Releases
Graham Holdings Company Reports 2018 and Fourth Quarter Earnings
The results for 2018 and 2017 were affected by a number of items as described in the following paragraphs. Excluding these items, net income attributable to common shares was
Items included in the Company’s net income for 2018 are listed below, and fourth quarter activity, if any, is highlighted for each item:
- a
$7.9 million intangible asset impairment charge at the healthcare business (after-tax impact of$5.8 million , or$1.08 per share); - a
$3.9 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of the FCC (after-tax impact of$3.0 million , or$0.55 per share);$1.8 million of these gains were recorded in the fourth quarter (after-tax impact of$1.4 million , or$0.26 per share); $6.2 million in interest expense related to the settlement of a mandatorily redeemable noncontrolling interest ($1.14 per share);$11.4 million in debt extinguishment costs (after-tax impact of$8.6 million , or$1.60 per share);- a
$30.3 million fourth quarter settlement gain related to a bulk lump sum pension offering and curtailment gain related to changes in the Company’s postretirement healthcare benefit plan (after-tax amount of$22.2 million , or$4.11 per share); $15.8 million in net losses on marketable equity securities (after-tax impact of$12.6 million , or$2.33 per share);$44.1 million of these losses were recorded in the fourth quarter (after-tax impact of$33.6 million , or$6.28 per share);- non-operating gain, net, of
$6.7 million from sales, write-ups and impairments of cost method and equity method investments, and related to sales of land and businesses, including guarantor lease obligations (after-tax impact of$5.7 million , or$1.03 per share);$10.3 million in net losses were recorded in the fourth quarter (after-tax impact of$7.7 million , or$1.43 per share); - a
$4.3 million gain on the Kaplan University Transaction (after-tax impact of$1.8 million or$0.33 per share); $3.8 million in non-operating foreign currency losses (after-tax impact of$2.9 million , or$0.54 per share);$1.6 million in losses were recorded in the fourth quarter (after-tax impact of$1.2 million or$0.23 per share);- a nonrecurring discrete
$17.8 million deferred state tax benefit related to the release of valuation allowances ($3.31 per share); and $1.8 million in income tax benefits related to stock compensation ($0.33 per share).
Items included in the Company’s net income for 2017 are listed below, and fourth quarter activity, if any, is highlighted for each item:
$10.0 million in restructuring and non-operating Separation Incentive Program charges at the education division (after-tax impact of$6.3 million , or$1.12 per share);$7.2 million of these charges were recorded in the fourth quarter (after-tax impact of$4.5 million , or$0.81 per share);- a
$9.2 million goodwill and other long-lived asset impairment charge at one of the manufacturing businesses (after-tax impact of$5.8 million , or$1.03 per share); $3.3 million in non-operating foreign currency gains (after-tax impact of$2.1 million or$0.37 per share);$3.3 million in losses were recorded in the fourth quarter (after-tax impact of$2.1 million or$0.37 per share);$177.5 million in fourth quarter net deferred tax benefits related to the enactment of the Tax Cuts and Jobs Act inDecember 2017 ($31.68 per share); and$5.9 million in income tax benefits related to stock compensation ($1.06 per share).
