Washington Post 2015 Annual Report Download - page 139

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For the years ended December 31, 2015, 2014 and 2013, approximately $628 million, $806 million and $819
million, respectively, of the Company’s education division revenue was derived from financial aid received by
students under Title IV programs. Management believes that the Company’s education division schools that
participate in Title IV programs are in material compliance with standards set forth in the Higher Education Act
and related regulations.
ED Program Reviews. The ED has undertaken program reviews at various KHE locations.
On February 23, 2015, the ED began a review of Kaplan University. The review will assess Kaplan’s
administration of its Title IV, HEA programs and will initially focus on the 2013 to 2014 and 2014 to 2015 award
years. On December 17, 2015, Kaplan University received a notice from the ED that it had been placed on
provisional certification status until September 30, 2018, in connection with the open and ongoing ED program
review. The ED has not notified Kaplan University of any negative findings. However, at this time, Kaplan
cannot predict the outcome of this review, when it will be completed or any liability or other limitations that the
ED may place on Kaplan University as a result of this review. During the period of provisional certification,
Kaplan University must obtain prior ED approval to open a new location, add an educational program, acquire
another school or make any other significant change.
In addition, there are four open program reviews at campuses that were part of the KHE Campuses business,
including the ED’s final reports on the program reviews at KHE’s Broomall, PA, and Pittsburgh, PA locations.
Kaplan retains responsibility for any financial obligation resulting from the ED program reviews at the KHE
Campuses business that were open at the time of sale of the campuses to ECA.
The Company does not expect the open program reviews to have a material impact on KHE; however, the results
of open program reviews and their impact on Kaplan’s operations are uncertain.
The 90/10 Rule. Under regulations referred to as the 90/10 rule, an institution would lose its eligibility to
participate in Title IV programs for a period of at least two fiscal years if the institution derives more than 90%
of its receipts from Title IV programs, as calculated on a cash basis in accordance with the Higher Education Act
and applicable ED regulations, in each of two consecutive fiscal years. An institution with Title IV receipts
exceeding 90% for a single fiscal year would be placed on provisional certification and may be subject to other
enforcement measures. Kaplan University derived less than 79% and less than 81% of its receipts from Title IV
programs in 2015 and 2014, respectively.
19. BUSINESS SEGMENTS
Basis of Presentation. The Company’s organizational structure is based on a number of factors that
management uses to evaluate, view and run its business operations, which include, but are not limited to,
customers, the nature of products and services and use of resources. The business segments disclosed in the
Consolidated Financial Statements are based on this organizational structure and information reviewed by the
Company’s management to evaluate the business segment results. The Company has four reportable segments:
KHE, KTP, Kaplan International, and television broadcasting.
The Company evaluates segment performance based on operating income before amortization of intangible
assets and impairment of goodwill and other long-lived assets. The accounting policies at the segments are the
same as described in Note 2. In computing income from operations by segment, the effects of equity in earnings
(losses) of affiliates, interest income, interest expense, other non-operating income and expense items and
income taxes are not included. Intersegment sales are not material.
Identifiable assets by segment are those assets used in the Company’s operations in each business segment. The
Prepaid Pension cost is not included in identifiable assets by segment. Investments in marketable equity
securities are discussed in Note 4.
2015 FORM 10-K 124