FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of February 2004 ------------- Commission File Number: 333-100069 ---------- NETEASE.COM, INC. Suite 1901, Tower E3 The Towers, Oriental Plaza Dong Cheng District Beijing, People's Republic of China 100738 (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F X 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): ---------------- 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): ---------------- Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No X -------------- ------------ If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- N.A. -------------
NETEASE.COM, INC. Form 6-K TABLE OF CONTENTS Page ---- Signature Page 3 Exhibit 99.1, Press Release Regarding Fourth Quarter and Year-End Page 4 Results dated February 17, 2004
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. NETEASE.COM, INC. By: /s/ Ted Sun ------------------------------------ Name: Mr. Ted Sun Title: Acting Chief Executive Officer and Director Date: February 19, 2004
Exhibit 99.1 [Company Logo] Press Release - -------------------------------------------------------------------------------- Contact for Media and Investors: Ms. Olive Wang NetEase.com, Inc. ir@corp.netease.com - ------------------- 8610-8518-0163, ext. 8243 Ms. Christina Splinder Ogilvy Public Relations Worldwide christina.splinder@ogilvy.com - ----------------------------- 8610-6443-6488, ext. 505 NetEase.com Reports Record Fourth Quarter and Fiscal Year 2003 Financial Results Highlights for the Fourth Quarter 2003 - -------------------------------------- - Continued total net revenue growth, increasing 16.4% over preceding quarter led by the Company's steady growth in online game business - Company increases operating profit to RMB98.3 million (US$11.9 million) and net profit of RMB94.1 million (US$11.4 million), or US$0.36 per American Depositary Share (basic) Highlights for Fiscal Year 2003 - ------------------------------- - Strong total net revenue growth of 145.4% over the preceding year driven by diverse revenue streams - Company achieves second consecutive year of net profit with substantial increase to RMB322.9 million (US$39.0 million) from RMB16.3 million (US$2.0 million) for the previous year (Beijing - February 18, 2004) - NetEase.com, Inc. (Nasdaq: NTES), one of China's leading Internet, online game and wireless value-added services providers, today announced financial results for its fourth quarter and fiscal year ended December 31, 2003. "Our strong performance in the fourth quarter has ended another outstanding year for NetEase, resulting in a second consecutive year of profit," said Ted Sun, Acting Chief Executive Officer of NetEase. "2003 was the year NetEase solidified its position as one of China's leading online game providers, and with our wireless value-added and other e-commerce services and online advertising businesses also performing well, we believe that we are well positioned for another year of growth."
[Company Logo] Financial Results For the fourth quarter ended December 31, 2003, the Company reported total net revenues of RMB161.8 million (US$19.5 million), a 16.4% and 77.9% increase over total net revenues of RMB138.9 million (US$16.8 million) for the preceding quarter and RMB90.9 million (US$11.0 million) for the corresponding period in 2002, respectively. The Company reported net profit of RMB94.1 million (US$11.4 million), or US$0.36 per American Depositary Share (basic), a 11.9% and 118.3% increase over net profit of RMB84.1 million (US$10.2 million) for the preceding quarter and RMB43.1 million (US$5.2 million) for the corresponding period in 2002, respectively. For the year ended December 31, 2003, the Company reported total net revenues of RMB542.1 million (US$65.5 million), a strong increase of 145.4% over total net revenues of RMB220.9 million (US$26.7 million) for the fiscal year 2002. For the fiscal year 2003, NetEase reported a gross profit and operating profit of RMB456.7 million (US$55.2 million) and RMB326.8 million (US$39.5 million), respectively, representing a substantial increase over gross profit of RMB149.3 million (US$18.0 million) and operating profit of RMB4.0 million (US$0.49 million) for the fiscal year 2002. The Company reported net profit of RMB322.9 million (US$39.0 million), or US$1.25 per American Depositary Share (basic), compared to the previous year's net profit of RMB16.3 million (US$2.0 million). For the fourth quarter ended December 31, 2003, online game services continued to grow steadily to RMB70.7 million (US$8.5 million), representing a 31.8% and 222.2% increase over RMB53.7 million (US$6.5 million) for the preceding quarter and RMB21.9 million (US$2.6 million) for the corresponding period a year ago, respectively. Strong growth in this revenue segment was largely due to the continued increase in popularity of the Company's self-developed