ChinaEdu Corporation Reports Third Quarter 2012 Results

           ChinaEdu Corporation Reports Third Quarter 2012 Results

Net Revenue Increases to $19.7 Million, Exceeding Company Guidance

PR Newswire

BEIJING, Dec. 19, 2012

BEIJING, Dec. 19, 2012 /PRNewswire/ -- ChinaEdu Corporation (NASDAQ: CEDU)
("ChinaEdu" or the "Company"), a leading online educational services provider
in China, today announced its unaudited financial results for the third
quarter and nine months ended September 30, 2012.[1]

Third Quarter 2012 Highlights 

  oTotal net revenue for the third quarter of 2012 was $19.7 million, an 8.7
    percent increase from $18.1 million in the corresponding period in 2011.
  oNet revenue from online degree programs was $15.8 million, an increase of
    9.4 percent from $14.4 million in the corresponding period of 2011.
  oNet income attributable to ChinaEdu was $0.5 million. There was a non-cash
    intangible assets impairment charge of $0.9 million and a related deferred
    income tax impact of $0.6 million in the third quarter of 2012.
  oAdjusted net income attributable to ChinaEdu[2] was $1.9 million.
  oNet income attributable to ChinaEdu per diluted ADS[3] was $0.030. The
    non-cash intangible assets impairment charge and related deferred income
    tax impact affected net income attributable to ChinaEdu per diluted ADS by
    $0.091.
  oAdjusted net income attributable to ChinaEdu per diluted ADS[4] was
    $0.115.
  oOperating margin in the third quarter of 2012 was 20.3 percent excluding
    the intangible assets impairment charge.
  oThe number of revenue students[5] in online degree programs during the
    Spring 2012 semester increased roughly 21.4 percent year-over-year to
    approximately 193,000 students.

[1] The reporting currency of the Company is RMB, but for the convenience of
the reader, the amounts for the three and nine months ended on September 30,
2012 are presented in U.S. dollars. Unless otherwise stated, all translations
from RMB to U.S.dollars were made at the rate of RMB6.2848 to $1.00, the noon
buying rate in effect on September 30, 2012 in the H.10 statistical release of
the Federal Reserve Board. The Company makes no representation that the RMB or
U.S.dollar amounts referred could be converted into U.S.dollars or RMB, as
the case may be, at any particular rate or at all. 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.
[2] "Adjusted net income attributable to ChinaEdu" is a non-GAAP measure
defined as net income attributable to ChinaEdu excluding share-based
compensation net of non-controlling interests' portion, amortization of
intangible assets and land use rights, and impairment charges.
[3] "ADS" is American Depositary Share. Each ADS represents three ordinary
shares.
[4] "Adjusted net income attributable to ChinaEdu per diluted ADS" is a
non-GAAP measure which is computed using adjusted net income attributable to
ChinaEdu over the number of ADSs used in net income attributable to ChinaEdu
per diluted ADS calculation.
[5] "Revenue students" refers to students of university online degree programs
who have paid tuitions. The numbers for the three months ended September 30,
2012 and 2011 are revenue students in Spring 2012 and Spring 2011,
respectively.

Julia Huang, executive chairman of ChinaEdu commented, "We are pleased with
our performance in the third quarter, particularly our ability to increase
gross marginto 61.0 percent. We continue to see healthy growth in our online
degree programs and are making efforts to build our online professional and
certification training programs to help narrow the gap between the skills of
the workforce and present-day employers' needs. We are also working to improve
our interactive learning capability by integrating mobile and social network
applications into our K-12 programs. As these programs begin to benefit from
our focus on technology-supported interactive learning, we will look for ways
to integrate the platforms into our adult training and degree offerings. At
the same time, we continue to closely monitor and control costs across our
businesses, enabling us to deliver yet another successful quarter. As we look
towards the close of 2012, we are confident in the full year results we will
deliver and we are optimistic about the year ahead."

Financial Results for the Third Quarter Ended September 30, 2012

Net Revenue

Total net revenue for the third quarter of 2012 was $19.7 million, an 8.7
percent increase from $18.1 million in the corresponding period in 2011.

Net revenue from online degree programs for the third quarter of 2012 was
$15.8 million, a 9.4 percent increase from $14.4 million in the corresponding
period in 2011. As seen in the previous quarter, the increase in net revenue
from online degree programs in the third quarter was primarily due to organic
growth in revenue students enrolled in core online degree programs. Some
growth was also attributed to greater revenue contribution from our learning
centers network and increased revenue contribution from our online non-degree
training programs. Enrollment for online degree programs in the Spring 2012
semester was approximately 193,000 revenue students, an increase of 21.4
percent from approximately 159,000 revenue students in the Spring 2011
semester.

As of September 30 2012, ChinaEdu's learning centers network was providing
recruiting services for 22 universities with 116 operational learning centers,
of which 55 were proprietary centers[6] and 61 were contracted centers[7].
This compares to 103 operational learning centers as of September 30, 2011, of
which 59 were proprietary and 44 were contracted centers.

