<PAGE>   1
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


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


                                    FORM 10-Q


             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


FOR THE PERIOD ENDED: SEPTEMBER 30, 1999       COMMISSION FILE NUMBER: 000-21363


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


                        EDUCATION MANAGEMENT CORPORATION
             (Exact name of registrant as specified in its charter)


                    PENNSYLVANIA                         25-1119571
          (State or other jurisdiction of             (I.R.S. Employer
           incorporation or organization)            Identification No.)


          300 SIXTH AVENUE, PITTSBURGH, PA                  15222
      (Address of principal executive offices)           (Zip Code)


       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (412) 562-0900


           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:


                          COMMON STOCK, $.01 PAR VALUE
                                (Title of class)


                         PREFERRED SHARE PURCHASE RIGHTS
                                (Title of class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes  X     No
   -----     -----

The number of shares outstanding of the registrant's Common Stock as of
September 30, 1999 was 29,182,876.


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<PAGE>   2


                                      INDEX


<TABLE>
<CAPTION>
PART I  -     FINANCIAL INFORMATION                                                                         PAGE
<S>           <C>                                                                                           <C>
              ITEM 1     -  CONDENSED CONSOLIDATED FINANCIAL
                            STATEMENTS (UNAUDITED)...........................................................3-6
              ITEM 2     -  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                            RESULTS OF OPERATIONS AND FINANCIAL CONDITION...................................7-10


PART II  -    OTHER INFORMATION

              ITEM 1     -  LEGAL PROCEEDINGS.................................................................11
              ITEM 2     -  CHANGES IN SECURITIES.............................................................11
              ITEM 3     -  DEFAULTS UPON SENIOR SECURITIES...................................................11
              ITEM 4     -  SUBMISSION OF MATTERS TO A VOTE OF
                            SECURITY HOLDERS..................................................................11
              ITEM 5     -  OTHER INFORMATION.................................................................11
              ITEM 6     -  EXHIBITS AND REPORTS ON FORM 8-K..................................................11


SIGNATURES....................................................................................................12
</TABLE>


                                       2
<PAGE>   3


                                     PART I

ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                        EDUCATION MANAGEMENT CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,  JUNE 30,  SEPTEMBER 30,
                                                                     1998         1999        1999
                                                                 -------------  --------  -------------
                                                                  (unaudited)              (unaudited)
<S>                                                                <C>          <C>         <C>
 ASSETS

 CURRENT ASSETS:
   Cash and cash equivalents, including restricted balances.....   $  7,125     $ 32,871    $  5,078
   Receivables..................................................     10,794       15,333      17,401
   Inventories..................................................      3,143        2,038       3,423
   Deferred income taxes........................................      2,361        2,476       2,476
   Other current assets.........................................      6,373        2,991       5,682
                                                                   --------     --------    --------
        Total current assets....................................     29,796       55,709      34,060
                                                                   --------     --------    --------
 PROPERTY AND EQUIPMENT, NET....................................     73,835       96,081      98,610
 DEFERRED INCOME TAXES AND OTHER LONG-TERM ASSETS...............      6,203        7,514       7,953
 INTANGIBLE ASSETS, NET OF AMORTIZATION ........................     19,443       19,442      27,918
                                                                   --------     --------    --------
        TOTAL ASSETS............................................   $129,277     $178,746    $168,541
                                                                   ========     ========    ========

 LIABILITIES AND SHAREHOLDERS' INVESTMENT
   CURRENT LIABILITIES:
   Current portion of long-term debt............................   $    745     $    731    $    292
   Accounts payable.............................................      5,753       12,110       6,108
   Accrued liabilities..........................................     10,155       11,438      12,085
   Advance payments.............................................     34,739       20,909      40,807
                                                                   --------     --------    --------
        Total current liabilities...............................     51,392       45,188      59,292
                                                                   --------     --------    --------
 LONG-TERM DEBT, LESS CURRENT PORTION...........................      1,832       36,500      14,903
 DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES..........      1,631          253         274
 COMMITMENTS AND CONTINGENCIES
   SHAREHOLDERS' INVESTMENT:
   Common Stock.................................................        292          295         296
   Additional paid-in capital...................................     89,542       93,736      93,954
   Treasury stock, at cost......................................       (354)        (495)     (4,373)
   Retained earnings (accumulated deficit)......................    (15,058)       3,269       4,195
                                                                   --------     --------    --------
        TOTAL SHAREHOLDERS' INVESTMENT..........................     74,422       96,805      94,072
                                                                   --------     --------    --------
        TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT..........   $129,277     $178,746    $168,541
                                                                   ========     ========    ========
</TABLE>


      The accompanying notes to condensed consolidated financial statements are
an integral part of these statements.



