6-K 1 a14-8449_16k.htm 6-K

 

 

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

 

For the month of March, 2014

 

Commission File Number 000-51138

 

GRAVITY Co., Ltd.

(Translation of registrant’s name into English)

 

15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea

(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:  x 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

 

 

 



 

RESULTS OF THE ANNUAL GENERAL MEETING OF SHAREHOLDERS AND THE BOARD MEETING OF GRAVITY CO., LTD.

 

Gravity Co., Ltd. (the “Company”) held its Annual General Meeting of Shareholders (the “AGM”) at the Conference Room located at 15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795 Korea at 10:00 a.m. on March 26, 2014.

 

The AGM was held with a quorum present and the agenda items were resolved by the shareholders in accordance with the Korean Commercial Code and the Company’s Articles of Incorporation as follows:

 

·                  Agendum 1: the shareholders approved the Company’s non-consolidated and consolidated financial statements as of and for the years ended December 31, 2013 and 2012 prepared in accordance with Accounting Standards for Non-Public Entities in Korea, or KAS-NPE, and audited in accordance with Generally Accepted Auditing Standards in Korea, or K-GAAS.

 

·                  Agendum 2: the shareholders approved the reappointment of seven directors, Messrs. Hyun Chul Park, Yoshinori Kitamura, Kazuki Morishita, Kazuya Sakai (who are inside directors) and Messrs. Jong Gyu Hwang, Doo Hyun Ryu and Jung Yoo (who are independent directors).

 

·                  Agendum 3: the shareholders approved the amount of KRW 1,400,000,000 as the maximum amount of compensation payable to directors as a group for fiscal year 2014.

 

Furthermore, the Company’s 2013 Annual Business Report was presented to the shareholders at the AGM.

 

The Company’s Board of Directors, consisting of the seven reelected directors, held a meeting immediately following the AGM (the “Board Meeting”). At the Board Meeting, Mr. Hyun Chul Park was reappointed as Chief Executive Officer and Mr. Yoshinori Kitamura was reappointed as Chairman of the Board of Directors.

 

Messrs. Jong Gyu Hwang, Doo Hyun Ryu and Jung Yoo were reappointed as Audit Committee members at the Board Meeting.

 

The Company expects to file the Company’s non-consolidated and consolidated financial statements, including the notes thereto, which are prepared in the Korean language prepared in accordance with KAS-NPE and audited in accordance with K-GAAS as of and for the years ended December 31, 2013 and 2012 (“2013/2012 KAS-NPE non-consolidated and consolidated financial statements”) with the Financial Supervisory Service of Korea on April 3, 2014. The condensed English translation version of the 2013/2012 KAS-NPE non-consolidated and consolidated financial statements is expected to be submitted to the United States Securities and Exchange Commission on Form 6-K at the same time.

 



 

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.

 

 

 

 

 

By:

/s/ Heung Gon Kim

 

Name:

Heung Gon Kim

 

Title:

Chief Financial Officer

 

Date: March 26, 2014

 



 

Exhibit Index

 

Exhibit No.

 

Description

 

 

 

99. 1

 

Gravity Reports Non-consolidated Financial Results for 2013

 

 

 

99. 2

 

Gravity Reports Consolidated Financial Results for 2013

 

 

 

99. 3

 

2013 Annual Business Report

 



Exhibit 99.1

 

GRAVITY REPORTS NON-CONSOLIDATED FINANCIAL RESULTS FOR 2013

 

Seoul, South Korea, March 26, 2014 - GRAVITY Co., Ltd. (NasdaqGM: GRVY) (“Gravity’“ or the “Company’“), an online game developer and publisher based in South Korea, announces its non-consolidated financial results for the fiscal year ended December 31, 2013, prepared in accordance with Accounting Standards for Non-Public Entities in Korea. Financial statements are available on Edgar at http://www.sec.gov.

 

REVIEW OF FINANCIAL RESULTS

 

Revenues and Cost of Revenues

 

Revenues for 2013 were KRW 26,257 million (US$ 24,882 thousand), representing a 34.5% decrease from KRW 40,105 million for 2012.

 

Royalties and licensing fees revenue for 2013 was KRW 22,060 million (US$ 20,905 thousand), representing a 27.6% decrease from KRW 30,486 million for 2012. This decrease primarily resulted from decreased revenues from Ragnarok Online in Japan and the strengthening of the Korean Won against the Japanese Yen. Such decrease was partially offset by the revenues from Ragnarok Online II, which was launched in Singapore, Malaysia, the United States, Canada, Indonesia, Thailand and 53 other countries and markets during 2013, and the revenues from Ragnarok Online in China where the game was relaunched in February 2013.

 

Subscription revenue decreased by 55.0% to KRW 2,446 million (US$ 2,318 thousand) in 2013 from KRW 5,438 million in 2012. The decrease resulted mainly from the significant decrease in revenues from Finding Neverland Online, which the Company ceased offering in July 2013.

 

Mobile game revenue for 2013 was KRW 544 million (US$ 516 thousand), representing a 64.0% decrease from KRW 1,512 million for 2012.

 

Character merchandising and other revenue was KRW 1,207 million (US$ 1,143 thousand) in 2013, representing a 54.8% decrease from KRW 2,669 million in 2012. The decrease was mostly attributable to decreased revenues from Ragnarok Odyssey, a PS Vita game, which was released in 2012.

 

Cost of revenues was KRW 20,047 million (US$ 18,997 thousand) in 2013, representing a 1.3% decrease from KRW 20,304 million in 2012. The decrease in cost of revenues was mainly attributable to decreased outsourcing fees related to game development.

 

As a result of the foregoing factors, gross profit for 2013 was KRW 6,210 million (US$ 5,885 thousand), representing a 68.6% decrease from KRW 19,801 million for 2012. The gross profit ratio decreased to 23.7% in 2013 from 49.4% in 2012.

 

Selling, General & Administrative Expenses (“SG&A”)

 

The Company’s total SG&A decreased 27.7% to KRW 14,163 million (US$ 13,421 thousand) in 2013 compared with KRW 19,601 million in 2012. This decrease in SG&A was mostly attributable to decrease in advertising expenses mainly due to decreased marketing expenses for Ragnarok Online, and for open beta testing and commercial launch of Finding Neverland Online and Ragnarok Online II, which did not occur in 2013.

 

Based on the foregoing factors, the Company recorded an operating loss of KRW 7,953 million (US$ 7,536 thousand) in 2013, compared to an operating income of KRW 200 million in 2012.

 



 

Non-operating Income and Non-operating Expenses

 

Non-operating income for 2013 was KRW 2,243 million (US$ 2,126 thousand) compared with KRW 4,494 million in 2012 representing a 50.1% decrease, which was primarily due to gain on valuation of equity-method investment in 2012, which did not occur in 2013.

 

Non-operating expenses for 2013 were KRW 6,466 million (US$ 6,127 thousand), a 57.4% decrease from KRW 15,171 million in 2012, which was due primarily to decreased impairment loss on equity method investments related to Gravity Games Corporation and loss on valuation of equity-method investment.

