Exhibit 99.1
Education Management Corporation Reports Fiscal 2004 Fourth Quarter and
Fiscal Year Results
PITTSBURGH, Aug. 3 /PRNewswire-FirstCall/ -- Education Management
Corporation (Nasdaq: EDMC) today reported its financial results for the fourth
quarter and twelve months ended June 30, 2004. For the quarter, net revenues
increased 32.4% to $215.9 million and net income grew 63.7% to $14.9 million,
or $0.20 cents per diluted share. For the twelve months ended June 30, 2004,
revenues rose 33.3% to $853.0 million and net income grew 36.8% to
$77.0 million, or $1.03 per diluted share.
John R. McKernan, Jr., EDMC's Vice Chairman and Chief Executive Officer,
commented, "We are pleased to report another fiscal year of strong financial
results. Enrollment growth on a same school basis remains at historically high
levels and the recent opening of The Art Institute of Ohio - Cincinnati and
the introduction of online programs at South University both met our
expectations. For fiscal year 2005, we believe EDMC will deliver the
consistent financial performance that investors have grown to expect."
Financial highlights:
- Revenues for the three months ended June 30, 2004 increased 32.4% to
$215.9 million, compared to $163.1 million for the same period a year
ago. For the twelve months ended June 30, 2004, revenues rose 33.3% to
$853.0 million, compared to $640.0 million for the comparable twelve-
month period last year. Current year student enrollment and revenues
reflect the acquisitions of South University and American Education
Centers. Revenue growth in the fourth quarter of fiscal 2004 resulted
from a 36.8% increase in total student enrollment, which includes the
beneficial impact of the acquisitions, and an increase of approximately
6% in average tuition rates. Average revenue per student declined
slightly in the quarter compared to the prior year period due to the
recent acquisitions. Total enrollment at the start of the fourth
quarter of fiscal 2004 was 57,141 students compared to 41,767 students
for the same period last year.
- Fourth quarter income before interest and taxes (operating income),
which also benefited from the aforementioned acquisitions and organic
growth, rose 64.6% to $25.8 million from $15.7 million for the same
period a year ago. For fiscal 2004, operating income rose 43.4% to
$133.0 million compared with $92.7 million in the prior year. The
consolidated operating margin improved 233 and 110 basis points for the
quarter and fiscal year, respectively. The improvement in consolidated
operating margin was due in part to greater operating leverage and
lower employee health benefit expense, including a fourth quarter
adjustment of $1.6 million as the estimates of incurred but not
reported claims used during the prior quarters were found to be higher
than the amounts determined at June 30, 2004.
- The effective tax rates for the 2004 fiscal fourth quarter and year
were 41.3% and 41.0% respectively, up from 40.7% and 38.5% in the
comparable prior year periods. The fiscal 2004 provision reflects
higher state and foreign tax expense. A charge of $2.2 million was
recognized in the fourth quarter to fully reserve the Company's
Canadian net deferred tax assets, as prescribed by Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes". This reserve, which resulted from the Company's losses in
Canada, does not affect the ability to utilize and realize the deferred
tax assets in the future. The reserve may be reversed in a future
period based on consideration of all available evidence as prescribed
in SFAS 109.
- Net income for the quarter grew 63.7% to $14.9 million, or $0.20 per
diluted share, compared to $9.1 million, or $0.12 per diluted share, in
the fourth quarter last year. For fiscal 2004, net income rose 36.8% to
$77.0 million, or $1.03 per diluted share, compared to $56.3 million,
or $0.77 per diluted share in the prior fiscal year.
- At June 30, 2004, the Company had cash and cash equivalents of
$116.7 million and short term revolving credit borrowing of
$125.1 million, compared to $89.0 million and $35.0 million,
respectively at June 30, 2003. Cash flow from operations for the
twelve-month period ending June 30, 2004 was $160.6 million compared to
$79.4 million last fiscal year. Fiscal 2004 cash flow was significantly
higher due in part to improved net income and higher non-cash charges,
accrued liabilities and advanced payments. In addition, the timing of
The Art Institutes' summer start in 2003 required financial aid to be
paid in July 2003. In spite of higher fourth quarter net income in the
current year, cash flow from operations was more negative because of
this year's sharp increase in the third quarter advance payment of
student financial aid funds.
