Education Management Corporation Reports Fiscal 2014 Third Quarter Results

  Education Management Corporation Reports Fiscal 2014 Third Quarter Results

- Reported net loss of $467.6 million or $3.71 per diluted share -

- Net income of $20.4 million or $0.16 per diluted share excluding certain
expenses -

- EBITDA of $95.0 million excluding certain expenses -

PR Newswire

PITTSBURGH, April 30, 2014

PITTSBURGH, April 30, 2014 /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
March 31, 2014. Net revenues during the quarter were $595.2 million, a
decrease of 6.8 percent from the prior year quarter, and, primarily as a
result of non-cash goodwill and indefinite-lived intangible asset impairment
charges of $509.2 million, the company reported a net loss of $467.6 million,
or $3.71 per diluted share. Excluding these non-cash impairment charges and
certain other expenses detailed below, EBITDA would have been $95.0 million
and net income would have been $20.4 million, or $0.16 per diluted share, for
the three months ended March 31, 2014.

"The current operating conditions continue to be challenging, as evidenced by
enrollments being down across post-secondary education. As a result of our
expectations for a continuation of the challenging operating environment in
the near-term combined with the strategic changes that are being made across
our education systems, we are adjusting our financial outlook for the
remainder of fiscal year 2014," said Edward H. West, Education Management's
president and CEO. "We believe these changes to concentrate on programs where
we see solid student outcomes and demand, and our continued efforts to improve
efficiencies and lower the cost structure are the right course of action for
the long-term benefit for our students. Our entire organization remains
focused on providing our students an affordable, quality education to position
them for success in their chosen fields."

Due primarily to changes in current and projected enrollment trends, the
company performed impairment reviews of the carrying value of goodwill and
indefinite-lived intangible assets at all of its four reporting units at March
31, 2014. The reviews resulted in a goodwill impairment of $433.7 million and
an indefinite-lived intangible asset impairment of $75.5 million at The Art
Institutes reporting unit, both of which are non-cash charges. Goodwill and
indefinite-lived intangible asset impairments were not required at the Argosy
University, South University or Brown Mackie Colleges reporting units. After
giving effect to these impairment charges, the company's goodwill and
intangible assets decreased from $1,077.1 million at December 31, 2013 to
$566.7 million at March 31, 2014. The goodwill impairment charges from fiscal
2013 and 2012 have been adjusted as further described below under "Revisions
to Impairment Charges."

Financial and Operational Highlights
Financial and operational highlights for the third quarter of fiscal 2014
included the following:

  oTotal new students were approximately 22,140, a decrease of 9.8 percent
    from approximately 24,540 new students in the prior year quarter. 
  oFor the three months ended March 31, 2014, average enrolled student body
    was approximately 119,500, a 6.9 percent decline from 128,330 in the prior
    year quarter. Net revenues were $595.2 million, a decrease of 6.8 percent
    from $638.9 million recorded in the third quarter of fiscal 2013. The
    revenue decrease was primarily due to the decline in average enrolled
    student body.
  oThe company recorded a net loss of $467.6 million, or $3.71 per diluted
    share, compared to a net loss of $260.4 million, or $2.09 per diluted
    share, for the prior year quarter. Earnings before interest, taxes and
    depreciation and amortization ("EBITDA") was a loss of $431.7 million in
    the current quarter compared to a loss of $183.3 million in the prior year
    quarter.
  oAfter adjusting for certain expenses described below, net income would
    have been $20.4 million, or $0.16 per diluted share, in the current
    quarter compared to $30.5 million, or $0.24 per diluted share, in the
    prior year quarter and EBITDA would have been $95.0 million in the current
    quarter compared to $122.0 million in the prior year quarter.



