TAL
$70.25
Tal Education Group
$.24
.34%
Earnings Details
2nd Quarter August 2020
Thursday, October 22, 2020 4:00:00 AM
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Summary

TAL Education Sees Revenue Below Estimates

Tal Education Group (TAL) reported 2nd Quarter August 2020 earnings of $0.02 per share on revenue of $1.1 billion.. Revenue grew 17.8% on a year-over-year basis.

The company said it expects third quarter revenue of $1.061 billion to $1.094 billion. The current consensus revenue estimate is $1.14 billion for the quarter ending November 30, 2020.

TAL International Group Inc is a lessor of intermodal containers and chassis. The Company operates in two business segments namely Equipment leasing and Equipment trading.

Results
Reported Earnings
$0.02
Earnings Whisper
-
Consensus Estimate
Reported Revenue
$1.10 Bil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

TAL Education Group Announces Unaudited Financial Results for the Second Fiscal Quarter Ended August 31, 2020

BEIJING, Oct. 22, 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 second quarter of fiscal year 2021 ended August 31, 2020.

Highlights for the Second Quarter of Fiscal Year 2021

  • Net revenues increased by 20.8% year-over-year to US$1,103.3 million from US$913.2 million in the same period of the prior year.
  • Loss from operations was US$49.1 million, compared to income from operations of US$60.8 million in the same period of the prior year.
  • Non-GAAP loss from operations, which excluded share-based compensation expenses, was US$11.8 million, compared to non-GAAP income from operations of US$89.7 million in the same period of the prior year.
  • Net income attributable to TAL was US$15.0 million, compared to net loss attributable to TAL of US$23.5 million in the same period of the prior year.
  • Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$52.3 million, compared to non-GAAP net income attributable to TAL of US$5.3 million in the same period of the prior year.
  • Basic and diluted net income per American Depositary Share ("ADS") were both US$0.02. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.09 and US$0.08, respectively. Three ADSs represent one Class A common share.
  • Cash, cash equivalents and short-term investments totaled US$2,786.9 million as of August 31, 2020, compared to US$2,219.3 million as of February 29, 2020.
  • Total student enrollments of normal priced long-term course increased by 65.0% year-over-year to approximately 5,632,210 from approximately 3,413,120 in the same period of the prior year.

Highlights for the Six Months Ended August 31, 2020

  • Net revenues increased by 26.9% year-over-year to US$2,013.9 million from US$1,586.6 million in the same period of the prior year.
  • Loss from operations was US$13.6 million, compared to income from operations of US$109.3 million in the same period of the prior year.
  • Non-GAAP income from operations, which excluded share-based compensation expenses, decreased by 65.3% to US$56.9 million from US$164.2 million in the same period of the prior year.
  • Net income attributable to TAL was US$96.6 million, compared to net loss attributable to TAL of US$39.7 million in the same period of the prior year.
  • Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$167.2 million, compared to non-GAAP net income attributable to TAL of US$15.3 million in the same period of the prior year.
  • Basic and diluted net income per ADS were US$0.16 and US$0.15, respectively. Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were US$0.28 and US$0.27, respectively.
  • Average student enrollments of normal priced long-term course per quarter during fiscal year 2021 increased by 67.4% year-over-year to approximately 4,294,300 from approximately 2,565,660 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 936 learning centers in 91 cities as of August 31, 2020.

Financial and Operating Data——Second Quarter and First Six Months of Fiscal Year 2021
(In US$ thousands, except per ADS data, student enrollments and percentages)


Three Months Ended


August 31,




2019

2020

Pct. Change

Net revenues

913,195

1,103,267

20.8%

Operating income/(loss)

60,812

(49,116)

(180.8%)

Non-GAAP operating income/(loss)

89,668

(11,809)

(113.2%)

Net (loss)/income attributable to TAL

(23,527)

14,969

(163.6%)

Non-GAAP net income attributable to TAL

5,329

52,276

881.0%

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

(0.04)

0.02

(162.8%)

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

(0.04)

0.02

(160.4%)

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

0.01

 

0.09

 

869.0%

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

0.01

 

0.08

 

872.1%

Total Student Enrollments of normal priced long-term
course

3,413,120

5,632,210

65.0%

 


Six Months Ended


August 31,




2019

2020

Pct. Change

Net revenues

1,586,609

2,013,931

26.9%

Operating income/(loss)

109,278

(13,625)

(112.5%)

Non-GAAP operating income

164,218

56,947

(65.3%)

Net (loss)/income attributable to TAL

(39,683)

96,620

(343.5%)

