Trip.com Group Ltd — Interim / Quarterly Report 2005

Feb 22, 2005

6-K 1 d6k.htm FORM 6-K Form 6-K

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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

For the month of February 2005

Commission File Number: 333-110455

CTRIP.COM INTERNATIONAL, LTD.

3F, Building 63-64

No. 421 Hong Cao Road

Shanghai 200233, People’s Republic of China

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F X Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes No X

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

82- N/A

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CTRIP.COM INTERNATIONAL, LTD.

Form 6-K

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	Page
Signature	3
Exhibit 99.1 – Press Release	4

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CTRIP.COM INTERNATIONAL, LTD.
By:	/s/ Neil Nanpeng Shen
Name:	Neil Nanpeng Shen
Title:	President and Chief Financial Officer

Date: February 22, 2005

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Exhibit 99.1

Ctrip Reports Fourth Quarter and Full Year 2004 Unaudited Financial Results

Shanghai, China, February 22, 2005 - Ctrip.com International, Ltd. (Nasdaq: CTRP), a leading consolidator of hotel accommodations and airline tickets in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2004.

Highlights for the fourth quarter of 2004:

• Net revenues were RMB98.5 million (US$11.9 million) in the fourth quarter of 2004, up 46% year-on-year.

• Operating income was RMB33.0 million (US$4.0 million) in the fourth quarter of 2004, up 49% year-on-year.

• Net income was RMB41.6 million (US$5.0 million) in the fourth quarter of 2004, up 69% year-on-year. Fully diluted earnings per ADS were RMB2.60 (US$0.31) against the original guidance of US$0.24 to US$0.25 per ADS.

• Gross margin was 84% in the fourth quarter of 2004, compared to 83% in the same period in 2003. Operating margin remained at 33% in the fourth quarter of 2004, compared to the same period in 2003.

• Net margin was 42% in the fourth quarter of 2004, up significantly from 37% in the same period in 2003.

Highlights for the full year 2004:

• Net revenues were RMB333.8 million (US$40.3 million) in 2004. Net revenues for 2003 were RMB173.1 million (US$20.9 million), which were adversely affected by the Severe Acute Respiratory Syndrome (SARS) outbreak.

• Operating income was RMB135.7 million (US$16.4 million) in 2004, compared to RMB58.1 (US$7.0 million) in 2003.

• Net income was RMB133.1 million (US$16.1 million) in 2004. The diluted earnings per ADS were RMB8.46 (US$1.02). Net income in 2003 was RMB53.8 million (US$6.5 million).

• Gross margin remained robust at 85% and operating margin increased to 41% in 2004 from 34% in 2003.

• Net margin was 40% in 2004, up significantly from 31% in 2003.

“Ctrip’s strong performance in the fourth quarter capped another record year for the Company,” said James Liang, Chairman and CEO. “Through relentless focus on execution, we have maintained our dominant position in the travel consolidator market. During this quarter, the number of cumulative customers reached a major milestone, surpassing the one million mark. We also expanded our global reach by partnering with leading international suppliers.”

Commenting on Ctrip’s financial performance, Neil Shen, President and CFO, said, “Ctrip continues to build a solid track record of delivering consistent revenue growth and generating strong cash flow from operations. We achieved excellent year-on-year revenue growth in the fourth quarter of 2004. We are particularly pleased to see that our top line grew by 9% quarter-on-quarter even though the fourth quarter normally tends to be weaker than the third quarter due to seasonality of the travel industry.

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Heading into 2005, we are confident that we will continue to grow at a healthy pace despite an anticipated seasonality effect in the first quarter, which is traditionally the slowest quarter of the year for business travel.”

Fourth Quarter and Full Year 2004 Financial Results

For the fourth quarter of 2004, Ctrip reported net revenues of RMB98.5 million (US$11.9 million), representing a 46% increase from the same period in 2003 and a 9% increase from the third quarter of 2004.

For the full year ended December 31, 2004, net revenues were RMB333.8 (US$40.3 million) compared to RMB173.1 million (US$20.9 million) in 2003, which were adversely affected by SARS.

