/C O R R E C T I O N -- Education Management Corporation/

          /C O R R E C T I O N -- Education Management Corporation/

PR Newswire

PITTSBURGH, Oct. 30, 2013

In the news release, Education Management Corporation Reports Fiscal 2014
First Quarter Results, issued 30-Oct-2013 by Education Management Corporation
over PR Newswire, we are advised by the company that the second bullet under
"Financial and Operational Highlights" should read "For the three months ended
Sept. 30, 2013, average enrolled student body was approximately 117,720, an
8.5 percent..." rather than "For the three months ended Sept. 30, 2013,
average enrolled student body was approximately 116,790, a 9.3 percent..." as
originally issued inadvertently. Additional changes were made to the "Average
Enrolled Student Body" financial table. The average enrolled student body for
The Art Institutes operating segment for the quarter ended Sept. 30, 2013 was
61,210 rather than 60,280 as reported. Due to this correction, total EDMC
average enrolled student body for the three months ended Sept. 30, 2013 was
117,720, a decrease of 8.5% from 128,710 reported in the prior year quarter.
The complete, corrected release follows:

  Education Management Corporation Reports Fiscal 2014 First Quarter Results

    - EBITDA of $52.2 million excluding certain expenses on reported net loss
    of $9.5 million -

    - Diluted EPS of $(0.08), or $(0.07) excluding certain expenses -

PITTSBURGH, Oct.30, 2013 /PRNewswire/ --Education Management Corporation
(NASDAQ: EDMC), one of the largest providers of post-secondary education in
North America, today reported its financial results for the three months ended
Sept.30, 2013. Net revenues during the quarter were $580.4 million, a
decrease of 4.8 percent from the prior year quarter, and the company reported
a net loss of $9.5 million, or $(0.08) per diluted share, as compared to a net
loss of $13.1 million, or $(0.11) per diluted share, in the prior year
quarter.

"Our faculty and staff across the system are doing an extraordinary job
managing through a period of unprecedented change in higher education," said
Edward H. West, Education Management's president and CEO. "We remain
dedicated to providing our students an education that allows them to build
careers as we maintain our focus on investing in new programs, process
optimization, and efficiency improvements to support access, affordability,
and achievement.

"The first quarter results were in-line with our expectations, and we are
encouraged by the recent October start for The Art Institute campuses as new
student enrollment was slightly positive year-over-year. In addition, we
experienced an improvement of over two percentage points in our 180-day new
student cohort retention rate in the first quarter, as compared to the prior
year period."

Financial and Operational Highlights

Financial and operational highlights for the first quarter of fiscal 2014
included the following:

  oTotal new students were approximately 30,770, a decrease of 6.1 percent
    from approximately 32,770 new students in the first quarter of fiscal
    2013.
  oFor the three months ended Sept.30, 2013, average enrolled student body
    was approximately 117,720, an 8.5 percent decline from 128,710 in the
    prior year quarter. Net revenues were $580.4 million, a decrease of 4.8
    percent from $609.6 million recorded in the first quarter of fiscal 2013.
    The revenue decrease was primarily due to the decline in average enrolled
    student body which was partially offset by additional revenue days and
    higher average registered credits per student recognized during the
    current quarter as compared to the prior year quarter.
  oThe company recorded a net loss of $9.5 million, or $(0.08) per diluted
    share, compared to a net loss of $13.1 million, or $(0.11) per diluted
    share, for the prior year quarter. The company incurred $1.6 million
    ($1.0 million net of tax) and $9.1 million ($5.5 million net of tax) of
    restructuring charges in the current quarter and the prior year quarter,
    respectively, as well as a loss on an asset disposal of $4.6 million ($2.7
    million net of tax) in the prior year quarter. Excluding these expenses,
    the net loss would have been $8.5 million, or $(0.07) per diluted share,
    in the current quarter compared to $4.9 million, or $(0.04) per diluted
    share, in the prior year quarter.
  oEarnings before interest, taxes and depreciation and amortization
    ("EBITDA") was $50.5 million in the current quarter compared to $53.8
    million in the prior year quarter. After adjusting for restructuring
    charges incurred in each quarter as noted above, EBITDA would have been
    $52.2 million in the current quarter compared to $62.9 million in the
    prior year quarter.
  oCash flows provided by operating activities for the three months
    endedSept.30, 2013 were $127.2 million compared to $156.6 million for
    the three months ended Sept.30, 2012. The decrease in cash flow from
    operations in the current quarter compared to the prior year quarter was
    primarily due to lower operating results and delays in financial aid
    receipts that were collected in October 2013.
  oAt Sept.30, 2013, cash and cash equivalents were $163.3 million, compared
    to $212.0 million at Sept.30, 2012.
  oOn a cash basis, capital expenditures were $17.3 million, or 3.0 percent
    of net revenues, for the three months ended Sept.30, 2013 compared to
    $20.5 million, or 3.4 percent of net revenues, for the three months ended
    Sept.30, 2012.

