11.0% Increase in Second Quarter Net Revenue Year-Over-Year with
Second Quarter Net Revenue Exceeding Guidance Live Conference Call
to be held on Thursday, August 20, 2009 at 8 a.m. (Eastern) / 5
a.m. (Pacific) / 8 p.m. (Beijing/Hong Kong) BEIJING, Aug. 19
/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
second quarter ended June 30, 2009.(1) Second Quarter 2009
Highlights (in thousands, unaudited) 3 Months Ended Period June
June June over Period Ended 30, 2008 30, 2009 30, 2009 Period
Currency in thousands RMB RMB USD % Financial Data: Net revenue
79,521 88,275 12,924 11% Gross profit 56,142 55,078 8,063 -2%
Income from operations 24,862 22,020 3,223 -11% Net income
attributable to CEDU 9,187 8,860 1,297 -4% Adjusted EBITDA
(Non-GAAP) 31,839 29,518 4,321 -7% Adjusted net income attributable
to CEDU (Non-GAAP) 12,956 12,097 1,771 -7% EPS 0.16 0.18 0.03 13%
Adjusted EPS (Non-GAAP) 0.22 0.25 0.04 14% Net income to CEDU per
ADS 0.48 0.54 0.09 13% Adjusted net income to CEDU per ADS
(Non-GAAP) 0.66 0.75 0.12 14% Operating Data: Revenue students for
online degree program 125,000 147,000 147,000 18% (in thousands,
unaudited) Six Months Ended Year Period Ended June June June over
30, 2008 30, 2009 30, 2009 Year Currency in thousands RMB RMB USD %
Financial Data: Net revenue 149,176 169,445 24,809 14% Gross profit
101,642 103,678 15,179 2% Income from operations 37,687 39,556
5,791 5% Net income attributable to CEDU 11,274 18,424 2,697 63%
Adjusted EBITDA (Non-GAAP) 50,177 55,106 8,067 10% Adjusted net
income attributable to CEDU (Non-GAAP) 17,738 25,476 3,729 44% EPS
0.19 0.38 0.05 100% Adjusted EPS (Non-GAAP) 0.30 0.52 0.08 73% Net
income to CEDU per ADS 0.57 1.14 0.15 100% Adjusted net income to
CEDU per ADS (Non-GAAP) 0.90 1.56 0.24 73% Operating Data: Revenue
students for online degree program 125,000 147,000 147,000 18% --
Total net revenue for the second quarter of 2009 increased by 11.0%
to RMB88.3 million ($12.9 million) from RMB79.5 million for the
corresponding period in 2008, exceeding our previously disclosed
guidance for the second quarter of 2009 of RMB83 million to RMB87
million. -- Net revenue from online degree programs, the Company's
major business segment, increased by 9.7% to RMB71.4 million ($10.5
million) for the second quarter of 2009 from RMB65.1 million for
the corresponding period in 2008. -- The number of revenue
students(2) in online degree programs during the second quarter of
2009 increased by approximately 18% to over 147,000 from
approximately 125,000 for the corresponding period in 2008. --
Income from operations decreased by 11.4% to RMB22.0 million ($3.2
million) in the second quarter of 2009 from RMB24.9 million for the
corresponding period in 2008. -- Net income attributable to
ChinaEdu Corporation, which is net income excluding net income
attributable to noncontrolling interest decreased by 3.6% to RMB8.9
million ($1.3 million) in the second quarter of 2009 from RMB9.2
million for the corresponding period in 2008. -- Adjusted EBITDA,
which is a non-GAAP measure defined as net income before interest
income, taxes, depreciation, amortization of intangible assets and
land use rights, share-based compensation and goodwill and
intangibles impairment charges, if applicable, decreased by 7.3% to
RMB29.5 million ($4.3 million) in the second quarter of 2009 from
RMB31.8 million for the corresponding period in 2008. -- Adjusted
net income attributable to ChinaEdu Corporation, which is a
non-GAAP measure defined as net income attributable to ChinaEdu
Corporation excluding share-based compensation, amortization of
intangible assets and land use rights and goodwill and intangibles
impairment charges, if applicable (all amounts are attributable to
ChinaEdu Corporation, net of noncontrolling interest), decreased by
6.6% to RMB12.1 million ($1.8 million) in the second quarter of
2009 from RMB13.0 million for the corresponding period in 2008. --
Basic net income attributable to ChinaEdu Corporation per share
("EPS") was RMB0.18 ($0.03) for the second quarter of 2009 compared
to RMB0.16 for the corresponding period in 2008. -- Basic net
income attributable to ChinaEdu Corporation per American Depositary
Share ("ADS") was RMB0.54 ($0.09) for the second quarter of 2009
compared to RMB0.48 for the corresponding period in 2008. -- Basic
adjusted net income attributable to ChinaEdu Corporation per share
(non-GAAP) was RMB0.25 ($0.04) for the second quarter of 2009
compared to RMB0.22 for the corresponding period in 2008. -- Basic
adjusted net income attributable to ChinaEdu Corporation per ADS
(non-GAAP) was RMB0.75 ($0.12) for the second quarter of 2009
compared to RMB0.66 for the corresponding period in 2008. (1) This
announcement contains translations of certain Renminbi ("RMB")
amounts into U.S. dollar ("$") 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
RMB6.8302 to $1.00, the noon buying rate in effect on June 30, 2009
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 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 enrollment and revenue growth for the
2009 spring semester," said Ms. Julia Huang, ChinaEdu's Chairman
and Chief Executive Officer. "In the second quarter of 2009, we
strived for strong revenue growth from our learning centers and
continued to expand our learning center network. In addition, we
are pleased to report continued progress in signing additional
university partners for our online degree programs, including
collaborative alliance agreements with provincial radio and
television universities. Our 101 online tutoring program continued
to improve with new and updated courseware, stronger sales channels
and improved customer services. In addition, we have continued to
invest in courseware development, technology upgrade and the
learning platform for both online degree and non-degree programs,
which we believe will position us for continued future growth.
