2007'12.05.Wed
The9 Limited Reports Third Quarter 2007 Unaudited Financial Results
November 16, 2007
SHANGHAI, China, Nov. 15 /Xinhua-PRNewswire/ -- The9
Limited (Nasdaq: NCTY) ("The9"), a leading online
game operator in China, announced today its unaudited
financial results for the third quarter ended September 30,
2007.
Third Quarter 2007 Financial Highlights:
-- Net revenues for the third quarter of 2007
increased by 17% quarter-
over-quarter and by 35% year-over-year to RMB316.0
million (US$42.2
million).
-- Net revenues attributable to the operations of
subscription-based
games, which included revenues from game playing
time, merchandise
and installation package sales, increased by 13%
quarter-over-quarter
and by 21% year-over-year to RMB278.9 million
(US$37.2 million) in
the third quarter of 2007; net revenues
attributable to the
operations of item-sales based games, which
included revenues from in-
game item sales and installation package sales,
increased by 97%
quarter-over-quarter to RMB32.0 million (US$4.3
million) in the third
quarter of 2007.
-- Net income for the third quarter of 2007 was
RMB38.2 million (US$5.1
million), a 25% decrease from RMB50.6 million
(US$6.8 million) in the
second quarter of 2007, and a 41% decrease from
RMB64.3 million
(US$8.6 million) in the third quarter of 2006.
-- Adjusted EBITDA (non-GAAP) was RMB118.1 million
(US$15.8 million) in
the third quarter of 2007, remained stable compared
to RMB117.8
million (US$15.7 million) in the second quarter of
2007, and a year-
over-year increase of 7% from RMB109.9 million
(US$14.7 million) in
the third quarter of 2006.
-- Fully diluted earnings per share (one American
Depositary Share "ADS"
represents one ordinary share) was RMB1.29
(US$0.17) for the third
quarter of 2007, compared with RMB1.90 (US$0.25)
for the second
quarter of 2007, and RMB2.61 (US$0.35) for the
third quarter of
2006. Fully diluted adjusted EBITDA (non-GAAP) per
share was RMB3.99
(US$0.53) for the third quarter of 2007, compared
with RMB4.42
(US$0.59) for the second quarter of 2007 and
RMB4.46 (US$0.60) for
the third quarter of 2006.
Management Comments:
Commenting on the third quarter 2007 results, Jun Zhu,
Chairman and Chief Executive Officer of The9 said, "We
are very pleased to report record total net revenues and
strong bottom-line earnings for the third quarter of 2007.
The solid financial results in the third quarter were
supported by the strong organic growth of Blizzard
Entertainment(R)'s World of Warcraft(R)*, as well as having
a full quarter of revenue contribution from Soul of The
Ultimate Nation(TM) ("SUN"). With the launch of
World of Warcraft: The Burning Crusade(TM) expansion pack
in mainland China in early September, we have attained a
record level of number of concurrent players and game-play
usage After a strong debut in the second quarter, SUN
continued to bring stable revenues from a different user
base. In the third quarter of 2007, we attained aggregate
peak concurrent users of approximately 985,000 for games
that are currently in commercial operations, and as of
September 30, 2007, we had over 27.6 million total
registered users.
In addition, we continued to execute our
diversification strategy in the third quarter by
introducing another new game, Granado Espada
("GE"), to the mainland China market. After GE's
limited open-beta testing in early September, we recently
commenced the game's full-scale open-beta testing on
October 31 and received promising feedback from users.
With more games in commercial operation or in beta-testing
phase under The9's platform, we have further focused our
management capabilities for multi-game operations, and
together with our strong and diversified game pipeline that
consists of various premium titles covering a wide spectrum
of game genres, we believe The9 is well prepared to deliver
sustained growth for the next few quarters to come".
