Net Revenues Increased by 23.8% Year-Over-Year BEIJING, Jan. 19
/PRNewswire-Asia/ -- New Oriental Education and Technology Group
Inc. (the "Company" or "New Oriental") (NYSE:EDU), the largest
provider of private educational services in China, today announced
its unaudited financial results for the second fiscal quarter ended
November 30, 2009, which is the second quarter of New Oriental's
fiscal year 2010. Highlights for the Second Fiscal Quarter Ended
November 30, 2009 -- Total net revenues increased by 23.8%
year-over-year to US$61.2 million from US$49.4 million in the same
period of the prior fiscal year. -- GAAP net income decreased by
63.9% year-over-year to US$1.1 million from US$3.1 million in the
same period of the prior fiscal year. Non- GAAP net income, which
excludes share-based compensation expenses, decreased by 25.8%
year-over-year to US$5.5 million from US$7.4 million in the same
period of the prior fiscal year. -- GAAP loss from operations was
US$0.9 million, compared to income from operations of US$0.9
million in the same period of the prior fiscal year. Non-GAAP
income from operations decreased by 33.4% year-over-year to US$3.5
million from US$5.2 million in the same period of the prior fiscal
year. -- GAAP basic and diluted net income per ADS were US$0.03 and
US$0.03, respectively. Non-GAAP basic and diluted net income per
ADS were US$0.15 and US$0.14, respectively. Each ADS represents
four common shares of the Company. -- Total student enrollments in
language training and test preparation courses increased by 5.1%
year-over-year to approximately 307,000 from approximately 292,200
in the same period of the prior fiscal year. -- The total number of
schools remained at 48, located in 40 cities, as of November 30,
2009. The number of learning centers increased by 11 to 250 as of
November 30, 2009, up from 239 as of August 31, 2009. Financial and
Student Enrollments Summary -- Second Fiscal Quarter 2010 and First
Six Months of FY2010 (US$ 000, except per ADS data and student
enrollments) Q2 of FY2010 Q2 of FY 2009 Pct. Change Net revenues
61,195 49,430 23.8% GAAP net income 1,107 3,064 -63.9% Non-GAAP net
income (1) 5,470 7,376 -25.8% GAAP operating income (loss) (911)
870 -204.7% Non-GAAP operating income (1) 3,452 5,182 -33.4% GAAP
net income per ADS basic (2) 0.03 0.08 -64.3% GAAP net income per
ADS diluted (2) 0.03 0.08 -64.1% Non-GAAP net income per ADS basic
(1)(2) 0.15 0.20 -26.7% Non-GAAP net income per ADS diluted (1)(2)
0.14 0.19 -26.4% Total student enrollments in language training and
test preparation courses 307,000 292,200 5.1% 1H of FY2010 1H of
FY2009 Pct. Change Net revenues 210,559 167,692 25.6% GAAP net
income 58,173 47,967 21.3% Non-GAAP net income (1) 66,237 56,163
17.9% GAAP operating income 60,020 49,735 20.7% Non-GAAP operating
income (1) 68,084 57,931 17.5% GAAP net income per ADS basic (2)
1.54 1.29 19.8% GAAP net income per ADS diluted (2) 1.50 1.25 20.5%
Non-GAAP net income per ADS basic (1)(2) 1.76 1.51 16.5% Non-GAAP
net income per ADS diluted (1)(2) 1.71 1.46 17.2% Total student
enrollments in language training and test preparation courses
954,500 837,600 14.0% (1) New Oriental provides net income,
operating income, net income per ADS on a Non-GAAP basis that
excludes share-based compensation expenses to reflect meaningful
supplemental information regarding its performance and liquidity.
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. (2) Each ADS represents four common shares. "Despite the
continued challenges posed by the H1N1 flu outbreak, we saw
sustained year-over-year revenue growth of 23.8% to US$61.2 million
in the second quarter of fiscal year 2010," said Michael Yu, New
Oriental's Chairman and Chief Executive Officer. "This was driven
by strong revenue growth in our middle-high school and kids
business lines, namely over 50% growth in middle and high school
English and U-Can all-subjects training and over 40% growth in POP
Kids English. We recorded blended average selling price
year-over-year growth of approximately 13.8% for the quarter,
mostly due to strong demand for higher priced one-to-one and small
size class offerings. Also we enhanced market coverage during the
quarter by adding a net of eleven new learning centers in ten
existing cities." Mr. Yu continued, "Our 5.1% year-over-year
increase in enrollments in this quarter was negatively impacted by
fear of H1N1, especially as the number of reported cases increased
throughout the quarter and peaked in the last week of November.
