UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 6-K

 


 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of October 2015

 

Commission File Number: 001-34900

 


 

TAL EDUCATION GROUP

 


 

12/F, Danling SOHO

No. 6 Danling Street, Haidian District

Beijing 100080

People’s Republic of China

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F   x            Form 40-F   o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

 

 



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

TAL Education Group

 

 

 

 

 

By:

/s/Rong Luo

 

 

Name: Rong Luo

 

 

Title: Chief Financial Officer

Date:      October 23, 2015

 

2



 

Exhibit Index

 

Exhibit 99.1 – Press Release

 

3


Exhibit 99.1

 

TAL Education Group Announces Unaudited Financial Results for the

 

Second Fiscal Quarter Ended August 31, 2015

 

· Quarterly Net Revenues up by 41.6% Year-Over-Year

· Net Revenues for the First Six Months Increased by 43.2% Year-Over-Year

· Quarterly Income from Operations up by 28.5% Year-Over-Year

· Quarterly Non-GAAP Income from Operations up by 29.3% Year-Over-Year

 

(Beijing—October 22, 2015)—TAL Education Group (NYSE: XRS) (“TAL” or the “Company”), a leading K-12 after-school tutoring services provider in China, today announced its unaudited financial results for the second quarter of fiscal year 2016 ended August 31, 2015.

 

Highlights for the Second Quarter of Fiscal Year 2016

 

·                  Net revenues increased by 41.6% year-over-year to US$173.3 million from US$122.4 million in the same period of the prior year.

·                  Income from operations increased by 28.5% to US$39.2 million from US$30.5 million in the same period of the prior year.

·                  Non-GAAP income from operations increased by 29.3% to US$44.9 million from US$34.7 million in the same period of the prior year.

·                  Net income attributable to TAL increased by 118.0% year-over-year to US$63.5 million from US$29.1 million in the same period of the prior year, taking into account US$3.7 million of exchange losses.

·                  Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 107.6% year-over-year to US$69.2 million from US$33.3 million in the same period of the prior year, taking into account US$3.7 million of exchange losses.

·                  Basic and diluted net income per American Depositary Share (“ADS”) were US$0.79 and US$0.72, respectively. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.87 and US$0.78, respectively. Each ADS represents two Class A common shares.

·                  Cash, cash equivalents and term deposits totaled US$537.7 million as of August 31, 2015, compared to US$491.4 million as of February 28, 2015.

·                  Total student enrollments increased by 54.8% year-over-year to approximately 631,430 from approximately 407,970 in the same period of the prior year.

 



 

Highlights for the Six Months Ended August 31, 2015

 

·                  Net revenues increased by 43.2% year-over-year to US$302.7 million from US$211.4 million in the same period of the prior year.

·                  Income from operations increased by 33.1% to US$58.8 million from US$44.2 million in the same period of fiscal year 2015.

·                  Non-GAAP income from operations increased by 32.7% to US$69.5 million from US$52.4 million in the same period of the prior year.

·                  Net income attributable to TAL increased by 94.1% year-over-year to US$82.4 million from US$42.5 million in the same period of the prior year, taking into account US$2.2 million of exchange losses.

·                  Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 83.8% year-over-year to US$93.2 million from US$50.7 million in the same period of the prior year, taking into account US$2.2 million of exchange losses.

·                  Basic and diluted net income per ADS were US$1.03 and US$0.94, respectively. Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were US$1.17 and US$1.06, respectively.

·                  Total student enrollments during the first six months of fiscal year 2016 increased by 51.9% year-over-year to approximately 1,043,550.

·                  Total physical network increased to 300 learning centers as of August 31, 2015 from 289 learning centers as of February 28, 2015.

