CTRP Ctrip Com International Ltd

SHANGHAI, China, Nov. 8 /Xinhua-PRNewswire-FirstCall/ -- Ctrip.com International, Ltd. (NASDAQ:CTRP), a leading travel service provider for hotel accommodations, airline tickets and packaged tours in China, today announced its unaudited financial results for the quarter ended September 30, 2006. Highlights for the third quarter of 2006 -- Net revenues were RMB208 million (US$26 million) for the third quarter of 2006, up 47% year-on-year. -- Gross margin was 79% for the third quarter of 2006, compared to 83% in the same period in 2005 largely due to the relatively higher cost of service as a result of increased revenue contribution from air ticketing services and packaged tours. -- Income from operations was RMB64 million (US$8 million) for the third quarter of 2006. Excluding share-based compensation charges (non-GAAP), income from operations was RMB78 million (US$10 million), up 23% year-on-year. -- Operating margin was 31% in the third quarter of 2006. Excluding share-based compensation charges (non-GAAP), operation margin was 38%, compared to 45% during the same period in 2005. -- Net income was RMB65 million (US$8 million) in the third quarter of 2006. Excluding share-based compensation charges (non-GAAP), net income was RMB79 million (US$10 million), up 20% year-on-year. -- Net margin was 31% in the third quarter of 2006. Excluding share-based compensation charges (non-GAAP), net margin was 38%, compared to 47% in the same period in 2005. -- Fully diluted earnings per share were RMB1.94 (US$0.25). Excluding share-based compensation charges (non-GAAP), fully diluted earnings per share were RMB2.36 (US$0.30). -- Share-based compensation charges were RMB14 million (US$2 million), which accounted for 7% of the net revenues, or RMB0.43 (US$0.05) per share for the third quarter of 2006. Min Fan, Chief Executive Office of Ctrip, said: 'I am very proud of the results Ctrip has achieved during the third quarter of 2006. We have demonstrated strong execution capability and excellent leadership during the transition period from paper tickets to e-tickets. We expect to continue our solid business growth going forward.' Financial Results For the third quarter of 2006, Ctrip reported total revenues of RMB223 million (US$28 million), representing a 47% increase from the same period in 2005 and a 10% increase from the second quarter of 2006. Hotel reservation revenues amounted to RMB125 million (US$16 million) for the third quarter of 2006, representing a 30% increase from the same period in 2005 and a 6% increase from the previous quarter. The total number of hotel room nights booked was approximately 1.82 million in the third quarter of 2006, compared to approximately 1.44 million room nights for the same period in 2005 and approximately 1.70 million room nights in the previous quarter. The average commission per room night was RMB69 (US$9) in the third quarter of 2006, compared to RMB67 (US$8) in the same period in 2005 and remained consistent with the amount in the previous quarter. Air ticket booking revenues for the third quarter of 2006 were RMB81 million (US$10 million), representing a 73% increase from the same period in 2005 and a 11% increase from the previous quarter. The total number of air tickets sold in the third quarter of 2006 was approximately 1.72 million, compared to approximately 1.02 million for the same period in 2005 and approximately 1.49 million in the previous quarter. The average commission per air ticket was RMB46 (US$6) in the third quarter of 2006, increased from RMB45 (US$6) in the same period in 2005 and decreased slightly from RMB47 (US$6) in the previous quarter. Packaged-tour revenues for the third quarter of 2006 were RMB13 million (US$2 million), up 97% from the same period in 2005 and 49% from the previous quarter due to increased FIT (Frequent Independent Travelers) tour packages. For the third quarter of 2006, net revenues were RMB208 million (US$26 million), a 47% increase from the same period in 2005. Net revenues increased by 10% from the second quarter in 2006. The gross margin was 79% in the third quarter of 2006, compared to 83% for the same period in 2005 and 81% in the previous quarter. This decrease was largely due to the relatively higher cost of services as a result of increased revenue contribution from air ticketing and packaged tours, as well as incremental cost incurred in connection with the industry transition from paper tickets to e-tickets. Product development expenses for the third quarter of 2006 increased by 94% to RMB27 million (US$3 million) from the same period in 2005 and increased by 11% compared to the previous quarter, primarily due to hiring of additional product development staffs. Excluding share-based compensation charges (non- GAAP), product development expenses accounted for 11% of the net revenue, remained relatively consistent with 10% in the same period last year and 11% in the previous quarter. Sales and marketing expenses for the third quarter of 2006 increased by 61% to RMB48 million (US$6 million) from the same period in 2005 and 15% from the previous quarter, primarily due to hiring of new sales and marketing staffs. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 22% 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 third quarter of 2006 increased by 141% to RMB25 million (US$3 million) from the same period in 2005, primarily due to the hiring of additional staffs and the incurrence of RMB8 million (US$1 million) for share-based compensation charges. General and administrative expenses increased by 14% from the previous quarter primarily due to the hiring of additional staffs. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 8% of the net revenues, remained consistent with 7% for both the same period last year and the previous quarter. Income from operations for the third quarter of 2006 was RMB64 million (US$8 million). Excluding share-based compensation charges (non-GAAP), income from operations was RMB78 million (US$10 million), increased 23% from the same period in 2005, and remained relatively flat with RMB79 million (US$10 million) in the previous quarter. Operating margin was 31% in the third quarter of 2006. Excluding share- based compensation charges (non-GAAP), operating margin was 38% compared to 45% in the third quarter of 2005 and 42% in the previous quarter. Net income for the third quarter of 2006 was RMB65 million (US$8 million). Excluding share-based compensation charges (non-GAAP), net income was RMB79 million (US$10 million), representing a 20% increase from the same period in 2005 and a 7% increase from the previous quarter. Net margin was 31% in the third quarter of 2006. Excluding share-based compensation charges (non-GAAP), net margin was 38%, compared to 47% for the same period in 2005 and 39% in the second quarter of 2006. The diluted earnings per share were RMB1.94 (US$0.25). Excluding share- based compensation charges (non-GAAP), the diluted earnings per share were RMB2.36 (US$0.30) for the third quarter of 2006. As of September 30, 2006, the cash balance was RMB766 million (US$97 million). Business Outlook For the fourth quarter of 2006, Ctrip expects to continue the year-on-year net revenue growth at a rate of approximately 40%. Note to Financial Statements Information 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 8:00PM Eastern Time on November 8, 2006 (or 9:00AM on November 9, 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 +1-866-713-8564, International dial-in number +1-617-597-5312; Passcode 87556987. A telephone replay of the call will be available after the conclusion of the conference call through November 15, 2006. 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 46271397. 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 November 8, 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 related to product development expenses, sales and marketing expenses, general and administrative 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 operating results from quarter to quarter and provides 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 accommodations, 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. - Financial Tables to follow - Ctrip.com International, Ltd. Consolidated Balance Sheet Information December September September 31, 2005 30, 2006 30, 2006 RMB RMB USD (Unaudited) (unaudited) (unaudited) ASSETS Current assets: Cash 735,061,898 759,397,327 96,077,597 Restricted cash 6,600,000 6,600,000 835,020 Accounts receivable 63,440,215 135,250,342 17,111,632 Prepayments and other current assets 44,077,341 67,001,272 8,476,882 Deferred tax assets 2,135,171 3,957,286 500,669 Total current assets 851,314,625 972,206,227 123,001,800 Long-term deposits 54,284,801 71,375,827 9,030,342 Long-term prepayment 66,430,515 67,568,137 8,548,600 Property, equipment and software 53,552,243 106,351,625 13,455,418 Long-term investment -- 80,430,123 10,175,876 Goodwill 9,515,849 14,595,849 1,846,641 Other long-term assets 803,050 3,093,379 391,369 Total assets 1,035,901,083 1,315,621,167 166,450,046 LIABILITIES Current liabilities: Accounts payable 72,353,392 142,177,352 17,988,025 Salary and welfare payable 21,343,901 24,857,763 3,144,960 Taxes payable 16,050,032 21,473,463 2,716,784 Advances from customers 28,172,743 44,134,407 5,583,807 Provisions for customer reward program 19,776,193 30,353,162 3,840,228 Dividend payable 67,273,747 -- -- Other payables and accruals 45,344,065 43,347,889 5,484,298 Total current liabilities 270,314,073 306,344,036 38,758,102 Other long-term payables -- 2,437,500 308,388 Total liabilities 270,314,073 308,781,536 39,066,490 Minority interests 871,406 613,271 77,590 SHAREHOLDERS' EQUITY Share capital 2,652,142 2,690,415 340,386 Additional paid-in capital 524,928,856 598,517,358 75,723,350 Statutory reserves 41,769,481 41,769,480 5,284,600 Deferred share-based compensation (465,255) -- -- Cumulative translation adjustments (7,639,603) (13,873,152) (1,755,206) Retained Earnings 203,469,983 377,122,259 47,712,836 Total shareholders' equity 764,715,604 1,006,226,360 127,305,966 Total