BEIJING, Nov. 23 /PRNewswire-Asia-FirstCall/ -- -- 9.4% Increase in
Third Quarter Net Revenue Year-Over-Year with Third Quarter Net
Revenue Exceeding Guidance -- Earnings per diluted ADS is $0.06 and
Adjusted Earnings per diluted ADS Increased 46% in 3Q09 to $0.08 --
Live Conference Call to be held on Tuesday, November 24, 2009 at 8
a.m. (Eastern) / 5 a.m. (Pacific) / 9 p.m. (Beijing/Hong Kong)
ChinaEdu Corporation (NASDAQ:CEDU) ("ChinaEdu" or the "Company"),
an educational services provider in China, today announced its
unaudited financial results for the third quarter ended September
30, 2009.(1) Third Quarter 2009 Highlights (in thousands,
unaudited) Three Months Ended Nine Months Ended Period Year Septe-
Septe- over Septe- Septe- over mber mber Period mber mber Year
Period Ended 30,2008 30,2009 % 30,2008 30,2009 % Currency USD USD
USD USD Financial Data: Net revenue 12,013 13,146 9.4% 33,867
37,970 12.1% Gross profit 7,442 8,023 7.8% 22,332 23,212 3.9%
Income from operations (217) 2,924 N/A 5,304 8,719 64.4% Net income
attributable to CEDU (2,243) 1,069 N/A (591) 3,768 N/A Adjusted
EBITDA (Non- GAAP) 3,602 3,930 9.1% 10,953 12,003 9.6% Adjusted net
income attributable to CEDU (Non-GAAP) 1,108 1,447 30.6% 3,707
5,179 39.7% -- -- Earnings per diluted ADS (0.114) 0.061 N/A
(0.031) 0.216 N/A Adjusted earnings per diluted ADS (Non-GAAP)
0.056 0.082 46.4% 0.180 0.296 64.4% Operating Data: Revenue
students for online degree program 125,000 147,000 17.6% 216,000
265,000 22.7% -- Total net revenue for the third quarter of 2009
increased by 9.4% to $13.1 million from $12.0 million for the
corresponding period in 2008, exceeding our previously disclosed
guidance for the third quarter of 2009 of $12 million to $13
million. -- Net revenue from online degree programs, the Company's
major business segment, increased by 9.4% to $10.5 million for the
third quarter of 2009 from $9.6 million for the corresponding
period in 2008. -- The number of revenue students(2) in online
degree programs during the third quarter of 2009 increased by
approximately 17.6% to over 147,000 from approximately 125,000 for
the corresponding period in 2008. -- Adjusted EBITDA(3) increased
by 9.1% to $3.9 million in the third quarter of 2009 from $3.6
million for the corresponding period in 2008. -- Net income
attributable to ChinaEdu Corporation increased to $1.1 million in
the third quarter of 2009 from a loss $2.2 million for the
corresponding period in 2008. -- Adjusted net income attributable
to ChinaEdu Corporation(4) increased by 30.6% to $1.4 million in
the third quarter of 2009 from $1.1 million for the corresponding
period in 2008. -- Diluted EPS or earnings per diluted ADS(5) was
$0.061 for the third quarter of 2009 as compared to a loss of
$0.114 for the corresponding period in 2008. -- Adjusted diluted
EPS or earnings per diluted ADS (non-GAAP) increased by 46.4% to
$0.082 for the third quarter of 2009 from $0.056 for the
corresponding period in 2008. (1) The reporting currency of the
Company is RMB, but for the convenience of the reader, the amounts
for three and nine months ended on September 30 of 2008 and 2009
are presented in U.S. dollars. Unless otherwise stated, all
translations from RMB to U.S. dollars were made at the rate of
RMB6.8262 to $1.00, the noon buying rate in effect on September 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 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. (3)
"Adjusted EBITDA" is a non-GAAP measure defined as net income
before interest income, taxes, exchange loss, depreciation,
amortization of intangible assets and land use rights, share-based
compensation and goodwill and intangibles impairment charges, if
applicable. (4) "Adjusted net income attributable to ChinaEdu
Corporation" is a non-GAAP measure defined as net income
attributable to ChinaEdu Corporation excluding share-based
compensation, exchange loss, noncontrolling interest for
share-based compensation, amortization of intangible assets and
land use rights and goodwill and intangibles impairment charges, if
applicable. (5) "ADS" is American Depositary Share. Each ADS is
equivalent to three ordinary shares. "We are pleased to report
another quarter of solid performance during the third quarter of
2009. Improved operating results and significant increase in
adjusted EPS showed the strength of the Company's operations
compared to the third quarter of 2008," said Ms. Julia Huang,
ChinaEdu's Chairman and Chief Executive Officer. "Our focus remains
the continued expansion of the learning centers network and growth
in our online degree program and 101 online tutoring programs. We
are also committed to continued research and development efforts of
the technology platform for the online degree programs and products
for the 101 online tutoring programs, which we believe will
position us for sustainable future growth." Financial Results for
the Third Quarter Ended September 30, 2009 Net Revenue Total net
revenue for the third quarter of 2009 was $13.1 million,
representing a 9.4% increase from the corresponding period in 2008.
