New Oriental Announces Results for the Fourth Fiscal Quarter and the Fiscal Year Ended May 31, 2019

BEIJING, July 23, 2019 /PRNewswire/ -- New Oriental Education & 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 fourth fiscal quarter ended May 31, 2019.

Financial Highlights for the Fourth Fiscal Quarter Ended May 31, 2019

    --  Total net revenues increased by 20.2% year-over-year to US$842.9 million
        for the fourth fiscal quarter of 2019.
    --  Operating income increased by 36.0% year-over-year to US$77.0 million
        for the fourth fiscal quarter of 2019.
    --  Non-GAAP operating income, which excludes share-based compensation
        expenses, increased by 30.3% year-over-year to US$102.7 million for the
        fourth fiscal quarter of 2019.
    --  Net income attributable to New Oriental decreased by 33.5%
        year-over-year to US$43.2 million for the fourth fiscal quarter of 2019.
    --  Non-GAAP net income attributable to New Oriental, which excludes
        share-based compensation expenses and gain / (loss) from fair value
        change of long-term investments, increased by 8.9% year-over-year to
        US$95.1 million for the fourth fiscal quarter of 2019.

Key Financial Results



            
              (in thousands US$, except per ADS(1) data)                                                          4Q FY2019 4Q FY2018          % of
                                                                                                                                                 change

    ---                                                                                                                                              ---


            Net revenues                                                                                                     842,851    701,001          20.2%



            Operating income                                                                                                  76,972     56,585          36.0%



            Non-GAAP operating income (2)(3)                                                                                 102,712     78,800          30.3%



            Net income attributable to New Oriental                                                                           43,248     65,082         -33.5%



            Non-GAAP net income attributable to New Oriental (2)(3)                                                           95,075     87,297           8.9%



            Net income per ADS attributable to New Oriental - basic                                                             0.27       0.41         -33.4%



            Net income per ADS attributable to New Oriental - diluted                                                           0.27       0.41         -33.6%



            Non-GAAP net income per ADS attributable to New Oriental                                                            0.60       0.55           9.2%
     - basic(3)(4)



            Non-GAAP net income per ADS attributable to New Oriental                                                            0.60       0.55           8.8%
     - diluted(3)(4)





            
              (in thousands US$, except per ADS(1) data)                                                            FY2019    FY2018           % of
                                                                                                                                                 change

    ---                                                                                                                                                   ---


            Net revenues                                                                                                   3,096,491  2,447,430          26.5%



            Operating income                                                                                                 305,534    262,959          16.2%



            Non-GAAP operating income(2)(3)                                                                                  376,870    320,402          17.6%



            Net income attributable to New Oriental                                                                          238,065    296,130         -19.6%



            Non-GAAP net income attributable to New Oriental(2)(3)                                                           411,080    353,573          16.3%



            Net income per ADS attributable to New Oriental - basic                                                             1.50       1.87         -19.7%



            Net income per ADS attributable to New Oriental - diluted                                                           1.50       1.87         -19.9%



            Non-GAAP net income per ADS attributable to New Oriental                                                            2.60       2.24          16.2%
     - basic(3)(4)



            Non-GAAP net income per ADS attributable to New Oriental                                                            2.58       2.23          15.9%
     - diluted(3)(4)





               (1)  Each ADS represents one common share.



               (2)  GAAP represents Generally Accepted Accounting Principles in the United States of America.



               (3)  New Oriental provides net income attributable to New Oriental, operating income and net income per ADS
             attributable to New Oriental on a non-GAAP basis that excludes share-based compensation expenses and
             gain / (loss) from fair value change of long-term investments 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.



               (4)  The Non-GAAP net income per ADS is computed using Non-GAAP net income and the same number of
             shares and ADSs used in GAAP basic and diluted EPS calculation.

Operating Highlights for the Fourth Fiscal Quarter Ended May 31, 2019

    --  Total student enrollments in academic subjects tutoring and test
        preparation courses increased by 33.9% year-over-year to approximately
        2,756,000 for the fourth fiscal quarter of 2019.
    --  The total number of schools and learning centers was 1,233 as of May 31,
        2019, an increase of 152 compared to 1,081 as of May 31, 2018, and an
        increase of 69 compared to 1,164 as of February 28, 2019. The total
        number of schools was 95 as of May 31, 2019.

