EX-99.1 2 v242850_ex99-1.htm PRESS RELEASE Unassociated Document
 
EXHIBIT 99.1

 
ChinaCast Education Reports Strong Third Quarter 2011 Financial Results
 
Total Revenues Increased 37% Net Income Attributable to the Company Increased 30%
 
BEIJING, Nov. 9, 2011 /PRNewswire-Asia-FirstCall/ -- ChinaCast Education Corporation (the "Company" or "ChinaCast") (Nasdaq GS: CAST), a leading post-secondary education and e-learning services provider in China, today announced its financial results for the third quarter ended September 30, 2011.
 
Financial Highlights for the Third Quarter of Fiscal Year 2011(1):
 
 
·
Total revenues increased 37% year-over-year to $25.6 million
 
·
Net income attributable to the Company increased 30% year-over-year to $8.1 million
 
·
Diluted EPS of $0.16
 
·
Adjusted net income (non-GAAP) increased 27% year-over-year to $10.1 million
 
·
Adjusted diluted EPS (non-GAAP) of $0.20
 
·
Adjusted EBITDA (non-GAAP) increased 24% year-over-year to $14.5 million
 
·
Cash, cash equivalents and term deposits were $169.9 million
 
·
Total shareholder equity was $292.2 million or $5.90 per share
 
Financial Highlights for the First Nine Months of Fiscal Year 2011:
 
 
·
Total revenues increased 46% year-over-year to $74.8 million
 
·
Net income attributable to the Company increased 30% year-over-year to $20.4 million
 
·
Diluted EPS of $0.41
 
·
Adjusted net income (non-GAAP) increased 31% year-over-year to $27.2 million
 
·
Adjusted diluted EPS (non-GAAP) of $0.54
 
·
Adjusted EBITDA (non-GAAP) increased 30% year-over-year to $40.2 million
 
(1) See financial tables and the GAAP to non-GAAP reconciliation table attached to this press release.  The US dollar figures presented in this release are derived from the corresponding RMB figures from the Company's Form 10-Q for the period ended September 30, 2011, and are based on the historical exchange rate of US$1.0 = 6.4 RMB on September 30, 2011, and US$1.0 = 6.7 RMB on September 30, 2010. Such translation should not be construed to be the amount that would have been reported under US GAAP.
  
   
 
 
 
 
 
 
Ron Chan, Chairman and Chief Executive Officer commented, "Our outstanding third quarter results were driven by another strong start to the 2011-2012 academic school year which commenced in September.  Total average enrollment at our universities increased approximately 9% year-on-year while our average tuition rates increased 5%.  We continue to reinvest in the expansion of our universities, adding faculty members, new courses, and new facilities to accommodate this growth.  We believe that these improvements, which will further enhance our academic rankings, will drive sustained growth in our education business for many years to come."
 
Added Antonio Sena, Chief Financial Officer, "The key operating metrics that we focus on, enrollment and tuition growth, are trending well in line with our annual guidance.  We will continue to carefully evaluate our investment options and deploy capital to areas where we see the greatest potential returns to shareholders."
 
Third Quarter 2011 Financial Results
 
ChinaCast is organized into two business segments, the Traditional University Group ("TUG") and the E-Learning Services Group ("ELG").  The TUG offers fully-accredited bachelor and diploma degree programs to students from our three universities in China:  Chongqing Normal University Foreign Trade and Business College ("FTBC") in Chongqing, the Lijiang College of Guilin Normal University ("LJC") in Guilin and Hubei Industrial University Business College ("HIUBC") in Wuhan.  The ELG provides distance learning services to post-secondary institutions, K-12 schools and government/corporate enterprises via the Company's nationwide satellite broadband network platform.
 
Total Revenues — Total revenues in the third quarter of 2011 increased 37% to $25.6 million from $18.7 million in the third quarter of 2010 partly due to the acquisition of HIUBC in the third quarter of 2010.  TUG revenue in the third quarter of 2011 increased 46% to $16.4 million from $11.2 million in the third quarter of 2010.  Total student enrollment in the third quarter of 2011 increased to approximately 35,100 from 32,600 in the third quarter of 2010.  ELG revenue in the third quarter of 2011 increased 24% to $9.2 million from $7.4 million in the third quarter of 2010 primarily due to an increase in equipment sales.  ELG total number of post-secondary students enrolled in courses using the Company's distance learning platform in the third quarter of 2011 increased to 145,000 compared to 143,000 in the third quarter of 2010.  ELG total number of subscribing schools for K-12 distance learning services in the third quarter of 2011 remained stable year-over-year at 6,500.  
 
