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The9 Limited Reports First and Second Quarter 2013 Unaudited Financial Results

The9 Limited Reports First and Second Quarter 2013 Unaudited Financial Results

PR Newswire

SHANGHAI, Sept. 5, 2013

SHANGHAI, Sept. 5, 2013 /PRNewswire-FirstCall/ -- The9 Limited (NASDAQ: NCTY)
("The9"), an online game developer and operator, announced its unaudited
financial results for the first quarter ended March 31, 2013 and the second
quarter ended June 30, 2013 today.

Financial Highlights:

  oNet revenues in the first quarter of 2013 amounted to RMB19.9 million
    (US$3.2 million), representing a 7% increase from RMB18.6 million (US$3.0
    million) in the fourth quarter of 2012. Net revenues in the second quarter
    of 2013 amounted to RMB26.2 million (US$4.3 million), representing a 32%
    increase from RMB19.9 million (US$3.2 million) in the first quarter of
    2013.
  oIn the first quarter of 2013, net loss attributable to holders of ordinary
    shares was RMB114.1 million (US$18.6 million), representing a 2% decrease
    from a net loss of RMB115.9 million (US$18.9 million) in the fourth
    quarter of 2012. In the second quarter of 2013, net loss attributable to
    holders of ordinary shares was RMB167.8 million (US$27.3 million),
    representing a 47% increase from RMB114.1 million (US$18.6 million) in the
    first quarter of 2013, including an impairment loss on investments of
    RMB32.8 million (US$5.3 million) recorded in the second quarter of 2013.

Management Comments:

Jun Zhu, Chairman and Chief Executive Officer of The9 said, "Our net losses in
the first and second quarters of 2013 in part reflected our ongoing
investments related to the development and upcoming launch of our widely
anticipated new games, Firefall and Qiji2. In the second half of 2013, we
expect to commence the marketing campaign for Firefall in the U.S. and Europe.
We also plan to launch Qiji2 in China in the second half of 2013. We have
great expectation for these two games on which we have invested more than $100
million in the past three years."

Discussion of The9's Unaudited First and Second Quarter 2013 Results

Net Revenues

Our net revenues in the first quarter of 2013 amounted to RMB19.9 million
(US$3.2 million), representing a 7% increase from RMB18.6 million (US$3.0
million) in the fourth quarter of 2012 and a 59% decrease from RMB48.6 million
(US$7.9 million) in the first quarter of 2012. The increase from the previous
quarter was primarily due to an increase in net revenues from Firefall close
beta testing. The decrease from the first quarter of 2012 was primarily due to
a decrease in net revenues from ShenXianZhuan.

Our net revenues in the second quarter of 2013 amounted to RMB26.2 million
(US$4.3 million), representing a 32% increase from RMB19.9 million (US$3.2
million) in the first quarter of 2013 and a 52% decrease from RMB54.8 million
(US$8.9 million) in the second quarter of 2012. The increase from the previous
quarter was primarily due to an increase in net revenues from the games newly
launched in the first quarter, including Firefall close beta testing,
Planetside2 and ReXueWuShuang (a new web game). The decrease from the first
quarter of 2012 was primarily due to a decrease in net revenues from
ShenXianZhuan, partially offset by the net revenues from our newly launched
games.

Gross Profit (Loss)

Our gross loss in the first quarter of 2013 amounted to RMB0.8 million (US$0.1
million), representing a 38% decrease from RMB1.3 million (US$0.2 million) in
the fourth quarter of 2012. We recorded a gross profit of RMB32.8 million
(US$5.3 million) in the first quarter of 2012. The decrease from the fourth
quarter of 2012 was primarily due to the increase in net revenues from the
games newly launched in the first quarter of 2013. We had a gross loss in the
first quarter of 2013 compared to a gross profit in the same quarter in 2012,
primarily reflected a decrease in net revenues from ShenXianZhuan and an
increase of amortization costs related to Firefall in the first quarter of
2013.

Our gross profit in the second quarter of 2013 amounted to RMB3.0 million
(US$0.5 million), compared to gross loss of RMB0.8 million (US$0.1 million) in
the first quarter of 2013. Such gross profit in the second quarter of 2013
represented a 92% decrease from a gross profit of RMB38.8 million (US$6.3
million) in the second quarter of 2012. The difference between the first two
quarters in 2013 reflected the increase in net revenues from the newly
launched games. The year-over-year decrease was primarily due to a decrease in
net revenues from ShenXianZhuan and an increase of amortization costs related
to Firefall.