Michael Minhong Yu, New Oriental's Executive Chairman, commented, "We are delighted to conclude the fiscal year 2019 with continued robust growth on the top line as well as improvement in operating margin. In the fourth quarter, we recorded a top line growth of 20.2%, or 28.4% if computed in Renminbi. Our key growth driver, the K-12 after-school tutoring business, achieved a year-over-year revenue growth of approximately 28.5%, or 37.2% if computed in Renminbi. Furthermore, our U-Can middle and high school all-subjects after-school tutoring business grew by approximately 27.2%, or 35.9% if computed in Renminbi, while our POP Kids program achieved a growth of approximately 31.0%, or 39.9% if computed in Renminbi. Looking ahead, we will remain focused on enhancing the quality and standards of our educational products and services, and strive to deliver maximum value to our students."

Chenggang Zhou, New Oriental's Chief Executive Officer, added, "We once again delivered a strong set of results through our execution of the well-proven "Optimize the Market" strategy. During the quarter, we added a net total of 65 learning centers in existing cities and opened three new offline training schools and one learning center in the cities of Baotou, Changshu and Yuci. In the fiscal year 2019, we added a total of 152 new facilities, including 141 new learning centers in existing cities, nine offline training facilities in six new cities and two dual-teacher model facilities in two low-tier cities. Altogether, the total square meters of our classroom area by the end of the fiscal year 2019 increased by approximately 24% year-over-year. We also continued to strategically deepen our investment into the dual-teacher model classes and new initiatives for K-12 tutoring in our pure online education platform, Koolearn.com. With the innovative application of technology in our education services, we are well-placed to continue to capture new business opportunities in lower-tier cities and remote areas."

Stephen Zhihui Yang, New Oriental's Chief Financial Officer, commented, "Our capacity grew steadily throughout the entire fiscal year, in line with our expansion plan, while we continued to emphasize on improving our operational efficiency. Riding on last quarter's strong bottom line performance, we once again delivered another year-over-year operating margin expansion in this quarter. During the quarter, our non-GAAP operating income increased by 30.3% year over year to approximately US$102.7 million, and non-GAAP operating margin rose by 100 basis points to 12.2% from 11.2% a year ago. As we enter the fiscal year 2020, we will continue to leverage our online and offline integrated education system across all business lines, and improve efficiency by using standardized, modularized and systemized operating process. We are confident that we will be able to deliver continued margin expansion, and generate sustainable long-term value to our customers and shareholders."

Financial Results for the Fourth Fiscal Quarter Ended May 31, 2019

Net Revenues

For the fourth fiscal quarter of 2019, New Oriental reported net revenues of US$842.9 million, representing a 20.2% increase year-over-year. Net revenues from educational programs and services for the fourth fiscal quarter were US$717.0 million, representing a 25.1% increase year-over-year. The growth was mainly driven by increases in student enrollments in K-12 after-school tutoring courses.

Total student enrollments in academic subjects tutoring and test preparation courses in the fourth fiscal quarter of 2019 increased by 33.9% year-over-year to approximately 2,756,000.

Operating Costs and Expenses

Operating costs and expenses for the quarter were US$765.9 million, representing an 18.9% increase year-over-year. Non-GAAP operating costs and expenses for the quarter, which exclude share-based compensation expenses, were US$740.2 million, representing a 19.0% increase year-over-year.

    --  Cost of revenues increased by 24.0% year-over-year to US$371.2 million,
        primarily due to increases in teachers' compensation for more teaching
        hours and rental costs for the increased number of schools and learning
        centers in operation.
    --  Selling and marketing expenses increased by 4.8% year-over-year to
        US$105.9 million.
    --  General and administrative expenses for the quarter increased by 18.4%
        year-over-year to US$288.8 million. Non-GAAP general and administrative
        expenses, which exclude share-based compensation expenses, were US$264.4
        million, representing a 19.2% increase year-over-year. The increase was
        primarily due to increased headcount as the Company grew its network of
        schools and learning centers, as well as increases in R&D expenses and
        human resources expenses related to the development of the Company's
        online and offline integrated education ecosystem.

