Four Seasons Education Reports Third Quarter Fiscal 2019 Unaudited Financial Results

SHANGHAI,Jan. 28,2019 -- Four Seasons Education (Cayman) Inc. ("Four Seasons Education" or the "Company") (NYSE: FEDU),a leading after-school math education service provider for elementary school students in Shanghai,today announced its unaudited financial results for the third quarter fiscal year 2019,ended November 30,2018.

Third Quarter Fiscal Year 2019 Financial and Operational Highlights

Revenue increased by 4.5% to RMB91.2 million (US$13.1 million) from RMB87.2 million in the same period of last year.

Gross profit decreased by 15.7% to RMB48.1 million (US$6.9 million) from RMB57.1 million in the same period of last year. Gross margin was 52.8%,compared with 65.4% in the same period of last year.

Operating income decreased by 64.4% to RMB7.7 million (US$1.1 million) from RMB21.6 million in the same period of last year.

Adjusted operating income(1) (non-GAAP) decreased by 40.2% to RMB16.7 million (US$2.4 million) from RMB27.9 million in the same period of last year. Adjusted operating margin (non-GAAP) was 18.3% compared with 32.0% in the same period of last year.

Net income decreased by 74.8% to RMB2.7 million (US$0.4 million) from RMB10.7 million in the same period of last year.

Adjusted net income(2) (non-GAAP) decreased by 19.5% to RMB13.7 million (US$2.0 million) from RMB17.0 million in the same period of last year. Adjusted net margin(3) (non-GAAP) was 15.0%,compared with 19.5% in the same period of last year.

Basic and diluted net income per American Depositary Share ("ADS") attributable to ordinary shareholders was RMB0.06 (US$0.01) and RMB0.05 (US$0.01),respectively,compared with RMB0.27 and RMB0.26 respectively,for the same period of last year. Each two ADSs represent one ordinary share.

Adjusted basic and diluted net income per ADS attributable to ordinary shareholders (non-GAAP) was RMB0.28 (US$0.04) and RMB0.27 (US$0.04),compared with RMB0.46 and RMB0.44,for the same period of last year.

Number of learning centers reached 56 as of November 30,2018,compared to 33 as of November 30,2017.

Total student enrollment(4) reached 45,857,down 8.7% from 50,221 during the same period of last year,primarily due to enrollment re-arrangement in accordance with the Opinion on Regulating the Development of After-School Tutoring Institutions issued by the State Council limiting the prepayment of a curriculum registration to three months.

(1) Adjusted operating income is defined as operating income excluding share-based compensation expenses.

(2) Adjusted net income is defined as net income excluding share-based compensation expenses and fair value change of investments measured at fair value.

(3) Adjusted net margin is defined as adjusted net income divided by revenue.

(4) Total student enrollment is defined as the cumulative number of courses enrolled in and paid for by the Company'sstudents during the respective period,including multiple courses enrolled in and paid for by the same student.

For more information on these adjusted financial measures,please see the section captioned under "About Non-GAAP Financial Measures" and the tables captioned "Reconciliation of GAAP and non-GAAP Results" set forth at the end of this release.

"During the third quarter,we continued to adjust our operations under the new regulatory requirements,while remaining steadfast in carrying out our strategy for quality growth," said Mr. Peiqing Tian,Chairman and Chief Executive Officer of Four Seasons Education. "As we constantly broaden our course coverage across the entire K-12 age groups with more in-demand class offerings on a variety of academic topics and areas,we have achieved further enrollment diversification in various subjects and age groups. Besides the course offerings that target improving students' academic performance,we are hosting a series of interest-oriented classes and activities to further promote student engagement. Based on our strong math teaching capabilities and resources,our featured classes for logic-based games such as Bridge,Sudoku and Rubik's Cube gained great popularity. We now deliver Bridge classes at ten Four Seasons Education's learning centers and have formed Four Seasons Education training teams in 2018 and 2019 for national competitions. Recently,our teams also achieved outstanding performance in bridge and Sudoku matches. We plan to organize more of these dynamic and enjoyable courses and activities which help students' logic-thinking and intellectual development.

"To comply with the latest set of regulatory changes,we have accordingly re-arranged our enrollment and class delivery process by limiting prepayment to cover a maximum of three-monthcurriculums.This operational adjustment has led to a year-over-year decrease in total enrollment for the quarter as we anticipated. However,we believe this change will not affect the overall demand. In addition,we have been optimizing our learning center network with prudent expansion. We added a learning center in Shanghai and one in Chongqing during the quarter. At the same time,we moved three learning centers in Shanghai to new locations to better meet the related requirement and provide a refreshing environment to our students. We also plan to restructure a few centers to optimize our facility utilization and profitability in the quarters ahead.

