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Previous: MORGAN STANLEY HIGH YIELD FUND INC, NSAR-B, 1998-03-12 |
Next: BOYDS WHEELS INC, 8-K, 1998-03-12 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 11, 1998
----------------------------
SYLVAN LEARNING SYSTEMS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 0-22844 52-1492296
- ------------------------ ------------------------ ----------------------
(State of Incorporation) (Commission File Number) (IRS Employer
Identification Number)
1000 Lancaster Street
Baltimore, Maryland 21202
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(410) 843-8000
--------------
(Registrant's telephone number)
<PAGE>
Item 5. Other Events.
The selected consolidated financial data schedule of Sylvan Learning Systems,
Inc. ("the Company") for each of the five years in the period ended December 31,
1996 and the Company's selected consolidated financial data schedule for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997 attached
hereto as Exhibits, have been restated to give retroactive effect to the
Company's adoption of Statement of Financial Accounting Standards No. 128
Earnings Per Share, as of December 31, 1997.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA(1)
<TABLE>
<CAPTION>
PARTNERSHIP
AND SYLVAN
PARTNERSHIP COMBINED SYLVAN
------------ ------------ -----------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------ ------------ -----------------------------------------
1992 1993 1994 1995 1996
-------- ------- -------- --------- --------
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Revenues $ 33,821 $51,519 $68,748 $111,059 $181,936
Cost and expenses:
Direct costs 28,840 44,056 60,388 96,708 150,449
General and
administrative expense 5,433 6,255 4,998 6,206 8,755
Loss on impairment of assets -- -- -- 3,316 --
-------- ------- -------- --------- --------
Total expenses 34,273 50,311 65,386 106,230 159,204
-------- ------- -------- --------- --------
Operating income (loss) (452) 1,208 3,362 4,829 22,732
Non-operating income (expense) 1 (116) 224 391 363
Interest income (expense), net (594) (1,290) (62) (1,440) 551
-------- ------- -------- --------- --------
Income (loss) from
continuing operations
before income taxes and
extraordinary items (1,045) (198) 3,524 3,780 23,646
Income taxes (16) (7) (76) (209) (8,850)
-------- ------- -------- --------- --------
Income (loss) from
continuing operations
before extraordinary
items (1,061) (205) 3,448 3,571 14,796
Discontinued operations(2):
Loss from operations,
net of tax (1,700) (375) -- -- --
Gain on disposal 427 580 -- -- --
-------- ------- -------- --------- --------
Income (loss) from
discontinued operations (1,273) 205 -- -- --
-------- ------- -------- --------- --------
Net income (loss) before
extraordinary items (2,334) -- 3,448 3,571 14,796
Extraordinary items(3) -- (177) -- -- --
-------- ------- -------- --------- --------
Net income (loss) (2,334) $ (177) $ 3,448 $ 3,571 $ 14,796
======== ======= ======== ========= ========
Earnings (loss) per common share(4)(5):
Income (loss) from continuing
operations before extraordinary
items $ (0.03) $ 0.24 $0.24 $ 0.64
Income from discontinued
operations 0.03 -- -- --
Extraordinary items (0.03) -- -- --
------- -------- --------- --------
Net income per common share $ (0.03) $ 0.24 $0.24 $ 0.64
======= ======== ========= ========
Earnings (loss) per common share -
assuming dilution(4)(5):
Income (loss) from continuing
operations before extraordinary
items $ (0.03) $ 0.21 $0.21 $ 0.60
Income from discontinued
operations 0.03 -- -- --
Extraordinary items (0.03) -- -- --
------- -------- --------- --------
Net income per common share -
assuming dilution $ (0.03) $ 0.21 $0.21 $ 0.60
======= ======== ========= ========
Weighted average shares
outstanding(4):
Basic 6,448 14,522 15,132 23,029
======= ======== ========= ========
Diluted 6,448 16,286 17,079 24,586
======= ======== ========= ========
BALANCE SHEET DATA (AT
PERIOD END):
Cash and cash equivalents $ 673 $11,499 $ 4,366 $ 2,903 $ 11,198
Available-for-sale securities 127 1,248 2,537 30,735 16,449
Net working capital (deficit) (3,302) 12,665 13,166 39,407 29,603
Intangible assets and
deferred contract costs 149 7,000 7,932 82,849 122,932
Total assets 18,446 42,003 50,046 174,070 259,590
Long-term debt and
capital leases 5,578 6,640 9,814 9,854 32,228
Stockholders' or
partners' equity 326 24,563 32,481 137,148 180,323
</TABLE>
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA (1)
<TABLE>
<CAPTION>
SYLVAN
---------------------------------------
THREE MONTHS
ENDED
---------------------------------------
March 31, June 30, September 30,
1997 1997 1997
---- ---- ----
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Revenues $ 51,944 $ 57,596 $ 58,464
Cost and expenses:
Direct costs 43,630 61,931 44,013
General and
administrative expense 2,961 9,913 3,664
Loss on impairment of assets -- 4,000 --
--------- --------- ---------
Total expenses 46,591 75,844 47,677
--------- --------- ---------
Operating income (loss) 5,353 (18,248) 10,787
Non-operating income (expense) (128) 28,241 (461)
Interest income (expense), net 480 658 1,254
--------- --------- ---------
Income before income taxes 5,705 10,651 11,580
Income taxes (2,258) (3,957) (4,053)
--------- --------- ---------
Net income $ 3,447 $ 6,694 $ 7,527
========= ========= =========
Net income per common share (4):
Basic $ 0.14 $ 0.26 $ 0.27
========= ========= =========
Diluted $ 0.13 $ 0.25 $ 0.26
