Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2018shares | |
Document Information [Line Items] | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Document Period End Date | Dec. 31, 2018 |
Amendment Flag | false |
Entity Registrant Name | Tarena International, Inc. |
Entity Emerging Growth Company | false |
Entity Central Index Key | 0001592560 |
Entity Current Reporting Status | No |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Accelerated Filer |
Entity Well-known Seasoned Issuer | No |
Entity Shell Company | false |
Entity Interactive Data Current | Yes |
Entity Voluntary Filers | No |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | FY |
Ordinary Shares [Member] | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 53,079,496 |
Common Class A [Member] | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 45,873,437 |
ADR [Member] | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 907,626 |
Common Class B [Member] | |
Document Information [Line Items] | |
Entity Common Stock, Shares Outstanding | 7,206,059 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Millions | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Current assets: | ||
Cash and cash equivalents (including cash of VIEs of RMB294 and RMB1,376 as of December 31, 2017 and 2018, respectively) | ¥ 686,691 | |
Time deposits | ¥ 158,585 | 432,536 |
Restricted cash | 14,700 | |
Accounts receivable, net of allowance for doubtful accounts | 39,901 | 51,643 |
Amounts due from related party | 9,938 | 6,942 |
Prepaid expenses and other current assets | 171,466 | 155,707 |
Total current assets | 925,574 | 1,333,519 |
Time deposits | 517 | 505 |
Accounts receivable, net of allowance for doubtful accounts-non current | 12,157 | 6,404 |
Amounts due from a related party | 6,500 | 6,500 |
Property and equipment, net (including property and equipment, net of VIEs of nil and RMB 2,652 as of December 31, 2017 and 2018, respectively) | 626,068 | 502,339 |
Intangible assets, net | 19,046 | 4,753 |
Goodwill | 52,782 | 3,365 |
Long-term investments, including long term investments of VIEs of RMB 46,500 and RMB 38,380 as of December 31, 2017 and 2018, respectively) | 59,651 | 77,170 |
Deferred income tax assets (including deferred tax assets of VIEs of RMB 684 and 916 as of December 31, 2017 and 2018, respectively) | 53,752 | 5,621 |
Other non-current assets (including other non-current assets of VIEs of RMB 2,880 and 333 as of December 31, 2017 and 2018, respectively) | 122,000 | 78,251 |
Total assets | 1,878,047 | 2,018,427 |
Current liabilities: | ||
Short-term bank loan | 13,726 | |
Accounts payable | 18,529 | 11,351 |
Amounts due to related parties | 872 | 216 |
Income taxes payable (including income taxes payable of VIEs of RMB3,052 and RMB3,398 as of December 31, 2017 and 2018, respectively) | 71,847 | 67,333 |
Deferred revenue | 830,019 | 352,260 |
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of VIEs of RMB 186 and RMB 2,115 as of December 31, 2017 and 2018, respectively) | 365,428 | 313,429 |
Total current liabilities | 1,300,421 | 744,589 |
Other non-current liabilities (including other non-current liabilities of VIEs of RMB 267 and RMB 267 as of December 31, 2017 and 2018, respectively) | 5,983 | 4,329 |
Total liabilities | 1,306,404 | 748,918 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Treasury shares (3,330,646 and 7,099,141 Class A ordinary shares as of December 31, 2017 and 2018, respectively, at cost) | (457,169) | (255,103) |
Additional paid-in capital | 1,222,072 | 1,094,872 |
Accumulated other comprehensive income | 50,472 | 39,372 |
Retained earnings (accumulated deficit) | (243,162) | 389,967 |
Total equity attributable to the shareholders of Tarena International, Inc. | 572,618 | 1,269,509 |
Non-controlling interest | (975) | |
Total liabilities and equity | 1,878,047 | 2,018,427 |
Common Class A [Member] | ||
Shareholders' equity: | ||
Ordinary shares | 331 | 327 |
Common Class B [Member] | ||
Shareholders' equity: | ||
Ordinary shares | ¥ 74 | ¥ 74 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - CNY (¥) ¥ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | ¥ 686,691 | |
Property and equipment, net | ¥ 626,068 | 502,339 |
Long-term Investments | 59,651 | 77,170 |
Deferred income tax assets | 4,162 | 5,648 |
Other non-current assets | 122,000 | 78,251 |
Current liabilities: | ||
Income taxes payable | 71,847 | 67,333 |
Accrued expenses and other current liabilities | 365,428 | 313,429 |
Other non-current liabilities | ¥ 5,983 | ¥ 4,329 |
Common Class A [Member] | ||
Ordinary shares | ||
Ordinary shares, par value | ¥ 0.001 | ¥ 0.001 |
Authorized | 860,000,000 | 860,000,000 |
Issued | 52,972,578 | 52,340,176 |
Outstanding | 45,873,437 | 49,009,530 |
Treasury shares | 7,099,141 | 3,330,646 |
Common Class B [Member] | ||
Ordinary shares | ||
Ordinary shares, par value | ¥ 0.001 | ¥ 0.001 |
Authorized | 40,000,000 | 40,000,000 |
Issued | 7,206,059 | 7,206,059 |
Outstanding | 7,206,059 | 7,206,059 |
VIE [Member] | ||
Current assets: | ||
Cash | ¥ 1,376 | ¥ 294 |
Property and equipment, net | 2,652 | 0 |
Investments, Fair Value Disclosure | 38,380 | 46,500 |
Deferred income tax assets | 916 | 684 |
Other non-current assets | 333 | 2,880 |
Current liabilities: | ||
Income taxes payable | 3,398 | 3,052 |
Accrued expenses and other current liabilities | 2,115 | 186 |
Other non-current liabilities | ¥ 267 | ¥ 267 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Cost of revenues | [1] | ¥ (918,549) | ¥ (592,946) |
Gross profit | 1,166,822 | 1,160,749 | |
Selling and marketing expenses | [1] | (1,047,632) | (707,157) |
General and administrative expenses | [1] | (546,568) | (354,832) |
Research and development expenses | [1] | (167,254) | (100,032) |
Operating income (loss) | (594,632) | (1,272) | |
Interest income | 26,200 | 16,097 | |
Other income (loss) | (33,583) | 16,702 | |
Loss on foreign currency forward contract | |||
Foreign currency exchange gains (loss) | 4,951 | (6,284) | |
Income (loss) before income taxes | (597,064) | 25,243 | |
Income tax (expense) benefit | 4,865 | (25,390) | |
Net income (loss) | (592,199) | (147) | |
Less: Net loss attributable to non-controlling interests | (2,025) | ||
Net income (loss) attributable to Class A and Class B ordinary shareholders | ¥ (590,174) | ¥ (147) | |
Basic earnings (loss) per Class A and Class B ordinary share | ¥ (10.744) | ¥ (0.003) | |
Diluted earnings (loss) per Class A and Class B ordinary share | ¥ (10.744) | ¥ (0.003) | |
Net income (loss) | ¥ (592,199) | ¥ (147) | |
Other comprehensive income (loss) | |||
Foreign currency translation adjustment, net of nil income taxes | 11,100 | (13,832) | |
Unrealized holding gains (loss) on available for sale securities, net of RMB 42, RMB 2,818 and RMB nil income taxes for year 2016, 2017 and 2018 | 11,496 | ||
Less: Other-than-temporary impairment loss recognized in other comprehensive loss (before tax) | (5,000) | ||
Comprehensive income (loss) | ¥ (581,099) | ¥ (18,979) | |
[1] | (a) Includes share-based compensation expense as follows (note 16): |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Foreign currency translation adjustment, taxes | |||
Share-based compensation expense | (124,253) | (77,415) | (67,824) |
Unrealized holding gains on available for sale securities | 0 | 2,818 | 42 |
Reclassification adjustment for gains on available for sale securities realized in net income taxes | 0 | 2,818 | 42 |
Cost of revenues [Member] | |||
Share-based compensation expense | (2,265) | (1,285) | (4,124) |
Selling and marketing expenses [Member] | |||
Share-based compensation expense | (8,866) | (4,863) | (5,496) |
General and administrative expenses [Member] | |||
Share-based compensation expense | (84,645) | (60,491) | (51,154) |
Research and development expenses [Member] | |||
Share-based compensation expense | ¥ (28,477) | ¥ (10,776) | ¥ (7,050) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CNY (¥) ¥ in Thousands | Ordinary Shares [Member]Common Class A [Member] | Ordinary Shares [Member]Common Class B [Member] | Treasury Shares [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings (accumulated deficit) [Member] | Non-controlling Interest [Member] | Common Class A [Member] | Common Class B [Member] | Total |
Balance at Dec. 31, 2015 | ¥ 276 | ¥ 98 | ¥ (49,355) | ¥ 907,018 | ¥ 30,232 | ¥ 281,107 | ¥ 1,169,376 | |||
Balance, shares at Dec. 31, 2015 | 44,914,538 | 10,574,896 | ||||||||
Net income (loss) | 226,120 | 226,120 | ||||||||
Conversion of Class B ordinary shares to Class A ordinary shares | ¥ 12 | ¥ (12) | ||||||||
Conversion of Class B ordinary shares to Class A ordinary shares (shares) | 1,679,647 | (1,679,647) | ||||||||
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares | ¥ 14 | 20,374 | 20,388 | |||||||
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares (shares) | 2,141,043 | |||||||||
Foreign currency translation adjustment, net of nil income taxes | 22,972 | 22,972 | ||||||||
Share-based compensation | 67,824 | 67,824 | ||||||||
Unrealized holding gains on available-for-sale security | 5,235 | 5,235 | ||||||||
Reclassification adjustment for gains on available for sale securities realized in net income | (235) | (235) | ||||||||
Dividends | (54,026) | (54,026) | ||||||||
Repurchase of Class A ordinary shares | (44,406) | (44,406) | ||||||||
Balance at Dec. 31, 2016 | ¥ 302 | ¥ 86 | (93,761) | 995,216 | 58,204 | 453,201 | 1,413,248 | |||
Balance, shares at Dec. 31, 2016 | 48,735,228 | 8,895,249 | ||||||||
Net income (loss) | (147) | (147) | ||||||||
Conversion of Class B ordinary shares to Class A ordinary shares | ¥ 12 | ¥ (12) | ||||||||
Conversion of Class B ordinary shares to Class A ordinary shares (shares) | 1,689,190 | (1,689,190) | ||||||||
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares | ¥ 13 | 22,241 | 22,254 | |||||||
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares (shares) | 1,915,758 | |||||||||
Foreign currency translation adjustment, net of nil income taxes | (13,832) | (13,832) | ||||||||
Share-based compensation | 77,415 | 77,415 | ||||||||
Unrealized holding gains on available-for-sale security | 11,496 | 11,496 | ||||||||
Reclassification adjustment for gains on available for sale securities realized in net income | (16,496) | |||||||||
Dividends | (63,087) | (63,087) | ||||||||
Repurchase of Class A ordinary shares | (161,342) | (161,342) | ||||||||
Balance at Dec. 31, 2017 | ¥ 327 | ¥ 74 | (255,103) | 1,094,872 | 39,372 | 389,967 | 1,269,509 | |||
Balance, shares at Dec. 31, 2017 | 52,340,176 | 7,206,059 | 52,340,176 | 7,206,059 | ||||||
Net income (loss) | (590,174) | ¥ (2,025) | (592,199) | |||||||
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares | ¥ 4 | 2,947 | 2,951 | |||||||
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares (shares) | 632,402 | |||||||||
Foreign currency translation adjustment, net of nil income taxes | 11,100 | 11,100 | ||||||||
Non-controlling interest | 1,050 | 1,050 | ||||||||
Share-based compensation | 124,253 | 124,253 | ||||||||
Dividends | (42,955) | (42,955) | ||||||||
Repurchase of Class A ordinary shares | (202,066) | (202,066) | ||||||||
Balance at Dec. 31, 2018 | ¥ 331 | ¥ 74 | ¥ (457,169) | ¥ 1,222,072 | ¥ 50,472 | ¥ (243,162) | ¥ (975) | ¥ 571,643 | ||
Balance, shares at Dec. 31, 2018 | 52,972,578 | 7,206,059 | 52,972,578 | 7,206,059 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |||
Foreign currency translation adjustment, taxes | |||
Unrealized holding gains on available for sale securities, net of income taxes | 0 | 2,818 | 42 |
Reclassification adjustment for gains on available for sale securities realized in net income taxes | ¥ 0 | ¥ 2,818 | ¥ 42 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating activities: | |||
Net income (loss) | ¥ (592,199) | ¥ (147) | ¥ 226,120 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 158,757 | 100,763 | 73,636 |
Loss on disposal of property and equipment | 1,238 | 917 | 297 |
Deferred income tax benefit | (46,595) | (1,171) | (1,547) |
Share based compensation expense | 124,253 | 77,415 | 67,824 |
Investment (income) loss | 1,548 | 47 | (71) |
Foreign currency exchange (gain) loss, net | (4,440) | 6,097 | (33,405) |
Impairment of long term investments | 35,524 | 10,000 | |
Changes in operating assets and liabilities | |||
Accounts receivable | 6,000 | (30,466) | 3,994 |
Amount due from a related party | (2,996) | (1,964) | (3,753) |
Inventory | (971) | ||
Prepaid expenses and other current assets | (3,454) | (33,126) | (65,491) |
Accrued interest income on time deposits | 9,814 | 1,809 | 5,264 |
Other non-current assets | (15,986) | 6,581 | (5,707) |
Accounts payable | (390) | (196) | (248) |
Fund wired to a related party | (22,488) | ||
Fund received from a related party | 22,488 | ||
Amounts due to related parties | 656 | (310) | (800) |
Income taxes payable | 2,978 | 17,049 | 27,043 |
Deferred revenue | 445,854 | 23,477 | 123,373 |
Accrued expenses and other current liabilities | 44,128 | 127,534 | 82,077 |
Other non-current liabilities | (638) | (2,604) | (2,559) |
Net cash provided by operating activities | 163,081 | 301,705 | 496,047 |
Investing activities: | |||
Purchase of property and equipment and intangible assets | (276,253) | (176,819) | (383,675) |
Proceeds from disposal of property and equipment | 8,905 | 423 | 446 |
Purchase of short-term investments | 0 | (950,000) | (420,000) |
Proceeds from maturity of short-term investments | 950,000 | 420,000 | |
Purchase of long-term investments | (14,580) | (50,500) | (12,755) |
Payment of long-term investment deposit | (4,380) | ||
Purchase of time deposits | (284,166) | (515,739) | (638,170) |
Proceeds from maturity of time deposits | 563,354 | 534,958 | 925,386 |
Payment for acquisition of Hanru Hangzhou | (4,360) | ||
Cash acquired from acquisition of Hanru Hangzhou | 148 | ||
Payment for acquisition of Hao Xiao Zi | (57,700) | ||
Cash acquired from acquisition of Hao Xiao Zi | 11,424 | ||
Issuance of loan to a related party | (6,500) | ||
Issuance of loans to employees | (69,784) | (30,626) | (12,143) |
Proceeds from repayment of loans from employees | 26,823 | 6,139 | 3,157 |
Net cash used in investing activities | (91,977) | (236,544) | (128,466) |
Financing activities: | |||
Proceeds from bank borrowing | 13,228 | ||
Contribution from non-controlling entities | 1,050 | ||
Issuance of Class A ordinary shares in connection with exercise of share options | 2,952 | 22,254 | 20,388 |
Payment of dividend | (42,955) | (63,087) | (54,026) |
Repurchase of treasury shares | (196,957) | (143,389) | (44,406) |
Net cash used in financing activities | (222,682) | (184,222) | (78,044) |
Changes in cash and cash equivalents | (151,578) | (119,061) | 289,537 |
Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash | 10,571 | (4,920) | 7,197 |
Net change in cash, cash equivalents and restricted cash | (141,007) | (123,981) | 296,734 |
Cash, cash equivalents and restricted cash at beginning of year | 686,691 | 810,672 | 513,938 |
Cash, cash equivalents and restricted cash at end of year | 686,691 | 810,672 | |
Supplemental disclosure of cash flow information: | |||
Income taxes paid | 37,216 | 9,615 | 2,724 |
Non-cash investing and financing activities: | |||
Accrual for purchase of equipment | 18,292 | 10,737 | ¥ 3,692 |
Payable for repurchase of treasury shares | ¥ 5,109 | ¥ 17,953 |
DESCRIPTION OF BUSINESS, ORGANI
DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS | 12 Months Ended |
Dec. 31, 2018 | |
DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS | |
DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS | 1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (a) Description of business Tarena International, Inc. (“Tarena International”), through its wholly-owned subsidiaries and consolidated variable interest entities or VIEs (collectively referred to hereinafter as the “Company”), is principally engaged in providing professional education services including professional information technology (“IT”) training courses and non-IT training courses across the People’s Republic of China (“PRC”). The Company is also engaged in providing IT and non-IT training courses for children. All of the Company’s operations are located in the PRC with nearly all of its customers located in the PRC. (b) Organization Tarena International is a holding company that was incorporated in the Cayman Islands on October 8, 2003 by Mr. Han Shaoyun (“Mr. Han”), the founder and former chief executive officer of the Company, and five other individuals. Tarena International is the parent company of a number of wholly-owned subsidiaries that are engaged in professional education services. The Company’s education services in certain locations of the PRC were previously conducted through Beijing Tarena Jinqiao Technology Co., Ltd. (“Beijing Tarena”) and Shanghai Tarena Software Technology Co., Ltd. (“Shanghai Tarena”) (collectively, the “Tarena Entities”), and their subsidiaries, in order to comply with the PRC laws and regulations which restricted foreign investments in companies that were engaged in education services. Pursuant to the VIE Agreements as described below, Tarena International has effective financial control over Tarena Entities and their initial capital funding was provided by Tarena Technologies Inc., (a wholly-owned subsidiary of Tarena International or the “WFOE”, formerly known as Beijing Tarena Technology Co., Ltd.). The recognized and unrecognized revenue-producing assets that were held by Tarena Entities and their subsidiaries primarily consisted of property and equipment, operating leases for the learning premises, ICP license, www.tmooc.cn website and assembled workforce in those learning centers. In 2016, Beijing Tarena received additional capital injection of RMB3,000 through its nominee equity holders. All of the equity interests of Tarena Entities are legally held by Mr. Han and Mr. Li Jianguang (“Mr. Li”), a director of Tarena International. Both individuals are nominee equity holders of Tarena Entities and holding their equity interests on behalf of Tarena International. Through a series of contractual agreements and arrangements (the “VIE Agreements”), among Tarena International, WFOE, Tarena Entities and their nominee equity holders, the nominee equity holders of Tarena Entities have granted all their legal rights including voting rights and disposition rights of their equity interests in Tarena Entities to Tarena International. The nominee equity holders of Tarena Entities do not participate significantly in income and loss and do not have the power to direct the activities of the Tarena Entities that most significantly impact their economic performance. Accordingly, the Tarena Entities are considered variable interest entities. In accordance with Accounting Standards Codification (“ASC”) 810‑10‑25‑38A, Tarena International has a controlling financial interest in Tarena Entities because Tarena International has (i) the power to direct activities of Tarena Entities that most significantly impact the economic performance of Tarena Entities; and (ii) the obligation to absorb the expected losses and the right to receive expected residual return of Tarena Entities that could potentially be significant to Tarena Entities. Thus, Tarena International is the primary beneficiary of the Tarena Entities. Under the terms of the VIE Agreements, Tarena International has (i) the right to receive economic benefits that could potentially be significant to Tarena Entities in the form of service fees under the exclusive business cooperation agreements; (ii) the right to receive all dividends declared by Tarena Entities and the right to all undistributed earnings of Tarena Entities; (iii) the right to receive the residual benefits of Tarena Entities through its exclusive option to acquire 100% of the equity interests in Tarena Entities, to the extent permitted under PRC law. Accordingly, Tarena International is the primary beneficiary of the Tarena Entities and the financial statements of Tarena VIE Entities are consolidated in Tarena International’s consolidated financial statements. Under the terms of the VIE Agreements, Tarena Entities’ nominee equity holders have no rights to the net assets nor have the obligations to fund the deficit, and such rights and obligations have been vested to Tarena International. All of the equity (net assets) and net income of Tarena Entities are attributed to Tarena International. The key terms of the VIE Agreements are as follows: Loan Agreements: The WFOE provided RMB6,000 loans in aggregate to Tarena Entities’ nominee equity holders for the sole purpose of their contribution of Tarena Entities’ registered capital. The nominee equity holders of Tarena Entities can only repay the loans by transferring all of their legal equity interest in Tarena Entities to the WFOE or its designated representatives pursuant to the exclusive option agreements. The loans shall be interest-free, unless the transfer price exceeds the principal of the loans when each nominee equity holder of Tarena Entities transfers his equity interests in Tarena Entities to Tarena International or its designated representatives. Such excess over the principal of the loan shall be deemed as the interest of the loans to the extent permitted under the PRC law. The initial terms of the loans expire in 2026, which can be extended with the written notice of both the WFOE and Tarena Entities before expiration. In March 2017, the Company dissolved Shanghai Tarena and obtained the repayment of RMB1,000 from Shanghai Tarena’s nominee equity holders. Exclusive Option Agreements: Each of the nominee equity holders irrevocably granted Tarena International, Inc. or its designated representatives an exclusive option to purchase, to the extent permitted under PRC law, all or part of his equity interests in Tarena Entities. In addition, Tarena International has the option to acquire the equity interests of Tarena Entities for a specified price equal to the loan provided by the WFOE to the nominee equity holders. If the lowest price permitted under PRC law is higher than the above price, the lowest price permitted under PRC law shall apply. Without Tarena International’s prior written consent, the nominee equity holders shall not sell, transfer, mortgage, or otherwise dispose any equity interests in Tarena Entities. These agreements will remain effective until all equity interests held in Tarena Entities by the nominee equity holders are transferred or assigned to Tarena International or its designated representatives. Exclusive Business Cooperation Agreements: The WFOE has the exclusive right to provide, among other things, technical support, business support and related consulting services to Tarena Entities and Tarena Entities agree to accept all the consultation and services provided by the WFOE. Without the WFOE’s prior written consent, Tarena Entities are prohibited from engaging any third party to provide any of the services under this agreement. In addition, the WFOE exclusively owns all intellectual property rights arising out of or created during the performance of this agreement. Tarena Entities agree to pay a monthly service fee to the WFOE at an amount determined solely by the WFOE after taking into account factors including the complexity and difficulty of the services provided, the time consumed, the seniority of the WFOE employees providing services to Tarena Entities, the value of services provided, the market price of comparable services and the operating conditions of Tarena Entities. Furthermore, to the extent permitted under the PRC law, the WFOE agrees to provide financial support to Tarena Entities. The term of the agreement will remain effective unless the WFOE terminates the agreement in writing or a competent governmental authority rejects the renewal applications by either Tarena Entities or the WFOE to renew its respective business license upon expiration. Tarena Entities are not permitted to terminate this agreement in any event unless required by applicable laws. Power of Attorney: Each nominee equity holder of Tarena Entities appointed the WFOE as the attorney-in-fact to act on all matters pertaining to Tarena Entities and to exercise all of their rights as an equity holder of Tarena Entities, including but not limited to attend shareholders’ meetings, vote on their behalf on all matters of Tarena Entities requiring shareholders’ approval under PRC laws and regulations and the articles of association of Tarena Entities, designate and appoint directors and senior management members. The WFOE may authorize or assign its rights under this appointment to any other person or entity at its sole discretion without prior notice to the nominee equity holders of Tarena Entities. Each power of attorney will remain effective until the nominee equity holder ceases to hold any equity interest in Tarena Entities. Equity Interest Pledge Agreements: Pursuant to the equity interest pledge agreement, Tarena Entities’ nominee equity holders pledged all of their equity interests in Tarena Entities to the WFOE to guarantee their performance of the obligations under the contractual arrangements including but not limited to, the service fees due to the WFOE. If Tarena Entities or any of Tarena Entities’ nominee equity holders breaches its contractual obligations under the contractual arrangements, the WFOE, as the pledgee, will be entitled to certain rights and entitlements, including receiving proceeds from the auction or sale of whole or part of the pledged equity interests of Tarena Entities in accordance with legal procedures. The WFOE has the right to receive dividends generated by the pledged equity interests during the term of the pledge. If any event of default as provided in the contractual arrangements occurs, the WFOE, as the pledgee, will be entitled to dispose of the pledged equity interests in accordance with PRC laws and regulations. The equity interest pledge agreements became effective on the date when the agreements were duly executed. The pledge was registered with the relevant local administration for industry and commerce in December 2013 and April 2017 and will remain binding until Tarena Entities and their nominee equity holders discharge all their obligations under the contractual arrangements. The registration of the equity pledge enables the WFOE to enforce the equity pledge against third parties who acquire the equity interests of Tarena Entities in good faith. Tarena International relies on the VIE Agreements to operate and control the Tarena Entities. However, these contractual arrangements may not be as effective as direct equity ownership in providing Tarena International with control over Tarena Entities. Any failure by Tarena Entities or the nominee equity holders to perform their obligations under the VIE Agreements would have a material adverse effect on the consolidated financial position and consolidated financial performance of the Company. All the VIE Agreements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit Tarena International’s ability to enforce these contractual arrangements. In addition, if the legal structure and the VIE Agreements were found to be in violation of any existing or future PRC laws and regulations, Tarena International may be subject to fines or other legal or administrative sanctions. In the opinion of management, based on the legal opinion obtained from the Company’s PRC legal counsel, the above contractual arrangements are legally binding and enforceable and do not violate current PRC laws and regulations. However, there are uncertainties regarding the interpretation and application of existing and future PRC laws and regulations. Accordingly, Tarena International cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to its opinion. If the current ownership structure of the Company and the VIE Arrangements are found to be in violation of any existing or future PRC laws and regulations, the PRC government could: · revoke the business and operating licenses of the WFOE, its subsidiaries and Tarena Entities; · discontinue or restrict the conduct of any transactions between the WFOE, its subsidiaries and Tarena Entities; · impose fines, confiscate the income from Tarena Entities, or impose other requirements with which the Company may not be able to comply; · require Tarena International to restructure its ownership structure or operations, including terminating the contractual arrangements with Tarena Entities and deregistering the equity pledges of Tarena Entities; and · restrict or prohibit the use of the proceeds of future offering to finance the Company’s business and operations in the PRC. If the imposition of any of these government actions causes Tarena International to lose its right to direct the activities of Tarena Entities or its right to receive substantially all the economic benefits and residual returns from Tarena Entities and Tarena International is not able to restructure its ownership structure and operations in a satisfactory manner, Tarena International would no longer be able to consolidate the financial results of Tarena Entities and their subsidiaries. In the opinion of management, the likelihood of deconsolidation of the Tarena Entities and their subsidiaries is remote based on current facts and circumstances. The equity interests of Tarena Entities are legally held by Mr. Han and Mr. Li as nominee equity holders on behalf of the Company. Mr. Han and Mr. Li are also directors of Tarena International. Mr. Han and Mr. Li each holds 68.9% and 0.1% of the total voting rights as of December 31, 2018, respectively, assuming the exercise of all outstanding options held by Mr. Han and Mr. Li as of such date. The Company cannot assure that when conflicts of interest arise, either of the nominee equity holders will act in the best interests of the Company or such conflicts will be resolved in the Company’s favor. Currently, the Company does not have any arrangements to address potential conflicts of interest between the nominee equity holders and the Company, except that Tarena International could exercise the purchase option under the exclusive option agreement with the nominee equity holders to request them to transfer all of their equity ownership in Tarena Entities to a PRC entity or individual designated by Tarena International. The Company relies on the nominee equity holders, who are both Tarena International’s directors and who owe a fiduciary duty to Tarena International, to comply with the terms and conditions of the contractual arrangements. Such fiduciary duty requires directors to act in good faith and in the best interests of Tarena International and not to use their positions for personal gains. If the Company cannot resolve any conflict of interest or dispute between the Company and the nominee equity holders of Tarena Entities, the Company would have to rely on legal proceedings, which could result in disruption of the Company’s business and subject the Company to substantial uncertainty as to the outcome of any such legal proceedings. The Company’s involvement with Tarena Entities under the VIE Agreements affected the Company’s consolidated financial position, results of operations and cash flows as indicated below. The assets and liabilities of Tarena Entities and their subsidiaries that were included in the accompanying consolidated financial statements as of December 31, 2017 and 2018 are as follows: December 31, 2017 2018 RMB RMB Cash 294 1,376 Amounts due from related parties 33,744 34,335 Prepaid expenses and other current assets 1 617 Total current assets 34,039 36,328 Property and equipment, net — 2,652 Long term investments 46,500 38,380 Deferred income tax assets 684 916 Other non-current assets 2,880 333 Total assets 84,103 78,609 Income taxes payable 3,052 3,398 Accrued expenses and other current liabilities 186 2,115 Amounts due to related parties, including amounts due to WFOE for accrued service fees 78,665 89,884 Total current liabilities 81,903 95,397 Other non-current liabilities 267 267 Total liabilities 82,170 95,664 Amounts due from/to related parties represents the amounts due from/to Tarena International and its wholly-owned subsidiaries, which are eliminated upon consolidation. The financial performance and cash flows of Tarena Entities and their subsidiaries that were included in the accompanying consolidated financial statements for the years ended December 31, 2016, 2017 and 2018 are as follows: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Net revenues — — 4,232 Net income (loss) 99 (11,597) (16,900) Net cash used in operating activities (727) (2,996) 1,540 Net cash used in investing activities (11,886) (29,380) (24,083) Net cash provided by financing activities 12,200 32,040 23,625 All of the assets of Tarena Entities and their subsidiaries can be used only to settle obligations of Tarena Entities and their subsidiaries. None of the assets of Tarena Entities and their subsidiaries have been pledged or collateralized. The creditors of Tarena Entities and their subsidiaries do not have recourse to the general credit of Tarena International and its wholly-owned subsidiaries. Assets of Tarena Entities and their subsidiaries that can be used only to settle obligations of Tarena Entities and their subsidiaries and liabilities of Tarena Entities and their subsidiaries for which creditors (or beneficial interest holders) do not have recourse to the general credit of Tarena International and its wholly owned subsidiaries have been presented parenthetically alongside each balance sheet caption on the face of the consolidated balance sheets. During the periods presented, Tarena International and its wholly-owned subsidiaries provided financial support to Tarena Entities that they were not previously contractually required to provide in the form of advances. To the extent Tarena Entities require financial support, pursuant to the exclusive business cooperation agreements, the WFOE may, at its option and to the extent permitted under the PRC law, provide such support to Tarena Entities through loans to Tarena Entities’ nominee equity holders or entrustment loans to Tarena Entities. (c) Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). (d) Significant concentrations and risks Revenue concentration A substantial portion of the Company’s total net revenues are generated from Java, Digital Arts, and Web Front courses. The percentages of the Company’s total net revenues from Java, Digital Arts and Web Front training courses are as follows: Year Ended December 31, 2016 2017 2018 Digital Arts 26.7 % 31.5 % 28.7 % Java 32.9 % 32.0 % 18.3 % Web Front 12.9 % 7.0 % 3.9 % Total 72.5 % 70.5 % 50.9 % The Company expects net revenues from these three training courses to continue to represent a majority portion of its total net revenues in the future. Negative factors that adversely affect net revenues generated by these three training courses will have a material adverse effect on the Company’s business, financial condition and results of operations. There were no other courses that represented revenues greater than 10% of total revenues. A substantial portion of the Company’s students financed their tuition fees through the loans offered to them by financial service providers including Baidu Small Loan Co., Ltd., Bank of China Consumer Finance Co., Ltd., Beijing Ronglian Shiji Information Technology Co., Ltd., and Qianchengyi during the 3-year period ended December 31, 2018. The Company expects students financed by these companies to continue to represent a major portion of its total students in the future. The Company believes other companies could provide similar loans to its students on comparable terms. However, negative factors that adversely affect these companies will have a material adverse effect on the Company’s business, financial condition and results of operations. Geographic concentration The percentages of the Company’s total net revenues generated from its business operations in Beijing are 16.0%, 13.6% and 13.5% for the years ended December 31, 2016, 2017 and 2018, respectively. The Company expects revenues derived from its business operations in Beijing to continue to be greater than 10% of total revenue in the future. Negative factors that adversely affect professional education services in Beijing will have a material adverse effect on the Company’s business, financial condition and results of operations. There were no other cities that represented revenues greater than 10% of total revenues. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Principles of consolidation The consolidated financial statements include the financial statements of Tarena International, its wholly-owned subsidiaries, VIEs in which Tarena International is the primary beneficiary and their wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation. (b) Liquidity Condition For the year ended December 31, 2018, the Company incurred a net loss from operations of RMB592.2 million. As of December 31, 2018, the Company had net current liability of RMB374.8 million. The Company’s operating results for future periods are subject to numerous uncertainties and it is uncertain if the Company will be able to reduce or eliminate its net losses in the foreseeable future. If management is not able to increase revenue and/or manage operating expenses in line with revenue forecasts, the Company may not be able to achieve profitability. Despite of the net loss for the year ended December 31, 2018, which included non-cash components of depreciation and amortization amounting to RMB159 million, share based compensation expense amounting to RMB124 million, and impairment loss of long-term investments amounting to RMB36 million, for the years ended December 31, 2016, 2017 and 2018, the Company generated net cash inflows from operating activities amounting to RMB496 million, RMB302 million, and RMB163 million, respectively. The Company expects a limited amount of net operating cash outflow, if not a net operating cash inflow, for the year ended December 31, 2019, taking into consideration of the significant expenses with respect to the Investigation as further discussed in Note 3 to the consolidated financial statements. As of December 31, 2018, the Company’s deferred revenue liability of RMB830 million does not represent potential cash outflows but will be recognized as revenue in the future as the Company provides the services in the end. For the next 12 months from the issuance date of this report, the Company plans to continues implementing various measures to boost revenue and controlling the cost and expenses within an acceptable level by offering online courses to all students, negotiating for relief or postpone of rentals for this special period of time and seeking for certain credit facilities, implementing comprehensive budget control and operation assessment, implementing enhanced vendor review and selection processes as well as enhancing internal controls on payable management, and creating synergy of the Company’s resources, which has considered the impact of COVID-19 as disclosed in Note 22 to the consolidated financial statements. Given the considerable gross margin ratio in its operations and the expected net operating cash inflow mentioned above, the Company assesses current working capital is sufficient to meet its obligations for the next 12 months from the issuance date of this report. (c) Use of estimates The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the estimated stand-alone selling price under ASC 606, the guarantee liability under ASC Topic 460, the fair values of share-based compensation awards, goodwill impairment and long term investments, the collectability of accounts receivable, the realizability of deferred income tax assets, the accruals for other contingencies, the recoverability of the carrying amounts of property and equipment and the useful lives of property and equipment. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. To allocate the transaction price for contracts with multiple deliverables and estimate the standalone selling price, the Company considers market data, including its pricing strategies for the products being evaluated and other similar products it offers, competitor pricing to the extent data is available, and costs to determine whether the estimated selling price yields an appropriate profit margin. (d) Business combinations Business combinations are recorded using the acquisition method of accounting. The purchase price of the acquisition is allocated to the identifiable assets and liabilities based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred. (e) Foreign currency The functional currency of Tarena International and Tarena Hong Kong Limited (“Tarena HK”) is the USD. The functional currency of Taiwan Tarena Counseling Software Co., Ltd. is the TWD. The functional currency of Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs is the RMB. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rate at the balance sheet date. The resulting exchange differences are recorded in foreign currency exchange gains (losses) in the consolidated statements of comprehensive income (loss). Assets and liabilities of entities with functional currencies other than RMB are translated into RMB using the exchange rate on the balance sheet date. Revenues and expenses are translated into RMB at average rates prevailing during the reporting period. The resulting foreign currency translation adjustment are recorded in accumulated other comprehensive income (loss) within shareholders’ equity. Since the RMB is not a fully convertible currency, all foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC. (f) Cash, cash equivalents, restricted cash and time deposits Cash consist of cash on hand and cash in bank, which are unrestricted as to withdrawal. Cash equivalents consist of interest-bearing certificates of deposit with initial term of no more than three months when purchased. Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term of greater than three months when purchased. Time deposits which mature over one year as of the balance sheet date are included in non-current assets. Restricted cash is the deposit as collateral for the USD$2 million bank loan with a period of 12 months. Cash, cash equivalents, time deposits and restricted cash maintained at financial institutions consist of the following: December 31, 2017 2018 RMB RMB RMB denominated bank deposits with financial institutions in the PRC 910,804 511,866 US dollar denominated bank deposits with financial institutions in the PRC 135,686 131,129 US dollar denominated bank deposits with financial institutions in Hong Kong Special Administrative Region (“HK SAR”) 4,387 53,148 HK dollar denominated bank deposits with financial institutions in HK SAR 1 15 RMB denominated bank deposits with a financial institution in HK SAR 21 147 US dollar denominated bank deposits with a financial institution in the U.S. 68,795 6,311 TWD denominated bank deposits with a financial institution in Taiwan — 2,170 Total 1,119,694 704,786 To limit exposure to credit risk relating to bank deposits, the Company primarily places bank deposits only with large financial institutions in the PRC, HK SAR, Taiwan and the U.S. with acceptable credit rating. (g) Short-term investment During the years ended December 31, 2016, 2017 and 2018, the Company invested RMB420,000, RMB950,000 and nil, respectively, in financial products managed by one financial institution in the PRC. The terms of the financial products range between 7 days and 84 days. All of these financial products matured before December 31, 2016, 2017 and 2018, respectively. The Company earned investment income of RMB12,676, RMB19,314 and nil, respectively on the financial products, which was included in other income (loss) in the consolidated statements of comprehensive income (loss) for the years ended December 31, 2016, 2017 and 2018. (h) Accounts receivable Accounts receivable primarily represent tuition fees due from students. Accounts receivable which are due over one year as of the balance sheet date are presented as non-current assets. The unearned interest on accounts receivable which are due over one year is reported in the consolidated balance sheets as a direct deduction from the principal amount of accounts receivable. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its students to make required payments. Accounts receivable is considered past due based on its contractual terms. In establishing the allowance, management considers historical losses, the students’ financial condition, the accounts receivables aging and the students’ payment patterns. Accounts receivable which are deemed to be uncollectible are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. There is a time lag between when the Company estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances is taken. The Company takes a write off of the account balances when the Company can demonstrate all means of collection on the outstanding balances have been exhausted. (i) Property and equipment Property and equipment are recorded at cost. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets. The estimated useful life of property and equipment is as follows: Office buildings 45 years Furniture 5 years Office equipment 3 to 4 years Leasehold improvements Shorter of the lease term or the estimated useful life of the assets Ordinary maintenance and repairs are charged to expenses as incurred, while replacements and betterments are capitalized. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value of the item disposed and proceeds realized thereon. Property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment loss is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. No impairment of long-lived assets was recognized for any of the years presented. (j) Goodwill The excess of the purchase price over the fair value of net assets acquired is recorded on the consolidated balance sheets as goodwill. Goodwill is not amortized, but tested for impairment annually or more frequently if event and circumstances indicate that it might be impaired. ASC 350‑20, Goodwill , permits the Company to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test, using a two-step approach. If this is the case, the two-step goodwill impairment test is required. If it is more likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required. If the two-step goodwill impairment test is required, the first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired and the second step is not required. If the fair value of the reporting unit is less than its carrying amount, the second step of the impairment test measures the amount of the impairment loss, if any, by comparing the implied fair value of goodwill to its carrying amount. If the carrying amount of goodwill exceeds its implied fair value, an impairment loss is recognized equal to that excess. The implied fair value of goodwill is calculated in the same manner that goodwill is calculated in a business combination, whereby the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit, with the excess purchase price over the amounts assigned to assets and liabilities representing the implied fair value of goodwill. The Company performs the annual goodwill impairment assessment using a two-step approach on December 31 and no goodwill impairment was identified as of December 31, 2017 and 2018 (Note 20). (k) Long-term investments · Equity investments without readily determinable fair values/ Cost method investments In January 2016, the FASB issued ASU 2016-01 (“ASU 2016-01”), Recognition and Measurement of Financial Assets and Financial Liabilities, which, among other things, generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and to recognize any changes in fair value in net income. ASU 2016-01 also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, and the guidance should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The guidance related to equity investments without readily determinable fair values (including disclosure requirements) is applied prospectively to equity investments that exist as of the date of adoption. ASU 2016-01, which the Company adopted on January 1, 2018, did not have a material impact on the consolidated financial statements. Since January 1, 2018, equity investments without readily determinable fair values are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes in accordance with ASC topic 321, Investments – Equity Securities. Prior to the fiscal year 2018, these securities were accounted for using the cost method of accounting, measured at cost less other-than-temporary impairment. · Equity method investments Under the equity method, the Company’s share of the post-acquisition profits or losses of the equity investment is recognized in the consolidated statements of comprehensive income; and the Company’s share of post-acquisition movements in equity is recognized in equity in the consolidated balance sheets. Unrealized gains on transactions between the Company and an entity in which it has recorded an equity investment are eliminated to the extent of the Company’s interest in the entity. To the extent of the Company’s interest in the investment, unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. When the Company’s share of losses in an entity in which it has recorded an equity investment equals or exceeds the Company’s interest in the entity, it does not recognize further losses, unless it has incurred obligations or made payments on behalf of the equity investee. The Company evaluates the equity method investments for impairment. An impairment loss on the equity method investments is recognized in earnings when the decline in value is determined to be other-than-temporary. · Available-for-sale debt securities Debt securities that the Company has positive intent and ability to hold to maturity are classified as held-to-maturity debt securities and are stated at amortized cost. Debt securities that the Company has the intent to hold the security for an indefinite period or may sell the security in response to the changes in economic conditions are classified as available for sale and reported at fair value. Unrealized gains and losses (other than impairment losses) are reported, net of the related tax effect, in other comprehensive income (OCI). Upon sale, realized gains and losses are reported in net income. The Company monitors the investments for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, the operating performance of the companies including current earnings trends and other company-specific information. (l) Revenue recognition The Company adopted ASC Topic 606 (“ASC 606”), Revenue from Contracts with Customers, with effect from January 1, 2018, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Accordingly, revenues for the year ended December 31, 2018 was presented under ASC 606, and revenues for the years ended December 31, 2016 and 2017 were not adjusted and continued to be presented under ASC topic 605 (“ASC 605”), Revenue Recognition. Revenue recognition before adoption of ASU 2014-09, “Revenue from Contracts with Customers (ASC 606)” Revenue is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. These criteria as they relate to each of the following major revenue generating activities are described below. Revenue is presented net of business tax and value added taxes (“VAT”) at rates ranging between 3% and 6%, and surcharges. VAT and business tax collected from customers, net of VAT paid for purchases, is recorded as a liability in the consolidated balance sheets until it is paid to the tax authorities. Tuition revenue Tuition fees are recognized as revenue proportionately as the training courses are delivered, with unearned portion of tuition fees being recorded as deferred revenue. For certain students who borrow the tuition fee from financial service providers, the Company also provides a guarantee service to financial service providers whereas in the event of default, the financial service providers are entitled to receive unpaid interest and principal from the Company . Given that the Company effectively takes on all of the credit risk of the borrowers and are compensated by the tuition fees charged, the guarantee is deemed as a service and the guarantee exposure is recognized as a stand-ready obligation in accordance with ASC Topic 460, Guarantees (see accounting policy for Guarantee Liabilities). The Company first allocates the transaction price to the guarantee liabilities, if any, in accordance with ASC Topic 460, Guarantees, which requires the guarantee to be measured initially at fair value based on the stand ready obligation. Then the remaining considerations are allocated to the tuition fees. Certain qualified students are allowed to pay their tuition fees on installment for a period of time after the completion of the course. When tuition services are sold on installment terms that exceeds one year beyond the point in time that revenue is recognized, the receivable, and therefore the revenue is recorded at the present value of the payments. The difference between the present value of the receivable and the nominal or principal value of the tuition fees is recognized as interest income over the contractual repayment period using the effective interest rate method. The interest rate used to determine the present value of total amount receivable is the rate subject to management decision on the date of the transaction and it reflects the rate that the students can obtain financing of a similar nature from other sources at the date of the transaction. The Company enters into arrangements with certain students that purchase multiple services, including tuition service and practical tutoring service (“multiple-element arrangements”). Each element within the multiple-element arrangements is accounted for as a separate unit of accounting provided the following criteria are met: the delivered services have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered services, delivery or performance of the undelivered service is considered probable and is substantially controlled by the Company. A deliverable has standalone value if the service is sold separately by the Company or another vendor. The Company’s revenue arrangements do not include a general right of return relative to the delivered services. The Company treats training contracts with multiple deliverable elements as separate units of accounting for revenue recognition purposes and recognizes revenue during the contract period when each deliverable service is provided. The Company allocates the contract price among all the deliverables at the inception of the arrangement on the basis of their relative selling prices according to the selling price hierarchy established by Topic 605-25, Revenue Recognition - Multiple - Element Arrangements. The Company first uses vendor-specific objective evidence (VSOE) of selling price, if it exists, otherwise the third-party evidence of selling price is used. If neither VSOE of selling price nor third-party evidence of selling price exists, the Company uses management’s best estimate of selling price for the deliverables. Certification service revenue The Company provides certification service to students who complete the training course and enroll for the exams. The Company is responsible for the certification service, including organization, proctoring and grading of exams, and providing the certificates to students. All certificates are issued by third parties to the students who pass the exam. The Company acts as the principal in providing this service and recognizes revenue on gross basis because the Company is the primary obligor in the arrangement and is responsible for fulfilling the ordered services by the students. Cash received before the students taking the exam, is recorded as deferred revenue, and subsequently recognized as certification service revenue upon completion of the certification service, which occurs when the certificates are provided to the students. Loan referral service revenue The Company promotes loan products of the financial service providers to its students, who need financial assistance for the payment of their tuition fees, in exchange for a referral fee at a rate of the effective principal amount of the loans. Loan referral service revenue is recognized upon the initiation of the loans and confirmed with the financial service providers on a monthly basis. Revenue recognition after adoption of ASU 2014-09, “Revenue from contracts with Customers (ASC 606)” with modified retrospective method Effective January 1, 2018, The Company evaluated and recognized revenue based on the five steps set forth in ASC 606 by: · identifying the contract(s) with the customer; · identifying the performance obligations in the contract; · determining the transaction price; · allocating the transaction price to performance obligations in the contract; and · recognizing revenue as each performance obligation is satisfied through the transfer of a promised good or service to a customer (i.e., “transfer of control”). These criteria as they relate to each of the following major revenue generating activities are described below. Revenue is presented net of business tax and value added taxes (“VAT”) at rates ranging between 3% and 6%, and surcharges. VAT and business tax to be collected from customers, net of VAT paid for purchases, is recorded as a liability in the consolidated balance sheets until it is paid to the tax authorities. Tuition revenue The Company provides IT and non-IT related training courses to both adult and K-12. A majority of contract of tuition service is accounted for as a single performance obligation which is satisfied proportionately over the service period. Tuition fees are recognized as revenue proportionately as the training courses are delivered, with unearned portion of tuition fees being recorded as deferred revenue. For certain students who borrow the tuition fee from financial service providers, the Company also provides a guarantee service to financial service providers whereas in the event of default, the financial service providers are entitled to receive unpaid interest and principal from the Company. Given that the Company effectively takes on all of the credit risk of the borrowers and are compensated by the tuition fees charged, the guarantee is deemed as a service and the guarantee exposure is recognized as a stand-ready obligation in accordance with ASC Topic 460, Guarantees (see accounting policy for Guarantee Liabilities). The Company first allocates the transaction price to the guarantee liabilities, if any, in accordance with ASC Topic 460, Guarantees, which requires the guarantee to be measured initially at fair value based on the stand ready obligation. Then the remaining considerations are allocated to the tuition fees consistent with the guidance in ASC 606. Certain qualified students are allowed to pay their tuition fees on installment for a period of time exceeding one year. When tuition services are sold on installment terms that exceeds one year beyond the point in time that revenue is recognized, the contract contains a significant financing component, and the consideration promised by the customer is variable. The receivable, and therefore the revenue is recorded at the present value of the payments. The difference between the present value of the receivable and the nominal or principal value of the tuition fees is recognized as interest income over the contractual repayment period using the effective interest rate method. The interest rate used to determine the present value of total amount receivable is the rate subject to management decision on the date of the transaction and it reflects the rate that the students can obtain financing of a similar nature from other sources at the date of the transaction. The Company enters into arrangements with certain students that purchase multiple services. The performance obligations identified include tuition service and practical tutoring service. The Company treats training contracts with multiple performance obligations as separate units of accounting for revenue recognition purposes and recognizes revenue during the contract period when each performance obligation is satisfied. The Company allocates the transaction price to each performance obligations based on stand-alone selling price. Refunds are provided to students if they withdraw from classes, and usually only those unearned portions of the fee which is available will be refunded. A refund liability represents the amounts of consideration received but are not expected to be entitled to earn, and thus are not included in the transaction price because these amounts are expected to be eventually refunded to students. The Company determines the transaction price to be earned by estimating the refund liability based on historical refund ratio on a portfolio basis using the expected value method. Reclassification was made from deferred revenue to refund liabilities, which was recorded under accrued expenses and other current liabilities. Historically, the Company has not had material refunds. Certification service revenue The Company provides certification service to students who complete the training course and enroll for the exams. The Company is responsible for the certification service, including organization, proctoring and grading of exams, and providing the certificates to students. All certificates are issued by third parties to the students who pass the exam. The Company is the principal to end customers. The Company acts as the principal in providing the certificate service to the students and recognizes revenue on gross basis because the Company is able to determine the price, acts as the main obligor in the arrangement, and, is responsible for fulfilling the services ordered by the students. Cash received before the students taking the exam is recorded as deferred revenue. Each contract of certification service is accounted for as a single performance obligation which is satisfied at a point in time. The performance obligation is satisfied when the certificates are provided to the students and the consideration are received, then the received consideration is recognized as certification service revenue. Loan referral service revenue The Company promotes loan products of financial service providers to its students, who need financial assistance for the payment of their tuition fees, in exchange for a referral fee generally at a rate of the principal amount of the loans. Each contract of loan referral service is accounted for as a single performance obligation which is satisfied at a point in time. Generally, the early repayment and default loan are excluded from the effective principal amount of the loans, and thus are not included in the transaction price because these amounts are expected to be eventually refunded to financial service providers. The Company determines the transaction price to be earned by estimating the refund liability based on historical refund ratio on a portfolio basis using the expected value method. Refund liability was recorded under accrued expenses and other current liabilities. Historically, the Company has not had material refunds. Loan referral service revenue is recognized upon the initiation of the loans as the performance obligation is satisfied and confirmed with the financial service providers on a monthly basis. Contract acquisition costs The Company has used practical expedients as allowed under ASC 606 to generally expenses sales commissions when incurred, because the amortization period would be one year or less. These costs are recorded as sales and marketing expenses. Contract liability The Company’s contract liabilities mainly consist of deferred revenue, with a balance of RMB352,260 and RMB830,019 as of December 31, 2017 and 2018, respectively. All contract liabilities before January 1, 2018 were recognized as revenue during the year ended December 31, 2018 and all contract liabilities as of December 31, 2018 are expected to be realized in the following year. Refund liability mainly related to the estimated refunds that are expected to be provided to students if they decide they no longer want to take the course. Refund liability estimates are based on historical refund ratio on a portfolio basis using the expected value method. The following table presents the impact of the adoption of ASC 60 |
RESTATEMENT AND RECLASSIFICATIO
RESTATEMENT AND RECLASSIFICATIONS | 12 Months Ended |
Dec. 31, 2018 | |
RESTATEMENT AND RECLASSIFICATIONS | |
RESTATEMENT AND RECLASSIFICATIONS | 3 RESTATEMENT AND RECLASSIFICATIONS Starting from April 2019, the Company’s audit committee conducted an independent investigation (the “Investigation”) regarding certain issues identified by its predecessor auditor during the course of the audit of the Company’s financial statements for the year ended December 31, 2018. Through the Investigation, the Company has identified certain management members and personnel were involved in misconducts in certain transactions. In response, the Company has restated its financial statements for the fiscal years from 2014 to 2017. The effects of the reclassifications and restatement for the errors on the consolidated balance sheets are as follows: As of December 31, 2016 As previously Restatement As Item reported adjustments Restated RMB RMB RMB ASSETS Current assets: Cash and cash equivalents 810,672 — 810,672 Time deposits 416,724 — 416,724 Restricted cash — — — Accounts receivable, net of allowance for doubtful accounts (a),(b)(e) 97,374 (79,059) 18,315 Amounts due from a related party (d) — 4,978 4,978 Prepaid expenses and other current assets (b) 126,088 5,017 131,105 Total current assets 1,450,858 (69,064) 1,381,794 Time deposits 58,667 — 58,667 Accounts receivable, net of allowance for doubtful accounts-non current (a) 1,176 8,089 9,265 Amounts due from a related party (d) — 6,500 6,500 Property and equipment, net (b),(e) 437,337 (10,336) 427,001 Intangible assets, net (e) — 5,194 5,194 Goodwill 3,365 — 3,365 Long term investments 41,760 — 41,760 Deferred income tax assets (f) 54,127 (49,575) 4,552 Other non-current assets (d),(e) 37,722 (1,810) 35,912 Total assets 2,085,012 (111,002) 1,974,010 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable 4,502 — 4,502 Amounts due to related parties (d) 79 447 526 Income taxes payable (f) 91,240 (40,853) 50,387 Deferred revenue (a),(e) 266,061 62,721 328,782 Accrued expenses and other current liabilities (a),(b),(e) 117,867 51,655 169,522 Total current liabilities 479,749 73,970 553,719 Other non-current liabilities 7,043 — 7,043 Total liabilities 486,792 73,970 560,762 Shareholders’ equity : Ordinary shares 388 — 388 Treasury shares (93,761) — (93,761) Additional paid-in capital 995,216 — 995,216 Accumulated other comprehensive income 58,204 — 58,204 Retained earnings (a),(b),(d),(e),(f) 638,173 (184,972) 453,201 Total shareholders’ equity 1,598,220 (184,972) 1,413,248 Total liabilities and equity 2,085,012 (111,002) 1,974,010 As of December 31, 2017 As previously Restatement As Item reported adjustments Restated RMB RMB RMB ASSETS Current assets: Cash and cash equivalents 686,691 — 686,691 Time deposits 432,536 — 432,536 Accounts receivable, net of allowance for doubtful accounts (a),(b),(e) 216,700 (165,057) 51,643 Amounts due from a related party (d) 231 6,711 6,942 Prepaid expenses and other current assets (b) 156,360 (653) 155,707 Total current assets 1,492,518 (158,999) 1,333,519 Time deposits 505 — 505 Accounts receivable, net of allowance for doubtful accounts-non current (a) 14,582 (8,178) 6,404 Amounts due from a related party (d) — 6,500 6,500 Property and equipment, net (b), (e) 519,691 (17,352) 502,339 Intangible assets, net (e) — 4,753 4,753 Goodwill 3,365 — 3,365 Long term investments (e) 101,920 (24,750) 77,170 Deferred income tax assets (f) 72,600 (66,979) 5,621 Other non-current assets (d),(e) 77,464 787 78,251 Total assets 2,282,645 (264,218) 2,018,427 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable 11,351 — 11,351 Amounts due to related parties (d) — 216 216 Income taxes payable (f) 125,971 (58,638) 67,333 Deferred revenue (a),(c),(e) 302,163 50,097 352,260 Accrued expenses and other current liabilities (a),(b),(c),(e) 184,646 128,783 313,429 Total current liabilities 624,131 120,458 744,589 Other non-current liabilities 4,329 — 4,329 Total liabilities 628,460 120,458 748,918 Shareholders’ equity : Ordinary shares 401 — 401 Treasury shares (255,103) — (255,103) Additional paid-in capital 1,094,872 — 1,094,872 Accumulated other comprehensive income (e) 54,122 (14,750) 39,372 Retained earnings (a), (b), (d), (e), (f) 759,893 (369,926) 389,967 Total shareholders’ equity 1,654,185 (384,676) 1,269,509 Total liabilities and equity 2,282,645 (264,218) 2,018,427 The effects of the reclassifications and restatement for the errors on the consolidated statements of operations and comprehensive loss are as follows: Year Ended December 31, 2016 As previously Restatement As Item reported adjustments Restated RMB RMB RMB Net revenues (a),(e) 1,579,604 (59,569) 1,520,035 Cost of revenues (a),(b) (449,104) 5,637 (443,467) Selling and marketing expenses (b) (527,553) 3,476 (524,077) General and administrative expenses (a),(b),(d) (307,519) 43,074 (264,445) Research and development expenses (65,594) — (65,594) Operating income 229,834 (7,382) 222,452 Interest income (a),(b) 23,974 1,091 25,065 Other income 15,960 — 15,960 Loss on foreign currency forward contract (12,898) — (12,898) Foreign currency exchange gains 3,760 — 3,760 Income before income taxes 260,630 (6,291) 254,339 Income tax expense (f) (18,776) (9,443) (28,219) Net income 241,854 (15,734) 226,120 Year Ended December 31, 2017 Item As previously Restatement As reported adjustments Restated RMB RMB RMB Net revenues (a),(c),(e) 1,973,806 (220,111) 1,753,695 Cost of revenues (a),(b) (599,199) 6,253 (592,946) Selling and marketing expenses (b) (713,120) 5,963 (707,157) General and administrative expenses (a),(b),(d) (392,296) 37,464 (354,832) Research and development expenses (100,032) — (100,032) Operating income (loss) 169,159 (170,431) (1,272) Interest income (a),(b) 21,000 (4,903) 16,097 Other income (loss) (e) 26,702 (10,000) 16,702 Foreign currency exchange loss (6,284) — (6,284) Income before income taxes 210,577 (185,334) 25,243 Income tax expense (f) (25,770) 380 (25,390) Net income (loss) 184,807 (184,954) (147) The effects of the reclassifications and restatement for the errors on the consolidated statements of cash flows are as follows: Year Ended December 31, 2016 As previously Restatement As reported adjustments Restated RMB RMB RMB Operating activities: Net income 241,854 (15,734) 226,120 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 72,757 879 73,636 Bad debt expense 33,605 (33,605) — Loss on disposal of property and equipment 297 — 297 Deferred income tax benefit (18,895) 17,348 (1,547) Share based compensation expense 67,824 — 67,824 Investment loss (gain) 29 (100) (71) Foreign currency exchange gain, net (3,760) (29,645) (33,405) Changes in operating assets and liabilities, net of effects from acquisition of Hanru Hangzhou and Hao Xiao Zi Accounts receivable 22,928 (18,934) 3,994 Amounts due from a related party — (3,753) (3,753) Prepaid expenses and other current assets (60,362) (5,129) (65,491) Accrued interest income on time deposits 5,264 — 5,264 Other non-current assets (7,071) 1,364 (5,707) Accounts payable (248) — (248) Amounts due to related parties (800) — (800) Income taxes payable 34,947 (7,904) 27,043 Deferred revenue 101,439 21,934 123,373 Accrued expenses and other current liabilities 36,781 45,296 82,077 Other non-current liabilities (2,559) — (2,559) Net cash provided by operating activities 524,030 (27,983) 496,047 Investing activities: Purchase of property and equipment and intangible assets (381,982) (1,693) (383,675) Proceeds from disposal of property and equipment 358 88 446 Purchase of short-term investments (1,937,000) 1,517,000 (420,000) Proceeds from maturity of short-term investments 1,937,000 (1,517,000) 420,000 Purchase of long-term investments (12,755) — (12,755) Purchase of time deposits (421,170) (217,000) (638,170) Proceeds from maturity of time deposits 678,741 246,645 925,386 Payment for acquisition of Hanru Hangzhou (4,360) — (4,360) Cash acquired from acquisition of Hanru Hangzhou 148 — 148 Issuance of loan to a related party (6,500) — (6,500) Issuance of loans to employees (12,025) (118) (12,143) Proceeds from repayment of loans from employees 3,096 61 3,157 Net cash used in investing activities (156,449) 27,983 (128,466) Financing activities: Issuance of Class A ordinary shares in connection with exercise of share options 20,388 — 20,388 Payment of dividend (54,026) — (54,026) Repurchase of treasury shares (44,406) — (44,406) Net cash used in financing activities (78,044) — (78,044) Changes in cash and cash equivalents 289,537 289,537 Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash 7,197 — 7,197 Net change in cash, cash equivalents and restricted cash 296,734 — 296,734 Cash, cash equivalents and restricted cash at beginning of year 513,938 — 513,938 Cash, cash equivalents and restricted cash at end of year 810,672 — 810,672 Year Ended December 31, 2017 As previously Restatement As reported adjustments Restated RMB RMB RMB Operating activities: Net income (loss) 184,807 (184,954) (147) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 100,724 39 100,763 Bad debt expense 31,499 (31,499) — Loss on disposal of property and equipment 917 — 917 Deferred income tax benefit (18,473) 17,302 (1,171) Share based compensation expense 77,415 — 77,415 Investment income (19,267) 19,314 47 Foreign currency exchange losses, net 6,471 (374) 6,097 Impairment of long-term investments — 10,000 10,000 Changes in operating assets and liabilities, net of effects from acquisition of Hanru Hangzhou and Hao Xiao Zi Accounts receivable (164,231) 133,765 (30,466) Amounts due from related parties — (1,964) (1,964) Prepaid expenses and other current assets (18,712) (14,414) (33,126) Accrued interest income on time deposits 1,809 — 1,809 Other non-current assets (12,432) 19,013 6,581 Accounts payable (196) — (196) Amounts due to related parties (310) — (310) Income taxes payable 34,731 (17,682) 17,049 Deferred revenue 36,102 (12,625) 23,477 Accrued expenses and other current liabilities 50,407 77,127 127,534 Other non-current liabilities (2,604) — (2,604) Net cash provided by operating activities 288,657 13,048 301,705 Investing activities: Purchase of property and equipment and intangible assets (177,251) 432 (176,819) Proceeds from disposal of property and equipment 462 (39) 423 Purchase of short-term investments (1,970,000) 1,020,000 (950,000) Proceeds from maturity of short-term investments 1,989,314 (1,039,314) 950,000 Purchase of long-term investments (50,500) — (50,500) Payment of long-term investment deposit (4,380) — (4,380) Purchase of time deposits (509,739) (6,000) (515,739) Proceeds from maturity of time deposits 528,999 5,959 534,958 Issuance of loans to employees (35,379) 4,753 (30,626) Proceeds from repayment of loans from employees 5,352 787 6,139 Net cash used in investing activities (223,122) (13,422) (236,544) Financing activities: Issuance of Class A ordinary shares in connection with exercise of share options 22,254 — 22,254 Payment of dividend (63,087) — (63,087) Repurchase of treasury shares (143,389) — (143,389) Net cash used in financing activities (184,222) — (184,222) Changes in cash and cash equivalents (118,687) (374) (119,061) Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash (5,294) 374 (4,920) Net change in cash, cash equivalents and restricted cash (123,981) — (123,981) Cash, cash equivalents and restricted cash at beginning of year 810,672 — 810,672 Cash, cash equivalents and restricted cash at end of year 686,691 — 686,691 The following errors in the Company’s annual financial statements were identified and corrected as part of the restatement: (a) Restatement adjustments to inaccurate revenue and relevant accounts The Company restated the inaccurate revenue recorded for years ended December 31, 2016 and 2017, which was due to the misstatement of revenue resulted from intentional revenue inflation, inaccurate student account status and loan data recorded in the Company’s customer relationship management (CRM) system, premature recognition of revenue from certain students, and inaccurate accounting treatment of tuition refunds. The restatement resulted in a decrease of RMB54,086 and RMB33,605 in revenue and general and administrative expenses for bad debt provision, respectively, for the year ended December 31, 2016, a decrease of RMB133,027 in current and non-current accounts receivable net balances, respectively, and an increase of RMB64,385 in deferred revenue as of December 31, 2016. The restatement resulted in a decrease of RMB193,303 and RMB31,499 in revenue and general and administrative expenses for bad debt provision, respectively, for the year ended December 31, 2017, a decrease of RMB270,520 in current and non-current accounts receivable net balances, and an increase of RMB97,553 in deferred revenue as of December 31, 2017. In addition, the interest income and cost of revenue for the years ended December 31, 2016 and 2017, and tax and other tax payable as of December 31, 2016 and 2017 were also restated accordingly. (b) Restatement adjustments to expense inaccuracies The Company discovered instances of improper charges against accounts receivable and/or bad debts, and certain students’ tuition fee refund due to early termination of study through payment for irregular expense or loan from an individual. The restatement resulted in an increase of RMB61,088, RMB48,539 and RMB5,015 in accounts receivable, other payable and other receivables, respectively, a decrease of RMB450 in property and equipment as of December 31, 2016, and an increase of RMB2,539 of interests expense, a decrease of RMB17,195 in cost of revenue, general and administrative expense and selling expenses collectively for the year ended December 31, 2016. The restatement resulted in an increase of RMB93,372, RMB58,697 and RMB1,563 in accounts receivable, other payable and other receivables, respectively, a decrease of RMB882 in property and equipment as of December 31, 2017, and an increase of RMB4,958 of interests expense, a decrease of RMB23,199 in cost of revenue, general and administrative expense and selling expenses collectively for the year ended December 31, 2017. (c) Restatement adjustment to accrue guarantee liabilities for the guarantee provided for students’ loan The Company did not recognize guarantee liabilities in accordance with ASC Topic 460 to reflect that it provided guarantee to certain students who borrowed the tuition fee from financial service providers. Thus the Company proposed restatement adjustments which resulted in an increase of RMB83,693 in accrued expenses and other current liabilities-guarantee liabilities, and a decrease of RMB46,165 in deferred revenue as of December 31, 2017, and a decrease of RMB37,529 in revenue for year ended December 31, 2017. (d) Incomplete disclosed related party transactions The Company has properly classified and presented the related party balances and transactions in the restated consolidation financial statements and disclosed in Note 14, in response to the audit committee’s finding on undisclosed conflict of interest and related party transactions. The restatement resulted in an increase of RMB11,478 in current and non-current amount due from related parties, and RMB447 in amount due to related parties as of December 31, 2016, and an increase of RMB13,211 in current and non-current amount due from related parties, and RMB216 in amount due to related parties as of December 31, 2017. (e) Restatement and reclassification adjustments to miscellaneous items The Company also corrected and reclassified some minor errors, which led to increase or decrease in certain accounts, i.e. accounts receivable, advance from customers, long-term investment and investment income, cost and expenses, as well as reclassification in property and equipment, intangible assets and other non-current assets, etc. (f) Adjustments on tax payable due to the restatement According to the restatement adjustments above, the Company restated the income tax payable and deferred tax assets, which resulted in an increase of RMB9,443 in income tax expense in year ended December 31, 2016, a decrease of RMB49,574 and RMB40,853 in non-current deferred tax assets and income tax payable, respectively, as of December 31, 2016, and a decrease of RMB380 in income tax expense in year ended December 31, 2017, a decrease of RMB66,979 and RMB58,638 in non-current deferred tax assets and income tax payable, respectively, as of December 31, 2017. (g) Retain earnings As a result of the foregoing, the Company restated the cumulative effect of the change on retained earnings, which resulted in a decrease of RMB184,972 and RMB369,926 in years ended December 31, 2016 and 2017. (h) Earnings (loss) per share As a result of the foregoing, the cumulative effect of earnings (loss) per share as follows: Year Ended December 31, 2016 As previously Restatement reported adjustments As restated RMB RMB RMB Numerator: Net income attributable to Class A and Class B ordinary shareholders 241,854 (15,734) 226,120 Net income for basic and diluted earnings per share 241,854 (15,734) 226,120 Denominator: Denominator for basic earnings per share: Weighted average number of Class A and Class B ordinary shares outstanding 55,540,670 0 55,540,670 Dilutive effect of outstanding share options 3,464,591 0 3,464,591 Denominator for diluted earnings per share 59,005,261 0 59,005,261 Basic earnings per Class A and Class B ordinary share 4.36 (0.28) 4.07 Diluted earnings per Class A and Class B ordinary share 4.10 (0.27) 3.83 Year Ended December 31, 2017 As previously Restatement reported adjustments As restated RMB RMB RMB Numerator: Net income (loss) attributable to Class A and Class B ordinary shareholders 184,807 (184,954) (147) Net income (loss) for basic and diluted earnings per share 184,807 (184,954) (147) Denominator: Denominator for basic earnings per share: Weighted average number of Class A and Class B ordinary shares outstanding 56,849,332 — 56,849,332 Dilutive effect of outstanding share options 2,749,379 — — Denominator for diluted earnings (loss) per share 59,598,711 — 56,849,332 Basic earnings (loss) per Class A and Class B ordinary share 3.25 (3.25) (0.00) Diluted earnings (loss) per Class A and Class B ordinary share 3.10 (3.10) (0.00) |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2018 | |
ACCOUNTS RECEIVABLE | |
ACCOUNTS RECEIVABLE | 4 ACCOUNTS RECEIVABLE Accounts receivable consists of the following: December 31, 2017 2018 RMB RMB Accounts receivable: Gross 67,235 69,301 Unearned interest (9,188) (17,243) Total accounts receivable 58,047 52,058 Less: allowance for doubtful accounts — — Accounts receivable, net 58,047 52,058 The classification of accounts receivable is as follows: December 31, 2017 2018 RMB RMB Accounts receivable – current portion 51,643 39,901 Accounts receivable – non-current portion 6,404 12,157 Total accounts receivable, net 58,047 52,058 Accounts receivable represents amounts due from customers of the Company's various subsidiaries and schools. The balances of accounts receivables were within credit terms as of December 31, 2016, 2017, and 2018, respectively. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 5 PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following: December 31, 2017 2018 RMB RMB Prepaid expenses and other current assets: Prepaid rental expenses 41,984 50,854 Interest receivable from time deposits 12,495 2,754 Prepaid security deposits (a) 17,269 24,337 Prepaid advertising expenses 26,393 17,967 Prepaid value-added tax 17,644 18,777 Loans made to employees (b) 12,698 37,586 Professional fee 11,528 10,020 Others (c) 15,696 9,171 Total prepaid expenses and other current assets 155,707 171,466 (a) Prepaid security deposits mainly included prepaid advertising deposits. (b) The Company provides short-term interest-free loans to employees for their purchase of residence or other personal needs. (c) Others mainly represent inventories, other deposits, and other miscellaneous prepaid expenses. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2018 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 6 PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: December 31, 2017 2018 RMB RMB Office buildings 285,184 287,208 Furniture 30,061 49,374 Office equipment 350,432 481,034 Leasehold improvements 94,666 184,687 Total property and equipment 760,343 1,002,303 Less: accumulated depreciation (258,004) (376,235) Property and equipment, net 502,339 626,068 Depreciation expense for property and equipment was allocated to the following: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Cost of revenues 62,000 85,059 127,850 Selling and marketing expenses 3,226 5,313 11,211 General and administrative expenses 6,455 8,064 16,511 Research and development expenses 1,177 1,461 1,335 Total 72,858 99,897 156,907 |
LONG-TERM INVESTMENTS, NET
LONG-TERM INVESTMENTS, NET | 12 Months Ended |
Dec. 31, 2018 | |
LONG-TERM INVESTMENTS, NET | |
LONG-TERM INVESTMENTS, NET | 7 LONG-TERM INVESTMENTS, NET Long-term investments consisted of the following: December 31, 2017 2018 RMB RMB Equity investments without readily determinable fair values A company providing mechanic training (a) 12,000 12,000 A company providing intelligent robot products (b) 24,000 24,000 A company providing information sharing IT platform (c) 22,500 22,500 Other equity investments without readily determinable fair values (d) 18,000 20,880 Less:impairment of equity investments without readily determinable fair values — (35,000) Total equity investments without readily determinable fair values, net 76,500 44,380 Equity method investments Companies providing hockey program management (e) 670 2,105 A company providing Internet product solutions (f) — 13,690 Less:impairment of equity method investments — (524) Total equity method investments, net 670 15,271 Available-for-sale investment (g) 15,000 15,000 impairment of available-for-sale investments (15,000) (15,000) Total available-for-sale investment, net — — Total long-term investments, net 77,170 59,651 Prior to January 1, 2018, the Company accounted for certain investments under the cost method as the Company was not able to exercise significant influence on the investees. After January 1, 2018, all such investments were identified as the equity investments without readily determinable fair values. (a) In October 2015, the Company paid RMB12,000 in cash to acquire 2.86% of the total equity interest in an education company, which provides training for senior mechanic in vehicle maintenance and repair. No impairment loss was recognized for both the years ended December 31, 2017 and 2018. (b) In May 2017, the Company paid RMB24,000 in cash to acquire 6% of the total equity interest in a company, which provides intelligent robot product. Based on the fact that the business conditions of this investee deteriorated in fiscal year 2018, the Company recognized impairment loss of nil and RMB24,000 for the years ended December 31, 2017 and 2018, respectively. (c) In July 2017, the Company paid RMB22,500 in cash to acquire 15% of the total equity interest in a company, which provides an information sharing IT platform. No impairment loss was recognized for both the years ended December 31, 2017 and 2018. (d) During the years ended December 31, 2017 and 2018, the Company acquired minority equity interest in several third-party companies.The Company recognized impairment loss of nil and RMB11,000 for the years ended December 31, 2017 and 2018, respectively. (e) In October 2016, the Company paid RMB790 in cash to acquire 28.5% of equity interest of a hockey program management company through investment in its common shares and accounted for the investment using equity method. The Company recognized impairment loss of nil and RMB524 for the year ended December 31, 2017 and 2018, respectively. In December 2018, the Company paid RMB1,580 in cash to acquire 20% of equity interest in another hockey program management company and accounted for the investment using equity method. (f) In January 2018, the company paid RMB14,000 in cash to acquire 20% of equity interest of a company which provides IT consulting services and programming account for the investment using equity method. No impairment loss was recognized for the year ended December 31, 2018. (g) In October 2016, the Company paid RMB10,000 in cash to acquire 13.9% equity interest in a private company, which provides employment course trainings and recruitment services. Because the investment terms contained both substantive liquidation preference over common stock and substantive redemption provision that is not available to common shareholders, the investment is not substantially similar to common stock. In addition, since the investment is redeemable at the option of the Company, the investment qualifies as a debt security. The Company recorded the investment as available-for-sale investment and recorded an accumulative increase of RMB5,000 in fair value of the investment with nil income tax effect by the end of 2016, as a component of other comprehensive income. In 2017, the investee received financing through a new private placement, the Company’s equity interest was reduced to 11.25%. However, it was subsequently found that the investee provided overstated financial statements to the new investors during the private placement in 2017 and lost in a lawsuit sued by one of the shareholders. Accordingly, the Company determined it to be an other-than-temporary impairment and fully impaired it in 2017. |
OTHER NON-CURRENT ASSET
OTHER NON-CURRENT ASSET | 12 Months Ended |
Dec. 31, 2018 | |
OTHER NON-CURRENT ASSET | |
OTHER NON-CURRENT ASSET | 8 OTHER NON-CURRENT ASSET Other non-current assets consist of the following: Year Ended December 31, 2017 2018 RMB RMB Other non-current assets: Rent and property management deposits 32,973 48,434 Housing loans made to employees (a) 11,339 29,893 Prepayment for equipment and leasehold improvement 11,717 13,089 Pledge loans to employees (b) 9,026 11,346 Other loans to employees 8,816 7,197 Others 4,380 12,041 Total other non-current assets 78,251 122,000 (a) Starting from 2016, the Company began to provide five-year loans with the annual interest rate of 3.325% to the employees, for their purchase of houses. (b) Starting from 2016, the Company began to provide five-year loans with the annual interest rate of 5% to the employees pledged by their share options. The interest was paid monthly and the principal was repaid upon maturity. |
SHORT-TERM BANK LOANS
SHORT-TERM BANK LOANS | 12 Months Ended |
Dec. 31, 2018 | |
SHORT-TERM BANK LOANS | |
SHORT-TERM BANK LOANS | 9 SHORT-TERM BANK LOANS In June 2018, Tarena International entered into a facilities agreement with an offshore branch of Hang Seng Bank Limited (the “Bank”), pursuant to which Tarena International may borrow from the Bank from time to time up to a combined aggregate of USD$12 million for a period of 12 months from the drawdown date. The purpose of the loan is to finance the Company’s offshore general working capital needs, including daily operating expenses and dividend payment. The bank loans were secured by an equivalent or greater amount of RMB deposits by Tarena in the onshore branch of the Bank . On December 19, 2018, Tarena International drew down a loan of USD$2 million for 12 months period. Interest is accrued and payable per 3 months, carrying a floating rate of 1.2% over the London Inter-Bank Offered Rate . The applicable interest rate for the loan is 4% per annum. The loans from the offshore branches of the Bank are classified as short-term bank loans based on the payment terms. As of December 31, 2018, USD$2 million bank loan was secured by an amount of RMB14.7 million deposit by Tarena International in the onshore branches of the Bank. The deposit is classified as restricted cash. The loan was subsequently repaid in June 2019. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2018 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 10 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Year Ended December 31, 2017 2018 RMB RMB Guarantee liability 83,693 27,505 Accrued payroll and employee benefits 88,713 128,224 Payable to a third-party individual 58,697 64,515 Refund liability — 35,772 VAT and other tax payables 18,015 34,731 Professional service fee 9,125 22,403 Rental fee 13,215 23,808 Payable for repurchasing of treasury shares 17,368 5,058 Others 24,603 23,412 Total 313,429 365,428 |
NET REVENUES
NET REVENUES | 12 Months Ended |
Dec. 31, 2018 | |
NET REVENUES | |
NET REVENUES | 11 NET REVENUES (a) Net revenues recognized under ASC Topic 605 for the years ended December 31, 2016 and 2017, and net revenue recognized under ASC Topic 606 for the year ended December 31, 2018 consisted of the following: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Tuition fee 1,491,594 1,658,981 1,896,642 Certification service fee 35,976 50,321 82,376 Loan referral service fee 9,855 33,533 18,096 Others 1,876 2,822 12,444 Business taxes and surcharges (19,266) (11,842) (13,878) Total net revenues 1,520,035 1,733,815 1,995,680 Others mainly include franchise fee and miscellaneous revenues. Year Ended December 31, 2016 2017 2018 RMB RMB RMB Timing of revenue recognition Services transferred at a point in time 45,831 83,854 100,472 Services transferred over time 1,474,204 1,649,961 1,895,208 Total net revenues 1,520,035 1,733,815 1,995,680 (b) Net revenues recognized under ASC Topic 460 for the years ended December 31, 2016, 2017 and 2018 consisted of the following: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Guarantee service — 19,880 89,691 |
LOSS ON FOREIGN CURRENCY FORWAR
LOSS ON FOREIGN CURRENCY FORWARD CONTRACT | 12 Months Ended |
Dec. 31, 2018 | |
LOSS ON FOREIGN CURRENCY FORWARD CONTRACT | |
LOSS ON FOREIGN CURRENCY FORWARD CONTRACT | 12 LOSS ON FOREIGN CURRENCY FORWARD CONTRACT The Company entered into a foreign currency forward contract on January 29, 2016 to sell its time deposits denominated in RMB for US dollars at a fixed rate at 6.7070 on May 19, 2016 with the notional amount of RMB564,095. The Company settled the forward contract on May 19, 2016 and incurred a loss on foreign currency forward contract in the amount of RMB12,898 for the year ended December 31, 2016. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
INCOME TAXES | 13 INCOME TAXES Under the current laws of the Cayman Islands, Tarena International is not subject to tax on its income or capital gains. For the period from its inception on October 22, 2012 to December 31, 2018, Tarena HK did not have any assessable profits arising in or derived from HK SAR. Tarena International’s PRC subsidiaries and consolidated VIEs and the subsidiaries of the VIEs file separate tax returns in the PRC. Effective from January 1, 2008, the PRC statutory income tax rate is 25% according to the Corporate Income Tax (“CIT”) Law which was passed by the National People’s Congress on March 16, 2007. Under the CIT Law, entities that qualify as “Advanced and New Technology Enterprise” (“ANTE”) are entitled to a preferential income tax rate of 15%. In 2015, the WFOE renewed its ANTE qualification, which entitled it to the preferential income tax rate of 15% from January 1, 2015 to December 31, 2017. In 2018, the WFOE renewed its ANTE qualification, which entitled it to the preferential income tax rate of 15% from January 1, 2018 to December 31, 2020. One of the Chinese subsidiaries of the Company was established in 2013 and qualified as an eligible software enterprise. As a result of this qualification, it is entitled to a tax holiday of a two-year full exemption followed by a three-year 50% exemption, commencing from 2014 in which its taxable income is greater than zero. As a result, its income tax rates for the years ended December 31, 2016, 2017 and 2018 were 12.5%, 12.5% and 12.5%, respectively. In 2016, another Chinese subsidiary of the Company was qualified as an eligible software enterprise, and was entitled to a tax holiday of a two-year full exemption followed by a three-year 50% exemption, commencing from the year in which its taxable income is greater than zero. As a result, the income tax rate of this Chinese subsidiary for the years ended December 31, 2016 and 2017 was nil, and for the year ended December 31, 2018 was 12.5%. Certain Tarena International’s subsidiaries and branches in China qualified as “Small Profit Enterprises” in 2016, 2017 and 2018, and therefore are subject to the preferential income tax rate of 20%. In 2017, one of the Chinese subsidiaries of the Company was established and qualified to be entitled to a tax holiday until end of year 2020. As a result, the income tax rate of this Chinese subsidiary for the years ended December 31, 2017 and 2018 was nil. According to the approvals from the tax authorities in certain locations in the PRC, Tarena International’s subsidiaries and consolidated VIEs and the subsidiaries of the VIEs that are based in these locations are required to use the deemed profit method to determine their income tax. Under the deemed profit method, these subsidiaries are subject to income tax at 25% on its deemed profit which is calculated based on revenues less deemed expenses equal to 85% and 90% of revenues. The components of income (loss) before income taxes are as follows: Year Ended December 31, 2016 2017 2018 RMB RMB RMB PRC 334,278 104,307 (467,953) Hong Kong (573) (2,415) (2,031) Cayman Islands (79,366) (76,649) (126,887) Taiwan — — (166) Canada — — (27) Total income (loss) before income taxes 254,339 25,243 (597,064) Income tax expense (benefit) consisted of the following: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Current income tax expense 29,766 26,561 16,058 Withholding tax expense — — 25,672 Deferred income tax benefit (1,547) (1,171) (46,595) Total 28,219 25,390 (4,865) The actual income tax expense reported in the consolidated statements of comprehensive income for each of the years ended December 31, 2016, 2017 and 2018 differs from the amount computed by applying the PRC statutory income tax rate to income before income taxes due to the following: Year Ended December 31, 2016 2017 2018 PRC statutory income tax rate 25.0 % 25.0 % 25.0 % Increase (decrease) in effective income tax rate resulting from: Impact of different tax rates in other jurisdictions 7.8 % 76.7 % (5.3) % Research and development bonus deduction (3.2) % (34.7) % 1.4 % Non-deductible expenses 1.7 % 62.7 % (1.4) % Preferential tax rates (23.7) % (199.9) % (0.3) % Change in valuation allowance 3.5 % 170.8 % (14.3) % Withholding tax — — (4.3) % Actual income tax expense 11.1 % 100.6 % 0.8 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities were as follows: December 31, 2017 2018 RMB RMB Non-current deferred income tax assets: Impairment of long-term investments 2,500 8,850 Tax loss carry forwards 33,201 157,264 Advertising expense 36,543 53,019 Others 5,648 4,162 Total non-current deferred income tax assets 77,892 223,295 Valuation allowance (72,271) (169,543) Non-current deferred income tax assets, net 5,621 53,752 Non-current deferred income tax liabilities: Valuation appreciation of intangible assets — 2,283 Non-current deferred income tax liabilities* — 2,283 * non-current deferred income tax liabilities are combined in other non-current liabilities. The movements of the valuation allowance are as follows: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Balance at the beginning of the year 28,583 37,521 72,271 Additions of valuation allowance 13,118 38,976 97,776 Reduction of valuation allowance (4,180) (4,226) (504) Balance at the end of the year 37,521 72,271 169,543 The valuation allowance as of December 31, 2017 and 2018 was primarily provided for the deferred income tax assets of certain Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs, which were at cumulative loss positions. In assessing the realization of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilizable. Management considers projected future taxable income and tax planning strategies in making this assessment. As of December 31, 2018, the Company had tax losses carryforwards of RMB656,702, including which from Hong Kong subsidiary of RMB10,906 and does not have an expiring date. Tax losses of RMB11,486, RMB9,175, RMB14,777, RMB92,289, and RMB518,069 will expire, if unused, by 2019, 2020, 2021, 2022 and 2023, respectively. The CIT Law and its implementation rules impose a withholding income tax at 10%, unless reduced by a tax treaty or arrangement, on the amount of dividends distributed by a PRC-resident enterprise to its immediate holding company outside the PRC that are related to earnings accumulated beginning on January 1, 2008. Dividends relating to undistributed earnings generated prior to January 1, 2008 are exempt from such withholding income tax. In fiscal year 2018, the Company distributed dividends to Tarena HK and paid a withholding income tax at the amount of RMB25,672. The Company has considered temporary differences on the book to tax differences pertaining to all investment in subsidiaries including the determination of the indefinite reinvestment assertion that would apply to each foreign subsidiary. The Company evaluated each entity’s historical, current business environment and plans to indefinitely reinvest all earnings accumulated in its respective jurisdiction for purpose of future business expansion. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2018 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 14 RELATED PARTY TRANSACTIONS The following is a list of related parties which the Company has transactions with: (1) Mr. Han Shao Yun (“Mr. Han”), the founder, chairman of our board of directors and former chief executive officer of the Company. (2) Chuanbang, a company wholly owned by Mr. Han. (3) Xi'an Beilin District Bolton vocational skill training school (“Bolton School”), a company controlled by Mr. Han’s brother-in-law. (4) Ningxia Tarena Technology Co., Ltd (“Ningxia Company”), a company wholly owned by Ms.Han Liping, a sister of Mr. Han. (5) Ms. Han Lijuan, a sister of Mr. Han. (6) Connion Capital Limited is a company ultimately owned by our chairman, Mr. Han through a trust. In 2018, the Company wired funds to and shortly received same funds back from Connion Capital Limited in five separate occasions with each no more than US$1 million in order for the Company to maintain the requisite minimum level of activity in its bank account. No amount was due from Connion Captal Limited as of December 31, 2018. The Company had the following balances and transactions with related parties: Related party balances As of December 31, 2017 2018 RMB RMB Amounts due from a related party Chuanbang (i) 6,942 9,938 Amounts due from a related party - non-current Ms. Han Lijuan (ii) 6,500 6,500 Notes: (i) The balance resulted from the service fee to Chuanbang for providing cash collection service. (ii) The balance represented a long-term loan to Ms. Han Lijuan and upon the Company’s request to avoid any risk of possible violation of Sarbanes-Oxley Act, all of the balance was repaid to the Company on April 2, 2020. Related party transactions The significant related party transactions for the years ended December 31, 2016, 2017 and 2018 are summarized as follows: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Cash collection service expense to Chuanbang (a) 6,445 3,230 3,489 Franchise and training service income from Bolton School 902 1,114 529 Franchise, training and consulting service income from Ningxia Company — 520 493 Training service expense to Bolton School 102 1,064 798 Interest income from Loan to Ms. Han Lijuan 81 325 325 Loan to Ms. Han Lijuan 6,500 — — Notes: (a) Pursuant to an agreement between Chuanbang and the Company, beginning August 2013, Chuanbang provides cash collection service on the Company’s accounts receivable. The fee for the service is calculated based on 2%~20% of the amount collected. |
ORDINARY SHARES AND STATUTORY R
ORDINARY SHARES AND STATUTORY RESERVE | 12 Months Ended |
Dec. 31, 2018 | |
ORDINARY SHARES AND STATUTORY RESERVE | |
