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TAL Education Group Announces Unaudited Financial Results for the Second Fiscal Quarter Ended August 31, 2018, and Adoption of up to US$100 Million Share Repurchase Program

-Quarterly Net Revenues up by 53.5% Year-Over-Year

-Quarterly Income from Operations Increased by 18.4% Year-Over-Year

-Quarterly Non-GAAP Income from Operations Increased by 23.8% Year-Over-Year

-Quarterly Student Enrollments up by 120.2% Year-Over-Year

BEIJING, Oct. 25, 2018 /PRNewswire/ -- TAL Education Group (TAL) ("TAL" or the "Company"), a leading K-12 after-school tutoring services provider in China, today announced its unaudited financial results for the second quarter of fiscal year 2019 ended August 31, 2018.

Highlights for the Second Quarter of Fiscal Year 2019

  • Net revenues increased by 53.5% year-over-year to US$699.8 million from US$455.8 million in the same period of the prior year.
  • Income from operations increased by 18.4% to US$80.9 million from US$68.3 million in the same period of the prior year.
  • Non-GAAP income from operations increased by 23.8% to US$99.0 million from US$79.9 million in the same period of the prior year.
  • Net income attributable to TAL increased by 29.5% year-over-year to US$77.0 million, from US$59.5 million in the same period of the prior year.
  • Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 33.8% to US$95.1 million from US$71.1 million in the same period of the prior year.
  • Basic and diluted net income per American Depositary Share ("ADS") were US$0.14 and US$0.13, respectively. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.17 and US$0.16, respectively. Three ADSs represent one Class A common share.
  • Cash, cash equivalents and short-term investments totaled US$1,646.5 million as of August 31, 2018, compared to US$1,498.9 million as of February 28, 2018.
  • Total student enrollments increased by 120.2% year-over-year to approximately 4,937,320 from approximately 2,242,380 in the same period of the prior year.

Highlights for the Six Months Ended August 31, 2018

  • Net revenues increased by 60.8% year-over-year to US$1,250.4 million from US$777.7 million in the same period of the prior year.
  • Income from operations increased by 60.5% to US$155.9 million from US$97.1 million in the same period of fiscal year 2018.
  • Non-GAAP income from operations increased by 58.2% to US$188.9 million from US$119.4 million in the same period of the prior year.
  • Net income attributable to TAL increased by 63.0% year-over-year to US$143.8 million, from US$88.2 million in the same period of the prior year.
  • Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 60.0% to US$176.9 million from US$110.5 million in the same period of the prior year.
  • Basic and diluted net income per ADS were US$0.25 and US$0.24, respectively. Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were US$0.31 and US$0.29, respectively.
  • Average student enrollments per quarter during fiscal year 2019 increased by 110.2% year-over-year to approximately 3,457,140 from approximately 1,645,070 in the same period of fiscal year 2018.
  • Total physical network increased from 594 learning centers in 42 cities as of February 28, 2018 to 648 learning centers in 43 cities as of August 31, 2018.

Financial and Operating Data -- Second Quarter and First Six Months of Fiscal Year 2019

(In US$ thousands, except per ADS data, student enrollments and percentages)


Three Months Ended


August 31,


2017

2018

Pct. Change

Net revenues

455,750

699,783

53.5%

Net income attributable to TAL

59,450

76,990

29.5%

Non-GAAP net income attributable to
TAL

 

71,069

 

