Sylvan Learning Systems, Inc. Reports Strong First Quarter Results

April 27, 2001

BALTIMORE–April 26, 2001– Sylvan Learning

Systems, Inc. (NASDAQ: SLVN) today announced financial

results for the quarter ended March 31, 2001.

Recent Financial and Business Highlights

  • First quarter 2001 EPS from continuing operations, excluding

    Sylvan Ventures, were $0.10 per share compared to $0.07 per

    share for the same quarter in 2000. These results were $0.02

    per share above the Company’s Outlook guidance of $0.08 per

    share, excluding Sylvan Ventures.

  • First quarter 2001 EPS from continuing operations, including

    Sylvan Ventures, were a loss of $0.31 per share.

  • As evidence of Sylvan’s reputation as a proven leader in

    education, Richard W. Riley, former U.S. Secretary of

    Education and former Governor of South Carolina, agreed to be

    nominated to serve on the boards of Sylvan Learning Systems

    and one of its subsidiaries, Sylvan International



  • Sylvan International Universities (SIU) announced total

    student enrollment growth of 45% at Universidad de Las

    Americas (UDLA), one of Chile’s leading private and fully

    accredited universities. The number of students enrolled at

    UDLA is now 7,925, compared to 5,454 students at the same time

    last year.

  • UDLA announced that it has opened a second campus in Santiago,

    Chile and has begun its first semester of instruction.

  • Universidad Europea de Madrid CEES, part of the SIU network,

    became Europe’s first known wireless campus with the

    introduction of a wireless local area network (LAN) developed

    in conjunction with Cisco Systems, Inc. This wireless campus

    offers students and faculty anytime, anywhere access to the

    Internet that will enhance the campus communities’

    communication, research capabilities, and access to

    educational resources.

  • To capture more of the growing global demand for English

    language instruction, Wall Street Institute (WSI) commenced

    operations in three new countries. WSI opened one new

    corporate-owned center and 15 new franchised centers


  • Canter, Sylvan’s teacher training subsidiary, announced an

    agreement with Walden University to offer a new specialization

    in elementary reading and literacy within Walden’s existing

    Master’s in Education.

  • Enrollment in Canter’s master’s degree programs grew to 8,900

    students, an increase of 25% from the same term last year.


  • Sylvan Learning Centers division reported that same store

    sales for the first quarter of 2001 continue to track at

    growth rates above the 10% level. For over nine consecutive

    years, Sylvan Learning Centers division has generated

    double-digit same store sales growth.

  • Sylvan Learning Centers reported that it opened 16 new

    franchised locations in the first quarter of 2001.

Sylvan Ventures

  • eSylvan completed development of and launched its online

    assessment tools, thereby allowing the Company to offer its

    interactive online tutoring programs nationwide. eSylvan is

    currently in a nationwide beta test and expects a national

    rollout of its complete online offering later this year.

  • iLearning signed several multi-year agreements including a

    six-year exclusive contract with the National Education

    Association (NEA) to develop an integrated, full-service

    education Internet portal that will offer a range of

    educational products and services to the more than 2.6 million

    NEA members.

  • Sylvan Ventures acquired a 41% interest in Walden University,

    a pioneer in the fast-growing distance and online learning

    market for adults. Walden, a fully accredited university,

    offers Ph.D. and other graduate-level degree programs to

    students nationwide.

Financial Results

Total revenues from continuing operations for the first quarter of

2001 were $120.4 million, an increase of 59% compared to total

revenues of $75.5 million in the first quarter of 2000. Total

operating income for the quarter, excluding Sylvan Ventures, was $6.4

million in the first quarter of 2001 compared to $6.3 million in the

first quarter of 2000.

Income from continuing operations after tax for the first quarter,

excluding Sylvan Ventures’ results, was $3.9 million, or $0.10 per

share on shares outstanding of 38.7 million. This compares to $3.8

million (on a full-year tax rate basis), or $0.07 per share on shares

outstanding of 51.6 million for the same period in 2000. Growth at

Sylvan Learning Centers and acquisitions at Sylvan International

Universities drove operating results in the first quarter of 2001.

For the quarter ended March 31, 2001, Sylvan reported a loss from

continuing operations of $11.6 million (including $15.5 million of

after tax losses associated with Sylvan Ventures and its portfolio

companies). Results for the previously announced dispositions of

Prometric and ASPECT are classified as discontinued operations in the

financial table that follows.

Total cash and marketable securities at the end of the quarter

stood at approximately $185 million, while total corporate debt stood

at approximately $45 million, excluding the $100 million convertible

debenture. The Company made its final tax payment relating to the gain

on the sale of Prometric in March of 2001.

Douglas Becker, Chairman and CEO, commented, “We are excited to

report that during the first quarter of 2001 each Sylvan business

division met or exceeded our expected operational and financial

milestones. This quarter demonstrates our ability to expand our

domestic and international businesses as well as deliver predictable

results. We are especially pleased with the strength of our Sylvan

International Universities division, which continues to show strong

student growth and improved financial visibility.”

Mr. Becker added, “Our strong performance this quarter puts us on

track for achieving our 2001 goals, particularly given the upcoming

second and fourth quarters, which are seasonally strong quarters for

our Sylvan International Universities division. We remain confident in

our year-end 2001 EPS guidance of $0.63 to $0.65 per share, excluding

Sylvan Ventures.”

Christopher Hoehn-Saric, Chairman and CEO, Sylvan Ventures,

stated, “The significant market adjustments that occurred in 2000

allowed us to take advantage of more reasonable valuations for

technology-based companies. This year, Sylvan Ventures is focused on

helping our existing portfolio companies develop and ensuring we

maintain financial flexibility as we seek additional investment


Second Quarter 2001 Outlook

The following statements are based on current expectations. These

statements are forward-looking, and actual results may differ


  • The Company anticipates total revenues of $119 to $127 million

    for the second quarter 2001.

