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New Oriental Announces Results for the Second Fiscal Quarter Ended November 30, 2012
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Highlights for the Second Fiscal Quarter Ended
- Total net revenues increased by 30.4% year-over-year to
US$165.9 million fromUS$127.2 million in the same period of the prior fiscal year. - Loss from operations was
US$26.9 million , compared to a loss ofUS$3.2 million in the same period of the prior fiscal year. - Non-GAAP loss from operations, which excludes share-based compensation expenses, was
US$20.1 million , compared to non-GAAP income from operations ofUS$1.0 million in the same period of the prior fiscal year. - Net loss attributable to New Oriental was
US$15.8 million , compared to net income attributable to New Oriental ofUS$3.3 million in the same period of the prior fiscal year. - Non-GAAP net loss attributable to New Oriental, which excludes share-based compensation expenses, was
US$9.0 million , compared to non-GAAP net income attributable to New Oriental ofUS$7.5 million in the same period of the prior fiscal year. - Basic and diluted net loss attributable to New Oriental per ADS were
US$0.10 andUS$0.10 , respectively. Non-GAAP basic and diluted net loss per ADS, which excludes share-based compensation expenses, wereUS$0.06 andUS$0.06 , respectively. Each ADS represents one common share of the Company. - Total student enrollments in academic subjects tutoring and test preparation courses increased by 7.2% year-over-year to approximately 505,500 from approximately 471,600 in the same period of the prior fiscal year.
- The total number of schools and learning centers increased to 744 in the quarter ended
November 30, 2012 , up from 726 in the previous quarter. New Oriental added a net of 18 schools and learning centers in the quarter.
Financial and Student Enrollments Summary – Second Fiscal Quarter 2013 and First Six Months of Fiscal Year 2013 |
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(in thousands US$, except per ADS data, student enrollments and percentages) |
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Q2 of FY2013 |
Q2 of FY2012 |
Pct. Change |
|
Net revenues |
165,906 |
127,194 |
30.4% |
Net income/(loss) attributable to New Oriental |
(15,769) |
3,314 |
|
Non-GAAP net income/(loss) attributable to New Oriental(1) |
(8,968) |
7,545 |
|
Operating income/(loss) |
(26,857) |
(3,240) |
728.9% |
Non-GAAP operating income/(loss) (1) |
(20,056) |
991 |
|
Net income/(loss) per ADS attributable to New Oriental - basic(2) |
(0.10) |
0.02 |
|
Net income/(loss) per ADS attributable to New Oriental - diluted(2) |
(0.10) |
0.02 |
|
Non-GAAP net income/(loss) per ADS attributable to New Oriental - basic(1)(2)(3) |
(0.06) |
0.05 |
|
Non-GAAP net income/(loss) per ADS attributable to New Oriental - diluted(1)(2)(3) |
(0.06) |
0.05 |
|
Total student enrollments in academic subjects tutoring and test preparation courses |
505,500 |
471,600 |
7.2% |
1H of FY2013 |
1H of FY2012 |
Pct. Change |
|
Net revenues |
501,735 |
394,044 |
27.3% |
Net income attributable to New Oriental |
80,083 |
94,023 |
(14.8)% |
Non-GAAP net income attributable to New Oriental (1) |
93,604 |
105,069 |
(10.9)% |
Operating income |
74,698 |
91,926 |
(18.7)% |
Non-GAAP operating income (1) |
88,219 |
102,972 |
(14.3)% |
Net income per ADS attributable to New Oriental - basic (2) |
0.51 |
0.61 |
(15.6)% |
Net income per ADS attributable to New Oriental - diluted (2) |
0.51 |
0.60 |
(15.3)% |
Non-GAAP net income per ADS attributable to New Oriental - basic (1)(2)(3) |
0.60 |
0.68 |
(11.7)% |
Non-GAAP net income per ADS attributable to New Oriental - diluted (1)(2)(3) |
0.59 |
0.67 |
(11.4)% |
Total student enrollments in academic subjects tutoring and test preparation courses |
1,404,400 |
1,279,300 |
9.8% |
(1) New Oriental provides net income (loss) attributable to New Oriental, operating income (loss), and net income (loss) 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. |
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(2) Each ADS represents one common share. |
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(3) The non-GAAP adjusted net income (loss) per share and per ADS are computed using non-GAAP adjusted net income (loss) and the same number of shares and ADSs used in GAAP basic and diluted EPS calculation. |
Mr. Yu continued, "On the positive side, the execution of our 'Harvest the Market' strategy is making good progress. We slowed down our expansion considerably by only adding a net of 18 schools and learning centers during this quarter. We opened a new school in Shiyan city, integrated the newly acquired
Financial Results for the Fiscal Quarter Ended
For the second fiscal quarter of 2013, 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 38.2% year-over-year to
Selling and marketing expenses for the quarter increased by 42.5% year-over-year to
General and administrative expenses for the quarter increased by 62.1% year-over-year to
Total share-based compensation expenses, which were allocated to related operating costs and expenses, increased by 60.7% to
Loss from operations for the quarter was
Operating margin for the quarter was negative 16.2%, compared to negative 2.5% 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 negative 12.1%, compared to positive 0.8% in the same period of the prior fiscal year. Operating margins were negatively affected by the large increase in cost and expenses mainly due to the heavy investment in learning center expansion.
