Activision, Inc. — 2004 Annual Report Consolidated Statements of Operations (In thousands, except per share data) For the years ended March 31, 2004 2003 2002 Net revenues $947,656 $864,116 $786,434 Costs and expenses: Cost of sales—product costs 475,541 440,977 435,725 Cost of sales—software royalties and amortization 59,744 79,194 58,892 Cost of sales—intellectual property licenses 31,862 45,002 40,114 Product development 97,859 56,971 40,960 Sales and marketing 128,221 100,646 86,161 General and administrative 44,612 46,479 44,008 Total costs and expenses 837,839 769,269 705,860 Income from operations 109,817 94,847 80,574 Investment income, net 6,175 8,560 2,546 Income before income tax provision 115,992 103,407 83,120 Income tax provision 38,277 37,227 30,882 Net income $ 77,715 $ 66,180 $ 52,238 Basic earnings per share $ 0.58 $ 0.46 $ 0.46 Weighted average common shares outstanding 133,249 144,359 113,966 Diluted earnings per share $ 0.54 $ 0.43 $ 0.39 Weighted average common shares outstanding—assuming dilution 144,893 155,483 133,775 The accompanying notes are an integral part of these consolidated financial statements. page 43