Financial Performance - For the third quarter of fiscal year 2022, net revenue decreased by 48.4% to $614.1 million compared to $1,190.5 million in the same period last year[3]. - The operating loss for the third quarter was $141.2 million, a significant decline from an operating profit of $101.5 million in the previous year, representing a change of -239.1%[3]. - Net loss attributable to New Oriental shareholders was $122.4 million, compared to a net profit of $151.3 million in the same quarter last year, marking a -180.9% change[3]. - For the first nine months of fiscal year 2022, net revenue was $2.58 billion, down 15.8% from $3.06 billion in the same period of the previous year[4]. - The operating loss for the first nine months was $876.9 million, compared to an operating profit of $219.6 million in the prior year, indicating a -499.2% change[4]. - Non-GAAP operating loss for the first nine months was $772.7 million, a decline of -387.9% from a profit of $268.4 million in the same period last year[4]. - Basic and diluted net loss per ADS for the third quarter was $(0.72), compared to earnings of $0.90 per ADS in the same quarter last year, reflecting a -180.6% change[3]. - The net loss attributable to shareholders for the quarter was $122.4 million, compared to a profit of $151.3 million in the same period last year, with a loss per ADS of $0.72[11]. - For the nine months ended February 28, 2022, net revenue was $2,581,223, a decrease of 15.7% from $3,064,553 in the same period of 2021[36]. - The net loss for the nine months ended February 28, 2022, was $(1,033,609), compared to a profit of $305,255 in the same period of 2021[36]. - Basic and diluted net loss per American Depositary Share (ADS) for the nine months ended February 28, 2022, was $(5.89), compared to $2.33 in 2021[37]. Operational Changes - Total number of schools and learning centers decreased to 847, down from 1,625 a year ago, reflecting a reduction of 778 centers[6]. - The total number of schools as of February 28, 2022, was 111, indicating a significant reduction from previous counts[6]. - For the third quarter of fiscal year 2022, New Oriental reported net revenue of $614.1 million, a decline of 48.4% year-over-year, primarily due to the termination of K-9 subject tutoring services in compliance with government policies[8]. - Operating costs and expenses for the quarter were $755.3 million, down 30.6% year-over-year, with a significant reduction in revenue costs decreasing by 30.9% to $372.7 million[9]. - The company is actively exploring new business opportunities, including non-academic tutoring and smart learning systems, which are expected to contribute meaningfully to total revenue starting from the next fiscal year[7]. Assets and Liabilities - As of February 28, 2022, New Oriental's cash and cash equivalents amounted to approximately $1.47 billion, with short-term investments totaling $2.03 billion[13]. - Deferred revenue at the end of the third quarter was $971.3 million, a decrease of 47.9% compared to $1.87 billion in the same quarter of the previous fiscal year[13]. - New Oriental's total assets as of February 28, 2022, amounted to $6.67 billion, a decrease from $10.15 billion as of May 31, 2021[22]. - Cash and cash equivalents decreased to $1.47 billion from $1.61 billion year-over-year[22]. - The total current assets were reported at $4.69 billion, down from $6.57 billion in the previous year[22]. - The company reported a net receivable of $2.03 billion, a significant drop from $3.43 billion[22]. - Total current liabilities amounted to $1,889,935 as of February 28, 2022, down from $3,471,445 as of May 31, 2021[24]. - Total liabilities were $2,564,640 as of February 28, 2022, compared to $5,132,877 as of May 31, 2021[25]. - Total equity was $4,022,771 as of February 28, 2022, compared to $4,913,275 as of May 31, 2021[26]. Financial Metrics and Management Insights - The company emphasizes the importance of Non-GAAP financial metrics for assessing performance and liquidity[19]. - New Oriental's management acknowledges inherent risks and uncertainties that may affect future performance[18]. - The company reported a non-GAAP operating loss of $(111,232) for the three months ended February 28, 2022, compared to a profit of $115,892 in the same period of 2021[32]. - The company’s non-GAAP net loss attributable to shareholders was $(95,503) for the three months ended February 28, 2022, compared to a profit of $163,236 in the same period of 2021[32]. - The company reported a significant increase in general and administrative expenses, which rose to $1,580,514 for the nine months ended February 28, 2022, from $980,342 in 2021[36]. - The company experienced a loss of $(13,251) from changes in the fair value of investments for the nine months ended February 28, 2022, compared to a loss of $(4,597) in 2021[39]. - The company’s operating loss margin under non-GAAP was -34.0% for the nine months ended February 28, 2022, compared to 7.2% in 2021[39].

Financial Performance - New Oriental Education reported a significant decline in total revenue due to the cessation of K-9 subject-related training services, impacting the six-month period ending November 30, 2021[3]. - Net revenue for the six months ended November 30, 2021, was $1,967,132, an increase from $1,874,055 for the same period in 2020, representing a growth of approximately 4.97%[9]. - Total operating costs and expenses for the six months ended November 30, 2021, were $2,702,802, compared to $1,755,897 in 2020, indicating an increase of about 53.73%[9]. - The company reported a net loss of $907,960 for the six months ended November 30, 2021, compared to a net profit of $178,613 in the same period of 2020, reflecting a significant decline in profitability[9]. - Basic and diluted net loss per American Depositary Share (ADS) for the six months ended November 30, 2021, was $(0.52), compared to a profit of $0.14 for the same period in 2020[9]. - The company experienced a loss of $(14,323) from changes in the fair value of investments for the six months ended November 30, 2021, compared to a loss of $(2,154) in 2020[9]. - Non-controlling interests accounted for a net loss of $31,980 for the six months ended November 30, 2021, compared to $49,941 in the same period of 2020[9]. - The company’s total operating loss for the six months ended November 30, 2021, was $(735,670), a significant decrease from an operating profit of $118,158 in the same period of 2020[9]. Assets and Liabilities - Total assets decreased from $10,151,053 thousand as of May 31, 2021, to $7,614,312 thousand as of November 30, 2021, representing a reduction of approximately 25.3%[4][8]. - Current assets fell from $6,574,155 thousand to $5,154,963 thousand, a decrease of about 21.5%[4]. - Total liabilities decreased from $5,132,877 thousand to $3,433,761 thousand, a reduction of approximately 33.1%[7][8]. - Shareholders' equity decreased from $5,018,176 thousand to $4,180,551 thousand, reflecting a decline of approximately 16.7%[8]. - Cash and cash equivalents were reported at $1,218 thousand, with short-term investments totaling $2,632,398 thousand as of November 30, 2021[4]. - Cash and cash equivalents, and restricted cash decreased by $581,997, ending at $1,050,130 for the six months ended November 30, 2021, down from $2,648,124 in 2020[12]. Operational Changes - The company has shifted focus towards non-K-9 educational products and services, including exam preparation courses and adult language training[3]. - The company incurred increased costs and expenses due to the termination of multiple learning center lease agreements and a layoff plan[3]. - The company plans to explore new business opportunities leveraging its operational experience and brand recognition[3]. - New Oriental will continue to seek guidance from government authorities and adjust its operations according to policy directives[3]. Cash Flow - Operating cash used for the six months ended November 30, 2021, was $(1,074,835), compared to cash generated from operations of $802,276 in the same period of 2020[12]. - The total cash flow from investing activities for the six months ended November 30, 2021, was $653,374, compared to cash used of $(796,800) in 2020[12].

