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 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   ¨

 

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):                 

 

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):                 

 

 

 

 

 

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 28, 2016

 

 

 

 

 

Exhibit Index

 

Exhibit 99.1 – Press Release

 

 

 

 

Exhibit 99.1

 

TAL Education Group Announces Unaudited Financial Results for the

 

Second Fiscal Quarter Ended August 31, 2016

 

- Quarterly Net Revenues up by 56.4% Year-Over-Year 

- Quarterly Income from Operations Increased by 31.4% Year-Over-Year 

- Quarterly Non-GAAP Income from Operations Increased by 33.3% Year-Over-Year 

- Total Student Enrollments up by 77.0% Year-Over-Year

- Company to Change NYSE Ticker Symbol to ‘TAL’ from December 1,2016 

 

Beijing–October 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 second quarter of fiscal year 2017 ended August 31, 2016.

 

Highlights for the Second Quarter of Fiscal Year 2017 

-Net revenues increased by 56.4% year-over-year to US$271.1 million from US$173.3 million in the same period of the prior year.
-Income from operations increased by 31.4% to US$51.5 million from US$39.2 million in the same period of the prior year.
-Non-GAAP income from operations increased by 33.3% to US$59.8 million from US$44.9 million in the same period of the prior year.
-Basic and diluted net income per American Depositary Share (“ADS”) were US$0.69 and US$0.61, respectively. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.79 and US$0.70, respectively. Each ADS represents two Class A common shares.
-Cash, cash equivalents and term deposits totaled US$505.3 million as of August 31, 2016, compared to US$451.3 million as of February 29, 2016.
-Total student enrollments increased by 77.0% year-over-year to approximately 1,117,650 from approximately 631,430 in the same period of the prior year.

 

 

 

 

Highlights for the Six Months Ended August 31, 2016

-Net revenues increased by 54.0% year-over-year to US$466.2 million from US$302.7 million in the same period of the prior year.
-Income from operations increased by 17.5% to US$69.1 million from US$58.8 million in the same period of fiscal year 2016.
-Non-GAAP income from operations increased by 23.3% to US$85.8 million from US$69.5 million in the same period of the prior year.
-Basic and diluted net income per ADS were US$0.85 and US$0.78, respectively. Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were US$1.06 and US$0.95, respectively.
-Total student enrollments during the first six months of fiscal year 2017 increased by 69.0% year-over-year to approximately 1,763,700.
-Total physical network increased from 363 learning centers in 25 cities as of February 29, 2016 to 422 learning centers in 25 cities as of August 31, 2016, including 47 learning centers in 5 cities from Firstleap Education (“Firstleap”).

 

Financial and Operating Data——Second Quarter of Fiscal Year 2017

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

 

   Three Months Ended 
   August 31, 
   2015   2016   Pct. Change 
Net revenues   173,330    271,121    56.4%
Net income attributable to TAL   63,481    55,740    -12.2%
Non-GAAP net income attributable to TAL   69,157    64,023    -7.4%
Operating income   39,201    51,526    31.4%
Non-GAAP operating income   44,877    59,808    33.3%
Net income per ADS attributable to TAL – basic   0.79    0.69    -13.4%
Net income per ADS attributable to TAL – diluted   0.72    0.61    -14.4%
Non-GAAP net income per ADS attributable to TAL – basic   0.87    0.79    -8.7%
Non-GAAP net income per ADS attributable to TAL – diluted   0.78    0.70    -9.9%
Total student enrollments in small class, one-on-one, and online courses   631,430    1,117,650    77.0%

 

 

 

 

   Six Months Ended 
   August 31, 
   2015   2016   Pct. Change 
Net revenues   302,717    466,216    54.0%
Net income attributable to TAL   82,435    68,976    -16.3%
Non-GAAP net income attributable to TAL   93,176    85,651    -8.1%
Operating income   58,801    69,095    17.5%
Non-GAAP operating income   69,542    85,770    23.3%
Net income per ADS attributable to TAL – basic   1.03    0.85    -17.4%
Net income per ADS attributable to TAL – diluted   0.94    0.78    -17.8%
Non-GAAP net income per ADS attributable to TAL – basic   1.17    1.06    -9.3%
Non-GAAP net income per ADS attributable to TAL – diluted   1.06    0.95    -10.2%
Total student enrollments in small class, one-on-one, and online courses   1,043,550    1,763,700    69.0%

 

 

 

“We are pleased to report strong topline growth fueled by high demand for our core small class tutoring services across the board. We generated 66% of revenue growth in RMB terms in the second quarter, which was supported by 77% of enrollment growth year-over-year. We added 27 learning centers on a net basis to meet the increased demand.” said Mr. Rong Luo, TAL’s Chief Financial Officer.

