2016
1,45 €
25
Cap Table Simplified
As at December 31, 2015
#Shares
% Ownership
Ker Ventures LLC
39 877 179
21,8%
F Chesnais
Alex Zyngier
12 013 615
6,6%
Director
116 679 245
63,7%
14 615 535
8,0%
183 185 574
100%
Public
Auto-contrôle
TOTAL
Double voting rights: 249 607 (no impact)
Potential dilution :
 Océanes 2020 : 3,4 million shares (€0,35 per océane)
 Stock options : 5,5 million shares (€0,20 per share)
January 2016
26
4 – Key Investment Considerations
January 2016
27
Key Investment Considerations

Iconic brand, with a worldwide appeal across generations

Sector with strong growth and multiple opportunities.
Much more than video games – significant trans-media opportunities:






Hardware (console, drones,…)
TV (scripted series, unscripted series)
Web series
Movies
Comic books
Merchandising

Efficient business model:
No fixed cost / Build portfolio value

Company in a turnaround phase,
with very significant investment risk and highly volatile stock price

Non-operational assets
(tax savings of up to Euro 1.45 per share)
January 2016
28
5 – Exhibits
January 2016
29
A Robust IP Catalog
• Act of War Series
• Double Dunk
• Miniature Golf
• Solar War
• Airborne Rangers
• Drag Race
• Missile Command
• Solaris
• Asteroids Series
• Fatal Run
• Monte Carlo
• Space Duel
• Atari Greatest Hits
• Food Fight
• Night Driver
• Space Race
• Atari Soccer
• Football
• Ninja Golf
• Spike
• Atari Video Cube
• Frog Pond
• Orbit
• Spitfire
• Avalanche
• Frisky Tom
• Outlaw
• Star Raiders
• Basketbrawl
• Fun With Numbers
• Planet Smashers
• Star Ship
• Breakout
• Gravitar
• Pong
• Street Racer
• Canyon Bomber
• Hangman
• Radar Lock
• Submarine Commander
• Castles and Catapults
• Haunted House
• Red Baron
• Subs
• Centipede Series
• Human Cannonball
• Return to Haunted House • Sword of the Samurai
• Circus Atari
• Iron Soldier
• Roadrunner
• Swordquest Series
• Codebreaker
• Liberator
• Saboteur
• Tank
• Cops and Robbers
• LocoMania
• Sentinel
• Telepathy
• Countermeasure
• Lunar Battle
• Shooting Arcade
• Tempest
• Crystal Castles
• Lunar Lander
• Sky Diver
• Terra Force
• Dark Chambers
• Major Havoc
• Sky Raider
• Tubes
• Dodge ’em
• Millipede
• Slot Machine
• Ultra Wars
• Dominos (Atari)
• Mind Maze
• Slot Racers
• Yars’ Revenge
January 2016
And Many More!
30
And Many More…
3D Asteroids
3D Tic-Tac-Toe
A Game of
Concentration
Act of War: Direct Action
Act of War: High
Treason
Adventure
Adventure II
Agent X *
Airborne Ranger
Air-Sea Battle
Akka Arrh
Alien Brigade
Alone In the Dark
Alpha 1
Anti-Aircraft
Aquaventure
Asteroids
Asteroids Deluxe
Asteroids On-line - Atari
GO version
Asteroids: Gunner
Asteroids: Gunner+
Atari 80 Classic Games
in One!
Atari Anniversary
Advance
Atari Anniversary Edition
Atari Anthology
Atari Arcade Hits:
Volume 1
Atari Arcade Hits:
Volume 2
Atari Baseball
Atari Basketball
Atari Casino
Atari Classics: Evolved
Atari Football
Atari Greatest Hits
Atari Greatest Hits:
Volume 1
Atari Greatest Hits:
Volume 2
Atari Mini Golf
Atari Outlaw
Atari Revival
Atari Soccer
Atari Video Cube
Aquaventure
Avalanche
Backgammon
Barroom Baseball
Basic Programming
Basketball
Basketbrawl
Bionic Breakthrough
Black Belt
Black Jack
Black Widow
Boogie Demo
Booty,
Bowling
Boxing
Brain Games
Breakout
Breakout
Breakout Boost
Canyon Bomber
Casino
Castles and Catapults
Caverns of Mars
Centipede
Centipede: Infestation
Centipede: Origins
Championship Soccer
Circus Atari
Cloak & Dagger
Cloud 9
Codebreaker
Combat
Cops 'N Robbers
Countermeasure
Crash 'N Score
