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TAL Education Group Announces Unaudited Financial Results for the Fourth Fiscal Quarter and Fiscal Year 2012 Ended February 29, 2012

BEIJING, April 25, 2012 /PRNewswire-Asia/ -- TAL Education Group (NYSE: XRS) ("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 fiscal year 2012 ended February 29, 2012.

Financial Highlights for the Fourth Fiscal Quarter Ended February 29, 2012

    --  Net revenues increased by 55.2% year-over-year to US$52.2 million from
        US$33.7 million in the same period of the prior fiscal year.
    --  Net income from continuing operations decreased by 9.5% year-over-year
        to US$7.6 million from US$8.4 million in the same period of the prior
        fiscal year.
    --  Net income attributable to TAL decreased by 10.2 % year-over-year to
        US$7.6 million from US$8.4 million in the same period of the prior
        fiscal year.
    --  Non-GAAP(1) net income attributable to TAL, which excluded share-based
        compensation expenses, decreased by 17.4 % year-over-year to US$9.0
        million from US$10.9 million in the same period of the prior fiscal
        year.
    --  Basic and diluted net income per American Depositary Share ("ADS")(2)
        were US$0.10 and US$0.10, respectively. Non-GAAP basic and diluted net
        income per ADS, in each case excluding share-based compensation
        expenses, were US$0.12 and US$0.12, respectively.
    --  Total student enrollments during the fourth quarter of fiscal year 2012
        increased by 47.0% year-over-year to approximately 228,500.
    --  Total physical network decreased to 270 learning centers as of February
        29, 2012 from 275 learning centers as of November 30, 2011.

Financial Highlights for the Fiscal Year Ended February 29, 2012

    --  Net revenues increased by 60.5% year-over-year to US$177.5 million from
        US$110.6 million in the prior fiscal year.
    --  Net income from continuing operations decreased by 0.3% year-over-year
        to US$24.3 million from US$24.4 million in the prior fiscal year.
    --  Net income attributable to TAL increased by 1.1% year-over-year to
        US$24.3 million from US$24.0 million in the prior fiscal year.
    --  Non-GAAP net income attributable to TAL, which excluded share-based
        compensation expenses, increased by 9.8% year-over-year to US$32.2
        million from US$29.3 million in the prior fiscal year.
    --  Basic and diluted net income per ADS were US$0.32 and US$0.31,
        respectively.  Non-GAAP basic and diluted net incomes per ADS, in each
        case excluded share-based compensation expenses, were US$0.42 and
        US$0.41, respectively.
    --  Total student enrollments during the fiscal year ended February 29, 2012
        increased by 41.9% year-over-year to approximately 690,300.
    --  Total physical network grew to 270 learning centers as of February 29,
        2012 from 132 learning centers as of February 28, 2011.
    (1) As used in this press release,
     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 are defined to
     exclude share-based compensation
     expense from operating costs and
     expenses, cost of revenues,
     selling and marketing expenses,
     general and administrative
     expenses, income from operations,
     net income attributable to TAL and
     earnings per ADS, respectively.
     See "About Non-GAAP Financial
     Measures" and "Reconciliation of
     Non-GAAP Measures To The Most
     Comparable GAAP Measures" at the
     end of this press release.
    (2) Each ADS represents two Class A
     common shares.

Financial and Operating Data--the Fourth Fiscal Quarter and Fiscal Year 2012 Ended February 29, 2012
(in US$ thousands, except per ADS data, student enrollments and percentages)

                                 Three Months Ended
                                       February 28/29,
                                    2011        2012   Pct. Change
                                    ----        ----   -----------
    Net revenues                  33,654      52,216                 55.2%
    Net income attributable to
     TAL                           8,446       7,582               (10.2)%
    Non-GAAP net income
     attributable to TAL          10,924       9,019               (17.4)%
    Operating income               8,161       6,321               (22.6)%
    Non-GAAP operating income     10,640       7,758               (27.1)%
    Net income per ADS
     attributable to TAL - basic    0.11        0.10               (11.6)%
    Net income per ADS
     attributable to TAL -
     diluted                        0.11        0.10               (10.6)%
    Non-GAAP net income per ADS
     attributable to TAL - basic    0.14        0.12               (18.7)%
    Non-GAAP net income per ADS
     attributable to TAL -
     diluted                        0.14        0.12               (19.3)%
    Total student enrollments in
     small class, one-on-one
     and online courses          155,400     228,500                 47.0%

