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ChinaCast Education Reports Strong Third Quarter 2011 Financial Results
Nov 09, 2011 (04:11 PM EST)


Total Revenues Increased 37%

Net Income Attributable to the Company Increased 30%

BEIJING, Nov. 9, 2011 /PRNewswire-Asia-FirstCall/ -- ChinaCast Education Corporation (the "Company" or "ChinaCast") (Nasdaq GS: CAST), a leading post-secondary education and e-learning services provider in China, today announced its financial results for the third quarter ended September 30, 2011.

Financial Highlights for the Third Quarter of Fiscal Year 2011(1):

  • Total revenues increased 37% year-over-year to $25.6 million
  • Net income attributable to the Company increased 30% year-over-year to $8.1 million
  • Diluted EPS of $0.16
  • Adjusted net income (non-GAAP) increased 27% year-over-year to $10.1 million
  • Adjusted diluted EPS (non-GAAP) of $0.20
  • Adjusted EBITDA (non-GAAP) increased 24% year-over-year to $14.5 million
  • Cash, cash equivalents and term deposits were $169.9 million
  • Total shareholder equity was $292.2 million or $5.90 per share

Financial Highlights for the First Nine Months of Fiscal Year 2011:

  • Total revenues increased 46% year-over-year to $74.8 million
  • Net income attributable to the Company increased 30% year-over-year to $20.4 million
  • Diluted EPS of $0.41
  • Adjusted net income (non-GAAP) increased 31% year-over-year to $27.2 million
  • Adjusted diluted EPS (non-GAAP) of $0.54
  • Adjusted EBITDA (non-GAAP) increased 30% year-over-year to $40.2 million

(1) See financial tables and the GAAP to non-GAAP reconciliation table attached to this press release.  The US dollar figures presented in this release are derived from the corresponding RMB figures from the Company's Form 10-Q for the period ended September 30, 2011, and are based on the historical exchange rate of US$1.0 = 6.4 RMB on September 30, 2011, and US$1.0 = 6.7 RMB on September 30, 2010. Such translation should not be construed to be the amount that would have been reported under US GAAP.



Ron Chan, Chairman and Chief Executive Officer commented, "Our outstanding third quarter results were driven by another strong start to the 2011-2012 academic school year which commenced in September.  Total average enrollment at our universities increased approximately 9% year-on-year while our average tuition rates increased 5%.  We continue to reinvest in the expansion of our universities, adding faculty members, new courses, and new facilities to accommodate this growth.  We believe that these improvements, which will further enhance our academic rankings, will drive sustained growth in our education business for many years to come."

Added Antonio Sena, Chief Financial Officer, "The key operating metrics that we focus on, enrollment and tuition growth, are trending well in line with our annual guidance.  We will continue to carefully evaluate our investment options and deploy capital to areas where we see the greatest potential returns to shareholders."

Third Quarter 2011 Financial Results

ChinaCast is organized into two business segments, the Traditional University Group ("TUG") and the E-Learning Services Group ("ELG").  The TUG offers fully-accredited bachelor and diploma degree programs to students from our three universities in China:  Chongqing Normal University Foreign Trade and Business College ("FTBC") in Chongqing, the Lijiang College of Guilin Normal University ("LJC") in Guilin and Hubei Industrial University Business College ("HIUBC") in Wuhan.  The ELG provides distance learning services to post-secondary institutions, K-12 schools and government/corporate enterprises via the Company's nationwide satellite broadband network platform.

Total Revenues – Total revenues in the third quarter of 2011 increased 37% to $25.6 million from $18.7 million in the third quarter of 2010 partly due to the acquisition of HIUBC in the third quarter of 2010.  TUG revenue in the third quarter of 2011 increased 46% to $16.4 million from $11.2 million in the third quarter of 2010.  Total student enrollment in the third quarter of 2011 increased to approximately 35,100 from 32,600 in the third quarter of 2010.  ELG revenue in the third quarter of 2011 increased 24% to $9.2 million from $7.4 million in the third quarter of 2010 primarily due to an increase in equipment sales.  ELG total number of post-secondary students enrolled in courses using the Company's distance learning platform in the third quarter of 2011 increased to 145,000 compared to 143,000 in the third quarter of 2010.  ELG total number of subscribing schools for K-12 distance learning services in the third quarter of 2011 remained stable year-over-year at 6,500.  

