<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 for the fiscal year ended DECEMBER 31, 1996
-----------------
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
----------
.
----------
COMMISSION FILE NUMBER 0-22844
-------
SYLVAN LEARNING SYSTEMS, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 52-1492296
- ------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1000 LANCASTER STREET, BALTIMORE, MARYLAND 21202
- ------------------------------------------ ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (410)843-8000
-------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- ---------------------------- ------------------------
COMMON STOCK, PAR VALUE $.01 NASDAQ
SECURITIES REGISTERED PURSUANT TO THE SECTION 12(g) OF THE ACT: NONE
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 [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting Common Stock held by non-affiliates of the
registrant was approximately $453 million as of March 17, 1997.
The registrant had 24,516,623 shares of Common Stock outstanding as of March 17,
1997.
<PAGE>
ITEM 14(a)(1) OF THE REGISTRANT'S FORM 10-K IS HEREBY AMENDED TO READ AS
- ------------------------------------------------------------------------
FOLLOWS:
- --------
ITEM 14(a)(1)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE REFERENCE
FROM FORM 10-K
---------------
<S> <C>
THE COMPANY:
Report of Independent Auditors................................................................ 30
Consolidated Balance Sheets as of December 31, 1995 and December 31, 1996..................... 31
Consolidated Statements of Operations for the years ended December 31, 1994, 1995 and
1996....................................................................................... 33
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1994,
1995 and 1996.............................................................................. 34
Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996.... 35
Notes to Consolidated Financial Statements.................................................... 36
Audited Financial Statements of Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
for the years ended December 31, 1996 and 1995............................................. 62
ITEM 14(a) 2 - FINANCIAL STATEMENT SCHEDULE:
Schedule II - Valuation and Qualifying Accounts............................................... 58
</TABLE>
2
<PAGE>
Report of Independent Auditors
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Baltimore, Maryland
We have audited the accompanying statements of net assets available for benefits
of the Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan as of
December 31, 1996 and 1995, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Sylvan
Learning Systems, Inc. 401(k) Retirement Savings Plan as of December 31, 1996
and 1995, and the changes in its net assets available for benefits for the years
then ended, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
----------------------
Ernst & Young LLP
June 20, 1997
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
DECEMBER 31,
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Investments, at fair value:
Sylvan Learning Systems, Inc. common stock $1,165,770 $ 339,626
Mutual funds:
MFS Emerging Growth Fund - 207,753
Euro Pacific Growth Fund - 117,220
Fidelity Advisor Equity Portfolio Growth Fund - 216,837
Fidelity Advisor Growth Opportunities Portfolio - 225,190
American Balanced Fund - 165,791
Alex Brown Cash Reserve Fund - 59,668
Growth and Income Fund 714,295 -
Putnam Income Fund 212,707 -
Putnam Vista Fund 649,587 -
Putnam OTC and Emerging Growth Fund 781,279 -
Putnam International Growth Fund 562,922 -
Putnam Stable Value Fund 622,222 -
Participant loans 43,708 28,315
---------- ----------
4,752,490 1,360,400
Unallocated insurance contract, at contract value:
First Colony Group Deposit Administration Contract - 142,688
---------- ----------
Total investments 4,752,490 1,503,088
Receivables:
Employer's contribution 247,953 -
Participants' contributions 168,185 77,849
Total receivables 416,138 77,849
---------- ----------
Net assets available for benefits $5,168,628 $1,580,937
========== ==========
</TABLE>
See accompanying notes.
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
---------- ----------
<S> <C> <C>
Investment income:
Interest $ 15,088 $ 31,246
Dividends 244,033 14,335
---------- ----------
259,121 45,581
READS Merger 804,381 -
Employee salary deferral contributions 2,307,698 536,825
Employee rollover contributions 262,750 236,385
---------- ----------
Total additions 3,633,950 818,791
Participant withdrawals (237,393) (13,251)
Net realized and unrealized appreciation
in fair value of investments 191,134 245,190
---------- ----------
Net increase 3,587,691 1,050,730
Net assets available for benefits at
beginning of year 1,580,937 530,207
---------- ----------
Net assets available for benefits at
end of year $5,168,628 $1,580,937
========== ==========
</TABLE>
See accompanying notes.
