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New Oriental Announces Unaudited Results for the Second Fiscal Quarter Ended November 30, 2013
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Highlights for the Second Fiscal Quarter Ended
- Total net revenues increased by 25.6% year-over-year to
US$208.3 million fromUS$165.9 million in the same period of the prior fiscal year. - Net income attributable to New Oriental was
US$4.3 million , compared to net loss attributable to New Oriental ofUS$15.8 million in the same period of the prior fiscal year. - Non-GAAP net income attributable to New Oriental, which excludes share-based compensation expenses, was
US$9.7 million , compared to non-GAAP net loss attributable to New Oriental ofUS$9.0 million in the same period of the prior fiscal year. - Operating income was
US$0.7 million , compared to a loss ofUS$26.9 million in the same period of the prior fiscal year. - Non-GAAP operating income, which excludes share-based compensation expenses, was
US$6.0 million , compared to non-GAAP operating loss ofUS$20.1 million in the same period of the prior fiscal year. - Basic and diluted net income attributable to New Oriental per ADS were
US$0.03 andUS$0.03 , respectively. Non-GAAP basic and diluted net income per ADS, which excludes share-based compensation expenses, wereUS$0.06 andUS$0.06 , respectively. Each ADS represents one common share of the Company. - Total student enrollments in academic subjects tutoring and test preparation courses increased by 11.8% year-over-year to approximately 565,100 from approximately 505,500 in the same period of the prior fiscal year.
- The total number of schools and learning centers was 711 as of
November 30, 2013 , down from 744 as ofNovember 30, 2012 . The total number of schools was 57 as ofNovember 30, 2013 . The number of schools and learning centers decreased by 2 in the second fiscal quarter to 711 as ofNovember 30, 2013 , down from 713 as ofAugust 31, 2013 .
Financial and Student Enrollments Summary – Second Fiscal Quarter 2014 and First Six Months of Fiscal Year 2014 |
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(in thousands US$, except per ADS data, student enrollments and percentages) |
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Q2 of FY2014 |
Q2 of FY2013 |
Pct. Change |
|
Net revenues |
208,330 |
165,906 |
25.6% |
Net income (loss) attributable to New Oriental |
4,266 |
(15,769) |
127.1% |
Non-GAAP net income (loss) attributable to New Oriental(1) |
9,651 |
(8,968) |
207.6% |
Operating income (loss) |
664 |
(26,857) |
102.5% |
Non-GAAP operating income (loss)(1) |
6,049 |
(20,056) |
130.2% |
Net income (loss) per ADS attributable to New Oriental - basic |
0.03 |
(0.10) |
127.1% |
Net income (loss) per ADS attributable to New Oriental - diluted |
0.03 |
(0.10) |
127.1% |
Non-GAAP net income (loss) per ADS attributable to New Oriental - basic(1) |
0.06 |
(0.06) |
207.6% |
Non-GAAP net income (loss) per ADS attributable to New Oriental - diluted(1) |
0.06 |
(0.06) |
207.7% |
Total student enrollments in academic subjects tutoring and test preparation courses |
565,100 |
505,500 |
11.8% |
1H of FY2014 |
1H of FY2013 |
Pct. Change |
|
Net revenues |
596,993 |
501,735 |
19.0% |
Net income attributable to New Oriental |
130,742 |
80,083 |
63.3% |
Non-GAAP net income attributable to New Oriental(1) |
141,507 |
93,604 |
51.2% |
Operating income |
136,132 |
74,698 |
82.2% |
Non-GAAP operating income(1) |
146,897 |
88,219 |
66.5% |
Net income per ADS attributable to New Oriental - basic |
0.84 |
0.51 |
63.5% |
Net income per ADS attributable to New Oriental - diluted |
0.83 |
0.51 |
63.4% |
Non-GAAP net income per ADS attributable to New Oriental - basic(1) |
0.91 |
0.60 |
51.4% |
Non-GAAP net income per ADS attributable to New Oriental - diluted(1) |
0.90 |
0.59 |
51.3% |
Total student enrollments in academic subjects tutoring and test preparation courses |
1,484,400 |
1,404,400 |
5.7% |
(1) New Oriental provides net income (loss) attributable to New Oriental, operating income (loss), 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. |
Mr. Hsieh continued, "Our two main business lines continued to experience strong growth in this quarter. Our overseas test preparation and overseas study consulting businesses together recorded about 28% year-over-year gross revenue growth to approximately
Recent Developments
On
Online Education Initiatives
New Oriental has been proactively exploring new internet-based education initiatives, including online-offline integration and pure online learning offerings.