"Our ongoing efforts to comply with the latest regulation have been recognized by the government and related authority. We are pleased to report that our Shanghai Four Seasons Education and Training Co.,Ltd.,Four Seasons Class Training Co.,Ltd. and other entities in our group were among the white list of after-school tutoring institutions released by the Shanghai Education Bureau in late December 2018,demonstrating our compliance in terms of operating licensure,educational content and the teaching facility environment. We would like to continue working with related authorities and adapting our operations to the evolving regulations of a rapidly growing after-school tutoring industry in China,as we fulfill our commitment to providing best-of-class educational services and learning experience to our students," Mr. Tian concluded.

Ms. Yi (Joanne) Zuo,Director and Chief Financial Officer of Four Seasons Education,commented,"It was very encouraging for us to achieve approximately 5% growth in the topline as compared to a relatively high revenue base in the same period of last year,thanks to our strategic adjustments to course offerings which better accommodate the evolving market's needs. During the third quarter,we focused on strengthening our core business,as we strategically combined several classes to improve overall efficiency. We are pleased with the initial positive result that gross margin improved sequentially in the third quarter. Looking forward,we plan to maintain our business strategy,seeking quality growth while making prudent operational adjustments for enhanced efficiency."

ThirdQuarter Fiscal Year 2019 Financial Results

Revenueincreased by 4.5% to RMB91.2 million (US$13.1 million) for the third quarter of fiscal year 2019 from RMB87.2 million in the same period of last year,primarily due to tuition increases in standard programs,increased revenue contribution from the Ivy Program and the small-class for standard programs,development of kindergarten and middle school and non-math programs as well as the expansion of physical learning center network,including the contribution from the newly acquired business that closed transaction in the first nine months of fiscal year 2019. This increase was partially offset by the decreased revenue contribution from math-competition focused classes as a result of changing regulatory requirement.

Cost of revenueincreased by 42.8% to RMB43.1 million (US$6.2 million) for the third quarter of fiscal year 2019 from RMB30.2 million in the same period of last year,primarily attributable to costs associated with the increase in faculty staff cost as well as learning centers' rental,utilities and maintenance and depreciation costs,as a result of increased number of learning centers.

Gross profitdecreasedby 15.7% to RMB48.1 million (US$6.9 million) for the third quarter of fiscal year 2019 from RMB57.1 million in the same period of last year.Gross margin was 52.8% for the third quarter of fiscal year 2019,compared with 65.4% in the same period of last year. The decrease in gross margin was primarily due to the expansion of new centers which yield relatively lower gross margin during the ramp-up period,and the increase in faculty staff cost as well as the discounts granted to students to promote the Company's middle school and non-math programs.

General and administrative expensesincreased by 25.2% to RMB32.1 million (US$4.6 million) for the third quarter of fiscal year 2019 from RMB25.6 million in the same period of last year,primarily attributable to increased staff cost of RMB4.6 million (US$0.7 million),an RMB1.1 million (US$0.2 million) of depreciation andamortization cost and increased share-based compensation expenses of RMB2.8 million (US$0.4 million). This increase was partially offset by IPO-related expenses in the same period of last year.

Sales and marketing expensesdecreased by 15.3% to RMB8.3 million (US$1.2 million) for the third quarter of fiscal year 2019 from RMB9.8 million in the same period of last year.

Operating incomedecreased by 64.4% to RMB7.7 million (US$1.1 million) for the third quarter of fiscal year 2019 from RMB21.6 million in the same period of last year. Adjusted operating income,which excludes share-based compensation expenses,decreased by 40.2% to RMB16.7 million (US$2.4 million) for the third quarter of fiscal year 2019 from RMB27.9 million in the same period of last year.

Interest incomedecreased by 13.5% to RMB1.2 million (US$0.2 million) for the third quarter of fiscal year 2019 from RMB1.4 million in the same period of last year,primarily due to the withdrawal of short-term deposit.

Other expenses,net were RMB2.6 million (US$0.4 million) for the third quarter of fiscal year 2019 from RMB0.04 million in the same period of last year,primarily due to an RMB2.0 million (US$0.3 million) fair value change of a 2-year Pimco fund-linked note and a 1-year certificate on a mutual fund,both with 100% minimum redemption level at maturity that the Company intends to hold to maturity. Other expense was partially offset by foreign currency revaluation gain.