Since that time, however, the challenging situation has stabilized
as the initial fear of H1N1 has begun to subside and the H1N1
vaccine has become widely available throughout the country,
especially in large cities. As of January 12, 2010 more than 58
million people have been vaccinated in mainland China, and
approximately 60% of school-aged children haven been immunized in
Beijing and Shanghai. As expected, since early December 2009 we
have been seeing a noticeable bounce back in cash receipts (cash
collected in advance for enrollments). In the past six weeks, cash
receipts have increased at least 30% each week compared to the same
period in the prior year." New Oriental's President and Chief
Financial Officer, Louis T. Hsieh, stated, "We are delighted to
report continued excellent progress in our non- English U-Can
programs, including our new customized learning program of small
and one-to-one class offerings. Even the seasonally slowest second
fiscal quarter witnessed more than 13,400 U-Can enrollments, up
from approximately 5,800 in the year ago period, representing over
100% year-over-year growth. In the first half of fiscal year 2010,
we recorded more than 46,900 U-Can enrollments and over US$12
million in revenue, more than double the enrollments and over four
times the revenue generated from the U-Can program in the year ago
period. We are on track to achieve the US$25 million revenue target
in fiscal year 2010 from the non-English U-Can program and our new
customized learning program, and another approximately US$40-45
million in middle-high school English revenue." Mr. Hsieh
continued, "Given the much better than expected demand for our
U-Can platform offerings, including the new customized learning
program, we have made the strategic decision to accelerate our
expansion of U-Can offerings to reach over 110 learning centers in
37 cities (previously 30 cities), with one-to-one and small class
offerings reaching 30 cities (previously 8 to 10 cities), by our
May 31, 2010 fiscal year end. To accomplish these aggressive
targets, we plan to hire over 1,000 full and part- time U-Can
teachers in fiscal year 2010, bringing the U-Can teacher total to
over 1,400. In addition, we plan to significantly augment our U-Can
department by adding over 250 staff, primarily in marketing and
customer service and R&D- content development. The incremental
cost of this accelerated expansion will be approximately US$4-5
million for the remaining two quarters of fiscal year 2010, but
this will position us well for our seasonally most important summer
quarter and beyond. We are confident that with New Oriental's
leading brand and our two-pronged strategy of offering both
affordable larger classes and higher priced individualized smaller
classes, we will continue to be the leader in China's huge
after-school training market." Mr. Hsieh noted that the second
quarter of New Oriental's fiscal year is typically the slowest in
terms of revenue quarter as students are occupied with the
beginning of the formal school year. Financial Results for the
Fiscal Quarter Ended November 30, 2009 For the second fiscal
quarter of 2010, New Oriental reported net revenues of US$61.2
million, representing a 23.8% increase year-over-year. Net revenues
from educational programs and services for the second fiscal
quarter were US$53.6 million, representing a 22.2% 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 quarter of fiscal year
2010 increased by 5.1% year-over-year to approximately 307,000 from
approximately 292,200 in the same period of the prior fiscal year.
GAAP operating costs and expenses for the quarter were US$62.1
million, representing a 27.9% increase year-over-year. Non-GAAP
operating costs and expenses for the quarter were US$57.7 million,
representing a 30.5% increase year-over-year. Cost of revenues
increased by 28.1% year-over-year to US$27.8 million, primarily due
to the increased number of courses and the greater number of
schools and learning centers in operation. Selling and marketing
expenses increased by 40.8% year-over-year to US$11.7 million,
primarily due to brand promotion expenses, especially for new
programs such as U-Can and the customized learning program. GAAP
general and administrative expenses were US$22.6 million,
representing a 21.9% increase year-over-year. Non-GAAP general and
administrative expenses for the quarter increased by 28.5%
year-over-year to US$18.5 million, primarily due to increased
headcount as the Company expanded its network of schools and
learning centers. Total share-based compensation expenses, which
were allocated to related operating costs and expenses, increased
slightly to US$4.4 million in the second quarter of fiscal year
2010 from US$4.3 million in the same period of the prior fiscal
year. GAAP loss from operations for the quarter was US$0.9 million,
compared to an income from operations of US$0.9 million in the same
period of the prior fiscal year, and Non-GAAP income from
operations for the quarter was US$3.5 million, compared to US$5.2
million in the same period of the prior fiscal year. GAAP operating
margin for the quarter was negative 1.5%, compared to 1.8% in the
same period of the prior fiscal year. Non-GAAP operating margin for
the quarter was 5.6%, compared to 10.5% in the same period of the
prior fiscal year. This decline in operating margin was primarily
due to the negative impact from the H1N1 flu pandemic and the
increased marketing expenses for brand promotion, especially for
new programs such as U-Can and the customized learning program.
