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10-K
GRAHAM HOLDINGS CO filed this Form 10-K on 02/23/2018
Entire Document
 


approval will be obtained; however, a decision is not expected to be received until later in the first quarter of 2018. If the transaction is not consummated by April 30, 2018, either party may terminate the Transfer Agreement.
Division Results
Education Division.  Education division revenue in 2017 totaled $1,516.8 million, down 5% from $1,598.5 million in 2016. Kaplan reported operating income of $75.2 million for 2017, a 20% decrease from $93.6 million in 2016. In 2017, operating results declined at KHE, partially offset by improved results at KTP and Kaplan International.
In recent years, Kaplan has formulated and implemented restructuring plans at its various businesses that have resulted in restructuring costs in 2017 and 2016, with the objective of establishing lower cost levels in future periods. Across all businesses, restructuring costs totaled $10.0 million in 2017 and $11.9 million in 2016.
A summary of Kaplan’s operating results is as follows:
 
Year Ended December 31
 
 
(in thousands)
2017
 
2016
 
% Change
Revenue
 
 
 
 
 
Higher education
$
547,264

 
$
617,047

 
(11
)
Test preparation
273,298

 
286,556

 
(5
)
Kaplan international
697,999

 
696,362

 

Kaplan corporate and other
294

 
214

 
37

Intersegment elimination
(2,079
)
 
(1,718
)
 

 
$
1,516,776

 
$
1,598,461

 
(5
)
Operating Income (Loss)
 

 
 

 
 

Higher education
$
44,277

 
$
66,632

 
(34
)
Test preparation
11,507

 
9,599

 
20

Kaplan international
50,730

 
48,398

 
5

Kaplan corporate and other
(26,326
)
 
(23,452
)
 
(12
)
Amortization of intangible assets
(5,162
)
 
(7,516
)
 
31

Intersegment elimination
143

 
(29
)
 

 
$
75,169

 
$
93,632

 
(20
)
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 training and other continuing education businesses.
In 2017, KHE revenue declined 11% due to declines in average enrollments at Kaplan University. KHE operating income declined in 2017 due primarily to lower enrollment at Kaplan University, partially offset by lower restructuring costs. Restructuring costs at KHE were $1.8 million for 2017, compared to $7.2 million for 2016.
New higher education student enrollments at Kaplan University declined 4% in 2017 due to lower demand across Kaplan University programs. Total students at Kaplan University were 28,718 at December 31, 2017, down 11% from December 31, 2016.
Kaplan University higher education student enrollments by certificate and degree programs are as follows:
 
As of December 31
 
2017
 
2016
Certificate
9.5
%
 
7.7
%
Associate’s
16.5
%
 
18.1
%
Bachelor’s
50.9
%
 
50.9
%
Master’s
23.1
%
 
23.3
%
 
100.0
%
 
100.0
%
KTP includes Kaplan’s standardized test preparation and new economy skills training programs. KTP revenue declined 5% in 2017. Enrollments, excluding the new economy skills training offerings, were up 4% in 2017; however, unit prices were generally lower. In comparison to 2016, KTP operating results improved in 2017 due primarily to operating cost efficiencies. Operating losses for the new economy skills training programs were $16.7 million and $13.0 million for 2017 and 2016, respectively, including restructuring costs incurred in connection with the closing of Dev Bootcamp that was completed in the second half of 2017. Dev Bootcamp made up the majority of KTP’s new economy skills training programs.
Kaplan International includes English-language programs and postsecondary education and professional training businesses largely outside the United States. Kaplan International revenue increased slightly in 2017, and on a constant currency basis, revenue increased 2%, primarily due to growth in Pathways enrollments. Kaplan

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