Income tax expensesdecreased by 68.3% to RMB3.9million (US$0.6 million) for the third quarter of fiscal year 2019 from RMB12.3 million in the same period of last year.

Net income was RMB2.7million (US$0.4million) during the third quarter of fiscal year 2019,down 74.8% from RMB10.7 million in the same period of last year. Adjusted net income,which excludes share-based compensation expenses and fair value change of investments measured at fair value,decreased by 19.5% to RMB13.7 million (US$2.0 million) from RMB17.0 million in the same period of last year. Adjusted net margin was 15.0%,compared with 19.5% in the same period of last year.

Basic and diluted net income per ADS attributable to ordinary shareholders for the third quarter of fiscal year 2019 was RMB0.06 (US$0.01) and RMB0.05 (US$0.01),compared with RMB0.27 and RMB0.26,for the same period of last year.Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders for the third quarter of fiscal year 2019 was RMB0.28 (US$0.04) and RMB0.27 (US$0.04),for the same period of last year.

Cash and cash equivalents. As of November 30,the Company had cash and cash equivalents of RMB497.0 million (US$71.4million),a decrease of 14.8% compared with RMB583.3 million as of February 28,primarily due to RMB139.1 million (US$20.0 million) cash payments for the acquisitions in Shanghai,and the increase in short-term investment of RMB34.8 million (US$5.0 million). The decrease was partially offset by the operating cash inflow generated in the first nine months of fiscal 2019.

Shares Outstanding

As of January 28,2019,the Company had a total of 24,966,591ordinary shares outstanding,or 49,933,182ADSs. Each two ADSs represent one ordinary share.

First Nine Months Fiscal Year 2019 Financial Results

Revenueincreased by 16.1% to RM270.9 million (US$39.0 million) for the first nine months of fiscal year 2019 from RMB233.4 million in the same period of last year,including the contribution from the newly acquired business that closed transaction in the first nine months of fiscal year 2019. This increase was partially offset by the decreased revenue contribution from math-competition focused classes as a result of changing regulatory requirement.

Cost of revenueincreased by 57.4% to RMB125.8 million (US$18.1 million) for the first nine months of fiscal year 2019 from RMB79.9 million in the same period of last year,as a result of increased number of learning centers.

Gross profitdecreased by 5.4% to RMB145.1 million (US$20.9 million) for the first nine months of fiscal year 2019 from RMB153.4 million in the same period of last year.Gross margin was 53.6% for the first nine months of fiscal year 2019,compared with 65.7% in the same period of last year. The decrease in gross margin was primarily due to the expansion of new centers which yield relatively lower gross margin during the ramp-up period,and the increase in faculty staff cost,as well as the discounts granted to students to promote the Company's middle school and non-math programs.

General and administrative expensesincreased by 29.7% to RMB89.1 million (US$12.8 million) for the first nine months of fiscal year 2019 from RMB68.7 million in the same period of last year,primarily attributable to increased staff cost of RMB12.7 million (US$1.8 million),increased share-based compensation expenses of RMB5.9 million (US$0.8 million) and an RMB3.0 million (US$0.4 million) of depreciation and amortization cost.

Sales and marketing expensesdecreased by 0.8% to RMB24.7 million (US$3.6 million) for the first nine months of fiscal year 2019 from RMB24.9 million in the same period of last year.

Operating incomedecreased by 47.7% to RMB31.3 million (US$4.5 million) for the first nine months of fiscal year 2019 from RMB59.8 million in the same period of last year. Adjusted operating income,decreased by 29.4% to RMB54.4 million (US$7.8 million) for the first nine months of fiscal year 2019 from RMB77.0 million in the same period of last year.

Interest incomeincreased by 71.6% to RMB5.9 million (US$0.8 million) for the first nine months of fiscal year 2019 from RMB3.4 million in the same period of last year,primarily due to increased cash and cash equivalent,and efficient cash management.

Other expense,net reached RMB6.0 million (US$0.9 million) for the first nine months of fiscal year 2019 from RMB0.7million in the same period of last year,primarily due to an RMB7.7 million (US$1.1 million) fair value change of a 2-year Pimco fund-linked note and a 1-year certificate on a mutual fund,both with 100% minimum redemption level at maturity that the Company intends to hold to maturity. Other expense was partially offset by foreign currency revaluation gain.

