New Oriental Announces Results for the Second Fiscal Quarter Ended November 30, 2011

Tue Jan 17, 2012 3:04am EST

* Reuters is not responsible for the content in this press release.

New Oriental Announces Results for the Second Fiscal Quarter Ended November 30, 2011

Quarterly Net Revenues Increased by 38.0% Year-Over-Year

Quarterly Net Income Attributable to New Oriental Increased by 80.5% Year-Over-Year

PR Newswire

BEIJING, Jan. 17, 2012 /PRNewswire-Asia/ -- New Oriental Education and Technology Group Inc. (the "Company" or "New Oriental") (NYSE: EDU), the largest provider of private educational services in China, today announced its unaudited financial results for the fiscal quarter ended November 30, 2011, which is the second quarter of New Oriental's fiscal year 2012.

Highlights for the Second Fiscal Quarter Ended November 30, 2011

  • Total net revenues increased by 38.0% year-over-year to US$132.0 million from US$95.7 million in the same period of the prior fiscal year.
  • Net income attributable to New Oriental increased by 80.5% year-over-year to US$3.3 million from US$1.8 million in the same period of the prior fiscal year.
  • Non-GAAP net income attributable to New Oriental, which excludes share-based compensation expenses, increased by 46.0% year-over-year to US$7.5 million from US$5.2 million in the same period of the prior fiscal year.
  • Loss from operations increased by 94.6% year-over-year to US$4.0 million from US$2.1 million in the same period of the prior fiscal year.
  • Non-GAAP income from operations, which excludes share-based compensation expenses, decreased by 81.2% year-over-year to US$0.2 million from US$1.3 million in the same period of the prior fiscal year.
  • Basic and diluted net income attributable to New Oriental per ADS were US$0.02 and US$0.02, respectively. Non-GAAP basic and diluted net income per ADS, which excludes share-based compensation expenses, were US$0.05 and US$0.05, respectively. Each ADS represents one common share of the Company.
  • Total student enrollments in academic subjects tutoring and test preparation courses increased by 16.2% year-over-year to approximately 471,600 from approximately 405,800 in the same period of the prior fiscal year.
  • Total number of schools and learning centers increased to 527 in the quarter ended November 30, 2011, up from 488 in the previous quarter. New Oriental built a net of 39 learning centers in the quarter.

Financial and Student Enrollments Summary – Second Fiscal Quarter 2012 and First Six Months of Fiscal Year 2012

(in thousands US$, except per ADS data, student enrollments and percentages)

 

Q2 of FY2012

Q2 of FY2011

Pct. Change

Net revenues

131,981

95,660

38.0%

Net income attributable to New Oriental

3,314

1,836

80.5%

Non-GAAP net income attributable to New Oriental(1)

7,545

5,168

46.0%

Operating income/(loss)

(3,990)

(2,050)

94.6%

Non-GAAP operating income(1)

241

1,282

-81.2%

Net income per ADS attributable to New Oriental - basic(2)

0.02

0.01

79.0%

Net income per ADS attributable to New Oriental - diluted(2)

0.02

0.01

79.6%

Non-GAAP net income per ADS attributable to New Oriental - basic(1)(2)(3)

0.05

0.03

44.8%

Non-GAAP net income per ADS attributable to New Oriental - diluted(1)(2)(3)

0.05

0.03

45.2%

Total student enrollments in academic subjects tutoring and test preparation courses

471,600

405,800

16.2%

 

 

1H of FY2012

1H of FY2011

Pct. Change

Net revenues

403,961

287,968

40.3%

Net income attributable to New Oriental

94,023

64,197

46.5%

Non-GAAP net income attributable to New Oriental (1)

105,069

72,477

45.0%

Operating income/(loss)

90,775

63,874

42.1%

Non-GAAP operating income (1)

101,821

72,154

41.1%

Net income per ADS attributable to New Oriental - basic (2)

