omniture

Ambow Education Announces Third Quarter 2011 Unaudited Financial Results

2011-11-15 06:05 2640

BEIJING, November 15, 2011 /PRNewswire-Asia/ -- Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE: AMBO), a leading national provider of educational and career enhancement services in China, today reported its unaudited financial results for the third quarter of 2011.

Financial Highlights for the Third Quarter Ended September 30, 2011:

  • Total net revenue increased 42.6% to $72.8 million(1) from $51.1 million for the same period in 2010 and organic growth increased 25.0% year-over-year.
    • Tutoring revenue increased 32.7% to $33.9 million from $25.5 million for the same period in 2010.
    • Career Enhancement revenue increased 88.7% to $23.0 million from $12.2 million for the same period in 2010.
    • The growth layer, which consists of Tutoring and Career Enhancement, achieved 50.8% year-over-year revenue growth, of which organic growth was 26.9%.
  • Non-GAAP operating income(2) increased to $10.3 million from $8.1 million for the same period in 2010.
  • Non-GAAP net income(3) increased to $7.3 million from $6.6 million for the same period in 2010.
  • Diluted non-GAAP net income per adjusted ADS attributable to Ambow(4) increased to $0.097 as compared to $0.091 for the same period in 2010.
  • Total student enrollments increased to 301,000 from 246,000 for the same period in 2010.
    • The growth layer's student enrollments increased 26.6% to 267,000 from 211,000 for the same period in 2010.

Financial Highlights for the Nine Months Ended September 30, 2011:

  • Total net revenue increased 32.5% to $204.5 million from $154.4 million for the same period in 2010 and organic growth increased 23.1% year-over-year.
    • Tutoring revenue increased 25.7% to $94.0 million from $74.7 million for the same period in 2010.
    • Career Enhancement revenue increased 94.5% to $56.2 million from $28.9 million for the same period in 2010.
    • The growth layer, which consists of Tutoring and Career Enhancement, achieved 44.9% year-over-year revenue growth, of which organic growth was 31.1%.
  • Non-GAAP operating income increased to $36.1 million from $27.5 million for the same period in 2010.
  • Non-GAAP net income increased to $28.0 million from $23.4 million for the same period in 2010.
  • Diluted non-GAAP net income per adjusted ADS attributable to Ambow increased to $0.372 as compared to $0.338 for the same period in 2010.
  • The growth layer's student enrollments increased 20.0% to 729,000 from 608,000 for the same period in 2010.

Commenting on the third quarter results, Ambow's President and Chief Executive Officer Dr. Jin Huang said, "I am pleased with Ambow's performance this quarter as we continue to successfully execute our strategy to sustain strong top-line growth and improve operating profit. We remain focused on growing our Tutoring and Career Enhancement services organically and satisfying the immense demand for these services through our diversified offerings. "

Dr. Huang continued, "The initial results of our tutoring center expansion strategy are satisfying: we added 13 new tutoring centers in the third quarter and are on the way to exceeding our full-year goals. In addition, growth in Tutoring enrollments is reaccelerating and increased by 17.6% this quarter. Turning to Career Enhancement, we continue to experience strong demand for our signature programs, which combine updated hard-skill, soft-skill and project-based training. Direct enrollments from universities have grown explosively and now contribute over 55% of Career Enhancement enrollments. This is in part due to our CCEP program, launched in March this year, which has already attracted more than 17,000 students. In addition to our traditional individual-paid and IT focused programs, we have, with the acquisition of Genesis Education in the second quarter, expanded our reach to include corporate training and soft-skill training. Our strong organic growth resulted in a 50.8% year-over-year revenue increase in our growth layer. We expect student enrollments in Tutoring and Career Enhancement to exceed one million in 2011. "

"During the quarter we also closed our last acquisition of the year. Due to our strong organic growth, we expect that acquisitions will contribute to less than 10% of our annual revenue in 2011." Dr. Huang concluded.

Ambow's Chief Financial Officer, Paul Chow, added, "In the third quarter, the Growth Layer which consists of Tutoring and Career Enhancement, achieved approximately 27% year-over-year organic growth."

"Turning to operations, I am very pleased to announce that, even though we are in the investment phase of our Tutoring and Career Enhancement businesses, we achieved 27.1% year-over-year non-GAAP operating income growth. Non-GAAP G&A expense(5) as a percentage of sales decreased to 17.9% in the third quarter from 19.8% for the same period of 2010. This decrease is a direct result of our efforts to improve the efficiency and scalability of our business. Though we are still in the early stages of our expansion, it is our goal to maintain sustainable growth in both the top and bottom lines," concluded Mr. Chow.