Hotel reservation revenues totaled RMB78.1 million (US$9.4 million) in the fourth quarter of 2004, representing a 35% increase from the same period in 2003 and a 5% increase from the third quarter of 2004. The total number of hotel room nights booked was approximately 1.19 million for the fourth quarter of 2004, compared to approximately 880,000 room nights for the same period in 2003 and approximately 1.13 million room nights in the third quarter of 2004.

For the full year ended December 31, 2004, hotel reservation revenues were RMB276 million (US$33.4 million), an 80% increase from 2003. The hotel reservation revenues accounted for 78% of the total revenues in 2004, compared to 84% in 2003. The total number of hotel room nights booked was approximately 4.2 million in 2004, compared to approximately 2.4 million room nights booked in 2003.

Air ticket booking revenues for the fourth quarter of 2004 were RMB21.7 million (US$2.6 million), representing a 151% increase from the same period in 2003 and a 23% increase from the previous quarter of 2004. The total number of air tickets sold in the fourth quarter of 2004 was approximately 540,000, compared to approximately 240,000 for the same period in 2003 and approximately 490,000 air tickets sold in the third quarter of 2004.

For the full year ended December 31, 2004, air ticket booking revenues were RMB63.0 million (US$7.6 million), a 210% increase from 2003. The air ticket booking revenues accounted for 18% of the total revenues in 2004, compared to 11% in 2003. The total number of air tickets sold was approximately 1.7 million in 2004, compared to approximately 610,000 in 2003.

Packaged tour revenues for the fourth quarter of 2004 were RMB3.4 million (US$412,090), up 12% from the same period in 2003 and up 15% from the previous quarter of 2004.

For the full year ended December 31, 2004, packaged tour revenues were RMB10.5 million (US$1.3 million), a 119% increase from 2003. Packaged tour revenues remained at 3% of the total revenues from 2003 to 2004.

Gross margin was 84% in the fourth quarter of 2004, compared to 83% for the same period in 2003. Gross margin decreased from 86% in the third quarter of 2004, largely

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due to higher cost of services associated with year-end discretionary bonuses as determined in the fourth quarter of 2004. For the full year, the gross margin remained stable at 85% in 2004.

Operating expenses for the fourth quarter of 2004 were RMB50.1 million (US$6.0 million), an increase of 47% from the same period in 2003. The operating expenses increased by 34% from the previous quarter in 2004, partly due to the year-end discretionary bonuses as determined in the fourth quarter of 2004 and increase in professional service fees.

For the full year ended December 31, 2004, operating expenses were RMB149.7 million (US$18.1 million), a 67% increase from 2003.

Operating income for the fourth quarter of 2004 was RMB33.0 million (US$4.0 million), an increase of 49% from the same period in 2003. It decreased by 19% from the third quarter of 2004 due to higher operating expenses incurred in the fourth quarter of 2004.

For the full year ended December 31, 2004, operating income was RMB135.7 million (US$16.4 million), a 134% increase from RMB58.1 million in 2003.

Operating margin remained at 33% in the fourth quarter of 2004, compared to the same period in 2003. Operating margin decreased from 45% in the third quarter of 2004, partly due to higher operating expenses associated with year-end discretionary bonuses as determined in the fourth quarter and increase in professional service fees. For the full year, operating margin was 41% in 2004, up significantly from 34% in 2003.

Net income for the fourth quarter was RMB41.6 million (US$5.0 million), representing an increase of 69% from the same period in 2003 and 9% from the previous quarter of 2004. For the fourth quarter, the diluted earnings per ADS were RMB2.60 (US$0.31) and per ordinary share were RMB1.30 (US$0.16), respectively.

For the full year ended December 31, 2004, net income was RMB133.1 million (US$16.1 million), representing a 147% increase from 2003. For the full year, the diluted earnings per ADS were RMB8.46 (US$1.02) and per ordinary share were RMB4.23 (US$0.51), respectively.

Net margin was 42% in the fourth quarter of 2004, up significantly from 37% in the same period in 2003. Net margin remained flat against the previous quarter of 2004, as the lower operating income was partly offset by the preferential tax treatment for a subsidiary in Shanghai in November 2004. Net margin was 40% for the full year 2004, up significantly from 31% in 2003.

