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TAL Education Group Announces Unaudited Financial Results for the Fourth Fiscal Quarter and the Fiscal Year 2020

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Corrections to Certain Line Items of Previously Released Financial Statements for the First, Second and Third Quarters of Fiscal Year 2020

- Quarterly Results:
Net Revenues up by 18.0% Year-Over-Year
Loss from Operations was US$41.3 million , compared to Income from Operations of US$114.7 million in the Same Period of Prior Year
Non-GAAP Loss from Operations was US$8.4 million , compared to Non-GAAP Income from Operations of US$137.0 million in the Same Period of Prior Year
Total Student Enrollments of Normal Priced Long-term Course up by 56.6% Year-Over-Year

- Fiscal Year Results:
Net Revenues up by 27.7%
Income from Operations was US$137.4 million , compared to Income from Operations of US$341.6 million in Fiscal Year 2019
Non-GAAP Income from Operations was US$255.4 million , compared to Non-GAAP Income from Operations of US$418.9 million in Fiscal Year 2019
Quarterly Average Student Enrollments of Normal Priced Long-term Course up by 55.2% Year-Over-Year

BEIJING , April 28, 2020 /PRNewswire/ -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"), a leading K-12 after-school tutoring services provider in China , today announced its unaudited financial results for the fourth quarter and the fiscal year ended February 29, 2020 .

Highlights for the Fourth Quarter of Fiscal Year 2020

  • Net revenues increased by 18.0% year-over-year to US$857.7 million from US$726.6 million in the same period of the prior year.

  • Loss from operations was US$41.3 million , compared to income from operations of US$114.7 million in the same period of the prior year.

  • Non-GAAP loss from operations, which excluded share-based compensation expenses, was US$8.4 million , compared to Non-GAAP income from operations of US$137.0 million in the same period of the prior year.

  • Net loss attributable to TAL was US$90.1 million , compared to net income attributable to TAL of US$99.6 million in the same period of the prior year.

  • Non-GAAP net loss attributable to TAL, which excluded share-based compensation expenses, was US$57.2 million , compared to Non-GAAP net income attributable to TAL of US$121.9 million in the same period of the prior year.

  • Basic and diluted net loss per American Depositary Share ("ADS") were both US$0.15 . Non-GAAP basic and diluted net loss per ADS, which excluded share-based compensation expenses, were both US$0.10 . Three ADSs represent one Class A common share.

  • Cash, cash equivalents and short-term investments totaled US$2,219.3 million as of February 29, 2020 , compared to US$1,515.6 million as of February 28, 2019 .

  • Total student enrollments of normal priced long-term course increased by 56.6% year-over-year to approximately 4,646,040 from approximately 2,966,400 in the same period of the prior year.

Highlights for the Fiscal Year Ended February 29, 2020

  • Net revenues increased by 27.7% year-over-year to US$3,273.3 million from US$2,563.0 million in fiscal year 2019.

  • Income from operations decreased by 59.8% to US$137.4 million from US$341.6 million in fiscal year 2019.

  • Non-GAAP income from operations, which excluded share-based compensation expenses, decreased by 39.0% to US$255.4 million from US$418.9 million in fiscal year 2019.

  • Net loss attributable to TAL was US$110.2 million , compared to net income attributable to TAL of US$367.2 million in fiscal year 2019.

  • Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$7.7 million , compared to  Non-GAAP net income attributable to TAL of US$444.5 million in fiscal year 2019.

  • Basic and diluted net loss per ADS were both US$0.19 . Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were both US$0.01 .

  • Average student enrollments of normal priced long-term course per quarter during fiscal year 2020 increased by 55.2% year-over-year to approximately 3,023,840 from approximately 1,948,350 in fiscal year 2019.

  • Total physical network increased from 676 learning centers in 56 cities as of February 28, 2019 to 871 learning centers in 70 cities as of February 29, 2020 .