 

Mr. Luo continued, “As of December 1, 2016, TAL Education Group’s ticker symbol on the New York Stock Exchange will change from ‘XRS’ to ‘TAL’. With the Company retaining the listing of its ADS under the new name ‘TAL’, we are excited to see our group name and abbreviated stock symbol unified.”

 

Financial Results for the Second Quarter of Fiscal Year 2017

 

Net Revenues

In the second quarter of fiscal year 2017, TAL reported net revenues of US$271.1 million, representing a 56.4% increase from US$173.3 million in the second quarter of fiscal year 2016. The increase was mainly driven by the growth in total student enrollments, which rose by 77.0% to approximately 1,117,650 from approximately 631,430 in the same period of the prior year. The increase in total student enrollments was driven primarily by the growth of enrollments in the small class offerings and online courses.

 

Operating Costs and Expenses

In the second quarter of fiscal year 2017, operating costs and expenses were US$221.8 million, a 62.2% increase from US$136.7 million in the second quarter of fiscal year 2016. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$213.6 million, a 62.9% increase from US$131.1 million in the second quarter of fiscal year 2016.

 

 

 

 

Cost of revenues grew by 63.9% to US$131.9 million from US$80.5 million in the second quarter of fiscal year 2016. The increase in cost of revenues was mainly due to i) an increase in teacher compensation and rental costs; and ii) cost of sales attributable to the newly acquired business. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 63.9% to US$131.9 million, from US$80.4 million in the second quarter of fiscal year 2016.

 

Selling and marketing expenses increased by 52.3% to US$28.6 million from US$18.8 million in the second quarter of fiscal year 2016. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 52.7% to US$27.9 million from US$18.2 million in the second quarter of fiscal year 2016. The increase of selling and marketing expenses in the second quarter of fiscal year 2017 was primarily a result of a rise in the compensation to sales and marketing staff to support a greater number of programs and service offerings compared to the year-ago period.

 

General and administrative expenses increased by 63.6% to US$61.3 million from US$37.5 million in the second quarter of fiscal year 2016. The increase in general and administrative expenses was mainly due to an increase of the number of our general and administrative personnel compared to the year-ago period and a rise in compensation to our general and administrative personnel, in particular such personnel supporting our online education initiatives among other new programs and service offerings, as well as an increase in consulting fees related to investment activities. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 66.3% to US$53.8 million, from US$32.4 million in the second quarter of fiscal year 2016.

 

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 45.9% to US$8.3 million in the second quarter of fiscal year 2017 from US$5.7 million in the same period of fiscal year 2016. The increase was mainly due to new grants of non-vested shares and options to directors and employees by the Company in fiscal year 2017.

 

Gross Profit

Gross profit grew by 49.9% to US$139.2 million from US$92.9 million in the second quarter of fiscal year 2016.

 

Income from Operations

Income from operations increased by 31.4% to US$51.5 million from US$39.2 million in the second quarter of fiscal year 2016. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 33.3% to US$59.8 million from US$44.9 million in the second quarter of fiscal year 2016.

 

Other (Expense)/Income

Other income was US$23.8 million for the second quarter of fiscal year 2017, compared to other expense of US$4.1 million in the second quarter of fiscal year 2016. The increase was mainly due to a one-off gain from remeasuring the fair value of the previously held equity interests in an acquiree at its acquisition date fair value during a business combination achieved in stages.

 

 

 

 

Impairment loss on long-term investments

Impairment loss on long-term investments was US$2.2 million in this quarter, compared to impairment loss on long-term investments of US$7.5 million in the second quarter of fiscal year 2016. Impairment loss on long-term investments was due to the other-than-temporary declines in the value of long-term investments in several investees.

