Strong 24.9% Increase in Net Revenue Year-Over-Year
With Second Quarter Net Revenue Exceeding Guidance
Live Conference Call to be held Wednesday, August 20, 2008
at 8 a.m. (Eastern) / 5 a.m. (Pacific) / 8 p.m. (Beijing/Hong Kong)
BEIJING, Aug. 20 /Xinhua-PRNewswire/ -- ChinaEdu Corporation (Nasdaq: CEDU) (“ChinaEdu” or the “Company”), an educational services provider in China, today announced its unaudited financial results for the quarter ended June 30, 2008. (1)
Second Quarter 2008 Highlights
3 Months Ended
Period Ending June 30, June 30, Year over
2007 2008 Year %
Currency in thousands RMB RMB
Financial Data:
Net Revenue 63,686 79,521 24.9%
Gross Profit 43,896 56,142 27.9%
Adjusted EBITDA 26,905 29,868 11.0%
Net Income 12,445 9,187 (26.2%)
Non-GAAP Net Income 15,451 12,815 (17.1%)
Operating Data:
Revenue Students for Online Degree
Program Services 100,000 125,000 25.0%
-- Total net revenue increased by 24.9% to RMB79.5 million ($11.6 million)
in the second quarter of 2008, as compared to RMB63.7 million in the
corresponding period in 2007.
-- Net revenue from online degree programs increased by 33.9% to RMB65.1
million ($9.5 million) in the second quarter, compared with RMB48.6
million in the corresponding period in 2007. Revenue growth from
online degree program services in the second quarter of 2008 was fueled
by a 25% year-over-year increase in enrollments to approximately
125,000 students from 100,000 students in the second quarter of 2007.
-- Income before income tax and minority interest increased by 21.8% to
RMB27.0 million ($3.9 million) in the second quarter of 2008, as
compared to RMB22.2 million in the corresponding period last year.
-- Gross margin improved to 70.6% in the second quarter, as compared to
68.9% in the corresponding period of last year.
-- For the six months ended June 30, 2008, total net revenue increased by
24.4% to RMB149.2 million ($21.7 million) and gross margin jumped to
68.1%, as compared to RMB120.0 million and 64.9% respectively, for the
six months ended June 30, 2007.
“We are pleased to report another strong quarter driven by our focused strategy to grow student enrollment and service revenue. Our second quarter financial results reflect strong organic growth in our online degree program services resulting from our expanded course offerings and our ability to partner with well recognized universities throughout China,” said Ms. Julia Huang, ChinaEdu’s Chairman and Chief Executive Officer. “Our 70.6% gross margin was fueled mainly by our online degree program, which recorded a gross margin of 79.3% for the quarter and 76.0% for the first six months of the year.”
“We recently signed eight new contracts, bringing us to a total of 20 partnerships with leading universities across China. We have been offering recruitment and support services to the new partner institutions through our learning center network, and we remain one of only three institutions approved to operate such a network in various cities and provinces throughout China. We continue to invest in expanding our learning center network, as we believe this will further boost student enrollment in our online degree programs and generate significant additional revenue in the long term.” Ms Huang added.
Financial Results for the Second Quarter Ended June 30, 2008
Net Revenue
Total net revenue for the second quarter of 2008 was RMB79.5 million ($11.6 million), representing an increase of 24.9% compared with the corresponding period in 2007. Net revenue from online degree programs, the Company’s core business segment, was RMB65.1 million ($9.5 million) for the second quarter of 2008, representing a 33.9% increase compared with RMB48.6 million for the corresponding period in 2007. This increase was primarily attributable to the significant growth in the number of revenue students (2) enrolled in our university partners’ online degree programs during the quarter. In aggregate, the Company’s university partners had enrolled approximately 125,000 revenue students during the second quarter of 2008, representing a 25% increase compared with 100,000 revenue students in the corresponding period of last year.
Net revenue from the Company’s non-online degree programs (international curriculum programs, private primary and secondary schools and online tutoring programs) was RMB14.4 million ($2.1 million) for the second quarter of 2008, representing a 4.3% decrease compared with RMB15.0 for the corresponding period in 2007.