Non-GAAP net income attributable to TAL

15,257

167,192

995.8%

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

(0.07)

0.16

(340.3%)

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

(0.07)

0.15

(330.8%)

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

0.03

0.28

981.5%

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

0.02

0.27

985.2%

Average Student Enrollments of normal
priced long-term course

2,565,660

4,294,300

67.4%

                                                                                     

"TAL's financial results of the second fiscal quarter reflected a combination of the continued strong growth momentum of our online courses and the lingering pressure on our offline business in this period. Although the second fiscal quarter was marked by the extended impact of the COVID-19 outbreak, we are encouraged to see that the public health situation and general economy began to improve in China, and offline teaching and tutoring gradually resumed during the summer months," said Rong Luo, TAL's chief financial officer.

"We will strictly adhere to all relevant government policies and regulations regarding national public health and remain fully committed to the protection of our students and employees. We will continue to be well prepared to flexibly serve our students and parents with diversified educational support. Despite the short-term challenges, we stay the course in our online and offline strategy and further development of our quality products, service and technology to satisfy the ever-changing customer demand and to pursue long-term success of our business," Mr. Luo continued.

Financial Results for the Second Quarter of Fiscal Year 2021

Net Revenues

In the second quarter of fiscal year 2021, TAL reported net revenues of US$1,103.3 million, representing a 20.8% increase from US$913.2 million in the second 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 65.0% to approximately 5,632,210 from approximately 3,413,120 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 second quarter of fiscal year 2021, operating costs and expenses were US$1,155.6 million, representing a 34.7% increase from US$857.8 million in the second quarter of fiscal year 2020. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$1,118.3 million, representing a 34.9% increase from US$829.0 million in the second quarter of fiscal year 2020.

Cost of revenues increased by 29.1% to US$522.0 million from US$404.5 million in the second 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 29.0% to US$521.5 million, from US$404.2 million in the second quarter of fiscal year 2020.

Selling and marketing expenses increased by 44.3% to US$379.8 million from US$263.3 million in the second quarter of fiscal year 2020. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 43.0% to US$370.3 million, from US$258.9 million in the second quarter of fiscal year 2020. The increase of selling and marketing expenses in the second 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 33.5% to US$253.8 million from US$190.1 million in the second 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 36.5% to US$226.4 million, from US$165.9 million in the second quarter of fiscal year 2020.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 29.3% to US$37.3 million in the second quarter of fiscal year 2021 from US$28.9 million in the same period of fiscal year 2020.

Gross Profit                                                                                                                                 

Gross profit increased by 14.3% to US$581.2 million from US$508.7 million in the second quarter of fiscal year 2020.

Income/(loss) from Operations

Loss from operations was US$49.1 million in the second quarter of fiscal year 2021, compared to income from operations of US$60.8 million in the second quarter of fiscal year 2020. Non-GAAP loss from operations was US$11.8 million, compared to Non-GAAP income from operations of US$89.7 million in the same period of the prior year.

Other (expense)/Income

Other income was US$45.3 million for the second 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. Other expense was US$55.6 million in the second quarter 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$4.6 million for the second quarter of fiscal year 2021, compared to US$54.2 million for the second 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 Benefit/(expense)

Income tax expense was US$2.4 million in the second quarter of fiscal year 2021, compared to US$8.1 million of income tax benefit in the second quarter of fiscal year 2020.

Net (loss)/Income Attributable to TAL Education Group

Net income attributable to TAL was US$15.0 million in the second quarter of fiscal year 2021, compared to net loss attributable to TAL of US$23.5 million in the second quarter of fiscal year 2020. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, was US$52.3 million, compared to Non-GAAP net income attributable to TAL of US$5.3 million in the second quarter of fiscal year 2020.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were both US$0.02, in the second quarter of fiscal year 2021. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.09 and US$0.08, respectively, in the second quarter of fiscal year 2021.

Cash Flow 

Net cash flow used in operating activities for the second quarter of fiscal year 2021 was US$56.3 million. Capital expenditures for the second quarter of fiscal year 2021 were US$67.8 million, compared to US$43.7 million for the second quarter of fiscal year 2020. The increase was mainly due to the purchase of fixed assets and leasehold improvement.

Cash, Cash Equivalents, and Short-Term Investments

As of August 31, 2020, the Company had US$2,206.1 million of cash and cash equivalents and US$580.8 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$1,172.5 million, compared to US$497.6 million as of August 31, 2019, representing a year-over-year increase of 135.6%, which was mainly contributed by the tuition collected in advance of part of the fall semester of Xueersi Peiyou small classes and online courses through www.xueersi.com.

