Washington Post 2009 Annual Report Download - page 73

THE WASHINGTON POST COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. ORGANIZATION AND NATURE OF OPERATIONS
The Washington Post Company, Inc. (the “Company”) is a diversified
education and media company. The Company’s Kaplan subsidiary
provides a wide variety of educational services, both domestically
and outside the United States. The Company’s media operations
consist of the ownership and operation of cable television systems,
newspaper publishing (principally The Washington Post), television
broadcasting (through the ownership and operation of six television
broadcast stations) and magazine publishing (Newsweek).
Education—Kaplan, Inc. provides an extensive range of educational
services for children, students and professionals. Kaplan’s various
businesses comprise four categories: Higher Education, Test
Preparation, Kaplan International and Kaplan Ventures.
Media—The Company’s diversified media operations consist of cable
television operations, newspaper publishing, television broadcasting,
and magazine publishing.
Cable television operations: Cable ONE provides cable services that
include basic video, digital video, cable modem and telephone
service in the midwestern, western and southern states of the United
States.
Newspaper publishing: Washington Post Media publishes The
Washington Post (“the Post”), which is the largest and most widely
circulated morning daily and Sunday newspaper, primarily distributed
by home delivery in the Washington, DC, metropolitan area
(including large portions of Maryland and northern Virginia).
Washington Post Media also produces washingtonpost.com, an
Internet site that features news and information products, as well as
the full editorial content of The Washington Post. Through the
Company’s other newspaper publishing businesses, the Company
also publishes weekly publications and tabloids distributed nationally
and within the Washington, DC, metropolitan area and produces
other websites and online magazines.
Television broadcasting: The Company owns six VHF television
stations located in Houston, TX; Detroit, MI; Miami, FL; Orlando, FL;
San Antonio, TX; and Jacksonville, FL. Other than the Company’s
Jacksonville station, WJXT, the Company’s television stations are
affiliated with one of the major national networks.
Magazine publishing: Newsweek, Inc. publishes Newsweek, a
weekly newsmagazine published both domestically and
internationally. The magazine publishing division also includes
newsweek.com.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year—The Company reports on a 52 to 53-week fiscal year
ending on the Sunday nearest December 31. Fiscal year 2009, which
ended on January 3, 2010, included 53 weeks. The fiscal years
2008 and 2007, which ended on December 28, 2008, and
December 30, 2007, respectively, included 52 weeks. With the
exception of most of the newspaper publishing operations and
corporate office, subsidiaries of the Company report on a calendar-
year basis.
Basis of Presentation and Principles of Consolidation—The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (“GAAP”) in
the United States and include the assets, liabilities, results of operations
and cash flows of the Company and its majority-owned and controlled
subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Reclassifications—Certain amounts in previously issued financial
statements have been reclassified to conform with the 2009
presentation.
Use of Estimates—The preparation of financial statements in
conformity with GAAP requires management to make estimates and
judgments that affect the amounts reported in the financial statements.
On an ongoing basis, the Company evaluates its estimates and
assumptions. Actual results could differ from these estimates.
Business Combinations—The purchase price of an acquisition is
allocated to the assets acquired, including intangible assets, and
liabilities assumed, based on their respective fair values at the acquisition
date. Starting in 2009, acquisition-related costs are expensed as
incurred. The excess of the cost of an acquired entity over the net of the
amounts assigned to the assets acquired and liabilities assumed is
recognized as goodwill. The net assets and results of operations of an
acquired entity are included in the Company’s consolidated financial
statements from the acquisition date.
Cash and Cash Equivalents—Cash and cash equivalents consist of
cash on hand, short-term investments with original maturities of three
months or less and investments in money market funds with weighted
average maturities of three months or less.
Concentration of Credit Risk—Cash and cash equivalents are
maintained with several financial institutions domestically and
internationally. Deposits held with banks may exceed the amount of
insurance provided on such deposits. Generally, these deposits may
be redeemed upon demand and are maintained with financial
institutions with investment grade credit ratings. The Company
routinely assesses the financial strength of significant customers, and
this assessment, combined with the large number and geographical
diversity of its customers, limits the Company’s concentration of risk
with respect to trade accounts receivable.
Allowance for Doubtful Accounts—Accounts receivable have been
reduced by an allowance for amounts that may be uncollectible in the
future. This estimated allowance is based primarily on the aging
category, historical trends and management’s evaluation of the
financial condition of the customer. Accounts receivable also have
been reduced by an estimate of advertising rate adjustments and
discounts, based on estimates of advertising volumes for contract
customers who are eligible for advertising rate adjustments and
discounts.
Investments in Marketable Equity Securities—The Company’s
investments in marketable equity securities are classified as
available-for-sale and therefore are recorded at fair value in the
consolidated financial statements, with the change in fair value during
the period excluded from earnings and recorded net of income taxes
as a separate component of other comprehensive income. If the fair
value of a marketable equity security declines below its cost basis
2009 FORM 10-K 59