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Shanda Games Reports Fourth Quarter and Full Year 2012 Unaudited Results



   Shanda Games Reports Fourth Quarter and Full Year 2012 Unaudited Results

PR Newswire

HONG KONG, Feb. 25, 2013

HONG KONG, Feb. 25, 2013 /PRNewswire/ -- Shanda Games Limited ("Shanda Games"
or the "Company") (NASDAQ: GAME), a leading online game developer, operator
and publisher in China, today announced its unaudited consolidated financial
results for the fourth quarter and full year ended December 31, 2012.

Q4 Non-GAAP Financial Highlights

  o Net revenues were RMB1,081.7 million (US$172.1 million), down 20.2% YoY
    and up 0.1% QoQ.
  o Gross profit was RMB728.4 million (US$115.9 million), down 15.7% YoY and
    up 3.3% QoQ.  Gross margin was 67.3%, up from 63.7% in Q4 2011 and 65.3%
    in Q3 2012.
  o Operating income was RMB350.8 million (US$55.8 million), down 20.8% YoY
    and up 8.2% QoQ.  Operating margin was 32.4%, compared with 32.7% in Q4
    2011 and 30.0% in Q3 2012.
  o Net income attributable to the Company's shareholders was RMB249.4 million
    (US$39.7 million), down 25.7% YoY and 14.0% QoQ. 
  o Earnings per diluted American Depositary Share ("ADS") were RMB0.92
    (US$0.15), compared with RMB1.20 in Q4 2011 and RMB1.04 in Q3 2012.

Q4 GAAP Financial Highlights

  o Net revenues were RMB1,081.7 million (US$172.1 million), down 20.2% YoY
    and up 0.1% QoQ.

       o Online game revenues generated in China were RMB976.2 million
         (US$155.3 million), down 22.6% YoY and 3.8% QoQ.
       o Other revenues were RMB105.5 million (US$16.8 million), up 12.2% YoY
         and 61.3% QoQ.

  o Gross profit was RMB707.5 million (US$112.6 million), down 15.2% YoY and
    up 3.4% QoQ.  Gross margin was 65.4%, up from 61.5% in Q4 2011 and 63.4%
    in Q3 2012.
  o Operating income was RMB306.9 million (US$48.9 million), down 23.4% YoY
    and up 9.4% QoQ.  Operating margin was 28.4%, compared with 29.6% in Q4
    2011 and 26.0% in Q3 2012.
  o Net income attributable to the Company's shareholders was RMB214.3 million
    (US$34.1 million), down 29.6% YoY and 15.6% QoQ. 
  o Earnings per diluted ADS were RMB0.78 (US$0.12), compared with RMB1.08 in
    Q4 2011 and RMB0.92 in Q3 2012.

Q4 Operating Highlights

  o Average Monthly Active Users (average MAUs) for all games operated in
    China increased 1.2% QoQ to 18.6 million.
  o Average Monthly Paying Users (average MPUs) for all games operated in
    China decreased 4.9% QoQ to 3.4 million as the Company continued to
    introduce a number of free functions and game play to users, resulting in
    a decline in low-spending paying accounts in Q4 2012.
  o Monthly Average Revenue per Paying User (ARPU) for all games operated in
    China increased 1.1% QoQ to RMB96.8.  The increase was primarily due to a
    decline in low-spending paying accounts during the quarter caused by
    reasons mentioned above.

Full Year 2012 Non-GAAP Financial Highlights

  o Net revenues decreased 11.4% YoY to RMB4,682.1 million (US$744.9 million).
  o Gross profit decreased 8.5% YoY to RMB3,060.0 million (US$486.8 million).
  o Operating income decreased 9.8% YoY to RMB1,558.7 (US$247.9 million).
  o Net income attributable to the Company's shareholders decreased 14.8% YoY
    to RMB1,258.0 million (US$200.1 million).
  o Earnings per diluted ADS were RMB4.54 (US$0.72), compared with RMB5.20 in
    2011.

Full Year 2012 GAAP Financial Highlights

  o Net revenues decreased 11.4% YoY to RMB4,682.1 million (US$744.9 million).

       o Revenues generated from online games in China decreased 13.2% YoY to
         RMB4,320.3 million (US$687.3 million).
       o Other revenues increased 18.1% YoY to RMB361.8 million (US$57.6
         million).

  o Gross profit decreased 7.9% YoY to RMB2,970.7 million (US$472.6 million).
  o Operating income decreased 6.5% YoY to RMB1,378.2 million (US$219.2
    million).
  o Net income attributable to the Company's shareholders decreased 12.0% YoY
    to RMB1,113.4 million (US$177.2 million).
  o Earnings per diluted ADS were RMB4.02 (US$0.64), compared with RMB4.46 in
    2011.

"Our fourth quarter results were in-line with our expectations as we continued
to strengthen our franchises, expand our game portfolio, and offer new content
through various platforms and distribution channels," commented Mr. Xiangdong
Zhang, Chief Executive Officer of Shanda Games. "While revenues remained flat
overall, we continued to gain traction overseas.  Other revenues rose 61.3%
quarter-over-quarter, driven in part by the solid performance of 'Dragon Nest'
in overseas markets and mobile game 'Million Arthur' in Korea."