Financial Results for the First Six Months of Fiscal Year 2021

Net Revenues

For the first six months of fiscal year 2021, TAL reported net revenues of US$2,013.9 million, representing a 26.9% increase from US$1,586.6 million in the first six months of fiscal year 2020. The increase was mainly driven by the growth in average student enrollments, which increased by 67.4% to approximately 4,294,300 from approximately 2,565,660 in the same period of the prior year. The increase in average student enrollments was driven primarily by the growth of enrollments in the small class offerings and online courses.

Operating Costs and Expenses

In the first six months of fiscal year 2021, operating costs and expenses were US$2,035.6 million, a 37.1% increase from US$1,485.2 million in the first six months of fiscal year 2020. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$1,965.0 million, a 37.4% increase from US$1,430.2 million in the first six months of fiscal year 2020.

Cost of revenues grew by 35.8% to US$951.6 million from US$700.9 million in the first six 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 35.8% to US$950.8 million from US$700.3 million in the first six months of fiscal year 2020.

Selling and marketing expenses increased by 43.0% to US$598.9 million from US$418.7 million in the first six months of fiscal year 2020. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 41.8% to US$581.5 million from US$410.2 million in the first six months of fiscal year 2020. The increase of selling and marketing expenses in the first six 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 32.6% to US$484.9 million from US$365.6 million in the first six 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 35.3% to US$432.4 million from US$319.7 million in the first six months of fiscal year 2020.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 28.5% to US$70.6 million in the first six months of fiscal year 2021 from US$54.9 million in the same period of fiscal year 2020.

Gross Profit

Gross profit grew by 19.9% to US$1,062.4 million from US$885.7 million in the first six months of fiscal year 2020.

Income/(loss) from Operations

Loss from operations was US$13.6 million in the first six months of fiscal year 2021, compared to income from operations of US$109.3 million in the same period of the prior year. Non-GAAP income from operations, which excluded share-based compensation expenses, decreased by 65.3% to US$56.9 million from US$164.2 million in the first six months of fiscal year 2020.

Other (expense)/Income

Other income was US$87.4 million for the first six months 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. Other expense was US$86.9 million for the first six 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$6.9 million for the first six months of fiscal year 2021, compared to US$104.8 million for the first six 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 Benefit/(expense)

Income tax expense was US$24.4 million in the first six months of fiscal year 2021, compared to US$10.9 million of income tax benefit in the first six months of fiscal year 2020.

Net (loss)/Income Attributable to TAL Education Group

Net income attributable to TAL was US$96.6 million in the first six months of fiscal year 2021, compared to net loss attributable to TAL of US$39.7 million in the first six months of fiscal year 2020. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 995.8% to US$167.2 million from US$15.3 million in the first six months of fiscal year 2020.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were US$0.16 and US$0.15, respectively, in the first six months of fiscal year 2021. Non-GAAP basic and Non-GAAP diluted net income per ADS, which excluded share-based compensation expenses, were US$0.28 and US$0.27, respectively.

Cash Flow 

Net cash flow provided by operating activities for the first six months of fiscal year 2021 was US$736.6 million. Capital expenditures for the first six months of fiscal year 2021 were US$121.0 million, compared to US$85.1 million in the first six 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 third quarter of fiscal year 2021 are expected to be between US$1,061.1 million and US$1,094.3 million, representing an increase of 28% to 32% 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 second fiscal quarter of fiscal year 2021 ended August 31, 2020 at 8:00 a.m. Eastern Time on October 22, 2020 (8:00 p.m. Beijing time on October 22, 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/7287105. It will automatically direct you to the registration page of "TAL Education Group Second 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 "7287105".

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 8:59 a.m. on October 30, 2020, U.S. Eastern time (8:59 p.m. Beijing time on October 30, 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:

7287105

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 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 91 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

August 31,
2020


ASSETS










Current assets





  Cash and cash equivalents

$ 1,873,866


$ 2,206,095


  Restricted cash-current

28,084


27,816


  Short-term investments

345,457


580,758


  Inventory

25,832


34,331


  Amounts due from related parties-current

3,642


1,802


  Income tax receivables

11,548


28


  Prepaid expenses and other current assets

207,352


267,964


Total current assets

2,495,781


3,118,794


  Restricted cash-non-current

13,235


15,857


  Property and equipment, net

366,656


450,253


  Deferred tax assets

79,534


146,673


  Rental deposits

72,721


90,465


  Intangible assets, net

58,985


73,659


  Land use right, net

204,853


206,978


  Goodwill

378,913


551,227


  Long-term investments

571,601


620,234


  Long-term prepayments and other non-current assets

85,275


62,557


  Operating lease right-of-use assets

1,243,692


1,363,110


Total assets

$ 5,571,246


$ 6,699,807







LIABILITIES AND EQUITY










Current liabilities





Accounts payable (including accounts payable of the
   consolidated VIEs without recourse to TAL Education
   Group of 104,231 and 155,879 as of February 29, 2020
   and August 31, 2020, respectively)