                                       3
<PAGE>   4




                        EDUCATION MANAGEMENT CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                   FOR THE THREE MONTHS
                                                                   ENDED SEPTEMBER 30,
                                                                 -------------------------
                                                                     1998         1999
                                                                 ------------  -----------
<S>                                                                 <C>          <C>
NET REVENUES................................................        $50,079      $60,850
COSTS AND EXPENSES:
  Educational services......................................         37,014       44,520
  General and administrative................................         12,073       14,305
  Amortization of intangibles...............................            294          332
                                                                    -------      -------
                                                                     49,381       59,157

INCOME BEFORE INTEREST AND TAXES............................            698        1,693
  Interest expense (income), net............................            (34)         123
                                                                    -------      -------
INCOME BEFORE INCOME TAXES..................................            732        1,570
  Provision for income taxes................................            307          644
                                                                    -------      -------
NET INCOME..................................................        $   425      $   926
                                                                    =======      =======
EARNINGS PER SHARE:
    Basic...................................................        $   .01      $   .03
                                                                    =======      =======
    Diluted.................................................        $   .01      $   .03
                                                                    =======      =======
 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (000's):
    Basic...................................................         29,074       29,340
    Diluted.................................................         30,258       30,109
</TABLE>


      The accompanying notes to condensed consolidated financial statements are
an integral part of these statements.


                                       4
<PAGE>   5


                        EDUCATION MANAGEMENT CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                FOR THE THREE MONTHS
                                                                 ENDED SEPTEMBER 30,
                                                                --------------------
                                                                  1998        1999
                                                                --------    --------
<S>                                                             <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income.......................................             $    425    $    926
  ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FLOWS
     FROM OPERATING ACTIVITIES:
       Depreciation and amortization.....................          3,671       4,638
       Changes in current assets and liabilities:
          Receivables....................................            884      (1,903)
          Inventories....................................         (1,210)     (1,256)
          Other current assets...........................         (4,032)     (2,371)
          Accounts payable...............................         (1,229)     (6,424)
          Accrued liabilities............................             (7)        242
          Advance payments...............................         16,401      18,982
                                                                --------    --------
            Total adjustments............................         14,478      11,908
                                                                --------    --------
            Net cash flows from operating activities.....         14,903      12,834
                                                                --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of subsidiaries, net of cash acquired......             --        (997)
  Expenditures for property and equipment................        (19,902)     (5,415)
  Other, net.............................................            (53)         26
                                                                --------    --------
            Net cash flows from investing activities.....        (19,955)     (6,386)
                                                                --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on debt.............................        (35,805)    (30,581)
  Repurchase of Common Stock.............................             --      (3,878)
  Net proceeds from issuance of Common Stock.............            664         218
  Other capital stock transactions, net..................              8          --
                                                                --------    --------
            Net cash flows from financing activities.....        (35,133)    (34,241)
                                                                ---------   ---------

NET CHANGE IN CASH AND CASH EQUIVALENTS..................        (40,185)    (27,793)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...........         47,310      32,871
                                                                --------    --------

CASH AND CASH EQUIVALENTS, END OF PERIOD.................       $  7,125    $  5,078
                                                                ========    ========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
  Interest (net of amount capitalized)...................       $    182    $     14
  Income taxes...........................................            466         117
NONCASH INVESTING AND FINANCING ACTIVITIES
  Acquisition of subsidiary with note payable............       $     --    $  7,050
</TABLE>


      The accompanying notes to condensed consolidated financial statements are
an integral part of these statements.



