Table of Contents
OF THE SECURITIES EXCHANGE ACT OF 1934
(Jurisdiction of incorporation or organization)
207 TIDING BOULEVARD, SECTION 2, TAIPEI 114, TAIWAN, R.O.C.
(Address of principal executive offices)
886-2- 2656-8000
Title of Each Class | Name of Each Exchange on Which Registered | |
Ordinary Shares | The NASDAQ Stock Market LLC |
None
None
Large accelerated filero | Accelerated filerþ | Non-accelerated filero |
U.S. GAAPþ | International Financial Reporting Standards as issued by the International Accounting Standards Boardo | Othero |
i
Table of Contents
• | our business plan and strategies; |
• | our future business development and potential financial condition, results of operations and other projected financial information; |
• | our ability to manage current and potential future growth; |
• | expected continued acceptance of our revenue model; |
• | our plans for strategic partnerships, licenses and alliances; |
• | our acquisition and strategic investment strategy, and ability to successfully integrate any past, current, or future acquisitions into our operations; |
1
Table of Contents
• | our ability to protect our intellectual property rights and the security of our customers’ information; |
• | launch of new online games according to our timetable; |
• | expected continued acceptance of our online games and gaming software, including expected growth of the online games and online gaming industry, and consumer preferences for our products and services; |
• | the in-house development of new online game and gaming software products and our plans to expand our in-house online game development team; |
• | our plans to license additional games from third parties, and the launch of these new games or gaming software systems, including the timing of any such development, licenses or launches, in various geographic markets; |
• | our ability to maintain and strengthen our position as one of the largest online MahJong operators in Taiwan; |
• | our ability to maintain the well-established online sports game platform in the PRC; |
• | potential entry of new competitors in any of our business lines; |
• | changes in the global regulatory environment relating to gaming software and services business; |
• | changes or stability in certain regulatory environments relating to our software licensees’ operations or gaming licenses; |
• | changes in PRC laws and regulations, and future enforcement of those laws and regulations, including laws and regulations relating to Internet usage, advertising over the Internet, Internet content providers, foreign investment and ownership in online business, distribution of dividends and foreign exchange controls; |
• | the outcome of ongoing, or any future, litigation or arbitration; and |
• | our corporate classification by various governmental entities. |
2
Table of Contents
(in thousands except for earnings per share amounts)
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
STATEMENT OF OPERATIONS DATA: | ||||||||||||||||||||
OPERATING REVENUES | ||||||||||||||||||||
Gaming software and service revenues | 11,434 | 22,511 | 55,019 | 118,950 | 144,765 | |||||||||||||||
Online game and service revenues | 0 | 0 | 18,692 | 32,764 | 45,604 | |||||||||||||||
Other revenues | 20 | 0 | 0 | 0 | 0 | |||||||||||||||
Total operating revenues | 11,454 | 22,511 | 73,711 | 151,714 | 190,369 | |||||||||||||||
OPERATING COSTS | ||||||||||||||||||||
Cost of gaming software and service revenues | (1,592 | ) | (3,327 | ) | (7,824 | ) | (16,201 | ) | 22,770 | |||||||||||
Cost of online game and service revenues | 0 | 0 | (3,667 | ) | (9,118 | ) | 12,404 | |||||||||||||
Cost of other revenues | (2 | ) | 0 | 0 | 0 | 0 | ||||||||||||||
Total operating costs | (1,594 | ) | (3,327 | ) | (11,491 | ) | (25,319 | ) | (35,174 | ) | ||||||||||
GROSS PROFIT | 9,860 | 19,184 | 62,220 | 126,395 | 155,195 | |||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Product development and engineering expenses | (1,408 | ) | (2,524 | ) | (5,244 | ) | (7,338 | ) | (13,455 | ) | ||||||||||
Selling and marketing expenses | (3,444 | ) | (8,042 | ) | (27,653 | ) | (60,106 | ) | (74,173 | ) | ||||||||||
General and administrative expenses | (3,493 | ) | (6,374 | ) | (11,096 | ) | (20,983 | ) | (25,035 | ) | ||||||||||
Bad debt expenses | 0 | 0 | (448 | ) | (548 | ) | (2,905 | ) |
3
Table of Contents
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
Impairment loss on prepaid licensing fees and intangible assets | 0 | 0 | 0 | 0 | (1,524 | ) | ||||||||||||||
Total operating expenses | (8,345 | ) | (16,940 | ) | (44,441 | ) | (88,975 | ) | (117,092 | ) | ||||||||||
Income from operations | 1,515 | 2,244 | 17,779 | 37,420 | 38,103 | |||||||||||||||
Income from continuing operations | 299 | 3,375 | 17,852 | 37,802 | 34,953 | |||||||||||||||
Income from discontinued operations | 1,383 | 2,961 | 12,932 | 1,088 | 9,435 | |||||||||||||||
Net income | 1,682 | 6,336 | 30,784 | 38,890 | 44,388 | |||||||||||||||
Earnings per share (in dollars): | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Income from continuing operations | 0.01 | 0.07 | 0.35 | 0.72 | 0.65 | |||||||||||||||
Income from discontinued operations | 0.02 | 0.06 | 0.25 | 0.02 | 0.17 | |||||||||||||||
Net income | 0.03 | 0.13 | 0.60 | 0.74 | 0.82 | |||||||||||||||
Diluted: | ||||||||||||||||||||
Income from continuing operations | 0.01 | 0.06 | 0.30 | 0.63 | 0.58 | |||||||||||||||
Income from discontinued operations | 0.02 | 0.06 | 0.21 | 0.02 | 0.16 | |||||||||||||||
Net income | 0.03 | 0.12 | 0.51 | 0.65 | 0.74 | |||||||||||||||
(US dollars in thousands except for number of issued shares)
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
BALANCE SHEET DATA: | ||||||||||||||||||||
Total current assets | 67,726 | 70,204 | 64,176 | 115,417 | 128,799 | |||||||||||||||
Property, plant and equipment-net | 15,056 | 10,747 | 10,098 | 13,008 | 13,468 | |||||||||||||||
Goodwill | 29,607 | 29,243 | 55,817 | 85,149 | 87,098 | |||||||||||||||
Intangible assets-net | 8,372 | 2,704 | 23,067 | 26,060 | 28,930 | |||||||||||||||
Total assets | 125,977 | 113,519 | 182,619 | 283,865 | 316,793 | |||||||||||||||
Total shareholders’ equity | 95,971 | 100,648 | 134,087 | 180,665 | 228,456 | |||||||||||||||
Common shares, no par value, and additional paid-in capital | 287,657 | 287,920 | 289,495 | 296,793 | 300,021 | |||||||||||||||
Number of issued shares (in thousands) | 50,154 | 50,344 | 51,495 | 53,700 | 54,365 | |||||||||||||||
Dividends declared per share (in dollars) | 0 | 0 | 0 | 0 | 0 |
4
Table of Contents
• | respond to technological changes or resolve unexpected service interruptions in a timely manner; |
• | adapt to regulatory changes; |
• | retain existing customers or attract new customers; |
• | license, develop, or acquire additional online games that are appealing to consumers; |
• | anticipate and adapt to changing consumer preferences; |
• | adapt to competitive market conditions; |
• | adequately and efficiently operate, upgrade and develop our transaction and service platforms; and |
• | maintain adequate control of our expenses. |
5
Table of Contents
• | the popularity of existing and new online games operated by us; |
• | the introduction of new online games by us or third parties, competing with or replacing our existing online games; |
6
Table of Contents
• | general economic conditions, particularly economic conditions adversely affecting discretionary consumer spending; |
• | changes in our customer demands and preferences; |
• | the availability of other forms of entertainment; and |
• | critical reviews and public tastes and preferences, all of which change rapidly and cannot be predicted. |
• | Gaming software and service business: the regulatory restrictions applicable to the Internet gaming industry; the revenues, expenses and results of operations of UIM, our largest licensee; global economic conditions and general economic conditions of the markets where our products target; availability of the Internet infrastructure; and the technological and other competition from existing and new competitors. |
• | Online games business: our ability to retain existing users; attract new users and maintain user satisfaction; the pace of rollout of new games or update to existing games by us or our competitors; the amount and timing of operating costs and capital expenditures relating to our business operations and expansion; seasonal trends in Internet use; price competition in the industry; regulatory and other risks associated from our operations in China and Taiwan. |
7
Table of Contents
8
Table of Contents
9
Table of Contents
10
Table of Contents
11
Table of Contents
12
Table of Contents
• | fund our operations; |
• | enhance and expand the range of products and services we offer; and |
• | respond to competitive pressures and perceived opportunities, such as investment, acquisition and international expansion activities. |
13
Table of Contents
14
Table of Contents
15
Table of Contents
16
Table of Contents
17
Table of Contents
18
Table of Contents
19
Table of Contents
Time | Event | |
April 2004 | We acquired the business and operations of Grand Virtual, Inc., a privately-held gaming software developer and application service provider, and its affiliates. | |
April 2004 | We entered into an end user license agreement with UIM, pursuant to which we granted a nonexclusive, non-transferable worldwide license to UIM to use our software and certain operational and support services. The royalties under the agreement were determined based on a revenue sharing mechanism. The term of the agreement is 10 years. | |
September 2005 | We sold all of our ownership interest in the Rose Records and Tachung Records music store chains with a view to eliminating the non-core operations. | |
January 2006 | We acquired FunTown, an online games business operated in Taiwan and Hong Kong, to enhance our position in the online entertainment market. | |
May 2006 | We disposed of our ADSL business, which was an operational line of our Internet access and services business. | |
December 2006 | We entered into a strategic alliance with Infocomm Asia, an operator and distributor of online games in Southeast Asia. In connection with the strategic alliance, we acquired preferred shares convertible into the issued ordinary shares of Infocomm Asia. As of May 31, 2009, we held preferred shares convertible into 28.43 percent of the ordinary shares of Infocomm Asia. Upon conversion of the preferred shares held by us into the ordinary shares of Infocomm Asia, we expect to become the largest shareholder of Infocomm Asia. | |
June 2007 | We completed the acquisition of the controlling interest in T2CN, one of the online casual game operators in the PRC. As of May 31, 2009, we hold 66.29 percent of the total outstanding voting rights of T2CN. |
20
Table of Contents
21
Table of Contents
22
Table of Contents
23
Table of Contents
• | Infrastructure Design and Management Services. We provide the architectural design of various infrastructure elements, including the servers, databases, networks, routers, firewalls and management tools that are required for Internet gaming operations. As part of customer support, we also provide round-the-clock monitoring services to ensure the functionality and security of the infrastructure. |
• | Transaction Processing Services. These services include (i) payment consultation for designing timely collection and distribution systems for payments through a variety of channels and merchants; (ii) billing consultation for designing real-time and out-of-band transaction processing and order management; and (iii) risk management consultation for creating and designing tools and processes for fraud detection, prevention and management. |
• | Customer Support Services. We offer clients a comprehensive round-the-clock consultation support to resolve infrastructure issues. We also provide platform technical support during periodic maintenance to update, patch, and fine-tune the system performance of our software solutions. |
• | Custom Gaming Software Development Services. We customize the entertainment modules and interfaces for the gaming platform to meet specific requests of UIM’s affiliates or partners. |
• | Marketing Support Services. We create branded websites and provide marketing support services to assist UIM in attracting new players. |
24
Table of Contents
25
Table of Contents
26
Table of Contents
Commercial | Game | Revenue | ||||||||
Game | Description | Launch | Source | Model | Market | |||||
Holic Online | Cartoon style adventure | January 2009 | Licensed | Item-billing | Taiwan | |||||
Warhammer Online: Age of Reckoning | War | June 2009 | Licensed | Pay-to-play | Taiwan Hong Kong Macau |
Game | Description | Status | Game Source | Target Market | ||||
Luna Online | Casual fantasy | Close Beta Testing | Licensed | PRC | ||||
XK Online | Martial arts adventure | Game Development | In-house Developed | PRC | ||||
Holic Online | Cartoon style adventure | Game Localization | Licensed | PRC Hong Kong Macau | ||||
Hellgate: London | Dark fantasy themed action | Game Localization | Licensed | Taiwan Hong Kong Macau |
