School Operator Tells of Accounting Issue

Edison Schools Inc., the largest private U.S. manager of public schools, explained for the first time in a regulatory filing that the company counts as revenue some money that it never gets.

On Wednesday, Chief Financial Officer Adam Feild, in response to a conference call question, said about 50% of its $375.8 million in revenue for fiscal 2001, ended June30, was never actually received.

Edison Chief Executive Christopher Whittle said that his company has been recording some revenue it never received for seven years. The company added a new paragraph about that policy in the 10-Q filing with the Securities and Exchange Commission.

Edison, which started managing schools in 1995, has accumulated losses totaling more than $230 million since it began in 1992, including more than $120 million over the last three years. Its reported revenue has soared to $375.8 million in fiscal 2001, from $11.8 million in fiscal 1996.

Edison shares fell 29 cents to $12.46 on Nasdaq.