Financial and Operating DataFourth Quarter and Fiscal Year 2020

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


Three Months Ended


February 28/29,


2019

2020

Pct. Change

Net revenues

726,561

857,682

18.0%

Operating income/(loss)

114,706

(41,256)

(136.0%)

Non-GAAP operating income/(loss)

136,981

(8,392)

(106.1%)

Net income/(loss) attributable to TAL

99,612

(90,074)

(190.4%)

Non-GAAP net income/(loss) attributable to TAL

121,887

(57,210)

(146.9%)

Net income/(loss) per ADS attributable to TAL basic

0.17

(0.15)

(186.8%)

Net income/(loss) per ADS attributable to TAL
diluted

0.17

(0.15)

(191.1%)

Non-GAAP net income/(loss) per ADS attributable to
TAL basic

0.21

(0.10)

(145.0%)

Non-GAAP net income/(loss) per ADS attributable to
TAL diluted

0.20

(0.10)

(147.3%)

Total Student Enrollments of normal priced long-term
course

2,966,400

4,646,040

56.6%

 


Fiscal Year Ended


February 28/29,


2019

2020

Pct. Change

Net revenues

2,562,984

3,273,308

27.7%

Operating income

341,582

137,443

(59.8%)

Non-GAAP operating income

418,859

255,386

(39.0%)

Net income/(loss) attributable to TAL

367,236

(110,195)

(130.0%)

Non-GAAP net income attributable to TAL

444,513

7,748

(98.3%)

Net income/(loss) per ADS attributable to TAL basic

0.64

(0.19)

(128.8%)

Net income/(loss) per ADS attributable to TAL
diluted

0.61

(0.19)

(130.3%)

Non-GAAP net income per ADS attributable to TAL
basic

0.78

0.01

(98.3%)

Non-GAAP net income per ADS attributable to TAL
diluted

0.74

0.01

(98.3%)

Average Student Enrollments of normal priced long-
term course

1,948,350

3,023,840

55.2%

                                                                                     

"Our fourth fiscal quarter revenue performance was impacted by the outbreak of COVID-19 and the resulting precautionary measures with respect to our offline business. The negative impact on our offline business was partially offset by the growth in student enrollments in online courses and related revenues for the quarter," said Rong Luo, TAL's chief financial officer.

"We maintain the utmost caution for the safety and health of all our students and employees and make any short-term adjustments to our business operations when needed. For the longer term, as an established and one of the leading companies in China's education market with many years of efforts to improve our education technology and services, we continue to have full confidence in our future development," Mr. Luo continued.

Financial Results for the Fourth Quarter of Fiscal Year 2020

Net Revenues

In the fourth quarter of fiscal year 2020, TAL reported net revenues of US$857.7 million , representing an 18.0% increase from US$726.6 million in the fourth quarter of fiscal year 2019. The increase was mainly driven by an increase in total student enrollments of normal priced long-term course, which increased by 56.6% to approximately 4,646,040 from approximately 2,966,400 in the same period of  the  prior year. The increase in total student enrollments of normal priced long-term course was primarily driven by the growth of enrollments in the small class offerings and online courses.

Operating Costs and Expenses

In the fourth quarter of fiscal year 2020, operating costs and expenses were US$899.3 million , representing a 47.0% increase from US$611.9 million in the fourth quarter of fiscal year 2019. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$866.5 million , a 46.9% increase from US$589.6 million in the fourth quarter of fiscal year 2019.

Cost of revenues increased by 32.6% to US$405.9 million from US$306.2 million in the fourth quarter of fiscal year 2019. The increase in cost of revenues was mainly due to an increase in teacher compensation, rental costs and learning materials. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 32.6% to US$405.6 million , from US$306.0 million in the fourth quarter of fiscal year 2019.

Selling and marketing expenses increased by 78.6% to US$243.2 million from US$136.2 million in the fourth quarter of fiscal year 2019. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 78.2% to US$236.8 million , from US$132.9 million in the fourth quarter of fiscal year 2019. The increase of selling and marketing expenses in the fourth quarter of fiscal year 2020 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 30.5% to US$221.2 million from US$169.6 million in the fourth quarter of fiscal year 2019. 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 29.3% to US$195.0 million , from US$150.8 million in the fourth quarter of fiscal year 2019.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 47.5% to US$32.9 million in the fourth quarter of fiscal year 2020 from US$22.3 million in the same period of fiscal year 2019.

Impairment loss on intangible assets and goodwill was US$29.0 million for the fourth quarter of fiscal year 2020, compared to nil for the fourth quarter of fiscal year 2019. Impairment loss on intangible assets and goodwill was mainly due to the decline in a reporting unit's fair value.