Financial Results for the Third Quarter of 2011:

Net Revenues

Total net revenues for the third quarter of 2011 were $72.8 million, increasing 42.6% year-over-year from $51.1 million for the same period in 2010.

Better Schools

Tutoring revenue increased 32.7% to $33.9 million from $25.5 million for the same period in 2010. The Company noted that the revenue growth in Tutoring was primarily a result of 17.6% growth in enrollments and 12.9% growth in Average Selling Price ("ASP").

K-12 Schools revenue increased 1.0% to $7.9 million from $7.8 million for the same period in 2010. During the quarter, enrollments decreased 7.8% while ASP increased 6%. The drop in enrollments was because we reverted the operating right for the Junior High portion of Zhenjiang Foreign Language School back to the original owner at the beginning of the third quarter. This is in line with Ambow's strategy to focus on the International High School Program, which the Company developed internally at the Zhenjiang school over the last three years. This shift will give Ambow more discretionary power over quality control, teacher management, pricing and other operations in the future.

No revenue was recognized from the Junior High business during the third quarter, and its revenue contribution over the last academic year through the second quarter of 2011 was a total of $3.38 million. The Company anticipated $0.24 million revenue from the Junior High business in the third quarter. It does not expect this adjustment to have any impact on operating profits in the future.

Total student enrollments in Better Schools for the third quarter of 2011 were approximately 252,000, with 231,000 in Tutoring and 21,000 in K-12 Schools.

Better Jobs

Career Enhancement revenue increased 88.7% to $23.0 million in the third quarter of 2011, compared to $12.2 million for the same period in 2010. The Company noted that the revenue growth in Career Enhancement was the result of an impressive 147.1% enrollments growth and 23.6% decrease in ASP.

Colleges revenue increased 45.7% to $8.1 million from $5.6 million for the same period in 2010, with $2.5 million attributable to the recognition of certain contributions from students, following the fulfillment of the related conditions. Such revenue did not arise in 2010 but will recur in future years in a similar pattern.

Total student enrollments in Better Jobs for the third quarter of 2011 were approximately 49,000, with 37,000 in Career Enhancement and over 12,000 in Colleges.

Gross Profit and Gross Margin

Overall gross profit increased 40.6% to $41.0 million for the third quarter of 2011, compared to $29.2 million for the same period in 2010. Gross margin was 56.3% for the third quarter of 2011 compared to 57.1% for the same period in 2010. The slight decrease in gross margin was due to tutoring center expansion costs and the return of Career Enhancement's gross margin to normal levels.

Operating Expenses and Income

Operating expenses, which include selling and marketing, general and administrative and research and development expenses, were $32.3 million for the third quarter of 2011, increasing 43.6% year-over-year from $22.5 million for the same period in 2010. Operating expenses as a percentage of total net revenues were 44.3% for the third quarter of 2011, compared to 44.0% for the same period in 2010. Non-GAAP operating income increased to $10.3 million from $8.1 million for the same period in 2010.

Income Tax Expenses

Income tax expenses were $1.4 million for the third quarter of 2011, compared to income tax expenses of $1.1 million for the same period in 2010.

Net Income and Adjusted EPS

Net income was $5.8 million for the third quarter of 2011, increasing 9.9% year-over-year from $5.3 million for the same period in 2010.

Non-GAAP net income was $7.3 million for the third quarter of 2011, increasing 10.0% year-over-year from $6.6 million for the same period in 2010.

Basic and diluted non-GAAP net income per adjusted ADS(6) attributable to Ambow was $0.102 and $0.097, respectively, compared to $0.097 and $0.091, respectively, for the same period in 2010.

Balance Sheet

Cash and cash equivalents, restricted cash and term deposits as of September 30, 2011 were $93.8 million, compared to $86.8 million as of June 30, 2011.

The Company's deferred revenue balances as of September 30, 2011 and September 30, 2010 were $99.1 million and $91.2 million, respectively. Included in the 2011 balance was $48.4 million of deferred revenue from the Company's growth layer, which increased by 43.9% year-over-year.

Financial Results for the Nine Months Ended September 30, 2011:

Net Revenues

Total net revenues for the nine months ended September 30, 2011 were $204.5 million, increasing 32.5% year-over-year from $154.4 million for the same period in 2010.

