Webzen Inc. Non-consolidated Balance Sheet SEOUL, South Korea, Dec.
21 /Xinhua-PRNewswire-FirstCall/ -- Webzen Inc. Non-consolidated
Balance Sheet (* The FY 2006 Interim financials have been prepared
on an unaudited basis, and may be subject to change during the
independent auditing process * The FY 2006 Interim financial
statements are non-consolidated, and have been prepared under the
Korean General Accepted Accounting Principles) As of 31-Dec-05
31-Mar-06 30-Jun-06 KRW KRW KRW Assets I. Current Assets
134,032,699,865 123,250,603,960 113,313,978,464 (1) Quick Assets
134,032,699,865 123,250,603,960 113,313,978,464 Cash and cash
equivalents 118,107,261,444 105,363,808,336 77,604,345,858
Short-term financial instruments 2,270,052,194 1,309,060,525
21,949,376,458 Accounts receivable, net. 4,364,944,214
4,466,009,611 4,720,401,212 Short-term loans 1,188,773,620
1,071,528,740 1,013,968,080 Accrued income receivable 123,611,466
150,949,677 86,659,730 Non-trade receivable 48,180,328 743,888,984
20,920,717 Marketable securities 4,812,410,603 6,447,830,088
2,372,063,336 Advance payments 236,773,361 1,068,608,839
1,223,618,070 Prepaid income taxes 706,861,305 142,483,720
314,947,780 Value added taxes -- -- 329,559,206 Prepaid expenses
270,442,755 514,203,679 526,109,706 Other current assets -- -- --
Deferred income tax debits 1,903,388,575 1,972,231,761
3,152,008,311 (2) Inventory -- -- -- 1. Goods -- -- -- II. Fixed
Assets 57,645,050,070 61,994,079,523 65,334,557,328 (1) Investments
34,296,263,543 38,407,472,371 40,891,582,266 Long-term financial
instruments -- -- -- Long-term loans 1,059,131,500 1,034,250,800
2,399,925,490 Investments in securities according to equity method
6,046,614,750 4,856,720,305 3,190,383,925 Available-for- sale
securities 535,665,682 535,665,682 535,665,682 Long-term prepaid
expenses 7,247,951,381 10,873,578,930 12,311,572,050 Guarantee
deposits 17,523,707,705 17,613,467,705 17,703,467,705 Long-term
Deferred Income Tax debits 1,883,192,525 3,493,788,949
4,750,567,414 (2) PP&E 11,806,355,288 12,159,980,245
12,572,286,502 Land 2,611,544,500 2,611,544,500 2,611,544,500
Buildings and auxiliary facilities 5,756,150,904 5,717,753,907
5,679,356,910 Equipment 3,017,003,089 3,331,438,040 3,721,058,846
Facilities 421,656,795 499,243,798 560,326,246 (3) Intangible
assets 11,542,431,239 11,426,626,907 11,870,688,560 Organization
expenses -- -- -- Software 4,323,065,415 4,172,336,319
3,961,803,910 Goodwill -- -- -- Capitalized R&D costs
7,219,365,824 7,254,290,588 7,908,884,650 Other intangible assets
-- -- -- Total assets 191,677,749,935 185,244,683,483
178,648,535,792 I. Current Liabilities 8,610,099,605 8,909,970,200
11,700,824,161 Accounts Payable 2,037,638,581 2,025,869,895
4,898,973,470 Accrued expenses 849,909,423 813,260,349
1,348,127,915 Accrued income taxes -- -- -- Withholdings
242,146,687 472,464,095 248,276,905 Deposits received 871,875,000
871,875,000 871,875,000 Withhold Value added tax 1,507,437
8,571,666 -- Advances received 95,018,396 106,250,696 100,953,176
Unearned revenues 4,172,407,865 4,167,136,621 3,776,344,528
Provision for sales promotion 251,796,216 258,783,068 253,233,996
Provision for other estimated liabilities 87,800,000 185,758,810
203,039,171 II. Fixed Liabilities 4,115,591,495 4,421,751,813
4,840,683,043 Accrued severance benefits 3,912,843,444
4,255,331,707 4,758,488,528 Long-term unearned income 192,748,051
156,420,106 72,194,515 Long Term Deferred Income Tax Credits -- --
-- Long-term accounts payable 10,000,000 10,000,000 10,000,000
Total Liabilities 12,725,691,100 13,331,722,013 16,541,507,204 I.
Capital Stock 6,485,000,000 6,485,000,000 6,485,500,000 Common
stock 6,485,000,000 6,485,000,000 6,485,500,000 II. Capital Surplus
135,405,721,645 135,436,087,227 135,436,087,227 Additional paid-in
capital 135,405,721,645 135,436,087,227 135,436,087,227 III.