Income tax expensesdecreased by 29.2% to RMB18.2 million (US$2.6 million) for the first nine months of fiscal year 2019 from RMB25.8 million in the same period of last year.

Net income wasRMB17.0million (US$2.4 million) during the first nine months of fiscal year 2019,down 56.5% from RMB39.2 million in the same period of last year. Adjusted net income,decreased by 15.1% to RMB47.8 million (US$6.9 million) from RMB56.3 million in the same period of last year. Adjusted net margin was 17.6%,compared with 24.1% in the same period of last year.

Basic and diluted net income per ADS attributable to ordinary shareholders for the first nine months of fiscal year 2019was RMB0.35 (US$0.05) and RMB0.33 (US$0.05),compared with RMB1.03 and RMB0.97,for the same period of last year.Non-GAAP basic and diluted net income per ADS attributable to ordinary shareholders for the first nine months of fiscal year 2019was RMB0.99 (US$0.14) and RMB0.94 (US$0.14),compared with RMB1.61 and RMB1.52,for the same period of last year.

Business Acquisitions

In the third quarter of fiscal year 2019,the Company entered into share purchase agreements to acquire 51% equity shares of two private education service providers. The purchase prices of the acquisitions are allocated to the tangible assets,liabilities,identifiable intangible assets acquired and non-controlling interest. Goodwill is recognized from both acquisitions. The purchase price allocations remain preliminary and are subject to finalization as of the announcement date.

Business Outlook

For the fourth quarter of fiscal year 2019,the Company expects revenue to be relatively flat compared to the fourth quarter of fiscal 2018.

The above guidance reflects the Company's current and preliminary view,which is subject to change.

Conference Call

The Company's management will host an earnings conference call at 8:00 AM U.S. Eastern Time on January 28,2019(9:00 PM Beijing/Hong Kong time on January 28,2019).

Dial-in details for the earnings conference call are as follows:

United States (toll free):

1-888-346-8982

International:

1-412-902-4272

Hong Kong (toll free):

800-905-945

Hong Kong:

852-3018-4992

China (toll free):

400-120-1203

Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for "Four Seasons Education."

Additionally,a live and archived webcast of the conference call will be available on the Company's investor relations website athttp://ir.sijiedu.com.

A replay of the conference call will be accessible approximately one hour after the conclusion of the live call until February 4,by dialing the following telephone numbers:

United States (toll free):

1-877-344-7529

International:

1-412-317-0088

Replay Access Code:

10128174

About Four Seasons Education (Cayman) Inc.

Four Seasons Education (Cayman) Inc. is a leading after-school math education service provider for elementary school students in Shanghai. The Company's vision is to unlock students' intellectual potential through high quality and effective math education that can profoundly benefit students' academic,career and life prospects. The Company provides educational programs that are primarily focused on elementary-level math,and have expanded in recent years to also include other subjects,including physics,chemistry,and languages,and other grade levels,including kindergarten-level and middle school-level programs. The Company's proprietary educational content is designed to cultivate students' interests and enhance their cognitive and logic abilities. The Company develops its educational content through a systematic development process and updates it regularly based on student performance and feedback. Such process allows the Company to effectively drive better learning outcomes and serve students of different ages,aptitude levels and learning objectives. The Company's faculty is led by a group of experienced senior educators,including recognized scholars,award-winning teachers,world-class competition champions and top mathematics Olympiad coaches in China. Over the years,the quality of the Company's education services has been demonstrated by its students' outstanding academic performance.

About Non-GAAP Financial Measures

In evaluating the Company's business,the Company considers and use certain non-GAAP measures,including primarily adjusted operating income,adjusted net income,adjusted margin and adjusted basic and diluted net income per ADS attributable to ordinary shareholders,as supplemental measures to review and assess the Company's operating performance. To present each of these non-GAAP measures,the Company excludes (i) share-based compensation expenses,and (ii) fair value change of investments measured at fair value. 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 U.S. GAAP.

The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses and fair value change of investments measured at fair value that may not be indicative of the Company's operating performance from a cash perspective. The Company 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 the Company's historical performance and liquidity. The Company also believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in the Company's financial and operational decision making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges and fair value change of investments measured at fair value that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. The Company 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.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted,all translations from RMB to U.S. dollars are made at a rate of RMB6.9558 to US$1.00,the rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on November 30,2018.

