Focuses on School Support and Customer Service
Significantly Reduces HQ Costs
NEW YORK, Aug. 21 /PRNewswire-FirstCall/ --
Edison Schools Inc. (Nasdaq: EDSN), the nation's leading private manager of
public schools, today unveiled several important headquarters initiatives
emerging from its company-wide reengineering effort. The initiatives are
intended to "reengineer" Edison's infrastructure to improve service delivery
to its schools; increase student achievement and customer satisfaction; and
accelerate Edison's path to profitability.
"Edison's first decade was focused on launching great schools and getting
to scale. As a result, in the 2002-2003 academic year, Edison Schools will be
the 35th largest school system (out of approximately 15,000 school systems) in
the nation serving approximately 84,000 children in 150 schools. Now, it is
critical that we have a corporate infrastructure that maintains excellence
while at scale, helps bring about continued academic performance, and brings
us to profitability. Our reengineering initiatives are a step toward solidly
positioning Edison for each of these objectives," said Founder and CEO Chris
Whittle.
Today, Edison announced significant improvements in its HQ operations
including an enhanced customer service function; strengthening of its
financial reporting and facilities financing unit; a ramp up of its
communications function; and a more efficient organization of its general
financial function. Edison will achieve additional operational efficiencies
by aligning its internal functions with a consolidated and streamlined
regional structure. All reengineering initiatives are designed to maintain
the quality of Edison's schools, increase student achievement, and accelerate
the Company's path to profitability.
The Company announced that, even as it continues to grow, it would reduce
budgeted FY03 HQ expenses by over 10% as compared with FY02 (taking into
account today's implementation date). On an annualized basis the HQ cost
reduction is expected to be a minimum of 15%. These figures are net of
one-time costs related to the reengineering. "As the company has gone through
the reengineering process, one difficult but expected reality is that
operational efficiency and excellence require fewer people," said Chris Cerf,
Edison's President and Chief Operating Officer. "We are guided during these
times by a principle to do all that we can to take care of individuals who
made substantial contributions during Edison's first decade."
The company reaffirmed its guidance for the current and coming fiscal
years and gave some insight into its reengineering goals. In the current
fiscal year, the company expects to post an operating profit (EBITDA net of
non-cash and one time charges) of at least $20 million and to achieve its
first net income in the 4th quarter of this year. Further, it is a goal of
the current reengineering process to achieve the first net income for a full
fiscal year in the coming fiscal period, FY04. The company said it would give
updated guidance at its first quarter earnings call, once the full effect of
re-engineering is clear.
These changes follow a significant enhancement of Edison's management
team. Earlier this month the company announced new management team members
including Charles "Chip" Delaney, formerly president of UBS Capital Americas,
as Edison's Vice Chairman; Jim Howland, formerly of American Express and Regus
Business Centres, as Edison's Chief Development Officer; and Martha Olson,
formerly of Sara Lee, as Edison's Executive Vice President for the School
Support Division.
The past several weeks have been important ones for Edison Schools.
Earlier this month it signed an historic contract with the Philadelphia School
District -- a contract to manage 20 elementary and middle schools. In
addition, Edison completed $40 million in financing with Merrill Lynch and
School Services, a newly formed entity organized by Leeds Weld & Co. and the
Adler Group, to fund its expansion and operation of schools.
Edison Schools manages 150 public schools with a total enrollment of
approximately 84,000 students. Through contracts with local school districts
and public charter school boards, Edison generally assumes educational and
operational responsibility for individual schools in return for funding that
is comparable to that spent on other public schools in the area. Over the
course of three years of intensive research, Edison's team of leading
educators and scholars developed an innovative, research-based curriculum and
school design. Edison opened its first four schools in August 1995, and has
grown rapidly in every subsequent year. For more information, please visit
http://www.edisonschools.com.
Any statements in this press release and any other press release issued by
Edison on or about the date hereof about future expectations, plans and
prospects for Edison, including statements containing the words "believes,"
"anticipates," "plans," "expects," "will," and similar expressions, constitute
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from
those indicated by such forward-looking statements as a result of various
important factors, including the risk factors discussed in our most recent
quarterly report filed with the SEC, and other factors such as, among other
things, the possibility that: (1) Edison, its independent auditors and/or the
SEC may identify additional items that materially and adversely affect
Edison's financial results; (2) the financing discussed here by Edison may
not be consummated; and (3) the events relating to the informal SEC inquiry or
its settlement may result in defaults under Edison's material agreements or
give rise to costly and protracted litigation against Edison. The
forward-looking statements included in this press release represent Edison's
estimates as of August 21, 2002. Edison anticipates that subsequent events
and developments will cause its estimates to change. While Edison may elect
to update these forward-looking statements at some point in the future, Edison
specifically disclaims any obligation to do so. These forward-looking
statements should not be relied upon as representing Edison's estimates or
views as of any date subsequent to August 21, 2002.
SOURCE Edison Schools Inc.
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Related links:
http://www.edisonschools.com
CONTACT:
Adam Tucker, VP Communications of Edison
Schools, +1-212-419-1602
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