Total share-based compensation expenses, which were allocated to related operating costs and expenses, increased by 15.9% to US$25.7 million in the fourth fiscal quarter of 2019.

Operating Income and Operating Margin

Operating income was US$77.0 million, a 36.0% increase from US$56.6 million in the same period of the prior fiscal year. Non-GAAP operating income for the quarter was US$102.7 million, a 30.3% increase from US$78.8 million in the same period of the prior fiscal year.

Operating margin for the quarter was 9.1%, compared to 8.1% in the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses, for the quarter was 12.2%, compared to 11.2% in the same period of the prior fiscal year.

Net Income and EPS

Net income attributable to New Oriental for the quarter was US$43.2 million, representing a 33.5% decrease from the same period of the prior fiscal year. Basic and diluted earnings per ADS attributable to New Oriental were US$0.27 and US$0.27, respectively.

Non-GAAP Net Income and Non-GAAP EPS

Non-GAAP net income attributable to New Oriental for the quarter was US$95.1 million, representing a 8.9% increase from the same period of the prior fiscal year. Non-GAAP basic and diluted earnings per ADS attributable to New Oriental were US$0.60 and US$0.60, respectively.

Cash Flow

Net operating cash flow for the fourth fiscal quarter of 2019 was approximately US$326.9 million. Capital expenditures for the quarter were US$80.0 million, which were primarily attributable to the opening of 104 facilities and renovations at existing learning centers.

Balance Sheet

As of May 31, 2019, New Oriental had cash and cash equivalents of US$1,157.1 million, compared to US$983.3 million as of May 31, 2018. In addition, the Company had US$365.7 million in term deposits and US$1,668.7 million in short-term investment.

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 fourth quarter of the fiscal year 2019 was US$1,301.1 million, an increase of 2.4% from US$1,270.2 million at the end of the fourth quarter of the fiscal year 2018. The Company adopted Revenue from Contracts with Customers ("Topic 606") starting June 1, 2018, and as a result, as of May 31, 2019, US$76.1 million of deferred revenue was reclassified to accrued expenses and other current liabilities, representing estimated amounts of tuition collected that may be refunded in the future if students withdraw from a course while there are remaining classes. In addition, the lower than usual increase was due to the change of tuition fees collection schedule for K-12 after-school tutoring courses to comply with the latest regulatory requirements.

Financial Results for the Fiscal Year Ended May 31, 2019

For the fiscal year 2019 ended May 31, 2019, New Oriental reported net revenues of US$3,096.5 million, representing a 26.5% increase year-over-year.

Total student enrollments in academic subjects tutoring and test preparation courses in the fiscal year 2019 increased by 32.4% to approximately 8,382,700.

Operating income for the fiscal year 2019 was US$305.5 million, representing a 16.2% increase year-over-year. Non-GAAP operating income for the fiscal year 2019 was US$376.9 million, representing a 17.6% increase year-over-year.

Operating margin for the fiscal year 2019 was 9.9%, compared to 10.7% for the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses for the fiscal year 2019, was 12.2%, compared to 13.1% for the same period of the prior fiscal year.

Net income attributable to New Oriental for the fiscal year 2019 was US$238.1 million, representing a 19.6% decrease year-over-year. Basic and diluted net income per ADS attributable to New Oriental for the fiscal year 2019 amounted to US$1.50 and US$1.50, respectively.

Non-GAAP net income attributable to New Oriental for the fiscal year 2019 was US$411.1 million, representing a 16.3% increase year-over-year. Non-GAAP basic and diluted net income per ADS attributable to New Oriental for the fiscal year 2019 amounted to US$2.60 and US$2.58 respectively.

Outlook for the First Quarter of the Fiscal Year 2020

New Oriental expects total net revenues in the first quarter of the fiscal year 2020 (June 1, 2019 to August 31, 2019) to be in the range of US$1,050.5 million to US$1,075.5 million, representing year-over-year growth in the range of 22% to 25%.