Safe Harbor Statement

This press release contains statements of a forward-looking nature. These statements,including the statements relating to the Company's future financial and operating results,are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "believes," "anticipates," "intends," "estimates" and similar statements. Among other things,management's quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations,assumptions,estimates and projections about the Company and the industry. Potential risks and uncertainties include,but are not limited to,those relating to its ability to attract new students and retain existing students,its ability to deliver a satisfactory learning experience and improving their academic performance,PRC regulations and policies relating to the education industry in China,general economic conditions in China,and the Company's ability to meet the standards necessary to maintain listing of its ADSs on the NYSE or other stock exchange,including its ability to cure any non-compliance with the NYSE's continued listing criteria. All information provided in this press release is as of the date hereof,and the Company undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances,or changes in its expectations,except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable,it cannot assure you that its expectations will turn out to be correct,and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by the Company is included in the Company's filings with the U.S. Securities and Exchange Commission,including its registration statement on Form F-1 filed in connection with its initial public offering.

For investor and media inquiries,please contact:

In China:

Four Seasons Education (Cayman) Inc.

Ellen Wang

Tel: +86 (21) 6317-6678

E-mail: IR@fsesa.com

The Piacente Group,Inc.

Xi Zhang

Tel: +86 (10) 5730-6200

E-mail: fourseasons@tpg-ir.com

In the United States:

The Piacente Group,Inc.

Brandi Piacente

Tel: +1-212-481-2050

E-mail: fourseasons@tpg-ir.com

FOUR SEASONS EDUCATION (CAYMAN) INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands,except share data and per share data)

As of

February 28

November 30

November 30

2018

2018

2018

RMB

RMB

USD

Current assets:

Cash and cash equivalents

583,324

496,965

71,446

Accounts receivable and contract assets

5,686

1,619

233

Other receivables,deposits and other assets

6,015

22,059

3,172

Short-term investment under fair value

-

33,711

4,846

Total current assets

595,025

554,354

79,697

Property and equipment,net

23,920

30,983

4,454

Intangible asset,net

-

45,027

6,473

Goodwill

557

150,332

21,612

Deferred tax assets

4,052

5,800

834

Equity method investment

-

300

43

Long-term investment under fair value

158,235

166,162

23,888

Rental deposits--non-current

10,493

11,171

1,606

Total non-current assets

197,257

409,775

58,910

TOTAL ASSETS

792,282

964,129

138,607

Current liabilities

Amounts due to related parties

390

15,590

2,241

Accrued expenses and other current liabilities

29,221

56,302

8,094

Income tax payable

14,622

16,475

2,369

Deferred revenue

90,101

79,947

11,494

Total current liabilities

134,334

168,314

24,198

Non-current liabilities

Deferred tax liability

-

11,181

1,607

Total non-current liabilities

-

11,181

1,607

TOTAL LIABILITIES

134,334

179,495

25,805

FOUR SEASONS EDUCATION (CAYMAN) INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands,except share data and per share data)

As of

February 28

November 30

November 30

2018

2018

2018

RMB

RMB

USD

EQUITY

Ordinary shares (US$0.0001 par value; 500,000,000 shares authorized,24,026,591 and

24,065,033 shares issued and outstanding as of February 28,2018 and

November 30,respectively)

15

15

2

Additional paid-in capital

679,829

702,507

100,996

Retained earnings

-

16,960

2,438

Accumulated other comprehensive income(loss)

(28,309)

20,329

2,922

Shareholders'equity

651,535

739,811

106,358

Non-controlling interests

6,413

44,823

6,444

Total equity

657,948

784,634

112,802

TOTAL LIABILITIES AND EQUITY

792,607

FOUR SEASONS EDUCATION (CAYMAN) INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands,except share data and per share data)

Three Months Ended November 30,

Nine Months Ended November 30,

2017

2018

2018

2017

2018

2018

RMB

RMB

USD

RMB

RMB

USD

Revenue

87,240

91,167

13,107

233,370

270,942

38,952

Cost of revenue

(30,156)

(43,064)

(6,191)

(79,948)

(125,837)

(18,091)

Gross profit

57,084

48,103

6,916

153,422

145,105

20,861

General and administrative expenses

(25,631)

(32,083)

(4,613)

(68,686)

(89,112)

(12,811)

Sales and marketing expenses

(9,840)

(8,336)

(1,198)

(24,913)

(24,717)

(3,554)