Cost of Sales — Cost of sales in the third quarter of 2011 increased 42% to $13.6 million from $9.6 million in the third quarter of 2010 primarily due to an increase in depreciation of fixed assets and amortization costs of land use rights and other intangible assets associated with the acquisition of HIUBC in the third quarter of 2010 and an increase in equipment sales.
 
 
 
 
 
Depreciation — Depreciation in the third quarter of 2011 increased 14% to $2.7 million from $2.3 million in the third quarter of 2010 primarily due to the acquisition of HIUBC in the third quarter of 2010.
 
Amortization of Acquired Intangible Assets — Amortization of acquired intangible assets in the third quarter of 2011 increased 17% to $1.7 million from $1.5 million in the third quarter of 2010 primarily due to the acquisition of HIUBC in the third quarter of 2010.
 
Gross Profit and Gross Margin — Gross profit in the third quarter of 2011 increased 33% to $12.1 million from $9.1 million in the third quarter of 2010.   Gross profit margin in the third quarter of 2011 was 47% compared to 49% in the third quarter of 2010 due to an increase in ELG equipment sales which typically have much lower gross margins than the ELG service revenue.  
 
Share-Based Compensation — Share-based compensation in the third quarter of 2011 increased 7% to $0.31 million from $0.29 million in the third quarter of 2010.
 
Operating Expenses — Operating expenses in the third quarter of 2011 increased 59% to $2.5 million compared to $1.6 million in the third quarter of 2010 primarily due to the increase in administrative expenses related to the acquisition of HIUBC in the third quarter of 2010.
 
Operating Income and Operating Income Margin — Operating income in the third quarter of 2011 increased 27% to $9.5 million compared to $7.5 million in the third quarter of 2010.  Operating income margin in the third quarter of 2011 was 37% compared to 40% in the third quarter of 2010.
 
Provision for Income Taxes — Income taxes in the third quarter of 2011 increased 25% to $1.5 million from $1.2 million in the third quarter of 2010 primarily due the increase in tax rate for the TUG business segment from 15% to 25% after the expiration of the western development preferential policy.  
 
Net Income Attributable to the Company and Net Income Margin — Net income attributable to the Company in the third quarter of 2011 increased 30% to $8.1 million from $6.2 million in the third quarter of 2010.  Net income margin in the third quarter of 2011 was 32% compared to 33% in the third quarter of 2010.
 
Diluted EPS - Diluted EPS in the third quarter of 2011 were $0.16 compared to $0.12 in the third quarter of 2010.  The weighted average number of shares used in the computation was 49,504,442 for the third quarter of 2011 and 50,370,903 for the third quarter of 2010.  
 
Adjusted Net Income and Adjusted Net Income Margin - Adjusted net income excluding share-based compensation, non-cash impairment charges and amortization of acquired intangible assets (non-GAAP) in the third quarter of 2011 increased 27% to $10.1 million from $8.0 million in the third quarter of 2010.  Adjusted net income margin (non-GAAP) in the third quarter of 2011 was 40% compared to 43% in the third quarter of 2010.
 
 
 
 
 
Adjusted Diluted EPS - Adjusted diluted earnings per share excluding share-based compensation expenses, non-cash impairment charges and amortization of acquired intangible assets (non-GAAP) in the third quarter of 2011 were $0.20 compared to $0.16 in the third quarter of 2010.
 
Adjusted EBITDA and Adjusted EBITDA Margin — Adjusted EBITDA (non-GAAP) in the third quarter of 2011 increased 24% to $14.5 million from $11.8 million in the third quarter of 2010.  Adjusted EBITDA margin (non-GAAP) in the third quarter of 2011 was 57% compared to 63% in the third quarter of 2010.
 
Cash and Bank Balances together with Term Deposits - Cash and bank balances together with term deposits were $169.9 million as of September 30, 2011.
 
Total Shareholder Equity - Total equity was $292.2 million or $5.90 per share.
 
First Nine Months 2011 Financial Results
 
Total Revenues — Total revenues in the first nine months of 2011 increased 46% to $74.8 million from $51.4million in the first nine months of 2010.  TUG revenue in the first nine months of 2011 increased 61% to $48.2 million from $29.9 million in the first nine months of 2010 primarily due to the acquisition of HIUBC in the third quarter of 2010.  ELG revenue in the first nine months of 2011 increased 23% to $26.5 million from $21.5 million in the first nine months of 2010 primarily due to an increase in equipment sales.  
 
