Activision Blizzard (ATVI)

Update Regarding Review of Stock Option Grant Practices

On January 23, 2007, the special sub-committee of independent members of the company’s board, with the assistance of its counsel, reported to the board on the status of its review of the company’s historical stock option grants over a fifteen year period from the company’s 1992 fiscal year until its 2006 fiscal year.  The subcommittee reported that it has identified a number of instances in which the actual measurement dates for certain stock option grants made during that period differ from the recorded grant dates for such awards.

Based on the information provided by the subcommittee, Activision believes it will have to record additional non-cash stock based compensation expense over the period from the company’s 1992 fiscal year through its current fiscal year.  Until the subcommittee’s review has been finalized, the company cannot determine the aggregate amount of the additional non-cash compensation expense it will be required to record or the additional expense to be recorded in any particular fiscal period during that period of time.  Until the amount of such

adjustments has been determined, the company cannot ascertain the resulting tax and accounting impacts.  However, the company believes that it is more likely than not that the amount of such additional expense relating to one or more fiscal periods from the period of review will be material and, therefore, the company expects to restate previously issued financial statements relating to such periods.

Accordingly, on January 23, 2007, the audit committee of the company’s board, after consultation with the company’s management, determined that the company’s financial statements, earnings releases and similar communications relating to fiscal periods commencing with the first period under review by the subcommittee should no longer be relied upon.

Based on the status of the subcommittee’s review of the company’s historical stock option grant practices, Activision will not be in a position to file its quarterly report on Form 10-Q for the quarter ended December 31, 2006 in a timely manner.  As soon as practicable after the subcommittee has completed its review, the company intends to file with the SEC an amended annual report on Form 10-K for the year ended March 31, 2006 and an amended quarterly report on Form 10-Q for the quarter ended June 30, 2006 providing restated financial statements for those periods, as well as all reports required by the federal securities laws that the company has not then filed, including its quarterly reports on Form 10-Q for the quarters ended September 30, 2006 and December 31, 2006.  The Company does not intend to amend any of its other previously filed annual reports on Form 10-K or quarterly reports on Form 10-Q for any other period affected by the adjustment.