  • Second quarter 2001 operating income excluding Sylvan Ventures

    is expected to be $14 to $16 million.

  • General and administrative expenses are expected to be

    approximately $6 million.

  • The Company currently believes that it will achieve EPS in the

    range of $0.20 to $0.21 per share for second quarter of 2001

    (excluding Sylvan Ventures).

Sylvan Learning Group – Expects $75 to $80 million in revenue with

approximately 20% operating margins

  • Sylvan Learning Centers expects revenues of $30 to $32 million

    with operating margins of approximately 25%.

  • Sylvan Education Solutions anticipates revenues of $33 to $35

    million with operating margins of approximately 20%. Included

    within Sylvan Education Solutions is Canter, which expects

    approximately 30% operating margins and revenues between $13

    and $14 million.

  • English Language Instruction revenues should range from $11 to

    $13 million with operating margins of approximately 5%.

Sylvan International Universities (SIU) – Anticipates $44 to $47

million in revenue, with operating margins of approximately 10%, after

the impact of SIU overhead.

Forward Looking Statements

This release includes information that could constitute

forward-looking statements made pursuant to the safe harbor provision

of the Private Securities Litigation Reform Act of 1995. Any such

forward-looking statements may involve risk and uncertainties.

Political, economic, currency, tax, regulatory, technological,

competitive and other factors could cause actual results to differ

materially from those anticipated in the forward-looking statements.

Additional information regarding these risk factors and uncertainties

is detailed from time to time in the Company’s filings with the

Securities and Exchange Commission, including but not limited to our

most recent Forms 10-K and 10-Q, available for viewing on our website.

(To access this information on our website, please click on “Investor

Relations,” “SEC Filings”).

Sylvan Learning Systems, Inc. ( builds profitable,

market-leading, learning networks on a global scale. Sylvan provides

courses to adult students throughout the world in the areas of English

language, teacher training and accredited university offerings through

the Wall Street Institute, Canter and Associates, and Sylvan

International Universities subsidiaries. The Sylvan Learning Centers

and Sylvan Education Services divisions provides personalized

instruction services to K-12 students through direct consumer

relationships and under contract to school systems.

Sylvan Learning Systems, Inc. and Subsidiaries

Consolidated Income Statements

(Thousands, except per share data)

Three Months Ended March 31,

2001 2000 % Variance

——— ———- ———-


Franchise Services $ 9,109 $ 7,596 20%


Learning Centers 14,715 11,114 32%

International 4,018 3,949 2%

——– ——– ——–

Learning Centers total 27,842 22,659 23%

——– ——– ——–

Sylvan At School 19,805 19,834 0%

Career Starters 1,806 803 125%

Canter 5,159 5,308 -3%

——– ——– ——–

Education Solutions total 26,770 25,945 3%

——– ——– ——–

English Language

Instruction total 13,017 12,435 5%

——– ——– ——–

Universidad Europea

de Madrid (UEM) 16,063 14,501 11%

Les Roches 3,345 – NA

Universidad de

Las Americas (UDLA) 2,728 – NA

Universidad del

Valle de Mexico (UVM) 30,681 – NA

——- ——– ——–


Universities total 52,817 14,501 NA

——- ——– ——-

Total Revenues 120,446 75,540 59%

——- ——– ——–

Operating Expense

Divisional Operating

Expenses – total 108,074 64,429 68%

General & Administrative 5,986 4,801 25%

——- ——- ——–

Total Operating Expenses 114,060 69,230 65%

Operating Income 6,386 6,310 1%

Non-Operating items

Interest & Other Income 3,132 2,721 15%

Interest Expense (2,229) (1,918) -16%

Equity in

Affiliates of Sylvan (126) (596) 79%

Minority Interest (1,420) (751) -89%

Exchange Gain/(Loss) 195 98 99%

——- ——- ——-

Total Non-Operating items (448) (446) 0%

Pretax Income (Loss)

before Sylvan Ventures 5,938 5,864 1%

Income Tax Expense (2,019) (1,458) -38%

Sylvan’s Interest

in Sylvan Ventures (1) (15,503) (997) NA

——– ——- ——-

Income (Loss) from

Continuing Operations (11,584) 3,409 NA

——- ——- ——-

Discontinued Operations:

Income (loss) from

operations of discontinued

operations, net of tax – (3,868) 100%

Gain (loss) on disposal

of discontinued operations,

after tax – 288,454 -100%

——– ——– ——

Net Income (Loss) $(11,584) $ 287,995 -104%

——– ——— ——

Earnings per share

Weighted Average

Shares Outstanding – Basic 37,441 50,802

Weighted Average

Shares Outstanding – Diluted 37,441 51,570

EPS – Net Income (Loss) ($0.31) $5.58

EPS – Continuing Operations ($0.31) $0.07

EPS – Operations prior

to Sylvan Ventures $0.10 $0.07

Weighted Average Shares

Used in Calculation 38,701 51,570

Operating Profit:

Learning Centers $5,690 $5,001 14%

Education Solutions $1,675 $1,867 -10%

English Language $688 $1,558 -56%

International Universities $4,319 $2,685 61%

(1) 2001 Ventures loss is presented net of tax benefit ($8,969)

and minority interest allocations ($1,291). 2000 Ventures loss is

presented net of tax benefit ($665).

Contact Information

Sylvan Contacts

Sean Creamer, 410/843-8991

Steve Drake, 410/843-6295

Chris Symanoskie, 410/843-6394