Net revenue from online degree programs for the third quarter of
2009 was $10.5 million, representing a 9.4% increase from $9.6
million for the corresponding period in 2008. The growth in net
revenue was due to strong enrollment growth for the 2009 spring
semester, which registered over 147,000 revenue students as
compared to 125,000 revenue students for the 2008 spring semester.
Net revenue from the Company's non-online degree programs (online
tutoring programs, international curriculum programs and private
primary and secondary schools) for the third quarter of 2009 was
$2.7 million, representing a 9.5% increase from $2.4 million for
the corresponding period in 2008. This increase was attributable to
a 60.1% increase in net revenue for the 101 online tutoring
programs from increased sales and a 57.9% increase in net revenue
at Anqing School due to increase in student enrollment for the
academic year beginning in September 2008 as a result of the
completion of construction of the new campus, but offset by a 41.5%
decrease in net revenue for the international curriculum programs
due to the termination of our New Zealand contract. Cost of revenue
Total cost of revenue for the third quarter of 2009 was $5.1
million, representing an increase of 12.1% as compared to $4.6
million for the corresponding period of 2008. Cost of revenue for
online degree programs for the third quarter of 2009 was $3.5
million, representing an increase of 22.7% as compared to $2.8
million for the third 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 the expansion of our learning centers network. Since
most of the recruiting services performed by our learning centers
to our university partners are recorded as cost of revenue, our
cost of revenue will continue to increase as the expansion of the
learning centers network continues. We had 56 operational learning
centers by the end of the third quarter of 2009, of which 23 were
proprietary and 33 were contracted locations, as compared to 35
operational learning centers as of the end of the third quarter of
2008. Cost of revenue for non-online degree programs for the third
quarter of 2009 was $1.66 million, representing a 5.0% decrease
from $1.74 million for the corresponding period in 2008. This
decrease was attributable primarily to a decrease in cost of
revenue for the international curriculum programs, due to the
termination of our New Zealand contract, which were partially
offset by increase in cost of revenue related to Anqing School's
new campus and increase in cost of revenue for our 101 online
tutoring programs. Gross Profit and Gross Margin Gross profit for
the third quarter of 2009 was $8.0 million, representing a 7.8%
increase from $7.4 million for the corresponding period of 2008.
Total gross margin for the third quarter of 2009 was 61.0% as
compared to 62.0% 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 expansion of the learning centers network, to 67.0% for the
third quarter of 2009 as compared to 70.5% for the corresponding
period of 2008. Gross margin for Anqing School improved
significantly, due to increased enrollment capacity, as compared to
the corresponding period in 2008 despite additional depreciation
expenses resulting from the new campus construction. Gross margin
for the international curriculum programs also improved due to
tight cost controls and gross margin for the 101 online tutoring
programs remained relatively stable at 75.3% as compared to 76.4%
in the third quarter of 2008. Operating Expenses Total operating
expenses were $5.1 million for the third quarter of 2009,
representing a 33.4% decrease from $7.7 million for the
corresponding period in 2008. This decrease was attributable
primarily to a lacking of goodwill and intangible assets
impairment, despite an increase in research and development
expenses as discussed below. -- General and administrative expenses
for the third quarter of 2009 were $3.0 million, which represented
a minor 1.8% increase from $2.95 million for the corresponding
period of 2008. -- Selling and marketing expenses were $1.0 million
for the third quarter of 2009, which represented a 22.9% decrease
from $1.3 million for the corresponding period in 2008. This
decrease was attributable primarily to a decrease in the amount
spent on general advertising and promotional activities,
particularly conference related expenses in the third quarter in
2009. -- Research and development expenses for the third quarter of
2009 were $1.1 million, representing a 36.5% increase from $0.8
million for the corresponding period in 2008. This increase was
attributable primarily to increased research and development
activities related to our technology platform for the online degree
programs and 101 online tutoring programs. -- Share-based
compensation for the third quarter of 2009, which was allocated to
the related cost and operating expense line items, remained flat at
$0.2 million as compared to $0.2 million for the corresponding
period in 2008. Income from Operations As a result of the factors
discussed above, income from operations for the third quarter of
2009 was $2.9 million, as compared to a loss of $0.2 million for
the corresponding period of 2008. Operating margin was 22.2% for
the third quarter of 2009 as compared to a loss of 1.8% in the
corresponding period of 2008. The increase was primarily due to a
lacking of goodwill and intangible assets impairment. Adjusted
income from operations, which is a non-GAAP measure defined as
income from operations excluding share-based compensation, exchange
loss, amortization of intangible assets and land use rights and
goodwill and intangibles impairment charges, if applicable, was
$3.3 million for the third quarter of 2009, which increased by 5.2%
as compared to $3.2 million in the corresponding period of 2008.
