Washington Post 2002 Annual Report Download - page 46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cost Method Investments. The Company uses the cost method of
accounting for its minority investments in non-public companies
Fiscal Year. The Company reports on a 52-53 week fiscal year where it does not have significant influence over the operations
ending on the Sunday nearest December 31. The fiscal years and management of the investee. Investments are recorded at
2002, 2001 and 2000, which ended on December 29, 2002, the lower of cost or fair value as estimated by management.
December 30, 2001, and December 31, 2000, respectively, Charges recorded to write-down cost method investments to their
included 52 weeks. With the exception of the newspaper pub- estimated fair value and gross realized gains or losses upon the
lishing operations, subsidiaries of the Company report on a sale of cost method investments are included in ‘‘Other income
calendar-year basis. (expense), net’’ in the Consolidated Statements of Income.
Principles of Consolidation. The accompanying financial state- Goodwill and Other Intangibles. Prior to 2002, goodwill and
ments include the accounts of the Company and its subsidiaries; other intangibles were amortized by use of the straight-line
significant intercompany transactions have been eliminated. method over periods ranging from 15 to 40 years (with the
Presentation. Certain amounts in previously issued financial majority being amortized over 15 to 25 years). In 2002, the
statements have been reclassified to conform with the 2002 Company adopted Statement of Financial Accounting Standards
presentation. No. 142 (SFAS 142), ‘‘Goodwill and Other Intangible Assets.’’
As a result of the adoption of SFAS 142, goodwill and indefinite-
Use of Estimates. The preparation of financial statements in con- lived intangibles are no longer amortized, but are reviewed at
formity with generally accepted accounting principles requires least annually for impairment. All other intangible assets are
management to make estimates and assumptions that affect the amortized over their useful lives.
amounts reported in the financial statements. Actual results could
differ from those estimates. Long-Lived Assets. The recoverability of long-lived assets is
assessed whenever adverse events and changes in circum-
Cash Equivalents. Short-term investments with original maturities stances indicate that previously anticipated undiscounted cash
of 90 days or less are considered cash equivalents. flows warrant assessment.
Investments in Marketable Equity Securities. The Company’s Program Rights. The broadcast subsidiaries are parties to
investments in marketable equity securities are classified as agreements that entitle them to show syndicated and other pro-
available-for-sale and therefore are recorded at fair value in the grams on television. The costs of such program rights are record-
Consolidated Balance Sheets, with the change in fair value dur- ed when the programs are available for broadcasting, and such
ing the period excluded from earnings and recorded net of tax costs are charged to operations as the programming is aired.
as a separate component of comprehensive income. Marketable
equity securities that the Company expects to hold long term are Revenue Recognition. Revenue from media advertising is recog-
classified as non-current assets. nized, net of agency commissions, when the underlying adver-
tisement is published or broadcast. Revenues from newspaper
Inventories. Inventories are valued at the lower of cost or mar- and magazine subscriptions are recognized upon delivery. Rev-
ket. Cost of newsprint is determined by the first-in, first-out enues from newspaper retail sales are recognized upon deliv-
method, and cost of magazine paper is determined by the spe- ery, and revenues from magazine retail sales are recognized on
cific-cost method. the later of delivery or cover date, with adequate provision
Property, Plant and Equipment. Property, plant and equipment made for anticipated sales returns. Cable subscriber revenue is
is recorded at cost and includes interest capitalized in connec- recognized monthly as services are delivered. Education reve-
tion with major long-term construction projects. Replacements nue is recognized ratably over the period during which educa-
and major improvements are capitalized; maintenance and tional services are delivered. For example, at Kaplan’s test prep-
repairs are charged to operations as incurred. aration division, estimates of average student course length are
developed for each course and these estimates are evaluated on
Depreciation is calculated using the straight-line method over the an ongoing basis and adjusted as necessary.
estimated useful lives of the property, plant and equipment: 3 to
20 years for machinery and equipment, and 20 to 50 years for The Company bases its estimates for sales returns on historical
buildings. The costs of leasehold improvements are amortized experience and has not experienced significant fluctuations
over the lesser of the useful lives or the terms of the respective between estimated and actual return activity. Amounts received
leases. from customers in advance of revenue recognition are deferred
as liabilities. Deferred revenue to be earned after one year is
Investments in Affiliates. The Company uses the equity method included in ‘‘Other Liabilities’’ in the Consolidated Balance
of accounting for its investments in and earnings or losses of Sheets.
affiliates that it does not control but over which it does exert
significant influence. Postretirement Benefits Other Than Pensions. The Company
provides health care and life insurance benefits for certain
44 THE WASHINGTON POST COMPANY