Cost of Sales – Cost of sales in the third quarter of 2011 increased 42% to $13.6 million from $9.6 million in the third quarter of 2010 primarily due to an increase in depreciation of fixed assets and amortization costs of land use rights and other intangible assets associated with the acquisition of HIUBC in the third quarter of 2010 and an increase in equipment sales.

Depreciation – Depreciation in the third quarter of 2011 increased 14% to $2.7 million from $2.3 million in the third quarter of 2010 primarily due to the acquisition of HIUBC in the third quarter of 2010.

Amortization of Acquired Intangible Assets – Amortization of acquired intangible assets in the third quarter of 2011 increased 17% to $1.7 million from $1.5 million in the third quarter of 2010 primarily due to the acquisition of HIUBC in the third quarter of 2010.

Gross Profit and Gross Margin – Gross profit in the third quarter of 2011 increased 33% to $12.1 million from $9.1 million in the third quarter of 2010.   Gross profit margin in the third quarter of 2011 was 47% compared to 49% in the third quarter of 2010 due to an increase in ELG equipment sales which typically have much lower gross margins than the ELG service revenue.  

Share-Based Compensation – Share-based compensation in the third quarter of 2011 increased 7% to $0.31 million from $0.29 million in the third quarter of 2010.

Operating Expenses – Operating expenses in the third quarter of 2011 increased 59% to $2.5 million compared to $1.6 million in the third quarter of 2010 primarily due to the increase in administrative expenses related to the acquisition of HIUBC in the third quarter of 2010.

Operating Income and Operating Income Margin – Operating income in the third quarter of 2011 increased 27% to $9.5 million compared to $7.5 million in the third quarter of 2010.  Operating income margin in the third quarter of 2011 was 37% compared to 40% in the third quarter of 2010.

Provision for Income Taxes – Income taxes in the third quarter of 2011 increased 25% to $1.5 million from $1.2 million in the third quarter of 2010 primarily due the increase in tax rate for the TUG business segment from 15% to 25% after the expiration of the western development preferential policy.  

Net Income Attributable to the Company and Net Income Margin – Net income attributable to the Company in the third quarter of 2011 increased 30% to $8.1 million from $6.2 million in the third quarter of 2010.  Net income margin in the third quarter of 2011 was 32% compared to 33% in the third quarter of 2010.

Diluted EPS - Diluted EPS in the third quarter of 2011 were $0.16 compared to $0.12 in the third quarter of 2010.  The weighted average number of shares used in the computation was 49,504,442 for the third quarter of 2011 and 50,370,903 for the third quarter of 2010.  

Adjusted Net Income and Adjusted Net Income Margin - Adjusted net income excluding share-based compensation, non-cash impairment charges and amortization of acquired intangible assets (non-GAAP) in the third quarter of 2011 increased 27% to $10.1 million from $8.0 million in the third quarter of 2010.  Adjusted net income margin (non-GAAP) in the third quarter of 2011 was 40% compared to 43% in the third quarter of 2010.

Adjusted Diluted EPS - Adjusted diluted earnings per share excluding share-based compensation expenses, non-cash impairment charges and amortization of acquired intangible assets (non-GAAP) in the third quarter of 2011 were $0.20 compared to $0.16 in the third quarter of 2010.

Adjusted EBITDA and Adjusted EBITDA Margin – Adjusted EBITDA (non-GAAP) in the third quarter of 2011 increased 24% to $14.5 million from $11.8 million in the third quarter of 2010.  Adjusted EBITDA margin (non-GAAP) in the third quarter of 2011 was 57% compared to 63% in the third quarter of 2010.