Better Schools

Tutoring revenue increased 25.7% to $94.0 million from $74.7 million for the same period in 2010. The Company noted that the revenue growth in Tutoring was a result of 13.9% growth in enrollments and 10.4% growth in ASP.

K-12 Schools revenue increased 4.5% to $28.7 million from $27.4 million for the same period in 2010.

Better Jobs

Career Enhancement revenue accounted for $56.2 million of total net revenues for the nine months ended September 30, 2011, compared to $28.9 million for the same period in 2010. The Company noted that Career Enhancement achieved record revenue growth of 94.5% year-over-year, with 114.9% growth in enrollments and 9.5% decrease in ASP.

Colleges achieved 10.1% growth year-over-year and accounted for $25.7 million of total net revenues for the nine months ended September 30, 2011, compared to $23.3 million for the same period in 2010, with $2.5 million attributable to the recognition of certain contributions from students, following the fulfillment of the related conditions. Such revenue did not arise in 2010 but will recur in future years in a similar pattern.

Gross Profit and Gross Margin

Overall gross profit increased 32.2% to $116.1 million for the nine months ended September 30, 2011, compared to $87.8 million for the same period in 2010. Gross margin was 56.8% for the nine months ended September 30, 2011 compared to 56.9% for the same period in 2010.

Operating Expenses and Income

Operating expenses, which include selling and marketing, general and administrative and research and development expenses, were $83.8 million for the nine months ended September 30, 2011, increasing 30.9% year-over-year from $64.0 million for the same period in 2010. Operating expenses as a percentage of total net revenues were 41.0% for the nine months ended September 30, 2011, compared to 41.5% for the same period in 2010. Non-GAAP operating income increased to $36.1 million from $27.5 million for the same period in 2010.

Income Tax Expenses

Income tax expenses were $4.2 million for the nine months ended September 30, 2011, compared to income tax expenses of $3.0 million for the same period in 2010.

Net Income and Adjusted EPS

Net income was $24.2 million for the nine months ended September 30, 2011, increasing 23.0% year-over-year from $19.7 million for the same period in 2010.

Non-GAAP net income was $28.0 million for the nine months ended September 30, 2011, increasing 19.4% year-over-year from $23.4 million for the same period in 2010.

Basic and diluted non-GAAP net income per adjusted ADS attributable to Ambow was $0.392 and $0.372, respectively, compared to $0.359 and $0.338, respectively, for the same period in 2010.

Financial Outlook for the Fourth Quarter and Full-Year 2011

The Company expects total net revenues in the fourth quarter of 2011 to be in the range of $81.5 million (Rmb520 million) to $83.0 million (Rmb530 million).

This is the Company's current view and it is subject to change.

Conference Call Information

Ambow's management will host an earnings conference call at 8:00 a.m. U.S. Eastern Time on November 15, 2011 (9:00 p.m. Beijing/Hong Kong Time on November 15, 2011).

The dial-in number and passcode for the conference call are as follows:

U.S. Toll Free: +1-866-549-1292
China Toll Free: +400-681-6949
International: +852-3005-2050

The passcode for the call is "657079 #".

Additionally, a live and archived webcast of this call will be available on the Investor Relations section of Ambow's website at: http://investors.ir.ambow.com/us/AMBO/irwebsite/

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. (NYSE: AMBO) is a leading national provider of educational and career enhancement services in China, offering high-quality, individualized services and products. Ambow has two business divisions: "Better Schools," which includes K-12 schools and tutoring centers; and "Better Jobs," which includes colleges and career enhancement centers. With its extensive network of regional service hubs complemented by a dynamic proprietary learning platform and distributors, Ambow provides its services and products to students in 30 out of the 31 provinces and autonomous regions within China.