Revenue for 2018 was
For the fourth quarter of 2018, revenue was
On
Division Results
Education
Education division revenue in 2018 totaled
Kaplan reported operating income of
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. There were no significant restructuring charges during 2018. Across all businesses, restructuring costs totaled
As a result of the KU Transaction that closed on
A summary of Kaplan’s operating results is as follows:
Three Months Ended December 31 |
Twelve Months Ended December 31 |
|||||||||||||||||||||
(in thousands) | 2018 | 2017 | % Change | 2018 | 2017 | % Change | ||||||||||||||||
Revenue | ||||||||||||||||||||||
Kaplan international | $ | 184,429 | $ | 190,431 | (3 | ) | $ | 719,982 | $ | 697,999 | 3 | |||||||||||
Higher education | 67,005 | 103,264 | (35 | ) | 342,085 | 431,425 | (21 | ) | ||||||||||||||
Test preparation | 60,598 | 60,320 | 0 | 256,102 | 273,298 | (6 | ) | |||||||||||||||
Professional (U.S.) | 35,472 | 27,027 | 31 | 134,187 | 115,839 | 16 | ||||||||||||||||
Kaplan corporate and other | 272 | 174 | 56 | 1,142 | 294 | — | ||||||||||||||||
Intersegment elimination | (866 | ) | (641 | ) | — | (2,483 | ) | (2,079 | ) | — | ||||||||||||
$ | 346,910 | $ | 380,575 | (9 | ) | $ | 1,451,015 | $ | 1,516,776 | (4 | ) | |||||||||||
Operating Income (Loss) | ||||||||||||||||||||||
Kaplan international | $ | 17,349 | $ | 22,614 | (23 | ) | $ | 70,315 | $ | 51,623 | 36 | |||||||||||
Higher education | (3,399 | ) | (360 | ) | — | 15,217 | 16,719 | (9 | ) | |||||||||||||
Test preparation | 1,883 | 1,300 | 45 | 19,096 | 11,507 | 66 | ||||||||||||||||
Professional (U.S.) | 7,745 | 5,513 | 40 | 28,608 | 27,558 | 4 | ||||||||||||||||
Kaplan corporate and other | (5,086 | ) | (6,760 | ) | 25 | (26,702 | ) | (24,701 | ) | (8 | ) | |||||||||||
Amortization of intangible assets | (3,868 | ) | (1,364 | ) | — | (9,362 | ) | (5,162 | ) | (81 | ) | |||||||||||
Intersegment elimination | (4 | ) | 179 | — | (36 | ) | 143 | — | ||||||||||||||
$ | 14,620 | $ | 21,122 | (31 | ) | $ | 97,136 | $ | 77,687 | 25 | ||||||||||||
Prior to the KU Transaction closing on
In 2018 and the fourth quarter of 2018, Higher Education revenue declined 21% and 35%, respectively, due largely to the sale of KU on
Kaplan Test Preparation (KTP) includes Kaplan’s standardized test preparation programs. In
Kaplan Professional (U.S.) includes the domestic professional and other continuing education businesses. In 2018 and the fourth quarter of 2018, Kaplan Professional (U.S.) revenue was up 16% and 31%, respectively, due primarily to the
Kaplan corporate and other represents unallocated expenses of Kaplan, Inc.’s corporate office, other minor businesses and certain shared activities.
Revenue at the television broadcasting division increased 23% to
For the fourth quarter of 2018, revenue increased 37% to
In 2018 and the fourth quarter of 2018, the television broadcasting division recorded
Manufacturing
Manufacturing includes four businesses: Dekko, a manufacturer of electrical workspace solutions, architectural lighting and electrical components and assemblies;
Manufacturing revenues and operating income increased in 2018 due largely to the Hoover acquisition. Also, in the second quarter of 2017, the Company recorded a
Healthcare
SocialCode
SocialCode is a provider of marketing solutions on social, mobile and video platforms. In the third quarter of 2018, SocialCode acquired Marketplace Strategy, a
Other Businesses
Other businesses include Slate and Foreign Policy, which publish online and print magazines and websites; and three investment stage businesses, Panoply, Pinna and CyberVista. Revenues increased 26% in 2018 and 80% for the fourth quarter of 2018, largely due to growth at Panoply. Losses from each of these businesses in 2018 adversely affected operating results.
Corporate Office
Corporate office includes the expenses of the Company’s corporate office and certain continuing obligations related to prior business dispositions.
Equity in Earnings (Losses) of Affiliates
At
Net Interest Expense, Debt Extinguishment Costs and Related Balances
On
The Company incurred net interest expense of
At
Non-Operating Pension and Postretirement Benefit Income, Net
In the first quarter of 2018, the Company adopted new accounting guidance that changes the income statement classification of net periodic pension and postretirement pension cost. Under the new guidance, service cost is included in operating income, while the other components (including expected return on assets) are included in non-operating income. The new guidance was required to be applied retroactively, with prior period financial information revised to reflect the reclassification. From a segment reporting perspective, this change had a significant impact on Corporate office reporting, with minimal impact on the television broadcasting and Kaplan corporate reporting.
