Consolidated Statements of Operations (In thousands, except per share data) TAKE-TWO INTERACTIVE SOFTWARE, INC. AND SUBSIDIARIES Years Ended October 31, 2003 2002 2001 (Restated) (Restated) Net sales $1,033,693 $794,676 $451,396 Cost of sales Product costs 537,257 411,518 282,279 Royalties 89,294 80,442 19,875 Software development costs 11,003 8,124 4,169 Total cost of sales 637,554 500,084 306,323 Gross profit 396,139 294,592 145,073 Operating expenses Selling and marketing 103,015 77,990 52,998 General and administrative 88,083 71,544 44,867 Research and development 25,107 11,524 6,190 Depreciation and amortization 16,923 10,829 12,641 Total operating expenses 233,128 171,887 116,696 Income from operations 163,011 122,705 28,377 Interest (income) expense, net (2,265) 480 8,510 Gain on sale of subsidiary — — (651) (Gain) loss on Internet investments (39) (181) 21,477 Class action settlement costs — 1,468 — Loss on early extinguishment of debt — — 3,165 Total non-operating (income) expenses (2,304) 1,767 32,501 Income (loss) before income taxes and cumulative effect of change  in accounting principle 165,315 120,938 (4,124) Provision (benefit) for income taxes 67,197 49,375 (2,450) Income (loss) before cumulative effect of change in accounting principle 98,118 71,563 (1,674) Cumulative effect of change in accounting principle, net of taxes of $3,496 — — 5,244 Net income (loss) $ 98,118 $ 71,563 $ (6,918) Per share data: Basic: Weighted average common shares outstanding 41,965 38,030 33,961 Income (loss) before cumulative effect of change in accounting principle per share $ 2.34 $ 1.88 $ (0.05) Cumulative effect of change in accounting principle per share — — (0.15) Net income (loss) per share—Basic $ 2.34 $ 1.88 $ (0.20) Diluted: Weighted average common shares outstanding 43,297 39,570 33,961 Income (loss) before cumulative effect of change in accounting principle per share $ 2.27 $ 1.81 $ (0.05) Cumulative effect of change in accounting principle per share — — (0.15) Net income (loss) per share—Diluted $ 2.27 $ 1.81 $ (0.20) The accompanying notes are an integral part of these consolidated financial statements. 28