<PAGE>
PROSPECTUS
1,414,000 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 National Market under the symbol
"SLVN." On November 21, 1997 the last sale price for the Common Stock as
reported on the Nasdaq Stock Market was $41.63 per share.
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 November 21, 1997.
<PAGE>
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: (i)
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 (with Items 6, 7 and 8 thereof
having been superseded by the information contained in the Company's Current
Report on Form 8-K dated July 15, 1997), (ii) the Company's Current Report on
Form 8-K and 8-K/A dated January 28, 1997, relating to the Company's acquisition
of Wall Street Institute; (iii) the Company's Current Report on Form 8-K/A dated
March 12, 1997, relating to the termination of the Company's Merger Agreement
with National Education Corporation; (iv) the Company's Current Report on
Form 8-K and 8-K/A dated April 17, 1997 and May 30, 1997, relating to the
Company's acquisition of I-R, Inc. and Independent Child Study Teams, Inc.
(collectively, "Educational Inroads"); (v) the Company's Current Report on Form
8-K dated July 15, 1997, restating certain historical financial information to
reflect the acquisition of Educational Inroads; (vi) the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997; (vii) the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997; (viii) the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1887; (ix) 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 (x) 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 21202, 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.
-2-
<PAGE>
THE COMPANY
Sylvan Learning Systems, Inc. (the "Company" or "Sylvan") is a leading
international private 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 divisions. The Core Educational
Services division designs and delivers individualized tutorial services to
school-age children and adults at 669 franchised and Company-owned Sylvan
Learning Centers. Sylvan Prometric, the Company's testing services division,
administers computer-based tests for major organizations, corporations,
professional associations and governmental agencies through its worldwide
network of Testing Centers. The Contract Educational Services division provides
Sylvan's core educational services under federal and state funding programs to
more than 12,000 students in 89 public schools and more than 38,000 students in
507 non-public schools (including Educational Inroads) and provides on-site
educational and training services to employees of large corporations. Since
1994, the Company has substantially expanded its business through a combination
of internal growth and acquisitions and has increased revenue and operating
income from $68.7 million and $3.4 million, respectively, in 1994 to $181.9
million and $22.7 million, respectively, in 1996. Sylvan's 1996 systemwide
revenues were approximately $310.3 million, consisting of $165.1 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 $58.2 million from contract
educational services.
Core Educational Services. The Company's Core Educational Services division
provides supplemental instruction in reading, mathematics and reading readiness
and features 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
September 30, 1997, the Company or its franchisees operated 669 Learning Centers
in 49 states, five Canadian provinces, Hong Kong, South Korea and Guam, with 403
franchisees owning and operating 628 Sylvan Learning Centers and Sylvan owning
and operating 41 Learning Centers .
Sylvan Prometric Testing Services. As of September 30, 1997, Sylvan or its
authorized representatives operated 1,908 Testing Centers, 1,217 of which were
located in North America and the remainder in 97 foreign countries. The Company
enters into contracts directly with various professional licensure, educational
and information technology ("IT") businesses, organizations and agencies, under
which Sylvan receives a fee based upon the number of tests given for those
customers. Principal customers for the Company's testing services are
Educational Testing Services ("ETS") and, in the IT industry, Microsoft Corp.
and Novell, Inc.. 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 the
SAT and PSAT) and operates 78 testing centers in 55 countries to facilitate
delivery of international testing for ETS. The Company also provides testing
services for organizations responsible for licensing broker-dealers, pilots,
aviation mechanics, computer professionals and medical laboratory technicians.
Through the Company's December 1996 acquisition of Wall Street Institute
International B.V. and its affiliates ("Wall Street"), Sylvan now provides live
and computer-based English instruction and testing in Europe and Latin America
through a network of more than 180 franchised and Company-owned centers.
Contract Educational Services; PACE; Sylvan-at-Work; Caliber Learning
Network, Inc. Sylvan provides educational services under federal and various
state funding programs to students in 89 public and 507 non-public schools.
