China Education Alliance Announces Fourth Quarter and Year End 2010 Financial Results

HARBIN, China, April 18, 2011 /PRNewswire-Asia-FirstCall/ -- China Education Alliance, Inc. ("China Education Alliance" or the "Company") (NYSE: CEU), a China-based education resource and services company, today announced fourth quarter and fiscal 2010 results.  The Company will host a conference call on Tuesday, April 19, 2011, at 8 a.m. EDT or 8 p.m. Beijing time.

Financial Highlights for the Fourth Quarter ended December 31, 2010

• Total revenue increased 19.3% year-over-year to $12.4 million.
• Gross profit rose 16.4% to $10.2 million or 82.3% of sales, compared to 84.3% of sales, or $8.78 million, in the fourth quarter of 2009.
• Operating income decreased 53.6%.
• Net income decreased 53.5% year-over-year to $2.1 million.
• EPS was $0.06 per fully diluted share, compared to EPS of $0.15 per fully diluted share in the fourth quarter of fiscal 2009.

Financial Highlights for Fiscal 2010

• Total revenue increased 25.1% year-over-year to $46.3 million.
• Gross profit rose 28.7% to $38.1 million or 82.3% of sales, up 2.2% and 220 basis points, respectively.
• Operating income totaled $16.6 million, compared to an operating income of $16.2 million in 2009.
• Net income increased 0.7% year-over-year to $15.2 million
• EPS was $0.48 per fully diluted share, a decrease of 18.6%

"We are pleased with our solid growth in online education and our training center businesses due to industry organic growth, which validates our focus on exam-oriented educational services and vocational training programs in China," said Mr. Xiqun Yu, Chairman and Chief Executive Officer of China Education Alliance. "Going forward, we will continue to develop and deliver high quality supplemental education resources and professional training programs. This will help us continue our business expansion and reaffirm our position as one of the leading education resource and service company in China."

Fiscal Year 2010 Review:

China Education Alliance reported total revenue of $46.3 million for the year ended December 31, 2010, an increase of 25.1% compared to $37.0 million for 2009. The Company's online education business generated 61.6% of its total revenue in 2010 compared to 60.2% for prior-year. Its training center business generated 34.7% of total revenue in 2010 compared to 32.7% for in 2009; its other business division generated the remaining 3.7% of total revenue in the year of 2010, compared to 7.1% for last year.

Online education revenue was $28.5 million, up 28.4% for the year of 2010 compared to $22.2 million in the in 2009 mainly due to increase of organic growth.

Training center revenue was $16.0 million in 2010, up 32.2% from $12.1 million in 2009. The increase was mainly due to organic growth.

Other revenue was $1.7 million in 2010, a decrease of 34.6% from $2.6 million last year. The significant decrease was due to our shift in focus of our two business lines – examination preparation and vocational training.

Net income for 2010 was $15.2 million, an increase of 0.7% over 2009 net income of $15.1 million. The increase was due to growth in our online education and training center businesses. Diluted earnings per share was $0.48, compared with $0.59 last year. The decrease in EPS was mainly due to the increase in number of shares outstanding with the exercise options and warrants, preferred stock converted into common stocks as well as Company's decision not to reserve their advance on the acquisition of WEI, totaling of 400,000 shares.

Operating income for the year 2010 increased to $16.6 million, from $16.2 million a year ago. Operating margin was 35.8% compared with 43.7% in 2009.

Overall cost of sales increased 10.8% to $8.2 million in 2010, compared to $7.4 million for 2009. Gross profit increased to $38.1 million in 2010, an increase of 28.7% from $29.6 million in 2009.

Selling expenses increased 84.5% to approximately $17.3 million for 2010, compared to $9.4 million in 2009, primarily due to the increase in agency fees associated with increased sales of our debit cards. Administrative expenses were approximately $3.3 million for the year 2010, an increase from $3.1 million in 2009, primarily due to renovations on the ZHLD office building and the increase of U.S. parent company expenses.

2010 Business Highlight

In February, Company incorporated a new company in the PRC, Beijing New Shifan Education & Technology ("New Shifan") who has a significant impact on the secondary education market in China, with a registered capital of RMB 1.95 million (approximately $284,962). Beijing Shifan was the sponsor and organizer of a nationwide contest for middle school and high school students, testing students' academic abilities in mathematics, physics and chemistry. There are over 100,000 students participating in the contest from 23 provinces in the PRC.

Financial Position

As of December 31, 2010, China Education Alliance had approximately $71.4 million in cash and cash equivalents, $72.6 million in working capital, and no long-term debt. Shareholders' equity at December 31, 2010 was approximately $91.8 million, an increase from approximately $75.3 million at December 31, 2009. The Company generated net cash from operating activities of $ million in the year ended December 31, 2009, up % from $18.6 million in the year-end period of 2009.

Conference Call

China Education Alliance will host a conference call and live webcast at 8 a.m. Eastern Daylight Time (EDT) (8 p.m. Harbin/Beijing time on April 19, 2011).

The dial-in details for the live conference call are as follows:

A telephone replay of the call will be available 1 hour after the end of the conference for seven days.

The dial-in details for the replay are as follows:

China Education Alliance, Inc. (http://www.chinaeducationalliance.com) is a fast-growing, leading, China-based company offering high-quality education resources and services to students ages 6 to 18 and adults (university students and professionals) ages 18 and over. For students ages 6 to 18, China Education Alliance offers supplemental, online exam-oriented training materials and onsite, exam-oriented training and tutoring services. The company provides online, downloadable famous-teacher resources and onsite, personalized instruction. All resources and tutoring services are provided by famous teachers within mainland China. The purpose of online exam-orientated resources and onsite tutoring is to help Chinese students (ages 6 to 18) pass the two most important and highly competitive exams in their educational career: the senior high school entrance and college entrance exams. For graduates and professionals age 18 and over, China Education Alliance provides vocational training including IT and several professional training programs.

Forward-Looking Statements

Statements contained in this press release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, expectations of signing new customers and contracts, developing new products, projected revenues and earnings, and the success of new products. These forward-looking statements are based largely on current expectations and are subject to a number of known and unknown risks, uncertainties and other factors beyond our control that could cause actual events and results to differ materially from these statements. These statements are not guarantees of future performance, and readers are cautioned not to place undue reliance on these forward-looking statements, which are relevant as of the date of the given press release and should not be relied upon as of any subsequent date. China Education Alliance undertakes no obligation to update the forward-looking information contained in this press release.