ATA Reports Fiscal 2015 First Quarter Financial Results

ATA Reports Fiscal 2015 First Quarter Financial Results 
Company to Hold Conference Call on August 8, 2014, at 8 a.m. ET;
Expanding Business Focus Into Online Education and Training Services;
Developed Exam Inventory Navigator ("Kao Shi Dao Hang") Mobile
Application; Establishing Joint Venture With New Oriental to Provide
Online Education Solutions 
BEIJING, CHINA -- (Marketwired) -- 08/07/14 --  ATA Inc. ("ATA" or
the "Company") (NASDAQ: ATAI), a leading provider of computer-based
testing and testing-related services in China, today announced
preliminary unaudited financial results for its fiscal first quarter
ended June 30, 2014 ("First Quarter 2015"). 
First Quarter 2015 Financial and Operating Highlights (percentage
changes and comparisons against fiscal first quarter ended June 30,
2013 ("First Quarter 2014")) 


 
--  Net revenues of RMB84.3 million (US$13.6 million), compared to RMB92.1
    million
--  Gross profit of RMB47.5 million (US$7.7 million), compared to RMB48.1
    million
--  Gross margin increased to 56.3%, compared to 52.2%
--  Income from operations of RMB7.9 million (US$1.3 million), compared to
    RMB9.1 million
--  Net income of RMB4.6 million (US$0.7 million), compared to RMB9.4
    million
--  Adjusted net income excluding share-based compensation expense and
    foreign currency exchange gain/loss (non-GAAP) of RMB8.7 million
    (US$1.4 million), compared to RMB11.1 million
--  Basic and diluted earnings per ADS excluding share-based compensation
    expense and foreign currency exchange gain/loss (non-GAAP) for First
    Quarter 2015 were both RMB0.36 (US$0.06)
--  Delivered approximately 2.3 million billable tests, compared to 2.1
    million billable tests
--  RMB337.7 million (US$54.4 million) in cash and no long-term debt as of
    June 30, 2014

  
Fiscal Year 2015 Outlook 


 
--  For the fiscal year ending March 31, 2015 ("Fiscal Year 2015"), ATA
    expects net revenues of between RMB385.0 million and RMB405.0 million
    and non-GAAP net income (adjusted net income, which excludes
    share-based compensation expense and foreign currency exchange
    gain/loss) of between RMB28.0 million and RMB38.0 million, which
    includes planned investments of up to RMB30.0 million to maintain and
    expand ATA's business.
--  For the quarter ending September 30, 2014 ("Second Quarter 2015"), ATA
    expects net revenues of between RMB90.0 million and RMB100.0 million.

