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     
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