<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, 1998
-----------------
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 $1.4 billion as of March 15, 1999.
The registrant had 50,874,171 shares of Common Stock outstanding as of March 15,
1999.
1
<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 32
Consolidated Balance Sheets as of December 31, 1997 and December 31, 1998 33
Consolidated Statements of Income for the years ended December 31, 1996, 1997 and
1998 35
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996,
1997 and 1998 36
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1997
and 1998 37
Notes to Consolidated Financial Statements 38
Audited Financial Statements of Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
for the years ended December 31, 1997 and 1998 69
</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, 1998 and 1997, 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 Plan at
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for the purpose of
additional analysis and are not a required part of the financial statements but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of
the Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the financial statements and, in
our opinion, are fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst & Young LLP
Baltimore, Maryland
May 18, 1999
3
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
December 31
1998 1997
----------------------------------
<S> <C> <C>
Assets
Investments, at fair value:
Sylvan Learning Systems, Inc. common stock $ 3,943,030 $ 2,367,764
Mutual funds:
Putnam Growth and Income Fund 4,544,209 3,026,732
Putnam Income Fund 800,256 502,654
Putnam Vista Fund 2,631,343 1,422,560
Putnam OTC and Emerging Growth Fund 2,692,869 1,451,242
Putnam International Growth Fund 1,961,757 1,093,749
Putnam Stable Value Fund 1,363,532 821,854
Participant loans 188,357 132,026
----------------------------------
Total investments 18,125,353 10,818,581
Receivables:
Employer's contribution 481,692 315,022
Participants' contributions 352,867 233,990
----------------------------------
Total receivables 834,559 549,012
----------------------------------
Net assets available for benefits $18,959,912 $11,367,593
==================================
</TABLE>
See accompanying notes.
4
<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
1998 1997
---------------------------------------
Investment income:
<S> <C> <C>
Interest $ 13,089 $ 5,158
Dividends 828,402 618,831
---------------------------------------
841,491 623,989
Transfers from merged plans 1,534,999 1,728,244
Employee salary deferral contributions 4,126,018 2,708,641
Employer contribution 481,692 315,022
Employee rollover contributions 808,664 414,717
---------------------------------------
Total additions 7,792,864 5,790,613
Participant withdrawals (1,217,457) (384,206)
Net realized and unrealized appreciation in fair value
of investments 1,016,912 792,558
---------------------------------------
Net increase 7,592,319 6,198,965
Net assets available for benefits at beginning of year 11,367,593 5,168,628
---------------------------------------
Net assets available for benefits at end of year $18,959,912 $11,367,593
=======================================
</TABLE>
See accompanying notes.
5
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements
1. Significant Accounting Policies
Basis of Accounting
The financial statements of the Sylvan Learning Systems, Inc. (the "Company" or
"Plan Sponsor") Retirement Plan are prepared using the accrual method of
accounting.
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.
Investment Valuation
Investments are stated at fair 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 approximates fair
value.
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.
6
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
1. Significant Accounting Policies (continued)
Administration Expenses
All costs and expenses incurred in connection with the administration of the
Plan are paid by the Company.
2. 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 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 the Employee Retirement
Income Security Act of 1974 (ERISA).
Plan Mergers
In connection with the Company's acquisitions of Educational & Training
Consultants of PA, Inc. and Drake Prometric, L.P., the Education & Training
Consultants of PA, Inc. 401(k) Plan (the "ETC Plan") and the Drake Prometric,
L.P. 401(k) Plan (the "Drake Plan") were merged into the Plan effective May 1,
1998 and July 1, 1998, respectively. The ETC Plan's net assets of $258,545 and
the Drake Plan's net assets of $1,276,454 were transferred into the Plan on May
1, 1998 and July 1, 1998, respectively.
In connection with the Company's acquisitions of Inroads, Inc. and Carter
Holdings, the ICST Savings & Investment Plan (the "ICST Plan") and the Carter
Holdings 401(k) Plan (the "Carter Plan") were merged into the Plan effective
November 1, 1997 and October 1, 1997, respectively. The ICST Plan's net assets
of $1,628,807 and the Carter Plan's net assets of $99,437 were transferred into
the Plan on November 5, 1997 and October 2, 1997, respectively.
7
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
2. Plan Description (continued)
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. The matching contribution
percentage for 1997 and 1998 was 25% of the participant contribution. Additional
discretionary contributions may be made at the option of the Company. There were
no additional discretionary contributions made by the Company in 1998 or 1997.