Fiscal 2014 Outlook

For the fiscal year ending June 30, 2014, capital expenditures are projected
to be between $80 million and $90 million, compared to $83.2 million in the
fiscal year ended June 30, 2013. Based on current assumptions regarding
market conditions and excluding restructuring and other special charges that
have been or may be incurred, including charges which will be incurred in the
second fiscal quarter associated with restructurings affecting less than two
percent of the company's workforce, the company provided the following outlook
for fiscal 2014.

Reconciliation of Fiscal Year 2014 Second Quarter and Annual Outlook of Net
Income to EBITDA
(Dollars in millions, except earnings per share) (Unaudited)
                                                 For the Three Months Ending
Fiscal 2014 Outlook – 2nd Quarter:
                                                 December 31, 2013
                                                 Low               High
Earnings per diluted share                       $    0.07         $   0.08
Net income                                       $    9            $   10
Income tax expense                               6                 8
Net interest expense                             32                32
Depreciation and amortization                    38                38
EBITDA                                           $    85           $   88
                                                 For the Twelve Months Ending
Fiscal 2014 Outlook – Annual:
                                                 June 30, 2014
                                                 Low               High
Earnings per diluted share                       $    0.21         $   0.28
Earnings per diluted share excluding expenses    $    0.22         $   0.29
related to restructuring charges
Net income                                       $    27           $   36
Expenses related to restructuring charges, net   1                 1
of tax
Net income excluding expenses related to         $    28           $   37
restructuring charges
Income tax expense                               19                25
Net interest expense                             126               126
Depreciation and amortization                    152               152
EBITDA excluding expenses related to             $    325          $   340
restructuring charges

The above discussion of the company's fiscal 2014 outlook includes information
that could constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. As more fully described
below under the heading "Cautionary Statement," these and other
forward-looking statements are based on information currently available to
management and involve estimates, assumptions, risks, uncertainties and other
factors that may cause actual results, performance or achievements to differ
materially and unpredictably from any future results, performance or
achievements expressed or implied by such forward-looking statements. 

The company's quarterly revenues and income fluctuate primarily as a result of
the pattern of student enrollments, and its first fiscal quarter is typically
the lowest revenue quarter of the fiscal year due to student vacations.
However, the seasonality of the company's business has decreased over the last
several years, primarily due to the percentage of students enrolling in online
programs, which generally experience less seasonal fluctuation than
campus-based programs.

The presentation of EBITDA as well as the presentations excluding certain
expenses, do not comply with U.S. generally accepted accounting principles
("GAAP"). For an explanation of EBITDA and EBITDA and net income excluding
certain expenses, together with a reconciliation to net income, which is the
most directly comparable GAAP financial measure, see the Non-GAAP Financial
Measures disclosure in the financial tables section below.

Conference Call and Webcast

Education Management Corporation will host a conference call to discuss its
fiscal 2014 first quarter results on Thursday, Oct.31, 2013 at 9 a.m.
(Eastern Time). Those wishing to participate in this call should dial
412-317-6789 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.edu. A replay of the conference call will be available
at www.edmc.edufor up to one year.

EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
                           For the Three Months Ended September 30,
                           2013                2012                 % Change
Net revenues               $   580,380         $   609,564          (4.8)    %
Costs and expenses:
Educational services ^(1) 357,688             381,296              (6.2)    %
General and administrative 172,169             174,492              (1.3)    %
^(2)
Depreciation and           38,605              44,145               (12.5)   %
amortization ^(3)
Total costs and expenses   568,462             599,933              (5.2)    %
Income before interest and 11,918              9,631                23.7     %
income taxes
Interest expense, net      31,866              31,452               1.3      %
Loss before income taxes   (19,948)            (21,821)             8.6      %
Income tax benefit         (10,434)            (8,728)              19.5     %
Net loss                   $   (9,514)         $   (13,093)         27.3     %
Loss per share:
Basic                      $   (0.08)          $   (0.11)
Diluted                    $   (0.08)          $   (0.11)
Weighted average number of
shares outstanding:
Basic                      124,657             124,478
Diluted                    124,657             124,478
(1) Includes restructuring charges of $0.8 million and $8.2 million in the
three months ended Sept. 30, 2013 and 2012, respectively.
(2) Includes restructuring charges of $0.8 million and $0.9 million in the
three months ended Sept. 30, 2013 and 2012, respectively.
(3) Includes a $4.6 million charge in the three months ended Sept. 30, 2012
related to software assets that no longer had a useful life.





EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
                         September30, 2013  June30, 2013  September30, 2012
                         (Unaudited)                        (Unaudited)
Assets
Current assets:
Cash and cash            $   163,307         $  130,695     $   211,956
equivalents
Restricted cash          273,037             271,340        277,376
Total cash, cash
equivalents and          436,344             402,035        489,332
restricted cash
Student receivables, net
of allowances of         340,858             206,406        234,777
$181,230, $174,760 and
$239,315
Notes, advances and      63,887              32,547         30,856
other receivables
Deferred income taxes    76,927              76,927         102,668
Prepaid income taxes     28,350              20,854         15,789
Other current assets     35,619              32,850         50,897
Total current assets     981,985             771,619        924,319
Property and equipment,  503,350             525,625        626,337
net
Other long-term assets   67,063              48,524         52,621
Intangible assets, net   300,141             300,435        329,658
Goodwill                 669,090             669,090        963,550
Total assets             $   2,521,629       $  2,315,293   $   2,896,485
Liabilities and
shareholders' equity
Current liabilities:
Current portion of       $   11,977          $  12,076      $   12,076
long-term debt
Revolving credit         —                   75,000         —
facility
Accounts payable         32,493              32,559         30,168
Accrued liabilities      147,355             157,417        154,342
Unearned tuition         421,721             113,371        168,601
Advance payments         89,235              95,675         238,957
Total current            702,781             486,098        604,144
liabilities
Long-term debt, less     1,272,788           1,273,164      1,450,583
current portion
Deferred income taxes    70,419              70,316         110,053
Deferred rent            196,020             201,202        198,449
Other long-term          32,636              34,414         46,429
liabilities
Shareholders' equity:
Common stock, at par     1,437               1,435          1,434
Additional paid-in       1,799,788           1,794,846      1,781,345
capital
Treasury stock, at cost  (328,605)           (328,605)      (328,605)
Accumulated deficit      (1,213,450)         (1,203,936)    (949,053)
Accumulated other        (12,185)            (13,641)       (18,294)
comprehensive loss
Total shareholders'      246,985             250,099        486,827
equity
Total liabilities and    $   2,521,629       $  2,315,293   $   2,896,485
shareholders' equity





EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
                                                       For the Three Months

                                                       Ended September 30,
                                                       2013        2012
Cash flows from operating activities:
Net loss                                               $ (9,514)   $ (13,093)
Adjustments to reconcile net loss to net cash flows
from

operating activities:
Depreciation and amortization of property and          37,087      42,616
equipment
Amortization of intangible assets                      1,518       1,529
Bad debt expense                                       45,063      48,931
Amortization of debt issuance costs                    3,618       1,280
Share-based compensation                               4,174       3,613
Non cash adjustments related to deferred rent          (4,441)     (3,622)
Amortization of deferred gains on sale-leaseback       (563)       —
transactions
Changes in assets and liabilities:
Restricted cash                                        (1,697)     (9,496)
Receivables                                            (58,003)    (91,299)
Reimbursements for tenant improvements                 73          1,202
Inventory                                              (377)       (1,654)
Other assets                                           (1,688)     (1,144)
Purchase of loans                                      (3,315)     —
Accounts payable                                       904         (21,896)
Accrued liabilities                                    (16,322)    10,624
Unearned tuition                                       (12,992)    52,324
Advance payments                                       143,682     136,662
Total adjustments                                      136,721     169,670
Net cash flows provided by operating activities        127,207     156,577
Cash flows from investing activities:
Expenditures for long-lived assets                     (17,332)    (20,541)
Reimbursements for tenant improvements                 (73)        (1,202)
Net cash flows used in investing activities            (17,405)    (21,743)
Cash flows from financing activities:
Payments under revolving credit facility               (75,000)    (111,300)
Issuance of common stock                               770         —
Principal payments on other long-term debt             (3,043)     (2,885)
Net cash flows used in financing activities            (77,273)    (114,185)
Effect of exchange rate changes on cash and cash       83          299
equivalents
Net change in cash and cash equivalents                32,612      20,948
Cash and cash equivalents, beginning of period         130,695     191,008
Cash and cash equivalents, end of period               $ 163,307   $ 211,956
Cash paid (received) during the period for:
Interest (including swap settlement)                   $ 38,475    $ 22,044
Income taxes, net of refunds                           (2,477)     1,059
                                                       As of September 30,
Noncash investing activities:                          2013        2012
Capital expenditures in current liabilities            $ 7,606     $ 9,050

EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

The company reports results in four segments - The Art Institutes, Argosy
University, Brown Mackie Colleges and South University. The company evaluates
segment performance based on EBITDA excluding certain expenses. Adjustments
to reconcile segment results to consolidated results are included under the
caption "Corporate and Other," which primarily includes unallocated corporate
activity.

