Exhibit 99.1
CHINAEDU REPORTS FOURTH QUARTER AND FISCAL YEAR 2007 RESULTS(1)
BEIJING, CHINA — March 19, 2008 — ChinaEdu Corporation (NASDAQ: CEDU), an educational services provider in China (“ChinaEdu” or the “Company”), today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2007.(2)
Fourth Quarter and Fiscal Year 2007 Highlights
· On December 14, 2007, ChinaEdu successfully completed its initial public offering and listing on the Nasdaq Global Market of 6,820,000 American Depositary Shares (“ADSs”), each representing three ordinary shares, at a price to the public of $10.00 per ADS.
· The number of revenue students(3) in online degree programs during the fourth quarter of 2007 increased by 23% to over 91,000 from approximately 74,000 for the same period in 2006.
· The number of revenue students in online degree programs for the fiscal year 2007 increased by 36% to over 192,000 from approximately 141,000 for fiscal year 2006.
· Total net revenue for the fourth quarter of 2007 increased by 37.6% to RMB79.6 million ($10.9 million) from RMB57.9 million for the corresponding period in 2006.
· Total net revenue for the fiscal year 2007 increased by 24.1% to RMB265.0 million ($36.3 million) from RMB213.5 million for the fiscal year 2006.
· Net revenue from online degree programs, the core business segment of ChinaEdu, increased by 54.5% to RMB64.8 million ($8.9 million) for the fourth quarter of 2007 from RMB41.9 million for the corresponding period in 2006.
· Net revenue from online degree programs for the fiscal year 2007 increased by 28.9% to RMB202.2 million ($27.7 million) from RMB156.8 million for the fiscal year 2006.
(1) This announcement contains translations of certain Renminbi (“RMB”) amounts into U.S. dollar (“$”) amounts at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to U.S. dollars were made at the rate of RMB7.2946 to $1.00, the noon buying rate in effect on December 31, 2007 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. The Company makes no representation that the RMB or U.S. dollar amounts referred to could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all. |
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(2) 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. |
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(3) “Revenue students” refers to students of university online degree programs who have paid tuition in the applicable period. |
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· Net income for the fourth quarter of 2007 increased by 220.6% to RMB9.4 million ($1.3 million) from RMB2.9 million for the same period in 2006. Diluted earnings per ordinary share for the fourth quarter of 2007 increased by 171.4% to RMB0.19 ($0.03) from RMB0.07 for the fourth quarter of 2006.
· Net income excluding share-based compensation, goodwill impairment charges and write-off of receivables from the prior owner of international curriculum program (non-GAAP) for the fourth quarter of 2007 increased by 204.8% to RMB10.3 million ($1.4 million) from RMB3.4 million for the same period in 2006.
· Net income for the fiscal year 2007 decreased by 90.3% to RMB2.5 million ($0.3 million) from RMB25.5 million for the fiscal year 2006. Diluted earnings per ordinary share for the fiscal year 2007 decreased by 91.7% to RMB0.05 ($0.01) per share from RMB0.60 per share for the fiscal year 2006.
· Net income excluding share-based compensation, goodwill impairment charges and write-off of receivables from the prior owner of international curriculum programs (non-GAAP) for the fiscal year 2007 decreased by 9.9% to RMB24.9 million ($3.4 million) from RMB27.7 million for the fiscal year 2006.
“We are pleased to report the solid results for the fourth quarter of 2007, with healthy revenue growth demonstrating scalability of our business model,” said Ms. Julia Huang, ChinaEdu’s Chairman and Chief Executive Officer. “These results were driven by our continued strategy of helping the universities to increase their enrollment growth in our online degree programs through enhancing our sales and marketing efforts and improving our quality of services to the Universities and students, which we believe will further strengthen our position as a leading education services provider in China.” Ms. Huang continued, “We expect to continue to take advantage of growth opportunities in the Chinese education market in order to position ourselves to achieve sustainable long-term growth.”
Financial Results for the Fourth Quarter Ended December 31, 2007
ChinaEdu reported total net revenue of RMB79.6 million ($10.9) for the fourth quarter ended December 31, 2007, representing a 37.6% increase from the corresponding period of 2006.
