Washington Post 2011 Annual Report Download - page 66

KTP revenue declined 4% in 2010; excluding acquisitions, KTP
revenue declined 9%, due mostly to the termination of certain K12
offerings. Revenue at the traditional test preparation programs in
2010 was essentially flat. Strong enrollment increases, particularly
in the pre-college and nursing programs, were offset by reduced
prices for many programs related to increased competition and
increased demand for lower priced online test preparation offerings.
KTP operating results were down in 2010 due to the termination of
certain K12 offerings and $7.8 million in related closure costs in
2010, reduced prices at the traditional test preparation programs
and higher spending to expand online offerings and innovate
various programs, as well as $10.4 million in 2010 restructuring-
related charges. KTP operating results in 2009 were also adversely
affected by a $4.6 million charge at the K12 business for product
development and other write-downs.
In March 2009, the Company approved a plan to close its Score
tutoring centers. The Company recorded charges of $24.9 million
in asset write-downs, lease terminations, severance and accelerated
depreciation of fixed assets in the first half of 2009.
Kaplan International includes professional training and
postsecondary education businesses outside the United States, as
well as English-language programs. Kaplan International revenue
increased 9% in 2010 and operating income rose 4% due to
enrollment growth in the pathways and other higher education
programs in the U.K. and Singapore. The rise in revenue is also
due to increased English-language program revenue and favorable
exchange rates in Australia and Singapore.
Kaplan Ventures is made up of a number of businesses in various
stages of development that are managed separately from the other
education businesses. Revenue at Kaplan Ventures increased 4% in
2010. Kaplan Ventures reported operating losses of $17.5 million
in 2010, compared to operating losses of $9.3 million in 2009.
The decline in results for 2010 is due to increased investment in
certain developing business units. A goodwill impairment charge of
$8.5 million was recorded at Kaplan in the third quarter of 2009
related to one of Kaplan Ventures’ businesses, as the book value of
this business exceeded its estimated fair value.
Corporate represents unallocated expenses of Kaplan, Inc.’s
corporate office and other minor shared activities. Corporate
expenses declined in 2010, due largely to the reversal of incentive
compensation accruals.
Cable Television Division. Cable television division revenue of
$759.9 million for 2010 represents a 1% increase from $750.4
million in 2009 due to continued growth of the division’s cable
modem and telephone revenues.
Cable television division operating income in 2010 decreased to
$163.9 million, from $169.1 million in 2009. The cable television
division’s operating results in 2009 included a $7.7 million gain
arising from changes to the cable television division retiree health
care benefits program. Excluding this gain, the cable television
division’s operating income in 2010 increased due to the division’s
revenue growth, offset by increased technical and sales costs.
Operating margin at the cable television division was 22% in 2010
and 23% in 2009.
At December 31, 2010, Primary Service Units (PSUs) were up 5%
from the prior year due to growth in high-speed data and telephony
subscribers, offset by a decrease in basic video subscribers. A
summary of PSUs is as follows:
As of December 31,
2010 2009
Basic video .................... 648,413 668,986
High-speed data ................ 425,402 392,832
Telephony ..................... 153,044 109,619
Total ....................... 1,226,859 1,171,437
PSUs include about 6,300 subscribers who receive free basic cable
service, primarily local governments, schools and other organizations
as required by various franchise agreements.
Below are details of the cable television division’s capital expenditures
for 2010 and 2009 in the NCTA Standard Reporting Categories:
(in thousands) 2010 2009
Customer premise equipment ........ $ 22,413 $24,131
Commercial ..................... 1,338 —
Scaleable infrastructure ............. 50,458 23,938
Line extensions ................... 7,118 10,104
Upgrade/rebuild ................. 7,192 8,581
Support capital .................. 21,059 17,273
Total ........................ $109,578 $84,027
Newspaper Publishing Division. For most of the newspaper
publishing division’s print publications, operating results in 2010
included 52 weeks, compared to 53 weeks in 2009. Newspaper
publishing division revenue in 2010 increased slightly to $680.4
million, from $679.3 million in 2009. Print advertising revenue at
the Post in 2010 declined 6% to $297.9 million, from $317.0
million in 2009. The print revenue declines in 2010 are due to
reductions in general, classified and retail advertising, along with
one less week in 2010 versus 2009. Revenue generated by the
Company’s newspaper online publishing activities, primarily
washingtonpost.com and Slate, increased 14% to $114.8 million,
from $100.4 million in 2009. Display online advertising revenue
grew 18% in 2010, and online classified advertising revenue on
washingtonpost.com increased slightly in 2010. Daily circulation
at the Post declined 7.5%, and Sunday circulation declined 8.2% in
2010. For 2010, average daily circulation at the Post totaled
550,900 (unaudited), and average Sunday circulation totaled
763,100 (unaudited).
As previously disclosed, the Post contributes to multiemployer plans
on behalf of three union-represented employee groups. The Post has
negotiated in collective bargaining the contractual right to withdraw
from two of these plans; the right to withdraw from the CWA-ITU
Negotiated Pension Plan (CWA-ITU Plan) was the subject of
contract negotiations that reached an impasse. In July 2010, the
Post notified the union and the CWA- ITU Plan of its unilateral
withdrawal from the Plan, effective November 30, 2010. In
connection with this action, the Post recorded a $20.4 million
charge based on an estimate of the withdrawal liability.
As previously reported, the Post recorded early retirement program
expense of $56.8 million in the second quarter of 2009, and
54 THE WASHINGTON POST COMPANY