                                                    For the Three Months Ended
(dollars in millions except per share data)
                                                    March 31,
                                                    2014            2013
EBITDA                                              $  (431.7)      $ (183.3)
Long-lived asset impairments                        509.2           300.1
Lease abandonment charge                            6.3             —
Restructuring                                       5.8             —
Loss on sale-leaseback transactions                 3.5             —
Settlement-related costs                            1.9             —
Loss on debt refinancing                            —               5.2
EBITDA excluding certain expenses                   $  95.0         $ 122.0
Net loss                                            $  (467.6)      $ (260.4)
Long-lived asset impairments and certain
                                                    491.0           291.6
other expenses presented above, net of tax
Reversal of uncertain tax position liability        (3.0)           (0.7)
Net income, excluding certain expenses              $  20.4         $ 30.5
Diluted loss per share                              $  (3.71)       $ (2.09)
Diluted earnings per share, excluding certain       $  0.16         $ 0.24
expenses



  oCash flows provided by operating activities for the nine months ended
    March 31, 2014 were $172.2 million compared to $286.2 million for the nine
    months ended March 31, 2013. The decrease in cash flow from operations in
    the current quarter compared to the prior year quarter was primarily due
    to lower operating results. At March 31, 2014, cash and cash equivalents
    were $177.5 million, compared to $183.6 million at March 31, 2013.
  oOn a cash basis, capital expenditures were $52.8 million, or 3.0 percent
    of net revenues, for the nine months ended March 31, 2014 compared to
    $64.6 million, or 3.4 percent of net revenues, for the nine months ended
    March 31, 2013.
  oDuring the quarter ended March 31, 2014, the company completed a
    sale-leaseback transaction with an unrelated third party for net cash
    proceeds of $9.6 million. The company recorded a net loss of $3.5 million
    in connection with the transaction during the quarter ended March 31,
    2014.

Fiscal 2014 Outlook
For the fiscal year ending June 30, 2014, capital expenditures are projected
to be approximately $80 million, compared to $83.2 million in the fiscal year
ended June 30, 2013. Based on current business trends, including the recent
April starting student body enrollment, the impact of an increase in
scholarships, and excluding long-lived asset impairments and certain other
expenses, including costs related to debt restructuring, that have been or may
be incurred, the company provided the following outlook for fiscal 2014.



Reconciliation of Fiscal Year 2014 Fourth 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 – 4th Quarter:
                                                  June 30, 2014
                                                  Low             High
Loss per diluted share                            $   (0.17)      $  (0.14)
Net loss                                          $   (21)        $  (18)
Income tax benefit                                (13)            (11)
Net interest expense                              33              33
Depreciation and amortization                     37              37
EBITDA                                            $   36          $  41
                                                  For the Twelve Months Ending
Fiscal 2014 Outlook – Annual:
                                                  June 30, 2014
                                                  Low             High
Loss per diluted share                            $   (3.96)      $  (3.94)
Earnings per diluted share excluding long-lived   $   0.03        $  0.05
asset impairments and certain other expenses
Net loss                                          $   (497)       $  (494)
Expenses related to long-lived asset impairments  501             501
and certain other expenses, net of tax
Net income excludinglong-lived asset             $   4           $  7
impairments and certain other expenses
Income tax benefit                                $   (14)        $  (12)
 Net interest expense                           128             128
Depreciation and amortization                     152             152
EBITDA excluding long-lived asset impairments     $   270         $  275
and certain other expenses



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.

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 loss, which is the
most directly comparable GAAP financial measure, see the "Non-GAAP Financial
Measures" disclosure in the financial tables section below.

Revisions toImpairment Charges

The financial statements for fiscal year 2013 have been revised to include an
adjustment to the goodwill impairment charges recorded during the fiscal 2013
and 2012 periods. These revisions do not impact EBITDA excluding certain
expenses, net income excluding certain expenses or earnings perdilutedshare
excluding certain expenses nor do they affect the company's compliance with
debt covenants. The goodwill impairment charges in fiscal 2013 and 2012 were
decreased by $23.6 million and $84.5 million, respectively, which decreased
the previously reported net losses by $23.6 million (net of tax) and $82.2
million (net of tax), respectively. The goodwill balance at June 30, 2013 and
March 31, 2013 was increased by $108.1 million. The company does not believe
these revisions are material to the previously reported financial results.

