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New Oriental Announces Results for the Third Fiscal Quarter Ended February 28, 2013, and Adoption of Up to US$50 Million Share



New Oriental Announces Results for the Third Fiscal Quarter Ended February 28,
      2013, and Adoption of Up to US$50 Million Share Repurchase Program

Third Quarter Net Revenues Increased by 28.6% Year-Over-Year

Third Quarter Operating Income Increased by 35.9% Year-Over-Year

Third Quarter Net Income Attributable to New Oriental Increased by 25.0%
Year-Over-Year

PR Newswire

BEIJING, April 24, 2013

BEIJING, April 24, 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 February 28, 2013, which is the
third quarter of New Oriental's fiscal year 2013.

Highlights for the Third Fiscal Quarter Ended February 28, 2013

  o Total net revenues increased by 28.6% year-over-year to US$218.5 million
    from US$169.9 million in the same period of the prior fiscal year.
  o Net income attributable to New Oriental increased by 25.0% year-over-year
    to US$28.0 million from US$22.4 million in the same period of the prior
    fiscal year.
  o Non-GAAP net income attributable to New Oriental, which excludes
    share-based compensation expenses, increased by 23.9% year-over-year to
    US$34.7 million from US$28.0 million in the same period of the prior
    fiscal year.
  o Income from operations increased by 35.9% year-over-year to US$23.5
    million from US$17.3 million in the same period of the prior fiscal year.
  o Non-GAAP income from operations, which excludes share-based compensation
    expenses, increased by 31.9% year-over-year to US$30.2 million from
    US$22.9 million in the same period of the prior fiscal year.
  o Basic and diluted net income attributable to New Oriental per ADS were
    US$0.18 and US$0.18, respectively. Non-GAAP basic and diluted net income
    per ADS, which excludes share-based compensation expenses, were US$0.22
    and US$0.22, respectively. Each ADS represents one common share of the
    Company.
  o Total student enrollments in academic subjects tutoring and test
    preparation courses decreased by 3.2% year-over-year to approximately
    576,900 from approximately 596,100 in the same period of the prior fiscal
    year.
  o The total number of schools and learning centers decreased by 11 to 733 in
    the quarter ended February 28, 2013, compared to 744 in the previous
    quarter.

Financial and Student Enrollments Summary – Third Fiscal Quarter 2013 and First
Nine Months of Fiscal Year 2013
(in thousands US$, except per ADS data, student enrollments and percentages)
                                          Q3 of FY2013 Q3 of FY2012 Pct. Change
Net revenues                              218,474      169,923      28.6%
Net income attributable to New Oriental   28,009       22,415       25.0%
Non-GAAP net income attributable to New
                                          34,735       28,043       23.9%
Oriental^(1)
Operating income                          23,490       17,280       35.9%
Non-GAAP operating income^(1)             30,216       22,908       31.9%
Net income per ADS attributable to New
                                          0.18         0.14         24.1%
Oriental - basic
Net income per ADS attributable to New
                                          0.18         0.14         23.9%
Oriental - diluted
Non-GAAP net income per ADS attributable 
                                          0.22         0.18         23.0%
to New Oriental - basic^(1)(2)
Non-GAAP net income per ADS attributable
                                          0.22         0.18         22.8%
to New Oriental - diluted^(1)(2)
Total student enrollments in academic

subjects tutoring and test preparation    576,900      596,100      -3.2%

courses
                                          YTD 9-Mo     YTD 9-Mo     Pct. Change

