<PAGE>   1
November 22, 1996
                                 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 quarterly period ending: September 30, 1996

                                       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.

                        [ ] Yes                  [X] No

              SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK

                            AS OF September 30, 1996

                     Class A Common Stock, 1,842,802 Shares
                     Class B Common Stock, 5,064,315 Shares

                                     - 1 -
<PAGE>   2
                 EDUCATION MANAGEMENT CORPORATION SUBSIDIARIES
                                   FORM 10-Q
                                     INDEX

<TABLE>
<CAPTION>
                                                                      PAGE
<S>                                                                  <C>
PART I -- FINANCIAL INFORMATION

Item 1.    Financial Statements........................................3-9
Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations.......................10-12

PART 11 -- OTHER INFORMATION

Item 1.    Legal Proceedings............................................13
Item 2.    Changes in Securities........................................13
Item 3.    Defaults Upon Senior Securities..............................13
Item 4.    Submission of Matters to a Vote of Security Holders..........13
Item 5.    Other Information............................................13
Item 6.    Exhibits and Reports on Form 8-K.............................13


SIGNATURES..............................................................14
</TABLE>

                                     - 2 -
<PAGE>   3
               EDUCATION MANAGEMENT CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                       SEPTEMBER 30,           JUNE 30,           SEPTEMBER 30,
ASSETS                                                     1995                  1996                 1996
------                                                     ----                  ----                 ----
                                                        (UNAUDITED)                                (UNAUDITED)
<S>                                                      <C>                   <C>                  <C>
CURRENT ASSETS:
  Cash and cash equivalents                              $  5,160              $ 26,162             $  5,096
  Restricted cash                                           7,847                 1,237                1,086
                                                         --------              --------             --------
    Total cash and cash equivalents                        13,007                27,399                6,182
  Receivables:
    Trade, net of allowances                                4,013                 5,680                6,763
    Notes, advances and other                               4,296                 2,492                2,566
  Inventories                                               1,832                 1,271                2,080
  Other current assets                                      3,645                 3,016                6,139
                                                         --------              --------             --------
Total current assets                                       26,793                39,858               23,730
                                                         --------              --------             --------

PROPERTY AND EQUIPMENT, NET                                34,897                41,174               46,497

OTHER ASSETS                                                4,688                 5,837                7,210

GOODWILL, NET OF AMORTIZATION                              13,869                14,543               18,358
                                                         --------              --------             --------
                                                         $ 80,247              $101,412             $ 95,795
                                                         ========              ========             ========
LIABILITIES AND REDEEMABLE SHAREHOLDERS' INVESTMENT

CURRENT LIABILITIES:
  Current portion of long-term debt                      $  6,302              $  3,890             $  3,814
  Accounts payable                                          1,797                 4,776                2,979
  Accrued liabilities                                       8,617                 7,355                7,332
  Advance payments                                         24,545                11,243               30,533
                                                         --------              --------             --------
Total current liabilities                                  41,261                27,264               44,658
                                                         --------              --------             --------

LONG-TERM DEBT, LESS CURRENT PORTION                       36,129                62,029               47,159

DEFERRED INCOME TAXES AND

  OTHER LONG-TERM LIABILITIES                               2,319                 2,463                2,488

COMMITMENTS AND CONTINGENCIES

REDEEMABLE SHAREHOLDERS' INVESTMENT:
  Capital stock:
    Preferred stock, Series A, at paid-in value            22,075                22,075               14,575
    Common stock, Class A and Class B,
      par value $.0001 per share                                1                     1                    1
  Warrants outstanding                                      7,683                 7,683                7,683
  Additional paid-in capital                               19,235                19,742               20,113
  Deferred compensation related to ESOP                    (3,587)                   --                   --
  Treasury stock                                             (250)                  (99)                (359)
  Stock subscriptions receivable                             (150)                 (442)                (171)
  Accumulated deficit                                     (44,469)              (39,304)             (40,352)
                                                         --------              --------             --------
TOTAL REDEEMABLE SHAREHOLDERS' INVESTMENT                     538                 9,656                1,490
                                                         --------              --------             --------
                                                         $ 80,247              $101,412             $ 95,795
                                                         ========              ========             ========
</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 SEPTEMBER 30,
                                                             ---------------------------------
                                                                 1995                  1996
                                                             -----------           -----------
                                                             (unaudited)           (unaudited)
<S>                                                            <C>                   <C>
NET REVENUES                                                   $28,333               $33,410