Financial Performance - Total net revenues for the six months ended November 30, 2021, were $1,967,132, representing an increase from $1,874,055 for the same period in 2020, a growth of approximately 5%[4] - Operating loss for the six months ended November 30, 2021, was $(735,670), compared to an operating income of $118,158 for the same period in 2020[4] - Net loss attributable to New Oriental Education & Technology Group Inc. for the six months ended November 30, 2021, was $(875,980), a significant decline from a net income of $228,554 in the same period of 2020[4] - The total operating costs and expenses for the six months ended November 30, 2021, were $2,702,802, significantly higher than $1,755,897 for the same period in 2020, an increase of approximately 53.8%[4] Assets and Liabilities - Total current assets decreased to $5,154,963 as of November 30, 2021, down from $6,574,155 as of May 31, 2021, a decline of approximately 21.5%[2] - Cash and cash equivalents decreased to $1,026,912 as of November 30, 2021, compared to $1,612,211 as of May 31, 2021, a decrease of about 36.2%[2] - Total liabilities as of November 30, 2021, were $5,132,877, down from $3,433,761 as of May 31, 2021, indicating a significant increase in liabilities[3] - Total equity decreased to $4,180,551 as of November 30, 2021, from $5,018,176 as of May 31, 2021, reflecting a decline of approximately 16.7%[3] Cash Flow - The company reported a net cash used in operating activities of $(1,074,835) for the six months ended November 30, 2021, compared to net cash provided by operating activities of $802,276 for the same period in 2020[6] - The company had a net cash provided by investing activities of $653,374 for the six months ended November 30, 2021, contrasting with net cash used in investing activities of $(796,800) for the same period in 2020[6]

Share Structure and Listing - The company reported a total of 1,690,082,150 ordinary shares with a par value of $0.001 each as of May 31, 2021[5] - The company's American Depositary Shares (ADS) are listed on the New York Stock Exchange under the ticker symbol "EDU"[3] - The company's American Depositary Shares (ADS) ratio changed from 1 ADS representing 4 ordinary shares to 1 ADS representing 1 ordinary share on August 18, 2011, with this change reflected retroactively in the annual report[9] - The company's ADS holders may have fewer rights compared to ordinary shareholders, including limited voting rights and potential delays in receiving voting materials[116] - ADS holders may face limited participation in future rights offerings, potentially leading to equity dilution[117] - The company's ADS may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors located in China, which could significantly adversely affect the value of investors' holdings[22] - The company's American Depositary Shares (ADS) and ordinary shares have experienced significant price volatility, with ADS prices ranging from $1.70 to $19.68 and ordinary shares ranging from HK$13.50 to HK$154.10 between June 2020 and September 2021[114] - The company's ADS and ordinary shares have experienced and may continue to experience significant price volatility, potentially causing substantial losses for shareholders[23] - The company's American Depositary Shares (ADS) may be subject to transfer restrictions, and the depositary may refuse to deliver or transfer ADS under certain circumstances[118] Financial Performance and Reporting - The company's financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP)[6] - The company's internal control over financial reporting was deemed effective by its registered public accounting firm[6] - The company's annual report includes audited consolidated financial statements for the fiscal year ended May 31, 2021[1] - The company's annual report is available on the Hong Kong Stock Exchange website and the company's investor relations website[1] - New Oriental Education & Technology Group Inc. reported selected consolidated financial data for fiscal years ending May 31, 2019, 2020, and 2021, with audited financial statements included in the annual report[13] - The company's financial statements are presented in USD, with certain financial data converted to USD for convenience using exchange rates of RMB 6.3674 to USD 1.00 and HKD 7.7610 to USD 1.00 as of May 28, 2021[9] - Net revenue from education courses and services increased from $1,608,954 thousand in 2017 to $3,936,969 thousand in 2021, representing a growth of approximately 145% over five years[14] - Total net revenue grew from $1,799,509 thousand in 2017 to $4,276,539 thousand in 2021, an increase of approximately 138%[14] - Operating income fluctuated over the years, peaking at $399,003 thousand in 2020 before dropping to $117,266 thousand in 2021[14] - Net profit attributable to shareholders decreased from $274,457 thousand in 2017 to $334,414 thousand in 2021, with a notable drop in 2021 compared to 2020[14] - Total assets increased significantly from $2,924,979 thousand in 2017 to $10,151,053 thousand in 2021, reflecting substantial growth in the company's asset base[17] - Cash and cash equivalents grew from $641,018 thousand in 2018 to $1,612,211 thousand in 2021, indicating improved liquidity[17] - Total liabilities rose from $1,204,901 thousand in 2017 to $5,132,877 thousand in 2021, reflecting increased financial obligations[17] - The company recorded goodwill impairment losses of $5.2 million in FY2019, $0 in FY2020, and $28.9 million in FY2021, along with $2.9 million in intangible asset impairment losses in FY2021[49] - The company reported a fair value loss of $3.8 million on long-term investments in FY2021, including a $5.5 million loss from its investment in Beijing Shangde[50] - The company's deferred revenue is subject to future performance obligations and may not represent actual revenue in future periods[48] - The company's financial and operating performance may not meet market expectations due to factors such as economic conditions, regulatory changes, and consumer behavior shifts[47] Regulatory and Legal Risks - The company faces significant risks related to regulatory changes in China's private education sector, particularly the "Double Reduction" policy, which has adversely impacted its business and financial performance[20] - The company's business, financial condition, and operating performance may be significantly adversely affected by changes in China's economic, political, or social conditions or government policies[22] - The company's ability to provide or continue to provide securities to investors may be severely restricted or completely hindered by Chinese government regulations, potentially leading to a significant decline in the value of such securities[22] - The company's operations and the value of its American Depositary Shares (ADS) may be significantly adversely affected by uncertainties in China's legal system, including risks related to law enforcement and rapidly evolving regulations[22] - The company's business, financial condition, and operating performance, as well as its ability to obtain financing, may be adversely affected by global or Chinese economic downturns[22] - The company's ADS may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors located in China, which could significantly adversely affect the value of investors' holdings[22] - The company's business, financial condition, and operating performance have been and will continue to be significantly adversely affected by compliance with China's "Double Reduction" policy and its implementation measures[24][25][26] - The company has ceased providing academic tutoring services during