<PAGE>   1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                        
                                   FORM 10-Q

(Mark One)

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

                     For the period ending March 31, 1998

                                       OR

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

                       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, PENNSYLVANIA 15222
          (Address of principal executive offices, including zip code)

                                 (412) 562-0900
              (Registrant's telephone number, including area code)

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.

                                 [X] Yes   [ ] No

              SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK

                              As of March 31, 1998

                        Common Stock: 14,462,850 shares
<PAGE>   2

                                     INDEX

<TABLE>
<CAPTION>
PART I -- FINANCIAL INFORMATION                                                                                PAGE
                                                                                                               ----
<S>                                                                                                            <C>
Item 1.   Financial Statements...................................................................................3-7
Item 2.   Management's Discussion and Analysis of 
          Results of Operations and Financial Condition..........................................................8-10

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 ......................................................................................................13
</TABLE>

<PAGE>   3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS

               EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                       MARCH 31,           JUNE 30,          MARCH 31,
ASSETS                                                    1997               1997              1998
------                                                    ----               ----              ----
                                                       (Unaudited)                          (Unaudited)
<S>                                                    <C>               <C>               <C>
CURRENT ASSETS:
  Cash and cash equivalents                             $ 11,592           $ 32,646          $ 20,634
  Restricted cash                                          1,958                581             1,370
                                                        --------           --------          --------
   Total cash and cash equivalents                        13,550             33,227            22,004
  Receivables:
    Trade, net of allowances                               7,683              8,706             7,623
    Notes, advances and other                              4,398              1,841             2,679
  Inventories                                              1,541              1,356             1,802
  Deferred income taxes                                      381              1,509             1,509
  Other current assets                                     3,908              2,247             4,674
                                                        --------           --------          --------
Total current assets                                      31,461             48,886            40,291
                                                        --------           --------          --------

PROPERTY AND EQUIPMENT, NET                               49,179             52,571            55,999

OTHER ASSETS                                               6,525              6,381             6,271

GOODWILL, NET OF AMORTIZATION                             18,580             18,454            19,716
                                                        --------           --------          --------
                                                        $105,745           $126,292          $122,277
                                                        ========           ========          ========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

CURRENT LIABILITIES:
  Current portion of long-term debt                     $  3,551           $  3,637          $  2,878
  Accounts payable                                         1,691              6,931             2,574
  Accrued liabilities                                     10,683              9,778            11,862
  Advance payments                                        26,902             15,832            30,694
                                                        --------           --------          --------
Total current liabilities                                 42,827             36,178            48,008
                                                        --------           --------          --------

LONG-TERM DEBT, LESS CURRENT PORTION                       4,418             30,394             1,409

DEFERRED INCOME TAXES AND
  OTHER LONG-TERM LIABILITIES                              2,505              1,964             1,937

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
  Capital stock:
  Common stock, par value $.01 per share,
   14,462,850 outstanding as of March 31, 1998               144                144               145
  Additional paid-in capital                              87,368             87,893            88,576
  Treasury stock 39,401 shares at cost                      (354)              (354)             (354)
  Stock subscriptions receivable                            (171)              (122)               (8)
  Accumulated deficit                                    (30,992)           (29,805)          (17,436)
                                                        --------           --------          --------

TOTAL SHAREHOLDERS' EQUITY                                55,995             57,756            70,923
                                                        --------           --------          --------
                                                        $105,745           $126,292          $122,277
                                                        ========           ========          ========
</TABLE>

