BEIJING, Jan. 15 /Xinhua-PRNewswire/ -- New Oriental Education and
Technology Group Inc. (NYSE:EDU), the largest provider of private
educational services in China, today announced its unaudited
financial results for the fiscal quarter ended November 30, 2006,
which is the second quarter for New Oriental's fiscal year 2007(1).
Highlights for the Fiscal Quarter Ended November 30, 2006 -- Total
net revenues increased by 32.9% year-over-year to RMB169.0 million
(US$21.6 million) from RMB127.2 million in the second quarter of
fiscal year 2006. -- Net income increased to RMB8.2 million (US$1.0
million) from a net loss of RMB8.7 million in the second quarter of
fiscal year 2006, and income attributable to holders of common
shares excluding share-based compensation expenses (non-GAAP)
increased to RMB16.2 million (US$2.1 million) from a net loss of
RMB34.2 million in the second quarter of fiscal year 2006. -- Basic
and diluted earnings per ADS were RMB0.23 (US$0.03) and RMB0.22
(US$0.03), respectively. Excluding share-based compensation
expenses (non-GAAP), basic and diluted earnings per ADS were
RMB0.46 (US$0.06) and RMB0.44 (US$0.06), respectively. Each ADS
represents four common shares. Common shares used in calculating
basic and diluted earnings per ADS increased in the second quarter
of fiscal 2007 due to 34.5 million new shares issued and sold by
the company in its initial public offering during the quarter. --
Total student enrollments in language training and test preparation
courses increased by 20.3% year-over-year to approximately 217,500
from approximately 180,800 in the second quarter of fiscal year
2006. -- Opened 2 new schools in the second quarter bringing the
total number of schools and learning centers to 34 and 121
(including the 34 schools), respectively, as of November 30, 2006,
up from 32 schools and 115 learning centers (including the 32
schools) as of August 31, 2006, respectively. 'During the second
quarter of fiscal year 2007, we experienced continued strong growth
in our student enrollments and net revenues enabling us to exceed
our revenue guidance by a substantial margin,' said New Oriental's
Chairman and Chief Executive Officer, Mr. Michael Yu. 'In addition,
we executed on our strategy of pursuing rapid organic growth by
adding two new schools, North Star in Beijing marking New
Oriental's entry into the fragmented professional certification
test preparation market, and our second primary/secondary campus in
Taixing, which is nearby our Yangzhou school.' New Oriental's Chief
Financial Officer, Mr. Louis T. Hsieh, added, 'During the second
fiscal quarter, we continued to improve our profitability by
simultaneously growing our revenues and controlling our expenses.
As we continue to expand our product offerings, student
enrollments, and geographic footprint into new markets across
China, we are confident that we will increasingly benefit from
economies of scale going forward.' Mr. Hsieh noted that the second
quarter of the Company's fiscal year is typically the slowest in
terms of revenue as students are occupied with the beginning of the
formal school year. 'We also used part of our IPO proceeds to clear
remaining debt ensuring a sound financial base for future
expansion,' added Mr. Hsieh. Financial Results for the Fiscal
Quarter Ended November 30, 2006 For the second fiscal quarter of
2007, New Oriental reported net revenues of RMB169.0 million
(US$21.6 million), representing a 32.9% increase year-over-year.
Net revenues from educational programs and services for the second
fiscal quarter were RMB152.0 million (US$19.4 million),
representing a 32.5% increase year-over-year. The growth was mainly
driven by the increase in the number of student enrollments in
language training and test preparation courses. Total student
enrollments in language training and test preparation courses in
the second fiscal quarter of 2007 increased by 20.3% year-over-year
to approximately 217,500 from approximately 180,800 in the second
quarter of fiscal year 2006. Total operating costs and expenses for
the quarter were RMB168.8 million (US$21.5 million), a 22.9%
increase year-over-year. Cost of revenues increased by 40.5%
year-over-year to RMB85.9 million (US$11.0 million), primarily due
to the increased number of courses offered to a larger student base
and the greater number of schools and learning centers in
operation. Selling and marketing expenses increased by 90.8%
year-over-year to RMB25.4 million (US$3.2 million), primarily due
to a refinement in accounting process in allocating some of the
personnel and other expenses which were included in our general and
administrative expenses in the second fiscal quarter of 2006 to our
selling and marketing expenses in the second fiscal quarter of
2007. General and administrative expenses decreased by 8.7%
year-over-year to RMB57.5 million (US$7.3 million), primarily due
to the implementation of the refined accounting process described
above. Without such accounting reclassification, general and
administrative expenses would have increased year-over-year. Total
share-based compensation expenses, which were allocated to related
operating costs and expenses, were RMB8.0 million (US$1.0 million)
in the second quarter of fiscal year 2007. There were no
share-based compensation expenses in the second quarter of fiscal
year 2006. Operating margin for the quarter was 0.2%, compared to
negative 8.0% in the corresponding period of the previous year.
