Activision Blizzard (ATVI)

General and Administrative (in thousands)

General and administrative expenses for the three months ended June 30, 2007 increased $13.9 million over the same period last year, from $21.9 million to $35.8 million.  As a percentage of consolidated net revenues, general and administrative expenses decreased from 12% to 7% as a result of the higher consolidated net revenues in the fiscal 2008 first quarter.  Expenses were higher in the three months ended June 30, 2007 primarily due to an increase in headcount related costs, legal and professional fees relating to our internal review of historical stock option granting practices, the consolidation of RedOctane, acquired in June 2006, into our results of operations for the quarter, amortization of intangible assets related to the RedOctane acquisition and the impact of changes in foreign currency rates.

We expect general and administrative expenses for the remainder of fiscal 2008 to be lower than the comparable period of fiscal 2007 due to fewer expenses associated with the RedOctane acquisition.

General and Administrative (in thousands)

General and administrative expenses for the year ended March 31, 2006 increased $33.1 million over the same period last year, from $63.2 million to $96.4 million.  As a percentage of consolidated net revenues, general and administrative expenses increased from 4% to 7%. The increases were primarily due to an increase in personnel costs including costs related to European territory expansion, separation and severance costs associated with a less than 7% reduction in workforce in the fourth quarter of fiscal 2006, increased bad debt write-offs, an increase in foreign currency transaction losses, and increased legal costs.

General and Administrative (in thousands)

General and administrative expenses for the three months ended September 30, 2006 increased $2.6 million over the same period last year, from $23.8 million to $26.3 million.  As a percentage of consolidated net revenues, general and administrative expenses increased from 11% to 14% for the three months ended September 30, 2005 and 2006, respectively.   For the six months ended September 30, 2006, general and administrative expenses increased $5.8 million or 14% over the same period last year, from $42.5 million to $48.3 million.  As a percentage of consolidated net revenues, general and administrative expenses increased from 9% to 13% for the six months ended September 30, 2005 as compared to the six months ended September 30, 2006.  The increases were primarily due to stock-based compensation expense of $3.0 million and $6.1 million for the three and six months ended September 30, 2006, respectively, associated with the implementation of SFAS 123R, the consolidation of RedOctane into our results of operations, and increased legal and professional fees relating primarily to our internal review of historical stock option practices.   These increases were partially offset by the benefits of our cost optimization program launched in the fourth quarter of fiscal 2006.

General and Administrative (in thousands)

General and administrative expenses for the three months ended June 30, 2006 increased $3.3 million over the same period last year, from $18.2 million to $21.5 million.  As a percentage of consolidated net revenues, general and administrative expenses also increased from 8% to 11% from June 30, 2006 to June 30, 2005.  The increases were primarily due to stock option expenses of $2.6 million associated with the implementation of SFAS 123R and the consolidation of RedOctane into our results of operations and an increase in personnel costs related to annual salary increases.  These increases were partially offset by the benefits of our cost optimization program launched in the fourth quarter of fiscal 2006.

General and Administrative (in thousands)

General and administrative expenses of $59.7 million and $44.6 million represented 4% and 5% of consolidated net revenues for the years ended March 31, 2005 and 2004, respectively. The increase in absolute dollars was primarily due to an increase in headcount and related costs to support business growth, as well as an increase in professional services fees to support Sarbanes-Oxley related compliance. The decrease as a percentage of consolidated net revenues was due mainly to the significant increase in sales volume.

49

General and Administrative (in thousands)

General and administrative expenses for the three months ended June 30, 2005 increased $4.5 million over the same period last year, from $13.7 million to $18.2 million.  As a percentage of consolidated net revenues, general and administrative expenses also increased from 7% to 8% from June 30, 2004 to June 30, 2005.  The increases were primarily due to an increase in personnel costs related to increased headcount to support expanding operations, annual salary increases and an increase in foreign currency transaction losses incurred by our European publishing business.

General and Administrative (in thousands)

General and administrative expenses for the year ended March 31, 2004 decreased $1.9 million over the same period last year, from $46.5 million to $44.6 million.  As a percentage of consolidated net revenues, general and administrative expenses remained constant at 5%.  The decrease in absolute dollars was primarily due to:

•                  Lower bad debt expense of approximately $3.9 million.

•                  The incurrence in the first quarter of fiscal 2003 of $1.0 million of merger related expenses by our publishing business.

•                  An approximate $2.0 million charge incurred in fiscal 2003 by our distribution business for the relocation of our UK distribution facility.

•                  Partially offset by a $5.2 million year-over-year increase in general and administrative employee related costs in both our publishing and distribution businesses.