Hannah Lee, Senior Vice President and Chief Financial
Officer, commented, "The third quarter 2007 results
were encouraging. Necessary server upgrades and
infrastructure enhancements for Blizzard Entertainment's
World of Warcraft in the first half of the year have proven
to be worthwhile investments, as we saw revenue growth
driven by strong user demand since the launch of Blizzard's
World of Warcraft: The Burning Crusade expansion pack in
September. We believe World of Warcraft will maintain its
growth momentum with continuous content upgrades to be
introduced on a similar basis as we have done in the past
two years. With increased player demand, we have been
opening up new realms in our most recently launched World
of Warcraft site, and are carefully planning for a
potential new server site to service World of Warcraft.
Regarding SUN, we are working closely with Webzen to push
out frequent content upgrades to improve the game's
performance. Gradual product diversification has always
been The9's key initiative and the solid revenues and
earnings from our commercialized games have provided the
The9 with strong financial support for the launches of new
games from our rich and diversified game portfolio."
Hannah further added, "On a separate note, in the
third quarter, we have signed a license agreement for our
first proprietary game, Joyful Journey West
("JJW"), granting a game operator in Malaysia the
right to operate the game in the Malaysian market for a
specified period. This is an important milestone for The9
as we begin to market our self-developed products to game
operators in the overseas markets. We will continue to
further explore licensing opportunities for JJW and other
proprietary games currently under development and slated to
be launched in the coming year."
* World of Warcraft(R) and Blizzard Entertainment(R)
are trademarks or
registered trademarks of Blizzard Entertainment(R),
Inc. in the U.S.
and/or other countries.
Discussion of The9's Third Quarter 2007 Results
(Preliminary Unaudited)
Revenues
For the third quarter of 2007, The9 reported total
gross revenues of RMB333.3 million (US$44.5 million), which
increased by 17% compared to RMB284.6 million (US$38.0
million) in the second quarter of 2007 and by 36% compared
to RMB245.8 million (US$32.8 million) in the third quarter
of 2006. Total net revenues were RMB316.0 million (US$42.2
million), which increased by 17% compared to RMB270.0
million (US$36.0 million) in the second quarter of 2007 and
by 35% compared to RMB233.4 million (US$31.1 million) in the
third quarter of 2006. The increase in total revenues was a
combined result of increased online game services revenues
and other revenues, offset slightly by decreased revenues
from game operating support, website solutions and
advertisement.
For the third quarter of 2007, online game services
gross revenues were RMB321.7 million (US$42.9 million),
representing a 16% increase from RMB276.5 million (US$36.9
million) in the second quarter of 2007 and a 33% increase
from RMB241.2 million (US$32.2 million) in the third
quarter of 2006. The increase was primarily because of
higher revenue from Blizzard Entertainment's World of
Warcraft, especially after the launch of Blizzard's World
of Warcraft: The Burning Crusade expansion pack in early
September, and the full-quarter revenue contribution from
Soul of The Ultimate Nation(TM).
For the third quarter of 2007, gross revenues from game
operating support, website solutions and advertisement, were
RMB2.2 million (US$0.3 million), representing a decrease of
71% from the previous quarter and a decrease of 19% from
the same period of last year. The decrease was mainly due
to decreased technical support services provided in the
quarter.
Other gross revenues mainly included sales of game
related merchandise, installation packages, and game
operation support software. Other gross revenues were
RMB9.5 million (US$1.3 million) in the third quarters of
2007, compared to RMB0.8 million (US$0.1 million) in the
second quarter and RMB1.9 million (US$0.3 million) in the
third quarter of 2006. The increase in other gross
revenues was primarily because of the increase in sales of
World of Warcraft related merchandise and sales of certain
proprietary game operation support software in the third
quarter of 2007.
In the third quarter of 2007, net revenues attributable
to the operations of subscription-based game, which included
revenues from game playing time, merchandise and
installation package sales, increased by 13%
quarter-over-quarter and by 21% year-over-year to RMB278.9
million (US$37.2 million). The increase in such revenues
was mainly due to higher concurrent user levels as well as
user usage levels after the launch of Blizzard's World of
Warcraft: The Burning Crusade expansion pack in early
September. Net revenues attributable to the operations of
item-sales based games, which included revenues from
in-game item sales and installation package sales,
increased by 97% quarter-over-quarter to RMB32.0 million
(US$4.3 million) in the third quarter of 2007 mainly due to
the commercialization of SUN in May 2007 which contributed
full-quarter revenue in the third quarter compared to less
than half a quarter revenue contribution in the second
quarter.
