ChinaEdu Reports First Quarter 2012 Results

Net Revenue Increases 24.7 Percent Year-Over-Year to $18.1 Million, Exceeding Company Guidance

Net Income Attributable to ChinaEdu per Diluted ADS Reaches $0.098

Income from Operations increases 105.7% Year-Over-Year to $3.6 Million

13 Jun, 2012, 17:00 ET from ChinaEdu Corporation

BEIJING, June 13, 2012 /PRNewswire-Asia/ -- ChinaEdu Corporation (NASDAQ: CEDU) ("ChinaEdu" or the "Company"), a leading online educational services provider in China, today announced its unaudited financial results for the first quarter ended March 31, 2012.[1]

First Quarter 2012 Highlights  

  • Total net revenue for the first quarter of 2012 was $18.1 million, a 24.7 percent increase from $14.5 million in the corresponding period in 2011.
  • Net revenue from online degree programs was $14.6 million, an increase of 28.3 percent from $11.4 million in the corresponding period of 2011.
  • Net income attributable to ChinaEdu was $1.6 million
  • Adjusted net income attributable to ChinaEdu[2] was $2.1 million.
  • Net income attributable to ChinaEdu per diluted ADS[3] was $0.098.
  • Adjusted net income attributable to ChinaEdu per diluted ADS[4] was $0.128.
  • Operating margin in the first quarter of 2012 was 19.6 percent.
  • The number of revenue students[5] in online degree programs during the Fall 2011 semester increased roughly 27.9 percent year-over-year to approximately 197,000 students.

Julia Huang, executive chairman commented, "We are pleased with our results in the first quarter of 2012 and are optimistic about the full year. As seen historically, over eighty percent of our net revenue results from student enrollments in our core online degree programs. We continue to focus our attention on our core business and are confident that with continued effort and innovation we will see further organic growth in student enrollments in these programs. We will continue to stay close to our online teaching expertise as we move through 2012 and beyond."

Mr. Simon Mei, chief financial officer commented, "With a strong top line, enhanced by significant increases in student enrollment in online degree programs, careful cost management allowed for an equally well enhanced bottom line in the first quarter of 2012. We have been cautious with headcount increases and marketing spending, even reducing headcount in certain non-essential areas where redundancies were found. Moving forward, we will continue to implement these cost control measures and manage our financial situation, allowing us to successfully navigate a developing industry."

Financial Results for the First Quarter Ended March 31, 2012

Net Revenue

Total net revenue for the first quarter of 2012 was $18.1 million, a 24.7 percent increase from $14.5 million in the corresponding period in 2011.

Net revenue from online degree programs for the first quarter of 2012 was $14.6 million, a 28.3 percent increase over $11.4 million in the corresponding period in 2011. The increase was primarily due to organic growth in revenue students enrolled in our core online degree programs. There was also strong growth in revenue contributed from our learning centers network and increased revenue contribution from our online non-degree training programs. Enrollment for 2011 Fall semester online degree programs was approximately 197,000 revenue students, a 27.9 percent increase from approximately 154,000 revenue students enrolled in the Fall 2010 semester.

As of March 31 2012, ChinaEdu's learning centers network was providing recruiting services for 22 universities with 105 operational learning centers, of which 55 were proprietary centers[6] and 50 were contracted centers[7]. This compares to 96 operational learning centers as of March 31, 2011, of which 53 were proprietary and 43 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 first quarter of 2012 was $3.5 million, an 11.8 percent increase from $3.1 million in the first quarter of 2011. The growth was mainly driven by an increase in student enrollments at our private schools in Anqing and Pingdingshan as well as strong performance by our 101 online school tutoring programs.

Cost of Revenue

Total cost of revenue for the first quarter of 2012 was $7.2 million, representing an increase of 14.5 percent, compared to $6.3 million in the corresponding period of 2011.

Cost of revenue for online degree programs in the first quarter of 2012 was $4.8 million, an increase of 13.5 percent from $4.2 million in the corresponding period of 2011. The cost increase was primarily due to the increase in staff costs that resulted from headcount increase across the Company, especially in our online degree programs that have seen significant growth beginning in the second half of 2011 and continuing in the first quarter of 2012.  

Cost of revenue for non-degree programs in the first quarter of 2011 was $2.4 million, an increase of 16.5 percent from $2.1 million in the first quarter of 2011. The cost of revenue increase was primarily related to employee costs, leasing costs and service fees 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.

