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New Oriental Announces Results for the Fourth Quarter and Fiscal Year Ended May 31, 2014, and Adoption of Up to US$120 Million

 New Oriental Announces Results for the Fourth Quarter and Fiscal Year Ended  May 31, 2014, and Adoption of Up to US$120 Million Share Repurchase Program  Quarterly Net Revenues Increased by 20.0% Year-Over-Year  Quarterly Operating Income Increased by 26.3% Year-Over-Year  Quarterly Net Income Attributable to New Oriental Increased by 52.2% Year-Over-Year  Fiscal Year Net Revenues Increased by 18.7% Year-Over-Year  Fiscal Year Operating Income Increased by 61.2% Year-Over-Year  Fiscal Year Net Income Attributable to New Oriental Increased by 58.3% Year-Over-Year  PR Newswire  BEIJING, July 22, 2014  BEIJING, July 22, 2014 /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 fourth quarter and fiscal year ended May 31, 2014.  Highlights for the Fourth Fiscal Quarter Ended May 31, 2014    oTotal net revenues increased by 20.0% year-over-year to US$287.5 million     from US$239.6 million in the same period of the prior fiscal year.   oNet income attributable to New Oriental increased by 52.2% year-over-year     to US$42.9 million from US$28.2 million in the same period of the prior     fiscal year.   oNon-GAAP net income attributable to New Oriental, which excludes     share-based compensation expenses, increased by 33.2% year-over-year to     US$46.8 million from US$35.2 million in the same period of the prior     fiscal year.   oOperating income increased by 26.3% year-over-year to US$30.8 million from     US$24.4 million in the same period of the prior fiscal year.   oNon-GAAP operating income, which excludes share-based compensation     expenses, increased by 10.7% year-over-year to US$34.7 million from     US$31.4 million in the same period of the prior fiscal year.   oBasic and diluted net income attributable to New Oriental per American     Depositary Shares ("ADS") were US$0.27 and US$0.27, respectively. Non-GAAP     basic and diluted net income per ADS, which excludes share-based     compensation expenses, were US$0.30 and US$0.30, respectively. Each ADS     represents one common share of the Company.   oTotal student enrollments in academic subjects tutoring and test     preparation courses increased by 4.0% year-over-year to approximately     581,400 from approximately 559,000 in the same period of the prior fiscal     year.  Highlights for the Fiscal Year Ended May 31, 2014    oTotal net revenues for the fiscal year increased by 18.7% year-over-year     to US$1,138.9 million from US$959.9 million.   oNet income attributable to New Oriental for the fiscal year increased by     58.3% year-over-year to US$215.7 million from US$136.3 million.   oNon-GAAP net income attributable to New Oriental for the fiscal year,     which excludes share-based compensation expenses, increased by 44.2%     year-over-year to US$235.8 million from US$163.5 million.   oOperating income for the fiscal year increased by 61.2% year-over-year to     US$197.6 million from US$122.6 million.   oNon-GAAP operating income for the fiscal year, which excludes share-based     compensation expenses, increased by 45.3% year-over-year to US$217.6     million from US$149.8 million.   oBasic and diluted net income attributable to New Oriental per ADS for the     fiscal year were US$1.38 and US$1.37, respectively. Non-GAAP basic and     diluted earnings per ADS, which excludes share-based compensation     expenses, were US$1.51 and US$1.49, respectively. Each ADS represents one     common share of the Company.   oTotal student enrollments in academic subjects tutoring and test     preparation courses for the fiscal year increased by 5.1% year-over-year     to approximately 2,668,700 from approximately 2,540,300 in the prior     fiscal year.   oThe total number of schools and learning centers was 703 as of May 31,     2014, down from 726 as of May 31, 2013, and an increase of three compared     to 700 as of February 28, 2014. The total number of schools was 56 as of     May 31, 2014.  Financial and Student Enrollments Summary – Fourth Fiscal Quarter and Fiscal Year 2014  (in thousands US$, except per ADS data, student enrollments and percentages)                                Q4of FY2014     Q4 of FY2013     Pct. Change Net revenues                  287,487          239,645          20.0% Net income attributable to    42,882           28,177           52.2% New Oriental Non-GAAP net income attributable to New           46,836           35,172           33.2% Oriental^(1) Operating income              30,780           24,377           26.3% Non-GAAP operating income^(1) 34,734           31,372           10.7% Net income per ADS attributable to New           0.27             0.18             51.1% Oriental - basic Net income per ADS attributable to New           0.27             0.18             51.7% Oriental - diluted Non-GAAP net income per ADS attributable                  0.30             0.23             32.2% to New Oriental - basic^(1)(2) Non-GAAP net income per ADS attributable                  0.30             0.22             32.7% to New Oriental - diluted^(1)(2) Total student enrollments in