Washington Post 2012 Annual Report Download - page 64

In September 2012, KHE announced a plan to consolidate its
market presence at certain of its fixed-facility campuses. Under this
plan, KHE has ceased new enrollments at nine ground campuses as
it considers alternatives for these locations and is in the process of
consolidating operations of four other campuses into existing,
nearby locations. Revenues at these campuses represent approx-
imately 4% of KHE’s total revenues. In the fourth quarter of 2012,
KHE also began implementing plans to consolidate facilities
and reduce workforce at its online programs. In connection with
these and other plans, KHE incurred $23.4 million in restructuring
costs from accelerated depreciation, and severance and lease
obligations in 2012.
In 2012, KHE revenue declined 18% due largely to declines in
average enrollments that reflect weaker market demand over the
past year. Operating income decreased 82% for 2012. These
declines were due primarily to lower revenue, a decline in
operating results from campuses planned for closure and significant
restructuring costs noted above that exceed similar charges in
2011. Offsetting the declines were expense reductions associated
with lower enrollments and recent restructuring efforts.
New student enrollments at Kaplan University and KHE Campuses
decreased 1% in 2012. Total students at December 31, 2012
were down 12% compared to December 31, 2011, as follows:
As of December 31, %
Change2012 2011
Kaplan University ............. 44,371 50,190 (12)
KHE Campuses .............. 21,099 24,360 (13)
65,470 74,550 (12)
Kaplan University students included 5,625 and 5,799 campus-
based students as of December 31, 2012 and 2011, respectively.
Kaplan University and KHE Campuses enrollments at December 31,
2012 and 2011, by degree and certificate programs, are as
follows:
As of December 31,
2012 2011
Certificate ....................... 23.2% 23.6%
Associate’s ...................... 29.1% 30.3%
Bachelor’s ....................... 33.8% 34.6%
Master’s ........................ 13.9% 11.5%
100.0% 100.0%
KTP includes Kaplan’s standardized test preparation and tutoring
offerings. KTP revenue declined 6% in 2012. Enrollment increased
11% for the fiscal year 2012 driven by strength in pre-college,
nursing and bar review programs. Enrollment increases were offset
by competitive pricing pressure and a continued shift in demand to
lower priced online test preparation offerings. The improvement in
KTP operating results in 2012 is largely a result of lower operating
expenses due to restructuring activities in prior years, including
$12.5 million in total KTP restructuring costs recorded in 2011.
While overall results improved at KTP in 2012, Kaplan recorded a
$111.6 million noncash goodwill and other long-lived assets
impairment charge in connection with KTP in the fourth quarter of
2012. This impairment charge was determined as part of the
Company’s annual goodwill and intangible assets impairment
testing based on KTP operating losses for the past three years and a
recent slowdown in enrollment growth. KTP produced positive cash
flow from operations in 2012.
Kaplan International includes English-language programs, and
postsecondary education and professional training businesses
outside the United States. In May 2011, Kaplan Australia acquired
Franklyn Scholar and Carrick Education Group, national providers
of vocational training and higher education in Australia. In June
2011, Kaplan acquired Structuralia, a provider of e-learning for the
engineering and infrastructure sector in Spain. Kaplan International
revenue increased 8% in 2012. Excluding revenue from acquired
businesses, Kaplan International revenue increased 4% in 2012 due
to enrollment growth in the English-language and Singapore higher
education programs.
Kaplan International operating income increased in 2012 due
largely to strong results in Singapore, offset by combined losses from
businesses acquired in 2011. These losses occurred primarily at
certain businesses in Australia where Kaplan has been consolidating
and restructuring its businesses to optimize operations. Restructuring
costs at Kaplan International totaled $16.4 million in 2012. These
restructuring costs were largely in Australia and included lease
obligations, accelerated depreciation and severance charges.
Corporate represents unallocated expenses of Kaplan, Inc.’s
corporate office and other minor shared activities.
In the fourth quarter of 2012, $2.6 million in restructuring costs is
included in amortization of intangible assets, largely from
accelerated intangible asset amortization associated with changes
to business operations in Australia.
Cable Television Division. Cable television division revenue for
2012 increased 4% to $787.1 million, from $760.2 million in
2011. The revenue results reflect continued growth of the division’s
Internet and telephone service revenues and rate increases for many
subscribers in June 2012, offset by a decline in basic video
subscribers.
Cable television division operating income in 2012 decreased 1%
to $154.6 million, from $156.8 million in 2011. The cable
television division’s operating income for 2012 declined primarily
due to increased programming and depreciation costs, offset
partially by increased revenues. Operating margin at the cable
television division was 20% in 2012 and 21% in 2011.
At December 31, 2012, Primary Service Units (PSUs) were down
1% from the prior year due to a decline in basic video subscribers,
offset by growth in high-speed data and telephony subscribers. A
summary of PSUs is as follows:
As of December 31,
2012 2011
Basic video ..................... 593,615 621,423
High-speed data ................. 459,235 451,082
Telephony ...................... 184,528 179,989
Total ........................ 1,237,378 1,252,494
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