Edison Schools Inc. –

NEW YORK – Edison Schools Inc., a private operator of public schools, went public November 11, offering 6.8 million shares at $18 apiece. The company’s stock priced well below its $21 to $23 filing range.

Merrill Lynch & Co., Banc of America Securities L.L.C., Credit Suisse First Boston, Donaldson, Lufkin & Jenrette Inc. and J.P. Morgan & Co. underwrote the initial public offering, which left 42.2 million shares outstanding.

There were no selling shareholders. D2F2 Foundation, the Sprout Group, J.P. Morgan Investment Corp., Investor International, J.W. Childs Associates L.P., Leeds Associates L.L.C., WSI Corp., UBS Capital Inc. and Vulcan Ventures Inc. were venture backers.

The company manages about 80 public schools in 16 states and Washington, D.C., including charter and contract schools, serving students from kindergarten through 12th grade. The schools have an academy-style focus, as well as longer school days and school years. Edison contracts with local school districts and public charter schools and assumes educational and operational responsibility for individual schools. In return, educational boards provide per-pupil funding comparable to that spent on other local public schools.

The $111.2 million in proceeds expected from the IPO will be used to fund future operating losses and capital expenditures and for general corporate purposes, including working capital.

Edison Schools has never been profitable, losing $21.9 million in 1998 and $49.4 million in 1999.

Janet Hickey, general partner at Sprout, joined the company’s board of directors in March 1995. John Childs, president at J.W. Childs, joined the company’s board of directors in November 1996. H. Christopher Whittle, president at WSI, has served as the company’s president since March 1997 and as chief executive officer since July 1998. John Fullerton, managing director at J.P. Morgan, joined the board in January 1998. Klas Hilstrom, senior investment manager at Investor International, joined the company’s board of directors in January 1998. Jeffrey Leeds, principal at Leeds Associates, joined the company’s board of directors in April 1999. Bert Kolde, vice president at Vulcan Ventures and Charles Delaney, president at UBS Capital, joined the board in July 1999.

Edison Schools – Selected Financial

(in thousands, except per share data)

Fiscal Year Ended June 30

1995 1996 1997 1998 1999

Total revenue 11,773 38,559 69,407 132,762

Net loss 14,125 10,103 11,422 21,915 49,433