Releases
Graham Holdings Company Reports 2019 and Fourth Quarter Earnings
The results for 2019 and 2018 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 2019 are listed below, and fourth quarter activity, if any, is highlighted for each item:
- a
$17.1 million provision recorded atKaplan International related to a Value Added Tax (VAT) receivable atUK Pathways (after-tax impact of$13.9 million , or$2.59 per share); - an
$11.8 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of the Federal Communications Commissions (FCC ) (after-tax impact of$9.1 million , or$1.70 per share);$1.1 million of these gains were recorded in the fourth quarter (after-tax impact of$0.8 million , or$0.15 per share); - a
$7.8 million fourth quarter intangible asset impairment charge at the television broadcasting division (after-tax impact of$6.0 million , or$1.12 per share); - a
$91.7 million fourth quarter settlement gain related to a retiree annuity pension purchase (after-tax impact of$66.9 million , or$12.50 per share); $6.6 million in expenses related to a non-operating Separation Incentive Program (SIP) at the education division (after-tax impact of$5.1 million , or$0.95 per share);$98.7 million in net gains on marketable equity securities (after-tax impact of$74.0 million , or$13.82 per share);$49.4 million of these gains were recorded in the fourth quarter (after-tax impact of$37.1 million , or$6.92 per share);- non-operating gain of
$5.1 million from write-ups of cost method investments (after-tax impact of$3.9 million , or$0.73 per share); $29.0 million gain from the sale of Gimlet Media (after-tax impact of$21.7 million , or$4.06 per share);$1.1 million in non-operating foreign currency losses (after-tax impact of$0.8 million , or$0.15 per share);$2.4 million in losses were recorded in the fourth quarter (after-tax impact of$1.8 million , or$0.33 per share); and$1.7 million in income tax benefits related to stock compensation ($0.32 per share).
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
$3.9 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of theFCC (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); - a
$7.9 million intangible asset impairment charge at the healthcare business (after-tax impact of$5.8 million , or$1.08 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 impact 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).
Revenue for 2019 was
For the fourth quarter of 2019, revenue was
Division Results
Education
Education division revenue in 2019 totaled
Kaplan reported operating income of
A summary of Kaplan’s operating results is as follows:
|
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
(in thousands) |
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
||||||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Kaplan international |
|
$ |
197,740 |
|
|
$ |
184,429 |
|
|
7 |
|
|
$ |
750,245 |
|
|
$ |
719,982 |
|
|
4 |
|
Higher education |
|
67,892 |
|
|
67,005 |
|
|
1 |
|
|
305,672 |
|
|
342,085 |
|
|
(11 |
) |
||||
Test preparation |
|
52,384 |
|
|
60,598 |
|
|
(14 |
) |
|
243,917 |
|
|
256,102 |
|
|
(5 |
) |
||||
Professional ( |
|
34,716 |
|
|
35,472 |
|
|
(2 |
) |
|
144,897 |
|
|
134,187 |
|
|
8 |
|
||||
Kaplan corporate and other |
|
2,359 |
|
|
272 |
|
|
— |
|
|
9,480 |
|
|
1,142 |
|
|
— |
|
||||
Intersegment elimination |
|
(877 |
) |
|
(866 |
) |
|
— |
|
|
(2,461 |
) |
|
(2,483 |
) |
|
— |
|
||||
|
|
$ |
354,214 |
|
|
$ |
346,910 |
|
|
2 |
|
|
$ |
1,451,750 |
|
|
$ |
1,451,015 |
|
|
0 |