Gross Profit and Gross Margin

Gross profit for the first quarter of 2012 was $10.9 million, compared to $8.2 million in the corresponding period of 2011. Gross margin increased to 60.1 percent, compared to 56.5 percent in the corresponding period in 2011.

Gross margin for online degree programs increased to 67.0 percent for the first quarter of 2012, compared to 62.7 percent in the corresponding period of 2011. The increases in gross margin and gross profit were primarily related to organic growth in the number of revenue students enrolled in online degree programs.

Gross margin for private schools increased to 27.6 percent in the first quarter of 2012, compared to 25.6 percent in the corresponding period in 2011. The increase was primarily due to continued strong enrollment at the Anqing School, which is enjoying economics of scale, as well as increased enrollment at our Pingdingshan School.

Gross margin for online tutoring programs decreased to 54.7 percent in the first quarter of 2012, from 64.4 percent in first quarter of 2011, largely due to increased staff and leasing costs associated with these programs.

Operating Expenses

Total operating expenses were $7.3 million in the first quarter of 2012, representing a 13.1 percent increase from $6.5 million for the corresponding period in 2011. As a percentage of net revenue, total operating expenses decreased to 40.4 percent, compared to 44.6 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 first quarter of 2012 were $4.1 million, an increase of 17.9 percent from $3.5 million in the corresponding period in 2011. More than half of the increase in general and administrative expenses over the year ago period was the result of an early termination penalty related to a terminated lease agreement. As a percentage of net revenue, general and administrative expenses decreased to 22.7 percent, compared with 24.0 percent in the same period in 2011 as a result of increased net revenue.
  • Selling and marketing expenses were $1.7 million in the first quarter of 2012, an increase of 15.4 percent compared to $1.4 million in the corresponding period in 2011. The increase in selling and marketing expenses was primarily attributable to an increase in marketing activities. As a percentage of net revenue, selling and marketing expenses decreased to 9.2 percent, compared with 9.9 percent in the same period in 2011.
  • Research and development expenses for the first quarter of 2012 were $1.6 million, flat with the corresponding period in 2011. As a percentage of net revenue, the research and development expense was 8.6 percent in the first quarter of 2012, decreasing from 10.7 percent in the same period of 2011.

Income from Operations

Income from operations in the first quarter of 2012 was $3.6 million, an increase of 105.7 percent compared to $1.7 million in the corresponding period of 2011. This was mainly due to the significant increase in student enrollment in online degree programs coupled with well-enforced cost controlling measures and cautious spending practices. Operating margin increased to 19.6 percent for the first quarter of 2012, compared to 11.9 percent in the corresponding period of 2011.

Adjusted income from operations, a non-GAAP measure defined as income from operations excluding share-based compensation, amortization of intangible assets and land use rights, was $4.1 million for the first quarter of 2012, an increase of 89.1 percent compared to $2.2 million in the corresponding period of 2011.

Adjusted operating margin, a non-GAAP measure defined as the ratio of adjusted income from operations (non-GAAP) over net revenue, for the first quarter of 2012 increased to 22.6 percent, compared to 14.9 percent for the corresponding period of 2011.

Interest and Investment Income

Interest and investment income for the first quarter of 2012 increased 91.7 percent to $0.6 million, compared to $0.3 million for the corresponding quarter of 2011.

Income Tax Expense

In the first quarter of 2012, income tax expense was $0.9 million and the effective income tax rate was 20.9 percent, compared with an income tax expense of $0.4 million and effective income tax rate of 19.2 percent in same period of 2011. The Company had a higher tax rate in the first quarter of 2012 due to the allowance provided for deferred income tax assets, considering cumulative historical losses at certain subsidiaries.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests increased to $1.7 million in the first quarter of 2012, compared to $1.1 million in 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 $1.6 million in the first quarter of 2012, representing an increase of 195.5 percent from $0.5 million in the corresponding period of 2011.

Net income attributable to ChinaEdu per basic and diluted ADS was $0.104 and $0.098, respectively, for the first quarter of 2012, as compared to $0.035 and $0.032, respectively, for the corresponding period in 2011.

Adjusted net income attributable to ChinaEdu (non-GAAP) was $2.1 million in the first quarter of 2012 compared to $1.0 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 (non-GAAP) over net revenue, was 11.9 percent in the first quarter of 2012, compared to 6.7 percent in the corresponding period of 2011.