 

Gain from disposal of a component

Gain from disposal of a component was nil in this quarter, compared to a gain of US$50.0 million in the second quarter of fiscal year 2016, 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$17.6 million in the second quarter of fiscal year 2017, compared to US$17.8 million in the second quarter of fiscal year 2016.

 

Net Income Attributable to TAL Education Group

Net income attributable to TAL decreased by 12.2% to US$55.7 million from US$63.5 million in the second quarter of fiscal year 2016. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, decreased by 7.4% to US$64.0 million from US$69.2 million in the second quarter of fiscal year 2016.

 

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were US$0.69 and US$0.61 respectively in the second quarter of fiscal year 2017. Non-GAAP basic and Non-GAAP diluted net income per ADS, which excluded share-based compensation expenses, were US$0.79 and US$0.70, respectively.

 

Capital Expenditures

Capital expenditures for the second quarter of fiscal year 2017 were US$18.9 million, representing an increase of US$8.1 million from US$10.8 million in the second quarter of fiscal year 2016. The increase was mainly due to leasehold improvements and the purchase of servers, computers, software systems and other hardware for the Company’s teaching facilities and mobile network research and development.

 

Cash, Cash Equivalents, and Term Deposits

As of August 31, 2016, the Company had US$503.8 million of cash and cash equivalents and US$1.5 million of term deposits, compared to US$434.0 million of cash and cash equivalents and US$17.3 million of term deposits as of February 29, 2016.

 

Deferred Revenue

As of August 31, 2016, the Company’s deferred revenue balance was US$463.4 million, compared to US$239.0 million as of August 31, 2015, representing an increase of 93.9%, which primarily consisted of the tuition revenue collected in advance for the fall semester of Xueersi Peiyou small classes and the deferred revenue acquired during the business acquisitions.

 

 

 

 

Financial Results for the First Six Months of Fiscal Year 2017

 

Net Revenues

For the first six months of fiscal year 2017, TAL reported net revenues of US$466.2 million, representing a 54.0% increase from US$302.7 million in the first six months of fiscal year 2016. The increase was mainly driven by an increase in total student enrollments, which grew by 69.0% to approximately 1,763,700 from approximately 1,043,550 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.

 

Operating Costs and Expenses

In the first six months of fiscal year 2017, operating costs and expenses were US$399.9 million, a 62.2% increase from US$246.5 million in the first six months of fiscal year 2016. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$383.2 million, a 62.5% increase from US$235.8 million in the first six months of fiscal year 2016.

 

Cost of revenues grew by 64.3% to US$232.4 million from US$141.4 million in the first six months of fiscal year 2016. The increase in cost of revenues was mainly due to i) an increase in teacher compensation and rental costs; and ii) cost of sales attributable to the newly acquired business. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 64.3% to US$232.3 million from US$141.4 million in the first six months of fiscal year 2016.

 

Selling and marketing expenses increased by 54.9% to US$52.7 million from US$34.0 million in the first six months of fiscal year 2016. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 55.2% to US$51.2 million from US$33.0 million in the first six months of fiscal year 2016. The increase of selling and marketing expenses in the first six months of fiscal year 2017 was primarily a result of an increase in the 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 61.5% to US$114.8 million from US$71.1 million in the first six months of fiscal year 2016. 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, as well as an increase in consulting fees related to investment activities. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 62.3% to US$99.7 million from US$61.4 million in the first six months of fiscal year 2016.

 

 

 

 

Total share-based compensation expenses allocated to the related operating costs and expenses increased by 55.2% to US$16.7 million in the first six months of fiscal year 2017 from US$10.7 million in the same period of fiscal year 2016. The increase was mainly due to new grants of non-vested shares and options to directors and employees by the Company in fiscal year 2017.

 

Gross Profit

Gross profit grew by 45.0% to US$233.9 million from US$161.3 million in the first six months of fiscal year 2016.

 

Income from Operations

Income from operations increased by 17.5% to US$69.1 million from US$58.8 million in the first six months of fiscal year 2016. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 23.3% to US$85.8 million from US$69.5 million in the first six months of fiscal year 2016.

