China Bilingual Announces Financial Results for the Third Quarter of Fiscal 2012

Nine-Month year-over-year revenue increases 72.5% to $31.5 million and EBITDA increases to $14.5 million or 46.1% of revenues

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China Bilingual Technology & Education Group Inc.

Jul 16, 2012, 02:32 ET

TAIYUAN CITY, China, July 16, 2012 /PRNewswire-Asia-FirstCall/ -- China Bilingual Technology & Education Group Inc. (OTCBB: CBLY) ("China Bilingual" or the "Company"), an education company that owns and operates high-quality, K-12 private boarding schools in China, today announced its financial results for the third quarter ended May 31, 2012.

Third Quarter Fiscal Year 2012 Financial Highlights: (Three-Month Results)

Revenues increased 63.4% year-over-year to $10.2 million, compared to $6.2 million for the three months ended May 31, 2012. The increase was primarily attributable to the acquisition of the Shanxi South School (formerly Shanxi Rising School), which increased the Company's total enrollment from approximately 9,200 students to 13,881 students for the current school year, as well as a slight tuition increase.
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") increased 71.5% year-over-year to $5.2 million, compared to $3.1 million for the three months ended May 31, 2011.
The schools owned by the Company are exempt from paying corporate income taxes because of its classification in China's primary education sector.
Net property, equipment, and land use rights were $125.5 million at historical book value as of May 31, 2012, an increase of 294.7% from $31.8 million as of December 31, 2010.
Stockholders' equity was $48.0 million as of May 31, 2012, an increase of 51.3% from $31.7 million as of December 31, 2010.

Nine Months Fiscal Year 2012 Financial Highlights: (Year-over-Year, Nine-Month Results)

Revenues increased 72.5% year-over-year to $31.5 million, compared to $18.3 million for the nine months ended May 31, 2011. The increase was primarily attributable to the acquisition of the Shanxi South School.
EBITDA increased 68.8% year-over-year to $14.5 million, compared to $8.6 million for the nine months ended May 31, 2011.

"China's middle class continues to grow, driving demand for private education," stated Mr. Ren Zhiqing, Chairman and CEO of China Bilingual. "Recent added support for private education from the Ministry of Education of the People's Republic of China will further accelerate this growing demand. Our reputation for academic excellence positions us to greatly benefit from these market dynamics, and with our schools at less than 70% of total capacity, we have the ability to dramatically improve revenue and earnings growth as our enrollments increase."

"Private education is a sunrise industry in China, with overall education and training spending in the country growing at an estimated compound annual growth rate of at least 20 percent from 2008 to 2013." (ChinaDaily.com.cn, January 21, 2011).

Conference Call and Webcast

Management will host a conference call to discuss these financial results Tuesday, July 17, 2012 at 10:00 a.m. Eastern time (7:00 a.m. Pacific).

To participate in the call, please dial (877) 941-1427, or (480) 629-9664 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found at http://ViaVid.net.

A replay of the call will be available for two weeks from 1:00 p.m. ET on July 17, 2012, until 11:59 p.m. ET on July 31, 2012. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the pin number for the replay is 4553596. In addition, a recording of the call will be available at http://www.RedChip.com for one year.

About China Bilingual Technology & Education Group Inc.

China Bilingual Technology and Education Group Inc. is an education company that owns and operates high-quality, K-12 private boarding schools in China. Founded in 1998, the Company currently operates three schools encompassing the kindergarten, elementary, middle and high school levels with approximately 13,881 students and 1,876 faculty and staff.

The Company's schools are located in Shanxi and Sichuan Provinces and provide students with an innovative and high-quality education with a focus on fluency and cultural skills in both Chinese and English. The schools regularly rank among the top schools in their respective regions for college entrance rates and national college entrance exam scores. The Company's schools have earned excellent teaching reputations and are recognized for the success of their students and strong faculty.

As China experiences rapid industrialization and economic growth, the government is focused on education as a means to increase worker productivity and raise the standard of living. Parents in China's new middle and upper classes are sending their children to receive private school education to give them an advantage in China's increasingly competitive workforce. The Company's sector in education is not subject to corporate income tax, and the Company anticipates its growth will come from both organic growth through increased enrollment and expansion of its business model and teaching methods into new schools to be acquired by the Company.

Forward-Looking Statements

Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about the Company's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of the Company may differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. For additional information, readers should carefully review reports or documents the Company files periodically with the Securities and Exchange Commission.

Contact:

At the Company:
Michael Toups, Chief Financial Officer
U.S. Office +1 727-641-1357
[email protected]

Investor Relations:
Mike Bowdoin
RedChip Companies, Inc.
Tel: +1-800-733-2447, Ext. 110
[email protected]
http://www.RedChip.com

China Bilingual Technology & Education Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

	May 31, 2012			August 31, 2011
ASSETS	(unaudited)
CURRENT ASSETS:
Cash and cash equivalents		$	9,012,557		$	15,090,521
Inventory			71,574			3,489
Prepayment and other current assets			2,982,030			9,606,682
Total Current Assets			12,066,161			24,700,692

LONG-TERM ASSETS:
Property, plant and equipment, net			80,246,741			81,958,342
Land use rights, net			45,266,573			45,783,579
Deposit paid for long-term assets			-			18,778

Total Long-Term Assets			125,513,314			127,760,699

TOTAL ASSETS		$	137,579,475		$	152,461,391

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable		$	99,974		$	48,824
Short-term payable-acquisition			18,721,361			21,177,319
Due to related parties			8,139,302			7,842,522
Other payables			514,545			333,202
Refundable deposits			545,664			795,848
Prepaid school fees			18,782,157			39,498,972
Home purchase down payment			930,366			878,668
Short-term bank loan			15,770,632			15,685,044
Accrued expenses and other current liabilities			934,231			908,268