Forward Looking Statements

Certain statements in this press release, including statements regarding the outlook for the fourth quarter and full year of 2011 and quotations from management concerning Ambow's strategic and operational plans and expectations are forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Ambow uses words such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates", "target" and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements are based on management's current expectations and involve risks and uncertainties. The following important factors, without limitation, could cause actual results to differ materially from those contained in these forward-looking statements: Ambow's ability to manage its business expansion and operations effectively, to make strategic acquisitions and investments and to successfully integrate acquired businesses; significant competition; Ambow's ability to continue to attract students to enroll in its programs, to continually enhance its programs, services and products, to successfully develop and introduce new services and products in time and to adequately and promptly respond to changes in curriculum, testing materials and standards; economic conditions; and changes in government policies, laws and regulations. More information on factors that could affect Ambow's results is included from time to time in Ambow's Securities and Exchange Commission filings and reports, including the risks described under the heading "Risk Factors" in Ambow's final prospectus relating to its initial public offering filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on August 5, 2010 as well as risk factors identified in Ambow's latest annual report on Form 20-F and Current Reports on Form 6-K. Other unknown or unpredictable factors also could have material adverse effects on Ambow's future results. In light of these risks, uncertainties and factors, you are cautioned not to place undue reliance on forward-looking statements. Ambow disclaims any obligation to update information contained in forward-looking statements, whether as a result of new information, future events or otherwise.

Statement Regarding Unaudited Financial Information

The Company has prepared the unaudited consolidated financial information on the same basis as its audited consolidated financial statements. The unaudited consolidated financial information includes all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position and results of operations for the quarters presented. Quarterly and year-to-date results may not be indicative of the Company's results of operations for future quarterly periods.

About Non-GAAP Financial Measures

To supplement Ambow's unaudited consolidated financial results presented in accordance with GAAP, Ambow uses the following measures defined as non-GAAP financial measures by the SEC: (i) Non-GAAP operating income, (ii) Non-GAAP net income, (iii) Non-GAAP net income attributable to Ambow per ADS basic and diluted and (iv) Adjusted EBITDA. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for 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 measures to the most comparable GAAP measures" set forth at the end of this release.

Ambow believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity that may not be indicative of its operating performance from a cash perspective. Ambow believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Ambow's historical performance and liquidity. Ambow computes its non-GAAP financial measures using the same consistent method from quarter to quarter. These non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP. Ambow believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations with GAAP financial measures that are most directly comparable to non-GAAP financial measures.

(1) The reporting currency of the Company is Renminbi ("RMB"), but for the convenience of the reader, the amounts presented throughout the release are in US dollar ("$"). Unless otherwise stated, all translations from RMB to US$ are based on the historical exchange rate of US$1.0 to RMB6.3780, representing the noon buying rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board on September 30, 2011. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.

(2) Non-GAAP operating income, being operation income attributable to Ambow excluding share-based compensation expenses incurred for the respective period.

(3) Non-GAAP net income, being net income attributable to Ambow excluding share-based compensation expenses incurred for the respective periods.

(4) Diluted non-GAAP net income per adjusted ADS attributed to Ambow is computed by dividing non-GAAP net income attributed to Ambow by weighted average number of common shares outstanding for the period plus (1) shares issuable upon the exercise of outstanding shares options and (2) the number of common shares resulting from the assumed conversion of all the outstanding redeemable convertible preferred share and exercise of warrants upon closing of the initial public offering as if the conversion or exercise had occurred at the beginning of the period.

(5) Non-GAAP G&A expenses, being G&A expenses excluding share-based compensation expenses incurred for the respective period.

(6) Each ADS represents two ordinary shares.



For investor and media inquiries please contact:

Ms. Mandy Li
Investor Relations Manager
Ambow Education Holding Ltd.
Tel: +86-10-6206-8130
Email: ir@ambow.com

Mr. Jeffrey Goldberger
KCSA Strategic Communications
Tel: +1-212-896-1249
Email: jgoldberger@kcsa.com

***** Tables to Follow ****

AMBOW EDUCATION HOLDING LTD

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(ALL AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

As of
September 30,

As of
June 30,

As of
September 30,

As of
June 30,

2011

2011

2011

2011

USD

USD


RMB

RMB

ASSETS









Current assets:









Cash and cash equivalents

90,344

82,275


576,214

524,751

Restricted cash

243

8


1,550

50

Term deposits

3,255

4,500


20,760

28,700

Accounts receivable, net

33,294

14,774


212,348

94,226

Amounts due from related parties

32,204

30,702


205,394

195,820

Deferred tax assets, current

2,300

1,947


14,667

12,421

Prepaid and other current assets

90,126

82,274


574,823

524,744

TOTAL CURRENT ASSETS

251,766

216,480


1,605,756

1,380,712

Property and equipment, net

128,185

120,786


817,563

770,372

Land use rights, net

41,697

41,956


265,944

267,598

Intangible assets, net

96,910

97,188


618,095

619,868

Goodwill

206,876

197,818


1,319,452

1,261,686

Deferred tax assets, non-current

1,075

863


6,857

5,507

Amounts due from related parties

3,528

3,534

22,502

22,541

Other non-current assets

26,860

29,349


171,314

187,185

TOTAL NON-CURRENT ASSETS

505,131

491,494

3,221,727

3,134,757

TOTAL ASSETS

756,897

707,974


4,827,483

4,515,469










LIABILITIES AND SHAREHOLDERS' EQUITY









Current liabilities:









Short-term borrowings

18,512

19,296


118,070

123,070

Current portion of Long-term borrowings

3,057

7,996


19,500

51,000

Deferred revenue

99,097

50,320


632,041

320,940

Accounts payable

7,714

9,280


49,201

59,188

Accrued expenses and other current liabilities

66,533

68,023


424,331

433,859

Income tax payable

19,318

17,524


123,211

111,766

Amount due to related parties

6,395

5,836


40,788

37,225

TOTAL CURRENT LIABILITIES

220,626

178,275


1,407,142

1,137,048

Deferred tax liabilities, non-current

27,930

27,587


178,138

175,951

Long-term borrowings

8,231

10,034


52,500

64,000

Non-current portion of consideration payable for acquisitions and other liabilities

47,500

45,220


302,958

288,412

TOTAL NON-CURRENT LIABILITIES

83,661

82,841


533,596

528,363

TOTAL LIABILITIES

304,287

261,116


1,940,738

1,665,411










SHAREHOLDERS' EQUITY

442,871

437,761


2,824,630

2,792,038

TOTAL AMBOW EDUCATION HOLDING LTD'S EQUITY

442,871

437,761


2,824,630

2,792,038

Non-controlling interest

9,739

9,097


62,115

58,020

TOTAL SHAREHOLDER'S EQUITY

452,610

446,858


2,886,745

2,850,058

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY

756,897

707,974


4,827,483

4,515,469



AMBOW EDUCATION HOLDING LTD

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(ALL AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)



For the three months ended September 30,


2011


2010


2011


2010

USD

USD

RMB

RMB

Better Schools

Tutoring

33,877

25,532

216,067

162,843

K-12 Schools

7,876

7,800

50,233

49,747

Better Job

Career Enhancement

22,974

12,175

146,529

77,652

Colleges

8,110

5,567

51,730

35,506

NET REVENUES

72,837

51,074

464,559

325,748

Cost of revenues

(31,828)

(21,908)

(203,001)

(139,726)

GROSS PROFIT

41,009

29,166

261,558

186,022

Operating expenses:








Selling and marketing

(15,824)

(10,372)

(100,924)

(66,158)

General and administrative

(14,250)

(11,152)

(90,889)

(71,134)

Research and development

(2,198)

(946)

(14,018)

(6,031)

TOTAL OPERATING EXPENSES

(32,272)

(22,470)

(205,831)

(143,323)

OPERATING INCOME

8,737

6,696

55,727

42,699

OTHER EXPENSE








Interest expense, net

(995)

(487)

(6,348)

(3,107)

Foreign exchange loss, net

(280)


(235)


(1,787)


(1,496)

Other expense, net

62

(56)

394

(354)

INCOME BEFORE TAX AND NON-CONTROLLING INTEREST

7,524


5,918


47,986


37,742

Income tax expenses

(1,397)

(1,068)

(8,908)

(6,820)

NET INCOME

6,127

4,850

39,078

30,922

Add: Net income attributable to non-controlling interest

(360)


400


(2,295)


2,549

NET INCOME ATTRIBUTABLE TO AMBOW EDUCATION HOLDING LTD

5,767

5,250

36,783

33,471










Preferred shares redemption value accretion

-


8,495


-


54,180

Allocation of net income to participating preferred shareholders

-


(1,435)


-


(9,154)

NET INCOME ATTRIBUTABLE TO ORDINARY SHAREHOLDERS

5,767

12,310

36,783

78,497





Net income/(loss) per ADS attributable to ordinary shareholders








Basic

0.08


0.23


0.51


1.50

Diluted

0.08

0.07

0.49

0.46









Weighted average number of ADS(Note 1)








Basic

71,560,179


52,433,234


71,560,179


52,433,234

Diluted

75,068,903


72,444,551


75,068,903


72,444,551









Supplementary Information:








Share-based compensation expense included in:








Selling and marketing

286


304


1,827


1,937

General and administrative

1,198

1,025

7,640

6,539

Research and development

33


44


207


279










Note 1: Each ADS represents two common shares.