95,091

33.8%

Operating income

68,326

80,891

18.4%

Non-GAAP operating income

79,945

98,992

23.8%

Net income per ADS attributable to
TAL – basic

0.11

0.14

17.8%

Net income per ADS attributable to
TAL – diluted

0.10

0.13

24.2%

Non-GAAP net income per ADS
attributable to TAL – basic

0.14

0.17

21.7%

Non-GAAP net income per ADS
attributable to TAL – diluted

0.12

0.16

28.4%

Total student enrollments in small
class, one-on-one, and online courses

2,242,380

4,937,320

120.2%










Six Months Ended


August 31,


2017

2018

Pct. Change

Net revenues

777,653

1,250,432

60.8%

Net income attributable to TAL

88,239

143,790

63.0%

Non-GAAP net income attributable to
TAL

110,543

176,857

60.0%

Operating income

97,131

155,880

60.5%

Non-GAAP operating income

119,435

188,947

58.2%

Net income per ADS attributable to
TAL – basic

0.17

0.25

46.1%

Net income per ADS attributable to
TAL – diluted

0.16

0.24

53.9%

Non-GAAP net income per ADS
attributable to TAL – basic

0.22

0.31

43.4%

Non-GAAP net income per ADS
attributable to TAL – diluted

0.19

0.29

51.8%

Average student enrollments per
quarter

1,645,070

3,457,140

110.2%

"In the second quarter, our revenue and enrollments grew steadily, which was based on stable online and offline business performance," said Mr. Rong Luo, TAL's Chief Financial Officer. "Looking ahead, we will continue to enhance product quality and customer satisfaction, and further our contribution to the healthy and sustainable development of the education sector."

Mr. Luo continued, "We continue to explore new technologies and deploy smart intelligence in our online and offline products to help promote education progress. We are confident that through our investments, we will continue to offer students innovative technology-based tutoring in a positive learning environment."

Adoption of Share Repurchase Program

On October 24, 2018, TAL's board of directors authorized the repurchase of up to US$100 million of the Company's common shares over the next 12 months.

This share repurchase program authorizes the Company to purchase its ADSs or common shares from time to time on the open market at prevailing market prices, in negotiated transactions off the market, in block trades and/ or other legally permissible ways in accordance with applicable rules and regulations. The timing and extent of any purchases will depend upon market conditions, the trading price of ADSs and other factors. TAL's board of directors will review the share repurchase program periodically and may authorize adjustment to its terms and size accordingly. TAL plans to fund any share repurchases made under this program from the Company's available cash balance.

Financial Results for the Second Quarter of Fiscal Year 2019

Net Revenues

In the second quarter of fiscal year 2019, TAL reported net revenues of US$699.8 million, representing a 53.5% increase from US$455.8 million in the second quarter of fiscal year 2018. The increase was mainly driven by the growth in quarterly student enrollments, which rose by 120.2% to approximately 4,937,320 from approximately 2,242,380 in the same period of the prior year. The increase in total student enrollments was driven primarily by summer promotions in small classes and online courses.

Operating Costs and Expenses

In the second quarter of fiscal year 2019, operating costs and expenses were US$620.1 million, a 58.7% increase from US$390.7 million in the second quarter of fiscal year 2018. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$602.0 million, a 58.8% increase from US$379.1 million in the second quarter of fiscal year 2018.

Cost of revenues grew by 34.6% to US$329.6 million from US$244.9 million in the second quarter of fiscal year 2018. The increase in cost of revenues was mainly due to an increase in teacher compensation. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 34.5% to US$329.4 million, from US$244.8 million in the second quarter of fiscal year 2018.

Selling and marketing expenses increased by 159.4% to US$151.7 million from US$58.5 million in the second quarter of fiscal year 2018. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 160.9% to US$149.3 million from US$57.2 million in the second quarter of fiscal year 2018. The increase of selling and marketing expenses in the second quarter of fiscal year 2019 was primarily a result of more marketing promotion activities to expand our customer base and brand enhancement, as well as a rise in the compensation to sales and marketing staff to support a greater number of programs and service offerings compared to the same period in the prior year.

General and administrative expenses increased by 59.0% to US$138.8 million from US$87.3 million in the second quarter of fiscal year 2018. The increase in general and administrative expenses was mainly due to an increase of the number of our general and administrative personnel compared to the same period in the prior year and a rise in compensation to our general and administrative personnel. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 60.0% to US$123.3 million, from US$77.1 million in the second quarter of fiscal year 2018.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 55.8% to US$18.1 million in the second quarter of fiscal year 2019 from US$11.6 million in the same period of fiscal year 2018.