Net revenue from online degree programs for the fourth quarter of 2007 was RMB64.8 million ($8.9 million), representing a 54.5% increase from RMB41.9 million for the corresponding period in 2006. This increase was attributable primarily to the following factors:
· Our university partners’ online degree programs experienced significant growth in revenue students in the quarter ended December 31, 2007 as compared to the corresponding period of 2006. In the aggregate, our university partners had over 91,000 revenue students during the fourth quarter of 2007, representing a 23% increase from the same period in 2006.
· A non-recurring RMB8.4 million ($1.2 million) payment made by our university partners during the fourth quarter as a result of excess spending by the online
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education colleges, which in turn reduced the tuition fees payable to ChinaEdu during the previous years.
· Value-added tax (“VAT”) refund of RMB3.5 million ($0.5 million) in the fourth quarter of 2007, which was recognized as net revenue from online degree programs when received.
Net revenue from the Company’s non-online degree programs (international curriculum programs, private primary and secondary schools and online tutoring programs) for the fourth quarter of 2007 were RMB14.8 million ($2.0 million), representing a 6.9% decrease from RMB15.9 for the corresponding period in 2006. This decrease was primarily attributable to the decline in revenue from the FEC program (part of our international curriculum programs), which has experienced lower student enrollment and lower per student fees for the academic year started in September 2007, as compared to the academic year started in September 2006. This is mainly attributable to intensified competition among service providers, which increased the bargaining power of the schools with such service providers, including the Company.
Total cost of revenue for the fourth quarter of 2007 was RMB24.5 million ($3.4 million), representing a 12.6% increase from RMB21.8 million for the corresponding period of 2006. This increase is attributable to the changes discussed below.
Cost of revenue for online degree programs for the fourth quarter of 2007 was RMB15.7 million ($2.2 million), representing a 14.2% increase from RMB13.8 million for the fourth quarter of 2006. This increase was attributable primarily to an increase in the number of students in our partners’ online degree programs and increased recruiting expenses.
Cost of revenue for non-online degree programs for the fourth quarter of 2007 was RMB8.8million ($1.2 million), representing a 9.8% increase from RMB8.0 million for the fourth quarter of 2006. This increase was attributable primarily to an increase in the number of faculty members in our private and primary schools in 2007 in response to projected growth in student enrollment in one of those schools.
As a result of the factors discussed above, gross profit for the fourth quarter of 2007 was RMB55.1 million ($7.6 million), representing a 52.7% increase from RMB36.1 million for the corresponding period of 2006.
General and administrative expenses for the fourth quarter of 2007 were RMB26.1 million ($3.6 million), representing a 79.4% increase from RMB14.6 million for the fourth quarter of 2006. This increase was attributable primarily to the increase in the number of general and administrative employees, an increase in performance-based compensation and additional expenses associated with being a newly listed public company in the U.S., including increased professional services fees, specifically increased accounting and legal fees.
Research and development expenses for the fourth quarter of 2007 were RMB6.8 million ($0.9 million), representing a 76.6% increase from RMB3.9 million for the corresponding period in 2006. This increase was attributable primarily to increased research and
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development activities in some of the Company’s collaborative alliances(4), and increased bonus compensation paid to research and development personnel.
Share-based compensation for the fourth quarter of 2007, which was allocated to related operating cost and expense line items, was RMB1.1 million ($0.2), representing an 83.3% increase from RMB0.6 million for the corresponding period in 2006. This increase was attributable primarily to an increase in share-based compensation due to an increase in the number of options granted in fiscal year 2007.
As a result of the factors discussed above, income from operations for the fourth quarter of 2007 was RMB18.7 million ($2.6 million), representing a 32.8% increase from RMB14.1 million for the corresponding period of 2006.
Net income was RMB9.4 million ($1.3 million) for the fourth quarter of 2007, representing a 220.6% increase from RMB2.9 million for the corresponding period in 2006. This increase was attributable primarily to the improved performance of the Company’s online degree programs, as well as the other factors discussed above. Diluted earnings per ordinary share for the fourth quarter of 2007 increased by 171.4% to RMB0.19 ($0.03) from RMB0.07 per share in the corresponding period of 2006.
As of December 31, 2007, the Company had cash, cash equivalents and term deposit of RMB503.2 million ($69.0million).