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


                                      -3-

<PAGE>   4
               EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                                MARCH 31,                          MARCH 31,
                                                                ---------                          ---------
                                                          1997            1998               1997            1998
                                                          ----            ----               ----            ----
                                                               (unaudited)                        (unaudited)
<S>                                                   <C>           <C>                 <C>              <C>
NET REVENUES                                           $    50,696   $    59,807         $   136,120      $   166,051
COSTS AND EXPENSES:
Educational services                                        32,346        39,318              87,320          107,601
General and administrative                                  11,409        12,191              30,562           35,727
Amortization of intangibles                                    540           294               1,533            1,317
                                                       -----------   -----------         -----------      -----------
                                                            44,295        51,803             119,415          144,645
                                                       -----------   -----------         -----------      -----------
INCOME BEFORE  INTEREST AND TAXES                            6,401         8,004              16,705           21,406
Interest expense, net                                           96           (15)              1,647               84
                                                       -----------   -----------         -----------      -----------
INCOME BEFORE INCOME TAXES                                   6,305         8,019              15,058           21,322
Provision for income taxes                                   2,650         3,368               6,329            8,955
                                                       -----------   -----------         -----------      -----------
NET INCOME                                             $     3,655   $     4,651         $     8,729      $    12,367
                                                       ===========   ===========         ===========      ===========
EARNINGS PER SHARE:

BASIC                                                  $       .25   $       .32         $       .74      $       .86
                                                       -----------   -----------         -----------      -----------
DILUTED                                                $       .25   $       .31         $       .65      $       .83
                                                       -----------   -----------         -----------      -----------
WEIGHTED AVERAGE SHARES OUTSTANDING:

BASIC                                                   14,389,343    14,454,942          11,117,102       14,441,108
                                                       -----------   -----------         -----------      -----------

DILUTED                                                 14,748,633    14,913,229          13,287,647       14,876,516
                                                       -----------   -----------         -----------      -----------
</TABLE>

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


                                      -4-

<PAGE>   5
               EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     NINE MONTHS ENDED MARCH 31,
                                                                     1997                   1998
                                                                     ----                   ----   
                                                                  (unaudited)            (unaudited)
<S>                                                               <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  NET INCOME                                                       $  8,729              $ 12,367

ADJUSTMENTS TO RECONCILE NET INCOME TO
   NET CASH FLOWS FROM OPERATING ACTIVITIES-
      Depreciation and amortization                                   9,120                10,542
      Vesting of compensatory stock options                             375                    --
      Changes in current assets and liabilities-
        Restricted cash                                                (721)                 (789)
        Receivables                                                  (3,890)                  291 
        Inventories                                                    (269)                 (446)
        Other current assets                                         (1,268)               (2,419)
        Accounts payable                                             (3,085)               (3,508)
        Accrued liabilities                                           3,369                 1,892
        Advance payments                                             15,658                14,769
                                                                   --------              --------

               Total adjustments                                     19,289                20,332
                                                                   --------              --------

               Net cash flows from operating activities              28,018                32,699
                                                                   --------              --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of subsidiaries                                        (9,753)               (1,488)
  Expenditures for property and equipment                           (12,089)              (13,839)
  Other items, net                                                     (175)                 (322)
                                                                   --------              --------

               Net cash flows from investing activities             (22,017)              (15,649)
                                                                   --------              --------

CASH FLOWS FROM FINANCING ACTIVITIES:

  Proceeds from public stock offering, net                           44,969                    --
  Principal payments on debt, net                                   (57,950)              (29,783)
  Dividends paid to ESOP                                                (83)                   --
  Capital stock transactions, net                                    (7,507)                  721
                                                                   --------              --------

                Net cash flows from financing activities            (20,571)              (29,062)
                                                                   --------              --------

NET CHANGE IN CASH AND CASH EQUIVALENTS                             (14,570)              (12,012)
                                                                   --------              --------

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                       26,162                32,646
                                                                   --------              --------

CASH AND CASH EQUIVALENTS, END OF PERIOD                           $ 11,592              $ 20,634
                                                                   ========              ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for:

Interest                                                           $  1,975              $    564
Income taxes                                                       $  4,766              $  9,389

</TABLE>

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


                                       5 
<PAGE>   6

               EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1.   The interim consolidated financial statements consist of the accounts of
     Education Management Corporation (the "Company") and its wholly owned
     subsidiaries, which include The Art Institutes International ("AII") and
     The National Center for Professional Development ("NCPD"). The Company's
     schools offer associate's and bachelor's degree programs and non-degree
     programs in the areas of design, technology, culinary arts, fashion and
     professional development. The Company has provided career-oriented
     education programs for over 35 years. Unless otherwise noted, references
     to the fiscal years 1997 and 1998 are to the periods ended March 31, 1997
     and 1998, respectively.

