ATA Announces Results for Second Fiscal Quarter 2010
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BEIJING, Nov. 8 /PRNewswire-Asia-FirstCall/ -- ATA Inc. ("ATA" or the
"Company") (Nasdaq: ATAI), the leading provider of computer-based testing and
testing-related services in China, today announced unaudited financial results
for its second fiscal quarter ended September 30, 2009 ("Second Quarter 2010").
Second Quarter 2010 Highlights
-- Net revenues decreased by 19.6% year-over-year to RMB41.6 million
(US$6.1 million).
-- Gross profit decreased by 54.3% year-over-year to RMB15.7 million
(US$2.3 million).
-- Loss from operations was RMB17.2 million (US$2.5 million) compared to
an operating income of RMB8.8 million in the same period last year.
-- Net loss was RMB16.4 million (US$2.4 million) compared to a net income
of RMB8.3 million in the same period last year.
-- Net loss excluding share-based compensation expense and foreign
currency exchange gain (losses) (non-GAAP) was RMB15.2 million (US$2.2
million).
-- Basic and diluted loss per ADS was RMB0.74 (US$0.11). Basic and diluted
loss per ADS excluding share-based compensation expense and foreign
currency exchange gain (losses) (non-GAAP) was RMB0.68 (US$0.10). Each
ADS represents two common shares of the Company.
-- For the quarter, revenue from testing services increased 88.8% from the
same period last year. ATA delivered approximately 0.7 million tests, a
decrease of 49.1% year-over-year while average revenue per test
increased to RMB36.2 from RMB9.8 in the same period last year.
"We are pleased with our results for the quarter, as we were able to meet
our guidance despite the challenging economic environment and pressure from
the H1N1 virus that delayed some of our tests," commented Kevin Ma, ATA's
Chairman and Chief Executive Officer. "Measures put in place to prevent the
spread of the H1N1 virus caused the postponement of 23,000 Securities, Broker,
Futures and Fund professional licensure tests in certain areas of China during
the quarter, but we were still able to deliver strong organic growth as
measured by number of test takers for these exams, which was up 94.9% compared
to the same period of last year. The Test of English for International
Communication ("TOEIC") contributed RMB3.8 million to net revenue in this
quarter with average revenue per test of RMB309.1. Additionally, we are very
pleased that the Agriculture Bank of China ("ABC") and the People's Insurance
Company (Group) of China ("PICC") adopted our HR select services this quarter
with approximately 84,000 candidates taking our staff assessment exam. This is
a very important milestone for our business and reflects our ability to
successfully leverage our technology platform and distribution capabilities to
broaden our service offerings and diversify into the non-government sponsored
testing areas to reduce our dependency on government decisions. We have so
far registered 32,000 companies with trial accounts and converted 15 companies
to HR Select service under contract, including ABC, PICC, Accenture China,
China Telecom Tianjin Branch, Servier China, among others. With both TOEIC and
HR Select making a solid contribution to our revenue we feel we are well
positioned to continue to increase our penetration of the private sector.
However, fiscal 2010 remains a transition year for ATA as we ramp up operation
resources for our private sector efforts while revenue takes time to build.
While these efforts may cause short term margin pressures for ATA, we are
confident they will increase shareholder value over the long term."
ATA's Chief Financial Officer, Carl Yeung, stated, "Our results for the
second quarter were impacted by the H1N1 virus as well as postponement of
government spending that depressed our NTET sales. Despite these setbacks we
were able to meet our guidance due to strong test-taker volume for tests we
delivered for the Securities Association of China as well as the deployment of
the HR select and the TOEIC exam offerings. The overall number of test takers
for the Securities, Brokers, Futures and Fund Sales Professionals exam
increased by 207,000 compared to the same period of last year. The HR Select
services for ABC and PICC contributed RMB4.2 million while the TOEIC added
RMB3.8 million to net revenues in this quarter. Offsetting the strong results
from our testing service business were declines in net revenue from our test
preparation and training solutions as well as from our test-based education
services. We expect our test preparation and training solutions business to
recover in the months ahead, but net revenues from our test-based education
services is expected to continue to decline, as we made the strategic decision
to redirect most of our sales and marketing efforts from our test-based
education services towards our newly developed testing services such as HR
Select and TOEIC, which we believe have bigger and more attractive market
opportunities. We believe the revenue opportunity from TOEIC and HR Select
will become increasingly more visible in the quarters ahead as these services
gain wider recognition and acceptance. While this quarter's results met
guidance, we are concerned about the development of the H1N1 virus and how
that affects our business. Because our large scale tests require the gathering
of large groups of test takers at school campuses and our testing centers, we
believe it is likely our business over the next two quarters will continue to
be affected by the virus. Therefore, we would like to be more conservative and
lower our next two quarters expectations as we enter the winter months."