The projected growth rate of revenue in our functional currency Renminbi is expected to be in the range of 26% to 29% for the first quarter of the fiscal year 2020.

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 July 23, 2019, U.S. Eastern Time (8 PM on July 23, 2019, Beijing/Hong Kong Time).

Dial-in details for the earnings conference call are as follows:

US: +1-845-675-0437
Hong Kong: +852-3018-6771
UK: +44-20-3621-4779

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is "2291305".

A replay of the conference call may be accessed by phone at the following number until July 31, 2019:

International: +61-2-8199-0299
Passcode: 2291305

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 language training and test preparation, primary and secondary school education, online education, content development and distribution, overseas study consulting services, pre-school education and study tour. New Oriental's ADSs, each of which represents one common share, currently trade on the New York Stock Exchange under the symbol "EDU."

For more information about New Oriental, please visit http://www.neworiental.org/english/.

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 first quarter of the fiscal year 2020, 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 U.S. Securities and Exchange Commission, in its annual reports 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; 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; health epidemics and other outbreaks in China; 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, 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 and gain / (loss) from fair value change of long-term investments, operating income excluding share-based compensation expenses, operating cost 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 and per share excluding share-based compensation expenses and gain / (loss) from fair value change of long-term investments. 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 tables 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 compensation expenses and gain / (loss) from fair value change of long-term investments 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 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 and gain / (loss) from fair value change of long-term investments 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:

Ms. Joanne Wong
FTI Consulting
Tel: +852-3768-4747
Email: NewOriental@fticonsulting.com

Ms. Sisi Zhao
New Oriental Education & Technology Group Inc.
Tel: +86-10-6260-5568
Email: zhaosisi@xdf.cn



                                                                                  
              
       NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.


                                                                                       
           
          CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                                               
        
                (In thousands)


                                                                                                                                                       As of May 31     As of May 31


                                                              
              
                2019                                                                     2018

                                                                           ---

                                                                                   (Unaudited)                                                  
      
        (Audited)


                                                                                                                                                  
      USD            
     USD

                                                                                                                                                                                 ---


           
                ASSETS:



           
                Current assets:



             Cash and cash equivalents                                                                                                                   1,157,113           983,319



             Restricted cash                                                                                                                                    43                47



             Term deposits                                                                                                                                 365,730           107,741



             Short-term investments                                                                                                                      1,668,689         1,623,763



             Accounts receivable, net                                                                                                                        3,300             3,179



             Inventory, net                                                                                                                                 29,046            40,175



             Prepaid expenses and other current assets, net                                                                                                199,677           182,095



             Amounts due from related parties, current                                                                                                      42,644             1,595



           
                Total current assets                                                                                                             3,466,242         2,941,914






             Restricted cash, non-current                                                                                                                    4,013             3,399



             Property and equipment, net                                                                                                                   532,015           449,592



             Land use rights, net                                                                                                                            6,405             3,785



             Amounts due from related parties, non-current                                                                                                   1,204             2,226



             Long-term deposits                                                                                                                             49,742            40,099



             Long-term prepaid rents                                                                                                                           442               191



             Intangible assets, net                                                                                                                         13,935             8,544



             Goodwill, net                                                                                                                                  79,614            31,729



             Long-term investments, net                                                                                                                    404,704           433,333



             Deferred tax assets, non-current, net                                                                                                          61,467            43,323



             Other non-current assets                                                                                                                       26,776            19,577



           
                Total assets                                                                                                                     4,646,559         3,977,712






           
                LIABILITIES, MEZZANINE EQUITY AND EQUITY



           
                Current liabilities:



             Accounts payable (including accounts payable of the consolidated                                                                               34,057            39,889
      variable interest entities without recourse to New Oriental of
      US$39,279 and US$33,646 as of May 31, 2018 and May 31, 2019,
      respectively)



             Accrued expenses and other current liabilities (including accrued                                                                             576,521           373,537
      expenses and other current liabilities of the consolidated variable
      interest entities without recourse to New Oriental of US$335,955
      and US$518,937 as of May 31, 2018 and May 31, 2019,
      respectively)