 

Financial and Operating Data——Second Quarter of Fiscal Year 2016

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

 

 

 

Three Months Ended

 

 

 

 

 

August 31,

 

 

 

 

 

2014

 

2015

 

Pct. Change

 

Net revenues

 

122,371

 

173,330

 

41.6

%

Net income attributable to TAL

 

29,118

 

63,481

 

118.0

%

Non-GAAP net income attributable to TAL

 

33,310

 

69,157

 

107.6

%

Operating income

 

30,508

 

39,201

 

28.5

%

Non-GAAP operating income

 

34,700

 

44,877

 

29.3

%

Net income per ADS attributable to TAL – basic

 

0.37

 

0.79

 

115.6

%

Net income per ADS attributable to TAL – diluted

 

0.34

 

0.72

 

109.1

%

Non-GAAP net income per ADS attributable to TAL – basic

 

0.42

 

0.87

 

105.3

%

Non-GAAP net income per ADS attributable to TAL – diluted

 

0.39

 

0.78

 

100.2

%

Total student enrollments in small class, one-on-one, and online courses

 

407,970

 

631,430

 

54.8

%

 



 

 

 

Six Months Ended

 

 

 

 

 

August 31,

 

 

 

 

 

2014

 

2015

 

Pct. Change

 

Net revenues

 

211,397

 

302,717

 

43.2

%

Net income attributable to TAL

 

42,468

 

82,435

 

94.1

%

Non-GAAP net income attributable to TAL

 

50,700

 

93,176

 

83.8

%

Operating income

 

44,174

 

58,801

 

33.1

%

Non-GAAP operating income

 

52,406

 

69,542

 

32.7

%

Net income per ADS attributable to TAL – basic

 

0.54

 

1.03

 

91.7

%

Net income per ADS attributable to TAL – diluted

 

0.52

 

0.94

 

82.3

%

Non-GAAP net income per ADS attributable to TAL – basic

 

0.64

 

1.17

 

81.5

%

Non-GAAP net income per ADS attributable to TAL – diluted

 

0.61

 

1.06

 

73.1

%

Total student enrollments in small class, one-on-one, and online courses

 

687,170

 

1,043,550

 

51.9

%

 

“Second quarter revenue again exceeded our expectation due to outstanding growth of our core small class business in cities other than Beijing. The widely spread growth momentum we saw in the first quarter continues, and we recorded triple-digit year-on-year growth in revenue in nine cities outside Beijing. Additionally, we are very pleased that our targeted summer class promotion in Beijing has begun to regenerate enrollment-driven growth for the fall term. We expect our organic business momentum to remain robust in the third quarter, mostly driven by enrollments, through our offline learning center network and deeper online engagement,” said Mr. Rong Luo, TAL’s Chief Financial Officer.

 

“We believe that in addition to our solid organic business development, we have made sound third-party investments and acquisitions in recent months, which will bring long-term value to our shareholders. These investments and acquisitions have been well coordinated and aligned with our overall strategic plan of being strongly leveraged in future education business models. All of these investments and acquisitions share a common focus on education in the K-12 segment, which is complementary to our organic growth,” Mr. Luo added.

 

Financial Results for the Second Quarter of Fiscal Year 2016

 

Net Revenues

 

In the second quarter of fiscal year 2016, TAL reported net revenues of US$173.3 million, representing a 41.6% increase from US$122.4 million in the second quarter of fiscal year 2015. The increase was mainly driven by an increase in total student enrollments, which increased by 54.8% to approximately 631,430 from approximately 407,970 in the same period of the prior year. The increase in total student enrollments was driven primarily by increases

 



 

of enrollments in the small class offerings and online courses, as well as more offering of the small-group class as a supplement to one-on-one tutoring. Average selling price (ASP) decreased by 8.5% from US$300 in the second quarter of fiscal year 2015 to US$275 in the same quarter of fiscal year 2016. The decrease in ASP was mainly attributable to our small class summer promotion in Beijing, more offering of the small-group class and more enrollment contribution from online courses, and was partially offset by the increase in the hourly rate of the small class course offerings.

 

Operating Costs and Expenses

 

In the second quarter of fiscal year 2016, operating costs and expenses were US$136.7 million, a 48.8% increase from US$91.9 million in the second quarter of fiscal year 2015. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$131.1 million, a 49.4% increase from US$87.7 million in the second quarter of fiscal year 2015.

 

Cost of revenues increased by 51.1% to US$80.5 million from US$53.2 million in the second quarter of fiscal year 2015. The increase in cost of revenues was mainly due to an increase in teacher compensation and rental costs, as well as increases in wages and teacher fees. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 51.1% to US$80.4 million, from US$53.2 million in the second quarter of fiscal year 2015.