Net revenue from non-degree programs, including online tutoring programs,
private primary and secondary schools and international and elite curriculum
programs, in the third quarter of 2012 was $3.9 million, a 6.0 percent
increase from $3.7 million in the third quarter of 2011. The growth was mainly
driven by increased enrollment at our private schools in Anqing and
Pingdingshan as well as an increase in tuition at our Anqing private school.

[6] Proprietary centers refer to self-owned learning centers operated either
under the Company's own brand name or the brand name of a university pursuant
to a licensing arrangement with that university.
[7] Contracted centers refer to agreement with third party learning centers
pursuant to which the Company only provides assistance in applying for
approval from provincial level education authorities as well as securing
additional university online degree programs. In return, the Company receives
a percentage of the tuition earned by these third party learning centers.

Cost of Revenue

Total cost of revenue for the third quarter of 2012 was $7.7 million,
representing an increase of 1.5 percent, compared to $7.6 million in the
corresponding period of 2011.

Cost of revenue for online degree programs in the third quarter of 2012 was
$5.4 million, an increase of 7.5 percent from $5.0 million in the
corresponding period of 2011. The increase in cost of revenue was primarily
due to an increase in staff costs that resulted from a headcount increase
across the Company.

Cost of revenue for non-degree programs in the third quarter of 2012 was $2.3
million, a decrease of 10.5 percent from $2.5 million in the third quarter of
2011. The decrease in cost of revenue in this area was mainly due to decreases
in employee costs and leasing costs related to our international and elite
curriculum programs.

Gross Profit and Gross Margin

Gross profit in the third quarter of 2012 was $12.0 million, compared to $10.6
million in the corresponding period of 2011. Gross margin increased to 61.0
percent, compared to 58.2 percent in the corresponding period in 2011.

Gross margin for online degree programs increased to 65.7 percent for the
third quarter of 2012, compared to 65.1 percent in the corresponding period of
2011.

Gross margin for private schools increased to 40.3 percent, compared to 29.4
percent in the corresponding period in 2011. The increase was primarily due to
increased student enrollment at our private schools in Anqing and Pingdingshan
as well as a tuition increase at the Anqing school.

Gross margin for online tutoring programs decreased to 63.9 percent from 65.6
percent in third quarter of 2011, largely due to decreased barter transaction
revenue.

Operating Expenses

Total operating expenses were $9.0 million in the third quarter of 2012,
representing a 16.3 percent increase from $7.7 million in the corresponding
period in 2011. As a percentage of net revenue, total operating expenses
increased to 45.5 percent, compared to 42.5 percent in the corresponding
period in 2011. The increase in total operating expense was the result of the
following:

  oGeneral and administrative expenses for the third quarter of 2012 were
    $4.3 million, an increase of 16.6 percent compared to $3.7 million in the
    corresponding period in 2011. The increase was mainly the result of an
    early termination fee related to a lease agreement and an increase in
    conference fees and travel fees. As a percentage of net revenue, general
    and administrative expenses increased to 22.0 percent, compared with 20.5
    percent in the same period in 2011.
  oSelling and marketing expenses were $2.0 million in the third quarter of
    2012,a decrease of 13.7 percent compared to $2.3 million in the
    corresponding period in 2011. The decrease was primarily attributable to a
    significant decrease in marketing activities surrounding international and
    elite curriculum programs. As a percentage of net revenue, selling and
    marketing expenses decreased to 9.9 percent, compared with 12.5 percent in
    the same period in 2011.
  oResearch and development expenses for the third quarter of 2012 were $1.7
    million, flat with the corresponding period in 2011. As a percentage of
    net revenue, the research and development expense was 8.8 percent in the
    third quarter of 2012, decreasing from 9.5 percent in the same period in
    2011.
  oThe Company incurred an intangible asset impairment charge in relation to
    the BCIT (British Columbia Institute of Technology) and FEC (Friendly
    Experimental Class) programs in the international and elite curriculum
    division in the third quarter of 2012, resulting in an aggregate non-cash
    charge of $0.9 million (RMB5.9 million). The Company does not plan to
    enter into new cooperative agreements such as these in the near future.
    Due to the projection that demonstrated the operation from the FEC program
    and continuing losses from the BCIT programs, the Company believes that
    the intangible assets carrying amount associated with the BCIT and FEC
    programs may not be recoverable. The fair value for the intangible assets
    of these programs is less than the carrying value as of September 30,
    2012, resulting in impairment of these two programs in the current
    quarter. The excess carrying value of the intangible assets over its fair
    value is recognized as an impairment loss.

Income from Operations

Income from operations in the third quarter of 2012 was $3.1 million, an
increase of 7.3 percent compared to $2.8 million in the corresponding period
of 2011. The increase was mainly due to an increase in student enrollment in
online degree programs in the Spring semester as well as increased enrollment
at our private schools. Operating margin decreased very slightly to 15.5
percent in the third quarter of 2012, compared to 15.7 percent in the
corresponding period of 2011. The non-cash intangible assets impairment
charge affected income from operations by $0.9 million.

