First Quarter 2009 Net Revenues Increased 9.1% QoQ to US$162.0
Million, SHANGHAI, June 2 /PRNewswire-Asia/ -- Shanda Interactive
Entertainment Limited (NasdaqGS: SNDA), or Shanda, a leading
interactive entertainment media company in China, today announced
its unaudited consolidated financial results for the first quarter
ended March 31, 2009. First Quarter 2009 Highlights(1) --
Consolidated net revenues increased 42.0% year-over-year and 9.1%
quarter-over-quarter to a record high of RMB1,107.1 million
(US$162.0 million), compared to the Company's previous guidance of
quarter-over-quarter growth between 3% and 5%. -- Massively
multi-player online role-playing games (MMORPGs) related revenues
increased 47.4% year-over-year and 8.0% quarter-over-quarter to
RMB944.5 million (US$138.2 million). -- Casual games(2) related
revenues increased 1.1% year-over-year and 21.3%
quarter-over-quarter to RMB117.9 million (US$17.2 million). --
Operating income increased 46.0% year-over-year and 10.3%
quarter-over-quarter to RMB455.7 million (US$66.7 million). --
Non-GAAP(3) net income increased 23.2% year-over-year and 10.0%
quarter-over-quarter to RMB374.7 million (US$54.8 million).
Non-GAAP earnings per diluted ADS were RMB5.48 (US$0.80), compared
with RMB4.14 in the first quarter of 2008 and RMB4.90 in the fourth
quarter of 2008. -- Net income increased 25.0% year-over-year and
10.6% quarter-over-quarter to RMB361.0 million (US$52.8 million).
Earnings per diluted ADS were RMB5.28 (US$0.78), compared with
RMB3.94 in the first quarter of 2008 and RMB4.70 in the fourth
quarter of 2008. -- Active paying accounts (APA) for MMORPGs
increased 22.1% quarter-over-quarter to 7.19 million. Average
monthly revenue per active paying account (ARPU) for MMORPGs
decreased 11.5% quarter-over-quarter to RMB43.8. -- APA for casual
games(2) increased 37.7% quarter-over-quarter to 2.06 million. ARPU
for casual games(2) decreased 11.9% quarter-over-quarter to
RMB19.1. "Shanda achieved another solid quarter of growth during
the first quarter of 2009, which further demonstrates the Company's
leadership position in the interactive entertainment media
industry," said Tianqiao Chen, Chairman and Chief Executive Officer
of Shanda. "Looking forward, we will make continuous efforts to
enhance our users' interactive entertainment experience by
combining our integrated service platform with our diversified
content businesses." Conference Call and Webcast Notice Shanda will
host a conference call at 9:00 p.m. on June 2, 2009 Eastern Time
(9:00 a.m. on June 3, 2009 Beijing/Hong Kong time), to present an
overview of the Company's financial performance and business
operations. A live webcast of the conference call will be available
on the Company's corporate website at http://www.snda.com/ . First
Quarter 2009 Financial Results(1) Net Revenues. In the first
quarter of 2009, Shanda reported net revenues of RMB1,107.1 million
(US$162.0 million), representing an increase of 42.0% from RMB779.8
million year-over-year and 9.1% from RMB1,015.2 million in the
fourth quarter of 2008. Online games related revenues, including
MMORPGs and casual games(2), were RMB1,062.4 million (US$155.4
million) in the first quarter of 2009, representing an increase of
40.3% from RMB757.4 million year-over-year and 9.3% from RMB971.7
million in the fourth quarter of 2008. MMORPGs related revenues in
the first quarter of 2009 increased 47.4% year-over-year and 8.0%
quarter-over-quarter to RMB944.5 million (US$138.2 million),
accounting for 85.3% of net revenues. The sequential growth in
MMORPG related revenues was primarily driven by the continued
release of expansion packs for our existing games as well as newly
launched games in the first quarter of 2009. The number of APA for
MMORPGs increased 22.1% sequentially to 7.19 million in the first
quarter of 2009, primarily due to the Company's continuous efforts
to convert free players to paying users. ARPU for MMORPGs was
RMB43.8 in the first quarter of 2009, compared with RMB49.5 in the
fourth quarter of 2008. Casual games(2) related revenues in the
first quarter of 2009 increased 1.1% year-over-year and increased
21.3% quarter-over-quarter to RMB117.9 million (US$17.2million).
