Exhibit 99.1
EDUCATION MANAGEMENT CORPORATION REPORTS FISCAL 2005 FOURTH QUARTER AND FISCAL
YEAR RESULTS
PITTSBURGH, Aug. 17 /PRNewswire-FirstCall/ -- Education Management
Corporation (Nasdaq: EDMC) today reported its financial results for the fourth
quarter and twelve months ended June 30, 2005. For the quarter, net revenues
increased 18.3% to $255.3 million and net income grew 31.6% to $19.6 million, or
$0.26 cents per diluted share. For the twelve months ended June 30, 2005,
revenues rose 19.5% to $1,019.3 million and net income grew 31.9% to $101.6
million, or $1.35 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 for the first quarter of fiscal 2006 met our
expectations. We believe we will continue to deliver consistent financial
performance during fiscal 2006."
Today, EDMC also announced that Joe Charlson, currently EDMC's Senior Vice
President - Strategic Marketing, has been appointed Chief Marketing Officer of
the Company. In his new role, Mr. Charlson provides leadership to all marketing
and admissions areas within EDMC. Before joining EDMC in February, Mr. Charlson
co-led a $1.5 billion retail pharmacy business for Target Corporation. Prior to
working for Target, he was with McKinsey & Company.
Mr. McKernan said, "Over the last six months Joe Charlson has demonstrated
the leadership qualities and marketing expertise to enable EDMC to reach a
broader prospective student population. We are very pleased to have Joe promoted
to this very important role for the Company."
Financial highlights:
* Revenues for the three months ended June 30, 2005 increased 18.3%
to $255.3 million, compared to $215.9 million for the same period
a year ago. For the twelve months ended June 30, 2005, revenues
rose 19.5% to $1,019.3 million, compared to $853.0 million for
the comparable twelve- month period last year. Revenue growth in
the fourth quarter of fiscal 2005 resulted from a 12.3% increase
in total student enrollment and an approximate 6% increase in
average revenue per student. Total enrollment at the start of the
fourth quarter of fiscal 2005 was 64,179 students compared to
57,141 students for the same period last year.
* Fourth quarter income before interest and taxes (operating
income) rose 30.0% to $33.5 million from $25.8 million for the
same period a year ago. For fiscal 2005, operating income rose
26.8% to $168.6 million compared with $133.0 million in the prior
year. The consolidated operating margin improved 120 and 95 basis
points for the quarter and fiscal year, respectively. For both
periods, the improvement in consolidated operating margin was due
in part to lower rent and salary expense as a percentage of
revenue.
* The effective tax rates for the 2005 fiscal fourth quarter and
year were 43.1% and 39.8%, respectively, as compared to 41.3% and
41.0% for the fourth quarter and fiscal 2004 periods.
* Net income for the quarter grew 31.6% to $19.6 million, or $0.26
per diluted share, compared to $14.9 million, or $0.20 per
diluted share, in the fourth quarter last year. For fiscal 2005,
net income rose 31.9% to $101.6 million, or $1.35 per diluted
share, compared to $77.0 million, or $1.03 per diluted share in
the prior fiscal year.
* At June 30, 2005, the Company had cash and cash equivalents of
$172.0 million and short term revolving credit borrowings of
$66.0 million, compared to $116.7 million and $125.1 million,
respectively, at June 30, 2004. Cash flow from operations for the
twelve-month period ended June 30, 2005 was $193.2 million
compared to $163.3 million last fiscal year. Fiscal 2005 cash
flow was higher due in part to improved net income and higher
non-cash charges, partially offset by changes in other working
capital components.
* Capital expenditures were $85.8 million, or 8.4% of revenue for
fiscal 2005, compared to $80.7 million, or 9.5% of revenue, in
fiscal 2004. Capital expenditures for fiscal 2005 include a $14.6
million cumulative adjustment for lease accounting recorded in
the third quarter related to cash received directly from
landlords for leasehold improvements.
