ChinaEdu Corporation Reports Third Quarter 2012 Results
Net Revenue Increases to $19.7 Million, Exceeding Company Guidance
BEIJING, Dec. 19, 2012 /PRNewswire/ -- ChinaEdu Corporation (NASDAQ: CEDU) ("ChinaEdu" or the "Company"), a leading online educational services provider in China, today announced its unaudited financial results for the third quarter and nine months ended September 30, 2012.[1]
Third Quarter 2012 Highlights
- Total net revenue for the third quarter of 2012 was $19.7 million, an 8.7 percent increase from $18.1 million in the corresponding period in 2011.
- Net revenue from online degree programs was $15.8 million, an increase of 9.4 percent from $14.4 million in the corresponding period of 2011.
- Net income attributable to ChinaEdu was $0.5 million. There was a non-cash intangible assets impairment charge of $0.9 million and a related deferred income tax impact of $0.6 million in the third quarter of 2012.
- Adjusted net income attributable to ChinaEdu[2] was $1.9 million.
- Net income attributable to ChinaEdu per diluted ADS[3] was $0.030. The non-cash intangible assets impairment charge and related deferred income tax impact affected net income attributable to ChinaEdu per diluted ADS by $0.091.
- Adjusted net income attributable to ChinaEdu per diluted ADS[4] was $0.115.
- Operating margin in the third quarter of 2012 was 20.3 percent excluding the intangible assets impairment charge.
- The number of revenue students[5] in online degree programs during the Spring 2012 semester increased roughly 21.4 percent year-over-year to approximately 193,000 students.
| [1] The reporting currency of the Company is RMB, but for the convenience of the reader, the amounts for the three and nine months ended on September 30, 2012 are presented in U.S. dollars. Unless otherwise stated, all translations from RMB to U.S. dollars were made at the rate of RMB6.2848 to $1.00, the noon buying rate in effect on September 30, 2012 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or U.S. dollar amounts referred could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release. An explanation of the Company's non-GAAP financial measures is included in the section entitled "Non-GAAP Financial Measures" below, and the related reconciliations to GAAP financial measures are presented in the accompanying financial statements. |
| [2] "Adjusted net income attributable to ChinaEdu" is a non-GAAP measure defined as net income attributable to ChinaEdu excluding share-based compensation net of non-controlling interests' portion, amortization of intangible assets and land use rights, and impairment charges. |
| [3] "ADS" is American Depositary Share. Each ADS represents three ordinary shares. |
| [4] "Adjusted net income attributable to ChinaEdu per diluted ADS" is a non-GAAP measure which is computed using adjusted net income attributable to ChinaEdu over the number of ADSs used in net income attributable to ChinaEdu per diluted ADS calculation. |
| [5] "Revenue students" refers to students of university online degree programs who have paid tuitions. The numbers for the three months ended September 30, 2012 and 2011 are revenue students in Spring 2012 and Spring 2011, respectively. |
Julia Huang, executive chairman of ChinaEdu commented, "We are pleased with our performance in the third quarter, particularly our ability to increase gross margin to 61.0 percent. We continue to see healthy growth in our online degree programs and are making efforts to build our online professional and certification training programs to help narrow the gap between the skills of the workforce and present-day employers' needs. We are also working to improve our interactive learning capability by integrating mobile and social network applications into our K-12 programs. As these programs begin to benefit from our focus on technology-supported interactive learning, we will look for ways to integrate the platforms into our adult training and degree offerings. At the same time, we continue to closely monitor and control costs across our businesses, enabling us to deliver yet another successful quarter. As we look towards the close of 2012, we are confident in the full year results we will deliver and we are optimistic about the year ahead."
Financial Results for the Third Quarter Ended September 30, 2012
Net Revenue
Total net revenue for the third quarter of 2012 was $19.7 million, an 8.7 percent increase from $18.1 million in the corresponding period in 2011.
Net revenue from online degree programs for the third quarter of 2012 was $15.8 million, a 9.4 percent increase from $14.4 million in the corresponding period in 2011. As seen in the previous quarter, the increase in net revenue from online degree programs in the third quarter was primarily due to organic growth in revenue students enrolled in core online degree programs. Some growth was also attributed to greater revenue contribution from our learning centers network and increased revenue contribution from our online non-degree training programs. Enrollment for online degree programs in the Spring 2012 semester was approximately 193,000 revenue students, an increase of 21.4 percent from approximately 159,000 revenue students in the Spring 2011 semester.
As of September 30 2012, ChinaEdu's learning centers network was providing recruiting services for 22 universities with 116 operational learning centers, of which 55 were proprietary centers[6] and 61 were contracted centers[7]. This compares to 103 operational learning centers as of September 30, 2011, of which 59 were proprietary and 44 were contracted centers.
Net revenue from non-degree programs, including online tutoring programs, private primary and secondary schools and international and elite curriculum programs, in the third quarter of 2012 was $3.9 million, a 6.0 percent increase from $3.7 million in the third quarter of 2011. The growth was mainly driven by increased enrollment at our private schools in Anqing and Pingdingshan as well as an increase in tuition at our Anqing private school.
| [6] Proprietary centers refer to self-owned learning centers operated either under the Company's own brand name or the brand name of a university pursuant to a licensing arrangement with that university. |
| [7] Contracted centers refer to agreement with third party learning centers pursuant to which the Company only provides assistance in applying for approval from provincial level education authorities as well as securing additional university online degree programs. In return, the Company receives a percentage of the tuition earned by these third party learning centers. |
Cost of Revenue
Total cost of revenue for the third quarter of 2012 was $7.7 million, representing an increase of 1.5 percent, compared to $7.6 million in the corresponding period of 2011.
