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ChinaEdu Reports Fourth Quarter and Fiscal Year 2007 Results(1)

2008-03-20 05:17 1682

BEIJING, March 20 /Xinhua-PRNewswire-FirstCall/ -- 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.

-- 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 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 was 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 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 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.

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.

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

Hong Kong: 852.3002.1672

China (Mainland): 10.800.130.0399

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.

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 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.

(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.

(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.

(3) “Revenue students” refers to students of university online degree

programs who have paid tuition in the applicable period.

(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.

ChinaEdu Corporation

Unaudited Condensed Consolidated Balance Sheets

Dec 31, Sep 30, Dec 31, Dec 31,

(in thousands) 2006 2007 2007 2007

RMB RMB RMB USD

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

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

Minority interests 49,323 61,690 57,996 7,951

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

ChinaEdu Corporation

Unaudited Condensed Consolidated Statements of Operations

(in thousands except for For the three Months Ended

share, per share December September December December

information) 31, 2006 30, 2007 31, 2007 31, 2007

RMB RMB RMB USD

Net Revenue:

Online degree programs 41,950 48,647 64,813 8,886

International curriculum

programs 7,772 8,957 6,640 910

Online tutoring programs 4,856 4,351 4,488 615

Private primary and

secondary schools 3,277 3,457 3,672 503

Total net revenue 57,855 65,412 79,613 10,914

Cost of revenue:

Online degree programs 13,774 18,557 15,729 2,156

International curriculum

programs 5,042 7,528 4,663 639

Online tutoring programs 879 1,031 720 99

Private primary and

secondary schools 2,093 2,649 3,414 468

Total cost of revenue 21,788 29,765 24,526 3,362

Gross profit:

Online degree programs 28,176 30,090 49,084 6,729

International curriculum

programs 2,730 1,429 1,977 271

Online tutoring programs 3,977 3,320 3,768 517

Private primary and

secondary schools 1,184 808 258 35

Total gross profit 36,067 35,647 55,087 7,552

Online degree programs 67.2% 61.9% 75.7% 75.7%

International curriculum

programs 35.1% 16.0% 29.8% 29.8%

Online tutoring programs 81.9% 76.3% 84.0% 84.0%

Private primary and

secondary schools 36.1% 23.4% 7.0% 7.0%

Gross profit margin 62.3% 54.5% 69.2% 69.2%

Operating expenses:

General and administrative 14,551 20,824 26,106 3,579

Selling and marketing 3,590 4,722 3,491 479

Research and development 3,861 5,605 6,818 935

Goodwill impairment 16,192

Total operating expenses 22,002 47,343 36,415 4,993

Income/(loss) from

operations 14,065 -11,696 18,672 2,559

Operating margin 24.3% -17.9% 23.5% 23.5%

Other income -- -- -- --

Interest income 379 516 2,398 329

Interest expense (570) (674) (475) (65)

Income/(loss) before income

tax provisions and

minority interest 13,874 (11,854) 20,595 2,823

Income tax expense (1,730) (2,505) (2,519) (345)

Minority interest, net of

taxes (9,201) (5,065) (8,639) (1,184)

Net income/(loss) 2,943 (19,424) 9,437 1,294

Net margin 5.1% -29.7% 11.9% 11.9%

Net income/(loss) per share:

Basic 0.07 -0.47 0.21 0.03

Diluted 0.07 -0.47 0.19 0.03

Net income/(loss) per ADS:

Basic 0.21 -1.41 0.63 0.09

Diluted 0.21 -1.41 0.57 0.09

Weighted average aggregate

number of ordinary shares

outstanding:

Basic 39,643,130 41,722,746 45,015,332 45,015,332

Diluted 42,774,398 41,722,746 50,477,265 50,477,265

ChinaEdu Corporation

Unaudited Condensed Consolidated Statements of Operations

Twelve Months Ended

(in thousands except for share, per December December December

share information) 31, 2006 31, 2007 31, 2007

RMB RMB USD

Net Revenue:

Online degree programs 156,845 202,185 27,717

International curriculum programs 28,428 31,434 4,309

Online tutoring programs 17,384 18,013 2,469

Private primary and secondary schools 10,874 13,356 1,831

Total net revenue 213,531 264,988 36,326

Cost of revenue:

