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TAL Education Group Announces Unaudited Financial Results For The Third Fiscal Quarter Ended November 30, 2010

1 As used in this press release, 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 are defined to exclude share-based compensation expense from operating costs and expenses, cost of revenues, selling and marketing expenses, general and administrative expenses, income from operations, net income attributable to TAL and earnings per ADS, respectively. See “About Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Measures To The Most Comparable GAAP Measures” at the end of this press release.

 

TAL Education Group UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In U.S. dollars)
 
            As ofFebruary 28, 2010   As ofNovember 30, 2010
ASSETS
 
Current assets
Cash and cash equivalents

$

50,752,481

 

$

178,561,614

 
Available-for-sale securities 1,918,156 464,599
Amounts due from related parties - 8,100
Inventory 121,819 192,211
Deferred tax assets-current 831,297 1,152,469
Prepaid expenses and other current assets   2,280,941     4,526,832  
Total current assets   55,904,694     184,905,825  

 

 
Property and equipment, net 4,991,490 6,595,296
Deferred tax assets-non-current 283,968 719,695
Rental deposit 2,170,548 2,603,269
Intangible assets, net 1,389,160 814,403
Goodwill   763,802     653,072  
Total assets $ 65,503,662   $ 196,291,560  

 

 
LIABILITIES AND EQUITY
 
Current liabilities

Accounts payable (including accounts payable of the consolidated VIEs without recourse to TAL Education Group of 915,408 and 490,117 as of February 28, 2010, and November 30, 2010, respectively)
$ 987,742 $ 749,696
Deferred revenue (including deferred revenue of the consolidated VIEs without recourse to TAL Education Group of 24,631,648 and 23,909,154 as of February 28,2010 and November 30, 2010, respectively) 29,407,994 38,007,019
Amounts due to related parties (including amounts due to related parties of the consolidated VIEs without recourse to TAL Education Group of 108,204 and 110,781 as of February 28, 2010 and November 30, 2010, respectively) 108,204 110,781
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities without recourse to TAL Education Group of 6,588,552 and 6,955,516 as of February 28, 2010 and November 30, 2010, respectively) 6,817,816 10,957,524

Income tax payable (including income tax payable of the consolidated VIEs without recourse to TAL Education Group of 2,653,324 and 2,695,667 as of February 28, 2010, and November 30, 2010, respectively)
  580,225     2,966,692  
Total current liabilities   37,901,981     52,791,712  
Convertible loan 500,000 -
Deferred tax liabilities-non-current   175,610     124,005  
Total liabilities   38,577,591     52,915,717  
Total TAL Education Group's equity   17,926,071     143,375,843  
Total liabilities and equity $ 65,503,662   $ 196,291,560  

 

 

 

TAL Education Group UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In U.S. dollars, except shares, ADS’s, and per share, per ADS data)
 
  For the Three Months EndedNovember 30,   For the Nine Months EndedNovember 30,
2009   2010 2009   2010
 
Net revenues

 

16,285,665

 

24,060,601

 

49,106,997

 

76,934,766
Cost of revenues   9,079,193     14,045,222     25,034,568     39,978,545  
 
Gross profit   7,206,472     10,015,379     24,072,429     36,956,221  
Operating expenses (note 1)
Selling and marketing 1,646,800 2,731,220 3,596,081 6,901,772
General and administrative   3,073,467     4,844,194     7,664,653     12,641,780  
 
Total operating expenses   4,720,267     7,575,414     11,260,734     19,543,552  
 
Income from operations   2,486,205     2,439,965     12,811,695     17,412,669  
 
Interest income 126,627 367,513 229,406 572,692
Interest expense - (15,512 ) - (58,942 )
Other expenses, net   (5,908 )   66,017     (124,638 )   45,073  
Income before income tax provision 2,606,924 2,857,983 12,916,463 17,971,492
Provision for income tax   232,187     296,275     1,144,455     1,971,545  
 
Net income from continuing operations   2,374,737     2,561,708     11,772,008     15,999,947  
Net income/(loss) from discontinued operations, net of tax 25,953 (212,671 ) 55,793 (405,069 )
 

Net income attributable to TAL Education Group
  2,400,690     2,349,037     11,827,801     15,594,878  
 

Net income attributable to common shareholders of TAL Education Group
  2,400,690     2,349,037     11,827,801     15,594,878  
 
 

TAL Education Group UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In U.S. dollars, except shares, ADS’s, and per share, per ADS data)
 