0.61

0.42

44.9%

Net income per ADS attributable to New Oriental - diluted (2)

0.60

0.41

45.6%

Non-GAAP net income per ADS attributable to New Oriental - basic (1)(2)(3)

0.68

0.47

43.4%

Non-GAAP net income per ADS attributable to New Oriental - diluted (1)(2)(3)

0.67

0.47

44.1%

Total student enrollments in academic subjects tutoring and test preparation courses

1,279,300

1,110,300

15.2%


 

(1)  New Oriental provides net income attributable to New Oriental, operating income, and net income per ADS attributable to New Oriental on a non-GAAP basis that excludes share-based compensation expenses to provide supplemental information regarding its operating performance. For more information on these non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" and the tables captioned "Reconciliations of Non-GAAP Measures to the Most Comparable GAAP Measures" set forth at the end of this release.

(2)  Each ADS represents one common share.

(3)  The Non-GAAP adjusted net income per share and per ADS are computed using Non-GAAP adjusted net income and the same number of shares and ADSs used in GAAP basic and diluted EPS calculation.

 

Michael Yu, New Oriental's Chairman and Chief Executive Officer, commented, "In the second quarter of the fiscal year, which is our seasonally slowest quarter, we posted solid revenue growth of 38.0% and even higher profit growth of 80.5% year-over-year. This is particularly pleasing considering we had very challenging comparables against last year's fiscal second quarter when we experienced a strong bounce back from the negative effect on our business due to the Shanghai World Expo in the summer of 2010 and recorded exceptionally strong revenue growth of over 56% and student enrollment growth of over 32%. In this fiscal quarter, by comparison, our student enrollments grew by 16.2% to about 471,600. To meet the continued strong market demand, especially in the K-12 after-school tutoring segment, during this quarter we opened a net of 39 learning centers in about 20 existing cities.  More than half of these are small facilities of approximately 500 square meters or less, which is in line with our strategy to "fill in" the convenient locations in markets where we have a strong presence."

Mr. Yu continued, "Although spending on educational services remains resilient and demand for New Oriental's educational services, in particular, continues to be very strong in the face of a slowing Chinese economy, we do expect the early timing of this year's Chinese New Year festival, which falls on January 23, to have a negative impact on our net revenues and profits for our third fiscal quarter ending February 28, 2012. Since the festival falls earlier this year, the 2012 Chinese New Year winter holiday for school-aged students has been shortened by up to a week in most provinces, leaving students with less time to attend New Oriental classes. We experienced a similar situation in 2009 when Chinese New Year also fell early, on January 26. However, in 2009 we saw a very strong bounce back in the fourth fiscal quarter ending May 31, with revenues up approximately 48% and net income up approximately 50% as Chinese students preparing to take the college and high school entrance exams in early June returned to New Oriental to make up for the test prep classes normally taken during the winter break. We anticipate a similar effect this year, and we are hopeful of a strong rebound in New Oriental's business in our fiscal fourth quarter this year."

Louis T. Hsieh, New Oriental's President and Chief Financial Officer, commented, "We are delighted to record solid performances across each of our key business lines this quarter. First, our overseas test preparation programs recorded year-over-year gross revenue growth of over 52% to over US$43 million and year-over-year enrollment growth of about 1% to 74,200, despite difficult comparisons to the second quarter of the previous fiscal year when the post-Expo rebound drove enrollments up by 39%. Second, our K-12 all-subjects after-school tutoring business recorded year-over-year gross revenue growth of about 45% to over US$44 million and year-over-year enrollment growth of more than 33% to over 232,900. Third, our VIP personalized classes experienced the most rapid pace of growth, with year-over-year cash revenue growing by more than 52% to over US$45 million and year-over-year enrollments increasing by about 42% to over 20,100. Finally, our Vision Overseas Study Consulting business maintained strong momentum, with year-over-year revenue growth of over 90% to about US$3.8 million."

