TAL Education Group Announces Unaudited Financial Results for the Fourth Fiscal Quarter and the Fiscal Year 2020
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$0.01.
- Average student enrollments of normal priced long-term course per quarter during fiscal year 2020 increased by 55.2% year-over-year to approximately 3,023,840 from approximately 1,948,350 in fiscal year 2019.
- Total physical network increased from 676 learning centers in 56 cities as of February 28, 2019 to 871 learning centers in 70 cities as of February 29, 2020.
Financial and Operating Data——Fourth Quarter and Fiscal Year 2020
(In US$ 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 – |
0.17 |
(0.15) |
(191.1%) |
Non-GAAP net income/(loss) per ADS attributable to |
0.21 |
(0.10) |
(145.0%) |
Non-GAAP net income/(loss) per ADS attributable to |
0.20 |
(0.10) |
(147.3%) |
Total Student Enrollments of normal priced long-term |
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 – |
0.61 |
(0.19) |
(130.3%) |
Non-GAAP net income per ADS attributable to TAL – |
0.78 |
0.01 |
(98.3%) |
Non-GAAP net income per ADS attributable to TAL – |
0.74 |
0.01 |
(98.3%) |
Average Student Enrollments of normal priced long- |
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: [email protected]
Caroline Straathof
IR Inside
Tel: +31 6 5462 4301
Email: [email protected]
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 |
$106,493 |
$117,770 |
||
Deferred revenue-current (including deferred revenue-current |
433,610 |
780,167 |
||
Amounts due to related parties-current (including amounts due |
24,375 |
4,361 |
||
Accrued expenses and other current liabilities (including |
365,195 |
552,650 |
||
Income tax payable (including income tax payable of the |
38,743 |
46,650 |
||
Short-term debt and current portion of long-term debt |
210,027 |
- |
||
Bond payable, current portion (including bond payable, current |
5,275 |
- |
||
Operating lease liabilities, current portion (including |
- |
304,960 |
||
Total current liabilities |
1,183,718 |
1,806,558 |
||
Deferred revenue-non-current (including deferred revenue- |
2,497 |
833 |
||
Amounts due to related parties-non-current (including amounts |
196 |
- |
||
Deferred tax liabilities-non-current (including deferred tax |
17,738 |
7,789 |
||
Other non-current liabilities (including other non-current |
465 |
- |
||
Long-term debt (including long-term debt of the consolidated |
- |
261,950 |
||
Operating lease liabilities, non-current portion (including |
- |
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 |
(7,247) |
(2,774) |
(58,091) |
(153,970) |
|||
Income/(loss) before income tax |
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 |
1,259 |
8,429 |
2,722 |
17,456 |
|||
Total net income/(loss) |
$99,612 |
$(90,074) |
$367,236 |
$(110,195) |
|||
Net income/(loss) per common |
|||||||
Basic |
$0.52 |
$(0.45) |
$1.93 |
$(0.56) |
|||
Diluted |
0.5 |
(0.45) |
1.83 |
(0.56) |
|||
Net income/(loss) per ADS |
|||||||
Basic |
$0.17 |
$(0.15) |
$0.64 |
$(0.19) |
|||
Diluted |
0.17 |
(0.15) |
0.61 |
(0.19) |
|||
Weighted average shares used in |
|||||||
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 |
|||||||
(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 |
53,507 |
5,703 |
(116,237) |
(47,825) |
|||
Comprehensive income/(loss) |
151,860 |
(92,800) |
248,277 |
(175,476) |
|||
Add: Comprehensive loss |
694 |
8,236 |
3,681 |
19,321 |
|||
Comprehensive income/(loss) |
$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 |
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 |
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 |
18,744 |
26,217 |
66,117 |
97,513 |
|||
Non-GAAP general and |
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 |
22,275 |
32,864 |
77,277 |
117,943 |
|||
Non-GAAP operating costs and |
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 |
136,981 |
(8,392) |
418,859 |
255,386 |
|||
Net income/(loss) attributable to |
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) |
$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 |
|||||||
Basic |
$0.21 |
$(0.10) |
$0.78 |
$0.01 |
|||
Diluted |
0.20 |
(0.10) |
0.74 |
0.01 |
|||
ADSs used in calculating net |
|||||||
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 |
|||||||
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 |
As revised (note 1) |
As previously |
As revised
|
As previously |
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 |
As revised (note 1) |
As previously |
As revised |
As previously |
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 |
(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 |
$(7,304) |
$(16,156) |
$(14,400) |
$(23,527) |
$28,177 |
$19,562 |
|||||
Net (loss)/income per common |
|||||||||||
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 |
As revised (note 1) |
As previously |
As revised |
As previously |
As revised |
||||||
Net (loss)/income |
$(10,216) |
$(19,068) |
$(17,373) |
$(26,500) |
$25,035 |
$16,420 |
|||||
Other comprehensive |
(34,948) |
(34,956) |
(40,759) |
(40,767) |
22,202 |
22,195 |
|||||
Comprehensive |
(45,164) |
(54,024) |
(58,132) |
(67,267) |
47,237 |
38,615 |
|||||
Comprehensive |
$(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 |
SOURCE TAL Education Group
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