Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES TAL Education Group (the "Company" or "TAL") was incorporated in the Cayman Islands on January 10, 2008 to be the holding company for a group of companies engaged in the provision of high quality after-school tutoring programs for primary and secondary school students in the People's Republic of China (the "PRC"). At the time of its incorporation and through the Variable Interest Entities ("VIEs") arrangements as described below, the ownership interest of the Company was held by Bangxin Zhang, Yundong Cao, Yachao Liu and Yunfeng Bai (collectively, "the founding shareholders"). The Company, its subsidiaries, its consolidated VIEs and VIEs' subsidiaries and schools are collectively referred to as the "Group". Place of Later of date of incorporation (or Percentage incorporation establishment) of legal Name or acquisition /operation ownership Principal activities Major Subsidiaries: TAL Holding Limited ("TAL Hong Kong") March 11, 2008 Hong Kong 100 Holding company Beijing Century TAL Education Technology Co., Ltd. ("TAL Beijing") May 8, 2008 Beijing 100 Software sales, and consulting service Beijing Huanqiu Zhikang Shidai Education Consulting Co., Ltd. ("Huanqiu Zhikang") September 17, 2009 Beijing 100 Education and management consulting service Yidu Huida Education Technology (Beijing) Co., Ltd. ("Yidu Huida") November 11, 2009 Beijing 100 Software sales and consulting service Yidu Technology Group ("Yidu Cayman") February 2, 2012 Cayman Islands 100 Holding company Yidu Technology Group Limited ("Yidu Hong Kong") April 13, 2012 Hong Kong 100 Holding company Beijing Xintang Sichuang Education Technology Co., Ltd. ("Beijing Xintang Sichuang") August 27, 2012 Beijing 100 Software and Network development, sales, and consulting service Zhixuesi Education Consulting (Beijing) Co., Ltd. ("Zhixuesi Beijing") October 23, 2012 Beijing 100 Software and Network development, sales, and consulting service YiduXuedi Network Technology (Beijing) Co., Ltd. ("Yidu Xuedi Beijing") November 30, 2012 Beijing 100 Software and Network development, sales, and consulting service Pengxin TAL Industrial investment (Shanghai) Co., Ltd. ("Pengxin TAL") June 26, 2014 Shanghai 100 Investment management and consulting services Tianjin Dongxuetang Education Information Consulting Co., Ltd (“Tianjin Dongxuetang”) June 15, 2015 Tianjin 100 Educational information consulting and educational software development Wuxi TAL Education Consulting Co., Ltd (“Wuxi TAL”) January 12, 2016 Wuxi 100 Educational information consulting and educational software development Firstleap Education (“Firstleap”) January 22, 2016 Cayman Islands 100 Holding company Firstleap Education (HK) Limited (“Firstleap Hong Kong”) January 22, 2016 Hong Kong 100 Holding company Beijing Lebai Information Consulting Co., Ltd (“Lebai Information”) January 22, 2016 Beijing 100 Education and management consulting service Beijing Yizhen Xuesi Education Technology Co., Ltd (“Yizhen Xuesi”) November 3, 2016 Beijing 100 Software and Network development, sales, and consulting service VIEs: Beijing Xueersi Education Technology Co., Ltd. ("Xueersi Education") December 31, 2005 Beijing N/A* Sales of educational materials and products Beijing Xueersi Network Technology Co., Ltd. ("Xueersi Network") August 23, 2007 Beijing N/A* Technology development and Educational consulting service Xinxin Xiangrong Education Technology (Beijing) Co., Ltd (“Xinxin Xiangrong”) June 23, 2015 Beijing N/A* Technology development and Educational consulting service Beijing Lebai Education Consulting Co., Ltd (“Lebai Education”) January 22, 2016 Beijing N/A* Educational consulting service VIEs' major subsidiaries and schools: Beijing Haidian District Xueersi Training School ("Beijing Haidian School") July 3, 2006 Beijing N/A* After-school tutoring for primary and secondary school students Beijing Dongcheng District Xueersi Training School ("Beijing Dongcheng School") March 21, 2008 Beijing N/A* After-school tutoring for primary and secondary school students Wuhan Jianghan District Xueersi English Training School ("Wuhan Jianghan School") July 1, 2008 Wuhan N/A* Language education Shanghai Changning District Xueersi Training School ("Shanghai Changning School") August 1, 2008 Shanghai N/A* After-school tutoring for primary and secondary school students Shanghai Minhang District Xueersi Training School ("Shanghai Minhang School") August 1, 2008 Shanghai N/A* Language education Nanjing Xueersi Education Training School ("Nanjing Xueersi School") April 19, 2013 Nanjing N/A* After-school tutoring for primary and secondary school students Tianjin Xueersi Education Information Consulting Co., Ltd. ("Tianjin Education") August 14, 2009 Tianjin N/A* Educational information consulting service Guangzhou Xueersi Education Technology Co., Ltd. ("Guangzhou Education") August 16, 2009 Guangzhou N/A* Educational technology research and development Shenzhen Xueersi Education Technology Co., Ltd. ("Shenzhen Education") December 22, 2009 Shenzhen N/A* Teaching software research and development Tianjin Hexi District Xueersi Training School (''Hexi Xueersi School'') August 3, 2010 Tianjin N/A* After-school tutoring for primary and secondary school students Hangzhou Xueersi Education Consulting Co., Ltd. (''Hangzhou Education'') December 1, 2010 Hangzhou N/A* Educational information consulting and educational software development Xi'an Xueersi Network Technology Co., Ltd. (''Xi'an Network'') February 15, 2011 Xi'an N/A* Education consulting service Chengdu Xueersi Education Consulting Co., Ltd. (''Chengdu Education'') March 18, 2011 Chengdu N/A* Educational information consulting and educational software development TaiyuanYingze District Xueersi Training School (" Taiyuan Yingze School") February 21, 2012 Taiyuan N/A* After-school tutoring for primary and secondary school students Suzhou TAL Network Technology Co., Ltd (''Suzhou TAL Network'') February 21, 2012 Suzhou N/A* Education consulting service Chongqing Shapingba District Xueersi Education Training School ("Chongqing Shapingba School") February 24, 2012 Chongqing N/A* After-school tutoring for primary and secondary school students Shenyang Xueersi Education Information Consulting Co., Ltd. ("Shenyang Education") April 12, 2012 Shenyang N/A* Educational information consulting service Zhengzhou Jinshui District Xueersi Shulihua Training Center ("Zhengzhou Jinshui Center") June 18, 2012 Zhengzhou N/A* After-school tutoring for primary and secondary school students Guangzhou Tianhe District Xueersi Training Center ("Guangzhou Tianhe Center") July 12, 2012 Guangzhou N/A* After-school tutoring for primary and secondary school students Qingdao Xueersi Education Information Consulting Co., Ltd. ("Qingdao Education") April 1, 2014 Qingdao N/A* Educational information consulting and educational software development Chongqing Nan'an Xueersi Training School ("Chongqing Nan’an School") April 11, 2014 Chongqing N/A* After-school tutoring for primary and secondary school students Changsha TAL Education Technology Co., Ltd. ("Changsha Education") August 1, 2014 Changsha N/A* Educational information consulting and educational software development Jinan Xueersi Education Training School ("Jinan Xueersi School") September 2, 2014 Jinan N/A* After-school tutoring for primary and secondary school students Shijiazhuang Qiaoxi District Xueersi Culture Training School ("Shijiazhuang Qiaoxi School") December 18, 2014 Shijiazhuang N/A* After-school tutoring for primary and secondary school students Xi'an Beilin District Xueersi Education Training Center (“Xi'an Beilin”) April 2, 2015 Xi'an N/A* After-school tutoring for primary and secondary school students Hefei Lebai Education Consulting Co., Ltd (“Hefei Lebai”) January 22, 2016 Hefei N/A* Educational information consulting service Shenyang Firstleap Education Training School (“Shenyang Firstleap”) January 22, 2016 Shenyang N/A* Tutoring for children English Beijing Yinghe Youshi Technology Co., Ltd (“Yinghe Youshi”) February 1, 2016 Beijing N/A* Educational information consulting service Beijing Shunshun Bida Information Consulting Co., Ltd. (“Shunshun Bida”) July 31, 2016 Beijing N/A* Study abroad intermediary service Shanghai Yaya Information Technology Co., Ltd (“Shanghai Yaya”) August 26, 2016 Shanghai N/A* Technology development and consulting service * These entities are controlled by the Company pursuant to the contractual arrangements disclosed below. The VIE arrangements Due to PRC legal restrictions on foreign ownership and investment in the education business in China, aside from the Group's personalized premium tutoring services in Beijing conducted by the Company’s wholly owned PRC subsidiaries, Huanqiu Zhikang and Zhixuesi Beijing, the Group provides and plans to provide most