Cost of revenue
Total cost of revenue was RMB23.4 million ($3.4 million) for the second quarter of 2008, representing an increase of 18.1% compared with RMB19.8 million for the same period in 2007. Cost of revenue for online degree programs was RMB13.5 million ($2.0 million) in the second quarter of 2008, representing an increase of 13.5% compared with RMB11.9 million in the second quarter of 2007. As compared to the 33.9% increase in revenue for online degree programs, the corresponding increase in cost of revenue was much smaller. This further demonstrates the scalability of our online service model and supports our margin strength. Cost of revenue for non-online degree program services was RMB9.9 million ($1.4 million) in the second quarter of 2008, representing a 25.1% increase, compared with RMB7.9 million in the second quarter of 2007. This increase was attributable primarily to a registration fee payment for the BCIT international program during the second quarter of 2008, and an increase in the number of faculty members at one of our private schools, the Anqing School, during the quarter in response to projected growth in student enrollment at that school.
Gross Profit
Gross profit for the second quarter of 2008 was RMB56.1 million ($8.2 million), representing a gross margin of 70.6%. This compares with gross profit and a gross margin of RMB43.9 million and 68.9%, respectively, in the second quarter of 2007. The increase in gross margin for the three months ended June 30, 2008 was primarily due to an improvement in the profit margin in the Company’s online degree program services, which improved to 79.3% in the second quarter of 2008 from 75.6% in the second quarter of 2007.
Operating Expenses
Total operating expenses were RMB33.3 million ($4.8 million) for the second quarter of 2008, representing a 49.3% increase compared with RMB22.3 million for the corresponding period in 2007. This increase was attributable primarily to the growth of the company’s business, which impacted both general and administrative and research and development expenses.
-- General and administrative (G&A) expenses were RMB20.4 million ($3.0
million) for the second quarter of 2008, versus RMB14.3 million for the
second quarter of 2007. The 42.8% increase in G&A expenses was
attributable primarily to (1) the increase in the number of employees,
mainly in the learning center business, and the related increase in
discretionary stock-based compensation paid to these employees, (2) an
increase in rent and depreciation expenses related to new office space,
and maintenance expenses related to the expansion of learning centers,
and (3) additional expenses associated with being a newly U.S.-listed
public company, including increased accounting personnel and related
consulting and legal service fees.
-- Selling and marketing expenses were RMB7.0 million ($1.0 million) for
the second quarter of 2008, representing an increase of 116.9% compared
with RMB3.2 million for the corresponding period in 2007. This
increase is attributable primarily to the increase in sales and
marketing activity as well as the hiring of additional sales and
marketing personnel in response to the ongoing expansion of the
Company’s business.
-- Research and development (R&D) expenses for the second quarter of 2008
were RMB5.8 million ($0.9 million), compared with RMB4.7 million for
the corresponding period in 2007, with the 22.8% increase attributable
primarily to increased R&D personnel and activities related to the
interactive services for use in the Company’s collaborative
alliances. (3)
-- Share-based compensation, which was allocated to the related
operating cost and expense line item, was RMB1.7 million ($0.2 million)
in the second quarter of 2008, representing a 72.3% increase compared
with RMB1.0 million for the corresponding period in 2007. This was
attributable to an increase in the number of options granted in the
first quarter of 2008, which in turn increased share-based compensation
during the second quarter of 2008.
Income from Operations
Income from operations was RMB22.9 million ($3.3 million) for the second quarter of 2008, representing a 5.9% increase compared with RMB21.6 million for the corresponding period in 2007. Income from operations excluding share-based compensation and amortization of intangible assets (non-GAAP) for the second quarter of 2008 increased by 8.3% to RMB 26.8 million ($3.9 million) from RMB24.8 million for the corresponding period in 2007.
Interest income
Interest income increased by 202.6% to RMB2.6 million ($0.4 million) in the second quarter of 2008, compared with RMB0.9 million in the corresponding period in 2007. This increase was attributable primarily to the interest income earned on the net proceeds from the Company’s initial public offering completed in December 2007.
Income Tax Expense and Minority Interest
Income tax expense for the second quarter of 2008 was RMB9.4 million ($1.4 million), representing a 161.4% increase from RMB3.6 million for the corresponding period in 2007. Most of our subsidiaries and affiliate companies previously were qualified under prior tax laws and regulations as “new and high technology enterprises,” and therefore were subject to certain tax exemptions and a preferential tax rate. Under the new Chinese Enterprise Income Tax Regulation that became effective in 2008, the statutory tax rate for all enterprises in China is 25%, except for “new and high technology enterprises,” which are required to re-apply for such status in order to be subject to the 15% preferential tax rate. We are currently applying for “new and high technology enterprise” status; however, until we receive official approval of this status, the Company must use the 25% statutory tax rate instead of the current preferential tax rate. As a result, the effective income tax rate applicable to the Company was significantly higher in the second quarter of 2008 than during the corresponding period in 2007.