2.   The results of operations for the three and nine-month periods ended March
     31, 1997 and 1998 are not necessarily indicative of the results to be
     expected for the entire fiscal year. The interim consolidated financial
     statements should be read in conjunction with the consolidated financial
     statements and notes thereto for the fiscal year ended June 30, 1997
     included in the Company's Annual Report on Form 10-K as filed with the
     Securities and Exchange Commission. The accompanying unaudited condensed
     consolidated financial statements have been prepared in accordance with
     generally accepted accounting  principles for interim financial information
     and with the instructions for Form 10-Q and Article 10 of Regulation S-X.
     Accordingly, they do not include all of the disclosures for complete
     financial statements. This financial information reflects all adjustments,
     consisting only of normal recurring adjustments, that are, in the opinion
     of management, necessary to present fairly the financial condition and
     results of operations for the interim periods presented. Third quarter
     fiscal year 1997 and 1998 interim financial information was reviewed by
     Arthur Andersen LLP as set forth in their report included in this document.

3.   The Company's authorized and outstanding capital stock was as follows:

                    MARCH 31, 1998
                    --------------

                    CAPITAL STOCK               AUTHORIZED           OUTSTANDING
                    -------------               ----------           -----------
                    Preferred Stock             10,000,000               --
                    Common Stock                60,000,000            14,462,850

                    JUNE 30, 1997
                    -------------

                    CAPITAL STOCK               AUTHORIZED           OUTSTANDING
                    -------------               ----------           -----------
                    Preferred Stock             10,000,000               --
                    Common Stock                60,000,000            14,417,874


4.   Effective August 1, 1996, the Company acquired certain net assets of The
     New York Restaurant School ("NYRS") for $9.5 million in cash. The Company
     acquired principally current assets net of specified current liabilities,
     property and equipment, student enrollment agreements, curriculum and
     trade names. The excess of the purchase price over the fair value of the
     assets acquired has been assigned to goodwill. This transaction was
     accounted for as a purchase.

     On January 30, 1997, the Company acquired the assets of Lowthian College,
     located in Minneapolis, Minnesota, for $200,000 in cash and approximately
     $200,000 of assumed liabilities. The Company acquired principally accounts
     receivable, equipment and student enrollment agreements. The excess of the
     purchase price over the fair value of the assets acquired has been
     assigned to goodwill. The school was renamed The Art Institute of
     Minnesota ("AIM"). This transaction was accounted for as a purchase.

     The Art Institute of Los Angeles ("AILA") became licensed in the State of
     California in March 1997. AILA began student recruiting and school
     startup activities in April 1997. Classes commenced in AILA in October
     1997. All costs associated with AILA's startup have been expensed as
     incurred and are reflected in the results of operations.


                                      -6-
<PAGE>   7



     On December 19, 1997, the Company acquired the assets of The Louise
     Salinger Academy of Fashion located in San Francisco, California, for
     $600,000 in cash. The Company also entered into a consulting agreement
     with the former president in exchange for an option to purchase 10,000
     shares of Common Stock of the Company at an exercise price of $25.93, the
     closing price of the Common Stock on December 19, 1997. The Company
     acquired principally accounts receivable and equipment. The excess of the
     purchase price over the fair value of the assets acquired has been
     assigned to goodwill. The school was renamed The Art Institutes
     International at San Francisco. This transaction was accounted for as a
     purchase. The Art Institutes International at San Francisco received U.S.
     Department of Education approval in April 1998.

