In the news release, "ChinaEdu Reports Fourth Quarter and Fiscal
Year 2008 Results" issued earlier today by ChinaEdu Corporation
(NASDAQ:CEDU) over PR Newswire Asia, we are advised by the Company
that the results announced are unaudited, instead of being audited,
as originally issued inadvertently. Affected parts are listed as
follows: The first paragraph should read, "ChinaEdu Corporation
(NASDAQ:CEDU) ("ChinaEdu" or the "Company"), an educational
services provider in China, today announced its unaudited financial
results for the fourth quarter and fiscal year ended December 31,
2008(1)." The first sentence under the section, "Non-GAAP Financial
Measures", should read, "To supplement the unaudited condensed
consolidated financial information presented in accordance with
Accounting Principles Generally Accepted in the United States of
America ("GAAP"), the Company uses non-GAAP measures of income from
operations and net income, which are adjusted from results based on
GAAP to exclude certain non-cash items of share-based compensation,
amortization of intangible assets, goodwill and intangibles
impairment, one-time accounts receivable write-off and currency
exchange loss." The heading of the financial table, "ChinaEdu
Corporation Audited Condensed Consolidated Balance Sheets", should
read "ChinaEdu Corporation Unaudited Condensed Consolidated Balance
Sheets". The heading of the financial table, "ChinaEdu Corporation
Audited Condensed Consolidated Statements of Operations", should
read "ChinaEdu Corporation Unaudited Condensed Consolidated
Statements of Operations". The heading of the financial table,
"ChinaEdu Corporation Audited Condensed Consolidated Statements of
Cash Flow", should read "ChinaEdu Corporation Unaudited Condensed
Consolidated Statements of Cash Flow". In the financial table,
"ChinaEdu Corporation Reconciliations of non-GAAP results of
operations measures to GAAP measures", for both "Three Months
Ended" and "Twelve Months Ended", "(in thousands, audited)", should
read "(in thousands, unaudited)". In the financial table, "ChinaEdu
Corporation Reconciliation from net income to adjusted EBITDA", for
both "Three Months Ended" and "Twelve Months Ended", "(in
thousands, audited)", should read "(in thousands, unaudited)".
Full, correct release follows: ChinaEdu Reports Fourth Quarter and
Fiscal Year 2008 Results 8.7% Increase in Fourth Quarter Net
Revenue Year-Over-Year with Fourth Quarter Net Revenue Exceeding
Guidance 19.9% Increase in Net Revenue Year-Over-Year for Fiscal
Year 2008 Live Conference Call to be held on Thursday, March 19,
2009 at 8 a.m. (Eastern) / 5 a.m. (Pacific) / 8 p.m. (Beijing/Hong
Kong) BEIJING, March 18 /PRNewswire-Asia-FirstCall/ -- ChinaEdu
Corporation (NASDAQ:CEDU) ("ChinaEdu" or the "Company"), an
educational services provider in China, today announced its
unaudited financial results for the fourth quarter and fiscal year
ended December 31, 2008(1). Fourth Quarter and Fiscal Year 2008
Highlights (in thousands) 3 Months Ended 12 Months Ended Year Year
December December over December December over Period Ending 31,2007
31,2008 Year 31,2007 31,2008 Year Currency in thousands RMB RMB %
RMB RMB % Financial Data: Net revenue 79,613 86,540 9% 264,988
317,720 20% Gross profit 55,087 47,542 -14% 168,639 199,987 19%
Goodwill impairment -- 52,236 -- 16,192 70,093 333% Income (loss)
from operations 18,672 (49,253) N/A 40,256 (13,050) N/A Adjusted
income (loss) from operations (Non-GAAP) 21,987 6,753 -69% 72,670
72,453 0% Adjusted EBITDA (Non-GAAP) 24,412 10,505 -57% 81,409
85,271 5% Net income (loss) 9,437 (38,984) N/A 2,487 (43,019) N/A
Adjusted net income (loss) (Non-GAAP) 12,487 16,819 35% 33,491
41,698 25% Operating Data: Revenue students for online degree
program services 91,000 118,000 30% 192,000 243,000 27% -- Total
net revenue for the fourth quarter of 2008 increased by 8.7% to
RMB86.5 million ($12.7 million) from RMB79.6 million for the
corresponding period in 2007. Excluding the effect of a
non-recurring revenue recognized of RMB8.4 million due to the
additional tuition fees from our university partners in the fourth
quarter of 2007, and the related effect of a value-added tax
("VAT") refund, revenue growth for the fourth quarter of 2008
increased by 18.9% compared to the corresponding period in 2007. --
Total net revenue for the fiscal year 2008 increased by 19.9% to
RMB317.7 million ($46.6 million) from RMB265.0 million for the
fiscal year 2007. -- Net revenue from online degree programs, the
Company's major business segment, increased by 7.9% to RMB69.9
million ($10.3 million) for the fourth quarter of 2008 from RMB64.8
million for the corresponding period in 2007. Excluding the effect
of a non-recurring revenue recognized due to the additional tuition
fee from our university partners in the fourth quarter of 2007 and
the related VAT refund, net revenue from online degree programs
increased by 20.8% for the fourth quarter of 2008 compared to the
corresponding period in 2007. -- Net revenue from online degree
programs for the fiscal year 2008 increased by 26.3% to RMB255.4
million ($37.4 million) from RMB202.2 million for the fiscal year
2007. -- The number of revenue students(2) in online degree
programs during the fourth quarter of 2008 increased by
approximately 30% to over 118,000 from approximately 91,000 for the
corresponding period in 2007. -- The number of revenue students in
online degree programs for the fiscal year 2008 increased by 27% to
approximately 243,000 from approximately 192,000 for the fiscal
year 2007. -- A goodwill and intangibles impairment charge of
RMB52.2 million ($7.7 million) was incurred in the fourth quarter
of 2008. Of this impairment charge, RMB50.3 million was related to
the international curriculum program (RMB21.2 million of goodwill
impairment and RMB29.1 million of intangibles impairment), and
RMB1.9 million was related to the Jingzhou School. Each of the
goodwill and intangibles impairment charges is a non-cash charge
and management does not believe that the fundamental operations of
the international curriculum program or the Jingzhou School have
been affected by the applicable impairment. -- Adjusted EBITDA,
which is a non-GAAP measure defined as earnings before minority
interest, interest income, taxes, depreciation, amortization,
share-based compensation, one-time receivables write-off (in the
third quarter of 2007), goodwill and intangibles impairment charges
and currency exchange loss, decreased by 57.0% to RMB10.5 million
($1.5 million) in the fourth quarter 2008 from RMB24.4 million for
the corresponding period in 2007. -- Adjusted EBITDA (non-GAAP) for
the fiscal year 2008 increased by 4.7% to RMB85.3 million ($12.5
million) from RMB81.4 million for the fiscal year 2007. -- Net
income for the fourth quarter of 2008 was a loss of RMB39.0 million
($5.7 million), as compared to income of RMB9.4 million for the
corresponding period in 2007. -- Net income for fiscal year 2008
was a loss of RMB43.0 million ($6.3 million), as compared to income
of RMB2.5 million for the fiscal year 2007. Earnings per ordinary
share (EPS) and diluted EPS for fiscal year 2008 were a loss of
-$0.11and -$0.11 per ordinary share, respectively. -- Adjusted net
income, which is a non-GAAP measure defined as net income excluding
share-based compensation, amortization of intangible assets,
one-time receivables write-off (in the third quarter of 2007),
goodwill and intangibles impairment charges, and currency exchange
loss, increased by 34.7% to RMB16.8 million ($2.5 million) in the
fourth quarter of 2008 from RMB12.5 million for the corresponding
period in 2007. -- Adjusted net income (non-GAAP) for the fiscal
year 2008 increased by 24.5% to RMB41.7 million ($6.1 million) from
RMB33.5 million for the fiscal year 2007. Adjusted EPS and diluted
adjusted EPS were $0.11 and $0.10 per ordinary share, respectively,
for the fiscal year 2008. (1) This announcement contains
translations of certain Renminbi ("RMB") amounts into U.S. dollar
("$") amounts at specified rates solely for the convenience of the
reader. Unless otherwise stated, all translations from RMB to U.S.