 

Selling and marketing expenses increased by 42.8% to US$18.8 million from US$13.2 million in the second quarter of fiscal year 2015. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 45.1% to US$18.2 million from US$12.6 million in the second quarter of fiscal year 2015. The increase of selling and marketing expenses in the second quarter of fiscal year 2016 was primarily a result of an increase in compensation to sales and marketing staff to support a greater number of programs and service offerings versus the year-ago period.

 

General and administrative expenses increased by 46.9% to US$37.5 million from US$25.5 million in the second quarter of fiscal year 2015. The increase in general and administrative expenses was mainly due to an increase in the number of our general and administrative personnel compared to the year-ago period and an increase in compensation to our general and administrative personnel, in particular such personnel supporting our online education initiatives among other new programs and service offerings. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 47.7% to US$32.4 million, from US$21.9 million in the second quarter of fiscal year 2015.

 

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 35.4% to US$5.7 million in the second quarter of fiscal year 2016 from US$4.2 million in the same period of fiscal year 2015.

 

Gross Profit

 

Gross profit increased by 34.3% to US$92.9 million from US$69.1 million in the second quarter of fiscal year 2015.

 



 

Income from Operations

 

Income from operations increased by 28.5% to US$39.2 million from US$30.5 million in the second quarter of fiscal year 2015. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 29.3% to US$44.9 million from US$34.7 million in the second quarter of fiscal year 2015.

 

Other Income / (Expense)

 

Other expense was US$4.1 million for the second quarter of fiscal year 2016, compared to other income of US$1.4 million in the second quarter of fiscal year 2015. Other expense in this quarter was mainly due to exchange losses. As the Company holds a significant portion of cash balance in RMB and reports in U.S. Dollars, it benefits from exchange gains in times of relative strength of the RMB and incurs exchange losses in times of relative strength of the U.S. Dollar.

 

Impairment loss on long-term investments

 

Impairment loss on long-term investments was $7.5 million, mainly because there were other-than-temporary declines in the value of long-term investments in several investees, primarily due to significant deteriorations in their operations, earnings performance and abilities to continue as a going concern.

 

Gain from disposal of a component

 

Gain from disposal of a component was $50.0 million, which was derived from a transaction in which the Company transferred its one-on-one business component in Guangzhou in exchange for noncontrolling equity interest in a third party.

 

Income Tax Expense

 

Income tax expense was US$17.8 million in the second quarter of fiscal year 2016, compared to US$5.4 million in the second quarter of fiscal year 2015. The increase was mainly due to the increase in income before tax and estimated annual effective income tax rate. The estimated annual effective income tax rate increased mainly because one of TAL’s subsidiaries was entitled to a two-year exemption from enterprise income tax for calendar years 2013 and 2014 as a Newly Established Software Enterprise, and enjoys preferential tax rate of 12.5% for calendar years 2015 through 2017.

 

Net Income Attributable to TAL Education Group

 

Net income attributable to TAL increased by 118.0% to US$63.5 million from US$29.1 million in the second quarter of fiscal year 2015. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 107.6% to US$69.2 million from US$33.3 million in the second quarter of fiscal year 2015.

 

Basic and Diluted Net Income per ADS

 

Basic and diluted net income per ADS were US$0.79 and US$0.72 respectively in the second quarter of fiscal year 2016. Non-GAAP basic and Non-GAAP diluted net income per ADS, which excluded share-based compensation expenses, were US$0.87 and US$0.78, respectively.

 



 

Capital Expenditures

 

Capital expenditures for the second quarter of fiscal year 2016 were US$10.8 million, representing an increase of US$2.2 million from US$8.6 million in the second quarter of fiscal year 2015. The increase was mainly due to leasehold improvements, expenditures on mobile network research and development, and the purchase of servers, computers, software systems and other hardware, for the Company’s teaching facilities.

 

Cash, Cash Equivalents, and Term Deposits

 

As of August 31, 2015, the Company had US$513.2 million of cash and cash equivalents and US$24.6 million of term deposits, compared to US$470.2 million of cash and cash equivalents and US$21.2 million of term deposits as of February 28, 2015.