national holidays, weekends, and school holidays, and may take further actions, including closing some learning centers and layoffs, to comply with regulations[26] - The company may face fines, penalties, or be required to immediately terminate certain operations due to regulatory non-compliance, which could further adversely affect its business, financial condition, and operating performance[26] - The company may incur significant impairment and severance costs related to lease terminations, employee dismissals, and other actions taken in response to regulatory developments, which could adversely affect its financial condition, operating performance, and prospects[26] - The revised "Private Education Promotion Law" prohibits social organizations and individuals from controlling private schools providing compulsory education or non-profit private schools offering preschool education through mergers or control agreements[27] - Off-campus tutoring institutions must comply with regulations including course material filing, class scheduling restrictions, and teacher qualification requirements[28] - The company's revenue may decline if it fails to attract students without significantly reducing course fees[29] - The company's business heavily relies on the "New Oriental" brand, and failure to maintain or enhance it could harm operations and performance[30] - The company depends on a qualified and dedicated teaching staff, and failure to maintain consistent teaching quality could negatively impact its brand and business[31] - The company's corporate structure, involving Cayman Islands registration and variable interest entities in China, poses legal and regulatory risks that could affect its operations and investor interests[21] - The company's ability to enforce share pledge agreements with variable interest entity (VIE) shareholders may be limited under Chinese law, with registered pledged equity amounts totaling RMB 50,000,000 for New Oriental China[74][75] - The company's contractual arrangements with VIEs and their shareholders are governed by Chinese law, and disputes must be resolved through arbitration or Chinese courts, which may limit enforcement capabilities[73] - The company's consolidated affiliated entities contributed 99.9% of total net revenue in fiscal year 2021, highlighting the critical importance of these arrangements to its financial performance[73] - The company may face challenges in enforcing its rights under share pledge agreements if Chinese courts determine that the registered pledged equity amounts represent the full collateral value, potentially leaving additional obligations unsecured[75] - The company's ability to direct the activities of consolidated affiliated entities and consolidate their financial results under U.S. GAAP could be jeopardized if contractual arrangements are not enforceable[73] - The company's reliance on contractual arrangements with VIEs and their shareholders exposes it to potential legal disputes and enforcement risks under Chinese law[73] - The company's Chinese operations are subject to regulatory risks, including potential restructuring requirements or restrictions on the use of proceeds from future offerings to fund its business in China[72] - The company's ability to operate private schools may be significantly impacted by changes in Chinese laws, regulations, and policies, such as the "Double Reduction" policy[78] - Contractual arrangements with consolidated affiliated entities may be subject to scrutiny by Chinese tax authorities, potentially leading to additional tax liabilities and penalties[79] - The company depends on dividends and distributions from its wholly-owned subsidiaries to meet cash and financing needs, which could be adversely affected if payment capabilities are restricted[79] - The company relies on dividends from its wholly-owned subsidiaries in China and service fees, license fees, and other payments from New Oriental China and its schools and affiliated companies to meet its cash needs, including any potential debt obligations[80] - Chinese regulations require subsidiaries to allocate at least 10% of post-tax profits (if any) to statutory reserves until the reserve reaches 50% of registered capital, and further allocations may be required for employee welfare funds[80] - Private schools in China must allocate a minimum of 25% of annual net profits to development funds if they seek reasonable returns, or 25% of the annual increase in net asset value if they do not seek reasonable returns[80] - Loans provided by the company to its Chinese subsidiaries or New Oriental China and its schools and affiliated companies must comply with Chinese regulations, including registration with the State Administration of Foreign Exchange (SAFE)[81] - The company may face restrictions on providing loans or additional capital injections to its Chinese subsidiaries due to Chinese regulations on offshore holding companies and currency exchange controls[81] - Foreign-invested enterprises in China are subject to restrictions on the use of RMB funds converted from foreign currency registered capital, which may limit the company's ability to fund or expand its business in China[82] - The company's ability to use proceeds from offshore offerings for its Chinese operations may be restricted by Chinese laws and regulations, potentially impacting liquidity and business expansion[83] - The company operates most of its business in China through contractual arrangements with New Oriental China and its schools and affiliated companies, which hold critical assets for its operations[83] - The company does not hold priority security interests or liens over the assets of New Oriental China, which could pose risks in the event of involuntary liquidation[83] - The company closely monitors the operations and finances of New Oriental China to mitigate risks of involuntary liquidation and ensure sufficient capital[83] - The company can enforce the transfer of all equity of New Oriental China to a designated entity if shareholders attempt to liquidate without prior consent[84] - New Oriental China shareholders are restricted from distributing dividends or retained earnings without the company's approval[84] - The company's operations are significantly influenced by China's political, economic, and social conditions, with potential adverse effects from government policies[85] - China's economic growth has slowed since 2010, and COVID-19 may continue to negatively impact the economy, potentially reducing demand for the company's products and services[85] - The Chinese government's significant oversight and discretionary power over the company's operations could lead to adverse changes in its business and ADS value[86] - Additional industry-wide regulations or government actions could severely limit the company's ability to offer securities, potentially causing a significant decline in its stock value[86] - The company's business, financial condition, and ability to obtain financing may be adversely affected by a global or Chinese economic recession[87] - Uncertainties in China's legal system, including the interpretation and enforcement of new laws, could negatively impact the company's operations[88] - Legal proceedings in China may be prolonged, costly, and divert resources and management attention from business operations[88] - The implementation and interpretation of the Foreign Investment Law may impact the company's structure, governance, and operations, potentially requiring adjustments to existing contractual arrangements or even divestment of certain business operations[89] - Internet content regulations in China