     On February 26, 1998, the Company acquired the assets of Bassist College
     in Portland, Oregon, for $888,000 in cash. The Company, as further
     consideration for the net assets acquired, has agreed to pay Bassist
     Corporation a percentage of gross revenues over the next five fiscal
     years. The Company acquired principally accounts receivable and equipment.
     The excess of the purchase price over the fair value of the assets
     acquired has been assigned to goodwill. The school was renamed The Art
     Institutes International at Portland. This transaction was accounted for
     as a purchase. The Art Institutes International at Portland received U.S.
     Department of Education approval in April 1998.

5.   In fiscal 1997, the net income allocable to common shareholders was reduced
     by dividends and a redemption premium on the Company's Series A 10.19%
     Convertible Preferred Stock, $.0001 par value (the "Series A Preferred
     Stock"), in the computation of earnings per share. Dividends accrued but
     not payable that reduced the net income applicable to common shareholders
     were not paid because the Series A Preferred Stock was converted into
     Common Stock immediately prior to the consummation of the initial public
     offering of the Common Stock of the Company, which closed on November 5,
     1996.

     Reconciliation of net income available for common shareholders

<TABLE>
<CAPTION>
       (Dollars in thousands)
                                                                     THREE MONTHS ENDED         NINE MONTHS ENDED
                                                                          MARCH 31,                 MARCH 31,
                                                                     1997          1998         1997         1998
                                                                     ----          ----         ----         ----
       <S>                                                         <C>           <C>         <C>          <C>
       Net income                                                      $3,655        $4,651       $8,729      $12,367

       Redemption premium on Series A Preferred Stock                      --            --         (107)          --
                                                                      -------       -------      -------      -------

       Net Income Available to common shareholders for
          diluted earnings per share                                   $3,655        $4,651       $8,622      $12,367
                                                                       ------        ------       ------      -------
       Dividends paid on Series A Preferred Stock                          --            --          (83)          --

       Dividends accrued, but not payable on Series A
          Preferred Stock                                                  --            --         (296)          --
                                                                      -------       -------      -------      -------

       Net income available to common shareholders for basic
          earnings per share                                           $3,655        $4,651       $8,243      $12,367
                                                                       ======        ======       ======      =======

</TABLE>

     On December 31, 1997, the Company adopted Financial Accounting Standards
     Board Statement #128. Accordingly, all prior period earnings per share
     amounts have been restated using the new computation method.

     Reconciliation of Diluted Shares:
<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED          NINE MONTHS ENDED
                                                                          MARCH 31,                   MARCH 31,
                                                                     1997          1998           1997         1998
                                                                     ----          ----           ----         ----
       <S>                                                      <C>            <C>            <C>          <C>
        Basic shares                                             14,389,343     14,454,942     11,117,102    14,441,108

        Dilution for stock options                                  359,290        458,287        293,399       435,408

        Dilution for warrants and Series A Preferred Stock               --             --      1,877,146            --  
                                                                 ----------     ----------     ----------    ----------

        Diluted Shares                                           14,748,633     14,913,229     13,287,647    14,876,516
                                                                 ==========     ==========     ==========    ==========
</TABLE>





                                      -7-
<PAGE>   8

PART I  -  FINANCIAL INFORMATION

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


The following discussion of the Company's results of operations and financial
condition should be read in conjunction with the interim unaudited consolidated
financial statements of the Company and the notes thereto. Unless otherwise
noted, references to the fiscal years 1997 and 1998 are to the periods ended
March 31, 1997 and 1998, respectively.