27
Table of Contents
Commercial | Game | Revenue | ||||||||
Game | Description | Launch | Source | Model | Market | |||||
Tales Runner | Sports — Obstacle running | June 2006 in Taiwan August 2006 in Hong Kong | Licensed | Item-billing | Taiwan Hong Kong | |||||
Freestyle | Sports — Basketball | May 2007 | Licensed | Item-billing | PRC | |||||
Nanaimo | Action | December 2007 | Licensed | Item-billing | Hong Kong | |||||
Paipaijoy | Sports — Tennis | June 2008 | Licensed | Item-billing | PRC |
28
Table of Contents
• | Player Clubs. We offer online club services in the FunTown game community. FunTown players can form their own clubs, invite other players with similar interests or skill levels to join, and organize online and offline events for club members. Player clubs complement the strong social features of online games by helping to maintain an online game community. |
• | Tournaments. As one of the key services, FunTown provides various tournaments for its online MahJong players. After players join a club, they can participate online in-club tournaments and compete in weekly online inter-club tournaments. On an annual basis, FunTown organizes large-scale tournaments, in which a large number of players are invited to the tournament premises and compete online via computers. |
• | Avatars. To enhance players’ overall entertainment experience, FunTown offers many in-game virtual items which may be purchased by players to customize their online personal graphic profiles, or avatars. Players use avatars to create their own unique look while participating in the online community. The virtual items for avatars include facial expressions, clothes and different accessories. These items are particularly popular with younger players, who customize their avatars to establish unique identities and pursue distinct fashions in the online community. |
• | Friends and Family Messenger. The FunTown platform has a unique function designed for players’ personal contacts, which is similar to the contact list of instant message programs. This enables players to see when their friends and family members are online and invite people in their personal network to play games together. |
29
Table of Contents
• | Social Networking. The FunTown platform provides an online social networking community called FunTown Village, in which players meet each other through their online avatars. In FunTown Village, players can interact and communicate, purchase virtual items, and even get married virtually. We plan to introduce more virtual items within FunTown Village to address the strong social interests of our players and to help increase FunTown’s overall appeal as a distinct online game community. |
• | Game Masters. FunTown delegates game masters to provide various in-game services for our MMORPG players. Game masters are responsible for organizing in-game events, troubleshooting and actively and continuously monitoring the online game environment. They respond to players’ inquiries, handle error reporting and removal process, and identify and deter inappropriate player behaviors. We believe that the provision of game masters is an important customer service function to maintain customer loyalty and effectively address technical problems as they arise. |
• | Customer Services. FunTown provides support and services to its customers primarily through walk-in customer service centers in Taipei and Hong Kong and e-mails and online bulletin boards where players can inquire and receive responses from us and other players. |
• | Membership Management. T2CN utilizes an integrated service platform, namely T2CN-Passport, to provide one-stop service to customers as well as distributors. T2CN-Passport is an integrated membership management and payment system, which allows T2CN to maintain a single customer database containing each customer’s profile and transaction history. Customers may log in, pay and use any of the fee-based products and services. In addition, T2CN-Passport allows our distributors to sell our game points to Internet cafés. Internet cafés can also use T2CN-Passport to check their point-balances and make payment on behalf of individual purchasers. |
• | Social Networking. T2CN’s integrated system also incorporates a variety of online community features, such as bulletin boards which allow registered users to post notes or inquiries and respond to other users’ questions and comments. We believe these features increase the user stickiness on our site and facilitate player interaction. T2CN is currently building an online social networking community to further facilitate access to our online game offering and accommodate different social net working needs of our users in the PRC. |
• | Game Masters. T2CN delegates game masters to provide various in-game services for our MMORPG players. Game masters are responsible for organizing in-game events, troubleshooting and actively and continuously monitoring the online game environment. They respond to players’ inquiries, handle error reporting and removal process, and identify and deter inappropriate player behaviors. |
• | Customer Services. T2CN focuses on providing quality customer service in order to retain its existing customers as well as attract new customers. T2CN offers multiple communication channels, including telephone hotline and customer service email, for the customers to provide feedback and complaints about our products or services at any time. |
30
Table of Contents
31
Table of Contents
32
Table of Contents
33
Table of Contents
34
Table of Contents
35
Table of Contents
• | MIIT (formerly the Ministry of Information Industry); |
• | the Ministry of Culture, or MOC; |
• | the General Administration of Press and Publication, or GAPP; |
• | the Ministry of Public Security; |
• | the State Administration of Industry and Commerce, or SAIC; |
• | the State Administration for Radio, Film and Television, or SARFT; |
• | the State Council Information Office, or SCIO; and |
• | the Ministry of Commerce, or MOFCOM. |
36
Table of Contents
37
Table of Contents
• | Each of the shareholders of T2 Entertainment has irrevocably granted T2CN Information Technology (Shanghai) Co., Ltd. (“T2 Technology”), the wholly-owned subsidiary of T2CN in the PRC, the power to exercise all of their voting rights of T2 Entertainment pursuant to the relevant voting rights and proxy agreement; |
• | Each of the shareholders of T2 Advertisement has irrevocably granted T2 Technology the power to exercise all of their voting rights of T2 Advertisement pursuant to the relevant voting rights and proxy agreement; |
• | Each of the shareholders of Jinyou has irrevocably granted T2 Technology the power to exercise all of their voting rights of Jinyou pursuant to the relevant voting rights and proxy agreement; |
• | Our majority-owned subsidiary in China has the power to appoint all directors and senior management members of the three VIEs; |
• | Each of the shareholders of T2 Entertainment has pledged all of their respective equity interests in T2 Entertainment as security for the full performance of their respective obligations under all of their agreements with T2 Technology; |
38
Table of Contents
• | Each of the shareholders of T2 Advertisement has pledged all of their respective equity interests in T2 Advertisement as security for the full performance of their respective obligations under all of their agreements with T2 Technology; |
• | Each of the shareholders of Jinyou has pledged all of their respective equity interests in Jinyou as security for the full performance of their respective obligations under all of their agreements with T2 Technology; |
• | Each of the shareholders of T2 Entertainment has granted T2 Technology an irrevocable option to acquire all or part of the equity interests held by them in T2 Entertainment pursuant to the relevant exclusive call option agreement, to the extent permitted by then-effective laws and regulations in the PRC; |
• | Each of the shareholders of T2 Advertisement has granted T2 Technology an irrevocable option to acquire all or part of the equity interests held by them in T2 Advertisement pursuant to the relevant exclusive call option agreement, to the extent permitted by then-effective laws and regulations in the PRC; and |
• | Each of the shareholders of Jinyou has granted T2 Technology an irrevocable option to acquire all or part of the equity interests held by them in Jinyou pursuant to the relevant exclusive call option agreement, to the extent permitted by then-effective laws and regulations in the PRC. |
39
Table of Contents
* | Includes our principal operating subsidiaries only. All subsidiaries are 100% owned unless otherwise indicated. |
40
Table of Contents
Our | ||||||||||||
Year of | Place of | Percentage | ||||||||||
Entity | Incorporation | Incorporation | Holding | Principal Activities | ||||||||
Held by our Company | ||||||||||||
GigaMedia International Holdings Limited | 2004 | British Virgin Islands | 100% | Holding company | ||||||||
Hoshin GigaMedia Center Inc. | 1998 | Taiwan | 100% | Online games | ||||||||
Held by GigaMedia International Holdings Limited | ||||||||||||
Cambridge Entertainment Software Limited | 2004 | British Virgin Islands | 100% | Holding company | ||||||||
FunTown World Limited | 2005 | British Virgin Islands | 100% | Holding company | ||||||||
GigaMedia Asia Limited | 2005 | British Virgin Islands | 100% | Holding company | ||||||||
GigaMedia Asia Pacific Limited | 2006 | British Virgin Islands | 100% | Holding company | ||||||||
GigaMedia Finance International Limited | 2000 | Cayman Islands | 100% | Holding company | ||||||||
GigaMedia Global Limited | 2004 | British Virgin Islands | 100% | Online games | ||||||||
GigaMedia (HK) Limited | 2004 | Hong Kong | 100% | Holding company | ||||||||
Skyace Pacific Limited | 2006 | British Virgin Islands | 100% | Holding company | ||||||||
Centermax Limited | 2007 | British Virgin Islands | 100% | Holding company | ||||||||
GigaMedia Capital Limited | 2007 | British Virgin Islands | 100% | Holding company | ||||||||
GigaMedia Development Limited | 2007 | British Virgin Islands | 100% | Holding company | ||||||||
Giga Slam Dunk Corporation | 2007 | Malaysia | 100% | Online games | ||||||||
Giga Wartime Corporation | 2007 | Malaysia | 100% | Online games | ||||||||
E-Sports International Corporation Limited | 2008 | Hong Kong | 100% | Online games | ||||||||
GigaMedia SuperCup Holdings Limited | 2008 | British Virgin Islands | 100% | Holding company |
41
Table of Contents
Our | ||||||||||||
Year of | Place of | Percentage | ||||||||||
Entity | Incorporation | Incorporation | Holding | Principal Activities | ||||||||
Dragon Mark Holdings Limited | 2008 | British Virgin Islands | 100% | Holding company | ||||||||
Premier Vantage Holdings Limited | 2009 | British Virgin Islands | 100% | Holding company | ||||||||
Held by FunTown World Limited | ||||||||||||
FunTown Hong Kong Limited | 1999 | Hong Kong | 100% | Online games | ||||||||
Held by FunTown Hong Kong Limited | ||||||||||||
FunTown Software (Shanghai) Limited | 2006 | PRC | 100% | Online games | ||||||||
Held by GigaMedia Asia Limited | ||||||||||||
GigaMedia China Limited | 2005 | British Virgin Islands | 100% | Holding company | ||||||||
Held by Skyace Pacific Limited | ||||||||||||
Dragongate Enterprises Limited | 2006 | British Virgin Islands | 70% | Online games | ||||||||
Held by Dragongate Enterprises Limited | ||||||||||||
GigaMedia Dragongate Limited | 2007 | Malaysia | 70% | Online games | ||||||||
Held by Cambridge Entertainment Software Limited | ||||||||||||
Cambridge Interactive Development Corporation | 1997 | U.S.A. | 100% | Software development and application services | ||||||||
Cambridge Interactive Development Corporation (Quebec) Inc. | 2005 | Canada | 100% | Financial and management services | ||||||||
Cambridge Interactive Development Co., Ltd | 2008 | United Kingdom | 100% | Software support services | ||||||||
Internet Media Licensing Limited | 2005 | British Virgin Islands | 100% | Software development and application services | ||||||||
Held by Internet Media Licensing Limited | ||||||||||||
Apexstar Pacific Limited | 2007 | British Virgin Islands | 100% | Software development and application services |
42
Table of Contents
Our | ||||||||||||
Year of | Place of | Percentage | ||||||||||
Entity | Incorporation | Incorporation | Holding | Principal Activities | ||||||||
Held by GigaMedia China Limited | ||||||||||||
T2CN Holding Limited | 2004 | British Virgin Islands | 66.29% | Online games | ||||||||
Held by T2CN Holding Limited | ||||||||||||
J-Town Information Co. (Shanghai), Ltd. | 2005 | PRC | 66.29% | Online games | ||||||||
T2CN Information Technology (Shanghai) Co., Ltd. | 2004 | PRC | 66.29% | Online games | ||||||||
Controlled by T2CN Information Technology (Shanghai) Co., Ltd. | ||||||||||||
Shanghai T2 Entertainment Co., Ltd. | 2004 | PRC | —* | Online games | ||||||||
Shanghai T2 Advertisement Co., Ltd. | 2006 | PRC | —* | Advertising | ||||||||
