SLVN ( $24-$26) EPS -$49c stronger Execution of Business Strategy Fuels 59% Revenue Growth
BALTIMORE--(BUSINESS WIRE)--July 26, 2001--Sylvan Learning Systems, Inc. (NASDAQ:SLVN - news) today announced financial results for the quarter and six months ended June 30, 2001.
Recent Financial and Business Highlights
Second quarter 2001 EPS from continuing operations were $0.23 per share, excluding Sylvan Ventures and previously announced charges relating to certain unpaid obligations and costs related to Sylvan's investment in and advances to Caliber Learning Network, Inc. as a result of Caliber's Chapter 11 bankruptcy filing. These results were $0.02 per share above the Company's prior guidance of $0.20 to $0.21 per share, and compare to $0.20 per share for the same quarter in 2000.
Second quarter 2001 EPS from continuing operations, including Sylvan Ventures and previously announced Caliber charges, were a loss of $0.35 per share.
The Company raises its full-year 2001 EPS guidance to $0.66 - $0.68 per share, from $0.63 - $0.65 per share, excluding Sylvan Ventures and previously announced Caliber charges.
Post-Secondary
Sylvan International Universities announces the expected opening of two new campuses at Universidad de Las Americas (UDLA) in Chile and the expected opening of one new campus at Universidad del Valle de Mexico (UVM) in Mexico. The campuses are expected to be open for the 2002 academic year.
Sylvan International Universities is increasing its ownership in Universidad Europea CEES (UEM) in Spain from 54% to approximately 78% as a result of a soon-to-be completed capital increase.
Sylvan created an Online Higher Education division to broaden its leading presence in the fast-growing sector of post-secondary and adult continuing education delivered through distance learning.
Paula Singer, a senior Sylvan executive since 1993 who has been serving as president of Sylvan's Education Solutions division, has been named president and CEO of the Online Higher Education division. Her management responsibilities for the new division include Canter, Sylvan Teachers Institute, OnlineLearning.net, and Sylvan Ventures' 41% interest in Walden University.
Summer enrollments in Canter's distance learning master's degree program increased 29% over the same period last year, fueling revenue growth of 28%.
Wall Street Institute (WSI) reported that it has 400 center locations worldwide. Now operating in 23 countries, Wall Street Institute expects to open as many as 10 new center locations by the end of 2001.
K-12
Sylvan Learning Centers added 11 new franchise locations and two new company-owned locations, bringing the total number of North American franchise and company-owned locations to 784 and 89, respectively.
Sylvan Learning Centers, through master franchisees, opened its first center locations in the United Kingdom and France.
Sylvan Education Solutions named Jeffrey H. Cohen president, with management responsibilities for Sylvan At School and Career Starters. Previously a Sylvan executive, and most recently senior vice president of Business Unit Management at Thomson Prometric, Mr. Cohen will take over duties previously handled by Ms. Singer.
Sylvan Ventures
Sylvan Ventures committed $2.5 million for approximately 30% ownership in EdVerify, an educational credential verification service. Sylvan Ventures also holds the option to increase its total ownership to 50% for an additional investment of $2.5 million.
As of June 30, 2001, Sylvan Ventures has made funding commitments of $252 million, of which $209 million has been invested.
Financial Results
Total revenues from continuing operations for the second quarter of 2001 were $130.4 million, an increase of 59% compared to total revenues of $82.2 million in the second quarter of 2000. Total operating income for the quarter, excluding Sylvan Ventures and previously announced Caliber charges, was $18.2 million in the second quarter of 2001 compared to $8.3 million in the second quarter of 2000.
Income from continuing operations after tax for the second quarter, excluding Sylvan Ventures and previously announced Caliber charges, was $9.7 million, or $0.23 per share on diluted shares outstanding of 45.5 million. This compares to $9.0 million (on a full-year tax rate basis), or $0.20 per share on diluted shares outstanding of 45.8 million for the same period in 2000.
Growth at Sylvan Learning Centers, Sylvan Education Solutions and acquisitions at Sylvan International Universities drove operating results in the second quarter of 2001.
For the quarter ended June 30, 2001, Sylvan reported a loss from continuing operations of $13.4 million (including $13.8 million of after tax losses associated with Sylvan Ventures and its portfolio companies and $9.4 million of after tax losses associated with the write-off of Caliber related receivables and guarantee commitments).
