"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 $20million 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 www.edisonschools.com.

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