Washington Post 2001 Annual Report Download - page 23

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THE WASHINGTON POST COMPANY
The cable system exchange with AT&T Broadband was completed
on March 1, 2001 and consisted of the exchange by the Company
of its cable systems in Modesto and Santa Rosa, California, and
approximately $42.0 million to AT&T Broadband for cable systems
serving approximately 155,000 subscribers principally located in
Idaho. In a related transaction on January 11, 2001, the Company
completed the sale of a cable system serving about 15,000 sub-
scribers in Greenwood, Indiana, for $61.9 million. The gain result-
ing from the cable system sale and exchange transactions
increased net income by $196.5 million, or $20.69 per share. For
income tax purposes, substantial components of the cable system
sale and exchange transactions qualify as like-kind exchanges, and
therefore, a large portion of these transactions does not result in a
current tax liability.
On August 2, 2000, the Company acquired Quest Education
Corporation (Quest) for approximately $177,700,000, including
assumed debt. The acquisition of Quest was completed through an
all cash tender offer in which the Company purchased substantially
all of the outstanding stock of Quest for $18.35 per share. The acqui-
sition was financed through the issuance of additional borrowings.
Quest is a provider of post-secondary education offering Bachelor’s
degrees, Associate’s degrees, and diploma programs primarily in the
fields of healthcare, business, and information technology.
In addition, the Company acquired two cable systems serving approx-
imately 8,500 subscribers in Nebraska (in June 2000) and Mississippi
(in August 2000) for approximately $16,200,000, as well as various
other smaller businesses throughout 2000 for $18,400,000 (principally
consisting of educational services companies).
During 1999, the Company acquired cable systems serving 10,300
subscribers in North Dakota, Oklahoma, and Arizona (April and
August 1999 for $18,300,000); two Certified Financial Analyst test
preparation companies (November and December 1999 for
$16,000,000), and a travel guide magazine (in December 1999 for
$10,200,000). In addition, the Company acquired various other
smaller businesses throughout 1999 for $46,000,000 (principally
consisting of educational services companies).
The results of operations for each of the businesses acquired are
included in the Consolidated Statements of Income from their
respective dates of acquisition. Pro forma results of operations for
2001, 2000, and 1999, assuming the acquisitions occurred at the
beginning of 1999, are not materially different from reported results
of operations.
In June 1999, the Company sold the assets of Legi-Slate, Inc., its
online services subsidiary that covered Federal legislation and reg-
ulation. No significant gain or loss was realized as a result of the sale.
KCONTINGENCIES
The Company and its subsidiaries are parties to various civil law-
suits that have arisen in the ordinary course of their businesses,
including actions for libel and invasion of privacy, and also to an
antitrust lawsuit related to the acquisition by a subsidiary of a group
of community newspapers in 2001. Management does not believe
that any litigation pending against the Company will have a mate-
rial adverse effect on its business or financial condition.
The Company’s education division derives a portion of its net rev-
enues from financial aid received by its students under Title IV pro-
grams (“Title IV Programs”) administered by the United States
Department of Education pursuant to the Federal Higher Education
Act of 1965 (“HEA”), as amended. In order to participate in Title IV
Programs, the Company must comply with complex standards set
forth in the HEA and the regulations promulgated thereunder (the
“Regulations”). The failure to comply with the requirements of HEA
or the Regulations could result in the restriction or loss of the abil-
ity to participate in Title IV Programs and subject the Company to
financial penalties. For the years ended December 30, 2001 and
December 31, 2000, approximately $101,500,000 and $35,000,000,
respectively, of the Company’s education division revenues were
derived from financial aid received by students under Title IV
Programs. These revenues were earned and recognized by Quest
following the Company’s acquisition of Quest in August 2000.
Management believes that the Company’s education division
schools that participate in Title IV Programs are in material compli-
ance with the standards set forth in the HEA and the Regulations.
LBUSINESS SEGMENTS
The Company operates principally in four areas of the media busi-
ness: newspaper publishing, television broadcasting, magazine pub-
lishing, and cable television. Through its subsidiary Kaplan, Inc., the
Company also provides educational services for individuals, schools,
and businesses.