online game title, Westward Journey Online Version 2.0, which had approximately 1.6 million unique paying users for the month of December 2003. Revenues from wireless value-added and other e-commerce services for the quarter were RMB64.6 million (US$7.8 million), representing a 8.4% increase over the preceding quarter's RMB59.6 million (US$7.2 million) and a 13.0% increase over RMB57.2 million (US$6.9 million) for the corresponding period a year ago. This increase in revenues from wireless value-added and e-commerce services reflected ongoing demand for value-added services by Chinese mobile phone customers and positive response to new company offerings in this area. Advertising revenues were RMB26.5 million (US$3.2 million), representing a 3.0% increase over the preceding quarter's RMB25.7 million (US$3.1 million) and a 123.8% increase over RMB11.8 million (US$1.4 million) for the corresponding period a year ago. The Company achieved gross profit in the fourth quarter of RMB136.2 million (US$16.5 million), increasing 12.4% over the previous quarter's RMB121.2 million (US$14.6 million) and 95.7% over RMB69.6 million (US$8.4 million) for the corresponding period a year ago. Gross margins were at 84.2% in the fourth quarter. Total operating expenses were RMB37.9 million (US$4.6 million), a 11.2% increase from the previous quarter's RMB34.1 million (US$4.1 million) and a 23.8% increase from the
[Company Logo] corresponding period a year ago of RMB30.7 million (US$3.7 million). This rise was partly due to ongoing investments in both product development staffing and online game product development, as well as an increase in marketing spending. The Company reported an operating profit of RMB98.3 million (US$11.9 million) in the fourth quarter, representing a 12.9% and 152.2% increase over last quarter's operating profit of RMB87.1 million (US$10.5 million) and RMB39.0 million (US$4.7 million) for the corresponding period last year, respectively. The Company reported a net profit of RMB94.1 million (US$11.4 million) in the fourth quarter, an increase of 11.9% over the previous quarter's net profit of RMB84.1 million (US$10.2 million) and 118.4% over RMB43.1 million (US$5.2 million) for the corresponding period a year ago. The Company's net profit was affected by an increase in the effective tax rate during the fourth quarter, which was primarily due to a smaller deferred tax credit adjustment made in the fourth quarter as compared with the third quarter relating to tax losses carry forwards. As of December 31, 2003, the Company's total cash and held-to-maturity investments balance was RMB1.7 billion (US$204.0 million), a 5.9% increase from the previous quarter's RMB1.6 billion (US$192.6 million). Cash flow generated from operating activities was approximately RMB104.9 million (US$12.7 million) during the quarter. Commenting on the Company's earnings, Ted Sun said, "In the fourth quarter, our growth was led by our online games division, which we expect will continue to be a major growth driver in 2004. Our first in-house developed game, Westward Journey Online Version 2.0, has met with much success in the Chinese market - it continues to rank among the most popular online games in China and has received numerous awards, including Top 10 Most Popular Domestic Developed Games by "China Game Industry Report 2003" sponsored by the General Administration of Press and Publication of the People's Republic of China. At the end of the quarter we also launched a new in-house developed game, Fantasy Westward Journey. This game is targeted at a different demographic segment and geographic base than our other titles and initial results have been very encouraging. Our proven in-house online game development capabilities is a key strength for the Company and has given us an important early lead in this fast-growing sector." "Our wireless value-added and other e-commerce business rebounded from last quarter, and our user base in this market is continuing to expand, due in part to new offerings and services made available during the quarter. While we expect the wireless value-added and other e-commerce related market in China to become increasingly competitive, we expect consumer demand to grow and we will continue to develop new and innovative services to attract users. The growth of advertising revenues was slow in the fourth quarter. However, advertising revenue showed good growth year-over-year, and will continue to be an important revenue driver for the Company in the coming year." Denny Lee, NetEase's Chief Financial Officer said, "NetEase continues to be on a very strong financial footing, with diversified revenue streams and positive operating cash flow. We will continue to invest in new products and services and our employee base, so as to maintain our leading position as one of the most innovative and profitable listed portals in China."