Adjusted income from operations, a non-GAAP measure defined as income from
operations excluding share-based compensation, amortization of intangible
assets, land use rights, and impairment charges, was $4.5 million for the
third quarter of 2012, an increase of 36.0 percent compared to $3.3 million in
the corresponding period of 2011.

Adjusted operating margin, a non-GAAP measure defined as the ratio of adjusted
income from operations over net revenue, for the third quarter of 2012
increased to 22.7 percent, compared to 18.2 percent in the corresponding
period of 2011.

Interest and Investment Income

Interest and investment income for the third quarter of 2012 increased 112.6
percent to $0.7 million, compared to $0.3 million for the corresponding
quarter of 2011.

Income Tax Expense

In the third quarter of 2012, the income tax expense was $1.5 million and the
effective income tax rate calculated without consideration for the impairment
charge was 31.5 percent. This compares with an income tax expense of $0.5
million and effective income tax rate of 14.2 percent in same period of 2011.
The increase in income tax expense is attributable to the provision of
valuation allowance of the deferred tax assets that arose in the carrying
losses in the international and elite programs.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests was to $1.8 million in
the third quarter of 2012, flat with the corresponding period in 2011.

Net Income  Attributable to ChinaEdu

Net income attributable to ChinaEdu, which is net income, excluding net income
attributable to non-controlling interests, was $0.5 million in the third
quarter of 2012, representing a decrease of 47.5 percent from $0.9 million in
the corresponding period of 2011. The non-cash intangible assets impairment
charge and related deferred income tax impact affected net income attributable
to ChinaEdu by $0.9 million and $0.6 million respectively.

Net income attributable to ChinaEdu per basic and diluted ADS was $0.031 and
$0.030, respectively, for the third quarter of 2012, compared to $0.060 and
$0.057, respectively, for the corresponding period in 2011. The non-cash
intangible assets impairment charge and related deferred income tax impact
affected net income attributable to ChinaEdu per basic and diluted ADS by
$0.096 and $0.091, respectively.

Adjusted net income attributable to ChinaEdu was $1.9 million in the third
quarter of 2012 compared to $1.4 million in the corresponding period of 2011.
Adjusted net margin, a non-GAAP measure defined as the ratio of adjusted net
income attributable to ChinaEdu over net revenue, was 9.7 percent in the third
quarter of 2012, compared to 7.6 percent in the corresponding period of 2011.
The non-cash intangible assets impairment charge and related deferred income
tax impact affected adjusted net income attributable to ChinaEdu by $0.9
million and $0.6 million, respectively, which affected adjusted net margin by
2.9 percent.

Adjusted net income attributable to ChinaEdu per basic and diluted ADS was
$0.120 and $0.115, respectively, for the third quarter of 2012, compared to
$0.088 and $0.083, respectively, in the corresponding period of 2011. The
non-cash intangible assets impairment charge and related deferred income tax
impact affected adjusted net income attributable to ChinaEdu per basic and
diluted ADS by $0.037 and $0.035, respectively.

Deferred Revenue

As of September 30, 2012, deferred revenue was $10.0 million, consisting of
current deferred revenue in the amount of $8.3 million and non-current
deferred revenue in the amount of $1.7 million.

Spring semester tuition is generally received during the second quarter but is
recognized both in the second quarter and the third quarter of the calendar
year. Service fees are amortized within the service period.

Private school revenue is generally received in September, but is amortized
over 6 or 12 months. Online tutoring program revenue can be received at
program enrollment and is mostly amortized within 12 months.

Cash and Cash Equivalents and Term Deposits

As of September 30, 2012, the Company had cash and cash equivalents and term
deposits of $63.0 million, which primarily consisted of cash, demand deposits
with original maturity terms of three months or less, and term deposits with
original maturity terms of greater than three months but less than one year.

Amounts Due from Related Parties

Amounts due from related parties, which represents cash owed to the Company by
collaborative alliance partners, were $41.0 million as of September 30, 2012
compared to $37.9 million as of September 30, 2011.

2012 Year-to-Date Financial Results

Net Revenue

For the nine months ended September 30, 2012, total net revenue was $56.1
million, representing an increase of 11.9 percent over $50.2 million in the
corresponding period in 2011. Net revenue from online degree programs for the
first nine months of 2012 was $45.0 million, representing a 13.1 percent
increase from $39.8 million in the corresponding period in 2011. Net revenue
from non-online degree programs for the first nine months of 2012 was $11.1
million, compared to $10.3 million in 2011, a 7.3 percent increase. Growth in
total net revenue was attributable to strong enrollment in online degree
programs in the Fall semester of 2011 and Spring semester of 2012,
particularly within the learning centers network. Growth in net revenue at the
Anqing School increased, while the Company saw a decrease in revenue
contributed by 101 online tutoring programs and international and elite
curriculum programs.