Financial Results for the Second Quarter 2010
For Second Quarter 2010, net revenues were RMB41.6 million (US$6.1
million), representing a 19.6% decrease compared to the same period last year.
This decrease was mainly driven by declines in test preparation and training
solutions as well as test-based educational programs which offset strong
results from our testing services. Net revenue from testing services was up
88.8% to RMB26.8 million (US$3.9 million) in the quarter from RMB14.2 million
in the same period last year, primarily due to the tests delivered for the
Securities Association of China, HR select services and TOEIC. Net revenue
from test preparation and training solutions was RMB3.9 million (US$0.6
million), down 81.5% from RMB21.2 million in the same period of last year, as
the Company recorded no sales of NTET software in the quarter. Net revenues
from test-based educational programs declined by 41.2% year-over-year to
RMB6.4 million (US$0.9 million) from RMB10.9 million. Other revenue decreased
16.8% year-over-year to RMB4.5 million (US$0.7 million) from RMB5.4 million.
The overall number of tests delivered decreased by 49.1% year-over-year to
approximately 0.7 million in the quarter as we did not conduct close to 1
million lower end tests such as provincial high school exams and NTET tests,
while the average revenue per test delivered increased 270.9% to RMB36.2 from
RMB9.8 in the same period of last year. The increase in average revenue per
test was driven by a higher value test mix that included HR select and TOEIC
tests, which have higher average per test revenue and were not offered in the
comparable period last year.
Gross profit decreased by 54.3% to RMB15.7 million (US$2.3 million) from
RMB34.4 million in the same period last year. Gross margin was 37.8% in the
Second Quarter 2010 down from 66.5% in the same period last year, mainly
driven by the lack of sales of NTET software which enjoyed high margins, and
the effect of the amortization of intangible assets such as the TOEIC royalty
fee and certain software, which were acquired and capitalized in the third and
fourth quarter of fiscal year 2009.
Operating expenses increased by 28.6% to RMB32.9 million (US$4.8 million)
up from RMB25.6 million in the same period last year. Research and development
expenses increased by 15.5% to RMB5.5 million (US$0.8 million) from RMB4.8
million in the comparable period of last year primarily driven by an increase
in headcount and higher associated compensation expense. Sales and marketing
expenses increased by 61.6% year-over-year to RMB11.2 million (US$1.6 million)
from RMB6.9 million, primarily resulting from the increase in marketing
efforts to support the launch of HR Select and other testing service
promotions as well as higher compensation expenses. General and administrative
expenses increased by 16.7% to RMB16.2 million (US$2.4 million) from RMB13.9
million in the same period last year, primarily due to the increase of
salaries and compensation Expenses.
Headcount expanded by 148 to 519 in the Second Quarter 2010 from 371 in
the comparable of fiscal year 2009 to support the operational continuity of
the JDX business following completion of acquisition as well as the business
development of TOEIC, HR Select and the Cambridge Young Learners English
online tutorials.
Loss from operations was RMB17.2 million (US$2.5 million) compared to an
operating income of RMB8.8 million in the same period last year.
Net loss for the Second Quarter 2010 was RMB16.4 million (US$2.4 million)
compared to a net income of RMB8.3 million in the same period last year. Basic
and diluted loss per common share was RMB0.37 (US$0.05), and basic and diluted
loss per ADS was RMB0.74 (US$0.11).
Net loss excluding share-based compensation expense and foreign currency
exchange gain (losses) (non-GAAP) was RMB15.2 million (US$2.2 million) for the
Second Quarter 2010. Basic and diluted loss per ADS excluding share-based
compensation expense and foreign currency exchange gain (losses) (non- GAAP)
were RMB0.68 (US$0.10).