Although there was a decline in gross profit, operating income and
net income in the second quarter of 2009 compared to the second
quarter of 2008, the Company's margins for EBITDA, adjusted
operating income and net income remained stable in the first half
of 2009 relative to the first half of 2008, which we believe
reflects improvements in the Company's operations given the
expansion of the learning centers network and investments in other
businesses." Financial Results for the Second Quarter Ended June
30, 2009 Net Revenue Total net revenue for the second quarter of
2009 was RMB88.2 million ($12.9 million), representing an 11.0%
increase from the corresponding period in 2008. Net revenue from
online degree programs for the second quarter of 2009 was RMB71.4
million ($10.5 million), representing a 9.7% increase from RMB65.1
million for the corresponding period in 2008. The growth in net
revenue was primarily due to strong enrollment growth for the
Spring semester of 2009, which registered over 147,000 revenue
students compared to 125,000 revenue students for the Spring
semester of 2008. Net revenue from the Company's non-online degree
programs (online tutoring program, international curriculum
programs and private primary and secondary schools) for the second
quarter of 2009 was RMB16.8 million ($2.5 million), representing a
17.2% increase from RMB14.4 million for the corresponding period in
2008. This increase was attributable to the increase in student
enrollment at Anqing School for the academic year beginning in
September 2008 as a result of the completion of Phase I of the new
campus construction as well as a slight increase in net revenue for
the 101 online tutoring programs. Cost of revenue Total cost of
revenue for the second quarter of 2009 was RMB33.2 million ($4.9
million), representing an increase of 42.0% as compared to RMB23.4
million for the corresponding period of 2008. Cost of revenue for
online degree programs for the second quarter of 2009 was RMB22.5
million ($3.3 million), representing an increase of 67.4% as
compared to RMB13.5 million for the second quarter of 2008. In
addition to increase in cost of revenue corresponding to enrollment
growth, the increase in cost of revenue for online degree programs
was attributable primarily to (i) enrollment growth in our
university partners' online degree programs in the Spring semester
of 2009 compared to the Spring semester of 2008, (ii) courseware
development for selected university partners at our collaborative
alliances(3) and (iii) the expansion of our learning center
network. Since most of the recruiting services performed by our
learning centers to our university partners are recorded as cost of
revenue, our total cost of revenue will continue to increase as we
continue the expansion of the learning centers network. We had 56
operational learning centers by the second quarter of 2009, of
which 21 were proprietary and 35 were contracted locations,
compared to 22 operational learning centers as of the end of the
second quarter of 2008. Cost of revenue for non-online degree
programs for the second quarter of 2009 was RMB10.7 million ($1.6
million), representing a 7.5% increase from RMB9.9 million for the
corresponding period in 2008. This increase was attributable
primarily to increased cost of revenue related to Anqing School's
new campus and 101 online tutoring program's investment in YoYo
Bear education products, which were partially offset by a decrease
in cost of revenue for the international curriculum programs. (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.
Gross Profit and Gross Margin Gross profit for the second quarter
of 2009 was RMB55.1 million ($8.1 million), representing a 1.9%
decrease from RMB56.1 million for the corresponding period of 2008,
as a result of the increase in cost of revenue, as discussed above.