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Kaplan international |
|
$ |
6,533 |
|
|
$ |
17,349 |
|
|
(62 |
) |
|
$ |
42,129 |
|
|
$ |
70,315 |
|
|
(40 |
) |
Higher education |
|
4,147 |
|
|
(3,399 |
) |
|
— |
|
|
13,960 |
|
|
15,217 |
|
|
(8 |
) |
||||
Test preparation |
|
(1,395 |
) |
|
1,883 |
|
|
— |
|
|
7,399 |
|
|
19,096 |
|
|
(61 |
) |
||||
Professional ( |
|
6,145 |
|
|
7,745 |
|
|
(21 |
) |
|
27,088 |
|
|
28,608 |
|
|
(5 |
) |
||||
Kaplan corporate and other |
|
(8,067 |
) |
|
(5,086 |
) |
|
(59 |
) |
|
(26,891 |
) |
|
(26,702 |
) |
|
(1 |
) |
||||
Amortization of intangible assets |
|
(4,027 |
) |
|
(3,868 |
) |
|
(4 |
) |
|
(14,915 |
) |
|
(9,362 |
) |
|
(59 |
) |
||||
Impairment of long-lived assets |
|
— |
|
|
— |
|
|
— |
|
|
(693 |
) |
|
— |
|
|
— |
|
||||
Intersegment elimination |
|
(3 |
) |
|
(4 |
) |
|
— |
|
|
(5 |
) |
|
(36 |
) |
|
— |
|
||||
|
|
$ |
3,333 |
|
|
$ |
14,620 |
|
|
(77 |
) |
|
$ |
48,072 |
|
|
$ |
97,136 |
|
|
(51 |
) |
In 2017, HMRC raised assessments against Kaplan
Prior to the KU Transaction closing on
Kaplan Test Preparation (KTP) includes Kaplan’s standardized test preparation programs. In
In the second quarter of 2019, the Company approved a SIP to reduce the number of employees at KTP and Higher Education. In connection with the SIP, the Company recorded
Kaplan Professional (
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 declined 8% to
For the fourth quarter of 2019, revenue declined 19% to
Manufacturing
Manufacturing includes four businesses:
Manufacturing revenues declined in 2019 and the fourth quarter of 2019 due primarily to a decline at Hoover from lower wood prices, partially offset by increases due to the
Healthcare
In
SocialCode
SocialCode is a provider of marketing solutions managing data, creative, media and marketplaces to accelerate client growth. In the third quarter of 2018, SocialCode acquired Marketplace Strategy, a
Other Businesses
On
On
Revenues from other businesses increased due mostly to the automotive dealership and CRG acquisitions. Operating results for the automotive dealerships and CRG were both positive for 2019, although results were adversely impacted by transaction and transition expenses. Automotive results were also adversely impacted by start-up costs for the new
Other businesses also include Slate and
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
In connection with the auto dealership acquisition that closed on
On
The Company incurred net interest expense of
At
Non-Operating Pension and Postretirement Benefit Income, Net
The Company recorded net non-operating pension and postretirement benefit income of
In the fourth quarter of 2019, the Company’s pension plan purchased a group annuity contract from an insurance company for a group of retirees. As a result, the Company recorded a
In the fourth quarter of 2018, the Company recorded a
Gain (Loss) on
The Company recognized
Other Non-Operating Income (Expense)
The Company recorded total other non-operating income, net, of
For the fourth quarter of 2019, the Company recorded other non-operating expense, net, of
Provision for Income Taxes
The Company’s effective tax rate for 2019 was 23.1%. In the first quarter of 2019, the Company recorded income tax benefits related to stock compensation of
The Company’s effective tax rate for 2018 was 16.1%. In the third quarter of 2018, the Company recorded a
Earnings Per Share