The sequential increase in casual games(2) related revenues was
primarily driven by the release of content upgrades, in-game
promotions and seasonal strength related to holidays. The number of
APA for casual games(2) increased 37.7% sequentially to 2.06
million in the first quarter of 2009. ARPU for casual games(2)
declined 11.9% sequentially to RMB19.1 in the first quarter of
2009. Other revenues in the first quarter of 2009 increased 99.6%
year-over-year and 3.1% quarter-over-quarter to RMB44.7 million
(US$6.6 million). Gross Profit. Gross profit for the first quarter
of 2009 was RMB801.0 million (US$117.2 million), representing a
47.8% increase from RMB542.1 million in the first quarter of 2008
and a 9.5% increase from RMB731.7 million in the fourth quarter of
2008. Gross margin was 72.3% in the first quarter of 2009, compared
with 69.5% in the first quarter of 2008 and 72.1% in the fourth
quarter of 2008. Income from Operations. Operating income for the
first quarter of 2009 was RMB455.7 million (US$66.7 million),
representing a 46.0% increase from RMB312.1 million in the first
quarter of 2008 and a 10.3% increase from RMB413.1 million in the
fourth quarter of 2008. Operating margin was 41.2% in the first
quarter of 2009, compared with 40.0% in the first quarter of 2008
and 40.7% in the fourth quarter of 2008. Share-based compensation
was RMB13.7 million (US$2.0 million) in the first quarter of 2009,
compared with RMB15.4 million in the first quarter of 2008 and
RMB14.2 million in the fourth quarter of 2008. Non-Operating
Income. Net non-operating income for the first quarter of 2009 was
RMB0.6 million (US$0.09 million), compared with RMB5.5 million in
the first quarter of 2008 and RMB6.4 million in the fourth quarter
of 2008. The quarter-over-quarter difference was primarily due to
the difference in government financial incentives between the first
quarter of 2009 compared with the fourth quarter of 2008.
Non-operating income contributed from government financial
incentives amounted to RMB1.6 million (US$0.2 million) in the first
quarter of 2009, compared with RMB1.8 million in the first quarter
of 2008 and RMB14.5 million in the fourth quarter of 2008. Income
Tax Expense. Income tax expense for the first quarter of 2009 was
RMB 95.3 million (US$13.9 million), as compared with income tax
expenses of RMB28.7 million in the first quarter of 2008 and
RMB93.0 million in the fourth quarter of 2008. Effective as of
January 1, 2008, the Chinese government adopted a new income tax
law that unified the enterprise income tax payable by domestic and
foreign-invested enterprises at 25%. The Company's subsidiaries and
VIEs are at various stages of progress depending on the
requirements of the different local tax authorities in recognition
of qualification of the NEW/HIGH Technology Enterprises preferred
tax treatment pursuant to "Working Guidelines for Assessment of
New/High Technology Enterprises" issued by the Chinese tax
authorities on July 8, 2008. In December 2008, government
recognition of certain entities as NEW/HIGH Technology Enterprises
was acknowledged by the local tax authority. Accordingly, these
entities were entitled to a preferential tax rate, which is
effective retroactively to January 1, 2008. As a result, the
Directors of the Company believe it is appropriate to report the
Company's income tax provision at the new statutory income tax rate
of 25%, except for entities that are still subject to tax holidays
or other preferential income tax policies. The future tax benefits
arising from the deductible temporary differences as of March 31,
2009 are recognized in the balance sheet to the extent it is
considered recoverable upon management's periodic assessment. Net
