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This excerpt taken from the ATVI 10-Q filed Aug 7, 2007. Cost of Sales — Software Royalties and Amortization (in thousands)
“Cost of sales — software royalties and amortization” increased $59.0 million from $19.3 million and 14% of publishing net revenues for the three months ended June 30, 2006, to $78.3 million and 18% of publishing net revenues for the three months ended June 30, 2007. The increase in absolute dollars is due to costs associated with Spider-Man 3, Guitar Hero II, Shrek The Third and TRANSFORMERS: The Game and the increase in “cost of sales — software royalties and amortization “ as a percentage of net revenues is primarily related to the higher developments costs of Spider-Man 3, and Shrek The Third. This compares to the fiscal 2007 first quarter which primarily included royalties and amortization related to Over the Hedge and X-Men: The Official Game. For fiscal 2008, we expect “costs of sales — software royalties and amortization” as a percentage of publishing net revenues to be slightly higher than fiscal 2007 levels. This excerpt taken from the ATVI 10-K filed Jun 14, 2007. Cost of Sales – Software Royalties and Amortization (in thousands)
Cost of sales – software royalties and amortization for the year ended March 31, 2006 increased as a percentage of publishing net revenues from the prior fiscal year, from 12% to 13%. In absolute dollars, cost of sales – software royalties and amortization for the year ended March 31, 2006 also increased from the prior fiscal year, from $123.8 million to $147.8 million. The increases in cost of sales – software royalties and amortization in both absolute dollars and as a percentage of publishing net revenues were mainly due to:
• Impairment charges and recoverability write-offs of $12.6 million in fiscal 2006. We performed a detailed review of capitalized costs for released titles and determined that expected future revenues, given the change
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in market conditions, on certain titles would not support the remaining capitalized software balance on these titles. As a result, we incurred a $3.8 million recoverability charge on these titles in fiscal 2006. In addition, we reviewed future recoverability of capitalized amounts on titles in development and determined that one of our titles, to be released in fiscal 2007, was unlikely to fully recover capitalized costs given the change in expectations as a result of weaker market conditions and uncertainty involved in the console transition and, as a result, took an impairment charge of $8.8 million on this title.
• Overall continued increases in costs to develop titles for additional platforms, particularly those titles released for the more technologically advanced next-generation console platforms.
This excerpt taken from the ATVI 10-K filed May 25, 2007. Cost of Sales – Software Royalties and Amortization (in thousands)
Cost of sales – software royalties and amortization for the year ended March 31, 2005 increased as a percentage of publishing net revenues from the prior fiscal year, from 9% to 12%. In absolute dollars, cost of sales – software royalties and amortization for the year ended March 31, 2005 also increased from the prior fiscal year, from $59.7 million to $123.8 million. This increase was due to an increase in the number of titles released as well as an increase in the overall costs to develop games. This compares to fiscal 2004 in which a higher proportion of revenues were derived from internally developed titles with lower associated game development costs. This excerpt taken from the ATVI 10-Q filed Aug 8, 2006. Cost of Sales – Software Royalties and Amortization (in thousands)
Cost of sales – software royalties and amortization for the three months ended June 30, 2006 increased as a percentage of publishing net revenues from 8% for the three months ended June 30, 2005 to 14% for the three months ended June 30, 2006. Cost of sales – software royalties and amortization for the three months ended June 30, 2005 increased from the prior fiscal year, from $14.6 million to $19.3 million. The increase in both the percentage of publishing net revenues and absolute dollars is due to the release of X-Men: The Official Game which had higher development costs than titles released in the prior year first quarter due to being developed across all platforms including the more technologically advanced Xbox360.
Due to our more focused fiscal 2007 title slate, we expect costs of sales – software royalties and amortization to decrease in fiscal 2007 in proportion to the expected decrease in net revenues.
This excerpt taken from the ATVI 10-K filed Jun 9, 2006. Cost of Sales – Software Royalties and Amortization (in thousands)
Cost of sales – software royalties and amortization for the year ended March 31, 2005 increased as a percentage of publishing net revenues from the prior fiscal year, from 9% to 12%. In absolute dollars, cost of sales – software royalties and amortization for the year ended March 31, 2005 also increased from the prior fiscal year, from $59.7 million to $123.8 million. This increase was due to an increase in the number of titles released as well as an increase in the overall costs to develop games This excerpt taken from the ATVI 10-Q filed Aug 4, 2005. Cost of Sales – Software Royalties and Amortization (in thousands)
Cost of sales – software royalties and amortization for the three months ended June 30, 2005 remained consistent as a percentage of publishing net revenues from the three months ended June 30, 2004 at 8%. Cost of sales – software royalties and amortization for the three months ended June 30, 2005 increased from the prior fiscal year, from $12.3 million to $14.6 million. The increase in absolute dollars is due to an increase in the number of platforms with associated software royalties and amortization, combined with external royalty payments for the This excerpt taken from the ATVI 10-K filed Jun 9, 2005. Cost of Sales – Software Royalties and Amortization (in thousands)
Cost of sales – software royalties and amortization for the year ended March 31, 2004 decreased as a percentage of publishing net revenues from the prior fiscal year, from 13% to 9%. In absolute dollars, cost of sales – software royalties and amortization for the year ended March 31, 2004 also decreased from the prior fiscal year, from $79.2 million to $59.7 million. The decrease in absolute dollars reflects that there were approximately fifteen major titles released in fiscal 2004 as compared to over twenty in fiscal 2003. The decrease in the percentage reflects the strong performance of our internally developed key fiscal 2004 third quarter releases.
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