Gross Profit
Gross profit for the third quarter of 2007 increased by
15% quarter-over-quarter and 23% year-over-year to RMB132.2
million (US$17.6 million). The sequentially increase of
gross profit was in line with the increase in net revenues.
Gross profit margin for the third quarter 2007 remained
stable at 42% compared to the previous quarter. In the
third quarter of 2007, considering the nature of the
assets, server specifications of games to be launched, and
industry practice, the depreciation lives of servers were
changed to a consistent period of four years. This is
accounted for as a change in accounting estimate and
prospectively from July 1, 2007, quarterly depreciation
charge relating to servers is estimated to decrease by
approximately RMB12.6 million (US$1.7 million).
Operating Expenses
For the third quarter of 2007, operating expenses were
RMB88.5 million (US$11.8 million), representing a 19%
increase from RMB74.5 million (US$9.9 million) in the
previous quarter and a 99% increase from RMB44.6 million
(US$5.9 million) in the same period of last year. The
sequential increase in operating expenses was primarily due
to increased sales and marketing expenses relating to the
launch of Blizzard's World of Warcraft: The Burning Crusade
expansion pack, increased general and administrative
expenses mainly due to full-quarter effect of share-based
compensation expenses for options granted in May 2007,
offset in part by decreased product development expenses
relating to SUN post-commercialization whereby direct costs
relating to pre-commercialization of a game are classified
under product development.
Share based compensation was RMB17.2 million (US$2.3
million) in the third quarter of 2007, compared to RMB9.2
million (US$1.2 million) in the second quarter of 2007 and
RMB4.5 million (US$0.6 million) in the third quarter of
2006. The increase of share-based compensation from the
second quarter of 2007 was mainly due to options granted in
May 2007.
Income from Operations
For the third quarter of 2007, profit from operations
was RMB43.7 million (US$5.8 million), which increased by 9%
quarter-over-quarter compared to RMB40.1 million (US$5.4
million) but decreased 31% year-over-year compared to
RMB63.3 million (US$8.4 million) for 2006. Operating
margin for the third quarter of 2007 was 14%, remained at a
stable level compared to 15% in the previous quarter, but
decreased year-over-year from 27% in the third quarter of
2006. Operating profit margin, excluding share-based
compensation expenses of RMB17.2 million (US$2.3 million),
was 19% for the third quarter of 2007, compared to 18% in
the second quarter of 2007, excluding share-based
compensation expenses of RMB9.2 million (US$1.2 million),
and 29% in the third quarter of 2006, excluding share-based
compensation expenses of RMB4.5 million (US$0.6 million).
Other Income (Expenses)
Other expenses for the third quarter of 2007 was
RMB16.1 million (US$2.2 million), compared to other income
of RMB4.1 million (US$0.6 million) in the second quarter of
2007 and other expenses of RMB1.0 million (US$0.1 million)
in the third quarter of 2006. The sequential difference of
other income (expenses) was primarily due to the combined
result of increased foreign exchange loss with the U.S.
Dollar deposit increase after EA's cash investment, as well
as the lack of any financial subsidy as compared to the
previous quarter. Foreign exchange loss for the third
quarter of 2007 was RMB16.1 million (US$2.1 million)
compared to RMB7.6 million (US$1.0 million) in the previous
quarter, and in the second quarter of 2007, RMB11.8 million
(US$1.6 million) of financial subsidy relating to the
second half of 2006 was received.
Income Tax Benefit (Expense)
Income tax expense for the third quarter of 2007 was
RMB6.8 million (US$0.9 million), compared to income tax
expenses of RMB1.1 million (US$0.1 million) in the second
quarter of 2007 and income tax benefit of RMB0.8 million
(US$0.1 million) in the third quarter of 2006. The
sequential increase of income tax expense was primarily due
to the updated estimation of annual effective tax rate.