Total gross margin for the second quarter of 2009 was 62.4% as
compared to 70.6% for the corresponding period of 2008. Since most
of the recruiting services performed by our learning centers to our
university partners are recorded as cost of revenue, our gross
margin for the online degree programs segment decreased as a result
of our continuous efforts in expanding the learning center network.
Furthermore, gross margin for Anqing School and 101 online tutoring
programs were negatively impacted by our investment in Anqing
School's new campus and investment in YoYo Bear products,
respectively, each of which are still in the early stages of
development and thus are currently producing less income than
expenses associated with such investments. Operating Expenses Total
operating expenses were RMB33.1 million ($4.8 million) for the
second quarter of 2009, representing a 5.7% increase from RMB31.3
million for the corresponding period in 2008. This increase was
attributable primarily to increases in general and administrative
and research and development expenses, partially offset by a
decrease in selling and marketing expenses, each as discussed
below. -- General and administrative expenses for the second
quarter of 2009 were RMB19.7 million ($2.9 million), which
represented a 7.1% increase from RMB18.4 million for the
corresponding period of 2008. This increase was attributable
primarily to an increase in performance-based employee
compensation. -- Selling and marketing expenses were RMB5.4 million
($0.8 million) for the second quarter of 2009, which represented a
22.6% decrease from RMB7.0 million for the corresponding period in
2008. This decrease is attributable primarily to a decrease in the
amount spent on general advertising and promotional activities for
our own learning center operations in the second quarter in 2009.
-- Research and development expenses for the second quarter of 2009
were RMB7.9 million ($1.2 million), representing a 35.2% increase
from RMB5.8 million for the corresponding period in 2008. This
increase was attributable primarily to increased technological
support and platform upgrades for certain collaborative alliances
in order to further enhance our online degree programs. --
Share-based compensation for the second quarter of 2009, which was
allocated to the related cost and operating expense line items, was
RMB2.1 million ($0.3 million) as compared to RMB1.7 million for the
corresponding period in 2008. The increase was attributable
primarily to costs related to the repricing of options (as
previously approved by our shareholders) during the current
quarter, which resulted in the recognition of incremental
compensation costs. Income from Operations As a result of the
factors discussed above, income from operations for the second
quarter of 2009 was RMB22.0 million ($3.2 million), which decreased
by 11.4% from RMB24.9 million for the corresponding period of 2008.
Adjusted income from operations, which is a non-GAAP measure
defined as income from operations excluding share-based
compensation, amortization of intangible assets and land use rights
and goodwill and intangibles impairment charges, if applicable, was
RMB25.5 million ($3.7 million) for the second quarter of 2009,
which decreased by 11.8% as compared to RMB28.9 million in the
corresponding period of 2008. The decrease was attributable
primarily to the increase in cost of revenue as discussed above.
Interest Income Interest income was RMB1.2 million ($0.2 million)
in the second quarter of 2009, as compared to RMB2.6 million in the
corresponding quarter of 2008. This decrease was attributable
primarily to (i) reduced interest-bearing cash and bank deposit
balance of RMB311 million as of June 30, 2009, compared to RMB434
million as of June 30, 2008, and (ii) a lower interest rate for the
second quarter of 2009 compared to the corresponding period of
2008. Income Tax Expense Income tax income for the second quarter
was RMB6.3 million ($0.9 million), as compared to income tax
expense of RMB9.4 million for the corresponding period in 2008.
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 enterprises"
status under the new Chinese Enterprise Income Tax Regulation,
which came into effect on January 1, 2008. 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%, thereby reducing the
effective tax rate for the second quarter of 2009 to 26.3% as
compared to 34.9% for the corresponding period in 2008.
Noncontrolling Interest Noncontrolling interest was RMB8.7 million
($1.3 million) in the second quarter of 2009, representing a 3.5%
increase from RMB8.4 million in the corresponding period in 2008,
which was attributable primarily to increased profitability of our
collaborative alliances related to the online degree programs. Net
Income (loss) attributable to ChinaEdu Corporation Net income
attributable to ChinaEdu Corporation, which is net income excluding
net income attributable to noncontrolling interest, was RMB8.9
million ($1.3 million) for the second quarter of 2009, representing
a decrease of 3.6% from net income attributable to ChinaEdu
Corporation of RMB9.2 million for the corresponding period in 2008.
Adjusted net income attributable to ChinaEdu Corporation (non-GAAP)
decreased by 6.6% to RMB12.1 million ($1.8 million) for the second
quarter of 2009, as compared to RMB13.0 million in the
corresponding period of 2008. The decrease in both net income and
adjusted net income attributable to ChinaEdu Corporation (non-GAAP)
was primarily due to the increase in cost of revenue in the second
quarter of 2009 as compared to the corresponding period in 2008.
