Dangdang Announces Unaudited Fourth Quarter and Fiscal Year 2014 Results

Net income in Q4 increased 51% year-over-year to RMB32.8 million

Mobile orders accounted for 31% of total orders in Q4

BEIJING, March 31, 2015 /PRNewswire/ — E-Commerce China Dangdang Inc. ("Dangdang" or the "Company") (NYSE: DANG), a leading business-to-consumer e-commerce company in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2014.

Fourth Quarter and Fiscal Year 2014 Highlights

  • Net Income for the fourth quarter of 2014 was RMB32.8 million ($5.3 million), or 1.3% of total net revenues, representing an increase of 51.4% from RMB21.7 million in the fourth quarter of 2013, or 1.1% of total net revenues.
  • Total net revenues for the fourth quarter of 2014 were RMB2,505.0 million ($403.7 million), a 27.0% increase from the corresponding period in 2013. Gross Merchandise Value ("GMV") from the marketplace in the fourth quarter of 2014 was RMB2,247.1 million ($362.2 million), a 61.2% increase from the corresponding period in 2013. The combination of product revenue from principal business and GMV from the marketplace reached RMB4,662.3 million ($751.4 million) and grew 42.7% year-over-year.
  • Dangdang had approximately 9.8 million active customers including approximately 3.7 million new customers, in the fourth quarter of 2014, representing increases of 10% and 20%, respectively, from the corresponding period in 2013. Total orders for the fourth quarter of 2014 were approximately 20.4 million, a 13% increase from the corresponding period in 2013.
  • Mobile orders accounted for 31% of total orders for the fourth quarter of 2014, compared to 13% for the corresponding period in 2013.
  • Total net revenues in fiscal year 2014 were RMB7,957.0 million ($1,282.4 million), a 25.8% increase from 2013.
  • Net income in fiscal year 2014 was RMB88.1 million ($14.2 million), compared to a net loss of RMB142.9 million in 2013.
  • GMV from the marketplace in fiscal year 2014 was RMB6,608.3 million ($1,065.1 million), a 76.9% increase from 2013.

"2014 was a year of great progress on all fronts. We grew the top line by a healthy rate and posted a full year of profitability. Our principal business is thriving and the third party marketplace continues to perform well. We strengthened our position as the dominant player in China’s books and media market while improving our gross margin. We have a fresh new brand image and slogan ‘dare to do, and dare to be’ which reflects our commitment to offering authentic, high-quality products to earn our customers’ trust and recognition. We continue to enjoy strong growth momentum in Mobile Dangdang," said Ms. Peggy Yu Yu, Executive Chairwoman of Dangdang.

"From incurring a loss of RMB142.9 million in 2013 to realizing a profit of RMB88.1 million in 2014, the RMB231.0 million turnaround was remarkable especially given our heavy spending in marketing and our investment in digital books and mobile technology. In 2015, we will continue to develop our principal and marketplace businesses and with our significant market share in China’s book industry, we intend to push aggressively in digital content and ebooks to increase customer stickiness. We will also invest heavily in mobile technology and mobile marketing to ride the wave of customer migration into the mobile world. With five consecutive quarters of profitability, we are confident in our ability to deliver strong results," Ms. Peggy Yu Yu concluded.

Fourth Quarter 2014 Results

Dangdang’s total net revenues in the fourth quarter of 2014 were RMB2,505.0 million ($403.7 million), a 27.0% increase from the corresponding period in 2013.

Media product revenue for the fourth quarter of 2014 was RMB1,455.2 million ($234.5 million), representing a 21.8% increase from the corresponding period in 2013. General merchandise revenue for the fourth quarter of 2014 was RMB960.0 million ($154.7 million), representing a 41.7% increase from the corresponding period in 2013. Other revenue including revenue from third-party merchants for the fourth quarter of 2014 was RMB89.7 million ($14.5 million), representing a 9.7% decrease from the corresponding period in 2013, primarily due to a decline in shipping revenue from third-party merchants.

