v2.3.0.11

Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2010
Commitments and Contingencies [Abstract] |
COMMITMENTS AND CONTINGENCIES |
25. |  | COMMITMENTS AND CONTINGENCIES
|  | Operating lease agreements
|  | The Group has entered into operating lease arrangements mainly relating to its office premises and computer equipment. Payments under operating leases are expensed on a straight-line basis over the periods of the respective leases. The terms of the leases do not contain rent escalation or contingent rents. Future minimum lease payments for non-cancelable operating leases as of December 31, 2010 are as follows:
|  | Office premises |  |  | Computer equipment |  |  | Total |
|  | (RMB) |  |  | (RMB) |  |  | (RMB) |  |  | (US$) |
2011 |  |  | 15,265,062 |  |  |  | 10,408,797 |  |  |  | 25,673,859 |  |  |  | 3,889,979 |
2012 |  |  | 1,206,909 |  |  |  | — |  |  |  | 1,206,909 |  |  |  | 182,865 |
2013 |  |  | 343,886 |  |  |  | — |  |  |  | 343,886 |  |  |  | 52,104 |
Total |  |  | 16,815,857 |  |  |  | 10,408,797 |  |  |  | 27,224,654 |  |  |  | 4,124,948 |
|  | Total rental expenses were RMB67,759,667, RMB70,216,710 and RMB65,034,773 (US$9,853,754) for the years ended December 31, 2008, 2009 and 2010 respectively.
|  | Commitments
|  | Capital commitments
|  | Capital commitments for purchases of property, equipment and software as of December 31, 2010 are approximately RMB3,902,164 (US$589,211). The payments for the commitments for these purchases are expected to be settled within the next twelve months.
|  | Online game licensing fee commitments
|  | The Company has commitments to pay licensing fees to third parties of RMB 18,212,425 (US$2,759,458) as of December 31, 2010.
|  | Contingencies
|  | Class actions
|  | Two securities class actions have been filed against the Company. The first was filed on November 26, 2007, entitled Pyramid Holdings, Inc V. Giant Interactive Group, Inc. (United States District court, Southern District of New York (07cv10588); and the second was filed on December 20, 2007, entitled Brooks v Giant Interactive Group, Inc. (United States District court, Southern District of New York (07cv11423). The actions assert similar allegations and seek similar damages, both alleging claims pursuant to Section 11 and Section 12(a)(2) of the Securities Exchange Act of 1933, on behalf of all persons who purchased Company’s ADSs pursuant to or traceable to the Company’s initial public offering from November 1, 2007, though November 10, 2007. The Company, Merrill Lynch & Co. and UBS Investment Bank are named as defendants. Plaintiffs also request that the action be maintained as class action and request relief in the form of class damages plus interest, attorneys’ fees, experts’ fee and other costs, and a rescinding of the initial public offering.
|  | Specifically, plaintiffs allege that the Company’s Registration Statement and prospectus contained untrue statement of material facts, omitted to state other facts necessary to make the statement made not misleading and were not prepared in accordance with the applicable rules and regulations. Plaintiffs were allegedly harmed when the Company’s stock price declined on November 19, 2007, when the Company announced its third quarter financial results and disclosed that during third quarter 2007, the Company’s average concurrent users (“ACU”) and peak concurrent users (“PCU”) decreased from the second quarter following a rule change made to ZT Online. Plaintiffs claim that the Company did not explain or describe the rule change in the Registration Statement or Prospectus, did not explain or highlight the alleged negative trend in ACU and PCU and did not disclose the supposed negative impact that rule change was having at the time of the initial public offering.
|  | The actions were consolidated by stipulation on January 31, 2008, into Giant Interactive Group, Inc. Securities Litigation. On August 5, 2008, the United States District court, Southern District of New York (“Court”) appointed a Lead Plaintiff and its Counsel in the consolidated action. The Lead Plaintiff filed a Consolidated Amended Complaint on October 6, 2008. The Company, Merrill Lynch & Co. and UBS Investment Bank filed motions to dismiss the Consolidated Amended Complaints on November 21, 2008. This motion has been fully briefed and was deemed submitted to the Court for decision as of February 25, 2009. On August 5, 2009, the Court denied the Company’s motion to dismiss the Complaint, because the Court required more facts and evidence prior to making the ruling. Following document and deposition discovery, the parties participated in a mediation in March 2011. The Company is currently in negotiations to reach a settlement. As negotiations are still in its early stages, the Company’s management has been advised by its legal counsel that it is unable to assess or conclude on the likelihood of an unfavorable outcome or any possible loss to the Company. In the event that the Company reaches a settlement with the counterparty and obtains relevant approval from the Court, the settlement payment will be made solely by the Company’s insurers to the counterparty directly and the Company does not expect to record any loss related to this settlement.
|  | Income taxes
|  | As of December 31, 2010, the Group has recognized RMB14,758,798 (US$2,236,182) (2009: 9,955,138) of unrecognized tax benefits, which have been classified as current liabilities. The final outcome of these tax uncertainties is dependent upon various matters including tax examinations, changes in regulatory tax laws, interpretation of those tax laws or expiration of status of limitation. However, based on the number of jurisdictions, the uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with these tax uncertainties.

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- Definition Includes disclosure of commitments and contingencies. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 14 -Paragraph 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 9, 10, 11, 12 + Details
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