Activision Reports Record Net Revenues for Fiscal 2007

May 31, 2007

- Company Expects FY 2008 Net Revenue Growth of 19% to Record $1.8 Billion - - Company Anticipates FY 2008 Operating Income to More than Double -

SANTA MONICA, Calif., May 31, 2007 (BUSINESS WIRE) -- Activision, Inc. (Nasdaq:ATVI) today announced record net revenues for the fiscal year ended March 31, 2007.

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(TM) 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.

Business Highlights

Activision's fiscal year results were driven by strong worldwide consumer response to Call of Duty 3, Marvel(TM): Ultimate Alliance(TM), Tony Hawk's Project 8(TM) 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(TM) 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(TM)," and DreamWorks Animation's "Shrek the Third(TM)." 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.

Company Outlook

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(TM): Quake Wars into the second quarter.

Stock Option Review and Restatement

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.

Conference Call

Today at 4:30 p.m. EDT, Activision's management will host a conference call and Webcast to discuss its fiscal 2007 year-end results and outlook for fiscal 2008. The company welcomes all members of the financial and media communities to visit the "Investor Relations" area of www.activision.com to listen to the conference call via a live Webcast or to listen to the call live by dialing in at (719) 457-2637 in the U.S.

Non-GAAP Financial Measures

Activision provides net earnings (loss) per share data excluding the impact of expenses related to stock options, employee stock purchase plans, restricted stock awards and other share-based compensation and the associated tax benefits.

Prior to April 1, 2006, Activision accounted for equity-based compensation under Accounting Principles Board, Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"). In accordance with APB No. 25 the company historically used the intrinsic value method to account for equity-based compensation. As of April 1, 2006, the company accounts for equity-based compensation using the fair value method under Statement of Financial Accounting Standards No. 123 (revised 2004), "Share Based Payment" ("FAS 123R").

This financial measure is not determined in accordance with generally accepted accounting principles (GAAP), and the exclusion of those amounts has the effect of increasing non-GAAP earnings per share by that same amount per share as compared to GAAP earnings per share for the period. Activision recognizes that there are limitations associated with the use of this non-GAAP financial measure as it does not reflect all of the expenses associated with our results as determined in accordance with GAAP and may reduce comparability to other companies that calculate similar non-GAAP measures differently.

Management compensates for the limitations resulting from the exclusion of expenses related to stock-based compensation by considering the amount and impact of equity-based compensation expenses separately and by considering the company's GAAP as well as non-GAAP results and, in this release, by presenting the most comparable GAAP measure, net income (loss), directly ahead of non-GAAP net income (loss) in this release and by providing a reconciliation that shows and describes the adjustments made in the accompanying tables. Management does not believe the limitations resulting from this exclusion are material, particularly when this non-GAAP financial measure is disclosed with its most comparable GAAP financial measure, net income (loss).

Management believes that the presentation of this non-GAAP financial measure provides investors with additional useful information to measure the company's financial performance because it allows for a better comparison of results in the periods reported herein to those in historical periods. This non-GAAP financial measure should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. Non-GAAP net earnings (loss) do not include certain expenses required to be recorded in order to present earnings in accordance with GAAP. This non-GAAP financial measure is not based on a comprehensive set of accounting rules or principles and the term non-GAAP net earnings (loss) does not have a standardized meaning. Therefore, other companies may use the same or similarly named measure but exclude different items, which may not provide investors a comparable view of the company's performance in relation to other companies in the same industry.

About Activision

Headquartered in Santa Monica, California, Activision, Inc. is a leading worldwide developer, publisher and distributor of interactive entertainment and leisure products. Founded in 1979, Activision posted net revenues of $1.5 billion for the fiscal year ended March 31, 2007.

Activision maintains operations in the U.S., Canada, the United Kingdom, France, Germany, Ireland, Italy, Scandinavia, Spain, the Netherlands, Australia, Japan and South Korea. More information about Activision and its products can be found on the company's World Wide Web site, which is located at www.activision.com.

Cautionary Note Regarding Forward-looking Statements: Information in this press release that involves Activision's expectations, plans, intentions or strategies regarding the future are forward-looking statements that are not facts and involve a number of risks and uncertainties. In this release they are identified by references to dates after the date of this release and words such as "will," "will be," "remains," "to be," "plans," "believes", "may", "expects," "intends," and similar expressions. These risks and uncertainties include, but are not limited to, further action by the Nasdaq Listing and Hearing Review Council relating to the continuation of the listing of Activision's common stock on the Nasdaq market; the completion of work by Activision management and Activision's auditors on the restatement of Activision's financial statements in response to the findings of the special sub-committee of independent directors established in July 2006 to review our historical stock option granting practices; the completion and filing of overdue quarterly reports and amendments to a previously filed quarterly report with the SEC; the further implementation, acceptance and effectiveness of the remedial measures recommended or adopted by the sub-committee, the board and the Activision; the outcome of the informal inquiry opened by the SEC in July 2006 and the derivative litigation filed in July 2006 against certain current and former directors and officers of the Activision relating to the Activision's stock option granting practices, and the possibility that additional claims and proceedings will be commenced, including additional stockholder litigation, employee litigation, and additional action by the SEC and/or other regulatory agencies. Other factors that could cause the Activision's actual future results to differ materially from those expressed in the forward-looking statements set forth in this release include, without limitation, other litigation (unrelated to stock option granting practices), sales of the Activision's titles, shifts in consumer spending trends, the seasonal and cyclical nature of the interactive game market, the Activision's ability to predict consumer preferences among competing hardware platforms (including next-generation hardware), declines in software pricing, product returns and price protection, product delays, retail acceptance of the Activision's products, adoption rate and availability of new hardware and related software, industry competition, rapid changes in technology and industry standards, protection of proprietary rights, maintenance of relationships with key personnel, customers, vendors and third-party developers, international economic and political conditions, integration of recently acquired subsidiaries and identification of suitable future acquisition opportunities, limitations on our ability to issue stock and options, foreign exchange rate changes, and the risks identified in the Activision's most recent annual report on Form 10-K/A and recent reports on Form 8-K. The forward-looking statements in this release are based upon information available to the Activision as of the date of this release, and the Activision assumes no obligations to update any such forward-looking statement. Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and may cause actual results to differ materially from our current expectations.

ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
                       Quarter ended March 31,  Year ended March 31,
---------------------- ----------------------- -----------------------
                          2007        2006        2007        2006
---------------------- ----------- ----------- ----------- -----------
                                    Restated                Restated
                       ----------- ----------- ----------- -----------

Net revenues             $312,512    $188,125  $1,513,012  $1,468,000
Costs and expenses:
  Cost of sales -
   product costs          181,425     117,853     799,587     734,874
  Cost of sales -
   software royalties
   and amortization        26,295       8,555     132,353     147,822
  Cost of sales -
   intellectual
   property licenses        8,287       1,901      46,125      57,666
  Product development      44,678      32,953     133,073     132,651
  Sales and marketing      40,074      24,285     196,213     283,395
  General and
   administrative          40,867      29,138     132,514      96,366
---------------------- ----------- ----------- ----------- -----------
       Total operating
        expenses          341,626     214,685   1,439,865   1,452,774
---------------------- ----------- ----------- ----------- -----------
Operating income
 (loss)                   (29,114)    (26,560)     73,147      15,226
Investment income, net     10,647       7,790      36,678      30,630
---------------------- ----------- ----------- ----------- -----------
Income (loss) before
 income tax provision     (18,467)    (18,770)    109,825      45,856
Income tax provision
 (benefit)                 (4,045)     (9,642)     24,038       5,605
---------------------- ----------- ----------- ----------- -----------
Net income (loss)        $(14,422)    $(9,128)    $85,787     $40,251
====================== =========== =========== =========== ===========


---------------------- ----------- ----------- ----------- -----------
Basic earnings (loss)
 per share                 $(0.05)     $(0.03)      $0.31       $0.15
Weighted average
 common shares
 outstanding              282,991     276,506     281,114     273,177
---------------------- ----------- ----------- ----------- -----------


---------------------- ----------- ----------- ----------- -----------
Diluted earnings
 (loss) per share          $(0.05)     $(0.03)      $0.28       $0.14
Weighted average
 common shares
 outstanding assuming
 dilution                 282,991     276,506     305,339     294,002
---------------------- ----------- ----------- ----------- -----------

----------------------------------------------------------------------

The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
----------------------------------------------------------------------
                                                March 31,   March 31,
                                                  2007        2006
                                               ----------- -----------
                                                           As Restated
---------------------------------------------- ----------- -----------
ASSETS
---------------------------------------------- ----------- -----------
 Current assets:
   Cash, cash equivalents and short-term
    investments                                  $954,849    $944,960
   Accounts receivable, net                       148,694      28,782
   Inventories                                     91,231      61,483
   Software development                           107,779      40,260
   Intellectual property licenses                  27,784       4,973
   Deferred income taxes                           51,564       9,664
   Other current assets                            19,332      25,933
---------------------------------------------- ----------- -----------
        Total current assets                    1,401,233   1,116,055
---------------------------------------------- ----------- -----------
 Software development                              23,143      20,359
 Intellectual property licenses                    72,490      82,073
 Property and equipment, net                       46,540      45,368
 Deferred income taxes                             48,791      52,545
 Other assets                                       6,376       1,409
 Goodwill                                         195,374     100,446
---------------------------------------------- ----------- -----------
                  Total assets                 $1,793,947  $1,418,255
============================================== =========== ===========

---------------------------------------------- -----------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------------------------------------
 Current liabilities:
   Accounts payable                              $136,517     $88,994
   Accrued expenses and other liabilities         204,652     104,862
---------------------------------------------- ----------- -----------
         Total current liabilities                341,169     193,856
---------------------------------------------- ----------- -----------
   Other liabilities                               41,246       1,776
---------------------------------------------- ----------- -----------

                Total liabilities                 382,415     195,632
---------------------------------------------- ----------- -----------
 Shareholders' equity:
   Common stock                                         -           -
   Additional paid-in capital                     963,553     867,297
   Retained earnings                              427,777     341,990
   Accumulated other comprehensive income          20,202      16,369
   Unearned compensation                                -      (3,033)
---------------------------------------------- ----------- -----------
         Total shareholders' equity             1,411,532   1,222,623
---------------------------------------------- ----------- -----------
             Total liabilities and
              shareholders' equity             $1,793,947  $1,418,255
============================================== =========== ===========

---------------------------------------------- ----------- -----------

The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
Quarter ended      Cost of   Product   Sales and General     Total
 March 31, 2007    Sales -    Develop-  Market-     and     Operating
                   Software    ment       ing     Admini-    Expenses
                   Royalties                     strative
                     and
                    Amorti-
                    zation
---------------------------- --------- --------- --------- -----------
GAAP Measurement    $26,295   $44,678   $40,074   $40,867    $341,626
  Less: Equity-
   Based
   Compensation
   Adjustment(a)        631     1,664     1,779     3,015       7,089
                  ---------- --------- --------- --------- -----------
Non-GAAP
 Measurement        $25,664   $43,014   $38,295   $37,852    $334,537
------------------========== ========= ========= ========= ===========

----------------------------------------------------------------------


----------------------------------------------------------
Quarter ended     Operating    Net      Basic    Diluted
 March 31, 2007     Income    Income    Earnings  Earnings
                    (Loss)     (Loss)   (Loss)    (Loss)
                                          per       per
                                         Share     Share
---------------------------- --------- --------- ---------
GAAP Measurement   $(29,114) $(14,422)   $(0.05)   $(0.05)
  Less: Equity-
   Based
   Compensation
   Adjustment(a)     (7,089)   (4,317)    (0.02)    (0.02)
                  ---------- --------- --------- ---------
Non-GAAP
 Measurement       $(22,025) $(10,105)   $(0.04)   $(0.04)
------------------========== ========= ========= =========

----------------------------------------------------------




----------------------------------------------------------------------
Year ended March   Cost of   Product   Sales and General     Total
 31, 2007          Sales -    Develop-  Market-     and     Operating
                   Software    ment       ing     Admini-    Expenses
                   Royalties                     strative
                     and
                    Amorti-
                    zation
---------------------------- --------- --------- --------- -----------
GAAP Measurement   $132,353  $133,073  $196,213  $132,514  $1,439,865
  Less: Equity-
   Based
   Compensation
   Adjustment(a)      2,503     5,728     5,267    12,024      25,522
                  ---------- --------- --------- --------- -----------
Non-GAAP
 Measurement       $129,850  $127,345  $190,946  $120,490  $1,414,343
------------------========== ========= ========= ========= ===========

----------------------------------------------------------------------


----------------------------------------------------------
Year ended March  Operating    Net      Basic    Diluted
 31, 2007           Income    Income    Earnings  Earnings
                    (Loss)     (Loss)   (Loss)    (Loss)
                                          per       per
                                         Share     Share
---------------------------- --------- --------- ---------
GAAP Measurement    $73,147   $85,787     $0.31     $0.28
  Less: Equity-
   Based
   Compensation
   Adjustment(a)    (25,522)  (15,543)    (0.06)    (0.05)
                  ---------- --------- --------- ---------
Non-GAAP
 Measurement        $98,669  $101,330     $0.36     $0.33
------------------========== ========= ========= =========

----------------------------------------------------------


      (a) Includes expense related to employee stock options, employee
       stock purchase plan and restricted stock under Statement of
       Financial Accounting Standards No. 123 (revised 2004), "Share
       Based Payment." See explanation above regarding the Company's
       practice on reporting non-GAAP financial measures. The per
       share equity-based compensation adjustment is presented as
       calculated, and the GAAP and Non-GAAP Earnings (Loss) per Share
       information is also presented as calculated. The sum of these
       measures, as presented, may differ due to the impact of
       rounding.


