CTRP Ctrip Com International Ltd

SHANGHAI, China, Aug. 9 /Xinhua-PRNewswire-FirstCall/ -- Ctrip.com International, Ltd. (NASDAQ:CTRP), a leading travel service provider for hotel accommodation, airline tickets and packaged tours in China, today announced its unaudited financial results for the quarter ended June 30, 2006. Highlights for the second quarter of 2006 * Net revenues were RMB190 million (US$24 million) in the second quarter of 2006, up 47% year-on-year. * Gross margin was 81% in the second quarter of 2006, compared to 85% in the same period in 2005 largely due to higher cost of service as a result of increased revenue contribution from air ticketing services. * Income from operations was RMB66 million (US$8 million) in the second quarter of 2006 on a GAAP basis. Excluding share-based compensation charges (non-GAAP), income from operations was RMB79 million (US$10 million), up 36% year-on-year. * Operating margin was 35% in the second quarter of 2006. Excluding share-based compensation charges (non-GAAP), operation margin was 42%, compared to 45% during the same period in 2005. * Net income was RMB61 million (US$8 million) in the second quarter of 2006 on a GAAP basis. Excluding share-based compensation charges (non-GAAP), net income was RM74 million (US$9 million), up 30% year- on-year. * Net margin was 32% in the second quarter of 2006. Excluding share- based compensation charges (non-GAAP), net margin was 39%, compared to 44% in the same period in 2005. * Fully diluted earnings per share were RMB1.82 (US$0.23). Excluding share-based compensation charges (non-GAAP), fully diluted earnings per share were RMB2.22 (US$0.28). * Share-based compensation charges were RMB13 million (US$2 million), which accounted for 7% of the net revenues, or RMB0.40 (US$0.05) per share for the second quarter of 2006. "We are very glad to report our solid performance during the second quarter of 2006. We were able to strengthen our market presence and enhance customers' satisfaction through operational excellence. We are confident that Ctrip will continue its healthy growth in the future," said Min Fan, Chief Executive Officer of Ctrip. Financial Results For the second quarter of 2006, Ctrip reported total revenues of RMB203 million (US$25 million), representing a 47% increase from the same period in 2005 and 21% increase from the first quarter of 2006. Hotel reservation revenues totaled RMB118 million (US$15 million) for the second quarter of 2006, representing a 28% increase from the same period in 2005 and a 23% increase from the previous quarter due to increased volume of hotel room nights booked and higher average commission per room night achieved in the second quarter of 2006. The total number of hotel room nights booked was approximately 1.7 million in the second quarter of 2006, compared to approximately 1.39 million room nights for the same period in 2005 and approximately 1.38 million room nights in the previous quarter. Air ticket booking revenues for the second quarter of 2006 were RMB73 million (US$9 million), representing a 94% increase from the same period in 2005 and a 22% increase from the previous quarter, primarily due to the growth of air tickets sales volume and higher average commission per ticket achieved in the second quarter of 2006. The total number of air tickets sold in the second quarter of 2006 was approximately 1.49 million air tickets, compared to approximately 0.8 million for the same period in 2005 and approximately 1.28 million in the previous quarter. Packaged-tour revenues for the second quarter of 2006 were RMB9 million (US$1 million), up 48% from the same period in 2005, and decreased by 7% from the previous quarter due to the company's strategic focus on core FIT (Frequent Independent Travelers) tour packages while ending the low-end group tour service. Revenues from core FIT tour packages increased by 121% in the second quarter of 2006 from the same period in 2005, offset in part by a 25% decrease in revenues from low-end group tours. For the second quarter of 2006, net revenues were RMB190 million (US$24 million), a 47% increase from the same period in 2005. Net revenues increased by 22% from the first quarter in 2006. The gross margin was 81% in the second quarter of 2006, compared to 85% for the same period in 2005. This decrease was largely due to higher cost of services as a result of increased revenue contribution from air ticketing services. The gross margin in the second quarter of 2006 remained largely unchanged compared to 82% in the previous quarter. Product development expenses for the second quarter of 2006 increased by 72% to RMB25 million (US$3 million) from the same period in 2005 and increased by 7% compared to the previous quarter. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 11% of the net revenue, remained flat with the same period last year and decreased from 13% in the previous quarter. Sales and marketing expenses for the second quarter of 2006 increased by 52% to RMB42 million (US$5 million) from the same period in 2005, primarily due to hiring of new sales and marketing staff and increased expenses associated with our customer reward program. Sales and marketing expenses increased by 20% from the previous quarter primarily due to increased advertising expenses. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 21% of the net revenue, remained consistent with 21% for both the same period last year and the previous quarter. General and administrative expenses for the second quarter of 2006 increased by 114% to RMB22 million (US$3 million) from the same period in 2005, primarily due to the hiring of additional staff, increased accrual for professional expenses and the incurrence of RMB8 million (US$1 million) for share-based compensation charges. General and administrative expenses increased by 8% from the previous quarter primarily due to the hiring of additional staff. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 7% of the net revenues, relatively consistent with 8% for both the same period last year and the previous quarter. Total operating expenses for the second quarter of 2006 were RMB88 million (US$11 million). Excluding share-based compensation charges (non-GAAP), total operating expenses were RMB75 million (US$9 million), representing 39% of the net revenues, compared to 40% in the same period in 2005 and 41% in the first quarter of 2006. Income from operations for the second quarter of 2006 was RMB66 million (US$8 million). Excluding share-based compensation charges (non-GAAP), income from operations was RMB79 million (US$10 million), increased 36% from the same period in 2005, and increased 26% from the previous quarter. Operating margin was 35% in the second quarter of 2006. Excluding share-based compensation charges (non-GAAP), operating margin was 42% compared to 45% in the second quarter of 2005 and 40% in the previous quarter. Net income for the second quarter of 2006 was RMB61 million (US$8 million). Excluding share-based compensation charges (non-GAAP), net income was RMB74 million (US$9 million), representing a 30% increase from the same period in 2005 and a 20% increase from the previous quarter. Net margin was 32% in the second quarter of 2006. Excluding share-based compensation charges (non-GAAP), net margin was 39%, compared to 44% for the same period in 2005 and 40% in the first quarter of 2006. The diluted earnings per share were RMB1.82 (US$0.23). Excluding share- based compensation charges (non-GAAP), the diluted earnings per share were RMB2.22 (US$0.28) for the second quarter of 2006. As of June 30, 2006, the cash balance increased to RMB808 million (US$101 million), compared to RMB794 million as of March 31, 2006. Business Outlook For the third quarter of 2006, Ctrip expects to continue the year-on-year net revenue growth at a rate of approximately 40%. Note to Financial Statements Certain accounts for prior years have been reclassified with no effect on net income or retained earnings to conform to the 2006 financial statement presentation. Conference Call Ctrip's management team will host a conference call at 9:00PM Eastern Time on August 9, 2006 (or 9:00AM on August 10, 2006 in the Shanghai/HK time zone) following the announcement. The conference call will be available on Webcast live and replay at: http://ir.ctrip.com/ The call will be archived for 12 months at this website. The dial-in details for the live conference call: U.S. Toll Free Number +1-800-901-5218, International dial-in number +1-617-786-4511; Passcode 59739408. A telephone replay of the call will be available one week after the conclusion of the conference call. The dial-in details for the replay: U.S. Toll Free Number +1-888-286-8010, International dial-in number +1-617-801- 6888; Passcode 10509865. Safe Harbor Statement This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expect," "anticipate," "future," "intend," "plan," "believe" "estimate," and "confident" and similar statements. Among other things, quotations from management and Business Outlook section in this press release, as well as Ctrip's strategic and operational plans, contain forward-looking statements. Ctrip may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Ctrip's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, declines or disruptions in the travel industry, the outbreak of serious contagious disease such as SARS or avian flu, Ctrip's reliance on the relationships with hotel suppliers and airline ticket suppliers, Ctrip's limited operating history, fluctuations in quarterly operating results and stock price, failure