Cost of Sales — Cost of sales in the first nine months of 2011 increased 55% to $38.1 million from $24.6 million in the first nine months of 2010 primarily due to an increase in depreciation of fixed assets and amortization costs of land use rights and other intangible assets related to the acquisition of HIUBC in the third quarter of 2010 and an increase in equipment sales.
 
Depreciation — Depreciation in the first nine months of 2011 increased 36% to $7.5 million from $5.5 million in the first nine months of 2010 primarily due to the acquisition of HIUBC in the third quarter of 2010.
 
Amortization of Acquired Intangible Assets — Amortization of acquired intangible assets in the first nine months of 2011 increased 38% to $5.6 million from $4.1 million in the first nine months of 2010 primarily due to the acquisition of HIUBC in the third quarter of 2010.
 
Gross Profit and Gross Margin — Gross profit in the first nine months of 2011 increased 37% to $36.7 million from $26.8 million in the first nine months of 2010.   Gross profit margin in the first nine months of 2011 was 49% compared to 52% in the first nine months of 2010 due to an increase in ELG equipment sales.  
 
 
 
 
 
Share-Based Compensation — Share-based compensation in the first nine months of 2011 increased 17% to $1.1 million from $0.97 million in the first nine months of 2010.
 
Operating Expenses — Operating expenses in the first nine months of 2011 increased 67% to $11.2 million compared to $6.7 million in the first nine months of 2010 primarily due to the increase in administrative expenses related to the acquisition of HIUBC in the third quarter of 2010.
 
Operating Income and Operating Income Margin — Operating income in the first nine months of 2011 increased 27% to $25.5 million compared to $20.0 million in the first nine months of 2010.  Operating income margin in the first nine months of 2011 was 34% compared to 39% in the first nine months of 2010.
 
Provision for Income Taxes — Income taxes in the first nine months of 2011 increased 20% to $5.0 million from $4.1 million in the first nine months of 2010 primarily due to the increase in tax rate for the TUG business segment from 15% to 25% after the expiration of the western development preferential policy.  
 
Net Income Attributable to the Company and Net Income Margin — Net income attributable to the Company in the first nine months of 2011 increased 30% to $20.4 million from $15.7 million in the first nine months of 2010.  Net income margin in the first nine months of 2011 was 27% compared to 31% in the first nine months of 2010.
 
Diluted EPS - Diluted EPS in the first nine months of 2011 were $0.41 compared to $0.33 in the first nine months of 2010.  The weighted average number of shares used in the computation was 50,057,748 in the first nine months of 2011 and 48,176,902 in the first nine months of 2010.  
 
Adjusted Net Income and Adjusted Net Income Margin - Adjusted net income excluding share-based compensation, non-cash impairment charges and amortization of acquired intangible assets (non-GAAP) in the first nine months of 2011 increased 31% to $27.2 million from $20.8 million in the first nine months of 2010.  Adjusted net income margin (non-GAAP) in the first nine months of 2011 was 36% compared to 40% in the first nine months of 2010.
 
Adjusted Diluted EPS - Adjusted diluted earnings per share excluding share-based compensation expenses, non-cash impairment charges and amortization of acquired intangible assets (non-GAAP) in the first nine months of 2011 were $0.54 compared to $0.43 in the first nine months of 2010.
 
Adjusted EBITDA and Adjusted EBITDA Margin — Adjusted EBITDA (non-GAAP) in the first nine months of 2011 increased 30% to $40.2 million from $31.0 million in the first nine months of 2010.  Adjusted EBITDA margin (non-GAAP) in the first nine months of 2011 was 54% compared to 60% in the first nine months of 2010.
 
 
 
 
 
Financial Outlook for Fiscal Year 2011
 
For the fiscal year ending December 31, 2011, the Company reiterates its guidance as follows:
 
 
·
Total net revenue is expected to be between $97 million to $99 million representing a year-on-year increase of 24% to 27%.  
 
·
Adjusted net income excluding share-based compensation, amortization of acquired intangibles, gain on disposal of property and equipment and impairment expenses (non-GAAP) is expected to be at the higher end of $32 million to $34 million representing a year-on-year increase of at least 25%.
 