Adjusted operating margin for the third quarter of 2009 was 25.3%
as compared to 26.3% for the corresponding period of 2008. Interest
Income Interest income was $0.2 million in the third quarter of
2009, as compared to $0.3 million in the corresponding quarter of
2008. This decrease was attributable primarily to (i) reduced
interest-bearing cash and bank deposit balance of $45.8 million as
of September 30, 2009, as compared to $59.7 million as of September
30, 2008, and (ii) a lower interest rate for the third quarter of
2009 as compared to the corresponding period of 2008. Income Tax
Expense Income tax expense for the third quarter was $0.7 million,
as compared to income tax expense of $1.3 million for the
corresponding period in 2008. This decrease 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%, as compared to the statutory tax rate of 25% for the
corresponding period in 2008. Noncontrolling Interest
Noncontrolling interest was $1.3 million in the third quarter of
2009, representing a 16.4% increase from $1.1 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 $1.1 million for the third quarter
of 2009, representing an increase from a net loss attributable to
ChinaEdu Corporation of $2.2 million for the corresponding period
in 2008. The increase was primarily due to a lacking of goodwill
and intangible assets impairment as well as a decrease in income
tax expenses. Adjusted net income attributable to ChinaEdu
Corporation (non-GAAP) increased by 30.6% to $1.4 million for the
third quarter of 2009, as compared to $1.1 million in the
corresponding period of 2008. Adjusted net margin was 11.0% in the
third quarter of 2009 as compared to 9.2% in the corresponding
period of 2008. The increase in both net income and adjusted net
income attributable to ChinaEdu Corporation (non-GAAP) was
primarily due to improved operating results as well as a decrease
in income tax expenses in the third quarter of 2009 as compared to
the corresponding period in 2008. Basic and diluted EPS or earnings
per ADS were $0.066 and $0.061, respectively, for the third quarter
of 2009, which have improved significantly as compared to losses of
$0.114 and $0.114, respectively, for the corresponding period in
2008. Similarly, basic and diluted adjusted EPS or adjusted
earnings per ADS were $0.089 and $0.082, respectively, for the
third quarter of 2009, which increased by 56.1% and 46.4% from
$0.057 and $0.056, respectively, for the corresponding period in
2008. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA (non-GAAP) was
$3.9 million for the third quarter of 2009, which increased by 9.1%
as compared to $3.6 million for the corresponding period in 2008.
This increase was attributable primarily to improved operating
results as discussed above. Deferred Revenue Deferred revenue at
the end of the third quarter of 2009 was $6.1 million, with current
deferred revenue of $4.8 million and non-current deferred revenue
of $1.3 million. Deferred revenue at the end of the third quarter
of 2009 decreased significantly as compared to deferred revenue of
$14.9 million at the end of the second 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 September 30, 2009, ChinaEdu reported cash and
cash equivalents of $32.9 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 $13.0 million and $29.1 million,
respectively, on September 30, 2009. 2009 Year-to-Date Financial
Results Net Revenue For the nine months ended September 30, 2009,
total net revenue was $38.0 million, representing an increase of
12.1% from $33.9 million for the corresponding period in 2008.
