SOURCE: EVCI Career Colleges Holding Corp.

August 12, 2005 17:38 ET

EVCI Career Colleges Releases Results for Second Quarter

Results Reflect Difference in Start Dates of Spring and Summer 2005 and 2004 Semesters and Continuing Investment in Growth

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

Comparing the second quarters of 2005 and 2004, total revenue was $9.7 million versus $5.8 million, income from operations was $0.5 million versus a loss of $0.6 million and net income was $0.3 million versus a loss of $0.6 million. Diluted earnings per share was $0.03 for the second quarter of 2005, compared to a loss of $0.05 for the first quarter last year.

Comparing the first six months of 2005 and 2004, total revenue was $19.9 million versus $14.3 million, income from operations was $1.4 million versus $1.9 million and net income was $1.0 million versus $1.5 million.

Dr. John J. McGrath, CEO and President, commented: "Our net income for the second quarter 2005 increased by $0.9 million from the second quarter 2004 loss because we had a 66% increase in revenue and a decrease in our operating expenses, as a percentage of our revenue, from 111% to 95%. Our second quarter revenue includes $2.0 million that was deferred from the first quarter due to the later start of our spring semester as compared to last years spring semester start date. However, our results for the second quarter and six months of 2005 reflect four less days of revenue recognition, or $522,000 attributable to the summer semester, as compared to the second quarter and six months of 2004."

Dr. McGrath continued: "Our 2005 quarterly and six months net income and earnings per share were also negatively impacted by costs of approximately $145,000 for the second quarter and approximately $278,000 for the six months, without any offsetting revenue, relating to the relocation of the campus of the Pennsylvania School of Business."

If we had been able to recognize the additional four days of revenue, and did not have the PSB costs, we would have had adjusted net income of $1.6 million and adjusted diluted earnings per common share of $0.12. 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                                $   987,000

Add:
   Additional revenue(1)                                  447,000
   PSB costs                                              278,000
                                                      -----------
                                                        1,712,000
Deduct:
   Assumed tax on additional revenue                     (145,000)
                                                      -----------
   Adjusted net income                                $ 1,567,000
                                                      ===========
   Adjusted diluted net income per common share (2)         $0.12
                                                      ===========


(1)  After deducting salaries of $75,000 of adjunct instructors that
are a variable cost directly  related to this revenue.
(2)  Based on 12,941,861 weighted average number of common shares
outstanding for the six months ended June 30, 2005 versus 12,388,334
weighted average number of shares outstanding for six months ended
June 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 difference in the number of semester days during each fiscal quarter.

As previously announced, EVCI expects to discuss its second quarter results in a conference call for investors scheduled for Monday, August 15, 2005 at 11 a.m. EDT. Investors interested in participating in the call should dial 800-922-0755 and ask for the EVCI second quarter results conference call. A replay of the call will be available for one week beginning August 15, 2005 and lasting through August 21, 2005. To access the replay, dial 877-519-4471 and enter the digital pin# 637 8278.


            EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEET

                                         June 30,        December 31,
                                           2005              2004
                                       (unaudited)        (audited)
                                       ------------     -------------
ASSETS

Current assets:
   Cash and cash equivalents           $  4,617,500     $  10,504,308
   Student accounts receivable,
    less allowance for doubtful
    accounts of $653,000 and
    $105,000, respectively               12,681,551         6,015,719
   Prepaid expenses and other
    current assets                          356,707           137,410
                                       ------------     -------------

        Total current assets             17,655,758        16,657,437

Property and Equipment - net              5,373,171         4,733,185

Intangible assets                           640,498                 -

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

Deposits                                  1,444,922           443,084

Other assets                                104,896            32,142
                                       ------------     -------------
        Total Assets                   $ 34,691,369     $  31,337,972
                                       ============     =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable and accrued
     expenses                         $   2,068,731     $   3,046,707
    Income taxes payable                     91,938           329,729
    Deferred tuition revenue              4,705,559         1,834,510
    Current portion of capital
     lease obligation                       258,381           275,329
    Current portion of notes payable        318,907           318,907
                                       ------------     -------------
         Total current liabilities        7,443,516         5,805,182

Capital lease obligation,
 net of current portion                     512,275           585,337

Notes payable,
 net of current portion                     120,035           286,518

Deferred rent                               828,301           766,710
                                       ------------     -------------
         Total liabilities                8,904,127         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 12,432,867
     and 12,329,603 shares, respectively      1,264             1,254
     Additional paid-in capital          50,828,336        49,922,445
     Accumulated deficit                (25,042,358)      (26,029,474)
                                       ------------     -------------

        Stockholders' equity             25,787,242        23,894,225
                                       ------------     -------------
        Total Liabilities and
         Stockholders' Equity          $ 34,691,369     $  31,337,972
                                       ============     =============

See Notes to Consolidated Financial Statements


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

                           Three months ended         Six months ended
                                 June 30,                  June 30,
                            2005         2004         2005         2004
                        -----------  -----------  -----------  -----------