"Our upcoming title, 'Rift,' has ranked among the top five most anticipated
games on several major Chinese game portals, which reinforces our belief in
the game's future potential once it starts the open-beta test next month.  In
addition, 'AION 4.0' expansion pack, 'World Zero,' 'Final Fantasy XIV' and
'Dungeon Striker' are all on track and progressing through the various stages
of development.  We look forward to the launch of these games as we believe
they will help us expand our user base and diversify revenue streams."

"We have begun 2013 on sound footing with a strong game pipeline, solid
revenue streams from new platforms and markets, and successful launches from
our mobile game segment.  To further build our brand equity and strengthen our
core competence, we intend to leverage these opportunities by aligning them
with our operational expertise, distribution channels and financial strength. 
We believe this will help to improve our financial and operational performance
over the long term."

Non-GAAP Quarterly Results
(in millions, except for per share data)
                             Q4 2011    Q3 2012    Q4 2012
                             (RMB)      (RMB)      (RMB)      (US$)     QoQ
Net Revenues                 1,356.0    1,080.5    1,081.7    172.1     0.1%
Gross Profit                 863.9      705.4      728.4      115.9     3.3%
Operating Income             443.0      324.2      350.8      55.8      8.2%
Government Financial         97.7       69.5       49.8       7.9       -28.3%
Incentives
Net Income Attributable to
the                          335.5      289.9      249.4      39.7      -14.0%
Company's Shareholders
Earnings Per Diluted ADS     1.20       1.04       0.92       0.15
Non-GAAP results exclude share-based compensation, amortization of
acquisition-related intangible assets and the related income tax effects.
GAAP Quarterly Results
(in millions, except for per share data)
                             Q4 2011    Q3 2012    Q4 2012
                             (RMB)      (RMB)      (RMB)      (US$)     QoQ
Net Revenues                 1,356.0    1,080.5    1,081.7    172.1     0.1%
Gross Profit                 834.3      684.5      707.5      112.6     3.4%
Operating Income             400.9      280.6      306.9      48.9      9.4%
Government Financial         97.7       69.5       49.8       7.9       -28.3%
Incentives
Net Income Attributable to
the                          304.3      253.9      214.3      34.1      -15.6%
Company's Shareholders
Earnings Per Diluted ADS     1.08       0.92       0.78       0.12
Non-GAAP Annual Results
(in millions, except for per share data)
                             2011       2012
                             (RMB)      (RMB)      (US$)      YoY
Net Revenues                 5,281.9    4,682.1    744.9      -11.4%
Gross Profit                 3,344.0    3,060.0    486.8      -8.5%
Operating Income             1,728.9    1,558.7    247.9      -9.8%
Government Financial         185.0      146.3      23.3       -20.9%
Incentives
Net Income Attributable to
the                          1,476.8    1,258.0    200.1      -14.8%
Company's Shareholders
Earnings Per Diluted ADS     5.20       4.54       0.72
Non-GAAP results exclude share-based compensation, amortization of
acquisition-related intangible assets and the related income tax
effects.
GAAP Annual Results
(in millions, except for per share data)
                             2011       2012
                             (RMB)      (RMB)      (US$)      YoY
Net Revenues                 5,281.9    4,682.1    744.9      -11.4%
Gross Profit                 3,225.9    2,970.7    472.6      -7.9%
Operating Income             1,474.0    1,378.2    219.2      -6.5%
Government Financial         185.0      146.3      23.3       -20.9%
Incentives
Net Income Attributable to   1,264.9    1,113.4    177.2      -12.0%
the Company's Shareholders
Earnings Per Diluted ADS     4.46       4.02       0.64

Fourth quarter 2012 Unaudited Financial Results (GAAP)

Net Revenues.  In the fourth quarter of 2012, Shanda Games reported net
revenues of RMB1,081.7 million (US$172.1 million), compared with RMB1,356.0
million in the fourth quarter of 2011 and RMB1,080.5 million in the third
quarter of 2012.  Online game revenues generated in China and other revenues
accounted for 90.2% and 9.8% of total net revenues, respectively. 

Net revenues from online games operated in China declined 22.6% year-over-year
and 3.8% quarter-over-quarter to RMB976.2 million (US$155.3 million) in the
fourth quarter of 2012.  The quarter-over-quarter decrease was primarily due
to weaker seasonality related to light MMORPGs and advanced casual games as
the fourth quarter has fewer school holidays than the third quarter.

Other revenues, which primarily represent net advertising revenues and net
overseas revenues generated from game licensing and game operations, increased
12.2% year-over-year and 61.3% quarter-over-quarter to RMB105.5 million
(US$16.8 million) in the fourth quarter of 2012.  The quarter-over-quarter
increase in other revenues was primarily due to an increase in overseas
operating revenues from Dragon Nest and mobile games, as well as an increase
in revenues related to cross-marketing activities in China during the fourth
quarter of 2012.