                                 Three Months Ended
                                         February 28/29,
                                                    2011 2012  Pct. Change
                                                              -----------
    Net revenues                                 110,588 177,520         60.5%
    Net income attributable to
     TAL                                          24,041 24,314          1.1%
    Non-GAAP net income
     attributable to TAL                          29,348 32,215          9.8%
    Operating income                              25,574 21,025       (17.8)%
    Non-GAAP operating income                     30,881 28,926        (6.3)%
    Net income per ADS
     attributable to TAL - basic                    0.36 0.32       (11.3)%
    Net income per ADS
     attributable to TAL -
     diluted                                        0.35 0.31       (11.5)%
    Non-GAAP net income per ADS
     attributable to TAL - basic                    0.43 0.42        (3.7)%
    Non-GAAP net income per ADS
     attributable to TAL -
     diluted                                        0.43 0.41        (3.9)%
    Total student enrollments in
     small class, one-on-one
     and online courses                          486,400 690,300         41.9%

"I am pleased to report that in our fourth fiscal quarter revenue growth once again exceeded our guidance and student enrollments continued to show strong momentum. Fiscal 2012 as a whole was a year of successful business expansion and enlarged market presence. We more than doubled the number of learning centers in our network and rolled out to eight new cities during the year. We also continued to enhance our product offering in our core small class business, made significant progress in online courses, and introduced a new tutoring format branded 'Mobby' to address the highly complementary pre-K market. In addition, we began to put into place a multi-level business unit structure with headquarters functions as the organizational foundation for our long-term growth and scaling," said TAL's Chairman and Chief Executive Officer, Mr. Bangxin Zhang.

"In fiscal year 2013, we aim to balance growth opportunities with our ambition to further solidify the basis of our leading and innovative education brand. We believe the time is right to build upon the traction we have established over the course of the last fiscal year in the 14 cities in which we now have learning centers. At the same time, we will continue to enhance our competitive strengths, particularly the top quality content and curriculum and outstanding teacher resources of our proven small-class business model," Mr. Zhang commented.

Mr. Joseph Kauffman, Chief Financial Officer, continued, "For our one-on-one business, our primary objective is not market share but managing the growth for continued profitability. On the back of ongoing strong topline performance, we maintained our efforts begun in the previous quarter to increase learning center utilization and implement cost and expense controls. As a result, our one-on-one business was again profitable in the fourth quarter."

"In the quarters ahead, we will continue to focus on the long-term health of our business. We will invest aggressively in our core assets and the operational support and systems required to sustain our successful business expansion. At the same time, we will look for cost and expense optimization opportunities and increased scalability in our business model," Mr. Kauffman added.

Financial Results for the Fourth Fiscal Quarter Ended February 29, 2012

Net Revenues
For the fourth quarter of fiscal year 2012, TAL reported net revenues of US$52.2 million, representing a 55.2% increase from US$33.7 million for the fourth quarter of fiscal year 2011. The increase was mainly driven by an increased number of total student enrollments combined with higher average selling prices (ASPs). Total student enrollments increased by 47.0% to approximately 228,500 from approximately 155,400 in the same period of the prior fiscal year. The increase in student enrollments was driven primarily by small class and online courses enrollments, and to a lesser extent by one-on-one tutoring services. ASPs increased by 5.5% to US$229 in the fourth quarter of fiscal year 2012 from US$217 in the same quarter of fiscal year 2011, mainly driven by foreign exchange rate fluctuation and hourly rate increases in a portion of our small class course offerings.

