Washington Post 2013 Annual Report Download - page 84

6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
As of December 31
(in thousands) 2013 2012
Land ......................... $ 32,618 $ 42,992
Buildings ...................... 299,652 364,844
Machinery, equipment and fixtures . . . 2,289,966 2,617,344
Leasehold improvements ........... 294,548 314,555
Construction in progress ........... 94,615 66,734
3,011,399 3,406,469
Less accumulated depreciation ...... (2,083,857) (2,325,232)
$ 927,542 $ 1,081,237
Depreciation expense was $233.2 million, $244.1 million and
$223.4 million in 2013, 2012 and 2011, respectively.
7. ACQUISITIONS AND DISPOSITIONS
Acquisitions. The Company completed business acquisitions totaling
approximately $23.8 million in 2013; $55.6 million in 2012; and
$136.5 million including assumed debt of $5.5 million in 2011.
The assets and liabilities of the companies acquired have been
recorded at their estimated fair values at the date of acquisition.
During 2013, the Company acquired six businesses. On August 1,
2013, the Company completed its acquisition of Forney Corporation,
a global supplier of products and systems that control and monitor
combustion processes in electric utility and industrial applications. The
operating results for Forney are included in other businesses. The
Company also acquired four small businesses in other businesses and
one small business in its education division. In the second quarter of
2013, Kaplan purchased the remaining 15% noncontrolling interest in
Kaplan China; this additional interest was accounted for as an equity
transaction. The purchase price allocations mostly comprise goodwill,
other intangible assets and current assets.
During 2012, the Company completed five business acquisitions. In
November 2012, the Company completed its acquisition of a
controlling interest in Celtic Healthcare, Inc. (Celtic), a provider of
home health care and hospice services in the northeastern and mid-
Atlantic regions. The operating results of Celtic are included in other
businesses. The fair value of the noncontrolling interest in Celtic was
$5.9 million at the acquisition date, determined using a market
approach. The minority shareholder has an option to put their shares to
the Company from 2018 to 2022, and the Company has an option
to buy the shares of the minority shareholder in 2022. The Company
also acquired three small businesses in its education division and one
small business in other businesses. The purchase price allocations
mostly comprised goodwill and other intangible assets.
During 2011, the Company completed five business acquisitions.
Kaplan acquired three businesses in its Kaplan International
division, one business in its KHE division and one business in its
Kaplan Ventures division. These included the May 2011
acquisitions of Franklyn Scholar and Carrick Education Group,
national providers of vocational training and higher education in
Australia, and the June 2011 acquisition of Structuralia, a provider
of e-learning for the engineering and infrastructure sector in Spain. The
purchase price allocations for these acquisitions mostly comprised
goodwill, other intangible assets and property, plant and equipment.
Dispositions. On October 1, 2013, the Company completed the
sale of its Publishing Subsidiaries that together conducted most of the
Company’s publishing business and related services, including
publishing The Washington Post, Express, The Gazette Newspapers,
Southern Maryland Newspapers, Greater Washington Publishing,
Fairfax County Times and El Tiempo Latino and related websites.
Slate magazine, TheRoot.com and Foreign Policy were not part of
the transaction and remain with the Company, as do the Trove and
SocialCode businesses, the Company’s interest in Classified Ventures
and certain real estate assets, including the headquarters building in
downtown Washington, DC. In March 2013, the Company
completed the sale of The Herald, a daily and Sunday newspaper
headquartered in Everett, WA. The Herald was previously reported
in the newspaper publishing division.
The Company divested its interest in Avenue100 Media Solutions in
July 2012, which was previously reported in other businesses.
Kaplan completed the sales of Kidum in August 2012, EduNeering
in April 2012, and KLT in February 2012, which were part of the
Kaplan Ventures division.
Kaplan completed the sales of KVE in July 2011 and KCS in October
2011, which were part of Kaplan Ventures and KHE, respectively.
Consequently, the Company’s income from continuing operations
excludes results from these businesses, which have been reclassified
to discontinued operations (see Note 3).
8. GOODWILL AND OTHER INTANGIBLE ASSETS
In 2013, as a result of operating losses and restructuring activities at
one of the Kaplan International businesses, Kaplan recorded an
intangible and other long-lived assets impairment charge of $3.3
million. The Company estimated the fair value of the student and
customer relationships and database and technology intangible assets
using the excess earnings method, and the fair value of the trade name
and trademarks intangible assets using the relief from royalty method.
As part of the Company’s annual impairment review in 2012, the
KTP reporting unit failed the step one goodwill impairment test, and,
therefore, a step two analysis was performed. As a result of the step
two analysis, the Company recorded a goodwill and other long-
lived asset impairment charge of $111.6 million. The Company
estimated the fair value utilizing a discounted cash flow model,
supported by a market approach. The impairment charge was the
result of a slowdown in enrollment growth at KTP, operating losses
for the preceding three years and other factors. A substantial portion
of the impairment charge was due to the amount of unrecognized
intangible assets identified in the step two analysis.
Amortization of intangible assets for the years ended December 31,
2013, 2012 and 2011, was $13.6 million, $20.9 million and
$22.2 million, respectively. Amortization of intangible assets is
estimated to be approximately $11 million in 2014, $9 million in
2015, $8 million in 2016, $5 million in 2017, $4 million in
2018 and $3 million thereafter.
66 GRAHAM HOLDINGS COMPANY