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New Oriental Announces Results for the Second Fiscal Quarter Ended November 30, 2008
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Net Revenues Increased by 53.7% Year-Over-Year
Non-GAAP Net Income Increased by 84.9% Year-Over-Year
GAAP Net Income Increased by 57.5% Year-Over-Year
Highlights for the Fiscal Quarter Ended November 30, 2008
-- Total net revenues increased by 53.7% year-over-year to US$49.4 million
from US$32.2 million in the same period of the prior fiscal year.
-- Net income, excluding share-based compensation expenses (Non-GAAP),
increased by 84.9% year-over-year to US$7.4 million from US$4.0 million
in the same period of the prior fiscal year. GAAP net income increased
by 57.5% year-over-year to US$3.1 million from US$1.9 million in the
same period of the prior fiscal year.
-- Non-GAAP income from operations increased by 170% year-over-year to
US$5.2 million from US$1.9 million in the same period of the prior
fiscal year. GAAP income from operations increased to US$0.9 million
from a loss of US$0.1 million in the same period of the prior fiscal
year.
-- Non-GAAP basic and diluted earnings per ADS were US$0.20 and US$0.19 ,
respectively. GAAP basic and diluted earnings per ADS were US$0.08 and
US$0.08 , respectively. Each ADS represents four common shares of the
Company.
-- Total student enrollments in language training and test preparation
courses increased by 13.4% year-over-year to approximately 292,200 from
approximately 257,700 in the same period of the prior fiscal year.
-- The total number of schools and learning centers increased by 25 to 247
in the quarter ended November 30, 2008 , up from 222 in previous quarter.
New Oriental opened one new school and a net of 22 new learning centers
during the quarter, and we completed the acquisition of 100% equity
interest of the two Tongwen schools in Changchun, Tongwen High School
and a Tongwen school for re-takers of the gaokao, China's national
college entrance examination. This brings the total number of schools
and learning centers to 46 and 201, respectively, as of November 30,
2008 .
Financial Summary - Second Fiscal Quarter 2009 and First Six Months
of FY2009
(US$ 000, except per ADS data and student enrollments)
Q2 of FY2009 Q2 of FY 2008 Pct. Change
Net revenues US$49,430 US$32,159 53.7 %
Non-GAAP net income (1) 7,376 3,989 84.9 %
GAAP net income 3,064 1,946 57.5 %
Non-GAAP operating income (1) 5,182 1,919 170.0 %
GAAP operating income 870 (124) -
Non-GAAP net income per ADS
basic (1)(2) 0.20 0.11 86.5 %
Non-GAAP net income per ADS
diluted (1)(2) 0.19 0.10 89.4 %
GAAP net income per ADS basic (2) 0.08 0.05 58.8 %
GAAP net income per ADS diluted (2) 0.08 0.05 61.3 %
Total student enrollments in
language training and test
preparation courses 292,200 257,700 13.4 %
1H of FY2009 1H of FY2008 Pct. Change
Net revenues US$167,692 US$112,737 48.7 %
Non-GAAP net income (1) 56,163 39,361 42.7 %
GAAP net income 47,967 35,648 34.6 %
Non-GAAP operating income (1) 57,931 38,995 48.6 %
GAAP operating income 49,735 35,282 41.0 %
Non-GAAP net income per ADS
basic (1)(2) 1.51 1.05 43.5 %
Non-GAAP net income per ADS
diluted (1)(2) 1.46 1.01 45.4 %
GAAP net income per ADS basic (2) 1.29 0.95 35.4 %
GAAP net income per ADS diluted (2) 1.25 0.91 37.1 %
Total student enrollments in
language training and test
preparation courses 837,700 698,200 20.0 %
(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 challenging global economic conditions, we are pleased to see
continued strong demand for New Oriental's educational programs and services.
We achieved year-over-year revenue growth of 53.7% to
Mr. Yu continued, "We were particularly pleased with the stellar growth in
our POP Kids English program, (the language training program for children of
ages 5 to 12). Enrollments in the program were up over 43% year-over-year to
over 56,000 during our second fiscal quarter, which is typically the slowest
quarter of our fiscal year, and up over 51% for the first half of fiscal year
2009 to over 154,000. To enhance our fast-growing POP Kids English program, in
Mr. Yu concluded, "We are pleased to report continued excellent progress in our U-Can programs, which provide all subjects after-school tutoring and gaokao test preparation. Our U-Can programs had enrollments in non-English courses of over 5,800 in the seasonally slowest second fiscal quarter and enrollments of over 22,000 for the first half of fiscal year 2009. We recorded over 143,000 enrollments for middle and high school English courses in the same period. In addition, we expect a pick-up in U-Can enrollments in the second half of fiscal year 2009 ending in May because the gaokao exam is given once a year in June and students typically begin preparing in earnest as the all-important exam nears. We remain on track to achieve our 40,000 to 50,000 enrollment target for U-Can non-English enrollments for fiscal year 2009."
