<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: MARCH 31, 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 of the registrant's Common Stock outstanding as of 
March 31, 1999 was 29,485,434.


================================================================================

<PAGE>   2



6


                                                       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>



<PAGE>   3



                                     PART I

ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
                                   EDUCATION MANAGEMENT CORPORATION
                                 CONDENSED CONSOLIDATED BALANCE SHEETS
                                         (DOLLARS IN THOUSANDS)
<CAPTION>

                                                                  MARCH 31,       JUNE 30,      MARCH 31,
                                                                    1998            1998          1999
                                                                 -----------     ----------    -----------
                                                                 (unaudited)                   (unaudited)
<S>                                                              <C>             <C>            <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents .................................     $  20,634      $  46,533      $  12,574 
  Restricted cash ...........................................         1,370            777            680 
                                                                  ---------      ---------      --------- 
       Total cash and cash equivalents ......................        22,004         47,310         13,254 
  Receivables:                                                                                            
    Trade, net of allowances ................................         7,623          7,689          6,846 
    Notes, advances and other ...............................         2,679          3,989          3,009 
  Inventories ...............................................         1,802          1,933          2,094 
  Deferred income taxes .....................................         1,509          2,361          2,361 
  Other current assets ......................................         4,674          2,341          4,043 
                                                                  ---------      ---------      --------- 
       Total current assets .................................        40,291         65,623         31,607 
                                                                  ---------      ---------      --------- 
PROPERTY AND EQUIPMENT, NET .................................        55,999         57,420         83,166 
OTHER ASSETS ................................................         6,271          6,287          6,942 
GOODWILL, NET OF AMORTIZATION ...............................        19,716         19,453         19,495 
                                                                  ---------      ---------      --------- 
       TOTAL ASSETS .........................................     $ 122,277      $ 148,783      $ 141,210 
                                                                  =========      =========      ========= 
                                                                                                          
LIABILITIES AND SHAREHOLDERS' INVESTMENT                                                                  
CURRENT LIABILITIES:                                                                                      
  Current portion of long-term debt .........................     $   2,878      $   2,615      $   1,346 
  Accounts payable ..........................................         2,574          6,982          3,674 
  Accrued liabilities .......................................        11,862         10,162         10,204 
  Advance payments ..........................................        30,694         18,338         32,974 
                                                                  ---------      ---------      --------- 
       Total current liabilities ............................        48,008         38,097         48,198 
                                                                  ---------      ---------      --------- 
LONG-TERM DEBT, LESS CURRENT PORTION ........................         1,409         35,767             -- 
DEFERRED INCOME TAXES AND OTHER LONG-TERM LIABILITIES........        1,937          1,594          1,501 
COMMITMENTS AND CONTINGENCIES                                                                    
SHAREHOLDERS' INVESTMENT:                                                                        
  Common stock ..............................................          290            290            295 
  Additional paid-in capital ................................       88,431         88,880         90,774 
  Treasury stock, 78,802 shares at cost .....................         (354)          (354)          (354)
  Stock subscriptions receivable ............................           (8)            (8)            -- 
  Retained earnings (accumulated deficit) ...................      (17,436)       (15,483)           796 
                                                                 ---------      ---------      --------- 
       TOTAL SHAREHOLDERS' INVESTMENT .......................       70,923         73,325         91,511 
                                                                 ---------      ---------      --------- 
       TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT........    $ 122,277      $ 148,783      $ 141,210 
                                                                 =========      =========      ========= 
</TABLE>





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





                                       3
<PAGE>   4





<TABLE>
                                  EDUCATION MANAGEMENT CORPORATION
                       CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                          (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
                                                              FOR THE THREE MONTHS          FOR THE NINE MONTHS
                                                                 ENDED MARCH 31,               ENDED MARCH 31,
                                                               1998           1999           1998          1999
                                                            ---------      ---------      ---------     ---------
<S>                                                         <C>            <C>            <C>           <C>
NET REVENUES ..........................................     $  59,807      $  70,575      $ 166,051     $ 195,640
COSTS AND EXPENSES:
  Educational services ................................        39,318         45,122        107,601       124,915
  General and administrative ..........................        12,191         14,890         35,727        42,230
  Amortization of intangibles .........................           294            314          1,317           901
                                                            ---------      ---------      ---------     ---------
                                                               51,803         60,326        144,645       168,046
                                                            ---------      ---------      ---------     ---------
INCOME BEFORE INTEREST AND TAXES ......................         8,004         10,249         21,406        27,594
  Interest expense (income), net ......................           (15)          (116)            84           (46)
                                                            ---------      ---------      ---------     ---------
INCOME BEFORE INCOME TAXES ............................         8,019         10,365         21,322        27,640
  Provision for income taxes ..........................         3,368          4,260          8,955        11,361
                                                            ---------      ---------      ---------     ---------
NET INCOME ............................................     $   4,651      $   6,105      $  12,367     $  16,279
                                                            =========      =========      =========     =========
EARNINGS PER SHARE:
    Basic .............................................     $     .16      $     .21      $     .43     $     .56
                                                            =========      =========      =========     =========
    Diluted ...........................................     $     .16      $     .20      $     .42     $     .53
                                                            =========      =========      =========     =========
 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING (000's):
    Basic .............................................        28,910         29,414         28,882        29,248
    Diluted ...........................................        29,826         30,867         29,753        30,596
</TABLE>

