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 January 2016

 

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:     January 28, 2016

 

2



 

Exhibit Index

 

Exhibit 99.1 — Press Release

 

3


 

Exhibit 99.1

 

TAL Education Group Announces Unaudited Financial Results for the

 

Third Fiscal Quarter Ended November 30, 2015

 

·Quarterly Net Revenues up by 43.1% Year-Over-Year

·Year-to-date Net Revenues up by 43.2% Year-Over-Year

 

(Beijing—January 27, 2016)—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 third quarter of fiscal year 2016 ended November 30, 2015.

 

Highlights for the Third Quarter of Fiscal Year 2016

 

·                  Net revenues increased by 43.1% year-over-year to US$142.2 million from US$99.4 million in the same period of the prior year.

·                  Income from operations increased by 16.8% to US$9.6 million from US$8.2 million in the same period of the prior year. Non-GAAP income from operations increased by 22.8% to US$16.1 million from US$13.1 million in the same period of the prior year.

·                  Basic and diluted net income per American Depositary Share (“ADS”) were both US$0.12. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.20 and US$0.19, respectively. Each ADS represents two Class A common shares.

·                  Cash, cash equivalents and term deposits totaled US$590.2 million as of November 30, 2015, compared to US$491.4 million as of February 28, 2015.

·                  Total student enrollments increased by 56.8% year-over-year to approximately 477,960 from approximately 304,910 in the same period of the prior year.

·                  Total physical network increased to 301 learning centers in 24 cities as of November 30, 2015 from 300 in 19 cities as of August 31, 2015.

 



 

Highlights for the Nine Months Ended November 30, 2015

 

·                  Net revenues increased by 43.2% year-over-year to US$444.9 million from US$310.8 million in the same period of the prior year.

·                  Income from operations increased by 30.6% to US$68.4 million from US$52.4 million in the same period of fiscal year 2015. Non-GAAP income from operations increased by 30.7% to US$85.7 million from US$65.5 million in the same period of the prior year.

·                  Net income attributable to TAL increased by 72.2% year-over-year to US$92.0 million from US$53.4 million in the same period of the prior year.

·                  Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 64.2% year-over-year to US$109.3 million from US$66.6 million in the same period of the prior year.

·                  Basic and diluted net income per ADS were US$1.15 and US$1.07, respectively. Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were US$1.37 and US$1.26, respectively.

·                  Total student enrollments during the first nine months of fiscal year 2016 increased by 53.4% year-over-year to approximately 1,521,510 from approximately 992,080 in the same period of the prior year.

·                  Total physical network increased to 301 learning centers in 24 cities as of November 30, 2015 from 289 learning centers in 19 cities as of February 28, 2015.

 

Financial and Operating Data—Third Quarter of Fiscal Year 2016

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

 

 

 

Three Months Ended

 

 

 

 

 

November 30,

 

 

 

 

 

2014

 

2015

 

Pct. Change

 

 

 

 

 

 

 

 

 

Net revenues

 

99,368

 

142,183

 

43.1

%

Operating income

 

8,219

 

9,604

 

16.8

%

Non-GAAP operating income

 

13,121

 

16,114

 

22.8

%

Net income attributable to TAL

 

10,959

 

9,585

 

-12.5

%

Non-GAAP net income attributable to TAL

 

15,861

 

16,095

 

1.5

%

Net income per ADS attributable to TAL — basic

 

0.14

 

0.12

 

-13.3

%

Net income per ADS attributable to TAL — diluted

 

0.13

 

0.12

 

-12.8

%

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

 

0.20

 

0.20

 

0.6

%

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

 

0.19

 

0.19

 

1.2

%

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

 

304,910

 

477,960

 

56.8

%

 

 

 

Nine Months Ended

 

 

 

 

 

November 30,

 

 

 

 

 

2014

 

2015

 

Pct. Change

 

 

 

 

 

 

 

 

 

Net revenues

 

310,765

 

444,900

 

43.2

%

Operating income

 

52,393

 

68,405

 

30.6

%

Non-GAAP operating income

 

65,527

 

85,657

 

30.7

%

Net income attributable to TAL

 

53,427

 

92,019

 

72.2

%

Non-GAAP net income attributable to TAL

 

