BEIJING, Sept. 7, 2011 /PRNewswire-Asia/ -- ChinaEdu
Corporation (NASDAQ: CEDU) ("ChinaEdu" or the "Company"), a
leading online education services provider in China, today announced its unaudited financial
results for the second quarter and six months ended June 30, 2011.(1)
Key Quarterly Financial and Operating Data
- Total net revenue for the second quarter of 2011 was
$17.0 million, a 10.6 percent
increase from $15.4 million in the
corresponding period in 2010, exceeding Company guidance of
$15.7 million to $16.2 million.
- Net revenue from online degree programs was $13.6 million, an increase of 9.8 percent from
$12.4 million in the corresponding
period of 2010.
- Net income attributable to ChinaEdu was $0.8 million.
- Adjusted net income attributable to ChinaEdu(2) was
$1.2 million.
- Net income attributable to ChinaEdu per diluted ADS(3) was
$0.046, compared to $0.121 in the corresponding period in 2010.
- Adjusted net income attributable to ChinaEdu per diluted ADS(4)
was $0.070, compared to $0.132 in the corresponding period in 2010.
- The number of revenue students(5) in online degree programs was
approximately 159,000 during the Spring 2011 semester.
"Revenue growth of ChinaEdu's four core business lines tracked
according to expectation in the second quarter of 2011," said
Julia Huang, chairman and chief
executive officer of ChinaEdu. Ms. Huang added, "Investment in
promising new business initiatives continues to put pressure on our
margins; however, we have implemented control measures aimed at
reducing costs in the coming quarters. Our foundation in online
degree programs allows us to explore strategic initiatives,
leveraging our expertise to capture the tremendous opportunities in
China's education market."
Ms. Huang continued, "We are pleased with our progress as we
ramp up our new business initiatives. During the second quarter,
our 101 online program team launched several successful new
interactive knowledge-based products. These new product offerings
attracted new users, growing our user base. Our interactive Q&A
tutoring website logged more than twenty million page views this
past quarter and we have launched an in-depth user feedback program
to help us improve the offering to drive continued growth."
Recent Developments
Julia Huang, chairman and chief
executive officer of ChinaEdu Corporation, has taken on the role of
acting chief financial officer, effective immediately. Ms. Huang
has served as the Company's chairman since 2007 and as chief
executive officer since 2000. Ms. Huang holds an MBA from
Columbia Business School with
concentrations in finance and international business, and a
master's degree in chemical engineering and microbiology from the
University of Tennessee in
Knoxville.
Financial Results for the Second Quarter Ended
June 30, 2011
Net Revenue
Total net revenue for the second quarter of 2011 was
$17.0 million, a 10.6 percent
increase from $15.4 million in the
corresponding period in 2010. Net revenue from online degree
programs for the second quarter of 2011 was $13.6 million, a 9.8 percent increase from
$12.4 million for the corresponding
period in 2010. The increase was primarily due to the continued
expansion of the learning center network, with organic growth in
revenue students enrolled in our online degree programs
contributing as well. Enrollment for 2011 spring semester online
degree programs was approximately 159,000 revenue students, a 1.3%
increase from approximately 157,000 revenue students in the Spring
2010 semester.
As of June 30, 2011, the ChinaEdu
learning center network was providing online degree programs for 21
universities with 100 operational learning centers, of which 57
were proprietary centers(6) and 43 were contracted centers(7). This
compares to 65 operational learning centers as of the end of the
second quarter of 2010, of which 27 were proprietary and 38 were
contracted centers.
Net revenue from non-degree programs, including online tutoring
programs, private primary and secondary schools and international
and elite curriculum programs, in the second quarter of 2011 was
$3.4 million, a 13.5 percent increase
from $3.0 million in the second
quarter of 2010. The $0.4 increase
was mainly attributable to increased student enrollment at our
private school in Anqing.
Cost of Revenue
Total cost of revenue for the second quarter of 2011 was
$6.8 million, an increase of 26.3
percent, up from $5.4 million in the
corresponding period of 2010. Cost of revenue for online degree
programs in the second quarter of 2011 was $4.6 million, an increase of 20.8 percent
compared to $3.8 million in the
corresponding period of 2010. Continued expansion of the Company's
learning center network, as well as spending related to the
development of teacher training programs hosted by collaborative
alliance partners, drove the increase in cost of revenue for online
degree programs.
Cost of revenue for non-degree programs in the second quarter of
2011 was $2.3 million, an increase of
38.9 percent from $1.6 million in the
second quarter of 2010. The rise in cost was related to an increase
in staff and rental costs associated with the expansion of
international and elite programs as well as the development of
interactive and personalized learning products for online tutoring
programs. The increase was also related to increased costs
associated with the Anqing School, including increased teaching
staff costs, cafeteria related costs and an increased depreciation
charge for the new campus.
Gross Profit and Gross Margin
Gross profit for the second quarter of 2011 was $10.2 million, compared to $10.0 million in the corresponding period of
2010. Total gross margin decreased to 59.9 percent, compared to
64.9 percent for the corresponding period in 2010. Gross margin for
online degree programs decreased to 66.5 percent for the second
quarter of 2011, compared to 69.6 percent in the corresponding
period of 2010. The decrease in gross margin was primarily due to
the expansion of our learning centers network and was also due to
increased costs associated with developing teacher training
programs. In the future, we expect gross margin for online degree
programs to continue to decrease somewhat as the percentage of
total net revenue contributed by the Company's learning centers
network increases. This is because the learning centers network's
sales and service scope results in a higher cost of sales for that
area of our business.
