TAL Education Group Announces Unaudited Financial Results for the Third Fiscal Quarter Ended November 30, 2018

BEIJING,Jan. 24,2019 -- TAL Education Group (NYSE: TAL) ("TAL" or the "Company"),a leading K-12 after-school tutoring services provider in China,today announced its unaudited financial results for the third quarter of fiscal year 2019 ended November 30,2018.

Highlights for the Third Quarter of Fiscal Year 2019

Net revenues increased by 35.3% year-over-year to US$586.0 million from US$433.3 million in the same period of the prior year.

Income from operations increased by 59.2% to US$71.0 million from US$44.6 million in the same period of the prior year.

Non-GAAP income from operations increased by 63.5% to US$92.9 million from US$56.8 million in the same period of the prior year.

Net income attributable to TAL increased by 204.5% year-over-year to US$123.8 million,from US$40.7 million in the same period of the prior year.

Non-GAAP net income attributable to TAL,which excluded share-based compensation expenses,increased by 175.5% to US$145.8 million from US$52.9 million in the same period of the prior year.

Basic and diluted net income per American Depositary Share ("ADS") were US$0.22 and US$0.21,respectively. Non-GAAP basic and diluted net income per ADS,excluding share-based compensation expenses,were US$0.26 and US$0.24,respectively. Three ADSs represent one Class A common share.

Cash,cash equivalents and short-term investments totaled US$1,612.3 million as of November 30,2018,compared to US$1,498.9 million as of February 28,2018.

Total student enrollments increased by 68.4% year-over-year to approximately 2,599,180 from approximately 1,543,740 in the same period of the prior year.

Highlights for the Nine Months Ended November 30,2018

Net revenues increased by 51.7% year-over-year to US$1,836.4 million from US$1,210.9 million in the same period of the prior year.

Income from operations increased by 60.1% to US$226.9 million from US$141.7 million in the same period of fiscal year 2018.

Non-GAAP income from operations increased by 59.9% to US$281.9 million from US$176.3 million in the same period of the prior year.

Net income attributable to TAL increased by 107.6% year-over-year to US$267.6 million from US$128.9 million in the same period of the prior year.

Non-GAAP net income attributable to TAL,increased by 97.4% year-over-year to US$322.6 million from US$163.5 million in the same period of the prior year.

Basic and diluted net income per ADS were US$0.47 and US$0.45,were US$0.57 and US$0.54,respectively.

Average student enrollments per quarter during fiscal year 2019 increased by 96.8% year-over-year to approximately 3,171,150 from approximately 1,611,290 in the same period of the prior year.

Total physical network increased from 594 learning centers in 42 cities as of February 28,to 666 learning centers in 54 cities as of November 30,2018.

Financial and Operating Data - Third Quarter and First Nine months of Fiscal Year 2019