Other Operating Data
As of September 30, 2009, ATA had 1,954 authorized test centers located
throughout China.
The number of weighted average ADSs used to calculate basic and diluted
earnings per ADS for the quarter ended September 30, 2009 were 22.4 million
and 22.5 million respectively. ATA had 45.7 million common shares outstanding
as of September 30, 2009.
Third Fiscal Quarter 2010 and Full Fiscal Year 2010 Guidance
For the third fiscal quarter 2010, ATA forecasts net revenues will be in
the range of RMB76 million to RMB80 million, representing growth in the range
of 12.0% to 17.9% compared to the third fiscal quarter 2009. ATA is lowering
net revenues expectation for the fiscal year ending March 31, 2010, and
forecasts that net revenues will be in the range of RMB225 million to RMB240
million, which is expected to represent a 3.4% to 10.3% growth over fiscal
year 2009. This is ATA's current and preliminary view, which is subject to
change. Operating results for the Second Quarter 2010 are not necessarily
indicative of operating results for any future periods.
Conference Call
The Company will host a conference call at 9:00 a.m. ET on November 9,
2009, to discuss the results for the Second Quarter 2010. Joining Kevin Ma,
Chairman and Chief Executive Officer of ATA Inc., will be Walter Wang,
Director and President, and Carl Yeung, Chief Financial Officer. To
participate in the conference call, please dial 1-866-804-6927 five to ten
minutes prior to the scheduled conference call time and mention the pass code
93328082. International callers should dial +1-857-350-1673 and mention the
pass code 93328082.
If you are unable to participate in the call at this time, a replay will
be available on November 9, 2009 at 12:00 p.m. ET, through November 16, 2009.
To access the replay, dial 1-888-286-8010, international callers should dial
+1-617-801-6888, and enter the pass code 17674995.
This conference call will be broadcast live over the Internet and can be
accessed by all interested parties on ATA Inc.'s website at
http://www.ata.net.cn . To listen to the live webcast, please go to ATA Inc.'s
website at least fifteen minutes prior to the start of the call to register,
download, and install any necessary audio software. For those unable to
participate during the live broadcast, a replay will be available shortly
after the call on ATA Inc.'s website for 90 days.
About ATA Inc.:
ATA is the leading provider of computer-based testing services in China.
The Company offers comprehensive services for the creation and delivery of
computer-based tests based on its proprietary testing technologies and test
delivery platform. The Company's computer-based testing services are used for
professional licensure and certification tests in various industries,
including information technology, or IT, services, banking, teaching,
securities, insurance and accounting. ATA's test center network comprised
1,954 authorized test centers located throughout China as of September 30,
2009, which the Company believes is the largest test center network of any
commercial testing service provider in China. Combined with its test delivery
technologies, this network allows ATA's clients to administer large-scale
nationwide tests in a consistent, secure and cost-effective manner. ATA has
delivered over 31.5 million tests including 21.4 million billable tests since
it commenced operations in 1999, and in June 2008 delivered tests to
approximately 470,000 test takers over a single weekend for the China Banking
Association through its test delivery platform. For further information,
please visit: http://www.ata.net.cn .
Cautionary Note Regarding Forward-looking Statements
This announcement contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, and as defined in the Private
Securities Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as "look forward to," "outlook," "forecast,"
"will," "expect," "anticipate," "future," "intend," "plan," "believe,"
"estimate" and similar terminology and include, among other things, the
Company's guidance relating to anticipated financial and operating results for
the fiscal quarter ending December 31, 2009 and the fiscal year ending March
31, 2010. Among the factors that could cause the Company's actual financial
and operating results to differ from what the Company currently anticipates
may include the Company's ability to meet challenges associated with its rapid
expansion, the Company's ability to meet the expectations of current and
future clients, the Company's ability to deploy new test titles, the Company's
ability to win new enterprise contracts, the Company's ability to convert its
existing enterprise contracts into actual revenue, the Company's ability to
implement and maintain effective internal controls over financial reporting,
the health of the PRC economy, and uncertainties with respect to the PRC legal
and regulatory environments. The financial information contained in this
release should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's annual report on Form
20-F for its fiscal year ended March 31, 2009, which was filed with the U.S.
