EX-99.1 2 v339714_ex99-1.htm EXHIBIT 99.1

 

 

CHINAEDU REPORTS FOURTH QUARTER AND FISCAL YEAR 2012 RESULTS

 

Fourth Quarter Net Revenue Exceeds Company Guidance, Increasing 12.4 Percent Year-Over-Year

Full Year 2012 Net Revenue Increases 12.0 Percent Year-Over-Year

 

BEIJING, CHINA – March 27, 2013 – ChinaEdu Corporation (NASDAQ: CEDU) (“ChinaEdu” or the “Company”), a leading online educational services provider in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2012.1

 

Fourth Quarter 2012 Highlights

 

·Total net revenue for the fourth quarter of 2012 was $21.8 million, a 12.4 percent increase from $19.4 million in the corresponding period in 2011. Total net revenue exceeded Company guidance for the quarter.

 

·Net revenue from online degree programs was $17.7 million, an increase of 13.9 percent from $15.5 million in the corresponding period of 2011.

 

·Net income attributable to ChinaEdu was $2.4 million, an increase of 552.8 percent from $0.4 million in the corresponding period of 2011.

 

·Adjusted net income attributable to ChinaEdu2 was $2.9 million, an increase of 257.9 percent from $0.8 million in the corresponding period of 2011.

 

·Net income attributable to ChinaEdu per diluted ADS3 was $0.144, an increase of 542.9 percent from $0.022 in the corresponding period of 2011.

 

·Adjusted net income attributable to ChinaEdu per diluted ADS4 was $0.173, an increase of 248.4 percent from $0.050 in the corresponding period of 2011.

 

·       The number of revenue students5 enrolled in online degree programs during the Fall 2012 semester increased 5.1 percent year-over-year to approximately 207,000 students.

 

Full Year 2012 Highlights

 

·Total net revenue for 2012 was $78.4 million, a 12.0 percent increase from $70.0 million in 2011.

 

·Net revenue from online degree programs was $63.1 million, an increase of 13.3 percent from $55.7 million in 2011.

 

·Net income attributable to ChinaEdu was $6.1 million, an increase of 125.7 percent from $2.7 million in the corresponding period of 2011.

 

1 The reporting currency of the Company is RMB, but for the convenience of the reader, the amounts for the three months and the years ended on December 31, 2012 and 2011 are presented in U.S. dollars. Unless otherwise stated, all translations from RMB to U.S. dollars were made at the rate of RMB6.2301 to $1.00, the noon buying rate in effect on December 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, amortization of intangible assets and land use rights, and intangible assets impairment.

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 December 31, 2012 and 2011 are revenue students in fall 2012 and fall 2011, respectively. The numbers for the years ended December 31, 2012 and 2011 are total revenue students in spring 2012 and fall 2012, in spring 2011 and fall 2011 respectively.

 

 

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·Adjusted net income attributable to ChinaEdu was $9.0 million, an increase of 102.4 percent from $4.4 million in 2011.

 

·Net income attributable to ChinaEdu per diluted ADS was $0.362, an increase of 126.0 percent from $0.161 in 2011.

 

·Adjusted net income attributable to ChinaEdu per diluted ADS was $0.535, an increase of 103.0 percent from $0.263 in 2011.

 

·The number of revenue students in online degree programs during 2012 increased roughly 12.4 percent over 2011 to approximately 400,000 students.

 

Julia Huang, executive chairman of ChinaEdu commented, “2012 was another successful year for ChinaEdu. Remaining focused on growth in our online degree programs, we expanded enrollment during the year to 400,000 revenue students. There were exciting developments in other areas of our business in 2012 as well. Particularly, several non-degree continued education programs for teachers were launched in 2012 and our recently expanded K-12 online interactive tutoring and Q&A programs have already gained traction and are showing encouraging results. Furthermore, enrollments at our private schools grew beyond expectations during the year as our brand name continues to draw in talented students.” She continued, “As we look to 2013, we will continue to grow our core business and explore opportunities that leverage our online-learning enabling capabilities. We remain committed to technological innovation in education and will continue to develop next generation technology platforms and interactive and mobile learning applications. Online learning has become more acceptable to users and mobile devices have become more readily available. We plan to penetrate the market further, applying our technological advantage across all areas of our business platform.”

