Filed by Bowne Pure Compliance
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
November 17, 2008
GRAVITY Co., Ltd.
(Translation of registrants name into English)
Nuritkum Square Business Tower 15F, 1605 Sangam-Dong, Mapo-Gu, Seoul, Korea 121-270
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or
Form 40-F:
þ Form 20-F
o Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7): o
Indicate by check mark whether the registrant by furnishing the information contained in this Form
is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934: o Yes þ No
If Yes is marked, indicate below the file number assigned to the registrant in connection with
Rule 12g3-2(b): n/a
GRAVITY REPORTS THIRD QUARTER OF 2008 RESULTS
Seoul, South Korea November 17, 2008 GRAVITY Co., Ltd. (NasdaqGM: GRVY) (Gravity or the
Company), an online game developer and publisher based in South Korea, today announced its
unaudited financial results for the third quarter ended September 30, 2008, prepared in accordance
with generally accepted accounting principles in the United States.
Revenues for the third quarter ended September 30, 2008 was KRW 12,782 million (US$10,128
thousand), representing a similar amount of revenue of KRW 12,662 million for the second quarter
ended June 30, 2008 (QoQ) and a 36.8% increase from KRW 9,341 million for the third quarter ended
September 30, 2007 (YoY). The Company turned profitable with its net income of KRW 932 million
(US$737 thousand) for the third quarter ended September 30, 2008, which was a result of the
Companys broad range of restructuring efforts led by the new management team appointed in June,
2008.
REVIEW OF FINANCIAL RESULTS
Revenues
Royalty and licensing fee revenues for the third quarter ended September 30, 2008 were KRW 7,226
million (US$5,726 thousand), representing a 7.2% increase QoQ from KRW 6,742 million and a 28.9%
increase YoY from KRW 5,607 million. The increase YoY was mainly resulted from the increase in
Japan revenues. The weakening of the Korean Won by approximately 28.7% against the Japanese Yen
from 2007 to 2008 also contributed to the increase YoY royalty revenues from Japan.
Subscription revenue for the third quarter of 2008 was KRW 3,539 million (US$2,804 thousand),
representing a 14.8% increase QoQ and a 35.6% increase YoY compared to KRW 3,082 million and KRW
2,610 million, respectively. The increases QoQ and YoY are primarily driven by the increase in
Korea revenues due to the increased revenues from the micro-transaction model resulted from opening
free-to-play servers in May 2008. The increase QoQ and YoY are also partly due to the
commercialization of Requiem in the United States, Canada and Russia in June 2008.
Mobile game revenues was KRW 1,614 million (US$1,279 thousand) for the third quarter of 2008,
representing a 22.3% decrease QoQ from KRW 2,076 million and a 100.5% increase YoY from KRW 805
million. The increase YoY is principally due to the revenues from the newly released mobile games
of NEOCYON, a subsidiary of the Company, in 2008.
Character merchandising, animation and other revenue was KRW 403 million (US$319 thousand) for the
third quarter of 2008, representing a 47.1% decrease QoQ from KRW 762 million and a 26.3% increase
YoY from KRW 319 million. The decrease QoQ is due to decrease in the animation related revenue. The
increase YoY is mainly due to the increase of product sales of NEOCYON.
Cost of Revenues and Operating Expenses
Cost of revenues were KRW 6,726 million (US$5,329 thousand) for the third quarter of 2008,
representing a 10.4% decrease QoQ from KRW 7,505 million and a 48.4% increase YoY from KRW 4,533
million. The increase YoY is primarily attributed to higher salaries of head quarters from the
commercialization of new games and of L5 games Inc., which was established in October 2007. The
increase YoY is also due to the increased amortization on development cost for Emil Chronicle
Online, Pucca Racing and Requiem, which were commercialized in August, September and October of
2007, respectively.