ORDINARY SHARES AND STATUTORY RESERVE | 15 ORDINARY SHARES AND STATUTORY RESERVE (a) Treasury shares On August 20, 2015, the board of directors of the Company authorized a share repurchase plan under which the Company may repurchase up to US$20 million of its ordinary shares over the next 12 months. The Company repurchased 926,113 ordinary shares on the open market with a consideration of approximately RMB49,355 for the year ended December 31, 2015. For the year ended December 31, 2016, 648,867 ordinary shares were repurchased on the open market in the amount of RMB44,406. In the second quarter of 2017, the board of directors authorized a share repurchase plan under which the Company may repurchase up to US$30 million of its shares over the next 12 months. For the year ended December 31, 2017, 1,755,666 ordinary shares were repurchased on the open market in the amount of RMB161,342. In the second quarter of 2018, the board of directors authorized an increase to the size of the share repurchase plan from US$30 million to US$70 million and an extension of the term of the plan to June 20, 2019. For the year ended December 31, 2018, 3,768,495 ordinary shares were repurchased on the open market in the amount of RMB202,066. (b) Statutory reserves and restricted net assets Under PRC rules and regulations, Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs (the “PRC Entities”) are required to appropriate 10% of their net profit, as determined in accordance with PRC accounting rules and regulations, to a statutory surplus reserve until the reserve balance reaches 50% of their registered capital. In addition, private schools (held by the PRC Entities) which require reasonable returns are required to appropriate 25% of their net profit, as determined in accordance with PRC accounting rules and regulations, to a statutory development fund, whereas in the case of private schools which do not require reasonable return, 25% of the annual increase of their net assets. The appropriation to these statutory reserves must be made before distribution of dividends to Tarena International can be made. For the years ended December 31, 2016, 2017 and 2018, the PRC Entities made appropriations to the statutory reserves of RMB37,996, RMB29,734 and RMB12,943, respectively. As of December 31, 2016, 2017 and 2018, the accumulated balance of the statutory reserves was RMB110,531, RMB140,265 and RMB153,208, respectively. Relevant PRC laws and regulations restrict the WFOE, VIE and VIE's subsidiary from transferring a portion of their net assets, equivalent to the balance of their paid-in-capital, additional paid-in-capital and statutory reserves to the Company in the form of loans, advances or cash dividends. Relevant PRC statutory laws and regulations restrict the payments of dividends by the Company's VIE and VIE's subsidiary from their respective retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The balances of restricted net assets as of December 31, 2016, 2017 and 2018 were RMB1,106,135, RMB1,235,538 and RMB1,375,685, respectively. Under applicable PRC laws, loans from PRC companies to their offshore affiliated entities require governmental approval, and advances by PRC companies to their offshore affiliated entities must be supported by bona fide business transactions. (c) Dividend On March 7, 2016, the Company's board of directors approved to declare a cash dividend of RMB0.98 (US$0.15) per ordinary share to shareholders as of the close of trading on April 6, 2016. The aggregate amount of cash dividends was approximately RMB54,026, which was paid in May 2016. On February 28, 2017, the Company’s board of directors approved to declare a cash dividend of RMB1.10 (US$0.16) per ordinary share to shareholders as of the close of trading on March 27, 2017. The aggregate amount of cash dividends was approximately RMB63,087, which was paid in June 2017. On March 6, 2018, the Company’s board of directors approved to declare a cash dividend of RMB0.76 (US$0.12) per ordinary share to shareholders as of the close of trading on April 5, 2018. The aggregate amount of cash dividends was approximately RMB42,955, which was paid in June 2018. |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2018 | |
SHARE BASED COMPENSATION | |
SHARE BASED COMPENSATION | 16 SHARE BASED COMPENSATION Share incentive plans On September 22, 2008, Tarena International adopted the 2008 Share Plan (the “2008 Plan”), pursuant to which Tarena International is authorized to issue share options and other share-based awards to key employees, directors and consultants of the Company to purchase up to 6,002,020 of its Class A ordinary shares (being retroactively adjusted to reflect the effect of the share split) under the 2008 Plan. On November 28, 2012, the Company increased the number of Class A ordinary shares authorized for issuance under the 2008 Plan to 8,184,990 Class A ordinary shares. Share options issued before September 22, 2008 are also administered under the 2008 Plan. The plan was terminated in 2018. According to its terms and there were no outstanding granted options by the termination date. On February 1, 2014, Tarena International adopted the 2014 Share Plan (the “2014 Plan”), pursuant to which Tarena International was authorized to issue options, non-vested shares and non-vested share units to qualified employees, directors and consultants of the Company. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, or the Award Pool, is 1,833,696, provided that the shares reserved in the Award Pool shall be increased on the first day of each fiscal year, commencing with January 1, 2015, if the unissued shares reserved in the Award Pool on such day account for less than 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding fiscal year, as a result of which increase the shares unissued and reserved in the Award Pool immediately after each such increase shall equal 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding fiscal year. Share options During the year ended December 31, 2016, the board of the directors of Tarena International approved the grant of options to certain officers and employees to purchase 1,138,119 ordinary shares of Tarena International at exercise prices ranging from US$0.058 to US$4.36 per share. These options vest over a period ranging between 0.08 year and 4 years. The options have a contractual term of ten years. During the year ended December 31, 2017, the board of the directors of Tarena International approved the grant of options to certain officers and employees to purchase 682,435 ordinary shares of Tarena International at exercise prices ranging from US$0.058 to US$4.36 per share. These options vest over a period ranging between 0.17 year and 4 years. The options have a contractual term of ten years. During the year ended December 31, 2018, the board of the directors of Tarena International approved the grant of options to certain officers and employees to purchase 1,085,094 ordinary shares of Tarena International at exercise prices ranging from US$0.06 to US$1.00 per share. These options vest over a period ranging between 0.33 year and 1 year. The options have a contractual term of ten years. A summary of share options activity for the years ended December 31, 2016, 2017 and 2018 is as follows: Weighted Weighted Average Number of Average Remaining Aggregate Share Exercise Price Contractual Intrinsic Options US$ Years Value US$ Outstanding at December 31, 2015 5,574,441 1.77 5.55 45,569 Granted 1,138,119 1.90 Exercised (2,106,043) 1.46 Forfeited (278,142) 2.89 Expired — — Outstanding at December 31, 2016 4,328,375 1.88 5.84 56,743 Granted 682,435 0.88 Exercised (1,898,391) 1.74 Forfeited (98,067) 3.30 Expired — — Outstanding at December 31, 2017 3,014,352 1.70 5.83 40,031 Granted 1,085,094 0.84 Exercised (615,746) 0.72 Forfeited (86,903) 1.49 Expired — — Outstanding at December 31, 2018 3,396,797 1.61 6.47 15,919 Vested and expected to vest as of December 31, 2018 3,262,468 1.56 6.43 15,469 Exercisable as of December 31, 2018 2,824,485 1.50 6.21 13,551 The total intrinsic value of options exercised during the years ended December 31, 2016, 2017 and 2018 were RMB189,154, RMB169,944 and RMB22,710, respectively. The Company calculated the fair value of the share options on the grant date using the Binomial option-pricing valuation model. The assumptions used in the valuation model are summarized in the following table. Year Ended December 31, 2016 2017 2018 US$ US$ US$ Expected volatility 63.5%‑68.8% 63.7%‑67.8% 53.52%-55.70% Expected dividends yield Exercise multiple 2.0 2.0 2.2-2.8 Risk-free interest rate per annum 2.15%‑3.18% 2.88%‑3.22% 2.54%-3.23% The fair value of underlying ordinary shares (per share) US$9.99‑US$16.54 US$14.27‑US$19.03 US$6.97-US$14.99 The expected volatility was based on the historical volatilities of the Company and comparable publicly traded companies engaged in the similar industry. No income tax benefit was recognized in the consolidated statements of comprehensive income as the share-based compensation expense was not tax deductible. The fair values of the options granted for the years ended December 31, 2016, 2017 and 2018 are as follows: Year Ended December 31, 2016 2017 2018 US$ US$ US$ Weighted average grant date fair value of option per share 10.15 15.99 12.35 Aggregate grant date fair value of options 11,551 10,915 13,402 As of December 31, 2018, there was approximately RMB46,565 of total unrecognized compensation cost related to unvested share options and the unrecognized compensation costs are expected to be recognized over a weighted average period of approximately 1.66 years. Non-vested shares On April 3, 2016, the board of directors of Tarena International approved the grant of 20,000 non-vested shares to three independent directors, 25% of which vest at the end of every quarter within one year. Grantees of non-vested shares have no voting rights or dividend rights with respect to shares that have not been vested. On February 28, 2017, the board of directors of Tarena International approved the grant of 700 non-vested shares to 7 employees. One hundred percent of the non-vested shares shall vest immediately on the grant date. On April 3, 2017, the board of directors of Tarena International approved the grant of 13,335 non-vested shares to three independent directors, 25% of which vest at the end of every quarter within one year. On February 28, 2017, the board of directors of Tarena International approved the grant of 28,475 and 87,325 non-vested shares to employees, of which the vest period is eight and nine years, respectively. Grantees of non-vested shares have no voting rights or dividend rights with respect to shares that have not been vested. On April 3, 2018, the board of directors of Tarena International approved the grant of 18,181 non-vested shares to three independent directors, 25% of which vest at the end of every quarter within one year. On April 1, 2018, the board of directors of Tarena International approved the grant of 193,796 non-vested shares to employees, of which the vest period is five years. Grantees of non-vested shares have no voting rights or dividend rights with respect to shares that have not been vested. A summary of the non-vested shares activity under the 2014 Share Plan for the years ended December 31, 2016, 2017, 2018 is summarized as follows: Weighted Average Number of Non- Grant Date Fair vested Shares Value US$ Outstanding as of December 31, 2015 25,000 9.63 Granted 20,000 10.82 Vested (35,000) 9.97 Forfeited — — Outstanding as of December 31, 2016 10,000 10.82 Granted 129,835 14.93 Vested (17,367) 14.08 Forfeited (15,701) 14.47 Outstanding as of December 31, 2017 106,767 14.75 Granted 211,977 11.20 Vested (16,557) 14.22 Forfeited (22,541) 12.39 Outstanding as of December 31, 2018 279,646 12.28 As of December 31, 2018, there was approximately RMB22,496 of total unrecognized compensation cost related to non-vested shares, which is expected to be recognized over a weighted average period of approximately 5.12 years. The total fair value of shares vested during the year ended December 31, 2016, 2017 and 2018 was RMB2,316, RMB1,652 and RMB1,557 respectively. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2018 | |
EARNINGS (LOSS) PER SHARE | |
EARNINGS (LOSS) PER SHARE | 17 EARNINGS (LOSS) PER SHARE Basic and diluted earnings (loss) per share is calculated as follows: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Numerator: Net income (loss) attributable to Class A and Class B ordinary shareholders 226,120 (147) (590,174) Net income (loss) for basic and diluted earnings per share 226,120 (147) (590,174) Denominator: Denominator for basic earnings per share: Weighted average number of Class A and Class B ordinary shares outstanding 55,540,670 56,849,332 54,929,910 Dilutive effect of outstanding share options 3,464,591 — — Denominator for diluted earnings (loss) per share 59,005,261 56,849,332 54,929,910 Basic earnings (loss) per Class A and Class B ordinary share 4.07 (0.00) (10.74) Diluted earnings (loss) per Class A and Class B ordinary share 3.83 (0.00) (10.74) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 18 COMMITMENTS AND CONTINGENCIES (a) Operating lease commitments Future minimum lease payments under non-cancelable operating lease agreements as of December 31, 2018 were as follows. The Company’s leases do not contain any contingent rent payment terms. RMB Year ending December 31, 2019 289,324 2020 232,688 2021 168,329 2022 119,024 2023 66,575 2024 and thereafter 47,447 Total 923,387 Gross rental expenses incurred under operating leases were RMB133,407, RMB178,802 and RMB262,440 for the years ended December 31, 2016, 2017, and 2018, respectively. Sublease rental income of RMB460, RMB630, and RMB1,533 for the years ended December 31, 2016, 2017, and 2018, respectively, were recognized as reductions of gross rental expenses. (b) Contingencies From time to time, the Company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 12 Months Ended |
Dec. 31, 2018 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | 19 BUSINESS COMBINATION On March 1, 2018, the Company acquired 100% of equity interest of Wuhan Haoxiaozi Robot Technology Co., Ltd, ("RTEC"), which provides K-12 robotics programming education services. The total consideration was RMB58,200 in cash. On the acquisition date, the allocation of the consideration of the assets acquired and liabilities assumed based on their fair value was as follows: RMB Amortization period Cash and cash equivalents 3,874 Financial receivables 7,550 Prepaid and other current assets 6,138 Inventory, net 803 Property and equipment 12,851 Intangible assets 12,688 10 Goodwill 49,417 Other non-current assets 114 Total assets 93,435 Deferred revenue (31,906) Accounts payable and other current liabilities (1,046) Deferred tax liabilities (2,283) Total 58,200 The excess of the purchase price over the tangible assets and identifiable intangible assets acquired reduced by liabilities assumed was initially recorded as goodwill and the goodwill is not deductible for tax purposes. The amount of goodwill resulted from the acquisition was RMB49,417 as of March 1, 2018.The acquired identifiable intangible assets were valued using discounted cash flow method. The goodwill acquired resulted primarily from the Company’s expected synergies from the integration of businesses acquired into the Company’s existing K-12 programs. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2018 | |
GOODWILL | |
GOODWILL | 20 GOODWILL Goodwill consisted of the following: As of December, 31 2017 2018 Beginning balance 3,365 3,365 Acquisition — 49,417 Ending balance 3,365 52,782 There was no goodwill impairment as of December 31, 2017 and 2018. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2018 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 21 SEGMENT INFORMATION The Company has organized its operations into two segments: Adult Training and Kid Training, which reflects the way the Company evaluates its business performance and manages its operations by the Company’s chief operating decision maker (“CODM”). The Company's CODM has been identified as the CEO who reviews the financial information of separate operating segments when making decisions about allocating resources and assessing performance of the Company. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The CODM evaluates performance based on each reporting segment’s revenues, cost of revenues, and gross profit. The CODM does not review balance sheet information to measure the performance of the reportable segments, nor is this part of the segment information regularly provided to the CODM. It is not practicable to restate the information for prior years of 2017 and 2016 due to that the Kid Training business was launched by the end of 2015 and the company’s internal operation structure, personnel structure and financial reporting structure was not setup to support the segments separately until early 2018, therefore the management determines that it applies to the practicality exception and does not present the numbers of fiscal year 2016 and 2017. Revenues, cost of revenues, and gross profit by segment for the year ended December 31, 2018 were as follows. Year Ended December 31, 2018 Adult Training Kid Training Total RMB RMB RMB Revenue 1,915,446 169,925 2,085,371 Cost (690,252) (228,297) (918,549) Gross Margin 1,225,194 (58,372) 1,166,822 |
PARENT ONLY FINANCIAL INFORMATI
PARENT ONLY FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2018 | |
PARENT ONLY FINANCIAL INFORMATION | |
PARENT ONLY FINANCIAL INFORMATION | 21 PARENT ONLY FINANCIAL INFORMATION The following presents condensed parent company financial information of Tarena International. Condensed Balance Sheets December 31, 2017 2018 RMB RMB ASSETS Current assets: Cash and cash equivalents 17,658 25,507 Time deposits 65,342 — Prepaid expenses and other current assets 970 696 Total current assets 83,970 26,203 Investments and loans to subsidiaries 1,210,622 567,003 Total assets 1,294,592 593,206 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term bank loan — 13,726 Accrued expenses and other current liabilities (1) 24,454 6,862 Total current liabilities 24,454 20,588 Other non-current liabilities 629 — Total liabilities 25,083 20,588 Commitments and contingencies — — Shareholders’ equity: Class A ordinary shares (US$0.001 par value,860,000,000 shares authorized, 52,340,176 and 52,972,578 shares issued, 49,009,530 and 45,873,437 shares outstanding as of December 31, 2017 and 2018, respectively) 327 331 Class B ordinary shares (US$0.001 par value, 40,000,000 shares authorized, 7,206,059 shares and 7,206,059 shares issued and outstanding as of December 31, 2017 and 2018, respectively) 74 74 Treasury shares (3,330,646 and 7,099,141 class A ordinary shares as of December 31, 2017 and 2018, respectively, at cost) (255,103) (457,169) Additional paid-in capital 1,094,872 1,222,072 Accumulated other comprehensive income 39,372 50,472 Retained earnings (accumulated deficit) 389,967 (243,162) Total shareholders’ equity 1,269,509 572,618 Total liabilities and shareholders’ equity 1,294,592 593,206 (1) Mainly related to repurchase of treasury shares. Condensed Statements of Comprehensive Income (Loss) Year Ended December 31, 2016 2017 2018 RMB RMB RMB Selling and marketing expenses — — (403) General and administrative expenses (4,477) (5,218) (5,536) Operating loss (4,477) (5,218) (5,939) Equity in earnings (loss) of subsidiaries 237,662 (913) (589,564) Foreign currency exchange losses (4,753) (421) 341 Interest income 8,027 2,327 413 Loss on foreign currency forward contract (12,898) — — Other income 2,559 4,078 2,550 Income (loss) before income taxes 226,120 (147) (592,199) Income tax expense — — — Net income (loss) 226,120 (147) (592,199) Other comprehensive income Foreign currency translation adjustment, net of nil income tax 22,972 (13,832) 11,100 Unrealized holding gains on available for sale securities, net of RMB42, RMB2,818 and nil income taxes for the year 2016, 2017 and 2018, respectively 5,235 11,496 — Less: Reclassification adjustment for loss on available for sale securities realized in net income, net of RMB42, RMB2,818 and nil income taxes for the year 2016, 2017 and 2018, respectively (235) (16,496) — Comprehensive income (loss) 254,092 (18,979) (581,099) Condensed Statements of Cash Flows Year Ended December 31, 2016 2017 2018 RMB RMB RMB Operating activities: Net cash (used in) provided by operating activities (15,581) (17,595) 165,098 Investing activities: Purchase of time deposits (298,688) (196,771) — Proceeds from maturity of time deposits 620,607 363,533 63,452 Investments made to subsidiaries (198,137) — — Foreign currency exchange losses — 10,691 1,890 Net cash provided by investing activities 123,782 177,453 65,342 Financing activities: Proceeds from bank borrowing — — Issuance of Class A ordinary shares in connection with exercise of share options 20,388 22,254 2,952 Payment of dividends (54,026) (63,087) (42,955) Repurchase of treasury shares (44,406) (143,389) (196,957) Net cash used in financing activities (78,044) (184,222) (223,732) Changes in cash and cash equivalents 30,157 (24,364) 6,708 Effect of foreign currency exchange rate changes on cash and cash equivalents 7,338 (1,748) 1,141 Net increase (decrease) in cash and cash equivalents 37,495 (26,112) 7,849 Cash and cash equivalents at beginning of year 6,275 43,770 17,658 Cash and cash equivalents at end of year 43,770 17,658 25,507 Non-cash financing activities: Payable for repurchase of treasury shares — 17,953 5,109 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2018 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 22 SUBSEQUENT EVENTS Long-term investment On January 17, 2019, the Company acquired 12.05% of equity interest of a company which mainly engaged in project investment in China. The total consideration was RMB10,000 in cash. The transaction will be accounted for as equity investments without readily determinable fair values. Independent Investigation On May 17, 2019, the Company received a notification letter from Nasdaq stating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) due to its failure to timely file its Annual Report on Form 20-F for the year ended December 31, 2018. The Nasdaq notification letter provides the Company 60 calendar days from the date of the notification, or until July 15, 2019, to submit a plan to Nasdaq to regain compliance with the Nasdaq’s continued listing requirements. During the period from April to November 2019, the Company’s audit committee conducted the Investigation. The Company identified accounting errors and restated its prior years financial statements as disclosed in Note 3 to the Consolidated Financial Statements. Loan & pledge On August 9, 2019, the Company entered into a line of credit contract with Bank of Beijing to borrow RMB190,000 for one year with validity period on August 8, 2021. The loan bears a fixed interest rate of one year Loan Prime Rate ("LPR") plus 1.15% per annum on the date of drawing. As of the issuance date of the consolidated financial statements, the Company borrowed RMB99,872 from Bank of Beijing, and the carrying value of office buildings pledged for the borrowing was RMB207,749. Impact of COVID-19 The recent outbreak of a novel strain of coronavirus, now named as COVID-19, has spread rapidly to many parts of the world. The epidemic has resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities in China and many other countries for the past few months. In March 2020, the World Health Organization declared the COVID-19 a pandemic. The current COVID-19 pandemic has already adversely affected many of our business activities, including delivering lectures at our learning centers, recruiting students and conducting our day-to-day business. As part of China’s nationwide efforts to contain the spread of COVID-19, our classrooms in Beijing as well as our learning centers across China have underwent temporary yet prolonged closure from February 2020 to present. Although we have arranged online webcasts for our students to study at home, we may not be able to achieve the same effectiveness and service quality without the disciplined and focused learning environment at our learning centers. As of the date of this annual report, our learning centers remain closed due to the government policies on suspending classes at school. In addition, we have experienced difficulty in recruiting students as we are unable to host regular seminars, information sessions and preparatory training camps for prospective students at our learning centers as usual as well as conducting other offline sales and marketing activities due to the general restrictions on travel and outdoor activities. Our ability to recruit students directly from cooperative universities and colleges is also negatively impacted as most universities and colleges have been closed. The outbreak of COVID-19 in China has also caused temporary closures of many of our offices, adjustment of operation hours and work-from-home arrangements in our Beijing headquarters and other offices in China. We have taken measures to facilitate our employees to work remotely, but we might still experience lower work efficiency and productivity, which may adversely affect our results of operations. As we derive most of our revenues in China, our results of operations will be adversely, and may be materially, affected to the extent that COVID-19 harms the Chinese and global economy in general. While the duration of this pandemic cannot be reasonably estimated at this time, we expect that our results of operations for the first quarter and second quarter of 2020 will be adversely affected. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of consolidation | (a) Principles of consolidation The consolidated financial statements include the financial statements of Tarena International, its wholly-owned subsidiaries, VIEs in which Tarena International is the primary beneficiary and their wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation. |
Liquidity Condition | (b) Liquidity Condition For the year ended December 31, 2018, the Company incurred a net loss from operations of RMB592.2 million. As of December 31, 2018, the Company had net current liability of RMB374.8 million. The Company’s operating results for future periods are subject to numerous uncertainties and it is uncertain if the Company will be able to reduce or eliminate its net losses in the foreseeable future. If management is not able to increase revenue and/or manage operating expenses in line with revenue forecasts, the Company may not be able to achieve profitability. Despite of the net loss for the year ended December 31, 2018, which included non-cash components of depreciation and amortization amounting to RMB159 million, share based compensation expense amounting to RMB124 million, and impairment loss of long-term investments amounting to RMB36 million, for the years ended December 31, 2016, 2017 and 2018, the Company generated net cash inflows from operating activities amounting to RMB496 million, RMB302 million, and RMB163 million, respectively. The Company expects a limited amount of net operating cash outflow, if not a net operating cash inflow, for the year ended December 31, 2019, taking into consideration of the significant expenses with respect to the Investigation as further discussed in Note 3 to the consolidated financial statements. As of December 31, 2018, the Company’s deferred revenue liability of RMB830 million does not represent potential cash outflows but will be recognized as revenue in the future as the Company provides the services in the end. For the next 12 months from the issuance date of this report, the Company plans to continues implementing various measures to boost revenue and controlling the cost and expenses within an acceptable level by offering online courses to all students, negotiating for relief or postpone of rentals for this special period of time and seeking for certain credit facilities, implementing comprehensive budget control and operation assessment, implementing enhanced vendor review and selection processes as well as enhancing internal controls on payable management, and creating synergy of the Company’s resources, which has considered the impact of COVID-19 as disclosed in Note 22 to the consolidated financial statements. Given the considerable gross margin ratio in its operations and the expected net operating cash inflow mentioned above, the Company assesses current working capital is sufficient to meet its obligations for the next 12 months from the issuance date of this report. |
Use of estimates | (c) Use of estimates The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the estimated stand-alone selling price under ASC 606, the guarantee liability under ASC Topic 460, the fair values of share-based compensation awards, goodwill impairment and long term investments, the collectability of accounts receivable, the realizability of deferred income tax assets, the accruals for other contingencies, the recoverability of the carrying amounts of property and equipment and the useful lives of property and equipment. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. To allocate the transaction price for contracts with multiple deliverables and estimate the standalone selling price, the Company considers market data, including its pricing strategies for the products being evaluated and other similar products it offers, competitor pricing to the extent data is available, and costs to determine whether the estimated selling price yields an appropriate profit margin. |
Business combinations | (d) Business combinations Business combinations are recorded using the acquisition method of accounting. The purchase price of the acquisition is allocated to the identifiable assets and liabilities based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred. |
Foreign currency | (e) Foreign currency The functional currency of Tarena International and Tarena Hong Kong Limited (“Tarena HK”) is the USD. The functional currency of Taiwan Tarena Counseling Software Co., Ltd. is the TWD. The functional currency of Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs is the RMB. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rate at the balance sheet date. The resulting exchange differences are recorded in foreign currency exchange gains (losses) in the consolidated statements of comprehensive income (loss). Assets and liabilities of entities with functional currencies other than RMB are translated into RMB using the exchange rate on the balance sheet date. Revenues and expenses are translated into RMB at average rates prevailing during the reporting period. The resulting foreign currency translation adjustment are recorded in accumulated other comprehensive income (loss) within shareholders’ equity. Since the RMB is not a fully convertible currency, all foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC. |
Cash, cash equivalents, restricted cash and time deposits | (f) Cash, cash equivalents, restricted cash and time deposits Cash consist of cash on hand and cash in bank, which are unrestricted as to withdrawal. Cash equivalents consist of interest-bearing certificates of deposit with initial term of no more than three months when purchased. Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term of greater than three months when purchased. Time deposits which mature over one year as of the balance sheet date are included in non-current assets. Restricted cash is the deposit as collateral for the USD$2 million bank loan with a period of 12 months. Cash, cash equivalents, time deposits and restricted cash maintained at financial institutions consist of the following: December 31, 2017 2018 RMB RMB RMB denominated bank deposits with financial institutions in the PRC 910,804 511,866 US dollar denominated bank deposits with financial institutions in the PRC 135,686 131,129 US dollar denominated bank deposits with financial institutions in Hong Kong Special Administrative Region (“HK SAR”) 4,387 53,148 HK dollar denominated bank deposits with financial institutions in HK SAR 1 15 RMB denominated bank deposits with a financial institution in HK SAR 21 147 US dollar denominated bank deposits with a financial institution in the U.S. 68,795 6,311 TWD denominated bank deposits with a financial institution in Taiwan — 2,170 Total 1,119,694 704,786 To limit exposure to credit risk relating to bank deposits, the Company primarily places bank deposits only with large financial institutions in the PRC, HK SAR, Taiwan and the U.S. with acceptable credit rating. |
Short-term investment | (g) Short-term investment During the years ended December 31, 2016, 2017 and 2018, the Company invested RMB420,000, RMB950,000 and nil, respectively, in financial products managed by one financial institution in the PRC. The terms of the financial products range between 7 days and 84 days. All of these financial products matured before December 31, 2016, 2017 and 2018, respectively. The Company earned investment income of RMB12,676, RMB19,314 and nil, respectively on the financial products, which was included in other income (loss) in the consolidated statements of comprehensive income (loss) for the years ended December 31, 2016, 2017 and 2018. |
Accounts receivable | (h) Accounts receivable Accounts receivable primarily represent tuition fees due from students. Accounts receivable which are due over one year as of the balance sheet date are presented as non-current assets. The unearned interest on accounts receivable which are due over one year is reported in the consolidated balance sheets as a direct deduction from the principal amount of accounts receivable. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its students to make required payments. Accounts receivable is considered past due based on its contractual terms. In establishing the allowance, management considers historical losses, the students’ financial condition, the accounts receivables aging and the students’ payment patterns. Accounts receivable which are deemed to be uncollectible are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. There is a time lag between when the Company estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances is taken. The Company takes a write off of the account balances when the Company can demonstrate all means of collection on the outstanding balances have been exhausted. |
Property and equipment | (i) Property and equipment Property and equipment are recorded at cost. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets. The estimated useful life of property and equipment is as follows: Office buildings 45 years Furniture 5 years Office equipment 3 to 4 years Leasehold improvements Shorter of the lease term or the estimated useful life of the assets Ordinary maintenance and repairs are charged to expenses as incurred, while replacements and betterments are capitalized. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value of the item disposed and proceeds realized thereon. Property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment loss is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. No impairment of long-lived assets was recognized for any of the years presented. |
Goodwill | (j) Goodwill The excess of the purchase price over the fair value of net assets acquired is recorded on the consolidated balance sheets as goodwill. Goodwill is not amortized, but tested for impairment annually or more frequently if event and circumstances indicate that it might be impaired. ASC 350‑20, Goodwill , permits the Company to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test, using a two-step approach. If this is the case, the two-step goodwill impairment test is required. If it is more likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required. If the two-step goodwill impairment test is required, the first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired and the second step is not required. If the fair value of the reporting unit is less than its carrying amount, the second step of the impairment test measures the amount of the impairment loss, if any, by comparing the implied fair value of goodwill to its carrying amount. If the carrying amount of goodwill exceeds its implied fair value, an impairment loss is recognized equal to that excess. The implied fair value of goodwill is calculated in the same manner that goodwill is calculated in a business combination, whereby the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit, with the excess purchase price over the amounts assigned to assets and liabilities representing the implied fair value of goodwill. The Company performs the annual goodwill impairment assessment using a two-step approach on December 31 and no goodwill impairment was identified as of December 31, 2017 and 2018 (Note 20). |