Cash and Bank Balances together with Term Deposits - Cash and bank balances together with term deposits were $169.9 million as of September 30, 2011.

Total Shareholder Equity - Total equity was $292.2 million or $5.90 per share.

First Nine Months 2011 Financial Results

Total Revenues – Total revenues in the first nine months of 2011 increased 46% to $74.8 million from $51.4million in the first nine months of 2010.  TUG revenue in the first nine months of 2011 increased 61% to $48.2 million from $29.9 million in the first nine months of 2010 primarily due to the acquisition of HIUBC in the third quarter of 2010.  ELG revenue in the first nine months of 2011 increased 23% to $26.5 million from $21.5 million in the first nine months of 2010 primarily due to an increase in equipment sales.  

Cost of Sales – Cost of sales in the first nine months of 2011 increased 55% to $38.1 million from $24.6 million in the first nine months of 2010 primarily due to an increase in depreciation of fixed assets and amortization costs of land use rights and other intangible assets related to the acquisition of HIUBC in the third quarter of 2010 and an increase in equipment sales.

Depreciation – Depreciation in the first nine months of 2011 increased 36% to $7.5 million from $5.5 million in the first nine months of 2010 primarily due to the acquisition of HIUBC in the third quarter of 2010.

Amortization of Acquired Intangible Assets – Amortization of acquired intangible assets in the first nine months of 2011 increased 38% to $5.6 million from $4.1 million in the first nine months of 2010 primarily due to the acquisition of HIUBC in the third quarter of 2010.

Gross Profit and Gross Margin – Gross profit in the first nine months of 2011 increased 37% to $36.7 million from $26.8 million in the first nine months of 2010.   Gross profit margin in the first nine months of 2011 was 49% compared to 52% in the first nine months of 2010 due to an increase in ELG equipment sales.  

Share-Based Compensation – Share-based compensation in the first nine months of 2011 increased 17% to $1.1 million from $0.97 million in the first nine months of 2010.

Operating Expenses – Operating expenses in the first nine months of 2011 increased 67% to $11.2 million compared to $6.7 million in the first nine months of 2010 primarily due to the increase in administrative expenses related to the acquisition of HIUBC in the third quarter of 2010.

Operating Income and Operating Income Margin – Operating income in the first nine months of 2011 increased 27% to $25.5 million compared to $20.0 million in the first nine months of 2010.  Operating income margin in the first nine months of 2011 was 34% compared to 39% in the first nine months of 2010.

Provision for Income Taxes – Income taxes in the first nine months of 2011 increased 20% to $5.0 million from $4.1 million in the first nine months of 2010 primarily due to the increase in tax rate for the TUG business segment from 15% to 25% after the expiration of the western development preferential policy.  

Net Income Attributable to the Company and Net Income Margin – Net income attributable to the Company in the first nine months of 2011 increased 30% to $20.4 million from $15.7 million in the first nine months of 2010.  Net income margin in the first nine months of 2011 was 27% compared to 31% in the first nine months of 2010.

Diluted EPS - Diluted EPS in the first nine months of 2011 were $0.41 compared to $0.33 in the first nine months of 2010.  The weighted average number of shares used in the computation was 50,057,748 in the first nine months of 2011 and 48,176,902 in the first nine months of 2010.  

Adjusted Net Income and Adjusted Net Income Margin - Adjusted net income excluding share-based compensation, non-cash impairment charges and amortization of acquired intangible assets (non-GAAP) in the first nine months of 2011 increased 31% to $27.2 million from $20.8 million in the first nine months of 2010.  Adjusted net income margin (non-GAAP) in the first nine months of 2011 was 36% compared to 40% in the first nine months of 2010.