Operating Costs and Expenses
Operating costs and expenses were US$45.9 million, a 79.0% increase from US$25.6 million in the fourth quarter of fiscal year 2011. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$44.5 million, a 91.9% increase from US$23.2 million in the fourth quarter of fiscal year 2011.

Cost of revenues increased by 76.4% to US$28.5 million, from US$16.2 million in the fourth quarter of fiscal year 2011. The increase in cost of revenues was primarily due to an increase in teacher compensation and rental costs associated with the business expansion that took place during fiscal year 2012, as well as other staff costs to support the larger number of learning centers in operation. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 77.6% to US$28.4 million, from US$16.0 million in the fourth quarter of fiscal year 2011.

Selling and marketing expenses increased by 82.4% to US$5.5 million, from US$3.0 million in the fourth quarter of fiscal year 2011. The increase was primarily due to an increase in sales and marketing staff expenses to support a greater number of program and service offerings and larger learning center network, and increased advertising expenses for marketing promotion. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 104.3% to US$5.2 million, from US$2.5 million in the fourth quarter of fiscal year 2011.

General and administrative expenses increased by 83.9% to US$11.9 million, from US$6.4 million in the fourth quarter of fiscal year 2011. The increase was mainly due to an increase in general and administrative staff expenses to support expanded operations and related rental and office expenses, as well as consulting fees incurred in the quarter. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 134.9% to US$10.8 million, from US$4.6 million in the fourth quarter of fiscal year 2011.

Total share-based compensation expenses that were allocated to related operating costs and expenses amounted to US$1.4 million in the fourth quarter of fiscal year 2012, as compared to US$2.5 million in the fourth quarter of fiscal year 2011.

Gross Profit
Gross profit increased by 35.5% to US$23.7 million, from US$17.5 million in the fourth quarter of fiscal year 2011.

Income from Operations
Income from operations decreased by 22.6% to US$6.3 million, from US$8.2 million in the fourth quarter of fiscal year 2011. Non-GAAP income from operations, which excluded share-based compensation expenses, decreased by 27.1% to US$7.8 million, from US$10.6 million in the fourth quarter of fiscal year 2011.

Income Tax Expense
Income tax expense was US$0.9 million in the fourth quarter of fiscal year 2012, as compared to US$0.7 million in the fourth quarter of fiscal year 2011, mainly because the income tax exemption period of one of TAL's entities expired in calendar year 2010 and this entity has become subject to a still preferential, but higher tax rate from calendar year 2011.

Net Income from Continuing Operations
Net income from continuing operations decreased by 9.5% to US$7.6 million, from US$8.4 million in the fourth quarter of fiscal year 2011.

Net Income Attributable to TAL Education Group
Net income attributable to TAL decreased 10.2% to US$ 7.6 million, from US$8.4 million in the fourth quarter of fiscal year 2011. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, decreased by 17.4% to US$9.0 million, from US$10.9 million in the fourth quarter of fiscal year 2011.

Basic and Diluted Net Income per ADS
Basic and diluted net income per ADS were US$0.10 and US$0.10, respectively, in the fourth quarter of fiscal year 2012. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.12 and US$0.12, respectively.

Financial Results for the Fiscal Year Ended February 29, 2012

Net Revenues
For the fiscal year 2012, TAL reported net revenues of US$177.5 million, representing a 60.5% increase from US$110.6 million in the fiscal year 2011. The increase was primarily due to an increase in the number of total student enrollments and higher ASP. Total student enrollments increased by 41.9% to approximately 690,300 from approximately 486,400 in the fiscal year ended February 28, 2011. ASPs increased by 13.1% to US$257 per enrollment in fiscal year 2012 from US$227 per enrollment in fiscal year 2011 mainly driven by an increase in the hourly rate of a portion of small class offerings in the first quarter of fiscal year 2012.

Operating Costs and Expenses
Operating costs and expenses were US$156.7 million, an 84.0% increase from US$85.2 million in fiscal year 2011. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$148.8 million, an 86.3% increase from US$79.9 million in fiscal year 2011.