In the fourth quarter of 2018, the Company recorded a
Loss on
In the first quarter of 2018, the Company adopted new guidance that requires changes in the fair value of marketable equity securities to be included in non-operating income (expense) on a prospective basis. Overall, the Company recognized
Other Non-Operating Income (Expense)
The Company recorded total other non-operating income, net, of
For the fourth quarter of 2018, the Company recorded other non-operating expense, net, of
Provision for (Benefit From) Income Taxes
The Company’s effective tax rate for 2018 was 16.1%. In the third quarter of 2018, the Company recorded a
The Company reported an income tax benefit of
Earnings Per Share
The calculation of diluted earnings per share for 2018 and the fourth quarter of 2018 was based on 5,369,611 and 5,308,710 weighted average shares, respectively, compared to 5,552,163 and 5,508,530 weighted average shares, respectively, for 2017 and the fourth quarter of 2017. At
Adoption of Revenue Recognition Standard
On
Forward-Looking Statements
This report contains certain forward-looking statements that are based largely on the Company’s current expectations. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results and achievements to differ materially from those expressed in the forward-looking statements. For more information about these forward-looking statements and related risks, please refer to the section titled “Forward-Looking Statements” in Part I of the Company’s Annual Report on Form 10-K.
GRAHAM HOLDINGS COMPANY | |||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
(Unaudited) | |||||||||||
Three Months Ended | |||||||||||
December 31 | % | ||||||||||
(in thousands, except per share amounts) | 2018 | 2017 | Change | ||||||||
Operating revenues | $ | 689,087 | $ | 675,817 | 2 | ||||||
Operating expenses | 585,330 | 597,399 | (2 | ) | |||||||
Depreciation of property, plant and equipment | 14,813 | 15,984 | (7 | ) | |||||||
Amortization of intangible assets | 13,362 | 12,897 | 4 | ||||||||
Impairment of goodwill and other long-lived assets | — | 78 | — | ||||||||
Operating income | 75,582 | 49,459 | 53 | ||||||||
Equity in earnings (losses) of affiliates, net | 1,426 | (4,697 | ) | — | |||||||
Interest income | 1,469 | 3,184 | (54 | ) | |||||||
Interest expense | (6,531 | ) | (8,103 | ) | (19 | ) | |||||
Non-operating pension and postretirement benefit income, net | 53,900 | 17,657 | — | ||||||||
Loss on marketable equity securities, net | (44,149 | ) | — | — | |||||||
Other expense, net | (12,559 | ) | (2,640 | ) | — | ||||||
Income from operations before income taxes | 69,138 | 54,860 | 26 | ||||||||
Provision for (Benefit from) income taxes | 12,400 | (159,700 | ) | — | |||||||
Net income | 56,738 | 214,560 | (74 | ) | |||||||
Net income attributable to noncontrolling interests | (53 | ) | (382 | ) | (86 | ) | |||||
Net Income Attributable to Graham Holdings Company Common Stockholders | $ | 56,685 | $ | 214,178 | (74 | ) | |||||
Per Share Information Attributable to Graham Holdings Company Common Stockholders | |||||||||||
Basic net income per common share | $ | 10.69 | $ | 38.76 | (72 | ) | |||||
Basic average number of common shares outstanding | 5,270 | 5,473 | |||||||||
Diluted net income per common share | $ | 10.61 | $ | 38.52 | (72 | ) | |||||
Diluted average number of common shares outstanding | 5,309 | 5,509 | |||||||||
GRAHAM HOLDINGS COMPANY | |||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
(Unaudited) | |||||||||||