66,561

 

109,271

 

64.2

%

Net income per ADS attributable to TAL — basic

 

0.68

 

1.15

 

70.3

%

Net income per ADS attributable to TAL — diluted

 

0.65

 

1.07

 

64.1

%

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

 

0.84

 

1.37

 

62.4

%

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

 

0.80

 

1.26

 

57.1

%

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

 

992,080

 

1,521,510

 

53.4

%

 



 

Topline growth for the third fiscal quarter was stronger than guidance due to strong demand for our core small class business throughout our network of learning centers. We are particularly pleased with the resumption of enrollment driven growth in Beijing,” said Mr. Rong Luo, TAL’s Chief Financial Officer.

 

We continued to add learning center capacity and widen our geographical footprint in the third fiscal quarter, laying a firm foundation for future growth. Fiscal year-to-date we have expanded learning center capacity by 40% over the same year-ago period to meet the ongoing high demand for our tutoring services. Our network now mostly consists of larger centers than before, which is in line with our long-term objective to achieve high operational efficiencies and center utilization. Moreover, we have extended our reach to 24 cities by entering into five new cities in the third fiscal quarter, and will add another city in the fourth fiscal quarter,” Mr. Luo added.

 

Financial Results for the Third Quarter of Fiscal Year 2016

 

Net Revenues

 

In the third quarter of fiscal year 2016, TAL reported net revenues of US$142.2 million, representing a 43.1% increase from US$99.4 million in the third quarter of fiscal year 2015. The increase was mainly driven by an increase in total student enrollments, which increased by 56.8% to approximately 477,960 from approximately 304,910 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 8.7% from US$326 in the third quarter of fiscal year 2015 to US$297 in the same quarter of fiscal year 2016. The decrease in ASP was mainly attributable to more enrollment contribution from online courses and small class offerings, and the foreign exchange rate fluctuation.

 



 

Operating Costs and Expenses

 

In the third quarter of fiscal year 2016, operating costs and expenses were US$133.2 million, a 46.1% increase from US$91.2 million in the third quarter of fiscal year 2015. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$126.7 million, a 46.9% increase from US$86.3 million in the third quarter of fiscal year 2015.

 

Cost of revenues increased by 50.0% to US$73.4 million, from US$49.0 million in the third 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 50.0% to US$73.4 million from US$48.9 million in the third quarter of fiscal year 2015.

 

Selling and marketing expenses increased by 27.1% to US$17.2 million from US$13.6 million in the third quarter of fiscal year 2015. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 27.3% to US$16.6 million from US$13.1 million in the third quarter of fiscal year 2015. The increase of selling and marketing expenses in the third 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 48.5% to US$42.6 million from US$28.7 million in the third 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 51.1% to US$36.7 million from US$24.3 million in the third quarter of fiscal year 2015.

 

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 32.8% to US$6.5 million in the third quarter of fiscal year 2016 from US$4.9 million in the same period of fiscal year 2015. The increase was mainly due to new grants of non-vested shares and options to directors and employees by the Company in fiscal year 2016.

 



 

Gross Profit

 

Gross profit increased by 36.4% to US$68.7 million from US$50.4 million in the third quarter of fiscal year 2015.

 

Income from Operations

 

Income from operations increased by 16.8% to US$9.6 million from US$8.2 million in the third quarter of fiscal year 2015. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 22.8% to US$16.1 million from US$13.1 million in the third quarter of fiscal year 2015.

 

Other Expense

 

Other expense was US$0.4 million for the third quarter of fiscal year 2016, compared to other expense of US$0.3 million in the third quarter of fiscal year 2015.

 

Income Tax Expense

 

Income tax expense was US$2.6 million in the third quarter of fiscal year 2016, compared to US$0.4 million in the third quarter of fiscal year 2015. The increase was mainly due to the expiration of an enterprise income tax (“EIT”) exemption period for one of TAL’s subsidiaries, Beijing Xintang Sichuang, upon which the subsidiary became subject to an EIT rate of 12.5%, and the reversal of around US$1.1 million of EIT accruals in the third quarter of fiscal year 2015, as one of TAL’s subsidiaries, TAL Beijing, was affirmed to be entitled to a preferential EIT rate.