The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
Quarter ended     Cost of   Product   Sales and  General     Total
 March 31, 2006   Sales -    Develop-  Marketing    and     Operating
                  Software    ment                Admini-    Expenses
                  Royalties                      strative
                    and
                   Amorti-
                   zation
--------------------------- --------- ---------- --------- -----------
GAAP Measurement    $8,555   $32,953    $24,285   $29,138    $214,685
  Less: Equity-
   Based
   Compensation
   Adjustment(b)         -       184         22       388         594
                 ---------- --------- ---------- --------- -----------
Non-GAAP
 Measurement        $8,555   $32,769    $24,263   $28,750    $214,091
-----------------========== ========= ========== ========= ===========

----------------------------------------------------------------------


----------------------------------------------------------
Quarter ended    Operating    Net       Basic    Diluted
 March 31, 2006    Income    Income    Earnings   Earnings
                   (Loss)     (Loss)    (Loss)    (Loss)
                                       per Share    per
                                                   Share
--------------------------- --------- ---------- ---------
GAAP Measurement  $(26,560)  $(9,128)    $(0.03)   $(0.03)
  Less: Equity-
   Based
   Compensation
   Adjustment(b)      (594)     (363)     (0.00)    (0.00)
                 ---------- --------- ---------- ---------
Non-GAAP
 Measurement      $(25,966)  $(8,765)    $(0.03)   $(0.03)
-----------------========== ========= ========== =========

----------------------------------------------------------




----------------------------------------------------------------------
Year ended March  Cost of   Product   Sales and  General     Total
 31, 2006         Sales -    Develop-  Marketing    and     Operating
                  Software    ment                Admini-    Expenses
                  Royalties                      strative
                    and
                   Amorti-
                   zation
--------------------------- --------- ---------- --------- -----------
GAAP Measurement  $147,822  $132,651   $283,395   $96,366  $1,452,774
  Less: Equity-
   Based
   Compensation
   Adjustment(b)         -       869        175     2,057       3,101
                 ---------- --------- ---------- --------- -----------
Non-GAAP
 Measurement      $147,822  $131,782   $283,220   $94,309  $1,449,673
-----------------========== ========= ========== ========= ===========

----------------------------------------------------------------------


----------------------------------------------------------
Year ended March Operating    Net       Basic    Diluted
 31, 2006          Income    Income    Earnings   Earnings
                   (Loss)     (Loss)    (Loss)    (Loss)
                                       per Share    per
                                                   Share
--------------------------- --------- ---------- ---------
GAAP Measurement   $15,226   $40,251      $0.15     $0.14
  Less: Equity-
   Based
   Compensation
   Adjustment(b)    (3,101)   (1,895)     (0.01)    (0.01)
                 ---------- --------- ---------- ---------
Non-GAAP
 Measurement       $18,327   $42,146      $0.15     $0.14
-----------------========== ========= ========== =========

----------------------------------------------------------


      (b) Includes expense related to employee stock options and
       restricted stock under Accounting Principles Board Opinion No.
       25, "Accounting for Stock Issued to Employees." See explanation
       above regarding the Company's practice on reporting non-GAAP
       financial measures. The per share equity-based compensation
       adjustment is presented as calculated, and the GAAP and Non-
       GAAP Earnings (Loss) per Share information is also presented as
       calculated. The sum of these measures, as presented, may differ
       due to the impact of rounding.


The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Year Ended March 31, 2007 and 2006
(Amounts in thousands)

                                                             Percent
                                                             Increase
                                  Quarter Ended             (Decrease)
                      ------------------------------------------------
                        March 31, 2007     March 31, 2006
                         Amount   % of      Amount   % of
                                   Total              Total
--------------------- ----------- ------ ----------- ------ ----------
Geographic Revenue
 Mix
 North America          $116,125     37%    $83,502     44%        39%
 International           196,387     63%    104,623     56%        88%
--------------------- ----------- ------ ----------- ------ ----------
 Total net revenues     $312,512    100%   $188,125    100%        66%
--------------------- ----------- ------ ----------- ------ ----------


--------------------- ----------- ------ ----------- ------ ----------
Segment/Platform Mix
Publishing:
 Console                $167,400     54%    $82,272     44%       103%
 Hand-held                32,232     10%     15,211      8%       112%
 PC                        9,443      3%     28,722     15%       -67%
--------------------- ----------- ------ ----------- ------ ----------
 Total publishing net
  revenues              $209,075     67%   $126,205     67%        66%
--------------------- ----------- ------ ----------- ------ ----------

Distribution:
 Console                 $74,022     24%    $33,069     18%       124%
 Hand-held                23,661      7%     16,744      9%        41%
 PC                        5,754      2%     12,107      6%       -52%
--------------------- ----------- ------ ----------- ------ ----------
 Total distribution
  net revenues          $103,437     33%    $61,920     33%        67%
--------------------------------- ------ ----------- ------ ----------
 Total net revenues     $312,512    100%   $188,125    100%        66%
--------------------- ------------------------------------------------



                                                             Percent
                                                             Increase
                                    Year Ended              (Decrease)
                      ------------------------------------------------
                        March 31, 2007     March 31, 2006
                         Amount   % of      Amount   % of
                                   Total              Total
--------------------- ----------- ------ ----------- ------ ----------
Geographic Revenue
 Mix
 North America          $753,376     50%   $710,040     48%         6%
 International           759,636     50%    757,960     52%         0%
--------------------- ----------- ------ ----------- ------ ----------
 Total net revenues   $1,513,012    100% $1,468,000    100%         3%
--------------------- ----------- ------ ----------- ------ ----------


--------------------- ----------- ------ ----------- ------ ----------
Segment/Platform Mix
Publishing:
 Console                $886,795     59%   $812,345     55%         9%
 Hand-held               153,357     10%    158,861     11%        -3%
 PC                       78,886      5%    183,457     13%       -57%
--------------------- ----------- ------ ----------- ------ ----------
 Total publishing net
  revenues            $1,119,038     74% $1,154,663     79%        -3%
--------------------- ----------- ------ ----------- ------ ----------

Distribution:
 Console                $238,662     16%   $196,413     13%        22%
 Hand-held               122,293      8%     76,973      5%        59%
 PC                       33,019      2%     39,951      3%       -17%
--------------------- ----------- ------ ----------- ------ ----------
 Total distribution
  net revenues          $393,974     26%   $313,337     21%        26%
--------------------------------- ------ ----------- ------ ----------
 Total net revenues   $1,513,012    100% $1,468,000    100%         3%
--------------------- ------------------------------------------------

ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Year Ended March 31, 2007 and 2006




                     ------------- ------------- ---------- ----------
                     Quarter Ended Quarter Ended Year Ended Year Ended
                      March 31,     March 31,    March 31,  March 31,
                          2007          2006        2007       2006

-------------------- ------------- ------------- ---------- ----------
Publishing Net
 Revenues

 PC                             5%           23%         7%        16%
-------------------- ------------- ------------- ---------- ----------

 Console                       80%           65%        80%        70%
-------------------- ------------- ------------- ---------- ----------
  Sony PlayStation 3           12%            0%         5%         0%
  Sony PlayStation 2           49%           27%        45%        36%
  Microsoft Xbox 360           12%           25%        18%         9%
  Microsoft Xbox                1%            8%         5%        18%
  Nintendo Wii                  5%            0%         5%         0%
  Nintendo GameCube             1%            5%         2%         7%

 Hand-held                     15%           12%        13%        14%
-------------------- ------------- ------------- ---------- ----------
  Sony PlayStation
   Portable                     8%            4%         4%         5%
  Nintendo Dual
   Screen                       5%            2%         5%         2%
  Nintendo Game Boy
   Advance                      2%            6%         4%         7%

-------------------- ------------- ------------- ---------- ----------
 Total publishing
  net revenues                100%          100%       100%       100%
-------------------- ------------- ------------- ---------- ----------

ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
                             Quarter ended       Nine months ended
                               December 31,          December 31,
-------------------------- ------------------- -----------------------
                             2006      2005       2006        2005
-------------------------- --------- --------- ----------- -----------
                                        As                 As Restated
                                      Restated
                           --------- --------- ----------- -----------

Net revenues               $824,259  $816,242  $1,200,500  $1,279,875
Costs and expenses:
  Cost of sales - product
   costs                    382,165   367,685     618,162     617,021
  Cost of sales - software
   royalties and
   amortization              77,449   104,264     106,058     139,267
  Cost of sales -
   intellectual property
   licenses                  23,566    26,376      37,838      55,765
  Product development        37,162    53,254      88,395      99,698
  Sales and marketing        87,410   156,013     156,139     259,110
  General and
   administrative            43,387    24,757      91,647      67,228
-------------------------- --------- --------- ----------- -----------
       Total operating
        expenses            651,139   732,349   1,098,239   1,238,089
-------------------------- --------- --------- ----------- -----------
Operating income            173,120    83,893     102,261      41,786
Investment income, net        9,724     9,162      26,031      22,840
-------------------------- --------- --------- ----------- -----------
Income before income tax
 provision                  182,844    93,055     128,292      64,626
Income tax provision         40,024    25,199      28,083      15,247
-------------------------- --------- --------- ----------- -----------
Net income                 $142,820   $67,856    $100,209     $49,379
========================== ========= ========= =========== ===========


-------------------------- --------- --------- ----------- -----------
Basic earnings per share      $0.51     $0.25       $0.36       $0.18
Weighted average common
 shares outstanding         282,512   274,965     280,499     272,089
-------------------------- --------- --------- ----------- -----------


-------------------------- --------- --------- ----------- -----------
Diluted earnings per share    $0.46     $0.23       $0.33       $0.17
Weighted average common
 shares outstanding
 assuming dilution          307,175   296,205     304,317     293,397
-------------------------- --------- --------- ----------- -----------

----------------------------------------------------------------------

The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
----------------------------------------------------------------------
                                              December 31,  March 31,
                                                 2006         2006
                                              ------------ -----------
                                                           As Restated
--------------------------------------------- ------------ -----------
ASSETS
--------------------------------------------- ------------ -----------
  Current assets:
    Cash, cash equivalents and short-term
     investments                                 $805,200    $944,960
    Accounts receivable, net                      456,589      28,782
    Inventories                                    85,680      61,483
    Software development                           86,119      40,260
    Intellectual property licenses                 28,628       4,973
    Deferred income taxes                           4,266       9,664
    Other current assets                           17,896      25,933
--------------------------------------------- ------------ -----------
         Total current assets                   1,484,378   1,116,055
--------------------------------------------- ------------ -----------
  Software development                             15,688      20,359
  Intellectual property licenses                   64,800      82,073
  Property and equipment, net                      46,713      45,368
  Deferred income taxes                            85,552      52,545
  Other assets                                      5,941       1,409
  Goodwill                                        188,398     100,446
--------------------------------------------- ------------ -----------
                   Total assets                $1,891,470  $1,418,255
============================================= ============ ===========

--------------------------------------------- ------------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------------- ------------ -----------
  Current liabilities:
    Accounts payable                             $193,875     $88,994
    Accrued expenses                              247,581     104,862
--------------------------------------------- ------------ -----------
          Total current liabilities               441,456     193,856
--------------------------------------------- ------------ -----------
    Other liabilities                              41,128       1,776
--------------------------------------------- ------------ -----------

                 Total liabilities                482,584     195,632
--------------------------------------------- ------------ -----------
  Shareholders' equity:
    Common stock                                        -           -
    Additional paid-in capital                    948,028     867,297
    Retained earnings                             442,199     341,990
    Accumulated other comprehensive income         18,659      16,369
    Unearned compensation                               -      (3,033)
--------------------------------------------- ------------ -----------
          Total shareholders' equity            1,408,886   1,222,623
--------------------------------------------- ------------ -----------
              Total liabilities and
               shareholders' equity            $1,891,470  $1,418,255
============================================= ============ ===========

----------------------------------------------------------------------

The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
Quarter ended     Cost of   Product   Sales and  General     Total
 December 31,     Sales -    Develop-  Marketing    and     Operating
 2006             Software    ment                Admini-    Expenses
                  Royalties                      strative
                    and
                   Amorti-
                   zation
--------------------------- --------- ---------- --------- -----------
GAAP Measurement   $77,449   $37,162    $87,410   $43,387    $651,139
  Less: Equity-
   Based
   Compensation
   Adjustment(a)     1,836     1,394      1,559     2,904       7,693
                 ---------- --------- ---------- --------- -----------
Non-GAAP
 Measurement       $75,613   $35,768    $85,851   $40,483    $643,446
-----------------========== ========= ========== ========= ===========

----------------------------------------------------------------------


----------------------------------------------------------
Quarter ended    Operating    Net       Basic    Diluted
 December 31,      Income    Income    Earnings   Earnings
 2006              (Loss)     (Loss)    (Loss)    (Loss)
                                       per Share    per
                                                   Share
--------------------------- --------- ---------- ---------
GAAP Measurement  $173,120  $142,820      $0.51     $0.46
  Less: Equity-
   Based
   Compensation
   Adjustment(a)    (7,693)   (4,685)     (0.02)    (0.02)
                 ---------- --------- ---------- ---------
Non-GAAP
 Measurement      $180,813  $147,505      $0.52     $0.48
-----------------========== ========= ========== =========

----------------------------------------------------------




----------------------------------------------------------------------
Nine months       Cost of   Product   Sales and  General     Total
 ended December   Sales -    Develop-  Marketing    and     Operating
 31, 2006         Software    ment                Admini-    Expenses
                  Royalties                      strative
                    and
                   Amorti-
                   zation
--------------------------- --------- ---------- --------- -----------
GAAP Measurement  $106,058   $88,395   $156,139   $91,647  $1,098,239
  Less: Equity-
   Based
   Compensation
   Adjustment(a)     1,872     4,064      3,488     9,009      18,433
                 ---------- --------- ---------- --------- -----------
Non-GAAP
 Measurement      $104,186   $84,331   $152,651   $82,638  $1,079,806
-----------------========== ========= ========== ========= ===========

----------------------------------------------------------------------


----------------------------------------------------------
Nine months      Operating    Net       Basic    Diluted
 ended December    Income    Income    Earnings   Earnings
 31, 2006          (Loss)     (Loss)    (Loss)    (Loss)
                                       per Share    per
                                                   Share
--------------------------- --------- ---------- ---------
GAAP Measurement  $102,261  $100,209      $0.36     $0.33
  Less: Equity-
   Based
   Compensation
   Adjustment(a)   (18,433)  (11,226)     (0.04)    (0.04)
                 ---------- --------- ---------- ---------
Non-GAAP
 Measurement      $120,694  $111,435      $0.40     $0.37
-----------------========== ========= ========== =========

----------------------------------------------------------


      (a) Includes expense related to employee stock options, employee
       stock purchase plan and restricted stock under Statement of
       Financial Accounting Standards No. 123 (revised 2004), "Share
       Based Payment." See explanation above regarding the Company's
       practice on reporting non-GAAP financial measures. The per
       share equity-based compensation adjustment is presented as
       calculated, and the GAAP and Non-GAAP Earnings (Loss) per Share
       information is also presented as calculated. The sum of these
       measures, as presented, may differ due to the impact of
       rounding.