Dangdang had approximately 9.8 million active customers, including approximately 3.7 million new customers, in the fourth quarter of 2014, representing increases of 10% and 20%, respectively, from the corresponding period in 2013. Total orders for the fourth quarter of 2014 were approximately 20.4 million, a 13% increase from the corresponding period in 2013.

Gross margin in the fourth quarter of 2014 was 17.1%, compared to 17.6% in the fourth quarter of 2013 and 18.9% in the third quarter of 2014. The year-over-year and quarter-over-quarter decreases in gross margin were due to a larger contribution of general merchandise sales as a percentage of total net revenues and a decline in shipping revenue from third-party merchants.

Fulfillment expenses which include warehousing, shipping and customer service expenses, were RMB219.7 million ($35.4 million), representing 8.8% of total net revenues, compared to 9.4% in the corresponding period in 2013 and 10.1% in the third quarter of 2014. The year-over-year and quarter-over-quarter decreases in fulfillment expenses as a percentage of total net revenues were primarily due to larger order size.

Marketing expenses were RMB119.2 million ($19.2 million), representing 4.8% of total net revenues, compared to 4.2% in the corresponding period in 2013 and 5.5% in the third quarter of 2014. The year-over-year increase in marketing expenses as a percentage of total net revenues reflected increased investment in advertising and marketing programs to build awareness of Dangdang’s newer destination categories. The quarter-over-quarter decrease as a percentage of total net revenues was primarily due to significant investments to promote mobile Dangdang and online and offline marketing programs to build awareness of Dangdang’s newer destination categories in the third quarter of 2014.

Technology and content expenses were RMB64.0 million ($10.3 million), representing 2.6% of total net revenues, compared to 2.0% in thecorresponding period in 2013 and 2.8% in the third quarter of 2014. The year-over-year increase in technology and content expenses as a percentage of total net revenues was primarily due to increased headcount to support the expansion of mobile Dangdang. The quarter-over-quarter decrease as a percentage of total net revenues was primarily due to operating leverage.

General and administrative expenses were RMB46.5 million ($7.5 million), representing 1.9% of total net revenues, compared to 2.3% in the corresponding period in 2013 and 2.0% in the third quarter of 2014. The year-over-year and quarter-over-quarter decreases in general and administrative expenses as a percentage of total net revenues were primarily due to larger scale and improved management efficiency.

Government grants and value-added tax refunds were RMB43.1 million ($6.9 million) representing 1.7% of total net revenues, compared to 0.6% in the corresponding period in 2013 and 2.2% in the third quarter of 2014. The year-over-year increase as a percentage of total net revenues was primarily due to refunds of value added tax on books that was paid in 2013.

Share-based compensation expenses, which were allocated to related expense line items, were RMB2.2 million ($0.4 million) in the fourth quarter of 2014, compared to RMB3.2 million in the corresponding period in 2013,representing a 30.7% decrease.

Dangdang recorded operating income of RMB22.5 million ($3.6 million) in the fourth quarter of 2014, representing a 217.0% increase from RMB7.1 million in the corresponding period in 2013.

Operating income excluding share-based compensation expenses (non-GAAP) was RMB24.7 million ($4.0 million), representing a 140.2% increase from RMB10.3 million in the corresponding period in 2013.

Net income was RMB32.8 million ($5.3 million), representing a 51.4% increase from RMB21.7 million in the corresponding period in 2013.

Net income excluding share-based compensation expenses (non-GAAP) was RMB35.0 million ($5.6 million), representing a 40.9% increase from RMB24.9 million in the corresponding period in 2013.

Net margin was 1.3%, compared to 1.1% in the corresponding period in 2013. Non-GAAP net margin was 1.4%, compared to a non-GAAP net margin of 1.3% in the corresponding period in 2013.

Diluted earnings per ADS was RMB0.39 ($0.06), compared to RMB0.26 in the corresponding period in 2013.