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




                                       4
<PAGE>   5




<TABLE>
                        EDUCATION MANAGEMENT CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                             (DOLLARS IN THOUSANDS)
<CAPTION>
                                                                FOR THE NINE MONTHS
                                                                   ENDED MARCH 31,
                                                               ------------------------
                                                                  1998          1999
<S>                                                            <C>           <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income ..............................................     $ 12,367      $ 16,279
  ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FLOWS    
     FROM OPERATING ACTIVITIES:                            
       Depreciation and amortization ......................       10,542        12,126
       Changes in current assets and liabilities:          
          Restricted cash .................................         (789)           97
          Receivables .....................................          291         1,823
          Inventories .....................................         (446)         (161)
          Other current assets ............................       (2,419)       (1,702)
          Accounts payable ................................       (3,508)       (3,308)
          Accrued liabilities .............................        1,892            42
          Advance payments ................................       14,769        14,636
                                                                --------      --------
            Total adjustments .............................       20,332        23,553
                                                                --------      --------
            Net cash flows from operating activities ......       32,699        39,832
                                                                --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:                      
  Acquisition of subsidiaries .............................       (1,488)         (500)
  Expenditures for property and equipment .................      (13,839)      (37,304)
  Other, net ..............................................         (322)         (858)
                                                                --------      --------
            Net cash flows from investing activities ......      (15,649)      (38,662)
                                                                --------      --------
                                                           
CASH FLOWS FROM FINANCING ACTIVITIES:                      
  Principal payments on debt ..............................      (29,783)      (37,036)
  Net proceeds from issuance of Common Stock ..............          607         1,899
  Other capital stock transactions, net ...................          114             8
                                                                --------      --------
            Net cash flows from financing activities ......      (29,062)      (35,129)
                                                                --------      --------
                                                           
NET CHANGE IN CASH AND CASH EQUIVALENTS ...................      (12,012)      (33,959)
                                                           
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ............       32,646        46,533
                                                                --------      --------
                                                           
CASH AND CASH EQUIVALENTS, END OF PERIOD ..................     $ 20,634      $ 12,574
                                                                ========      ========
                                                           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION           
Cash paid during the period for:                           
  Interest (net of interest capitalized of $0 and $262) ...     $    564      $    229
  Income taxes ............................................        9,389         9,933
</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 1998 Annual Report on Form 10-K. The
         accompanying condensed consolidated balance sheet as of June 30, 1998
         has been derived from the audited balance sheet included in the
         Company's 1998 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 such adjustments are normal, recurring adjustments. The results for
         the three-month and nine-month periods ended March 31, 1999 are not
         necessarily indicative of the results to be expected for the full
         fiscal year. Unless otherwise noted, references to 1998 and 1999 refer
         to the periods ended March 31, 1998 and 1999, respectively.

2.       Education Management Corporation ("EDMC" or the "Company") is among the
         largest providers of proprietary postsecondary education in the United
         States, based on student enrollments and revenues. EDMC's schools offer
         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, and its schools have graduated over 100,000
         students.