Financial Results for the Fiscal Quarter Ended November 30, 2011

For the second fiscal quarter of 2012, New Oriental reported net revenues of US$132.0 million, representing a 38.0% increase year-over-year.

Net revenues from educational programs and services for the second fiscal quarter were US$120.1 million, representing a 42.1% increase year-over-year. Growth was mainly driven by an increase in student enrollments in academic subjects tutoring and test preparation courses, as well as an increase in average selling prices resulting from price increases and an increase in the number of students selecting more expensive, smaller class options. Total student enrollments in academic subjects tutoring and test preparation courses in the second quarter of fiscal year 2012 increased by 16.2% year-over-year to approximately 471,600, from approximately 405,800 in the same period of the prior fiscal year.

Operating costs and expenses for the quarter were US$136.0 million, a 39.2% increase year-over-year. Non-GAAP operating costs and expenses, which exclude share-based compensation expenses, for the quarter were US$131.7 million, a 39.6% increase year-over-year.

Cost of revenues for the quarter increased by 37.2% year-over-year to US$61.2 million, primarily due to increases in the number of courses being offered and the number of schools and learning centers in operation.

Selling and marketing expenses for the quarter increased by 32.3% year-over-year to US$24.5 million, primarily due to brand promotion expenses.

General and administrative expenses for the quarter increased by 45.4% year-over-year to US$50.3 million. Non-GAAP general and administrative expenses, which excludes share-based compensation expenses, were US$46.0 million, a 46.4% increase year-over-year, primarily due to increased headcount as the Company expanded its network of schools and learning centers by a net of 39 facilities in the quarter, and invested in content and new program development offerings, as well as in improving teacher training resources.

Total share-based compensation expenses, which were allocated to related operating costs and expenses, increased by 27.0% to US$4.2 million in the second quarter of fiscal year 2012 from US$3.3 million in the same period of the prior fiscal year.

Loss from operations for the quarter was US$4.0 million, a 94.6% increase from a loss from operations of US$2.1 million in the same period of the prior fiscal year. Non-GAAP income from operations for the quarter was US$0.2 million, an 81.2% decrease from US$1.3 million in the same period of the prior fiscal year.

Operating margin for the quarter was negative 3.0%, compared to negative 2.1% in the same period of the prior fiscal year. Non-GAAP operating margin, which excludes the impact of share-based compensation expenses, for the quarter was 0.2%, compared to 1.3% in the same period of the prior fiscal year.

Other income for the quarter increased by 82.0% year-over-year to US$6.4 million, primarily due to an increase in interest income resulting from higher cash deposits and higher savings interest rates.

Net income attributable to New Oriental for the quarter was US$3.3 million, representing an 80.5% increase from the same period of the prior fiscal year. Basic and diluted earnings per ADS attributable to New Oriental were US$0.02 and US$0.02, respectively.

Non-GAAP net income attributable to New Oriental for the quarter was US$7.5 million, representing a 46.0% increase from the same period of the prior fiscal year. Non-GAAP basic and diluted earnings per ADS attributable to New Oriental were US$0.05 and US$0.05, respectively.

Capital expenditures for the quarter were US$13.1 million, which were primarily attributed to the addition of learning centers.

As of November 30, 2011, New Oriental had cash and cash equivalents of US$379.2 million, as compared to US$398.4 million as of August 31, 2011. In addition, the Company had US$93.4 million in term deposits and US$233.0 million in short term investment as of November 30, 2011. Net operating cash flow for the second quarter of fiscal year 2012 was approximately US$12.4 million.

New Oriental's deferred revenue balance, which is cash collected from registered students for courses, and recognized proportionally as revenue as the instructions are delivered, as of November 30, 2011, was US$201.8 million, an increase of 46.3% as compared to US$137.9 million as of November 30, 2010.

