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China Education Alliance Announces Fourth Quarter and Year End 2010 Financial Results


News provided by

China Education Alliance, Inc.

Apr 18, 2011, 08:00 ET

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HARBIN, China, April 18, 2011 /PRNewswire-Asia-FirstCall/ -- China Education Alliance, Inc. ("China Education Alliance" or the "Company") (NYSE: CEU), a China-based education resource and services company, today announced fourth quarter and fiscal 2010 results.  The Company will host a conference call on Tuesday, April 19, 2011, at 8 a.m. EDT or 8 p.m. Beijing time.

Financial Highlights for the Fourth Quarter ended December 31, 2010

  • Total revenue increased 19.3% year-over-year to $12.4 million.
  • Gross profit rose 16.4% to $10.2 million or 82.3% of sales, compared to 84.3% of sales, or $8.78 million, in the fourth quarter of 2009.
  • Operating income decreased 53.6%.
  • Net income decreased 53.5% year-over-year to $2.1 million.
  • EPS was $0.06 per fully diluted share, compared to EPS of $0.15 per fully diluted share in the fourth quarter of fiscal 2009.

Financial Highlights for Fiscal 2010

  • Total revenue increased 25.1% year-over-year to $46.3 million.
  • Gross profit rose 28.7% to $38.1 million or 82.3% of sales, up 2.2% and 220 basis points, respectively.
  • Operating income totaled $16.6 million, compared to an operating income of $16.2 million in 2009.
  • Net income increased 0.7% year-over-year to $15.2 million
  • EPS was $0.48 per fully diluted share, a decrease of 18.6%

"We are pleased with our solid growth in online education and our training center businesses due to industry organic growth, which validates our focus on exam-oriented educational services and vocational training programs in China," said Mr. Xiqun Yu, Chairman and Chief Executive Officer of China Education Alliance. "Going forward, we will continue to develop and deliver high quality supplemental education resources and professional training programs. This will help us continue our business expansion and reaffirm our position as one of the leading education resource and service company in China."

Fiscal Year 2010 Review:

China Education Alliance reported total revenue of $46.3 million for the year ended December 31, 2010, an increase of 25.1% compared to $37.0 million for 2009. The Company's online education business generated 61.6% of its total revenue in 2010 compared to 60.2% for prior-year. Its training center business generated 34.7% of total revenue in 2010 compared to 32.7% for in 2009; its other business division generated the remaining 3.7% of total revenue in the year of 2010, compared to 7.1% for last year.

Online education revenue was $28.5 million, up 28.4% for the year of 2010 compared to $22.2 million in the in 2009 mainly due to increase of organic growth.

Training center revenue was $16.0 million in 2010, up 32.2% from $12.1 million in 2009. The increase was mainly due to organic growth.

Other revenue was $1.7 million in 2010, a decrease of 34.6% from $2.6 million last year. The significant decrease was due to our shift in focus of our two business lines – examination preparation and vocational training.

Net income for 2010 was $15.2 million, an increase of 0.7% over 2009 net income of $15.1 million. The increase was due to growth in our online education and training center businesses. Diluted earnings per share was $0.48, compared with $0.59 last year. The decrease in EPS was mainly due to the increase in number of shares outstanding with the exercise options and warrants, preferred stock converted into common stocks as well as Company's decision not to reserve their advance on the acquisition of WEI, totaling of 400,000 shares.

Operating income for the year 2010 increased to $16.6 million, from $16.2 million a year ago. Operating margin was 35.8% compared with 43.7% in 2009.

Overall cost of sales increased 10.8% to $8.2 million in 2010, compared to $7.4 million for 2009. Gross profit increased to $38.1 million in 2010, an increase of 28.7% from $29.6 million in 2009.

Selling expenses increased 84.5% to approximately $17.3 million for 2010, compared to $9.4 million in 2009, primarily due to the increase in agency fees associated with increased sales of our debit cards. Administrative expenses were approximately $3.3 million for the year 2010, an increase from $3.1 million in 2009, primarily due to renovations on the ZHLD office building and the increase of U.S. parent company expenses.