Gross Profit                                                                                                                                 

Gross profit grew by 75.6% to US$370.2 million from US$210.8 million in the second quarter of fiscal year 2018.

Income from Operations

Income from operations increased by 18.4% to US$80.9 million from US$68.3 million in the second quarter of fiscal year 2018. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 23.8% to US$99.0 million from US$79.9 million in the second quarter of fiscal year 2018.

Other Income/(Expense)

Other expense was US$0.4 million for the second quarter of fiscal year 2019, compared to other income of US$2.0 million in the second quarter of fiscal year 2018.

Income Tax Expense

Income tax expense was US$15.5 million in the second quarter of fiscal year 2019, compared to US$16.2 million in the second quarter of fiscal year 2018.

Net Income Attributable to TAL Education Group

Net income attributable to TAL increased by 29.5% to US$77.0 million from US$59.5 million in the second quarter of fiscal year 2018. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 33.8% to US$95.1 million from US$71.1 million in the second quarter of fiscal year 2018.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were US$0.14 and US$0.13 respectively, in the second quarter of fiscal year 2019. Non-GAAP basic and Non-GAAP diluted net income per ADS, which excluded share-based compensation expenses, were US$0.17 and US$0.16, respectively.

Capital Expenditures

Capital expenditures for the second quarter of fiscal year 2019 were US$42.5 million, an increase of US$4.9 million from US$37.6 million in the second quarter of fiscal year 2018. The increase was mainly due to leasehold improvements and the purchase of servers, computers, software systems and other hardware for the Company's teaching facilities and mobile network research and development.

Cash, Cash Equivalents, and Short-Term Investments

As of August 31, 2018, the Company had US$819.4 million of cash and cash equivalents and US$827.1 million of short-term investments, compared to US$711.5 million of cash and cash equivalents and US$787.4 million of short-term investments as of February 28, 2018.

Deferred Revenue

As of August 31, 2018, the Company's deferred revenue balance was US$869.8 million, compared to US$728.8 million as of August 31, 2017, representing an increase of 19.3%. Deferred revenue primarily consisted of the tuition collected in advance for the fall semester of Xueersi small classes.

Financial Results for the First Six Months of Fiscal Year 2019

Net Revenues

For the first six months of fiscal year 2019, TAL reported net revenues of US$1,250.4 million, representing a 60.8% increase from US$777.7 million in the first six months of fiscal year 2018. The increase was mainly driven by the growth in average student enrollments, which increased by 110.2% to approximately 3,457,140 from approximately 1,645,070 in the same period of the prior year. The increase in average student enrollments was driven primarily by the growth in enrollments in the small class offerings and online courses.

Operating Costs and Expenses

In the first six months of fiscal year 2019, operating costs and expenses were US$1,100.8 million, a 60.8% increase from US$684.4 million in the first six months of fiscal year 2018. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$1,067.7 million, a 61.3% increase from US$662.1 million in the first six months of fiscal year 2018.

Cost of revenues grew by 42.5% to US$590.6 million from US$414.5 million in the first six months of fiscal year 2018. The increase in cost of revenues was mainly due to an increase in teacher compensation and rental costs. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 42.4% to US$590.3 million from US$414.4 million in the first six months of fiscal year 2018.

Selling and marketing expenses increased by 141.5% to US$246.2 million from US$102.0 million in the first six months of fiscal year 2018. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 143.2% to US$242.2 million from US$99.6 million in the first six months of fiscal year 2018. The increase of selling and marketing expenses in the first six months of fiscal year 2019 was primarily a result of more marketing promotion activities to expand our customer base and brand enhancement, as well as a rise in the compensation to sales and marketing staff to support a greater number of programs and service offerings compared to the same period in the prior year.

