Ctrip Reports Third Quarter 2008 Financial Results

SHANGHAI, China, Nov. 17 /Xinhua-PRNewswire-FirstCall/ -- Ctrip.com International, Ltd. , 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, 2008.

Highlights for the Third Quarter of 2008 -- Net revenues were RMB370 million (US$55 million) for the third quarter of 2008, up 15% year-on-year. -- Gross margin was 77% for the third quarter of 2008, compared to 80% in the same period in 2007. -- Income from operations was RMB107 million (US$16 million) for the third quarter of 2008, down 4% year-on-year. Excluding share-based compensation charges (non-GAAP), income from operations was RMB138 million (US$20 million), up 3% year-on-year. -- Operating margin was 29% in the third quarter of 2008, compared to 34% in the third quarter of 2007. Excluding share-based compensation charges (non-GAAP), operating margin was 37%, compared to 41% during the same period in 2007. -- Net income was RMB104 million (US$15 million) in the third quarter of 2008, down 5% year-on-year. Excluding share-based compensation charges (non-GAAP), net income was RMB136 million (US$20 million), up 2% year- on-year. -- Diluted earnings per ADS were RMB1.52 (US$0.22). Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.97 (US$0.29). -- Share-based compensation charges were RMB31 million (US$5 million), accounting for approximately 8% of the net revenues, or RMB0.45 (US$0.07) per ADS, for the third quarter of 2008.

"Although the travel industry had a tough time during the third quarter of 2008 in China, Ctrip continued to outperform our peers with a healthy growth in revenue year-on-year," said Min Fan, Chief Executive Officer of Ctrip. "While Ctrip is not immune from the current volatile economic environment, our team is focusing on gaining more market share and strengthening our leadership in the challenging market."

Third Quarter 2008 Financial Results

For the third quarter of 2008, Ctrip reported total revenues of RMB397 million (US$58 million), representing a 15% increase from the same period in 2007 and a 1% decrease from the previous quarter.

Hotel reservation revenues amounted to RMB186 million (US$27 million) for the third quarter of 2008, representing a 6% increase from the same period in 2007 primarily due to increased hotel booking volume and a 5% decrease from the previous quarter primarily due to decreased hotel booking volume .

Air-ticketing revenues for the third quarter of 2008 were RMB166 million (US$25 million), representing a 21% increase from the same period in 2007 primarily due to a 37% increase in air-ticketing sales volume, which was offset by a 12% decrease in commission per ticket primarily due to a decrease in ticket prices. Air-ticketing revenues remained relatively consistent with the previous quarter.

Packaged-tour revenues for the third quarter of 2008 were RMB28 million (US$4 million), up 37% from the same period in 2007 and up 19% from the previous quarter, primarily due to the increased leisure travel volume.

For the third quarter of 2008, net revenues were RMB370 million (US$55 million), a 15% increase from the same period in 2007. Net revenues remained relatively consistent with the previous quarter.

Gross margin was 77% in the third quarter of 2008, compared to 80% in the same period in 2007 and 79% in the previous quarter.

Product development expenses for the third quarter of 2008 increased by 28% to RMB61 million (US$9 million) from the same period in 2007 and increased by 8% compared to the previous quarter, primarily due to the increased product development personnel resources. Excluding share-based compensation charges (non-GAAP), product development expenses accounted for 14% of the net revenues, which was an increase from 13% in the same period last year and the previous quarter.

Sales and marketing expenses for the third quarter of 2008 increased by 12% to RMB71 million (US$10 million) from the same period in 2007 primarily due to the increased sales and marketing personnel resources and other marketing activities. Sales and marketing expenses increased by 4% from the previous quarter primarily due to the increased marketing activities. Excluding share-based compensation charges (non-GAAP), sales and marketing expenses accounted for 18% of the net revenues, decreased from 19% in the same period last year and increased from 17% in the previous quarter.

General and administrative expenses for the third quarter of 2008 increased by 24% to RMB45 million (US$7 million) from the same period in 2007 primarily due to the increased personnel resources and share-based compensation charges. General and administrative expenses increased by 4% from the previous quarter primarily due to increase of personnel resources. Excluding share-based compensation charges (non-GAAP), general and administrative expenses accounted for 7% of the net revenues, which remained consistent with the same period last year and increased from 6% in the previous quarter.

