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8-K
GRAHAM HOLDINGS CO filed this Form 8-K on 11/01/2017
Entire Document
 


A summary of Kaplan’s operating results is as follows:
 
 
Three Months Ended
 
 
 
Nine Months Ended
 
 
  
 
September 30
 
  
 
September 30
 
  
(in thousands)
 
2017
 
2016
 
% Change
 
2017
 
2016
 
% Change
Revenue
 
  
 
  
 
  
 
  
 
  
 
  
Higher education
 
$
133,459

 
$
148,602

 
(10
)
 
$
416,973

 
$
472,131

 
(12
)
Test preparation
 
72,680

 
78,291

 
(7
)
 
212,978

 
224,102

 
(5
)
Kaplan international
 
171,259

 
160,456

 
7

 
507,568

 
512,068

 
(1
)
Kaplan corporate and other
 
49

 
47

 
4

 
120

 
190

 
(37
)
Intersegment elimination
 
(642
)
 
(460
)
 

 
(1,438
)
 
(1,266
)
 

  
 
$
376,805

 
$
386,936

 
(3
)
 
$
1,136,201

 
$
1,207,225

 
(6
)
Operating Income (Loss)
 
  

 
  

 
  

 
  

 
  

 
  

Higher education
 
$
8,809

 
$
11,494

 
(23
)
 
$
39,124

 
$
50,037

 
(22
)
Test preparation
 
7,330

 
8,588

 
(15
)
 
10,207

 
13,314

 
(23
)
Kaplan international
 
5,348

 
1,561

 

 
29,009

 
22,937

 
26

Kaplan corporate and other
 
(6,682
)
 
(3,537
)
 
(89
)
 
(19,159
)
 
(17,368
)
 
(10
)
Amortization of intangible assets
 
(1,355
)
 
(1,773
)
 
24

 
(3,798
)
 
(5,158
)
 
26

Intersegment elimination
 
(59
)
 

 

 
(36
)
 
(49
)
 

  
 
$
13,391

 
$
16,333

 
(18
)
 
$
55,347

 
$
63,713

 
(13
)
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 third quarter and first nine months of 2017, KHE revenue was down 10% and 12%, respectively, due to declines in average enrollments at Kaplan University. KHE operating results declined in the first nine months of 2017 due primarily to lower enrollment at Kaplan University.
New higher education student enrollments at Kaplan University declined 8% in the third quarter of 2017 and 4% for the first nine months of 2017; total students at Kaplan University were 30,461 at September 30, 2017, down 12% from September 30, 2016.
Kaplan University enrollments at September 30, 2017 and 2016, by degree and certificate programs, are as follows:
  
 
As of September 30
  
 
2017
 
2016
Certificate
 
10.0
%
 
7.7
%
Associate’s
 
16.8
%
 
19.5
%
Bachelor’s
 
50.1
%
 
51.0
%
Master’s
 
23.1
%
 
21.8
%
  
 
100.0
%
 
100.0
%
Kaplan Test Preparation (KTP) includes Kaplan’s standardized test preparation programs. KTP revenue declined 7% and 5% for the third quarter and first nine months of 2017, respectively. Enrollments, excluding the new economy skills training offerings, were flat for both the third quarter and the first nine months of 2017; however, unit prices were generally lower. In comparison to 2016, KTP operating results were down 15% and 23% in the third quarter and first nine months of 2017, respectively, due to lower revenues and increased losses from the new economy skills training programs. Operating losses for the new economy skills training programs were $11.2 million and $9.8 million for the first nine months of 2017 and 2016, respectively, including $1.3 million in restructuring costs in the third quarter of 2017. In July 2017, Kaplan announced that Dev Bootcamp, which makes up the majority of KTP’s new economy skills training programs, will be closing operations by the end of 2017.
Kaplan International includes English-language programs, and postsecondary education and professional training businesses largely outside the United States. Kaplan International revenue increased 7% for the third quarter and decreased 1% for the first nine months of 2017, respectively. On a constant currency basis, revenue increased 6% for the third quarter and 3% for the first nine months of 2017, respectively, primarily due to growth in Pathways enrollments and favorable timing of class starts in the third quarter of 2017. Operating income increased 26% in the first nine months of 2017, due largely to improved Pathways results, partially offset by a decline in Singapore. Restructuring costs at Kaplan International totaled $0.9 million and $3.2 million for the first nine months of 2017 and 2016, respectively.
Kaplan corporate and other represents unallocated expenses of Kaplan, Inc.’s corporate office, other minor businesses and certain shared activities.

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