The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
Quarter ended     Cost of   Product   Sales and  General     Total
 December 31,     Sales -    Develop-  Marketing    and     Operating
 2005             Software    ment                Admini-    Expenses
                  Royalties                      strative
                    and
                   Amorti-
                   zation
--------------------------- --------- ---------- --------- -----------
GAAP Measurement  $104,264   $53,254   $156,013   $24,757    $732,349
  Less: Equity-
   Based
   Compensation
   Adjustment(b)         -       115         14       193         322
                 ---------- --------- ---------- --------- -----------
Non-GAAP
 Measurement      $104,264   $53,139   $155,999   $24,564    $732,027
-----------------========== ========= ========== ========= ===========

----------------------------------------------------------------------


----------------------------------------------------------
Quarter ended    Operating    Net       Basic    Diluted
 December 31,      Income    Income    Earnings   Earnings
 2005              (Loss)     (Loss)    (Loss)    (Loss)
                                       per Share    per
                                                   Share
--------------------------- --------- ---------- ---------
GAAP Measurement   $83,893   $67,856      $0.25     $0.23
  Less: Equity-
   Based
   Compensation
   Adjustment(b)      (322)     (198)     (0.00)    (0.00)
                 ---------- --------- ---------- ---------
Non-GAAP
 Measurement       $84,215   $68,054      $0.25     $0.23
-----------------========== ========= ========== =========

----------------------------------------------------------




----------------------------------------------------------------------
Nine months       Cost of   Product   Sales and  General     Total
 ended December   Sales -    Develop-  Marketing    and     Operating
 31, 2005         Software    ment                Admini-    Expenses
                  Royalties                      strative
                    and
                   Amorti-
                   zation
--------------------------- --------- ---------- --------- -----------
GAAP Measurement  $139,267   $99,698   $259,110   $67,228  $1,238,089
  Less: Equity-
   Based
   Compensation
   Adjustment(b)         -       685        153     1,669       2,507
                 ---------- --------- ---------- --------- -----------
Non-GAAP
 Measurement      $139,267   $99,013   $258,957   $65,559  $1,235,582
-----------------========== ========= ========== ========= ===========

----------------------------------------------------------------------


----------------------------------------------------------
Nine months      Operating    Net       Basic    Diluted
 ended December    Income    Income    Earnings   Earnings
 31, 2005          (Loss)     (Loss)    (Loss)    (Loss)
                                       per Share    per
                                                   Share
--------------------------- --------- ---------- ---------
GAAP Measurement   $41,786   $49,379      $0.18     $0.17
  Less: Equity-
   Based
   Compensation
   Adjustment(b)    (2,507)   (1,532)     (0.01)    (0.01)
                 ---------- --------- ---------- ---------
Non-GAAP
 Measurement       $44,293   $50,911      $0.19     $0.17
-----------------========== ========= ========== =========

----------------------------------------------------------


      (b) Includes expense related to employee stock options and
       restricted stock under Accounting Principles Board Opinion No.
       25, "Accounting for Stock Issued to Employees." See explanation
       above regarding the Company's practice on reporting non-GAAP
       financial measures. The per share equity-based compensation
       adjustment is presented as calculated, and the GAAP and Non-
       GAAP Earnings (Loss) per Share information is also presented as
       calculated. The sum of these measures, as presented, may differ
       due to the impact of rounding.


The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Nine Months Ended December 31, 2006 and 2005
(Amounts in thousands)

                                                             Percent
                                                             Increase
                                  Quarter Ended             (Decrease)
                      ------------------------------------------------
                      December 31, 2006  December 31, 2005
                         Amount   % of      Amount   % of
                                   Total              Total
--------------------- ----------- ------ ----------- ------ ----------
Geographic Revenue
 Mix
  North America         $463,388     56%   $402,314     49%        15%
  International          360,871     44%    413,928     51%      (13%)
--------------------- ----------- ------ ----------- ------ ----------
  Total net revenues    $824,259    100%   $816,242    100%         1%
--------------------- ----------- ------ ----------- ------ ----------


--------------------- ----------- ------ ----------- ------ ----------
Segment/Platform Mix
Publishing:
  Console               $545,070     66%   $479,686     59%        14%
  Hand-held               71,339      9%     74,032      9%       (4%)
  PC                      33,388      4%    113,782     14%      (71%)
--------------------- ----------- ------ ----------- ------ ----------
  Total publishing
   net revenues          649,797     79%    667,500     82%       (3%)
--------------------- ----------- ------ ----------- ------ ----------

Distribution:
  Console                102,515     12%     95,408     12%         7%
  Hand-held               57,047      7%     37,154      4%        54%
  PC                      14,900      2%     16,180      2%       (8%)
--------------------- ----------- ------ ----------- ------ ----------
  Total distribution
   net revenues          174,462     21%    148,742     18%        17%
--------------------- ----------- ------ ----------- ------ ----------
  Total net revenues    $824,259    100%   $816,242    100%         1%
--------------------- ------------------------------------------------



                                                             Percent
                                                             Increase
                                Nine Months Ended           (Decrease)
                      ------------------------------------------------
                      December 31, 2006  December 31, 2005
                         Amount   % of      Amount   % of
                                   Total              Total
--------------------- ----------- ------ ----------- ------ ----------
Geographic Revenue
 Mix
  North America         $637,251     53%   $626,538     49%         2%
  International          563,249     47%    653,337     51%      (14%)
--------------------- ----------- ------ ----------- ------ ----------
  Total net revenues  $1,200,500    100% $1,279,875    100%       (6%)
--------------------- ----------- ------ ----------- ------ ----------


--------------------- ----------- ------ ----------- ------ ----------
Segment/Platform Mix
Publishing:
  Console               $719,395     60%   $730,073     57%       (1%)
  Hand-held              121,125     10%    143,650     11%      (16%)
  PC                      69,443      6%    154,735     12%      (55%)
--------------------- ----------- ------ ----------- ------ ----------
  Total publishing
   net revenues          909,963     76%  1,028,458     80%      (12%)
--------------------- ----------- ------ ----------- ------ ----------

Distribution:
  Console                164,640     14%    163,344     13%         1%
  Hand-held               98,632      8%     60,229      5%        64%
  PC                      27,265      2%     27,844      2%       (2%)
--------------------- ----------- ------ ----------- ------ ----------
  Total distribution
   net revenues          290,537     24%    251,417     20%        16%
--------------------- ----------- ------ ----------- ------ ----------
  Total net revenues  $1,200,500    100% $1,279,875    100%       (6%)
--------------------- ------------------------------------------------


The statement of operations and balance sheets for the second and
 third quarters of fiscal 2007 presented in this earnings release have
 been updated from previously announced preliminary financial results,
 and reflect subsequent event adjustments primarily related to a
 change in the company's effective tax rate, changes in expense
 accrual estimates and adjustments to equity-based compensation
 expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION
For the Quarter and Nine Months Ended December 31, 2006 and 2005