 

Mr. Simon Mei, chief financial officer commented, “Recognizing our success in 2012 and the opportunities that lay ahead, the Company recently decided to make a major reinvestment in our business by negotiating a repurchase of shares. The repurchase program was completed at the end of February 2013. The Company repurchased 19,695,552 ordinary shares or the equivalent 6,565,184 ADSs. This is equal to 36.9% of the total issued ordinary shares of 53,428,219 prior to the transaction. The completion of the stock repurchase reflects the board of directors’ and management’s continued commitment to enhancing stockholder value, as well as confidence for the company’s future business perspectives. Other factors being equal, the stock repurchase will increase the Company’s earnings per share.”

 

Financial Results for the Fourth Quarter Ended December 31, 2012

 

Net Revenue

Total net revenue for the fourth quarter of 2012 was $21.8 million, a 12.4 percent increase from $19.4 million in the corresponding period in 2011.

 

Net revenue from online degree programs for the fourth quarter of 2012 was $17.7 million, a 13.9 percent increase over $15.5 million in the corresponding period in 2011. The increase in net revenue from online degree programs was primarily related to continued expansion and optimization of the Company’s learning centers network, as well as organic growth in revenue students enrolled in online degree programs. Enrollment for the 2012 Fall semester online degree programs was approximately 207,000 revenue students, a 5.1 percent increase from approximately 197,000 revenue students enrolled in the Fall semester in 2011.

 

 

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As of December 31 2012, ChinaEdu’s learning centers network was providing recruiting services for 22 universities with 118 operational learning centers, of which 57 were proprietary centers6 and 61 were contracted centers7. This compares to 105 operational learning centers as of December 31, 2011, of which 61 were proprietary and 44 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 fourth quarter of 2012 was $4.1 million, a 6.4 percent increase from $3.8 million in the fourth quarter of 2011. Of that, approximately $0.4 million was attributable to increased enrollment at our private school in the city of Anqing.

 

Cost of Revenue

Total cost of revenue for the fourth quarter of 2012 was $9.8 million, an increase of 13.3 percent, from $8.7 million in the corresponding period of 2011.

 

Cost of revenue for online degree programs in the fourth quarter of 2012 was $6.8 million, an increase of 16.2 percent compared to $5.8 million in the corresponding period of 2011. The increase in cost of revenue is mainly attributable to increased staff related costs.

 

Cost of revenue for non-degree programs in the fourth quarter of 2012 was $3.0 million, an increase of 7.4 percent from $2.8 million in the fourth quarter of 2011. The increase is attributable to increases in staff related costs and service fees for the private school in Anqing as well as the online tutoring program.

 

Gross Profit and Gross Margin

Gross profit for the fourth quarter of 2012 was $11.9 million, compared to $10.7 million in the corresponding period of 2011. Gross margin decreased slightly to 54.8 percent, compared to 55.1 percent for the corresponding period in 2011.

 

Gross margin for online degree programs decreased slightly to 61.6 percent, from 62.3 percent in the fourth quarter of 2011. The decrease was primarily due to an overall increase in the percentage of total net revenue contributed by the Company’s learning centers network. The learning centers network’s sales and service based model results in a higher cost of sales, whereas the joint venture model is more operationally driven. In general, more revenue generated from learning centers results in lower gross margin for our overall online degree programs.

 

Gross margin for online tutoring programs decreased to 37.7 percent, from 55.7 percent in fourth quarter of 2011, mainly due to the increased service fees associated with the expansion of the Company’s interactive course offerings.

 

Gross margin for private schools in the fourth quarter of 2012 decreased to 20.4 percent, compared to 24.8 percent in the corresponding period in 2011. The decrease of gross margin was primarily due to increased labor costs at our private school in Anqing.

 

Operating Expenses

Total operating expenses were $7.6 million in the fourth quarter of 2012, a decrease of 3.6 percent, from $7.9 million in the corresponding period in 2011. As a percentage of net revenue, total operating expenses decreased to 34.8 percent, compared to 40.6 percent in the corresponding period in 2011. The decrease in total operating expense was the result of the following:

 

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 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.

 

 

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·General and administrative expenses for the fourth quarter of 2012 were $3.7 million, a decrease of 4.8 percent from $3.9 million in the corresponding period in 2011. As a percentage of net revenue, general and administrative expenses decreased to 16.9 percent from 20.0 percent in the same period in 2011.
·Selling and marketing expenses were $2.3 million in the fourth quarter of 2012, a decrease of 6.8 percent compared to $2.5 million in the corresponding period in 2011. As a percentage of net revenue, selling and marketing expenses decreased to 10.6 percent from 12.7 percent in the same period in 2011. The decrease in selling and marketing expenses was primarily due to a reduction in barter transactions related to online tutoring programs.
·Research and development expenses for the fourth quarter of 2012 were $1.6 million, an increase of 4.6 percent compared to $1.5 million in the corresponding period in 2011. As a percentage of net revenue, the research and development expense was 7.3 percent in the fourth quarter of 2012, decreasing from 7.9 percent in the same period of 2011. The slight increase in research and development expenses was primarily attributable to increased staff costs.

