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

Jan 27, 2016, 03:00 ET from TAL Education Group

BEIJING, Jan. 27, 2016 /PRNewswire/ -- 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, andNovember 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 Group's 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.

SOURCE TAL Education Group