Adjusted Diluted EPS - Adjusted diluted earnings per share excluding share-based compensation expenses, non-cash impairment charges and amortization of acquired intangible assets (non-GAAP) in the first nine months of 2011 were $0.54 compared to $0.43 in the first nine months of 2010.

Adjusted EBITDA and Adjusted EBITDA Margin – Adjusted EBITDA (non-GAAP) in the first nine months of 2011 increased 30% to $40.2 million from $31.0 million in the first nine months of 2010.  Adjusted EBITDA margin (non-GAAP) in the first nine months of 2011 was 54% compared to 60% in the first nine months of 2010.

Financial Outlook for Fiscal Year 2011

For the fiscal year ending December 31, 2011, the Company reiterates its guidance as follows:

  • Total net revenue is expected to be between $97 million to $99 million representing a year-on-year increase of 24% to 27%.  
  • Adjusted net income excluding share-based compensation, amortization of acquired intangibles, gain on disposal of property and equipment and impairment expenses (non-GAAP) is expected to be at the higher end of $32 million to $34 million representing a year-on-year increase of at least 25%.
  • Based on the current weighted average shares and the higher tax rate accrual used in computation, adjusted diluted EPS (non-GAAP) is expected to be at the higher end of $0.64 to $0.68.
  • Adjusted EBITDA excluding share-based compensation (non-GAAP) is expected to be at the higher end of $50 million to $52 million representing a year-on-year increase of at least 25%.  

This is the Company's current and preliminary view, which is subject to change.

Conference Call Information

ChinaCast's management team will host an earnings conference call at 8:00 am ET, Thursday, November 10, 2011.  The dial-in details for the earnings conference call are as follows:

Earnings Call Telephone Numbers:
US/Canada Toll Free:  +877-303-9226
International:  +1-760-666-3566

A replay of the earnings conference call will be available at the following numbers:

Replay Telephone Numbers:
US/Canada Toll Free:  +1-855-859-2056
International:  +1-404-537-3406
Replay Pass Code:  22274982

The replay will be available starting at 11:00 am ET, Thursday, November 10, 2011, through 11:59 pm ET, Thursday, November 17, 2011.

Additionally, a live and archived version of the earnings call will be available at www.chinacasteducation.com. Please access the website approximately 10 minutes prior to the start time in order to download and install any necessary software.

About ChinaCast Education Corporation

Established in 1999, ChinaCast Education Corporation is a leading post-secondary education and e-learning services provider in China. The Company provides post-secondary degree and diploma programs through its three fully accredited universities:  The Foreign Trade and Business College of Chongqing Normal University located in Chongqing; Lijiang College of Guangxi Normal University located in Guilin; and Hubei Industrial University Business College located in Wuhan.  These universities offer four year and three year, career-oriented bachelor's degree and diploma programs in business, finance, economics, law, IT, engineering, hospitality and tourism management, advertising, language studies, art and music.

The Company also provides e-learning services to post-secondary institutions, K-12 schools, government agencies and corporate enterprises via its nationwide satellite broadband network. These services include interactive distance learning applications, multimedia education content delivery and vocational training courses. The Company is listed on the NASDAQ Global Select Market with the ticker symbol CAST.

Safe Harbor Statement

This press release may contain statements that are forward-looking, as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of future performance, statements of management's plans and objectives, future contracts, and forecasts of trends and other matters. These projections, expectations and trends are dependent on certain risks and uncertainties including such factors, among others, as growth in demand for education services, smooth and timely implementation of new training centers and other risk factors listed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010. Forward-looking statements speak only as of the date of this filing, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as "anticipate," "estimate," "expect," "believe," "will likely result," "outlook," "project" and other words and expressions of similar meaning. No assurance can be given that the results in any forward-looking statements will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.

