Sylvan reports 4Q loss of 15 cents a share

Investment unit's failings, after-tax charges noted

February 21, 2003|By Julie Bell | Julie Bell,SUN STAFF

Sylvan Learning Systems Inc. said yesterday that its fourth-quarter loss grew more than sevenfold to $6.1 million as the company's investment losses continued and it recorded $10.4 million in after-tax charges.

The Baltimore-based operator of learning centers, which has been struggling to overcome steep losses in a venture-investment arm launched in 2000, said the fourth-quarter loss amounted to 15 cents per share. Sylvan lost $796,000, or 2 cents per share, in the fourth quarter of 2001.

Revenue totaled $174.7 million in the quarter, up 27 percent from $137.7 million a year ago.

Chairman and Chief Executive Officer Douglas L. Becker highlighted the company's revenue growth and operating income, which improved to $14.3 million in the quarter from $11.3 million a year ago, adding that "Sylvan's K-12 and post-secondary businesses performed extraordinarily well in a challenging global economy."

But investors appeared to focus instead on the $8.1 million in losses attributable to investment unit Sylvan Ventures, which lost $7.1 million in the year-ago period. Company shares lost $1.98, or 12.25 percent, to close at $14.18 on the Nasdaq stock market.

"It certainly was a disappointment to investors and most of the reason the stock was down so severely," Bear, Stearns & Co. analyst Jennifer L. Childe said about losses in the venture unit, formed to invest in new education and technology companies. "I'm starting to wonder why it's taking so long" to dispose of the money-losing investments.

Investor relations manager Chris Symanoskie said the company is "doing everything it can right now to perform a thorough due diligence to ensure we make the correct decisions" about venture investments. "You can manage the business based on today's stock price or take a longer-term view."

Excluding the special charges and Sylvan Ventures losses, Sylvan said, it earned $15.5 million, or 33 cents per share, in the quarter, up from $13 million, or 28 cents per share, in the 2001 fourth quarter, when Sylvan had fewer shares outstanding.

The results that exclude the venture losses and special charges reflect what Sylvan believes to be its core operations. Analysts had estimated the company would earn 35 cents per share on core operations, according to the average estimate of 11 analysts surveyed by Thomson Financial/First Call.

Sylvan said the $10.4 million in charges included $2.1 million in costs related to a contemplated initial public offering of its international universities. About $7.9 million of the charge was related to a write-down of its investment in an underperforming Sylvan Learning Center master franchise in Spain.

Symanoskie said the franchise's business has suffered from the refusal of Spanish banks to provide student loans in the wake of a separate tutoring company's bankruptcy. But, he said, "We think the business can be fixed."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.