Non-GAAP diluted earnings per ADS was RMB0.42 ($0.07), compared to RMB0.30 in the corresponding period in 2013.

As of December 31, 2014, Dangdang had cash and cash equivalents, restricted cash, short-term time deposits and held-to-maturity investments of RMB1,399.0 million ($225.5 million), compared to RMB1,213.5 million as of December 31, 2013. As of December 31, 2014, Dangdang had no bank loans.

Capital expenditures for the fourth quarter of 2014 were RMB26.7 million ($4.3 million).

Fiscal Year 2014 Results

Total net revenues in fiscal year 2014 were RMB7,957.0 million ($1,282.4 million), representing a 25.8% increase from 2013.

Media product revenue in 2014 was RMB5,036.0 million ($811.7 million), representing a 24.3% increase from 2013. General merchandise revenue in 2014 was RMB2,599.4 million ($418.9 million), representing a 30.3% increase from 2013. Other revenue including revenues from third-party merchants in 2014 was RMB321.5 million ($51.8 million), representing a 15.1% increase from 2013.

Dangdang had about 24.3 million active customers and 13.3 million new customers in 2014, representing 16% and 24% increases from 2013, respectively. Total orders in 2014 were approximately 72.1 million, a 13% increase from 2013.

Gross margin in the fiscal year 2014 was 18.5%, compared to 17.4% in 2013 due to strong gross margin contribution from books and media products, and the increase in other revenue, representing the sustained scaling of the marketplace.

Fulfillment expenses which include warehousing, shipping and customer service expenses, were RMB775.5 million ($125.0 million), representing 9.7% of total net revenues, compared to 11.5% in 2013. The decrease as a percentage of total net revenues was primarily due to larger order size.

Marketing expenses were RMB374.2 million ($60.3 million), representing 4.7% of total net revenues, compared to 4.1% in 2013. The increase as a percentage of total net revenues was primarily due to increased investment in advertising and marketing programs to build awareness of Dangdang’s newer destination categories and to promote mobile Dangdang.

Technology and content expenses were RMB208.2 million ($33.6 million), representing 2.6% of total net revenues, compared to 2.8% in 2013. The decrease as a percentage of total net revenues was primarily due to operating leverage.

General and administrative expenses were RMB165.3 million ($26.6 million), representing 2.1% of total net revenues, compared to 2.4% in 2013. The decrease as a percentage of total net revenues was primarily due to larger scale and improved management efficiency.

Government grants and value-added tax refunds were RMB113.8 million ($18.3 million), representing 1.4% of total net revenues, compared to 0.3% in 2013. The increase as a percentage of total net revenues was primarily due to refunds of value added tax on books that were paid in 2013.

Share-based compensation expenses, which were allocated to the related expense line items, were RMB10.4 million ($1.7 million) in 2014, down 6.2% from RMB11.1 million in 2013.

Dangdang recorded operating income of RMB60.3 million ($9.7 million) in the fiscal year 2014, compared to an operating loss of RMB195.5 million in 2013.

Operating income excluding share-based compensation expenses (non-GAAP) was RMB70.7 million ($11.4 million) in the fiscal year 2014, compared to an operating loss excluding share-based compensation expenses (non-GAAP) of RMB184.4 million in 2013.

Net income was RMB88.1 million ($14.2 million), compared to a net loss of RMB142.9 million in 2013.

Net income excluding share-based compensation expenses (non-GAAP) was RMB98.5 million ($15.9 million), compared to a net loss excluding share-based compensation expenses (non-GAAP) of RMB131.8 million in 2013.

Net margin was 1.1%, compared to a net margin of negative 2.3% in 2013. Non-GAAP net margin was 1.2%, compared to a non-GAAP net margin of negative 2.1% in 2013.

Diluted earnings per ADS was RMB1.06 ($0.17), compared to a diluted loss per ADS of RMB1.78 in the corresponding period in 2013.

