BEIJING, Oct. 20, 2009 (PRNewswire-Asia) -- New Oriental Education and 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 first quarter ended August 31, 2009, which is the first quarter of New Oriental's fiscal year 2010.

    Highlights for the First Fiscal Quarter Ended August 31, 2009
-- Total net revenues increased by 26.3% year-over-year to US$149.4
million from US$118.3 million in the same period of the prior fiscal
year.
-- GAAP net income increased by 27.1% year-over-year to US$57.1 million
from US$44.9 million in the same period of the prior fiscal year.
Non-GAAP net income, which excludes share-based compensation expenses,
increased by 24.6% year-over-year to US$60.8 million from US$48.8
million in the same period of the prior fiscal year.
-- GAAP income from operations increased by 24.7% year-over-year to
US$60.9 million from US$48.9 million in the same period of the prior
fiscal year. Non-GAAP income from operations increased by 22.5%
year-over-year to US$64.6 million from US$52.7 million in the same
period of the prior fiscal year.
-- GAAP basic and diluted net income per ADS were US$1.52 and US$1.47,
respectively. Non-GAAP basic and diluted net income per ADS were
US$1.61 and US$1.57, respectively. Each ADS represents four common
shares of the Company.
-- Total student enrollments in language training and test preparation
courses increased by 18.7% year-over-year to approximately 647,500 from
approximately 545,400 in the same period of the prior fiscal year.
-- The total number of schools and learning centers increased to 287 as of
August 31, 2009, up from 270 as of May 31, 2008. The total number of
schools remained at 48, located in 40 cities, as of August 31, 2009.
The number of learning centers increased by 17 in the quarter to 239 as
of August 31, 2009, up from 222 as of May 31, 2009.

Financial and Student Enrollments Summary - First Quarter 2010
(US$ 000, except per ADS data and student enrollments)

Q1 of FY2010  Q1 of FY2009   Pct. Change
Net revenues                         149,364       118,262         26.3 %
Non-GAAP net income (1)               60,767        48,787         24.6 %
GAAP Net income                       57,066        44,903         27.1 %
Non-GAAP operating income (1)         64,632        52,749         22.5 %
GAAP Operating income                 60,931        48,865         24.7 %
Non-GAAP net income per ADS
basic (1)(2)                           1.61          1.31         23.0 %
Non-GAAP net income per ADS
diluted (1)(2)                         1.57          1.27         23.9 %
GAAP Net income per ADS basic (2)       1.52          1.21         25.5 %
GAAP Net income per ADS diluted (2)     1.47          1.17         26.4 %
Total student enrollments in
language training and test
preparation courses                 647,500       545,400         18.7 %

(1) New Oriental provides net income, operating income, and net income per
ADS on a Non-GAAP basis that excludes share-based compensation
expenses to reflect meaningful supplemental information regarding its
performance and liquidity. For more information on these Non-GAAP
financial measures, please see the table captioned "Reconciliation of
Non-GAAP measures to the most comparable GAAP measures" set forth at
the end of this release.
(2) Each ADS represents four common shares.

"We are pleased to finish the first quarter of fiscal year 2010 with revenue growth of 26.3% to approximately US$149.4 million and even higher net income growth of 27.1% to over US$57 million," said Mr. Michael Yu, New Oriental's chairman and chief executive officer. "Strong first fiscal quarter student enrollments, with enrollment growth in language training and test preparation courses increasing 18.7% year-over-year to over 647,500, drove solid results despite the global economic slowdown and challenges resulting from the H1N1 flu pandemic. We estimate that the H1N1 flu pandemic negatively impacted our top line growth by 2-4% with a more significant negative percentage impact on our bottom line for the quarter. In particular, fear of the H1N1 flu adversely impacted enrollments as we received tens of thousands of inquiries from concerned parents and students, and a large percentage of the students decided not to enroll in New Oriental classes during the summer as an extra precaution. Further, we experienced record cancellations and deferments in enrollments from registered students, and we closed or cancelled classes and summer camps across China whenever an enrolled student was diagnosed with the H1N1 flu, as required by applicable local health regulations. We are hopeful that the adverse effects on our business from the fear of H1N1 will gradually subside as the H1N1 flu vaccine has been made available in China this month and will become widely available across the country with over 60 million doses planned in the months ahead. Our strong financial results in the face of these challenging external factors underline the strength of the New Oriental brand and the important role we play in the lives of Chinese students."

Mr. Yu continued, "We are delighted and excited to announce that during the quarter we officially launched our customized learning program for 6- to 18-year-olds, offering one-to-one tutoring and small class size tutoring (up to five students per class), in all subjects classes required for the gaokao (Chinese National College Entrance Examination) and zhongkao (Chinese National High School Entrance Examination). This will complement our very successful U-Can program, launched last year targeting class sizes of 20 to 50 students, which recorded over 55,000 enrollments in non-English subjects in its first year. This two-pronged strategy of offering affordable larger classes of 20 or more students and higher priced individualized small and one-to-one classes for school aged students will enable New Oriental to expand our leading position in the multi-billion dollar after school training market in China, targeting the approximately 190 million students aged 6 to 18 years old. We are targeting over US$25 million in revenue in fiscal year 2010 from non-English U-Can and our new individualized small class offerings, more than triple the revenue generated from U-Can last fiscal year."

Louis T. Hsieh, New Oriental's president and chief financial officer, stated, "During the first fiscal quarter notwithstanding the challenges to our business posed by the fear of the H1N1 flu, we saw continued strong growth in our three key growth segments; (i) POP Kids English with enrollments up over 34% to approximately 131,200 and over 40% revenue growth, (ii) English for Middle and High School Students enrollments, including U-Can, up over 18% to approximately 157,800 and over 40% revenue growth, and U-Can non-English all subjects enrollments up over 100% to approximately 32,400, and (iii) Overseas Test Preparation with enrollments up over 14% to approximately 74,800 and over 27% revenue growth. We recorded blended average selling price growth of approximately 9.5% for the quarter, mostly driven by students electing higher priced smaller size class offerings."

Financial Results for the Fiscal Quarter Ended August 31, 2009

For the first fiscal quarter of 2010, New Oriental reported net revenues of US$149.4 million, representing a 26.3% increase year-over-year.

Net revenues from educational programs and services for the first fiscal quarter were US$142.4 million, representing a 28.1% increase year-over-year. The growth was mainly driven by the increase in the number of student enrollments in language training and test preparation courses. Total student enrollments in language training and test preparation courses in the first quarter of fiscal year 2010 increased by 18.7% year-over-year to approximately 647,500 from approximately 545,400 in the same period of the prior fiscal year.

GAAP operating costs and expenses for the quarter were US$88.4 million, a 27.4% increase year-over-year. Non-GAAP operating costs and expenses for the quarter were US$84.7 million, a 29.3% increase year-over-year.

Cost of revenues increased by 23.8% year-over-year to US$47.7 million, primarily due to the increased number of courses and the greater number of schools and learning centers in operation.

Selling and marketing expenses increased by 57.3% year-over-year to US$15.5 million, primarily due to new program and brand promotion expenses related to POP Kids English, U-Can and the launch of New Oriental's customized learning program.

GAAP general and administrative expenses were US$25.3 million, a 20.0% increase year-over-year.