 

Other (Expense)/Income

Other income was US$23.8 million for the first six months of fiscal year 2017, compared to other expense of US$2.7 million in the first six months of fiscal year 2016. The increase was mainly due to a gain from remeasuring the fair value of the previously held equity interests in an acquiree at its acquisition date fair value during a business combination achieved in stages.

 

Income Tax Expense

Income tax expense was US$22.1 million in the first six months of fiscal year 2017, compared to US$22.6 million in the first six months of fiscal year 2016.

 

Net Income Attributable to TAL Education Group

Net income attributable to TAL decreased by 16.3% to US$69.0 million from US$82.4 million in the first six months of fiscal year 2016. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, decreased by 8.1% to US$85.7 million from US$93.2 million in the first six months of fiscal year 2016.

 

Basic and Diluted Net Income per ADS

Basic and diluted net income per ADS were US$0.85 and US$0.78, respectively, in the first six months of fiscal year 2017. Non-GAAP basic and Non-GAAP diluted net income per ADS, which excluded share-based compensation expenses, were US$1.06 and US$0.95, respectively.

 

Capital Expenditures

Capital expenditures for the first six months of fiscal year 2017 were US$31.6 million, an increase of US$14.5 million from US$17.1 million in the first six months of fiscal year 2016. The increase was mainly due to leasehold improvements and the purchase of servers, computers, software systems and other hardware for the Company’s teaching facilities and mobile network research and development.

 

Cash, Cash Equivalents, and Term Deposits

As of August 31, 2016, the Company had US$503.8 million of cash and cash equivalents and US$1.5 million of term deposits, compared to US$434.0 million of cash and cash equivalents and US$17.3 million of term deposits as of February 29, 2016.

 

 

 

 

Business Outlook

Based on the Company’s current estimates, total net revenues for the third quarter of fiscal year 2017 are expected to grow 68% to 70% 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 2017 to be between US$227.5 million and US$230.3 million, representing an increase of 60% to 62% 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.

 

Change of Stock Symbol

The Company will change its ticker symbol on the NYSE to “TAL”, effective on December 1, 2016, and the Company retains the listing of its American depositary shares on the NYSE.

 

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 2017 ended August 31, 2016 at 8:00 a.m. Eastern Time on October 27, 2016 (8:00 p.m. Beijing time on October 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: 90010227

 

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 8:59 a.m. U.S. Eastern time, November 4, 2016 (8:59 p.m. Beijing time, November 4, 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: 400-602-2065
- International toll: +61-2-8199-0299
Conference ID: 90010227

 

 

 

 

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 2017, 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 422 physical learning centers as of August 31, 2016, located in 25 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, Fuzhou and Hefei. 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: +861052926658

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 29,
2016

  

As of

August 31,
2016

 
ASSETS          
           
Current assets          
Cash and cash equivalents  $434,042,036   $503,784,203 
Term deposits   17,292,636    1,518,510 
Restricted cash-current   1,083,787    796,716 
Short-term investment   27,470,431    60,647,538 
Inventory   600,441    1,671,016 
Amounts due from related parties-current   2,594,430    1,195,859 
Deferred tax assets-current   738,406    859,598 
Income tax receivables   -    1,321,015 
Prepaid expenses and other current assets   32,037,407    70,793,287 
Total current assets   515,859,574    642,587,742 
Restricted cash-non-current   3,881,858    5,166,621 
Property and equipment, net   114,629,683    133,824,115 
Deferred tax assets-non-current   6,654,778    11,106,677 
Rental deposit   17,114,552    24,115,884 
Intangible assets, net   15,194,421    35,627,251 
Goodwill   87,022,517    210,636,982 
Amounts due from related parties-non-current   1,342,999    1,107,617 
Long-term investments   274,356,960    352,434,250 
Long-term prepayments and other non-current assets   25,321,691    97,760,676 
Total assets  $1,061,379,033   $1,514,367,815 
           