Long-term investments | (k) Long-term investments · Equity investments without readily determinable fair values/ Cost method investments In January 2016, the FASB issued ASU 2016-01 (“ASU 2016-01”), Recognition and Measurement of Financial Assets and Financial Liabilities, which, among other things, generally requires companies to measure investments in other entities, except those accounted for under the equity method, at fair value and to recognize any changes in fair value in net income. ASU 2016-01 also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, and the guidance should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The guidance related to equity investments without readily determinable fair values (including disclosure requirements) is applied prospectively to equity investments that exist as of the date of adoption. ASU 2016-01, which the Company adopted on January 1, 2018, did not have a material impact on the consolidated financial statements. Since January 1, 2018, equity investments without readily determinable fair values are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes in accordance with ASC topic 321, Investments – Equity Securities. Prior to the fiscal year 2018, these securities were accounted for using the cost method of accounting, measured at cost less other-than-temporary impairment. · Equity method investments Under the equity method, the Company’s share of the post-acquisition profits or losses of the equity investment is recognized in the consolidated statements of comprehensive income; and the Company’s share of post-acquisition movements in equity is recognized in equity in the consolidated balance sheets. Unrealized gains on transactions between the Company and an entity in which it has recorded an equity investment are eliminated to the extent of the Company’s interest in the entity. To the extent of the Company’s interest in the investment, unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. When the Company’s share of losses in an entity in which it has recorded an equity investment equals or exceeds the Company’s interest in the entity, it does not recognize further losses, unless it has incurred obligations or made payments on behalf of the equity investee. The Company evaluates the equity method investments for impairment. An impairment loss on the equity method investments is recognized in earnings when the decline in value is determined to be other-than-temporary. · Available-for-sale debt securities Debt securities that the Company has positive intent and ability to hold to maturity are classified as held-to-maturity debt securities and are stated at amortized cost. Debt securities that the Company has the intent to hold the security for an indefinite period or may sell the security in response to the changes in economic conditions are classified as available for sale and reported at fair value. Unrealized gains and losses (other than impairment losses) are reported, net of the related tax effect, in other comprehensive income (OCI). Upon sale, realized gains and losses are reported in net income. The Company monitors the investments for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, the operating performance of the companies including current earnings trends and other company-specific information. |
Revenue recognition | (l) Revenue recognition The Company adopted ASC Topic 606 (“ASC 606”), Revenue from Contracts with Customers, with effect from January 1, 2018, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Accordingly, revenues for the year ended December 31, 2018 was presented under ASC 606, and revenues for the years ended December 31, 2016 and 2017 were not adjusted and continued to be presented under ASC topic 605 (“ASC 605”), Revenue Recognition. Revenue recognition before adoption of ASU 2014-09, “Revenue from Contracts with Customers (ASC 606)” Revenue is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. These criteria as they relate to each of the following major revenue generating activities are described below. Revenue is presented net of business tax and value added taxes (“VAT”) at rates ranging between 3% and 6%, and surcharges. VAT and business tax collected from customers, net of VAT paid for purchases, is recorded as a liability in the consolidated balance sheets until it is paid to the tax authorities. Tuition revenue Tuition fees are recognized as revenue proportionately as the training courses are delivered, with unearned portion of tuition fees being recorded as deferred revenue. For certain students who borrow the tuition fee from financial service providers, the Company also provides a guarantee service to financial service providers whereas in the event of default, the financial service providers are entitled to receive unpaid interest and principal from the Company . Given that the Company effectively takes on all of the credit risk of the borrowers and are compensated by the tuition fees charged, the guarantee is deemed as a service and the guarantee exposure is recognized as a stand-ready obligation in accordance with ASC Topic 460, Guarantees (see accounting policy for Guarantee Liabilities). The Company first allocates the transaction price to the guarantee liabilities, if any, in accordance with ASC Topic 460, Guarantees, which requires the guarantee to be measured initially at fair value based on the stand ready obligation. Then the remaining considerations are allocated to the tuition fees. Certain qualified students are allowed to pay their tuition fees on installment for a period of time after the completion of the course. When tuition services are sold on installment terms that exceeds one year beyond the point in time that revenue is recognized, the receivable, and therefore the revenue is recorded at the present value of the payments. The difference between the present value of the receivable and the nominal or principal value of the tuition fees is recognized as interest income over the contractual repayment period using the effective interest rate method. The interest rate used to determine the present value of total amount receivable is the rate subject to management decision on the date of the transaction and it reflects the rate that the students can obtain financing of a similar nature from other sources at the date of the transaction. The Company enters into arrangements with certain students that purchase multiple services, including tuition service and practical tutoring service (“multiple-element arrangements”). Each element within the multiple-element arrangements is accounted for as a separate unit of accounting provided the following criteria are met: the delivered services have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered services, delivery or performance of the undelivered service is considered probable and is substantially controlled by the Company. A deliverable has standalone value if the service is sold separately by the Company or another vendor. The Company’s revenue arrangements do not include a general right of return relative to the delivered services. The Company treats training contracts with multiple deliverable elements as separate units of accounting for revenue recognition purposes and recognizes revenue during the contract period when each deliverable service is provided. The Company allocates the contract price among all the deliverables at the inception of the arrangement on the basis of their relative selling prices according to the selling price hierarchy established by Topic 605-25, Revenue Recognition - Multiple - Element Arrangements. The Company first uses vendor-specific objective evidence (VSOE) of selling price, if it exists, otherwise the third-party evidence of selling price is used. If neither VSOE of selling price nor third-party evidence of selling price exists, the Company uses management’s best estimate of selling price for the deliverables. Certification service revenue The Company provides certification service to students who complete the training course and enroll for the exams. The Company is responsible for the certification service, including organization, proctoring and grading of exams, and providing the certificates to students. All certificates are issued by third parties to the students who pass the exam. The Company acts as the principal in providing this service and recognizes revenue on gross basis because the Company is the primary obligor in the arrangement and is responsible for fulfilling the ordered services by the students. Cash received before the students taking the exam, is recorded as deferred revenue, and subsequently recognized as certification service revenue upon completion of the certification service, which occurs when the certificates are provided to the students. Loan referral service revenue The Company promotes loan products of the financial service providers to its students, who need financial assistance for the payment of their tuition fees, in exchange for a referral fee at a rate of the effective principal amount of the loans. Loan referral service revenue is recognized upon the initiation of the loans and confirmed with the financial service providers on a monthly basis. Revenue recognition after adoption of ASU 2014-09, “Revenue from contracts with Customers (ASC 606)” with modified retrospective method Effective January 1, 2018, The Company evaluated and recognized revenue based on the five steps set forth in ASC 606 by: · identifying the contract(s) with the customer; · identifying the performance obligations in the contract; · determining the transaction price; · allocating the transaction price to performance obligations in the contract; and · recognizing revenue as each performance obligation is satisfied through the transfer of a promised good or service to a customer (i.e., “transfer of control”). These criteria as they relate to each of the following major revenue generating activities are described below. Revenue is presented net of business tax and value added taxes (“VAT”) at rates ranging between 3% and 6%, and surcharges. VAT and business tax to be collected from customers, net of VAT paid for purchases, is recorded as a liability in the consolidated balance sheets until it is paid to the tax authorities. Tuition revenue The Company provides IT and non-IT related training courses to both adult and K-12. A majority of contract of tuition service is accounted for as a single performance obligation which is satisfied proportionately over the service period. Tuition fees are recognized as revenue proportionately as the training courses are delivered, with unearned portion of tuition fees being recorded as deferred revenue. For certain students who borrow the tuition fee from financial service providers, the Company also provides a guarantee service to financial service providers whereas in the event of default, the financial service providers are entitled to receive unpaid interest and principal from the Company. Given that the Company effectively takes on all of the credit risk of the borrowers and are compensated by the tuition fees charged, the guarantee is deemed as a service and the guarantee exposure is recognized as a stand-ready obligation in accordance with ASC Topic 460, Guarantees (see accounting policy for Guarantee Liabilities). The Company first allocates the transaction price to the guarantee liabilities, if any, in accordance with ASC Topic 460, Guarantees, which requires the guarantee to be measured initially at fair value based on the stand ready obligation. Then the remaining considerations are allocated to the tuition fees consistent with the guidance in ASC 606. Certain qualified students are allowed to pay their tuition fees on installment for a period of time exceeding one year. When tuition services are sold on installment terms that exceeds one year beyond the point in time that revenue is recognized, the contract contains a significant financing component, and the consideration promised by the customer is variable. The receivable, and therefore the revenue is recorded at the present value of the payments. The difference between the present value of the receivable and the nominal or principal value of the tuition fees is recognized as interest income over the contractual repayment period using the effective interest rate method. The interest rate used to determine the present value of total amount receivable is the rate subject to management decision on the date of the transaction and it reflects the rate that the students can obtain financing of a similar nature from other sources at the date of the transaction. The Company enters into arrangements with certain students that purchase multiple services. The performance obligations identified include tuition service and practical tutoring service. The Company treats training contracts with multiple performance obligations as separate units of accounting for revenue recognition purposes and recognizes revenue during the contract period when each performance obligation is satisfied. The Company allocates the transaction price to each performance obligations based on stand-alone selling price. Refunds are provided to students if they withdraw from classes, and usually only those unearned portions of the fee which is available will be refunded. A refund liability represents the amounts of consideration received but are not expected to be entitled to earn, and thus are not included in the transaction price because these amounts are expected to be eventually refunded to students. The Company determines the transaction price to be earned by estimating the refund liability based on historical refund ratio on a portfolio basis using the expected value method. Reclassification was made from deferred revenue to refund liabilities, which was recorded under accrued expenses and other current liabilities. Historically, the Company has not had material refunds. Certification service revenue The Company provides certification service to students who complete the training course and enroll for the exams. The Company is responsible for the certification service, including organization, proctoring and grading of exams, and providing the certificates to students. All certificates are issued by third parties to the students who pass the exam. The Company is the principal to end customers. The Company acts as the principal in providing the certificate service to the students and recognizes revenue on gross basis because the Company is able to determine the price, acts as the main obligor in the arrangement, and, is responsible for fulfilling the services ordered by the students. Cash received before the students taking the exam is recorded as deferred revenue. Each contract of certification service is accounted for as a single performance obligation which is satisfied at a point in time. The performance obligation is satisfied when the certificates are provided to the students and the consideration are received, then the received consideration is recognized as certification service revenue. Loan referral service revenue The Company promotes loan products of financial service providers to its students, who need financial assistance for the payment of their tuition fees, in exchange for a referral fee generally at a rate of the principal amount of the loans. Each contract of loan referral service is accounted for as a single performance obligation which is satisfied at a point in time. Generally, the early repayment and default loan are excluded from the effective principal amount of the loans, and thus are not included in the transaction price because these amounts are expected to be eventually refunded to financial service providers. The Company determines the transaction price to be earned by estimating the refund liability based on historical refund ratio on a portfolio basis using the expected value method. Refund liability was recorded under accrued expenses and other current liabilities. Historically, the Company has not had material refunds. Loan referral service revenue is recognized upon the initiation of the loans as the performance obligation is satisfied and confirmed with the financial service providers on a monthly basis. Contract acquisition costs The Company has used practical expedients as allowed under ASC 606 to generally expenses sales commissions when incurred, because the amortization period would be one year or less. These costs are recorded as sales and marketing expenses. Contract liability The Company’s contract liabilities mainly consist of deferred revenue, with a balance of RMB352,260 and RMB830,019 as of December 31, 2017 and 2018, respectively. All contract liabilities before January 1, 2018 were recognized as revenue during the year ended December 31, 2018 and all contract liabilities as of December 31, 2018 are expected to be realized in the following year. Refund liability mainly related to the estimated refunds that are expected to be provided to students if they decide they no longer want to take the course. Refund liability estimates are based on historical refund ratio on a portfolio basis using the expected value method. The following table presents the impact of the adoption of ASC 606 on the consolidated balance sheet and statement of operations as of and for the year ended December 31, 2018. As of December 31, 2018 Balances without adoption of Effect change As reported ASC 606 higher/(lower) Deferred revenue 830,019 865,791 (35,772) Accrued expenses and other current liabilities 365,428 329,656 35,772 Guarantee service revenue recognized under ASC 460 At the inception of each loan, the guarantee liabilities recorded at fair value based on ASC Topic 460 is determined on a loan by loan basis. The guarantee liabilities are generally reduced by recording a credit to guarantee service revenue as the guarantor is released from the underlying guaranteed risk. Subsequent to initial recognition, the guarantee obligation’s release from risk has typically been recognized over the term of the guarantee using a rational amortization method. |
Cost of revenues | (m) Cost of revenues Cost of revenues consists of payroll and employee benefits, rent expenses of learning centers, depreciation relating to property and equipment used for operating the learning centers, and other operating costs that are directly attributed to the provision of training services. |
Guarantee liabilities | (n) Guarantee liabilities For certain students who borrow the tuition fee from financial service providers, the Company provides a guarantee service to financial service providers whereas in the event of default, the financial service providers are entitled to receive unpaid interest and principal from the Company. In general, any unpaid interest and principal are paid when the borrower does not repay as scheduled. For accounting purposes, at the inception of each loan, the Company recognizes the guarantee liability in accrued expenses and other current liabilities at fair value in accordance with ASC 460-10, which incorporates the expectation of potential future payments under the guarantee and takes into both non-contingent and contingent aspects of the guarantee. Subsequent to the loan's inception, the guarantee liability is composed of two components: (i) ASC Topic 460 component; and (ii) ASC Topic 450 component. The liability recorded based on ASC Topic 460 is determined on a loan by loan basis and it is reduced when the Company is released from the underlying risk, i.e. as the loan is repaid by the borrower or when the investor is compensated in the event of a default. This component is a stand ready obligation which is not subject to the probable threshold used to record a contingent obligation. The guarantee liabilities are generally reduced by recording a credit to guarantee service revenue as the guarantor is released from the underlying guaranteed risk. Subsequent to initial recognition, the guarantee obligation’s release from risk has typically been recognized over the term of the guarantee using a rational amortization method. The other component is a contingent liability determined based on probable loss considering the actual historical performance and current conditions, representing the obligation to make future payouts under the guarantee liability in excess of the stand-ready liability, measured using the guidance in ASC Topic 450, loans with similar risk characteristics are pooled into cohorts. The ASC 450 contingent component is recognized as part of operating expenses. At all times the recognized liability (including the stand ready liability and contingent liability) is at least equal to the probable estimated losses of the guarantee portfolio. |
Advertising costs | (o) Advertising costs Advertising costs are expensed as incurred and included in selling and marketing expenses. Advertising costs were RMB213,078, RMB270,790 and RMB339,385 for the years ended December 31, 2016, 2017 and 2018, respectively. |
Operating lease | (p) Operating lease The Company leases premises for learning centers and offices under non-cancellable operating leases. Leases with escalated rent provisions are recognized on a straight-line basis commencing with the beginning of the lease term. There are no capital improvement funding, other lease concessions or contingent rent in the lease agreements. The lease terms of the Company’s learning centers mainly range between 1 and 10 years. The Company has no legal or contractual asset retirement obligations at the end of the lease term. Certain learning centers of the Company sublease a portion of the areas to certain students for their living accommodation. Income from subleases is recognized on a straight-line basis over the term of the lease and recognized as reduction of costs of revenues. |
Government grant | (q) Government grant Government grant is recognized when there is reasonable assurance that the Company will comply with the conditions attached to it and the grant will be received. Government grant for the purpose of giving immediate financial support to the Company with no future related costs or obligation is recognized in the Company’s consolidated statements of comprehensive income when the grant becomes receivable. Government grants of RMB3,266, RMB7,435 and RMB2,292 were recognized and included in other income for the years ended December 31, 2016, 2017 and 2018, respectively. |
Research and development expense | (r) Research and development expense Research and development costs are expensed as incurred. |
Employee benefits | (s) Employee benefits Pursuant to relevant PRC regulations, the Company is required to make contributions to various defined contribution plans organized by municipal and provincial PRC governments. The contributions are made for each PRC employee at rates ranging from 24.3% to 53.1% on a standard salary base as determined by local social security bureau. Contributions to the defined contribution plans are charged to the consolidated statements of comprehensive income when the related service is provided. For the years ended December 31, 2016, 2017, and 2018, the costs of the Company’s obligations to the defined contribution plans amounted to RMB60,327, RMB84,275, and RMB129,455, respectively. The Company has no other obligation for the payment of employee benefits associated with these plans beyond the contributions described above. |
Income taxes | (t) Income taxes The Company follows the asset and liability method in accounting for income taxes in accordance to ASC topic 740 “Taxation” (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The Company adopted ASC 740 to account for uncertainty in income taxes. ASC 740 clarifies the accounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in the consolidated financial statements. The Company recognizes in the consolidated financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to an unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of comprehensive income (loss). The Company does not expect that the position of unrecognized tax benefits will materially change within the next twelve months of December 31, 2018. In accordance with PRC Tax Administration Law on the Levying and Collection of Taxes, the PRC authorities generally have up to five years to assess underpaid tax plus penalties and interest for PRC entities’ tax filings. In case of tax evasion, which is not clearly defined in the law, there is no limitation on the tax years open for investigation. Accordingly, the PRC entities remain subject to examination by the tax authorities based on above. |
Share based compensation | (u) Share based compensation The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, net of estimated forfeitures, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. Forfeiture rates are estimated based on historical and future expectations of employee turnover rates. |
Commitments and contingencies | (v) Commitments and contingencies In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters. An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. |
Earnings (loss) per share | (w) Earnings (loss) per share Basic earnings (loss) per Class A and Class B ordinary share is computed by dividing net income (loss) attributable to Tarena International’s Class A and Class B ordinary shareholders by the weighted average number of Class A and Class B ordinary shares outstanding during the year using the two-class method. Under the two-class method, net income (loss) attributable to Tarena International’s Class A and Class B ordinary shareholders is allocated between Class A and Class B ordinary shares and other participating securities, if any, based on participating rights in undistributed earnings. Diluted earnings per share is calculated by dividing net income (loss) attributable to Tarena International’s Class A and Class B ordinary shareholders as adjusted for the effect of dilutive Class A and Class B ordinary share equivalents, if any, by the weighted average number of Class A and Class B ordinary and dilutive Class A and Class B ordinary share equivalents outstanding during the year. Class A and Class B ordinary share equivalents include the Class A and Class B ordinary shares issuable upon the exercise of the outstanding share options (using the treasury stock method). Potential dilutive securities are not included in the calculation of diluted earnings (loss) per Class A and Class B ordinary share if the impact is anti-dilutive. If there is a loss from continuing operations, diluted EPS would be computed in the same manner as basic EPS is computed, even if an entity has net income after adjusting for a discontinued operation or an extraordinary item. |
Segment reporting | (x) Segment reporting The Company uses the management approach in determining its operating segments. The management approach considers the internal reporting used by the Company’s chief operating decision maker for making decisions about the allocation of resources to and the assessment of the performance of the segments of the Company. Management has determined that the Company has two operating segments, which is the Adult Training segment and Kid Training segment. The majority of the Company’s operations and customers are located in the PRC. Consequently, no geographic information is presented. |
Fair value measurements | (y) Fair value measurements The Company applies the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities and for fair value measurements of non-financial items that are recognized or disclosed at fair value in the financial statements on a recurring and non-recurring basis. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC Topic 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. · Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. · Level 3 inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. In situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects management’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by management based on the best information available in the circumstances. The carrying amounts of cash and cash equivalents, current time deposits, accounts receivable, loans to employees, amounts due from related parties, accounts payable, amounts due to related parties, accrued expenses and other current liabilities as of December 31, 2017 and 2018 approximate their fair value because of short maturity of these instruments. The carrying amounts of non-current time deposits as of December 31, 2017 and 2018 approximates their fair value since the interest rates of the time deposits did not differ significantly from the market interest rates for similar types of time deposits. The fair values of time deposits as of December 31, 2017 and 2018 are categorized as Level 2 measurement. |
Recently issued accounting standards | (z) Recently issued accounting standards In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. The new standard requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with terms longer than 12 months. The Company plans to make a policy election that will keep leases with an initial term of 12 months or less off the balance sheet and will result in recognizing those lease payments in the consolidated statements of comprehensive income comprehensive income on a straight-line basis over the lease term. Consistent with current GAAP, the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a financing or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, ASU 2016-02 will require both types of leases to be recognized on the balance sheet. As a result, lessees will be required to put most leases on their balance sheets while recognizing expense on their statements of comprehensive income in a manner similar to current accounting. In addition, this guidance requires disclosures about the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 specifies a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements and that the new and enhanced disclosures be provided for each period presented (including comparative periods). In July 2018, the FASB issued ASU 2018-11, Leases (ASC 842): Targeted Improvements, which provides companies an optional adoption method to ASU 2016-02 whereby a company does not have to adjust comparative period financial statements for the new standard. The new standard will be effective for the Company on January 1, 2019. The Company estimates that approximately RMB767 million and RMB731 million would be recognized as total right-of-use assets and total lease liabilities on our consolidated balance sheet as of January 1, 2019. The Company does not expect the new standard to have a material impact on its results of operations or cash flows. In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments — Credit Losses (Topic 326) , Measurement of Credit Losses on Financial Statements. This ASU requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The amendments affect loans, debt securities, trade receivables, net investments in leases, exposures on guarantee liabilities, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual rights to receive cash. The standard is effective for the Company from fiscal year 2020, with early adoption permitted for fiscal year 2019. The Company is evaluating the impact of the adoption of this standard on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Based on management’s preliminary assessment, the Company believes that the change will not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13 , Fair Value Measurement (Topic 820)- Disclosure Framework : Changes to the Disclosure Requirements for Fair Value Measurement. The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions to its consolidated financial statements. Recently issued ASUs by the FASB, except for the ones mentioned above, have no material impact on the Company’s consolidated results of operations or financial position. |
DESCRIPTION OF BUSINESS, ORGA_2
DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Concentration Risk [Line Items] | |
Schedule of Variable Interest Entity Information | December 31, 2017 2018 RMB RMB Cash 294 1,376 Amounts due from related parties 33,744 34,335 Prepaid expenses and other current assets 1 617 Total current assets 34,039 36,328 Property and equipment, net — 2,652 Long term investments 46,500 38,380 Deferred income tax assets 684 916 Other non-current assets 2,880 333 Total assets 84,103 78,609 Income taxes payable 3,052 3,398 Accrued expenses and other current liabilities 186 2,115 Amounts due to related parties, including amounts due to WFOE for accrued service fees 78,665 89,884 Total current liabilities 81,903 95,397 Other non-current liabilities 267 267 Total liabilities 82,170 95,664 Year Ended December 31, 2016 2017 2018 RMB RMB RMB Net revenues — — 4,232 Net income (loss) 99 (11,597) (16,900) Net cash used in operating activities (727) (2,996) 1,540 Net cash used in investing activities (11,886) (29,380) (24,083) Net cash provided by financing activities 12,200 32,040 23,625 |
Net revenues [Member] | Product concentration [Member] | |
Concentration Risk [Line Items] | |
Schedule of Revenue Concentration | Year Ended December 31, 2016 2017 2018 Digital Arts 26.7 % 31.5 % 28.7 % Java 32.9 % 32.0 % 18.3 % Web Front 12.9 % 7.0 % 3.9 % Total 72.5 % 70.5 % 50.9 % |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of Cash, cash equivalents, time deposits and restricted cash | December 31, 2017 2018 RMB RMB RMB denominated bank deposits with financial institutions in the PRC 910,804 511,866 US dollar denominated bank deposits with financial institutions in the PRC 135,686 131,129 US dollar denominated bank deposits with financial institutions in Hong Kong Special Administrative Region (“HK SAR”) 4,387 53,148 HK dollar denominated bank deposits with financial institutions in HK SAR 1 15 RMB denominated bank deposits with a financial institution in HK SAR 21 147 US dollar denominated bank deposits with a financial institution in the U.S. 68,795 6,311 TWD denominated bank deposits with a financial institution in Taiwan — 2,170 Total 1,119,694 704,786 |
Schedule of Property, Plant and Equipment, Useful Life | Office buildings 45 years Furniture 5 years Office equipment 3 to 4 years Leasehold improvements Shorter of the lease term or the estimated useful life of the assets |
Schedule of Change In Refund Liability | As of December 31, 2018 Balances without adoption of Effect change As reported ASC 606 higher/(lower) Deferred revenue 830,019 865,791 (35,772) Accrued expenses and other current liabilities 365,428 329,656 35,772 |
RESTATEMENT AND RECLASSIFICAT_2
RESTATEMENT AND RECLASSIFICATIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
RESTATEMENT AND RECLASSIFICATIONS | |
