UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 6-K

 


 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of January 2014

 

Commission File Number: 001-34900

 


 

TAL EDUCATION GROUP

 


 

12/F, Danling SOHO

No. 6 Danling Street, Haidian District

Beijing 100080

People’s Republic of China

(Address of principal executive offices)

 

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

 

Form 20-F  x  Form 40-F  o

 

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

 

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

 

 

 



 

SIGNATURE

 

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

 

 

TAL Education Group

 

 

 

 

 

By:

/s/ Joseph Kauffman

 

 

Name: Joseph Kauffman

 

 

Title: Chief Financial Officer

 

 

 

 

Date: January 23, 2014

 

 

2



 

Exhibit Index

 

Exhibit 99.1 — Press Release

 

3


Exhibit 99.1

 

TAL Education Group Announces Unaudited Financial Results for the

 

Third Fiscal Quarter Ended November 30, 2013

 

·                                          Quarterly Net Revenues up by 50.4% Year-Over-Year

·                                          Quarterly Income from Operations up by 287.5% Year-Over-Year

·                                          Quarterly Net Income Attributable to TAL up by 123.4% Year-Over-Year

 

(Beijing—January 22, 2014)—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 quarter ended November 30, 2013, which is the third quarter of TAL’s fiscal year 2014.

 

Highlights for the Third Quarter of Fiscal Year 2014

 

·                  Net revenues increased by 50.4% year-over-year to US$73.5 million from US$48.9 million in the same period of the prior year.

·                  Income from operations increased by 287.5% to US$11.9 million, from US$3.1 million in the third quarter of fiscal year 2013.

·                  Net income attributable to TAL increased by 123.4% year-over-year to US$12.5 million from US$5.6 million in the same period of the prior year.

·                  Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 85.6% year-over-year to US$14.6 million from US$7.9 million in the same period of the prior year.

·                  Basic and diluted net income per American Depositary Share (“ADS”) were US$0.16 and US$0.15, respectively. Non-GAAP basic and diluted net income per ADS, which excluded share-based compensation expenses, were US$0.19 and US$0.18, respectively. Each ADS represents two Class A common shares.

·                  Cash, cash equivalents and term deposits totaled US$333.2 million as of November 30, 2013, compared to US$209.2 million as of February 28, 2013.

·                  Total student enrollments increased by 46.2% year-over-year to approximately 224,810.

·                  Total physical network consisted of 265 learning centers as of November 30, 2013, from 264 as of August 31, 2013.

 

Highlights for the First Nine Months Ended November 30, 2013

 

·                  Net revenues increased by 36.5% year-over-year to US$226.9 million from US$166.3 million in the same period of the prior year.

·                  Income from operations increased by 66.9% to US$43.0 million, from US$25.8 million in the same period of fiscal year 2013.

·                  Net income attributable to TAL increased by 65.1% year-over-year to US$43.9 million from US$26.6 million in the same period of the prior year.

·                  Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 49.8% year-over-year to US$49.7 million from US$33.2 million in the same period of the prior year.

·                  Basic and diluted net income per American Depositary Share (“ADS”) were US$0.56 and US$0.55, respectively. Non-GAAP basic and diluted net income per ADS, excluding share-based compensation expenses, were US$0.63 and US$0.62, respectively.

·                  Total student enrollments during the first nine months of fiscal year 2014 increased by 28.4% year-over-year to approximately 725,950.

·                  Total physical network increased to 265 learning centers as of November 30, 2013 from 255 learning centers as of February 28, 2013.