 

Loss before income tax for 2013 was KRW 12,176 million (US$ 11,537 thousand), compared with loss before income tax of KRW 10,477 million in 2012.

 

Gravity recorded a net loss of KRW 17,955 million (US$ 17,015 thousand) in 2013 compared with a net loss of KRW 14,298 million in 2012.

 

The balance of cash and cash equivalents and short-term financial instruments was KRW 41,402 million (US$ 39,234 thousand) as of December 31, 2013.

 

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the rate of KRW 1,055.25 to US$1.00, the noon buying rate in effect on December 31, 2013 as quoted by the Federal Reserve Bank of New York.

 



Exhibit 99.2

 

GRAVITY REPORTS CONSOLIDATED FINANCIAL RESULTS FOR 2013

 

Seoul, South Korea, March 26, 2014 - GRAVITY Co., Ltd. (NasdaqGM: GRVY) (“Gravity’“ or the “Company’“), an online game developer and publisher based in South Korea, announces its consolidated financial results for the fiscal year ended December 31, 2013, prepared in accordance with Accounting Standards for Non-Public Entities in Korea. The consolidated subsidiary as of December 31, 2012 and as of December 2013 is NeoCyon, Inc., or Neo Cyon. The other subsidiaries of the Company are not subject to consolidation under Enforcement Decree of the Act on External Audit of Stock Companies of Korea and are accounted for as equity method investments. Financial statements are available on Edgar at http://www.sec.gov.

 

REVIEW OF FINANCIAL RESULTS

 

Revenues and Cost of Revenues

 

Revenues for 2013 were KRW 42,438 million (US$ 40,216 thousand), representing an 18.3% decrease from KRW 51,951 million for 2012.

 

Royalties and licensing fees revenue for 2013 was KRW 22,224 million (US$ 21,060 thousand), representing a 28.8% decrease from KRW 31,211 million for 2012. This decrease primarily resulted from decreased revenues from Ragnarok Online in Japan and the strengthening of the Korean Won against the Japanese Yen. Such decrease was partially offset by the revenues from Ragnarok Online II, which was launched in Singapore, Malaysia, the United States, Canada, Indonesia, Thailand and 53 other countries and markets during 2013, and the revenues from Ragnarok Online in China where the game was relaunched in February 2013.

 

Subscription revenue decreased by 55.0% to KRW 2,446 million (US$ 2,318 thousand) for 2013 from KRW 5,438 million for 2012. The decrease resulted mainly from the significant decrease in revenues from Finding Neverland Online, which the Company ceased offering in July 2013.

 

Mobile game revenue for 2013 was KRW 14,504 million (US$ 13,745 thousand), representing a 75.6% increase from KRW 8,262 million for 2012. The increase was mostly driven by the revenues from NeoCyon’s mobile game operation service for a third party and the revenues from Ragnarok Online — Uprising: Valkyrie.

 

Character merchandising and other revenue was KRW 3,264 million (US$ 3,093 thousand) for the 2013, representing a 53.6% decrease from KRW 7,040 million in 2012. The decrease was mostly attributable to decreased revenues from Ragnarok Odyssey, a PS Vita game, which was released in 2012, and the revenues from sales of goods related to mobile phones in 2012, which did not occur in 2013.

 

Cost of revenues was KRW 30,924 million (US$ 29,305 thousand) for 2013, representing a 7.9% increase from KRW 28,671 million for 2012. The increase in cost of revenues was mainly attributable to increased commission paid mostly related to our service provided to third parties, and for digital storefronts where our mobile games are offered, as well as increased salaries resulting from commercial launch of some of our mobile games and increased number of mobile game developers of

 



 

NeoCyon. Such increase was substantially offset by decreased outsourcing fees, which is mostly related to development of online and mobile games, and cost of goods sold associated with sales of goods related to mobile phones in 2012, which did not occur in 2013.

 

As a result of the foregoing factors, gross profit for 2013 was KRW 11,514 million (US$ 10,911 thousand), representing a 50.5% decrease from KRW 23,280 million for 2012. The gross profit ratio decreased to 27.1% in 2013 from 44.8% in 2012.

 

Selling, General & Administrative Expenses (“SG&A”)

 

The Company’s total SG&A decreased 10.2% to KRW 20,242 million (US$ 19,182 thousand) for 2013 compared with KRW 22,552 million for 2012. This decrease in SG&A was mostly attributable to decrease in advertising expenses mainly due to decreased marketing expenses for Ragnarok Online, and for open beta testing and commercial launch of Finding Neverland Online and Ragnarok Online II, which did not occur in 2013.

 

Based on the foregoing factors, the Company recorded an operating loss of KRW 8,728 million (US$ 8,271 thousand) in 2013, compared to an operating income of KRW 728 million for 2012.

 

Non-operating Income and Non-operating Expenses

 

Non-operating income for 2013 was KRW 2,291 million (US$ 2,171 thousand) compared with KRW 3,515 million in 2012 representing a 34.8% decrease, which was primarily due to gain on valuation of equity-method investment in 2012, which did not occur in 2013.

 

Non-operating expenses for 2013 were KRW 6,309 million (US$ 5,979 thousand), a 59.3% decrease from KRW 15,491 million in 2012, which was due primarily to decreased impairment loss on equity method investments related to Gravity Games Corporation and loss on valuation of equity-method investment.

 

Loss before income tax for 2013 was KRW 12,746 million (US$ 12,079 thousand), compared with loss before income tax of KRW 11,248 million in 2012.

 

Gravity recorded a net loss of KRW 17,984 million (US$ 17,042 thousand) for 2013 compared with a net loss of KRW 14,229 million for 2012.

 

The balance of cash and cash equivalents and short-term financial instruments was KRW 47,725 million (US$ 45,226 thousand) as of December 31, 2013.

 

Notes:

 

1) The Company reclassified certain revenue within Mobile games revenue as Character merchandising and other revenue in 2013 as this better represents the nature of the revenue. The same reclassification has been made to 2012 to conform to the presentation of 2013. The reclassification has no effect on the Company’s previously reported total net revenue and other line items on the consolidated financial statements.

 

2) For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the rate of KRW 1,055.25 to US$1.00, the noon buying rate in effect on December 31, 2013 as quoted by the Federal Reserve Bank of New York.

 



Exhibit 99.3

 

2013 Annual Business Report

 

Table of Contents

 

1.

Business Overview

(1)

Business Results and Financial Statements for the Past Three Fiscal Years (2011 — 2013)

 

 

2.

Company Overview

(1)

Registered Purpose of the Company

(2)

Description of Primary Business

(3)

Problems Confronting the Company

(4)

Business Offices and Game Development Facilities

(5)

Stock

(6)

Debenture

(7)

Major Shareholders

(8)

Investment in Other Companies

(9)

Directors Holding Concurrent Positions

(10)

Material Transactions with Related Parties

(11)

Significant Creditors

(12)

Employees

(13)

Directors and Auditors

(14)

Material Events after the End of Fiscal Year 2013

 

 

3.