Gross Profit                                                                                                                                 

Gross profit increased by 7.5% to US$451.8 million from US$420.4 million in the fourth quarter of fiscal year 2019.

Income/(loss) from Operations

Loss from operations was US$41.3 million in the fourth quarter of fiscal year 2020, compared to income from operations of US$114 .7 million in the fourth quarter of fiscal year 2019. Non-GAAP loss from operations, which excluded share-based compensation expenses, was US$8.4 million , compared to Non-GAAP income from operations of US$137.0 million in the fourth quarter of fiscal year 2019.

Other Income/(Expense)

Other expense was US$4.7 million for the fourth quarter of fiscal year 2020, compared to other income of US$24.7 million in the fourth quarter of fiscal year 2019.

Impairment Loss on Long-term Investments

Impairment loss on long-term investments was US$2.8 million for the fourth quarter of fiscal year 2020, compared to US$7.2 million for the fourth quarter of fiscal year 2019. Impairment loss on long-term investments was mainly due to other-than temporary declines in the value of long-term investments in several investees.

Income Tax Expense

Income tax expense was US$63.6 million in the fourth quarter of fiscal year 2020, compared to US$33.2 million of income tax expense in the fourth quarter of fiscal year 2019.

Net Income/(loss) Attributable to TAL Education Group

Net loss attributable to TAL was US$90.1 million in the fourth quarter of fiscal year 2020, compared to net income attributable to TAL of US$99.6 million in the fourth quarter of fiscal year 2019. Non-GAAP net loss attributable to TAL, which excluded share-based compensation expenses was US$57.2 million in the fourth quarter of fiscal year 2020, compared to Non-GAAP net income attributable to TAL of US$121.9 million in the fourth quarter of fiscal year 2019.

Basic and Diluted Net Income/(loss) per ADS

Basic and diluted net loss per ADS were both US$0.15 in the fourth quarter of fiscal year 2020. Non-GAAP basic and diluted net loss per ADS, which excluded share-based compensation expenses, were both US$0.10 in the fourth quarter of fiscal year 2020.

Capital Expenditures

Capital expenditures for the fourth quarter of fiscal year 2020 were US$62.3 million , compared to US$209.1 million for the fourth quarter of fiscal year 2019. The capital expenditures for the fourth quarter of fiscal year 2019 was mainly due to the capital expenditures for the purchase of land use rights.

Cash, Cash Equivalents, and Short-Term Investments

As of February 29, 2020 , the Company had US$1,873.9 million of cash and cash equivalents and US$345.4 million of short-term investments, compared to US$1,247.1 million of cash and cash equivalents and US$268.4 million of short-term investments as of February 28, 2019 .

Deferred Revenue

As of February 29, 2020 , the Company's deferred revenue balance was US$781.0 million , compared to US$436.1 million as of February 28, 2019 , representing a year-over-year increase of 79.1%. Deferred revenue primarily consisted of the tuition collected in advance of Xueersi Peiyou small classes, as well as deferred revenue related to other businesses.

Financial Results for the Fiscal Year Ended February 29, 2020

Net Revenues

For fiscal year 2020, TAL reported net revenues of US$3,273.3 million , representing a 27.7% increase from US$2,563.0 million in fiscal year 2019. The increase was mainly driven by the growth in average student enrollments of normal priced long-term course, which increased by 55.2% to approximately 3,023,840 from approximately 1,948,350 in the prior year. The increase in average student enrollments of normal priced long-term course was driven primarily by the growth of enrollments in the small class offerings and online courses. 

Operating Costs and Expenses

In fiscal year 2020, operating costs and expenses were US$3,145.3 million , a 41.2% increase from US$2,228.1 million in fiscal year 2019. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$3,027.4  million, a 40.8% increase from US$2,150.8 million in fiscal year 2019.

Cost of revenues grew by 26.1% to US$1,468.6 million from US$1,164.5 million in fiscal year 2019. The increase in cost of revenues was mainly due to increase in teacher compensation, rental costs and learning materials. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 26.1% to US$1,467.5 million from US$1,163.7 million in fiscal year 2019.

