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