GAAP net income for the quarter was US$1.1 million, representing a
63.9% decrease from the same period of the prior fiscal year. Basic
and diluted net income per ADS were US$0.03 and US$0.03,
respectively. Non-GAAP net income was US$5.5 million, representing
a 25.8% decrease from the same period of the prior fiscal year.
Non-GAAP basic and diluted net income per ADS were US$0.15 and
US$0.14, respectively. Capital expenditures for the quarter were
US$3.4 million, which was primarily used to add a net of 11 new
learning centers and remodel older learning centers during the
quarter. As of November 30, 2009, New Oriental had cash and cash
equivalents of US$210.6 million, as compared to US$238.7 million as
of August 31, 2009. In addition, the Company had US$141.7 million
in term deposits at the end of the quarter. Net operating cash flow
generated for the second quarter of fiscal year 2010 was US$9.6
million. The deferred revenue balance (cash collected from
registered students for courses and to be recognized proportionally
as revenue as the instructions are delivered) at the end of the
second quarter of fiscal year 2010 was US$71.1 million,
representing an increase of 34.9% from US$52.7 million at the end
of the second quarter of fiscal year 2009. Financial Results for
the Six Months Ended November 30, 2009 For the first six months of
fiscal year 2010, New Oriental reported net revenues of US$210.6
million, representing a 25.6% increase year-over-year. Total
student enrollments in language training and test preparation
courses in the first six months of fiscal year 2010 increased by
14.0% to approximately 954,500 from approximately 837,600 in the
same period of the prior fiscal year. GAAP income from operations
for the first six months of fiscal year 2010 was US$60.0 million,
representing a 20.7% increase year-over-year. Non-GAAP income from
operations for the first six months of fiscal year 2010 was US$68.1
million, representing a 17.5% increase year-over-year. GAAP
operating margin for the first six months of fiscal year 2010 was
28.5%, compared to 29.7% for the same period of the prior fiscal
year. Non- GAAP operating margin for the first six months of fiscal
year 2010 was 32.3%, compared to 34.5% for the same period of the
prior fiscal year. GAAP net income for the first six months of
fiscal year 2010 was US$58.2 million, representing a 21.3% increase
year-over-year. GAAP basic and diluted earnings per ADS for the
first six months of fiscal year 2010 amounted to US$1.54 and
US$1.50, respectively. Non-GAAP net income for the first six months
of fiscal year 2010 was US$66.2 million, representing a 17.9%
increase year-over-year. Non-GAAP basic and diluted earnings per
ADS for the first six months of fiscal year 2010 amounted to
US$1.76 and US$1.71, respectively. Outlook for the Third Quarter of
Fiscal Year 2010 New Oriental expects its total net revenues in the
third quarter of fiscal year 2010 (December 1, 2009 to February 28,
2010) to be in the range of US$82.5 million to US$85.1 million,
representing year-over-year growth in the range of 26% to 30%,
respectively. Please note that Chinese New Year 2010 will occur on
February 14, 19 days later than the corresponding date in 2009 when
Chinese New Year occurred on January 26, 2009. The Company believes
that the late timing of Chinese New Year in 2010 will have the
effect of pushing some enrollments into the fourth quarter of
fiscal year 2010 at the expense of the third quarter of fiscal year
2010 as students return to their formal studies and enroll in New
Oriental's Spring classes in early March 2010. The opposite
occurred in 2009, due to the early timing of Chinese New Year, when
students returned to their formal studies in mid-February 2009 and
enrolled in Spring classes in the third quarter instead of the
fourth quarter of fiscal year 2009. Therefore, in fiscal year 2009,
New Oriental recorded third quarter enrollment growth of 31% and
fourth quarter enrollment growth of only 8% as enrollments shifted
to the third quarter of 2009 from the fourth quarter of 2009. 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 19, 2010 U.S. Eastern Time (9PM on January 19, 2010
Beijing/Hong Kong time). Dial-in details for the earnings
conference call are as follows: US: + 1-617-213-8054 Hong Kong: +
852-3002-1672 UK: + 44-207-365-8426 Please dial-in 10 minutes