Shanghai Jinyou Network & Technology Co., Ltd. | 2007 | PRC | —* | Online games | ||||||||
Held by Dragon Mark Holdings Limited | ||||||||||||
Wolverine Holdings Group Limited | 2009 | British Virgin Islands | 100% | Holding company |
* | We have entered into a series of contractual arrangements through which we have effective control over these entities. |
43
Table of Contents
• | Through our gaming software and service business, we develop and license online poker and casino gaming software solutions and application services, primarily targeting continental European markets. |
• | Our online games business operates a portfolio of online games, primarily targeting online Greater China markets. |
44
Table of Contents
45
Table of Contents
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Revenue | $ | 20,581 | $ | 15,164 | $ | 9,289 | ||||||
Income (loss) from discontinued operations before tax | $ | 6,290 | $ | 1,090 | $ | (593 | ) | |||||
Gain on sale of the discontinued operations before tax | 7,668 | — | 11,014 | |||||||||
Income tax expenses | (1,026 | ) | (2 | ) | (986 | ) | ||||||
Income from discontinued operations | $ | 12,932 | $ | 1,088 | $ | 9,435 | ||||||
(in US$ thousands) | ||||
Cash | $ | 493 | ||
Accounts receivable | 2,325 | |||
Other current assets | 1,125 | |||
Property and equipment | 4,328 | |||
Other assets | 165 | |||
Total assets | $ | 8,436 | ||
Accounts payable | $ | 1,056 | ||
Other current liabilities | 759 | |||
Noncurrent liabilities | 672 | |||
Total liabilities | $ | 2,487 | ||
46
Table of Contents
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Total revenue | $ | 55,019 | $ | 118,650 | $ | 144,765 | ||||||
Net income (loss) | $ | 320 | $ | 348 | $ | (206 | ) | |||||
(in US$ thousands) | 2007 | 2008 | ||||||
Net assets | $ | 178 | $ | 3,258 | ||||
Total assets | $ | 11,666 | $ | 17,524 | ||||
Total liabilities | $ | 11,488 | $ | 14,265 | ||||
Total revenues | $ | 14,973 | $ | 20,312 | ||||
Net income | $ | 2,429 | $ | 1,571 | ||||
47
Table of Contents
48
Table of Contents
49
Table of Contents
50
Table of Contents
51
Table of Contents
52
Table of Contents
December 31, 2008 | ||||||||||||||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | Fair Value Measurements | ||||||||||||||||||||||||
% of | % of | % of | ||||||||||||||||||||||||||
total assets | total assets | total assets | ||||||||||||||||||||||||||
measured at | measured at | measured at | ||||||||||||||||||||||||||
Amount | fair value | Amount | fair value | Amount | fair value | Amount | ||||||||||||||||||||||
Cash equivalents — time deposits | $ | — | — | $ | 12,512 | 29.8 | % | $ | — | — | $ | 12,512 | ||||||||||||||||
Marketable securities — current | — | — | 3,419 | 8.2 | % | — | — | 3,419 | ||||||||||||||||||||
Marketable securities — noncurrent | — | — | — | — | 26,041 | 62.0 | % | 26,041 | ||||||||||||||||||||
Total | $ | — | — | $ | 15,931 | 38.0 | % | $ | 26,041 | 62.0 | % | $ | 41,972 | |||||||||||||||
Fair Value Measurements Using | ||||
Significant Unobservable Inputs | ||||
(Level 3) | ||||
Marketable Securities-Noncurrent | ||||
Beginning Balance | $ | 21,018 | ||
Total gains or losses (realized/unrealized) | ||||
Included in earnings | — | |||
Included in other comprehensive income | — | |||
Purchases and settlements | 5,023 | |||
Transfer in and/or out of Level 3 | — | |||
Ending Balance | $ | 26,041 | ||
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date | None | |||
53
Table of Contents
54
Table of Contents
55
Table of Contents
56
Table of Contents
57
Table of Contents
58
Table of Contents
• | the development and regulation of these industries generally; |
• | our adaptation to technological change; |
• | changing consumer preferences; |
• | legal development affecting these industries, in particular the gaming software and service industry; and |
• | general economic conditions in the markets where we or our licensees operate. |
59
Table of Contents
For the year ended December 31, | ||||||||||||||||||||||||
2006 | 2007 | 2008 | ||||||||||||||||||||||
Amount in | % of | Amount | % of | Amount | % of | |||||||||||||||||||
US$ | total | in US$ | total | in US$ | total | |||||||||||||||||||
thousands | revenues | thousands | revenues | thousands | revenues | |||||||||||||||||||
Particulars | ||||||||||||||||||||||||
OPERATING REVENUES | ||||||||||||||||||||||||
Gaming software and service revenues | 55,019 | 74.6 | 118,950 | 78.4 | 144,765 | 76.0 | ||||||||||||||||||
Online game and service revenues | 18,692 | 25.4 | 32,764 | 21.6 | 45,604 | 24.0 | ||||||||||||||||||
Total operating revenues | 73,711 | 100.0 | 151,714 | 100.0 | 190,369 | 100.0 | ||||||||||||||||||
OPERATING COSTS | ||||||||||||||||||||||||
Cost of gaming software and service revenues | 7,824 | 10.6 | 16,201 | 10.7 | 22,770 | 12.0 | ||||||||||||||||||
Cost of online game and service revenues | 3,667 | 5.0 | 9,118 | 6.0 | 12,404 | 6.5 | ||||||||||||||||||
Total operating costs | 11,491 | 15.6 | 25,319 | 16.7 | 35,174 | 18.5 | ||||||||||||||||||
Gross profit | 62,220 | 84.4 | 126,395 | 83.3 | 155,195 | 81.5 | ||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||
Product development and engineering expenses | 5,244 | 7.1 | 7,338 | 4.8 | 13,455 | 7.1 | ||||||||||||||||||
Selling and marketing expenses | 27,653 | 37.5 | 60,106 | 39.6 | 74,173 | 39.0 | ||||||||||||||||||
General and administrative expenses | 11,096 | 15.1 | 20,983 | 13.8 | 25,035 | 13.2 | ||||||||||||||||||
Bad debt expense | 448 | 0.6 | 548 | 0.4 | 2,905 | 1.5 | ||||||||||||||||||
Impairment loss on prepaid licensing fees and intangible assets | — | — | — | — | 1,524 | 0.8 | ||||||||||||||||||
Total operating expenses | 44,441 | 60.3 | 88,975 | 58.6 | 117,092 | 61.5 | ||||||||||||||||||
Income from operations | 17,779 | 24.1 | 37,420 | 24.7 | 38,103 | 20.0 | ||||||||||||||||||
NON-OPERATING INCOME (EXPENSES) | 917 | 1.2 | 2,064 | 1.4 | (1,324 | ) | (0.7 | ) | ||||||||||||||||
INCOME TAX EXPENSE | (523 | ) | (0.7 | ) | (401 | ) | (0.3 | ) | (1,069 | ) | (0.6 | ) | ||||||||||||
MINORITY INTEREST | (321 | ) | (0.4 | ) | (1,281 | ) | (0.8 | ) | (757 | ) | (0.4 | ) | ||||||||||||
INCOME FROM CONTINUING OPERATIONS | 17,852 | 24.2 | 37,802 | 24.9 | 34,953 | 18.4 | ||||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS | 12,932 | 17.5 | 1,088 | 0.7 | 9,435 | 5.0 | ||||||||||||||||||
NET INCOME | 30,784 | 41.8 | 38,890 | 25.6 | 44,388 | 23.3 | ||||||||||||||||||
60
Table of Contents
61
Table of Contents
62
Table of Contents
63
Table of Contents
64
Table of Contents
65
Table of Contents
66
Table of Contents
• | the rate at which we enter into strategic transactions; |
• | the rate at which we expand our operations and employee base; |
• | the timing of entry into new markets and new services offered; |
• | changes in revenues and cost splits with our business partners; |
• | the rate at which we invest in developing and licensing our products and upgrading and maintaining our network and future technologies; and |
• | the rate at which we grow and monetize our customer bases. |
67
Table of Contents
68
Table of Contents
Payment Due by Period (in US dollars) | ||||||||||||||||||||
Within 1 year | 1-3 years | 3-5 years | >5 years | Total | ||||||||||||||||
1. Operating leases | 5,255,902 | 8,975,000 | 5,683,733 | 1,747,162 | 21,661,797 | |||||||||||||||
2. License fees | 1,012,500 | 3,300,000 | — | — | 4,312,500 | |||||||||||||||
3. Minimum guarantees against royalties | 7,815,000 | 22,400,000 | 5,600,000 | — | 35,815,000 | |||||||||||||||
Total contractual cash obligations | 14,083,402 | 34,675,000 | 11,283,733 | 1,747,162 | 61,789,297 | |||||||||||||||
4. Other liabilities-accrued pension liabilities | — | — | — | 107,616 | 107,616 | |||||||||||||||
5. Other long-term obligations | — | 186,070 | — | — | 186,070 | |||||||||||||||
69
Table of Contents
Year Appointed to | ||||||||||
Name | Age | Position | Current Position | |||||||
DING, Michael Y.J. | 52 | Chairman of the Board and Independent Non-Executive Director | 2009*/2003 | |||||||
WANG, Arthur M. | 48 | Director and Chief Executive Officer | 2003 | |||||||
HUI, Thomas T. | 37 | Director, President and Chief Operating Officer | 2005/2007 | |||||||
BAO, Gilbert | 45 | Independent Non-Executive Director | 2003 | |||||||
HSU, Emmet Yu-Jui | 46 | Independent Non-Executive Director | 2003 | |||||||
HU ZEE, Nancy Jing-Ying | 50 | Independent Non-Executive Director | 2003 | |||||||
LEE, Howe Yong | 53 | Independent Non-Executive Director | 2004 | |||||||
LEE, Yichin | 48 | Independent Non-Executive Director | 2003 | |||||||
TANG, Quincy | 46 | Chief Financial Officer | 2008 | |||||||
WONG, Lester A. | 42 | General Counsel | 2008 | |||||||
CAHILL, Robert J. | 43 | Head of Gaming software and Services Business | 2004 | |||||||
CHEN, Yautian | 39 | Head of Online Games Business in Taiwan and Hong Kong | 2008 | |||||||
WANG, Jim Ji | 38 | Head of Online Games Business in the PRC | 2008 |
* | Mr. Ding was appointed as chairman of the board of directors of our Company on May 14, 2009 following the resignation of Mr. Daniel Chuen-Tai Wu, the former chairman, on April 29, 2009. |
70
Table of Contents
71
Table of Contents
72
Table of Contents
Number of | Number of Shares | |||||||
Common | Issuable upon exercise | |||||||
Person | Shares | of options | ||||||
DING, Michael Y.J. | * | * | ||||||
WANG, Arthur M. | * | 2,249,000 | ||||||
HUI, Thomas T. | * | 1,600,000 | ||||||
BAO, Gilbert T.C. | * | * | ||||||
HSU, Emmet Yu-Jui | 0 | * | ||||||
HU ZEE, Nancy Jing-Ying | * | * | ||||||
LEE, Howe Yong | * | * | ||||||
LEE, Yichin | * | * | ||||||
TANG, Quincy | 0 | * | ||||||
WONG, Lester A. | 0 | * | ||||||
CAHILL, Robert J. | * | 600,000 | ||||||
CHEN, Yautian | 0 | 0 | ||||||
WANG, Jim Ji | * | 0 | ||||||
Directors and Officers as a group | * | 5,024,000 |
* | Less than 1 percent |
73
Table of Contents
74
Table of Contents
75
Table of Contents
76
Table of Contents
Ordinary Shares | ||||||||||||
Underlying | ||||||||||||
Outstanding | Exercise Price | |||||||||||
Date of Grant | Options | ($/Share) | Date of Expiration | |||||||||
August 12, 2004 | 3,559,000 | 0.79 | June 29, 2014 | |||||||||
December 18, 2005 | 400,000 | 2.55 | June 29, 2014 | |||||||||
August 9, 2007 | 400,000 | 10.15 | August 9, 2017 | |||||||||
December 1, 2008 | 150,000 | 4.24 | June 29, 2017 | |||||||||
515,000 | 4.24 | June 19, 2018 | ||||||||||
Total | 5,024,000 | |||||||||||
Percentage of | ||||||||
Name of Owner | Shares Owned | Shares Owned | ||||||
Best Method Limited (1) | 10,799,999 | 19.85 | % | |||||
Criterion Capital Management, LLC | 7,937,694 | 14.59 | % |
(1) | Through Best Method Limited, a British Virgin Islands company, Jeffrey Koo, Jr. and Andre Koo jointly have a beneficial ownership of 10,799,999 common shares of our Company. |
77
Table of Contents
78
Table of Contents
79
Table of Contents
80
Table of Contents
Common Shares | ||||||||
Year Ending December 31 | High | Low | ||||||
(in US$) | ||||||||
2004 | $ | 2.43 | $ | 0.70 | ||||
2005 | $ | 2.99 | $ | 1.30 | ||||
2006 | $ | 12.38 | $ | 2.90 | ||||
2007 | $ | 24.61 | $ | 9.28 | ||||
2008 | $ | 20.70 | $ | 2.90 |
Common Shares | ||||||||
Year Ending December 31, 2007 | High | Low | ||||||
(in US$) | ||||||||
First quarter | $ | 14.34 | $ | 9.28 | ||||
Second quarter | $ | 15.97 | $ | 12.96 | ||||
Third quarter | $ | 16.76 | $ | 9.45 | ||||
Fourth quarter | $ | 24.61 | $ | 16.43 |
81
Table of Contents
Common Shares | ||||||||
Year Ending December 31, 2008 | High | Low | ||||||
(in US$) | ||||||||
First quarter | $ | 20.70 | $ | 14.24 | ||||
Second quarter | $ | 19.26 | $ | 11.93 | ||||
Third quarter | $ | 13.32 | $ | 6.83 | ||||
Fourth quarter | $ | 7.30 | $ | 2.90 |
Common Shares | ||||||||
Year Ending December 31, 2009 | High | Low | ||||||
(in US$) | ||||||||
First quarter | $ | 7.47 | $ | 4.33 | ||||
Second quarter (through June 25, 2009) | $ | 7.02 | $ | 5.29 |
Common Shares | ||||||||
Monthly Highs and Lows | High | Low | ||||||
(in US$) | ||||||||
December 2008 | $ | 6.48 | $ | 4.24 | ||||
January 2009 | $ | 6.92 | $ | 5.63 | ||||
February 2009 | $ | 7.47 | $ | 5.85 | ||||
March 2009 | $ | 6.36 | $ | 4.33 | ||||
April 2009 | $ | 7.02 | $ | 5.51 | ||||
May 2009 | $ | 6.70 | $ | 5.79 | ||||
June 2009 (only through June 25, 2009) | $ | 6.30 | $ | 5.29 |
82
Table of Contents
B. | Memorandum and Articles of Association |
83
Table of Contents
84
Table of Contents
• | the dividends are received from a jurisdiction with a maximum tax rate on the trade or business income of a company of at least 15 percent; and |
• | the dividends themselves, or the income from which they are paid, have been subject to tax in the foreign jurisdiction or have been exempted from tax under an incentive granted for substantive business activities. |
85
Table of Contents
• | bank; |
• | broker-dealer; |
• | financial institution or insurance company; |
86
Table of Contents
• | tax-exempt entity; |
• | person holding Shares as part of a straddle, hedge, conversion or other integrated investment; |
• | a person owning, actually or constructively, 10 percent or more of the combined voting power of all classes of our stock; or |
• | a person whose “functional currency” is not the U.S. dollar. |