$ 117,770


$ 169,267


Deferred revenue-current (including deferred revenue-current of
   the consolidated VIEs without recourse to TAL Education
   Group of 733,253 and 1,094,480 as of February 29, 2020
   and August 31, 2020, respectively)

780,167


1,144,414


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 3,596 as of
   February 29, 2020 and August 31, 2020, respectively)

4,361


3,611


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 735,052 as of February 29, 2020 and
   August 31, 2020, respectively)

552,650


884,217


Income tax payable (including income tax payable of the
   consolidated VIEs without recourse to TAL Education Group
   of 43,233 and 56,321 as of February 29, 2020 and August 31,
   2020, respectively)

46,650


79,722


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 1,320 as of February 29, 2020
   and August 31, 2020, respectively)

-


1,320


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 305,937 as of February 29, 2020 and August 31, 2020,
   respectively)

304,960


334,554


Total current liabilities

1,806,558


2,617,105


Deferred revenue-non-current (including deferred revenue-non-
   current of the consolidated VIEs without recourse to TAL
   Education Group of 833 and 28,089 as of February 29, 2020
   and August 31, 2020, respectively)

833


28,089


Deferred tax liabilities (including deferred tax liabilities of the
   consolidated VIEs without recourse to TAL Education Group
   of 7,197 and 11,624 as of February 29, 2020 and August 31,
   2020, respectively)

7,789


12,277


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 August 31, 2020, respectively)

261,950


264,050


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 981,871 as of February 29, 2020 and August
   31, 2020, respectively)

949,919


1,049,355


Total liabilities

3,027,049


3,970,876


Mezzanine equity





Redeemable non-controlling interests

-


1,775


Equity





Class A common shares

133


134


Class B common shares

67


67


Additional paid-in capital

1,675,640


1,741,037


Statutory reserve

82,712


81,853


Retained earnings

786,097


876,925


Accumulated other comprehensive (loss)/income

(28,913)


3,599


Total TAL Education Group's equity

2,515,736


2,703,615


Noncontrolling interest

28,461


23,541


Total equity

2,544,197


2,727,156


Total liabilities, mezzanine equity and equity

$ 5,571,246


$ 6,699,807








 

 

 

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
August 31,


For the Six Months Ended

August 31,


2019


2020


2019


2020

 

Net revenues

 

$ 913,195


 

$ 1,103,267


 

$ 1,586,609


 

$ 2,013,931

Cost of revenues (note 1)

404,499


522,037


700,870


951,552

Gross profit

508,696


581,230


885,739


1,062,379

Operating expenses (note 1)








  Selling and marketing

263,258


379,774


418,657


598,851

  General and administrative

190,056


253,756


365,641


484,892

  Impairment loss on intangible 
  assets and goodwill

-


-


-


304

Total operating expenses

453,314


633,530


784,298


1,084,047

Government subsidies

5,430


3,184


7,837


8,043

Income/(loss) from operations

60,812


(49,116)


109,278


(13,625)

Interest income

17,783


23,697


33,870


50,186

Interest expense

(2,104)


(3,068)


(5,228)


(6,664)

Other (expense)/income

(55,555)


45,330


(86,886)


87,441

Impairment loss on long-term
    investments

(54,194)


(4,585)


(104,788)


(6,885)

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

(33,258)


12,258


(53,754)


110,453

Income tax benefit/(expense)

8,116


(2,443)


10,875


(24,443)

(Loss)/income from equity
    method investments

(1,358)


2,601


(2,689)


5,941

Net (loss)/income

(26,500)


12,416


(45,568)


91,951

Add: Net loss attributable to
    noncontrolling interest

2,973


2,553


5,885


4,669

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

$ (23,527)


$ 14,969


$ (39,683)


$ 96,620

Net (loss)/income per common
  share








   Basic

$ (0.12)


$ 0.07


$ (0.20)


$ 0.48

   Diluted

(0.12)


0.07


(0.20)


0.46

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








Basic

$ (0.04)


$ 0.02


$ (0.07)


$ 0.16

Diluted

(0.04)


0.02


(0.07)