                                       5
<PAGE>   6


                        EDUCATION MANAGEMENT CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.           The accompanying condensed consolidated financial statements should
         be read in conjunction with the Notes to Consolidated Financial
         Statements included in the Company's 1999 Annual Report on Form 10-K.
         The accompanying condensed consolidated balance sheet as of June 30,
         1999 has been derived from the audited balance sheet included in the
         Company's 1999 Annual Report on Form 10-K. The accompanying interim
         financial statements are unaudited; however, management believes that
         all adjustments necessary for a fair presentation have been made and
         all adjustments are normal, recurring adjustments. The results for the
         three months ended September 30, 1999 are not necessarily indicative of
         the results to be expected for the full fiscal year. Unless otherwise
         noted, references to 1999 and 2000 refer to the three-month periods
         ended September 30, 1998 and 1999, respectively.

2.           Education Management Corporation ("EDMC" or the "Company") is one
         of the largest providers of proprietary postsecondary education in the
         United States, based on student enrollments and revenues. Through its
         operating units, primarily the Art Institutes ("the Art Institutes"),
         the Company offers bachelor's and associate's degree programs and
         non-degree programs in the areas of design, media arts, culinary arts,
         fashion and paralegal studies. The Company has provided career-oriented
         education programs for over 35 years.

3.           Reflected below is a summary of the Company's capital stock:

<TABLE>
<CAPTION>
                                            PAR VALUE     AUTHORIZED    SEPTEMBER 30, 1998  JUNE 30, 1999   SEPTEMBER 30, 1999
<S>                                         <C>           <C>               <C>               <C>               <C>
         ISSUED:
              Preferred Stock               $    .01      10,000,000                     -              -                    -
              Common Stock                  $    .01      60,000,000            29,185,060     29,546,833           29,570,022
          HELD IN TREASURY:
              Common Stock                       N/A             N/A                78,803         85,646              387,146
</TABLE>

             On August 3, 1999, the Board of Directors authorized the Company to
         repurchase up to $10 million of its currently outstanding Common Stock.
         Management will determine the quantity and timing of such purchases
         based upon market conditions and other factors. Through September
         30, 1999, the Company had repurchased 301,500 shares at an approximate
         cost of $3.9 million.

4.           On August 17, 1999, the Company acquired the outstanding stock of
         the American Business & Fashion Institute in Charlotte, North
         Carolina. On August 26, 1999, the Company acquired the outstanding
         stock of Massachusetts Communications College in Boston, Massachusetts.

             The Company's acquisitions have been accounted for using the
         purchase method of accounting, with the excess of the purchase price
         over the fair value of the assets acquired being assigned to
         identifiable intangible assets and goodwill. The results of the
         acquired entities have been included in the Company's results from the
         respective dates of acquisition. The pro forma effects, individually
         and collectively, of the acquisitions in the Company's condensed
         consolidated financial statements would not materially impact the
         reported results.

5.           Reconciliation of diluted shares (000's):

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED SEPTEMBER 30,
                                                                   --------------------------------
                                                                      1998                  1999
                                                                   -----------           ----------
<S>                                                                  <C>                   <C>
                      Basic shares...........................        29,074                29,340
                      Dilution for stock options.............         1,184                   769
                                                                     ------                ------
                      Diluted shares.........................        30,258                30,109
                                                                     ======                ======
</TABLE>

             Options to purchase 226,388 shares were excluded from the diluted
         earnings per share calculation because of their antidilutive effect
         (due to the exercise price of such options exceeding the average market
         price for the period) for the period ended September 30, 1999.

6.           Certain prior period balances have been reclassified to conform to
         the current period presentation.


                                       6
<PAGE>   7


ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION

         This Quarterly Report on Form 10-Q contains statements that may be
         forward-looking statements within the meaning of the U.S. Private
         Securities Litigation Reform Act of 1995. Those statements can be
         identified by the use of forward-looking terminology such as
         "believes," "estimates," "anticipates," "continues," "contemplates,"
         "expects," "may," "will," "could," "should" or "would" or the negatives
         thereof or other variations thereon or comparable terminology. Those
         statements are based on the intent, belief or expectation of Education
         Management Corporation ("EDMC" or the "Company") as of the date of this
         Quarterly Report. Any such forward-looking statements are not
         guarantees of future performance and may involve risks and
         uncertainties that are outside the control of the Company. Results may
         vary materially from the forward-looking statements contained herein as
         a result of changes in United States or international economic
         conditions, governmental regulations and other factors. The Company
         expressly disclaims any obligation or understanding to release publicly
         any updates or revisions to any forward-looking statement contained
         herein to reflect any change in the Company's expectations with regard
         thereto or any change in events, conditions or circumstances on which
         any such statement is based. The following discussion of the Company's
         results of operations and financial condition should be read in
         conjunction with the interim unaudited condensed consolidated financial
         statements of the Company and the notes thereto, included herein.
         Unless otherwise noted, references to 1999 and 2000 are to the
         three-month periods ended September 30, 1998 and 1999, respectively.