Operating Expenses

In the first quarter of 2013, our operating expenses were RMB125.4 million
(US$20.4 million), representing a 16% decrease from RMB148.9 million (US$24.3
million) in the fourth quarter of 2012 and a 19% decrease from RMB154.9
million (US$25.2 million) in the first quarter of 2012. The decrease from the
fourth quarter of 2012 was primarily due to a decrease in marketing expenses
related to Firefall and Planetside 2, as well as a decrease in product
development expenses related to Firefall, Qiji2 and mobile games. The decrease
from the first quarter of 2012 was primarily due to a decrease in marketing
expenses related to ShenXianZhuan, as well as a decrease in product
development expenses as a result of our disposal of certain research and
development entities in the third quarter of 2012. In the first quarter of
2013, our share-based compensation was RMB7.9 million (US$1.3 million),
compared to RMB8.2 million (US$1.3 million) in the fourth quarter of 2012 and
RMB9.0 million (US$1.5 million) in the first quarter of 2012.

In the second quarter of 2013, our operating expenses were RMB149.4 million
(US$24.3 million), representing a 19% increase from RMB125.4 million (US$20.4
million) in the first quarter of 2013 and a 12% decrease from RMB168.8 million
(US$27.5 million) in the second quarter of 2012. The increase from the first
quarter of 2013 was primarily due to an increase in marketing expenses related
to Planetside 2, an increase in product development expenses related to
Firefall, Qiji2 and web games, and an increase in share-based compensation.
The decrease from the second quarter of 2012 was primarily due to a decrease
in marketing expenses related to ShenXianZhuan, as well as a decrease in
product development expenses as a result of our disposal of certain research
and development entities in the third quarter of 2012. In the second quarter
of 2013, our share-based compensation was RMB11.8 million (US$1.9 million),
compared to RMB7.9 million (US$1.3 million) in the first quarter of 2013 and
RMB8.9 million (US$1.5 million) in the second quarter of 2012.

Interest Income

Our interest income in the first quarter of 2013 was RMB3.6 million (US$0.6
million), compared to RMB3.6 million (US$0.6 million) in the fourth quarter of
2012 and RMB6.8 million (US$1.1 million) in the first quarter of 2012. The
decrease from the first quarter of 2012 was primarily due to a decrease in our
cash balance.

Our interest income in the second quarter of 2013 was RMB2.2 million (US$0.4
million), compared to RMB3.6 million (US$0.6 million) in the first quarter of
2013 and RMB6.5 million (US$1.1 million) in the second quarter of 2012. Such
decreases were primarily due to decreases in our cash balance.

Impairment Loss on Investments

In the second quarter of 2013, we recognized an impairment loss of RMB32.8
million (US$5.3 million) in relation to our investments in several early–stage
mobile game and application development companies in the U.S and China.

Net Loss Attributable to Holders of Ordinary Shares

As a result of the foregoing, in the first quarter of 2013, our net loss
attributable to holders of ordinary shares was RMB114.1 million (US$18.6
million), representing a 2% decrease from RMB115.9 million (US$18.9 million)
in the fourth quarter of 2012 and a 3% increase from RMB111.4 million (US$18.1
million) in the first quarter of 2012. Our fully diluted loss per share and
per ADS in the first quarter of 2013 was RMB4.79 (US$0.78), compared to
RMB4.73 (US$0.77) in the fourth quarter of 2012 and RMB4.55 (US$0.74) in the
first quarter of 2012.

In the second quarter of 2013, our net loss attributable to holders of
ordinary shares was RMB167.8 million (US$27.3 million), representing a 47%
increase from RMB114.1 million (US$18.6 million) in the first quarter of 2013
and a 42% increase from RMB118.0 million (US$19.2 million) in the second
quarter of 2012. Our fully diluted loss per share and per ADS in the second
quarter of 2013 was RMB7.34 (US$1.20), compared to RMB4.79 (US$0.78) in the
first quarter of 2013 and RMB4.82 (US$0.79) in the second quarter of 2012.