  
Mr. Cheng-Yaw Sun, ATA's Chief Executive Officer, stated, "We were
pleased with the exam volume growth ATA achieved during First Quarter
2015, delivering 2.3 million billable exams during the period, most
of which were for the financial sector. Our First Quarter 2015
revenues were impacted by the termination of the exclusive
distributor contract between Educational Testing Services ('ETS') and
ATA for TOEIC in fiscal 2014, but we anticipate that our new
initiatives and deeper business relationships with existing customers
in fiscal 2015 will offset the effects of the termination of this
contract."  
Mr. Sun continued, "During the period, we began administering a new
assessment exam for the Tianjin Commodity Traders Association and
delivered the National College Students Futures and Derivatives
Knowledge Competition with comprehensive computer-based testing
services for the China Financial Futures Exchange. We are excited to
announce these new developments and will continue to focus on
reinvesting in our technology with the ultimate goal of providing the
most advanced testing capabilities to our clients as we work to
establish and deepen our relationships with both test sponsors and
corporations in China. In addition, we will focus on how ATA can
better serve consumers and have already begun working on various
projects that we believe will enable us to do so, including the
introduction of our very own mobile application Exam Inventory
Navigator ('Kao Shi Dao Hang') in June 2014 and the recently
announced joint venture with New Oriental Education & Technology
Group ('New Oriental'), which will grow and reinforce ATA's online
continuing education business."  
Operating Review
 In First Quarter 2015, ATA delivered a total of 2.3
million billable tests, compared to 2.1 million in First Quarter
2014. The Company had a network of 3,012 authorized test centers
throughout China as of June 30, 2014, which the Company believes to
be the largest test center network of any commercial testing service
provider in China. ATA has delivered more than 59.6 million billable
tests since it began operations in 1999. 
GAAP Results
 First Quarter 2015
 For First Quarter 2015, ATA's total
net revenues were RMB84.3 million (US$13.6 million), compared to
RMB92.1 million in First Quarter 2014, primarily due to decreased
revenue contributions from TOEIC and HR Select. Net revenues from
TOEIC and HR Select for First Quarter 2015 were RMB11.3 million
(US$1.8 million), compared to RMB20.2 million in First Quarter 2014,
as a result of decreased volumes of TOEIC, primarily due to the
termination of the exclusive distributor contract between ETS and ATA
for TOEIC. 
Gross profit for First Quarter 2015 was RMB47.5 million (US$7.7
million), compared to RMB48.1 million in First Quarter 2014. Gross
margin increased to 56.3% in First Quarter 2015, compared to 52.2% in
First Quarter 2014, primarily as a result of continued improvement in
service delivery efficiencies and decreased TOEIC exam royalties to
ETS.  
Income from operations in First Quarter 2015 was RMB7.9 million
(US$1.3 million), compared to RMB9.1 million in First Quarter 2014.  
Net income for First Quarter 2015 was RMB4.6 million (US$0.7
million), compared to RMB9.4 million in First Quarter 2014. For First
Quarter 2015, basic and diluted earnings per common share were both
RMB0.09 (US$0.01), compared to RMB0.20 in First Quarter 2014. Basic
and diluted earnings per ADS were both RMB0.18 (US$0.02) in First
Quarter 2015, compared to RMB0.40 in First Quarter 2014. 
Non-GAAP Measures
 Adjusted net income for First Quarter 2015, which
excludes share-based compensation expense and foreign currency
exchange gain/loss (non-GAAP), totaled RMB8.7 million (US$1.4
million), compared to RMB11.1 million in First Quarter 2014. Basic
and diluted earnings per common share excluding share-based
compensation expense and foreign currency exchange gain/loss
(non-GAAP) for First Quarter 2015 were both RMB0.18 (US$0.03). 
Basic and diluted earnings per ADS excluding share-based compensation
expense and foreign currency exchange gain/loss (non-GAAP) for First
Quarter 2015 were both RMB0.36 (US$0.06), compared to RMB0.48 in
First Quarter 2014. 
Please see the note about non-GAAP measures and the reconciliation
table at the end of this press release. 
Other Data
 The number of weighted average ADSs used to calculate
both basic and diluted earnings per ADS for First Quarter 2015 was
22.7 million. Each ADS represents two common shares. 
Share Repurchase Plan
 On August 5, 2014, the Company's Board of
Directors approved a share repurchase plan effective immediately.
Under the plan, ATA is authorized to repurchase up to US$5.0 million
of its issued and outstanding ADSs during the period from August 5,
2014, to January 31, 2015. The repurchases will be made from time to
time on the open market at prevailing market prices, in negotiated
off-market transactions, in block trades, or otherwise. 
The timing and extent of any purchases will depend upon market
conditions, the trading price of ATA's ADSs, and other factors, and
subject to restrictions relating to price, volume, and timing under
applicable law, including the anti-manipulation provisions of Rule
10b-18 under the Securities Exchange Act of 1934, as amended. ATA
expects to use cash to finance repurchases. 
ATA expects to implement this share repurchase program in a manner
consistent with market conditions and the interest of the
shareholders. ATA's Board of Directors will periodically review the
share repurchase program and may authorize adjustments to the
program's terms and size. The Board may also suspend or discontinue
the repurchase program at any time. The repurchase program does not
obligate ATA to make additional repurchases at any specific time or
situation. 
Guidance for Fiscal Year 2015 and for Second Quarter 2015
 For Second
Quarter 2015, ATA expects net revenues of between RMB90.0 million and
RMB100.0 million, as a result of the National Unified Certified
Public Accountants exam being held in Second Quarter 2015 instead of
the fiscal third quarter ending December 31, 2014. 
For Fiscal Year 2015, ATA expects net revenues of between RMB385.0
million and RMB405.0 million and non-GAAP net income of between
RMB28.0 million and RMB38.0 million. 