Conference Call and Webcast
Education Management Corporation will host a conference call to discuss its
fiscal 2014 third quarter results on Thursday, May 1, 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          For the Nine Months Ended

               March 31,                           March 31,
               2014          2013          %       2014          2013          %
                                           Change                              Change
Net revenues   $ 595,202     $ 638,903     (6.8)%  $ 1,769,255   $ 1,903,363   (7.0)%
Costs and
expenses:
Educational    356,858       350,134       1.9%    1,060,074     1,091,808     (2.9)%
services ^(1)
General and
administrative 160,837       166,814       (3.6)%  509,480       512,496       (0.6)%
^(2)
Depreciation
and            37,109        40,266        (7.8)%  114,307       123,667       (7.6)%
amortization
Long-lived
asset          509,248       300,104       69.7%   513,095       300,104       71.0%
impairments
Total costs
and            1,064,052     857,318       24.1%   2,196,956     2,028,075     8.3%

expenses
Loss before
interest and   (468,850)     (218,415)     114.7%  (427,701)     (124,712)     243.0%
income taxes
Interest       31,076        30,464        2.0%    94,557        92,924        1.8%
expense, net
Loss on debt   —             5,232         N/M     —             5,232         N/M
refinancing
Loss before    (499,926)     (254,111)     96.7%   (522,258)     (222,868)     134.3%
income taxes
Income tax
(benefit)      (32,280)      6,297         N/M     (46,186)      19,489        N/M
expense
Net loss       $ (467,646)   $ (260,408)   79.6%   $ (476,072)   $ (242,357)   96.4%
Loss per
share:
Basic          $ (3.71)      $ (2.09)              $ (3.80)      $ (1.95)
Diluted        $ (3.71)      $ (2.09)              $ (3.80)      $ (1.95)
Weighted
average number
of shares
outstanding:
Basic          125,933       124,602               125,347       124,546
Diluted        125,933       124,602               125,347       124,546

(1) Includes the following charges:
      oa lease abandonment charge of $6.3 million in the current quarter;
      orestructuring charges of $4.3 million in the three months ended March
        31, 2014 and $9.0 million and $8.2 million in the nine months ended
        March 31, 2014 and 2013, respectively; and
      olosses on sale-leaseback transactions of $3.5 million in the current
        quarter and $3.9 million in the nine months ended March 31, 2013.
    Includes restructuring costs of $1.5 million in the three months ended
    March 31, 2014 and $7.9 million and $0.9 million in the nine months ended
    March 31,

(2) 2014 and 2013, respectively. Also includes settlement-related costs of
    $1.9 million and $7.9 million in the three and nine months ended March 31,
    2014,

    respectively.



EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
                                 March31, 2014  June30, 2013  March31, 2013
                                 (Unaudited)                    (Unaudited)
Assets
Current assets:
Cash and cash equivalents        $  177,468      $  130,695     $  183,614
Restricted cash                  272,090         271,340        272,029
Total cash, cash equivalents and 449,558         402,035        455,643
restricted cash
Student receivables, net of
allowances of $176,039, $174,760
and                              176,847         206,406        153,069

$177,802
Notes, advances and other        43,176          32,547         27,509
receivables
Deferred income taxes            76,813          76,927         102,793
Prepaid income taxes             29,147          20,854         —
Other current assets             36,983          32,850         40,547
Total current assets             812,524         771,619        779,561
Property and equipment, net      442,902         525,625        543,731
Goodwill                         343,406         777,153        777,153
Intangible assets, net           223,282         300,435        301,039
Other long-term assets           55,236          48,524         55,878
Total assets                     $  1,877,350    $  2,423,356   $  2,457,362


Liabilities and shareholders'
(deficit) equity
Current liabilities:
Current portion of long-term     $  11,875       $  12,076      $  12,076
debt
Revolving credit facility        —               75,000         —
Accounts payable                 31,594          32,559         20,955
Accrued liabilities              171,248         157,417        148,782
Accrued income taxes             —               —              3,174
Unearned tuition                 74,051          113,371        78,473
Advance payments                 165,253         95,675         222,942
Total current liabilities        454,021         486,098        486,402
Long-term debt, less current     1,271,986       1,273,164      1,283,344
portion
Deferred rent                    187,739         201,202        206,847
Deferred income taxes            40,487          72,622         90,522
Other long-term liabilities      24,090          34,414         39,250
Shareholders' (deficit) equity:
Common stock, at par             1,451           1,435          1,435
Additional paid-in capital       1,813,308       1,794,846      1,789,672
Treasury stock, at cost          (331,812)       (328,605)      (328,605)
Accumulated deficit              (1,574,251)     (1,098,179)    (1,096,146)
Accumulated other comprehensive  (9,669)         (13,641)       (15,359)
loss
Total shareholders' (deficit)    (100,973)       355,856        350,997
equity
Total liabilities and            $  1,877,350    $  2,423,356   $  2,457,362
shareholders' (deficit) equity



EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
                                           For the Nine Months Ended March 31,
                                           2014                2013
Cash flows from operating activities:
Net loss                                   $   (476,072)       $  (242,357)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation and amortization of property  109,647             118,814
and equipment
Amortization of intangible assets          4,660               4,853
Bad debt expense                           124,979             129,659
Long-lived asset impairments               513,095             300,104
Amortization of debt issuance costs        10,694              5,032
Loss on debt refinancing                   —                   5,232
Share-based compensation                   13,536              11,938
Non cash adjustments related to deferred   (13,886)            (12,610)
rent
Amortization of deferred gains on          (1,689)             (1,012)
sale-leaseback transactions
Changes in assets and liabilities:
Restricted cash                            (750)               (4,149)
Receivables                                (106,255)           (91,473)
Reimbursements for tenant improvements     1,168               7,102
Inventory                                  (674)               1,383
Other assets                               5,170               3,635
Accounts payable                           1,483               (29,792)
Accrued liabilities, including income      (43,355)            (3,096)
taxes
Unearned tuition                           (39,320)            (37,804)
Advance payments                           69,744              120,743
Total adjustments                          648,247             528,559
Net cash flows provided by operating       172,175             286,202
activities
Cash flows from investing activities:
Expenditures for long-lived assets         (52,766)            (64,586)
Proceeds from sale of fixed assets         9,565               65,065
Reimbursements for tenant improvements     (1,168)             (7,102)
Net cash flows used in investing           (44,369)            (6,623)
activities
Cash flows from financing activities:
Payments under revolving credit facility   (75,000)            (111,300)
Repayment of senior notes                  —                   (162,246)
Issuance of common stock as a result of    2,958               3
stock-option exercises
Gross excess tax benefit from share-based  3,417               —
compensation
Minimum tax withholding requirements upon  (3,207)             —
restricted stock unit vesting
Principal payments on long-term debt       (9,082)             (9,117)
Debt issuance costs                        —                   (4,436)
Net cash flows used in financing           (80,914)            (287,096)
activities
Effect of exchange rate changes on cash    (119)               123
and cash equivalents
Net change in cash and cash equivalents    46,773              (7,394)
Cash and cash equivalents, beginning of    130,695             191,008
period
Cash and cash equivalents, end of period   $   177,468         $  183,614
Cash paid (received) during the period
for:
Interest (including swap settlement)       $   94,442          $  89,705
Income taxes, net of refunds               (2,048)             34,960
                                           As of March 31,
Noncash investing activities:              2014                2013
Capital expenditures in current            $   7,497           $  7,756
liabilities



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 income
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 income, excluding certain expenses is detailed
below:



Segment Information and Reconciliation of EBITDA to Net Loss to
Net Income Excluding Certain Expenses
(In thousands, except per share amounts) (Unaudited)
                   For the Three Months Ended March     For the Nine Months Ended March 31,
                   31,
                   2014          2013          %        2014          2013          %
                                               Change                               Change
Net revenues:
The Art Institutes $ 358,624     $ 393,560     (8.9)%   $ 1,086,613   $ 1,185,232   (8.3)%
Argosy University  91,729        94,430        (2.9)%   251,518       268,663       (6.4)%
Brown Mackie       65,858        73,876        (10.9)%  205,507       226,122       (9.1)%
Colleges
South University   78,991        77,037        2.5%     225,617       223,346       1.0%
Total EDMC         595,202       638,903       (6.8)%   1,769,255     1,903,363     (7.0)%
EBITDA excluding certain
expenses:
The Art Institutes 78,988        101,081       (21.9)%  226,077       288,250       (21.6)%
Argosy University  19,176        16,250        18.0%    25,108        31,269        (19.7)%
Brown Mackie       4,560         7,638         (40.3)%  17,967        25,824        (30.4)%
Colleges
South University   13,178        15,777        (16.5)%  30,727        32,140        (4.4)%
Corporate and      (20,877)      (18,791)      (11.1)%  (65,603)      (65,341)      (0.4)%
other
Total EDMC         95,025        121,955       (22.1)%  234,276       312,142       (24.9)%
Reconciliation to
EBITDA:
Long-lived asset   509,248       300,104       69.7%    513,095       300,104       71.0%
impairments
Lease abandonment  6,367         —             N/M      6,367         —             N/M
charge
Restructuring      5,760         —             N/M      16,858        9,145         84.3%
Loss on
sale-leaseback     3,491         —             N/M      3,491         3,938         (11.4)%
transactions
Settlement-related 1,900         —             N/M      7,859         —             N/M
costs
Loss on debt       —             5,232         N/M      —             5,232         N/M
refinancing
EBITDA             (431,741)     (183,381)     N/M      (313,394)     (6,277)       N/M
Reconciliation to net loss:
Depreciation and   37,109        40,266        (7.8)%   114,307       123,667       (7.6)%
amortization
Net interest       31,076        30,464        2.0%     94,557        92,924        1.8%
expense
Income tax expense (32,280)      6,297         N/M      (46,186)      19,489        N/M
(benefit)
Net loss           $ (467,646)   $ (260,408)   79.6%    $ (476,072)   $ (242,357)   96.4%
Long-lived asset
impairments, net   $ 480,558     $ 288,412     66.6%    $ 482,866     $ 288,412     67.4%
of tax
Lease abandonment  3,820         —             N/M      3,820         —             N/M
charge, net of tax
Restructuring, net 3,456         —             N/M      10,115        5,488         84.3%
of tax
Loss on
sale-leaseback
transactions, net  2,095         —             N/M      2,095         2,363         (11.3)%
of

tax
Settlement-related 1,140         —             N/M      4,715         —             N/M
costs, net of tax
Loss on debt
refinancing, net   —             3,139         N/M      —             3,139         N/M
of tax
Loss on disposal
of asset, net of   —             —             N/M      —             2,753         N/M
tax
Reversal of
uncertain tax      (2,976)       (691)         N/M      (2,976)       (691)         N/M
position liability
Net income,
excluding certain  $ 20,447      $ 30,452      (32.9)%  $ 24,563      $ 59,107      (58.4)%
expenses
Diluted loss per   $ (3.71)      $ (2.09)               $ (3.80)      $ (1.95)
share
Diluted earnings
per share,         $ 0.16        $ 0.24                 $ 0.19        $ 0.47
excluding certain
expenses
Weighted average
number of diluted
shares             129,283       125,167                129,697       124,802
outstanding,
excluding certain
expenses



New Student Enrollment
                      For the Three Months Ended March 31,
                      2014          2013        % Change
The Art Institutes    9,450         11,210      (15.7)%
Argosy University     4,500         5,130       (12.3)%
Brown Mackie Colleges 3,590         4,110       (12.7)%
South University      4,600         4,090       12.5%
Total EDMC            22,140        24,540      (9.8)%

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 March 31, 2014
were approximately 7,010 as compared to 7,650 in the three months ended March
31, 2013.

Average Enrolled Student Body
                      For the Three Months Ended March 31,
                      2014         2013         % Change
The Art Institutes    62,070       67,070       (7.5)%
Argosy University     23,480       25,260       (7.0)%
Brown Mackie Colleges 15,380       17,040       (9.7)%
South University      18,570       18,960       (2.1)%
Total EDMC            119,500      128,330      (6.9)%

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 29,040 for the three months ended March 31, 2014 as compared to
31,790 in the three months ended March 31, 2013.

For April 2014, starting student body enrollment for Total EDMC was
approximately 114,440, a decrease of 8.1 percent from April 2013. 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 strives to improve the learning experience for its
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, depreciation and
amortization, impairments, cash flows, restructuring and other special
charges, growth rates and financial results, including the fourth 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, performance and operating environment, and other
future developments, including expected strategic changes. 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; challenges in the company's operating environment;
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 and other
strategic changes and the results thereof; the impact of the proposed gainful
employment regulation issued by the U. S. Department of Education on March 14,
2014; adjustments to the company's programmatic offerings to comply with the
90/10 rule; its high degree of leverage and ability to maintain compliance
with the covenants and other requirements in its loan agreements and 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
 
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