Cost of Revenues.  Cost of revenues for the fourth quarter of 2012 was
RMB374.2 million (US$59.5 million), a decrease of 28.3% from RMB521.7 million
in the fourth quarter of 2011 and 5.5% from RMB396.0 million in the third
quarter of 2012.  The quarter-over-quarter decrease was mainly attributable to
a decrease in royalty fees paid to third parties as a result of lower revenues
from licensed games and a decrease in platform fees, which are calculated
based upon the Company's revenues, paid to Shanda Online.  Cost of revenues
represented 34.6% of net revenues, compared with 38.5% in the fourth quarter
of 2011 and 36.6% in the third quarter of 2012.  Cost of revenues as a
percentage of net revenues decreased quarter-over-quarter, mainly due to an
increase in revenues generated from in-house games as a percentage of net
revenues.

Gross Profit. Gross profit for the fourth quarter of 2012 was RMB707.5 million
(US$112.6 million), representing a decrease of 15.2% from RMB834.3 million in
the fourth quarter of 2011 and an increase of 3.4% from RMB684.5 million in
the third quarter of 2012.  Gross margin was 65.4% in the fourth quarter of
2012, up from 61.5% in the fourth quarter of 2011 and 63.4% in the third
quarter of 2012. 

Operating Expenses. Total operating expenses for the fourth quarter of 2012
were RMB400.6 million (US$63.7 million), representing a decrease of 7.6% from
RMB433.4 million in the fourth quarter of 2011 and 0.8% from RMB403.9 million
in the third quarter of 2012.  Operating expenses represented 37.0% of net
revenues, compared with 32.0% in the fourth quarter of 2011 and 37.4% in the
third quarter of 2012.

Product development expenses decreased 9.6% year-over-year and increased 6.6%
quarter-over-quarter to RMB172.1 million (US$27.3 million) in the fourth
quarter of 2012.  The sequential increase in product development expenses was
primarily due to an increase in bonuses for research and development personnel
during the fourth quarter of 2012 in order to incentivize these teams. 
Product development expenses represented 15.9% of net revenues, compared with
14.0% in the fourth quarter of 2011 and 14.9% in the third quarter of 2012. 

Sales and marketing expenses increased 10.7% year-over-year and 3.3%
quarter-over-quarter to RMB157.5 million (US$25.1 million) in the fourth
quarter of 2012.  The sequential increase was primarily due to an increase in
marketing and promotional expenses for upcoming new games and expansion packs,
partially offset by a decrease in service fees for distributing and marketing
prepaid cards during the fourth quarter.  Sales and marketing expenses
represented 14.6% of net revenues, compared with 10.5% in the fourth quarter
of 2011 and 14.1% in the third quarter of 2012. 

General and administrative expenses decreased 29.6% year-over-year and 21.0%
quarter-over-quarter to RMB71.0 million (US$11.3 million) in the fourth
quarter of 2012.  The sequential decrease in general and administrative
expenses was primarily due to the recognition of an impairment charge last
quarter that related to certain assets as the Company initiated a series of
restructuring measures and streamlined its previous investments.  General and
administrative expenses accounted for 6.6% of net revenues, compared with 7.4%
in the fourth quarter of 2011 and 8.3% in the third quarter of 2012.

Share-based compensation expenses were RMB12.2 million (US$1.9 million) in the
fourth quarter of 2012, compared with RMB0.8 million in the fourth quarter of
2011 and RMB11.5 million in the third quarter of 2012. 

Operating Income.  Operating income for the fourth quarter of 2012 was
RMB306.9 million (US$48.9 million), a decrease of 23.4% from RMB400.9 million
in the fourth quarter of 2011 and an increase of 9.4% from RMB280.6 million in
the third quarter of 2012.  Operating margin was 28.4% in the fourth quarter
of 2012, compared with 29.6% in the fourth quarter of 2011 and 26.0% in the
third quarter of 2012. 

Government Financial Incentives.  Government financial incentives totaled
RMB49.8 million (US$7.9 million) in the fourth quarter of 2012, compared with
RMB97.7 million in the fourth quarter of 2011 and RMB69.5 million in the third
quarter of 2012.  The Company's receipt of government financial incentives is
subject to time lags and inconsistent government administrative practices
relating to the timing of payments.

Income Tax Expense.  Income tax expense for the fourth quarter of 2012 was
RMB122.0 million (US$19.4 million), compared with RMB226.3 million in the
fourth quarter of 2011 and RMB92.1 million in the third quarter of 2012.  The
year-over-year decrease in tax expense was primarily due to a RMB134.0 million
accrued withholding tax associated with dividends distribution from the
Company's subsidiaries to their holding companies overseas during the fourth
quarter of 2011.  The quarter-over-quarter increase in tax expense was
primarily due to a one-time income tax expense of RMB36.3 million (US$5.8
million) on taxable capital gains as a result of the sale of 20.5% equity
interest in Eyedentity Games to Actoz during the fourth quarter of 2012. 
Actoz is a Korean-based online game publisher in which Shanda Games owns a
majority stake.