The calculation of diluted earnings per share for 2019 and the fourth quarter of 2019 was based on 5,326,953 and 5,324,079 weighted average shares, respectively, compared to 5,369,611 and 5,308,710 weighted average shares, respectively, for 2018 and the fourth quarter of 2018. At
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.
|
|||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||
(Unaudited) |
|||||||||
|
|
|
|||||||
|
Three Months Ended |
|
|||||||
|
|
% |
|||||||
(in thousands, except per share amounts) |
2019 |
|
2018 |
Change |
|||||
Operating revenues |
$ |
763,478 |
|
|
$ |
689,087 |
|
11 |
|
Operating expenses |
694,853 |
|
|
585,330 |
|
19 |
|
||
Depreciation of property, plant and equipment |
16,495 |
|
|
14,813 |
|
11 |
|
||
Amortization of intangible assets |
13,731 |
|
|
13,362 |
|
3 |
|
||
Impairment of long-lived assets |
8,087 |
|
|
— |
|
— |
|
||
Operating income |
30,312 |
|
|
75,582 |
|
(60 |
) |
||
Equity in earnings of affiliates, net |
3,835 |
|
|
1,426 |
|
— |
|
||
Interest income |
1,398 |
|
|
1,469 |
|
(5 |
) |
||
Interest expense |
(7,192 |
) |
|
(6,531 |
) |
10 |
|
||
Non-operating pension and postretirement benefit income, net |
111,061 |
|
|
53,900 |
|
— |
|
||
Gain (loss) on marketable equity securities, net |
49,407 |
|
|
(44,149 |
) |
— |
|
||
Other expense, net |
(3,704 |
) |
|
(12,559 |
) |
(71 |
) |
||
Income before income taxes |
185,117 |
|
|
69,138 |
|
— |
|
||
Provision for income taxes |
39,100 |
|
|
12,400 |
|
— |
|
||
Net income |
146,017 |
|
|
56,738 |
|
— |
|
||
Net income attributable to noncontrolling interests |
(136 |
) |
|
(53 |
) |
— |
|
||
Net Income Attributable to Graham Holdings Company Common Stockholders |
$ |
145,881 |
|
|
$ |
56,685 |
|
— |
|
Per Share Information Attributable to Graham Holdings Company Common Stockholders |
|
|
|
|
|||||
Basic net income per common share |
$ |
27.45 |
|
|
$ |
10.69 |
|
— |
|
Basic average number of common shares outstanding |
5,284 |
|
|
5,270 |
|
|
|||
Diluted net income per common share |
$ |
27.25 |
|
|
$ |
10.61 |
|
— |
|
Diluted average number of common shares outstanding |
5,324 |
|
|
5,309 |
|
|
|||
|
|
||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
||||||||
(Unaudited) |
|
||||||||
|
|
|
|||||||
|
Twelve Months Ended |
|
|||||||
|
|
% |
|||||||
(in thousands, except per share amounts) |
2019 |
|
2018 |
Change |
|||||
Operating revenues |
$ |
2,932,099 |
|
|
$ |
2,695,966 |
|
9 |
|
Operating expenses |
2,665,905 |
|
|
2,337,560 |
|
14 |
|
||
Depreciation of property, plant and equipment |
59,253 |
|
|
56,722 |
|
4 |
|
||
Amortization of intangible assets |
53,243 |
|
|
47,414 |
|
12 |
|
||
Impairment of long-lived assets |
9,152 |
|
|
8,109 |
|
13 |
|
||
Operating income |
144,546 |
|
|
246,161 |
|
(41 |
) |
||
Equity in earnings of affiliates, net |
11,664 |
|
|
14,473 |
|
(19 |
) |
||
Interest income |
6,151 |
|
|
5,353 |
|
15 |
|
||
Interest expense |
(29,779 |
) |
|
(37,902 |
) |
(21 |
) |
||
Debt extinguishment costs |
— |
|
|
(11,378 |
) |
— |
|
||
Non-operating pension and postretirement benefit income, net |
162,798 |
|
|
120,541 |
|
35 |
|
||
Gain (loss) on marketable equity securities, net |
98,668 |
|
|
(15,843 |
) |
— |
|
||
Other income, net |
32,431 |
|
|
2,103 |
|
— |
|
||
Income before income taxes |
426,479 |
|
|
323,508 |
|
32 |
|
||
Provision for income taxes |
98,600 |
|
|
52,100 |
|
89 |
|
||
Net income |
327,879 |
|
|
271,408 |
|
21 |
|
||
Net income attributable to noncontrolling interests |
(24 |
) |
|
(202 |
) |
(88 |
) |
||
Net Income Attributable to Graham Holdings Company Common Stockholders |
$ |
327,855 |
|
|