Income from operations for the third quarter of 2008 was RMB107 million (US$16 million), which represented a 4% decrease from the same period in 2007 and a 16% decrease from the previous quarter. Excluding share-based compensation charges (non-GAAP), income from operations was RMB138 million (US$20 million), representing a 3% increase from the same period in 2007 and a 13% decrease from the pervious quarter.

Operating margin was 29% in the third quarter of 2008, compared to 34% in the third quarter of 2007 and in the previous quarter. Excluding share-based compensation charges (non-GAAP), operating margin was 37% in the third quarter of 2008 compared to 41% in the third quarter of 2007 and 42% in the previous quarter.

Net income for the third quarter of 2008 was RMB104 million (US$15 million), representing a 5% decrease from the same period in 2007, and a 12% decrease from the previous quarter. Excluding share-based compensation charges (non-GAAP), net income was RMB136 million (US$20 million), representing a 2% increase from the same period in 2007 and a 10% decrease from the previous quarter.

The effective tax rate for the third quarter of 2008 was 17%, increased from 15% in the same period of 2007 primarily due to the application of a statutory tax rate of 25% under the new PRC Enterprise Income Tax Law, which became effective on January 1, 2008, to PRC enterprises that are not entitled to enjoy the grandfathering provision of transitional preferential tax rate. The effective tax rate for the third quarter of 2008 decreased from 26% in the previous quarter primarily due to the transitional preferential tax rate of 18% applied to one of the PRC enterprises established in Pudong New Area.

Diluted earnings per ADS were RMB1.52 (US$0.22) for the third quarter of 2008. Excluding share-based compensation charges (non-GAAP), diluted earnings per ADS were RMB1.97 (US$0.29) for the third quarter of 2008.

As of September 30, 2008, the balance of cash and short-term investment was RMB1.4 billion (US$207 million).

Business Outlook

For the fourth quarter of 2008, Ctrip expects the year-on-year net revenue growth rate to be in the range of 5-15%.

Conference Call

Ctrip's management team will host a conference call at 8:00PM US Eastern Time on November 17, 2008 (or 9:00AM on November 18, 2008 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 one month at this website.

The dial-in details for the live conference call: U.S. Toll Free Number 1.888.680.0869, International dial-in number +1.617.213.4854; Passcode 72507674. For pre-registration, please click https://www.theconferencingservice.com/prereg/key.process?key=PGAVKHKF9 .

A telephone replay of the call will be available after the conclusion of the conference call through November 25, 2008. 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 39879145.

