Washington Post 2008 Annual Report Download - page 39

• Failure to Maintain Institutional Accreditation Could Lead to Loss of Ability to Participate in Title IV Programs
Each of Kaplan Higher Education’s ground campuses and online university are institutionally accredited by one or another
of a number of national and regional accreditors recognized by the U.S. Department of Education. Accreditation by an
accrediting agency recognized by the U.S. Department of Education is required for an institution to become and remain
eligible to participate in Title IV programs. The loss of accreditation would, among other things, render Kaplan schools
and programs ineligible to participate in Title IV programs and would have a material adverse effect on its business.
• Failure to Maintain State Authorizations Could Cause Loss of Ability to Operate and to Participate in Title IV Programs
in Some States
Kaplan Higher Education ground campuses and online university are authorized to operate and to grant degrees,
certificates or diplomas by the applicable state agency of each state where such authorization is required. Such state
authorization is required for each campus located in the state or, in the case of states that require it, for Kaplan University
online to offer post-secondary education. In either case, state authorization is required for students at Higher Education
campuses or enrolled in online programs to be eligible to participate in Title IV programs. The loss of such authorization
would preclude the campuses or online university from offering post-secondary education and render students ineligible to
participate in Title IV programs. Loss of authorization at those state campus locations or, in states that require it for Kaplan
University online, could have a material adverse effect on Kaplan Higher Education’s business.
• Changes in the Extent to Which Standardized Tests Are Used in the Admissions Process by Colleges or Graduate
Schools
A substantial portion of Kaplan’s operating income is generated by its Test Prep and Admissions operations. The source of
this income is fees charged for courses that prepare students for a broad range of admissions examinations that are
required for admission to colleges and graduate schools. Historically, colleges and graduate schools have required
standardized tests as part of the admissions process. There has been some movement away from this historical reliance
on standardized admissions tests among a small number of colleges that have adopted “test-optional” admissions
policies. Any significant reduction in the use of standardized tests in the college or graduate school admissions process
could have an adverse effect on Kaplan’s operating results.
• Changes in the Extent to Which Licensing and Proficiency Examinations Are Used to Qualify Individuals to Pursue
Certain Careers
A substantial portion of Kaplan Professional’s revenue comes from preparing individuals for licensing or technical
proficiency examinations in various fields. Any significant relaxation or elimination of licensing or technical proficiency
requirements in those fields served by Kaplan’s Professional Division could negatively impact Kaplan’s operating results.
• Failure to Successfully Assimilate Acquired Businesses
The Company’s Kaplan subsidiary has historically been an active acquirer of businesses that provide educational
services. Consistent with this historical trend, during 2008 Kaplan completed a total of nine acquisitions. Acquisitions
involve various inherent risks and uncertainties, including difficulties in efficiently integrating the service offerings,
accounting and other administrative systems of an acquired business; the challenges of assimilating and retaining key
personnel; the consequences of diverting the attention of senior management from existing operations; the possibility that
an acquired business does not meet or exceed the financial projections that supported the purchase price; and the
possible failure of the due diligence process to identify significant business risks or undisclosed liabilities associated with
the acquired business. A failure to effectively manage growth and integrate acquired businesses could have a material
adverse effect on Kaplan’s operating results.
• Difficulties of Managing Foreign Operations
Kaplan has operations and investments in a growing number of foreign countries, including Canada, Mexico, the United
Kingdom, Ireland, France, Israel, Australia, New Zealand, Singapore, India and China. Operating in foreign countries
presents a number of inherent risks, including the difficulties of complying with unfamiliar laws and regulations, effectively
managing and staffing foreign operations, successfully navigating local customs and practices, preparing for potential
political and economic instability and adapting to currency exchange rate fluctuations. The failure to manage these risks
could have a material adverse effect on Kaplan’s operating results.
• Negative Impact of Recent Financial Market Crisis and Economic Downturn, Particularly in the Specific Geographic
Markets Served by the Company’s Publishing and Television Broadcasting Businesses
A significant portion of the Company’s revenues in its publishing and broadcasting businesses comes from advertising.
The demand for advertising is sensitive to the overall level of economic activity, both nationally and locally. The financial
2008 FORM 10-K 27