-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GpB2vFtvk4kuSQxtaGlmxN/cqyU2W25fl5BRDqBr1geaAwhrcklktmQj0Hn1WW9z HVNrErwJYZxwXz1eOHlAVA== 0000950169-00-000220.txt : 20000322 0000950169-00-000220.hdr.sgml : 20000322 ACCESSION NUMBER: 0000950169-00-000220 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000306 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYLVAN LEARNING SYSTEMS INC CENTRAL INDEX KEY: 0000912766 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 521492296 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22844 FILM NUMBER: 574674 BUSINESS ADDRESS: STREET 1: 1000 LANCASTER ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4108438000 MAIL ADDRESS: STREET 1: 1000 LANCASTER ST CITY: BALTIMORE STATE: MD ZIP: 21202 8-K 1 SYLVAN LEARNING SYSTEMS, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 6, 2000 Sylvan Learning Systems, Inc. (Exact Name of Registrant as Specified in Charter) Maryland 0-22844 52-1492296 (State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer 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 (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets. On March 6, 2000, Sylvan Learning Systems, Inc. ("Sylvan") announced the consummation of the sale of its computer-based testing division, known as Sylvan Prometric. On January 26, 2000, (i) Sylvan entered into a Stock Purchase Agreement with Prometric, Inc., a Maryland corporation and a wholly- owned subsidiary of Sylvan ("Prometric"), The Thomson Corporation, a corporation formed under the laws of Ontario, Canada ("Thomson"), and Prometric Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Thomson (the "Stock Purchase Agreement"), and (ii) Sylvan I B.V., a wholly-owned Dutch subsidiary of Sylvan, entered into an Acquisition Agreement with Dodd Street Holdings B.V., a wholly-owned Dutch subsidiary of Thomson (the "Acquisition Agreement" and, together with the Stock Purchase Agreement, the "Agreements"). Pursuant to the Agreements, Sylvan agreed to sell Prometric for an aggregate purchase price of approximately $775,000,000. The purchase price remains subject to adjustment upon certain events described in the Agreements. The foregoing description of the Agreements and the transactions contemplated thereby, does not purport to be complete and is qualified in its entirety by reference to the Agreements, each filed as exhibits to Sylvan's Form 8-K filed on February 2, 2000. A press release issued by Sylvan on March 6, 2000 announcing the consummation of the sale is attached hereto as Exhibit 99.01 and incorporated by reference herein. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Not Applicable. (b) Pro Forma Financial Information. The following unaudited pro forma consolidated balance sheet data gives effect to the disposition of Sylvan Prometric as if had occurred on December 31, 1999. The unaudited pro forma consolidated statement of operations data are not necessarily indicative of the operating results that would have been achieved had the transaction actually occurred on January 1, 1999, nor are they necessarily indicative of future operations. The pro forma adjustments and the assumptions on which they are based are described in the accompanying notes to the unaudited pro forma consolidated financial information.
December 31, 1999 ---------------------------------------------------------------------------------- (2) (3) Consolidated Prometric Pro Forma Actual Sale Adjustments Pro Forma ---------------------------------------------------------------------------------- (Amounts in thousands) Condensed Balance Sheet : Cash and cash equivalents $ 20,410 $ - $ - $ 20,410 Available-for-sale securities 10,890 600,000 (122,991) 487,899 Receivables 127,163 (51,696) - 75,467 Other current assets 33,435 (8,752) - 24,683 Property and equipment, net 213,462 (85,742) - 127,720 Intangible assets, net 326,735 (134,563) - 192,172 Other assets 106,097 (49,600) - 56,497 -------------- ----------------- ----------------- -------------- Total assets $838,192 $ 269,647 $(122,991) $984,848 ============== ================= ================= ============== Accounts payable and accrued expenses $ 93,249 $ (41,332) $ - $ 51,917 Due to shareholders of acquired companies 22,474 - - 22,474 Long-term debt 151,204 - (122,991) 28,213 Other liabilities 85,087 (8,734) - 76,353 -------------- ----------------- ----------------- -------------- Total liabilities 352,014 (50,066) (122,991) 178,957 Minority interest 12,085 - - 12,085 Stockholders' equity 474,093 319,713 - 793,806 -------------- ----------------- ----------------- -------------- Total liabilities and stockholders equity $838,192 $ 269,647 $(122,991) $984,848 ============== ================= ================= ==============
Year Ended December 31, 1999 ---------------------------------------------------------------------- (1) (2) (3) Consolidated Prometric Pro Forma Actual Sale Adjustments Pro Forma ---------------------------------------------------------------------- (Amounts in thousands, except per share data) Condensed Statement of Operations: Revenues $558,309 $(219,813) $ - $338,496 Direct costs 479,644 (193,677) - 285,967 Other expenses 32,138 (156) - 31,982 -------------- ------------- -------------- ------------ Operating income 46,527 (25,980) - 20,547 Non-operating income (21,081) 479 28,282 7,680 -------------- ------------- -------------- ------------ Income from continuing operations before income taxes and cumulative effect of change in accounting principle 25,446 (25,501) 28,282 28,227 Tax benefit (expense) (11,113) 12,169 (11,596) (10,540) -------------- ------------- -------------- ------------ Income from continuing operations before cumulative effect of change in accounting principle $ 14,333 $ (13,332) $ 16,686 $ 17,687 ============= ============ ============= =========== Earning per common share from continuing operations: Basic $ 0.28 $ 0.34 ============== ============ Diluted $ 0.27 $ 0.33 ============== ============