New Oriental has developed its own Online Interactive Learning Platform, covering all major product lines. The platform enables students to continue their learning after class by completing exercises and quizzes and interacting with teachers online. It also records the students' learning progress. The Company believes that its new Online Interactive Learning Platform will significantly enhance the Company's customers' learning experience, create new revenue streams through value-added online services, and drive online-to-offline traffic to generate more enrollments and increase revenues.
The Company is also piloting a program on its own Koolearn.com online platform and company official website to offer live broadcasts of some short-term test preparation cram courses for adults. Users can pay to watch live broadcasts at set times and can replay recordings of the classes at any time.
Koolearn.com now offers over 2,000 online courses for teenagers and adults, including language training, test preparation and vocational education.
In addition, New Oriental has developed a series of mobile and web applications, branded as "DONUT", for children aged 2 to 8. This suite of products focuses on game-based learning and includes English, math, Chinese reading and parenting games. Content is updated on monthly basis. Currently, most of the applications are free to download, and include embedded in-application purchases to generate monetization opportunities.
In addition to its own efforts, the Company is also exploring opportunities to work with other large-scale internet companies for further development of its online education offering.
Financial Results for the Fiscal Quarter Ended
For the second fiscal quarter of 2014, New Oriental reported net revenues of
Net revenues from educational programs and services for the second fiscal quarter were
Operating costs and expenses for the quarter were
Cost of revenues for the quarter increased by 20.8% year-over-year to
Selling and marketing expenses for the quarter increased by 7.1% year-over-year to
General and administrative expenses for the quarter declined by 5.6% year-over-year to
Total share-based compensation expenses, which were allocated to related operating costs and expenses, decreased by 20.8% to
Operating income for the quarter was
Operating margin for the quarter was 0.3%, compared to negative 16.2% in the same period of the prior fiscal year. Non-GAAP operating margin, which excludes the impact of share-based compensation expenses for the quarter, was 2.9%, compared to negative 12.1% in the same period of the prior fiscal year.
Net income attributable to New Oriental for the quarter was
Non-GAAP net income attributable to New Oriental for the quarter was
Capital expenditures for the quarter were
As of
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 second quarter of fiscal year 2014 was
Financial Results for the Six Months Ended
For the first six months of fiscal year 2014, New Oriental reported net revenues of
Total student enrollments in academic subjects tutoring and test preparation courses in the first six months of fiscal year 2014 increased by 5.7% to approximately 1,484,400, from approximately 1,404,400 in the same period of the prior fiscal year.
Income from operations for the first six months of fiscal year 2014 was
Operating margin for the first six months of fiscal year 2014 was 22.8%, compared to 14.9% for the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses for the first six months of fiscal year 2014, was 24.6%, compared to 17.6% for the same period of the prior fiscal year.
Net income attributable to New Oriental for the first six months of fiscal year 2014 was
Non-GAAP net income attributable to New Oriental for the first six months of fiscal year 2014 was
Outlook for Third Quarter of Fiscal Year 2014
New Oriental expects its total net revenues in the third quarter of fiscal year 2014 (
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: |
+1-845-675-0437 |
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
International: |
+61-2-8199-0299 |
Passcode: |
29474976 |
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 third quarter of fiscal year 2014 and quotations from management in this announcement, as well as New Oriental's strategic and operational plans, contain forward-looking statements. New Oriental may also make written or oral forward-looking statements in its reports filed or furnished to the
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 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
Mr.
Tel: +86-10-8591-1060
Email: martin.reidy@fticonsulting.com
Ms.
