Net revenues for the fiscal year ended March 31, 2005 were a record $1,405.9 million, or 48% higher, as compared to $947.7 million for the fiscal year ended March 31, 2004. Net income for the fiscal year was a record $138.3 million, or $0.66 per diluted share, a 78% increase over net income of $77.7 million, or $0.40 per diluted share reported for the last fiscal year.

Net revenues for the fourth quarter ended March 31, 2005 were $203.9 million, an increase of 25%, as compared to $162.9 million that the company reported for the fourth quarter of the last fiscal year. For this fiscal year's fourth quarter, the company reported net income of $3.6 million, or earnings per diluted share of $0.02, which is $0.02 higher than the company's prior guidance. Net income for the fiscal year 2004 fourth quarter was $6.7 million, or earnings per diluted share of $0.03.

Robert Kotick, Chairman and CEO of Activision, Inc. commented, "Fiscal 2005 was another record year for Activision. We delivered the highest net revenues, operating margin and earnings in the company's history. Our net revenues reached $1.4 billion, which was driven by an increase in the number of million-unit selling games year over year. We have one of the industry's strongest balance sheets with $841 million of cash and short-term investments and for the trailing 12 months our free cash flow was a record $200 million and return on invested capital was 45%. Perhaps most importantly, our gain in shareholders' equity in fiscal 2005 was $267 million. Since fiscal 2000, our shareholders' equity has increased from $132 million to $1.1 billion, a 53% rate compounded annually."

Kotick added, "We entered fiscal 2006 with the largest installed base of video gaming platforms in the industry's history and, we believe, our strongest product release slate ever. Our lineup includes new versions of our top-selling franchises -- Tony Hawk, Spider-Man, Shrek, Call of Duty, DOOM, X-Men, True Crime and Quake -- as well as, Fantastic Four, Madagascar, The Movies and an original property from the development team behind the Tony Hawk series. We have more depth in our portfolio of franchises, and with over 1,000 talented team members in our internal studios, we have one of the strongest product development operations in the industry. We remain enthusiastic about our long-term prospects and our operating margin expansion programs should enable us to continue delivering long-term value to our shareholders."

Business Highlights

Activision's fiscal year end results were driven by record worldwide sales of several titles across all platforms. As a result of these strong sales, the company's domestic publishing net revenues increased 56% and its international publishing revenues grew 72%. The company ended the fiscal year with two top-10 best-selling games across the console and handheld platforms in the U.S. -- Spider-Man 2 and Tony Hawk's Underground 2 and three top-10 best-selling PC games in the U.S. -- DOOM 3, Rome: Total War and Call of Duty, according to NPD.

During the fourth quarter, the company released Spider-Man 2 and Tony Hawk's Underground 2 Remix for the PSP simultaneously with the North American release of the new handheld platform, as well as three titles from LucasArts that were released in Europe -- Star Wars Knights of the Old Republic II: The Sith Lords, Mercenaries and Star Wars Republic Commando.

Other business highlights are as follows:

• Spider-Man 2 for the Nintendo DS topped the charts as the #1 best-selling third-party title for the platform during the holiday period in the U.S., and the #3 best-selling third-party title in the U.K., according to NPD Funworld and Chart Track.
• During the quarter, Tony Hawk's Underground 2 Remix, ranked as the #3 best-selling third-party title for the new PSP platform, according to NPD Funworld.
• During the fiscal year, we grew our publishing revenues from the handheld platform by 456% or $114 million.
• During the fiscal year, Activision's Call of Duty franchise established itself as the best-selling console game franchise based on a new intellectual property.
• For calendar 2004, Spider-Man 2 was the #1 best-selling movie-based game in the U.S. and Shrek 2 was the #1 best-selling children's video game in the U.S., according to NPD Funworld.
• On January 20, 2005, Activision announced that the company further strengthened its next-generation development capabilities through the acquisition of game developer Vicarious Visions, the creative studio behind the #1 best-selling third-party Nintendo DS title, Spider-Man 2.
• On May 3, 2005, Activision announced that the company acquired game developer Toys For Bob. As a result of the acquisition, Activision now has approximately 1,000 employees in its studio operations.