Cost of Revenue

For the nine months ended September 30, 2012, total cost of revenue was $22.4
million, an increase from $20.9 million in the corresponding period in 2011.
Cost of revenue for online degree programs in the first nine months of 2012
was $15.2 million, an increase of 8.6 percent compared to $14.0 million in the
corresponding period of 2011. The increase was primarily due to cost increases
in headcount as well as expansion of the Company's learning centers network.

Cost of revenue for non-online degree programs in the first nine months of
2012 was $7.2 million, an increase of 4.0 percent compared to $7.0 million in
the corresponding period of 2011. The increase in cost of revenue was
primarily related to employee costs, leasing costs and service costs
associated with our 101 online tutoring programs and teaching costs,
dormitory, canteen and transportation costs related to our private primary
schools in Anqing and Pingdingshan. Cost of revenue for international and
elite curriculum programs decreased as those programs have grown smaller over
the course of the year.

Gross Profit

Gross profit for the nine months ended September 30, 2012 was $33.7 million,
an increase of 15.3 percent compared with $29.2 million for the corresponding
period in 2011. The increase was primarily due to an increase in gross margin
across online degree programs and private school programs.

Income from Operations

Income from operations was $10.2 million for the nine months ended September
30, 2012, representing an increase of 41.2 percent from $7.2 million for the
corresponding period in 2011. Operating margin was 18.2 percent for the nine
months ended September 30, 2012 compared to 14.4 percent for the corresponding
period in 2011. The non-cash intangible assets impairment charge affected
income from operations and operating margin by $0.9 million and 1.7 percent,
respectively.

Adjusted income from operations was $12.7 million for the first nine months of
2012, representing an increase of 47.9 percent, compared to $8.6 million in
the corresponding period of 2011. Adjusted operating margin for the nine
months ended September 30, 2012 was 22.6 percent, compared to 17.1 percent for
the corresponding period in 2011.

Interest Income and Investment Income

Interest income and investment income increased 84.7 percent to $2.0 million
in the first nine months of 2012, compared to $1.1 million in the
corresponding period of last year.

Income Tax Expense

Income tax expense for the first nine months of 2012 was $3.3 million, as
compared with $1.5 million for the corresponding period of last year.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests was $5.4 million in first
nine months of 2012, an increase of 17.2 percent compared to $4.6 million in
the first nine months of 2011. The increase was primarily attributable to a
non-controlling interest impact related to the increase in net income from
online degree programs in the first nine months of 2012.

Net Income attributable to ChinaEdu

Net income attributable to ChinaEdu was $3.6 million for the nine months ended
September 30, 2012, representing an increase of 57.0 percent from $2.3 million
for the corresponding period in 2011. Net margin was 6.4 percent for the nine
months ended September 30, 2012, compared to 4.6 percent for the corresponding
period in 2011. The non-cash intangible assets impairment charge and related
deferred income tax impact affected net income attributable to ChinaEdu by
$0.9 million and $0.6 million respectively, which affected net margin for nine
months ended September 30, 2012 by 2.7 percent.

Adjusted net margin was 10.7 percent for the nine months ended September 30,
2012, compared to 7.1 percent for the corresponding period of 2011. The
increase was primarily due to increased net profit in the first nine months of
2012. The non-cash intangible assets impairment charge and related deferred
income tax impact affected adjusted net margin for nine months ended September
30, 2012 by one percent.

Fourth Quarter 2012 Guidance

ChinaEdu management expects total net revenue in the fourth quarter of 2012 to
range from RMB124 million to RMB129 million or $19.7 million to $20.5 million,
representing a three to seven percent increase compared to the corresponding
period in 2011. This forecast reflects ChinaEdu's current and preliminary
view, which is subject to change.

Conference Call

ChinaEdu's management will hold an earnings conference call at 8:00 a.m. U.S.
Eastern Time on December 20, 2012 (9:00 p.m. Beijing/Hong Kong Time on
December 20, 2012).

Dial-in details for the earnings conference call are as follows:

International:           +6567239381
Hong Kong:               +85224750994
United States:           +1 (718) 354-1231
Toll-free China, Mobile: 4006208038
Toll-free China:         8008190121
Toll-free United States: +1 (866) 519-4004
Passcode:                79539648

A live and archived webcast of the conference call will be available on the
investor relations page of ChinaEdu's website at http://ir.chinaedu.net and a
replay of the conference call may be accessed by phone until December 27,
2012.

Dial-in numbers for the replay are as follows:

Toll Free United States +1 (855) 452-5696
International           +61 281990299
Conference ID:          79539648

Non-GAAP Financial Measures

To supplement the unaudited condensed consolidated financial information
presented in accordance with Generally Accepted Accounting Principles in the
United States of America ("GAAP"), the Company uses non-GAAP measures of
income from operations and net income attributable to ChinaEdu, which are
adjusted from results based on GAAP to exclude certain non-cash items of
share-based compensation, amortization of intangible assets and land use
rights and impairment charge. Adjusted operating margin defined as the ratio
of adjusted operating income from operation over net revenue. Adjusted net
income attributable to ChinaEdu per basic and diluted ADS are a non-GAAP
measure which are computed using adjusted net income attributable to ChinaEdu
over the number of ADSs used in net income attributable to ChinaEdu per basic
and diluted ADS calculation.