dollars were made at the rate of RMB6.8225 to $1.00, the noon
buying rate in effect on December 31, 2008 in The City of New York
for cable transfers of RMB as certified for customs purposes by the
Federal Reserve Bank of New York. The Company makes no
representation that the RMB or U.S. dollar amounts referred to
could be converted into U.S. dollars or RMB, as the case may be, at
any particular rate or at all. For analytical presentation, all
percentages are calculated using the numbers presented in the
financial statements contained in this earnings release. An
explanation of the Company's non-GAAP financial measures is
included in the section entitled "Non-GAAP Financial Measures"
below, and the related reconciliations to GAAP financial measures
are presented in the accompanying financial statements. (2)
"Revenue students" refers to students of university online degree
programs who have paid tuition in the applicable period. "We are
pleased to report healthy revenue growth for the fourth quarter of
2008, completing the fiscal year of 2008 with 19.9% total net
revenue growth. We also made a conscious effort to invest in our
future growth," said Ms. Julia Huang, ChinaEdu's Chairman and Chief
Executive Officer. "Although our fiscal year 2008 GAAP results were
impacted by non-cash goodwill and intangibles impairment charges in
our non-core business segments, we are pleased with our operational
results for the year. Our online degree program services
demonstrated significant enrollment growth. We successfully
executed the build out of our learning center network from one
operational learning center in 2007 to our current network of 47
learning centers. In addition, in the past year we continued to
invest in courseware and technology development for our online
degree programs, our online tutoring program as well as Anqing
School in order to be well positioned for future growth. We believe
our investment in the selected business areas will contribute to
the future growth of our revenue. Looking ahead, we will continue
to focus on the growth of our online education services through
business development, improving operational efficiencies and
improving our quality of services to university partners and
students." Financial Results for the Fourth Quarter Ended December
31, 2008 Net Revenue Total net revenue for the fourth quarter of
2008 was RMB86.5 million ($12.7 million), representing an 8.7%
increase from the corresponding period in 2007. Net revenue from
online degree programs for the fourth quarter of 2008 was RMB69.9
million ($10.3 million), representing a 7.9% increase from RMB64.8
million for the corresponding period in 2007. There were several
factors that impacted the increase in net revenue: -- Our
university partners' online degree programs experienced strong
growth in the number of revenue students in the fourth quarter of
2008 as compared to the corresponding period of 2007. In the
aggregate, our university partners had over 118,000 revenue
students during the fourth quarter of 2008, representing an
approximately 30% increase from the corresponding period of 2007.
-- In the fourth quarter of 2007, there was a non-recurring revenue
of RMB8.4 million recognized due to the additional tuition fee from
our university partners. -- VAT refund of RMB6.0 million in the
fourth quarter of 2008, which was recognized as net revenue from
online degree programs, as compared to a VAT refund of RMB3.5
million in the fourth quarter of 2007. Excluding the effect of a
non-recurring revenue recognized due to the additional tuition fee
from our university partners in the fourth quarter of 2007 and the
effect of the related VAT refund, net revenue from online degree
programs increased by 20.8% in the fourth quarter of 2008 compared
to the corresponding period in 2007. Net revenue from the Company's
non-online degree programs (online tutoring program, international
curriculum programs and private primary and secondary schools) for
the fourth quarter of 2008 was RMB16.6 million ($2.4 million),
representing a 12.1% increase from RMB14.8 million for the
corresponding period in 2007. This increase was attributable to the
increase in student enrollment at Anqing School for the academic
year beginning in September 2008 upon completion of Phase I of the
new campus construction. Cost of revenue Total cost of revenue for
the fourth quarter of 2008 was RMB39.0 million ($5.7 million),
representing an increase of 59.0% as compared to RMB24.5 million
for the corresponding period of 2007. Cost of revenue for online
degree programs for the fourth quarter of 2008 was RMB28.2 million
($4.1 million), representing an increase of 79.3% as compared to
RMB15.7 million for the fourth quarter of 2007. The increase in
cost of revenue for online degree programs was attributable
primarily to the factors discussed below: -- Enrollment growth: In
the fourth quarter of 2008, the number of revenue students enrolled
in our university partners' online degree programs increased by
approximately 30% to over 118,000 from approximately 91,000 in the
corresponding period, which resulted in an increase in
recruiting-related expenses. -- Learning center operations: We
continued to invest in expanding our learning center network in the
fourth quarter of 2008 and in connection therewith recorded RMB2.0
million in related cost of revenue. Costs related to the operation
of our learning centers in 2007 were insignificant, as we were in
the planning stage of the learning center network in 2007. --
Courseware development and technology upgrade: In the fourth
quarter of 2008, we also invested in new courseware development and
hardware upgrades at our collaborative alliances(3) and in
connection therewith recorded approximately RMB3.2 million in
increased cost of revenue. -- Recruiting related commissions: We
recorded RMB1.4 million in commission payments in the fourth
quarter of 2008 related to recruiting efforts by third parties. In
2007, commissions related to third-party recruiting efforts were
recorded in the third quarter as opposed to the fourth quarter of
2007 due to different completion times of recruiting activities.
(3) "Collaborative alliance" or "Collaborative alliances" refer to
the subsidiary or subsidiaries that the Company formed with certain
university partners to provide services to their online degree
programs, which subsidiaries are majority owned by the Company.