                                          FY 2013      FY 2012       
Net revenues                              720,209      563,967      27.7%
Net income attributable to New Oriental   108,092      116,438      -7.2%
Non-GAAP net income attributable to New
                                          128,339      133,112      -3.6%
Oriental ^(1)
Operating income                          98,188       109,206      -10.1%
Non-GAAP operating income ^(1)            118,435      125,880      -5.9%
Net income per ADS attributable to New
                                          0.69         0.75         -7.9%
Oriental - basic
Net income per ADS attributable to New
                                          0.68         0.74         -7.8%
Oriental - diluted
Non-GAAP net income per ADS attributable
                                          0.82         0.86         -4.4%
to New Oriental - basic ^(1)(2)
Non-GAAP net income per ADS attributable
                                          0.81         0.85         -4.2%
to New Oriental - diluted ^(1)(2)
Total student enrollments in academic

subjects tutoring and test preparation    1,981,300    1,875,300    5.7%

courses

    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
(1) 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.
    The Non-GAAP adjusted net income per share and per ADS are computed using
(2) 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,
"We are pleased to report solid results for the third fiscal quarter with
sustained top-line growth of 28.6%, which was well above the guidance range of
22% to 27% growth, as well as stronger than expected operating income growth
of 35.9%, and profit growth of 25% year-over-year. Further, during the quarter
we achieved notable progress in a number of important areas. For instance, we
experienced encouraging improvements at our two largest schools in Beijing and
Shanghai. As a result of an effective restructuring program over the past few
months, these two schools recorded a combined increase in revenues of 17% and
a combined increase in net income of 9% year-over-year. Moreover, we are
encouraged by the year-on-year improvement in overall operating margin this
quarter, following margin compression in the previous five quarters when we
focused on rapid expansion of our learning center network. During the period,
we continued to transition to our 'Harvest the Market' strategy and, as a
result, recorded GAAP operating margin of 10.8%, compared to 10.2% in the same
period a year ago."

Mr. Yu continued, "At the core of our 'Harvest the Market' strategy is an
emphasis on improving operational efficiency and increasing profitability. We
imposed strict top-down control over learning center openings and closed some
underperforming learning centers in a few cities. We closed a total of 22
learning centers in the quarter and opened 11 learning centers in fast growing
markets. We also reduced our total headcount by about 1,200 during the
quarter. The 'Harvest the Market' strategy and accompanying operating
discipline translated into healthy operating margin expansion in the third
quarter and we expect continued improvement in operational efficiency in the
coming quarters as we increase the utilization and class offerings in our
existing facilities. While we have slowed our pace of expansion considerably,
given the significant potential of the Chinese market, our strong presence in
the key markets, and our outstanding brand advantage nationwide, we are
confident that we can continue to maintain healthy top-line growth."

Louis T. Hsieh, New Oriental's President and Chief Financial Officer,
commented, "The slight year-over-year decrease in enrollments this quarter was
largely due to the closing of approximately 30 underperforming learning
centers in the past two quarters and the late timing of Chinese New Year
("CNY") in 2013. CNY occurred on February 10 this year compared to January 23
last year, which meant that the winter holiday for most public schools fell
approximately 10 days later in 2013 than in 2012. This shift, in turn, delayed
a significant portion of student enrollment for our Spring semester classes,
pushing sign-up from February to March this year. We have seen that spillover
reflected in our early results for the fourth fiscal quarter. In the first six
weeks of our fourth quarter, we recorded a noticeable 14% increase in
enrollments year-over-year and a 34% increase year-over-year in cash receipts,
or cash collected in advance for enrollments."

Mr. Hsieh continued, "To the best of our knowledge, as of the date of this
earnings release we have not experienced a material negative impact on
enrollments or revenues from the spread of the avian virus H7N9 in China. We
are hopeful that so long as the H7N9 outbreak can be contained, and there are
no documented instances of human-to-human transmission, the Chinese government
will not close education facilities or ban large gatherings of people."

Recent Developments - Adoption of Share Repurchase Program

On April 23, 2013, New Oriental's board of directors authorized the repurchase
of up to US$50 million of the Company's shares during the period from April
29, 2013, through July 31, 2013.

This share repurchase program authorizes the Company to purchase its American
Depositary Shares ("ADSs") or common shares from time to time on the open
market at prevailing market prices, in negotiated transactions off the market,
in block trades, pursuant to a 10b5-1 plan or other legally permissible ways
in accordance with applicable rules and regulations. The timing and extent of
any purchases will depend upon market conditions, the trading price of ADSs
and other factors.