- Capital expenditures for fiscal year 2004 totaled $80.8 million on an
accrual basis compared to $76.9 million in the prior year period.
Student Enrollment
At the start of the current summer quarter (first quarter of fiscal 2005),
total enrollment at EDMC's schools was 53,073 students, a 32.8% increase from
the same time last year. Same-school enrollment (schools owned for one year or
more) increased 14.8% to 45,893 students. Students taking 100% of their
coursework online increased 118.5% to 1,940 students.
2005 2004 %
Summer Summer Change
Total enrollment 53,073 39,977 32.8%
Same-school enrollment
(owned for 1 year or more) 45,893 39,977 14.8%
Same-school enrollment
(owned for 2 years or more) 43,284 37,761 14.6%
Students taking 100% of their
coursework online 1,940 888 118.5%
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 begin post-secondary education programs.
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 $0.08. For the fiscal year ending
June 30, 2005, the Company projects revenue growth of approximately 19% and
diluted EPS of approximately $1.25.
Conference Call with Management
Education Management will host a conference call to discuss its fiscal
2004 fourth quarter and year to date results tomorrow at 10:30 a.m. (Eastern
Time). Those wishing to participate in this call should dial 303-262-2140
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. Student enrollment exceeded 58,000 as of fall
2003. EDMC has 67 primary campus locations in 24 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, information technology, legal
studies and business fields, culminating in the award of associate's through
doctoral degrees. EDMC has provided career-oriented education for over
40 years.
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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
For the three months For the fiscal year
ended June 30, ended June 30,
(unaudited)
2004 2003 2004 2003
Net revenues $215,913 $163,057 $853,019 $640,027
Costs and expenses:
Educational services 144,719 114,228 546,132 417,557
General and
administrative 43,695 31,972 166,990 125,294
Amortization
of intangible assets 1,718 1,192 6,911 4,443
190,132 147,392 720,033 547,294
Income before
interest and taxes 25,781 15,665 132,986 92,733
Interest expense, net 382 301 2,475 1,282
Income before
income taxes 25,399 15,364 130,511 91,451
Provision for
income taxes 10,490 6,257 53,497 35,174
Net income $14,909 $9,107 $77,014 $56,277
Diluted earnings
per share* $0.20 $0.12 $1.03 $0.77
Weighted average
number of diluted shares
outstanding (000's):* 75,594 74,120 74,870 73,018
* Prior periods adjusted to reflect a 2-for-1 stock split on December 22,
2003
Selected Cash Flow Data
For the three months For the fiscal
ended June 30, year ended June 30,
(unaudited)
2004 2003 2004 2003
Net cash flows
provided by (used in)
operations $(43,249) $(34,261) $160,617 $79,387
Depreciation and
amortization 14,966 14,477 55,287 44,920
Capital expenditures (15,011) (13,071) (80,703) (80,809)
Net cash paid for
acquisitions - (174) (157,777) (23,661)
Selected Consolidated Balance Sheet Data:
As of June 30,
2004 2003
Cash and cash equivalents $116,728 $ 88,957
Receivables, net 52,196 40,641
Current assets 204,818 161,022
Total assets 827,763 577,595
Current liabilities 279,105 140,201
Long-term debt (including current portion) 139,560 38,500
Shareholders' investment 530,582 427,779
Certain amounts from prior periods have been reclassified to conform with
the current presentation.
FOR: Education Management Corporation
COMPANY CONTACTS:
Robert McDowell
Executive Vice President and Chief Financial Officer
(412) 562-0900
James Sober, CFA
Vice President, Investor Relations
(412) 995-7684
SOURCE Education Management Corporation
-0- 08/03/2004
/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: EDU ART
SU: ERN ERP CCA MAV