eLong Reports Third Quarter 2012 Unaudited Financial Results
eLong Reports Third Quarter 2012 Unaudited Financial Results
Adds nearly 2 million room nights compared to third quarter of 2011
PR Newswire
BEIJING, Nov. 15, 2012
BEIJING, Nov. 15, 2012 /PRNewswire/ -- eLong, Inc. (Nasdaq: LONG), a leading
online travel service provider in China, today reported unaudited financial
results for the third quarter ended September 30, 2012.
(Logo: http://photos.prnewswire.com/prnh/20041118/ELONGLOGO)
Highlights
o Hotel room nights booked through eLong in the third quarter increased 70%
to 4.6 million room nights compared to 2.7 million in the prior year
period. Online hotel bookings comprised 76% of total hotel bookings,
compared to 60% in the third quarter of 2011.
o Hotel commission revenue for the third quarter increased 24% to RMB156.6
million (US$24.9 million), compared to RMB126.0 million (US$19.8 million)
in the third quarter of 2011.
o Net revenues for the third quarter increased 20% to RMB197.3 million
(US$31.4 million), compared to RMB164.3 million (US$25.8 million) in the
third quarter of 2011.
o Domestic hotel coverage network expanded 54% to almost 36,000 domestic
hotels as of September 30, 2012, compared to 23,000 as of September 30,
2011. In addition, eLong offers over 160,000 international hotels through
a direct connection to Expedia.
o Entered into a new cooperation agreement with Expedia that provides an
increased level of strategic cooperation with our largest shareholder.
o Received several industry awards and honors, including: being named (1) a
Top Micro-Innovation Company by BizReview Magazine, (2) a 2012 China Best
Employer award by Zhaopin.com and Beijing University, and (3) a 2012 China
Best Call Center by the China Federation of IT Promotion.
"In the third quarter, we launched our largest-ever marketing campaign,
featuring our 'Book Hotel, Use eLong' branding and increased coupon
promotions. The campaign contributed to significantly improved brand awareness
and growth in our market share. It did come with a price, but we are willing
to take a short-term loss for long term gain. Going forward, we will continue
with our online hotel strategy, invest aggressively and drive harder," said
Guangfu Cui, Chief Executive Officer of eLong.
"We are strong believers in the eLong team and their ability to grow and
continue to gain share in China. We are just getting started," said Dara
Khosrowshahi, President and Chief Executive Officer of Expedia.
Business Results
Revenues
Total revenues by product for the third quarter of 2012 as compared to the
same period in 2011 were as follows (in RMB million):
Q3 2012 % Q3 2011 % Y/Y
Total Total Growth
Hotel reservations 156.6 74% 126.0 72% 24%
Air ticketing 35.2 17% 33.7 19% 5%
Other 20.1 9% 15.5 9% 30%
Total revenues 211.9 100% 175.2 100% 21%
Hotel Reservations
Hotel commission revenue increased 24% in the third quarter of 2012 compared
to the same period in 2011, primarily due to higher volume, partially offset
by lower commission per room night. Room nights booked through eLong in the
third quarter increased 70% year-on-year to 4.6 million. Commission per room
night decreased 27% year-on-year, primarily due to an increase in the size of
our coupon program both in terms of the number of hotels and the cash-back
amounts offered, as well as the growth of groupbuy and budget hotels and lower
average daily rates across other hotel segments. Hotel commission revenue grew
to 74% of total revenues from 72% in the prior year quarter.
Air Ticketing
Air ticketing commission revenue increased 5% in the third quarter of 2012
compared to the prior year quarter, driven by a 12% increase in air segments
to 662,000, partially offset by a 7% decrease in commission per segment.
Commission per segment decreased due to a lower air commission rate compared
to the same quarter of 2011 as well as air segments booked using our new air
coupon program. Air ticketing commission revenue decreased to 17% of total
revenues from 19% in the prior year quarter.
Other
Other revenue is primarily derived from advertising and travel insurance.
