2011 Annual Report
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New Oriental Education & Technology Group Inc. (EDU) 20-F Annual and transition report of foreign private issuers pursuant to sections 13 or 15(d) Filed on 10/14/2011 Filed Period 05/31/2011 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (Mark One) ¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 OR x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 31, 2011. OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report For the transition period from to Commission file number: 001-32993 NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC. (Exact name of Registrant as specified in its charter) N/A (Translation of Registrant's name into English) Cayman Islands (Jurisdiction of incorporation or organization) No. 6 Hai Dian Zhong Street Haidian District, Beijing 100080 The People's Republic of China (Address of principal executive offices) Louis T. Hsieh, President and Chief Financial Officer Tel: +(86 10) 6260-5566 E-mail: [email protected] Fax: +(86 10) 6260-5511 No. 6 Hai Dian Zhong Street Haidian District, Beijing 100080 The People's Republic of China (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Exchange on Which Registered American depositary shares, each representing one New York Stock Exchange common share* Common shares, par value US$0.01 per share New York Stock Exchange** * Effective August 18, 2011, the ratio of ADSs to our common shares was changed from one ADS representing four common shares to one ADS representing one common share. ** Not for trading, but only in connection with the listing on New York Stock Exchange of the American depositary shares. Securities registered or to be registered pursuant to Section 12(g) of the Act: None (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None (Title of Class) Indicate the number of outstanding shares of each of the Issuer's classes of capital or common stock as of the close of the period covered by the annual report. 158,379,387 common shares, par value US$0.01 per share, as of May 31, 2011. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨ If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP x International Financial Reporting Standards as issued by the International Accounting Standards Board ¨ Other ¨ If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ¨ Item 18 ¨ If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨ Table of Contents TABLE OF CONTENTS INTRODUCTION 1 PART I 2 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 2 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 2 ITEM 3. KEY INFORMATION 2 ITEM 4. INFORMATION ON THE COMPANY 26 Item 4A. UNRESOLVED STAFF COMMENTS 44 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 44 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 64 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 70 ITEM 8. FINANCIAL INFORMATION 72 ITEM 9. THE OFFER AND LISTING 73 ITEM 10. ADDITIONAL INFORMATION 74 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 80 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 81 PART II 82 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 82 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS 82 ITEM 15. CONTROLS AND PROCEDURES 82 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT 83 ITEM 16B. CODE OF ETHICS 84 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES 84 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES 84 ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS 84 ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANTS 84 ITEM 16G. CORPORATE GOVERNANCE 84 PART III 85 ITEM 17. FINANCIAL STATEMENTS 85 ITEM 18. FINANCIAL STATEMENTS 85 ITEM 19. EXHIBITS 85 Table of Contents INTRODUCTION Unless otherwise indicated and except where the context otherwise requires, references in this annual report on Form 20-F to: • "we," "us," "our company" or "our" refers to New Oriental Education & Technology Group Inc., its predecessor entities and subsidiaries and, in the context of describing our operations and consolidated financial data, also include New Oriental China; • "China" or "PRC" refers to the People's Republic of China, and for the purpose of this annual report, excludes Taiwan, Hong Kong and Macau; • "New Oriental China" refers to our consolidated affiliated entity in the PRC, Beijing New Oriental Education & Technology (Group) Co., Ltd., and its subsidiaries; • "student enrollments" refers to the cumulative total number of courses enrolled in and paid for by our students, including multiple courses enrolled in and paid for by the same student but excluding courses offered at our primary and secondary schools; • "shares" or "common shares" refers to our common shares, par value US$0.01 per share; • "ADSs" refers to our American depositary shares. Prior to August 18, 2011, each of our ADSs represented four common shares. On August 18, 2011, we effected a change in the ratio of our ADSs to common shares from one ADS representing four common shares to one ADS representing one common share. Except as otherwise noted, this change in our ADS to common share ratio has been retroactively reflected in all net income per ADS data included in this annual report on Form 20-F; and • "RMB" or "Renminbi" refers to the legal currency of China and "$," "dollars," "US$" or "U.S. dollars" refers to the legal currency of the United States. We refer to our teaching facilities in this annual report as either "schools" or "learning centers," based primarily on a facility's functions. Generally, our schools consist of classrooms and administrative facilities with student and administrative services, while our learning centers consist primarily of classroom facilities. Glossary of Major Admissions and Assessment Tests ACT American College Test (US) BEC Business English Certificate (US) CET 4 College English Test Level 4 (PRC) CET 6 College English Test Level 6 (PRC) GMAT Graduate Management Admission Test (US) GRE Graduate Record Examination (US) IELTS International English Language Testing System (Commonwealth countries) LSAT Law School Admission Test (US) PETS Public English Test System (PRC) SAT SAT College Entrance Test (US) TOEFL Test of English as a Foreign Language (US) TOEIC Test of English for International Communication (US) TSE Test of Spoken English (US) 1 Table of Contents FORWARD-LOOKING STATEMENTS This annual report contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. You can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "is expected to," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to" or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.