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New Oriental Announces Results for the First Fiscal Quarter Ended August 31, 2009
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Highlights for the First Fiscal Quarter Ended August 31, 2009
-- Total net revenues increased by 26.3% year-over-year to US$149.4
million from US$118.3 million in the same period of the prior fiscal
year.
-- GAAP net income increased by 27.1% year-over-year to US$57.1 million
from US$44.9 million in the same period of the prior fiscal year.
Non-GAAP net income, which excludes share-based compensation expenses,
increased by 24.6% year-over-year to US$60.8 million from US$48.8
million in the same period of the prior fiscal year.
-- GAAP income from operations increased by 24.7% year-over-year to
US$60.9 million from US$48.9 million in the same period of the prior
fiscal year. Non-GAAP income from operations increased by 22.5%
year-over-year to US$64.6 million from US$52.7 million in the same
period of the prior fiscal year.
-- GAAP basic and diluted net income per ADS were US$1.52 and US$1.47 ,
respectively. Non-GAAP basic and diluted net income per ADS were
US$1.61 and US$1.57 , respectively. Each ADS represents four common
shares of the Company.
-- Total student enrollments in language training and test preparation
courses increased by 18.7% year-over-year to approximately 647,500 from
approximately 545,400 in the same period of the prior fiscal year.
-- The total number of schools and learning centers increased to 287 as of
August 31, 2009 , up from 270 as of May 31, 2008 . The total number of
schools remained at 48, located in 40 cities, as of August 31, 2009 .
The number of learning centers increased by 17 in the quarter to 239 as
of August 31, 2009 , up from 222 as of May 31, 2009 .
Financial and Student Enrollments Summary - First Quarter 2010
(US$ 000, except per ADS data and student enrollments)
Q1 of FY2010 Q1 of FY2009 Pct. Change
Net revenues 149,364 118,262 26.3 %
Non-GAAP net income (1) 60,767 48,787 24.6 %
GAAP Net income 57,066 44,903 27.1 %
Non-GAAP operating income (1) 64,632 52,749 22.5 %
GAAP Operating income 60,931 48,865 24.7 %
Non-GAAP net income per ADS
basic (1)(2) 1.61 1.31 23.0 %
Non-GAAP net income per ADS
diluted (1)(2) 1.57 1.27 23.9 %
GAAP Net income per ADS basic (2) 1.52 1.21 25.5 %
GAAP Net income per ADS diluted (2) 1.47 1.17 26.4 %
Total student enrollments in
language training and test
preparation courses 647,500 545,400 18.7 %
(1) New Oriental provides net income, operating income, and 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 "Reconciliation 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.
"We are pleased to finish the first quarter of fiscal year 2010 with
revenue growth of 26.3% to approximately
Mr. Yu continued, "We are delighted and excited to announce that during
the quarter we officially launched our customized learning program for 6- to
18-year-olds, offering one-to-one tutoring and small class size tutoring (up
to five students per class), in all subjects classes required for the gaokao
(Chinese National College Entrance Examination) and zhongkao (Chinese National
High School Entrance Examination). This will complement our very successful
U-Can program, launched last year targeting class sizes of 20 to 50 students,
which recorded over 55,000 enrollments in non-English subjects in its first
year. This two-pronged strategy of offering affordable larger classes of 20 or
more students and higher priced individualized small and one-to-one classes
for school aged students will enable New Oriental to expand our leading
position in the multi-billion dollar after school training market in
Financial Results for the Fiscal Quarter Ended
For the first fiscal quarter of 2010, New Oriental reported net revenues
of
Net revenues from educational programs and services for the first fiscal
quarter were
GAAP operating costs and expenses for the quarter were
Cost of revenues increased by 23.8% year-over-year to
Selling and marketing expenses increased by 57.3% year-over-year to
GAAP general and administrative expenses were
Total share-based compensation expenses, which were allocated to related
operating costs and expenses, decreased slightly to
GAAP income from operations for the quarter was
GAAP operating margin for the quarter was 40.8%, compared to 41.3% in the same period of the prior fiscal year. Non-GAAP operating margin for the quarter was 43.3%, compared to 44.6% in the same period of the prior fiscal year. This decline in operating margin was primarily due to increased marketing expenses related to POP Kids English, U-Can and the launch of New Oriental's customized learning program.
GAAP net income for the quarter was
Non-GAAP net income was
Capital expenditures for the quarter were
As of
The deferred revenue balance (cash collected from registered students for
courses and recognized proportionally as revenue as the instructions are
delivered) at the end of the first quarter of fiscal year 2010 was
Outlook for Second Quarter of Fiscal Year 2010
New Oriental expects its total net revenues in the second quarter of
fiscal year 2010 (
Conference Call Information
New Oriental's management will host an earnings conference call at
Dial-in details for the earnings conference call are as follows:
US: +1-617-213-8837
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
International: +1-617-801-6888
Passcode: 80512116
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
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 second 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
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
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.