Cost of revenue for non-online degree programs for the fourth
quarter of 2008 was RMB10.8 million ($1.6 million), representing a
22.8% increase from RMB8.8 million for the corresponding period in
2007. This increase was attributable primarily to increased cost of
revenue related to Anqing School's new campus, which was partially
offset by a decrease in cost of revenue for the Pingdingshan
School. In September 2008, we completed Phase I of Anqing School's
new campus construction and began enrollment at Anqing School's new
campus. As a result, in the fourth quarter of 2008, we recorded an
increase of RMB3.3 million ($0.5 million) in cost of revenue for
the Anqing School, primarily as a result of increased faculty and
facility costs, and depreciation of fixed assets. Gross Profit
Gross profit for the fourth quarter of 2008 was RMB47.5 million
($7.0 million), representing a 13.7% decrease from RMB55.1 million
for the corresponding period of 2007. Gross margin for the fourth
quarter of 2008 was 54.9% as compared to 69.2% for the
corresponding period of 2007. This decrease was primarily
attributable to our continued investment in our learning center
network and new courseware development. Although these investments
have impacted our gross margin in the short term, management
believes that these investments will bring long-term growth in the
future. Operating Expenses Total operating expenses were RMB96.8
million ($14.2 million) for the fourth quarter of 2008, which
increased by RMB60.4 million from RMB36.4 for the corresponding
period in 2007. This increase was attributable primarily to the
factors discussed below: -- General and administrative expenses for
the fourth quarter of 2008 were RMB27.4 million ($4.0 million),
which represented a 5.0% increase from RMB26.1 million for the
corresponding period of 2007. This increase was attributable
primarily to an increase in performance-based annual bonuses in
2008 as compared to 2007. -- Selling and marketing expenses were
RMB8.2 million ($1.2 million) for the fourth quarter of 2008, which
increased by RMB4.7 million from RMB3.5 million for the
corresponding period in 2007. This increase is attributable
primarily to our investments in the following business segments: --
Learning center network expansion: Approximately RMB1.1 million of
our selling and marketing expenses was attributable to the
expansion of our learning center network. Selling and marketing
expenses related to our learning centers were insignificant in
2007. -- Online tutoring programs: In the fourth quarter of 2008,
we continued to make significant operational changes at our online
tutoring program, including increased promotion and advertising
activities and expanding our internal sales force, and as a result,
we incurred an increase of RMB2.6 million in selling and marketing
expenses. -- Non-degree online education: In the fourth quarter of
2008, one of our university collaborative alliances incurred
approximately RMB0.8 million in selling and marketing related
expenses to promoting post secondary online education opportunities
in the non-degree education market. -- Research and development
expenses for the fourth quarter of 2008 were RMB8.9 million ($1.3
million), representing a 31.2% increase from RMB6.8 million for the
corresponding period in 2007. This increase was attributable
primarily to increased technology platform upgrade and
reconfiguration activities in some of our collaborative alliances
in order to further enhance and support our online degree programs.
-- Share-based compensation for the fourth quarter of 2008, which
was allocated to the related operating cost and expense line items,
was RMB1.7 million ($0.2 million), which increased by RMB0.6
million from RMB1.1 million for the corresponding period in 2007.
This increase was attributable primarily to an increase in the
number and fair value of options granted in the fourth quarter of
2008 as compared to the corresponding period in 2007. -- A goodwill
and intangibles impairment charge was incurred with respect to the
international curriculum program and the private primary and
secondary school program in the fourth quarter of 2008, which
resulted in an aggregate non-cash charge of RMB52.2 million ($7.7
million). Of this impairment charge, RMB50.3 million was related to
the international curriculum program, of which RMB21.2 million was
related to goodwill impairment and RMB29.1 million was related to
intangibles impairment. Management has significantly reduced its
profitability forecast with respect to the international curriculum
program due to adverse changes in the government regulatory
environment and the resulting early termination of our previous
overseas partner. However, the Company has since engaged a new
overseas partner and, as a result, despite the goodwill impairment
charge, management continues to believe in the long-term prospect
of the program. The goodwill impairment charge of RMB1.9 million
($0.3 million) for the private primary and secondary school program
was primarily due to management's assessment that construction of
Jingzhou School's South campus will be further delayed, and as a
result there is no definite expected enrollment period. Income
(loss) from Operations As a result of the factors discussed above,
loss from operations for the fourth quarter of 2008 was -RMB49.3
million (-$7.2 million), as compared to income of RMB18.7 million
for the corresponding period of 2007. Adjusted income from
operations, which is a non-GAAP measure defined as income from
operations excluding certain non-cash items, including share-based
compensation, amortization of intangible assets, one-time
receivables write-off (in the third quarter of 2007), goodwill and
intangibles impairment and currency exchange loss, was RMB6.8
million ($1.0 million) for the fourth quarter of 2008, as compared
to RMB22.0 million in the corresponding period of 2007. The
decrease in adjusted income from operations was attributable to our
continued investment in the business and operations of the Company
and as a result, we continue to believe that the fundamentals of
our operations are consistent with the past year. In particular, in
the fourth quarter of 2008, the Company made significant
investments in expanding our learning center network, new
courseware development and technology upgrades for the online
degree program, increased sales and marketing efforts for the
online tutoring program, as well as efforts to develop non-degree
education at one of our collaborative alliances. Interest income
Interest income increased by 24.0% to RMB3.0 million ($0.4 million)
in the fourth quarter of 2008, as compared to RMB2.4 million in the
corresponding quarter of 2007. This increase was attributable
primarily to interest income earned on net proceeds from the
Company's initial public offering completed in December 2007.
Income Tax Expense and Minority Interest Income tax income for the
fourth quarter was RMB19.6 million ($2.9 million), representing a
change from an income tax expense of RMB2.5 million for the
corresponding period in 2007. This was attributable primarily to
the fact that, in the fourth quarter of 2008, seven of our
subsidiaries and affiliate companies applied and qualified for the
"new and high technology enterprise" status under the new Chinese
Enterprise Income Tax Regulation, which came into effect on January
1, 2008. Under the new tax regulation, the statutory tax rate for
all enterprises in China is 25%, except for enterprises who have
obtained the newly implemented "new and high technology enterprise"
status. As a result of their qualification for the "new and high
technology enterprises" status, these subsidiaries received certain
tax exemptions and a preferential statutory tax rate of 15%, which
we used to reduce our deferred tax liabilities recorded in the
past. Also compared to 2007 during which some of our subsidiaries
had used 33% statutory tax rate, while in the process of
re-applying for the newly implemented "new and high technology
enterprise" status in 2008, the Company used the 25% statutory tax
rate instead of the preferential tax rate of 15%. In addition, as a
result of the impairment loss for the acquired intangible assets
from our international curriculum programs, the related deferred
tax liabilities recorded was reversed which reduced our income tax
expense for the current quarter. Minority interest was RMB12.5
million ($1.8 million) in the fourth quarter of 2008, representing
a 44.3% increase, as compared to RMB8.6 million in the
corresponding period in 2007, which is primarily attributable to
the increased profitability of our collaborative alliances related
to our online degree program. Net Income (loss) Net loss was
RMB-39.0 million (-$5.7 million) for the fourth quarter of 2008,
representing a decrease from net income of RMB9.4 million for the
corresponding period in 2007. The loss in the fourth quarter was
attributable primarily to the goodwill and intangibles impairment
charges discussed above. Adjusted net income (non-GAAP) decreased
to RMB16.8 million ($2.5 million) for the fourth quarter of 2008,
as compared to RMB12.5 million in the corresponding period of 2007.