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

Three Months Ended

November 30,

2017

2018

Pct.Change

Net revenues

433,265

585,991

35.3%

Operating income

44,597

70,996

59.2%

Non-GAAP operating income

56,844

92,931

63.5%

Net income attributable to TAL

40,662

123,834

204.5%

Non-GAAP net income attributable to

TAL

52,909

145,769

175.5%

Net income per ADS attributable to

TAL - basic

0.08

0.22

184.7%

Net income per ADS attributable to

TAL- diluted

0.07

0.21

193.2%

Non-GAAP net income per ADS

attributable to TAL- basic

0.10

0.26

157.5%

Non-GAAP net income per ADS

attributable to TAL- diluted

0.09

0.24

165.8%

Total student enrollments in small class,

one-on-one,and online courses

1,740

2,180

68.4%

Nine Months Ended

November 30,

2017

2018

Pct.Change

Net revenues

1,210,918

1,836,423

51.7%

Operating income

141,728

226,876

60.1%

Non-GAAP operating income

176,279

281,878

59.9%

Net income attributable to TAL

128,901

267,624

107.6%

Non-GAAP net income attributable to

TAL

163,452

322,626

97.4%

Net income per ADS attributable to

TAL- basic

0.24

0.47

94.2%

Net income per ADS attributable to

TAL- diluted

0.22

0.45

102.5%

Non-GAAP net income per ADS

attributable to TAL- basic

0.31

0.57

84.7%

Non-GAAP net income per ADS

attributable to TAL- diluted

0.28

0.54

93.3%

Average student enrollments per

quarter

1,290

3,150

96.8%

"Our third quarter revenue performance was based on healthy growth of small class business and the continued scaling of our online courses," said Mr. Rong Luo,TAL's Chief Financial Officer. "We are pleased to see that during the quarter,our overall financial and business performance have further improved due to our ongoing efforts to upgrade operational utilization and efficiency."

Mr. Luo continued,"TAL is as always committed to promote education through science and technology. For the long term,we will maintain our investments in enriching the content and all cutting-edge areas of educational technologies,which will enable students to develop their potential through both curriculum based and competence oriented tutoring programs."

Financial Results for the Third Quarter of Fiscal Year 2019

Net Revenues

In the third quarter of fiscal year 2019,TAL reported net revenues of US$586.0million,representing a 35.3% increase from US$433.3 million in the third quarter of fiscal year 2018. The increase was mainly driven byan increase in total student enrollments,which increased by 68.4% to approximately 2,740in the same period of the prior year. Theincreasein total student enrollments was driven primarily bypromotions insmall class and online courses.

Operating Costs and Expenses

In the third quarter of fiscal year 2019,operating costs and expenses were US$515.4 million,a 32.4% increase from US$389.3million in the third quarter of fiscal year 2018. Non-GAAP operating costs and expenses,were US$493.5 million,a 30.9% increase from US$377.0 million in the third quarter of fiscal year 2018.

Cost of revenues increased by 21.0% to US$267.6 million,from US$221.1 million in the third quarter of fiscal year 2018. The increase in cost of revenues was mainly due to an increase in teacher compensation and rental costs. Non-GAAP cost of revenues,increased by 21.0% to US$267.5 million from US$221.0 million in the third quarter of fiscal year 2018.

Selling and marketing expenses increased by 64.4%to US$101.6 million from US$61.8million in the third quarter of fiscal year 2018. Non-GAAP selling and marketing expenses,increased by 62.9%to US$98.5 million from US$60.5 million in the third quarter of fiscal year 2018. The increase of selling and marketing expenses in the third quarter of fiscal year 2019 was primarily a result of more marketingpromotion activities to expand our customer base and brand enhancement,as well as a rise in the compensation to sales and marketing staff to support agreater number of programs and service offerings compared to the same period in the prior year.

General and administrative expenses increased by 37.9% to US$146.2 million from US$106.0million in the third quarter of fiscal year 2018. The increase ingeneral and administrative expenses was mainly due to an increase of the number of our general and administrative personnel compared to the same period inthe prior year and a rise in compensation to our general and administrative personnel. Non-GAAP general and administrative expenses,increased by 33.9% to US$127.5 million from US$95.2million in the third quarter of fiscal year 2018.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 79.1% to US$21.9 million in the third quarter of fiscal year 2019 from US$12.2million in the same period of fiscal year 2018.

Gross Profit

Gross profit increased by 50.1% to US$318.4 million from US$212.2 million in the third quarter of fiscal year 2018.

Income from Operations

Income from operations increased by 59.2% to US$71.0 million from US$44.6 million in the third quarter of fiscal year 2018. Non-GAAP income from operations,increased by 63.5%to US$92.9 million from US$56.8million in the third quarter of fiscal year 2018.

Other Income

Other income was US$98.7 million for the third quarter of fiscal year 2019,compared to other income of US$5.4 million in the third quarter of fiscal year 2018. Other income in the third quarter of fiscal year 2019 was substantially all from the fair value changes of a long-term investment. The fair value changes of the long-term investment were transferred from accumulated other comprehensive income to other income as the investment was reclassified from available-for-sale investment to equity security with readily determinable fair value upon listing on the Hong Kong Exchange in November 2018.

