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New Oriental Announces Results for the Second Fiscal Quarter Ended November 30, 2012



 New Oriental Announces Results for the Second Fiscal Quarter Ended November
                                   30, 2012

PR Newswire

BEIJING, Jan. 29, 2013

BEIJING, Jan. 29, 2013 /PRNewswire/ -- 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, 2012, which is the
second quarter of New Oriental's fiscal year 2013.

Highlights for the Second Fiscal Quarter Ended November 30, 2012

  o Total net revenues increased by 30.4% year-over-year to US$165.9 million
    from US$127.2 million in the same period of the prior fiscal year.
  o Loss from operations was US$26.9 million, compared to a loss of US$3.2
    million in the same period of the prior fiscal year.
  o Non-GAAP loss from operations, which excludes share-based compensation
    expenses, was US$20.1 million, compared to non-GAAP income from operations
    of US$1.0 million in the same period of the prior fiscal year.
  o Net loss attributable to New Oriental was US$15.8 million, compared to net
    income attributable to New Oriental of US$3.3 million in the same period
    of the prior fiscal year.
  o Non-GAAP net loss attributable to New Oriental, which excludes share-based
    compensation expenses, was US$9.0 million, compared to non-GAAP net income
    attributable to New Oriental of US$7.5 million in the same period of the
    prior fiscal year.
  o Basic and diluted net loss attributable to New Oriental per ADS were
    US$0.10 and US$0.10, respectively. Non-GAAP basic and diluted net loss per
    ADS, which excludes share-based compensation expenses, were US$0.06 and
    US$0.06, respectively. Each ADS represents one common share of the
    Company.
  o Total student enrollments in academic subjects tutoring and test
    preparation courses increased by 7.2% year-over-year to approximately
    505,500 from approximately 471,600 in the same period of the prior fiscal
    year.
  o The total number of schools and learning centers increased to 744 in the
    quarter ended November 30, 2012, up from 726 in the previous quarter. New
    Oriental added a net of 18 schools and learning centers in the quarter.

Financial and Student Enrollments Summary – Second Fiscal Quarter 2013 and
First Six Months of Fiscal Year 2013
(in thousands US$, except per ADS data, student enrollments and percentages)
                                  Q2 of FY2013    Q2 of FY2012   Pct. Change
Net revenues                      165,906         127,194        30.4%
Net income/(loss) attributable to (15,769)        3,314
New Oriental
Non-GAAP net income/(loss)        (8,968)         7,545
attributable to New Oriental^(1)
Operating income/(loss)           (26,857)        (3,240)        728.9%
Non-GAAP operating income/(loss)  (20,056)        991
^ (1)
Net income/(loss) per ADS
attributable to New Oriental -    (0.10)          0.02
basic^(2)
Net income/(loss) per ADS
attributable to New Oriental -    (0.10)          0.02
diluted^(2)
Non-GAAP net income/(loss) per
ADS attributable to New Oriental  (0.06)          0.05
- basic^(1)(2)(3)
Non-GAAP net income/(loss) per
ADS attributable to New Oriental  (0.06)          0.05
- diluted^(1)(2)(3)
Total student enrollments in
academic subjects tutoring and    505,500         471,600        7.2%
test preparation courses
                                  1H of FY2013    1H of FY2012   Pct. Change
Net revenues                      501,735         394,044        27.3%
Net income attributable to New    80,083          94,023         (14.8)%
Oriental
Non-GAAP net income attributable  93,604          105,069        (10.9)%
to New Oriental ^(1)
Operating income                  74,698          91,926         (18.7)%
Non-GAAP operating income ^(1)    88,219          102,972        (14.3)%
Net income per ADS attributable   0.51            0.61           (15.6)%
to New Oriental - basic ^(2)
Net income per ADS attributable   0.51            0.60           (15.3)%
to New Oriental - diluted ^(2)
Non-GAAP net income per ADS
attributable to New Oriental -    0.60            0.68           (11.7)%
basic ^(1)(2)(3)
Non-GAAP net income per ADS
attributable to New Oriental -    0.59            0.67           (11.4)%
diluted ^(1)(2)(3)
Total student enrollments in
academic subjects tutoring and    1,404,400       1,279,300      9.8%
test preparation courses
(1)   New Oriental provides net income (loss) attributable to New Oriental,
operating income (loss), and net income (loss) 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 (loss) per share and per ADS are
computed using non-GAAP adjusted net income (loss) 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,
"We maintained healthy year-over-year top-line growth of 30.4% in the second
fiscal quarter, and our revenue from second- and third-tier cities outside
Beijing and Shanghai continued to grow significantly, by 40% year-over-year.
While we slowed down our network expansion in the second quarter to focus on
utilization, over the last four quarters we added a net of over 200 new
learning centers, compared to just 80 over the four preceding quarters up to
November 30, 2011, and this has put significant pressure on cost and expenses.
These added pressures, combined with the seasonally low utilization, produced
a net loss of US$15.8 million in the second quarter. The loss this quarter was
also partly attributable to the expenses incurred in this quarter from the
internal investigation and regulatory proceedings. Furthermore, our most
profitable schools, in Beijing and Shanghai, continued to underperform, with
revenues increasing by only 20% and net income falling over 50%. Our overseas
test preparation business in Beijing, Shanghai and some other cities is facing
growing competition as we reduce class sizes in accordance with market needs.
Our overseas test preparation programs recorded a 7% year-over-year enrollment
decrease and 22% year-over-year gross revenue growth."