RESULTS OF OPERATIONS

         Net revenues increased by 21.5% to $60.8 million in 2000 from $50.1
million in 1999 due primarily to a 16.2% increase in student enrollments,
accompanied by a tuition increase. Total student enrollment at the Company's
schools increased from 15,672 in 1999 to 18,208 in 2000, including enrollment
growth of approximately 12.3% at the schools that have been operated by the
Company for 24 months or more. The Company acquired both the American Business
and Fashion Institute and Massachusetts Communications College in August 1999.

         Educational services expense increased by $7.5 million, or 20.3%, to
$44.5 million in 2000 from $37.0 million in 1999, due primarily to the
incremental costs to support higher student enrollments. As a percentage of net
revenues, educational services expense decreased from 73.9% to 73.2%, for the
respective quarters, reflecting leverage on fixed costs.

         General and administrative expense was $14.3 million in 2000, up 18.5%
from $12.1 million in 1999. The increase over the comparable quarter in the
prior year reflects higher marketing and student admissions expense, resulting
from increased employee compensation and media advertising costs. General and
administrative expense as a percent of net revenues decreased from 24.1% in the
first quarter of fiscal 1999, to 23.5% this year, reflecting improved operating
leverage. Expenses related to centralized support functions as a percentage of
net revenues decreased slightly, as compared to those incurred during the three
months ended September 30, 1998.

         Amortization of intangibles increased by 12.9%, to $332,000 in 2000
from $294,000 in 1999, resulting primarily from the amortization of the
intangible assets associated with the acquisition of subsidiaries in August,
1999, discussed above.

         The Company had net interest expense of $123,000 for 2000, as compared
to net interest income of $34,000 for 1999. This change was mainly attributable
to an increase in the average outstanding borrowings, related to capital
expenditures, acquisitions and the repurchase of shares.

         The Company's effective tax rate decreased from 41.9% in 1999 to 41.0%
in 2000. This decrease reflects a change in the distribution of taxable income
among the states in which the Company operates, and differs from the combined
federal and state statutory rates due to expenses that are nondeductible for tax
purposes.

         Net income increased by $501,000 to $926,000 in 2000 from $425,000 in
1999. The increase is attributable to improved results from operations at the
Company's schools, partially offset by higher amortization of intangibles and
interest expense.

SEASONALITY AND OTHER FACTORS AFFECTING QUARTERLY RESULTS

         The Company's quarterly revenues and income fluctuate primarily as a
result of the pattern of student enrollments. The Company experiences a seasonal
increase in new enrollments in the fall (fiscal year second quarter), which is
traditionally when the largest number of new high school graduates begin
postsecondary education. Some students choose not to attend classes during
summer months, although the Company's schools encourage year-round attendance.
As a result, total student enrollments at the Company's schools are highest in
the fall quarter and lowest in the summer months (fiscal year first quarter).
The Company's costs and expenses,



                                       7
<PAGE>   8

however, do not fluctuate as significantly as revenues on a quarterly basis.
Historically, the Company's profitability has been lowest in its fiscal first
quarter due to lower revenues combined with expenses incurred in preparation for
the peak enrollments in the fall quarter. The Company anticipates that the
seasonal pattern in revenues and earnings will continue in the future.

LIQUIDITY AND CAPITAL RESOURCES

         The Company generated positive cash flow from operating activities of
$14.9 million and $12.8 million for the three months ended September 30, 1998
and 1999, respectively. The decrease between years results mainly from
approximately $5.1 million of cash payments made during the three months ended
September 30, 1999, related to capital expenditures made prior to June 30, 1999,
that were included in accounts payable at year-end.