Non-GAAP diluted earnings per ADS was RMB1.18 ($0.19), compared to non-GAAP diluted loss per ADS of RMB1.64 in 2013.

Full year capital expenditures were RMB103.8 million ($16.7 million).

Outlook for First Quarter 2015

Dangdang expects total net revenues in the first quarter of 2015 to be approximately RMB2.2 billion, representing year-over-year growth of approximately 28%. The Company also expects GMV from its marketplace to grow at a rate of 49% year-over-year to approximately RMB1.77 billion in the first quarter of 2015. This forecast reflects Dangdang’s current and preliminary view, which is subject to change.

Adjustment of Previously Announced Unaudited Financial Results

In connection with the preparation of the unaudited financial information for the year ended December 31, 2014, the Company identified that certain transactions recorded in the three-month periods ended June 30, 2014 and September 30, 2014 did not meet all revenue recognition criteria. Accordingly, the Company’s previously announced unaudited net revenues and cost of revenues for the three-month periods ended June 30, 2014 and September 30, 2014 have been adjusted downward by RMB179.1 million and RMB68.3 million, respectively. These adjustments have no impact to the gross profit or net income for such periods. These adjustments have been reflected in the Company’s unaudited financial results for fiscal year 2014 reported in this release. The adjusted unaudited consolidated statements of comprehensive income (loss) for the three-month periods ended June 30, 2014 and September 30, 2014 appear in the tables at the end of this release, which replace the previously announced unaudited consolidated statements of comprehensive income (loss) for the same periods in their entirety.

Conference Call Information

Dangdang’s management will host an earnings conference call on March 31, 2015 at 8:00 AM U.S. Eastern Time (or 8:00 PM on March 31, 2015 Beijing/Hong Kong time).

Dial-in details for the earnings conference call are as follows:

US: +1-845-675-0437
China, Domestic: +400-620-8038
Hong Kong: +852-3018-6771
International: +65-6723-9381

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is "Dangdang earnings call."

A replay of the conference call may be accessed by phone at the following number through April 8, 2015:

International: +61-2-8199-0299
Conference ID: 98091668

A live and archived webcast of this conference call will be available at http://ir.dangdang.com through March 31, 2016.

About Dangdang

E-Commerce China Dangdang Inc. is a leading business-to-consumer e-commerce company in China. On its website dangdang.com and through mobile Dangdang, the Company offers books and media products as well as selected general merchandise products including fashion and apparel, baby, children and maternity and home and lifestyle products, among others. It also operates the dangdang.com marketplace program, which allows third-party merchants to sell their products alongside products sourced by the Company. Dangdang is transforming itself into an integrated online shopping experience with prominent destination categories. Dangdang’s nationwide fulfilment and delivery capabilities, high-quality customer service support and scalable technology infrastructure enable it to provide a compelling online shopping experience to customers. For more information, please visit ir.dangdang.com.

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," "confident" and similar statements. Among other things, the outlook for the first quarter 2015 and quotations from management in this announcement, as well as Dangdang’s strategic and operational plans, contain forward-looking statements. Dangdang may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, 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 Dangdang’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Dangdang’s growth strategies; its future business development, results of operations and financial condition; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; trends and competition in China’s business-to-consumer e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese business-to-consumer e-commerce market; Chinese governmental policies relating to Dangdang’s industry and general economic conditions in China. Further information regarding these and other risks is included in Dangdang’s annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Dangdang does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of this press release, and Dangdang undertakes no duty to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Dangdang’s consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), we use the following measures as non-GAAP financial measures: non-GAAP operating (loss) income, non-GAAP operating margin, non-GAAP net(loss) income , non-GAAP net margin, non-GAAP diluted (loss) earnings per ADS and adjusted EBITDA (collectively referred to as the "Non-GAAP Financial Measures" thereafter). We define non-GAAP operating (loss) income, non-GAAP operating margin, non-GAAP net (loss) income, non-GAAP net margin and non-GAAP diluted (loss) earnings per ADS as operating (loss) income, operating margin, net (loss) income, net margin and diluted (loss) earnings per ADS excluding the impact of share-based compensation expenses respectively; we define adjusted EBITDA as (loss) income before interest, taxes, depreciation, amortization, other non-operating income, and share-based compensation expenses. We review the Non-GAAP Financial Measures together with net (loss) income to obtain a better understanding of our operating performance. We believe that these Non-GAAP Financial Measures provide meaningful supplemental information regarding the Company’s performance and liquidity. However, a limitation of using the Non-GAAP Financial Measures as an analytical tool is that they do not include all items that impact operating (loss) income, operating margin, net (loss) income, and net margin or diluted (loss) earnings per ADS for the period. In addition, because they are not calculated in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider the Non-GAAP Financial Measures in isolation from or as an alternative to operating (loss) income, operating margin, net (loss) income, and net margin or diluted (loss) earnings per ADS prepared in accordance with U.S. GAAP.

