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To฀the฀Board฀of฀Directors฀and฀Shareholders฀of฀Activision,฀Inc.:
We฀have฀completed฀an฀integrated฀audit฀of฀Activision,฀Inc.’s฀2005฀consolidated฀financial฀statements฀and฀of฀its฀internal฀control฀over฀financial฀reporting฀as฀of฀March฀31,฀2005฀
and฀audits฀of฀its฀2004฀and฀2003฀consolidated฀financial฀statements฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Company฀Accounting฀Oversight฀Board฀(United฀States).฀
Our฀opinions,฀based฀on฀our฀audits,฀are฀presented฀below.
CONSOLIDATED FINANCIAL STATEMENTS
In฀our฀opinion,฀the฀accompanying฀consolidated฀balance฀sheets฀and฀the฀related฀consolidated฀statements฀of฀operations,฀of฀changes฀in฀shareholders’฀equity฀and฀of฀cash฀
flows฀present฀fairly,฀in฀all฀material฀respects,฀the฀financial฀position฀of฀Activision,฀Inc.฀and฀its฀subsidiaries฀(the฀“Company”)฀at฀March฀31,฀2005฀and฀2004฀and฀the฀results฀of฀
their฀operations฀and฀their฀cash฀flows฀for฀each฀of฀the฀three฀years฀in฀the฀period฀ended฀March฀31,฀2005฀in฀conformity฀with฀accounting฀principles฀generally฀accepted฀in฀the฀
United฀States฀of฀America.฀These฀financial฀statements฀are฀the฀responsibility฀of฀the฀Company’s฀management.฀Our฀responsibility฀is฀to฀express฀an฀opinion฀on฀these฀financial฀
statements฀based฀on฀our฀audits.฀We฀conducted฀our฀audits฀of฀these฀statements฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Company฀Accounting฀Oversight฀Board฀
(United฀States).฀Those฀standards฀require฀that฀we฀plan฀and฀perform฀the฀audit฀to฀obtain฀reasonable฀assurance฀about฀whether฀the฀financial฀statements฀are฀free฀of฀material฀
misstatement.฀An฀audit฀of฀financial฀statements฀includes฀examining,฀on฀a฀test฀basis,฀evidence฀supporting฀the฀amounts฀and฀disclosures฀in฀the฀financial฀statements,฀assessing฀
the฀accounting฀principles฀used฀and฀significant฀estimates฀made฀by฀management,฀and฀evaluating฀the฀overall฀financial฀statement฀presentation.฀We฀believe฀that฀our฀audits฀
provide฀a฀reasonable฀basis฀for฀our฀opinion.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Also,฀in฀our฀opinion,฀management’s฀assessment,฀included฀in฀the฀accompanying฀Management’s฀Report฀on฀Internal฀Control฀Over฀Financial฀Reporting,฀that฀the฀Company฀
maintained฀ effective฀ internal฀ control฀ over฀ financial฀ reporting฀ as฀ of฀ March฀ 31,฀ 2005฀ based฀ on฀ criteria฀ established฀ in฀
Internal Control—Integrated Framework
฀ issued฀ by฀ the฀
Committee฀of฀Sponsoring฀Organizations฀of฀the฀Treadway฀Commission฀(COSO),฀is฀fairly฀stated,฀in฀all฀material฀respects,฀based฀on฀those฀criteria.฀Furthermore,฀in฀our฀opinion,฀
the฀ Company฀ maintained,฀ in฀ all฀ material฀ respects,฀ effective฀ internal฀ control฀ over฀ financial฀ reporting฀ as฀ of฀ March฀ 31,฀ 2005,฀ based฀ on฀ criteria฀ established฀ in฀
Internal
Control—Integrated Framework
฀ issued฀ by฀ the฀ COSO.฀ The฀ Company’s฀ management฀ is฀ responsible฀ for฀ maintaining฀ effective฀ internal฀ control฀ over฀ financial฀ reporting฀ and฀ for฀ its฀
assessment฀of฀the฀effectiveness฀of฀internal฀control฀over฀financial฀reporting.฀Our฀responsibility฀is฀to฀express฀opinions฀on฀management’s฀assessment฀and฀on฀the฀effectiveness฀
of฀the฀Company’s฀internal฀control฀over฀financial฀reporting฀based฀on฀our฀audit.฀We฀conducted฀our฀audit฀of฀internal฀control฀over฀financial฀reporting฀in฀accordance฀with฀the฀
standards฀of฀the฀Public฀Company฀Accounting฀Oversight฀Board฀(United฀States).฀Those฀standards฀require฀that฀we฀plan฀and฀perform฀the฀audit฀to฀obtain฀reasonable฀assurance฀
about฀ whether฀ effective฀ internal฀ control฀ over฀ financial฀ reporting฀ was฀ maintained฀ in฀ all฀ material฀ respects.฀ An฀ audit฀ of฀ internal฀ control฀ over฀ financial฀ reporting฀ includes฀
obtaining฀an฀understanding฀of฀internal฀control฀over฀financial฀reporting,฀evaluating฀management’s฀assessment,฀testing฀and฀evaluating฀the฀design฀and฀operating฀effectiveness฀
of฀internal฀control,฀and฀performing฀such฀other฀procedures฀as฀we฀consider฀necessary฀in฀the฀circumstances.฀We฀believe฀that฀our฀audit฀provides฀a฀reasonable฀basis฀for฀
our฀opinions.
Report of Independent Registered Public Accounting Firm
page 52
Activision, Inc. — 2005 Annual Report