Minority interest was RMB8.4 million ($1.2 million) in the second quarter of 2008, representing a 37.3% increase from RMB6.1 million in the corresponding period in 2007, primarily attributable to the higher net profit earned by some of the Company’s collaborative alliances.
Net Income
ChinaEdu reported GAAP net income of RMB9.2 million ($1.3 million) in the second quarter of 2008, compared with RMB12.4 million in the corresponding period in 2007. This decrease was attributable primarily to the adoption of the new unified income tax rate, as discussed above. The increase in costs associated with the active expansion of the Company’s learning center network also impacted net income for the quarter. Diluted earnings per ordinary share for the second quarter of 2008 was RMB0.15 ($0.022) compared with RMB0.26 per share in the corresponding period in 2007. This decrease was also attributable primarily to the factors discussed above, together with the increase in the total number of outstanding shares following the Company’s initial public offering in December 2007.
Net income excluding share-based compensation and amortization of intangible assets (non-GAAP) was RMB 12.8 million ($1.9 million) in the second quarter of 2008, compared with RMB 15.5 million in the corresponding period in 2007.
Deferred Revenue
Deferred revenue at the end of the second quarter of 2008 was RMB 86.8 million ($12.7 million), with current deferred revenue of RMB81.0 million ($11.8 million) and non-current deferred revenue of RMB5.9 million ($0.9 million).
Cash and Cash Equivalents
As of June 30, 2008, ChinaEdu reported cash and cash equivalents of RMB400.7 million ($58.4 million), which primarily consisted of cash-on-hand, demand deposits and term deposits with maturity periods of three months or less. Term deposits and the amount due from related parties amounted to RMB33.0 million ($4.8 million) and RMB168.6 million ($24.6 million), respectively, at June 30, 2008.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA, a non-GAAP figure that we define as earnings before minority interest, interest, taxes, depreciation, amortization and stock-based compensation expenses, was RMB 29.9 million ($4.4 million) for the second quarter of 2008, representing an increase of 11.0% from RMB26.9 million in the second quarter of 2007.
Year-to-Date Financial Results
For the six months ended June 30, 2008, the Company reported total net revenue of RMB149.2 million ($21.7 million), representing an increase of 24.4% from RMB120.0 million in the corresponding period in 2007. Total net revenue for the sixth months ended June 30, 2008 consisted of RMB120.1 million ($17.5 million) in net revenue from online degree programs and RMB29.1 million in net revenue from non-online degree programs. For the first six months of 2008, total cost of revenue was RMB47.5 million ($6.9 million), compared with RMB42.1 million in the corresponding period in 2007.
Gross profit of RMB101.6 million ($14.8 million) was 68.1% of total revenue for the first half of 2008, compared with RMB 77.9 million, or 64.9% of total revenue, for the first half of 2007. Total operating expenses were RMB65.9 million ($9.6 million), representing an increase of 47.7% from RMB44.6 million for the first six months of 2007.
ChinaEdu reported net income of RMB11.3 million ($1.6 million) in the first six months of 2008, a decrease of 9.6% compared with RMB12.5 million in the first six months of 2007. Diluted earnings per ordinary share for the first half of 2008 decreased to RMB0.18 ($0.026) from RMB0.27 per share in the first half of 2007.
2008 Third Quarter Total Net Revenue Guidance
ChinaEdu expects its total net revenue in the third quarter of 2008 to be in the range of RMB78 million ($11.4 million) to RMB80 million ($11.7 million), representing an increase of 20% to 23.1% from the total net revenue in the third quarter of 2007. This forecast reflects ChinaEdu’s current and preliminary view, which is subject to change.
Conference Call
ChinaEdu senior management will host a conference call on Wednesday, August 20, 2008 at 8:00 a.m. U.S. Eastern time / 5:00 a.m. U.S. Pacific time / 8:00 p.m. Beijing/Hong Kong time.
Dial-in information for the live earnings conference call is as follows: +1-866-700-0133 (U.S.) / +1-617-213-8831 (International), and entering the passcode: CEDU. A telephone replay of the conference call will be available until August 27, 2008 by dialing +1-888-286-8010 (U.S.) or +1-617-801-6888 (International) and entering passcode: 12350208. A live and archived webcast may also be accessed via the Internet at http://ir.chinaedu.net .