 
Estimated Financial Results                                                 
(RMB in millions)                                                           
                                                                            
                Estimated for the year ending    Actual for the year ended  
                        March 31, 2015                March 31, 2014        
                ----------------------------- ------------------------------
                                                                            
Net Revenues             385.0-405.0                       384.7            
Non-GAAP Net                                                                
 Income                   28.0-38.0                        37.9             
                                                                            
                  Estimated for the quarter    Actual for the quarter ended 
                  ending September 30, 2014         September 30, 2013      
                ----------------------------- ------------------------------
                                                                            
Net Revenues              90.0-100.0                       45.1             

 
Mr. Sun concluded, "ATA is thrilled to be partnering with New
Oriental, one of the most innovative leaders in China's education
industry, and looks forward to combining our companies' strengths to
help the large population of working professionals in China
accomplish their career goals through this new online platform. To
better serve test takers, we have also developed the Exam Inventory
Navigator ('Kao Shi Dao Hang'), a new iOS- and Android-compatible
mobile application that functions as an exam navigation tool,
allowing those who download it to their mobile devices to access
information on exams being administered throughout China, such as
exam offerings, pricing, dates, locations, etc. Since the
application's initial launch in June, over 60,000 users have
downloaded, installed, and activated an account on the tool. We
believe that the New Oriental joint venture and our new exam
navigation tool will help to fulfill needs not currently being met in
the education and assessment marketplace in China -- a growing need
for readily available information and personalized, flexible
professional career education, while increasing ATA's direct exposure
and brand awareness to consumers in China, which is a key component
to the Company's long-term strategy and vision for growth in Fiscal
Year 2015. Through these new initiatives, ATA plans to collect and
analyze data that will prove valuable to education and training
organizations, recruiting agencies, and consumers themselves. In this
regard, we continue looking for opportunities to partner with leaders
in various industries that we feel will add value to all parties, and
are optimistic about the partnerships we have forged thus far. We
look forward to keeping investors apprised of our progress." 
These are ATA's current projections, which are subject to change. You
are cautioned that operating results in First Quarter 2015 are not
necessarily indicative of operating results for any future periods. 
Conference Call and Webcast Information (With Accompanying
Presentation)
 ATA will host a conference call at 8 a.m. Eastern Time
on Friday, August 8, 2014, during which management will discuss the
results of First Quarter 2015. To participate in the conference call,
please use the following dial-in numbers about 10 minutes prior to
the scheduled conference call time: 


 
U.S. & Canada (Toll-Free):     +1 (888) 339-2688                            
International (Toll):          +1 (617) 847-3007                            
                                                                            
                               Toll-Free              Local Access          
                               ---------------------- ----------------------
China (Netcom):                (10 800) 713 1756                            
China (Telecom):               (10 800) 130 1713      (400) 881 1630        
Hong Kong:                     (800) 96 3844          3002 1672             
                                                                            