Other revenue increased 30% year-on-year in the third quarter of 2012, mainly
driven by increased advertising revenue. Other revenue was 9% of total
revenues, consistent with the prior year quarter.
Profitability
Gross margin in the third quarter of 2012 decreased to 70%, compared to 73% in
the third quarter of 2011. Gross margin decline was primarily due to lower
hotel commission revenue per room night as well as higher volume-driven
fulfillment costs.
Operating expenses for the third quarter of 2012 as compared to the same
period in 2011 were as follows (in RMB million):
Q3 2012 % of Net Q3 2011 % of Net Y/Y Growth
Revenue Revenue
Service development 33.4 17% 26.4 16% 27%
Sales and marketing 144.7 74% 69.0 42% 110%
General and administrative 16.2 8% 12.9 8% 25%
Amortization of intangible 0.3 - 0.1 - 104%
assets
Charges related to property
and equipment and intangible 0.4 - - - N/M
assets
Total operating expenses 195.0 99% 108.4 66% 80%
Total operating expenses increased 80% for the third quarter of 2012 compared
to the third quarter of 2011. Total operating expenses increased to 99% of net
revenues in the third quarter of 2012 from 66% in the prior year quarter which
led to an operating loss of RMB56.2 million compared to operating income of
RMB11.6 million in the prior year quarter.
Service development expenses consist of expenses related to technology and our
product offering, including our websites, platforms and other system
development, as well as our supplier relations function. Service development
expenses increased 27% compared to the prior year quarter, mainly driven by
higher personnel expenses. Service development expenses increased to 17% of
net revenues in the third quarter of 2012 from 16% in the same quarter of
2011.
Sales and marketing expenses for the third quarter of 2012 increased 110% over
the prior year quarter, mainly driven by increased advertising expenses from
our marketing campaign and a further level of increased investment in online
marketing channels. Sales and marketing expenses increased to 74% of net
revenues in the third quarter of 2012 from 42% in the same quarter of 2011.
General and administrative expenses for the third quarter of 2012 increased
25% compared to the prior year quarter, mainly driven by higher personnel
expenses. General and administrative expenses were 8% of net revenues,
consistent with the same quarter of 2011.
Other income/(expense) represents interest income, foreign exchange losses and
other income/(expense). Other income was RMB16.2 million in the third quarter
of 2012 compared to other income of RMB0.9 million in the third quarter of
2011, primarily driven by an increase in interest income and a decrease in
foreign exchange losses. Interest income in the third quarter of 2012
increased to RMB15.0 million, compared to RMB7.2 million in the third quarter
of 2011, due to higher interest yield. Foreign exchange losses on our cash and
cash equivalents and short-term investments decreased to RMB0.1 million in the
third quarter of 2012, from RMB5.9 million in the third quarter of 2011 as we
held a smaller percentage of our cash and cash equivalents, short-term
investments and restricted cash in US dollars than in the prior year quarter.
As of September 30, 2012, eLong held cash and cash equivalents, short-term
investments and restricted cash of RMB1.9 billion (US$306 million), of which
96% was held in Renminbi and 4% was held in US dollars, compared to total cash
and cash equivalents, short-term investments and restricted cash of RMB1.9
billion (US$291 million), of which 86% was held in Renminbi and 14% held in US
dollars as of September 30, 2011.
Net loss for the third quarter of 2012 was RMB33.1 million, compared to net
income of RMB9.4 million during the prior year quarter.
Net loss per ADS and diluted net loss per ADS for the third quarter of 2012
were each RMB0.96 (US$0.16), compared to net income per ADS and diluted net
income per ADS of RMB0.28 (US$0.04) in the prior year quarter.
Business Outlook
eLong currently expects net revenues for the fourth quarter of 2012 to
increase by 15% to 25% compared to the fourth quarter of 2011. This outlook
reflects eLong's current and preliminary view, which is subject to change.
Share Repurchase Program
Since August 17, 2012, no additional shares have been repurchased under
eLong's share repurchase program.
