Exhibit 99.1
Education Management Corporation Reports Fiscal 2003 Fourth Quarter and Fiscal
Year Financial Results; Jock McKernan named CEO
PITTSBURGH, Aug. 4 /PRNewswire-FirstCall/ -- Education Management
Corporation (Nasdaq: EDMC) today reported its financial results for the fourth
quarter and twelve months ended June 30, 2003. For the quarter, net revenues
increased 22.1% to $163.1 million and net income grew 48.9% to $9.1 million,
or 25 cents per diluted share.
Robert Knutson, EDMC's Chairman and Chief Executive Officer, commented,
"We are pleased to report another fiscal year of strong financial results. We
continue to see significant interest in our program offerings and our
education institutions are off to a good start for fiscal 2004."
The company also announced that effective September 1, 2003, John
McKernan, President, will also become Chief Executive Officer. Robert Knutson
will continue as Chairman. Each will be employed under a five-year contract.
Mr. Knutson said, "Jock McKernan has the breadth of experience and the
leadership qualities that will serve our company well as we continue our
planned growth. While this will give me some additional personal time, the
performance of EDMC and attaining our strategic objectives will continue to be
my top priority. I will remain a member of our Management Committee, which
includes Jock McKernan and our highly qualified executive vice presidents Rob
McDowell, Dave Pauldine, and, when we close on our acquisition of American
Education Centers, Bill Brooks."
Financial highlights:
- Revenues for the three months ended June 30, 2003 increased 22.1% to
$163.1 million, compared to $133.5 million for the same period a year
ago. For the twelve months ended June 30, 2003, revenues rose 27.9% to
$640.0 million, compared to $500.6 million, for the comparable twelve-
month period last year. Revenue growth in the fourth quarter resulted
from a 16.7% increase in total student enrollment and an increase of
approximately 6% in average tuition rates. Total enrollment at the
start of the fourth quarter of fiscal 2003 was 41,767 students as
compared to 35,790 students for the same period last year.
- Fourth quarter income before interest and taxes (operating income) rose
57.8% to $15.7 million from $9.9 million for the same period a year
ago. For fiscal 2003, operating income rose 34.5% to $92.7 million
compared with $69.0 million in the prior year. The consolidated
operating margin improved 218 and 71 basis points for the quarter and
fiscal year, respectively. Educational services expense for both the
fourth quarter and fiscal year ended June 30, 2003 includes a
$3.2 million charge related to revising the estimated useful lives of
several classes of fixed assets and the resulting write-off of the net
book value of certain fixed assets as of the start of the fourth
quarter.
- The effective tax rate for the fiscal year was 38.5%, up from 37.2% in
the prior year. Last year's provision reflects the one-time tax credit
for building rehabilitation. The tax rate for the fiscal year is higher
than the rate recorded for the first three quarters due primarily to
the distribution of taxable income as apportioned through unitary
filings.
- Net income for the quarter grew 48.9% to $9.1 million, or $.25 per
diluted share, compared to $6.1 million, or $.17 per diluted share, in
the fourth quarter last year. For fiscal 2003, net income rose 33.0% to
$56.3 million, or $1.54 per diluted share, compared to $42.3 million,
or $1.23 per diluted share in the prior fiscal year.
- At June 30, 2003, the Company had cash and cash equivalents of
$80.5 million. Cash flow from operations for the twelve-month period
ending June 30, 2003 was $78.0 million, compared to $92.8 million last
fiscal year. Cash flow was affected by The Art Institutes' current
summer academic quarter starting six days later in July this year than
last year. Student loan proceeds normally received by electronic
transfer in the last week of June were received in early July, because
federal regulations provide for the payment of these funds only within
ten days of the start of classes. Last year $31.0 million in financial
aid related to The Art Institutes' summer quarter starting in July was
received in June, while none was received in June this year.
- Capital expenditures for the fiscal year totaled $76.9 million
on an accrual basis. The new Twin Cities facility located in Eagan,
Minnesota is on schedule to open next month and the Company's Tampa
startup is on schedule to open in early calendar 2004.
Student Enrollment
At the start of the current summer quarter (first quarter of fiscal 2004),
total enrollment at EDMC's schools was 39,977, a 21.8% increase from the same
time last year. The Art Institutes' enrollment increased 17.1% to 32,910 from
28,108 in the prior year. Total enrollment for the current summer quarter for
Argosy University, Western State and South University increased 50.2% over the
prior year. South University enrollment was 1,254 students in the first
quarter of fiscal 2004.