2010 Business Highlight

In February, Company incorporated a new company in the PRC, Beijing New Shifan Education & Technology ("New Shifan") who has a significant impact on the secondary education market in China, with a registered capital of RMB 1.95 million (approximately $284,962). Beijing Shifan was the sponsor and organizer of a nationwide contest for middle school and high school students, testing students' academic abilities in mathematics, physics and chemistry. There are over 100,000 students participating in the contest from 23 provinces in the PRC.

Financial Position

As of December 31, 2010, China Education Alliance had approximately $71.4 million in cash and cash equivalents, $72.6 million in working capital, and no long-term debt. Shareholders' equity at December 31, 2010 was approximately $91.8 million, an increase from approximately $75.3 million at December 31, 2009. The Company generated net cash from operating activities of $ million in the year ended December 31, 2009, up % from $18.6 million in the year-end period of 2009.

Conference Call

China Education Alliance will host a conference call and live webcast at 8 a.m. Eastern Daylight Time (EDT) (8 p.m. Harbin/Beijing time on April 19, 2011).

The dial-in details for the live conference call are as follows:


- Participant Dial In (Toll Free USA): 1.866.713.8564

- International Dial In: 1.617.597.5312

- China Toll Free:  108008521490 

- Hong Kong Toll Free: 800963844

Conference ID: CEU


A live webcast of the conference call will be available in the investor relations section of the Company's website at: http://www.chinaeducationalliance.com/index.jsp

A telephone replay of the call will be available 1 hour after the end of the conference for seven days.

The dial-in details for the replay are as follows:


- US Toll Free:  1.888.286.8010

- International Toll:  1.617.801.6888

Passcode Number: 16090924


About China Education Alliance, Inc.

China Education Alliance, Inc. (http://www.chinaeducationalliance.com) is a fast-growing, leading, China-based company offering high-quality education resources and services to students ages 6 to 18 and adults (university students and professionals) ages 18 and over. For students ages 6 to 18, China Education Alliance offers supplemental, online exam-oriented training materials and onsite, exam-oriented training and tutoring services. The company provides online, downloadable famous-teacher resources and onsite, personalized instruction. All resources and tutoring services are provided by famous teachers within mainland China. The purpose of online exam-orientated resources and onsite tutoring is to help Chinese students (ages 6 to 18) pass the two most important and highly competitive exams in their educational career: the senior high school entrance and college entrance exams. For graduates and professionals age 18 and over, China Education Alliance provides vocational training including IT and several professional training programs.

Forward-Looking Statements

Statements contained in this press release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, expectations of signing new customers and contracts, developing new products, projected revenues and earnings, and the success of new products. These forward-looking statements are based largely on current expectations and are subject to a number of known and unknown risks, uncertainties and other factors beyond our control that could cause actual events and results to differ materially from these statements. These statements are not guarantees of future performance, and readers are cautioned not to place undue reliance on these forward-looking statements, which are relevant as of the date of the given press release and should not be relied upon as of any subsequent date. China Education Alliance undertakes no obligation to update the forward-looking information contained in this press release.


For more information, please contact:


China Education Alliance, Inc.

Alice Lee Rogers, CFO

Tel: +1-626-379-5956

Email: [email protected]


Christensen

Jenny Wu

Telephone: +86 10 5826 4939

Email: [email protected]


China Education Alliance, Inc. and Subsidiaries

Consolidated Statements of Operations

(Expressed in US Dollars)

For Years Ended December 31, 2009 and 2010






Year Ended Dec 31


2009


2010

Revenues




Online education revenues

22,238,325

 

28,495,602

Training center revenues

12,097,375


16,033,297

Other Revenues

2,631,783

 

1,738,090

Total revenue

36,967,483


46,266,989

 

 

 

 

Cost of Goods Sold




Online education costs

4,584,519

 

