Washington Post 2010 Annual Report Download - page 69

terminations. These businesses are part of Kaplan’s Test Preparation
division. In the fourth quarter of 2008, Kaplan expanded this
restructuring to include additional operations. Total restructuring-
related expenses of $8.3 million were recorded in 2009 related to
lease termination costs, accelerated depreciation of fixed assets
and severance costs, compared to $11.0 million in restructuring-
related severance costs recorded in 2008.
Kaplan International includes professional training and post-
secondary education businesses outside the United States, as well
as English-language programs. Kaplan International revenue
declined 1% in 2009. Excluding revenue from acquired businesses,
Kaplan International revenue was down 6% in 2009. The decline
for 2009 is primarily the result of unfavorable exchange rates in the
U.K., Europe and Australia. These declines were offset by revenue
growth at International’s Asian operations. Kaplan International
operating income was down in 2009 largely due to weakness in
the financial education programs in the U.K. and English-language
programs, offset by improved operating results at International’s
Asian operations.
Kaplan Ventures is made up of a number of businesses in various
stages of development that are managed separately from the other
education businesses. Revenue at Kaplan Ventures increased 4% in
2009. Kaplan Ventures reported operating losses of $16.4 million
in 2009, compared to operating losses of $2.9 million in 2008,
due primarily to increased losses at Kaplan Virtual Education, a
developing group of online high school institutions. A goodwill and
other long-lived assets impairment charge of $25.4 million was
recorded at Kaplan in the third quarter of 2009 related to certain
Kaplan Ventures’ businesses, as the book value of these businesses
exceeded their estimated fair value.
Corporate represents unallocated expenses of Kaplan, Inc.’s
corporate office and other minor activities. Corporate expenses in
2008 included expenses associated with the resignation of
Kaplan’s former chief executive officer in 2008.
Stock compensation (charges) credits relate to incentive
compensation arising from equity awards under the Kaplan stock
option plan, which was established for certain members of Kaplan’s
management. Kaplan recorded stock compensation expense of
$0.9 million in 2009, compared to a stock compensation credit of
$7.8 million in 2008. The stock compensation credit in 2008
relates primarily to the forfeiture of 21,526 Kaplan stock options
due to the resignation noted above.
Cable Television Division. Cable television division revenue of
$750.4 million for 2009 represents a 4% increase from $719.1
million in 2008. The 2009 revenue increase is due to continued
growth in the division’s cable modem and telephone revenues and
a $4 monthly rate increase for most basic subscribers in June 2009.
Cable television division operating income in 2009 increased 4%
to $169.1 million, from $162.2 million in 2008. The cable
division’s operating results in 2009 included a $7.7 million gain
arising from changes to the cable division retiree health care
benefits program. Excluding this gain, the cable division’s operating
income in 2009 was even with 2008, as revenue increases were
offset by increased programming, depreciation and general and
administrative costs. Operating margin at the cable television
division was 23% in 2009 and 2008.
Revenue generating units (RGUs) were even with the prior year-end
due to a reduction in basic and digital subscribers, offset by
continued growth in high-speed data and telephony subscribers. A
summary of RGUs is as follows:
Cable Television Division
Subscribers December 31, 2009 December 31, 2008
Basic ...................... 668,986 699,469
Digital ..................... 219,062 224,877
High-speed data ............. 392,832 372,887
Telephony .................. 109,619 93,520
Total .................... 1,390,499 1,390,753
RGUs include about 6,300 subscribers who receive free basic
video service, primarily local governments, schools and other
organizations as required by various franchise agreements.
Below are details of cable television division capital expenditures
for 2009 and 2008 in the NCTA Standard Reporting Categories:
(in millions) 2009 2008
Customer premise equipment ..... $24.1 $ 34.5
Scalable infrastructure .......... 23.9 19.0
Line extensions ............... 10.1 16.2
Upgrade/rebuild ............. 8.6 14.8
Support capital ............... 17.3 29.7
Total ..................... $84.0 $114.2
Newspaper Publishing Division. For most of the newspaper
divisions’s print publications, 2009 included 53 weeks compared
to 52 weeks in 2008. Newspaper publishing division revenue in
2009 decreased 15% to $679.3 million, from $801.3 million in
2008. Print advertising revenue at the Post in 2009 declined 23%
to $317.0 million, from $410.4 million in 2008. The print revenue
decline in 2009 is from large decreases in classified, zones and
retail advertising. Revenue generated by the Company’s newspaper
online publishing activities, primarily washingtonpost.com, declined
8% to $99.6 million, from $108.3 million in 2008. Display online
advertising revenue grew 2% in 2009 and online classified
advertising revenue on washingtonpost.com declined 24%. Daily
circulation at the Post declined 5.9% and Sunday circulation
declined 4.7% in 2009; average daily circulation at the Post
totaled 595,800 (unaudited) and average Sunday circulation
totaled 831,300 (unaudited).
The Company offered a Voluntary Retirement Incentive Program to
certain employees of The Washington Post newspaper in the first
quarter of 2009. A total of 221 employees accepted the offer, and
early retirement program expense of $56.8 million was recorded in
the second quarter of 2009, which is being funded primarily from
the assets of the Company’s pension plans. In the third quarter of
2009, the Company offered a Voluntary Retirement Incentive
Program to certain employees at Robinson Terminal Warehouse
Corporation, and $1.1 million in early retirement program expense
was recorded, also to be funded from the assets of the Company’s
pension plans. In the first quarter of 2008, a Voluntary Retirement
Incentive Program was offered at The Washington Post, with 231
2010 FORM 10-K 53