Twelve Months Ended | |||||||||||
December 31 | % | ||||||||||
(in thousands, except per share amounts) | 2018 | 2017 | Change | ||||||||
Operating revenues | $ | 2,695,966 | $ | 2,591,846 | 4 | ||||||
Operating expenses | 2,337,560 | 2,342,133 | 0 | ||||||||
Depreciation of property, plant and equipment | 56,722 | 62,509 | (9 | ) | |||||||
Amortization of intangible assets | 47,414 | 41,187 | 15 | ||||||||
Impairment of intangible and other long-lived assets | 8,109 | 9,614 | (16 | ) | |||||||
Operating income | 246,161 | 136,403 | 80 | ||||||||
Equity in earnings (losses) of affiliates, net | 14,473 | (3,249 | ) | — | |||||||
Interest income | 5,353 | 6,581 | (19 | ) | |||||||
Interest expense | (37,902 | ) | (33,886 | ) | 12 | ||||||
Debt extinguishment costs | (11,378 | ) | — | — | |||||||
Non-operating pension and postretirement benefit income, net | 120,541 | 72,699 | 66 | ||||||||
Loss on marketable equity securities, net | (15,843 | ) | — | — | |||||||
Other income, net | 2,103 | 4,241 | (50 | ) | |||||||
Income from operations before income taxes | 323,508 | 182,789 | 77 | ||||||||
Provision for (Benefit from) income taxes | 52,100 | (119,700 | ) | — | |||||||
Net income | 271,408 | 302,489 | (10 | ) | |||||||
Net income attributable to noncontrolling interests | (202 | ) | (445 | ) | (55 | ) | |||||
Net Income Attributable to Graham Holdings Company Common Stockholders | $ | 271,206 | $ | 302,044 | (10 | ) | |||||
Per Share Information Attributable to Graham Holdings Company Common Stockholders | |||||||||||
Basic net income per common share | $ | 50.55 | $ | 54.24 | (7 | ) | |||||
Basic average number of common shares outstanding | 5,333 | 5,516 | |||||||||
Diluted net income per common share | $ | 50.20 | $ | 53.89 | (7 | ) | |||||
Diluted average number of common shares outstanding | 5,370 | 5,552 | |||||||||
GRAHAM HOLDINGS COMPANY | ||||||||||||||||||||||
BUSINESS DIVISION INFORMATION |
||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
December 31 | % | December 31 | % | |||||||||||||||||||
(in thousands) | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Operating Revenues | ||||||||||||||||||||||
Education | $ | 346,910 | $ | 380,575 | (9 | ) | $ | 1,451,015 | $ | 1,516,776 | (4 | ) | ||||||||||
Television broadcasting | 152,647 | 111,023 | 37 | 505,549 | 409,916 | 23 | ||||||||||||||||
Manufacturing | 117,723 | 116,029 | 1 | 487,619 | 414,193 | 18 | ||||||||||||||||
Healthcare | 37,960 | 38,610 | (2 | ) | 149,275 | 154,202 | (3 | ) | ||||||||||||||
SocialCode | 16,878 | 20,151 | (16 | ) | 58,728 | 62,077 | (5 | ) | ||||||||||||||
Other businesses | 17,024 | 9,480 | 80 | 43,880 | 34,733 | 26 | ||||||||||||||||
Corporate office | — | — | — | — | — | — | ||||||||||||||||
Intersegment elimination | (55 | ) | (51 | ) | — | (100 | ) | (51 | ) | — | ||||||||||||
$ | 689,087 | $ | 675,817 | 2 | $ | 2,695,966 | $ | 2,591,846 | 4 | |||||||||||||
Operating Expenses | ||||||||||||||||||||||
Education | $ | 332,290 | $ | 359,453 | (8 | ) | $ | 1,353,879 | $ | 1,439,089 | (6 | ) | ||||||||||
Television broadcasting | 79,227 | 71,487 | 11 | 295,016 | 270,658 | 9 | ||||||||||||||||
Manufacturing | 111,311 | 107,285 | 4 | 458,768 | 399,246 | 15 | ||||||||||||||||
Healthcare | 37,032 | 41,557 | (11 | ) | 157,676 | 156,771 | 1 | |||||||||||||||
SocialCode | 17,560 | 15,673 | 12 | 59,809 | 65,751 | (9 | ) | |||||||||||||||
Other businesses | 22,864 | 16,004 | 43 | 71,896 | 65,269 | 10 | ||||||||||||||||
Corporate office | 13,276 | 14,950 | (11 | ) | 52,861 | 58,710 | (10 | ) | ||||||||||||||
