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TAL Education Group Announces Unaudited Financial Results for the Third Fiscal Quarter Ended November 30, 2020

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-Net Revenues up by 35.0% Year-Over-Year for the Third Fiscal Quarter

-Net Revenues up by 29.7% Year-Over-Year for the First Nine Months of Fiscal Year 2021

-Total Student Enrollments of Normal Priced Long-term Course up by 46.5% Year-Over-Year

BEIJING, Jan. 21, 2021 /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 third quarter of fiscal year 2021 ended November 30, 2020.

Highlights for the Third Quarter of Fiscal Year 2021

  • Net revenues increased by 35.0% year-over-year to US$1,119.1 million from US$829.0 million in the same period of the prior year.

  • Loss from operations was US$127.4 million, compared to income from operations of US$69.4 million in the same period of the prior year.

  • Non-GAAP loss from operations, which excluded share-based compensation expenses, was US$73.4 million, compared to non-GAAP income from operations of US$99.6 million in the same period of the prior year.

  • Net loss attributable to TAL was US$43.6 million, compared to net income attributable to TAL of US$19.6 million in the same period of the prior year.

  • Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$10.4 million, compared to non-GAAP net income attributable to TAL of US$49.7 million in the same period of the prior year.

  • Basic and diluted net loss per American Depositary Share ("ADS") were both US$0.07. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were both US$0.02. Three ADSs represent one Class A common share.

  • Cash, cash equivalents and short-term investments totaled US$5,098.0 million as of November 30, 2020, compared to US$2,219.3 million as of February 29, 2020.

  • Total student enrollments of normal priced long-term course increased by 46.5% year-over-year to approximately 3,397,030 from approximately 2,318,000 in the same period of the prior year.

Highlights for the Nine Months Ended November 30, 2020

  • Net revenues increased by 29.7% year-over-year to US$3,133.1 million from US$2,415.6 million in the same period of the prior year.

  • Loss from operations was US$141.0 million, compared to income from operations of US$178.7 million in the same period of the prior year.

  • Non-GAAP loss from operations, which excluded share-based compensation expenses, was US$16.4 million, compared to non-GAAP income from operations of US$263.8 million in the same period of the prior year.

  • Net income attributable to TAL was US$53.0 million, compared to net loss attributable to TAL of US$20.1 million in the same period of the prior year.

  • Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$177.6 million, compared to non-GAAP net income attributable to TAL of US$65.0 million in the same period of the prior year.

  • Basic and diluted net income per ADS were US$0.09 and US$0.08 respectively. Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were US$0.29 and US$0.28 respectively.

  • Average student enrollments of normal priced long-term course per quarter during fiscal year 2021 increased by 60.9% year-over-year to approximately 3,995,210 from approximately 2,483,100 in the same period of fiscal year 2020.

  • Total physical network increased from 871 learning centers in 70 cities as of February 29, 2020 to 990 learning centers in 102 cities as of November 30, 2020.

Financial and Operating Data——Third Quarter and First Nine Months of Fiscal Year 2021

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


Three Months Ended


November 30,


2019

2020

Pct. Change

Net revenues

829,017

1,119,135

35.0%

Operating income/(loss)

69,421

(127,389)

(283.5%)

Non-GAAP operating income/(loss)

99,560

(73,354)

(173.7%)

Net income/(loss) attributable to TAL

19,562

(43,608)

(322.9%)

Non-GAAP net income attributable to TAL

49,701

10,427

(79.0%)

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

0.03

(0.07)

(319.1%)

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

0.03

(0.07)

(328.5%)

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

0.08

0.02

(79.4%)

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

0.08

0.02

(79.2%)

Total Student Enrollments of normal priced long-term
course

2,318,000

3,397,030

46.5%


Nine Months Ended


November 30,


2019

2020

Pct. Change

Net revenues

2,415,626

3,133,066

29.7%

Operating income/(loss)

178,699

(141,014)

(178.9%)

Non-GAAP operating income/(loss)

263,778

(16,407)

(106.2%)

Net (loss)/income attributable to TAL

(20,121)

53,012

(363.5%)