Due to a reduction in the number of basic and diluted shares
outstanding for the second quarter of 2009 compared to the
corresponding period in 2008 as a result of the Company's stock
repurchase in the first quarter of 2009, basic and diluted EPS were
RMB0.18 ($0.03) and RMB0.17 ($0.03), respectively, for the second
quarter of 2009, compared to RMB0.16 and RMB0.15, respectively, for
the second quarter of 2008. Similarly, basic and diluted adjusted
EPS (non-GAAP) were RMB0.25 ($0.04) and RMB0.23 ($0.03),
respectively, for the second quarter of 2009, compared to RMB0.22
and RMB0.21, respectively, for the second quarter of 2008. In
addition, basic and diluted net income attributable to CEDU per ADS
were RMB0.54 ($0.09) and RMB0.51 ($0.09), respectively, for the
second quarter of 2009, compared to RMB0.48 and RMB0.45,
respectively, for the corresponding period in 2008. Similarly,
basic and diluted adjusted net income attributable to CEDU per ADS
were RMB0.75 ($0.12) and RMB0.69 ($0.10), respectively, for the
second quarter of 2009, compared to RMB0.66 and RMB0.63,
respectively, for the corresponding period in 2008. Adjusted EBITDA
(Non-GAAP) Adjusted EBITDA (non-GAAP) was RMB29.5 million ($4.3
million) for the second quarter of 2009, which decreased by 7.3% as
compared to RMB31.8 million for the corresponding period in 2008.
This decrease was attributable primarily to the increase in cost of
revenue, as discussed above. Deferred Revenue Deferred revenue at
the end of the second quarter of 2009 was RMB101.5 million ($14.9
million), with current deferred revenue of RMB95.3 million ($14.0
million) and non-current deferred revenue of RMB6.2 million ($0.9
million). Deferred revenue at the end of the second quarter of 2009
increased significantly compared to deferred revenue of RMB36.5
million at the end of the first quarter 2009 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 June
30, 2009, ChinaEdu reported cash and cash equivalents of RMB231.1
million ($33.8 million), which primarily consisted of cash-on-hand,
demand deposits and term deposits with maturity periods of three
months or less. Term Deposits 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 RMB79.5 million ($11.6 million) and RMB225.7 million
($33.0 million), respectively, on June 30, 2009. 2009 Year-to-Date
Financial Results Net Revenue For the six months ended June 30,
2009, total net revenue was RMB169.4 million ($24.8 million),
representing an increase of 13.6% from RMB149.2 million for the
corresponding period in 2008. Total net revenue for the sixth
months ended June 30, 2009 consisted of RMB137.2 million ($20.1
million) in net revenue from online degree programs and RMB32.3
million ($4.7 million) in net revenue from non-online degree
programs. The growth in total net revenue was attributable
primarily to strong enrollment growth for the online degree
programs and growth in net revenue at Anqing School and 101 online
tutoring programs. Cost of Revenue For the first six months of
2009, total cost of revenue was RMB65.8 million ($9.6 million),
representing an increase of 38.4% as compared to RMB47.5 million
for the corresponding period in 2008, which increase was primarily
due to the expansion of our learning centers network, courseware
development for selected university partners at our collaborative
alliances, and the increase in cost of revenue at Anqing School and
101 online tutoring programs. Gross Profit Gross profit for the
first six months of 2009 was RMB103.7 million ($15.2 million) as
compared with RMB101.6 million for the corresponding period in
2008, representing an increase of 2.0%. Income from Operations
Income from operations were RMB39.6 million ($5.8 million) for the
first six months of 2009, representing an increase of 5.0% from
RMB37.7 million for the first six months of 2008. Net Income (loss)
attributable to ChinaEdu Corporation Net income attributable to
ChinaEdu Corporation was RMB18.4 million ($2.7 million) for the
first six months of 2009, representing an increase of 63.4%
compared with RMB11.3 million for the corresponding period in 2008,
primarily due to an increase in income from operations, as well as
a decrease in income tax expenses compared to the corresponding