Financial Results for the Six Months Ended November 30, 2011

For the first six months of fiscal year 2012, New Oriental reported net revenues of US$404.0 million, representing a 40.3% increase year-over-year.

Total student enrollments in academic subjects tutoring and test preparation courses in the first six months of fiscal year 2012 increased by 15.2% to approximately 1,279,300 from approximately 1,110,300 in the same period of the prior fiscal year.

Income from operations for the first six months of fiscal year 2012 was US$90.8 million, representing a 42.1% increase year-over-year. Non-GAAP income from operations for the first six months of fiscal year 2012 was US$101.8 million, representing a 41.1% increase year-over-year.

Operating margin for the first six months of fiscal year 2012 was 22.5%, compared to 22.2% for the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses, for the first six months of fiscal year 2012 was 25.2%, compared to 25.1% for the same period of the prior fiscal year.

Net income attributable to New Oriental for the first six months of fiscal year 2012 was US$94.0 million, representing a 46.5% increase year-over-year. Basic and diluted net income per ADS attributable to New Oriental for the first six months of fiscal year 2012 amounted to US$0.61 and US$0.60, respectively.

Non-GAAP net income attributable to New Oriental for the first six months of fiscal year 2012 was US$105.1 million, representing a 45.0% increase year-over-year. Non-GAAP basic and diluted net income per ADS attributable to New Oriental for the first six months of fiscal year 2012 amounted to US$0.68 and US$0.67, respectively.

Outlook for Third Quarter of Fiscal Year 2012

New Oriental expects its total net revenues in the third quarter of fiscal year 2012 (December 1, 2011, to February 29, 2012) to be in the range of US$168.3 million to US$176.2 million, representing year-over-year growth in the range of 27.0% to 33.0%. This revenue outlook reflects the anticipated negative impact on the Company's business of the early timing of Chinese New Year, which falls on January 23 this year. This forecast reflects New Oriental's current and preliminary view, which is subject to change.

Conference Call Information

New Oriental's management will host an earnings conference call at 8 AM on January 17, 2012, U.S. Eastern Time (9 PM on January 17, 2012, Beijing/Hong Kong time).

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

US:                  

+1-718-354-1231

Hong Kong:      

+852-2475-0994

UK:                       

+44-203-0598-139

Please dial-in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is "New Oriental Earnings Call."

A replay of the conference call may be accessed by phone at the following number until January 22, 2012:

International:     

+61-2-8235-5000

Passcode:        

39868206

Additionally, a live and archived webcast of the conference call will be available at http://investor.neworiental.org.

About New Oriental

New Oriental is the largest provider of private educational services in China based on the number of program offerings, total student enrollments and geographic presence. New Oriental offers a wide range of educational programs, services and products consisting primarily of English and other foreign language training, test preparation courses for major admissions and assessment tests in the United States, the PRC and Commonwealth countries, primary and secondary school education, development and distribution of educational content, software and other technology, and online education. New Oriental's ADSs, each of which represents one common share, currently trade on the New York Stock Exchange under the symbol ''EDU.''

For more information about New Oriental, please visit http://english.neworiental.org.

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 outlook for the third quarter of fiscal year 2012 and quotations from management in this announcement, as well as New Oriental's strategic and operational plans, contain forward-looking statements. New Oriental may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports 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 New Oriental'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: our ability to attract students without a significant decrease in course fees; our ability to continue to hire, train and retain qualified teachers; our ability to maintain and enhance our "New Oriental" brand; our ability to effectively and efficiently manage the expansion of our school network and successfully execute our growth strategy; the outcome of ongoing, or any future, litigation or arbitration, including those relating to copyright and other intellectual property rights; competition in the private education sector in China; changes in our revenues and certain cost or expense items as a percentage of our revenues; the expected growth of the Chinese private education market; Chinese governmental policies relating to private educational services and providers of such services; health epidemics and other outbreaks in China; and general economic conditions in China. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. New Oriental 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 New Oriental undertakes no duty to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement New Oriental's consolidated financial results presented in accordance with GAAP, New Oriental uses the following measures defined as non-GAAP financial measures by the SEC: net income excluding share-based compensation expenses, operating income excluding share-based compensation expenses, operating costs and expenses excluding share-based compensation expenses, general and administrative expenses excluding share-based compensation expenses, operating margin excluding share-based compensation expenses, and basic and diluted net income per ADS and per share excluding share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release.

