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PURSUANT TO RULE 424(B)(4)
REGISTRATION NO. 333-67727
DECEMBER 4, 1998
PROSPECTUS
614,135 Shares
SYLVAN LEARNING SYSTEMS, INC.
COMMON STOCK
___________
The shares of common stock of Sylvan Learning Systems, Inc. covered by this
Prospectus are outstanding shares which may be offered and sold by the
stockholders named herein. Sylvan 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 December 3, 1998, the last sale price for the common stock as
reported on the Nasdaq Stock Market was $27.5625 per share.
The selling stockholders may 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. 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.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is December 4 , 1998.
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AVAILABLE INFORMATION
Sylvan 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 Sylvan 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 Sylvan is quoted on the Nasdaq National
Market. Reports, proxy statements and other information concerning Sylvan 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 Sylvan 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 Sylvan with the Commission (File No. 0-
22844) pursuant to the 1934 Act are incorporated herein by reference:
(i) Annual Report on Form 10-K for the year ended December 31, 1997, as
amended by its Annual Report on Form 10-K/A;
(ii) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
(iii) Current Report on Form 8-K dated July 29, 1998, relating to the
restatement of Sylvan's consolidated financial statements for each of the three
years in the period ended December 31, 1997 and for the quarters ended March 31,
1998 and 1997 to give retroactive effect to Sylvan's merger with Aspect
International Language Schools, B.V. and subsidiaries ("Aspect");
(iv) Current Report on Form 8-K dated March 11, 1998, relating to the
restatement of Sylvan's selected financial data schedule to give effect to
Sylvan's adoption of Statement of Financial Accounting Standards No. 128,
Earnings Per Share as of December 31, 1997;
(v) the description of common stock contained in Item 4 of Sylvan's
Registration Statement on Form 8-A, filed with the Commission under the 1934
Act; and
(vi) all other documents filed by Sylvan 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.
Sylvan 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.
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THE COMPANY
Sylvan is the leading provider of educational services to families, schools
and industry. Sylvan provides lifelong educational services through three
divisions: Sylvan Learning Centers, Sylvan Prometric and Sylvan Contract
Educational Services. Sylvan Learning Centers provides personalized
instructional services to kindergarten through 12th grade students of various
skill levels. Sylvan Prometric provides computer-based testing for academic
admissions and professional and licensing certification programs. This division
includes Wall Street Institute and Aspect. Wall Street is a European-based
franchisor and operator of learning centers for English language instruction
that also administers certain computer-based testing programs throughout Europe
and Latin America. Aspect is a leading provider of international educational
programs, primarily English as a Second Language for students worldwide. Sylvan
Contract Educational Services provides educational services and professional
development through contracts with school systems and other organizations. This
division includes the operations of Canter and Associates, Inc. and Canter
Educational Products, Inc., a leading provider of materials and training
programs for educators. Sylvan delivers its services through approximately
3,000 educational and testing centers around the globe. In 1997, system-wide
revenues were approximately $448.0 million, composed of $193.6 million from
Sylvan Learning Centers ($162.4 million from franchised Learning Centers and
$31.2 million from Company-owned Learning Centers, product sales, franchise
sales fees and other franchise service revenues), $187.8 million from Sylvan
Prometric and $66.6 million from Sylvan Contract Educational Services. In
addition, Wall Street's franchise system generated approximately $85.0 million
of revenues in 1997.
Sylvan Learning Centers. This division 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 September 30, 1998, Sylvan or its franchisees
operated 710 Learning Centers. These centers are in 49 states, six Canadian
provinces, South Korea and Guam. As of that date, Sylvan owned and operated 63
Learning Centers, and more than 450 franchisees operated 647 Sylvan Learning
Centers.
Sylvan Prometric. As of September 30, 1998, Sylvan's testing business was
operated through more than 2,000 testing centers, approximately 1,100 of which
are located in the United States and Canada and the remainder of which are
located in more than 100 foreign countries. Sylvan Prometric's principal
customers are Educational Testing Services ("ETS") and, in the Information
Technology ("IT") industry, Microsoft Corp. and Novell, Inc. Sylvan provides
certification testing for its IT customers that have worldwide certification
programs for various professionals, such as network administrators and
engineers, service technicians and instructors, application specialists and
developers, and system administrators, operators and engineers. Sylvan has been
designated the exclusive commercial provider of computer-based tests
administered by ETS (excluding the SAT/PSAT and Achievement Test). As of
September 30, 1998, Sylvan operated 174 permanent and 88 temporary sites in more
than 100 countries to facilitate delivery of international testing for ETS.
Sylvan also provides testing services to organizations that license beginning
teachers, physicians, registered and practical nurses, pilots and aviation
mechanics and for organizations in many other fields, including computer
professionals, medical laboratory technicians and military candidates. Through
Sylvan's December 1996 acquisition of Wall Street Institute and its May 1998
acquisition of Aspect, Sylvan provides live and computer-based English
instruction in the U.S., Canada, Europe, Latin America and Australia.