Notes to Pro Forma Financial Information (amounts in thousands): (1) During the year ended December 31, 1999, Sylvan recognized restructuring costs of $5,127. Additionally, Sylvan recognized significant non-recurring operating charges, which totaled $10,300. These charges principally related to asset impairment charges, which resulted from management's focus on simplification of the business model and a return to the core business strengths. Losses recorded on disposal of investments also resulted in $13,400 of non-recurring charges during the year. The cumulative effect of these significant, unusual charges was to reduce income from continuing operations before income taxes and cumulative effect of change in accounting principle by $28,800 in 1999. (2) The balance sheet has been adjusted to remove the assets and liabilities of Sylvan Prometric at December 31, 1999 and reflect the receipt of $775,000 of cash from the sale, net of income taxes of $143,000 and transaction related costs offset by estimated working capital settlements of $32,000. The final gain from sale after the analysis is complete is not expected to vary significantly from the pro forma amount. Sylvan has estimated the domestic and foreign income taxes resulting from the sale based on the expected allocation of proceeds to subsidiaries that are a party to the transaction and the tax laws of the jurisdictions in which these subsidiaries operate. Available-for-sale securities has been adjusted to reflect the $600,000 of net cash. Stockholders' equity has been adjusted to reflect the estimated gain on disposition of $319,713. The statement of operations has been adjusted to remove the actual results of operations of Sylvan Prometric for the year ended December 31, 1999. (3) The balance sheet has been adjusted to reflect the repayment of $122,991 of outstanding debt on Sylvan's line of credit with the proceeds from the sale of Sylvan Prometric. The statement of operations has been adjusted to remove interest expense of $9,202 as a result of the debt repayment at an assumed average rate of 7.48% and to reflect interest income of $19,080 from investing the excess proceeds from the sale at an assumed rate of 4%. Taxes were assumed at a rate of 41% for the year. (c) Exhibits. The following exhibits are filed with this report: 99.01 Press Release, dated March 6, 2000 of Sylvan Learning Systems, Inc., filed herewith. [Signature on following 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 hereunto duly authorized. SYLVAN LEARNING SYSTEMS, INC. /s/ B. Lee McGee ______________________________________ Name: B. Lee McGee Title: Executive Vice President and Chief Financial Officer Date: March 21, 2000 EXHIBIT INDEX ------------- Exhibit Description Page No. - ------- ----------- ------- 99.01 Press Release, dated March 6, 2000 of Sylvan Learning Systems, Inc., filed herewith. EX-99 2 EX-99.01 PRESS RELEASE Exhibit 99.01 Monday March 6, 8:01 am Eastern Time Company Press Release Sylvan Learning Systems Completes Sale of Prometric Testing Division BALTIMORE--(BUSINESS WIRE)--March 6, 2000--Sylvan Learning System (NASDAQ:SLVN - ---- news) a leading provider of education services, announced today that it has - ---- completed the sale of its computer-based testing division, Prometric, Inc., to The Thomson Corporation (TSE:TOC - news) for $775 million in cash, or over $600 --- ---- million net of tax and transaction costs. As previously announced, Sylvan plans to use the proceeds from the sale of Prometric as follows: approximately $130 million to be used to repay the company's revolving credit facility; $100 million committed for expansion of the international university initiative; and additional funds to repurchase the company's shares at amounts and times the Board determines are appropriate. The company also plans to commit $220 million in cash to launch an internet incubator that will focus on bringing emerging internet technology solutions to the education and training marketplace. The sale of its testing division is a part of Sylvan's new business strategy. Announced last week, the new strategy focuses the company's operating business on providing consumer-oriented education services, while launching an internet incubator that will concentrate on investing in and starting companies that have strong potential for market leadership in the education internet space. "We are very excited as we move forward with our new strategy that we believe allows for growth and profitability of Sylvan's operating companies while establishing the leadership position in the internet market for education and training," said Douglas Becker, the Chairman and CEO of Sylvan Learning Systems. "Our goal is to become the true 'clicks-and-mortar' leader in the education industry." About Sylvan Learning Systems Sylvan Learning Systems, Inc. (www.sylvan.net) is the leading provider of -------------- educational services to families, schools and industry. The Sylvan Learning Centers and Contract Education Services divisions provides personalized instruction services to K-12 students through direct consumer relationships and under contract to school systems. 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/ ASPECT, Canter and Sylvan International Universities subsidiaries. Through its affiliate, Caliber Learning Network, Inc., Sylvan also has the ability to distribute world-class adult professional education and training programs. 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. Contact: Sylvan Learning Systems Christine Mohrmann, Vice President, Investor Relations 410/843-8732 -----END PRIVACY-ENHANCED MESSAGE-----