Carolyne Sohn - Senior Associate, The Equity Gruop Kevin Ma - Chairman & CEO Shelly Jiang - CFO

Good day, ladies and gentleman, and welcome to the ATA Inc. Fiscal Year 2016 Third Quarter Financial Results Conference Call. My name is Rwanda, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to Carolyne Sohn, Senior Associate. Please proceed.

Thanks Rwanda, and good morning, everyone. Thank you for joining us. Copies of the press release announcing ATA’s fiscal 2016 third quarter results are available at the IR section of the company’s website at www.atai.net.cn. As a part of this conference call, the company has accompanying slide presentation available on its website. You're also welcome to contact our office at (212) 836-9600 and we would be happy to send you a copy. In addition, a replay of this broadcast will be made available at ATA’s website for the next 90 days. Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contains certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Although the company believes that the expectations reflected in its forward-looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected. There can be no assurance that those expectations will prove to be correct. Information about the risks associated with investing in ATA is included in its filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision. The company does not assume any obligation to update any forward-looking statements as a result of new information, future events, changes in market conditions or otherwise, except as required by law. Regarding the disclaimer language, I would also like to refer you to Slide 2 of the conference call presentation for further information. All US dollar amounts in this conference call relating to financial results for the company’s most recent quarter ended December, 31, 2015 are converted from RMB using an exchange rate of RMB6.4778 to $1.00, the noon buying rate as of December 31, 2015. All historical conversions are accurate as of the time reported unless otherwise noted. The company reports its financial results under US GAAP in RMB and all percentages are calculated in the presentation are based on RMB, unless otherwise noted. For those of you following along with the accompanying PowerPoint presentation, there is an overview of the company on Slide 3. The company’s Interim CFO, Ms. Shelly Jiang will provide an overview of operational and financial highlights for third quarter 2016 beginning with Slide 4. The company’s Chairman and CEO, Mr. Kevin Ma, will then discuss ATA’s outlook and growth strategy for the remainder of fiscal year 2016, before opening the floor for questions. With that, I’ll turn the call over to ATA’s Interim CFO, Ms. Shelly Jiang. Please go ahead, Shelly.

Thank you, Carolyne, and welcome everyone. Today I will provide an overview of our operating and financial highlights, and then briefly discuss our outlook for fiscal year 2016. I will begin on Slide 5, which lists some of our operating highlights for third quarter 2016. We were pleased to deliver record results in third quarter 2016. In this fiscal third quarter has historically been our strongly lift due to the timing of our clients exams. During third quarter 2016, we delivered approximately 5.1 billable tests, which compares to about 2.6 million in the prior-year period. This increase was primarily due to the change in timing of the CPA exam, which took place in third quarter 2016 versus the second quarter in the prior fiscal year. Increased exam volumes from the new Fund Practitioners Certification Exam and National Patent Agent Qualification Exam also contributed to overall exam volume growth during the period. In October 2016, ATA successfully delivered the computer-based CPA exam for the fourth consecutive year. The exams saw a record results with over 1.9 million exams taken across China and the Hong Kong and the Macau special administrative regions, surpassing last year’s 1.6 million exams delivered. We recently announced ATA’s engagement as a service provider for the first computer-based National Tax Adviser Occupational Qualification Exam, which is scheduled to be delivered February 27 to 28, 2016. ATA has a proven record of successfully transitioning exams from traditional paper and pen format to a technology-based platform, and it continues to be an area we are exploring and we work to grow our testing services business. We are working closely with the China Certified Tax Agents Association on ensuring a smooth exam process later this month. During the period, we also continued to make progress on the wholly-owned subsidiary, ATA Online’s…

Thank you, Shelly. Slide 14 is our overall growth strategies. I’m very proud of the results we had by the hard work of the entire ATA organization that we saw in fiscal year 2016. We have already made a great deal of progress on our goal of growing our core testing services business and we are continually looking to take advantage of the ongoing shift from paper-based testing to computer-based testing as we explore additional opportunities to utilize our extensive data to enhance ATA’s value to clients and test takers alike. A few weeks ago, we announced that during the recently completed bidding process, ATA was not selected to be the service provider for the computer-based SAC exam during calendar years 2016 and 2017. We are naturally disappointed in this results. However we remain confident in the superiority of our service offerings and our ability to secure new business, which has made a strong showing in fiscal year 2016. We don’t expect the loss of the SAC exam to impact our fiscal year 2016 results, and as Shelly mentioned earlier, given our strong third quarter 2016, ATA is raising its net revenue guidance for fiscal year 2016. We continued to progress on our New Third Board listing efforts and are pleased that in just a few months ATA Online was able to gain the necessary approval for its shares to officially be listed on the New Third Board. We believe this listing in China where any organizations in China with whom we conduct the majority of our business to more recently organized ATA as a Chinese company and be more weighting to partner with us. It will also increase ATA’s brand exposure to the general Chinese public. With the official listing of ATA Online’s shares on the New Third Board,…

Thank you.[Operator Instructions] Your first question comes from the line John Zang [ph]. Please proceed.