Selling and marketing expenses increased by 76.2% to US$852.8 million from US$484.0 million in fiscal year 2019. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 76.0% to US$833.5 million from US$473.5 million in fiscal year 2019. The increase of selling and marketing expenses in fiscal year 2020 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 37.1% to US$795.0 million from US$579.7 million in fiscal year 2019. 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 35.8% to US$697.4 million from US$513.6 million in fiscal year 2019.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 52.6% to US$117.9 million in fiscal year 2020 from US$77.3 million in fiscal year 2019.

Impairment loss on intangible assets and goodwill was US$29.0 million for the fiscal year 2020, compared to nil for the fiscal year 2019. Impairment loss on intangible assets and goodwill was mainly due to the decline in a reporting unit's fair value.

Gross Profit

Gross profit grew by 29.0% to US$1,804.7 million from US$1,398.5 million in fiscal year 2019.

Income/(loss) from Operations

Income from operations decreased by 59.8% to US$137.4 million from US$341.6 million in fiscal year 2019. Non-GAAP income from operations, which excluded share-based compensation expenses, decreased by 39.0% to US$255.4 million from US$418.9 million in fiscal year 2019.

Other Income/(Expense)

Other expense was US$95.3 million for the fiscal year 2020, compared to other income of US$131.7 million in fiscal year 2019. Other expense in fiscal year 2020 was mainly related to the fair value changes of a long-term investment.

Impairment Loss on Long-term Investments

Impairment loss on long-term investments was US$154.0 million for fiscal year 2020, compared to US$58.1 million for fiscal year 2019. Impairment loss on long-term investments was mainly due to other-than temporary declines in the value of long-term investments in several investees.

Income Tax Expense

Income tax expense was US$69.3 million in fiscal year 2020, compared to US$76.5 million of income tax expense in fiscal year 2019.

Net Income/(loss) Attributable to TAL Education Group

Net loss attributable to TAL was US$110.2 million in fiscal year 2020, compared to net income attributable to TAL of US$367.2 million in fiscal year 2019. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, decreased by 98.3% to US$7.7 million from US$444.5 million in fiscal year 2019.

Basic and Diluted Net Income/(loss) per ADS

Basic and diluted net loss per ADS were both US$0.19 in fiscal year 2020. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were both US$0.01 in fiscal year 2020.

Capital Expenditures

Capital expenditures for fiscal year 2020 were US$187.5 million , compared to US$353.3 million for fiscal year 2019. The capital expenditures for fiscal year 2019 was mainly due to the capital expenditures for the purchase of land use rights.

Business Outlook

Based on our current estimates, total net revenues for the first quarter of fiscal year 2021 are expected to be between US$875.4 million and US$895.6 million , representing an increase of 30% to 33% 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 38% for the first quarter of fiscal year 2021. 

These estimates reflect the Company's current expectation, which is subject to change.

Recent Developments

Further Investment in Online English Tutoring Service Provider

TAL today announced that it had recently entered into a definitive agreement to further invest US$10.4 million of cash in exchange of controlling equity interests in a distressed online provider of one-on-one English tutoring services with material deferred revenue liability. Before the completion of the foregoing transaction, the Company has minority equity interests in the investee.

Previously Released Unaudited Quarterly Financial Statements

As TAL previously announced on April 7, 2020 , during its routine internal auditing process, the Company discovered certain employee wrongdoing in relation to the "Light Class" business. As a result of such wrongdoing, the Company would need to make corrections to certain line items of its previously released unaudited quarterly condensed consolidated financial statements as of and for the three months ended May 31, 2019 , August 31, 2019 , and November 30, 2019 . For more detailed information, please refer to the Annex titled "Corrections to Certain Line Items of Previously Released Financial Statements for the First, Second and Third Quarters of Fiscal Year 2020" attached to this earnings release.

Adoption of Share Repurchase Plan

On April 28, 2020 , TAL's board of directors authorized the repurchase of up to US$500 million of the Company's common shares over the next 12 months, subject to the applicable rules under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition, the Company's management, informed the Company of their intention to repurchase up to a total US$100 million of the Company's common shares, subject to the applicable rules under the Exchange Act.

This share repurchases may be made by the Company and/or its management from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades and/ or through 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 plan periodically and may authorize adjustment to its terms and size accordingly. TAL plans to fund any share repurchases made under this plan from the Company's available cash balance.

