Sylvan Learning Systems, Inc. Reports Record Fourth Quarter And Year End 1998 Financial Results.BALTIMORE--(BUSINESS WIRE)--Feb. 25, 1999--Sylvan Learning Systems, Inc. (NASDQ: SLVN) today announced record revenues and earnings for the fourth quarter and year ended December December: see month. 31, 1998, meeting analyst expectations. Total revenues for the fourth quarter of 1998 were $145.0 million, an increase of 49% compared to revenues of $97.5 million in the fourth quarter of 1997. The revenue increase is 38% excluding revenue from businesses acquired in 1998 and therefore not included in 1997 results. For the fourth quarter of 1998, Sylvan sylvan emanating from or pertaining to woods. See also sylvatic. reported net income of $19.6 million or $0.37 per share on diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding of 53.3 million, compared to net income of $10.9 million or $0.22 per share on diluted shares outstanding of 49.0 million in the 1997 quarter. The fourth quarter of 1997 included $4.3 million of non-recurring expenses related to the ASPECT acquisition without which the 1997 net income would have been approximately $4.0 million higher. Revenues for the year ended December 31, 1998 increased 47% to $440.3 million compared to revenues for the same period in 1997. The increase is 32 % excluding revenue from businesses acquired during 1998, and therefore not included in 1997 results. Net income for the year ended December 31, 1998 was $35.7 million, or $0.70 per share, on diluted shares outstanding of 51.3 million, compared to net income of $27.6 million, or $0.62 per share, on diluted shares outstanding of 44.8 million for the same period in 1997. However, as disclosed in the second quarter of 1998, the ASPECT acquisition-related costs significantly reduced the 1998 net income and earnings per share. Furthermore, in 1997 net income benefited from (i) approximately $3.0 million in non-recurring pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. resulting from the NEC (NEC Corporation, Tokyo, www.nec.com, www.necus.com) An electronics conglomerate known in the U.S. for its monitors. In Japan, it had the lion's share of the PC market until the late 1990s (see PC 98). NEC was founded in Tokyo in 1899 as Nippon Electric Company, Ltd. acquisition termination income net of non-recurring costs, as previously disclosed, and (ii) the $5.4 million in non- non- word element [L.]not . non- pref. Not: noninvasive. recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. costs for ASPECT in 1997. If the one-time costs and income were excluded from net income in 1997 and 1998 growth would be 45 %. The impact of the ASPECT acquisition-related costs to the year ended December 31, 1998 was a reduction to pretax income of $9.9 million. Sylvan's net income for the year ended December 31, 1998, excluding the costs noted, would have been approximately $44.5 million, or $0.87 per share on diluted shares of 51.3 million. The net income for the year ended December 31, 1997 restated for the $3.0 million in non- recurring pretax income and $5.4 million in non-recurring costs, as previously noted, would have been approximately $30.7 million, or $0.69 per share, on diluted shares outstanding of 44.8 million. Each of Sylvan's business divisions contributed to the revenue growth for the 1998 fourth quarter. The Learning Center division revenues increased $7.6 million to $20.7 million for the fourth quarter of 1998, an increase of 58% compared to the 1997 quarter. This increase was 34% excluding business acquired in 1998 and therefore not included in 1997 results. Same center revenues for company-owned centers grew by 20% for the fourth quarter of 1998 compared to the 1997 quarter, and same center franchise royalties grew by 18% for the same period. Franchise sales fees increased $2.1 million to $4.4 million for the fourth quarter 1998 compared to 1997 primarily due to the sale of a development agreement for the United Kingdom. The Contract Education Services division revenues increased $11.6 million, or 56%, to $32.3 million for the 1998 fourth quarter compared to the 1997 quarter. This increase is the result of $7.6 million in revenues from The Canter canter a gallop at an easy pace. The rhythm is three-time, first one hind, then the opposite hind with the diagonal fore, then the opposite fore, the leading limb. collected canter Group, acquired in January of 1998, and a 38% increase in revenues from public and non-public school contracts. The increases are offset by a $1.8 million decrease in revenues from the PACE adult training business. Revenues from the Sylvan Prometric testing division increased by $28.2 million to $91.9 million in the fourth quarter of 1998 compared to 1997. The increase resulted from revenue increases from our English language English language, member of the West Germanic group of the Germanic subfamily of the Indo-European family of languages (see Germanic languages). Spoken by about 470 million people throughout the world, English is the official language of about 45 nations. instruction businesses, Wall Street Institute and ASPECT, and volume increases in Academic admissions, Information Technology and Professional certification Professional certification, trade certification, or