3.       On December 2, 1998, the Company's Board of Directors authorized a
         2-for-1 stock split effected in the form of a stock dividend.
         Shareholders received one share of Common Stock for each outstanding
         share of Common Stock owned. All applicable data, including earnings
         per share, related to the Company's Common Stock have been restated to
         reflect this stock split. Below is a summary of the Company's
         authorized and outstanding capital stock:

<TABLE>
<CAPTION>
                                                                                             OUTSTANDING
                                                                    ---------------------------------------------------------------
       CAPITAL STOCK             PAR VALUE       AUTHORIZED           MARCH 31, 1998        JUNE 30, 1998         MARCH 31, 1999
       -------------------    --------------     --------------     -------------------     ---------------     -------------------
<S>                             <C>                <C>              <C>                     <C>                 <C>
       Preferred Stock          $    .01           10,000,000                       -                   -                       -
       Common Stock             $    .01           60,000,000              28,925,700          28,998,892              29,485,434
</TABLE>

4.       On December 19, 1997, the Company acquired the assets (principally
         accounts receivable and equipment) of The Louise Salinger School in San
         Francisco, California, for $600,000 in cash. The school was renamed The
         Art Institutes International at San Francisco.

         On February 26, 1998, the Company acquired certain assets related to
         the operations of Bassist College in Portland, Oregon, for
         approximately $900,000 in cash. The purchase agreement provides for
         certain adjustments, based upon the resolution of certain liabilities
         and additional consideration, based upon a specified percentage of
         gross revenues over the next five years. The assets acquired were
         principally accounts receivable and equipment. The school was
         renamed The Art Institutes International at Portland.

         On October 1, 1998, the Company acquired the assets of Socrates
         Distance Learning Technologies Group for approximately $500,000 in
         cash. This acquisition was made to further the development of the
         Company's distance learning capabilities. The previous owners will
         continue to be employed by the Company under two-year employment and
         non-compete arrangements.

         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 net 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 MARCH 31,    NINE  MONTHS ENDED MARCH 31,
                                                         -----------------------------    ----------------------------
                                                              1998            1999            1998            1999
                                                             ------          ------          ------          ------
<S>                                                        <C>             <C>             <C>             <C>   
               Basic shares...........................       28,910          29,414          28,882          29,248
               Dilution for stock options.............          916           1,453             871           1,348
                                                             ------          ------          ------          ------
               Diluted shares.........................       29,826          30,867          29,753          30,596
                                                             ======          ======          ======          ======
</TABLE>




                                       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. Those statements are
    based on the intent, belief or expectation 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 1998 and 1999 are to
    the periods ended March 31, 1998 and 1999, respectively.


RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1998

    Net revenues increased by 18.0% to $70.6 million in 1999 from $59.8 million
in the third quarter of 1998 due primarily to a 14.8% increase in student
enrollments, accompanied by an approximate 5% tuition price increase. Total
student enrollment at the Company's schools increased from 18,041 in 1998 to
20,711 in 1999, including enrollment growth of approximately 10.1% at the
schools that have been operated by the Company for 24 months or more. Net
revenues include those of acquired entities from the date of acquisition. The
Company acquired Bassist College in February 1998 and renamed the school The Art
Institutes International at Portland ("AIPD").

     Educational services expense increased by $5.8 million, or 14.8%, to $45.1
million in 1999 from $39.3 million in 1998, due primarily to the incremental
costs to support higher student enrollments. As a percentage of net revenues,
educational services expense decreased from 65.7% to 63.9%, for the respective
quarters. Leveraging of certain expenses, such as salaries and facilities costs,
contributed to this improvement.

     General and administrative expense was $14.9 million in 1999, up 22.1% from
$12.2 million in 1998. The increase over the comparable quarter in the prior
year reflects higher marketing and student admissions expense, resulting
primarily from increased employee compensation and media advertising costs.
General and administrative expense, as a percent of net revenues, increased
from 20.4% in the third quarter of fiscal 1998, to 21.1%. This increase
reflects the costs associated with the initial marketing effort for the newly
acquired schools.

    Amortization of intangibles increased by $20,000, to $314,000 in 1999, due
to the amortization of intangibles resulting from a minor acquisition.

    Net interest income increased from $15,000 in 1998 to $116,000 in 1999.
Average outstanding borrowings were lower in 1999, as compared to the same
period for 1998. Accordingly, less interest expense was offset against interest
income.

    The Company's effective tax rate was 41.1% in 1999 and 42.0% in 1998. The
effective rates differed from the combined federal and state statutory rates due
to expenses that are nondeductible for tax purposes.

    Net income increased by $1.5 million to $6.1 million in 1999 from $4.7
million in 1998, resulting from increased revenue and improved margins.