Excluding share-based compensation expenses (non-GAAP), operating
margin for the quarter was 4.9%, compared to negative 8.0% in the
corresponding period of the prior year. This increase was primarily
due to the improved operating efficiency as revenue growth outpaced
the growth in operating costs and expenses. Income for the quarter
was RMB8.2 million (US$1.0 million) compared to a net loss of
RMB8.7 million in the second quarter of fiscal year 2006. Basic and
diluted earnings per share amounted to RMB0.06 (US$0.01) and
RMB0.06 (US$0.01), respectively, and basic and diluted earnings per
ADS were RMB0.23 (US$0.03) and RMB0.22 (US$0.03), respectively.
Income attributable to holders of common shares excluding
share-based compensation expenses (non-GAAP) was RMB16.2 million
(US$2.1 million). Basic and diluted earnings per ADS excluding
share based compensation expenses (non-GAAP) were RMB0.46 (US$0.06)
and RMB0.44 (US$0.06), respectively. Capital expenditures for the
quarter were RMB7.6 million (US$1.0 million). As of November 30,
2006, New Oriental had cash and cash equivalents of RMB1,166.5
million (US$148.8 million), as compared to RMB294.9 million as of
August 31, 2006. The increase in cash and cash equivalents was
primarily due to the net proceeds from our initial public offering
on the New York Stock Exchange on September 7, 2006. Net operating
cash flow for the second quarter of fiscal year 2007 was RMB42.4
million (US$5.4 million). Financial Results for the Six Months
Ended November 30, 2006 For the six months ended November 30, 2006
New Oriental reported net revenues of RMB598.4 million (US$76.4
million), representing a 31.8% increase year-over-year. Total
student enrollments in language training and test preparation
courses in the six months ended November 30, 2006 increased by
23.6% year-over-year to approximately 554,900 from approximately
448,900 in the six months ended November 30, 2005. Operating margin
for the six months ended November 30, 2006 was 30.2%, compared to
18.8% for the six months ended November 30, 2005. Net income for
the six months ended November 30, 2006 was RMB173.3 million
(US$22.1 million), representing a 135.7% increase year-over-year.
Basic and diluted earnings per ADS for the six months ended
November 30, 2006 amounted to RMB5.72 (US$0.73) and RMB5.31
(US$0.68), respectively. Common shares used in calculating basic
and diluted earnings per ADS increased in the second quarter of
fiscal year 2007 due to 34.5 million new shares issued and sold by
the company in its initial public offering during the quarter.
Outlook for Fiscal Third Quarter 2007 New Oriental expects its
total net revenues in the third quarter of fiscal year 2007
(December 1, 2006 to February 28, 2007) to be in the range of
RMB202 million (US$25.8 million) to RMB212 million (US$27.1
million), representing year-over-year growth in the range of 19.8%
to 25.8%, respectively. 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 16, 2007 U.S. Eastern
Time (9 PM on January 16, 2007 Beijing/Hong Kong time). Dial-in
details for the earnings conference call are as follows: US:
+1-617-213-8055 Hong Kong +852-3002-1672 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 11 AM on January 23, 2007 U.S. Eastern Time:
International: +1-617-801-6888 Passcode: 38993793 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 four
common shares, 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 third quarter of fiscal year 2007 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 periodic reports to the U.S.