before the call is scheduled to begin and provide the passcode to
join the call. The passcode is "New Oriental earnings call." A
replay of the conference call may be accessed by phone at the
following number until January 26, 2010: International:
+1-617-801-6888 Passcode: 76618020 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 the third quarter of fiscal year 2010 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 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; health epidemics and other outbreaks in
China; 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; 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, unless indicated otherwise, 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 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
"Reconciliation 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
financial measures is that these non-GAAP measures exclude the
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. NEW
ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands) As of November 30 As of
August 31 2009 2009 USD USD ASSETS: Current assets: Cash and cash
equivalents 210,574 238,709 Restricted cash 571 541 Term deposits
141,666 129,027 Accounts receivable, net 2,039 1,985 Inventory
14,577 13,672 Deferred tax assets-Current 2,043 1,855 Prepaid
expenses and other current assets 17,437 16,963 Total current
assets 388,907 402,752 Property, plant and equipment, net 113,213
112,721 Land use right, net 3,445 3,464 Amounts due from related
parties 396 396 Deferred tax assets 854 664 Long term deposit 3,050
2,861 Long term prepaid rent 1,138 1,223 Intangible assets 821 837
Goodwill 2,712 2,711 Long term investment 2 2 Total assets 514,538
527,631 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable-trade 9,110 8,300 Accrued expenses and other
current liabilities 32,930 45,398 Income tax payable 6,189 7,801
Amount due to related parties 36 51 Deferred revenue 71,061 57,941
Total current liabilities 119,326 119,491 Deferred tax liabilities
142 149 Total long-term liabilities 142 149 Total liabilities
119,468 119,640 Total New Oriental Education & Technology Group
Inc. shareholders' equity 395,157 407,991 Noncontrolling interest
(note 1) (87) -- Total equity 395,070 407,991 Total liabilities and
equity 514,538 527,631 NEW ORIENTAL EDUCATION & TECHNOLOGY
GROUP INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands except for per share and per ADS amounts)
For the Three Months Ended November 30 2009 2008 USD USD Net
Revenues: Educational Programs and services 53,581 43,833 Books and
others 7,614 5,597 Total net revenues 61,195 49,430 Operating costs
and expenses (note 2): Cost of revenues 27,823 21,719 Selling and
marketing 11,676 8,291 General and administrative 22,607 18,550
Total operating costs and expenses 62,106 48,560 Operating income
(loss) (911) 870 Other income, net 1,635 2,605 Provision for income
taxes 296 (411) Less: Net income attributable to the noncontrolling
interest (note 3) 87 -- Net income attributable to New Oriental
Education & Technology Group Inc. 1,107 3,064 Net income per
share-basic 0.01 0.02 Net income per share-diluted 0.01 0.02 Net
income per ADS-basic (note 4) 0.03 0.08 Net income per ADS-diluted
(note 4) 0.03 0.08 Notes: Note 1: Amount in relation to
noncontrolling interest, formerly named minority interest, as of
May 31, 2009 is separately presented as a component of
stockholders' equity on the unaudited condensed consolidated
financial statements in accordance with FASB Statement No. 160,
Noncontrolling Interest, which was adopted by the Company on June
1, 2009. Note 2: Share-based compensation expenses (in thousands)
are included in the operating costs and expenses as follows: For
the Three Months Ended November 30 2009 2008 (Unaudited)
(Unaudited) USD USD Cost of revenues 173 83 Selling and marketing
52 52 General and administrative 4,138 4,177 Total 4,363 4,312 Note
3: Amount in relation to noncontrolling interest, formerly named
minority interest, for the three-month period ended November 30,
2008 is reclassified in accordance with FASB Statement No. 160,
Noncontrolling Interest, which was adopted by the Company on June
1, 2009. Note 4: 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 2009 2008 (Unaudited) (Unaudited) USD USD General
and administrative expenses 22,607 18,550 Share-based compensation