 

Deferred Revenue

 

As of August 31, 2015, the Company’s deferred revenue balance was US$239.0 million, compared to US$177.9 million as of August 31, 2014, representing an increase of 34.4%.

 

Financial Results for the First Six Months of Fiscal Year 2016

 

Net Revenues

 

For the first six months of fiscal year 2016, TAL reported net revenues of US$302.7 million, representing a 43.2% increase from US$211.4 million in the first six months of fiscal year 2015. The increase was mainly driven by an increase in total student enrollments, which increased by 51.9% to approximately 1,043,550 from approximately 687,170 in the same period of the prior year. The increase in total student enrollments was driven primarily by increases of enrollments in the small class offerings and online courses, as well as more offering of the small-group class as a supplement to one-on-one tutoring. ASP decreased by 5.7% from US$308 in the first six months of fiscal year 2015 to US$290 in the first six months of fiscal year 2016. The decrease in ASP was mainly attributable to our small class summer promotion in Beijing, more offering of the small-group class and more enrollment contribution from online courses, and was partially offset by the increase in the hourly rate of the small class course offerings.

 

Operating Costs and Expenses

 

In the first six months of fiscal year 2016, operating costs and expenses were US$246.5 million, a 47.3% increase from US$167.4 million in the first six months of fiscal year 2015. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$235.8 million, a 48.1% increase from US$159.2 million in the first six months of fiscal year 2015.

 

Cost of revenues increased by 49.0% to US$141.4 million from US$94.9 million in the first six months of fiscal year 2015. The increase in cost of revenues was mainly due to an increase in teacher compensation and rental costs, as well as increases in wages and teacher fees. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 49.0% to US$141.4 million from US$94.9 million in the first six months of fiscal year 2015.

 

Selling and marketing expenses increased by 38.8% to US$34.0 million from US$24.5 million in the first six months of fiscal year 2015. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 40.6% to US$33.0 million from US$23.5 million in the first six months of fiscal year 2015. The increase of selling and marketing expenses in the first six months of fiscal year 2016 was primarily a result of an increase in compensation to sales and marketing staff to support a greater number of programs and service offerings versus the year-ago period.

 



 

General and administrative expenses increased by 48.3% to US$71.1 million from US$47.9 million in the first six months of fiscal year 2015. The increase in general and administrative expenses was mainly due to an increase in the number of our general and administrative personnel compared to the year-ago period and an increase in compensation to our general and administrative personnel, in particular such personnel supporting our online education initiatives among other new programs and service offerings. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 50.5% to US$61.4 million from US$40.8 million in the first six months of fiscal year 2015.

 

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 30.5% to US$10.7 million in the first six months of fiscal year 2016 from US$8.2 million in the same period of fiscal year 2015.

 

Gross Profit

 

Gross profit increased by 38.5% to US$161.3 million from US$116.5 million in the first six months of fiscal year 2015.

 

Income from Operations

 

Income from operations increased by 33.1% to US$58.8 million from US$44.2 million in the first six months of fiscal year 2015. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 32.7% to US$69.5 million from US$52.4 million in the first six months of fiscal year 2015.

 

Other Income / (Expense)

 

Other expense was US$2.7 million for the first six months of fiscal year 2016, compared to other income of US$1.2 million in the first six months of fiscal year 2015. Other expense in the first six months was mainly due to exchange losses. As the Company holds a significant portion of cash balance in RMB and reports in U.S. Dollars, it benefits from exchange gains in times of relative strength of the RMB and incurs exchange losses in times of relative strength of the U.S. Dollar.

 

Income Tax Expense

 

Income tax expense was US$22.6 million in the first six months of fiscal year 2016, compared to US$7.8 million in the first six months of fiscal year 2015. The increase was mainly due to the increase in income before tax and estimated annual effective income tax rate. The estimated annual effective income tax rate increased mainly because one of TAL’s subsidiaries was entitled to a two-year exemption from enterprise income tax for calendar years 2013 and 2014 as a Newly Established Software Enterprise, and enjoys preferential tax rate of 12.5% for calendar years 2015 through 2017.