Impairment loss on long-term investments

Impairment loss on long-term investments was US$41.1 millionin the third quarter of fiscal year 2019,compared to US$1.5 million in the third quarter of fiscal year 2018. Impairmentloss 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$10.4 million in the third quarter of fiscal year 2019,compared to US$11.4 million in the third quarter of fiscal year 2018.

Net Income Attributable to TAL Education Group

Net income attributable to TAL increased by 204.5% to US$123.8 million from US$40.7 million in the third quarter of fiscal year 2018. Non-GAAP net income attributable to TAL,increased by 175.5% to US$145.8 million from US$52.9 million in the third quarter of fiscal year 2018.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were US$0.22and US$0.21,respectively in the third quarter of fiscal year 2019. Non-GAAP basic and diluted net income per ADS,respectively.

Capital Expenditures

Capital expenditures for the third quarter of fiscal year 2019 were US$73.0 million,representing an increase of US$44.7 million from US$28.3 million in the third quarter of fiscal year 2018. The increase was mainly due to leasehold improvements and the purchase of land use right,servers,computers,software systems and other hardware for the Company's teaching facilities and mobile network research and development.

Cash,Cash Equivalents and Short-Term Investments

As of November 30,the Company had US$1,253.0 million of cash and cash equivalentsand US$359.3 million of short-term investments,compared to US$711.5 million of cash and cash equivalents and US$787.4 million of short-term investments as of February 28,2018.

Deferred Revenue

As of November 30,the Company's deferred revenue balance was US$866.3 million,074.9 million as of November 30,2017,representing a decrease of 19.4% mainly due to the change of tuition fees collection schedule and the adoption of Revenue from Contracts with Customers ("Topic 606") beginning March 1,2018.

Financial Results for the First Nine Months of Fiscal Year 2019

Net Revenues

For the first nine months of fiscal year 2019,TAL reported net revenues of US$1,836.4 million,representing a 51.7% increase from US$1,210.9 million in the first nine months of fiscal year 2018. The increase was mainly driven by an increase in total student enrollments,which increased by 96.8% to approximately 3,150from approximately 1,290in the same period of the prior year. The increase in total 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 nine months of fiscal year 2019,operating costs and expenses were US$1,616.2 million,a 50.5% increase from US$1,073.7 million in the first nine months of fiscal year 2018. Non-GAAP operating costs and expenses,were US$1,561.2 million,a 50.2% increase from US$1,039.1million in the first nine months of fiscal year 2018.

Cost of revenues increased by 35.0%to US$858.3 million from US$635.6million in the first nine months of fiscal year 2018. The increase in cost of revenues wasmainly due to an increase in teacher compensation and rental costs.Non-GAAP cost of revenues,increased by 35.0% to US$857.8 million from US$635.4 million in the first nine months of fiscal year 2018.

Selling and marketing expenses increased by 112.4% to US$347.8 million from US$163.8 million in the first nine months of fiscal year 2018. Non-GAAP selling and marketing expenses,increased by 112.9% to US$340.7 million from US$160.0million in the first nine months of fiscal year 2018. The increase of selling and marketing expenses in the first nine months of fiscal year 2019 was primarily a result of moremarketing promotion activities to expand our customer base and brand enhancement,as well as a rise in the compensation to sales and marketing staff tosupport a greater number of programs and service offerings compared to the same period in the prior year.

General and administrative expenses increased by 49.7%to US$410.1 million from US$273.9 million in the first nine months of fiscal year 2018. The increasein general and administrative expenses was mainly due to an increase of the number of our general and administrative personnel compared to the same periodin the prior year and a rise in compensation to our general and administrative personnel. Non-GAAP general and administrative expenses,increased by 49.1% to US$362.7 million from US$243.4 million in the first nine months of fiscal year 2018.

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 59.2%to US$55.0 million in the first nine months of fiscal year 2019 from US$34.6 million in the same period of fiscal year 2018.

Gross Profit

Gross profit increased by 70.0%to US$978.1 million from US$575.3 million in the first nine months of fiscal year 2018.