This decrease was attributable to the costs associate with our
significant investments in expanding our learning center network,
new courseware development and technology upgrades, increased sales
and marketing efforts for the online tutoring program, as well as
efforts to develop non-degree education at one of our collaborative
alliances. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA (non-GAAP)
was RMB10.5 million ($1.5 million) for the fourth quarter of 2008,
as compared to RMB24.4 million for the corresponding period in
2007. This decrease was also attributable primarily to the costs
associate with our significant investments in expanding our
learning center network, new courseware development and technology
upgrades, increased sales and marketing efforts for the online
tutoring program, as well as efforts to develop non-degree
education at one of our collaborative alliances. Deferred Revenue
Deferred revenue at the end of the fourth quarter of 2008 was
RMB102.1 million ($15.0 million), with current deferred revenue of
RMB96.1 million ($14.1 million) and non-current deferred revenue of
RMB6.1 million ($0.9 million). Deferred revenue at the end of the
fourth quarter of 2008 increased significantly compared to deferred
revenue of RMB33.2 million at the end of the third quarter 2008 due
to the seasonality of enrollments, which results in tuition being
received generally during the second quarter (spring semester) and
the fourth quarter (fall semester) of each year. Cash and Cash
Equivalents As of December 31, 2008, ChinaEdu reported cash and
cash equivalents of RMB353.9 million ($51.9 million), which
primarily consisted of cash-on-hand, demand deposits and term
deposits with maturity periods of three months or less. Term
Deposit and Amount Due from Related Parties Term deposits and the
amount due from related parties (which represents cash owed to us
by our collaborative alliance partners) amounted to RMB63.5 million
($9.3 million) and RMB150.5 million ($22.1 million), respectively,
at December 31, 2008. Financial Results for the Fiscal Year Ended
December 31, 2008 Net Revenue We reported total net revenue for the
fiscal year ended December 31, 2008 of RMB317.7 million ($46.6
million), representing a 19.9% increase from RMB265.0 million for
the fiscal year ended December 31, 2007. Net revenue from online
degree programs for the fiscal year 2008 was RMB255.4 million
($37.4 million), representing a 26.3% increase from RMB202.2
million for the fiscal year 2007. This increase was attributable
primarily to the solid enrollment growth at our university
partners' online degree programs in fiscal year 2008 as compared to
fiscal year 2007. In the aggregate, our university partners had
approximately 243,000 revenue students during fiscal year 2008,
representing a 27% increase from approximately 192,000 revenue
students in fiscal year 2007. Net revenue from the Company's
non-online degree programs for the fiscal year 2008 was RMB62.3
million ($9.1 million), which remained relatively flat compared to
RMB62.8 million for the fiscal year 2007. This result was
attributable primarily to the increase in student enrollment at the
Anqing School in fiscal year 2008 being offset by a decrease in net
revenue from our online tutoring program and international
curriculum programs. Cost of revenue Total cost of revenue for
fiscal year 2008 was RMB117.7 million ($17.3 million), representing
a 22.2% increase from RMB96.3 million for fiscal year 2007. Cost of
revenue from our online degree programs for fiscal year 2008 was
RMB76.2 million ($11.2 million), representing a 31.4% increase from
RMB58.0 million in fiscal year 2007. The increase was attributable
primarily to the following factors: -- Enrollment growth: In fiscal
year 2008, the number of revenue students enrolled in our
university partners' online degree programs increased by 27% to
approximately 243,000 from approximately 192,000 revenue students
in fiscal year 2007, which resulted in an increase in
recruiting-related expenses. -- Learning center operation: In 2008,
we significantly expanded our learning center network, increasing
the number of learning centers from one operational learning center
at the end of 2007 to 37 as of fiscal year-end 2008. As a result of
this significant expansion, cost of revenue related to learning
centers operations was approximately RMB3.5 million for fiscal year
2008. Cost of revenue related to our learning centers operations
was insignificant in 2007. -- Courseware development and technology
upgrade: We invested in new courseware development and hardware
upgrades at our collaborative alliances in the fourth quarter of
2008 and in connection therewith recorded approximately RMB3.2
million in increased cost of revenue. -- Non-degree online
education: In the second half of 2008, one of our university
collaborative alliances incurred approximately RMB1.0 million in
cost of revenue related to developing post secondary online
education opportunities in the non-degree education market. Cost of
revenue for non-online degree programs for the fiscal year 2008 was
RMB41.5 million ($6.1million), representing an 8.3% increase from
RMB38.3 million for the fiscal year 2007. This increase was
attributable primarily to increased faculty and other operating
facility costs as well as depreciation of fixed assets in the
fourth quarter of 2008 of an aggregate of RMB3.3 million at Anqing
School's new campus upon completion of Phase I construction. Gross
Profit Gross profit for the fiscal year 2008 was RMB200.0 million
($29.3 million), representing an 18.6% increase from RMB168.6
million for the fiscal year of 2007. Gross margin for the fiscal
year 2008 was 62.9%, as compared with gross margin of 63.6% for the
fiscal year 2007. Gross margin for the online degree programs was
70.2% in 2008 as compared with gross margin for the online degree
programs of 71.3% for 2007. The decrease in gross margin was
primarily due to our investment in our learning center network and
new courseware development. Although these investments have
impacted our gross margin in the short term, management believes
that these investments will bring long-term growth in the future.
Operating Expenses Total operating expenses for the fiscal year
2008 were RMB213.0 million ($31.2 million), representing a 65.9%
increase from RMB128.4 million for fiscal year 2007. This increase
was attributable primarily to the factors discussed below: --
General and administrative expenses for the fiscal year 2008 were
RMB86.9 million ($12.7 million), representing a 13.0% increase from
RMB76.9 million for fiscal year 2007. The increase was primarily
due to expenses associated with being a new U.S. publicly listed
company. In particular, in 2008 we incurred an increase of
approximately RMB6.0 million in professional fees paid to auditors,
lawyers, Sarbanes-Oxley Act of 2002 consultants, and other
third-party service providers that provide advice and guidance
regarding compliance with the regulatory requirements of a publicly
listed company. -- Selling and marketing expenses for the fiscal
year 2008 were RMB29.9 million ($4.4 million) as compared to
RMB14.3 million for the fiscal year 2007. The increase is
attributable primarily to the following factors: -- Learning center
network expansion: We recorded approximately RMB8.4 million in
selling and marketing expenses in connection with the expansion of,
and related marketing expenses related to, our learning center
network in fiscal year 2008. Selling and marketing expenses related
to our learning centers were insignificant in 2007. -- Online
tutoring program: We incurred an additional RMB3.6 million in
selling and marketing expenses for our online tutoring program. --
Non-degree online education: One of our university collaborative
alliances incurred approximately RMB1.1 million in selling and
marketing related expenses to promoting post secondary online
education opportunities in the non-degree education market. --
Research and development expenses for the fiscal year 2008 were
RMB26.2 million ($3.8 million), representing a 24.6% increase from
RMB21.0 million for the fiscal year 2007. This increase was
attributable primarily to technology platform upgrade and
reconfiguration activities in some of the Company's collaborative
alliances in order to further enhance and support our online degree
programs. -- In the fiscal year 2008, the Company recognized total
goodwill and intangibles impairment charges of RMB70.1 million
($10.3 million). Of this amount, RMB68.2 million ($10.0 million) of
impairment loss was related to the international curriculum
program, which management has significantly reduced profitability
forecast due to adverse change in government regulatory
environment. Despite the goodwill and intangibles impairment
charge, management continues to believe in the long-term prospects
of the program. The goodwill impairment charge of RMB1.9 million
($0.3 million) for the private primary and secondary school program
was taken in the fourth quarter of 2008, and is primarily due to
management's assessment that construction of Jingzhou School's
South campus will be further delayed, and as a result there is no
definite expected enrollment period. -- Share-based compensation
for the fiscal year 2008, which was allocated to the related cost
of revenue and operating expense line items, was RMB5.2 million
($0.8 million), which represents an increase of RMB1.6 million from
RMB3.6 million for the fiscal year 2007. This increase was
attributable primarily to an increase in the number and fair value
of options granted in fiscal year 2008 as compared to fiscal year
2007. Income (loss) from Operations Loss from operations for fiscal
year 2008 was -RMB13.1 million (-$1.9 million), as compared to an
income of RMB40.3 million for the fiscal year 2007. This decrease
was attributable to the factors discussed above regarding increases
in our cost of revenue and operating expenses. Adjusted income from
operations (non-GAAP) for fiscal year 2008 was RMB72.5 million
($10.6 million), representing a 0.3% decrease from RMB72.7 million
for the fiscal year 2007. Correspondingly, adjusted operating
margin (adjusted income from operations (non-GAAP) as a percentage
of net revenue) was 22.8% for the fiscal year 2008 as compared to
27.4% for the fiscal year 2007. Excluding the effect of increased
expenses associated with being a publicly listed company of RMB6.0
million, adjusted operating margin was 24.7% for fiscal year 2008,
as compared to 27.4% for fiscal year 2007. The decrease was
attributable primarily to costs and expenses related to the
operation of our learning center network, increased new courseware
development, increased sales and marketing efforts at our online
tutoring program, as well as efforts to develop non-degree
education at one of our collaborative alliances. Interest income
Interest income increased by 158.7% to RMB10.7 million ($1.6
million) in the fiscal year 2008, as compared to RMB4.1 million in
the fiscal year 2007. This increase was attributable primarily to
the interest income earned on the net proceeds from the Company's
initial public offering completed in December 2007. Income Tax
Expense and Minority Interest Income tax expense for the fiscal
year 2008 was RMB3.5 million ($0.5 million), representing a
significant decrease from RMB15.0 million for the fiscal year 2007.