Net Income Attributable to the Company's Shareholders.  Net income for the
fourth quarter of 2012 was RMB214.3 million (US$34.1 million), a decrease of
29.6% from RMB304.3 million in the fourth quarter of 2011 and 15.6% from
RMB253.9 million in the third quarter of 2012.  Earnings per diluted ADS in
the fourth quarter of 2012 were RMB0.78 (US$0.12), compared with RMB1.08 in
the fourth quarter of 2011 and RMB0.92 in the third quarter of 2012.

Net Cash.  In the fourth quarter of 2012 the Company generated RMB305.6
million (US$48.6 million) in cash flows from operating activities.  The
Company's cash and cash equivalent, short-term investments, restricted cash
and time deposits, net of loans and dividend payable, increased from
RMB3,072.6 million as of September 30, 2012 to RMB3,267.8 million (US$519.9
million) as of December 31, 2012.

Full Year 2012 Unaudited Financial Results

Net Revenues.  Net revenues for the full year 2012 totaled RMB4,682.1 million
(US$744.9 million), compared with RMB5,281.9 million for the full year 2011.

Gross Profit.  Gross profit for the full year 2012 was RMB2,970.7 million
(US$472.6 million), compared with RMB3,225.9 million for the full year 2011. 
Gross margin increased from 61.1% in 2011 to 63.4% in 2012.

Operating Income.  Operating income for the full year 2012 was RMB1,378.2
million (US$219.2 million), compared with RMB1,474.0 million for the full year
2011.  Operating margin increased from 27.9% in 2011 to 29.4% in 2012. 

Non-GAAP Operating Income.  Non-GAAP operating income for the full year 2012
was RMB1,558.7 million (US$247.9 million), compared with RMB1,728.9 million
for the full year 2011.  Non-GAAP operating margin increased from 32.7% in
2011 to 33.3% in 2012.

Net Income Attributable to the Company's Shareholders.  Net income for the
full year 2012 was RMB1,113.4 million (US$177.2 million), compared with
RMB1,264.9 million in 2011.  Net margin decreased slightly from 23.9% in 2011
to 23.8% in 2012.  Earnings per diluted ADS were RMB4.02 (US$0.64), compared
with RMB4.46 in 2011. 

Non-GAAP Net Income Attributable to the Company's Shareholders.  Non-GAAP net
income for the full year 2012 was RMB1,258.0 million (US$200.1 million),
compared with RMB1,476.8 million in 2011.  Non-GAAP net margin was 26.9%,
compared with 28.0% in 2011.  Non-GAAP earnings per diluted ADS were RMB4.54
(US$0.72), compared with RMB5.20 in 2011.

Net Cash.  In the full year of 2012 the Company generated RMB1,478.3 million
(US$235.2 million) in cash flows from operating activities.  The Company's
cash and cash equivalent, short-term investments, restricted cash and time
deposits, net of loans and dividend payable, increased from RMB2,160.1 million
as of December 31, 2011 to RMB3,267.8 million (US$519.9 million) as of
December 31, 2012.

Recent Business Highlights

  o December 20, 2012 - Shanda Games' Korean subsidiary Actoz (KOSDAQ:
    052790.KQ) launched "Million Arthur," an online mobile card game developed
    by Square Enix, in Korea.  The game has ranked as the top grossing app
    among all categories in Apple's Korean App Store for over 42 consecutive
    days since its official launch and currently remains one of the top 3
    grossing apps.
  o December 26, 2012 - Shanda Games received a total of nine industry awards
    at the 2012 Golden Plume Awards Ceremony, including:

       o Top Ten Most Anticipated Online Game: RIFT
       o Top Ten Most Popular Online Games: Woool 2, Age of Wushu (jointly
         operated with Snail Game)
       o Best Domestic Online Games: World Zero, Age of Wushu (jointly
         operated with Snail Game)
       o Best Foreign Online Game: Dragon Nest
       o Top Ten Most Popular Web Game: Woool of Paladin
       o Best Online Mobile Game: Woool of Paladin (Mobile Version)
       o Best 3D Online Game: Age of Wushu (jointly operated with Snail Game)

  o January 10, 2013 - Neowiz Games, a leading game publisher in Korea, began
    open-beta testing of Shanda Games' in-house developed MMORPG "Legend of
    Immortals" in Korea.
  o January 21, 2013 - Shanda Games began the third round of closed-beta
    testing of "RIFT," a 3D MMORPG licensed from Trion World, in Mainland
    China. 
  o February 7, 2013 - Eyedentity Games signed a publishing agreement for
    "Dungeon Striker" with GameFlier, a leading game publisher in Taiwan. 
    Pursuant to the agreement, GameFlier will be the exclusive operator of
    "Dungeon Striker" in Taiwan, Hong Kong and Macau.

Share Repurchase

In June 2012, the Company's Board of Directors approved a share repurchase
program under which the Company is authorized to repurchase up to $100 million
worth of its outstanding ADSs during the next twelve (12) months.  As of
February 22, 2013, the Company has repurchased approximately 11.4 million ADSs
for an aggregate consideration of US$41.5 million.

Conference Call and Webcast Notice

Shanda Games will host a conference call at 9:00 a.m. on February 26, 2013
Beijing/Hong Kong Time (8:00 p.m. on February 25, 2013 Eastern Time), to
discuss its fourth quarter results. 