·
Based on the current weighted average shares and the higher tax rate accrual used in computation, adjusted diluted EPS (non-GAAP) is expected to be at the higher end of $0.64 to $0.68.
 
·
Adjusted EBITDA excluding share-based compensation (non-GAAP) is expected to be at the higher end of $50 million to $52 million representing a year-on-year increase of at least 25%.  
 
This is the Company's current and preliminary view, which is subject to change.
 
Conference Call Information
 
ChinaCast's management team will host an earnings conference call at 8:00 am ET, Thursday, November 10, 2011.  The dial-in details for the earnings conference call are as follows:
 
Earnings Call Telephone Numbers:
 
US/Canada Toll Free:  +877-303-9226
International:  +1-760-666-3566
 
A replay of the earnings conference call will be available at the following numbers:
 
Replay Telephone Numbers:
 
US/Canada Toll Free:  +1-855-859-2056
International:  +1-404-537-3406
Replay Pass Code:  22274982
 
The replay will be available starting at 11:00 am ET, Thursday, November 10, 2011, through 11:59 pm ET, Thursday, November 17, 2011.
 
 
 
 
 
Additionally, a live and archived version of the earnings call will be available at www.chinacasteducation.com. Please access the website approximately 10 minutes prior to the start time in order to download and install any necessary software.
 
About ChinaCast Education Corporation
 
Established in 1999, ChinaCast Education Corporation is a leading post-secondary education and e-learning services provider in China. The Company provides post-secondary degree and diploma programs through its three fully accredited universities:  The Foreign Trade and Business College of Chongqing Normal University located in Chongqing; Lijiang College of Guangxi Normal University located in Guilin; and Hubei Industrial University Business College located in Wuhan.  These universities offer four year and three year, career-oriented bachelor's degree and diploma programs in business, finance, economics, law, IT, engineering, hospitality and tourism management, advertising, language studies, art and music.
 
The Company also provides e-learning services to post-secondary institutions, K-12 schools, government agencies and corporate enterprises via its nationwide satellite broadband network. These services include interactive distance learning applications, multimedia education content delivery and vocational training courses. The Company is listed on the NASDAQ Global Select Market with the ticker symbol CAST.
 
Safe Harbor Statement
 
This press release may contain statements that are forward-looking, as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of future performance, statements of management's plans and objectives, future contracts, and forecasts of trends and other matters. These projections, expectations and trends are dependent on certain risks and uncertainties including such factors, among others, as growth in demand for education services, smooth and timely implementation of new training centers and other risk factors listed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010. Forward-looking statements speak only as of the date of this filing, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as "anticipate," "estimate," "expect," "believe," "will likely result," "outlook," "project" and other words and expressions of similar meaning. No assurance can be given that the results in any forward-looking statements will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.
 
 

 
 
 

About Non-GAAP Financial Measures
 
To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: adjusted net income, adjusted net-income margin, adjusted EPS (basic and diluted), adjusted EBITDA and adjusted EBITDA margin. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures" included at the end of this release.
 
We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results."  These non-GAAP financial measures exclude from our operating performance not only non-cash charges, such as stock-based compensation, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.  The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
 
CONTACT:  
 
ChinaCast Education
Michael J. Santos, President-International
+1-347-788-0030
mjsantos@chinacasteducation.com
 
MZ Group
Ted Haberfield, President
MZ North America, IR
+1-760-755-2716
thaberfield@hcinternational.net
 

 
 
 

 
CHINACAST EDUCATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share-related data)
 
     
As of
September 30,
    
As of
December 31,
  
     
2011
      
2011
    
2010
  
    $
US
      
RMB
    
RMB
  
Assets
                      
Current assets:
                        
Cash and cash equivalents
    
75,359
      
482,300
      
244,403
  
Term deposits
    
94,531
      
605,000
      
704,000
  
Accounts receivable
    
8,297
      
53,098
      
59,420
  
Inventory
    
149
      
955
      
993
  
Prepaid expenses and other current assets
    
4,484
      
28,698
      
48,221
  
Amounts due from related parties
    
537
      
3,438
      
3,438
  
Deferred tax assets
    
264
      
1,688
      
2,972
  
Current portion of prepaid lease payments for land use rights
    
640
      
4,097
      
3,986
  
Total current assets
    
184,261
      
1,179,274
      
1,067,433
  
Non-current deposits
    
6,680
      
42,752
      
7,388
  
Prepayment for construction projects
    
6,797
      
43,502
      
-
  
Property and equipment, net
    
115,288
      
737,846
      
763,926
  
Prepaid lease payments for land use rights - non-current
    
27,244
      
174,361
      
177,544
  
Acquired intangible assets, net
    
10,142
      
64,909
      
100,816
  
Long-term investments
    
469
      
3,000
      
3,000
  
Goodwill
    
120,932
      
773,967
      
774,083
  
Total assets
    
471,813
      
3,019,611
      
2,894,190
  
 
 