Participant Passcode:          73238401                                     

 
A live webcast of the conference call can be accessed at the investor
relations section of ATA's website at www.ata.net.cn or by clicking
the following link: https://www.webcaster4.com/Webcast/Page/274/5184. 
An accompanying slide presentation in PDF format will also be made
available 30 minutes prior to the conference call on the same
investor relations section of ATA's website. To listen to the
webcast, please visit ATA's website a few minutes prior to the start
of the call to register, download, and install any necessary audio
software. 
A replay will be available shortly after the call on the investor
relations section of ATA's website and will remain available for 90
days. 
About ATA Inc.
 ATA is a leading provider of advanced testing
technologies in China. The Company offers comprehensive services for
the creation and delivery of assessments based on its proprietary
testing technologies and test delivery platform. ATA's testing
technologies are used for professional licensure and certification
tests in various industries, including information technology
services, banking, teaching, securities, insurance, and accounting.
As of June 30, 2014, ATA's test center network comprised 3,012
authorized test centers located throughout China. The Company
believes that it has the largest test center network of any
commercial testing service provider in China.  
ATA has delivered more than 59.6 million billable tests since ATA
started operations in 1999. 
For more information, please visit ATA's website at www.ata.net.cn.  
Cautionary Note Regarding Forward-looking Statements
 This
announcement contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and as
defined in the Private Securities Litigation Reform Act of 1995.  
These forward-looking statements can be identified by terms such as
"anticipate," "believe," "could," "estimate," "expect," "forecast,"
"future," "intend," "look forward to," "outlook," "plan," "should,"
"will," and similar terms and include, among other things, the
Company's guidance relating to anticipated financial and operating
results for the First Quarter 2015 and Fiscal Year 2015 and
statements regarding market demand and trends, the SAC exam, the
potential growth and success of the Company's CPA, security guard and
Cambridge English Junior Exam and other businesses, including its HR
Select and MTS businesses, the Company's share repurchase plan and
the Company's future growth and results of operations. 
The factors that could cause the Company's actual financial and
operating results to differ from what the Company currently
anticipates can include its ability to meet challenges associated
with its rapid expansion, its ability to meet the expectations of
current and future clients, its ability to deploy new test titles,
its ability to win new enterprise contracts, its ability to convert
its existing contracts into actual revenues, the economy of China,
uncertainties with respect to the China's legal and regulatory
environments, and other factors stated in the Company's filings with
the U.S. Securities and Exchange Commission ("SEC"). 
The financial information contained in this release should be read in
conjunction with the consolidated financial statements and related
notes included in the Company's annual report on Form 20-F for its
fiscal year ended March 31, 2014, and other filings that ATA has made
with the SEC. The filings are available on the SEC's website at
www.sec.gov and at ATA's website at www.ata.net.cn. For additional
information on the risk factors that could adversely affect the
Company's business, financial condition, results of operations, and
prospects, please see the "Risk Factors" section of the Company's
Form 20-F for the fiscal year ended March 31, 2014. 
The selected unaudited financial results for the First Quarter 2015
announced today are subject to adjustments. The anticipated results
for the First Quarter 2015 remain subject to the finalization of the
Company's year-end closing, reporting and audit processes. 
The forward-looking statements in this release involve known and
unknown risks and uncertainties and are based on current
expectations, assumptions, estimates, and projections about ATA and
the markets in which it operates. The Company undertakes no
obligation to update forward-looking statements, which speak only as
of the date of this release, to reflect subsequent events or
circumstances, or to changes in its expectations, except as may be
required by law. Although the Company believes that the expectations
expressed in these forward-looking statements are reasonable, the
Company cannot assure you that its expectations and assumptions will
turn out to be correct, and investors are cautioned that actual
results may differ materially from the anticipated results. 
Currency Convenience Translation
 The Company's financial information
is stated in Renminbi ("RMB"), the currency of the People's Republic
of China. The translation of RMB amounts for First Quarter 2015 ended
June 30, 2014, into U.S. dollars are included solely for the
convenience of readers and have been made at the rate of RMB6.2036 to
US$1.00, the noon buying rate as of June 30, 2014, in New York for
cable transfers in RMB per U.S. dollar as set forth in the H.10
weekly statistical release of the Federal Reserve Board. Such
translations should not be construed as representations that RMB
amounts could be converted into U.S. dollars at that rate or any
other rate, or to be the amounts that would have been reported under
U.S. GAAP. 
About Non-GAAP Financial Measures
 To supplement ATA's consolidated
financial information presented in accordance with U.S. generally
accepted accounting principles ("GAAP"), ATA uses the following
non-GAAP financial measures: net income (loss) excluding share-based
compensation expense and foreign currency exchange gain or loss, and
basic and diluted earnings (losses) per common share and ADS
excluding share-based compensation expense and foreign currency
exchange gain or loss.  
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. ATA
believes these non-GAAP financial measures provide meaningful
supplemental information about its performance by excluding
share-based compensation expense and foreign currency exchange gains
or losses, which may not be indicative of its operating performance
from a cash perspective.  
ATA 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 ATA's
historical performance. ATA computes its non-GAAP financial measures
using a consistent method from period to period. ATA 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 net income (loss) excluding share-based
compensation expense and foreign currency exchange gains or losses
and basic and diluted earnings (losses) per common share and per ADS
excluding share-based compensation expense and foreign currency
exchange gain or loss is that share-based compensation charges and
foreign currency exchange gains or losses have been, and are expected
to continue to be for the foreseeable future, a significant recurring
expense in ATA's business.  
Management compensates for these limitations by providing specific
information regarding the GAAP amounts excluded from each non-GAAP
measure. The table captioned "Unaudited Reconciliations of Non-GAAP
Measures to the Most Comparable GAAP Measures" shown at the end this
news release has more details on the reconciliations between GAAP
financial measures that are most directly comparable to the non-GAAP
financial measures used by ATA. 