Financial Results for the Fiscal Year Ended December 31, 2007
ChinaEdu reported total net revenue for the fiscal year ended December 31, 2007 of RMB265.0 million ($36.3 million), representing a 24.1% increase from the fiscal year ended December 31, 2006.
Net revenue from online degree programs for the fiscal year 2007 was RMB202.2 million ($27.7 million), representing a 28.9% increase from RMB156.8 million for the fiscal year 2006. This increase was attributable primarily to following factors:
· Our university partners’ online degree programs experienced significant growth in revenue students in fiscal year 2007 as compared to fiscal year 2006. In the aggregate, our university partners had approximately 192,000 revenue students during fiscal year 2007, representing a 36% increase from fiscal year 2006. This increase in revenue students was partially offset by increased payments to third-party learning centers by our university partners. The aggregate payment to third-party learning centers by our university partners in 2007 increased to 41% of gross tuition receipts in 2007, from 38% in 2006. This increase was attributable primarily to increased demand by universities for services provided by a limited number of learning centers.
· A non-recurring RMB8.4 million ($1.2 million) compensation by our university partners during the fourth quarter for the over spending by the online education
(4) “Collaborative alliance” or “Collaborative alliances” refer to the subsidiary or subsidiaries that the Company formed with certain university partners to provide services to their online degree programs, which subsidiaries are majority owned by the Company.
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colleges which in turn reduced the tuition fees payable to ChinaEdu during the previous years.
Net revenue from the Company’s non-online degree programs for the fiscal year 2007 was RMB62.8 million ($8.6 million), representing a 10.8% increase from RMB56.7 million for the fiscal year 2006. This increase was attributable primarily to the increase in student enrollment for the academic year started in September 2006 and ended in August 2007, as compared to the academic year started in September 2005 and ended in August 2006.
Total cost of revenue for fiscal year 2007 was RMB96.3 million ($13.2 million), representing a 20% growth from RMB80.3 million for fiscal year 2006. This increase is attributable to the changes discussed below.
Cost of revenue for online degree programs for fiscal year 2007 was RMB58.0 million ($7.9 million), representing a 13.3% increase from RMB51.2 million in the fiscal year 2006. This increase was attributable primarily to an increase in the number of students enrolled in our university partners’ online degree programs and increased student recruiting-related expenses.
Cost of revenue for non-online degree programs for the fiscal year 2007 was RMB38.3 million ($5.3 million), representing a 31.7% increase from RMB29.1 million for the fiscal year 2006. This increase was attributable primarily to following factors:
· The number of faculty members in the Company’s private primary and secondary schools increased significantly in 2007, in response to a projected increase in student enrollment.
· The international curriculum program organized more overseas student academic tours and overseas training tours for teachers in fiscal year 2007, as compared to fiscal year 2006.
General and administrative expenses for the fiscal year 2007 were RMB76.9 million ($10.5 million), representing a 57.4% growth from RMB48.8 million in fiscal year 2006. The increase was primarily attributable to the following factors:
· In the quarter ended September 30, 2007, the Company recorded a write-off of approximately RMB4.7 million, including write-offs of approximately RMB4 million in delinquent accounts receivable and loans due from the prior owner of the international curriculum program, and a write-off of approximately RMB0.7 million of fixed assets attributable to the online tutoring program.
· In fiscal year 2007, the Company incurred additional expenses associated with being a new public company, including increased professional services fees, specifically increased accounting and legal fees.
· In fiscal year 2007, the Company substantially increased the number of employees as a result of continuous business expansions.
· In fiscal year 2007, the Company paid more in performance-based bonus compensation due to improved operational results in most of its collaborative alliances.
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Selling and marketing expenses for the fiscal year 2007 were RMB14.3 million ($2.0 million), representing a 10.7% increase from RMB12.9 million for the fiscal year 2006. This increase is attributable primarily to an increase in the number of sales and marketing personnel in fiscal year 2007 in response to the continuous expansion of our business.
Research and development expenses for the fiscal year 2007 were RMB21.0 million ($2.9 million), representing a 47.4% growth from RMB14.3 million for the fiscal year 2006. This increase was attributable primarily to increased research and development activities in some of the Company’s collaborative alliances, and increased bonus compensation paid to research and development personnel.