COSTS AND EXPENSES:
    Educational services                                        21,942                24,929
    General and administrative                                   6,453                 8,177
    Amortization of intangibles                                    265                   447
    ESOP expense                                                   238                    --
                                                               -------               -------

                                                                28,898                33,553
                                                               -------               -------

INCOME (LOSS) BEFORE INTEREST AND TAXES                           (565)                 (143)

    Interest expense, net                                          916                   952
                                                               -------               -------

INCOME (LOSS) BEFORE INCOME TAXES                               (1,481)               (1,095)

    Provision (credit) for income taxes                           (550)                 (460)
                                                               -------               -------

NET INCOME (LOSS)                                              $  (931)              $  (635)
                                                               =======               =======

SERIES A PREFERRED STOCK TRANSACTIONS:

  Dividends paid                                               $  (563)              $   (83)

  Redemption premium                                                --                  (107)

  Dividends accruable but not paid                                  --                  (223)
                                                               -------               -------
INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS                $(1,494)              $(1,048)
                                                               =======               =======
EARNINGS (LOSS) PER SHARE APPLICABLE
  TO COMMON SHAREHOLDERS:                                      $  (.22)              $  (.15)
                                                               =======               =======
Shares used in calculating per
  share amounts (in thousands):                                  6,916                 6,922

PRO FORMA EARNINGS (LOSS) PER SHARE
  FOR THE TRANSACTIONS:                                        $  (.10)              $  (.07)
                                                               =======               =======
Pro forma shares used in calculating
  pro forma per share amounts (in thousands):                   11,019                11,026
</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>
                                                          THREE MONTHS ENDED SEPTEMBER 30,
                                                          ---------------------------------
                                                              1995                  1996
                                                          -----------           -----------
                                                          (UNAUDITED)           (UNAUDITED)
<S>                                                        <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  NET INCOME (LOSS)                                        $   (931)             $   (635)

ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO
   NET CASH FLOWS FROM OPERATING ACTIVITIES-
      Depreciation and amortization                           2,093                 2,739
      ESOP expense                                              238                    --
      Vesting of compensatory stock options                     116                   375
      Changes in current assets and liabilities-
        Restricted cash                                        (344)                  151
        Receivables                                            (895)               (1,157)
        Inventories                                            (840)                 (809)
        Other current assets                                 (2,012)               (3,123)
        Accounts payable                                     (4,960)               (1,797)
        Accrued liabilities                                    (554)                 (246)
        Advance payments                                     11,381                19,290
                                                           --------              --------
                Total adjustments                             4,223                15,423
                                                           --------              --------
                Net cash flows from operating
                  activities                                  3,292                14,788
                                                           --------              --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of Subsidiary                                      --                (9,553)
  Expenditures for property and equipment, net               (2,756)               (2,488)
  Other items, net                                             (178)               (1,184)
                                                           --------              --------
     Net cash flows from investing activities                (2,934)              (13,225)
                                                           --------              --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on debt, net                           (27,379)              (14,946)
  Dividends paid to ESOP                                         --                   (83)
  Capital stock transactions, net                                61                (7,600)
                                                           --------              --------
    Net cash flows from financing activities                (27,318)              (22,629)
                                                           --------              --------
NET CHANGE IN CASH AND CASH EQUIVALENTS                     (26,960)              (21,066)

CASH AND CASH EQUIVALENTS, BEGINNING OF QUARTER              32,120                26,162
                                                           --------              --------
CASH AND CASH EQUIVALENTS, END OF QUARTER                  $  5,160              $  5,096
                                                           ========              ========
</TABLE>

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

                                     - 5 -
<PAGE>   6
                        EDUCATION MANAGEMENT CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1.       The interim consolidated financial statements include the accounts of
         Education Management Corporation (or the "Company") and its wholly
         owned subsidiaries, which include The Art Institutes International
         ("AII"), The New York Restaurant School ("NYRS"), The National Center
         for Paralegal Training ("NCPT") and The National Center for
         Professional Development ("NCPD"). The Company offers associate's and
         bachelor'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 nearly 35
         years. Unless otherwise noted, references to 1996 and 1997 refer to the
         periods ended September 30, 1995 and 1996, respectively.