EBITDA, a measure used by management to measure operating performance, is
defined as net income before net interest expense, income taxes and
depreciation and amortization. EBITDA is not a recognized term under GAAP and
does not purport to be an alternative to net income as a measure of operating
performance or to cash flows from operating activities as a measure of
liquidity. Additionally, EBITDA is not intended to be a measure of free cash
flow available for management's discretionary use, as it does not consider
certain cash requirements such as interest payments, tax payments and debt
service requirements. Management believes EBITDA is helpful in highlighting
trends because EBITDA excludes the results of decisions that are outside the
control of operating management and can differ significantly from company to
company depending on long-term strategic decisions regarding capital
structure, the tax jurisdictions in which companies operate and capital
investments. Management also presents diluted earnings per share, net loss
and EBITDA after adjusting for certain expenses, which also are non-GAAP
financial measures. Management believes this presentation is also helpful in
highlighting trends in our business because it excludes certain expenses
management believes are not indicative of ongoing operations. Management
compensates for the limitations of using non-GAAP financial measures by using
them to supplement GAAP results to provide a more complete understanding of
the factors and trends affecting the business than GAAP results alone. Because
not all companies use identical calculations, this presentation of EBITDA may
not be comparable to similarly titled measures of other companies. A
reconciliation of EBITDA excluding certain expenses by segment to consolidated
net loss to consolidated net loss, excluding certain expenses is detailed
below:

Segment Information and Reconciliation of EBITDA to Net Loss to
Net Loss Excluding Certain Expenses
(In thousands, except per share amounts) (Unaudited)
                                    For the Three Months Ended September 30,
                                    2013            2012             % Change
Net revenues:
The Art Institutes                  $  356,516      $  380,139       (6.2)   %
Argosy University                   83,148          81,920           1.5     %
Brown Mackie Colleges               70,186          73,972           (5.1)   %
South University                    70,530          73,533           (4.1)   %
Total EDMC                          580,380         609,564          (4.8)   %
EBITDA excluding certain expenses:
The Art Institutes                  59,097          69,419           (14.9)  %
Argosy University                   3,385           170              N/M
Brown Mackie Colleges               6,284           9,206            (31.7)  %
South University                    5,392           7,232            (25.4)  %
Corporate and other                 (21,990)        (23,106)         4.8     %
Total EDMC                          52,168          62,921           (17.1)  %
Reconciliation to EBITDA:
Restructuring                       1,645           9,145            N/M
EBITDA                              50,523          53,776           (6.0)   %
Reconciliation to net loss:
Depreciation and amortization       38,605          44,145           (12.5)  %
Net interest expense                31,866          31,452           1.3     %
Income tax benefit                  (10,434)        (8,728)          19.5    %
Net loss                            $  (9,514)      $  (13,093)      27.3    %
Restructuring, net of tax           987             5,488            (82.0)  %
Loss on disposal of asset, net of   —               2,753            N/M
tax
Net loss, excluding certain         $  (8,527)      $  (4,852)       (75.7)  %
expenses
Diluted loss per share              $  (0.08)       $  (0.11)
Diluted loss per share, excluding   $  (0.07)       $  (0.04)
certain expenses

New Student Enrollment

                      For the Three Months Ended September 30,
                      2013            2012           % Change
The Art Institutes    15,570          16,930         (8.0)%
Argosy University     5,750           5,890          (2.4)%
Brown Mackie Colleges 4,800           5,040          (4.8)%
South University ^    4,650           4,910          (5.3)%
Total EDMC            30,770          32,770         (6.1)%

The new student enrollment data shown above includes the number of new
students who enrolled in fully online programs at The Art Institute of
Pittsburgh, Argosy University and South University. Total new students who
enrolled in fully online programs for the three months ended Sept.30, 2013
were approximately 7,480 as compared to 8,650 in the three months ended
Sept.30, 2012.