Cost of revenues increased by 70.3% to US$95.6 million, from US$56.1 million in fiscal year 2011. The increase in cost of revenues was primarily due to an increase in teacher compensation, rental costs associated with the business expansion, as well as staff costs to support the larger number of learning centers in operation. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 71.1% to US$95.2 million, from US$55.6 million in fiscal year 2011.

Selling and marketing expenses increased by 133.2% to US$23.2 million, from US$9.9 million in fiscal year 2011. The increase was primarily due to an increase in sales and marketing staff expenses to support a greater number of program and service offerings and larger learning center network, and increased advertising expenses for marketing promotion. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 141.8% to US$21.7 million, from US$9.0 million in fiscal year 2011.

General and administrative expenses increased by 98.1% to US$37.8 million, from US$19.1 million in fiscal year 2011. The increase was mainly due to an increase in general and administrative staff expenses to support expanded operations and related rental and office expenses, and also consulting fees incurred in the second half year of fiscal year 2012. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 108.4% to US$31.8 million, from US$15.3 million in fiscal year 2011.

Total share-based compensation expenses that were allocated to related operating costs and expenses amounted to US$7.9 million in fiscal year 2012, as compared to US$5.3 in fiscal year 2011.

Gross Profit
Gross profit increased by 50.5% to US$81.9 million, from US$54.4 million in fiscal year 2011.

Income from Operations
Income from operations decreased by 17.8% to US$21.0 million, from US$25.6 million in fiscal year 2011. Non-GAAP income from operations, which excluded share-based compensation expenses, decreased by 6.3% to US$28.9 million, from US$30.9 million in fiscal year 2011.

Income Tax Expense
Income tax expense was US$4.2 million in fiscal year 2012, as compared to US$2.6 million in fiscal year 2011, mainly because the exemption period of one of TAL's entities expired in calendar year 2010 and this entity has become subject to a still preferential, but higher tax rate from calendar year 2011.

Net Income from Continuing Operations
Net income from continuing operations decreased by 0.3% to US$24.3 million, from US$ 24.4 million in fiscal year 2011.

Net Income Attributable to TAL Education Group
Net income attributable to TAL increased by 1.1% to US$24.3 million, from US$24.0 million in fiscal year 2011. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 9.8% to US$32.2 million, from US$29.3 million in fiscal year 2011.

Basic and Diluted Net Income per ADS
Basic and diluted net income per ADS were US$0.32 and US$0.31, respectively, in the fiscal year 2012. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.42 and US$0.41, respectively.

Capital Expenditures
Capital expenditures for fiscal year 2012 were US$74.3 million, driven largely by the purchase of office space for which the Company paid $62.5 million

Cash and Cash Equivalents
As of February 29, 2012, the Company had US$188.6 million of cash and cash equivalents and US$10.3 million of term deposits, as compared to US$173.2 million of cash and cash equivalents and US$25.9 million of term deposit as of February 28, 2011.

Deferred Revenue
As of February 29, 2012, the Company's deferred revenue balance was US$85.6 million compared to US$50.7 million as of February 28, 2011, representing an increase of 68.9% versus the same period of the previous year.

Business Outlook

Based on the Company's current estimates, total net revenues for the fiscal quarter ending May 31, 2012 are expected to be between US$44.2 million and US$45.8 million, representing an increase of 33% to 38% on a year-over-year basis. This estimate reflects the Company's current expectation, which is subject to change.

For fiscal year ending February 28,2013, the Company expects total net revenues to be in the estimated range of US$230.8 million to US$239.7 million, representing an increase of 30% to 35% year-over-year, assuming no material change in exchange rates.

Conference Call

The Company will host a conference call and live webcast to discuss its financial results for the fourth fiscal quarter and fiscal year 2012 ended February 29, 2012 at 8:00 am Eastern Time on April 25, 2012 (8:00 pm Beijing time on April 25, 2012).