could lead to penalties, license revocation, or website closures if the company's online platforms are found in violation, affecting operations and reputation[90] - The company must obtain and maintain multiple licenses and permits for its education and training services in China, with non-compliance risking fines, revenue forfeiture, or operational suspension[90] - Chinese regulations on overseas special purpose companies may restrict the company's ability to inject capital into its Chinese subsidiaries or repatriate profits, potentially impacting financial operations[91] - Regulatory uncertainties around employee participation in equity incentive plans could limit the company's ability to grant stock awards to Chinese employees, affecting talent retention[92] - Foreign acquisitions in China are subject to complex procedures under the M&A regulations and other Chinese laws, potentially hindering the company's growth through acquisitions[93] - Overseas investments by Chinese-controlled entities must comply with NDRC's approval, filing, and reporting requirements, with sensitive projects requiring pre-approval[94] - Rising labor costs in China, including wages and employee benefits, are expected to continue increasing, potentially impacting profitability[95] - The company's ability to pay dividends in foreign currency may be restricted due to China's foreign exchange controls[96] - Fluctuations in the RMB exchange rate against foreign currencies, particularly the USD, could significantly impact the company's revenue, profits, and stock value[97] - Limited availability of hedging tools in China to mitigate foreign exchange risks, with potential losses exacerbated by foreign exchange control regulations[98] - The company's six wholly-owned subsidiaries in China, including Beijing Zhiyu Jiaye Software Technology Co., Ltd. and Beijing Dingshixing Education Consulting Co., Ltd., qualify as "High-Tech Enterprises" and are eligible for a preferential corporate income tax rate of 15%[99] - Four of the company's wholly-owned subsidiaries in China, including Beijing Jinghong Software Technology Co., Ltd. and Beijing Zhiyuan Hangcheng Software Technology Co., Ltd., qualify as "Software Enterprises" and are exempt from corporate income tax for the first two profitable years, followed by a reduced tax rate of 12.5% for the next three years[99] - The company's actual effective tax rates for the fiscal years ending May 31, 2019, 2020, and 2021 were 26.96%, 27.46%, and 26.53%, respectively[100] - As of May 31, 2021, 11 of the company's schools have chosen to operate as non-profit schools, while 31 have chosen to operate as for-profit schools[100] - The termination of preferential tax treatments currently enjoyed by the company, particularly in major cities, could lead to an increase in the effective tax rate, resulting in higher income tax expenses and reduced net profits[100] - The company may be classified as a "resident enterprise" under Chinese tax law, potentially requiring it to pay Chinese income tax on its global income and withhold taxes on dividends paid to non-Chinese shareholders and ADS holders[100] - Foreign enterprises established outside China but with "effective management institutions" in China may be classified as "resident enterprises" and subject to a unified corporate income tax rate of 25%[101] - The State Taxation Administration has issued notices clarifying the criteria for determining "resident enterprise" status, including the location of senior management, financial decision-making, and key assets[101] - Overseas-registered, Chinese-controlled enterprises classified as "resident enterprises" must submit classification applications to local tax authorities and are subject to taxation on dividends, profits, and other equity investment income[101] - The company may be considered a Chinese resident enterprise, subject to a 25% corporate income tax rate on global income, potentially increasing tax burden and impacting cash flow and profitability[102] - Dividends received by non-Chinese investors may be subject to a 10% withholding tax if the company is deemed a Chinese resident enterprise[102] - Dividends from Chinese subsidiaries to non-resident enterprises are subject to a maximum withholding tax rate of 20%, reduced to 10% by the State Council[103] - Dividends paid to Hong Kong entities under the double taxation arrangement may be subject to a 5% withholding tax if certain conditions are met[103] - Indirect transfers of Chinese resident enterprise equity by non-resident enterprises may be reclassified and subject to a 10% withholding tax under Bulletin 7[104] - The company faces uncertainty regarding the application of Bulletin 7 and Bulletin 37, which may require significant resources to comply with or determine tax obligations[104] - The company's online education services may require specific licenses, and failure to obtain or maintain these licenses could result in fines, legal sanctions, or suspension of services[105] - The definition of "audio-visual programs" and "broadcast television programs" is ambiguous, creating uncertainty about whether the company's online courses require specific licenses[105] - The company's U.S. depositary shares may be delisted under the Holding Foreign Companies Accountable Act (HFCAA) if PCAOB cannot inspect auditors located in China, potentially adversely affecting investment value[106] - The HFCAA requires the SEC to prohibit trading of the company's securities if it determines that the company has submitted audit reports for three consecutive years (starting from 2021) from auditors not inspected by PCAOB[106] - The U.S. Senate passed a bill on June 22, 2021, which, if enacted, would reduce the required consecutive non-inspection years for delisting from three to two under the HFCAA[106] - PCAOB cannot fully evaluate the audit and quality control procedures of the company's independent registered public accounting firm due to its inability to conduct inspections in China[107] - In 2013, PCAOB established a cooperation framework with Chinese regulators for document exchange related to investigations, but joint inspections of audit firms in China remain unresolved[108] - The SEC's administrative proceedings against China's "Big Four" accounting firms (including the company's auditor) could result in financial statements being deemed non-compliant with securities laws[109] - If the SEC restarts administrative proceedings, U.S.-listed companies with major China operations may face difficulties retaining auditors, potentially leading to delisting[110] - Overseas regulators face significant challenges in conducting investigations or evidence collection within China due to legal and practical barriers[111] - China's new regulations on cracking down on securities violations, issued on July 6, 2021, may impose additional requirements on overseas-listed Chinese companies[112] - The company's compliance costs may increase if its shares are deemed to have a dual primary listing in Hong Kong, requiring potential revisions to its corporate structure and articles of association[113] - Shareholders may face challenges enforcing judgments against the company due to its Cayman Islands incorporation and primary operations in China, as Cayman Islands and Chinese laws may not enforce foreign judgments[119] - Chinese courts may not recognize or enforce U.S. court judgments against the company or its directors, as there is no treaty or reciprocal agreement between China and the U.S. for mutual recognition of foreign judgments[120] - Shareholder rights under Cayman Islands law are more

