ATVI » Topics » Cost of Sales - Software Royalties and Amortization (in thousands, as restated)

This excerpt taken from the ATVI 10-Q filed Jun 7, 2007.

Cost of Sales Software Royalties and Amortization (in thousands, as restated)

Three Months
Ended
June 30,
2006

 

% of
Publishing
Net Revenues

 

Three Months
Ended
June 30,
2005

 

% of
Publishing
Net Revenues

 

Increase/
(Decrease)

 

Percent 
Change

 

$19,261

 

14%

 

$14,576

 

8%

 

$4,685

 

32%

 

 

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, 2006 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.

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