 

1



 

Financial and Operating Data——Third Quarter and First Nine Months of Fiscal Year 2014

 

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

 

 

 

Three Months Ended

 

 

 

 

 

November 30,

 

 

 

 

 

2012

 

2013

 

Pct. Change

 

Net revenues

 

48,905

 

73,530

 

50.4

%

Net income attributable to TAL

 

5,599

 

12,509

 

123.4

%

Non-GAAP net income attributable to TAL

 

7,852

 

14,575

 

85.6

%

Operating income

 

3,069

 

11,893

 

287.5

%

Non-GAAP operating income

 

5,323

 

13,960

 

162.3

%

Net income per ADS attributable to TAL — basic

 

0.07

 

0.16

 

121.6

%

Net income per ADS attributable to TAL — diluted

 

0.07

 

0.15

 

116.1

%

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

 

0.10

 

0.19

 

84.1

%

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

 

0.10

 

0.18

 

79.5

%

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

 

153,800

 

224,810

 

46.2

%

 

 

 

Nine Months Ended

 

 

 

 

 

November 30,

 

 

 

 

 

2012

 

2013

 

Pct. Change

 

Net revenues

 

166,283

 

226,896

 

36.5

%

Net income attributable to TAL

 

26,592

 

43,896

 

65.1

%

Non-GAAP net income attributable to TAL

 

33,153

 

49,662

 

49.8

%

Operating income

 

25,759

 

43,000

 

66.9

%

Non-GAAP operating income

 

32,319

 

48,765

 

50.9

%

Net income per ADS attributable to TAL — basic

 

0.34

 

0.56

 

63.8

%

Net income per ADS attributable to TAL — diluted

 

0.34

 

0.55

 

61.1

%

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

 

0.43

 

0.63

 

48.7

%

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

 

0.42

 

0.62

 

46.2

%

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

 

565,410

 

725,950

 

28.4

%

 

“We are pleased to report a stellar quarter with outperformance on our revenue guidance and strong profitability, resulting from higher-than-expected enrollment growth and center utilization. Net revenue of US$73.5 million came in US$2.5 million above the top end of our guidance. Revenue growth was supported by a 46.2% increase in enrollments. Our execution on the top line was better than expected as cities outside Beijing and Shanghai continued to outperform and contributed 40% of our total small class revenue, while at the same time Shanghai once again performed well and Beijing began to show signs of recovery,” said TAL’s Chairman and Chief Executive Officer, Mr. Bangxin Zhang.

 

“Given our healthy business fundamentals, we are ready to lead the business into newly evolving growth opportunities in the market. Consumer behavior on Internet and mobile, education reform, and the changing needs of the labor market in China are revolutionizing the ways in which students learn in and around school. With our recent launch of the ICS 3.0 version that creates an upgraded interactive white board and pad-based environment in the classroom, we are bringing class-based tutoring to a new level. In addition, we see a host of new opportunities in terms of expanding addressable markets, widening the range of subjects and introducing new tutoring formats.”

 

Mr. Joseph Kauffman, Chief Financial Officer, continued, “Our top line growth and effective cost control resulted in the strong bottom line in the third quarter. We were able to keep the costs of business expansion well under control as we tempered the pace of center and classroom capacity expansion as guided. Other factors contributing to gross margin strength in this quarter were improved center utilization and changing business mix as small class continued to grow faster than our one-on-one business. We expect small class to remain our key growth driver in coming quarters.”

 

“Our expectation for the fourth quarter is strong as we see the positive momentum to continue and cap a remarkable year of growth, business expansion and profitability. The fourth quarter outlook looks particularly high on a year-on-year basis because it will cycle a low quarter and include an extra week of classes due to the timing of Chinese New Year.”

 

2



 

Financial Results for the Third Quarter of Fiscal Year 2014

 

Net Revenues

 

In the third quarter of fiscal year 2014, TAL reported net revenues of US$73.5 million, representing a 50.4% increase from US$48.9 million in the third quarter of fiscal year 2013. The increase was mainly driven by an increased number of total student enrollments combined with increased average selling prices (ASPs). Total student enrollments increased by 46.2% to approximately 224,810 from approximately 153,800 in the same period one year ago. The increase in total student enrollments was driven primarily by increases of enrollments in the small class offerings. ASP increased by 2.8% from US$318 in the third quarter of fiscal year 2013 to US$327 in the same quarter of fiscal year 2014. The growth in ASP was mainly driven by the hourly rate increases of a portion of the small class course offerings and the foreign exchange rate fluctuation.