period in 2008. Third Quarter 2009 Total Net Revenue Guidance For
the third quarter of 2009, ChinaEdu expects its total net revenue
to be in the range of RMB84 million ($12 million) to RMB88 million
($13 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,
August 20, 2009 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) 866 383 7989/ (International)
+1 617 597 5328/ (HK) +852 3002 1672/ (China) +86 10 800 152 1490,
and entering the passcode: 48836701. A telephone replay of the
conference call will be available shortly after the call until
August 27, 2009 at (US) 888 286 8010/ (International) +1 617 801
6888 and entering passcode: 27031028. 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 attributable to ChinaEdu Corporation,
which are adjusted from results based on GAAP to exclude certain
non-cash items of share-based compensation, amortization of
intangible assets and land use rights and goodwill and intangibles
impairment charges, if applicable. The Company also uses adjusted
EBITDA, which is also a non-GAAP measure and is adjusted from GAAP
results of net income to exclude interest income, taxes,
depreciation, amortization of intangible assets and land use
rights, share-based compensation and goodwill and intangibles
impairment charges, if applicable. 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 17 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, 2008,
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 31, 2008 As June 30,
June 30, (in thousands, unaudited) Adjusted(2) 2009 2009 RMB RMB
US$ Current assets: Cash and cash equivalents 353,933 231,132
33,840 Accounts receivable, net 14,854 24,965 3,655 Term deposits
63,500 79,491 11,638 Inventory -- 1,077 158 Prepaid expenses and
other current assets 20,251 15,937 2,333 Amounts due from related
parties 150,472 225,734 33,049 Deferred tax assets 3,986 1,640 240
Total current assets 606,996 579,976 84,913 Cost method investment
1,210 1,210 177 Land use rights, net 28,344 28,178 4,126 Property
and equipment, net 161,925 190,034 27,823 Deposits paid for
acquisition of property and equipment 8,619 8,619 1,262 Intangible
assets, net 70,377 67,884 9,939 Deferred tax assets 2,096 3,043 446
Rental deposits 958 863 126 Goodwill 38,155 38,155 5,586 Total
assets 918,680 917,962 134,398 Liabilities and equity Current
liabilities: Accounts payable 8,530 6,988 1,023 Deferred revenues
96,068 95,376 13,964 Accrued expenses and other current liabilities
51,629 52,243 7,649 Amounts due to related parties 25,769 53,872
7,887 Income taxes payable 27,917 23,458 3,434 Other taxes payable
12,008 11,724 1,716 Total current liabilities 221,921 243,661
35,673 Deferred revenues 6,073 6,156 901 Deferred tax liabilities
11,069 10,640 1,558 Unrecognized tax benefit 5,473 7,454 1,091
Total liabilities 244,536 267,911 39,223 Total shareholders'
equity: 589,829 552,582 80,905 Noncontrolling interest(1) 84,315
97,469 14,270 Total equity 674,144 650,051 95,175 Total liabilities
and equity 918,680 917,962 134,398 (1) Effective January 1, 2009,
the Company adopted SFAS 160 (Statement of Financial Accounting
Standards No. 160, "Noncontrolling Interests in Consolidated
Financial Statements"). SFAS 160, which was retrospectively
applied, requires noncontrolling interests to be separately
presented as a component of stockholders' equity on the unaudited
condensed consolidated financial statements. (2) December 31, 2008
balances were extracted from the form 6-K for the quarters ended
December 31, 2008, as adjusted to reflect the adoption of SFAS 160.
ChinaEdu Corporation Unaudited Condensed Consolidated Statements of
Operations Three Months Ended (in thousands, except for June 30,
percentage, share, and per 2008 As March June 30, June 30, share
information) Adjusted(3) 31, 2009 2009 2009 RMB RMB RMB US$ Net
Revenue: Online degree programs 65,124 65,764 71,447 10,460
International curriculum programs 6,587 5,583 5,213 763 Online
tutoring programs 4,078 3,592 4,704 689 Private primary and
secondary schools 3,732 6,231 6,911 1,012 Total net revenue 79,521
81,170 88,275 12,924 Cost of revenue: Online degree programs 13,461
22,683 22,537 3,300 International curriculum programs 5,674 2,948
2,793 409 Online tutoring programs 995 1,441 1,624 238 Private