$ |
271,206 |
|
21 |
|
Per Share Information Attributable to Graham Holdings Company Common Stockholders |
|
|
|
|
|||||
Basic net income per common share |
$ |
61.70 |
|
|
$ |
50.55 |
|
22 |
|
Basic average number of common shares outstanding |
5,285 |
|
|
5,333 |
|
|
|||
Diluted net income per common share |
$ |
61.21 |
|
|
$ |
50.20 |
|
22 |
|
Diluted average number of common shares outstanding |
5,327 |
|
|
5,370 |
|
|
|||
|
|||||||||||||||||||||||
BUSINESS DIVISION INFORMATION |
|||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||
|
|
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
||||||||||||||
|
|
|
|
|
% |
|
|
|
% |
||||||||||||||
(in thousands) |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
|||||||||||
Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Education |
|
|
$ |
354,214 |
|
|
$ |
346,910 |
|
|
2 |
|
|
$ |
1,451,750 |
|
|
$ |
1,451,015 |
|
|
0 |
|
Television broadcasting |
|
|
123,452 |
|
|
152,647 |
|
|
(19 |
) |
|
463,464 |
|
|
505,549 |
|
|
(8 |
) |
||||
Manufacturing |
|
|
107,347 |
|
|
117,723 |
|
|
(9 |
) |
|
449,053 |
|
|
487,619 |
|
|
(8 |
) |
||||
Healthcare |
|
|
42,711 |
|
|
37,960 |
|
|
13 |
|
|
161,768 |
|
|
149,275 |
|
|
8 |
|
||||
SocialCode |
|
|
16,950 |
|
|
16,878 |
|
|
0 |
|
|
62,754 |
|
|
58,728 |
|
|
7 |
|
||||
Other businesses |
|
|
119,278 |
|
|
17,024 |
|
|
— |
|
|
344,092 |
|
|
43,880 |
|
|
— |
|
||||
Corporate office |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Intersegment elimination |
|
|
(474 |
) |
|
(55 |
) |
|
— |
|
|
(782 |
) |
|
(100 |
) |
|
— |
|
||||
|
|
|
$ |
763,478 |
|
|
$ |
689,087 |
|
|
11 |
|
|
$ |
2,932,099 |
|
|
$ |
2,695,966 |
|
|
9 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Education |
|
|
$ |
350,881 |
|
|
$ |
332,290 |
|
|
6 |
|
|
$ |
1,403,678 |
|
|
$ |
1,353,879 |
|
|
4 |
|
Television broadcasting |
|
|
87,631 |
|
|
79,227 |
|
|
11 |
|
|
310,796 |
|
|
295,016 |
|
|
5 |
|
||||
Manufacturing |
|
|
101,691 |
|
|
111,311 |
|
|
(9 |
) |
|
428,586 |
|
|
458,768 |
|
|
(7 |
) |
||||
Healthcare |
|
|
40,938 |
|
|
37,032 |
|
|
11 |
|
|
153,860 |
|
|
157,676 |
|
|
(2 |
) |
||||
SocialCode |
|
|
14,862 |
|
|
17,560 |
|
|
(15 |
) |
|
66,037 |
|
|
59,809 |
|
|
10 |
|
||||
Other businesses |
|
|
125,972 |
|
|
22,864 |
|
|
— |
|
|
374,221 |
|
|
71,896 |
|
|
— |
|
||||
Corporate office |
|
|
11,665 |
|
|
13,276 |
|
|
(12 |
) |
|
51,157 |
|
|
52,861 |
|
|
(3 |
) |
||||
Intersegment elimination |
|
|
(474 |
) |
|
(55 |
) |
|
— |
|
|
(782 |
) |
|
(100 |
) |
|
— |
|
||||
|
|
|
$ |
733,166 |
|
|
$ |
613,505 |
|
|
20 |
|
|
$ |
2,787,553 |
|
|
$ |
2,449,805 |
|
|
14 |
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Education |
|
|
$ |
3,333 |
|
|
$ |
14,620 |
|
|
(77 |
) |
|
$ |
48,072 |
|
|
$ |
97,136 |
|
|
(51 |
) |
Television broadcasting |
|
|
35,821 |
|
|
73,420 |
|
|
(51 |
) |
|
152,668 |
|
|
210,533 |
|
|
(27 |
) |
||||
Manufacturing |
|
|
5,656 |
|
|
6,412 |
|
|
(12 |
) |
|
20,467 |
|
|
28,851 |
|
|
(29 |
) |
||||
Healthcare |
|
|
1,773 |
|
|
928 |
|
|
91 |
|
|
7,908 |
|
|
(8,401 |
) |
|
— |
|
||||
SocialCode |
|
|
2,088 |
|
|
(682 |
) |
|
— |
|
|
(3,283 |
) |
|
(1,081 |
) |
|
— |
|
||||
Other businesses |
|
|
(6,694 |
) |
|
(5,840 |
) |
|
(15 |
) |
|
(30,129 |
) |
|
(28,016 |
) |
|
(8 |
) |
||||
Corporate office |
|
|
(11,665 |
) |
|
(13,276 |
) |
|
12 |
|
|
(51,157 |
) |
|
(52,861 |
) |
|
3 |
|
||||
|
|
|
$ |
30,312 |
|
|
$ |
75,582 |
|
|
(60 |
) |
|
$ |
144,546 |
|
|
$ |
246,161 |
|
|
(41 |
) |
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Education |
