Activision Blizzard (ATVI)

The SEC investigation relating to stock options remains pending and may adversely affect our business and results of operations.

Although the special subcommittee of independent members of our Board of Directors established in July 2006 to review Activision’s historical stock option granting practices has completed its review of those practices and Activision’s stock option grants made in the period between 1992 and 2006, and although we have made to the SEC Staff an offer of settlement of the SEC’s formal investigation relating to our stock option granting practices, which the SEC Staff has indicated it is prepared to recommend to the SEC, the settlement with the SEC remains subject to final documentation and then approval by the Commission. We believe that we have taken appropriate action by restating our financial statements through the fiscal year ended March 31, 2006, as filed in our amended Annual Report on Form 10-K/A on May 25, 2007, and made appropriate disclosures for matters relating to stock options. If, however, the pending settlement offer is not approved, the SEC could institute enforcement action seeking other or additional relief. Under such circumstances, we could be required to further restate our prior financial statements, further amend our filings with the SEC, or take other actions not currently contemplated. In addition, additional proceedings would be likely to result in additional legal expense that could affect our results in future periods, and could also result in diversion of management attention and other resources, as well as fines, penalties, damages and other sanctions against us or individual directors and officers. These eventualities could materially and adversely affect our business and results of operations. We cannot currently predict the ultimate outcome of these proceedings.