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 the 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, a slow-down of economic growth or an economic downturn in China, inflation in China, disruptions in the financial markets and other macro-economic challenges currently affecting the economy of the United States and other parts of the world, declines or disruptions in the travel industry, volatility in the trading price of Ctrip's ADSs, Ctrip's reliance on the relationships with travel suppliers and strategic alliances, failure to further increase Ctrip's brand recognition to obtain new business partners and consumers, failure to compete against new and existing competitors, damage to or failure of Ctrip's infrastructure and technology, loss of services of Ctrip's key executives, risks and uncertainties associated with PRC laws and regulations governing internet content providers and affecting Ctrip's business 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 17, 2008, 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 the 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, and diluted earnings per ordinary share and per ADS, each of which is adjusted from the most comparable GAAP result to exclude the share-based compensation charges recorded under Statement of Financial Accounting Standard 123R, "Share-Based Payment", for 2008 and 2007. Ctrip's management believes the non- GAAP financial measures facilitate better understanding 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 data to the most comparable GAAP data included in the consolidated statement of operations are included at 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 enables customers to make informed and cost-effective hotel and flight bookings. Ctrip also sells packaged tours that include transportation and accommodations, as well as guided tours in some instances. Ctrip targets primarily business and leisure travelers in China who do not travel in groups. These travelers form a traditionally under-served yet fast-growing segment of the travel industry in China. 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 31, September 30, September 30, 2007 2008 2008 RMB RMB USD (unaudited) (unaudited) (unaudited) ASSETS Current assets: Cash 1,064,418,278 1,197,541,068 176,370,943 Restricted cash 6,600,000 6,600,000 972,032 Short-term investment 141,174,094 199,486,687 29,379,915 Accounts receivable, net 260,683,770 365,955,042 53,896,971 Prepayments and other current assets 63,489,599 114,935,749 16,927,458 Deferred tax assets 11,275,767 11,625,338 1,712,152 Total current assets 1,547,641,508 1,896,143,884 279,259,471 Long-term deposits 147,092,990 144,764,157 21,320,514 Land use rights 65,083,814 112,157,284 16,518,253 Property, equipment and software 267,194,788 276,810,487 40,767,977 Investment 80,416,250 208,046,406 30,640,570 Goodwill 14,595,849 15,560,658 2,291,736 Other long-term assets 2,918,809 3,853,897 567,592 Total assets 2,124,944,008 2,657,336,773 391,366,113 LIABILITIES Current liabilities: Accounts payable 230,904,562 412,963,022 60,820,192 Salary and welfare payable 65,497,142 62,448,966 9,197,332 Taxes payable 49,079,149 81,461,286 11,997,420 Advances from customers 96,672,341 137,378,063 20,232,708 Accrued liability for customer reward program 44,659,657 57,356,218 8,447,285 Dividend payable 119,497,083 -- -- Other payables and accruals 65,731,210 61,667,563 9,082,249 Total current liabilities 672,041,144 813,275,118 119,777,186 Other long-term payables 1,625,000 812,500 119,663 Total liabilities 673,666,144 814,087,618 119,896,849 Minority interests 1,158,767 1,425,908 210,004 SHAREHOLDERS' EQUITY Share capital 2,742,210 2,759,378 406,395 Additional paid-in capital 791,336,910 931,313,846 137,161,644 Statutory reserves 60,869,845 60,869,845 8,964,763 Accumulated other comprehensive loss (36,420,706) (107,371,081) (15,813,352) Retained Earnings 631,590,838 954,251,259 140,539,810 Total shareholders' equity 1,450,119,097 1,841,823,247 271,259,260 Total liabilities and shareholders' equity 2,124,944,008 2,657,336,773 391,366,113 Ctrip.com International, Ltd. Consolidated Statement of Operations Information Quarter Ended Quarter Ended Quarter Ended Quarter Ended September 30, June 30, September 30, September 30, 2007 2008 2008 2008 RMB RMB RMB USD (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Hotel reservation 175,578,714 195,873,161 186,005,621 27,394,456 Air-ticketing 137,659,009 168,818,839 166,420,800 24,510,052 Packaged tour 20,683,731 23,831,611 28,371,045 