RESULTS OF OPERATIONS

For the three months ended March 31, 1998 compared to the three months ended
March 31, 1997:

     Net revenues increased by 18.0% to $59.8 million in the third quarter of
fiscal 1998 from $50.7 million in the third quarter of fiscal 1997 due primarily
to a 14.6% increase in student enrollments at Company-owned schools, accompanied
by an approximate 5.0% tuition price increase. Total student enrollment at the
Company's schools increased from 15,746 at the start of the third quarter of
fiscal 1997 to 18,041 at the start of the third quarter of fiscal 1998,
including growth of approximately 13.0% at the twelve Company-owned schools
that, as of the start of the quarter, had been operated by the Company for 24
months or more. In addition, the Company had three more schools in the third
quarter when compared to the prior year's quarter. The Art Institute of Los
Angeles ("AILA") commenced classes in October 1997. The Louise Salinger Academy
of Fashion in San Francisco, California was acquired in December 1997 and
renamed the Art Institutes International at San Francisco ("AISF"). Bassist
College in Portland, Oregon was acquired in February 1998 and renamed the Art
Institutes International at Portland ("AIPD").

     Educational services expense increased by $7.0 million, or 21.6%, to $39.3
million in the third quarter of fiscal 1998 from $32.3 million in the third
quarter of fiscal 1997. The increase was primarily the result of the additional
costs required to service higher student enrollments at The Art Institutes, the
addition of AILA, AISF, and AIPD and normal cost increases for wages, supplies
expense and other services. Educational services expense in the third quarter
of fiscal 1998 was 65.7% of net revenues, compared to 63.8% in the same period
last year. Educational services expense, as a percentage of net revenue for new
schools, such as AILA, AIPD and AISF is higher than the overall consolidated
percentage.

     General and administrative expense increased by $782,000, or 6.9%, to $12.2
million in the third quarter of fiscal 1998 from $11.4 million in the third
quarter of fiscal 1997 primarily because of higher marketing and student
admissions expense, including normal cost increases for wages and media
advertising. General and administrative expense as a percentage of net revenues
decreased to 20.4% in the third quarter of fiscal 1998, compared to 22.5% in the
same period last year, principally because corporate and centralized
administrative expense grew more slowly than net revenues.

     Amortization of intangibles decreased by 45.6%, to $294,000 in the third
quarter of fiscal 1998 from $540,000 in the third quarter of fiscal 1997. The
decrease in amortization expense primarily resulted from certain intangible
assets becoming fully amortized during the third quarter of fiscal 1998.

     The Company had net interest income in the third quarter of fiscal 1998
compared to net expense in the third quarter of fiscal 1997 due to higher
average cash balances (invested in short-term instruments) and lower average
outstanding indebtedness.

     The Company's effective tax rate has remained constant at 42.0% for fiscal
1998 and fiscal 1997.

     Net income for the quarter increased 27.3% to $4.7 million in fiscal 1998
compared to $3.7 million in fiscal 1997. The increase was primarily the result
of increased revenues and improved margins.


                                      -8-
<PAGE>   9

RESULTS OF OPERATIONS

For the nine months ended March 31, 1998 compared to the nine months ended
March 31, 1997:

     Net revenues increased by 22.0% to $166.1 million in fiscal 1998 from
$136.1 million in fiscal 1997 due primarily to an 18.0% increase in average
student enrollments at Company-owned schools, accompanied by an approximate
5.0% tuition price increase. In addition, the Company's revenues and earnings
reflect an increase in the number of schools during all or part of the
nine-month period compared to the prior year period. Average starting student
enrollment at the Company's schools increased from 14,296 in fiscal 1997 to
16,860 in fiscal 1998. The New York Restaurant School was acquired in August
1996. In January, 1997, a Minneapolis school was acquired and renamed The Art
Institute of Minnesota ("AIM"). A new school, The Art Institute of Los Angeles,
commenced classes in October 1997. In December 1997, a school was acquired and
renamed The Art Institutes International at San Francisco. In February 1998, a
school was acquired and renamed The Art Institutes International at Portland.

     Educational services expense increased by $20.3 million, or 23.2%, to
$107.6 million in fiscal 1998 from $87.3 million in fiscal 1997. The increase
was primarily the result of the additional costs required to service higher
student enrollments at The Art Institutes, normal cost increases for wages,
supplies expense and other services and the addition of AIM, AILA, AISF and
AIPD. Educational services expense, as a percentage of net revenues was 64.8% in
fiscal 1998 compared to 64.1% in fiscal 1997.