 

Net Income Attributable to TAL Education Group

 

Net income attributable to TAL decreased by 12.5% to US$9.6 million from US$11.0 million in the third quarter of fiscal year 2015. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 1.5% to US$16.1 million from US$15.9 million in the third quarter of fiscal year 2015.

 

Basic and Diluted Net Income per ADS

 

Basic and diluted net income per ADS were both US$0.12 in the third quarter of fiscal year 2016. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.20 and US$0.19, respectively.

 

Capital Expenditures

 

Capital expenditures for the third quarter of fiscal year 2016 were US$6.4 million, representing a decrease of US$1.1 million from US$7.5 million in the third quarter of fiscal year 2015.

 

Cash, Cash Equivalents, and Term Deposits

 

As of November 30, 2015, the Company had US$563.2 million of cash and cash equivalents and US$27.0 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 November 30, 2015, the Company’s deferred revenue balance was US$351.7 million, compared to US$247.0 million as of November 30, 2014, representing an increase of 42.4%.

 



 

Financial Results for the First Nine Months of Fiscal Year 2016

 

Net Revenues

 

For the first nine months of fiscal year 2016, TAL reported net revenues of US$444.9 million, representing a 43.2% increase from US$310.8 million in the first nine months of fiscal year 2015. The increase was mainly driven by an increase in total student enrollments, which increased by 53.4% to approximately 1,521,510 from approximately 992,080 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 classas as a supplement to one-on-one tutoring. ASP decreased by 6.7% from US$313 in the first nine months of fiscal year 2015 to US$292 in the first nine months of fiscal year 2016. The decrease in ASP was mainly attributable to more enrollment contribution from online courses and small class offerings and the foreign exchange rate fluctuation, and was partially offset by the increase in the hourly rate of the small class course offerings.

 

Operating Costs and Expenses

 

In the first nine months of fiscal year 2016, operating costs and expenses were US$379.8 million, a 46.9% increase from US$258.6 million in the first nine months of fiscal year 2015. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$362.5 million, a 47.7% increase from US$245.4 million in the first nine months of fiscal year 205.

 

Cost of revenues increased by 49.3% to US$214.9 million from US$143.9 million in the first nine 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 49.3% to US$214.8 million from US$143.9 million in the first nine months of fiscal year 2015.

 

Selling and marketing expenses increased by 34.6% to US$51.3 million from US$38.1 million in the first nine months of fiscal year 2015. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 35.8% to US$49.6 million from US$36.5 million in the first nine months of fiscal year 2015. The increase of selling and marketing expenses in the first nine 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$113.6 million from US$76.6 million in the first nine 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 50.7% to US$98.1 million from US$65.1 million in the first nine months of fiscal year 2015.

 

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 31.4% to US$17.3 million in the first nine months of fiscal year 2016 from US$13.1 million in the same period of fiscal year 2015. The increase was mainly due to new grants of non-vested shares and options to directors and employees by the Company in fiscal year 2016.

 



 

Gross Profit

 

Gross profit increased by 37.9% to US$230.0 million from US$166.9 million in the first nine months of fiscal year 2015.

 

Income from Operations

 

Income from operations increased by 30.6% to US$68.4 million from US$52.4 million in the first nine months of fiscal year 2015. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 30.7% to US$85.7 million from US$65.5 million in the first nine months of fiscal year 2015.

 

Other Income/ (Expense)

 

Other expense was US$3.0 million for the first nine months of fiscal year 2016, compared to other income of US$0.8 million in the first nine months of fiscal year 2015. Other expense in the first nine months was mainly due to exchange losses. As the holding 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 components

 

Gain from disposal of components were $50.4 million, which was mainly 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. US$12.6 million of income tax expense was accrued accordingly by applying applicable EIT rates.

 

Income Tax Expense

 

Income tax expense was US$25.3 million in the first nine months of fiscal year 2016, compared to US$8.2 million in the first nine 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, Beijing Xintang Sichuang, was exempted from enterprise income tax for calendar years 2013 and 2014 as a Newly Established Software Enterprise, and is subject to 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 72.2% to US$92.0 million from US$53.4 million in the first nine months of fiscal year 2015. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 64.2% to US$109.3 million from US$66.6 million in the first nine months of fiscal year 2015.

