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SEC Filings

10-Q
GRAHAM HOLDINGS CO filed this Form 10-Q on 05/03/2017
Entire Document
 


Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition.
This analysis should be read in conjunction with the condensed consolidated financial statements and the notes thereto.
Results of Operations
The Company reported net income attributable to common shares of $21.1 million ($3.75 per share) for the first quarter of 2017, compared to $37.8 million ($6.59 per share) for the first quarter of 2016.
Items included in the Company’s net income for the first quarter of 2017:
$1.7 million in non-operating foreign currency gains (after-tax impact of $1.1 million, or $0.19 per share); and
$5.9 million in income tax benefits related to stock compensation ($1.06 per share).
Items included in the Company’s net income for the first quarter of 2016:
an $18.9 million non-operating gain arising from the sale of a business (after-tax impact of $11.9 million, or $2.08 per share);
a $1.8 million gain on sale of marketable equity securities (after-tax impact of $1.1 million, or $0.19 per share); and
$5.4 million in non-operating foreign currency losses (after-tax impact of $3.4 million, or $0.60 per share).
Revenue for the first quarter of 2017 was $582.7 million, down 3% from $601.7 million in the first quarter of 2016. Revenues declined at the education and television broadcasting divisions, offset by an increase in other businesses. The Company reported operating income of $29.1 million for the first quarter of 2017, compared to $51.9 million for the first quarter of 2016. The operating income decline is driven by lower earnings at the television broadcasting division largely due to a new NBC contract for the Company's NBC affiliates in Houston and Detroit, and a decrease in earnings at Kaplan Higher Education (KHE) due to lower enrollments at Kaplan University. Operating results for other businesses were also down for the quarter.
Division Results
Education  
Education division revenue totaled $372.9 million for the first quarter of 2017, down 7% from revenue of $401.1 million for the same period of 2016. Kaplan reported operating income of $9.0 million for the first quarter of 2017, compared to $14.5 million for the first quarter of 2016.
A summary of Kaplan’s operating results for the first quarter of 2017 compared to 2016 is as follows:
 
Three Months Ended
 
 
  
March 31
 
  
(in thousands)
2017
 
2016
 
% Change
Revenue
  
 
  
 
  
Higher education
$
144,310

 
$
165,549

 
(13
)
Test preparation
64,568

 
66,462

 
(3
)
Kaplan international
164,562

 
169,287

 
(3
)
Kaplan corporate and other
14

 
125

 
(89
)
Intersegment elimination
(557
)
 
(347
)
 

  
$
372,897

 
$
401,076

 
(7
)
Operating Income (Loss)
  

 
  

 
  

Higher education
$
12,604

 
$
21,306

 
(41
)
Test preparation
(2,864
)
 
(2,310
)
 
(24
)
Kaplan international
7,707

 
4,897

 
57

Kaplan corporate and other
(7,349
)
 
(7,724
)
 
5

Amortization of intangible assets
(1,120
)
 
(1,681
)
 
33

Intersegment elimination
53

 

 

  
$
9,031

 
$
14,488

 
(38
)
KHE includes Kaplan’s domestic postsecondary education businesses, made up of fixed-facility colleges and online postsecondary and career programs. KHE also includes the domestic professional and other continuing education businesses.

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