academic subjects tutoring    581,400          559,000          4.0% and test preparation courses                               FY 2014          FY 2013          Pct. Change Net revenues                  1,138,887        959,854          18.7% Net income attributable to    215,704          136,269          58.3% New Oriental Non-GAAP net income attributable to New Oriental  235,783          163,511          44.2% ^(1) Operating income              197,567          122,565          61.2% Non-GAAP operating income     217,646          149,807          45.3% ^(1) Net income per ADS attributable to New           1.38             0.87             58.0% Oriental - basic Net income per ADS attributable to New           1.37             0.86             58.2% Oriental - diluted Non-GAAP net income per ADS attributable to               1.51             1.05             43.9% New Oriental - basic ^(1)(2) Non-GAAP net income per ADS attributable to               1.49             1.04             44.1% New Oriental - diluted ^(1)(2) Total student enrollments in academic subjects             2,668,700        2,540,300        5.1% tutoring and test preparation courses (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) 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, "We are pleased to report healthy top line growth of 20.0% and sustained strong profit growth of 52.2% for the fourth fiscal quarter, as we ended our fiscal year 2014 on a strong note. During this past fiscal year, we achieved major milestones on both the top and bottom lines, with revenues exceeding US$1 billion to US$1.139 billion and net profit exceeding US$200 million to US$215.7 million for the first time. We are particularly encouraged that our 'Harvest the Market' strategy has driven a significant improvement in profitability during the year. Gross margin for fiscal year 2014 increased by 30 basis points to 60.3% from 60.0% in fiscal year 2013, operating margin increased by 450 basis points to 17.3% from 12.8%, and net margin increased by a very impressive 470 basis points to 18.9% from 14.2%."  Mr. Yu continued, "Starting in the fourth quarter of fiscal year 2014, we once again started to expand our network by adding a net of three learning centers, giving us a total of 703 schools and learning centers as of the end of fiscal year 2014. We also added more than 9,300 square meters of additional classroom area by expanding 10 of our existing learning centers. Moving into fiscal year 2015, we plan to extend our penetration rate in existing markets by adding capacity in cities where we are experiencing rapid growth and strong profitability."  Mr. Yu concluded, "Looking ahead, while we expect that the reduction in the size of our network over the last year, uncertainty about province-by-province implementation of new policies relating to the English test for the Gaokao college entrance exam, increased competition especially in second- and third-tier cities, and O2O product transitions in our POP Kids program will result in somewhat slower top-line growth in the first half of fiscal year 2015, we believe that the fundamentals of our business remain strong and that we will extend our clear leadership position in China's education market."  Louis T. Hsieh, New Oriental's President and Chief Financial Officer, commented, "Although we did not expand our school network over the last fiscal year, we nevertheless continued to record strong growth momentum across our key business lines as we improved utilization rates across the network. Our overseas test preparation and overseas study consulting businesses together recorded year-over-year gross revenue growth of about 22% to approximately US$440.6 million, while our U-Can grade 7 to 12 all-subjects after-school tutoring business recorded year-over-year gross revenue growth of about 23% to approximately US$328.4 million."  Adoption of Share Repurchase Program  On July 22, 2014, New Oriental's board of directors authorized the repurchase of up to US$120 million of the Company's shares during the period from July 28, 2014, through March 31, 2015.  This share repurchase program authorizes the Company to purchase its 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.  Updates on Online Education Strategy: Establishment of Online and Offline Integrated Education Ecosystem  New Oriental is in the process of establishing an online and offline integrated education ecosystem. This ecosystem strategy consists of three levels.  1) The core element of the ecosystem is to develop an "O2O Two-way Interactive Education System" by extending New Oriental's traditional offline classroom-teaching offerings to online educational services.  New Oriental has developed a platform featuring a series of online education modules to support classroom teaching, after-class self-learning, and interaction between students, teachers, and parents via internet-enabled devices, such as smartphones, tablets and PCs. The Company has been piloting and upgrading the platform for all major product lines since the beginning of fiscal year 2015. A newly revamped POP kids English program, called "Shuang You" will be fully launched throughout the New Oriental network in the second quarter of fiscal year 2015. A revamped U-Can all-subject after-school tutoring program, named "U-Can Visible Progress Teaching system," has been piloted in several large cities and will be rolled out to more cities in the first half of fiscal year 2015. Similar systems will also be implemented for overseas test preparation and domestic test preparation courses beginning from the second quarter of fiscal year 2015.  