New Oriental expects to implement this share repurchase program in a manner
consistent with market conditions and the interests of the shareholders. New
Oriental's board of directors will review the share repurchase program
periodically and may authorize adjustment of its terms and size accordingly.
New Oriental plans to fund any share repurchases made under this program from
the Company's available cash balance.

Financial Results for the Fiscal Quarter Ended February 28, 2013

For the third fiscal quarter of 2013, New Oriental reported net revenues of
US$218.5 million, representing a 28.6% increase year-over-year.

Net revenues from educational programs and services for the quarter were
US$198.0 million, representing a 30.3% increase year-over-year. The growth was
mainly driven by an increase in average selling prices resulting from price
increases and an increase in the number of students selecting more expensive,
smaller class options.

Operating costs and expenses for the quarter were US$195.0 million, a 27.7%
increase year-over-year. Non-GAAP operating costs and expenses, which exclude
share-based compensation expenses, for the quarter were US$188.3 million, a
28.1% increase year-over-year.

Cost of revenues for the quarter increased by 31.5% year-over-year to US$91.2
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 14.5%
year-over-year to US$31.6 million, primarily due to an increase in the number
of customer service representatives. Actual brand and market promotion
expenses declined approximately 13% year-over-year to approximately US$11.1
million.

General and administrative expenses for the quarter increased by 29.6%
year-over-year to US$72.2 million. Non-GAAP general and administrative
expenses, which excludes share-based compensation expenses, were US$65.4
million, a 30.7% increase year-over-year, primarily due to an increase in
headcount in line with the Company's expansion of its network of schools and
learning centers as compared to the year ago period.

Total share-based compensation expenses, which were allocated to related
operating costs and expenses, increased by 19.5% to US$6.7 million in the
third quarter of fiscal year 2013 from US$5.6 million in the same period of
the prior fiscal year.

Income from operations for the quarter was US$23.5 million, a 35.9% increase
from US$17.3 million in the same period of the prior fiscal year. Non-GAAP
income from operations for the quarter was US$30.2 million, a 31.9% increase
from US$22.9 million in the same period of the prior fiscal year.

Operating margin for the quarter was 10.8% compared to 10.2% 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 13.8%
compared to 13.5% in the same period of the prior fiscal year.

Net income attributable to New Oriental for the quarter was US$28.0 million,
representing a 25.0% increase from the same period of the prior fiscal year.
Basic and diluted earnings per ADS attributable to New Oriental were US$0.18
and US$0.18, respectively.

Non-GAAP net income attributable to New Oriental for the quarter was US$34.7
million, representing a 23.9% increase from the same period of the prior
fiscal year. Non-GAAP basic and diluted earnings per ADS attributable to New
Oriental were US$0.22 and US$0.22, respectively.

Capital expenditures for the quarter were US$16.1 million. This was primarily
invested in the opening of 11 new learning centers and in the purchase for
approximately US$2.6 million of one floor of a building in Changsha to be used
as headquarters for the Company's Changsha school.

As of February 28, 2013, New Oriental had cash and cash equivalents of
US$514.4 million and short term investment of US$328.3 million, compared to
cash and cash equivalents of US$282.3 million and short term investment of
US$509.2 million as of November 30, 2012. Net operating cash flow for the
quarter was approximately US$68.1 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 February 28, 2013, was US$293.9 million,
an increase of 22.5% as compared to US$239.8 million as of February 29, 2012.

Financial Results for the Nine Months Ended February 28, 2013

For the first nine months of fiscal year 2013, New Oriental reported net
revenues of US$720.2 million, representing a 27.7% increase year-over-year.

Total student enrollments in academic subjects tutoring and test preparation
courses in the first nine months of fiscal year 2013 increased by 5.7% to
approximately 1,981,300 from approximately 1,875,300 in the same period of the
prior fiscal year.

Income from operations for the first nine months of fiscal year 2013 was
US$98.2 million, representing a 10.1% decrease year-over-year. Non-GAAP income
from operations for the first nine months of fiscal year 2013 was US$118.4
million, representing a 5.9% decrease year-over-year.

