Business Overview

Kaplan Educational Centers

In 1998 Kaplan continued its record of fast growth through aggressive expansion and strategic acquisitions. Revenues climbed to $195 million in 1998, while annualized revenues totaled $225 million. Kaplan has been organized into six operating divisions, each dedicated to helping individuals achieve their educational and career goals. The company posted growth in every division.

Test Preparation and Admissions. Kaplan's test prep business had another strong year, increasing revenue by more than 11 percent. Kaplan introduced new tutoring programs in its pre-college business, with revenue growing 12 percent. Revenue for the Law School Admission Test (LSAT) course rose 13 percent, while revenue for the Graduate Management Admission Test (GMAT) course grew 17 percent. Kaplan dramatically extended its market share for the United States Medical Licensing Exam (USMLE) by acquiring National Medical School Review, Inc. (NMSR), a leading provider of live lecture review programs. Kaplan partnered with the Mount Sinai School of Medicine, offering the first course preparing international medical school graduates for the new Clinical Skills Assessment (CSA). On the English-language front, Kaplan introduced a new course for the Test of English as a Foreign Language (TOEFL) as it switched to computer format. In addition, Kaplan acquired LCP International Institute, a provider of intensive English-language programs with five campus locations.

Score! Educational Centers. Score!, Kaplan's after-school learning center division, exceeded its goal and doubled its revenue for the third consecutive year. It continues to attract parents seeking new ways to help their children excel. Score! opened 31 centers in 1998 and now operates 70 centers in seven markets. Score! will open more than 30 centers in 1999 and will hire 250 full-time staff.

Kaplan Professional. Launched in 1998, Kaplan Professional has been built largely through strategic acquisitions. The division provides recruitment, assessment, training, and certification for corporate clients and individuals seeking to advance their careers.

Kaplan Professional includes Kaplan Professional Career Services, the nation's leading provider of career fairs and diversity recruitment in North America. In 1998 Kaplan acquired four geographically diverse career fair companies, adding them to previous acquisitions. Kaplan Professional also includes HireSystems, Inc., which provides a Web-based system that offers resume processing and searching, database hosting, and applicant tracking.

Kaplan also acquired Dearborn Publishing Group, Inc., a leader in publishing and training for securities, real estate, and insurance professionals, as well as Perfect Access, which delivers customized software training, consulting, and support services to top law firms, financial services firms, and Fortune 500 companies.

Publishing. Kaplan's publishing venture with Simon & Schuster had 95 book titles in print at the end of 1998, up from 69 in 1997. Topics include test prep, admissions, career guidance, academics, and life skills. Revenue grew 15 percent.

Kaplan's software business surged, with roughly 50 percent revenue growth and 100 percent profit growth. Kaplan dominates the test prep category, with 57 percent market share in SAT and 80 percent market share in graduate software.

Through its partnership with Knowledge Adventure, Inc., Kaplan added titles on basic skills, foreign languages, and more. By the end of 1998, Kaplan had ten software titles on the shelf, with plans to introduce another six in 1999.

Kaplan Learning Services. This division provides customized assessment, education, and training programs for K through 12 schools and universities, with major programs in New York, California, Pennsylvania, and Florida. Services include basic skills instruction, diagnostic testing, professional development, and family learning workshops.

Kaplan Learning Services continued its multi-year partnerships with Greenville Technical College in South Carolina and Chattanooga State Technical Community College in Tennessee to help incoming students excel on placement tests, improve academic performance, and boost their chances of graduating.

Kaplan University. This distance learning division was launched in September with Concord University School of Law, the nation's first online law school, whose graduates will be eligible to sit for the California State Bar Examination. In its first three months, Concord received thousands of requests for applications and enrolled its first class, half of whom hold advanced degrees. Concord, provisionally licensed by the State of California, serves an untapped niche of professionals, family caretakers, working students, and others whose circumstances prevent them from attending a fixed-facility law school.

Washingtonpost.Newsweek Interactive

As the Internet continues to revolutionize information delivery, communications, and business, Washingtonpost.Newsweek Interactive (WPNI) is setting the standard for journalistic endeavors on the Web and building a worldwide online audience for The Washington Post and Newsweek.

In 1998, with the eyes of the world focused on Washington, established itself as the premier source for news and information in the nation's capital. In addition, extended The Washington Post franchise to national and global audiences. The site consistently ranked among the top five news sites on the Web--second only to USA Today among newspaper sites. Having experienced significant growth in page views, currently serves nearly 70 million page views a month. was named best overall online service among large newspapers in the 1999 EPpy Awards competition, sponsored by Editor & Publisher Interactive. The site also was honored for having the best news section, best design, and best classified section. was recognized by various industry groups for its superior political news coverage and local arts and entertainment guide.

