Washington Post 2004 Annual Report Download - page 68

tions utilized to determine periodic cost for the years ended Janua- Minimum payments have not been reduced by minimum sublease
ry 2, 2005, December 28, 2003, and December 29, 2002: rentals of $5.5 million due in the future under noncancelable
Pension Plans Postretirement Plans subleases.
2004 2003 2002 2004 2003 2002 Rent expense under operating leases included in operating costs
was approximately $97.6 million, $76.8 million, and $60.7 million
Discount rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6.25% 6.75% 7.0% 6.25% 6.75% 7.0%
Expected return on plan assetsÏÏÏ 7.5% 7.5% 7.5% ÌÌÌ in 2004, 2003, and 2002, respectively. Sublease income was
Rate of compensation increaseÏÏÏ 4.0% 4.0% 4.0% ÌÌÌ approximately $0.6 million, $0.6 million, and $0.6 million in 2004,
In determining the expected rate of return on plan assets, the 2003, and 2002, respectively.
Company considers the relative weighting of plan assets, the The Company's broadcast subsidiaries are parties to certain agree-
historical performance of total plan assets and individual asset ments that commit them to purchase programming to be produced in
classes and economic and other indicators of future performance. In future years. At January 2, 2005, such commitments amounted to
addition, the Company may consult with and consider the input of approximately $93.0 million. If such programs are not produced,
financial and other professionals in developing appropriate return the Company's commitment would expire without obligation.
benchmarks.
J. ACQUISITIONS, EXCHANGES AND DISPOSITIONS
In December of 2003, the Medicare Prescription Drug, Improve-
ment, and Modernization Act of 2003 (the Act) was enacted. The The Company completed business acquisitions and exchanges total-
Act introduced a prescription drug benefit under Medicare, as well ing approximately $63.9 million in 2004, $169.5 million in 2003
as a federal subsidy to sponsors of retiree health benefit plans that and $90.5 million in 2002 (including estimated fair value of cable
provide a benefit that meets certain criteria. The Company's other systems surrendered, assumed debt and related acquisition costs).
postretirement plans covering retirees currently provide certain pre- All of these acquisitions were accounted for using the purchase
scription benefits to eligible participants. In accordance with FASB method, and accordingly, the assets and liabilities of the companies
Staff Position No. 106-2, ""Accounting and Disclosure Requirements acquired have been recorded at their estimated fair values at the
Related to the Medicare Prescription Drug, Improvement, and Mod- date of acquisition. The purchase price allocations for these acquisi-
ernization Act of 2003,'' the Company has concluded that the Act tions mostly comprised goodwill and other intangibles and property,
is not significant to the Company's other postretirement plans and plant and equipment.
therefore, the effects of the Act were incorporated into the latest
On January 14, 2005, the Company completed the acquisition of
valuation of December 31, 2004. Overall, the Company's Postre-
Slate, the online magazine, which will be included as part of the
tirement benefit obligation was reduced by about $4.0 million at
Company's newspaper publishing division.
January 2, 2005 as a result of the Act; the Company's postretire-
ment expense is expected to be reduced by about $0.5 million in During 2004, Kaplan acquired eight businesses in its higher educa-
fiscal year 2005 as a result of the Act. tion and professional divisions for a total of $59.6 million, financed
Contributions to multi-employer pension plans, which are generally with cash and $8.7 million of debt. In addition, the cable division
based on hours worked, amounted to $2.0 million in 2004, completed two small transactions for $2.8 million. In May 2004,
$2.0 million in 2003, and $2.0 million in 2002. the Company acquired El Tiempo Latino, a leading Spanish-lan-
guage weekly newspaper in the greater Washington area. Most of
The Company recorded expense associated with retirement bene- the purchase price for the 2004 acquisitions was allocated to
fits provided under incentive savings plans (primarily 401(k) goodwill and other intangibles.
plans) of approximately $17.6 million in 2004, $15.5 million in
2003, and $15.4 million in 2002. During 2003, Kaplan acquired 13 businesses in its higher education
and professional divisions for a total of $166.8 million, financed
I. LEASE AND OTHER COMMITMENTS with cash and $36.7 million of debt. The largest of these was the
The Company leases real property under operating agreements. March 2003 acquisition of the stock of The Financial Training
Many of the leases contain renewal options and escalation clauses Company (FTC), for 55.3 million ($87.4 million). Headquar-
that require payments of additional rent to the extent of increases in tered in London, FTC provides test preparation services for account-
the related operating costs. ants and financial services professionals, with 28 training centers in
At January 2, 2005, future minimum rental payments under noncan- the United Kingdom as well as operations in Asia. This acquisition
celable operating leases approximate the following (in was financed with cash and $29.7 million of debt, primarily to
thousands): employees of the business. In November 2003, Kaplan acquired
Dublin Business School, Ireland's largest private undergraduate
2005ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 80,842
institution. Most of the purchase price for the 2003 Kaplan acquisi-
2006ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 75,974
tions was allocated to goodwill and other intangibles and property,
2007ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 71,181
2008ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 61,767 plant and equipment.
2009ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 52,303 In addition, the cable division acquired three additional systems in
ThereafterÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 154,541
2003 for $2.8 million. Most of the purchase price for these
$496,608
52 THE WASHINGTON POST COMPANY