professional designation, often called simply certification or qualification, is a designation earned by a person to assure that he/she is qualified to perform a job or task. testing. Academic admissions testing revenues increased 48% in the fourth quarter 1998 compared to the 1997 quarter primarily due to volume increases in the Graduate Record Exam (GRE (Generic Routing Encapsulation) A tunneling protocol developed by Cisco that allows network layer packets to contain packets from a different protocol. It is widely used to tunnel protocols inside IP packets for virtual private networks (VPNs). ) and initial rollout of Test of English as a Foreign Language (TOEFL TOEFL A trademark for a standardized examination for proficiency in English as a foreign language. ) exams. Information Technology certification test revenues increased 60% in the fourth quarter 1998 compared to the 1997 quarter. Professional certification revenues increased 26% for the 1998 quarter compared to the 1997 quarter. Educational Testing Service The Educational Testing Service (or ETS) is the world's largest private educational testing and measurement organization, operating on an annual budget of approximately $1.1 billion on a proforma basis in 2007. international revenues grew 90% to $12.8 million in the fourth quarter 1998. Douglas Becker Douglas Becker is a choreographer and teacher working in many idioms, including contemporary ballet and improvisation throughout Europe and the United States. A founding member and principal dancer of the Frankfurt Ballet, where he performed with distinction for over 10 years under , Co-Chief Executive Officer, stated, "We are very pleased with our strong fourth quarter and 1998 year end results. The growth in our Testing business in all testing categories was excellent, highlighted by the implementation of the Test of English as a Foreign Language (TOEFL) computer based test that began in the third quarter. We expect the growth to continue based on the announcements of securing the United Kingdom drivers licensing exam that begins in January of the year 2000 and the full implementation of the National Board of Medical Examiners A public official charged with investigating all sudden, suspicious, unexplained, or unnatural deaths within the area of his or her appointed jurisdiction. A medical examiner differs from a Coroner in that a medical examiner is a physician. testing which began in early 1999. Additionally, our joining with Chauncey (the for profit subsidiary of Educational Testing Service) to aggressively pursue state based testing was another significant accomplishment for this division. In our Learning Center division we continue to see strong same center revenue growth in both Franchised and Company owned centers which were 18% and 16%, respectively, for 1998. In 1998 we made our first significant investment outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. in the tutorial An instructional book or program that takes the user through a prescribed sequence of steps in order to learn a product. Contrast with documentation, which, although instructional, tends to group features and functions by category. See tutorials in this publication. learning business with the acquisition of Schulerhilfe (a German tutorial company) which we feel is a platform for expansion of the tutorial business overseas. Our Contract Services business continued its expansion to eleven new school districts in 1998. The acquisition of Canter, our teacher training business, in January 1998 has been very successful with the company exceeding our expectations for the year. With the momentum we have in each business unit, we can expect 1999 to be an exciting year for Sylvan." In December 1998, the company secured a $100 million five year Revolving Credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. Facility with market terms. The lead bank was Bankers Trust The Bankers Trust is a historic American banking organisation that was acquired by Deutsche Bank in 1998. It was originally set up when banks could not perform trust company services. Company with NationsBank, N.A. as Syndication See syndication format. Agent. Participating banks include ABN AMRO ABN AMRO Algemene Bank Nederland-Amsterdam Roterdam Bank (Dutch bank) , First Union, First National Bank of Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). and Crestar Bank. This credit facility is expected to be used for acquisitions. B. Lee McGee, Executive Vice President and CFO See Chief Financial Officer. , announced that Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs B. McCord has been promoted to Sr. Vice President of Corporate Finance. Mr. McCord, who will report to Mr. McGee, will manage the Sylvan corporate accounting and finance department and will have the divisional Vice Presidents of finance reporting to him. Mr. McGee stated, "Tom has been the CFO of our Sylvan Prometric division since early 1996 and has done an outstanding job as a member of the senior management team of the division. Tom brings strong financial and operational skills to this position. Before coming to Sylvan Tom was the CFO of a public company for five years and prior to that worked in various significant finance roles with McCormick and Company for twenty years TWENTY YEARS. The lapse of twenty years raises a presumption of certain facts, and after such a time, the party against whom the presumption has been raised, will be required to prove a negative to establish his rights. 