 
 
 
 
 
 
   
As of
September 30,
    
As of
December 31,
  
   
2011
    
2011
    
2010
  
   
US$
    
RMB
    
RMB
  
                   
Liabilities and equity
                  
Current liabilities:
                  
Accounts payable (including accounts payable of the consolidated VIE without recourse to ChinaCast Education Corporation of RMB682 and RMB1,635 as of September 30, 2011 and December 31, 2010, respectively)
    
7,350
      
47,042
      
48,602
  
Accrued expenses and other current liabilities (including accrued expenses and other liabilities of the consolidated VIE without recourse to ChinaCast Education Corporation of RMB17,209 and RMB17,462 as of September 30, 2011 and December 31, 2010, respectively)
    
30,627
      
196,023
      
270,703
  
Deferred revenues
    
54,876
      
351,208
      
262,824
  
Income taxes payable (including income taxes payable of  the consolidated VIE without recourse  to ChinaCast Education Corporation of RMB4,294 and RMB4,844 as of September 30, 2011 and December 31, 2010, respectively)
    
18,000
      
115,198
      
99,461
  
Current portion of long-term bank borrowings (including current portion of long-term bank borrowings of the consolidated VIE without recourse to ChinaCast Education Corporation of nil as of September 30, 2011 and December 31, 2010)
    
29,813
      
190,800
      
170,000
  
Other borrowings(including other borrowings of the consolidated VIE without recourse to ChinaCast Education Corporation of nil as of September 30, 2011 and December 31, 2010)
    
-
      
-
      
1,500
  
Total current liabilities
    
140,666
      
900,271
      
853,090
  
Non-current liabilities:
                        
Long-term deposit received
    
1,506
      
9,636
      
9,270
  
Long-term bank borrowings (including long-term bank Borrowings of the consolidated VIE without recourse to ChinaCast Education Corporation of nil as of September 30, 2011 and December 31, 2010)
    
10,938
      
70,000
      
90,000
  
Deferred tax liabilities — non-current (including deferred tax liabilities — non-current of the consolidated VIE without recourse to ChinaCast Education Corporation of nil as of September 30, 2011 and December 31, 2010)
    
7,264
      
46,491
      
51,503
  
Unrecognized tax benefits — non-current (including unrecognized tax benefits of the consolidated VIE without recourse to ChinaCast Education Corporation of RMB6,205 and RMB5,799 as of September 30, 2011 and December 31, 2010, respectively)
    
19,241
      
123,142
      
109,933
  
Total non-current liabilities
    
38,949
      
249,269
      
260,706
  
                         
Total liabilities
    
179,615
      
1,149,540
      
1,113,796
  
Commitments and contingencies
                        
Equity:
                        
Preferred stock (US$0.0001 par value; 500,000 shares authorized; none issued or outstanding)
    
-
      
-
      
-
  
Ordinary shares (US$0.0001 par value; 100,000,000 shares authorized; 49,020,291 and 49,778,952 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively)
    
6
      
36
      
36
  
Additional paid-in capital
    
232,351
      
1,487,047
      
1,510,527
  
Statutory reserve
    
7,443
      
47,634
      
47,671
  
Accumulated other comprehensive loss
    
(360)
      
(2,295)
      
(3,194)
  
Retained earnings
    
51,632
      
330,443
      
199,862
  
                         
Total ChinaCast Education Corporation shareholders' equity
    
291,072
      
1,862,865
      
1,754,902
  
Noncontrolling interest
    
1,126
      
7,206
      
25,492
  
                         
Total equity
    
292,198
      
1,870,071
      
1,780,394
  
                         
Total liabilities and equity
    
471,813
      
3,019,611
      
2,894,190
  
 
 

 
 
 

CHINACAST EDUCATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
(In thousands, except share-related data)
  
 
   
For the three months ended September 30,
    
For the nine months ended September 30,
  
 
  
