Washington Post 2003 Annual Report Download - page 50

43 percent of the increase in Kaplan revenue is from acquired reflects a significant increase in the value of Kaplan due to its rapid
businesses, primarily in the higher education division and the profes- earnings growth and the general rise in valuations of education
sional training schools that are part of supplemental education. A companies. See additional discussion above regarding the Compa-
summary of operating results for 2003 compared to 2002 is as ny's announcement in September 2003 of its offer to purchase
follows (in thousands): 55 percent of the outstanding Kaplan stock options.
2003 2002 % Change In February 2004, Kaplan announced that its higher education
division acquired Texas School of Business, a career-oriented post-
Revenue secondary school providing training in the fields of allied health and
Supplemental educationÏÏ $ 471,767 $371,248 27 business.
Higher education ÏÏÏÏÏÏÏ 366,310 249,877 47
Corporate Office. The corporate office operating expenses
$ 838,077 $621,125 35
increased to $30.3 million in 2003, from $27.4 million in 2002.
Operating income The increase in expenses for 2003 is associated with several
(loss) companywide technology projects.
Supplemental educationÏÏ $ 87,866 $ 54,103 62
Higher education ÏÏÏÏÏÏÏ 57,606 27,569 109 Equity in Losses of Affiliates. The Company's equity in losses
Kaplan corporate of affiliates for 2003 was $9.8 million, compared to losses of
overhead ÏÏÏÏÏÏÏÏÏÏÏÏ (36,782) (26,143) (41) $19.3 million for 2002. The Company's affiliate investments at the
OtherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (120,399) (35,017) (244) end of 2003 consisted of a 49 percent interest in BrassRing LLC and
$ (11,709) $ 20,512 Ì a 49 percent interest in Bowater Mersey Paper Company Limited.
BrassRing results improved in 2003, despite a second quarter
Supplemental education includes Kaplan's test preparation, profes- charge arising from the shutdown of one of the BrassRing business-
sional training and Score! businesses. On March 31, 2003, Kaplan es, which increased the Company's equity in losses of BrassRing by
completed its acquisition of Financial Training Company (FTC) for $2.2 million. The Company's equity in losses of BrassRing totaled
55.3 million ($87.4 million), financed through cash and debt. $7.7 million for 2003, compared to $13.9 million for 2002.
Headquartered in London, FTC provides test preparation services
for accountants and financial services professionals, with training On January 1, 2003, the Company sold its 50 percent interest in
centers in the United Kingdom and Asia. The improvement in supple- the International Herald Tribune for $65 million and recorded an
mental education results for 2003 is due to increased enrollment at after-tax non-operating gain of $32.3 million in the first quarter of
Kaplan's traditional test preparation business, significant increases 2003.
in the professional real estate courses, and the FTC acquisition. Non-Operating Items. The Company recorded other non-
Score! also contributed to the improved results, with increased operating income, net, of $55.4 million in 2003, compared to
enrollments at existing centers and the addition of 10 new centers $28.9 million in 2002. The 2003 non-operating income, net,
compared to last year. mostly comprises a $49.8 million pre-tax gain from the sale of the
Higher education includes all of Kaplan's post-secondary education Company's 50 percent interest in the International Herald Tribune.
businesses, including fixed-facility colleges, as well as online post- The 2002 non-operating income, net, includes a pre-tax gain of
secondary and career programs (various distance-learning busi- $27.8 million on the exchange of certain cable systems in the fourth
nesses). Higher education results are showing significant growth quarter of 2002 and a gain on the sale of marketable securities,
due to student enrollment increases, high student retention rates and offset by write-downs recorded on certain investments.
several acquisitions. A summary of non-operating income (expense) for the years
Corporate overhead represents unallocated expenses of Kaplan's ended December 28, 2003 and December 29, 2002, follows (in
corporate office, including a $6.5 million charge in the fourth millions):
quarter of 2003 for the Kaplan Educational Foundation, and 2003 2002
expenses associated with the design and development of educa-
tional software that, if successfully completed, will benefit all of Gain on sale of interest in IHT ÏÏÏÏÏÏÏÏÏÏÏ $49.8 $Ì
Kaplan's business units. Foreign currency gains, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.2 Ì
Impairment write-downs on cost method
Other expense comprises accrued charges for stock-based incen-
and other investmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1.3) (21.2)
tive compensation arising from a stock option plan established for
Gain on exchange of cable system
certain members of Kaplan's management (the general provisions businessÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì27.8
of which are discussed in Note G to the Consolidated Financial Gain on sale of marketable securities ÏÏÏÏ Ì13.2
Statements) and amortization of certain intangibles. Under the Other gains ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.7 9.1
stock-based incentive plan, the amount of compensation expense TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $55.4 $28.9
varies directly with the estimated fair value of Kaplan's common
stock and the number of options outstanding. The Company record- The Company incurred net interest expense of $26.9 million in
ed expense of $119.1 million and $34.5 million for 2003 and 2003, compared to $33.5 million in 2002, due to lower average
2002, respectively, related to this plan. The increase for 2003 borrowings during 2003 compared to 2002. At December 28,
30 THE WASHINGTON POST COMPANY