Washington Post 2010 Annual Report Download - page 51

• Changes in the Extent to Which Licensing and Proficiency Examinations Are Used to Qualify Individuals to Pursue
Certain Careers
A substantial portion of Kaplan Test Preparation’s and Kaplan International’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 Test Preparation’s and Kaplan International’s
businesses 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 2010 Kaplan completed four 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 U.K.,
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 effectively manage these risks
could have a material adverse effect on Kaplan’s operating results.
• Changes in International Regulatory and Physical Environments Could Negatively Affect International Student
Enrollments
A substantial portion of Kaplan International’s revenue comes from programs that prepare international students to study
and travel to English-speaking countries, principally the U.S., the U.K., Australia, and Singapore. Any significant changes
to the regulatory environment, or a natural disaster or pandemic, in either the students’ counties of origin or the countries
to which they desire to travel or study, could negatively affect Kaplan’s ability to attract and retain such students, which
could negatively impact Kaplan’s operating results. An example of this is the recent immigration regulatory changes in the
U.K. which impose recruitment quotas and stringent progression criteria as requirements for the maintenance of certain
overseas student recruitment licenses.
• Negative Impact of the Recession, 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 recession
reduced advertising expenditures of many of the Company’s advertisers, which has had a lingering negative impact on
the operating results of the Company’s newspaper and television broadcasting businesses. A decline in general economic
conditions in the United States may have a material adverse effect on the operating results of the Company’s businesses.
• Changing Preferences of Readers or Viewers Away From Traditional Media Outlets
The rates that the Company’s print publishing and television broadcasting businesses can charge for advertising are
directly related to the number of readers and viewers of its publications and broadcasts. There is tremendous competition
for readers and viewers from other media. The Company’s publishing and television broadcasting businesses will be
adversely affected to the extent that individuals decide to obtain news, entertainment, classified listings and local
shopping information from Internet-based or other media to the exclusion of the Company’s websites, print publications
and broadcasts.
• Changing Perceptions About the Effectiveness of Publishing and Television Broadcasting in Delivering Advertising
Historically, newspaper publishing and television broadcasting have been viewed as cost-effective methods of delivering
various forms of advertising. There can be no guarantee that this historical perception will guide future decisions on the
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