Washington Post 2010 Annual Report Download - page 63

fiscal year 2010 and 2009, respectively. Income from continuing
operations available for common shares was $306.0 million
($34.26 per share) for fiscal year 2010, compared to $136.9
million ($14.58 per share) for fiscal year 2009. As a result of the
Company’s share repurchases, there were fewer diluted average
shares outstanding in 2010.
On September 30, 2010, the Company completed the sale of
Newsweek. Consequently, the Company’s income from continuing
operations excludes Newsweek results, which have been
reclassified to discontinued operations.
Items included in the Company’s income from continuing operations
for 2010:
• A $20.4 million charge recorded at The Washington Post in
connection with the withdrawal from a multiemployer pension
plan (after-tax impact of $12.7 million, or $1.38 per share);
• A $27.5 million goodwill and other long-lived assets impairment
charge at the Company’s online lead generation business,
included in other businesses (after-tax impact of $26.3 million,
or $2.96 per share);
• $31.2 million in severance and restructuring charges (after-tax
impact of $19.3 million, or $2.31 per share); and
• $6.7 million in non-operating unrealized foreign currency gains
arising from the weakening of the U.S. dollar (after-tax impact of
$4.2 million, or $0.47 per share).
Items included in the Company’s income from continuing operations
for 2009:
• $57.9 million in early retirement program expense at the
newspaper publishing division (after-tax impact of $35.9 million,
or $3.82 per share);
• $33.2 million in restructuring charges related to Kaplan’s Score
and Test Preparation operations (after-tax impact of $20.6
million, or $2.19 per share);
• $33.8 million in accelerated depreciation at The Washington
Post (after-tax impact of $21.0 million, or $2.23 per share);
• A $25.4 million goodwill and other long-lived assets impairment
charge related to Kaplan Ventures (after-tax impact of $18.8
million, or $2.00 per share);
• A $29.0 million decline in equity in earnings (losses) of affiliates
associated with impairment charges at two of the Company’s
affiliates (after-tax impact of $18.8 million, or $2.00 per share);
and
• $16.9 million in non-operating unrealized foreign currency gains
arising from the weakening of the U.S. dollar (after-tax impact of
$10.3 million, or $1.10 per share).
Revenue for 2010 was $4,723.6 million, up 8% compared to
revenue of $4,386.5 million in 2009. The increase is due to strong
revenue growth at the education and television broadcasting
divisions, and increased revenue at the cable television division. In
2010, education revenue increased 10%, advertising revenue
increased 7%, circulation and subscriber revenue increased 1% and
other revenue increased 4%. Revenue growth at Kaplan accounted
for the increase in education revenue. The increase in advertising
revenue is due to increased revenues at the television broadcasting
division and increases in newspaper publishing online revenue,
offset by declines in print advertising at The Washington Post.
The increase in circulation and subscriber revenue is due to a 1%
increase in subscriber revenue at the cable division and a 4%
increase in circulation revenue at the Post.
Operating costs and expenses for the year increased 1% to
$4,176.7 million in 2010, from $4,128.6 million in 2009. The
increase is due to higher expenses at the education, cable television
and television broadcasting divisions, offset by reduced costs at the
newspaper publishing division.
Operating income for 2010 increased to $546.8 million, from
$257.9 million in 2009, due to improved results at the education,
newspaper publishing and television broadcasting divisions.
DIVISION RESULTS
Education Division. Education division revenue in 2010 increased
to $2,901.8 million, a 10% increase from $2,636.6 million in
2009. Kaplan reported operating income of $330.9 million for
2010, compared to $194.8 million in 2009. Kaplan’s results for
2010 and 2009 were impacted by several charges or credits
(discussed below).
A summary of Kaplan’s operating results for 2010 compared to
2009 is as follows:
(in thousands) 2010 2009 % Change
Revenue
Higher education ...............$1,789,038 $1,539,196 16
Test preparation, excluding Score . . . 415,678 433,579 (4)
Score . . . .................... —8,557 —
Kaplan international . . ........... 585,924 537,238 9
Kaplan ventures ................ 114,029 126,418 (10)
Kaplan corporate ............... 5,537 2,436 —
Intersegment elimination .......... (8,395) (10,786) —
$2,901,811 $2,636,638 10
Operating income (loss)
Higher education ...............$ 396,193 $ 279,765 42
Test preparation, excluding Score . . . (24,044) 15,892 —
Score . . . .................... —(36,787) —
Kaplan international . . ........... 56,152 53,772 4
Kaplan ventures ................ (30,723) (16,421) (87)
Kaplan corporate ............... (45,765) (53,227) 14
Kaplan stock compensation ....... 1,179 (933) —
Amortization of intangible assets .... (21,855) (22,223) 2
Impairment of goodwill and other
long-lived assets . . . ........... —(25,387) —
Intersegment elimination .......... (234) 310 —
$ 330,903 $ 194,761 70
KHE includes Kaplan’s domestic postsecondary education
businesses, made up of fixed-facility colleges and online post-
secondary and career programs. Higher education revenue and
operating income grew in 2010 due to enrollment growth, improved
student retention and increased margins during most of 2010. The
increased operating results were offset by a $9.3 million charge for
severance costs associated with a workforce reduction, increased
regulatory compliance costs and the implementation of the Kaplan
Commitment program (discussed below).
During the fourth quarter of 2010, KHE phased in a new program,
the Kaplan Commitment. Under this program, new students of
Kaplan University, Kaplan College and other KHE schools enroll in
2010 FORM 10-K 47