Financial Performance - Total net revenues for the fiscal year 2021 reached $4,276,539, an increase of 19.5% from $3,578,682 in 2020[19]. - Operating income for 2021 was $117,266, a significant decrease of 70.7% compared to $399,003 in 2020[19]. - Net income attributable to shareholders for 2021 was $334,414, down from $413,333 in 2020, reflecting a decline of 19.1%[19]. - The company reported a basic net income per share of $0.20 for 2021, down from $0.26 in 2020[19]. - The weighted average shares used in calculating diluted net income per share increased to 1,651,982,384 in 2021 from 1,595,368,900 in 2020[19]. - Cash and cash equivalents as of May 31, 2021, were $1,612,211, an increase from $915,057 in 2020[21]. - Total assets grew to $10,151,053 in 2021, up from $6,556,885 in 2020, marking a 54.5% increase[21]. - Total liabilities increased to $5,132,877 in 2021, compared to $3,687,074 in 2020, representing a rise of 39.1%[21]. - The company recorded goodwill impairment losses of US$28.9 million for the fiscal year ended May 31, 2021, and US$2.9 million in intangible assets impairment losses for the same period[74]. - A loss from fair value change of long-term investments was recorded at US$3.8 million for the fiscal year ended May 31, 2021, with US$5.5 million attributed to an investment in Sunlands[75]. Regulatory Environment - The company faced significant uncertainties due to changes in PRC laws affecting the private education industry, which could materially impact financial performance[25]. - The PRC private education industry, particularly the after-school tutoring sector, has faced significant regulatory changes, including the prohibition of new academic tutoring institutions and the requirement for existing institutions to register as non-profit by the end of 2021[30][31]. - Compliance with the Alleviating Burden Opinion has materially and adversely affected the company's business, financial condition, and results of operations, leading to potential employee layoffs and closure of learning centers[32]. - The company is actively monitoring the evolving regulatory environment and is making efforts to comply with new requirements, which may include further operational adjustments[32]. - The company must comply with various PRC regulations for operating licenses and permits, particularly for K-12 tutoring services, which could materially affect its business if not adhered to[161]. - Changes in PRC laws and regulations, such as the Amended Implementation Rules and Alleviating Burden Opinion, may significantly impact the company's ability to operate private schools[135]. - The evolving regulatory landscape in China regarding data protection is expected to become more stringent, posing challenges for the company's operations[91]. Business Operations and Strategy - The company faced challenges in hiring and retaining qualified teachers due to regulatory requirements for teacher licenses, which may impact the quality of education provided[40]. - The company is exploring new program and service offerings in response to market demands and regulatory changes, which may affect its ability to maintain quality and consistency[44]. - The success of the business is heavily reliant on student enrollments and course fees, with a critical need to attract students without significantly decreasing fees to maintain profitability[37]. - The company has ceased providing tutoring services during national holidays, weekends, and school breaks to comply with new regulations, which may impact revenue generation[32]. - The company must continually enhance its online programs and adapt to technological changes to maintain market share in the competitive online education market[81]. - The company is subject to fluctuations in operating results due to various factors, including economic conditions and regulatory actions affecting private educational services in China[72]. Legal and Compliance Risks - The company was ordered to pay approximately RMB 6.5 million in damages due to copyright infringement claims related to test materials, highlighting ongoing legal risks[47]. - The company is subject to ongoing legal proceedings related to intellectual property rights, which could divert management's attention and resources[49]. - The company may face legal proceedings that could materially affect its business and financial condition, including potential class action lawsuits[95]. - The company may need to rely on legal proceedings to resolve conflicts of interest, which could disrupt business operations and create uncertainty[129]. Market and Competitive Landscape - The private education sector in China is highly fragmented and competitive, with intense competition potentially leading to decreased student enrollments and profitability[52]. - The COVID-19 pandemic has materially impacted the company's business operations, with a shift to online classes and challenges in acquiring new students[55]. - The company faces challenges in retaining key management personnel, which is crucial for its ongoing success[80]. - The brand "New Oriental" is crucial for competitive advantage, and maintaining brand awareness is essential for attracting students and ensuring business success[38][39]. Financial and Capital Management - Additional capital may be required for future developments, and financing may not be available on acceptable terms, impacting growth opportunities[98]. - The company’s ability to raise additional capital is subject to various uncertainties, including market conditions and regulatory policies[99]. - Without sufficient capital, the company may need to reduce growth and limit its ability to develop new businesses or respond to competitive pressures[100]. - The company completed an offering of US$300 million aggregate principal amount of 2.125% notes due 2025[102]. - The company may face challenges in obtaining new leases at desirable locations or renewing existing leases on acceptable terms, which could adversely affect its business[104]. Taxation and Financial Obligations - The company may face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements do not represent an arm's-length price, potentially increasing tax liabilities[137]. - The imposition of penalties for violations of PRC laws could materially and adversely affect the company's business operations and financial results[122]. - The company may be deemed a PRC resident enterprise, subjecting it to a 25% enterprise income tax on global income, which could significantly increase tax burden[186]. - Dividends from PRC subsidiaries are subject to a maximum withholding tax rate of 20%, reduced to 10% in the absence of applicable tax treaties[188]. Investor Relations and Market Perception - The trading prices of the company's ADSs and common shares have shown significant volatility, with a high of US$19.68 and a low of US$1.70 on NYSE from June 1, 2020, to September 23, 2021[213]. - The market price of the company's ADSs may be adversely affected by uncertainties related to the HFCA Act and potential regulatory changes[200]. - The inability of the PCAOB to conduct inspections in China may lead to a loss of investor confidence in the company's financial statements[201]. Operational Risks - The performance and reliability of the online program infrastructure are critical, and any system disruptions could limit student retention and enrollment growth[86]. - The company has experienced cybersecurity incidents in the past, which could lead to economic and reputational damages if student data is compromised[87]. - Compliance with PRC data protection and cybersecurity regulations is essential, and failure to comply may result in penalties and operational disruptions[89].