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

    International:                    +656-723-9381
    U.S.:                             +1-718-354-1231
    China:                            800-819-0121
    Conference ID:                                      67174146

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

A telephone replay of the call will be available after the conclusion of the conference call through May 2, 2012.

The dial-in details for the replay are as follows:

    International:                    +61-2-8235-5000
    U.S. :                            +1-718-354-1232
    China:                            400-692-0026
    Conference ID:                                      67174146

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 and full year of fiscal year 2013 and 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: its ability to continue to attract students to enroll in its courses; its ability to continue to recruit, train and retain qualified teachers; its ability to improve the content of its existing course offerings and to develop new courses; its ability to maintain and enhance its brand; its ability to maintain and continue to improve its teaching results; and its 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 Securities and Exchange Commission. TAL Education Group does not undertake any obligation to update any forward-looking statement, except as required under applicable law. 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, except as required under applicable law.

About TAL Education Group

TAL Education Group, which operates under the brand "Xueersi," is a leading K-12 after-school tutoring service provider in China associated with high teaching quality and outstanding student academic performance. Its tutoring services cover the core subjects in China's school curriculum, including mathematics, English, Chinese, physics, chemistry and biology, and are delivered through three formats: small class, one-on-one, and online courses. The Company's network includes 270 physical learning centers as of February 29, 2012, located in 14 key cities in China: Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Wuhan, Xi'an, Chengdu, Nanjing, Hangzhou, Taiyuan, Zhengzhou, Chongqing, and Suzhou. It also operates www.eduu.com, a leading online education platform in China. The Company's ADSs trade on the New York Stock Exchange under the symbol "XRS."

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 charge that has 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:

For Investors:
Fei Li
Investor Relations
TAL Education Group
Tel: +86-10-5292-6658
Email: ir@xueersi.com

For Media:
Caroline Straathof
IR Inside
Tel: +31 6 5462 4301
Email: info@irinside.com


                                                                     TAL Education Group

                                                       UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                      (In U.S. dollars)
                                                                                                          As of                   As of
                                                                                                       February 28,           February 29,
                                                                                                                         2011          2012
                                                                                                                         ----          ----

    ASSETS

    Current assets
      Cash and cash equivalents                                                                                  $173,165,661  $188,579,767
      Term deposits                                                                                                25,870,071    10,328,116
      Available-for-sale securities                                                                                   465,709       361,803
      Inventory                                                                                                       117,827       223,611
      Deferred tax assets-current                                                                                   1,082,932     1,729,758
      Prepaid expenses and other current assets                                                                     4,746,929     9,011,975
                                                                                                                    ---------     ---------
    Total current assets                                                                                          205,449,129   210,235,030
                                                                                                                  -----------   -----------
      Property and equipment, net                                                                                   7,515,325    76,726,219
      Deferred tax assets-non-current                                                                                 668,096       490,222
      Rental deposit                                                                                                2,818,126     4,545,605
      Intangible assets, net                                                                                          656,785       183,523
      Goodwill                                                                                                        662,583       548,825
      Long-term prepayments                                                                                                 -     1,923,481
                                                                                                                          ---     ---------
    Total assets                                                                                                 $217,770,044  $294,652,905
                                                                                                                 ============  ============

    LIABILITIES AND EQUITY

    Current liabilities
    Accounts payable (including accounts payable of the consolidated                                                 $911,254    $2,863,596
      VIEs without recourse to TAL Education Group of 736,655 and
      1,993,297 as of February 28, 2011,and February 29, 2012,
      respectively)
    Deferred revenue (including deferred revenue of the consolidated                                               50,678,025    85,594,032
    VIEs without recourse to TAL Education Group of 34,169,473
    and 50,395,945 as of February 28, 2011,and February 29, 2012,
         respectively)
    Amounts due to related parties (including amounts due to related                                                   79,893             -
    parties of the consolidated VIEs without recourse to TAL
    Education Group of 79,893 and nil as of February 28, 2011,
         and February 29, 2012 ,respectively)
    Accrued expenses and other current liabilities (including accrued                                               8,053,980    15,284,190
    expenses and other current liabilities without recourse to TAL
    Education Group of 5,729,657 and 9,546,915 as of February 28,
         2011, and February 29, 2012, respectively)
    Income tax payable (including income tax payable of the                                                         2,877,887       637,302
    consolidated VIEs without recourse to TAL Education Group
    of 2,650,269 and 2,206,266 as of February 28, 2011, and
    February 29, 2012, respectively)