0.15

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








Basic

197,940,260


200,391,436


197,550,175


200,167,150

Diluted

197,940,260


208,477,760


197,550,175


208,429,705









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










For the Three Months

Ended August 31,


For the Six Months

Ended August 31,


2019


2020


2019


2020

Cost of revenues

$ 318


$ 490


$ 565


$ 754

Selling and marketing expenses

4,377


9,469


8,417


17,322

General and administrative expenses

24,161


27,348


45,958


52,496

Total

$ 28,856


$ 37,307


$ 54,940


$ 70,572


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

 

 

 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE (LOSS)/INCOME

(In thousands of U.S. dollars)



For the Three Months Ended

August 31,


For the Six Months Ended

August 31,


2019


2020


2019


2020









Net (loss)/income

$ (26,500)


$ 12,416


$ (45,568)


$ 91,951

Other comprehensive (loss)
   /income, net of tax

(40,767)


58,325


(75,723)


32,890

Comprehensive (loss)/income

(67,267)


70,741


(121,291)


124,841

Add: Comprehensive loss
   attributable to noncontrolling
   interest

4,370


1,703


8,548


4,291

Comprehensive (loss)/income
    attributable to TAL
   Education Group

$ (62,897)


$ 72,444


$ (112,743)


$ 129,132

 

 

 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

CASH FLOWS

(In thousands of U.S. dollars)



For the Three Months Ended

August 31,


For the Six Months Ended

August 31,


2019


2020


2019


2020









Net cash (used in)/provided by operating
   activities

$ (269,007)


$ (56,273)


$ 299,457


$ 736,637

Net cash used in investing activities

(17,780)


(58,336)


(133,620)


(388,885)

Net cash provided by/(used in) financing
   activities

366


2,889


(139,659)


(6,839)

Effect of exchange rate changes

5,584


(2,799)


7,851


(6,330)









Net change in cash, cash equivalents and
   restricted cash

(280,837)


(114,519)


34,029


334,583

Cash, cash equivalents and restricted
   cash at beginning of period

1,578,567


2,364,287


1,263,701


1,915,185









Cash, cash equivalents and restricted
   cash at end of period

$ 1,297,730


$ 2,249,768


$ 1,297,730


$ 2,249,768

 

 

 

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 August 31,


For the Six Months
Ended August 31,


2019


2020


2019


2020









Cost of revenues

$ 404,499


$ 522,037


$ 700,870


$ 951,552

Share-based compensation expense
   in cost of revenues

318


490


565


754

Non-GAAP cost of revenues

404,181


521,547


700,305


950,798









Selling and marketing expenses

263,258


379,774


418,657


598,851

Share-based compensation expense
   in selling and marketing expenses

4,377


9,469


8,417


17,322

Non-GAAP selling and marketing
expenses

258,881


370,305


410,240


581,529


General and administrative
expenses

190,056


253,756


365,641


484,892

Share-based compensation expense
   in general and administrative
   expenses

24,161


27,348


45,958


52,496

Non-GAAP general and
administrative expenses

165,895


226,408


319,683


432,396









Operating costs and expenses

857,813


1,155,567


1,485,168


2,035,599

Share-based compensation expense
   in operating costs and expenses

28,856


37,307


54,940


70,572

Non-GAAP operating costs and
expenses

828,957


1,118,260


1,430,228


1,965,027









Income/(loss) from operations

60,812


(49,116)


109,278


(13,625)

Share based compensation expenses

28,856


37,307


54,940


70,572

Non-GAAP income/(loss) from
operations

89,668


(11,809)


164,218


56,947









Net (loss)/income attributable to
TAL Education Group

(23,527)


14,969


(39,683)


96,620

Share based compensation expenses

28,856


37,307


54,940


70,572

Non-GAAP net income
attributable to TAL Education
Group

$ 5,329


$ 52,276


$ 15,257


$ 167,192

Net (loss)/income per ADS


Basic

$ (0.04)


$ 0.02


$ (0.07)


$ 0.16

Diluted

(0.04)


0.02


(0.07)


0.15

Non-GAAP Net income per ADS








Basic

$ 0.01


$ 0.09


$ 0.03


$ 0.28

Diluted

0.01


0.08


0.02


0.27

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








Basic

593,820,780


601,174,308


592,650,525


600,501,450

Diluted

593,820,780


625,433,280


592,650,525


625,289,115

ADSs used in calculating Non-
GAAP net income per ADS








Basic

593,820,780


601,174,308


592,650,525


600,501,450

Diluted

619,765,083


625,433,280


619,203,039


625,289,115

 

 

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SOURCE TAL Education Group