New Oriental believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based compensation expenses that may not be indicative of its operating performance from a cash perspective. New Oriental believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to New Oriental's historical performance and liquidity. New Oriental computes its non-GAAP financial measures using the same consistent method from quarter to quarter. New Oriental believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP measures is that they exclude share-based compensation charge that has been and will continue to be for the foreseeable future a significant recurring expense in our business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

Contacts

For investor and media inquiries, please contact:

In China:

Ms. Sisi Zhao
New Oriental Education and Technology Group Inc.
Tel:     +86-10-6260-5568
Email: zhaosisi@xdf.cn

Mr. Martin Reidy
Beijing Brunswick Consultancy Ltd.
Tel:       +86-10-5960-8616
Email:   mreidy@brunswickgroup.com

In the U.S.:

Ms. Cindy Zheng
Brunswick Group LLC
Tel:       +1-212-333-3810
Email:   czheng@brunswickgroup.com  

 

NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

As of November 30

 

As of Auguest 31

2011

 

2011

(Unaudited)

 

(Unaudited)

 

USD

 

USD

ASSETS:

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

379,179

 

398,389

Restricted cash

2,943

 

4,588

Term deposits

93,374

 

103,822

Short term investment (note1)

232,970

 

203,832

Accounts receivable, net

2,886

 

2,924

Inventory

17,238

 

17,468

Deferred tax assets-Current

5,275

 

4,853

Prepaid expenses and other current assets

49,904

 

43,633

 

 

 

 

Total current assets

783,769

 

779,509

 

 

 

 

Property, plant and equipment, net

176,705

 

170,727

Land use right, net

3,515

 

3,536

Deferred tax assets

1,272

 

1,215

Long term deposit

11,272

 

8,749

Long term prepaid rent

2,320

 

2,581

Intangible assets

858

 

871

Goodwill

1,796

 

1,796

Long term investment

2,002

 

2

 

 

 

 

Total assets

983,509

 

968,986

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable (including accounts payable of the consolidated
VIEs without recourse to New Oriental of US$ 7,944 and US$
8,297 as of  Augest 31, 2011 and November 30, 2011,
respectively) 

8,458

 

8,357

Accrued expenses and other current liabilities (including accrued
expenses and other current liabilities of the consolidated VIEs
without recourse to New Oriental of US$ 79,442 and US$  63,703
as of  Augest 31, 2011 and November 30, 2011, respectively) 

73,760

 

90,236

Income tax payable (including income tax payable of the
consolidated VIEs without recourse to New Oriental of US$ 8,620 
and US$11,740  as of  Augest 31, 2011 and November 30, 2011,
respectively) 

12,030

 

15,026

Deferred revenue (including deferred revenue of the consolidated
VIEs without recourse to New Oriental of US$ 171,817 and US$
199,692 as of  Augest 31, 2011 and November 30, 2011,
respectively) 

201,770

 

174,680

 

 

 

 

Total current liabilities

296,018

 

288,299

 

 

 

 

Deferred tax liabilities 

117

 

120

 

 

 

 

Total long-term liabilities

117

 

120

 

 

 

 

Total liabilities

296,135

 

288,419

 

 

 

 

Total shareholder's equity

687,374

 

680,567

 

 

 

 

Total liabilities and shareholder's equity

983,509

 

968,986

 

 

 

 

Note 1:Short term investment represented held-to-maturity investment with maturity of less than one year.

NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except for per share and per ADS amounts)

 

 

 

 

For the Three Months Ended November 30

 

2011

 

2010

 

(Unaudited)

 

(Unaudited)

 

USD

 

USD

Net Revenues:

 

 

 

Educational Programs and services

120,057

 

84,504

Books and others

11,924

 

11,156

Total net revenues

131,981

 

95,660

 

 

 

 

Operating costs and expenses (note 1):

 

 

 

Cost of revenues 

61,163

 

44,591

Selling and marketing

24,540

 

18,554

General and administrative 

50,268

 

34,565

Total operating costs and expenses

135,971

 

97,710

Operating loss

(3,990)

 

(2,050)

 

 

 

 

Other income, net

6,382

 

3,507

 

 

 

 

Benefits for income taxes

922

 

296

Net income 

3,314

 

1,753

 

 

 

 

Less: Net income attributable to the noncontrolling interests

-

 

83

 

 

 

 

Net income attributable to New Oriental Education &
Technology Group Inc.

3,314

 

1,836

 

 

 

 

Net income per share attributable to New Oriental-Basic

0.02

 

0.01

Net income per share attributable to New Oriental-Diluted

0.02

 

0.01

 

 

 

 

Net income per ADS attributable to New Oriental-Basic (note 2)

0.02

 

0.01

Net income per ADS attributable to New Oriental-Diluted (note 2)

0.02

 

0.01

Notes:

 

 

 

 

Note 1: Share-based compensation expenses (in thousands) are included in the operating costs and expenses as follows:

 

 

 

 

 

For the Three Months Ended November 30

 

2011

 

2010

 

(Unaudited)

 

(Unaudited)

 

USD

 

USD

Cost of revenues

-

 

220

Selling and marketing

-

 

-

General and administrative

4,231

 

3,112

Total

4,231

 

3,332

 

 

 

 

 

Note 2: Each ADS represents one common share.

 

 

NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.

RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES

(In thousands except for per share and per ADS amounts)

 

 

 

For the Three Months Ended November 30

 

2011

 

2010

 

(Unaudited)

 

(Unaudited)

 

USD

 

USD

 

 

 

 

General and administrative expenses

50,268

 

34,565

Share-based compensation expense in
general and administrative expenses

4,231

 

3,112

Non-GAAP general and administrative
expenses

46,037

 

31,453

 

 

 

 

Total operating costs and expenses

135,971

 

97,710

Share-based compensation expenses

4,231

 

3,332

Non-GAAP operating costs and
expenses

131,740

 

94,378

 

 

 

 

Operating income(loss)

(3,990)

 

(2,050)

Share-based compensation expenses

4,231

 

3,332

Non-GAAP operating income

241

 

1,282

 

 

 

 

Operating margin 

-3.0%

 

-2.1%

Non-GAAP operating margin

0.2%

 

1.3%

 

 

 

 

Net income attributable to New Oriental

3,314

 

1,836

Share-based compensation expense

4,231

 

3,332

Non-GAAP net income

7,545

 

5,168

 

 

 

 

Net income per ADS attributable to New
Oriental- Basic (note 1)

0.02

 

0.01

Net income per ADS attributable to New
Oriental- Diluted (note 1)

0.02

 

0.01

 

 

 

 

Non-GAAP net income per ADS attributable
to New Oriental - Basic (note 1)

0.05

 

0.03

Non-GAAP net income per ADS attributable
to New Oriental - Diluted (note 1)

0.05

 

0.03

 

 

 

 

Weighted average shares used in calculating
basic net income per ADS (note 1)

154,706,757

 

153,431,993

Weighted average shares used in calculating
diluted net income per ADS (note 1)

157,000,285

 

156,189,905

 

 

 

 

Non-GAAP Income per share - basic

0.05

 

0.03

Non-GAAP Income per share - diluted

0.05

 

0.03

 

 

 

 

Note 1: Each ADS represents one common share.