             Income taxes payable (including income tax payable of the                                                                                      94,071            67,233
      consolidated variable interest entities without recourse to New
      Oriental of US$54,844 and US$79,067 as of May 31, 2018 and
      May 31, 2019, respectively)



             Amounts due to related parties (including amounts due to related                                                                                  472                30
      parties of the consolidated variable interest entities without
      recourse to New Oriental of US$30 and US$472 as of May 31,
      2018 and May 31, 2019, respectively)



             Deferred revenue (including deferred revenue of the consolidated                                                                            1,301,103         1,270,195
      variable interest entities without recourse to New Oriental of
      US$1,244,748 and US$1,268,318 as of May 31, 2018 and May 31,
      2019, respectively)





           
                Total current liabilities                                                                                                        2,006,224         1,750,884






             Deferred tax liabilities, non-current (including deferred tax liabilities                                                                      18,781            12,133
      of the consolidated variable interest entities without recourse to
      New Oriental of US$13,782 and US$18,607 as of May 31, 2018
      and May 31, 2019, respectively)



             Long term loan (includingLong term loan of the consolidated                                                                                    96,457                 -
      variable interest entities without recourse to New Oriental of nil
      and nil as of May 31, 2018 and May 31, 2019, respectively)



           
                Total long-term liabilities                                                                                                        115,238            12,133






           
                Total liabilities                                                                                                                2,121,462         1,763,017






           
                Mezzanine equity                                                                                                                         -          206,624



               Redeemable non-controlling interests



           
                Equity



               New Oriental Education & Technology Group Inc. shareholders'                                                                              2,360,686         1,991,589
        equity



               Non-controlling interests                                                                                                                   164,411            16,482



           
                Total equity                                                                                                                     2,525,097         2,008,071






           
                Total liabilities, mezzanine equity and equity                                                                                   4,646,559         3,977,712


                                                                            
          
          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 May 31



                                                                                                                                                                   2019                         2018

                                                                                                                                                                                                ---

                                                                                                                                                            (Unaudited)          
     
       (Unaudited)


                                                                                                                                             
        USD                              
     USD






              
                Net revenues                                                                                                                        842,851                      701,001

                                                                                                                                                                                                ---




              
                Operating cost and expenses (note 1)



                Cost of revenues                                                                                                                               371,241                      299,465



                Selling and marketing                                                                                                                          105,931                      101,046



                General and administrative                                                                                                                     288,759                      243,905

                                                                                                                                                                                                ---


              
                Total operating cost and expenses                                                                                                   765,931                      644,416



              Gain on disposal of a subsidiary                                                                                                                      52



              
                Operating income                                                                                                                     76,972                       56,585

                                                                                                                                                                                                ---


              Loss from fair value change of long-term investments                                                                                            (29,044)



              Other income, net                                                                                                                                 21,535                       23,652



              Provision for income taxes                                                                                                                      (30,555)                    (16,148)



              Loss from equity method investments                                                                                                              (1,077)                       (370)





              
                Net income                                                                                                                           37,831                       63,719

                                                                                                                                                                                                ===


              Add: Net loss attributable to non-controlling interests                                                                                            5,417                        1,363

                                                                                                                                                                                                ---




              
                Net income attributable to New Oriental Education &                                                                                  43,248                       65,082
    Technology Group Inc.'s shareholders

                                                                                                                                                                                                ---




              
                Net income per common share



              
                       - Basic                                                                                                                         0.27                         0.41



              
                       - Diluted                                                                                                                       0.27                         0.41





              
                Net income per ADS (note 2)



              
                       - Basic                                                                                                                         0.27                         0.41



              
                       - Diluted                                                                                                                       0.27                         0.41


                                                                    
              
                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 Three Months Ended May 31



                                                                                                                                                                     2019                                    2018


                                                                                                                                                        
     
       (Unaudited)                  
        
       (Unaudited)


                                                                                                                                                          
     USD                                 
     USD






              General and administrative expenses                                                                                                                288,759                                 243,905



              Less: Share-based compensation expenses in general and                                                                                              24,401                                  22,215
    administrative expenses