For information on the reconciliation between the Non-GAAP Financial Measures and the GAAP financial measures presented in accordance with U.S. GAAP for the periods presented, please see the tables captioned "Non-GAAP operating (loss) income, operating margin and net (loss) income" and "Adjusted EBITDA" at the end of this release.

Investor Contacts:

Tony Hung
Senior Investor Relations Director
E-Commerce China Dangdang Inc.
Phone: +86-10-5799-2301
E-mail: ir@dangdang.com

Sophia Zhou
Investor Relations Director
E-Commerce China Dangdang Inc.
Phone: +86-10-5799-2306
E-mail: ir@dangdang.com

Elaine Ketchmere, CFA
Compass Investor Relations
Phone: +1-310-528-3031
E-mail: eketchmere@compass-ir.com

– Financial Tables Follow –

E-Commerce China Dangdang Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share related data)

As of December 31, 2013

As of December 31, 2014

RMB

RMB

US$

(Audited)

(Unaudited)

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

353,273

350,946

56,562

Restricted cash

6,964

23,726

3,824

Time deposits with original maturities

853,222

674,363

108,688

exceeding three months

Held-to-maturity investments

350,000

56,410

Inventories

1,760,904

2,201,170

354,764

Accounts receivable, net

37,446

28,763

4,636

Prepaid expenses and other current assets

328,887

543,180

87,545

Amounts due from related parties

2,691

375

60

Total current assets

3,343,387

4,172,523

672,489

Fixed assets, net

241,805

252,966

40,771

Intangible assets, net

43,316

42,423

6,837

Prepaid expenses and deposits

5,949

14,589

2,351

Total assets

3,634,457

4,482,501

722,448

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

1,970,651

2,446,848

394,360

Deferred revenue

407,794

627,122

101,074

Accrued expenses and other current liabilities

650,413

704,483

113,542

Amounts due to related parties

3,182

2,237

361

Total current liabilities

3,032,040

3,780,690

609,337

Non-current liabilities

32,724

24,227

3,905

Total liabilities

3,064,764

3,804,917

613,242

Shareholders’ equity:

Class A common shares (par value of

US$0.0001 per share; 686,505,790 shares

authorized; 270,466,820 and 272,092,590

shares issued and outstanding as of

December 31, 2013 and December 31, 2014,

respectively)

201

201

32

Class B common shares (par value of

US$0.0001 per share; 313,494,210 shares

authorized; 131,876,660 shares issued and

outstanding as of December 31, 2013 and

December 31, 2014)

103

103

17

Additional paid-in capital

1,871,095

1,885,878

303,948

Accumulated other comprehensive loss

(134,939)

(129,948)

(20,944)

Accumulated deficit

(1,166,767)

(1,078,650)

(173,847)

Total shareholders’ equity

569,693

677,584

109,206

Total liabilities and shareholders’ equity

3,634,457

4,482,501

722,448

E-Commerce China Dangdang Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except share related data)