Total net revenue for the nine months ended September 30, 2009
consisted of $30.6 million in net revenue from online degree
programs and $7.4 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 nine months ended
September 30, 2009, total cost of revenue was $14.8 million,
representing an increase of 28.0% as compared to $11.5 million for
the corresponding period in 2008, primarily due to the expansion of
our learning centers network, courseware development for selected
university partners at our collaborative alliances, and increase in
cost of revenue at Anqing School and 101 online tutoring programs,
but offset by a decrease in cost of revenue for the international
curriculum programs. Gross Profit Gross profit for the nine months
ended September 30, 2009 was $23.2 million as compared with $22.3
million for the corresponding period in 2008, representing an
increase of 3.9%. Income from Operations Income from operations
were $8.7 million for the nine months ended September 30, 2009,
representing an increase of 64.4% from $5.3 million for the
corresponding period in 2008. Operating margin was 23.0% for the
nine months ended September 30, 2009 as compared to 15.7% for the
corresponding period in 2008. The increase was primarily due to a
lacking of goodwill and intangible assets impairment. Adjusted
operating margin for the nine months ended September 30, 2009 was
27.0% as compared to 28.6% for the corresponding period in 2008,
primarily due to the expansion of our learning centers network. Net
Income (loss) attributable to ChinaEdu Corporation Net income
attributable to ChinaEdu Corporation was $3.8 million for the nine
months ended September 30, 2009, compared with a loss of $0.6
million for the corresponding period in 2008, primarily due to a
lacking of goodwill and intangible assets impairment as well as a
decrease in income tax expenses. Adjusted net margin was 13.6% for
the nine months ended September 30, 2009 as compared to 10.9% for
the corresponding period of 2008. The increase was primarily due to
improved operating results as well as a decrease in income tax
expenses. Fourth Quarter 2009 Total Net Revenue Guidance For the
fourth quarter of 2009, ChinaEdu expects its total net revenue to
be in the range of RMB88 million to RMB92 million or $12.9 million
to $13.5 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 Tuesday,
November 24, 2009 at 8:00 a.m. U.S. Eastern time / 5:00 a.m. U.S.
Pacific time / 9:00 p.m. Beijing/Hong Kong time. The conference
call may be accessed by calling (US) 866 543 6408/ (International)
+1 617 213 8899/ (HK) +852 3002 1672/ (China) +86 10 800 152 1490,
and entering the passcode: 90226371. A telephone replay of the
conference call will be available shortly after the call until
December 2, 2009 at (US) 888 286 8010/ (International) +1 617 801
6888 and entering passcode: 40097404. A live and archived webcast
may be accessed via ChinaEdu's investor relations website 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, exchange loss, 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, exchange loss,
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 15 long-term, exclusive contracts that
generally vary from 10 to 50 years in length. ChinaEdu also
performs recruiting services for 15 universities through its
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. 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: ChinaEdu Corporation Unaudited Condensed Consolidated
Balance Sheets December 31, 2008 As September September (in
thousands, unaudited) Adjusted (2) 30, 2009 30, 2009 RMB RMB US$
Current assets: Cash and cash equivalents 353,933 224,240 32,850
Term deposits 63,500 88,479 12,962 Accounts receivable, net 14,854
13,152 1,927 Inventory -- 1,799 264 Prepaid expenses and other
current assets 20,251 22,515 3,298 Amounts due from related parties
150,472 198,913 29,140 Deferred tax assets 3,986 1,710 251
Investments -- 11,083 1,624 Total current assets 606,996 561,891
82,316 Cost method investment 1,210 1,210 177 Loan receivable --