Intersegment elimination | (55 | ) | (51 | ) | — | (100 | ) | (51 | ) | — | ||||||||||||
$ | 613,505 | $ | 626,358 | (2 | ) | $ | 2,449,805 | $ | 2,455,443 | 0 | ||||||||||||
Operating Income (Loss) | ||||||||||||||||||||||
Education | $ | 14,620 | $ | 21,122 | (31 | ) | $ | 97,136 | $ | 77,687 | 25 | |||||||||||
Television broadcasting | 73,420 | 39,536 | 86 | 210,533 | 139,258 | 51 | ||||||||||||||||
Manufacturing | 6,412 | 8,744 | (27 | ) | 28,851 | 14,947 | 93 | |||||||||||||||
Healthcare | 928 | (2,947 | ) | — | (8,401 | ) | (2,569 | ) | — | |||||||||||||
SocialCode | (682 | ) | 4,478 | — | (1,081 | ) | (3,674 | ) | 71 | |||||||||||||
Other businesses | (5,840 | ) | (6,524 | ) | 10 | (28,016 | ) | (30,536 | ) | 8 | ||||||||||||
Corporate office | (13,276 | ) | (14,950 | ) | 11 | (52,861 | ) | (58,710 | ) | 10 | ||||||||||||
$ | 75,582 | $ | 49,459 | 53 | $ | 246,161 | $ | 136,403 | 80 | |||||||||||||
Depreciation | ||||||||||||||||||||||
Education | $ | 6,969 | $ | 7,912 | (12 | ) | $ | 28,099 | $ | 32,906 | (15 | ) | ||||||||||
Television broadcasting | 3,961 | 3,476 | 14 | 13,204 | 12,179 | 8 | ||||||||||||||||
Manufacturing | 2,400 | 2,544 | (6 | ) | 9,515 | 9,173 | 4 | |||||||||||||||
Healthcare | 629 | 1,154 | (45 | ) | 2,577 | 4,583 | (44 | ) | ||||||||||||||
SocialCode | 177 | 251 | (29 | ) | 797 | 1,004 | (21 | ) | ||||||||||||||
Other businesses | 428 | 389 | 10 | 1,523 | 1,546 | (1 | ) | |||||||||||||||
Corporate office | 249 | 258 | (3 | ) | 1,007 | 1,118 | (10 | ) | ||||||||||||||
$ | 14,813 | $ | 15,984 | (7 | ) | $ | 56,722 | $ | 62,509 | (9 | ) | |||||||||||
Amortization of Intangible Assets and Impairment of Goodwill and Other Long-Lived Assets | ||||||||||||||||||||||
Education | $ | 3,868 | $ | 1,364 | — | $ | 9,362 | $ | 5,162 | 81 | ||||||||||||
Television broadcasting | 1,408 | 3,406 | (59 | ) | 5,632 | 6,349 | (11 | ) | ||||||||||||||
Manufacturing | 6,530 | 5,935 | 10 | 24,746 | 31,052 | (20 | ) | |||||||||||||||
Healthcare | 1,399 | 2,187 | (36 | ) | 14,855 | 7,905 | 88 | |||||||||||||||
SocialCode | 157 | 83 | 89 | 928 | 333 | — | ||||||||||||||||
Other businesses | — | — | — | — | — | — | ||||||||||||||||
Corporate office | — | — | — | — | — | — | ||||||||||||||||
$ | 13,362 | $ | 12,975 | 3 | $ | 55,523 | $ | 50,801 | 9 | |||||||||||||
Pension Expense | ||||||||||||||||||||||
Education | $ | 2,104 | $ | 2,431 | (13 | ) | $ | 8,753 | $ | 9,720 | (10 | ) | ||||||||||
Television broadcasting | 550 | 485 | 13 | 2,188 | 1,942 | 13 | ||||||||||||||||
Manufacturing | 18 | 17 | 6 | 72 | 79 | (9 | ) | |||||||||||||||
Healthcare | 143 | 167 | (14 | ) | 573 | 665 | (14 | ) | ||||||||||||||
SocialCode | 181 | 148 | 22 | 723 | 593 | 22 | ||||||||||||||||
Other businesses | 161 | 117 | 38 | 578 | 453 | 28 | ||||||||||||||||
Corporate office | 1,334 | 1,226 | 9 | 5,334 | 5,235 | 2 | ||||||||||||||||
$ | 4,491 | $ | 4,591 | (2 | ) | $ | 18,221 | $ | 18,687 | (2 | ) | |||||||||||
GRAHAM HOLDINGS COMPANY | ||||||||||||||||||||||
EDUCATION DIVISION INFORMATION |
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(Unaudited) | ||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
December 31 | % | December 31 | % | |||||||||||||||||||
(in thousands) | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Operating Revenues | ||||||||||||||||||||||
Kaplan international | $ | 184,429 | $ | 190,431 | (3 | ) | $ | 719,982 | $ | 697,999 | 3 | |||||||||||
Higher education | 67,005 | 103,264 | (35 | ) | 342,085 | 431,425 | (21 | ) | ||||||||||||||