2) The second level above the O2O Two-way Interactive Education System is to invest in the development of supplementary online educational products and services.  New Oriental's own online education website koolearn.com now offers over 2,000 online courses in language training, overseas and domestic test preparation and vocational education with over 9.2 million cumulative registered users by the end of fiscal year 2014 and about 177,700 paying users in fiscal year 2014. Recent developments relating to koolearn.com include:    oKoolearn.com recently launched an online test preparation program, which     features live broadcasts of a series of New Oriental's most popular     offline test preparation classes. This program had achieved over 264,400     registrations in the second half of fiscal year 2014.   oIn July 2014, Koolearn.com and ATA Inc. (NASDAQ: ATAI), a leading provider     of advanced testing technologies and testing-related services in China,     established a joint venture to provide online and mobile education and     training to working professionals in China. The partnership aims to     leverage New Oriental's expertise in online education website and its     distribution channels, and ATA Inc.'s experience in assessment deliveries,     student resources, learning tools, software and other technical resources.   oKoolearn.com's "DONUT" game-based mobile learning applications for     children aged 2 to 8 recorded over 8 million downloads by the end of     fiscal year 2014 and Koolearn.com has reached agreements for DONUT     applications to be used in about 20 kindergartens by September 2014.  In addition, during the fourth fiscal quarter of 2014 New Oriental made important progress in its strategy to develop other supplementary online education products and services under the New Oriental brand, either independently or in majority-held partnerships with other companies. Recent developments in this regard include:    oIn May 2014, the Company launched an English language vocabulary training     application, "Le Ci", for mobile phones and tablets. Le Ci aids vocabulary     memorization and language development using techniques developed by New     Oriental's Chairman and CEO, Michael Yu. Over time, social networking and     incentive-based learning features will be added to the application. In the     two months since it was launched, the application has already recorded     over 310,000 users.   oIn July 2014, the Company also launched anonline education platform for     primary and secondary schools. The "OKAY" platform was developed in     cooperation with more than 30,000 teachers from 49 public schools in China     and was specifically designed to support learning activities in primary     and secondary classrooms. It features an extensive database of educational     content and resources, which can support intelligent, customized,     interactive in-class teaching and learning on New Oriental customized     tablets and digital whiteboards. The platform can also track and analyze     students' after-class self-learning progress, and automatically push     customized content that can improve students' learning efficiency.   oNew Oriental has developed a strategic partnership with Tencent Holdings     Limited ("Tencent", SEHK: 00700), a leading provider of comprehensive     Internet services in China, to research and develop unique mobile-based     English language learning offerings that will build on the Company's deep     resources in terms of content and educational research and Tencent's     technological expertise and online penetration. The first product is     expected to be launched by the end of 2014, and will be promoted through     Tencent's online channels and New Oriental's offline network.  3) New Oriental is also exploring opportunities to invest in selected online education companies with minority stake to further support its efforts to develop a comprehensive online and offline integrated education ecosystem.  New Oriental intends to focus on investing in online education companies that have business models or technologies that are complementary to its online education strategy.  Financial Results for the Fourth Fiscal Quarter Ended May 31, 2014  For the fourth fiscal quarter of 2014, New Oriental reported net revenues of US$287.5 million, representing a 20.0% increase year-over-year.  Net revenues from educational programs and services for the fourth fiscal quarter were US$236.2 million, representing a 16.6% increase year-over-year. The 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. Total student enrollments in academic subjects tutoring and test preparation courses in the fourth quarter of fiscal year 2014 increased by 4.0% year-over-year to approximately 581,400 from approximately 559,000 in the same period of the prior fiscal year.  