Hello. I have two question. The first, what’s the impact of the loss of the Financial Securities Association as plan down the company going forward award? Could you also give some color around fiscal year 2017 financials? Thank you.

Okay. Thank you for your questions. As we mentioned earlier, we are disappointed with the loss of the SAC [ph] contract. However, from the other assignments, we feel encouraged that it reflects our general session for the computer-based testing is increasing and our market is growing. With our first-mover advantage and our strength, with our solid operational experiences over 3,000 test centers all over China, flexible testing technologies and our pragmatic assessment capabilities, we remain optimistic of our business going forward. So regarding our fiscal year 2017, we have gained a number of new clients this year, such as we mentioned before, Fund Practitioners Certification Exam, National Tax Adviser Occupational Qualification Exam and National Patent Agent Qualification Exams. We shall work closely with these associations throughout the test volumes. We are also working on a number of prospective clients covering testing, test and preparation & training and online continued education services. So combining the growth of existing clients and driving off new clients, we believe we can make up a significant proportion, if not, less of the volume resulting from the SAC contract in the coming year. We anticipate to complete our fiscal year 2017 in March, so we think we will be ready to share more with you in our fiscal year 2016 Q4 and full-year earnings call in May 2016. Thank you for your questions.

Got it. Thank you.

Your next question comes from the line of Manny Supakis [ph] with the Markets Edge [ph]. Please proceed.

Thanks for taking my call. Actually my question would be - couple of questions. First of all, could you - could the management or Mr. Ma just briefly talk about right now the share ownership structure of the company? We noticed that recently 13D file, Mr. Ma has purchased roughly 33% of the total outstanding shares of the company at a price of 9.50 per ADS from previous shareholder and we just want to - I just want to - I’m just curious about the current ownership structure of the company. This is my first question. My second question would be - yes, this is my first question. Thanks.

Okay. For the share ownership, yes, like what you said that we can see the filing of the 13D by Kevin Ma, and after this changes, the ownership is Kevin Ma will hold over 44% of our whole shares - outstanding shares and our management will hold around 5% of the total outstanding shares. So if we combine the Kevin Ma and our senior management’s shares that will be around 49% of the total outstanding shares. That’s the major by shareholders.

Okay. Thank you.

[Foreign Language - Chinese]

So you’re talking about the U.S. outstanding shares. Yes, America...

[Foreign Language - Chinese]

[Foreign Language - Chinese]

Thank you. So just a follow-up actually. Any other like significant institutional holders for the company?

I think the major institution investor is GIC that’s Singapore Investment Corp. Their share around 5% of the total outstanding shares.

Okay. Thanks. So my second question would be the company announced - ATA announced that the ATA Online is planning to do a private placement in news reporting channel and with no more than US$57.5 million. What sort of private placement? And I’m just curious after the - what’s the like right now the schedule of this private placement and after the private placement, I’m guessing or I’m assuming that ATA, in the U.S. ATAI, will consolidate their cash rates from that private placement, and if that’s the case, then cash balance of ATAI would be close to US$100 million. Am I correct?

Yes, you’re correct. So about the valuation of the private placement plan, we were reasonable than the RMB378 million. So the total valuation of the ATA Online that is the New Third Board entity, and that will be around RMB1.6 billion. So after we raising the capital from the New Third Board, our cash balance of the ATA Inc. will increase, the same balance that we closed by end of year December 31, our balance is around RMB280 million. So first, the additional funding around RMB378 million that will be over RMB600 million balance - yes, in our cash balance.

Okay. That’s very helpful. This is my last question, I’m sorry.

Thank you.

So we noticed that Mr. Tong Zhilei has been appointed as a new Director to the Board of Directors and I’m just curious, so if the company in the foreseeable future is going to expand or establish any business relationship with the ChinaAll Digital company which is China Asia listed company?

I think Mr. Tong has more experience in revolutionizing on the publishing industry in China, and I currently expect that not only he will bring his personal industry experience in our company, also that maybe we can see some business opportunities in the future.

Thank you. That’s very helpful. Thank you.

Thank you.

Thank you.

[Operator Instructions] Your next question is a follow-up from the line of John Zang [ph]. Please proceed.

Hello. My second question is, could you provide more explanation about valuation and [indiscernible] placement plan and what’s the benefit to the shareholders of the ATA Inc.?

Okay. Thank you for the question. I think how the valuation, I have answered on the last question raised by another sir. So I will answer the second question. After the private placements, ATA will still own a substantial majority of the outstanding equity interest of ATA Online, representing around 77%, and ATA Inc. will continue to consolidate the financial results on the business of ATA. Regarding the benefit, investors will be benefited from our dividend distribution and capital appreciation of the ATA Online listed in New Third Board. Thank you.

Thank you, John Zang [ph].

And with no further questions in queue, I would now like to hand the conference over to Kevin Ma for closing remarks.

Thanks again to all of you for joining us. If anyone has question for us, please feel free to reach directly to us or our Investor Relations firm, The Equity Group. We look forward to speaking with you all again during our fourth quarter 2016 financial results call. As always we welcome any investors to our office in Beijing. Thank you.

Ladies and gentleman, thank you for joining today’s conference. That concludes the presentation. You may now disconnect. Have a great day.