Washington Post 2002 Annual Report Download - page 54

system sale and exchange transactions qualify as like-kind goodwill and indefinite-lived intangible assets, were as follows
exchanges and therefore, a large portion of these transactions (in thousands, except per share amounts):
does not result in a current tax liability.
2002 2001 2000
In August 2000, the Company acquired Quest Education Cor-
Income before cumulative effect of
poration (Quest) for approximately $177.7 million, including change in accounting principle,
assumed debt. The acquisition of Quest was completed through as reported ************************** $ 216,368 $229,639 $136,470
Amortization of goodwill and other
an all cash tender offer in which the Company purchased sub- intangibles, net of tax**************** —54,989 43,079
stantially all of the outstanding stock of Quest for $18.35 per Pro forma income before cumulative
effect of change in
share. The acquisition was financed through the issuance of accounting principle ***************** 216,368 284,628 179,549
additional borrowings. Quest is a provider of post-secondary Cumulative effect of change in method
of accounting for goodwill
education offering Bachelor’s degrees, Associate’s degrees and and other intangible assets, net of tax (12,100) ——
diploma programs primarily in the fields of health care, business Redeemable preferred stock dividends** (1,033) (1,052) (1,026)
Pro forma net income available for
and information technology. common shares ********************** $ 203,235 $283,576 $178,523
In addition, the Company acquired two cable systems serving Basic earnings per share:
Before cumulative effect of change in
approximately 8,500 subscribers in Nebraska (in June 2000) accounting principle, as reported*** $ 22.65 24.10 14.34
and Mississippi (in August 2000) for approximately $16.2 mil- Cumulative effect of change in
accounting principle *************** (1.27) ——
lion, as well as various other smaller businesses throughout Amortization of goodwill and other
2000 for $18.4 million (principally consisting of educational intangibles ************************ —5.79 4.56
Pro forma net income available for
services companies). common shares ******************** $ 21.38 $ 29.89 $ 18.90
The results of operations for each of the businesses acquired are Diluted earnings per share:
Before cumulative effect of change in
included in the Consolidated Statements of Income from their accounting principle, as reported*** $ 22.61 $ 24.06 $ 14.32
respective dates of acquisition. Pro forma results of operations Cumulative effect of change in
accounting principle *************** (1.27) ——
for 2002, 2001 and 2000, assuming the acquisitions and Amortization of goodwill and other
exchanges occurred at the beginning of 2000, are not material- intangibles ************************ —5.79 4.55
Pro forma net income available for
ly different from reported results of operations. common shares ******************** $ 21.34 $ 29.85 $ 18.87
K. GOODWILL AND OTHER INTANGIBLE ASSETS
In accordance with SFAS 142, the Company has reviewed its
The Company adopted Statement of Financial Accounting Stan- goodwill and other intangible assets and classified them in three
dards No. 142 (SFAS 142), ‘‘Goodwill and Other Intangible categories (goodwill, indefinite-lived intangible assets and
Assets’’ effective on the first day of its 2002 fiscal year. As a amortized intangible assets). The Company’s intangible assets
result of the adoption of SFAS 142, the Company ceased most with an indefinite life are from franchise agreements at its cable
of the periodic charges previously recorded from the amortiza- division. Amortized intangible assets are primarily non-compete
tion of goodwill and other intangibles. agreements, with amortization periods up to five years. The
Company’s amortized intangible assets increased $1.4 million
As required under SFAS 142, earlier this year, the Company
in 2002 due to acquisitions. Amortization expense was
completed its transitional impairment review of indefinite-lived
$655,000 in 2002, and is estimated to be less than $1 million
intangible assets and goodwill. The expected future cash flows
in each of the next five years.
for PostNewsweek Tech Media (part of the magazine publishing
segment), on a discounted basis, did not support the net carry- The Company’s goodwill and other intangible assets as of
ing value of the related goodwill. Accordingly, an after-tax December 29, 2002 and December 30, 2001 were as follows
goodwill impairment loss of $12.1 million, or $1.27 per share, (in thousands):
was recorded. The loss is included in the Company’s fiscal year
results as a cumulative effect of change in accounting principle. Accumulated
Gross Amortization Net
On a pro forma basis, the Company’s 2001 and 2000 operat-
2002:
ing income would have been $298.3 million and $402.1 mil- Goodwill ********************** $1,069,263 $298,402 $ 770,861
lion, respectively, if SFAS 142 had been adopted at the begin- Indefinite-lived intangible assets 646,225 163,806 482,419
Amortized intangible assets***** 3,525 1,372 2,153
ning of fiscal 2000, compared to $377.6 million for 2002.
$1,719,013 $463,580 $1,255,433
Other pro forma results for the years ended December 30, 2001:
2001, and December 30, 2000, to exclude amortization of Goodwill ********************** $1,033,956 $279,402 $ 754,554
Indefinite-lived intangible assets 614,565 163,806 450,759
Amortized intangible assets***** 2,165 717 1,448
$1,650,686 $443,925 $1,206,761
52 THE WASHINGTON POST COMPANY