 

Net Income Attributable to TAL Education Group

 

Net income attributable to TAL increased by 94.1% to US$82.4 million from US$42.5 million in the first six months of fiscal year 2015. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 83.8% to US$93.2 million from US$50.7 million in the first six months of fiscal year 2015.

 



 

Basic and Diluted Net Income per ADS

 

Basic and diluted net income per ADS were US$1.03 and US$0.94, respectively, in the first six months of fiscal year 2016. Non-GAAP basic and Non-GAAP diluted net income per ADS, which excluded share-based compensation expenses, were US$1.17 and US$1.06, respectively.

 

Business Outlook

 

Based on the Company’s current estimates, total net revenues for the third quarter of fiscal year 2016 are expected to grow 40% to 43% on a year-over-year basis, in RMB terms. Taking into consideration the recent significant change in RMB exchange rate against the US dollar, the Company expects total net revenues for the third quarter of fiscal year 2016 to be between US$135.1 million and US$138.1 million, representing an increase of 36% to 39% on a year-over-year basis, assuming no material change in exchange rates.

 

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

 

Conference Call

 

The Company will host a conference call and live webcast to discuss its financial results for the second fiscal quarter of fiscal year 2016 ended August 31, 2015 at 8:00 a.m. Eastern Time on October 22, 2015 (8:00 p.m. Beijing time on October 22, 2015).

 

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

· U.S. toll free:

+1-866-519-4004

· Hong Kong toll free:

800-906-601

· Mainland China toll free:

400-620-8038

· International toll:

+65-6713-5090

Conference ID:

47985404

 

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

 

A telephone replay of the conference call will be available through 11:59 p.m. U.S. Eastern time, October 30, 2015 (11:59 a.m. Beijing time, October 31, 2015).

 

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

· U.S. toll free:

+1-855-452-5696

· Hong Kong toll free:

800-963-117

· Mainland China toll free:

400-632-2162

· International toll:

+61-2-8199-0299

Conference ID:

47985404

 



 

Safe Harbor Statement

 

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the outlook for the third quarter of fiscal year 2016, quotations from management in this announcement, as well as TAL Education Group’s strategic and operational plans, contain forward-looking statements. The Company may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s ability to continue to attract students to enroll in its courses; the Company’s ability to continue to recruit, train and retain qualified teachers; the Company’s ability to improve the content of its existing course offerings and to develop new courses; the Company’s ability to maintain and enhance its brand; the Company’s ability to maintain and continue to improve its teaching results; and the Company’s ability to compete effectively against its competitors. Further information regarding these and other risks is included in the Company’s reports filed with, or furnished to the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and TAL Education Group undertakes no duty to update such information or any forward-looking statement, except as required under applicable law.

 

About TAL Education Group

 

TAL Education Group is a leading K-12 after-school tutoring services provider in China. The acronym “TAL” stands for “Tomorrow Advancing Life,” which reflects our vision to promote top learning opportunities for Chinese students through both high-quality teaching and content, as well as leading edge application of technology in the education experience. TAL Education Group offers comprehensive tutoring services to students from pre-school to the twelfth grade through three flexible class formats: small classes, personalized premium services, and online courses. Our tutoring services cover the core academic subjects in China’s school curriculum including mathematics, English, Chinese, physics, chemistry, and biology. The Company’s learning center network includes 300 physical learning centers as of August 31, 2015, located in 19 key cities in China: Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Wuhan, Xi’an, Chengdu, Nanjing, Hangzhou, Taiyuan, Zhengzhou, Chongqing, Suzhou, Shenyang, Jinan, Shijiazhuang, Qingdao and Changsha. We also operate www.jzb.com, a leading online education platform in China. Our ADSs trade on the New York Stock Exchange under the symbol “XRS.”

 



 

About Non-GAAP Financial Measures

 

In evaluating its business, TAL considers and uses the following measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission as supplemental metrics to review and assess its operating performance: non-GAAP operating costs and expenses, non-GAAP cost of revenues, non-GAAP selling and marketing expenses, non-GAAP general and administrative expenses, non-GAAP income from operations, non-GAAP net income attributable to TAL, non-GAAP basic and non-GAAP diluted net income per ADS. To present each of these non-GAAP measures, the Company excludes share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of non-GAAP measures to the most comparable GAAP measures” set forth at the end of this release.