Non-GAAP net income attributable to TAL

64,958

177,619

173.4%

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

(0.03)

0.09

(359.7%)

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

(0.03)

0.08

(349.8%)

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

0.11

0.29

169.5%

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

0.10

0.28

170.8%

Average Student Enrollments of normal
priced long-term course

2,483,100

3,995,210

60.9%

"In the third quarter, along with the effective measures China's government has taken to continuously improve the public health situation and economy, we are pleased to see our tutoring business has also demonstrated on-track performance in this fiscal quarter. Looking ahead, we will keep making every effort to optimize our products, service and technology, and further build up our all-round education services with top quality content and customer experience," said Rong Luo, TAL's chief financial officer.

Financial Results for the Third Quarter of Fiscal Year 2021

Net Revenues

In the third quarter of fiscal year 2021, TAL reported net revenues of US$1,119.1 million, representing a 35.0% increase from US$829.0 million in the third quarter of fiscal year 2020. The increase was mainly driven by an increase in total student enrollments of normal priced long-term course, which increased by 46.5% to approximately 3,397,030 from approximately 2,318,000 in the same period of the prior year. The increase in total student enrollments of normal priced long-term course was primarily the result of the growth of enrollments in the small class offerings and online courses.

Operating Costs and Expenses

In the third quarter of fiscal year 2021, operating costs and expenses were US$1,255.9 million, representing a 65.1% increase from US$760.8 million in the third quarter of fiscal year 2020. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$1,201.8 million, representing a 64.5% increase from US$730.7 million in the third quarter of fiscal year 2020.

Cost of revenues increased by 42.5% to US$515.6 million from US$361.8 million in the third quarter of fiscal year 2020. 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 42.5% to US$515.2 million, from US$361.6 million in the third quarter of fiscal year 2020.

Selling and marketing expenses increased by 120.3% to US$420.7 million from US$190.9 million in the third quarter of fiscal year 2020. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 118.0% to US$406.4 million, from US$186.4 million in the third quarter of fiscal year 2020. The increase of selling and marketing expenses in the third quarter of fiscal year 2021 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 36.4% to US$283.8 million from US$208.1 million in the third quarter of fiscal year 2020. 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 33.8% to US$244.5 million, from US$182.7 million in the third quarter of fiscal year 2020.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 79.3% to US$54.0 million in the third quarter of fiscal year 2021 from US$30.1 million in the same period of fiscal year 2020.

Impairment loss on intangible assets and goodwill was US$35.7 million for the third quarter of fiscal year 2021, compared to nil for the third quarter of fiscal year 2020. Impairment loss on goodwill was mainly due to the decline in a reporting unit's fair value.

Gross Profit

Gross profit increased by 29.2% to US$603.6 million from US$467.2 million in the third quarter of fiscal year 2020.

Income/(loss) from Operations

Loss from operations was US$127.4 million in the third quarter of fiscal year 2021, compared to income from operations of US$69.4 million in the third quarter of fiscal year 2020. Non-GAAP loss from operations was US$73.4 million, compared to Non-GAAP income from operations of US$99.6 million in the same period of the prior year.

Other (expense)/Income

Other income was US$45.5 million for the third quarter of fiscal year 2021, compared to other expense of US$3.7 million in the third quarter of fiscal year 2020. Other income in the third quarter of fiscal year 2021 was primarily due to the value-added tax and social security expense exemption offered by the government during the COVID-19 outbreak.

Impairment Loss on Long-term Investments

Impairment loss on long-term investments was US$11.5 million for the third quarter of fiscal year 2021, compared to US$46.4 million for the third quarter of fiscal year 2020. Impairment loss on long-term investments was mainly due to declines in the value of long-term investments in several investees.

Income Tax (expense)/Benefit

Income tax benefit was US$13.9 million in the third quarter of fiscal year 2021, compared to US$16.6 million of income tax expense in the third quarter of fiscal year 2020.

Net Income/(loss) Attributable to TAL Education Group

Net loss attributable to TAL was US$43.6 million in the third quarter of fiscal year 2021, compared to net income attributable to TAL of US$19.6 million in the third quarter of fiscal year 2020. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$10.4 million, compared to Non-GAAP net income attributable to TAL of US$49.7 million in the third quarter of fiscal year 2020.