• | individual who is a citizen or resident of the United States; |
• | corporation, or other entity treated as a corporation, created or organized under the laws of the United States or any political subdivision thereof; |
• | estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | trust if (1) it is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (2) it has otherwise elected to be treated as a U.S. person under the Internal Revenue Code. |
87
Table of Contents
88
Table of Contents
• | excess distribution or gain would be allocated ratably over your holding period for the Shares; |
• | amount allocated to the current taxable year and any taxable year prior to the first taxable year in which we are classified as a PFIC (a “pre-PFIC year”) would be taxable as ordinary income; |
• | amount allocated to each prior taxable year, other than the current taxable year or a pre-PFIC year, would be subject to tax at the highest tax rate in effect applicable to you for that year; and |
• | interest charge generally applicable to underpayments of tax would be imposed on the tax attributable to each prior taxable year, other than the current taxable year or a pre-PFIC year. |
• | a U.S. person; |
• | a foreign person 50 percent or more of whose gross income is effectively connected with a U.S. trade or business for a specified three-year period; |
89
Table of Contents
• | a “controlled foreign corporation” for U.S. tax purposes; or |
• | a foreign partnership, if at any time during its tax year; |
• | one or more of its partners are U.S. holders (as defined in U.S. Treasury regulations) who in the aggregate hold more than 50 percent of the income or capital interest in the partnership; or |
• | such foreign partnership is engaged in a U.S. trade or business; |
90
Table of Contents
91
Table of Contents
92
Table of Contents
93
Table of Contents
For the Years Ended December 31, | ||||||||
2007 | 2008 | |||||||
(in US$) | (in US$) | |||||||
Audit Fees | 1,036,738 | 1,190,974 | ||||||
Audit-Related Fees | 9,867 | 0 | ||||||
Tax Fees | 42,847 | 23,004 | ||||||
All Other Fees | 0 | 0 |
94
Table of Contents
95
Table of Contents
Page | ||||
F-1¾F-2 | ||||
F-3¾F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7¾F-8 | ||||
F-9¾F-89 |
EXHIBIT | INDEX | |||
1.1 | Amended Memorandum and Articles of Association of our Company, incorporated by reference to Exhibit 1.3 to our annual report for the year 2006 on Form 20-F filed with the SEC on June 29, 2007 | |||
4.1 | End-User License Agreement between Internet Media Licensing Limited and Ultra Internet Media, S.A., dated April 1, 2004, incorporated by reference to Exhibit 4.41 to our annual report for the year 2004 on Form 20-F filed with the SEC on June 30, 2005 | |||
4.2 | Second Amendment to the End-User License Agreement between Internet Media Licensing Limited and Ultra Internet Media, S.A., dated March 1, 2006, incorporated by reference to Exhibit 4.41 to our annual report for the year 2005 on Form 20-F filed with the SEC on June 28, 2006 | |||
4.3 | Third Amendment to the End-User License Agreement between Internet Media Licensing Limited and Ultra Internet Media, S.A., dated March 1, 2007, incorporated by reference to Exhibit 4.50 to our annual report for the year 2006 on Form 20-F filed with the SEC on June 29, 2007 | |||
4.4 | Fourth Amendment to the End-User License Agreement between Internet Media Licensing Limited and Ultra Internet Media, S.A., dated March 1, 2008# | |||
4.5 | Exclusive Business Consultancy Service Agreement between T2 Technology and T2 Entertainment, dated November 15, 2006, incorporated by reference to Exhibit 4.55 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.6 | Supplemental Agreement to Exclusive Business Consultancy Service Agreement between T2 Technology and T2 Entertainment, dated April 1, 2007, incorporated by reference to Exhibit 4.56 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.7 | Exclusive Technical Service and Consultancy Agreement between T2 Entertainment and T2 Technology, dated November 15, 2006, incorporated by reference to Exhibit 4.57 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.8 | Supplemental Agreement to Exclusive Technical Service and Consultancy Agreement between T2 Entertainment and T2 Technology, dated April 1, 2007, incorporated by reference to Exhibit 4.58 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.9 | Agreement for Pledge of Shares in T2 Entertainment between Wang Chi, Lu Ning and T2 Technology, dated February 9, 2007, incorporated by reference to Exhibit 4.59 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.10 | Exclusive Call Option Agreement regarding T2 Entertainment between Wang Chi, Lu Ning, T2 Entertainment and T2 Technology, dated February 9, 2007, incorporated by reference to Exhibit 4.60 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 |
96
Table of Contents
EXHIBIT | INDEX | |||
4.11 | Proxy Voting Agreement regarding T2 Entertainment between T2 Technology, T2 Entertainment, Wang Chi and Lu Ning, dated February 9, 2007, incorporated by reference to Exhibit 4.61 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.12 | Exclusive Business Consultancy Service Agreement between T2 Technology and T2 Advertisement, dated November 15, 2006, incorporated by reference to Exhibit 4.62 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.13 | Supplemental Agreement to Exclusive Business Consultancy Service Agreement between T2 Technology and T2 Advertisement, dated January 1, 2007, incorporated by reference to Exhibit 4.63 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.14 | Agreement for Pledge of Shares in T2 Advertisement between Chi Min, Chang Tao and T2 Technology, dated March 20, 2008, incorporated by reference to Exhibit 4.64 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.15 | Exclusive Call Option Agreement regarding T2 Advertisement between Chi Min, Chang Tao, T2 Advertisement and T2 Technology, dated March 20, 2008, incorporated by reference to Exhibit 4.65 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.16 | Proxy Voting Agreement regarding T2 Advertisement between T2 Technology, T2 Advertisement, Chi Min and Chang Tao, dated March 20, 2008, incorporated by reference to Exhibit 4.66 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.17 | Share Purchase Agreement between William Zhu and GigaMedia China Limited, dated June 3, 2007, incorporated by reference to Exhibit 4.67 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.18 | Share Purchase Agreement between Yu-Chia Lee and GigaMedia China Limited, dated June 6, 2007, incorporated by reference to Exhibit 4.68 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.19 | Share Purchase Agreement between Zheng Bin and GigaMedia China Limited, dated June 10, 2007, incorporated by reference to Exhibit 4.69 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.20 | Share Purchase Agreement between J&R Music LLC, Ya-Tsen Lin and GigaMedia China Limited, dated July 5, 2007, incorporated by reference to Exhibit 4.70 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.21 | Share Purchase Agreement between Kingland Overseas Development Inc. and GigaMedia China Limited, dated July 6, 2007, incorporated by reference to Exhibit 4.71 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.22 | Share Purchase Agreement between Jim Ji Wang and GigaMedia China Limited, dated July 6, 2007, incorporated by reference to Exhibit 4.72 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.23 | Share Purchase Agreement between Marvel City Investments Limited and GigaMedia China Limited, dated May 26, 2008, incorporated by reference to Exhibit 4.73 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.24 | Agreement for Pledge of Shares in Jinyou among Yang Zhuojun, Tan Yihui and T2 Technology, dated June 15, 2009# | |||
4.25 | Exclusive Call Option Agreement regarding Jinyou among Yang Zhuojun, Tan Yihui, Jinyou and T2 Technology, dated June 15, 2009# | |||
4.26 | Proxy Voting Agreement regarding Jinyou among T2 Technology, Jinyou, Yang Zhuojun and Tan Yihui, dated June 15, 2009# |
97
Table of Contents
EXHIBIT | INDEX | |||
4.27 | Exclusive Business Consultancy Service Agreement between T2 Technology and Jinyou, dated November 26, 2007# | |||
4.28 | Exclusive Technical Service and Consultancy Agreement between Jinyou and T2 Technology, dated November 26, 2007# | |||
4.29 | Share Sale and Purchase Agreement among Champion Limited, Gigamedia International Holdings Limited and GigaMedia, dated August 28, 2008# | |||
4.30 | Share Sale and Purchase Agreement between China Network Systems Co., Ltd. and Hoshin GigaMedia, dated August 28, 2008# | |||
4.31 | Asset Sale and Purchase Agreement among Ko Ying, Hoshin GigaMedia and China Network Systems Co., Ltd., dated August 28, 2008# | |||
4.32 | Transitional Service Agreement among Ko Ying, Hoshin GigaMedia and KBT, dated September 3, 2008# | |||
4.33 | Assignment and Assumption Agreement between Hoshin GigaMedia and Hoshin Multimedia, dated September 3, 2008# | |||
8.1 | List of Subsidiaries# | |||
12.1 | Certification by our Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act# | |||
12.2 | Certification by our Chief Financial Officer pursuant to Rule13a-14(b) of the Securities Exchange Act# | |||
13.1 | Certification by our Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002# | |||
13.2 | Certification by our Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002# | |||
15.1 | Consent of GHP Horwath, P.C., Independent Registered Public Accounting Firm# |
# | Filed herewith. |
98
Table of Contents
GIGAMEDIA LIMITED | ||||
By: | /s/ Arthur M. Wang | |||
Chief Executive Officer | ||||
Date: June 26, 2009 |
99
Table of Contents
GigaMedia Limited
F-1
Table of Contents
May 15, 2009
F-2
Table of Contents
December 31, 2007 and 2008
December 31 | ||||||||
2007 | 2008 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents (Note 9) | $ | 68,563 | $ | 95,953 | ||||
Marketable securities-current (Note 10) | 11,354 | 3,419 | ||||||
Accounts receivable-net (Note 11) | 18,291 | 15,188 | ||||||
Prepaid expenses (Note 1) | 5,615 | 9,907 | ||||||
Restricted cash (Note 13) | 6,247 | — | ||||||
Other current assets (Notes 14 and 23) | 5,347 | 4,332 | ||||||
Total Current Assets | 115,417 | 128,799 | ||||||
Marketable securities-noncurrent (Note 12) | 21,018 | 26,041 | ||||||
Investments | 4,612 | 1,905 | ||||||
PROPERTY, PLANT AND EQUIPMENT | ||||||||
Land and buildings | 1,853 | 1,832 | ||||||
Information and communication equipment | 23,163 | 11,601 | ||||||
Office furniture and fixtures | 2,029 | 2,575 | ||||||
Leasehold improvements | 2,222 | 5,115 | ||||||
Other | 2,020 | 250 | ||||||
31,287 | 21,373 | |||||||
Less: Accumulated depreciation | (18,279 | ) | (7,905 | ) | ||||
13,008 | 13,468 | |||||||
GOODWILL (Notes 5 and 6) | 85,149 | 87,098 | ||||||
INTANGIBLE ASSETS-NET (Notes 5 and 7) | 26,060 | 28,930 | ||||||
OTHER ASSETS | ||||||||
Restricted cash (Note 13) | — | 2,125 | ||||||
Refundable deposits | 1,528 | 7,265 | ||||||
Prepaid licensing and royalty fees (Note 24) | 16,739 | 20,540 | ||||||
Other (Note 23) | 334 | 622 | ||||||
Total Other Assets | 18,601 | 30,552 | ||||||
TOTAL ASSETS | $ | 283,865 | $ | 316,793 | ||||
F-3
Table of Contents
December 31, 2007 and 2008
December 31 | ||||||||
2007 | 2008 | |||||||
LIABILITIES & SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Short-term borrowings (Notes 15 and 24) | $ | 33,301 | $ | 15,243 | ||||
Accounts payable | 1,922 | 899 | ||||||
Accrued compensation | 5,750 | 3,503 | ||||||
Accrued expenses (Note 16) | 9,151 | 11,345 | ||||||
Player account balances | 27,136 | 32,827 | ||||||
Other current liabilities (Notes 17 and 23) | 14,652 | 12,386 | ||||||
Total Current Liabilities | 91,912 | 76,203 | ||||||
OTHER LIABILITIES | ||||||||
Accrued pension liabilities (Note 19) | 436 | 108 | ||||||
Other (Notes 23 and 25) | 1,042 | 3,406 | ||||||
Total Other Liabilities | 1,478 | 3,514 | ||||||
Total Liabilities | 93,390 | 79,717 | ||||||
MINORITY INTERESTS | 9,810 | 8,620 | ||||||
COMMITMENTS AND CONTINGENCIES (Notes 25 and 26) | — | — | ||||||
SHAREHOLDERS’ EQUITY (Note 20) | ||||||||
Common shares, no par value, and additional paid-in capital; issued and outstanding 53,700 thousand and 54,365 thousand shares on December 31, 2007 and 2008 | 296,793 | 300,021 | ||||||
Accumulated deficit | (89,692 | ) | (45,304 | ) | ||||
Accumulated other comprehensive loss | (26,436 | ) | (26,261 | ) | ||||
Total Shareholders’ Equity | 180,665 | 228,456 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 283,865 | $ | 316,793 | ||||
F-4
Table of Contents
For the Years Ended December 31, 2006, 2007 and 2008
2006 | 2007 | 2008 | ||||||||||
OPERATING REVENUES | ||||||||||||
Gaming software and service revenues | $ | 55,019 | $ | 118,950 | $ | 144,765 | ||||||
Online game and service revenues | 18,692 | 32,764 | 45,604 | |||||||||
Total | 73,711 | 151,714 | 190,369 | |||||||||
OPERATING COSTS | ||||||||||||
Cost of gaming software and service revenues | (7,824 | ) | (16,201 | ) | (22,770 | ) | ||||||