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements
1. ASSET TRANSFER
Effective July 1, 1996, Sylvan Learning Systems, Inc. (the "Company") appointed
a new trustee, Putnam Investments, to hold all plan assets. The net assets of
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan (the "Plan") held
by ATR, Inc., the previous trustee, totaling $3,641,426 were transferred to
Putnam Investments as of July 1, 1996. Certain plan provisions were amended and
restated in accordance with this transfer.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Company's Plan are prepared using the accrual
method of accounting.
Participant withdrawals are recorded when paid. Amounts allocated to terminated
participants at December 31, 1996 and 1995 were $367,679 and $25,264,
respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets during the period.
Actual results could differ from those estimates.
Certain 1995 amounts have been reclassified to conform to 1996 presentation.
INVESTMENT VALUATION
Investments are stated at fair value except for the unallocated insurance
contract which was valued at contract value. Sylvan Learning Systems, Inc.
common stock is valued at the last reported sales price on the last business day
of the plan year. Mutual funds are reported at current redemption value.
Participant loans are carried at their unpaid principal balance which represents
fair value.
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT VALUATION (CONTINUED)
The unallocated insurance contract with First Colony Group Deposit
Administration was valued at contract value as estimated by the insurance
company. Contract value represents contributions made under contract, plus
interest at the contract rate, less funds used to pay withdrawals and to pay for
the insurance company's administrative expenses.
Realized gains or losses on the sale of investments are computed as the
difference between the proceeds received and the average cost of investments
held. The change in the difference between cost and fair value, including
realized gains and losses, is included in the statements of changes in net
assets available for benefits as net appreciation or depreciation in the fair
value of investments.
ADMINISTRATION EXPENSES
All costs and expenses incurred in connection with the administration of the
Plan are paid by the Company.
3. PLAN DESCRIPTION
The following description of the Plan provides only general information.
Participants should refer to the Summary Plan Description for a more complete
------------------------
description of the Plan's provisions. Copies of this summary are available from
the Company's Human Resources Department.
GENERAL
The Plan is a defined contribution plan covering substantially all employees of
the Company and, effective November 1, 1996, of Caliber Learning Network, Inc.
(a corporate joint venture 10% owned by the Company) who are age twenty-one or
older and have completed one year of service. It is subject to the provisions
of Employee Retirement Income Security Act of 1974 (ERISA).
PLAN MERGERS
In connection with the Company's acquisition of Remedial Education Diagnostic
Corporation, Inc., the Remedial Education Diagnostic Corporation Retirement Plan
(the "READS Plan") was merged into the Plan effective October 1, 1995. The
READS Plan's net assets of $804,381 was transferred into the Plan on February 1,
1996.
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
3. PLAN DESCRIPTION (CONTINUED)
PLAN MERGERS (CONTINUED)
In connection with the Company's acquisition of The PACE Group, Inc., The PACE
Group, Inc. 401(k) Plan (the "PACE Plan") was merged into the Plan effective
December 31, 1995. The PACE Plan's net assets have not been transferred into
the Plan as of the date of this report.
CONTRIBUTIONS
Participants may contribute up to 15% of their pretax annual compensation,
subject to certain annual limitations imposed by the Internal Revenue Code. In
addition, employees may rollover distributions received from other plans. The
Company makes a discretionary matching contribution equal to a percentage of the
amount of the compensation that the participant elected to contribute up to a
maximum of 6% of the participant's compensation. Additional discretionary
contributions may be made at the option of the Company. The matching
contribution percentage for 1996 was 25% of the participant contribution. No
matching contribution was made in 1995.
Each participant account is credited with the participant's contribution and an
allocation of (a) the Company's contribution, (b) Plan earnings, and (c)
forfeitures of terminated participants' nonvested accounts. Allocations are
based on participant earnings or account balances, as defined.
VESTING
Participants are immediately vested in their contributions plus earnings
thereon. Vesting in the Company's discretionary contributions, if any, plus
earnings thereon is based on years of continuous service at a rate of 25 percent
per year in years two through five. A participant is 100 percent vested after
five years of credited service.
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
3. PLAN DESCRIPTION (CONTINUED)
INVESTMENTS
Upon enrollment in the Plan, a participant may direct employee contributions in
any of the available investment options. At December 31, 1996, the following
investment options were available: Sylvan Learning Systems, Inc. common stock
and the following Putnam Funds: Growth and Income Fund, Income Fund, Vista Fund,
OTC and Emerging Growth Fund, International Growth Fund, and Stable Value Fund.