Basic and Diluted Net Income/(loss) per ADS

Basic and diluted net loss per ADS were both US$0.07 in the third quarter of fiscal year 2021. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were both US$0.02, in the third quarter of fiscal year 2021.

Cash Flow

Net cash flow provided by operating activities for the third quarter of fiscal year 2021 was US$844.6 million. Capital expenditures for the third quarter of fiscal year 2021 were US$42.2 million, an increase of US$2.1 million from US$40.1 million for the third quarter of fiscal year 2020. The increase was mainly due to leasehold improvement.

Cash, Cash Equivalents, and Short-Term Investments

As of November 30, 2020, the Company had US$4,233.2 million of cash and cash equivalents and US$864.8 million of short-term investments, compared to US$1,873.9 million of cash and cash equivalents and US$345.4 million of short-term investments as of February 29, 2020.

Deferred Revenue

The Company's deferred revenue balance was US$1,957.1 million, compared to US$1,241.2 million as of November 30, 2019, representing a year-over-year increase of 57.7%, which was mainly contributed by the tuition collected in advance of the fall semester, winter semester and part of spring semester of Xueersi Peiyou small classes and online courses through www.xueersi.com.

Financial Results for the First Nine Months of Fiscal Year 2021

Net Revenues

For the first nine months of fiscal year 2021, TAL reported net revenues of US$3,133.1 million, representing a 29.7% increase from US$2,415.6 million in the first nine months of fiscal year 2020. The increase was mainly driven by the growth in average student enrollments, which increased by 60.9% to approximately 3,995,210 from approximately 2,483,100 in the same period of the prior year. The increase in average student enrollments was primarily the result of the growth of enrollments in the small class offerings and online courses.

Operating Costs and Expenses

In the first nine months of fiscal year 2021, operating costs and expenses were US$3,291.5 million, a 46.5% increase from US$2,246.0 million in the first nine months of fiscal year 2020. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$3,166.9 million, a 46.6% increase from US$2,160.9 million in the first nine months of fiscal year 2020.

Cost of revenues grew by 38.1% to US$1,467.1 million from US$1,062.7 million in the first nine months of fiscal year 2020. 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 38.1% to US$1,466.0 million from US$1,061.9 million in the first nine months of fiscal year 2020.

Selling and marketing expenses increased by 67.3% to US$1,019.6 million from US$609.6 million in the first nine months of fiscal year 2020. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 65.6% to US$988.0 million from US$596.7 million in the first nine months of fiscal year 2020. The increase of selling and marketing expenses in the first nine months of fiscal year 2021 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 34.0% to US$768.7 million from US$573.7 million in the first nine months of fiscal year 2020. 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 34.7% to US$676.9 million from US$502.4 million in the first nine months of fiscal year 2020.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 46.5% to US$124.6 million in the first nine months of fiscal year 2021 from US$85.1 million in the same period of fiscal year 2020.

Impairment loss on intangible assets and goodwill was US$36.0 million for the first nine months of fiscal year 2021, compared to nil for the same period of fiscal year 2020. 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 23.1% to US$1,666.0 million from US$1,352.9 million in the first nine months of fiscal year 2020.

Income/(loss) from Operations

Loss from operations was US$141.0 million in the first nine months of fiscal year 2021, compared to income from operations of US$178.7 million in the same period of the prior year. Non-GAAP loss from operations, which excluded share-based compensation expenses, was US$16.4 million for the first nine months of fiscal year 2021, compared to non-GAAP income from operations, which excluded share-based compensation expenses, was US$263.8 million in the first nine months of fiscal year 2020.

Other (expense)/Income

Other income was US$132.9 million for the first nine months of fiscal year 2021, primarily due to the value-added tax and social security expense exemption offered by the government during the COVID-19 outbreak. Other expense was US$90.6 million for the first nine months of fiscal year 2020, mainly related to loss from the fair value change of an equity security with readily determinable fair value.