Gross margin for online tutoring programs decreased slightly to
71.4 percent, down from 75.8 percent in second quarter of 2010,
largely due to increased staff costs associated with expanding
interactive course offerings and adding additional off-line
personalized tutoring services. Despite increased cost of revenue,
gross margin for private schools improved to 29.3 percent, compared
to 25.8 percent in the corresponding period in 2010. The
improvement was due to increased enrollment at the Anqing School's
new campus.
With a new program launched in our international division this
fiscal year, gross margin for the international curriculum and
elite programs was negative 48.0 percent for the second quarter of
2011, compared to 45.9 percent for the second quarter of 2010. This
was primarily due to investments in staff and rental costs related
to the expansion of international and elite programs.
Operating Expenses
Total operating expenses were $7.6
million in the second quarter of 2011, a 36.8 percent
increase from $5.6 million for the
corresponding period in 2010. As a percentage of net revenue, total
operating expenses increased to 44.7 percent, compared with 36.1
percent in the corresponding period in 2010. The increase in total
operating expenses resulted from the following:
- General and administrative expenses for the second quarter of
2011 were $3.8 million, a 33.8
percent increase from $2.8 million
for the corresponding period in 2010. As a percentage of net
revenue, general and administrative expenses increased to 22.4
percent, from 18.5 percent in the same period in 2010. Increased
staff costs and rising costs associated with leased facilities were
the primary reasons for the increase. ChinaEdu's donation of
approximately RMB1 million, or
$0.2 million, in supplies to the
Beijing Language and Culture University, in line with the Company's
corporate social responsibility efforts, was also included in the
quarterly general and administrative expense.
- Selling and marketing expenses were $2.2
million in the second quarter of 2011, an increase of 74.8
percent compared to $1.2 million for
the corresponding period in 2010. As a percentage of net revenue,
selling and marketing expenses increased to 12.8 percent, up from
8.1 percent in the same period in 2010. The increase in selling and
marketing expenses were mainly related to growth in sales force
headcount for online tutoring programs in Beijing and expenses related to national
promotion and branding activities.
- Research and development expenses for the second quarter of
2011 were $1.6 million, an increase
of 10.4 percent from $1.5 million in
the corresponding period in 2010. The increase was primarily
attributable to an increase in research and development headcount
in connection with upgrading learning management systems and
enhancing courseware development, particularly for the development
of interactive products. As a percentage of net revenue, research
and development expense was 9.5 percent in the second quarter 2011,
a slight decrease from 9.6 percent in the same period of 2010.
- Share-based compensation for the second quarter of 2011, which
is allocated to the related cost and operating expense line items,
increased to $0.3 million from
$0.1 million in the corresponding
period in 2010, due to a true-up adjustment of forfeiture rate that
occurred in second quarter of 2010.
Income from Operations
Income from operations for the second quarter of 2011 was
$2.6 million, a decrease of 41.6
percent compared to $4.4 million in
the corresponding period of 2010. Operating margin decreased to
15.2 percent for the second quarter of 2011, compared to 28.7
percent in the corresponding period of 2010.
Adjusted income from operations, a non-GAAP measure defined as
income from operations excluding share-based compensation, and
amortization of intangible assets and land use rights, was
$3.0 million for the second quarter
of 2011, a decrease of 35.4 percent compared to $4.7 million in the corresponding period of
2010.
Adjusted operating margin, a non-GAAP measure defined as the
ratio of adjusted operating income from operations (non-GAAP) over
net revenue, for the second quarter of 2011 decreased to 17.7
percent, compared to 30.3 percent for the corresponding period of
2010.
Interest Income and Investment Income
Interest income and investment income for the second quarter of
2011 increased 48.3 percent to $0.4
million, compared to $0.3
million for the corresponding quarter of 2010.
Income Tax Expense
In the second quarter of 2011, income tax expense was
$0.6 million and the effective income
tax rate was 20.1 percent, compared with a tax rate of 21.0 percent
in same period of 2010.
Net Income Attributable to Non-controlling
Interests
Net income attributable to non-controlling interests remained
stable at $1.7 million in the second
quarter of 2011, compared to $1.6
million in the corresponding period in 2010.
Net Income Attributable to ChinaEdu
Net income attributable to ChinaEdu, which is net income,
excluding net income attributable to non-controlling interests, was
$0.8 million in the second quarter of
2011, representing a decrease of 62.8 percent from $2.1 million in the corresponding period of
2010.
Net income attributable to ChinaEdu per basic and diluted ADS
was $0.049 and $0.046, respectively, for the second quarter of
2011, as compared to $0.130 and
$0.121, respectively, for the
corresponding period in 2010.
Adjusted net income attributable to ChinaEdu (non-GAAP) was
$1.2 million in the second quarter of
2011 compared to $2.3 million in the
corresponding period of 2010. Adjusted net margin, a non-GAAP
measure defined as the ratio of adjusted net income attributable to
ChinaEdu (non-GAAP) over net revenue, was 7.0 percent in the second
quarter of 2011, compared to 14.8 percent in the corresponding
period of 2010.