This was attributable primarily to the fact that, in the fourth
quarter of 2008, seven of our subsidiaries and affiliate companies
applied and qualified for the "new and high technology enterprise"
status under the new Chinese Enterprise Income Tax Regulation,
which came into effect on January 1, 2008. Under the new tax
regulation, the statutory tax rate for all enterprises in China is
25%, except for enterprises who have obtained the newly implemented
"new and high technology enterprise" status. As a result of their
qualification for the "new and high technology enterprise" status,
these subsidiaries received certain tax exemptions and a
preferential statutory tax rate of 15%, which resulted in a
decrease in our deferred tax liabilities. In addition, as a result
of the impairment loss for acquired intangible assets from our
international curriculum programs, the related deferred tax
liabilities recorded was reversed which reduced our income tax
expense for the current year. Minority interest was RMB36.4 million
($5.3 million) in the fiscal year 2008, representing a 44.8%
increase, as compared to RMB25.1 million in the corresponding
period in 2007, which was primarily attributable to the increased
profitability of our collaborative alliances. Net Income (loss) The
Company recognized a net loss of -RMB43.0 million (-$6.3 million)
for the fiscal year 2008, representing a significant decrease from
net income of RMB2.5 million for the fiscal year 2007. EPS and
diluted EPS were a loss of -$0.11 per ordinary share for the fiscal
year of 2008, as compared to EPS and diluted EPS of $0.01 per share
for the fiscal year of 2007. The loss was attributable primarily to
the goodwill and intangibles impairment charges discussed above.
Adjusted net income (non-GAAP) was RMB41.7 million ($6.1 million),
representing a 24.5% increase from RMB33.5 million for the fiscal
year 2007. Adjusted EPS and diluted adjusted EPS were $0.11 and
$0.10 per ordinary share, respectively for the fiscal year 2008,
which amounts were the same in fiscal year 2007. Adjusted net
margin (adjusted net income (non-GAAP) as a percentage of net
revenue) was 13.1% in fiscal year 2008 compared to 12.6% in fiscal
year 2007. This increase was attributable primarily to the income
tax benefit recorded in 2008 due to the reduction of deferred tax
liabilities. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA (non-GAAP)
was RMB85.3 million ($12.5 million) for the fiscal year 2008,
representing an increase of 4.7% as compared to RMB81.4 million for
the fiscal year 2007. Adjusted EBITDA margin (adjusted EBITDA as a
percentage of net revenue) was 26.8% in 2008 as compared to 30.7%
in 2007. Excluding the effect of increased expenses related to
being a publicly listed company of RMB6.0 million, adjusted EBITDA
margin decreased to 28.7% for fiscal year 2008 compared to 30.7%
for the fiscal year 2007. The decrease was attributable primarily
to costs and expenses related to the operation of our learning
center network, increased new courseware development, increased
sales and marketing efforts at our online tutoring program, as well
as efforts to develop non-degree education at one of our
collaborative alliances. First Quarter 2009 Total Net Revenue
Guidance For the first quarter of 2009, ChinaEdu expects its total
net revenue to be in the range of RMB75 million ($11.0 million) to
RMB78 million ($11.4 million). This forecast reflects ChinaEdu's
current and preliminary view, which is subject to change.
Conference Call ChinaEdu senior management will host a conference
call on Thursday, March 19, 2008 at 8:00 a.m. U.S. Eastern time /
5:00 a.m. U.S. Pacific time / 8:00 p.m. Beijing/Hong Kong time. The
conference call may be accessed by calling (US) 866 730 5765/
(International) +1 857 350 1589/ (HK) +852 3002 1672/ (China) +86
10 800 130 0399, and entering the passcode: 49391574. A telephone
replay of the conference call will be available shortly after the
call until March 26, 2009 at (US) 888 286 8010/ (International) +1
617 801 6888 and entering passcode: 29928336. A live and archived
webcast may be accessed via the Internet at http://ir.chinaedu.net/
. Non-GAAP Financial Measures To supplement the unaudited condensed
consolidated financial information presented in accordance with
Accounting Principles Generally Accepted in the United States of
America ("GAAP"), the Company uses non-GAAP measures of income from
operations and net income, which are adjusted from results based on
GAAP to exclude certain non-cash items of share-based compensation,
amortization of intangible assets, goodwill and intangibles
impairment, one-time accounts receivable write-off and currency
exchange loss. The Company also uses adjusted EBITDA, which is also
a non-GAAP measure and is adjusted from GAAP results of net income
to exclude minority interest, interest income, taxes, depreciation,
amortization, share-based compensation, one-time accounts
receivables write-off, goodwill and intangibles impairment,
one-time accounts receivable write-off and currency exchange loss.
These non-GAAP financial measures are provided to enhance the
investors' overall understanding of the Company's current and past
financial performance in on-going core operations as well as
prospects for the future. These measures should be considered in
addition to results prepared and presented in accordance with GAAP,
but should not be considered a substitute for or superior to GAAP
results. Management considers the non-GAAP information as important
measures internally and therefore deems it important to provide all
of this information to investors. About ChinaEdu ChinaEdu
Corporation is an educational services provider in China,
incorporated as an exempted limited liability company in the Cayman
Islands. Established in 1999, the Company's primary business is to
provide comprehensive services to the online degree programs of
leading Chinese universities. These services include academic
program development, technology services, enrollment marketing,
student support services and finance operations. The Company's
other lines of businesses include the operation of private primary
and secondary schools, online interactive tutoring services and
providing marketing and support for international curriculum
programs. The Company believes it is the largest service provider
to online degree programs in China in terms of the number of higher
education institutions that are served and the number of student
enrollments supported. The Company currently has 12 long-term,
exclusive contracts that generally vary from 15 to 50 years in
length. ChinaEdu also performs recruiting services for 14
universities through our nationwide learning center network.