|
|
$ |
7,059 |
|
|
$ |
6,969 |
|
|
1 |
|
|
$ |
25,655 |
|
|
$ |
28,099 |
|
|
(9 |
) |
Television broadcasting |
|
|
2,978 |
|
|
3,961 |
|
|
(25 |
) |
|
12,817 |
|
|
13,204 |
|
|
(3 |
) |
||||
Manufacturing |
|
|
2,548 |
|
|
2,400 |
|
|
6 |
|
|
10,036 |
|
|
9,515 |
|
|
5 |
|
||||
Healthcare |
|
|
531 |
|
|
629 |
|
|
(16 |
) |
|
2,314 |
|
|
2,577 |
|
|
(10 |
) |
||||
SocialCode |
|
|
125 |
|
|
177 |
|
|
(29 |
) |
|
1,017 |
|
|
797 |
|
|
28 |
|
||||
Other businesses |
|
|
3,080 |
|
|
428 |
|
|
— |
|
|
6,539 |
|
|
1,523 |
|
|
— |
|
||||
Corporate office |
|
|
174 |
|
|
249 |
|
|
(30 |
) |
|
875 |
|
|
1,007 |
|
|
(13 |
) |
||||
|
|
|
$ |
16,495 |
|
|
$ |
14,813 |
|
|
11 |
|
|
$ |
59,253 |
|
|
$ |
56,722 |
|
|
4 |
|
Amortization of Intangible Assets and Impairment of Long-Lived Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Education |
|
|
$ |
4,027 |
|
|
$ |
3,868 |
|
|
4 |
|
|
$ |
15,608 |
|
|
$ |
9,362 |
|
|
67 |
|
Television broadcasting |
|
|
9,184 |
|
|
1,408 |
|
|
— |
|
|
13,408 |
|
|
5,632 |
|
|
— |
|
||||
Manufacturing |
|
|
6,762 |
|
|
6,530 |
|
|
4 |
|
|
26,342 |
|
|
24,746 |
|
|
6 |
|
||||
Healthcare |
|
|
1,689 |
|
|
1,399 |
|
|
21 |
|
|
6,411 |
|
|
14,855 |
|
|
(57 |
) |
||||
SocialCode |
|
|
156 |
|
|
157 |
|
|
(1 |
) |
|
626 |
|
|
928 |
|
|
(33 |
) |
||||
Other businesses |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
Corporate office |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
|
|
|
$ |
21,818 |
|
|
$ |
13,362 |
|
|
63 |
|
|
$ |
62,395 |
|
|
$ |
55,523 |
|
|
12 |
|
Pension Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Education |
|
|
$ |
2,596 |
|
|
$ |
2,104 |
|
|
23 |
|
|
$ |
10,385 |
|
|
$ |
8,753 |
|
|
19 |
|
Television broadcasting |
|
|
752 |
|
|
550 |
|
|
37 |
|
|
3,025 |
|
|
2,188 |
|
|
38 |
|
||||
Manufacturing |
|
|
20 |
|
|
18 |
|
|
11 |
|
|
80 |
|
|
72 |
|
|
11 |
|
||||
Healthcare |
|
|
123 |
|
|
143 |
|
|
(14 |
) |
|
492 |
|
|
573 |
|
|
(14 |
) |
||||
SocialCode |
|
|
219 |
|
|
181 |
|
|
21 |
|
|
877 |
|
|
723 |
|
|
21 |
|
||||
Other businesses |
|
|
186 |
|
|
161 |
|
|
16 |
|
|
763 |
|
|
578 |
|
|
32 |
|
||||
Corporate office |
|
|
1,200 |
|
|
1,334 |
|
|
(10 |
) |
|
4,800 |
|
|
5,334 |
|
|
(10 |
) |
||||
|
|
|
$ |
5,096 |
|
|
$ |
4,491 |
|
|
13 |
|
|
$ |
20,422 |
|
|
$ |
18,221 |
|
|
12 |
|
|
||||||||||||||||||||||
EDUCATION DIVISION INFORMATION |
||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
||||||||||||||
|
|
|
|
% |
|
|
|
% |
||||||||||||||
(in thousands) |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
||||||||||
Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Kaplan international |
|
$ |
197,740 |
|
|
$ |
184,429 |
|
|
7 |
|
|
$ |
750,245 |
|
|
$ |
719,982 |
|
|
4 |
|
Higher education |
|
67,892 |
|
|
67,005 |
|
|
1 |
|
|
305,672 |
|
|
342,085 |
|
|
(11 |
) |
||||
Test preparation |
|
52,384 |
|
|
60,598 |
|
|
(14 |
) |
|
243,917 |
|
|
256,102 |
|
|
(5 |
) |
||||
Professional ( |
|
34,716 |
|
|
35,472 |
|
|
(2 |
) |
|
144,897 |
|
|
134,187 |
|
|
8 |
|
||||
Kaplan corporate and other |
|
2,359 |
|
|
272 |
|
|
— |
|
|
9,480 |
|
|
1,142 |
|
|
— |
|
||||
Intersegment elimination |
|
(877 |
) |
|
(866 |
) |
|
— |
|
|
(2,461 |
) |
|
(2,483 |
) |
|
— |
|
||||
|
|
$ |
354,214 |
|
|
$ |
346,910 |
|
|
2 |
|
|
$ |
1,451,750 |
|
|
$ |
1,451,015 |
|
|
0 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Kaplan international |
|
$ |
191,207 |
|
|
$ |
167,080 |
|
|
14 |
|
|
$ |
708,116 |
|
|
$ |
649,667 |
|
|
9 |
|
Higher education |
|
63,745 |
|
|
70,404 |
|
|
(9 |
) |
|