Non-Consolidated Financial Statements as of and for the fiscal years ended December 31, 2013 and 2012

(1)

Balance Sheets

(2)

Income Statements

(3)

Statements of Disposition of Accumulated Deficit

(4)

Statements of Changes in Equity

(5)

Statements of Cash Flows

(6)

Notes to Non-Consolidated Financial Statements

 

 

4.

Consolidated Financial Statements as of and for the fiscal years ended December 31, 2013 and 2012

(1)

Consolidated Balance Sheets

(2)

Consolidated Income Statements

(3)

Consolidated Statements of Changes in Equity

(4)

Consolidated Statements of Cash Flows

(5)

Notes to Consolidated Financial Statements

 



 

1. Business Overview

 

(1)         Business Results and Financial Statements for the Past Three Fiscal Years (2011 — 2013)

 

(In Korean Won)

 

Category

 

2013

 

2012

 

2011

 

Current assets

 

47,505,633,406

 

55,717,624,294

 

61,944,250,781

 

· Quick assets

 

47,505,633,406

 

55,717,624,294

 

61,944,250,781

 

Non-current assets

 

35,940,889,480

 

48,466,233,817

 

56,759,120,403

 

· Investment asset

 

10,391,266,236

 

13,658,241,648

 

21,072,545,640

 

· Tangible asset

 

651,534,949

 

1,007,535,695

 

1,261,672,069

 

· Intangible asset

 

13,573,210,684

 

19,286,513,607

 

19,905,123,988

 

· Other non-current asset

 

11,324,877,611

 

14,513,942,867

 

14,519,778,706

 

Total assets

 

83,446,522,886

 

104,183,858,111

 

118,703,371,184

 

Current liabilities

 

7,914,388,543

 

8,611,856,040

 

9,847,425,028

 

Non-current liabilities

 

6,725,211,896

 

8,748,925,892

 

7,531,044,348

 

Total liabilities

 

14,639,600,439

 

17,360,781,932

 

17,378,469,376

 

Common stock

 

3,474,450,000

 

3,474,450,000

 

3,474,450,000

 

Additional paid-in capital

 

75,380,209,013

 

75,380,209,013

 

75,380,209,013

 

Retained earnings (Accumulated deficit)

 

(11,419,602,518

)

6,535,090,813

 

20,833,492,247

 

Accumulated other comprehensive income and loss

 

1,371,865,952

 

1,433,326,353

 

1,636,750,548

 

Total equity

 

68,806,922,447

 

86,823,076,179

 

101,324,901,808

 

Revenues

 

26,257,395,408

 

40,104,850,485

 

40,224,258,623

 

Operating income (loss)

 

(7,952,560,429

)

200,286,936

 

8,462,252,055

 

Income (loss) before income tax

 

(12,175,488,665

)

(10,477,026,633

)

7,987,324,201

 

Net income (loss)

 

(17,954,693,331

)

(14,298,401,434

)

14,771,572,441

 

 

2. Company Overview

 

(1)    Registered Purpose of the Company

 

1)         Software consulting, development and supply

2)         Development and sales of software and CD

3)         Information-technology-related software development

4)         Production, development, distribution, sales and consulting of digital contents, including game software, as well as corresponding licensing

5)         Online network game services

6)         Applied package-related software development

7)         Production and sales of computer programs

8)         Import and export of software

9)         E-commerce

10)  Character development business

11)  Animation business

12)  Real estate leasing

13)  Service-area restaurant business

14)  Media-related business

15)  Printing and publication

16)  Record & video production and distribution

17)  Any other businesses incidental to the above businesses

 



 

(2)    Description of Primary Business

 

Gravity Co., Ltd. (the “Company”) is the developer of Ragnarok Online, an MMORPG, which was launched in August 2002 and is commercially offered in 60 markets worldwide, including Korea, Japan, Taiwan, Southeast Asia, the United States and Europe as of December 31, 2013. Requiem, which was commercially launched in October 2007, is currently serviced worldwide including the United States and Russia. In March 2012, the Company released Ragnarok Online II, which is currently serviced in 60 markets, including the Unites States and Europe as of December 31, 2013.

 

Having strong global network and success from Ragnarok Online, the Company is expanding its business areas from online game development and publishing to cultural contents business based on various platforms, such as development of games for smartphones, console and IPTV, and animation and game character merchandising.

 

In addition, in order to strengthen its presence in the overseas markets, the Company has subsidiaries in the United States and Japan, and joint venture companies in France. The Company also has subsidiaries in Korea, such as NeoCyon, Inc. and Gravity Games Corp.

 

(3)    Problems Confronting the Company

 

Since the Company operates in a highly competitive industry, the Company is making every effort to enhance its development capacity and to maintain and increase its market share in overseas markets to preserve its competitive advantage.

 

Due to its high dependence on Ragnarok Online, the Company is in need of diversified revenue structure, global market expansion and new business initiatives for sustainable revenue growth. The Company is doing its best to build its next game line-up through enhancing mobile game business.

 

(4)    Business Offices and Game Development Facilities

 

Classification

 

Location

Head Office

 

(Nuritkum Square Business Tower) 15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea

Game Development Facilities

 

(Nuritkum Square R&D Tower) 15F, 396 World Cup buk-ro, Mapo-gu, Seoul 121-795, Korea

 

(5)    Stock

 

1) Total number of shares

 

(As of December 31, 2013)

 

Total number of shares authorized

 

Total number of shares issued

 

Total number of shares unissued

 

40,000,000 shares

 

6,948,900 shares

 

33,051,100 shares

 

 

2)  Type of Stock issued (Par value per share: KRW 500)

 

(As of December 31, 2013)

 

Type

 

Number of shares

 

Total par value

 

%

 

Registered common stock

 

6,948,900 shares

 

KRW

3,474,450,000

 

100

%

 

(6)    Debenture: None.

 

(7)    Major Shareholders

 

(As of December 31, 2013)

 

Shareholder

 

Shares owned

 

%

 

Transaction with the Company

 

GungHo Online Entertainment, Inc.

 

4,121,739

 

59.31

 

*

 

Others

 

2,827,161

 

40.69

 

 

Total

 

6,948,900

 

100.00

 

 

 


* Refer to “(10) Material Transactions with Related Parties.”

 



 

(8)    Investment in Other Companies

 

(As of December 31, 2013)

 

Companies

 

Relationship with the Company

 

Name

 

Location

 

Common Stock

 

Main business

 

Shares owned

 

%

 

Relationship

 

Gravity Interactive, Inc.

 

California, US

 

USD

5,040,000

 

Gaming Service

 

100,000

 

100.00

%

Subsidiary

 

Gravity Entertainment Corp.

 

Tokyo, Japan

 

JPY

167,850,000

 

Animation making/service

 

1,000

 

100.00

%

Subsidiary

 

Gravity Middle East & Africa FZ-LLC*

 

Dubai, U.A.E.

 

AED

7,800,000

 

Gaming Service

 

7,800

 

100.00

%

Subsidiary

 

NeoCyon, Inc.