Mr. Yu continued, "On the positive side, the execution of our 'Harvest the
Market' strategy is making good progress. We slowed down our expansion
considerably by only adding a net of 18 schools and learning centers during
this quarter. We opened a new school in Shiyan city, integrated the newly
acquired China Management Software Institute in Beijing, and added a net of 16
learning centers in around 10 second- and third-tier cities. Meanwhile, our
total headcount was reduced by about 1,500 during the quarter, following net
headcount increases in the previous three quarters. In order to improve our
long-term profitability, we will continue to execute this strategy in the
coming quarters, and we expect to return to profitability in the current
quarter and improve bottom-line margins in a couple of quarters."

Louis T. Hsieh, New Oriental's President and Chief Financial Officer,
commented, "Our sustained top-line growth was driven by the good performance
of a number of our key business lines. First, our K-12 all-subjects
after-school tutoring business recorded over 14% year-over-year enrollment
growth and over 50% year-over-year gross revenue growth. Second, our VIP
personalized classes across the board recorded year-over-year enrollment
growth of about 25% to over 25,100 and year-over-year cash revenue growth of
over 38% to over US$62 million in this quarter. Finally, our 'Vision Overseas
Study Consulting' business continued its outstanding performance, with
year-over-year revenue growth of over 97% to about US$7.5 million in the
quarter."

Financial Results for the Fiscal Quarter Ended November 30, 2012

For the second fiscal quarter of 2013, New Oriental reported net revenues of
US$165.9 million, representing a 30.4% increase year-over-year.

Net revenues from educational programs and services for the second fiscal
quarter were US$149.3 million, representing a 29.5% 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 2013 increased by 7.2% year-over-year to
approximately 505,500, from approximately 471,600 in the same period of the
prior fiscal year.

Operating costs and expenses for the quarter were US$192.8 million, a 47.8%
increase year-over-year. Non-GAAP operating costs and expenses, which exclude
share-based compensation expenses, for the quarter were US$186.0 million, a
47.4% increase year-over-year.

Cost of revenues for the quarter increased by 38.2% year-over-year to US$80.7
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 42.5%
year-over-year to US$34.3 million, primarily due to an increase in the number
of customer service representatives and brand promotion expenses.

General and administrative expenses for the quarter increased by 62.1%
year-over-year to US$77.7 million. Non-GAAP general and administrative
expenses, which exclude share-based compensation expenses, were US$70.9
million, a 62.2% increase year-over-year, primarily due to increased headcount
as the Company expanded its network of schools and learning centers, as well
as expenses relating to the Company's internal investigation and regulatory
proceedings accrued in this quarter.

Total share-based compensation expenses, which were allocated to related
operating costs and expenses, increased by 60.7% to US$6.8 million in the
second quarter of fiscal year 2013 from US$4.2 million in the same period of
the prior fiscal year.

Loss from operations for the quarter was US$26.9 million, compared to a loss
of US$3.2 million in the same period of the prior fiscal year. Non-GAAP loss
from operations for the quarter was US$20.1 million, compared to non-GAAP
income from operations of US$1.0 million in the same period of the prior
fiscal year.

Operating margin for the quarter was negative 16.2%, compared to negative 2.5%
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
negative 12.1%, compared to positive 0.8% in the same period of the prior
fiscal year. Operating margins were negatively affected by the large increase
in cost and expenses mainly due to the heavy investment in learning center
expansion.

Net loss attributable to New Oriental for the quarter was US$15.8 million,
compared to net income attributable to New Oriental of US$3.3 million in the
same period of the prior fiscal year. Basic and diluted net loss per ADS
attributable to New Oriental were US$0.10 and US$0.10, respectively.