Income from operations for fiscal year 2007 was RMB40.3 million ($5.5 million), a 29.6% decrease from RMB57.2 million for the fiscal year 2006. Income from operations excluding goodwill impairment charge, share-based compensation, and write-off of receivables from the prior owner of the international curriculum programs (non-GAAP) for fiscal year 2007 was RMB64.1 million, representing a 7% increase from RMB59.9 million for the fiscal year 2006.
Net income for fiscal year 2007 was RMB2.5 million ($0.3 million), representing a 90.3% decrease from RMB25.5 million for the fiscal year 2006. Net income excluding share-based compensation, goodwill impairment charge and write-off of receivables from the prior owner of international curriculum program (non-GAAP) was RMB24.9 million ($3.4 million), representing a 9.9% decrease from RMB27.7 million for the fiscal year 2006.
Write-down of goodwill and intangible assets. In the third quarter of 2007, the Company recognized a goodwill impairment charge of RMB16.2 million ($2.2 million). The impairment related to the FEC program, as management has significantly reduced its profitability forecast for this portion of the Company’s business. Management now expects future net revenue from the FEC program to be lower than previous forecasts because of lower student enrollment and lower per student fees under the Company’s contractual arrangements with participating schools. These developments are the result of intensified competition among service providers, which increased the bargaining power of the schools with such service providers, including the Company, and the Company’s expansion of the program into less affluent areas of China, where tuition and fees tend to be lower.
Recent Developments
· In March 2008, ChinaEdu entered into a definitive agreement to acquire the remaining 20% equity interest in the 101 Online School, an online tutoring and test preparation program in which the Company owned the other 80% interest, in order to capitalize on the growth potential of the online tutoring business.
· In March 2008, the Company announced an exclusive 20-year joint venture agreement with Beijing Forestry University to provide online education services to the University.
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Outlook for the First Quarter of 2008
For the first quarter of 2008, ChinaEdu expects its total net revenue to be in the range of RMB66 million ($9.0 million) to RMB68 million ($9.3 million). This forecast reflects ChinaEdu’s current and preliminary view, which is subject to change.
Conference Call
ChinaEdu will host a conference call on Thursday, March 20, 2008 at 8:30 AM U.S. Eastern Time 8:30 PM Beijing/Hong Kong Time on March 20, 2008.
Dial-in information for the earnings conference call is as follows:
US: | | 1.866.761.0749 / 1.617.614.2707 |
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Hong Kong: | | 852.3002.1672 |
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China (Mainland): | | 10.800.130.0399 |
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The passcode for the call is: CEDU.
A replay of the conference call will be available until March 27, 2008 by dialing 1.888.286.8010 or 1.617.801.6888 and entering passcode: 24141533.
Additionally, a live and archived webcast of the conference call will be available at http://www.chinaedu.net.
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Non-GAAP Financial Measures
To supplement the unaudited condensed consolidated financial information presented in accordance with Accounting Principles Generally Accepted in the United States of America (“GAAP”), the Company uses non-GAAP measures of income from operations and net income, which are adjusted from results based on GAAP to exclude goodwill impairment, share-based compensation and write-off of receivables from the prior owner of international curriculum programs. The 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 uses both GAAP and non-GAAP information in evaluating and operating business 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 and support for international curriculum programs.
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 strategic relationships with twelve universities to operate online degree programs, ten of which are under long-term, exclusive contracts that vary from 15 to 50 years in length.
Forward-Looking Statement
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and contingencies, many of which are beyond our control which may cause actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The Company’s actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including those described under the heading “Risk Factors” in the Company’s final prospectus filed with the Securities and Exchange Commission on December 11, 2007, and in documents subsequently filed by the Company from time to time with the
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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.