(1) This announcement contains translations of certain Renminbi (“RMB”)
amounts into U.S. dollar (“$”) amounts at specified rates solely for
the convenience of the reader. Unless otherwise stated, all
translations from RMB to U.S. dollars were made at the rate of
RMB6.8591 to $1.00, the noon buying rate in effect on June 30, 2008 in
The City of New York for cable transfers of RMB as certified for
customs purposes by the Federal Reserve Bank of New York. The Company
makes no representation that the RMB or U.S. dollar amounts referred
to could be converted into U.S. dollars or RMB, as the case may be, at
any particular rate or at all. For analytical presentation, all
percentages are calculated using the numbers presented in the
financial statements contained in this earnings release. An
explanation of the Company’s non-GAAP financial measures is included
in the section entitled “Non-GAAP Financial Measures” below, and the
related reconciliations to GAAP financial measures are presented in
the accompanying financial statements.
(2) “Revenue students” refer to students of the university online degree
programs that have paid tuition during the applicable period.
(3) “Collaborative alliance” or “Collaborative alliances” refer to the
subsidiary or subsidiaries that the Company formed with certain
university partners to provide services to their online degree
programs, which subsidiaries are majority owned by the Company.
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, net income, which are adjusted from results based on GAAP to exclude share-based compensation and amortization of intangible assets. The Company also uses EBITDA and Adjusted EBITDA, both of which are non-GAAP measures, which are adjusted from GAAP results of net income to exclude minority interest, interest, taxes, depreciation, amortization and stock-based compensation expenses. 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 uses both GAAP and non-GAAP information in evaluating and operating business 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 strategic relationships with 20 universities to operate online degree programs, nine of which are under long-term, exclusive contracts that vary from 15 to 50 years in length.
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 final prospectus filed with the Securities and Exchange Commission on December 11, 2007, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Unless required by law, the Company undertakes no obligation to (and expressly disclaim any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
ChinaEdu Corporation
Unaudited Condensed Consolidated Balance Sheets
December March June June
(in thousands) 31, 2007 31, 2008 30, 2008 30, 2008
RMB RMB RMB US$
Current assets:
Cash and cash equivalents 497,114 431,979 400,737 58,424
Accounts receivable, net 1,238 1,400 13,722 2,001
Term deposit 6,042 8,000 33,000 4,811
Prepaid expenses and other current
assets 17,492 24,849 16,747 2,442
Amounts due from related parties 105,522 69,933 168,610 24,582
Deferred tax assets 9,521 3,313 1,682 245
Total current assets 636,929 539,474 634,498 92,505
Cost method investment 1,210 1,210 1,210 176
Land use rights, net 26,949 26,808 26,667 3,888
Property and equipment, net 130,745 136,465 146,858 21,411
Deposits paid for acquisition of
property and equipment 2,025 2,056 979 143
Intangible assets, net 105,852 103,597 104,888 15,292
Deferred tax assets 1,416 1,416 1,416 206
Rental deposits 1,623 795 1,061 155
Goodwill 73,319 73,319 79,191 11,545
Total assets 980,068 885,140 996,768 145,321
Liabilities, minority interest and
shareholders’ equity
Current liabilities:
Accounts payable 2,773 2,626 2,717 396
Deferred revenues 83,816 24,691 80,963 11,804
Accrued expenses and other current
liabilities 42,096 31,638 36,517 5,324
Amounts due to related parties 28,316 16,264 49,244 7,179
Income taxes payable 22,455 15,273 23,243 3,389