 

Seoul, Korea

 

KRW

964,005,000

 

Mobile game development

 

185,301

 

96.11

%

Subsidiary

 

Gravity Games Corp.

 

Seoul, Korea

 

KRW

1,134,730,000

 

Online game development

 

194,035

 

85.50

%

Subsidiary

 

Gravity EU SAS

 

Paris, France

 

EUR

1,000,000

 

Gaming Service

 

2,500

 

25.00

%

Joint Venture

 

 


* The liquidation of Gravity Middle East & Africa FZ-LLC was in progress as of December 31, 2013.

 

(9)    Directors Holding Concurrent Positions

 

 

 

Company

Name

 

Name

 

Position

 

Responsibility

Hyun Chul Park

 

Gravity Co., Ltd.

 

CEO

 

Overall management

 

NeoCyon, Inc.

 

Executive Director

 

Chief Operating Officer

 

Gravity Games Corp.

 

Executive Director

 

Yoshinori Kitamura

 

Gravity Co., Ltd.

 

Executive Director

 

Chief Operating Officer

 

Gravity Interactive, Inc.

 

CEO

 

Overall management

 

Gravity Entertainment Corp.

 

CEO

 

Overall management

 

NeoCyon, Inc.

 

CEO

 

Overall management

 

Gravity Games Corp.

 

Executive Director

 

 

Gravity EU SAS

 

Executive Director

 

 

(10) Material Transactions with Related Parties

 

Sales and purchases

 

(In thousands of Korean Won)

 

 

 

 

 

2013

 

2012

 

Nature

 

Related companies

 

Sales

 

Purchases

 

Sales

 

Purchase

 

Parent company

 

GungHo Online Entertainment, Inc.

 

13,073,185

 

974,019

 

25,341,971

 

2,766,976

 

Subsidiaries

 

Gravity Interactive, Inc.

 

1,481,564

 

1,346

 

887,986

 

 

 

NeoCyon. Inc.

 

705,324

 

1,567,000

 

1,739,398

 

1,896,145

 

 

Gravity Games Corp.

 

153,139

 

207,525

 

16,706

 

288,633

 

 

Gravity CIS Co., Ltd.

 

 

 

6,950

 

120,361

 

Equity-method investee

 

Ingamba LLC

 

 

 

137,803

 

 

 

Gravity EU SAS

 

351,812

 

 

433,401

 

 

 

 

Total

 

15,765,024

 

2,749,890

 

28,564,215

 

5,072,115

 

 



 

Receivables and Payables

 

- 2013

 

(In thousands of Korean Won)

 

 

 

 

 

Receivables

 

Payables

 

Nature

 

Related companies

 

Accounts
receivable

 

Loans

 

Other
receivable

 

Accounts
payable

 

Other
payable

 

Parent company

 

GungHo Online Entertainment, Inc.

 

915,357

 

 

43,718

 

278,967

 

5,445,033

 

Subsidiaries

 

Gravity Interactive, Inc.

 

1,223,146

 

1,606,650

 

 

52,894

 

 

 

Gravity Middle East & Africa FZ-LLC

 

 

 

 

 

1,820,301

 

 

NeoCyon. Inc.

 

201,918

 

 

78,189

 

111,100

 

117,799

 

 

Gravity Games Corp.

 

28,361

 

1,972,000

 

1,981,541

 

37,821

 

33,180

 

Equity-method investee

 

Gravity EU SAS

 

61,879

 

 

19,356

 

 

31,414

 

 

 

Total

 

2,430,661

 

3,578,650

 

2,122,804

 

480,782

 

7,447,727

 

 

- 2012

 

(In thousands of Korean Won)

 

 

 

 

 

Receivables

 

Payables

 

Nature

 

Related companies

 

Accounts
receivable

 

Loans

 

Other
receivable

 

Accounts
payable

 

Other
payable

 

Parent company

 

GungHo Online Entertainment, Inc.

 

2,126,772

 

 

62,620

 

563,225

 

5,892,473

 

Subsidiaries

 

Gravity Interactive, Inc.

 

555,071

 

1,606,650

 

3,323

 

 

 

 

Gravity Middle East & Africa FZ-LLC

 

 

 

 

 

1,820,301

 

 

NeoCyon. Inc.

 

509,149

 

 

38,655

 

290,941

 

79,243

 

 

Gravity Games Corp.

 

3,669

 

1,154,000

 

2,003,697

 

 

75,245

 

Equity-method investee

 

Gravity EU SAS

 

147,272

 

 

19,356

 

 

106,806

 

 

 

Total

 

3,341,933

 

2,760,650

 

2,127,651

 

854,166

 

7,974,068

 

 

(11) Significant Creditors: The Company had no significant creditors as of December 31, 2013.

 

(12) Employees

 

(As of December 31, 2013)

 

Category

 

Directors & Officers

 

Developers

 

Marketing/Operating

 

Finance/Administration

 

Total

Employees

 

9

 

210

 

39

 

36

 

294

 

(13) Directors and Auditors

 

Name

 

Position

 

Main work

 

Transaction with the
Company

Hyun Chul Park

 

CEO

 

Chief Executive Officer

 

Yoshinori Kitamura

 

Executive Director

 

Chief Operating Officer

 

Kazuki Morishita

 

Executive Director

 

 

Kazuya Sakai

 

Executive Director

 

 

Jong Gyu Hwang

 

Independent Director

 

Member of audit committee

 

Doo Hyun Ryu

 

Independent Director

 

Member of audit committee

 

Jung Yoo

 

Independent Director

 

Member of audit committee

 

 

(14) Material Events after the end of fiscal year 2013: N/A

 



 

3. Non-Consolidated Financial Statements as of and for the fiscal year ended December 31, 2013 and 2012

 

(1)                    Balance Sheets

 

GRAVITY CO., LTD.

(In Korean Won)

 

 

 

2013

 

2012

 

Assets

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

47,505,633,406

 

 

 

55,717,624,294

 

Quick assets

 

 

 

47,505,633,406

 

 

 

55,717,624,294

 

Cash and cash equivalents

 

23,402,391,895

 

 

 

29,078,231,109

 

 

 

Short-term financial instruments

 

18,000,000,000

 

 

 

17,500,000,000

 

 

 

Accounts receivable

 

3,777,634,986

 

 

 

4,645,298,139

 

 

 

Allowance for doubtful accounts

 

(18,290,031

)

 

 

(8,715,590

)

 

 

Short-term loans

 

893,273,661

 

 

 

254,999,874

 

 

 

Allowance for doubtful accounts

 

(860,495,832

)

 

 

(200,000,000

)

 

 

Other accounts receivable

 

565,553,353

 

 

 

507,409,890

 

 

 

Allowance for doubtful accounts

 

(334,984,189

)

 

 

(256,598,537

)

 

 

Accrued income

 

359,668,942

 

 

 

342,863,925

 

 

 

Allowance for doubtful accounts

 

(115,151,736

)

 

 

 

 

 

Advance payments

 

1,813,278,112

 

 

 

3,091,968,755

 

 

 

Allowance for doubtful accounts

 