Test preparation | 60,598 | 60,320 | 0 | 256,102 | 273,298 | (6 | ) | |||||||||||||||
Professional (U.S.) | 35,472 | 27,027 | 31 | 134,187 | 115,839 | 16 | ||||||||||||||||
Kaplan corporate and other | 272 | 174 | 56 | 1,142 | 294 | — | ||||||||||||||||
Intersegment elimination | (866 | ) | (641 | ) | — | (2,483 | ) | (2,079 | ) | — | ||||||||||||
$ | 346,910 | $ | 380,575 | (9 | ) | $ | 1,451,015 | $ | 1,516,776 | (4 | ) | |||||||||||
Operating Expenses | ||||||||||||||||||||||
Kaplan international | $ | 167,080 | $ | 167,817 | 0 | $ | 649,667 | $ | 646,376 | 1 | ||||||||||||
Higher education | 70,404 | 103,624 | (32 | ) | 326,868 | 414,706 | (21 | ) | ||||||||||||||
Test preparation | 58,715 | 59,020 | (1 | ) | 237,006 | 261,791 | (9 | ) | ||||||||||||||
Professional (U.S.) | 27,727 | 21,514 | 29 | 105,579 | 88,281 | 20 | ||||||||||||||||
Kaplan corporate and other | 5,358 | 6,934 | (23 | ) | 27,844 | 24,995 | 11 | |||||||||||||||
Amortization of intangible assets | 3,868 | 1,364 | — | 9,362 | 5,162 | 81 | ||||||||||||||||
Intersegment elimination | (862 | ) | (820 | ) | — | (2,447 | ) | (2,222 | ) | — | ||||||||||||
$ | 332,290 | $ | 359,453 | (8 | ) | $ | 1,353,879 | $ | 1,439,089 | (6 | ) | |||||||||||
Operating Income (Loss) | ||||||||||||||||||||||
Kaplan international | $ | 17,349 | $ | 22,614 | (23 | ) | $ | 70,315 | $ | 51,623 | 36 | |||||||||||
Higher education | (3,399 | ) | (360 | ) | — | 15,217 | 16,719 | (9 | ) | |||||||||||||
Test preparation | 1,883 | 1,300 | 45 | 19,096 | 11,507 | 66 | ||||||||||||||||
Professional (U.S.) | 7,745 | 5,513 | 40 | 28,608 | 27,558 | 4 | ||||||||||||||||
Kaplan corporate and other | (5,086 | ) | (6,760 | ) | 25 | (26,702 | ) | (24,701 | ) | (8 | ) | |||||||||||
Amortization of intangible assets | (3,868 | ) | (1,364 | ) | — | (9,362 | ) | (5,162 | ) | (81 | ) | |||||||||||
Intersegment elimination | (4 | ) | 179 | — | (36 | ) | 143 | — | ||||||||||||||
$ | 14,620 | $ | 21,122 | (31 | ) | $ | 97,136 | $ | 77,687 | 25 | ||||||||||||
Depreciation | ||||||||||||||||||||||
Kaplan international | $ | 4,258 | $ | 3,821 | 11 | $ | 15,755 | $ | 14,892 | 6 | ||||||||||||
Higher education | 779 | 1,975 | (61 | ) | 4,826 | 9,117 | (47 | ) | ||||||||||||||
Test preparation | 957 | 1,206 | (21 | ) | 3,941 | 5,286 | (25 | ) | ||||||||||||||
Professional (U.S.) | 925 | 735 | 26 | 3,096 | 3,041 | 2 | ||||||||||||||||
Kaplan corporate and other | 50 | 175 | (71 | ) | 481 | 570 | (16 | ) | ||||||||||||||
$ | 6,969 | $ | 7,912 | (12 | ) | $ | 28,099 | $ | 32,906 | (15 | ) | |||||||||||
Pension Expense | ||||||||||||||||||||||
Kaplan international | $ | 65 | $ | 66 | (2 | ) | $ | 298 | $ | 264 | 13 | |||||||||||
Higher education | 1,050 | 1,318 | (20 | ) | 4,310 | 5,269 | (18 | ) | ||||||||||||||
Test preparation | 576 | 689 | (16 | ) | 2,611 | 2,755 | (5 | ) | ||||||||||||||
Professional (U.S.) | 291 | 228 | 28 | 1,162 | 913 | 27 | ||||||||||||||||
Kaplan corporate and other | 122 | 130 | (6 | ) | 372 | 519 | (28 | ) | ||||||||||||||
$ | 2,104 | $ | 2,431 | (13 | ) | $ | 8,753 | $ | 9,720 | (10 | ) | |||||||||||
NON-GAAP FINANCIAL INFORMATION
(Unaudited)
In addition to the results reported in accordance with accounting principles generally accepted in
- the ability to make meaningful period-to-period comparisons of the Company’s ongoing results;
- the ability to identify trends in the Company’s underlying business; and
- a better understanding of how management plans and measures the Company’s underlying business.