 

Income from Operations

Income from operations in the fourth quarter of 2012 was $4.3 million, an increase of 54.5 percent compared to $2.8 million in the corresponding period of 2011. Operating margin increased to 19.9 percent in the fourth quarter of 2012, compared to 14.5 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, land use rights and intangible assets impairment, was $4.9 million for the fourth quarter of 2012, an increase of 48.6 percent compared to $3.3 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 fourth quarter of 2012 increased to 22.3 percent, compared to 16.9 percent for the corresponding period of 2011.

 

Interest and Investment Income

Interest and investment income for the fourth quarter of 2012 remained stable at $0.5 million, compared to the corresponding quarter of 2011.

 

Income Tax Expense

In the fourth quarter of 2012, income tax expense was $0.9 million and the effective income tax rate was 17.5 percent.

 

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests remained stable at $1.8 million in the fourth quarter of 2012, compared to $1.7 million in the corresponding period in 2011.

 

Net Income Attributable to ChinaEdu

 

 

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Net income attributable to ChinaEdu, which is net income, excluding net income attributable to non-controlling interests, was $2.4 million in the fourth quarter of 2012, representing a significant increase of 552.8 percent from $0.4 million in the corresponding period of 2011. The increase was primarily due to an increase in gross profit across online degree programs, as well as effective expenses control.

 

Net income attributable to ChinaEdu per basic and diluted ADS was $0.154 and $0.144, respectively, for the fourth quarter of 2012, compared to $0.024 and $0.022, respectively, for the corresponding period in 2011.

 

Adjusted net income attributable to ChinaEdu (non-GAAP) was $2.9 million in the fourth quarter of 2012, compared to $0.8 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 13.5 percent in the fourth quarter of 2012, compared to 4.2 percent in the corresponding period of 2011.

 

Adjusted net income attributable to ChinaEdu per basic and diluted ADS (non-GAAP) was $0.185 and $0.173 respectively, for the fourth quarter of 2012, compared to $0.051 and $0.050, respectively, for the corresponding period of 2011.

 

Deferred Revenue

As of December 31, 2012, deferred revenue was $23.2 million, consisting of current deferred revenue in the amount of $21.5 million and non-current deferred revenue in the amount of $1.7 million.

 

In general, Fall semester tuition for online degree programs is received during the fourth quarter but is recognized both in the fourth quarter of the current year and the first quarter of the following year.

 

Private school revenue is received in September, but 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 December 31, 2012, the Company reported cash and cash equivalents and term deposits of $76.7 million, which primarily consisted of cash and cash equivalents, 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 $48.5 million as of December 31, 2012 compared to $38.2 million as of December 31, 2011.

 

Fiscal Year 2012 Results

 

Net Revenue

 

Total net revenue in 2012 was $78.4 million, an increase of 12.0 percent from $70.0 million in 2011.

 

Net revenue from online degree programs in 2012 was $63.1 million, a 13.3 percent increase from $55.7 million in 2011. This increase was primarily attributable to strong enrollment growth in online degree programs in 2012, particularly through our learning centers network. In aggregate, the number of revenue students enrolled in online degree programs was approximately 400,000 in 2012, a 12.4 percent increase from approximately 356,000 revenue students enrolled in online degree programs in 2011.

 

 

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Net revenue from non-degree programs in 2012 was $15.2 million, compared to $14.2 million in 2011. The 7.0 percent increase was primarily attributable to increased student enrollments and increased tuition fees at our Anqing private school.

 

Cost of Revenue

Total cost of revenue in 2012 was $32.4 million, an increase of 8.9 percent from $29.8 million in 2011.

 

Cost of revenue for online degree programs in 2012 was $22.1 million, an increase of 10.8 percent compared to $19.9 million in 2011. The increase in cost of revenue was primarily due to an increase in staff costs resulting from headcount increases across the Company, as well as an increase in courseware costs related to new training courses and the growth of student body. Additionally, the learning centers network’s sales and service based model results in a higher cost of sales. The more revenue generated from learning centers, the higher the cost of revenue incurred.