General and administrative expenses increased by 57.2% to US$263.9 million from US$167.9 million in the first six months of fiscal year 2018. The increase in general and administrative expenses was mainly due to an increase of the number of our general and administrative personnel compared to the same period in the prior year and a rise in compensation to our general and administrative personnel. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 58.8% to US$235.3 million from US$148.2 million in the first six months of fiscal year 2018.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 48.3% to US$33.1 million in the first six months of fiscal year 2019 from US$22.3 million in the same period of fiscal year 2018.

Gross Profit

Gross profit grew by 81.7% to US$659.8 million from US$363.1 million in the first six months of fiscal year 2018.

Income from Operations

Income from operations increased by 60.5% to US$155.9 million from US$97.1 million in the first six months of fiscal year 2018. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 58.2% to US$188.9 million from US$119.4 million in the first six months of fiscal year 2018.

Other Income/(Expense)

Other income was US$8.3 million for the first six months of fiscal year 2019, mainly related to the fair value changes of equity securities in accordance with the update (ASU 2016-01 and ASU 2018-03) to the accounting standard (ASC321) adopted on March 1, 2018.

Income Tax Expense

Income tax expense was US$32.9 million in the first six months of fiscal year 2019, compared to US$24.6 million in the first six months of fiscal year 2018.

Net Income Attributable to TAL Education Group

Net income attributable to TAL increased by 63.0% to US$143.8 million from US$88.2 million in the first six months of fiscal year 2018. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 60.0% to US$176.9 million from US$110.5 million in the first six months of fiscal year 2018.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were US$0.25 and US$0.24, respectively, in the first six months of fiscal year 2019. Non-GAAP basic and Non-GAAP diluted net income per ADS, which excluded share-based compensation expenses, were US$0.31 and US$0.29, respectively.

Capital Expenditures

Capital expenditures for the first six months of fiscal year 2019 were US$71.2 million, an increase of US$4.0 million from US$67.2 million in the first six months of fiscal year 2018. The increase was mainly due to leasehold improvements and the purchase of servers, computers, software systems and other hardware for the Company's teaching facilities and mobile network research and development.

Business Outlook

Based on our current estimates, total net revenues for the third quarter of fiscal year 2019 are expected to be between US$563.2 million and US$571.9 million, representing an increase of 30% to 32% on a year-over-year basis. If not taking into consideration the impact of potential change in exchange rate between Renminbi and the U.S. Dollar, the projected revenue growth rate is expected to be in the range of 35% to 37% for the third quarter of fiscal year 2019. These estimates reflect our current expectations, which is subject to change.

Conference Call

The Company will host a conference call and live webcast to discuss its financial results for the second fiscal quarter of fiscal year 2019 ended August 31, 2018 at 8:00 a.m. Eastern Time on October 25, 2018 (8:00 p.m. Beijing time on October 25, 2018).

The dial-in details for the live conference call are as follows:

- U.S. toll free:

+1-866-519-4004

- Hong Kong toll free:

800-906-601

- International toll:

+65-6713-5090

Conference ID:

2299945

A live and archived webcast of the conference call will be available on the Investor Relations section of TAL's website at http://ir.100tal.com

A telephone replay of the conference call will be available through 9:59 a.m. on November 2, 2018, U.S. Eastern Time (9:59 p.m. on November 2, 2018, Beijing Time).

The dial-in details for the replay are as follows:

- U.S. toll free:

+1-855-452-5696

- Hong Kong toll free:

800-963-117

- International toll:

+61-2-8199-0299

Conference ID:

2299945

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 third quarter of fiscal year 2019, quotations from management in this announcement, as well as TAL Education Group's strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, 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 the Company'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: the Company's ability to continue to attract students to enroll in its courses; the Company's ability to continue to recruit, train and retain qualified teachers; the Company's ability to improve the content of its existing course offerings and to develop new courses; the Company's ability to maintain and enhance its brand; the Company's ability to maintain and continue to improve its teaching results; and the Company's ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company's reports filed with, or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and TAL Education Group undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.

