UNITED STATES
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): June 30, 2003

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.)

1001 Fleet Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (ZIP Code)

Registrant’s telephone number, including area code: (410) 843-8000

Item 2. Acquisition or Disposition of Assets

On June 30, 2003, Sylvan Learning Systems, Inc. (the “Company”) and Educate Operating Company, LLC (“Educate LLC”), a company newly-formed by Apollo Management, L.P. (“Apollo”), completed the previously announced sale of substantially all of the Company’s K-12 education business units to Educate LLC, including eSylvan, Inc. and Connections Academy, Inc., which had been investments held by Sylvan Ventures. Apollo previously owned $80.0 million of a total $95.0 million in convertible debentures issued by the Company, held two board seats of the Company, and held 25% of Sylvan Ventures.

The consideration for the sale of the assets comprising the K-12 business units was determined by negotiations of the parties and consisted of the following at closing:

• Approximately $113.0 million in cash, in addition to $4.2 million from the sale of its tuition finance portfolio, plus deferred payments of $3.0 million;

• A subordinated note in the amount of $55.0 million, bearing interest at 12% per annum and maturing in 2009;

• The surrender of the Company’s outstanding convertible debentures held by Apollo Management, with a face value of approximately $50.6 million, which were convertible into 3.2 million Sylvan shares. This leaves approximately $44.4 million of convertible debentures outstanding.

• The assumption of trade accounts payable of the K-12 business units, and other specified liabilities of the K-12 business units;

• Apollo’s 25% preferred interest in Sylvan Ventures;

The Company is also entitled to up to $10.0 million in additional considerations if certain operations of Connections Academy, a former Sylvan Ventures portfolio company, exceed specified levels of earnings prior to December 31, 2007. The transaction will result in the elimination of various consent and governance rights that had been held by Apollo. Apollo’s representation on the Company’s Board of Directors will be reduced from two board seats to one.

The completed divestiture of Company’s K-12 assets to Educate, Inc. positions the Company to further expand on its proven global successes in post-secondary education. Over the past five years, the Company has built a network of accredited universities that today provide traditional, classroom-based, and online post-secondary education to nearly 100,000 degree-seeking, full-time students and working adults worldwide.

The publicly traded Sylvan Learning Systems, Inc. will change its corporate name and NASDAQ ticker within one year following the completion of the transaction, as Educate, Inc. retains all rights to the Sylvan brand.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(b) The pro forma financial information required by this item was filed on Form 8-K on June 9, 2003, which restated the December 31, 2002 Annual Report on Form 10-K reflecting the Company’s K-12 operations as discontinued operations. The sale of the Company’s K-12 education business units to Educate, Inc. qualified for treatment as discontinued operations.

The pro forma financial information required by this item as of March 31, 2003 was presented in the Company’s Quarterly Report on Form 10-Q filed on May 15, 2003.

99.01 Press Release dated July 1, 2003

SIGNATURE

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/ Sean R. Creamer
	Name: Sean R. Creamer
	Title:	Senior Vice President and Chief Financial Officer


Date: July 2, 2003

Exhibit 99.01

Sylvan Contacts:
Sean Creamer Chief Financial Officer (410) 843-8991	Chris Symanoskie Manager, Investor Relations (410) 843-6394

SYLVAN LEARNING SYSTEMS COMPLETES TRANSACTIONS TO FOCUS
EXCLUSIVELY ON POST-SECONDARY EDUCATION

Company Uniquely Positioned For Accelerated Online and Campus-based Growth

BALTIMORE, MD – July 1, 2003 – Sylvan Learning Systems, Inc. (NASDAQ: SLVN) a global leader in higher education, today announced the completion of certain previously disclosed transactions to focus exclusively on its campus-based and online university business by selling its K-12 education business units and disbanding Sylvan Ventures.

The completed divestiture of Sylvan’s K-12 assets to Educate, Inc., a newly formed entity associated with the leading private equity firm Apollo Management, LP, positions Sylvan to further expand on its proven global success in post-secondary education. Over the past five years, Sylvan has built a network of accredited universities that today provide traditional, classroom-based and online post-secondary education to nearly 100,000 degree-seeking, full-time students and working adults worldwide.

“Sylvan is now entirely focused on growing what is one of the world’s largest networks of online and campus-based universities,” said Doug Becker, Chairman and CEO of Sylvan Learning Systems, Inc. “As we meet the education and career needs of our fast-growing, global community of students, Sylvan will continue to deliver to investors a unique blend of robust revenue growth, increasing profitability, earnings visibility, and international diversification.”

In connection with the transactions, Sylvan Learning Systems received:

• Approximately $113 million in cash, in addition to approximately $4 million from the sale of its tuition finance portfolio

• A $55 million, six-year subordinated note paying 12% annual interest

• Retirement of a majority of Sylvan’s outstanding convertible debentures held by Apollo Management, with a face value of approximately $51 million, which were convertible into 3.2 million Sylvan shares. This leaves approximately $44 million in convertible debentures outstanding following the transaction.

• Apollo Management’s preferred interest in Sylvan Ventures, valued at approximately $45 million.

• As much as $13 million in deferred or contingent consideration, mostly depending on the performance of Connections Academy, a former Sylvan Ventures portfolio company.

• The 51% ownership interest in Walden University previously held by Sylvan Ventures.

• The 100% ownership interest in National Technological University (NTU) previously held by Sylvan Ventures. Walden and NTU’s financial results will be consolidated into Sylvan’s online results.

• Remaining non-strategic Sylvan Ventures investments were sold to a third party on a contingent basis.

The publicly traded Sylvan Learning Systems will change its corporate name and NASDAQ ticker within one year following the completion of the transaction, as Educate, Inc. retains all rights to the Sylvan brand.

About Sylvan Learning Systems

Sylvan Learning Systems, Inc. (NASDAQ: SLVN) is focused exclusively on providing a superior university experience to nearly 100,000 students through the leading global network of accredited campus-based and online universities. Addressing the rapidly growing global demand for higher education, Sylvan offers a broad range of career-oriented undergraduate and graduate programs through seven universities located in Europe and Latin America. Through two U.S. based and accredited universities, Sylvan offers the growing population of non-traditional, working-adult students the convenience and flexibility of distance learning to pursue undergraduate, master’s and doctorate degree programs in major career fields including engineering, education, business, and healthcare.

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. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company’s actual results could differ materially from those described in the forward-looking statements:

The following factors might cause such a difference:

• The Company’s operations can be materially affected by competition in its target markets and by overall market conditions, among other factors.

• The Company’s foreign operations, in particular, are subject to political, economic, legal, regulatory and currency-related risks.

Additional information regarding these risk factors and uncertainties is detailedfrom 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”)

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