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SEC Filings

10-Q
GRAHAM HOLDINGS CO filed this Form 10-Q on 08/02/2017
Entire Document
 


Items included in the Company’s net income for the first six months of 2016:
a $40.3 million non-operating gain from the sales of land and marketable equity securities (after-tax impact of $25.0 million, or $4.42 per share);
a $22.2 million non-operating gain arising from the sale of a business and the formation of a joint venture (after-tax impact of $13.6 million, or $2.37 per share);
$29.5 million in non-operating foreign currency losses (after-tax impact of $18.9 million, or $3.33 per share); and
a favorable $5.6 million out of period deferred tax adjustment related to the KHE goodwill impairment recorded in the third quarter of 2015 ($1.00 per share).
Revenue for the first six months of 2017 was $1,258.8 million, up 2% from $1,230.7 million in the first six months of 2016. Revenues increased at the television broadcasting division and in other businesses, offset by a decline at the education division. The Company reported operating income of $97.4 million for the first six months of 2017, compared to $126.0 million for first six months of 2016. Operating results declined at the education and television broadcasting divisions and in other businesses.
Division Results
Education  
Education division revenue totaled $386.5 million for the second quarter of 2017, down 8% from revenue of $419.2 million for the same period of 2016. Kaplan reported operating income of $32.9 million for each of the second quarters of 2017 and 2016.
For the first six months of 2017, education division revenue totaled $759.4 million, down 7% from revenue of $820.3 million for the same period of 2016. Kaplan reported operating income of $42.0 million for the first six months of 2017, compared to $47.4 million for the first six months of 2016.
A summary of Kaplan’s operating results is as follows:
 
Three Months Ended
 
 
 
Six Months Ended
 
 
  
June 30
 
  
 
June 30
 
  
(in thousands)
2017
 
2016
 
% Change
 
2017
 
2016
 
% Change
Revenue
  
 
  
 
  
 
  
 
  
 
  
Higher education
$
139,204

 
$
157,980

 
(12
)
 
$
283,514

 
$
323,529

 
(12
)
Test preparation
75,730

 
79,349

 
(5
)
 
140,298

 
145,811

 
(4
)
Kaplan international
171,747

 
182,325

 
(6
)
 
336,309

 
351,612

 
(4
)
Kaplan corporate and other
57

 
18

 

 
71

 
143

 
(50
)
Intersegment elimination
(239
)
 
(459
)
 

 
(796
)
 
(806
)
 

  
$
386,499

 
$
419,213

 
(8
)
 
$
759,396

 
$
820,289

 
(7
)
Operating Income (Loss)
  

 
  

 
  

 
  

 
  

 
  

Higher education
$
17,711

 
$
17,237

 
3

 
$
30,315

 
$
38,543

 
(21
)
Test preparation
5,741

 
7,036

 
(18
)
 
2,877

 
4,726

 
(39
)
Kaplan international
15,954

 
16,479

 
(3
)
 
23,661

 
21,376

 
11

Kaplan corporate and other
(5,128
)
 
(6,107
)
 
16

 
(12,477
)
 
(13,831
)
 
10

Amortization of intangible assets
(1,323
)
 
(1,704
)
 
22

 
(2,443
)
 
(3,385
)
 
28

Intersegment elimination
(30
)
 
(49
)
 

 
23

 
(49
)
 

  
$
32,925

 
$
32,892

 

 
$
41,956

 
$
47,380

 
(11
)
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.
In the second quarter and first six months of 2017, KHE revenue was down 12%, due to declines in average enrollments at Kaplan University, offset by increased revenues at the domestic professional and other continuing education businesses. KHE operating results declined in the first half of 2017 due primarily to lower enrollment at Kaplan University.
New higher education student enrollments at Kaplan University declined 5% in the second quarter of 2017 and 1% for the first six months of 2017; total students at Kaplan University were 29,193 at June 30, 2017, down 13% from June 30, 2016.

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