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5
2011 ANNUAL REPORT
just one example. We’d cut tuition for many pro-
grams if somehow freed from these regulations.)
What might have been better (if existing regu-
lations were done away with):
• Howaboutincentingprivate-sectorcolleges
to educate lower income students who need
the most help?
• How about regulating private-sector col-
leges based on what students actually learn?
(Remember, all our programs are aimed at
teaching job-related skills.)
• Howaboutmakingpartoffederalaiddepen-
dent on students graduating?
• How about asking private-sector colleges
to share the government’s losses when stu-
dents default?
Kaplan results from 2011 were very poor com-
pared to 2010:
%
(in thousands) 2011 2010 Change
Operating Income (Loss)
Higher education $148,9 1 5)$406,880)(63)
Test preparation (28,498) (32,583) 13)
Kaplan international 46,498)56, 1 52)(17)
Kaplan ventures (10,093) ( 1 7,490) 42)
Kaplan corporate
and other (67,388) (66,226) (2)
$ 89,434)$346,733)(74)
Almost all of the decline in profits came from
our higher education business. It won’t be
reversed soon. We are recruiting and accept-
ing fewer lower income students under the new
“gainful employment” regulation, so the num-
ber of student “starts” is down from past years.
But we’re still graduating pretty large numbers
of those who started our programs a few years
ago, when our student “starts” were much
greater. The math makes it almost impossible
for our revenue numbers to grow in 2012.
But we do intend to grow. As I’ve just written:
high-quality private-sector higher education
seems a very promising business for the future.
We’re recruiting dierent students: investments
in still-better courses should increase our grad-
uation rates; and the Kaplan Commitment I’ve
described so often will improve these rates, too.
Elsewhere in Kaplan: our test prep business
made significant progress in changing its
business model. John Polstein, who has come
through for Kaplan in countless challenging
assignments, may be succeeding in the tough-
est of all.
In Kaplan Asia Pacific, we acquired two good-
sized vocational-training businesses in Australia — 
Franklyn Scholar and Carrick Education Group.
Going forward, these should be important con-
tributors to Kaplan.
Let us now say a word in praise of Cable ONE
and Post–Newsweek Stations, whose steady
profitability and excellent management have
been crucial to the Company during bad days
at the Post and Kaplan.
Cable ONE continued to provide great service
to customers in its markets. Our profits were
pinched by our own strategy. We’ve taken no
rate increases since 2009 to hold market share
against satellite and telephone competitors.
Our capital expenditures will be high in 2012
and 2013 as we renovate our plant.