 
                                                                            
                                                                            
                         ATA INC. AND SUBSIDIARIES                          
              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS               
                                                                            
                                  March 31,        June 30,        June 30, 
                                       2014            2014            2014 
                             --------------  --------------  -------------- 
                                        RMB             RMB             USD 
                             --------------  --------------  -------------- 
ASSETS                                                                      
Current assets:                                                             
  Cash                          311,947,098     337,687,024      54,434,042 
  Restricted cash                 2,700,000               -               - 
  Accounts receivable, net       68,353,075      49,942,266       8,050,530 
  Prepaid expenses and other                                                
   current assets                15,092,674      10,185,018       1,641,792 
                             --------------  --------------  -------------- 
    Total current assets        398,092,847     397,814,308      64,126,364 
                             --------------  --------------  -------------- 
                                                                            
  Property and equipment,                                                   
   net                           55,814,182      54,595,572       8,800,627 
  Goodwill                       31,011,902      31,011,902       4,999,017 
  Intangible assets, net          1,792,935       1,744,717         281,243 
  Other assets                    4,524,858      18,407,354       2,967,205 
                             --------------  --------------  -------------- 
    Total assets                491,236,724     503,573,853      81,174,456 
                             --------------  --------------  -------------- 
                                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Current liabilities:                                                        
  Accrued expenses and other                                                
   payables                      68,766,143      68,938,553      11,112,667 
  Dividend payable                        -      58,446,624       9,421,404 
  Deferred revenues               8,383,327       9,823,306       1,583,485 
                             --------------  --------------  -------------- 
    Total current                                                           
     liabilities                 77,149,470     137,208,483      22,117,556 
                             --------------  --------------  -------------- 
                                                                            
  Deferred revenues               2,195,382       2,037,137         328,380 
                             --------------  --------------  -------------- 
    Total liabilities            79,344,852     139,245,620      22,445,936 
                             --------------  --------------  -------------- 
                                                                            
Shareholders' equity:                                                       
  Common shares                   3,474,894       3,509,349         565,696 
  Treasury shares                (1,029,766)     (1,832,850)       (295,449)
  Additional paid-in capital    437,964,776     386,545,958      62,309,943 
  Accumulated other                                                         
   comprehensive loss           (27,145,929)    (27,127,624)     (4,372,884)
  Retained earnings                                                         
   (accumulated deficit)         (1,372,103)      3,233,400         521,214 
                             --------------  --------------  -------------- 
    Total shareholders'                                                     
     equity                     411,891,872     364,328,233      58,728,520 
                             --------------  --------------  -------------- 
    Total liabilities and                                                   
     shareholders' equity       491,236,724     503,573,853      81,174,456 
                             ==============  ==============  ============== 
                                                                            