Operating income

21,613

7,684

1,105

59,823

31,276

4,496

Subsidy income

23

340

49

2,384

4,145

596

Interest income

1,398

1,209

174

3,417

5,865

843

Other expense,net

(35)

(2,635)

(379)

(711)

(6,018)

(865)

Income before income taxes

22,999

6,598

949

64,913

35,268

5,070

Income tax expense

(12,340)

(3,912)

(563)

(25,753)

(18,230)

(2,621)

Net income

10,659

2,686

386

39,160

17,038

2,449

Net income (loss) attributable to non-controlling interest

(361)

(37)

(5)

(1,113)

78

11

Net income attributable to Four Seasons Education (Cayman) Inc.

11,020

2,723

391

40,273

16,960

2,438

Net income per ordinary share:

Basic

0.54

0.11

0.02

2.06

0.70

0.10

Diluted

0.51

0.11

0.02

1.94

0.67

0.10

Weighted average shares used in calculating net income per

ordinary share:

Basic

16,374,603

24,033

24,033

14,785,778

24,033

Diluted

17,293,615

25,136,142

25,142

15,651,768

25,405,619

25,619

FOUR SEASONS EDUCATION (CAYMAN) INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands,

2017

2018

2018

2017

2018

2018

RMB

RMB

USD

RMB

RMB

USD

Net income

10,659

2,686

386

39,160

17,038

2,449

Other comprehensive income,net of tax of nil

Foreign currency translation adjustments

2,079

8,508

1,223

5,915

48,638

6,992

Comprehensive income

12,738

11,194

1,609

45,075

65,676

9,441

Less: Comprehensive income (loss) attributable to

non-controlling interest

(361)

(37)

(5)

(1,113)

78

11

Comprehensive income attributable

to Four Seasons Education (Cayman) Inc.

13,099

11,231

1,614

46,188

65,598

9,430

FOUR SEASONS EDUCATION (CAYMAN) INC.

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(in thousands,

2017

2018

2018

2017

2018

2018

RMB

RMB

USD

RMB

RMB

USD

Net income

10,449

Add: share-based compensation expenses (net of tax effect of nil)

6,311

9,022

1,297

17,160

23,098

3,321

Add: fair value change of investments,excluding foreign currency

translation adjustment (net of tax effect of nil)

-

1,953

281

-

7,666

1,102

Adjusted net income (non-GAAP)

16,970

13,661

1,964

56,320

47,802

6,872

Net margin

12.2

%

2.9

%

2.9

%

16.8

%

6.3

%

6.3

%

Add: share-based compensation expenses

7.3

%

9.9

%

9.9

%

7.3

%

8.5

%

8.5

%

Add: fair value change of investments,excluding foreign

currency translation adjustment

-

2.1

%

2.1

%

-

2.8

%

2.8

%

Adjusted net margin (non-GAAP)

19.5

%

15.0

%

15.0

%

24.1

%

17.6

%

17.6

%

Net operating income

21,613

7,684

1,105

59,823

31,276

4,496

Add: share-based compensation expenses

6,321

Adjusted operating income (non-GAAP)

27,924

16,706

2,402

76,983

54,374

7,817

Basic net income per ADS attributable to

ordinary shareholders

0.27

0.06

0.01

1.03

0.35

0.05

Add: share-based compensation expenses per ADS

attributable to ordinary shareholders

0.19

0.18

0.03

0.58

0.48

0.07

Add: fair value change of investments per ADS

attributable to ordinary shareholders

-

0.04

0.00

-

0.16

0.02

Adjusted basic net income per ADS attributable to

ordinary shareholders (non-GAAP)

0.46

0.28

0.04

1.61

0.99

0.14

Diluted net income per ADS attributable to ordinary

shareholders

0.26

0.05

0.01

0.97

0.33

0.05

Add: share-based compensation expenses per ADS

attributable to ordinary shareholders

0.18

0.18

0.03

0.55

0.46

0.07

Add: fair value change of investments per ADS

attributable to ordinary shareholders

-

0.04

0.00

-

0.15

0.02

Adjusted diluted net income per ADS attributable to

ordinary shareholders (non-GAAP)

0.44

0.27

0.04

1.52

0.94

0.14

Weighted average ADSs used in calculating earnings

per ADS

Basic

32,749,206

48,130,065

48,065

29,571,556

48,065

Diluted

34,587,230

50,272,285

50,285

31,303,536

50,811,238

50,238

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