Net loss attributable to New Oriental for the quarter was
Non-GAAP net loss 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, as of
Financial Results for the Six Months Ended
For the first six months of fiscal year 2013, 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 2013 increased by 9.8% to approximately 1,404,400 from approximately 1,279,300 in the same period of the prior fiscal year.
Income from operations for the first six months of fiscal year 2013 was
Operating margin for the first six months of fiscal year 2013 was 14.9%, compared to 23.3% 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 2013, was 17.6%, compared to 26.1% for the same period of the prior fiscal year.
Net income attributable to New Oriental for the first six months of fiscal year 2013 was
Non-GAAP net income attributable to New Oriental for the first six months of fiscal year 2013 was
Outlook for Third quarter of Fiscal Year 2013
New Oriental expects its total net revenues in the third quarter of fiscal year 2013 (
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: |
+1-718-354-1231 |
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: |
85008261 |
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 2013 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
Ms.
Tel: +86-10-6260-5568
Email: zhaosisi@xdf.cn
Mr.
Tel: +86-10-5960-8600
Email: edu@brunswickgroup.com
In the U.S.:
Ms.
Tel: +1-415-671-7676
Email: edu@brunswickgroup.com
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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2012 |
2012 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
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ASSETS: |
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Current assets: |
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Cash and cash equivalents |
282,349 |
512,460 |
|
Restricted cash |
3,031 |
4,135 |
|
Term deposits |
48,068 |
74,222 |
|
Short term investments |
509,229 |
303,862 |
|
Accounts receivable, net |
4,174 |
4,183 |
|
Inventory |
21,264 |
20,734 |
|
Deferred tax assets, current |
6,463 |
5,662 |
|
Prepaid expenses and other current assets |
58,309 |
59,685 |
|
Amounts due from related parties, current |
1,998 |
- |
|
Total current assets |
934,885 |
984,943 |
|
Property, plant and equipment, net |
244,520 |
217,608 |
|
Land use right, net |
4,532 |
3,465 |
|
Amounts due from related party, non-current |
1,060 |
1,195 |
|
Deferred tax assets, non-current |
1,647 |
1,858 |
|
Long term deposit |
12,832 |
14,111 |
|
Long term prepaid rent |
1,647 |
1,903 |
|
Prepayment for business acquisition |
- |
3,735 |
|
Intangible assets |
913 |
821 |
|
Goodwill |
3,704 |
1,804 |
|
Long term investments |
3,978 |
3,002 |
|
Total assets |
1,209,718 |
1,234,445 |
|
LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable (including accounts payable of the consolidated VIEs without recourse to New Oriental of US$9,606 and US$9,956 as of August 31, 2012 and November 30, 2012, respectively) |
9,958 |
9,758 |
|
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to New Oriental of US$101,041 and US$80,910 as of August 31, 2012 and November 30, 2012, respectively) |
96,917 |
113,730 |
|
Dividend payable (including dividend payable of the consolidated VIEs without recourse to New Oriental of nil and nil as of August 31, 2012 and November 30, 2012, respectively) |
- |
50,000 |
|
Income tax payable (including income tax payable of the consolidated VIEs without recourse to New Oriental of US$19,460 and US$16,085 as of August 31, 2012 and November 30, 2012, respectively) |
13,011 |
22,533 |
|
Amounts due to related parties (including amounts due to related parties of the consolidated VIEs without recourse to New Oriental of US$88 and US$985 as of August 31, 2012 and November 30, 2012, respectively) |
985 |
88 |
|
Deferred revenue (including deferred revenue of the consolidated VIEs without recourse to New Oriental of US$241,070 and US$274,821 as of August 31, 2012 and November 30, 2012, respectively) |
278,040 |
243,621 |
|
Total current liabilities |
398,911 |
439,730 |
|
Deferred tax liabilities (including deferred tax liabilities of the consolidated VIEs without recourse to New Oriental of US$47 and US$1,846 of August 31, 2012 and November 30, 2012, respectively) |
1,846 |
101 |
|
Acquisition payable (including acquisition payables of the consolidated VIEs without recourse to New Oriental of nil and US$4,312 as of August 31, 2012 and November 30, 2012, respectively) |
4,312 |
- |
|
Total long-term liabilities |
6,158 |
101 |
|
Total liabilities |
405,069 |
439,831 |
|
Total shareholder's equity |
804,649 |
794,614 |
|
Total liabilities and shareholder's equity |
1,209,718 |
1,234,445 |
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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2012 |