expense in general and administrative expenses 4,138 4,177 Non-GAAP
general and administrative expenses 18,469 14,373 Total operating
costs and expenses 62,106 48,560 Share-based compensation expenses
4,363 4,312 Non-GAAP operating costs and expenses 57,743 44,248
Operating income (loss) (911) 870 Share-based compensation expenses
4,363 4,312 Non-GAAP operating income 3,452 5,182 Operating margin
-1.5% 1.8% Non-GAAP operating margin 5.6% 10.5% Net income 1,107
3,064 Share-based compensation expense 4,363 4,312 Non-GAAP net
income 5,470 7,376 Net income per ADS - basic (note 1) 0.03 0.08
Net income per ADS - diluted (note 1) 0.03 0.08 Non-GAAP net income
per ADS - basic (note 1) 0.15 0.20 Non-GAAP net income per ADS -
diluted (note 1) 0.14 0.19 Weighted average shares used in
calculating basic net income per ADS (note 1) 150,684,203
148,852,433 Weighted average shares used in calculating diluted net
income per ADS (note 1) 154,578,625 153,437,244 Note 1: Each ADS
represents four common shares. NEW ORIENTAL EDUCATION &
TECHNOLOGY GROUP INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (In thousands except for per share and per ADS
amounts) For the Six Months Ended November 30 2009 2008 USD USD Net
Revenues: Educational Programs and services 196,002 155,054 Books
and others 14,557 12,638 Total net revenues 210,559 167,692
Operating costs and expenses (note 1): Cost of revenues 75,475
60,205 Selling and marketing 27,186 18,150 General and
administrative 47,878 39,602 Total operating costs and expenses
150,539 117,957 Operating income 60,020 49,735 Other income, net
3,098 4,468 Provision for income taxes (5,270) (6,637) Less: Net
income attributable to the noncontrolling interest (note 2) 325 401
Net income attributable to New Oriental Education & Technology
Group Inc. 58,173 47,967 Net income per share-basic 0.39 0.32 Net
income per share-diluted 0.38 0.31 Net income per ADS-basic (note
3) 1.54 1.29 Net income per ADS-diluted (note 3) 1.50 1.25 Notes:
Note 1: Share-based compensation expenses (in thousands) are
included in the operating costs and expenses as follows: For the
Six Months Ended November 30 2009 2008 (Unaudited) (Unaudited) USD
USD Cost of revenues 366 313 Selling and marketing 106 114 General
and administrative 7,592 7,769 Total 8,064 8,196 Note 2: Amount in
relation to noncontrolling interest, formerly named minority
interest, for the six-month period ended November 30, 2008 is
reclassified in accordance with FASB Statement No. 160,
Noncontrolling Interest, which was adopted by the Company on June
1, 2009 Note 3: 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 2009 2008 (Unaudited) (Unaudited) USD USD General
and administrative expenses 47,878 39,602 Share-based compensation
expense in general and administrative expenses 7,592 7,769 Non-GAAP
general and administrative expenses 40,286 31,833 Total operating
costs and expenses 150,539 117,957 Share-based compensation
expenses 8,064 8,196 Non-GAAP operating costs and expenses 142,475
109,761 Operating income 60,020 49,735 Share-based compensation
expenses 8,064 8,196 Non-GAAP operating income 68,084 57,931
Operating margin 28.5% 29.7% Non-GAAP operating margin 32.3% 34.5%
Net income 58,173 47,967 Share-based compensation expense 8,064
8,196 Non-GAAP net income 66,237 56,163 Net income per ADS - basic
(note 1) 1.54 1.29 Net income per ADS - diluted (note 1) 1.50 1.25
Non-GAAP net income per ADS - basic (note 1) 1.76 1.51 Non-GAAP net
income per ADS - diluted (note 1) 1.71 1.46 Weighted average shares
used in calculating basic net income per ADS (note 1) 150,638,331
148,770,074 Weighted average shares used in calculating diluted net
income per ADS (note 1) 154,726,841 153,718,565 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: +86-10-6260-5568 Email: Ms. Courtney
Shike Brunswick Group LLC Tel: +86-10-6566-2256 Email: In the U.S.:
Ms. Kate Tellier Brunswick Group LLC Tel: +1-212-333-3810 Email:
DATASOURCE: New Oriental Education and Technology Group Inc.
CONTACT: in China, Ms. Sisi Zhao of New Oriental Education and
Technology Group Inc., +86-10-6260-5568, ; or Courtney Shike of
Brunswick Group LLC, +86-10-6566-2256, ; or in the U.S., Kate
Tellier of Brunswick Group LLC, +1-212-333-3810, Web site:
http://english.neworiental.org/ http://investor.neworiental.org/
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