3,000 439 Land use rights, net 28,344 28,026 4,106 Property and
equipment, net 161,925 197,467 28,928 Deposits paid for acquisition
of property and equipment 8,619 6,003 879 Intangible assets, net
70,377 67,015 9,817 Deferred tax assets 2,096 3,477 509 Rental
deposits 958 930 136 Goodwill 38,155 38,155 5,589 Total assets
918,680 907,174 132,896 Liabilities and equity Current liabilities:
Short term loan -- 2,117 310 Accounts payable 8,530 7,011 1,027
Deferred revenues 96,068 32,696 4,790 Accrued expenses and other
current liabilities 51,629 60,674 8,888 Amounts due to related
parties 25,769 65,820 9,642 Income taxes payable 27,917 28,258
4,140 Other taxes payable 12,008 13,846 2,028 Total current
liabilities 221,921 210,422 30,825 Deferred revenues 6,073 8,715
1,277 Deferred tax liabilities 11,069 10,531 1,543 Unrecognized tax
benefit 5,473 7,543 1,105 Total liabilities 244,536 237,211 34,750
ChinaEdu shareholders' equity 589,829 563,639 82,570 Noncontrolling
interest (1) 84,315 106,324 15,576 Total equity 674,144 669,963
98,146 Total liabilities and equity 918,680 907,174 132,896 (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 20-F for the year
ended of 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
September June September September for percentage, 30, 2008 30,
2009 30, 2009 30, 2009 share, and per share As Adjusted
information) (3) RMB RMB RMB US$ Gross Revenue (4) 84,700 92,794
94,303 13,815 Business Tax and Surcharge 2,696 4,519 4,559 669 Net
Revenue: Online degree programs 65,359 71,447 71,510 10,476 Online
tutoring programs 3,609 4,704 5,778 846 Private primary and
secondary schools 4,858 6,911 7,669 1,123 International curriculum
programs 8,178 5,213 4,787 701 Total net revenue 82,004 88,275
89,744 13,146 Cost of revenue: Online degree programs 19,266 22,537
23,633 3,462 Online tutoring programs 852 1,624 1,426 209 Private
primary and secondary schools 5,134 6,243 7,070 1,036 International
curriculum programs 5,949 2,793 2,840 416 Total cost of revenue
31,201 33,197 34,969 5,123 Gross profit: Online degree programs
46,093 48,910 47,877 7,014 Online tutoring programs 2,757 3,080
4,352 637 Private primary and secondary schools (276) 668 599 87
International curriculum programs 2,229 2,420 1,947 285 Total gross
profit 50,803 55,078 54,775 8,023 Online degree programs 70.5%
68.5% 67.0% 67.0% Online tutoring programs 76.4% 65.5% 75.3% 75.3%
Private primary and secondary schools -5.7% 9.7% 7.8% 7.8%
International curriculum programs 27.3% 46.4% 40.7% 40.7% Gross
margin 62.0% 62.4% 61.0% 61.0% Operating expenses: General and
administrative 20,150 19,742 20,519 3,006 Selling and marketing
8,770 5,434 6,766 991 Research and development 5,510 7,882 7,522
1,102 Goodwill and intangible assets impairment 17,857 -- -- --
Total operating expenses 52,287 33,058 34,807 5,099 Income from
operations (1,484) 22,020 19,968 2,924 Operating margin -1.8% 24.9%
22.2% 22.2% Other income 121 625 (264) (39) Interest income 2,326
1,182 1,041 153 Interest expense (106) -- (1) -- Income before
income tax provisions 857 23,827 20,744 3,038 Income tax expense
(8,769) (6,257) (4,835) (708) Net income (7,912) 17,570 15,909
2,330 Net income attributable to the noncontrolling interest
(7,397) (8,710) (8,610) (1,261) Net income attributable to ChinaEdu
Corporation (15,309) 8,860 7,299 1,069 Net margin -18.7% 10.0% 8.1%
8.1% Net income attributable to CEDU per ADR: Basic (0.78) 0.54
0.45 0.066 Diluted (0.78) 0.51 0.41 0.061 Weighted average
aggregate number of ADRs outstanding: Basic 19,304,646 16,095,158
16,227,267 16,227,267 Diluted 19,304,646 17,198,522 17,604,567
17,604,567 (3) Amounts were extracted from Form 6-K for the quarter
ended September 30, 2008, as adjusted resulting from the adoption
of Statement of Financial Accounting Standards No. 160. (4) Gross
revenue are detailed as follows Online degree programs 67,530
75,522 75,564 11,070 Online tutoring programs 3,771 4,795 6,002 879
Private primary and secondary schools 4,858 6,961 7,671 1,124
