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The following table summarizes our minimum contractual obligations and commercial commitments as of October 31, 2003: 

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## Fluctuations in Operating Results and Seasonality 

We have experienced fluctuations in quarterly operating results as a result of the timing of the introduction of new titles; variations in sales of titles developed for particular platforms; market acceptance of our titles; development and promotional expenses relating to the introduction of new titles, sequels or enhancements of existing titles; projected and actual changes in platforms; the timing and success of title introductions by our competitors; product returns; changes in pricing policies by us and our competitors; the size and timing of acquisitions; the timing of orders from major customers; and order cancellations and delays in product shipment. Sales of our titles are also seasonal, with peak shipments typically occurring in the fourth calendar quarter (our fourth and first fiscal quarters) as a result of increased demand for titles during the holiday season. Quarterly comparisons of operating results are not necessarily indicative of future operating results. 

## International Operations 

Sales in international markets, principally in the United Kingdom and other countries in Europe, have accounted for a significant por- tion of our net sales. For fiscal 2003 and 2002, sales in international markets accounted for approximately 27.9% and 20.0%, respectively, of our net sales. We are subject to risks inherent in foreign trade, including increased credit risks, tariffs and duties, fluctuations in for- eign currency exchange rates, shipping delays and international politi- cal, regulatory and economic developments, all of which can have a significant impact on our operating results. 

## Cautionary Statement and Risk Factors 

Safe Harbor Statement under the Securities Litigation Reform Act of 1995: We make statements in this report that are considered forward-looking statements under federal securities laws. Such forward-looking statements are based on the beliefs of management as well as assumptions made by and information currently available to them. The words “expect,” “anticipate,” “believe,” “may,” “estimate,” “intend” and similar expressions are intended to identi- fy such forward-looking statements. Forward-looking statements involve risks, uncertainties and assumptions including, but not limited to, the following which could cause our actual results, performance or achievements to be materially different from results, performance or achievements, expressed or implied by such forward-looking statements: 

The market for interactive entertainment software titles is characterized by short product life cycles. The interactive entertain- ment software market is characterized by short product life cycles and frequent introductions of new products. New products introduced by us may not achieve significant market acceptance or achieve suffi- cient sales to permit us to recover development, manufacturing and marketing costs. Historically, few interactive entertainment software products have achieved sustained market acceptance. Even the most successful titles remain popular for only limited periods of time, often less than nine months, although sales of certain products may extend for significant periods of time, including through our election to participate in Sony’s Greatest Hits and Microsoft’s Platinum Hits programs. 

The life cycle of a game generally involves a relatively high level of sales during the first few months after introduction followed by a decline in sales. Because net sales associated with the initial ship- ments of a new product generally constitute a high percentage of the total net sales associated with the life of a product, any delay in the introduction of one or more new products could adversely affect our operating results. Additionally, because we introduce a relatively limit- ed number of new products in any period, the failure of one or more of our products to achieve market acceptance could adversely affect our operating results. 

A significant portion of our net sales is derived from a limited number of titles. For the year ended October 31, 2003, our ten best- selling titles accounted for approximately 50.5% of our net sales, with Grand Theft Auto: Vice City for PlayStation 2 accounting for 33.6% of our net sales, Midnight Club 2 for PlayStation 2 accounting for 4.1% of our net sales and Grand Theft Auto: Vice City for PC accounting for 2.6% of our net sales. Our ten best-selling titles accounted for approxi- mately 59.5% of our net sales for the year ended October 31, 2002. For this period, Grand Theft Auto 3 for PlayStation 2 accounted for 29.8% of our net sales, Grand Theft Auto: Vice City for the PlayStation 2 accounted for 7.5% of our net sales and Max Payne for PlayStation 2 accounted for 6.6% of our net sales. Our ten best-selling titles accounted for approximately 30.8% of our net sales for the fiscal year ended October 31, 2001. Our future titles may not be commercially viable. If we fail to continue to develop and sell new, commercially successful titles, our net sales and profits may decrease substantially and we may incur losses. 