 

Basic and Diluted Net Income per ADS

 

Basic and diluted net income per ADS were US$1.15 and US$1.07, respectively, in the first nine months of fiscal year 2016. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$1.37 and US$1.26, respectively.

 



 

Business Outlook

 

Taking into consideration the recent significant change in RMB exchange rate against the U.S. dollar, based on the Company’s current estimates, total net revenues for the fourth quarter of fiscal year 2016 are expected to be between US$166.3 million and US$168.8 million, representing an increase of 35% to 37% on a year-over-year basis. If not including the impact from the recent depreciation of RMB against the U.S. Dollar, the projected revenue growth rate is expected to be in the range of 40% to 42% for the fourth quarter of fiscal year 2016.

 

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

 

Conference Call

 

The Company will host a conference call and live webcast to discuss its financial results for the third fiscal quarter of fiscal year 2016 ended November 30, 2015 at 8:00a.m. U.S. Eastern Time on January 27, 2016 (9:00p.m. Beijing time on January 27, 2016).

 

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:

14170103

 

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, February 4, 2016 (12:59 p.m. Beijing time, February 5, 2016).

 

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:

14170103

 



 

Safe Harbor Statement

 

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the outlook for the fourth quarter of fiscal year 2016 and the fiscal year ending February 29, 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 301 physical learning centers as of November 30, 2015, located in 24 key cities in China: Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Wuhan, Xi`an, Chengdu, Nanjing, Hangzhou, Taiyuan, Zhengzhou, Chongqing, Suzhou, Shenyang, Jinan, Shijiazhuang, Qingdao, Changsha, Luoyang, Nanchang, Ningbo, Wuxi and Fuzhou. 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
November 30,
2015

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

470,157,430

 

$

563,188,634

 

Term deposits

 

21,229,763

 

27,004,054

 

Restricted cash-current

 

606,169

 

438,476

 

Short-term investment

 

765,611

 

 

Assets held for sale

 

 

469,609

 

Inventory

 

544,085

 

357,622

 

Amounts due from related parties-current

 

159,502

 

3,130,723

 

Deferred tax assets-current

 

4,562,034

 

644,174

 

Income tax receivable

 

3,222,529

 

 

Prepaid expenses and other current assets

 

38,185,411

 

37,733,313

 

Total current assets

 

539,432,534

 

632,966,605

 

Restricted cash-non-current

 

3,773,302

 

3,913,519

 

Property and equipment, net

 

93,575,648

 

105,855,891

 

Deferred tax assets-non-current

 

1,708,212

 

5,449,542

 

Rental deposit

 

11,034,812

 

14,838,100

 

Intangible assets, net

 

3,687,255

 

3,126,572

 

Goodwill

 

12,330,326

 

12,307,410

 

Amounts due from related party

 

319,005

 

751,374

 

Long-term investments

 

97,359,075

 

230,846,414

 

Long-term prepayments and other non-current assets

 

9,194,468

 

74,612,822

 

Total assets

 

$

772,414,637

 

$

1,084,668,249

 

 

 

 

 

 

 

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 6,492,291 as of February 28, 2015, and November 30, 2015, respectively)

 

$

4,705,492

 

$

7,366,732

 

Deferred revenue (including deferred revenue of the consolidated VIEs without recourse to TAL Education Group of 154,982,001 and 332,621,800 as of February 28, 2015, and November 30, 2015, respectively)

 

177,639,939

 

351,710,126

 

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 4,515,557 as of February 28, 2015, and November 30, 2015, respectively)

 

22,077

 

4,515,557

 

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 42,237,622 as of February 28, 2015, and November 30, 2015, respectively)

 

43,988,602

 

58,730,851

 

Income tax payable (including income tax payable of the consolidated VIEs without recourse to TAL Education Group of 4,193,507 and 14,242,449 as of February 28, 2015, and November 30, 2015, respectively)

 

6,136,813

 

13,047,985

 

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 November 30, 2015, respectively)

 

62,100

 

13,800

 

Total current liabilities

 

232,555,023

 

435,385,051

 

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 431,832 as of February 28, 2015, and November 30, 2015, respectively)

 