Convenience Currency Translation

The translation of Renminbi (RMB) into US dollars (US$) in this press release
is presented solely for the convenience of readers. The translation was made
based on the noon buying rate for U.S. dollars in the City of New York for
cable transfers in Renminbi as certified for customs purposes by the H.10
weekly statistical release of the Federal Reserve Board as of June 30, 2013,
which was RMB 6.1374 to US$1.00. Such translations should not be construed as
any representation that the related RMB amounts represent, have been or could
be converted into U.S. dollars at that or any other exchange rate. The
percentages stated in this press release are calculated based on the RMB
amounts.

Conference Call / Webcast Information

The9's management team will host a conference call on Thursday, September 5,
2013 at 9:00 PM, U.S. Eastern Time, corresponding to Friday, September 6, 2013
at 9:00 AM, Beijing Time, to present an overview of The9's financial
performance and business operations.

Investors, analysts and other interested parties will be able to access the
live conference by calling:

US Toll Free:                      +1-866-519-4004
Mainland China (mobile users):     400-620-8038
Mainland China (fixed line users): 800-819-0121
Hong Kong Toll:                    +852-2475-0994
International Toll:                +65-6723-9381
Passcode:                          32285426

A digital recording of the conference will be available for replay from 12:00
AMET on September 6, 2013 for 7 days.

The dial-in details for the replay are:

U.S. Toll Free:     +1-855-452-5696
International Toll: +1-646-254-3697
Passcode:           32285426

The9 will also provide a live webcast of the earnings call. Participants in
the webcast may log onto the Company's Investor Relations website
http://www.corp.the9.com15 minutes prior to the call, then click on the icon
for "The9 Limited 1Q & 2Q 2013 Earnings Conference Call" and follow the
instructions.

About The9

The9 Limited is an online game developer and operator. The9 develops and
operates, directly or through its affiliates, its proprietary MMO games
including Firefall and Qiji2. The9 also develops and operates web games and
social games including ReXueWuShuang and Winning Dunk. The9 has also obtained
exclusive licenses to operate other MMO games in mainland China such as
Planetside 2. In 2010, The9 established its Mobile Internet Unit to focus on
mobile internet business.

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. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates" and similar statements. Among
other things, the business outlook and quotations from management in this
press release contain forward-looking statements. The9 may also make written
or oral forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual
report to shareholders, in press releases and other written materials and in
oral statements made by its officers, directors or employees to third parties.
Statements that are not historical facts, including statements about The9's
beliefs and expectations, are forward-looking statements. Forward-looking
statements involve inherent risks and uncertainties. A number of important
factors could cause actual results to differ materially from those contained
in any forward-looking statement. Potential risks and uncertainties include,
but are not limited to, political and economic policies of the Chinese
government, the laws and regulations governing the online game industry,
information disseminated over the Internet and Internet content providers in
China, intensified government regulation of Internet cafes, The9's ability to
retain existing players and attract new players, license, develop or acquire
additional online games that are appealing to users, anticipate and adapt to
changing consumer preferences and respond to competitive market conditions,
and other risks and uncertainties outlined in The9's filings with the U.S.
Securities and Exchange Commission, including its annual reports on Form 20-F.
The9 does not undertake any obligation to update any forward-looking
statement, except as required under applicable law.

For further information, please contact:

Ms. Phyllis Sai
Manager, Investor Relations
The9 Limited
Tel: +86 (21) 5172-9990
Email: IR@corp.the9.com
Website: http://www.corp.the9.com/

- Tables follow -

THE9 LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Expressed in Renminbi - RMB and US Dollars - US$, except share data)
                                                  Quarter ended
                                                   March 31,      June 30,       December31,   March 31,      June 30,       March 31,     June 30,