Schedule of Reclassifications and restatement | The effects of the reclassifications and restatement for the errors on the consolidated balance sheets are as follows: As of December 31, 2016 As previously Restatement As Item reported adjustments Restated RMB RMB RMB ASSETS Current assets: Cash and cash equivalents 810,672 — 810,672 Time deposits 416,724 — 416,724 Restricted cash — — — Accounts receivable, net of allowance for doubtful accounts (a),(b)(e) 97,374 (79,059) 18,315 Amounts due from a related party (d) — 4,978 4,978 Prepaid expenses and other current assets (b) 126,088 5,017 131,105 Total current assets 1,450,858 (69,064) 1,381,794 Time deposits 58,667 — 58,667 Accounts receivable, net of allowance for doubtful accounts-non current (a) 1,176 8,089 9,265 Amounts due from a related party (d) — 6,500 6,500 Property and equipment, net (b),(e) 437,337 (10,336) 427,001 Intangible assets, net (e) — 5,194 5,194 Goodwill 3,365 — 3,365 Long term investments 41,760 — 41,760 Deferred income tax assets (f) 54,127 (49,575) 4,552 Other non-current assets (d),(e) 37,722 (1,810) 35,912 Total assets 2,085,012 (111,002) 1,974,010 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable 4,502 — 4,502 Amounts due to related parties (d) 79 447 526 Income taxes payable (f) 91,240 (40,853) 50,387 Deferred revenue (a),(e) 266,061 62,721 328,782 Accrued expenses and other current liabilities (a),(b),(e) 117,867 51,655 169,522 Total current liabilities 479,749 73,970 553,719 Other non-current liabilities 7,043 — 7,043 Total liabilities 486,792 73,970 560,762 Shareholders’ equity : Ordinary shares 388 — 388 Treasury shares (93,761) — (93,761) Additional paid-in capital 995,216 — 995,216 Accumulated other comprehensive income 58,204 — 58,204 Retained earnings (a),(b),(d),(e),(f) 638,173 (184,972) 453,201 Total shareholders’ equity 1,598,220 (184,972) 1,413,248 Total liabilities and equity 2,085,012 (111,002) 1,974,010 As of December 31, 2017 As previously Restatement As Item reported adjustments Restated RMB RMB RMB ASSETS Current assets: Cash and cash equivalents 686,691 — 686,691 Time deposits 432,536 — 432,536 Accounts receivable, net of allowance for doubtful accounts (a),(b),(e) 216,700 (165,057) 51,643 Amounts due from a related party (d) 231 6,711 6,942 Prepaid expenses and other current assets (b) 156,360 (653) 155,707 Total current assets 1,492,518 (158,999) 1,333,519 Time deposits 505 — 505 Accounts receivable, net of allowance for doubtful accounts-non current (a) 14,582 (8,178) 6,404 Amounts due from a related party (d) — 6,500 6,500 Property and equipment, net (b), (e) 519,691 (17,352) 502,339 Intangible assets, net (e) — 4,753 4,753 Goodwill 3,365 — 3,365 Long term investments (e) 101,920 (24,750) 77,170 Deferred income tax assets (f) 72,600 (66,979) 5,621 Other non-current assets (d),(e) 77,464 787 78,251 Total assets 2,282,645 (264,218) 2,018,427 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable 11,351 — 11,351 Amounts due to related parties (d) — 216 216 Income taxes payable (f) 125,971 (58,638) 67,333 Deferred revenue (a),(c),(e) 302,163 50,097 352,260 Accrued expenses and other current liabilities (a),(b),(c),(e) 184,646 128,783 313,429 Total current liabilities 624,131 120,458 744,589 Other non-current liabilities 4,329 — 4,329 Total liabilities 628,460 120,458 748,918 Shareholders’ equity : Ordinary shares 401 — 401 Treasury shares (255,103) — (255,103) Additional paid-in capital 1,094,872 — 1,094,872 Accumulated other comprehensive income (e) 54,122 (14,750) 39,372 Retained earnings (a), (b), (d), (e), (f) 759,893 (369,926) 389,967 Total shareholders’ equity 1,654,185 (384,676) 1,269,509 Total liabilities and equity 2,282,645 (264,218) 2,018,427 The effects of the reclassifications and restatement for the errors on the consolidated statements of operations and comprehensive loss are as follows: Year Ended December 31, 2016 As previously Restatement As Item reported adjustments Restated RMB RMB RMB Net revenues (a),(e) 1,579,604 (59,569) 1,520,035 Cost of revenues (a),(b) (449,104) 5,637 (443,467) Selling and marketing expenses (b) (527,553) 3,476 (524,077) General and administrative expenses (a),(b),(d) (307,519) 43,074 (264,445) Research and development expenses (65,594) — (65,594) Operating income 229,834 (7,382) 222,452 Interest income (a),(b) 23,974 1,091 25,065 Other income 15,960 — 15,960 Loss on foreign currency forward contract (12,898) — (12,898) Foreign currency exchange gains 3,760 — 3,760 Income before income taxes 260,630 (6,291) 254,339 Income tax expense (f) (18,776) (9,443) (28,219) Net income 241,854 (15,734) 226,120 Year Ended December 31, 2017 Item As previously Restatement As reported adjustments Restated RMB RMB RMB Net revenues (a),(c),(e) 1,973,806 (220,111) 1,753,695 Cost of revenues (a),(b) (599,199) 6,253 (592,946) Selling and marketing expenses (b) (713,120) 5,963 (707,157) General and administrative expenses (a),(b),(d) (392,296) 37,464 (354,832) Research and development expenses (100,032) — (100,032) Operating income (loss) 169,159 (170,431) (1,272) Interest income (a),(b) 21,000 (4,903) 16,097 Other income (loss) (e) 26,702 (10,000) 16,702 Foreign currency exchange loss (6,284) — (6,284) Income before income taxes 210,577 (185,334) 25,243 Income tax expense (f) (25,770) 380 (25,390) Net income (loss) 184,807 (184,954) (147) The effects of the reclassifications and restatement for the errors on the consolidated statements of cash flows are as follows: Year Ended December 31, 2016 As previously Restatement As reported adjustments Restated RMB RMB RMB Operating activities: Net income 241,854 (15,734) 226,120 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 72,757 879 73,636 Bad debt expense 33,605 (33,605) — Loss on disposal of property and equipment 297 — 297 Deferred income tax benefit (18,895) 17,348 (1,547) Share based compensation expense 67,824 — 67,824 Investment loss (gain) 29 (100) (71) Foreign currency exchange gain, net (3,760) (29,645) (33,405) Changes in operating assets and liabilities, net of effects from acquisition of Hanru Hangzhou and Hao Xiao Zi Accounts receivable 22,928 (18,934) 3,994 Amounts due from a related party — (3,753) (3,753) Prepaid expenses and other current assets (60,362) (5,129) (65,491) Accrued interest income on time deposits 5,264 — 5,264 Other non-current assets (7,071) 1,364 (5,707) Accounts payable (248) — (248) Amounts due to related parties (800) — (800) Income taxes payable 34,947 (7,904) 27,043 Deferred revenue 101,439 21,934 123,373 Accrued expenses and other current liabilities 36,781 45,296 82,077 Other non-current liabilities (2,559) — (2,559) Net cash provided by operating activities 524,030 (27,983) 496,047 Investing activities: Purchase of property and equipment and intangible assets (381,982) (1,693) (383,675) Proceeds from disposal of property and equipment 358 88 446 Purchase of short-term investments (1,937,000) 1,517,000 (420,000) Proceeds from maturity of short-term investments 1,937,000 (1,517,000) 420,000 Purchase of long-term investments (12,755) — (12,755) Purchase of time deposits (421,170) (217,000) (638,170) Proceeds from maturity of time deposits 678,741 246,645 925,386 Payment for acquisition of Hanru Hangzhou (4,360) — (4,360) Cash acquired from acquisition of Hanru Hangzhou 148 — 148 Issuance of loan to a related party (6,500) — (6,500) Issuance of loans to employees (12,025) (118) (12,143) Proceeds from repayment of loans from employees 3,096 61 3,157 Net cash used in investing activities (156,449) 27,983 (128,466) Financing activities: Issuance of Class A ordinary shares in connection with exercise of share options 20,388 — 20,388 Payment of dividend (54,026) — (54,026) Repurchase of treasury shares (44,406) — (44,406) Net cash used in financing activities (78,044) — (78,044) Changes in cash and cash equivalents 289,537 289,537 Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash 7,197 — 7,197 Net change in cash, cash equivalents and restricted cash 296,734 — 296,734 Cash, cash equivalents and restricted cash at beginning of year 513,938 — 513,938 Cash, cash equivalents and restricted cash at end of year 810,672 — 810,672 Year Ended December 31, 2017 As previously Restatement As reported adjustments Restated RMB RMB RMB Operating activities: Net income (loss) 184,807 (184,954) (147) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 100,724 39 100,763 Bad debt expense 31,499 (31,499) — Loss on disposal of property and equipment 917 — 917 Deferred income tax benefit (18,473) 17,302 (1,171) Share based compensation expense 77,415 — 77,415 Investment income (19,267) 19,314 47 Foreign currency exchange losses, net 6,471 (374) 6,097 Impairment of long-term investments — 10,000 10,000 Changes in operating assets and liabilities, net of effects from acquisition of Hanru Hangzhou and Hao Xiao Zi Accounts receivable (164,231) 133,765 (30,466) Amounts due from related parties — (1,964) (1,964) Prepaid expenses and other current assets (18,712) (14,414) (33,126) Accrued interest income on time deposits 1,809 — 1,809 Other non-current assets (12,432) 19,013 6,581 Accounts payable (196) — (196) Amounts due to related parties (310) — (310) Income taxes payable 34,731 (17,682) 17,049 Deferred revenue 36,102 (12,625) 23,477 Accrued expenses and other current liabilities 50,407 77,127 127,534 Other non-current liabilities (2,604) — (2,604) Net cash provided by operating activities 288,657 13,048 301,705 Investing activities: Purchase of property and equipment and intangible assets (177,251) 432 (176,819) Proceeds from disposal of property and equipment 462 (39) 423 Purchase of short-term investments (1,970,000) 1,020,000 (950,000) Proceeds from maturity of short-term investments 1,989,314 (1,039,314) 950,000 Purchase of long-term investments (50,500) — (50,500) Payment of long-term investment deposit (4,380) — (4,380) Purchase of time deposits (509,739) (6,000) (515,739) Proceeds from maturity of time deposits 528,999 5,959 534,958 Issuance of loans to employees (35,379) 4,753 (30,626) Proceeds from repayment of loans from employees 5,352 787 6,139 Net cash used in investing activities (223,122) (13,422) (236,544) Financing activities: Issuance of Class A ordinary shares in connection with exercise of share options 22,254 — 22,254 Payment of dividend (63,087) — (63,087) Repurchase of treasury shares (143,389) — (143,389) Net cash used in financing activities (184,222) — (184,222) Changes in cash and cash equivalents (118,687) (374) (119,061) Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash (5,294) 374 (4,920) Net change in cash, cash equivalents and restricted cash (123,981) — (123,981) Cash, cash equivalents and restricted cash at beginning of year 810,672 — 810,672 Cash, cash equivalents and restricted cash at end of year 686,691 — 686,691 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
ACCOUNTS RECEIVABLE | |
Schedule of Accounts Receivable | December 31, 2017 2018 RMB RMB Accounts receivable: Gross 67,235 69,301 Unearned interest (9,188) (17,243) Total accounts receivable 58,047 52,058 Less: allowance for doubtful accounts — — Accounts receivable, net 58,047 52,058 |
Summary of Allowance for Doubtful Accounts | December 31, 2017 2018 RMB RMB Accounts receivable – current portion 51,643 39,901 Accounts receivable – non-current portion 6,404 12,157 Total accounts receivable, net 58,047 52,058 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of Property and Equipment | Property and equipment consisted of the following: December 31, 2017 2018 RMB RMB Office buildings 285,184 287,208 Furniture 30,061 49,374 Office equipment 350,432 481,034 Leasehold improvements 94,666 184,687 Total property and equipment 760,343 1,002,303 Less: accumulated depreciation (258,004) (376,235) Property and equipment, net 502,339 626,068 |
Schedule of Depreciation Expense | Depreciation expense for property and equipment was allocated to the following: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Cost of revenues 62,000 85,059 127,850 Selling and marketing expenses 3,226 5,313 11,211 General and administrative expenses 6,455 8,064 16,511 Research and development expenses 1,177 1,461 1,335 Total 72,858 99,897 156,907 |
LONG-TERM INVESTMENTS, NET (Tab
LONG-TERM INVESTMENTS, NET (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
LONG-TERM INVESTMENTS, NET | |
Schedule of Long-term investments | December 31, 2017 2018 RMB RMB Equity investments without readily determinable fair values A company providing mechanic training (a) 12,000 12,000 A company providing intelligent robot products (b) 24,000 24,000 A company providing information sharing IT platform (c) 22,500 22,500 Other equity investments without readily determinable fair values (d) 18,000 20,880 Less:impairment of equity investments without readily determinable fair values — (35,000) Total equity investments without readily determinable fair values, net 76,500 44,380 Equity method investments Companies providing hockey program management (e) 670 2,105 A company providing Internet product solutions (f) — 13,690 Less:impairment of equity method investments — (524) Total equity method investments, net 670 15,271 Available-for-sale investment (g) 15,000 15,000 impairment of available-for-sale investments (15,000) (15,000) Total available-for-sale investment, net — — Total long-term investments, net 77,170 59,651 (a) In October 2015, the Company paid RMB12,000 in cash to acquire 2.86% of the total equity interest in an education company, which provides training for senior mechanic in vehicle maintenance and repair. No impairment loss was recognized for both the years ended December 31, 2017 and 2018. (b) In May 2017, the Company paid RMB24,000 in cash to acquire 6% of the total equity interest in a company, which provides intelligent robot product. Based on the fact that the business conditions of this investee deteriorated in fiscal year 2018, the Company recognized impairment loss of nil and RMB24,000 for the years ended December 31, 2017 and 2018, respectively. (c) In July 2017, the Company paid RMB22,500 in cash to acquire 15% of the total equity interest in a company, which provides an information sharing IT platform. No impairment loss was recognized for both the years ended December 31, 2017 and 2018. (d) During the years ended December 31, 2017 and 2018, the Company acquired minority equity interest in several third-party companies.The Company recognized impairment loss of nil and RMB11,000 for the years ended December 31, 2017 and 2018, respectively. (e) In October 2016, the Company paid RMB790 in cash to acquire 28.5% of equity interest of a hockey program management company through investment in its common shares and accounted for the investment using equity method. The Company recognized impairment loss of nil and RMB524 for the year ended December 31, 2017 and 2018, respectively. In December 2018, the Company paid RMB1,580 in cash to acquire 20% of equity interest in another hockey program management company and accounted for the investment using equity method. (f) In January 2018, the company paid RMB14,000 in cash to acquire 20% of equity interest of a company which provides IT consulting services and programming account for the investment using equity method. No impairment loss was recognized for the year ended December 31, 2018. (g) In October 2016, the Company paid RMB10,000 in cash to acquire 13.9% equity interest in a private company, which provides employment course trainings and recruitment services. Because the investment terms contained both substantive liquidation preference over common stock and substantive redemption provision that is not available to common shareholders, the investment is not substantially similar to common stock. In addition, since the investment is redeemable at the option of the Company, the investment qualifies as a debt security. The Company recorded the investment as available-for-sale investment and recorded an accumulative increase of RMB5,000 in fair value of the investment with nil income tax effect by the end of 2016, as a component of other comprehensive income. In 2017, the investee received financing through a new private placement, the Company’s equity interest was reduced to 11.25%. However, it was subsequently found that the investee provided overstated financial statements to the new investors during the private placement in 2017 and lost in a lawsuit sued by one of the shareholders. Accordingly, the Company determined it to be an other-than-temporary impairment and fully impaired it in 2017. |
OTHER NON-CURRENT ASSET (Tables
OTHER NON-CURRENT ASSET (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
OTHER NON-CURRENT ASSET | |
Schedule of Other non-current assets | Year Ended December 31, 2017 2018 RMB RMB Other non-current assets: Rent and property management deposits 32,973 48,434 Housing loans made to employees (a) 11,339 29,893 Prepayment for equipment and leasehold improvement 11,717 13,089 Pledge loans to employees (b) 9,026 11,346 Other loans to employees 8,816 7,197 Others 4,380 12,041 Total other non-current assets 78,251 122,000 (a) Starting from 2016, the Company began to provide five-year loans with the annual interest rate of 3.325% to the employees, for their purchase of houses. (b) Starting from 2016, the Company began to provide five-year loans with the annual interest rate of 5% to the employees pledged by their share options. The interest was paid monthly and the principal was repaid upon maturity. |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of Accrued Expenses and Other Current Liabilities | Year Ended December 31, 2017 2018 RMB RMB Guarantee liability 83,693 27,505 Accrued payroll and employee benefits 88,713 128,224 Payable to a third-party individual 58,697 64,515 Refund liability — 35,772 VAT and other tax payables 18,015 34,731 Professional service fee 9,125 22,403 Rental fee 13,215 23,808 Payable for repurchasing of treasury shares 17,368 5,058 Others 24,603 23,412 Total 313,429 365,428 |
NET REVENUES (Tables)
NET REVENUES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
NET REVENUES | |
Schedule of net revenue | Year Ended December 31, 2016 2017 2018 RMB RMB RMB Tuition fee 1,491,594 1,658,981 1,896,642 Certification service fee 35,976 50,321 82,376 Loan referral service fee 9,855 33,533 18,096 Others 1,876 2,822 12,444 Business taxes and surcharges (19,266) (11,842) (13,878) Total net revenues 1,520,035 1,733,815 1,995,680 Year Ended December 31, 2016 2017 2018 RMB RMB RMB Timing of revenue recognition Services transferred at a point in time 45,831 83,854 100,472 Services transferred over time 1,474,204 1,649,961 1,895,208 Total net revenues 1,520,035 1,733,815 1,995,680 Year Ended December 31, 2016 2017 2018 RMB RMB RMB Guarantee service — 19,880 89,691 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
Schedule of Income (Loss) before Income Taxes | The components of income (loss) before income taxes are as follows: Year Ended December 31, 2016 2017 2018 RMB RMB RMB PRC 334,278 104,307 (467,953) Hong Kong (573) (2,415) (2,031) Cayman Islands (79,366) (76,649) (126,887) Taiwan — — (166) Canada — — (27) Total income (loss) before income taxes 254,339 25,243 (597,064) |
Schedule of Income Tax Expense (Benefit) | Income tax expense (benefit) consisted of the following: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Current income tax expense 29,766 26,561 16,058 Withholding tax expense — — 25,672 Deferred income tax benefit (1,547) (1,171) (46,595) Total 28,219 25,390 (4,865) |
Schedule of Income Tax Rate Reconciliation | The actual income tax expense reported in the consolidated statements of comprehensive income for each of the years ended December 31, 2016, 2017 and 2018 differs from the amount computed by applying the PRC statutory income tax rate to income before income taxes due to the following: Year Ended December 31, 2016 2017 2018 PRC statutory income tax rate 25.0 % 25.0 % 25.0 % Increase (decrease) in effective income tax rate resulting from: Impact of different tax rates in other jurisdictions 7.8 % 76.7 % (5.3) % Research and development bonus deduction (3.2) % (34.7) % 1.4 % Non-deductible expenses 1.7 % 62.7 % (1.4) % Preferential tax rates (23.7) % (199.9) % (0.3) % Change in valuation allowance 3.5 % 170.8 % (14.3) % Withholding tax — — (4.3) % Actual income tax expense 11.1 % 100.6 % 0.8 % |
Schedule of Deferred Income Tax Assets | Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities were as follows: December 31, 2017 2018 RMB RMB Non-current deferred income tax assets: Impairment of long-term investments 2,500 8,850 Tax loss carry forwards 33,201 157,264 Advertising expense 36,543 53,019 Others 5,648 4,162 Total non-current deferred income tax assets 77,892 223,295 Valuation allowance (72,271) (169,543) Non-current deferred income tax assets, net 5,621 53,752 Non-current deferred income tax liabilities: Valuation appreciation of intangible assets — 2,283 Non-current deferred income tax liabilities* — 2,283 |
Summary of Valuation Allowance | The movements of the valuation allowance are as follows: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Balance at the beginning of the year 28,583 37,521 72,271 Additions of valuation allowance 13,118 38,976 97,776 Reduction of valuation allowance (4,180) (4,226) (504) Balance at the end of the year 37,521 72,271 169,543 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
RELATED PARTY TRANSACTIONS | |
Schedule of Related Party Transactions | The Company had the following balances and transactions with related parties: Related party balances As of December 31, 2017 2018 RMB RMB Amounts due from a related party Chuanbang (i) 6,942 9,938 Amounts due from a related party - non-current Ms. Han Lijuan (ii) 6,500 6,500 Notes: (i) The balance resulted from the service fee to Chuanbang for providing cash collection service. (ii) The balance represented a long-term loan to Ms. Han Lijuan and upon the Company’s request to avoid any risk of possible violation of Sarbanes-Oxley Act, all of the balance was repaid to the Company on April 2, 2020. Related party transactions The significant related party transactions for the years ended December 31, 2016, 2017 and 2018 are summarized as follows: Year Ended December 31, 2016 2017 2018 RMB RMB RMB Cash collection service expense to Chuanbang (a) 6,445 3,230 3,489 Franchise and training service income from Bolton School 902 1,114 529 Franchise, training and consulting service income from Ningxia Company — 520 493 Training service expense to Bolton School 102 1,064 798 Interest income from Loan to Ms. Han Lijuan 81 325 325 Loan to Ms. Han Lijuan 6,500 — — Notes: (a) Pursuant to an agreement between Chuanbang and the Company, beginning August 2013, Chuanbang provides cash collection service on the Company’s accounts receivable. The fee for the service is calculated based on 2%~20% of the amount collected. |
SHARE BASED COMPENSATION (Table
SHARE BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SHARE BASED COMPENSATION | |
Summary of share options activity | Weighted Weighted Average Number of Average Remaining Aggregate Share Exercise Price Contractual Intrinsic Options US$ Years Value US$ Outstanding at December 31, 2015 5,574,441 1.77 5.55 45,569 Granted 1,138,119 1.90 Exercised (2,106,043) 1.46 Forfeited (278,142) 2.89 Expired — — Outstanding at December 31, 2016 4,328,375 1.88 5.84 56,743 Granted 682,435 0.88 Exercised (1,898,391) 1.74 Forfeited (98,067) 3.30 Expired — — Outstanding at December 31, 2017 3,014,352 1.70 5.83 40,031 Granted 1,085,094 0.84 Exercised (615,746) 0.72 Forfeited (86,903) 1.49 Expired — — Outstanding at December 31, 2018 3,396,797 1.61 6.47 15,919 Vested and expected to vest as of December 31, 2018 3,262,468 1.56 6.43 15,469 Exercisable as of December 31, 2018 2,824,485 1.50 6.21 13,551 |
Summary of fair value assumptions | The Company calculated the fair value of the share options on the grant date using the Binomial option-pricing valuation model. The assumptions used in the valuation model are summarized in the following table. Year Ended December 31, 2016 2017 2018 US$ US$ US$ Expected volatility 63.5%‑68.8% 63.7%‑67.8% 53.52%-55.70% Expected dividends yield Exercise multiple 2.0 2.0 2.2-2.8 Risk-free interest rate per annum 2.15%‑3.18% 2.88%‑3.22% 2.54%-3.23% The fair value of underlying ordinary shares (per share) US$9.99‑US$16.54 US$14.27‑US$19.03 US$6.97-US$14.99 |
Schedule of fair values of the options granted | Year Ended December 31, 2016 2017 2018 US$ US$ US$ Weighted average grant date fair value of option per share 10.15 15.99 12.35 Aggregate grant date fair value of options 11,551 10,915 13,402 |
Summary of the non-vested shares activity | Weighted Average Number of Non- Grant Date Fair vested Shares Value US$ Outstanding as of December 31, 2015 25,000 9.63 Granted 20,000 10.82 Vested (35,000) 9.97 Forfeited — — Outstanding as of December 31, 2016 10,000 10.82 Granted 129,835 14.93 Vested (17,367) 14.08 Forfeited (15,701) 14.47 Outstanding as of December 31, 2017 106,767 14.75 Granted 211,977 11.20 Vested (16,557) 14.22 Forfeited (22,541) 12.39 Outstanding as of December 31, 2018 279,646 12.28 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
EARNINGS (LOSS) PER SHARE | |
Schedule of Basic and Diluted Earnings Loss Per Share | Year Ended December 31, 2016 2017 2018 RMB RMB RMB Numerator: Net income (loss) attributable to Class A and Class B ordinary shareholders 226,120 (147) (590,174) Net income (loss) for basic and diluted earnings per share 226,120 (147) (590,174) Denominator: Denominator for basic earnings per share: Weighted average number of Class A and Class B ordinary shares outstanding 55,540,670 56,849,332 54,929,910 Dilutive effect of outstanding share options 3,464,591 — — Denominator for diluted earnings (loss) per share 59,005,261 56,849,332 54,929,910 Basic earnings (loss) per Class A and Class B ordinary share 4.07 (0.00) (10.74) Diluted earnings (loss) per Class A and Class B ordinary share 3.83 (0.00) (10.74) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of Future Minimum Lease Payments | The Company’s leases do not contain any contingent rent payment terms. RMB Year ending December 31, 2019 289,324 2020 232,688 2021 168,329 2022 119,024 2023 66,575 2024 and thereafter 47,447 Total 923,387 |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
BUSINESS COMBINATION | |
Schedule of allocation of the consideration of the assets acquired and liabilities assumed | RMB Amortization period Cash and cash equivalents 3,874 Financial receivables 7,550 Prepaid and other current assets 6,138 Inventory, net 803 Property and equipment 12,851 Intangible assets 12,688 10 Goodwill 49,417 Other non-current assets 114 Total assets 93,435 Deferred revenue (31,906) Accounts payable and other current liabilities (1,046) Deferred tax liabilities (2,283) Total 58,200 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
GOODWILL | |
Summary of goodwill | As of December, 31 2017 2018 Beginning balance 3,365 3,365 Acquisition — 49,417 Ending balance 3,365 52,782 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SEGMENT INFORMATION | |
Schedule of segment information | Year Ended December 31, 2018 Adult Training Kid Training Total RMB RMB RMB Revenue 1,915,446 169,925 2,085,371 Cost (690,252) (228,297) (918,549) Gross Margin 1,225,194 (58,372) 1,166,822 |
PARENT ONLY FINANCIAL INFORMA_2
PARENT ONLY FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
PARENT ONLY FINANCIAL INFORMATION | |
Schedule of Condensed Balance Sheets | December 31, 2017 2018 RMB RMB ASSETS Current assets: Cash and cash equivalents 17,658 25,507 Time deposits 65,342 — Prepaid expenses and other current assets 970 696 Total current assets 83,970 26,203 Investments and loans to subsidiaries 1,210,622 567,003 Total assets 1,294,592 593,206 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term bank loan — 13,726 Accrued expenses and other current liabilities (1) 24,454 6,862 Total current liabilities 24,454 20,588 Other non-current liabilities 629 — Total liabilities 25,083 20,588 Commitments and contingencies — — Shareholders’ equity: Class A ordinary shares (US$0.001 par value,860,000,000 shares authorized, 52,340,176 and 52,972,578 shares issued, 49,009,530 and 45,873,437 shares outstanding as of December 31, 2017 and 2018, respectively) 327 331 Class B ordinary shares (US$0.001 par value, 40,000,000 shares authorized, 7,206,059 shares and 7,206,059 shares issued and outstanding as of December 31, 2017 and 2018, respectively) 74 74 Treasury shares (3,330,646 and 7,099,141 class A ordinary shares as of December 31, 2017 and 2018, respectively, at cost) (255,103) (457,169) Additional paid-in capital 1,094,872 1,222,072 Accumulated other comprehensive income 39,372 50,472 Retained earnings (accumulated deficit) 389,967 (243,162) Total shareholders’ equity 1,269,509 572,618 Total liabilities and shareholders’ equity 1,294,592 593,206 |
Schedule of Condensed Statements of Comprehensive Income | Year Ended December 31, 2016 2017 2018 RMB RMB RMB Selling and marketing expenses — — (403) General and administrative expenses (4,477) (5,218) (5,536) Operating loss (4,477) (5,218) (5,939) Equity in earnings (loss) of subsidiaries 237,662 (913) (589,564) Foreign currency exchange losses (4,753) (421) 341 Interest income 8,027 2,327 413 Loss on foreign currency forward contract (12,898) — — Other income 2,559 4,078 2,550 Income (loss) before income taxes 226,120 (147) (592,199) Income tax expense — — — Net income (loss) 226,120 (147) (592,199) Other comprehensive income Foreign currency translation adjustment, net of nil income tax 22,972 (13,832) 11,100 Unrealized holding gains on available for sale securities, net of RMB42, RMB2,818 and nil income taxes for the year 2016, 2017 and 2018, respectively 5,235 11,496 — Less: Reclassification adjustment for loss on available for sale securities realized in net income, net of RMB42, RMB2,818 and nil income taxes for the year 2016, 2017 and 2018, respectively (235) (16,496) — Comprehensive income (loss) 254,092 (18,979) (581,099) |
Schedule of Condensed Statements of Cash Flows | Year Ended December 31, 2016 2017 2018 RMB RMB RMB Operating activities: Net cash (used in) provided by operating activities (15,581) (17,595) 165,098 Investing activities: Purchase of time deposits (298,688) (196,771) — Proceeds from maturity of time deposits 620,607 363,533 63,452 Investments made to subsidiaries (198,137) — — Foreign currency exchange losses — 10,691 1,890 Net cash provided by investing activities 123,782 177,453 65,342 Financing activities: Proceeds from bank borrowing — — Issuance of Class A ordinary shares in connection with exercise of share options 20,388 22,254 2,952 Payment of dividends (54,026) (63,087) (42,955) Repurchase of treasury shares (44,406) (143,389) (196,957) Net cash used in financing activities (78,044) (184,222) (223,732) Changes in cash and cash equivalents 30,157 (24,364) 6,708 Effect of foreign currency exchange rate changes on cash and cash equivalents 7,338 (1,748) 1,141 Net increase (decrease) in cash and cash equivalents 37,495 (26,112) 7,849 Cash and cash equivalents at beginning of year 6,275 43,770 17,658 Cash and cash equivalents at end of year 43,770 17,658 25,507 Non-cash financing activities: Payable for repurchase of treasury shares — 17,953 5,109 |
DESCRIPTION OF BUSINESS, ORGA_3
DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (Organization) (Details) - CNY (¥) ¥ in Thousands | 1 Months Ended | 12 Months Ended | 13 Months Ended | ||||
Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2016 | Oct. 31, 2016 | Dec. 31, 2015 | |
Variable Interest Entity [Line Items] | |||||||
Cash | ¥ 686,691 | ¥ 810,672 | ¥ 810,672 | ¥ 513,938 | |||
Amounts due from related party | ¥ 9,938 | 6,942 | |||||
Prepaid expenses and other current assets | 171,466 | 155,707 | |||||
Total current assets | 925,574 | 1,333,519 | |||||
Property and equipment, net | 626,068 | 502,339 | |||||
Long term investments | 59,651 | 77,170 | |||||
Deferred income tax assets | 916 | 684 | |||||
Other non-current assets | 122,000 | 78,251 | |||||
Total assets | 1,878,047 | 2,018,427 | |||||
Income taxes payable | 71,847 | 67,333 | |||||
Accrued expenses and other current liabilities | 365,428 | 313,429 | |||||
Amounts due to related parties including amounts due to WOFE for accrued service fees | 872 | 216 | |||||
Total current liabilities | 1,300,421 | 744,589 | |||||
Other non-current liabilities | 5,983 | 4,329 | |||||
Total liabilities | 1,306,404 | 748,918 | |||||
Net revenues | 1,520,035 | ||||||
Net income (loss) | ¥ (592,199) | (147) | 226,120 | ||||
Equity Method Investments, Percentage of Equity Acquired through Options | 100.00% | ||||||
Equity Method Investment, Ownership Percentage | 13.90% | ||||||
Proceeds from Collection of Loans Receivable | ¥ 26,823 | 6,139 | 3,157 | ||||
Tarena Entities [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Cash | 1,376 | 294 | |||||
Amounts due from related party | 34,335 | 33,744 | |||||
Prepaid expenses and other current assets | 617 | 1 | |||||
Total current assets | 36,328 | 34,039 | |||||
Property and equipment, net | 2,652 | ||||||
Long term investments | 38,380 | 46,500 | |||||
Other non-current assets | 333 | 2,880 | |||||
Total assets | 78,609 | 84,103 | |||||
Income taxes payable | 3,398 | 3,052 | |||||
Accrued expenses and other current liabilities | 2,115 | 186 | |||||
Amounts due to related parties including amounts due to WOFE for accrued service fees | 89,884 | 78,665 | |||||
Total current liabilities | 95,397 | 81,903 | |||||
Other non-current liabilities | 267 | 267 | |||||
Total liabilities | 95,664 | 82,170 | |||||
Net revenues | 4,232 | ||||||
Net income (loss) | (16,900) | (11,597) | 99 | ||||
Net cash used in operating activities | 1,540 | (2,996) | (727) | ||||
Net cash used in investing activities | (24,083) | (29,380) | (11,886) | ||||
Net cash provided by financing activities | ¥ 23,625 | ¥ 32,040 | ¥ 12,200 | ||||
Mr. Han [Member] | Tarena Entities [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Equity Method Investment, Ownership Percentage | 68.90% | ||||||
Mr. Li [Member] | Tarena Entities [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Equity Method Investment, Ownership Percentage | 0.10% | ||||||
Loan Agreements [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Debt Instrument, Initial Expiration Year | 2026 | ||||||
Loan Agreements [Member] | Equity Holders [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Debt Instrument, Face Amount | ¥ 6,000 | ||||||
Shanghai Tarena Software Technology Co [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Proceeds from Collection of Loans Receivable | ¥ 1,000 | ||||||
Beijing Tarena Jinqiao Technology Co [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Proceeds from Contributed Capital | ¥ 3,000 |
DESCRIPTION OF BUSINESS, ORGA_4
DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (Significant Concentrations and Risks) (Details) - Net revenues [Member] | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Concentration Risk [Line Items] | |||
Concentration percentage | 10.00% | ||
Product concentration [Member] | |||
Concentration Risk [Line Items] | |||
Concentration percentage | 50.90% | 70.50% | 72.50% |
Product concentration [Member] | Digital Arts [Member] | |||
Concentration Risk [Line Items] | |||
Concentration percentage | 28.70% | 31.50% | 26.70% |
Product concentration [Member] | Java [Member] | |||
Concentration Risk [Line Items] | |||
Concentration percentage | 18.30% | 32.00% | 32.90% |
Product concentration [Member] | Web Front [Member] | |||
Concentration Risk [Line Items] | |||
Concentration percentage | 3.90% | 7.00% | 12.90% |
Geographic concentration [Member] | Beijing [Member] | |||
Concentration Risk [Line Items] | |||
Concentration percentage | 13.50% | 13.60% | 16.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Liquidity Condition, Cash, cash equivalents and time deposits, Short-term investment, Property and equipment, Revenue Recognition, Advertising costs, Operating lease, Government grant and Employee benefits (Details) ¥ in Thousands, $ in Millions | 12 Months Ended | 24 Months Ended | ||||
Dec. 31, 2018CNY (¥)segment | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | |
Significant Accounting Policies [Line Items] | ||||||
Net income (loss) | ¥ (592,199) | ¥ (147) | ¥ 226,120 | |||
