Washington Post 2012 Annual Report Download - page 50

The Company’s computer networks may also be vulnerable to unauthorized access, computer hackers, computer viruses
and other security threats. The Company has expended, and will continue to expend, significant resources to protect
against the threat of security breaches, but its systems may still be vulnerable to these threats. A user who circumvents
security measures could misappropriate proprietary information or cause disruptions or malfunctions in operations. Any of
these events could have a material adverse effect on the Company’s business and results of operations.
• Failure to Successfully Assimilate Acquired Businesses Could Negatively Affect Kaplan’s Business
The Company’s Kaplan subsidiary has historically been an active acquirer of businesses that provide educational
services. Although during 2012 Kaplan only completed three acquisitions, historically it has acquired several businesses
each year, and we expect that trend to continue. 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 Could Negatively Affect Kaplan’s Business
Kaplan has operations and investments in a growing number of foreign countries, including Canada, Mexico, the U.K.,
Ireland, France, 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. 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. Kaplan International’s
ability to enroll students in these programs is directly dependent on its ability to comply with complex regulatory
environments. A recent example of this is the immigration regulatory changes in the U.K., which impose recruitment quotas
and stringent progress criteria as requirements for the maintenance of certain overseas student recruitment licenses. Any
significant changes to the regulatory environment or a natural disaster or pandemic in either the students’ countries 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.
• Failure to Comply with Regulations Applicable to International Operations Could Negatively Impact Kaplan’s
Business
Kaplan is subject to a wide range of regulations relating to its international operations. These include domestic laws such
as the U.S. Foreign Corrupt Practices Act, as well as the local regulatory schemes of the countries in which Kaplan
operates. Compliance with these regulations requires utmost vigilance. Failure to comply can result in the imposition of
significant penalties or revocation of Kaplan’s authority to operate in the applicable jurisdiction, each of which could
have a material adverse effect on Kaplan’s operating results.
• 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 digital media offerings, 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 by
38 THE WASHINGTON POST COMPANY