Net income excluding certain items should not be considered substitutes or alternatives to computations calculated in accordance with and required by GAAP. These non-GAAP financial measures should be read only in conjunction with financial information presented on a GAAP basis.
The following table reconciles the non-GAAP financial measures to the most directly comparable GAAP measures:
Three Months Ended December 31 | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
(in thousands, except per share amounts) |
Income |
Income |
Net |
Income |
Income |
Net |
||||||||||||||||||
Amounts attributable to Graham Holdings Company Common Stockholders | ||||||||||||||||||||||||
As reported | $ | 69,138 | $ | 12,400 | $ | 56,738 | $ | 54,860 | $ | (159,700 | ) | $ | 214,560 | |||||||||||
Attributable to noncontrolling interests | (53 | ) | (382 | ) | ||||||||||||||||||||
Attributable to Graham Holdings Company Stockholders | 56,685 | 214,178 | ||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Restructuring and non-operating separation incentive program charges |
— | — | — | 7,181 | 2,657 | 4,524 | ||||||||||||||||||
Reduction to operating expenses in connection with the broadcast spectrum repacking | (1,814 | ) | (399 | ) | (1,415 | ) | — | — | — | |||||||||||||||
Settlement gain related to bulk lump sum pension offering and curtailment gain related to postretirement healthcare benefit plan | (30,298 | ) | (8,120 | ) | (22,178 | ) | — | — | — | |||||||||||||||
Net losses on marketable equity securities | 44,148 | 10,596 | 33,552 | — | — | — | ||||||||||||||||||
Non-operating loss, net, from cost method investments and guarantor lease obligations | 10,333 | 2,669 | 7,664 | — | — | — | ||||||||||||||||||
Foreign currency loss | 1,639 | 393 | 1,246 | 3,298 | 1,220 | 2,078 | ||||||||||||||||||
Net deferred tax benefits related to the enactment of the Tax Cuts and Jobs Act | — | — | — | — | 177,532 | (177,532 | ) | |||||||||||||||||
Net Income, adjusted (non-GAAP) | $ | 75,554 | $ | 43,248 | ||||||||||||||||||||
Per share information attributable to Graham Holdings Company Common Stockholders | ||||||||||||||||||||||||
Diluted income per common share, as reported | $ | 10.61 | $ | 38.52 | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Restructuring and non-operating separation incentive program charges | — | 0.81 | ||||||||||||||||||||||
Reduction to operating expenses in connection with the broadcast spectrum repacking | (0.26 | ) | — | |||||||||||||||||||||
Settlement gain related to bulk lump sum pension offering and curtailment gain related to postretirement healthcare benefit plan | (4.11 | ) | — | |||||||||||||||||||||
Net losses on marketable equity securities | 6.28 | — | ||||||||||||||||||||||
Non-operating loss, net, from cost method investments and guarantor lease obligations | 1.43 | — | ||||||||||||||||||||||
Foreign currency loss | 0.23 | 0.37 | ||||||||||||||||||||||
Net deferred tax benefits related to the enactment of the Tax Cuts and Jobs Act | — | (31.93 | ) | |||||||||||||||||||||
Diluted income per common share, adjusted (non-GAAP) | $ | 14.18 | $ | 7.77 | ||||||||||||||||||||
The adjusted diluted per share amounts may not compute due to rounding. | ||||||||||||||||||||||||
Twelve Months Ended December 31 | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
(in thousands, except per share amounts) |
Income |
Income |
Net |
Income |
Income |
Net |
||||||||||||||||||
Amounts attributable to Graham Holdings Company Common Stockholders | ||||||||||||||||||||||||
As reported | $ | 323,508 | $ | 52,100 | $ | 271,408 | $ | 182,789 | $ | (119,700 | ) | $ | 302,489 | |||||||||||
Attributable to noncontrolling interests | (202 | ) | (445 | ) | ||||||||||||||||||||