Adjusted net income attributable to ChinaEdu per basic and
diluted ADS (non-GAAP) was $0.076 and
$0.070, respectively, for the second
quarter of 2011, compared to $0.142
and $0.132, respectively, in the
corresponding period of 2010.
Deferred Revenue
At the end of the second quarter of 2011, deferred revenue was
$20.0 million, consisting of current
deferred revenue in the amount of $18.5
million and non-current deferred revenue in the amount of
$1.5 million. Spring semester tuition
is generally received during the second quarter but is recognized
both in the second quarter and the third quarter of the year.
Cash and Cash Equivalents and Term Deposits
As of June 30, 2011, the Company
reported cash and cash equivalents and term deposits of
$46.3 million, which primarily
consisted of cash, demand deposits with original maturity terms of
three months or less, and term deposits with original maturity
terms of greater than three months but less than one year.
Amounts Due from Related Parties
Amounts due from related parties, which represents cash owed to
the Company by collaborative alliance partners, were $41.9 million as of June
30, 2011 as compared to $38.2
million as of December 31,
2010.
2011 Year-to-Date Financial Results
Net Revenue
For the six months ended June 30,
2011, total net revenue was $31.2
million, which represented an increase of 7.8 percent over
$28.9 million in the corresponding
period in 2010. Net revenue from online degree programs for the
first half of 2011 was $24.7 million,
representing a 7.4 percent increase from $23.0 million in the corresponding period in
2010. And net revenue from non-online degree programs for the first
half of 2011 was $6.4 million,
compared to $5.9 million in 2010, a
9.3 percent increase. The growth in total net revenue was
attributable to strong enrollment for the online degree programs
both in the Fall semester of 2010 and Spring semester of 2011,
particularly at learning centers. Growth in net revenue at the
Anqing School and for 101 online tutoring programs also contributed
to the net revenue increase, despite a decrease in revenue for
international and elite curriculum programs.
Cost of Revenue
For the six months ended June 30,
2011, total cost of revenue was $13.0
million, an increase from $10.3
million for the corresponding period in 2010. Cost of
revenue for online degree programs in the first half of 2011 was
$8.7 million, an increase of 23.6
percent compared to $7.0 million in
the corresponding period of 2010. The increase was primarily due to
cost increases related to the expansion of the Company's learning
centers network and increases in headcount across business lines.
Cost of revenue for non-online degree programs in the first half
of 2011 was $4.3 million, an increase
of 32.8 percent compared to $3.2
million in the corresponding period of 2010. The increase
was primarily attributable to an increase in teaching and
recruiting costs related to the expansion of international and
elite programs to meet market demand for study-abroad
opportunities. This increase was also due to an increase in
depreciation charges at the Anqing School as well as additional
headcount required to develop interactive and personalized learning
products for online tutoring programs.
Gross Profit
Gross profit for the six months ended June 30, 2011 was $18.2
million, a slight decrease of 2.5 percent compared with
$18.6 million for the corresponding
period in 2010. The decrease was primarily due to a decrease in
gross margin for international and elite curriculum programs.
Income from Operations
Income from operations was $4.3
million for the six months ended June
30, 2011, representing a decrease of 42.7 percent from
$7.4 million for the corresponding
period in 2010. Operating margin was 13.7 percent for the six
months ended June 30, 2011 compared
to 25.7 percent for the corresponding period in 2010.
Adjusted income from operations (non-GAAP) was $5.1 million for the first half of 2011,
representing a decrease of 37.6 percent, compared to $8.2 million in the corresponding period of 2010.
Adjusted operating margin (non-GAAP) for the six months ended
June 30, 2011 was 16.4 percent,
compared to 28.4 percent for the corresponding period in 2010.
Interest Income and Investment Income
Interest income and investment income increased 60.0 percent to
$0.7 million in the year 2011,
compared to $0.5 million in the year
2010.
Income Tax Expense
Income tax expense for the year 2011 was $1.0 million, as compared with $2.3 million for the year 2010.
Net Income Attributable to Non-controlling
Interests
Net income attributable to non-controlling interests was
$2.7 million in first half of 2011,
an increase of 11.1 percent compared to $2.5
million in the first half of 2010. The increase was
primarily attributable to a non-controlling interest impact related
to the increase in net income from online degree programs in the
first half of 2011.
Net Income attributable to ChinaEdu
Net income attributable to ChinaEdu was $1.3 million for the six months ended
June 30, 2011, representing a
decrease of 58.9 percent from $3.2
million for the corresponding period in 2010. Net margin was
4.2 percent for the six months ended June
30, 2011, compared to 11.1 percent for the corresponding
period in 2010.
Adjusted net margin was 6.9 percent for the six months ended
June 30, 2011, compared to 13.5
percent for the corresponding period of 2010.The decrease was
primarily due to the decreased net profit in the second quarter of
2011.
Third Quarter 2011 Total Net Revenue Guidance
ChinaEdu expects total net revenue in the third quarter of 2011
to range from RMB112 million to RMB116
million or $17.4 million to $18.0
million. This forecast reflects ChinaEdu's current and
preliminary view, which is subject to change.
Conference Call
ChinaEdu's management will hold an earnings conference call at
8:00 a.m. U.S. Eastern Time on
September 8, 2011 (8:00 p.m. Beijing/Hong Kong Time on September 8, 2011).