Income. Net income for the first quarter of 2009 was RMB361.0
million (US$52.8 million), compared with RMB288.8 million in the
first quarter of 2008 and RMB326.5 million in the fourth quarter of
2008. Earnings per diluted ADS in the first quarter of 2009 were
RMB5.28 (US$0.78), compared with RMB3.94 in the first quarter of
2008 and RMB4.70 in the fourth quarter of 2008. Non-GAAP Net
Income. Non-GAAP net income for the first quarter of 2009 was
RMB374.7 million (US$54.8 million), an increase of 23.2% from
RMB304.2 million in the first quarter of 2008 and an increase of
10.0% from RMB340.7 million in the fourth quarter of 2008. Non-GAAP
earnings per diluted ADS in the first quarter of 2009 were RMB5.48
(US$0.80), compared with RMB4.14 in the first quarter of 2008 and
RMB4.90 in the fourth quarter of 2008. (1) The conversion of
Renminbi (RMB) into U.S. dollars in this release is based on
RMB6.8359 to US$1.00 as published by the People's Bank of China on
March 31, 2009. The percentages stated in this press release are
calculated based on the RMB amounts. (2) Casual games include
advanced casual games, online chess and board game platforms, and
e-sports platform. (3) Non-GAAP measures are disclosed below and
reconciled to the corresponding GAAP measures in the section below
titled "Non-GAAP Financial Measures." Recent Business Highlights On
March 24, 2009, Shanda Online announced that it has established a
strategic cooperation with LineKong Entertainment Technology Co.,
Ltd. Through this strategic cooperation, Shanda Online will open
its unified platform to support the operation of the MMORPG, The
Legend of Kung-Fu. On April 16, 2009, Shanda Games commercially
launched AION: The Tower of Eternity. On April 22, 2009, Shanda
Online announced that it has established a strategic cooperation
with Razer to promote Razer's high-end precision gaming and
lifestyle peripherals on its platform. On May 25, 2009, Shanda
announced its plan to submit a draft registration statement on a
confidential basis to the U.S. Securities and Exchange Commission
for a possible initial public offering of Shanda Games Limited. *
Please visit Shanda's website ( http://www.snda.com/ ) for details
about these and other announcements. Note to the Financial
Information The unaudited financial information disclosed above is
preliminary. The audit of the financial statements and related
notes to be included in the Company's annual report on Form 20-F
for the year ended December 31, 2008 is still in progress. In
addition, the audit of the Company's financial information for the
year ending December 31, 2009 will not be completed until the
filing of the Company's annual report on Form 20-F for the year
ending December 31, 2009 during the second quarter of 2010.
Adjustments to the financial statements may be identified when
audit work is completed, which could result in significant
differences from the audited financial statements to this
preliminary unaudited financial information relating to, for
example, the Company's income tax expenses. In addition, because
management's evaluation of the Company's internal controls over
financial reporting in connection with of the Sarbanes-Oxley Act of
2002 has not yet been completed, the Company makes no
representation as to the effectiveness of those internal controls
as of the end of the Company's fiscal year of 2008. Non-GAAP
Financial Measures To supplement the financial measures prepared in
accordance with generally accepted accounting principals in the
United States, or GAAP, this press release includes non-GAAP
financial measures of adjusted net income and adjusted earning per
ADS, each of which is adjusted to exclude share-based compensation.