(1,500,000,000

)

 

 

(1,500,000,000

)

 

 

Prepaid expenses

 

304,317,584

 

 

 

449,669,356

 

 

 

Current deferred tax assets

 

366,000,000

 

 

 

633,000,000

 

 

 

Prepaid income taxes

 

694,558,607

 

 

 

963,145,295

 

 

 

Refund of income taxes receivable

 

157,878,054

 

 

 

216,352,078

 

 

 

Non-current Assets

 

 

 

35,940,889,480

 

 

 

48,466,233,817

 

Investment assets

 

 

 

10,391,266,236

 

 

 

13,658,241,648

 

Equity method investments

 

10,377,516,269

 

 

 

11,811,902,502

 

 

 

Long-term available-for-sale securities

 

 

 

 

647,061,335

 

 

 

Long-term loans

 

3,931,904,135

 

 

 

3,805,927,811

 

 

 

Allowance for doubtful accounts

 

(3,918,154,168

)

 

 

(2,606,650,000

)

 

 

Tangible assets

 

 

 

651,534,949

 

 

 

1,007,535,695

 

Computer and equipment

 

6,454,419,316

 

 

 

10,110,035,435

 

 

 

Accumulated depreciation

 

(5,819,516,561

)

 

 

(9,147,422,722

)

 

 

Vehicles

 

28,110,738

 

 

 

28,110,738

 

 

 

Accumulated depreciation

 

(28,110,738

)

 

 

(28,110,738

)

 

 

Furniture and fixtures

 

843,767,187

 

 

 

876,559,441

 

 

 

Accumulated depreciation

 

(827,134,993

)

 

 

(833,007,293

)

 

 

Leasehold improvements

 

745,967,319

 

 

 

745,967,319

 

 

 

Accumulated depreciation

 

(745,967,319

)

 

 

(744,596,485

)

 

 

Intangible assets

 

 

 

13,573,210,684

 

 

 

19,286,513,607

 

Capitalized R&D cost, net

 

12,542,369,221

 

 

 

16,992,155,328

 

 

 

Software

 

864,482,024

 

 

 

1,375,034,002

 

 

 

Other intangible assets, net

 

166,359,439

 

 

 

919,324,277

 

 

 

Other non-current assets

 

 

 

11,324,877,611

 

 

 

14,513,942,867

 

Leasehold deposits

 

1,250,166,550

 

 

 

1,374,231,810

 

 

 

Long-term prepaid expenses

 

48,666,664

 

 

 

66,666,660

 

 

 

Non-current deferred tax assets

 

5,728,000,000

 

 

 

8,905,000,000

 

 

 

Other non-current assets

 

4,298,044,397

 

 

 

4,168,044,397

 

 

 

Total assets

 

 

 

83,446,522,886

 

 

 

104,183,858,111

 

Liabilities

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

7,914,388,543

 

 

 

8,611,856,040

 

Accounts payable

 

2,747,370,416

 

 

 

4,094,502,416

 

 

 

Advances received

 

1,920,365,988

 

 

 

1,920,365,988

 

 

 

Withholdings

 

131,308,618

 

 

 

148,737,099

 

 

 

Deferred income

 

2,968,959,784

 

 

 

2,203,565,249

 

 

 

Income tax payable

 

146,383,737

 

 

 

244,685,288

 

 

 

 



 

 

 

2013

 

2012

 

Non-current liabilities

 

 

 

6,725,211,896

 

 

 

8,748,925,892

 

Long-term deferred income

 

6,475,232,037

 

 

 

8,495,437,880

 

 

 

Asset retirement obligation

 

99,000,000

 

 

 

99,000,000

 

 

 

Leasehold deposit received

 

150,979,859

 

 

 

154,488,012

 

 

 

Total liabilities

 

 

 

14,639,600,439

 

 

 

17,360,781,932

 

Equity

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

3,474,450,000

 

 

 

3,474,450,000

 

Common stock

 

3,474,450,000

 

 

 

3,474,450,000

 

 

 

Capital surplus

 

 

 

75,380,209,013

 

 

 

75,380,209,013

 

Additional paid-in capital

 

73,255,072,627

 

 

 

73,255,072,627

 

 

 

Other capital surplus

 

2,125,136,386

 

 

 

2,125,136,386

 

 

 

Accumulated other comprehensive income and loss

 

 

 

1,371,865,952

 

 

 

1,433,326,353

 

Net accumulated comprehensive income of equity method investees

 

1,532,202,141

 

 

 

1,484,906,049

 

 

 

Net accumulated comprehensive loss of equity method investees

 

(160,336,189

)

 

 

(51,579,696

)

 

 

Retained earnings (accumulated deficit)

 

 

 

(11,419,602,518

)

 

 

6,535,090,813

 

Unappropriated retained earnings (undisposed accumulated deficit)

 

(11,419,602,518

)

 

 

6,535,090,813

 

 

 

Total equity

 

 

 

68,806,922,447

 

 

 

86,823,076,179

 

Total liabilities and equity

 

 

 

83,446,522,886

 

 

 

104,183,858,111

 

 



 

(2)                    Income Statements

 

GRAVITY CO., LTD.

(In Korean Won)

 

 

 

2013

 

2012

 

Revenues

 

 

 

26,257,395,408

 

 

 

40,104,850,485

 

Online games-subscription revenue

 

2,446,493,355

 

 

 

5,437,988,285

 

 

 

Online games-royalties and license fees

 

22,060,067,331

 

 

 

30,485,995,147

 

 

 

Mobile games

 

544,160,209

 

 

 

1,511,693,503

 

 

 

Character merchandising, animation and other revenue

 

1,206,674,513

 

 

 

2,669,173,550

 

 

 

Cost of revenues

 

 

 

20,046,866,670

 

 

 

20,303,476,269

 

Cost of revenues-games

 

20,046,866,670

 

 

 

20,303,476,269

 

 

 

Gross profit

 

 

 

6,210,528,738

 

 

 

19,801,374,216

 

Selling and administrative expenses

 

 

 

14,163,089,167

 

 

 

19,601,087,280

 

Salaries

 

4,906,162,523

 

 

 

5,778,272,364

 

 

 

Severance benefits

 

382,561,480

 

 

 

409,454,270

 

 

 

Employee benefits

 

821,735,973

 

 

 

977,961,165

 

 

 

Transportation

 

174,133,984

 

 

 

337,661,961

 

 

 

Entertainment

 

37,689,239

 

 

 

57,963,948

 

 

 

Communication

 

87,572,827

 

 

 

82,971,839

 

 

 

Taxes and dues

 

263,962,950

 

 

 

289,822,610

 

 

 

Depreciation

 

140,906,865

 

 

 

161,664,102

 

 

 

Rent

 

743,624,537

 

 

 

929,417,181

 

 

 

Insurance premium

 

141,256,213

 

 

 

156,260,760

 

 

 

Vehicles maintenance

 

4,399,000

 

 

 

3,207,100

 

 

 

Freight expenses

 

1,767,053

 

 

 

3,297,250

 

 