Dial-in details for the earnings conference call are as
follows:
U.S. Toll Free
Number:
|
+1 866 519 4004
|
|
International Dial-in
Number:
|
+1 718 354 1231
|
|
China Domestic (Mobile
Callers):
|
400 620 8038
|
|
China Domestic:
|
800 819 0121
|
|
Hong Kong:
|
+852 2475 0994
|
|
Conference ID:
|
95956555
|
|
|
|
A live and archived webcast of the conference call will be
available on the investor relations page of ChinaEdu's website at
http://ir.chinaedu.net and a replay of the conference call may be
accessed by phone at the following numbers until September 29, 2011.
Dial-in numbers for the replay are as follows:
U.S. Toll Free
Number
|
+1 866 214 5335
|
|
International Dial-in
Number
|
+1 718 354 1232
|
|
Conference ID:
|
95956555
|
|
|
|
Non-GAAP Financial Measures
To supplement the unaudited condensed consolidated financial
information presented in accordance with Generally Accepted
Accounting Principles in the United
States of America ("GAAP"), the Company uses non-GAAP
measures of income from operations and net income attributable to
ChinaEdu, which are adjusted from results based on GAAP to exclude
certain non-cash items of share-based compensation and amortization
of intangible assets and land use rights. 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, support for international and elite curriculum
programs and online learning community for adult students.
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 19 long-term contracts that generally vary from 10 to
50 years in length. ChinaEdu also performs recruiting services for
21 universities through 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, 2010, 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.
Notes:
(1) The reporting currency of the Company is RMB, but for the
convenience of the reader, the amounts for the three and six months
ended on June 30, 2010 and
June 30, 2011 are presented in U.S.
dollars. Unless otherwise stated, all translations from RMB to U.S.
dollars were made at the rate of RMB6.4635 to $1.00,
the noon buying rate in effect on June 30,
2011 in the H.10 statistical release of the Federal Reserve
Board. The Company makes no representation that the RMB or U.S.
dollar amounts referred 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) "Adjusted net income attributable to ChinaEdu" is a non-GAAP
measure defined as net income attributable to ChinaEdu excluding
share-based compensation net of noncontrolling interest portion,
and amortization of intangible assets and land use rights.
(3) "ADS" is American Depositary Share. Each ADS represents
three ordinary shares.
(4) "Adjusted net income attributable to ChinaEdu per diluted
ADS" is a non-GAAP measure which is computed using adjusted net
income attributable to ChinaEdu over number of ADSs used in net
income attributable to ChinaEdu per diluted ADS calculation.
(5) "Revenue students" refers to students of university online
degree programs who have paid tuitions. The numbers for the three
months ended 30 June 2011 are revenue
students in spring 2011.
(6) Proprietary centers refer to self-owned learning centers
operated either under the Company's own brand name or the brand
name of a university pursuant to a licensing arrangement with that
university.
(7) Contracted centers refer to agreement with third party
learning centers pursuant to which the Company only provides
assistance applying for approval from provincial level education
authorities as well as securing additional university online degree
programs. In return, the Company receives a percentage of the
tuition earned by these third party learning centers.
For investor and media inquiries, please contact:
Helen Plummer
Senior Investor Relations Coordinator
ChinaEdu Corporation
Phone: +86 13911672124
E-mail: helen@chinaedu.net
Jin Yu
Investor Relations Manager
ChinaEdu Corporation
Phone: +86 15711096022
E-mail: jinyu@chinaedu.net
ChinaEdu
Corporation
|
|
Unaudited
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
(in thousands,
unaudited)
|
December
31, 2010
|
June
30, 2011
|
June
30, 2011
|
|
|
|
RMB
|
RMB
|
US$
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
190,493
|
172,875
|
26,746
|
|
|
Term deposits
|