Operating expenses were KRW 5,815 million (US$4,609 thousand) for the third quarter of 2008,
representing a 1.1% decrease QoQ from KRW 5,881 million and a 67.9% decrease YoY from KRW 18,135
million. The decrease YoY is primarily attributed to the recognition of KRW 8,619 million
impairment loss of Perpetual Entertainment, Inc. in the third quarter of 2007, which went into
liquidation in October 2007. The decrease YoY is also attributed to the overall decrease of
marketing and advertising expense as a part of restructuring efforts, amounted to KRW 3,556 million
(US$2,818 thousand), compared to the third quarter of 2007.
Income before income tax expenses and others was KRW 1,879 million (US$1,487 thousand) for the
third quarter of 2008, which represents a 754.1% increase QoQ compared with KRW 220 million, and a
turnaround from the loss before income tax expenses and others of KRW 11,995 million for the third
quarter of 2007.
As a result of the foregoing factors, Gravity recorded a net income of KRW 932 million (US$737
thousand) for the third quarter of 2008 compared with a net loss of KRW 665 million for the second
quarter of 2008 and a net loss of KRW 12,576 million for the third quarter of 2007.
The balance of cash and cash equivalents and short-term financial instruments was KRW 55,688
million (US$44,126 thousand) as of September 30, 2008.
Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the
rate of KRW 1,262.00 to US$1.00, the noon buying rate in effect on November 3, 2008, as quoted by
the Federal Reserve Bank of New York.
About GRAVITY Co., Ltd.
Based in Korea, Gravity is a developer and publisher of online games. Gravitys principal product,
Ragnarok Online, is a popular online game in many markets, including Japan, Taiwan and Thailand,
and is currently commercially offered in 22 markets. For more information about Gravity, please
visit http://www.gravity.co.kr.
Forward-Looking Statements:
Certain statements in this press release may include, in addition to historical information,
forward-looking statements within the meaning of the safe-harbor provisions of the U.S. Private
Securities Litigation Reform Act 1995. Forward-looking statements can generally be identified by
the use of forward-looking terminology, such as may,
will, expect, intend, estimate, anticipate, believe project, or continue or the
negative thereof or other similar words, although not all forward-looking statements
contain these words. Investors should consider the information contained in our submissions and
filings with the United States Securities and Exchange Commission (the SEC), including our
registration statement on Form F-1, as amended, and our annual reports on Form 20-F, together with
such other documents and we may submit to or file with the SEC from time to time, on Form 6-K. The
forward-looking statements speak only as of this press release and we assume no duty to update them
to reflect new, changing or unanticipated events or circumstances.
Contact:
Mr. Heung Gon Kim
Chief Financial Officer
Gravity Co., Ltd.
Email: kheung@gravity.co.kr
Mr. Andy Eom
IR Manager
Gravity Co., Ltd.