Participants have the opportunity to change their investment options daily.
PARTICIPANT LOANS
Participants may borrow from their account balances a minimum of $1,000 up to a
maximum of $50,000 or 50% of their vested account balance. Principal and
interest are repaid ratably through payroll deductions over loan terms which
generally do not exceed five years. Hardship distributions are also permitted
from a participant's account.
PAYMENT OF BENEFITS
On termination of service, a participant may receive a lump sum amount equal to
the vested value of his or her account, or upon death, disability, or
retirement, elect to receive periodic installments in accordance with plan
provisions.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right to
discontinue its contributions at any time and to terminate the Plan subject to
the provisions of ERISA.
4. INVESTMENTS
During 1996 and 1995 the Plan's investments (including investments bought, sold
and held during the year) appreciated (depreciated) in fair value by $191,134
and $245,190 respectively, as follows:
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
4. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------
NET APPRECIATION FAIR VALUE
IN FAIR VALUE AT
DURING YEAR END OF YEAR
---------------- ----------------
<S> <C> <C>
Fair value as determined by quoted market price:
Sylvan Learning Systems, Inc. common stock $103,896 $1,165,770 *
Mutual funds:
Putnam Growth and Income Fund (25,752) 714,295 *
Putnam Income Fund (1,686) 212,707
Putnam Vista Fund (31,676) 649,587 *
Putnam OTC and Emerging Growth Fund (66,898) 781,279 *
Putnam International Growth Fund 11,655 562,922 *
Putnam Stable Value Fund - 622,222 *
Net appreciation of assets through date of transfer 201,595
Fair value as estimated by Plan Administrator:
Participant loans - 43,708
---------------- ----------------
$191,134 $4,752,490
================ ================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
----------------------------------------------
NET APPRECIATION FAIR VALUE
IN FAIR VALUE AT
DURING YEAR END OF YEAR
---------------- ----------------
<S> <C> <C>
Fair value as determined by quoted market price:
Sylvan Learning Systems, Inc. common stock $ 108,695 $ 339,626 *
Mutual funds:
MFS Emerging Growth 39,512 207,753 *
Euro Pacific Growth Fund 8,043 117,220 *
Fidelity Advisor Equity Portfolio Growth Fund 30,471 216,837 *
Fidelity Advisor Growth Opportunities Portfolio 32,927 225,190 *
American Balanced Fund 17,287 165,791 *
Alex Brown Cash Reserve Fund 59,668
Growth Fund of America 3,564 -
Investment Company of America 4,691 -
Fair Value as estimated by Plan Administrator:
Participant loans - 28,315
Contract value as determined by insurance company:
First Colony Group Deposit Administration Contract - 142,688 *
---------------- ----------------
$ 245,190 $ 1,503,088
================ ================
</TABLE>
* Denotes individual investments that represent 5% or more of the Plan's net
assets available for benefits.
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
5. CONTRACT WITH INSURANCE COMPANY
In August 1992, the Company entered into a Group Deposit Administration contract
with First Colony which was sold upon of the plan assets during 1996. For
investment purposes, the premiums paid by the Plan were commingled with other
assets of First Colony in the Deposit Administration Fund. The Deposit
Administration Fund guaranteed a 4% interest rate, compounded annually. The
crediting interest rate was adjusted periodically as determined by First Colony
based on market rates. Actual interest earned for 1996 ranged from 5.87% to
6.21% and for 1995 from 5.40% to 6.65%.
6. TAX STATUS
The Internal Revenue Service has determined and informed the Plan by a letter
dated June 2, 1997 that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code (IRC), and are therefore
not subject to tax under present income tax laws. The Plan management believes
that the Plan continues to qualify and to operate as designed.
7. RECONCILIATION OF FORM 5500
The financial statements at December 31, 1996 and 1995 differ from Form 5500
filed with the IRS in that net realized gains (losses) and unrealized
appreciation (depreciation) in fair value of investments have been summarized in
the financial statements rather than shown as several categories of net
investment gain (loss) per line 32b of the Form 5500.
