EX-99.1 2 exhibit1.htm EX-99.1 Exhibit  EX-99.1

2Q05 Financial Statements

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GRAVITY Co. Ltd.                                    
Condensed Consolidated Statements of Operations(unaudited)                            
For the Three Months Ended Jun 30, 2004 and 2005, June 30, 2005                            
(In million of Korean Won and in thousands of US dollars, except share and per share data)                    
                                    For the three months ended (unaudited)
    Jun 30,   Jun 30,   Mar 31,   Mar 31,   Jun 30,   Jun 30,
    2004   2004   2005   2005   2005   2005
 
   KRW
   US$
   KRW
   US$
   KRW
   US$
Total Net revenues
     15,527       15,314       15,833       15,616       13,457       13,273  
Subscription revenues
     3,892       3,839       3,848       3,795       2,691       2,654  
Royalties & License fees
     11,056       10,904       11,163       11,010       9,602       9,471  
Mobile revenues
     124       122       174       172       343       338  
Other revenues
     455       449       648       639       821       810  
Cost of revenues
     2,333       2,301       3,525       3,477       3,688       3,637  
Gross profit
     13,194       13,013       12,308       12,139       9,769       9,636  
Operating expenses :
     3,231       3,188       4,375       4,315       6,634       6,544  
General and administrative
     2,223       2,193       2,865       2,826       3,388       3,342  
Research and development
     464       458       949       936       2,638       2,602  
Advertising expenses
     544       537       561       553       608       600  
Operating income
     9,963       9,825       7,933       7,824       3,135       3,092  
Other income(expenses) :
     (1,245 )     (1,228 )     (677 )     (667 )     (254 )     (252 )
Interest income
     67       66       451       445       786       775  
Gain on foreign currency transaction
     78       77       671       662       732       722  
Interest expense
     (1,193 )     (1,177 )     (883 )     (871 )     (651 )     (642 )
Loss on foreign currency transaction
     (197 )     (194 )     (916 )     (903 )     (1,121 )     (1,106 )
Income before income tax expenses
     8,718       8,597       7,256       7,157       2,881       2,841  
Income tax expenses
     1,285       1,267       1,777       1,753       822       811  
Income before minority interest & losses from equity method investee
     7,433       7,330       5,479       5,404       2,059       2,030  
Minority interest
     15       15       —       0       —       —  
Equity in loss of related joint venture
     —       —       37       36       (117 )     (115 )
Net Income
     7,448       7,345       5,516       5,440       1,942       1,915  
Earnings per share
                                                
Basic and diluted (Based on ADS)
     336     US$ 0.33       219     US$ 0.22       70     US$ 0.07  

• Our net income set forth above is net of our income tax expenses, which was calculated using a corporate income tax rate of 24.75% tax rate under the assumption that we may fail to be designated as a venture company under applicable Korean law and regulations. However, if we are successful in renewing our designation as a venture company again this year, we will be entitled to the 50% reduction in corporate income tax rate. If so, our tax rate will be 13.75% and our net income would be US$6.4 million for the first quarter of 2005 and US$2.2 million for the second quarter of 2005.

• The exchange rate applied is the Market Average Exchange Rate in Korea effective as of August 08, 2005, which was KRW 1,013.9 to US$1.00.

                                 
GRAVITY Co., Ltd.                
Condensed Consolidated Balance Sheet(unaudited)                
As of June 30, 2005                
(In million of Korean Won and in thousands of US dollars, except share and per share data)
    March 31,   Jun 30,
    2005   2005   2005   2005
 
   KRW
   US$
   KRW
   US$
ASSETS
                                
Current assets :
                                
Cash and cash equivalents
     11,812       11,650       9,443       9,314  
Short-term financial instruments
     90,816       89,571       93,234       91,956  
Accounts receivable
     9,000       8,877       8,347       8,233  
Current deferred income tax assets
     2,443       2,410       2,652       2,616  
Other current assets
     5,299       5,226       4,139       4,082  
Total current assets
     119,370       117,734       117,815       116,201  
 
                                
Property and equipment, net
     15,669       15,454       17,110       16,875  
Leasehold and other deposits
     4,246       4,188       4,729       4,664  
Other non-current assets
     2,948       2,907       4,724       4,659  
TOTALASSETS
     142,233       140,283       144,378       142,399  
 
