Washington Post 1999 Annual Report Download - page 13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNI FICANT ACCOUNTING POLICIES
The Washington Post Company (the “Company”) is a diversified
media organization whose principal operations consist of newspaper
publishing (primarily The Washington Post newspaper), television
broadcasting (through the ownership and operation of six network-
affiliated television stations), the ownership and operation of cable
television systems, and magazine publishing (primarily Newsweek
magazine). Through its subsidiary Kaplan, Inc., the Company provides
educational and career services for individuals, schools and busi-
nesses. The Company also owns and operates a number of media web
sites for the primary purpose of developing the Company’s newspaper
and magazine publishing businesses on the world wide web.
Fiscal Year. The Company reports on a 52-53 week fiscal year
ending on the Sunday nearest December 31. The fiscal year 1999,
which ended on January 2, 2000, included 52 weeks, while 1998
included 53 weeks and 1997 included 52 weeks. With the exception
of the newspaper publishing operations, subsidiaries of the Company
report on a calendar-year basis.
Principles of Consolidation. The accompanying financial statements
include the accounts of the Company and its subsidiaries; significant
intercompany transactions have been eliminated.
Presentation. Certain amounts in previously issued financial state-
ments have been reclassified to conform to the 1999 presentation.
Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements. Actual results could
differ from those estimates.
Cash Equivalents. Short-term investments with original maturities
of 90 days or less are considered cash equivalents.
Investments in Marketable Equity Securities. The Company’s invest-
ments in marketable equity securities are classified as available-
for-sale and therefore are recorded at fair value in the Consolidated
Balance Sheets, with the change in fair value during the period
excluded from earnings and recorded net of tax as a separate com-
ponent of equity and comprehensive income.
Inventories. Inventories are valued at the lower of cost or market.
Cost of newsprint is determined by the first-in, first-out method, and
cost of magazine paper is determined by the specific-cost method.
Investments in Affiliates. The Company uses the equity method of
accounting for its investments in and earnings or losses of affiliates.
Property, Plant and Equipment. Property, plant and equipment is
recorded at cost and includes interest capitalized in connection with
major long-term construction projects. Replacements and major
improvements are capitalized; maintenance and repairs are charged
to operations as incurred.
Depreciation is calculated using the straight-line method over
the estimated useful lives of the property, plant and equipment:
3 to 20 years for machinery and equipment, and 20 to 50 years for
buildings. The costs of leasehold improvements are amortized over
the lesser of the useful lives or the terms of the respective leases.
Goodwill and Other Intangibles. Goodwill and other intangibles rep-
resent the unamortized excess of the cost of acquiring subsidiary
companies over the fair values of such companies’ net tangible
assets at the dates of acquisition. Goodwill and other intangibles
are being amortized by use of the straight-line method over periods
ranging from 15 to 40 years (with the majority being amortized
over 15 to 20 years).
Long-Lived Assets. The recoverability of long-lived assets, including
goodwill and other intangibles, is assessed annually or whenever
adverse events and changes in circumstances indicate that previously
anticipated undiscounted cash flows warrant assessment.
Program Rights. The broadcast subsidiaries are parties to agree-
ments that entitle them to show syndicated and other programs on
television. The cost of such program rights is recorded when the
programs are available for broadcasting and such costs are charged
to operations as the programming is aired.
Deferred Subscription Revenue and Magazine Subscription
Procurement Costs. Deferred subscription revenue, which primarily
represents amounts received from customers in advance of
magazine and newspaper deliveries, is included in revenues over
the related subscription term.
Deferred subscription revenue to be earned after one year is
included in “Other liabilities” in the Consolidated Balance Sheets.
Magazine subscription procurement costs are charged to operations
as incurred.
Education Revenue. Education revenue in recognized ratably over
the period during which educational services are delivered.
Postretirement Benefits Other Than Pensions. The Company provides
certain health care and life insurance benefits for retired employees.
The expected cost of providing these postretirement benefits is
accrued over the years that employees render services.
Income Taxes. The provision for income taxes is determined using
the asset and liability approach. Under this approach, deferred
income taxes represent the expected future tax consequences of
44 THE WASHINGTON POST COMPANY