AMBOW EDUCATION HOLDING LTD

RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES

(ALL AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)




For the three months ended September 30,

2011

2010


2011

2010

USD

USD


RMB

RMB

Operating income

8,737

6,696


55,727

42,699

Share-based compensation expenses

1,517

1,373


9,674

8,755

Non-GAAP operating income

10,254

8,069


65,401

51,454










Net income attributable to Ambow

5,767

5,250


36,783

33,471

Share-based compensation expenses

1,517

1,373

9,674

8,755

Non-GAAP net income

7,284

6,623

46,457

42,226










Net income margin

7.9%

10.3%

7.9%

10.3%

Non-GAAP net income margin

10.0%

13.0%

10.0%

13.0%










Net income per adjusted ADS attributable to Ordinary Shareholders - Basic

0.081

0.235

0.514

1.497

Net income per adjusted ADS attributable to Ordinary Shareholders - Diluted

0.077

0.072

0.490

0.462










Net income per adjusted ADS attributable to Ambow - Basic

0.081

0.077

0.514

0.490

Net income per adjusted ADS attributable to Ambow - Diluted (Note 3)

0.077

0.072

0.490

0.462










Non-GAAP net income per adjusted ADS attributable to Ambow - Basic

0.102

0.097

0.649

0.618

Non-GAAP net income per adjusted ADS attributable to Ambow - Diluted

0.097

0.091

0.619

0.583










Adjusted weighted average number of ADS used in calculating net income and non GAAP net income attributable to Ambow per ADS - basic

71,560,179

68,348,705

71,560,179

68,348,705

Adjusted weighted average number of ADS used in calculating net income and non GAAP net income attributable to Ambow per ADS - diluted

75,068,903

72,462,360

75,068,903

72,462,360



















EBITDA (Note 1)

13,261

11,205


84,580

71,466

Share-based compensation expenses

1,517

1,373

9,674

8,755

Adjusted EBITDA (Note 2)

14,778

12,578

94,254

80,221










EBITDA margin

18.2%

21.9%

18.2%

21.9%

Adjusted EBITDA margin

20.3%

24.6%

20.3%

24.6%


Note 1: EBITDA, a non-GAAP measure, being net income attributable to Ambow excluding interest expense, income tax expenses, depreciation and amortization. The depreciation and amortization in the third quarter of 2011 and 2010 were RMB 32,541 and RMB 28,068, respectively.

Note 2: Adjusted EBITDA being EBITDA excluding share based compensation.

Note 3: Net income per adjusted ADS attributable to Ambow - diluted is computed by dividing net income attributable to Ambow by weighted average number of common shares outstanding for the period plus (1) shares issuable upon the exercise of outstanding share options and (2) the number of common shares resulting from the assumed conversion of all the outstanding redeemable convertible preferred share and exercise of warrants upon closing of the initial public offering as if the conversion or exercise had occurred at the beginning of the period.



AMBOW EDUCATION HOLDING LTD

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(ALL AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)



For the nine months ended September 30,

2011

2010

2011

2010

USD

USD

RMB

RMB

Better Schools

Tutoring

93,969

74,740

599,336

476,693

K-12 Schools

28,667

27,420

182,839

174,886

Better Job








Career Enhancement

56,189

28,883

358,374

184,218

Colleges

25,714

23,347

164,003

148,903

NET REVENUES

204,539

154,390

1,304,552

984,700

Cost of revenues

(88,417)

(66,582)

(563,933)

(424,653)

GROSS PROFIT

116,122

87,808

740,619

560,047

Operating expenses:








Selling and marketing

(38,342)

(28,640)

(244,546)

(182,663)

General and administrative

(40,773)

(32,500)

(260,042)

(207,286)

Research and development

(4,681)

(2,897)

(29,858)

(18,474)

TOTAL OPERATING EXPENSES

(83,796)

(64,037)

(534,446)

(408,423)

OPERATING INCOME

32,326

23,771

206,173

151,624

OTHER EXPENSE








Interest expense, net

(2,757)

(1,421)

(17,587)

(9,065)

Foreign exchange losses, net

(823)

(335)

(5,249)

(2,134)

Other income (expense), net

(65)

176

(417)