Cost of revenue for online degree programs in the third quarter of 2012 was $5.4 million, an increase of 7.5 percent from $5.0 million in the corresponding period of 2011. The increase in cost of revenue was primarily due to an increase in staff costs that resulted from a headcount increase across the Company.
Cost of revenue for non-degree programs in the third quarter of 2012 was $2.3 million, a decrease of 10.5 percent from $2.5 million in the third quarter of 2011. The decrease in cost of revenue in this area was mainly due to decreases in employee costs and leasing costs related to our international and elite curriculum programs.
Gross Profit and Gross Margin
Gross profit in the third quarter of 2012 was $12.0 million, compared to $10.6 million in the corresponding period of 2011. Gross margin increased to 61.0 percent, compared to 58.2 percent in the corresponding period in 2011.
Gross margin for online degree programs increased to 65.7 percent for the third quarter of 2012, compared to 65.1 percent in the corresponding period of 2011.
Gross margin for private schools increased to 40.3 percent, compared to 29.4 percent in the corresponding period in 2011. The increase was primarily due to increased student enrollment at our private schools in Anqing and Pingdingshan as well as a tuition increase at the Anqing school.
Gross margin for online tutoring programs decreased to 63.9 percent from 65.6 percent in third quarter of 2011, largely due to decreased barter transaction revenue.
Operating Expenses
Total operating expenses were $9.0 million in the third quarter of 2012, representing a 16.3 percent increase from $7.7 million in the corresponding period in 2011. As a percentage of net revenue, total operating expenses increased to 45.5 percent, compared to 42.5 percent in the corresponding period in 2011. The increase in total operating expense was the result of the following:
- General and administrative expenses for the third quarter of 2012 were $4.3 million, an increase of 16.6 percent compared to $3.7 million in the corresponding period in 2011. The increase was mainly the result of an early termination fee related to a lease agreement and an increase in conference fees and travel fees. As a percentage of net revenue, general and administrative expenses increased to 22.0 percent, compared with 20.5 percent in the same period in 2011.
- Selling and marketing expenses were $2.0 million in the third quarter of 2012,a decrease of 13.7 percent compared to $2.3 million in the corresponding period in 2011. The decrease was primarily attributable to a significant decrease in marketing activities surrounding international and elite curriculum programs. As a percentage of net revenue, selling and marketing expenses decreased to 9.9 percent, compared with 12.5 percent in the same period in 2011.
- Research and development expenses for the third quarter of 2012 were $1.7 million, flat with the corresponding period in 2011. As a percentage of net revenue, the research and development expense was 8.8 percent in the third quarter of 2012, decreasing from 9.5 percent in the same period in 2011.
- The Company incurred an intangible asset impairment charge in relation to the BCIT (British Columbia Institute of Technology) and FEC (Friendly Experimental Class) programs in the international and elite curriculum division in the third quarter of 2012, resulting in an aggregate non-cash charge of $0.9 million (RMB5.9 million). The Company does not plan to enter into new cooperative agreements such as these in the near future. Due to the projection that demonstrated the operation from the FEC program and continuing losses from the BCIT programs, the Company believes that the intangible assets carrying amount associated with the BCIT and FEC programs may not be recoverable. The fair value for the intangible assets of these programs is less than the carrying value as of September 30, 2012, resulting in impairment of these two programs in the current quarter. The excess carrying value of the intangible assets over its fair value is recognized as an impairment loss.
Income from Operations
Income from operations in the third quarter of 2012 was $3.1 million, an increase of 7.3 percent compared to $2.8 million in the corresponding period of 2011. The increase was mainly due to an increase in student enrollment in online degree programs in the Spring semester as well as increased enrollment at our private schools. Operating margin decreased very slightly to 15.5 percent in the third quarter of 2012, compared to 15.7 percent in the corresponding period of 2011. The non-cash intangible assets impairment charge affected income from operations by $0.9 million.
Adjusted income from operations, a non-GAAP measure defined as income from operations excluding share-based compensation, amortization of intangible assets, land use rights, and impairment charges, was $4.5 million for the third quarter of 2012, an increase of 36.0 percent compared to $3.3 million in the corresponding period of 2011.
Adjusted operating margin, a non-GAAP measure defined as the ratio of adjusted income from operations over net revenue, for the third quarter of 2012 increased to 22.7 percent, compared to 18.2 percent in the corresponding period of 2011.
Interest and Investment Income
Interest and investment income for the third quarter of 2012 increased 112.6 percent to $0.7 million, compared to $0.3 million for the corresponding quarter of 2011.
Income Tax Expense
In the third quarter of 2012, the income tax expense was $1.5 million and the effective income tax rate calculated without consideration for the impairment charge was 31.5 percent. This compares with an income tax expense of $0.5 million and effective income tax rate of 14.2 percent in same period of 2011. The increase in income tax expense is attributable to the provision of valuation allowance of the deferred tax assets that arose in the carrying losses in the international and elite programs.
Net Income Attributable to Non-controlling Interests
Net income attributable to non-controlling interests was to $1.8 million in the third quarter of 2012, flat with the corresponding period in 2011.
Net Income Attributable to ChinaEdu
Net income attributable to ChinaEdu, which is net income, excluding net income attributable to non-controlling interests, was $0.5 million in the third quarter of 2012, representing a decrease of 47.5 percent from $0.9 million in the corresponding period of 2011. The non-cash intangible assets impairment charge and related deferred income tax impact affected net income attributable to ChinaEdu by $0.9 million and $0.6 million respectively.
Net income attributable to ChinaEdu per basic and diluted ADS was $0.031 and $0.030, respectively, for the third quarter of 2012, compared to $0.060 and $0.057, respectively, for the corresponding period in 2011. The non-cash intangible assets impairment charge and related deferred income tax impact affected net income attributable to ChinaEdu per basic and diluted ADS by $0.096 and $0.091, respectively.
