Washington Post 2012 Annual Report Download - page 63

Items included in the Company’s income from continuing operations
for 2012 are listed below:
• $111.6 million noncash goodwill and other long-lived assets
impairment charge at KTP (after-tax impact of $81.9 million, or
$11.33 per share);
• $63.7 million in early retirement, severance and other
restructuring charges at the education and newspaper publishing
divisions (after-tax impact of $45.5 million, or $6.18 per share);
• an $18.0 million write-down of a marketable equity security
(after-tax impact of $11.2 million, or $1.54 per share);
• a $5.8 million gain on the sale of a cost method investment
(after-tax impact of $3.7 million, or $0.48 per share); and
• $3.1 million in non-operating unrealized foreign currency gains
(after-tax impact of $2.0 million, or $0.27 per share).
Items included in the Company’s income from continuing operations
for 2011 are listed below:
• $31.3 million in severance and other restructuring charges at the
education and newspaper publishing divisions (after-tax impact of
$19.4 million, or $2.46 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).
Revenue for 2012 was $4,017.7 million, down 3% from
$4,131.1 million in 2011. Revenues were down at the education
and newspaper publishing divisions, partially offset by increases at
the television broadcasting and cable television divisions.
In 2012, education revenue decreased 9%, advertising revenue
increased 4%, circulation and subscriber revenue increased 2%
and other revenue increased 36%. Revenue declines at Kaplan
accountedforthedecreaseineducationrevenue.Theincreasein
advertising revenue is due to increased television broadcasting
revenue, offset by a decline at the newspaper publishing division.
Subscriber revenue increased at the cable television division,
but circulation revenue declined at the Post. The increase in other
revenue is largely due to higher sales at Social Code.
Operating costs and expenses for the year increased 2% to
$3,873.1 million in 2012, from $3,805.3 million in 2011.
Excluding the noncash goodwill and other-long lived assets
impairment charge at Kaplan, overall costs at Kaplan declined in
2012, and expenses were lower at the newspaper publishing
division. This was offset by increased costs at the television
broadcasting and cable television divisions, along with higher
expenses in other businesses.
Operating income for 2012 decreased to $144.5 million,
from $325.9 million in 2011. Operating results declined at
all of the Company’s divisions, except for the television
broadcasting division.
DIVISION RESULTS
Education Division. Education division revenue in 2012 totaled
$2,196.5 million, a 9% decline from $2,404.5 million in 2011.
Excluding revenue from acquired businesses, education division
revenue declined 10% in 2012. Kaplan reported an operating loss
of $105.4 million for 2012, compared to operating income of
$96.3 million in 2011. Kaplan’s 2012 operating results were
adversely impacted by a significant decline in KHE results; a
$111.6 million noncash goodwill and other long-lived assets
impairment charge related to KTP; and $45.2 million in restructuring
costs. These were offset by improved results at KTP and Kaplan
International.
In response to student demand levels, Kaplan has formulated and
implemented restructuring plans at its various businesses that have
resulted in significant costs in 2012 and 2011, with the objective
of establishing lower cost levels in future periods. Across all
businesses, restructuring costs totaled $45.2 million in 2012 and
$28.9 million in 2011. Kaplan currently expects to incur approx-
imately $25 million in additional restructuring costs in 2013 at
KHE and Kaplan International in conjunction with completing these
restructuring plans. Kaplan may also incur additional restructuring
charges in 2013 as the Company continues to evaluate its cost
structure.
A summary of Kaplan’s operating results for 2012 compared to
2011 is as follows:
(in thousands) 2012 2011 % Change
Revenue
Higher education ....... $1,149,407 $1,399,583 (18)
Test preparation ........ 284,252 303,093 (6)
Kaplan international ..... 764,184 704,581 8
Kaplan corporate ....... 4,645 4,585 1
Intersegment elimination . . . (5,992) (7,383) —
$2,196,496 $2,404,459 (9)
Operating Income (Loss)
Higher education ....... $ 27,245 $ 148,915 (82)
Test preparation ........ (10,799) (28,498) 62
Kaplan international ..... 49,069 41,506 18
Kaplan corporate ....... (42,617) (45,100) 6
Amortization of
intangible assets ...... (17,719) (19,417) 9
Impairment of goodwill and
other long-lived assets . . (111,593) ——
Intersegment elimination . . . 1,046 (1,120) —
$ (105,368) $ 96,286 —
Kaplan sold Kidum in August 2012, EduNeering in April
2012 and Kaplan Learning Technologies in February 2012.
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 domestic
professional training and other continuing education businesses.
2012 FORM 10-K 51