291,712 |
|
|
326,868 |
|
|
(11 |
) |
||||
Test preparation |
|
53,779 |
|
|
58,715 |
|
|
(8 |
) |
|
236,518 |
|
|
237,006 |
|
|
0 |
|
||||
Professional ( |
|
28,571 |
|
|
27,727 |
|
|
3 |
|
|
117,809 |
|
|
105,579 |
|
|
12 |
|
||||
Kaplan corporate and other |
|
10,426 |
|
|
5,358 |
|
|
95 |
|
|
36,371 |
|
|
27,844 |
|
|
31 |
|
||||
Amortization of intangible assets |
|
4,027 |
|
|
3,868 |
|
|
4 |
|
|
14,915 |
|
|
9,362 |
|
|
59 |
|
||||
Impairment of long-lived assets |
|
— |
|
|
— |
|
|
— |
|
|
693 |
|
|
— |
|
|
— |
|
||||
Intersegment elimination |
|
(874 |
) |
|
(862 |
) |
|
— |
|
|
(2,456 |
) |
|
(2,447 |
) |
|
— |
|
||||
|
|
$ |
350,881 |
|
|
$ |
332,290 |
|
|
6 |
|
|
$ |
1,403,678 |
|
|
$ |
1,353,879 |
|
|
4 |
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Kaplan international |
|
$ |
6,533 |
|
|
$ |
17,349 |
|
|
(62 |
) |
|
$ |
42,129 |
|
|
$ |
70,315 |
|
|
(40 |
) |
Higher education |
|
4,147 |
|
|
(3,399 |
) |
|
— |
|
|
13,960 |
|
|
15,217 |
|
|
(8 |
) |
||||
Test preparation |
|
(1,395 |
) |
|
1,883 |
|
|
— |
|
|
7,399 |
|
|
19,096 |
|
|
(61 |
) |
||||
Professional ( |
|
6,145 |
|
|
7,745 |
|
|
(21 |
) |
|
27,088 |
|
|
28,608 |
|
|
(5 |
) |
||||
Kaplan corporate and other |
|
(8,067 |
) |
|
(5,086 |
) |
|
(59 |
) |
|
(26,891 |
) |
|
(26,702 |
) |
|
(1 |
) |
||||
Amortization of intangible assets |
|
(4,027 |
) |
|
(3,868 |
) |
|
(4 |
) |
|
(14,915 |
) |
|
(9,362 |
) |
|
(59 |
) |
||||
Impairment of long-lived assets |
|
— |
|
|
— |
|
|
— |
|
|
(693 |
) |
|
— |
|
|
— |
|
||||
Intersegment elimination |
|
(3 |
) |
|
(4 |
) |
|
— |
|
|
(5 |
) |
|
(36 |
) |
|
— |
|
||||
|
|
$ |
3,333 |
|
|
$ |
14,620 |
|
|
(77 |
) |
|
$ |
48,072 |
|
|
$ |
97,136 |
|
|
(51 |
) |
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Kaplan international |
|
$ |
4,196 |
|
|
$ |
4,258 |
|
|
(1 |
) |
|
$ |
15,394 |
|
|
$ |
15,755 |
|
|
(2 |
) |
Higher education |
|
817 |
|
|
779 |
|
|
5 |
|
|
2,883 |
|
|
4,826 |
|
|
(40 |
) |
||||
Test preparation |
|
926 |
|
|
957 |
|
|
(3 |
) |
|
3,284 |
|
|
3,941 |
|
|
(17 |
) |
||||
Professional ( |
|
1,046 |
|
|
925 |
|
|
13 |
|
|
3,848 |
|
|
3,096 |
|
|
24 |
|
||||
Kaplan corporate and other |
|
74 |
|
|
50 |
|
|
48 |
|
|
246 |
|
|
481 |
|
|
(49 |
) |
||||
|
|
$ |
7,059 |
|
|
$ |
6,969 |
|
|
1 |
|
|
$ |
25,655 |
|
|
$ |
28,099 |
|
|
(9 |
) |
Pension Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Kaplan international |
|
$ |
113 |
|
|
$ |
65 |
|
|
74 |
|
|
$ |
454 |
|
|
$ |
298 |
|
|
52 |
|
Higher education |
|
1,134 |
|
|
1,050 |
|
|
8 |
|
|
4,535 |
|
|
4,310 |
|
|
5 |
|
||||
Test preparation |
|
844 |
|
|
576 |
|
|
47 |
|
|
3,378 |
|
|
2,611 |
|
|
29 |
|
||||
Professional ( |
|
339 |
|
|
291 |
|
|
16 |
|
|
1,356 |
|
|
1,162 |
|
|
17 |
|
||||
Kaplan corporate and other |
|
166 |
|
|
122 |
|
|
36 |
|
|
662 |
|
|
372 |
|
|
78 |
|
||||
|
$ |
2,596 |
|
$ |
2,104 |
|
|
23 |
|
|
$ |
10,385 |
|
|
$ |
8,753 |
|
|
19 |
|
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 |
|||||||||||||||||||||||
|
2019 |
|
2018 |
|||||||||||||||||||||
(in thousands, except per share amounts) |
Income |
|
Income |
|
Net |
|
Income |
|
Income |
|
Net |
|||||||||||||
Amounts attributable to Graham Holdings Company Common Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
As reported |
$ |
185,117 |
|
|
$ |
39,100 |
|
|
$ |
146,017 |
|
|
$ |
69,138 |
|
|
$ |
12,400 |
|
|
$ |
56,738 |
|
|
Attributable to noncontrolling interests |
|
|
|
|
(136 |
) |
|
|
|
|
|
(53 |
) |
|||||||||||
Attributable to Graham Holdings Company Stockholders |
|
|
|
|
