Washington Post 2002 Annual Report Download - page 53

J. ACQUISITIONS, EXCHANGES AND DISPOSITIONS
The assumed health care cost trend rate used in measuring the
postretirement benefit obligation at December 29, 2002 was The Company completed business acquisitions and exchanges
10.5 percent for both pre-age 65 and post-age 65 benefits totaling approximately $47.4 million in 2002, $104.4 million
decreasing to 5 percent in the year 2013 and thereafter. in 2001 and $212.3 million in 2000 (including assumed debt
and related acquisition costs). All of these acquisitions were
Assumed health care cost trend rates have a significant effect on
accounted for using the purchase method, and accordingly, the
the amounts reported for the health care plans. A change of
assets and liabilities of the companies acquired have been
1 percentage point in the assumed health care cost trend rates
recorded at their estimated fair values at the date of acquisition.
would have the following effects (in thousands):
The purchase price allocations for these acquisitions mostly com-
1% 1% prised goodwill and other intangibles and property, plant and
Increase Decrease equipment.
During 2002, Kaplan acquired several businesses in their higher
Benefit obligation at end of year ******** $16,740 $(15,637)
education and test preparation divisions for approximately
Service cost plus interest cost *********** 2,115 (2,050)
$42.2 million. About $9.6 million remains to be paid on these
Contributions to multi-employer pension plans, which are gener- acquisitions, of which $2.2 million has been classified in current
ally based on hours worked, amounted to $2.0 million in 2002, liabilities and $7.4 million as long-term debt at December 29,
$1.8 million in 2001 and $1.1 million in 2000. 2002.
The Company recorded expense associated with retirement ben- In November 2002, the Company completed a cable system
efits provided under incentive savings plans (primarily 401(k) exchange transaction with Time Warner Cable which consisted
plans) of approximately $15.4 million in 2002, $14.5 million of the exchange by the Company of its cable system in Akron,
in 2001 and $13.3 million in 2000. Ohio serving about 15,500 subscribers, and $5.2 million to
Time Warner Cable, for cable systems serving about 20,300
I. LEASE AND OTHER COMMITMENTS subscribers in Kansas. The Kansas systems acquired in the
The Company leases real property under operating agreements. exchange transaction were recorded at their estimated fair
Many of the leases contain renewal options and escalation value. The non-cash, non-operating gain resulting from the
clauses that require payments of additional rent to the extent of exchange transaction increased net income by $16.7 million, or
increases in the related operating costs. $1.75 per share.
At December 29, 2002, future minimum rental payments under The Company’s acquisitions in 2001 principally included the
noncancelable operating leases approximate the following (in purchase of Southern Maryland Newspapers, a division of
thousands): Chesapeake Publishing Corporation, and amounts paid as part
of a cable system exchange with AT&T Broadband. During
2003************************************* $ 55,335 2001, the Company also acquired a provider of CFA˛ exam
2004************************************* 49,650
preparation services and a company that provides pre-certifica-
2005************************************* 43,178
tion training for real estate, insurance and securities
2006************************************* 37,915
2007************************************* 32,855 professionals.
Thereafter********************************* 74,039 Southern Maryland Newspapers publishes the Maryland Inde-
$292,972 pendent in Charles County, Maryland; The Enterprise in St.
Mary’s County, Maryland; and The Calvert Recorder in Calvert
Minimum payments have not been reduced by minimum sub-
County, Maryland, with a combined total paid circulation of
lease rentals of $4.4 million due in the future under noncancel-
approximately 50,000.
able subleases.
The cable system exchange with AT&T Broadband was complet-
Rent expense under operating leases included in operating costs
ed in March 2001 and consisted of the exchange by the Com-
and expenses was approximately $60.7 million, $58.3 million
pany of its cable systems in Modesto and Santa Rosa, Califor-
and $49.7 million in 2002, 2001 and 2000, respectively.
nia, and approximately $42.0 million to AT&T Broadband for
Sublease income was approximately $0.6 million, $1.5 million
cable systems serving approximately 155,000 subscribers prin-
and $1.2 million in 2002, 2001 and 2000, respectively.
cipally located in Idaho. The Idaho systems acquired in the
The Company’s broadcast subsidiaries are parties to certain exchange transactions were recorded at their estimated fair
agreements that commit them to purchase programming to be value. In a related transaction in January 2001, the Company
produced in future years. At December 29, 2002, such commit- completed the sale of a cable system serving about 15,000
ments amounted to approximately $52.3 million. If such pro- subscribers in Greenwood, Indiana, for $61.9 million. The gain
grams are not produced, the Company’s commitment would resulting from the cable system sale and exchange transactions
expire without obligation. increased net income by $196.5 million, or $20.69 per share.
For income tax purposes, substantial components of the cable
2002 FORM 10-K 51