 

Cost of revenue for non-degree programs in 2012 was $10.3 million, an increase of 5.0 percent compared to $9.8 million in 2011. The increase was primarily attributable to increased staff and transportation costs at the Anqing School, as well as an increase in service costs and leasing costs related to our online tutoring business.

 

Gross Profit

Gross profit for 2012 was $45.9 million, an increase of 14.4 percent compared with $40.2 million in 2011.

 

Gross margin in 2012 was 58.6 percent, compared with gross margin of 57.4 percent in 2011. The increase was primarily due to an increase in net revenue coupled with stringent cost controls over the year.

 

Operating Expenses

Total operating expenses in 2012 were $31.3 million, a 4.1 percent increase from $30.1 million in 2011. The increase was primarily attributable to the following:

 

·General and administrative expenses in 2012 were $16.1 million, a 6.7 percent increase from $15.1 million in 2011. The increase was mainly the result of an early termination of a lease agreement, an increase in stock related expenses due to the granting of restricted shares for staff, as well as an increase in conference attendance and travel costs.
·Selling and marketing expenses in 2012 were $7.8 million, an 8.3 percent decrease from $8.5 million in 2011. The decrease in selling and marketing expenses was primarily attributable to a significant decrease in marketing activities surrounding international and elite curriculum programs.
·Research and development expenses in 2012 were $6.5 million, flat with 2011.
·The Company incurred an intangible asset impairment charge in relation to the BCIT (British Columbia Institute of Technology) and FEC (Friendly Experimental Class) programs in the international and elite curriculum division in the third quarter of 2012, resulting in an aggregate non-cash charge of $0.9 million (RMB5.9 million).
·Share-based compensation in 2012, which was allocated to the related cost of revenue and operating expense line items, was $1.3 million, increased 27.4% percent from $1.0 million in 2011.

 

Income from Operations 

 

 

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Income from operations was $14.6 million in 2012, an increase of 44.9 percent from $10.1 million in 2011. Operating margin was 18.7 percent in 2012, compared to 14.4 percent in 2011.

 

Adjusted income from operations (non-GAAP) in 2012 was $17.6 million, an increase of 48.1 percent compared to $11.9 million in 2011. Adjusted operating margin (non-GAAP) was 22.5 percent in 2012, compared to 17.0 percent in 2011.

 

Interest Income and Investment Income

Interest income and investment income increased 52.1 percent to $2.4 million in 2012, compared to $1.6 million in 2011. Interest income increased $0.7 million while investment income increased $0.1 million in 2012.

 

Income Tax Expense

Income tax expense in 2012 was $4.2 million, compared with $2.7 million in 2011. The 2012 effective tax rate was 24.1 percent, compared with 23.2 percent of 2011.

 

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests was $7.3 million in 2012, an increase of 14.1 percent compared to $6.4 million in 2011. The increase was primarily due to the non-controlling interest impact related to the increase in net income from online degree programs.

 

Net Income attributable to ChinaEdu

Net income attributable to ChinaEdu was $6.1 million in 2012, representing an increase of 125.7 percent from $2.7 million in 2011. Net margin was 7.8 percent in 2012, compared to 3.9 percent in 2011.

 

Adjusted net margin was 11.5 percent in 2012, compared to 6.4 percent in 2011.

 

First Quarter 2013 Guidance

ChinaEdu management expects total net revenue in the first quarter of 2013 to range from RMB116 million to RMB120 million or $18.6 million to $19.3 million, representing a 1.8 percent to 5.3 percent increase from RMB114 million or $18.3 million compared to the corresponding period in 2012.

 

Conference Call

ChinaEdu’s management will hold an earnings conference call at 8:00 a.m. U.S. Eastern Time on March 28, 2013 (8:00 p.m. Beijing/Hong Kong Time on March 28, 2013).

 

Dial-in details for the earnings conference call are as follows:

 

International: +65 67239382
Hong Kong: +852 25214709
United States: +1 (718) 354-1231
Toll-free China, Mobile: 4006208038
Toll-free China: 8008190121
Toll-free United States: 1 (866) 519-4004
Conference ID: 21948711
Conference Password: ChinaEdu

 

 

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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 April 5, 2013.