Income from Operations

Income from operations increased by 60.1%to US$226.9 million from US$141.7million in the first nine months of fiscal year 2018. Non-GAAP income from operations,increased by 59.9%to US$281.9 million from US$176.3 million in the first nine months of fiscal year 2018.

Other Income

Other income was US$107.0 million for the first nine months of fiscal year 2019,mainly due to the fair value changes of a long-term investment.

Impairment loss on long-term investments

Impairment loss on long-term investments was US$50.8 million for the first nine months of fiscal year 2019,compared to US$2.2 million for the first nine months of fiscal year 2018. 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$43.3 million in the first nine months of fiscal year 2019,compared to US$35.9million in the first nine months of fiscal year 2018.

Net Income Attributable to TAL Education Group

Net income attributable to TAL increased by 107.6% to US$267.6 million from US$128.9million in the first nine months of fiscal year 2018. Non-GAAP net income attributable to TAL,increased by 97.4% to US$322.6 million from US$163.5 million in the first nine months of fiscal year 2018.

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were US$0.47and US$0.45,respectively,in the first nine months of fiscal year 2019. Non-GAAP basic and diluted net income per ADS,respectively.

Business Outlook

Based on the Company's current estimates,total net revenues for the fourth quarter of fiscal year 2019 are expected to be between US$670.5 million and US$685.6 million,representing an increase of 33% to 36% 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 40% to 43% for the fourth quarter of fiscal year 2019.

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

Conference Call

The Company will host a conference call and live webcast to discuss its financial results for the third fiscal quarter of fiscal year 2019 ended November 30,2018 at 8:00a.m. U.S. Eastern Time on January 24,2019(9:00p.m. Beijing time on January 24,2019).

The dial-in details for the live conference call are as follows:

- U.S. toll free:

+1-866-519-4004

- Hong Kong toll free:

800-906-601

- International toll:

+65-6713-5090

Conference ID:

7998495

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

A telephone replay of the conference call will be available through 8:59 a.m. U.S. Eastern time,February 1,2019 (9:59 p.m. Beijing time,2019).

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:

7998495

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things,the outlook for the fourth quarter of fiscal year 2019 and the fiscal year ending February 28,2019,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 over 50 key cities in China.

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 U.S. Securities and Exchange Commission 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 from or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures,please see the table captioned "Reconciliations of non-GAAP measures to the most comparable GAAP measures" set forth at the end of this release.

TAL believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. TAL believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to TAL's historical performance and liquidity. TAL computes its non-GAAP financial measures using the same consistent method from quarter to quarter and from period to period. TAL believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP measures is that these non-GAAP measures exclude share-based compensation charges that have been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

For further information,please contact:

Echo Yan

Investor Relations

TAL Education Group

Tel: +86 10 5292 6658

Email: ir@100tal.com

Caroline Straathof

IR Inside

Tel: +31 6 5462 4301

Email: info@irinside.com

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)

As of

As of

February 28,

November 30,

2018

2018

ASSETS

Current assets

Cash and cash equivalents

711,519

1,253,012

Restricted cash-current

6,267

4,504

Short-term investments

787,391

359,311

Inventory

5,272

6,436

Amounts due from related parties-current

3,229

10,304

Income tax receivables

15,093

6,930

Prepaid expenses and other current assets

133,235

178,668

Total current assets

1,662,006

1,819,165

Restricted cash-non-current

9,911

8,348

Amounts due from related parties-non-current

-

2,438

Property and equipment,net

247,266

269,425

Deferred tax assets-non-current

17,361

27,853

Rental deposits

47,333

51,775

Intangible assets,net

43,505

61,729

Goodwill

291,382

305,234

Long-term investments

597,606

745,720

Long-term prepayments and other non-current assets

138,190

135,460

Total assets

$ 3,054,560

$ 3,427,147

LIABILITIES AND EQUITY

Current liabilities

Accounts payable (including accounts payable of the

consolidated VIEs without recourse to TAL

Education Group of 51,809and 71,435as of February

28,and November 30,respectively)