[Company Logo] Ted Sun concluded, "We are optimistic about the Company's prospects for growth going forward. We believe that NetEase's strong market position in online advertising and wireless value-added services, combined with our offerings targeted to the fast growing online game industry in China will again benefit the Company in 2004." Users of the NetEase Web sites continued to grow, with 167 million accumulated registered accounts at the end of the fourth quarter, an increase of 16.0% over the 144 million accounts at the end of the previous quarter and a 74.5% increase over the 95.7 million accounts at the same time a year ago. ** Note: The conversion of Renminbi (RMB) into U.S. dollars in this release is based on the exchange rate of US$1 = RMB8.2767. The percentages stated in this press release are calculated based on RMB.** About NetEase NetEase.com, Inc. is a leading China-based Internet technology company that pioneered the development of applications, services and other technologies for the Internet in China. Our online communities and personalized premium services have established a large and stable user base for the NetEase Web sites which are operated by our affiliate. As of December 31, 2003 we had approximately 167 million accumulated registered accounts, and our average daily page views for the month ended December 31, 2003 exceeded 390 million. Community products and services which the NetEase Web sites offer include instant messaging, personals, matchmaking, alumni clubs, personal home pages and community forums. NetEase is also the largest provider of free e-mail services in China. Furthermore, the NetEase Web sites provide 20 channels of content. NetEase sources news content on world events, sports, science and technology, and financial markets as well as entertainment content such as cartoons, games, astrology and jokes from over one hundred international and domestic content providers. NetEase offers on-line advertising on its Web sites as well as paid listings on its Search Engine, Web Directory and Classified Ads services, and an Online Mall, which provides opportunities for e-commerce and traditional businesses to establish their own storefront on the Internet. NetEase also offers wireless value-added services such as news and information content sent over short-messaging services, multi-media messaging services and wireless application protocol technologies, and online game services through three massively multi-player online role-playing game titles, Westward Journey Online Version 2.0, Fantasy Westward Journey and PristonTale 2.0. * * * This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. The accuracy of these statements may be impacted by a number of business risks and uncertainties that
[Company Logo] could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the online game market will not continue to grow or that NetEase will not be able to maintain its leading position in that market; the risk that NetEase will be unable to compete effectively in the wireless value-added services market; the risk that the current popularity of SMS in China will not continue for whatever reason, including SMS being superseded by other technologies for which NetEase is unable to offer attractive products and services; the risk that NetEase may not be able to continuously develop new and creative online services; the risk that the online advertising market in China will not continue to grow and will remain subject to intense competition; the risk that NetEase will not be able to continue to successfully monetize the user base of the NetEase Web sites and that its e-commerce and other fee-based services revenues will not continue to grow; the risk that NetEase will not be able to control its expenses in future periods; the impact of the outbreak of severe acute respiratory syndrome, or SARS, in China and risks related to any possible recurrence of SARS or another public health problem in China; the risk that the trading price of NetEase's American Depositary Shares may decrease for a variety of reasons, some of which may be beyond the control of management; the risk that current or future appointees to management are not effective in their respective positions; the difficulty in locating and recruiting suitable candidates for middle and senior management positions; the risk that NetEase may not be able to satisfy its obligations with respect to its Zero Coupon Convertible Subordinated Notes which could lead to a default on the Notes and an adverse affect on its business and financial condition; the risk that NetEase may not use the proceeds from the offering of those Notes and its other cash in a productive manner; NetEase's ability to develop and implement additional operational and financial systems to manage NetEase's operations; competition in NetEase's existing and potential markets; governmental uncertainties, general competition and price pressures in the marketplace; uncertainty as to future profitability; the risk that security, reliability and confidentiality concerns may impede broad use of the Internet and e-commerce and other services; and other risks outlined in NetEase's filings with the Securities and Exchange Commission, including its registration statements on Form F-1 and Form F-3, as amended. NetEase does not undertake any obligation to update this forward-looking information, except as required under applicable law.