Impairment Loss on Long-term Investments

Impairment loss on long-term investments was US$18.4 million for the first nine months of fiscal year 2021, compared to US$151.2 million for the first nine months of fiscal year 2020. Impairment loss on long-term investments was mainly due to declines in the value of long-term investments in several investees.

Income Tax Expense

Income tax expense was US$10.6 million in the first nine months of fiscal year 2021, compared to US$5.7 million of income tax expense in the first nine months of fiscal year 2020.

Net (loss)/Income Attributable to TAL Education Group

Net income attributable to TAL was US$53.0 million in the first nine months of fiscal year 2021, compared to net loss attributable to TAL of US$20.1 million in the first nine months of fiscal year 2020. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 173.4% to US$177.6 million from US$65.0 million in the first nine months of fiscal year 2020.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were US$0.09 and US$0.08 respectively, in the first nine months of fiscal year 2021. Non-GAAP basic and Non-GAAP diluted net income per ADS, which excluded share-based compensation expenses, were US$0.29 and US$0.28 respectively.

Cash Flow

Net cash flow provided by operating activities for the first nine months of fiscal year 2021 was US$1,581.2 million. Capital expenditures for the first nine months of fiscal year 2021 were US$163.2 million, compared to US$125.2 million in the first nine months of fiscal year 2020. The increase was mainly due to the purchase of fixed assets and leasehold improvement.

Business Outlook

Based on our current estimates, total net revenues for the fourth quarter of fiscal year 2021 are expected to be between US$1,175.0 million and US$1,200.8 million, representing an increase of 37% to 40% on a year-over-year basis.

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

Conference Call

The Company will host a conference call and live webcast to discuss its financial results for the third fiscal quarter of fiscal year 2021 ended November 30, 2020 at 8:00 a.m. Eastern Time on January 21, 2021 (9:00 p.m. Beijing time on January 21, 2021).

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/6743927. It will automatically direct you to the registration page of "TAL Education Group Third Quarter of Fiscal Year 2021 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 "6743927".

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 7:59 a.m. on February 5, 2021, U.S. Eastern time (8:59 p.m. Beijing time on February 5, 2021).

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:

6743927

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 fourth 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 102 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@tal.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 February 29,
2020


As of November 30,
2020

ASSETS








Current assets




Cash and cash equivalents

$ 1,873,866


$ 4,233,169

Restricted cash-current

28,084


30,309

Short-term investments

345,457


864,798

Inventory

25,832


33,441

Amounts due from related parties-current

3,642


3,205

Income tax receivables

11,548


30

Prepaid expenses and other current assets

207,352


260,568

Total current assets

2,495,781


5,425,520

Restricted cash-non-current

13,235


16,618

Property and equipment, net

366,656


478,029

Deferred tax assets

79,534


207,943

Rental deposits

72,721


95,968

Intangible assets, net

58,985


71,145

Land use right, net

204,853


214,408

Goodwill

378,913


522,927

Long-term investments

571,601


620,331

Long-term prepayments and other non-current assets

85,275


62,400

Operating lease right-of-use assets

1,243,692


1,526,212

Total assets

$ 5,571,246


$ 9,241,501





LIABILITIES AND EQUITY








Current liabilities




Accounts payable (including accounts payable of the
consolidated VIEs without recourse to TAL Education
Group of 104,231 and 224,060 as of February 29, 2020 and
November 30, 2020, respectively)

$ 117,770


$ 238,513

Deferred revenue-current (including deferred revenue-current of
the consolidated VIEs without recourse to TAL Education
Group of 733,253 and 1,829,655 as of February 29, 2020
and November 30, 2020, respectively)

780,167


1,926,673

Amounts due to related parties-current (including amounts due
to related parties-current of the consolidated VIEs without
recourse to TAL Education Group of 4,264 and 3,566 as of
February 29, 2020 and November 30, 2020, respectively)

4,361


3,575

Accrued expenses and other current liabilities (including
accrued expenses and other current liabilities of the
consolidated VIEs without recourse to TAL Education
Group of 470,519 and 705,425 as of February 29, 2020 and
November 30, 2020, respectively)

