Education Management Corporation Reports Fiscal 2002 Second Quarter and Six Month Financial Results

Second Quarter Revenue Up 25.6%; Quarterly Net Income Increases 32.7%

Pittsburgh, Pennsylvania, UNITED STATES


PITTSBURGH, Feb. 5, 2002 (PRIMEZONE) -- Education Management Corporation (Nasdaq:EDMC) today reported its financial results for the second quarter ended December 31, 2001.

Net revenues for the second quarter of fiscal 2002 increased by 25.6% to $129.5 million, compared with $103.1 million in the second quarter of fiscal 2001. Net income for the quarter grew 32.7% to $19.3 million, or $.58 per diluted share, as compared to $14.5 million, or $.47 per diluted share, in the second quarter last year.

For the six months ended December 31, 2001, net revenues rose 26.0% to $221.4 million, compared with $175.7 million, for the comparable six-month period last year. Net income for the first six months of fiscal 2002 increased 35.6% to $21.3 million, or $.65 per diluted share, as compared to $15.7 million, or $.51 per diluted share, for the same period last year.

Revenue growth in the second quarter resulted from a 15.6% increase in student enrollment and an increase in average tuition rates of approximately 7% over last year. Total student enrollment at the start of the second quarter of fiscal 2002 was 32,375 as compared to 27,999 last year.

As previously announced, the Company completed two acquisitions in the second quarter of fiscal 2002: ITI Information Technology Institute ("ITI") on November 23, 2001 and Argosy Education Group, Inc. ("Argosy") on December 21, 2001. Organizationally, ITI is being combined with Argosy. The results of operations for these entities are included in EDMC's second quarter results from the respective acquisition dates. These entities contributed approximately $1.5 million of revenue and had an immaterial effect on operating results for the second quarter.

At the start of the current third quarter, total enrollment at EDMC's schools, including Argosy and ITI, was 37,658. The Art Institutes' enrollment increased 15.8% to 31,272 from 26,997 as compared to the third quarter last year. At the 18 Art Institutes operated by EDMC for two or more years, enrollment grew 7.3% in the quarter to 27,962 students, as compared to 26,050 students at the start of the same period last year. Total enrollment in The Art Institutes' bachelor's degree programs was 12,830, a 52.6% increase from the prior year.

Argosy's enrollment for the third quarter was 6,386, a 38.1% increase as compared to the start of the same period last year. On a same school basis (excluding ITI and Western State University College of Law), Argosy's enrollment increased 22.9% from 4,625 students last January to 5,685 students this year.

The above third quarter figures exclude enrollment at The National Center for Paralegal Training. The school, which is located in The Art Institute of Atlanta facility, will no longer accept new students but will continue to conduct classes to permit its present 183 students to complete their education programs.

The Company's quarterly revenues and income fluctuate with student enrollment patterns. Student enrollment has typically increased 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.

Robert Knutson, EDMC's Chairman and Chief Executive Officer, commented, "The completion of our merger with Argosy Education Group in December was the culmination of over six months of effort by many people. I want to again welcome the faculty and staff of Argosy and ITI to Education Management Corporation. Our transition plans are being implemented and we are very encouraged about our combined growth opportunities."

Education Management Corporation (www.edumgt.com) is among the largest providers of private post-secondary education in North America, based on student enrollment and revenue, with 40 primary campus locations in 26 major cities, and with approximately 39,000 students as of fall 2001. EDMC's Art Institutes (www.artinstitutes.edu) offer master's, bachelor's, associate's and non-degree programs in the areas of design, media arts, fashion and culinary arts. EDMC's Argosy University (www.argosyu.edu) provides doctoral, master's, bachelor's and associate's degree programs in the behavioral sciences, education, business and health sciences fields. EDMC has provided career-oriented education for 40 years, and its education institutions have more than 135,000 alumni.

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           Six Months
                                ended Dec. 31,        ended Dec. 31,
                                 (unaudited)           (unaudited)
                               2001       2000       2001        2000
                             --------   --------   --------   --------
 
 Net revenues                $129,490   $103,112   $221,364   $175,673
 
 Costs and expenses:
 Educational services          74,326     58,073    141,458    111,069
 General and
  administrative               22,679     19,951     43,403     36,637
 Amortization of
  intangibles                     530        449        839        817
                             --------   --------   --------   --------
 
                               97,535     78,473    185,700    148,523
                             --------   --------   --------   --------
 Income before
  interest and taxes
  (EBIT)                       31,955     24,639     35,664     27,150
 Interest expense, net            548        823      1,027      1,438
                             --------   --------   --------   --------
 Income before income
  taxes                        31,407     23,816     34,637     25,712
 Provision for income
  taxes                        12,123      9,285     13,370     10,025
                             --------   --------   --------   --------
 
 Net income                  $ 19,284   $ 14,531   $ 21,267   $ 15,687
                             ========   ========   ========   ========
 
 Diluted earnings
  per share                  $    .58   $    .47   $    .65   $    .51
                             ========   ========   ========   ========
 
 Weighted average
 number of diluted
 shares outstanding
 (000's):                      33,363     30,963     32,626     30,628
 
 
 Selected Balance Sheet Data:
                                                      As of Dec. 31
                                                   2001         2000
                                                --------      --------
 
 Cash and cash equivalents                      $ 44,452      $  9,448
 Receivables, net                                 33,318        26,272
 Current assets                                   98,332        49,622
 Total assets                                    439,312       244,486
 Current liabilities                             117,732        85,020
 Long-term debt (including
  current portion)                                 4,049        25,161
 Shareholders' investment                        312,298       134,336


        

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