Forward-Looking Statement This press release contains
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, including certain plans,
expectations, goals, and projections, which are subject to numerous
assumptions, risks, and uncertainties. Forward-looking statements
involve known and unknown risks, uncertainties and contingencies,
many of which are beyond our control which may cause actual
results, levels of activity, performance or achievements to differ
materially from any future results, levels of activity, performance
or achievements expressed or implied by such forward-looking
statements. The Company's actual results could differ materially
from those contained in the forward-looking statements due to a
number of factors, including those described under the heading
"Risk Factors" in the Company's Annual Report on Form 20-F for the
year ended December 31, 2007, and in documents subsequently filed
by the Company from time to time with the Securities and Exchange
Commission. Unless required by law, the Company undertakes no
obligation to (and expressly disclaim any such obligation to)
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. ChinaEdu
Corporation Unaudited Condensed Consolidated Balance Sheets
December December December (in thousands) 31, 2007 31, 2008 31,
2008 RMB RMB US$ Current assets: Cash and cash equivalents 497,114
353,933 51,877 Accounts receivable, net 1,238 14,854 2,177 Term
deposit 6,042 63,500 9,307 Prepaid expenses and other current
assets 17,492 20,251 2,968 Amounts due from related parties 105,522
150,472 22,055 Deferred tax assets 9,521 3,986 584 Total current
assets 636,929 606,996 88,968 Cost method investment 1,210 1,210
177 Land use rights, net 26,949 28,344 4,154 Property and
equipment, net 130,745 161,925 23,734 Deposits paid for acquisition
of property and equipment 2,025 8,619 1,263 Intangible assets, net
105,852 70,377 10,315 Deferred tax assets 1,416 2,096 307 Rental
deposits 1,623 958 140 Goodwill 73,319 38,155 5,593 Total assets
980,068 918,680 134,651 Liabilities, minority interest and
shareholders' equity Current liabilities: Accounts payable 2,773
8,530 1,250 Deferred revenues 83,816 96,068 14,081 Accrued expenses
and other current liabilities 42,096 51,629 7,567 Amounts due to
related parties 28,316 25,769 3,777 Income taxes payable 22,455
27,917 4,092 Other taxes payable 6,666 12,008 1,760 Total current
liabilities 186,122 221,921 32,527 Long term debt 25,724 -- --
Deferred revenues 3,124 6,073 890 Deferred tax liabilities 24,036
11,069 1,622 Unrecognized tax benefit 4,332 5,473 802 Total
liabilities 243,338 244,536 35,841 Minority interests 57,996 84,315
12,358 Total shareholders' equity 678,734 589,829 86,452 Total
liabilities, minority interest, and shareholders' equity 980,068
918,680 134,651 ChinaEdu Corporation Unaudited Condensed
Consolidated Statements of Operations (in thousands, except for
Three Months Ended percentage and share, per December September
December December share information) 31, 2007 30, 2008 31, 2008 31,
2008 RMB RMB RMB US$ Net Revenue: Online degree programs 64,813
65,359 69,945 10,252 International curriculum programs 6,640 8,178
5,300 777 Online tutoring programs 4,488 3,609 4,472 655 Private
primary and secondary schools 3,672 4,858 6,823 1,000 Total net
revenue 79,613 82,004 86,540 12,684 Cost of revenue: Online degree
programs 15,729 19,266 28,195 4,133 International curriculum
programs 4,663 5,949 3,532 518 Online tutoring programs 720 852
1,443 212 Private primary and secondary schools 3,414 5,134 5,828
854 Total cost of revenue 24,526 31,201 38,998 5,717 Gross profit:
Online degree programs 49,084 46,093 41,750 6,119 International
curriculum programs 1,977 2,229 1,768 259 Online tutoring programs
3,768 2,757 3,029 443 Private primary and secondary schools 258
(276) 995 146 Total gross profit 55,087 50,803 47,542 6,967 Online
degree programs 75.7% 70.5% 59.7% 59.7% International curriculum
programs 29.8% 27.3% 33.4% 33.4% Online tutoring programs 84.0%
76.4% 67.7% 67.7% Private primary and secondary schools 7.0% -5.7%
14.6% 14.6% Gross margin 69.2% 62.0% 54.9% 54.9% Operating
expenses: General and administrative 26,106 20,150 27,410 4,018
Selling and marketing 3,491 8,770 8,202 1,202 Research and
development 6,818 5,510 8,947 1,311 Goodwill and Intangible assets
impairment -- 17,857 52,236 7,656 Total operating expenses 36,415
52,287 96,795 14,187 Income (loss) from operations 18,672 (1,484)
(49,253) (7,220) Operating margin 23.5% -1.8% -56.9% -56.9% Other
income (expense) -- 121 145 21 Interest income 2,398 2,326 2,973
436 Interest expense (475) (106) (1) -- Income (loss) before income
tax provisions and minority interest 20,595 857 (46,136) (6,763)
Income tax expense (2,519) (8,769) 19,621 2,876 Minority interest,
net of taxes (8,639) (7,397) (12,469) (1,828) Net income (loss)
9,437 (15,309) (38,984) (5,715) Net margin 11.9% -18.7% -45.0%
-45.0% Net income (loss) per share: Basic 0.21 (0.26) (0.70) (0.10)
Diluted 0.19 (0.26) (0.70) (0.10) Net income (loss) per ADS: Basic
0.63 (0.78) (2.10) (0.30) Diluted 0.57 (0.78) (2.10) (0.30)
Weighted average aggregate number of ordinary shares outstanding:
Basic 45,015,332 57,913,939 55,951,673 55,951,673 Diluted
50,477,265 57,913,939 55,951,673 55,951,673 Twelve Months Ended (in
thousands, except for percentage December December December and
share, per share information) 31, 2007 31, 2008 31, 2008 RMB RMB
US$ Net Revenue: Online degree programs 202,185 255,388 37,433
International curriculum programs 31,434 27,607 4,046 Online
tutoring programs 18,013 15,436 2,263 Private primary and secondary
schools 13,356 19,289 2,827 Total net revenue 264,988 317,720
46,569 Cost of revenue: Online degree programs 58,027 76,224 11,172
International curriculum programs 23,503 19,920 2,920 Online
tutoring programs 3,875 4,017 589 Private primary and secondary
schools 10,944 17,572 2,576 Total cost of revenue 96,349 117,733
17,257 Gross profit: Online degree programs 144,158 179,164 26,261
International curriculum programs 7,931 7,687 1,126 Online tutoring
programs 14,138 11,419 1,674 Private primary and secondary schools
2,412 1,717 251 Total gross profit 168,639 199,987 29,312 Online
degree programs 71.3% 70.2% 70.2% International curriculum programs
25.2% 27.8% 27.8% Online tutoring programs 78.5% 74.0% 74.0%
Private primary and secondary schools 18.1% 8.9% 8.9% Gross margin