552,650


832,962

Income tax payable (including income tax payable of the
consolidated VIEs without recourse to TAL Education Group
of 43,233 and 76,808 as of February 29, 2020 and November
30, 2020, respectively)

46,650


88,327

Operating lease liabilities, current portion (including
operating lease liabilities, current portion of the consolidated
VIEs without recourse to TAL Education Group of 276,712
and 340,496 as of February 29, 2020 and November 30,
2020, respectively)

304,960


370,301

Total current liabilities

1,806,558


3,460,351

Deferred revenue-non-current (including deferred revenue-non-
current of the consolidated VIEs without recourse to TAL
Education Group of 833 and 30,468 as of February 29, 2020
and November 30, 2020, respectively)

833


30,468

Deferred tax liabilities (including deferred tax liabilities of the
consolidated VIEs without recourse to TAL Education Group
of 7,197 and 11,563 as of February 29, 2020 and November
30, 2020, respectively)

7,789


11,935

Long-term debt (including long-term debt of the consolidated
VIEs without recourse to TAL Education Group of nil and nil
as of February 29, 2020 and November 30, 2020,
respectively)

261,950


265,100

Operating lease liabilities, non-current portion (including
operating lease liabilities, non-current portion of the
consolidated VIEs without recourse to TAL Education Group
of 883,603 and 1,110,699 as of February 29, 2020 and
November 30, 2020, respectively)

949,919


1,188,989

Total liabilities

3,027,049


4,956,843

Mezzanine equity




Redeemable non-controlling interests

-


1,775

Equity




Class A common shares

133


142

Class B common shares

67


67

Additional paid-in capital

1,675,640


3,295,787

Statutory reserve

82,712


81,852

Retained earnings

786,097


833,318

Accumulated other comprehensive (loss)/income

(28,913)


57,841

Total TAL Education Group's equity

2,515,736


4,269,007

Noncontrolling interest

28,461


13,876

Total equity

2,544,197


4,282,883

Total liabilities, mezzanine equity and equity

$ 5,571,246


$ 9,241,501

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
November 30,

For the Nine Months Ended
November 30,


2019


2020


2019


2020

Net revenues

$ 829,017


$ 1,119,135


$ 2,415,626


$ 3,133,066

Cost of revenues (note 1)

361,817


515,560


1,062,687


1,467,112

Gross profit

467,200


603,575


1,352,939


1,665,954

Operating expenses (note 1)








Selling and marketing

190,947


420,747


609,604


1,019,598

General and administrative

208,071


283,827


573,712


768,719

Impairment loss on intangible
assets and goodwill

-


35,727


-


36,031

Total operating expenses

399,018


740,301


1,183,316


1,824,348

Government subsidies

1,239


9,337


9,076


17,380

Income/(loss) from operations

69,421


(127,389)


178,699


(141,014)

Interest income

19,691


28,879


53,561


79,065

Interest expense

(2,735)


(2,714)


(7,963)


(9,378)

Other (expense)/income

(3,732)


45,507


(90,618)


132,948

Impairment loss on long-term
investments

(46,408)


(11,472)


(151,196)


(18,357)

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

36,237


(67,189)


(17,517)


43,264

Income tax (expense)/benefit

(16,611)


13,887


(5,736)


(10,556)

(Loss)/income from equity
method investments

(3,206)


411


(5,895)


6,352

Net income/(loss)

16,420


(52,891)


(29,148)


39,060

Add: Net loss attributable to
noncontrolling interest

3,142


9,283


9,027


13,952

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

$ 19,562


$ (43,608)


$ (20,121)


$ 53,012

Net income/(loss) per common
share








Basic

$ 0.10


$ (0.22)


$ (0.10)


$ 0.26

Diluted

0.09


(0.22)


(0.10)


0.25

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








Basic

$ 0.03


$ (0.07)


$ (0.03)


$ 0.09

Diluted

0.03


(0.07)


(0.03)


