SHANGHAI, July 15 /PRNewswire-Asia/ -- The9 Limited (Nasdaq: NCTY) ("The9") filed its annual report on Form 20-F for the fiscal year ended December 31, 2008 with the Securities and Exchange Commission today. On April 16, 2009, The9 announced that it had learned that Blizzard Entertainment's World of Warcraft will be licensed to another China-based online game company following the expiration of the license agreement with The9. As a result of the expiration and non-renewal of the license agreement, as well as taking into consideration certain other events that occurred subsequent to year-end in connection with certain other licensed games and lower than expected operating performance of one of its games, The9 has revised the amounts of certain of the line items included in the financial information as of and for the year and quarter ended December 31, 2008 that The9 announced in a Form 6-K on February 24, 2009. The net income and basic and diluted earnings per share for the year ended December 31, 2008 presented in The9's annual report on Form 20-F are 72% lower than those for the same period presented in the Form 6-K on February 24, 2009. Attached is a comparison of the amounts included in the 2008 Form 20-F which The9 filed today and the amounts reported on February 24, 2009.
About The9 Limited
The9 Limited is an online game operator and developer 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 and advanced casual games including Soul of The Ultimate Nation(TM), Granado Espada, EA SPORTS(TM) FIFA Online 2 and Atlantica in mainland China. It has also obtained exclusive licenses to operate other games in mainland China, including Audition 2 and Field of Honor. In addition, The9 is developing various proprietary games, including World of Fighter, Jiu Zhou Zhan Ji and other MMORPGs and advanced causal games.
For further information, please contact:
Ms. Phyllis Sai
IR Manager, Investor Relations
The9 Limited
Tel: +86-21-5172-9990
Fax: +86-21-5172-9903
Email: IR@corp.the9.com
Web: http://www.corp.the9.com/
-- Tables follow --
THE9 LIMITED
Comparison of Amounts Included in the 2008 Audited Financial Statements
Presented in the 20-F and the 2008 Unaudited Financial Information
Presented in the 6-K on February 24, 2009
Consolidated Statement of Operations Information
(Expressed in Renminbi - RMB and US Dollars - US$, except share data)
Per 6-K Per 20-F
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2008 2008 2008 2008
RMB US$ RMB US$
(unaudited) (unaudited) Note (unaudited)
Net
Revenues 1,708,058,000 250,356,614 1,711,490,694 250,859,756
Gross
Profit 780,335,256 114,376,732 713,542,154 104,586,610
Profit
from
operations 363,348,490 53,257,382 134,549,625 19,721,454
Net
income 348,347,222 51,058,589 96,836,036 14,193,629
Earnings
per share
- Basic 12.59 1.85 3.50 0.51
- Diluted 12.57 1.84 3.50 0.51
Difference
Year Ended Year Ended
December 31, 2008 December 31, 2008 Notes
RMB US$
Net Revenues 3,432,694 503,142 A
Gross Profit (66,793,102) (9,790,122) B
Profit from
operations (228,798,865) (33,535,928) C, D
Net income (251,511,186) (36,864,960) E
Earnings per
share
- Basic -9.09 -1.34
- Diluted -9.07 -1.33
Note: Numbers extracted from the 2008 audited financial statements
THE9 LIMITED
Comparison of the 2008 Q4 Revised Amounts and the 2008 Unaudited
Financial Information Presented in the 6-K on February 24, 2009
Consolidated Statement of Operations Information
(Expressed in Renminbi - RMB and US Dollars - US$, except share data)
Per 6-K Revised Amounts
Quarter Quarter Quarter Quarter
Ended Ended Ended Ended
December December December December
31, 2008 31, 2008 31, 2008 31, 2008
RMB US$ RMB US$
(unaudited) (unaudited) (unaudited) (unaudited)
Net Revenues 405,126,956 59,381,013 408,559,650 59,884,155
Gross Profit 177,381,131 25,999,434 159,389,309 23,362,302
Profit from
operations 57,690,651 8,455,941 (122,306,934) (17,926,997)
Net income 44,386,700 6,505,930 (158,323,206) (23,206,040)
Earnings per share
- Basic 1.62 0.24 -5.78 -0.85
- Diluted 1.62 0.24 -5.78 -0.85
Difference
Quarter Quarter Notes
Ended Ended
December December
31, 2008 31, 2008
RMB US$
Net Revenues 3,432,694 503,142 A
Gross Profit (17,991,822) (2,637,132) B
Profit from operations (179,997,585) (26,382,938) C, D
Net income (202,709,906) (29,711,970) E
Earnings per share
- Basic -7.40 -1.09