2. . As a result of Tom's new position, I am looking forward to having more time to dedicate ded·i·cate tr.v. ded·i·cat·ed, ded·i·cat·ing, ded·i·cates 1. To set apart for a deity or for religious purposes; consecrate. 2. to investor communication and other strategic financial matters." Sylvan Learning Sylvan Learning (formerly Sylvan Learning Center) is a chain of franchised tutoring centers which provide personalized tutoring in reading, writing, mathematics, study skills and test-prep for college entrance and state exams. Systems, Inc. is the leading provider of educational services to families, schools and industry. The company provides lifelong educational services through three divisions: The Sylvan Prometric division delivers computer- based testing for academic admissions, Information Technology and professional certification programs; the Sylvan Learning Centers division provides personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. instructional services to students of all ages and skill levels; and the Sylvan Contract Educational Services division provides supplemental educational services under contract to school systems and other organizations. Sylvan subsidiaries include the PACE Group, which provides corporate consulting, training and professional development services, the Canter Group, which provides professional development and graduate degree programs for teachers, Wall Street Institute and ASPECT, which deliver English language instruction to professionals and college students, respectively. Through its affiliate, Caliber Learning Network, Inc., formed as a joint initiative between Sylvan and MCI Communications This article is about MCI before it merged with WorldCom. For other uses, see MCI. MCI Communications was an American telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T monopoly of American telephony and Corp., Sylvan has the ability to distribute world-class adult professional education and training programs. Sylvan's services are delivered through its network of more than 3,000 educational and testing centers around the globe. -0-
SYLVAN LEARNING SYSTEMS, INC.
SUMMARY OF CONSOLIDATED INCOME STATEMENT
($ in thousands, except per share amounts)
Three months ended Year ended
December 31 December 31
1998 1997 1998 1997
Operating revenues $144,979 $97,548 $440,331 $298,671
Operating expenses
Recurring 116,323 76,289 374,028 254,240
Non-recurring
- Aspect related - 4,247(1) 9,899(3) 5,380(1)
Non-recurring - Other - - - 21,541(2)
Loss on impairment
of assets - - 4,000(2)
Operating income 28,656 17,012 56,404 13,510
Termination fee, net
of direct cost - - - 28,500(2)
Other income (expense),
net 994 461 819 2,039
Income before income
taxes 29,650 17,473 57,223 44,049
Income taxes (10,081) (6,559) (21,559) (16,426)
Net Income $19,569 $10,914 $35,664 $27,623
Earnings per share
-diluted $0.37 $0.22 $0. 70 $0.62
Weighted average shares
outstanding
- diluted 53,334 49,022 51,286 44,811
(1) Included in operating income for the three month and
year ended December 31, 1997 are non-recurring expenses
of $4.3 and $5.4 million respectively, for certain
compensation payable to former owners of ASPECT,
including profit-sharing payments, and certain
transaction costs. The net effect of the above non-
recurring items was a decrease in pre-tax income of $4.3
for the fourth quarter 1997 and $5.4 million for the year
ended December 31, 1997 and to decrease net income $4.0
million or $0.08 per diluted share for the fourth quarter
and to decrease net income $5.0 million or $0.11 per
diluted share for the year ended December 31,1997.
(2) During the year ended December 31, 1997, the Company
recognized an impairment loss of $4.0 million, income
from a termination fee of $28.5 million and recorded
expense related to contributions which totaled $21.5
million. The net effect of these non-recurring items was
an increase in pre-tax income of $3.0 million and net
income of $1.9 million. The net effect of note (1) and
(2) for the year 1997 was to decrease net income $3.1
million, or $0.07 per diluted share.
(3) During the year ended December 31, 1998, the Company
recognized certain non-recurring expenses related to the
merger with ASPECT. These expenses include $6.2 million of
shareholder non-recurring expenses and transaction-related
costs, such as legal, accounting and advisory fees, and $3.7
million of costs, classified in the financial statements as
restructuring costs that relate to the integration of ASPECT
with Sylvan. The net effect of the above non-recurring
items was a decrease in pre-tax income of $9.9 million and
net income of $8.9 million, or $0.17 per diluted share.
This release may include 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 that could cause actual results to differ
materially from any future results encompassed within the
forward-looking statements. Factors that could cause or
contribute to such differences include those matters
disclosed in the Company's Security and Exchange Commission
filings.
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