Average Enrolled Student Body

                      For the Three Months Ended September 30,
                      2013            2012            % Change
The Art Institutes    61,210          66,870          (8.5)%
Argosy University     23,200          24,620          (5.8)%
Brown Mackie Colleges 15,950          17,410          (8.4)%
South University      17,360          19,810          (12.4)%
Total EDMC            117,720         128,710         (8.5)%

Average enrolled student body is the three month average of the unique
students who met attendance requirements within each month of the quarter.
The data above includes the number of students enrolled in fully online
programs at The Art Institute of Pittsburgh, Argosy University and South
University. The average enrolled student body in fully online programs was
approximately 29,570 for the three months ended Sept.30, 2013 as compared to
33,590 in the three months ended Sept.30, 2012.

For October 2013, starting student body enrollment for Total EDMC was
approximately 125,560, a decrease of 7.4 percent from October 2012. Starting
student body reflects the campus-based student census after the add/drop
period for the first month of the fiscal quarter plus the average of fully
online students who met attendance requirements in the third month of the
prior fiscal quarter.

About Education Management Corporation

Education Management Corporation (www.edmc.edu), with approximately 125,560
students as of October 2013, is among the largest providers of post-secondary
education in North America, based on student enrollment and revenue, with a
total of 110 locations in 32 U.S. states and Canada. The company offers
academic programs to students through campus-based and online instruction, or
through a combination of both. The company is committed to offering quality
academic programs and strive to improve the learning experience for our
students. Its educational institutions offer students the opportunity to earn
undergraduate and graduate degrees and certain specialized non-degree diplomas
in a broad range of disciplines, including media arts, health sciences,
design, psychology and behavioral sciences, culinary, business, fashion,
legal, education and information technology.

Cautionary Statement

This press release includes information that could constitute forward-looking
statements with the meaning of the Private Securities Litigation Reform Act of
1995. These statements, which are based on information currently available to
management, concern the company's strategy, plans, intentions or expectations
and typically contain words such as "anticipates," "believes," "estimates,"
"expects," "intends," "may," "will," "should," "seeks," "approximately,"
"plans," "projects," or similar words, although the absence of such words does
not mean that any particular statement is not forward-looking. All of the
statements included in this press release that relate to estimated and
projected earnings, margins, costs, expenditures, cash flows, growth rates and
financial results, including the second quarter and annual outlook for fiscal
2014, and including statements regarding expected enrollment, revenue, expense
levels, capital expenditures and earnings, are forward-looking statements, as
are any statements concerning the company's expected future operations and
performance and other future developments. These and other forward-looking
statements involve estimates, assumptions, known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements to differ materially and unpredictably from any future results,
performance or achievements expressed or implied by such forward-looking
statements. The company derives many of its forward-looking statements from
its operating budgets and forecasts, which are based upon many detailed
assumptions, and the company cautions that it is very difficult to predict the
impact of unknown factors, and impossible to anticipate all factors, that
could affect its actual results. Some of the factors that the company
believes could affect its results and that could cause actual results to
differ materially from expectations include, but are not limited to: the
timing and magnitude of student enrollment and changes in student mix,
including the relative proportions of campus-based and online students
enrolled in its programs; changes in average registered credits taken by
students; student retention; the company's ability to maintain eligibility to
participate in Title IV programs; changes in government spending; other
changes in its students' ability to access federal and state financial aid, as
well as obtain loans from third-party lenders; difficulties the company may
face in growing its academic programs; increased or unanticipated legal and
regulatory costs; the success of cost-cutting initiatives; the results of
program reviews and audits; changes in accreditation standards; the
implementation of new operating procedures for the company's fully online
programs; the potential impact of the draft gainful employment regulation
issued by the U. S. Department of Education on August 30, 2013; adjustments to
the company's programmatic offerings to comply with the 90/10 rule; its high
degree of leverage and ability to generate sufficient cash to service all of
its debt obligations and other liquidity needs; market and credit risks
associated with the post-secondary education industry, adverse media coverage
of the industry and the overall condition of the industry; changes in the
overall U.S. or global economies and access to credit and capital markets; the
effects of war, terrorism, natural disasters or other catastrophic events and
other risks affecting the company, including but not limited to those
described in its periodic reports filed with the Securities Exchange
Commission pursuant to the Securities Exchange Act of 1934. Education
Management does not undertake any obligation to update any forward-looking
statements except as required by securities laws. 

Investor Contact:
John Iannone
Director of Investor Relations
(412) 995-7727

Media Contact:
Chris Hardman
VP of Communications
(412) 995-7187

SOURCE Education Management Corporation

Website: http://www.edmc.edu