Loss on Equity Investments
For the third quarter of 2007, loss on equity
investments, net of taxes, amounted to RMB0.7 million
(US$0.1 million), compared to a loss of RMB2.1 million
(US$0.3 million) for the second quarter of 2007, and a loss
of RMB1.2 million (US$0.2 million) for the third quarter of
2006. The sequential decrease in loss on equity
investments was primarily due to the decrease of loss from
certain joint venture and increase of profit from certain
joint ventures as they generated net income in the third
quarter of 2007.
Net Income
For the third quarter of 2007, net income was RMB38.2
million (US$5.1 million), which decreased by 25% from
RMB50.6 million (US$6.8 million) in the second quarter of
2007 and by 41% compared to RMB64.3 million (US$8.6
million) in the third quarter of 2006. The decrease in net
income was a result of the cumulative effect of the
foregoing factors.
Fully diluted earnings per share and per ADS for the
third quarter of 2007 was RMB1.29 (US$0.17), compared to
RMB1.90 (US$0.25) in the second quarter of 2007 and RMB2.61
(US$0.35) in the third quarter of 2006. It should be noted
that with the issuance of approximately 4.5 million common
shares to Electronic Arts Inc. in May 2007, diluted
weighted average shares outstanding increased from
26,667,691 for the second quarter to 29,635,516 for the
third quarter of 2007. This increase in diluted weighted
average shares outstanding impacted full diluted earnings
per share and per ADS.
Adjusted EBITDA (non-GAAP) is defined as earnings
before depreciation of fixed assets, amortization of land
use right and intangibles, share based compensation and
income tax expenses/benefits, as applicable. For the third
quarter of 2007, adjusted EBITDA (non-GAAP) was RMB118.1
million (US$15.8 million) compared to adjusted EBITDA
(non-GAAP) of RMB117.8 million (US$15.7 million) for the
previous quarter and RMB109.9 million (US$14.7 million) for
the same period of last year.
For the third quarter of 2007, fully diluted adjusted
EBITDA (non-GAAP) per share was RMB3.99 (US$0.53), compared
to RMB4.42 (US$0.59) for the second quarter of 2007 and
RMB4.46 (US$0.60) in the third quarter of 2006.
As at September 30, 2007, the Company's total cash and
cash equivalents balance was RMB2.08 billion (US$277.1
million). A stable level of cash and cash equivalents was
maintained compared to RMB2.09 billion (US$278.5 million)
as at June 30, 2007. This was mainly due to the combined
result of cash receipts from sales of prepaid game points,
offset by prepaid royalty payments to the licensor relating
to World of Warcraft(R) and SUN, capital expenditures
relating to Granado Espada, as well as license fee payments
for several licensed games.
The conversion of Renminbi (RMB) into U.S. dollars
(US$) in this press release is based on the noon buying
rate in The City of New York for cable transfers in
Renminbi per U.S. dollar as certified for customs purposes
by the Federal Reserve Bank of New York as of September 28,
2007 (the last business day of third quarter of 2007), which
was RMB7.4928 to US$1.00. The percentages stated in this
press release are calculated based on the RMB amounts.
Non-GAAP Measure
To supplement the consolidated financial statements
presented in accordance with accounting principles
generally accepted in the United States ("GAAP"),
The9 uses the non-GAAP measure of adjusted EBITDA, which is
adjusted from the most directly comparable financial
measures calculated and presented in accordance with GAAP
to exclude certain expenses. The non-GAAP financial
measure is provided to enhance investors' overall
understanding of the Company's operating performance.