Sylvan Contract Educational Services. As of September 30, 1998, Sylvan
provided educational services under federal and various state funding programs
to students in 152 public and 700 non-public schools. Sylvan provides remedial
educational services to public and non-public school systems. Sylvan expanded
these services through its May 1997 acquisition of I-R, Inc. and Independent
Child Study Teams, Inc. Sylvan's January 1998 acquisition of Canter, which
specializes in teacher training products and services, enhances Sylvan's teacher
development services for public and non-public school contracts and capitalizes
on the growing market for teacher training. Sylvan also 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 and Sylvan's Sylvan-At-Work
program.
Sylvan'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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USE OF PROCEEDS
All of the proceeds from the sale of the shares of Sylvan's common stock
offered hereby will be received by the selling stockholders. Sylvan 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 Sylvan's common stock by the person listed therein 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 Sylvan's common stock by
the selling stockholders after this offering, assuming that all shares of common
stock offered hereby are sold.
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<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Offering Shares To Owned After Offering
Name and Address of ------------------------------ Be Sold In -------------------------------
Beneficial Owner Number Percent Offering Number Percent
- ---------------------------------------- -------------- ------------ -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
The Chauncey Group International, Ltd./1/ 277,056 * 277,056 -0- *
664 Rosedale Road
Princeton, New Jersey 08540
Insurance Testing Corporation/2/ 258,246 * 258,246 -0- *
664 Rosedale Road
Princeton, New Jersey 08540
Barbara S. Stipek3 61,867 * 61,867 -0- *
5017 S.W. Orchard Lane
Portland, Oregon 97219
Congress & Co., as Escrow Agent/3/ 16,966 * 16,966 -0- *
Two International Place, 5th Floor
Boston, Massachusetts 02110
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* Less than 1%.
1. Pursuant to the Stock Purchase Agreement between The Chauncey Group
International, Ltd. ("Chauncey") and Sylvan dated September 9, 1998, Sylvan
acquired 52,632 shares of Chauncey's convertible preferred stock in exchange for
277,056 shares of Sylvan common stock.
2. Pursuant to the Asset Purchase Agreement by and between Sylvan and Insurance
Testing Corporation ("ITC") dated August 1, 1998, Sylvan acquired certain of
ITC's assets in exchange for 258,246 shares of Sylvan common stock.
3. Pursuant to the Stock Purchase Agreement by and among Barabara S. Stipek (the
"Stockholder") and Sylvan dated August 15, 1998 (the "Stock Purchase
Agreement"), Sylvan acquired all of the issued and outstanding capital stock of
Pacific Language Associates, Inc. in exchange for 78,833 shares of Sylvan's
common stock, 16,966 shares (the "Escrow Shares") of which were placed in two
escrow accounts. Each escrow account stands as security for claims made by
Sylvan against the Stockholder in respect of the representations, warranties and
covenants made by the Stockholder in the Agreement. The Escrow Shares may be
released to the Stockholder at specified times under the terms of the escrow
agreements. There can be no assurance, however, that any of the Escrow Shares
will be released to the Stockholder.
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PLAN OF DISTRIBUTION
Sylvan'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 (or their pledgees, donees, transferees or other successors in
interest) directly or through broker-dealers or underwriters who may act solely
as agents, or who may acquire the Shares as 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 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. From time to time, the selling
stockholders may engage in short sales, short sales against the box, puts and
calls and other transactions in securities of Sylvan or derivatives thereof, and
may sell and deliver the Shares in connection therewith or in settlement of
securities loans. From time to time, the selling stockholders may pledge their
Shares pursuant to the margin provisions of their customer agreements with their
respective brokers. Upon a default by the selling stockholders, the broker may
offer and sell the pledged shares from time to time. Sylvan 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.
Sylvan has agreed to bear the cost of preparing the Registration Statement of
which 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 Sylvan
by Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The consolidated financial statements of Sylvan at December 31, 1997 and
1996, and for each of the three years in the period ended December 31, 1997
appearing in the Current Report on Form 8-K dated July 29, 1998 of Sylvan have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report included therein and 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 years 1997, 1996 and 1995, is based in part
on the reports of Smith, Lange & Phillips, LLP and Deloitte & Touche,
independent auditors. Such consolidated financial statements are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing.
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<S> <C>
614,135 Shares
No person has been authorized by Sylvan
to give any information or to make any
representations other than those
contained in this Prospectus in SYLVAN LEARNING
connection with the offer contained in SYSTEMS, INC.
this Prospectus, and if given or made, Common Stock
such information or representations
may not be relied upon as having been
authorized by Sylvan. This Prospectus
does not constitute an offer to sell PROSPECTUS
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 December 4, 1998
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 Sylvan since the date
hereof.
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TABLE OF CONTENTS
PAGE
- ---------------------------------------------
Available Information............. 1
Incorporation of Certain
Documents by Reference......... 1
The Company....................... 2
Use of Proceeds................... 3
Selling Stockholders.............. 3
PLAN OF DISTRIBUTION.............. 4
Legal Matters..................... 4
Experts........................... 4
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