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RULE NO. 424(b)(3)
REGISTRATION NO. 333-26633
PROSPECTUS
320,097 Shares
SYLVAN LEARNING SYSTEMS, INC.
Common Stock
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The shares of Common Stock of Sylvan Learning Systems, Inc. (the "Company")
covered by this Prospectus are outstanding shares which may be offered and sold
from time to time by the stockholders named herein. See "Selling Stockholders."
The Company will not receive any proceeds from the sale of the shares by the
Selling Stockholders.
The Common Stock is quoted on the Nasdaq Stock Market (National Market)
under the symbol "SLVN." On May 20, 1997 the last sale price for the Common
Stock as reported on the Nasdaq Stock Market was $34.75 per share.
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "SLVN." The Selling Stockholders may from time to time sell shares of
the Common Stock offered hereby in transactions on the Nasdaq Stock Market, in
privately-negotiated transactions or otherwise, in each case at negotiated
prices. See "Plan of Distribution." The brokers or dealers through or to whom
the shares of Common Stock covered hereby may be sold may be deemed
"underwriters" within the meaning of the Securities Act of 1933, in which event
all brokerage commissions or discounts and other compensation received by such
brokers or dealers may be deemed underwriting compensation.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The date of this Prospectus is May 21, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission, including the reports and
other information incorporated by reference into this Prospectus, can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at rates prescribed by the Commission or from the Commission's Internet
web site at http:\\www.sec.gov. The Common Stock of the Company is quoted on the
Nasdaq National Market. Reports, proxy statements and other information
concerning the Company can be inspected at the offices of the Nasdaq Stock
Market, 1735 K Street, Washington, D.C. 20006. This Prospectus does not contain
all the information set forth in the Registration Statement of which this
Prospectus is a part and exhibits relating thereto which the Company has filed
with the Commission. Copies of the information and exhibits are on file at the
offices of the Commission and may be obtained, upon payment of the fees
prescribed by the Commission, may be examined without charge at the offices of
the Commission or through the Commission's Internet web site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No. 0-
22844) pursuant to the 1934 Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1996, as amended by its Annual Report on Form 10-K/A and its Quartely Report on
Form 10-Q for the quarter ended March 31, 1997.
2. The Company's Current Reports on Forms 8-K and 8-K/A dated January 28,
1997, relating to the Company's acquisition of Wall Street Institute.
3. The Company's Current Report on Form 8-K dated April 17, 1997,
relating to the Company's agreement to acquire I-R, Inc. and Independent Child
Study Teams, Inc.
4. The Company's Current Report on Form 8-K/A dated March 12, 1997 relating
to the termination of the Company's Agreement to acquire National Education
Corporation and receipt of fees related thereto.
5. The description of Common Stock contained in Item 4 of the Company's
Registration Statement on Form 8-A, filed with the Commission under the 1934
Act; and
6. All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act subsequent to the date of filing of the
Registration Statement of which this Prospectus is a part and prior to the
termination of the offering made hereby.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the request of any such person, a copy of any or
all of the documents which have been incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be directed to Sylvan Learning Systems, Inc., 1000 Lancaster Street,
Baltimore, Maryland 21231, Attention: Chief Financial Officer, telephone: (410)
843-8000.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
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THE COMPANY
Sylvan Learning Systems, Inc. (the "Company" or "Sylvan") is a leading
international provider of educational and testing services. The Company delivers
a broad array of supplemental and remedial educational services and computer-
based testing through three principal segments. Through its Core Educational
Services segment, the Company designs and delivers individualized tutorial
services to school-age children and adults through its 620 franchised and
Company-owned Sylvan Learning Centers in 49 states, five Canadian provinces, and
Hong Kong, South Korea and Guam. Sylvan Prometric, the Company's testing
services segment, administers computer-based tests for major corporations,
professional associations and governmental agencies through its network of
certification centers, which are located throughout the world. In addition, the
Company's Contract Educational Services segment now serves 72 schools and over
10,000 by educational services to public and non-public school districts
receiving funding under federal and state programs and provides contract
educational and training services on-site to employees of large corporations. In
1996, total system-wide revenues were approximately $285.5 million, composed of
$165.7 million from core educational services ($139.5 million from franchised
Learning Centers and $25.6 million from Company-owned Learning Centers, product
sales and franchise sales fees), $87.0 million from testing services and $33.4
million from contract educational services.