Adjusted EBITDA (non-GAAP) is defined as earnings
before depreciation of fixed assets, amortization of land
use right and intangibles, share based compensation and
income tax expenses/benefits, as applicable. The Company
believes its adjusted EBITDA provides useful information to
both management and investors as it excludes certain
expenses that are not expected to result in future cash
payments. The use of adjusted EBITDA has certain
limitations. Depreciation and amortization expense for
various assets and income tax expenses/benefits have been
and will be incurred and are not reflected in the
presentation of adjusted EBITDA. Each of these items
should also be considered in the overall evaluation of our
results. Adjusted EBITDA should not be considered as a
measure of our liquidity. We compensate for these
limitations by providing the relevant disclosure of our
depreciation and amortization, share based compensation and
income tax expenses/benefits in our reconciliations to the
GAAP financial measure, which should be considered when
evaluating our performance. Adjusted EBITDA is not defined
under GAAP, and our adjusted EBITDA is not a measure of net
income, operating income, operating performance or
liquidity presented in accordance with GAAP. When
assessing our operating performance, you should not
consider this data in isolation or as a substitute for our
net income, operating income or any other operating
performance measure that is calculated in accordance with
GAAP. In addition, our adjusted EBITDA may not be
comparable to similarly titled measures utilized by other
companies since such other companies may not calculate
adjusted EBITDA in the same manner as we do. For more
information on this non-GAAP financial measure, please see
the tables captioned "Reconciliation of non-GAAP to
GAAP results" set forth at the end of this release.
Conference Call / Webcast Information
The9's management team will host a conference call on
Thursday, November 15, 2007 at 8:00 P.M., U.S. Eastern
Time, corresponding to Friday, November 16, 2007 at 9:00
A.M., Beijing Time, to present an overview of The9's
financial performance and business operations.
Investors, analysts and other interested parties will
be able to access the live conference by calling
+1-617-786-4511, password "39088982". In the
U.S., members of the financial community may also
participate in the call by dialing toll-free
+1-800-901-5218, password "39088982". A replay
of the call will be available through November 23, 2007.
The dial-in details for the replay: U.S. toll free number
+1-888-286-8010, International dial-in number
+1-617-801-6888; Password "69250503".
The9 Limited will also provide a live webcast of the
earnings call. Participants in the webcast should log onto
the Company's web site http://www.corp.the9.com 15 minutes
prior to the call, then click on the icon for "The9
Limited Q3 2007 Earnings Conference Call" and follow
the instructions.
About The9 Limited
The9 Limited is a leading online game operator in
China. The9's business is primarily focused on operating
and developing high-quality games for the Chinese online
game market. The9 directly or through affiliates operates
licensed MMORPGs, consisting of MU(R), Blizzard
Entertainment(R)'s World of Warcraft(R), Soul of The
Ultimate Nation(TM), and its first proprietary MMORPG,
Joyful Journey West(TM), in mainland China. It has also
obtained exclusive licenses to operate additional MMORPGs
and advanced casual games in mainland China, including
Granado Espada, Guild Wars, Hellgate: London, Ragnarok
Online 2, Emil Chronicle Online, Huxley(TM), FIFA Online 2,
Audition 2, Field of Honor and Audition. In addition, The9
is also developing two proprietary MMORPG games, Fantastic
Melody Online(TM) and Warriors of Fate Online.
Safe Harbor Statement
This announcement contains forward-looking statements.
These statements are made under the "safe harbor"
provisions of the U.S. Private Securities Litigation Reform
Act of 1995. These forward-looking statements can be
identified by terminology such as "will,"
"expects," "anticipates,"
"future," "intends," "plans,"
"believes," "estimates" and similar
statements. Among other things, the business outlook and
quotations from management in this press release contain
forward-looking statements. The9 may also make written or
oral forward-looking statements in its periodic reports to
the U.S. Securities and Exchange Commission on Forms 20-F
and 6-K, etc., in its annual report to shareholders, in
press releases and other written materials and in oral
statements made by its officers, directors or employees to
third parties. Statements that are not historical facts,
including statements about The9's beliefs and expectations,
are forward-looking statements. Forward-looking statements
involve inherent risks and uncertainties. A number of
important factors could cause actual results to differ
materially from those contained in any forward-looking
statement. Potential risks and uncertainties include, but
are not limited to, The9's limited operating history as an
online game operator, political and economic policies of
the Chinese government, the laws and regulations governing
the online game industry, information disseminated over the
Internet and Internet content providers in China,
intensified government regulation of Internet cafes, The9's
ability to retain existing players and attract new players,
license, develop or acquire additional online games that
are appealing to users, anticipate and adapt to changing
consumer preferences and respond to competitive market
conditions, and other risks and uncertainties outlined in
The9's filings with the U.S. Securities and Exchange
Commission, including its annual reports on Form 20-F.
