Washington Post 2009 Annual Report Download - page 54

segments. A summary of Kaplan’s operating results reported under
this structure for 2009 compared to 2008 is as follows:
(in thousands) 2009 2008 % Change
Revenue
Higher education ..... $1,539,587 $1,160,062 33
Test preparation,
excluding Score .... 436,438 478,440 (9)
Score .............. 8,557 28,672 (70)
Kaplan international . . . 537,238 545,070 (1)
Kaplan ventures ...... 124,250 126,242 (2)
Kaplan corporate ..... 1,354 1,426 (5)
Intersegment
elimination ........ (10,786) (8,332) —
$2,636,638 $2,331,580 13
Operating income (loss)
Higher education ..... $ 274,753 $ 172,897 59
Test preparation,
excluding Score .... 21,205 47,580 (55)
Score .............. (36,787) (13,278) —
Kaplan international . . . 53,772 59,957 (10)
Kaplan ventures ...... (16,332) (3,844) —
Kaplan corporate ..... (53,617) (49,143) (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)
Kaplan Higher Education (KHE) includes Kaplan’s domestic post-
secondary 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 59% 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 9% 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
terminations. These businesses are now 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. Kaplan Ventures includes Kaplan
EduNeering, Kaplan Compliance Solutions, Kaplan IT Learning,
Education Connection, Kaplan Virtual Education, Kidum and other
smaller businesses. Revenues at Kaplan Ventures declined 2% in
2009. Kaplan Ventures reported operating losses of $16.3 million
in 2009, compared to operating losses of $3.8 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.
40 THE WASHINGTON POST COMPANY