                                                                                                                                                                                                             ---


              Non-GAAP general and administrative expenses                                                                                                       264,358                                 221,690

                                                                                                                                                                                                             ---




              Total operating cost and expenses                                                                                                                  765,931                                 644,416



              Less: Share-based compensation expenses                                                                                                             25,740                                  22,215

                                                                                                                                                                                                             ---


              Non-GAAP operating cost and expenses                                                                                                               740,191                                 622,201

                                                                                                                                                                                                             ---




              Operating income                                                                                                                                    76,972                                  56,585



              Add: Share-based compensation expenses                                                                                                              25,740                                  22,215



              Non-GAAP operating income                                                                                                                          102,712                                  78,800

                                                                                                                                                                                                             ---




              Operating margin                                                                                                                                      9.1%                                   8.1%



              Non-GAAP operating margin                                                                                                                            12.2%                                  11.2%





              Net income attributable to New Oriental                                                                                                             43,248                                  65,082



              Add: Share-based compensation expenses                                                                                                              22,783                                  22,215



              Add: Loss from fair value change of long-term investments                                                                                           29,044



              Non-GAAP net income attributable to New Oriental                                                                                                    95,075                                  87,297

                                                                                                                                                                                                             ---




              Net income per ADS attributable to New Oriental - Basic (note 2)                                                                                      0.27                                    0.41



              Net income per ADS attributable to New Oriental - Diluted (note 2)                                                                                    0.27                                    0.41





              Non-GAAP net income per ADS attributable to New Oriental                                                                                              0.60                                    0.55
    - Basic (note 2)



              Non-GAAP net income per ADS attributable to New Oriental                                                                                              0.60                                    0.55
    - Diluted (note 2)





              Weighted average shares used in calculating basic net income                                                                                   157,849,975                             158,319,910
    per ADS (note 2)



              Weighted average shares used in calculating diluted net income                                                                                 159,066,864                             158,934,539
    per ADS (note 2)





              Non-GAAP income per share - basic                                                                                                                     0.60                                    0.55



              Non-GAAP income per share - diluted                                                                                                                   0.60                                    0.55



              
                Notes:





              Note 1: Share-based compensation expenses (in thousands) are included in the operating cost
    and expenses as follows:




                                                                                                                   For the Three Months Ended May 31



                                                                                                                          2019                                      2018

                                                                                                                                                                    ---

                                                                                                           
      
        (Unaudited)                 
          
        (Unaudited)


                                                                                                             
      USD                                  
      USD




              Cost of revenues                                                                                            134



              Selling and marketing                                                                                     1,205



              General and administrative expenses                                                                      24,401                                    22,215



              Total                                                                                                    25,740                                    22,215

                                                                                                                                                                    ===






              Note 2: Each ADS represents one common share.


                                                                                  
         
         NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.


                                                                                  
         
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                              
           
       (In thousands except for per share and per ADS amounts)




                                                                                                                                                     For the Year Ended May 31



                                                                                                                                                                     2019                  2018

                                                                                                                                                                                           ---

                                                                                                                                                              (Unaudited)          (Unaudited)


                                                                                                                                                  
     USD                        
     USD




              
                Net revenues                                                                                                                        3,096,491             2,447,430

                                                                                                                                                                                           ---




              
                Operating costs and expenses (note 1):



                Cost of revenues                                                                                                                               1,376,269             1,065,740



                Selling and marketing                                                                                                                            384,287               324,249



                General and administrative                                                                                                                     1,034,028               794,482



              
                Total operating costs and expenses                                                                                                  2,794,584             2,184,471

                                                                                                                                                                                           ---


              Gain on disposal of a subsidiary                                                                                                                     3,627



              
                Operating income                                                                                                                      305,534               262,959

                                                                                                                                                                                           ---


              Loss from fair value change of long-term investments                                                                                             (104,636)





              Other income, net                                                                                                                                  114,951                94,065



              Provision for income taxes                                                                                                                        (85,714)             (59,408)



              Loss from equity method investments                                                                                                                (2,289)                (379)





              
                Net income                                                                                                                            227,846               297,237

                                                                                                                                                                                           ===




              Add: Net loss (income) attributable to non-controlling                                                                                              10,219               (1,107)
    interests

                                                                                                                                                                                           ---




              
                Net income attributable to New Oriental Education &                                                                                   238,065               296,130
    Technology Group Inc.