Dial-in details for the live conference call are as follows:

    U.S. Toll Free:  1866-519-4004
    Mainland China Toll Free (for mobile users):  400-620-8038
    Mainland China Toll Free (for fixed line users):  800-819-0121
    Hong Kong Toll Free:  800-930-346
    U.K. Toll Free:  0808-234-6646
    International Toll:  +65-6723-9381
    Passcode:  12754581

A replay of the conference call will be available from 12:00 pm (Beijing/Hong
Kong Time) on February 26, 2013 for 7 days.

    U.S. Toll Free:  1855-452-5696 
    International Toll:  +61-2-8199-0299
    Passcode:  12754581

A live and archived webcast of the conference call will also be available on
Shanda Games' investor relations website at http://ir.shandagames.com/.

Currency Convenience Translation

The United States dollar (US$) amounts disclosed in this press release are
presented solely for the convenience of the reader.  The conversion of
Renminbi (RMB) into U.S. dollars is based on RMB6.2855 to US$1.00 as published
by the People's Bank of China on December 31, 2012.  The Company makes no
representation that the Renminbi or US dollar amounts referred to in this
release could have been, or could be, converted into US dollars at such rate
or at all.  The percentages stated are calculated based on the RMB amounts.

Note to the Financial Information

The unaudited financial information disclosed above is preliminary and subject
to adjustments.  Adjustments to these preliminary financial statements may be
identified when audit work is performed for the year-end audit, which could
result in significant differences from this preliminary unaudited financial
information.

Non-GAAP Financial Measures

In addition to disclosing financial results in accordance with United States
(U.S.) generally accepted accounting principles (GAAP), this earnings release
contains non-GAAP financial numbers including non-GAAP gross profit, non-GAAP
operating income, non-GAAP net income attributable to the Company's
shareholders and non-GAAP per share data.

The non-GAAP financial measures disclosed by the Company exclude share-based
compensation, amortization of acquisition-related intangible assets and the
related income tax effects.  These non-GAAP measures are not in accordance
with, or an alternative for, measures prepared in accordance with generally
accepted accounting principles and may be different from non-GAAP measures
used by other companies.  In addition, these non-GAAP measures are not based
on any comprehensive set of accounting rules or principles.  Shanda Games
believes that non-GAAP measures have limitations in that they do not reflect
all of the amounts associated with Shanda Games' results of operations as
determined in accordance with GAAP and that these measures should only be used
to evaluate the Company's results of operations in conjunction with the
corresponding GAAP measures.

Shanda Games believes that the presentation of non-GAAP financial measures
when shown in conjunction with the corresponding GAAP measures provides useful
information to investors and management regarding financial and business
trends relating to its financial condition and results of operations.  Shanda
Games' management also believes that the non-GAAP financial measures are
appropriate for period to period comparisons in the Company's budget, planning
and evaluation processes.  From time to time in the future, there may be other
items that Shanda Games may exclude in reviewing its financial results.

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
long-term growth of the Company; the introduction and potential success of new
game titles; the expansion into global market; and the expansion into mobile
games and the future benefits brought by these games 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 launch
of, or the Company is unable to launch, the games the Company intends to
release; such games and any related expansion packs are not well received by
users in China; the games fail to meet the expectations of end users; the
games that the Company operates overseas or has licensed to partners globally
are not well received by end users in these countries and the Company fails to
deliver long-term growth, as well as 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 Games

Shanda Games Limited (NASDAQ: GAME) is a leading online game developer,
operator and publisher in China.  Shanda Games offers a diversified game
portfolio, which includes some of the most popular massively multiplayer
online role-playing games (MMORPGs) and advanced casual games in China,
targeting a large and diverse community of users.  Shanda Games manages and
operates online games that are developed in-house, co-developed with
world-leading game developers, acquired through investments or licensed from
third parties.  For more information about Shanda Games, please visit
http://www.shandagames.com.

Contact

Shanda Games Limited:

Ellen Chiu, Investor Relations Director
Maggie Zhou, Investor Relations Associate Director
Phone:  +86-21-5050-4740 (Shanghai)
Email:  IR@ShandaGames.com

Christensen:

Christian Arnell
Phone:  +86-10-5826-4939 (China)
Email:  carnell@ChristensenIR.com

Linda Bergkamp
Phone:  +1-480-614-3004 (U.S.A.)
Email:  lbergkamp@ChristensenIR.com