Investor Contacts
In China:
Michael Xu
Chief Financial Officer
ChinaEdu Corporation
Phone: +86-10-8418 6655 x1002
E-mail: ir@chinaedu.net
Pamela Leung
Taylor Rafferty, Hong Kong
Phone: +852 3196 3712
E-mail: chinaedu@taylor-rafferty.com
In the United States:
Jessica McCormick,
Taylor Rafferty, New York
Phone: +1 212 889 4350
E-mail: chinaedu@taylor-rafferty.com
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Chinaedu corporation
Unaudited Condensed Consolidated Balance Sheets
(in thousands) | | December 31,
2006 | | September 30,
2007 | | December 31,
2007 | | December 31,
2007 | |
| | RMB | | RMB | | RMB | | US$ | |
| | | | | | | | | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | | 148,315 | | 128,834 | | 497,114 | | 68,148 | |
Accounts receivable, net | | 12,578 | | 1,425 | | 1,238 | | 170 | |
Term deposit | | 10,000 | | 10,200 | | 6,042 | | 828 | |
Prepaid expenses and other current assets | | 8,999 | | 15,241 | | 17,492 | | 2,398 | |
Amounts due from related parties | | 59,979 | | 62,320 | | 105,522 | | 14,466 | |
Deferred tax assets | | 5,347 | | 1,700 | | 9,521 | | 1,305 | |
Total current assets | | 245,218 | | 219,720 | | 636,929 | | 87,315 | |
Cost method investment | | 1,210 | | 1,210 | | 1,210 | | 166 | |
Land use rights, net | | 25,287 | | 25,589 | | 26,949 | | 3,694 | |
Property and equipment, net | | 43,657 | | 61,954 | | 130,745 | | 17,924 | |
Deposits paid for acquisition of property and equipment | | — | | 28,624 | | 2,025 | | 278 | |
Intangible assets, net | | 102,836 | | 108,019 | | 105,852 | | 14,511 | |
Deferred tax assets | | 2,057 | | 2,188 | | 1,416 | | 194 | |
Rental deposits | | 436 | | 1,387 | | 1,623 | | 222 | |
Goodwill | | 76,509 | | 73,319 | | 73,319 | | 10,051 | |
Total assets | | 497,210 | | 522,010 | | 980,068 | | 134,355 | |
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Liabilities, minority interest and shareholders’ equity | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | | 8,413 | | 3,309 | | 2,773 | | 380 | |
Deferred revenues | | 78,746 | | 27,888 | | 83,816 | | 11,490 | |
Accrued expenses and other current liabilities | | 21,754 | | 20,178 | | 42,096 | | 5,771 | |
Amounts due to related parties | | 7,121 | | 18,901 | | 28,316 | | 3,882 | |
Income taxes payable | | 12,960 | | 13,409 | | 22,455 | | 3,078 | |
Other taxes payable | | 3,752 | | 4,483 | | 6,666 | | 914 | |
Total current liabilities | | 132,746 | | 88,168 | | 186,122 | | 25,515 | |
Long term debt | | — | | — | | 25,724 | | 3,526 | |
Deferred revenues | | 289 | | 103 | | 3,124 | | 428 | |
Convertible notes | | 30,654 | | 23,333 | | — | | — | |
Deferred tax liabilities | | 19,879 | | 23,528 | | 24,036 | | 3,295 | |
Unrecognized tax benefit | | — | | 4,198 | | 4,332 | | 594 | |
Total liabilities | | 183,568 | | 139,330 | | 243,338 | | 33,358 | |
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Minority interests | | 49,323 | | 61,690 | | 57,996 | | 7,951 | |
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Shareholders’ equity: | | | | | | | | | |
Total shareholders’ equity | | 264,319 | | 320,990 | | 678,734 | | 93,046 | |
Total liabilities, minority interest, and shareholders’ equity | | 497,210 | | 522,010 | | 980,068 | | 134,355 | |
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Chinaedu corporation
Unauited Condensed Consolidated Statements of Operations
| | Three Months Ended | | Twelve Months Ended | |
(in thousands except for percentages and share, per share information) | | December 31,
