Form 6-K TAL Education Group For: Oct 28

 

 

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: [email protected]

 

Caroline Straathof

IR Inside

Tel: +31 6 5462 4301

Email: [email protected]

 

 

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.

 

 

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