 

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

 

For further information, please contact:

 

Mei Li

Investor Relations

TAL Education Group

Tel: +86 10 5292 6658

Email: ir@100tal.com

 

Caroline Straathof

IR Inside

Tel: +31 6 5462 4301

Email: info@irinside.com

 



 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In U.S. dollars)

 

 

 

As of
February 28,
2015

 

As of
August 31,
2015

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

470,157,430

 

$

513,165,756

 

Term deposits

 

21,229,763

 

24,560,853

 

Restricted cash-current

 

606,169

 

470,619

 

Short-term investment

 

765,611

 

 

Assets held for sale

 

 

470,514

 

Inventory

 

544,085

 

397,231

 

Amounts due from related parties-current

 

159,502

 

1,097,867

 

Deferred tax assets-current

 

4,562,034

 

486,181

 

Income tax receivable

 

3,222,529

 

 

Prepaid expenses and other current assets

 

38,185,411

 

39,894,519

 

Total current assets

 

539,432,534

 

580,543,540

 

Restricted cash-non-current

 

3,773,302

 

3,645,384

 

Property and equipment, net

 

93,575,648

 

104,071,430

 

Deferred tax assets-non-current

 

1,708,212

 

4,302,665

 

Rental deposit

 

11,034,812

 

13,718,897

 

Intangible assets, net

 

3,687,255

 

3,349,587

 

Goodwill

 

12,330,326

 

12,309,743

 

Amounts due from related parties-non-current

 

319,005

 

941,029

 

Long-term investments

 

97,359,075

 

189,729,767

 

Long-term prepayments and other non-current assets

 

9,194,468

 

45,971,515

 

Total assets

 

$

772,414,637

 

$

958,583,557

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable (including accounts payable of the consolidated VIEs without recourse to TAL Education Group of 4,115,254 and 5,981,984 as of February 28, 2015, and August 31, 2015, respectively)

 

$

4,705,492

 

$

6,484,349

 

Deferred revenue (including deferred revenue of the consolidated VIEs without recourse to TAL Education Group of 154,982,001 and 221,088,164 as of February 28, 2015, and August 31, 2015, respectively)

 

177,639,939

 

239,010,157

 

Amounts due to related parties (including amount due to related parties of the consolidated VIEs without recourse to TAL Education Group of 22,077 and 4,632,628 as of February 28, 2015, and August31, 2015, respectively)

 

22,077

 

4,632,628

 

Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to TAL Education Group of 30,106,008 and 40,396,199 as of February 28, 2015, and August 31, 2015, respectively)

 

43,988,602

 

58,793,088

 

Income tax payable (including income tax payable of The consolidated VIEs without recourse to TAL Education Group of 4,193,507 and 14,880,773 as of February 28, 2015, and August 31, 2015, respectively)

 

6,136,813

 

16,056,950

 

Deferred tax liabilities-current (including deferred tax liabilities-current of the consolidated VIEs without recourse to TAL Education Group of nil and nil as of February 28, 2015, and August 31, 2015, respectively)

 

62,100

 

136,620

 

Total current liabilities

 

232,555,023

 

325,113,792

 

Deferred tax liabilities-non-current (including deferred tax liabilities-non-current of the consolidated VIEs without recourse to TAL Education Group of 215,764 and 355,854 as of February 28, 2015, and August 31, 2015, respectively)

 

226,792

 

386,887

 

Bond payable (including bond payable of the consolidated VIEs without recourse to TAL Education Group of nil and nil as of February 28, 2015, and August 31, 2015, respectively)

 

226,062,006

 

226,934,953

 

 

 

 

 

 

 

Total liabilities

 

458,843,821

 

552,435,632

 

 

 

 

 

 

 

TAL Education Group Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Class A common shares

 

88,372

 

88,563

 

Class B common shares

 

71,456

 

71,456

 

Additional paid-in capital

 

82,479,806

 

92,435,247

 

Statutory reserve

 

18,961,627

 

18,961,627

 

Retained earnings

 

207,522,766

 

289,957,444

 

Accumulated other comprehensive income

 