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 20 percent
per year in years two through five and 20 percent after the first year of
service. A participant is 100 percent vested after five years of credited
service.
Investments
Upon enrollment in the Plan, a participant may direct employee contributions in
any of the available investment options. At December 31, 1998, 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.
8
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
2. Plan Description (continued)
Participant Loans
Participants may borrow from their account balances a minimum of $1,000 up to a
maximum of the lesser 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 a life annuity, joint and survivor annuity or
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. In the event of plan termination, participants will
become 100 percent vested in their accounts.
9
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments
During 1998 and 1997 the Plan's investments (including investments bought, sold
and held during the year) appreciated in fair value by $1,016,912 and $792,558
respectively, as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1998
-----------------------------------------
Net Appreciation
(Depreciation) in Fair Value
Fair Value at
During Year End of Year
-----------------------------------------
Fair value as determined by quoted market price:
<S> <C> <C>
Sylvan Learning Systems, Inc. common stock $ 427,352 $ 3,943,030
Mutual funds:
Putnam Growth and Income Fund 138,571 4,544,209
Putnam Income Fund (20,074) 800,256
Putnam Vista Fund 182,173 2,631,343
Putnam OTC and Emerging Growth Fund 116,319 2,692,869
Putnam International Growth Fund 172,571 1,961,757
Putnam Stable Value Fund - 1,363,532
Fair value as estimated by Plan Administrator:
Participant loans - 188,357
-----------------------------------------
$1,016,912 $18,125,353
=========================================
</TABLE>
10
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments (continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1997
----------------------------------------
Net Appreciation
(Depreciation) in Fair Value
Fair Value at
During Year End of Year
----------------------------------------
Fair value as determined by quoted market price:
<S> <C> <C>
Sylvan Learning Systems, Inc. common stock $ 610,263 $ 2,367,764
Mutual funds:
Putnam Growth and Income Fund (102,191) 3,026,732
Putnam Income Fund 4,735 502,654
Putnam Vista Fund 100,861 1,422,560
Putnam OTC and Emerging Growth Fund 127,075 1,451,242
Putnam International Growth Fund 51,815 1,093,749
Putnam Stable Value Fund - 821,854
Fair value as estimated by Plan Administrator:
Participant loans - 132,026
----------------------------------------
$ 792,558 $10,818,581
========================================
</TABLE>
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated June 2, 1997, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
5. Reconciliation of Form 5500
The financial statements at December 31, 1998 and 1997 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.
11
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
6. Year 2000 (Unaudited)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
year 2000 dates. The Plan Sponsor is taking a two phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Both internal and external resources are being utilized to replace or
modify existing software applications, and test the software and equipment for
the year 2000 modifications. The Plan Sponsor has substantially completed this
phase of the project. Costs associated with modifying software and equipment are
not estimated to be significant and will be paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they are year 2000 compliant. If modification of data processing systems of
either the Plan, the Plan Sponsor, or its service providers are not completed
timely, the year 2000 problem could have a material impact on the operations of
the Plan. Plan management has not developed a contingency plan, because they
are confident that all systems will be year 2000 ready.
12
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
7. Allocation of Net Assets Available for Benefits to Investment Programs
<TABLE>
<CAPTION>
December 31, 1998
------------------------------------------------------------------
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 $3,943,030 $4,544,209 $800,256 $2,631,343 $2,692,869
Employer's contributions
receivable 481,692 -- -- -- --
Participants' contributions
receivable 67,018 82,392 17,675 63,975 59,440
------------------------------------------------------------------
Net assets available for
benefits $4,491,740 $4,626,601 $817,931 $2,695,318 $2,752,309
==================================================================
<CAPTION>
December 31, 1997
------------------------------------------------------------------
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 $2,367,764 $3,026,732 $502,654 $1,422,560 $1,451,242
Employer's contributions
receivable 315,022 -- -- -- --
Participants' contributions
receivable 38,248 47,361 10,993 41,492 50,629