Financial Data and Key Metrics Changes - Total net revenue for Q3 2021 was $1,190 million, representing a 29% year-over-year increase [5][19] - Operating income was $101.5 million, a 13.5% decrease year-over-year, with a non-GAAP operating income of $115.9 million, reflecting a 14% decrease [19] - Net income attributable to New Oriental was $151.3 million, a 9.9% increase year-over-year, with non-GAAP net income also increasing by 9.9% to $163.2 million [21][19] - Operating margin decreased to 8.5% from 12.7% year-over-year, while non-GAAP operating margin fell to 9.7% from 14.6% [19] Business Line Data and Key Metrics Changes - K-12 all-subjects after-school tutoring business achieved approximately 37% year-over-year revenue growth [5][10] - U-Can middle school and high school business recorded a revenue increase of approximately 35% with student enrollments growing by 56% [10][11] - POP Kids program revenue increased by about 40%, with enrollments up by 61% [11] - Overseas test prep revenue decreased by about 12%, while overseas consulting and study tour business recorded an 11% increase [11][6] Market Data and Key Metrics Changes - Total student enrollments in academic subjects tutoring and test prep courses increased by 43% year-over-year to approximately 2,296,800 [8] - Per program blended average selling price (ASP) increased by about 7% year-over-year [9] - Hourly blended ASP also increased by 7% year-over-year, consistent with normal price increases of 5% to 8% [9] Company Strategy and Development Direction - The company is focusing on expanding its offline business by adding around 20% capacity and enhancing classroom areas [25] - Investments in digital technologies and the OMO system are prioritized to improve service quality and capture market opportunities post-COVID [26][27] - The company aims to leverage its strong financial position to take market share from smaller players during the expected market consolidation [25][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery trend and long-term market opportunities, emphasizing a balanced investment strategy [24][28] - The company expects total revenue for the next quarter to be in the range of $1,101.9 million to $1,141.8 million, representing a year-over-year increase of 38% to 43% [29] - The K-12 business is expected to grow by 45% to 50% in the next quarter, while overseas test prep is projected to grow around 30% [29] Other Important Information - The company invested $59 million in the quarter to enhance its OMO integrated education ecosystem [13] - Cash and cash equivalents as of February 28, 2021, were $1,569.8 million, up from $915.1 million a year earlier [22] - Deferred revenue increased by 35.7% year-over-year to $1,865.7 million [23] Q&A Session Summary Question: Regulatory environment and potential impacts - Management acknowledged the government's intention to tighten regulations in the after-school tutoring sector but does not foresee material impacts on top-line revenue [32] Question: Summer promotion plans - The company plans to replicate last year's successful summer promotion, expecting higher retention rates and significant enrollments [35] Question: OMO revenue contribution and margin profile - OMO currently contributes single-digit revenue but is expected to grow rapidly, with margins anticipated to be higher than traditional offline classes [38] Question: Outlook for overseas testing and consulting - Management noted a recovery in overseas test prep, with a projected revenue increase of around 30% in the next quarter [41] Question: Capacity expansion plans - The company plans to open more learning centers, particularly in Beijing, and aims for a 20% capacity expansion this fiscal year [45] Question: Margin trends - Management expects margin decline to narrow in the next quarter, with confidence in long-term margin recovery post-pandemic [50]

Financial Data and Key Metrics Changes - Total net revenue for Q2 2021 was $887.7 million, a 13.1% increase year-over-year [6] - Operating costs and expenses increased by 21% year-over-year to $919.8 million [21] - Net income attributable to New Oriental was $53.9 million, a 0.9% increase from the same period last year [23] - Non-GAAP net income increased by 21.3% year-over-year to $69.1 million [23] - Operating loss for the quarter was $32.1 million compared to a loss of $25.3 million in the previous year [22] Business Line Data and Key Metrics Changes - K-12 after-school tutoring business revenue grew approximately 26% year-over-year [11] - U-Can middle and high school tutoring revenue increased by approximately 27% [11] - POP Kids program revenue rose by about 24% [12] - Overseas test prep business revenue decreased by about 29% year-over-year, showing signs of recovery compared to a 51% decrease in the previous quarter [12] - VIP personalized class business recorded a cash revenue increase of about 20% year-over-year [13] Market Data and Key Metrics Changes - Total student enrollments in academic subjects tutoring and test prep courses increased by 10.4% year-over-year to approximately 4,183,100 [9] - Per program blended average selling price (ASP) increased by about 13% year-over-year [10] - Hourly blended ASP remained flat year-over-year, with U-Can classes increasing by 8% and overseas test prep programs increasing by 13% [10] Company Strategy and Development Direction - The company is focusing on expanding its OMO (Online-Merge-Offline) system to enhance flexibility and reach [7][8] - Plans to expand offline business capacity by 20% to 25% in fiscal year 2021 [26] - Emphasis on cost control and effective marketing strategies to cushion pandemic impacts [8][21] - The company aims to leverage digital technologies and enhance its OMO system for better service delivery [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery trends despite ongoing pandemic challenges [25] - The company expects total revenue for the next quarter to be in the range of $1,098.6 million to $1,144.8 million, representing a year-over-year increase of 19% to 24% [32] - Management highlighted the importance of maintaining a stable investment strategy for sustainable growth [25][30] Other Important Information - The company invested $54 million in the OMO integrated education ecosystem during the quarter [14] - Cash and cash equivalents as of November 30, 2020, were $2,643.2 million, significantly up from $915.1 million as of May 31, 2020 [24] Q&A Session Summary Question: Importance of OMO strategy for future growth - Management emphasized the OMO model's role in enhancing student retention and satisfaction, contributing to overall revenue growth [36][38] Question: FY22 guidance on revenue growth and capacity expansion - Management indicated expectations for booming revenue growth in FY22, with a focus on expanding capacity and improving service quality [40] Question: Impact of COVID-19 on guidance and enrollment growth - Management acknowledged potential negative impacts from COVID-19 but expressed confidence in better preparedness compared to previous outbreaks [42][43] Question: Pricing strategy amidst competition - Management stated that pricing strategies remain consistent, focusing on quality over price, which is valued by parents and students [50][51] Question: Capital allocation strategy going forward - Management plans to use raised funds for potential valuable investments and to continue rewarding investors through dividends and buybacks [58]

