UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August, 2010
Commission File Number 000-51138

GRAVITY Co., Ltd.

 

(Translation of registrant’s name into English)

Nuritkum Square Business Tower 15F, 1605 Sangam-Dong, Mapo-Gu, Seoul, Korea 121-795(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
þ Form 20-F o Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934: o Yes þ No

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): n/a

 

 

GRAVITY REPORTS SECOND QUARTER OF 2010 RESULTS

Seoul, South Korea — August 19, 2010 — GRAVITY Co., Ltd. (NasdaqGM: GRVY) (“Gravity” or “Company”), an online game developer and publisher based in South Korea, today announced its unaudited financial results for the second quarter ended June 30, 2010, prepared in accordance with generally accepted accounting principles in the United States.

Revenues for the second quarter ended June 30, 2010 was KRW 11,326 million (US$ 9,756 thousand), representing a 1.9% increase from KRW 11,119 million for the first quarter ended March 31, 2010 (“QoQ”) and a 19.2% decrease from KRW 14,018 million for the second quarter ended June 30, 2009 (“YoY”).

REVIEW OF FINANCIAL RESULTS

Revenues

Royalty and licensing fee revenues for the second quarter of 2010 were KRW 6,572 million (US$ 5,661 thousand), representing a 1.4% increase QoQ from KRW 6,484 million but a 21.3% decrease YoY from KRW 8,350 million. The decrease YoY was primarily due to the decreased revenues in the Japanese market.

Subscription revenues for the second quarter of 2010 were KRW 2,691 million (US$ 2,317 thousand), representing a 10.5% increase QoQ from KRW 2,435 million but a 9.7% decrease YoY from KRW 2,980 million. The increase QoQ was driven by the increased revenues in the United States and Canada. The decrease YoY was primarily driven by the decreased revenues in Korea.

Mobile game revenues were KRW 1,840 million (US$ 1,585 thousand) for the second quarter of 2010, representing a modest increase QoQ from KRW 1,839 million and a 5.0% increase YoY from KRW 1,752 million.

Character merchandising, animation and other revenues were KRW 223 million (US$ 193 thousand) for the second quarter of 2010, representing a 38.2% decrease QoQ from KRW 361 million and a 76.2% decrease YoY from KRW 936 million. The decreases QoQ and YoY were primarily due to decreased revenues from sales of Ragnarok DS and decreased royalty revenues from Ragnarok character merchandising.

Cost of Revenue and Operating Expenses

Cost of revenues was KRW 4,942 million (US$ 4,257 thousand) for the second quarter of 2010, representing a 1.7% increase QoQ from KRW 4,861 million and a 9.2% decrease YoY from KRW 5,441 million. The decrease YoY was mainly attributable to the decrease in cost of goods sold by NeoCyon and decrease in rent expenses of the subsidiary in the U.S. due to its relocation in October 2009.

Operating expenses were KRW 6,112 million (US$ 5,265 thousand) for the second quarter of 2010, representing a 22.3% increase QoQ from KRW 4,996 million and a 13.4% increase YoY from KRW 5,389 million. The increases in operating expenses QoQ and YOY were mainly as a result of increased advertising expenses and increase in employee separation costs. The increases in operating expenses QoQ and YoY were partially offset by decreases in salaries and commission paid, respectively.

Income before income tax expenses and others was KRW 1,384 million (US$ 1,192 thousand) for the second quarter of 2010, which represents a 8.5% decrease QoQ from KRW 1,512 million and a 58.4% decrease YoY from KRW 3,327 million.

As a result of the foregoing factors, Gravity recorded a net income attributable to parent company of KRW 465 million (US$ 401 thousand) for the second quarter of 2010 compared to KRW 381 million for the first quarter of 2010 and KRW 1,938 million for the second quarter of 2009.

The balance of cash and cash equivalents and short-term financial instruments was KRW 66,534 million (US$ 57,308 thousand) as of June 30, 2010.

Note: For convenience purposes only, the KRW amounts have been expressed in U.S. dollars at the exchange rate of KRW 1,161.0 to US$ 1.00, the noon buying rate in effect on August 6, 2010 as quoted by the Federal Reserve Bank of New York.

About GRAVITY Co., Ltd. ---------------------------------------------------

Based in Korea, Gravity is a developer and publisher of online games. Gravity’s principal product, Ragnarok Online™, is a popular online game in many markets, including Japan, Taiwan and Thailand, and is currently commercially offered in 59 markets. For more information about Gravity, please visit http://www.gravity.co.kr.

Forward-Looking Statements:

Certain statements in this press release may include, in addition to historical information, “forward-looking statements” within the meaning of the “safe-harbor” provisions of the U.S. Private Securities Litigation Reform Act 1995. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” “project,” or “continue” or the negative thereof or other similar words, although not all forward-looking statements contain these words. Investors should consider the information contained in our submissions and filings with the United States Securities and Exchange Commission (the “SEC”), including our registration statement on Form F-1, as amended, and our annual reports on Form 20-F, together with such other documents and we may submit to or file with the SEC from time to time, on Form 6-K. The forward-looking statements speak only as of this press release and we assume no duty to update them to reflect new, changing or unanticipated events or circumstances.