2011
    
2011
    
2010
    
2011
    
2011
    
2010
  
 
  
US$
    
RMB
    
RMB
    
US$
    
RMB
    
RMB
  
 
                                    
Revenues:
                                    
Service
     23,708       151,732       122,195       70,197       449,262       341,170  
Equipment
     1,915       12,256       2,924       4,555       29,153       2,955  
 
                                                
 
     25,623       163,988       125,119       74,752       478,415       344,125  
 
                                                
Cost of revenues:
                                                
Service
     (11,645 )     (74,527 )     (61,358 )     (33,552 )     (214,731 )     (161,713 )
Equipment
     (1,914 )     (12,251 )     (2,832 )     (4,535 )     (29,022 )     (2,832 )
 
                                                
 
     (13,559 )     (86,778 )     (64,190 )     (38,087 )     (243,753 )     (164,545 )
 
                                                
Gross profit
     12,064       77,210       60,929       36,665       234,662       179,580  
 
                                                
Operating (expenses) income:
                                                
 
                                                
Selling and marketing expenses (including share-based compensation of nil for the three months ended September 30 for 2011 and 2010, share-based compensation of nil  and RMB410 for the nine months ended September 30 for 2011 and 2010, respectively)
     (44 )     (281 )     (394 )     (156 )     (1,000 )     (1,702 )
General and administrative expenses (including  share-based compensation of RMB1,974 and RMB1,922 for the three months ended September 30 for 2011 and 2010, respectively, share-based compensation of RMB7,289 and RMB6,114 for the nine months ended September 30 for 2011 and 2010, respectively)
     (3,827 )     (24,494 )     (19,739 )     (12,266 )     (78,505 )     (52,291 )
Foreign exchange loss
     (61 )     (393 )     (4 )     (154 )     (988 )     (557 )
Gain from change in contingent consideration
     1,344       8,601       9,467       1,344       8,601       9,467  
Other operating income
     44       280       (34 )     62       398       180  
                                                 
Total operating expenses, net
     (2,544 )     (16,287 )     (10,704 )     (11,170 )     (71,494 )     (44,903 )
 
 
 
 
 
 
 
 
   
For the three months ended September 30,
    
For the nine months ended September 30,
  
   
2011
    
2011
    
2010
    
2011
    
2011
    
2010
  
   
US$
    
RMB
    
RMB
    
US$
    
RMB
    
RMB
  
                                     
Income from operations
     9,520       60,923       50,225       25,495       163,168       134,677  
Interest income
     673       4,306       3,650       1,943       12,437       10,138  
Interest expense
     (777 )     (4,974 )     (4,058 )     (1,988 )     (12,723 )     (10,623 )
Income before provision for income taxes and earnings in equity method investments
     9,416       60,255       49,817       25,450       162,882       134,192  
Provision for income taxes
     (1,454 )     (9,306 )     (7,791 )     (4,950 )     (31,679 )     (27,540 )
Net income before earnings in equity investments
     7,962       50,949       42,026       20,500       131,203       106,652  
Loss in equity investments
     -       -       (26 )     -       -       (86 )
Income from continuing operation, net of tax
     7,962       50,949       42,000       20,500       131,203       106,566  
Discontinued operations
                                                
Loss from discontinued operations, net of taxes of nil for the three months and nine months ended September 30 for 2011 and 2010:
     (110 )     (701 )     100       (265 )     (1,694 )     100  
Gain from disposal of discontinued operations
     268       1,716       -       268       1,716       -  
Net income
     8,120       51,964       42,100       20,503       131,225       106,666  
Less: Net income attributable to non-controlling interest
     (39 )     (248 )     (559 )     (101 )     (644 )     (1,427 )
Net income attributable to ChinaCast Education Corporation
     8,081       51,716       41,541       20,402       130,581       105,239  
Net income
     8,120       51,964       42,100       20,503       131,225       106,666  
Foreign currency translation adjustments
     75       477       338       141       899       1,994  
Comprehensive income
     8,195       52,441       42,438       20,644       132,124       108,660  
Comprehensive income attributable to non-controlling interest
     (2,792 )     (17,869 )     (510 )     (2,857 )     (18,286 )     (1,377 )
Comprehensive income attributable to ChinaCast Education Corporation
     5,403       34,572       41,928       17,787       113,838       107,283  
                                                 
Net income per share
                                                
Income from continuing operations attributable to ChinaCast Education Corporation per share:
                                                