[Company Logo] NETEASE.COM, INC. UNAUDITED CONSOLIDATED BALANCE SHEETS December 31, December 31, December 31, 2002 2003 2003 ------------- --------------- --------------- RMB RMB USD (Note 1) Assets Current assets: Cash 560,069,711 1,356,069,544 163,841,814 Restricted cash 1,208,305 - - Held-to-maturity investments - 332,093,546 40,123,908 Prepayments and other current assets 6,110,689 19,749,369 2,386,140 Due from related parties, net 22,448,509 15,182,589 1,834,377 Deferred tax assets 2,395,888 9,669,543 1,168,284 -------------- ----------------- ---------------- Total current assets 592,233,102 1,732,764,591 209,354,523 Non-current rental deposit 1,065,912 1,430,544 172,840 Property, equipment and software, net 26,379,182 40,410,264 4,882,413 Deferred assets - 12,086,693 1,460,328 -------------- ----------------- ---------------- Total assets 619,678,196 1,786,692,092 215,870,104 ============== ================= ================ Liabilities & Shareholders' Equity Current liabilities: Accounts payable and other liabilities 22,631,064 38,413,193 4,641,124 Salary and welfare payable 16,023,380 17,405,624 2,102,967 Due to a related party, net - 21,947,411 2,651,710 -------------- ----------------- ---------------- Total current liabilities 38,654,444 77,766,228 9,395,801 -------------- ----------------- ---------------- Long-term payable: Zero Coupon Convertible Subordinated Notes due July 15, 2023 - 827,670,000 100,000,000 Other long-term payable - 231,449 27,964 -------------- ----------------- ---------------- - 827,901,449 100,027,964 -------------- ----------------- ---------------- Total liabilities 38,654,444 905,667,677 109,423,765 -------------- ----------------- ---------------- Shareholders' equity: Ordinary shares, US$0.0001 par value: 1,000,300,000,000 shares authorized, 3,100,162,537 shares issued and outstanding as of December 31, 2002, and 3,128,958,189 shares issued and outstanding as of December 31, 2003 2,566,543 2,589,756 312,897 Additional paid-in capital 1,049,651,354 993,254,740 120,006,130 Less: Subscriptions receivable (33,113,848) - - Statutory reserve - 33,699,834 4,071,651 Deferred compensation (474,739) (69,175) (8,358) Translation adjustments 228,910 210,838 25,474 Accumulated deficit (437,834,468) (148,661,578) (17,961,455) -------------- ----------------- ---------------- Total shareholders' equity 581,023,752 881,024,415 106,446,339 -------------- ----------------- ---------------- Total liabilities and shareholders' equity 619,678,196 1,786,692,092 215,870,104 ============== ================= ================ Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB 8.2767 on December 31, 2003 in The City of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York.
[Company Logo] NETEASE.COM, INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS Quarter Ended Year Ended -------------------------------------------------------------------------------------------------- December 31, September 30, December 31, December 31, December 31, December 31, December 2002 2003 2003 2003 2002 2003 31, 2003 ------------------------------------------------------------------------------------ ------------- RMB RMB RMB USD (Note 1) RMB RMB USD (Note 1) Net revenues: Wireless value-added and other EC related services 57,165,438 59,576,498 64,587,038 7,803,477 153,241,602 265,676,301 32,099,304 Online game services 21,925,716 53,660,287 70,728,416 8,545,484 35,200,743 193,083,719 23,328,587 Advertising services 11,831,766 25,712,554 26,477,574 3,199,050 32,498,907 83,374,495 10,073,398 ------------------------------------------ ------------- ------------- ------------- ------------- Total net revenues 90,922,920 138,949,339 161,793,028 19,548,011 220,941,252 542,134,515 65,501,289 ------------------------------------------ ------------- ------------- ------------- ------------- Cost of revenues: Wireless value-added and other EC related services (8,591,113) (5,797,489) (9,000,874) (1,087,495) (29,524,647) (36,965,776) (4,466,246) Online game services (5,851,030) (4,693,865) (7,696,695) (929,923) (15,530,501) (20,873,502) (2,521,959) Advertising