LIABILITIES AND EQUITY          
           
Current liabilities          
Accounts payable (including accounts payable of the consolidated VIEs without recourse to TAL
Education Group of 9,371,013 and 15,072,117 as of February 29, 2016, and August 31, 2016, respectively)
  $10,404,047   $16,877,268 
Deferred revenue-current (including deferred revenue-current of the consolidated VIEs without recourse to TAL Education Group of 260,137,064 and 419,885,063 as of February 29, 2016, and August 31, 2016, respectively)
   280,934,750    452,971,754 
Amounts due to related parties (including amounts due to related parties of the consolidated VIEs without
recourse to TAL Education Group of 4,277,896 and 3,562,447 as of February 29, 2016, and August31, 2016, respectively)
   4,277,896    3,562,447 
Accrued expenses and other current liabilities (including accrued expenses and other current
liabilities of the consolidated VIEs without recourse to TAL Education Group of 51,183,663 and 78,135,551 as of February 29, 2016, and August 31, 2016, respectively)
   70,267,551    98,357,805 
Income tax payable (including income tax payable of the consolidated VIEs without recourse to TAL Education Group of 15,525,069 and 16,238,515 as of February 29, 2016, and August 31, 2016, respectively)   17,187,453    24,144,297 
Deferred tax liabilities-current (including deferred tax liabilities-current of the consolidated VIEs without
recourse to TAL Education Group of 57,230 and nil as of February 29, 2016, and August 31, 2016, respectively)
   91,730    75,900 
Total current liabilities   383,163,427    595,989,471 
Deferred revenue-non-current (including deferred revenue-non-current of the consolidated VIEs without recourse to TAL Education Group of 8,346,457 and 10,391,753 as of February 29, 2016, and August 31, 2016, respectively)   8,346,457    10,391,753 
Deferred tax liabilities-non-current (including deferred tax liabilities-non-current of the consolidated VIEs without recourse to TAL Education Group of 1,164,389 and 12,279,721 as of February 29, 2016, and August 31, 2016, respectively)   1,304,361    12,349,396 
Bond payable (including bond payable of the consolidated VIEs without recourse to TAL Education Group of nil and nil as of February 29, 2016, and August 31,2016, respectively)   227,827,301    228,740,608 
Long-term debt (including long-term debt of the consolidated VIEs without recourse to TAL Education Group of nil and nil as of February 29, 2016, and August 31, 2016, respectively)   -    25,000,000 
Total liabilities   620,641,546    872,471,228 
           
TAL Education Group Shareholders’ Equity          
Class A common shares   90,310    91,349 
Class B common shares   71,456    71,456 
Additional paid-in capital   108,404,873    131,707,998 
Statutory reserve   22,981,900    22,981,900 
Retained earnings   306,381,011    375,357,424 
Accumulated other comprehensive (loss)/income   (949,647)   63,463,244 
Total TAL Education Group’s equity   436,979,903    593,673,371 
Non-controlling interest   3,757,584    48,223,216 
Total equity   440,737,487    641,896,587 
Total liabilities and equity  $1,061,379,033   $1,514,367,815 

 

 

 

 

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,

 
   2015   2016   2015   2016 

 

Net revenues

  $173,329,982   $271,121,287   $302,716,944   $466,216,375 
Cost of revenues   80,454,749    131,879,033    141,425,661    232,366,242 
Gross profit   92,875,233    139,242,254    161,291,283    233,850,133 
Operating expenses (note 1)                    
Selling and marketing   18,790,668    28,620,113    34,042,281    52,743,743 
General and administrative   37,492,740    61,343,393    71,072,504    114,773,223 
Total operating expenses   56,283,408    89,963,506    105,114,785    167,516,966 
Government subsidies   2,609,058    2,246,800    2,624,586    2,761,607 
Income from operations   39,200,883    51,525,548    58,801,084    69,094,774 
Interest income   4,927,453    4,449,108    9,739,359    7,837,460 
Interest expense   (1,879,395)   (2,667,238)   (3,731,975)   (4,555,211)
Other (expenses)/income   (4,085,117)   23,802,211    (2,650,493)   23,787,119 
Impairment loss on long-term investments   (7,503,944)   (2,211,642)   (7,503,944)   (2,211,642)
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   81,345,677    74,897,987    105,339,828    93,952,500 
Provision for income tax   (17,834,656)   (17,597,079)   (22,632,882)   (22,075,286)
Loss from equity method investments   (18,741)   (2,168,346)   (273,021)   (3,840,133)
Net income   63,492,280    55,132,562    82,433,925    68,037,081 
Add: Net (gain)/loss attributable to noncontrolling interest   (11,222)   607,705    753    939,332 
                     
