Activision, Inc. has exercised its option to acquire the remaining 60% equity interest in Gray Matter Interactive Studios. Under the terms of the agreement, Gray Matter Interactive Studios will become a wholly owned subsidiary of Activision. Activision issued 133,690 shares of common stock in connection with the acquisition. "Gray Matter has a very talented team of programmers, designers and artists and we are confident that the studio's development strengths will further establish Activision as a leader in the PC action genre," stated Ron Doornink, president and COO of Activision. Along with key employees, industry veteran Drew Markham has signed a long-term employment contract with Activision and will continue to manage Gray Matter Studios. Gray Matter is a Los Angeles-based game developer responsible for creating some of the most popular PC action games, including QUAKE II and RETURN TO CASTLE WOLFENSTEIN. The company also has proprietary technologies used in the creation of first-person action games. Activision does not expect this transaction to affect its previously announced revenue and earnings per share guidance for the fiscal year ended March 31, 2002 or for fiscal year 2003.