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## Restatement of Historical Financial Statements 

We restated our previously issued financial statements for the fis- cal years ended October 31, 1999, 2000, 2001 and 2002, the interim quarters of 2002 and the first three quarters of 2003 to reflect our revised revenue recognition policy. Under this policy, we recognize as a reduction of net sales a reserve for estimated future price conces- sions in the period in which the sale is recorded. Measurement of the reserve is based on, among other factors, an historical analysis of price concessions, an assessment of field inventory levels and sell- through for each product, current industry conditions and other factors affecting the estimated timing and amount of concessions manage- ment believes will be granted. We previously recognized price con- cession reserves in the period in which we communicated the price concessions to our customers. We also restated our financial state- ments for the fiscal years ended October 31, 2000 and 2001 to increase our provision for returns at October 31, 2000 by approxi- mately $4.9 million for certain sales transactions primarily to retail cus- tomers in fiscal 2000, and to reflect the fiscal 2001 returns as a reduc- tion of the revised October 31, 2000 reserve for returns rather than the previously reported reduction of sales in fiscal 2001. Additionally, fiscal 2000 and 2001 revenues were restated for approximately $0.2 million to adjust for sales cut-off transactions at the end of fiscal 2000. See Notes 2 and 19 to Consolidated Financial Statements for details relating to the restatement. 

Our 2002 financial statements have been restated as follows: 

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All applicable amounts relating to the aforementioned restatements have been reflected in these consolidated financial statements and notes thereto. 

Our Consolidated Statement of Operations for the year ended October 31, 2001 has been restated as follows: 

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* As required by Statement of Financial Accounting Standards No. 145, “Rescis- sion of FASB Statements No. 4, 44 and 64, Amendment to FASB Statement No. 13, and Technical Corrections”, the $1,948 net loss on extinguishment of debt for the year ended October 31, 2001, previously classified as an extraor- dinary item, has been reclassified in the As Reported column as follows: $3,165 of loss on extinguishment to non-operating expenses and $1,217 of tax benefit to benefit for income taxes in the above table. 

## Overview 

We are a leading global publisher of interactive software games designed for personal computers, video game consoles and handheld platforms manufactured by Sony, Microsoft and Nintendo. We also distribute our products as well as third-party products, hardware and accessories to retail outlets in North America through our Jack of All Games subsidiary, and we have sales, marketing and publishing oper- ations in the United Kingdom, France, Germany, Holland, Austria, Italy, Australia, New Zealand and Canada. 