Locally, remains committed to serving the greater Washington community with a comprehensive suite of services designed to enhance daily life. Style Live is's award-winning city guide, built with tools and technology from CitySearch. The yellowpages, a complement to the Style Live service, is among the most successful newspaper-originated online yellow pages in the country. In concert with The Washington Post newsroom, regularly features extensive coverage of local news events.

Throughout the year, WPNI developed new products to support key categories where advertiser relationships are strongest. In conjunction with Classified Ventures, a consortium of eight media companies that unite local newspapers with a nationwide technological platform and brand, WPNI launched, and in the classified category. In the recruitment category, pioneered the development of online employment classified solutions through CareerPost. As a member of, a national consortium that includes over 70 newspapers in every major market in the country, expanded awareness of its employment products.

WPNI was one of the first media companies to introduce integrated e-commerce for its Web sites. The Marketplace section, designed to convert the sizable editorial traffic of and into revenue, is phase one of what will become a fully integrated shopping service featuring local and national merchants, classifieds, yellow pages, and auctions.

In October, Washingtonpost.Newsweek Interactive launched, an Internet version of the magazine featuring Newsweek's perspective, insight, and wit. The site offers breaking news from, weekday updates to readers' favorite sections--Newsmakers, Periscope, and Cyberscope--as well as the full contents of the print edition, enhanced with links and multimedia additions. The arrival of on the Web was well received by reviewers and readers alike and was heralded as an "...impressive debut on the Web" by American Journalism Review.

In 1999 WPNI will be focused on building revenues, readership, and sustainable businesses to support its leading news, information, and e-commerce products.

Legi-Slate, Inc.

Legi-Slate has been meeting the legislative and regulatory information needs of professionals in a wide spectrum of industries for more than 20 years. Focused on meeting specific customer needs, Legi-Slate provides a wide range of news, uniquely indexed data, information, and analysis of federal and state legislative and regulatory issues, online, via fax, and over the Web.

Continuing in the tradition of developing services to meet the evolving demands of the marketplace, Legi-Slate expanded its services in 1998 by consolidating its 50-state monitoring subsidiary, focusing on its proprietary research business, and partnering with industry leader StateNet to market and sell one another's online tracking services.


Education on Demand

By Andrew E. Kaplan
Vice President and Publisher, Kaplan Interactive

They say the Internet operates in dog years. One year online is like seven years in other businesses. I came to Kaplan in 1996--two decades ago in Web years, and a lifetime ago in terms of Kaplan's evolution and the extensive changes in technology and the education industry. I was attracted to Kaplan for two reasons. First, I wanted to have a broad impact on people's lives as they faced some of their most significant academic and professional hurdles. Second, the management team was passionate about changing for-profit education. I believe technology will be a key driver of that change, and that the technology-based products and services we create will help hundreds of thousands of people a year accomplish their goals, wherever and whenever they choose.

Technology has been enriching education for several years. For instance, CD-ROMs have provided immersive information experiences, drills for building skills, and tools such as word processors and spreadsheets. But this technology has been only supplemental to the live learning process.

When I first started in 1996, Kaplan was using technology as an extension of the classroom to provide personalized feedback to students taking practice tests. But a major change was underway. Admissions exams for business and graduate school were being replaced by "adaptive" tests given on the computer. Other major tests, including the SAT, are expected to follow. We had to figure out a way to help students prepare for exams that were not only offered on computer but were different for each student depending on his or her skills and test-taking behavior.

We developed adaptive testing CD-ROMs that provided close simulations of real computer exams to help students learn how to excel on computer adaptive tests. The CD-ROMs also strategically analyzed student performance on the test, providing detailed feedback on the kinds of questions they got right and wrong, their "guessing" skills, and how effective they were at time management. Students could use this feedback to focus their studies and improve performance.

Meanwhile, the Internet had become broadly available, along with the growing sense that "everything" could be done somewhere on the Web. It wasn't just cool gizmos and flaming logos anymore. The Internet's interpersonal communications capabilities and instant access to the benefits of multimedia software finally allowed for significant and rich learning to take place on demand--anywhere a student could access the Net. Customers in all of Kaplan's businesses were beginning to seek personalized education for the most efficient learning experiences.