primary and secondary schools 3,249 5,498 6,243 914 Total cost of
revenue 23,379 32,570 33,197 4,861 Gross profit: Online degree
programs 51,663 43,081 48,910 7,160 International curriculum
programs 913 2,635 2,420 354 Online tutoring programs 3,083 2,151
3,080 451 Private primary and secondary schools 483 733 668 98
Total gross profit 56,142 48,600 55,078 8,063 Online degree
programs 79.3% 65.5% 68.5% 68.5% International curriculum programs
13.9% 47.2% 46.4% 46.4% Online tutoring programs 75.6% 59.9% 65.5%
65.5% Private primary and secondary schools 12.9% 11.8% 9.7% 9.7%
Gross margin 70.6% 59.9% 62.4% 62.4% Operating expenses: General
and administrative 18,433 19,583 19,742 2,890 Selling and marketing
7,017 4,910 5,434 796 Research and development 5,830 6,571 7,882
1,154 Total operating expenses 31,280 31,064 33,058 4,840 Income
from operations 24,862 17,536 22,020 3,223 Operating margin 31.3%
21.6% 24.9% 24.9% Other income 145 626 625 92 Interest income 2,605
1,672 1,182 173 Interest expense (585) -- -- -- Income before
income tax provisions 27,027 19,834 23,827 3,488 Income tax expense
(9,425) (2,708) (6,257) (916) Net income 17,602 17,126 17,570 2,572
Net income attributable to the noncontrolling interest (8,415)
(7,562) (8,710) (1,275) Net income attributable to ChinaEdu
Corporation 9,187 9,564 8,860 1,297 Net margin 11.6% 11.8% 10.0%
10.0% Net income attributable to CEDU per share: Basic 0.16 0.19
0.18 0.03 Diluted 0.15 0.18 0.17 0.03 Net income attributable to
CEDU per ADS: Basic 0.48 0.57 0.54 0.09 Diluted 0.45 0.54 0.51 0.09
Weighted average aggregate number of ordinary shares outstanding:
Basic 58,434,407 49,983,675 48,285,473 48,285,473 Diluted
61,813,068 52,919,048 51,595,566 51,595,566 Six Months Ended (in
thousands, except for June 30, percentage, share, and 2008 As June
30, June 30, per share information) Adjusted(3) 2009 2009 RMB RMB
US$ Net Revenue: Online degree programs 120,084 137,211 20,089
International curriculum programs 14,129 10,796 1,581 Online
tutoring programs 7,355 8,296 1,215 Private primary and secondary
schools 7,608 13,142 1,924 Total net revenue 149,176 169,445 24,809
Cost of revenue: Online degree programs 28,763 45,220 6,621
International curriculum programs 10,439 5,741 841 Online tutoring
programs 1,722 3,065 449 Private primary and secondary schools
6,610 11,741 1,719 Total cost of revenue 47,534 65,767 9,630 Gross
profit: Online degree programs 91,321 91,991 13,468 International
curriculum programs 3,690 5,055 740 Online tutoring programs 5,633
5,231 766 Private primary and secondary schools 998 1,401 205 Total
gross profit 101,642 103,678 15,179 Online degree programs 76.0%
67.0% 67.0% International curriculum programs 26.1% 46.8% 46.8%
Online tutoring programs 76.6% 63.1% 63.1% Private primary and
secondary schools 13.1% 10.7% 10.7% Gross margin 68.1% 61.2% 61.2%
Operating expenses: General and administrative 39,348 39,325 5,758
Selling and marketing 12,879 10,344 1,514 Research and development
11,728 14,453 2,116 Total operating expenses 63,955 64,122 9,388
Income from operations 37,687 39,556 5,791 Operating margin 25.3%
23.3% 23.3% Other income 296 1,251 183 Interest income 5,353 2,854
418 Interest expense (1,191) -- -- Income before income tax
provisions 42,145 43,661 6,392 Income tax expense (14,325) (8,965)
(1,313) Net income 27,820 34,696 5,079 Net income attributable to
the noncontrolling interest (16,546) (16,272) (2,382) Net income
attributable to ChinaEdu Corporation 11,274 18,424 2,697 Net margin
7.6% 10.9% 10.9% Net income attributable to CEDU per share: Basic
0.19 0.38 0.05 Diluted 0.18 0.35 0.05 Net income attributable to
CEDU per ADS: Basic 0.57 1.14 0.15 Diluted 0.54 1.05 0.15 Weighted
average aggregate number of ordinary shares outstanding: Basic
58,434,407 49,129,883 49,129,883 Diluted 62,298,037 52,252,616
52,252,616 (3) Amounts were extracted from Form 6-K for the quarter
ended June 30, 2008, as adjusted resulting from the adoption of
Statement of Financial Accounting Standards No. 160. ChinaEdu
Corporation Unaudited Condensed Consolidated Statements of Cash
Flow Three Months Ended June March June June (in thousands) 30,
2008 31, 2009 30, 2009 30, 2009 RMB RMB RMB US$ Operating
activities: Net income 17,602 17,126 17,570 2,572 Share-based