Conference Call

The Company will host a conference call and live webcast to discuss its financial results for the fourth fiscal quarter of fiscal year 2020 ended February 29, 2020 at 8:00 a.m. Eastern Time on April 28, 2020 ( 8:00 p.m. Beijing time on April 28, 2020 ).

Please note that you will need to pre-register for conference call participation, using the link provided below. Upon registering, you will be sent participant dial-in numbers, Direct Event passcode and unique registrant ID by email.

Conference call registration link: http://apac.directeventreg.com/registration/event/1398186 . It will automatically direct you to the registration page of "TAL Education Group Fourth Quarter and Fiscal Year 2020 Earnings Conference Call", where you may fill in your details for RSVP. When you are requested to submit a participant conference ID, please enter the number "1398186".

In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), Direct Event passcode and unique registrant ID) provided in the confirmation email that you have received following your pre-registration.

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

A telephone replay of the conference call will be available through 9:59 a.m. on May 6, 2020 , U.S. Eastern time ( 9:59 p.m. on May 6, 2020 , Beijing time, 2020).

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:                      

1398186

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the outlook for the first quarter of fiscal year 2021, 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 as well as competence oriented programs. The Company's learning center network currently covers 70 cities.

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 SEC 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 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 of U.S. dollars)




As of  


As of



February 28,


February 29,



2019


2020

ASSETS










Current assets





  Cash and cash equivalents


$1,247,140


$1,873,866

  Restricted cash-current


9,227


28,084

  Short-term investments


268,424


345,457

  Inventory


7,750


25,832

  Amounts due from related parties-current


3,341


3,642

  Income tax receivables


7,204


11,548

  Prepaid expenses and other current assets


202,630


207,352

Total current assets


1,745,716


2,495,781

  Restricted cash-non-current


7,334


13,235

  Amounts due from related parties-non-current


1,747


-

  Property and equipment, net


287,877


366,656

  Deferred tax assets-non-current


29,179


79,534

  Rental deposits


56,135


72,721

  Intangible assets, net


74,776


58,985

  Land use right, net


-


204,853

  Goodwill


414,228


378,913

  Long-term investments


850,695


571,601

  Long-term prepayments and other non-current assets


267,404


85,275

  Operating lease right-of-use assets


-


1,243,692

Total assets


$3,735,091


$5,571,246






LIABILITIES AND EQUITY










Current liabilities





Accounts payable (including accounts payable of the
    consolidated VIEs without recourse to TAL Education
    Group of 98,436 and 104,231 as of February 28, 2019 and 
    February 29, 2020, respectively) 


$106,493


$117,770

Deferred revenue-current (including deferred revenue-current
    of the consolidated VIEs without recourse to TAL
    Education Group of 401,027 and 733,253 as of February
    28, 2019 and February 29, 2020, respectively)


433,610


780,167

Amounts due to related parties-current (including amounts due
    to related parties-current of the consolidated VIEs without
    recourse to TAL Education Group of 18,504 and 4,264 as of
    February 28, 2019 and February 29, 2020, respectively)


24,375


4,361

Accrued expenses and other current liabilities (including
    accrued expenses and other current liabilities of the
    consolidated VIEs without recourse to TAL Education
    Group of 291,728 and 470,519 as of February 28, 2019 and
    February 29, 2020, respectively)


365,195


552,650

Income tax payable (including income tax payable of the
    consolidated VIEs without recourse to TAL Education
    Group of 36,670 and 43,233 as of February 28, 2019 and
    February 29, 2020, respectively)


38,743


46,650

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, 2019 and
    February 29, 2020, respectively)


210,027


-

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, 2019 and
    February 29, 2020, respectively)


5,275


-

Operating lease liabilities, current portion (including 
    operating lease liabilities, current portion of the consolidated
    VIEs without recourse to TAL Education Group of nil and
    276,712 as of February 28, 2019 and February 29, 2020,
    respectively)


-


304,960

Total current liabilities


1,183,718


1,806,558

Deferred revenue-non-current (including deferred revenue-
    non-current of the consolidated VIEs without recourse to
    TAL Education Group of 2,497 and 833 as of February 28,
    2019 and February 29, 2020, respectively)


2,497


833

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 106 and nil as
    of February 28, 2019 and February 29, 2020, respectively)