  For the Three Months EndedNovember 30,   For the Nine Months EndedNovember 30,
2009   2010 2009   2010
 
Net income per common share
Basic from continuing operations

 

0.02

 

 

0.02

 

0.09

 

 

0.12
Basic from discontinued operations   0.00     (0.00 )   0.00     (0.00 )

 

 

 

 
Basic   0.02     0.02     0.09     0.12  

 

 

 

 

Diluted from continuing operations

0.02

0.02

0.09

0.12
Diluted from discontinued operations   0.00     (0.00 )   0.00     (0.00 )

 

 

 

 
Diluted   0.02     0.02     0.09     0.12  

 

 

 

 
 
Net income per ADS (note 2)
Basic from continuing operations 0.04 0.04 0.19 0.25
Basic from discontinued operations   0.00     (0.01 )   0.00     (0.01 )

 

 

 

 
Basic   0.04     0.03     0.19     0.24  

 

 

 

 
Diluted from continuing operations 0.04 0.04 0.19 0.25
Diluted from discontinued operations   0.00     (0.01 )   0.00     (0.01 )

 

 

 

 
Diluted   0.04     0.03     0.19     0.24  

 

 

 

 
 

Net income per Series A convertible redeemable preferred share-Basic
  0.02     0.02     0.09     0.12  

 

 

 

 

Weighted average shares used in calculating net income per common share
Basic 120,000,000 135,046,154 120,000,000 125,015,385
Diluted   125,000,000     140,320,667     125,000,000     130,235,796  

 

 

 

 

Weighted average shares used in calculating net income per Series A convertible redeemable preferred share-basic
  5,000,000     2,747,253     5,000,000     4,254,545  

 

 

 

 

Notes:

Note 1: Share-based compensation expenses are included in the operating costs and expenses as follows:
 
  For the Three MonthsEnded November 30   For the Nine MonthsEnded November 30
2009   2010 2009   2010
US$ US$ US$ US$
 
Cost of revenues - 260,878 - 370,291
Selling and marketing - 309,977 - 472,975
General and administrative - 1,337,561 - 1,985,012
Total - 1,908,416 - 2,828,278
 

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

TAL Education Group Reconciliation of Non-GAAP Measures To The Most Comparable GAAP Measures (In U.S. dollar, except share, ADS, and per share, per ADS data)
 

For the Three Months Ended November 30,

For the Nine Months Ended November 30,
2009   2010 2009   2010
US$ US$ US$ US$
Cost of revenues 9,079,193 14,045,222 25,034,568 39,978,545
Share-based compensation expense in cost of revenues - 260,878 - 370,291
Non-GAAP cost of revenues 9,079,193 13,784,344 25,034,568 39,608,254
 
Selling and marketing expenses 1,646,800 2,731,220 3,596,081 6,901,772
Share-based compensation expense in selling and marketing expenses - 309,977 - 472,975
Non-GAAP selling and marketing expenses 1,646,800 2,421,243 3,596,081 6,428,797
 
General and administrative expenses 3,073,467 4,844,194 7,664,653 12,641,780
 
Share-based compensation expense in general and administrative expenses - 1,337,561 - 1,985,012
Non-GAAP general and administrative expenses 3,073,467 3,506,633 7,664,653 10,656,768
Operating costs and expenses 13,799,460 21,620,636 36,295,302 59,522,097
Share-based compensation expense in operating costs and expenses - 1,908,416 - 2,828,278
Non-GAAP operating costs and expenses 13,799,460 19,712,220 36,295,302 56,693,819
 
Income from operations 2,486,205 2,439,965 12,811,695 17,412,669
 
Share based compensation charge - 1,908,416 - 2,828,278
Non-GAAP income from operations 2,486,205 4,348,381 12,811,695 20,240,947

 
GAAP net income attributable to TAL Education Group 2,400,690 2,349,037 11,827,801 15,594,878
Share based compensation charge - 1,908,416 - 2,828,278
Non-GAAP net income attributable to TAL Education Group 2,400,690 4,257,453 11,827,801 18,423,156
 
Net income per ADS
- Basic 0.04 0.03 0.19 0.24
- Diluted 0.04 0.03 0.19 0.24
 
Non-GAAP net income per ADS
- Basic 0.04 0.06 0.19 0.29
- Diluted 0.04 0.06 0.19 0.28
 
ADSs used in calculating net income per ADS
- Basic 60,000,000 67,523,077 60,000,000 62,507,693
- Diluted 62,500,000 70,160,334 62,500,000 65,117,898

Note:

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