- Diluted -7.40 -1.09
THE9 LIMITED
Comparison of Amounts Included in the 2008 Audited Financial Statements
Presented in the 20-F and the 2008 Unaudited Financial Information
Presented in the 6-K on February 24, 2009
Consolidated Balance Sheet Information
(Expressed in Renminbi - RMB and US Dollars - US$)
Per 6-K Per 20-F
December 31, December 31, December 31, December 31,
2008 2008 2008 2008
RMB US$ RMB US$
(unaudited) (unaudited) Note (unaudited)
Accounts receivable 28,265,038 4,142,915 8,323,084 1,219,945
Advances to suppliers 10,127,063 1,484,362 1,435,781 210,448
Prepayments and other
current assets 75,859,061 11,118,954 68,371,912 10,021,533
Prepaid royalties 142,725,743 20,919,860 138,843,227 20,350,784
Deferred costs 57,237,238 8,389,482 55,748,737 8,171,306
Deferred tax assets,
current 5,604,862 821,526 -- --
Property, equipment
and software 277,305,841 40,645,781 200,034,094 29,319,766
Intangible assets 203,673,697 29,853,235 136,129,801 19,953,068
Prepayment for equipment 46,500,000 6,815,683 -- --
Deferred tax assets,
non-current 17,107,459 2,507,506 -- --
Other taxes payable 99,226,613 14,544,025 99,416,815 14,571,903
Advances from customers 144,040,476 21,112,565 143,464,990 21,028,214
Deferred revenue 205,268,848 30,087,043 201,645,952 29,556,021
Difference
December 31, December 31, Notes
2008 2008
RMB US$
Accounts receivable (19,941,954) (2,922,970) C
Advances to suppliers (8,691,282) (1,273,914) B, C
Prepayments and other current assets (7,487,149) (1,097,421) B, C
Prepaid royalties (3,882,516) (569,076) B
Deferred costs (1,488,501) (218,176) A
Deferred tax assets, current (5,604,862) (821,526) E
Property, equipment and software (77,271,747) (11,326,015) B, D
Intangible assets (67,543,896) (9,900,167) D
Prepayment for equipment (46,500,000) (6,815,683) C
Deferred tax assets, non-current (17,107,459) (2,507,506) E
Other taxes payable 190,202 27,878 A
Advances from customers (575,486) (84,351) C
Deferred revenue (3,622,896) (531,022) A
Note: Numbers extracted from the 2008 audited financial statements
Notes:
A. Recognition of additional revenue in connection with WoW CD-Key. Prior to 2008, CD-Key fees are amortized over one-year period; effective January 1, 2008, they are amortized over the shorter of one year or WoW's remaining license period, starting from the time when the game players activate the
CD-Key. The corresponding additional deferred cost and sales taxes are accrued accordingly. Details see 2008 audited financial statements Note
2< 14 >.
B. Gross profit decreased because the Company recorded impairment and certain other charges in cost of services, as a result of the non-renewal of the WoW license agreement beyond June 7, 2009 including WoW-related prepaid royalties and inventories included in prepayments and other current assets. In addition, the Company adjusted the expected useful life of the servers and related equipment, and the expected value of the servers and related equipment at the end of the WoW license. Details see 2008 audited financial statements Note 2< 8 >. The effect of depreciation charge increased cost of services in 2008 Q1, Q2, Q3 and Q4 by RMB14,058,294, RMB16,860,935, RMB17,882,051 and RMB19,569,203, respectively.
C. Additional general and administrative expenses are recorded since certain prepayment for equipment, advances to suppliers, accounts receivable and prepayments and other current assets were written off due to the expiration and non-renewal of WoW. Details see 2008 audited financial statements Notes 16, 2< 7 > and 22.
D. Impairment provision is made due to the write off of intangible assets and equipment. As a result of the non-renewal of the WoW license agreement beyond June 7, 2009, as well as taking into consideration certain other events that occurred subsequent to year-end in connection with certain other licensed games and lower than expected operating performance of Granado Espada, the Company recorded impairment and certain charged to upfront licensed fee and computer and equipment. Details see 2008 audited financial statements Note 13.
E. Valuation allowance of deferred tax assets is provided based on the latest estimated future utilization of deferred tax assets, which is revised due to the expiration and non-renewal of WoW license. Details see 2008 audited financial statements Notes 15.