$ 57,605

$ 79,414

Deferred revenue-current (including deferred revenue-

current of the consolidated VIEs without recourse to

TAL Education Group of 772,642 and 805,248as of

February 28,

respectively)

824,276

862,433

Amounts due to related parties-current (including

amounts due to related parties-current of the

consolidated VIEs without recourse to TAL

Education Group of 2,875 and 18,003 as of February

28,respectively)

8,746

28,318

Accrued expenses and other current liabilities (including

accrued expenses and other current liabilities of the

consolidated VIEs without recourse to TAL

Education Group of 158,849and 290,409 as of

February 28,

respectively)

229,122

360,892

Income tax payable (including income tax payable of

the consolidated VIEs without recourse to TAL

Education Group of 12,106and 31,818as of February

28,respectively)

13,638

31,262

Short-term debt and current portion of long-term debt

(including short-term debt and current portion of

long-term debt of the consolidated VIEs without

recourse to TAL Education Group of nil and nil as of

February 28,

respectively)

-

239,376

Bond payable,current portion (including bond payable,

current portion of the consolidated VIEs without

recourse to TAL Education Group of nil and nil as of

February 28,

respectively)

-

5,275

Total current liabilities

1,133,387

1,606,970

Deferred revenue-non-current (including deferred

revenue-non-currentof the consolidated VIEs without

recourse to TAL Education Group of 17,980 and

3,866as of February 28,

2018,respectively)

17,980

3,866

Amounts due to related parties-non-current (including

amounts due to related parties-non-currentof the

consolidated VIEs without recourse to TAL

Education Group of niland 134as of February 28,respectively)

271

270

Deferred tax liabilities-non-current (includingdeferred

tax liabilities-non-current of the consolidated VIEs

without recourse to TAL Education Group of 19,867

and 5,549 as of February 28,respectively)

20,039

6,318

Bond payable (including bond payable of the

consolidated VIEs without recourse to TAL

Education Group of nil and nil as of February 28,respectively)

11,075

-

Long-term payable (including long-term payable of the

consolidated VIEs without recourse to TAL

Education Group of 4,660 and nilas of February 28,respectively)

6,344

447

Long-term debt (including long-term debt of the

consolidated VIEs without recourse to TAL

Education Group of nil and nil as of February 28,respectively)

225,000

-

Total liabilities

1,414,096

1,617,871

TAL Education Group Shareholders'Equity

Class A common shares

118

120

Class B common shares

71

71

Class A common shares issuable

-

1,726

Additional paid-in capital

884,717

946,112

Statutory reserve

38,315

38,315

Retained earnings

565,202

841,077

Accumulated other comprehensive income/(loss)

132,325

(35,896)

Total TAL Education Group's equity

1,620,748

1,791,525

Noncontrolling interest

19,716

17,751

Total equity

1,640,464

1,809,276

Total liabilities and equity

$ 3,147

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATEDSTATEMENTS OF OPERATIONS

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

For the Three Months Ended

November 30,

For the Nine Months Ended

November 30,

2017

2018

2017

2018

Net revenues

$ 433,265

$ 585,991

$ 1,918

$ 1,423

Cost of revenues

221,102

267,633

635,636

858,280

Gross profit

212,163

318,358

575,282

978,143

Operating expenses (note 1)

Selling and marketing

61,802

101,597

163,755

347,804

General and administrative

106,000

146,170

273,943

410,119

Impairment loss on intangible assets and

goodwill

358

-

358

-

Total operating expenses

168,160

247,767

438,056

757,923

Government subsidies

594

405

4,502

6,656

Income from operations

44,597

70,996

141,728

226,876

Interest income

8,249

13,507

26,484

49,329

Interest expense

(3,906)

(4,059)

(13,001)

(11,881)

Other income

5,370

98,690

14,176

107,021

Impairment loss on long-term

investments

(1,513)

(41,131)

(2,213)

(50,844)

Income before provision for

income tax and loss from

equity method investments

52,797

138,003

167,174

320,501

Provision for income tax

(11,389)

(10,404)

(35,942)