120,500
|
126,099
|
19,509
|
|
|
Short-term
investments
|
32,469
|
38,237
|
5,916
|
|
|
Accounts
receivable
|
35,091
|
37,787
|
5,846
|
|
|
Inventories
|
358
|
-
|
-
|
|
|
Prepaid expenses and other
current assets
|
30,966
|
33,111
|
5,123
|
|
|
Amounts due from related
parties
|
246,925
|
270,626
|
41,870
|
|
|
Deferred tax
assets-current
|
5,003
|
1,209
|
187
|
|
Total
current assets
|
661,805
|
679,944
|
105,197
|
|
|
Deferred tax
assets-non-current
|
3,470
|
7,075
|
1,095
|
|
|
Rental deposits
|
936
|
2,528
|
391
|
|
|
Land use rights
|
27,265
|
26,961
|
4,171
|
|
|
Property and equipment,
net
|
227,507
|
231,347
|
35,793
|
|
|
Deposits paid for
acquisition of property and equipment
|
19,792
|
27,314
|
4,226
|
|
|
Acquired intangible
assets, net
|
65,849
|
63,815
|
9,873
|
|
|
Goodwill
|
43,255
|
43,255
|
6,692
|
|
Total
assets
|
1,049,879
|
1,082,239
|
167,438
|
|
|
|
|
|
|
|
Liabilities
and equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable
(including accounts payable of the consolidated VIE without
recourse to the
Group of 10,277 and 8,410
as of December 31, 2010 and June 30, 2011)
|
11,410
|
10,151
|
1,571
|
|
|
Deferred revenues-current
(including deferred revenues of the consolidated VIE without
recourse to
the Group of 18,762 and
19,282 as of December 31, 2010 and June 30, 2011)
|
105,891
|
119,279
|
18,454
|
|
|
Accrued expenses and other
current liabilities (including accrued expenses and other
current
liabilities of the
consolidated VIE without recourse to the Group of 12,486 and
17,723
as of December 31, 2010
and June 30, 2011)
|
83,486
|
93,613
|
14,482
|
|
|
Amounts due to related
parties (including amounts due to related parties of the
consolidated VIE
without recourse to the
Group of 2,201 and 1,174 as of December 31, 2010 and June 30,
2011)
|
31,177
|
40,025
|
6,192
|
|
|
Income taxes payable
(including income taxes payable of the consolidated VIE without
recourse to the
Group of 8,432 and 8,768
as of December 31, 2010 and June 30, 2011)
|
44,612
|
36,888
|
5,707
|
|
|
Other taxes payable
(including other taxes payable of the consolidated VIE without
recourse to the
Group of 2,482 and 2,760
as of December 31, 2010 and June 30, 2011)
|
20,508
|
16,935
|
2,620
|
|
Total
current liabilities
|
297,084
|
316,891
|
49,026
|
|
|
Deferred
revenues-non-current (including deferred revenues of the
consolidated VIE without recourse
to the Group of 71 and 47
as of December 31, 2010 and June 30, 2011)
|
9,804
|
9,799
|
1,516
|
|
|
Deferred tax
liabilities-non-current (including deferred tax liabilities of the
consolidated VIE without
recourse to the Group of
1,057 and 1,037 as of December 31, 2010 and June 30,
2011)
|
9,836
|
9,615
|
1,488
|
|
|
Unrecognized tax benefit
(including unrecognized tax benefit of the consolidated VIE
without
recourse to the Group of
1,251 and 1,794 as of December 31, 2010 and June 30,
2011)
|
3,691
|
4,949
|
766
|
|
Total
liabilities
|
320,415
|
341,254
|
52,796
|
|
|
|
|
|
|
|
ChinaEdu
Corporation shareholders’ equity
|
595,979
|
599,307
|
92,722
|
|
|
Noncontrolling
interests
|
133,485
|
141,678
|
21,920
|
|
Total
equity
|
729,464
|
740,985
|
114,642
|
|
Total
liabilities and equity
|
1,049,879
|
1,082,239
|
167,438
|
|
|
|
|
|
|
ChinaEdu
Corporation
|
|
Unaudited
Condensed Consolidated Statements of Operations
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
(in
thousands, except for percentage, share,
and per share information)
|
|
June
30, 2010
|
March
31, 2011
|
June
30, 2011
|
June
30, 2011
|
June
30, 2010
|
June
30, 2011
|
June
30, 2011
|
|
|
|
RMB
|
RMB
|
RMB
|
US$
|
RMB
|
RMB
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
Gross Revenue
*
|
|
104,108
|
95,862
|
115,327
|
17,843
|
195,197
|
211,189
|
32,675
|
|
|
|
|
|
|
|
|
|
|
|
Business Tax
|
|
4,591
|
4,512
|
5,296
|
819
|
8,403
|
9,808
|
1,517
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue:
|
|
|
|
|
|
|
|
|
|
Online degree
programs
|
|
80,188
|
71,665
|
88,085
|
13,628
|
148,703
|
159,750
|
24,716
|
|
Online tutoring
programs
|
|
6,084
|
5,656
|
7,250
|
1,122
|
11,485
|
12,906
|
1,997
|
|
Private primary and
secondary schools
|
|
9,454
|
11,240
|
11,880
|
1,838
|
18,734
|
23,120
|
3,577
|
|
