Net Loss of 37 cents per Share is On Track For Minimum of $26,000,000 EBITDA
and Positive 4th Quarter Net Income
Company Expects to Generate an Additional $50-$70 Million of Cash from
Refinancing of Charter School Notes and Improvements in Receivables
Collections During Next Three Quarters
NEW YORK, Nov. 14 /PRNewswire-FirstCall/ --
Edison Schools Inc. (Nasdaq: EDSN), the nation's leading private manager of
public schools, announced today that it lost 37 cents per share in its first
quarter and that it is on track to produce $26 million in EBITDA, net of stock
based compensation, for the current year. The company also said that it
expects to post positive net income in the fourth quarter of this fiscal year,
the first quarterly net income in the company's 10 year history. In addition,
Edison announced that it expects to generate approximately $50 to $70 million
in incremental cash flow during the next three quarters from refinancing of a
portion of its notes receivable from charter schools (approximately
$30-$50 million), and improvements in the collection of receivables from its
managed schools customers (approximately $20 million). Finally, Edison says
it is on track to reduce its net loss for the year by approximately 75% versus
the prior year.
Regarding the first quarter results, gross site contribution and EBITDA
are heading in the right direction. "Our first quarter is historically
complex and requires careful interpretation for a variety of reasons," said
Chip Delaney, Edison's Vice Chairman of Business and Finance. "As is the case
with all of our first quarters, this one is negatively burdened with the
opening costs of new schools and the fact that our schools are not in session
during July. This year, there are added complexities. We have two major
accounts with whom we are either initiating or moving to a fixed net fee basis
versus our traditional gross approach. This gives the appearance of a decline
in our revenues, when, in fact, our enrollment has increased and we expect
dramatic EBITDA improvements. Second, we have been going through a major
re-engineering process during this quarter. As a result of these matters, we
will attempt, within this release, to provide certain apples-to-apples
comparisons which will make clearer the true progress we are making."
"We are very pleased with the academic and financial progress of the
company," said Chris Cerf, Edison's President and COO. "For years we have
produced outstanding academic results and taken a long-term view on our
finances. We will continue to perform for our students while responding to
today's financial markets, which require accelerating the path to
profitability."
The company reported that its full-time enrollment is approximately
80,000 students, an increase of approximately 5,000 students from the same
period last year. Due primarily to a significant new contract that is
accounted for on a fixed fee basis versus the traditional gross basis, and the
ending of certain unprofitable contracts, the company's revenues were
$73.1 million, a decline from $89.9 million the same period a year ago. The
company's Gross Site Contribution was $8.5 million versus $9.4 a year ago. If
one excludes the one-time revenues from a short term consulting engagement,
which positively affected last year's GSC, the company's GSC actually
increased by 26.9% versus the same period a year ago. Edison reported an
improvement in its EBITDA from a loss of $10.8 million a year ago to a loss
of $9.3 million today. On a per student basis, EBITDA improved from a loss of
$146 per student for the same period last year to $117 per student this
quarter. The company's loss per share was 37 cents versus 24 cents for the
same period a year ago.
The company said it expects to generate approximately $35 million in
EBITDA, net of stock based compensation charges, during the next three
quarters.
The company is making major improvements in the timing of its receivables
collection. Its receivables are of high quality as they are almost exclusively
government funded, and disputed amounts are adequately reserved. The
improvements are coming primarily from more rapid reconciliation of accounts
with client coupled with steps to insure prompt payment. Management believes
these accelerated account reconciliations and collections should reduce
receivables from managed school clients by approximately $20 million by year
end. Management also believes that substantial refinancings on its charter
notes will close in the next two quarters. A number of charter accounts are
moving toward tax-exempt bond offerings or new bank financings which will
provide $30 million to $50 million in repayments to Edison before year end.
The combination of improved EBITDA, cash on the balance sheet, refinancing
of the notes receivable and better receivables timing will place the Company
in a strong financial position at year end.
Management continues to be comfortable with the company's liquidity
position. Cash at June 30, 2002 was $40.6 million and at September 30, 2002
was $31.5 million. The company expects to end the fiscal year with cash on the
balance sheet of approximately $25 million. This amount would be after a
material reduction in the company's debt level and substantial investment in
FY04 new business.
The company's balance sheet remains strong with shareholder equity of
$219 million or $4.07 per share. "Shareholders should take note of a number
of important items on our balance sheet including over $30 million in cash,
approximately $80 million in notes due to us, and over $70 million in
receivables, all from government funded entities. Likewise, it is important
to understand that our liquidity and cash position remain comfortable and we
expect this to be the case at year end as well," said Mr. Delaney.
ABOUT EDISON SCHOOLS
Edison is the nation's largest private manager of public schools. Edison
educates approximately 110,000 students in 150 full year schools and
175 summer schools. Through contracts with local school districts, states,
and public charter school boards, Edison assumes educational and operational
responsibility for individual schools in return for funding that is generally
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 curriculum and school design. Edison opened
its first four schools in August 1995, and has grown rapidly in every
subsequent year.
Any statements in this press release about future expectations, plans and
prospects for Edison, including statements about Edison's future financial
results and other 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 that Edison could lose revenue if it is unable to
enroll enough students or to attract and retain enough principals and
teachers, Edison's management agreements involve financial risk and are
terminable under specified circumstances prior to their expiration, Edison
could be come liable for its charter schools' financial obligations and other
factors discussed in our most recent Annual Report on Form 10-K filed with the
SEC on September 30, 2002. In addition, the forward-looking statements
included in this press release represent Edison's estimates as of November 14,
2002. Edison anticipates that subsequent events and developments will cause
Edison's estimates to change. However, 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 November 14, 2002.
Edison Schools Inc.
Three Months Ended September 31, 2002
(Dollars in 000's, except loss per share data)
Three Months Ended
Sept. 2002 Sept. 2001
Gross student funding $79,545 $97,267
Net revenue $73,092 $89,745
Education and operating expenses:
Direct site expenses
Company paid 34,971 40,699
Client paid 29,593 39,674
Curriculum, administration and development 15,837 16,464
Preopening expenses 2,011 3,735
Stock-based compensation 83 (5,338)
Depreciation and amortization 10,039 7,855
Total education and operating expenses 92,534 103,089
Loss from operations (19,442) (13,344)
Other income (expense)
Interest income 2,216 2,252
Interest expense (2,152) (1,411)
Other 18 6
Total other 82 847
Loss before provision for state taxes (19,360) (12,497)
Provision for state taxes (331) (175)
Net loss $(19,691) $(12,672)
Per share data
Basic and diluted net loss per share $(0.37) $(0.24)
Weighted average shares of common stock
outstanding used in computing
basic and diluted net loss per share 53,824 53,120
Operating information
Enrollment - students* 80,000 74,000
Gross site contribution 8,528 9,372
Stock-based non cash charges 83 (5,338)
EBITDA, net of stock-based
non cash charges (9,320) (10,827)
EBITDA, net of stock-based
non cash charges, per student (117) (146)
* Does not include students enrolled in our summer school program
SOURCE Edison Schools Inc.
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Related links:
http://www.edisonschools.com
CONTACT:
Chris Scarlata, Chief Financial Officer of
Edison Schools Inc., +1-212-419-1645
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