Cost of online game and service revenues | (3,667 | ) | (9,118 | ) | (12,404 | ) | ||||||
(11,491 | ) | (25,319 | ) | (35,174 | ) | |||||||
GROSS PROFIT | 62,220 | 126,395 | 155,195 | |||||||||
OPERATING EXPENSES | ||||||||||||
Product development and engineering expenses | (5,244 | ) | (7,338 | ) | (13,455 | ) | ||||||
Selling and marketing expenses | (27,653 | ) | (60,106 | ) | (74,173 | ) | ||||||
General and administrative expenses | (11,096 | ) | (20,983 | ) | (25,035 | ) | ||||||
Bad debt expenses (Notes 11 and 14) | (448 | ) | (548 | ) | (2,905 | ) | ||||||
Impairment loss on prepaid licensing fees and intangible assets (Note 1) | — | — | (1,524 | ) | ||||||||
(44,441 | ) | (88,975 | ) | (117,092 | ) | |||||||
INCOME FROM OPERATIONS | 17,779 | 37,420 | 38,103 | |||||||||
NON-OPERATING INCOME (EXPENSES) | ||||||||||||
Interest income | 716 | 1,434 | 1,460 | |||||||||
Gains on sales of marketable securities | 70 | 184 | 373 | |||||||||
Interest expense | (428 | ) | (547 | ) | (976 | ) | ||||||
Foreign exchange gain (loss) | (122 | ) | (679 | ) | 240 | |||||||
Loss on disposal of property, plant and equipment | (3 | ) | (102 | ) | (253 | ) | ||||||
Loss on equity method investments (Note 1) | — | (369 | ) | (3,010 | ) | |||||||
Other (Note 22) | 684 | 2,143 | 842 | |||||||||
917 | 2,064 | (1,324 | ) | |||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST | 18,696 | 39,484 | 36,779 | |||||||||
INCOME TAX EXPENSES (Note 23) | (523 | ) | (401 | ) | (1,069 | ) | ||||||
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST | 18,173 | 39,083 | 35,710 | |||||||||
MINORITY INTEREST | (321 | ) | (1,281 | ) | (757 | ) | ||||||
INCOME FROM CONTINUING OPERATIONS | 17,852 | 37,802 | 34,953 | |||||||||
INCOME FROM DISCONTINUED OPERATIONS-NET OF TAX (Note 4) | 12,932 | 1,088 | 9,435 | |||||||||
NET INCOME | $ | 30,784 | $ | 38,890 | $ | 44,388 | ||||||
EARNINGS PER SHARE (Note 2) | ||||||||||||
Basic: | ||||||||||||
Income from continuing operations | $ | 0.35 | $ | 0.72 | $ | 0.65 | ||||||
Income from discontinued operations | 0.25 | 0.02 | 0.17 | |||||||||
Net income | $ | 0.60 | $ | 0.74 | $ | 0.82 | ||||||
Diluted: | ||||||||||||
Income from continuing operations | $ | 0.30 | $ | 0.63 | $ | 0.58 | ||||||
Income from discontinued operations | 0.21 | 0.02 | 0.16 | |||||||||
Net income | $ | 0.51 | $ | 0.65 | $ | 0.74 | ||||||
WEIGHTED AVERAGE SHARES USED TO COMPUTE EARNINGS PER SHARE (Note 2) | ||||||||||||
Basic | 50,921 | 52,876 | 54,110 | |||||||||
Diluted | 61,114 | 60,022 | 60,152 | |||||||||
F-5
Table of Contents
For the Years Ended December 31, 2006, 2007 and 2008
Common shares | Accumulated other | |||||||||||||||||||
and additional paid-in capital | Accumulated | comprehensive | ||||||||||||||||||
Shares | Amount | deficit (Note 20) | income (loss) | Total | ||||||||||||||||
Balance as of January 1, 2006 | 50,344 | $ | 287,920 | $ | (159,223 | ) | $ | (28,049 | ) | $ | 100,648 | |||||||||
Issuance of common shares from exercise of stock options | 1,151 | 1,265 | — | — | 1,265 | |||||||||||||||
Stock-based compensation | — | 310 | — | — | 310 | |||||||||||||||
Adjustment for initial application of FAS 158 | — | — | — | 235 | 235 | |||||||||||||||
Net income | — | — | 30,784 | — | 30,784 | |||||||||||||||
Components of other comprehensive income: | — | |||||||||||||||||||
Change in unrealized gain (loss) on marketable securities | — | — | — | 335 | 335 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | 510 | 510 | |||||||||||||||
Total comprehensive income | — | — | — | — | 31,629 | |||||||||||||||
Balance as of December 31, 2006 | 51,495 | 289,495 | (128,439 | ) | (26,969 | ) | 134,087 | |||||||||||||
Issuance of common shares from exercise of stock options and RSUs | 1,979 | 2,733 | — | — | 2,733 | |||||||||||||||
Issuance of common shares for acquisition (Note 5) | 226 | 2,703 | — | — | 2,703 | |||||||||||||||
Stock-based compensation | — | 1,862 | — | — | 1,862 | |||||||||||||||
Adjustment for initial application of FIN 48 (Note 23) | — | — | (143 | ) | — | (143 | ) | |||||||||||||
Net income | — | — | 38,890 | — | 38,890 | |||||||||||||||
Components of other comprehensive income: | ||||||||||||||||||||
Change in unrealized gain (loss) on marketable securities | — | — | — | 58 | 58 | |||||||||||||||
Defined benefit pension plan adjustment | — | — | — | (54 | ) | (54 | ) | |||||||||||||
Foreign currency translation adjustment | — | — | — | 529 | 529 | |||||||||||||||
Total comprehensive income | — | — | — | — | 39,423 | |||||||||||||||
Balance as of December 31, 2007 | 53,700 | 296,793 | (89,692 | ) | (26,436 | ) | 180,665 | |||||||||||||
Issuance of common shares from exercise of stock options and RSUs | 665 | 495 | — | — | 495 | |||||||||||||||
Stock-based compensation | — | 2,733 | — | — | 2,733 | |||||||||||||||
Net income | — | — | 44,388 | — | 44,388 | |||||||||||||||
Components of other comprehensive income: | ||||||||||||||||||||
Change in unrealized gain (loss) on marketable securities | — | — | — | (282 | ) | (282 | ) | |||||||||||||
Defined benefit pension plan adjustment | — | — | — | 95 | 95 | |||||||||||||||
Foreign currency translation adjustment | — | — | — | 362 | 362 | |||||||||||||||
Total comprehensive income | — | — | — | — | 44,563 | |||||||||||||||
Balance as of December 31, 2008 | 54,365 | $ | 300,021 | $ | (45,304 | ) | $ | (26,261 | ) | $ | 228,456 | |||||||||
F-6
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2006, 2007 and 2008
(in thousands)
2006 | 2007 | 2008 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net income | $ | 30,784 | $ | 38,890 | $ | 44,388 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation | 3,167 | 3,184 | 4,031 | |||||||||
Amortization | 2,876 | 3,214 | 4,342 | |||||||||
Stock-based compensation | 310 | 1,862 | 2,780 | |||||||||
Impairment loss on prepaid licensing fees and intangible assets | — | — | 1,524 | |||||||||
Provision for bad debt expenses | 715 | 743 | 2,953 | |||||||||
Gain on divestiture of business | (7,668 | ) | — | (11,014 | ) | |||||||
Gain on sales of investment option rights | — | (498 | ) | — | ||||||||
Gain on cancellation of prefered share call options | — | (1,069 | ) | — | ||||||||
Loss on disposal of property, plant and equipment | 37 | 134 | 282 | |||||||||
Gain on sale of marketable securities | (2,189 | ) | (205 | ) | (400 | ) | ||||||
Loss on equity method investments | — | 369 | 3,010 | |||||||||
Interest income from premium of convertible notes | (140 | ) | — | — | ||||||||
Gain on early redemption of convertible notes | (625 | ) | — | — | ||||||||
Minority interest | 321 | 1,281 | 757 | |||||||||
Other | 63 | (86 | ) | 300 | ||||||||
Net changes in operating assets and liabilities, net of business acquisitions: | ||||||||||||
Accounts receivable | (5,723 | ) | (3,864 | ) | 465 | |||||||
Prepaid expenses | (2,422 | ) | (2,316 | ) | (4,373 | ) | ||||||
Other current assets | (438 | ) | 3,673 | (2,304 | ) | |||||||
Accounts payable | 69 | (327 | ) | 33 | ||||||||
Accrued expenses | 2,419 | 2,893 | 2,326 | |||||||||
Accrued compensation | 2,264 | 1,991 | (2,057 | ) | ||||||||
Player account balances | 7,440 | 17,609 | 5,691 | |||||||||
Other current liabilities | 254 | (1,259 | ) | 336 | ||||||||
Accrued pension liabilities | (150 | ) | (62 | ) | (167 | ) | ||||||
Prepaid licensing and royalty fees | (3,374 | ) | (9,829 | ) | (4,685 | ) | ||||||
Other | 1,553 | (165 | ) | 2,532 | ||||||||
Net cash provided by operating activities | 29,543 | 56,163 | 50,750 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Decrease (increase) in restricted cash | (2,697 | ) | (3,550 | ) | 4,122 | |||||||
Proceeds from disposal of marketable securities | 26,700 | 20,151 | 25,095 | |||||||||
Divestiture of business, net of cash transferred | 3,318 | 4,930 | 16,471 | |||||||||
Purchase of property, plant and equipment | (2,716 | ) | (4,900 | ) | (8,814 | ) | ||||||
Proceeds from disposal of property, plant and equipment | 8 | 46 | 35 | |||||||||
Proceeds from sales of investment option rights | — | 580 | — | |||||||||
Purchase of marketable securities | (42,509 | ) | (26,552 | ) | (24,746 | ) | ||||||
Purchase of investments | — | (1,827 | ) | (190 | ) | |||||||
Purchase of intangible assets | (2,583 | ) | (4,642 | ) | (7,509 | ) | ||||||
Acquisitions, net of cash acquired | (26,760 | ) | (13,983 | ) | (4,642 | ) | ||||||
Increase in loan receivable | — | (2,500 | ) | — | ||||||||
Increase in refundable deposits | (197 | ) | (610 | ) | (5,862 | ) | ||||||
Decrease in other assets | (82 | ) | — | — | ||||||||
Other | (368 | ) | (314 | ) | (380 | ) | ||||||
Net cash used in investing activities | (47,886 | ) | (33,171 | ) | (6,420 | ) | ||||||
F-7
Table of Contents
For the Years Ended December 31, 2006, 2007 and 2008
2006 | 2007 | 2008 | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Proceeds from (repayment of) short-term borrowings | 12,853 | 20,126 | (18,058 | ) | ||||||||
Capital contribution received from minority shareholders | — | 30 | — | |||||||||
Redemption of convertible notes | (15,000 | ) | — | — | ||||||||
Cash received from the exercise of stock options | 1,265 | 2,733 | 495 | |||||||||
Cash dividend to minority interest shareholders of variable interest entity | (100 | ) | (200 | ) | (300 | ) | ||||||
Other | (80 | ) | (117 | ) | (13 | ) | ||||||
Net cash (used in) provided by financing activities | (1,062 | ) | 22,572 | (17,876 | ) | |||||||
Exchange difference | 46 | 627 | 936 | |||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (19,359 | ) | 46,191 | 27,390 | ||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 41,731 | 22,372 | 68,563 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 22,372 | $ | 68,563 | $ | 95,953 | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||
Interest paid during the year | $ | 581 | $ | 621 | $ | 1,008 | ||||||
Income tax paid during the year | $ | 455 | $ | 827 | $ | 1,412 | ||||||
NON-CASH FINANCING AND INVESTING ACTIVITIES: | ||||||||||||
Change in unrealized holding (loss) gain on available-for-sale securities | $ | 335 | $ | 58 | $ | (282 | ) | |||||
Accrual for investing in marketable securities | — | $ | 2,204 | — | ||||||||
Issuance of common shares for acquisition | — | $ | 2,703 | — | ||||||||
Issuance of convertible notes as acquisition consideration | $ | 15,000 | — | — | ||||||||
Adjustment to acquisition purchase price | $ | 5,000 | — | — | ||||||||
Divestiture of business — consideration receivable | $ | 4,966 | — | 1,006 | ||||||||
F-8
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
NOTE 1. | BUSINESS OVERVIEW, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
F-9
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-10
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-11
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-12
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-13
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-14
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-15
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-16
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-17
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-18
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Categories | Years | |||
Buildings | 50 | |||
Information and communication equipment | 2 to 5 | |||
Office furniture and equipment | 3 to 5 | |||
Leasehold improvements | 2 to 5 | |||
Other | 5 |
Amount | ||||
Year | (in US$ thousands) | |||
2009 | $ | 43 | ||
2010 | 20 |
F-19
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-20
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-21
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-22
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-23
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-24
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-25
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-26
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-27
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-28
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands, except per share figures) | 2006 | 2007 | 2008 | |||||||||
Weighted average outstanding shares | ||||||||||||
Basic | 50,921 | 52,876 | 54,110 | |||||||||
Effect of dilutive securities | ||||||||||||
Employee share-based compensation | 7,509 | 7,146 | 6,042 | |||||||||
Convertible notes | 2,684 | — | — | |||||||||
Diluted | 61,114 | 60,022 | 60,152 | |||||||||
Earnings Per Share — Basic | ||||||||||||
Income from continuing operations | $ | 17,852 | $ | 37,802 | $ | 34,953 | ||||||
Income from discontinued operations, net of taxes | 12,932 | 1,088 | 9,435 | |||||||||
Net income | $ | 30,784 | $ | 38,890 | $ | 44,388 | ||||||
Earnings per share | ||||||||||||
Continuing operations | $ | 0.35 | $ | 0.72 | $ | 0.65 | ||||||
Discontinued operations | 0.25 | 0.02 | 0.17 | |||||||||
$ | 0.60 | $ | 0.74 | $ | 0.82 | |||||||
Earnings Per Share — Diluted | ||||||||||||
Income from continuing operations | $ | 17,852 | $ | 37,802 | $ | 34,953 | ||||||
Interest charges associated with convertible notes | 288 | — | — | |||||||||
Income from continuing operations after assumed conversion of convertible notes | 18,140 | 37,802 | 34,953 | |||||||||