of its services in the PRC through its VIEs including Xueersi Education, Xueersi Network, Xinxin Xiangrong, Lebai Education and their subsidiaries and schools. To provide the Company the power to control and the ability to receive the expected residual returns of the VIEs and their subsidiaries and schools, the Company's wholly owned subsidiary, TAL Beijing, entered into a series of contractual arrangements with Xueersi Education, Xueersi Network and their respective shareholders on February 12, 2009 and August 12, 2009, including exclusive business service agreements, which were superseded by the Exclusive Business Cooperation Agreement entered into on June 25, 2010. TAL Beijing entered into a series of contractual arrangements with Xinxin Xiangrong on August 4, 2015. Besides, in connection with the Company's acquisition of Firstleap during fiscal year 2016, Lebai Information, a wholly owned PRC subsidiary of Firstleap, entered into a series of contractual arrangements on October 26, 2015 with Lebai Education and its sole shareholder, Xueersi Education, which is a VIE of the Group. The VIEs and their subsidiaries and schools hold various licenses upon which the Group’s business depends. A substantial majority of the Group’s employees who provide the Group’s services are hired by the VIEs and their subsidiaries and schools, and the VIEs and their subsidiaries and schools lease a substantial majority of the properties upon which the Group’s services are delivered. The net revenue from the VIEs and their subsidiaries and schools accounted for 93.8 Through the below contractual arrangements, TAL Beijing and Lebai Information have (1) the power to direct the activities of the VIEs and their subsidiaries and schools that most significantly affect their economic performance and (2) the right to receive substantially all the benefits from the VIEs and their subsidiaries and schools. They are therefore considered the primary beneficiaries of the VIEs and their subsidiaries and schools, and accordingly, the results of operations, assets and liabilities of the VIEs and their subsidiaries and schools are consolidated in the Group's financial statements. Series of exclusive technology support and service agreements: Lebai Information, Lebai Education and its sole shareholder, subsidiaries and schools have entered into an Exclusive Business Service Agreement on October 26, 2015, the terms of which are substantially the same as the agreement of Xinxin Xiangrong summarized above. The term of such agreement is 10 years The services under each of these agreements include, but are not limited to, employee training, technology development, transfer and consulting services, public relation services, market survey, research and consulting services, market development and planning services, human resource and internal information management, network development, upgrade and ordinary maintenance services, and software and trademark licensing and other additional services as the parties may mutually agree from time to time. TAL Beijing, Lebai Information or their designated affiliates, owns the exclusive intellectual property rights developed in the performance of these agreements. As consideration for these services, TAL Beijing, Lebai Information or their designated affiliates are entitled to charge the VIEs and VIEs' subsidiaries and schools service fees annually or regularly, and adjust the service fee rates from time to time at their discretion. Call option agreement: TAL Beijing, Xinxin Xiangrong and the shareholders of Xinxin Xiangrong have entered into a call option agreement on August 4, 2015. Lebai Information, Lebai Education and the sole shareholder of Lebai Education have entered into a call option agreement on October 26, 2015, the terms of which are substantially the same as the call option agreement summarized above. Under each of these agreements, TAL Beijing or Lebai Information has sole discretion to decide when to exercise the option, and whether to exercise the option in part or in full. Unless earlier terminated by mutual agreement of all parties, these agreements shall remain effective until TAL Beijing and Lebai Information exercise their purchase right to purchase all the VIEs' equity interests according to these agreements. Equity pledge agreement: TAL Beijing, Xinxin Xiangrong and the shareholders of Xinxin Xiangrong have entered into an equity pledge