2011 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
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Net Revenues: |
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Educational Programs and services |
149,284 |
115,270 |
|
Books and others |
16,622 |
11,924 |
|
Total net revenues |
165,906 |
127,194 |
|
Operating costs and expenses (note 1): |
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Cost of revenues |
80,679 |
58,368 |
|
Selling and marketing |
34,347 |
24,106 |
|
General and administrative |
77,737 |
47,960 |
|
Total operating costs and expenses |
192,763 |
130,434 |
|
Operating loss |
(26,857) |
(3,240) |
|
Other income, net |
7,180 |
6,372 |
|
Benefits for income taxes |
3,908 |
922 |
|
Income (Loss) from continuing operations |
(15,769) |
4,054 |
|
Loss on discontinued operations, net of tax |
- |
(740) |
|
Net income (loss) attributable to New Oriental Education & Technology Group Inc. |
(15,769) |
3,314 |
|
Net income per share attributable to New Oriental-Basic |
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Income (Loss) from continuing operations |
(0.10) |
0.03 |
|
Loss on discontinued operations |
- |
(0.00) |
|
Net income per share attributable to New Oriental-Diluted |
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Income (Loss) from continuing operations |
(0.10) |
0.03 |
|
Loss on discontinued operations |
- |
(0.00) |
|
Net income per ADS attributable to New Oriental-Basic (note 2) |
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Income (Loss) from continuing operations |
(0.10) |
0.03 |
|
Loss on discontinued operations |
- |
(0.00) |
|
Net income per ADS attributable to New Oriental-Diluted (note 2) |
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Income (Loss) from continuing operations |
(0.10) |
0.03 |
|
Loss on discontinued operations |
- |
(0.00) |
|
Other comprehensive income (loss), net of tax |
15,760 |
(747) |
|
Comprehensive income (loss) |
(9) |
2,567 |
|
Comprehensive income (loss) attributable to New Oriental Education & Technology Group Inc. |
(9) |
2,567 |
|
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 |
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2012 |
2011 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
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Cost of revenues |
- |
- |
|
Selling and marketing |
- |
- |
|
General and administrative |
6,081 |
4,231 |
|
Total |
6,801 |
4,231 |
|
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 |
|||||
2012 |
2011 |
||||
(Unaudited) |
(Unaudited) |
||||
USD |
USD |
||||
General and administrative expenses |
77,737 |
47,960 |
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Share-based compensation expense in general and administrative expenses |
6,801 |
4,231 |
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Non-GAAP general and administrative expenses |
70,936 |
43,729 |
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Total operating costs and expenses |
192,763 |
130,434 |
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Share-based compensation expenses |
6,801 |
4,231 |
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Non-GAAP operating costs and expenses |
185,962 |
126,203 |
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Operating loss |
(26,857) |
(3,240) |
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Share-based compensation expenses |
6,801 |
4,231 |
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Non-GAAP operating income (loss) |
(20,056) |
991 |
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Operating margin |
-16.2% |
-2.5% |
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Non-GAAP operating margin |
-12.1% |
0.8% |
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Net income (loss) attributable to New Oriental |
(15,769) |
3,314 |
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Share-based compensation expense |
6,801 |
4,231 |
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Non-GAAP net income (loss) |
(8,968) |
7,545 |
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Net income (loss) per ADS attributable to New Oriental- Basic (note 1) |
(0.10) |
0.02 |
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Net income (loss) per ADS attributable to New Oriental- Diluted (note 1) |
(0.10) |
0.02 |
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Non-GAAP net income (loss) per ADS attributable to New Oriental - Basic (note 1) |
(0.06) |
0.05 |
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Non-GAAP net income (loss) per ADS attributable to New Oriental - Diluted (note 1) |
(0.06) |
0.05 |
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Weighted average shares used in calculating basic net income per ADS (note 1) |
155,856,826 |