Securities and Exchange Commission on September 15, 2009 and is available on
the Securities and Exchange Commission's website at http://www.sec.gov . For
additional information on these and other important factors that could
adversely affect the Company's business, financial condition, results of
operations and prospects, see the "Risk Factors" section of the Company's Form
20-F for the fiscal year ended March 31, 2009.
The forward-looking statements in this release involve known and unknown
risks and uncertainties and are based on current expectations, assumptions,
estimates and projections about the Company and the markets in which it
operates. The Company undertakes no obligation to update forward-looking
statements, which speak only of the Company's views as of the date of this
release, to reflect subsequent events or circumstances, or to changes in its
expectations, except as may be required by law. Although the Company believes
that the expectations expressed in these forward-looking statements are
reasonable, the Company cannot assure you that its expectations will turn out
to be correct, and investors are cautioned that actual results may differ
materially from the anticipated results.
About Non-GAAP Financial Measures
To supplement ATA's consolidated financial information presented in
accordance with U.S. generally accepted accounting principles ("GAAP"), ATA
uses the following measures defined as non-GAAP financial measures by the U.S.
Securities and Exchange Commission: net income (loss) excluding share-based
compensation expenses and foreign currency exchange gains (losses) and basic
and diluted earnings per ADS excluding share-based compensation expenses and
foreign currency exchange gains (losses). The presentation of these non-GAAP
financial measures is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in accordance
with GAAP. For more information on these non-GAAP financial measures, please
see the table captioned "Unaudited Reconciliations of Non-GAAP Measures to the
Most Comparable GAAP Measures" set forth at the end of this release. ATA
believes that these non-GAAP financial measures provide meaningful
supplemental information regarding its performance and liquidity by excluding
share-based compensation expenses and foreign currency exchange gains (losses),
which may not be indicative of its operating performance from a cash
perspective. ATA believes that both management and investors benefit from
these non-GAAP financial measures in assessing its performance and when
planning and forecasting future periods. These non-GAAP financial measures
also facilitate management's internal comparisons to ATA's historical
performance and liquidity. ATA computes its non-GAAP financial measures using
a consistent method from quarter to quarter. ATA believes these non-GAAP
financial measures are useful to investors in allowing for greater
transparency with respect to supplemental information used by management in
its financial and operational decision making. A limitation of using non-GAAP
net income (loss) excluding share-based compensation expenses and basic and
diluted earnings per share and per ADS excluding share-based compensation
expenses is that share-based compensation charges have been, and are expected
to continue to be for the foreseeable future, a significant recurring expense
in ATA's business. Management compensates for these limitations by providing
specific information regarding the GAAP amounts excluded from each non-GAAP
measure. The table captioned "Unaudited Reconciliations of Non-GAAP Measures
to the Most Comparable GAAP Measures" set forth at the end this release has
more details on the reconciliations between GAAP financial measures that are
most directly comparable to the non-GAAP financial measures used by ATA.
Currency Convenience Translation
The Company's financial information is stated in RMB. The translation of
RMB amounts for the second quarter of 2010 into United States dollars is
included solely for the convenience of readers and has been made at the rate
of RMB6.8262 to US$1.00, the noon buying rate as of September 30, 2009 in the
City of New York for cable transfers in RMB per US dollar as certified for
customs purposes by the Federal Reserve Bank of New York. Such translations
should not be construed as representations that RMB amounts could be converted
into US dollars at that rate or any other rate, or to be the amounts that
would have been reported under US GAAP.
For further information, please contact:
ATA Inc.