4,798,259

Training center costs

2,569,538


3,232,063

Other costs

210,882

 

147,656

Total cost of goods sold

7,364,939


8,177,979

 

 

 

 

Gross Profit




Online education gross profit

17,653,806

 

23,697,343

Training center gross profit

9,527,837


12,801,233

Other gross profit

2,420,901

 

1,590,434

Total gross profit

29,602,544


38,089,010

 

 

 

 

Operating Expenses




Selling expenses

9,352,392

 

17,250,787

Administrative

3,145,094


3,349,116

Depreciation and amortization

952,193

 

913,965

Total operating expenses

13,449,679


21,513,867

 

 

 

 

Income from operations

16,152,865


16,575,142

 

 

 

 

Other Income (Expense)




Other income

130,056

 

(67)

Interest income

130,675


223,803

Investment loss

(671)

 

-

Total other income

260,060


223,735

 

 

 

 

Net Income Before Provision for Income Tax

16,411,925


16,798,878

Provision for income taxes

1,295,224

 

1,648,158





Net Income

15,116,701

 

15,150,719

Net loss attributable to the noncontrolling interests

(90,071)


(111,689)

Net Income - attributable to CEU and Subsidiaries

15,206,772

 

15,262,408





Basic Earnings Per Share

0.63

 

0.48

Diluted Earnings Per Share

0.59


0.48

 

 

 

 

Basic Weighted  Average Shares Outstanding

24,081,002


31,928,992

Diluted Weighted  Average Shares Outstanding

25,622,606

 

32,033,326





The Components of Other Comprehensive Income

 

 

 

Net income

15,206,772


15,262,408

Foreign currency translation adjustment

189,644

 

2,687,478





Comprehensive income

15,396,416

 

17,949,886


China Education Alliance, Inc. and Subsidiaries

Consolidated Balance Sheets

(Expressed in US Dollars)

As at December 31, 2009 and 2010






December 31, 2009


December 31, 2010

Assets

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

65,035,332

 

71,105,415

Accounts receivable

1,274,727

 

-

Other receivables

-

 

432,030

Prepaid expenses

2,692,310


2,834,976

Total Current Assets

69,002,369

 

74,372,421





Non-current Assets

 

 

 

Note receivable

-


7,172,301

Property & equipment, net

6,589,982

 

9,946,729

Intangible and capitalized software, net

737,761


1,515,381

Advance on acquisition

932,000

 

-

Long-term investment

341,686


559,269

Total Noncurrent Assets

8,601,429

 

19,193,680

Total Assets

77,603,798


93,566,101

 

 

 

 

Liabilities and stockholders' equity




Current Liabilities

 

 

 

Accounts payable and accrued expenses

1,255,991


686,102

Deferred revenues

1,008,884

 

1,072,373

Total Current Liabilities

2,264,875


1,758,475

 

 

 

 

Stockholders' Equity




Preferred stock ($0.001 par value, 20,000,000 shares authorized,0 and 4,502,143 issued and outstanding, respectively, aggregate liquidation preference of 0 and $1,665,793, respectively)

1,867,644

 

-

Common stock ($0.001 par value, 150,000,000 shares authorized,31,261,911 and 30,040,954 issued at December 31, 2010 and 2009, respectively; and 412,536 shares held in treasury at December 31, 2010)

30,041


31,263

Additional paid in capital

38,231,623

 

39,705,625

Statutory reserve

3,016,143


3,731,672

Accumulated other comprehensive income

2,886,087

 

5,573,565

Retained earnings

30,044,687


44,591,566

Less: Treasury stock

-

 

(977,072)

Stockholders' equity - China Education Alliance, Inc. and Subsidiaries

76,076,225


92,656,618

Noncontrolling interests in subsidiaries

(737,302)

 

(848,991)

Total Stockholders' Equity

75,338,923


91,807,627

Total Liabilities and Stockholders' Equity

77,603,798

 

93,566,101



SOURCE China Education Alliance, Inc.

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