About TAL Education Group

TAL Education Group is a leading K-12 after-school tutoring services provider in China. The acronym "TAL" stands for "Tomorrow Advancing Life", which reflects our vision to promote top learning opportunities for Chinese students through both high-quality teaching and content, as well as leading edge application of technology in the education experience. TAL Education Group offers comprehensive tutoring services to students from pre-school to the twelfth grade through three flexible class formats: small classes, personalized premium services, and online courses. Our tutoring services cover the core academic subjects in China's school curriculum including mathematics, English, Chinese, physics, chemistry, and biology. The Company's learning center network currently covers over 40 key cities in China.

We also operate www.jzb.com, a leading online education platform in China. Our ADSs trade on the New York Stock Exchange under the symbol "TAL".

About Non-GAAP Financial Measures

In evaluating its business, TAL considers and uses the following measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission as supplemental metrics to review and assess its operating performance: non-GAAP operating costs and expenses, non-GAAP cost of revenues, non-GAAP selling and marketing expenses, non-GAAP general and administrative expenses, non-GAAP income from operations, non-GAAP net income attributable to TAL, non-GAAP basic and non-GAAP diluted net income per ADS. To present each of these non-GAAP measures, the Company excludes share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from 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 table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release.

TAL believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. TAL believes that both management and investors benefit from 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 TAL's historical performance and liquidity. TAL computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. TAL 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 non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's 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.

For further information, please contact:

Echo Yan
Investor Relations 
TAL Education Group
Tel: +86 10 5292 6658
Email: ir@100tal.com

Caroline Straathof
IR Inside
Tel: +31 6 5462 4301
Email: info@irinside.com

 

 


TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)



As of

February 28,
2018


As of

August 31,
2018

ASSETS








Current assets




Cash and cash equivalents

$ 711,519


$ 819,376

Restricted cash-current

6,267


1,867

Short-term investments

787,391


827,074

Inventory

5,272


8,375

Amounts due from related parties-current

3,229


14,886

Income tax receivables

15,093


7,058

Prepaid expenses and other current assets

133,235


172,157

Total current assets

1,662,006


1,850,793

Restricted cash-non-current

9,911


9,513

Property and equipment, net

247,266


269,858

Deferred tax assets-non-current

17,361


25,033

Rental deposits

47,333


51,008

Intangible assets, net

43,505


57,275

Goodwill

291,382


280,222

Long-term investments

597,606


811,619

Long-term prepayments and other non-current assets

138,190


100,818

Total assets

$ 3,054,560


$ 3,456,139





LIABILITIES AND EQUITY








Current liabilities




Accounts payable (including accounts payable of
  
the consolidated VIEs without recourse to TAL
  
Education Group of 51,809 and 63,469 as of
   February 28, 2018, and August 31, 2018,
  
respectively)

$ 57,605


$ 71,370

Deferred revenue-current (including deferred revenue-
   current of the consolidated VIEs without recourse to
   TAL Education Group of 772,642 and 816,155 as of
   February 28, 2018, and August 31, 2018,
   respectively)

824,276


864,573

Amounts due to related parties-current (including
  
amounts due to related parties-current of the
   consolidated VIEs without recourse to TAL
   Education Group of 2,875 and 3,337 as of February
   28, 2018, and August 31, 2018, respectively)

8,746


13,652

Accrued expenses and other current liabilities
  
(including accrued expenses and other current
  
liabilities of the consolidated VIEs without recourse
  
to TAL Education Group of 158,849 and 283,872 as of
   February 28, 2018, and August 31, 2018,
   respectively)

229,122


342,087

Income tax payable (including income tax payable of
  
the consolidated VIEs without recourse to TAL
   Education Group of 12,106 and 24,904 as of
   February 28, 2018, and August 31, 2018,
   respectively)