                               --------- --------- --------- ---------
                               Quarter   Quarter     Nine      Nine
                                 Ended     Ended    Months    Months
                                                     Ended     Ended
                               December  December  December  December
                                31, 2006  31, 2005  31, 2006  31, 2005
------------------------------ --------- --------- --------- ---------
Publishing Net Revenues

  PC                                  5%       17%        8%       15%
------------------------------ --------- --------- --------- ---------

  Console                            84%       72%       79%       71%
------------------------------ --------- --------- --------- ---------
    Sony PlayStation 3                4%        0%        3%        0%
    Sony PlayStation 2               45%       39%       44%       38%
    Microsoft Xbox 360               22%       11%       19%        7%
    Microsoft Xbox                    5%       15%        6%       19%
    Nintendo Wii                      7%        0%        5%        0%
    Nintendo GameCube                 1%        7%        2%        7%

  Hand-held                          11%       11%       13%       14%
------------------------------ --------- --------- --------- ---------
    Sony PlayStation Portable         4%        3%        4%        5%
    Nintendo Dual Screen              4%        2%        4%        2%
    Nintendo Game Boy Advance         3%        6%        5%        7%

------------------------------ --------- --------- --------- ---------
  Total publishing net
   revenues                         100%      100%      100%      100%
---------------------------------------- --------- --------- ---------

The statement of operations and balance sheets for the second and
 third quarters of fiscal 2007 presented in this earnings release have
 been updated from previously announced preliminary financial results,
 and reflect subsequent event adjustments primarily related to a
 change in the company's effective tax rate, changes in expense
 accrual estimates and adjustments to equity- based compensation
 expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
                              Quarter ended        Six months ended
                               September 30,         September 30,
-------------------------- --------------------- ---------------------
                             2006       2005       2006       2005
-------------------------- --------- ----------- --------- -----------
                                     As Restated           As Restated
                           --------- ----------- --------- -----------

Net revenues               $188,172    $222,540  $376,241    $463,633
Costs and expenses:
 Cost of sales - product
  costs                     127,374     112,582   235,997     249,336
 Cost of sales - software
  royalties and
  amortization                9,348      20,427    28,609      35,003
 Cost of sales -
  intellectual property
  licenses                    4,356       8,449    14,272      29,389
 Product development         25,608      28,366    51,233      46,444
 Sales and marketing         32,550      56,730    68,729     103,097
 General and
  administrative             26,346      23,774    48,260      42,471
-------------------------- --------- ----------- --------- -----------
      Total operating
       expenses             225,582     250,328   447,100     505,740
-------------------------- --------- ----------- --------- -----------
Operating loss              (37,410)    (27,788)  (70,859)    (42,107)
Investment income, net        8,032       6,330    16,307      13,678
-------------------------- --------- ----------- --------- -----------
Loss before income tax
 benefit                    (29,378)    (21,458)  (54,552)    (28,429)
Income tax benefit           (5,076)     (7,228)  (11,941)     (9,952)
-------------------------- --------- ----------- --------- -----------
Net loss                   $(24,302)   $(14,230) $(42,611)   $(18,477)
========================== ========= =========== ========= ===========


-------------------------- --------- ----------- --------- -----------
Basic loss per share         $(0.09)     $(0.05)   $(0.15)     $(0.07)
Weighted average common
 shares outstanding         280,627     272,129   279,487     270,643
-------------------------- --------- ----------- --------- -----------


-------------------------- --------- ----------- --------- -----------
Diluted loss per share       $(0.09)     $(0.05)   $(0.15)     $(0.07)
Weighted average common
 shares outstanding
 assuming dilution          280,627     272,129   279,487     270,643
-------------------------- --------- ----------- --------- -----------

----------------------------------------------------------------------

The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
----------------------------------------------------------------------
                                             September 30,  March 31,
                                                 2006         2006
                                             ------------- -----------
                                                           As Restated
-------------------------------------------- ------------- -----------
ASSETS
-------------------------------------------- ------------- -----------
  Current assets:
    Cash, cash equivalents and short-term
     investments                                 $747,395    $944,960
    Accounts receivable, net                       97,086      28,782
    Inventories                                    71,063      61,483
    Software development                           95,694      40,260
    Intellectual property licenses                 23,996       4,973
    Deferred income taxes                           6,484       9,664
    Other current assets                           37,917      25,933
-------------------------------------------- ------------- -----------
         Total current assets                   1,079,635   1,116,055
-------------------------------------------- ------------- -----------
  Software development                             22,094      20,359
  Intellectual property licenses                   71,100      82,073
  Property and equipment, net                      45,185      45,368
  Deferred income taxes                           121,085      52,545
  Other assets                                      5,676       1,409
  Goodwill                                        188,254     100,446
-------------------------------------------- ------------- -----------
                   Total assets                $1,533,029  $1,418,255
============================================ ============= ===========

-------------------------------------------- ------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------- ------------- -----------
  Current liabilities:
    Accounts payable                              $83,418     $88,994
    Accrued expenses                              169,195     104,862
-------------------------------------------- ------------- -----------
          Total current liabilities               252,613     193,856
-------------------------------------------- ------------- -----------
    Other liabilities                              41,070       1,776
-------------------------------------------- ------------- -----------

                 Total liabilities                293,683     195,632
-------------------------------------------- ------------- -----------
  Shareholders' equity:
    Common stock                                        -           -
    Additional paid-in capital                    927,392     867,297
    Retained earnings                             299,379     341,990
    Accumulated other comprehensive income         12,575      16,369
    Unearned compensation                               -      (3,033)
-------------------------------------------- ------------- -----------
          Total shareholders' equity            1,239,346   1,222,623
-------------------------------------------- ------------- -----------
              Total liabilities and
               shareholders' equity            $1,533,029  $1,418,255
============================================ ============= ===========

----------------------------------------------------------------------

The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
Quarter ended      Cost of   Product   Sales and  General     Total
 September 30,     Sales -    Develop-  Marketing    and     Operating
 2006              Software    ment                Admini-   Expenses
                   Royalties                      strative
                     and
                    Amorti-
                    zation
---------------------------- --------- ---------- --------- ----------
GAAP Measurement     $9,348   $25,608    $32,550   $26,346   $225,582
  Less: Equity-
   Based
   Compensation
   Adjustment(a)          -       991        889     3,011      4,891
                  ---------- --------- ---------- --------- ----------
Non-GAAP
 Measurement         $9,348   $24,617    $31,661   $23,335   $220,691
------------------========== ========= ========== ========= ==========

----------------------------------------------------------------------


-----------------------------------------------------------
Quarter ended     Operating    Net       Basic    Diluted
 September 30,      Income    Income    Earnings   Earnings
 2006               (Loss)     (Loss)    (Loss)    (Loss)
                                        per Share    per
                                                    Share
---------------------------- --------- ---------- ---------
GAAP Measurement   $(37,410) $(24,302)    $(0.09)   $(0.09)
  Less: Equity-
   Based
   Compensation
   Adjustment(a)     (4,891)   (2,979)     (0.01)    (0.01)
                  ---------- --------- ---------- ---------
Non-GAAP
 Measurement       $(32,519) $(21,323)    $(0.08)   $(0.08)
------------------========== ========= ========== =========