154,706,757 |
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Weighted average shares used in calculating diluted net income per ADS (note 1) |
157,930,678 |
157,000,285 |
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Non-GAAP Income (loss) per share - basic |
(0.06) |
0.05 |
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Non-GAAP Income (loss) per share - diluted |
(0.06) |
0.05 |
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Note 1: Each ADS represents one common share. |
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) |
|||
For the Six Months Ended November 30 |
|||
2012 |
2011 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
Net Revenues: |
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Educational Programs and services |
457,139 |
362,035 |
|
Books and others |
44,596 |
32,009 |
|
Total net revenues |
501,735 |
394,044 |
|
Operating costs and expenses (note 1): |
|||
Cost of revenues |
198,895 |
148,053 |
|
Selling and marketing |
73,817 |
52,329 |
|
General and administrative |
154,325 |
101,736 |
|
Total operating costs and expenses |
427,037 |
302,118 |
|
Operating income |
74,698 |
91,926 |
|
Other income, net |
14,919 |
11,540 |
|
Provision for income taxes |
(9,127) |
(8,306) |
|
Income from continuing operations |
80,490 |
95,160 |
|
Loss on discontinued operations, net of tax |
(407) |
(1,137) |
|
Net income attributable to New Oriental Education & Technology Group Inc. |
80,083 |
94,023 |
|
Net income per share attributable to New Oriental-Basic |
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Income from continuing operations |
0.52 |
0.62 |
|
Loss on discontinued operations |
(0.00) |
(0.01) |
|
Net income per share attributable to New Oriental-Diluted |
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Income from continuing operations |
0.51 |
0.61 |
|
Loss on discontinued operations |
(0.00) |
(0.01) |
|
Net income per ADS attributable to New Oriental-Basic (note 2) |
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Income from continuing operations |
0.52 |
0.62 |
|
Loss on discontinued operations |
(0.00) |
(0.01) |
|
Net income per ADS attributable to New Oriental-Diluted (note 2) |
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Income from continuing operations |
0.51 |
0.61 |
|
Loss on discontinued operations |
(0.00) |
(0.01) |
|
Other comprehensive income, net of tax |
16,003 |
7,761 |
|
Comprehensive income |
96,086 |
101,784 |
|
Comprehensive income attributable to New Oriental Education & Technology Group Inc. |
96,086 |
101,784 |
|
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 Six Months Ended November 30 |
|||
2012 |
2011 |
||
(Unaudited) |
(Unaudited) |
||
USD |
USD |
||
Cost of revenues |
- |
216 |
|
Selling and marketing |
- |
- |
|
General and administrative |
13,521 |
10,830 |
|
Total |
13,521 |
11,046 |
|
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) |
|||||
For the Six Months Ended November 30 |
|||||
2012 |
2011 |
||||
(Unaudited) |
(Unaudited) |
||||
USD |
USD |
||||
General and administrative expenses |
154,325 |
101,736 |
|||
Share-based compensation expense in general and administrative expenses |
13,521 |
10,830 |
|||
Non-GAAP general and administrative expenses |
140,804 |
90,906 |
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Total operating costs and expenses |
427,037 |
302,118 |
|||
Share-based compensation expenses |
13,521 |
11,046 |
|||
Non-GAAP operating costs and expenses |
413,516 |
291,072 |
|||
Operating income |
74,698 |
91,926 |
|||
Share-based compensation expenses |
13,521 |
11,046 |
|||
Non-GAAP operating income |
88,219 |
102,972 |
|||
Operating margin |
14.9% |
23.3% |
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Non-GAAP operating margin |
17.6% |
26.1% |
|||
Net income attributable to New Oriental |
80,083 |
94,023 |
|||
Share-based compensation expense |
13,521 |
11,046 |
|||
Non-GAAP net income |
93,604 |
105,069 |
|||
Net income per ADS attributable to New Oriental- Basic (note 1) |
0.51 |
0.61 |
|||
Net income per ADS attributable to New Oriental- Diluted (note 1) |
0.51 |
0.60 |
|||
Non-GAAP net income per ADS attributable to New Oriental - Basic (note 1) |
0.60 |
0.68 |
|||
Non-GAAP net income per ADS attributable to New Oriental - Diluted (note 1) |
0.59 |
0.67 |
|||
Weighted average shares used in calculating basic net income per ADS (note 1) |
155,716,176 |
154,377,584 |
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Weighted average shares used in calculating diluted net income per ADS (note 1) |
157,589,419 |
156,747,335 |
|||
Non-GAAP Income per share - basic |
0.60 |
0.68 |
|||
Non-GAAP Income per share - diluted |
0.59 |
0.67 |
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Note 1: Each ADS represents one common share. |
SOURCE