                                                                            
                         ATA INC. AND SUBSIDIARIES                          
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME     
                                                                            
                                        Three-month Period Ended            
                             ---------------------------------------------- 
                                   June 30,        June 30,        June 30, 
                                       2013            2014            2014 
                             --------------  --------------  -------------- 
                                        RMB             RMB             USD 
Net revenues:                                                               
  Testing services               84,170,350      79,235,722      12,772,539 
  Test preparation and                                                      
   training solutions             2,392,471         809,524         130,493 
  Other revenue                   5,502,992       4,272,229         688,669 
   Total net revenues            92,065,813      84,317,475      13,591,701 
 Cost of revenues                43,998,285      36,809,919       5,933,638 
                             --------------  --------------  -------------- 
   Gross profit                  48,067,528      47,507,556       7,658,063 
                                                                            
Operating expenses:                                                         
Research and development          6,327,262       9,686,960       1,561,506 
Sales and marketing              11,440,939      11,531,767       1,858,883 
General and administrative       21,170,466      18,428,102       2,970,550 
                             --------------  --------------  -------------- 
  Total operating expenses       38,938,667      39,646,829       6,390,939 
                             --------------  --------------  -------------- 
Income from operations            9,128,861       7,860,727       1,267,124 
                                                                            
Other income (expense):                                                     
Interest income                     754,034       1,320,286         212,826 
Foreign currency exchange                                                   
 gain (loss), net                   125,088        (972,420)       (156,751)
                             --------------  --------------  -------------- 
  Total other income                879,122         347,866          56,075 
Income before income taxes       10,007,983       8,208,593       1,323,199 
                                                                            
Income tax expense                  599,420       3,603,090         580,806 
                             --------------  --------------  -------------- 
Net income                        9,408,563       4,605,503         742,393 
                             --------------  --------------  -------------- 
                                                                            
Other comprehensive income                                                  
 (loss):                                                                    
Foreign currency translation                                                
 adjustment, net of nil                                                     
 income taxes                      (577,836)         18,305           2,951 
                             --------------  --------------  -------------- 
Comprehensive income              8,830,727       4,623,808         745,344 
                             ==============  ==============  ============== 
                                                                            
Basic earnings per common                                                   
 share                                 0.20            0.09            0.01 
                                                                            
Diluted earnings per common                                                 
 shareShare                            0.20            0.09            0.01 
                                                                            
Basic earnings per ADS                 0.40            0.18            0.02 
                                                                            
Diluted earnings per ADS               0.40            0.18            0.02 
                                                                            
                                                                            
               UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES               
                    TO THE MOST COMPARABLE GAAP MEASURES                    
                                                                            
                                                Three-month Period Ended    
                                            --------------------------------
                                                   June 30,         June 30,
                                                       2013             2014
                                            ---------------  ---------------
                                                        RMB              RMB
                                                                            
GAAP net income                                   9,408,563        4,605,503
Share-based compensation expenses                 1,791,475        3,158,424
Foreign currency exchange (gain) loss, net         (125,088)         972,420
                                                                            
Non-GAAP net income                              11,074,950        8,736,347
                                                                            
GAAP earnings per common share:                                             
  Basic                                                0.20             0.09
  Diluted                                              0.20             0.09
                                                                            
Non-GAAP earnings per common share:                                         
  Basic                                                0.24             0.18
  Diluted                                              0.24             0.18

  
For more information on our company, please contact the following individuals: 
At the Company 
ATA, Inc. 
Benson Tsang
CFO 
+86 10 6518 1122 x5107 
bensontsang@ata.net.cn 
Investor Relations 
The Equity Group Inc. 
Carolyne Y. Sohn
Senior Associate 
415-568-2255 
+86 10 6587 6435
csohn@equityny.com  
Adam Prior
Senior Vice President
 212-836-9606
aprior@equityny.com 
 
 
Press spacebar to pause and continue. Press esc to stop.