 

Dial-in numbers for the replay are as follows:

 

Toll Free United States +1 (855) 452-5696
International +61 2 8199 0299
Conference ID: 21948711
Conference Password: ChinaEdu

 

 

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, amortization of intangible assets and land use rights and intangible assets impairment. Adjusted operating margin is 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 non-GAAP measures 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 entered into collaborative alliances with 12 universities, ranging from 10 to 50 years in length. The Company has also entered into technology agreements with 6 universities. Besides, ChinaEdu performs recruiting services for 22 universities through nationwide learning center network.

 

Forward-Looking Statements

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.

 

 

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For investor and media inquiries, please contact:

 

Helen Plummer
Senior Investor Relations Coordinator
ChinaEdu Corporation
Phone: +1 908-442-9395
E-mail: helen@chinaedu.net

 

Simon Mei
Chief Financial Officer
ChinaEdu Corporation
Phone: +86 13810568391
E-mail: simon@chinaedu.net

 

 

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ChinaEdu Corporation            
Unaudited Condensed Consolidated Balance Sheets            
             
(in thousands, unaudited)  December
31,2011		   December
31,2012		   December
31,2012		 
   RMB   RMB   US$ 
             
Current assets:               
Cash and cash equivalents   273,746    385,922    61,945 
Term deposits   98,163    92,028    14,772 
Short-term investments   34,648    23,575    3,784 
Accounts receivable, net   31,478    34,917    5,605 
Prepaid expenses and other current assets   22,725    23,455    3,763 
Amounts due from related parties-current   238,016    260,184    41,762 
Deferred tax assets-current   5,697    9,571    1,536 
Total current assets   704,473    829,652    133,167 
Property and equipment, net   239,210    238,563    38,292 
Amounts due from related party-non-current   -    41,979    6,739 
Land use rights   26,657    26,049    4,181 
Deposits paid for acquisition of property and equipment   17,902    3,873    622 
Deferred tax assets-non-current   8,217    2,085    335 
Long-term investments   -    801    129 
Rental deposits   2,213    1,497    240 
Acquired intangible assets, net   63,638    54,499    8,748 
Goodwill   43,255    43,255    6,943 
Total assets  1,105,565    1,242,253    199,396 
                
Liabilities and equity               
Current liabilities:               
Accounts payable (including accounts payable of the consolidated VIE without recourse to the
  Group of 1,975 and 2,007 as of December 31, 2011 and December 31, 2012, respectively)		   2,239    2,401    385 
Deferred revenues-current (including deferred revenues of the consolidated VIE without recourse to
  the Group of 20,525 and 23,518 as of December 31, 2011 and December 31, 2012, respectively)		   125,332    134,175    21,537 
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 22,113
  as of December 31, 2011 and December 31, 2012, respectively)		   91,980    113,558    18,228 
Amounts due to related parties-current (including amounts due to related parties of the consolidated                                     VIE without recourse to the Group of 1,953 and 1,926 as of December 31, 2011 and December 31, 2012, respectively)   13,146    35,507    5,699 
Income taxes payable (including income taxes payable of the consolidated VIE without recourse to the
  Group of 8,893 and 10,004 as of December 31, 2011 and December 31, 2012, respectively)		   51,448    49,294    7,912 
Other taxes payable (including other taxes payable of the consolidated VIE without recourse to the
  Group of 3,047 and 4,442 as of December 31, 2011 and December 31, 2012, respectively)		   21,970    27,294    4,381 
Total current liabilities   306,115    362,229    58,142 
Deferred revenues-non-current (including deferred revenues of the consolidated VIE without recourse
  to the Group of 33 and 29 as of December 31, 2011 and December 31, 2012, respectively)		   12,059    10,654    1,710 
Deferred tax liabilities-non-current (including deferred tax liabilities of the consolidated VIE without
  recourse to the Group of 1,017 and 978 as of December 31, 2011 and December 31, 2012, respectively)		   9,243    13,473    2,163 
Unrecognized tax benefit (including unrecognized tax benefit of the consolidated VIE without
  recourse to the Group of 2,364 and 3,555 as of December 31, 2011 and December 31, 2012, respectively)		   6,089    8,795    1,412 
Total liabilities  333,506    395,151    63,427 
                
    ChinaEdu shareholders’ equity   604,806    650,191    104,363 
Noncontrolling interests   167,253    196,911    31,606 
Total  equity  772,059    847,102    135,969 
Total liabilities and equity   1,105,565    1,242,253    199,396 

 

 

 
 

 