Total Current Liabilities			64,438,232			87,168,667

Long-term payable-acquisition			25,171,348			22,656,106

TOTAL LIABILITIES		$	89,609,580		$	109,824,773

STOCKHOLDERS' EQUITY:
Common Stock, $0.001par value; 75,000,000 shares authorized; 30,014,528 issued and outstanding as of May 31, 2012 and August 31, 2011			30,015			30,015
Additional paid-in capital			67,421			67,421
Retained earnings			45,211,581			40,100,740
Accumulated other comprehensive income			2,660,878			2,438,442

TOTAL STOCKHOLDERS' EQUITY			47,969,895			42,636,618

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	137,579,475		$	152,461,391

The accompanying notes to these consolidated financial statements, as filed with the SEC, are an integral part of these balance sheets.

China Bilingual Technology & Education Group Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Other Comprehensive Income
(Unaudited)

	For the Three Months Ended
	May 31, 2012		May 31, 2011

REVENUES	$	10,151,351	$	6,213,940
COST OF REVENUES		5,547,069		2,960,417
GROSS PROFIT		4,606,282		3,253,523
OPERATING EXPENSES
General and Administrative Expenses		528,073		526,808
TOTAL OPERATING EXPENSES		528,073		526,808
INCOME FROM OPERATIONS		4,078,209		2,726,715
OTHER INCOME (EXPENSE)
Interest Income		8,267		6,309
Interest Expense		(2,083,241)		-
NET INCOME BEFORE INCOME TAXES	$	2,003,235	$	2,733,024
INCOME TAX EXPENSE		-		-
NET INCOME	$	2,003,235	$	2,733,024
Foreign currency translation, net of tax		(304,705)		478,568
COMPREHENSIVE INCOME	$	1,698,530	$	3,211,592

Earnings per Common Share:
Basic	$	0.07	$	0.09
Diluted	$	0.07	$	0.09

Weighted Average Common Shares Outstanding:
Basic		30,109,677		30,010,114
Diluted		30,109,677		30,010,114

The accompanying notes to consolidated financial statements, as filed with the SEC, are an integral part of these statements.

China Bilingual Technology & Education Group Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Other Comprehensive Income
(Unaudited)

	For The Nine Months Ended
	May 31, 2012		May 31, 2011

REVENUES	$	31,533,148	$	18,284,643
COST OF REVENUES		18,574,019		9,410,816
GROSS PROFIT		12,959,129		8,873,827
OPERATING EXPENSES
General and Administrative Expenses		1,658,566		1,227,436
TOTAL OPERATING EXPENSES		1,658,566		1,227,436
INCOME FROM OPERATIONS		11,300,563		7,646,391
OTHER INCOME (EXPENSE)
Interest Income		39,166		25,703
Interest Expense		(6,228,888)		-
NET INCOME BEFORE INCOME TAXES	$	5,110,841	$	7,672,094
INCOME TAX EXPENSE		-		-
NET INCOME	$	5,110,841	$	7,672,094
Foreign currency translation, net of tax		222,436		1,535,189
COMPREHENSIVE INCOME	$	5,333,277	$	9,207,283

Earnings per Common Share:
Basic	$	0.17	$	0.26
Diluted	$	0.17	$	0.26

Weighted Average Common Shares Outstanding:
Basic		30,079,330		30,004,503
Diluted		30,079,330		30,004,503

The accompanying notes to these consolidated financial statements, as filed with the SEC, are an integral part of these balance sheets.

China Bilingual Technology & Education Group Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

	For The Nine Months Ended
	May 31, 2012		May 31, 2011

Cash Flows From Operating Activities:
Net income	$	5,110,841	$	7,672,094
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		2,442,943		835,892
Amortization		767,122		113,512
Accretion of interest payable – acquisition		4,572,250		-
Stock-based compensation		79,861		99,000
(Increases) Decreases in Assets:
Inventories		(68,093)		1,825
Prepayment and other current assets		6,698,595		674,894
Increases (Decreases) in Liabilities:
Accounts payable		50,903		(17,636)
Other payables		179,595		(485,742)
Refundable deposits		(254,627)		(722,847)
Prepaid school fees		(20,940,603)		(12,701,222)
Home purchase down payment		46,922		121,245
Accrued expenses and other current liabilities		(58,462)		(91,724)
Net Cash Provided By (Used In) Operating Activities		(1,372,753)		(4,500,709)

Cash Flows From Investing Activities:
Deposits - long term assets		-		(7,865,907)
Fixed asset additions		(283,275)		(315,935)
Receipts - related parties receivables		-		3,539,714
Net Cash Provided By (Used In) Investing Activities		(283,275)		(4,642,128)

Cash Flows From Financing Activities: Proceeds from related party loan		253,999		-
Payments made on acquisition - payable		(4,750,346)		-
Net Cash Provided By (Used In) Financing Activities		(4,496,347)		-

Effect of Exchange Rate Changes on Cash		74,411		340,667

Net Increase (Decrease) in Cash and Cash Equivalents		(6,077,964)		(8,809,985)

Cash and Cash Equivalents, Beginning of Period		15,090,521		10,888,988

Cash and Cash Equivalents, End of Period	$	9,012,557	$	2,086,818

Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	1,325,256	$	-
Cash paid for taxes	$	-	$	-

The accompanying notes to consolidated financial statements, as filed with the SEC, are an integral part of these statements.