Safe Harbor Statement
It is currently expected that the Business Outlook will not be updated until
the release of eLong's next quarterly earnings announcement; however, eLong
reserves the right to update its Business Outlook at any time for any reason.
Statements in this press release concerning eLong's future business, operating
results and financial condition are "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E
of the Securities Exchange Act of 1934, as amended, and as defined in the
Private Securities Litigation Reform Act of 1995. Words such as "anticipate,"
"believe," "estimate," "expect," "forecast," "intend," "may," "plan,"
"project," "predict," "future," "is/are likely to," "should" and "will" and
similar expressions as they relate to eLong are intended to identify such
forward-looking statements, but are not the exclusive means of doing so. These
forward-looking statements are based upon management's current views and
expectations with respect to future events and are not a guarantee of future
performance. Forward-looking statements include, but are not limited to,
statements about our anticipated growth strategies, our future business
development, results of operations and financial condition, our ability to
control costs and/or maintain profitability, our ability to attract customers
and leverage our brand, and trends and competition in the travel industry in
China and globally. Furthermore, these statements are, by their nature,
subject to a number of risks and uncertainties that could cause our actual
performance and results to differ materially from those discussed in the
forward-looking statements. Factors that could affect our actual results and
cause our actual results to differ materially from those referred in any
forward-looking statement include, but are not limited to, declines or
disruptions in the travel industry, international financial, political or
economic crises, a slowdown in the PRC economy, an outbreak of bird flu, H1N1
flu, SARS or other disease, eLong's reliance on maintaining good relationships
with, and stable air and hotel inventory from, hotel suppliers and airline
ticket suppliers, and on establishing new relationships with suppliers on
similar terms, our reliance on the TravelSky GDS system for our air business
and Baidu for our search engine marketing, the risk that eLong will not be
able to increase our brand recognition, the possibility that eLong will be
unable to continue timely compliance with the Sarbanes-Oxley Act or other
regulatory requirements, the risk that eLong will not be successful in
competing against new and existing competitors, the risk that our
infrastructure and technology are damaged, fail or become obsolete, risks
associated with Expedia, Inc.'s (Nasdaq: EXPE) majority ownership interest and
Tencent's shareholding in eLong, risks relating to eLong's investment in other
businesses and assets, fluctuations in the value of the Renminbi, inflation in
China, changes in eLong's management team and other personnel, risks relating
to uncertainties in the PRC legal system, including but not limited to, risks
relating to our affiliated Chinese operating entities and risks relating to
the application of preferential tax policies, and other risks mentioned in
eLong's filings with the U.S. Securities and Exchange Commission, including
eLong's Annual Report on Form 20-F.
If one or more of these risks or uncertainties occur, or if our underlying
assumptions prove to be incorrect, actual events or results may vary
significantly from those implied or projected by the forward
looking-statements. Investors should not rely upon forward-looking statements
as predictions of future events. Except as required by law, we undertake no
obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. All
forward-looking statements contained in this press release are qualified by
reference to this cautionary statement.
Conference Call
eLong will host a conference call to discuss its third quarter 2012 unaudited
financial results on November 16, 2012 at 8:00 am Beijing time (November 15,
2012, 7:00 pm ET). The management team will be on the call to discuss the
quarterly results and to answer questions. The toll-free number for U.S.
participants is +1-866-844-9413. The dial-in number for Hong Kong participants
is +852-3001-3802. International participants can dial +1-210-795-0512. Pass
code: eLong.
Additionally, an archived web cast of this call will be available on the
Investor Relations section of the eLong web site at
http://www.elong.net/AboutUs/conference.html.
About eLong, Inc.
eLong, Inc. (Nasdaq: LONG - News) is a leading online travel service provider
in China. Headquartered in Beijing, eLong provides business and leisure
travelers a leading selection of almost 36,000 hotels in China and over
160,000 international hotels in over 200 countries worldwide. eLong empowers
travelers to make informed travel decisions with user-friendly website and
mobile technology, a 24-hour customer service center and easy to use booking
tools such as maps, destination guides, photographs, virtual tours and user
reviews. eLong can also fulfill domestic and international air ticket
reservations across China. eLong's largest shareholders are Expedia, Inc.