145,881 |
|
|
|
|
|
|
56,685 |
|
|||||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Reduction to operating expenses in connection with the broadcast spectrum repacking |
(1,074 |
) |
|
(247 |
) |
|
(827 |
) |
|
(1,814 |
) |
|
(399 |
) |
|
(1,415 |
) |
|||||||
Intangible asset impairment charges |
7,800 |
|
|
1,794 |
|
|
6,006 |
|
|
— |
|
|
— |
|
|
— |
|
|||||||
Settlement gain related to retiree annuity pension purchase |
(91,676 |
) |
|
(24,752 |
) |
|
(66,924 |
) |
|
— |
|
|
— |
|
|
— |
|
|||||||
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 (gains) losses on marketable equity securities |
(49,406 |
) |
|
(12,351 |
) |
|
(37,055 |
) |
|
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 |
2,353 |
|
|
588 |
|
|
1,765 |
|
|
1,639 |
|
|
393 |
|
|
1,246 |
|
|||||||
Net Income, adjusted (non-GAAP) |
|
|
|
|
$ |
48,846 |
|
|
|
|
|
|
$ |
75,554 |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Per share information attributable to Graham Holdings Company Common Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Diluted income per common share, as reported |
|
|
|
|
$ |
27.25 |
|
|
|
|
|
|
$ |
10.61 |
|
|||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Reduction to operating expenses in connection with the broadcast spectrum repacking |
|
|
|
|
(0.15 |
) |
|
|
|
|
|
(0.26 |
) |
|||||||||||
Intangible asset impairment charges |
|
|
|
|
1.12 |
|
|
|
|
|
|
— |
|
|||||||||||
Settlement gain related to retiree annuity pension purchase |
|
|
|
|
(12.50 |
) |
|
|
|
|
|
— |
|
|||||||||||
Settlement gain related to bulk lump sum pension offering and curtailment gain related to postretirement healthcare benefit plan |
|
|
|
|
— |
|
|
|
|
|
|
(4.11 |
) |
|||||||||||
Net (gains) losses on marketable equity securities |
|
|
|
|
(6.92 |
) |
|
|
|
|
|
6.28 |
|
|||||||||||
Non-operating loss, net, from cost method investments and guarantor lease obligations |
|
|
|
|
— |
|
|
|
|
|
|
1.43 |
|
|||||||||||
Foreign currency loss |
|
|
|
|
0.33 |
|
|
|
|
|
|
0.23 |
|
|||||||||||
Diluted income per common share, adjusted (non-GAAP) |
|
|
|
|
$ |
9.13 |
|
|
|
|
|
|
$ |
14.18 |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
The adjusted diluted per share amounts may not compute due to rounding. |
||||||||||||||||||||||||
|
Twelve Months Ended |
|||||||||||||||||||||||
|
2019 |
|
2018 |
|||||||||||||||||||||
(in thousands, except per share amounts) |
Income |
|
Income |
|
Net |
|
Income |
|
Income |
|
Net |
|||||||||||||
Amounts attributable to Graham Holdings Company Common Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
As reported |
$ |
426,479 |
|
|
$ |
98,600 |
|
|
$ |
327,879 |
|
|
$ |
323,508 |
|
|
$ |
52,100 |
|
|
$ |
271,408 |
|
|
Attributable to noncontrolling interests |
|
|
|
|
(24 |
) |
|
|
|
|
|
(202 |
) |
|||||||||||
Attributable to Graham Holdings Company Stockholders |
|
|
|
|
$ |
327,855 |
|
|
|
|
|
|
$ |
271,206 |
|
|||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Provision related to a VAT receivable |
17,132 |
|
|
3,255 |
|
|
13,877 |
|
|
— |
|
|
— |
|
|
— |
|
|||||||
Reduction to operating expenses in connection with the broadcast spectrum repacking |
(11,821 |
) |
|
(2,719 |
) |
|
(9,102 |
) |
|
(3,881 |
) |
|
(854 |
) |
|
(3,027 |
) |
|||||||
Intangible asset impairment charges |
7,800 |
|
|
1,794 |
|
|
6,006 |
|
|
7,909 |
|
|
2,099 |
|
|
5,810 |
|
|||||||
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 retiree annuity pension purchase |
(91,676 |
) |
|
(24,752 |
) |
|
(66,924 |
) |
|
— |
|
|
— |
|
|
— |
|