International curriculum programs 8,541 5,516 5,066 742 Nine Months
Ended (in thousands, except September September September for
percentage, 30, 2008 30, 2009 30, 2009 share, and per share As
Adjusted information) (3) RMB RMB US$ Gross Revenue (4) 238,462
272,576 39,931 Business Tax and Surcharge 7,282 13,387 1,961 Net
Revenue: Online degree programs 185,443 208,721 30,576 Online
tutoring programs 10,964 14,074 2,062 Private primary and secondary
schools 12,466 20,811 3,049 International curriculum programs
22,307 15,583 2,283 Total net revenue 231,180 259,189 37,970 Cost
of revenue: Online degree programs 48,029 68,853 10,087 Online
tutoring programs 2,574 4,491 658 Private primary and secondary
schools 11,744 18,811 2,756 International curriculum programs
16,388 8,581 1,257 Total cost of revenue 78,735 100,736 14,758
Gross profit: Online degree programs 137,414 139,868 20,489 Online
tutoring programs 8,390 9,583 1,404 Private primary and secondary
schools 722 2,000 293 International curriculum programs 5,919 7,002
1,026 Total gross profit 152,445 158,453 23,212 Online degree
programs 74.1% 67.0% 67.0% Online tutoring programs 76.5% 68.1%
68.1% Private primary and secondary schools 5.8% 9.6% 9.6%
International curriculum programs 26.5% 44.9% 44.9% Gross margin
65.9% 61.1% 61.1% Operating expenses: General and administrative
59,498 59,844 8,767 Selling and marketing 21,649 17,110 2,507
Research and development 17,238 21,975 3,219 Goodwill and
intangible assets impairment 17,857 -- -- Total operating expenses
116,242 98,929 14,493 Income from operations 36,203 59,524 8,719
Operating margin 15.7% 23.0% 23.0% Other income 417 987 145
Interest income 7,679 3,895 571 Interest expense (1,297) (1) --
Income before income tax provisions 43,002 64,405 9,435 Income tax
expense (23,094) (13,800) (2,022) Net income 19,908 50,605 7,413
Net income attributable to the noncontrolling interest (23,943)
(24,882) (3,645) Net income attributable to ChinaEdu Corporation
(4,035) 25,723 3,768 Net margin -1.7% 9.9% 9.9% Net income
attributable to CEDU per ADR: Basic (0.21) 1.58 0.231 Diluted
(0.21) 1.47 0.216 Weighted average aggregate number of ADRs
outstanding: Basic 19,419,884 16,326,294 16,326,294 Diluted
19,419,884 17,479,334 17,479,334 (3) Amounts were extracted from
Form 6-K for the quarter ended September 30, 2008, as adjusted
resulting from the adoption of Statement of Financial Accounting
Standards No. 160. (4) Gross revenue are detailed as follows Online
degree programs 191,316 220,751 32,339 Online tutoring programs
11,415 14,472 2,120 Private primary and secondary schools 12,466
20,863 3,056 International curriculum programs 23,265 16,490 2,416
ChinaEdu Corporation Unaudited Condensed Consolidated Statements of
Cash Flow Three Months Ended Sept- Sept- September June ember ember
(in thousands) 30,2008 30,2009 30,2009 30,2009 RMB RMB RMB US$
Operating activities: Net income (7,912) 17,570 15,909 2,330
Share-based compensation 1,494 2,055 1,488 218 Depreciation 3,005
3,983 4,119 603 Amortization of land use rights 142 152 152 22
Amortization of intangible assets 2,142 1,308 1,114 163 Goodwill
and intangible assets impairment 17,857 -- -- -- Accounts
receivable write-off -- 347 16 2 Loss from disposal of property and
equipment -- 15 110 16 Deferred income taxes 787 (825) (613) (90)
Accounts receivable 8,167 (20,898) 11,797 1,728 Inventory --
(1,077) (722) (106) Prepaid expenses and other current assets 3,610
6,188 (6,582) (964) Amounts due from related parties 41,085
(111,046) 26,821 3,929 Rental deposits (4) 48 (67) (10) Land use
right -- (1,040) -- -- Accounts payable 190 1,772 (1,368) (200)
Deferred revenues (53,603) 65,006 (60,114) (8,806) Accrued expenses
and other current liabilities 1,629 2,648 8,437 1,236 Amounts due
to related parties 12,081 24,840 11,946 1,750 Unrecognized tax
benefit -- 1,633 89 13 Other taxes payable 2,206 4,249 2,122 311
Income tax payable 9,229 4,770 4,800 703 Net cash provided by (used
in) operating activities 42,105 1,698 19,454 2,848 Investing