Operating costs and expenses for the quarter were US$260.3 million, a 20.9% increase year-over-year. Non-GAAP operating costs and expenses, which exclude share-based compensation expenses, for the quarter were US$256.4 million, a 23.1% increase year-over-year.  Cost of revenues increased by 21.0% year-over-year to US$113.8 million, primarily due to increases in teachers' compensation which is in line with the revenue growth.  Selling and marketing expenses increased by 40.9% year-over-year to US$51.7 million, primarily due to brand promotion expenses.  General and administrative expenses for the quarter increased by 12.2% year-over-year to US$94.8 million. Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, were US$90.9 million, a 17.2% increase year-over-year.  Total share-based compensation expenses, which were allocated to related operating costs and expenses, decreased by 43.5% to US$4.0 million in the fourth quarter of fiscal year 2014 from US$7.0 million in the same period of the prior fiscal year.  Operating income for the quarter was US$30.8 million, a 26.3% increase from US$24.4 million in the same period of the prior fiscal year. Non-GAAP operating income, which excludes share-based compensation expenses, for the quarter was US$34.7 million, a 10.7% increase from US$31.4 million in the same period of the prior fiscal year.  Operating margin for the quarter was 10.7%, compared to 10.2% in the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses, for the quarter was 12.1%, compared to 13.1% in the same period of the prior fiscal year.  Net income attributable to New Oriental for the quarter was US$42.9 million, representing a 52.2% increase from the same period of the prior fiscal year. Basic and diluted earnings per ADS attributable to New Oriental were US$0.27 and US$0.27, respectively.  Non-GAAP net income attributable to New Oriental for the quarter was US$46.8 million, representing a 33.2% increase from the same period of the prior fiscal year. Non-GAAP basic and diluted earnings per ADS attributable to New Oriental were US$0.30 and US$0.30, respectively.  Capital expenditures for the quarter were US$8.9 million, which were primarily attributable to the opening of 24 new learning centers and renovations at older, existing learning centers.  As of May 31, 2014, New Oriental had cash and cash equivalents of US$371.6 million, as compared to US$355.8 million as of February 28, 2014. In addition, the Company had US$98.5 million in term deposits and US$643.4 million in short-term investment at the end of the quarter. Net operating cash flow for the fourth quarter of fiscal year 2014 was approximately US$93.6 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, at the end of the fourth quarter of fiscal year 2014 was US$380.8 million, an increase of 14.6% as compared to US$332.2 million at the end of the fourth quarter of fiscal year 2013.  Financial Results for the Fiscal Year Ended May 31, 2014  For the fiscal year ended May 31, 2014, New Oriental reported net revenues of US$1,138.9 million, an 18.7% increase year-over-year.  Total student enrollments in academic subjects tutoring and test preparation courses for the fiscal year ended May 31, 2014, increased by 5.1% year-over-year to approximately 2,668,700 from approximately 2,540,300 for the fiscal year ended May 31, 2013.  Operating income for the fiscal year ended May 31, 2014, was US$197.6 million, a 61.2% increase year-over-year. Non-GAAP operating income, which excludes share-based compensation expenses, for the fiscal year ended May 31, 2014, was US$217.6 million, a 45.3% increase year-over-year.  Operating margin for the fiscal year ended May 31, 2014, was 17.3%, compared to 12.8% for the fiscal year ended May 31, 2013. Non-GAAP operating margin, which excludes share-based compensation expenses, for the fiscal year ended May 31, 2014, was 19.1%, compared to 15.6% for the fiscal year ended May 31, 2013.  Net income attributable to New Oriental for the fiscal year ended May 31, 2014, was US$215.7 million, representing a 58.3% increase year-over-year. Basic and diluted earnings per ADS attributable to New Oriental for the fiscal year ended May 31, 2014, were US$1.38 and US$1.37, respectively.  Non-GAAP net income attributable to New Oriental, which excludes share-based compensation expenses, for the fiscal year ended May 31, 2014, was US$235.8 million, a 44.2% increase year-over-year. Non-GAAP basic and diluted earnings per ADS attributable to New Oriental for the fiscal year ended May 31, 2014, were US$1.51 and US$1.49, respectively.  Outlook for First Quarter of Fiscal Year 2015  New Oriental expects total net revenues in the first quarter of fiscal year 2015 (June 1, 2014, to August 31, 2014) to be in the range of US$412.0 million to US$427.5 million, representing year-over-year growth in the range of 6% to 10%. This lower-than-normal projected revenue growth rate reflects the anticipated impact on the Company's top-line performance of margin expansion initiatives in fiscal year 2014, the transition to a new POP Kids program, changes in product mix and business seasonality, as well as certain macroeconomic factors. We are in the process of reducing our previous learning center opening plan of 10 to 12 per quarter in light of the slower than expected revenue growth outlook for our first quarter of 2015.  