Financial Performance - For the second quarter of fiscal year 2021, net revenue increased by 13.1% to $887.7 million compared to the same period last year[5]. - The company reported an operating loss of $32.1 million for the second quarter, compared to an operating profit of $25.3 million in the same quarter last year[5]. - Net profit attributable to New Oriental shareholders was $53.9 million, reflecting a year-on-year increase of 0.9%[5]. - The company’s total net revenue for the first half of fiscal year 2021 was $1.87 billion, a slight increase of 0.9% from the previous year[7]. - The operating profit for the first half of fiscal year 2021 decreased by 56.5% to $118.2 million compared to $271.5 million in the previous year[7]. - Basic earnings per ADS for the second quarter was $0.33, a decrease of 0.9% from $0.34 in the same quarter last year[6]. - Non-GAAP net profit for the quarter was $69.1 million, a year-over-year increase of 21.3%[16]. - The company reported a net income excluding stock-based compensation and fair value changes, which is considered a key performance metric for evaluating operational efficiency[30]. - The company reported a net profit of $178,613,000 for the six months ended November 30, 2020, down from $252,811,000 in the same period of 2019[43]. - Non-GAAP net profit for the six months ended November 30, 2020, was $253,666,000, compared to $287,149,000 in the same period of 2019[46]. Student Enrollment and Business Growth - The number of student enrollments for the second quarter rose by 10.4% to approximately 4,183,100[9]. - Total number of schools and learning centers reached 1,518, an increase of 214 from 1,304 a year ago[9]. - The K-12 after-school education business saw significant revenue growth of approximately 26%, with middle school business up 27% and children's business up about 24% year-over-year[10]. - Total student enrollments for tutoring and exam preparation courses increased by 10.4% to approximately 4,183,100 in the second quarter[11]. - Revenue from K-12 after-school education business grew by 162.9% year-over-year, with paid student enrollments increasing by approximately 143.4%[20]. - The number of enrollments for DFUB courses and Koolearn K-12 courses increased by 170.3% and 134.4% year-over-year, respectively[20]. Operating Costs and Expenses - Operating costs and expenses for the quarter were $919.8 million, a year-over-year increase of 21.0%[12]. - Total operating expenses for the three months ended November 30, 2020, were $919,836,000, up 21.0% from $759,912,000 in the same period of 2019[37]. - General and administrative expenses for the six months ended November 30, 2020, were $24.55 million, compared to $21.61 million in 2019, marking an increase of about 14%[48]. - Sales and marketing expenses for the six months ended November 30, 2020, were $5.93 million, a significant increase from $0.57 million in 2019, indicating a rise of approximately 938%[48]. Cash and Liquidity - The cash and cash equivalents as of November 30, 2020, were $2,643.2 million, up from $915.1 million as of May 31, 2020[17]. - Cash and cash equivalents increased to $2,648,124,000 as of November 30, 2020, from $1,051,365,000 as of November 30, 2019[42]. - The ending cash, cash equivalents, and restricted cash balance as of November 30, 2020, was $2.65 billion, up from $1.05 billion in 2019, indicating a significant increase of approximately 152%[49]. - Net cash provided by operating activities for the six months ended November 30, 2020, was $802.28 million, an increase from $656.33 million in 2019, reflecting a growth of about 22%[49]. Future Outlook and Strategy - The company plans to focus more resources on its OMO strategy to expand service coverage to more cities and students[10]. - New Oriental Online plans to invest more resources in K-12 education business expansion, including content development, teacher recruitment and training, marketing, and R&D[20]. - The company expects net revenue for the third quarter of fiscal year 2021 to be between USD 1,098.6 million and USD 1,144.8 million, reflecting a year-over-year growth rate of 19% to 24%[23]. Stock Market and Corporate Actions - New Oriental successfully listed on the Hong Kong Stock Exchange on November 9, 2020, raising approximately HKD 11,493.2 million (USD 1,482.8 million) from the global offering[22]. - New Oriental's management will hold an earnings conference call on January 22, 2021, to discuss the financial results and future outlook[24]. Financial Position - Total current assets reached $6,364,220 thousand as of November 30, 2020, compared to $3,756,420 thousand as of May 31, 2020, indicating an increase of about 69%[32]. - Total liabilities amounted to $4,661,432 thousand as of November 30, 2020, up from $3,687,074 thousand as of May 31, 2020, reflecting a rise of approximately 26%[34]. - The company's total equity was $4,816,528 thousand as of November 30, 2020, compared to $2,869,811 thousand as of May 31, 2020, showing an increase of around 68%[35]. - The total assets of the company reached $9,477,960 thousand as of November 30, 2020, compared to $6,556,885 thousand as of May 31, 2020, indicating a growth of approximately 44%[32]. Non-GAAP Financial Metrics - Non-GAAP financial indicators are used to provide additional insights into operational performance by excluding stock-based compensation expenses and fair value changes of long-term investments[30]. - The company believes that Non-GAAP financial indicators are more helpful for management and investors in assessing performance and making future plans[30]. - The company has emphasized the importance of transparency in financial and operational decision-making through the use of Non-GAAP financial indicators[30]. - New Oriental's non-GAAP basic and diluted net profit per ADS for the six months ended November 30, 2020, was $1.58, down from $1.81 in 2019, reflecting a decrease of approximately 13%[47].

Financial Data and Key Metrics Changes - Total net revenue for Q1 2021 was $986.4 million, representing an 8% decrease year-over-year, which was better than previous guidance [4] - Net revenues from education programs and services were $935.6 million, a 6.1% decrease year-over-year [4] - Operating income was $150.3 million, a 38.9% decrease year-over-year, with a non-GAAP operating income of $166.1 million, down 35.4% year-over-year [19] - Net income attributable to New Oriental was $174.7 million, a 16.4% decrease from the same period last year [20] - Operating margin for the quarter was 15.2%, compared to 23.0% in the same period of the prior fiscal year [19] Business Line Data and Key Metrics Changes - K-12 after-school tutoring business achieved year-over-year revenue growth of approximately 8% [8] - U-Can middle and high school all-subjects after-school tutoring business recorded a revenue increase of approximately 9% and student enrollments grew 23% year-over-year [8] - POP Kids program saw a revenue increase of about 3.5% with a 17% increase in enrollment [9] - Overseas test prep business recorded a revenue decrease of about 51% due to pandemic-related challenges [9] - VIP personalized class business experienced a cash revenue decline of about 10% year-over-year [10] Market Data and Key Metrics Changes - Total student enrollments in academic subjects tutoring and test preparation courses increased by about 13.5% year-over-year to approximately 2,961,100 [5] - Deferred revenue balance increased by 17.5% year-over-year to $1,563.1 million [21] - The company opened seven new offline training schools, increasing classroom area by approximately 23% year-over-year [12] Company Strategy and Development Direction - The company is focusing on expanding its offline business by adding around 20% to 25% capacity, including new learning centers [22] - Investment in digital technologies and the OMO system will be leveraged for K-12 distance and overseas test prep offerings [24] - The company aims to capture market share from smaller players during the post-COVID market consolidation [23] - Continued investment in teacher training and technology platforms to enhance the OMO integrated education ecosystem [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery trends and market opportunities despite ongoing pandemic challenges [21] - The company expects total revenue for the next quarter to be in the range of $863.7 million to $887.3 million, representing