of competing against new and exist competitors, PRC laws and regulations governing internet content providers in China and other risks outlined in Ctrip's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F and other filings. All information provided in this press release and in the attachments is as of August 9, 2006, and Ctrip does not undertake any obligation to update any forward-looking statement, except as required under applicable law. About Non-GAAP Financial Measures To supplement Ctrip's unaudited consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Ctrip uses non-GAAP financial information of product development expenses, sales and marketing expenses, general and administrative expenses, total operating expenses, income from operations, operating margin, net income, net margin and diluted earnings per share, each of which is adjusted from the most comparable GAAP results to exclude the share-based compensation charges recorded under Statement of Financial Accounting Standard 123R, 'Share-Based Payment', and APB25, 'Accounting for Stock Issued to Employees', for 2006 and 2005, respectively. Ctrip's management believes the non-GAAP financial measures facilitate better comparison of operation results from quarter to quarter and provide the management better capability to plan and forecast future periods. The non-GAAP information is not in accordance with GAAP and may be different from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered a substitute for the GAAP results. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude share- based compensation charges that have been and will continue to be significant recurring expenses in our business for the foreseeable future. Reconciliations of Ctrip's non-GAAP financial measures to consolidated statement of operations information are included in the end of this press release. About Ctrip.com International, Ltd. Ctrip.com International, Ltd. is a leading travel service provider of hotel accommodation, airline tickets and packaged-tours in China. Ctrip aggregates information on hotels and flights and enable customers to make informed and cost-effective hotel and flight bookings. Ctrip targets primarily business and leisure travelers in China who do not travel in-group. These travelers form a traditionally under-served yet fast-growing segment of the China travel industry. Since its inception in 1999, Ctrip has experienced substantial growth and become one of the best-known travel brands in China. Ctrip.com International, Ltd. Consolidated Balance Sheet Information December 31, 2005 June 30, 2006 June 30, 2006 RMB RMB USD (Unaudited) (unaudited) (unaudited) (Note 1) ASSETS Current assets: Cash 735,061,898 801,491,874 100,257,918 Restricted cash 6,600,000 6,600,000 825,588 Accounts receivable 63,440,215 110,655,931 13,841,854 Prepayments and other current assets 44,077,341 44,835,726 5,608,462 Deferred tax assets 2,135,171 3,060,549 382,841 Total current assets 851,314,625 966,644,080 120,916,663 Long-term deposits 54,284,801 61,303,979 7,668,461 Long-term prepayment 66,430,515 66,430,515 8,309,735 Property, equipment and software 53,552,243 81,880,264 10,242,331 Long-term investment -- 53,871,993 6,738,801 Goodwill 9,515,849 9,515,849 1,190,329 Other long-term assets 803,050 2,733,222 341,896 Total assets 1,035,901,083 1,242,379,902 155,408,216 LIABILITIES Current liabilities: Accounts payable 72,353,392 93,390,719 11,682,163 Salary and welfare payable 21,343,901 20,940,929 2,619,483 Taxes payable 16,050,032 19,348,880 2,420,335 Advances from customers 28,172,743 23,953,204 2,996,285 Provisions for customer reward program 19,776,193 26,105,068 3,265,460 Dividend payable 67,273,747 67,273,747 8,415,214 Other payables and accruals 45,344,065 66,365,764 8,301,635 Total current liabilities 270,314,073 317,378,311 39,700,575 Minority interests 871,406 1,020,381 127,639 Commitments and contingencies SHAREHOLDERS' EQUITY Share capital 2,652,142 2,685,630 335,943 Additional paid-in capital 524,928,856 578,237,557 72,331,231 Statutory reserves 41,769,481 41,769,480 5,224,908 Deferred share-based compensation (465,255) -- -- Cumulative translation adjustments (7,639,603) (11,137,240) (1,393,148) Retained Earnings 203,469,983 312,425,783 39,081,068 Total shareholders' equity 764,715,604 923,981,210 115,580,002 Total liabilities and shareholders' equity 1,035,901,083 1,242,379,902 155,408,216 Note 1: The conversion of Renminbi (RMB) into U.S. dollars (USD) is based on the noon buying rate of USD1.00=RMB7.9943 on June 30, 2006 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. Note 2: Certain accounts for prior years have been reclassified with no effect on net income or retained earnings to conform to the 2006 financial statement presentation. Ctrip.com International, Ltd. Consolidated