Contact:

Mr. Heung Gon Kim
Chief Financial Officer
Gravity Co., Ltd.
Email: kheung@gravity.co.kr

Ms. Yoon Joo Lee
IR Manager
Gravity Co., Ltd.
Email: yoonjoo.lee@gravity.co.kr
Telephone: +82-2-2132-7800

#     #     #

GRAVITY Co., Ltd.
Consolidated Balance Sheet

(In millions of KRW and in thousands of US$ )

		As of
		31-Dec-09								30-Jun-10
		KRW				US$				KRW				US$
Assets		(audited)				(unaudited)				(unaudited)				(unaudited)
Current assets:
Cash and cash equivalents			51,333				44,214				41,034				35,344
Short-term financial instruments			16,000				13,781				25,500				21,964
Short-term available-for-sale investments			4,973				4,283				5,066				4,364
Accounts receivable, net			5,907				5,088				5,457				4,700
Other current assets			4,686				4,037				6,899				5,942
Total current assets			82,899				71,403				83,956				72,314
Property and equipment, net			2,837				2,444				2,247				1,936
Leasehold and other deposits			1,496				1,289				1,558				1,342
Intangible assets			12,455				10,728				13,085				11,270
Equity method investments			1,100				947				1,389				1,197
Other non-current assets			1,651				1,422				1,619				1,393
Total assets			102,438				88,233				103,854				89,452
Liabilities and Equity
Current liabilities:
Accounts payable			3,205				2,761				3,636				3,131
Deferred revenue			3,750				3,230				3,985				3,433
Other current liabilities			1,293				1,113				1,199				1,033
Total current liabilities			8,248				7,104				8,820				7,597
Long-term deferred income			9,658				8,319				9,254				7,971
Accrued severance benefits			478				412				559				482
Other non-current liabilities			444				382				430				369
Total liabilities			18,828				16,217				19,063				16,419
Common shares			3,474				2,992				3,474				2,992
Additional paid-in capital			75,395				63,940				75,395				64,940
Retained earnings			1,265				1,090				2,111				1,819
Accumulated other comprehensive income			3,262				2,809				3,569				3,073
Total parent company shareholders’ equity			83,396				71,831				84,549				72,824
Non-controlling interest			214				185				242				209
Total equity			83,610				72,016				84,791				73,033
Total liabilities and equity			102,438				88,233				103,854				89,452

GRAVITY Co., Ltd.
Consolidated Statements of Operations

(In millions of KRW and in thousands of US$ , except for share and ADS data)

		Three months ended																Six months ended
		31-Mar-10				30-Jun-09				30-Jun-10								30-Jun-09				30-Jun-10
		(KRW)				(KRW)				(KRW)				(US$ )				(KRW)				(KRW)				(US$ )
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenues:
Online games-subscription revenue			2,435				2,980				2,691				2,317				6,455				5,125				4,415
Online games-royalties and license fees			6,484				8,350				6,572				5,661				19,165				13,056				11,246
Mobile games			1,839				1,752				1,840				1,585				3,604				3,679				3,169
Character merchandising, animation and other revenue			361				936				223				193				1,401				585				503
Total net revenue			11,119				14,018				11,326				9,756				30,625				22,445				19,333
Cost of revenue			4,861				5,441				4,942				4,257				10,869				9,803				8,444
Gross profit			6,258				8,577				6,384				5,499				19,756				12,642				10,889
Operating expenses:
Selling, general and administrative			4,335				4,953				5,291				4,558				10,270				9,626				8,291
Research and development			661				436				821				707				785				1,482				1,277
Operating income			1,262				3,188				272				234				8,701				1,534				1,321
Other income (expenses):
Interest income			520				537				508				437				1,274				1,028				885
Interest expense			(5	)			(11	)			(3	)			(3	)			(26	)			(8	)			(7	)
Foreign currency gains (losses), net			(315	)			(430	)			596				513				333				281				242
Others, net			50				43				11				11				42				61				54
Income before income tax expenses and equity loss of joint venture and partnership			1,512				3,327				1,384				1,192				10,324				2,896				2,495
Income tax expenses			947				1,103				796				686				2,508				1,743				1,502
Income before equity loss of related joint venture and partnership			565				2,224				588				506				7,816				1,153				993
Equity loss of joint venture and partnership			159				267				120				102				587				279				240
Net income			406				1,957				468				404				7,229				874				753
LESS: Net income attributable to the non-controlling interest			25				19				3				3				38				28				24
Net income attributable to parent company			381				1,938				465				401				7,191				846				729
Earnings per share
- Basic and diluted			55				279				67				0.06				1,035				122				0.11
Weighted average number of shares outstanding
- Basic and diluted			6,948,900				6,948,900				6,948,900				6,948,900				6,948,900				6,948,900				6,948,900
Earnings per ADS (1)
- Basic and diluted			14				70				17				0.02				259				31				0.03

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.