The specific factors impacting the Company's guidance are:    oThe fact that the Company has reduced the total number of schools and     learning centers in its network, which decreased by a net of 23 during     fiscal year 2014 to 703 at the end of fiscal year 2014 from 726 at the end     of fiscal year 2013;   oThe ongoing rollout of a revamped POP Kids program, which has impacted     enrollments in this business line and is expected to be fully completed in     the second quarter of fiscal year 2015;   oAn expected continued decline in enrollments for the Company's legacy     business lines of adult English and domestic college English test     preparation;   oUncertainty about the implementation of new policies related to the     English test for the Gaokao, or college entrance exam, which is being     determined on a province-by-province basis;   oChanging trends in the seasonality of the Company's business as its     fastest-growing business line, K-12 after-school tutoring, experiences a     slack season in the first fiscal quarter when primary and secondary     schools are closed for the summer break;   oGrowing local competition in second and third tier cities in the K-12     after-school tutoring segment;   oThe slowing Chinese economy which has adversely affected discretionary     consumer spending, notwithstanding the fact that educational services     remain more resilient than most other discretionary consumer categories;     and   oThe recent depreciation of Renminbi against U.S. dollar.  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 July 22, 2014, U.S. Eastern Time (8 PM on July 22, 2014, Beijing/Hong Kong Time).  Dial-in details for the earnings conference call are as follows:  US:  +1-845-675-0437 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 July 29, 2014:  International: +61-2-8199-0299 Passcode:   67230146  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 first quarter of fiscal year 2015, 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:  Mr. Martin Reidy FTI Consulting Tel:+86-10-8591-1060 Email:martin.reidy@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)                                                AsofMay31  AsofFebruary28                                                2014          2014                                                (Unaudited)   (Unaudited)                                                USD           USD ASSETS: Current assets: Cash and cash equivalents                      371,593       355,782 Restricted cash, current                       488           1,635 Term deposits                                  98,489        99,612 Short term investments                         643,410       696,225 Accounts receivable, net                       2,782         3,700 Inventory                                      22,366        23,388 Deferred tax assets, current                   12,033        8,380 Prepaid expenses and other current assets      78,398        61,351 Amounts due from related parties, current      4,116         2,427 Total current assets                           1,233,675     1,252,500 Property, plant and equipment, net             225,335       231,681 Land use rights, net                           4,344         4,446 Amounts due from related party, non-current    930           - Deferred tax assets, non-current               2,224         1,763 Long term deposit                              12,574        13,633 Long term prepaid rent                         1,082         1,025 Restricted cash, non-current                   1,840         1,789 Intangible assets                              736           772 Goodwill                                       3,692         3,753 Long term investments                          117,113       7,340 Total assets                                   1,603,545     1,518,702 LIABILITIES AND EQUITY Current liabilities: Accounts payable (including accounts payable of the consolidated VIEs without recourse to New Oriental of US$10,601 and US$8,501 as of   8,586         10,796 February 28, 2014 and May 31, 2014, respectively) Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without   168,918       117,054 recourse to New Oriental of US$105,636 and US$144,304 as of February 28, 2014 and May 31, 2014, respectively) Income taxes payable (including income tax payable of the consolidated VIEs without recourse to New Oriental of US$11,693 and      17,720        13,688 US$15,920 as of February 28, 2014 and May 31, 2014, respectively) Amounts due to related parties (including amounts due to related parties of the consolidated VIEs without recourse to New      4             2,444 Oriental ofnil and nil as of February 28, 2014 and May 31, 2014, respectively) Deferred revenue (including deferred revenue of the consolidated VIEs without recourse to New Oriental of US$375,752 and US$380,062 as   380,837       381,358 of February 28, 2014 and May 31, 2014, respectively) Total current liabilities                      576,065       525,340 Deferred tax liabilities (including deferred tax