a year-over-year increase of 10% to 13% [28] - Management highlighted the importance of maintaining a stable investment strategy focused on product quality and teacher salaries [22] Other Important Information - The company invested $39 million in the quarter to improve its OMO integrated education ecosystem [14] - The summer promotion campaign resulted in a 31% increase in total promotion enrollments year-over-year, reaching 1,079,000 [10] Q&A Session Summary Question: What caused the significant decline in gross margin year-over-year? - Management noted that the gross margin was down by roughly 6% due to an 8% revenue decline and increased teacher salaries [34] Question: What is the current utilization rate of offline classes? - Management indicated that it is difficult to disclose the utilization rate due to the pandemic but expects it to improve as operations normalize [38] Question: Can you discuss the outlook for the overseas test prep business? - Management acknowledged a 51% decline in overseas test prep revenue but expects gradual recovery in Q2 with a forecasted decline of 30% to 35% [41] Question: What is the guidance for FY '21 and operating margin targets? - Management provided guidance for Q2 revenue growth of 10% to 15% and indicated that margin decline will continue to narrow in Q2 [44] Question: How will the company approach capacity expansion amid the pandemic? - Management aims to add 20% to 25% new capacity in FY '21 and sees opportunities to capture market share during consolidation [74]

Executive Compensation and Benefits - For the fiscal year ended May 31, 2020, the company paid approximately US$1.8 million in cash to executive officers and non-executive directors[554]. - The company contributed US$106,000 to pension insurance, medical insurance, housing fund, unemployment, and other benefits for executive officers and non-executive directors[554]. - The company has entered into employment agreements with executive officers, allowing termination for cause without notice or remuneration[551]. - Each executive officer is required to maintain confidentiality regarding the company's trade secrets and confidential information[553]. - The compensation committee is responsible for reviewing and approving the total compensation package for the chief executive officer and other executive officers[573]. Share Incentive Plans - The 2006 Share Incentive Plan allows for a maximum of 8,000,000 shares to be issued, with additional shares added annually since 2007[555]. - The 2006 plan expired in January 2016, and no additional awards may be granted under this plan[556]. - The company has a vesting schedule where one-sixth of the common shares underlying an option will vest every six months[562]. - The exercise price of options under the 2006 plan may be fixed or variable, determined by the plan administrator[561]. - The 2016 Share Incentive Plan allows for the issuance of up to 10,000,000 shares, with 1,256,505 non-vested equity shares outstanding as of May 31, 2020[563]. - The company amended its 2006 share incentive plan in September 2012, allowing the administrator to reduce the exercise price of outstanding options without shareholder approval, provided it does not incur significant additional share-based compensation expenses[708]. - The company adopted its 2016 share incentive plan in January 2016, following home country practice and obtaining board approval without requiring shareholder approval[708]. Board of Directors and Governance - The company’s independent directors include notable figures such as Robin Yanhong Li, co-founder of Baidu, and Denny Lee, former CFO of NetEase[548][549]. - The company’s executive team includes experienced professionals with backgrounds in finance, education, and technology[543][544][545]. - The board of directors consists of six members, including three independent directors, complying with NYSE requirements for independent oversight[569]. - The audit committee held meetings or passed resolutions 14 times in the fiscal year ended May 31, 2020, ensuring oversight of financial reporting processes[572]. - The nominating and corporate governance committee is tasked with selecting nominees for the board and ensuring compliance with corporate governance standards[574]. - The company has a board of directors consisting of three independent directors and three executive officers, maintaining independent audit, compensation, and governance committees[707]. - The company has no significant differences in corporate governance practices compared to domestic listed companies as per NYSE requirements[709]. Financial Performance and Position - The company reported a net income of $1.02 billion for the year ended May 31, 2020, compared to $1.05 billion in 2019, a decrease of approximately 3%[730]. - Total assets increased from $3.98 billion in 2018 to $6.56 billion in 2020, representing a growth of approximately 64%[738]. - Cash and cash equivalents decreased from $1.41 billion in 2019 to $915.06 million in 2020, a decline of about 35%[738]. - Short-term investments rose significantly from $1.67 billion in 2019 to $2.32 billion in 2020, an increase of approximately 39%[738]. - Total liabilities increased from US$1,763,017 in 2018 to US$3,687,074 in 2020, representing a growth of 108.5%[740]. - Total equity rose from US$2,008,071 in 2018 to US$2,869,811 in 2020, an increase of 43%[742]. - Retained earnings grew significantly from US$1,352,543 in 2018 to US$1,986,411 in 2020, reflecting a rise of 46.8%[742]. - Additional paid-in capital increased from US$129,059 in 2018 to US$456,088 in 2020, marking a growth of 253.5%[742]. Legal and Regulatory Matters - The company has been involved in a putative securities class action lawsuit, with ongoing proceedings related to allegations of material misstatements in public filings[596]. - The lease agreements with Metropolis Holding were approved by all directors, including disinterested directors, ensuring compliance with related party transaction regulations[589]. - The company has not entered into any material contracts outside the ordinary course of business, except those described in the annual report[644]. - Under Cayman Islands law, the company is not required to hold annual shareholders meetings every year, and it did not hold one in the fiscal year of 2020[709]. Taxation and Financial Reporting - There are no taxes levied on profits, income, or gains in the Cayman Islands, and no inheritance tax or estate duty applies[647]. - The company may be classified as a "resident enterprise" under PRC tax law if it meets specific criteria, which could subject dividends to a 10% withholding tax[649]. - The company does not intend to determine earnings and profits based on U.S. federal income tax principles, and distributions will generally be reported as dividends[656]. - The company maintained effective internal control over financial reporting as of May 31, 2020, as confirmed by an independent audit[692]. - The company adopted new accounting standards for leases in 2020, impacting the financial reporting of operating lease liabilities[731]. Risk Management - The company has not been exposed to material risks due to changes in interest rates, but a hypothetical one percentage point decrease in interest rates would have resulted in a decrease of approximately US$33.6 million in interest income for the year ended May 31, 2020[675]. - All revenues and most expenses are denominated in RMB, with exposure to foreign exchange risk primarily related to cash and cash equivalents denominated in U.S. dollars[676]. - The company does not believe it currently has any significant direct foreign exchange risk and has not hedged exposures denominated in foreign currencies[676]. - The conversion of Renminbi into foreign currencies is based on rates set by the People's Bank of China, and fluctuations in the exchange rate can significantly impact the value of investments[677].