Operating margin for the first nine months of fiscal year 2013 was 13.6%,
compared to 19.4% for the same period of the prior fiscal year. Non-GAAP
operating margin, which excludes share-based compensation expenses, for the
first nine months of fiscal year 2013 was 16.4%, compared to 22.3% for the
same period of the prior fiscal year.

Net income attributable to New Oriental for the first nine months of fiscal
year 2013 was US$108.1 million, representing a 7.2% decrease year-over-year.
Basic and diluted net income per ADS attributable to New Oriental for the
first nine months of fiscal year 2013 amounted to US$0.69 and US$0.68,
respectively.

Non-GAAP net income attributable to New Oriental for the first nine months of
fiscal year 2013 was US$128.3 million, representing a 3.6% decrease
year-over-year. Non-GAAP basic and diluted net income per ADS attributable to
New Oriental for the first nine months of fiscal year 2013 amounted to US$0.82
and US$0.81, respectively.

Outlook for Fourth Quarter of Fiscal Year 2013

New Oriental expects its total net revenues in the fourth quarter of fiscal
year 2013 (March 1, 2013, to May 31, 2013) to be in the range of US$232.8
million to US$242.2 million. Compared to the Company's reported net revenues
for the fourth quarter of fiscal year 2012, which included revenues from ELITE
English, year-over-year revenue growth is expected to be in the range of 20%
to 25%. If the impact from the disposal of the ELITE English business is
excluded, year-over-year revenue growth is expected to be in the range of 23%
to 28%. 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
April 24, 2013, U.S. Eastern Time (8 PM on April 24, 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 May 1, 2013:

International: +61-2-8199-0299
Passcode:      29330197

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 fourth 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:

Mr. Martin Reidy
F T I Consulting
Tel: +86-10-8591-1060
Email: neworiental@fticonsulting.com

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

 

NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                                 As of February 28  As of November 30
                                                                 2013               2012
                                                                 (Unaudited)        (Unaudited)
                                                                 USD                USD
ASSETS:
Current assets:
Cash and cash equivalents                                        514,395            282,349
Restricted cash                                                  2,953              3,031
Term deposits                                                    50,129             48,068
Short term investments                                           328,341            509,229
Accounts receivable, net                                         6,166              4,174
Inventory                                                        21,376             21,264
Deferred tax assets, current                                     7,059              6,463
Prepaid expenses and other current assets                        50,820             58,309
Amounts due from related parties, current                        2,176              1,998
Total current assets                                             983,415            934,885
Property, plant and equipment, net                               246,708            244,520
Land use right, net                                              4,507              4,532
Amounts due from related party, non-current                      1,061              1,060
Deferred tax assets, non-current                                 3,686              1,647
Long term deposit                                                15,464             12,832
Long term prepaid rent                                           1,406              1,647
Intangible assets                                                884                913
Goodwill                                                         3,707              3,704
Long term investments                                            3,564              3,978
Total assets                                                     1,264,402          1,209,718
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable (including accounts payable of the consolidated

VIEs without recourse to New Oriental of US$9,956 and US$8,378   8,355              9,958

as of November 30, 2012 and February 28, 2013, respectively) 
 

Accrued expenses and other current liabilities (including
accrued
                                                                 98,457             96,917
expenses and other current liabilities of the consolidated VIEs

without recourse to New Oriental of US$80,910 and US$89,022 as

of November 30, 2012 and February 28, 2013, respectively) 
 

Income tax payable (including income tax payable of the

consolidated VIEs without recourse to New Oriental of US$16,085  15,745             13,011

and US$14,135 as of November 30, 2012 and February 28, 2013,

respectively) 
 

Amounts due to related parties (including amounts due to related

parties of the consolidated VIEs without recourse to New         1,176              985
Oriental
of US$985 and US$1,176 as of November 30, 2012 and February 28,

2013, respectively) 
 

Deferred revenue (including deferred revenue of the consolidated

VIEs without recourse to New Oriental of US$274,821 and          293,860            278,040

US$290,210 as of November 30, 2012 and February 28, 2013,

respectively) 
Total current liabilities                                        417,593            398,911
Deferred tax liabilities (including deferred tax liablities of
the

consolidated VIEs without recourse to New Oriental of US$1,846   1,831              1,846

and US$1,831 as of November 30, 2012 and February 28, 2013,

respectively) 
 

