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SEC Filings

10-Q
GRAHAM HOLDINGS CO filed this Form 10-Q on 11/01/2017
Entire Document
 


Items included in the Company’s net income for the first nine 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);
a $15.0 million non-operating expense from the write-down of a cost method investment (after-tax impact of $9.6 million, or $1.70 per share);
$33.3 million in non-operating foreign currency losses (after-tax impact of $21.3 million, or $3.76 per share);
a net nonrecurring $8.3 million deferred tax benefit related to Kaplan's international operations ($1.47 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 nine months of 2017 was $1,916.0 million, up 3% from $1,852.3 million in the first nine months of 2016. Revenues increased in other businesses, offset by a decline at the education and television broadcasting divisions. The Company reported operating income of $142.0 million for the first nine months of 2017, compared to $194.0 million for first nine months of 2016. Operating results declined at the education and television broadcasting divisions and in other businesses.
Division Results
Education  
Education division revenue totaled $376.8 million for the third quarter of 2017, down 3% from $386.9 million for the same period of 2016. Kaplan reported operating income of $13.4 million for the third quarter of 2017, compared to $16.3 million for the third quarter of 2016.
For the first nine months of 2017, education division revenue totaled $1,136.2 million, down 6% from $1,207.2 million for the same period of 2016. Kaplan reported operating income of $55.3 million for the first nine months of 2017, compared to $63.7 million for the first nine months of 2016.
In recent years, Kaplan has formulated and implemented restructuring plans at its various businesses that have resulted in restructuring costs, with the objective of establishing lower cost levels in future periods. Across all businesses, restructuring costs totaled $2.7 million and $4.9 million for the first nine months of 2017 and 2016, respectively. Additional restructuring costs are expected to be incurred in the fourth quarter of 2017.
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.

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