Sylvan provides educational and training services to large corporations
throughout the United States, including racial and gender workplace diversity
training and skills improvement programs such as writing, advanced reading,
listening and public speaking, through its wholly-owned subsidiary, The PACE
Group ("PACE"), and the Company's Sylvan-at-Work program. In November 1996,
Caliber Learning Network, Inc. was formed as a joint initiative of Sylvan and
MCI Telecommunications Corporation to become a worldwide distribution network of
professional education centers equipped with satellite-based video conferencing
and computer network capabilities. Sylvan currently owns a 10 percent interest
in Caliber Learning Network and has the option to acquire a majority interest in
the future.
The Company's principal executive offices are located at 1000 Lancaster
Street, Baltimore, Maryland 21202, and its telephone number is (410) 843-8000.
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<PAGE>
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 offered
hereby.
SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership
of the Company's Common Stock by the person 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 Number Percent Offering Number Percent
- -------------------------------- -------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
Anthony O' Donnell.............. 707,000 2.4% 707,000 -- --
100 Mendham Road
Gladstone, New York 07394
Harold Scholl................... 707,000 2.4% 707,000 -- --
377 Danforth Avenue
Jersey City, New Jersey 07305
</TABLE>
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* Less than 1%.
The Selling Stockholders acquired the shares of Common Stock being offered
hereby pursuant to an Agreement and Plan of Reorganization effective as of May
30, 1997 (the "Agreement"), by and among the Company, Independent Child Study
Teams, Inc. ("Child Study"), I-R, Inc. ("I-R" and, together with Child Study,
"Educational Inroads") and the Selling Stockholders, as sole stockholders of
Educational Inroads. Pursuant to the Agreement, Educational Inroads was merged
with and into the Company, and the Company acquired all of the outstanding stock
of Educational Inroads from the Selling Stockholders in exchange for 1,414,000
shares of Common Stock of the Company. All of the shares of Common Stock issued
to the Selling Stockholders pursuant to the Agreement are being offered hereby,
as required by the Agreement. Pursuant to an Asset Purchase Agreement dated as
of April 17, 1997 and a Share Pledge and Security Agreement dated as of May 30,
1997, Mr. O'Donnell has pledged to the Company the number of his shares of
Common Stock which has an aggregate market value equal to $1,905,481.00 as
security for a promissory note issued to the Company by an affiliate of Mr.
O'Donnell. The note represents the purchase price for certain assets formerly
owned by Educational Inroads. As a result of the Company's acquisition of
Educational Inroads, Dr. Scholl became and continues to be employed by the
Company.
PLAN OF DISTRIBUTION
The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol "SLVN." The Shares may be sold from time to time by the Selling
Stockholders directly or through broker-dealers or underwriters who may act
solely as agents, or who may acquire the Shares a principals. In connection with
any sales of the Shares hereunder, the Selling Stockholders and any broker-
dealers participating such sales may be deemed to be "underwriters" within the
-4-
<PAGE>
meaning of the Securities Act. The distribution of the Shares hereunder by the
Selling Stockholders may be effected in one or more transactions that may take
place on the Nasdaq National Market or otherwise, including block trades or
ordinary brokers' transactions, or through privately negotiated transactions,
through an underwritten public offering, or through a combination of any such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Usual and
customary or specially negotiated brokerage fees or commissions may be paid by
the Selling Stockholders in connection with such sales. The Company will not
bear any commissions or discounts paid or allowed by the Selling Stockholders to
underwriters, dealers, brokers or agents. To the extent required, the specific
shares of Common Stock to be sold, purchase price, public offering price, the
names of any such agent, dealer or underwriter and any applicable commission or
discount with respect to a particular offering may be set forth in an
accompanying Prospectus Supplement. 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 Selling 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. at December 31, 1996 and 1995 and for each of the three years in
the period ended December 31, 1996, incorporated by reference in this Prospectus
and Registration Statement, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon also incorporated herein by
reference which, as to the years 1996 and 1995, is based in part on the reports
of Deloitte & Touche LLP, independent auditors, and as to the year 1994, is
based in part on the report of Canterelli & Vernoia, CPAs, independent auditors.
Such consolidated financial statements have been incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
-5-
<PAGE>
No person has been authorized by
the Company to give any information or to
make any representations other than those 1,414,000 SHARES
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 SYLVAN LEARNING
in which such offer or solicitation is not SYSTEMS, INC.
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. COMMON STOCK
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 PROSPECTUS
----
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
November 21, 1997
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