 

Operating Costs and Expenses

 

Operating costs and expenses were US$62.5 million, a 34.5% increase from US$46.4 million in the third quarter of fiscal year 2013. Non-GAAP operating costs and expenses, which excluded share-based compensation expenses, were US$60.4 million, a 36.7% increase from US$44.2 million in the third quarter of fiscal year 2013.

 

Cost of revenues increased by 34.1% to US$35.9 million, from US$26.7 million in the third quarter of fiscal year 2013. The increase in cost of revenues was mainly due to an increase in teacher compensation, rental costs and other staff costs associated primarily with an expansion of learning center capacity as well as increases in wages and teacher fees. Non-GAAP cost of revenues, which excluded share-based compensation expenses, increased by 34.2% to US$35.9 million, from US$26.7 million in the third quarter of fiscal year 2013.

 

Selling and marketing expenses increased by 34.8% to US$9.3 million, from US$6.9 million in the third quarter of fiscal year 2013. Non-GAAP selling and marketing expenses, which excluded share-based compensation expenses, increased by 40.0% to US$9.0 million, from US$6.4 million in the third quarter of fiscal year 2013. The increase of selling and marketing expenses in the third quarter of fiscal year 2014 was primarily a result of an increase in compensation to sales and marketing staff to support a greater number of programs and service offerings.

 

General and administrative expenses increased by 35.2% to US$17.3 million, from US$12.8 million in the third quarter of fiscal year 2013. The increase in general and administrative expenses was mainly due to an increase in compensation to our general and administrative personnel in recognition of outperformance against budget and to support a greater number of programs and service offerings. Also, the depreciation of the Beijing office space was an expense the Company incurred this quarter but not in the same period of the previous year. Non-GAAP general and administrative expenses, which excluded share-based compensation expenses, increased by 41.0% to US$15.5 million, from US$11.0 million in the third quarter of fiscal year 2013.

 

Total share-based compensation expenses allocated to the related operating costs and expenses decreased by 8.3% to US$2.1 million in the third quarter of fiscal year 2014, from US$2.3 million in the same period of fiscal year 2013.

 

3



 

Gross Profit

 

Gross profit increased by 69.9% to US$37.7 million, from US$22.2 million in the third quarter of fiscal year 2013.

 

Income from Operations

 

Income from operations increased by 287.5% to US$11.9 million, from US$3.1 million in the third quarter of fiscal year 2013. Non-GAAP income from operations, which excluded share-based compensation expenses, increased by 162.3% to US$14.0 million, from US$5.3 million in the third quarter of fiscal year 2013.

 

Other Income /(Expense)

 

Other expense was US$51 thousand for the third quarter of fiscal year 2014, compared to other income of US$1.8 million in the third quarter of fiscal year 2013. Other expense in this quarter was mainly due to the Company’s donation to the TAL Charitable Foundation, which was created in order to support the Company’s corporate social responsibility initiatives. The other income in the same period of the previous fiscal year was primarily driven by exchange gains. As the Company holds the vast majority of its cash balance in RMB and reports in US 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 US Dollar.

 

Income Tax Expense

 

Income tax expense was US$1.9 million in the third quarter of fiscal year 2014, as compared to US$0.8 million in the third quarter of fiscal year 2013.

 

Net Income Attributable to TAL Education Group

 

Net income attributable to TAL increased by 123.4% to US$12.5 million, from US$5.6 million in the third quarter of fiscal year 2013. Non-GAAP net income attributable to TAL, which excluded share-based compensation expenses, increased by 85.6% to US$14.6 million, from US$7.9 million in the third quarter of fiscal year 2013.

 

Basic and Diluted Net Income per ADS

 

Basic and diluted net income per ADS were US$0.16 and US$0.15, respectively, in the third quarter of fiscal year 2014. Non-GAAP basic and Non-GAAP diluted net income per ADS, which excluded share-based compensation expenses, were US$0.19 and US$0.18, respectively.

 

Capital Expenditures

 

Capital expenditures for the third quarter of fiscal year 2014 were US$3.3 million, representing an increase of US$2.0 million from US$1.3 million in the third quarter of fiscal year 2013. 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.