226,792

 

454,766

 

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 November 30, 2015, respectively)

 

226,062,006

 

227,378,071

 

Total liabilities

 

458,843,821

 

663,217,888

 

 

 

 

 

 

 

TAL Education Group Shareholders Equity

 

 

 

 

 

 

 

 

 

 

 

Class A common shares

 

88,372

 

88,572

 

Class B common shares

 

71,456

 

71,456

 

Additional paid-in capital

 

82,479,806

 

98,884,982

 

Statutory reserve

 

18,961,627

 

18,961,627

 

Retained earnings

 

207,522,766

 

299,542,054

 

Accumulated other comprehensive income

 

4,168,548

 

3,646,645

 

Total TAL Education Groups equity

 

313,292,575

 

421,195,336

 

Noncontrolling interest

 

278,241

 

255,025

 

Total equity

 

313,570,816

 

421,450,361

 

Total liabilities and equity

 

$

772,414,637

 

$

1,084,668,249

 

 



 

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
November 30,

 

For the Nine Months Ended
November 30,

 

 

 

2014

 

2015

 

2014

 

2015

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

99,368,290

 

$

142,183,159

 

$

310,765,018

 

$

444,900,103

 

Cost of revenues (note 1)

 

48,956,572

 

73,434,709

 

143,888,626

 

214,860,370

 

Gross profit

 

50,411,718

 

68,748,450

 

166,876,392

 

230,039,733

 

Operating expenses (note 1)

 

 

 

 

 

 

 

 

 

Selling and marketing

 

13,557,704

 

17,229,350

 

38,084,854

 

51,271,631

 

General and administrative

 

28,662,950

 

42,555,604

 

76,602,601

 

113,628,108

 

Total operating expenses

 

42,220,654

 

59,784,954

 

114,687,455

 

164,899,739

 

Government subsidies

 

27,835

 

640,048

 

204,325

 

3,264,634

 

Income from operations

 

8,218,899

 

9,603,544

 

52,393,262

 

68,404,628

 

Interest income

 

4,400,938

 

3,809,519

 

11,646,249

 

13,548,878

 

Interest expense

 

(1,749,206

)

(1,880,618

)

(3,939,150

)

(5,612,593

)

Other (expenses)/income

 

(309,619

)

(355,377

)

846,074

 

(3,005,870

)

Impairment loss on long-term investments

 

 

 

 

(7,503,944

)

Gain on fair value change from long-term investments

 

1,003,000

 

681,000

 

1,003,000

 

1,131,000

 

Gain from disposal of components

 

 

377,126

 

 

50,377,126

 

Gain from disposal of investments

 

 

 

 

235,797

 

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

 

11,564,012

 

12,235,194

 

61,949,435

 

117,575,022

 

Provision for income tax

 

(428,934

)

(2,620,266

)

(8,239,275

)

(25,253,148

)

Loss from equity method investments

 

(196,853

)

(47,910

)

(306,586

)

(320,931

)

Net income

 

10,938,225

 

9,567,018

 

53,403,574

 

92,000,943

 

Add: Net loss attributable to noncontrolling interest

 

20,837

 

17,592

 

23,780

 

18,345

 

Total net income attributable to TAL Education Group

 

$

10,959,062

 

$

9,584,610

 

$

53,427,354

 

$

92,019,288

 

Net income per common share

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

$

0.06

 

$

0.34

 

$

0.58

 

Diluted

 

0.07

 

0.06

 

0.33

 

0.54

 

Net income per ADS (note 2)

 

 

 

 

 

 

 

 

 

Basic

 

$

0.14

 

$

0.12

 

$

0.68

 

$

1.15

 

Diluted

 

0.13

 

0.12

 

0.65

 

1.07

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in calculating net income per common share

 

 

 

 

 

 

 

 

 

Basic

 

158,625,698

 

160,022,437

 

158,151,073

 

159,915,849

 

Diluted

 

164,846,471

 

165,270,632

 

175,783,136

 

182,357,981

 

 

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

 

 

 

For the Three Months

 

For the Nine Months

 

 

 

Ended November 30,

 

Ended November 30,

 

 

 

2014

 

2015

 

2014

 

2015

 

Cost of revenues

 