Ctrip Travel Information Technology (Shanghai) Co., Ltd (“Ctrip Travel Information”), one of Ctrip’s wholly-owned subsidiaries, historically enjoyed a preferential income tax rate of 15% as it is registered in Pudong New District, Shanghai. During the fourth quarter of 2004, Ctrip Travel Information obtained approval from the relevant tax bureau for full exemption of income tax for 2004 and a 50% reduction of the income tax statutory rate for the period from 2005 to 2007.

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Accordingly, income tax previously paid for 2004 at the 15% rate was refunded and the amount has been reflected as a tax benefit for the fourth quarter of 2004.

Cash flow from operating activities was RMB57.5 million (US$7.0 million) in the fourth quarter of 2004, compared to RMB36.5 million (US$4.4 million) for the same period in 2003. Cash flow from operating activities was RMB56.7 million (US$6.8 million) in the previous quarter of 2004.

For the full year ended December 31, 2004, cash flow from operating activities was RMB161.5 million (US$19.5 million), compared to RMB74.1 million in 2003. As of December 31, 2004, the cash balance was RMB615.9 million (US$74.4 million), compared to RMB472 million (US$57.0 million) as of December 31, 2003.

Business Outlook

For the first quarter of 2005, the company expects healthy year-on-year revenue growth of 30-40%. Net income is expected to achieve a similar level of growth compared to the first quarter of 2004. The first quarter of each year is generally the most sluggish for business travel in China primarily as a result of the Chinese New Year Holidays, therefore the company expects revenues and net income in the first quarter of 2005 to decrease from the fourth quarter of 2004. However, the company looks forward to continuing its strong growth in 2005.

Conference Call

Ctrip’s management team will host a conference call at 8:00AM Eastern Time on February 22, 2005 (or 9:00PM on February 22, 2005 in the Shanghai/HK time zone) following the announcement.

The conference call will be available on Webcast live and replay at: http://english.ctrip.com/Public/IR.asp?ID=32. 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 +1-800-265-0241, International dial-in number +1-617-847-8704; Passcode 33156942.

A replay of the call will be available for 72 hours 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 84049912.

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,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the Business Outlook section and quotations from management in this press release, as well as Ctrip’s strategic and operational plans, contain forward-looking statements. Ctrip may also

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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, Ctrip’s historical losses, its limited operating history, declines or disruptions in the travel industry, the recurrence of SARS, Ctrip’s reliance on the relationships with hotel suppliers and airline ticket suppliers, fluctuations in quarterly operating results, failure of competing against new and existing competitors, and other risks outlined in Ctrip’s filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1, as amended. Ctrip does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About Ctrip.com International, Ltd.

Ctrip.com International, Ltd. is a leading consolidator of hotel accommodations and airline tickets 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 became a publicly traded company in December of 2003. Ctrip’s American Depositary Shares, or ADSs, each of which represents two ordinary shares of Ctrip, are currently traded on the Nasdaq National Market.

For further information

Yin Yin

Ctrip.com International, Ltd.

Tel: (852) 2169 0915/0912

Email: yinyin@ctrip.com

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Ctrip.com International, Ltd.