(Nasdaq: EXPE) and Tencent Holdings Ltd. (HKSE: 0700). eLong operates websites
including www.elong.com, www.elong.net and www.xici.net.
For further information, please contact:
eLong, Inc.
Investor Relations
ir@corp.elong.com
+86-10-6436-7570
eLong, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AND PER ADS AMOUNTS)
Three Months Ended Nine Months Ended
Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30, Sep. 30, Sep. 30,
2011 2012 2012 2012 2011 2012 2012
RMB RMB RMB USD^(1) RMB RMB USD^(1)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Hotel reservations 126,043 153,843 156,598 24,917 321,245 433,335 68,950
Air ticketing 33,681 29,944 35,198 5,600 96,093 92,301 14,686
Other 15,444 13,259 20,053 3,191 39,472 47,149 7,502
Total revenues 175,168 197,046 211,849 33,708 456,810 572,785 91,138
Business tax and (10,822) (12,007) (14,590) (2,322) (28,785) (37,334) (5,940)
surcharges
Net revenues 164,346 185,039 197,259 31,386 428,025 535,451 85,198
Cost of (44,319) (46,149) (58,514) (9,310) (114,416) (145,938) (23,221)
services
Gross profit 120,027 138,890 138,745 22,076 313,609 389,513 61,977
Operating
expenses:
Service (26,347) (30,494) (33,381) (5,311) (69,595) (91,110) (14,497)
development
Sales and (68,993) (90,526) (144,722) (23,028) (167,496) (302,198) (48,084)
marketing
General and (12,936) (14,591) (16,194) (2,577) (38,641) (45,559) (7,249)
administrative
Amortization of (137) (279) (279) (44) (410) (809) (129)
intangible assets
Charges related to
property and (7) - (378) (60) (148) (378) (60)
equipment and
intangible assets
Total operating (108,420) (135,890) (194,954) (31,020) (276,290) (440,054) (70,019)
expenses
Income/(loss) from 11,607 3,000 (56,209) (8,944) 37,319 (50,541) (8,042)
operations
Other
income/(expenses):
Interest income 7,166 14,006 14,955 2,380 17,061 40,568 6,455
Foreign exchange (5,923) (29) (83) (13) (17,189) (730) (116)
losses
Other (337) 65 1,339 213 (4,855) 2,829 450
Total other
income/(expense), 906 14,042 16,211 2,580 (4,983) 42,667 6,789
net
Income/(loss)
before income tax 12,513 17,042 (39,998) (6,364) 32,336 (7,874) (1,253)
benefit/(expense)
Income tax (2,921) (963) 7,178 1,142 (7,956) 3,567 568
benefit/(expense)
Equity in net (156) (65) (320) (51) (115) (935) (149)
loss of affiliates
Net income/(loss) 9,436 16,014 (33,140) (5,273) 24,265 (5,242) (834)
Net income/(loss) 0.14 0.23 (0.48) (0.08) 0.42 (0.08) (0.01)
per share
Diluted net
income/(loss) per 0.14 0.23 (0.48) (0.08) 0.40 (0.08) (0.01)
share
Net income/(loss) 0.28 0.46 (0.96) (0.16) 0.84 (0.16) (0.02)
per ADS^(2)(3)
Diluted net
income/(loss) per 0.28 0.46 (0.96) (0.16) 0.80 (0.16) (0.02)
ADS^(2)(3)
Shares used in computing net
income per share[:]
Basic 67,831 68,687 68,859 68,859 57,782 68,711 68,711
Diluted 69,547 69,225 69,404 69,404 60,003 69,438 69,438
Share-based
compensation 5,886 8,168 6,979 1,110 16,304 22,096 3,516
charges included
in:
Cost of 393 638 417 66 1,084 1,520 242
services
Service 2,239 3,221 2,660 423 5,514 8,653 1,377
development
Sales and 1,114 1,069 1,015 162 2,678 3,370 536
marketing
General 2,140 3,240 2,887 459 7,028 8,553 1,361
and administrative
Note 1: The conversion of Renminbi (RMB) into United States dollars (USD) is based on the noon buying
rate of USD1.00=RMB6.2848 on September 30, 2012 in the City of New York for cable transfers of Renminbi
as certified for customs purposes by the Federal Reserve. No representation is made that the RMB amounts
could have been, or could be, converted or settled into USD at the rates stated herein on the reporting
dates, at any other rates or at all.