Retained Earnings 54,045,173,788 47,959,620,351 39,161,687,531
Legal appropriated retained earnings 322,500,000 322,500,000
322,500,000 Appropriated- Reserve for business rationalization
117,904,363 117,904,363 117,904,363 Appropriated- Reserve for
future investments 442,699,142 442,699,142 442,699,142
Unappropriated retained earnings to be carried forward
53,162,070,283 47,076,516,846 38,278,584,026 IV. Capital
adjustments (16,983,836,598) (17,968,246,108) (18,976,246,170)
Capital Adjustment- Unrealized gains on AFS 287,070,348 216,635,418
130,673,638 Capital Adjustment- Unrealized losses on AFS --
(2,415,660) -- Treasury Stock (16,865,799,640) (17,634,086,540)
(18,307,830,040) Stock option 474,087,134 513,924,979 639,786,799
Loss on investments in equity method securities (879,194,440)
(1,049,630,205) (1,426,202,467) Gains on sale of treasury stock --
(12,674,100) (12,674,100) Total shareholders' equity
178,952,058,835 171,912,961,470 162,107,028,588 Total liabilities
and SE 191,677,749,935 185,244,683,483 178,648,535,792 Webzen Inc.
Non-consolidated Income Statement (* The FY 2006 Interim financials
have been prepared on an unaudited basis, and may be subject to
change during the independent auditing process * The FY 2006
Interim financial statements are non-consolidated, and have been
prepared under the Korean General Accepted Accounting Principles)
Six months Three months ended ended 31-Mar-06 30-Jun-06 30-Jun-06
KRW KRW KRW I. Sales 5,182,005,433 6,367,970,478 11,549,975,911
Online game 4,353,300,999 4,591,389,994 8,944,690,993 Royalty
828,704,434 1,776,580,484 2,605,284,918 Merchandise -- -- -- II.
Cost of goods sold 2,539,453,906 2,835,791,830 5,375,245,736 Online
game 2,539,453,906 2,835,791,830 5,375,245,736 Merchandise -- -- --
III. Gross profit 2,642,551,527 3,532,178,648 6,174,730,175 IV.
Selling, general and administrative 9,009,645,183 14,471,086,443
23,480,731,626 Salaries expenses 1,974,607,644 1,886,818,021
3,861,425,665 Severance benefits 167,519,555 220,113,075
387,632,630 Welfare benefits 220,703,863 256,325,586 477,029,449
Travel expenses 154,366,215 177,666,868 332,033,083 Entertainment
expenses 77,760,371 131,271,921 209,032,292 Communication expense
74,480,368 40,579,949 115,060,317 Utility expenses 28,194,651
19,557,027 47,751,678 Taxes and dues 101,232,661 81,290,869
182,523,530 Depreciation 129,223,788 148,866,959 278,090,747 Rental
expense 72,550,233 59,500,542 132,050,775 Repairs expenses --
3,900,000 3,900,000 Insurance premium 47,005,520 51,611,780
98,617,300 Vehicle maintenance expenses 18,958,856 16,379,090
35,337,946 Ordinary research and development expenses 3,904,121,855
4,490,717,823 8,394,839,678 Freight expenses 9,228,409 4,877,214
14,105,623 Training expenses 32,930,007 23,040,054 55,970,061
Publication expenses 7,960,141 9,388,631 17,348,772 Office supplies
expenses 3,316,768 1,839,568 5,156,336 Supplies expenses 21,983,163
22,122,625 44,105,788 Commissions paid 863,343,197 982,212,908
1,845,556,105 Advertising expenses 772,279,783 5,285,174,867
6,057,454,650 Bad debt expenses 45,168,867 240,353,578 285,522,443
Sales commissions 194,350,392 187,348,165 381,698,557 Amortization
cost of intangible assets 41,192,998 38,878,256 80,071,254 Sample
expenses -- -- -- Compensation expenses assoc. W/ stock options
47,165,878 91,251,069 138,416,947 V. Operating profit
(6,367,093,656) (10,938,907,795) (17,306,001,451) VI. Non-operating
income 1,101,782,478 1,432,002,269 2,320,411,437 Interest income
1,011,347,645 1,033,311,304 2,044,658,949 Gains on foreign currency
transaction 747,582 9,874,585 10,622,167 Income from commission
19,500,000 17,000,000 36,500,000 Gains on foreign currency
translation 619,675 42,956,912 4,458,781 Gains on valuation of
forward currency contracts -- -- -- Gains on disposition of PPE
276,648 298,000 574,648 Equity income on investments -- 174,255,504
-- Gains on available for sale securities 68,355,679 142,760,802
211,116,481 Gains on forward currency transactions -- -- --
Reversal of Compensation Exp. associated with SO -- -- --
Miscellaneous income 935,249 11,545,162 12,480,411 VII.