For the six month period ended June 30, 2001, total revenues from continuing operations were $250.8 million, an increase of 59% compared to total revenues of $157.8 million in the same period of 2000. Total operating income for the six month period, excluding Sylvan Ventures and previously announced Caliber charges, was $24.5 million compared to $14.6 million in the same period of 2000.
For the six month period ended June 30, 2001, income from continuing operations after tax, excluding Sylvan Ventures and previously announced Caliber charges, was $13.6 million, or $0.34 per share on diluted shares outstanding of 45.3 million. This compares to $13.5 million, or $0.28 per share on diluted shares outstanding of 48.7 million for the same six month period in 2000.
For the six month period ended June 30, 2001, Sylvan reported a loss from continuing operations (which includes $29.3 million of after tax losses associated with Sylvan Ventures and its portfolio companies and $9.4 million of after tax losses associated with the write-off of Caliber related receivables and guarantee commitments) of $25.0 million.
Total cash and marketable securities at the end of the second quarter 2001 stood at approximately $182 million, while total corporate debt stood at approximately $41 million, excluding the $100 million convertible debenture.
Douglas Becker, Chairman and CEO, commented, ``We are proud to report on another quarter of outstanding growth, fueled by rapid expansion of our post-secondary businesses, and bolstered by our thriving K-12 operations. In post-secondary, we are very excited about the direction of enrollments and financial performance across the institutions that comprise Sylvan International Universities. At the same time, we are aggressively expanding our leadership position in adult continuing education delivered through distance learning by bringing together our existing online, post-secondary businesses to form the new Online Higher Education division.''
Mr. Becker continued, ``In K-12, our Sylvan Learning Center and Sylvan Education Solutions divisions are benefiting from strong consumer demand and continued emphasis on school accountability by political leaders at the federal and state levels, who view supplemental education as an important component in raising the academic achievement of our children.''
Mr. Becker also stated, ``This quarter's performance gives us confidence in achieving our 2001 goals. Therefore, we are raising our year-end 2001 EPS guidance to $0.66 - $0.68 per share, from $0.63 - $0.65 per share, excluding Sylvan Ventures and previously announced Caliber charges.''
Third 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 $98 to $105 million for the third quarter 2001.
Third quarter 2001 operating income excluding Sylvan Ventures is expected to be $6.4 to $6.9 million.
General and administrative expenses are expected to be approximately $6 million.
The Company currently believes that it will achieve an EPS of $0.09 per share for third quarter of 2001 (excluding Sylvan Ventures).
Sylvan Learning Group - Expects $61 to $66 million in revenue with approximately 16% operating margins
Sylvan Learning Centers expects revenues of $28 to $30 million with operating margins of approximately 22%.
Sylvan Education Solutions anticipates revenues of $21 to $23 million with operating margins of approximately 20%. Included within Sylvan Education Solutions is Canter, which expects approximately 25% operating margins and revenues between $13 and $14 million.
English Language Instruction revenues should range from $12 to $13 million with a break-even operating margin in the seasonally slow summer period.
Sylvan International Universities (SIU) - Anticipates $37 to $39 million in revenue, with operating margins of approximately 4%, in the seasonally slow summer period.
Note on Presentation of Sylvan Learning Systems, Inc. Financial Results
For purposes of this and all earnings announcements, Sylvan Learning Systems, Inc. reports on the financial results of its operating businesses (including its Sylvan Learning Center, Sylvan Education Solutions, Wall Street Institute and Sylvan International Universities units).
Additionally, the Company reports on the impact of operating costs and flow-through losses from its investment arm, Sylvan Ventures, and Sylvan Ventures' portfolio companies.
Sylvan Learning Systems, Inc. and Apollo Management, LLP committed a total of $400 million to form Sylvan Ventures, with the express purpose of investing in start-up and early-stage companies that offer emerging technology and Internet-based solutions to the education and training marketplace. It is characteristic of these early-stage companies to generate losses.
Sylvan Learning Systems, Inc. is required to include its proportionate share of these losses in its financial results.
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) is the leading provider of education services to families and schools worldwide. The Sylvan Learning Centers and Sylvan Education Solutions divisions provide 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 teacher training, accredited university offerings, and English language, through the Online Higher Education, Sylvan International Universities and Wall Street Institute businesses. Sylvan International Universities is pioneering the largest and most ambitious network of post-secondary education institutions worldwide.
Sylvan Ventures, Sylvan's e-learning investment vehicle, focuses on bringing emerging Internet technology solutions to the education and training marketplace.
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