Adjusted net income attributable to ChinaEdu was $1.9 million in the third quarter of 2012 compared to $1.4 million in the corresponding period of 2011. Adjusted net margin, a non-GAAP measure defined as the ratio of adjusted net income attributable to ChinaEdu over net revenue, was 9.7 percent in the third quarter of 2012, compared to 7.6 percent in the corresponding period of 2011. The non-cash intangible assets impairment charge and related deferred income tax impact affected adjusted net income attributable to ChinaEdu by $0.9 million and $0.6 million, respectively, which affected adjusted net margin by 2.9 percent.
Adjusted net income attributable to ChinaEdu per basic and diluted ADS was $0.120 and $0.115, respectively, for the third quarter of 2012, compared to $0.088 and $0.083, respectively, in the corresponding period of 2011. The non-cash intangible assets impairment charge and related deferred income tax impact affected adjusted net income attributable to ChinaEdu per basic and diluted ADS by $0.037 and $0.035, respectively.
Deferred Revenue
As of September 30, 2012, deferred revenue was $10.0 million, consisting of current deferred revenue in the amount of $8.3 million and non-current deferred revenue in the amount of $1.7 million.
Spring semester tuition is generally received during the second quarter but is recognized both in the second quarter and the third quarter of the calendar year. Service fees are amortized within the service period.
Private school revenue is generally received in September, but is amortized over 6 or 12 months. Online tutoring program revenue can be received at program enrollment and is mostly amortized within 12 months.
Cash and Cash Equivalents and Term Deposits
As of September 30, 2012, the Company had cash and cash equivalents and term deposits of $63.0 million, which primarily consisted of cash, demand deposits with original maturity terms of three months or less, and term deposits with original maturity terms of greater than three months but less than one year.
Amounts Due from Related Parties
Amounts due from related parties, which represents cash owed to the Company by collaborative alliance partners, were $41.0 million as of September 30, 2012 compared to $37.9 million as of September 30, 2011.
2012 Year-to-Date Financial Results
Net Revenue
For the nine months ended September 30, 2012, total net revenue was $56.1 million, representing an increase of 11.9 percent over $50.2 million in the corresponding period in 2011. Net revenue from online degree programs for the first nine months of 2012 was $45.0 million, representing a 13.1 percent increase from $39.8 million in the corresponding period in 2011. Net revenue from non-online degree programs for the first nine months of 2012 was $11.1 million, compared to $10.3 million in 2011, a 7.3 percent increase. Growth in total net revenue was attributable to strong enrollment in online degree programs in the Fall semester of 2011 and Spring semester of 2012, particularly within the learning centers network. Growth in net revenue at the Anqing School increased, while the Company saw a decrease in revenue contributed by 101 online tutoring programs and international and elite curriculum programs.
Cost of Revenue
For the nine months ended September 30, 2012, total cost of revenue was $22.4 million, an increase from $20.9 million in the corresponding period in 2011. Cost of revenue for online degree programs in the first nine months of 2012 was $15.2 million, an increase of 8.6 percent compared to $14.0 million in the corresponding period of 2011. The increase was primarily due to cost increases in headcount as well as expansion of the Company's learning centers network.
Cost of revenue for non-online degree programs in the first nine months of 2012 was $7.2 million, an increase of 4.0 percent compared to $7.0 million in the corresponding period of 2011. The increase in cost of revenue was primarily related to employee costs, leasing costs and service costs associated with our 101 online tutoring programs and teaching costs, dormitory, canteen and transportation costs related to our private primary schools in Anqing and Pingdingshan. Cost of revenue for international and elite curriculum programs decreased as those programs have grown smaller over the course of the year.
Gross Profit
Gross profit for the nine months ended September 30, 2012 was $33.7 million, an increase of 15.3 percent compared with $29.2 million for the corresponding period in 2011. The increase was primarily due to an increase in gross margin across online degree programs and private school programs.
Income from Operations
Income from operations was $10.2 million for the nine months ended September 30, 2012, representing an increase of 41.2 percent from $7.2 million for the corresponding period in 2011. Operating margin was 18.2 percent for the nine months ended September 30, 2012 compared to 14.4 percent for the corresponding period in 2011. The non-cash intangible assets impairment charge affected income from operations and operating margin by $0.9 million and 1.7 percent, respectively.
Adjusted income from operations was $12.7 million for the first nine months of 2012, representing an increase of 47.9 percent, compared to $8.6 million in the corresponding period of 2011. Adjusted operating margin for the nine months ended September 30, 2012 was 22.6 percent, compared to 17.1 percent for the corresponding period in 2011.
Interest Income and Investment Income
Interest income and investment income increased 84.7 percent to $2.0 million in the first nine months of 2012, compared to $1.1 million in the corresponding period of last year.
Income Tax Expense
Income tax expense for the first nine months of 2012 was $3.3 million, as compared with $1.5 million for the corresponding period of last year.
Net Income Attributable to Non-controlling Interests
Net income attributable to non-controlling interests was $5.4 million in first nine months of 2012, an increase of 17.2 percent compared to $4.6 million in the first nine months of 2011. The increase was primarily attributable to a non-controlling interest impact related to the increase in net income from online degree programs in the first nine months of 2012.
Net Income attributable to ChinaEdu
Net income attributable to ChinaEdu was $3.6 million for the nine months ended September 30, 2012, representing an increase of 57.0 percent from $2.3 million for the corresponding period in 2011. Net margin was 6.4 percent for the nine months ended September 30, 2012, compared to 4.6 percent for the corresponding period in 2011. The non-cash intangible assets impairment charge and related deferred income tax impact affected net income attributable to ChinaEdu by $0.9 million and $0.6 million respectively, which affected net margin for nine months ended September 30, 2012 by 2.7 percent.