Tel: +86-10-6260-5568
Email: zhaosisi@xdf.cn
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In thousands) |
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As of November 30 |
As of August 31 |
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2013 |
2013 |
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(Unaudited) |
(Unaudited) |
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USD |
USD |
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ASSETS: |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
420,629 |
480,618 |
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Restricted cash |
1,729 |
2,539 |
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Term deposits |
56,184 |
50,366 |
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Short term investments |
614,988 |
587,431 |
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Accounts receivable, net |
3,817 |
4,225 |
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Inventory |
24,407 |
21,936 |
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Deferred tax assets, current |
7,911 |
7,153 |
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Prepaid expenses and other current assets |
60,570 |
73,286 |
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Amounts due from related parties, current |
2,703 |
2,599 |
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Total current assets |
1,192,938 |
1,230,153 |
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Property, plant and equipment, net |
238,737 |
242,732 |
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Land use right, net |
4,514 |
4,523 |
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Amounts due from related party, non-current |
1,095 |
1,001 |
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Deferred tax assets, non-current |
1,896 |
1,291 |
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Long term deposit |
13,393 |
12,655 |
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Long term prepaid rent |
912 |
1,040 |
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Intangible assets |
806 |
833 |
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Goodwill |
3,786 |
3,769 |
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Long term investments |
7,316 |
7,823 |
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Total assets |
1,465,393 |
1,505,820 |
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LIABILITIES AND EQUITY |
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Current liabilities: |
|||||||
Accounts payable (including accounts payable of the consolidated |
11,485 |
13,910 |
|||||
Accrued expenses and other current liabilities (including accrued |
112,503 |
150,751 |
|||||
Dividend payable (including dividend payable of the consolidated |
6,670 |
53,966 |
|||||
Income tax payable (including income tax payable of the |
24,064 |
29,001 |
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Amounts due to related parties (including amounts due to related |
1,315 |
1,121 |
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Deferred revenue (including deferred revenue of the consolidated |
363,696 |
323,745 |
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Total current liabilities |
519,733 |
572,494 |
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Deferred tax liabilities (including deferred tax liablities of the 30, 2013, respectively) |
1,804 |
1,817 |
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Acquisition payable (including acquisiton payables of the |
- |
4,601 |
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Total long-term liabilities |
1,804 |
6,418 |
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Total liabilities |
521,537 |
578,912 |
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Total shareholder's equity |
943,856 |
926,908 |
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Total liabilities and shareholder's equity |
1,465,393 |
1,505,820 |
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NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands except for per share and per ADS amounts) |
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For the Three Months Ended November 30 |
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2013 |
2012 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
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Net Revenues: |
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Educational Programs and services |
188,483 |
149,284 |
|
Books and others |
19,847 |
16,622 |
|
Total net revenues |
208,330 |
165,906 |
|
Operating costs and expenses (note 1): |
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Cost of revenues |
97,474 |
80,679 |
|
Selling and marketing |
36,782 |
34,347 |
|
General and administrative |
73,410 |
77,737 |
|
Total operating costs and expenses |
207,666 |
192,763 |
|
Operating income (loss) |
664 |
(26,857) |
|
Other income, net |
9,701 |
7,631 |
|
(Provision) Benefits for income taxes |
(5,562) |
3,908 |
|
Loss from equity method investment |
(537) |
(451) |
|
Net income (loss) attributable to New Oriental |
4,266 |
(15,769) |
|
Net income (loss) per share attributable to New |
0.03 |
(0.10) |
|
Net income (loss) per share attributable to New |
0.03 |
(0.10) |
|
Net income (loss) per ADS attributable to New |
0.03 |
(0.10) |
|
Net income (loss) per ADS attributable to New |
0.03 |
(0.10) |
|
Other comprehensive income, net of tax |
6,544 |
15,760 |
|
Comprehensive income (loss) |
10,810 |
(9) |
|
Comprehensive income (loss) attributable to New |
10,810 |
(9) |
|
Notes: |