Total net income attributable to TAL Education Group  $63,481,058   $55,740,267   $82,434,678   $68,976,413 
                     
Net income per common share                    
Basic  $0.40   $0.34   $0.52   $0.43 
Diluted   0.36    0.31    0.47    0.39 
                     

Net income per ADS (note 2)

                    
Basic  $0.79   $0.69   $1.03   $0.85 
Diluted   0.72    0.61    0.94    0.78 
                     
Weighted average shares used in calculating net income per common share                    
Basic   159,898,391    162,158,462    159,863,134    161,961,997 
Diluted   182,606,281    188,197,500    182,485,970    187,541,900 

 

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, 
   2015   2016   2015   2016 
Cost of revenues  $11,129   $15,598   $22,258   $23,338 
Selling and marketing   548,135    762,661    1,044,755    1,538,626 
General and administrative   5,116,584    7,504,515    9,674,356    15,113,099 
Total  $5,675,848   $8,282,774   $10,741,369   $16,675,063 

 

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   For the Six Months Ended 
   August 31,   August 31, 
   2015   2016   2015   2016 
Net income  $63,492,280   $55,132,562   $82,433,925   $68,037,081 
Other comprehensive (loss)/income, net of tax   (4,367,740)   (30,496,590)   187,552    64,347,466 
Comprehensive income   59,124,540    24,635,972    82,621,477    132,384,547 
Add: Comprehensive (income)/loss attributable to noncontrolling interest   (3,588)   659,981    5,178    1,004,756 
Comprehensive income attributable to TAL Education Group  $59,120,952   $25,295,953   $82,626,655   $133,389,303 

 

 

 

 

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,
 
   2015   2016   2015   2016 
                 
Cost of revenues  $80,454,749   $131,879,033   $141,425,661   $232,366,242 
Share-based compensation expense in cost of revenues   11,129    15,598    22,258    23,338 
Non-GAAP cost of revenues   80,443,620    131,863,435    141,403,403    232,342,904 
                     
Selling and marketing expenses   18,790,668    28,620,113    34,042,281    52,743,743 
Share-based compensation expense in selling and marketing expenses   548,135    762,661    1,044,755    1,538,626 
Non-GAAP selling and marketing expenses   18,242,533    27,857,452    32,997,526    51,205,117 

 

General and administrative expenses

   37,492,740    61,343,393    71,072,504    114,773,223 
Share-based compensation expense in general and administrative expenses   5,116,584    7,504,515    9,674,356    15,113,099 
Non-GAAP general and administrative expenses   32,376,156    53,838,878    61,398,148    99,660,124 
                     
Operating costs and expenses   136,738,157    221,842,539    246,540,446    399,883,208 
Share-based compensation expense in operating costs and expenses   5,675,848    8,282,774    10,741,369    16,675,063 
Non-GAAP operating costs and expenses   131,062,309    213,559,765    235,799,077    383,208,145 
                     
Income from operations   39,200,883    51,525,548    58,801,084    69,094,774 
Share based compensation expenses   5,675,848    8,282,774    10,741,369    16,675,063 
Non-GAAP income from operations   44,876,731    59,808,322    69,542,453    85,769,837 
                     
Net income attributable to TAL Education Group   63,481,058    55,740,267    82,434,678    68,976,413 
Share based compensation expenses   5,675,848    8,282,774    10,741,369    16,675,063 
Non-GAAP net income attributable to TAL Education Group  $69,156,906   $64,023,041   $93,176,047   $85,651,476 
                     
Net income per ADS                    
Basic  $0.79   $0.69   $1.03   $0.85 
Diluted   0.72    0.61    0.94    0.78 
                     
Non-GAAP Net income per ADS (note 3)                    
Basic  $0.87   $0.79   $1.17   $1.06 
Diluted   0.78    0.70    1.06    0.95 
                     
ADSs used in calculating net income per ADS                    
Basic   79,949,196    81,079,231    79,931,567    80,980,998 
Diluted   91,303,141    94,098,750    91,242,985    93,770,950 

 

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.