Acquisition payable (including acquisiton payables of the

consolidated VIEs without recourse to New Oriental of US$4,312   4,384              4,312

and US$4,384 as of November 30, 2012 and February 28, 2013,

respectively) 
Total long-term liabilities                                      6,215              6,158
Total liabilities                                                423,808            405,069
Total shareholder's equity                                       840,594            804,649
Total liabilities and shareholder's equity                       1,264,402          1,209,718

 

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  For the Three Months
                                    Ended February 28     Ended February 29
                                    2013                  2012
                                    (Unaudited)           (Unaudited)
                                    USD                   USD
Net Revenues:
  Educational Programs and services 197,957               151,909
  Books and others                  20,517                18,014
Total net revenues                  218,474               169,923
Operating costs and expenses (note
1):
  Cost of revenues                  91,194                69,330
  Selling and marketing             31,615                27,620
  General and administrative        72,175                55,693
Total operating costs and expenses  194,984               152,643
Operating income                    23,490                17,280
Other income, net                   8,393                 7,057
  Provision for income taxes        (3,874)               (1,220)
Income from continuing operations   28,009                23,117
Loss on discontinued operations,    -                     (702)
net of tax
 

Net income attributable to New      28,009                22,415
Oriental Education & Technology
Group Inc.
Net income (loss) per share
attributable to New Oriental-
Basic
Income from continuing operations   0.18                  0.15
Loss on discontinued operations     -                     (0.00)
Net income (loss) per share
attributable to New
Oriental-Diluted
Income from continuing operations   0.18                  0.15
Loss on discontinued operations     -                     (0.00)
Net income (loss) per ADS
attributable to New Oriental-Basic
(note 2)
Income from continuing operations   0.18                  0.15
Loss on discontinued operations     -                     (0.00)
Net income (loss) per ADS
attributable to New
Oriental-Diluted (note 2)
Income from continuing operations   0.18                  0.15
Loss on discontinued operations     -                     (0.00)
Other comprehensive income, net of  1,126                 7,356
tax
Comprehensive income                29,135                29,771
Comprehensive income attributable
to New Oriental                     29,135                29,771

Education & 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      For the Three Months

                             Ended February 28         Ended February 29
                             2013                      2012
                             (Unaudited)               (Unaudited)
                             USD                       USD
Cost of revenues             -                         -
Selling and marketing        -                         -
General and administrative   6,726                     5,628
Total                        6,726                     5,628
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     For the Three
                                             Months            Months

                                             Ended February    Ended February
                                             28                29
                                             2013              2012
                                             (Unaudited)       (Unaudited)
                                             USD               USD
General and administrative expenses          72,175            55,693
Share-based compensation expense in general
                                             6,726             5,628
and administrative expenses
Non-GAAP general and administrative expenses 65,449            50,065
Total operating costs and expenses           194,984           152,643
Share-based compensation expenses            6,726             5,628
Non-GAAP operating costs and expenses        188,258           147,015
Operating income                             23,490            17,280
Share-based compensation expenses            6,726             5,628
Non-GAAP operating income                    30,216            22,908
Operating margin                             10.8%             10.2%
Non-GAAP operating margin                    13.8%             13.5%
Net income attributable to New Oriental      28,009            22,415
Share-based compensation expense             6,726             5,628
Non-GAAP net income                          34,735            28,043
Net income per ADS attributable to New
                                             0.18              0.14
Oriental- Basic (note 1)
Net income per ADS attributable to New
                                             0.18              0.14
Oriental- Diluted (note 1)
Non-GAAP net income per ADS attributable to
                                             0.22              0.18
New Oriental - Basic (note 1)
Non-GAAP net income per ADS attributable to
                                             0.22              0.18
New Oriental - Diluted (note 1)
Weighted average shares used in calculating
                                             155,907,570       154,781,265
basic net income per ADS (note 1)
Weighted average shares used in calculating
                                             158,344,168       156,958,280
diluted net income per ADS (note 1)
Non-GAAP Income per share - basic            0.22              0.18
Non-GAAP Income per share - diluted          0.22              0.18
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 Nine Months  For the Nine Months