services (6,861,241) (7,286,807) (8,882,933) (1,073,246) (26,622,426) (27,623,438) (3,337,494) ------------------------------------------ ------------- ------------- ------------- ------------- Total cost of revenues (21,303,384) (17,778,161) (25,580,502) (3,090,664) (71,677,574) (85,462,716) (10,325,699) ------------------------------------------ ------------- ------------- ------------- ------------- Gross profit 69,619,536 121,171,178 136,212,526 16,457,347 149,263,678 456,671,799 55,175,590 ------------------------------------------ ------------- ------------- ------------- ------------- Operating expenses: Selling, general and administrative expenses (26,717,117) (29,984,969) (31,357,504) (3,788,648) (92,785,244) (110,619,237) (13,365,138) Asset impairment loss - - - - (746,857) - - Research and development expenses (3,643,946) (4,095,277) (6,651,157) (803,600) (13,808,360) (19,032,591) (2,299,539) Share compensation cost (296,612) (27,964) 66,786 8,069 (1,898,733) (239,402) (28,925) Class action settlement - - - - (36,005,385) - - ------------- -------------- ------------- ------------- ------------- ------------- ------------- Total operating expenses (30,657,675) (34,108,210) (37,941,875) (4,584,179) (145,244,579) (129,891,230) (15,693,602) ------------- -------------- ------------- ------------- ------------- ------------- ------------- Operating profit 38,961,861 87,062,968 98,270,651 11,873,168 4,019,099 326,780,569 39,481,988 Other income (expenses): Investment income - - 538,278 65,035 - 538,278 65,035 Interest income 1,611,700 3,640,487 3,986,707 481,678 7,562,322 11,273,685 1,362,099 Interest expense - - - - (1,401,041) - - Other, net 111,430 (121,222) (141,983) (17,155) 3,725,370 5,410,171 653,663 ------------- ------------- -------------- ------------- ------------- ------------- ------------- Profit before tax 40,684,991 90,582,233 102,653,653 12,402,726 13,905,750 344,002,703 41,562,785 Income tax 2,395,888 (6,492,105) (8,573,459) (1,035,855) 2,395,888 (21,129,978) (2,552,947) ------------- ------------- -------------- ------------- ------------- ------------- ------------- Net profit 43,080,879 84,090,128 94,080,194 11,366,871 16,301,638 322,872,725 39,009,838 ============= ============= ============== ============= ============= ============= ============= Earnings per share, basic 0.01 0.03 0.03 0.01 0.01 0.10 0.01 ============= ============= ============= ============= ============= ============= ============= Earnings per ADS, basic 1.39 2.69 3.01 0.36 0.53 10.34 1.25 ============= ============= ============= ============= ============= ============= ============= Earnings per share, diluted 0.01 0.02 0.03 0.01 0.01 0.10 0.01 ============= ============= ============= ============= ============= ============= ============= Earnings per ADS, diluted 1.35 2.44 2.88 0.35 0.52 9.78 1.18 ============= ============= ============= ============= ============= ============= ============= Weighted average number of ordinary shares outstanding, basic 3,091,650,900 3,124,178,385 3,127,532,135 3,127,532,135 3,051,395,100 3,122,257,952 3,122,257,952 ============= ============= ============= ============= ============= ============= ============= Weighted average number of ADS outstanding, basic 30,916,509 31,241,784 31,275,321 31,275,321 30,513,951 31,222,580 31,222,580 ============= ============= ============= ============= ============= ============= ============= Weighted average number of ordinary shares outstanding, diluted 3,185,313,400 3,439,778,658 3,268,091,968 3,268,091,968 3,127,837,900 3,301,311,499 3,301,311,499 ============= ============= ============= ============= ============= ============= ============= Weighted average number of ADS outstanding, diluted 31,853,134 34,397,787 32,680,920 32,680,920 31,278,379 33,013,115 33,013,115 ============= ============= ============= ============= ============= ============= ============= Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB 8.2767 on December 31, 2003 in The City of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York.