Core Educational Services. Sylvan is widely recognized as providing high
quality educational services with consistent, quantifiable results, and has
delivered its core educational service to more than 1,000,000 students primarily
in grades three through eight over the past 17 years through both Company-owned
and franchised Sylvan Learning Centers. The Company's core educational service
segment provides supplemental instruction in reading, mathematics and reading
readiness, featuring an extensive series of standardized diagnostic tests,
individualized instruction, a student motivational system and continued
involvement from both parents and the child's regular school teacher. As of
December 31, 1996, there were a total of 620 Learning Centers in 49 states, five
Canadian provinces, Hong Kong, South Korea and Guam operated by the Company or
its franchisees. As of that date, there were 434 franchisees operating 581
Sylvan Learning Centers. As of December 31, 1996, Sylvan owned and operated 39
Learning Centers: five in Baltimore, six in Dallas, six in Los Angeles, five in
the greater Philadelphia area, six in South Florida, six in the greater
Washington, D.C. area and five in the greater Minneapolis area. As of December
31, 1996, nine of the Company-owned Learning Centers contained Technology
Centers for computer-based testing. The Company may consider selected
acquisitions of additional Learning Centers now operated by franchisees.
Sylvan Prometric Testing Services. Sylvan has established 221 testing centers
which are located in existing Learning Centers, 20 stand-alone testing centers
and, with the acquisition of Drake Prometric, L.P. in December 1995, added an
additional 990 testing centers, 594 of which are located in North America and
the remainder in 95 foreign countries. In addition, Sylvan acquired contract
rights from the National Association of Securities Dealers ("NASD") and assumed
management of 56 NASD testing centers in April 1996. Pursuant to the NASD
contract, the Company is in the process of reducing the number of these testing
centers. The Company enters into contracts directly with the testing
organization, such as Educational Testing Services ("ETS"), under which Sylvan
receives a fee based upon the number of tests given. Principal customers for the
Company's testing services in the information technology ("IT") industry are
Novell, Inc. and Microsoft Corp. IT customers sponsor worldwide certification
programs for various professionals such as network administrators and engineers,
service technicians and instructors. Sylvan has been designated as the
exclusive commercial provider of computer-based tests administered by ETS
(excluding tests not currently offered by the College Board in computer-based
format) so long as Sylvan is able to provide sufficient capacity to meet the
demand of candidates seeking to take computer-based versions of tests. The
Company is also one of two entities licensed by the FAA to deliver computer-
based versions of various pilot and mechanic licensing tests for private
aviation, and also provides testing services for organizations in many other
fields, such as for computer professionals, medical laboratory technicians and
military candidates.
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Effective December 1, 1996, the Company purchased the privately-held Wall
Street Institute International, B.V. and its commonly controlled affiliates
(collectively, "WSI"), a European based franchisor and operator of learning
centers where English is taught through a combination of computer-based and live
instruction. Typically, the instructional programs are approximately nine
months to one year in duration. With more than 170 franchised centers in
operation throughout Europe and Latin America, WSI had revenues of approximately
$14.0 million for the fiscal year ended August 31, 1996.
Contract Educational Services; PACE; Sylvan-At-Work. Under federal and
various state funding programs to provide supplemental and remedial education to
academically and economically disadvantaged students, such as the Title I
(formerly Chapter I) program administered by the U.S. Department of Education,
Sylvan has contracts to provide virtually the same core educational services
offered at Sylvan Learning Centers to students in the following public schools:
22 Baltimore schools, 10 District of Columbia schools, seven schools in four
districts in Texas and Maryland, 14 schools in Chicago, three schools in Newark,
five St. Paul schools, two schools in Broward County, Florida, one school in New
Orleans and schools in the Charleston, Oklahoma City and Richmond districts.
Under the same funding programs, Sylvan contracts with public school districts
to provide its services to parochial or private school students. In March, 1995,
the Company acquired the PACE Group ("PACE"), a provider of educational and
training services to large corporations throughout the United States. Services
offered by PACE include racial and gender workplace diversity training and
skills improvement programs such as writing, advanced reading, listening and
public speaking. The Company's Sylvan-At-Work program, which has been offered
since 1990, is a modified version of Sylvan's core educational service provided
to businesses on-site. Programs are currently offered for Motorola, Inc., Texas
Instruments Incorporated and Martin Marietta Energy Systems, Inc.
The Company's principal executive offices are located at 1000 Lancaster
Street, Baltimore, Maryland 21202, (410)843-8000.
USE OF PROCEEDS
All of the proceeds from the sale of the shares of the Company's Common Stock
offered hereby will be received by the Selling Stockholders. The Company will
receive none of the proceeds from the sale of the shares of Common Stock.
SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership
of the Company's Common Stock by the persons listed therein (the "Selling
Stockholders") prior to this offering, the maximum number of shares of Common
Stock to be sold by the Selling Stockholders hereby, and the beneficial
ownership of the Company's Common Stock by the Selling Stockholders after this
offering, assuming that all shares of Common Stock offered hereby are sold.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Offering Shares To Owned After Offering
--------------------------- Be Sold In ------------------------
Name and Address of Beneficial This
Owner(1) Number Percent Offering Number Percent
- -------------------------------- ------------ ----------- ------------ -------- ----------
<S> <C> <C> <C> <C> <C>
Alan B. Carter.......................... 79,105 * 39,553 39,552 *
Dr. Luigi T. Peccenini.................. 714,884 2.9 280,544 434,340 1.8
Torre Mapfre
Marina, 16-18, 18th Floor
08005 Barcelona, Spain
</TABLE>
Alan B. Carter acquired his shares of Common Stock pursuant to an Agreement
and Plan of Reorganization effective as of December 31, 1996 (the "Carter
Agreement"), by and among the Company, Carter Holdings, Inc. ("Carter") and
Alan B. Carter, as sole stockholder of Carter.
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Pursuant to the Carter Agreement, Carter was merged with and into the Company,
and the Company acquired all of the outstanding stock of Carter from Mr. Carter
in exchange for 79,105 shares of Common Stock of the Company, half of which are
being offered in this Prospectus, as required by the Carter Agreement. As a
result of the Company's acquisiton, Mr. Carter became and continues to be an
employee of the Company. The Carter Agreement requires the Company to register
the remaining shares Mr. Carter acquired pursuant to the Carter Agreement on or
before January 29, 1998. Dr. Luigi T. Peccenini (together with Mr. Carter, the
"Selling Stockholders") acquired an aggregate of 714,884 shares of Common Stock
(the "WSI Shares") pursuant to the Agreement for Purchase and Sale of the
Business of WSI, dated December 1, 1996 (the "WSI Agreement"). Pursuant to the
WSI Agreement, 280,544 of the WSI Shares are being offered in this Prospectus.
In connection with the Company's acquisition of WSI, Dr. Peccenini became and
continues to be a consultant to the Company.
PLAN OF DISTRIBUTION
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "SLVN." The Selling Stockholders may from time to time sell shares of
Common Stock offered hereby in transactions on the Nasdaq Stock Market, in
privately-negotiated transactions or otherwise, in each case at negotiated
prices. The broker-dealers through or to whom the shares of Common Stock offered
hereby may be sold may be deemed "underwriters" within the meaning of the
Securities Act of 1933, in which event, all brokerage commissions or discounts
and other compensation received by such broker-dealer may be deemed underwriting
compensation.
The Common Stock offered hereby will be sold by the Selling Stockholders
acting as principal for their own account, and the Company will receive no
proceeds from this offering. The Selling Stockholders will pay all applicable
stock transfer taxes, transfer fees and brokerage commissions or discounts. The
Company has agreed to bear the cost of preparing the Registration Statement of
which this Prospectus is a part and all filing fees and legal and accounting
expenses in connection with registration of the shares of Common Stock offered
by the Stockholders hereby under federal and state securities laws.
LEGAL MATTERS
The legality of the shares offered hereby has been passed upon for the
Company by Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The consolidated financial statements and schedule of Sylvan Learning
Systems, Inc. appearing in the Annual Report of Sylvan Learning Systems, Inc.
(Form 10-K) for the year ended December 31, 1996 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements have been incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
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320,097 Shares
SYLVAN LEARNING
SYSTEMS, INC.
Common Stock
PROSPECTUS
May 21, 1997
No person has been authorized by the Company to give any information or to
make any representations other than those contained in this Prospectus in
connection with the offer contained in this Prospectus, and if given or made,
such information or representations may not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any of the securities in any jurisdiction
in which such offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so, or to any person to
whom it is unlawful to make such offer or solicitation. Neither the delivery of
this Prospectus nor any sale made hereunder shall create an implication that
there has been no change in the affairs of the Company since the date hereof.
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TABLE OF CONTENTS
Page
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Available Information..................................................... 2
Incorporation of Certain
Documents by Reference................................................... 2
The Company............................................................... 3
Use of Proceeds........................................................... 4
Selling Stockholders...................................................... 4
Plan of Distribution...................................................... 4
Legal Matters............................................................. 5
Experts................................................................... 5
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