0.08

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








Basic

198,555,124


202,039,751


197,882,722


200,786,811

Diluted

207,120,564


202,039,751


197,882,722


208,710,216

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


For the Three Months
Ended November 30,

For the Nine Months

Ended November 30,



2019


2020


2019


2020


Cost of revenues

$ 267


$ 404


$ 832


$ 1,158


Selling and marketing expenses

4,534


14,322


12,951


31,644


General and administrative expenses

25,338


39,309


71,296


91,805


Total

$ 30,139


$ 54,035


$ 85,079


$ 124,607


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

November 30,

For the Nine Months Ended

November 30,



2019


2020


2019


2020









Net income/(loss)

$16,420


$(52,891)


$(29,148)


$39,060

Other comprehensive
income/(loss), net of tax

22,195


54,944


(53,528)


87,834

Comprehensive income/(loss)

38,615


2,053


(82,676)


126,894

Add: Comprehensive income
attributable to noncontrolling
interest

2,537


8,581


11,085


12,872

Comprehensive income/(loss)
attributable to TAL
Education Group

$41,152


$10,634


$(71,591)


$139,766

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

CASH FLOWS

(In thousands of U.S. dollars)



For the Three Months Ended

November 30,

For the Nine Months Ended

November 30,



2019


2020


2019


2020









Net cash provided by operating activities

$939,849


$844,605


$1,239,306


$1,581,242

Net cash used in investing activities

(136,834)


(317,382)


(270,454)


(706,267)

Net cash provided by financing activities

270,886


1,499,351


131,227


1,492,512

Effect of exchange rate changes

236


3,754


8,087


(2,576)









Net change in cash, cash equivalents and
restricted cash

1,074,137


2,030,328


1,108,166


2,364,911

Cash, cash equivalents and restricted
cash at beginning of period

1,297,730


2,249,768


1,263,701


1,915,185









Cash, cash equivalents and restricted
cash at end of period

$2,371,867


$4,280,096


$2,371,867


$4,280,096

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

Ended November 30,

For the Nine Months
Ended November 30,


2019


2020


2019


2020

Cost of revenues

$ 361,817


$ 515,560


$ 1,062,687


$ 1,467,112

Share-based compensation expense
in cost of revenues

267


404


832


1,158

Non-GAAP cost of revenues

361,550


515,156


1,061,855


1,465,954









Selling and marketing expenses

190,947


420,747


609,604


1,019,598

Share-based compensation expense
in selling and marketing expenses

4,534


14,322


12,951


31,644

Non-GAAP selling and marketing
expenses

186,413


406,425


596,653


987,954

General and administrative
expenses

208,071


283,827


573,712


768,719

Share-based compensation expense
in general and administrative
expenses

25,338


39,309


71,296


91,805

Non-GAAP general and
administrative expenses

182,733


244,518


502,416


676,914









Operating costs and expenses

760,835


1,255,861


2,246,003


3,291,460

Share-based compensation expense
in operating costs and expenses

30,139


54,035


85,079


124,607

Non-GAAP operating costs and
expenses

730,696


1,201,826


2,160,924


3,166,853









Income/(loss) from operations

69,421


(127,389)


178,699


(141,014)

Share based compensation expenses

30,139


54,035


85,079


124,607

Non-GAAP income/(loss) from
operations

99,560


(73,354)


263,778


(16,407)









Net income/(loss) attributable to
TAL Education Group

19,562


(43,608)


(20,121)


53,012

Share based compensation expenses

30,139


54,035


85,079


124,607

Non-GAAP net income
attributable to TAL Education
Group

$ 49,701


$ 10,427


$ 64,958


$ 177,619

Net income/(loss) per ADS


Basic

$ 0.03


$ (0.07)


$ (0.03)


$ 0.09

Diluted

0.03


(0.07)


(0.03)


0.08

Non-GAAP Net income per ADS








Basic

$ 0.08


$ 0.02


$ 0.11


$ 0.29

Diluted

0.08


0.02


0.10


0.28

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








Basic

595,665,372


606,119,253


593,648,166


602,360,433

Diluted

621,361,692


606,119,253


593,648,166


626,130,648

ADSs used in calculating Non-
GAAP net income per ADS








Basic

595,665,372


606,119,253


593,648,166


602,360,433

Diluted

621,361,692


627,950,637


620,250,195


626,130,648

Cision
Cision

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SOURCE TAL Education Group