activities: Purchase of business (2,700) -- -- -- Purchase of
property and equipment (11,853) (29,919) (10,270) (1,504) Deposits
paid for acquisition of property and equipment (5,024) -- 2,616 383
Purchase of term deposit (71,500) 15,008 (8,988) (1,317) Purchase
of investments -- -- (11,083) (1,624) Purchase of loan receivable
-- -- (3,000) (439) Purchase of contractual right -- -- -- --
Proceeds from disposal of property and equipment -- -- -- -- Net
cash provided by (used in) investing activities (91,077) (14,911)
(30,725) (4,501) Financing activities: Repurchase of ordinary
shares (14,725) -- -- -- Cancellation of repurchased ordinary
shares -- -- (249) (36) Short term loan -- -- 2,117 310 Repayment
of long-term loan interest and principal (23,568) -- -- -- Cash
dividends paid to noncontrolling shareholders (4,050) -- -- --
Capital contributions by noncontrolling shareholders -- -- -- --
Proceeds from exercise of options 404 711 2,463 361 Prepayment for
share repurchase (5,751) -- -- -- Net cash provided by (used in)
financing activities (47,690) 711 4,331 635 Effect of foreign
exchange rate changes (746) (76) 48 8 CASH AND CASH EQUIVALENTS,
beginning of period 400,737 243,710 231,132 33,860 CASH AND CASH
EQUIVALENTS, end of period 303,329 231,132 224,240 32,850 Net
increase (decrease) in cash (97,408) (12,578) (6,892) (1,010) Nine
Months Ended (in thousands) September September September 30,2008
30,2009 30,2009 RMB RMB US$ Operating activities: Net income 19,908
50,605 7,413 Share-based compensation 3,548 5,805 850 Depreciation
8,642 12,043 1,764 Amortization of land use rights 424 467 68
Amortization of intangible assets 6,659 4,108 602 Goodwill and
intangible assets impairment 17,857 -- -- Accounts receivable
write-off -- 425 62 Loss from disposal of property and equipment --
203 30 Deferred income taxes 7,924 357 52 Accounts receivable
(4,320) 1,277 187 Inventory -- (1,799) (264) Prepaid expenses and
other current assets 4,317 (2,275) (333) Amounts due from related
parties (22,003) (37,841) (5,543) Rental deposits 558 28 4 Land use
right -- (1,989) (291) Accounts payable 134 1,488 218 Deferred
revenues (53,715) (60,725) (8,896) Accrued expenses and other
current liabilities (6,202) 9,039 1,324 Amounts due to related
parties 24,734 37,791 5,536 Unrecognized tax benefit 269 2,070 303
Other taxes payable 55 1,838 269 Income tax payable 10,017 341 50
Net cash provided by (used in) operating activities 18,806 23,256
3,405 Investing activities: Purchase of business (6,700) -- --
Purchase of property and equipment (31,578) (50,794) (7,441)
Deposits paid for acquisition of property and equipment (6,034)
2,616 383 Purchase of term deposit (98,458) (24,988) (3,661)
Purchase of investments -- (11,083) (1,624) Purchase of loan
receivable -- (3,000) (439) Purchase of contractual right (1,225)
(500) (73) Proceeds from disposal of property and equipment 31 --
-- Net cash provided by (used in) investing activities (143,964)
(87,749) (12,855) Financing activities: Repurchase of ordinary
shares (14,725) (61,647) (9,031) Cancellation of repurchased
ordinary shares -- (249) (36) Short term loan -- 2,117 310
Repayment of long-term loan interest and principal (25,724) -- --
Cash dividends paid to noncontrolling shareholders (4,050) (10,600)
(1,553) Capital contributions by noncontrolling shareholders 1,225
980 144 Proceeds from exercise of options 404 3,887 569 Prepayment
for share repurchase (5,751) -- -- Net cash provided by (used in)
financing activities (48,621) (65,512) (9,597) Effect of foreign
exchange rate changes (20,006) 312 48 CASH AND CASH EQUIVALENTS,
beginning of period 497,114 353,933 51,849 CASH AND CASH
EQUIVALENTS, end of period 303,329 224,240 32,850 Net increase
(decrease) in cash (193,785) (129,693) (18,999) ChinaEdu
Corporation Reconciliations of non-GAAP results of operations
measures to GAAP measures Three Months Ended September June
September September (in thousands, unaudited) 30, 2008 30, 2009 30,
2009 30, 2009 RMB RMB RMB US$ Income (loss) from operations GAAP