Attributable to Graham Holdings Company Stockholders | $ | 271,206 | $ | 302,044 | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Restructuring and non-operating separation incentive program charges | — | — | — | 9,958 | 3,684 | 6,274 | ||||||||||||||||||
Goodwill and other long-lived asset impairment charges | 7,909 | 2,099 | 5,810 | 9,224 | 3,413 | 5,811 | ||||||||||||||||||
Reduction to operating expenses in connection with the broadcast spectrum repacking | (3,881 | ) | (854 | ) | (3,027 | ) | — | — | — | |||||||||||||||
Interest expense related to the settlement of a mandatorily redeemable noncontrolling interest | 6,169 | — | 6,169 | — | — | — | ||||||||||||||||||
Debt extinguishment costs | 11,378 | 2,731 | 8,647 | — | — | — | ||||||||||||||||||
Settlement gain related to bulk lump sum pension offering and curtailment gain related to postretirement healthcare benefit plan | (30,298 | ) | (8,120 | ) | (22,178 | ) | — | — | — | |||||||||||||||
Net losses on marketable equity securities | 15,843 | 3,236 | 12,607 | — | — | — | ||||||||||||||||||
Non-operating gain, net, from cost and equity method investments and related to sales of land and businesses, including guarantor lease obligations | (6,705 | ) | (995 | ) | (5,710 | ) | — | — | — | |||||||||||||||
Gain on Kaplan University Transaction | (4,315 | ) | (2,472 | ) | (1,843 | ) | — | — | — | |||||||||||||||
Foreign currency loss (gain) | 3,844 | 923 | 2,921 | (3,310 | ) | (1,225 | ) | (2,085 | ) | |||||||||||||||
Nonrecurring deferred state tax benefit related to the release of valuation allowances | — | 17,783 | (17,783 | ) | — | — | — | |||||||||||||||||
Net deferred tax benefits related to the enactment of the Tax Cuts and Jobs Act | — | — | — | — | 177,532 | (177,532 | ) | |||||||||||||||||
Tax benefit related to stock compensation | — | 1,810 | (1,810 | ) | — | 5,933 | (5,933 | ) | ||||||||||||||||
Net Income, adjusted (non-GAAP) | $ | 255,009 | $ | 128,579 | ||||||||||||||||||||
Per share information attributable to Graham Holdings Company Common Stockholders | ||||||||||||||||||||||||
Diluted income per common share, as reported | $ | 50.20 | $ | 53.89 | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Restructuring and non-operating separation incentive program charges | — | 1.12 | ||||||||||||||||||||||
Goodwill and other long-lived asset impairment charges | 1.08 | 1.03 | ||||||||||||||||||||||
Reduction to operating expenses in connection with the broadcast spectrum repacking | (0.55 | ) | — | |||||||||||||||||||||
Interest expense related to the settlement of a mandatorily redeemable noncontrolling interest | 1.14 | — | ||||||||||||||||||||||
Debt extinguishment costs | 1.60 | — | ||||||||||||||||||||||
Settlement gain related to bulk lump sum pension offering and curtailment gain related to postretirement healthcare benefit plan | (4.11 | ) | — | |||||||||||||||||||||
Net losses on marketable equity securities | 2.33 | — | ||||||||||||||||||||||
Non-operating gain, net, from cost and equity method investments and related to sales of land and businesses, including guarantor lease obligations | (1.03 | ) | — | |||||||||||||||||||||
Gain on Kaplan University Transaction | (0.33 | ) | — | |||||||||||||||||||||
Foreign currency loss (gain) | 0.54 | (0.37 | ) | |||||||||||||||||||||
Nonrecurring deferred state tax benefit related to the release of valuation allowances | (3.31 | ) | — | |||||||||||||||||||||
Net deferred tax benefits related to the enactment of the Tax Cuts and Jobs Act | — | (31.68 | ) | |||||||||||||||||||||
Tax benefit related to stock compensation | (0.33 | ) | (1.06 | ) | ||||||||||||||||||||
Diluted income per common share, adjusted (non-GAAP) | $ | 47.23 | $ | 22.93 | ||||||||||||||||||||
The adjusted diluted per share amounts may not compute due to rounding. | ||||||||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190225005140/en/
Source:
Wallace R. Cooney
(703) 345-6470