|||||||
Charges related to non-operating SIP at the education division |
6,607 |
|
|
1,520 |
|
|
5,087 |
|
|
— |
|
|
— |
|
|
— |
|
|||||||
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 (gains) losses on marketable equity securities |
(98,668 |
) |
|
(24,667 |
) |
|
(74,001 |
) |
|
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 |
(5,080 |
) |
|
(1,168 |
) |
|
(3,912 |
) |
|
(6,705 |
) |
|
(995 |
) |
|
(5,710 |
) |
|||||||
Gain on sale of Gimlet Media |
(28,994 |
) |
|
(7,248 |
) |
|
(21,746 |
) |
|
— |
|
|
— |
|
|
— |
|
|||||||
Gain on Kaplan University Transaction |
— |
|
|
— |
|
|
— |
|
|
(4,315 |
) |
|
(2,472 |
) |
|
(1,843 |
) |
|||||||
Foreign currency loss |
1,070 |
|
|
268 |
|
|
802 |
|
|
3,844 |
|
|
923 |
|
|
2,921 |
|
|||||||
Nonrecurring deferred state tax benefit related to the release of valuation allowances |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
17,783 |
|
|
(17,783 |
) |
|||||||
Tax benefit related to stock compensation |
— |
|
|
1,700 |
|
|
(1,700 |
) |
|
— |
|
|
1,810 |
|
|
(1,810 |
) |
|||||||
Net Income, adjusted (non-GAAP) |
|
|
|
|
$ |
176,242 |
|
|
|
|
|
|
$ |
255,009 |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Per share information attributable to Graham Holdings Company Common Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Diluted income per common share, as reported |
|
|
|
|
$ |
61.21 |
|
|
|
|
|
|
$ |
50.20 |
|
|||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Provision related to a VAT receivable |
|
|
|
|
2.59 |
|
|
|
|
|
|
— |
|
|||||||||||
Reduction to operating expenses in connection with the broadcast spectrum repacking |
|
|
|
|
(1.70 |
) |
|
|
|
|
|
(0.55 |
) |
|||||||||||
Intangible asset impairment charges |
|
|
|
|
1.12 |
|
|
|
|
|
|
1.08 |
|
|||||||||||
Interest expense related to the settlement of a mandatorily redeemable noncontrolling interest |
|
|
|
|
— |
|
|
|
|
|
|
1.14 |
|
|||||||||||
Debt extinguishment costs |
|
|
|
|
— |
|
|
|
|
|
|
1.60 |
|
|||||||||||
Settlement gain related to retiree annuity pension purchase |
|
|
|
|
(12.50 |
) |
|
|
|
|
|
— |
|
|||||||||||
Charges related to non-operating SIP at the education division |
|
|
|
|
0.95 |
|
|
|
|
|
|
— |
|
|||||||||||
Settlement gain related to bulk lump sum pension offering and curtailment gain related to postretirement healthcare benefit plan |
|
|
|
|
— |
|
|
|
|
|
|
(4.11 |
) |
|||||||||||
Net (gains) losses on marketable equity securities |
|
|
|
|
(13.82 |
) |
|
|
|
|
|
2.33 |
|
|||||||||||
Non-operating gain, net, from cost and equity method investments and related to sales of land and businesses, including guarantor lease obligations |
|
|
|
|
(0.73 |
) |
|
|
|
|
|
(1.03 |
) |
|||||||||||
Gain on sale of Gimlet Media |
|
|
|
|
(4.06 |
) |
|
|
|
|
|
— |
|
|||||||||||
Gain on Kaplan University Transaction |
|
|
|
|
— |
|
|
|
|
|
|
(0.33 |
) |
|||||||||||
Foreign currency loss |
|
|
|
|
0.15 |
|
|
|
|
|
|
0.54 |
|
|||||||||||
Nonrecurring deferred state tax benefit related to the release of valuation allowances |
|
|
|
|
— |
|
|
|
|
|
|
(3.31 |
) |
|||||||||||
Tax benefit related to stock compensation |
|
|
|
|
(0.32 |
) |
|
|
|
|
|
(0.33 |
) |
|||||||||||
Diluted income per common share, adjusted (non-GAAP) |
|
|
|
|
$ |
32.89 |
|
|
|
|
|
|
$ |
47.23 |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
The adjusted diluted per share amounts may not compute due to rounding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200226005077/en/
(703) 345-6470
Source:
Wallace R. Cooney
(703) 345-6470