Result (1,484) 22,020 19,968 2,924 Share-based compensation 1,494
2,055 1,488 218 Exchange loss 1,433 -- -- -- Amortization 2,284
1,460 1,266 185 Goodwill and intangible assets impairment 17,857 --
-- -- Adjusted income from operations (Non-GAAP) 21,584 25,535
22,722 3,327 Adjusted operating margin 26.3% 28.9% 25.3% 25.3% Net
income (loss) attributable to ChinaEdu Corporation GAAP Result
(15,309) 8,860 7,299 1,069 Share-based compensation 1,494 2,055
1,488 218 Exchange loss 1,433 -- -- -- Share-based compensation
attributable to the noncontrolling interest (194) (278) (168) (25)
Amortization 2,284 1,460 1,266 185 Goodwill and intangible assets
impairment 17,857 -- -- -- Adjusted net income attributable to
ChinaEdu Corporation (Non-GAAP) 7,565 12,097 9,885 1,447 Adjusted
net margin 9.2% 13.7% 11.0% 11.0% Adjusted net income per ADR Basic
0.39 0.75 0.61 0.089 Diluted 0.38 0.70 0.56 0.082 Weighted average
aggregate number of ordinary shares outstanding: Basic 19,304,646
16,095,158 16,227,267 16,227,267 Diluted 19,933,446 17,198,522
17,604,567 17,604,567 Nine Months Ended (in thousands, unaudited)
September September September 30, 2008 30, 2009 30, 2009 RMB RMB
US$ Income (loss) from operations GAAP Result 36,203 59,524 8,719
Share-based compensation 3,548 5,805 850 Exchange loss 1,433 -- --
Amortization 7,083 4,575 670 Goodwill and intangible assets
impairment 17,857 -- -- Adjusted income from operations (Non-GAAP)
66,124 69,904 10,239 Adjusted operating margin 28.6% 27.0% 27.0%
Net income (loss) attributable to ChinaEdu Corporation GAAP Result
(4,035) 25,723 3,768 Share-based compensation 3,548 5,805 850
Exchange loss 1,433 -- -- Share-based compensation attributable to
the noncontrolling interest (583) (742) (109) Amortization 7,083
4,575 670 Goodwill and intangible assets impairment 17,857 -- --
Adjusted net income attributable to ChinaEdu Corporation (Non-GAAP)
25,303 35,361 5,179 Adjusted net margin 10.9% 13.6% 13.6% Adjusted
net income per ADR Basic 1.30 2.17 0.317 Diluted 1.23 2.02 0.296
Weighted average aggregate number of ordinary shares outstanding:
Basic 19,419,884 16,326,294 16,326,294 Diluted 20,488,799
17,479,334 17,479,334 Adjusted income from operations, which is a
non-GAAP measure defined as income from operations excluding
share-based compensation, exchange loss, 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, exchange loss, 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 September June September
September (in thousands, unaudited) 30,2008 30,2009 30,2009 30,2009
RMB RMB RMB US$ Net income (7,912) 17,570 15,909 2,330 Income tax
provision 8,769 6,257 4,835 708 Exchange loss 1,433 -- -- --
Interest income and other, net (2,341) (1,807) (776) (114)
Depreciation 3,005 3,983 4,119 603 Amortization 2,284 1,460 1,266
185 Goodwill and intangible assets impairment 17,857 -- -- --
Share-based compensation 1,494 2,055 1,488 218 Adjusted EBITDA
24,589 29,518 26,841 3,930 Adjusted EBITDA margin 30.0% 33.4% 29.9%
29.9% Nine Months Ended (in thousands, unaudited) September
September September 30,2008 30,2009 30,2009 RMB RMB US$ Net income
19,908 50,605 7,413 Income tax provision 23,094 13,800 2,022
Exchange loss 1,433 -- -- Interest income and other, net (6,799)
(4,881) (716) Depreciation 8,642 12,043 1,764 Amortization 7,083
4,575 670 Goodwill and intangible assets impairment 17,857 -- --
Share-based compensation 3,548 5,805 850 Adjusted EBITDA 74,766
81,947 12,003 Adjusted EBITDA margin 32.3% 31.6% 31.6% Adjusted
EBITDA, which is a non-GAAP measure defined as earnings before
interest income, taxes, exchange loss, depreciation, amortization
of intangible assets and land use rights, share-based compensation
and goodwill and intangibles impairment charges, if applicable.
DATASOURCE: ChinaEdu Corporation CONTACT: Lily Liu, CFO,
+86-10-8418-6655 x1002, or , or S. Jimmy Xia, IR Manager,
+86-10-8418-6655 x1150, or , both of ChinaEdu Web Site:
http://ir.chinaedu.net/
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