agreement on August 4, 2015. Lebai Information, Lebai Education and the sole shareholder of Lebai Education have entered into an equity pledge agreement on October 26, 2015, the terms of which are substantially the same as the agreements summarized above. These agreements are effective on the date of execution and terminate when all the secured rights under the relevant agreements, as the case may be, are completely fulfilled or terminated in accordance thereof. Letter of Undertaking: Power of attorney: The articles of associations of each of the VIEs state that the major rights of the shareholders in shareholders' meeting include the power to approve the operating strategy and investment plan, elect the members of board of directors and approve their compensation and review and approve annual budget and earning distribution plan. Therefore, through the irrevocable power of attorney arrangement TAL Beijing or Lebai Information has the ability to exercise effective control over each of the VIEs respectively through shareholder votes and, through such votes, to also control the composition of the board of directors. As a result of these contractual rights, the Company has the power to direct the activities of each of the VIEs that most significantly impact their economic performance. Spousal consent letter: The spouse of each shareholder of the VIEs has entered into a spousal consent letter to acknowledge that she is aware of, and consents to, the execution by her spouse of the call option agreement described above. Each spouse further agrees that she will not take any actions or raise any claims to interfere with the performance by her spouse of the obligations under the above mentioned agreements. Deed of undertaking: Pursuant to the Deed, Mr. Zhang has irrevocably covenanted and undertaken to the Company that: · as long as Mr. Bangxin Zhang owns shares in the Company, whether legally or beneficially, and directly or indirectly (including shares held through Mr. Bangxin Zhang’s personal holding company Bright Unison Limited or any other company, trust, nominee or agent, if any), representing more than 50% of the aggregate voting power of the then total issued and outstanding shares of the Company; · Mr. Bangxin Zhang will not, directly or indirectly, (i) requisition or call any meeting of shareholders for the purpose of removing or replacing any of existing directors or appointing any new director, or (ii) propose any resolution at any of shareholders meetings to remove or replace any of existing directors or appoint any new director; and should any meeting of shareholders be called by the board of directors or requisitioned or called by shareholders for the purpose of removing or replacing any of the directors or appointing any new director, or if any resolution is proposed at any of shareholder meetings to remove or replace any of the directors or appoint any new director, the maximum number of votes which Mr. Bangxin Zhang will be permitted to exercise shall be equal to the total aggregate number of votes of the then total issued and outstanding shares of the Company held by all members of the Company, other than shares which are owned, whether legally or beneficially, and directly or indirectly by Mr. Bangxin Zhang, less one vote; and · Mr. Bangxin Zhang will not cast any votes he has as a director or shareholder (if applicable) on any resolutions or matters concerning enforcing, amending or otherwise relating to the Deed being considered or voted upon by board of directors or shareholders, as the case may be. In the opinion of Maples and Calder (Hong Kong) LLP, the Company's Cayman Islands legal counsel, the deed of undertaking constitutes the legal, valid and binding obligations of Mr. Bangxin Zhang, which cannot be unilaterally revoked by Mr. Bangxin Zhang, and is enforceable in accordance with its terms under existing Cayman Islands laws. Risks in relation to the VIE structure The Company believes that TAL Beijing and Lebai Information's contractual arrangements with the VIEs and their respective subsidiaries, schools and shareholders are in compliance with PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company's ability to enforce these contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of any existing PRC laws and regulations, the Group would be subject to fines or potential actions by the relevant PRC regulatory authorities with