Adjusted net margin was 10.7 percent for the nine months ended September 30, 2012, compared to 7.1 percent for the corresponding period of 2011. The increase was primarily due to increased net profit in the first nine months of 2012. The non-cash intangible assets impairment charge and related deferred income tax impact affected adjusted net margin for nine months ended September 30, 2012 by one percent.
Fourth Quarter 2012 Guidance
ChinaEdu management expects total net revenue in the fourth quarter of 2012 to range from RMB124 million to RMB129 million or $19.7 million to $20.5 million, representing a three to seven percent increase compared to the corresponding period in 2011. This forecast reflects ChinaEdu's current and preliminary view, which is subject to change.
Conference Call
ChinaEdu's management will hold an earnings conference call at 8:00 a.m. U.S. Eastern Time on December 20, 2012 (9:00 p.m. Beijing/Hong Kong Time on December 20, 2012).
Dial-in details for the earnings conference call are as follows:
| International: |
+6567239381 |
| Hong Kong: |
+85224750994 |
| United States: |
+1 (718) 354-1231 |
| Toll-free China, Mobile: |
4006208038 |
| Toll-free China: |
8008190121 |
| Toll-free United States: |
+1 (866) 519-4004 |
| Passcode: |
79539648 |
A live and archived webcast of the conference call will be available on the investor relations page of ChinaEdu's website at http://ir.chinaedu.net and a replay of the conference call may be accessed by phone until December 27, 2012.
Dial-in numbers for the replay are as follows:
| Toll Free United States |
+1 (855) 452-5696 |
| International |
+61 281990299 |
| Conference ID: |
79539648 |
Non-GAAP Financial Measures
To supplement the unaudited condensed consolidated financial information presented in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), the Company uses non-GAAP measures of income from operations and net income attributable to ChinaEdu, which are adjusted from results based on GAAP to exclude certain non-cash items of share-based compensation, amortization of intangible assets and land use rights and impairment charge. Adjusted operating margin defined as the ratio of adjusted operating income from operation over net revenue. Adjusted net income attributable to ChinaEdu per basic and diluted ADS are a non-GAAP measure which are computed using adjusted net income attributable to ChinaEdu over the number of ADSs used in net income attributable to ChinaEdu per basic and diluted ADS calculation.
These non-GAAP financial measures are provided to enhance the investors' overall understanding of the Company's current and past financial performance in on-going core operations as well as prospects for the future. These measures should be considered in addition to results prepared and presented in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Management considers the non-GAAP information as important measures internally and therefore deems it important to provide all of this information to investors.
About ChinaEdu
ChinaEdu Corporation is an educational services provider in China, incorporated as an exempted limited liability company in the Cayman Islands. Established in 1999, the Company's primary business is to provide comprehensive services to the online degree programs of leading Chinese universities. These services include academic program development, technology services, enrollment marketing, student support services and finance operations. The Company's other lines of businesses include the operation of private primary and secondary schools, online interactive tutoring services and providing marketing, support for international and elite curriculum programs and online learning community for adult students.
The Company believes it is the largest service provider to online degree programs in China in terms of the number of higher education institutions that are served and the number of student enrollments supported. The Company currently has entered into collaborative alliances with 12 universities, ranging from 10 to 50 years in length. The Company has also entered into technology agreements with 6 universities. Besides, ChinaEdu performs recruiting services for 22 universities through nationwide learning center network.
Forward-Looking Statements
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, 2011, 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 investor and media inquiries, please contact:
Helen Plummer
Senior Investor Relations Coordinator
ChinaEdu Corporation
Phone: +1 908-442-9395
E-mail: [email protected]
Jin Yu
Investor Relations Manager
ChinaEdu Corporation
Phone: +86 15711096022
E-mail: [email protected]
