I write to clarify four issues regarding Edison Schools in a recent Gadfly article written by Allison Cole, "Edison's Year has a Rocky Start" [see http://www.edexcellence.net/gadfly/issue.cfm?issue=38#546]:
- The article suggests that the financial ratio expectations connected with our recent financing (as described in our recently submitted 10K) should be cause for concern. This is absolutely NOT the case. Financial ratios such as these are normal course for financing deals—it is simply a description of the terms of the deal. As a publicly traded company, our finances are transparent, sometimes leaving ample opportunity for misinterpretation. It important to note that just last week we announced that we are on target to meet all financial requirements and expectations for the year.
- Edison's board of directors is not in trouble. To the contrary, there have been changes on it in order for board members to increase their contributions to Edison. In fact, the three board members referenced in the article have increased their investment in Edison Schools in the past few months. In July 2002, Chip Delaney joined the company's executive management team as Vice Chairman. As an employee, Delaney could no longer serve as a member of the Board audit committee so he stepped down in that capacity. He remains a member of the Board of Directors. Jeffrey Leeds and Jonathan Newcombe (Newcombe is a partner at Leeds Weld Co.) stepped down from the Board of Directors in July 2002 when it became apparent that Leeds Weld Co. might be interested in investing in Edison Schools. Subsequently, Leeds Weld Co., through School Services, became a key investor in the $40 million financing deal Edison Schools announced in early August 2002. Board movement is not always a sign of problems.
- Our arrangement in Philadelphia has always called for our first payment to come after we (Edison) and the District completed a "stand still agreement" - a document outlining what happens to material investments in the schools should the partnership end early. Stand still agreements, particularly when a lender is involved, can be extremely complicated. In order to be deliberate, both Edison and the Philadelphia district are considering every possible contingency before these papers are finalized. We have always known that our first payment would be contingent on these documents being finalized. While Edison chooses to be deliberate about final business arrangements, services to teachers and children remain smooth.
- Regarding the location of our staff in Philadelphia, our model allows for some of our staff to work within schools to be close to students, families, principals, and teachers. Being part of the school community is essential to improving schools. We are hopeful that Superintendent Vallas will continue to support a hands-on approach to collaboration between Edison's staff and the staff at each school.
We, at Edison Schools, encourage the Gadfly's readership to watch for positive changes in the 20 schools that Edison is managing for Philadelphia. Our focus has been on—and will continue to be—infusing schools with additional resources, training teachers and staff, and building achievement managements systems. We do this knowing that it is aligned with our mission, "providing every child with a world class education."
For recent and accurate information on Edison Schools, visit our web site www.edisonschools.com.
Sincerely,
Adam Tucker
VP, Communications
Edison Schools