                                                   2012           2012           2012           2013           2013           2013          2013
                                                   RMB            RMB            RMB            RMB            RMB            US$           US$
Revenues:
Onlinegameservices                           51,591,154     57,422,981     15,480,802     18,853,262     23,862,119     3,071,865     3,887,985
Otherrevenues                                 527,388        716,506        3,813,959      1,530,828      2,895,626      249,426       471,800
                                                   52,118,542     58,139,487     19,294,761     20,384,090     26,757,745     3,321,291     4,359,785
SalesTaxes                                       (3,510,585)    (3,343,719)    (706,456)      (492,703)      (583,489)      (80,279)      (95,071)
Net Revenues                                      48,607,957     54,795,768     18,588,305     19,891,387     26,174,256     3,241,012     4,264,714
CostofServices                                  (15,817,867)   (16,045,323)   (19,921,262)   (20,720,433)   (23,169,282)   (3,376,093)   (3,775,097)
GrossProfit(loss)                               32,790,090     38,750,445     (1,332,957)    (829,046)      3,004,974      (135,081)     489,617
OperatingExpenses:
Productdevelopment                            (69,261,659)   (78,253,825)   (68,702,039)   (53,510,806)   (59,174,437)   (8,718,806)   (9,641,614)
Salesandmarketing                            (48,703,335)   (44,795,100)   (41,084,956)   (29,319,993)   (37,689,001)   (4,777,266)   (6,140,875)
Generalandadministrative                      (36,952,477)   (45,156,943)   (39,068,639)   (42,530,459)   (52,504,655)   (6,929,719)   (8,554,869)
Impairmentofequipmentandintangibleassets  -              (569,139)      -              -              -              -             -
                                                                                 -
Total operating expenses                          (154,917,471)  (168,775,007)  (148,855,634)  (125,361,258)  (149,368,093)  (20,425,791)  (24,337,358)
Other operating Income                            30,000         30,000         30,000         30,000         34,628         4,888         5,642
Loss from operations                              (122,097,381)  (129,994,562)  (150,158,591)  (126,160,304)  (146,328,491)  (20,555,984)  (23,842,099)
Interest income, net                              6,771,491      6,517,258      3,548,297      3,561,357      2,209,606      580,271       360,023
Other (expenses) income, net                      875,783        1,621,895      2,258,930      144,567        2,171,902      23,555        353,880
Loss before gain on investment disposal,
impairment loss on investments and           (114,450,107)  (121,855,409)  (144,351,364)  (122,454,380)  (141,946,983)  (19,952,158)  (23,128,196)
share of loss in equity investments
Gain on investment disposal                       -              -              15,725,792     -              -              -             -
Impairment loss on investments                    -              -              -              -              (32,789,319)   -             (5,342,542)
Share of loss in equity investments               (1,856,783)    (2,521,100)    (31,544)       (920,541)      (1,043,738)    (149,989)     (170,062)
Net loss                                          (116,306,890)  (124,376,509)  (128,657,116)  (123,374,921)  (175,780,040)  (20,102,147)  (28,640,800)
Less:Netlossattributabletononcontrolling
                                                   (4,953,916)    (6,356,698)    (12,766,951)   (9,280,345)    (7,973,642)    (1,512,097)   (1,299,189)
interest
Net loss attributable to                          (111,352,974)  (118,019,811)  (115,890,165)  (114,094,576)  (167,806,398)  (18,590,050)  (27,341,611)
 holders of ordinary shares
Net loss                                          (116,306,890)  (124,376,509)  (128,657,116)  (123,374,921)  (175,780,040)  (20,102,147)  (28,640,800)
Other Comprehensive loss:
Unrealized loss on                              -              -              (56,600)       (16,600)       -              (2,705)       -
available-for-saleinvestments
 Currency translation adjustments               (41,316)       (111,701)      (1,830,684)    121,010        (1,727,211)    19,717        (281,424)
Comprehensive loss                                (116,348,206)  (124,488,210)  (130,544,400)  (123,270,511)  (177,507,251)  (20,085,135)  (28,922,224)
Less: Comprehensive loss attributable to           (4,953,109)    (6,374,414)    (12,621,017)   (9,196,148)    (7,356,438)    (1,498,378)   (1,198,625)
 noncontrolling interest
Comprehensive loss attributable to holders of      (111,395,097)  (118,113,796)  (117,923,383)  (114,074,363)  (170,150,813)  (18,586,757)  (27,723,599)
 ordinary shares
Net loss attributable to holders of ordinary
 shares per share
 - Basic and diluted                            (4.55)         (4.82)         (4.73)         (4.79)         (7.34)         (0.78)        (1.20)
Weighted average number of shares outstanding
 - Basic and diluted                            24,459,891     24,474,211     24,518,298     23,838,496     22,850,083     23,838,496    22,850,083



