Activision, Inc. — 2004 Annual Report Investment income, net for the year ended March 31, 2004 was $6.2 million as compared to $8.6 million for the year ended March 31, 2003. The decrease was primarily due to interest rate reductions and the utilization of excess cash to enter into structured stock repurchase transactions and to purchase treasury stock during the year ended March 31, 2004. Premiums earned on structured stock repurchase transactions are recorded in additional paid-in capital. Provision for Income Taxes The income tax provision of $38.3 million for the year ended March 31, 2004 reflects our effective income tax rate of 33%. The significant items that generated the variance between our effective rate and our statutory rate of 35% were research and development tax credits and the impact of foreign tax rate differentials, partially offset by an increase in our deferred tax asset valuation allowance and state taxes. The realization of deferred tax assets depends primarily on the generation of future taxable income. We believe that it is more likely than not that we will generate  taxable income sufficient to realize the benefit of net deferred tax assets recognized. (In thousands) % of % of March 31, Pre-Tax March 31, Pre-Tax Increase/ Percent 2004 Income 2003 Income (Decrease) Change $38,277 33% $37,227 36% $1,050 3% Increase/ Percent Year ended March 31, 2003 2002 (Decrease) Change Publishing Net Revenues North America $432,261 $404,905 $27,356 7% Europe 164,984 131,873 33,111 25% Other 18,730 12,730 6,000 47% Total International 183,714 144,603 39,111 27% Total Publishing Net Revenues 615,975 549,508 66,467 12% Distribution Net Revenues 248,141 236,926 11,215 5% Consolidated Net Revenues $864,116 $786,434 $77,682 10% The following table details our consolidated net revenues by business segment and our publishing net revenues by terri- tory for the years ended March 31, 2003 and 2002 (in thousands): Net revenues for the year ended March 31, 2003 increased 10% from the prior fiscal year, from $786.4 million to $864.1 million. This increase was generated by our publishing business and, to a lesser degree, our distribution business. Net income for the year ended March 31, 2003 was $66.2 million or $0.43 per diluted share, as compared to $52.2 million or $0.39 per diluted share for the year ended March 31, 2002. Results of Operations—Fiscal Years Ended March 31, 2003 and 2002 Net Revenues page 29