-----------------------------------------------------------


----------------------------------------------------------------------
Six months ended   Cost of   Product   Sales and  General     Total
 September 30,     Sales -    Develop-  Marketing    and     Operating
 2006              Software    ment                Admini-   Expenses
                   Royalties                      strative
                     and
                    Amorti-
                    zation
---------------------------- --------- ---------- --------- ----------
GAAP Measurement    $28,609   $51,233    $68,729   $48,260   $447,100
  Less: Equity-
   Based
   Compensation
   Adjustment(a)         36     2,670      1,929     6,105     10,740
                  ---------- --------- ---------- --------- ----------
Non-GAAP
 Measurement        $28,573   $48,563    $66,800   $42,155   $436,360
------------------========== ========= ========== ========= ==========

----------------------------------------------------------------------


-----------------------------------------------------------
Six months ended  Operating    Net       Basic    Diluted
 September 30,      Income    Income    Earnings   Earnings
 2006               (Loss)     (Loss)    (Loss)    (Loss)
                                        per Share    per
                                                    Share
---------------------------- --------- ---------- ---------
GAAP Measurement   $(70,859) $(42,611)    $(0.15)   $(0.15)
  Less: Equity-
   Based
   Compensation
   Adjustment(a)    (10,740)   (6,541)     (0.02)    (0.02)
                  ---------- --------- ---------- ---------
Non-GAAP
 Measurement       $(60,119) $(36,070)    $(0.13)   $(0.13)
------------------========== ========= ========== =========

-----------------------------------------------------------


      (a) Includes expense related to employee stock options, employee
       stock purchase plan and restricted stock under Statement of
       Financial Accounting Standards No. 123 (revised 2004), "Share
       Based Payment." See explanation above regarding the Company's
       practice on reporting non-GAAP financial measures. The per
       share equity-based compensation adjustment is presented as
       calculated, and the GAAP and Non-GAAP Earnings (Loss) per Share
       information is also presented as calculated. The sum of these
       measures, as presented, may differ due to the impact of
       rounding.


The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
Quarter ended      Cost of   Product   Sales and  General     Total
 September 30,     Sales -    Develop-  Marketing    and     Operating
 2005              Software    ment                Admini-   Expenses
                   Royalties                      strative
                     and
                    Amorti-
                    zation
---------------------------- --------- ---------- --------- ----------
GAAP Measurement    $20,427   $28,366    $56,730   $23,774   $250,328
  Less: Equity-
   Based
   Compensation
   Adjustment(b)          -       294         90       935      1,319
                  ---------- --------- ---------- --------- ----------
Non-GAAP
 Measurement        $20,427   $28,072    $56,640   $22,839   $249,009
------------------========== ========= ========== ========= ==========

----------------------------------------------------------------------


-----------------------------------------------------------
Quarter ended     Operating    Net       Basic    Diluted
 September 30,      Income    Income    Earnings   Earnings
 2005               (Loss)     (Loss)    (Loss)    (Loss)
                                        per Share    per
                                                    Share
---------------------------- --------- ---------- ---------
GAAP Measurement   $(27,788) $(14,230)    $(0.05)   $(0.05)
  Less: Equity-
   Based
   Compensation
   Adjustment(b)     (1,319)     (806)     (0.00)    (0.00)
                  ---------- --------- ---------- ---------
Non-GAAP
 Measurement       $(26,469) $(13,424)    $(0.05)   $(0.05)
------------------========== ========= ========== =========

-----------------------------------------------------------


----------------------------------------------------------------------
Six months ended   Cost of   Product   Sales and  General     Total
 September 30,     Sales -    Develop-  Marketing    and     Operating
 2005              Software    ment                Admini-   Expenses
                   Royalties                      strative
                     and
                    Amorti-
                    zation
---------------------------- --------- ---------- --------- ----------
GAAP Measurement    $35,003   $46,444   $103,097   $42,471   $505,740
  Less: Equity-
   Based
   Compensation
   Adjustment(b)          -       570        139     1,476      2,185
                  ---------- --------- ---------- --------- ----------
Non-GAAP
 Measurement        $35,003   $45,874   $102,958   $40,995   $503,555
------------------========== ========= ========== ========= ==========

----------------------------------------------------------------------


-----------------------------------------------------------
Six months ended  Operating    Net       Basic    Diluted
 September 30,      Income    Income    Earnings   Earnings
 2005               (Loss)     (Loss)    (Loss)    (Loss)
                                        per Share    per
                                                    Share
---------------------------- --------- ---------- ---------
GAAP Measurement   $(42,107) $(18,477)    $(0.07)   $(0.07)
  Less: Equity-
   Based
   Compensation
   Adjustment(b)     (2,185)   (1,335)     (0.00)    (0.00)
                  ---------- --------- ---------- ---------
Non-GAAP
 Measurement       $(39,922) $(17,142)    $(0.06)   $(0.06)
------------------========== ========= ========== =========

-----------------------------------------------------------


      (b) Includes expense related to employee stock options and
       restricted stock under Accounting Principles Board Opinion No.
       25, "Accounting for Stock Issued to Employees." See explanation
       above regarding the Company's practice on reporting non-GAAP
       financial measures. The per share equity-based compensation
       adjustment is presented as calculated, and the GAAP and Non-
       GAAP Earnings (Loss) per Share information is also presented as
       calculated. The sum of these measures, as presented, may differ
       due to the impact of rounding.


The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
                                               Quarter ended June 30,
---------------------------------------------- -----------------------
                                                  2006        2005
---------------------------------------------- ----------- -----------
                                               As Restated As Restated
                                               ----------- -----------

Net revenues                                     $188,069    $241,093
Costs and expenses:
  Cost of sales - product costs                   108,623     136,754
  Cost of sales - software royalties and
   amortization                                    19,261      14,576
  Cost of sales - intellectual property
   licenses                                         9,916      20,940
  Product development                              25,625      18,078
  Sales and marketing                              36,179      46,367
  General and administrative                       21,914      18,697
---------------------------------------------- ----------- -----------
       Total operating expenses                   221,518     255,412
---------------------------------------------- ----------- -----------
Operating loss                                    (33,449)    (14,319)
Investment income, net                              8,275       7,348
---------------------------------------------- ----------- -----------
Loss before income tax benefit                    (25,174)     (6,971)
Income tax benefit                                 (6,865)     (2,724)
---------------------------------------------- ----------- -----------
Net loss                                         $(18,309)    $(4,247)
============================================== =========== ===========


---------------------------------------------- ----------- -----------
Basic loss per share                               $(0.07)     $(0.02)
Weighted average common shares outstanding        278,335     269,141
---------------------------------------------- ----------- -----------


---------------------------------------------- ----------- -----------
Diluted loss per share                             $(0.07)     $(0.02)
Weighted average common shares outstanding
 assuming dilution                                278,335     269,141
---------------------------------------------- ----------- -----------

----------------------------------------------------------------------

Share and earnings per share data have been restated to reflect our
 four-for-three stock split for shareholders of record as of October
 10, 2005, paid October 24, 2005.