THE9 LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS INFORMATION
(Expressed in Renminbi - RMB and US Dollars - US$)
                                         As at
                                         December31,2012  March31,2013   June30,2013    March31,2013  June30,2013
                                         RMB                RMB              RMB              US$             US$
Assets
Current Assets
Cashandcashequivalents             554,278,809        432,629,134      321,210,487      70,490,621      52,336,574
Short term investment                 877,350            279,150          55,830           45,483          9,097
Accounts receivable                   15,621,678         19,437,139       19,990,552       3,166,999       3,257,169
Due from related parties              -                  -                163,863          -               26,699
Advances to suppliers                 2,094,525          3,079,581        6,364,475        501,773         1,036,999
Prepaymentsandothercurrentassets  76,022,204         49,836,458       55,009,071       8,120,125       8,962,927
Prepaid royalties                     14,820,331         14,781,163       12,051,430       2,408,375       1,963,605
Deferred costs                        900,961            834,692          2,493,128        136,001         406,219
Total current assets                     664,615,858        520,877,317      417,338,836      84,869,377      67,999,289
Restricted cash                          737,959            737,959          700,000          120,240         114,055
Investments in equity investees          76,017,792         80,245,745       52,674,765       13,074,876      8,582,586
Available-for-sale investments           6,285,500          6,268,900        -                1,021,426       -
Property,equipmentandsoftware         64,575,315         62,002,915       60,630,081       10,102,473      9,878,789
Goodwill                                 10,011,247         9,984,807        9,841,141        1,626,879       1,603,471
Intangible assets                        155,049,811        149,080,004      143,147,821      24,290,417      23,323,854
Land use right                           74,115,115         73,634,888       73,154,660       11,997,733      11,919,487
Other long-term assets                   60,936,775         51,305,441       50,207,883       8,359,475       8,180,644
Total Assets                             1,112,345,372      954,137,976      807,695,187      155,462,896     131,602,175
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable                      54,947,197         41,236,041       55,715,695       6,718,813       9,078,062
Other taxes payable                   4,148,647          2,681,563        4,369,145        436,922         711,889
Advances from customers               17,878,053         19,502,390       17,813,636       3,177,631       2,902,473
Deferred revenue                      20,255,327         23,711,065       30,035,379       3,863,373       4,893,828
Refund of game points                 169,998,682        169,998,682      169,998,682      27,698,811      27,698,811
Other payables and accruals           50,484,656         42,607,932       45,814,808       6,942,342       7,464,856
Total current liabilities                317,712,562        299,737,673      323,747,345      48,837,892      52,749,919
Long-term accounts payable               39,912,925         39,807,515       39,234,745       6,486,055       6,392,731
Deferred tax liabilities, non-current    5,508,341          5,493,793        5,414,746        895,134         882,254
Total Liabilities                        363,133,828        345,038,981      368,396,836      56,219,081      60,024,904
Equity
Common shares (US$0.01 par value;
24,484,634

shares issued and outstanding as of
December 31, 2012,

23,080,797 shares issued and             1,997,390          1,882,919        1,862,254        306,794         303,427
outstanding as of March

31, 2013, 22,830,431 shares issued and
outstanding as

of June 30, 2013)
Additional paid-in capital            2,148,416,134      2,131,822,657    2,139,927,380    347,349,473     348,670,020
Statutory reserves                    28,071,982         28,071,982       28,071,982       4,573,921       4,573,921
Accumulated other comprehensive loss  (6,710,971)        (6,690,758)      (9,035,173)      (1,090,162)     (1,472,150)
Accumulated deficit                   (1,386,308,302)    (1,500,402,878)  (1,668,209,276)  (244,468,811)   (271,810,422)
The9 Limited shareholders' equity        785,466,233        654,683,922      492,617,167      106,671,215     80,264,796
Noncontrolling interests                 (36,254,689)       (45,584,927)     (53,318,816)     (7,427,400)     (8,687,525)
Total equity                             749,211,544        609,098,995      439,298,351      99,243,815      71,577,271
Total liabilities and equity             1,112,345,372      954,137,976      807,695,187      155,462,896     131,602,175

SOURCE The9 Limited

Website: http://www.corp.the9.com