Crystal Castles
Dark Chambers
Demons to Diamonds
Desert Falcon
Destroyer
Doctor Pong "aka
Puppy Pong"
Dodge ’Em
Dominos
Double Dunk
Drag Race
Fast Freddie
Fatal Run
Final Legacy
Fire Truck
Firefox
January 2016
Flag Capture
Flyball
Food Fight (Charley
Chuck's)
Football
Frisky Tom
Frog Pond
Fun With Numbers
Gerry the Germ Goes
Body Poppin
Goal 4
Golf
Gotcha
Gran Trak 10
Gran Trak 20
Gravitar
Hangman
Haunted House
HiWay
Holey Moley
Home Run
Human Cannonball
Hunt & Score
I, Robot
Indy 4
Indy 500
Jet Fighter
LeMans
Liberator
Lunar Battle
Lunar Lander
Major Havoc
Maze Craze
Meebzork
Meltdown
Micro-gammon
Millipede
Mind Maze
Miniature Golf
Minimum
Missile Command
Missile Command 2
Missile Command 3D
Monstercise
Monte Carlo
Moto Psycho
MotoRodeo
Night Driver
Ninja Golf
Off the Wall
Orbit
Outlaw
Peek-A-Boo
Pin Pong
Planet Smashers
Pong
Pong Doubles
Pong Tournament
Pong World
Pong: The Next Level
Pool Shark
Pursuit
Quadra Pong
Quadrun
Quantum
Quiz Show
Qwak!
Radar Lock
Realsports Baseball
Realsports Basketball
Realsports Boxing
Realsports Football
Realsports Soccer
Realsports Tennis
Realsports Volleyball
Rebound
Red Baron
Retro Atari Classics
Return to Haunted House
Roadrunner
RollerCoaster Tycoon
Runaway
Saboteur
Save Mary
Space War
Space War 2000
Spike
Spitfire
Sprint
Sprint 4
Sprint 8
Sprintmaster
Star Raiders
Star Raiders II
Star Ship
Steeplechase
Steeplechase
Stellar Track
Stock Car
Street Racer
Stunt Cycle
Submarine
Commander
Subs
Super Asteroids &
Missile Command
Super Baseball
Super Breakout
Super Bunny Breakout
Super Football
Superbug
Surround
Swordquest:
Earthworld
Swordquest: Fireworld
Swordquest:
Waterworld
Tank
Tank II
Tank III
Telepathy
Tempest
Tempest 2000
Tempest: Menace of
the Arcade Dwellers Online version
Test Drive Series
Tournament Table
Triple Hunt
Tubes
Typo Attack
Ultra Tank
Video Checkers
Video Chess
Video Olympics
Video Pinball
Warlords
Wizard
Wolf Pack
Xari Arena
Yar's Return
Yar's Revenge
Zulu
31
RollerCoaster Tycoon Franchise
January 2016
32
RollerCoaster Tycoon
Popular management simulation franchise
that allows players to construct the theme
park of their wildest dreams
The franchise popularity
extends to Europe and
has a strong presence in
the UK and Germany, with
more than 4.6 million
units sold in Europe
The franchise
has generated
over $220
million in
North America
sales
Sales with over
14.4 million units
sold worldwide
RollerCoaster Tycoon 4
Mobile: 15 millions
download since April
2014
License extends through 2019
January 2016
33
RollerCoaster Tycoon
1999
2002
PC
Edited by
Hasbro
Interactive
6.7m sold units
2004
PC
Edited by
Infogrames
Launched on PC
Edited by ATARI
3.7m sold units
4.0m sold units
Multi-revenue
streams
January 2016
RCT licensed until 2019. Source: Vgchartz, Internet , proprietary data
PC
2014
Aggregate
total
sales:
14.6m
Units 1
Launch of
mobile
version
Next sequel: “Rollercoaster
Tycoon World” - release
scheduled for early 2016
34
Note: (1)includes total sales, add-ons, international sales and digital
Licensing
•
Atari is leveraging a strong foundation for brand extensions and licensing,
including for film and television
•
Company has focused primarily on global trademarks for Atari brand and Atari
library of IP
•
Pursuing partners for hardware and accessories - Plug and play gaming products
have generated sales of over $110 million, with over 7 million units sold
•
Create exposure through integration with national and global brands
January 2016
35
www.atari.com
January 2016
36