The Company believes these non-GAAP financial measures are
important to help investors understand the Company's current
financial performance and future prospects, compare business trends
among different reporting periods on a consistent basis and assess
the Company's core operating results. These non-GAAP financial
measures should be considered in addition to financial measures
prepared in accordance with GAAP, but should not be considered a
substitute for, or superior to, financial measures prepared in
accordance with GAAP. For a reconciliation of each of these
non-GAAP financial measures to the most directly comparable GAAP
financial measure, please see the financial statements included
with this press release. 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. Statements in this announcement that
are not historical facts, including but not limited to statements
regarding the continuous growth of the Company, the introduction of
expansion packs to existing titles, the introduction and timing of
new MMORPG game titles and the introduction of new casual game
titles, represent only the Company's current expectations,
assumptions, estimates and projections and are forward-looking
statements. These forward-looking statements involve various risks
and uncertainties. Important risks and uncertainties that could
cause the Company's actual results to be materially different from
expectations include but are not limited to the risk that there are
delays in the localization and/or development of the MMORPGs and
casual games Shanda intends to release in 2009, the risk that such
MMORPGs and casual games are not well received by users in China,
the risk that the games fail to be commercialized or the
commercialized results fail to meet the expectations of end users,
the risk that the Company fails to deliver continuous growth in
2009, and the risks set forth in the Company's filings with the
U.S. Securities and Exchange Commission, including the Company's
annual report on Form 20-F. The Company does not undertake any
obligation to update any forward-looking statement, except as
required under applicable law. About Shanda Interactive
Entertainment Limited Shanda Interactive Entertainment Limited
(NasdaqGS: SNDA) is a leading interactive entertainment media
company in China. Shanda offers a portfolio of diversified
entertainment content including some of the most popular massively
multi-player online role-playing games (MMORPGs) and advanced
casual online games in China, as well as online chess and board
games, e-sports game platform and a variety of cartoons, literature
works and music. Shanda's interactive entertainment platform
attracts a large and loyal user base, with more and more home
users. Each user can interact with thousands of other users and
enjoy the interactive entertainment content that Shanda provides.
Interaction enriches your life. For more information about Shanda,
please visit http://www.snda.com/ . SHANDA INTERACTIVE
ENTERTAINMENT LIMITED UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEET (in millions) As of December 31, 2008 As of March 31, 2009
(As adjusted)(1) RMB RMB US$ ASSETS Current assets: Cash and cash
equivalents 3,397.8 3,259.1 476.8 Short-term investments 853.3
1,371.9 200.7 Marketable securities 36.7 41.5 6.1 Accounts
receivable 35.8 38.9 5.7 Inventories 3.2 2.8 0.4 Deferred licensing
fees and related costs 54.1 59.6 8.7 Prepayments and other current
assets 190.3 187.2 27.4 Deferred tax assets 89.3 111.5 16.3 Total
current assets 4,660.5 5,072.5 742.1 Investment in equity investees
61.2 62.5 9.1 Property, equipment and software 312.4 330.2 48.3
Intangible assets 476.3 479.9 70.2 Goodwill 590.3 590.3 86.3
Long-term deposits 50.4 52.8 7.7 Long-term prepayments 146.0 263.0
38.5 Long-term assets 136.0 178.4 26.1 Non-current deferred tax
assets 34.7 20.8 3.0 Total assets 6,467.8 7,050.4 1,031.3
LIABILITIES Current liabilities: Accounts payable 54.5 80.4 11.7
Licensing fees payable 203.2 203.3 29.7 Taxes payable 112.5 172.5
25.2 Deferred revenue 513.8 519.4 76.0 Due to related parties 3.0
3.0 0.4 Short term loan -- 1.2 0.2 Other payables and accruals
349.9 448.4 65.7 Deferred tax liabilities 67.8 67.8 9.9 Total