                                       7
<PAGE>   8



NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO THE NINE MONTHS ENDED MARCH 31,
1997

     Net revenues increased by 17.8% to $195.6 million for the first nine
months of fiscal 1999 from $166.1 million for the comparable period in
fiscal 1998. Average student enrollment at the Company's schools increased
from 16,860 in 1998 to 19,300 in 1999, or 14.5%. The enrollment growth and
an approximate 5% tuition increase resulted in greater net revenues. The
Art Institute of Los Angeles ("AILA") commenced classes in October 1997.
Net revenues include those of acquired entities from the date of
acquisition. The Company acquired the Louise Salinger School in December
1997 and renamed the school The Art Institutes International at San
Francisco ("AISF"). Net revenues for 1999 include nine months of revenue
for newer schools: AILA, AISF and AIPD.

     Educational services expense increased by $17.3 million, or 16.1%, to
$124.9 million in 1999 from $107.6 million in 1998, due primarily to the
incremental costs to support higher student enrollments. As a percentage of
net revenues, educational services expense decreased from 64.8% to 63.8%,
for the respective periods. Leveraging of certain expenses, such as
salaries and facilities costs, contributed to this improvement.

     General and administrative expense was $42.2 million in 1999, up 18.2%
from $35.7 million in 1998. The increase over the comparable period in the
prior year reflects higher marketing and student admissions expense,
resulting primarily from increased employee compensation and media
advertising costs. General and administrative expense, represented 21.5%
and 21.6% of net revenues in the first nine months of fiscal 1998 and
fiscal 1999, respectively.

    Amortization of intangibles decreased by 31.6% to $901,000 in 1999 from $1.3
million in 1998. The decrease in amortization expense, for the nine-month
period, results from certain intangible assets becoming fully amortized.

    Net interest income was $46,000 in 1999, as compared to net interest expense
of $84,000 in 1998. Interest expense declined in connection with the repayment
of outstanding borrowings. Accordingly, less interest expense was offset against
interest income.

    The Company's effective tax rate was 41.1% in 1999 and 42.0% in 1998. The
effective rates differed from the combined federal and state statutory rates due
to expenses that are nondeductible for tax purposes.

    Net income increased by $3.9 million or 31.6% to $16.3 million in 1999 from
$12.4 million in 1998, resulting from increased revenue and improved margins.

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, 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 $39.8
million for the nine months ended March 31, 1999, an increase of $7.1 million
over the comparable period for 1998. The year-to-year improvement reflects the
increases in net income and non-cash charges, along with a reduced working
capital commitment.

     The Company had a $16.6 million working capital deficit as of March 31,
1999 as compared to $27.5 million of working capital as of June 30, 1998. The
decrease in working capital was due primarily to cash used for capital
expenditures of $37.3 million and for $37.0 million in debt repayments under the
Amended and Restated Credit Agreement, dated March 16, 1995 (the "Revolving
Credit Agreement") and capitalized leases.

    Borrowings under the Revolving Credit Agreement are used by the Company
primarily to fund working capital needs, resulting 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.





                                       8
<PAGE>   9




    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.

    The Company's capital expenditures were $13.8 million and $37.3 million in
1998 and 1999, respectively. The increase is attributable to the acquisitions
and subsequent improvements of three buildings; The Art Institute of Seattle's
main facility, a dormitory facility in Ft. Lauderdale and a building in Denver.
The combined purchase price of these facilities was approximately $20.5 million.
The properties acquired in Seattle and Ft. Lauderdale were previously leased.
The acquisition of the building in Denver will enable The Colorado Institute of
Art to consolidate operations that now occupy three facilities (two leased, one
owned) into one building.

    Subsequent to March 31, 1999, the Company acquired a building in Pittsburgh
for approximately $5.1 million. The Company plans to relocate The Art Institute
of Pittsburgh to this property after planned renovations have been completed.

     The Company anticipates increased capital spending for 1999, principally
related to the acquisition and improvement of buildings discussed above, the
introduction and expansion of culinary arts programs, further investment in
schools acquired or started during the previous three years and classroom
technology.

     The Company leases a significant portion of its facilities. Future
commitments on existing leases will be paid from cash provided from operating
activities.

IMPACT OF NEW ACCOUNTING STANDARDS

    In June 1998, the Statement of Financial Accounting Standards ("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. SFAS No. 133 is effective for years
beginning after June 15, 1999. The Company will adopt SFAS No. 133 in fiscal
2000 and does not anticipate that this statement will have a significant impact
on its financial statements or disclosures.

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. Additionally,
such products and systems may experience miscalculations, malfunctions or
disruptions caused by other dates, such as September 9, 1999 (9/9/99), which was
a date traditionally used as a default date by computer programmers. This
problem is commonly referred to as the "Year 2000" problem, and the acronym
"Y2K" is commonly substituted for the phrase "Year 2000."