International and elite
curriculum programs
|
|
3,791
|
2,789
|
2,816
|
436
|
7,872
|
5,605
|
868
|
|
Total net
revenue
|
|
99,517
|
91,350
|
110,031
|
17,024
|
186,794
|
201,381
|
31,158
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
|
Online degree
programs
|
|
24,417
|
26,712
|
29,500
|
4,564
|
45,465
|
56,212
|
8,697
|
|
Online tutoring
programs
|
|
1,473
|
2,013
|
2,077
|
321
|
2,638
|
4,090
|
633
|
|
Private primary and
secondary schools
|
|
7,016
|
8,361
|
8,395
|
1,299
|
13,740
|
16,756
|
2,592
|
|
International and elite
curriculum programs
|
|
2,052
|
2,665
|
4,168
|
645
|
4,463
|
6,833
|
1,057
|
|
Total cost of
revenue
|
|
34,958
|
39,751
|
44,140
|
6,829
|
66,306
|
83,891
|
12,979
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit:
|
|
|
|
|
|
|
|
|
|
Online degree
programs
|
|
55,771
|
44,953
|
58,585
|
9,064
|
103,238
|
103,538
|
16,019
|
|
Online tutoring
programs
|
|
4,611
|
3,643
|
5,173
|
801
|
8,847
|
8,816
|
1,364
|
|
Private primary and
secondary schools
|
|
2,438
|
2,879
|
3,485
|
539
|
4,994
|
6,364
|
985
|
|
International and elite
curriculum programs
|
|
1,739
|
124
|
(1,352)
|
(209)
|
3,409
|
(1,228)
|
(189)
|
|
Total gross
profit
|
|
64,559
|
51,599
|
65,891
|
10,195
|
120,488
|
117,490
|
18,179
|
|
|
|
|
|
|
|
|
|
|
|
Online degree
programs
|
|
69.6%
|
62.7%
|
66.5%
|
66.5%
|
69.4%
|
64.8%
|
64.8%
|
|
Online tutoring
programs
|
|
75.8%
|
64.4%
|
71.4%
|
71.4%
|
77.0%
|
68.3%
|
68.3%
|
|
Private primary and
secondary schools
|
|
25.8%
|
25.6%
|
29.3%
|
29.3%
|
26.7%
|
27.5%
|
27.5%
|
|
International and elite
curriculum programs
|
|
45.9%
|
4.4%
|
(48.0%)
|
(48.0%)
|
43.3%
|
(21.9%)
|
(21.9%)
|
|
Gross margin
|
|
64.9%
|
56.5%
|
59.9%
|
59.9%
|
64.5%
|
58.3%
|
58.3%
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
18,400
|
21,897
|
24,612
|
3,808
|
38,320
|
46,509
|
7,196
|
|
Selling and
marketing
|
|
8,056
|
9,068
|
14,083
|
2,179
|
15,796
|
23,151
|
3,582
|
|
Research and
development
|
|
9,512
|
9,758
|
10,501
|
1,625
|
18,283
|
20,259
|
3,134
|
|
Total operating
expenses
|
|
35,968
|
40,723
|
49,196
|
7,612
|
72,399
|
89,919
|
13,912
|
|
Income from
operations
|
|
28,591
|
10,876
|
16,695
|
2,583
|
48,089
|
27,571
|
4,267
|
|
Operating
margin
|
|
28.7%
|
11.9%
|
15.2%
|
15.2%
|
25.7%
|
13.7%
|
13.7%
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
144
|
123
|
299
|
46
|
288
|
422
|
65
|
|
Interest income
|
|
1,345
|
1,910
|
2,139
|
331
|
2,402
|
4,049
|
626
|
|
Investment
income
|
|
522
|
-
|
629
|
97
|
522
|
629
|
97
|
|
Income before income
tax
|
|
30,602
|
12,909
|
19,762
|
3,057
|
51,301
|
32,671
|
5,055
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
(6,441)
|
(2,475)
|
(3,981)
|
(616)
|
(14,612)
|
(6,456)
|
(999)
|
|
Net income
|
|
24,161
|
10,434
|
15,781
|
2,441
|
36,689
|
26,215
|
4,056
|
|
Net income attributable to
the noncontrolling interests
|
|
(10,616)
|
(6,940)
|
(10,741)
|
(1,662)
|
(15,912)
|
(17,681)
|
(2,736)
|
|
Net income attributable to
ChinaEdu
|
|
13,545
|
3,494
|
5,040
|
779
|
20,777
|
8,534
|
1,320
|
|
Net margin
|
|
13.6%
|
3.8%
|
4.6%
|
4.6%
|
11.1%
|
4.2%
|
4.2%
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
ChinaEdu per ADS:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
0.84
|
0.22
|
0.32
|
0.049
|
1.30
|
0.54
|
0.083
|
|
Diluted
|
|
0.78
|
0.20
|
0.30
|
0.046
|
1.20
|
0.50
|
0.077
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average aggregate
number of ADSs outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
16,029,983
|
15,910,224
|
15,853,838
|
15,853,838
|
15,992,637
|
15,881,875
|
15,881,875
|
|
Diluted
|
|
17,376,199
|
17,229,640
|
17,000,614
|
17,000,614
|
17,386,445
|
17,114,971
|
17,114,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Gross revenue are
detailed as follows
|
|
|
|
|
|
|
|
|
|
Online degree
programs
|
|
84,365
|
75,809
|
93,028
|
14,393
|
156,823
|
168,837
|
26,122
|
|
Online tutoring
programs
|
|
6,278
|
5,850
|
7,414
|
1,147
|
11,311
|
13,264
|
2,052
|
|
Private primary and
secondary schools
|
|
9,454
|
11,252
|
11,905
|
1,842
|
18,734
|
23,157
|
3,583
|
|
International curriculum
programs
|
|
4,011
|
2,951
|
2,980
|
461
|
8,329
|
5,931
|
918
|
|
|
|
|
|
|
|
|
|
|
ChinaEdu
Corporation