4,168,548

 

4,360,525

 

Total TAL Education Group’s equity

 

313,292,575

 

405,874,862

 

Non-controlling interest

 

278,241

 

273,063

 

Total equity

 

313,570,816

 

406,147,925

 

Total liabilities and equity

 

$

772,414,637

 

$

958,583,557

 

 



 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

For the Three Months Ended
August 31,

 

For the Six Months Ended
August 31,

 

 

 

2014

 

2015

 

2014

 

2015

 

Net revenues

 

$

122,370,891

 

$

173,329,982

 

$

211,396,728

 

$

302,716,944

 

Cost of revenues

 

53,237,815

 

80,454,749

 

94,932,054

 

141,425,661

 

Gross profit

 

69,133,076

 

92,875,233

 

116,464,674

 

161,291,283

 

Operating expenses (note 1)

 

 

 

 

 

 

 

 

 

Selling and marketing

 

13,154,448

 

18,790,668

 

24,527,150

 

34,042,281

 

General and administrative

 

25,527,059

 

37,492,740

 

47,939,651

 

71,072,504

 

Total operating expenses

 

38,681,507

 

56,283,408

 

72,466,801

 

105,114,785

 

Government subsidies

 

56,231

 

2,609,058

 

176,490

 

2,624,586

 

Income from operations

 

30,507,800

 

39,200,883

 

44,174,363

 

58,801,084

 

Interest income

 

4,507,287

 

4,927,453

 

7,245,311

 

9,739,359

 

Interest expense

 

(1,887,093

)

(1,879,395

)

(2,189,944

)

(3,731,975

)

Other income/(expenses)

 

1,437,803

 

(4,085,117

)

1,155,693

 

(2,650,493

)

Impairment loss on long-term investment

 

 

(7,503,944

)

 

(7,503,944

)

Gain on fair value change of long-term investment

 

 

450,000

 

 

450,000

 

Gain from disposal of a component

 

 

50,000,000

 

 

50,000,000

 

Gain from disposal of investments

 

 

235,797

 

 

235,797

 

Income before provision for income tax and loss from equity method investments

 

34,565,797

 

81,345,677

 

50,385,423

 

105,339,828

 

Provision for income tax

 

(5,362,735

)

(17,834,656

)

(7,810,341

)

(22,632,882

)

Loss from equity method investments

 

(81,112

)

(18,741

)

(109,733

)

(273,021

)

Net income

 

29,121,950

 

63,492,280

 

42,465,349

 

82,433,925

 

Add: Net (gain)/loss attributable to noncontrolling interest

 

(3,985

)

(11,222

)

2,943

 

753

 

Total net income attributable  to TAL Education Group

 

$

29,117,965

 

$

63,481,058

 

$

42,468,292

 

$

82,434,678

 

 

 

 

 

 

 

 

 

 

 

Net income per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

$

0.40

 

$

0.27

 

$

0.52

 

Diluted

 

0.17

 

0.36

 

0.26

 

0.47

 

 

 

 

 

 

 

 

 

 

 

Net income per ADS (note 2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

0.37

 

0.79

 

0.54

 

1.03

 

Diluted

 

$

0.34

 

$

0.72

 

$

0.52

 

$

0.94

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in calculating net income per common share

 

 

 

 

 

 

 

 

 

Basic

 

158,097,533

 

159,898,391

 

157,916,340

 

159,863,134

 

Diluted

 

181,134,165

 

182,606,281

 

172,419,960

 

182,485,970

 

 



 

Note1: Share-based compensation expenses are included in the operating costs and expenses as follows:

 

 

 

For the Three Months

 

For the Six Months

 

 

 

Ended August 31,

 

Ended August 31,

 

 

 

2014

 

2015

 

2014

 

2015

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

$

11,521

 

$

11,129

 

$

23,042

 

$

22,258

 

Selling and marketing

 

578,499

 

548,135

 

1,060,933

 

1,044,755

 

General and administrative

 

3,602,386

 

5,116,584

 

7,147,622

 

9,674,356

 

Total

 

$

4,192,406

 

$

5,675,848

 

$

8,231,597

 

$

10,741,369

 

 

Note 2: Each ADS represents two Class A common shares.

