Business Acquisitions During fiscal 2003, we acquired the assets of Frog City, Inc.  (“Frog City”), the developer of  Tropico 2 :  Pirate Cove , and all of the outstanding membership interests of Cat Daddy Games LLC (“Cat Daddy”), another development studio. The total purchase price for both studios consisted of $757 in cash and $319 of prepaid royalties previously advanced to Frog City. We also agreed to make additional payments of up to $2,500 to the former owners of Cat Daddy, based on a percentage of Cat Daddy’s profits for the first three years after acquisition, which will be recorded as compensation expense if the targets are met. In connection with the acquisitions, we recorded goodwill of $1,267 and net liabilities of $191. In November 2002, we acquired all of the outstanding capital stock of Angel Studios, Inc. (“Angel”), the developer of the  Midnight Club and  Smuggler’s Run franchises. The purchase price consisted  of 235,679 shares of restricted common stock (valued at $6,557), $28,512 in cash and $5,931 (net of $801 of royalties payable to Angel) of prepaid royalties previously advanced to Angel. In connec- tion with the acquisition, we recorded identifiable intangibles of $4,720 (comprised of intellectual property of $2,810, technology  of $1,600 and non-competition agreements of $310), goodwill of $37,425 and net liabilities of $1,145. In August 2002, we acquired all of the outstanding capital stock  of Barking Dog Studios Ltd. (“Barking Dog”), a Canadian-based In December 2003, we acquired all of the outstanding capital stock and paid certain liabilities of TDK Mediactive, Inc. (“TDK”). The pur- chase price of approximately $14,276 consisted of $17,116 in cash and issuance of 163,641 restricted shares of our common stock (valued at $5,160), reduced by approximately $8,000 due to TDK under a distri- bution agreement. We are in the process of completing the purchase price allocation. TDK’s results will be included in our operating results beginning in the first quarter of fiscal 2004. The acquisitions have been accounted for as purchase transactions and, accordingly, the results of operations and financial position of the acquired businesses are included in our consolidated financial statements from the respective dates of acquisition. In November 2000, we acquired all of the capital stock of VLM Entertainment Group Inc. (“VLM”), a third-party video game distribu- tor, for $2,000 in cash and 875,000 shares of common stock (valued  at $8,039). VLM accounted for 14.5% of our distribution net sales in fiscal 2001. development studio. The purchase price consisted of 242,450 shares of restricted common stock (valued at $3,801), $3,000 in cash, $825 of prepaid royalties previously advanced to Barking Dog and assumed net liabilities of $70. In connection with the acquisition,  we recorded identifiable intangibles of $2,200, comprised of non- competition agreements of $2,000 and intellectual property of $200, and goodwill of $6,372. Net Sales. The increase in net sales was attributable to growth  in our publishing and distribution operations. The increase in publishing revenues was primarily attributable to sales of  Grand Theft Auto: Vice City for PlayStation 2, which was released in October 2002 in North America and in November 2002 internationally and reflected the growth of our publishing operations in Europe. We expect continued growth in our publishing business in fiscal 2004. Publishing revenues in fiscal 2003 and 2002 include licensing revenues of $25,002 and $13,873, respectively. Products designed for video game console platforms accounted for 81.2% of fiscal 2003 publishing revenues as compared to 83.9% for fiscal 2002. Products designed for PC platforms accounted for 17.2% of fiscal 2003 publishing revenues as compared to 14.3%  for fiscal 2002. We anticipate our product mix will remain relatively constant for the foreseeable future but may fluctuate from period  to period. Distribution revenues are derived from the sale of third-party soft- ware titles, accessories and hardware. The increase in distribution  revenues was primarily attributable to our increasing market share for budget titles in North American retail channels. We expect continued growth in our distribution business in fiscal 2004, and that distribution revenues may increase as a percentage of net sales during this period. International operations accounted for approximately $288,753, or 27.9% of net sales for fiscal 2003 compared to $159,245, or 20.0% of net sales for fiscal 2002. The increases were primarily attributable to expanded publishing operations in Europe, which benefited from the November 2002 release of  Grand Theft Auto: Vice City for PlayStation 2, and significantly higher average foreign exchange rates. We expect international sales to continue to account for a significant portion of our revenues. 15 Fiscal Years Ended October 31, 2003 and 2002 Net Sales Years ended October 31, 2003 % 2002 % $ Increase % Inc Publishing $ 671,892 65.0 $568,492 71.5 $103,400 18.2 Distribution 361,801 35.0 226,184 28.5 135,617 60.0 Net sales $1,033,693 100.0 $794,676 100.0 $239,017 30.1