Activision Blizzard (ATVI)

General and Administrative (in thousands, as restated)

General and administrative expenses for the three months ended June 30, 2006 increased $3.2 million over the same period last year, from $18.7 million to $21.9 million.  As a percentage of consolidated net revenues, general and administrative expenses also increased from 8% to 12% 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 No. 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, as restated)

General and administrative expenses of $63.2 million and $47.2 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.

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