Three Months Ended

December 31,
2013

December 31,
2014

December 31,
2014

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

Net revenues

Product revenue

1,872,577

2,415,277

389,272

Media

1,195,121

1,455,245

234,543

General merchandise

677,456

960,032

154,729

Other revenue

99,323

89,714

14,459

Total net revenues

1,971,900

2,504,991

403,731

Cost of revenues

(1,623,956)

(2,076,168)

(334,618)

Gross profit

347,944

428,823

69,113

Operating expenses:

Fulfillment

(185,348)

(219,690)

(35,408)

Marketing

(82,807)

(119,176)

(19,208)

Technology and content

(39,241)

(63,993)

(10,314)

General and administrative

(45,493)

(46,506)

(7,495)

Government grants and value-added tax refunds

12,051

43,065

6,941

Total operating expenses, net

(340,838)

(406,300)

(65,484)

Income from operations

7,106

22,523

3,630

Interest income

9,598

12,764

2,057

Interest expense

(240)

Other income (expenses), net

5,196

(2,488)

(401)

Income before income taxes

21,660

32,799

5,286

Income tax expenses

Net income

21,660

32,799

5,286

Net income attributable to common
shareholders

21,660

32,799

5,286

Income per common share:

– Basic

0.05

0.08

0.01

– Diluted

0.05

0.08

0.01

Income per ADS:

– Basic

0.27

0.41

0.07

– Diluted

0.26

0.39

0.06

Income allocated to common shareholders
used in income per share/ADS calculation:

– Basic

21,660

32,799

5,286

– Diluted

21,660

32,799

5,286

Shares used in income per common share
computation:

Class A common shares:

– Basic

270,351,248

272,009,317

272,009,317

– Diluted

414,771,148

416,206,757

416,206,757

Class B common shares:

– Basic

131,876,660

131,876,660

131,876,660

– Diluted

131,876,660

131,876,660

131,876,660

ADSs used in income per ADS calculation:

– Basic

80,445,582

80,777,195

80,777,195

– Diluted

82,954,230

83,241,351

83,241,351

Other comprehensive loss

Foreign currency translation adjustment, net
of taxes

(11,940)

(7,810)

(1,259)

Comprehensive income attributable to
common shareholders

9,720

24,989

4,027

E-Commerce China Dangdang Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands, except share related data)

Twelve Months Ended

December 31,

December 31,

December 31,

2013

2014

2014

RMB

RMB

US$

(Audited)

(Unaudited)

(Unaudited)

Net revenues

Product revenue

6,045,573

7,635,450

1,230,611

Media

4,050,122

5,036,039

811,662

General merchandise

1,995,451

2,599,411

418,949

Other revenue

279,425

321,513

51,818

Total net revenues

6,324,998

7,956,963

1,282,429

Cost of revenues

(5,224,114)

(6,487,201)

(1,045,547)

Gross profit

1,100,884

1,469,762

236,882

Operating expenses:

Fulfillment

(727,683)

(775,534)

(124,993)

Marketing

(260,988)

(374,227)

(60,314)

Technology and content

(180,158)

(208,214)

(33,558)

General and administrative

(148,919)

(165,284)

(26,639)

Government grants and value-added tax refunds

21,392

113,781

18,338

Total operating expenses, net

(1,296,356)

(1,409,478)

(227,166)

(Loss) income from operations

(195,472)

60,284

9,716

Interest income

30,727

44,839

7,227

Interest expense

(6,042)

Other income (expenses), net

27,922

(17,006)

(2,741)

(Loss) income before income taxes

(142,865)

88,117

14,202

Income tax expenses

Net (loss) income

(142,865)

88,117

14,202

Net (loss) income attributable to common shareholders

(142,865)

88,117

14,202

(Loss) income per common share:

– Basic

(0.36)

0.22

0.04

– Diluted

(0.36)

0.21

0.03

(Loss) income per ADS:

– Basic

(1.78)

1.09

0.18

– Diluted

(1.78)