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
8. ALLOCATION OF NET ASSETS AVAILABLE FOR BENEFITS TO INVESTMENT PROGRAMS
<TABLE>
<CAPTION>
December 31, 1996
--------------------------------------------------------------------------------
Sylvan
Learning Putnam Putnam
Systems, Inc. Fund for Putnam Putnam OTC and
Common Growth Income Vista Emerging
Stock and Income Fund Fund Growth Fund
------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value $ 1,165,770 $ 714,295 $ 212,707 $ 649,587 $ 781,279
Employer's contributions
receivable 247,953 - - - -
Participants' contributions
receivable 28,609 31,497 7,000 29,085 37,546
------------- ------------- ------------- ------------- ------------
Net assets available for benefits $ 1,442,332 $ 745,792 $ 219,707 $ 678,672 $ 818,825
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
----------------------------------------------------------------
Putnam Putnam
International Stable
Growth Value Participant
Fund Fund Loans Total
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value $ 562,922 $ 622,222 $ 43,708 $ 4,752,490
Employer's contributions
receivable - - - 247,953
Participants' contributions
receivable 22,551 11,897 - 168,185
------------- ------------- ------------- -------------
Net assets available for benefits $ 585,473 $ 634,119 $ 43,708 $ 5,168,628
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
---------------------------------------------------------------------------------------
Sylvan Fidelity Fidelity
Learning MFS Advisor Advisor
Systems, Inc. Emerging Euro Pacific Equity Growth
Common Growth Growth Portfolio Opportunities
Stock Fund Fund Growth Fund Portfolio
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value $ 339,626 $ 207,753 $ 117,220 $ 216,837 $ 225,190
Unallocated insurance contract,
at contract value - - - - -
Contributions receivable from
employees 20,848 13,226 6,119 12,666 11,777
-------------- -------------- -------------- -------------- --------------
Net assets available for benefits $ 360,474 $ 220,979 $ 123,339 $ 229,503 $ 236,967
============== ============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
---------------------------------------------------------------------------------------
Alex Brown First Colony
American Cash Group Deposit
Balanced Reserve Participant Administration
Fund Fund Loans Contract Total
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value $ 165,791 $ 59,668 $ 28,315 $ - $ 1,360,400
Unallocated insurance contract,
at contract value - - - 142,688 142,688
Contributions receivable from
employees 8,411 1,802 - 3,000 77,849
-------------- -------------- -------------- -------------- --------------
Net assets available for benefits $ 174,202 $ 61,470 $ 28,315 $ 145,688 $ 1,580,937
============== ============== ============== ============== ==============
</TABLE>
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
9. ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS TO INVESTMENT
PROGRAMS
<TABLE>
<CAPTION>
Year ended December 31, 1996
---------------------------------------------------------------------------------------------------
Sylvan Fidelity Fidelity
Learning MFS Advisor Advisor
Systems, Inc. Emerging Euro Pacific Equity Growth American
Common Growth Growth Portfolio Opportunities Balanced
Stock Fund Fund Growth Fund Portfolio Fund
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ 1,752 $ - $ - $ 2,030 $ - $ 1,178
Dividends 1,624 - 5,735 - - 6,687
------------- ------------- ------------- ------------- ------------- -------------
3,376 - 5,735 2,030 - 7,865
Employee salary deferral
contributions 339,758 173,683 96,528 181,952 173,934 107,823
Employer contribution 247,953 - - - - -
Employee rollover
contributions 22,770 9,458 584 3,654 810 853
------------- ------------- ------------- ------------- ------------- -------------
Total additions 613,857 183,141 102,847 187,636 174,744 116,541
Withdrawals (16,197) (4,651) (3,426) (2,912) (1,952) (4,400)
Net appreciation/
(depreciation) in fair
value of investments 196,730 41,767 9,207 29,525 22,648 5,614
READS Transfer 29,379 110,981 39,315 135,278 131,017 153,808
Interfund transfers 258,089 26,299 (1,347) (687) (361) (5,373)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) 1,081,858 357,537 146,596 348,840 326,096 266,190
Net assets available for
benefits at beginning of
year 360,474 220,979 123,339 229,503 236,967 174,202
------------- ------------- ------------- ------------- ------------- -------------
Net assets available for
benefits 1,442,332 578,516 269,935 578,343 563,063 440,392
Transfer from ATR to Putnam - (578,516) (269,935) (578,343) (563,063) (440,392)
------------- ------------- ------------- ------------- ------------- -------------
Net assets available for
benefits at end of the year $ 1,442,332 $ - $ - $ - $ - $ -
============= ============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Short
Alex Brown First Colony Term Putnam
Cash Group Deposit Money Fund for Putnam Putnam