About Non-GAAP Financial Measures

To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: adjusted net income, adjusted net-income margin, adjusted EPS (basic and diluted), adjusted EBITDA and adjusted EBITDA margin. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, 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 results of operations measures to the nearest comparable GAAP measures" included at the end of this release.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results."  These non-GAAP financial measures exclude from our operating performance not only non-cash charges, such as stock-based compensation, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.  The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

CONTACT:  
ChinaCast Education
Michael J. Santos, President-International
+1-347-788-0030
mjsantos@chinacasteducation.com

MZ Group
Ted Haberfield, President
MZ North America, IR
+1-760-755-2716
thaberfield@hcinternational.net

CHINACAST EDUCATION CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except share-related data)


















As of September 30,



As of
December 31,





2011




2011



2010





US$




RMB



RMB


Assets












Current assets:













Cash and cash equivalents



75,359




482,300




244,403


Term deposits



94,531




605,000




704,000


Accounts receivable



8,297




53,098




59,420


Inventory



149




955




993


Prepaid expenses and other current assets



4,484




28,698




48,221


Amounts due from related parties



537




3,438




3,438


Deferred tax assets



264




1,688




2,972


Current portion of prepaid lease payments for land use rights



640




4,097




3,986


Total current assets



184,261




1,179,274




1,067,433


Non-current deposits



6,680




42,752




7,388


Prepayment for construction projects



6,797




43,502




-


Property and equipment, net



115,288




737,846




763,926


Prepaid lease payments for land use rights - non-current



27,244




174,361




177,544


Acquired intangible assets, net



10,142




64,909




100,816


Long-term investments



469




3,000




3,000


Goodwill



120,932




773,967




774,083


Total assets



471,813




3,019,611




2,894,190











As of




As of September 30,



December 31,




2011



2011



2010




US$



RMB



RMB












Liabilities and equity










Current liabilities:










Accounts payable (including accounts payable of the consolidated VIE without recourse to ChinaCast Education Corporation of RMB682 and RMB1,635 as of September 30, 2011 and December 31, 2010, respectively)



7,350




47,042




48,602


Accrued expenses and other current liabilities (including accrued expenses and other liabilities of the consolidated VIE without recourse to ChinaCast Education Corporation of RMB17,209 and RMB17,462 as of September 30, 2011 and December 31, 2010, respectively)



30,627




196,023




270,703


Deferred revenues



54,876




351,208




262,824


Income taxes payable (including income taxes payable of  the consolidated VIE without recourse  to ChinaCast Education Corporation of RMB4,294 and RMB4,844 as of September 30, 2011 and December 31, 2010, respectively)



18,000




115,198




99,461


Current portion of long-term bank borrowings (including current portion of long-term bank borrowings of the consolidated VIE without recourse to ChinaCast Education Corporation of nil as of September 30, 2011 and December 31, 2010)



29,813




190,800




170,000


Other borrowings(including other borrowings of the consolidated VIE without recourse to ChinaCast Education Corporation of nil as of September 30, 2011 and December 31, 2010)



-




-




1,500


Total current liabilities



140,666




900,271




853,090


Non-current liabilities:













Long-term deposit received



1,506




9,636




9,270


Long-term bank borrowings (including long-term bank Borrowings of the consolidated VIE without recourse to ChinaCast Education Corporation of nil as of September 30, 2011 and December 31, 2010)



10,938




70,000




90,000


Deferred tax liabilities – non-current (including deferred tax liabilities – non-current of the consolidated VIE without recourse to ChinaCast Education Corporation of nil as of September 30, 2011 and December 31, 2010)



7,264




46,491




51,503


Unrecognized tax benefits – non-current (including unrecognized tax benefits of the consolidated VIE without recourse to ChinaCast Education Corporation of RMB6,205 and RMB5,799 as of September 30, 2011 and December 31, 2010, respectively)



19,241




123,142




109,933


Total non-current liabilities



38,949




249,269




260,706















Total liabilities



179,615




1,149,540




1,113,796


Commitments and contingencies













Equity:













Preferred stock (US$0.0001 par value; 500,000 shares authorized; none issued or outstanding)