Non-operating expenses 2,107,787,301 1,884,546,566 3,778,960,557
Losses on foreign currency transaction 173,086,868 74,747,986
247,834,854 Donations -- -- -- Losses on foreign currency
translation 85,117,086 29,556,032 75,555,312 Loss on disposal of
tangible assets -- 7,284,087 7,284,087 Losses on forward currency
transactions -- -- -- Losses on disposal of available-for-sale
securities -- 390,000 390,000 Losses on valuation of intangible
assets -- -- -- Miscellaneous losses 36,012,275 4,563,052
40,575,327 Losses on valuation of forward currency contracts -- --
-- Additional Payment of Income Taxes -- -- -- Losses on
disposition of PPE -- -- -- Equity losses on investments
1,813,571,072 1,768,005,409 3,407,320,977 VIII. Profit before
extraordinary items (7,373,098,479)
(11,391,452,092)(18,764,550,571) IX. Extraordinary gains -- -- --
X. Extraordinary losses -- -- -- XI. Income before income tax
expenses (7,373,098,479) (11,391,452,092)(18,764,550,571) XII.
Income tax expenses (1,515,812,111) (2,593,519,272) (4,109,331,383)
XIII. Net income (loss) (5,857,286,368)
(8,797,932,820)(14,655,219,188) 2006 Second Quarter Results Summary
Revenues Revenue for second quarter ended June 30, 2006 was KRW 6.4
billion, representing a 23% increase from first quarter of 2006.
This increase was primarily due to the stabilization of our game MU
in Korea and the increase of overseas royalty revenue related to
the commercialization of MU in Vietnam and US. Overseas revenue
increased more than the domestic revenue. Domestic revenue
increased 6% to 4.6 billion KRW. And this resulted from the
stabilization of MU since 4th quarter of 2005. Overseas revenue
increased 115% to 1.8 billion KRW, due to the revenue from the
commercialization of MU in Vietnam and the US. Other revenue which
is related with mobile revenue decreased 36% from 1st quarter.
Currently, domestic and overseas revenue consist of 72% and 28%
respectively of the total revenue. Among the domestic revenue,
individual subscription revenue increased 8% to 3.4 billion KRW,
and internet cafe revenue was 1.1billion KRW, which was similar to
last quarter. Overseas revenue increased 115% QoQ. Regionally,
Philippines increased by a large percentage, recording 120 million
KRW. China and Japan showed a 4% decrease and recorded 59 million
KRW and 487 million KRW respectively. Revenue from Vietnam and the
US was generated from the commercial launch of MU during April. We
recognized 345 million and 511 million KRW respectively. Overseas
revenue has shown a sign of stabilization and the commercial launch
of MU in Vietnam and US are expected to contribute to the
stabilization. Operating Expenses Total operating expenses
increased 50% to KRW 17.3 billion due to the E3 game show expense
and SUN open beta marketing expense. Labor costs was KRW 6.7
billion which increased 3.7% from previous quarter. Labor costs
account for 38% of total operating costs. Depreciation increased
30% to KRW 755 million related to the addition of new servers for
the new service of games. Commission paid increased 77% from
previous quarter due to the increase of agency business fee and
outsourcing fee, and was KRW 1.9 billion. Marketing expenses
increased 584% to 5.2 billion KRW. The increase was due to the E3
Game Expo and marketing related to our new game SUN. Sales
Commission decreased 3% due to the decrease of internet cafe
revenue to 187 million KRW. Other costs were KRW 2.5 billion and
was similar to previous quarter. We recognized a negative KRW 453
million non-operating income during 2nd quarter. Interest income
increased 2%.As of end of 2nd quarter, cash and cash equivalents,
including marketable securities was KRW 101.9 billion. KRW 9.9
billion decreased from previous quarter. (end of Q1: KRW 111.8
billion) We experienced a KRW 1.6 billion loss in equity method. We
recognized an equity gain in Webzen China due to the profit related
to a service contract for Kingdom of Warriors. Webzen America's
equity loss increased due to the adjustment (write-off) of deferred
income tax. Private Securities Litigation Reform Act Safe Harbor
Statement Except for the historical and present factual information
contained herein, the matters set forth in this press release,
including statements as to the expected benefits of the
commercialization, and other statements identified by words such as
"expects," "projects," "plans," and similar expressions are
forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
These forward- looking statements are subject to risks and
uncertainties that may cause actual results to differ materially,
including the possibility that the anticipated benefits from the
commercial launch may be fully realized, the impact of competition
and other risk factors relating to our industry as detailed from
time to time in each of Webzen Inc.'s reports filed with the SEC.
Webzen Inc. disclaims any responsibility to update these
forward-looking statements. Contacts: Sung Ho Lee Webzen Inc.
Investor Relations Tel: +82-2-3498-6818 Daelim Acrotel Building,
6th Floor 467-6 Dogok-dong, Kangnam-Ku, Seoul, Korea 135-971
DATASOURCE: Webzen Inc. CONTACT: Sung Ho Lee of Webzen Inc.,
+82-2-3498-6818
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