Other taxes payable 6,666 2,359 4,515 658
Total current liabilities 186,122 92,851 197,199 28,750
Long term debt 25,724 24,659 23,568 3,436
Deferred revenues 3,124 4,766 5,865 855
Deferred tax liabilities 24,036 23,684 23,609 3,442
Unrecognized tax benefit 4,332 4,465 4,601 671
Total liabilities 243,338 150,425 254,842 37,154
Minority interests 57,996 66,128 68,717 10,018
Total shareholders’ equity 678,734 668,587 673,209 98,149
Total liabilities, minority
interest, and shareholders’ equity 980,068 885,140 996,768 145,321
ChinaEdu Corporation
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except for Three Months Ended
percentage and share, per
share information) June 30, March 31, June 30, June 30,
2007 2008 2008 2008
RMB RMB RMB US$
Net Revenue:
Online degree programs 48,645 54,960 65,124 9,495
International curriculum
programs 6,740 7,542 6,587 960
Online tutoring programs 5,109 3,277 4,078 595
Private primary and
secondary schools 3,192 3,876 3,732 544
Total net revenue 63,686 69,655 79,521 11,594
Cost of revenue:
Online degree programs 11,860 15,302 13,461 1,963
International curriculum
programs 4,673 4,765 5,674 827
Online tutoring programs 1,037 727 995 145
Private primary and
secondary schools 2,220 3,361 3,249 474
Total cost of revenue 19,790 24,155 23,379 3,409
Gross profit:
Online degree programs 36,785 39,658 51,663 7,532
International curriculum
programs 2,067 2,777 913 133
Online tutoring programs 4,072 2,550 3,083 450
Private primary and
secondary schools 972 515 483 70
Total gross profit 43,896 45,500 56,142 8,185
Online degree programs 75.6% 72.2% 79.3% 79.3%
International curriculum
programs 30.7% 36.8% 13.9% 13.9%
Online tutoring programs 79.7% 77.8% 75.6% 75.6%
Private primary and
secondary schools 30.5% 13.3% 12.9% 12.9%
Gross profit margin 68.9% 65.3% 70.6% 70.6%
Operating expenses:
General and administrative 14,291 20,915 20,404 2,975
Selling and marketing 3,235 5,862 7,017 1,023
Research and development 4,747 5,898 5,830 850
Total operating expenses 22,273 32,675 33,251 4,848
Income (loss) from
operations 21,623 12,825 22,891 3,337
Operating margin 34.0% 18.4% 28.8% 28.8%
Other income
Other non operating income -- 151 2,116 308
Interest income 861 2,748 2,605 380
Interest expense (303) (606) (585) (85)
Income (loss) before
income tax provisions and
minority interest 22,181 15,118 27,027 3,940
Income tax expense (3,606) (4,900) (9,425) (1,374)
Minority interest, net of
taxes (6,130) (8,131) (8,415) (1,227)
Net income (loss) 12,445 2,087 9,187 1,339
Net margin 19.5% 3.0% 11.6% 11.6%
Net income (loss) per
share:
Basic 0.30 0.04 0.16 0.023
Diluted 0.26 0.03 0.15 0.022
Net income (loss) per ADS:
Basic 0.90 0.12 0.48 0.069
Diluted 0.78 0.09 0.45 0.066
Weighted average aggregate
number of ordinary shares
outstanding:
Basic 41,644,485 58,434,407 58,434,407 58,434,407
Diluted 47,427,325 62,789,582 61,813,068 61,813,068
ChinaEdu Corporation
Unaudited Condensed Consolidated Statements of Operations
Six Months Ended
(in thousands, except for percentage
and share, per share information) June 30, June 30, June 30,
2007 2008 2008
RMB RMB US$
Net Revenue:
Online degree programs 88,725 120,084 17,507
International curriculum programs 15,837 14,129 2,060
Online tutoring programs 9,174 7,355 1,072
Private primary and secondary schools 6,227 7,608 1,109
Total net revenue 119,963 149,176 21,748
Cost of revenue:
Online degree programs 23,741 28,763 4,193
International curriculum programs 11,313 10,439 1,522
Online tutoring programs 2,123 1,722 251
Private primary and secondary schools 4,881 6,610 964
Total cost of revenue 42,058 47,534 6,930
Gross profit:
Online degree programs 64,984 91,321 13,314
International curriculum programs 4,524 3,690 538
Online tutoring programs 7,051 5,633 821
Private primary and secondary schools 1,346 998 145
Total gross profit 77,905 101,642 14,818
Online degree programs 73.2% 76.0% 76.0%