Reserve Administration Market Growth Income Vista
Fund Contract Account and Income Fund Fund
------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ 920 $ 6,307 $ - $ - $ - $ -
Dividends 3,379 - 73,849 48,658 2,580 37,384
------------- -------------- ------------- ------------- ------------- -------------
4,299 6,307 73,849 48,658 2,580 37,384
Employee salary deferral
contributions 54,185 49,803 - 183,871 42,763 181,257
Employer contribution - - - - - -
Employee rollover
contributions - 584 - 44,492 7,022 45,962
------------- -------------- ------------- ------------- ------------- -------------
Total additions 58,484 56,694 73,849 277,021 52,365 264,603
Withdrawals (2,606) (1,666) - (14,143) (5,795) (4,049)
Net appreciation/
(depreciation) in fair
value of investments - - - (25,752) (1,686) (31,676)
READS Transfer 148,705 55,898 - - - -
Interfund transfers (22,594) (2,123) (3,002,048) 508,666 174,823 449,794
------------- -------------- ------------- ------------- ------------- -------------
Net increase (decrease) 181,989 108,803 (2,928,199) 745,792 219,707 678,672
Net assets available for
benefits at beginning of
year 61,470 145,688 - - - -
------------- -------------- ------------- ------------- ------------- -------------
Net assets available for
benefits 243,459 254,491 (2,928,199) 745,792 219,707 678,672
Transfer from ATR to Putnam (243,459) (254,491) 2,928,199 - - -
------------- -------------- ------------- ------------- ------------- -------------
Net assets available for
benefits at end of the year $ - $ - $ - $ 745,792 $ 219,707 $ 678,672
============= ============== ============= ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
Putnam Putnam Putnam
OTC and International Stable
Emerging Growth Value Participant Grand
Growth Fund Fund Fund Loans Total
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $ - $ - $ - $ 2,901 $ 15,088
Dividends 51,277 7,632 5,228 - 244,033
------------- ------------- ------------- ------------- -------------
51,277 7,632 5,228 2,901 259,121
Employee salary deferral
contributions 249,660 138,123 86,405 - 2,059,745
Employer contribution - - - - 247,953
Employee rollover
contributions 67,682 53,948 4,931 - 262,750
------------- ------------- ------------- ------------- -------------
Total additions 368,619 199,703 96,564 2,901 2,829,569
Withdrawals (14,051) (8,662) (152,883) - (237,393)
Net appreciation/
(depreciation) in fair
value of investments (66,898) 11,655 - - 191,134
READS Transfer - - - - 804,381
Interfund transfers 531,155 382,777 690,438 12,492 -
------------- ------------- ------------- ------------- -------------
Net increase (decrease) 818,825 585,473 634,119 15,393 3,587,691
Net assets available for
benefits at beginning of
year - - - 28,315 1,580,937
------------- ------------- ------------- ------------- -------------
Net assets available for
benefits 818,825 585,473 634,119 43,708 5,168,628
Transfer from ATR to Putnam - - - - -
------------- ------------- ------------- ------------- -------------
Net assets available for
benefits at end of the year $ 818,825 $ 585,473 $ 634,119 $ 43,708 $ 5,168,628
============= ============= ============= ============= =============
</TABLE>
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
9. ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS TO INVESTMENT
PROGRAMS (CONTINUED)
<TABLE>
<CAPTION>
Year ended December 31, 1995
---------------------------------------------------------------------------------------------------
Sylvan Fidelity Fidelity
Learning MFS Advisor Advisor
Systems, Inc. Emerging Euro Pacific Equity Growth American
Common Growth Growth Portfolio Opportunities Balanced
Stock Fund Fund Growth Fund Portfolio Fund
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest $ 2,134 $ - $ 721 $ 10,331 $ 2,694 $ 5,157
Dividends - - 2,415 330 2,761 4,917
------------- ------------- ------------- ------------- ------------- -------------
2,134 - 3,136 10,661 5,455 10,074
Employee salary deferral
contributions 114,578 74,631 50,345 88,679 89,833 64,978
Employee rollover
contributions 34,701 46,015 11,813 31,298 50,756 32,235
------------- ------------- ------------- ------------- ------------- -------------
Total additions 151,413 120,646 65,294 130,638 146,044 107,287
Withdrawals (1,498) (152) (270) (1,975) (145) (1,714)
Net appreciation/
(depreciation) in fair
value of investments 108,695 39,512 8,043 30,471 32,927 17,287
Interfund transfers 29,464 60,973 50,272 28,154 58,141 10,831
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) 288,074 220,979 123,339 187,288 236,967 133,691
Net assets available for
benefits at beginning of
year 72,400 - - 42,215 - 40,511
------------- ------------- ------------- ------------- ------------- -------------
Net assets available for
benefits at end of the year $ 360,474 $ 220,979 $ 123,339 $ 229,503 $ 236,967 $ 174,202
============= ============= ============= ============= ============== =============
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
U.S.