Telephone: +822-2132-7801
Email: andyeom@gravity.co.kr
# # #
GRAVITY Co., Ltd.
Consolidated Balance Sheet
(In millions of KRW and in thousands of US$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
31-Dec-07 |
|
|
30-Sep-08 |
|
|
|
KRW |
|
|
US$ |
|
|
KRW |
|
|
US$ |
|
Assets |
|
(audited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
53,588 |
|
|
|
42,463 |
|
|
|
52,583 |
|
|
|
41,666 |
|
Short-term financial instruments |
|
|
8,715 |
|
|
|
6,906 |
|
|
|
3,105 |
|
|
|
2,460 |
|
Accounts receivable, net |
|
|
4,820 |
|
|
|
3,819 |
|
|
|
5,579 |
|
|
|
4,421 |
|
Other current assets |
|
|
5,544 |
|
|
|
4,393 |
|
|
|
5,359 |
|
|
|
4,247 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
72,667 |
|
|
|
57,581 |
|
|
|
66,626 |
|
|
|
52,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
7,195 |
|
|
|
5,701 |
|
|
|
6,139 |
|
|
|
4,865 |
|
Leasehold and other deposits |
|
|
2,412 |
|
|
|
1,911 |
|
|
|
2,206 |
|
|
|
1,748 |
|
Intangible assets |
|
|
11,686 |
|
|
|
9,260 |
|
|
|
11,207 |
|
|
|
8,881 |
|
Goodwill |
|
|
1,451 |
|
|
|
1,150 |
|
|
|
1,451 |
|
|
|
1,150 |
|
Investments |
|
|
20 |
|
|
|
16 |
|
|
|
6,910 |
|
|
|
5,475 |
|
Other non-current assets |
|
|
1,496 |
|
|
|
1,185 |
|
|
|
1,512 |
|
|
|
1,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
96,927 |
|
|
|
76,804 |
|
|
|
96,051 |
|
|
|
76,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
4,573 |
|
|
|
3,624 |
|
|
|
2,799 |
|
|
|
2,218 |
|
Deferred income |
|
|
3,639 |
|
|
|
2,884 |
|
|
|
3,445 |
|
|
|
2,730 |
|
Current portion of deferred tax liabilities |
|
|
583 |
|
|
|
462 |
|
|
|
134 |
|
|
|
106 |
|
Other current liabilities |
|
|
1,317 |
|
|
|
1,043 |
|
|
|
1,539 |
|
|
|
1,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
10,112 |
|
|
|
8,013 |
|
|
|
7,917 |
|
|
|
6,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term deferred income |
|
|
10,245 |
|
|
|
8,118 |
|
|
|
10,012 |
|
|
|
7,933 |
|
Accrued severance benefits |
|
|
715 |
|
|
|
567 |
|
|
|
570 |
|
|
|
452 |
|
Deferred income tax liabilities |
|
|
49 |
|
|
|
39 |
|
|
|
61 |
|
|
|
48 |
|
Other non-current liabilities |
|
|
262 |
|
|
|
207 |
|
|
|
258 |
|
|
|
205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
21,383 |
|
|
|
16,944 |
|
|
|
18,818 |
|
|
|
14,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest |
|
|
68 |
|
|
|
54 |
|
|
|
130 |
|
|
|
103 |
|
Common stock |
|
|
3,474 |
|
|
|
2,753 |
|
|
|
3,474 |
|
|
|
2,753 |
|
Additional paid-in capital |
|
|
75,126 |
|
|
|
59,529 |
|
|
|
75,185 |
|
|
|
59,576 |
|
Retained earnings |
|
|
(2,879 |
) |
|
|
(2,281 |
) |
|
|
(3,982 |
) |
|
|
(3,155 |
) |
Accumulated other comprehensive income (loss) |
|
|
(245 |
) |
|
|
(195 |
) |
|
|
2,426 |
|
|
|
1,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
75,476 |
|
|
|
59,806 |
|
|
|
77,103 |
|
|
|
61,096 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
|
96,927 |
|
|
|
76,804 |
|
|
|
96,051 |
|
|
|
76,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of
KRW1,262.00 to US$1.00, the noon buying rate in effect on November 3, 2008 as quoted by the Federal
Reserve Bank of New York. |
GRAVITY Co., Ltd.
