Atari 2010 Annual Report Download - page 12

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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INTRA-GROUP DISTRIBUTION AGREEMENT
This agreement sets forth the terms and conditions for the distribution by Group subsidiaries of products published by the
Group or third parties. Among other provisions, Atari Inc. and Atari Europe SAS have granted each other reciprocal
exclusive distribution rights to the games they publish in their respective regions.
In September 2008, Atari Europe and Namco Bandai Games Europe SAS (Namco Bandai) signed a letter of intent to set
up a strategic distribution partnership. The transaction was completed in February 2009, with Namco Bandai acquiring a
34% interest in Namco Bandai Partners, an Atari Europe subsidiary that houses Atari’s distribution operations for
Europe, Asia, Africa, the Middle East and South America. Atari Europe held the remaining 66% stake in Namco Bandai
Partners. The agreement also gave Namco Bandai Partners exclusive retail distribution rights for video games produced
by Namco Bandai in Europe, Australia, New Zealand and Africa as well as by Atari in these same regions plus Asia and
South America.
In March 2009, Atari Europe announced that in accordance with the terms of the strategic partnership agreement entered
into with Namco Bandai, it intended to exercise its option to sell its 66% interest in Namco Bandai Partners to Namco
Bandai. For the purpose of exercising this option, the enterprise value of Namco Bandai Partners was set at €60 million
with the transaction to be carried out on a cash-free, debt-free basis, as provided for in the partnership agreement.
In addition, for a period of five years from the transaction’s completion date (early July 2009), Namco Bandai Partners
has exclusive retail distribution rights for video games produced by Atari in Europe, Asia (excluding Japan), Africa, the
Middle East, Central and South America, Australia and New Zealand.
As Atari Europe exercised its put option prior to March 31, 2009, income and expenses relating to Namco Bandai
Partners have been recorded on separate lines in the income statement for the years ended March 31, 2010, March 31,
2009 and March 31, 2008, under “Profit (loss) from discontinued operations”.
For further information see Notes 1 and 22 to the 2009-2010 consolidated financial statements.
HASBRO LICENSING AGREEMENT
Previously, the Company had entered into various agreements with Hasbro to which it sold most of its historical rights in
June 2005. On July 18, 2007, the Company signed its latest agreement with Hasbro, pertaining to:
• The extension until 2017 of the rights to the Dungeons & Dragons theme, under an exclusive license for all
interactive formats, including online and wireless. The agreement covers all existing and future products based
on that theme, which include NeverWinter Nights and Baldur’s Gate;
• The repurchase by Hasbro of online and wireless rights attached to various licenses (Monopoly, Scrabble, Risk,
Game of Life, Clue, Yahtzee, Battleship, Boggle and Simon), for €14.1 million (USD 19.3 million). This
transaction had only a negligible impact on revenue for fiscal year 2007-2008.
BANDAI NAMCO DISTRIBUTION AGREEMENTS IN THE US
In Europe and Asia (in the PAL regions) the distribution operations were sold to Namco Bandai Games Europe, as part
of the sale of Namco Bandai Partners. Consequently, this business is no longer significant for the Group in Europe or in
Asia (PAL regions).
In North America, Atari Inc. entered into an exclusive agreement with FUNimation Productions on January 11, 2005 for
the Dragon Ball license, which also covers Australia, New Zealand and South Africa. Under the four-year agreement,
which can be extended for one year, Atari Inc. has the exclusive right to develop, publish and distribute interactive video
games based on the Dragon Ball, Dragon Ball Z® and Dragon Ball GT® cartoon series and characters, for all current
game consoles and handheld game systems.
In October 2007, because of a dispute concerning previous royalty payments, Atari Inc. was served a notice by
FUNimation Productions terminating two Dragon Ball Z licenses. Following negotiations, the parties agreed that the
licenses would continue to run normally until their expiration date.
In May 2009, Atari Inc. entered into an agreement with Namco Bandai under which Namco Bandai would buy the next
releases of Dragon Ball Z for USD 1.9 million in cash and cover the royalties paid to FUNimation, as well as the
localization and production expenses.
AGREEMENTS WITH CONSOLE MANUFACTURERS
The special relationship between the Group and console manufacturers is governed by agreements entered into by the
Company and/or its subsidiaries with Nintendo, Sony Computer Entertainment and Microsoft. The agreements concretely
authorize the Company to use these manufacturers’ technology for the purpose of manufacturing products compatible