| ChinaEdu Corporation |
||||
| Unaudited Condensed Consolidated Balance Sheets |
||||
| (in thousands, unaudited) |
December 31, 2011 |
September 30, 2012 |
September 30, 2012 |
|
| RMB |
RMB |
US$ |
||
| Current assets: |
||||
| Cash and cash equivalents |
273,746 |
196,951 |
31,338 |
|
| Term deposits |
98,163 |
199,028 |
31,668 |
|
| Short-term investments |
34,648 |
23,420 |
3,726 |
|
| Accounts receivable, net |
31,478 |
38,989 |
6,204 |
|
| Prepaid expenses and other current assets |
22,725 |
26,234 |
4,174 |
|
| Amounts due from related parties |
238,016 |
257,367 |
40,951 |
|
| Deferred tax assets-current |
5,697 |
1,808 |
288 |
|
| Total current assets |
704,473 |
743,797 |
118,349 |
|
| Deferred tax assets-non-current |
8,217 |
4,264 |
678 |
|
| Rental deposits |
2,213 |
1,480 |
235 |
|
| Land use rights |
26,657 |
26,201 |
4,169 |
|
| Property and equipment, net |
239,210 |
227,880 |
36,259 |
|
| Deposits paid for acquisition of property and equipment |
17,902 |
17,902 |
2,848 |
|
| Acquired intangible assets, net |
63,638 |
55,662 |
8,857 |
|
| Goodwill |
43,255 |
43,255 |
6,882 |
|
| Total assets |
1,105,565 |
1,120,441 |
178,277 |
|
| Liabilities and equity |
||||
| Current liabilities: |
||||
| Accounts payable (including accounts payable of the consolidated VIE without recourse to the Group of 1,975 and 9,856 as of December 31, 2011 and September 30, 2012, respectively) |
2,239 |
10,015 |
1,594 |
|
| Deferred revenues-current (including deferred revenues of the consolidated VIE without recourse to the Group of 20,525 and 24,297 as of December 31, 2011 and September 30, 2012, respectively) |
125,332 |
51,851 |
8,250 |
|
| Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIE without recourse to the Group of 18,644 and 25,601 as of December 31, 2011 and September 30, 2012, respectively) |
91,980 |
119,415 |
19,000 |
|
| Amounts due to related parties (including amounts due to related parties of the consolidated VIE without recourse to the Group of 1,953 and 2,008 as of December 31, 2011 and September 30, 2012, respectively) |
13,146 |
20,138 |
3,204 |
|
| Income taxes payable (including income taxes payable of the consolidated VIE without recourse to the Group of 8,893 and 10,182 as of December 31, 2011 and September 30, 2012, respectively) |
51,448 |
48,322 |
7,689 |
|
| Other taxes payable (including other taxes payable of the consolidated VIE without recourse to the Group of 3,047 and 3,622 as of December 31, 2011 and September 30, 2012, respectively) |
21,970 |
24,127 |
3,839 |
|
| Total current liabilities |
306,115 |
273,868 |
43,576 |
|
| Deferred revenues-non-current (including deferred revenues of the consolidated VIE without recourse to the Group of 33 and 29 as of December 31, 2011 and September 30, 2012, respectively) |
12,059 |
10,986 |
1,748 |
|
| Deferred tax liabilities-non-current (including deferred tax liabilities of the consolidated VIE without recourse to the Group of 1,017 and 988 as of December 31, 2011 and September 30, 2012, respectively) |
9,243 |
7,274 |
1,157 |
|
| Unrecognized tax benefit (including unrecognized tax benefit of the consolidated VIE without recourse to the Group of 2,364 and 3,241 as of December 31, 2011 and September 30, 2012, respectively) |
6,089 |
7,951 |
1,265 |
|
| Total liabilities |
333,506 |
300,079 |
47,746 |
|
| ChinaEdu shareholders' equity |
604,806 |
634,576 |
100,970 |
|
| Noncontrolling interests |
167,253 |
185,786 |
29,561 |
|
| Total equity |
772,059 |
820,362 |
130,531 |
|
| Total liabilities and equity |
1,105,565 |
1,120,441 |
178,277 |
|
| ChinaEdu Corporation |
||||||||||||||
| Unaudited Condensed Consolidated Statements of Operations |
||||||||||||||
| Three Months Ended |
Nine Months Ended |
|||||||||||||
| (in thousands, except for percentage, share, and per share information) |
September 30, 2011 |
June 30, 2012 |
September 30, 2012 |
September 30, 2012 |
September 30, 2011 |
September 30, 2012 |
September 30, 2012 |
|||||||
| RMB |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
||||||||
| Gross Revenue * |
118,800 |
119,519 |
129,012 |
20,527 |
329,989 |
368,163 |
58,579 |
|||||||
| Business Tax |
4,880 |
4,486 |
5,192 |
826 |
14,688 |
15,383 |
2,447 |
|||||||
| Net Revenue: |
||||||||||||||
| Online degree programs |
90,597 |
92,089 |
99,097 |
15,768 |
250,347 |
283,113 |
45,046 |
|||||||
| Online tutoring programs |
6,792 |
6,389 |
6,025 |
958 |
19,698 |
18,423 |
2,931 |
|||||||
| Private primary and secondary schools |
12,445 |
13,815 |
16,311 |
2,596 |
35,565 |
43,662 |
6,948 |
|||||||
| International and elite curriculum programs |
4,086 |
2,740 |
2,387 |
379 |
9,691 |
7,582 |
1,207 |
|||||||
