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Revenue for 2014 was $2,737.0 million, up 5% from $2,600.6 million in 2013. Revenues increased at the
television broadcasting division and in other businesses, offset by a slight decline at the education division.
In 2014, education revenue was flat, advertising revenue increased 12% and other revenue increased 66%. The
flat revenue results at Kaplan account for the reported education revenue. The increase in advertising revenue is
due to increased television broadcasting revenue. The increase in other revenues is due primarily to the inclusion
of acquired businesses in 2014 and 2013.
Operating costs and expenses for the year increased 2% to $2,504.3 million in 2014, from $2,451.2 million in
2013. Expenses were higher in other businesses and the television broadcasting division in 2014, partially offset
by decreased costs at the education division.
Operating income for 2014 increased to $232.7 million, from $149.4 million in 2013. Operating results improved
at all divisions and benefited from an increase in the net pension credit.
On July 1, 2015, the Company completed the spin-off of Cable ONE as an independent, publicly traded
company. The transaction was structured as a tax-free spin-off of Cable ONE to the stockholders of the Company
as one share of Cable ONE common stock was distributed for every share of Class A and Class B common stock
of Graham Holdings outstanding on the June 15, 2015, record date. The historical operating results of the
Company’s cable division are included in discontinued operations, net of tax, for all periods presented.
On June 30, 2014, the Company and Berkshire Hathaway Inc. completed a transaction in which Berkshire
acquired a wholly owned subsidiary of the Company that included, among other things, WPLG, a Miami-based
television station, 2,107 Class A Berkshire shares and 1,278 Class B Berkshire shares owned by Graham
Holdings and $327.7 million in cash, in exchange for 1,620,190 shares of Graham Holdings Class B common
stock owned by Berkshire Hathaway (Berkshire exchange transaction). As a result, income from continuing
operations for 2014 includes a $266.7 million gain from the exchange of the Berkshire Hathaway shares, and
income from discontinued operations for 2014 includes a $375.0 million gain from the WPLG exchange.
DIVISION RESULTS
Education Division. Education division revenue in 2014 totaled $2,160.4 million, compared to $2,163.7
million in 2013. Kaplan reported operating income of $65.5 million for 2014, compared to $51.0 million in 2013.
Kaplan’s 2014 operating results in comparison to 2013 benefited from strong improvement in KHE and Kaplan
International results, offset by increased intangible and other long-lived asset impairment charges.
In recent years, Kaplan has formulated and implemented restructuring plans at its various businesses that have
resulted in significant costs in 2014 and 2013, with the objective of establishing lower cost levels in future
periods. Across all businesses, restructuring costs and software asset write-offs totaled $16.8 million in 2014 and
$36.4 million in 2013.
In the third quarter of 2014, Kaplan completed the sale of three of its schools in China that were previously part
of Kaplan International. The sale of an additional school in China was completed in January 2015. Kaplan’s
operating results exclude these schools, which have been reclassified to discontinued operations for all periods
presented.
53 GRAHAM HOLDINGS COMPANY