Adjusted net income attributable to ChinaEdu per basic and diluted ADS (non-GAAP) was $0.136 and $0.128, respectively, for the first quarter of 2012, compared to $0.060 and $0.056, respectively, in the corresponding period of 2011.

Deferred Revenue

As of March 31, 2012, deferred revenue was $9.3 million, consisting of current deferred revenue in the amount of $7.5 million and non-current deferred revenue in the amount of $1.8 million. In general, the Fall semester tuition is finally received during the first quarter of the following year but is recognized both in the fourth quarter of the current year and in the first quarter of the following year. Private school revenue is received in September, but is amortized over 6 or 12 months while 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 March 31, 2012, the Company reported cash and cash equivalents and term deposits of $55.5 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 $37.5 million as of March 31, 2012 compared to $37.8 million as of December 31, 2011.

Second Quarter 2012 Guidance

ChinaEdu management expects total net revenue in the second quarter of 2012 to range from RMB111 million to RMB113 million or $17.6 million to $17.8 million, representing a one percent to two 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 June 14, 2012 (8:00 p.m. Beijing/Hong Kong Time on June 14, 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:

82646278

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 June 21, 2012.

Dial-in numbers for the replay are as follows:

Toll Free United States:

+1 866 214 5335

International:

+1 718 354 1232

Conference ID:

82646278

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 and amortization of intangible assets and land use rights. 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 18 long-term contracts that generally vary from 10 to 50 years in length. ChinaEdu also performs recruiting services for 22 universities through 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, 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: +86 13911672124 E-mail: helen@chinaedu.net

Jin Yu Investor Relations Manager ChinaEdu Corporation Phone: +86 15711096022 E-mail: jinyu@chinaedu.net  

 

ChinaEdu Corporation

Unaudited Condensed Consolidated Balance Sheets

(in thousands, unaudited)

December 31,2011

March 31,2012

March 31,2012

RMB

RMB

US$

Current assets:

Cash and cash equivalents

273,746

275,691

43,778

Term deposits 

98,163

74,028

11,755

Short-term investments

34,648

24,649

3,914

Accounts receivable, net 

31,478

22,299

3,541

Prepaid expenses and other current assets 

22,725

24,939

3,961

Amounts due from related parties 

238,016

236,178

37,503

Deferred tax assets-current

5,697

1,520

241

Total current assets 

704,473

659,304

104,693

Deferred tax assets-non-current

8,217

9,838

1,562

Rental deposits

2,213

1,742

277

Land use rights

26,657

26,505

4,209

Property and equipment, net 

239,210

232,882

36,980

Deposits paid for acquisition of property and equipment

17,902

17,902

2,843

Acquired intangible assets, net 

63,638

62,653

9,949

Goodwill 

43,255

43,255

6,869

Total assets 

1,105,565

1,054,081

167,382

Liabilities and equity

Current liabilities:

Accounts payable (including accounts payable of the consolidated VIE   without recourse to the Group of 1,975 and 4,579 as of December 31,   2011 and March 31, 2012)

2,239

4,738

752

Deferred revenues-current (including deferred revenues of the   consolidated VIE without recourse to the Group of 20,525 and 21,211   as of December 31, 2011 and March 31, 2012)

125,332

46,941

7,454

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 20,711 as of December 31, 2011   and March 31, 2012)

91,980

97,956

15,555

Amounts due to related parties (including amounts due to related parties   of the consolidated VIE without recourse to the Group of 1,953 and   1,484 as of December 31, 2011 and March 31, 2012)

13,146

23,098

3,668

Income taxes payable (including income taxes payable of the   consolidated VIE without recourse to the Group of 8,893 and 9,437 as   of December 31, 2011 and March 31, 2012)

51,448

40,846

6,486

Other taxes payable (including other taxes payable of the consolidated   VIE without recourse to the Group of 3,047 and 3,268 as of December   31, 2011 and March 31, 2012)

21,970

17,010

2,701

Total current liabilities 

306,115

230,589

36,616

Deferred revenues-non-current (including deferred revenues of the   consolidated VIE without recourse to the Group of 33 and 31 as of   December 31, 2011 and March 31, 2012)

12,059

11,459

1,820

Deferred tax liabilities-non-current (including deferred tax liabilities of the   consolidated VIE without recourse to the Group of 1,017 and 1,007 as   of December 31, 2011 and March 31, 2012)