Non-GAAP net loss attributable to New Oriental for the quarter was US$9.0
million, compared to non-GAAP net income attributable to New Oriental of
US$7.5 million in the same period of the prior fiscal year. Non-GAAP basic and
diluted net loss per ADS attributable to New Oriental were US$0.06 and
US$0.06, respectively.

Capital expenditures for the quarter were US$16.2 million, primarily
attributable to the addition of learning centers.

As of November 30, 2012, New Oriental had cash and cash equivalents of
US$282.3 million and short term investment of US$509.2 million, compared to
cash and cash equivalents of US$512.5 million and short term investment of
US$303.9 million as of August 31, 2012. Net operating cash flow for the second
quarter of fiscal year 2013 was approximately US$4.3 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, 2012, was US$278.0 million,
an increase of 37.8% compared to US$201.8 million as of November 30, 2011.

Financial Results for the Six Months Ended November 30, 2012

For the first six months of fiscal year 2013, New Oriental reported net
revenues of US$501.7 million, representing a 27.3% increase year-over-year.

Total student enrollments in academic subjects tutoring and test preparation
courses in the first six months of fiscal year 2013 increased by 9.8% to
approximately 1,404,400 from approximately 1,279,300 in the same period of the
prior fiscal year.

Income from operations for the first six months of fiscal year 2013 was
US$74.7 million, representing an 18.7% decrease year-over-year. Non-GAAP
income from operations for the first six months of fiscal year 2013 was
US$88.2 million, representing a 14.3% decrease year-over-year.

Operating margin for the first six months of fiscal year 2013 was 14.9%,
compared to 23.3% 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 2013, was 17.6%, compared to 26.1% for the
same period of the prior fiscal year.

Net income attributable to New Oriental for the first six months of fiscal
year 2013 was US$80.1 million, representing a 14.8% decrease year-over-year.
Basic and diluted net income per ADS attributable to New Oriental for the
first six months of fiscal year 2013 amounted to US$0.51 and US$0.51,
respectively.

Non-GAAP net income attributable to New Oriental for the first six months of
fiscal year 2013 was US$93.6 million, representing a 10.9% decrease
year-over-year. Non-GAAP basic and diluted net income per ADS attributable to
New Oriental for the first six months of fiscal year 2013 amounted to US$0.60
and US$0.59, respectively.

Outlook for Third quarter of Fiscal Year 2013

New Oriental expects its total net revenues in the third quarter of fiscal
year 2013 (December 1, 2012, to February 28, 2013) to be in the range of
US$212.4 million to US$220.9 million, representing year-over-year growth in
the range of 25% to 30%, excluding the impact from the disposal of the ELITE
English business. Compared to the Company's reported net revenues for the
third quarter of fiscal year 2012, which included revenues from ELITE English,
the growth is in the range of 22% to 27%. 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 29, 2013, U.S. Eastern Time (9 PM on January 29 ^ , 2013, 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:        +44-20-3059-8139

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 February 5, 2013:

International: +61-2-8199-0299
Passcode:      85008261

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 2013 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. Nick Beswick
Beijing Brunswick Consultancy Ltd.
Tel:         +86-10-5960-8600
Email:     edu@brunswickgroup.com

In the U.S.:

Ms. Patricia Graue
Brunswick Group LLC
Tel:      +1-415-671-7676
Email:     edu@brunswickgroup.com

 

NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                                            As of November 30  As of August 31
                                            2012               2012
                                            (Unaudited)        (Unaudited)
                                            USD                USD
ASSETS:
Current assets:
Cash and cash equivalents                   282,349            512,460
Restricted cash                             3,031              4,135
Term deposits                               48,068             74,222
Short term investments                      509,229            303,862
Accounts receivable, net                    4,174              4,183
Inventory                                   21,264             20,734
Deferred tax assets, current                6,463              5,662
Prepaid expenses and other current assets   58,309             59,685
Amounts due from related parties, current   1,998              -
Total current assets                        934,885            984,943
Property, plant and equipment, net          244,520            217,608
Land use right, net                         4,532              3,465
Amounts due from related party, non-current 1,060              1,195
Deferred tax assets, non-current            1,647              1,858
Long term deposit                           12,832             14,111
Long term prepaid rent                      1,647              1,903
Prepayment for business acquisition         -                  3,735
Intangible assets                           913                821
Goodwill                                    3,704              1,804
Long term investments                       3,978              3,002
Total assets                                1,209,718          1,234,445
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable (including accounts
payable of the consolidated VIEs without
recourse to New Oriental of US$9,606 and    9,958              9,758
US$9,956 as of August 31, 2012 and November
30, 2012, respectively) 
Accrued expenses and other current
liabilities (including accrued expenses and
other current liabilities of the
consolidated VIEs without recourse to New   96,917             113,730
Oriental of US$101,041 and US$80,910 as of
August 31, 2012 and November 30, 2012,
respectively) 
Dividend payable (including dividend
payable of the consolidated VIEs without
recourse to New Oriental of nil and nil as  -                  50,000
of August 31, 2012 and November 30, 2012,
respectively) 
Income tax payable (including income tax
payable of the consolidated VIEs without
recourse to New Oriental of US$19,460 and   13,011             22,533
US$16,085 as of August 31, 2012 and
November 30, 2012, respectively) 
Amounts due to related parties (including
amounts due to related parties of the
consolidated VIEs without recourse to New   985                88
Oriental of US$88 and US$985 as of August
31, 2012 and November 30, 2012,
respectively) 
Deferred revenue (including deferred
revenue of the consolidated VIEs without
recourse to New Oriental of US$241,070 and  278,040            243,621
US$274,821 as of August 31, 2012 and
November 30, 2012, respectively) 
Total current liabilities                   398,911            439,730
Deferred tax liabilities (including
deferred tax liabilities of the
consolidated VIEs without recourse to New   1,846              101
Oriental of US$47 and US$1,846 of August
31, 2012 and November 30, 2012,
respectively) 
Acquisition payable (including acquisition
payables of the consolidated VIEs without
recourse to New Oriental of nil and         4,312              -
US$4,312 as of August 31, 2012 and November
30, 2012, respectively) 
Total long-term liabilities                 6,158              101
Total liabilities                           405,069            439,831
Total shareholder's equity                  804,649            794,614
Total liabilities and shareholder's equity  1,209,718          1,234,445

 