current liabilities 1,304.7 1,496.0 218.8 Non-current deferred tax
liabilities 31.5 29.5 4.3 Non-current income tax liabilities 9.4
9.4 1.4 Long-term liabilities 1,000.7 1,017.9 148.9 Non-current
deferred revenue 1.7 3.0 0.4 Total liabilities 2,348.0 2,555.8
373.8 Shareholders' equity Ordinary shares 11.4 11.2 1.6 Additional
paid-in capital 1,931.7 2,281.8 333.8 Statutory reserves 183.8
187.7 27.5 Accumulated other comprehensive loss -134.0 -144.0 -21.1
Retained earnings 1,838.1 1,859.1 272.0 Total Shanda shareholders'
equity 3,831.0 4,195.8 613.8 Non-controlling interests 288.8 298.8
43.7 Total shareholder's equity 4,119.8 4,494.6 657.5 Total
liabilities and shareholders' equity 6,467.8 7,050.4 1,031.3 (1)
Reflects retrospective application of SFAS 160, "Non-controlling
Interests in Consolidated Financial Statements-an amendment of ARB
No.51." and FSP APB 14-1, "Accounting for Convertible Debt
Instruments that May be Settled in Cash upon Conversion (Including
Partial Cash Settlement)." SHANDA INTERACTIVE ENTERTAINMENT LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
millions, except for share and per share data) For the three months
period ended, March 31, December 31, March 31, 2008 2008 2009 (As
(As adjusted)(1) adjusted)(1) RMB RMB RMB US$ Net revenues MMORPG
640.8 874.6 944.5 138.2 Casual game 116.6 97.1 117.9 17.2 Others
22.4 43.5 44.7 6.6 Total net revenues 779.8 1,015.2 1,107.1 162.0
Cost of services Ongoing licensing fees for online games -107.7
-135.9 -142.1 -20.8 Amortization of intangible assets -21.7 -31.6
-36.9 -5.4 Server leasing and maintenance fees -23.6 -25.6 -22.3
-3.3 Salary and benefits -21.7 -24.2 -36.0 -5.3 Depreciation of
property, equipment and software -13.5 -14.2 -12.1 -1.8 Others
-49.5 -52.0 -56.7 -8.2 Total cost of services -237.7 -283.5 -306.1
-44.8 Gross profit 542.1 731.7 801.0 117.2 Operating expenses:
Product development -64.7 -77.2 -98.9 -14.5 Sales and marketing
-59.2 -92.6 -97.0 -14.1 General and administrative -106.1 -148.8
-149.4 -21.9 Total operating expenses -230.0 -318.6 -345.3 -50.5
Income from operations 312.1 413.1 455.7 66.7 Interest income 18.9
15.6 14.6 2.1 Interest expense -2.4 -25.7 -25.8 -3.8 Amortization
of convertible debt issuance cost -- -2.1 -2.1 -0.3 Investment
income 2.8 1.7 28.0 4.1 Other income(expenses), net -10.9 19.9 1.3
0.2 Income before income tax expenses, equity in loss o (gain) of
affiliates 320.5 422.5 471.7 69.0 Income tax expense -28.7 -93.0
-95.3 -13.9 Equity in loss (gain) of affiliates -0.4 0.4 -9.6 -1.4
Net income 291.4 329.9 366.8 53.7 Less: Net income attributable to
non- controlling interests -2.6 -3.4 -5.8 -0.9 Net income
attributable to ordinary shareholders 288.8 326.5 361.0 52.8
Earnings per share: Basic 1.99 2.37 2.66 0.39 Diluted 1.97 2.35
2.64 0.39 Earnings per ADS: Basic 3.98 4.74 5.32 0.78 Diluted 3.94
4.70 5.28 0.78 Weighted average ordinary shares outstanding: Basic
144,885,662 137,563,925 135,486,121 135,486,121 Diluted 146,794,340
139,055,080 136,969,705 136,969,705 Weighted average ADS
outstanding: Basic 72,442,831 68,781,963 67,743,061 67,743,061
Diluted 73,397,170 69,527,540 68,484,853 68,484,853 Reconciliation
from Non-GAAP measures to GAAP measures: Non-GAAP income 304.2
340.7 374.7 54.8 Share-based compensation cost -15.4 -14.2 -13.7
-2.0 Net income 288.8 326.5 361.0 52.8 Non-GAAP diluted earnings
per ADS 4.14 4.90 5.48 0.80 Share-based compensation cost per ADS
-0.20 -0.20 -0.20 -0.02 Diluted earnings per ADS 3.94 4.70 5.28
0.78 (1) Reflects retrospective application of SFAS 160,
"Non-controlling Interests in Consolidated Financial Statements-an
amendment of ARB No.51." and FSP APB 14-1, "Accounting for
Convertible Debt Instruments that May be Settled in Cash upon
Conversion (Including Partial Cash Settlement)." For further
information, please contact: Shanda Interactive Entertainment Ltd.
Maggie Yun Zhou, IR manager Vivian Chen, IR manager Tel:
+86-21-5050-4740 (Shanghai) Email: DATASOURCE: Shanda Interactive
Entertainment Limited CONTACT: Maggie Yun Zhou, IR manager and
Vivian Chen, IR manager, Shanda Interactive Entertainment Limited
at +86-21-5050-4740 (Shanghai) or Web site: http://www.snda.com/
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