         As of September 30, 1999, the Company had a working capital deficit of
$25.2 million, as compared to $10.5 million of working capital as of June 30,
1999. The decrease in working capital was due primarily to $30.6 million in debt
repayments under the Amended and Restated Credit Agreement dated March 16, 1995
(the "Revolving Credit Agreement") and capitalized leases. Net trade receivables
increased by $1.3 million from June 30, 1999. This increase matches the net
trade receivables of the schools acquired during the period. As compared to
September 30,1998, net trade receivables increased primarily as a result of the
enrollment and corresponding revenue increase, acquisitions and the timing of
the class starts.

         Borrowings under the Revolving Credit Agreement are used by the Company
primarily to fund its occasional working capital needs arising from the
seasonal pattern of cash receipts throughout the year. The level of accounts
receivable reaches a peak immediately after the billing of tuition and fees at
the beginning of each academic quarter. Collection of these receivables is
heaviest at the start of each academic quarter.

         The Company believes that cash flow from operations, supplemented from
time to time by borrowings under the Revolving Credit Agreement, will provide
adequate funds for ongoing operations, planned expansion to new locations,
planned capital expenditures and debt service during the term of the Revolving
Credit Agreement.

         Capital expenditures were $19.9 million and $5.4 million, in 1999 and
2000, respectively. The 1999 expenditures included approximately $15.5 million,
attributable to real estate acquisitions.

         The Company anticipates its capital spending for 2000 will be
approximately equivalent to the 1999 level of expenditures. The 2000 additions
will be primarily related to the introduction and expansion of culinary
programs, further investment in schools acquired or started during the current
and previous four years, continued improvements to the facilities under
construction, additional or replacement school and housing facilities and
classroom technology.

         The majority of the Company's facilities are leased. Future commitments
on existing leases will be paid from cash provided from operating activities.

IMPACT OF NEW ACCOUNTING STANDARDS

         In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued. The statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value.
Additionally, SFAS No. 133 requires that changes in a derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. This statement has been amended by SFAS No. 137 "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the effective date of SFAS No.
133." SFAS No. 137 will be effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. The Company does not anticipate that this
standard will have a significant impact on its financial statements.

YEAR 2000 ISSUES

THE PROBLEM

         The Year 2000 problem arises from the fact that many existing
information technology ("IT") hardware and software systems and non-information
technology ("non-IT") products containing embedded microchip processors were
originally programmed to represent any date with six digits (e.g., 12/31/99), as
opposed to eight digits (e.g., 12/31/1999). Accordingly, problems may arise for
many such products and systems when attempting to process information containing
dates that fall after December 31, 1999. As a result, many such products and
systems could experience miscalculations, malfunctions or disruptions. This
problem is commonly referred to as the "Year 2000" problem, and the acronym
"Y2K" is commonly substituted for the phrase "Year 2000."


                                       8
<PAGE>   9


         At this time, the Company believes that all of the significant internal
IT and non-IT systems with potential Y2K problems have been repaired, replaced
or upgraded in order to avoid any major business interruption from Y2K issues.

THE COMPANY'S STATE OF READINESS FOR ITS YEAR 2000 ISSUES

         As a result of the Company's software upgrades and computer system
purchases over the past few years, substantially all of EDMC's computer systems
are anticipated to be Y2K-compliant. The Company created a task force (the "Y2K
Task Force") which has members from its significant operating areas. The Y2K
Task Force implemented a program to assess the potential exposure of each such
area, evaluate whether such potential exposure would result in a problem that
would require remediation, determine the best course of action to, implement the
solution and develop contingency plans to the extent possible and necessary, and
arrange for independent and coordinated testing to ensure Y2K compliance in each
operating area. This program covers Y2K problems in either IT or non-IT systems.

         Testing of EDMC's most critical IT systems has been completed. The Y2K
Task Force has also completed its identification of non-IT systems that may have
Y2K problems, and has sent inquiries to the entities that own or control any of
those non-IT systems, including elevators, electricity, telephones, security
systems and HVAC systems, that could have a material impact on the Company's
operations, such as the owners of the buildings and other facilities that house
or service the Company's schools and administrative offices. Additionally, the
Y2K Task Force identified those third parties, such as governmental and other
regulatory agencies, guaranty agencies, software and hardware suppliers,
telephone companies, significant vendors and external file exchange system
providers, whose Y2K compliance or lack thereof could pose problems for the
Company. These third parties were contacted and have responded with Y2K
compliance plans that appear to be adequate. However, the Company cannot
independently verify the adequacy of such plans.