SHANDA GAMES LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except for share and per share data)
                                                    December 31,   September 30,   December 31, 
                                                    2011           2012            2012
                                                    RMB            RMB             RMB          US$
ASSETS
Current assets:
Cash and cash equivalents                           1,835.5        1,625.6         2,100.8      334.2
Restricted cash                                     20.4           258.4           1.0          0.2
Short-term investments                              2,209.0        2,356.5         1,663.3      264.6
Marketable securities                               3.8            6.5             7.2          1.1
Accounts receivable, net of allowance for           72.8           88.1            105.8        16.8
    doubtful accounts 
Accounts receivable due from related parties        406.0          327.9           325.8        51.8
Deferred licensing fees and related costs           19.8           12.1            6.1          1.0
Prepayments and other current assets                182.0          203.7           191.9        30.5
Other receivables due from related parties [1]      931.3          2,063.9         2,080.4      331.1
Deferred tax assets                                 74.7           65.3            69.7         11.1
Total current assets                                5,755.3        7,008.0         6,552.0      1,042.4
Time deposit with maturity over one year            -              -               -            -
Investment in affiliated companies                  37.9           193.8           186.9        29.7
Investment in securities                            -              5.7             5.9          0.9
Property and equipment                              230.5          207.9           189.1        30.1
Intangible assets                                   994.7          617.4           578.4        92.0
Goodwill                                            492.1          329.2           329.2        52.4
Long-term deposits                                  95.1           53.2            55.6         8.9
Other long-term assets                              326.6          186.2           196.5        31.3
Non-current deferred tax assets                     26.4           22.6            21.0         3.3
Total assets                                        7,958.6        8,624.0         8,114.6      1,291.0
LIABILITIES
Current liabilities:
Short-term borrowings                               858.8          2,132.7         1,482.4      235.8
Accounts payable                                    38.4           40.3            45.2         7.2
Accounts payable due to related parties             77.3           64.2            71.7         11.4
Licensing fees payable                              188.2          149.1           160.6        25.6
Taxes payable                                       190.6          150.6           181.5        28.9
Deferred revenue                                    173.4          139.3           130.1        20.7
Other payables and accruals                         416.0          383.0           508.5        80.9
Other payables due to related parties [2]           125.9          1,002.8         984.0        156.6
Dividend payable                                    1,823.4        13.3            11.5         1.8
Deferred tax liabilities                            72.9           98.0            53.5         8.5
Total current liabilities                           3,964.9        4,173.3         3,629.0      577.4
Long-term liabilities                               68.9           99.9            26.0         4.1
Non-current deferred tax liabilities                260.2          108.7           102.4        16.3
Non-current deferred revenue                        47.6           36.0            37.8         6.0
Total liabilities                                   4,341.6        4,417.9         3,795.2      603.8
Redeemable non-controlling interests                14.0           14.0            14.0         2.2
SHAREHOLDERS' EQUITY
Ordinary shares outstanding                         560,309,556    547,874,828     540,947,314  540,947,314
ADS equivalent outstanding                          280,154,778    273,937,414     270,473,657  270,473,657
Ordinary shares (US$0.01 par value)                 40.9           40.1            39.7         6.3
Additional paid-in capital                          1,561.3        1,352.8         1,578.6      251.1
Statutory reserves                                  147.1          149.8           149.8        23.8
Accumulated other comprehensive loss                (68.5)         (47.9)          (38.9)       (6.2)
Retained earnings                                   1,665.0        2,385.9         2,522.8      401.5
Total Shanda Games Limited shareholders'            3,345.8        3,880.7         4,252.0      676.5
    equity 
Non-controlling interests                           257.2          311.4           53.4         8.5
Total shareholders' equity                          3,603.0        4,192.1         4,305.4      685.0
Total liabilities and shareholders' equity          7,958.6        8,624.0         8,114.6      1,291.0
 

Note: 
 

[1] The balance of "other receivables due from related parties" as of December 31, 2012 mainly represented
the outstanding loans we lent to our parent company Shanda Interactive Entertainment Limited or its
affiliates.  The aggregate amount of these loans was RMB1,943.7 million (US$309.2 million), with interest
rates ranging from 3% to 6.71%. The interest receivable related to these loans amounted to RMB111.7 million
(US$17.8 million).
[2] The balance of "other payables due to related parties" as of December 31, 2012 mainly represented the
outstanding loans we obtained from our parent company Shanda Interactive Entertainment Limited or its
affiliates.  The aggregate amount of these loans was RMB947.1 million (US$150.7 million), with interest
rate of 3%. The interest payable related to these loans amounted to RMB25.5 million (US$4.1 million).