-




-




-


Ordinary shares (US$0.0001 par value; 100,000,000 shares authorized; 49,020,291 and 49,778,952 shares issued and outstanding as of September 30, 2011 and December 31, 2010, respectively)



6




36




36


Additional paid-in capital



232,351




1,487,047




1,510,527


Statutory reserve



7,443




47,634




47,671


Accumulated other comprehensive loss



(360)




(2,295)




(3,194)


Retained earnings



51,632




330,443




199,862















Total ChinaCast Education Corporation shareholders' equity



291,072




1,862,865




1,754,902


Noncontrolling interest



1,126




7,206




25,492















Total equity



292,198




1,870,071




1,780,394















Total liabilities and equity



471,813




3,019,611




2,894,190





CHINACAST EDUCATION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)

(In thousands, except share-related data)




For the three months ended September 30,



For the nine months ended September 30,




2011



2011



2010



2011



2011



2010




US$



RMB



RMB



US$



RMB



RMB





















Revenues:



















Service



23,708




151,732




122,195




70,197




449,262




341,170


Equipment



1,915




12,256




2,924




4,555




29,153




2,955






























25,623




163,988




125,119




74,752




478,415




344,125



























Cost of revenues:

























Service



(11,645)




(74,527)




(61,358)




(33,552)




(214,731)




(161,713)


Equipment



(1,914)




(12,251)




(2,832)




(4,535)




(29,022)




(2,832)






























(13,559)




(86,778)




(64,190)




(38,087)




(243,753)




(164,545)



























Gross profit



12,064




77,210




60,929




36,665




234,662




179,580



























Operating (expenses) income:


















































Selling and marketing expenses (including share-based compensation of nil for the three months ended September 30 for 2011 and 2010, share-based compensation of nil and RMB410 for the nine months ended September 30 for 2011 and 2010, respectively)



(44)




(281)




(394)




(156)




(1,000)




(1,702)


General and administrative expenses (including share-based compensation of RMB1,974 and RMB1,922 for the three months ended September 30 for 2011 and 2010, respectively, share-based compensation of RMB7,289 and RMB6,114 for the nine months ended September 30 for 2011 and 2010, respectively)



(3,827)




(24,494)




(19,739)




(12,266)




(78,505)




(52,291)


Foreign exchange loss



(61)




(393)




(4)




(154)




(988)




(557)


Gain from change in contingent consideration



1,344




8,601




9,467




1,344




8,601




9,467


Other operating income



44




280




(34)




62




398




180



























Total operating expenses, net



(2,544)




(16,287)




(10,704)




(11,170)




(71,494)




(44,903)








For the three months ended September 30,



For the nine months ended September 30,




2011



2011



2010



2011



2011



2010




US$



RMB



RMB



US$



RMB



RMB





















Income from operations



9,520




60,923




50,225




25,495




163,168




134,677


Interest income



673




4,306




3,650




1,943




12,437




10,138


Interest expense



(777)




(4,974)




(4,058)




(1,988)




(12,723)




(10,623)


Income before provision for income taxes and earnings in equity method investments



9,416




60,255




49,817




25,450




162,882




134,192


Provision for income taxes



(1,454)




(9,306)




(7,791)




(4,950)




(31,679)




(27,540)


Net income before earnings in equity investments



7,962




50,949




42,026




20,500




131,203




106,652


Loss in equity investments



-




-




(26)




-




-




(86)


Income from continuing operation, net of tax



7,962




50,949




42,000




20,500




131,203




106,566


Discontinued operations

























Loss from discontinued operations, net of taxes of nil for the three months and nine months ended September 30 for 2011 and 2010:



(110)




(701)




100




(265)




(1,694)




100


Gain from disposal of discontinued operations



268




1,716




-




268




1,716




-


Net income



8,120




51,964




42,100




20,503




131,225




106,666


Less: Net income attributable to noncontrolling interest



(39)




(248)




(559)




