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 September 2012, KHE announced a plan to consolidate its market presence at certain of its fixed-facility campuses. Under this plan, KHE has ceased new enrollments at nine ground campuses as it considers alternatives for these locations, and is in the process of consolidating operations of four other campuses into existing, nearby locations. Revenues at these campuses represent approximately 4% of KHE’s total revenues. In the fourth quarter of 2012, KHE also began implementing plans to consolidate facilities and reduce workforce at its online programs. In connection with these and other plans, KHE incurred $23.4 million in restructuring costs from accelerated depreciation, and severance and lease obligations in 2012 ($16.9 million was recorded in the fourth quarter).

In 2012 and the fourth quarter of 2012, KHE revenue declined 18% and 15%, respectively, due largely to declines in average enrollments that reflect weaker market demand over the past year. Operating income decreased 82% and 61% for 2012 and the fourth quarter of 2012, respectively. These declines were due primarily to lower revenue, a decline in operating results from campuses planned for closure, and significant restructuring costs noted above that exceed similar charges in 2011. Offsetting the declines were expense reductions associated with lower enrollments and recent restructuring efforts.

New student enrollments at Kaplan University and KHE Campuses decreased 1% in 2012. Total students at December 31, 2012 were down 12% compared to December 31, 2011, and down 11% compared to September 30, 2012, as follows:
Students as of
December 31,   September 30,   December 31,
          2012   2012   2011
Kaplan University 44,371 49,132 50,190
KHE Campuses 21,099   24,129   24,360
65,470   73,261   74,550

Kaplan University students included 5,625, 6,822 and 5,799 campus-based students as of December 31, 2012, September 30, 2012, and December 31, 2011, respectively.

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