 

Cash, Cash Equivalents, and Term Deposits

 

As of November 30, 2013, the Company had US$304.0 million of cash and cash equivalents and US$29.2 million of term deposits, as compared to US$185.1 million of cash and cash equivalents and US$24.1 million of term deposits as of February 28, 2013.

 

4



 

Deferred Revenue

 

As of November 30, 2013, the Company’s deferred revenue balance was US$173.0 million as compared to US$107.3 million as of November 30, 2012, representing a year-over-year increase of 61.2%.

 

Business Outlook

 

Based on the Company’s current estimates, total net revenues for the fourth quarter of fiscal year 2014 are expected to be between US$84.7 million and US$87.1 million, representing an increase of 42% to 46% on a year-over-year basis.

 

For the fiscal year ending February 28, 2014, the Company expects total net revenues to be in the estimated range of US$311.6 million to US$314.0 million, representing an increase of 37.9% to 39.0% year-over-year.

 

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 2014 ended November 30, 2013 at 8:00 a.m. Eastern Time on January 22, 2014 (9:00 p.m. Beijing time on January 22, 2014).

 

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

 

· U.S. toll free:

+1-866-519-4004

· Hong Kong toll free:

800-930-346

· China toll free:

400-620-8038

· International toll:

+65-6723-9381

Conference ID:

30250490

 

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, January 29, 2014 (12:59 pm Beijing time, January 30, 2014).

 

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

· China toll free:

400-632-2162

· International toll:

+61-2-8199-0299

Conference ID:

30250490

 

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 2014 and the fiscal year ending February 28, 2014, 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: its ability to continue to attract students to enroll in its courses; its ability to continue to recruit, train and retain qualified teachers; its ability to improve the content of its existing course offerings and to develop new courses; its ability to maintain and enhance its brand; its ability to maintain and continue to improve its teaching results; and its 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 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.

 

5



 

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 265 physical learning centers as of November 30, 2013, located in fifteen key cities in China: Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Wuhan, Xi`an, Chengdu, Nanjing, Hangzhou, Taiyuan, Zhengzhou, Chongqing, Suzhou and Shenyang. We also operate www.eduu.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 SEC 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 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

 

6



 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In U.S. dollars)

 

 

 

As of

 

As of

 

 

 

February 28,

 

November 30,

 

 

 

2013

 

2013

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

185,080,673

 

$

304,009,219

 

Term deposits

 

24,110,716

 

29,217,688

 

Restricted cash-current

 

2,270,269

 

1,130,294

 

Available-for-sale securities

 

399,955

 

 

Inventory

 

410,167

 

169,219

 

Deferred tax assets-current

 

2,260,446

 

3,479,409

 

Income tax receivable

 

 

7,134,021

 

Prepaid expenses and other current assets

 

11,906,317

 

14,195,773

 

Total current assets

 

226,438,543

 

359,335,623

 

Restricted cash-non-current

 

 

2,567,064

 

Property and equipment, net

 

76,115,088

 

79,329,226

 

Deferred tax assets-non-current

 

538,464

 

723,889

 

Rental deposit

 

5,179,073

 

6,969,209

 

Intangible assets, net

 

1,724,444

 

1,427,328

 

Goodwill

 

555,194

 

566,959

 

Long-term prepayments

 

 

82,072

 

Long-term investment

 

5,491,073

 

3,080,000

 

Total assets

 

$

316,041,879

 

$

454,081,370

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable (including accounts payable of the consolidated VIEs without recourse to TAL Education Group of 1,739,337 and 1,502,871 as of February 28, 2013, and November 30, 2013, respectively)

 

$

2,009,473

 

$

2,104,065

 

Deferred revenue (including deferred revenue of the consolidated VIEs without recourse to TAL Education Group of 67,743,448 and 139,409,451 as of February 28, 2013, and November 30, 2013, respectively)

 

102,513,876

 

172,964,192

 

Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to TAL Education Group of 11,269,507 and 19,337,921 as of February 28, 2013, and November 30, 2013, respectively)

 

17,196,001

 

27,416,554

 

Income tax payable (including income tax payable of the consolidated VIEs without recourse to TAL Education Group of 2,165,785 and 3,378,813 as of February 28, 2013, and November 30, 2013, respectively)

 

2,778,305

 

5,872,007

 

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, 2013, and November 30, 2013, respectively)

 

 

294,654

 

Total current liabilities

 

124,497,655

 

208,651,472

 

Deferred tax liabilities-non-current (including deferred tax liabilities-non-current of the consolidated VIEs without recourse to TAL Education Group of 36,845 and 29,285 as of February 28, 2013, and November 30, 2013, respectively)

 

98,945

 

29,285

 

Long-term payable (including long-term payable of the consolidated VIEs without recourse to TAL Education Group of nil and 1,313,155 as of February 28, 2013, and November 30, 2013, respectively)

 

 

1,313,155

 

Total liabilities

 

124,596,600

 

209,993,912

 

 

 

 

 

 

 

TAL Education Group Shareholders’ Equity

 

 

 

 

 

Class A common shares

 

68,314

 

77,500

 

Class B common shares

 

87,806

 

79,531

 

Additional paid-in capital

 

86,016,387

 

91,666,668

 

Statutory reserve

 

12,291,341

 

12,291,341

 

Retained earnings

 

86,430,705

 

130,326,867

 

Accumulated other comprehensive income

 

6,550,726

 

9,645,551

 

Total TAL Education Group’s equity

 

191,445,279

 

244,087,458

 

Total liabilities and equity

 

$

316,041,879

 

$

454,081,370

 

 

7



 

TAL EDUCATION GROUP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(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,

 

 

 

2012

 

2013

 

2012

 

2013

 

Net revenues

 

$

48,904,852

 

$

73,529,703

 

$

166,283,279

 

$

226,896,452

 

Cost of revenues

 

26,737,436

 

35,862,040

 

84,359,651

 

110,775,673

 

Gross profit

 

22,167,416

 

37,667,663

 

81,923,628

 

116,120,779

 

Operating expenses (note 1)

 

 

 

 

 

 

 

 

 

Selling and marketing

 

6,904,319

 

9,307,892

 

20,049,555

 

25,577,610

 

General and administrative

 

12,786,196

 

17,287,151

 

36,746,145

 

48,457,547

 

Total operating expenses

 

19,690,515

 

26,595,043

 

56,795,700

 

74,035,157

 

Government Subsidies

 

592,570

 

820,692

 

630,639

 

914,353

 

Income from operations

 

3,069,471

 

11,893,312

 

25,758,567

 

42,999,975

 

Interest income

 

1,547,025

 

2,483,284

 

3,911,054

 

6,639,171

 

Other income / (expenses)

 

1,823,454

 

(51,146

)

891,706

 

466,135

 

Gain on short-term investment

 

 

 

 

297,120

 

Gain on sales of available-for-sale securities

 

 

52,958

 

 

52,958

 

Income before income tax provision

 

6,439,950

 

14,378,408

 

30,561,327

 

50,455,359

 

Provision for income tax

 

(841,338

)

(1,869,194

)

(3,969,347

)

(6,559,197

)

Net income

 

5,598,612

 

12,509,214

 

26,591,980

 

43,896,162

 

Total net income attributable to TAL Education Group

 

$

5,598,612

 

$

12,509,214

 

$

26,591,980

 

$

43,896,162

 

Net income per common share

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

$

0.08

 

$

0.17

 

$

0.28

 

Diluted

 

0.04

 

0.08

 

0.17

 

0.27

 

Net income per ADS (note 2)

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

$

0.16

 

$

0.34

 

$

0.56

 

Diluted

 

0.07

 

0.15

 

0.34

 

0.55

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, net of tax

 

2,251,418

 

741,506

 

1,482,269

 

3,094,825

 

Comprehensive income

 

7,850,030

 

13,250,720

 

28,074,249

 