2004 2003 Change
Summer Summer %
Total enrollment
The Art Institutes 32,910 28,108 17.1%
Argosy University, Western
State University and
South University 7,067 4,706 50.2%
Total enrollment 39,977 32,814 21.8%
Same-school enrollment
(schools owned for 2 years
or more)
The Art Institutes 30,961 27,115 14.2%
Argosy University and
Western State University 5,761 4,706 22.4%
Total same-school enrollment 36,722 31,821 15.4%
Total online enrollment * 3,051 1,101 177.1%
* Enrollment based on a point-in-time methodology
The Company's quarterly revenues and income fluctuate with student
enrollment patterns. Student enrollment has typically peaked in the fall
(fiscal year second quarter), when the largest number of recent high school
and college graduates traditionally begins a new post-secondary education
program. The Company's quarterly costs and expenses, however, do not fluctuate
as significantly as revenues.
Business Outlook
For the first fiscal quarter, the Company estimates revenue growth of
approximately 25% and diluted EPS of $0.10. For the fiscal year ending
June 30, 2004, the Company projects revenue growth of approximately 22% and
diluted EPS of approximately $1.87. The above estimates include results for
South University, acquired July 14, 2003, but do not include revenues and
income from the announced acquisition of American Education Centers, which the
Company expects to close in early September.
Conference Call with Management
Education Management will host a conference call to discuss its fiscal
2003 fourth quarter and year-end results tomorrow at 10:30 a.m. (Eastern
Time). Those wishing to participate in this call should dial 303-262-2125
approximately 10 minutes prior to the start of the call. A listen-only audio
of the conference call will also be broadcast live over the Internet
at www.edmc.com .
Education Management Corporation ( www.edmc.com ) is among the largest
providers of private post-secondary education in North America, based on
student enrollment and revenue. Including the recent acquisition of South
University, student enrollment was approximately 45,000 as of fall 2002. EDMC
has 47 primary campus locations in 20 states and two Canadian provinces.
EDMC's education institutions offer a broad range of academic programs
concentrated in the media arts, design, fashion, culinary arts, behavioral
sciences, health sciences, education and business fields, culminating in the
award of associate's through doctoral degrees. EDMC has provided career-
oriented education for over 40 years, and its education institutions have more
than 150,000 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.
COMPANY CONTACTS:
Robert McDowell
Executive Vice President and Chief Financial Officer
(412) 562-0900
James Sober, CFA
Vice President, Investor Relations
(412) 995-7684
EDUCATION MANAGEMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
For the three months For the twelve months
ended June 30, ended June 30,
(unaudited)
2002 2003 2002 2003
Net revenues $133,502 $163,057 $500,576 $640,027
Costs and expenses:
Educational services 92,318 114,228 325,027 417,557
General and
administrative 29,380 31,972 102,486 125,294
Amortization of
intangible assets 1,879 1,192 4,096 4,443
123,577 147,392 431,609 547,294
Income before interest
and taxes 9,925 15,665 68,967 92,733
Interest expense,
net 247 301 1,552 1,282
Income before income
taxes 9,678 15,364 67,415 91,451
Provision for
income taxes 3,564 6,257 25,101 35,174
Net income $6,114 $9,107 $42,314 $56,277
Diluted earnings per
share $.17 $ .25 $1.23 $1.54
Weighted average number
of diluted shares
outstanding (000's): 36,626 37,060 34,479 36,509
Selected Cash Flow Data:
For the year ended
June 30,
2002 2003
Cash flows from operations $92,778 $77,971
Capital expenditures 45,400 80,809
Depreciation and amortization 34,064 44,920
Selected Consolidated Balance Sheet Data:
As of June 30,
2002 2003
Cash and cash equivalents $86,233 $80,491
Receivables, net 30,378 39,709
Current assets 140,042 151,201
Total assets 492,655 566,745
Current liabilities 139,672 130,267
Long-term debt (including current portion) 28,576 38,500
Shareholders' investment 346,577 427,779
SOURCE Education Management Corporation
-0- 08/04/2003
/CONTACT: Robert McDowell, Executive Vice President and Chief Financial
Officer, +1-412-562-0900, or James Sober, CFA, Vice President, Investor
Relations, +1-412-995-7684, both of Education Management Corporation/
/Web site: http://www.edmc.com /
(EDMC)
CO: Education Management Corporation
ST: Pennsylvania
IN: FIN EDU
SU: ERN ERP MAV CCA PER