Sylvan Learning Systems, Inc. Reports Strong First Quarter Results
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
Universities.
Post-Secondary
-
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
worldwide.
-
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.
K-12
-
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
opportunities.”
Second Quarter 2001 Outlook
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially.
-
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. (www.sylvan.net) 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
——— ———- ———-
Revenues
Franchise Services $ 9,109 $ 7,596 20%
Company-owned
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
——- ——– ——–
International
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