Alex Brown Growth Investment Treasury
Cash Fund Company Money
Reserve of of Fund Participant
Fund America America of America loans
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $ - $ 68 $ - $ - $ 1,216
Dividends $ 3013 $ 11 888 - -
------------- ------------- ------------- ------------- -------------
3013 79 888 - 1,216
Employee salary deferral
contributions 15,060 - - - -
Employee rollover
contributions 7,473 - - - -
------------- ------------- ------------- ------------- -------------
Total additions 25,546 79 888 - 1,216
Withdrawals (3,908) (1,196) (726) - -
Net appreciation/
(depreciation) in fair
value of investments - 3,564 4,691 - -
Interfund transfers 39,832 (60,104) (136,143) (19,519) 12,928
------------- ------------- ------------- ------------- -------------
Net increase (decrease) 61,470 (57,657) (131,290) (19,519) 14,144
Net assets available for
benefits at beginning of
year - 57,657 131,290 19,519 14,171
------------- ------------- ------------- ------------- -------------
Net assets available for
benefits at end of the year $ 61,470 $ - $ - $ - 28,315
============= ============= ============= ============= =============
</TABLE>
<TABLE>
First Colony
Group Deposit
Administration
Contract Total
------------- -------------
<S> <C> <C>
Investment income:
Interest $ 8,925 $ 31,246
Dividends - 14,335
------------- -------------
8,925 45,581
Employee salary deferral
contributions 38,721 536,825
Employee rollover
contributions 22,094 236,385
------------- -------------
Total additions 69,740 818,791
Withdrawals (1,667) (13,251)
Net appreciation/
(depreciation) in fair
value of investments - 245,190
Interfund transfers (74,829) -
------------- -------------
(6,756) 1,050,730
Net increase (decrease)
Net assets available for
benefits at beginning of
year 152,444 530,207
------------- -------------
Net assets available for
benefits at end of the year $ 145,688 $ 1,580,937
============= =============
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Sylvan Learning Systems, Inc.
By /s/ B. Lee McGee
-------------------------------------
B. Lee McGee, Chief Financial Officer
Date June 27, 1997
----------------------------------
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
<S> <C> <C>
23.01 Consent of Independent Auditors
</TABLE>
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following Registration
Statements on Form S-8 of Sylvan Learning Systems, Inc. of our report dated June
20, 1997, with respect to the financial statements of Sylvan Learning Systems,
Inc. 401(k) Retirement Savings Plan, incorporated by reference in the amended
Sylvan Learning Systems, Inc. Annual Report (Form 10-K/A) for the year ended
December 31, 1996.
<TABLE>
<CAPTION>
Name Registration Number Date Filed
- ---- ------------------- -----------------
<S> <C> <C>
1987 - 1991 Employee Stock
Option Plan 33-77384 April 6, 1994
1993 Director Stock Option
Plan 33-77386 April 6, 1994
1993 Employee Stock
Option Plan 33-77390 April 6, 1994
1993 Management Stock
Option Plan 33-77388 April 6, 1994
1997 Employee Stock
Purchase Plan 333-21963 February 18, 1997
</TABLE>
/s/ Ernst & Young LLP
- ---------------------
Ernst & Young LLP
Baltimore, Maryland
June 25, 1997
