Washington Post 2006 Annual Report Download - page 54

for the Multistate Bar Exam. These new businesses are all included in the enrichment to children. Revenue and operating income at Score!
supplemental education results. As noted above, Kaplan incurred were down for 2006. There were 161 Score! centers at the end of
$11.9 million in transition costs and operating losses from these acquired December 2006, compared to 168 at the end of December 2005.
businesses and start-ups, most of which are included in the supplemental Operating income for supplemental education is down largely due
education results. to soft market demand in Kaplan Professional's real estate business-
es, transition costs and operating losses related to acquisitions, and
In February 2007, Kaplan announced an agreement to acquire the reduction in revenue growth at Kaplan's test preparation division
EduNeering Holdings, Inc., a provider of knowledge management due to a fourth quarter revenue decrease related to timing of
solutions for organizations in the pharmaceutical, medical device, courses and estimates of average course length (discussed
healthcare, energy and manufacturing sectors. Headquartered in above).
Princeton, N.J., EduNeering will become part of Kaplan Profession-
al. The acquisition is expected to close in March 2007. Higher education includes all of Kaplan's post-secondary education
businesses, including fixed-facility colleges as well as online post-
A summary of operating results for 2006 compared to 2005 is as secondary and career programs. In May 2005, Kaplan acquired
follows (in thousands): Singapore-based Asia Pacific Management Institute, a private edu-
2006 2005 % Change cation provider for undergraduate and postgraduate students in
Asia. Excluding revenue from acquired businesses, higher education
Revenue revenue grew 19% for 2006. Higher education enrollments
Supplemental educationÏÏ $ 805,152 $ 690,815 17 increased 7% to 75,800 at December 31, 2006, compared to
Higher education ÏÏÏÏÏÏÏ 878,989 721,579 22 70,900 at December 31, 2005, with most of the enrollment growth
$1,684,141 $1,412,394 19 occurring in the online programs. Higher education results for the
online programs in 2006 benefited from increases in both price and
Operating income
demand, as well as an increase in the number of course offerings.
(loss)
Higher education results were adversely affected by $3.0 million in
Supplemental educationÏÏ $ 109,887 $ 117,075 (6)
Higher education ÏÏÏÏÏÏÏ 103,938 82,660 26 asset write-downs related to three campuses in the fourth quarter of
Kaplan corporate 2006; an additional $3.0 million of expense related to lease
overhead ÏÏÏÏÏÏÏÏÏÏÏÏ (50,726) (33,305) (52) obligation charges is expected to be incurred in the first and second
OtherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (32,910) (8,595) Ì quarters of 2007.
$ 130,189 $ 157,835 (18)
Corporate overhead represents unallocated expenses of Kaplan,
Supplemental education includes Kaplan's test preparation, profes- Inc.'s corporate office. Corporate expenses increased in 2006
sional training and Score! businesses. Excluding revenue from primarily due to a fourth quarter 2006 charge of $13.0 million
acquired businesses, supplemental education revenue grew by 7% related to an agreement to settle a lawsuit.
in 2006. Test preparation revenue grew by 22% due to strong Other includes charges for incentive compensation arising from
enrollment in the GMAT, MCAT, nursing and English-language equity awards under the Kaplan stock option plan, which was
course offerings, as well as from acquisitions (the October 2006 established for certain members of Kaplan's management. In addi-
Aspect and PMBR acquisitions and the August 2005 acquisition of tion, Other includes amortization of certain intangibles. In the first
The Kidum Group, the leading provider of test preparation services quarter of 2006, the Company adopted SFAS 123R, which
in Israel). Also included in supplemental education is FTC Kaplan required the Company to change its accounting for Kaplan equity
Limited (FTC). Headquartered in London, FTC primarily provides awards from the intrinsic value method to the fair-value-based
training services for accountants and financial services profession- method of accounting (see additional discussion below regarding
als, with training centers in the U.K. and Asia. FTC revenue grew by the cumulative effect of change in accounting principle). Excluding
25% in 2006 due to favorable exchange rates, higher enrollments, Kaplan stock compensation expense recorded as a result of this
price increases and an acquisition. Supplemental education also change in accounting, Kaplan recorded stock compensation
includes professional real estate, insurance, securities and other expense of $27.7 million in 2006, compared to $3.0 million in
professional courses and related products. In April 2005, Kaplan 2005. The increase in the charge for 2006 reflects growth and
Professional completed the acquisition of BISYS Education Services, improved prospects for several Kaplan businesses.
a provider of licensing education and compliance solutions for
financial services institutions and professionals. Kaplan Professional Newspaper Publishing Division. Newspaper publishing divi-
revenue increased 3% in 2006 due primarily to acquisitions; sion revenue in 2006 increased 1% to $961.9 million, from
however, there was soft market demand for Kaplan Professional's $957.1 million in 2005. Division operating income for 2006
real estate book publishing and real estate course offerings. For the totaled $63.4 million, compared to $125.4 million in 2005. The
real estate businesses of Kaplan Professional, operating income decline in operating results for 2006 is due primarily to $47.1 mil-
declined $13.3 million compared to 2005. Also included in supple- lion in pre-tax charges associated with early retirement plan buyouts
mental education is Tribeca Learning Limited, which was acquired in at The Washington Post and a decrease in print advertising at The
the second quarter of 2006 as discussed above. The final business Post, offset by improved results at the division's online publishing
within supplemental education is Score!, which provides academic activities, both washingtonpost.com and Slate, and a $2.3 million
38 THE WASHINGTON POST COMPANY