To meet our customers' needs and drive the growth of our business, we have been developing a set of Internet distance learning tools that allows Kaplan to deliver lessons, tests, and feedback that are all specific to a student's goals, learning styles, skills, and preferences. Students can get just what they need, when they need it. The instruction can be truly customized to the unique abilities of each learner. We can track student behaviors and provide individually tailored education, anytime and anywhere.

People are increasingly using the Internet to take courses and get advanced degrees, and Kaplan has been at the forefront of that trend. In the fall, Kaplan launched the country's first online law school, Concord University. We use distance learning as an extension of our test prep courses and also plan to deliver continuing education courses for insurance agents and preparation for securities tests online. And we will use the Internet to help us train large numbers of Score! coaches. But the most exciting part for me is that this is just the beginning--there are dozens of innovative programs under consideration.

I have been an educational technology professional for 11 years--ancient in Web years. I chose this field because I wanted to use the technology I love to do something meaningful and positive. I sought the opportunity to transform education with technology. Kaplan has a chance to revolutionize the way people learn, and for me, it's my dream career come true.


Rules of the e-Road

By Caroline H. Little
Vice President, Administration, and General Counsel, Washingtonpost.Newsweek Interactive

I came to Washingtonpost.Newsweek Interactive in 1997, moving from print media to electronic media. The move proved to be more dramatic than I had anticipated. No longer could I anticipate what issues might come across my desk (or computer screen); and no longer was there a mature body of law to serve as precedent for commonly understood questions and more importantly, answers. Over the past two years, I have had a few pangs of nostalgia for more ordinary questions for which there were clear legal precedents to consult, yet the creativity that the medium requires--from each person in the company, including its lawyers--is a welcome and exhilarating challenge.

This medium also encourages collaboration--certainly more collaboration between the editorial and business side than in the print medium, with its relatively strict "church and state" separation. Perhaps that's because the Internet is still in its nascent stages, and we are experimenting with its reach and voice. Also, the standards (and infinite possibilities) of advertising and editorial placement are less established. And all departments of the company are united in our dependence on an evolving technology. These new partnerships make for fascinating discussions and debates, many of which I am privileged to participate in as counsel to the company.

The medium of the Internet is a fine example of the fast pace of technology and the slower pace of the law to catch up with its dizzying speed. Indeed, the Web has even developed its own language with some strange terminology, such as spamming (sending thousands or millions of the same message to Internet users, typically for advertising purposes), flaming (sending offensive mail messages), and, my favorite, netiquette (Internet etiquette).

That's not to say that Congress and the courts have been silent on key issues affecting the Internet. Last year lower courts ruled for the first time on several issues involving the use of copyrighted works on the Internet. And in just the last few years, a substantial body of case law has developed with regard to Internet domain names and related trademark infringement issues. Similarly, courts have adjudicated with increasing frequency the issue of, and have sustained in many cases, personal jurisdiction in cyberspace--that is, the ability of a court to adjudicate a dispute over an out-of-state defendant. Cyberspace turns the traditional jurisdictional analysis of "minimum contacts" on its head, since a Web site is continually accessible to Internet users around the world. Thus, the global reach of the Internet poses difficult questions about increased exposure to lawsuits in distant forums.

Congress has been active in this area, too. While several other pending bills were deferred to this Congress, including those relating to "junk" electronic mail, legal protection for databases, and prohibition of Internet gambling, Congress passed and President Clinton signed new laws addressing Internet privacy for children, copyright, taxation, and pornography. Perhaps the most visible and contentious of the new laws is the Digital Millennium Copyright Act. The Act seeks to balance the public interest in the free flow of information with the rights of copyright holders. Most notably, the Act adds a new section to the Copyright Act that limits the copyright liability of Internet service providers and access providers under certain circumstances.

The area of law most affected by the Internet seems to be copyright. Since information in digital form can easily be copied, it also can be easily infringed. This is a concern not only to publishers and other content providers, but also to software companies. Coupled with the physical ease of copying in a digital medium, there is also a prevalent attitude on the Internet, held by at least a vocal minority of "netizens," that one of the fundamental principles of the copyright law--that the copyright holder holds the exclusive right to reproduce the work--should not be as sacrosanct in the electronic medium as in the print medium. In this arena where the law by itself may not provide adequate protections, copyright owners are increasingly looking for and using other avenues to protect their work, including digital watermarking, encryption, monitoring services, and other technologies that limit the ability to reproduce.

What will 1999 bring? More attention by lawmakers to privacy issues on the Web. More electronic commerce initiatives in the industry. More Internet users. And--best of all for Washingtonpost.Newsweek Interactive--more collaboration and more challenges.