The9 does not undertake any obligation to update any
forward-looking statement, except as required under
applicable law.
THE9 LIMITED
CONSOLIDATED STATEMENTS OF INCOME
(Expressed in Renminbi - RMB and US Dollars - US$, except
share data)
Quarter Ended
September 30, June 30,
September 30, September 30,
2006 2007
2007 2007
RMB RMB RMB
US$
(unaudited) (unaudited)
(unaudited) (unaudited)
Revenues:
Online game
services 241,164,777 276,501,327
321,723,690 42,937,712
Game operating
support,
website
solutions and
advertisement 2,671,945 7,339,827
2,155,636 287,694
Other revenues 1,917,314 780,444
9,450,513 1,261,279
245,754,036 284,621,598
333,329,839 44,486,685
Sales Taxes (12,367,467) (14,633,882)
(17,363,309) (2,317,333)
Net Revenues 233,386,569 269,987,716
315,966,530 42,169,352
Cost of Services (125,522,051) (155,380,871)
(183,802,302) (24,530,523)
Gross Profit 107,864,518 114,606,845
132,164,228 17,638,829
Operating
Expenses:
Product
development (7,749,225) (11,406,746)
(8,005,085) (1,068,370)
Sales and
marketing (11,699,467) (22,518,505)
(31,886,696) (4,255,645)
General and
administrative (25,112,296) (40,567,082)
(48,580,085) (6,483,569)
Total operating
expenses: (44,560,988) (74,492,333)
(88,471,866) (11,807,584)
Profit from
operations 63,303,530 40,114,512
43,692,362 5,831,245
Interest income,
net 2,479,258 9,515,538
18,124,257 2,418,890
Other income
(expenses), net (1,034,921) 4,148,574
(16,120,271) (2,151,435)
Income before
income tax
benefit
(expense) and
loss on equity
investments 64,747,867 53,778,624
45,696,348 6,098,700
Income tax benefit
(expense) 794,368 (1,102,507)
(6,819,088) (910,085)
Income before loss
on equity
investments 65,542,235 52,676,117
38,877,260 5,188,615
Loss on equity
investments, net
of taxes (1,208,010) (2,064,807)
(691,118) (92,238)
Net income 64,334,225 50,611,310
38,186,142 5,096,377
Earnings per share
- Basic 2.62 1.92
1.30 0.17
- Diluted 2.61 1.90
1.29 0.17
Weighted average
shares
outstanding
- Basic 24,508,974 26,382,259
29,367,354 29,367,354
- Diluted 24,615,761 26,667,691
29,635,516 29,635,516
THE9 LIMITED
CONSOLIDATED BALANCE SHEETS
(Expressed in Renminbi - RMB and US Dollars - US$)
As at
December 31,
September 30,
2006
2007
RMB
RMB
(audited)
(unaudited)
Assets
Current Assets
Cash and cash equivalents 937,845,817
2,076,171,417
Accounts receivable 10,174,484
20,651,610
Advances to suppliers 9,036,620
10,111,742
Prepayments and other current
assets 69,153,131
83,479,358
Prepaid royalties 27,558,207
100,455,847
Deferred costs 33,324,942
43,041,860
Deferred tax assets, current --
9,734,632
Total current assets 1,087,093,201
2,343,646,466
Investments in equity investees 30,117,605
35,857,211
Property, equipment and software 227,512,006
377,614,217
Goodwill 30,199,751
30,199,751
Land use right --
84,199,893
Intangible assets 244,271,279
302,576,240
Prepayment for equipments --
14,000,000
Long-term deposit --
454,212
Deferred tax assets, non-current 5,391,123
15,453,966
Total Assets 1,624,584,965
3,204,001,956
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable 12,692,978
30,018,263
Due to related parties 332,797
240,863
Income tax payable --
2,779,795
Other taxes payable 23,589,754
29,593,342
Advances from customers 88,040,975
148,970,561
Deferred revenue 111,302,531
150,437,885
Other payables and accruals 52,467,643
43,730,536