Consolidated Balance Sheets

	December 31, 2003 RMB — (audited)		December 31, 2004 RMB — (unaudited)		December 31, 2004 USD — (unaudited) (Note 1)
ASSETS
Current assets:
Cash	471,968,850		615,875,363		74,412,537
Accounts receivable	28,939,700		35,418,477		4,279,403
Due from related parties	611,640		59,252		7,159
Prepayments and other current assets	7,130,947		18,503,778		2,235,701
Deferred tax assets, current	541,300		1,009,403		121,960
Total current assets	509,192,437		670,866,273		81,056,760
Long-term loans to related parties	2,310,000		500,000		60,412
Long-term deposits	11,192,277		26,715,547		3,227,880
Property, equipment and software	23,279,247		31,897,651		3,854,002
Goodwill	9,515,849		9,515,849		1,149,743
Other intangible assets	1,715,253		1,222,353		147,690
Total assets	557,205,063		740,717,673		89,496,487
LIABILITIES
Current liabilities:
Accounts payable	14,694,057		30,150,303		3,642,881
Due to a related party	4,018,284		3,378,980		408,262
Salary and welfare payable	9,799,711		14,110,730		1,704,915
Taxes payable	9,270,024		23,421,257		2,829,850
Advances from customers	3,839,843		6,526,639		788,575
Provisions for customer reward program	4,708,670		10,462,103		1,264,073
Dividend payable	—		39,937,887		4,825,456
Other payables and accruals	17,586,657		10,755,790		1,299,558
Total current liabilities	63,917,246		138,743,689		16,763,570
Minority interests	563,655		602,616		72,810
Commitments and contingencies	—		—		—
Shareholders’ equity
Share capital	2,498,484		2,613,542		315,779
Additional paid-in capital	498,566,368		511,367,287		61,785,451
Statutory reserves	5,531,309		19,256,862		2,326,691
Deferred share-based compensation	(4,995,407	)	(2,258,908	)	(272,930	)
Cumulative translation adjustments	1,575,733		1,382,060		166,986
Accumulated deficit/Retained Earnings	(10,452,325	)	69,010,525		8,338,129
Total shareholders’ equity	492,724,162		601,371,368		72,660,106
Total liabilities and shareholders’ equity	557,205,063		740,717,673		89,496,487

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Ctrip.com International, Ltd.

Consolidated Statements of Operations and Comprehensive Income

	Quarter Ended December 31, 2003 RMB — (unaudited)		Quarter Ended September 30, 2004 RMB — (unaudited)		Quarter Ended December 31, 2004 RMB — (unaudited)		Quarter Ended December 31, 2004 USD — (unaudited) (Note 1)
Revenues:
Hotel reservation	57,860,634		74,639,591		78,137,963		9,440,943
Air-ticketing	8,675,037		17,702,533		21,741,209		2,626,860
Packaged tour	3,053,684		2,968,102		3,410,665		412,090
Others	1,763,383		865,978		1,400,336		169,194
Total revenues	71,352,738		96,176,204		104,690,173		12,649,087
Less: business tax and related surcharges	(3,923,021	)	(5,702,482	)	(6,190,017	)	(747,903	)
Net revenues	67,429,717		90,473,722		98,500,156		11,901,184
Cost of services	(11,206,893	)	(12,266,114	)	(15,467,054	)	(1,868,792	)
Gross profit	56,222,824		78,207,608		83,033,102		10,032,392
Operating expenses:
Product development	(7,429,255	)	(9,571,991	)	(13,005,322	)	(1,571,355	)
Sales and marketing	(19,169,772	)	(18,322,096	)	(23,053,971	)	(2,785,473	)
General and administrative	(6,758,199	)	(8,710,727	)	(13,578,764	)	(1,640,641	)
Share-based compensation	(552,566	)	(528,695	)	(299,546	)	(36,192	)
Amortization of other intangible assets	(123,225	)	(123,225	)	(123,225	)	(14,889	)
Total operating expenses	(34,033,017	)	(37,256,734	)	(50,060,828	)	(6,048,550	)
Income from operations	22,189,807		40,950,874		32,972,274		3,983,842
Interest income	157,980		1,519,268		2,206,163		266,557
Other income (expense)	1,618,497		3,088,987		1,187,929		143,530
Income before income tax expense, minority interest and share of loss of joint venture companies	23,966,284		45,559,129		36,366,366		4,393,929
Income tax expense	716,887		(7,200,375	)	5,263,622		635,972
Minority interests	(61,956	)	(12,940	)	(13,047	)	(1,576	)
Net income	24,621,215		38,345,814		41,616,941		5,028,325
Profit allocated to preferred shares	(11,811,211	)
Net income attributable to ordinary shareholders	12,810,004		38,345,814		41,616,941		5,028,325
Other comprehensive income:
Translation adjustments	(1,387,875	)	(35,381	)	1,867,146		225,596
Comprehensive income	11,422,129		38,310,433		43,484,087		5,253,921
Earnings per ordinary share (Note 2)
- Basic	0.91		1.25		1.33		0.16
- Diluted	0.80		1.20		1.30		0.16
Earnings per ADS (Note 2)
- Basic	1.82		2.50		2.67		0.32
- Diluted	1.60		2.40		2.60		0.31
Weighted average ordinary shares outstanding
- Basic	14,064,565		30,733,186		31,190,543		31,190,543
- Diluted	15,979,518		32,083,140		32,065,061		32,065,061

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Ctrip.com International, Ltd.