broad discretions, which could include: · revoke the Group's business and operating licenses; · require the Group to discontinue or restrict its operations; · limit the Group's business expansion in China by way of entering into contractual arrangements; · restrict the Group's right to collect revenues or impose fines; · block the Group's websites; · require the Group to restructure the operations in such a way as to compel the Group to establish a new enterprise, re-apply for the necessary licenses or relocate its businesses, staff and assets; · impose additional conditions or requirements with which the Group may not be able to comply; or · take other regulatory or enforcement actions against the Group that could be harmful to its business. The imposition of any of these penalties could result in a material adverse effect on the Company's ability to conduct the Group's business. In addition, if the imposition of any of these penalties causes the Company to lose the rights to direct the activities of the VIEs, and the VIEs' subsidiaries and schools, or the right to receive their economic benefits, the Company would no longer be able to consolidate the VIEs, and the VIEs' subsidiaries and schools. The Company does not believe that any penalties imposed or actions taken by the PRC government would result in the liquidation or dissolution of the Company, TAL Beijing, Lebai Information, or the VIEs and their respective subsidiaries and schools. The four three The VIE arrangements As of February 29, As of February 28, 2016 2017 Cash and cash equivalents $ 239,371,252 $ 129,006,713 Term deposits 8,090,042 - Prepaid expenses and other current assets 24,983,517 183,886,072 Total current assets 272,444,811 312,892,785 Property and equipment, net 82,652,777 120,949,643 Other non-current assets 163,504,716 392,352,040 Total assets 518,602,304 826,194,468 Deferred revenue-current 260,137,064 465,944,822 Accrued expenses and other current liabilities 80,414,871 127,137,865 Total current liabilities 340,551,935 593,082,687 Total non-current liabilities 9,510,846 27,789,961 Total liabilities $ 350,062,781 $ 620,872,648 For the year ended For the year ended For the year ended February 28, February 29, February 28, 2015 2016 2017 Net revenues $ 393,401,571 $ 575,928,039 $ 978,290,610 Net income $ 121,489,140 $ 175,088,200 $ 279,491,964 For the year ended For the year ended For the year ended February 28, February 29, February 28, 2015 2016 2017 Net cash provided by operating activities $ 85,654,272 $ 200,357,576 $ 211,244,112 Net cash used in investing activities $ (60,089,867) $ (111,318,060) $ (298,626,732) Net cash used in financing activities $ - $ - $ (16,376,965) As of February 28, 2015, February 29, 2016 and February 28, 2017, the balance of the amount payable by the VIEs and their subsidiaries and schools to TAL Beijing, Lebai Information or their designated affiliates related to the service fees was $ 18.7 17.9 49.0 As of February 29, As of February 28, 2016 2017 Cash and cash equivalents $ 194,670,784 $ 341,210,291 Term deposits 9,202,594 - Prepaid expenses and other current assets 39,541,385 217,017,929 Total current assets 243,414,763 558,228,220 Property and equipment, net 31,976,906 33,357,075 Other non-current assets 267,385,060 411,126,188 Total assets 542,776,729 1,002,711,483 Deferred revenue-current 20,797,686 38,202,210 Accrued expenses and other current liabilities 21,813,806 35,855,446 Total current liabilities 42,611,492 74,057,656 Total non-current liabilities 227,967,273 453,111,316 Total liabilities $ 270,578,765 $ 527,168,972 For the year ended For the year ended For the year ended February 28, February 29, February 28, 2015 2016 2017 Net revenues $ 40,567,998 $ 44,020,738 $ 64,809,045 Net loss $ (54,345,119) $ (72,332,000) $ (167,002,120) For the year ended For the year ended For the year ended February 28, February 29, February 28, 2015 2016 2017 Net cash provided by/ (used in) operating activities $ 61,923,715 $ (12,639,156) $ 148,313,329 Net cash used in investing activities $ (85,695,143) $ (104,033,927) $ (219,638,616) Net cash provided by financing activities $ 201,837,942 $ 645,989 $ 214,673,801 Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of their statutory reserve and their paid in capital, to the Company in the form of loans and advances or cash dividends. Please refer to Note 23 for disclosure of restricted net assets. |