These 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 considers the non-GAAP information as
important measures 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, support for international and elite curriculum
programs and online learning community for adult students.

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 entered into collaborative alliances with 12 universities,
ranging from 10 to 50 years in length. The Company has also entered into
technology agreements with 6 universities. Besides, ChinaEdu performs
recruiting services for 22 universities through nationwide learning center
network.

Forward-Looking Statements

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 Annual Report on Form20-F for the year ended December31,
2011, 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.

For investor and media inquiries, please contact:

Helen Plummer
Senior Investor Relations Coordinator
ChinaEdu Corporation
Phone: +1 908-442-9395
E-mail: helen@chinaedu.net

Jin Yu
Investor Relations Manager
ChinaEdu Corporation
Phone: +86 15711096022
E-mail: jinyu@chinaedu.net



ChinaEdu Corporation
Unaudited Condensed Consolidated Balance Sheets
(in thousands, unaudited)             December31, September30, September30,
                                      2011         2012          2012
                                      RMB          RMB           US$
Current assets:
 Cash and cash equivalents            273,746      196,951       31,338
 Term deposits                       98,163       199,028       31,668
 Short-term investments               34,648       23,420        3,726
 Accounts receivable, net            31,478       38,989        6,204
 Prepaid expenses and other current   22,725       26,234        4,174
 assets
 Amounts due from related parties    238,016      257,367       40,951
 Deferred tax assets-current          5,697        1,808         288
Total current assets                 704,473      743,797       118,349
 Deferred tax assets-non-current      8,217        4,264         678
 Rental deposits                      2,213        1,480         235
 Land use rights                      26,657       26,201        4,169
 Property and equipment, net         239,210      227,880       36,259
 Deposits paid for acquisition of     17,902       17,902        2,848
 property and equipment
 Acquired intangible assets, net     63,638       55,662        8,857
 Goodwill                            43,255       43,255        6,882
Total assets                         1,105,565    1,120,441     178,277
Liabilities and equity
Current liabilities:
 Accounts payable (including accounts
 payable of the consolidated VIE
 without recourse to theGroup of     2,239        10,015        1,594
 1,975 and 9,856 as of December 31,
 2011 and September 30, 2012,
 respectively)
 Deferred revenues-current (including
 deferred revenues of the
 consolidated VIE without recourse to 125,332      51,851        8,250
 the Group of 20,525 and 24,297 as of
 December 31, 2011 and September 30,
 2012, respectively)
 Accrued expenses and other current
 liabilities (including accrued
 expenses and other current
 liabilities of the consolidated VIE  91,980       119,415       19,000
 without recourse to the Group of
 18,644 and 25,601 as of December 31,
 2011 and September 30, 2012,
 respectively)
 Amounts due to related parties
 (including amounts due to related
 parties of the consolidated
 VIEwithout recourse to the Group of 13,146       20,138        3,204
 1,953 and 2,008 as of December 31,
 2011 and September 30, 2012,
 respectively)
 Income taxes payable (including
 income taxes payable of the
 consolidated VIE without recourse to 51,448       48,322        7,689
 the Group of 8,893 and 10,182 as of
 December 31, 2011 and September 30,
 2012, respectively)
 Other taxes payable (including other
 taxes payable of the consolidated
 VIE without recourse to the Group of 21,970       24,127        3,839
 3,047 and 3,622 as of December 31,
 2011 and September 30, 2012,
 respectively)
Total current liabilities            306,115      273,868       43,576
 Deferred revenues-non-current
 (including deferred revenues of the
 consolidated VIE without recourse to 12,059       10,986        1,748
 the Group of 33 and 29 as of
 December 31, 2011 and September 30,
 2012, respectively)
 Deferred tax liabilities-non-current
 (including deferred tax liabilities
 of the consolidated VIE without      9,243        7,274         1,157
 recourse to the Group of 1,017 and
 988 as of December 31, 2011 and
 September 30, 2012, respectively)
 Unrecognized tax benefit (including
 unrecognized tax benefit of the
 consolidated VIE without recourse to 6,089        7,951         1,265
 the Group of 2,364 and 3,241 as of
 December 31, 2011 and September 30,
 2012, respectively)
Total liabilities                    333,506      300,079       47,746
 ChinaEdu shareholders' equity     604,806      634,576       100,970
 Noncontrolling interests             167,253      185,786       29,561
Total equity                        772,059      820,362       130,531
Total liabilities and equity         1,105,565    1,120,441     178,277