(43,268)

Loss from equity method

investments

(1,790)

(3,934)

(5,038)

(11,072)

Net income

39,618

123,665

126,194

266,161

Add: Net loss attributable to

noncontrolling interest

1,044

169

2,707

1,463

Total net income attributable

to TAL Education Group

$ 40,662

$ 123,834

$ 128,901

$ 267,624

Net income per common share

Basic

$ 0.23

$ 0.65

$ 0.73

$ 1.41

Diluted

0.21

0.62

0.66

1.34

Net income per ADS (note 2)

Basic

$ 0.08

$ 0.22

$ 0.24

$ 0.47

Diluted

0.07

0.21

0.22

0.45

Weighted average shares used

in calculating net income per

common share

Basic

177,882,195

190,312,127

177,388,055

189,601,790

Diluted

193,855,487

199,636,171

198,821,015

200,186,601

Note 1: Share-based compensation expenses are included in the operating costs and expenses as follows:

For the Three Months

For the Nine Months

Ended November 30,

Ended November 30,

2017

2018

2017

2018

Cost of revenues

$ 112

$ 158

$ 254

$ 506

Selling and marketing

1,330

3,090

3,706

7,123

General and administrative

10,805

18,687

30,591

47,373

Total

$ 12,247

$ 21,935

$ 34,551

$ 55,002

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

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATEDSTATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)

For the Three Months Ended

November 30,

2017

2018

2017

2018

Net income

$ 39,618

$ 123,665

$ 126,194

$ 266,161

Other comprehensive

(loss)/income,net of tax

(13,116)

(213,073)

18,183

(169,744)

Comprehensive income/(loss)

26,502

(89,408)

144,377

96,417

Add: Comprehensive loss

attributable to noncontrolling

interest

1,044

441

2,707

2,987

Comprehensive income/(loss)

attributable to TAL

Education Group

$ 27,546

$ (88,967)

$ 147,084

$ 99,404

TAL EDUCATION GROUP

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

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

For the Three Months

Ended November 30,

For the Nine Months

Ended November 30,

2017

2018

2017

2018

Cost of revenues

$ 221,102

$ 267,633

$ 635,636

$ 858,280

Share-based compensation

expense in cost of revenues

112

158

254

506

Non-GAAP cost of revenues

220,990

267,475

635,382

857,774

Selling and marketing expenses

61,804

Share-based compensation

expense in selling and

marketing expenses

1,123

Non-GAAP selling and

marketing expenses

60,472

98,507

160,049

340,681

General and administrative

expenses

106,119

Share-based compensation

expense in general and

administrative expenses

10,373

Non-GAAP general and

administrative expenses

95,195

127,483

243,352

362,746

Operating costs and expenses

389,262

515,400

1,073,692

1,616,203

Share-based compensation

expense in operating costs and

expenses

12,247

21,935

34,551

55,002

Non-GAAP operating costs and

expenses

377,015

493,465

1,039,141

1,561,201

Income from operations

44,876

Share based compensation

expenses

12,002

Non-GAAP income from

operations

56,844

92,931

176,279

281,878

Net income attributable to TAL

Education Group

40,662

123,834

128,901

267,624

Share based compensation

expenses

12,002

Non-GAAP net income

attributable to TAL Education

Group

$ 52,909

$ 145,769

$ 163,452

$ 322,626

Net income per ADS

Basic

$ 0.08

$ 0.22

$ 0.24

$ 0.47

Diluted

0.07

0.21

0.22

0.45

Non-GAAP Net income per

ADS (note 3)

Basic

$ 0.10

$ 0.26

$ 0.31

$ 0.57

Diluted

0.09

0.24

0.28

0.54

ADSs used in calculating net

income per ADS

Basic

533,646,584

570,936,381

532,164,166

568,805,370

Diluted

581,566,462

598,908,513

596,463,046

600,559,803

Note 3: The Non-GAAP adjusted net income per ADS is computed using Non-GAAP adjusted net

income and the same number of ADSs used in GAAP basic and diluted EPS calculation.

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