Carl Yeung, CFO
Phone: +86-10-6518-1122 ext. 5107
Email: ir@ata.net.cn
CCG Investor Relations
Crocker Coulson, President
Phone: +1-646-213-1915
Ed Job, CFA
Phone: +1-646-213-1914
Email: ed.job@ccgir.com
ATA INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, September 30, September 30,
2009 2009 2009
RMB RMB USD
ASSETS
Current assets:
Cash 310,503,071 233,719,719 34,238,627
Accounts receivable, net 71,076,794 87,407,955 12,804,775
Inventories 2,287,260 2,480,763 363,418
Prepaid expenses and other current
assets 15,134,804 14,668,357 2,148,832
Total current assets 399,001,929 338,276,794 49,555,652
Property and equipment, net 20,987,472 72,332,087 10,596,245
Goodwill 23,422,850 23,422,850 3,431,316
Intangible assets, net 25,994,261 24,600,426 3,603,824
Other assets 1,838,544 1,488,251 218,020
Total assets 471,245,056 460,120,408 67,405,057
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accrued expenses and other payables 44,950,280 50,605,464 7,413,416
Deferred revenues 40,238,256 27,028,858 3,959,576
Total current liabilities 85,188,536 77,634,322 11,372,992
Deferred revenues 5,626,153 5,236,896 767,176
Deferred tax liabilities 189,583 166,979 24,461
Total liabilities 91,004,272 83,038,197 12,164,629
Shareholders' equity:
Common shares 3,503,619 3,503,619 513,261
Treasury shares (10,126,861) (17,018,432) (2,493,105)
Receivable from shareholders (5,226,173) -- --
Additional paid-in capital 500,350,068 502,699,362 73,642,636
Accumulated other comprehensive
loss (16,157,846) (16,328,764) (2,392,072)
Accumulated deficit (92,102,023) (95,773,574) (14,030,292)
Total shareholders' equity 380,240,784 377,082,211 55,240,428
Total liabilities and shareholders'
equity 471,245,056 460,120,408 67,405,057
ATA INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-month Period Ended
September June September September
30, 2008 30, 2009 30, 2009 30, 2009
RMB RMB RMB USD
Net revenues 51,696,431 79,802,924 41,582,006 6,091,531
Testing services 14,175,165 63,651,285 26,756,135 3,919,624
Test-based educational
services 10,937,400 9,293,623 6,435,702 942,794
Test preparation and
training solutions 21,215,476 1,549,421 3,921,362 574,458
Other revenue 5,368,390 5,308,595 4,468,807 654,655
Cost of revenues 17,321,775 35,198,516 25,880,510 3,791,350
Gross profit 34,374,656 44,604,408 15,701,496 2,300,181
Operating expenses:
Research and development 4,778,038 5,768,559 5,519,310 808,548
Sales and marketing 6,908,588 8,399,617 11,166,569 1,635,840
General and
administrative 13,911,591 14,926,414 16,236,304 2,378,528
Total operating expenses 25,598,217 29,094,590 32,922,183 4,822,916
Income (loss) from
operations 8,776,439 15,509,818 (17,220,687) (2,522,735)
Subsidy income 2,000,000 -- -- --
Interest income 61,664 179,902 153,148 22,435
Foreign currency exchange
gain (loss), net 135,115 (169,731) (116,492) (17,065)
61,664
Earnings (loss) before
income taxes 10,973,218 15,519,989 (17,184,031) (2,517,365)
Income tax benefit
(expense) (2,628,085) (2,829,740) 822,231 120,452
Net income (loss) 8,345,133 12,690,249 (16,361,800) (2,396,913)
Basic earnings (loss) per
common share 0.18 0.28 (0.37) (0.05)
Diluted earnings (loss)
per common share 0.18 0.28 (0.37) (0.05)
Basic earnings (loss) per
ADS 0.36 0.56 (0.74) (0.11)
Diluted earnings per
(loss) ADS 0.36 0.56 (0.74) (0.11)
UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES TO THE MOST COMPARABLE
GAAP MEASURES
Three-month Period Ended
September 30, September 30,
2008 2009
RMB RMB
GAAP net income (loss) 8,345,133 (16,361,800)
Share-based compensation expenses 1,447,324 1,071,338
Foreign currency exchange (gain)
losses (135,115) 116,492
Non-GAAP net income (loss) 9,657,342 (15,173,970)
GAAP earnings (loss) per ADS:
Basic 0.36 (0.74)
Diluted 0.36 (0.74)
Share-based compensation expenses per
ADS:
Basic 0.06 0.05
Diluted 0.06 0.05
Foreign currency exchange (gain)
losses per ADS:
Basic (0.01) 0.01
Diluted (0.01) 0.01
Non-GAAP earnings (loss) per ADS:
Basic 0.41 (0.68)
Diluted 0.41 (0.68)
Non-GAAP earnings (loss) per common
share:
Basic 0.21 (0.37)
Diluted 0.21 (0.37)
SOURCE ATA Inc.
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Copyright © 2008
PR Newswire. All rights reserved.
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