For investor and media inquiries, please contact:
In China :
Ms. Maria Xin
New Oriental Education and Technology Group Inc.
Tel: +86-10-6260-5566 x8931
Email: xinyi@staff.neworiental.org
Ms. Courtney Shike
Brunswick Group LLC
Tel: +86-10-6566-2256
Email: cshike@brunswickgroup.com
In the U.S.:
Ms. Kate Tellier
Brunswick Group LLC
Tel: +1-212-333-3810
Email: ktellier@brunswickgroup.com
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
As of August 31, As of May 31,
2009 2009
(Unaudited) (Unaudited)
USD USD
ASSETS:
Current assets:
Cash and cash equivalents 238,709 254,772
Restricted cash 541 540
Term deposits 129,027 59,845
Accounts receivable, net 1,985 1,539
Inventory 13,672 15,188
Deferred tax assets-Current 1,855 1,621
Prepaid expenses and other current
assets 16,963 14,222
Total current assets 402,752 347,727
Property, plant and equipment, net 112,721 109,785
Land use right, net 3,464 3,485
Amounts due from related parties 396 396
Deferred tax assets 664 1,077
Long term deposit 2,861 2,021
Long term prepaid rent 1,223 1,331
Intangible assets 837 866
Goodwill 2,711 2,712
Long term investment 2 2
Total assets 527,631 469,402
LIABILITIES, MINORITY INTEREST AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable-trade 8,300 9,295
Accrued expenses and other current
liabilities 45,398 29,854
Income tax payable 7,801 3,728
Amount due to related parties 51 102
Deferred revenue 57,941 74,782
Total current liabilities 119,491 117,761
Deferred tax liabilities 149 157
Total long-term liabilities 149 157
Total liabilities 119,640 117,918
Total New Oriental Education & Technology
Group Inc. shareholders' equity 407,991 351,246
Noncontrolling interests (note 1) 0 238
Total equity 407,991 351,484
Total liabilities and equity 527,631 469,402
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 August 31,
2009 2008
(Unaudited) (Unaudited)
USD USD
Net Revenues:
Educational Programs and services 142,421 111,221
Books and others 6,943 7,041
Total net revenues 149,364 118,262
Operating costs and expenses (note 2):
Cost of revenues 47,652 38,486
Selling and marketing 15,510 9,859
General and administrative 25,271 21,052
Total operating costs and expenses 88,433 69,397
Operating income 60,931 48,865
Other income, net 1,463 1,863
Provision for income taxes (5,566) (6,226)
Less: Net income attributable to the
noncontrolling interests (note 3) 238 401
Net income attributable to New Oriental
Education & Technology Group Inc. 57,066 44,903
Net income per share-basic 0.38 0.30
Net income per share-diluted 0.37 0.29
Net income per ADS-basic (note 4) 1.52 1.21
Net income per ADS-diluted (note 4) 1.47 1.17
Notes:
Note 1: Amount in relation to noncontrolling interest, formerly named
minority interest, as of May 31, 2009 is reclassified 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 August 31,
2009 2008
(Unaudited) (Unaudited)
USD USD
Cost of revenues 193 230
Selling and marketing 54 62
General and administrative 3,454 3,592
Total 3,701 3,884
Note 3: Amount in relation to noncontrolling interest, formerly named
minority interest, for the three-month period ended August 31,
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 August 31,
2009 2008
(Unaudited) (Unaudited)
USD USD
General and administrative expenses 25,271 21,052
Share-based compensation expense in
general and administrative expenses 3,454 3,592
Non-GAAP general and administrative
expenses 21,817 17,460
Total operating costs and expenses 88,433 69,397
Share-based compensation expenses 3,701 3,884
Non-GAAP operating costs and expenses 84,732 65,513
Operating income 60,931 48,865
Share-based compensation expenses 3,701 3,884
Non-GAAP operating income 64,632 52,749
Operating margin 40.8% 41.3%
Non-GAAP operating margin 43.3% 44.6%
Net income 57,066 44,903
Share-based compensation expense 3,701 3,884
Non-GAAP net income 60,767 48,787
Net income per ADS - basic (note 1) 1.52 1.21
Net income per ADS - diluted (note 1) 1.47 1.17
Non-GAAP net income per ADS - basic
(note 1) 1.61 1.31
Non-GAAP net income per ADS - diluted
(note 1) 1.57 1.27
Weighted average shares used in
calculating basic net income per ADS
(note 1) 150,592,959 148,688,611
Weighted average shares used in
calculating diluted net income per
ADS (note 1) 154,875,557 154,000,783
Note 1: Each ADS represents four common shares.
SOURCE
In China: Ms. Maria Xin, New Oriental Education and Technology Group Inc., +86-10-6260-5566 x8931, xinyi@staff.neworiental.org,Ms. Courtney Shike, Brunswick Group LLC, +86-10-6566-2256, cshike@brunswickgroup.com; In the U.S.: Ms. Kate Tellier, Brunswick Group LLC, +1-212-333-3810, ktellier@brunswickgroup.com