compensation 1,671 2,262 2,055 301 Depreciation 2,903 3,941 3,983
583 Amortization of land use rights 141 163 152 22 Amortization of
intangible assets 2,262 1,686 1,308 192 Accounts receivable
write-off -- 62 347 51 Loss from disposal of property and equipment
-- 78 15 2 Deferred income taxes 1,281 1,795 (825) (121) Accounts
receivable (12,324) 10,378 (20,898) (3,060) Inventory -- -- (1,077)
(158) Prepaid expenses and other current assets 8,093 (1,881) 6,188
906 Amounts due from related parties (98,677) 46,384 (111,046)
(16,258) Rental deposits (266) 47 48 7 Land use right -- (949)
(1,040) (152) Accounts payable 91 1,084 1,772 259 Deferred revenues
57,371 (65,617) 65,006 9,517 Accrued expenses and other current
liabilities 2,283 (2,046) 2,648 388 Amounts due to related parties
24,705 1,005 24,840 3,637 Unrecognized tax benefit 136 348 1,633
239 Other taxes payable 2,156 (4,533) 4,249 622 Income tax payable
7,970 (9,229) 4,770 698 Net cash provided by (used in) operating
activities 17,398 2,104 1,698 247 Investing activities: Purchase of
business (4,000) -- -- -- Purchase of property and equipment
(11,240) (10,605) (29,919) (4,380) Deposits paid for acquisition of
property and equipment (979) -- -- -- Purchase of term deposit
(25,000) (31,008) 15,008 2,197 Purchase of contractual right
(1,225) (500) -- -- Proceeds from disposal of property and
equipment -- -- -- -- Net cash provided by (used in) investing
activities (42,444) (42,113) (14,911) (2,183) Financing activities:
Repurchase of ordinary shares -- (61,647) -- -- Repayment of
long-term loan interest and principal (1,091) -- -- -- Cash
dividends paid to noncontrolling shareholders -- (10,600) -- --
Capital contributions by noncontrolling shareholders 1,225 980 --
-- Proceeds from exercise of options -- 713 711 104 Net cash
provided by (used in) financing activities 134 (70,554) 711 104
Effect of foreign exchange rate changes (6,330) 340 (76) (9) CASH
AND CASH EQUIVALENTS, beginning of period 431,979 353,933 243,710
35,681 CASH AND CASH EQUIVALENTS, end of period 400,737 243,710
231,132 33,840 Net increase (decrease) in cash (31,242) (110,223)
(12,578) (1,841) Six Months Ended (in thousands) June June June 30,
2008 30, 2009 30, 2009 RMB RMB US$ Operating activities: Net income
27,820 34,696 5,079 Share-based compensation 2,054 4,317 632
Depreciation 5,637 7,924 1,160 Amortization of land use rights 282
315 46 Amortization of intangible assets 4,517 2,994 438 Accounts
receivable write-off -- 409 60 Loss from disposal of property and
equipment -- 93 14 Deferred income taxes 7,137 970 142 Accounts
receivable (12,487) (10,520) (1,540) Inventory -- (1,077) (158)
Prepaid expenses and other current assets 707 4,307 631 Amounts due
from related parties (63,088) (64,662) (9,467) Rental deposits 562
95 14 Land use right -- (1,989) (291) Accounts payable (56) 2,856
418 Deferred revenues (112) (611) (89) Accrued expenses and other
current liabilities (7,831) 602 88 Amounts due to related parties
12,653 25,845 3,784 Unrecognized tax benefit 269 1,981 290 Other
taxes payable (2,151) (284) (42) Income tax payable 788 (4,459)
(653) Net cash provided by (used in) operating activities (23,299)
3,802 556 Investing activities: Purchase of business (4,000) -- --
Purchase of property and equipment (19,725) (40,524) (5,933)
Deposits paid for acquisition of property and equipment (1,010) --
-- Purchase of term deposit (26,958) (16,000) (2,343) Purchase of
contractual right (1,225) (500) (73) Proceeds from disposal of
property and equipment 31 -- -- Net cash provided by (used in)
investing activities (52,887) (57,024) (8,349) Financing
activities: Repurchase of ordinary shares -- (61,647) (9,026)
Repayment of long-term loan interest and principal (2,156) -- --
Cash dividends paid to noncontrolling shareholders -- (10,600)
(1,552) Capital contributions by noncontrolling shareholders 1,225
980 143 Proceeds from exercise of options -- 1,424 208 Net cash
provided by (used in) financing activities (931) (69,843) (10,227)
Effect of foreign exchange rate changes (19,260) 264 41 CASH AND
CASH EQUIVALENTS, beginning of period 497,114 353,933 51,819 CASH
AND CASH EQUIVALENTS, end of period 400,737 231,132 33,840 Net
increase (decrease) in cash (96,377) (122,801) (17,979) ChinaEdu