2006 | | September 30,
2007 | | December 31,
2007 | | December 31,
2007 | | December 31,
2006 | | December 31,
2007 | | December 31,
2007 | |
| | RMB | | RMB | | RMB | | US$ | | RMB | | RMB | | US$ | |
| | | | | | | | | | | | | | | |
Net Revenue: | | | | | | | | | | | | | | | |
Online degree programs | | 41,950 | | 48,647 | | 64,813 | | 8,886 | | 156,845 | | 202,185 | | 27,717 | |
International curriculum programs | | 7,772 | | 8,957 | | 6,640 | | 910 | | 28,428 | | 31,434 | | 4,309 | |
Online tutoring programs | | 4,856 | | 4,351 | | 4,488 | | 615 | | 17,384 | | 18,013 | | 2,469 | |
Private primary and secondary schools | | 3,277 | | 3,457 | | 3,672 | | 503 | | 10,874 | | 13,356 | | 1,831 | |
Total net revenue | | 57,855 | | 65,412 | | 79,613 | | 10,914 | | 213,531 | | 264,988 | | 36,326 | |
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Cost of revenue: | | | | | | | | | | | | | | | |
Online degree programs | | 13,774 | | 18,557 | | 15,729 | | 2,156 | | 51,215 | | 58,027 | | 7,955 | |
International curriculum programs | | 5,042 | | 7,528 | | 4,663 | | 639 | | 17,212 | | 23,503 | | 3,222 | |
Online tutoring programs | | 879 | | 1,031 | | 720 | | 99 | | 3,452 | | 3,875 | | 531 | |
Private primary and secondary schools | | 2,093 | | 2,649 | | 3,414 | �� | 468 | | 8,429 | | 10,944 | | 1,500 | |
Total cost of revenue | | 21,788 | | 29,765 | | 24,526 | | 3,362 | | 80,308 | | 96,349 | | 13,208 | |
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Gross profit: | | | | | | | | | | | | | | | |
Online degree programs | | 28,176 | | 30,090 | | 49,084 | | 6,729 | | 105,630 | | 144,158 | | 19,762 | |
International curriculum programs | | 2,730 | | 1,429 | | 1,977 | | 271 | | 11,216 | | 7,931 | | 1,087 | |
Online tutoring programs | | 3,977 | | 3,320 | | 3,768 | | 517 | | 13,932 | | 14,138 | | 1,938 | |
Private primary and secondary schools | | 1,184 | | 808 | | 258 | | 35 | | 2,445 | | 2,412 | | 331 | |
Total gross profit | | 36,067 | | 35,647 | | 55,087 | | 7,552 | | 133,223 | | 168,639 | | 23,118 | |
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Online degree programs | | 67.2 | % | 61.9 | % | 75.7 | % | 75.7 | % | 67.3 | % | 71.3 | % | 71.3 | % |
International curriculum programs | | 35.1 | % | 16.0 | % | 29.8 | % | 29.8 | % | 39.5 | % | 25.2 | % | 25.2 | % |
Online tutoring programs | | 81.9 | % | 76.3 | % | 84.0 | % | 84.0 | % | 80.1 | % | 78.5 | % | 78.5 | % |
Private primary and secondary schools | | 36.1 | % | 23.4 | % | 7.0 | % | 7.0 | % | 22.5 | % | 18.1 | % | 18.1 | % |
Gross profit margin | | 62.3 | % | 54.5 | % | 69.2 | % | 69.2 | % | 62.4 | % | 63.6 | % | 63.6 | % |
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Operating expenses: | | | | | | | | | | | | | | | |
General and administrative | | 14,551 | | 20,824 | | 26,106 | | 3,579 | | 48,846 | | 76,893 | | 10,541 | |
Selling and marketing | | 3,590 | | 4,722 | | 3,491 | | 479 | | 12,893 | | 14,277 | | 1,957 | |
Research and development | | 3,861 | | 5,605 | | 6,818 | | 935 | | 14,263 | | 21,021 | | 2,882 | |
Goodwill impairment | | | | 16,192 | | | | | | | | 16,192 | | 2,220 | |
Total operating expenses | | 22,002 | | 47,343 | | 36,415 | | 4,993 | | 76,002 | | 128,383 | | 17,600 | |
Income (loss) from operations | | 14,065 | | (11,696 | ) | 18,672 | | 2,559 | | 57,221 | | 40,256 | | 5,518 | |
Operating margin | | 24.3 | % | (17.9 | )% | 23.5 | % | 23.5 | % | 26.8 | % | 15.2 | % | 15.2 | % |
| | | | | | | | | | | | | | | |