Note 2: 1 ADS = 2 shares.
Note 3: Non-GAAP financial measures
eLong, Inc.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
Dec. 31, Sep. 30, Sep. 30,
2011 2012 2012
RMB RMB USD
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents 411,676 341,220 54,293
Short-term investments 1,433,425 1,519,243 241,733
Restricted cash 61,400 61,400 9,770
Accounts receivable, net 83,311 131,620 20,943
Amounts due from related parties 11,632 29,896 4,757
Prepaid expenses 18,223 26,626 4,237
Other current assets 33,761 101,300 16,117
Total current assets 2,053,428 2,211,305 351,850
Property and equipment, net 44,230 70,772 11,261
Investment in equity affiliates 15,549 18,024 2,868
Goodwill 61,061 61,061 9,716
Intangible assets, net 5,308 6,969 1,109
Other non-current assets 31,142 35,664 5,674
Total assets 2,210,718 2,403,795 382,478
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 60,899 88,196 14,033
Income taxes payable 7,009 9,650 1,535
Amounts due to related parties 2,624 61,076 9,718
Deferred revenue 20,880 40,693 6,475
Accrued expenses and other current liabilities 111,787 180,929 28,789
Total current liabilities 203,199 380,544 60,550
Other liabilities 1,536 1,494 238
Total liabilities 204,735 382,038 60,788
Shareholders' equity
Ordinary shares 2,864 2,864 456
High-vote ordinary shares 2,691 2,691 428
Treasury stock (75,494) (72,377) (11,516)
Additional paid-in capital 2,209,469 2,231,344 355,038
Accumulated deficit (133,547) (142,765) (22,716)
Total shareholders' equity 2,005,983 2,021,757 321,690
Total liabilities and shareholders' equity 2,210,718 2,403,795 382,478
eLong, Inc.
TRENDED OPERATIONAL METRICS
(IN THOUSANDS)
The metrics below are intended as a supplement to the financial statements
found in this press release and in our filings with the SEC. In the event of
discrepancies between amounts in these tables and our historical financial
statements, readers should rely on our filings with the SEC and financial
statements in our most recent press release.
We intend to periodically review and refine the definition, methodology and
appropriateness of each of our supplemental metrics. As a result, metrics are
subject to removal and/or change, and such changes could be material.
2011 (Unaudited) 2012 (Unaudited)
Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3
Hotel Reservations
Room Nights 1,700 2,217 2,702 2,583 9,202 2,844 3,666 4,601
Room Night Y/Y 41% 43% 42% 50% 44% 67% 65% 70%
Average Daily Rate Y/Y (1%) (9%) (9%) (8%) (7%) (12%) (11%) (9%)
Commission/Room Night (7%) (15%) (12%) (7%) (10%) (19%) (11%) (27%)
Y/Y
Hotel Commissions Y/Y 31% 22% 25% 39% 29% 36% 47% 24%
Air Ticketing
Air Segments 587 568 591 571 2,317 554 525 662
Air Segments Y/Y (10%) (4%) (6%) 1% (5%) (6%) (8%) 12%
Average Ticket Value 11% 7% 0% 4% 5% 1% 5% 0%
Y/Y
Commission/Segment Y/Y 14% 10% 8% (4%) 7% (5%) 1% (7%)
Air Commissions Y/Y 2% 6% 2% (4%) 2% (10%) (7%) 5%
Non-GAAP Financial Measures
To supplement the financial measures calculated in accordance with generally
accepted accounting principles in the United States, or GAAP, this press
release includes certain non-GAAP financial measures including net income per
ADS, diluted net income per ADS, Adjusted Earnings Before Interests, Taxes,
Depreciation and Amortization ("Adjusted EBITDA"), Adjusted Net Income ("ANI")
and Adjusted Net Income Per Share. We believe these non-GAAP financial
measures may help investors understand eLong's current financial performance
and compare business trends among different reporting periods. These non-GAAP
financial measures should be considered in addition to financial measures
presented in accordance with GAAP, but should not be considered as a
substitute for, or superior to, financial measures presented in accordance
with GAAP. We seek to compensate for the limitations of the non-GAAP measures
presented by also providing the comparable GAAP measures, GAAP financial
statements, and descriptions of the reconciling items and adjustments, to
derive the non-GAAP measures.