| Total net revenue |
113,920 |
115,033 |
123,820 |
19,701 |
315,301 |
352,780 |
56,132 |
|||||||
| Cost of revenue: |
||||||||||||||
| Online degree programs |
31,597 |
31,035 |
33,982 |
5,407 |
87,809 |
95,336 |
15,169 |
|||||||
| Online tutoring programs |
2,334 |
2,700 |
2,178 |
347 |
6,424 |
7,599 |
1,209 |
|||||||
| Private primary and secondary schools |
8,782 |
10,205 |
9,740 |
1,550 |
25,538 |
29,751 |
4,734 |
|||||||
| International and elite curriculum programs |
4,902 |
3,020 |
2,422 |
385 |
11,735 |
8,105 |
1,290 |
|||||||
| Total cost of revenue |
47,615 |
46,960 |
48,322 |
7,689 |
131,506 |
140,791 |
22,402 |
|||||||
| Gross profit: |
||||||||||||||
| Online degree programs |
59,000 |
61,054 |
65,115 |
10,361 |
162,538 |
187,777 |
29,877 |
|||||||
| Online tutoring programs |
4,458 |
3,689 |
3,847 |
611 |
13,274 |
10,824 |
1,722 |
|||||||
| Private primary and secondary schools |
3,663 |
3,610 |
6,571 |
1,046 |
10,027 |
13,911 |
2,214 |
|||||||
| International and elite curriculum programs |
(816) |
(280) |
(35) |
(6) |
(2,044) |
(523) |
(83) |
|||||||
| Total gross profit |
66,305 |
68,073 |
75,498 |
12,012 |
183,795 |
211,989 |
33,730 |
|||||||
| Online degree programs |
65.1% |
66.3% |
65.7% |
65.7% |
64.9% |
66.3% |
66.3% |
|||||||
| Online tutoring programs |
65.6% |
57.7% |
63.9% |
63.9% |
67.4% |
58.8% |
58.8% |
|||||||
| Private primary and secondary schools |
29.4% |
26.1% |
40.3% |
40.3% |
28.2% |
31.9% |
31.9% |
|||||||
| International and elite curriculum programs |
(20.0%) |
(10.2%) |
(1.5%) |
(1.5%) |
(21.1%) |
(6.9%) |
(6.9%) |
|||||||
| Gross margin |
58.2% |
59.2% |
61.0% |
61.0% |
58.3% |
60.1% |
60.1% |
|||||||
| Operating expenses: |
||||||||||||||
| General and administrative |
23,320 |
24,251 |
27,182 |
4,325 |
69,829 |
77,243 |
12,290 |
|||||||
| Selling and marketing |
14,264 |
11,316 |
12,315 |
1,959 |
37,415 |
34,094 |
5,425 |
|||||||
| Research and development |
10,843 |
9,894 |
10,914 |
1,737 |
31,102 |
30,585 |
4,867 |
|||||||
| Intangible assets impairment |
- |
- |
5,901 |
939 |
- |
5,901 |
939 |
|||||||
| Total operating expenses |
48,427 |
45,461 |
56,312 |
8,960 |
138,346 |
147,823 |
23,521 |
|||||||
| Income from operations |
17,878 |
22,612 |
19,186 |
3,052 |
45,449 |
64,166 |
10,209 |
|||||||
| Operating margin |
15.7% |
19.7% |
15.5% |
15.5% |
14.4% |
18.2% |
18.2% |
|||||||
| Other income |
297 |
266 |
404 |
64 |
719 |
917 |
146 |
|||||||
| Interest income |
2,153 |
3,583 |
3,352 |
534 |
6,202 |
9,923 |
1,579 |
|||||||
| Investment income |
37 |
786 |
1,303 |
207 |
666 |
2,763 |
440 |
|||||||
| Income before income tax |
20,365 |
27,247 |
24,245 |
3,857 |
53,036 |
77,769 |
12,374 |
|||||||
| Income tax expense |
(2,897) |
(5,831) |
(9,510) |
(1,513) |
(9,353) |
(20,824) |
(3,314) |
|||||||
| Net income |
17,468 |
21,416 |
14,735 |
2,344 |
43,683 |
56,945 |
9,060 |
|||||||
| Net income attributable to the noncontrolling interests |
(11,514) |
(12,124) |
(11,611) |
(1,847) |
(29,195) |
(34,204) |
(5,442) |
|||||||
| Net income attributable to ChinaEdu |
5,954 |
9,292 |
3,124 |
497 |
14,488 |
22,741 |
3,618 |
|||||||
| Net margin |
5.2% |
8.1% |
2.5% |
2.5% |
4.6% |
6.4% |
6.4% |
|||||||
| Net income attributable to ChinaEdu per ADS: |
||||||||||||||
| Basic |
0.38 |
0.59 |
0.20 |
0.031 |
0.91 |
1.44 |
0.229 |
|||||||
| Diluted |
0.36 |
0.55 |
0.19 |
0.030 |
0.85 |
1.36 |
0.216 |
|||||||
| Weighted average aggregate number of ADSs outstanding: |
||||||||||||||
| Basic |
15,573,809 |
15,852,495 |
15,884,264 |
15,884,264 |
15,838,717 |
15,827,795 |
15,827,795 |
|||||||
| Diluted |
16,720,855 |
16,927,279 |
16,625,395 |
16,625,395 |
16,983,130 |
16,771,477 |
16,771,477 |
|||||||
| * Gross revenue are detailed as follows |
||||||||||||||
| Online degree programs |
95,073 |
96,268 |
103,920 |
16,535 |
263,910 |
297,506 |
47,336 |
|||||||
| Online tutoring programs |
6,940 |
6,511 |
6,181 |
983 |
20,204 |
18,849 |
2,999 |
|||||||
| Private primary and secondary schools |
12,463 |
13,837 |
16,382 |
2,607 |
35,620 |
43,777 |
6,966 |
|||||||
| International and elite curriculum programs |
4,324 |
2,903 |
2,529 |
402 |
10,255 |
8,031 |
1,278 |
|||||||
|
ChinaEdu Corporation |
||||||||||||||
| Unaudited Condensed Consolidated Statements of Comprehensive Income |
||||||||||||||
| Three Months Ended |
Nine Months Ended |
|||||||||||||
| (in thousands, unaudited) |
September 30, 2011 |
June 30, 2012 |
September 30, 2012 |
September 30, 2012 |
September 30, 2011 |
September 30, 2012 |
September 30, 2012 |
|||||||
| RMB |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
||||||||
| Net income |
17,468 |
21,416 |
14,735 |
2,344 |
43,683 |
56,945 |
9,060 |
|||||||
