Risk & Compliance

Atari on Pause after Goodwill Charge

The video-game maker delays its 10-K after a loss in market value forces an impairment charge.
Stephen TaubJune 15, 2007

After losing nearly one-third of what it made in revenues last year, Atari Inc. says it will take a goodwill impairment charge equal to all or a substantial portion of the $54.1 million of goodwill on the company’s books. The impairment charge will increase the company’s net loss of about $17.2 million by as much as $54.1 million. The noncash charge is being blamed on a “significant decline in the company’s market capitalization,” Atari reported in a regulatory filing.

As a result of the charge, the company — which makes and distributes video games — will delay the filing of its annual report for the fiscal year ended March 2007. Officials at Atari say they expect to file the annual report in late June.

Atari is not the company founded by Nolan Bushnell and Ted Dabney in the early 1970s, which all but invented the video-game business with the introduction of its pioneering “Pong” game. The current Atari was founded in 1992 and was formerly known as Infogrames Inc. and GT Interactive Software Corp. It was rebranded Atari in 2003 through an intellectual-property leasing arrangement.

“In any language, Atari is synonymous with video games, and it’s recognized for transforming entertainment,” says Bruno Bonnell, chairman and CEO of Infogrames Entertainment SA. The video-game maker is a subsidiary of IESA.

Atari’s market capitalization is currently about $44 million. In fiscal 2006, it lost $69 million on $219 million in revenues. In the first nine months of 2007, it lost $7.5 million on about $96 million in revenues.