Statement of Operations Information Quarter Quarter Quarter Quarter Ended Ended Ended Ended June 30, March 31, June 30, June 30, 2005 2006 2006 2006 RMB RMB RMB USD (unaudited) (unaudited) (unaudited) (unaudited) (Note 1) Revenues: Hotel reservation 92,258,219 95,629,719 117,898,002 14,747,758 Air-ticketing 37,418,941 59,775,033 72,711,431 9,095,409 Packaged tour 5,802,977 9,265,058 8,611,708 1,077,231 Others 2,613,641 2,592,865 3,297,876 412,528 Total revenues 138,093,778 167,262,675 202,519,017 25,332,926 Less: business tax and related surcharges (8,418,407) (11,233,882) (12,503,723) (1,564,080) Net revenues 129,675,371 156,028,793 190,015,294 23,768,846 Cost of services (19,716,097) (28,164,948) (35,557,687) (4,447,880) Gross profit 109,959,274 127,863,845 154,457,607 19,320,966 Operating expenses: Product development * (14,289,569) (22,985,588) (24,590,478) (3,076,001) Sales and marketing * (27,334,276) (34,515,120) (41,544,155) (5,196,722) General and administrative * (10,362,220) (20,514,717) (22,177,304) (2,774,140) Total operating expenses (51,986,065) (78,015,425) (88,311,937) (11,046,863) Income from operations 57,973,209 49,848,420 66,145,670 8,274,103 Interest income 3,130,722 4,278,327 4,540,286 567,940 Other income 2,681,002 2,742,851 625,231 78,210 Income before income tax expense and minority interest 63,784,933 56,869,598 71,311,187 8,920,253 Income tax expense (7,171,263) (8,504,297) (10,571,713) (1,322,406) Minority interests (73,675) 42,267 (191,242) (23,922) Net income 56,539,995 48,407,568 60,548,232 7,573,925 Earnings per share - Basic 1.78 1.51 1.87 0.23 - Diluted 1.74 1.48 1.82 0.23 Weighted average shares outstanding - Basic 31,732,838 32,067,925 32,293,221 32,293,221 - Diluted 32,571,802 32,815,598 33,270,085 33,270,085 * Share-based compensation charges included are as follows: Product development 94,111 3,176,702 3,245,904 406,027 Sales and marketing 60,418 1,978,929 2,010,748 251,523 General and administrative 260,730 8,138,835 8,062,924 1,008,584 Note 1: The conversion of Renminbi (RMB) into U.S. dollars (USD) is based on the noon buying rate of USD1.00=RMB7.9943 on June 30, 2006 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. Note 2: Certain accounts for prior years have been reclassified with no effect on net income or retained earnings to conform to the 2006 financial statement presentation. Note 3: Effective on April 11, 2006, Company changed ratio of the American Depositary Shares ('ADSs') to ordinary shares from one (1) ADS representing two (2) ordinary shares to one (1) ADS representing one (1) ordinary share. The change is reflected in the numbers above. Ctrip.com International, Ltd. Reconciliation of GAAP and Non-GAAP Results (In RMB, except % and per share information) Quarter Ended June 30, 2006 GAAP % of Net Share-based % of Net Non-GAAP % of Net Result Revenue Compensation Revenue Result Revenue Product development (24,590,478) 13% 3,245,904 2% (21,344,574) 11% Sales and marketing (41,544,155) 22% 2,010,748 1% 39,533,407) 21% General and administrat- ive (22,177,304) 12% 8,062,924 4% (14,114,380) 7% Total operating expenses (88,311,937) 46% 13,319,576 7% (74,992,361) 39% Income from operations 66,145,670 35% 13,319,576 7% 79,465,246 42% Net income 60,548,232 32% 13,319,576 7% 73,867,808 39% Diluted earnings per share (USD) 0.23 0.05 0.28 Quarter Ended March 31, 2006 GAAP % of Net Share-based % of Net Non-GAAP % of Net Result Revenue Compensation Revenue Result Revenue Product development (22,985,588) 15% 3,176,702 2% (19,808,886) 13% Sales and marketing (34,515,120) 22% 1,978,929 1% (32,536,191) 21% General and administrat- ive (20,514,717) 13% 8,138,835 5% (12,375,882) 8% Total operating expenses (78,015,425) 50% 13,294,466 9% (64,720,959) 41% Income from operations 49,848,420 32% 13,294,466 9% 63,142,886 40% Net income 48,407,568 31% 13,294,466 9% 61,702,034 40% Diluted earnings per share (USD) 0.18 0.05 0.23 Quarter Ended June 30, 2005 GAAP % of Net Share-based % of Net Non-GAAP % of Net Result Revenue Compensation Revenue Result Revenue Product development (14,289,569) 11% 94,111 0% (14,195,458) 11% Sales and marketing (27,334,276) 21% 60,418 0% (27,273,858) 21% General and administrat- ive (10,362,220) 8% 260,730 0% (10,101,490) 8% Total operating expenses (51,986,065) 40% 415,259 0% (51,570,806) 40% Income from operations 57,973,209 45% 415,259 0% 58,388,468 45% Net income 56,539,995 44% 415,259 0% 56,955,254 44% Diluted earnings per share (USD) 0.21 0.00 0.21 For further information Tracy Cui Ctrip.com International, Ltd. Tel: +86-21-3406-4880 X 12216 Email: DATASOURCE: Ctrip.com International, Ltd. CONTACT: Tracy Cui of Ctrip.com International, Ltd., +86-21-3406-4880 X 12216, or Web site: http://ir.ctrip.com/

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