Adjusted EBITDA is defined as net income plus (1) interest expense (income);
(2) income tax expense; (3) depreciation; (4) amortization of intangible
assets; (5) share-based compensation charges; (6) foreign exchange losses
(gains); (7) acquisition-related impacts, including (i) goodwill and
intangible asset impairment, and (ii) losses (gains) recognized on
noncontrolling investment basis adjustments when we acquire controlling
interests; and (8) certain other items, including restructuring charges and
equity in net loss (income) of affiliates. We believe Adjusted EBITDA is a
useful financial metric to assess our operating and financial performance
before the impact of investing and financing transactions, if any, and income
tax expense. Since share-based compensation charges are non-cash expenses, we
believe excluding them from our calculation of Adjusted EBITDA allows us to
provide investors with a more useful tool for assessing our operating and
financial performance. In addition, we believe that Adjusted EBITDA is used by
other companies and may be used by investors as a measure of our financial
performance. The presentation of Adjusted EBITDA should not be construed as an
indication that eLong's future results will be unaffected by other charges and
gains we consider to be outside the ordinary course of our business. The use
of Adjusted EBITDA has certain limitations. Amortization and depreciation
expenses for various non-current assets, share-based compensation charges,
other income/(expenses), and income tax expense have been and will be incurred
and are not reflected in the presentation of Adjusted EBITDA. Each of these
items should also be considered in the overall evaluation of our results.
Additionally, Adjusted EBITDA does not consider capital expenditures and other
investing activities and should not be considered as a measure of eLong's
liquidity. We seek to compensate for these limitations by providing the
relevant disclosure of our amortization and depreciation expenses, and
share-based compensation charges in the reconciliations to the GAAP financial
measure. The term Adjusted EBITDA is not defined under GAAP, and Adjusted
EBITDA is not measure of net income, income from operations, operating
performance or liquidity presented in accordance with GAAP. In addition,
eLong's Adjusted EBITDA may not be comparable to Adjusted EBITDA or similarly
titled measures utilized by other companies since such other companies may not
calculate Adjusted EBITDA in the same manner as we do.
Adjusted EBITDA should be considered in addition to results prepared in
accordance with GAAP, but should not be considered a substitute for, or
superior to, GAAP measures. We present a reconciliation of this non-GAAP
financial measure to GAAP below.
eLong, Inc.