Income from discontinued operations, net of taxes | 12,932 | 1,088 | 9,435 | |||||||||
Net income after assumed conversion of convertible notes and discontinued operations | $ | 31,072 | $ | 38,890 | $ | 44,388 | ||||||
Earnings per share | ||||||||||||
Continuing operations | $ | 0.30 | $ | 0.63 | $ | 0.58 | ||||||
Discontinued operations | 0.21 | 0.02 | 0.16 | |||||||||
$ | 0.51 | $ | 0.65 | $ | 0.74 | |||||||
F-29
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Total revenue | $ | 55,019 | $ | 118,650 | $ | 144,765 | ||||||
Net income (loss) | $ | 320 | $ | 348 | $ | (206 | ) | |||||
F-30
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-31
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | 2007 | 2008 | ||||||
Net assets | $ | 178 | $ | 3,258 | ||||
Total assets | $ | 11,666 | $ | 17,524 | ||||
Total liabilities | $ | 11,488 | $ | 14,265 | ||||
Total revenues | $ | 14,973 | $ | 20,312 | ||||
Net income | $ | 2,429 | $ | 1,571 | ||||
F-32
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-33
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Revenue | $ | 20,581 | $ | 15,164 | $ | 9,289 | ||||||
Income (loss) from discontinued operations before tax | $ | 6,290 | $ | 1,090 | $ | (593 | ) | |||||
Gain on sale of the discontinued operations before tax | 7,668 | — | 11,014 | |||||||||
Income tax expenses | (1,026 | ) | (2 | ) | (986 | ) | ||||||
Income (loss) from discontinued operations | $ | 12,932 | $ | 1,088 | $ | 9,435 | ||||||
F-34
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | ||||
Cash | $ | 493 | ||
Accounts receivable | 2,325 | |||
Other current assets | 1,125 | |||
Property and equipment | 4,328 | |||
Other assets | 165 | |||
Total assets | $ | 8,436 | ||
Accounts payable | $ | 1,056 | ||
Other current liabilities | 759 | |||
Noncurrent liabilities | 672 | |||
Total liabilities | $ | 2,487 | ||
F-35
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-36
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Amortization life | ||||||||
(in US$ thousands) | (in years) | Amount | ||||||
Cash acquired | $ | 11,773 | ||||||
Marketable securities / Investments | 3,724 | |||||||
Other current assets | 5,892 | |||||||
Fixed assets / non-current assets | 3,717 | |||||||
Intangible assets | ||||||||
Capitalized software cost | 3.5~5 | 2,974 | ||||||
Goodwill | N/A | 29,354 | ||||||
Total assets acquired | 57,434 | |||||||
Current liabilities | 11,500 | |||||||
Noncurrent liabilities | 1,050 | |||||||
Minority interest | 6,171 | |||||||
Total liabilities assumed | 18,721 | |||||||
Total purchase price | $ | 38,713 | ||||||
F-37
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands, | Year ended December 31 | |||||||
except per share figures) | 2006 | 2007 | ||||||
Unaudited | Unaudited | |||||||
Net revenue | $ | 105,629 | $ | 172,473 | ||||
Income from operations | 4,186 | 38,617 | ||||||
Net income | 21,009 | 38,980 | ||||||
Basic earnings per share | 0.41 | 0.74 | ||||||
Diluted earnings per share | 0.35 | 0.65 |
F-38
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-39
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Amortization life | Original | Price | Total | |||||||||||||
(in US$ thousands) | (in years) | amount | adjustment | allocation | ||||||||||||
Cash acquired | $ | 463 | $ | — | $ | 463 | ||||||||||
Accounts receivable | 3,626 | — | 3,626 | |||||||||||||
Other current assets | 106 | — | 106 | |||||||||||||
Fixed assets / non-current assets | 628 | — | 628 | |||||||||||||
Intangible assets | ||||||||||||||||
Trade name and trademark | N/A | 10,795 | — | 10,795 | ||||||||||||
Customer relationships | 9 | 5,546 | — | 5,546 | ||||||||||||
Completed technology | 7 | 2,301 | — | 2,301 | ||||||||||||
Self-developed software | 5 | 1,534 | — | 1,534 | ||||||||||||
Other | 5 | 73 | — | 73 | ||||||||||||
Goodwill | N/A | 21,409 | 4,762 | 26,171 | ||||||||||||
Total assets acquired | 46,481 | 4,762 | 51,243 | |||||||||||||
Current liabilities | (3,501 | ) | — | (3,501 | ) | |||||||||||
Noncurrent liabilities | (1 | ) | — | (1 | ) | |||||||||||
Total liabilities assumed | (3,502 | ) | — | (3,502 | ) | |||||||||||
Total purchase price | $ | 42,979 | $ | 4,762 | $ | 47,741 | ||||||||||
F-40
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Gaming software | Online game | |||||||||||
(in US$ thousands) | and service | and service | Total | |||||||||
Balance as of December 31, 2006 | 29,243 | 26,574 | $ | 55,817 | ||||||||
Acquisition-T2CN | — | 29,354 | 29,354 | |||||||||
Post-acquisition adjustment | — | (238 | ) | (238 | ) | |||||||
Translation adjustment | — | 216 | 216 | |||||||||
Balance as of December 31, 2007 | 29,243 | 55,906 | 85,149 | |||||||||
Acquisition-T2CN | — | 1,738 | 1,738 | |||||||||
Other adjustment | — | 511 | 511 | |||||||||
Translation adjustment | — | (300 | ) | (300 | ) | |||||||
Balance as of December 31, 2008 | $ | 29,243 | $ | 57,855 | $ | 87,098 | ||||||
December 31, 2007 | ||||||||||||
Gross carrying | Accumulated | |||||||||||
(in US$ thousands) | amount | amortization | Net | |||||||||
Completed technology | $ | 3,631 | $ | (1,966 | ) | $ | 1,665 | |||||
Trade name, trademark and non-competition agreement | 11,898 | (423 | ) | 11,475 | ||||||||
Capitalized software cost | 12,222 | (3,711 | ) | 8,511 | ||||||||
Customer relationships | 5,618 | (1,249 | ) | 4,369 | ||||||||
Other | 66 | (26 | ) | 40 | ||||||||
Total | $ | 33,435 | $ | (7,375 | ) | $ | 26,060 | |||||
F-41
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
December 31, 2008 | ||||||||||||
Gross carrying | Accumulated | |||||||||||
(in US$ thousands) | amount | amortization | Net | |||||||||
Completed technology | $ | 3,605 | $ | (2,288 | ) | $ | 1,317 | |||||
Trade name, trademark and non-competition agreement | 11,774 | (539 | ) | 11,235 | ||||||||
Capitalized software cost | 19,077 | (6,435 | ) | 12,642 | ||||||||
Customer relationships | 5,555 | (1,852 | ) | 3,703 | ||||||||
Other | 66 | (33 | ) | 33 | ||||||||
Total | $ | 40,077 | $ | (11,147 | ) | $ | 28,930 | |||||
Amount | ||||
(in US$ thousands) | ||||
2009 | $ | 5,147 | ||
2010 | 5,307 | |||
2011 | 4,203 | |||
2012 | 1,667 | |||
2013 | 700 | |||
$ | 17,024 | |||
F-42
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-43
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
December 31, 2008 | ||||||||||||||||
Fair Value | ||||||||||||||||
(in US$ thousands) | Level 1 | Level 2 | Level 3 | Measurements | ||||||||||||
Assets | ||||||||||||||||
Cash equivalents — time deposits | $ | — | $ | 12,512 | $ | — | $ | 12,512 | ||||||||
Marketable securities — current | — | 3,419 | — | 3,419 | ||||||||||||
Marketable securities — noncurrent | — | — | 26,041 | 26,041 | ||||||||||||
Total | $ | — | $ | 15,931 | $ | 26,041 | $ | 41,972 | ||||||||
F-44
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Fair Value Measurements | ||||
Using Significant | ||||
Unobservable Inputs | ||||
(Level 3) | ||||
Marketable Securities - | ||||
(in US$ thousands) | Noncurrent | |||
Beginning Balance | $ | 21,018 | ||
Total gains or losses (realized/unrealized) Included in earnings | — | |||
Included in other comprehensive income | — | |||
Purchases and settlements | 5,023 | |||
Transfers in and/or out of Level 3 | — | |||
Ending Balance | $ | 26,041 | ||
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date. | None | |||
F-45
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
December 31, | ||||||||
(in US$ thousands) | 2007 | 2008 | ||||||
Checking and savings accounts | $ | 60,809 | $ | 83,441 | ||||
Time deposits | 7,754 | 12,512 | ||||||
Total | $ | 68,563 | $ | 95,953 | ||||
December 31, | ||||||||
(in US$ thousands) | 2007 | 2008 | ||||||
Available-for-sale securities | ||||||||
Open-end funds | $ | 11,354 | $ | 3,419 | ||||
F-46
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
December 31, | ||||||||
(in US$ thousands) | 2007 | 2008 | ||||||
Accounts receivable | $ | 19,653 | $ | 15,442 | ||||
Less: Allowance for doubtful accounts | (1,362 | ) | (254 | ) | ||||
Net | $ | 18,291 | $ | 15,188 | ||||
For the years ended December 31, | ||||||||||||
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Allowance for doubtful accounts | ||||||||||||
Balance at beginning of year | $ | 1,684 | $ | 1,895 | $ | 1,362 | ||||||
Business acquisition | 163 | — | — | |||||||||
Additions: Provision for bad debt expenses | 715 | 743 | 313 | |||||||||
Less: Write-offs | (681 | ) | (1,279 | ) | (399 | ) | ||||||
Divestiture — Internet access and service business | — | — | (1,041 | ) | ||||||||
Translation adjustment | 14 | 3 | 19 | |||||||||
Balance at end of year | $ | 1,895 | $ | 1,362 | $ | 254 | ||||||
F-47
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
December 31, | ||||||||
(in US$ thousands) | 2007 | 2008 | ||||||
Available-for-sale securities | ||||||||
Debt securites | $ | 21,018 | $ | 26,041 | ||||
F-48
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
December 31, | ||||||||
(in US$ thousands) | 2007 | 2008 | ||||||
Current assets: | ||||||||
Time deposit pledged to banks as guarantees for bank loans | $ | 6,247 | $ | — | ||||
Other assets: | ||||||||
Time deposit pledged to a Bank as escrow amount for divestiture of Internet access and service business (See Note 4, “Divestitures”, for additional information) | — | 2,125 | ||||||
Total | $ | 6,247 | $ | 2,125 | ||||
F-49
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
December 31, | ||||||||
(in US$ thousands) | 2007 | 2008 | ||||||
Accrued advertising expenses | $ | 3,402 | $ | 5,013 | ||||
Accrued professional fees | 1,832 | 2,627 | ||||||
Other | 3,917 | 3,705 | ||||||
Total | $ | 9,151 | $ | 11,345 | ||||
F-50
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
December 31, | ||||||||
(in US$ thousands) | 2007 | 2008 | ||||||
Deferred revenue | $ | 7,647 | $ | 7,738 | ||||
Accrual for investing in marketable securities | 2,204 | — | ||||||
Income taxes | 1,041 | 1,431 | ||||||
Other | 3,760 | 3,217 | ||||||
Total | $ | 14,652 | $ | 12,386 | ||||
F-51
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-52
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | 2007 | 2008 | ||||||
Change in benefit obligation | ||||||||
Benefit obligation at beginning of year | $ | 541 | $ | 600 | ||||
Service cost | 14 | — | ||||||
Interest cost | 15 | 11 | ||||||
Actuarial gain (loss) | 27 | (37 | ) | |||||
Curtailment | — | (87 | ) | |||||
Divestiture | — | (208 | ) | |||||
Translation adjustment | 3 | 6 | ||||||
Benefit obligation at end of year | $ | 600 | $ | 285 | ||||
Change in plan assets | ||||||||
Fair value of plan assets at beginning of year | $ | 135 | $ | 204 | ||||
Actual return on plan assets | 3 | 5 | ||||||
Employer contribution | 66 | 37 | ||||||
Divestiture | — | (67 | ) | |||||
Translation adjustment | — | (2 | ) | |||||
Fair value of plan assets at end of year | $ | 204 | $ | 177 | ||||
Accumulated benefit obligation | $ | (497 | ) | $ | (229 | ) | ||
Funded status | $ | (396 | ) | $ | (108 | ) | ||
Pension Benefits | ||||||||
(in US$ thousands) | 2007 | 2008 | ||||||
Accrued benefit cost | $ | (396 | ) | $ | (108 | ) | ||
Accumulated other comprehensive income | ||||||||
Unrecognized transition obligation | $ | 76 | $ | — | ||||
Unrecognized net gain | (257 | ) | (276 | ) | ||||
Accumulated other comprehensive income | $ | (181 | ) | $ | (276 | ) | ||
F-53
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Service cost | $ | 12 | $ | 14 | $ | — | ||||||
Interest cost | 16 | 15 | 11 | |||||||||
Expected return on plan assets | (4 | ) | (5 | ) | (4 | ) | ||||||
Amortization of transition obligation | 4 | 4 | — | |||||||||
Amortization of net gain | (47 | ) | (29 | ) | (21 | ) | ||||||
Net periodic benefit cost | $ | (19 | ) | $ | (1 | ) | $ | (14 | ) | |||
Curtailment gain | $ | (42 | ) | $ | — | $ | (87 | ) | ||||
2006 | 2007 | 2008 | ||||||||||
Discount rate | 2.75 | % | 2.75 | % | 2.50 | % | ||||||
Rate of return on plan assets | 2.75 | % | 2.75 | % | 2.50 | % | ||||||
Rate of compensation increase | 1.00 | % | 1.00 | % | 1.00 | % |
F-54
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-55
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-56
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-57
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-58
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Cost of online game and service revenues | $ | — | $ | 48 | $ | 27 | ||||||
Product development & engineering expenses | 115 | 250 | 480 | |||||||||
Selling and marketing expenses | 56 | 142 | 244 | |||||||||
General and administrative expenses | 54 | 1,394 | 1,954 | |||||||||
Pre-tax stock-based compensation expense | 225 | 1,834 | 2,705 | |||||||||
Income tax benefit | 33 | 249 | 269 | |||||||||
Total stock-based compensation expense reported in continuing operations | $ | 192 | $ | 1,585 | $ | 2,436 | ||||||
Total stock-based compensation expense reported in discontinued operations, net of tax | $ | 58 | $ | 28 | $ | 63 | ||||||
F-59
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-60
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-61
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Stock-Based | ||||||||||
compensation | Granted | Options’ exercise | RSUs’ grant | |||||||