196


-

Deferred tax liabilities-non-current (including deferred tax
    liabilities-non-current of the consolidated VIEs without
    recourse to TAL Education Group of 16,951 and 7,197 as of
    February 28, 2019 and February 29, 2020, respectively)


17,738


7,789

Other non-current liabilities (including other non-current
    liabilities of the consolidated VIEs without recourse to TAL
    Education Group of 465 and nil as of February 28, 2019 and
    February 29, 2020, respectively)


465


-

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, 2019, and February 29, 2020,
    respectively)


-


261,950

Operating lease liabilities, non-current portion (including
    operating lease liabilities, non-current portion of the
    consolidated VIEs without recourse to TAL Education
    Group of nil and 883,603 as of February 28, 2019 and
    February 29, 2020, respectively)


-


949,919

Total liabilities


1,204,614


3,027,049











Equity





Class A common shares


127


133

Class B common shares


71


67

Class A common shares issuable


1,977


-

Additional paid-in capital


1,485,521


1,675,640

Statutory reserve


58,690


82,712

Retained earnings


920,314


786,097

Accumulated other comprehensive income/(loss)


17,047


(28,913)

Total TAL Education Group's equity


2,483,747


2,515,736

Noncontrolling interest


46,730


28,461

Total equity


2,530,477


2,544,197

Total liabilities and equity


$3,735,091


$5,571,246

 

 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except share, ADS, per share and per ADS data)  



For the Three Months Ended 


For the Fiscal Year Ended


February 28/29,


February 28/29,


2019


2020


2019


2020









Net revenues

$726,561


$857,682


$2,562,984


$3,273,308

Cost of revenues (note 1)

306,174


405,882


1,164,454


1,468,569

Gross profit

420,387


451,800


1,398,530


1,804,739

Operating expenses (note 1)








  Selling and marketing

136,196


243,204


484,000


852,808

  General and administrative

169,553


221,245


579,672


794,957

  Impairment loss on intangible 








   assets and goodwill

-


28,998


-


28,998

Total operating expenses

305,749


493,447


1,063,672


1,676,763

Government subsidies

68


391


6,724


9,467

Income/(loss) from operations

114,706


(41,256)


341,582


137,443

Interest income

10,285


19,430


59,614


72,991

Interest expense

(5,747)


(3,857)


(17,628)


(11,820)

Other income/(expense) 

24,706


(4,679)


131,727


(95,297)

Impairment loss on long-term
    investments

(7,247)


(2,774)


(58,091)


(153,970)

Income/(loss) before income tax
    and loss from equity method
    investments

136,703


(33,136)


457,204


(50,653)

Income tax expense

(33,236)


(63,592)


(76,504)


(69,328)

Loss from equity method investments

(5,114)


(1,775)


(16,186)


(7,670)

Net income/(loss)

$98,353


$(98,503)


$364,514


$(127,651)

Add: Net loss attributable to
    noncontrolling interest

1,259


8,429


2,722


17,456

Total net income/(loss)
    attributable to TAL
    Education Group

$99,612


$(90,074)


$367,236


$(110,195)

Net income/(loss) per common
  share








  Basic

$0.52


$(0.45)


$1.93


$(0.56)

  Diluted

0.5


(0.45)


1.83


(0.56)

Net income/(loss) per ADS
(note 2)








  Basic

$0.17


$(0.15)


$0.64


$(0.19)

  Diluted

0.17


(0.15)


0.61


(0.19)

















Weighted average shares used in
    calculating net income/(loss)
    per common share








Basic

191,020,638


199,095,944


189,951,643


198,184,370

Diluted

200,670,945


199,095,944


200,224,934


198,184,370









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











For the Three Months


For the Fiscal Year


Ended February 28/29,


Ended February 28/29,


2019


2020


2019


2020

Cost of revenues

$200


$242


$706


$1,074

Selling and marketing expenses

3,331


6,405


10,454


19,356

General and administrative expenses

18,744


26,217


66,117


97,513

Total

$22,275


$32,864


$77,277


$117,943


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


 

 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME/(LOSS)

(In thousands of U.S. dollars)



For the Three Months Ended


For the Fiscal Year Ended


February 28/29,


February 28/29,


2019


2020


2019


2020

Net income/(loss)

$98,353


$(98,503)


$364,514


$(127,651)

Other comprehensive
income/(loss), net of tax

53,507


5,703


(116,237)