13,638


29,948

Short-term debt and current portion of long-term debt
   (including short-term debt and current portion of
   long-term debt of the consolidated VIEs without
   recourse to TAL Education Group of nil and nil as
   of February 28, 2018, and August 31, 2018,
   respectively)

-


239,641

Bond payable, current portion (including bond
    payable, current portion of the consolidated VIEs
   without recourse to TAL Education Group of nil
   and nil as of February 28, 2018, and August 31,
   2018, respectively)

-


5,275

Total current liabilities

1,133,387


1,566,546

Deferred revenue-non-current (including deferred
   revenue-non-current of the consolidated VIEs
   without recourse to TAL Education Group of
   17,980 and 5,273 as of February 28, 2018, and
   August 31, 2018, respectively)

 

 

17,980


5,273

Amounts due to related parties-non-current (including
   amounts due to related parties-non-current of the
   consolidated VIEs without recourse to TAL
   Education Group of nil and 151 as of February 28,
   2018, and August 31, 2018, respectively)

 

 

271


 

 

331

Deferred tax liabilities-non-current (including deferred
   tax liabilities-non-current of the consolidated VIEs
   without recourse to TAL Education Group of
   19,867 and 7,260 as of February 28, 2018, and
   August 31, 2018, respectively)

 

 

20,039


 

 

7,400

Bond payable (including bond payable of the
   consolidated VIEs without recourse to TAL
   Education Group of nil and nil as of February 28,
   2018, and August 31,2018, respectively)

 

11,075


 

-

Long-term payable (including long-term payable of
   the consolidated VIEs without recourse to TAL
   Education Group of 4,660 and nil as of February 28,
   2018, and August 31, 2018, respectively)

6,344


1,683

Long-term debt (including long-term debt of the
   consolidated VIEs without recourse to TAL
   Education Group of nil and nil as of February 28,
   2018, and August 31, 2018, respectively)

225,000


-

Total liabilities

1,414,096


1,581,233





TAL Education Group Shareholders' Equity




Class A common shares

118


120

Class B common shares

71


71

Additional paid-in capital

884,717


924,059

Statutory reserve

38,315


38,315

Retained earnings

565,202


717,243

Accumulated other comprehensive income

132,325


176,906

Total TAL Education Group's equity

1,620,748


1,856,714

Noncontrolling interest

19,716


18,192

Total equity

1,640,464


1,874,906

Total liabilities and equity

$ 3,054,560


$ 3,456,139

 

 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share, ADS, per share and per ADS data)



For the Three Months Ended
August 31,


For the Six Months Ended
August 31,


2017


2018


2017


2018

 

Net revenues

 

$ 455,750


 

$ 699,783


 

$ 777,653


 

$ 1,250,432

Cost of revenues (note 1)

244,930


329,565


414,534


590,647

Gross profit

210,820


370,218


363,119


659,785

Operating expenses (note 1)








  Selling and marketing

58,491


151,700


101,953


246,207

  General and administrative

87,312


138,798


167,943


263,949

Total operating expenses

145,803


290,498


269,896


510,156

Government subsidies

3,309


1,171


3,908


6,251

Income from operations

68,326


80,891


97,131


155,880

Interest income

10,534


19,259


18,235


35,822

Interest expense

(3,870)


(3,957)


(9,095)


(7,822)

Other income/(expense)

2,018


(355)


8,806


8,331

Impairment loss on long-term
   investments

-


-


(700)


(9,713)

Income before provision for
   income tax and loss from
   equity method investments

77,008


95,838


114,377


182,498

Provision for income tax

(16,158)


(15,532)


(24,553)


(32,864)

Loss from equity method
   investments

(1,965)


(4,081)


(3,248)


(7,138)

Net income

58,885


76,225


86,576


142,496

Add: Net loss attributable to
noncontrolling interest

565


765


1,663


1,294

Total net income attributable
   to TAL Education Group

$ 59,450


$ 76,990


$ 88,239


$ 143,790

Net income per common share








Basic

$ 0.34


$ 0.41


$ 0.52


$ 0.76

Diluted

0.31


0.38


0.47


0.72

Net income per ADS (note 2)








