Education Management Corporation Reports Fiscal 2001 and Fourth Quarter Financial Results; Fourth Quarter Revenue Up 24.2% and Quarterly Net Income Increases 27.8%; Fiscal 2002 First Quarter Student Enrollment Increases 17.8%


PITTSBURGH, July 31, 2001 (PRIMEZONE) -- Education Management Corporation (Nasdaq:EDMC) today reported its financial results for the fourth quarter and year ended June 30, 2001.

Net revenues for the fourth quarter of fiscal 2001 increased by 24.2% to $94.6 million, compared with $76.2 million in the fourth quarter of fiscal 2000. Net income for the quarter grew 27.8% to $3.8 million, or $.12 per diluted share, as compared to $3.0 million, or $.10 per diluted share, in the fourth quarter last year.

For the twelve months ended June 30, 2001, net revenues rose 20.6% to $370.7 million, compared with $307.2 million, in the prior year. Net income for fiscal 2001 increased 28.6% to $29.0 million, or $.93 per diluted share, as compared to $22.5 million, or $.75 per diluted share, last year.

Revenue growth in the fourth quarter resulted from a 15.9% increase in student enrollment and an increase in average tuition rates of approximately 7% over last year. Total student enrollment at the Company's schools in the fourth quarter of fiscal 2001 was 25,945 compared to 22,390 last year.

At the start of the current summer quarter (first quarter of fiscal 2002), total enrollment at EDMC's schools increased 17.8% to 24,735, up from 20,991 as of the comparable point last year. At the 17 schools operated by EDMC for two or more years, enrollment grew 10.3% in the quarter to 22,522 students, as compared to 20,424 students at the start of the same period last year. Total enrollment in bachelor's degree programs was 8,640, a 65.0% increase from start of the first quarter last year.

The Company's quarterly revenues and income fluctuate with student enrollment patterns. Student enrollment typically increases in the fall (fiscal year second quarter), when the largest number of new high school graduates traditionally begin post-secondary education. The Company's quarterly costs and expenses, however, do not fluctuate as significantly as revenues.

Earlier this month, EDMC announced the signing of agreements to acquire Argosy Education Group, headquartered in Chicago, and International Fine Arts College, Miami, Florida. When the transactions are approved by regulatory authorities, education programs in psychology, education, law, business and various art and design fields will be added to the EDMC system, at the undergraduate, graduate and postgraduate levels, serving more than 7,000 students at a number of campus locations.

Robert Knutson, EDMC's Chairman and Chief Executive Officer, commented, "We're pleased to report another quarter and fiscal year of improved operating results. The recently announced agreement to acquire Argosy Education Group, when closed later this calendar year, will provide a platform for EDMC to participate more broadly in the growing higher education market."

Mr. Knutson added, "The Art Institutes, our core business, has consistently demonstrated that a focus on student outcomes serves all our constituencies well. The announced acquisition of International Fine Arts College represents an extension of our strategy to enter attractive new geographic markets and add promising new education programs. We believe we will have sufficient revenue growth and margin expansion to deliver better than 20% earnings per share growth in our current fiscal year."

EDMC is among the largest providers of proprietary post-secondary education in the United States, based on student enrollment and revenue. EDMC's 24 current education institutions offer bachelor's and associate's degree programs and non-degree programs in the areas of design, media arts, culinary arts and fashion. The Company has provided career-oriented education programs for over 35 years, and its Art Institutes have more than 125,000 graduates. For more information about The Art Institutes and The Art Institute Online, visit their Web sites at www.artinstitutes.edu and www.aionline.edu.

This press release may include information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements may involve risk and uncertainties that could cause actual results to differ materially from any future results encompassed within the forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the Company's Securities and Exchange Commission filings. Past results of EDMC are not necessarily indicative of its future results. EDMC does not undertake any obligation to update any forward-looking statements.


                 Education Management Corporation
             Summary Consolidated Statements of Income
             (In thousands, except earnings per share)


                               Three Months          Twelve Months
                               ended June 30,        ended June 30,
                                (unaudited)
                              2001       2000       2001       2000
                            --------   --------   --------   --------

 Net revenues               $ 94,642   $ 76,181   $370,681   $307,249
 Costs and expenses:
  Educational services        67,115     53,418    242,313    201,187
  General and
    administrative            20,417     17,252     76,716     66,209
  Amortization of
    intangibles                  594        396      1,977      1,511
                            --------   --------   --------   --------
                              88,126     71,066    321,006    268,907
                            --------   --------   --------   --------
 Income before interest
        and taxes (EBIT)       6,516      5,115     49,675     38,342
 Interest expense, net           398        197      2,275
                            --------   --------   --------   --------
                                                                  726
 Income before income taxes    6,118      4,918     47,400     37,616
 Provision for income taxes    2,325      1,951     18,422     15,086
                            --------   --------   --------   --------

 Net income                 $  3,793   $  2,967   $ 28,978   $ 22,530
                            ========   ========   ========   ========

 Diluted earnings per share $    .12   $    .10   $    .93   $    .75
                            ========   ========   ========   ========
 Weighted average number of
   diluted shares
   outstanding (000's):       31,659     30,186     31,016     29,921

 

 Selected Balance Sheet Data:
                                              As of June 30,
                                          2001             2000
                                          ----             ----
 Cash and cash equivalents             $ 47,290         $ 39,538
 Receivables, net                        18,945           14,931
 Current assets                          84,434           66,713
 Total assets                           286,280          240,675
 Current liabilities                     70,150           62,891
 Long-term debt
   (including current portion)           53,660           64,283
 Shareholders' investment               159,949          112,950


            

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