plan | awards | Vesting schedule | price | date fair value | ||||||
2002 plan | 3,000,000 | immediately upon granting | $0.79 | — | ||||||
2004 plan | 7,528,185 | immediately upon granting to three years | $0.79 ~ $2.55 | — | ||||||
2006 plan | 999,543 | immediately upon granting to four years | $10.15 ~ $16.6 | $9.81 ~ $16.01 | ||||||
2007 plan | 1,980,907 | one to four years | $4.24 ~ $18.17 | $4.24 ~ $15.35 | ||||||
2008 plan | 560,000 | four to six years | $4.24 | — |
F-62
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
For the years ended December 31, | 2006 | 2007 | 2008 | |||||
Option term (years) | — | 2.77 | 2.77~4.58 | |||||
Volatility | — | 57.41%~58.80% | 57.83%~64.58% | |||||
Weighted-average volatility | — | 58.68% | 64.01% | |||||
Risk-free interest rate | — | 3.24%~4.56% | 1.72%~2.88% | |||||
Dividend yield | — | 0% | 0% | |||||
Weighted-average fair value of option granted | — | $4.46 | $2.36 |
F-63
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
2006 | 2007 | 2008 | ||||||||||||||||||||||||||||||
Weighted | ||||||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | -Average | Aggregate | ||||||||||||||||||||||||||||
Avg. | Avg. | Avg. | Remaining | Intrinsic | ||||||||||||||||||||||||||||
Exercise | No. of Shares | Exercise | No. of Shares | Exercise | No. of Shares | Contractual | Value | |||||||||||||||||||||||||
Price | (in thousands) | Price | (in thousands) | Price | (in thousands) | Term | (in thousands) | |||||||||||||||||||||||||
Balance at January 1, | $ | 1.11 | 10,000 | $ | 1.11 | 8,789 | $ | 2.42 | 7,912 | |||||||||||||||||||||||
Options granted | — | — | 10.78 | 1,145 | 4.69 | 1,341 | ||||||||||||||||||||||||||
Options exercised | 1.10 | (1,152 | ) | 1.43 | (1,911 | ) | 0.95 | (518 | ) | |||||||||||||||||||||||
Options Forfeited/canceled /expired | 1.48 | (59 | ) | 2.47 | (111 | ) | 9.97 | (448 | ) | |||||||||||||||||||||||
Balance at December 31, | $ | 1.11 | 8,789 | $ | 2.42 | 7,912 | $ | 2.47 | 8,287 | 6.32 | $ | 30,644 | ||||||||||||||||||||
Exercisable at December 31, | $ | 1.08 | 8,318 | $ | 1.06 | 6,692 | $ | 1.33 | 6,448 | 5.59 | $ | 28,851 | ||||||||||||||||||||
Vested and expected to vest at December 31, | $ | 1.11 | 8,783 | $ | 2.42 | 7,912 | $ | 2.47 | 8,287 | 6.32 | $ | 30,644 | ||||||||||||||||||||
F-64
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Options outstanding | Options currently exercisable | |||||||||||||
Weighted average | ||||||||||||||
No. of Shares | remaining | No. of Shares | ||||||||||||
Exercise price | (in thousands) | contractual life | Exercise price | (in thousands) | ||||||||||
under $1 | 5,431 | 5.50 years | under $1 | 5,431 | ||||||||||
$1~$10 | 2,094 | 7.61 years | $1~$10 | 804 | ||||||||||
$10~$20 | 762 | 8.67 years | $10~$20 | 213 | ||||||||||
8,287 | 6,448 | |||||||||||||
Number of units | Weighted-average | |||||||
(in thousands) | grant date fair value | |||||||
Nonvested at December 31, 2007 | 238 | $ | 10.25 | |||||
Granted | 634 | $ | 10.65 | |||||
Vested | (132 | ) | $ | 11.12 | ||||
Forfeited | (99 | ) | $ | 10.63 | ||||
Nonvested at December 31, 2008 | 641 | $ | 10.41 | |||||
F-65
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
For the years ended December 31, | 2006 | 2007 | 2008 | |||
Option term (years) | 5.63~6.41 | 5.44~6.02 | 3.50~6.26 | |||
Volatility | 47.39%~56.10% | 44.64%~46.96% | 47.85%~57.41% | |||
Weighted-average volatility | 53.81% | 45.03% | 48.19% | |||
Risk-free interest rate | 4.54%~4.82% | 4.31%~4.68% | 2.20%~4.54% | |||
Dividend yield | 0% | 0% | 0% | |||
Weighted-average fair value of option granted | $0.39 | $0.52 | $0.38 |
F-66
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
2007 | 2008 | |||||||||||||||||||||||
Weighted- | ||||||||||||||||||||||||
Average | ||||||||||||||||||||||||
Remaining | Aggregate | |||||||||||||||||||||||
Weighted Avg. | No. of Shares | Weighted Avg. | No. of Shares | Contractual | Intrinsic Value | |||||||||||||||||||
Exercise Price | (in thousands) | Exercise Price | (in thousands) | Term | (in thousands) | |||||||||||||||||||
Balance at Beginning of the year | $ | 1.30 | 2,973 | $ | 1.24 | 3,300 | ||||||||||||||||||
Options granted | 1.00 | 501 | $ | 1.02 | 6,500 | |||||||||||||||||||
Options | ||||||||||||||||||||||||
Forfeited/canceled /expired | 1.57 | (174 | ) | $ | 1.15 | (2,959 | ) | |||||||||||||||||
Balance at December 31, | $ | 1.24 | 3,300 | $ | 1.07 | 6,841 | 5.20 | $ | 3,584 | |||||||||||||||
Exercisable at December 31, | $ | 1.20 | 937 | $ | 1.27 | 1,406 | 7.76 | $ | 461 | |||||||||||||||
Vested and expected to vest at December 31, | $ | 1.24 | 3,016 | $ | 1.06 | 5,753 | 5.20 | $ | 3,070 | |||||||||||||||
F-67
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Options outstanding | Options currently exercisable | |||||||||||||||
Weighted average | ||||||||||||||||
Range of | No. of Shares | remaining | Weighted average | No. of Shares | ||||||||||||
exercise price | (in thousands) | contractual life | exercise price | (in thousands) | ||||||||||||
$1.00 | 6,075 | 4.86 years | $ | 1.00 | 782 | |||||||||||
$1.60 | 766 | 7.94 years | $ | 1.60 | 624 | |||||||||||
6,841 | 1,406 | |||||||||||||||
For the years ended December 31, | ||||||||||||
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Gain on cancellation of preferred share call options | $ | — | $ | 1,069 | $ | — | ||||||
Indemnification from termination of game licensing | — | 601 | — | |||||||||
Compensation from termination of investment option rights | — | 498 | — | |||||||||
Gain on early redemption of convertible notes | 625 | — | — | |||||||||
Subsidy received from tax authority | 561 | |||||||||||
Other | 59 | (25 | ) | 281 | ||||||||
$ | 684 | $ | 2,143 | $ | 842 | |||||||
F-68
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
For the years ended December 31, | ||||||||||||
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Income from continuing operations before income taxes U.S. operations | $ | 865 | $ | 489 | $ | 1,095 | ||||||
Non-U.S. operations | 17,831 | 38,995 | 35,684 | |||||||||
Total income from continuing operations before income taxes | $ | 18,696 | $ | 39,484 | $ | 36,779 | ||||||
For the years ended December 31, | ||||||||||||
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
U.S. operations | $ | 366 | $ | 224 | $ | 620 | ||||||
Non-U.S. operations | 157 | 177 | 449 | |||||||||
$ | 523 | $ | 401 | $ | 1,069 | |||||||
For the years ended December 31, | ||||||||||||
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
U.S. federal | ||||||||||||
Current | $ | 266 | $ | 281 | $ | (57 | ) | |||||
Deferred | 8 | (111 | ) | 528 | ||||||||
$ | 274 | $ | 170 | $ | 471 | |||||||
U.S. state and local : | ||||||||||||
Current | $ | 90 | $ | 84 | $ | 208 | ||||||
Deferred | 2 | (30 | ) | (59 | ) | |||||||
$ | 92 | $ | 54 | $ | 149 | |||||||
Non — U.S. : | ||||||||||||
Current | $ | 173 | $ | 132 | $ | 976 | ||||||
Deferred | (16 | ) | 45 | (527 | ) | |||||||
$ | 157 | $ | 177 | $ | 449 | |||||||
Total income tax provisions | $ | 523 | $ | 401 | $ | 1,069 | ||||||
F-69
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
For the years ended December 31, | ||||||||||||
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Federal statutory rate | 34.00 | % | 34.00 | % | 34.00 | % | ||||||
State and local — net of federal tax benefit | 6.78 | % | 6.27 | % | 6.27 | % | ||||||
Foreign tax differential | (35.75 | %) | (36.16 | %) | (31.10 | %) | ||||||
Loss carryforward utilized | (5.67 | %) | (3.33 | %) | (2.89 | %) | ||||||
Reversal of valuation allowance | — | — | (4.69 | %) | ||||||||
Other | 3.44 | % | 0.24 | % | 1.32 | % | ||||||
Effective rate | 2.80 | % | 1.02 | % | 2.91 | % | ||||||
December 31, | ||||||||
(in US$ thousands) | 2007 | 2008 | ||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 1,128 | $ | 1 | ||||
Deferred revenue | 451 | 472 | ||||||
Amortization | 213 | 378 | ||||||
Investment credits | 322 | 185 | ||||||
Share-based compensation | 74 | 116 | ||||||
Allowance for doubtful accounts | 284 | — | ||||||
Pension expense | 145 | 80 | ||||||
Depreciation | 201 | 22 | ||||||
Others | 194 | 214 | ||||||
3,012 | 1,468 | |||||||
Less: valuation allowance | (3,012 | ) | (106 | ) | ||||
Deferred tax assets — net | $ | — | $ | 1,362 | ||||
F-70
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
December 31, | ||||||||
(in US$ thousands) | 2007 | 2008 | ||||||
Deferred tax liabilities: | ||||||||
Depreciation and amortization | $ | — | $ | 1,754 | ||||
Others | (107 | ) | (244 | ) | ||||
Deferred tax liabilities — net | $ | (107 | ) | $ | 1,510 | |||
For the years ended December 31, | ||||||||||||
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Valuation allowance: | ||||||||||||
Balance at beginning of year | $ | 10,396 | $ | 4,032 | $ | 3,012 | ||||||
Subsequent reversal/utilization of valuation allowance | (4,160 | ) | (1,224 | ) | (2,787 | ) | ||||||
Reversal of valuation allowance due to loss carryforwards expired unused | (2,283 | ) | (990 | ) | — | |||||||
Divestiture | — | — | (219 | ) | ||||||||
Acquisition | — | 1,197 | — | |||||||||
Exchange differences | 79 | (3 | ) | 100 | ||||||||
Balance at end of year | $ | 4,032 | $ | 3,012 | $ | 106 | ||||||
F-71
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-72
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | ||||
Balance at January 1, 2007 | $ | 209 | ||
Decrease due to settlement | (82 | ) | ||
Balance at December 31, 2007 | 127 | |||
Decrease due to settlement | (127 | ) | ||
Balance at December 31, 2008 | $ | — | ||
F-73
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-74
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-75
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Amount | ||||
Year | (in US$ thousands) | |||
2009 | $ | 5,256 | ||
2010 | 5,272 | |||
2011 | 3,703 | |||
2012 | 3,302 | |||
2013 | 2,382 | |||
Thereafter | 1,747 | |||
Total | $ | 21,662 | ||
F-76
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Minimum | ||||||||||||
guarantees against | ||||||||||||
License fees | future royalties | Total | ||||||||||
Minimum required payments: | ||||||||||||
In 2009 | $ | 1,013 | $ | 7,815 | $ | 8,828 | ||||||
After 2009 | 3,300 | 28,000 | 31,300 | |||||||||
$ | 4,313 | $ | 35,815 | $ | 40,128 | |||||||
F-77
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-78
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-79
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-80
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-81
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-82
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
F-83
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Gaming | ||||||||||||
software and | Online game | |||||||||||
(in US$ thousands) | service | and service | Total | |||||||||
2006: | ||||||||||||
Segment profit or loss: | ||||||||||||
Net revenue from external customers | $ | 55,019 | $ | 18,692 | $ | 73,711 | ||||||
Income from operations | $ | 16,772 | $ | 5,618 | $ | 22,390 | ||||||
Share-based compensation | $ | 82 | $ | 101 | $ | 183 | ||||||
Interest income | $ | 212 | $ | 20 | $ | 232 | ||||||
Interest expense | $ | — | $ | 1 | $ | 1 | ||||||
Gains on sales of marketable securities | $ | — | $ | 4 | $ | 4 | ||||||
Foreign exchange loss | $ | 27 | $ | 1 | $ | 28 | ||||||
Depreciation | $ | 517 | $ | 250 | $ | 767 | ||||||
Amortization, including intangible assets | $ | 1,292 | $ | 1,423 | $ | 2,715 | ||||||
Income tax expense | $ | 415 | $ | 108 | $ | 523 | ||||||
Segment assets: | ||||||||||||
Additions to property, plant and equipment | $ | 1,701 | $ | 738 | $ | 2,439 | ||||||
Additions to intangible assets | $ | 1,172 | $ | 21,359 | $ | 22,531 | ||||||
Additions to goodwill | $ | — | $ | 26,409 | $ | 26,409 | ||||||
Total assets | $ | 56,850 | $ | 54,457 | $ | 111,307 | ||||||
F-84
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Gaming | ||||||||||||
software and | Online game | |||||||||||
(in US$ thousands) | service | and service | Total | |||||||||
2007: | ||||||||||||
Segment profit or loss: | ||||||||||||
Net revenue from external customers | $ | 118,950 | $ | 32,764 | $ | 151,714 | ||||||
Income from operations | $ | 37,703 | $ | 6,844 | $ | 44,547 | ||||||
Share-based compensation | $ | 548 | $ | 373 | $ | 921 | ||||||
Interest income | $ | 871 | $ | 194 | $ | 1,065 | ||||||
Interest expense | $ | 1 | $ | — | $ | 1 | ||||||
Loss on sales of marketable securities | $ | — | $ | 104 | $ | 104 | ||||||
Foreign exchange loss | $ | 486 | $ | 195 | $ | 681 | ||||||
Loss on equity method investments | $ | — | $ | 369 | $ | 369 | ||||||
Depreciation | $ | 1,060 | $ | 589 | $ | 1,649 | ||||||
Amortization, including intangible assets | $ | 1,271 | $ | 1,852 | $ | 3,123 | ||||||
Income tax expense | $ | 229 | $ | 172 | $ | 401 | ||||||
Segment assets: | ||||||||||||
Equity method investments | $ | — | $ | 2,762 | $ | 2,762 | ||||||
Additions to property, plant and equipment | $ | 2,280 | $ | 2,575 | $ | 4,855 | ||||||
Additions to intangible assets | $ | 2,070 | $ | 3,575 | $ | 5,645 | ||||||
Additions to goodwill | $ | — | $ | 29,354 | $ | 29,354 | ||||||