New Oriental's Chief Financial Officer,
Financial Results for the Fiscal Quarter Ended
For the second fiscal quarter of 2009, New Oriental reported net revenues
of
Net revenues from educational programs and services for the second fiscal
quarter were
Non-GAAP operating costs and expenses for the quarter were
Cost of revenues increased by 39.9% year-over-year to
Selling and marketing expenses increased by 62.9% year-over-year to
Non-GAAP general and administrative expenses were
Total share-based compensation expenses, which were allocated to related
operating costs and expenses, increased to
Non-GAAP income from operations for the quarter was
Non-GAAP operating margin for the quarter was 10.5%, compared to 6.0% in the same period of the prior fiscal year. GAAP operating margin for the quarter was 1.8%, compared to negative 0.4% in the same period of the prior fiscal year. This rise was primarily due to improved operating efficiency as revenue growth outpaced the growth in operating cost and expenses.
Non-GAAP net income was
GAAP net income for the quarter 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 second quarter of fiscal year 2009 was
Financial Results for the Six Months Ended
For the first six months of fiscal year 2009, New Oriental reported net
revenues of
Total student enrollments in language training and test preparation courses in the first six months of fiscal year 2009 increased by 20.0% to approximately 837,700 from approximately 698,200 in the same period of the prior fiscal year.
Non-GAAP income from operations for the first six months of fiscal year
2009 was
Non-GAAP operating margin for the first six months of fiscal year 2009 was 34.5%, compared to 34.6% for the same period of the prior fiscal year; GAAP operating margin for the first six months of fiscal year 2009 was 29.7%, compared to 31.3% for the same period of the prior fiscal year.
Non-GAAP net income for the first six months of fiscal year 2009 was
GAAP net income for the first six months of fiscal year 2009 was
Outlook for Third Quarter of Fiscal Year 2009
New Oriental expects its total net revenues in the third quarter of fiscal
year 2009 (
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: + 1 617.213.8847
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: 42733134
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 2009 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 SEC: net income excluding share-based compensation expenses and basic and diluted earnings per ADS excluding share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release. New Oriental believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. New Oriental believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to New Oriental's historical performance and liquidity. New Oriental computes its non-GAAP financial measures using the same consistent method from quarter to quarter. New Oriental believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP net income excluding share-based compensation expenses, and basic and diluted earnings per share and per ADS excluding share-based compensation expenses is that these non-GAAP measures exclude share-based compensation charge that has been and will continue to be for the foreseeable future a significant recurring expense in our business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
For investor and media inquiries, please contact:
In China :
Ms. Sisi Zhao
New Oriental Education and Technology Group Inc.
Tel: +86-10-6260-5566 x8203
Email: zhaosisi@staff.neworiental.org
Ms. Cynthia He Brunswick Group LLC
Tel: +86-10-6566-9504
Email: edu@brunswickgroup.com
In the U.S.:
Mr. Michael Guerin Brunswick Group LLC
Tel: +1-212-333-3810
Email: mguerin@brunswickgroup.com
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
As of November 30 As of August 31
2008 2008
(Unaudited) (Unaudited)
USD USD
ASSETS:
Current assets:
Cash and cash equivalents 182,831 196,885
Restricted cash 531 530
Term deposits 86,536 68,939
Accounts receivable, net 1,315 1,410
Inventory 12,866 13,071
Prepaid expenses and other current assets 16,131 15,870
Total current assets 300,210 296,705
Property, plant and equipment, net 107,988 107,432
Land use right, net 3,527 3,547
Amounts due from related parties 396 396
Deferred tax assets 1,570 1,622
Long term prepaid rent 738 583
Deposits for business acquisition - 366
Intangible assets 955 660
Goodwill 2,163 1,401
Long term investment 2 2
Total assets 417,549 412,714
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable-trade 8,139 9,474
Accrued expenses and other current
liabilities 25,121 32,509
Income tax payable 4,268 8,286
Amount due to related parties 9 1,506
Deferred revenue 52,660 42,554
Total current liabilities 90,197 94,329
Total liabilities 90,197 94,329
Total shareholders' equity 327,352 318,385
Total liabilities and shareholders' equity 417,549 412,714
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for per share and per ADS amounts)
For the Three Months
Ended November 30
2008 2007
(Unaudited) (Unaudited)
USD USD
Net Revenues:
Educational Programs and services 43,833 28,004
Books and others 5,597 4,155
Total net revenues 49,430 32,159
Operating costs and expenses (note 1):
Cost of revenues 21,719 15,523
Selling and marketing 8,291 5,089
General and administrative 18,550 11,671
Total operating costs and expenses 48,560 32,283
Operating income (loss) 870 (124)
Other income, net 2,605 2,221
Provision for income taxes (411) (191)
Minority interest, net of taxes - 40
Net Income 3,064 1,946
Net income per share-basic 0.02 0.01
Net income per share-diluted 0.02 0.01
Net income per ADS-basic (note 2) 0.08 0.05
Net income per ADS-diluted (note 2) 0.08 0.05
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for per share and per ADS amounts)
For the Six Months
Ended November 30
2008 2007
(Unaudited) (Unaudited)
USD USD
Net Revenues:
Educational Programs and services 155,054 104,136
Books and others 12,638 8,601
Total net revenues 167,692 112,737
Operating costs and expenses (note 1):
Cost of revenues 60,205 41,075
Selling and marketing 18,150 11,183
General and administrative 39,602 25,197
Total operating costs and expenses 117,957 77,455
Operating income 49,735 35,282
Other income, net 4,468 3,808
Provision for income taxes (6,637) (3,528)
Minority interest, net of taxes 401 86
Net Income 47,967 35,648
Net income per share-basic 0.32 0.24
Net income per share-diluted 0.31 0.23
Net income per ADS-basic (note 2) 1.29 0.95
Net income per ADS-diluted (note 2) 1.25 0.91
Notes:
Note 1: Share-based compensation expenses (in thousands) are included in
the operating costs and expenses as follows:
For the Three Months
Ended November 30
2008 2007
(Unaudited) (Unaudited)
USD USD
Cost of revenues 83 326
Selling and marketing 52 67
General and administrative 4,177 1,650
Total 4,312 2,043
Note 2: Each ADS represents four common shares.