Securities and Exchange Commission in its annual report to
shareholders, in press releases and other written materials and in
oral statements made by its officers, directors or employees to
third parties. Statements that are not historical facts, including
statements about 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 growth strategies; our future business development,
results of operations and financial condition; 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; and Chinese governmental policies
relating to private educational services and providers of such
services. Further information regarding these and other risks is
included in our registration statement on Form F-1 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 January 15, 2007, 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 and basic and diluted earnings
per share and per ADS 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 table 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
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 non-GAAP net income excluding share-based
compensation expenses, and basic and diluted earnings per share and
per ADS excluding share-based compensation expenses is that these
non-GAAP measures 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. (1) This announcement contains
translations of certain RMB amounts into U.S. dollars at specified
rates solely for the convenience of readers. Unless otherwise
noted, all translations from RMB to U.S. dollars for the entities
with the functional currency of RMB are made at a rate of RMB7.834
to US$1.00, the effective noon buying rate as of November 30, 2006
in The City of New York for cable transfers of RMB as certified for
customs purposes by the Federal Reserve Bank of New York. NEW
ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands) As of As of November 30
August 31 2006 2006 (Unaudited) (Unaudited) RMB USD RMB ASSETS:
Current assets: Cash and cash equivalents 1,166,510 148,766 294,948
Restricted cash 3,064 391 3,000 Term deposits -- -- 1,000 Accounts
receivable, net 2,664 340 1,542 Inventory 40,758 5,203 43,174
Prepaid expenses and other current assets 43,692 5,577 42,974 Total
current assets 1,256,688 160,277 386,638 Property, plant and
equipment, net 708,269 90,410 712,312 Land use right, net 25,180
3,214 25,318 Deposit for acquiring property and equipment -- -- --
Amounts due from related parties 464 64 2,691 Deferred tax assets
8,996 1,148 3,870 Long term prepaid rent -- -- 1,038 Trade mark
1,637 209 1,637 Total assets 2,001,234 255,322 1,133,504
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts
payable-trade 37,360 4,769 51,140 Accrued expenses and other
current liabilities 118,649 15,145 128,223 Income tax payable
21,041 2,686 18,413 Current portion of long-term debt -- -- 42,998
Amount due to related parties -- -- 162 Deferred revenue 182,651
23,315 135,728 Total current liabilities 359,701 45,915 376,664
Long-term debt, less current portion -- -- 64,445 Total long-term
liabilities -- -- 64,445 Minority interest 2,023 258 200 Total
liabilities 361,724 46,173 441,309 SHAREHOLDERS' EQUITY Series A
convertible preferred shares (US$ 0.01 par value; 11,111,111 shares
authorized as of August 31, 2006; 11,111,111 and nil shares issued
and outstanding as of August 31, 2006)(liquidation value US$22,500)
-- -- 920 Common Shares (US$ 0.01 par value; 150,000,000 shares
authorized as of August 31, 2006; 100,000,000 shares issued and
outstanding as of August 31, 2006; 300,000,000 shares authorized
and 145,611,111 shares issued and outstanding as of November 30,
2006) 11,940 1,456 8,277 Additional paid-in capital 1,264,475
158,440 315,208 Retained earnings 376,147 47,999 367,930
Accumulated other comprehensive loss (gain) (13,052) 1,254 (140)
Total shareholders' equity 1,639,510 209,149 692,195 Total
liabilities and shareholders' equity 2,001,234 255,322 1,133,504
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
2006 2005 (Unaudited) (Unaudited) RMB USD RMB Net Revenues:
Educational Programs and services 151,967 19,398 114,714 Books and
others 17,062 2,178 12,509 Total net revenues 169,029 21,576
127,223 Operating costs and expenses (note 1): Cost of revenues
85,903 10,965 61,142 Selling and marketing 25,409 3,243 13,314
General and administrative 57,456 7,332 62,909 Total operating
costs and expenses 168,768 21,540 137,365 Operating income (loss)
261 36 (10,142) Other income (expenses), net 8,085 1,023 (2,185)
Income tax expense (485) (62) 1,862 Minority interest, net of tax
356 45 -- Income from continuing operations 8,217 1,042 (10,465)
Income on discontinued operations -- -- 1,784 Net Income 8,217
1,042 (8,681) Dividend in kind -- -- (25,526) Income attributable
to holders of common shares 8,217 1,042 (34,207) Net income per