1,115

INCOME BEFORE TAX AND NON-CONTROLLING INTEREST

28,681

22,191

182,920

141,540

Income tax expense

(4,151)

(2,992)

(26,476)

(19,082)

NET INCOME

24,530

19,199

156,444

122,458

Add: Net loss attributable to non-controlling interest

(356)

462

(2,268)

2,949

NET INCOME ATTRIBUTABLE TO AMBOW EDUCATION HOLDING LTD

24,174

19,661

154,176

125,407

Preferred shares redemption value accretion

-

(14,771)

-

(94,209)

Allocation of net income to participating preferred shareholders

-

(8,707)

-

(55,534)

NET INCOME (LOSS) ATTRIBUTABLE TO ORDINARY SHAREHOLDERS

24,174

(3,817)

154,176

(24,336)









Net income (loss) per ADS attributable to ordinary shareholders








Basic

0.34

(0.12)

2.16

(0.74)

Diluted

0.32

(0.12)

2.05

(0.74)









Weighted average number of ADS (Note 1)








Basic

71,391,596

32,992,231

71,391,596

32,992,231

Diluted

75,221,843

32,992,231

75,221,843

32,992,231









Supplementary Information:








Share-based compensation expense included in:








Selling and marketing

853

836

5,441

5,332

General and administrative

2,839

2,814

18,106

17,947

Research and development

99

113

632

724


Note 1: Each ADS represents two common shares.



AMBOW EDUCATION HOLDING LTD

RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES

(ALL AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)




For the nine months ended September 30,


2011

2010

2011

2010


USD

USD

RMB

RMB

Operating income


32,326

23,771

206,173

151,624

Share-based compensation expenses


3,791

3,763

24,179

24,003

Non-GAAP operating income


36,117

27,534

230,352

175,627










Net income attributable to Ambow


24,174

19,661

154,176

125,407

Share-based compensation expenses

3,791

3,763

24,179

24,003

Non-GAAP net income

27,965

23,424

178,355

149,410

Net income margin

11.8%

12.7%

11.8%

12.7%

Non-GAAP net income margin

13.7%

15.2%

13.7%

15.2%










Net income per adjusted ADS attributable to Ordinary Shareholders - Basic

0.339

(0.116)

2.160

(0.738)

Net income per adjusted ADS attributable to Ordinary Shareholders - Diluted

0.321

(0.116)

2.050

(0.738)










Net income per adjusted ADS attributable to Ambow - Basic

0.339

0.301

2.160

1.920

Net income per adjusted ADS attributable to Ambow - Diluted (Note 3)

0.321

0.283

2.050

1.808










Non-GAAP Net income per adjusted ADS attributable to Ambow - Basic

0.392

0.359

2.498

2.287

Non-GAAP Net income per adjusted ADS attributable to Ambow - Diluted

0.372

0.338

2.371

2.154










Adjusted weighted average number of ADS used in calculating net income and non GAAP net income attributable to Ambow per ADS - basic

71,391,596

65,321,950

71,391,596

65,321,950

Adjusted weighted average number of ADS used in calculating net income and non GAAP net income attributable to Ambow per ADS - diluted

75,221,843

69,364,627

75,221,843

69,364,627



















EBITDA (Note 1)


46,577

37,226

297,069

237,426

Share-based compensation expenses

3,791

3,763

24,179

24,003

Adjusted EBITDA (Note 2)

50,368

40,989

321,248

261,429










EBITDA margin

22.8%

24.1%

22.8%

24.1%

Adjusted EBITDA margin

24.6%

26.5%

24.6%

26.5%










Note 1: EBITDA, a non-GAAP measure, being net income attributable to Ambow excluding interest expense, income tax expenses, depreciation and amortization. The depreciation and amortization for the first nine months of 2011 and 2010 were RMB 98,831 and RMB 83,872, respectively.

Note 2: Adjusted EBITDA being EBITDA excluding share based compensation.

Note 3: Net income per adjusted ADS attributable to Ambow - diluted is computed by dividing net income attributable to Ambow by weighted average number of common shares outstanding for the period plus (1) shares issuable upon the exercise of outstanding share options and (2) the number of common shares resulting from the assumed conversion of all the outstanding redeemable convertible preferred share and exercise of warrants upon closing of the initial public offering as if the conversion or exercise had occurred at the beginning of the period.



Source: Ambow Education Holding Ltd.
collection