ChinaEdu Corporation
Unaudited Condensed Consolidated Statements of Operations
                                                        Three Months Ended                                      Nine Months Ended
(in thousands, except for percentage, share, and per    September30,  June30,    September30,  September30,  September30,  September30,  September30,
share information)                                      2011           2012        2012           2012           2011           2012           2012
                                                        RMB            RMB         RMB            US$            RMB            RMB            US$
Gross Revenue ^*                                        118,800        119,519     129,012        20,527         329,989        368,163        58,579
Business Tax                                            4,880          4,486       5,192          826            14,688         15,383         2,447
Net Revenue:
Onlinedegreeprograms                                  90,597         92,089      99,097         15,768         250,347        283,113        45,046
Onlinetutoringprograms                                6,792          6,389       6,025          958            19,698         18,423         2,931
Private primary and secondary schools                   12,445         13,815      16,311         2,596          35,565         43,662         6,948
International and elite curriculum programs             4,086          2,740       2,387          379            9,691          7,582          1,207
Total net revenue                                       113,920        115,033     123,820        19,701         315,301        352,780        56,132
Cost of revenue:
Online degree programs                                  31,597         31,035      33,982         5,407          87,809         95,336         15,169
Online tutoring programs                                2,334          2,700       2,178          347            6,424          7,599          1,209
Private primary and secondary schools                   8,782          10,205      9,740          1,550          25,538         29,751         4,734
International and elite curriculum programs             4,902          3,020       2,422          385            11,735         8,105          1,290
Total cost of revenue                                   47,615         46,960      48,322         7,689          131,506        140,791        22,402
Gross profit:
Online degree programs                                  59,000         61,054      65,115         10,361         162,538        187,777        29,877
Online tutoring programs                                4,458          3,689       3,847          611            13,274         10,824         1,722
Private primary and secondary schools                   3,663          3,610       6,571          1,046          10,027         13,911         2,214
International and elite curriculum programs             (816)          (280)       (35)           (6)            (2,044)        (523)          (83)
Total gross profit                                      66,305         68,073      75,498         12,012         183,795        211,989        33,730
Online degree programs                                  65.1%          66.3%       65.7%          65.7%          64.9%          66.3%          66.3%
Online tutoring programs                                65.6%          57.7%       63.9%          63.9%          67.4%          58.8%          58.8%
Private primary and secondary schools                   29.4%          26.1%       40.3%          40.3%          28.2%          31.9%          31.9%
International and elite curriculum programs             (20.0%)        (10.2%)     (1.5%)         (1.5%)         (21.1%)        (6.9%)         (6.9%)
Gross margin                                            58.2%          59.2%       61.0%          61.0%          58.3%          60.1%          60.1%
Operating expenses:
General and administrative                              23,320         24,251      27,182         4,325          69,829         77,243         12,290
Selling and marketing                                   14,264         11,316      12,315         1,959          37,415         34,094         5,425
Research and development                                10,843         9,894       10,914         1,737          31,102         30,585         4,867
Intangible assets impairment                            -              -           5,901          939            -              5,901          939
Total operating expenses                                48,427         45,461      56,312         8,960          138,346        147,823        23,521
Income from operations                                  17,878         22,612      19,186         3,052          45,449         64,166         10,209
Operating margin                                        15.7%          19.7%       15.5%          15.5%          14.4%          18.2%          18.2%
Other income                                            297            266         404            64             719            917            146
Interest income                                        2,153          3,583       3,352          534            6,202          9,923          1,579
Investment income                                       37             786         1,303          207            666            2,763          440
Income before income tax                                20,365         27,247      24,245         3,857          53,036         77,769         12,374
Income tax expense                                      (2,897)        (5,831)     (9,510)        (1,513)        (9,353)        (20,824)       (3,314)
Net income                                              17,468         21,416      14,735         2,344          43,683         56,945         9,060
Net income attributable to the noncontrolling           (11,514)       (12,124)    (11,611)       (1,847)        (29,195)       (34,204)       (5,442)
interests
Net income attributable to ChinaEdu                     5,954          9,292       3,124          497            14,488         22,741         3,618
Net margin                                              5.2%           8.1%        2.5%           2.5%           4.6%           6.4%           6.4%
Net income attributable to ChinaEdu per ADS:
 Basic                                            0.38           0.59        0.20           0.031          0.91           1.44           0.229
 Diluted                                          0.36           0.55        0.19           0.030          0.85           1.36           0.216
WeightedaverageaggregatenumberofADSsoutstanding:
 Basic                                            15,573,809     15,852,495  15,884,264     15,884,264     15,838,717     15,827,795     15,827,795
 Diluted                                          16,720,855     16,927,279  16,625,395     16,625,395     16,983,130     16,771,477     16,771,477
* Gross revenue are detailed as follows
Online degree programs                                  95,073         96,268      103,920        16,535         263,910        297,506        47,336
Online tutoring programs                                6,940          6,511       6,181          983            20,204         18,849         2,999
Private primary and secondary schools                   12,463         13,837      16,382         2,607          35,620         43,777         6,966
International and elite curriculum programs             4,324          2,903       2,529          402            10,255         8,031          1,278





