SOURCE: EVCI Career Colleges Holding Corp.

May 12, 2005 17:08 ET

EVCI Career Colleges Posts Results for First Quarter

Results Reflect Nine Less Days of Revenue Recognition and Investment in Growth

YONKERS, NY -- (MARKET WIRE) -- May 12, 2005 -- EVCI Career Colleges Holding Corp. (NASDAQ: EVCI) today announced results and filing of its 10-Q for the first quarter of 2005.

Comparing the first quarters of 2005 and 2004, total revenue was $10.2 million versus $8.5 million, income from operations was $0.9 million versus $2.5 million, net income was $0.7 million versus $2.1 million. Diluted earnings per share was $0.05 for the first quarter of 2005, compared to $0.18 for the first quarter last year. Full-time enrollment was approximately 3,700 in the first quarter of 2005 compared to approximately 2,800 in the 2004 period, a 32% quarter-over-quarter increase.

Dr. John J. McGrath, CEO and President, commented: "Because the spring 2005 semester began January 24, 2005, Interboro only had 49 days of revenue recognition in the first quarter of 2005. In contrast, the spring, 2004 semester started January 12, 2004, and Interboro had 58 days of revenue recognition in the first quarter of 2004, except with respect to Interboro's Yonkers site, which had only 16 days of revenue recognition. The nine day difference between 49 and 58 days of revenue recognition represents $2 million of our total deferred revenue of $4.4 million at March 31, 2005. All of this deferred revenue will be recorded as revenue in the second quarter of 2005."

Dr. McGrath continued: "Our 2005 first quarter net income and earnings per share were also negatively impacted by costs, without any offsetting revenue, relating to the relocation of the campus of the Pennsylvania School of Business and regulatory compliance requirements relating to EVCI's acquisition of PSB in January 2005. We are very pleased to report that we now expect that PSB will be fully operational in time for the fall 2005 semester.

If we had been able to recognize the additional nine days of revenue, and did not have the PSB costs, we would have had net income of $2.3 million and diluted earnings per share of $0.18. The calculation of these amounts is detailed in Management's Discussion and Analysis of Financial Condition and Results of Operations of our 10-Q and presented below for convenience:


Net income as reported                                          $  667,000

Add:
  Additional revenue(1)                                          1,850,000
  PSB costs                                                        132,000
                                                                ----------
                                                                 2,649,000

Deduct:
  Assumed tax on additional revenue                               (315,000)
                                                                ----------
Adjusted net income                                             $2,334,000
                                                                ==========
Adjusted diluted net income per common share (2)                $     0.18
                                                                ==========

(1)  After deducting salaries of $150,000 of adjunct instructors that are
     a variable cost directly related to this revenue.
(2)  Based on 12,937,900 weighted average number of common shares
     outstanding versus 11,665,022 weighted average number of shares
     outstanding for first quarter 2004.
The adjusted net income and diluted net income per common share amounts set forth above are non-GAAP financial measures that should not be considered as an alternative to net income and net income per common share as indicators of operating performance. Management believes this information is of interest to investors as a supplemental measure of EVCI's operating performance, particularly in light of the significant difference in the number of semester days during each fiscal quarter.

Concluding Dr. McGrath remarks: "While Interboro continues to increase its focus on improving academic operations, administrative operations and operating efficiencies, EVCI still believes that Interboro will continue to realize substantial organic growth for the foreseeable future, including increases in year-over-year enrollment that is, on a percentage basis, much greater than the post-secondary education industry average. In addition, EVCI is seeking other acquisitions that we believe will further accelerate our growth and increase our stockholder value."

As previously announced, EVCI expects to discuss its first quarter results in a conference call for investors scheduled for Friday, May 13, 2005, at 11 a.m. EDT. Investors interested in participating in the call should dial 800-922-0755 and ask for the EVCI first quarter results conference call. A replay of the call will be available for one week beginning May 13, 2005, and lasting through May 19, 2005. To access the replay, dial 877-519-4471 and enter the digital pin# 6060872.

The forward-looking statements in this release regarding our expectation that PSB will be fully operational by the fall 2005; Interboro realizing substantial organic growth for the foreseeable future, including percentage increases in enrollments that are much greater than the industry average; and EVCI's seeking other acquisitions, reflect management's current views with respect to future events and are subject to certain assumptions, risks and uncertainties. These include: PSB's new location may not be ready for the start of the fall 2005 semester; Interboro may not be able to obtain the requisite additional capacity for continuing growth; problems with regulators could adversely affect Interboro's existing sites and its ability to open new sites; changes in regulations governing student financial aid could materially and adversely affect Interboro's operations and growth; and the other specific risks described in EVCI's 10-Q for its quarter ended March 31, 2005 and 10-KSB for its year ended December 31, 2004. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated by any forward-looking statement. EVCI undertakes no obligation to update the information in this press release.

           EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEET

                                                March 31,     December 31,
                                                  2005            2004
                                              (unaudited)      (audited)
                                              ------------    ------------
ASSETS

Current assets:
  Cash and cash equivalents                   $  9,928,425    $ 10,504,308
  Student accounts receivable, less
   allowance for doubtful accounts of $590,000
   and $105,000, respectively                    9,222,871       6,015,719
  Prepaid expenses and other current assets        609,601         137,410
                                              ------------    ------------
    Total current assets                        19,760,897      16,657,437

Property and Equipment - net                     5,372,691       4,733,185

Intangible assets                                  638,742               -

Goodwill                                         3,914,624       3,914,624

Deferred income tax asset, net of valuation
 allowance of $1,827,500                         5,557,500       5,557,500

Other assets                                       626,500         475,226
                                              ------------    ------------
    Total Assets                              $ 35,870,954    $ 31,337,972
                                              ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses       $  3,614,648    $  3,046,707
  Income taxes payable                                   -         329,729
  Deferred tuition revenue                       4,371,132       1,834,510
  Current portion of capital lease obligation      405,516         275,329
  Current portion of notes payable                 318,907         318,907
                                              ------------    ------------
    Total current liabilities                    8,710,203       5,805,182

Capital lease obligation, net of current
 portion                                           768,455         585,337

Notes payable, net of current portion              203,827         286,518

Deferred rent                                      826,255         766,710
                                              ------------    ------------
    Total liabilities                           10,508,740       7,443,747
                                              ------------    ------------

Stockholders' Equity:
  Preferred stock - $.0001 par value;
   authorized 1,000,000 shares: none issued
   and outstanding
  Common stock - $.0001 par value; authorized
   20,000,000 shares; issued and outstanding
   12,429,603 and 12,329,603 shares,
   respectively                                      1,264           1,254
  Additional paid-in capital                    50,723,427      49,922,445
  Accumulated deficit                          (25,362,477)    (26,029,474)
                                              ------------    ------------
    Stockholders' equity                        25,362,214      23,894,225
                                              ------------    ------------
    Total Liabilities and Stockholders'
     Equity                                   $ 35,870,954    $ 31,337,972
                                              ============    ============


          EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF INCOME
                              (unaudited)

                                              Three months ended March 31,
                                                  2005            2004
                                              ------------    ------------

Net revenue                                   $ 10,130,543    $  8,392,663
Other income                                        64,203          95,614
                                              ------------    ------------
Total revenue                                   10,194,746       8,488,277
                                              ------------    ------------
Operating expenses:
  Cost of revenue                                2,264,646       1,471,530
  Selling, general and administrative            7,034,749       4,503,175
                                              ------------    ------------
Total operating expenses                         9,299,395       5,974,705
                                              ------------    ------------
Income from operations                             895,351       2,513,572

Other income (expense):
  Interest and financing costs                     (56,150)        (46,336)
  Interest income                                   17,796           2,205
                                              ------------    ------------
Income before provision for income taxes           856,997       2,469,441

Provision for income taxes                         190,000         375,000
                                              ------------    ------------
Net income                                    $    666,997    $  2,094,441
                                              ============    ============

Net income  per common share:
  Basic                                       $       0.05    $       0.19
                                              ============    ============
  Diluted                                     $       0.05    $       0.18
                                              ============    ============
Weighted-average number of common shares
 outstanding:
  Basic                                         12,371,967      10,946,801
                                              ============    ============
  Diluted                                       12,937,900      11,665,022
                                              ============    ============


          EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF CASH FLOWS
                              (unaudited)

                                              Three months ended March 31,
                                                  2005            2004
                                              ------------    ------------

Cash flows from operating activities:
  Net income                                  $    666,997    $  2,094,441
Adjustments to reconcile net income  to net
 cash provided by operating activities:
  Depreciation and amortization                    412,651         164,562
  Bad debt expense                                 200,000               -
  Non cash compensation expense                    100,992          10,800
 Changes in operating assets and liabilities;
  net of effects of acquisition:
  Increase in students accounts receivable      (3,392,742)     (3,012,264)
  Increase in prepaid expenses and other
   current assets                                 (468,476)       (146,384)
  Decrease (increase) in other assets             (151,274)         30,486
  Increase in accounts payable and
   accrued expenses                                567,550         891,420
  Decrease in income taxes payable                (329,729)              -
  Increase in deferred tuition revenue           2,536,622       1,305,990
  Increase in deferred rent                         59,545         151,083
                                              ------------    ------------
    Net cash provided by operating activities      202,136       1,490,134
                                              ------------    ------------

Cash flows from investing activities:
  Purchases of property and equipment             (653,379)       (499,901)
  Repayment of notes receivable                          -          22,500
  Payments on accrued purchase price payable             -         (35,000)
  Cash paid on acquisition of Pennsylvania
   School of Business, net of cash received
   of $11,768                                     (658,232)              -
                                              ------------    ------------
    Net cash used in investing activities       (1,311,611)       (512,401)
                                              ------------    ------------

Cash flows from financing activities:
  Principal payments on capital lease
   obligation                                      (83,717)        (65,734)
  Principal payment on notes payable               (82,691)       (116,872)
  Proceeds from issuance of common stock                 -       9,321,460
  Proceeds from exercise of options and
   warrants                                        700,000         278,323
                                              ------------    ------------
    Net cash provided by financing activities      533,592       9,417,177
                                              ------------    ------------

Net increase (decrease) in cash and
 cash equivalents                                 (575,883)     10,394,910
Cash and cash equivalents at beginning of
 period                                         10,504,308       2,522,107
                                              ------------    ------------
Cash and cash equivalents at end of period    $  9,928,425    $ 12,917,017
                                              ============    ============

    Supplemental disclosures of cash flow
     information:

Cash paid during the period for:
  Interest                                    $     62,469    $     46,336
                                              ============    ============
  Income taxes                                $    557,792    $    239,268
                                              ============    ============

    Supplemental schedule of noncash investing
     and financing activities:

Capital lease obligations incurred in the
 acquisition of equipment                     $    397,022    $    480,039
                                              ============    ============

Contact Information

  • Contact:
    EVCI Career Colleges Holding Corp.
    Dr. John J. McGrath
    Chief Executive Officer & President
    914-623-0700