2.       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, 1996 included in the
         Company's Registration Statement on Form S-1 as filed with the
         Securities and Exchange Commission on August 19, 1996 and the related
         amendments thereto. 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.
         First quarter fiscal year 1997 interim financial information was
         reviewed by Arthur Andersen LLP as set forth in their report included
         in this document. The 1996 interim financial information was not
         reviewed by the Company's independent accountants in accordance with
         standards established for such reviews.

3.       The results of operations for the three months ended September 30, 1995
         and 1996 are not necessarily indicative of the results to be expected
         for the entire fiscal year. On November 5, 1996 the Company completed
         an initial public offering of Common Stock (the "Offering"). In
         connection with the Offering, the Company's existing Class A and Class
         B Common Stock were converted on a one for two basis. Additionally, the
         Series A Preferred Stock was converted and the outstanding warrants
         were exercised. The financial statements do not reflect these
         transactions, except earnings per share reflects the one-for-two
         reverse stock split (See Note 9).

4.       In 1996 and 1997, the weighted average common shares and common stock
         equivalent shares do not include the assumed exercise of stock options
         the exercise of the warrants or the conversion of the 10.19%
         Convertible Series A Preferred Stock (the "Series A Preferred Stock")
         as the effect would be antidilutive.

         The net loss allocable to common shareholders has been increased by
         dividends paid on Series A Preferred Stock in the computation of
         earnings per share. However, dividends accruable but not paid reflected
         in the loss applicable to common shareholders will not be paid because
         the Series A Preferred Stock was converted immediately prior to the
         consummation of the Offering.

         Pro forma earnings per share are computed as if the Series A Preferred
         Stock redemption, the conversion of Series A Preferred Stock and the
         exercise of the stock warrants had occurred as of the beginning of the
         reported period (See Notes to Consolidated Financial Statements 8 and
         9(a)) 

5.       The Company provides an Employee Stock Ownership Plan and Trust (the
         "ESOP") for certain of its employees. In connection with establishing
         the ESOP, the borrowings under a senior term loan financing ("ESOP
         Term Loan") were loaned to the ESOP on the same terms. This loan was
         recorded as "deferred compensation related to ESOP" and is shown as a
         reduction in redeemable shareholders' investment in the accompanying
         consolidated financial statements.

                                     - 6 -
<PAGE>   7
         As this loan was repaid, shares were released from pledge and
         allocated to ESOP participants' accounts. ESOP expense primarily
         represents the difference between the cost of shares released to ESOP
         participants' accounts and the dividends used by the ESOP for
         principal and interest repayment on this loan. The dividends paid to
         the ESOP on the Series A Preferred Stock were used by the ESOP trustee
         to pay the Company principal and interest due on the ESOP's loan from
         the Company. As of June 30, 1996, the senior term loan had been
         repaid, as was the loan due from the ESOP to the Company. There will
         be no future ESOP expense attributable to the repayment of this loan.

6.       Shareholders' investment is described as redeemable because, prior to
         the closing date of the Offering on November 5, 1996, holders of the
         Company's equity securities had the right, under certain circumstances,
         to require the Company to repurchase such securities. In addition, the
         Company had the right to redeem shares of Series A Preferred Stock and
         Class B Stock under certain circumstances. Coincident with the Offering
         (see Notes 4 and 8), these rights expired and, accordingly, the term
         "redeemable" will not appear in the caption included in future
         balance sheets.