ChinaEdu Corporation
Unaudited Condensed Consolidated Statements of Comprehensive Income
                                                Three Months Ended                                     Nine Months Ended
(in thousands, unaudited)                       September30,  June30,  September30,  September30,  September30,  September30,  September30,
                                                2011           2012      2012           2012           2011           2012           2012
                                                RMB            RMB       RMB            US$            RMB            RMB            US$
Net income                                      17,468         21,416    14,735         2,344          43,683         56,945         9,060
Othercomprehensiveincome,netoftax
 Foreigncurrencytranslation adjustments      (1,984)        120       (121)          (19)           (1,898)        6              1
 Change in fair value of available for sale    904            205       515            82             727            957            152
investments
Comprehensive income                            16,388         21,741    15,129         2,407          42,512         57,908         9,213
Less: comprehensive income attributable to the  13,739         11,106    13,591         2,163          34,392         35,143         5,592
noncontrollng interest
ComprehensiveincomeattributabletoChinaEdu  2,649          10,635    1,538          244            8,120          22,765         3,621





ChinaEdu Corporation
Unaudited Condensed Consolidated Statements of Cash Flow
                                                     Three Months Ended                                     Nine Months Ended
(inthousands,unaudited)                            September30,  June30,   September30,  September30,  September30,  September30,  September30,
                                                     2011           2012       2012           2012           2011           2012           2012
                                                     RMB            RMB        RMB            US$            RMB            RMB            US$
Operating activities:
 Net income                                   17,468         21,416     14,735         2,344          43,683         56,945         9,060

Adjustmentstoreconcilenetincometonetcash
providedby operating activities:
 Share-based compensation                 1,619          1,892      1,885          300            4,823          5,996          954
 Depreciation and amortization of          5,728          6,304      6,355          1,011          17,263         18,963         3,017
property and equipment
 Amortization of land use rights          152            152        152            24             456            456            73
 Amortization of acquired intangible       1,059          1,036      1,035          165            3,093          3,056          486
assets
 Intangible Assets impairment             -              -          5,901          939            -              5,901          939
 Gain on sale of investment               -              (158)      -              -              (687)          (227)          (36)
 Gain on disposal                         -              -          (1,303)        (207)          -              (1,303)        (207)
 Loss on sale of bonds                    (37)           -          -              -              21             -              -
 Loss on discontinued operations          -              -          -              -              16             -              -
 Loss from disposal of property and        55             16         586            93             137            1,414          225
equipment
 Changes in assets and liabilities
 Accounts receivable                      14,342         (24,932)   8,242          1,311          11,646         (7,851)        (1,249)
 Inventory                                 -              -          -              -              358            -              -
 Provision for Accounts Receivable         -              -          -              -              -              340            54
 Prepaid expenses and other current        5,087          (377)      1,239          196            3,022          (1,351)        (215)
assets
 Amounts due from related parties         41,318         (65,981)   40,792         6,491          17,354         (23,351)       (3,715)
 Rental deposits                          (94)           (34)       296            47             (1,686)        733            117
 Accounts payable                         1,854          2,324      2,951          470            6,436          7,789          1,239
 Deferred revenues                        (72,711)       79,370     (74,887)       (11,916)       (59,257)       (74,508)       (11,855)
 Accrued expenses and other current        7,943          3,167      17,532         2,791          18,164         26,673         4,245
liabilities
 Amounts due to related parties           (7,944)        (6,596)    8,265          1,315          (12,791)       11,621         1,849
 Income tax payable                      5,241          4,021      3,462          551            (2,483)        (3,119)        (496)
 Other taxes payable                       1,555          1,558      5,559          885            (2,018)        2,157          343
 Deferred income taxes                    (3,108)        608        2,909          463            (3,140)        5,873          934
 Unrecognized tax benefit                 473            586        637            101            1,731          1,863          296
Netcashprovidedbyoperatingactivities            20,000         24,372     46,343         7,374          46,141         38,070         6,058
Investing activities:
 Purchase of property and equipment       (3,810)        (2,071)    (6,283)        (1,000)        (18,086)       (9,157)        (1,457)
 Proceeds from discontinued operations    -              -          4,000          636            233            4,000          636
 Deposits paid for acquisition of          (444)          -          -              -              (14,990)       -              -
property and equipment
 Purchase of/ maturity of term deposits   38,936         (122,000)  (3,000)        (477)          33,337         (100,865)      (16,049)
 Purchase of investments                  -              (12,571)   -              -              (17,000)       (12,571)       (2,000)
 Proceeds from the sale of investment     1,674          14,634     -              -              10,361         24,952         3,970
 Proceeds from the sale of bonds          -              -          -              -              2,859          -              -
 Proceeds of exclusive contractual right  -              (980)      -              -              -              (980)          (156)
 Proceeds of exclusive partnership        (1,960)        -          -              -              (1,960)        -              -
 Proceeds from disposal of property and    21             1          94             15             22             95             15
equipment
Netcashprovidedby(usedin)investingactivities  34,417         (122,987)  (5,189)        (826)          (5,224)        (94,526)       (15,041)
Financing activities:
 Cash dividends paid to noncontrolling     -              (4,642)    (16,799)       (2,673)        (10,251)       (21,441)       (3,412)
shareholders
 Capital contributions by noncontrolling   1,960          -          -              -              2,960          -              -
shareholders
 Capital contributions by shareholders    -              980        -              -              -              980            156
 Proceeds from exercise of share options  204            2,777      16             3              578            3,738          595
 Prepayment for shares repurchase         -              (886)      -              -              (130)          (886)          (141)
 Repurchase and cancellation of ordinary   (1,026)        (385)      (2,343)        (373)          (6,749)        (2,728)        (434)
shares
 Repayment of loan from related party     (8,000)        -          (5,500)        (875)          (33,000)       (5,500)        (875)
 Loan from related party                  2,000          5,500      -              -              37,500         5,500          875
Net cash (used in)providedbyfinancingactivities  (4,862)        3,344      (24,626)       (3,918)        (9,092)        (20,337)       (3,236)
Effect of foreign exchange rate changes              (9)            (6)        9              2              103            (2)            -
CASH AND CASH EQUIVALENTS,                           172,875        275,691    180,414        28,706         190,493        273,746        43,557
beginning of period
CASH AND CASH EQUIVALENTS,                           222,421        180,414    196,951        31,338         222,421        196,951        31,338
end of period
Net decrease in cash and cash equivalents           49,546         (95,277)   16,537         2,632          31,928         (76,795)       (12,219)