Student Enrollment
At the start of the current summer quarter (first quarter of fiscal 2006),
total enrollment at EDMC's schools was 59,739 students, a 12.6% increase from
the same time last year. Same-school enrollment (schools owned for one year or
more) increased 12.0% to 59,457 students. Students taking 100% of their
coursework online increased 78.4% to 3,461 students.
2006 2005 %
Summer Summer Change
------ ------ ------
Total enrollment 59,739 53,073 12.6%
Same-school enrollment
(owned for 1 year or more) 59,457 53,073 12.0%
Students taking 100% of
their coursework online 3,461 1,940 78.4%
The Company's quarterly revenues and income fluctuate primarily as a result
of the pattern of student enrollments. Student enrollment at the Art Institute
schools 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 first quarter is typically the lowest
revenue recognition quarter due to student vacations. The seasonality of the
Company's business has decreased over the last several years due to an increased
percentage of students at the Company's schools enrolling in bachelor's and
graduate degree programs.
Business Outlook
Effective July 1, 2005, the Company adopted Statement of Financial
Accounting Standards No. 123R, "Share-Based Payment" ("SFAS 123R"), using the
(modified retrospective method.) Beginning with the first quarter of fiscal
2006, the Company will reflect compensation expense in accordance with the SFAS
123R transition provisions. Under the modified retrospective method, companies
are allowed to restate prior periods by recognizing compensation cost in the
amounts previously reported in the pro forma footnote disclosures. Accounting
for the projected impact of SFAS 123R, the Company estimates first fiscal
quarter revenue growth of 17% and diluted EPS of $0.09 compared to $0.05 in the
prior year period. For the fiscal year ending June 30, 2006, the Company
projects revenue growth of 15% and diluted EPS of $1.43 compared to $1.13 in the
prior year period after adjusting for the projected impact of SFAS 123R.
Conference Call with Management
Education Management will host a conference call to discuss its fiscal 2005
fourth quarter and year end results on Thursday, August 18, 2005 at 10:30 a.m.
(Eastern Time). Those wishing to participate in this call should dial
303-262-2194 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. EDMC has 71 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)
(unaudited)
For the three months For the fiscal year
ended June 30, ended June 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------
Net revenues $ 255,337 $ 215,913 $ 1,019,338 $ 853,019
Costs and expenses:
Educational services* 165,603 144,719 640,445 546,132
General and
administrative 54,772 43,695 203,813 166,990
Amortization of
intangible assets 1,422 1,718 6,492 6,911
221,797 190,132 850,750 720,033
Income before interest
and taxes 33,540 25,781 168,588 132,986
Interest (income)
expense, net (927) 382 (220) 2,475
Income before income taxes 34,467 25,399 168,808 130,511
Provision for income taxes 14,852 10,490 67,234 53,497
Net income $ 19,615 $ 14,909 $ 101,574 $ 77,014
Diluted earnings per share $ 0.26 $ 0.20 $ 1.35 $ 1.03
Weighted average number
of diluted shares
outstanding (000's): 75,747 75,594 75,153 74,870
Selected Cash Flow Data*:
For the three months For the fiscal year
ended June 30, ended June 30,
----------------------------- -----------------------------
2005 2004 2005 2004
------------- ------------- ------------- -------------
Net cash flows provided by
(used in) operations $ (63,387) $ (41,190) $ 193,189 $ 163,296
Depreciation and
amortization 15,076 14,966 79,964 55,287
Capital expenditures (17,695) (15,011) (85,834) (80,703)
Selected Consolidated Balance Sheet Data:
As of June 30,
-----------------------
2005 2004
---------- ----------
Cash and cash equivalents $ 171,974 $ 116,728
Receivables, net 57,968 52,196
Current assets 279,678 205,054
Total assets 956,027 827,999
Current liabilities 232,638 281,508
Long-term debt (including current portion) 70,420 139,560
Shareholders' investment 666,010 528,687
* Includes the effect of lease accounting adjustments for the current
periods. Certain amounts from prior periods have been reclassified to
conform with the current presentation.
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- 08/17/2005
/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/
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