Education & Distance Learning Enthusiasts- Acquisitions drive almost half of Kaplan's revenue growth in 2003

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Acquisitions drive almost half of Kaplan's revenue growth in 2003

Educational Marketer - February 9, 2004

Kaplan (New York) continues to be a fast-growing revenue driver for its parent, The Washington Post Co. Kaplan generated $838.1 million in 2003, up 34.9% from $621.1 million in 2002.

Kaplan, which provides test preparation, professional training and post-secondary fixed-facility and distance learning degree programs, garnered 43% of that growth from acquisitions during the year. Kaplan completed eight acquisitions in 2003, including Dublin Business School and Financial Training Co., which provide degrees and career training in the U.K. and Asia, extending Kaplan's reach abroad (EM, Dec. 8, 2003).

Higher education was Kaplan's growth driver, boosting sales 46.6% to $366.3 million in 2003. While acquisitions drove revenue growth in this segment, management said increases in student enrollment and higher student retention rates also contributed.

Increased enrollment at Kaplan's traditional test-prep business and the $87.4 million acquisition of FTC in March were the primary growth drivers in Kaplan's supplemental segment, where revenue increased 27% to $471.8 million.

Acquisitions accounted for 49% of Kaplan's revenue growth in the fourth quarter alone. Fourth-quarter revenue was up 46.6% to $240.1 million.

The historically profitable business suffered an operating loss in 2003 of $11.7 million, compared to operating income of $20.5 million in 2002. Management attributed the loss to an $84.6 million increase in Kaplan stock compensation expense.

The company in September announced an offering of $138 million for approximately 55% of the stock options at Kaplan, including a 10% premium over current valuation price. The company paid out $118.7 million in the fourth quarter and will make additional payouts through 2006. The company does not plan to issue additional stock options in the future.

Kaplan Inc. 212 492-5800; www.kaplan.com

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