SHANDA GAMES LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except for share and per share data)
                                            Three months ended
                                            December 31,   September 30,   December 31, 
                                            2011           2012            2012
                                            RMB            RMB             RMB          US$
Net revenues:
Online game revenues generated in China     1,262.0        1,015.1         976.2        155.3
Other revenues                              94.0           65.4            105.5        16.8
Total net revenues                          1,356.0        1,080.5         1,081.7      172.1
Cost of revenues                            (521.7)        (396.0)         (374.2)      (59.5)
Gross profit                                834.3          684.5           707.5        112.6
Operating expenses:
Product development                         (190.3)        (161.5)         (172.1)      (27.3)
Sales and marketing                         (142.3)        (152.5)         (157.5)      (25.1)
General and administrative                  (100.8)        (89.9)          (71.0)       (11.3)
Total operating expenses                    (433.4)        (403.9)         (400.6)      (63.7)
Income from operations                      400.9          280.6           306.9        48.9
Interest income net with interest expense   34.6           32.8            25.1         4.0
Government financial incentives             97.7           69.5            49.8         7.9
Other income (expense), net                 13.6           (28.1)          (35.9)       (5.8)
Income before income tax expenses, equity
    in affiliated companies, and            546.8          354.8           345.9        55.0
    non-controlling interests 
Income tax expenses                         (226.3)        (92.1)          (122.0)      (19.4)
Equity in loss of affiliated companies      (5.5)          (4.9)           (8.1)        (1.3)
Net income                                  315.0          257.8           215.8        34.3
Net income attributable to non-controlling  (10.7)         (3.9)           (1.5)        (0.2)
    interests 
Net income attributable to the Company's    304.3          253.9           214.3        34.1
    shareholders
Earnings per ordinary share 
Basic                                       0.54           0.46            0.39         0.06
Diluted                                     0.54           0.46            0.39         0.06
Earnings per ADS
Basic                                       1.08           0.92            0.78         0.12
Diluted                                     1.08           0.92            0.78         0.12
Weighted average ordinary shares
    outstanding 
Basic                                       560,914,251    554,753,776     542,570,995  542,570,995
Diluted                                     560,958,127    554,759,632     542,579,324  542,579,324
Weighted average ADS outstanding 
Basic                                       280,457,126    277,376,888     271,285,498  271,285,498
Diluted                                     280,479,064    277,379,816     271,289,662  271,289,662
Reconciliation from non-GAAP measures to GAAP measures
Non-GAAP gross profit                       863.9          705.4           728.4        115.9
Intangible assets amortization arising from (29.3)         (20.9)          (20.9)       (3.3)
    acquisition
Share-based compensation cost               (0.3)          -               -            -
GAAP gross profit                           834.3          684.5           707.5        112.6
Non-GAAP operating income                   443.0          324.2           350.8        55.8
Intangible assets amortization arising from (41.3)         (32.1)          (31.7)       (5.0)
    acquisition
Share-based compensation cost               (0.8)          (11.5)          (12.2)       (1.9)
GAAP operating income                       400.9          280.6           306.9        48.9
Non-GAAP net income attributable to the     335.5          289.9           249.4        39.7
    Company's shareholders
Intangible assets amortization arising from (41.3)         (32.1)          (31.7)       (5.0)
    acquisition
Share-based compensation cost               (0.8)          (11.5)          (12.2)       (1.9)
Income tax effect                           10.1           7.0             6.9          1.0
Intangible assets amortization of           0.8            0.6             1.9          0.3
    non-controlling interests
GAAP net income attributable to the         304.3          253.9           214.3        34.1
    Company's shareholders
Non-GAAP diluted earnings per share         0.60           0.52            0.46         0.07
Non-GAAP expense per share                  (0.06)         (0.06)          (0.07)       (0.01)
GAAP diluted earnings per share             0.54           0.46            0.39         0.06
Non-GAAP diluted earnings per ADS           1.20           1.04            0.92         0.15
Non-GAAP expense per ADS                    (0.12)         (0.12)          (0.14)       (0.03)
GAAP diluted earnings per ADS               1.08           0.92            0.78         0.12
Supplemental disclosure of intangible assets amortization arising from acquisitions
included in:
Cost of revenues                            (29.3)         (20.9)          (20.9)       (3.3)
Product development                         (3.2)          (6.9)           (6.9)        (1.1)
Sales and marketing                         (3.8)          (1.8)           (1.4)        (0.2)
General and administrative                  (5.0)          (2.5)           (2.5)        (0.4)
Total                                       (41.3)         (32.1)          (31.7)       (5.0)
Supplemental disclosure of share-based compensation cost included in:
Cost of revenues                            (0.3)          -               -            -
Product development                         (5.7)          (4.8)           (5.2)        (0.8)
Sales and marketing                         -              (0.3)           0.1          -
General and administrative                  5.2            (6.4)           (7.1)        (1.1)
Total                                       (0.8)          (11.5)          (12.2)       (1.9)

 