9,243

9,043

1,436

Unrecognized tax benefit (including unrecognized tax benefit of the   consolidated VIE without  recourse to the Group of 2,364 and 2,641 as   of December 31, 2011 and March 31, 2012)

6,089

6,729

1,069

Total liabilities 

333,506

257,820

40,941

      ChinaEdu shareholders' equity

604,806

617,112

97,993

Noncontrolling interests

167,253

179,149

28,448

Total  equity 

772,059

796,261

126,441

Total liabilities and equity 

1,105,565

1,054,081

167,382

  

ChinaEdu Corporation

Unaudited Condensed Consolidated Statements of Operations 

Three Months Ended 

(in thousands, except for percentage, share, and per share information)

March 31,2011

March

31,2012

March 31,2012

RMB

RMB

US$

Gross Revenue *

95,862

119,632

18,997

Business Tax

4,512

5,705

906

Net Revenue:

Online degree programs

71,665

91,927

14,597

Online tutoring programs

5,656

6,009

954

Private primary and secondary schools

11,240

13,536

2,150

International and elite curriculum programs

2,789

2,455

390

Total net revenue

91,350

113,927

18,091

Cost of revenue:

Online degree programs

26,712

30,319

4,814

Online tutoring programs

2,013

2,721

432

Private primary and secondary schools

8,361

9,806

1,557

International and elite curriculum programs

2,665

2,663

423

Total cost of revenue

39,751

45,509

7,226

Gross profit:

Online degree programs

44,953

61,608

9,783

Online tutoring programs

3,643

3,288

522

Private primary and secondary schools

2,879

3,730

593

International and elite curriculum programs

124

(208)

(33)

Total gross profit

51,599

68,418

10,865

Online degree programs

62.7%

67.0%

67.0%

Online tutoring programs

64.4%

54.7%

54.7%

Private primary and secondary schools

25.6%

27.6%

27.6%

International and elite curriculum programs

4.4%

(8.5%)

(8.5%)

Gross margin

56.5%

60.1%

60.1%

Operating expenses:

General and administrative

21,897

25,810

4,098

Selling and marketing

9,068

10,463

1,661

Research and development

9,758

9,777

1,553

Total operating expenses

40,723

46,050

7,312

Income from operations

10,876

22,368

3,553

Operating margin

11.9%

19.6%

19.6%

Other income

123

247

39

Interest income 

1,910

2,988

474

Investment income

-

674

107

Income before income tax

12,909

26,277

4,173

Income tax expense

(2,475)

(5,483)

(871)

Net income

10,434

20,794

3,302

Net income attributable to the noncontrolling interests

(6,940)

(10,469)

(1,662)

Net income attributable to ChinaEdu

3,494

10,325

1,640

Net margin

3.8%

9.1%

9.1%

Net income attributable to ChinaEdu per ADS:

      Basic 

0.22

0.66

0.104

      Diluted 

0.20

0.62

0.098

Weighted average aggregate number of ADSs outstanding:

      Basic 

15,910,224

15,746,005

15,746,005

      Diluted 

17,229,640

16,761,137

16,761,137

* Gross revenue are detailed as follows

Online degree programs

75,809

97,318

15,453

Online tutoring programs

5,850

6,157

978

Private primary and secondary schools

11,252

13,558

2,153

International and elite curriculum programs

2,951

2,599

413

  

ChinaEdu Corporation

Unaudited Condensed Consolidated Statements of Comprehensive Income 

Three Months Ended

(in thousands, unaudited)

March 31,2011

March 31,2012

March 31,2012

RMB

RMB

  US$

Net income

10,434

20,794

3,302

Other comprehensive income, net of tax

  Foreign currency translation adjustments

332

7

1

  Change in fair value of available for sale investments

(163)

237

38

Comprehensive income

10,603

21,038

3,341

Less: comprehensive income attributable to the noncontrollng interest

7,988

10,446

1,659

Comprehensive income attributable to ChinaEdu 

2,615

10,592

1,682

 

  

ChinaEdu Corporation

Unaudited Condensed Consolidated Statements of Cash Flow

Three Months Ended 

(in thousands, unaudited)

March 31,2011

March

31,2012

March 31,2012

 RMB 

RMB

US$

Operating activities:

       Net income 

10,434

20,794

3,302

       Adjustments to reconcile net income to net cash provided by operating            activities: 