         As of September 30, 1996, the Company's authorized and outstanding
         Series A Preferred Stock and Class A Stock and Class B Common Stock
         were as reflected below:

<TABLE>
<CAPTION>
                                                 Authorized         Outstanding
                                                 ----------         -----------
         <S>                                     <C>                 <C>
         Series A Preferred Stock.............    1,000,000            145,750
         Class A Common Stock.................   25,000,000          1,842,802
         Class B Common Stock.................   17,000,000          5,064,315
</TABLE>

7.       Effective August 1, 1996, the Company acquired certain net assets of
         NYRS (subject to obtaining certain regulatory approvals) for $9.5
         million in cash. The Company acquired principally accounts receivable,
         property and equipment, certain contracts and student agreements,
         curriculum, trade names, goodwill and certain other assets. The final
         values will be determined based upon the resolution of certain
         pre-acquisition contingencies. The acquisition was accounted for as a
         purchase.

                                     - 7 -
<PAGE>   8
8.       On August 9, 1996, the Company redeemed 75,000 shares of Series A
         Preferred Stock from the ESOP at $101.43 per share, plus accrued and
         unpaid dividends. The redemption was funded through borrowings of $7.6
         million under the Revolving Credit Agreement (as defined below).

9.       SUBSEQUENT EVENTS

    (a)  Conversion of Preferred Stock and Exercise of Stock Warrants

         Coincident with the closing of the Offering, the ESOP converted the 
         remaining 145,750 shares of Series A Preferred Stock into 1,124,977 
         shares of Class A Common Stock.

         Also, coincident with the completion of the Offering, all outstanding
         warrants were exercised for an aggregate of 2,978,039 shares of Class B
         Common Stock.

    (b)  Amendment to Articles of Incorporation

         On August 15, 1996, the Board of Directors authorized, and on October
         24, 1996, the shareholders approved and adopted, the Amended and
         Restated Articles of Incorporation (the "Articles") providing for,
         among other things, capital stock consisting of the Common Stock, $.01
         par value (the "Common Stock"), and Preferred Stock and effecting the
         conversion of all shares of the existing and outstanding Class A Stock
         and Class B Stock into Common Stock at the rate of one share of Common
         Stock for each two shares of existing and outstanding Class A Stock and
         Class B Stock immediately upon the filing of the Articles. The Articles
         were filed and became effective on November 5, 1996. Accordingly, the
         number of shares of Class A Stock and Class B Stock, conversion ratios,
         exercise prices and per share amounts in the accompanying consolidated
         financial statements and notes to consolidated financial statements
         have been retroactively restated to reflect a one-for-two reverse stock
         split.

    (c)  Shareholder Rights Plan

         Pursuant to a Preferred Share Purchase Rights Plan (the "Rights Plan")
         approved by the Company's Board of Directors, and which became
         effective upon the consummation of the Offering, one Preferred Share
         Purchase Right (a "Right") will be associated with each outstanding
         share of Common Stock. Each Right will entitle its holder to buy one
         one-hundredth of a share of Series A Junior Participating Preferred
         Stock at an exercise price of $50, subject to adjustment (the "Purchase
         Price"). The Rights Plan is not subject to shareholder approval.

         The Rights will become exercisable following a public announcement of a
         person or group of persons acquiring or intending to make a tender
         offer for 17.5% or more of the outstanding shares of Common Stock (an
         "Acquiring Person"). If an Acquiring Person acquires 17.5% or more of
         the Common Stock, each Right will entitle the shareholders, except the
         Acquiring Person, to receive that number of shares of Common Stock
         having a market value of two times the Purchase Price of the Right. In
         the event the Company is acquired in a merger or other business
         combination transaction or 50% or more of its consolidated assets or
         earning power are sold after a person or group of persons

                                     - 8 -
<PAGE>   9
         becomes an Acquiring Person, each Right will entitle its holder to
         purchase, at the Purchase Price, that number of shares of the acquiring
         company having a market value of two times the Purchase Price. The
         Rights will expire on the tenth anniversary of the effective date and
         are subject to redemption by the Company at $.01 per Right, subject to
         adjustment.