Online degree programs 51,215 58,027 7,955

International curriculum programs 17,212 23,503 3,222

Online tutoring programs 3,452 3,875 531

Private primary and secondary schools 8,429 10,944 1,500

Total cost of revenue 80,308 96,349 13,208

Gross profit:

Online degree programs 105,630 144,158 19,762

International curriculum programs 11,216 7,931 1,087

Online tutoring programs 13,932 14,138 1,938

Private primary and secondary schools 2,445 2,412 331

Total gross profit 133,223 168,639 23,118

Online degree programs 67.3% 71.3% 71.3%

International curriculum programs 39.5% 25.2% 25.2%

Online tutoring programs 80.1% 78.5% 78.5%

Private primary and secondary schools 22.5% 18.1% 18.1%

Gross profit margin 62.4% 63.6% 63.6%

Operating expenses:

General and administrative 48,846 76,893 10,541

Selling and marketing 12,893 14,277 1,957

Research and development 14,263 21,021 2,882

Goodwill impairment 16,192 2,220

Total operating expenses 76,002 128,383 17,600

Income/(loss) from operations 57,221 40,256 5,518

Operating margin 26.8% 15.2% 15.2%

Other income -- 394 54

Interest income 1,172 4,118 565

Interest expense (2,279) (2,130) (292)

Income/(loss) before income

tax provisions and

minority interest 56,114 42,638 5,845

Income tax expense (6,994) (15,003) (2,057)

Minority interest, net of taxes (23,581) (25,148) (3,447)

Net income/(loss) 25,539 2,487 341

Net margin 12.0% 0.9% 0.9%

Net income/(loss) per share:

Basic 0.65 0.06 0.01

Diluted 0.60 0.05 0.01

Net income/(loss) per ADS:

Basic 1.95 0.18 0.03

Diluted 1.80 0.15 0.03

Weighted average aggregate number of

ordinary shares outstanding:

Basic 39,209,606 42,147,170 42,147,170

Diluted 42,708,213 47,322,184 47,322,184

ChinaEdu Corporation

Reconciliations of non-GAAP results of operations

measures to GAAP measures

Three Months Ended

December September December December

(in thousands, unaudited) 31, 2006 30, 2007 31, 2007 31, 2007

RMB RMB RMB US$

Income (loss) from operations

GAAP Result 14,065 (11,696) 18,672 2,559

Adjustment-Share-based compensation 588 1,180 1,148 157

Adjustment-Goodwill impairment -- 16,192 -- --

Adjustment for write-off of

receivables from prior owner of

International Curriculum Program 4,031

Non-GAAP Result 14,653 9,707 19,820 2,716

Net income (loss)

GAAP Result 2,943 (19,424) 9,437 1,294

Adjustment for operation profit 588 21,403 1,148 157

Adjustment-Minority interest for

Share-based compensation (145) (273) (265) (36)

Adjustment-Deferred tax benefit for

write-off of receivables from prior

owner of International Curriculum

Programs (636)

Non-GAAP Result 3,386 1,070 10,320 1,415

ChinaEdu Corporation

Reconciliations of non-GAAP results of operations

measures to GAAP measures

Twelve Months Ended

December December December

(in thousands, unaudited) 31, 2006 31, 2007 31, 2007

RMB RMB US$

Income (loss) from operations

GAAP Result 57,221 40,256 5,518

Adjustment-Share-based compensation 2,711 3,643 499

Adjustment-Goodwill impairment -- 16,192 2,220

Adjustment for write-off of

receivables from prior owner of

International Curriculum Program 4,031 553

Non-GAAP Result 59,932 64,122 8,790

Net income (loss)

GAAP Result 25,539 2,487 341

Adjustment for operation profit 2,711 23,866 3,272

Adjustment-Minority interest for

Share-based compensation (569) (774) (106)

Adjustment-Deferred tax benefit for

write-off of receivables from prior

owner of International Curriculum

Programs (636) (87)

Non-GAAP Result 27,681 24,943 3,420

Source: ChinaEdu Corporation
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