THE COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES

         To date, the Company has incurred approximately $250,000 of costs
directly associated with its efforts to address its Y2K issues. This amount does
not include an allocation of salaries of EDMC personnel participating in this
effort. Nor does it include recent hardware, software, or systems purchases
which are, or have been, warranted to be Y2K-compliant. Based upon its current
understanding of the Company's Y2K issues, the Y2K Task Force anticipates
additional direct costs of approximately $300,000, will be incurred to address
these issues. Of the remaining cost to be incurred, approximately $200,000 will
be used, if necessary, to replace technology hardware and software at Company
schools; $100,000 is budgeted for contingency plan implementation, if necessary.
All Y2K-related expenditures are expensed as incurred.

         The Company has shifted resources to the resolution of Y2K issues. This
has resulted in the deferral of some existing or contemplated projects,
particularly computer-system oriented projects. Management believes that the
cost of remediating the Company's internal Y2K problems will not have a material
adverse impact upon its business, results of operations, liquidity or financial
condition.

RISKS RELATED TO THE COMPANY'S YEAR 2000 ISSUES

         The Company has identified several possible worst-case scenarios that
could arise because of Y2K issues; however, at this time, the Company does not
have sufficient information to make an assessment of the likelihood of any of
these worst-case scenarios. It should be noted that the Company's schools will
not be in session on December 31, 1999 or January 1, 2000, with classes resuming
in mid-January 2000.

         Because the Company is in a regulated industry and relies, indirectly,
on only a few sources for a substantial portion of its revenues, EDMC's business
is very dependent upon those entities' efforts to address their own Y2K issues.
The Y2K Task Force has identified those third parties whose failure to resolve
their own Y2K issues could have a material impact upon the Company's operations,
and is taking steps it currently believes appropriate to analyze both such
parties' Y2K status and the Company's options in the event that any such party
is not Y2K-compliant in sufficient time prior to December 31, 1999. Should any
such third parties experience Y2K-related disruptions, it could have a material
adverse impact on the Company's business, results of operations, liquidity or
financial condition.



                                       9
<PAGE>   10

         For example, as with all postsecondary education-oriented businesses
whose students receive governmental financial aid, the Company's operations and
liquidity depend upon the student funding provided by Title IV programs for its
students. The U.S. Department of Education's computer systems handle processing
of applications for this funding. The U.S. Department of Education has stated
that its systems are Y2K-compliant. The Company has successfully completed file
exchange tests with the U.S. Department of Education. Any problems with the U.S.
Department of Education's systems could result in an interruption in the funding
for students nationwide, including the Company's students. Any prolonged
interruption could have a material adverse impact upon the education industry
and, accordingly, upon the Company's business, results of operations, liquidity
and financial condition.

         Similarly, the Company's schools are licensed by one or more agencies
in the states in which they are based and accredited by one or more accrediting
bodies that are recognized by the U.S. Department of Education. The Company
continues to assess the Y2K-readiness of these agencies and bodies. In the event
that any of these entities are unable, due to Y2K problems, to renew a school's
license or accreditation, an interruption in such school's operations could
occur. Depending upon the school involved, a prolonged interruption could have a
material adverse impact upon the Company's business, results of operations,
liquidity and financial condition.

         Five guaranty agencies provide the vast majority of the guarantees for
the loans issued to the Company's students under Title IV Programs. The Company
has completed file exchange tests successfully with the agency that accounts for
approximately 85% of those guarantees. As with the U.S. Department of Education,
the Company is unable to assess independently the readiness of any of these
agencies at the present time, although all such agencies have reported that they
are Y2K-compliant. The majority of the Title IV Program loans to the Company's
students are funded through six banks, five of which work with the Company's
primary guaranty agency. The five lenders that work with that agency use an
affiliate of that agency to disburse and service their loans, and the Company
has successfully completed file exchange tests with the affiliated agency.

         The Company has also reviewed the Y2K compliance efforts of its
transfer agent and of the NASDAQ National Market System and does not anticipate
any serious disruptions in service from these providers.

         The Y2K Task Force has made inquiries of the major financial
institutions and utilities that provide services to the Company and continues to
assess the potential effects of those entities' failures to become Y2K-compliant
within the time remaining. If, notwithstanding any such entity's representations
that it will be Y2K-compliant in time, it is not compliant, the Company's
business, results of operations, liquidity and financial condition could be
adversely affected.