share-basic 0.06 0.01 (0.34) Net income per share-diluted 0.06 0.01
(0.31) Net income per ADS-basic (note 2) 0.23 0.03 (1.36) Net
income per ADS-diluted (note 2) 0.22 0.03 (1.24) Notes: Note 1:
Share-based compensation expenses are included in the operating
costs and expenses as follows: For the Three Months Ended November
30 2006 2005 Unaudited Unaudited RMB USD RMB Cost of revenues 209
27 -- Selling and marketing 118 15 -- General and administrative
7,698 983 -- Note 2: Each ADS represents four common shares 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
2006 2005 (Unaudited) (Unaudited) RMB USD RMB Net Revenues:
Educational Programs and services 563,881 71,979 429,535 Books and
others 34,481 4,401 24,530 Total net revenues 598,362 76,380
454,065 Operating costs and expenses (note 1): Cost of revenues
224,540 28,662 174,915 Selling and marketing 61,141 7,805 35,455
General and administrative 132,246 16,877 158,398 Total operating
costs and expenses 417,927 53,344 368,768 Operating income (loss)
180,435 23,036 85,297 Other income (expenses), net 6,168 779
(5,321) Income tax expense (13,683) (1,747) (16,039) Minority
interest, net of tax 356 45 (12) Income from continuing operations
173,276 22,113 63,925 Income on discontinued operations -- -- 9,595
Net Income 173,276 22,113 73,520 Dividend in kind -- -- (25,526)
Income attributable to holders of common shares 173,276 22,113
47,994 Net income per share-basic 1.43 0.18 0.48 Net income per
share-diluted 1.33 0.17 0.43 Net income per ADS-basic (note 2) 5.72
0.73 1.92 Net income per ADS-diluted (note 2) 5.31 0.68 1.73 Notes:
Note 1: Share-based compensation expenses are included in the
operating costs and expenses as follows: For the Six Months Ended
November 30 2006 2005 Unaudited Unaudited RMB USD RMB Cost of
revenues 352 45 65 Selling and marketing 217 28 793 General and
administrative 13,145 1,678 25,367 Note 2: Each ADS represents four
common shares NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP
MEASURES (In thousands except share and per ADS amounts) For the
Three Months Ended November 30 2006 2005 (Unaudited) (Unaudited)
RMB USD RMB GAAP net income 8,217 1,042 (8,681) Dividend in kind --
-- (25,526) GAAP income attributable to holders of common shares
8,217 1,042 (34,207) Share-based compensation expenses 8,025 1,025
-- Non-GAAP income attributable to holders of common shares 16,242
2,067 (34,207) GAAP net income per ADS - basic (note 1) 0.23 0.03
(1.36) GAAP net income per ADS - diluted (note 1) 0.22 0.03 (1.24)
Non-GAAP net income per ADS - basic (note 1) 0.46 0.06 (1.36)
Non-GAAP net income per ADS - diluted (note 1) 0.44 0.06 (1.24)
Shares used in calculated basic net income per ADS (note 1)
142,603,785 142,603,785 100,000,000 Shares used in calculated
diluted net income per ADS (note 1) 148,176,297 148,176,297
111,111,111 Note 1: Each ADS represents four common shares NEW
ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. RECONCILIATION OF
NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES (In
thousands except share and per ADS amounts) For the Six Months
Ended November 30 2006 2005 (Unaudited) (Unaudited) RMB USD RMB
GAAP net income 173,276 22,113 73,520 Dividend in kind -- --
(25,526) GAAP income attributable to holders of common shares
173,276 22,113 47,994 Share-based compensation expenses 13,714
1,751 26,225 Non-GAAP income attributable to holders of common
shares 16,242 23,864 74,219 GAAP net income per ADS - basic (note
1) 5.72 0.73 1.92 GAAP net income per ADS - diluted (note 1) 5.31
0.68 1.73 Non-GAAP net income per ADS - basic (note 1) 6.17 0.79
2.97 Non-GAAP net income per ADS - diluted (note 1) 5.73 0.73 2.67
Shares used in calculated basic net income per ADS (note 1)
121,185,489 121,185,489 100,000,000 Shares used in calculated
diluted net income per ADS (note 1) 130,565,761 130,565,761
111,111,111 Note 1: Each ADS represents four common shares For
investor and media inquiries, please contact: In China: Ms. Sisi
Zhao New Oriental Education and Technology Group Inc. Tel:
+86-10-6260-5566 x8203 Email: Mr. Rory Macpherson Ogilvy Public
Relations Worldwide Tel: +86-10-8520-6553 Email: In the United
States: Mr. Thomas Smith Ogilvy Public Relations Worldwide Tel:
+1-212-880-5269 Email: DATASOURCE: New Oriental Education and
Technology Group Inc. CONTACT: In China -- Ms. Sisi Zhao of New
Oriental Education and Technology Group Inc., +86-10-6260-5566
x8203, or , or Mr. Rory Macpherson of Ogilvy Public Relations
Worldwide, +86-10-8520-6553, or ; or in the United States -- Mr.
Thomas Smith of Ogilvy Public Relations Worldwide, +1-212-880-5269,
or , for EDU Web Site: http://english.neworiental.org/
http://investor.neworiental.org/
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