Washington Post 2011 Annual Report Download - page 61

to $319.3 million ($35.75 per share) for fiscal year 2010. As a
result of the Company’s share repurchases, there were 11% fewer
diluted average shares outstanding in 2011.
Items included in the Company’s income from continuing operations
for 2011:
• $29.2 million in severance and restructuring charges at Kaplan
(after-tax impact of $18.1 million, or $2.30 per share);
• a $2.4 million charge recorded at the newspaper publishing
division in connection with the withdrawal from a multiemployer
pension plan (after-tax impact of $1.5 million, or $0.19 per
share);
• an $11.9 million goodwill impairment charge at the Company’s
online lead generation business, included in other businesses
(after-tax impact of $11.9 million, or $1.51 per share);
• a $9.2 million impairment charge at one of the Company’s
affiliates (after-tax impact of $5.7 million, or $0.72 per share);
• a $53.8 million write-down of a marketable equity security
(after-tax impact of $34.6 million, or $4.34 per share); and
• $3.3 million in non-operating unrealized foreign currency losses
(after-tax impact of $2.1 million, or $0.26 per share).
Items included in the Company’s income from continuing operations
for 2010:
• a $20.4 million charge recorded at the Post in connection with
the withdrawal from a multiemployer pension plan (after-tax
impact of $12.7 million, or $1.38 per share);
• $39.0 million in severance and restructuring charges (after-tax
impact of $24.2 million, or $2.83 per share);
• a $27.5 million goodwill and other intangible assets impairment
charge at the Company’s online lead generation business,
included in other businesses (after-tax impact of $26.3 million, or
$2.96 per share); and
• $6.7 million in non-operating unrealized foreign currency gains
(after-tax impact of $4.2 million, or $0.47 per share).
Revenue for 2011 was $4,214.8 million, down 10% from
$4,684.0 million in 2010. Revenues were down at the education,
newspaper publishing and television broadcasting divisions, while
revenues were up slightly at the cable television division. In 2011,
education revenue decreased 14%, advertising revenue decreased
9%, circulation and subscriber revenue was flat and other revenue
increased 6%. Revenue declines at Kaplan accounted for the
decrease in education revenue. The decrease in advertising revenue
is due to declines at the television broadcasting and newspaper
publishing divisions. Both subscriber revenue at the cable television
division and circulation revenue at the Post were even with last
year.
Operating costs and expenses for the year decreased 5% to
$3,918.9 million in 2011, from $4,121.4 million in 2010. The
decline is due to lower expenses at the education, television
broadcasting and newspaper publishing divisions, offset by
increased costs at the cable television division.
Operating income for 2011 decreased to $296.0 million, from
$562.7 million in 2010. Operating results declined at all of the
Company’s divisions.
DIVISION RESULTS
Education Division. Education division revenue in 2011 totaled
$2,465.0 million, a 14% decline from revenue of $2,862.3
million in 2010. Excluding revenue from acquired businesses,
education division revenue declined 16% in 2011. Kaplan reported
operating income of $89.4 million for 2011, down from $346.7
million in 2010.
In light of recent revenue declines and other business challenges,
Kaplan has formulated and implemented restructuring plans at its
various businesses that have resulted in significant costs in 2010
and 2011, with the objective of establishing lower cost levels in
future periods. Across all businesses, severance and restructuring
costs totaled $29.2 million in 2011 and $27.5 million in 2010.
A summary of Kaplan’s operating results for 2011 compared to
2010 is as follows:
(in thousands) 2011 2010 % Change
Revenue
Higher education ....... $1,399,582 $1,905,038 (27)
Test preparation ....... 303,093 314,879 (4)
Kaplan international ..... 690,225 585,924 18
Kaplan ventures ........ 74,946 59,296 26
Kaplan corporate ...... 4,585 5,537 (17)
Intersegment elimination . . (7,383) (8,395) —
$2,465,048 $2,862,279 (14)
Operating Income (Loss)
Higher education ....... $ 148,915 $ 406,880 (63)
Test preparation ....... (28,498) (32,583) 13
Kaplan international ..... 46,498 56,152 (17)
Kaplan ventures ........ (10,093) (17,490) 42
Kaplan corporate ...... (45,101) (44,586) (1)
Amortization of intangible
assets ............. (21,167) (21,406) 1
Intersegment elimination . . (1,120) (234) —
$ 89,434 $ 346,733 (74)
Kaplan sold Kaplan Compliance Solutions (KCS) in October 2011,
Kaplan Virtual Education (KVE) in July 2011 and Education
Connection in April 2010. Consequently, the education division’s
operating results exclude these businesses.
KHE includes Kaplan’s domestic postsecondary education
businesses, made up of fixed-facility colleges and online post-
secondary and career programs. KHE also includes the Kaplan
University School of Professional and Continuing Education. In
2011, KHE revenue declined 27% due to declines in average
enrollments. Operating income decreased 63% in 2011 due to
lower revenue, increased regulatory compliance costs and $13.2
million in severance and restructuring costs in 2011. Offsetting the
decline were lower advertising costs, other expense reductions
associated with lower enrollments, incentive compensation credits
recorded in 2011 related to amounts previously accrued and $9.3
million in 2010 severance costs.
KHE has implemented a number of marketing and admissions
changes to increase student selectivity and help KHE comply with
recent regulations. KHE also implemented the Kaplan Commitment
program, which provides first-time students with a risk-free trial
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