    Total current liabilities                                                                                      62,601,039   104,379,120
                                                                                                                   ----------   -----------

    Deferred tax liabilities-non-current (including deferred tax                                                      117,781       156,494
    liabilities-non-current of the consolidated VIEs without
    recourse to TAL Education Group of 85,248 and 45,881
    as of February 28, 2011, and February 29, 2012, respectively)

    Total liabilities                                                                                              62,718,820   104,535,614
                                                                                                                   ----------   -----------

    TAL Education Group Shareholders' Equity
    Class A common shares                                                                                              27,600        45,277
    Class B common shares                                                                                             125,000       109,681
    Additional paid-in capital                                                                                    112,055,718   119,769,989
    Statutory reserve                                                                                               8,240,697    10,502,713
    Retained earnings                                                                                              32,727,630    54,779,267
    Accumulated other comprehensive income                                                                          1,874,579     4,910,364
                                                                                                                    ---------     ---------
    Total TAL Education Group's equity                                                                            155,051,224   190,117,291
                                                                                                                  -----------   -----------
    Total liabilities and equity                                                                                 $217,770,044  $294,652,905
                                                                                                                 ============  ============

                                                                                                                                TAL Education Group
                                                                                                             UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                         (In U.S. dollars, except shares, ADS, per share and per ADS data)
                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                 For the Three Months Ended     For the Fiscal Year Ended
                                                                                                                                                                                                                                                                                            February 28/29,               February 28/29,
                                                                                                                                                                                                                                                                                                       2011                          2012             2011             2012
                                                                                                                                                                                                                                                                                                       ----                          ----             ----             ----
    Net revenues                                                                                                                                                                                                                                                                                $33,653,533                   $52,215,556     $110,588,299     $177,519,672
    Cost of revenues                                                                                                                                                                                                                                                                             16,164,293                    28,510,837       56,142,838       95,587,218
                                                                                                                                                                                                                                                                                                 ----------                    ----------       ----------       ----------
    Gross profit                                                                                                                                                                                                                                                                                 17,489,240                    23,704,719       54,445,461       81,932,454
                                                                                                                                                                                                                                                                                                 ----------                    ----------       ----------       ----------
    Operating expenses (note 1)
      Selling and marketing                                                                                                                                                                                                                                                                       3,033,166                     5,533,211        9,934,938       23,166,231
      General and administrative                                                                                                                                                                                                                                                                  6,443,234                    11,850,869       19,085,014       37,814,962
      Impairment loss on goodwill                                                                                                                                                                                                                                                                         -                             -                -          139,660
                                                                                                                                                                                                                                                                                                        ---                           ---              ---          -------
    Total operating expenses                                                                                                                                                                                                                                                                      9,476,400                    17,384,080       29,019,952       61,120,853
                                                                                                                                                                                                                                                                                                  ---------                    ----------       ----------       ----------
    Government Subsidies                                                                                                                                                                                                                                                                            148,537                             -          148,537          213,270
                                                                                                                                                                                                                                                                                                    -------                           ---          -------          -------
    Income from operations                                                                                                                                                                                                                                                                        8,161,377                     6,320,639       25,574,046       21,024,871
                                                                                                                                                                                                                                                                                                  ---------                     ---------       ----------       ----------
    Interest income                                                                                                                                                                                                                                                                                 773,592                       909,394        1,346,284        3,499,926
    Interest expense                                                                                                                                                                                                                                                                                   (270)                            -          (59,212)               -
    Other (expenses)/ income                                                                                                                                                                                                                                                                        (36,926)                    1,214,199            1,718        3,945,306
    Gain from sales of available-for-sale securities                                                                                                                                                                                                                                                      -                             -            6,429                -
    Gain on extinguishment of liabilities                                                                                                                                                                                                                                                           134,370                             -          134,370                -
                                                                                                                                                                                                                                                                                                    -------                           ---          -------              ---
    Income before income tax provision                                                                                                                                                                                                                                                            9,032,143                     8,444,232       27,003,635       28,470,103
    Provision for income tax                                                                                                                                                                                                                                                                       (656,545)                     (862,055)      (2,628,090)      (4,156,450)
                                                                                                                                                                                                                                                                                                   --------                      --------       ----------       ----------
    Net income from continuing operations                                                                                                                                                                                                                                                         8,375,598                     7,582,177       24,375,545       24,313,653
                                                                                                                                                                                                                                                                                                  ---------                     ---------       ----------       ----------
    Net income/(loss) from discontinued operations, net of taxes                                                                                                                                                                                                                                     70,674                             -         (334,395)               -
                                                                                                                                                                                                                                                                                                     ------                           ---         --------              ---
    Net income                                                                                                                                                                                                                                                                                    8,446,272                     7,582,177       24,041,150       24,313,653
                                                                                                                                                                                                                                                                                                  ---------                     ---------       ----------       ----------
    Total net income attributable to TAL Education Group                                                                                                                                                                                                                                         $8,446,272                    $7,582,177      $24,041,150      $24,313,653
                                                                                                                                                                                                                                                                                                 ==========                    ==========      ===========      ===========