------------------------------------------------------------------
Net assets available for
benefits $2,721,034 $3,074,093 $513,647 $1,464,052 $1,501,871
==================================================================
<CAPTION>
December 31, 1998
-----------------------------------------------------
Putnam Putnam
International Stable
Growth Value Participant
Fund Fund Loans Total
-----------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Investments, at fair value $1,961,757 $1,363,532 $188,357 $18,125,353
Employer's contributions
receivable -- -- -- 481,692
Participants' contributions
receivable 44,285 18,082 -- 352,867
-----------------------------------------------------
Net assets available for
benefits $2,006,042 $1,381,614 $188,357 $18,959,912
=====================================================
<CAPTION>
December 31, 1997
-------------------------------------------------------
Putnam Putnam
International Stable
Growth Value Participant
Fund Fund Loans Total
-------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Investments, at fair value $1,093,749 $821,854 $132,026 $10,818,581
Employer's contributions
receivable -- -- -- 315,022
Participants' contributions
receivable 32,066 13,201 -- 233,990
-------------------------------------------------------
Net assets available for
benefits $1,125,815 $835,055 $132,026 $11,367,593
=======================================================
</TABLE>
13
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
8. Allocation of Changes in Net Assets Available for Benefits to Investment
Programs
<TABLE>
<CAPTION>
Year Ended December 31, 1998
-----------------------------------------------------------
Sylvan Putnam
Learning Putnam OTC and
Systems, Inc. Fund for Putnam Putnam Emerging
Common Growth Income Vista Growth
Stock and Income Fund Fund Fund
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $ -- $ -- $ -- $ -- $ --
Dividends -- 388,747 42,977 190,417 83,980
-----------------------------------------------------------
-- 388,747 42,977 190,417 83,980
Transfers from merged plans -- 530,687 34,248 7 343,265
Employee salary deferral
contributions 783,632 963,395 206,667 748,052 695,029
Employer contribution 481,692 -- -- -- --
Employee rollover contributions 143,358 139,254 34,082 195,012 190,568
-----------------------------------------------------------
Total additions 1,408,682 2,022,083 317,974 1,133,488 1,312,842
Participant withdrawals (137,695) (561,195) (67,683) (120,564) (122,266)
Net realized and unrealized
appreciation (depreciation) in
fair value of investments 427,352 138,571 (20,074) 182,173 116,319
Interfund transfers 72,367 (46,951) 74,067 36,169 (56,457)
-----------------------------------------------------------
Net increase 1,770,706 1,552,508 304,284 1,231,266 1,250,438
Net assets available for benefits
at beginning of year 2,721,034 3,074,093 513,647 1,464,052 1,501,871
-----------------------------------------------------------
Net assets available for benefits
at end of the year $4,491,740 $4,626,601 $817,931 $2,695,318 $2,752,309
===========================================================
<CAPTION>
Year ended December 31, 1998
----------------------------------------------------
Putnam Putnam
International Stable
Growth Value Participant
Fund Fund Loans Total
----------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Interest $ -- $ -- $ 13,089 $ 13,089
Dividends 56,437 65,844 -- 828,402
----------------------------------------------------
56,437 65,844 13,089 841,491
Transfers from merged plans 155,056 456,894 14,842 1,534,999
Employee salary deferral
contributions 517,817 211,426 -- 4,126,018
Employer contribution -- -- -- 481,692
Employee rollover contributions 75,326 31,064 -- 808,664
----------------------------------------------------
Total additions 804,636 765,228 27,931 7,792,864
Participant withdrawals (112,959) (71,824) (23,271) (1,217,457)
Net realized and unrealized
appreciation (depreciation) in
fair value of investments 172,571 -- -- 1,016,912
Interfund transfers 15,980 (146,846) 51,671 --
----------------------------------------------------
Net increase 880,228 546,558 56,331 7,592,319
Net assets available for benefits
at beginning of year 1,125,815 835,055 132,026 11,367,593
----------------------------------------------------
Net assets available for benefits
at end of the year $2,006,043 $1,381,613 $188,357 $18,959,912
====================================================
</TABLE>
14
<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, 1997
---------------------------------------------------------------------
Sylvan Putnam Putnam
Learning Fund for OTC and
Systems, Inc. Growth Putnam Putnam Emerging
Common and Income Vista Growth
Stock Income Fund Fund Fund
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest $ -- $ -- $ -- $ -- $ --
Dividends -- 391,330 22,024 106,770 36
---------------------------------------------------------------------
-- 391,330 22,024 106,770 36
Transfers from merged plans -- 1,367,648 173,932 71,417 --
Employee salary deferral
contributions 442,756 548,246 127,252 480,311 586,072