4,178,419 Others 11,909,481 13,361,644 16,248,986 2,393,111 Total revenues 345,830,935 401,885,255 397,046,452 58,476,038 Less: business tax and related surcharges (23,160,551) (26,841,572) (26,909,297) (3,963,136) Net revenues 322,670,384 375,043,683 370,137,155 54,512,902 Cost of revenues (64,011,659) (79,671,771) (86,404,046) (12,725,378) Gross profit 258,658,725 295,371,912 283,733,109 41,787,524 Operating expenses: Product development * (47,941,336) (56,890,322) (61,254,023) (9,021,344) Sales and marketing * (63,466,452) (68,281,458) (71,028,049) (10,460,839) General and administrative * (36,269,362) (42,902,709) (44,819,506) (6,600,908) Total operating expenses (147,677,150) (168,074,489) (177,101,578) (26,083,091) Income from operations 110,981,575 127,297,423 106,631,531 15,704,433 Interest income 4,670,322 9,272,875 8,012,955 1,180,128 Other income 13,577,722 24,597,709 11,442,154 1,685,173 Income before income tax expense and minority interests 129,229,619 161,168,007 126,086,640 18,569,734 Income tax expense (19,518,480) (41,600,995) (21,604,489) (3,181,857) Minority interests (32,723) (251,471) 13,291 1,958 Net income 109,678,416 119,315,541 104,495,442 15,389,835 Earnings per ordinary share -- Basic 3.32 3.58 3.13 0.46 -- Diluted 3.21 3.44 3.03 0.45 Earnings per ADS -- Basic 1.66 1.79 1.56 0.23 -- Diluted 1.60 1.72 1.52 0.22 Weighted average ordinary shares outstanding -- Basic 33,070,087 33,339,364 33,400,258 33,400,258 -- Diluted 34,197,196 34,648,516 34,447,448 34,447,448 *Share-based compensation charges included are as follows: Product development 5,918,151 7,843,570 8,131,437 1,197,578 Sales and marketing 3,540,669 4,516,199 4,496,630 662,253 General and administrative 13,396,356 18,923,915 18,657,104 2,747,773 Ctrip.com International, Ltd. Reconciliation of GAAP and Non-GAAP Results (In RMB, except % and per share information) Quarter Ended September 30, 2008 GAAP %of Net Share-based %of Net Non-GAAP %of Net Result Revenue Compensation Revenue Result Revenue Product development (61,254,023) 17% 8,131,437 2% (53,122,586) 14% Sales and marketing (71,028,049) 19% 4,496,630 1% (66,531,419) 18% General and Administrative (44,819,506) 12% 18,657,104 5% (26,162,402) 7% Total operating expenses (177,101,578) 48% 31,285,171 8% (145,816,407) 39% Income from operations 106,631,531 29% 31,285,171 8% 137,916,702 37% Net income 104,495,442 28% 31,285,171 8% 135,780,613 37% Diluted earnings per ordinary share (RMB) 3.03 -- 0.91 -- 3.94 -- Diluted earnings per ADS (RMB) 1.52 -- 0.45 -- 1.97 -- Diluted earnings per ADS (USD) 0.22 -- 0.07 -- 0.29 -- Quarter Ended June 30, 2008 GAAP %of Net Share-based %of Net Non-GAAP %of Net Result Revenue Compensation Revenue Result Revenue Product development (56,890,322) 15% 7,843,570 2% (49,046,752) 13% Sales and marketing (68,281,458) 18% 4,516,199 1% (63,765,259) 17% General and administrative (42,902,709) 11% 18,923,915 5% (23,978,794) 6% Total operating expenses (168,074,489) 45% 31,283,684 8% (136,790,805) 36% Income from operations 127,297,423 34% 31,283,684 8% 158,581,107 42% Net income 119,315,541 32% 31,283,684 8% 150,599,225 40% Diluted earnings per ordinary share (RMB) 3.44 -- 0.90 -- 4.35 -- Diluted earnings per ADS (RMB) 1.72 -- 0.45 -- 2.17 -- Diluted earnings per ADS (USD) 0.25 -- 0.07 -- 0.32 -- Quarter Ended September 30, 2007 GAAP %of Net Share-based %of Net Non-GAAP %of Net Result Revenue Compensation Revenue Result Revenue Product development (47,941,336) 15% 5,918,151 2% (42,023,185) 13% Sales and marketing (63,466,452) 20% 3,540,669 1% (59,925,783) 19% General and administrative (36,269,362) 11% 13,396,356 4% (22,873,006) 7% Total operating expenses (147,677,150) 46% 22,855,176 7% (124,821,974) 39% Income from operations 110,981,575 34% 22,855,176 7% 133,836,751 41% Net income 109,678,416 34% 22,855,176 7% 132,533,592 41% Diluted earnings per ordinary share (RMB) 3.21 -- 0.67 -- 3.88 -- Diluted earnings per ADS (RMB) 1.60 -- 0.33 -- 1.94 -- Diluted earnings per ADS (USD) 0.21 -- 0.04 -- 0.26 -- 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=RMB6.7899 on September 30, 2008 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 July 31, 2007, Company changed ratio of the American Depositary Shares ("ADSs") to ordinary shares from one (1) ADS representing one (1) ordinary shares to two (2) ADS representing one (1) ordinary share. The change is reflected retroactively in the numbers for all the periods presented above. For further information: Jade Wei Ctrip.com International, Ltd. Tel: [phone] X 11543 Email: [e-mail]