International curriculum programs 28.6% 26.1% 26.1%
Online tutoring programs 76.9% 76.6% 76.6%
Private primary and secondary schools 21.6% 13.1% 13.1%
Gross profit margin 64.9% 68.1% 68.1%
Operating expenses:
General and administrative 29,963 41,319 6,024
Selling and marketing 6,064 12,879 1,878
Research and development 8,598 11,728 1,710
Total operating expenses 44,625 65,926 9,612
Income (loss) from operations 33,280 35,716 5,206
Operating margin 27.7% 23.9% 23.9%
Other income
Other non operating income 394 2,267 331
Interest income 1,204 5,353 780
Interest expense (981) (1,191) (174)
Income (loss) before income tax
provisions and minority interest 33,897 42,145 6,143
Income tax expense (9,979) (14,325) (2,088)
Minority interest, net of taxes (11,444) (16,546) (2,412)
Net income (loss) 12,474 11,274 1,643
Net margin 10.4% 7.6% 7.6%
Net income (loss) per share:
Basic 0.31 0.19 0.028
Diluted 0.27 0.18 0.026
Net income (loss) per ADS:
Basic 0.93 0.57 0.084
Diluted 0.81 0.54 0.078
Weighted average aggregate number of
ordinary shares outstanding:
Basic 40,715,717 58,434,407 58,434,407
Diluted 46,314,558 62,298,037 62,298,037
ChinaEdu Corporation
Unaudited Condensed Consolidated Statements of Cash Flow
Three Months Ended
June March June June
(in thousands) 30, 2007 31, 2008 30, 2008 30, 2008
RMB RMB RMB US$
Operating activities:
Net income 12,445 2,087 9,187 1,339
Minority interest 6,130 8,131 8,415 1,227
Share-based compensation 970 383 1,671 244
Depreciation 2,007 2,734 2,903 423
Amortization of land use
rights 129 141 141 21
Amortization of intangible
assets 2,176 2,255 2,262 330
Interest expense 303 -- -- --
Deferred income taxes 7,877 5,856 1,281 187
Accounts receivable (1,260) (163) (12,324) (1,797)
Prepaid expenses and other
current assets (1,159) (7,386) 8,093 1,180
Amounts due from related
parties (48,439) 35,589 (98,677) (14,386)
Rental deposits - 828 (266) (39)
Accounts payable (3,427) (147) 91 13
Deferred revenues 40,698 (57,483) 57,371 8,364
Accrued expenses and other
current liabilities 3,820 (10,114) 2,283 333
Amounts due to related
parties (39,808) (12,052) 24,705 3,602
Unrecognized tax benefit -- 133 136 20
Other taxes payable 4,142 (4,307) 2,156 314
Income tax payable (5,573) (7,182) 7,970 1,162
Net cash provided by (used in)
operating activities (18,969) (40,697) 17,398 2,537
Investing activities:
Purchase of business (13,000) -- (4,000) (583)
Purchase of property and
equipment (12,049) (8,485) (11,240) (1,639)
Deposits paid for
acquisition of property
and equipment (26,672) (31) (979) (143)
Purchase of term deposit (36,053) (1,958) (25,000) (3,645)
Purchase of contract right -- -- (1,225) (179)
Proceeds from disposal of
property and equipment -- 31 -- --
Net cash used in investing activities (87,774) (10,443) (42,444) (6,189)
Financing activities:
Proceeds from issuance of
Series D convertible
preferred shares -- -- -- --
Collection of subscription
receivable -- -- -- --
Ordinary shares repurchased -- -- -- --
Re-issuance of ordinary
shares -- -- -- --
Repayment of convertible
notes -- -- -- --
Repayment of long-term
loan -- (1,065) (1,091) (159)
Cash dividends paid to
minority shareholders (3,380) -- -- --
Capital contributions by
minority shareholders -- -- 1,225 179
Net cash provided by (used in)
financing activities (3,380) (1,065) 134 20
Effect of foreign exchange rate
changes 1,272 (12,930) (6,330) (923)
CASH AND CASH EQUIVALENTS, beginning
of period 217,664 497,114 431,979 62,979
CASH AND CASH EQUIVALENTS, end of
period 108,813 431,979 400,737 58,424
Net increase (decrease) in cash (108,851) (65,135) (31,242) (4,555)
ChinaEdu Corporation
Unaudited Condensed Consolidated Statements of Cash Flow
Six Months Ended
(in thousands) June 30, June 30, June 30,
2007 2008 2008
RMB RMB US$
Operating activities:
Net income 12,474 11,274 1,643
Minority interest 11,444 16,546 2,412
Share-based compensation 1,315 2,054 299