ChinaEdu Corporation
Unaudited reconciliations from income from operations to adjusted income from operations (non-GAAP) and adjusted operating margin (non-GAAP)
                                            Three Months Ended                                      Nine Months Ended
(in thousands, unaudited)                   September30,  June30,    September30,  September30,  September30,  September30,  September30,
                                            2011           2012        2012           2012           2011           2012           2012
                                            RMB            RMB         RMB            US$            RMB            RMB            US$
Net revenue                                 113,920        115,033     123,820        19,701         315,301        352,780        56,132
Income from operations                     17,878         22,612      19,186         3,052          45,449         64,166         10,209
Adjustment:
 Share-based compensation                  1,619          1,892       1,885          300            4,823          5,996          954
 Amortization of intangible assets and     1,211          1,188       1,187          189            3,549          3,512          559
land use rights
 Intangible assets impairment              -              -           5,901          939            -              5,901          939
Adjustedincomefromoperations(non-GAAP)   20,708         25,692      28,159         4,480          53,821         79,575         12,661
Adjusted operating margin (non-GAAP)        18.2%          22.3%       22.7%          22.7%          17.1%          22.6%          22.6%


ChinaEdu Corporation
Unaudited reconciliations from net income attributable to ChinaEdu to adjusted net income attributable to ChinaEdu
(non-GAAP), adjusted net margin (non-GAAP) and adjusted net income per ADS (non-GAAP)
                                            Three Months Ended                                      Nine Months Ended
(in thousands, unaudited)                   September30,  June30,    September30,  September30,  September30,  September30,  September30,
                                            2011           2012        2012           2012           2011           2012           2012
                                            RMB            RMB         RMB            US$            RMB            RMB            US$
Net revenue                                 113,920        115,033     123,820        19,701         315,301        352,780        56,132
Netincome(loss)attributabletoChinaEdu  5,954          9,292       3,124          497            14,488         22,741         3,618
Adjustment:
 Share-based compensation                  1,619          1,892       1,885          300            4,823          5,996          954
 Share-based compensation attributable to  (122)          (110)       (82)           (13)           (376)          (369)          (59)
the noncontrolling interest
 Amortization of intangible assets and     1,211          1,188       1,187          189            3,549          3,512          559
land use rights
 Intangible assets impairment              -              -           5,901          939            -              5,901          939
Adjusted net income attributable to         8,662          12,262      12,015         1,912          22,484         37,781         6,011
ChinaEdu (non-GAAP)
Adjusted net margin (non-GAAP)              7.6%           10.7%       9.7%           9.7%           7.1%           10.7%          10.7%
Adjusted net income attributable to
ChinaEdu per ADS (non-GAAP):
 Basic                                0.55           0.77        0.76           0.120          1.42           2.39           0.380
 Diluted                              0.52           0.72        0.72           0.115          1.32           2.25           0.358
Weighted average aggregate number of ADSs
outstanding:
 Basic                                15,573,809     15,852,495  15,884,264     15,884,264     15,838,717     15,827,795     15,827,795
 Diluted                              16,720,855     16,927,279  16,625,395     16,625,395     16,983,130     16,771,477     16,771,477



SOURCE ChinaEdu Corporation

Website: http://ir.chinaedu.net/index.html