Activision, Inc. — 2004 Annual Report Activision, Inc. — 2004 Annual Report Consolidated Statements of Changes in Shareholders’ Equity Accumulated Additional Other (In thousands) Common Stock Paid-In Retained Treasury Stock Comprehensive Shareholders’ For the years ended March 31, 2004, 2003 and 2002 Shares Amount Capital Earnings Shares Amount Income (Loss) Equity Balance, March 31, 2001 101,813 $— $ 200,786 $ 12,146 (9,734) $ (20,249) $(11,377) $ 181,306 Components of comprehensive income: Net income for the year — — — 52,238 — — — 52,238 Foreign currency translation adjustment — — — — — — (121) (121) Total comprehensive income 52,117 Issuance of common stock pursuant to warrants and common stock warrants 2,332 — 1,044 — — — — 1,044 Issuance of common stock and common stock options to employees 19,740 — 63,053 — — — — 63,053 Tax benefit attributable to employee stock options and common stock warrants — — 48,513 — — — — 48,513 Issuance of common stock pursuant to conversion of convertible subordinated notes 10,716 — 58,651 — — — — 58,651 Issuance of common stock to effect business combinations 2,726 — 25,481 — — — — 25,481 Purchase of treasury shares — — — — (6) (74) — (74) Balance, March 31, 2002 137,327 — 397,528 64,384 (9,740) (20,323) (11,498) 430,091 Components of comprehensive income: Net income for the year — — — 66,180 — — — 66,180 Unrealized appreciation on short-term investments — — — — — — 134 134 Foreign currency translation adjustment — — — — — — 7,930 7,930 Total comprehensive income 74,244 Issuance of common stock pursuant to underwritten public offering 16,875 — 247,291 — — — — 247,291 Issuance of common stock to employees 5,999 — 20,547 — — — — 20,547 Issuance of common stock pursuant to warrants and common stock warrants 69 — 2,184 — — — — 2,184 Tax benefit attributable to employee stock options and common stock warrants — — 23,884 — — — — 23,884 Purchase of structured stock repurchase transactions — — (110,000) — — — — (110,000) Issuance of common stock to effect business combinations 790 — 10,861 — — — — 10,861 Purchase of treasury shares — — — — (16,192) (101,362) — (101,362) Balance, March 31, 2003 161,060 — 592,295 130,564 (25,932) (121,685) (3,434) 597,740 Components of comprehensive income: Net income for the year — — — 77,715 — — — 77,715 Unrealized depreciation on short-term investments — — — — — — (37) (37) Foreign currency translation adjustment — — — — — — 13,432 13,432 Total comprehensive income 91,110 Issuance of common stock to employees 5,140 — 25,730 — — — — 25,730 Issuance of common stock pursuant to warrants and common stock warrants 419 — 1,038 — — — — 1,038 Tax benefit attributable to employee stock options and common stock warrants — — 12,417 — — — — 12,417 Structured stock repurchase transactions — — (52,621) — — — — (52,621) Settlement of structured stock repurchase transactions — — 176,521 — (1,716) (10,000) — 166,521 Issuance of common stock to effect business combinations 258 — 3,246 — — — — 3,246 Purchase of treasury shares — — — — (1,898) (12,443) — (12,443) Balance, March 31, 2004 166,877 $— $ 758,626 $208,279 (29,546) $(144,128) $ 9,961 $ 832,738 The accompanying notes are an integral part of these consolidated financial statements. page 45 page 44