Consolidated Statements of Operations and Comprehensive Income

	2003 RMB — (audited)		2004 RMB — (unaudited)		2004 USD — (unaudited) (Note 1)
Revenues:
Hotel reservation	153,388,686		276,042,944		33,352,618
Air-ticketing	20,322,986		63,005,651		7,612,596
Packaged tour	4,788,727		10,479,780		1,266,209
Others	4,178,419		4,500,698		543,792
Total revenues	182,678,818		354,029,073		42,775,215
Less: business tax and related surcharges	(9,532,290	)	(20,208,996	)	(2,441,732	)
Net revenues	173,146,528		333,820,077		40,333,483
Cost of services	(25,654,057	)	(48,475,283	)	(5,856,979	)
Gross profit	147,492,471		285,344,794		34,476,504
Operating expenses:
Product development	(20,683,821	)	(37,959,208	)	(4,586,384	)
Sales and marketing	(47,571,050	)	(72,863,325	)	(8,803,640	)
General and administrative	(19,190,803	)	(36,401,461	)	(4,398,171	)
Share-based compensation	(1,583,409	)	(1,958,022	)	(236,576	)
Amortization of other intangible assets	(388,156	)	(492,900	)	(59,554	)
Total operating expenses	(89,417,239	)	(149,674,916	)	(18,084,325	)
					—
Income from operations	58,075,232		135,669,878		16,392,179
Invest income
Interest income	400,557		5,542,520		669,670
Other income (expense)	5,093,203		4,469,974		540,080
Income before income tax expense, minority	63,568,992		145,682,372		17,601,929
Share of loss of joint venture companies	573,423		—		—
Income tax expense	(10,249,404	)	(12,517,121	)	(1,512,369	)
Minority interests	(79,496	)	(38,961	)	(4,707	)
Net income	53,813,515		133,126,290		16,084,853
Accretion for Series B Redeemable Convertible Preferred Shares	(12,365,534	)	—		—
Deemed dividends to holders of Series A and Series B Preferred Shares for spin-off of joint venture company	(2,829,064	)	—		—
Deemed dividends upon repurchase of Preferred Shares	(35,336,150	)	—		—
Net income attributable to ordinary share	3,282,767		133,126,290		16,084,853
Other comprehensive income:
Translation adjustments	1,474,545		193,673		23,400
Comprehensive income	55,288,060		133,319,963		16,108,253
Earnings per ordinary share (Note 2)
- Basic	0.13		4.33		0.52
- Diluted	0.11		4.23		0.51
Earnings per ADS (Note 2)
- Basic	0.26		8.66		1.05
- Diluted	0.22		8.46		1.02
Weighted average ordinary shares outstanding
- Basic	10,605,957		30,712,466		30,712,466
- Diluted	12,312,207		31,504,702		31,504,702

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Note 1: The conversion of Renminbi (RMB) into U.S. dollars (USD) is based on the noon buying rate of USD1.00=RMB8.2765 on December 31, 2004 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: In March 2004, the Emerging Issues Task Force reached a consensus on Issue No. 03-06 - “Participating Securities and the Two-Class Method under FASB Statement No. 128” (“EITF No. 03-06”). EITF No. 03-06 provides guidance regarding the computation of earnings (loss) per share by companies that have issued securities other than common share that entitle the holder to participate in dividends and earnings (loss) of the company. In addition, EITF No. 03-06 provides guidance on what constitutes a participating security and requires the application of the two-class method in determining earnings (loss) per share. EITF No. 03-06 is effective for the quarter ended June 30, 2004. EITF No. 03-06 requires prior period earnings (loss) per share amounts to be restated to conform to the consensus to ensure comparability on a period-over-period basis. Accordingly, EITF No. 03-06 has been applied to all periods presented and prior period earnings per share have been adjusted when necessary.