Employer contribution 315,022 -- -- -- --
Employee rollover contributions 21,625 136,619 12,715 73,579 87,360
---------------------------------------------------------------------
Total additions 779,403 2,443,843 335,923 732,077 673,468
Withdrawals (65,715) (57,490) (15,414) (62,561) (73,735)
Net appreciation (depreciation) in
fair value of investments 610,263 (102,191) 4,735 100,861 127,075
Interfund transfers (45,249) 44,139 (31,304) 15,003 (43,762)
---------------------------------------------------------------------
Net increase (decrease) 1,278,702 2,328,301 293,940 785,380 683,046
Net assets available for benefits at
beginning of year 1,442,332 745,792 219,707 678,672 818,825
---------------------------------------------------------------------
Net assets available for benefits at
end of the year $2,721,034 $3,074,093 $513,647 $1,464,052 $1,501,871
=====================================================================
<CAPTION>
Year ended December 31, 1997
------------------------------------------------------
Putnam Putnam
International Stable
Growth Value Participant
Fund Fund Loans Totals
------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Interest $ -- $ -- $ 5,158 $ 5,158
Dividends 63,648 35,023 -- 618,831
------------------------------------------------------
63,648 35,023 5,158 623,989
Transfers from merged plans 13,646 101,601 -- 1,728,244
Employee salary deferral
contributions 371,193 152,811 -- 2,708,641
Employer contribution -- -- -- 315,022
Employee rollover contributions 82,569 250 -- 414,717
------------------------------------------------------
Total additions 531,056 289,685 5,158 5,790,613
Withdrawals (47,419) (61,872) -- (384,206)
Net appreciation (depreciation) in
fair value of investments 51,815 -- -- 792,558
Interfund transfers 4,890 (26,877) 83,160 --
------------------------------------------------------
Net increase (decrease) 540,342 200,936 88,318 6,198,965
Net assets available for benefits at
beginning of year 585,473 634,119 43,708 5,168,628
------------------------------------------------------
Net assets available for benefits at
end of the year $1,125,815 $835,055 $132,026 $11,367,593
======================================================
</TABLE>
15
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
EIN: 52-1492296
Plan # 001
Line 27a--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Description of Investment
Including Maturity Date,
Identity of Issue, Borrower, Rate of Interest, Par or Current
Lessor or Similar Party Maturity Value Cost Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sylvan Learning Systems, Inc.** 129,277 shares of Common Stock $ 2,702,757 $ 3,943,030
Mutual Funds:**
Putnam Growth and Income Fund 221,777 shares 4,538,160 4,544,209
Putnam Income Fund 115,645 shares 817,456 800,256
Putnam Vista Fund 201,327 shares 2,397,148 2,631,343
Putnam OTC and Emerging
Growth Fund 156,108 shares 2,500,646 2,692,869
Putnam International Growth
Fund 102,016 shares 1,747,406 1,961,757
Putnam Stable Value Fund 1,363,532 shares 1,363,532 1,363,532
Participant loans 188,357 principal balance,
various rates and maturities -- 188,357
---------------------------------
Total investments $16,067,105 $18,125,353
=================================
</TABLE>
** Party-in-interest
16
<PAGE>
Sylvan Learning Systems, Inc. 401(k) Retirement Savings Plan
EIN: 52-1492296
Plan # 001
Line 27d--Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
(a) (h)
Identity Current Value
of Party (c) Purchase (d) Selling (g) Cost of of Asset on (i) Net Gain
Involved (b) Description of Assets Price Price Asset Transaction Date or (Loss)
- ---------------------------------------------------------------------------------------------------------------------------
Category (iii)--series of transactions in excess of 5% of plan assets
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Putnam Growth & Income $1,598,993 $ -- $1,598,993 $1,598,993 $ --
Putnam Growth & Income -- 750,774 751,042 750,774 (268)
Putnam Vista 1,218,365 -- 1,218,365 1,218,365 --
Putnam Vista -- 191,762 180,737 191,762 11,025
Putnam OTC & Emerging Growth 1,004,275 -- 1,004,275 1,004,275 --
Putnam OTC & Emerging Growth -- 222,234 224,711 222,234 (2,477)
Putnam International Growth 675,950 -- 675,950 675,950 --
Putnam International Growth 135,569 122,404 135,569 13,165
Putnam Stable Value 413,414 -- 413,414 413,414 --
Putnam Stable Value -- 328,630 328,630 328,630 --
* Sylvan Learning Systems
common stock 1,412,235 -- 1,412,235 1,412,235 --
* Sylvan Learning Systems
common stock -- 264,402 203,692 264,402 60,710
</TABLE>
* Transactions made on the market.
There were no category (i), (ii), or (iv) reportable transactions during 1998.
Column (e) is not applicable.
Column (f) is not applicable as the commissions and fees related to purchases
and sales of investments are included in the proceeds from the sale and are not
separately identified by the trustee.
17
<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 25, 1999
18
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -------------------------------
23.01 Consent of Independent Auditors
19