 

Repairs expenses

 

4,818,000

 

 

 

3,807,600

 

 

 

Training expenses

 

1,920,000

 

 

 

11,380,001

 

 

 

Books & subscription

 

7,325,563

 

 

 

17,334,461

 

 

 

Office supplies

 

29,446,553

 

 

 

36,121,300

 

 

 

Commission paid

 

2,784,967,695

 

 

 

3,298,959,172

 

 

 

Advertising

 

526,740,024

 

 

 

4,124,411,894

 

 

 

Research and development

 

2,798,864,229

 

 

 

2,692,107,705

 

 

 

Bad debt

 

87,960,093

 

 

 

5,901,168

 

 

 

Amortization on intangible assets

 

215,274,366

 

 

 

223,109,429

 

 

 

Operating income (loss)

 

 

 

(7,952,560,429

)

 

 

200,286,936

 

Non-operating income

 

 

 

2,243,247,967

 

 

 

4,493,589,205

 

Interest income

 

1,380,337,408

 

 

 

1,570,694,695

 

 

 

Gain on foreign currency translation

 

19,784,229

 

 

 

31,568,664

 

 

 

Gain on foreign exchange transactions

 

465,239,559

 

 

 

406,126,770

 

 

 

Gain on valuation of equity-method investments

 

 

 

 

1,709,803,616

 

 

 

Gain on disposal of property and equipment

 

1,482,680

 

 

 

7,188,410

 

 

 

Other income

 

376,404,091

 

 

 

768,207,050

 

 

 

Non-operating expenses

 

 

 

6,466,176,203

 

 

 

15,170,902,774

 

Other bad debt

 

2,087,151,736

 

 

 

2,067,279,776

 

 

 

Loss on foreign currency translation

 

205,682,412

 

 

 

395,764,469

 

 

 

Loss on foreign exchange transactions

 

577,647,108

 

 

 

764,069,778

 

 

 

Loss on valuation of equity-method investments

 

2,102,172,982

 

 

 

4,180,478,516

 

 

 

Loss on disposal of securities under equity method

 

 

 

 

333,389,213

 

 

 

Loss on impairment of securities under equity method

 

70,792,850

 

 

 

6,732,616,544

 

 

 

Loss on disposal of long-term available-for-sale securities

 

67,834,609

 

 

 

 

 

 

Loss on impairment of long-term available-for-sale securities

 

 

 

 

399,404,898

 

 

 

Loss on disposal of intangible assets

 

 

 

 

923,838

 

 

 

Loss on impairment of intangible assets

 

1,344,119,878

 

 

 

291,094,431

 

 

 

Loss on disposal of other non-current assets

 

 

 

 

5,880,000

 

 

 

Other losses

 

10,774,628

 

 

 

1,311

 

 

 

 



 

 

 

2013

 

2012

 

Loss before income tax

 

 

 

(12,175,488,665

)

 

 

(10,477,026,633

)

Income tax expense

 

 

 

5,779,204,666

 

 

 

3,821,374,801

 

Net loss

 

 

 

(17,954,693,331

)

 

 

(14,298,401,434

)

Loss per share*

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

 

(2,584

)

 

 

(2,058

)

 


* Each ADS represents one-fourth of one share of our common stock. Therefore, earnings (loss) per ADS is one-fourth of earnings per share.

 



 

(3)                    Statements of Disposition of Accumulated Deficit

 

GRAVITY CO., LTD.

(In Korean Won)

 

 

 

2013

 

2012

 

 

 

Confirmed disposition date:
March 26, 2014

 

Confirmed appropriation date:
March 27, 2013

 

Accumulated deficit before disposition (retained earnings before appreciation)

 

 

 

11,419,602,518

 

 

 

(6,535,090,813

)

Unappropriated retained earnings carried over from prior year

 

6,535,090,813

 

 

 

20,833,492,247

 

 

 

Net loss

 

(17,954,693,331

)

 

 

(14,298,401,434

)

 

 

Disposition of accumulated deficit

 

 

 

11,419,602,518

 

 

 

 

Transfer from capital surplus

 

11,419,602,518

 

 

 

 

 

 

Undisposed accumulated deficit (unappropriated retained earnings) carried forwards to subsequent year

 

 

 

 

 

 

(6,535,090,813

)

 



 

(4)                    Statements of Changes in Equity

 

GRAVITY CO., LTD.

(In Korean Won)

 

 

 

Capital Stock

 

Capital Surplus

 

Accumulated
Other
Comprehensive
Income and Loss

 

Retained
Earnings

 

Total

 

Balance at January 1, 2012

 

3,474,450,000

 

75,380,209,013

 

1,636,750,548

 

20,833,492,247

 

101,324,901,808

 

Net loss

 

 

 

 

(14,298,401,434

)

(14,298,401,434

)

Changes in equity-method investees with accumulated comprehensive income

 

 

 

(151,844,499

)

 

(151,844,499

)

Changes in equity-method investees with accumulated comprehensive loss

 

 

 

(51,579,696

)

 

(51,579,696

)

Balance at December 31, 2012

 

3,474,450,000

 

75,380,209,013

 

1,433,326,353

 

6,535,090,813

 

86,823,076,179

 

Balance at January 1, 2013

 

3,474,450,000

 

75,380,209,013

 

1,433,326,353

 

6,535,090,813

 

86,823,076,179

 

Net loss

 

 

 

 

(17,954,693,331

)

(17,954,693,331

)

Changes in equity-method investees with accumulated comprehensive income

 

 

 

47,296,092

 

 

47,296,092

 

Changes in equity-method investees with accumulated comprehensive loss

 

 

 

(108,756,493

)

 

(108,756,493

)

Balance at December 31, 2013

 

3,474,450,000

 

75,380,209,013

 

1,371,865,952

 

(11,419,602,518

)

68,806,922,447

 

 



 

(5)                    Statements of Cash Flows

 

GRAVITY CO., LTD.

(In Korean Won)

 

 

 

2013

 

2012

 

Cash flows from operating activities

 

 

 

(2,169,269,828

)

 

 

5,575,999,596

 

Net loss

 

(17,954,693,331

)

 

 

(14,298,401,434

)

 

 

Addition of expenses not involving cash outflows

 

12,313,160,868

 

 

 

19,839,438,456

 

 

 

Depreciation

 

478,006,082

 

 

 

490,034,669

 

 

 

Amortization on intangible assets

 

5,988,100,766

 

 

 

5,179,797,645

 

 

 

Bad debt

 

87,960,093

 

 

 

5,901,168

 

 

 

Other bad debt

 

2,087,151,736

 

 

 

2,067,279,776

 

 

 

Loss on foreign currency translation

 

87,021,872

 

 

 

152,637,758

 

 

 

Loss on valuation of equity-method investments

 

2,102,172,982

 

 

 

4,180,478,516

 

 

 

Loss on disposal of securities under equity method

 

 

 

 

333,389,213

 

 

 

Loss on impairment of securities under equity method

 

70,792,850

 

 

 

6,732,616,544

 

 

 