(47,825)

Comprehensive income/(loss)

151,860


(92,800)


248,277


(175,476)

Add: Comprehensive loss
attributable to noncontrolling
interest

694


8,236


3,681


19,321

Comprehensive income/(loss)
attributable to TAL
Education Group

$152,554


$(84,564)


$251,958


$(156,155)

TAL EDUCATION GROUP

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

(In thousands of U.S. dollars, except share, ADS, per share and per ADS data)



For the Three Months


For the Fiscal Year


Ended February 28/29,


Ended February 28/29,


2019


2020


2019


2020









Cost of revenues

$306,174


$405,882


$1,164,454


$1,468,569

Share-based compensation expense
in cost of revenues

200


242


706


1,074

Non-GAAP cost of revenues

305,974


405,640


1,163,748


1,467,495









Selling and marketing expenses

136,196


243,204


484,000


852,808

Share-based compensation expense
in selling and marketing expenses

3,331


6,405


10,454


19,356

Non-GAAP selling and marketing expenses

132,865


236,799


473,546


833,452


169,553


221,245


579,672


794,957

General and administrative expenses








Share-based compensation expense
in general and administrative
expenses

18,744


26,217


66,117


97,513

Non-GAAP general and
administrative expenses

150,809


195,028


513,555


697,444









Operating costs and expenses

611,923


899,329


2,228,126


3,145,332

Share-based compensation expense
in operating costs and expenses

22,275


32,864


77,277


117,943

Non-GAAP operating costs and
expenses

589,648


866,465


2,150,849


3,027,389









Income/(loss) from operations

114,706


(41,256)


341,582


137,443

Share based compensation expenses

22,275


32,864


77,277


117,943

Non-GAAP income/(loss) from
operations

136,981


(8,392)


418,859


255,386









Net income/(loss) attributable to
TAL Education Group

99,612


(90,074)


367,236


(110,195)

Share based compensation expenses

22,275


32,864


77,277


117,943

Non-GAAP net income/(loss)
attributable to TAL Education
Group

$121,887


$(57,210)


$444,513


$7,748

















Net income/(loss) per ADS








Basic

$0.17


$(0.15)


$0.64


$(0.19)

Diluted

0.17


(0.15)


0.61


(0.19)

Non-GAAP Net income/(loss) per
ADS








Basic

$0.21


$(0.10)


$0.78


$0.01

Diluted

0.20


(0.10)


0.74


0.01

ADSs used in calculating net
income/(loss) per ADS








Basic

573,061,914


597,287,832


569,854,929


594,553,110

Diluted

602,012,835


597,287,832


600,674,802


594,553,110

ADSs used in calculating








Non-GAAP net income/(loss) per
ADS








Basic

573,061,914


597,287,832


569,854,929


594,553,110

Diluted

602,012,835


597,287,832


600,674,802


620,891,562

Annex

Corrections to Certain Line Items of Previously Released Financial Statements for the First, Second and Third Quarters of Fiscal Year 2020

As TAL Education Group (NYSE: TAL) ("TAL" or the "Company") previously announced on April 7, 2020, during its routine internal auditing process, the Company discovered certain employee wrongdoing in relation to the "Light Class" business. The wrongdoing inflated "Light Class" transactions. As a result, the Company's unaudited quarterly condensed consolidated financial statements as of and for the three months ended May 31, 2019, August 31, 2019, and November 30, 2019 were impacted.

The Company is setting forth hereby corrections for the transactions at issue, which mainly include a reversal of net revenues, cost of revenues, general and administrative, inventory, prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities. The accumulated negative impact for the first three quarters of fiscal year 2020 on net revenues and net income attributable to TAL Education Group was US$86.1 million and US$26.6 million, respectively. The decrease of basic net income per American Depositary Share for the nine months ended November 30, 2019 was US$0.04. The table below illustrates the impact of the aforementioned corrections on the Company's condensed consolidated balance sheets, condensed consolidated statements of operations and condensed consolidated statements of comprehensive income/(loss) for the relevant periods.