liablities of the consolidated VIEs without recourse to New Oriental of US$1,767   1,722         1,767 and US$1,722 as of February 28, 2014 and May 31, 2014, respectively) Total long-term liabilities                    1,722         1,767 Total liabilities                              577,787       527,107 Total shareholder's equity                     1,025,758     991,595 Total liabilities and shareholder's equity     1,603,545     1,518,702      NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except for per share and per ADS amounts)                                              FortheThreeMonthsEndedMay31                                              2014               2013                                              (Unaudited)        (Unaudited)                                              USD                USD Net Revenues: Educational programs and services            236,239            202,589 Books and others                             51,248             37,056 Total net revenues                           287,487            239,645 Operating costs and expenses (note 1): Cost of revenues                            113,819            94,088 Selling and marketing                        51,666             36,666 General and administrative                  94,843             84,514 Total operating costs and expenses           260,328            215,268 Gain on disposal of subsidiaries             3,621              - Operating income                             30,780             24,377 Other income, net                            14,014             6,715 Provision for income taxes                   (1,912)            (2,354) Loss from equity method investment          -                  (561) Net income attributable to New Oriental      42,882             28,177 Education & Technology Group Inc. Net income per share attributable to New     0.27               0.18 Oriental-Basic Net income per share attributable to New     0.27               0.18 Oriental-Diluted Net income per ADS attributable to New       0.27               0.18 Oriental-Basic (note 2) Net income per ADS attributable to New       0.27               0.18 Oriental-Diluted (note 2) Other comprehensive (loss) income, net of    (19,708)           10,600 tax Comprehensive income                         23,174             38,777 Comprehensive income attributable to New     23,174             38,777 Oriental 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 Ended May 31                                              2014               2013                                              (Unaudited)        (Unaudited)                                              USD                USD General and administrative                   3,954              6,995 Total                                        3,954              6,995 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)                                            FortheThreeMonthsEndedMay31                                            2014               2013                                            (Unaudited)        (Unaudited)                                            USD                USD General and administrative expenses        94,843             84,514 Share-based compensation expense in        3,954              6,995 general and administrative expenses Non-GAAP general and administrative        90,889             77,519 expenses Total operating costs and expenses         260,328            215,268 Share-based compensation expenses          3,954              6,995 Non-GAAP operating costs and expenses      256,374            208,273 Operating income                           30,780             24,377 Share-based compensation expenses          3,954              6,995 Non-GAAP operating income                  34,734             31,372 Operating margin                          10.7%              10.2% Non-GAAP operating margin                  12.1%              13.1% Net income attributable to New Oriental    42,882             28,177 Share-based compensation expense           3,954              6,995 Non-GAAP net income                        46,836             35,172 Net income per ADS attributable to New     0.27               0.18 Oriental- Basic (note 1) Net income per ADS attributable to New     0.27               0.18 Oriental- Diluted (note1) Non-GAAP net income per ADS attributable to                                         0.30               0.23 New Oriental - Basic (note 1) Non-GAAP net income per ADS attributable to                                         0.30               0.22 New Oriental - Diluted (note 1) Weighted average shares used in calculating                                156,868,796        155,714,549 basic net income per ADS (note 1) Weighted average shares used in calculating                                158,284,927        157,774,804 diluted net income per ADS (note 1) Non-GAAP income per share - basic          0.30               0.23 Non-GAAP income per share - diluted        0.30               0.22 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 Year Ended May 31                                        2014                    2013                                        (Unaudited)             (Unaudited)                                        USD                     USD Net Revenues: Educational programs and services      1,006,198               857,685 Books and others                       132,689                 102,169 Total net revenues                     1,138,887               959,854 Operating costs and expenses (note 1): Cost of revenues                      451,669                 384,177 Selling and marketing                  169,062                 142,098 General and administrative            324,210                 311,014 Total operating costs and expenses     944,941                 837,289 Gain on disposal of subsidiaries       3,621                   - Operating income                      197,567                 122,565 Other income, net                      45,632                  30,893 Provision for income taxes             (26,042)                (15,355) Loss from equity method investment    (1,453)                 (1,427) Income from continuing operations      215,704                 136,676 Loss on discontinued operations, net   -                       (407) of tax Net income attributable to New Oriental Education &                   215,704                 136,269 Technology Group Inc. Net income (loss) per share attributable to New Oriental-Basic Income from continuing operations      1.38                    0.88 Loss on discontinued operations        -                       (0.00) Net income (loss) per share attributable to New Oriental-Diluted Income from continuing operations      1.37                    0.87 Loss on discontinued operations        -                       (0.00) Net income (loss) per ADS attributable to New Oriental-Basic (note 2) Income from continuing operations      1.38                    0.88 Loss on discontinued operations        -                       (0.00) Net income (loss) per ADS attributable to New Oriental-Diluted (note 2) Income from continuing operations      1.37                    0.87 Loss on discontinued operations        -                       (0.00) Other comprehensive (loss) income, net (17,308)                27,729 of tax Comprehensive income                   198,396                 163,998 Comprehensive income attributable to New Oriental Education & Technology    198,396                 163,998 Group Inc. Notes: Note 1: Share-based compensation expenses (in thousands) are included in the operating costs and expenses as follows:                                        For the Year Ended May 31                                        2014                    2013                                        (Unaudited)             (Unaudited)                                        USD                     USD General and administrative             20,079                  27,242 Total                                  20,079                  27,242 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 Year Ended May 31                                                    2014          2013                                                    (Unaudited)   (Unaudited)                                                    USD           USD General and administrative expenses                324,210       311,014 Share-based compensation expense in                20,079        27,242 general and administrative expenses Non-GAAP general and administrative expenses       304,131       283,772 Total operating costs and expenses                 944,941       837,289 Share-based compensation expenses                  20,079        27,242 Non-GAAP operating costs and expenses              924,862       810,047 Operating income                                   197,567       122,565 Share-based compensation expenses                  20,079        27,242 Non-GAAP operating income                          217,646       149,807 Operating margin                                  17.3%         12.8% Non-GAAP operating margin                          19.1%         15.6% Net income attributable to New Oriental            215,704       136,269 Share-based compensation expense                   20,079        27,242 Non-GAAP net income                                235,783       163,511 Net income per ADS attributable to New             1.38          0.87 Oriental- Basic (note 1) Net income per ADS attributable to New             1.37          0.86 Oriental- Diluted (note 1) Non-GAAP net income per ADS attributable to        1.51          1.05 New Oriental - Basic (note 1) Non-GAAP net income per ADS attributable to        1.49          1.04 New Oriental - Diluted (note 1) Weighted average shares used in calculating basic  156,033,992   155,762,959 net income per ADS (note 1) Weighted average shares used in calculating diluted                                            157,903,464   157,823,792 net income per ADS (note 1) Non-GAAP income per share - basic                  1.51          1.05 Non-GAAP income per share - diluted                1.49          1.04 Note 1: Each ADS represents one common share.  SOURCE New Oriental Education and Technology Group Inc.  Website: http://investor.neworiental.org Website: http://english.neworiental.org  
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