                                                          Ended February 28    Ended February 29
                                                          2013                 2012
                                                          (Unaudited)          (Unaudited)
                                                          USD                  USD
Net Revenues:
Educational Programs and services                         655,096              513,944
Books and others                                          65,113               50,023
Total net revenues                                        720,209              563,967
Operating costs and expenses (note 1):
Cost of revenues                                          290,089              217,382
Selling and marketing                                     105,432              79,949
General and administrative                                226,500              157,430
Total operating costs and expenses                        622,021              454,761
Operating income                                          98,188               109,206
Other income, net                                         23,312               18,597
Provision for income taxes                                (13,001)             (9,526)
Income from continuing operations                         108,499              118,277
Loss on discontinued operations, net of tax               (407)                (1,839)
Net income attributable to New Oriental Education &
                                                          108,092              116,438
Technology Group Inc.
Net income (loss) per share attributable to New Oriental-

Basic
Income from continuing operations                         0.70                 0.77
Loss on discontinued operations                           (0.00)               (0.01)
Net income (loss) per share attributable to New Oriental-

Diluted
Income from continuing operations                         0.69                 0.75
Loss on discontinued operations                           (0.00)               (0.01)
Net income (loss) per ADS attributable to New Oriental-

Basic (note 2)
Income from continuing operations                         0.70                 0.77
Loss on discontinued operations                           (0.00)               (0.01)
Net income (loss) per ADS attributable to New Oriental-

Diluted (note 2)
Income from continuing operations                         0.69                 0.75
Loss on discontinued operations                           (0.00)               (0.01)
Other comprehensive income, net of tax                    17,129               15,117
Comprehensive income                                      125,221              131,555
Comprehensive income attributable to New Oriental
                                                          125,221              131,555
Education & Technology Group Inc.

Notes:
Note 1: Share-based compensation expenses (in thousands) are included in the

operating costs and expenses as follows:
                           For the Nine Months          For the Nine Months

                           Ended February 28            Ended February 29
                           2013                         2012
                           (Unaudited)                  (Unaudited)
                           USD                          USD
Cost of revenues           -                            216
Selling and marketing      -                            -
General and administrative 20,247                       16,458
Total                      20,247                       16,674
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 Nine Months  For the Nine Months

                                       Ended February 28    Ended February 29
                                       2013                 2012
                                       (Unaudited)          (Unaudited)
                                       USD                  USD
General and administrative expenses    226,500              157,430
Share-based compensation expense in 
                                       20,247               16,458
general and administrative expenses
Non-GAAP general and administrative
                                       206,253              140,972
expenses
Total operating costs and expenses     622,021              454,761
Share-based compensation expenses      20,247               16,674
Non-GAAP operating costs and expenses  601,774              438,087
Operating income                       98,188               109,206
Share-based compensation expenses      20,247               16,674
Non-GAAP operating income              118,435              125,880
Operating margin                       13.6%                19.4%
Non-GAAP operating margin              16.4%                22.3%
Net income attributable to New         108,092              116,438
Oriental
Share-based compensation expense       20,247               16,674
Non-GAAP net income                    128,339              133,112
Net income per ADS attributable to New
                                       0.69                 0.75
Oriental- Basic (note 1)
Net income per ADS attributable to New
                                       0.68                 0.74
Oriental- Diluted (note 1)
Non-GAAP net income per ADS

attributable to New Oriental - Basic   0.82                 0.86
(note

1)
Non-GAAP net income per ADS

attributable to New Oriental - Diluted 0.81                 0.85

(note 1)
Weighted average shares used in

calculating basic net income per ADS   155,779,273          154,511,653

(note 1)
Weighted average shares used in

calculating diluted net income per ADS 157,840,299          156,817,159

(note 1)
Non-GAAP Income per share - basic      0.82                 0.86
Non-GAAP Income per share - diluted    0.81                 0.85
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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