| Other comprehensive income, net of tax |
||||||||||||||
| Foreign currency translation adjustments |
(1,984) |
120 |
(121) |
(19) |
(1,898) |
6 |
1 |
|||||||
| Change in fair value of available for sale investments |
904 |
205 |
515 |
82 |
727 |
957 |
152 |
|||||||
| Comprehensive income |
16,388 |
21,741 |
15,129 |
2,407 |
42,512 |
57,908 |
9,213 |
|||||||
| Less: comprehensive income attributable to the noncontrollng interest |
13,739 |
11,106 |
13,591 |
2,163 |
34,392 |
35,143 |
5,592 |
|||||||
| Comprehensive income attributable to ChinaEdu |
2,649 |
10,635 |
1,538 |
244 |
8,120 |
22,765 |
3,621 |
|||||||
| ChinaEdu Corporation |
||||||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flow |
||||||||||||||
| Three Months Ended |
Nine Months Ended |
|||||||||||||
| (in thousands, unaudited) |
September 30, 2011 |
June 30, 2012 |
September 30, 2012 |
September 30, 2012 |
September 30, 2011 |
September 30, 2012 |
September 30, 2012 |
|||||||
| RMB |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
||||||||
| Operating activities: |
||||||||||||||
| Net income |
17,468 |
21,416 |
14,735 |
2,344 |
43,683 |
56,945 |
9,060 |
|||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||
| Share-based compensation |
1,619 |
1,892 |
1,885 |
300 |
4,823 |
5,996 |
954 |
|||||||
| Depreciation and amortization of property and equipment |
5,728 |
6,304 |
6,355 |
1,011 |
17,263 |
18,963 |
3,017 |
|||||||
| Amortization of land use rights |
152 |
152 |
152 |
24 |
456 |
456 |
73 |
|||||||
| Amortization of acquired intangible assets |
1,059 |
1,036 |
1,035 |
165 |
3,093 |
3,056 |
486 |
|||||||
| Intangible Assets impairment |
- |
- |
5,901 |
939 |
- |
5,901 |
939 |
|||||||
| Gain on sale of investment |
- |
(158) |
- |
- |
(687) |
(227) |
(36) |
|||||||
| Gain on disposal |
- |
- |
(1,303) |
(207) |
- |
(1,303) |
(207) |
|||||||
| Loss on sale of bonds |
(37) |
- |
- |
- |
21 |
- |
- |
|||||||
| Loss on discontinued operations |
- |
- |
- |
- |
16 |
- |
- |
|||||||
| Loss from disposal of property and equipment |
55 |
16 |
586 |
93 |
137 |
1,414 |
225 |
|||||||
| Changes in assets and liabilities |
||||||||||||||
| Accounts receivable |
14,342 |
(24,932) |
8,242 |
1,311 |
11,646 |
(7,851) |
(1,249) |
|||||||
| Inventory |
- |
- |
- |
- |
358 |
- |
- |
|||||||
| Provision for Accounts Receivable |
- |
- |
- |
- |
- |
340 |
54 |
|||||||
| Prepaid expenses and other current assets |
5,087 |
(377) |
1,239 |
196 |
3,022 |
(1,351) |
(215) |
|||||||
| Amounts due from related parties |
41,318 |
(65,981) |
40,792 |
6,491 |
17,354 |
(23,351) |
(3,715) |
|||||||
| Rental deposits |
(94) |
(34) |
296 |
47 |
(1,686) |
733 |
117 |
|||||||
| Accounts payable |
1,854 |
2,324 |
2,951 |
470 |
6,436 |
7,789 |
1,239 |
|||||||
| Deferred revenues |
(72,711) |
79,370 |
(74,887) |
(11,916) |
(59,257) |
(74,508) |
(11,855) |
|||||||
| Accrued expenses and other current liabilities |
7,943 |
3,167 |
17,532 |
2,791 |
18,164 |
26,673 |
4,245 |
|||||||
| Amounts due to related parties |
(7,944) |
(6,596) |
8,265 |
1,315 |
(12,791) |
11,621 |
1,849 |
|||||||
| Income tax payable |
5,241 |
4,021 |
3,462 |
551 |
(2,483) |
(3,119) |
(496) |
|||||||
| Other taxes payable |
1,555 |
1,558 |
5,559 |
885 |
(2,018) |
2,157 |
343 |
|||||||
| Deferred income taxes |
(3,108) |
608 |
2,909 |
463 |
(3,140) |
5,873 |
934 |
|||||||
| Unrecognized tax benefit |
473 |
586 |
637 |
101 |
1,731 |
1,863 |
296 |
|||||||
| Net cash provided by operating activities |
20,000 |
24,372 |
46,343 |
7,374 |
46,141 |
38,070 |
6,058 |
|||||||
| Investing activities: |
||||||||||||||
| Purchase of property and equipment |
(3,810) |
(2,071) |
(6,283) |
(1,000) |
(18,086) |
(9,157) |
(1,457) |
|||||||
| Proceeds from discontinued operations |
- |
- |
4,000 |
636 |
233 |
4,000 |
636 |
|||||||
| Deposits paid for acquisition of property and equipment |
(444) |
- |
- |
- |
(14,990) |
- |
- |
|||||||
| Purchase of/ maturity of term deposits |
38,936 |
(122,000) |
(3,000) |
(477) |
33,337 |
(100,865) |
(16,049) |
|||||||
| Purchase of investments |
- |
(12,571) |
- |
- |
(17,000) |
(12,571) |
(2,000) |
|||||||
| Proceeds from the sale of investment |
1,674 |
14,634 |
- |
- |
10,361 |
24,952 |
3,970 |
|||||||
| Proceeds from the sale of bonds |
- |
- |
- |
- |
2,859 |
- |
- |
|||||||
| Proceeds of exclusive contractual right |
- |
(980) |
- |
- |
- |
(980) |
(156) |
|||||||
| Proceeds of exclusive partnership |
(1,960) |
- |
- |
- |
(1,960) |
- |
- |
|||||||
| Proceeds from disposal of property and equipment |
21 |
1 |
94 |
15 |
22 |
95 |
15 |
|||||||
| Net cash provided by (used in) investing activities |
34,417 |
(122,987) |
(5,189) |
(826) |
(5,224) |
(94,526) |
(15,041) |
|||||||