Basic
     0.16       1.03       0.83       0.41       2.63       2.21  
Diluted
     0.16       1.01       0.82       0.41       2.60       2.18  
                                                 
Income from discontinued operations attributable to ChinaCast Education Corporation per share:
                                                
Basic
     -       0.03       -       -       0.01       -  
Diluted
     -       0.03       -       -       0.01       -  
                                                 
Net income attributable to ChinaCast Education Corporation per share:
                                                
Basic
     0.16       1.06       0.83       0.41       2.64       2.21  
Diluted
     0.16       1.04       0.82       0.41       2.61       2.18  
                                                 
Weighted average shares used in computation:
                                                
Basic
     49,009,512       49,009,512       49,834,291       49,531,187       49,531,187       47,693,969  
Diluted
     49,504,442       49,504,442       50,370,903       50,057,748       50,057,748       48,176,902  
 

 
 
 
 
 
 
CHINACAST EDUCATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
 
   
For the nine months ended September 30,
  
   
2011
    
2011
    
2010
  
   
US$
    
RMB
    
RMB
  
                     
Cash flows from operating activities:
                        
Net income
    
20,503
      
131,225
      
106,666
  
Adjustments to reconcile net income to net cash provided by operating activities:
                        
Depreciation
    
7,453
      
47,701
      
36,832
  
Amortization of acquired intangible assets
    
5,610
      
35,907
      
27,231
  
Amortization of land use rights
    
480
      
3,072
      
2,510
  
Share-based compensation
    
1,139
      
7,289
      
6,522
  
Loss on disposal of property, plant and equipment
    
29
      
183
      
-
  
Loss in equity investments
    
-
      
-
      
86
  
Gain on disposal of discontinued operation
    
(268)
      
(1,716)
      
-
  
Change in fair value of contingent consideration-prior year
    
(1,344)
      
(8,601)
      
-
  
Changes in assets and liabilities:
                        
Accounts receivable
    
877
      
5,610
      
4,823
  
Inventory
    
3
      
21
      
(52)
  
Prepaid expenses and other current assets
    
4,534
      
29,017
      
(3,607)
  
Non-current deposits
    
(3,348)
      
(21,422)
      
5390
  
Amounts due from related parties
    
-
      
-
      
2,950
  
Accounts payable
    
(244)
      
(1,560)
      
(2,657)
  
Accrued expenses and other current liabilities
    
1,004
      
6,427
      
(13,158)
  
Deferred revenues
    
14,617
      
93,549
      
159,699
  
Income taxes payable
    
2,459
      
15,737
      
19,656
  
Deferred tax assets
    
167
      
1,069
      
931
  
Deferred tax liabilities
    
(783)
      
(5,012)
      
(4,765)
  
Unrecognized tax benefits
    
2,134
      
13,655
      
13,320
  
Net cash provided by operating activities
    
55,022
      
352,151
      
362,377
  
Cash flows from investing activities:
                        
Repayment from advance to related party
    
-
      
-
      
62
  
Purchase of subsidiaries, net of cash acquired
    
-
      
-
      
(374,374)
  
Cash in the disposed subsidiary
    
(1,596)
      
(10,214)
      
-
  
Purchase of property and equipment
    
(6,805)
      
(43,553)
      
(54,708)
  
Purchase of term deposits
    
(94,531)
      
(605,000)
      
(93,000)
  
Proceeds from maturity of term deposits
    
110,000
      
704,000
      
-
  
Deposits for investments
    
(80)
      
(510)
      
(3,000)
  
Deposit for land use rights
    
(2,022)
      
(12,942)
      
-
  
Prepayment for construction projects
    
(6,797)
      
(43,502)
      
-
  
Net cash used in investing activities
    
(1,831)
      
(11,721)
      
(525,020)
  
 
 
 
 
 

 
 
   
For the nine months ended September 30,
  
   
2011
    
2011
    
2010
  
   
US$
    
RMB
    
RMB
  
                   
Cash flows from financing activities:
                  
Payment of deferred consideration paid for acquisition of subsidiary
    
(10,956)
      
(70,120)
      
-
  
Other borrowings raised
    
5,313
      
34,000
      
93,500
  
Repayment of other borrowings
    
(5,547)
      
(35,500)
      
(92,200)
  
Bank borrowings raised
    
20,281
      
129,800
      
80,000
  
Bank borrowings repaid
    
(20,156)
      
