Fitch Rates Ringling School of Art and Design -- Florida -- $23.5MM Bonds 'A-'.

Business Editors

NEW YORK--(BUSINESS WIRE)--June 1, 2004

Fitch Ratings assigns an 'A-' rating on approximately $23.5 million Higher Educational Facilities Financing Authority (FL) educational facilities revenue bonds (Ringling School of Art and Design, Inc. Project) series 2004. The financing will consist of approximately $12.4 million of new money and $11.1 million for the current refunding of the City of Sarasota, Fla., educational facilities revenue bonds, series 2000. The bonds are expected to be sold on a negotiated bases through SunTrust Capital Markets, Inc. the week of June 15. Bond proceeds will be used to fund construction of a multipurpose building that will consist of 100 beds of student housing, administrative offices for student affairs, a student center and will provide academic teaching space. The bonds are expected to be insured by Radian Asset Assurance Inc. The Rating Outlook is Stable.

The long term 'A-' rating reflects the Ringling School's strong student demand, low rate of tuition discounting, positive operating margins and financial flexibility with the use of part time faculty. Fall 2003 headcount enrollment of 989 students reflects an 11.9% growth since fall 1998. Ringling School's ability to attract students is demonstrated by its student matriculation rate of 43.4% which is high compared to other 'A' rated colleges and universities. This is particularly impressive given the low tuition discount rate of 3.6% for fall 2003. The low tuition discount rate has contributed to positive operating margins ranging from 6% to 10% over the past five years. The school, like other schools that primarily offer art programs, uses a high percent of part time faculty. Approximately 32% of the full time equivalent faculty is part time with one year contracts and no union representation.

The primary credit concerns include the Ringling School's increasing debt burden, limited liquidity, and lack of revenue diversity. Maximum annual debt service with the issuance of the series 2004 bonds is projected to be $1.25 million and would represent a use of 5.5% of fiscal 2003 unrestricted revenues. Beyond the series 2004 bonds, no debt issuance is planned at this time. Fitch measures liquidity by computing the level of available funds to unrestricted expenses. Available funds are defined as unrestricted and temporarily restricted cash and investments. As of May 31, 2003, available funds were $12.7 million and would cover 62% of fiscal 2003 unrestricted expense. The median of available funds to unrestricted expenses for Fitch rated 'A' credits is 110% with a range of 50% to 150%. Like other private schools, Ringling School is very dependent on student generated fees which represented 90% of fiscal 2003 revenues.

The Ringling School of Art and Design, founded in 1931, is a private, coeducational university located on a 35-acre campus located in Sarasota, Fla.