Loss on disposal of long-term available-for-sale securities

 

67,834,609

 

 

 

 

 

 

Loss on impairment of long-term available-for-sale securities

 

 

 

 

399,404,898

 

 

 

Loss on disposal of intangible assets

 

 

 

 

923,838

 

 

 

Loss on impairment of intangible assets

 

1,344,119,878

 

 

 

291,094,431

 

 

 

Loss on disposal of other non-current assets

 

 

 

 

5,880,000

 

 

 

Deduction of revenues not involving cash inflows

 

(21,266,909

)

 

 

(1,748,560,690

)

 

 

Gain on foreign currency translation

 

19,784,229

 

 

 

31,568,664

 

 

 

Gain on valuation of equity-method investments

 

 

 

 

1,709,803,616

 

 

 

Gain on disposal of property and equipment

 

1,482,680

 

 

 

7,188,410

 

 

 

Changes in assets and liabilities arising from operating activities

 

3,493,529,544

 

 

 

1,783,523,264

 

 

 

Decrease in trade accounts receivable

 

780,689,775

 

 

 

2,314,422,600

 

 

 

Decrease (increase) in accounts receivable

 

(58,152,223

)

 

 

188,141,724

 

 

 

Increase in accrued income

 

(16,805,017

)

 

 

(6,293,686

)

 

 

Decrease (increase) in advance payments

 

740,900,327

 

 

 

(580,422,612

)

 

 

Decrease in prepaid expenses

 

164,685,108

 

 

 

137,535,960

 

 

 

Decrease in current portion of deferred tax assets

 

267,000,000

 

 

 

606,000,000

 

 

 

Decrease (increase) in prepaid income taxes

 

268,586,688

 

 

 

(65,698,687

)

 

 

Decrease (increase) in refund of income taxes receivable

 

58,474,024

 

 

 

(28,163,007

)

 

 

Decrease (increase) in long-term prepaid expenses

 

(1,333,340

)

 

 

42,460,171

 

 

 

Decrease (increase) in non-current deferred tax assets

 

3,177,000,000

 

 

 

(107,000,000

)

 

 

Increase in other non-current assets

 

(130,000,000

)

 

 

 

 

 

Decrease in accounts payable

 

(383,466,305

)

 

 

(1,044,782,763

)

 

 

Decrease in withholdings

 

(17,428,481

)

 

 

(61,948,058

)

 

 

Decrease in deferred income

 

(215,300,056

)

 

 

(1,638,872,574

)

 

 

Decrease in income tax payable

 

(98,301,551

)

 

 

(67,417,206

)

 

 

Increase (decrease) in long-term deferred income

 

(1,039,511,252

)

 

 

2,085,297,672

 

 

 

Increase in leasehold deposits received

 

(3,508,153

)

 

 

10,263,730

 

 

 

Cash flows from investing activities

 

 

 

(3,506,569,386

)

 

 

(8,238,332,931

)

Cash inflows from investing activities

 

41,099,813,399

 

 

 

31,132,142,574

 

 

 

Proceeds from disposal of short-term financial instruments

 

39,500,000,000

 

 

 

30,000,000,000

 

 

 

Collection of short-term loans receivable

 

870,694,331

 

 

 

176,249,892

 

 

 

Proceeds from disposal of short-term available-for-sale securities

 

 

 

 

905,280,000

 

 

 

Proceeds from disposal of long-term available-for-sale securities

 

579,226,726

 

 

 

 

 

 

Collection of long-term loans receivable

 

23,055,558

 

 

 

12,777,772

 

 

 

 



 

 

 

2013

 

2012

 

Proceeds from disposal of computer and equipment

 

1,313,487

 

 

 

4,194,510

 

 

 

Proceeds from disposal of furniture and fixtures

 

1,458,037

 

 

 

3,006,400

 

 

 

Decrease in leasehold deposits

 

124,065,260

 

 

 

2,634,000

 

 

 

Proceeds from disposal of other non-current assets

 

 

 

 

28,000,000

 

 

 

Cash outflows from investing activities

 

(44,606,382,785

)

 

 

(39,370,475,505

)

 

 

Increase in short-term financial instruments

 

40,000,000,000

 

 

 

32,500,000,000

 

 

 

Increase in short-term loans receivable

 

800,000,000

 

 

 

 

 

 

Acquisition of securities under equity method

 

800,040,000

 

 

 

 

 

 

Increase in long-term loans receivable

 

858,000,000

 

 

 

2,965,600,000

 

 

 

Acquisition of computer and equipment

 

118,453,272

 

 

 

252,664,561

 

 

 

Acquisition of furniture and fixtures

 

3,277,808

 

 

 

6,686,000

 

 

 

Increase in development costs

 

464,919,300

 

 

 

2,080,916,374

 

 

 

Acquisition of software

 

1,195,901,970

 

 

 

890,657,570

 

 

 

Acquisition of other intangible assets

 

365,790,435

 

 

 

645,681,000

 

 

 

Increase in leasehold deposits

 

 

 

 

270,000

 

 

 

Acquisition of other non-current assets

 

 

 

 

28,000,000

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Cash inflows from financing activities

 

 

 

 

 

 

 

Cash outflows from financing activities

 

 

 

 

 

 

 

Decrease in cash

 

 

 

(5,675,839,214

)

 

 

(2,662,333,335

)

Cash at beginning of year

 

 

 

29,078,231,109

 

 

 

31,740,564,444

 

Cash at end of year

 

 

 

23,402,391,895

 

 

 

 29,078,231,109

 

 



 

(6)   Notes to Non-Consolidated Financial Statements

 

* For the notes to the non-consolidated financial statements, please refer to the condensed English translation version of the Company’s KAS-NPE non-consolidated financial statements as of and for the years ended December 31, 2013 and 2012 and the independent auditor’s report to be submitted to the United States Securities and Exchange Commission on Form 6-K on April 3, 2014.

 



 

3. Consolidated Financial Statements as of and for the fiscal year ended December 31, 2013 and 2012

 

(1)         Consolidated Balance Sheets

 

GRAVITY CO., LTD. and a Subsidiary

(In Korean Won)

 

 

 

2013

 

2012

 

Assets

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

57,024,971,668

 

 

 

65,595,030,136

 

Quick assets

 

 

 

57,024,971,668

 

 

 

65,595,030,136

 

Cash and cash equivalents

 

29,724,747,844

 

 

 

35,467,760,770

 

 

 

Short-term financial instruments

 

18,000,000,000

 

 

 

17,500,000,000

 

 

 

Accounts receivable

 

6,120,828,372

 

 

 

6,974,173,803

 

 

 

Allowance for doubtful accounts

 

(18,290,031

)

 

 

(8,715,590

)

 

 

Short-term loans

 

893,273,661

 

 

 

254,999,874

 

 

 

Allowance for doubtful accounts

 

(860,495,832

)

 

 

(200,000,000

)

 

 

Other accounts receivable

 

716,872,354

 

 

 

518,234,607

 

 

 

Allowance for doubtful accounts

 

(344,434,189

)

 

 

(266,048,537

)