    Although the Company is unable at this time to assess the possible impact on
its results of operations, liquidity or financial condition of any Y2K-related
disruptions to its business caused by the malfunctioning of any IT or non-IT
system and products that it uses or that third parties with which it has
material relationships use, management does not believe at the current time that
the cost of remediating the Company's internal Y2K problems will have a material
adverse impact upon its business, results of operations, liquidity or financial
condition.

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

    The Company has created a task force (the "Y2K Task Force") which includes
members from the Company's significant operating areas. The Y2K Task Force has
implemented a program, the goal of which is to assess the potential exposure of
each such area to the Y2K problem, which is the first phase of EDMC's overall
Y2K program, and, as the second phase thereof, has designed a coordinated plan
to determine whether any such potential exposure would result in a problem that
would require some remediation. As each such area's Y2K problems are identified,
the third phase is to determine the best course of action to address each such
problem, implement the solution and to develop contingency plans, to the extent
possible and necessary. The final phase of the overall Y2K program is 




                                       9
<PAGE>   10



both independent and coordinated testing to ensure Y2K compliance in each
operating area. The Company believes that the Y2K Task Force has identified all
material IT and non-IT systems owned or operated by EDMC that require a Y2K
compliance review.

    The Y2K Task Force has completed the assessment/inventory phase. As part of
such phase, the Y2K Task Force successfully completed a "date ahead" test of the
school administrative system in October 1998. Responses to the Y2K Task Force's
inquiries to third parties regarding Y2K readiness have been slower than
expected with about 50% of the vendors responding to the initial inquiry. As a
result, vendors that did not respond were either removed from the critical
vendors list, as the result of our internal contingency planning, or sent a
second questionnaire. Responses from vendors are still arriving, as of April
1999. Of those third parties responding, each entity has made representations
that it is Y2K compliant, or will be in a timely fashion.

    The Y2K Task Force has created a methodology for the testing and remediation
of our classroom environment, and this has been successfully completed at one
location. Testing and remediation using the same methodology is now in progress
at the other locations.

    As part of the Y2K Task Force's program, the Company's accounting, human
resources and payroll systems were successfully upgraded to a Y2K certified
version in March 1999.

    A comprehensive "end-to-end date ahead" test is scheduled for June 1999 that
includes testing of the Company's complete software suite and file exchanges.
This testing will include as many external agencies that are available or is
practicable.

THE COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES

    Based upon its current understanding of the Company's Y2K issues, the Y2K
Task Force's estimate for the direct costs of implementing its investigation and
remediation plans is between $250,000 and $750,000. These costs will be incurred
in fiscal years 1999 and 2000. Additional information must be obtained to
determine, for example, whether to recommend the replacement of older hardware
and software systems or to expend the resources to bring those systems into Y2K
compliance.

RISKS RELATED TO THE COMPANY'S YEAR 2000 ISSUES

    The Company has outlined 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. On the other hand, 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. 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. 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 to
its students. The U.S. Department of Education's computer systems handle
processing of applications for this funding. In April 1999, the U.S.
Department of Education announced that all of its 175 data systems,
including its 14 mission-critical systems are Y2K-compliant. The Company is
scheduled to test the interface with the U.S. Department of Education of
the remediated systems during June 1999.

    Similarly, five guaranty agencies provide a substantial majority of the
guarantees for the loans issued to the Company's students pursuant to Title IV
Programs. The Company completed testing with its largest guaranty agency (which
accounts for approximately 85% of its total guarantees) in November 1998, with
no significant problems encountered.

CONTINGENCY PLANS

    The Y2K Task Force is developing 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. Drafts of these plans are scheduled for
completion by June 1999, with testing and revisions continuing through November
1999.

    A more complete discussion of the Company's Y2K issues is contained in the
Company's 1998 Annual Report on Form 10-K.





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<PAGE>   11




                                     PART II


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 Schedule submitted to the Securities
                          and Exchange Commission in electronic format, filed
                          herewith

           (b) Reports on Form 8-K:

                          A report on Form 8-K dated March 19, 1999 was filed
                          during the three months ended March 31, 1999 related
                          to the Company's promotion of Robert P. Gioella to
                          President and Chief Operating Officer and David J.
                          Pauldine to Executive Vice President. The Items listed
                          were Item 5, Other Events, and Item 7(c), Exhibits.





                                       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 17, 1999





                              /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