Washington Post 2013 Annual Report Download - page 63

online test preparation offerings. The improvement in KTP operating
results in 2012 is largely a result of lower operating expenses due
to restructuring activities in prior years, including $12.5 million in
total KTP restructuring costs recorded in 2011.
While overall results improved at KTP in 2012, Kaplan recorded a
$111.6 million noncash goodwill and other long-lived assets
impairment charge in connection with KTP in the fourth quarter of
2012. This impairment charge was determined as part of the
Company’s annual goodwill and intangible assets impairment
testing, based on KTP operating losses for the past three years and
a recent slowdown in enrollment growth. KTP produced positive
cash flow from operations in 2012.
Kaplan International includes English-language programs, and
postsecondary education and professional training businesses
outside the United States. In May 2011, Kaplan Australia acquired
Franklyn Scholar and Carrick Education Group, national providers
of vocational training and higher education in Australia. In June
2011, Kaplan acquired Structuralia, a provider of e-learning for the
engineering and infrastructure sector in Spain. Kaplan International
revenue increased 9% in 2012. Excluding revenue from acquired
businesses, Kaplan International revenue increased 4% in 2012 due
to enrollment growth in the English-language and Singapore higher
education programs.
Kaplan International operating income increased in 2012 due
largely to strong results in Singapore, offset by combined losses from
businesses acquired in 2011. These losses occurred primarily at
certain businesses in Australia where Kaplan has been consolidating
and restructuring its businesses to optimize operations. Restructuring
costs at Kaplan International totaled $16.4 million in 2012. These
restructuring costs were largely in Australia and included lease
obligations, accelerated depreciation and severance charges.
Corporate represents unallocated expenses of Kaplan, Inc.’s
corporate office, other minor businesses and certain shared
activities.
In the fourth quarter of 2012, $2.6 million in restructuring costs is
included in amortization of intangible assets, largely from accel-
erated intangible asset amortization associated with changes to
business operations in Australia.
Cable Division. Cable division revenue for 2012 increased 4% to
$787.1 million, from $760.2 million in 2011. The revenue results
reflect continued growth of the division’s Internet and telephone
service revenues and rate increases for many subscribers in June
2012, offset by a decline in video subscribers.
Cable division operating income in 2012 decreased 1% to
$154.6 million, from $156.8 million in 2011. The cable division’s
operating income for 2012 declined primarily due to increased
programming and depreciation costs, offset partially by increased
revenues. Operating margin at the cable division was 20% in
2012 and 21% in 2011.
At December 31, 2012, PSUs were down 1% from the prior year
due to a decline in video subscribers, offset by growth in high-
speed data and telephony subscribers. A summary of PSUs is as
follows:
As of December 31
2012 2011
Video .......................... 593,615 621,423
High-speed data .................. 459,235 451,082
Telephony ...................... 184,528 179,989
Total ......................... 1,237,378 1,252,494
PSUs include about 6,000 subscribers who receive free video cable
service, primarily local governments, schools and other organizations
as required by various franchise agreements.
Below are details of the cable division’s capital expenditures,
presented in the NCTA Standard Reporting Categories:
Year Ended December 31
(in thousands) 2012 2011
Customer premise equipment ....... $ 43,629 $ 53,139
Commercial ................... 4,549 3,487
Scalable infrastructure ............ 24,048 34,748
Line extensions ................. 5,997 6,318
Upgrade/rebuild ............... 16,957 12,951
Support capital ................. 55,345 32,582
Total ....................... $150,525 $143,225
Television Broadcasting Division. Revenue for the television
broadcasting division increased 25% to $399.7 million in 2012,
from $319.2 million in 2011. Television broadcasting division
operating income for 2012 increased 64% to $191.6 million, from
$117.1 million in 2011.
The increase in revenue and operating income for 2012 reflects
improved advertising demand across many product categories.
These results include a $48.1 million increase in political adver-
tising revenue in 2012; $10.8 million in incremental summer
Olympics-related advertising at the Company’s NBC affiliates in
the third quarter of 2012; and increased retransmission revenues.
Operating margin at the television broadcasting division was 48%
in 2012 and 37% in 2011.
Competitive market position remained strong for the Company’s
television stations. WDIV in Detroit, KSAT in San Antonio and WJXT
in Jacksonville ranked number one in the November 2012 ratings
period, Monday through Friday, sign-on to sign-off; WPLG in Miami
tied for the number one rank (Anglo stations), and KPRC in Houston
and WKMG in Orlando ranked third.
Other Businesses. Other businesses includes the operating results of
SocialCode, a marketing solutions provider helping companies with
marketing on social-media platforms; Trove, a digital team focused
on emerging technologies and new product development; and
Celtic Healthcare, Inc., a provider of home health and hospice
services in the northeastern and mid-Atlantic regions that was
acquired by the Company in November 2012. Also included are
The Slate Group and FP Group, previously included as part of the
Company’s newspaper publishing division.
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