 

 

Accrued income

 

374,399,353

 

 

 

361,904,336

 

 

 

Allowance for doubtful accounts

 

(115,151,736

)

 

 

 

 

 

Advance payments

 

2,022,317,298

 

 

 

3,122,840,851

 

 

 

Allowance for doubtful accounts

 

(1,500,000,000

)

 

 

(1,500,000,000

)

 

 

Prepaid expenses

 

658,091,014

 

 

 

731,290,937

 

 

 

Current deferred tax assets

 

474,018,019

 

 

 

1,425,995,882

 

 

 

Prepaid income taxes

 

699,857,607

 

 

 

996,241,125

 

 

 

Refund of income taxes receivable

 

178,937,934

 

 

 

216,352,078

 

 

 

Non-current Assets

 

 

 

29,947,263,622

 

 

 

40,838,688,584

 

Investment assets

 

 

 

1,671,505,922

 

 

 

4,206,205,165

 

Equity method investments

 

1,657,755,955

 

 

 

2,359,866,019

 

 

 

Long-term available-for-sale securities

 

 

 

 

647,061,335

 

 

 

Long-term loans

 

3,931,904,135

 

 

 

3,805,927,811

 

 

 

Allowance for doubtful accounts

 

(3,918,154,168

)

 

 

(2,606,650,000

)

 

 

Tangible assets

 

 

 

912,194,786

 

 

 

1,313,983,034

 

Computer and equipment

 

6,682,673,741

 

 

 

10,334,944,860

 

 

 

Accumulated depreciation

 

(6,011,839,745

)

 

 

(9,332,515,938

)

 

 

Vehicles

 

28,110,738

 

 

 

28,110,738

 

 

 

Accumulated depreciation

 

(28,110,738

)

 

 

(28,110,738

)

 

 

Furniture and fixtures

 

1,826,251,555

 

 

 

1,737,529,330

 

 

 

Accumulated depreciation

 

(1,584,890,765

)

 

 

(1,427,346,052

)

 

 

Leasehold improvements

 

745,967,319

 

 

 

745,967,319

 

 

 

Accumulated depreciation

 

(745,967,319

)

 

 

(744,596,485

)

 

 

Intangible assets

 

 

 

13,668,811,418

 

 

 

19,659,547,419

 

Capitalized R&D cost, net

 

12,542,369,221

 

 

 

17,387,029,387

 

 

 

Software

 

960,082,758

 

 

 

1,428,794,140

 

 

 

Other intangible assets, net

 

166,359,439

 

 

 

843,723,892

 

 

 

Other non-current assets

 

 

 

13,694,751,496

 

 

 

15,658,952,966

 

Leasehold deposits

 

1,250,166,550

 

 

 

1,374,231,810

 

 

 

Long-term prepaid expenses

 

48,666,664

 

 

 

66,834,074

 

 

 

Non-current deferred tax assets

 

8,095,543,885

 

 

 

9,844,792,685

 

 

 

Other non-current assets

 

4,300,374,397

 

 

 

4,373,094,397

 

 

 

Total assets

 

 

 

86,972,235,290

 

 

 

106,433,718,720

 

Liabilities

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

10,964,637,877

 

 

 

10,146,253,560

 

Accounts payable

 

4,417,582,140

 

 

 

5,350,029,507

 

 

 

Advances received

 

1,921,398,364

 

 

 

1,921,231,604

 

 

 

Withholdings

 

201,798,840

 

 

 

325,093,424

 

 

 

Deferred income

 

4,277,474,796

 

 

 

2,305,213,737

 

 

 

Income tax payable

 

146,383,737

 

 

 

244,685,288

 

 

 

 



 

 

 

2013

 

2012

 

Non-current liabilities

 

 

 

6,847,747,407

 

 

 

9,081,822,942

 

Long-term deferred income

 

6,715,567,037

 

 

 

8,907,577,454

 

 

 

Asset retirement obligation

 

99,000,000

 

 

 

99,000,000

 

 

 

Leasehold deposit received

 

33,180,370

 

 

 

75,245,488

 

 

 

Total liabilities

 

 

 

17,812,385,284

 

 

 

19,228,076,502

 

Equity

 

 

 

 

 

 

 

 

 

Parent interest

 

 

 

68,806,922,447

 

 

 

86,823,076,179

 

Common stock

 

 

 

3,474,450,000

 

 

 

3,474,450,000

 

Common stock

 

3,474,450,000

 

 

 

3,474,450,000

 

 

 

Consolidated capital surplus

 

 

 

75,380,209,013

 

 

 

75,380,209,013

 

Additional paid-in capital

 

73,255,072,627

 

 

 

73,255,072,627

 

 

 

Other capital surplus

 

2,125,136,386

 

 

 

2,125,136,386

 

 

 

Consolidated accumulated other comprehensive income and loss

 

 

 

1,371,865,952

 

 

 

1,433,326,353

 

Accumulated comprehensive income of equity method investees

 

1,532,202,141

 

 

 

1,484,906,049

 

 

 

Accumulated comprehensive loss of equity method investees

 

(160,336,189

)

 

 

(51,579,696

)

 

 

Consolidated retained earnings (consolidated accumulated deficit)

 

 

 

(11,419,602,518

)

 

 

6,535,090,813

 

Unappropriated consolidated retained earnings (undisposed consolidated accumulated deficit)

 

(11,419,602,518

)

 

 

6,535,090,813

 

 

 

Non-controlling interest in consolidated subsidiary

 

 

 

352,927,559

 

 

 

382,566,039

 

Total equity

 

 

 

69,159,850,006

 

 

 

87,205,642,218

 

Total liabilities and equity

 

 

 

86,972,235,290

 

 

 

106,433,718,720

 

 



 

(2)         Consolidated Income Statements

 

GRAVITY CO., LTD. and a Subsidiary

(In Korean Won)

 

 

 

2013

 

2012

 

Revenues

 

 

 

42,437,954,760

 

 

 

51,951,081,797

 

Online games-subscription revenue

 

2,446,493,355

 

 

 

5,437,988,285

 

 

 

Online games-royalties and license fees

 

22,223,575,496

 

 

 

31,211,154,620

 

 

 

Mobile games

 

14,503,971,352

 

 

 

8,261,501,430

 

 

 

Character merchandising, animation and other revenue

 

3,263,914,557

 

 

 

7,040,437,462

 

 

 

Cost of revenues

 

 

 

30,924,395,914

 

 

 

28,671,332,710

 

Cost of revenues-games

 

30,924,395,914

 

 

 

28,671,332,710

 

 

 

Gross profit

 

 

 

11,513,558,846

 

 

 

23,279,749,087

 

Selling and administrative expenses

 

 

 

20,241,905,388

 

 

 

22,552,040,578

 

Salaries

 

5,704,531,983

 

 

 

6,532,986,229

 

 

 

Severance benefits

 

441,574,550

 

 

 

487,148,730

 

 

 

Employee benefits

 

1,009,974,401

 

 

 

1,089,617,936

 

 

 

Transportation

 

193,168,546