(101)




(644)




(1,427)


Net income attributable to ChinaCast Education Corporation



8,081




51,716




41,541




20,402




130,581




105,239


 Net income



8,120




51,964




42,100




20,503




131,225




106,666


Foreign currency translation adjustments



75




477




338




141




899




1,994


Comprehensive income



8,195




52,441




42,438




20,644




132,124




108,660


Comprehensive income attributable to noncontrolling interest



(2,792)




(17,869)




(510)




(2,857)




(18,286)




(1,377)


 Comprehensive income attributable to ChinaCast Education Corporation



5,403




34,572




41,928




17,787




113,838




107,283



























Net income per share

























Income from continuing operations attributable to ChinaCast Education Corporation per share:

























Basic



0.16




1.03




0.83




0.41




2.63




2.21


Diluted



0.16




1.01




0.82




0.41




2.60




2.18



























Income from discontinued operations attributable to ChinaCast Education Corporation per share:

























Basic



-




0.03




-




-




0.01




-


Diluted



-




0.03




-




-




0.01




-



























Net income attributable to ChinaCast Education Corporation per share:

























Basic



0.16




1.06




0.83




0.41




2.64




2.21



























Diluted



0.16




1.04




0.82




0.41




2.61




2.18



























Weighted average shares used in computation:

























Basic



49,009,512




49,009,512




49,834,291




49,531,187




49,531,187




47,693,969



























Diluted



49,504,442




49,504,442




50,370,903




50,057,748




50,057,748




48,176,902





CHINACAST EDUCATION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)




For the nine months ended September 30,




2011



2011



2010




US$



RMB



RMB













Cash flows from operating activities:













Net income



20,503




131,225




106,666


Adjustments to reconcile net income to net cash provided by operating activities:













Depreciation



7,453




47,701




36,832


Amortization of acquired intangible assets



5,610




35,907




27,231


Amortization of land use rights



480




3,072




2,510


Share-based compensation



1,139




7,289




6,522


Loss on disposal of property, plant and equipment



29




183




-


Loss in equity investments



-




-




86


Gain on disposal of discontinued operation



(268)




(1,716)




-


Change in fair value of contingent consideration-prior year



(1,344)




(8,601)




-


Changes in assets and liabilities:













Accounts receivable



877




5,610




4,823


Inventory



3




21




(52)


Prepaid expenses and other current assets



4,534




29,017




(3,607)


Non-current deposits



(3,348)




(21,422)




5390


Amounts due from related parties



-




-




2,950


Accounts payable



(244)




(1,560)




(2,657)


Accrued expenses and other current liabilities



1,004




6,427




(13,158)


Deferred revenues



14,617




93,549




159,699


Income taxes payable



2,459




15,737




19,656


Deferred tax assets



167




1,069




931


Deferred tax liabilities



(783)




(5,012)




(4,765)


Unrecognized tax benefits



2,134




13,655




13,320


Net cash provided by operating activities



55,022




352,151




362,377


Cash flows from investing activities:













Repayment from advance to related party



-




-




62


Purchase of subsidiaries, net of cash acquired



-




-




(374,374)


Cash in the disposed subsidiary



(1,596)




(10,214)




-


Purchase of property and equipment



(6,805)




(43,553)




(54,708)


Purchase of term deposits



(94,531)




(605,000)




(93,000)


Proceeds from maturity of term deposits



110,000




704,000




-


Deposits for investments



(80)




(510)




(3,000)


Deposit for land use rights



(2,022)




(12,942)




-


Prepayment for construction projects



(6,797)




(43,502)




-


Net cash used in investing activities



(1,831)




(11,721)




(525,020)








For the nine months ended September 30,




2011



2011



2010




US$



RMB



RMB












Cash flows from financing activities:










Payment of deferred consideration paid for acquisition of subsidiary



(10,956)




(70,120)




-


Other borrowings raised



5,313




34,000




93,500


Repayment of other borrowings



(5,547)