Basic

$ 0.11


$ 0.14


$ 0.17


$ 0.25

Diluted

0.10


0.13


0.16


0.24

 

Weighted average shares used in
calculating net income per
common share








  Basic

172,388,942


189,483,546


169,669,402


189,250,482

  Diluted

193,131,866


200,422,889


193,585,695


200,406,007



Note1: Share-based compensation expenses are included in the operating costs and expenses as follows:



For the Three Months


For the Six Months


Ended August 31,


Ended August 31,


2017


2018


2017


2018

Cost of revenues

$109


$185


$142


$348

Selling and marketing

1,258


2,407


2,376


4,033

General and administrative

10,252


15,509


19,786


28,686

Total

$11,619


$18,101


$22,304


$33,067


Note 2: Three ADSs represent one Class A common Share.

 

 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)



For the Three Months Ended

August 31,


For the Six Months Ended

August 31,


2017


2018


2017


2018









Net income

$ 58,885


$ 76,225


$ 86,576


$ 142,496

Other comprehensive
income/(loss), net of tax

24,005


(43,380)


31,299


43,329

Comprehensive income

82,890


32,845


117,875


185,825

Add: Comprehensive loss
attributable to noncontrolling
interest

565


1,804


1,663


2,546

Comprehensive income
attributable to TAL
Education Group

$ 83,455


$ 34,649


$ 119,538


$ 188,371

 

 

TAL EDUCATION GROUP

Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures

(In thousands, except share, ADS, per share and per ADS data)



For the Three Months

Ended August 31,


For the Six Months
Ended August 31,


2017


2018


2017


2018









Cost of revenues

$ 244,930


$ 329,565


$ 414,534


$ 590,647

Share-based compensation expense
   in cost of revenues

109


185


142


348

Non-GAAP cost of revenues

244,821


329,380


414,392


590,299









Selling and marketing expenses

58,491


151,700


101,953


246,207

Share-based compensation expense
   in selling and marketing expenses

1,258


2,407


2,376


4,033

Non-GAAP selling and marketing
expenses

57,233


149,293


99,577


242,174

 

General and administrative
expenses

87,312


138,798


167,943


263,949

Share-based compensation expense
   in general and administrative
   expenses

10,252


15,509


19,786


28,686

Non-GAAP general and
administrative expenses

77,060


123,289


148,157


235,263









Operating costs and expenses

390,733


620,063


684,430


1,100,803

Share-based compensation expense
   in operating costs and expenses

11,619


18,101


22,304


33,067

Non-GAAP operating costs and
expenses

379,114


601,962


662,126


1,067,736









Income from operations

68,326


80,891


97,131


155,880

Share based compensation expenses

11,619


18,101


22,304


33,067

Non-GAAP income from
operations

79,945


98,992


119,435


188,947









Net income attributable to TAL
Education Group

59,450


76,990


88,239


143,790

Share based compensation expenses

11,619


18,101


22,304


33,067

Non-GAAP net income
attributable to TAL Education
Group

$ 71,069


$ 95,091


$ 110,543


$ 176,857



Net income per ADS


Basic

$ 0.11


$ 0.14


$ 0.17


$ 0.25

Diluted

0.10


0.13


0.16


0.24

Non-GAAP Net income per ADS
(note 3)








Basic

$ 0.14


$ 0.17


$ 0.22


$ 0.31

Diluted

0.12


0.16


0.19


0.29

ADSs used in calculating net
income per ADS








Basic

517,166,827


568,450,639


509,008,205


567,751,446

Diluted

579,395,597


601,268,668


580,757,085


601,218,021


Note 3: The Non-GAAP adjusted net income per ADS is computed using Non-GAAP adjusted net
income and the same number of ADSs used in GAAP basic and diluted EPS calculation.

 

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