CONTINGENCY PLANS

         The Y2K Task Force's responsibilities include development of
contingency plans for each of EDMC's significant operating areas. These
contingency plans would be utilized in the event that, despite the Company's
best efforts, or due to the Company's lack of control over certain third
parties, a system is not Y2K-compliant and EDMC's business is adversely
affected. Each operating area has prepared a contingency plan to operate for up
to three consecutive days without standard computer support. In addition, the
Company maintains a "hot site" contract with Hewlett-Packard that allows it to
run its day-to-day central computer operations from a remote location in
Washington State. The "hot site" is a contingency against a regional Y2K failure
that would cause business interruptions at the Company's corporate offices in
Pittsburgh, Pennsylvania. The Y2K Task Force expects to have substantially all
of its contingency plans in place by December 1, 1999.



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<PAGE>   11


                                     PART II

ITEM 1 - LEGAL PROCEEDINGS

         EDMC and its wholly-owned subsidiaries, The Art Institutes
         International, Inc. and The Art Institute of Houston, Inc. are
         defendants in a suit in the District Court of Harris County, Texas,
         filed on June 30, 1999 by 145 former and current students of The Art
         Institute of Houston and subsequently amended to add 90 more mostly
         former students. On November 5, 1999, the complaint was further amended
         to add an additional 90 plaintiffs, most of whom are former students.
         Plaintiffs claim, among other things, that they were misled about the
         nature, quality and utility of the education they would receive at The
         Art Institute of Houston. The complaint seeks unspecified compensatory
         and consequential damages, exemplary or punitive damages, additional
         damages under the Texas Deceptive Trade Practices Act, and attorneys'
         fees, expenses and interest. The litigation is at a preliminary stage,
         and discovery has not yet begun. Given the preliminary stage of the
         case, the nature of plaintiffs' claims and the inherent uncertainties
         of litigation, management is unable to predict the ultimate number,
         scope or duration of any such claims or the eventual outcome or costs
         of defending any such claims.

ITEM 2 - CHANGES IN SECURITIES

         Not Applicable

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

         Not Applicable

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not Applicable

ITEM 5 - OTHER INFORMATION

         On November 9, 1999, the Company amended its Rights Agreement dated as
         of October 1, 1996 (the "Rights Agreement") solely for the purpose of
         adding an exception to the definition of "Acquiring Person" to permit
         Baron Capital Group, Inc., BAMCO, Inc., Baron Capital Management, Inc.,
         Baron Asset Fund (or any other fund or funds managed by an entity
         controlled by Ronald Baron), or Ronald Baron (collectively, the "Baron
         Holders") to own in the aggregate up to 5,922,600 Common Shares of the
         Company without being deemed to be an "Acquiring Person." In connection
         with the amendment, the Baron Holders confirmed that the Common Shares
         they beneficially own are being held for investment purposes only and
         agreed not to become an "Acquiring Person" during the term of the
         Rights Agreement.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

         (a)    Exhibits:

                (4.01)  Amendment No. 1, dated November 9, 1999, to the Rights
                        Agreement dated as of October 1, 1996 between the
                        Company and ChaseMellon Shareholder Services, L.L.C., as
                        Rights Agent.

                (4.02)  Letter Agreement dated November 9, 1999 by and among the
                        Company, Baron Capital Group, Inc., BAMCO, Inc., Baron
                        Capital Management, Inc. and Ronald Baron.

                (15)    Report of Independent Public Accountants.

                (27)    Financial Data Schedule submitted to the Securities
                        and Exchange Commission in electronic format, filed
                        herewith.

         (b)    Reports on Form 8-K

                No reports on Form 8-K were filed for the three months ended
                September 30, 1999.


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<PAGE>   12


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                            EDUCATION MANAGEMENT CORPORATION
                                            (Registrant)


Date: November 15, 1999








                                            /s/ Robert B. Knutson
                                            ------------------------------------
                                            Robert B. Knutson
                                            Chairman and Chief Executive Officer

                                            /s/ Robert T. McDowell
                                            ------------------------------------
                                            Robert T. McDowell
                                            Executive Vice President and
                                              Chief Financial Officer


                                       12