ChinaEdu Reports Third Quarter 2009 Results
Copyright 2010 PR Newswire. All Rights Reserved
2009-11-23
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: ir@chinaedu.net
S. Jimmy Xia, IR Manager
Phone: +86-10-8418-6655 x1150
Email: ir@chinaedu.net
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.
SOURCE ChinaEdu Corporation
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