    (d)  Initial Public Offering

         On November 5, 1996, the Company closed the Offering of 5,073,600
         shares of Common Stock, including 1,701,391 shares from selling
         shareholders at a price of $15 per share. The Company received total
         net proceeds, after deduction of expenses payable and underwriting
         discounts by the Company, of approximately $45 million. On the date the
         Offering closed, $38.5 million of the proceeds were used to repay the
         outstanding indebtedness under the amended and restated credit facility
         dated March 16, 1995 (the "Revolving Credit Agreement"). The remaining
         proceeds are being used for general corporate purposes.

                                     - 9 -
<PAGE>   10
PART I - FINANCIAL INFORMATION

ITEM 2 - EDUCATION MANAGEMENT CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS

       The following discussion of the Company's results of operations and 
financial condition should be read in conjunction with the consolidated 
financial statements of the Company and the notes thereto. 

RESULTS OF OPERATIONS

For the 3 months ended September 30, 1996 compared to the 3 months ended
September 30, 1995:

       Net revenues increased by 17.9% to $33.4 million in 1997 from $28.3
million in 1996 due primarily to a 13.7% increase in student enrollments at 
company owned schools, accompanied by an average 6.0% tuition price increase at
The Art Institutes. Total student enrollment at the Company's schools
increased from 9,944 in 1996 to 11,303 in 1997. In November 1995, a group of
two schools was acquired and renamed The Illinois Institute of Art at Chicago
and The Illinois Institute of Art at Schaumburg. A new school, The Art
Institute of Phoenix, commenced classes in January 1996 and The New York
Restaurant School (NYRS) was acquired in August 1996.

       Educational services expense increased by $3.0 million, or 13.6%, to
$24.9 million in 1997 from $21.9 million in 1996. The increase was primarily
the result of the additional costs required to service higher student
enrollments at The Art Institutes, the inclusion of NYRS and normal
inflationary cost increases for wages and other services. As a percentage of
net revenues, educational services expense declined generally because of
operating leverage associated with the increased student enrollment.

       General and administrative expense increased by $1.7 million, or 26.7%,
to $8.2 million in 1997 from $6.5 million in 1996 primarily because of higher
marketing and student admissions expense, including the addition of $1.1
million of such expenses at four new schools and normal inflationary cost
increases for wages and media advertising. In addition, charges for non-cash
compensation expense related to the vesting of non-statutory stock options
increased from $116,000 in 1996 to $375,000 in 1997. As a result of the above 
factors, general and administrative expense as a percent of revenue increased 
to 24.5% in the first quarter of fiscal 1997, compared to 22.8% the same period 
last year.

                                     - 10 -
<PAGE>   11
       Amortization of intangibles increased by 68.7%, to $447,000 in 1997 from
$265,000 in 1996. The increase in amortization expense resulted from the
acquisition of the two Illinois Institutes of Art and NYRS. ESOP expense was
zero in 1997 compared to $238,000 in 1996 because the entire ESOP Term Loan was
repaid as of June 30, 1996. Accordingly, the Company will incur no ESOP expense
subsequent to June 30, 1996 resulting from the repayment of such loan.

       Historically, the Company has experienced net losses in its fiscal first
quarter ending September 30, due to lower revenues combined with expenses
incurred in preparation for the peak enrollments in the fall quarter. The
consolidated loss before interest and taxes decreased from $565,000 in 1996 to
$143,000 in 1997.

       Net interest expense increased slightly to $952,000 in 1997 from $916,000
in 1996. The higher interest expense was primarily attributable to an increase
in the average outstanding indebtedness to approximately $49 million in 1997
from $44 million in 1996 as a result of borrowings under the Revolving Credit
Agreement to fund the acquisition of NYRS and to complete the Series A Preferred
Stock redemption.

       The Company's effective tax credit rate increased from 37.1% in 1996 to
42.0% in 1997. The rate in fiscal 1996 was lower than the combined federal and
state statutory rate due to the tax deductibility of dividends on the Series A
Preferred Stock paid to the ESOP and used for ESOP Term Loan repayment.

       The Company's net loss for the quarter decreased by $.3 million to $.6
million in 1997 from $.9 million in 1995. The lower loss resulted principally
from improved operations at The Art Institutes, partially offset by a lower
credit for income taxes.