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
                                        2012                   2011
                                        (Unaudited)            (Unaudited)
                                        USD                    USD
Net Revenues:
Educational Programs and services       149,284                115,270
Books and others                        16,622                 11,924
Total net revenues                      165,906                127,194
Operating costs and expenses (note 1):
Cost of revenues                        80,679                 58,368
Selling and marketing                   34,347                 24,106
General and administrative              77,737                 47,960
Total operating costs and expenses      192,763                130,434
Operating loss                          (26,857)               (3,240)
Other income, net                       7,180                  6,372
Benefits for income taxes               3,908                  922
Income (Loss) from continuing           (15,769)               4,054
operations
Loss on discontinued operations, net of -                      (740)
tax
Net income (loss) attributable to New
Oriental Education & Technology Group   (15,769)               3,314
Inc.
Net income per share attributable to
New Oriental-Basic
Income (Loss) from continuing           (0.10)                 0.03
operations
Loss on discontinued operations         -                      (0.00)
Net income per share attributable to
New Oriental-Diluted
Income (Loss) from continuing           (0.10)                 0.03
operations
Loss on discontinued operations         -                      (0.00)
Net income per ADS attributable to New
Oriental-Basic (note 2)
Income (Loss) from continuing           (0.10)                 0.03
operations
Loss on discontinued operations         -                      (0.00)
Net income per ADS attributable to New
Oriental-Diluted (note 2)
Income (Loss) from continuing           (0.10)                 0.03
operations
Loss on discontinued operations         -                      (0.00)
Other comprehensive income (loss), net  15,760                 (747)
of tax
Comprehensive income (loss)             (9)                    2,567
Comprehensive income (loss)
attributable to New Oriental Education  (9)                    2,567
& Technology Group Inc.
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
                                        2012                   2011
                                        (Unaudited)            (Unaudited)
                                        USD                    USD
Cost of revenues                        -                      -
Selling and marketing                   -                      -
General and administrative              6,081                  4,231
Total                                   6,801                  4,231
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
                                      2012                   2011
                                      (Unaudited)            (Unaudited)
                                      USD                    USD
General and administrative expenses   77,737                 47,960
Share-based compensation expense in   6,801                  4,231
general and administrative expenses
Non-GAAP general and administrative   70,936                 43,729
expenses
Total operating costs and expenses    192,763                130,434
Share-based compensation expenses     6,801                  4,231
Non-GAAP operating costs and expenses 185,962                126,203
Operating loss                        (26,857)               (3,240)
Share-based compensation expenses     6,801                  4,231
Non-GAAP operating income (loss)      (20,056)               991
Operating margin                      -16.2%                 -2.5%
Non-GAAP operating margin             -12.1%                 0.8%
Net income (loss) attributable to New (15,769)               3,314
Oriental
Share-based compensation expense      6,801                  4,231
Non-GAAP net income (loss)            (8,968)                7,545
Net income (loss) per ADS
attributable to New Oriental- Basic   (0.10)                 0.02
(note 1)
Net income (loss) per ADS
attributable to New Oriental- Diluted (0.10)                 0.02
(note 1)
Non-GAAP net income (loss) per ADS
attributable to New Oriental - Basic  (0.06)                 0.05
(note 1)
Non-GAAP net income (loss) per ADS
attributable to New Oriental -        (0.06)                 0.05
Diluted (note 1)
Weighted average shares used in
calculating basic net income per ADS  155,856,826            154,706,757
(note 1)
Weighted average shares used in
calculating diluted net income per    157,930,678            157,000,285
ADS (note 1)
Non-GAAP Income (loss) per share -    (0.06)                 0.05
basic
Non-GAAP Income (loss) per share -    (0.06)                 0.05
diluted
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
                                          2012                 2011
                                          (Unaudited)          (Unaudited)
                                          USD                  USD
Net Revenues:
Educational Programs and services         457,139              362,035
Books and others                          44,596               32,009
Total net revenues                        501,735              394,044
Operating costs and expenses (note 1):
Cost of revenues                          198,895              148,053
Selling and marketing                     73,817               52,329
General and administrative                154,325              101,736
Total operating costs and expenses        427,037              302,118
Operating income                          74,698               91,926
Other income, net                         14,919               11,540
Provision for income taxes                (9,127)              (8,306)
Income from continuing operations         80,490               95,160
Loss on discontinued operations, net of   (407)                (1,137)
tax
Net income attributable to New Oriental   80,083               94,023
Education & Technology Group Inc.
Net income per share attributable to New
Oriental-Basic
Income from continuing operations         0.52                 0.62
Loss on discontinued operations           (0.00)               (0.01)
Net income per share attributable to New
Oriental-Diluted
Income from continuing operations         0.51                 0.61
Loss on discontinued operations           (0.00)               (0.01)
Net income per ADS attributable to New
Oriental-Basic (note 2)
Income from continuing operations         0.52                 0.62
Loss on discontinued operations           (0.00)               (0.01)
Net income per ADS attributable to New
Oriental-Diluted (note 2)
Income from continuing operations         0.51                 0.61
Loss on discontinued operations           (0.00)               (0.01)
Other comprehensive income, net of tax    16,003               7,761
Comprehensive income                      96,086               101,784
Comprehensive income attributable to New
Oriental Education & Technology Group     96,086               101,784
Inc.
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
                                          2012                 2011
                                          (Unaudited)          (Unaudited)
                                          USD                  USD
Cost of revenues                          -                    216
Selling and marketing                     -                    -
General and administrative                13,521               10,830
Total                                     13,521               11,046
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
                                        2012                 2011
                                        (Unaudited)          (Unaudited)
                                        USD                  USD
General and administrative expenses     154,325              101,736
Share-based compensation expense in     13,521               10,830
general and administrative expenses
Non-GAAP general and administrative     140,804              90,906
expenses
Total operating costs and expenses      427,037              302,118
Share-based compensation expenses       13,521               11,046
Non-GAAP operating costs and expenses   413,516              291,072
Operating income                        74,698               91,926
Share-based compensation expenses       13,521               11,046
Non-GAAP operating income               88,219               102,972
Operating margin                        14.9%                23.3%
Non-GAAP operating margin               17.6%                26.1%
Net income attributable to New Oriental 80,083               94,023
Share-based compensation expense        13,521               11,046
Non-GAAP net income                     93,604               105,069
Net income per ADS attributable to New  0.51                 0.61
Oriental- Basic (note 1)
Net income per ADS attributable to New  0.51                 0.60
Oriental- Diluted (note 1)
Non-GAAP net income per ADS
attributable to New Oriental - Basic    0.60                 0.68
(note 1)
Non-GAAP net income per ADS
attributable to New Oriental - Diluted  0.59                 0.67
(note 1)
Weighted average shares used in
calculating basic net income per ADS    155,716,176          154,377,584
(note 1)
Weighted average shares used in
calculating diluted net income per ADS  157,589,419          156,747,335
(note 1)
Non-GAAP Income per share - basic       0.60                 0.68
Non-GAAP Income per share - diluted     0.59                 0.67
Note 1: Each ADS represents one common share.

SOURCE New Oriental Education and Technology Group Inc.

Website: http://english.neworiental.org
Website: http://investor.neworiental.org
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