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
2008 2007
(Unaudited) (Unaudited)
USD USD
Cost of revenues 313 441
Selling and marketing 114 126
General and administrative 7,769 3,146
Total 8,196 3,713
Note 2: Each ADS represents four common shares.
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES
(In thousands except share and per ADS amounts)
For the Three Months
Ended November 30
2008 2007
(Unaudited) (Unaudited)
USD USD
General and administrative expenses 18,550 11,671
Share-based compensation expense in
general and administrative expenses 4,177 1,650
Non-GAAP general and administrative
expenses 14,373 10,021
Total operating costs and expenses 48,560 32,283
Share-based compensation expenses 4,312 2,043
Non-GAAP operating costs and expenses 44,248 30,240
Operating income 870 (124)
Share-based compensation expenses 4,312 2,043
Non-GAAP operating income 5,182 1,919
Operating margin 1.8% (0.4%)
Non-GAAP operating margin 10.5% 6.0%
Net income 3,064 1,946
Share-based compensation expense 4,312 2,043
Non-GAAP net income 7,376 3,989
Net income per ADS - basic (note 1) 0.08 0.05
Net income per ADS - diluted (note 1) 0.08 0.05
Non-GAAP net income per ADS - basic (note 1) 0.20 0.11
Non-GAAP net income per ADS - diluted (note 1) 0.19 0.10
Weighted average shares used in
calculating basic net income per ADS
(note 1) 148,852,433 150,163,711
Weighted average shares used in
calculating diluted net income per
ADS (note 1) 153,437,244 157,175,447
Note 1: Each ADS represents four common shares.
NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES
(In thousands except share and per ADS amounts)
For the Six Months
Ended November 30
2008 2007
(Unaudited) (Unaudited)
USD USD
General and administrative expenses 39,602 25,197
Share-based compensation expense in
general and administrative expenses 7,769 3,146
Non-GAAP general and administrative
expenses 31,833 22,051
Total operating costs and expenses 117,957 77,455
Share-based compensation expenses 8,196 3,713
Non-GAAP operating costs and expenses 109,761 73,742
Operating income 49,735 35,282
Share-based compensation expenses 8,196 3,713
Non-GAAP operating income 57,931 38,995
Operating margin 29.7% 31.3%
Non-GAAP operating margin 34.5% 34.6%
Net income 47,967 35,648
Share-based compensation expense 8,196 3,713
Non-GAAP net income 56,163 39,361
Net income per ADS - basic (note 1) 1.29 0.95
Net income per ADS - diluted (note 1) 1.25 0.91
Non-GAAP net income per ADS - basic (note 1) 1.51 1.05
Non-GAAP net income per ADS - diluted (note 1) 1.46 1.01
Weighted average shares used in
calculating basic net income per ADS
(note 1) 148,770,074 149,669,791
Weighted average shares used in
calculating diluted net income per
ADS (note 1) 153,718,565 156,594,510
Note 1: Each ADS represents four common shares.
SOURCENew Oriental Education and Technology Group Inc -0-01/19/2009 /CONTACT: InChina : Ms. Sisi Zhao ofNew Oriental Education and Technology Group Inc. , +86-10-6260-5566 x8203, zhaosisi@staff.neworiental.org; or Ms.Cynthia He ofBrunswick Group LLC , +86-10-6566-9504, edu@brunswickgroup.com, for New Oriental; or In the U.S.: Mr.Michael Guerin ofBrunswick Group LLC , +1-212-333-3810, mguerin@brunswickgroup.com, for New Oriental/ (EDU) CO:New Oriental Education and Technology Group Inc ST:China IN: EDU NET MLM CPR HED SU: ERN CCA ERP AR -- CNM016 -- 192701/19/2009 03:24 EST http://www.prnewswire.com