63.6% 62.9% 62.9% Operating expenses: General and administrative
76,893 86,908 12,738 Selling and marketing 14,277 29,851 4,375
Research and development 21,021 26,185 3,838 Goodwill and
Intangible assets impairment 16,192 70,093 10,274 Total operating
expenses 128,383 213,037 31,225 Income (loss) from operations
40,256 (13,050) (1,913) Operating margin 15.2% -4.1% -4.1% Other
income (expense) 394 562 82 Interest income 4,118 10,652 1,561
Interest expense (2,130) (1,298) (190) Income (loss) before income
tax provisions and minority interest 42,638 (3,134) (460) Income
tax expense (15,003) (3,473) (509) Minority interest, net of taxes
(25,148) (36,412) (5,337) Net income (loss) 2,487 (43,019) (6,306)
Net margin 0.9% -13.5% -13.5% Net income (loss) per share: Basic
0.06 (0.75) (0.11) Diluted 0.05 (0.75) (0.11) Net income (loss) per
ADS: Basic 0.18 (2.25) (0.33) Diluted 0.15 (2.25) (0.33) Weighted
average aggregate number of ordinary shares outstanding: Basic
42,147,170 57,679,504 57,679,504 Diluted 47,322,184 57,679,504
57,679,504 ChinaEdu Corporation Unaudited Condensed Consolidated
Statements of Cash Flow Three Months Ended December September
December December (in thousands) 31,2007 30,2008 31,2008 31,2008
RMB RMB RMB US$ Operating activities: Net income 9,437 (15,309)
(38,984) (5,715) Minority interest 8,639 7,397 12,469 1,828
Share-based compensation 1,148 1,494 1,683 247 Depreciation 2,285
3,005 3,570 523 Amortization of land use rights 140 142 182 27
Amortization of intangible assets 2,167 2,142 2,087 306 Goodwill
and Intangible assets impairment -- 17,857 52,236 7,656 Accounts
receivable write- off 3,018 -- 1,215 178 Fixed assets write down --
-- -- -- Other income -- -- -- -- Interest expense 475 -- -- --
Loss (gain) from disposal of property and equipment 89 -- 1,663 244
Deferred income taxes (6,541) 787 (16,310) (2,391) Accounts
receivable 187 8,167 (10,341) (1,516) Prepaid expenses and other
current assets (2,351) 3,610 (7,287) (1,068) Amounts due from
related parties (46,120) 41,085 (22,991) (3,370) Rental deposits
(236) (4) 107 16 Accounts payable (536) 190 (1,084) (159) Deferred
revenues 58,949 (53,603) 68,925 10,103 Accrued expenses and other
current liabilities 21,918 1,629 16,213 2,375 Amounts due to
related parties 9,415 12,081 (29,096) (4,265) Unrecognized tax
benefit 134 -- 872 128 Other taxes payable 2,183 2,206 5,287 775
Income tax payable 9,046 9,229 (4,556) (668) Net cash provided by
(used in) operating activities 73,446 42,105 35,860 5,254 Investing
activities: Purchase of business -- (2,700) -- -- Purchase of land
use right (1,500) -- (160) (23) Purchase of property and equipment
(44,745) (11,853) (4,745) (695) Deposits paid for acquisition of
property and equipment 26,599 (5,024) (2,616) (383) Purchase of
term deposit 4,158 (71,500) 41,000 6,010 Purchase of contractual
right -- -- -- -- Proceeds from disposal of property and equipment
-- -- -- -- Net cash used in investing activities (15,488) (91,077)
33,479 4,909 Financing activities: Proceeds from IPO 348,827 -- --
-- Proceeds from issuance of Series D convertible preferred shares
-- -- -- -- Proceeds from exercise of warrants 1,664 -- -- --
Collection of subscription receivable -- -- -- -- Repurchase of
ordinary shares -- (14,725) (13,714) (2,010) Repurchase of series B
convertible preferred shares -- -- -- -- Repayment of convertible
notes (22,650) -- -- -- Repayment of long-term loan interest and
principal (1,080) (23,568) -- -- Cash dividends paid to minority
shareholders (12,333) (4,050) (7,269) (1,065) Capital contributions
by minority shareholders -- -- -- -- Proceeds from exercise of
options -- 404 1,383 203 Prepayment for share repurchase -- (5,751)
-- -- Net cash provided by (used in) financing activities 314,428
(47,690) (19,600) (2,872) Effect of foreign exchange rate changes
(4,106) (746) 865 126 CASH AND CASH EQUIVALENTS, beginning of
period 128,834 400,737 303,329 44,460 CASH AND CASH EQUIVALENTS,
end of period 497,114 303,329 353,933 51,877 Net increase
(decrease) in cash 368,280 (97,408) 50,604 7,417 Twelve Months
Ended December December December (in thousands) 31, 2007 31, 2008
31, 2008 RMB RMB US$ Operating activities: Net income 2,487
(43,019) (6,306) Minority interest 25,148 36,412 5,337 Share-based
compensation 3,643 5,231 767 Depreciation 8,206 12,212 1,790
Amortization of land use rights 533 606 89 Amortization of
intangible assets 8,548 8,746 1,282 Goodwill and Intangible assets
impairment 16,192 70,093 10,274 Accounts receivable write- off
7,049 1,215 178 Fixed assets write down 688 -- -- Other income
(394) -- -- Interest expense 2,130 -- -- Loss (gain) from disposal
of property and equipment 89 1,663 244 Deferred income taxes
(1,283) (8,387) (1,229) Accounts receivable 11,340 (14,658) (2,148)
Prepaid expenses and other current assets (8,737) (2,970) (435)
Amounts due from related parties (52,492) (44,950) (6,588) Rental
deposits (1,187) 665 97 Accounts payable (5,640) (950) (139)
Deferred revenues 7,905 15,210 2,229 Accrued expenses and other
current liabilities 20,860 10,011 1,467 Amounts due to related
parties 25,045 (4,368) (640) Unrecognized tax benefit 588 1,141 167
Other taxes payable 2,914 5,342 783 Income tax payable 9,495 5,462
801 Net cash provided by (used in) operating activities 83,127
54,707 8,020 Investing activities: Purchase of business (22,520)
(6,700) (982) Purchase of land use right (2,195) (160) (23)
Purchase of property and equipment (69,687) (36,323) (5,324)
Deposits paid for acquisition of property and equipment (2,025)
(8,650) (1,268) Purchase of term deposit 3,958 (57,458) (8,422)
Purchase of contractual right (3,430) (1,225) (180) Proceeds from
disposal of property and equipment -- 31 5 Net cash used in
investing activities (95,899) (110,485) (16,194) Financing
activities: Proceeds from IPO 348,827 -- -- Proceeds from issuance
of Series D convertible preferred shares 72,033 -- -- Proceeds from
exercise of warrants 3,838 -- -- Collection of subscription
receivable 1,117 -- -- Repurchase of ordinary shares (12,813)
(34,190) (5,011) Repurchase of series B convertible preferred
shares (640) -- -- Repayment of convertible notes (27,783) -- --
Repayment of long-term loan interest and principal (1,080) (25,724)
(3,770) Cash dividends paid to minority shareholders (19,028)
(11,319) (1,659) Capital contributions by minority shareholders
2,030 1,225 180 Proceeds from exercise of options -- 1,787 262
