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.
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SOURCE New Oriental Education and Technology Group Inc.