                                                                                                                                                                                           ---






              
                Net income per share attributable to New Oriental-Basic                                                                                  1.50                  1.87





              
                Net income per share attributable to New Oriental-Diluted                                                                                1.50                  1.87





              
                Net income per ADS attributable to New Oriental-Basic                                                                                    1.50                  1.87
    (note 2)





              
                Net income per ADS attributable to New Oriental-Diluted                                                                                  1.50                  1.87
    (note 2)


                                                               
       
                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 Year Ended May 31



                                                                                                                                                         2019                             2018

                                                                                                                                                                                          ---

                                                                                                                                            
     
       (Unaudited)               
     
       (Unaudited)


                                                                                                                                              
     USD                           
     USD






            General and administrative expenses                                                                                                    1,034,028                          794,482



            Less: Share-based compensation expenses in                                                                                                69,997                           57,443
      general and administrative expenses

                                                                                                                                                                                          ---


            Non-GAAP general and administrative expenses                                                                                             964,031                          737,039

                                                                                                                                                                                          ---




            Total operating costs and expenses                                                                                                     2,794,584                        2,184,471



            Less: Share-based compensation expenses                                                                                                   71,336                           57,443

                                                                                                                                                                                          ---


            Non-GAAP operating costs and expenses                                                                                                  2,723,248                        2,127,028

                                                                                                                                                                                          ---




            Operating income                                                                                                                         305,534                          262,959



            Add: Share-based compensation expenses                                                                                                    71,336                           57,443

                                                                                                                                                                                          ---


            Non-GAAP operating income                                                                                                                376,870                          320,402

                                                                                                                                                                                          ---




            Operating margin                                                                                                                            9.9%                           10.7%



            Non-GAAP operating margin                                                                                                                  12.2%                           13.1%





            Net income attributable to New Oriental                                                                                                  238,065                          296,130



            Add: Share-based compensation expenses                                                                                                    68,379                           57,443

                                                                                                                                                                                          ---


            Add: Loss from fair value change of long-term                                                                                            104,636
      investments

                                                                                                                                                                                          ---


            Non-GAAP net income to New Oriental                                                                                                      411,080                          353,573

                                                                                                                                                                                          ---




            Net income per ADS attributable to New                                                                                                      1.50                             1.87
      Oriental- Basic (note 2)



            Net income per ADS attributable to New                                                                                                      1.50                             1.87
      Oriental- Diluted (note 2)





            Non-GAAP net income per ADS attributable to                                                                                                 2.60                             2.24
      New Oriental - Basic (note 2)



            Non-GAAP net income per ADS attributable to                                                                                                 2.58                             2.23
      New Oriental - Diluted (note 2)





            Weighted average shares used in calculating                                                                                          158,293,890                      158,168,794
      basic net income per ADS (note 2)



            Weighted average shares used in calculating                                                                                          159,039,345                      158,556,500
      diluted net income per ADS (note 2)





            Non-GAAP income per share - basic                                                                                                           2.60                             2.24



            Non-GAAP income per share - diluted                                                                                                         2.58                             2.23



              
                Notes:





              Note 1: Share-based compensation expenses (in thousands) are included in the operating
    costs and expenses as follows:




                                                                                                          For the Year Ended May 31



                                                                                                                 2019                           2018

                                                                                                                                                ---

                                                                                                          (Unaudited)                   (Unaudited)


                                                                                                      
     USD                         
     USD




              Cost of revenues                                                                                   134



              Selling and marketing                                                                            1,205



              General and administrative expense                                                              69,997                         57,443



              Total                                                                                           71,336                         57,443

                                                                                                                                                ===






              Note 2: Each ADS represents one common share.

View original content:http://www.prnewswire.com/news-releases/new-oriental-announces-results-for-the-fourth-fiscal-quarter-and-the-fiscal-year-ended-may-31-2019-300889274.html

SOURCE New Oriental Education and Technology Group Inc.