Washington Post 2010 Annual Report Download - page 68

Revenue for 2009 was $4,386.5 million, up 4% compared to
revenue of $4,211.7 million in 2008. The increase is due primarily
to strong revenue growth at the education division and increased
revenue at the cable division, partially offset by revenue declines at
the Company’s newspaper publishing and television broadcasting
divisions. In 2009, education revenue increased 13%, advertising
revenue decreased 18%, circulation and subscriber revenue
increased 6% and other revenue increased 1%. Revenue growth at
Kaplan accounted for the increase in education revenue. The
decrease in advertising revenue is due to declines in print
advertising at The Washington Post, as well as to declines in the
television broadcasting divisions. The increase in circulation and
subscriber revenue is due to a 5% increase in subscriber revenue at
the cable division from continued revenue growth in all major
product offerings and a 7% increase in circulation revenue at the
Post.
Operating costs and expenses for the year increased 4% to
$4,128.6 million, from $3,979.8 million in 2008. The increase is
due to higher expenses from operating growth at Kaplan and Cable
ONE, offset by reduced costs at the newspaper publishing division.
Operating income for 2009 increased to $257.9 million, from
$231.9 million in 2008. Operating results were significantly
impacted by the operating items described above. Excluding
these items, results at the newspaper publishing and television
broadcasting divisions were down, generally due to weakness in
advertising demand, offset by improved results at the Company’s
education and cable television divisions.
The Company’s 2009 operating income includes $8.1 million of
net pension credits, compared to $25.7 million in 2008. These
amounts exclude $57.9 million and $82.8 million in charges
related to early retirement programs in 2009 and 2008,
respectively.
DIVISION RESULTS
Education Division. Education division revenue in 2009 increased
to $2,636.6 million, a 13% increase from $2,331.6 million in
2008. Kaplan reported operating income of $194.8 million for
2009, compared to $206.3 million in 2008. Kaplan’s results for
2009 and 2008 were impacted by several charges (discussed
below).
A summary of Kaplan’s operating results for 2009 compared to
2008 is as follows:
(in thousands) 2009 2008 % Change
Revenue
Higher education ............. $1,539,196 $1,160,063 33
Test preparation, excluding Score . . 433,579 482,993 (10)
Score ..................... 8,557 28,672 (70)
Kaplan international ........... 537,238 545,070 (1)
Kaplan ventures .............. 126,418 121,664 4
Kaplan corporate ............. 2,436 1,450 68
Intersegment elimination ........ (10,786) (8,332) —
$2,636,638 $2,331,580 13
(in thousands) 2009 2008 % Change
Operating income (loss)
Higher education ................ $279,765 $174,707 60
Testpreparation,excludingScore ..... 15,892 44,591 (64)
Score ......................... (36,787) (13,278) —
Kaplan international . . . . . . . . ...... 53,772 59,957 (10)
Kaplan ventures ................. (16,421) (2,924) —
Kaplan corporate ................ (53,227) (48,884) (9)
Kaplan stock compensation . . . ...... (933) 7,829 —
Amortization of intangible assets ..... (22,223) (15,472) (44)
Impairment of goodwill and other long-
lived assets . . ................. (25,387) ——
Intersegment elimination . . . . . ...... 310 (224) —
$194,761 $206,302 (6)
KHE includes Kaplan’s domestic postsecondary education
businesses, made up of fixed-facility colleges as well as online
postsecondary and career programs. Higher education revenue
grew by 33% for 2009 due mostly to strong enrollment growth.
Operating income at KHE increased 60% in 2009 due to this
strong enrollment growth, offset by increased marketing and
advertising costs in the first quarter of 2009, including a $21.0
million national media campaign. At December 31, 2009, KHE’s
enrollments totaled 104,900, a 32% increase compared to total
enrollments of 79,800 at December 31, 2008. Enrollment growth
was particularly strong at Kaplan University’s online offerings, which
grew 47% in 2009. Beginning in 2008, KHE provided loans
directly to some Kaplan students under an institutional loan program.
Lending under Kaplan’s institutional loan program totaled
approximately 1% of its higher education revenue in 2009.
Test Preparation includes Kaplan’s standardized test preparation
and tutoring offerings, as well as the professional domestic training
business, K12 and other businesses. Test Preparation revenue,
excluding Score, declined 10% in 2009 due to continued revenue
declines in the real estate and financial education businesses,
declines at the traditional test preparation programs and softness in
other programs. Test Preparation operating results, excluding Score,
were also down in 2009 due to declines at the traditional test
preparation programs and softness in other programs, along with a
fourth quarter $4.6 million charge at the K12 business for product
development and other write-downs. The declines were offset by
improved results at Test Preparation’s professional domestic training
businesses due to expense reductions.
At the end of March 2009, the Company approved a plan to offer
tutoring services, previously provided at Score, in Kaplan test
preparation centers. The plan was substantially completed by the
end of the second quarter of 2009; 14 existing Score centers were
converted into Kaplan test preparation centers, and the remaining
64 Score centers were closed. Score revenues declined to $8.6
million in 2009, from $28.7 million in 2008. Operating losses at
Score increased to $36.8 million in 2009, inclusive of $24.9
million in restructuring-related charges, compared to $13.3 million
in operating losses for 2008.
In 2007, Kaplan announced restructuring plans at its professional
domestic training businesses that involved product changes and
decentralization of certain operations, in addition to employee
52 THE WASHINGTON POST COMPANY