Retained earnings (accumulated deficit) | 389,967 | ¥ (243,162) | ||||
Net current liability | 374,800 | |||||
Depreciation and amortization | 159,000 | |||||
Share based compensation expense | 124,000 | |||||
Net Cash Provided by (Used in) Operating Activities | 163,081 | 301,705 | 496,047 | |||
Impairment of long term investments | 35,524 | 10,000 | ||||
Restricted cash, collateral bank loan | $ 2 | 14,700 | ||||
Deferred revenue liability | 830,000 | |||||
Cash, cash equivalents, time deposits and restricted time deposits | 1,119,694 | 704,786 | ||||
Short-term investment | 0 | 950,000 | 420,000 | |||
Investment income | 0 | 19,314 | 12,676 | |||
Advertising costs | 339,385 | 270,790 | 213,078 | |||
Net revenues | 1,520,035 | |||||
Contributions to employee benefits | ¥ 129,455 | 84,275 | 60,327 | |||
Number of operating segments | segment | 2 | |||||
Goodwill Impairment | ¥ 0 | |||||
Grant | ||||||
Significant Accounting Policies [Line Items] | ||||||
Net revenues | ¥ 2,292 | 7,435 | ¥ 3,266 | |||
PRC | RMB Denominated Bank Deposits | ||||||
Significant Accounting Policies [Line Items] | ||||||
Cash, cash equivalents, time deposits and restricted time deposits | 910,804 | 511,866 | ||||
PRC | US Dollar Denominated Bank Deposits | ||||||
Significant Accounting Policies [Line Items] | ||||||
Cash, cash equivalents, time deposits and restricted time deposits | 135,686 | 131,129 | ||||
Hong Kong | RMB Denominated Bank Deposits | ||||||
Significant Accounting Policies [Line Items] | ||||||
Cash, cash equivalents, time deposits and restricted time deposits | 21 | 147 | ||||
Hong Kong | US Dollar Denominated Bank Deposits | ||||||
Significant Accounting Policies [Line Items] | ||||||
Cash, cash equivalents, time deposits and restricted time deposits | 4,387 | 53,148 | ||||
Hong Kong | HK Dollar Denominated Bank Deposits | ||||||
Significant Accounting Policies [Line Items] | ||||||
Cash, cash equivalents, time deposits and restricted time deposits | 1 | 15 | ||||
US | US Dollar Denominated Bank Deposits | ||||||
Significant Accounting Policies [Line Items] | ||||||
Cash, cash equivalents, time deposits and restricted time deposits | ¥ 68,795 | 6,311 | ||||
Taiwan | TWD Denominated Bank Deposit | ||||||
Significant Accounting Policies [Line Items] | ||||||
Cash, cash equivalents, time deposits and restricted time deposits | ¥ 2,170 | |||||
Office buildings | ||||||
Significant Accounting Policies [Line Items] | ||||||
Useful life | 45 years | |||||
Furniture | ||||||
Significant Accounting Policies [Line Items] | ||||||
Useful life | 5 years | |||||
Minimum | ||||||
Significant Accounting Policies [Line Items] | ||||||
Operating lease term | 1 year | 1 year | ||||
Contributions to employee benefits, percentage of salary | 24.30% | |||||
Business and Value Added Taxes | 3.00% | |||||
Minimum | Office equipment | ||||||
Significant Accounting Policies [Line Items] | ||||||
Useful life | 3 years | |||||
Maximum | ||||||
Significant Accounting Policies [Line Items] | ||||||
Operating lease term | 10 years | 10 years | ||||
Contributions to employee benefits, percentage of salary | 53.10% | |||||
Business and Value Added Taxes | 6.00% | |||||
Maximum | Office equipment | ||||||
Significant Accounting Policies [Line Items] | ||||||
Useful life | 4 years |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Refund liability and impact of adoption of Topic 606 (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Contract with Customer, Asset and Liability [Abstract] | ||
Contract with Customer, Liability | ¥ 830,019 | ¥ 352,260 |
Deferred revenue | 830,019 | |
Accrued expenses and other current liabilities | 365,428 | ¥ 313,429 |
Balances without adoption of Topic 606 | ||
Contract with Customer, Asset and Liability [Abstract] | ||
Deferred revenue | 865,791 | |
Accrued expenses and other current liabilities | 329,656 | |
Effect change higher/(lower) | ||
Contract with Customer, Asset and Liability [Abstract] | ||
Deferred revenue | (35,772) | |
Accrued expenses and other current liabilities | ¥ 35,772 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently issued accounting standards (Details) - Scenario Forecast Adjustment - Accounting Standards Update 2016-02 ¥ in Millions | Jan. 01, 2019CNY (¥) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Operating Lease, Right-of-Use Asset | ¥ 767 |
Operating Lease, Liability | ¥ 731 |
RESTATEMENT AND RECLASSIFICAT_3
RESTATEMENT AND RECLASSIFICATIONS - Consolidated balance sheets (Details) ¥ in Thousands, $ in Millions | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
Current assets: | |||||
Cash and cash equivalents | ¥ 686,691 | ¥ 810,672 | ¥ 513,938 | ||
Time deposits | ¥ 158,585 | 432,536 | |||
Restricted cash | $ 2 | 14,700 | |||
Accounts receivable, net of allowance for doubtful accounts | 39,901 | 51,643 | |||
Amounts due from a related party | 9,938 | 6,942 | |||
Prepaid expenses and other current assets | 171,466 | 155,707 | |||
Total current assets | 925,574 | 1,333,519 | |||
Time deposits | 517 | 505 | |||
Accounts receivable, net of allowance for doubtful accounts-non current | 12,157 | 6,404 | |||
Amounts due from a related party | 6,500 | 6,500 | |||
Property and equipment, net | 626,068 | 502,339 | |||
Intangible assets, net | 19,046 | 4,753 | |||
Goodwill | 52,782 | 3,365 | 3,365 | ||
Long term investments | 59,651 | 77,170 | |||
Deferred income tax assets | 916 | 684 | |||
Other non-current assets | 122,000 | 78,251 | |||
Total assets | 1,878,047 | 2,018,427 | |||
Current liabilities: | |||||
Accounts payable | 18,529 | 11,351 | |||
Amounts due to related parties | 872 | 216 | |||
Income taxes payable | 71,847 | 67,333 | |||
Deferred revenue | 830,019 | 352,260 | |||
Accrued expenses and other current liabilities | 365,428 | 313,429 | |||
Total current liabilities | 1,300,421 | 744,589 | |||
Other non-current liabilities | 5,983 | 4,329 | |||
Total liabilities | 1,306,404 | 748,918 | |||
Shareholders' equity: | |||||
Treasury shares | (457,169) | (255,103) | |||
Additional paid-in capital | 1,222,072 | 1,094,872 | |||
Accumulated other comprehensive income | 50,472 | 39,372 | |||
Retained earnings | (243,162) | 389,967 | |||
Total equity attributable to the shareholders of Tarena International, Inc. | 572,618 | 1,269,509 | |||
Total liabilities and equity | ¥ 1,878,047 | 2,018,427 | |||
As previously reported | |||||
Current assets: | |||||
Cash and cash equivalents | 686,691 | 810,672 | ¥ 513,938 | ||
Time deposits | 432,536 | 416,724 | |||
Accounts receivable, net of allowance for doubtful accounts | 216,700 | 97,374 | |||
Amounts due from a related party | 231 | ||||
Prepaid expenses and other current assets | 156,360 | 126,088 | |||
Total current assets | 1,492,518 | 1,450,858 | |||
Time deposits | 505 | 58,667 | |||
Accounts receivable, net of allowance for doubtful accounts-non current | 14,582 | 1,176 | |||
Property and equipment, net | 519,691 | 437,337 | |||
Goodwill | 3,365 | 3,365 | |||
Long term investments | 101,920 | 41,760 | |||
Deferred income tax assets | 72,600 | 54,127 | |||
Other non-current assets | 77,464 | 37,722 | |||
Total assets | 2,282,645 | 2,085,012 | |||
Current liabilities: | |||||
Accounts payable | 11,351 | 4,502 | |||
Amounts due to related parties | 79 | ||||
Income taxes payable | 125,971 | 91,240 | |||
Deferred revenue | 302,163 | 266,061 | |||
Accrued expenses and other current liabilities | 184,646 | 117,867 | |||
Total current liabilities | 624,131 | 479,749 | |||
Other non-current liabilities | 4,329 | 7,043 | |||
Total liabilities | 628,460 | 486,792 | |||
Shareholders' equity: | |||||
Ordinary shares | 401 | 388 | |||
Treasury shares | (255,103) | (93,761) | |||
Additional paid-in capital | 1,094,872 | 995,216 | |||
Accumulated other comprehensive income | 54,122 | 58,204 | |||
Retained earnings | 759,893 | 638,173 | |||
Total equity attributable to the shareholders of Tarena International, Inc. | 1,654,185 | 1,598,220 | |||
Total liabilities and equity | 2,282,645 | 2,085,012 | |||
Restatement adjustments | |||||
Current assets: | |||||
Accounts receivable, net of allowance for doubtful accounts | (165,057) | (79,059) | |||
Amounts due from a related party | 6,711 | 4,978 | |||
Prepaid expenses and other current assets | (653) | 5,017 | |||
Total current assets | (158,999) | (69,064) | |||
Accounts receivable, net of allowance for doubtful accounts-non current | (8,178) | 8,089 | |||
Amounts due from a related party | 6,500 | 6,500 | |||
Property and equipment, net | (17,352) | (10,336) | |||
Intangible assets, net | 4,753 | 5,194 | |||
Long term investments | (24,750) | ||||
Deferred income tax assets | (66,979) | (49,575) | |||
Other non-current assets | 787 | (1,810) | |||
Total assets | (264,218) | (111,002) | |||
Current liabilities: | |||||
Amounts due to related parties | 216 | 447 | |||
Income taxes payable | (58,638) | (40,853) | |||
Deferred revenue | 50,097 | 62,721 | |||
Accrued expenses and other current liabilities | 128,783 | 51,655 | |||
Total current liabilities | 120,458 | 73,970 | |||
Total liabilities | 120,458 | 73,970 | |||
Shareholders' equity: | |||||
Accumulated other comprehensive income | (14,750) | ||||
Retained earnings | (369,926) | (184,972) | |||
Total equity attributable to the shareholders of Tarena International, Inc. | (384,676) | (184,972) | |||
Total liabilities and equity | (264,218) | (111,002) | |||
As Restated | |||||
Current assets: | |||||
Cash and cash equivalents | 686,691 | 810,672 | |||
Time deposits | 432,536 | 416,724 | |||
Accounts receivable, net of allowance for doubtful accounts | 51,643 | 18,315 | |||
Amounts due from a related party | 6,942 | 4,978 | |||
Prepaid expenses and other current assets | 155,707 | 131,105 | |||
Total current assets | 1,333,519 | 1,381,794 | |||
Time deposits | 505 | 58,667 | |||
Accounts receivable, net of allowance for doubtful accounts-non current | 6,404 | 9,265 | |||
Amounts due from a related party | 6,500 | 6,500 | |||
Property and equipment, net | 502,339 | 427,001 | |||
Intangible assets, net | 4,753 | 5,194 | |||
Goodwill | 3,365 | 3,365 | |||
Long term investments | 77,170 | 41,760 | |||
Deferred income tax assets | 5,621 | 4,552 | |||
Other non-current assets | 78,251 | 35,912 | |||
Total assets | 2,018,427 | 1,974,010 | |||
Current liabilities: | |||||
Accounts payable | 11,351 | 4,502 | |||
Amounts due to related parties | 216 | 526 | |||
Income taxes payable | 67,333 | 50,387 | |||
Deferred revenue | 352,260 | 328,782 | |||
Accrued expenses and other current liabilities | 313,429 | 169,522 | |||
Total current liabilities | 744,589 | 553,719 | |||
Other non-current liabilities | 4,329 | 7,043 | |||
Total liabilities | 748,918 | 560,762 | |||
Shareholders' equity: | |||||
Ordinary shares | 401 | 388 | |||
Treasury shares | (255,103) | (93,761) | |||
Additional paid-in capital | 1,094,872 | 995,216 | |||
Accumulated other comprehensive income | 39,372 | 58,204 | |||
Retained earnings | 389,967 | 453,201 | |||
Total equity attributable to the shareholders of Tarena International, Inc. | 1,269,509 | 1,413,248 | |||
Total liabilities and equity | ¥ 2,018,427 | ¥ 1,974,010 |
RESTATEMENT AND RECLASSIFICAT_4
RESTATEMENT AND RECLASSIFICATIONS - Consolidated statements of operations and comprehensive loss (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net revenues | ¥ 1,520,035 | |||
Cost of revenues | [1] | ¥ (918,549) | ¥ (592,946) | (443,467) |
Selling and marketing expenses | [1] | (1,047,632) | (707,157) | (524,077) |
General and administrative expenses | [1] | (546,568) | (354,832) | (264,445) |
Research and development expenses | [1] | (167,254) | (100,032) | (65,594) |
Operating income (loss) | (594,632) | (1,272) | 222,452 | |
Interest income | 26,200 | 16,097 | 25,065 | |
Other income (loss) | (33,583) | 16,702 | 15,960 | |
Loss on foreign currency forward contract | (12,898) | |||
Foreign currency exchange gains (loss) | 4,951 | (6,284) | 3,760 | |
Income (loss) before income taxes | (597,064) | 25,243 | 254,339 | |
Income tax expense | 4,865 | (25,390) | (28,219) | |
Net income (loss) | (592,199) | (147) | 226,120 | |
Comprehensive income (loss) | (581,099) | (18,979) | 254,092 | |
Foreign currency translation adjustment, taxes | ||||
Unrealized holding gains on available for sale securities | 0 | 2,818 | 42 | |
Reclassification adjustment for gains on available for sale securities realized in net income taxes | ¥ 0 | 2,818 | 42 | |
As previously reported | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net revenues | 1,973,806 | 1,579,604 | ||
Cost of revenues | (599,199) | (449,104) | ||
Selling and marketing expenses | (713,120) | (527,553) | ||
General and administrative expenses | (392,296) | (307,519) | ||
Research and development expenses | (100,032) | (65,594) | ||
Operating income (loss) | 169,159 | 229,834 | ||
Interest income | 21,000 | 23,974 | ||
Other income (loss) | 26,702 | 15,960 | ||
Loss on foreign currency forward contract | (12,898) | |||
Foreign currency exchange gains (loss) | (6,284) | 3,760 | ||
Income (loss) before income taxes | 210,577 | 260,630 | ||
Income tax expense | (25,770) | (18,776) | ||
Net income (loss) | 184,807 | 241,854 | ||
Restatement adjustments | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net revenues | (220,111) | (59,569) | ||
Cost of revenues | 6,253 | 5,637 | ||
Selling and marketing expenses | 5,963 | 3,476 | ||
General and administrative expenses | 37,464 | 43,074 | ||
Operating income (loss) | (170,431) | (7,382) | ||
Interest income | (4,903) | 1,091 | ||
Other income (loss) | (10,000) | |||
Income (loss) before income taxes | (185,334) | (6,291) | ||
Income tax expense | 380 | (9,443) | ||
Net income (loss) | (184,954) | (15,734) | ||
As Restated | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net revenues | 1,753,695 | 1,520,035 | ||
Cost of revenues | (592,946) | (443,467) | ||
Selling and marketing expenses | (707,157) | (524,077) | ||
General and administrative expenses | (354,832) | (264,445) | ||
Research and development expenses | (100,032) | (65,594) | ||
Operating income (loss) | (1,272) | 222,452 | ||
Interest income | 16,097 | 25,065 | ||
Other income (loss) | 16,702 | 15,960 | ||
Loss on foreign currency forward contract | (12,898) | |||
Foreign currency exchange gains (loss) | (6,284) | 3,760 | ||
Income (loss) before income taxes | 25,243 | 254,339 | ||
Income tax expense | (25,390) | (28,219) | ||
Net income (loss) | ¥ (147) | ¥ 226,120 | ||
[1] | (a) Includes share-based compensation expense as follows (note 16): |
RESTATEMENT AND RECLASSIFICAT_5
RESTATEMENT AND RECLASSIFICATIONS - Consolidated statements of cash flows (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating activities: | |||
Net income (loss) | ¥ (592,199) | ¥ (147) | ¥ 226,120 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 158,757 | 100,763 | 73,636 |
Loss on disposal of property and equipment | 1,238 | 917 | 297 |
Deferred income tax benefit | (46,595) | (1,171) | (1,547) |
Share based compensation expense | 124,253 | 77,415 | 67,824 |
Investment (income) loss | 1,548 | 47 | (71) |
Foreign currency exchange (gain) loss, net | (4,440) | 6,097 | (33,405) |
Impairment of long term investments | 35,524 | 10,000 | |
Changes in operating assets and liabilities, net of effects from acquisition of Hanru Hangzhou and Hao Xiao Zi | |||
Accounts receivable | 6,000 | (30,466) | 3,994 |
Amounts due from a related party | (2,996) | (1,964) | (3,753) |
Prepaid expenses and other current assets | (3,454) | (33,126) | (65,491) |
Accrued interest income on time deposits | 9,814 | 1,809 | 5,264 |
Other non-current assets | (15,986) | 6,581 | (5,707) |
Accounts payable | (390) | (196) | (248) |
Amounts due to related parties | 656 | (310) | (800) |
Income taxes payable | 2,978 | 17,049 | 27,043 |
Deferred revenue | 445,854 | 23,477 | 123,373 |
Accrued expenses and other current liabilities | 44,128 | 127,534 | 82,077 |
Other non-current liabilities | (638) | (2,604) | (2,559) |
Net cash provided by operating activities | 163,081 | 301,705 | 496,047 |
Investing activities: | |||
Purchase of property and equipment and intangible assets | (276,253) | (176,819) | (383,675) |
Proceeds from disposal of property and equipment | 8,905 | 423 | 446 |
Purchase of short-term investments | 0 | (950,000) | (420,000) |
Proceeds from maturity of short-term investments | 950,000 | 420,000 | |
Purchase of long-term investments | (14,580) | (50,500) | (12,755) |
Payment of long-term investment deposit | (4,380) | ||
Purchase of time deposits | (284,166) | (515,739) | (638,170) |
Proceeds from maturity of time deposits | 563,354 | 534,958 | 925,386 |
Payment for acquisition of Hanru Hangzhou | (4,360) | ||
Cash acquired from acquisition of Hanru Hangzhou | 148 | ||
Issuance of loan to a related party | (6,500) | ||
Issuance of loans to employees | (69,784) | (30,626) | (12,143) |
Proceeds from repayment of loans from employees | 26,823 | 6,139 | 3,157 |
Net cash used in investing activities | (91,977) | (236,544) | (128,466) |
Financing activities: | |||
Issuance of Class A ordinary shares in connection with exercise of share options | 2,952 | 22,254 | 20,388 |
Payment of dividend | (42,955) | (63,087) | (54,026) |
Repurchase of treasury shares | (196,957) | (143,389) | (44,406) |
Net cash used in financing activities | (222,682) | (184,222) | (78,044) |
Changes in cash and cash equivalents | (151,578) | (119,061) | 289,537 |
Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash | 10,571 | (4,920) | 7,197 |
Net change in cash, cash equivalents and restricted cash | (141,007) | (123,981) | 296,734 |
Cash, cash equivalents and restricted cash at beginning of year | 686,691 | 810,672 | 513,938 |
Cash, cash equivalents and restricted cash at end of year | 686,691 | 810,672 | |
As previously reported | |||
Operating activities: | |||
Net income (loss) | 184,807 | 241,854 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 100,724 | 72,757 | |
Bad debt expense | 31,499 | 33,605 | |
Loss on disposal of property and equipment | 917 | 297 | |
Deferred income tax benefit | (18,473) | (18,895) | |
Share based compensation expense | 77,415 | 67,824 | |
Investment (income) loss | (19,267) | 29 | |
Foreign currency exchange (gain) loss, net | 6,471 | (3,760) | |
Changes in operating assets and liabilities, net of effects from acquisition of Hanru Hangzhou and Hao Xiao Zi | |||
Accounts receivable | (164,231) | 22,928 | |
Prepaid expenses and other current assets | (18,712) | (60,362) | |
Accrued interest income on time deposits | 1,809 | 5,264 | |
Other non-current assets | (12,432) | (7,071) | |
Accounts payable | (196) | (248) | |
Amounts due to related parties | (310) | (800) | |
Income taxes payable | 34,731 | 34,947 | |
Deferred revenue | 36,102 | 101,439 | |
Accrued expenses and other current liabilities | 50,407 | 36,781 | |
Other non-current liabilities | (2,604) | (2,559) | |
Net cash provided by operating activities | 288,657 | 524,030 | |
Investing activities: | |||
Purchase of property and equipment and intangible assets | (177,251) | (381,982) | |
Proceeds from disposal of property and equipment | 462 | 358 | |
Purchase of short-term investments | (1,970,000) | (1,937,000) | |
Proceeds from maturity of short-term investments | 1,989,314 | 1,937,000 | |
Purchase of long-term investments | (50,500) | (12,755) | |
Payment of long-term investment deposit | (4,380) | ||
Purchase of time deposits | (509,739) | (421,170) | |
Proceeds from maturity of time deposits | 528,999 | 678,741 | |
Payment for acquisition of Hanru Hangzhou | (4,360) | ||
Cash acquired from acquisition of Hanru Hangzhou | 148 | ||
Issuance of loan to a related party | (6,500) | ||
Issuance of loans to employees | (35,379) | (12,025) | |
Proceeds from repayment of loans from employees | 5,352 | 3,096 | |
Net cash used in investing activities | (223,122) | (156,449) | |
Financing activities: | |||
Issuance of Class A ordinary shares in connection with exercise of share options | 22,254 | 20,388 | |
Payment of dividend | (63,087) | (54,026) | |
Repurchase of treasury shares | (143,389) | (44,406) | |
Net cash used in financing activities | (184,222) | (78,044) | |
Changes in cash and cash equivalents | (118,687) | 289,537 | |
Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash | (5,294) | 7,197 | |
Net change in cash, cash equivalents and restricted cash | (123,981) | 296,734 | |
Cash, cash equivalents and restricted cash at beginning of year | ¥ 686,691 | 810,672 | 513,938 |
Cash, cash equivalents and restricted cash at end of year | 686,691 | 810,672 | |
Restatement adjustments | |||
Operating activities: | |||
Net income (loss) | (184,954) | (15,734) | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 39 | 879 | |
Bad debt expense | (31,499) | (33,605) | |
Deferred income tax benefit | 17,302 | 17,348 | |
Investment (income) loss | 19,314 | (100) | |
Foreign currency exchange (gain) loss, net | (374) | (29,645) | |
Impairment of long term investments | 10,000 | ||
Changes in operating assets and liabilities, net of effects from acquisition of Hanru Hangzhou and Hao Xiao Zi | |||
Accounts receivable | 133,765 | (18,934) | |
Amounts due from a related party | (1,964) | (3,753) | |
Prepaid expenses and other current assets | (14,414) | (5,129) | |
Other non-current assets | 19,013 | 1,364 | |
Income taxes payable | (17,682) | (7,904) | |
Deferred revenue | (12,625) | 21,934 | |
Accrued expenses and other current liabilities | 77,127 | 45,296 | |
Net cash provided by operating activities | 13,048 | (27,983) | |
Investing activities: | |||
Purchase of property and equipment and intangible assets | 432 | (1,693) | |
Proceeds from disposal of property and equipment | (39) | 88 | |
Purchase of short-term investments | 1,020,000 | 1,517,000 | |
Proceeds from maturity of short-term investments | (1,039,314) | (1,517,000) | |
Purchase of time deposits | (6,000) | (217,000) | |
Proceeds from maturity of time deposits | 5,959 | 246,645 | |
Issuance of loans to employees | 4,753 | (118) | |
Proceeds from repayment of loans from employees | 787 | 61 | |
Net cash used in investing activities | (13,422) | ¥ 27,983 | |
Financing activities: | |||
Changes in cash and cash equivalents | (374) | ||
Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash | ¥ 374 |
RESTATEMENT AND RECLASSIFICAT_6
RESTATEMENT AND RECLASSIFICATIONS - Additional Information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net revenues | ¥ 1,520,035 | |||
General and administrative expenses | [1] | ¥ 546,568 | ¥ 354,832 | 264,445 |
Accounts Receivable, Net | 52,058 | 58,047 | ||
Deferred revenue. | 830,019 | |||
Other payable | 365,428 | 313,429 | ||
Property and equipment, net | 626,068 | 502,339 | ||
Cost of revenues | [1] | 918,549 | 592,946 | 443,467 |
Income tax (expense) benefit | 4,865 | (25,390) | (28,219) | |
deferred income tax assets | 916 | 684 | ||
Retained earnings | (243,162) | 389,967 | ||
Selling and marketing expenses | [1] | ¥ 1,047,632 | 707,157 | 524,077 |
Restatement adjustments | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net revenues | (220,111) | (59,569) | ||
General and administrative expenses | (37,464) | (43,074) | ||
Other payable | 128,783 | 51,655 | ||
Property and equipment, net | (17,352) | (10,336) | ||
Cost of revenues | (6,253) | (5,637) | ||
Income tax (expense) benefit | 380 | (9,443) | ||
deferred income tax assets | (66,979) | (49,575) | ||
Retained earnings | (369,926) | (184,972) | ||
Selling and marketing expenses | (5,963) | (3,476) | ||
Restatement adjustments | Errors due to Inaccurate Revenue and Relevant Accounts [Member] | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net revenues | (193,303) | (54,086) | ||
General and administrative expenses | (31,499) | (33,605) | ||
Accounts Receivable, Net | (270,520) | (133,027) | ||
Deferred revenue. | 97,553 | 64,385 | ||
Restatement adjustments | Errors due to restatement adjustments to expense inaccuracies | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Accounts Receivable, Net | 93,372 | 61,088 | ||
Other payable | 58,697 | 48,539 | ||
Other Receivables | 1,563 | 5,015 | ||
Property and equipment, net | (882) | (450) | ||
Interest expense | 4,958 | 2,539 | ||
Operating Expenses | (23,199) | (17,195) | ||
Restatement adjustments | Error due to restatement adjustment to accrue guarantee liabilities for the guarantee provided for students' loan | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net revenues | (37,529) | |||
Deferred revenue. | (46,165) | |||
Accrued Liabilities and Other Liabilities | 83,693 | |||
Restatement adjustments | Error due to incomplete disclosed related party transactions | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Due from Related Parties | 13,211 | 11,478 | ||
Due to Related Parties | 216 | 447 | ||
Restatement adjustments | Error Due to Adjustments on tax payable due to the restatement | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Income tax (expense) benefit | 380 | (9,443) | ||
Taxes Payable | (58,638) | 40,853 | ||
deferred income tax assets | 66,979 | 49,574 | ||
Restatement adjustments | Errors Due to Cumulative Effect of Change in Retained Earnings [Member] | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Retained earnings | ¥ (369,926) | ¥ (184,972) | ||
[1] | (a) Includes share-based compensation expense as follows (note 16): |
RESTATEMENT AND RECLASSIFICAT_7
RESTATEMENT AND RECLASSIFICATIONS - Earnings (loss) per Share (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | |||
Net income (loss) attributable to Class A and Class B ordinary shareholders | ¥ (590,174) | ¥ (147) | ¥ 226,120 |
Net income (loss) for basic and diluted earnings per share | ¥ (590,174) | ¥ (147) | ¥ 226,120 |
Denominator: | |||
Weighted average number of Class A and Class B ordinary shares outstanding | 54,929,910 | 56,849,332 | 55,540,670 |
Dilutive effect of outstanding share options | 3,464,591 | ||
Denominator for diluted earnings (loss) per share | 54,929,910 | 56,849,332 | 59,005,261 |
Basic earnings (loss) per Class A and Class B ordinary share | ¥ (10.744) | ¥ (0.003) | ¥ 4.071 |
Diluted earnings (loss) per Class A and Class B ordinary share | ¥ (10.744) | ¥ (0.003) | ¥ 3.832 |
As previously reported | |||
Numerator: | |||
Net income (loss) attributable to Class A and Class B ordinary shareholders | ¥ 184,807 | ¥ 241,854 | |
Net income (loss) for basic and diluted earnings per share | ¥ 184,807 | ¥ 241,854 | |
Denominator: | |||
Weighted average number of Class A and Class B ordinary shares outstanding | 56,849,332 | 55,540,670 | |
Dilutive effect of outstanding share options | 2,749,379 | 3,464,591 | |
Denominator for diluted earnings (loss) per share | 59,598,711 | 59,005,261 | |
Basic earnings (loss) per Class A and Class B ordinary share | ¥ 3.25 | ¥ 4.36 | |
Diluted earnings (loss) per Class A and Class B ordinary share | ¥ 3.10 | ¥ 4.10 | |
Restatement adjustments | |||
Numerator: | |||
Net income (loss) attributable to Class A and Class B ordinary shareholders | ¥ (184,954) | ¥ (15,734) | |
Net income (loss) for basic and diluted earnings per share | ¥ (184,954) | ¥ (15,734) | |
Denominator: | |||
Weighted average number of Class A and Class B ordinary shares outstanding | 0 | ||
Dilutive effect of outstanding share options | 0 | ||
Denominator for diluted earnings (loss) per share | 0 | ||
Basic earnings (loss) per Class A and Class B ordinary share | ¥ (3.25) | ¥ (0.28) | |
Diluted earnings (loss) per Class A and Class B ordinary share | ¥ (3.10) | ¥ (0.27) |
ACCOUNTS RECEIVABLE (Schedule o
ACCOUNTS RECEIVABLE (Schedule of Accounts Receivable) (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts receivable: | ||
Gross | ¥ 69,301 | ¥ 67,235 |
Unearned interest | (17,243) | (9,188) |
Total accounts receivable | 52,058 | 58,047 |
Total accounts receivable, net | ¥ 52,058 | ¥ 58,047 |
ACCOUNTS RECEIVABLE (Classifica
ACCOUNTS RECEIVABLE (Classification of Accounts Receivable) (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
ACCOUNTS RECEIVABLE | ||
Accounts receivable, net - current portion | ¥ 39,901 | ¥ 51,643 |
Accounts receivable, net - non-current portion | 12,157 | 6,404 |
Total accounts receivable, net | ¥ 52,058 | ¥ 58,047 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||
Prepaid rental expenses | ¥ 50,854 | ¥ 41,984 |
Interest receivable from time deposits | 2,754 | 12,495 |
Prepaid security deposits | 24,337 | 17,269 |
Prepaid advertising expenses | 17,967 | 26,393 |
Prepaid value-added tax | 18,777 | 17,644 |
Loans made to employees | 37,586 | 12,698 |
Professional fees | 10,020 | 11,528 |
Others | 9,171 | 15,696 |
Total prepaid expenses and other current assets | ¥ 171,466 | ¥ 155,707 |
PROPERTY AND EQUIPMENT, NET (Sc
PROPERTY AND EQUIPMENT, NET (Schedule of Property and Equipment) (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | ¥ 1,002,303 | ¥ 760,343 |
Less: accumulated depreciation | (376,235) | (258,004) |
Property and equipment, net | 626,068 | 502,339 |
Office Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 287,208 | 285,184 |
Furniture | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 49,374 | 30,061 |
Office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 481,034 | 350,432 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | ¥ 184,687 | ¥ 94,666 |
PROPERTY AND EQUIPMENT, NET (_2
PROPERTY AND EQUIPMENT, NET (Schedule of Depreciation Expense) (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | ¥ 156,907 | ¥ 99,897 | ¥ 72,858 |
Cost of revenues [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | 127,850 | 85,059 | 62,000 |
Selling and marketing expenses [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | 11,211 | 5,313 | 3,226 |
General and administrative expenses [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | 16,511 | 8,064 | 6,455 |
Research and development expenses [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | ¥ 1,335 | ¥ 1,461 | ¥ 1,177 |
LONG-TERM INVESTMENTS, NET (Det
LONG-TERM INVESTMENTS, NET (Details) - CNY (¥) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Equity investments without readily determinable fair values | ||||
Lessimpairment of equity investments without readily determinable fair values | ¥ (35,000,000) | ¥ 0 | ||
Total equity investments without readily determinable fair values, net | 44,380,000 | 76,500,000 | ||
Equity method investments | ||||
Equity method investment | 15,271,000 | 670,000 | ||
Lessimpairment of long-term investments | (524,000) | 0 | ||
Total equity method investments, net | 15,271,000 | 670,000 | ||
Available-for-sale investment | 15,000,000 | 15,000,000 | ||
Less: Changes in Fair Value | (11,496,000) | ¥ (5,235,000) | ||
impairment of available-for-sale investments | (15,000,000) | (15,000,000) | ||
Total available-for-sale investment, net | 0 | |||
Total long-term investments, net | 59,651,000 | 77,170,000 | ||
Hockey Global Resources Investment Limited [Member] | ||||
Equity method investments | ||||
Equity method investment | [1] | 0 | ||
Total equity method investments, net | [1] | 0 | ||
A company providing mechanic training | ||||
Equity investments without readily determinable fair values | ||||
Equity investments without readily determinable fair values | [2] | 12,000,000 | 12,000,000 | |
Lessimpairment of equity investments without readily determinable fair values | 0 | 0 | ||
A company providing intelligent robot products | ||||
Equity investments without readily determinable fair values | ||||
Equity investments without readily determinable fair values | [3] | 24,000,000 | 24,000,000 | |
Lessimpairment of equity investments without readily determinable fair values | (24,000,000) | 0 | ||
A company providing information sharing IT platform | ||||
Equity investments without readily determinable fair values | ||||
Equity investments without readily determinable fair values | [4] | 22,500,000 | 22,500,000 | |
Lessimpairment of equity investments without readily determinable fair values | 0 | 0 | ||
Other equity investments without readily determinable fair values | ||||
Equity investments without readily determinable fair values | ||||
Equity investments without readily determinable fair values | [5] | 20,880,000 | 18,000,000 | |
Lessimpairment of equity investments without readily determinable fair values | (11,000,000) | 0 | ||
Companies providing hockey program management | ||||
Equity method investments | ||||
Equity method investment | 2,105,000 | 670,000 | ||
Lessimpairment of long-term investments | (524,000) | 0 | ||
Total equity method investments, net | 2,105,000 | 670,000 | ||
A company providing Internet product solutions | ||||
Equity method investments | ||||
Equity method investment | 13,690,000 | 0 | ||
Lessimpairment of long-term investments | 0 | |||
Total equity method investments, net | ¥ 13,690,000 | ¥ 0 | ||
[1] | In October 2016, the Company paid RMB790 in cash to acquire 28.5% of | |||
[2] | Prior to January 1, 2018, the Company accounted for certain investments under the cost method as the Company was not able to exercise significant influence on the investees. After January 1, 2018, all such investments were identified as the equity investments without readily determinable fair values.In October 2015, the Company paid RMB12,000 in cash to acquire 2.86% of the total equity interest in an education company, which provides training for senior mechanic in vehicle maintenance and repair. | |||
[3] | In May 2017, the Company paid RMB24,000 in cash to acquire 6% of the total equity interest in a company, which provides intelligent robot product. Based on the fact that the business conditions of this investee deteriorated in fiscal year 2018, the Company recognized impairment loss of nil and RMB24,000 for the years ended December 31, 2017 and 2018, respectively. | |||
[4] | In July 2017, the Company paid RMB22,500 in cash to acquire 15% of the total equity interest in a company, which provides an information sharing IT platform. | |||
[5] | During the years ended December 31, 2017 and 2018, the Company acquired minority equity interest in several third-party companies.The Company recognized impairment loss of nil and RMB11,000 for the years ended December 31, 2017 and 2018, respectively. |
LONG-TERM INVESTMENTS, NET - Ad
LONG-TERM INVESTMENTS, NET - Additional information (Details) - CNY (¥) | Jan. 31, 2018 | Jul. 31, 2017 | May 31, 2017 | Oct. 31, 2016 | Oct. 31, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of Investments and Cost Method Investments [Line Items] | ||||||||
Equity Method Investment, Ownership Percentage | 13.90% | |||||||
Impairment of equity investments without readily determinable fair values | ¥ 35,000,000 | ¥ 0 | ||||||
Equity investment percentage | 13.90% | |||||||
Impairment of long-term investments | 524,000 | 0 | ||||||
Payment to acquire available for sale securities | ¥ 10,000,000 | |||||||
Increase in fair value of the investment | 11,496,000 | ¥ 5,235,000 | ||||||
Unrealized holding gains on available for sale securities, net of income taxes | 0 | ¥ 2,818,000 | ¥ 42,000 | |||||
Beijing Crouching Tiger Hidden Dragon Internet Technology Co Ltd [Member] | ||||||||
Schedule of Investments and Cost Method Investments [Line Items] | ||||||||
Equity Method Investment, Ownership Percentage | 11.25% | |||||||
Equity investment percentage | 11.25% | |||||||
A company providing mechanic training | ||||||||
Schedule of Investments and Cost Method Investments [Line Items] | ||||||||
Payment to acquire cost method investment | ¥ 12,000,000 | |||||||