 



 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In U.S. dollars)

 

 

 

For the Three Months Ended
August 31,

 

For the Six Months Ended
August 31,

 

 

 

2014

 

2015

 

2014

 

2015

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

29,121,950

 

$

63,492,280

 

$

42,465,349

 

$

82,433,925

 

Other comprehensive income/(loss), net of tax

 

3,842,770

 

(4,367,740

)

487,216

 

187,552

 

Comprehensive income

 

32,964,720

 

59,124,540

 

42,952,565

 

82,621,477

 

Add: Comprehensive (income)/loss attributable to noncontrolling interest

 

(8,626

)

(3,588

)

(1,698

)

5,178

 

Comprehensive income attributable to TAL Education Group

 

$

32,956,094

 

$

59,120,952

 

$

42,950,867

 

$

82,626,655

 

 



 

TAL EDUCATION GROUP

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

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

 

 

 

For the Three Months
Ended August 31,

 

For the Six Months
Ended August 31,

 

 

 

2014

 

2015

 

2014

 

2015

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

$

53,237,815

 

$

80,454,749

 

$

94,932,054

 

$

141,425,661

 

Share-based compensation expense in cost of revenues

 

11,521

 

11,129

 

23,042

 

22,258

 

Non-GAAP cost of revenues

 

53,226,294

 

80,443,620

 

94,909,012

 

141,403,403

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

13,154,448

 

18,790,668

 

24,527,150

 

34,042,281

 

Share-based compensation expense in selling and marketing expenses

 

578,499

 

548,135

 

1,060,933

 

1,044,755

 

Non-GAAP selling and marketing expenses

 

12,575,949

 

18,242,533

 

23,466,217

 

32,997,526

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

25,527,059

 

37,492,740

 

47,939,651

 

71,072,504

 

Share-based compensation expense in general and administrative expenses

 

3,602,386

 

5,116,584

 

7,147,622

 

9,674,356

 

Non-GAAP general and administrative expenses

 

21,924,673

 

32,376,156

 

40,792,029

 

61,398,148

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses

 

91,919,322

 

136,738,157

 

167,398,855

 

246,540,446

 

Share-based compensation expense in operating costs and expenses

 

4,192,406

 

5,675,848

 

8,231,597

 

10,741,369

 

Non-GAAP operating costs and expenses

 

87,726,916

 

131,062,309

 

159,167,258

 

235,799,077

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

30,507,800

 

39,200,883

 

44,174,363

 

58,801,084

 

Share based compensation expenses

 

4,192,406

 

5,675,848

 

8,231,597

 

10,741,369

 

Non-GAAP income from operations

 

34,700,206

 

44,876,731

 

52,405,960

 

69,542,453

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to TAL Education Group

 

29,117,965

 

63,481,058

 

42,468,292

 

82,434,678

 

Share based compensation expenses

 

4,192,406

 

5,675,848

 

8,231,597

 

10,741,369

 

Non-GAAP net income attributable to TAL Education Group

 

$

33,310,371

 

$

69,156,906

 

$

50,699,889

 

$

93,176,047

 

 

 

 

 

 

 

 

 

 

 

Net income per ADS

 

 

 

 

 

 

 

 

 

Basic

 

$

0.37

 

$

0.79

 

$

0.54

 

$

1.03

 

Diluted

 

0.34

 

0.72

 

0.52

 

0.94

 

Non-GAAP Net income per ADS (note 3)

 

 

 

 

 

 

 

 

 

Basic

 

0.42

 

0.87

 

0.64

 

1.17

 

Diluted

 

$

0.39

 

$

0.78

 

$

0.61

 

$

1.06

 

 

 

 

 

 

 

 

 

 

 

ADSs used in calculating net income per ADS

 

 

 

 

 

 

 

 

 

Basic

 

79,048,767

 

79,949,196

 

78,958,170

 

79,931,567

 

Diluted

 

90,567,082

 

91,303,141

 

86,209,980

 

91,242,985

 

 

Note 3: The Non-GAAP adjusted net income per ADS is computed using Non-GAAP adjusted net income and the same number of ADSs used in GAAP basic and diluted EPS calculation.