                                                                     TAL Education Group
                                                  UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                              (In U.S. dollars, except shares, ADS, per share and per ADS data)

                                                                                                               For the Three Months Ended          For the Fiscal Year Ended
                                                                                                                       February 28/29,                       February 28/29,
                                                                                                                       2011                   2012         2011                   2012
                                                                                                                       ----                   ----         ----                   ----
    Net income per common share

      Basic  continuing operations                                                                                    $0.05                  $0.05        $0.18                  $0.16
      Basic from discontinued operations                                                                                  0                      -            0                      -
                                                                                                                        ---                    ---          ---                    ---
    Basic                                                                                                              0.05                   0.05         0.18                   0.16
                                                                                                                       ====                   ====         ====                   ====

      Diluted from continuing operations                                                                               0.05                   0.05         0.18                   0.16
      Diluted from discontinued operations                                                                                0                      -            0                      -
                                                                                                                        ---                    ---          ---                    ---
    Diluted                                                                                                            0.05                   0.05         0.18                   0.16
                                                                                                                       ====                   ====         ====                   ====

    Net income per ADS (note 2)
      Basic from continuing operations                                                                                 0.11                    0.1         0.36                   0.32
      Basic from discontinued operations                                                                                  0                      -            0                      -
                                                                                                                        ---                    ---          ---                    ---
    Basic                                                                                                              0.11                    0.1         0.36                   0.32
                                                                                                                       ====                    ===         ====                   ====

    Diluted from continuing operations                                                                                 0.11                    0.1         0.35                   0.31
      Diluted from discontinued operations                                                                                0                      -            0                      -
                                                                                                                        ---                    ---          ---                    ---
    Diluted                                                                                                           $0.11                  $0.10        $0.35                  $0.31
                                                                                                                      =====                  =====        =====                  =====

    Weighted average shares used in
      calculating net income per common share
      Basic                                                                                                     152,600,000            154,958,044  131,911,539            154,000,219
      Diluted                                                                                                   155,591,537            156,151,875  136,445,635            155,874,381

    Notes:
    Note 1: 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
                                                                                                                                         --------------------                                --------------------
                                                                                                                                               2011                                  2012                                                2011                 2012
                                                                                                                                               ----                                  ----                                                ----                 ----
    Cost of revenues
                                                                                                                                           $151,096                               $71,359                                            $521,387             $417,984
    Selling and marketing                                                                                                                   502,139                               361,164                                             975,114            1,497,266
    General and administrative                                                                                                            1,824,959                             1,004,448                                           3,809,971            5,985,993
    Total                                                                                                                                $2,478,194                            $1,436,971                                          $5,306,472           $7,901,243
                                                                                                                                         ==========                            ==========                                          ==========           ==========
       Note 2: Each ADS represents
        two Class A common shares.