ChinaEdu Corporation                        
Unaudited Condensed Consolidated Statements of Operations                        
   Three Months Ended   Twelve Months Ended 
(in thousands,except for percentage, share, and per share information)  December
31,2011		   December
31,2012		   December
31,2012		   December
31,2011		   December
31,2012		   December
31,2012		 
   RMB   RMB   US$   RMB   RMB   US$ 
                         
Gross Revenue *   123,127    135,889    21,812    453,116    504,052    80,904 
                               
Business Tax   2,569    347    55    17,257    15,730    2,525 
                               
Net Revenue:                              
Online degree programs   96,760    110,230    17,693    347,107    393,343    63,135 
Online tutoring programs   6,057    6,843    1,099    25,755    25,266    4,055 
Private primary and secondary schools   14,088    16,275    2,613    49,653    59,937    9,620 
International and elite curriculum programs   3,653    2,194    352    13,344    9,776    1,569 
Total net revenue   120,558    135,542    21,757    435,859    488,322    78,379 
                               
Cost of revenue:                              
Online degree programs   36,433    42,353    6,798    124,242    137,689    22,101 
Online tutoring programs   2,683    4,262    684    9,107    11,861    1,904 
Private primary and secondary schools   10,589    12,962    2,081    36,127    42,713    6,856 
International and elite curriculum programs   4,393    1,741    279    16,128    9,846    1,580 
Total cost of revenue   54,098    61,318    9,842    185,604    202,109    32,441 
                               
Gross profit:                              
Online degree programs   60,327    67,877    10,895    222,865    255,654    41,034 
Online tutoring programs   3,374    2,581    415    16,648    13,405    2,151 
Private primary and secondary schools   3,499    3,313    532    13,526    17,224    2,764 
International and elite curriculum programs   (740)   453    73    (2,784)   (70)   (11)
Total gross profit   66,460    74,224    11,915    250,255    286,213    45,938 
                               
Online degree programs   62.3%   61.6%   61.6%   64.2%   65.0%   65.0%
Online tutoring programs   55.7%   37.7%   37.7%   64.6%   53.1%   53.1%
Private primary and secondary schools   24.8%   20.4%   20.4%   27.2%   28.7%   28.7%
International and elite curriculum programs   (20.3%)   20.6%   20.6%   (20.9%)   (0.7%)   (0.7%)
Gross margin   55.1%   54.8%   54.8%   57.4%   58.6%   58.6%
                               
Operating expenses:                              
General and administrative   24,121    22,961    3,685    93,950    100,204    16,084 
Selling and marketing   15,362    14,313    2,297    52,777    48,407    7,770 
Research and development   9,487    9,927    1,593    40,589    40,512    6,503 
Intangible assets impairment   -    -    -    -    5,901    947 
Total operating expenses   48,970    47,201    7,575    187,316    195,024    31,304 
Income from operations   17,490    27,023    4,340    62,939    91,189    14,634 
Operating margin   14.5%   19.9%   19.9%   14.4%   18.7%   18.7%
                               
Interest income   2,641    3,330    536    8,843    13,253    2,127 
Gain on disposal of assets   -    894    143    -    2,197    353 
Investment income   166    -    -    832    1,460    234 
Other income   284    459    74    1,003    1,376    221 
Income before income tax and equity method investments   20,581    31,706    5,093    73,617    109,475    17,569 
Income tax expense   (7,691)   (5,603)   (899)   (17,044)   (26,427)   (4,242)
Net income before income from equity method investments   12,890    26,103    4,194    56,573    83,048    13,327 
Income from equity method investments, net of taxes   -    261    42    -    261    42 
Net income   12,890    26,364    4,236    56,573    83,309    13,369 
Net income attributable to the noncontrolling interests   (10,557)   (11,134)   (1,787)   (39,752)   (45,338)   (7,277)
Net income attributable to ChinaEdu  2,333    15,230    2,449    16,821    37,971    6,092 
Net margin   1.9%   11.2%   11.2%   3.9%   7.8%   7.8%
                               
Net income attributable to ChinaEdu per ADS:                              
      Basic   0.15    0.96    0.154    1.06    2.40    0.385 
      Diluted   0.14    0.90    0.144    1.00    2.26    0.362 
                               
Weighted average aggregate number of ADSs outstanding:                              
      Basic   15,756,432    15,880,826    15,880,826    15,817,977    15,841,125    15,841,125 
      Diluted   16,569,830    17,001,590    17,001,590    16,889,743    16,829,078    16,829,078 
                               