[Company Logo] NETEASE.COM INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS Quarter Ended Year Ended ------------------------------------------------------------------------------------------- December September December December December December December 31, 2002 30, 2003 31, 2003 31, 2003 31, 2002 31, 2003 31, 2003 ------------------------------------------------------------------------------------------- RMB RMB RMB USD (Note 1) RMB RMB USD (Note 1) Cash flows from operating activities: Net profit 43,080,879 84,090,128 94,080,194 11,366,873 16,301,638 322,872,724 39,009,838 Adjustments for: Depreciation 5,564,302 4,344,976 4,493,899 542,958 21,797,267 16,682,356 2,015,581 Share compensation cost 773,641 27,964 (66,786) (8,069) 3,806,858 239,402 28,925 Provision for doubtful debts 2,420,003 652,338 1,613,926 194,996 3,254,783 1,454,482 175,732 Write down of property, equipment and software - - - - 746,857 - - Amortization of issuance cost of convertible bonds - 1,532,884 1,978,391 239,032 - 3,511,275 424,234 (Increase) Decrease in prepayments and other current assets 60,743 (5,431,696) 5,084,094 614,266 3,025,673 (6,076,535) (734,174) (Increase) Decrease in due from/to related parties (8,283,073) 17,507,550 (4,945,452) (597,515)(23,413,088) 27,758,849 3,353,855 Decrease in deferred assets 277,499 - - - 783,352 - - (Increase) Decrease in deferred tax assets (2,395,888) 149,574 (431,837) (52,175) (2,395,888) (7,273,655) (878,811) Increase (Decrease) in accounts payable and other liabilities (5,071,161) (1,590,446) (271,835) (32,844) (3,196,259) 12,146,735 1,467,582 Increase in salary and welfare payable 5,393,139 975,004 3,341,596 403,735 6,087,169 1,382,244 167,004 ------------------------------------------------------------------------------------------- Net cash provided by operating activities 41,820,084 102,258,276 104,876,190 12,671,257 26,798,362 372,697,877 45,029,766 ------------------------------------------------------------------------------------------- Cash flows from investing activities Increase in held-to-maturity investments - - 332,093,546) (40,123,908) -(332,093,546) (40,123,908) Decrease in temporary cash investments - - - - 45,521,300 - - Purchase of property, equipment and software (3,476,284) (8,670,601) (11,262,621) (1,360,762)(12,567,218) (27,078,044) (3,271,599) Proceeds from disposal of convertible preference shares - - - - 9,701,293 - - (Increase) Decrease in non-current deposit (1,065,912) (40,500) (116,707) (14,101) 21,575 (364,632) (44,055) ------------------------------------------------------------------------------------------- Net cash (used in) provided by investing activities (4,542,196) (8,711,101)(343,472,874) (41,498,771) 42,676,950 (359,536,222) (43,439,562) ------------------------------------------------------------------------------------------- Cash flows from financing activities: Payment of short-term bank loans - - - -(84,000,000) - - Proceed from employee exercising stock options 1,264,444 4,324,582 603,301 72,891 3,887,419 15,034,010 1,816,426 Collection of subscriptions receivable for Series B preference shares issued in 2000 - (38,157,538) - - 1,986,720 (38,157,537) (4,610,236) Increase (Decrease) in long-term payable - 827,700,000 (114,866) (13,878) - 827,901,449 100,027,964 Payment for issuance cost of - convertible notes - (23,160,113) - - (23,160,113) (2,798,230) ------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 1,264,444 770,706,931 488,435 59,013(78,125,861) 781,617,809 94,435,924 ------------------------------------------------------------------------------------------- Effect of change rate changes on cash 15,435 - - - 11,583 12,064 1,458 ------------------------------------------------------------------------------------------- - Net increase (decrease) in cash 38,557,767 864,254,106(238,108,249) (28,768,501) (8,638,966) 794,791,528 96,027,586 Less: (Increase) Decrease in restricted cash (4,754) 1,217,622 - - 89,100,143 1,208,305 145,989 Cash, beginning of the year/quarter 521,516,698 728,706,065 1,594,177,793 192,610,315 479,608,534 560,069,711 67,668,239 -------------------------------------------------------------------------------------------- Cash, end of the year/quarter 560,069,711 1,594,177,793 1,356,069,544 163,841,814 560,069,711 1,356,069,544 163,841,814 ============================================================================================ Supplemental disclosures of cash flow information: Cash paid during the year/quarter for income taxes - 13,055,806 7,737,704 934,878 - 20,793,510 2,512,295 ============================================================================================ Cash paid during the year/quarter - - - - 1,057,225 - - for interest ============================================================================================ Supplemental schedule of non-cash investing and financing activities: Compensation costs, arising from transfer of ordinary shares and issuance of stock options in the Company to senior management personnel and some non-employees of the Company 773,641 27,964 (66,786) (8,069) 3,806,858 239,402 28,925 ============================================================================================ Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying rate of USD1.00=RMB 8.2767 on December 31, 2003 in The City of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York.