Prepayment for share repurchase -- -- -- Net cash provided by (used
in) financing activities 366,501 (68,221) (9,998) Effect of foreign
exchange rate changes (4,930) (19,182) (2,815) CASH AND CASH
EQUIVALENTS, beginning of period 148,315 497,114 72,864 CASH AND
CASH EQUIVALENTS, end of period 497,114 353,933 51,877 Net increase
(decrease) in cash 348,799 (143,181) (20,987) ChinaEdu Corporation
Reconciliations of non-GAAP results of operations measures to GAAP
measures Three Months Ended December September December December
(in thousands, unaudited) 31, 2007 30, 2008 31, 2008 31, 2008 RMB
RMB RMB US$ Income (loss) from operations GAAP Result 18,672
(1,484) (49,253) (7,220) Share-based compensation 1,148 1,494 1,683
247 Exchange loss -- 1,433 -- -- Amortization of intangible assets
2,167 2,142 2,087 306 Goodwill and Intangible assets impairment --
17,857 52,236 7,656 Accounts receivable write- off from prior owner
of International Curriculum Program -- -- -- -- Adjusted income
(loss) from operations (Non- GAAP) 21,987 21,442 6,753 989 Adjusted
operating margin 27.6% 26.1% 7.8% 7.8% Net income (loss) GAAP
Result 9,437 (15,309) (38,984) (5,715) Share-based compensation
1,148 1,494 1,683 247 Exchange loss -- 1,433 -- -- Minority
interest for Share-based compensation (265) (194) (203) (30)
Amortization of intangible assets 2,167 2,142 2,087 306 Goodwill
and Intangible assets impairment -- 17,857 52,236 7,656 Accounts
receivable write- off from prior owner of International Curriculum
Program -- -- -- -- Deferred tax benefit for accounts receivable
write-off from prior owner of International Curriculum Programs --
-- -- -- Adjusted net income (loss) (Non-GAAP) 12,487 7,423 16,819
2,464 Adjusted net margin 15.7% 9.1% 19.4% 19.4% Adjusted net
income (loss) per share: Basic 0.28 0.13 0.30 0.04 Diluted 0.25
0.12 0.29 0.04 Weighted average aggregate number of ordinary shares
outstanding: Basic 45,015,332 57,913,939 55,951,673 55,951,673
Diluted 50,477,265 59,800,339 57,563,770 57,563,770 Twelve Months
Ended December December December (in thousands, unaudited) 31, 2007
31, 2008 31, 2008 RMB RMB US$ Income (loss) from operations GAAP
Result 40,256 (13,050) (1,913) Share-based compensation 3,643 5,231
767 Exchange loss -- 1,433 210 Amortization of intangible assets
8,548 8,746 1,282 Goodwill and Intangible assets impairment 16,192
70,093 10,274 Accounts receivable write-off from prior owner of
International Curriculum Program 4,031 -- -- Adjusted income (loss)
from operations (Non-GAAP) 72,670 72,453 10,620 Adjusted operating
margin 27.4% 22.8% 22.8% Net income (loss) GAAP Result 2,487
(43,019) (6,306) Share-based compensation 3,643 5,231 767 Exchange
loss - 1,433 210 Minority interest for Share-based compensation
(774) (786) (115) Amortization of intangible assets 8,548 8,746
1,282 Goodwill and Intangible assets impairment 16,192 70,093
10,274 Accounts receivable write-off from prior owner of
International Curriculum Program 4,031 -- -- Deferred tax benefit
for accounts receivable write-off from prior owner of International
Curriculum Programs (636) -- -- Adjusted net income (loss)
(Non-GAAP) 33,491 41,698 6,112 Adjusted net margin 12.6% 13.1%
13.1% Adjusted net income (loss) per share: Basic 0.79 0.72 0.11
Diluted 0.71 0.69 0.10 Weighted average aggregate number of
ordinary shares outstanding: Basic 42,147,170 57,679,504 57,679,504
Diluted 47,322,184 60,487,587 60,487,587 Adjusted income from
operations, which is a non-GAAP measure defined as income from
operations excluding certain non-cash items, including share- based
compensation, amortization of intangible assets, one-time
receivables write-off (in the third quarter of 2007), goodwill and
intangibles impairment and currency exchange loss. Adjusted net
income, which is a non-GAAP measure defined as net income excluding
share-based compensation, amortization of intangible assets,
one-time receivables write-off (in the third quarter of 2007),
goodwill and intangibles impairment charges, and currency exchange
loss. ChinaEdu Corporation Reconciliation from net income to
adjusted EBITDA (*) Three Months Ended December September December
December (in thousands, unaudited) 31, 2007 30, 2008 31, 2008 31,
2008 RMB RMB RMB US$ Net income/(loss) 9,437 (15,309) (38,984)
(5,715) Minority interest 8,639 7,397 12,469 1,828 Income tax
provision 2,519 8,769 (19,621) (2,876) Exchange loss -- 1,433 -- --
Interest income and other, net (1,923) (2,341) (3,117) (457)
Depreciation 2,285 3,005 3,570 523 Intangible Amortization 2,167
2,142 2,087 306 Land use right amortization 140 142 182 27 Goodwill
and Intangible assets impairment -- 17,857 52,236 7,656 Accounts
receivable write-off -- -- -- -- Share-based compensation 1,148
1,494 1,683 247 Adjusted EBITDA 24,412 24,589 10,505 1,539 Adjusted
EBITDA margin 30.7% 30.0% 12.1% 12.1% Twelve Months Ended December
December December (in thousands, unaudited) 31, 2007 31, 2008 31,
2008 RMB RMB US$ Net income/(loss) 2,487 (43,019) (6,306) Minority
interest 25,148 36,412 5,337 Income tax provision 15,003 3,473 509
Exchange loss -- 1,433 210 Interest income and other, net (2,382)
(9,916) (1,453) Depreciation 8,206 12,212 1,790 Intangible
Amortization 8,548 8,746 1,282 Land use right amortization 533 606
89 Goodwill and Intangible assets impairment 16,192 70,093 10,274
Accounts receivable write-off 4,031 -- -- Share-based compensation
3,643 5,231 767 Adjusted EBITDA 81,409 85,271 12,499 Adjusted
EBITDA margin 30.7% 26.8% 26.8% Adjusted EBITDA, which is a
non-GAAP measure defined as earnings before minority interest,
interest income, taxes, depreciation, amortization, share-based
compensation, one-time receivables write-off (in the third quarter
of 2007), goodwill and intangibles impairment charges and currency
exchange loss. For more information, please contact: Company
Contacts: Lily Liu, CFO ChinaEdu Corporation Phone:
+86-10-8418-6655 x1002 Email: S. Jimmy Xia, IR Manager ChinaEdu
Corporation Phone: +86-10-8418-6655 x1150 Email: DATASOURCE:
ChinaEdu Corporation Web site: http://ir.chinaedu.net/
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Chinaedu Corp. ADS, Each Representing Three Ordinary Shares (MM) (NASDAQ:CEDU)
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Chinaedu Corp. ADS, Each Representing Three Ordinary Shares (MM) (NASDAQ:CEDU)
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