     General and administrative expense increased by $5.1 million, or 16.9%, to
$35.7 million in fiscal 1998 from $30.6 million in fiscal 1997 primarily
because of higher marketing and student admissions expense, including the
addition of approximately $1.6 million of such expenses at AIM, AILA, AIPD and
AISF and normal cost increases for wages and media advertising. General and
administrative expense as a percentage of net revenues decreased to 21.5% for
fiscal 1998, compared to 22.5% for fiscal 1997.

     Amortization of intangibles decreased by 14.1% to $1.3 million in fiscal
1998 from $1.5 million in fiscal 1997 because certain intangible assets became
fully amortized in the third quarter.

     Net interest expense decreased to $84,000 in fiscal 1998 from $1.6 million
in fiscal 1997. The lower interest expense was primarily attributable to a
decrease in the average outstanding indebtedness from $27.3 million in fiscal
1997 to $5.7 million in fiscal 1998.

     The Company's effective tax rate has remained constant at 42.0% for fiscal
1998 and fiscal 1997.

     Net income for the period increased by $3.7 million or 41.7% to $12.4
million in fiscal 1998 from $8.7 million in fiscal 1997. This increase is
primarily the result of greater revenues at Company-owned schools, slightly
higher margins and lower 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 Art Institutes and NYRS 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, however, do not fluctuate as
significantly as revenues on a quarterly basis.

LIQUIDITY AND CAPITAL RESOURCES

     The Company generated positive cash flow from operating activities of
$32.7 million and $28.0 million for the nine months ended March 31, 1998 and
1997, respectively.

     The Company had a working capital deficit of $7.7 million as of March 31,
1998, compared to $12.7 million of working capital as of June 30, 1997. The
decrease in working capital was due primarily to $29.7 million in debt
repayments on revolving credit borrowings and capitalized leases.


                                      -9-
<PAGE>   10


     Effective October 13, 1997, in accordance with the terms of the Company's
revolving credit agreement, the amount of the facility thereunder was reduced
from $70.0 million to $65.0 million. Borrowings under the revolving credit
agreement bear interest at one of three rates set forth in the revolving credit
agreement at the election of the Company. Available borrowing capacity is
reduced by outstanding letters of credit. As of March 31, 1998, the Company was
in compliance with all covenants and had $64.0 million of borrowing capacity
available under the revolving credit agreement.

     Borrowings under the revolving credit agreement are used by the Company
primarily to fund its capital investment program, finance acquisitions and meet
seasonal working capital needs. The pattern of cash receipts is seasonal
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 its revolving credit agreement, will provide
adequate funds for ongoing operations, planned expansion of new locations, and
planned capital expenditures and debt service during the term of the revolving
credit agreement.

     The Company's capital expenditures were $12.1 million and $13.8 million for
the nine months ended March 31, 1997 and 1998, respectively. The Company
anticipates a slight increase in capital spending for 1998, principally related
to the continued investment in schools acquired or opened during fiscal 1996,
1997 and 1998, additional investment in classroom technology and the
introduction and expansion of culinary arts and other education programs.

     The Company leases nearly all of its facilities. Future commitments on
existing leases will be paid from cash provided by operating activities.


                                      -10-
<PAGE>   11


PART II    -      OTHER INFORMATION

Item 1.   Legal Proceedings.......................................Not Applicable

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.......................................Not Applicable

Item 6.   Exhibits and reports on Form 8-K
          
(a)  Exhibits:

     (15)  Report of Independent Public Accountants
     (27)  Financial Data Schedules


(b)  Reports on Form 8-K

No reports on Form 8-K were filed during the three months ended March 31, 1998


                                      -11-
<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: May 15, 1998

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

                                     /s/ ROBERT T. McDOWELL
                                     -------------------------------------
                                         Robert T.  McDowell
                                         Senior Vice President and 
                                         Chief Financial Officer


                                      -12-