46,990,987

 

Comprehensive income attributable to TAL Education Group

 

$

7,850,030

 

$

13,250,720

 

$

28,074,249

 

$

46,990,987

 

Weighted average shares used in calculating net income per common share

 

 

 

 

 

 

 

 

 

Basic

 

155,747,816

 

157,024,948

 

155,363,214

 

156,542,919

 

Diluted

 

156,115,200

 

161,425,202

 

156,316,199

 

160,159,944

 

 

Note 1: Share-based compensation expenses are included in the operating costs and expenses as follows:

 

 

 

For the Three Months
Ended November 30

 

For the Nine Months
Ended November 30

 

 

 

2012

 

2013

 

2012

 

2013

 

Cost of revenues

 

$

13,307

 

$

11,234

 

$

102,018

 

$

33,302

 

Selling and marketing

 

464,440

 

292,135

 

1,531,300

 

877,123

 

General and administrative

 

1,775,362

 

1,762,840

 

4,927,532

 

4,855,033

 

Total

 

$

2,253,109

 

$

2,066,209

 

$

6,560,850

 

$

5,765,458

 

 

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

 

8



 

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,

 

 

 

2012

 

2013

 

2012

 

2013

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

$

26,737,436

 

$

35,862,040

 

$

84,359,651

 

$

110,775,673

 

Share-based compensation expense in cost of revenues

 

13,307

 

11,234

 

102,018

 

33,302

 

Non-GAAP cost of revenues

 

26,724,129

 

35,850,806

 

84,257,633

 

110,742,371

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

6,904,319

 

9,307,892

 

20,049,555

 

25,577,610

 

Share-based compensation expense in selling and marketing expenses

 

464,440

 

292,135

 

1,531,300

 

877,123

 

Non-GAAP selling and marketing expenses

 

6,439,879

 

9,015,757

 

18,518,255

 

24,700,487

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

12,786,196

 

17,287,151

 

36,746,145

 

48,457,547

 

Share-based compensation expense in general and administrative expenses

 

1,775,362

 

1,762,840

 

4,927,532

 

4,855,033

 

Non-GAAP general and administrative expenses

 

11,010,834

 

15,524,311

 

31,818,613

 

43,602,514

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses

 

46,427,951

 

62,457,083

 

141,155,351

 

184,810,830

 

Share-based compensation expense in operating costs and expenses

 

2,253,109

 

2,066,209

 

6,560,850

 

5,765,458

 

Non-GAAP operating costs and expenses

 

44,174,842

 

60,390,874

 

134,594,501

 

179,045,372

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

3,069,471

 

11,893,312

 

25,758,567

 

42,999,975

 

Share based compensation expenses

 

2,253,109

 

2,066,209

 

6,560,850

 

5,765,458

 

Non-GAAP income from operations

 

5,322,580

 

13,959,521

 

32,319,417

 

48,765,433

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to TAL Education Group

 

5,598,612

 

12,509,214

 

26,591,980

 

43,896,162

 

Share based compensation expenses

 

2,253,109

 

2,066,209

 

6,560,850

 

5,765,458

 

Non-GAAP net income attributable to TAL Education Group

 

$

7,851,721

 

$

14,575,423

 

$

33,152,830

 

$

49,661,620

 

Net income per ADS

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

$

0.16

 

$

0.34

 

$

0.56

 

Diluted

 

0.07

 

0.15

 

0.34

 

0.55

 

Non-GAAP Net income per ADS (note 3)

 

 

 

 

 

 

 

 

 

Basic

 

$

0.10

 

$

0.19

 

$

0.43

 

$

0.63

 

Diluted

 

0.10

 

0.18

 

0.42

 

0.62

 

 

 

 

 

 

 

 

 

 

 

ADSs used in calculating net income per ADS

 

 

 

 

 

 

 

 

 

Basic

 

77,873,908

 

78,512,474

 

77,681,607

 

78,271,459

 

Diluted

 

78,057,600

 

80,712,601

 

78,158,100

 

80,079,972

 

 

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.

 

9