|
|
Unaudited
Condensed Consolidated Statements of Cash
Flow
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
(in
thousands, unaudited)
|
|
June
30, 2010
|
|
March
31, 2011
|
|
June
30, 2011
|
|
June
30, 2011
|
|
June
30, 2010
|
|
June
30, 2011
|
|
June
30, 2011
|
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
24,161
|
|
10,434
|
|
15,781
|
|
2,441
|
|
36,689
|
|
26,215
|
|
4,056
|
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
366
|
|
1,555
|
|
1,649
|
|
255
|
|
2,504
|
|
3,204
|
|
496
|
|
Depreciation and amortization of property and
equipment
|
|
4,820
|
|
5,787
|
|
5,748
|
|
889
|
|
9,510
|
|
11,535
|
|
1,785
|
|
Amortization of land use rights
|
|
153
|
|
152
|
|
152
|
|
24
|
|
305
|
|
304
|
|
47
|
|
Amortization of acquired intangible assets
|
|
1,093
|
|
1,017
|
|
1,017
|
|
158
|
|
2,173
|
|
2,034
|
|
316
|
|
Gain on sale of investment
|
|
(522)
|
|
-
|
|
(687)
|
|
(106)
|
|
(522)
|
|
(687)
|
|
(106)
|
|
Loss on sale of bonds
|
|
-
|
|
-
|
|
58
|
|
9
|
|
-
|
|
58
|
|
9
|
|
Loss on discontinued operations
|
|
-
|
|
16
|
|
-
|
|
-
|
|
(4)
|
|
16
|
|
2
|
|
Loss from disposal of property and equipment
|
|
(8)
|
|
65
|
|
17
|
|
3
|
|
-
|
|
82
|
|
13
|
|
Deferred income taxes
|
|
269
|
|
1,047
|
|
(1,079)
|
|
(167)
|
|
754
|
|
(32)
|
|
(5)
|
|
Changes in assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
(16,907)
|
|
19,796
|
|
(22,492)
|
|
(3,480)
|
|
(4,027)
|
|
(2,696)
|
|
(417)
|
|
Inventory
|
|
119
|
|
(2)
|
|
360
|
|
56
|
|
519
|
|
358
|
|
55
|
|
Prepaid expenses and other current assets
|
|
(4,805)
|
|
(489)
|
|
(1,576)
|
|
(244)
|
|
4,695
|
|
(2,065)
|
|
(319)
|
|
Amounts due from related parties
|
|
(112,040)
|
|
72,795
|
|
(96,759)
|
|
(14,970)
|
|
(77,209)
|
|
(23,964)
|
|
(3,708)
|
|
Rental deposits
|
|
(111)
|
|
(1,317)
|
|
(275)
|
|
(43)
|
|
(122)
|
|
(1,592)
|
|
(246)
|
|
Accounts payable
|
|
1,164
|
|
1,321
|
|
3,261
|
|
505
|
|
356
|
|
4,582
|
|
709
|
|
Deferred revenues
|
|
70,558
|
|
(61,272)
|
|
74,726
|
|
11,561
|
|
9,637
|
|
13,454
|
|
2,082
|
|
Accrued expenses and other current
liabilities
|
|
9,310
|
|
(6,952)
|
|
17,173
|
|
2,657
|
|
3,864
|
|
10,221
|
|
1,581
|
|
Amounts due to related parties
|
|
27,653
|
|
(10,005)
|
|
8,368
|
|
1,295
|
|
38,383
|
|
(1,637)
|
|
(253)
|
|
Income tax payable
|
|
6,401
|
|
(11,259)
|
|
3,535
|
|
547
|
|
4,090
|
|
(7,724)
|
|
(1,195)
|
|
Other taxes payable
|
|
3,380
|
|
(6,974)
|
|
3,401
|
|
526
|
|
(1,454)
|
|
(3,573)
|
|
(553)
|
|
Unrecognized tax benefit
|
|
125
|
|
596
|
|
662
|
|
102
|
|
487
|
|
1,258
|
|
195
|
|
Net cash
provided by operating activities
|
|
15,179
|
|
16,311
|
|
13,040
|
|
2,018
|
|
30,628
|
|
29,351
|
|
4,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
(3,509)
|
|
(7,921)
|
|
(6,355)
|
|
(983)
|
|
(10,199)
|
|
(14,276)
|
|
(2,209)
|
|
Proceeds from discontinued operations
|
|
-
|
|
233
|
|
-
|
|
-
|
|
(57,337)
|
|
233
|
|
36
|
|
Deposits paid for acquisition of property and
equipment
|
|
-
|
|
-
|
|
(14,546)
|
|
(2,250)
|
|
-
|
|
(14,546)
|
|
(2,250)
|
|
Purchase of term deposits
|
|
(55,318)
|
|
(43,000)
|
|
37,401
|
|
5,786
|
|
-
|
|
(5,599)
|
|
(866)
|
|
Purchase of investments
|
|
(19,924)
|
|
(6,000)
|
|
(11,000)
|
|
(1,702)
|
|
(19,924)
|
|
(17,000)
|
|
(2,630)
|
|
Proceeds from the sale of investment
|
|
8,522
|
|
-
|
|
8,687
|
|
1,344
|
|
8,522
|
|
8,687
|
|
1,344
|
|
Proceeds from the sale of bonds
|
|
-
|
|
-
|
|
2,859
|
|
442
|
|
-
|
|
2,859
|
|
442
|
|
Proceeds from disposal of property and
equipment
|
|
59
|
|
-
|
|
1
|
|
-
|
|
108
|
|
1
|
|
-
|
|
Net cash
(used in) provided by investing activities
|
|
(70,170)
|
|
(56,688)
|
|
17,047
|
|
2,637
|
|
(78,830)
|
|
(39,641)
|
|
(6,133)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of share options
|
|
847
|
|
280
|
|
94
|
|
15
|
|
2,186
|
|
374
|
|
58
|
|
Prepayment for shares repurchase
|
|
(1,824)
|
|
-
|
|
(130)
|
|
(20)
|
|
(1,824)
|
|
(130)
|
|
(20)
|
|
Repurchase and cancellation of ordinary
shares
|
|
(213)
|
|
-
|
|
(5,723)
|
|
(885)
|
|
(326)
|
|
(5,723)
|
|
(885)
|
|
Repayment of related party's loan
|
|
-
|
|
-
|
|
(25,000)
|
|
(3,868)
|
|
-
|
|
(25,000)
|
|
(3,868)
|
|
Loan from related party
|
|
-
|
|
35,500
|
|
-
|
|
-
|
|
-
|
|