Net revenue             $ 9,609,705  $ 5,788,423  $19,740,248  $14,181,086
Other income                 45,774       44,716      109,977      140,330

                        -----------  -----------  -----------  -----------
Total revenue             9,655,479    5,833,139   19,850,225   14,321,416
                        -----------  -----------  -----------  -----------

Operating expenses:
   Cost of revenue        3,013,329    1,985,945    5,780,779    3,614,850
   Selling, general and
    administrative        6,174,482    4,491,475   12,706,427    8,837,275

                        -----------  -----------  -----------  -----------
Total operating expenses  9,187,811    6,477,420   18,487,206   12,452,125
                        -----------  -----------  -----------  -----------

Income/ (loss) from
 operations                 467,668     (644,281)   1,363,019    1,869,291

Other income (expense):
   Interest and financing
    costs                   (47,503)     (70,070)    (103,653)    (116,406)
   Interest income           29,954       29,727       47,750       31,932

                        -----------  -----------  -----------  -----------

Income/ (loss) before
 provision for income
 taxes                      450,119     (684,624)   1,307,116    1,784,817

Provision/ (benefit) for
 income taxes               130,000     (100,000)     320,000      275,000

                        -----------  -----------  -----------  -----------
Net income/ (loss)          320,119     (584,624)     987,116    1,509,817
                        ===========  ===========  ===========  ===========

Net income/ (loss) per
 common share:
  Basic:                $      0.03  $     (0.05) $      0.08  $      0.13
                        ===========  ===========  ===========  ===========

  Diluted:              $      0.03  $     (0.05) $      0.08  $      0.12
                        ===========  ===========  ===========  ===========

Weighted-average number
 of common shares
 outstanding:
   Basic                 12,430,802   12,146,319   12,401,722   11,546,262
                        ===========  ===========  ===========  ===========
   Diluted               12,917,269   12,146,319   12,941,861   12,388,334
                        ===========  ===========  ===========  ===========

See Notes to Consolidated Financial Statements


           EVCI CAREER COLLEGES HOLDING CORP. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF CASH FLOWS
                              (unaudited)
                                         Six months ended June 30,
                                           2005             2004
                                       ------------     ------------

Cash flows from operating activities:
Net income                             $    987,116     $  1,509,817
Adjustments to reconcile net income
 to net cash used in operating
 activities:
  Depreciation and amortization             857,266          373,201
  Bad debt expense                          300,000                -
  Non cash compensation expense             201,984           21,600
Changes in operating assets and
 liabilities; net of effects of
 acquisition:
  Increase in student accounts
   receivable                            (6,951,422)      (6,354,701)
  Increase in prepaid expenses and
   other current assets                    (215,582)        (345,262)
  Increase in other assets                  (72,754)               -
  Increase/(decrease) in accounts
   payable and accrued expenses            (978,367)         369,592
  Increase in income taxes payable         (237,791)               -
  Increase in deferred tuition revenue    2,871,049        2,574,693
  Increase in deferred rent                  61,591          364,187
                                       ------------     ------------
    Net cash used in operating
     activities                          (3,176,910)      (1,486,873)
                                       ------------     ------------

Cash flows from investing activities:
  Purchases of property and equipment    (1,098,474)        (862,516)
  Deposits required                      (1,001,838)        (285,840)
  Return of restricted certificates
   of deposit                                                254,662
  Repayment of notes receivable                   -           45,000
  Payments on accrued purchase price
   payable                                        -         (256,522)
  Cash paid on acquisition of
   Pennsylvania School of Business,
   net of cash received of $11,768         (659,988)               -
                                       ------------     ------------
    Net cash used in investing
     activities                          (2,760,300)      (1,105,216)
                                       ------------     ------------

Cash flows from financing activities:
  Principal payments on capital lease
   obligation                              (487,032)        (264,731)
  Principal payment on notes payable       (166,483)        (678,300)
  Proceeds from issuance of common
   stock                                          -        9,348,840
  Proceeds from exercise of options
   and warrants                             703,917          618,354

                                       ------------     ------------
    Net cash provided by financing
     activities                              50,402        9,024,163
                                       ------------     ------------

Net increase (decrease) in cash and
 cash equivalents                        (5,886,808)       6,432,074

Cash and cash equivalents at
 beginning of period                     10,504,308        2,522,107

                                       ------------     ------------
Cash and cash equivalents at end of
 period                                $  4,617,500     $  8,954,181
                                       ============     ============

    Supplemental disclosures of cash
     flow information:

Cash paid during the period for:
  Interest                             $    103,653     $     61,279
                                       ============     ============
  Income taxes                         $          -     $    144,944
                                       ============     ============

    Supplemental schedule of noncash
     investing and financing
     activities:

Capital lease obligations incurred
 in the acquisition of equipment       $    397,022     $     71,495
                                       ============     ============

See Notes to Consolidated Financial Statements

Contact Information

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