liabilities and shareholders' equity 1,035,901,083 1,315,621,167 166,450,046 Ctrip.com International, Ltd. Consolidated Statement of Operations Information Quarter Ended Quarter Ended Quarter Ended Quarter Ended September 30, June 30, 2006 September 30, September 30, 2005 2006 2006 2006 RMB RMB RMB USD (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Hotel reservation 96,166,979 117,898,002 125,143,244 15,832,900 Air-ticketing 46,747,595 72,711,431 80,983,415 10,245,877 Packaged tour 6,537,353 8,611,708 12,863,465 1,627,463 Others 1,610,462 3,297,876 3,582,534 453,256 Total revenues 151,062,389 202,519,017 222,572,658 28,159,496 Less: business tax and related surcharges (9,788,304) (12,503,723) (14,417,209) (1,824,040) Net revenues 141,274,085 190,015,294 208,155,449 26,335,456 Cost of services (24,009,346) (35,557,687) (43,640,055) (5,521,262) Gross profit 117,264,739 154,457,607 164,515,394 20,814,194 Operating expenses: Product development* (14,102,976) (24,590,478) (27,349,052) (3,460,153) Sales and marketing* (29,558,425) (41,544,155) (47,701,000) (6,035,046) General and administrative* (10,474,983) (22,177,304) (25,271,889) (3,197,354) Total operating expenses (54,136,384) (88,311,937) (100,321,941) (12,692,553) Income from operations 63,128,355 66,145,670 64,193,453 8,121,641 Interest income 3,022,705 4,540,286 3,704,148 468,642 Other income 9,603,538 625,231 8,116,653 1,026,905 Income before income tax expense and minority interest 75,754,598 71,311,187 76,014,254 9,617,188 Income tax expense (10,077,248) (10,571,713) (11,304,888) (1,430,274) Minority interests (145,698) (191,242) (12,890) (1,631) Net income 65,531,652 60,548,232 64,696,476 8,185,283 Earnings per share -- Basic 2.06 1.87 1.99 0.25 -- Diluted 2.00 1.82 1.94 0.25 Weighted average shares outstanding -- Basic 31,809,693 32,293,221 32,478,507 32,478,507 -- Diluted 32,772,502 33,270,085 33,366,826 33,366,826 * Share-based compensation charges included are as follows: Product development 83,206 3,245,904 3,657,057 462,684 Sales and marketing 53,417 2,010,748 2,283,444 288,897 General and administrative 230,515 8,062,924 8,265,930 1,045,791 Ctrip.com International, Ltd. Reconciliation of GAAP and Non-GAAP Results (In RMB, except % and per share information) Quarter Ended September 30, 2006 GAAP % of Net Share-based Result Revenue Compensation Product development (27,349,052) 13% 3,657,057 Sales and marketing (47,701,000) 23% 2,283,444 General and administrative (25,271,889) 12% 8,265,930 Total operating expenses (100,321,941) 48% 14,206,431 Income from operations 64,193,453 31% 14,206,431 Net income 64,696,476 31% 14,206,431 Diluted earnings per share (USD) 0.25 -- 0.05 Quarter Ended September 30, 2006 % of Net % of Net Revenue Non-GAAP Result Revenue Product development 2% (23,691,995) 11% Sales and marketing 1% (45,417,556) 22% General and administrative 4% (17,005,959) 8% Total operating expenses 7% (86,115,510) 41% Income from operations 7% 78,399,884 38% Net income 7% 78,902,907 38% Diluted earnings per share (USD) -- 0.30 -- Quarter Ended June 30, 2006 GAAP % of Net Share-based Result Revenue Compensation Product development (24,590,478) 13% 3,245,904 Sales and marketing (41,544,155) 22% 2,010,748 General and administrative (22,177,304) 12% 8,062,924 Total operating expenses (88,311,937) 46% 13,319,576 Income from operations 66,145,670 35% 13,319,576 Net income 60,548,232 32% 13,319,576 Diluted earnings per share (USD) 0.23 -- 0.05 Quarter Ended June 30, 2006 % of Net Non-GAAP % of Net Revenue Result Revenue Product development 2% (21,344,574) 11% Sales and marketing 1% (39,533,407) 21% General and administrative 4% (14,114,380) 7% Total operating expenses 7% (74,992,361) 39% Income from operations 7% 79,465,246 42% Net income 7% 73,867,808 39% Diluted earnings per share (USD) -- 0.28 -- Quarter Ended September 30, 2005 Share- % of based % of Non- % of GAAP Net Compen- Net GAAP Net Result Revenue sation Revenue Result Revenue Product development (14,102,976) 10% 83,206 0% (14,019,770) 10% Sales and marketing (29,558,425) 21% 53,417 0% (29,505,008) 21% General and administrative (10,474,983) 7% 230,515 0% (10,244,468) 7% Total operating expenses (54,136,384) 38% 367,138 0% (53,769,246) 38% Income from operations 63,128,355 45% 367,138 0% 63,495,493 45% Net income 65,531,652 46% 367,138 0% 65,898,790 47% Diluted earnings per share (USD) 0.25 -- 0.00 -- 0.25 -- Notes for all the financial schedules presented: Note 1: The conversion of Renminbi (RMB) into U.S. dollars (USD) is based on the noon buying rate of USD1.00=RMB7.9040 on September 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: 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. Note 3: Certain accounts for prior years have been reclassified with no effect on net income or retained earnings to conform to the 2006 financial statement information presentation. For further information Tracy Cui Ctrip.com International, Ltd. Tel: +86-21-3406-4880 x12216 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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