(35,500)




(92,200)


Bank borrowings raised



20,281




129,800




80,000


Bank borrowings repaid



(20,156)




(129,000)




(94,400)


Repayment of capital lease obligation



-




-




(10)


Cash received from noncontrolling interest for establishing joint venture



-




-




20,000


Share repurchase



(4,808)




(30,769)




-


Deposit for bank borrowing guarantee



(781)




(5,000)




-


Collection of deposit for bank borrowing guarantee



625




4,000




-


Proceeds from issuance of share, net of issuance costs



-




-




232,970


Net cash provided by/(used in) financing activities



(16,029)




(102,589)




239,860


Effect of foreign exchange rate changes



9




56




308


Net increase in cash and cash equivalents



37,171




237,897




77,525


Cash and cash equivalents at beginning of the period



38,188




244,403




327,628















Cash and cash equivalents at end of the period



75,359




482,300




405,153


Supplemental noncash investing and financing activities:













Consideration receivable from disposal of QPU



1,875




12,000




-


NCI eliminated due to disposal of QPU



(106)




(677)




-





Non-GAAP figures





YoY



3 months ended

3 months ended

%change



30/9/2011

30/9/2010

+/(-)



US$'000

US$'000


Adjusted Net Income (Non-GAAP)




Net income attributable to ChinaCast Education Corporation

8,081

6,200

30.34

Share-based Compensation

308

287

7.32

Amortization of Acquired Intangible Assets

1,746

1,492

17.02

Adjusted Net Income (non-GAAP)

10,135

7,979

27.02

   Adjusted Net Margin (non-GAAP)

39.60%

42.70%


Adjusted Diluted EPS (Non-GAAP)

0.20

0.16

25.00






Adjusted EBITDA (Non-GAAP)




Net income attributable to ChinaCast Education Corporation

8,081

6,200

30.34

Depreciation

2,654

2,333

13.76

Amortization of Acquired Intangible Assets

1,746

1,492

17.02

Amortization of Land Use Rights

160

132

21.21

Share-based Compensation

308

287

7.32

Interest Income

-673

-545

23.49

Interest Expense

777

606

28.22

Provision for income taxes

1,454

1,163

25.02

Earnings in equity investments

-

4

-100

Net income attributable to noncontrolling interest

39

83

-53.01

Adjusted EBITDA(non-GAAP)

14,546

11,755

23.74

   Adjusted EBITDA Margin (non-GAAP)

56.80%

62.90%











YoY



9 months ended

9 months ended

%change



30/9/2011

30/9/2010

+/(-)



US$'000

US$'000


Adjusted Net Income (Non-GAAP)




Net income attributable to ChinaCast Education Corporation

20,402

15,707

29.89

Share-based Compensation

1,139

973

17.06

Amortization of Acquired Intangible Assets

5,610

4,064

38.04

Adjusted Net Income (non-GAAP)

27,151

20,744

30.89

   Adjusted Net Margin (non-GAAP)

36.30%

40.40%


Adjusted Diluted EPS (Non-GAAP)

0.54

0.43

25.58






Adjusted EBITDA (Non-GAAP)




Net income attributable to ChinaCast Education Corporation

20,402

15,707

29.89

Depreciation

7,453

5,497

35.58

Amortization of Acquired Intangible Assets

5,610

4,064

38.04

Amortization of Land Use Rights

480

375

28

Share-based Compensation

1,139

973

17.06

Interest Income

-1,943

-1,513

28.42

Interest Expense

1,988

1,586

25.35

Provision for income taxes

4,950

4,110

20.44

Earnings in equity investments

-

13

-100

Net income attributable to noncontrolling interest

101

213

-52.58

Adjusted EBITDA(non-GAAP)

40,180

31,025

29.51

   Adjusted EBITDA Margin (non-GAAP)

53.80%

60.40%




SOURCE ChinaCast Education Corporation