Washington Post 2007 Annual Report Download - page 69

Kaplan recorded stock compensation expense of $41.3 million
for 2007, compared to $27.7 million for 2006 and $3.0 million
for 2005, excluding Kaplan stock compensation expense in
2006 of $8.2 million as a result of the change in accounting
under SFAS 123R. In 2007, 2006 and 2005, total net payouts
were $8.1 million, $31.1 million and $35.2 million,
respectively. At December 30, 2007, the Company’s accrual
balance related to Kaplan stock-based compensation totaled
$101.2 million. If Kaplan’s profits increase and the value
of education companies increases in 2008, there will be
significant Kaplan stock-based compensation in 2008.
Note I to the Consolidated Financial Statements provides
additional details surrounding Kaplan stock compensation.
Goodwill and Other Intangibles. The Company reviews
goodwill and indefinite-lived intangibles at least annually for
impairment, generally utilizing a discounted cash flow model.
In the case of the Company’s cable systems, both a discounted
cash flow model and a market approach employing comparable
sales analysis are considered. In reviewing the carrying value of
goodwill and indefinite-lived intangible assets at the cable
division, the Company aggregates its cable systems on a
regional basis. The Company must make assumptions
regarding estimated future cash flows and market values to
determine a reporting unit’s estimated fair value. If these
estimates or related assumptions change in the future, the
Company may be required to record an impairment charge. At
December 30, 2007, the Company has $2,089.6 million in
goodwill and other intangibles, net.
OTHER
New Accounting Pronouncements. In June 2006, The
Financial Accounting Standards Board (“FASB”) issued FASB
Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in
Income Taxes — an Interpretation of FASB Statement
No. 109.” FIN 48 prescribes a comprehensive model of
how a company should recognize, measure, present and
disclose in its financial statements uncertain tax positions
that a company has taken or expects to take on a tax return.
The Company implemented FIN 48 in the first quarter of 2007,
and there was no impact on the Company’s financial position
or results of operations as a result of the implementation. The
Company has determined that there are no material
transactions or material tax positions taken by the Company
that would fail to meet the more likely than not threshold
established by FIN 48 for recognizing transactions or tax
positions in the financial statements. In making this
determination, the Company presumes that all matters will be
examined with full knowledge of all relevant information by
appropriate taxing authorities and that the Company will
pursue, if necessary, resolution by related appeals or litigation.
The Company has accrued a tax liability for certain tax positions
reflected in the financial statements where it is uncertain whether
the tax benefit associated with the tax positions will ultimately be
recognized in full. The amount of, and changes to, this accrued
tax liability are not material to the Company’s financial position or
results of operations, and the Company does not expect the total
amount of this accrued tax liability or the gross unrecognized tax
benefits to significantly increase or decrease within the next
12 months.
In September 2006, the FASB issued SFAS 157, “Fair Value
Measurements,” which defines fair value, establishes a
framework for measuring fair value and expands disclosures
about fair value measurements. The provisions of SFAS 157
are effective as of the beginning of the Company’s 2008 fiscal
year. However, the FASB deferred the effective date of SFAS 157
for nonfinancial assets and liabilities that are not remeasured at
fair value on a recurring basis, until the beginning of the
Company’s 2009 fiscal year. We are currently evaluating the
impact of adopting SFAS 157 on the Company’s financial
statements, but do not expect the adoption to have a material
impact.
In February 2007, the FASB issued SFAS 159, “The Fair Value
Option for Financial Assets and Financial Liabilities Including an
amendment of FASB Statement No. 115.” SFAS 159 permits
entities to choose to measure eligible items at fair value at
specified election dates and report unrealized gains and losses
on items for which the fair value option has been elected in
earnings at such subsequent reporting dates. The provisions of
SFAS 159 are effective as of the beginning of the Company’s
2008 fiscal year. The adoption of SFAS 159 is not expected to
impact the Company’s financial statements.
In December 2007, the FASB issued SFAS 141 (revised 2007),
“Business Combinations“ (SFAS 141R), and SFAS 160, “Non-
controlling Interests in Consolidated Financial Statements,” to
improve, simplify and converge internationally the accounting
for business combinations and the reporting of noncontrolling
interests in consolidated financial statements. The provisions of
SFAS 141R and SFAS 160 are effective as of the beginning of the
Company’s 2009 fiscal year. We are currently evaluating the
impact of adopting SFAS 141R and SFAS 160 on the Company’s
financial statements.
2007 FORM 10-K 53