1.06

0.17

(Loss) income allocated to common

shareholders used in (loss) income per

share/ADS calculation:

– Basic

(142,865)

88,117

14,202

– Diluted

(142,865)

88,117

14,202

Shares used in (loss) income per common share computation:

Class A common shares:

– Basic

269,520,110

271,445,384

271,445,384

– Diluted

401,416,715

416,533,054

416,533,054

Class B common shares:

– Basic

131,896,605

131,876,660

131,876,660

– Diluted

131,896,605

131,876,660

131,876,660

ADSs used in (loss) income per ADS

calculation:

– Basic

80,283,343

80,664,409

80,664,409

– Diluted

80,283,343

83,306,611

83,306,611

Other comprehensive (loss) income

Foreign currency translation

(42,873)

4,991

804

adjustment, net of taxes

Comprehensive (loss) income

(185,738)

93,108

15,006

attributable to common shareholders

Share-based compensation

(In thousands)

Three Months Ended

December 31,

December 31,

December 31,

2013

2014

2014

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

Share-based compensation expenses included are as follows:

Operating expenses:

Fulfillment

457

573

93

Marketing

128

124

20

Technology and content

222

298

48

General and administrative

2,387

1,218

196

Total

3,194

2,213

357

Share-based compensation

(In thousands)

Twelve Months Ended

December 31,

December 31,

December 31,

2013

2014

2014

RMB

RMB

US$

(Audited)

(Unaudited)

(Unaudited)

Share-based compensation expenses included are as follows:

Operating expenses:

Fulfillment

1,755

2,126

343

Marketing

412

509

82

Technology and content

964

1,075

173

General and administrative

7,977

6,707

1,081

Total

11,108

10,417

1,679

(1) This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader.
Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.2046 to US$1.00, the noon buying rate on Dec 31,
2014 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.

(2) Each ADS represents five common shares of the Company.

Non-GAAP operating income, operating margin and net income

(In thousands)

Three Months Ended

December 31,

December 31,

December 31,

2013

2014

2014

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

Income from operations

7,106

22,523

3,630

Share-based compensation expenses

3,194

2,213

357

Non-GAAP operating income

10,300

24,736

3,987

Operating margin

0.4%

0.9%

0.9%

Share-based compensation expenses

0.1%

0.1%

0.1%

Non-GAAP operating margin

0.5%

1.0%

1.0%

Net income

21,660

32,799

5,286

Share-based compensation expenses

3,194

2,213

357

Non-GAAP net income

24,854

35,012

5,643

Non-GAAP operating (loss) income, operating margin and net (loss) income

(In thousands)

Twelve Months Ended

December 31,

December 31,

December 31,

2013

2014

2014

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

(Loss) income from operations

(195,472)

60,284

9,716

Share-based compensation expenses

11,108

10,417

1,679

Non-GAAP operating (loss) income

(184,364)

70,701

11,395

Operating margin

-3.1%

0.8%

0.8%

Share-based compensation expenses

0.2%

0.1%

0.1%

Non-GAAP operating margin

-2.9%

0.9%

0.9%

Net (loss) income

(142,865)

88,117

14,202

Share-based compensation expenses

11,108

10,417

1,679

Non-GAAP net (loss) income

(131,757)

98,534

15,881

Adjusted EBITDA

(In thousands)

Three Months Ended

December 31,

December 31,

December 31,

2013

2014

2014

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

Income from operations

7,106

22,523

3,630

Add back:

Depreciation and amortization

12,112

14,249

2,297

Share-based compensation expenses

3,194

2,213

357

Adjusted EBITDA

22,412

38,985

6,284

Adjusted EBITDA

(In thousands)

Twelve Months Ended

December 31,

December 31,

December 31,

2013

2014

2014

RMB

RMB

US$

(Unaudited)

(Unaudited)

(Unaudited)

(Loss) income from operations

(195,472)

60,284

9,716

Add back:

Depreciation and amortization

48,929

54,350

8,760

Share-based compensation expenses

11,108

10,417

1,679

Adjusted EBITDA

(135,435)

125,051

20,155

E-Commerce China Dangdang Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except share related data)

Three Months Ended

June 30,
2014

September 30,
2014

RMB

RMB

(Unaudited)

(Unaudited)

Net revenues

Product revenue*

1,701,177

1,850,662

Media*

1,176,871

1,252,250

General merchandise

524,306

598,412

Other revenue

80,477

83,877

Total net revenues*

1,781,654

1,934,539

Cost of revenues*

(1,423,084)

(1,568,827)

Gross profit

358,570

365,712

Operating expenses:

Fulfillment

(189,779)

(195,290)

Marketing

(81,543)

(106,625)

Technology and content

(47,040)

(53,619)

General and administrative

(41,594)

(39,549)

Government grants and value added tax refunds

15,980

42,468

Total operating expenses, net

(343,976)

(352,615)

Income from operations

14,594

13,097

Interest income

10,426

13,645

Interest expense

Other income, net

3,801

(2,200)

Income before income taxes

28,821

24,542

Income tax expense

Net income

28,821

24,542

Net income attributable to common shareholders

28,821

24,542

Income per common share:

– Basic

0.07

0.06

– Diluted

0.07

0.06

Income per ADS:

– Basic

0.36

0.30

– Diluted

0.35

0.29

Income allocated to common shareholders used in income
per share/ADS calculation:

– Basic

28,821

24,542

– Diluted

28,821

24,542

Shares used in income per common share computation:

Class A common shares:

– Basic

271,309,522

271,729,455

– Diluted

416,177,972

417,283,285

Class B common shares:

– Basic

131,876,660

131,876,660

– Diluted

131,876,660

131,876,660

ADSs used in income per ADS calculation:

– Basic

80,637,236

80,721,223

– Diluted

83,235,594

83,456,657

Other comprehensive income (loss)

Foreign currency translation adjustment, net of taxes

156

(76)

Unrealized gain on available-for-sale investments, net of taxes

978

Transferred to statements of comprehensive income of
realized gain on available-for-sale investments, net of taxes

(1,493)

Comprehensive income attributable to common shareholders

29,955

22,973

* These line items have been adjusted, as set forth in detail below.

(In thousands)

Previous Announced Amount

Adjusted Amount

Change

Q2 2014

Q3 2014

Q2 2014

Q3 2014

Q2 2014

Q3 2014

RMB

RMB

RMB

RMB

RMB

RMB

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Product Revenue

1,880,299

1,918,928

1,701,177

1,850,662

(179,122)

(68,266)

Media

1,355,993

1,320,516

1,176,871

1,252,250

(179,122)

(68,266)

Total net revenues

1,960,776

2,002,805

1,781,654

1,934,539

(179,122)

(68,266)

Cost of revenues

(1,602,206)

(1,637,093)

(1,423,084)

(1,568,827)

179,122

68,266

Gross profit

358,570

365,712

358,570

365,712

Non-GAAP operating income, operating margin and net income

(In thousands)

Three Months Ended

June 30,
2014

September 30,
2014

RMB

RMB

(Unaudited)

(Unaudited)

Income from operations

14,594

13,097

Share-based compensation expenses

2,890

2,118

Non-GAAP operating income

17,484

15,215

Operating margin

0.8%

0.7%

Share-based compensation expenses

0.2%

0.1%

Non-GAAP operating margin

1.0%

0.8%

Net income

28,821

24,542

Share-based compensation expenses

2,890

2,118

Non-GAAP net income

31,711

26,660

* These line items have been adjusted, as set forth in detail below.

Q2 2014

Previous
Announced
Amount

Adjusted
Amount

Change

(Unaudited)

(Unaudited)

Operating margin

0.7%

0.8%

0.1%

Share-based compensation expenses

0.2%

0.2%

Non-GAAP operating margin

0.9%

1.0%

0.1%

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