Net revenues for the fiscal year ended March 31, 2007 were $1.51 billion, as compared to $1.47 billion for the fiscal year ended March 31, 2006. Net income for the fiscal year was $85.8 million, or $0.28 per diluted share, as compared to net income of $40.3 million, or $0.14 per diluted share reported for the last fiscal year. Excluding the impact of expenses relating to equity-based compensation, the company reported earnings per diluted share of $0.33 for the fiscal year. This compares to the company's previous outlook of $0.26 per share excluding equity-based compensation expense.

Net revenues for the fourth quarter ended March 31, 2007 were $313 million, as compared to $188 million that the company reported for the fourth quarter of the last fiscal year. For the fourth quarter, the company reported a net loss of $14.4 million, or a loss per share of $0.05, as compared to a net loss of $9.1 million, or a loss per share of $0.03 for the fiscal year 2006 fourth quarter. Excluding equity-based compensation expense, the company reported a loss per share of $0.04 for the fourth quarter.

Additionally, the company has updated its preliminary financial results for the nine months ended December 31, 2006. The company's previous preliminary earnings per diluted share estimate for the nine months ended December 31, 2006 was $0.30 including equity-based compensation expense. Excluding the impact of equity-based compensation expense, the company's previous preliminary earnings per diluted share for the nine months were $0.33.

As a result of updating its financial statements for charges related to its review of historical stock option practices, and subsequent events adjustments primarily related to a change in the company's effective tax rate, the company's updated nine month earnings per diluted share, including equity-based compensation expense, increased to $0.33. Excluding the impact of equity-based compensation expense, the company's updated nine month earnings per diluted share were $0.37.

Robert Kotick, Chairman and CEO of Activision, Inc., commented, "Activision's fiscal year 2007 net revenues, which were the highest in the company's history, totaled $1.5 billion, marking 15 consecutive years of revenue growth. We delivered solid results for the fourth quarter driven by the success of Guitar Hero II and Call of Duty(R) 3, as well as better than expected performance of the company's distribution business. Our balance sheet remains one of the strongest in the industry with nearly $1 billion in cash and short-term investments and $1.4 billion in shareholders' equity.

"We expect fiscal 2008 to be our largest and most profitable year ever. The combination of our first quarter slate and superb release schedule for the balance of the year, Guitar Hero's rapid rise as a popular cultural phenomenon and our solid leadership position on all of the major gaming platforms, should provide us with a competitive advantage as we enter the growth phase of the new hardware cycle. We remain focused on expanding operating margins by growing our balanced franchise portfolio, increasing our international publishing capabilities and continuing to improve operational efficiencies worldwide," Kotick added.

Activision's fiscal year results were driven by strong worldwide consumer response to Call of Duty 3, Marvel: Ultimate Alliance, Tony Hawk's Project 8 and Guitar Hero II, as well as the strength of its distribution business. During the fiscal year, the company grew its U.S. console market share, was the #2 U.S. third-party software publisher overall, and had two top-10 best-selling titles overall in the U.S., Call of Duty 3 and Guitar Hero II, according to The NPD Group.

During the fiscal year, Activision successfully integrated RedOctane into its business and expanded the Guitar Hero franchise globally. According to The NPD Group, in the U.S. Guitar Hero II was the #2 best-selling franchise overall and the #1 best-selling franchise on the PlayStation(R) 2 computer entertainment system.

During the fourth quarter, Activision released three titles for the PLAYSTATION 3 in Europe - Tony Hawk's Project 8, Call of Duty 3 and Marvel Ultimate Alliance as well as Call of Duty: Roads to Victory for the PSP worldwide.

Other business highlights are as follows:

• During the fiscal year, Activision was the only U.S. publisher to rank as a top three publisher for both the recently released Wii and PLAYSTATION 3, according to The NPD Group.
• According to The NPD Group, Call of Duty 3 ended the fiscal year as the #3 best-selling game in the U.S. on the Xbox 360.
• On May 11, 2007, Activision completed its acquisition of DemonWare, the leading provider of network middleware technologies for console and PC games headquartered in Dublin, Ireland.
• On June 6, 2006, Activision acquired video game publisher RedOctane, Inc. the publisher of the popular Guitar Hero franchise.
• On May 3, 2006, Activision announced that MGM Interactive and EON Productions Ltd. awarded the company the rights to develop and publish interactive entertainment games based on the James Bond license through 2014.

For the first quarter of fiscal 2008, Activision has already released Guitar Hero II for the Xbox 360, as well as games based on Sony Pictures Entertainment's Columbia Pictures and Marvel Studios' "Spider-Man 3," and DreamWorks Animation's "Shrek the Third." At the end of June, the company will release TRANSFORMERS: The Game in the U.S., which is based on DreamWorks Pictures' and Paramount Pictures' upcoming feature film that opens theatrically in North America on July 4, 2007. The company will release TRANSFORMERS: The Game internationally in the second quarter concurrent with the theatrical release.

For fiscal 2008, Activision increased its net revenues outlook to $1.8 billion. Additionally, the company expects operating income to grow in excess of 100% over fiscal 2007. The company also expects earnings per diluted share of $0.45, including the impact of equity-based compensation expense. Excluding the impact of equity-based compensation expense, the company expects earnings per diluted share of $0.55.

For the first quarter of the fiscal year 2008, the company expects net revenues of $425 million and earnings per diluted share of $0.03, including the impact of equity-based compensation expense. The company's earnings per diluted share outlook for the first quarter excluding the impact of equity-based compensation expense is expected to be $0.05. The company expects that its first quarter outlook will be impacted by legal expenses and professional fees relating primarily to its internal review of historical stock option practices, including the completion of restatement-related filings and Nasdaq proceedings, matters relating to the pending informal SEC inquiry and defense of the pending derivative litigation. The company also announced that it would move the release of Enemy Territory: Quake Wars into the second quarter.

On Friday, May 25, 2007, Activision filed an amended annual report on Form 10-K/A for the fiscal year ended March 31, 2006. Consistent with the estimate released by Activision on May 3, 2007, the Form 10-K/A reports a total of approximately $66.7 million in additional pre-tax ($45.4 million after-tax) non-cash equity-based compensation expense as a result of the stock option inquiry over the thirteen year period from April 1, 1993 through March 31, 2006. All but $2.6 million of the additional pre-tax non-cash equity-based compensation expense relates to periods prior to fiscal year 2006, and eighty percent of the additional pre-tax non-cash equity-based compensation expense relates to periods prior to April 1, 2003. In addition, Activision will report $0.6 million in additional pre-tax non-cash equity-based compensation expense during the quarter ended June 30, 2006.

Activision expects that it will shortly be in a position to file an amended quarterly report on Form 10-Q/A for the quarter ended June 30, 2006 and quarterly reports on Form 10-Q for the quarters ended September 30 and December 31, 2006. The completion of these filings will bring the company current in its periodic reporting obligations and will restore the company's compliance with Nasdaq listing requirements.

The company also intends to file its annual report on Form 10-K for the fiscal year ended March 31, 2007 on or before June 14, 2007, and to that end has filed for an automatic 15-day extension of the deadline for that filing to June 14, 2007.

The foregoing summary is qualified in its entirety by, and investors are urged to carefully read, the Form 10-K/A for the fiscal year ended March 31, 2006 that was filed last week.