| Financing activities: |
||||||||||||||
| Cash dividends paid to noncontrolling shareholders |
- |
(4,642) |
(16,799) |
(2,673) |
(10,251) |
(21,441) |
(3,412) |
|||||||
| Capital contributions by noncontrolling shareholders |
1,960 |
- |
- |
- |
2,960 |
- |
- |
|||||||
| Capital contributions by shareholders |
- |
980 |
- |
- |
- |
980 |
156 |
|||||||
| Proceeds from exercise of share options |
204 |
2,777 |
16 |
3 |
578 |
3,738 |
595 |
|||||||
| Prepayment for shares repurchase |
- |
(886) |
- |
- |
(130) |
(886) |
(141) |
|||||||
| Repurchase and cancellation of ordinary shares |
(1,026) |
(385) |
(2,343) |
(373) |
(6,749) |
(2,728) |
(434) |
|||||||
| Repayment of loan from related party |
(8,000) |
- |
(5,500) |
(875) |
(33,000) |
(5,500) |
(875) |
|||||||
| Loan from related party |
2,000 |
5,500 |
- |
- |
37,500 |
5,500 |
875 |
|||||||
| Net cash (used in) provided by financing activities |
(4,862) |
3,344 |
(24,626) |
(3,918) |
(9,092) |
(20,337) |
(3,236) |
|||||||
| Effect of foreign exchange rate changes |
(9) |
(6) |
9 |
2 |
103 |
(2) |
- |
|||||||
| CASH AND CASH EQUIVALENTS, |
172,875 |
275,691 |
180,414 |
28,706 |
190,493 |
273,746 |
43,557 |
|||||||
| CASH AND CASH EQUIVALENTS, |
222,421 |
180,414 |
196,951 |
31,338 |
222,421 |
196,951 |
31,338 |
|||||||
| Net decrease in cash and cash equivalents |
49,546 |
(95,277) |
16,537 |
2,632 |
31,928 |
(76,795) |
(12,219) |
|||||||
| ChinaEdu Corporation |
||||||||||||||
| Unaudited reconciliations from income from operations to adjusted income from operations (non-GAAP) and adjusted operating margin (non-GAAP) |
||||||||||||||
| Three Months Ended |
Nine Months Ended |
|||||||||||||
| (in thousands, unaudited) |
September 30, 2011 |
June 30, 2012 |
September 30, 2012 |
September 30, 2012 |
September 30, 2011 |
September 30, 2012 |
September 30, 2012 |
|||||||
| RMB |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
||||||||
| Net revenue |
113,920 |
115,033 |
123,820 |
19,701 |
315,301 |
352,780 |
56,132 |
|||||||
| Income from operations |
17,878 |
22,612 |
19,186 |
3,052 |
45,449 |
64,166 |
10,209 |
|||||||
| Adjustment: |
||||||||||||||
| Share-based compensation |
1,619 |
1,892 |
1,885 |
300 |
4,823 |
5,996 |
954 |
|||||||
| Amortization of intangible assets and land use rights |
1,211 |
1,188 |
1,187 |
189 |
3,549 |
3,512 |
559 |
|||||||
| Intangible assets impairment |
- |
- |
5,901 |
939 |
- |
5,901 |
939 |
|||||||
| Adjusted income from operations(non-GAAP) |
20,708 |
25,692 |
28,159 |
4,480 |
53,821 |
79,575 |
12,661 |
|||||||
| Adjusted operating margin (non-GAAP) |
18.2% |
22.3% |
22.7% |
22.7% |
17.1% |
22.6% |
22.6% |
|||||||
|
ChinaEdu Corporation |
||||||||||||||
| Unaudited reconciliations from net income attributable to ChinaEdu to adjusted net income attributable to ChinaEdu (non-GAAP), adjusted net margin (non-GAAP) and adjusted net income per ADS (non-GAAP) |
||||||||||||||
| Three Months Ended |
Nine Months Ended |
|||||||||||||
| (in thousands, unaudited) |
September 30, 2011 |
June 30, 2012 |
September 30, 2012 |
September 30, 2012 |
September 30, 2011 |
September 30, 2012 |
September 30, 2012 |
|||||||
| RMB |
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
||||||||
| Net revenue |
113,920 |
115,033 |
123,820 |
19,701 |
315,301 |
352,780 |
56,132 |
|||||||
| Net income (loss) attributable to ChinaEdu |
5,954 |
9,292 |
3,124 |
497 |
14,488 |
22,741 |
3,618 |
|||||||
| Adjustment: |
||||||||||||||
| Share-based compensation |
1,619 |
1,892 |
1,885 |
300 |
4,823 |
5,996 |
954 |
|||||||
| Share-based compensation attributable to the noncontrolling interest |
(122) |
(110) |
(82) |
(13) |
(376) |
(369) |
(59) |
|||||||
| Amortization of intangible assets and land use rights |
1,211 |
1,188 |
1,187 |
189 |
3,549 |
3,512 |
559 |
|||||||
| Intangible assets impairment |
- |
- |
5,901 |
939 |
- |
5,901 |
939 |
|||||||
| Adjusted net income attributable to ChinaEdu (non-GAAP) |
8,662 |
12,262 |
12,015 |
1,912 |
22,484 |
37,781 |
6,011 |
|||||||
| Adjusted net margin (non-GAAP) |
7.6% |
10.7% |
9.7% |
9.7% |
7.1% |
10.7% |
10.7% |
|||||||
| Adjusted net income attributable to ChinaEdu per ADS (non-GAAP): |
||||||||||||||
| Basic |
0.55 |
0.77 |
0.76 |
0.120 |
1.42 |
2.39 |
0.380 |
|||||||
| Diluted |
0.52 |
0.72 |
0.72 |
0.115 |
1.32 |
2.25 |
0.358 |
|||||||
| Weighted average aggregate number of ADSs outstanding: |
||||||||||||||
| Basic |
15,573,809 |
15,852,495 |
15,884,264 |
15,884,264 |
15,838,717 |
15,827,795 |
15,827,795 |
|||||||
| Diluted |
16,720,855 |
16,927,279 |
16,625,395 |
16,625,395 |
16,983,130 |
16,771,477 |
16,771,477 |
|||||||
SOURCE ChinaEdu Corporation
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