                               
* Gross revenue is detailed as follows:                              
Online degree programs   98,978    110,363    17,714    362,888    407,869    65,466 
Online tutoring programs   6,177    7,025    1,128    26,381    25,874    4,153 
Private primary and secondary schools   14,106    16,289    2,615    49,726    60,066    9,641 
International and elite curriculum programs   3,866    2,212    355    14,121    10,243    1,644 

 

 

 
 

 

ChinaEdu Corporation                        
Unaudited Condensed Consolidated Statements of Comprehensive Income                        
   Three Months Ended   Twelve Months Ended 
(in thousands, unaudited)  December
31,2011		   December
31,2012		   December
31,2012		   December
31,2011		   December
31,2012		   December
31,2012		 
   RMB   RMB   US$   RMB   RMB   US$ 
Net income   12,890    26,364    4,236    56,573    83,309    13,369 
Other comprehensive income, net of taxes                              
  Foreign currency translation adjustments   1,143    (94)   (15)   (751)   (87)   (14)
  Change in fair value of available for sale investments   (539)   290    47    187    1,247    200 
Comprehensive income   13,494    26,560    4,268    56,009    84,469    13,555 
Less: comprehensive income attributable to the noncontrolling interests   11627    12,694    2,038   46,020    47,836    7,678 
Comprehensive income attributable to Chinaedu  1,867    13,866    2,230    9,989    36,633    5,877 

 

 

 
 

 

ChinaEdu Corporation                          
Unaudited Condensed Consolidated Statements of Cash Flow                          
    Three Months Ended    Twelve Months Ended 
(in thousands, unaudited)     December
31,2011		   December
31,2012		   December
31,2012		   December
31,2011		   December
31,2012		   December
31,2012
      RMB   RMB   US$   RMB   RMB   US$
                           
Operating activities:                          
       Net income            12,890            26,364              4,236            56,573                83,309            13,369
       Adjustments to reconcile net income to net cash provided            by operating activities:                           
           Share-based compensation              1,660              2,262                 363              6,483                  8,258              1,326
           Depreciation and amortization of property and            equipment              6,637              6,414              1,030            23,900                25,377              4,073
           Amortization of land use rights                 152                 152                   24                 608                     608                   98
           Amortization of acquired intangible assets              1,078                 847                 136              4,171                  3,903                 626
           Accounts receivable writeoff                      -                      -                      -                      -                        340                   55
           Intangible assets impairment                    -                      -                      -                      -                     5,901                 947
           Investment income               (166)                   -                      -                    201                 (1,460)               (234)
           Gain on disposal of assets                    -                  (894)               (143)                   -                    (2,197)               (353)
           Income form equity method investments                      -                    219                   35                   -                        219                   35
           Loss from disposal of property and equipment                    81                 197                   32                 234                  1,611                 259
       Changes in assets and liabilities                           
           Accounts receivable            (8,033)              4,072                 654              3,613                 (3,779)               (607)
           Inventory                   -                      -                      -                    358                        -                      -   
           Prepaid expenses and other current assets              4,436              2,565                 411              7,458                     532                   86
           Amounts due from related parties            (8,708)          (44,974)            (7,221)              8,646               (64,325)          (10,324)
           Rental deposits                 409                 (17)                   (3)            (1,277)                     716                 115
           Accounts payable            (8,449)            (7,627)            (1,224)            (2,013)                     162                   26
           Deferred revenues            81,115            81,946            13,153            21,858                  7,438              1,195
           Accrued expenses and other current liabilities            (9,464)            (5,958)               (956)              8,700                20,851              3,348
           Amounts due to related parties          (10,136)            14,847              2,381          (19,717)                22,468              3,606
           Income tax payable               9,319                 965                 155              6,836                 (2,154)               (346)
           Other taxes payable             3,480              3,167                 508              1,462                  5,324                 855
           Deferred income taxes            (2,894)                 615                   99            (6,034)                  6,488              1,041
           Unrecognized tax benefit                 667                 844                 135              2,398                  2,706                 434
Net cash provided by operating activities           74,074            86,006            13,805          124,458              122,296            19,630
                           