Consolidated Statements of Operations
(In millions of KRW and in thousands of US$)
|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
30-Jun-08 |
|
|
30-Sep-07 |
|
|
30-Sep-08 |
|
|
30-Sep-07 |
|
|
30-Sep-08 |
|
|
|
(KRW) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
(KRW) |
|
|
(KRW) |
|
|
(US$) |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Online games-subscription revenue |
|
|
3,082 |
|
|
|
2,610 |
|
|
|
3,539 |
|
|
|
2,804 |
|
|
|
6,518 |
|
|
|
9,481 |
|
|
|
7,513 |
|
Online games-royalties and license fees |
|
|
6,742 |
|
|
|
5,607 |
|
|
|
7,226 |
|
|
|
5,726 |
|
|
|
18,519 |
|
|
|
20,865 |
|
|
|
16,533 |
|
Mobile games |
|
|
2,076 |
|
|
|
805 |
|
|
|
1,614 |
|
|
|
1,279 |
|
|
|
2,988 |
|
|
|
5,111 |
|
|
|
4,050 |
|
Character merchandising, animation and other revenue |
|
|
762 |
|
|
|
319 |
|
|
|
403 |
|
|
|
319 |
|
|
|
1,238 |
|
|
|
2,515 |
|
|
|
1,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues |
|
|
12,662 |
|
|
|
9,341 |
|
|
|
12,782 |
|
|
|
10,128 |
|
|
|
29,263 |
|
|
|
37,972 |
|
|
|
30,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
7,505 |
|
|
|
4,533 |
|
|
|
6,726 |
|
|
|
5,329 |
|
|
|
12,780 |
|
|
|
21,735 |
|
|
|
17,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
5,157 |
|
|
|
4,808 |
|
|
|
6,056 |
|
|
|
4,799 |
|
|
|
16,483 |
|
|
|
16,237 |
|
|
|
12,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
5,272 |
|
|
|
17,402 |
|
|
|
5,401 |
|
|
|
4,280 |
|
|
|
28,179 |
|
|
|
16,601 |
|
|
|
13,155 |
|
Research and development |
|
|
609 |
|
|
|
733 |
|
|
|
414 |
|
|
|
329 |
|
|
|
5,545 |
|
|
|
1,806 |
|
|
|
1,430 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(724 |
) |
|
|
(13,327 |
) |
|
|
241 |
|
|
|
190 |
|
|
|
(17,241 |
) |
|
|
(2,170 |
) |
|
|
(1,719 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
702 |
|
|
|
764 |
|
|
|
661 |
|
|
|
524 |
|
|
|
2,308 |
|
|
|
2,065 |
|
|
|
1,636 |
|
Interest expense |
|
|
(6 |
) |
|
|
(1 |
) |
|
|
(7 |
) |
|
|
(6 |
) |
|
|
(17 |
) |
|
|
(18 |
) |
|
|
(14 |
) |
Foreign currency gains (losses), net |
|
|
248 |
|
|
|
568 |
|
|
|
1,000 |
|
|
|
792 |
|
|
|
162 |
|
|
|
1,962 |
|
|
|
1,555 |
|
Others, net |
|
|
|
|
|
|
1 |
|
|
|
(16 |
) |
|
|
(13 |
) |
|
|
198 |
|
|
|
(19 |
) |
|
|
(16 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income tax expense,
minority interest and
equity in loss of
related joint venture |
|
|
220 |
|
|
|
(11,995 |
) |
|
|
1,879 |
|
|
|
1,487 |
|
|
|
(14,590 |
) |
|
|
1,820 |
|
|
|
1,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses (benefit) |
|
|
808 |
|
|
|
554 |
|
|
|
865 |
|
|
|
686 |
|
|
|
1,995 |
|
|
|
2,521 |
|
|
|
1,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
minority interest and
equity in loss of related
joint venture |
|
|
(588 |
) |
|
|
(12,549 |
) |
|
|
1,014 |
|
|
|
801 |
|
|
|
(16,585 |
) |
|
|
(701 |
) |
|
|
(555 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest |
|
|
18 |
|
|
|
14 |
|
|
|
22 |
|
|
|
17 |
|
|
|
31 |
|
|
|
61 |
|
|
|
48 |
|
Equity in loss of related joint venture |
|
|
59 |
|
|
|
13 |
|
|
|
60 |
|
|
|
47 |
|
|
|
347 |
|
|
|
341 |
|
|
|
271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
(665 |
) |
|
|
(12,576 |
) |
|
|
932 |
|
|
|
737 |
|
|
|
(16,963 |
) |
|
|
(1,103 |
) |
|
|
(874 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
For convenience purposes only, the KRW amounts are expressed in U.S. dollars at the rate of
KRW1,262.00 to US$1.00, the noon buying rate in effect on November 3, 2008 as quoted by the
Federal Reserve Bank of New York. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
GRAVITY Co., Ltd.
|
|
Date: 11/17/2007 |
By: |
/s/ Heung Gon Kim |
|
|
|
Name: |
Heung Gon Kim |
|
|
|
Title: |
Chief Financial Officer |
|
|