The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
----------------------------------------------------------------------
                                                June 30,    March 31,
                                                  2006        2006
                                               ----------- -----------
                                               As Restated As Restated
---------------------------------------------- ----------- -----------
ASSETS
---------------------------------------------- ----------- -----------
  Current assets:
    Cash, cash equivalents and short-term
     investments                                 $792,576    $944,960
    Accounts receivable, net                       65,361      28,782
    Inventories                                    64,095      61,483
    Software development                           65,650      40,260
    Intellectual property licenses                 23,844       4,973
    Deferred income taxes                          12,245       9,664
    Other current assets                           40,229      25,933
---------------------------------------------- ----------- -----------
         Total current assets                   1,064,000   1,116,055
---------------------------------------------- ----------- -----------
  Software development                             12,982      20,359
  Intellectual property licenses                   73,100      82,073
  Property and equipment, net                      43,986      45,368
  Deferred income taxes                            57,349      52,545
  Other assets                                      4,113       1,409
  Goodwill                                        180,646     100,446
---------------------------------------------- ----------- -----------
                   Total assets                $1,436,176  $1,418,255
============================================== =========== ===========

---------------------------------------------- ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------- ----------- -----------
  Current liabilities:
    Accounts payable                              $73,344     $88,994
    Accrued expenses                               87,142     104,862
---------------------------------------------- ----------- -----------
          Total current liabilities               160,486     193,856
---------------------------------------------- ----------- -----------
    Other liabilities                              40,960       1,776
---------------------------------------------- ----------- -----------

                 Total liabilities                201,446     195,632
---------------------------------------------- ----------- -----------
  Shareholders' equity:
    Common stock                                        -           -
    Additional paid-in capital                    909,584     867,297
    Retained earnings                             323,681     341,990
    Accumulated other comprehensive income          1,465      16,369
    Unearned compensation                               -      (3,033)
---------------------------------------------- ----------- -----------
          Total shareholders' equity            1,234,730   1,222,623
---------------------------------------------- ----------- -----------
              Total liabilities and
               shareholders' equity            $1,436,176  $1,418,255
============================================== =========== ===========

----------------------------------------------------------------------


The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

ACTIVISION, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)

----------------------------------------------------------------------
Quarter ended      Cost of   Product   Sales and  General     Total
 June 30, 2006     Sales -    Develop-  Marketing    and     Operating
                   Software    ment                Admini-   Expenses
                   Royalties                      strative
                     and
                    Amorti-
                    zation
---------------------------- --------- ---------- --------- ----------
GAAP Measurement    $19,261   $25,625    $36,179   $21,914   $221,518
  Less: Equity-
   Based
   Compensation
   Adjustment(a)         36     1,679      1,040     3,094      5,849
                  ---------- --------- ---------- --------- ----------
Non-GAAP
 Measurement        $19,225   $23,946    $35,139   $18,820   $215,669
------------------========== ========= ========== ========= ==========

----------------------------------------------------------------------


-----------------------------------------------------------
Quarter ended     Operating    Net       Basic    Diluted
 June 30, 2006      Income    Income    Earnings   Earnings
                    (Loss)     (Loss)    (Loss)    (Loss)
                                        per Share    per
                                                    Share
---------------------------- --------- ---------- ---------
GAAP Measurement   $(33,449) $(18,309)    $(0.07)   $(0.07)
  Less: Equity-
   Based
   Compensation
   Adjustment(a)     (5,849)   (3,562)     (0.01)    (0.01)
                  ---------- --------- ---------- ---------
Non-GAAP
 Measurement       $(27,600) $(14,747)    $(0.05)   $(0.05)
------------------========== ========= ========== =========

-----------------------------------------------------------


      (a) Includes expense related to employee stock options, employee
       stock purchase plan and restricted stock under Statement of
       Financial Accounting Standards No. 123 (revised 2004), "Share
       Based Payment." See explanation above regarding the Company's
       practice on reporting non-GAAP financial measures. The per
       share equity-based compensation adjustment is presented as
       calculated, and the GAAP and Non-GAAP Earnings (Loss) per Share
       information is also presented as calculated. The sum of these
       measures, as presented, may differ due to the impact of
       rounding.


----------------------------------------------------------------------
Quarter ended      Cost of   Product   Sales and  General     Total
 June 30, 2005     Sales -    Develop-  Marketing    and     Operating
                   Software    ment                Admini-   Expenses
                   Royalties                      strative
                     and
                    Amorti-
                    zation
---------------------------- --------- ---------- --------- ----------
GAAP Measurement    $14,576   $18,078    $46,367   $18,697   $255,412
  Less: Equity-
   Based
   Compensation
   Adjustment(b)          -       276         49       541        866
                  ---------- --------- ---------- --------- ----------
Non-GAAP
 Measurement        $14,576   $17,802    $46,318   $18,156   $254,546
------------------========== ========= ========== ========= ==========

----------------------------------------------------------------------


-----------------------------------------------------------
Quarter ended     Operating    Net       Basic    Diluted
 June 30, 2005      Income    Income    Earnings   Earnings
                    (Loss)     (Loss)    (Loss)    (Loss)
                                        per Share    per
                                                    Share
---------------------------- --------- ---------- ---------
GAAP Measurement   $(14,319)  $(4,247)    $(0.02)   $(0.02)
  Less: Equity-
   Based
   Compensation
   Adjustment(b)       (866)     (529)     (0.00)    (0.00)
                  ---------- --------- ---------- ---------
Non-GAAP
 Measurement       $(13,453)  $(3,718)    $(0.01)   $(0.01)
------------------========== ========= ========== =========

-----------------------------------------------------------



      (b) Includes expense related to employee stock options and
       restricted stock under Accounting Principles Board Opinion No.
       25, "Accounting for Stock Issued to Employees." See explanation
       above regarding the Company's practice on reporting non-GAAP
       financial measures. The per share equity-based compensation
       adjustment is presented as calculated, and the GAAP and Non-
       GAAP Earnings (Loss) per Share information is also presented as
       calculated. The sum of these measures, as presented, may differ
       due to the impact of rounding.


The quarterly and annual fiscal 2006 and first quarter fiscal 2007
 statements of operations and balance sheets reflect the correction of
 errors in the determination of the measurement date as defined in
 Accounting Principles Board Opinion No. 25, "Accounting for Stock
 Issued to Employees", with respect to certain employee options
 granted and modified in our fiscal years between 1992 and 2006. These
 errors were identified by a special subcommittee of independent
 members of the company's Board of Directors. The findings of the
 special sub-committee's review were announced on March 8, 2007. As a
 result, we restated previously issued consolidated financial
 statements included in our recently filed Annual Report on Form 10-
 K/A for the fiscal year ended March 31, 2006, and we expect to file
 shortly restated previously issued consolidated financial statements
 for the first quarter of fiscal 2007 on Form 10-Q/A.

Additionally, the statement of operations and balance sheets for the
 second and third quarters of fiscal 2007 presented in this earnings
 release have been updated from previously announced preliminary
 financial results, and reflect subsequent event adjustments primarily
 related to a change in the company's effective tax rate, changes in
 expense accrual estimates and adjustments to equity-based
 compensation expense.

Throughout this press release, all referenced amounts for prior
 periods and prior period comparisons reflect the balances and amounts
 on a restated basis.

SOURCE: Activision, Inc.

Activision, Inc.
Kristin Southey
Vice President, Investor Relations
310-255-2635
ksouthey@activision.com
Maryanne Lataif
Vice President, Corporate Communications
310-255-2704
mlataif@activision.com

Copyright Business Wire 2007

News Provided by COMTEX