Total assets | $ | 93,144 | $ | 92,597 | $ | 185,741 | ||||||
F-85
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
Gaming | ||||||||||||
software and | Online game | |||||||||||
(in US$ thousands) | service | and service | Total | |||||||||
2008: | ||||||||||||
Segment profit or loss: | ||||||||||||
Net revenue from external customers | $ | 144,765 | $ | 45,604 | $ | 190,369 | ||||||
Income from operations | $ | 36,360 | $ | 7,998 | $ | 44,358 | ||||||
Share-based compensation | $ | 1,249 | $ | 547 | $ | 1,796 | ||||||
Impairment loss on prepaid licensing fees and intangible assets | $ | — | $ | 1,524 | $ | 1,524 | ||||||
Interest income | $ | 680 | $ | 367 | $ | 1,047 | ||||||
Interest expense | $ | 7 | $ | — | $ | 7 | ||||||
Gains on sales of marketable securities | $ | — | $ | 4 | $ | 4 | ||||||
Foreign exchange gain (loss) | $ | 269 | $ | (124 | ) | $ | 145 | |||||
Loss on equity method investments | $ | — | $ | 3,010 | $ | 3,010 | ||||||
Depreciation | $ | 2,064 | $ | 1,080 | $ | 3,144 | ||||||
Amortization, including intangible assets | $ | 1,704 | $ | 2,549 | $ | 4,253 | ||||||
Income tax expense | $ | 743 | $ | 326 | $ | 1,069 | ||||||
Segment assets: | ||||||||||||
Equity method investments | $ | — | $ | 75 | $ | 75 | ||||||
Additions to property, plant and equipment | $ | 6,095 | $ | 1,585 | $ | 7,680 | ||||||
Additions to intangible assets | $ | 3,953 | $ | 3,383 | $ | 7,336 | ||||||
Additions to goodwill | $ | — | $ | 2,249 | $ | 2,249 | ||||||
Total assets | $ | 132,631 | $ | 130,327 | $ | 262,958 | ||||||
F-86
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Income (loss) from operations: | ||||||||||||
Total segments | $ | 22,390 | $ | 44,547 | $ | 44,358 | ||||||
Adjustment* | (4,611 | ) | (7,127 | ) | (6,255 | ) | ||||||
Total GigaMedia consolidated | $ | 17,779 | $ | 37,420 | $ | 38,103 | ||||||
Share-based compensation | ||||||||||||
Total segments | $ | 183 | $ | 921 | $ | 1,796 | ||||||
Adjustment* | 42 | 913 | 909 | |||||||||
Total GigaMedia consolidated | $ | 225 | $ | 1,834 | $ | 2,705 | ||||||
Interest income: | ||||||||||||
Total segments | $ | 232 | $ | 1,065 | $ | 1,047 | ||||||
Adjustment* | 484 | 369 | 413 | |||||||||
Total GigaMedia consolidated | $ | 716 | $ | 1,434 | $ | 1,460 | ||||||
Interest expense: | ||||||||||||
Total segments | $ | 1 | $ | 1 | $ | 7 | ||||||
Adjustment* | 427 | 546 | 969 | |||||||||
Total GigaMedia consolidated | $ | 428 | $ | 547 | $ | 976 | ||||||
Gain (loss) on sales of marketable securities: | ||||||||||||
Total segments | $ | 4 | $ | (104 | ) | $ | 4 | |||||
Adjustments* | 66 | 288 | 369 | |||||||||
Total GigaMedia consolidated | $ | 70 | $ | 184 | $ | 373 | ||||||
Foreign exchange gain (loss): | ||||||||||||
Total segments | $ | (28 | ) | $ | (681 | ) | $ | 145 | ||||
Adjustments* | (94 | ) | 2 | 95 | ||||||||
Total GigaMedia consolidated | $ | (122 | ) | $ | (679 | ) | $ | 240 | ||||
Depreciation: | ||||||||||||
Total segments | $ | 767 | $ | 1,649 | $ | 3,144 | ||||||
Adjustments* | — | — | 177 | |||||||||
Total GigaMedia consolidated | $ | 767 | $ | 1,649 | $ | 3,321 | ||||||
Amortization: | ||||||||||||
Total segments | $ | 2,715 | $ | 3,123 | $ | 4,253 | ||||||
Adjustments* | 16 | 26 | 34 | |||||||||
Total GigaMedia consolidated | $ | 2,731 | $ | 3,149 | $ | 4,287 | ||||||
Income tax expense: | ||||||||||||
Total segments | $ | 523 | $ | 401 | $ | 1,069 | ||||||
Adjustments* | — | — | — | |||||||||
Total GigaMedia consolidated | $ | 523 | $ | 401 | $ | 1,069 | ||||||
F-87
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | 2006 | 2007 | 2008 | |||||||||
Equity method investment: | ||||||||||||
Total segments | $ | — | $ | 2,762 | $ | 75 | ||||||
Adjustments** | — | — | — | |||||||||
Total GigaMedia consolidated | $ | — | $ | 2,762 | $ | 75 | ||||||
Additions to property, plant and equipment: | ||||||||||||
Total segments | $ | 2,439 | $ | 4,855 | $ | 7,680 | ||||||
Adjustments** | 750 | 1,392 | 1,134 | |||||||||
Total GigaMedia consolidated | $ | 3,189 | $ | 6,247 | $ | 8,814 | ||||||
Additions to intangible assets: | ||||||||||||
Total segments | $ | 22,531 | $ | 5,645 | $ | 7,336 | ||||||
Adjustments** | 301 | 1,088 | 309 | |||||||||
Total GigaMedia consolidated | $ | 22,832 | $ | 6,733 | $ | 7,645 | ||||||
Additions to goodwill: | ||||||||||||
Total segments | $ | 26,409 | $ | 29,354 | $ | 2,249 | ||||||
Adjustments** | — | — | — | |||||||||
Total GigaMedia consolidated | $ | 26,409 | $ | 29,354 | $ | 2,249 | ||||||
Total assets: | ||||||||||||
Total segments | $ | 111,307 | $ | 185,741 | $ | 262,958 | ||||||
Adjustment** | 71,312 | 98,124 | 53,835 | |||||||||
Total GigaMedia consolidated | $ | 182,619 | $ | 283,865 | $ | 316,793 | ||||||
* | Adjustment items include corporate and certain back-office costs and expenses not attributable to any specific segment. | |
** | Adjustment items include total corporate assets, the Internet access and service business segment and eliminations. |
F-88
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
(in US$ thousands) | ||||||||||||
Geographic region/country | 2006 | 2007 | 2008 | |||||||||
Canada | $ | 55,019 | $ | 118,650 | $ | 144,765 | ||||||
Taiwan | 16,854 | 18,388 | 20,932 | |||||||||
PRC | 7 | 8,883 | 19,652 | |||||||||
Hong Kong | 1,831 | 5,360 | 4,964 | |||||||||
Others | — | 433 | 56 | |||||||||
Total | $ | 73,711 | $ | 151,714 | $ | 190,369 | ||||||
(in US$ thousands) | December 31, | |||||||||||
Geographic region | 2006 | 2007 | 2008 | |||||||||
Taiwan | $ | 8,241 | $ | 8,431 | $ | 4,118 | ||||||
Canada | 1,143 | 2,053 | 2,264 | |||||||||
PRC | 51 | 1,334 | 1,734 | |||||||||
United States | 632 | 943 | 4,642 | |||||||||
Hong Kong | 31 | 247 | 710 | |||||||||
Total | $ | 10,098 | $ | 13,008 | $ | 13,468 | ||||||
F-89
Table of Contents
EXHIBIT | ||||
No. | DESCRIPTION | |||
1.1 | Amended Memorandum and Articles of Association of our Company, incorporated by reference to Exhibit 1.3 to our annual report for the year 2006 on Form 20-F filed with the SEC on June 29, 2007 | |||
4.1 | End-User License Agreement between Internet Media Licensing Limited and Ultra Internet Media, S.A., dated April 1, 2004, incorporated by reference to Exhibit 4.41 to our annual report for the year 2004 on Form 20-F filed with the SEC on June 30, 2005 | |||
4.2 | Second Amendment to the End-User License Agreement between Internet Media Licensing Limited and Ultra Internet Media, S.A., dated March 1, 2006, incorporated by reference to Exhibit 4.41 to our annual report for the year 2005 on Form 20-F filed with the SEC on June 28, 2006 | |||
4.3 | Third Amendment to the End-User License Agreement between Internet Media Licensing Limited and Ultra Internet Media, S.A., dated March 1, 2007, incorporated by reference to Exhibit 4.50 to our annual report for the year 2006 on Form 20-F filed with the SEC on June 29, 2007 | |||
4.4 | Fourth Amendment to the End-User License Agreement between Internet Media Licensing Limited and Ultra Internet Media, S.A., dated March 1, 2008# | |||
4.5 | Exclusive Business Consultancy Service Agreement between T2 Technology and T2 Entertainment, dated November 15, 2006, incorporated by reference to Exhibit 4.55 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.6 | Supplemental Agreement to Exclusive Business Consultancy Service Agreement between T2 Technology and T2 Entertainment, dated April 1, 2007, incorporated by reference to Exhibit 4.56 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.7 | Exclusive Technical Service and Consultancy Agreement between T2 Entertainment and T2 Technology, dated November 15, 2006, incorporated by reference to Exhibit 4.57 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.8 | Supplemental Agreement to Exclusive Technical Service and Consultancy Agreement between T2 Entertainment and T2 Technology, dated April 1, 2007, incorporated by reference to Exhibit 4.58 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.9 | Agreement for Pledge of Shares in T2 Entertainment between Wang Chi, Lu Ning and T2 Technology, dated February 9, 2007, incorporated by reference to Exhibit 4.59 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.10 | Exclusive Call Option Agreement regarding T2 Entertainment between Wang Chi, Lu Ning, T2 Entertainment and T2 Technology, dated February 9, 2007, incorporated by reference to Exhibit 4.60 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.11 | Proxy Voting Agreement regarding T2 Entertainment between T2 Technology, T2 Entertainment, Wang Chi and Lu Ning, dated February 9, 2007, incorporated by reference to Exhibit 4.61 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.12 | Exclusive Business Consultancy Service Agreement between T2 Technology and T2 Advertisement, dated November 15, 2006, incorporated by reference to Exhibit 4.62 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.13 | Supplemental Agreement to Exclusive Business Consultancy Service Agreement between T2 Technology and T2 Advertisement, dated January 1, 2007, incorporated by reference to Exhibit 4.63 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 |
Table of Contents
EXHIBIT | ||||
No. | DESCRIPTION | |||
4.14 | Agreement for Pledge of Shares in T2 Advertisement between Chi Min, Chang Tao and T2 Technology, dated March 20, 2008, incorporated by reference to Exhibit 4.64 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.15 | Exclusive Call Option Agreement regarding T2 Advertisement between Chi Min, Chang Tao, T2 Advertisement and T2 Technology, dated March 20, 2008, incorporated by reference to Exhibit 4.65 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.16 | Proxy Voting Agreement regarding T2 Advertisement between T2 Technology, T2 Advertisement, Chi Min and Chang Tao, dated March 20, 2008, incorporated by reference to Exhibit 4.66 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.17 | Share Purchase Agreement between William Zhu and GigaMedia China Limited, dated June 3, 2007, incorporated by reference to Exhibit 4.67 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.18 | Share Purchase Agreement between Yu-Chia Lee and GigaMedia China Limited, dated June 6, 2007, incorporated by reference to Exhibit 4.68 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.19 | Share Purchase Agreement between Zheng Bin and GigaMedia China Limited, dated June 10, 2007, incorporated by reference to Exhibit 4.69 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.20 | Share Purchase Agreement between J&R Music LLC, Ya-Tsen Lin and GigaMedia China Limited, dated July 5, 2007, incorporated by reference to Exhibit 4.70 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.21 | Share Purchase Agreement between Kingland Overseas Development Inc. and GigaMedia China Limited, dated July 6, 2007, incorporated by reference to Exhibit 4.71 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.22 | Share Purchase Agreement between Jim Ji Wang and GigaMedia China Limited, dated July 6, 2007, incorporated by reference to Exhibit 4.72 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.23 | Share Purchase Agreement between Marvel City Investments Limited and GigaMedia China Limited, dated May 26, 2008, incorporated by reference to Exhibit 4.73 to our annual report for the year 2007 on Form 20-F filed with the SEC on June 30, 2008 | |||
4.24 | Agreement for Pledge of Shares in Jinyou among Yang Zhuojun, Tan Yihui and T2 Technology, dated June 15, 2009# | |||
4.25 | Exclusive Call Option Agreement regarding Jinyou among Yang Zhuojun, Tan Yihui, Jinyou and T2 Technology, dated June 15, 2009# | |||
4.26 | Proxy Voting Agreement regarding Jinyou among T2 Technology, Jinyou, Yang Zhuojun and Tan Yihui, dated June 15, 2009# | |||
4.27 | Exclusive Business Consultancy Service Agreement between T2 Technology and Jinyou, dated November 26, 2007# | |||
4.28 | Exclusive Technical Service and Consultancy Agreement between Jinyou and T2 Technology, dated November 26, 2007# | |||
4.29 | Share Sale and Purchase Agreement among Champion Limited, Gigamedia International Holdings Limited and GigaMedia, dated August 28, 2008# | |||
4.30 | Share Sale and Purchase Agreement between China Network Systems Co., Ltd. and Hoshin GigaMedia, dated August 28, 2008# | |||
4.31 | Asset Sale and Purchase Agreement among Ko Ying, Hoshin GigaMedia and China Network Systems Co., Ltd., dated August 28, 2008# |
Table of Contents
EXHIBIT | ||||
No. | DESCRIPTION | |||
4.32 | Transitional Service Agreement among Ko Ying, Hoshin GigaMedia and KBT, dated September 3, 2008# | |||
4.33 | Assignment and Assumption Agreement between Hoshin GigaMedia and Hoshin Multimedia, dated September 3, 2008# | |||
8.1 | List of Subsidiaries# | |||
12.1 | Certification by our Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act# | |||
12.2 | Certification by our Chief Financial Officer pursuant to Rule13a-14(b) of the Securities Exchange Act# | |||
13.1 | Certification by our Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002# | |||
13.2 | Certification by our Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002# | |||
15.1 | Consent of GHP Horwath, P.C., Independent Registered Public Accounting Firm# |
# | Filed herewith. |