TAL EDUCATION GROUP

CORRECTED LINE ITEMS OF UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)



As of May 31, 2019


As of August 31, 2019


As of November 30, 2019





























As previously
reported

As revised

(note 1)


As previously
reported

As revised


As previously
reported

As revised










ASSETS


















Current assets









Inventory

10,880

10,880


12,456

12,456


21,288

22,006

Prepaid expenses and other current assets

199,730

169,161


213,904

162,221


244,873

161,165

Total current assets

2,146,075

2,115,506


1,788,436

1,736,753


3,007,136

2,924,146

Total assets

$5,101,410

$5,070,841


$4,726,173

$4,674,490


$5,938,695

$5,855,705










LIABILITIES AND EQUITY


















Current liabilities









Accounts payable

$76,759

$56,237


$112,246

$77,408


$148,393

$90,947

Accrued expenses and other current liabilities

361,707

360,520


401,359

402,509


503,781

504,854

Total current liabilities

1,684,275

1,662,566


1,338,162

1,304,474


2,187,891

2,131,518

Total liabilities

2,518,258

2,496,549


2,171,588

2,137,900


3,307,872

3,251,499










Equity









Retained earnings

913,010

904,158


898,610

880,631


926,787

900,193

Accumulated other comprehensive loss

(16,635)

(16,643)


(55,997)

(56,013)


(34,400)

(34,423)

Total TAL Education Group's equity

2,540,600

2,531,740


2,513,596

2,495,601


2,594,126

2,567,509

Total equity

2,583,152

2,574,292


2,554,585

2,536,590


2,630,823

2,604,206

Total liabilities and equity

$5,101,410

$5,070,841


$4,726,173

$4,674,490


$5,938,695

$5,855,705

TAL EDUCATION GROUP

CORRECTED LINE ITEMS OF UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except share, ADS, per share and per ADS data)



For the Three Months Ended


For the Three Months Ended


For the Three Months Ended


May 31, 2019


August 31, 2019


November 30, 2019


As previously
reported


As revised

(note 1)


As previously
reported


As revised


As previously
reported


As revised














$702,770


$673,414


$936,626


$913,195


$862,357


$829,017

Net revenues












Cost of revenues

316,875


296,371


418,803


404,499


385,122


361,817

Gross profit

385,895


377,043


517,823


508,696


477,235


467,200

Operating expenses












General and administrative

175,585


175,585


190,056


190,056


209,491


208,071

Total operating expenses

330,984


330,984


453,314


453,314


400,438


399,018

Income from operations

57,318


48,466


69,939


60,812


78,036


69,421

(Loss)/income before income
tax and loss from equity
method investments

(11,644)


(20,496)


(24,131)


(33,258)


44,852


36,237

Net (loss)/income

(10,216)


(19,068)


(17,373)


(26,500)


25,035


16,420

Total net (loss)/income
attributable to TAL
Education Group

$(7,304)


$(16,156)


$(14,400)


$(23,527)


$28,177


$19,562













Net (loss)/income per common
share












Basic

$(0.04)


$(0.08)


$(0.07)


$(0.12)


$0.14


$0.10

Diluted

(0.04)


(0.08)


(0.07)


(0.12)


0.14


0.09

Net (loss)/income per ADS












Basic

$(0.01)


$(0.03)


$(0.02)


$(0.04)


$0.05


$0.03

Diluted

(0.01)


(0.03)


(0.02)


(0.04)


0.05


0.03



TAL EDUCATION GROUP

CORRECTED LINE ITEMS OF UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands of U.S. dollars)



For the Three Months Ended


For the Three Months Ended


For the Three Months Ended


May 31, 2019


August 31, 2019


November 30, 2019


As previously
reported


As revised

(note 1)


As previously
reported


As revised


As previously
reported


As revised













Net (loss)/income

$(10,216)


$(19,068)


$(17,373)


$(26,500)


$25,035


$16,420

Other comprehensive
(loss)/income, net of tax

(34,948)


(34,956)


(40,759)


(40,767)


22,202


22,195

Comprehensive
(loss)/income

(45,164)


(54,024)


(58,132)


(67,267)


47,237


38,615

Comprehensive
(loss)/income attributable
to TAL Education Group

$(40,986)


$(49,846)


$(53,762)


$(62,897)


$49,774


$41,152


Note 1: The transaction at issue has immaterial impact to fiscal year 2019. The impact is included in the condensed consolidated financial statements as of and for the
three months ended May 31, 2019, as revised.

Cision
Cision

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SOURCE TAL Education Group