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. Historically, the Company has
experienced net losses in its fiscal first quarter ending September 30 due to
lower revenues combined with expenses incurred in preparation for the peak
enrollments in the fall quarter.

LIQUIDITY AND CAPITAL RESOURCES

       The Company generated positive cash flow from operating activities for
the three months ended September 30, 1995 and 1996 respectively. Cash flow from
operations was $3.3 million and $14.8 million for 1995 and 1996, respectively.

                                     - 11 -
<PAGE>   12
       The Company had a $20.9 million working capital deficit as of September
30, 1996 as compared to $12.6 million of working capital as of June 30, 1996.
The decrease in working capital was due primarily to $14.9 million in debt
repayments under its Revolving Credit Agreement and capitalized leases.

       Effective October 13, 1995 the Company and its lenders amended the
Revolving Credit Agreement in order to increase the amount of the facility
thereunder to $70.0 million and to extend its term to October 13, 2000.
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. As of September 30, 1996, the Company was in compliance with all
covenants under the Revolving Credit Agreement. As of September 30, 1996, the
Company had $41 million of additional 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
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.

       Following the consummation of the Offering, $38.5 million of the net
proceeds received by the Company was used to repay indebtedness under the
Revolving Credit Agreement. It is expected that the Company's interest expense
in periods following the Offering will be lower and will have a lesser
proportionate impact on net income in comparison to periods prior to the
Offering.

       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 $2.8 million and $2.5 million
for the three months ended September 30, 1995 and 1996, respectively. The
Company anticipates increased capital spending for 1997, principally related to
the introduction and expansion of culinary programs, further investment in
schools acquired during 1996 and 1997 and additional investment in classroom
technology.  The Company does not have any material commitments for any capital
expenditures in 1997 or beyond.

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

                                     - 12 -
<PAGE>   13
<TABLE>
<S>                                                                   <C>
PART II -- OTHER INFORMATION

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

Item 2.    Changes in Securities

           As approved by the shareholders on October 24, 1996, the Articles
           reclassified all of the Company's common stock so that each existing
           share of Class A and Class B Stock, outstanding immediately prior to
           the filing of the Articles with the Department of State of the
           Commonwealth of Pennsylvania and any treasury stock held by the
           Company, was automatically reclassified as and converted into
           one-half of a share of the New Common Stock.

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
</TABLE>

(a)   Exhibits:

      (3)(a)  Amended and Restated Articles of Incorporation (1)

      (3)(b)  Amended and Restated Bylaws (2)  
      
      (4)     Rights Agreement, dated October 1, 1996, between Education 
              Management Corporation and Mellon Bank, N.A. (3)    

      (15.1)  Report of Independent Public Accountants

      (27)    Financial Data Schedules  

----------

      (1)     Previously filed with the Company's registration statement on 
              Form S-1 as amended (Registration No. 333-10385) filed on
              August 19, 1996 and incorporated herein by reference.  

      (2)     Previously filed with the Company's registration statement on 
              Form S-1 as amended (Registration No. 333-10385) filed on
              August 19, 1996 and incorporated herein by reference.  

      (3)     Previously filed with the Company's registration statement on 
              Form S-1 as amended (Registration No. 333-10385) filed on
              August 19, 1996 and incorporated herein by reference. Since the 
              filing of this exhibit this agreement has been executed in the
              form filed with the Securities and Exchange Commission on October
              1, 1996, by Education Management Corporation and Mellon Bank, N.A.

(b)   Reports on Form 8-K

      No reports on Form 8-K were filed for the three months ended 
      September 30, 1996

                                     - 13 -
<PAGE>   14
                                   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 21, 1996               By:  /s/ ROBERT B. KNUTSON
                                           ------------------------------------
                                           Robert B.  Knutson
                                           Chairman and Chief Executive Officer

                                       By:  /s/ ROBERT T. MCDOWELL
                                           ------------------------------------
                                           Robert T.  McDowell
                                           Senior Vice President and Chief
                                           Financial Officer

                                     - 14 -