Corporation Reconciliations of non-GAAP results of operations
measures to GAAP measures Three Months Ended June March June June
(in thousands, unaudited) 30, 2008 31, 2009 30, 2009 30, 2009 RMB
RMB RMB US$ Income (loss) from operations GAAP Result 24,862 17,536
22,020 3,223 Share-based compensation 1,671 2,262 2,055 301
Amortization 2,403 1,849 1,460 214 Adjusted income from operations
(Non-GAAP) 28,936 21,647 25,535 3,738 Adjusted operating margin
36.4% 26.7% 28.9% 28.9% Net income (loss) attributable to ChinaEdu
Corporation GAAP Result 9,187 9,564 8,860 1,297 Share-based
compensation 1,671 2,262 2,055 301 Share-based compensation
attributable to the noncontrolling interest (305) (296) (278) (41)
Amortization 2,403 1,849 1,460 214 Adjusted net income attributable
to ChinaEdu Corporation (Non-GAAP) 12,956 13,379 12,097 1,771
Adjusted net margin 16.3% 16.5% 13.7% 13.7% Adjusted net income per
share: Basic 0.22 0.27 0.25 0.04 Diluted 0.21 0.25 0.23 0.03
Weighted average aggregate number of ordinary shares outstanding:
Basic 58,434,407 49,983,675 48,285,473 48,285,473 Diluted
61,813,068 52,919,048 51,595,566 51,595,566 Six Months Ended June
June June (in thousands, unaudited) 30, 2008 30, 2009 30, 2009 RMB
RMB US$ Income (loss) from operations GAAP Result 37,687 39,556
5,791 Share-based compensation 2,054 4,317 632 Amortization 4,799
3,309 484 Adjusted income from operations (Non-GAAP) 44,540 47,182
6,907 Adjusted operating margin 29.9% 27.8% 27.8% Net income (loss)
attributable to ChinaEdu Corporation GAAP Result 11,274 18,424
2,697 Share-based compensation 2,054 4,317 632 Share-based
compensation attributable to the noncontrolling interest (389)
(574) (84) Amortization 4,799 3,309 484 Adjusted net income
attributable to ChinaEdu Corporation (Non-GAAP) 17,738 25,476 3,729
Adjusted net margin 11.9% 15.0% 15.0% Adjusted net income per
share: Basic 0.30 0.52 0.08 Diluted 0.28 0.49 0.07 Weighted average
aggregate number of ordinary shares outstanding: Basic 58,434,407
49,129,883 49,129,883 Diluted 62,298,037 52,252,616 52,252,616
Adjusted income from operations, which is a non-GAAP measure
defined as income from operations excluding share-based
compensation, amortization of intangible assets and land use rights
and goodwill and intangibles impairment, if applicable. Adjusted
net income attributable to ChinaEdu Corporation, which is a
non-GAAP measure defined as net income attributable to the ChinaEdu
Corporation excluding share-based compensation, noncontrolling
interest for share-based compensation, amortization of intangible
assets and land use rights and goodwill and intangibles impairment
charges, if applicable. ChinaEdu Corporation Reconciliation from
net income to adjusted EBITDA (*) Three Months Ended June March 31,
June June 30, (in thousands, unaudited) 30, 2008 2009 30, 2009 2009
RMB RMB RMB US$ Net income 17,602 17,126 17,570 2,572 Income tax
provision 9,425 2,708 6,257 916 Interest income and other, net
(2,165) (2,298) (1,807) (265) Depreciation 2,903 3,941 3,983 583
Amortization 2,403 1,849 1,460 214 Share-based compensation 1,671
2,262 2,055 301 Adjusted EBITDA 31,839 25,588 29,518 4,321 Adjusted
EBITDA margin 40.0% 31.5% 33.4% 33.4% Six Months Ended (in
thousands, unaudited) June June 30, June 30, 2008 2009 30, 2009 RMB
RMB US$ Net income 27,820 34,696 5,079 Income tax provision 14,325
8,965 1,313 Interest income and other, net (4,458) (4,105) (601)
Depreciation 5,637 7,924 1,160 Amortization 4,799 3,309 484
Share-based compensation 2,054 4,317 632 Adjusted EBITDA 50,177
55,106 8,067 Adjusted EBITDA margin 33.6% 32.5% 32.5% Adjusted
EBITDA, which is a non-GAAP measure defined as earnings before
interest income, taxes, depreciation, amortization of intangible
assets and land use rights, share-based compensation and goodwill
and intangibles impairment charges, if applicable. For further
information, please contact: ChinaEdu Corporation Lily Liu, CFO
Phone: +86-10-8418-6655 x1002 Email: S. Jimmy Xia, IR Manager
Phone: +86-10-8418-6655 x1150 Email: DATASOURCE: ChinaEdu
Corporation CONTACT: ChinaEdu Corporation, Lily Liu, CFO,
+86-10-8418-6655 x1002, and S. Jimmy Xia, IR Manager,
+86-10-8418-6655 x1150, Web site: http://ir.chinaedu.net/
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