(129,000)
      
(94,400)
  
Repayment of capital lease obligation
    
-
      
-
      
(10)
  
Cash received from noncontrolling interest for establishing joint venture
    
-
      
-
      
20,000
  
Share repurchase
    
(4,808)
      
(30,769)
      
-
  
Deposit for bank borrowing guarantee
    
(781)
      
(5,000)
      
-
  
Collection of deposit for bank borrowing guarantee
    
625
      
4,000
      
-
  
Proceeds from issuance of share, net of issuance costs
    
-
      
-
      
232,970
  
Net cash provided by/(used in) financing activities
    
(16,029)
      
(102,589)
      
239,860
  
Effect of foreign exchange rate changes
    
9
      
56
      
308
  
Net increase in cash and cash equivalents
    
37,171
      
237,897
      
77,525
  
Cash and cash equivalents at beginning of the period
    
38,188
      
244,403
      
327,628
  
                         
Cash and cash equivalents at end of the period
    
75,359
      
482,300
      
405,153
  
Supplemental noncash investing and financing activities:
                        
Consideration receivable from disposal of QPU
    
1,875
      
12,000
      
-
  
NCI eliminated due to disposal of QPU
    
(106)
      
(677)
      
-
  
 
 
 
 
 
 

 
Non-GAAP figures
  
               
YoY
  
   
3 months ended
    
3 months ended
    
%change
  
   
30/9/2011
    
30/9/2010
       +/(-)  
   
US$'000
    
US$'000
          
Adjusted Net Income (Non-GAAP)
                    
Net income attributable to ChinaCast Education Corporation
     8,081       6,200       30.34  
Share-based Compensation
     308       287       7.32  
Amortization of Acquired Intangible Assets
     1,746       1,492       17.02  
Adjusted Net Income (non-GAAP)
     10,135       7,979       27.02  
   Adjusted Net Margin (non-GAAP)
     39.60 %     42.70 %        
Adjusted Diluted EPS (Non-GAAP)
     0.20       0.16       25.00  
                         
Adjusted EBITDA (Non-GAAP)
                        
Net income attributable to ChinaCast Education Corporation
     8,081       6,200       30.34  
Depreciation
     2,654       2,333       13.76  
Amortization of Acquired Intangible Assets
     1,746       1,492       17.02  
Amortization of Land Use Rights
     160       132       21.21  
Share-based Compensation
     308       287       7.32  
Interest Income
     -673       -545       23.49  
Interest Expense
     777       606       28.22  
Provision for income taxes
     1,454       1,163       25.02  
Earnings in equity investments
     -       4       -100  
Net income attributable to noncontrolling interest
     39       83       -53.01  
Adjusted EBITDA(non-GAAP)
     14,546       11,755       23.74  
   Adjusted EBITDA Margin (non-GAAP)
     56.80 %     62.90 %        
 
                   
               
YoY
  
   
9 months ended
    
9 months ended
    
%change
  
   
30/9/2011
    
30/9/2010
       +/(-)  
   
US$'000
    
US$'000
          
Adjusted Net Income (Non-GAAP)
                    
Net income attributable to ChinaCast Education Corporation
     20,402       15,707       29.89  
Share-based Compensation
     1,139       973       17.06  
Amortization of Acquired Intangible Assets
     5,610       4,064       38.04  
Adjusted Net Income (non-GAAP)
     27,151       20,744       30.89  
   Adjusted Net Margin (non-GAAP)
     36.30 %     40.40 %        
Adjusted Diluted EPS (Non-GAAP)
     0.54       0.43       25.58  
                         
Adjusted EBITDA (Non-GAAP)
                        
Net income attributable to ChinaCast Education Corporation
     20,402       15,707       29.89  
Depreciation
     7,453       5,497       35.58  
Amortization of Acquired Intangible Assets
     5,610       4,064       38.04  
Amortization of Land Use Rights
     480       375       28  
Share-based Compensation
     1,139       973       17.06  
Interest Income
     -1,943       -1,513       28.42  
Interest Expense
     1,988       1,586       25.35  
Provision for income taxes
     4,950       4,110       20.44  
Earnings in equity investments
     -       13       -100  
Net income attributable to noncontrolling interest
     101       213       -52.58  
Adjusted EBITDA(non-GAAP)
     40,180       31,025       29.51  
   Adjusted EBITDA Margin (non-GAAP)
     53.80 %     60.40 %