Other income | | — | | — | | — | | — | | — | | 394 | | 54 | |
Interest income | | 379 | | 516 | | 2,398 | | 329 | | 1,172 | | 4,118 | | 565 | |
Interest expense | | (570 | ) | (674 | ) | (475 | ) | (65 | ) | (2,279 | ) | (2,130 | ) | (292 | ) |
Income (loss) before income tax provisions and minority interest | | 13,874 | | (11,854 | ) | 20,595 | | 2,823 | | 56,114 | | 42,638 | | 5,845 | |
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Income tax expense | | (1,730 | ) | (2,505 | ) | (2,519 | ) | (345 | ) | (6,994 | ) | (15,003 | ) | (2,057 | ) |
Minority interest, net of taxes | | (9,201 | ) | (5,065 | ) | (8,639 | ) | (1,184 | ) | (23,581 | ) | (25,148 | ) | (3,447 | ) |
Net income (loss) | | 2,943 | | (19,424 | ) | 9,437 | | 1,294 | | 25,539 | | 2,487 | | 341 | |
Net margin | | 5.1 | % | (29.7 | )% | 11.9 | % | 11.9 | % | 12.0 | % | 0.9 | % | 0.9 | % |
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Net income (loss) per share: | | | | | | | | | | | | | | | |
Basic | | 0.07 | | (0.47 | ) | 0.21 | | 0.03 | | 0.65 | | 0.06 | | 0.01 | |
Diluted | | 0.07 | | (0.47 | ) | 0.19 | | 0.03 | | 0.60 | | 0.05 | | 0.01 | |
| | | | | | | | | | | | | | | |
Net income (loss) per ADS: | | | | | | | | | | | | | | | |
Basic | | 0.21 | | (1.41 | ) | 0.63 | | 0.09 | | 1.95 | | 0.18 | | 0.03 | |
Diluted | | 0.21 | | (1.41 | ) | 0.57 | | 0.09 | | 1.80 | | 0.15 | | 0.03 | |
| | | | | | | | | | | | | | | |
Weighted average aggregate number of ordinary shares outstanding: | | | | | | | | | | | | | | | |
Basic | | 39,643,130 | | 41,722,746 | | 45,015,332 | | 45,015,332 | | 39,209,606 | | 42,147,170 | | 42,147,170 | |
Diluted | | 42,774,398 | | 41,722,746 | | 50,477,265 | | 50,477,265 | | 42,708,213 | | 47,322,184 | | 47,322,184 | |
| | | | | | | | | | | | | | | | | |
14
Chinaedu corporation
Reconciliations of non-GAAP results of operations measures to GAAP measures
| | Three Months Ended | | Twelve Months Ended | |
(in thousands, unaudited) | | December 31,
2006 | | September 30,
2007 | | December 31,
2007 | | December 31,
2007 | | December 31,
2006 | | December 31,
2007 | | December 31,
2007 | |
| | RMB | | RMB | | RMB | | US$ | | RMB | | RMB | | US$ | |
| | | | | | | | | | | | | | | |
Income (loss) from operations | | | | | | | | | | | | | | | |
GAAP Result | | 14,065 | | (11,696 | ) | 18,672 | | 2,559 | | 57,221 | | 40,256 | | 5,518 | |
Adjustment-Share-based compensation | | 588 | | 1,180 | | 1,148 | | 157 | | 2,711 | | 3,643 | | 499 | |
Adjustment-Goodwill impairment | | — | | 16,192 | | — | | — | | — | | 16,192 | | 2,220 | |
Adjustment for write-off of receivables from prior owner of International Curriculum Program | | | | 4,031 | | | | | | | | 4,031 | | 553 | |
Non-GAAP Result | | 14,653 | | 9,707 | | 19,820 | | 2,716 | | 59,932 | | 64,122 | | 8,790 | |
| | | | | | | | | | | | | | | |
Net income (loss) | | | | | | | | | | | | | | | |
GAAP Result | | 2,943 | | (19,424 | ) | 9,437 | | 1,294 | | 25,539 | | 2,487 | | 341 | |
Adjustment for operation profit | | 588 | | 21,403 | | 1,148 | | 157 | | 2,711 | | 23,866 | | 3,272 | |
Adjustment-Minority interest for Share-based compensation | | (145 | ) | (273 | ) | (265 | ) | (36 | ) | (569 | ) | (774 | ) | (106 | ) |
Adjustment-Deferred tax benefit for write-off of receivables from prior owner of International Curriculum Programs | | | | (636 | ) | | | | | | | (636 | ) | (87 | ) |
Non-GAAP Result | | 3,386 | | 1,070 | | 10,320 | | 1,415 | | 27,681 | | 24,943 | | 3,420 | |
15