                                
LIABILITIES&SHAREHOLDERS’ EQUITY
                                
Current Liabilities:
                                
Accounts payable
     2,732       2,695       3,258       3,213  
Deferred Income
     5,370       5,296       5,543       5,467  
Current portion of long-term debt
     803       792       272       268  
Accrued interest
     263       259       213       210  
Income taxes payable
     486       479       440       434  
Other current liabilities
     918       906       950       937  
Total Current Liabilities
     10,572       10,427       10,676       10,529  
 
                                
Long term deferred income
     3,756       3,705       3,282       3,237  
Accrued severance benefits
     1,022       1,008       1,221       1,204  
Other non-current liabilities
     2,009       1,981       2,170       2,141  
TOTAL LIABILITIES
     17,359       17,121       17,349       17,111  
Total Shareholders’ Equity
     124,874       123,162       127,029       125,288  
TOTAL LIABILITIES&SHAREHOLDERS’ EQUITY
     142,233       140,283       144,378       142,399  
 
                                

*Above balance sheet was stated based on the rate of 24.75% not applying 50% tax reduction as we are not certain if we will satisfy the law and regulations for venture company designation. However, if we are successful in renewing our designation as a venture company again this year, we will be entitled to the 50% reduction in corporate income tax rate and our tax rate will be 13.75%.

• The exchange rate applied is the Market Average Exchange Rate in Korea effective as of August 08, 2005, which was KRW 1,013.9 to US$1.00.

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RO Statistics
(As of June 30, 2005)

                                                                                                         
            3Q 02   4Q 02   1Q 03   2Q 03   3Q 03   4Q 03   1Q 04   2Q 04   3Q 04   4Q 04   1Q 05   2Q05
Korea
   # of server sets     10       10       10       10       10       10       10       10       11       11       11       11  
   PCU
     24,966       31,294       28,598       29,103       33,491       27,931       30,059       22,051       26,508       20,587       22,403       15,784  
   ACU
     13,880       14,930       15,758       14,687       17,554       14,430       15,439       11,236       13,023       10,179       10,569       7,153  
Japan
   # of server sets             7       7       7       12       12       13       13       19       19       20       24  
   PCU
             56,033       58,785       75,582       75,026       83,880       89,111       101,983       100,503       104,559       106,195       96,119  
Taiwan/Hong Kong
   # of server sets             14       20       22       30       42       48       52       59       61       61       61  
   PCU
             112,823       158,695       184,436       206,904       250,030       342,228       339,843       352,592       325,351       344,534       326,848  
Thailand
   # of server sets                     7       8       13       15       17       17       19       21       22       22  
   PCU
                     65,100       60,600       66,700       72,200       82,385       86,133       107,798       130,148       116,672       111,959  
China
   # of server sets                     22       23       26       30       31       31       34       37       36       36  
   PCU
                             112,844       125,183       118,257       147,059       116,208       100,002       78,320       76,993       64,970  
Philippines
   # of server sets                                     2       4       7       7       7       8       9       9  
   PCU
                                     15,186       30,108       37,441       38,440       36,436       50,816       54,533       45,805  
Malaysia/Singapore
   # of server sets                                                             7       8       9       11       11  
   PCU
                                                             28,614       31,648       30,234       29,080       24,956  
Indonesia
   # of server sets                                             2       4       4       5       5       5       5  
   PCU
                                             10,854       16,879       20,726       26,881       26,053       21,390       23,415  
USA/Canada
   # of server sets                                     3       3       3       4       4       4       4       4  
   PCU
                                     9,000       7,484       9,456       11,230       12,965       10,011       9,190       8,997  
Europe(5 countries)*
   # of server sets                                                             2       3       3       3       3  
   PCU
                                                             4,125       5,818       5,972       7,321       7,364  
Australia/New Zealand
   # of server sets                                                                             1       2       2  
   PCU
                                                                             1,083       951       999  
Brazil
   # of server sets                                                                                     3       3  
   PCU
                                                                                     8,913       16,033  

* Europe (5 countries) represents Germany, Australia, Switzerland, Italy and Turkey.

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