Total current liabilities 288,426,678
405,771,245
Minority interests --
--
Commitments and contingencies --
--
Shareholders' Equity
Common shares (US$0.01 par value;
24,688,038 shares issued and
outstanding as of December 31, 2006,
29,373,503 shares issued and
outstanding as of September 30,
2007) 2,041,673
2,400,343
Additional paid-in capital 941,786,807
2,248,618,089
Statutory reserves 20,745,422
20,745,422
Retained earnings 371,584,385
526,466,857
Total shareholders' equity 1,336,158,287
2,798,230,711
Total liabilities and shareholders'
equity 1,624,584,965
3,204,001,956
THE9 LIMITED
CONSOLIDATED BALANCE SHEETS
(Expressed in Renminbi - RMB and US Dollars - US$)
As at
September 30,
2007
US$
(unaudited)
Assets
Current Assets
Cash and cash equivalents
277,088,861
Accounts receivable
2,756,194
Advances to suppliers
1,349,528
Prepayments and other current
assets
11,141,276
Prepaid royalties
13,406,984
Deferred costs
5,744,429
Deferred tax assets, current
1,299,198
Total current assets
312,786,470
Investments in equity investees
4,785,556
Property, equipment and software
50,396,943
Goodwill
4,030,503
Land use right
11,237,440
Intangible assets
40,382,266
Prepayment for equipments
1,868,460
Long-term deposit
60,620
Deferred tax assets, non-current
2,062,509
Total Assets
427,610,767
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable
4,006,281
Due to related parties
32,146
Income tax payable
370,995
Other taxes payable
3,949,571
Advances from customers
19,881,828
Deferred revenue
20,077,659
Other payables and accruals
5,836,342
Total current liabilities
54,154,822
Minority interests
--
Commitments and contingencies
--
Shareholders' Equity
Common shares (US$0.01 par value;
24,688,038 shares issued and
outstanding as of December 31, 2006,
29,373,503 shares issued and
outstanding as of September 30,
2007)
320,353
Additional paid-in capital
300,103,845
Statutory reserves
2,768,714
Retained earnings
70,263,033
Total shareholders' equity
373,455,945
Total liabilities and shareholders'
equity
427,610,767
THE9 LIMITED
RECONCILIATION OF NON-GAAP TO GAAP RESULTS
(Expressed in Renminbi - RMB and US Dollars - US$, except
share data)
Quarter
Ended
September 30, June 30,
September 30, September 30,
2006 2007
2007 2007
RMB RMB
RMB US$
(unaudited) (unaudited)
(unaudited) (unaudited)
GAAP net income 64,334,225 50,611,310
38,186,142 5,096,377
Depreciation of
property, equipment
and software 18,513,748 35,040,340
32,601,209 4,351,005
Amortization of land
use right and
intangible assets 23,306,626 21,858,233
23,280,919 3,107,105
Share based
compensation 4,532,883 9,198,777
17,218,946 2,298,066
Income tax expense
(benefit) (794,368) 1,102,507
6,819,088 910,085
Adjusted EBITDA (Non-
GAAP) 109,893,114 117,811,167
118,106,304 15,762,638
GAAP earnings per share
- Basic 2.62 1.92
1.30 0.17
- Diluted 2.61 1.90
1.29 0.17
Adjusted EBITDA (Non-
GAAP) per share
- Basic 4.48 4.47
4.02 0.54
- Diluted 4.46 4.42
3.99 0.53
Weighted average shares
outstanding
- Basic 24,508,974 26,382,259
29,367,354 29,367,354
- Diluted 24,615,761 26,667,691
29,635,516 29,635,516
For further information, please contact:
Ms. Dahlia Wei
Senior Manager, Investor Relations
The9 Limited
Tel: +86 (21) 5172-9990
Email: IR@corp.the9.com
Website: http://www.corp.the9.com/
PR
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