TABULAR RECONCILIATION FOR NON-GAAP MEASURE
Adjusted EBITDA
(IN THOUSANDS)
2011 (Unaudited) 2012 (Unaudited)
Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3
RMB RMB RMB RMB RMB RMB RMB RMB
Net income 7,712 7,119 9,436 15,004 39,271 11,883 16,014 (33,140)
Interest income (4,591) (5,304) (7,166) (8,587) (25,648) (11,606) (14,006) (14,955)
Income tax 2,786 2,250 2,921 2,790 10,747 2,648 963 (7,178)
expense/(benefit)
Depreciation 4,987 5,206 5,512 5,593 21,298 5,985 6,435 7,096
Amortization of 136 137 137 137 547 251 279 279
intangible assets
Share-based
compensation 4,779 5,637 5,886 5,620 21,922 6,948 8,168 6,979
charges
Foreign exchange 3,131 8,135 5,923 2,314 19,503 617 29 83
losses
Other 15 84 161 1,155 1,415 (873) - (641)
Adjusted EBITDA 18,955 23,264 22,810 24,026 89,055 15,853 17,882 (41,477)
Adjusted Net Income generally captures all items on the statements of
operations that occur in normal course operations and have been, or ultimately
will be, settled in cash and is defined as net income plus net of tax: (1)
share-based compensation charges; (2) acquisition-related impacts, including
(i) amortization of intangible assets, including as part of equity-method
investments, and goodwill and intangible asset impairment, (ii) losses (gains)
recognized on changes in the value of contingent consideration arrangements,
and (iii) losses (gains) recognized on noncontrolling investment basis
adjustments when we acquire controlling interests; (3) foreign exchange
losses; (4) certain other items, including restructuring charges; and (5)
discontinued operations. We believe Adjusted Net Income is useful to investors
because it represents eLong's results, taking into account depreciation, which
management believes is an ongoing cost of doing business, but excluding the
impact of other non-cash expenses, infrequently occurring items and items not
directly tied to the core operations of our businesses.
Adjusted Net Income Per Share is defined as Adjusted Net Income divided by
adjusted weighted average shares outstanding, which include dilution from
options and warrants per the treasury stock method and include all shares
relating to Performance Units in shares outstanding for Adjusted Net Income
Per Share. This differs from the GAAP method for including Performance Units,
which treats them on a treasury stock method basis. Shares outstanding for
Adjusted Net Income Per Share purposes are therefore higher than shares
outstanding for GAAP Net Income Per Share purposes. We believe Adjusted Net
Income Per Share is useful to investors because it represents, on a per share
basis, eLong's consolidated results, taking into account depreciation, which
we believe is an ongoing cost of doing business, as well as other items which
are not allocated to the operating businesses such as interest income and
income tax expense, but excluding the effects of non-cash expenses not
directly tied to the core operations of our businesses. Adjusted Net Income
and Adjusted Net Income Per Share have similar limitations as Adjusted EBITDA.
In addition, Adjusted Net Income does not include all items that affect our
net income and net income per share for the period. Therefore, we think it is
important to evaluate these measures along with our consolidated statements of
operations.
Adjusted Net Income and Adjusted Net Income Per Share should be considered in
addition to results prepared in accordance with GAAP, but should not be
considered a substitute for, or superior to, GAAP measures. We present a
reconciliation of these non-GAAP financial measures to GAAP below.
eLong, Inc.
TABULAR RECONCILIATION FOR NON-GAAP MEASURE
Adjusted Net Income and Adjusted Net Income Per Share
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
2011 (Unaudited) 2012 (Unaudited)
Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3
RMB RMB RMB RMB RMB RMB RMB RMB
Net income 7,712 7,119 9,436 15,004 39,271 11,883 16,014 (33,140)
Share-based 4,779 5,637 5,886 5,620 21,922 6,948 8,168 6,979
compensation charges
Amortization of 136 137 137 137 547 251 279 279
intangible assets
Foreign exchange 3,131 8,135 5,923 2,314 19,503 617 29 83
losses
Other 3,432 386 263 524 4,605 (40) (73) 317
Adjusted net income 19,190 21,414 21,645 23,599 85,848 19,659 24,417 (25,482)
Shares used in computing adjusted net
income per share:
GAAP diluted
weighted average 52,105 57,920 69,547 69,080 62,298 69,342 69,225 69,404
shares outstanding
Additional 316 229 214 280 262 390 796 747
performance units
Adjusted weighted
average shares 52,421 58,149 69,761 69,360 62,560 69,732 70,021 70,151
outstanding
Adjusted net income 0.37 0.37 0.31 0.34 1.37 0.28 0.35 (0.36)
per share
SOURCE eLong, Inc.
Website: http://www.eLong.com
Website: http://www.elong.net/AboutUs/conference.html
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