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Note 1: Share-based compensation expenses (in thousands) are included in the operating costs and expenses as follows: |
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For the Three Months Ended November 30 |
|||
2013 |
2012 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
General and administrative |
5,385 |
6,801 |
|
Total |
5,385 |
6,801 |
|
Note 2: Each ADS represents one common share. |
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. |
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RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES |
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(In thousands except for per share and per ADS amounts) |
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For the Three Months Ended November 30 |
|||
2013 |
2012 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
General and administrative expenses |
73,410 |
77,737 |
|
Share-based compensation expense in general |
5,385 |
6,801 |
|
Non-GAAP general and administrative expenses |
68,025 |
70,936 |
|
Total operating costs and expenses |
207,666 |
192,763 |
|
Share-based compensation expenses |
5,385 |
6,801 |
|
Non-GAAP operating costs and expenses |
202,281 |
185,962 |
|
Operating income (loss) |
664 |
(26,857) |
|
Share-based compensation expenses |
5,385 |
6,801 |
|
Non-GAAP operating income (loss) |
6,049 |
(20,056) |
|
Operating margin |
0.3% |
-16.2% |
|
Non-GAAP operating margin |
2.9% |
-12.1% |
|
Net income (loss) attributable to New Oriental |
4,266 |
(15,769) |
|
Share-based compensation expense |
5,385 |
6,801 |
|
Non-GAAP net income (loss) |
9,651 |
(8,968) |
|
Net income (loss) per ADS attributable to |
0.03 |
(0.10) |
|
Net income (loss) per ADS attributable to |
0.03 |
(0.10) |
|
Non-GAAP net income (loss) per ADS |
0.06 |
(0.06) |
|
Non-GAAP net income (loss) per ADS |
0.06 |
(0.06) |
|
Weighted average shares used in calculating |
155,837,230 |
155,856,826 |
|
Weighted average shares used in calculating |
157,845,516 |
157,930,678 |
|
Non-GAAP income (loss) per share - basic |
0.06 |
(0.06) |
|
Non-GAAP income (loss) per share - diluted |
0.06 |
(0.06) |
|
Note 1: Each ADS represents one common share. |
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||
(In thousands except for per share and per ADS amounts) |
|||
For the Six Months Ended November 30 |
|||
2013 |
2012 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
Net Revenues: |
|||
Educational Programs and services |
541,768 |
457,139 |
|
Books and others |
55,225 |
44,596 |
|
Total net revenues |
596,993 |
501,735 |
|
Operating costs and expenses (note 1): |
|||
Cost of revenues |
230,083 |
198,895 |
|
Selling and marketing |
79,474 |
73,817 |
|
General and administrative |
151,304 |
154,325 |
|
Total operating costs and expenses |
460,861 |
427,037 |
|
Operating income |
136,132 |
74,698 |
|
Other income, net |
19,929 |
15,370 |
|
Provision for income taxes |
(24,322) |
(9,127) |
|
Loss from equity method investment |
(997) |
(451) |
|
Income from continuing operations |
130,742 |
80,490 |
|
Loss on discontinued operations, net of tax |
- |
(407) |
|
Net income attributable to New Oriental Education & |
130,742 |
80,083 |
|
Net income (loss) per share attributable to New |
|||
Income from continuing operations |
0.84 |
0.52 |
|
Loss on discontinued operations |
- |
(0.00) |
|
Net income (loss) per share attributable to New |
|||
Income from continuing operations |
0.83 |
0.51 |
|
Loss on discontinued operations |
- |
(0.00) |
|
Net income (loss) per ADS attributable to New |
|||
Income from continuing operations |
0.84 |
0.52 |
|
Loss on discontinued operations |
- |
(0.00) |
|
Net income (loss) per ADS attributable to New |
|||
Income from continuing operations |
0.83 |
0.51 |
|
Loss on discontinued operations |
- |
(0.00) |
|
Other comprehensive income, net of tax |
7,913 |
16,003 |
|
Comprehensive income |
138,655 |
96,086 |
|
Comprehensive income attributable to New |
138,655 |
96,086 |
|
Notes: |
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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 |
|||
2013 |
2012 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
General and administrative |
10,765 |
13,521 |
|
Total |
10,765 |
13,521 |
|
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 Six Months Ended November 30 |
|||
2013 |
2012 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
General and administrative expenses |
151,304 |
154,325 |
|
Share-based compensation expense in |
10,765 |
13,521 |
|
Non-GAAP general and administrative |
140,539 |
140,804 |
|
Total operating costs and expenses |
460,861 |
427,037 |
|
Share-based compensation expenses |
10,765 |
13,521 |
|
Non-GAAP operating costs and expenses |
450,096 |
413,516 |
|
Operating income |
136,132 |
74,698 |
|
Share-based compensation expenses |
10,765 |
13,521 |
|
Non-GAAP operating income |
146,897 |
88,219 |
|
Operating margin |
22.8% |
14.9% |
|
Non-GAAP operating margin |
24.6% |
17.6% |
|
Net income attributable to New Oriental |
130,742 |
80,083 |
|
Share-based compensation expense |
10,765 |
13,521 |
|
Non-GAAP net income |
141,507 |
93,604 |
|
Net income per ADS attributable to |
0.84 |
0.51 |
|
Net income per ADS attributable to |
0.83 |
0.51 |
|
Non-GAAP net income per ADS |
0.91 |
0.60 |
|
Non-GAAP net income per ADS |
0.90 |
0.59 |
|
Weighted average shares used in |
155,484,823 |
155,716,176 |
|
Weighted average shares used in |
157,475,053 |
157,589,419 |
|
Non-GAAP income per share - basic |
0.91 |
0.60 |
|
Non-GAAP income per share - diluted |
0.90 |
0.59 |
|
Note 1: Each ADS represents one common share. |
SOURCE