Equity investment , cost method percentage | 2.86% | |||||||
Impairment of equity investments without readily determinable fair values | 0 | ¥ 0 | ||||||
A company providing intelligent robot products | ||||||||
Schedule of Investments and Cost Method Investments [Line Items] | ||||||||
Payment to acquire cost method investment | ¥ 24,000,000 | |||||||
Equity investment , cost method percentage | 6.00% | |||||||
Impairment of equity investments without readily determinable fair values | 24,000,000 | 0 | ||||||
A company providing information sharing IT platform | ||||||||
Schedule of Investments and Cost Method Investments [Line Items] | ||||||||
Payment to acquire cost method investment | ¥ 22,500,000 | |||||||
Equity investment , cost method percentage | 15.00% | |||||||
Impairment of equity investments without readily determinable fair values | 0 | 0 | ||||||
Other equity investments without readily determinable fair values | ||||||||
Schedule of Investments and Cost Method Investments [Line Items] | ||||||||
Impairment of equity investments without readily determinable fair values | ¥ 11,000,000 | 0 | ||||||
Companies providing hockey program management | ||||||||
Schedule of Investments and Cost Method Investments [Line Items] | ||||||||
Equity Method Investment, Ownership Percentage | 28.50% | 20.00% | ||||||
Payment to acquire investment | ¥ 790,000 | ¥ 1,580,000 | ||||||
Equity investment percentage | 28.50% | 20.00% | ||||||
Impairment of long-term investments | ¥ 524,000 | ¥ 0 | ||||||
A company providing Internet product solutions | ||||||||
Schedule of Investments and Cost Method Investments [Line Items] | ||||||||
Equity Method Investment, Ownership Percentage | 20.00% | |||||||
Payment to acquire investment | ¥ 14,000,000 | |||||||
Equity investment percentage | 20.00% | |||||||
Impairment of long-term investments | ¥ 0 |
OTHER NON-CURRENT ASSET (Detail
OTHER NON-CURRENT ASSET (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Other non-current assets: | ||
Deferred income tax assets | ¥ 916 | ¥ 684 |
Rent and property management deposits | 48,434 | 32,973 |
Housing loans made to employees | 29,893 | 11,339 |
Prepayment for equipment and leasehold improvement | 13,089 | 11,717 |
Pledge loans to employees | 11,346 | 9,026 |
Other loans to employees | 7,197 | 8,816 |
Others | 12,041 | 4,380 |
Total other non-current assets | ¥ 122,000 | ¥ 78,251 |
OTHER NON-CURRENT ASSET- Additi
OTHER NON-CURRENT ASSET- Additional information (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other Assets, Noncurrent Disclosure [Line Items] | ||||
Deferred income tax assets, valuation allowance | ¥ 169,543 | ¥ 72,271 | ¥ 37,521 | ¥ 28,583 |
Housing loans made to employees | ||||
Other Assets, Noncurrent Disclosure [Line Items] | ||||
Term of loans receivable | 5 years | |||
Annual interest rate (as a percent) | 3.325% | |||
Loans to employees pledged by share options | ||||
Other Assets, Noncurrent Disclosure [Line Items] | ||||
Term of loans receivable | 5 years | |||
Annual interest rate (as a percent) | 5.00% |
SHORT-TERM BANK LOANS (Details)
SHORT-TERM BANK LOANS (Details) ¥ in Thousands, $ in Millions | Dec. 19, 2018USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) |
SHORT-TERM BANK LOANS [Line Items] | |||||
Bank loan borrowed | ¥ | ¥ 13,228 | ||||
Time deposit | ¥ | ¥ 14,700 | ||||
Short-term bank loans | |||||
SHORT-TERM BANK LOANS [Line Items] | |||||
Borrowing capacity | $ 12 | ||||
Debt term | 12 months | ||||
Bank loan borrowed | $ 2 | ||||
Interest rate for the loan | 4.00% | ||||
Bank loan | $ 2 | ||||
Short-term bank loans | LIBOR | |||||
SHORT-TERM BANK LOANS [Line Items] | |||||
Margin on interest rate | 1.20% |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Guarantee liability | ¥ 27,505 | ¥ 83,693 |
Accrued payroll and employee benefits | 128,224 | 88,713 |
Payable to a third-party individual | 64,515 | 58,697 |
Refund liability | 35,772 | |
VAT and other tax payables | 34,731 | 18,015 |
Professional service fee | 22,403 | 9,125 |
Rental fee | 23,808 | 13,215 |
Payable for repurchasing of treasury shares | 5,058 | 17,368 |
Others | 23,412 | 24,603 |
Total | ¥ 365,428 | ¥ 313,429 |
NET REVENUES (Details)
NET REVENUES (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disaggregation of Revenue [Line Items] | |||
Net revenues | ¥ 1,520,035 | ||
Business taxes and surcharges | ¥ (13,878) | ¥ (11,842) | (19,266) |
Total net revenues | 1,520,035 | ||
Services transferred at a point in time | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 100,472 | 83,854 | 45,831 |
Total net revenues | 100,472 | 83,854 | 45,831 |
Services transferred over time | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 1,895,208 | 1,649,961 | 1,474,204 |
Total net revenues | 1,895,208 | 1,649,961 | 1,474,204 |
Tuition fee | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 1,896,642 | 1,658,981 | 1,491,594 |
Total net revenues | 1,896,642 | 1,658,981 | 1,491,594 |
Certification service fee | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 82,376 | 50,321 | 35,976 |
Total net revenues | 82,376 | 50,321 | 35,976 |
Loan referral service fee | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 18,096 | 33,533 | 9,855 |
Total net revenues | 18,096 | 33,533 | 9,855 |
Others | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 12,444 | 2,822 | 1,876 |
Total net revenues | 12,444 | 2,822 | ¥ 1,876 |
Guarantee service | |||
Disaggregation of Revenue [Line Items] | |||
Net revenues | 89,691,000 | 19,880,000 | |
Total net revenues | ¥ 89,691,000 | ¥ 19,880,000 |
LOSS ON FOREIGN CURRENCY FORW_2
LOSS ON FOREIGN CURRENCY FORWARD CONTRACT (Narrative) (Details) | 1 Months Ended | 12 Months Ended | ||
May 19, 2016CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Gain (Loss) on Derivative Instruments, Net, Pretax | ¥ (12,898,000) | |||
Foreign Exchange Forward [Member] | ||||
Derivative, Inception Date | Jan. 29, 2016 | |||
Derivative, Forward Exchange Rate | 6.7070 | |||
Derivative, Notional Amount | ¥ 564,095 | |||
Derivative, Maturity Date | May 19, 2016 | |||
Gain (Loss) on Derivative Instruments, Net, Pretax | ¥ 12,898 |
INCOME TAXES (Schedule of Incom
INCOME TAXES (Schedule of Income loss before Income Taxes) (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes [Line Items] | |||
Total income (loss) before income taxes | ¥ (597,064) | ¥ 25,243 | ¥ 254,339 |
PRC | |||
Income Taxes [Line Items] | |||
Total income (loss) before income taxes | (467,953) | 104,307 | 334,278 |
Hong Kong | |||
Income Taxes [Line Items] | |||
Total income (loss) before income taxes | (2,031) | (2,415) | (573) |
Cayman Islands | |||
Income Taxes [Line Items] | |||
Total income (loss) before income taxes | (126,887) | ¥ (76,649) | ¥ (79,366) |
Taiwan | |||
Income Taxes [Line Items] | |||
Total income (loss) before income taxes | (166) | ||
Canada | |||
Income Taxes [Line Items] | |||
Total income (loss) before income taxes | ¥ (27) |
INCOME TAXES (Schedule of Inc_2
INCOME TAXES (Schedule of Income Tax Expense benefit) (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
INCOME TAXES | |||
Current income tax expense | ¥ 16,058 | ¥ 26,561 | ¥ 29,766 |
Withholding tax expense | 25,672 | ||
Deferred income tax benefit | (46,595) | (1,171) | (1,547) |
Total | ¥ (4,865) | ¥ 25,390 | ¥ 28,219 |
INCOME TAXES (Schedule of Inc_3
INCOME TAXES (Schedule of Income Tax Rate Reconciliation) (Details) | Jan. 01, 2008 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Effective income tax rate reconciliation [Line Items] | ||||
PRC statutory income tax rate | 25.00% | 25.00% | 25.00% | 25.00% |
Impact of different tax rates in other jurisdictions | (5.30%) | 76.70% | 7.80% | |
Research and development bonus deduction | 1.40% | (34.70%) | (3.20%) | |
Non-deductible selling, general and administrative expenses | ||||
Non-deductible expenses | (1.40%) | 62.70% | 1.70% | |
Tax holiday | (0.00%) | (0.00%) | ||
Withholding tax | (4.3) | |||
Actual income tax expense | 0.80% | 100.60% | 11.10% | |
ANTE [Member] | ||||
Non-deductible selling, general and administrative expenses | ||||
Preferential tax rates | (0.30%) | (199.90%) | (23.70%) | |
HK [Member] | ||||
Non-deductible selling, general and administrative expenses | ||||
Change in valuation allowance | (14.30%) | 170.80% | 3.50% |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Income Tax Assets And Liabilities) (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Non-current deferred income tax assets: | ||||
Impairment of long-term investments | ¥ 8,850 | ¥ 2,500 | ||
Tax loss carry forwards | 157,264 | 33,201 | ||
Advertising expense | 53,019 | 36,543 | ||
Others | 4,162 | 5,648 | ||
Total non-current deferred income tax assets | 223,295 | 77,892 | ||
Valuation allowance | (169,543) | (72,271) | ¥ (37,521) | ¥ (28,583) |
Non-current deferred income tax assets, net | 53,752 | ¥ 5,621 | ||
Non-current deferred income tax liabilities: | ||||
Valuation appreciation of intangible assets | 2,283 | |||
Non-current deferred income tax liabilities | ¥ 2,283 |
INCOME TAXES (Summary of Valuat
INCOME TAXES (Summary of Valuation Allowance) (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
INCOME TAXES | |||
Balance at the beginning of the year | ¥ 72,271 | ¥ 37,521 | ¥ 28,583 |
Additions of valuation allowance | 97,776 | 38,976 | 13,118 |
Reduction of valuation allowance | (504) | (4,226) | (4,180) |
Balance at the end of the year | ¥ 169,543 | ¥ 72,271 | ¥ 37,521 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - CNY (¥) ¥ in Thousands | Jan. 01, 2008 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Tax losses carry forwards | ¥ 656,702 | ||||
PRC statutory income tax rate | 25.00% | 25.00% | 25.00% | 25.00% | |
Income Taxes, Preferential Income Tax Rate Advanced and New Technology Enterprises | 15.00% | 15.00% | |||
Effective Income Tax Rate Reconciliation, Tax Exempt Income, Percent | 12.50% | 0.00% | 0.00% | ||
Income Taxes, Calculation Basis under Deemed Profit Method | 25 | ||||
Withholding tax expense | ¥ 25,672 | ||||
Effective Income Tax Rate Reconciliation, Tax Holiday, Percent | 0.00% | 0.00% | |||
State Administration of Taxation, China [Member] | |||||
Withholding Tax Percentage On Repatriated Earnings | 10.00% | ||||
Maximum | |||||
Income Taxes, Preferential Income Tax Rate Small Profit Enterprises | 20.00% | 20.00% | 20.00% | ||
HK [Member] | |||||
Tax losses carry forwards | ¥ 10,906 | ||||
Tarena Hangzhou [Member] | |||||
PRC statutory income tax rate | 12.50% | 12.50% | 12.50% | ||
Effective Income Tax Rate Reconciliation, Tax Exempt Income, Percent | 50.00% | ||||
Hanru Hangzhou [Member] | |||||
Effective Income Tax Rate Reconciliation, Tax Exempt Income, Percent | 50.00% | ||||
2019 [Member] | |||||
Tax losses carry forwards | ¥ 11,486 | ||||
2020 [Member] | |||||
Tax losses carry forwards | 9,175 | ||||
2021 [Member] | |||||
Tax losses carry forwards | 14,777 | ||||
2022 [Member] | |||||
Tax losses carry forwards | 92,289 | ||||
2023 [Member] | |||||
Tax losses carry forwards | ¥ 518,069 |
RELATED PARTY TRANSACTIONS (Sch
RELATED PARTY TRANSACTIONS (Schedule of Related Party Transactions) (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Amount due from related parties | ||
Due from Related Parties, Current, Total | ¥ 9,938 | ¥ 6,942 |
Amounts due from related parties - non-current | 6,500 | 6,500 |
Amount due to related parties | ||
Due to Related Parties, Current, Total | 872 | 216 |
Chuanbang | ||
Amount due from related parties | ||
Due from Related Parties, Current, Total | 9,938 | 6,942 |
Ms. Han Lijuan | ||
Amount due from related parties | ||
Amounts due from related parties - non-current | ¥ 6,500 | ¥ 6,500 |
RELATED PARTY TRANSACTIONS (S_2
RELATED PARTY TRANSACTIONS (Schedule of Related Parties Transactions) (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Chuanbang | Cash collection service | |||
Related Party Transaction [Line Items] | |||
Expenses from transactions with related party | ¥ 3,489 | ¥ 3,230 | ¥ 6,445 |
Bolton School | Franchise and training service | |||
Related Party Transaction [Line Items] | |||
Revenue from related party | 529 | 1,114 | 902 |
Bolton School | Training service | |||
Related Party Transaction [Line Items] | |||
Expenses from transactions with related party | 798 | 1,064 | 102 |
Ningxia Company | Franchise, training and consulting service | |||
Related Party Transaction [Line Items] | |||
Revenue from related party | 493 | 520 | |
Ms. Han Lijuan | |||
Related Party Transaction [Line Items] | |||
Interest income derived from the loan to related party | ¥ 325 | ¥ 325 | 81 |
Loan to related party | ¥ 6,500 |
RELATED PARTY TRANSACTIONS (S_3
RELATED PARTY TRANSACTIONS (Schedule of Significant Related Party Transactions) (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Chuanbang | Service fee payable | Minimum | |
Related Party Transaction [Line Items] | |
Cash collection service fees percentage | 2.00% |
Chuanbang | Service fee payable | Maximum | |
Related Party Transaction [Line Items] | |
Cash collection service fees percentage | 20.00% |
Connion Capital Limited | Minimum level of activity in bank account | |
Related Party Transaction [Line Items] | |
Number of times funds will receive | 5 |
Minimum amount of fund to be received at each time | $ 1,000,000 |
Due from related parties | $ 0 |
ORDINARY SHARES AND STATUTORY_2
ORDINARY SHARES AND STATUTORY RESERVE (Ordinary Shares) (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||||||||||
Jun. 30, 2018CNY (¥) | Jun. 30, 2017CNY (¥) | May 31, 2016CNY (¥) | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017CNY (¥)shares | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015CNY (¥)shares | Jun. 30, 2018USD ($) | Mar. 06, 2018$ / shares | Mar. 06, 2018¥ / shares | Jun. 30, 2017USD ($) | Feb. 28, 2017$ / shares | Feb. 28, 2017¥ / shares | Mar. 07, 2016$ / shares | Mar. 07, 2016¥ / shares | Aug. 20, 2015USD ($) | |
Class of Stock [Line Items] | ||||||||||||||||
Total consideration of Shares repurchased | ¥ | ¥ 202,066 | ¥ 161,342 | ¥ 44,406 | |||||||||||||
Dividends Payable, Amount Per Share | (per share) | $ 0.12 | ¥ 0.76 | $ 0.16 | ¥ 1.10 | $ 0.15 | ¥ 0.98 | ||||||||||
Dividends, Common Stock, Cash | ¥ | ¥ 42,955 | ¥ 63,087 | ¥ 54,026 | |||||||||||||
Treasury Shares [Member] | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Share repurchase plan, authorized amount | $ | $ 30 | $ 20 | ||||||||||||||
Shares repurchased | shares | 3,768,495 | 1,755,666 | 648,867 | 926,113 | ||||||||||||
Total consideration of Shares repurchased | ¥ | ¥ 202,066 | ¥ 161,342 | ¥ 44,406 | ¥ 49,355 | ||||||||||||
Treasury Shares [Member] | Minimum | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Share repurchase plan, authorized amount | $ | $ 30 | |||||||||||||||
Treasury Shares [Member] | Maximum | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Share repurchase plan, authorized amount | $ | $ 70 |
ORDINARY SHARES AND STATUTORY_3
ORDINARY SHARES AND STATUTORY RESERVE (Statutory Reserve) (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
ORDINARY SHARES AND STATUTORY RESERVE | |||
Appropriations | ¥ 12,943 | ¥ 29,734 | ¥ 37,996 |
Statutory reserve | ¥ 153,208 | 140,265 | 110,531 |
Statutory Reserves, Percentage of Appropriation From Net Profit | 10.00% | ||
Statutory Reserves, Balance As Percentage to Capital | 50.00% | ||
Statutory Reserves for Private Schools Requiring Reasonable Returns, Percentage of Appropriation From Net Profit | 25.00% | ||
Statutory Reserves for Private Schools Not Requiring Reasonable Returns, Percentage of Expected Annual Increase in Net Assets | 25.00% | ||
Restricted net assets | ¥ 1,375,685 | ¥ 1,235,538 | ¥ 1,106,135 |
SHARE BASED COMPENSATION - Summ
SHARE BASED COMPENSATION - Summary of share options activity (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2015 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Number of Share Options | ||||
Outstanding, beginning balance | 3,014,352 | 4,328,375 | 5,574,441 | |
Granted | 1,085,094 | 682,435 | 1,138,119 | |
Exercised | (615,746) | (1,898,391) | (2,106,043) | |
Forfeited | (86,903) | (98,067) | (278,142) | |
Outstanding, ending balance | 5,574,441 | 3,396,797 | 3,014,352 | 4,328,375 |
Vested and expected to vest | 3,262,468 | |||
Exercisable | 2,824,485 | |||
Weighted Average Exercise Price | ||||
Outstanding, beginning balance | $ 1.70 | $ 1.88 | $ 1.77 | |
Granted | 0.84 | 0.88 | 1.90 | |
Exercised | 0.72 | 1.74 | 1.46 | |
Forfeited | 1.49 | 3.30 | 2.89 | |
Outstanding, ending balance | $ 1.77 | 1.61 | $ 1.70 | $ 1.88 |
Vested and expected to vest | 1.56 | |||
Exercisable | $ 1.50 | |||
Weighted Average Remaining Contractual Years | ||||
Outstanding | 5 years 6 months 18 days | 6 years 5 months 19 days | 5 years 9 months 29 days | 5 years 10 months 2 days |
Vested and expected to vest | 6 years 5 months 5 days | |||
Exercisable | 6 years 2 months 16 days | |||
Outstanding, Aggregate Intrinsic Value | $ 45,569 | $ 15,919 | $ 40,031 | $ 56,743 |
Vested and expected to vest, Aggregate Intrinsic Value | 15,469 | |||
Exercisable, Aggregate Intrinsic Value | $ 13,551 |
SHARE BASED COMPENSATION - Su_2
SHARE BASED COMPENSATION - Summary of fair value assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2018$ / shares | Dec. 31, 2017$ / shares | Dec. 31, 2016$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected dividends yield | 0.00% | 0.00% | 0.00% |
Exercise multiple | 2 | 2 | |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 53.52% | 63.50% | |
Expected dividends yield | 63.70% | ||
Exercise multiple | 2.2 | ||
Risk-free interest rate per annum | 2.54% | 2.88% | 2.15% |
The fair value of underlying ordinary shares (per share) | $ 6.97 | $ 14.27 | $ 9.99 |
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 68.80% | ||
Expected dividends yield | 55.70% | 67.80% | |
Exercise multiple | 2.8 | ||
Risk-free interest rate per annum | 3.23% | 3.22% | 3.18% |
The fair value of underlying ordinary shares (per share) | $ 14.99 | $ 19.03 | $ 16.54 |
SHARE BASED COMPENSATION - Sche
SHARE BASED COMPENSATION - Schedule fair values of the options granted (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
SHARE BASED COMPENSATION | |||
Weighted average grant date fair value of option per share | $ 12.35 | $ 15.99 | $ 10.15 |
Aggregate grant date fair value of options | $ 13,402 | $ 10,915 | $ 11,551 |
SHARE BASED COMPENSATION - Su_3
SHARE BASED COMPENSATION - Summary of the non-vested shares activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Non-vested Shares | |||
Outstanding, beginning balance | 106,767 | 10,000 | 25,000 |
Granted | 211,977 | 129,835 | 20,000 |
Vested | (16,557) | (17,367) | (35,000) |
Forfeited | (22,541) | (15,701) | |
Outstanding, ending balance | 279,646 | 106,767 | 10,000 |
Weighted Average Grant Date Fair Value | |||
Outstanding, beginning balance | $ 14.75 | $ 10.82 | $ 9.63 |
Granted | 11.20 | 14.93 | 10.82 |
Vested | 14.22 | 14.08 | 9.97 |
Forfeited | 12.39 | 14.47 | |
Outstanding, ending balance | $ 12.28 | $ 14.75 | $ 10.82 |
SHARE BASED COMPENSATION (Narra
SHARE BASED COMPENSATION (Narrative) (Details) ¥ in Thousands | Apr. 03, 2018shares | Apr. 01, 2018shares | Apr. 03, 2017shares | Apr. 03, 2016shares | Feb. 28, 2017shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017CNY (¥)shares | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2018$ / shares | Dec. 31, 2018CNY (¥) | Dec. 31, 2017$ / shares | Dec. 31, 2016$ / shares | Dec. 31, 2014shares | Nov. 28, 2012shares | Sep. 22, 2008shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Options granted | 1,085,094 | 682,435 | 1,138,119 | ||||||||||||
Total intrinsic value of options exercised | ¥ | ¥ 22,710 | ¥ 169,944 | ¥ 189,154 | ||||||||||||
Non-vested shares granted | 211,977 | 129,835 | 20,000 | ||||||||||||
Unrecognized stock option compensation expense | ¥ | ¥ 46,565 | ||||||||||||||
Unrecognized stock option compensation expense, period for recognition | 1 year 7 months 28 days | ||||||||||||||
Unrecognized non-vested shares compensation expense | ¥ | ¥ 22,496 | ||||||||||||||
Unrecognized non-vested shares compensation expense, period for recognition | 5 years 1 month 13 days | ||||||||||||||
Fair value of vested restricted shares | ¥ | ¥ 1,557 | ¥ 1,652 | ¥ 2,316 | ||||||||||||
Minimum | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Exercise prices | $ / shares | $ 0.06 | $ 0.058 | $ 0.058 | ||||||||||||
Vesting period | 3 months 29 days | 2 months 1 day | 29 days | ||||||||||||
Share price | $ / shares | 6.97 | 14.27 | 9.99 | ||||||||||||
Maximum | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Exercise prices | $ / shares | 1 | 4.36 | 4.36 | ||||||||||||
Vesting period | 1 year | 4 years | 4 years | ||||||||||||
Share price | $ / shares | $ 14.99 | $ 19.03 | $ 16.54 | ||||||||||||
Share-based Compensation Award, Tranche One [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vesting period | 8 years | ||||||||||||||
Non-vested shares granted | 28,475 | ||||||||||||||
Share-based Compensation Award, Tranche Two [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vesting period | 9 years | ||||||||||||||
Non-vested shares granted | 87,325 | ||||||||||||||
Independent Directors [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vesting period | 5 years | ||||||||||||||
Vesting percentage | 25.00% | 25.00% | |||||||||||||
Non-vested shares granted | 193,796 | 13,335 | 20,000 | 700 | |||||||||||
January 1 [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Expiration period | 10 years | 10 years | 10 years | ||||||||||||
April 3 [Member] | Independent Directors [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Vesting percentage | 25.00% | ||||||||||||||
Non-vested shares granted | 18,181 | ||||||||||||||
2008 Plan [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Authorized | 8,184,990 | 6,002,020 | |||||||||||||
2014 Plan [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||
Authorized | 1,833,696 |
EARNINGS (LOSS) PER SHARE (Sche
EARNINGS (LOSS) PER SHARE (Schedule of Basic and Diluted Earnings Loss Per Share) (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | |||
Net income (loss) attributable to Class A and Class B ordinary shareholders | ¥ (590,174) | ¥ (147) | ¥ 226,120 |
Net income (loss) for basic and diluted earnings per share | ¥ (590,174) | ¥ (147) | ¥ 226,120 |
Denominator: | |||
Weighted average number of Class A and Class B ordinary shares outstanding | 54,929,910 | 56,849,332 | 55,540,670 |
Dilutive effect of outstanding share options | 3,464,591 | ||
Denominator for diluted earnings (loss) per share | 54,929,910 | 56,849,332 | 59,005,261 |
Basic earnings (loss) per Class A and Class B ordinary share | ¥ (10.744) | ¥ (0.003) | ¥ 4.071 |
Diluted earnings (loss) per Class A and Class B ordinary share | ¥ (10.744) | ¥ (0.003) | ¥ 3.832 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |||
Gross rental expenses | ¥ 262,440 | ¥ 178,802 | ¥ 133,407 |
Sublease rental income | 1,533 | ¥ 630 | ¥ 460 |
Future minimum lease payments: | |||
2019 | 289,324 | ||
2020 | 232,688 | ||
2021 | 168,329 | ||
2022 | 119,024 | ||
2023 | 66,575 | ||
2024 and thereafter | 47,447 | ||
Total | ¥ 923,387 |
BUSINESS COMBINATION (Details)
BUSINESS COMBINATION (Details) - CNY (¥) ¥ in Thousands | Mar. 01, 2018 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
BUSINESS COMBINATION [Line Items] | ||||
Total consideration | ¥ 4,360 | |||
Allocation of the consideration of the assets acquired and liabilities assumed | ||||
Goodwill | ¥ 3,365 | ¥ 52,782 | ¥ 3,365 | |
RTEC | ||||
BUSINESS COMBINATION [Line Items] | ||||
Equity Interest acquired | 100.00% | |||
Total consideration | ¥ 58,200,000 | |||
Allocation of the consideration of the assets acquired and liabilities assumed | ||||
Cash and cash equivalents | 3,874 | |||
Financial receivables | 7,550 | |||
Prepaid and other current assets | 6,138 | |||
Inventory, net | 803 | |||
Property and equipment | 12,851 | |||
Intangible assets | 12,688 | |||
Goodwill | 49,417 | |||
Other non-current assets | 114 | |||
Total assets | 93,435 | |||
Deferred revenue | (31,906) | |||
Accounts payable and other current liabilities | (1,046) | |||
Deferred tax liabilities | (2,283) | |||
Total | ¥ 58,200 | |||
Amortization period | 10 years |
GOODWILL (Details)
GOODWILL (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill [Roll Forward] | ||
Beginning balance | ¥ 3,365 | ¥ 3,365 |
Acquisition | 49,417 | |
Ending balance | 52,782 | 3,365 |
Goodwill impairment | ¥ 0 | ¥ 0 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2018CNY (¥)segment | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | ||
SEGMENT INFORMATION [Line Items] | ||||
Number of operating segments | segment | 2 | |||
Revenues, cost of revenues, and gross profit by segment | ||||
Revenue | ¥ 1,520,035 | |||
Cost | [1] | ¥ (918,549) | ¥ (592,946) | (443,467) |
Gross profit | 1,166,822 | ¥ 1,160,749 | ¥ 1,076,568 | |
Adult Training | ||||
Revenues, cost of revenues, and gross profit by segment | ||||
Revenue | 1,915,446 | |||
Cost | (690,252) | |||
Gross profit | 1,225,194 | |||
Kid Training | ||||
Revenues, cost of revenues, and gross profit by segment | ||||
Revenue | 169,925 | |||
Cost | (228,297) | |||
Gross profit | ¥ (58,372) | |||
[1] | (a) Includes share-based compensation expense as follows (note 16): |
PARENT ONLY FINANCIAL INFORMA_3
PARENT ONLY FINANCIAL INFORMATION (Condensed Balance Sheets) (Details) ¥ / shares in Units, ¥ in Thousands | Dec. 31, 2018$ / shares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017$ / shares | Dec. 31, 2017CNY (¥)¥ / sharesshares | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | |
Current assets: | |||||||
Time deposits | ¥ 158,585 | ¥ 432,536 | |||||
Prepaid expenses and other current assets | 171,466 | 155,707 | |||||
Total current assets | 925,574 | 1,333,519 | |||||
Total assets | 1,878,047 | 2,018,427 | |||||
Current liabilities: | |||||||
Short-term bank loan | 13,726 | ||||||
Accrued expenses and other current liabilities | 365,428 | 313,429 | |||||
Total current liabilities | 1,300,421 | 744,589 | |||||
Other non-current liabilities | 5,983 | 4,329 | |||||
Total liabilities | 1,306,404 | 748,918 | |||||
Commitments and contingencies | |||||||
Shareholders' equity: | |||||||
Treasury shares | (457,169) | (255,103) | |||||
Additional paid-in capital | 1,222,072 | 1,094,872 | |||||
Accumulated other comprehensive income | 50,472 | 39,372 | |||||
Retained earnings (accumulated deficit) | (243,162) | 389,967 | |||||
Total equity attributable to the shareholders of Tarena International, Inc. | 572,618 | 1,269,509 | |||||
Total liabilities and equity | 1,878,047 | 2,018,427 | |||||
Common Class A [Member] | |||||||
Shareholders' equity: | |||||||
Ordinary shares | ¥ 331 | ¥ 327 | |||||
Ordinary shares | |||||||
Ordinary shares, par value | ¥ / shares | ¥ 0.001 | ¥ 0.001 | |||||
Authorized | shares | 860,000,000 | 860,000,000 | |||||
Issued | shares | 52,972,578 | 52,340,176 | |||||
Outstanding | shares | 45,873,437 | 49,009,530 | |||||
Treasury shares | shares | 7,099,141 | 3,330,646 | |||||
Common Class B [Member] | |||||||
Shareholders' equity: | |||||||
Ordinary shares | ¥ 74 | ¥ 74 | |||||
Ordinary shares | |||||||
Ordinary shares, par value | ¥ / shares | ¥ 0.001 | ¥ 0.001 | |||||
Authorized | shares | 40,000,000 | 40,000,000 | |||||
Issued | shares | 7,206,059 | 7,206,059 | |||||
Outstanding | shares | 7,206,059 | 7,206,059 | |||||
Parent Company [Member] | |||||||
Current assets: | |||||||
Cash and cash equivalents | ¥ 25,507 | ¥ 17,658 | ¥ 43,770 | ¥ 6,275 | |||
Time deposits | 65,342 | ||||||
Prepaid expenses and other current assets | 696 | 970 | |||||
Total current assets | 26,203 | 83,970 | |||||
Investments and loans to subsidiaries | 567,003 | 1,210,622 | |||||
Total assets | 593,206 | 1,294,592 | |||||
Current liabilities: | |||||||
Short-term bank loan | 13,726 | ||||||
Accrued expenses and other current liabilities | [1] | 6,862 | 24,454 | ||||
Total current liabilities | 20,588 | 24,454 | |||||
Other non-current liabilities | 629 | ||||||
Total liabilities | 20,588 | 25,083 | |||||
Shareholders' equity: | |||||||
Treasury shares | (457,169) | (255,103) | |||||
Additional paid-in capital | 1,222,072 | 1,094,872 | |||||
Accumulated other comprehensive income | 50,472 | 39,372 | |||||
Retained earnings (accumulated deficit) | (243,162) | 389,967 | |||||
Total equity attributable to the shareholders of Tarena International, Inc. | 572,618 | 1,269,509 | |||||
Total liabilities and equity | 593,206 | 1,294,592 | |||||
Parent Company [Member] | Common Class A [Member] | |||||||
Shareholders' equity: | |||||||
Ordinary shares | ¥ 331 | ¥ 327 | |||||
Ordinary shares | |||||||
Ordinary shares, par value | $ / shares | $ 0.001 | $ 0.001 | |||||
Authorized | shares | 860,000,000 | 860,000,000 | |||||
Issued | shares | 52,972,578 | 52,340,176 | |||||
Outstanding | shares | 45,873,437 | 49,009,530 | |||||
Treasury shares | shares | 7,099,141 | (3,330,646) | |||||
Parent Company [Member] | Common Class B [Member] | |||||||
Shareholders' equity: | |||||||
Ordinary shares | ¥ 74 | ¥ 74 | |||||
Ordinary shares | |||||||
Ordinary shares, par value | $ / shares | $ 0.001 | $ 0.001 | |||||
Authorized | shares | 40,000,000 | 40,000,000 | |||||
Issued | shares | 7,206,059 | 7,206,059 | |||||
Outstanding | shares | 7,206,059 | 7,206,059 | |||||
[1] | Mainly related to repurchase of treasury shares. |
PARENT ONLY FINANCIAL INFORMA_4
PARENT ONLY FINANCIAL INFORMATION (Condensed Statements of Comprehensive Income) (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Condensed Income Statements, Captions [Line Items] | ||||
Selling and marketing expenses | [1] | ¥ 1,047,632 | ¥ 707,157 | ¥ 524,077 |
General and administrative expenses | [1] | (546,568) | (354,832) | (264,445) |
Operating loss | (594,632) | (1,272) | 222,452 | |
Foreign currency exchange losses | 4,951 | (6,284) | 3,760 | |
Interest income | 26,200 | 16,097 | 25,065 | |
Loss on foreign currency forward contract | (12,898) | |||
Other income | (33,583) | 16,702 | 15,960 | |
Income (loss) before income taxes | (597,064) | 25,243 | 254,339 | |
Income tax expense | 4,865 | (25,390) | (28,219) | |
Net income (loss) | (592,199) | (147) | 226,120 | |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment, net of nil income tax | 11,100 | (13,832) | 22,972 | |
Unrealized holding gains on available for sale securities, net of RMB42, RMB2,818 and nil income taxes for the year 2016, 2017 and 2018 | 11,496 | 5,235 | ||
Less: Reclassification adjustment for loss on available for sale securities realized in net income, net of RMB42, RMB2,818 and nil income taxes for the year 2016, 2017 and 2018 | (235) | |||
Comprehensive income (loss) | (581,099) | (18,979) | 254,092 | |
Foreign currency translation adjustment, taxes | ||||
Unrealized holding gains on available for sale securities, net of income taxes | 0 | 2,818 | 42 | |
Reclassification adjustment for gains on available for sale securities realized in net income taxes | 0 | 2,818 | 42 | |
Parent Company [Member] | ||||
Condensed Income Statements, Captions [Line Items] | ||||
Selling and marketing expenses | (403) | |||
General and administrative expenses | (5,536) | (5,218) | (4,477) | |
Operating loss | (5,939) | (5,218) | (4,477) | |
Equity in earnings (loss) of subsidiaries | (589,564) | (913) | 237,662 | |
Foreign currency exchange losses | 341 | (421) | (4,753) | |
Interest income | 413 | 2,327 | 8,027 | |
Loss on foreign currency forward contract | (12,898) | |||
Other income | 2,550 | 4,078 | 2,559 | |
Income (loss) before income taxes | (592,199) | (147) | 226,120 | |
Net income (loss) | (592,199) | (147) | 226,120 | |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment, net of nil income tax | 11,100 | (13,832) | 22,972 | |
Unrealized holding gains on available for sale securities, net of RMB42, RMB2,818 and nil income taxes for the year 2016, 2017 and 2018 | 11,496 | 5,235 | ||
Less: Reclassification adjustment for loss on available for sale securities realized in net income, net of RMB42, RMB2,818 and nil income taxes for the year 2016, 2017 and 2018 | (16,496) | (235) | ||
Comprehensive income (loss) | (581,099) | (18,979) | 254,092 | |
Foreign currency translation adjustment, taxes | 0 | 0 | 0 | |
Unrealized holding gains on available for sale securities, net of income taxes | 0 | 2,818 | 42 | |
Reclassification adjustment for gains on available for sale securities realized in net income taxes | ¥ 0 | ¥ 2,818 | ¥ 42 | |
[1] | (a) Includes share-based compensation expense as follows (note 16): |
PARENT ONLY FINANCIAL INFORMA_5
PARENT ONLY FINANCIAL INFORMATION (Condensed Statements of Cash Flows) (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Investing activities: | |||
Purchase of time deposits | ¥ (284,166) | ¥ (515,739) | ¥ (638,170) |
Proceeds from maturity of time deposits | 563,354 | 534,958 | 925,386 |
Foreign currency exchange losses | (4,440) | 6,097 | (33,405) |
Financing activities: | |||
Proceeds from bank borrowing | 13,228 | ||
Issuance of Class A ordinary shares in connection with exercise of share options | 2,952 | 22,254 | 20,388 |
Payment of dividends | (42,955) | (63,087) | (54,026) |
Repurchase of treasury shares | (196,957) | (143,389) | (44,406) |
Changes in cash and cash equivalents | (151,578) | (119,061) | 289,537 |
Effect of foreign currency exchange rate changes on cash and cash equivalents | 10,571 | (4,920) | 7,197 |
Non-cash investing and financing activities: | |||
Payable for repurchase of treasury shares | 5,109 | 17,953 | |
Parent Company [Member] | |||
Operating activities: | |||
Net cash (used in) provided by operating activities | 165,098 | (17,595) | (15,581) |
Investing activities: | |||
Purchase of time deposits | (196,771) | (298,688) | |
Proceeds from maturity of time deposits | 63,452 | 363,533 | 620,607 |
Investments made to subsidiaries | (198,137) | ||
Foreign currency exchange losses | 1,890 | 10,691 | |
Net cash provided by investing activities | 65,342 | 177,453 | 123,782 |
Financing activities: | |||
Proceeds from bank borrowing | 13,228 | ||
Issuance of Class A ordinary shares in connection with exercise of share options | 2,952 | 22,254 | 20,388 |
Payment of dividends | (42,955) | (63,087) | (54,026) |
Repurchase of treasury shares | (196,957) | (143,389) | (44,406) |
Net cash used in financing activities | (223,732) | (184,222) | (78,044) |
Changes in cash and cash equivalents | 6,708 | (24,364) | 30,157 |
Effect of foreign currency exchange rate changes on cash and cash equivalents | 1,141 | (1,748) | 7,338 |
Net increase (decrease) in cash and cash equivalents | 7,849 | (26,112) | 37,495 |
Cash and cash equivalents at beginning of year | 17,658 | 43,770 | 6,275 |
Cash and cash equivalents at end of year | 25,507 | 17,658 | ¥ 43,770 |
Non-cash investing and financing activities: | |||
Payable for repurchase of treasury shares | ¥ 5,109 | ¥ 17,953 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - CNY (¥) ¥ in Thousands | Aug. 09, 2019 | Jan. 17, 2019 | Dec. 31, 2018 |
SUBSEQUENT EVENTS [Line Items] | |||
Bank loan borrowed | ¥ 13,228 | ||
Subsequent event | |||
SUBSEQUENT EVENTS [Line Items] | |||
Percentage of equity interest acquired, cost method | 12.05% | ||
Total consideration | ¥ 10,000 | ||
Subsequent event | Credit of line | |||
SUBSEQUENT EVENTS [Line Items] | |||
Percentage of equity interest acquired, cost method | 1.15% | ||
Face amount of debt | ¥ 190,000 | ||
Bank loan borrowed | 99,872 | ||
Carrying value of office buildings pledged for the loan | ¥ 207,749 |