35,500
|
|
5,492
|
|
Cash dividends paid to noncontrolling
shareholders
|
|
-
|
|
(13,461)
|
|
-
|
|
-
|
|
(1,470)
|
|
(13,461)
|
|
(2,083)
|
|
Capital contributions by noncontrolling
shareholders
|
|
-
|
|
1,000
|
|
-
|
|
-
|
|
-
|
|
1,000
|
|
155
|
|
Net cash
(used in) provided by financing activities
|
|
(1,190)
|
|
23,319
|
|
(30,759)
|
|
(4,758)
|
|
(1,434)
|
|
(7,440)
|
|
(1,151)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
foreign exchange rate changes
|
|
(210)
|
|
151
|
|
(39)
|
|
(7)
|
|
(214)
|
|
112
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND
CASH EQUIVALENTS, beginning of period
|
|
209,684
|
|
190,493
|
|
173,586
|
|
26,856
|
|
203,143
|
|
190,493
|
|
29,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND
CASH EQUIVALENTS, end of period
|
|
153,293
|
|
173,586
|
|
172,875
|
|
26,746
|
|
153,293
|
|
172,875
|
|
26,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash
equivalents
|
|
(56,391)
|
|
(16,907)
|
|
(711)
|
|
(110)
|
|
(49,850)
|
|
(17,618)
|
|
(2,726)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ChinaEdu
Corporation
|
|
Reconciliations from income from
operations to adjusted income from operations (non-GAAP) and
adjusted operating margin (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
(in
thousands, unaudited)
|
|
June
30, 2010
|
|
March
31, 2011
|
|
June
30, 2011
|
|
June
30, 2011
|
|
June
30, 2011
|
|
June
30, 2011
|
|
June
30, 2011
|
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
99,517
|
|
91,350
|
|
110,031
|
|
17,024
|
|
186,794
|
|
201,381
|
|
31,158
|
|
Income from
operations
|
|
28,591
|
|
10,876
|
|
16,695
|
|
2,583
|
|
48,089
|
|
27,571
|
|
4,267
|
|
Adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
366
|
|
1,555
|
|
1,649
|
|
255
|
|
2,504
|
|
3,204
|
|
496
|
|
Amortization of
intangible assets and land use rights
|
|
1,246
|
|
1,169
|
|
1,169
|
|
182
|
|
2,478
|
|
2,338
|
|
363
|
|
Adjusted
income from operations (non-GAAP)
|
|
30,203
|
|
13,600
|
|
19,513
|
|
3,020
|
|
53,071
|
|
33,113
|
|
5,126
|
|
Adjusted operating margin
(non-GAAP)
|
|
30.3%
|
|
14.9%
|
|
17.7%
|
|
17.7%
|
|
28.4%
|
|
16.4%
|
|
16.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ChinaEdu
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations from net income
attributable to ChinaEdu to adjusted net income attributable to
ChinaEdu (non-GAAP), adjusted net margin (non-GAAP) and adjusted
net income per ADS (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
(in
thousands, unaudited)
|
|
June
30, 2010
|
|
March
31, 2011
|
|
June
30, 2011
|
|
June
30, 2011
|
|
June
30, 2011
|
|
June
30, 2011
|
|
June
30, 2011
|
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
99,517
|
|
91,350
|
|
110,031
|
|
17,024
|
|
186,794
|
|
201,381
|
|
31,158
|
|
Net income attributable to
ChinaEdu
|
|
13,545
|
|
3,494
|
|
5,040
|
|
779
|
|
20,777
|
|
8,534
|
|
1,320
|
|
Adjustment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
366
|
|
1,555
|
|
1,649
|
|
255
|
|
2,504
|
|
3,204
|
|
496
|
|
Share-based
compensation attributable to the noncontrolling interest
|
|
(381)
|
|
(134)
|
|
(122)
|
|
(19)
|
|
(624)
|
|
(256)
|
|
(40)
|
|
Amortization of
intangible assets and land use rights
|
|
1,246
|
|
1,169
|
|
1,169
|
|
182
|
|
2,478
|
|
2,338
|
|
363
|
|
Adjusted net
income attributable to ChinaEdu (non-GAAP)
|
|
14,776
|
|
6,084
|
|
7,736
|
|
1,197
|
|
25,135
|
|
13,820
|
|
2,139
|
|
Adjusted net margin
(non-GAAP)
|
|
14.8%
|
|
6.7%
|
|
7.0%
|
|
7.0%
|
|
13.5%
|
|
6.9%
|
|
6.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
attributable to ChinaEdu per ADS (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
0.92
|
|
0.38
|
|
0.49
|
|
0.076
|
|
1.57
|
|
0.87
|
|
0.135
|
|
Diluted
|
|
0.85
|
|
0.35
|
|
0.46
|
|
0.070
|
|
1.45
|
|
0.81
|
|
0.125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average aggregate
number of ADSs outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
16,029,983
|
|
15,910,224
|
|
15,853,838
|
|
15,853,838
|
|
15,992,637
|
|
15,881,875
|
|
15,881,875
|
|
Diluted
|
|
17,376,199
|
|
17,229,640
|
|
17,000,614
|
|
17,000,614
|
|
17,386,445
|
|
17,114,971
|
|
17,114,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE ChinaEdu Corporation