$

11,494

 

$

11,007

 

$

34,536

 

$

33,265

 

Selling and marketing

 

502,648

 

615,834

 

1,563,581

 

1,660,589

 

General and administrative

 

4,387,973

 

5,883,976

 

11,535,595

 

15,558,332

 

Total

 

$

4,902,115

 

$

6,510,817

 

$

13,133,712

 

$

17,252,186

 

 

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
November 30,

 

For the Nine Months Ended
November 30,

 

 

 

2014

 

2015

 

2014

 

2015

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

10,938,225

 

$

9,567,018

 

$

53,403,574

 

$

92,000,943

 

Other comprehensive (loss)/income, net of tax

 

(34,427

)

(714,326

)

452,789

 

(526,774

)

Comprehensive income

 

10,903,798

 

8,852,692

 

53,856,363

 

91,474,169

 

Add: Comprehensive loss attributable to noncontrolling interest

 

20,786

 

18,038

 

19,088

 

23,216

 

Comprehensive income attributable to TAL Education Group

 

$

10,924,584

 

$

8,870,730

 

$

53,875,451

 

$

91,497,385

 

 



 

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 November 30,

 

For the Nine Months
Ended November 30,

 

 

 

2014

 

2015

 

2014

 

2015

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

$

48,956,572

 

$

73,434,709

 

$

143,888,626

 

$

214,860,370

 

Share-based compensation expense in cost of revenues

 

11,494

 

11,007

 

34,536

 

33,265

 

Non-GAAP cost of revenues

 

48,945,078

 

73,423,702

 

143,854,090

 

214,827,105

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

13,557,704

 

17,229,350

 

38,084,854

 

51,271,631

 

Share-based compensation expense in selling and marketing expenses

 

502,648

 

615,834

 

1,563,581

 

1,660,589

 

Non-GAAP selling and marketing expenses

 

13,055,056

 

16,613,516

 

36,521,273

 

49,611,042

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

28,662,950

 

42,555,604

 

76,602,601

 

113,628,108

 

Share-based compensation expense in general and administrative expenses

 

4,387,973

 

5,883,976

 

11,535,595

 

15,558,332

 

Non-GAAP general and administrative expenses

 

24,274,977

 

36,671,628

 

65,067,006

 

98,069,776

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses

 

91,177,226

 

133,219,663

 

258,576,081

 

379,760,109

 

Share-based compensation expense in operating costs and expenses

 

4,902,115

 

6,510,817

 

13,133,712

 

17,252,186

 

Non-GAAP operating costs and expenses

 

86,275,111

 

126,708,846

 

245,442,369

 

362,507,923

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

8,218,899

 

9,603,544

 

52,393,262

 

68,404,628

 

Share based compensation expenses

 

4,902,115

 

6,510,817

 

13,133,712

 

17,252,186

 

Non-GAAP income from operations

 

13,121,014

 

16,114,361

 

65,526,974

 

85,656,814

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to TAL Education Group

 

10,959,062

 

9,584,610

 

53,427,354

 

92,019,288

 

Share based compensation expenses

 

4,902,115

 

6,510,817

 

13,133,712

 

17,252,186

 

Non-GAAP net income attributable to TAL Education Group

 

$

15,861,177

 

$

16,095,427

 

$

66,561,066

 

$

109,271,474

 

 

 

 

 

 

 

 

 

 

 

Net income per ADS

 

 

 

 

 

 

 

 

 

Basic

 

$

0.14

 

$

0.12

 

$

0.68

 

$

1.15

 

Diluted

 

0.13

 

0.12

 

0.65

 

1.07

 

Non-GAAP Net income per ADS (note 3)

 

 

 

 

 

 

 

 

 

Basic

 

$

0.20

 

$

0.20

 

$

0.84

 

$

1.37

 

Diluted

 

0.19

 

0.19

 

0.80

 

1.26

 

 

 

 

 

 

 

 

 

 

 

ADSs used in calculating net income per ADS

 

 

 

 

 

 

 

 

 

Basic

 

79,312,849

 

80,011,219

 

79,075,536

 

79,957,924

 

Diluted

 

82,423,236

 

82,635,316

 

87,891,568

 

91,178,991

 

 

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.