========= ========= =========
Weighted average shares
outstanding (4):
Basic 25,379 25,499 27,746
========= ========= =========
Diluted 27,251 27,109 29,255
========= ========= =========
BALANCE SHEET DATA (AT
PERIOD END):
Cash and cash equivalents $ 12,789 $ 29,883 $ 29,624
Available-for-sale securities 10,730 10,081 80,523
Net working capital 40,228 55,369 132,922
Intangible assets and
deferred contract costs 120,948 119,031 116,652
Total assets 260,380 278,829 368,616
Long-term debt and
capital leases 22,524 7,140 926
Stockholders' or
partners' equity 201,880 233,250 326,582
</TABLE>
<PAGE>
- ---------
(1) Prior to February 1, 1991, the Sylvan Learning Centers business was
conducted by Sylvan Learning Corporation (the "Predecessor"). On February 1,
1991, the Predecessor contributed the Sylvan Learning Centers business to
Sylvan KEE Systems, a Maryland general partnership (the "Partnership") in
exchange for a 50% partnership interest, and Sylvan contributed its computer
training software development business to the Partnership in exchange for
the other 50% partnership interest. On January 26, 1993, Sylvan acquired the
Predecessor and dissolved the Partnership. On September 3, 1993, Sylvan sold
its computer training software development business.
During 1994, Sylvan acquired by mergers all of the outstanding stock of
Learning Services, Inc. ("LSI") and Loralex Corporation ("Loralex"). These
companies owned and operated a total of nine Sylvan Learning Centers located
in the Northeast United States and Florida. On February 17, 1995, Sylvan
acquired by merger all of the outstanding stock of Remedial Education and
Diagnostic Services, Inc. and READS, Inc. (collectively, "READS"), a
Philadelphia-based provider of remedial, education and a variety of
consulting services to school districts, county-wide educational agencies
and municipalities in the Eastern United States. The READS, Loralex and LSI
acquisitions have been accounted for by Sylvan as poolings-of-interests and,
accordingly, Sylvan's financial statements have been restated for all
periods presented to include the results of operations of READS, Loralex and
LSI.
Effective September 30, 1995 Sylvan acquired Drake Prometric, L.P.
("Drake"), a leading provider of computer-based certification, licensure and
assessment testing. The transaction was accounted for using the purchase
method of accounting, and Sylvan's results of operations from October 1,
1995 include the operations of Drake.
Effective December 1, 1996, Sylvan acquired Wall Street Institute
International, B.V., and its commonly controlled affiliates (collectively
"Wall Street"), a European-based franchisor and operator of learning centers
that teach the English language. This transaction was accounted for using
the purchase method of accounting and Sylvan's results of operations from
December 1, 1996 include the operations of Wall Street. Sylvan paid $4.9
million of the $20.1 million purchase price in cash and the remainder in
714,884 shares of Common Stock.
On May 30, 1997, the Company consummated its acquisition by merger of all of
the outstanding common stock of Educational Inroads. Educational Inroads
provided contract educational services to school districts in New Jersey and
several other states. The Educational Inroads acquisition has been accounted
for by Sylvan as a pooling-of-interests and, accordingly, Sylvan's financial
statements have been restated for all periods prior to the acquisition to
include the results of operations of Educational Inroads. Educational
Inroads generated revenues of $24.8 million in 1996.
<PAGE>
(2) Represents Sylvan's computer training software development business which
was sold in September 1993 and a Canadian computer training business,
80.1% of which was sold in 1992.
(3) Represents the $350,000 gain on extinguishment of a $3.5 million debt to
Learning Centers, Inc., and a $527,000 loss on an extinguishment of $5.0
million of notes payable to stockholders, each recorded in 1993.
(4) All share and per share data have been restated to retroactively reflect a
3-for-2 stock split of the Company's common stock for stockholders of
record on November 7, 1996.
(5) The following table sets forth the reconciliation of the numerators and
denominators used in the computation of basic and diluted earnings per share
for the financial statements presented for the most recent three years:
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Numerator for basic and diluted earnings per share:
Net Income $ 3,448 $ 3,571 $14,796
======= ======= =======
Denominator:
Denominator for basic earnings per share -
weighted average shares 14,522 15,132 23,029
Effect of dilutive securities:
Employee stock options 1,764 1,851 1,379
Common stock contingently issuable -- 96 178
------- ------- -------
Total dilutive potential common shares 1,764 1,947 1,557
Denominator for diluted earnings per share -
weighted average shares and assumed
conversions 16,286 17,079 24,586
======= ======= =======
Basic earnings per share $ 0.24 $ 0.24 $ 0.64
======= ======= =======
Diluted earnings per share $ 0.21 $ 0.21 $ 0.60
======= ======= =======
</TABLE>
<PAGE>
SIGNATURES
----------
Pursuant to the requirements 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.
Date: March 11, 1998 SYLVAN LEARNING SYSTEMS, INC.
By: /s/ B. Lee McGee
------------------------------------------
B. Lee McGee, Executive Vice
President and Chief Financial Officer
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