Investing activities:                          
           Purchase of property and equipment            (2,702)            (3,538)               (568)          (20,788)               (12,407)            (1,991)
           Proceeds from disposal of assets                    -                 1,335                 214                   -                     5,430                 872
           Deposits paid for acquisition of property and equipment            (3,873)                   -                      -             (18,863)                        -                      -   
           (Purchase) maturity of term deposits          (11,000)          107,000            17,175            22,337                  6,135                 985
           Purchase of investments            (2,556)                   -                      -             (19,556)               (13,591)            (2,182)
           Proceeds from the sale of short term investments              4,119                   -                      -               16,306                26,187              4,203
           Purchase of exclusive partnership with universities                    -                      -                      -               (1,960)                    (980)               (157)
           Proceeds from disposal of property and equipment                   20                   -                      -                    275                        -                      -   
Net cash (used in) provided by investing activities         (15,992)          104,797            16,821          (22,249)                10,774              1,730
                           
Financing activities:                          
           Deferred payment of purchase of property and equipment            (1,479)                   -                      -               (1,479)                        -                      -   
           Cash dividends paid to noncontrolling shareholders                 (49)                   -                      -             (13,510)               (21,441)            (3,442)
           Capital contributions by noncontrolling shareholders                    -                      -                      -                 2,960                        -                      -   
           Proceeds from exercise of share options                   20              1,330                 213                 598                  5,068                 813
           Prepayment for shares repurchase                 (38)                   -                      -                  (168)                        -                      -   
           Repurchase and cancellation of ordinary shares               (688)            (1,846)               (296)            (7,437)                 (4,574)               (734)
           Repayment of loan from related party          (14,500)                   -                      -                      -                           -                      -   
           Loan from related party            10,000                   -                      -                      -                           -                      -   
Net cash used in financing activities           (6,734)               (516)                 (83)          (19,036)               (20,947)            (3,363)
                           
Effect of foreign exchange rate changes                (23)                   57                   10                   80                       53                     9
                           
CASH AND CASH EQUIVALENTS, beginning of period         222,421          195,578            31,392          190,493              273,746            43,939
                           
CASH AND CASH EQUIVALENTS, end of period         273,746          385,922            61,945          273,746              385,922            61,945
                           
Net  increase in cash and cash equivalents           51,325          190,344            30,553            83,253              112,176            18,006

 

 

 
 

 

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

 

    Three Months Ended    Twelve Months Ended 
(in thousands, unaudited)   December
31,2011		   December
31,2012		   December
31,2012		   December
31,2011		   December
31,2012		   December
31,2012
    RMB   RMB   US$   RMB   RMB   US$
                         
Net revenue            120,558           135,542             21,757           435,859               488,322                 78,379
Income from operations               17,490             27,023               4,340             62,939                 91,189                 14,634
Adjustments:                        
  Share-based compensation                1,660               2,262                  363               6,483                   8,258                   1,326
  Amortization of intangible assets and land use rights                1,230                  999                  160               4,779                   4,511                      724
  Intangible assets impairment                     -                        -                        -                        -                      5,901                      947
Adjusted income from operations (non-GAAP)              20,380             30,284               4,863             74,201               109,859                 17,631
Adjusted operating margin (non-GAAP)   16.9%   22.3%   22.3%   17.0%   22.5%   22.5%
                         
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    Twelve Months Ended 
(in thousands, unaudited)   December
31,2011		   December
31,2012		   December
31,2012		   December
31,2011		   December
31,2012		   December
31,2012
    RMB   RMB   US$   RMB   RMB   US$
                         
Net revenue            120,558           135,542             21,757           435,859               488,322                 78,379
Net income attributable to ChinaEdu                2,333             15,230               2,449             16,821                 37,971                   6,092
Adjustments:                        
  Share-based compensation                1,660               2,262                  363               6,483                   8,258                   1,326
  Share-based compensation attributable to the noncontrolling interest                 (110)                (193)                  (31)                (376)                    (562)                      (90)
  Amortization of intangible assets and land use rights                1,230                  999                  160               4,779                   4,511                      724
  Intangible assets impairment                     -                        -                        -                        -                      5,901                      947
Adjusted net income attributable to ChinaEdu (non-GAAP)                5,113             18,298               2,941             27,707                 56,079                   8,999
Adjusted net margin (non-GAAP)   4.2%   13.5%   13.5%   6.4%   11.5%   11.5%
                         
Adjusted net income attributable to ChinaEdu per ADS (non-GAAP):                        
      Basic    0.32   1.15   0.185   1.75   3.54   0.568
      Diluted    0.31   1.08   0.173   1.64   3.33   0.535
                         
Weighted average aggregate number of ADSs outstanding:                        
      Basic        15,756,432      15,880,826      15,880,826      15,817,977          15,841,125          15,841,125
      Diluted        16,569,830      17,001,590      17,001,590      16,889,743          16,829,078          16,829,078