Depreciation 4,001 5,637 822
Amortization of land use
rights 259 282 41
Amortization of intangible
assets 4,213 4,517 659
Interest expense 981 -- --
Deferred income taxes 4,709 7,137 1,041
Accounts receivable 10,528 (12,487) (1,821)
Prepaid expenses and other
current assets (7,384) 707 103
Amounts due from related
parties (18,464) (63,088) (9,198)
Rental deposits (677) 562 82
Accounts payable (5,328) (56) (8)
Deferred revenues (4,377) (112) (16)
Accrued expenses and other
current liabilities 3,515 (7,831) (1,142)
Amounts due to related
parties 4,930 12,653 1,845
Unrecognized tax benefit 320 269 39
Other taxes payable 294 (2,151) (314)
Income tax payable (1,398) 788 115
-- -- --
Net cash provided by (used in)
operating activities 21,355 (23,299) (3,398)
Investing activities:
Purchase of business (22,020) (4,000) (583)
Purchase of property and
equipment (16,108) (19,725) (2,876)
Deposits paid for
acquisition of property
and equipment (26,672) (1,010) (147)
Purchase of term deposit (41,053) (26,958) (3,930)
Purchase of contract right (3,430) (1,225) (179)
Proceeds from disposal of
property and equipment -- 31 5
Net cash used in investing activities (109,283) (52,887) (7,710)
Financing activities:
Proceeds from issuance of
Series D convertible
preferred shares 53,678 -- --
Collection of subscription
receivable 1,117 -- --
Ordinary shares repurchased (50,047) -- --
Re-issuance of ordinary
shares 48,447 -- --
Repayment of convertible
notes (3,151) -- --
Repayment of long-term
loan -- (2,156) (314)
Cash dividends paid to
minority shareholders (3,380) -- --
Capital contributions by
minority shareholders 2,030 1,225 179
Net cash provided by (used in)
financing activities 48,694 (931) (135)
Effect of foreign exchange rate
changes (268) (19,260) (2,808)
CASH AND CASH EQUIVALENTS, beginning
of period 148,315 497,114 72,475
CASH AND CASH EQUIVALENTS, end of
period 108,813 400,737 58,424
Net increase (decrease) in cash (39,502) (96,377) (14,051)
ChinaEdu Corporation
Reconciliations of Non-GAAP Results of Operations Measures to GAAP
Measures
Three Months Ended Six Months Ended
(in thousands, June March June June June June June
unaudited) 30, 31, 30, 30, 30, 30, 30,
2007 2008 2008 2008 2007 2008 2008
RMB RMB RMB US$ RMB RMB US$
Income (loss) from
operations
GAAP Result 21,623 12,825 22,891 3,337 33,280 35,716 5,206
Adjustment-Share-
based compensation 970 383 1,671 244 1,315 2,054 299
Amortization of
intangible assets 2,176 2,255 2,262 330 4,213 4,517 659
Non-GAAP Result 24,769 15,463 26,824 3,911 38,808 42,287 6,164
Net income (loss)
GAAP Result 12,445 2,087 9,187 1,339 12,474 11,274 1,643
Adjustment-Share-
based compensation 970 383 1,671 244 1,315 2,054 299
Adjustment-Minority
interest for Share-
based compensation (140) (84) (305) (45) (236) (389) (57)
Amortization of
intangible assets 2,176 2,255 2,262 330 4,213 4,517 659
Non-GAAP Result 15,451 4,641 12,815 1,868 17,766 17,456 2,544
ChinaEdu Corporation
Reconciliation From Net Income to Adjusted EBITDA (*)
For the Three Months Ended Six Months Ended
(in thousands, June March June June June June June
unaudited) 30, 31, 30, 30, 30, 30, 30,
2007 2008 2008 2008 2007 2008 2008
RMB RMB RMB US$ RMB RMB US$
Net income/(loss) 12,445 2,087 9,187 1,339 12,474 11,274 1,643
Minority interest 6,130 8,131 8,415 1,227 11,444 16,546 2,412
Income tax
provision 3,606 4,900 9,425 1,374 9,979 14,325 2,088
Interest income
and other, net (558) (2,293) (4,136) (603) (617) (6,429) (937)
Depreciation 2,007 2,734 2,903 423 4,001 5,637 822
Intangible
Amortization 2,176 2,255 2,262 330 4,213 4,517 659
Land use right
amortization 129 141 141 21 259 282 41
Share based
compensation 970 383 1,671 244 1,315 2,054 299
Adjusted EBITDA 26,905 18,338 29,868 4,355 43,068 48,206 7,027
(*) Definition of adjusted EBITDA: earnings before interest, taxes,
depreciation, amortization, share-based compensation and minority
interest.