           Share-based compensation 

1,555

2,219

352

           Depreciation and amortization of property and equipment 

5,787

6,304

1,001

           Amortization of land use rights 

152

152

24

           Amortization of acquired intangible assets 

1,017

985

156

           Loss (gain) on sale of investment 

16

(69)

(11)

           Provision for Accounts Receivable

-

340

54

           Loss from disposal of property and equipment  

65

812

129

      Changes in assets and liabilities 

           Accounts receivable 

19,796

8,839

1,404

           Inventory

(2)

-

-

           Prepaid expenses and other current assets 

(489)

(2,213)

(350)

           Amounts due from related parties 

72,795

1,838

292

           Rental deposits 

(1,317)

471

75

           Accounts payable 

1,321

2,514

399

           Deferred revenues 

(61,272)

(78,991)

(12,543)

           Accrued expenses and other current liabilities 

(6,952)

5,974

950

           Amounts due to related parties 

(12,945)

9,952

1,580

           Income tax payable  

(11,259)

(10,602)

(1,684)

           Other taxes payable

(6,974)

(4,960)

(788)

           Deferred income taxes 

1,047

2,356

374

           Unrecognized tax benefit 

596

640

102

Net cash provided by (used in) operating activities

13,371

(32,645)

(5,182)

Investing activities:

           Purchase of property and equipment 

(7,921)

(803)

(128)

           Proceeds from discontinued operations 

233

-

-

           Purchase of/ mature of term deposits 

(43,000)

24,135

3,832

           Purchase of investments 

(6,000)

-

-

           Proceeds from the sale of investment 

-

10,318

1,638

Net cash (used in) provided  by investing activities

(56,688)

33,650

5,342

Financing activities:

           Cash dividends paid to noncontrolling shareholders 

(10,521)

-

-

           Capital contributions by noncontrolling shareholders 

1,000

-

-

           Proceeds from exercise of share options 

280

945

150

           Loan from related party 

35,500

-

-

Net cash provided by financing activities

26,259

945

150

Effect of foreign exchange rate changes

151

(5)

(1)

CASH AND CASH EQUIVALENTS, beginning of period

190,493

273,746

43,469

CASH AND CASH EQUIVALENTS, end of period

173,586

275,691

43,778

Net  (decrease) increase in cash and cash equivalents

(16,907)

1,945

309

 

ChinaEdu Corporation

Unaudited reconciliations from income from operations to adjusted income from operations (non-GAAP) and adjusted operating margin (non-GAAP)

Three Months Ended 

(in thousands, unaudited)

March 31,2011

March

31,2012

March 31,2012

RMB

RMB

US$

Net revenue

91,350

113,927

18,091

Income from operations 

10,876

22,368

3,553

Adjustment:

  Share-based compensation

1,555

2,219

352

  Amortization of intangible assets and land use rights

1,169

1,137

180

Adjusted income from operations (non-GAAP)

13,600

25,724

4,085

Adjusted operating margin (non-GAAP)

14.9%

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 

(in thousands, unaudited)

March 31,2011

March         31,2012

March 31, 2012

RMB

RMB

US$

Net revenue

91,350

113,927

18,091

Net income attributable to ChinaEdu

3,494

10,325

1,640

Adjustment:

  Share-based compensation

1,555

2,219

352

  Share-based compensation attributable to the noncontrolling interest 

(134)

(177)

(28)

  Amortization of intangible assets and land use rights                             

1,169

1,137

180

Adjusted net income attributable to ChinaEdu (non-GAAP)

6,084

13,504

2,144

Adjusted net margin (non-GAAP)

6.7%

11.9%

11.9%

Adjusted net income attributable to ChinaEdu per ADS (non-GAAP):

      Basic 

0.38

0.86

0.136

      Diluted 

0.35

0.81

0.128

Weighted average aggregate number of ADSs outstanding:

      Basic 

15,910,224

15,746,005

15,746,005

      Diluted 

17,229,640

16,761,137

16,761,137

[1] The reporting currency of the Company is RMB, but for the convenience of the reader, the amounts for the three months ended on March 31, 2012 are presented in U.S. dollars. Unless otherwise stated, all translations from RMB to U.S. dollars were made at the rate of RMB6.2975 to $1.00, the noon buying rate in effect on March 31, 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, and amortization of intangible assets and land use rights.

 

[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 March 31, 2012 and 2011 are revenue students in Fall 2011 and Fall 2010, respectively.

 

[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.

 

SOURCE ChinaEdu Corporation



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