SHANDA GAMES LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except for share and per share data)
                                 Twelve months ended
                                 December 31,        December 31, 
                                 2011                2012
                                 RMB                 RMB           US$
Net revenues:
Online game revenues generated   4,975.5             4,320.3       687.3
in China
Other revenues                   306.4               361.8         57.6
Total net revenues               5,281.9             4,682.1       744.9
Cost of revenues                 (2,056.0)           (1,711.4)     (272.3)
Gross profit                     3,225.9             2,970.7       472.6
Operating expenses:
Product development              (694.3)             (658.7)       (104.8)
Sales and marketing              (610.2)             (596.3)       (94.9)
General and administrative       (447.4)             (337.5)       (53.7)
Total operating expenses         (1,751.9)           (1,592.5)     (253.4)
Income from operations           1,474.0             1,378.2       219.2
Interest income net with         112.4               106.8         17.0
interest expense
Government financial incentives  185.0               146.3         23.3
Other income (expense), net      9.9                 (55.0)        (8.7)
Income before income tax
expenses, equity in              1,781.3             1,576.3       250.8
    affiliated companies, and
non-controlling interests 
Income tax expenses              (485.3)             (418.8)       (66.6)
Equity in loss of affiliated     (10.0)              (20.9)        (3.3)
companies 
Net income                       1,286.0             1,136.6       180.9
Net income attributable to       (21.1)              (23.2)        (3.7)
non-controlling interests 
Net income attributable to the
Company's                        1,264.9             1,113.4       177.2
    shareholders
Earnings per ordinary share 
Basic                            2.23                2.01          0.32
Diluted                          2.23                2.01          0.32
Earnings per ADS
Basic                            4.46                4.02          0.64
Diluted                          4.46                4.02          0.64
Weighted average ordinary shares
outstanding 
Basic                            567,138,809         554,813,612   554,813,612
Diluted                          567,178,693         554,842,073   554,842,073
Weighted average ADS
outstanding 
Basic                            283,569,405         277,406,806   277,406,806
Diluted                          283,589,347         277,421,037   277,421,037
Reconciliation from non-GAAP measures to GAAP
measures
Non-GAAP gross profit            3,344.0             3,060.0       486.8
Intangible assets amortization   (117.1)             (89.0)        (14.2)
arising from acquisition
Share-based compensation cost    (1.0)               (0.3)         -
GAAP gross profit                3,225.9             2,970.7       472.6
Non-GAAP operating income        1,728.9             1,558.7       247.9
Intangible assets amortization   (163.9)             (138.0)       (22.0)
arising from acquisition
Share-based compensation cost    (91.0)              (42.5)        (6.7)
GAAP operating income            1,474.0             1,378.2       219.2
Non-GAAP net income attributable
to the Company's                 1,476.8             1,258.0       200.1
    shareholders
Intangible assets amortization   (163.9)             (138.0)       (22.0)
arising from acquisition
Share-based compensation cost    (91.0)              (42.5)        (6.7)
Income tax effect                39.8                31.9          5.2
Intangible assets amortization
of non-controlling               3.2                 4.0           0.6
    interests
GAAP net income attributable to
the Company's                    1,264.9             1,113.4       177.2
    shareholders
Non-GAAP diluted earnings per    2.60                2.27          0.36
share
Non-GAAP expense per share       (0.37)              (0.26)        (0.04)
GAAP diluted earnings per share  2.23                2.01          0.32
Non-GAAP diluted earnings per    5.20                4.54          0.72
ADS
Non-GAAP expense per ADS         (0.74)              (0.52)        (0.08)
GAAP diluted earnings per ADS    4.46                4.02          0.64
Supplemental disclosure of intangible assets amortization arising
from acquisitions included in:
Cost of revenues                 (117.1)             (89.0)        (14.2)
Product development              (12.7)              (27.5)        (4.4)
Sales and marketing              (14.3)              (9.4)         (1.5)
General and administrative       (19.8)              (12.1)        (1.9)
Total                            (163.9)             (138.0)       (22.0)
Supplemental disclosure of share-based
compensation cost included in:
Cost of revenues                 (1.0)               (0.3)         -
Product development              (24.1)              (20.1)        (3.2)
Sales and marketing              (0.2)               (0.2)         -
General and administrative       (65.7)              (21.9)        (3.5)
Total                            (91.0)              (42.5)        (6.7)

 

SHANDA GAMES LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, except for share and per share data)
                                             Twelve months ended
                                             December 31,   December 31, 
                                             2011           2012
                                             RMB            RMB        US$
Cash flows from operating activities: 
Net income                                   1,286.0        1,136.6    180.9
Adjustments for: 
Share-based compensation expenses            91.0           42.5       6.8
Depreciation and amortization                352.8          271.2      43.1
Others                                       24.7           43.1       6.8
Changes in assets and liabilities, net of
acquisitions: 
Prepayments and licensing fee and royalty    (292.1)        4.8        0.8
Others                                       (63.2)         (19.9)     (3.2)
Net cash provided by operating activities    1,399.2        1,478.3    235.2
Cash flows from investing activities: 
Purchase of property, equipment and          (159.3)        (58.6)     (9.3)
intangible assets
Acquisition (net of cash acquired) and
equity                                       (31.4)         (50.6)     (8.1)
    investment
Changes of short-term investments and time
deposit                                      (441.8)        591.4      94.1
    with maturity over one year 
Increase in loan receivable                  (390.7)        (1,059.0)  (168.5)
Others                                       (0.5)          (8.0)      (1.2)
Net cash used in investing activities        (1,022.7)      (584.8)    (93.0)
Cash flows from financing activities: 
Repurchase of common stock                   (186.3)        (255.4)    (40.6)
Proceeds from loan borrowed                  968.0          3,774.1    600.4
Repayment of loans                           (908.4)        (2,323.6)  (369.7)
Dividends paid to the company shareholders   -              (1,810.0)  (288.0)
Others                                       40.0           (19.9)     (3.1)
Net cash used in financing activities        (86.7)         (634.8)    (101.0)
Effect of exchange rate changes on cash      (26.1)         6.6        0.9
Net decrease in cash and cash equivalents    263.7          265.3      42.1
Cash and cash equivalents, beginning of      1,571.8        1,835.5    292.1
period  
Cash and cash equivalents, end of period     1,835.5        2,100.8    334.2

SOURCE Shanda Games Limited

Website: http://www.shandagames.com
Website: http://ir.shandagames.com
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