 

NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except for per share and per ADS amounts)

 

 

 

 

For the Six Months Ended November 30

 

2011

 

2010

 

(Unaudited)

 

(Unaudited)

 

USD

 

USD

Net Revenues:

 

 

 

Educational Programs and services

371,952

 

265,385

Books and others

32,009

 

22,583

Total net revenues

403,961

 

287,968

 

 

 

 

Operating costs and expenses (note 1):

 

 

 

Cost of revenues 

153,890

 

111,012

Selling and marketing

53,060

 

41,899

General and administrative 

106,236

 

71,183

Total operating costs and expenses

313,186

 

224,094

Operating income 

90,775

 

63,874

 

 

 

 

Other income, net

11,554

 

5,908

 

 

 

 

Provision for income taxes

(8,306)

 

(5,820)

Net income 

94,023

 

63,962

 

 

 

 

Less: Net income attributable to the noncontrolling interests

-

 

235

 

 

 

 

Net income attributable to New Oriental Education
& Technology Group Inc.

94,023

 

64,197

 

 

 

 

Net income per share attributable to New Oriental-Basic

0.61

 

0.42

Net income per share attributable to New Oriental-Diluted

0.60

 

0.41

 

 

 

 

Net income per ADS attributable to New Oriental-Basic (note 2)

0.61

 

0.42

Net income per ADS attributable to New Oriental-Diluted (note 2)

0.60

 

0.41

Notes:

 

 

 

 

 

 

 

Note 1: Share-based compensation expenses (in thousands) are included in the operating costs and expenses as follows:

 

 

 

 

 

For the Six Months Ended November 30

 

2011

 

2010

 

(Unaudited)

 

(Unaudited)

 

USD

 

USD

Cost of revenues

216

 

452

Selling and marketing

-

 

-

General and administrative

10,830

 

7,828

Total

11,046

 

8,280

 

 

 

 

 

Note 2: Each ADS represents one common share.

NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.

RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES

(In thousands except for per share and per ADS amounts)

 

 

 

For the Six Months Ended November 30

 

2011

 

2010

 

(Unaudited)

 

(Unaudited)

 

USD

 

USD

 

 

 

 

General and administrative expenses

106,236

 

71,183

Share-based compensation expense in
general and administrative expenses

10,830

 

7,828

Non-GAAP general and administrative
expenses

95,406

 

63,355

 

 

 

 

Total operating costs and expenses

313,186

 

224,094

Share-based compensation expenses

11,046

 

8,280

Non-GAAP operating costs and
expenses

302,140

 

215,814

 

 

 

 

Operating income(loss)

90,775

 

63,874

Share-based compensation expenses

11,046

 

8,280

Non-GAAP operating income

101,821

 

72,154

 

 

 

 

Operating margin 

22.5%

 

22.2%

Non-GAAP operating margin

25.2%

 

25.1%

 

 

 

 

Net income attributable to New Oriental

94,023

 

64,197

Share-based compensation expense

11,046

 

8,280

Non-GAAP net income

105,069

 

72,477

 

 

 

 

Net income per ADS attributable to New
Oriental- Basic (note 1)

0.61

 

0.42

Net income per ADS attributable to New
Oriental- Diluted (note 1)

0.60

 

0.41

 

 

 

 

Non-GAAP net income per ADS attributable
to New Oriental - Basic (note 1)

0.68

 

0.47

Non-GAAP net income per ADS attributable
to New Oriental - Diluted (note 1)

0.67

 

0.47

 

 

 

 

Weighted average shares used in calculating
basic net income per ADS (note 1)

154,377,584

 

152,757,063

Weighted average shares used in calculating
diluted net income per ADS (note 1)

156,747,335

 

155,793,277

 

 

 

 

Note 1: Each ADS represents one common share.

 

SOURCE New Oriental Education and Technology Group Inc.

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