                                                        TAL Education Group
                             Reconciliation of Non-GAAP Measures to the Most Comparable GAAP Measures
                                  (In U.S. dollar, 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,
                                              ---------------------                           ---------------------
                                                    2011                   2012                       2011                 2012
                                                    ----                   ----                       ----                 ----

    Cost of revenues                         $16,164,293            $28,510,837                $56,142,838          $95,587,218
    Share-based
     compensation expense in
     cost of revenues                            151,096                 71,359                    521,387              417,984
    Non-GAAP cost of
     revenues                                 16,013,197             28,439,478                 55,621,451           95,169,234
                                              ==========             ==========                 ==========           ==========

    Selling and marketing
     expenses                                  3,033,166              5,533,211                  9,934,938           23,166,231
    Share-based
     compensation expense in
     selling and marketing
     expenses                                    502,139                361,164                    975,114            1,497,266
    Non-GAAP selling and
     marketing expenses                        2,531,027              5,172,047                  8,959,824           21,668,965
                                               =========              =========                  =========           ==========
    General and
     administrative expenses                   6,443,234             11,850,869                 19,085,014           37,814,962
    Share-based
     compensation expense in
     general and
     administrative expenses                   1,824,959              1,004,448                  3,809,971            5,985,993
    Non-GAAP general and
     administrative expenses                   4,618,275             10,846,421                                      31,828,969
                                                                                  15,275,043


    Operating costs and
     expenses                                 25,640,693             45,894,917                 85,162,790          156,708,071
    Share-based
     compensation expense in
     operating costs and
     expenses                                  2,478,194              1,436,971                  5,306,472            7,901,243
    Non-GAAP operating
     costs and expenses                       23,162,499             44,457,946                                     148,806,828
                                                                                  79,856,318


    Income from operations                     8,161,377              6,320,639                 25,574,046           21,024,871
    Share based compensation
     expenses                                  2,478,194              1,436,971                  5,306,472            7,901,243
    Non-GAAP income from
     operations                               10,639,571              7,757,610                 30,880,518           28,926,114
                                              ==========              =========                 ==========           ==========

    GAAP net income
     attributable to  TAL
     Education Group                           8,446,272              7,582,177                 24,041,150           24,313,653
    Share based compensation
     expenses                                  2,478,194              1,436,971                  5,306,472            7,901,243
    Non-GAAP net income
     attributable to TAL
     Education Group                        $10, 924,466             $9,019,148                                     $32,214,896
                                                                                 $29,347,622

                                                For the Three Months         For the Fiscal Year Ended
                                                Ended February 28/29,                February 28/29,
                                                ---------------------                ---------------
                                                      2011                  2012       2011              2012
                                                      ----                  ----       ----              ----

    Net income per ADS
       - Basic                                       $0.11                 $0.10      $0.36             $0.32
       - Diluted                                      0.11                  0.10       0.35              0.31

    Non-GAAP net income per ADS
       - Basic                                        0.14                  0.12       0.43              0.42
       - Diluted                                     $0.14                 $0.12      $0.43             $0.41

    ADSs used in calculating net income per ADS
       - Basic                                  76,300,000            77,479,022 65,955,769        77,000,109
       - Diluted                                77,795,768            78,075,937 68,222,817        77,937,191

    Note:
    (1) The Non-GAAP adjusted
     net income per share and per
     ADS are computed using Non-
     GAAP adjusted net income and
     the same number of shares
     and ADSs used in GAAP basic
     and diluted EPS calculation.

SOURCE TAL Education Group

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