TOKYO--Atlus stated today that it suffered an 855 million yen ($7.8 million) loss in the first half of its fiscal year, between April and September 2003. The company had made 6 million yen ($55,245) in profits during the same period last year. Atlus' sales in the consumer sector were 1.63 billion yen ($14.9 million), which is 550 million yen ($5.05 million) higher than the same period in 2002.

　　The company has been doing well in the area of DVD sales, with products such as the anime Kiddy Grade, which is a part of its consumer-sector activity. However, the consumer sector still recorded a 672 million yen ($6.17 million) operating loss due to declining video game sales and the cancellation of projects in development. Atlus also suffered 483 million ($4.4 million) yen in special losses that emerged from revaluation of video game back stock.

　　Atlus has not been doing well in the arcade sector either, taking a loss of 56 million yen ($514,000). While Atlus was once a pioneer in the arcades with its Print Club sticker machines, the company failed to reach expected profits with new machine models--due to fierce competition. However, Atlus has been succeeding in the amusement sector overall, deriving a 429 million yen ($3.9 million) profit from its nationwide arcade facilities in Japan.

　　To improve its current financial situation, Atlus is planning a three-year reorganization designed to strengthen management and create a new income base. Aside from plans to merge some of its operations with Takara, Atlus hopes, in particular, to get a foothold in the mobile phone business and to also develop software for LCD-screen Pachinko machines, a popular form of legal gambling in Japan.

　　Atlus is scheduled to become a full subsidiary of Japanese toymaker Takara in its next fiscal year. Takara currently owns 41 percent of Atlus' stock.